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March 09, 2005

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Publication Date: Wednesday, March 09, 2005

Cadillac of Menlo Park closing down Cadillac of Menlo Park closing down (March 09, 2005)

** Loss of dealership "a significant blow" to city's sales-tax revenues.

By Andrea Gemmet

Almanac Staff Writer

Menlo Park officials are moving as quickly as they can to make way for an auto mall near U.S. 101 and Marsh Road, but it's not quickly enough for one Menlo Park dealership.

A General Motors spokeswoman said that Cadillac Buick Pontiac GMC of Menlo Park, located at 1300 El Camino Real, will be closing down on April 30, putting its 69 employees out of work.

"The dealership has been having financial difficulties, probably since back in 2001. It's not anything to do with the people there, or the management," said Susan Garontakos, GM's manager of dealer and field communications in Detroit. "It's one of those sad things."

The auto dealership is one of four located in Menlo Park, and all of them are among the top 10 producers of sales-tax revenue for the city, said City Manager David Boesch.

"The loss of one (dealership), let alone a consolidated one like the Cadillac Buick GMC, is a significant blow to our revenues," Mr. Boesch said. "It's been clear to us that sales have been flagging, based on our sales-tax revenue reports from the state."

Sales tax on new car sales is the biggest money-maker in the transportation category, said Finance Director Carol Augustine.

New car sales from all four dealerships generated $692,000 of the $1 million in transportation sales taxes Menlo Park received for the one-year period ending September 30, 2004, she said.

That's down from the $990,000 in new car sales out of total transportation revenues of $1.35 million in the previous one-year period, Ms. Augustine said.

To put that in context, Menlo Park received a total of $6 million in sales-tax revenues last year, a large chunk of the nearly $26 million in general fund revenues, she said.

City officials have been in almost continuous discussions with the Cadillac dealership, but they were caught off guard by the announcement that it would close down, Mr. Boesch said. "We thought we had more time," he said.

It's no surprise to the city that local dealerships are struggling and say their locations on El Camino are too small and too hard for customers to find. Such locations may have been adequate in the past, but not anymore, said Mr. Boesch.

These days, dealerships would rather be located in an auto mall near the freeway, he said.

"Because land is at premium on the Peninsula and it's hard to find good locations, we think we have an ideal one," Mr. Boesch said.

The City Council has earmarked the Haven Avenue area east of U.S. 101 as ideal for redevelopment as an auto mall, and has put the project on the fast track, he said.

A traffic-impact study is being commissioned, and data from it should be available in a couple of months, he said. A recent consultant's report confirmed that the site would be very attractive to auto dealerships.

Despite the City Council making the auto mall project one of its top priorities in last weekend's goals-setting session, it won't happen overnight. Environmental studies will be required, zoning ordinances changed and the city's general plan amended, said Mr. Boesch.

To speed up the process, the city could buy land as it becomes available, in order to help dealers put together large enough parcels, he said. "The last thing we want is to do is use eminent domain, but it is a tool in our tool box," said Mr. Boesch.

Menlo Park Councilwoman Lee Duboc said the dealership's closure shows that the city should get going as soon as possible on the auto mall, and that it is on the right track to do just that.

"I know I said when we were talking about directing staff to do this, back in the summer, it really isn't if we lose auto dealerships in Menlo Park, but when ," Ms. Duboc said.

GM spokeswoman Ms. Garontakos said the Cadillac dealership, which is owned by GM through Motors Holding, notified employees on March 1 about the closure.

Customers -- anyone who bought a vehicle or services -- will be notified by letter in April, she said. The GM Web site, www.gm.com, has a dealership-locator feature to help people find the next nearest one, she said.

Richard Mugnolo, the former owner of Cadillac of Menlo Park, bought the Menlo Park Buick Pontiac GMC dealership at 550 El Camino in early 2003 and, shortly thereafter, sold the entire dealership to GM and retired.

Phil Dirickson, the acting general manager of Cadillac Buick Pontiac GMC of Menlo Park, declined to comment, saying he had been instructed by GM to refer all questions to its media relations office in Detroit.


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