Development on downtown parking lots

The City is preparing to issue a request for qualifications (RFQ) to solicit interest from experienced developers for the redevelopment of Parking Plazas 1, 2, and/or 3. The RFQ will prioritize the development of affordable housing but will allow for a mix of uses as part of a comprehensive development.

While the primary goal is to provide at least 345 affordable housing units across any combination of the three sites, developers may propose to include other uses, such as market-rate residential units, ground-floor retail or commercial space, and public open space. The exact mix of uses will depend on the feasibility of integrating different components while meeting the City's affordable housing objectives and financing the overall project.

Ultimately, the development program for each site will be determined through a collaborative process between the City and the selected developer, with input from the community and consideration of factors such as design, access and uses. The goal is to create a development that enhances the vitality of downtown Menlo Park while addressing the critical need for affordable housing and efforts to alleviate the regional and state housing crisis.

The City's Housing Element identifies the parking plazas as key opportunity sites for achieving the City's affordable housing goals. Throughout the development of the Housing Element, the City considered and included various sites and strategies throughout City Council Districts 2 through 5 to meet its Regional Housing Needs Allocation (RHNA) as defined by the State of California and to Affirmatively Further Fair Housing. Housing developments under construction in District 1 (primarily the Belle Haven and Bayfront neighborhoods) also count toward the City’s housing needs through 2031.

Development of affordable housing on the parking plazas is a critical component for the City in meeting its housing needs. Because the City owns the land, it lowers the potential costs of affordable housing, making development more likely to be built. The parking plazas are ideal sites because they are within a high resource area near public transit and goods and services, which addresses some of the requirements for site selection set by the state Department of Housing and Community Development. The City's goal is to provide at least 345 units affordable to very low-income households, which are those earning between 30% and 50% of AMI (area median income). Development of affordable units could be integrated with residential units at other income levels, residential and public parking, commercial development, and/or open space, as allowed by the Specific Plan zoning for the sites. The uses and components of a development would be determined in coordination with a selected developer.

The City completed the Affordable Housing on City-Owned Downtown Parking Lots Feasibility Study in 2024 to evaluate which of the eight downtown parking plazas would be most suitable for affordable housing development. The study considered factors such as:

• Lot size and shape: Parking Plazas 1 and 3 are the largest of the eight plazas and Parking Plaza 2 has a more regular configuration that can accommodate efficient site layouts for housing;
• Location: The three selected parking plazas are all located north of Santa Cruz Avenue, in close proximity to transit, goods and services, and amenities. This makes them well-suited for residential development;
• Access: Each of the three parking plazas has good access to the surrounding street network and downtown destinations for vehicles, pedestrians and bicyclists;
• Development potential: Parking Plazas 1, 2, and 3 have the capacity to accommodate housing units while still allowing for the inclusion of replacement public parking. Together, the three sites can support at least 345 affordable units with the potential for other uses and unit types; and
• Consistency with Specific Plan: The redevelopment of these three parking plazas most closely aligns with the vision and goals outlined in the El Camino Real/Downtown Specific Plan, which envisioned the potential for parking structures and/or pocket parks on the lots.

Affordable housing generally refers to units that are required to be sold or rented at below market rates to households earning a certain percentage of the area median income (AMI). The commonly used income categories are as follows:

• Acutely low income: 0-15% of AMI
• Extremely low income: 15-30% of AMI
• Very low income: 30-50% of AMI
• Low income: 50-80% of AMI
• Moderate income: 80-120% of AMI

In 2024, the San Mateo County AMI for a household of four is $186,600. Based on current State income and rent limits, the maximum affordable rent payment for a very low-income household would be $2,203 for a two-bedroom unit, $2,545 for a three-bedroom unit, or $2,840 for a four-bedroom unit. The maximum affordable rents in Menlo Park may differ slightly. Additional information on 2024 income limits and maximum rent payments in San Mateo County is available here: smcgov.org/housing/income-limits-and-rent-payments.

