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Needed: A Freeway-Centered Auto Row

Original post made by Karen White, Duveneck/St. Francis, on Jul 16, 2006

City officials should seize the opportunity to add $1.6 million each year in new sales tax revenue for Palo Alto through increased auto sales. In talking about locating an auto center at our Municipal Services Center and other sites along West Bayshore that are prime candidates for auto sales, consider the following:

An auto center along West Bayshore should be considered a new extension of our current Embarcadero auto row, not a replacement for current dealer space. An auto center on all or part of the MSC site would become one part of a synergistic Embarcadero-and-West Bayshore row. The resulting critical mass will increase auto sales across the board. It may be possible to use 8 acres of airport land for half of current 16-acre MSC operations. This would open 8 acres with freeway frontage at the MSC for auto dealership use.

Car dealerships represent small-scale development when contrasted with the square footage that could be built along West Bayshore, given what zoning allows. Dealerships are low trip-generators and bring minimal negative environmental impacts. Encouraging the use of green building standards would enhance the community value of new dealerships.

With these thoughts in mind, the City should move assertively to establish transfer of development rights, creating an economic incentive for establishing auto dealerships (instead of building housing or offices) along West Bayshore where vacant offices now sit. These sites border the freeway and are prime locations for auto sales.

In short: Palo Alto should create a freeway centered auto row by 1) using any portion of the MSC that proves economically sound, remembering its prime location, and 2) immediately adopting land-use incentives to encourage auto dealerships on private land along 101. We stand to gain $1.6 million each year in new sales tax revenue. But the opportunity costs from not acting on these initiatives include losing our dealerships altogether.

Comments (9)

Posted by Boris Foelsch
a resident of Palo Verde
on Jul 17, 2006 at 10:40 am

Hi Karen,

I believe and hope you meant East Bayshore, not West Bayshore. West Bayshore is the name of the frontage road that is the border of the Palo Verde neighborhood in which I live. East Bayshore is the road on the Bay side of the freeway.

-Boris Foelsch

Posted by Jay Thorwaldson
editor emeritus
on Jul 17, 2006 at 11:04 am

Jay Thorwaldson is a registered user.

Checking with Karen White, she "Absolutely!" means East Bayshore Road, not West Bayshore, and apologizes for the confusion. -jay

Posted by Ted Mulvaney
a resident of Barron Park
on Jul 17, 2006 at 9:34 pm

I respectfully disagree with Ms. White’s posting. While the basic idea is, I think, a good one (opening East Bayshore for development of a business that could potentially provide the city with additional tax revenues), the execution of it seems completely at odds with what has made Silicon Valley the thriving place it is.

Instead of letting dozens of groups of entrepreneurs or other businesses decide what kinds of businesses would make sense in that location, the proposal goes well beyond to circumscribe exactly what kind of business would be allowed. Which is to say that the City of Palo Alto has decided that it can pick business winners, and probably pick them better than any of the venture capital firms on Sand Hill.

Why not open that area for development and see what value everyone puts on it? Answer: because the winner of that contest might not be an auto dealer. The solution, apparently, is to not only restrict the development to auto-dealers, but probably give them incentives to come to our fair city.

But the last time I checked, Palo Alto is not the only city on the Peninsula bordering 101. Even if we were able to identify a dealer to take our offering, do we not think other cities will learn that lesson and try to lure them away? It doesn’t seem to be much of a secret that auto dealers can provide tax revenues - is there any sustainable advantage that Palo Alto has that would make dealers want to stay here? The answer to that question is quite possibly “yes,” but I haven’t seen anything to support it.

And does anyone really believe that people will think “Gee, I need to get a good deal on a car. I should head down to Palo Alto” ?

The dealers are clearly (sorry) in the driver’s seat. Instead of trying to “catch” them, we should do what we can to make Palo Alto a business-friendly town. And while we’re at it, we might want to evaluate our current city budgeting in light of likely lost revenues.

Posted by Very Tas
a resident of Evergreen Park
on Jul 18, 2006 at 2:43 am

Well said, Ted (rhyme not intended).

Letting that land go to "market rules" is the right thing. It seems odd that we're so fixated on the auto delaerships, because in doing so we've practically shown them our negotiating cards before they come to the table. Looks like a giveaway in the making that precludes other, potentially more profitable uses.

It's not an easy choice though. Palo Alto needs revenue NOW - so even a bad deal with the auto people gets us some needed cash. We're paying for prior short-term thinking. NO one to blame, really. It's easy to get sucked into thinking good times will last forever. An adjustment period is in order.

Palo Alto is in a really bad spot right now. We're outflanked by big box retail, right on our borders. (Home Depot is probably going into the old Sears spot on San Antonio in Mt. View). We're outflanked by new hotels, and soon to be new hotels (Sand Hill and 280, Menlo Park).

If I was running location and real estate at Fry's, I'd have my real estate team negotiating with Menlo Park's deserted auto row right now, get my best deal, and then come back to PA and force concessions. And then I'd go back to Menlo Park one more time to grind a little more, and finish with PA. I hope our negotiators have kneepads.

Both cities will negotiate to the bottom, because both cities are in dire revenue straits. If Fry's isn't doing this now, it's gotta be on their "to do" list.

We're about to lose "shopkeeper" retail. Tiny shops on University are paying upwards of $9K per month for rent. How much barbequed chicken. tea, ice cream, etc. can one sell in a month?

The result? HIGHER end retail. It's coming soon, to a neighborhood near you. Forget the friendly little guy or gal who wants to open up a small retail store with longevity. Those days are OVER here.

High end boutiques, restaurants galore (coming and going) and the occasional niche player that's foolish, or courageous, enough to take the chance to bring something 'different' to Palo Alto.

