Almanac

Viewpoint - April 9, 2014

Editorial: Menlo Park wrestles with non-resident fees

Cities like Menlo Park started as homogeneous enclaves that over the years added territory on all sides as outlying residents opted in so they could receive city services. Often this process leapfrogged over so-called unincorporated territory, and in several cases, like University Heights and Menlo Oaks, the city simply grew around them and residents never did opt to join the city.

But whether official residents of Menlo Park or not, those living in "unincorporated" Menlo Park have come to enjoy the same zip code, the same schools and the same real estate values as official citizens of Menlo Park, but are exempt from city tax assessments.

This dichotomy has existed for years and is rarely an issue. Unincorporated residents have accepted that they cannot vote for Menlo Park City Council members, cannot participate in some city programs, and in most cases, are not treated as equals when signing up for the city's numerous recreation programs for adults and children.

This issue popped up after a Menlo Oaks resident became upset when his daughter attempted to register for a gymnastics class with fellow city-resident classmates after the deadline for nonresidents, and the class had filled up. Had she registered in time and was willing to pay a surcharge, she would have been accepted. But along with lower fees, some classes give priority to city residents, only accepting nonresident registrations after a class deadline. If a class fills up by the deadline, nonresidents are out of luck, which sparked the questions raised by the disgruntled parent in recent testimony before the Parks and Recreation Commission.

Now the commission, which is examining changes in the current 35 percent surcharge for nonresidents, has asked city staff members for more information about why city residents get priority in registering for classes, and what contributions unincorporated residents make to city coffers. The surcharges and higher fees have come about over the years and now are a key contributor as the city attempts to recover all or most of its costs for the programs.

It is a worthwhile exercise. Almanac blogger Erin Glanville took a deep look at the subject (see her take at tinyurl.com/noo43sz) and found significant differences in the fees charged nonresidents in Menlo Park and nearby communities. She also found that some nonresidents have abandoned Menlo Park classes and registered elsewhere (where fees are lower), which takes revenue away from the city and those offering the classes.

In some cases, the nonresident fees are not significant. For example, registering for a Menlo Park gymnastics class costs $13.40 for residents and $18 for nonresidents if the student is attending only once a week. But for three-times-a-week use, the fees drop to $10.45 and $14 respectively for residents and nonresidents. All users must pay a fee of $9 for residents and $11.25 for nonresidents. Costs go up considerably to rent gym space for a season of volleyball: Cost for a team of residents is $527, and nonresidents, $713.

Nonresident fees are a significant source of revenue for the city, bringing in nearly $400,000 a year. Overall, about 50 percent of those participating in the city's recreation programs are nonresidents, and 16 percent of those live in unincorporated areas sharing the city's zip code.

Changing that formula will be difficult for the commission, given its huge financial impact. The bottom line is simple: Nonresidents do not pay the taxes that support all city services, including recreation programs. Nevertheless, this is an opportune time to reassess all the city's fee structures to make sure they are fair to residents and nonresidents alike.

And it is especially important to look at nonresidents who live in unincorporated Menlo Park whose children attend local schools and whose parents pay sales taxes in city businesses. Under the current policy, these children can sometimes get shut out of programs they want to attend with their friends, who live within the city boundaries. One way to improve is to give unincorporated Menlo Park residents an equal shot at all classes, but otherwise assesses them the same fees as other nonresidents. If fees are applied equally across all activities, the city may be able to slightly reduce the surcharge, but we doubt if any commissioner or council member would agree to lose a significant portion of the $400,000 a year by dropping the surcharge for nonresidents.

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