Billing errors lead to higher assessments for Palo Alto businesses

City to fix invoices for Business Improvement District assessments

A "clerical error" has prompted the City of Palo Alto to send incorrect bills to downtown businesses as part of their assessment for the Business Improvement District -- a mistake that the city is now trying to solve.

In an Aug. 15 response to a complaint from a business owner, the city's Economic Development Manager Thomas Fehrenbach acknowledged that some businesses "received improper billings" this year as part of the city's effort to collect fees for the Palo Alto Downtown Businesses and Professional Association. The nonprofit association advocates on behalf of businesses in downtown's "Business Improvement District."

Fehrenbach said the errors in billing occurred after the City Council re-authorized the association in May.

"Once we leaned of the issue, we worked to correct the problem, and sent out letters to every business within the BID to alert them to the situation and to the forthcoming correct invoices," Fehrenbach wrote in a response to Winnie Lewis, whose company PACE Properties, LLC, owns two downtown properties.

Lewis wrote that her assessment for the property at 791 High St. went from $130 in 2013 to $170 in 2014. Another property at 157 Homer Ave. received a bill of $340, which after protests from her and many other merchants, was reduced to $50.

Lewis also wondered in her complaint what the assessments were for:

"We maintain our own sidewalks; no one has ever swept the sidewalk anywhere in the South of Forest Area. There are no garbage bins provided on the sidewalks for our businesses. We have never been contacted by anyone representing the association to promote any of our businesses except when the fee is not paid."

Lewis encouraged the city auditor to look into what she called an "abuse of taxing authority."

"No member of the public knows how these assessments are spent," she wrote. "There is no transparency."

Fehrenbach in his response apologized for the billing error. He also noted that the invoices for her two properties, Pace and Safe Self Storage, were corrected.

Fehrenbach told the Weekly that the city's focus is on processing refunds for those businesses that have overpaid.

"We are also working to correct the the rest of the discrepancies caused by the clerical error," Fehrenbach said. "We are extending the due date for all invoices."

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Like this comment
Posted by Wondering?
a resident of Another Palo Alto neighborhood
on Aug 21, 2014 at 10:42 am

It’s a shame that the City’s software doesn’t do basic data input error checking. The rules for assigning BID fees are pretty simple, so it would not be hard to check at initial data entry time, and also to run a double-check program to insure that all the fees meet the fee assignment rules. That is if the City cared enough to make certain that it did its job right the first time.

Got to wonder how many more overcharges have occurred, and if the government will acknowledge those overcharges once the matter is cleared up.

Government is quick to fine people when they are late paying their bills—but government never seems to see it as much of a problem when it makes mistakes, or is caught in fraudulent billing practices.

The article includes the complainant’s question: “where is the money going”. The BID has collected easily $1M since it’s being forced on the downtown businesses by the Council. Wonder how many business owners know that they can end the BID by a majority vote to do so? If you are a business owner, and are tired of being gouged by this make-work entity that seems to be sucking up $100+K of your hard-earned money every year—then do something about it, and vote this micro-monster out of existence when the next vote for re-authorization comes around.

Like this comment
Posted by What do you get?
a resident of South of Midtown
on Aug 21, 2014 at 12:07 pm

To Ms. Lewis,

The city provides your business patrons with sidewalks to walk on, streets to drive and park on, street lights, parking garages, events designed to draw people downtown, a free shuttle that brings patrons to you. I could go on, but you get the point.

Thank you for cleaning your sidewalk like the rest of the good citizens. I bet your patrons make a bigger mess than my single family home members do. I sweep the walk in front of my home as well. I bet you don't clean the street. The city does that. Residents pay far more in taxes than many businesses. This is a way for you to pay your fair share for the services you receive.

Thank you for doing your part (along with the rest of us)to make Palo Alto a nice place to work, live, and visit. Let's not take for granted the excellent services we receive in this community. When I visit other Bay Area cities, I am surprised by their poorly designed downtowns, paid parking EVERYWHERE (I bet businesses would hate that if we did it here).

Be careful what you wish for.

Like this comment
Posted by Ronna Devincenzi
a resident of Another Palo Alto neighborhood
on Aug 21, 2014 at 2:20 pm

The business owner that brought this error to the attention of the city did everyone a favor.

Businesses are continually asked by schools, charities and other non-profits to contribute to good causes. All businesses I know do that, even those in Los Altos, providing free goods/coupons all the time. Greater communities benefit from all that good-will.

Businesses pay other fees, taxes, parking assessments, too, so what the city should normally provide is not given for free. Business pays to play. On top of that, most do even more, making their business to stand out and look good. Advertising costs drawing customers could be astronomical. It all adds up.

There should be a written list of benefits that each business can expect from this separate tax they are forced to pay. Businesses should be kept informed via email (easy to do) about what is happening in their district.

