Quite some time ago I headed to Redwood City’s website and signed up for all of their newsletters, figuring that I’d get some good ideas from their occasional mailings (go here to sign up). Those newsletters have indeed proven to be a great source of information. Indeed, this week’s post is largely motivated by something I read in the August Economic Development Newsletter. (Don’t stop reading if you aren’t interested in the city’s economic engine! I then go on to provide some around-town updates.)
The Economic Development Newsletter contains short articles on, as you might expect, local businesses and city-wide economic matters. I particularly like the Market Updates section, which summarizes commercial real estate activity in San Mateo County and/or Redwood City, and the Revenue Row section. Revenue Row dives in to the city’s revenue picture, disclosing how much the city receives and from where it comes. Since we don’t see a line for “Redwood City” on our property tax bills, I’ve always been curious about the city’s sources of income. This week I thought it might be instructive to shine a bit of light on where Redwood City gets its money, and just how much it expects to receive this year.
As it turns out, line item or no, property taxes make up the largest source of general fund revenues for Redwood City (general fund revenues are tax monies that can be used for any purpose, and are not earmarked for a specific function such as road maintenance). Redwood City anticipates taking in a total of $106.4 million in general fund revenues throughout the current (2015-2016) tax year; about 38% of that, or some $40.7 million, will come from property taxes. Because we pay our property taxes to the state Franchise Tax Board, who then disburses a percentage to the city, the amount that goes to Redwood City is not itemized on our tax bills. But Redwood City receives approximately 18% of the amount on your tax bill labeled “General Tax Rate,” which itself is 1% of the full cash value of your property. Using round numbers, if your property is deemed to be worth $1 million, your General Tax Rate would be $10,000, and Redwood City’s cut would work out to $1,800. Note that there are some line items on your tax bill: this other tax revenue doesn’t go into the general fund. These are for bond measures and other earmarked funds.
If property tax revenue makes up 38% of the money that the city receives, where does the rest come from? Well, the next biggest source of revenue is sales tax. For the 2015-2016 tax year, Redwood City expects that sales tax will bring in $23 million, or about 22% of general fund revenues. Sales taxes come from a variety of businesses, but I was somewhat surprised to see just how much Redwood City receives in sales taxes from “Transportation,” a sales tax category made up of automobile dealerships and related businesses (such as gas stations). Transportation—which is the largest category—accounts for a whopping 35% of sales tax revenues. The Economic Development Newsletter also includes a sidebar listing of the 25 Redwood City businesses that collect the most sales tax, and I noted that more than half fell into the Transportation category. In alphabetical order (not in order of tax received), they are:
- Boardwalk Auto Center
- Boardwalk Chevrolet
- Carlsen Porsche
- Carlsen Subaru
- Chevron Service Stations
- Enterprise Car Sales
- Ferrari Silicon Valley
- Honda Redwood City
- Hopkins Acura
- Land Rover
- Peninsula Infiniti
- Putnam Lexus
- Thompson Toyota
- Towne Ford Sales
- Towne Mazda
Seeing them all in the “top 25” list makes me realize just how important auto dealerships are to a city, and how much impact the loss of one or two dealerships can have. So here is where I pass on a fairly credible rumor that Honda Redwood City may be moving to San Carlos late next year…
Following “Transportation,” about 30% of Redwood City’s sales tax revenues come from a category titled “General Retail.” This category includes companies such as Kohl’s, Target, K-Mart, and Costco. As you might expect, Costco and Target are on the list of top 25 sales tax generators, as are some others which I’m guessing fall into the category of General Retail:
- Airport Home Appliance
- Davies Appliance
- Lyngso Garden Materials
Other sales tax categories are “Business to Business,” “Food Products,” “Construction,” and “Miscellaneous.” I assume that Oracle Corporation falls under “Business to Business.” Safeway Stores probably slots into “Food Products” (or is that category just for restaurants?). And then there is R&B Company (formerly known as Roberts & Brune Company). I’ve walked past R&B many times: they are located at 939 Broadway Street, just a bit below Woodside Road. I never paid them much attention before, but seeing them on the list of Top 25 Sales Tax Generators made me open up a web browser and do a little digging.
Just what do they do that generates so much sales tax? Essentially, they sell pipe (water, gas, sewer), valves, and fittings. And when you think of valves, you usually think of faucets and such; R&B, however, sells large industrial valves—including fire hydrants. It’s a very low-tech business for such a high-tech world, but no amount of software is going to eliminate the need for water and sewer pipes and valves!
