With City Hall salaries on the rise, Palo Alto plans to raise most of its fees by 7.5% in July to keep up with growing expenses.
The change, which the City Council Finance Committee endorsed on Thursday afternoon, would apply to dozens of programs throughout the organization, from renting space at local recreation facilities to obtaining a building permit. The goal, according to staff, is to achieve cost recovery at a time when employee costs are on the rise.
In some cases, the fees would rise by an even higher percentage. The cost of reserving space in the Oak Grove picnic area at Foothills Park would go up by 12.5%. Whereas today rates range from $80 (for groups of one to 50 people) to $240 (for groups of 101 to 150 people), starting in July the rates in these categories would be $90 and $270, respectively). And the permit fee for projects involving storm drains will go up from $814 per project to $1,010, a 25% hike.
In some cases, such as the Foothills Park rates, the fees were increased to align with market value, according to Administrative Service Department staff. In most others, they went up to keep up with the growing labor costs, thus helping the council achieve its goal of more cost recovery. A report from the Administrative Services Department notes that the average increase of salaries and benefits between the current fiscal year and fiscal year 2020 (which begins on July 1) is 7.5% and this rate was applied to most fees to maintain cost recovery levels.
"This year over year increase is higher than typically seen as it includes the City Council's new direction to use a more conservative assumption for pension costs," the report states, alluding to the council's recent decision to use a lower projection for CalPERS' rate of return that it has used in the past.
Palo Alto's new fee schedule will also make it much more expensive for developers to pay "in lieu parking fees" instead of building parking as part of their new projects. In this case, however, the increase has less to do with employee contracts and more to do with the hot construction market.
Under the proposed scheduled, which the full council is set to approve next month, the parking in-lieu fee of $70,094 would be raised to $106,171 per parking space, a 51.1% jump. The change was prompted by the growing costs of constructing new parking spaces in the city's commercial areas. Palo Alto is now building a new California Avenue garage, which has an estimated price tag of $50.1 million. The new in-lieu fee is based on this price tag (dividing $50.1 million by 475, the number of spaces in the new garage).
At the same time, the city plans to strike off the books about two dozen fees that had been deemed obsolete or that relate to a service that no longer has a market. This includes fees that the Police Department had in place for billiard parlors, bingo establishments, rodeos and circuses.
The council considered deleting these fees last year, but delayed to give staff more time to analyze the subject. Councilwoman Alison Cormack, a member of the Finance Committee, said Thursday that she was glad to see these fees get deleted "so we don't have to talk about rodeos, bingo, carnivals and whatever else we used to do, which sounded like a lot more fun."
Vice Mayor Adrian Fine and Committee Chair Tom DuBois also supported moving ahead with all the proposed changes, though DuBois also raised some concerns about implementing 7.5% hikes for fees for programs at the lower end of the table, particularly ones that target low-income residents or that support council priorities.
"Typically, these fees are fees that we had decided to subsidize," DuBois said. "If we're going to have a 7.5% increase in those fees, I want to see what it looks like."
While the committee recommended approving the proposed fee schedule for fiscal year 2020, it also directed staff to return with a list of all fees, current and future, so that council members can better understand the impacts of the change.
The committee's final budget-review meeting will be held this Tuesday, May 28.
Comments
Another Palo Alto neighborhood
on May 27, 2019 at 9:05 am
on May 27, 2019 at 9:05 am
This is very unfair to those of us who live here. The city staff is growing in numbers, primarily to administer the costs associated with having more residential units and more office space. It should be those building and running the new units who should be paying for a higher number of city staff, not a family trying to hold a birthday party or a church wanting to have a summer picnic.
The amount of recreational space per resident diminishes each time a new condo unit is built. The amount of recreational activities are getting smaller all the time and places like the Winter Lodge are flooded with bookings for parties due to the lack of choices available.
