Yesterday June 4, Palo Alto City Council decided to take the next steps to pursue a potential hotel tax increase to help close an infrastructure funding gap.
At the Council meeting, hotel businesses spoke in opposition, concerned that the tax increase from 14% to 16% would put Palo Alto the highest of hotel taxes in the state (above Anaheim with 15%), and might encourage customers to stay in neighboring cities with lower hotel taxes.
In 2014, Palo Alto had increased its hotel tax from 12% to 14% to fund its infrastructure priorities. However, the city’s top infrastructure projects, including public safety buildings to replace non-seismically safe headquarters, and two parking garages, have seen substantial cost over-runs.
Reprioritize projects including parking garages? Cal Ave garage review next week
Members of Carbon-Free Palo Alto, a local environmental group, advocated for deferring the parking garages. Early results from Palo Alto’s transportation management association have shown success in reducing car trips and parking demand, and the TMA is planning to expand activities to the Cal Ave area. The Carbon-Free Palo Alto group – and Friends of Caltrain – have made the case that the city could alleviate its parking crunch more cost-effectively with strategies to reduce solo driving.
Several council members, including Holman, Tanaka and Fine, expressed concern about the costs of projects, and encouraged re-prioritization of projects, including potentially deferring the downtown garage, and revisiting a staff proposal to downsize the California Avenue garage.
The California Avenue garage plans and Sherman Ave public safety building will come back to Council for review at its next meeting.
Council advances hotel tax; wants further study of soda tax, interest in future business tax
The Council voted to continue pursuing the hotel tax increase from 12% to 14%, and also to investigate an option suggested by the hotel businesses, to increase the hotel tax by 1 percentage point, and also add a visitor tax similar to a visitor tax in Anaheim. As the next step, staff will bring back specific ballot language for the city council to review for approval to go on the ballot in November 2018.
Council also decided to refer a proposed sugary beverage tax to its Policy and Services committee to consider a variety of questions about how to implement such a tax. Council members were very interested in the idea, which has been strongly supported by groups of public health advocates, along the lines of measures passed in San Francisco and Berkeley. However, there were more details about how to implement the tax than could be figured out in the short time remaining in the Council’s session before summer break. The goal of such a tax would be public health, rather than contributing substantial funds to the city.
Also, several council members expressed interest in future consideration of an employee-based business tax, especially to fund the city’s Transportation Management Association and other transportation priorities. Mountain View is considering a business tax for transportation this week.
The question about how to provide local funding for Caltrain grade separations has been deferred as the city grapples with its choices for grade separation designs, including some options that would incur hundreds of millions or even billions of dollars beyond the funding available from regional, state, and other sources.