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Infrastructure bond a tough sell, survey says

Original post made on Jun 3, 2013

The good news for Palo Alto officials is that citizens feel confident in the City Council's ability to take care of the city's gaping infrastructure needs, a new survey indicates.

Read the full story here Web Link posted Monday, June 3, 2013, 9:52 AM

Comments (37)

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Posted by 35 year resident
a resident of Old Palo Alto
on Jun 3, 2013 at 10:20 am

Palo Altans may be waking up and it's about time. Let's reign in bloated city employee salaries, reform the outrageous pension and benefit packages they receive and bring them in line with the private sector. Most importantly, let's stop using the excuse that we have to pay more to keep up with local cities in the area. City employees have it much better than most and they know it. I'm sure there would be a line out the door to replace those that leave for greener pastures, and at lower salaries/benefit packages to boot.


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Posted by Taxes
a resident of Midtown
on Jun 3, 2013 at 10:30 am

We have to pay for the things we want. It should come from a balance of cutting spending in some areas, and increased "revenue" or taxes in other areas. Sound familiar? Same problem on a national level. I see they list an increase in hotel occupancy tax as a potential source. We already have the highest in the area. The city could raise substantially more revenues by adding more hotels, not by increasing the tax. Average rates these days hover in the $200 range with occupancies close to 90% for the area. One, 100 room hotel, with 85% occupancy and $190 in rate would generate over $700,000 in taxes. That's a small hotel, with no restaurant or other implications.


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Posted by Voter
a resident of College Terrace
on Jun 3, 2013 at 10:44 am

We're spending a quarter of a million dollars per year to employ a chief PR bureaucrat. I'm not voting for any new revenue until this and other obvious examples of government bloat run amok are dealt with.

The current council is terrible. Their thirst for revenue to fund their beloved bureaucracy knows no bounds. They're currently trying to trade neighborhood quality of life, safety, and traffic for developer favors and ABAG funds. The university ave "Theater district," the Jay Paul development, and perhaps most egregiously the monstrous high density project on Maybell are all examples of this.

The city needs to organize and either neuter or recall this council. Referendums to stop the sellout projects is a start. Citizen initiatives to stop the ridiculous pensions and spot-zoning would be another. Voting out or recalling most of the incumbents (Schmid and Holman are the only reliably pro-resident votes) is the best endgame.

Also, voting down any bond issue to cover the city's fiscal mismanagement goes without saying.


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Posted by Crescent Park Dad
a resident of Crescent Park
on Jun 3, 2013 at 12:10 pm

As far as infrastructure improvements go, my position has always been that the city should have partitioned funds for repair and replacement all along - a fund for pot holes, replacing, etc. that would eventually come along. Totally irresponsible not do that.

On principal I will not support any bond or tax that would do the job that the city should have prepared for all this time.

However new projects are a different situatiation and should be given full consideration. For example, I would support new safety services facilities.

Just my two cents.


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Posted by Peter Carpenter
a resident of Atherton
on Jun 3, 2013 at 12:34 pm

Peter Carpenter is a registered user.

If you want the cost of infrastructure to be borne by the users then, in addition to a hotel occupancy tax increase, there should be an across the board property tax increase. Lots of reasons why that will not happen but it is the only equitable solution.


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Posted by musical
a resident of Palo Verde
on Jun 3, 2013 at 2:08 pm

Everyone has their own definition of "equitable".


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Posted by Peter Carpenter
a resident of Atherton
on Jun 3, 2013 at 2:13 pm

Peter Carpenter is a registered user.

My definition of equitable is that the cost of the city's infrastructure should be borne by ALL the users - most of whom are property owners or renters.


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Posted by Jill
a resident of Crescent Park
on Jun 3, 2013 at 2:46 pm

The current city council has shown their utter incompetence. Just say "no."
When benefactor Lucy Stern built the Lucy Stern Community Center and theater, 80 plus years ago, it was because the theater's location at that time was was in the MacArthur Park restaurant building. She and the people of Palo Alto thought having a theater so close to the railroad tracks was a bad idea. The train noise was a disruption to the performances. So why does Palo Alto want to again locate the local theater so close to the railroad tracks? The city council needs a history leasson. John Arrillaga's sly offer to build a new PA theater in his proposed monsterous office towers next to the railroad tracks is a bad deal, all the way around.


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Posted by musical
a resident of Palo Verde
on Jun 3, 2013 at 2:59 pm

@Peter: Agreed -- borne by ALL the users. But equally? Scaled by income? Scaled by assets? Scaled by use? Dependent on age, health or family obligations? Or threshold of pain?

