News

After eleventh-hour deal, business tax lands on ballot

Palo Alto reaches compromise with opponents, moves ahead with revised measure

Palo Alto's proposed business tax would target companies with more than 10,000 square feet of space, including those at Stanford Research Park. Embarcadero Media file photo by Veronica Weber.

Palo Alto voters will have a chance in November to approve a business tax, though the measure they'll be considering will be far more modest than the one that the City Council was contemplating just days ago.

The council voted 6-1 on Wednesday night to approve a measure that would allow the city to shed its long-held status as one of very few municipalities in the state that don't have a business tax. But in a last-minute compromise with leaders of a business coalition, city leaders agreed to reduce the rate of the business tax from 11 cents per square foot per month to 7 and a half cents per square foot and to set a $500,000 cap on the amount any business would pay, down from the $1 million cap that was in the prior proposal.

Both versions of the tax exclude all companies with less than 10,000 square feet of space.

The council agreed to scale down the tax proposal after two days of negotiations with two leading critics of the tax: the Silicon Valley Leadership Group and the Palo Alto Chamber of Commerce. Another group, NAIOP Silicon Valley, had previously participated in the anti-tax coalition but it announced earlier in the week that it is pulling out of the opposition because it doesn't have the resources to campaign against the business tax.

On Wednesday, the opposition abruptly dissolved as representatives from both groups confirmed that they will no longer fight the tax proposal. Their decision came after a Tuesday mediation session coordinated by former Mayor Larry Klein, negotiations with a council ad hoc committee composed of Mayor Pat Burt and council members Eric Filseth and Tom DuBois and continuous tweaks by city staff to the tax proposal.

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City Manager Ed Shikada said that the Tuesday mediation effort was productive but concluded without an agreement.

"That effort was quite extensive and, quite frankly I think, very illuminating to all parties in drawing out interests as well as areas of flexibility," Shikada said. "Unfortunately, the mediation effort yesterday was not successful so at the end of the day all parties left and had concluded that there was a gap that was yet to be addressed and we were prepared to report that no progress had been made."

Staff continued having conversations with business leaders on Wednesday and, after making further changes, secured the commitment of the business groups to not oppose the measure.

With this agreement at hand, the council voted Wednesday to revoke the tax resolution that it had passed on Monday, which had called for an 11 cents per square foot tax, and adopted new resolution with a lower rate, which the city is required to submit to Santa Clara County by Friday. If approved, the business tax would generate about $9.6 million annually, with the proceeds going to support affordable housing, public safety and improvements to the rail corridor.

"Our chances of success with the voters are drastically improved as a result of a compromise where we do not have opposition from the business community," Burt said. "I think this accomplishes a great deal. We didn't get everything we wanted but at this point in time we got what we needed."

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As part of the same vote, the council placed on the ballot a measure that would affirm the city's historic policy of transferring revenues from the gas utility to the general fund. The city recently halted the transfers after a lawsuit from resident Miriam Green led to a court to conclude that the transfers constituted an illegal tax and ordered the city to issue refunds.

The business coalition had previously vowed to campaign against both tax measures but after the Wednesday compromise it assured the city that it would not oppose either proposal.

Dan Kostenbauder, vice president for tax policy at the Silicon Valley Leadership Group, which represents large corporations, said his group had carefully studied the city's revised proposal and members were united in agreeing to drop their opposition. On Monday, both his group and the Chamber of Commerce were lobbying for a rate of no greater than 6 cents per square foot and were noncommittal about the possibility of their groups shifting their respective positions. But on Wednesday, they both agreed to not oppose a slightly higher rate.

"It has been a long journey but our alliance will not stand in the way of this opportunity for Palo Alto to finally have a business tax," Kostenbauder said Wednesday.

The Wednesday vote concludes what has been a tortuous journey that began more than five years ago. The council had initially considered placing the measure on the 2020 ballot but aborted that plan because of the pandemic before resuscitating it last year. But while the last-second revisions succeeded in cooling some of the passions in what had been a heated debate, they also left some of the tax supporters feeling lukewarm and deeply ambivalent about the final product.

DuBois and council member Lydia Kou both said they were disappointed by where the city ended up with the tax, which DuBois called "insufficient."

"The question council members have to ask themselves is: Is something better than nothing? Perhaps. But for the amount of effort that's needed, it's a huge disappointment to go through this effort and at the end of the day not being able to fund very much," DuBois said.

Kou took issue with the nature of negotiations, which involved the business groups but which she argued did not give enough weight to what residents wanted.

"It was mostly communications and negotiations with the coalition, when there should have been involvement with the residents as well," Kou said.

Council member Greer Stone shared their disappointment but concluded after speaking to the city's polling consultants that the tax would likely have a much higher chance of passing without an organized opposition. With surveys showing a tight split over the measure, the outcome would probably be a "jump ball" if businesses were to campaign against it, he said.

He called the Wednesday vote "one of the harder votes I'll be taking."

"I'm not happy with this, but we're working with the art of the possible," Stone said.

The only council member who opposed the measure was Greg Tanaka, a steadfast opponent of all prior attempts to tax businesses. Council member Alison Cormack, who had joined him in voting against prior attempts to place a higher business tax on the ballot, saw the Wednesday outcome as a major victory and enthusiastically supported the revised version.

"The lack of opposition is critical to our success," Cormack said. "I believe we will set this community up for a very stable and positive future."

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Gennady Sheyner
 
Gennady Sheyner covers the City Hall beat in Palo Alto as well as regional politics, with a special focus on housing and transportation. Before joining the Palo Alto Weekly/PaloAltoOnline.com in 2008, he covered breaking news and local politics for the Waterbury Republican-American, a daily newspaper in Connecticut. Read more >>

Follow Palo Alto Online and the Palo Alto Weekly on Twitter @paloaltoweekly, Facebook and on Instagram @paloaltoonline for breaking news, local events, photos, videos and more.

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After eleventh-hour deal, business tax lands on ballot

Palo Alto reaches compromise with opponents, moves ahead with revised measure

by / Palo Alto Weekly

Uploaded: Wed, Aug 10, 2022, 10:58 pm

Palo Alto voters will have a chance in November to approve a business tax, though the measure they'll be considering will be far more modest than the one that the City Council was contemplating just days ago.

The council voted 6-1 on Wednesday night to approve a measure that would allow the city to shed its long-held status as one of very few municipalities in the state that don't have a business tax. But in a last-minute compromise with leaders of a business coalition, city leaders agreed to reduce the rate of the business tax from 11 cents per square foot per month to 7 and a half cents per square foot and to set a $500,000 cap on the amount any business would pay, down from the $1 million cap that was in the prior proposal.

Both versions of the tax exclude all companies with less than 10,000 square feet of space.

The council agreed to scale down the tax proposal after two days of negotiations with two leading critics of the tax: the Silicon Valley Leadership Group and the Palo Alto Chamber of Commerce. Another group, NAIOP Silicon Valley, had previously participated in the anti-tax coalition but it announced earlier in the week that it is pulling out of the opposition because it doesn't have the resources to campaign against the business tax.

