News

Menlo Park: Council may agree to spend more than city takes in for three years

 

Menlo Park's proposed $78.1 million budget for fiscal year 2015-16 may look upside down to some: The city's staff has asked to spend $49.3 million from the general fund, while revenue is projected to lag behind at $48.1 million.

"The theme for the budget this year is, it's time to invest," City Manager Alex McIntyre told the City Council during a public hearing on June 2.

According to the staff report, that investment entails "ramping up staffing to meet service-level demand for development-related activity, as well as to achieve other Council priorities." That translates to hiring the equivalent of about 11 full-time staff members during the next year in the public works (six), community development (four) and information technology (one) departments, on top of nine positions already added to the city's roster this year.

Overall personnel expenses for the city would be $36.7 million, according to the budget report, with $32.9 million of that coming from the general fund.

Money from various reserve funds, such as the capital improvement fund, would be transferred to cover the deficit, which is projected to last through fiscal year 2017-18. At that point projects already in the works, such as the Menlo Gateway complex, are expected to generate enough revenue to overcome the gap, leaving Menlo Park with at least $3.1 million more in revenue than it had in 2015, according to the city manager.

Conservative assumptions were built into the budget, Finance Director Drew Corbett explained, and those may prove too conservative. In three years, annual hotel tax revenue from Menlo Gateway is expected to reach $3.1 million, for example, but the budget rounds that down to $2.2 million to anticipate a possible economic downtown.

The budget also estimates Excess Educational Revenue Augmentation Funds (ERAF) -- the amount of property tax revenue left over from local school funding and returned to the city -- at about $700,000 annually, or 50 percent of what it may actually be.

Three years of deficit spending did not go over easily with the City Council, although three members backed what they described as a "counter-intuitive" budget.

"I do support this budget," Councilman Peter Ohtaki said, but he added that he'd like to see the deficit spending end sooner rather than later.

Vice Mayor Rich Cline acknowledged that the general fund is healthy to the point where investing the money makes sense. So the question becomes, "How do we invest the money and get all these projects through before the window of opportunity shrinks?" he asked, and the answer is that it requires adding staff, quickly. Given the conservative assumptions, he said, he thought the budget looked very strong.

Councilwoman Kirsten Keith noted that she would like to see the city catch up on the backlog of projects, but raised the specter of layoffs in the future should the economy take another downturn.

Mayor Catherine Carlton said she was "loath" to have an unbalanced budget, but that delayed projects get more expensive. There's also an opportunity cost, she said, as developers decide to walk away from Menlo Park and take their proposals to other cities. She asked what the community's return on the investment would be.

City Manager Alex McIntyre responded that the return is a financially stable Menlo Park in three years. Each month that the Menlo Gateway project stagnates without sufficient city staff to move it along, the city loses $300,000 in revenue, he said.

Councilman Ray Mueller said he wasn't comfortable with the budget as proposed. "I understand it's called making an investment in the future" but it's really just servicing the projects that have come into town, he noted. The economy is robust now, which to him means building reserves, not spending more, to plan for the downturn. "I don't see this economy lasting five more years."

The budget returns to the council for adoption on Tuesday, June 16.

Comments

2 people like this
Posted by Bob
a resident of Menlo Park: Downtown
on Jun 8, 2015 at 10:21 am

Interesting explanations from City Council members to justify overspending. This has been one of the ways government has gotten in over its head in the past -- spending beyond its means. Hopefully, there are safeguard to curtail spending if there is a downturn or plateau. Adding staff members is always costly.


10 people like this
Posted by Todd
a resident of Portola Valley: other
on Jun 8, 2015 at 10:59 am

good job Ray Mueller!


4 people like this
Posted by Stats
a resident of Menlo Park: South of Seminary/Vintage Oaks
on Jun 8, 2015 at 11:41 am

Investment implies an ROI (return on investment) at the other end of the the investment. I can only see a small percentage of the the hiring "investment" having financial payoff, as key projects are worked through and delivered more quickly. I would like to see Mr. Cline's rough calculations on benefits to the city from the new hiring. Once hired, personnel expenses and retirement benefits are with us for a long time.


9 people like this
Posted by maximusgolden
a resident of Atherton: Lindenwood
on Jun 8, 2015 at 12:31 pm

This is the classic situation where bringing on contractors, rather than employees, makes sense, even if the short term cost is higher.

If I understand the article correctly, the council wants to speed imminent development projects through the approval pipeline and implementation, so they can be completed before the next "bust" in the local tech economy. (Yes, this bubble will burst, we just don't know when!)

This sounds like a need to staff for a temporary peak, not long term demand.

Why would the city take on retirement costs and potential severance costs to meet a short term need?