I'm really not trying to be obtuse. Such is the history of taxation, how to divide the pie. I guess the best solutions always involve everyone feeling that they are unfairly being forced to subsidize others.

And it's not just dollars. Some areas bear an extra cost in terms of traffic, lack of nearby amenities, car campers on their curb, high density housing plopped in their backyard, or an entire neighborhood disappearing to make way for developers.


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Posted by Wayne Martin
a resident of Fairmeadow
on Jun 3, 2013 at 3:39 pm

> My definition of equitable is that the cost of the city's
> infrastructure should be borne by ALL the users - most of
> whom are property owners or renters.

A good half of Palo Alto's housing stock is in the hands of renters--many living in multi-family dwellings. It's not likely that these people will be expected to pay the same property-based tax as people who own single-family homes, or businesss (which routinely don't City services as residents do).

There are somewhere in the vacinity of 3500 dwelling units that are in tax-free buildings--like Channing House, or Lytton Gardens. These consumers of various City services, and "infrastructure", will not be expected to pay any new property-based taxes (other than their share of any parcel taxes that are imposed).

"Ad Velorem" property-based taxes force some people to pay more for the City's infrastructure than other people. This is hardly equitable--since it's unlikely that those people in the more expensive homes actually consume more of the City's infrastructure than other folks in less expensive homes.

Stanford, with its large footprint inside the Palo Alto municipal boundary, pays very little in property-based taxes--since it has been awarded a roughly $5B exemption.

It's hard to see how property-based taxes can ever be "equitable" in this town.



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Posted by Peter Carpenter
a resident of Atherton
on Jun 3, 2013 at 3:47 pm

Peter Carpenter is a registered user.

"Stanford, with its large footprint inside the Palo Alto municipal boundary, pays very little in property-based taxes--since it has been awarded a roughly $5B exemption."

Please document this interesting assertion. The city receives a huge amount of property taxes for the Stanford Shopping Center and the research park and the leased land along ECR.


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Posted by Not asked
a resident of Palo Alto High School
on Jun 3, 2013 at 4:00 pm

Interesting side note to this "random" sample. The only adult in our household who was contacted happened to be the 21 year old college student who does not contribute to household expenses. He of course answered he would vote yes for the bond.


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Posted by Wayne Martin
a resident of Fairmeadow
on Jun 3, 2013 at 4:09 pm

Over the past two decades, the revenues and expenditures for the City have doubled every decade or so. Most of that money has gone to salaries and benefits for the employees—who have not shown much, in terms of productivity increases, for these salary increases.

It's not clear that the City will see another doubling of its revenue streams in the coming decade, but it's a worthwhile question to ask: what are some of the City's revenue streams that might be "targeted" for "infrastructure"?

Five percent (5%) of the salary expenditures on a base of $100M would generate about 65M over a ten year period; 7.5% would generate about $86M over that same period. Access to this money would most easily be achieved via a salary reduction, or freeze.

The pass-thru from the Utility Enterprise Fund has been in the range of $15M/year. This would generate about $150M over a ten year period. The Utility Users Tax (UUT) has been generating about $5M over the amount promised to the PAUSD. Applying this excess to "infrastructure" would produce $50M over the next ten years.

The City is sitting on about $20B in real estate. The golf course, and the airport are sitting on about $1B of real estate. Selling these properties off would put a fair bit of change in the City's pocket. Invested in 4% municipal bonds would produce about 40M a year for the City to spend on "infrastructure". The sale of other properties would increase the yearly income from its investments.

And then there are the give-away rents that the City has negotiated with the various clients of the Cubberley Center—many of whose activities have nothing to do with Palo Alto. Certainly charging market rates for these clients would add millions to the "infrastructure fund" in years to come.

Notice—that all of these options to fund Palo Alto's infrastructure needs don't involve any new property-based taxes.


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Posted by Wayne Martin
a resident of Fairmeadow
on Jun 3, 2013 at 4:24 pm


> please prove this interesting claim ..

Mr. Carpenter—it's understandable that being a resident of San Mateo County you might not be particularly familiar with all of the details associated with life in Santa Clara County—so here's this year's Assessors Annual Report for you to peruse:

Web Link

On page 13, you'll see that the Assessor has awarded a $7.1B exemption to the University and the Hospital. That's more that I quoted, since earlier Annual Reports didn't include the Hospital in this call out.

Hopefully you will accept the Assessor's work as valid.

> Stanford Shopping Center Property taxes.

Five years, or so, ago, the Stanford Shopping Center was sold to shopping mall developer Simon Properties. To the best of my knowledge, they are responsible for those property taxes—not Stanford.


