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By Diana Diamond

PA's downtown business problems not simple to solve

Uploaded: Sep 15, 2021

Some businesses are closing in Palo Alto's downtown; city business revenues the past two years have dropped significantly, and the town's main street connecting 101 to Stanford -- University Avenue -- has been closed to traffic for the past several months to provide outdoor space for restaurants. Hotels remain unfilled, hotel taxes to the city have dropped, boarded storefronts are apparent around the downtown.

So, the downtown business issues for council members to decide are: a) whether the city should hire an economic development person, b), what months should University Avenue be closed to cars, c) should the city impose a new business tax, and d) if restaurants use sidewalks and a parking spot for extra outdoor eating space, should the city charge businesses rent for these "parklets."

University Avenue has seen its tax receipts drop by 32.2 percent between 2019 and 2020, and by another added 1.5 percent drop between 2020 and 2021, according to recent reports from the city's consultant, Avenu Insights, and from city staff. The financial problems are real and there's fear that more businesses may be forced to close if the city doesn't focus on what to do.

The reasons for the downfall are several: the pandemic causing people to shop and dine less, the decline of full-time workers downtown daily -- many people are finding it better to work at home some or all of the week, and the increase in online shopping in lieu of trips to local retail stores.

Today, I'll tackle the hiring of an economic development director (EDD). This position has certainly been fluid over recent years in Palo Alto. The first EDD I remember talking with in the early 1990s tried to recruit a couple of new businesses (she brought a few in), talk to Midtown shopping district's owners to try to increase retail stores and spruce up the visual ambience (she failed), and develop a plan to improve retail downtown. Two of the succeeding directors thought their job was to be chummy with the Chamber of Commerce -- attend board meetings, store openings and Parties! And one director tried to redevelop the business directory (which still needs work).

Along the way, I met with the EDD of Menlo Park, an aggressive, friendly guy, who analyzed the retail mix on Santa Cruz Avenue and decided certain businesses were missing at the time, like a children's clothing store, a paint and wallpaper place, an art gallery, etc. He used his contacts, met with a couple of retailers he thought might belong in MP downtown and got them to relocate. Then he realized the block on El Camino just south of Santa Cruz would be a good spot. His big coup was in recruiting Pendleton -- a women's and men's woolen clothing specialty store. He convinced them they would get more eyeballs on ECR and there was parking in front. Pendleton set up an outlet, three other retailers moved into adjacent space and voila!

He is my model now for an active economic development director. He brought in a lot of new retail.

PA's city council is now struggling with the hire. Led by Mayor Tom DuBois and councilmember Lydia Kou, they hope to have a director who would work on wooing retail.

That director position would cost about $275K or so, but if a person with connections, business acumen and convincing skills was found, I believe s/he would be worth it.

City Manager Ed Shikada has a different point of view He sees the job as a research analyst. His description of the job includes analyzing the business registry, studying demographics and economic indications as well as "existing and emerging clusters," and creating an "economic snapshot' of the city. That job would warrant a $160 to $190k (plus benefits). I am not sure what this jargon really means.

To me that sounds more like an assistant /business position, The city needs to look for a leader, not a clerk. Shikada said the position would report to him.

This hire of an economic development director is crucial, in my estimation, and this role is one of the biggest and most-needed and necessary jobs for our downtown's future. As one council member pointed out, this is one of the few jobs, if done properly, that pays for itself.

Palo Alto's financial future is at stake. It's time for the council to decide what kind of EDD it wants, and then go out quickly and hire the right one. Easy to say, I know. But we have to decide and act now, not a year from now, which is how long staff predicts this hire will take.


Kudos to the council for expanding the role of the outside police auditor, the OIR group. Director Michael Gennaco's concern about getting more information about the police department's work and making it public was refreshing, to say the least. No more departmental excuses that some cases were too minor to report, and indeed fewer police clashes will no longer be referred to the city's HR, but to OIR. Good work, council members. I think the public is relieved and believe the needed police oversight will happen


NOTE -- After my recent blog, "Is PAMF running amok?" at his invitation, I met with Dr. Robert Nordgren, who is Area CEO for Sutter Health, in charge of most of the Peninsula. He said he plans on hiring six to ten new MDs by the first of the year, focusing on finding more GPs. They are difficult to convince that they should move to this area while also paying off the medical school loans, he said. I wish him good luck, on behalf of all of us.