It comes down to the fact that Palo Alto is turning into a business park with dormitory facilities because anything that makes for pleasant quality of life here is being taken away, getting harder to book, or getting so expensive that it will soon become unaffordable to have fun.
On top of that, a building permit for remodeling a kitchen or bathroom on a 70 year old home is already taking long to obtain and long to make an appointment for an inspection, so what will that do to the average homeowner trying to make an older home fit for family life!
Registered user
Barron Park
on May 27, 2019 at 10:51 am
Registered user
on May 27, 2019 at 10:51 am
Set fees to "align with market value?" Folks, we're talking government services here, not income from rental properties.
Another Palo Alto neighborhood
on May 27, 2019 at 11:04 am
on May 27, 2019 at 11:04 am
@Resident,
You are 100% right. The answer is for residents to get together and start putting forward initiatives that ensure the city serves residents, not companies that don't even pay a fraction of the costs and damage they do.
It will have to do more than just stem the tide of destructive overdevelopment, but instead plan for the future.
Who will start the ball rolling? That's the big question.
Community Center
on May 27, 2019 at 1:27 pm
on May 27, 2019 at 1:27 pm
This is a UNION issue, paying UNIONIZED public workers too generous salaries and benefits and squeezing out actual city services for residents, and now asking for increased fees from residents on top of residents paying for increased salaries and to make up the underfunded city of Palo Alto pensions to the tune of $900 million - $900 million underfunded!!! Our city council refuses to say no as they are in the pocket of and captive to the public sector UNIONS.
Take a look at cities that went bankrupt for what the future holds, Stockton, San Bernardino, Detroit. Bankruptcy and no services. There are other similar stories of other cities approaching bankruptcy and little city services due to captive city councils.
Community Center
on May 27, 2019 at 1:28 pm
on May 27, 2019 at 1:28 pm
The city is gouging folks on fees to avoid raising taxes...
College Terrace
on May 27, 2019 at 3:51 pm
on May 27, 2019 at 3:51 pm
This is good news and about time the city had the courage to raise the fees.
We need good staff working for our city and that requires good wages.
It’s time for Palo Alto citizens to start paying for its high quality leaders and employees, instead of looking to continue their “free ride”.
Greendell/Walnut Grove
on May 27, 2019 at 4:13 pm
on May 27, 2019 at 4:13 pm
Walter, that’s exactly the problem. We don’t have high quality leaders and employees. I really wush we did.
For example, we increase the number of employees and the amount we pay each employee in order to handle the growing population of the city and the services they require.
But we don’t consider how much money we have available for that.
And, if more services are now available to more people, the additional fees should cover those additional services. The fee for each should not need to go up - it should go down because of the economy of scale we get. The increased people resources available to the city should allow for more efficient operation, unless the leadership and management is weak and/or in the pocket of the unions (who will insist that flexibility of work assignment and multiple roles are anathema).
Greenmeadow
on May 27, 2019 at 4:59 pm
on May 27, 2019 at 4:59 pm
More city personnel hired to do less work.
Higher city fees to cover their salaries & PERs.
Fairmeadow
on May 27, 2019 at 7:26 pm
on May 27, 2019 at 7:26 pm
How did finance committee get stacked with all the free spending council members this year?
We are probably going to get hammered with new tax hikes and fees this year.
Downtown North
on May 27, 2019 at 8:06 pm
on May 27, 2019 at 8:06 pm
AKA, things get more expensive.
Yes, we understand those of you that moved here in the 50s-80s all wish that the moat had been built the day after you came. Prop 13 already has you dramatically underpaying your share of needed services... so get over it.
Another Palo Alto neighborhood
on May 28, 2019 at 8:09 am
on May 28, 2019 at 8:09 am
Sally.
People who think that everybody should be paying more to live in the town we have lived in for a long time are completely misunderstanding the values of family life that many of us have.