On Wednesday, the opposition abruptly dissolved as representatives from both groups confirmed that they will no longer fight the tax proposal. Their decision came after a Tuesday mediation session coordinated by former Mayor Larry Klein, negotiations with a council ad hoc committee composed of Mayor Pat Burt and council members Eric Filseth and Tom DuBois and continuous tweaks by city staff to the tax proposal.

City Manager Ed Shikada said that the Tuesday mediation effort was productive but concluded without an agreement.

"That effort was quite extensive and, quite frankly I think, very illuminating to all parties in drawing out interests as well as areas of flexibility," Shikada said. "Unfortunately, the mediation effort yesterday was not successful so at the end of the day all parties left and had concluded that there was a gap that was yet to be addressed and we were prepared to report that no progress had been made."

Staff continued having conversations with business leaders on Wednesday and, after making further changes, secured the commitment of the business groups to not oppose the measure.

With this agreement at hand, the council voted Wednesday to revoke the tax resolution that it had passed on Monday, which had called for an 11 cents per square foot tax, and adopted new resolution with a lower rate, which the city is required to submit to Santa Clara County by Friday. If approved, the business tax would generate about $9.6 million annually, with the proceeds going to support affordable housing, public safety and improvements to the rail corridor.

"Our chances of success with the voters are drastically improved as a result of a compromise where we do not have opposition from the business community," Burt said. "I think this accomplishes a great deal. We didn't get everything we wanted but at this point in time we got what we needed."

As part of the same vote, the council placed on the ballot a measure that would affirm the city's historic policy of transferring revenues from the gas utility to the general fund. The city recently halted the transfers after a lawsuit from resident Miriam Green led to a court to conclude that the transfers constituted an illegal tax and ordered the city to issue refunds.

The business coalition had previously vowed to campaign against both tax measures but after the Wednesday compromise it assured the city that it would not oppose either proposal.

Dan Kostenbauder, vice president for tax policy at the Silicon Valley Leadership Group, which represents large corporations, said his group had carefully studied the city's revised proposal and members were united in agreeing to drop their opposition. On Monday, both his group and the Chamber of Commerce were lobbying for a rate of no greater than 6 cents per square foot and were noncommittal about the possibility of their groups shifting their respective positions. But on Wednesday, they both agreed to not oppose a slightly higher rate.

"It has been a long journey but our alliance will not stand in the way of this opportunity for Palo Alto to finally have a business tax," Kostenbauder said Wednesday.

The Wednesday vote concludes what has been a tortuous journey that began more than five years ago. The council had initially considered placing the measure on the 2020 ballot but aborted that plan because of the pandemic before resuscitating it last year. But while the last-second revisions succeeded in cooling some of the passions in what had been a heated debate, they also left some of the tax supporters feeling lukewarm and deeply ambivalent about the final product.

DuBois and council member Lydia Kou both said they were disappointed by where the city ended up with the tax, which DuBois called "insufficient."

"The question council members have to ask themselves is: Is something better than nothing? Perhaps. But for the amount of effort that's needed, it's a huge disappointment to go through this effort and at the end of the day not being able to fund very much," DuBois said.

Kou took issue with the nature of negotiations, which involved the business groups but which she argued did not give enough weight to what residents wanted.

"It was mostly communications and negotiations with the coalition, when there should have been involvement with the residents as well," Kou said.

Council member Greer Stone shared their disappointment but concluded after speaking to the city's polling consultants that the tax would likely have a much higher chance of passing without an organized opposition. With surveys showing a tight split over the measure, the outcome would probably be a "jump ball" if businesses were to campaign against it, he said.

He called the Wednesday vote "one of the harder votes I'll be taking."

"I'm not happy with this, but we're working with the art of the possible," Stone said.

The only council member who opposed the measure was Greg Tanaka, a steadfast opponent of all prior attempts to tax businesses. Council member Alison Cormack, who had joined him in voting against prior attempts to place a higher business tax on the ballot, saw the Wednesday outcome as a major victory and enthusiastically supported the revised version.

"The lack of opposition is critical to our success," Cormack said. "I believe we will set this community up for a very stable and positive future."

Comments

Annette
Registered user
College Terrace
on Aug 11, 2022 at 7:58 am
Annette, College Terrace
Registered user
on Aug 11, 2022 at 7:58 am

This is more a business TAP than a business tax. I recommend watching the videos of the CC proceedings before voting. What started out as a plan for a tax that would finally have the business community contributing their fair share to the cost of maintaining the infrastructure (including public safety services) that supports this city, was whittled down, by the business heavies, into something so low they won't even bother to engage an effort to defeat it. This sums it up:

"It has been a long journey but our alliance will not stand in the way of this opportunity for Palo Alto to finally have a business tax," Kostenbauder said Wednesday.

Of course not. They had already started a campaign to defeat the tax as originally planned. That tax would have been meaningful. They deftly continued their campaign at the negotiating table, successfully shaping the potential tax into one they will hardly notice. Opportunity lost.


Mondoman
Registered user
Green Acres
on Aug 11, 2022 at 8:40 am
Mondoman, Green Acres
Registered user
on Aug 11, 2022 at 8:40 am

Perhaps the City Council is more interested in getting voter permission for their long-running sneaky siphoning of money from CPA Utilities. With this deal, the business groups won't oppose that either.

It's stuff like this that prompted many western states to introduce the initiative process a century ago. Interestingly, initiative petitions in Palo Alto (to say, impose the higher business tax) only require about 2500 signatures, with no time limit for collecting them.


peppered
Registered user
Community Center
on Aug 11, 2022 at 10:17 am
peppered, Community Center
Registered user
on Aug 11, 2022 at 10:17 am

This proposal is perfectly designed to provide yet another reason for companies to bail out of high tax California. No amount of tax is enough for these insane elected officials to indulge their pet projects. We have high income tax rates, high sales tax rates, property tax, so this is could very well be the last straw.

We already lost HP and Tesla to TX.

And anyway, many of these taxes merely result in bloated pensions and generous lifelong benefits for employees with as little as 10 years with the city.

Enough is enough. Just say NO to any more taxes.


Local Resident
Registered user
Community Center
on Aug 11, 2022 at 10:40 am
Local Resident, Community Center
Registered user
on Aug 11, 2022 at 10:40 am

Vote yes on a modest business tax on large businesses to pay for their fair share. There is no reason you, as a voter, should be paying for big businesses use of city services like fire, police and road maintenance. This tax is less than 1% of their annual rent and they pay around 6% in rent increases every year. Almost every other city in the Bay Area already has a business tax. The City Council bent over backwards to address business concerns with this tax so much so that even groups like Silicon Valley Business Group and the Chamber of Commerce are not opposing it. Without this tax, the city will have to cut your police & fire services significantly within two years. This tax also goes to protecting students via improved rail safety and to funding affordable housing and reducing homelessness.


