As the COVID-19 pandemic continues to batter the local economy, the Palo Alto City Council is preparing for a fresh round of budget cuts in the coming months to account for a sharp drop in sales and hotel tax revenues.
The council is expecting to see a budget shortfall of nearly $7 million in fiscal year 2022, which begins on July 1. The estimate is based on an admittedly uncertain assumption by city staff that the economic recovery will proceed at a moderate pace over the next few years.
In its first major discussion of the city's budget, the council agreed on Monday night to adopt this "moderate" scenario for planning purposes and to take a fresh look at the city's list of infrastructure projects to see which can be deferred or scrapped.
By a 6-1 vote, with council member Greg Tanaka dissenting, the council adopted the economic forecast from the Administrative Service Department, which assumes a $6.8 million shortfall in 2022.The scenario estimates that the city will see about $30 million in sales tax revenues and $10 million in transient occupancy tax revenues in 2022. That would be up from the current year, in which the city is projecting $25 million and $4.8 million in these two categories, respectively.
While the council didn't discuss specific projects that would be deferred, it directed staff to return with some options for dropping or deferring capital expenditures.
Levi's Stadium opens as vaccination site
The largest COVID-19 mass vaccination center in the state opened Tuesday at Levi's Stadium in Santa Clara, and Gov. Gavin Newsom and local officials took to the field to celebrate the kickoff.
The vaccination site, which opened for appointments at noon Tuesday, currently has the capacity to vaccinate 5,000 people per day, with plans to increase capacity to 15,000 people per day.
The stadium is only open to county residents or health care workers who work in the county. Currently, residents 65 years and older in addition to health care workers are eligible for the vaccine.
County Supervisor Susan Ellenberg, who attended the opening, said the site will help get residents across the county get vaccinated quicker and ensure more equitable access to the vaccine.
The Santa Clara Valley Transportation Authority as of Monday started providing front-door services to the stadium and suspended fare collection on all buses and light-rail vehicles in the system.
So far, the county's health system has provided more than 113,000 first doses and has more than 40,000 vaccine appointments scheduled in the week ahead.
—Bay City News Service
Town & Country wants medical offices
Even before the COVID-19 pandemic began to shut down local businesses last March, Town & Country Village was staring into a murky future. With online shopping on a steady rise, the shopping center's boutique shops have taken a hit and the shopping center's retail vacancy rate had risen from 1.4% in 2018 to 8.2% in 2019, according to Jim Ellis, whose company, Ellis Partners, owns the mall. The economic shutdown that began in March has since forced many retailers and restaurants to shut down. Mayfield Bakery & Café, GNC, Patrick James, Sweaty Betty, SpaceNK and Ella are among the businesses that have shuttered during the pandemic.
Today, the vacancy rate is at about 21% and is expected to rise, Ellis said.
To address this trend, Ellis Partners is proposing a change that could permanently transform the popular shopping center: converting some of the retail spaces into medical offices. Last December, it requested that the city allow up to 20% of its ground-floor retail space to become medical offices, a use that is currently prohibited by the zoning code. It also requested that the city allow up to 30% of the shopping center's total space to be used for medical offices.
On Wednesday, the Planning Commission supported a zone change that would provide some flexibility for Town & Country, though not as much as the mall owners had hoped for. By a 3-2 vote, with commissioners Ed Lauing and Doria Summa dissenting, the commission recommended allowing up to 15% of the ground-floor retail area to switch to medical offices and specified that no more than 25.8% of total mall space can be used for office space.
If the council adopts the commission's recommendation, Town & Country would be able to lease space to medical practices such as clinics, dental offices and acupuncture specialists, among others.