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About this blog: So much is right — and wrong — about what is happening in Palo Alto. In this blog I want to discuss all that with you. I know many residents care about this town, and I want to explore our collective interests to help ...  (More)

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If at first the city does not succeed …

Uploaded: Feb 3, 2022
Once again (sigh), our city officials in Palo Alto are moving ahead to adopt a business tax – the revenue will probably go into the city’s general operating fund. The city council has tried several times before – and failed. They even had a ballot measure in 2009 to adopt a business tax based on gross receipts, but the public turned it down.

Undaunted, they are still carrying the tax flag forward, marching the measure toward the ballot this November for voter approval.

Why discuss this now? Because the council is still deciding what the tax proposal should contain, and I think this is a good chance for all of us to try to influence council’s thinking – including suggestions on this site, which I will forward to council.

The tax probably will have the following provisions, although at this time all is very fluid: The business tax would be based on square footage, with exemptions for small businesses, groceries and hotels. Bigger companies with larger square footage would pay a portion of the tax once a year, and then make additional monthly payments. One good thing – the limits the annual bill for businesses with less than 5,000 square feet of space would be $50.

The council’s reason for pursuing it? No surprise – more money for city coffers. They were spurred forward after a new poll they paid for indicated 62 percent of voters MAY favor it. Estimates range from about $2 million annually to $10 million additional revenue– depending on the way the tax is structured. It’s easy to understand their logic.

One of the council’s arguments for the tax is it needs it, well, because it doesn’t have one – and other cities do. But so what? Is this just another way to ensure Palo Alto “is keeping up with the Joneses”?

Keep in mind that businesses leasing office space in this city find it is much more expensive here than, say leasing in San Jose. Plus, utility rates in Palo Alto are seeing frequent increases in water, electricity and gas bills. Businesses know they will have high costs when they locate here.

We never know the tipping point as to when a business decides to stay or leave because of a new tax could be the last straw. We do know that higher taxes can result in business moving out.

If you haven’t guessed yet, I am against the business tax.

I want businesses to thrive here, because they produce sales taxes for the city among other taxes they have to pay. But they also provide fine stores, shops and restaurants we all enjoy. I want more retail in town, to make sure downtown and Cal Ave are fun places to go – day and night. I want a thriving community, not one whose two downtowns become boarded up.

Over the years, opponents of the tax have said “this is not a good time.” Well, for better or worse, I will repeat that refrain. This is not a good time to enact a business tax. Just look at the number of stores that have closed or moved out during this pandemic. For those who remain, most say their sales are down considerably, and some add they are just hanging on, since their revenues have declined due to coronavirus, and employees are difficult to find. If businesses leave, our previously thriving downtown will no longer thrive.

Another problem I have with the proposed tax is that council members don’t yet to know what to do with the money they collect. They have offered a number of suggestions. They have pretty well agreed it should go into the city’s general account, because then a majority vote (50 percent plus one) is all that is needed for the measure to pass. If the money is designated for specifics, e.g., new bike paths and affordable housing, then a two-thirds vote is needed. Putting a specific purpose for the tax is a risk the council does not want to take.

The council is talking about “replenishing the general fund,” so taxes could go to parks, libraries, or other community services.

Others oppose it, especially if the money collected goes into the general fund. History has shown that when the general fund gets the money, that money can be used for anything – including city employee pay raises. Previous lists of suggested areas of investments for these taxes get diverted to pay for other things in the city, Hence, they argue for a two-thirds vote.

They make an interesting point. If a business tax passes and the money goes to the general fund, chances are that no one will keep track of how that money is used, except for the city manager.

Many residents may favor the business tax because they may feel taxes are okay – for somebody else, like businesses. That way they can support such a tax, since they I do not have to pay.

I know it’s early to come out against a business tax since the election is in November, but I do want residents to think this proposal through - - its benefits to the community as well as its effect on the business community. And keep in mind that traditionally, when business costs increase, they pass on their new expenses to customers who are charged more. That means you and me.
Community.
What is it worth to you?

