General Motors plans to buy about 22 acres of Tyco Electronics’ campus in east Menlo Park to build an auto sales center on Bayfront Expressway at Willow Road, the city of Menlo Park announced last week.
The plan is for GM to create an initial cluster of new auto sales stores on 8.5 acres of the property, said David Johnson, the city’s business development manager.
Non-GM dealerships or “destination-type regional retail uses” on the remaining 13.5 acres of the property will be pursued, he said in the city’s Oct. 5 announcement.
For the proposal to move forward, the city must approve the plan, including agreeing to split with GM on a 50/50 basis the sales tax revenues from the sale of cars.
“It is our understanding that without this arrangement there will be no deal,” Mr. Johnson said. “That was made very clear from the beginning.”
GM plans to present the proposal to the City Council on Tuesday, Oct. 10.
GM had previously been in talks with the city to build an auto center near Marsh Road and U.S. 101. After both parties determined the site near Marsh Road wouldn’t work, attention turned to the Tyco property, Mr. Johnson said.
Because of groundwater contamination and the need to remove an on-site power substation, the site was initially labeled “challenging at best,” Mr. Johnson said, and he was “thrilled” to see Tyco and GM come to an agreement.
“This makes us part of [GM’s] national recovery strategy,” he said.
“This announcement culminates more than a year of effort between GM, Tyco and the city of Menlo Park,” said Mayor Nicholas Jellins in a press release. “A great deal of energy has gone into locating and securing a suitable high visibility and accessible location for dealerships.”
All six candidates for three council seats in the Nov. 7 election expressed initial support, although at least one had reservations about splitting the sales tax.
Heyward Robinson said the news is “a very positive development,” but called the sales-tax split “a big concern — it’s a potential deal breaker.”
Others said that part of the package would have to be examined before they could express an opinion on it.
Councilwoman Mickie Winkler noted that the proposed site “provides a lot more dealership space” than lots previously used on El Camino Real.
“This isn’t going to solve the city’s budget deficit, but it’s a big step forward,” said Councilwoman Kelly Fergusson.
“I’m cautiously optimistic the city should be able to land this big deal,” said candidate John Boyle. “I like the fact it’s on the periphery of our city rather than downtown.”
“This is obviously very good,” said Vincent Bressler. “This is the kind of change to the general plan I could get behind.”
Sales taxes
First-year sales tax revenue for the city in the 50/50 split is estimated by GM at $750,000, Mr. Johnson said. Over the estimated 40-year life of the project, net revenues to the city are estimated at a minimum of $38 million, he said.The 50/50 sharing of sales tax revenues is proposed to last 15 years, or until GM receives an “agreed-upon total payment” of $10 million, Mr. Johnson said.
The city’s sales tax revenue has dropped in recent years as all but one of the city’s four auto dealerships have closed shop.
Council action
Since the election for three seats on the five-member council takes place is less than a month, the decision on the auto mall will likely be up to the next council.The project would require a traffic study, and possibly a mitigated negative declaration or an environmental impact report, said Mr. Johnson in a staff report. Also, the city’s general plan and zoning ordinance would have to be amended, he said.
GM has not decided which brands of cars it plans to sell at the Menlo Park site. Terms of the agreement between GM and Tyco were not disclosed.
INFORMATION
The Menlo Park City Council is scheduled to hear a presentation by General Motors and give direction on the auto mall proposal at its meeting on Tuesday, Oct. 10. The meeting begins at 7 p.m. in the council chambers at the Civic Center, between Laurel and Alma streets.
