The vote this Tuesday that could quietly pick a downtown affordable housing developer.

How to read this piece

An advance on an upcoming vote — stated conditionally, because the Council has not yet acted.

Nothing here has been decided. Item J1 is a noticed public hearing — the agenda was posted and the hearing advertised in the local newspaper and mailed to owners and occupants within 300 feet of the site — so the Council takes public testimony before it votes. At the close of the hearing it acts by resolution, and it is the Council, not the Planning Commission, that is the final decision-maker on the fee concession: the Commission’s 6-0 partial-waiver recommendation is advisory only. The staff report puts three choices before the Council: deny the fee concession in full (staff’s recommendation), grant a partial waiver of the $372,400 recreation in-lieu fee only (the Planning Commission’s recommendation, which the Council may adopt, reject, or modify), or grant the full fee-waiver concession that Habitat says it needs. (Choose the third path and staff would bring the final resolution back on a later consent calendar — but the substantive decision would be made Tuesday.)

This report analyzes the consequences of one of those paths — the denial staff urges — and states them in the conditional throughout: if the Council adopts staff’s resolution, then a chain of effects logically could follow. The layers are kept separate.

Sections 1–2 are facts on the record: what Habitat asked, and the affordability reason staff gives for recommending denial.

Sections 3–5, flagged ANALYSIS, take that reasoning at face value and follow it — first to the three plaza proposals, next to the Alliant proposal itself, and finally to the City’s grim five-year budget picture.

1 · What Habitat has asked, and what staff urges ON THE RECORD

Agenda item J1 · Staff Report #26-136-CC · 335–355 Pierce Rd. (Laurel Landing), Belle Haven

Laurel Landing is a 100% affordable, for-sale townhouse community — eight ownership units on two vacant parcels totaling about 0.35 acres, deed-restricted affordable for at least 55 years. Under State Density Bonus Law (Gov. Code § 65915), Habitat has requested a concession to waive all City development-impact and permitting fees. Habitat estimated the total at $944,330; City staff, checking department by department, put it at $596,644. Staff recommends the Council approve the subdivision but deny the fee waiver in full — one of three options the report lays out.

Source: Aug. 11, 2026 City Council agenda (PDF), item J1, Staff Report #26-136-CC, Table 2 and "Impact on City Resources," pp. J-1.5–J-1.8.

2 · The guardrail a denial would set THE STANDARD

Read staff’s own words and the affordability test is explicit

Staff’s case for denial is not about the merit of Habitat’s Laurel Landing project; it centers on the General Fund. Three reasons articulated by staff, and one mechanism, would define a fiscal-and-policy guardrail the Council would tacitly adopt by denying the fee-waiver request:

• The City has already committed $3.6 million from the BMR Housing Fund to the project — $450,000 per home, which staff calls “the highest per-unit funding contribution ever awarded from the BMR Housing Fund” — as a grant that “will not be repaid.”
• A fee waiver would force a General Fund backfill up to $596,644, including $396,800 in transfers out plus ~$199,844 in foregone cost-recovery revenue, requiring a mid-year budget amendment.
• The fund meant to receive the largest waived fee — the Recreation In-Lieu Fund — holds only ~$346,000, less than the single $372,400 fee at issue.

Source: Staff Report #26-136-CC, "Staff recommendation," "Impact on City Resources," and footnote 4, pp. J-1.7–J-1.8. Legal basis as cited by staff: Gov. Code § 65915; Quimby Act, Gov. Code § 66477; MPMC § 15.16.020.

