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In the wake of a merger, one of Menlo Park’s top sales tax producers is decamping for Fremont this fall, according to the city.
Office Depot Max will shut down its local distribution facility in mid to late November, company spokesperson Karen Denning said. Operations will be consolidated with a larger facility in Fremont; most of the approximately 130 employees at the Menlo Park warehouse will be offered a chance to transfer.
Ms. Denning said the company intends to sell its 11.2-acre Menlo Park property once vacated.
According to Jim Cogan, the city’s economic development manager, the property, located off O’Brien Drive in the M2 industrial district, could be worth $25 million to $30 million.
“From Menlo Park’s standpoint, the (distribution facility) was great, because it had a really low traffic impact, but high revenue generation,” he said.
Mr. Cogan explained that confidentiality agreements prevent disclosing how much tax revenue a given business generates. The loss of Office Depot Max won’t hurt Menlo Park during the 2014-15 fiscal year, which starts July 1, but will impact the city’s revenue in subsequent years.
He said the question is how to mitigate the large loss of sales tax revenue in the mid-term. “We’re really hoping downtown development can help bridge that gap. The (downtown/El Camino Real) specific plan is really a big part of our approach to that, by diversifying our tax base so we’re not relying so heavily on one source.”
Mr. Cogan said that with the proposed initiative to change the specific plan looking like it will be on the November election ballot, the outcome of the vote could reduce the potential investment in downtown.
“It is something we’re concerned about,” he said.
If the initiative, put forward by grassroots coalition Save Menlo, wins a majority of the vote, the city would have to look for other ways to diversify its tax base.
“Off the top of my head, our (1 percent) users utility tax is incredibly low. An increase of 1 percent equals (another) $1.13 million a year to the city, which would help offset the loss of sales tax,” Mr. Cogan said.
He noted that there are other strategies to explore including updating the zoning code for the M2 district, which is currently underway. The changes would ideally encourage companies to stick around.
“Menlo Park often has these amazing companies start here, grow to a certain size, and then move, like Cisco,” Mr. Cogan commented. “We’re excited about the opportunity to work with property owners to create a space where our next generation of revenue generators — biotech companies (for example) — have the interest and means to stay in Menlo Park to grow. It’s a far stronger, more consistent sales tax generator group.”
Mayor Ray Mueller, who focused on the future of the M2 district while running for council, agreed that the city’s revised land-use policy needs to stimulate diversification “so that no one sector’s downturn will cripple the city’s revenue projections.”
He said he’d like the city to make it easier for biotech and healthcare manufacturers to relocate to the M2, “as both of these sectors are highly regulated and are less likely to move offshore” and they collaborate with the city’s information technology and software sector.
The M2 district already has one type of diversification in progress, albeit slowly: Menlo Gateway, an office-hotel complex on 16 acres along Independence and Constitution drives. The project, approved in 2010, would provide an estimated $1.4 million in annual hotel revenue. But until recently, investors weren’t interested in building hotels, according to project developer David Bohannon. Now that’s changing.
“We are in conversations with several potential operators for the Menlo Gateway Hotel. The market is encouraging,” Mr. Bohannon told the Almanac. The Gateway hotel, he said, needs to be full service as compared to the boutique hotels being considered for downtown Menlo Park. He said he hopes to announce an agreement “in the not too distant future.”
The city would love for that to pan out: “We’re definitely going to be more interested in seeing that project move forward in light of the loss of sales tax, and definitely if the initiative passes, because we’re going to need some investment,” Mr. Cogan said.
Mr Cogan claims that the loss of tax revenue won’t impact 2014-15 FY which started today. That’s bureaucrat talk. He thinks it won’t impact because the ‘budget’ is set. But in reality, if Office Max moves out in November, more than half the tax revenue for the fiscal year will be missing. We’ll just have a budget miss for the end of the year.
Time for the drunken sailor that is Menlo Park city government to sober up.
Has anyone else noticed how it seems like every time Jim Cogan is interviewed, he spins the topic to how the Save Menlo initiative will harm the city? Here, he takes the Office Max tax loss and spins it + the dreaded Save Menlo initiative to necessitate new taxes. Jim Cogan’s strategy regardless of the topic: Scare voters to reject the initiative.
Personally, I’d be interested in Mr. Cogan addressing why MP has a higher ratio of city employees per resident than any nearby city. Perhaps he could also explain why MP compensates its employees more than our neighbors. (Given the lapses in the Specific Plan, maybe some of those folks aren’t quite earning their paychecks.) Perhaps he could focus his efforts on finding new tax revenue in the M2 district. Perhaps he could consider pruning staff, or outsourcing, or sharing personnel with neighboring cities before talking about a new utility tax. In my opinion, Mr. Cogan spends a good deal of his time pickling new red herrings, all with the aim of defeating the initiative.