4 people like this
Posted by Seriously
a resident of Menlo Park: Downtown
on Jun 8, 2015 at 12:31 pm

Could we hear more about this backlog of projects. How many projects are on that list? How much revenue would they bring to the city?

The only project mention is Bohannon's, which was approved in 2010. Remember the city vote? He's been dragging his heels on getting the hotel built. Can someone explain how adding more planners would move the project along when he has yet to submit plans?


4 people like this
Posted by More Development
a resident of Menlo Park: Downtown
on Jun 8, 2015 at 12:36 pm

Don't be fooled, all this budget represents is the foolish agenda of this Council (except perhaps Mueller),and certainly empire builder McIntyre to spur development at any cost. (when this all falls apart McIntyre will have long departed most likely)

It is not enough that FaceBook will bring in over 13,000 new employees, we need more and more and more. Council should really get push back on this. Write the council and object. Even Lee DuBoc seems to have reservations on this.


10 people like this
Posted by Mike Keenly
a resident of Menlo Park: Allied Arts/Stanford Park
on Jun 8, 2015 at 1:02 pm

In a good economy, some of the increase in revenues should be invested and some should be set aside for the next inevitable downturn in the economy. Apparently, only Ray Mueller understands this.


8 people like this
Posted by Council needs a tuneup.
a resident of Menlo Park: Downtown
on Jun 8, 2015 at 1:03 pm

Fire McIntyre.

Remove Cat Carlton.


4 people like this
Posted by Facts!
a resident of Menlo Park: Central Menlo Park
on Jun 8, 2015 at 1:30 pm

@Council needs a tuneup: Mayor Carlton was the other vote (with Ray Mueller) against this budget. She deserves praise, not criticism. Keith, Cline and Ohtaki voted for the budget and need to be questioned.

This 6/2 budget meeting is available online. Web Link It's worth watching.


5 people like this
Posted by Ol' Homeboy
a resident of Menlo Park: Allied Arts/Stanford Park
on Jun 8, 2015 at 1:32 pm

Unfriggingbelievable! Has that $18K/year raise the council just handed McIntyre for "not stealing from the city" gone to his head? Since when does the budget need a theme?
Fiscal responsibility is the foundation of every council given the power to allocate funds. Our council, except for Mr. Mueller, sees fit to ignore the basic fundamentals of accounting 101. Those charged with accounting need to be "Accountable". Clearly, this council has deemed itself above accountability. And Peter Otaki, pleeeaase take a stand on something — "he'd like to see the deficit spending end sooner rather than later." Really Peter? How about cutting some of those mystic "other Council priorities."


1 person likes this
Posted by Norman
a resident of Menlo Park: Central Menlo Park
on Jun 8, 2015 at 1:36 pm

It is so much fun to play Santa Claus. Rationales are easy. The future will take care of all expenses planned. Not a new concept in public life.


10 people like this
Posted by Steve Taffee
a resident of Menlo Park: The Willows
on Jun 8, 2015 at 2:30 pm

As we proceed with development projects, we should do so with an abundance of fiscal caution. I support those council members who do not want deficit spending.

I see no compelling reason to get multiple new development projects underway at the same time. Completing projects in a serial fashion provides time to assess the impact of a given development on the entire metropolitan system and thereby inform the next move. Meanwhile, there's plenty of opportunities to invest in existing infrastructure maintenance and upgrades. (Fiber optic cable anyone?)

If there is a backlog of work, do as a business would and bring on contractors to address the most pressing needs and then re-assess staffing.


1 person likes this
Posted by planning
a resident of Menlo Park: other
on Jun 8, 2015 at 4:27 pm

One headline read, "City may go into debt to hire more workers." Well, the city has reserves, so we're not planning to go into debt. Sure, the city "may" go into debt or an asteroid "may" come crashing down and destroy all like on Earth, but that's not what we're planning for.


2 people like this
Posted by Reason
a resident of Menlo Park: Sharon Heights
on Jun 8, 2015 at 4:28 pm

This is irresponsible. I hope the other council members will side with Ray Mueller and block this short-sighted budget.


9 people like this
Posted by Alan
a resident of Menlo Park: Belle Haven
on Jun 8, 2015 at 4:38 pm

Alan is a registered user.

"There's also an opportunity cost, she said, as developers decide to walk away from Menlo Park and take their proposals to other cities." I sometimes wonder if this sort of logic drives some cities to lavish benefits on businesses that never get returned (for example, some cities which heavily finance NFL stadiums...) A city needs to establish the likelihood of getting a return on their investment, and be hard-headed about it. There comes a time to go into debt, but they don't want to be charmed into it. Good times may be our opportunity to have a surplus.


