Dealership brings its fleet to Palo Alto animal shelter lot

City agreement gives Anderson Honda access to East Bayshore Road property

In May of last year, Palo Alto's utility workers arrived at the Animal Services Center site on East Bayshore Road to move a giant container filled with emergency-response supplies but found an unexpected sight: a fleet of Hondas occupying the city-owned lot and blocking access to the container in question.

The cars belonged to Anderson Honda, an Embarcadero Road dealership that has been coveting the shelter land for well over a decade. The site's location at 3281 East Bayshore Road, south of Oregon Expressway and immediately adjacent to U.S. Highway 101, makes for ideal visibility for an auto dealership, a fact that has not been lost on Palo Alto officials. Every few years, a proposal has surfaced to move the animal shelter and make its land available to car dealers. Anderson Honda has invariably been at the center of these talks.

The council held a study session on the topic in 2006, and in May 2008, when a worsening economic climate placed new pressures on dealerships to secure freeway-friendly locations, then-City Manager Frank Benest told the council that John Anderson, who owns Anderson Honda, "is under incredible pressure from Honda to get freeway frontage."

"Unless we find a way to do that, we are going to lose Anderson," Benest told the council at the time.

The land swap Benest and others had envisioned -- Honda's property for the animal shelter's -- never materialized, as residents and council members struggled to reach a consensus about a plan that would place a dealership and possibly a billboard next to the Baylands. Some, like Benest, maintained that the city should do what it can to promote economic vitality and help local dealerships, which are a major source of sales taxes. Others balked at any talk of allowing more human activity near the Baylands, even in the largely industrial city-owned parcel next to the highway.

But while the plan to create a cluster of dealerships never really advanced, it never really died either. Neither did Anderson's interest in the site.

City staff again explored the idea of a land swap as part of its 2011 assessment of the city's infrastructure. A specially appointed Infrastructure Blue Ribbon Commission in its report highlighted sales-tax revenues as an "important component of the city's financial stability."

"The city recognizes a need to pursue economic-development strategies that enhance the benefits for businesses to locate in Palo Alto and, for that reason, has begun to consider the creation of an auto-dealer cluster along East Bayshore Road," the report states.

Though the current council hasn't really explored the topic, the idea came up last October when officials considered approving funds for a study of the sprawling Municipal Services Center immediately next to the animal shelter. The $250,000 study would consider "options for relocating City functions, personnel, and equipment currently operating out of the Municipal Services Center (MSC) and Animal Services Center (ASC), and then repurposing the sites to produce longterm economic benefits for the city."

At the time, council members Karen Holman and Greg Schmid both expressed concerns about the study and the potential effect on the animal shelter, prompting staff to defer the item to a meeting the following month.

"The consideration of moving those facilities and locating those that will bring revenues to city, such as auto dealerships, has been at the front of discussion for a few years," Holman said at the Oct. 20 meeting, in stating her dissent. "When those projects came forward before, it seemed like it really was not a financial advantage to the city."

When the proposed study resurfaced on Nov. 4, the council voted unanimously not to proceed with it at the time. The $250,000 was placed into the city's Infrastructure Reserve, with the intent of revisiting the appropriation request in 2015.

But even though a land swap is not currently in the works and the stretch along Highway 101 in Palo Alto remains billboard-free, Anderson Honda has quietly moved onto a peripheral portion of the animal-services property -- and it did so without a peep of public debate.

Last April, John Anderson reached out to the city about leasing an L-shaped portion of the animal shelter parking lot and using it for car storage. About a month later, a licensing agreement was in place, with Anderson paying the city $5,400 a month to store cars at the lot, which was previously used by the Utilities Department and the city's Office of Emergency Services.

The city's agreement with Anderson Honda was never discussed by the council or publicly disclosed until December, when it was mentioned in City Manager James Keene's annual report on the city's leases of public sites.

Documents obtained by the Weekly through the Public Records Act paint a picture that is quite different from the one Benest painted in 2008, when the land-swap proposal was framed as a way to keep an important revenue generator from leaving the city during a time of economic stress. Last April, the dealership was facing a different problem: rising sales and not enough space to fit all of its cars.

"Our business is booming right now, and it looks like we may need more storage soon," John Anderson wrote on April 3 to Thomas Fehrenbach, the city's economic development manager. "Is there any place we could store cars in the back of the Corp yard?"