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Posted by Ann Bilodeau
a resident of Community Center
on Jun 3, 2013 at 4:43 pm

Re: Stanford and property taxes. Part of Stanford is in Palo Alto (the shopping center, the research park, faculty housing) and part (mostly academic; I'm not sure about the hospital) is not in Palo Alto but in unincorporated Santa Clara County. It may well be exempt from property taxes for the part that is in unincorporated Santa Clara County.

Stanford did not "sell" the shopping center; it is forbidden by its charter from selling any of its land. It sold the operation of the Shopping Center. It may still be on the hook for property taxes as the owner of the land, or it may have specified in its contract that Simon Properties pay the property taxes. If so, then that was factored into the amount Simon Properties paid it.


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Posted by Peter Carpenter
a resident of Atherton
on Jun 3, 2013 at 5:09 pm

Peter Carpenter is a registered user.

The land on which Stanford Hospital (which was originally co-owned by the city and Stanford) sits was annexed by Stanford to the city at the time it was built and remained in the city limits after the city sold its interest in the hospital to Stanford.


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Posted by Wayne Martin
a resident of Fairmeadow
on Jun 3, 2013 at 5:21 pm

> or it may have specified in its contract that
> Simon Properties pay the property taxes

From studying Stanford's tax data, this is how Stanford generally seems to structure its contracts for all of the properties it has leased in its business park(s). Each of the leasees is responsible for the taxes, as each parcel in these areas on the Assessor's database shows.

> Stanford didn't sell the Shopping Center.

For the sake of this discussion, we are only talking about who is liable for the property taxes.


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Posted by Peter Carpenter
a resident of Atherton
on Jun 3, 2013 at 5:34 pm

Peter Carpenter is a registered user.

"Mr. Carpenter—it's understandable that being a resident of San Mateo County you might not be particularly familiar with all of the details associated with life in Santa Clara County"

As others have noted it is you who do not understand in which jurisdictions the cited exemptions apply. The hospital is the only part of Stanford that is both in Palo Alto and exempt - and that was because the city demanded that the hospital site be annexed to the city at the time it was built.


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Posted by neighbor
a resident of another community
on Jun 3, 2013 at 5:39 pm

There seems to be a misunderstanding about renters and property tax.....An earlier letter writer wrote

"A good half of Palo Alto's housing stock is in the hands of renters--many living in multi-family dwellings. It's not likely that these people will be expected to pay the same property-based tax as people who own single-family homes, or businesss (which routinely don't City services as residents do)."

Renters don't directly pay property taxes. The Property Owners pay them and the amount is reflected in the rent that the owners charge tenants. All properties therefore pay property taxes.


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Posted by Wayne Martin
a resident of Fairmeadow
on Jun 3, 2013 at 5:51 pm

> The hospital is the only part of Stanford that is both
> in Palo Alto and exempt

I have not brought up the hospital--as you seem to have, on several occasions. The Hospital is irrelevant to any of these discussions, because it is tax exempt. The Assessor added it to his yearly call-out on the "exemptions page" of his annual report for Stanford University. I only mentioned it because it has not been clearly identifed in the past.

And, City property, for the most part, seems to be tax exempt also.

So--there isn't any reason to be discussing the Hospital.

The main point was that Stanford enjoys a 7.1B exemption from SCC property taxes. No doubt, since some of Stanford is also in SMC, it avoids taxes in that County too.


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Posted by Peter Carpenter
a resident of Atherton
on Jun 3, 2013 at 6:01 pm

Peter Carpenter is a registered user.

"The main point was that Stanford enjoys a 7.1B exemption from SCC property taxes."

Interesting but irrelevant to this discussion about the City of Palo Alto in which the hospital is the only part of Stanford that is both in Palo Alto and exempt - and that was because the city demanded that the hospital site be annexed to the city at the time it was built.


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Posted by common sense
a resident of Midtown
on Jun 3, 2013 at 6:29 pm

Although the discussion about what Stanford may pay in property tax very amusing, I think the more interesting topics are:

* Palo Alto is a very revenue rich city compared to other Silicon Cities of similar size; although previous councils have always said "Palo Alto offers more services", they have never provided any list of services that Palo Alto offers that other cities do not.

* In terms of sources of revenue, the biggest revenue generator for the City of Palo Alto is the utilities: Utility User Tax, "Return on Investment", the rents the utilities pay to the city, the offloading of what were general fund expenses to the utility rate payers (like street sweeping, and the streelights). Around 30% of the city's operating budget comes from the utilities. Take that out of the revenue stream, and the city would be more in line with other cities in regards to revenue.

* The city has transfer tax on real estate sales, which very few cities has.

