Palo Alto's evolving shopping list for infrastructure improvements began to crystalize Tuesday morning as city officials endorsed a funding plan that includes a downtown garage, numerous bike projects and, above all, a new police headquarters.
The City Council's Infrastructure Committee discussed the city's infrastructure needs in preparation for the November election, when voters will be asked to approve a 2 percent increase in the hotel-tax rate, which would go from 12 percent to 14 percent. The revenues from the ballot measure, coupled with funds from new hotels and various cash reserves, are expected to bring in the roughly $118.3 million required to fund the projects on the list.
The top priority, a new police building, will be pursued whether or not voters approve the hotel-tax increase, the council agreed. The project, which has a $57 million price tag and has been frustrating city officials for more than a decade, could be funded from existing revenues. City officials estimate that revenues from new hotels alone can be leveraged to obtain $33.6 million in funding for infrastructure repairs. Other existing revenue sources include funds from the Stanford University Medical Center development agreement, which earmarks $22.1 million for infrastructure, and budget surpluses from 2013 and 2014, which add up to another $12.5 million.
Even with the improving revenue picture, council members have been aggressively marching toward the November ballot measure, which they view as a huge step toward addressing the city's gaping infrastructure backlog. The list of needed fixes has been dominating council agendas since 2011, when a specially appointed citizens committee surveyed the city's infrastructure needs and presented a list of recommendations for raising revenues, including a tax increase and a bond for a police building.
The Infrastructure Committee's recommendation was a bit more aggressive than the proposal staff put forth last week. After the full council decided in March to raise the hotel-tax rate to 14 percent rather than to 15 percent (as the Infrastructure Committee initially recommended), staff from the Administrative Services Department trimmed the shopping list slightly, reducing (among other things) proposed funding for park improvements and deferring the reconstruction of Fire Station 4 (located at Mitchell Park). The list did include, among other items, $20 million for bike projects, reconstruction of Fire Station 3 (near Rinconada Park) and new garages in downtown and near California Avenue.
Councilman Larry Klein, who chairs the committee, generally concurred with the plan but suggested putting Fire Station 4 back into the funding plan. The city, Klein noted, is expecting get more revenues from other sources now under consideration. These include new development fees to cover public-safety and general-government facilities, a new provision that eliminates a Utility Users Tax discount for large customers and revenue from leasing out the existing police headquarters at City Hall.
Given these additional revenue streams, which weren't considered in the recent staff analysis, Klein argued that both outdated fire stations (at Rinconada and Mitchell parks) should remain in the funding plan. The station at Rinconada Park, he noted, is about 60 years old and is "clearly obsolete as compared to peer groups around the area."
"There's a cost to not doing some of these things," Klein said.
The committee deliberately didn't include in its vote a specific recommendation for which revenue sources would be used for items not included in staff's plan. Councilman Marc Berman recommended maintaining such flexibility.
"We're all very confident we'll have the money necessary to fund the projects, but we won't at this time proscribe what those would be," he said.
Councilman Pat Burt agreed with Klein, though he also observed that staff's timeline may be a bit too aggressive. The proposal outlined in the staff report aims to take care of all the fixes by 2018. Burt suggested that this may be setting the bar too high and urged caution in making such a time commitment.
"I want to exercise some caution in terms of setting expectations," Burt said. "It's great to have 'stretch' goals, but if they are perceived as a commitment, especially when we go to the voters, I think that will be problematic."
Burt suggested that the plan should be thought of as a "funding plan" rather than a "construction plan." While construction may occur within the four-year timeline, the more immediate goal is to cement the funding sources.
The committee voted 3-1, with Greg Scharff dissenting, to support Klein's proposal. Scharff said he didn't see the proposed motion as any different from "just saying we'll fund all the projects."