The following day, Fehrenbach replied that there "might be space in the Animal Services lot." A few days later, he put Anderson in touch with Hamid Ghaemmaghami, who runs the city's Real Estate Division. On May 2, Anderson, who signs his emails John "BigDog" Anderson, wrote to Ghaemmaghami that he would "love to grab that Animal Services lot for two months if I could." On May 6, Fehrenbach emailed Ghaemmaghami to "follow up with this important request."

"If you could get rolling on this, I know John would appreciate it!" Fehrenbach said.

Later that day, Anderson sent his own email to Ghaemmaghami, saying, "Sorry to rush you, but we need to start parking there asap." Within days, the agreement was in place and Honda moved the fleet south to its new station near the animal shelter. Unlike a formal lease, this was a "license agreement" that functioned on a month-to-month basis and gave each party the right to cancel the agreement with a 30-day notice, Ghaemmaghami told the Weekly. Under the terms, Anderson paid the city 40 cents per square foot, the lot's appraised value. For the 13,500-square-foot site, this came out to $5,400 a month.

The arrangement was made at the city-staff level, without council or public input, and the timing seemed to surprise even some city employees. In early May, Nathan Rainey from the city's Office of Emergency Services was preparing to move a 20-foot long container stored at the animal-shelter site and requested assistance from other departments with lifting the container. On May 12, the day before the container was to be moved, Rainey received an email from Russ Kamiyama, a manager in the Utilities Department.

"I happened to stroll over to the Animal Shelter, and I noticed that Anderson Honda has already begun to park their cars, and the container in question is buried," Kamiyama wrote.

City officials quickly reached out to Anderson Honda and the company agreed to move its cars later that afternoon. In response to a Weekly inquiry, Rainey said the container included emergency supplies and equipment "tailored to large field operations or a large disaster, which are not routine in Palo Alto." He emphasized that there was no risk to public safety as a result of the cars and noted that since the incident the city has "repositioned some of the equipment from that container to be more mobile and accessible."

Though Anderson initially requested leasing the land for two months, the Anderson fleet has remained on the shelter property ever since. This week, about 30 Hondas were parked there.

John Anderson did not respond to a request for comment, but in an interview with the Weekly, both Fehrenbach and Ghaemmaghami said that there is nothing unusual or improper about the city's agreement with the dealership. City policy gives City Manager James Keene the right to lease land for up to three years without approval from the council (at Cubberley Community Center, the terms are five years). The rules did not require staff to notify the council and, accordingly, no one on staff did so, even when the topic of the Animal Services Center came up during last fall's discussion of the Municipal Services Center study. When asked whether this agreement should have been disclosed more publicly, Fehrenbach noted that the animal shelter was listed on LoopNet, a website for commercial sites available for rental.

"Hamid marketed this through public real estate channels, so it was sitting out there as a potential situation," Fehrenbach told the Weekly. "We took the opportunity of Anderson needing some short-term parking space."

But unless one takes time to go through the city's LoopNet listings, the fleet of Hondas sitting next to the animal shelter could raise an eyebrow or two. Both Holman and Councilman Greg Scharff were surprised Wednesday when the Weekly asked them if they knew about Anderson Honda's use of the lot. Neither was aware of that fact.

Ghaemmaghami also noted that in reaching the license agreement, the city did not play favorites with Anderson Honda. The rental rate was based on the site's appraised value. Furthermore, this was an opportunity to support a local business, Ghaemmaghami said.

"They are part of the community, too," he said. "They bring in sales tax, they hire people and they're good citizens for the community."

Keene told the Weekly that the ongoing agreement with Anderson in no way implies that the city has any larger or more permanent plans for the animal-shelter property. The idea of having a cluster of dealerships in the Baylands is "ancient history," he said.

"Our sense was that any idea about Anderson Honda going there permanently was just not an option at all," Keene said. "This was just about parking some cars in a place where we've had a history of parking vehicles, both for Utilities and Emergency Services."

Keene also noted that, as a month-to-month license from which the city can get out any time, the arrangement is sensible and low-risk, as well as one that provides a "small revenue stream to the city." If the council were to ask staff to move the cars, that would happen.

