In his most recent widely distributed email, titled YOUR CITY / YOUR TURN NEWSLETTER (issue 2007/11), Council Member John Boyle writes of the Derry project:

The new project also creates fewer housing units to address our housing shortage, and since many of our city fees are tied to the development of housing units, our city actually loses more than $2M worth of fees and subsidies that the old project would have generated (rec-in-lieu fees, school impact fees, below market rate housing subsidies, etc).

This is not true.

We want to set the record straight on this section from his newsletter

The new project contains a $2,000,000 cash payment to the City in addition to all mandated fees --which are reduced---but in all scenarios, the $2,000,000 public benefit payment exceeds the loss of impact fees by at least $500,000 and as much as $1,000,000.

Public impact fees are directly associated with anticipated negative impacts; with fewer negative impacts anticipated from a project reduced in size, the fees are correspondingly lower. These fees were never free spending money as he implies, but are to be spent to relieve impacts from the project.

Recreation in-lieu fees are supposed to pay for the incremental additional burden on recreation facilities. Likewise traffic impact fees. With a smaller project, they naturally are somewhat decreased.

Mr. Boyle's analysis incorrectly bundles below Market Rate ("BMR") housing units with public benefits; he co-mingles public impact fees with personal estimates for BMR subsidies and oddly, he confuses public and private wealth.

For the record, the value of BMR units is never computed or included by the City in impact fee calculations. Per planning principles, BMR units are "mitigations", not "public benefits". Mitigations are designed to offset identified negatives like additional stress on public parks and additional traffic and other infrastructure impacts. The public benefit associated with government imposed BMR housing units is diversity, an abstraction without financial valuation. The units are private not public, and any subsidies made are given implicitly, not as cash, by the private developer to the private purchaser, not to the City, through the City, or by the City. Neither the units nor the subsidies can be counted or lost as public wealth.

Each distinction is material, and Councilman Boyle, who has a Stanford MBA Degree, fudges them all.

If Councilman Boyle values private BMR housing units more than public impact fees he should say so plainly. Many do. But to confuse the public by the false comparison of the impact fees with the true public benefit value which the revised project compromise yields, demands this response.

Just to be clear, for a substantially less intrusive project, we negotiated a public benefit payment of $2,000,000 as real cash, undesignated as to application except that it will benefit the public/community. This is in contrast to the $100,000 cash benefit that the previous project would produce, and which already had been specified to be used for an additional study, with no other debate or discussion of its potential use.

Morris Brown
Contact person
Menlo Park Tomorrow