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20,000 businesses in Palo Alto — or 3,000? Consultant didn't find the other 17,000

Original post made on Jul 29, 2019

Despite vowing to reform its beleaguered business-registry program and hiring a consultant to lead the effort last year, Palo Alto has little to show for its efforts, according to a new review by the Office of the City Auditor.

Read the full story here Web Link posted Monday, July 29, 2019, 4:58 PM

Comments (28)

Posted by Dendromecon
a resident of Ventura
on Jul 29, 2019 at 5:56 pm

Dendromecon is a registered user.

Wouldn't the Palo Alto Utilities Department have a list of non-residential customers who have electric accounts? Their list might not capture all of the sub-tenants but it might be more accurate than the consultant's list.

Posted by margaret heath
a resident of Evergreen Park
on Jul 29, 2019 at 9:18 pm

margaret heath is a registered user.

When the auditor presented her report to the Council's Policy and Services meeting last September, which I attended, our then city manager, Mr. Keene, revealed why Palo Alto's Business Registry has had such a slow start and, after four years, still so incomplete that the data was completely unreliable. Mr. Keene didn't want it. I was quite surprised by his vigorous and quite lengthy argument against having a Business Registry. Among other things Mr. Keene stated that not only had no one ever asked him for this data, he himself had never needed this information during his entire time as city manager. Nor had he needed such data in any of his seven prior city government positions. He also noted that some might be disappointed with the data and how it might be used.

Mr. Keene's recommendation to the Committee was to take the concept back to the Council to discuss if and why they might want a Business Registry, how and why it might be used, and who would be permitted access to the data. In other words, go back to the beginning. Council member Adrian Fine, also in attendance, voiced similar concerns as to the value of having the Business Registry and who and how it would be used.

Mr. Keene concluded his arguments by stating that he and his staff had the expertise and competence to design an efficient Business Registry. It could have been up and running within a year and producing the data the Council wanted if they had asked him to do so. If Council wanted a Business Registry they should come back and tell him which other local city has a successful one and he would take a look at it.

Posted by Resident
a resident of Another Palo Alto neighborhood
on Jul 30, 2019 at 10:18 am

So is this incompetence or deliberate subterfuge?

I think either is possible and par for the course in Palo Alto council mismanagement.

Posted by Ray
a resident of Professorville
on Jul 30, 2019 at 11:21 am

Offhand, it appears that the Registry needs some basic work that has never been done. The purpose of it sounds fuzzy . . . a plan to collect fair taxes? Or a plan to help the community with traffic and parking issues? Or a plan to learn what the businesses do? Who works here? What's the impact on City assets? I admit that I don't know what the purpose is and suspect it is an example of the old saw about a duckbilled platypus being an animal assembled by committee, but if I were in charge of an attempt to make it work (and be thankful that I am not, I agree with you) I'd want to start with a definition of what a "business" is. Then have an objective the City wants to achieve and how a "business" can help. Finally, go about educating and working with known businesses to achieve the goal. (Don't bother telling me it is more complicated than that. I am sure it is. I used to teach management and the classroom is easier than the City Hall. Just saying. (Sorry, platypus.)

Posted by New city manager any better?
a resident of Crescent Park
on Jul 30, 2019 at 11:39 am

There never was a question about Mr Keene's primary loyalty to business and developers, nor Adrian Fine's. Fine is quite open about it.
Is our new City Manager doing any better?

What about Kniss [portion removed] and the others who supposedly represent us?

Posted by Anon
a resident of Another Palo Alto neighborhood
on Jul 30, 2019 at 11:45 am

Posted by Ray, a resident of Professorville

"speaking for myself":

>> The purpose of it sounds fuzzy . . . a plan to collect fair taxes?


>> Or a plan to help the community with traffic and parking issues?


>> Or a plan to learn what the businesses do? Who works here? What's the impact on City assets?

Yes, yes, and yes. "Speaking for myself", I would like to figure out how the city could reduce the number of larger company employees downtown to make room for startups and small businesses. For example, presumably Palantir has ~2,400 employees downtown. Maybe they could be somehow encouraged to consolidate/move to a big campus somewhere to make room for the next crop of startups. Does anybody have a -registry- of all these large/medium businesses downtown? It would be nice to know who they are and how big they are. Is it possible that Mr. Keene did not want -us- to know for some reason? I wonder how many people are packed into 10,000 square feet these days in downtown.

I admit that I don't know what the purpose is

Posted by Novelera
a resident of Midtown
on Jul 30, 2019 at 11:55 am

Novelera is a registered user.

