After nearly a year of closed-session council talks and negotiations, the cities of East Palo Alto and Menlo Park have agreed to the terms of a lawsuit settlement.
The city of East Palo Alto filed a lawsuit against the city of Menlo Park on Dec. 28, 2016 following Menlo Park's approval of its general plan update, which creates the zoning to allow up to 2.3 million new square feet of nonresidential space, 4,500 units of new housing and up to 400 hotel rooms, all east of U.S. Highway 101.
East Palo Alto alleged that Menlo Park violated the California Environmental Quality Act because the city underestimated the amount of new employment and traffic that would result from those changes to its general plan.
The terms of the agreement, which the Menlo Park City Council approved without public discussion on Tuesday, lay out several protocols that both cities will follow when it comes to big development projects.
Menlo Park City Attorney Bill McClure said the settlement agreement "more specifically memorializes in writing what is generally the practice already, and provides East Palo Alto some assurances – and vice versa – that we will each, kind of, follow these best practices."
The settlement says that a full environmental impact report (a lengthy, costly process to determine how a potential development will affect its surroundings) will have to be done for any development in Menlo Park's rezoned "M-2" area that meets or exceeds certain thresholds. It would apply to any proposed development that seeks "bonus" level density allowances, adds more than 250,000 net new square feet or includes a master plan (such as Facebook's proposed "Willow Campus").
McClure said he thinks the settlement terms could apply to five or six future developments in the M-2 area.
Developers are already required to do such environmental analyses on any project that is likely to "have a significant environmental impact," according to the California Environmental Quality Act. In some cases, the process can be streamlined if the potential impacts have already been studied and accepted by a city, as Menlo Park did in its updated general plan.
In addition to environmental studies, both cities have agreed that developers will conduct separate housing-needs assessments to look specifically at residential displacement and the "multiplier effect."
The concept behind the "multiplier effect" is that additional low-income housing demand is created by the service needs of residents at new housing developments.
For example, when new apartments are built, the tenants add to the demand for services such as restaurants and schools, which creates demand for new workers. Those workers need a place to live. If they cannot afford local market-rate housing, they create a demand for more affordable housing.
While the cities will conduct housing-needs assessments to quantify this impact, state law does not require this impact to be addressed. But a city council could potentially withhold discretionary approval of a development if the developer doesn't sufficiently address the housing demand created, McClure said.
The city would also have to pay "fair share" mitigation traffic impact fees on any intersection in East Palo Alto that is adversely affected by Menlo Park development, and East Palo Alto would do the same for Menlo Park for its development impacts.
Under the agreement, East Palo Alto could request quarterly monitoring reports from developments that impose a lid on the number of vehicle trips allowed.