City in search of 'next wave'

Menlo Park looks to shape revitalization of its 'industrial' district — and boost tax revenue

By Sean Howell

Menlo Park's downtown area may be the first place that comes to mind when residents think of the city's businesses. But increasingly, the city is focusing its attention and resources east of U.S. 101, on the city's so-called industrial area.

Home to the sprawling campuses of Tyco Electronics and Sun Microsystems, as well as a smattering of other technology and manufacturing companies, the district perhaps is better known for what it could be (or might have been). David Bohannon's proposed 1-million-square-foot office/hotel complex is still in the design phases; General Motors is still searching for a buyer for the 22-acre site where it had once planned an auto mall.

But city officials and property owners are focusing on other possibilities for the area. They see the potential for clusters of biotech and "green" technology companies, as well as freeway-visible retail operations.

No one suggests that the area will transform overnight, and some question the extent to which the city can shape development — or if it should do so at all.

But with Menlo Park facing the prospect of a stagnant revenue stream, efforts to generate more sales tax and retain the businesses already there have grown more urgent. City officials view the industrial area's empty or blighted tracts of land as a prime opportunity for expansion, and are working with property owners to retool sites that were previously devoted to light industrial, or to computing companies.

"We've got to make the pie bigger," said Mayor Heyward Robinson, referring to the city's revenues. "If we're successful in revitalizing the area, it's going to come back to us many times over in property taxes and sales taxes."

A subcommittee including Mr. Robinson and Councilman John Boyle, tasked with interacting with the city's business owners and providing guidance on the city's planning efforts, met for the first time last week. Business Manager Dave Johnson hopes to set up periodic meetings that would bring together city officials and major property owners.

Residents may be more familiar with Menlo Park's downtown businesses, but the area east of Middlefield Road produces approximately 54 percent of the city's sales tax revenue, according to Finance Director Carol Augustine. Vendors of office supplies and electronic equipment bring in more sales tax revenue than the city's restaurants and retailers.

The city can get "more bang for our buck, sooner," by focusing its business development efforts on the industrial area, Mr. Johnson said in an interview. "That's where we should be spending a majority of our time."

Historically, the city's management of the industrial area has "been pretty laissez-faire," Mayor Robinson says.

Though residents likely feel more attached to a downtown mainstay, such as Kepler's, than to OfficeMax's distribution center, the latter probably has a bigger impact on the city's bottom line.

Among the city's highest sales tax producers are companies that makes automated lab products, medical devices, and gardening implements. Providers of office and electronic equipment generate more revenue for the city than restaurants and retail outlets.

Menlo Park residents think of the city's industrial area as a vague sprawl east of the freeway — if they think of it at all.

But when Mr. Johnson looks at a map, he sees eight distinct districts, each suited to different types of development.

For instance, a blighted stretch of Haven Avenue between U.S. 101 and Bayfront Expressway, near Marsh Road, would be ideal for a "freeway-visible" retail operation, according to Mr. Johnson. (General Motors had wanted to build an auto mall on that site several years ago, but ran into complications and instead bought a 22-acre plot from Tyco Electronics.)

The Haven site is eligible for funding through the city's redevelopment district, as is a section of the business park area to the east. Redevelopment funds could be used to improve the streetscape, and to enter into public/private partnerships with industries that would benefit the surrounding community.

The city is working with several property owners in the industrial district's eastern reaches, encouraging them to try to attract companies in booming industries.

"Menlo Park has driven and benefited from every wave of innovation," said Councilwoman Ms. Fergusson. "I think we're all asking ourselves, 'What is the next wave?'"

City officials seem to agree that the "next wave" includes companies involved in clean energy technology, and manufacturers of medical devices and laboratory equipment.

One major property owner in the business park has allowed for "incubator" space for start-up companies, in the form of a series of small "wet laboratories," Mr. Johnson said. Once some of those companies start to take off, property owners need to provide enough space to accommodate them, he said.

"We don't want to let a home run get away," he said.

The city has a few quivers in its belt when it comes to shaping development and retaining businesses. In addition to deploying redevelopment funds where applicable, the city can build infrastructure — it's working on a pilot program to create a fiber-optic network in the business park — and could also offer incentives to certain industries, or change zoning requirements.

But the city can't tell property owners how to manage their land, and it can't force them to develop it.

"Property owners have to be motivated to spend capital to make changes," said Mr. Johnson. "If they want to be able to attract a more stable tenant, they have to be willing to pay a price."

What kind of a role should the city take in shaping the industries that develop within its borders?

A large one, several city officials say. Councilwoman Fergusson has spoken of creating a "green brand" for Menlo Park, and council members have bandied about the idea of marketing the city in the hopes of luring companies.

If property owners are able to bring in high-profile "life sciences" companies, the marketing may work itself out, Mr. Johnson said. He maintains that complementary businesses tend to cluster, feeding off each other.

Councilman Boyle is wary of the city pursuing specific industries, saying that, in general, he'd prefer to let the free market sort it out. He pointed out that the city would have been in a bad way during the dot-com bust if it had courted only computing companies.

Holding on to the businesses currently in Menlo Park might be challenge enough. The city has been working with Sun Microsystems to reduce its energy bills in an effort to keep the firm in Menlo Park, according to Mr. Johnson. He said it was too early to say whether Sun would close its Menlo Park complex, but that a meeting has been scheduled between the company, Mayor Robinson, and City Manager Glen Rojas, to discuss the issue.

Mr. Robinson has said he's concerned that the city relies too heavily on a handful of businesses. Two companies generate around 30 percent of the city's sales tax revenue. (The city doesn't disclose the names of those companies.)

"I want to hear from companies and landowners," Mr. Robinson said. "What are your obstacles? I don't know if we can solve them, but what can we do to help you?"

Companies in Menlo Park industrial zone.

Bohannon survey shows support for his big project


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