Becky Sanders
Registered user
Ventura
on Aug 11, 2022 at 10:59 am
Becky Sanders, Ventura
Registered user
on Aug 11, 2022 at 10:59 am

I'm excited that the Chamber and Silicon Valley Leadership Group no longer oppose the tax. The original proposal was not to their taste, shall we say. So the hope of a 5000 square feet threshold to participate was pushed up to a 10,000 square foot commercial space occupancy to participate. In the interest of compromise, this is the arrangement that is working. Mom and Pops and other specific businesses are exempt, were exempt from the get-go. We need money for affordable housing, public safety and grade separation, where the funds are to be allocated. This is something that is overdue, sorely needed and a very reasonable ask of businesses who have driven so many negative impacts into town. They use and rely on city resources. Why shouldn't businesses, like the residents, participate in sharing the costs?


Consider Your Options.
Registered user
Another Palo Alto neighborhood
on Aug 11, 2022 at 11:12 am
Consider Your Options. , Another Palo Alto neighborhood
Registered user
on Aug 11, 2022 at 11:12 am

1). There was nothing "sneaky" about the UUT or how the money has been used. The amount charged has always been publicly noticed and all meetings/discussions re: any increases have been publicly noticed. The public has had ample opportunity to weigh in on use of UUT revenue collection and expenditure over the years in countless community meetings. In addition, when rates go up, it is always explained in communications to residents in our billing. How the money is spent is publicly disclosed in the city budget. I moved here two decades ago and knew about it the first year I moved here. Though I was not here for the voting process, I did read about it and I have read the original ballot language that was passed. PA Weekly has written many articles about it. If you didn't know how the money was being used, you weren't paying attention to public process at all. The money is well spent. Stop with the conspiracy language. Even judges make mistakes.

2). Businesses are paying a far lower share of overall taxes than they used to. I would have supported the previous higher (though still conservative) business tax because it would have restored some fair balance. I'm sorry that big business has so much clout that they controlled this process with threats to spend a flood of money on a campaign to squash the tax. The business leaders at the front of this who hid behind their political advocacy coalitions are a sad new breed of CEOs who are unwilling to pay their fair share to support the infrastructure and services the city must provide every work day to their tens of thousands of workers. They have behaved like bullying freeloaders on this matter. In so doing, they have lost my respect.

I'll be voting for both measures. It's ridiculous that we have to reapprove the UUT, and I wish the business tax had stayed at the previous level.


Online Name
Registered user
Embarcadero Oaks/Leland
on Aug 11, 2022 at 11:45 am
Online Name, Embarcadero Oaks/Leland
Registered user
on Aug 11, 2022 at 11:45 am

Since businesses get to negotiate the taxes THEY want to pay, residents should have the same opportunity to negotiate what taxes WE want to pay, especially what we want re CPAU.

I want accrued interest on the late payment of our settlement in the Miriam Green case, a refund on the fees paid to outside counsel by the City Attorney to oppose and stall that payment, a refund for service outage periods stemming from fallen branches and mylar balloons, compensation for spoiled food during outages and an update on undergrounding -- to name but a few.

Re the sub-headline "Palo Alto reaches compromise with opponents, moves ahead with revised measure," I think Winter's description of it as a skinny plucked chicken carcass is more accurate.

Also WHY was the public left out of this whole process by the CC?? Aren't we also stakeholders?

We too have priorities like better police protection since not a day goes by without a robbery, car break-in etc. Why the business community whose retailers also get robbed with great regularity aren't willing to pay for protection is incomprehensible and shameful.

The gloating over shifting even more of tax the burden from business to the residents via the Utility Transfer tax was absolutely shameful. Vote NO on that. After last night's meeting, I'm undecided about supporting the pathetic chicken carcass of a business.

I expected better from the mayor and more balance from this mayor and City Council after suffering so long under previous pro-business build-baby-build ones that stuck us with too many offices and thus excessive jobs-based housing targets,




mjh
Registered user
College Terrace
on Aug 11, 2022 at 12:10 pm
mjh, College Terrace
Registered user
on Aug 11, 2022 at 12:10 pm

While there has been a lot of publicity about the monthly surcharge added to our gas bills for the general fund there hasn’t been anything recently about the approximately $20 million annually transferred from utilities to the city’s general fund by padding our monthly utility bills. I would prefer that there was a line item on our bills for what is essentially a city utility tax so we know how much we are being charged over and above the utilities we use.


Online Name
Registered user
Embarcadero Oaks/Leland
on Aug 11, 2022 at 12:21 pm
Online Name, Embarcadero Oaks/Leland
Registered user
on Aug 11, 2022 at 12:21 pm

@mjh, also that they've been transferring that $20M each and every year for a long time while trying to hide the fact.

Years ago people were discussing this on NextDoor in a CPAU thread. The City Spokesman tried to respond PRIVATELY when questions were raised and wasn't pleased that people publicly posted her admission that the amount was indeed $20,000,000 -- an amount that adds up over the years.


Local Resident
Registered user
Community Center
on Aug 11, 2022 at 1:33 pm
Local Resident, Community Center
Registered user
on Aug 11, 2022 at 1:33 pm

The Utility Transfer Tax Measure on the ballot is only for gas not electricity. Thus this provides an incentive to stop burning fossil fuels and move over to the city's 100% renewable electricity for your houses needs. Note, new houses are already mandated to be 100% electric. Supporting this Utility Transfer Tax provides funds for city services that many residents benefit from, which were cut during Covid and will need to be cut again once the Covid stimulus runs out if not passed.


mjh
Registered user
College Terrace
on Aug 11, 2022 at 1:45 pm
mjh, College Terrace
Registered user
on Aug 11, 2022 at 1:45 pm

I understand the city’s Utilities were set up as a separate independent nonprofit entity from the city of Palo Alto. If memory serves, the practice of linking the Utilities to the city general fund began after the 2000 dot-combust when the city budget declined and the then council noticed utilities had a well funded contingency fund, as required.

At that time the first transfer from the city’s utility contingency fund was approximately $6 million. However, after the economy recovered the practice of siphoning off an annual “donation” from our utility bills continued, buried in the city’s annual budget. Now approximately an approximately $20 million donation on a continuing upward trajectory, funded by padding our monthly utility bills.








Online Name
Registered user
Embarcadero Oaks/Leland
on Aug 11, 2022 at 1:48 pm
Online Name, Embarcadero Oaks/Leland
Registered user
on Aug 11, 2022 at 1:48 pm

@Local Resident, understood. They're already still taking the $20M from us each year. Look at your bill and see how many taxes, surcharges, extra fees, transfer charges,
etc there are funding they funnel into the General Fund. As for funding services "that some residents use," how nice. Better than than wasting 6 years of staff time on the Casti hearings, settlements for police misconduct, appealing the Miriam Green suit, an over-staffed City Manager's office ..

@Mondoman, please expand on your idea above. A number of us on an email thread have been cheering it and would support it.


Local Resident
Registered user
Community Center
on Aug 11, 2022 at 1:54 pm
Local Resident, Community Center
Registered user
on Aug 11, 2022 at 1:54 pm

The ballot measure to continue the Utility Transfer Tax is only for the gas utility and is about $7 million per year. The $20 million per year includes electricity which is not on the ballot.


mjh
Registered user
College Terrace
on Aug 11, 2022 at 2:25 pm
mjh, College Terrace
Registered user
on Aug 11, 2022 at 2:25 pm

Yes, only the gas portion of the $20 million annual transfer from our utility bills is on the ballot.