Comments

Posted by Allen Akin, a resident of Professorville,
on Feb 3, 2022 at 4:42 pm

Allen Akin is a registered user.

The only way to reduce the jobs/housing imbalance is to make it relatively more expensive to locate jobs (by this I mean office jobs) here, and relatively less expensive to build housing here.

If the business tax is designed properly, it can do both of those things. Large companies will have more incentive to expand elsewhere, or even to reduce their facilities already here (thus freeing up valuable real estate). Money raised by the tax could go into the city's housing fund, or to support new infrastructure for a larger resident population.

If I had my way, the tax would be based on employee count and business type, rather than floor area, and the revenue would be dedicated to specific purposes. However, my understanding is that Staff and Council have already ruled out the first option, and the second would require a 2/3 vote, which is unlikely. So we wound up with a compromise that's not optimal, but if managed carefully could still be an improvement over the current situation. The trick will be to put the rules into place to guarantee that careful management.


Posted by The Humanitarian, a resident of Atherton,
on Feb 4, 2022 at 7:38 am

The Humanitarian is a registered user.

> "The council's reason for pursuing it? No surprise " more money for city coffers."

>> "council members don't yet to know what to do with the money they collect. They have offered a number of suggestions."

A suggestion...if this proposed business tax is approved and fully implemented, why not use the fiscal resources to create a safe and convenient homeless village to accommodate the increasing number of transients now resituating in Palo Alto?

Affordable housing has always been a pressing issue in Palo Alto and the projected $2-10 million dollar additional revenue could go a long ways towards reaffirming Palo Alto's growing reputation as a progressive sanctuary community that welcomes and embraces both economic and social disparites.

The key is to start slowly and gradually build upwards, both figuratively and literally.

A series of multi-story projects situated along El Camino Real would provide an ideal location as it is adjacent to the VTA 22 bus line which offers both situational convenience and a key hub to other VTA bus lines including SAMTRANS at the downtown Palo Alto train station.

The resources should not go into a general fund targeted for future city employee raises as most of them already have a relatively cush job with excellent benefits and retirement provisions.

While it will obviously take more than an initial $10 million dollar seed fund to alleviate homelessness in Palo Alto, combined with community fundraising efforts and corporate donations this concept can easily come to fruition and establish a working model that other municipalities could use as a blueprint towards further addressing and resolving the homeless issue that many cities are currently experiencing.

To quote 'The Field of Dreams', "If you build it, they will come."


Posted by Jim Sloan , a resident of another community,
on Feb 4, 2022 at 8:13 am

Jim Sloan is a registered user.

"If you build it, they will come."

^ Palo Alto could also use the funds towards building a new Little League complex by retro-fitting and re-designing the older facility on Middlefield Road.

The venue could also be used for Pop Warner football during the fall season and adding lights for both baseball and football night games would be an added plus.

A mixed-use design could also accommodate a variety of other activities including off-road bike racing, equestrian competitions, and concerts.

By combining corporate sponsorships, along with the proposed tax base, and resident fundraising efforts, this goal could be easily achieved with grounds and facility maintenance provided by the city public works department or former county jail inmates who have been released early with mandatory community service work requirements.

Most importantly, encouraging kids to play more sports might keep them out of further mischief by providing another outlet to burn off steam.






Posted by Annette, a resident of College Terrace,
on Feb 4, 2022 at 8:19 am

Annette is a registered user.

It's unfortunate that the 2009 effort aimed for a tax based on gross receipts and also unfortunate, I think, that this one is likely to be a general revenue measure rather than a special tax. Promises to spend the revenue on specific uses can vaporize just as easily as campaign promises. A yes vote on a general tax is a vote based on trust. Do Palo Alto voters trust that the City Manager and City Council will spend the money restoring services, improving public safety, affordable housing, etc? Or will it be used on nice but not necessary special projects, comp, benefits, and pension obligations? Maybe CC should host a debate on this and take a straw poll afterwards. I think this might give a better indication of voter inclination than the survey.