Not all people living in Palo Alto are earning high megabuck tech salaries. There are many here who are nurses, teachers, professional service providers, as well as lower income families. It is sad that there are those who think that we are able to endlessly dig into our shallow pockets to pay for things that the influx of incoming residential dwellers require. If the city needs extra staff to pay for additional services for additional housing units dwellers, then those building the units should be paying for them.
Yes Palo Alto is expensive and always has been. But if you think that we should move so that higher paid workers can live here then where do you think we should go? We are not retirees who can choose anywhere we want to live. We are the ones who have lived here because we work near here too and we want to be able to live near where we work too.
The fees that the City proposes to raise are things that should be affordable for all. If the City needs more employees, these fees are not the way to pay for them as it is not our fault there are more people living in Palo Alto.
If those of us who work in town and are doing the non-tech work earning average salaries, if we left, there would be nobody to replace us. Then the city would be in a bad way if they could not replace us. Or perhaps you think that all the schools should have no teachers, no administrators, we have no dental assistants, no nurses or hospital workers, no tax preparers or legal assistants. If we go, we can't easily be replaced!
Stop the selfishness. We deserve to be able to live where we have lived for many years much more than FAANG employees.
Community Center
on May 28, 2019 at 9:45 am
on May 28, 2019 at 9:45 am
Sally -
I don't agree that public sector union workers should bankrupt our city by being paid overly generous salaries and pensions by a captive city council. The city has $900 million in unfunded pension obligations!!!!!!!! Now increased fees for services to cover over generous salaries.Get over it yourself.
another community
on May 28, 2019 at 10:13 am
on May 28, 2019 at 10:13 am
@Cover-up Culture
What is the median salary of a Palo Alto City Employee?
I want to know what generous is.
Midtown
on May 28, 2019 at 10:45 am
on May 28, 2019 at 10:45 am
1. Long time palo alto residents have been reaping the benefit of living here without paying into any capital depreciation and maintenance fund. For example, if you live in a house for 20 years with minimal maintenance and are not putting aside money each year for the eventual cost of painting, new roof, plumbing upgrades, re-landscaping, etc, then when it is necessary to do that work, it will need to be paid from 'current income'. Saying that new residents should pay more is actually backwards. The people who should pay are the people who 'consumed' the resource (wore it down) without putting aside the money to pay for replacing/repairing it. That is why such funds are critically important. Yet few politicians have the guts to force the establishment and funding of such funds, and few citizens would support them because they don't understand it (or don't want to pay for it themselves).
2. Perhaps it is (finally?) time for a city income tax. Let's give it a serious thought.
Another Palo Alto neighborhood
on May 28, 2019 at 11:33 am
on May 28, 2019 at 11:33 am
@Funding
You are so wrong. The City should have been preparing for years for maintaining infrastructure out of the taxes we pay. This is the way most households work, putting money into a rainy day fund for repairs and replacement. If the city is not doing this then it is not our fault.
However, reading the article the increases in fees is for increases in city employees which is needed because there are more residents in town. This means that every city department is growing in personnel to deal with the increase in the number of residents.
We as residents should not be paying for more employees. I don't even think the new residents should be paying for more employees in direct taxation. What I do think is that those developers who are making money building and developing the housing that these new residents will be living in should be the ones who are paying for the new employees. Then since the pool of residents will be higher, the fees and taxes that everyone pays should be paying for the larger number of employees salaries.
I know of two homes that have been sold and both the homes had been owned for many years, one over 20 years and one over 40 years. In both cases the amount of money the City will be receiving from property taxes will be a huge increase from what was being received in the past.
The City has no right to complain about not receiving enough money to pay for increases in the number of employees. Their income is increasing all the time.
Old Palo Alto
on May 28, 2019 at 11:53 am
on May 28, 2019 at 11:53 am
Bay area companies are doing what successful business does at it’s best - grow, create opportunity, produce wealth. Unions are doing what they do - advocating for their members. Government, other than providing efficient basic services, is expected to be the regulators. State, county, local Government, busy pushing social engineering and saving the rest of the world, is the core problem. Failure to plan and regulate has resulted in crises from once manageable challenges. Unfunded pensions. Unrestricted business expansion without sufficient housing. Etc.
