Palo Alto voters have a chance to approve a business tax in November, but the measures they consider will be much more modest than what the city council was considering just a few days ago.
The city council voted Wednesday night 6-1 to approve legislation that would allow the city to relinquish its long-held status as one of the very few municipalities in the state without a business tax. I was. However, in a last-minute compromise with business coalition leaders, city leaders cut the rate of the business tax from $0.11 to $0.075 per square foot per month, capping businesses to pay $500,000. I agree to set. , down from the $1 million cap in the previous proposal.
Both versions of the tax exclude all businesses with less than 10,000 square feet of space.
The council agreed to scale back the tax bill after two days of negotiations with leaders of the Silicon Valley Leadership Group and the Palo Alto Chamber of Commerce, the tax’s main critics. NAIOP Silicon Valley, which previously joined the anti-tax coalition, announced earlier in the week that it would be withdrawing from the opposition because it lacked the resources to campaign against the business tax.
On Wednesday, the opposition abruptly dissolved, with representatives from both groups confirming they would no longer oppose the tax bill. Their decision follows Tuesday’s arbitration session coordinated by former mayor Larry Klein, negotiations with Mayor Pat Bart and a city council task force made up of city council members Eric Philces and Tom DuBois, and city officials. It came down after continued fine-tuning to the tax proposal.
Mayor Ed Shikada said mediation efforts on Tuesday were productive but ended without an agreement.
“The effort has been very broad and, frankly, I think it has shed a lot of light on all parties involved in drawing out areas of interest and flexibility,” Cicada said. “Unfortunately, yesterday’s mediation efforts were unsuccessful, so at the end of the day all parties left, concluding that there were still gaps to be addressed, and were ready to report that no progress had been made.
Staff continued the conversation on Wednesday and secured the business group’s commitment not to oppose the bill after making further changes.
With the deal in hand, Congress voted Wednesday to reverse the tax resolution passed Monday, calling for a 0.11-cent tax and adopting a new resolution that reduced the tax rate. Friday. If approved, the business tax will generate about $9.6 million annually, with the proceeds going toward affordable housing, public safety, and improved rail corridors.
“Our chances of success with voters improve dramatically as a result of compromises where there is no opposition from the business community,” Burt said. I didn’t get everything I wanted, but I got what I needed at this point.”
As part of the same vote, the council voted on a bill supporting the city’s historic policy of transferring revenues from the gas business to the General Fund. The city recently stopped the transfer after a lawsuit from resident Miriam Greene led the court to conclude that the transfer constituted illegal taxes and ordered the city to refund them.
The business coalition, which had previously vowed to campaign against both tax measures, assured the city after Wednesday’s compromise that it would not oppose either.
Dan Costenbauder, vice president of tax policy at the Silicon Valley Leadership Group, which represents large companies, said his group carefully considered the city’s revised proposal and members agreed to drop their objections. said. On Monday, both his group and the Chamber of Commerce said he was lobbying for a rate not exceeding $0.06 per square foot and made no commitments about the group’s potential to change their positions. did. But on Wednesday, they both agreed not to oppose slightly higher interest rates.
“It’s been a long road, but our alliance does not stand in the way of this opportunity for Palo Alto to finally introduce a business tax,” Kostenbauder said Wednesday.
Wednesday’s vote marks the end of a winding road that began more than five years ago. The council originally considered putting the bill on his 2020 ballot, but canceled that plan due to the pandemic and reinstated it last year. But while the last-minute revisions succeeded in cooling the passion of some of the heated debates, some tax advocates grew lukewarm and deeply ambivalent about the final outcome.
DuBois and city council member Lydia Kou said they were disappointed with how the city paid its taxes, which DuBois called “insufficient.”
“The question that council members have to ask themselves is is something better than nothing? Maybe. A lot of things,” Dubois said.
Kou had a problem with the nature of the negotiations. The negotiations involved a group of companies, she argued, but they didn’t give enough weight to what residents wanted.
“It was mainly contact and negotiation with the coalition, but it also required engagement with the residents,” Kou said.
City Councilman Greer Stone shared the disappointment, but concluded after speaking with the city’s polling consultants that the tax would be much more likely to pass if there were no organized opposition. Opinions over the measures are so divided, he said, that the result would likely be a “jumping ball” if companies protested.
He called Wednesday’s poll “one of the hardest polls I’ll ever take.”
“I’m not happy with this, but we’re working on the art of possibility,” Stone said.
The only city councilor to oppose the measure was Greg Tanaka, who was adamantly opposed to all previous attempts to tax corporations. City Councilman Allison Cormack, who joined him in voting against an earlier attempt to impose a higher business tax on the ballot, saw Wednesday’s result as a big win and enthusiastically supported the revised version.
“Having no opposition is critical to our success,” said Cormack. “We believe we can prepare this community for a very stable and positive future.”