* The cities hotel tax is one of the highest in the county.

So you can see, Palo Alto does very well in revenue; it just squanders that extra revenue on many pet projects that help to embellish the council and city management's resumes. That's why several of the current council members ran for office - they get to spend our money on their pet projects.


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Posted by boscoli
a resident of Old Palo Alto
on Jun 4, 2013 at 6:51 am

If we examine one, but extremely important ingredient of the infrastructure, roads, we realize that their rapid degradation is partially caused by non-residents. Many of them are Stanford employees, or users of Stanford services like the shopping center and hospital. They use Palo Alto streets and roads to get to and from their destination. Our traffic congestion is in large part due to Stanford and its various projects.


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Posted by And the point is....
a resident of Stanford
on Jun 4, 2013 at 7:37 am

What's your point, boscoli?
There are other employers in Palo Alto that draw traffic. There really is no traffic congestion in Palo Alto--not what you see in big cities. The claims of "traffic congestion" have been overused by PA residents that they cannot be taken seriously.
Of course, how much revenue does Palo Alto derive from Stanford and the non-residents that come to town?
Would you like it to be the opposite--no Stanford, no traffic, no visitors, no tax revenue???


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Posted by Resident
a resident of Another Palo Alto neighborhood
on Jun 4, 2013 at 9:03 am

It matters not which employer causes the traffic, it matters that the traffic is not moving efficiently.

Yes we have traffic congestion, but I suppose you need to ask at what level heavy traffic is called congestion.

I call congestion when I have to wait for more than one green light to get through an intersection.

I call congestion when I discover that other drivers are going through residential neighborhoods to avoid the delays on arterial streets.

I call congestion when I see a stream of cars waiting to do U turns on El Camino because they can't go straight from Alma to Page Mill.

I call congestion when I am waiting on an expressway (Oregon) at a red light and when it changes to green traffic doesn't move as there has been so much traffic entering from the side street that there is nowhere for the traffic to move until the lights further ahead change to allow perhaps 3 vehicles through before the light goes back to red again.

I call congestion when instead of moving at the limit I am crawling along at less than 15 mph in stop and go traffic.

I call congestion when each light on ECR or Oregon is red when I get there while traveling at the limit even in light traffic.

I call congestion a trip to take my child to school with a big project or a child on crutches (a rare occurrence I know) and I have to leave earlier than when said child would leave if riding a bike.

I call congestion when a simple trip late at night takes 5 minutes but during the am or pm takes 25.

Should I go on?


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Posted by And the point is....
a resident of Portola Valley
on Jun 4, 2013 at 9:15 am

Resident--you are expecting to jump into your car-day or night- and just zip along to your destination. Clearly there are major commute hours when traffic will flow slower. If you are delayed in any way--then it is due to "congestion".
Traffic in Palo Alto is a healthy sign--people are going to work, people are visiting. AS I asked the other poster--would you like the opposite?
Maybe if you feel that "congestion" is a problem, then you can talk to the city about some of the bottlenecks they have put in the way of traffic in recent years (i.e. Arastedero Road). Regardless, PA has cried wolf to often about traffic--they cannot be expected to be taken seriously now.


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Posted by Resident
a resident of Another Palo Alto neighborhood
on Jun 4, 2013 at 9:32 am

And the point is, yes, we have congestion.

No I don't expect to be able to get where I want to go in commute times in the same time frame as with no traffic.

But so many of the bottlenecks around town are unnecessary as they are designed to prevent efficient traffic flow. The backups Alma/Page Mill cause are felt at places like Churchill, Oregon and Embarcadero.

The backups from Arastradero are felt on ECR and Foothill. The mess outside Town & Country which is there regardless of when Paly students are stopping the pedestrian light.

The poor timing of lights, the additional light at Alma Plaza, the difficulties at LomaVerde/Middlefield with no dedicated left turn light. The problems getting from a side street onto Oregon, the difficulty getting from a side street to turn left on Alma, are all adding to the inefficient movement of traffic.

It is about time that the traffic engineers worked out that the traffic needs to get where it wants to go. If traffic needs to get from 101 to 280, it needs to get there. Making it difficult for that traffic to move is not going to make it go away. Making that traffic use U turns, side streets, or already congested streets, is not making it go away.

A better way of getting traffic to move efficiently around town is much better than hindering it.


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Posted by Resident
a resident of Another Palo Alto neighborhood
on Jun 4, 2013 at 9:33 am

Sorry, in the above I meant Alma/Sand Hill not Page Mill.