However, if we are to pay an additional annual fee over and above the cost of our actual utility use, I would prefer this be a line item so this is transparent.

My preference would be to use this money to incentivize and encourage individuals to undertake the costly transition to reduce our carbon and water footprint. Such as electric water and house heating, insulation and other building upgrades, solar, grey water systems, replacing water hogging landscaping not just lawns, etc. Water our struggling street trees on city property whose canopy can reduce a city’s heat footprint by several degrees.



Annette
Registered user
College Terrace
on Aug 11, 2022 at 2:35 pm
Annette, College Terrace
Registered user
on Aug 11, 2022 at 2:35 pm

Maybe I am misunderstanding the cost of grade separation, affordable housing, and public safety services. IF the revenue for this tax is $9.6M and IF that is appropriated evenly for transportation, housing, and public safety services, the annual budget for each of those areas will include $3.2M from business tax revenue. Better than nothing, but just a sliver of the amount of money needed. Where will the balance come from? Taxes on business? Nope. This little tax locks in a sweet deal for the big businesses that pack a whollop, impact-wise. That leaves residents (again) to either forego certain services or pay more for them. Per an Aug. 3 article by Gennady Sheyner, grade separation is "a project that is expected to cost hundreds of millions of dollars and more than a decade to complete".

The prospect of business tax revenue for this city's critical needs should be something residents can applaud. This one missed the mark by such a wide margin that I think it reasonable for residents to be concerned about this city's financial future. And the future of public safety.


mjh
Registered user
College Terrace
on Aug 11, 2022 at 3:00 pm
mjh, College Terrace
Registered user
on Aug 11, 2022 at 3:00 pm

Hard to get the least bit excited about a tax that is so low it will make virtually no contribution to building non-profit housing, let alone grade separation necessary for office commuters. Although I hope we can fund more traffic enforcement since it’s been about 20 years since the last traffic enforcement team was let go.


Local Resident
Registered user
Community Center
on Aug 11, 2022 at 3:22 pm
Local Resident, Community Center
Registered user
on Aug 11, 2022 at 3:22 pm

Affordable housing and grade separation require the city to put in money to get matching funds (at some multiple) from the county, state and feds. Because the money is recurring every year, it will add up especially when matched by some multiple. However, to get both of these done we do need both taxes to pass so keep that in mind if you want affordable housing and/or grade separation.


Bingo
Registered user
Professorville
on Aug 11, 2022 at 3:22 pm
Bingo, Professorville
Registered user
on Aug 11, 2022 at 3:22 pm

Mondoman,
Your suggestion of an initiative is a good one. A few years ago a successful effort for a ballot initiative to cap office growth was undertaken. It took only weeks to garner a surplus of the required 3,000 signatures.

This would be another opportunity for council to listen to RESIDENTS and not SV business groups about what happens in our town. Which begs the question:
Why weren’t residents included in the first place when this was being drafted?

To settle for only $15M was a mistake. Big mistake. Council needs to understand that - yes - residents do care and are paying attention to these critical issues.


MargaretJ
Registered user
Greenmeadow
on Aug 11, 2022 at 4:12 pm
MargaretJ, Greenmeadow
Registered user
on Aug 11, 2022 at 4:12 pm

After watching them grind away at tree branches all morning I was left to wonder what "this city's critical needs" means. This is a town that could be way way way way better if it had half the budget it has, and now it wants more and more.


Annette
Registered user
College Terrace
on Aug 11, 2022 at 4:18 pm
Annette, College Terrace
Registered user
on Aug 11, 2022 at 4:18 pm

@Bingo. They didn't settle for $15M. If only; they settled for $9.6M.


Eric Filseth
Registered user
Downtown North
on Aug 11, 2022 at 4:26 pm
Eric Filseth, Downtown North
Registered user
on Aug 11, 2022 at 4:26 pm

On the Gas Fund Transfer, I agree with the Mayor’s comments on the principle that if PG+E is allowed to earn a profit they spend on their shareholders, then residents with their own utility ought to be allowed to do something analogous to spend on their community, as long as a majority agree. Palo Alto adopted such a provision in its City Charter many decades ago, for both our electricity and gas utilities, which was approved by a majority of voters.

The $20M/yr number means both transfers, and varies from year to year. The Green lawsuit was over both. The electric transfer was upheld, but part of the gas transfer, about $4M/yr, was struck down.

Some argue the whole concept is illegal; but you can't really argue the gas transfer is illegal because the courts struck it down, and then argue the electric transfer is also illegal even though the courts upheld it.

Having observed this matter for some years now, my overwhelming impression is that the legal differences are sensitive to specific circumstances, the exact details of how the statutes are written, and any changes over time in the background of state laws, of which there have been some.

The broader issue of “how much tax vs how much services" to me seems like a Values issue that not everybody agrees on, which is why it rightly goes to voters. But even voter intent has to work legally. The proposed GFT ballot measure updates the legal language from the City Charter to conform with modern conditions. Does a majority of voters still have the intent? Polls suggest so, but only a ballot box will tell for sure.

The $4M is paid about 50-50 by residents and businesses.


Online Name
Registered user
Embarcadero Oaks/Leland
on Aug 11, 2022 at 6:26 pm
Online Name, Embarcadero Oaks/Leland
Registered user
on Aug 11, 2022 at 6:26 pm

@Bingo, bingo for supporting Mondoman and asking why residents weren't included in the tax discussions.

Eric, why should the city be allowed to profit from us? It's not a corporation. We --the investor/taxpayers -- don't get shares, dividends or benefits from growth. We don't get shareholder meeting to negotiate our tax acceptable to us or how they'll be spent to reflect our priorities such as controlling crime -a no-brainer given the daily crime reports. Instead, we get bogus polls even this pollster admitted were flawed.

So when do We get OUR good faith negotiation sessions?

As Bingo said, "Council needs to understand that - yes - residents do care and are paying attention to these critical issues."

The city -- unlike for-profit corporations -- doesn't provide cost-effective efficiently delivered services customers want, words absent city's mission statements, project plans, reports from consultants, task forces...

Isn't the CC supposed to ensue the well-compensated city staff provides such goods and services efficiently and cost-effectively.

"The $4M is paid about 50-50 by residents and businesses."

What about the annual $20,000,000? More critically, what about ALL city taxes and fees? We know Business's share keeps shrinking and ours keeps rising -- as Former Mayor Schmidt keeps telling CC each year.


JC
Registered user
Crescent Park
on Aug 11, 2022 at 6:33 pm
JC, Crescent Park
Registered user
on Aug 11, 2022 at 6:33 pm

The idea that business will pay this tax needs more thought. If we pass this tax business will determine the cost and increase their prices to cover the tax.....The result is WE will pay the tax.....
The idea that. business should pay "their fair share" is argued without determining what "their fair share" is. Politicians use the "fair share" argument all the time and I find that notion nonsensical. Taxes are an expense to business and they will determine what is their "fair share" and will move out of town if they find expenses too much compared to other places to operate.
If you decide to vote for this tax just remember that YOU will pay the tax not the business.


