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Editorial: Palo Alto business registry has failed to deliver its promised value

When Palo Alto launched a business "registry" more than a year ago, the goal was to collect useful information about who was operating businesses in the city, facilitate communication with them and compile data that could inform city decision-making on transportation, parking and zoning strategies.

With only a modest annual fee of $50, it was intentionally not designed as a revenue-generating business-license tax, which quickly becomes complex and controversial, as evidenced by the 2009 ballot measure when 59 percent of Palo Alto voters defeated such a proposal.

One of the few cities without any business license or tax, Palo Alto sought instead to assemble information that could answer long-debated questions, such as the number of employees who work in our various commercial districts, the how many office employees work per square feet of office space and their parking and commute habits.

But the city quickly discovered that setting up even a limited data collection system was more difficult than expected, and it has struggled over the last year to achieve full participation and procure anything close to reliable information.

As the program enters its second year and with the recent release of some of the data compiled over the last year, it is clear the program needs help.

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The data reveals inconsistent participation, with some long-standing businesses having not registered at all, some businesses registering twice and many errors in response to questions on square footage and parking. Tenants in multi-tenant buildings provided inconsistent answers, and there was no method of avoiding duplicate responses from building managers, owners or master tenants. The overall number of employees accounted for in the survey doesn't approach the number otherwise estimated to actually work in Palo Alto.

A city staff report claims 93 percent participation by Palo Alto businesses but seems to have achieved that level by continuously reducing its estimate of the number of businesses without explaining its methodology for doing so.

The city acknowledges the data is still in a "preliminary, raw state," but a more accurate characterization might be "garbage in, garbage out." There is virtually nothing in the available data that can be utilized with any confidence, and unless the city moves deliberately and quickly to address the problems, the registry will remain a near-useless exercise.

Many of the problems can be traced to the lack of preliminary outreach to businesses and the failure to conduct a pre-launch pilot program that could have uncovered issues before attempting to roll out the registry citywide. Had the staff worked with a cross-section of employers and property owners to develop the initial survey instrument, it would have quickly discovered the problems in its approach and the lack of clear thinking about the ultimate use of the data.

For example, while an owner-operator of a small, independent business might be able to answer the required questions, the form could easily flummox the local manager of a chain store, fast-food restaurant or Starbucks.

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Asking for the square footage occupied by the business, the maximum number of employees that are at the location at any one time, the number of parking spaces on-site and the number of employee parking permits purchased by the business leads to unreliable self-reporting, particularly if an employer or a manager believes there could be negative repercussions by giving certain answers.

By combining the attempt to learn ownership and occupancy information with a series of more intrusive questions, the city confused some businesses, scared away others and was completely ignored by many. Requiring the information under penalty of perjury didn't help.

The business registry shows all the signs of a program that was never truly embraced by the city, was inadequately funded and poorly executed.

It is inevitable that some businesses will be missed with a program like this, as the comings and goings of small businesses and individual providers of professional services occur at a fast clip in Palo Alto. But it is sign of flawed process when, for example, a year into the program Midtown's largest employer, Safeway, and McDonald's on El Camino had not registered.

The origin of the registry dates back to early 2014, when then-councilmembers Marc Berman, Pat Burt and Karen Holman (along with former Councilman Larry Klein) proposed it to their colleagues as a means of developing reliable data to aid future policy decisions. They now need to take the lead in developing the rescue mission for this fledgling program.

— Palo Alto Weekly editorial board

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Editorial: Palo Alto business registry has failed to deliver its promised value

Uploaded: Fri, Apr 29, 2016, 7:45 am

When Palo Alto launched a business "registry" more than a year ago, the goal was to collect useful information about who was operating businesses in the city, facilitate communication with them and compile data that could inform city decision-making on transportation, parking and zoning strategies.

With only a modest annual fee of $50, it was intentionally not designed as a revenue-generating business-license tax, which quickly becomes complex and controversial, as evidenced by the 2009 ballot measure when 59 percent of Palo Alto voters defeated such a proposal.

One of the few cities without any business license or tax, Palo Alto sought instead to assemble information that could answer long-debated questions, such as the number of employees who work in our various commercial districts, the how many office employees work per square feet of office space and their parking and commute habits.

But the city quickly discovered that setting up even a limited data collection system was more difficult than expected, and it has struggled over the last year to achieve full participation and procure anything close to reliable information.

As the program enters its second year and with the recent release of some of the data compiled over the last year, it is clear the program needs help.

The data reveals inconsistent participation, with some long-standing businesses having not registered at all, some businesses registering twice and many errors in response to questions on square footage and parking. Tenants in multi-tenant buildings provided inconsistent answers, and there was no method of avoiding duplicate responses from building managers, owners or master tenants. The overall number of employees accounted for in the survey doesn't approach the number otherwise estimated to actually work in Palo Alto.

A city staff report claims 93 percent participation by Palo Alto businesses but seems to have achieved that level by continuously reducing its estimate of the number of businesses without explaining its methodology for doing so.

