Revisions to tax proposal fail to sway business leaders | July 15, 2022 | Palo Alto Weekly | Palo Alto Online |

Palo Alto Weekly

News - July 15, 2022

Revisions to tax proposal fail to sway business leaders

Coalition of opponents push for lower rate, more exemptions in Palo Alto's planned measure

by Gennady Sheyner

Palo Alto's elected leaders have yet to finalize the details of the city's proposed business tax, but the campaigns for and against the measure are already in full swing, four months before the November election.

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Email Staff Writer Gennady Sheyner at [email protected] IN A BOX


Posted by Novelera
a resident of Midtown
on Jul 8, 2022 at 2:14 pm

Novelera is a registered user.

I should not be shocked at greed. But somehow I am. From what I've read about the impact of a business tax on small businesses, there should be a minimal cost. But I am quite sure my mailbox will be stuffed come Election Day with cries of anguish about the City driving away small businesses.

My place of business is a subcontractor for many residential construction properties. The general contractors insist on our having business licenses. I send checks (none more than $200) to Menlo Park, Woodside, Portola Valley, San Francisco, Atherton, Monte Sereno, Saratoga, Los Altos, Los Altos Hills, and Los Gatos. If we are awarded a contract in other cities up and down the peninsula, I have to immediately pay for a business license as part of the contractual requirements of the general contractor for that residential project.

I have always been baffled by the odd fact that the city in which I live is the only city I am aware of where businesses do not have to pay their fair share.

Posted by Louise Beattie
a resident of Crescent Park
on Jul 8, 2022 at 2:27 pm

Louise Beattie is a registered user.

I would be more willing to support a tax if I knew exactly what the money was going to be used for. The uses given are just a list of the same wishes we have heard over and over, nothing concrete. Meanwhile, daily we read about small businesses leaving our downtown because they can't afford to rent here. Why don't we give businesses a break, at least until we have a plan for the money?

Posted by Novelera
a resident of Midtown
on Jul 8, 2022 at 2:42 pm

Novelera is a registered user.

@Louise Beattie: As I mentioned in my comment, small business taxes in other communities cost less than $200, at least for our company. If a business cannot afford this quite small tax, then maybe they aren't viable at all. You can be quite sure the big bucks involved in opposing this tax are coming from other sources than the small business owners you have sympathy for.

Posted by Sheri
a resident of Midtown
on Jul 8, 2022 at 2:45 pm

Sheri is a registered user.

"The Silicon Valley Leadership Group and the Palo Alto Chamber of Commerce issued a joint statement in which they called the business tax 'an unfortunate example of the wrong policy and the wrong time.'"
Same thing they've said for as long as I can remember every time this issue comes up. They pay a business tax in virtually every city in California. What's so economically disastrous about here?

Posted by mjh
a resident of College Terrace
on Jul 8, 2022 at 3:14 pm

mjh is a registered user.

Every time the question of Palo Alto doing what other cities do and have a business tax there is always a predictable “chicken little” chorus crying “the sky is falling” and now is not a good time.

Unfortunately, as a business tax with dedicated and restricted spending requires two-thirds of the vote to pass, and the business community and its out of town representatives have already shown they are willing to spend whatever it takes on an anti-business tax campaign, we are stuck with a general tax ballot which only requires a majority to pass.

It’s completely disengenuous for representatives of the business community to complain they would be more likely to support a business tax if the proceeds were for a specified dedicated purpose when that is axactly what the business community and their wealthy out of town representatthey are preventing.

Posted by Online Name
a resident of Embarcadero Oaks/Leland
on Jul 8, 2022 at 7:24 pm

Online Name is a registered user.

I'm tired of the obstructionism of the business community and am wondering what they've dome for us lately vs the very involved business leaders in Menlo Park and Los Alto.

In fact, I'm hard pressed to name a Palo Alto "business leader" but can easily praise the owner of Bistro Vida Ali Eslady and Nature Galleru owner Carol Garsten for creating events that bring people downtown AND cost their cities nothing so it was a no-brainer for them to yes rather than creating roadblocks, hiring consultants etc etc.

(The Nature Gallery used to be in Town & Country and is now thriving on State St in Los Altos., hosting periodic cocktail parties in her store.)

Garsten's recruited 12 bands / musicians who play for free on the First Friday of every month. Ali created the Weds French market each week. Both downtowns are packed.

Who/ What does PA have that's comparable?

Posted by S. Underwood
a resident of Crescent Park
on Jul 9, 2022 at 12:50 pm

S. Underwood is a registered user.

Last I checked, the City has an $800 million dollar annual budget {excluding PAUSD, just the City} for a population of about 70k.

