While navigating through red tape in a bid to expand at its new Menlo Park campus, Facebook is checking out real estate opportunities elsewhere as a backup plan, company officials acknowledged Thursday.
Although he wouldn't confirm or deny a report in the Silicon Valley/San Jose Business Journal that the social media giant is looking at Pacific Research Center in Newark, Facebook spokesman Tucker Bounds said the company is hoping for the best but preparing for the worst.
"We hope that city (Menlo Park) officials see the significant economic benefits that come with having a good neighbor, like Facebook, join the community," Bounds wrote in an email. "Our expectation is to grow and thrive responsibly in Menlo Park, but it's important for us to evaluate other options in the case that our plans are not fully approved and supported."
By the end of last year Facebook had moved its 2,000 employees from Palo Alto to the former Sun Microsystems campus at the intersection of Bayfront Expressway and Willow Road. It has asked the city for permission to eventually employ more than 3,600 people at the campus -- the maximum number Sun had been allowed. Facebook envisions having as many as 6,600 employees there within a few years.
It faces several regulatory hurdles, however, such as getting the city to approve an environmental impact report that shows growth impacts such as traffic can be offset. That report is scheduled to be released at the end
of next month.
Facebook also is negotiating a development agreement that will include a list of community benefits the city wants it to provide. The two sides have been negotiating since February and hope to come up with an agreement by April 17.
Among the potential benefits that city officials and residents have been pining for are improved bicycle routes, assistance for affordable housing and local schools, and sums of money equivalent to the sales tax revenue that Facebook doesn't bring since it is not a retail operation like Sun Microsystems.
City Attorney William McClure said he isn't surprised that Facebook is looking at other office options, because that's what businesses do when going through the uncertainties of a project approval processes.
"That's always been out there if the project doesn't get approved or can't get approved, that it (campus) doesn't meet their requirements," McClure said. "If there's a problem in getting the project approved and they're going to exceed 3,600 employees, what are they going to do?
During a February city council meeting, Facebook Chief Financial Officer David Ebersman put Menlo Park on notice about the company's willingness to leave by describing the development agreement negotiations as "critical conversations that will determine whether or not Facebook will move forward with our plans to plant our long-term roots in Menlo Park."
Mayor Kirsten Keith said in an email Thursday that the city is "happy to have Facebook in Menlo Park.
"We have just begun negotiating a development agreement with Facebook. I am sure that we will reach a satisfactory agreement that will be beneficial to all stakeholders," Keith said.
If things don't work out in Menlo Park, Newark would enthusiastically welcome Facebook, said Terrence Grindall, that city's community development director. Newark issued a press release earlier this week boasting that an "unnamed biotechnology firm" from Palo Alto signed a lease for 220,000 square feet at the Pacific Research Center and touting Newark's "great business environment, low fees, simple regulations, available affordable spaces, and a great location on I-880 and just across the Bay from Palo Alto/Menlo Park."
Grindall said he'd heard a few weeks ago from one of the brokers at Kidder Matthews, the commercial real estate company handling Pacific Research Center, that it is working on getting Facebook's business.
Kidder Matthews Executive Vice President Gregg Domanico declined to discuss whether Facebook is a current or prospective client, explaining that the company has nondisclosure agreements for confidentiality purposes.
However, he did note that although the Newark business park is filling fast, there is still "about 400,000 square feet that we can deliver and we also have the ability to build on another 600,000 square feet."
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