3 · Apply that guardrail and the plaza field would narrow to one ANALYSIS

Parking Plazas 1, 2 & 3 · RFP for ≥345 affordable units + 556 replacement spaces · three proposals filed Dec. 15, 2025

The RFP cautioned developers that the City’s contribution would consist of “the land itself” — a 55-year ground lease at $1.00 a year — and that any additional subsidy “should not be presumed.” Only one bidder, Alliant, submitted a bid that, at least at the outset, would adhere to that restriction. Measured against the affordability guardrail a vote this week to deny Habitat’s fee waiver would set, here is how the three downtown suitors fare on their own filed terms:

This Alliant assessment squares with its own filing, not a summary of it: Alliant writes that “the City’s primary contribution will be the long-term ground lease or land disposition consistent with the RFP, without requirement for additional subsidy of city funds,” and that it anticipates “requesting a city loan of impact fees, to be repaid with interest.” (An outside analyst has noted Alliant’s no-City-cost parking assumes open-shop labor and could need City help if union labor were mandated — a conditional Alliant did not itself request.)

A second, independent factor points the same way — that the Alliant bid gives the Council’s pro-housing members their only real choice. The $1-a-year, 55-year lease the City’s plaza-conversion plan contemplates is possible only if the City first declares the plazas “exempt surplus land” under California’s Surplus Land Act — a designation whose affordable-housing pathways key on lower-income (≤80% AMI) households. By that measure, too — which sets aside whether the busy city-owned lots are “surplus” in any ordinary sense — only Alliant qualifies across the board: its 100% affordable, roughly 55%-AMI plan (a majority restricted at or below 50% AMI) clears the exempt-surplus pathways with no market-rate carve-out, while Presidio Bay’s workforce housing (80–120% AMI) by its own filing “does not deliver the very low income housing requested in the RFP,” and Related/Alta’s mixed-income plan leaves the trigger “to be nailed down later.” As a prior MonitorMenlo Surplus Land Act analysis concluded, “only Alliant clearly gives the City the means to declare the three plazas exempt surplus property.”

Sources: MonitorMenlo, "RFP Fast Facts" (Aug. 3, 2026), drawn from the City's RFP and the three Dec. 15, 2025 filings — Alliant, Presidio Bay, Related/Alta. Presidio Bay’s “waive all impact, planning, and permitting fees” language and its $15M / $43,228-per-unit figures are stated in its own filing under “Proposed City Responsibilities.” Combs $26–27M figure: June 2, 2026 study session (councilmember estimate, not in Related/Alta's filing). · Surplus-land qualification: MonitorMenlo, “If this surplus Jeep is going to drive, Alliant is behind the wheel” (monitormenlo.news/surplus-jeep).

4 · Even Alliant would not square with the Habitat analysis ANALYSIS

The land is not free — it is the biggest subsidy of all, just unpriced

Even a new Habitat “no fee waiver” guardrail leaves open the larger questions of budgetary affordability and stewardship that any city council should weigh when it is taking in less than it spends. Alliant would “clear” that prudential test only because the land donation the City committed to in its RFP is treated as costless. It is not.

The City would lease roughly nine downtown acres — in one of the Peninsula’s most valuable retail cores — for $1 a year across a 55-year term. That footprint is about 26 times the 0.35 acres Habitat had to acquire (nine acres ÷ 0.35 = ~26). Habitat received no land gift; it bought its parcels, with the City’s grant partly covering the purchase. So the plaza model would not avoid subsidy — it would swap a visible cash grant for an invisible land grant.

And the City has already told us, in its own documents, how expensive this land grant is:

• Menlo Park’s $164,951 ballot-measure analysis identifies land cost as among the largest barriers to affordable housing in the county — i.e., the thing the City would donate is precisely the most valuable input.
• The same report concedes that because 100% affordable housing is generally property-tax-exempt, the downtown affordable housing the City is pursuing would likely cost the General Fund more than it returns — a recurring net draw, not a one-time hit.

Put those against the Habitat file. Alliant is a 100% affordable, 345-unit project — the same tax-exempt, net-cost profile the City flags — that would sit on donated public land 26× larger than Habitat’s, with the City foregoing lease revenue for 55 years. Whatever measure staff would use to call Habitat’s $596,644 one-time waiver unaffordable — General Fund exposure, per-unit public contribution, “the City will not be repaid” — the Alliant land donation would be larger, not smaller. In other words, the lone suitor that would clear the City’s affordability guardrail would be condemned by the City’s affordability analysis.