We have plenty of funds to do what we want and need. What we need is to get to work.

If the City were committed to not expanding its budget, but to use these funds to reduce or eliminate other resident taxes or fees, it would be a different conversation. I won't hold my breath.

Posted by mjh
a resident of College Terrace
on Jul 9, 2022 at 1:14 pm

mjh is a registered user.

Not plenty of extra funds for capital improvements such as the hundreds of millions needed for the new underpasses/overpasses along Alma that will be necessary with the railway tracks electrification. Or the kind of funds required to build lower income housing for teachers, etc. Two of the items the council planned to dedicate the business tax funds for if the business community at large were not funding a campaign to make sure there isn't the two-thirds majority required for a dedicated tax.

Posted by Online Name
a resident of Embarcadero Oaks/Leland
on Jul 9, 2022 at 2:37 pm

Online Name is a registered user.

My point above is that not everything needs to cost money IF there's creativity, resourcefulness and IF the business leaders step up and actually give back like they do in Los Altos, Menlo Park and of course Redwood City.

Been to one of their Friday night concerts at Court House Square? Thousands of people loving the music sponsored by Chan Zuckerberg who live in Palo Alto, not RWC!

Posted by Annette
a resident of College Terrace
on Jul 9, 2022 at 7:11 pm

Annette is a registered user.

Good points made by Online Name: Palo Alto is surrounded by cities that do a great job of attracting people to their downtown areas.

MJH also makes good points, but I think it critical that CC put a harder-to-pass special tax on the ballot rather than a general tax. It is critical that the City be obliged to spend the revenue in the areas identified by this CC, none of which are likely to ever not need funding. I also think the City is underestimating the percentage of "yes votes" that will be lost precisely b/c the tax is general rather than specific. I do not own a business in town, but I think every business on the hook for this tax should be able to rely on how the revenue will be used. The opposition might even be less b/c big businesses can hardly make a credible argument that their presence here does not impact infrastructure, housing, transportation, fire, and police.

How about approaching the business community with a compromise for a specific tax for X years, exempting businesses under an agreed-upon size. Other cities have managed to enact a business tax; Palo Alto should be able to as well. That we haven't sometimes makes me wonder if the City is indeed serious about enacting one.

This issue is tremendously vexing since it is past Councils that put us in this lousy position.

Posted by Palo Alto Resident
a resident of Downtown North
on Jul 9, 2022 at 9:12 pm

Palo Alto Resident is a registered user.

It's shocking to me that this is even controversial. Businesses need to pay their fair share, and they don't. On a workday, there are more business employees in town than there are residents, and that requires services - public safety, road & infrastructure, etc. Over time, Prop 13 has significantly lowered the % of tax paid by commercial property owners, so this kind of tax is both fair and necessary to maintain services for both businesses AND residents.

The idea that this will drive out businesses - no way, think it through. A tax on square footage is ultimately just additional rent (about a 1% one-time increase). For the vast majority of businesses, the amount is just immaterial (esp with the first 5000 sqft exempted). But even if it *were* material, over time it would just mean lower rents, as landlords adjusted rates to what the market would pay. No wonder it is commercial developers who are leading the opposition!

And, btw, the alternative is either LOWER SERVICES or HIGHER TAXES ON RESIDENTS. With those alternatives, this one looks like a no-brainer.

Posted by Annette
a resident of College Terrace
on Jul 10, 2022 at 7:13 am

Annette is a registered user.

Palo Alto Resident is exactly right. Businesses should contribute to the infrastructure and services they use and impact. Past Councils saw this differently, though, and turned Palo Alto into the goose that laid the golden egg - for developers. Their vision on this was damagingly short term, often self-serving, and apparently difficult to remedy.

Posted by Eric Filseth
a resident of Downtown North
on Jul 11, 2022 at 7:46 am

Eric Filseth is a registered user.

It’s curious why the Silicon Valley Leadership Group, based in San Jose, is even here at all.

The City proposal exempts small businesses, and for large ones is basically a one-time 1% rent increase. Most commercial leases in Palo Alto increase 2-4% =every year= with no mass exodus, so why would another 1%, once, in Palo Alto, and re-invested in public safety and affordable housing no less, be a concern to SVLG?

Only SVLG know for sure, but here’s a speculation.

The true cost of fixing Bay Area’s transportation and housing woes, if you really set out to do it, is probably $200-300 Billion today; 2-3X that if collected over decades. By comparison, Measure A raised $950 million - a lot of good money, but still a fraction of the need.

If you actually wanted to find $300 Billion for housing and transportation, where might you look?

It’s possible the issue is that question, because it has only one answer.