Posted by Bystander, a resident of Another Palo Alto neighborhood,
on Feb 4, 2022 at 8:36 am

Bystander is a registered user.

I have said before on the subject that I am not against it on principle but getting more and more concerned about how fiscally responsible the CC will be with any extra money.

Due to the pandemic we lost many services, particularly the free shuttle and crossing guards, due to lack of funds. We are now told that the City is more solvent, but they are not seeming bringing back what was reduced due to lack of money.

Until we can be confident that the money has a particular criteria as to how it will be used and they can be accountable to follow through and even more importantly be seen to follow through, then I am no longer enthusiastic about this. When it takes over 10 years to build a bridge that ends up being given the nickname of rusty old railroad bridge by outsiders who drive under it, I am in despair that any extra funds will be misused and mishandled.


Posted by Austin Rhodes, a resident of Barron Park,
on Feb 4, 2022 at 8:48 am

Austin Rhodes is a registered user.

Maybe consider using the tax money towards enhancing and/or expanding the trailer park off Robles Avenue in Barron Park.

The site could use a facelift and being the only trailer park in Palo Alto, why not improve its overall appearance as a testimony to Palo Alto's ongoing commitment to providing affordable housing?

With the evolving demographics in Palo Alto and steady increases in residential property values, there is still a lot of untapped money in this community and older residents still covered under Prop. 13 should have no complaints about any progressive measures as they are already paying the absolute minimum in property taxes.

As for taxing businesses, this is the price of doing business in Palo Alto and if additional taxation poses too much of an encumbrance for certain businesses, they can relocate their operations to a more affordable locale.

This is no different than telling prospective residents that they cannot afford to live in Palo Alto.


Posted by Julia Decker, a resident of Charleston Meadows,
on Feb 4, 2022 at 10:10 am

Julia Decker is a registered user.

What is the political party affiliation of our PACC members?

Reason for asking:

Republicans tend to be more conservative & fiscally austere than
Democrats who are always trying to find ways of raising taxes so they can spend more.

Unless these tax resources can be applied towards the common good of all Palo Alto residents in a highly visible and practical manner, this proposed tax should not be initiated.

The suggestions that propose homeless housing assistance, and various improvements to both baseball fields, and trailer parks are pure folly and concepts one would expect of typical Democrats who have no problem spending other people's money.

Imagine if everytime we wanted to spend more money we simply approached our bosses and asked for another raise.

America doesn't work that way as there is no such thing as a free lunch unless one is a politician.


Posted by Julia Decker, a resident of Charleston Meadows,
on Feb 4, 2022 at 10:10 am

Julia Decker is a registered user.

What is the political party affiliation of our PACC members?

Reason for asking:

Republicans tend to be more conservative & fiscally austere than
Democrats who are always trying to find ways of raising taxes so they can spend more.

Unless these tax resources can be applied towards the common good of all Palo Alto residents in a highly visible and practical manner, this proposed tax should not be initiated.

The suggestions that propose homeless housing assistance, and various improvements to both baseball fields, and trailer parks are pure folly and concepts one would expect of typical Democrats who have no problem spending other people's money.

Imagine if everytime we wanted to spend more money we simply approached our bosses and asked for another raise.

America doesn't work that way as there is no such thing as a free lunch unless one is a politician.


Posted by Becky+Sanders, a resident of Ventura,
on Feb 4, 2022 at 10:38 am

Becky+Sanders is a registered user.