The city acknowledges the data is still in a "preliminary, raw state," but a more accurate characterization might be "garbage in, garbage out." There is virtually nothing in the available data that can be utilized with any confidence, and unless the city moves deliberately and quickly to address the problems, the registry will remain a near-useless exercise.

Many of the problems can be traced to the lack of preliminary outreach to businesses and the failure to conduct a pre-launch pilot program that could have uncovered issues before attempting to roll out the registry citywide. Had the staff worked with a cross-section of employers and property owners to develop the initial survey instrument, it would have quickly discovered the problems in its approach and the lack of clear thinking about the ultimate use of the data.

For example, while an owner-operator of a small, independent business might be able to answer the required questions, the form could easily flummox the local manager of a chain store, fast-food restaurant or Starbucks.

Asking for the square footage occupied by the business, the maximum number of employees that are at the location at any one time, the number of parking spaces on-site and the number of employee parking permits purchased by the business leads to unreliable self-reporting, particularly if an employer or a manager believes there could be negative repercussions by giving certain answers.

By combining the attempt to learn ownership and occupancy information with a series of more intrusive questions, the city confused some businesses, scared away others and was completely ignored by many. Requiring the information under penalty of perjury didn't help.

The business registry shows all the signs of a program that was never truly embraced by the city, was inadequately funded and poorly executed.

It is inevitable that some businesses will be missed with a program like this, as the comings and goings of small businesses and individual providers of professional services occur at a fast clip in Palo Alto. But it is sign of flawed process when, for example, a year into the program Midtown's largest employer, Safeway, and McDonald's on El Camino had not registered.

The origin of the registry dates back to early 2014, when then-councilmembers Marc Berman, Pat Burt and Karen Holman (along with former Councilman Larry Klein) proposed it to their colleagues as a means of developing reliable data to aid future policy decisions. They now need to take the lead in developing the rescue mission for this fledgling program.

— Palo Alto Weekly editorial board

Comments

Marc
Midtown
on Apr 29, 2016 at 9:05 am
Marc, Midtown
on Apr 29, 2016 at 9:05 am
6 people like this

Is your proposed "...rescue mission for this fledgling program..." involve hiring lots of new city employees, hiring outside consultants and commuting large amounts of money?

/marc


Resident
Another Palo Alto neighborhood
on Apr 29, 2016 at 10:07 am
Resident, Another Palo Alto neighborhood
on Apr 29, 2016 at 10:07 am
15 people like this

I think the council should resurrect the business tax to help mitigate impacts of business on quality of lofe, and exempt retail businesses, possibly even use a lot of the tax to help support retail. Would that we had civically minded illionaires like those at Passarelle in Los Altos.


Joe
Another Palo Alto neighborhood
on Apr 29, 2016 at 12:27 pm
Joe, Another Palo Alto neighborhood
on Apr 29, 2016 at 12:27 pm
2 people like this

The idea of a business registry goes back to at least 2004—

Publication Date: Wednesday, October 13, 2004

Business license? Nope -- think "registry"
Web Link

There has never been a clear idea of what this data is supposed to provide the City so that it can make better decisions.


senor blogger
Palo Verde
on Apr 29, 2016 at 12:27 pm
senor blogger, Palo Verde
on Apr 29, 2016 at 12:27 pm
5 people like this

Council,
Stop futzing around.
Pass a Business License Tax, based on revenues and get on with it.


Marie
Downtown North
on Apr 29, 2016 at 1:12 pm
Marie, Downtown North
on Apr 29, 2016 at 1:12 pm
3 people like this

Council,

Do something real, but get rid of the Business Association assessment fee, which is another form of taxation without it being called so.

--and let's not get into what that has achieved for all businesses involved in the last decade or so, which is yet another issue.


Curmudgeon
Downtown North
on Apr 29, 2016 at 5:08 pm
Curmudgeon, Downtown North
on Apr 29, 2016 at 5:08 pm
7 people like this

"Palo Alto business registry has failed to deliver its promised value"

Not HAS failed, WAS failed. This extremely simple task could fail only if it was intentionally sabotaged by the city staff tasked to sink it, and they succeeded brilliantly. No ordinary incompetence here.

For some unpublic reason, we citizens are not supposed to know who is doing business in Palo Alto and how much business they are doing.


SteveU
Registered user
Barron Park
on Apr 29, 2016 at 8:47 pm
SteveU, Barron Park
Registered user
on Apr 29, 2016 at 8:47 pm
2 people like this

San Jose has a YEARLY Business License (Tax) that even Home based Consultants, Authors and the like, have to pay.
Many of these jobs are indistinguishable from their counterparts in Industry. They generate no additional traffic, and may even cause less as they work from home instead of commuting. BUT they get to PAY.
What do these folk get for their fee (TAX)? Unlike Retail, the police are not called to deal with misbehaving customers. They don't need public parking...

