Menlo Park Sales Taxes are Not Recovering
Original post made by Worried, Menlo Park: The Willows, on Oct 25, 2006
WINKLER MIS-DIAGNOSED THE PROBLEM: Winkler's simplistic analysis is that sales have waxed and waned with the boom and bust, that Menlo Park is (still after four years of her policies) "unfriendly", and her only policy, "streamlining", a euphemism for zoning liberlizations, will fix it.
ITS HIGH RENTS, STUPID: Retailers and sales tax producers are being driven out by high rents both downtown (car dealers) and in the east (light manufacturers.) Menlo Park office rents are and have been the highest in San Mateo County for a long time, and Menlo Park commercial property has fetched the highest prices ever on the West Coast. High rents and high land prices contradict Mickie's claim that there is no economic demand for businesses to locate in Menlo Park. If we are so unfriendly, why are we getting such high rents and property prices.
CASE STUDY: THE PARK THEATER. The owner terminated the lease on his tenant in the expectation of gaining future higher rents from office price. The tenant was willing to pay, and could afford only a slight rent increase. Forced vacancy had nothing to do with "unfriendliness."
HIGH RENT PAYERS PRODUCE LITTLE SALES TAX. RESULT: LOSS OF SALES TAX PRODUCERS: Sales tax revenues are down despite the recovery because there are fewer sales tax producers than there were before the boom. A sales tax producer exodus has occurred because businesses that do not generate sales tax are replacing those that do. Office conversions in the east and downtown, and now condo conversions on El Camino are replacing retailers and other sales tax producers with tenants (professional services) who can afford the rents but pay no sales taxes.
"STREAMLINING (ZONING LIBERALIZATION) MAKES IT WORSE: Property owners want to maximize their rents and property value, not sales tax for the city. Winkler and Duboc's zoning liberalizations make spec development easier, and therefore encourage property owners and developers to convert properties to non sales tax producing uses. The most prominent example is auto dealers, being replaced by offices and condos. Out went the car dealers, in came the condos. There is a net loss in sales tax, because Duboc and Winkler don't understand that commercial parcels that produce sales tax need to be preserved, and they need to add sales tax producers, and "the market" won't do that on its own.
THE PROBLEM WAS FORESEEN IN 1999: This was already known in 1999 by the city council who, then, were taking some actions to preserve sales tax producing zones. Those actions were abandoned in 2002 when Duboc and Winkler took office.