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September 01, 2004

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Publication Date: Wednesday, September 01, 2004

Menlo council paves way for auto mall Menlo council paves way for auto mall (September 01, 2004)

** Hungry for sales-tax revenue, officials see opportunity in the industrial Haven Avenue area.

By Rebecca Wallace
Almanac Staff Writer

When most people picture Menlo Park, they don't think of the Haven Avenue area.

Instead of the pretty shops on Santa Cruz Avenue, there are industrial buildings and car-storage lots. Freeway noise from nearby U.S. 101 provides the soundtrack, and a thin, apathetic creek crawls next to the road, which is peppered with "For Lease" and "For Rent" signs.

An area lacking charm, though, can still be industrious. The sites have a great deal of vacant space, but they also contain security, flooring, and hardware businesses; an antique restorer; an insurance agency; and dog and cat kennels.

And when city officials look at the area these days, they also picture a bright future: robust auto malls filled with dealers pulling in much more sales-tax revenue for the city than the existing businesses. Or perhaps a "big-box" retail chain store or a posh new hotel like the Four Seasons planned for neighboring East Palo Alto.

To get to that future for the Haven Avenue area, which is bounded by Bayfront Expressway and Marsh Road, one governmental hurdle needs to be knocked down. As City Councilman Chuck Kinney put it last week, "The zoning there is limiting to what the potential could be in the future."

His colleagues agreed. At the August 24 meeting, the council unanimously voted to have city staff look into expanding the area's zoning, which now only allows industrial uses such as light manufacturing, research and development, offices and limited retail sales.

Staff members are expected to come back to the council in 60 days after studying such factors as what developers and auto dealers might be willing to pay for land in the area, City Manager David Boesch said.

Although Haven Avenue looks rundown in many places, city officials trumpet that it's rife with opportunity, particularly for an auto mall. Its easy freeway access is key, and the larger parcels mean more space for vehicle storage than the city's four auto dealers currently have on El Camino Real, Mr. Boesch said.

According to David Johnson, Menlo Park's business development manager, the dealers are among the top nine revenue producers for the city because of the coveted sales-tax revenue they provide. So, obviously, city officials would prefer to woo their dealers to the other side of town rather than have them move out of Menlo Park.

Such a relocation would also open up more downtown retail space on El Camino for new businesses, Mr. Johnson said.

As inspiration, officials look to the Redwood City side of Haven Avenue, where a Porsche dealership draws traffic and cheerily waves banners easily visible from U.S. 101.

"El Camino isn't the thriving auto dealership corridor that it used to be," Mr. Boesch said. "Many (dealers) across the country are seeking out visible freeway sites. We think of El Camino as a heavily traveled roadway, but it's only a fraction of what goes up and down 101 on a daily basis."

Indeed, Richard Mugnolo, who owns Cadillac Buick Pontiac GMC of Menlo Park, is casting an intrigued eye on the Haven area. He told the council August 24 that he was feeling squeezed for vehicle storage space on El Camino, especially with a large apartment project planned for nearby Oak Grove Avenue and Derry Lane that would use a storage lot he leases.

"The area that we're in is hard to find and hard to get to," he said, adding about Haven Avenue: "This is a perfect area for auto dealerships. I've talked to other dealers who would be willing to take a look out there."

Mr. Mugnolo also said that locating several dealerships together would allow them to save money by doing joint advertising.

No guarantee

Still, there's no certainty that auto dealers, hotels and chain stores will flock to the Haven area if the zoning is changed.

Some business owners have pointed out that the area needs infrastructure work, particularly in the areas where storm drains flood. And the Menlo Park side of Haven Avenue is set farther back from 101 than the Redwood City side, so it could be less visible from the freeway.

And, as always, Menlo Park has to duke it out with other cities that are also hankering for new businesses and sales-tax dollars in the weak economy.
Industrial condos

Currently, there is one Haven-area project in the pipeline, on a vacant site at 3633 Haven Ave. The applicant, Redwood City-based Foster Enterprises, is seeking to build 96,000 square feet of industrial condominiums, units ranging from 1,200 to 5,000 square feet that individual business people would purchase.

General partner Mark C. Foster said the units would sell for $180 to $200 a square foot and would ideally be used for a range of businesses: carpet, tile, painting and welding businesses, as well as biotech and medical research and development.

"My project allows a small business owner to own his own shop; he won't be driven out by increasing rent," Mr. Foster told the council on August 24.

City officials, though, have opined that the project might not be the best use of the land because it could yield less sales-tax revenue for Menlo Park.

"They probably would not have a lot of customers coming to the site," Mr. Boesch said after the meeting.

Mr. Foster told the Almanac that he was open to talking with Mr. Mugnolo about using the site for an auto dealership. He added, though, that he hadn't yet met with him and that he still believed in his own project, which is scheduled for a study session at the Planning Commission next month.

Foster Enterprises has already spent several hundred thousand dollars cleaning up the site, which formerly housed a dredging company, Mr. Foster said. He said he's also willing to improve the storm drain there to help alleviate the area's flooding.

"'The best use of the site' is a subjective term," he said. "If the highest and best use is to improve property values, mine is the best. But if the best use is sales tax, that (an auto dealership) would be better."


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