Local Resident
Registered user
Community Center
on Aug 11, 2022 at 7:19 pm
Local Resident, Community Center
Registered user
on Aug 11, 2022 at 7:19 pm

In terms of "Fair Share" there are 100,000 employees who work in Palo Alto and 68,000 residents yet businesses pay at most 35% of the property taxes and the residents pay 65%. This tax represents about one percent of the rent businesses pay vs. 6% average annual rent increase. Any business under 10,000 square feet is exempt as are grocery stores, non-profits and financial institutions. There is also a cap of $500,000 for the largest companies (who make many billions a year). The threat that large businesses will move out because they are taxed only works on folks who don't understand the facts.


mjh
Registered user
College Terrace
on Aug 11, 2022 at 7:20 pm
mjh, College Terrace
Registered user
on Aug 11, 2022 at 7:20 pm

When businesses renew their office leases of commercial space over 10,000 square feet (when the business tax kicks in) the most likely scenario is that the cost of the business tax will be taken into account in the price of the new lease. While owners of Palo Alto commercial space do charge a surcharge for a Palo Alto location, they still have to be competitive with the price of commercial space in other local cities. All of which already have a business tax.


Eric Filseth
Registered user
Downtown North
on Aug 11, 2022 at 7:26 pm
Eric Filseth, Downtown North
Registered user
on Aug 11, 2022 at 7:26 pm

I don’t think “the city profiting off us” is really the perspective that makes the most sense here.

The City doesn’t make a profit; we as a community tax ourselves to hire services - police, fire, 911 emergency, libraries, street sweeping etc. Doing it for 68,500 people means tons of practical constraints, and we also have to be able tell the difference between what’s legal and protects everybody's civil rights, and what’s a community preference. For better and worse, City staff who do the work, overseen by elected part-time city councils, are how we organize this. It’s not a perfect system, but none is.

I’ve seen no evidence the polling we’ve done is bogus. It’s never perfect, but I have a bit of experience with market research, and it looks to me like it’s been reasonably rigorous for what it is.


Eric Filseth
Registered user
Downtown North
on Aug 11, 2022 at 7:28 pm
Eric Filseth, Downtown North
Registered user
on Aug 11, 2022 at 7:28 pm

The numbers I have are that last year businesses paid 28% of property tax in Palo Alto and residents paid 72%.


Online Name
Registered user
Embarcadero Oaks/Leland
on Aug 11, 2022 at 7:30 pm
Online Name, Embarcadero Oaks/Leland
Registered user
on Aug 11, 2022 at 7:30 pm

"On the Gas Fund Transfer, I agree with the Mayor’s comments on the principle that if PG+E is allowed to earn a profit they spend on their shareholders, then residents with their own utility ought to be allowed to do something analogous to spend on their community, as long as a majority agree. Palo Alto adopted such a provision in its City Charter many decades ago, for both our electricity and gas utilities, which was approved by a majority of voters."

Eric, just following through on your point about the city earning a profit from us and noting the difference between a city and a for-profit company.

Re the polling errors, do a search. I'm on the way out but it was in one of the 2 papers. He clarified his errors.


mjh
Registered user
College Terrace
on Aug 11, 2022 at 7:37 pm
mjh, College Terrace
Registered user
on Aug 11, 2022 at 7:37 pm

In the mid 1970’s Palo Alto’s property tax revenue was split approximately 50-50 between owners of commercial properties and residential properties. However, since then, owing to the way California’s property tax rules were written, year on year the share of Palo Alto’s property tax revenue from commercial is on a continuing downward trajectory.


resident3
Registered user
Another Palo Alto neighborhood
on Aug 11, 2022 at 9:11 pm
resident3, Another Palo Alto neighborhood
Registered user
on Aug 11, 2022 at 9:11 pm

"Our chances of success with the voters are drastically improved as a result of a compromise where we do not have opposition from the business community," Burt said."

Actually, this outcome shows how little anything City government has with "the voters" to begin with. That it all boiled down to fear from a survey and the dull story about what he said, and he said and then they said during last ditch begging. The Palo Alto Daily Post had one visual on the front page today that said it all. That we have poor negotiators.

@Eric FIlseth,

"I’ve seen no evidence the polling we’ve done is bogus. It’s never perfect, but I have a bit of experience with market research, and it looks to me like it’s been reasonably rigorous for what it is."

Only the dumbest business would base a massive decision on a survey. And while you make the City Manager our "CEO," the City is not supposed to be a business. I realize that expectations of government are really low, so "CEO" must sound a step up but then what is the point of all of you 7 elected people taking turns at being Mayor.

Nobody is accountable here, not even the "CEO."


Jeremy Erman
Registered user
Midtown
on Aug 12, 2022 at 3:11 am
Jeremy Erman, Midtown
Registered user
on Aug 12, 2022 at 3:11 am

Ordinary citizens get 1-3 minutes to speak to an issue at a City Council meeting and are usually told that council and staff cannot legally respond to their comments or discuss anything with them. Occasionally council or staff may respond to citizen e-mails, but never in a group or to decide anything, since that would be a Brown Act violation.

Business lobbyists, on the other hand, get to privately sit down with council and staff and "negotiate" with them until the council makes a decision they like.

Is anyone at City Hall willing to repudiate this double-standard?


Annette
Registered user
College Terrace
on Aug 12, 2022 at 8:02 am
Annette, College Terrace
Registered user
on Aug 12, 2022 at 8:02 am

resident3's observation that "Nobody is accountable here, not even the "CEO" is an understatement. Council Members are accountable to voters IF they run for reelection. The City Manager (CEO in this instance) is supposed to be accountable to the Council, but in practice he is accountable to no one. I think Palo Alto would be better served by having an elected Mayor who ran the city instead of the city manager model that we have now.

As for how this tax was negotiated, it seems wrong on every level. The business heavies get to dictate terms? A business-friendly former mayor serves as mediator? The City Manager somehow inserts himself in place of the AdHoc committee? The only party that performed successfully here is the Business Alliance and they sure as heck didn't have the best interests of the residents of Palo Alto in mind. Looking at the outcome, no one did. The AdHoc team may have started out with our best interests in mind, but the Business Alliance eroded that.

Mondoman and Bingo mentioned an initiative. It's a shame that even has to be mentioned, but it might be the best route at this point. Or maybe a referendum on the tax if it is enacted. One way or another, this tax needs to at least be reasonable so that big business contributes adequately to the infrastructure and essential public services that support it.


resident3
Registered user
Another Palo Alto neighborhood
on Aug 12, 2022 at 8:20 am
resident3, Another Palo Alto neighborhood
Registered user
on Aug 12, 2022 at 8:20 am

Jeremy Erman,

"Business lobbyists, on the other hand, get to privately sit down with council and staff and "negotiate" with them until the council makes a decision they like.

Is anyone at City Hall willing to repudiate this double-standard?"

Very unlikely that repudiation will come from the inside. City Hall and Council (once elected) don't need to make a case to voters for anything they do, they just have to communicate and negotiate with each other. At least this negotiation was public but all the other stuff we can find out later and probably not because with the exception of the Post, we don't exactly have a watchdog press.

