Sticker shock, business tax voter initiative ideas at Palo Alto grade separation forum

At Wednesday evening’s well-attended Community Meeting regarding Palo Alto grade separation, some residents expressed “sticker shock” at the $2.5 Billion to $3.8 Billion price tag for a citywide tunnel to separate the Caltrain tracks from cross streets; and the stark difference between this price tag and the cost of other recent and upcoming corridor grade separation projects in the region (with costs in the $140 to $390Million range.

The forum included a presentation on the citywide tunnel option; options to close Churchill and provide a bicycle/pedestrian crossing, and ways to mitigate the car traffic that would be diverted from Churchill if the street were closed to cars. Following the presentation, attendees had a chance to ask questions and comments at a variety of table as and posters around the room at the Mitchell Park Community Center.

Funding and financing – questions and tax ideas

At the table focused on funding and financing, community members asked questions about a variety of funding and financing mechanisms, including “value capture” from potential development along the corridor, and bonds based on property taxes or business taxes. The consultant staffing the table, Paul Peninger of AECOM,  said that the material in the white paper draft initially published in late 2017 was still valid, and that additional analysis would be needed to explore how the mechanisms might specifically apply to options that the city would consider.

In the discussion at that table, Arthur Keller, a former Planning Commissioner, expressed strong interest in a business tax, in the range of $1,000 per employee (which he reported was a similar level to the business taxes in San Francisco), focusing on the 2/3 of workers in Palo Alto with larger salaries at larger companies.   With about 66,000 employees in this category, Keller believed that bonding against these revenues would result in $1B to $2B in revenue.  Keller noted that a citizen initiative may be able to be passed with a 50% +1 majority, following a recent state supreme court case, although this interpretation is facing legal challenges.

The recent elections in Mountain View, East Palo Alto – and polling in San Mateo County about business taxes, show that voters can be supportive of business tax measures.  Mountain View’s recent “Measure P” business tax increase, also focusing on larger employers, passed handily with over 70% of the vote. But it was much smaller, 75 to $150 per employee based on the company’s size. Also, the goals of Measure P included transportation projects and affordable housing that offer benefits for businesses; and the business community did not campaign against it.

Businesses in Palo Alto (and elsewhere on the Peninsula Corridor) will benefit from the additional Caltrain capacity and cross-town traffic reduction facilitated by grade separations; but they don’t benefit extra from the more costly grade separation options that put trains underground and out of sight; so this strategy may risk opposition.

Churchill bike/pedestrian crossing and traffic 

Community members also considered options for pedestrian / bicycle undercrossings that could be built if Churchill is closed to cars, and the car traffic consequences of a Churchill closure.  Similar to public comments at the recent city council meeting, some community members urged the city to delay closing Churchill since Caltrain traffic is expected to increase incrementally over time, but the consequences of the extra train service with 2022 electrification will not be as severe as service increases being planned for later in the future.


Now back to Council

Following this community meeting, City Council will consider the community feedback in deciding which options to keep on the table, for further consideration about designs and funding/financing options.