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Menlo Park Sales Taxes are Not Recovering

Original post made by Worried, Menlo Park: The Willows, on Oct 25, 2006

MENLO PARK SALES TAX RATES ARE FLAT AND HAVE NOT RECOVERED: When sales revenues bottomed at pre-boom (1995) levels they remained flat despite 1.) Duboc & Winkler's "streamlining" policies and 2.) a state and national recovery. California state sales taxes have surpassed pre-boom levels, but local sales tax revenues are stuck below pre-boom levels.

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.

Comments (4)

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Posted by IndieFan
a resident of Menlo Park: Downtown
on Oct 25, 2006 at 3:49 pm

Well, I have to agree with Winkler on one thing -- it was darned unfriendly of Sandy Crittenden to boot Landmark from the Park Theater. Of course, he's from Atherton, so I'm not sure it can be chalked up to Menlo Park's unfriendliness.

Other than that, your points are all solid. Winkler's New, New, New Math for justifying her positions is just nuts.


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Posted by Worried
a resident of Menlo Park: The Willows
on Oct 25, 2006 at 4:13 pm

Yeah, it was pretty unfriendly of Crittenden. Mickie's usual claim, though, is that the City is unfriendly to property owners. In Howard's case, the property owner was unfriendly to the tenant.


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Posted by Worried
a resident of Menlo Park: The Willows
on Oct 27, 2006 at 4:22 pm


As an addendum: Information recently appearing elsewhere in the public forum, citing a memo given to council members by Finance Direct Carol Augustine, confirms that this year's (FY2006) sales tax revenue is down from last year and at a 13-year low.

The trend described above has been happening for more than a decade in Menlo Park, and citizen from both sides should move quickly to call for land-use policies that both protect and expand sales tax producers in Menlo Park. It is critical to the financial well-being of the city.


 +   Like this comment
Posted by Me Too
a resident of Menlo Park: Downtown
on Nov 6, 2006 at 10:40 pm

Yeah, the structural deficits really do look grim


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