Keene also noted that the city's recent projects near the Baylands make it increasingly unlikely that the chronically percolating idea of a land swap with a commercial entity will ever resurface.

"I just think that the efforts we've made with the early closure of the landfill, the planning and design we're doing now on the Highway 101 pedestrian-and-bike bridge and the general sensitivity about land around the Baylands and in the whole area really argues for us moving as much as possible (away) from an industrial presence there."

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12 people like this
Posted by resident
a resident of Midtown
on Jan 16, 2015 at 8:11 am

Does anyone remember that in the 2012 budget, the city manager proposed shutting down the Animal Services - here is the PA Weekly article:
Web Link

Was this a coincidence? or was there a hidden motive to shut down animal services so that the city manager could make the land available to the car dealer in this proposal?

Given the hidden dealings with Arigilla in a proposed sale of 8 acres of city owned parkland, the proposed development of 27 University Ave, this would fit a pattern of operation.

2 people like this
Posted by musical
a resident of Palo Verde
on Jan 16, 2015 at 9:17 am

Seen the Mings parking lot lately?

7 people like this
Posted by Alan
a resident of Greenmeadow
on Jan 16, 2015 at 9:58 am

The short answer to any car dealership using land near the Baylands should be NO.

The conversation should stop there and be done with it.

3 people like this
Posted by SteveU
a resident of Barron Park
on Jan 16, 2015 at 10:11 am

SteveU is a registered user.

Vehicles parked upon public property require a current registration.

Ticket them.
Government can always use the cash

5 people like this
Posted by Mike
a resident of Crescent Park
on Jan 16, 2015 at 10:20 am

I noticed the Mings parking lot yesterday while travelling to the Post Office. I liken the car dealerships to a mutating cell, taking over what it can. The City of course views these dealerships as revenue streams and does not want to rock their boat's so to speak.
PA Council and city staff----Anything for the $$$$$'s

7 people like this
Posted by Brian
a resident of Evergreen Park
on Jan 16, 2015 at 10:33 am

It's nice to see the city manager is doing his job. Getting income from a vacant piece of property is in his/her job description. I go by it each day and never even notices the cars from the street side of the property. Keep up the good work.

1 person likes this
Posted by Jacky Hood
a resident of Crescent Park
on Jan 16, 2015 at 10:51 am

There is no date in this article more recent than November. There is a Jan 13 under one of the pictures but nothing in the article about that date. It's great to provide historical info but the first paragraph should contain news.

5 people like this
Posted by ANON
a resident of Evergreen Park
on Jan 16, 2015 at 10:57 am

KEENE said

"The idea of having a cluster of dealerships in the Baylands is "ancient history," he said."

Huh, i remember he said something similar about 27 university, the behind the scenes dealing, when the grand Jury report came out.
It seem stat when Mr. Keene gets caught, he likes to diminish the offense by claiming it is no longer relevant.

Given how much public discussion there has been regarding the idea of "preferential" use of the bay lands for a car dealership; and the City councils rejection of that plan it is outrageous that Mr. Keen and Mr. Fehrenbach would do this behind the "publics back". Very sneaky, and not right!

Mr. Fehrenbach has not demonstrated any vision for business in PA. I think the only two real proposals he has made was for the Electronic Billboard on 101 and the use of the animal services
site for a car dealership: both rejected by the public and the council; and rightly so.

Why doesn't Mr. Fehrenbach use his time more wisely and work on how to maintain small unique retail businesses in PA.?
He has not demonstrated any ability to add to the character and vitality of the city, he seems to want to drag us back to a less enlightened era with tacky billboards and auto dealerships violating our bay land views!

1 person likes this
Posted by resident
a resident of Midtown
on Jan 16, 2015 at 11:07 am

To people complaining about the Anderson using land near the Baylands, this dealership has been near the Baylands for decades (next to Mings). This new deal just moves some of their inventory to a nearby location.

This article does not say if there will be any public parking or customer access to the new location. That would be a big problem for people using the Bayshore bike path, which is the main detour for people trying to bicycle to the Baylands when the Adobe Creek bike path is closed (like right now).

2 people like this
Posted by taxpayer/investor
a resident of Barron Park
on Jan 16, 2015 at 11:27 am

more evidence of Palo Alto Inc.

But where's my percentage?