@anon. "I admit that I don't know what the purpose is." I do. The purpose is to bring Palo Alto in line with every other city/town on the Peninsula who charges a business registry/tax. For small businesses and/or contractors who don't have employees who actually spend time in a brick and mortar building, but rather send their workers to construction sites the fee could be modest. Think of getting, say, $150 for every subcontractor who works here on these large construction projects. We could do a lot with that money. Every other city/town does just that.

Posted by gUS l.
a resident of Barron Park
on Jul 30, 2019 at 3:36 pm

It was a stupid idea then, its a stupid idea NOW..
Stop with the behind the back shady taxes. ie Business alarm fees, Water Back Flow Testing Fees etc.

Posted by rsmithjr
a resident of Duveneck/St. Francis
on Jul 30, 2019 at 4:09 pm

rsmithjr is a registered user.

My suspicion has been that this is in preparation of installing a business tax. First, find your targets, then bill them.

The real discussion I want is why we need a business tax.

Posted by Mark Weiss
a resident of Downtown North
on Jul 30, 2019 at 6:17 pm

Mark Weiss is a registered user.

Why don’t we focus on payroll tax of the billion dollar unicorns and leave the 1000 to 20,000 schedule C people to our pathetic half lives ?

Posted by Commute traffic and parking
a resident of Evergreen Park
on Jul 30, 2019 at 6:50 pm

Commute traffic and parking is a registered user.

Because of the increased number of office employees commuting into Palo Alto there is a need for the larger employers to contribute to, if not completely fund, solutions to the traffic and parking problems they have and are bringing to Palo Alto.

For many years developers have been very astute at manipulating the system to enable them to get away with providing completely inadequate parking for their commercial ventures, outsourcing the cost and problems to residents, aided and abetted it sometimes appears by city employees.

Keep in mind that property taxes from commercial property are on a steadily decreasing trajectory every year as a percentage of the total, due to loopholes in the law, now down to approximately 25%. During a council meeting some years ago then city manager, Jim Keene, admitted that an analysis showed the commercial sector does not cover the cost of providing city services to them, a surprising admission from someone who always seemed to be very pro-business and continuing to expand office development without restraints.

Posted by He Must Go
a resident of Old Palo Alto
on Jul 30, 2019 at 8:43 pm

Business Registry is a pretty simple idea. It’s not that had to figure out and how to enact it. But like most things in this city they lack real leadership.

In the article and some of the responses your not really sure what a Business Registry is supposed to do.... so here is exactly what a Business Registry should do. 1. First what it Is... It’s an application first. Like in most cities we need to know what you want to do in our community. Is it suitable for the location your proposing. 2. How many people are you planning on employing at this location. 3. Do you have other licenses as part or your business, ie: liquor, health department, etc. 4. Do you plan to use or store chemicals or other hazardous materials as part of your business.

These are the types of things that should be asked before any business is allowed to set up shop in our community. These are things that are typically handled in the Community Development Centers up and down the peninsula and it was supposed to be but again there is no leadership in our Community Development Center since Peter Pirnejad left Palo Alto.

The current leadership under George Hoyt is only worried about continuously changing the fee structure that we all pay for permits, inspections, and plan checks. There’s no leadership. We have all information through utilities to verify all current businesses. It’s not that hard the real lack of leaders that are the highest paid within the city have no leadership skills. They hire an outside contractor to put together an incomplete list. Who authorized that.?

He Must Go

Posted by It can't be that hard
a resident of Palo Verde
on Jul 30, 2019 at 10:01 pm

Wow. This is ridiculous.
Of course, the city should know how many businesses, how many employees, and what they are doing in our town.
It's appalling that we don't already know this.


Posted by Anon
a resident of Another Palo Alto neighborhood
on Jul 31, 2019 at 9:09 am

Posted by It can't be that hard, a resident of Palo Verde

>> Of course, the city should know how many businesses, how many employees, and what they are doing in our town.
It's appalling that we don't already know this.

I wonder why the former city manager did not want or need to know this information, then?

>> Incompetent.

I dunno about that. Developers said he was -extremely competent-. Perhaps "competent" is not the relevant concept here. Perhaps you mean to ask whether he was serving the existing residents well?

TBH, I'm not excited about the city collecting additional taxes from every out-of-town plumber who unclogs a drain. I would just like to tax now-big businesses to encourage them to move their commuter traffic out of town. We have too many people driving to work here. Let's stop building office space, maybe set minimum office space standards per person, tax something that will reduce the number of people driving into this city.

