In most California cities, a business license is one of those necessities of getting any business up and running.
But in Palo Alto, where we sometimes seem to get pleasure from trying to reinvent the wheel, proposals to implement a business license have come and gone every few years without resolution.
The problem, of course, has been in the details, and to some extent, the purpose.
Other cities implemented business-license programs long ago, primarily as a way to raise revenue. This taxing purpose quickly gets complicated and controversial, as Palo Alto found in 2009, when a poorly constructed business-license tax was put on the ballot by the City Council and was rejected by 59 percent of voters.
Earlier, in 2005, another proposal couldn't get any traction and never made it to the ballot.
When devising a business-license tax, the mechanics get very complicated and virtually every business sector and type has an argument as to why it is disproportionately and unfairly impacted.
For example, should the tax be based on revenues, employees or square footage? How would a venture-capital firm or a startup be treated, compared to a café or an art gallery? Should home-based businesses be included? What about businesses not located in Palo Alto but transacting business or providing services here? The list of legitimate and debatable questions grows as one attempts to formulate an equitable scheme, and it quickly becomes a controversial mess.
In the 2009 election, we urged defeat of the tax because it was so poorly drafted and created a ridiculously complicated structure. And after its defeat we suggested the city staff bring back a much simpler proposal that could garner community support.
But as political bodies are prone to do after embarrassing defeats, the issue was put away for another day.
It now appears likely that the Council will move forward as early as next Tuesday with direction to city staff to take a very different, and we think better, approach: a straight-forward business registry instead of a business-license tax. One key advantage is that a registry, with no taxing element, does not require voter approval.
Council members Karen Holman, Pat Burt, Larry Klein and Marc Berman pressed for the new approach in a memo to their colleagues in February and with only one more vote needed to move forward, the simplified approach seems well on its way to adoption.
While some business owners will continue to resist any attempt to impose a licensing or registry system out of fear it could easily morph into a tax in the future, we think most will be easily persuaded of the value from the city finally knowing who is doing business here.
As things exist today, there is no dependable way to know such important information as the number and types of businesses, number of employees, from where and how employees commute, and the square footage of the offices, stores or facilities of each business. And equally important, there is no simple way of communicating with business owners.
Some have argued that a combination of utility-billing records and business property-tax statements could be used to generate a list of businesses, but that data would not only be a nightmare to sort through but also prone to significant error. Utility account holders are often the owners of buildings, not the businesses that occupy them.
A simple business registry, requiring all businesses with a physical location in the city to file an annual data report along with a small administrative fee, would provide essential information and inform many important planning issues.
Recent discussions about the number of employees working downtown, the density of workers in commercial offices and their commute and parking habits all suffered from the lack of hard data, leaving it to consultants, city staff and the City Council to merely speculate.
With the stakes of planning, zoning and transportation decisions so high, the Council should move forward in creating a simple online process for business registration and licensing.
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Comments
Another Palo Alto neighborhood
on Apr 25, 2014 at 10:38 am
on Apr 25, 2014 at 10:38 am
It was reported in the Mountain View Voice newspaper that Google was asked repeatedly for a numbers count of their employees, per square foot, and by the City of Mountain View. Each time, they refused to answer.
I think the hard print copy of that article is dated April 11, under the headline: "City Poised for Explosive Office Growth". It mentions the Google people refusing to answer Mountain View's queries. But that statement is not in any online version that I could find.
An edited version of that article, leaving out the mention of Google's refusal to answer, is at this on-line link. See the last line of the article to note that it was "edited".
Web Link
Palo Alto's Plan is a TAX. Everyone knows it.
Community Center
on Apr 25, 2014 at 10:48 am
on Apr 25, 2014 at 10:48 am
If the information that businesses can provide is so valuable to the City of Palo Alto, then the City should be willing to pay them for it. Businesses should be reimbursed for the time and effort it takes to provide this information. This is definitely another tax.
Professorville
on Apr 25, 2014 at 10:58 am
on Apr 25, 2014 at 10:58 am
It's most definitely not a tax and it's not fair to call it that. Read the proposal here . . .
Web Link
. . . and specifically the type of information for which the proposed questionnaire is asking.
Without this kind of information the City Council and the Planning Department haven't a prayer of making the types of well-informed decisions required to effectively manage our burgeoning commercial development and business growth, not to mention their associated impacts on traffic and parking throughout the community as a whole.
South of Midtown
on Apr 25, 2014 at 11:07 am
on Apr 25, 2014 at 11:07 am
Of course it's a tax under another name!
What about the small start-ups that are just trying to get into the black?! More money out the door?!
I agree *Neal* Let the city pay the businesses for the information they want.
Another Palo Alto neighborhood
on Apr 25, 2014 at 12:05 pm
on Apr 25, 2014 at 12:05 pm
> Without this kind of information the City Council and the
> Planning Department haven't a prayer of making the
> types of well-informed decisions
Got to wonder if folks like this think through their posts, if they are so lithified in their thinking processes that they just don't -- they accept without question what they are told by government, at every level.