People who run for Council often get elected because they will be able to get along- that lessens time trying to negotiate with each other but then we have to live with whatever that one front does. Reducing the size of Council from 9 to 7 may have helped but it probably all depends on how the City Manager manages all this.

A normal "CEO" wouldn't have 7 people to negotiate with about what to focus city resources on. The $100 million fiber project doesn't come from a groundswell of "voters" asking for it. It just received a lot of attention and time from this last Council negotiations. Voters are not a priority, it's how smart they think voters will think they are.

Ironically, voters are not considered very smart. That a case could not be brought to voters to have a business tax without businesses telling us what to do.



resident3
Registered user
Another Palo Alto neighborhood
on Aug 12, 2022 at 10:07 am
resident3, Another Palo Alto neighborhood
Registered user
on Aug 12, 2022 at 10:07 am

Add one more thing,

The City Attorney has no obligations to "the voters."

The City Attorney serves to protect the Council that is not really accountable.


Online Name
Registered user
Embarcadero Oaks/Leland
on Aug 12, 2022 at 10:33 am
Online Name, Embarcadero Oaks/Leland
Registered user
on Aug 12, 2022 at 10:33 am

"Is anyone at City Hall willing to repudiate this double-standard?"

And are they and the Mayor willing to discuss this double-standard?

Interviews perhaps? Comments on the comments here? Substantive responses to the letters sent to the Mayor and City Council?

Scheduling the "shareholder" negotiation sessions?

PS: Speaking of double standards, pay attention to the League of Women Voters' campaign to limit campaign contributions only from people, NOT from businesses, lobbyists and other organizations.


Consider Your Options.
Registered user
Another Palo Alto neighborhood
on Aug 12, 2022 at 11:32 am
Consider Your Options. , Another Palo Alto neighborhood
Registered user
on Aug 12, 2022 at 11:32 am

The city has been holding public meetings on this subject for MONTHS. These meetings were publicly noticed as they always are in the newspaper and on the city web site. To say that citizens have been "excluded" from the process is not true.

This is how democracy works. Watch the publicly posted agendas and SHOW UP. City Council and Finance Committee meetings are now hybrid with an option to participate on Zoom, so you don't even have to leave the comfort of your home to attend. Democracy is not a spectator sport. Citizens are supposed to be active participants between elections.

It is the job of government to notice and hold public meetings. It is the job of citizens to show up and participate. Government did its job. Did you do yours?Kvetching on Palo Alto Online is not how you influence decision-making.

Nonetheless, it is appalling that these companies threatened to throw money at defeating the measure and seem to feel no responsibility for paying taxes to help pay for the infrastructure that they and their employees need. Our population more than doubles every work day. Our city provides and maintains the infrastructure all of those workers use. They should pay their fair share. They used to pay a greater share. We could make some progress toward fixing that disparity with this measure. I wish more citizens had shown up to these meetings to make it crystal clear that their behavior will give them a black eye.

I plan to vote for both measures. I read the budget annually. We need this revenue. If the UUT measure fails, plan to live massive cuts to services and needed capital projects--which I am sure many will complain about online.


Cherjo
Registered user
Midtown
on Aug 12, 2022 at 12:23 pm
Cherjo, Midtown
Registered user
on Aug 12, 2022 at 12:23 pm

Watching 5 decades of repeated poor choices and huge mistakes made by our CC’s over the years who feel they are ”the smartest people on the Peninsula”… I just can’t take it anymore. I have been embarrassed to tell people where I live for over a decade and tell everybody I live in Sunnyvale now, because the response isn’t pleasant when I say I live in Palo Alto. There is nothing to be proud of here anymore. This town is in serious trouble and faces huge challenges created by our many CC’s who now are in need of extreme luck fixing all that has been neglected, ruined, and poorly planned. I am not hanging around to watch this bad drama play itself out…again. Nothing changes for the better here. Ever. Can’t wait for my moving truck to arrive. I will accept all your “good riddences” with the “best of luck” to you.


resident3
Registered user
Another Palo Alto neighborhood
on Aug 12, 2022 at 12:54 pm
resident3, Another Palo Alto neighborhood
Registered user
on Aug 12, 2022 at 12:54 pm

@Consider your options,

"The city has been holding public meetings on this subject for MONTHS. These meetings were publicly noticed as they always are in the newspaper and on the city web site. To say that citizens have been "excluded" from the process is not true.

This is how democracy works. Watch the publicly posted agendas and SHOW UP.....Democracy is not a spectator sport. Citizens are supposed to be active participants between elections. "

The activity between elections is actually a spectator sport in Palo Alto.

Regular people get 3 minutes to speak; the rest is an obligation to hear Council members and staff talk with each other, which is not exactly inviting to "voters."


Online Name
Registered user
Embarcadero Oaks/Leland
on Aug 12, 2022 at 12:57 pm
Online Name, Embarcadero Oaks/Leland
Registered user
on Aug 12, 2022 at 12:57 pm

@Consider Your Options, watching CC meetings and listening to 2-3 minutes per person for public comment isn't "public involvement" because CC doesn't respond to the points raised or answer any of the questions, including those questioning the legality of actions being taken even when raised by informed local lawyers like Bill Ross.

Yes, people can donate their time to other speakers so CC can hear one person comment in-depth on issues for maybe 8-10 minutes total but there's still no reaction from CC to what's been said and presented.

Many are involved enough reading about issues and watching the meetings while doing o real-time email commentary. They're commenting later here and elsewhere.

Letting people vent for a few minutes in public comment is more a placating pat on the head than real "public involvement." If a tree falls in the forest and no one's listening does it matter? In this case, clearly it doesn't.


mjh
Registered user
College Terrace
on Aug 12, 2022 at 1:46 pm
mjh, College Terrace
Registered user
on Aug 12, 2022 at 1:46 pm

I would not categorize this process as, “This is how democracy is supposed to work.”

Hours before the deadline the city manager swoops in and convenes a last ditch private meeting with business representatives to renegotiate and rewrite the terms of the business tax. While usually less blatant, what a clear demonstration of the influence of power and money in city hall.

A fait accompli to undo the huge amount of work, hours, and ultimate recommendations of the council’s ad hoc committee. An ad hoc committee composed of both council and citizen representatives who sacrificed their time and energy to come up with a fair business tax.

As well as by those council members and citizens who have been working for years to get a reasonable business tax on the ballot, which a less interested and connected casual observer would be unaware of. Gone in a puff of smoke.

In addition, anyone familiar with Larry Klein when he was on the council, the phrase “fox in the henhouse” might come to mind.


resident3
Registered user
Another Palo Alto neighborhood
on Aug 12, 2022 at 3:32 pm
resident3, Another Palo Alto neighborhood
Registered user
on Aug 12, 2022 at 3:32 pm

@mjh,

"In addition, anyone familiar with Larry Klein when he was on the council, the phrase “fox in the henhouse” might come to mind."

It's actually fitting. That after a tenure of fighting for business interests and never getting even close to taxing them, Larry Klein was invited to mediate.

Then, after the "negotiation" was down below 10 million, from the higher range of 45 million, they split the difference, was there applause? I would have voted for both tax measures, gladly, but giving the City money when it is spent by a consortium of people who are not accountable gives me more than pause. I feel like the poster who says he lives in Sunnyvale.