There are some cool possibilities on the horizon, like the PTOD in the Cal Ave. corridor, and other developments on Cal Ave. Midtown has some neat possibilties, and there are others. The thing to watch for there is that developers and landlords are going to have to be encouraged to promote healthy retail mix. That's a leadership issue; and it's something that we've been loath to get into. We'd better start thinking about this NOW, however, or we're going to end up with a very unhealthy high end mix. If word gets out about that, that mix will start to migrate up and down the Peninsula, near long term, because our neighbors are lagging behind us by just 5-8 years in terms of heading in the same direction.

What we're heading for near-term are some very uncomfortable times that will probably be dealt with by cutting services. Some very special services that have been around for a long time are going to be challenged. Citizens are going to have to pony up to keep some things running.

All this isn't necessarily bad; it's just going to make Palo Alto a different place. Given the new demographic that's rolling into town, it could be that the scenario described above will suit newcomers just fine.

the times, they are a'changin'

But the weather is still the best!

Posted by Bob Gardiner
a resident of Midtown
on Jul 19, 2006 at 7:01 am

VT: If 'Tiny shops on University are paying upwards of $9K per month for rent. ', then commercial property values and the resultng taxes should be way above per capita average for a city.

Where is the money going?

Posted by Ralph Britton and Bob Lenox, Palo Alto Airport Association
a resident of Old Palo Alto
on Jul 19, 2006 at 8:59 am


While we support attracting auto dealerships to the City, we point out that dedicated airport land is not an appropriate location for non-aviation activities. While there currently is an unimproved area on the airport, it is used for some aircraft operations today, and the Draft Master Plan for the Airport calls for a terminal and a helipad, among other things, on this space. Palo Alto Airport is a busy general aviation facility on a restricted space which cannot be expanded. It is essential that this limited amount of land be exclusively reserved for aviation purposes.

Posted by Karen White
a resident of Duveneck/St. Francis
on Jul 19, 2006 at 9:57 am

A good solution would be to establish transferable development rights that would encourage the private owners of vacant buildings with freeway frontage to build dealerships or lease to them. Those vacant buildings along 101 will be redeveloped sooner or later. Let's encourage auto dealerships there instead of housing or offices, for which freeway frontage is not essential.

Under a TDR program, landowners can sell their unused development rights, which then could be used downtown or in other locations where higher density housing or offices might be appropriate. Bottom line: With land use incentives to spur action by the private sector 1) Palo Alto would see new car dealerships with freeway frontage, 2)landowners would retain the economic benefit of redeveloping their sites, and 3) there'd be no direct cost to the City.

Related: here is Marc Fleischmann's timely Town Square post (copied with Marc's permission) on the need for concerted action to retain and enhance Palo Alto retail.

"Do you hear that sucking sound?

That all of our tax dollars being sucked out of Palo Alto by the surrounding towns. Take a good look at the attached map and you can see why the city's income is on a downward spiral.

Since we moved here in 1991 all we've ever seen is retail business leave Palo Alto. All the talk by the City Council and City Management has been a waste of time.

All the coffee shops, all the restaurants and all the fro-foo french patio stores don't bring in the tax revenue that one big box retailer or car dealer does.

Here's my prediction for the next five years.

Magnussen's Toyota moves to Mountain View.

Whole Food's sales drop 40% once the Mountain View super store opens.

Mangnolia HiFi closes due to the Best Buy in East Palo Alto and Mountain View.

Fry's moves to Menlo Park, just north of Palo Alto on the site of the closed auto dealers. Plenty of room for a huge building and parking.

What will the city council say then? That it's time to form another Blue Ribbon committee to develop a plan to save retail."
In answer to Bob's question on the use of funds, please see the City Budget. It can be reviewed at The home page includes a direct link.

Posted by Sheri Furman
a resident of Midtown
on Jul 19, 2006 at 3:41 pm

Thanks to Karen for clarifying she meant East (not West) Bayshore. Although Council and Staff are once again considering West Bayshore, it remains an inappropriate location for auto dealerships. The commercial sites are far too narrow (600'), they back up directly to residential properties, and access is problematic. With the Canpus for Jewish Life being built at the San Antonio end, freeway access will be difficult for someone test driving a car they're unfamiliar with and the Oregon side is not much better with its sharp turn (autos being delivered could not use this entrance).

Potential areas previously mentioned, but undiscussed lately are the Palo Alto Business Park at the junction of 101 and East San Antonio (easy freeway access) and the entire area of Embarcadero between 101 and the airport. The dealers need not be directly on 101, if reasonable signage (not 80'!) is provided at the 101 and Embarcedro or San Antonio intersections. And, no, the sites need not necessarily impact the Baylands.

It makes more sense to provide owners of these sites with incentives to sell so the properties can be consolidated rather than to create an expensive and potentially visually disruptive auto row at the MSC (the Baylands and those signs again...).

Posted by Too much traffic
a resident of Downtown North
on Jul 21, 2006 at 11:32 am

I say let the auto dealers, and the rest of the retail that want out of Palo ALto, move to another city. These businesses generate too much traffic and negatively impact my quality of life.
Why waste City Council time debating about this issue? As soon as the Council will find a spot to put an auto row or any other retail, then some neighborhood group and neigborhood leader will rise up to oppose it or it will be nit-picked to death via the Palo Alto process. The council, unwilling to stand up to these people/groups, will recommend years of discussion, the need to hire consultants and to start studies on the matter.
Think I am kidding? Check out the Council's history with regard to the Hyatt and Alma Plaza issues. Now we are also starting anew round with Edgewood Plaza--how many years before that will be resolved?
Let's just cut to the chase--let the retail go now and save the aggrivation and bickering.

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