How does knowing how many people employed given the City an actual number of cars, solo drivers, and number of minutes of City-street use per day? Yes, there are some rought estimates that might pop out, but those same numbers can be measured using well-established traffic engineering techniques--and more acurately than any goofy models.
But more to the question--how is the City going to know how many companies are going to locate here in the next ten years, by establishing a business registry today? Got an answer for that one?
This is just the first step for a tax--that will end up going into higher salaries and benefits for people that are not worthy of their current salaries.
If a national health care mandate is a "tax" -- how can everything that is forced on us by governments also not be a "tax"?
Palo Verde
on Apr 25, 2014 at 1:14 pm
on Apr 25, 2014 at 1:14 pm
Anything under a 100% tax rate is a government subsidy. The old joke about the simplified 2-line IRS form: (1) "How much money did you make?" (2) "Send it in."
Palo Verde
on Apr 25, 2014 at 6:23 pm
on Apr 25, 2014 at 6:23 pm
Some very strange ideas expressed here. It seems to me that the city extends the privilege to do business here. There is no inherent right.
Another Palo Alto neighborhood
on Apr 28, 2014 at 8:18 am
on Apr 28, 2014 at 8:18 am
> It seems to me that the city extends the privilege to do business here.
This point-of-view pops up from time-to-time. Autocrat Larry Klien expressed the same premise during the Measure A Business Tax campaign. The premise that doing business in a town, in the Unitend States of America, is a privilege--is truly a point-of-view that seems to ignore the philosophy, and history, of our great country.
The Constitution, once ratified, provided us with a framework of a rights-based society that did away with the privileged-based society of the United Kingdom, the mother country of our original thirteen colonies. The word “privilege” occurs only once in the Constitution, where as the word “right” is clearly the focus of much of the document.
Everything that the Framers did, and said, reinforced their passionate belief that their new country should not have a privileged class—who would dispense privileges to those whom they favored, and denied privileges to those that displeased them.
To suggest that the City of Palo Alto government is not constrained by the US and California Constitutions is a very sad statement. People have a right to live here if they want (and there is room). They have a right to do business here, based on the guarantees of the California and US Constitutions.
The City has certain rights, and even, perhaps, obligations, to create an environment that is healthy, and wholesome, for all. It certainly has the right to restrict, through zoning regulation, certain business activities—such as steel plants, airports, or enterprises that can be shown to be detrimental to the quality of life of its residents (consistent with State law). But it can not, legally, claim that one must be granted the privilege of the government in order to open a business here, or to have the products of that business be made available for sale.
Anyone who would make such a claim has no idea what it means to be an American, or to believe in the basis of a rights-based society—and their counsel must to ignored, and all-too-often, resisted by whatever means necessary.
Evergreen Park
on Apr 28, 2014 at 8:47 am
on Apr 28, 2014 at 8:47 am
This is just another ploy to extort money from small business owners. The city does not need money, it is rolling in dough, but if the people in charge want to extort money from someone, develop a DEVELOPER registry!
Another Palo Alto neighborhood
on Apr 28, 2014 at 9:27 am
on Apr 28, 2014 at 9:27 am
Palo Alto is a vibrant community that owes much of its vitality to its geographical location (immediately adjacent to Stanford University and Silicon Valley) and positive weather virtues. There is great demand for both housing and business in Palo Alto. Downtown Palo Alto has become a magnet to Venture Capital firms, Silicon Valley startups and law firms. These firms all support a huge restaurant industry. The downside to all of this activity in downtown is heavy traffic, a lack of parking, high rents and a deterioration of local service retail businesses. City government has done a poor job with its planning and zoning efforts dealing with business in Palo Alto (because the City has had no strategy at all). In reality, business is successful in spite of City of Palo Alto government efforts. I oppose the City stepping in now (with the proposed business registry and data collection process) because they just haven't proven capable of doing much right in the past. What is Jim Keene going to do with all of the data he keeps? And how much money (in the form of additional city employee salaries and pension benefits) is this business registry really going to cost all of us? Before anyone supports the business registry, the City should make full disclosure on the long term cost and long term objectives of such a registry. Alternatively, it should be limited to a trial period which is not renewed unless results warrant its continuation into perpetuity.
another community
on Apr 28, 2014 at 10:55 am
on Apr 28, 2014 at 10:55 am
Don't see anything wrong with a business license, shouldn't become a tax. You go in into city hall, apply for.license, get all the rules and regs of the city. Should not be a high price fee that will drive away businesses, fees should be based on the number of employees.
Businesses of all sorts have one goal in mind. To stay in business and I guess the second goal is? To become successful.
Palo Verde
on Apr 28, 2014 at 11:23 am
on Apr 28, 2014 at 11:23 am
I thought business permits came from the State Board of Equalization. And other licenses for many activities or professions also come from the State. Health permits for restaurants come from the County. Elevator permits are issued by the State. Anything the City stacks on top must come out of employee wages or customer wallets.