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Posted by keepUp
a resident of another community
on Jun 4, 2013 at 9:44 am

Why spent $$$ on a predictable result? If you want A, then you have to pay A,B&C. WTF


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Posted by And the point is....
a resident of Stanford
on Jun 4, 2013 at 11:21 am

Resident--I agree with you--many of the bottlenecks are unnecessary. But with our traffic person, Jamie Rodriguez, being a tool of the bike people, this is what we have. Look at the Arastedero fiasco--many many people have come forward with evidence the the narrowing of the road is causing congestion and driving traffic onto side streets. Jamie just ignored their concerns and parroted the claims of the bike people--everything is fine, the thing is a success.
The fact that the light issue near T&C has not been addressed is another disgrace


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Posted by I did that survey
a resident of Another Palo Alto neighborhood
on Jun 4, 2013 at 2:38 pm

I participated in that survey. It was pretty obviously slanted to try to get the result they wanted. A survey result that supported more taxation. Maybe if we stopped spending money on stuff we dont need there would be money to spend on what we do need.


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Posted by Wayne Martin
a resident of Fairmeadow
on Jun 4, 2013 at 8:13 pm

> Although the discussion about what Stanford
> may pay in property tax very amusing,

Amusing?

Well, consider the following:

At 1% of the assessed value, Stanford is avoiding paying $70M a year in taxes that would be used to pay for local infrastructure, and County/City operations. Palo Alto is missing out on about $5M a year, of this $70M.

As for additional property-based taxes, if a property-tax for Palo Alto infrastructure were to be $100/$100,000 of assessed value, then Stanford would be paying $7.1M into Palo Alto's infrastructure fund.

I spent the day researching the Stanford exemption. It was not an easy sell, taking perhaps three years of maneuvering in the State Legislature between 1897 and 1900. Eventually, the Legislature passed the question on the State's voters in the November, 1900 election. The San Francisco Call (5 Dec. 1900) stated that the Stanford Taxation Exemption Constitutional Amendment was passed by the voters: 137,607 to 67,737.

The following is the effect of the Stanford exemption for the first year after the passage of the Constitutional exemption--
----
San Francisco Call, Volume 87, Number 54, 24 July 1901

Santa Clara County's Wealth.
SAN JOSE, July 23.— The assessment roll just completed by Assessor Spitzer indicates the vast resources of Santa Clara County. All property in the county assessed foots up $50,643,985, against $50,725,593 last year. This reduction is caused by the tax being taken off church property and Stanford University. The assessment of church property was $177,915 and the Stanford University assessment $200,185, making a total of $378,020.
===

Since 1901, until today, Stanford's assessed property value has increased by $7.1B. Stanford's endowment is not included in this property value assessment.
----


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Posted by there's no here here
a resident of Another Palo Alto neighborhood
on Jun 4, 2013 at 10:06 pm

I would once have voted for any infrastructure bond. After what's been happening with the City giving carte blanche to developers and targeting south of Oregon for dense development, even putting that in the general plan, I'm worried they'll just find ways to make us into a crowded metropolis, or build infrastructure that allows it even more.


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Posted by No more, thanks
a resident of Crescent Park
on Jun 5, 2013 at 12:38 am

I also responded to the survey that I would be willing to pay something like $250 a year because it was asked in such a way that I didn't want to sound mean.
Actually I have no intention of supporting a bond, because I think the staff services developers, not the community's needs.
How much did they waste developing the Arrillaga-TheaterWorks monstrosity? $500,000? No more from me, thank you.


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Posted by musical
a resident of Palo Verde
on Jun 5, 2013 at 10:39 am

Interesting history Wayne. News to me. 200K out of 50M is less than half a percent of the County's assessed value in 1901. Wonder what Stanford's fraction would be today. 113 years of annual 1% increases would triple the assessed value, plus whatever improvements they've built.


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Posted by Peter Carpenter
a resident of Atherton
on Jun 5, 2013 at 12:13 pm

Peter Carpenter is a registered user.

Wayne - How much is Stanford or its tenants currently paying to Palo Alto in property taxes and sales taxes each year?


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Posted by Marie
a resident of Midtown
on Jun 5, 2013 at 12:16 pm

Marie is a registered user.

I also responded to the survey, mostly negatively. I said I would only support an infrastructure bond if the public safety building was not part of pc=zoned overly dense office buildings and if Arillaga's office buildings are turned down. Until we are in compliance with ABAG, I support no changes in zoning that allow more office buildings. I am against hiring any new employees until the pension and retiree health benefits for retirees are sustainable.

What happened to the "dream team" plan for the transit center created in the 90's? Shouldn't that at least be given a second look as an alternative, given all the money spent to create it? I suspect no one in the city planning wants to look at it as it doesn't include any office buildings!!


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