Publication Date: Wednesday, March 30, 2005
Editorial: Can city move fast to keep car dealers?
Editorial: Can city move fast to keep car dealers?
(March 30, 2005) Palo Alto suddenly awakens to urgency of creating an 'auto row' to compete with neighboring towns and prevent further erosion of sales-tax base
The sudden realization that Palo Alto is in serious trouble when it comes to sustaining its tax revenues -- the foundation of all city services -- shouldn't really be sudden at all.
Warning signs have been around for two decades, easily tracked through past issues of the Weekly. A drop in city revenues in the mid-1980s jolted city leaders, and there was a flurry of activity and concern in the early 1990s.
But Palo Alto city staff was enmeshed in "Palo Alto Process" up through the 1990s. In the late 1990s the City Council seemed to be endlessly celebrating the city's 1994 centennial as residents and businesses reveled in an unprecedented wave of prosperity from the dot-com boom of 1994-2001. Odd internal politics on the council from 2000 to 2004 preoccupied everyone.
Few remembered the deep recession that blanketed Silicon Valley in 1991 -- when the city commissioned an Economic Resources Plan. The five-point plan arrived in late 1993 and worked its way to the council by mid-1994 -- the leisurely timing itself illustrates the problem.
The thin, 21-page plan called for both a "business outreach program" and a "business retention program." The outreach program would promote the city as business-friendly and assign an "expeditor/facilitator" to major projects. The retention program would target major revenue-generating sectors of the city: shopping districts, hotels and motels and auto dealerships.
Other elements called for expediting permits for new businesses, regional economic-development efforts and exploring economic-development tools used in other cities -- such as redevelopment agencies, assessment districts and bonds for public "infrastructure" improvements.
Yet the plan became one more dust-collector in city archives, despite an effort by then-Councilman Gary Fazzino to create an "Economic Vitality Task Force."
Today, the plan deserves dusting off.
The emerging wave of concern may mark an historic moment in the city's history. Scarred by bitter "residentialists versus establishment" political battles over growth in the 1960s and early 1970s and with a generally healthy financial base, city leaders have shunned discussing ways to assure long-term financial health. Expressing pro-business sentiment was seen as a third rail of local politics -- touch it and you died, politically.
Historically, neither the city nor the Chamber of Commerce have been drum-beaters for new businesses. High financial-management ratings and a belief by most residents that the city is well-run, despite some vocal critics in recent years, resulted in a lack of a sense of urgency and no consistent push for effective action or mechanism to bring together people with disparate views and concerns.
It wasn't until the creation of a Retail Outreach Committee last year by then-Mayor Bern Beecham -- who has since been assigned to chair the committee by current Mayor Jim Burch -- that a framework was created to bridge the decades-old dialogue gap between residents and business leaders.
Initial meetings have produced a strong consensus that the city must move -- now, urgently -- to meet the needs of its remaining auto dealerships by creating an attractive auto row with Bayshore Freeway access and exposure, supplanting mostly vacant office buildings where possible.
Neighborhood leaders (with strong protectionist credentials for both neighborhoods and the environment) are concurring with long-time local developers and business leaders on the need to move quickly, with appropriate safeguards for the baylands and residential areas. Some committee members (see Guest Opinion on opposite page) believe the city can't wait even for the full retail-retention plan to be ready in June.
The numbers are stark: Between 2000 and 2003, the city's sales-tax revenues from car dealerships plunged from $3.1 million to $1.9 million -- a significant element of an overall sales-tax drop of from $25.8 million to just over $17 million in recent years.
News that car dealers are being actively wooed by other cities -- which are creating auto rows along Bayshore -- has shaken Palo Alto city leaders. A city ordinance adopted last fall to make life easier for dealerships admittedly is not enough to do the job of keeping them in town over the long run. They need more space and greater visibility to compete in today's sales market.
Local history tells us that Palo Alto won't be able to pull it off. All who value city services should hope we can prove history wrong this time.
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