Another Palo Alto neighborhood
on Apr 28, 2014 at 12:04 pm
on Apr 28, 2014 at 12:04 pm
What an interesting thread! The article says no taxes but a way to know who is doing business in the town.
City shoudl pay the businesses for filling out a form? What kind of nonesense is that? Do we individuals get paid to fill out census data so we can keep numbers on population? Or pay us for filling out tax forms? What kind of logic is this, could you explain?
Other cities require a business license, and that information on size and location useful to those wanting to start a similar business in a certain area. It is statistically useful information. Palo Alto has no such resource. Business licenses or certificates from the state don't cover all businesses, nor do elevator licenses.
Come on guys, you can do better than that. Fear of taxes is one thing, but you are showing your fear of all government.
Another Palo Alto neighborhood
on Apr 28, 2014 at 1:11 pm
on Apr 28, 2014 at 1:11 pm
It was in Mountain View Voice, Page 5, issue April 18 where it was reported that Google REFUSES to tell the City and Voice Reporters how many employees it has crammed into cubicles. If that City cannot find out how many employees are in the area, to cause traffic, take city services, etc., what is the great need for having this data?
It's a TAX. Likely going into the pot to pay for employee perks and for their early retirements, including those retirees that get paid, though they are now employed in other cities, double-dipping.
Don't punish mom and pops, and their customers, and the middle class, for city council and staff whims. Other cities that had this FEE, TAX, whatever you want to call it, probably had good intentions when it was initiated. Now? It's a TAX, for council and staff to spend. "Information" is not worth it. Like Google refusing to answer the city and reporter's questions.
Registered user
Barron Park
on Apr 28, 2014 at 3:43 pm
Registered user
on Apr 28, 2014 at 3:43 pm
It is a TAX. Especially if it includes Home Offices, where the public is not permitted. (San Jose charged $150 for a home office. That includes Book Authors, (art) Painters. No service was provided/used except to COLLECT $)
Just another reason to hire more city workers with a sweet benefit package.
I am not against inspection of places accessed by the public or having non-family employees, be funded by an Occupancy fee. The fee rate is determined by the type of Occupancy. No fee stacking games: No Fire Fee, Food Fee, Retail fee. One fee to rule them all and ONE Inspection. I have seen conflicting inspector requirements before.
College Terrace
on Apr 28, 2014 at 6:30 pm
on Apr 28, 2014 at 6:30 pm
Great idea to require all firms in Palo Alto to disclose the number of employees they have; moreover, if they live in Palo Alto, or not (most I suspect do not). And if it costs a business (a tax) to provide the information, more power to us. In fact, I have no problem with imposing an additional tax on businesses based on their gross earnings. More money in our coffers to provide low to no interest loans for Palo Alto homeowners for upgrades or permitted expansions within their property area.
Also, set a maximum rate for people to work in a building and a capacity maximum for events/meetings; make the first number lower than the second. The "tax" will also pay for unannounced inspections by city of Palo Alto commercial enforcement division officers. This is good. Beginning to take the city back from the growth-happy city council administrations of the past. We can still save Palo Alto. All you other start-ups - go to the East Bay or East Palo Alto- they need your drive, intellect, employment, tax base more than we ever have! Stop clustering. High tech is not an industry dependent on a physical location for input resources.
However, they love to cluster for leads on research (Stanford), funding (Venture Capitalists), intellectual property rights (Law Firms) and the prestige of proximity to all the existing High-techs who access a talented labor pool. We see it. Also, huge - the weather in the peninsula and its infrastructure and lifestyle options (parks, homes, ocean, mountains, San Fran). Yet, it's time to create "other" Silicon Valley's in California and in other States, too. Capping high tech office space in Palo Alto is the beginning of the end for more dense housing. In time, other cities will follow, too. We still have a huge chunk of profit from this new economy. Time to push the wealth around (and out).
Barron Park
on Apr 28, 2014 at 7:06 pm
on Apr 28, 2014 at 7:06 pm
"NO NEW TAXES"
Crescent Park
on Apr 28, 2014 at 7:09 pm
on Apr 28, 2014 at 7:09 pm
[Post removed.]
Old Palo Alto
on Apr 30, 2014 at 10:21 am
on Apr 30, 2014 at 10:21 am
Everybody else is doing it so lets get onboard! That's what made America great, we love to follow. Had a good laugh with the post that exclaims creating business' in Palo Alto is a privilege extended by government officials. Good grief! Probably a good reason why companies that defined Palo Alto as an innovative intelligent destination, such as HP, Facebook, Rosche, Agilent, Xerox, Digital, numerous biotech companies, etc.... joined the exodus early on. It seems the new residents of Palo Alto are content with becoming a bedroom retirement community and letting government make every decision for us. What a difference a couple of decades make when Palo Alto was a magnet for companies who were willing to build our community into what it is today. So long Palo Alto!