Posted by Abitarian
a resident of Downtown North
on Jul 31, 2019 at 11:00 am

Of course, we need a business registry and developing one should not be a particularly difficult assignment. Just recently, we were reminded that 1969 technology brought humans to the moon and safely home.

Once again, we need to question why city hall cannot accomplish even basic tasks. While many reliable consultancies are available, why do city leaders always seem to choose the duds?

Is this a matter of abject incompetence or outright corruption?

Posted by Online Name
a resident of Embarcadero Oaks/Leland
on Jul 31, 2019 at 1:03 pm

How much did Mr. Keene pay the consultant for such an absurd and inaccurate study? Whatever it was, it should clawed back from his ridiculously high retirement benefits.

Did no one think the report was odd when we know that commuters are over-running us at a 4:1 ratio? Maybe it's like the "nope. no traffic problems here" claims from our officials when they want to ignore real problems.

Posted by margaret heath
a resident of Evergreen Park
on Jul 31, 2019 at 2:19 pm

margaret heath is a registered user.

There are various models to tax businesses that have a physical presence in a city. And it can exempt small businesses with under a certain number of employees and individuals from a business tax. I'm thinking small medical offices, tax preparers, insurance agents, retail, restaurants. Some cities charge by the commercial square footage, possibly paid for by the building owner, employee headcount.

With so many non-resident serving businesses located in Palo Alto, many residents think it is entirely reasonable at this point to know who is operating here, what they are doing, and how many employees they have, just as other jobs-rich cities do. Given the traffic and parking problems associated with and exacerbated by being so jobs-rich, also entirely reasonable to put a business tax on the ballot. Something that some council members have actively resisted, not surprising given either their professional or personal affiliations and/or links and/or their campaign donor base. Also city hall culture operating under Mr. Keene's management, style with his famous "white glove treatment" directive to staff concerning people interacting with city hall. It is not, on the whole, residents who are cultivating city hall relationships and lobbying.

Before the city can have a business tax there needs to be a robust business directory. Mr. Keene was very against a business tax, and that tells you all you need to know why, under his watch and despite a directive from the city council in 2014, he made sure that the comprehensive collection of data for a business registry was a failure.

Posted by History Buff
a resident of another community
on Jul 31, 2019 at 6:21 pm

Sounds like the DMV.

How many city employees have failed at what should be a simple, straightforward task? How much money has the city spent on this, and similar efforts, since 2005?

Business fee would do more harm than good

A proposal to expand the Palo Alto Police Department space at City Hall has
City Manager Frank Benest¹s staff scrambling for ways to fund this $45
million project. One idea we are hearing a bit too frequently is that part
of the cost could be paid by creating a business license fee."

The police building is at $106M and the business fee/license/tax is still a mess.

Nothing changes, but at least there's now a new PR person (at a salary of $180,000/year) to put a good spin on this story.

Posted by PA Grandma
a resident of Community Center
on Aug 1, 2019 at 10:30 am

Absolutely Palo Alto should have a business registry. It's hard to believe the Chamber of Commerce (is there a Chamber of Commerce?) doesn't already have a list of the businesses in Palo Alto. It can't be that hard.

Name of Company, Owner/Owners of Company, Incorporation location, Gross income, net income, Address/addresses of company buildings in Palo Alto, Number of full and part time employees, Addresses of Owners, employees, etc. How many people commute by car. How many people commute by train. ETC.

I'm sure there is more information needed, but get the city manager to put together a spread sheet, send it to the companies to fill out, give them a deadline, and make it happen. The companies have to have all that information in an easily accessible electronic format. If the companies are publicly traded, they have to provide quarterly reports on the company status.

Posted by musical
a resident of Palo Verde
on Aug 1, 2019 at 1:33 pm

^ My company has no idea how I commute to work. Yes we get the usual questionnaire, but can answer whatever we calculate to be the politically correct response, just like our politically correct responses during the interview process.

Posted by New city manager any better?
a resident of Crescent Park
on Aug 2, 2019 at 11:44 am

This is some kind of sick joke.
In a city brimming with computing talent they can't figure out how to collect this information?
How about starting with Utilities Dept accounts. Just for starters.

Business interests have successfully stopped this. Ask the Chamber of Commerce.

Posted by margaret heath
a resident of College Terrace
on Aug 2, 2019 at 2:39 pm

This was not incompetence. It was deliberate. As then city manager Mr. Keene strongly pushed back last September, when pressed by Councilmember Dubois as to why, after being directed by council four years ago to initiate a fully functioning and comprehensive business registry, vociferously (to my eyes belligerently) argued that essentially he had thought all along it was a bad idea for businesses located in Palo Alto to have to register with the city. The underlying assumption that if there was a robust business registry in place that would be the first step toward a business tax, which he was clearly against. Perhaps he forgot that there was a member of the public sitting behind him in the conference room, or knowing he was about to retire didn't care about being polite or more discreet.