While many merchants are too busy to read said email or other updates that are sent out, when fees are lower [$100 a year or less] when there is a substantial increase in fees, without any measurable or expected benefit,
it is unacceptable and it is not conducive to the way the tax was first proposed years ago when the group voted for it.

It's good this is being addressed. Merchants and property owners that voted this tax in have a right to know for what they are paying in today's economy, taxed appropriately, without being gouged [or even dime-d to death] for nothing.

Kudos to Ms. Lewis for mentioning this error, so it can be corrected for everyone in the downtown business district.

Like this comment
Posted by Wondering?
a resident of Another Palo Alto neighborhood
on Aug 21, 2014 at 4:45 pm

> Merchants and property owners that voted this tax in

A couple of errors to correct here.

Firstly, this is not a TAX (or so we're told)--it's a FEE. (Of course to most, a Fee/Tax looks the same, smells the same and bites the same.)

Secondly, the Merchants didn't vote this fee in--it was created by fiat of the City Council. Merchants/Business owners currently who have been forced into the BID have the right to end it--but to date, there has been little interest to do so. It seems that many of the people paying the bill don't bother to ask: "what is a BID, and why should I have to pay this bill?"

> The city provides your business patrons with sidewalks to walk on,
> streets to drive and park on, street lights, parking garages, events
> designed to draw people downtown, a free shuttle that brings patrons to
> you

Well .. not exactly. When the BID was being considered, the downtown merchants had quite a list of complaints about the City's not providing adequate services that would help to make the downtown attractive. The list was quite long at the time--including the failure of the City to clean the sidewalks, and to remove the trash from the bins in a timely fashion.

The solution that emerged--was to increase the money being spent on downtown maintenance, via this BID fee. The City could then wash its hands of some of the downtown maintenance--claiming the BID was taking care of it.

Sadly, the Chamber seems to be without any meaningful leadership, and it just wimped out and let this BID thing come into existence. It has been sucking money of the downtown businesses since then--while providing not very much back for those funds.

Residents, of course, had very little to say about this--since we didn't have a vote. So, the cost of government got a little bigger, with no clear evidence in the City's published budget of those extra expenses.

It's hard to see that very many people actually use the Shuttle to go downtown to shop, by the way. Some use it to shop in Midtown, but not so much downtown.

Like this comment
Posted by Bob
a resident of Professorville
on Aug 21, 2014 at 9:05 pm

Seems to me the BID does quite a bit. Check out their website. It's filled with activities that help downtown businesses. and their Facebook page is also a testament to all the work they do for downtown. Web Link

Seems to me that the above criticisms are baseless.

Like this comment
Posted by Wondering?
a resident of Another Palo Alto neighborhood
on Aug 22, 2014 at 9:20 am

> Seems to me the BID does quite a bit.

And how many of these "events" actually occurred? How much has the BID increased the reported sales of the downtown area? How much of an increase in sales taxes from the downtown area been reported by the City, providing clear evidence that the BID is performing as advertised?

This are reasonable questions. Got any answers?

> baseless


Like this comment
Posted by Herb Borock
a resident of Professorville
on Aug 22, 2014 at 3:55 pm

Since 1953, it has been the responsibility of the occupant, tenant, or property owner to "keep the sidewalk free of dirt, debris and litter". That responsibility is set forth in Palo Alto Municipal Code Section 9.48.050.

9.48.050 Obligation to clean sidewalk.

The occupant or tenant, or in the absence of an occupant or tenant, the owner of any real estate in Palo Alto in front of which there is a paved sidewalk shall keep the sidewalk free of dirt, debris and litter. Sweepings from the sidewalk shall not be swept or otherwise made or allowed to go into the street but shall be disposed of by the person responsible for the cleaning of the sidewalk.
(Ord. 1504 (part), 1953: prior code § 20.10)

The University Avenue Parking Permit Fund pays for monthly steam cleaning of University Avenue sidewalks and the Downtown area. Here is what the Fiscal Year 2015 Adopted Operating Budget says about the Business Improvement District:

The Downtown Business Improvement District (BID) was established by an ordinance adopted in January 2004 to promote the downtown business community through a variety of efforts including beautification, advocacy, and marketing.
The BID continually surveys its member businesses to determine what its priorities should be. Two priorities identified were street cleanliness and issues related to the homeless in downtown. In response, the Palo Alto Downtown Business and Professional Association (which operates the BID under contract with the City) initiated the Downtown Streets Team, empowering the homeless to care for the streets and take responsibility for cleanliness of the area. In addition, increased frequency of mechanical street cleaning along with improved equipment has resulted in cleaner sidewalks. A team of police officers dedicated to the downtown has been initiated. New events have been developed and new communications tools, such as social media and downtown walking maps, are underway. Other
programs that help keep Downtown Palo Alto Safe, Spotless, and Successful will advance as the Palo Alto Business and Professional Association continues to operate the Downtown Palo Alto BID for Fiscal Year 2015.

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