Perhaps impolite to say but the Left is not focused on fixing these issues, their priorities are elsewhere. The right isn’t much better but at least have made a start. It’s hard to applaud the left sitting on their hands in Washington doing everything possible to resist. They are not doing anything for their country, or California.
Much of the support for the right today is simply a lot of people who want better results. People who see their communities in peril and want better results from their government.
PA once again, in a steady stream of increases, is again raising the cost of being here. The CC needs to justify the need for so many increases. Most taxes are percentages of the sticker prices. Houses, retail sales, services, all increasing in big leaps, why is that never enough?
In the end, communities die and bubbles pop.
Registered user
College Terrace
on May 29, 2019 at 1:50 pm
Registered user
on May 29, 2019 at 1:50 pm
Per the article, "the average increase of salaries and benefits between the current fiscal year and fiscal year 2020 . . . is 7.5% and this rate was applied to most fees to maintain cost recovery levels." In the private sector, average salary increases are much lower than 7.5%. Raises in the 2% - 3% range are more typical. Is the difference the cost of benefits?
Also, the article suggests that the proposed increases are meant to cover existing staffing levels. As is, we read about staffing shortages and our new City Manager often echoes our former CM's complaint that Staff has too much to do. Are staffing levels going to increase? If yes, do we have the funding to support that? If no, what's the plan for supporting growth vis-à-vis the city services aspects of infrastructure?
Growth is obviously a very complicated beast. Given our various problems I think it can be fairly said that we've not done a good job preparing for and managing growth. Periodically increasing fees to cover increased costs is understandable but how far does that really get us? Maybe we need to seriously reevaluate the level of growth we can afford and support. And maybe we need to be honest about the possibility that we have already reached our maximum.
Midtown
on May 31, 2019 at 6:34 am
on May 31, 2019 at 6:34 am
Next time you vote for "a business tax" so they can "pay their fair share" or a "transportation TMA tax" to "reduce single-occupant vehicles" or a "gas tax" to save the environment, or a tax to eradicate plastic, or a tax for....
Pay attention to where the money is REALLY going.
Big Government is a black hole swallowed up all your hard-earned dollars. Oh but we need to impeach Trump!
College Terrace
on Jun 2, 2019 at 4:23 pm
on Jun 2, 2019 at 4:23 pm
I'm always mindful that the city sets our utility rates at a level that allows a profit of approximately $20 million a year which is then transferred to the Palo Alto's general fund. There is a deliberate lack of transparency about this hidden tax. The percentage of our utility bill charges that are earmarked for transfer to the city's general fund should be a line item on our bills.
Palo Verde
on Jun 2, 2019 at 4:44 pm
on Jun 2, 2019 at 4:44 pm
^ Taxes are never a line item on my gasoline receipts either.
Downtown North
on Jun 2, 2019 at 7:15 pm
on Jun 2, 2019 at 7:15 pm
"Big Government is a black hole swallowed up all your hard-earned dollars."
Whatever that might mean. Why can't these Big Government allegers learn simple English?
Leland Manor/Garland Drive
on Jun 3, 2019 at 9:57 am
on Jun 3, 2019 at 9:57 am
Most of the comments miss the issue: this isn't about the quality or quantity of city services, the impact of Prop. 13 (not directly in any event) or the FAANG companies; this is about the soaring cost of public pensions due to decades of underfunding and overly-rosy return forecasts. The fact is the City of Palo Alto, the State of California and many, many other States and municipalities are allocating ever-larger percentages of their budgets to shore up their spiraling pension obligations. This means less money for current services and capital improvements. While not wishing to wade into the politics of public pension reform in this comment, let's at least recognize the primary cause for the seemingly never ending need to increase public sector revenue.
another community
on Jun 7, 2019 at 10:11 am
on Jun 7, 2019 at 10:11 am
The City publishes a financial forecast (LRFF) every year that provides a ten-year outlook for revenues and expenditures. This document closely mirrors the next year’s budget. It’s clear that the current financial management of the City is on auto-pilot. This LRFF shows that the City expects its revenue to increase at/about 3% a year and its expenditures—meaning labor costs—would increase similarly.
