New developer fees are likely ahead New developer fees are likely ahead (March 19, 2004)

Money would be used to fund road improvements

by Don Kazak

Assessing a new fee on developers of commercial properties could be taken as an anti-business tax that could generate a howl of protest.

Instead, the idea won support from the Chamber of Commerce Wednesday night when the Palo Alto Planning and Transportation Commission voted unanimously to recommend City Council approval of a transportation impact fee on all new developments in the city.

"We think it will make Palo Alto better in the long run," said Tony Carrasco, chair of the Chamber's board of directors.

The transportation impact fee would be assessed on all new commercial and residential developments, including single-family homes. Retail stores, except supermarkets, are exempt.

The fees would help pay for improvements to the city's roads over the next two decades, bike lanes and make the city more pedestrian friendly.

"That's why we like it," Carrasco said. "It's not quite a blind leap of faith by moving the city into the 21st century." By making a good faith effort to fund its own projects, Carrasco said the city "will be more likely to get state funds."

The city has a $118 million shopping list of road projects dating through the year 2025, including computerizing traffic signals, expanding shuttle bus services, improving bike lanes and building a bicycle/pedestrian under-crossing at the Caltrain tracks in south Palo Alto. The fee on new development would cover 7.6 percent of those costs, or $9 million.

The idea of such a fee is not new. Approximately half of California cities, including Menlo Park, have similar assessments. Other cities charge on a square-footage basis, while the proposed Palo Alto fee would be charged per evening automobile trip generated.

The fee would be assessed, on a complicated formula, at $2,234 per new automobile trip generated during the evening rush hour for each new development project. The new fee would be one-time only for new development. If enacted, it would cost the proposed Campus for Jewish Life $1.9 million and the proposed new Hyatt Rickey's Hotel $1.4 million.

"Ours is modest compared to others," said commission member Pat Burt. "It's below average." But he was concerned whether the new fee would send prospective new businesses elsewhere.

Longtime Palo Alto developer Chop Keenan, who wasn't at the commission meeting, questioned the wisdom of putting another fee on developers.

Keenan said that businesses aren't shy to step up when it will help them, including their financial support of the two new underutilized downtown parking garages.

"This is to fix what we haven't spent in years," he said, "and the newcomer gets the bill."

There is no date yet for when the City Council will consider the recommendation from the Planning Commission.

Don Kazak can be e-mailed at dkazak@paweekly.com

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