2 people like this
Posted by Concerned
a resident of Midtown
on Jan 16, 2015 at 11:37 am

Really, the Weekly spent time and money on this article but hasn't raised a single question about the death of the young man as a result of a drunken fight outside The Patio? A reader posed a very good question. Why did the police send those young men off to get into their cars when they obviously had had too much to drink? The Weekly might want to look at the relationship between the owners of The Patio and our police.

5 people like this
Posted by muttiallen
a resident of Adobe-Meadow
on Jan 16, 2015 at 12:00 pm

muttiallen is a registered user.

I think swapping locations for Animal Services and Anderson Honda sounds like a great idea. None of us is willing to give up our cars. I have a Ford and was sad when the Ford dealership in Palo Alto closed. I use more gas and time and cause more traffic because I have to go to Sunnyvale to get my car fixed. Let's keep these businesses and services in Palo Alto, please.

4 people like this
Posted by Alan
a resident of Old Palo Alto
on Jan 16, 2015 at 12:23 pm

Is Anderson paying fair market value for the space rental? Or is this yet another insider "special deal"?

2 people like this
Posted by cur mudgeon
a resident of Greenmeadow
on Jan 16, 2015 at 12:38 pm

1. Pay fair market rent for use of the space
2. Not visible from 101 or frontage road!!!
3. No more car dealerships east of 101 in undeveloped land.

11 people like this
Posted by jm
a resident of Barron Park
on Jan 16, 2015 at 12:49 pm

Fehrenbach and Keene approved a proposal that blocked a container of supplies needed in a major earthquake? That should be a major scandal. Glad to know the supplies are now accessible. How about allocating the $5,400 to the animal services budget?

3 people like this
Posted by Wayne Martin
a resident of Another Palo Alto neighborhood
on Jan 16, 2015 at 1:06 pm

> Under the terms, Anderson paid the city
> 40 cents per square foot, the lot's appraised value

And when was this appraisal done and by whom? With property going for $5M-$8M an acre here in Palo Alto, 13K square feet is about a quarter acre, so at those prices, the land would be worth $120-$190/sq. ft.

While I’m not certain that I have a problem with short term leases that are charged out at a fair price, this deal is beginning to take on a distinctly 27 University Ave smell.

While the cars being on City land is clear evidence of some sort of deal having taken place, one has to wonder what “policy” allows the City Manager to lease property without the approval of the City Council for three years. So, what happens then? Does the City Manager get to do another three year deal? And just how transparent are these occupancy deals? Are they to be found on the City’s web-site, or does one have to attempt to piece the veil of the City of Palo Alto’s public records request system—which may, or may not, produce records in response to a request??

Without more information, it would appear that the City has undercharged for the use of this property. What’s also worrisome is the possibility that once Anderson has had access to this property for a while, he might decide it’s effectively his.

Perhaps this is another of those matters that should be referred to the Civil Grand Jury. It’s a shame our City Auditor does not seem very interested in investigating these sorts of activities on the part of City Management. Maybe it’s time for the Council to review this, and other, policies allowing the City Manager to operate in the dark.

5 people like this
Posted by anonymous
a resident of Duveneck/St. Francis
on Jan 16, 2015 at 1:14 pm

I just want to add my voice to those expressing concern about this "deal." Thank you to the reporter for shining a iight on this use (to me, a mis-use) of Baylands lands. Please followup with the city to see what happens next.

8 people like this
Posted by Resident
a resident of Crescent Park
on Jan 16, 2015 at 1:36 pm

Let's hope the new city council and Mayor Holman fire City Manager Keene. I'm tired of his secretive dealings. I know that some members of the council are extremely unhappy with him.

1 person likes this
Posted by gdrer
a resident of Charleston Meadows
on Jan 16, 2015 at 2:37 pm

The Mings parking might be the Audi dealership.

5 people like this
Posted by Sally
a resident of Downtown North
on Jan 16, 2015 at 2:49 pm

The land use designation at the city service yard is Public Facility. This zoning does NOT allow for land uses that include car sales and related commercial activities. Did the City Staff obtain a temporary use permit?

If not then why are they engaging in commercial transactions that generate revenue and violate zoning without any purpose related to the mission of governing a city?