Parking will be provided, but the number of spaces, location and configuration have not yet been determined. The draft request for qualifications (RFQ) indicates that a minimum of 506 public parking spaces should be provided if all three parking plazas are developed with housing. Current parking utilization patterns suggest that 506 spaces are the peak number of spaces needed. However, the draft RFQ states that, if feasible, all 556 existing spaces should be replaced if all three lots are developed. The requested amount of replacement public parking is subject to change based on a downtown parking management study currently underway, scheduled to be finalized in summer 2025. If a lot is not redeveloped as part of the current process, the intent would be for the existing parking lot to remain.

An integral goal in working with any developer will be the replacement of public parking into future developments, either within the same structure or as a standalone parking facility. The goal is to ensure an adequate supply of conveniently located public parking for downtown businesses and visitors, in addition to the parking needs of new residents. Shared parking agreements and creative parking management strategies have been requested in the draft request for qualifications (RFQ) and the City seeks developer responses that explore these components as a part of any proposed development.

The City recognizes the importance of maintaining parking availability throughout the redevelopment process. Strategies to minimize disruption, such as phased construction or temporary parking arrangements, will be identified in coordination with the selected developer. In addition, Parking Plazas 4 through 8 are not included in the project at this time, and are likely to remain available as surface public parking lots during the development process.

The City's Housing Element establishes a goal of completing the affordable housing developments on the parking plazas by 2027. The project timeline involves several key steps:

1. Issue a request for qualifications (RFQ) to solicit interest from experienced developers;
2. Review RFQ submissions and determine any additional steps, such as a request for proposals (RFP) process, to select a developer;
3. Work with the developer to conduct community outreach, prepare and review project plans;
4. Complete project review and secure entitlements including comprehensive environmental review; and
5. Finalize project financing and commence construction.

Throughout the process, there will be multiple opportunities for community input, including public meetings during the developer solicitation and selection process, the project design and the entitlement stage.

The City will work with the selected developer to ensure that the redevelopment plan incorporates appropriate loading zones and access for business deliveries. This may include designated loading areas within the project site or on adjacent streets

Under the Specific Plan zoning, when certain conditions are met the maximum allowable height for development on the parking plazas would be 85 feet, which typically equates to six to seven stories. State density bonus laws would allow the option for taller buildings depending upon the percentage of affordable units and income levels proposed, as well as the need for additional height.

The parking plazas are zoned "Downtown (D)" in the El Camino Real/Downtown Specific Plan, which allows a mix of land uses. Permitted uses include multi-family residential, retail, office and personal services. The Specific Plan also allows for mixed-use projects combining residential and non-residential uses.

The primary focus for redevelopment of the parking plazas will be affordable housing, but any of the uses above could be incorporated into the developments as long as the zoning standards and the Housing Element goals are met.

If the City fails to meet its RHNA targets at various affordability levels, it may face a range of consequences from the state. The California Department of Housing and Community Development monitors each jurisdiction's progress toward meeting its RHNA goals annually, and can take enforcement actions against cities that are not making sufficient progress.

Potential consequences for non-compliance include:

• Loss of local land use decision-making: The state may revoke the City's ability to make certain land use decisions and instead allow housing developments that meet specific criteria to be approved ministerially without discretionary review by the City under Senate Bill 35;
• Financial penalties: The City may become ineligible for certain state funding sources, such as grants for affordable housing, transportation or infrastructure projects; and/or
• Decertification of Housing Element: The state may revoke its certification of the City’s Housing Element. The Department of Housing and Community Development certified the City’s Housing Element in 2024.

By working to meet its RHNA through projects like the development of the selected downtown parking plazas, the City can avoid these consequences and demonstrate its commitment to addressing the regional housing crisis.

There will be multiple opportunities for community members to provide input and stay engaged throughout the process of redeveloping the downtown parking plazas with housing and potentially other uses. Sign up for the project email list on the City's website at menlopark.gov/downtownhousing to receive updates on the project status, upcoming meetings and opportunities for input.

The City will also hold public meetings during the developer solicitation and selection process, project design phase and entitlement stage. These meetings will provide a forum for community members to learn about the project, ask questions and provide feedback. Meeting dates and times will be posted on the project webpage and publicized through the City's communication channels.