It's not easy to ask voters for a tax increase when city coffers are flush with cash, but that is the awkwardly enviable position that members of the Palo Alto City Council find themselves in as they eye a November ballot measure.
Even if the voters shoot down the proposed increase to the city's hotel-tax rate that is recommended by city officials, the council will push forward with its most urgent and most complex infrastructure priority -- a new public-safety building.
That was the consensus of the council's Infrastructure Committee, which voted unanimously on Wednesday to make the public-safety building the city's top priority. The vote came after a broader discussion about the city's long list of needed infrastructure repairs, some of which would potentially be paid for with revenues from the hotel-tax hike.
The committee has yet to figure out what projects to include in the possible bond package. Despite the council's sense of urgency about a new police building, the project has consistently failed to attract the public. Recent polls confirmed the findings of past polls: While a bare majority might support the $57 million police headquarters, it would be difficult for the council to get the supermajority of voters needed to pass a bond. With its vote Wednesday, the committee signaled that the project should be pursued regardless of the November results, with existing funds if necessary.
City officials have been talking for more than a decade about the need to replace the small and seismically deficient police headquarters inside City Hall. The Infrastructure Blue Ribbon Committee, a citizen task force charged in 2010 with identifying the city's infrastructure priorities, described the existing headquarters as "unsafe and vulnerable." Yet the quest for a new police building has been riddled with setbacks and disappointments. In 2009, with the economy sagging and no imminent plans to fund the project, the city terminated its option to lease two properties on Park Boulevard that officials had hoped could house the new facility. And last month, developer Jay Paul Co. withdrew its offer to build a new police building in exchange for the city's permission to construct two office buildings next to the AOL headquarters at 395 Page Mill Road.
With an estimated price tag of $57 million, the public-safety building comprises more than a third of the city's budget on needed infrastructure repairs. City Manager James Keene likened the infrastructure picture to a stackable Matryoshka doll, with the public-safety building on the outside layer. Having a definite plan for funding this project, he noted, could help shift the conversation on paying for the other items on the long list, which under the most recent estimate adds up to about $155 million.
While a bond measure would help the council tackle some of the other gaping projects on the list -- including new downtown garages, a host of bike improvements and replacement of two obsolete fire stations -- members of the four-member committee agreed that the police building is important enough to be pursued with existing funding.
It helps, of course, that there's now plenty of existing funding available. With budget surpluses in 2013 and 2014 of more than $12 million; more than $34.4 million in revenues available from the city's agreement with the Stanford University Medical Center (including $22.1 million specifically earmarked for infrastructure); and new hotels that are expected to bring in enough revenue to issue bonds for $33.6 million in improvements, at least one committee member wondered Wednesday whether a tax increase is even necessary.
Earlier this month, the committee answered that question in the affirmative when it voted unanimously to support a hotel-tax hike, though it left open the question of whether to raise the current rate of 12 percent to 14 or 15 percent. Councilman Larry Klein, who chairs the Infrastructure Committee, appeared to have some second thoughts on Wednesday, when staff presented a chart showing the city's various funding sources and infrastructure priorities. The chart isolates the police building and proposes to use leveraged hotel-tax revenues ($33.6 million), a budget surplus from fiscal year 2013 ($8.5 million), and infrastructure funds from the Stanford agreement ($14.9 million) to pay for the new building.
"We absolutely should set $57 million aside and kind of 'lock-box' it," said Councilman Marc Berman, who had served on the citizen committee before getting elected to the council in 2012.
Klein agreed. Though the committee directed staff earlier this month to formulate a plan for a new police building, the Wednesday meeting further underscored and formalized the committee's position that the project is important enough to be considered separately from all the others.
"Our first overriding priority is the public-safety building," Klein said. "We danced around it, but this chart makes it explicit."
At the same time, the four-member committee expressed a range of opinions during Wednesday's discussion about funding sources and infrastructure priorities. Klein favored including $8 million from the city's infrastructure reserve in the pool of existing funding while Berman advocated keeping the cash in the reserve and then using it as needed.
"We are going to be instituting a lot of pretty transformative changes to how people park and get around in Palo Alto, and I don't know how those will turn out," Berman said. "I'm sure they won't turn out exactly how we anticipate they'll turn out. I think it makes sense to have some money available to make changes and additions to the projects as we get a sense for how it plays out in the next several years."
Then there's the divisive issue of parking garages, three of which are included on the city's list. The project list includes two downtown garages with 214 and 89 spaces, respectively, and one garage on California Avenue with 272 spaces. The two downtown garages would cost a total of $18.4 million while the one on California Avenue would cost $16.5 million. Staff emphasized that the proposals for new garages remain unrefined and warrant much more study before any actions are taken. (Among the biggest unanswered questions is: How many spaces do the business districts need?).
The committee didn't take any positions on the issue of garages, though members offered at-times clashing opinions on the topic. Councilman Greg Scharff urged the city to be aggressive about new garages, referred to the existing parking "crisis" downtown and predicted that California Avenue will soon have a similar crisis if the council doesn't get ahead of the problem and build a garage there. The Ventura neighborhood, he said, will soon resemble downtown's parking-strapped Professorville neighborhood if the city doesn't act, he said.
"If we do nothing and don't build a California Avenue garage, that's on us," Scharff said. "I think that would be shame on us."
Councilman Pat Burt was far more cautious. The city, he said, should tread slowly on this topic because of the city's much discussed and soon-to-be-unveiled "transportation demand management" (TDM) program, which aims to get commuters to switch from cars to other modes of transportation. The plan calls for new shuttles, satellite parking lots east of U.S. Highway 101 and possible creation of business districts that would assess members fees to support programs that encourage commuters to switch modes.
Burt also advocated more discussion of bike improvements and consideration of how these efforts can curtail traffic. He also warned about the visual impact of having a five-story, 272-car garage on California Avenue, where it would tower over neighboring buildings.
"I'm very hesitant to be considering two parking garages downtown and 272 spaces on California Avenue prior to implementing our TDM program," Burt said.
The committee plans to hold one more meeting in mid-February before the full council considers the city's options for a November ballot measure on Feb. 24.