The Staff justification that they can do whatever they want because City Policy allows shows their complete disregard for the residents who pay the majority of taxes that cover city expenses. Keene needs to be fired and a new city manager with ethics and integrity needs to be brought on board.

1 person likes this
Posted by Bill1940
a resident of Menlo Park
on Jan 16, 2015 at 2:50 pm

Well, Ming's has closed, and the owners are going to build a long-term resident hotel and a smaller restaurant with underground parking on their property. The construction should clear up the automobile storage on the Ming's land.

Hey, maybe these dealers should rent the abandoned automobile dealerships on El Camino Real in Menlo Park! They can't possibly make that property look any worse than it does ..

1 person likes this
Posted by Sparty
a resident of another community
on Jan 16, 2015 at 3:13 pm

Sparty is a registered user.

So get down their people, and do something. Well not the baylands but city council.

I can't say that they'll care....because like every other city, they know both individuals and "groups" are sometimes just one issue'll need to do a lot to put some heat on.

For example...Mt View. The old council pretty much was jaded with one citizen and his rent a mob. Now that the guy is in...he ditched his rent a mob and might actually have to do something that makes sense instead of being a PitA just for the sake of being a PitA.

So find some likewise minded people, put the heat on the right city people for some answers and go from there... Speculating here is no more useful that facebook slactivism.

3 people like this
Posted by Anon
a resident of Evergreen Park
on Jan 16, 2015 at 3:35 pm

If this is a zoning violation, the city attorneys office should clarify ASAP!

As to the the desirability of this …..please city council,please weigh in on this and do not fail your public!

5 people like this
Posted by Don
a resident of Evergreen Park
on Jan 16, 2015 at 3:57 pm

The reporters aren't doing enough investigation. Here are 2 photos I took on Wednesdady, of the Palo Alto Airport parking lot (the lot next to the golf course; the one that's supposed to be for... airport parking). It's been full of dealership cars since back in December.

Web Link
Web Link

The city took over management of the airport last August.

This use strikes me as a particularly egregious use of what should be parking available to airport tenants and guests.

4 people like this
Posted by Gus L.
a resident of Barron Park
on Jan 16, 2015 at 6:04 pm

How many Hondas were parked on Our Property?
Have you seen the TREES that the Audi Dealership Cut Down? Shameful..Beautiful trees wiped out..
I guess that dealership is expanding its building on that site.

Like this comment
Posted by Scottie Zimmerman
a resident of Midtown
on Jan 16, 2015 at 6:13 pm

Sorry if this is a dumb question, but is there a place where I can get a map (or maps) of Palo Alto that shows the different zones? When we remodeled our house, we got some kind of map of all the parcels (?) in our neighborhood so we'd know whom to notify of our changes. Is it possible to get similar maps of, for example, the areas on Embarcadero, east of 101, and along the frontage road south to San Antonio? It's confusing trying to keep track of what goes where without a map. Or maybe I could get myself a tiny drone with a camera?

9 people like this
Posted by William Warrior
a resident of Midtown
on Jan 16, 2015 at 7:13 pm

The City could replace James Keene with Vladimir Putin and no one would notice.

3 people like this
Posted by Susan
a resident of another community
on Jan 16, 2015 at 7:55 pm

@ Scottie Zimmerman: The index for all zoning district maps can be found on the city website at this URL.
Web Link

Animal Services is on Map 7. It's PF(D) which means Public Facility with a Design Review overlay (additional review).
Web Link

5 people like this
Posted by Bewildered
a resident of Midtown
on Jan 16, 2015 at 8:51 pm

Why is everyone in Palo Alto so against bringing money into the city, in this case a car dealership which sells big-ticket items and could benefit the city?

I like Anderson Honda, and I get my car serviced there, and I have bought 2 cars there. I don't want to have to drive to other cities for cars and servicing, the way I have to for groceries and for affordable shopping. Anderson Honda has been there for probably longer than most of you, and they are nice, and they don't pour oil into the baylands. They aren't Bad Guys.

If most Palo Alto residents hate businesses, then be like Atherton, and don't allow any. The homeowners each pay a large annual fee or tax to run the city. If you don't want to do that, then allow businesses to do business in the city.

