Facebook paying Menlo Park millions for HQ expansion

Facebook will pay the city of Menlo Park millions of dollars for at least the next decade so the company can conduct a smooth expansion of its headquarters and house thousands more employees.

Facebook plans to pay millions of dollars to the city of Menlo Park in exchange for its approval of the social networking giant's plan to increase the number of workers in its new headquarters. The Menlo Park City Council has approved a development agreement that spells out a series of payments and actions to offset the cost of allowing Facebook to expand. In exchange, Menlo Park has agreed to process permits quickly and refrain from making Facebook pay any unexpected fees.

According to the agreement, Facebook will pay a guaranteed $8.5 million to the city spread over the next 10 years (annual payments of $800,000 for the first five years and of $900,000 for the following five years). This is to compensate Menlo Park for the sales tax or other revenue that it may have received if the site were used by a company that produces sales tax, according to Mercury News. Facebook will also pay $1 million per year for the five subsequent years, along with increases based on the Consumer Price Index (CPI).

Furthermore, Facebook said it will make a one-time payment of $1.1 million for city capital improvement projects. Last but not least, the company is also contributing a $500,000 donation to provide job training, a high school internship program, economic incentives to encourage employees to patronize local businesses, improvements to nearby public trails, participation in the Caltrans Adopt-a-Highway program, housing assistance through investments in low-income housing tax credits, and potential contributions to a housing development project.

Facebook has operated out of Palo Alto since June 2004, four months after the company was founded in Mark Zuckerberg's Harvard University dorm room. In February 2011, Facebook announced plans to move to Menlo Park so that it could have more room for its quickly growing number of employees (3,200 around the world as of December 31, 2011).

The social networking giant signed a 15-year lease on the old Sun Microsystems campus, and renamed the ring road around the East Campus "Hacker Way" from Sun's previous "Network Circle." In December 2011, Facebook completed its move from Palo Alto to Menlo Park.

Facebook agreed to the deal with Menlo Park because it wants to lift the city's 3,600-employee limit for the property. The ten building, 1-million square foot campus currently has around 2,000 local employees, but the social networking giant isn't satisfied with that.

In fact, Facebook is also building a second campus across the street and joining the two with an underground tunnel. Ultimately, the company wants to be able to house 9,400 employees. That means, Facebook hopes up to 6,600 workers will occupy the nine-building East Campus (57 acres) and as many as 2,800 workers will be in the five-building West Campus (22 acres). A tunnel under Highway 84 will connect the two campuses.

Menlo Park still needs to approve a final environmental impact report on Facebook's plans. A hearing before the council is scheduled for May 29.

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