Menlo auto mall not a 'slam dunk' (December 08, 2004)

** Council agrees to change zoning in the area, but it could be costly for auto dealers to move.

By Rebecca Wallace

Almanac Staff Writer

City officials in Menlo Park have taken another step toward having auto dealers, a hotel and big-box retail in the Haven Avenue area on the Bay side of U.S. 101.

The City Council agreed November 30 to push ahead with changing the area's zoning to allow these types of businesses. But just because you repave a road doesn't mean the fast cars will come.

The prospect of wooing Menlo Park's four auto dealers from El Camino Real to the Haven area is "not even close to a slam dunk," consultant A. Jerry Keyser told the council.

Land costs and rent are high in the area, he said, echoing the financial feasibility study that his firm, Keyser Marston Associates Inc. of San Francisco, recently did for the city on moving the dealers.

Mr. Keyser described the Haven site as a "very hot location," but noted that auto companies have had layoffs and other financial troubles, and that hotels in general have been in the economic "doldrums." He advised the council to take the process "one step at a time," working closely with the dealers.

City officials know the stakes are high; the dealerships are among the city's top nine revenue producers because of their sales-tax revenue, officials say.

While they have been hit like everyone else by the rough economy, Menlo Park dealers have also said their location is a factor in slumping sales; they say their El Camino sites are hard to find and lack sufficient storage space. At least one, Cadillac Buick Pontiac GMC of Menlo Park, has been looking into moving to another city, according to Mr. Keyser's report.

"It's not 'if' we're going to lose our dealerships; it's 'when,'" Mayor Lee Duboc said at the meeting. She added that she and Councilwoman Mickie Winkler met recently with the dealers to learn about their concerns and hopes.

Wooing the dealers to the Haven area is not just a matter of negotiations; it would also likely require a financial commitment by the city to help dealers cover land and rent costs, Mr. Keyser said.

At the meeting, City Attorney Bill McClure said cities provide this sort of commitment in different ways, including giving dealers a partial rebate of some of the sales tax revenue they contribute to the city.

"If you think of getting zero sales tax revenue if they leave the city, giving up part of the sales tax revenue may not be such a bad deal," he said.

Following the council's direction, city staff will be starting the process of expanding the zoning on 23 acres' worth of parcels in the area, which contain warehouses, light manufacturing, office and commercial buildings. The process will include traffic and environmental studies to try to determine the impacts of having auto dealers, a hotel, or big-box retail there.

In addition, staff will work on expanding the zoning on a smaller, 7-acre parcel to allow auto dealers. This could be used as an interim site for dealers while a larger site for an auto-mall configuration is being arranged.
INFORMATION

To read the Keyser Marston Associates Inc. report, go to www.menlopark.org, click on "City Council," and go to the meeting agenda for November 30.

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