It appears that the way responsibility for the city was originally divided between the council and the city manager, the city manager has great autonomy and independence.

Posted by Agent 42
a resident of another community
on Aug 6, 2019 at 10:09 am

I am sure the folks at Palantir have this information and much more already.

Posted by Annette
a resident of College Terrace
on Aug 6, 2019 at 4:50 pm

Annette is a registered user.

Margaret Heath has correctly pointed out that the failure was (is?) deliberate. The initial year was nothing short of a joke. I recall sitting in CC the night the person in charge was scheduled to report on the status of the registry and it was clear that he didn't have a clue about what he was doing. He took notes as Councilmembers asked questions, promising to get back to them with answers. As the audit revealed, things didn't get better.

If you were tasked with something your boss didn't care about or support would you work hard on that or on something that mattered to your boss? I wouldn't expect much success on this unless and until CC makes it clear to the City Manager that it is a critical priority. Even so, it is rather embarrassing (amusing even) that iconic Palo Alto cannot count heads.

Posted by Resident 1-Adobe Meadows
a resident of Adobe-Meadow
on Aug 6, 2019 at 5:24 pm

Resident 1-Adobe Meadows is a registered user.

So Mr. Keene practiced subterfuge in this whole matter while the city was paying a "consultant". Why do we hire consultants when we have city personnel who are suppose to be hired with specific skill sets for the jobs?

Since Mr. Keene is now gone let's hope that his replacement has a more disciplined frame of mind relative to organizing the cities business base. And while you all are at it please note who is paying taxes and who is not paying taxes. Giant cries in the debates relative to Amazon who is paying no taxes. Are we so desperate that we are handing out locations for businesses that do not pay taxes?

I think it is time that we open that subject up and find out how many "under the table" actions are on going in this city and work to correct them. Maybe that was Mr. Keen's major worry.

Posted by It's Not Being Fixed!!!
a resident of Crescent Park
on Aug 6, 2019 at 5:52 pm

Lest anyone think the new city manager and crew are one bit better, here's an excerpt from an August 2 memo from them to the Council:

** Since these new measures were put into place for 2019 activity and the business registry audit and subsequent analysis looked at 2017 and 2018 data, the effect of these new measures on improving the quality of the business registry data is not yet known. City staff in charge of managing the business registry program and the oversight of the MuniServices contract may have additional insights into the new measures that were implemented. **

What a masterpiece of misdirection. First, why should the city manager's office tell the council to go ask someone else? Those people report to the city manager. Can't he just pick up the phone and ask them?

Plus, the registration period for the 2019 business registry ended four months ago. How hard would it be to provide a count of how many businesses registered and the total employees, parking places, and square feet they reported ... after four months??? Anyone competent could produce that a day after registration ended. Sure, some cleanup and pursuit of non-reporting companies may also be happening, but the initial totals would tell us if say fewer companies reported or their numbers are way off.

The Business Registry is another in a long line of incompetent City Hall screw-ups: 27 University, the Palantir tent, the bungled Edgewood Plaza agreement, grade crossings, the President Hotel ... add your own to this list.

Posted by Anon
a resident of Another Palo Alto neighborhood
on Aug 7, 2019 at 8:28 am

Posted by It's Not Being Fixed!!!, a resident of Crescent Park

>> The Business Registry is another in a long line of incompetent City Hall screw-ups

I have to argue against this yet again. I see no evidence of incompetence. City Hall has been getting what it wants: growth of jobs; lots of people commuting to and working in town. That may not be what -residents- want, but, apparently, for some reason, we don't count.

Posted by Resident 1-Adobe Meadows
a resident of Adobe-Meadow
on Aug 7, 2019 at 7:27 pm

Resident 1-Adobe Meadows is a registered user.

It would seem to me that there should be a computer print-out that lays out the businesses in the city with the specific information that is required - # of employees, size of property, number of commuters and spaces for them to park. size of company for reporting purposes - taxes. It could be divided by regions in the city. Need to include non-profits. That is important since many companies register as non-profits yet have a large portfolio of activities. Oshman / JCC has a lot of people who park in residential streets - who are they? Employees?

The magic of reporting in to one location with information is that all those businesses have to fess up as to what they are doing. The end result is ACCOUNTABILITY.

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