Hey Guess What? Let's give it a whirl. Dozens of cities up and down the peninsula have business taxes. Why not Palo Alto? It hasn't crippled their economies. And I have the best, most moral, most wonderful idea as to how to use that money wisely - for 100% Below Market Rate Housing and truly affordable housing to support our missing middle. Here's the catch. A general tax with no targeted allocation takes less of a majority than a targeted allocation to pass. Isn't that nuts? So if we say we wanted to target the tax to build the housing and say, another good thing like booster our grossly understaffed public safety resources, like restoring brigades to help us in fire season... we'd have to pass it with, what over 60% versus a simple majority required for adding to the city's slush fund. So if we want to target the tax to solve a specific problem we'll have to work harder to educate the community and get us all on board rowing the same way. And may I say that while we're at it, the city council should rezone commercial sites to housing, go ahead and allow for the required amortization, but let's start now... we've got a great Housing Element Working Group identifying great spots for housing all through the city...


Posted by Citizen , a resident of College Terrace,
on Feb 4, 2022 at 10:46 am

Citizen is a registered user.

No more taxes - businesses will simply either 1) pass on the increased cost to it's customers, or 2) pay its employees less.

How about the City reduces its expenses and pay for things that way? Tell me why they can't.

Wait for the proposed increase property tax next.


Posted by Citizen , a resident of College Terrace,
on Feb 4, 2022 at 10:46 am

Citizen is a registered user.

No more taxes - businesses will simply either 1) pass on the increased cost to it's customers, or 2) pay its employees less.

How about the City reduces its expenses and pay for things that way? Tell me why they can't.

Wait for the proposed increase property tax next.


Posted by staying home, a resident of Crescent Park,
on Feb 4, 2022 at 11:26 am

staying home is a registered user.

@jim sloan Love the idea of a massive multiuse sporting complex for youths, but did you know that the LL field at Middlefield isn't city property? It was a private donation (from the Arriaga family in 1957, but I might be wrong there). The neighboring residents are very sensitive to expanding any use, especially lights at night, and have contested most expansions. And as for it being run down, it is considered one of the best fields in the area based on condition, facilities, location, etc. That's why it consistently hosts district tournaments.

The city own the Baylands complex BTW. Lots more space there.


Posted by Sally Montrose, a resident of Palo Alto Hills,
on Feb 4, 2022 at 11:53 am

Sally Montrose is a registered user.

"What is the political party affiliation of our PACC members?"

Given the topic, I suspect that the majority of PACC members are Democrat.

In other words, fiscally irresponsible and always looking for ways to milk PA residents and businesses by way of more taxes.

Only council member Greg Tanaka seems to question unwarranted municipal expenditures and this in itself is very troublesome.

Palo Alto is a city that prides itself on superficial appearances and those appearances often come at the expense of additional taxpayer dollars.

We do not need to accommodate the unwanted homeless nor do we need to spend taxpayer dollars on improving a decrepit trailer court or a children's ballpark.

If anything, reduce our utility bills and provide better crime prevention measures as Pal Alto is rapidly becoming an unchecked haven for felononius activities.


Posted by Sally-Ann Rudd, a resident of Downtown North,
on Feb 4, 2022 at 12:14 pm

Sally-Ann Rudd is a registered user.

Inflation is currently nearing 8% the highest it has been in decades so the city needs new sources of revenue desperately just to pay the bills never mind build new facilities. Small/ legacy/ retail businesses should be exempted or pay a nominal fee. But there is a branch of Amazon sitting at the end of Lytton Ave so the idea that there are businesses that will go somewhere else because of a poxy city business tax is ludicrous. Same with all the law firms, banks, venture capital companies, real estate companies, they are going nowhere. Let them pay.


Posted by mjh, a resident of College Terrace,
on Feb 4, 2022 at 12:34 pm

mjh is a registered user.

Palo Alto is the only city around here that has no business tax.

Also, in 1975 Palo Alto's revenue from property taxes were split approximately 50-50 between residential and commercial properties. Since then the percentage from commercial property owners has been on a continuing downward trajectory. Now down to approximately 25% with residential property owners picking up 75%. Partly because commercial properties are seldom sold and partly when they do there are loopholes in the state law that allow a change of commercial property ownership to be structured in such a way as to not trigger a new property tax assessment.