There is one other company on the top 25 list that I was surprised to see. Not because they aren’t (apparently) a profitable business, but because I wasn’t aware that they are headquartered in Redwood City (in Redwood Shores):
In case you aren’t familiar with Shutterfly, they are one of the leaders in the field of turning your digital photos into photo books, holiday cards, announcements, and the like. Shutterfly is actually just one brand under the Shutterfly Inc. corporate umbrella: other brands include Tiny Prints, Wedding Paper Divas, ThisLife, MyPublisher, and BorrowLenses.com. This last is another company you may have noticed: although they aren’t in Redwood City, their “West Coast Headquarters” is at 1664 Industrial Road in San Carlos, which is extremely close to Redwood City’s border. In case you can’t guess from the name, BorrowLenses.com rents camera lenses and related gear.
Just to wrap up Redwood City’s revenue picture, after property and sales taxes the city’s next largest source of general fund revenue is from “Charges for Services”; the city expects that service charges will bring in some $12.65 million in the 2015-2016 tax year. After that is “Other Taxes” at $10.7 million. I suspect that this includes Transient Occupancy Taxes—taxes on hotel rooms—which, over the current tax year, should add up to some $6 million.
If all of these detailed figures excite you or raise questions in your mind, you can find Redwood City’s budget, along with the Comprehensive Annual Financial Report and other financial documents on the city’s website, at http://www.redwoodcity.org/finance/fininfo/index.html.
Moving on, I made my usual rounds of our downtown this week, and have a few things to report:
Broadway Masala—the popular Indian restaurant at the corner of Broadway Street and Winslow Street—appears to be expanding into corner site that once housed New Kapadokia (a Turkish restaurant). If true, this is a sign that Broadway Masala is doing well in the site that for a long time was the home of Siciliano Ristorante Italiano, one of my favorite Italian restaurants.
My current favorite Redwood City restaurant, Aly’s on Main, has applied for an upgraded liquor license that will allow them to add sidewalk seating. And it seems that they will be featured on an upcoming edition of the ever popular Check Please! Bay Area (a KQED production). My understanding is that their segment will air on October 20, so watch for it. I sure do love seeing our local restaurants getting so much attention from the larger community!
Timber & Salt (at 881 Middlefield Road, on Theatre Way next to Arya) is scheduled to open to the public next week, after a series of private parties this week. I wandered by to check on their progress, and ran into none other than Stewart Putney, the owner and manager (and proprietor of Putney Farm). He was gracious enough to take me inside and show me around. I’ll write more about them when they’re open and I’ve had a chance to sample their wares, but the menu looks terrific and their bar looks, well, extensive:
Be sure to check out his murals. He has two, and they reflect the name of the restaurant. I had been wondering what “Timber & Salt” referred to, and just about slapped myself on the forehead when he explained that it was an homage to two of Redwood City’s former industries: Redwood logging (timber) and salt harvesting. On one wall of the restaurant there is a mural showing our old Leslie Salt operation, while an opposite wall shows lumberjacks hard at work harvesting redwoods high in our hills, and men loading (or unloading) milled lumber on a ship in the bay. Finally, be sure to note the rough-hewn redwood timbers just inside the door; they add the perfect touch to the restaurant’s otherwise modern decor. I have a really good feeling about this place…
Lastly, in response to a reader question I headed down Middlefield Road and took this shot:
Cocola’s new rainbow-colored building is located just past Costco Wholesale and the mini-storage, just steps beyond the city borders. They currently have a presence in the area, at 2810 Bay Road, but this Middlefield Road location appears to be much larger and much easier to get to, so my guess is that they’ll move to Middlefield Road once construction on the above-pictured building is complete. (Then again, this could just be their new kitchens from which they’ll supply their stores.) Cocola is a “premier retail patisserie”: a high-end French bakery that serves, in addition to its cakes and tarts, sandwiches, soups and salads, and coffee and other beverages. In addition to their Bay Road location Cocola has five others: Santana Row (in San Jose), Stonestown Galleria (in San Francisco), Stanford Shopping Center, and Valley Fair Mall (in Santa Clara; this one is called “Maison de Patisserie”). They take online orders, and deliver to most parts of the Bay Area.
It is exciting to see so many of our small businesses doing well. While I don’t expect to see Broadway Masala, Aly’s on Main, or Cocola on future Top 25 Sales Tax Generator lists, they nevertheless are important factors in the continuing diversification of Redwood City’s economy. I look forward to supporting these and other local businesses, and hope you will, too.