7 people like this
Posted by More Development
a resident of Menlo Park: Central Menlo Park
on Jun 8, 2015 at 4:50 pm

It would seem that this is really already a done deal. At the end of the discussion McIntyre asked for a "straw vote -- sort of ", since he wanted to be assured it would receive a favorable vote when brought back.

Keith, Ohtaki and Cline all assured McIntyre they would have their vote to approve. Mueller said No way. Carleton expressed some reservations, but who knows she might also join the other three.

Hopeless I fear.


1 person likes this
Posted by Scholar
a resident of Menlo Park: Sharon Heights
on Jun 9, 2015 at 12:45 pm

Irresponsible and appalling suggestion.


10 people like this
Posted by Downtowner
a resident of Menlo Park: Menlo Oaks
on Jun 9, 2015 at 12:58 pm

Keith, Otaki, & Cline have given McIntyre a new contract, with a raise, as a reward for ?? Certainly not for good management or fiscal responsibility. Does he have any clue what Menlo Park, not McIntyre, really needs?

If Keith & Otaki spent as much time investigating earlier financial profligacy & its long-term negative effect on the town as they did touting their candidacies at the last election, we'd be in better shape by far.

Kirsten Keith & her husband John Woodell (do spouses share ethical boundaries?) raised eyebrows before. She has attached herself to every political group she can find to set up a run for higher office in a few years. The list of her associations is so vast that it calls into question the depth of her commitment to any organization. How many hours does it take to maintain a law practice, care for a family, campaign relentlessly for office(s), climb mountains, and fully investigate & educate oneself on issues one promotes?

Web Link

As a woman whose ambition cannot be denied, she'll approve spending anywhere which may garner future support in a quid pro quo, regardless of its benefit to her current constituents.

Mueller - hang tough. Carlton, get a spine.


4 people like this
Posted by Uptowner
a resident of Menlo Park: Sharon Heights
on Jun 9, 2015 at 1:18 pm

Downtowner,

Are you sure you were talking about Kirsten Keith and not Virginia Kiraly?


Like this comment
Posted by new topic
a resident of Menlo Park: other
on Jun 9, 2015 at 2:38 pm

Are are on a new topic? Are we attacking women for being a ambitious, or just popular and successful?


2 people like this
Posted by Seriously
a resident of Menlo Park: Downtown
on Jun 9, 2015 at 2:52 pm

Looks as though someone is trying to divert discussion of a serious topic by turning it into an online version of roller derby. Nice try. That you, McIntyre?


4 people like this
Posted by James Madison
a resident of Menlo Park: Central Menlo Park
on Jun 9, 2015 at 4:05 pm

A City Council that would approve a salary increase for McIntyre deserves to receive a budget like he proposed. Ray Mueller again appears to be the only member with sense.


3 people like this
Posted by double counting
a resident of Menlo Park: Central Menlo Park
on Jun 9, 2015 at 4:44 pm

The budget is irresponsible. Several others got it right. Just hire full time contractors. Over time the cost is less than hiring full time employees who are costly to remove and who bring along long term obligations.

Development fees should cover the costs related to development. It's a cost of doing business and every developer knows it. So does the city manager but apparently a council majority does not.

To say this is an investment overlooks that the projects mentioned had big costs and big adverse impacts that were to be offset by ostensible positives. That's how their approvals were won. Now the city manager and complicit council members are attempting to double count the benefits to justify even more costs. Not so fast!


Like this comment
Posted by say more
a resident of Menlo Park: other
on Jun 9, 2015 at 5:13 pm

Are we picking our words carefully? Please say more about "complicit" council members.

Complicit: involved with others in an illegal activity or wrongdoing, an individual is complicit in a crime if he is aware of its occurrence and has the ability to report the crime, but fails to do so.


Like this comment
Posted by double counting
a resident of Menlo Park: Central Menlo Park
on Jun 10, 2015 at 9:46 am

@ say more:
I used "complicit" according to the meaning "to do wrong", not to imply there is anything illegal. Clearly there is not.
Would you be happier if I had used words like "compliant" or "ill-advised" or "incurious" or "willfully ignorant"?



1 person likes this
Posted by nonsense
a resident of Menlo Park: other
on Jun 11, 2015 at 11:16 pm

Your definition of "complicit" is nonsense. No crime was committed, so there is no way anyone can be complicit.


2 people like this
Posted by Council Watcher
a resident of Menlo Park: Central Menlo Park
on Jun 13, 2015 at 4:02 pm

With a budget like that you would think that Gail and Kelly were still on the Menlo Park city council.


Posted by Name hidden
a resident of Atherton: West of Alameda

on Sep 26, 2017 at 6:40 am

Due to repeated violations of our Terms of Use, comments from this poster are automatically removed. Why?


Sorry, but further commenting on this topic has been closed.

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