If PA goes down this path, There needs to be a CLEAR list of services that are being provided for the Licensee. If they work from home, not engaged in manufacturing, have no or very infrequent client visits, they should be exempt. A FEE without providing a NEEDED Service is a TAX


GusL.
Barron Park
on Apr 30, 2016 at 7:51 am
GusL., Barron Park
on Apr 30, 2016 at 7:51 am
2 people like this

Its just another Tax..
Palo Alto never needed it before, they don't need it now.. They just want the bureaucracy and money..
Bigger Govt. More intrusion..


NeedIt
Palo Alto Hills
on Apr 30, 2016 at 10:35 am
NeedIt, Palo Alto Hills
on Apr 30, 2016 at 10:35 am
1 person likes this

We definitely need a business tax. As sales tax has diminished, residents pay an increasing share of the general fund. A business tax would help restore balance with businesses paying their fair share.


Marc
Midtown
on Apr 30, 2016 at 11:19 am
Marc, Midtown
on Apr 30, 2016 at 11:19 am
1 person likes this

@NeedIt here, here. And while we are at it make sure that all the airbnb hosts pay their taxes. That includes the hotel tax, the capital property tax to the county and the sales tax owed the state. All home based businesses need to investigated that they are all paying the appropriate excise tax. This also includes all artists, writers, consultants, etc.

All those uber drivers need to pay their taxes, make sure they have the proper business insurance on their vehicle and are paying their capital property tax to the county.

Don't forget all those that are buying and selling items online and the people that have a garage sale every month. They all owe excise tax to the state.

And what about all the startups that giving away their product? They use the same amount of city resources, produce the same amount of traffic as businesses that sell a tangible good. They should all be taxed on their "perceived value" of their product or service.

:^)

/marc


History Buff
another community
on May 1, 2016 at 3:13 pm
History Buff, another community
on May 1, 2016 at 3:13 pm
Like this comment

I agree that PA should just get over itself and have a business tax like every other city.

SJ Mercury article has some info (re Palantir) that should be in the business registry:

Web Link

Passarelle has not been wildly successful in Los Altos and is now reinventing itself:
Web Link


common sense
Midtown
on May 1, 2016 at 6:06 pm
common sense, Midtown
on May 1, 2016 at 6:06 pm
Like this comment

The editor writes "unless the city moves deliberately and quickly to address the problems, the registry will remain a near-useless exercise."

The data is useful for ABAG to use to determine housing allocation. ABAG estimated that in 2010, Palo Alto had 89,560 jobs, and that was a driving factor to assign 2,000 more housing units to Palo Alto.

The business registry, at 93% completion, in 2016 shows that Palo Alto has about 73,000 jobs. That's a difference of 16,000 jobs. Do I think that the registry is off by 16,000 jobs? No I don't think so. Those 16,000 are the equivalent of 8+ companies the size of Palantir (which based on an article in the Mercury News, has 1,800 employees, and leases 250,000 square feet of office space), and it mean that the registry does not account for some 2 million square feet in office space.

And remember the ABAG estimate was during the depth of the "Great Recession" in 2010, while the business registry is reporting jobs numbers from the height of the
of a business boom in 2016. ABAG may have been off in their estimate by 30% to 40%.

The city council should push ABAG to revise their housing allocation based on the data gathered from the Business Registry. The local economist, who has been consulting with ABAG on their projections should revise his methodology to accurately reflect the best data available - which is the business registry.


Commentator
Professorville
on May 1, 2016 at 7:06 pm
Commentator, Professorville
on May 1, 2016 at 7:06 pm
Like this comment

"the best data available - which is the business registry."

The "best data available" is woefully inadequate. Especially in this instance. We need ACCURATE data. We ain't got it.


common sense
Midtown
on May 1, 2016 at 8:04 pm
common sense, Midtown
on May 1, 2016 at 8:04 pm
Like this comment

The business registry is a better estimate for the number of jobs in Palo Alto, than what ABAG has estimated - no one except for the ABAG staff knows how they came up with 89,000 jobs (or specifically 89,560 jobs) in 2010.


Commentator
Professorville
on May 1, 2016 at 9:53 pm
Commentator, Professorville
on May 1, 2016 at 9:53 pm
Like this comment

"The business registry is a better estimate for the number of jobs in Palo Alto, than what ABAG has estimated"

There is no logical justification for that statement. The business registry is known to be heavily flawed. Not knowing how a competing result was obtained does not a priori mean it is less reliable--the possibility exists it was derived via valid rigorous methods. The solution is to redo the local registry correctly, if city staff can. If not, ABAG rules.


common sense
Midtown
on May 1, 2016 at 9:59 pm
common sense, Midtown
on May 1, 2016 at 9:59 pm
Like this comment

There is a logical justification to use a number where we know how that number has been achieved (business registry), versus a number which has no documentation at all.

City council needs to have ABAG justify their number; City Council should demand a lower housing allocation based on the business registry data.


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