A new fiscal impact analysis shows how plans to rezone Menlo Park's M-2 area east of U.S. 101 to allow substantial new development could be profitable for city government.
However, the same analysis, which also looks at potential development from the city's existing general plan, shows potential negative fiscal impacts on school districts outside the M-2 area, including the Menlo Park City and Las Lomitas school districts.
The Menlo Park Planning Commission will review the analysis at its meeting on Monday, Sept. 12, which starts at 7 p.m., in the council chambers at 701 Laurel St. in the Civic Center. Read the agenda here or watch the meeting online. The meeting starts at 7 p.m.
According to the fiscal impact analysis by the consulting firm BAE Urban Economics, released Sept. 8, the city of Menlo Park could receive a net increase in annual revenue after expenses of $9 million from the eventual buildout from proposed zoning changes in the city's M-2 area. The proposed changes are part of the city's process to update its general plan, which governs future development in the city.
The analysis compares revenues the development could bring to the city with expected city expenses to accommodate increased demands for services and infrastructure created by added residents and workers.
Three scenarios were examined. One looked at the current proposal, which would allow the building of 4,500 residential units, 2.3 million square feet of nonresidential space, and 400 hotel rooms in the M-2 area. The second scenario considered the impacts if the city were to halve the amount of nonresidential and hotel space allowed, and the third looked at reducing all of the potential development allowed by 25 percent.
The city could be expected to get a net positive annual revenue increase of about $9 million for option one, $5.6 million for option two, and $7.3 million for option three.
The $9 million is based on an estimate that at maximum buildout, the city would have additional annual revenue of $20.4 million and additional annual expenditures of $11.4 million.
Meanwhile, according to the analysis, growth in other areas of the city (outside of the M-2 area and already zoned for development) could have negative fiscal impact amounting to $4.5 million for the Menlo Park City School District and $795,000 for the Las Lomitas School District.
In the Sequoia Union High School District, the negative annual fiscal impact could be $5.5 million from new development that could increase the student population by an estimated 1,100 by 2040.
In the Ravenswood City and Redwood City school districts, student population would be expected to increase due to growth in the M-2 area, but school finances would not be affected as much because those districts receive funding from the state based on the number of students enrolled. In the Ravenswood City School District, elementary student population could increase by 2,078 students, the analysis says.
The fiscal impact analysis of the general plan update made these other points:
● New development could increase revenue to the Menlo Park Fire Protection District by about $2.8 million a year.
● The city could get the maximum amount of annual sales tax revenue from the first option: $1.6 million from residents and $320,000 from workers. Business-to-business sales tax revenue estimates vary, but the midrange estimate is $5.4 million.
● The city's updated general plan at full buildout citywide could yield an increase in assessed property value of $6.82 billion. That would generate an additional $6.2 million annually in property tax revenues for the city. These numbers assume that 15 percent of the housing units to be built in the M-2 area would be designated as "below market rate" and not subject to property taxes, the report said.
● Hotel taxes could generate an additional $2.6 million a year in revenue for the city if 425 hotel rooms are built.