Households don’t have $300B. Per Joint Venture Silicon Valley, the personal non-home assets of Silicon Valley and SF are about $750B. You’d need 40% of the savings of every Bay Area household. Bridge tolls and parcel taxes, which tax individuals, will not get there.

Even Sacramento doesn’t have $300B.

There’s only one place that kind of investible asset exists: the publicly-traded corporate equity of Silicon Valley and SF, about $14 Trillion this year per JVSV. $300B is 2% of that. And once you start thinking about the $14T and the Valley’s future, you get pretty fast to … business assessments. Perhaps this is really about an Idea.

People shouldn’t fear that idea. The scary one lies behind it: if we =don’t= invest the $300B, is the future of the $14T at risk? People are leaving the Valley, after all.

The good fight is not to fight the tax but to champion it, and then help well-meaning but distracted governments to use it wisely: to really solve the problem, and not just waste the money, always a danger. That would be Leadership.

Posted by jlanders
a resident of Barron Park
on Jul 11, 2022 at 12:04 pm

jlanders is a registered user.

Eric Filseth and fellow council members, please stop trying to tailor this critically important ballot initiative to the whims of the SVLG. Palo Alto needs this tax to fund the City's critical infrastructure projects including vehicle and pedestrian rail crossings, affordable housing and funding city services that include public safety and citizen well being.

The majority of folks in Palo Alto understand the financial need is larger than potential tax revenue. Your focus should be on promoting the projects and what can be accomplished, not on pennies that Palo Alto's largest businesses will be obligated to pay. Glossy mailers with "alternative facts" and "scary stories" from the SVLG sent to residents will be cheerfully placed into our blue bins for recycling. SVLG has sway with businesses, not residents. And residents know that businesses, particularly large businesses, aren't paying their fair share in Palo Alto. That's the message you need to deliver.

Council needs to add the gas tax initiative to the ballot. Gas tax revenue fills a critical budget hole for Palo Alto. This is a consumption tax and businesses are the largest gas consumers, so residents get a 2 to 3 times payback from this tax. Stop listening to the crackpots, malcontents and anonymous online posters waiting for their $60 refund from the Greene lawsuit. This tax is a great deal for the residents of Palo Alto.

Posted by HHTurner
a resident of Ventura
on Jul 13, 2022 at 1:58 am

HHTurner is a registered user.

Guys are upset that they have to pay taxes. What a surprise

Posted by Resident11
a resident of Fairmeadow
on Jul 13, 2022 at 9:48 am

Resident11 is a registered user.

I agree with the above two posters. We are behind the times on a business tax and arguably should do even more. We also need the gas tax. It is a no-brainer in terms of services and climate not to mention precedent if we had a privacy utility. We need to clear the air of the Fear Uncertainty and Doubt that businesses and utility haters are promoting.

Posted by Evergreen Park Observer
a resident of Evergreen Park
on Jul 13, 2022 at 11:01 am

Evergreen Park Observer is a registered user.

I agree with all of the commenters about the silliness of opposing this tax. I might add just one point. Small business owners are being harmed by the land owners -- may of whom purchase their property many, many years ago -- who continue to raise rents to unreasonable levels. Los Altos figured out a way to prevent this, and thus their small retailers are able to thrive in their downtown.

Some Palo Alto property owners are will to leave their properties vacant rather than rent them out at lower rates. They are hoping their cries of desperation will pressure the City Council to allow them to convert to office space or professional services that will pay higher rents.

Posted by Consider Your Options.
a resident of Another Palo Alto neighborhood
on Jul 13, 2022 at 2:43 pm

Consider Your Options. is a registered user.

Dear local business leaders,

You have convinced me. I plan to vote for the tax measure.

Thank you for helping me decide.

Posted by Paige
a resident of another community
on Jul 18, 2022 at 11:20 am

Paige is a registered user.

@eric filseth "If you actually wanted to find $300 Billion for housing and transportation, where might you look?"

You need to work on your positioning. This is a deep pockets argument.

Make an AB16000 nexus case, not a tax the rich case.

The better argument is that businesses are continuing beneficiaries of local government services and, who, through existing (throttled) property tax mechanisms and under assessed impact fees, do not pay their fair share of ongoing service and infrastructure costs. In short, they are subsidized.

Then compute the subsidy on a per employee or per sf basis. It's not that hard. If you can't compute the subsidy you have no business asking for money.

If you did that then you'd have a basis for asking them to pay for their fair share of costs of local government from which they benefit.

And finally, these costs should have been assessed at the time of approval of the construction which hosts the businesses. If your impact fees are too low, raise them. If they are on-going rather than one-time, extend them.

We're talking about eliminating externalized or socialized costs. There's not an economist in the world who would defend long-term business subsidies.
End them.

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