With the business community in a rapid downspin because of the coronavirus pandemic, Palo Alto is preparing to drop its yearslong plan to place a business tax on the ballot this November.
City Manager Ed Shikada issued a recommendation to discontinue all work on the proposed tax measure, which the City Council was planning to use primarily for transportation improvements, including redesigning the city's rail crossings. In a report issued Thursday, Shikada noted that the city's economic landscape has "shifted significantly, with COVID-19 significantly impacting business."
He also noted that with the Santa Clara County Public Health Department issuing a shelter-at-home order Monday, "staff's ability to complete outreach, engagement and education related to a ballot measure will be severely hampered." Polling, he added, would likely not produce useful results at this time.
"Small businesses, such as restaurants and cafes, have closed or are seeing precipitous declines in patronage while large companies face heightened uncertainty," Shikada wrote in the report. "In addition, Santa Clara County's public health order to shelter in place makes it more difficult to solicit meaningful engagement and feedback with stakeholders, including both residents and businesses."
Shikada noted that it is unclear how long the economic, community and social impacts of this public health emergency will persist. To get the measure on the November ballot, the council would need to fully define what the tax looks like by July.
Shikada recommended that rather than pursuing the business tax, staff will work to improve and streamline the city's glitchy business registry and make sure the data in the registry is complete and reliable.
If the council accepts Shikada's recommendation, it will defer deliberating on the tax measure and consider it for November 2022 ballot.
The council discussion this Monday will come a time when the local economy is cratering, with most businesses shuttered, hotels seeing occupancy rates dwindle into single digits and restaurants either closed or limited to to-go orders by the county's Monday directive. Judy Kleinberg, president of the Palo Alto Chamber of Commerce, said the business community is "reeling from this virus."
"This is an economic crisis," Kleinberg told the Weekly. "It is a recession. It may turn into a Great Recession. We are looking at a very long, challenging economic crisis."
Councilman Greg Tanaka also offered a bleak forecast at the March 16 meeting and urged his colleagues not to move ahead with a business tax at this time.
"Right now our businesses are suffering big time — every single business," Tanaka said. "I don't think there is a single business out there that hasn't been hit hard.
Now, having a business tax in place doesn't seem like the right thing to do, given the stress that the economy is in right now. Maybe we can pick it up later once things pick up."
The City Council will consider the recommendation from Shikada on Monday night.
Find comprehensive coverage on the Midpeninsula's response to the new coronavirus by Palo Alto Online, the Mountain View Voice and the Almanac here.
Comments
Esther Clark Park
on Mar 20, 2020 at 6:12 pm
on Mar 20, 2020 at 6:12 pm
No business tax,ever. It will just roll on down to us residents.
And who wants to give the city money to help ruin our town by closing Churchill. No. Forget it.
Fairmeadow
on Mar 21, 2020 at 7:52 am
on Mar 21, 2020 at 7:52 am
A sensible thing. Things weren’t this bad even in 2008-2009 for business. What a terrible time to be a small business owner. Absolute decimation.
This will take a long time to recover...from restaurants to hotels. The city’s tax revenue is going to plummet. We need to prop back up these businesses as soon as the shelter in place is done. Let’s do our part as citizens to support local businesses.
Downtown North
on Mar 21, 2020 at 10:05 am
on Mar 21, 2020 at 10:05 am
Certainly, small businesses, such as "mom and pop" retail, should be exempt regardless of whether the economy is good or bad, but at a time when revenues decrease and needs increase, companies like HP, VMware, and Palantir can certainly contribute their fair share. If they don't, once again, we citizens will be required to pick up the slack regardless of our own financial situations.
Community Center
on Mar 21, 2020 at 10:23 am
on Mar 21, 2020 at 10:23 am
The writing has been on the wall for weeks. Based on the severe social and economic impacts of the coronavirus emergency, it is very unlikely that there will be any taxes on the November 2020 ballot, including the Palo Alto business tax. The regional transportation "mega measure" has already been pulled and the city is likely to defer consideration of the business tax, along with extending the timeline for selecting the grade separation preferred alternatives.
Cities are just starting to digest the drastic changes ahead that will transform their use of staff and financial resources for the foreseeable future.
In the meantime, this is a period in need of much greater community volunteerism from residents and the business community, especially big businesses. Many people are ready to step up to help and are looking for how to do that. The city has already initiated a call for more Emergency Services Volunteers (ESV's) including Block Preparedness Coordinators (BPC's). People can sign up at esv@cityofpaloalto.org. Developers, big businesses and individuals with great resources will be needed to support a range of emerging needs, such as short term housing for the homeless.
Old Palo Alto
on Mar 21, 2020 at 11:20 am
on Mar 21, 2020 at 11:20 am
Property tax payments should be deferred as well.
Old Palo Alto
on Mar 21, 2020 at 2:41 pm
on Mar 21, 2020 at 2:41 pm
Makes sense that no new taxes should be imposed at this moment. Measure G, which passed on Mar 3 by a narrow margin, unfortunately will add to everyone's tax burden to fund $898 million of unclear expenditures for Foothill and DeAnza College. This tax passed by a narrow margin on Mar 3 (unfortunately just as the virus was becoming known).