7 people like this
Posted by Cheesey
a resident of Leland Manor/Garland Drive
on Jan 16, 2015 at 8:58 pm

Absolutely tacky behavior! Inexcusable on the part of Anderson Honda! How cheesy-sleazy can they get?

2 people like this
Posted by Scottie Zimmerman
a resident of Midtown
on Jan 17, 2015 at 1:24 am

@ Susan
Thanks very much for the link to City zoning maps. I'm exploring....

2 people like this
Posted by Oldster
a resident of Old Palo Alto
on Jan 17, 2015 at 1:59 am

Renting out airport land for a non-airport use (like car dealer parking) is likely to get the airport into serious doo-doo with the FAA which looks harshly on such uses come FAA-audit time of airports which have taken FAA money... which Palo Alto Airport has.

Then again.... lots of golf balls come over to that new Audi parking lot by the FAA tower. FOUR! Here's hoping the geniuses at the City Hall real estate office made the Audi dealer expressly assume the risk of golf ball hits.

Like this comment
Posted by Oldster
a resident of Old Palo Alto
on Jan 17, 2015 at 2:14 am

And, I've used that parking lot by the FAA tower for almost 30 years. Picked up so many golf balls there over the years.... I've never had to buy one in .... I can't remember when!

Like this comment
Posted by RoxyPaloAlto
a resident of Community Center
on Jan 17, 2015 at 7:46 am

Looks to me like "Big Dog" Anderson has his foot in the door.

6 people like this
Posted by agenda
a resident of Another Palo Alto neighborhood
on Jan 17, 2015 at 10:21 am

Cheesey, why attack anderson? They approached the city about renting space. The city said okay. Anderson is paying the city. If you are unhappy with the deal complain to the city. Anderson has done nothing inexcusable, cheesey or sleazy. Typical non story reported by the weekly to stir the pot.

4 people like this
Posted by RobertN
a resident of Midtown
on Jan 18, 2015 at 10:34 pm

This looks like a good deal for the city of Palo Alto.

I have trouble finding outrage for the city renting out an unused city parking lot, at market rate, for an auto dealer to park cars. It's a month-month arrangement, so if there is some required city use, it would be easy to end the deal.

4 people like this
Posted by Tom
a resident of Crescent Park
on Apr 12, 2015 at 1:32 pm

Close that animal shelter and rent that property to a car dealer or anything legal that brings money for the city. Wake up city manager and city council please do your job. The whole bayland by east bayshore could bring a lot income to the city. We are in 2015 we don't need more grass and that ogly baylands. If it was like Foothills park, arastradero preserve or Los Trancos Open Space, I would say NO but the baylands it is right there by 101. I don't see nothing nice about it.

6 people like this
Posted by Online Name
a resident of Embarcadero Oaks/Leland
on Apr 12, 2015 at 1:57 pm

The city has more than enough money. Our pets are more important than some of the ridiculous projects the city undertakes.

Look at the waste:

$4.5 million to decorate the the 1st floor of City Hall, $330,000 "wayfaring art" for the 1st floor -- otherwise known as signage!

Hundreds of thousands of "community outreach" consultants who are from out of town.

Hundreds of thousands of "social media" consultants from out of town because the city thinks PA doesn't have enough tech talent.

A $220,000 assistant city manager who Mr. Keene thinks needs a $30,000 housing allowance when she comes from Napa where the rents and property values rival Palo Alto.

One could go on endlessly. If my pet got lost -- as pets do -- I'd much rather have you find him, that waste close to $5,000,000 redecorating City Hall which other news sources claim is structurally unsound any way.

4 people like this
Posted by Tom
a resident of Embarcadero Oaks/Leland
on Apr 18, 2015 at 1:31 pm

This online name is everywhere but have not posted its real name yet. You like your pet so much , how much are you donating every month for PAAS so maybe the city keep PAAS open? $1.000 , $10.000, $100.000 or let me guess nothing right $0000000000000000.

Like this comment
Posted by Dee
a resident of Adobe-Meadow
on Apr 21, 2015 at 9:58 pm

I spoke with a Park Ranger up on Foothills Park and the Ranger told me that they are short on staff and sometimes there is no ranger on duty or one ranger for patrol the Baylands, foothills Parks, the Arastradero Preserve. The ranger said the City doesn't want to hire more ranger. So, it is not only PAAS in trouble but the other departments also.

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

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