The budget documents (operating and capital) are lengthy. It’s doubtful that any of the Council spend too much time reviewing them. It’s equally unlikely that the public spends much time reviewing these documents either. None of these documents are released in terms of Excel spreadsheets to facilitate analysis.
People interested in understanding the City’s use of money need to review the LRFF, and the CAFR (Comprehensive Annual Financial Report) to understand where the City is going (financially) and how its money (capital) has been used in the past.
The City has made an effort to better fund its CalPERS obligations. The premise is that by paying more yearly then the unfunded liability will eventually diminish. What’s missing at this point is a model of the City’s finances that prove the point. But the bottom line is that the costs of pensions has become so large that reduced services and higher fees/fines/taxes are needed to pay the bill.
Registered user
Evergreen Park
on Jun 7, 2019 at 11:22 am
Registered user
on Jun 7, 2019 at 11:22 am
"But the bottom line is that the costs of pensions has become so large that reduced services and higher fees/fines/taxes are needed to pay the bill."
A good argument to follow the lead of other cities and vote for a business tax. Prop 13 property tax revenue for commercial is down to 25% and continuing to go down and we have little if any manufacturing that generates a sales tax. But a lot of new and increasing expenses to administering an every larger number of residential parking programs because of under parked office/R&D buildings. Increased cost of road replacement and repair, additional traffic lights, additional bike paths to protect from increased traffic, etc. etc. And the need for a robust system of convenient city shuttles so residents and commuters need to rely less on their cars. Grade separations, because of the projected increase in commute trains, etc. etc.
another community
on Jun 7, 2019 at 2:55 pm
on Jun 7, 2019 at 2:55 pm
> A good argument to follow the lead of other cities and vote for a business tax.
A better argument would be to thoroughly analyze the City’s needs for at least a thirty-year period. While cost estimates are probably not all that accurate beyond a ten-year horizon, given the increasing assets of the City that are not used by most Palo Altans—such as the Airport, and golf course to name only two—coming up with the total cost of running Palo Alto would provide a staggering number.
The idea of going on a spending spree for all sorts of new services is how businesses and individuals go bankrupt. As it were, Cities just wring more money out of its residents and businesses.
Given a 30-year financial outlook, there would be more than ample evidence to consider merging some departments with neighboring cities. Departments like HR, Library, and Parks/Recreation all have similar goals, and could be merged without the sky falling. Other departments like police and fire would run into problems at first because of unions and local laws/regulations. But over time, these problems could be handled.
Reality is that the cost of labor is going up, up and up in the coming decades until it really is painful. With 3% to 5% salaries increased geometrically, year after year—it’s only a matter of time until police and fire employees are commanding salaries in the $300K to $400K range. The only saving grace in this scenario is that in time all of the “classic” employees will have retired and all of those commanding these sky-high salaries will have their pensions limited by PEPRA.
What’s needed is a rethink of the use of technology—particularly where self-driving vehicles are concerned. The use of speech-to-text voice technology would be very useful for just about everyone employed by the City, once yield (accuracy) is at 99.9%. Over time, most lighting elements will be LEDs, reducing the need for constant replacement. The P/W Department is currently working on a very interesting asset management information management system. It’s effects would be fully realized for a few years, but once in place it should make P/W activities more productive than in the past.
All of these changes are needed to reduce the cost of labor.
So, as long as so few people really care about constraints on government spending in Palo Alto, the future has a very dark cloud over it for the taxpayers.