Posted by WhatAboutme, a resident of Midtown,
on Feb 4, 2022 at 12:43 pm

WhatAboutme is a registered user.

Posted by The Humanitarian, a resident of Atherton,

> "The council's reason for pursuing it? No surprise ?" more money for city coffers."

>> "council members don't yet to know what to do with the money they collect. They have offered a number of suggestions."

A suggestion...if this proposed business tax is approved and fully implemented, why not use the fiscal resources to create a safe and convenient homeless village to accommodate the increasing number of transients now resituating in Palo Alto?

Affordable housing has always been a pressing issue in Palo Alto and the projected $2-10 million dollar additional revenue could go a long ways towards reaffirming Palo Alto's growing reputation as a progressive sanctuary community that welcomes and embraces both economic and social disparites.

*****
You are in Atherton and seem to have NO idea what you are proposing.
How would you like it if you had a "convenient homeless village" near Holbrook/Palmer park?

Trailers, RV's, drug and alcohol addiction, and the myriad of issues PA had to deal with on the daily.
I've worked voluntarily with the unhoused and can say that 90 percent are NOT even from California, let alone Palo
Alto.


Posted by Leona Charles, a resident of Adobe-Meadow,
on Feb 4, 2022 at 12:53 pm

Leona Charles is a registered user.

The only justification for this proposed business tax is if the proceeds are used to clean up downtown Palo Alto along with providing additional residential security measures.

Which means hiring additional police to (1) eradicate transient loitering and vagrancy, (2) arrest recurrent perps, and (3) provide added patrols to safeguard neighborhoods and pedestrians.

With crime running rampant due to an onslaught of overly permissive and progressive Democrat-inspired ideals, it is now time for Palo Alto to establish itself as a law and order community by getting tougher on crime and sending out a clear message that transients are not welcome here.

Los Altos doesn't seem to have any of these ongoing problems. Why Palo Alto?

This also would include towing away all of those decepit RVs scattered about the city and impounding them.


Posted by Larry Chen, a resident of Los Altos,
on Feb 4, 2022 at 4:39 pm

Larry Chen is a registered user.

~ "Los Altos doesn't seem to have any of these ongoing problems. Why Palo Alto?"

From a sociological and resident perspective, I think it is because Los Altos is more homogenous and conservative than Palo Alto.

A conservative and predominantly white, upper-middle class suburban population tends to support its local police in their endeavors to maintain a certain status quo and as a result, there is minimal downtown vagrancy as transients are made to feel very unwelcome.

Palo Alto and Mountain View are more progressive cities and provide a relatively safe and convenient sanctuary which may explain why so many transient out-of-towners like to settle there (including Santa Cruz, Davis, Los Angeles, San Francisco, and Berkeley).

If the city of Palo Alto were to allocate funds for a homeless village I suspect that most PA residents would be adamantly against the idea in lieu of their self-professed and lofty progressive ideals.


Posted by Karen White, a resident of Barron Park,
on Feb 6, 2022 at 9:24 am

Karen White is a registered user.

"Palo Alto and Mountain View are more progressive cities and provide a relatively safe and convenient sanctuary which may explain why so many transient out-of-towners like to settle there (including Santa Cruz, Davis, Los Angeles, San Francisco, and Berkeley)."

The transient population tends to prefer more moderate climates which explains why homelessness is less prevalent in regions where the winters are considerably harsher.

A Palo Alto business tax could be used to provide improved accomodations for both incoming and current transient residents.

And so the question is...would Palo Alto residents prefer that these hypothetical tax funds be allocated towards accommodating its homeless population or for additional city employee raises and benefit enhancements?


Posted by Larry Bergman, a resident of Community Center,
on Feb 6, 2022 at 10:57 am

Larry Bergman is a registered user.

> "would Palo Alto residents prefer that these hypothetical tax funds be allocated towards accommodating its homeless population or for additional city employee raises and benefit enhancements?"

How about "none of the above" as fewer city salaries to pay and fewer homeless people in Palo Alto would undoubtedly make for a more pleasant community.


