Palo Alto voters will have a chance in November to raise the city's hotel-tax rate to help fund the city's wish list of infrastructure projects, which include the new police headquarters, various bike projects and potential improvements to the city's animal shelter and the Junior Museum and Zoo.
The City Council voted 6-3 on Monday night, July 30, with Karen Holman, Lydia Kou and Greg Tanaka dissenting, to put a measure on the ballot that would raise the transient-occupancy tax (commonly known as "hotel tax") rate from 14 percent to 15.5 percent. If approved, the revenues would bring in about $2.55 million in annual revenues, according to a staff analysis.
The proposal is somewhat milder than the one the council had considered prior to its June 18 meeting, when it dropped a prior proposal to raise the tax rate to 16 percent, which would have made the local rate the highest in the state. Now, even if the measure passes, the hotel-tax rate would be below that of Healdsburg, which has a 16 percent rate, Councilman Greg Scharff said at the Monday meeting. Mayor Liz Kniss, who in June led the charge for scaling down the proposed increase from the 16 percent to 15.5 percent (Scharff was lobbying for 16 percent), said other cities in California are also looking at going to 16 percent.
"It's kind of a painless thing for a city to do," Kniss said, "Which probably isn't the best reason for the city to do it."
The Monday discussion was relatively brief, with only Tanaka coming out strongly against the proposed hotel-tax hike. He criticized the ballot language for not explicitly listing how much each infrastructure project would receive from the new hotel-tax revenues. The language states that the funding would be used "for vital City services such as ensuring modern, stable 911 emergency communications, earthquake-safe fire stations and emergency command center; improving pedestrian and bicyclist safety; ensuring safe routes to schools; maintaining City streets and sidewalks; and other city services."
Tanaka argued that by not specifically calling out the projects such as the public-safety building, the city is doing "a little bait and switch."
"I wonder if we're doing some fearmongering here about, 'If you're not doing this, our 911 isn't going to work here anymore.' It's not true," Tanaka said.
City Manager James Keene noted that the subject of emergency communications polled well in recent surveys on the proposed tax increase. He also argued that the statement is in fact accurate. The Police Department's current headquarters at City Hall has long been deemed seismically unsafe, a big reason for the city's two-decadelong quest to build a new headquarters.
"If we don't move our EOC (Emergency Operations Center) in an essential-services-standard building and we have a major quake, we would lose our communication and our 911 system," Keene said.
Holman and Kou had also expressed some reservations in the past about the proposed hotel-tax hike. At the June 18 meeting, Holman said that she believes trying to raise money by raising a tax is "clearly not taking responsibility that we can do a better job in how we spend money."
Kou had argued in the past that the city should take fresh look at its infrastructure plan and consider removing or scaling back some of the projects.
This will be the second time in four years that Palo Alto voters are being asked to raise the hotel tax to help fund infrastructure. In 2014, voters overwhelmingly passed a measure raising the tax rate from 12 percent to 14 percent.