5 · And the budget would make the collision worse over time ANALYSIS

“Can’t afford it now” would become “can afford it even less later”

A denial would land in a City wrestling with its budget. The City’s May 2025 five-year forecast projected an initial ~$2.8 million deficit in a ~$90.5 million General Fund, and through the spring the Council weighed cuts to childcare, pool hours, and holiday lights, and to a $43K downtown string-light contract, alongside higher development fees. That forecast projected operating deficits that deepen over time:

As projected — the City’s May 2025 five-year forecast

Projected General Fund operating surplus/(deficit), City five-year forecast (Staff Report #25-072-CC, May 2025), historically typical CIP-transfer scenario.

As revised — the June 2026 adopted budget and updated five-year forecast

FY2026-27 was adopted balanced (no reserve draw, June 23, 2026); the out-year bars are the structural operating deficits in the City’s updated five-year General Fund forecast (FY2026-27 budget, Staff Report #26-103-CC, June 9, 2026). The deeper out-year gaps chiefly reflect the loss of a recurring state VLF backfill.

Now lay the plaza calendar over that curve. The developers’ own schedules put plaza construction in roughly 2028–2032 — the very years the revised forecast marks as deepest in the red, at roughly $4.5 million to $5.8 million a year. The City balanced FY2026-27 with one-time help, but the recurring cost of a 345-unit plaza project — forgone land revenue, net-cost services, and whatever a selected developer ultimately requires — would arrive when the structural gap is at its worst.

Sources: Original projection — City of Menlo Park, Updated General Fund Five-Year Forecast, Staff Report #25-072-CC (May 13, 2025). Revised — City of Menlo Park FY2026-27 adopted budget (adopted June 23, 2026) and updated five-year forecast, Staff Report #26-103-CC (June 9, 2026); state VLF backfill and balanced-adoption per the City’s budget statement (InMenlo, June 30, 2026). Related: MonitorMenlo, “Two ledgers, one street.”

6 · One standard, or two? ANALYSIS

The whole argument, drawn to one dollar axis

If the Council follows the staff report on Aug. 11, the question would no longer be “can the City afford Habitat?” It would be whether the affordability standard that denial establishes is then applied to the City’s own project.

Applied evenhandedly, that guardrail would do two things at once: it would eliminate the two plaza suitors that ask for cash or waivers, quietly narrowing the field to Alliant before any public selection — and it would then condemn the Alliant land donation on the same grounds, because a 100%-affordable project on 26× the land is, by the City’s own analysis, a bigger General Fund commitment than the eight-home waiver staff would have it reject.

Accountability questions for the Council

• If the Council denies Habitat’s $596,644 waiver as unaffordable, on what basis could it later grant Presidio Bay’s request to waive all fees and construction taxes and add $15M, or take on Related/Alta’s ~$63M garage bond — and would denying Habitat therefore narrow the plaza field to Alliant before the outside September review is even received?
• Has staff placed any value on the $1-a-year, 55-year ground lease of the ~9 downtown acres? Without it, how could the Council know whether the “no-subsidy” Alliant path is cheaper or dearer, per unit, than the Habitat commitment it would be declining to extend?
• The City’s own 9212 report finds that 100%-affordable downtown housing would likely cost the General Fund more than it returns. How would that recurring net cost, at 345 units on donated land, be affordable if a one-time $596,644 waiver for eight units is not?
• Given the five-year forecast shows deficits deepening to ~$3.0M by FY29-30 — the years plaza construction would land — what is the plan to carry a downtown project’s ongoing General Fund cost? And would granting the Planning Commission’s partial waiver of the $372,400 recreation in-lieu fee instead of a full denial materially change that picture, or risk any BMR grant, county NOFA award, or construction milestone?