Hard to imagine people would vote "yes" for this given current situation.
Any way to claw that back so people aren't punished with NEW taxes like this?
Downtown North
on Mar 21, 2020 at 6:28 pm
on Mar 21, 2020 at 6:28 pm
Those of us who have businesses downtown have had enough of this and are going to move out. Yes, it won't pass this time, but the government was always just casting about looking for the most palatable way of increasing taxes. It was never really about any particular improvement, it was just an attempt to justify a new source of tax revenue.
So now they are going to focus on "improving the business registry" a list of businesses that we all have to pay for to be on that serves no useful purpose whatsoever. It's just an excuse to extract money from businesses that was on top of this new tax and the $800 per year they charge me for all of my employees to park on the street.
The only useful improvement would be to remove the business registry and refund the thousands of dollars I've paid to be on a worthless "business registry". So now I suppose they are going to "improve it" by adding boldface lettering to all of the commas and doubling the price, as if it cost them anything in the first place.
My business has just been cut in half, and yet they literally cannot stop. They literally cannot stop trying to get more and more out of me by "improving the business registry". I've had enough. My lease is up later this year and this is the end for me here. I'm done. I'm not investing any more effort in building a business in an area that only tries to attack me, endlessly.
Another Palo Alto neighborhood
on Mar 21, 2020 at 9:45 pm
on Mar 21, 2020 at 9:45 pm
Posted by DTNResident, a resident of Downtown North
>> Those of us who have businesses downtown have had enough of this and are going to move out.
What, exactly, have you had enough of? Your post is just not specific enough. To be useful, you need to describe what type of business it is (retail; personal services - e.g. CPAs, lawyers, etc.; software development), number of employees, and, what the city is doing to discourage your business.
>>My business has just been cut in half, and yet they literally cannot stop. They literally cannot stop trying to get more and more out of me by "improving the business registry". I've had enough. My lease is up later this year and this is the end for me here. I'm done. I'm not investing any more effort in building a business in an area that only tries to attack me, endlessly.
How much time do you spend each year on the business registry information? How many employees do you have? Retail or local service business? Number of employees? etc. etc. There just isn't enough information in your post to explain why you consider Palo Alto unfriendly.
University South
on Mar 21, 2020 at 10:20 pm
on Mar 21, 2020 at 10:20 pm
@DTN Resident
You are likely having to pay very high rent and salaries for your business in Palo Alto. But local city taxes are not your problem. Palo Alto is one of the only cities in the region is one of the only cities in the region without any business tax. You claimed to have paid thousands of dollars on the business registry, but the charge is a flat rate of $54 per year and has only been in existence a few years. P
No doubt your costs of doing business here are high, but it is not due to city taxes.
Downtown North
on Mar 21, 2020 at 11:46 pm
on Mar 21, 2020 at 11:46 pm
Celebration time for the Chamber of Commerce and developers, Yay!
Best excuse ever, to oppose a business tax.
That the city charges businesses to be on the Registry is an indication they tried to kill it. In what universe do you penalize people when you are asking them to give you information?
Yes likely the previous City Manager tried to kill the registry. let's see if our current CM can do better.
Downtown North
on Mar 22, 2020 at 2:57 pm
on Mar 22, 2020 at 2:57 pm
"As local economy reels, Palo Alto looks to nix planned business tax"
Balderdash! This is Silicon Valley. Business does not reel in Silicon Valley. Somebody has been whispering in someone's ear.
University South
on Mar 22, 2020 at 4:17 pm
on Mar 22, 2020 at 4:17 pm
The grade separations should be designed and built quickly and inexpensively.
There will be a need for WPA type projects to support the economy during the coming difficult times.
University South
on Mar 22, 2020 at 4:20 pm
on Mar 22, 2020 at 4:20 pm
We should be sympathatic to small business, but keep in mind, they will be flooded with money from the Federal government. The unemployed will receive as much as 100% income replacement. The rest of us will be left with much diminished retirement funds as a result of this huge income and wealth redistribution.
Palo Verde
on Mar 23, 2020 at 11:40 am
on Mar 23, 2020 at 11:40 am
Which businesses use Contactless Payment?
Downtown North
on Mar 23, 2020 at 12:50 pm
on Mar 23, 2020 at 12:50 pm
Isn't the basic point that We the People should have some benefit to Palantir's occupation of downtown, in the way that in hindsight we should have gotten some value to Facebook's $420 Billion and Google's $717 Billion with a B their respective market caps use of our resources during their tenure here?
We should have had a billion dollar rainy day fund from just those two.
All of which is more fundamental that the winds that blow and the virus running its course.
Palo Verde
on Mar 23, 2020 at 4:04 pm
on Mar 23, 2020 at 4:04 pm
> Those of us who have businesses downtown have had enough of this and are going to move out.
I also think we're going to see businesses go out of business or close up for other reasons permanently. I remember some businesses closing even before the virus, and I know a long-running single-owner small business which is closing up permanently.