“It is something we’re concerned about,” he said.
If the initiative, put forward by grassroots coalition Save Menlo, wins a majority of the vote, the city would have to look for other ways to diversify its tax base.
“Off the top of my head, our (1 percent) users utility tax is incredibly low. An increase of 1 percent equals (another) $1.13 million a year to the city, which would help offset the loss of sales tax,” Mr. Cogan said
“Mr. Cogan said that with the proposed initiative to change the specific plan looking like it will be on the November election ballot, the outcome of the vote could reduce the potential investment in downtown.”
Save Menlo’s response is:
“Has anyone else noticed how it seems like every time Jim Cogan is interviewed, he spins the topic to how the Save Menlo initiative will harm the city? Here, he takes the Office Max tax loss and spins it + the dreaded Save Menlo initiative to necessitate new taxes. Jim Cogan’s strategy regardless of the topic: Scare voters to reject the initiative. ”
What people really should notice is Save Menlo’s strategy of attempting to disqualify the opinions of zany of their opponents by attacking them personally. Cogan’s JOB is to attract new investments to Menlo Park and clearly the initiative will discourage some of those potential investments. Cogan is perfectly correct to point that out.
Last night at the Fire Board meeting the Lanza/Fry supporters attempted to disqualify me from the discussion regarding Station 6 because I have publicly opposed their poorly written and misguided initiative – an initiative which has created a significant problem for the Fire District. My JOB as someone elected by the citizens is to ensure the best possible level of fire service and the initiative is an impediment to doing that job. The Lanza/Fry folks refuse to accept that the initiative’s definition of the Specific Plan boundaries and the requirement for a city wide vote to change those boundaries precludes the Fire District from merging one parcel which is inside the Specific Plan boundary with another, immediately adjacent parcel, which is outside the Specific Plan boundary without such a vote. And Fry insists that the Fire District should just build a suboptimal station on the existing station parcel – which would not accommodate the equipment needed to provide fire services to a hopefully growing downtown. And then George Fisher called on me to recuse myself from the Station 6 discussion because I had ‘worked at Stanford almost 40 years ago”.
The Save Menlo strategy is clear – use personal attacks to attempt to discredit anyone who opposes the poorly write and unveiled initiative Lanza/Fry initiative.
This is every bit the example of what happens in a town seen as unfriendly to business — Menlo Park is not an attractive city for a new business or an expanding business. Save Menlo’s approach to issues (misrepresenting the ballot initiative at the Farmer’s market) and its regular scare tactics contribute to this perception in a big way. Wake up folks.
What is Save Menlo’s motivation for restricting development? Are they incumbent local business interests fearful of new competitors? What is their rationale? What is going on here? Just trying to understand!
Bob:
Savemenlo’s motivation is that most live in the Allied Arts area and are afraid of increased cut through traffic that might be created by development at the Stanford properties. Never mind that there are other ways to deal with that problem. They have chosen to put forward an initiative with multiple unanticipated consequences (see the inability of the fire district to combine two lots to build a new fire station among many others). In order to protect their own narrow self interest they have put forward a poorly written initiative with multiple unforeseen consequences for the future of our city. Bottom line is they don’t care about the rest of the city beyond protecting their little neighborhood.
Peter,
Why did you write that my comment was Save Menlo’s response? I am not in any way affiliated with Save Menlo. Please retract your statement, and be more careful in the future about ascribing names and positions to posters who don’t share your views.
I find it ironic that you wrote the following in response to my post:
“The Save Menlo strategy is clear – use personal attacks to attempt to discredit anyone who opposes the poorly write and unveiled initiative Lanza/Fry initiative.”
Talk about the pot calling the kettle black!
(Note to Almanac editorial staff: I would guess that Peter is among your most prolific Town Square contributors. I respectfully request that you make note of his ad hominem attack, and more carefully monitor his future postings.)
Propoganda – you choose to be anonymous so you bear the consequences of that choice. You are the one who identified with Save Menlo in your posting.
If it walks like a duck, talks like a duck then it probably is a duck.
Yes, I am a prolific poster but I do so in my own real name, there is lots of information available about me and I bear the full responsibility for my postings and my actions.
Propoganda – I also think it is absolute cowardice for you to anonymously attack Jim Cogan.
Why did you not use your real name in making that attack?????
Peter,
Please reread my post. I did not attack Mr. Cogan. I shared an observation.
I am not a coward. I choose not to share my name because it is not required. Are you accusing every poster who does not use their name of being a coward?
As previously noted, I am not in any way affiliated with Save Menlo. I did however, sign their petition.
Your two recent comments constitute additional ad hominem attacks. I respectfully request that the Almanac staff to take appropriate action.