Gale Johnson
Registered user
Adobe-Meadow
on Aug 12, 2022 at 5:49 pm
Gale Johnson, Adobe-Meadow
Registered user
on Aug 12, 2022 at 5:49 pm

I predicted this but didn't think it would be the result of a negotiated deal to allow it to have a chance of passing in November. I thank all the CC members who worked so hard to get an equitable tax passed. In the end they accepted a compromise rate that made them look like losers. No, you are not losers, but the residents of Palo Alto are the real losers. CC might have caved in early...but Greer Stone did his homework and made the effort of checking with pollsters to find the most likely rate that would get approved by voters in November. Of course the well funded power groups got their way! I used to think serving on the Palo Alto Chamber of Commerce was a respectable and honorable position and that it would serve us citizens. I surely got that wrong.

I think I might have said "Screw the pollsters!". Didn't they get it wrong in 2016? Their fall back position is always the 5% margin of error. How convenient!

We shouldn't feel any comfort or relief if it passes. Divided three ways, the amount available for each area of need will be a drop in the bucket to satisfy that need. Get ready residents of Palo Alto, for more taxes. Big businesses, relax, you have nothing to worry about. The residents of Palo Alto are taking care of you!


Annette
Registered user
College Terrace
on Aug 12, 2022 at 6:26 pm
Annette, College Terrace
Registered user
on Aug 12, 2022 at 6:26 pm

Which is better: 1) defeating this ballot measure so that we aren’t locked into a tax that works for the business heavies, protecting them for decades from contributing as they should so that we can try again or 2) taking our lumps (again) by accepting this and continuing to (essentially) subsidize the big businesses that call Palo Alto home (and crow about it)? What an absurd situation.


Online Name
Registered user
Embarcadero Oaks/Leland
on Aug 12, 2022 at 8:49 pm
Online Name, Embarcadero Oaks/Leland
Registered user
on Aug 12, 2022 at 8:49 pm

Re affordable housing and the business community's willingness to pay a pitiful $3.5M toward affordable housing, read today's New York Times article entitled:

The Summer of NIMBY in Silicon Valley’s Poshest Town

Moguls and investors from the tech industry, which endorses housing relief, banded together to object to a plan for multifamily homes near their estates in Atherton, Calif. Web Link

The article names the big names who've been lobbying so strongly for housing for THEIR workers and funding the YIMBY's while playing NIMBY in their own backyards.

"The companies that made Atherton’s residents rich have donated huge sums to nonprofits to offset their impact on the local economy, including driving housing costs up. Some of the letter writers have even sat on the boards of charities aimed at addressing the region’s poverty and housing problems."

" One technology executive suggested in his letter that Atherton try counting all the pool houses. Others spoke directly about their home values. Mr. Andreessen, the venture capitalist, and his wife, Laura Arrillaga-Andreessen, a scion of the real estate developer John Arrillaga, warned in a letter in June that more than one residence on a single acre of land “will MASSIVELY decrease our home values, the quality of life of ourselves and our neighbors and IMMENSELY increase the noise pollution and traffic.” The couple signed the letter with their address and an apparent reference to four properties they own on Atherton’s Tuscaloosa Avenue."

How huge were their contributions?

"Many of the largest tech companies have donated money toward addressing the Bay Area’s housing crisis in recent years. Meta, the company formerly known as Facebook, where Mr. Andreessen is a member of the board of directors, has committed $1 billion toward the problem. Google pledged $1 billion. Apple topped them both with a $2.5 billion pledge."

Got hypocrisy?


JH
Registered user
Another Palo Alto neighborhood
on Aug 15, 2022 at 12:34 pm
JH, Another Palo Alto neighborhood
Registered user
on Aug 15, 2022 at 12:34 pm

The property tax structure in the State of California was modified as a result of Proposition 13 back in 1978. One of the goals of Proposition 13 was strengthening local neighborhoods through stability and continuity (people would stay in their houses longer. The tenure of property owners did increase after the passage of Proposition 13.. The Proposition was confirmed (as valid) by the US Supreme Court in 1992. A large benefit to the passage of Proposition 13 was that property owners faced lower property taxes in the years ahead. A reality of Proposition 13 is that local governments that rely on property tax revenues would likely need to be mindful (in their future consideration of expenditures) of lower property tax revenues. In other words, local governments likely needed to curtail spending (i.e. live within their means). One can argue that the citizens of California not only endorsed the proposition back in 1978 but also endorsed ramifications of Proposition 13 (including a shifting between business and residential as to where revenues are generated).

Like it or not, Proposition 13 is the law of the California land and its leaders (including City of Palo Alto) and citizens should respect it or participate in a statewide effort to change state law.




Online Name
Registered user
Embarcadero Oaks/Leland
on Aug 15, 2022 at 1:03 pm
Online Name, Embarcadero Oaks/Leland
Registered user
on Aug 15, 2022 at 1:03 pm

@jh, thanks. It also should be said that while the pro-density forces love to blame residential property owners for their woes they rarely mention the commercial property owners, businesses that "live" in the sane place much longer than homeowners who die or move much more often. Thus businesses keep paying a declining share of property taxes than residents.


mjh
Registered user
College Terrace
on Aug 15, 2022 at 1:26 pm
mjh, College Terrace
Registered user
on Aug 15, 2022 at 1:26 pm

Not only does commercial property seldom change hands, Prop 13 included sweetheart deals for commercial property owners to allow the transfer of ownership of commercial properties to be structured in a way that does not trigger a new property tax assessment. In other words, while the cost of any "improvements" to a commercial property are added to the are property tax base, the land itself still retains the 1970's property tax rate plus 2% added per year.

Which is why during the last fifty years Palo Alto's commercial property owners have gone from contributing approximately 50% of the property tax revenue to approximately 25% today, on a continuing downward trajectory.


Consider Your Options.
Registered user
Another Palo Alto neighborhood
on Aug 15, 2022 at 2:09 pm
Consider Your Options. , Another Palo Alto neighborhood
Registered user
on Aug 15, 2022 at 2:09 pm

That's right, MJH. Corporations are the biggest beneficiaries of Prop 13. There are many ways they might have protected the ability of people to stay in their homes longer that would not have reduced corporate tax contributions so much. But corporations helped write the measure, their money flowed into the Prop 13 campaign, and residents fell for it. It's time we fixed the disparity created by Prop 13. I'm voting for the business tax. I wish the higher tax were on the ballot so I could vote for that.


mjh
Registered user
College Terrace
on Aug 15, 2022 at 2:36 pm
mjh, College Terrace
Registered user
on Aug 15, 2022 at 2:36 pm

The business community dictated the terms of the proposed Palo Alto business tax. So even those who might have originally been opposed or doubtful have no reason not to support and vote for the Palo Alto business tax which will be on the ballot. Most importantly for retail and other smaller businesses, commercial enterprises under 10,000 sq ft. are exempted.


