With offices filling up in downtown Palo Alto and parking shortages spurring tension between employees and residents, city officials are proposing to start a business-registry program that they hope will help them solve the growing problem.
The proposal, which the City Council will consider Tuesday, April 29, would require local businesses to participate in the Business Registry Certificate program, which would require annual updates on data like employee count, square footage occupied and the number of employees who live in Palo Alto. Businesses would be able to register and make their updates through an online database that the city plans to set up.
The proposal is a response to a memo that was issued in February by council members Marc Berman, Pat Burt, Karen Holman and Larry Klein. The council quartet stated in the memo that the "impacts of commercial development activity, such as traffic and parking impacts, are at the forefront of community concerns" and that the city "lacks adequate, reliable and updated data to analyze the issues, structure best policies and programs and to measure their effect."
The memo recommends an online business registry, with fees limited to cost recovery.
The staff proposal, which was released Wednesday afternoon, aims to have such a registry in place by the end of this year. A report from the office of City Manager James Keene notes that Palo Alto is one of of a small number of cities in the state that do not have a business registry or a business tax. The city's last attempt to institute a business tax fizzled in 2009, when voters rejected a proposal that would tax businesses based on gross receipts. Keene's report notes that as the demand for office space in Palo Alto has increased, so has the density of use in commercial space, particularly in high-tech offices.
"The changing nature of office use has come with more people occupying buildings in new open floor plan configurations," Keene's report states. "This has had a perceived deleterious effect on the parking and traffic situations as well as the quality of the environment around our business district."
The need for the registry, Keene said, is clear.
"With such data, the City can begin to measure employment trends and business activity throughout the City in a cohesive and coordinated manner," the report states. "Its availability is vital for developing and measuring the effectiveness of transportation demand programs, and other transportation planning efforts."
Currently, a business that is occupying a commercial space in Palo Alto is required to take out a one-time "Certificate of Use" for a fee of $413. Staff estimates that about 2,000 local businesses currently comply with this provision and about 1,000 operate without a certificate. The new program would try to capture both of these groups, as well as new businesses coming to the city. Unlike in the 2009 proposal, the business registry would not come with a tax on receipts but would include an annual fee of $35 to $75, provided the business is in compliance with the certificate-of-use requirement.
A business that is not compliant will be given a grace period of 120 days to obtain a certificate of use (which would still come with a $413 fee). After that, it would be required to provide annual updates.
One issue that still has to be worked out revolves around privacy. According to Keene, some businesses expressed concern that the information they share with the city would become public. Keene noted that, in general, staff's goal is to collect data that would be made publicly available for third-party use. But the report indicates that at least some of the data could remain private.
"Staff has committed to having conversations with the businesses to explore mechanisms for keeping certain data confidential," Keene's report states.
Enforcement of the registry requirement would be conducted through spot checks. Businesses would be required to post their certificates in plain site and penalties would be "significant," ranging from administrative fees to prohibition of occupancy, according to the report.
Staff expects that developing the new online interface for the registry will cost about $125,000 and that the costs of marketing, training staff and outreach to the business community will come out between $150,000 to $250,000. Staff expects the fees for the registry to ultimately offset these expenses and keep the new system sustainable on an ongoing basis.