Posted by Bette Layne, a resident of Cuesta Park,
on Feb 6, 2022 at 11:59 am

Bette Layne is a registered user.

Mountain View has a homeless problem especially in the downtown area and around Bailey Park.

Nothing can be done because city officials seem to be following the SF Tenderloin and Berkeley model which is to live and let live regardless of the problem.

Palo Alto appears to be following in the same footsteps given the various complaints posted by Palo Alto residents.


Posted by Jim Gates, a resident of Blossom Valley,
on Feb 6, 2022 at 2:26 pm

Jim Gates is a registered user.

Many of the homeless prefer to live outdoors free from any supervision or house rules.

Providing a designated area or park would be the best option.


Posted by Mondoman, a resident of Green Acres,
on Feb 6, 2022 at 8:28 pm

Mondoman is a registered user.

@Karen
Los Altos doesn't have a less moderate climate than does Palo Alto, while Seattle has a much less moderate climate. Los Altos having less of a homeless problem and Seattle's having more suggests that it is city policies rather than climate that are responsible for the differences.


Posted by Jeff Ferrin, a resident of Crescent Park,
on Feb 7, 2022 at 7:41 am

Jeff Ferrin is a registered user.

Mondoman is correct. Palo Alto and Mountain View homeless policies are more lax than that of Los Altos.

These policies are reflective of their respective city councils and residents, and the police respond accordingly.

Fortunately for many homeless, Palo Alto and Mountain View residents welcome them into their community while either pretending to look the other way or by keeping their thoughts to themselves.

Los Altos on the other hand, does not extend a welcome mat to transients and at every opportunity, the police run them out of the city.

Whether this measure is good or bad depends on the overall perspective of the community as Palo Alto is considered enlightened, highly educated, and progressive.

[Portion removed.]


Posted by Rev. Thomas Beecham (retired), a resident of another community,
on Feb 7, 2022 at 9:35 am

Rev. Thomas Beecham (retired) is a registered user.

Since Palo Alto is receptive to its homeless population, this proposed business tax should be used to provide additional homeless services including temporary lodging at the various motels along El Camino Real, a city-operated homeless dining facility, free VTA passes, and convenient access to all social services.

Local Palo Alto churches should also get further involved and work with the city to provide for the transients who are now Palo Alto residents and citizens.

All it takes is some compassion and caring on the part of those who can easily afford to do so.


Posted by Monty Withers, a resident of Castro City,
on Feb 7, 2022 at 11:09 am

Monty Withers is a registered user.

- "Palo Alto is considered enlightened, highly educated, and progressive."

If so, then the residents of Palo Alto should have no issues with the homeless population in their city.

Palo Alto is a wealthy community and can easily accommodate the homeless who cannot afford to live there.

Mountain View cannot.


Posted by Resident 1-Adobe Meadows, a resident of Adobe-Meadow,
on Feb 10, 2022 at 9:32 am

Resident 1-Adobe Meadows is a registered user.

On the news last night they interviewed a homeless person in SF - he gets $600+ a month from the city. People are flocking to CA from other states due to the payouts for coming here. Is that what the people of CA and SF voted on? Is that what businesses are paying taxes for? Is this the Land of OZ where people are following the Yellow Brick Road to CA? Another article is debating the fees applied to building new facilities to increase density. All of a sudden density is not a popular idea - we have few resources to support density - Transportation, Water, Educational facilities, Food Supply, etc.

I am for a business tax to support the Utility System which needs upgrade, the Electrical grid, the roads - 101 is now a toll road but has potholes - how can you be toll road if you are broken. El Camino is in dire need of an upgrade. A city - to be humanitarian needs to be able to provide the basic resources for living in a safe environment. That means more police and fire people. We have already seen the outcome of the "message" on that topic. The message seemed to not address the topic of safety for the tax paying citizen. Clean up the messages and get to work on real projects that will help the city be a working place for everyone.


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