Online Name
Registered user
Embarcadero Oaks/Leland
on Aug 15, 2022 at 3:30 pm
Online Name, Embarcadero Oaks/Leland
Registered user
on Aug 15, 2022 at 3:30 pm

@mjh, indeed they did dictate the terms of the proposed business tax during several special meetings with CC while residents were denies the same opportunity. It's worth noting City Manager Ed Shikada serves on the board of Silicon Valley Leadership group, the lead negotiator on the business side and one to which the Chamber of Commerce kept deferring before its spokesperson would give opinions.

[Moderator's Note: Shikada is on the board of Joint Venture Silicon Valley, not of the Silicon Valley Leadership Group, as this poster states.]

If the revenues from the proposed tax get allocated equally, PA "affordable" housing would get less than $4,000,000 while SVLG's member companies have spent Billions od dollars lobbying for increased density -- Apple $2,500,000,000, Google, $1,000,000,000, Meta $1,000,000,000 -- and claiming more a few Million in taxes is too onerous for them.

Again, who's representing us? Still waiting for some answers from the City Council and City Manager?


mjh
Registered user
College Terrace
on Aug 15, 2022 at 3:34 pm
mjh, College Terrace
Registered user
on Aug 15, 2022 at 3:34 pm

That Ed Shikada serves on the board of [Joint Venture Silicon Valley] begs the question as to whose interests he is primarily serving? The city of Palo Alto or the corporate members of the Silicon Valley Leadership group? I think the answer has become even more obvious than it was before. Perhaps in this case it wasn't Larry Klein who was the fox in the henhouse. It was our city manager, Ed Shikada.

Moderator's Note: Shikada is on the board of Joint Venture Silicon Valley, not of the Silicon Valley Leadership Group, as this poster states.


Online Name
Registered user
Embarcadero Oaks/Leland
on Aug 15, 2022 at 3:58 pm
Online Name, Embarcadero Oaks/Leland
Registered user
on Aug 15, 2022 at 3:58 pm

Maybe there were several foxes in the henhouse given the "scrawny plucked chicken" carcass of a business tax we were left with, to paraphrase Winter's apt description.


Me 2
Registered user
Old Palo Alto
on Aug 15, 2022 at 6:29 pm
Me 2, Old Palo Alto
Registered user
on Aug 15, 2022 at 6:29 pm

There's no such thing as a "business tax." Taxes to businesses are just another expense, like labor, rent, and utilities. Costs elevate enough, they get passed to their customers.

All taxes are paid by the consumer in the end.


resident3
Registered user
Another Palo Alto neighborhood
on Aug 15, 2022 at 7:56 pm
resident3, Another Palo Alto neighborhood
Registered user
on Aug 15, 2022 at 7:56 pm

@Me 2,

What businesses are you thinking of that would pass off their costs? Most of the retail businesses that your comment applies to were exempt from the “business tax.”

If businesses can’t share any burden for being in the community, doing charity for them doesn’t help and ends up costing everyone more.

Old chamber of commerce talking points get really old when they have enough money to lobby City Hall with no shame.


Me 2
Registered user
Old Palo Alto
on Aug 15, 2022 at 8:20 pm
Me 2, Old Palo Alto
Registered user
on Aug 15, 2022 at 8:20 pm

"What businesses are you thinking of that would pass off their costs? "

All businesses pass along their costs. You think they run a charity or something?


resident3
Registered user
Another Palo Alto neighborhood
on Aug 15, 2022 at 8:39 pm
resident3, Another Palo Alto neighborhood
Registered user
on Aug 15, 2022 at 8:39 pm

@ Me 2,

Right, Palo Alto is like a business too, and can’t afford servicing all the businesses for free.


Me 2
Registered user
Old Palo Alto
on Aug 15, 2022 at 10:03 pm
Me 2, Old Palo Alto
Registered user
on Aug 15, 2022 at 10:03 pm

"Right, Palo Alto is like a business too, and can’t afford servicing all the businesses for free."

Who's servicing businesses for free? They pay plenty of taxes. To pretend they don't pay taxes is to willfully ignorant of the costs of running a business.

(and yes, those taxes, increased minimum wage mandates, etc. are all passed to where you end up paying for it in the end)

It's like pretending that developers eat the cost of BMRs. No they don't - they pass those costs to market rate units. That's right. BMRs are contributing to the inflated rental and property costs for everyone else.

Like economists like to say: there's no free lunch.


Online Name
Registered user
Embarcadero Oaks/Leland
on Aug 15, 2022 at 11:16 pm
Online Name, Embarcadero Oaks/Leland
Registered user
on Aug 15, 2022 at 11:16 pm

"Who's servicing businesses for free? They pay plenty of taxes. To pretend they don't pay taxes is to willfully ignorant of the costs of running a business."

Presumably they're paying federal and state taxes in the state where they're based / incorporated; the question is what are they paying here in Palo Alto where the residents keep bearing an increasing share of the local tax burden.

Businesses that sell things here -- like car dealers -- pay sales tax. We pay the police who protect their businesses, especially retail businesses.


Me 2
Registered user
Old Palo Alto
on Aug 16, 2022 at 10:58 am
Me 2, Old Palo Alto
Registered user
on Aug 16, 2022 at 10:58 am

Cities get around 12 percent of property tax revenue -- Web Link

If a company does a Triple Net lease, those companies are responsible for the property tax of what they lease. Even if they don't do a Triple Net, presumably the owner of the property ensures that the leasing terms cover the property tax costs -- remember how businesses pass their costs to their customers?

So, yes, Palo Alto gets tax revenue from these businesses already. In fact, the reason why there's a disproportionate amount of commercial development vs. residential development in California towns is because of Prop 13 - revenue from residential properties (especially from long term owners) has been going down relative to other sources of revenue.


Online Name
Registered user
Embarcadero Oaks/Leland
on Aug 16, 2022 at 11:45 am
Online Name, Embarcadero Oaks/Leland
Registered user
on Aug 16, 2022 at 11:45 am

Everyone pays some property tax.


Part of the point is that the property tax paid by businesses has barely budged from many many many decades ago when they bought the property, hence their share of taxes paid keeps slipping while residents' share keeps rising and PA keeps getting more revenue from us. Their low taxes haven't kept them from raising rents dramatically,


Me 2
Registered user
Old Palo Alto
on Aug 16, 2022 at 7:35 pm
Me 2, Old Palo Alto
Registered user
on Aug 16, 2022 at 7:35 pm

"Part of the point is that the property tax paid by businesses has barely budged from many many many decades ago"

By your same logic, we need to institute a Residents Tax for homeowners who have owned their house or condo many many decades and have had their property tax capped by Prop 13.

Not a bad idea. I'm tired of subsidizing the government services of my neighbors who have owned their houses since the 1980s.


resident3
Registered user
Another Palo Alto neighborhood
on Aug 17, 2022 at 8:00 am
resident3, Another Palo Alto neighborhood
Registered user
on Aug 17, 2022 at 8:00 am

@Me 2,

“Not a bad idea. I'm tired of subsidizing the government services of my neighbors who have owned their houses since the 1980s.”

And that’s exactly where we are, whichever side you’re on..the end result is that there is no “extra money” from anyone beyond “costs” as you say.

That means the city can’t “invest” in anything or “spend” beyond its means.


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