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 trafficÂ
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.
re: Measure P in Mountain View, it’s important to note
1. how low the previous business tax was compared to our neighbors (google paying only $70 more than a 1 person part time business)
2. the previous business tax had not be raised once in the past 50+ years (can’t think of any other tax that hadn’t)
“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.”
Grade seps have no effect whatsoever on train capacity. And they can reduce congestion — but not traffic. Congestion reduction can uncork latent demand, and so grade seps may, therefore, increase traffic.
Where will the other billion or two come from if Mr. Keller is right that Palo Altans can with a simple majority vote force larger Palo Alto employers to pay a $1k “head tax” sufficient to sell $1-2 billion from a bond issue.
Additionally, consider the opportunity cost. If the additional cost of undergrounding is, say, $1-2 billion … what else could that $1-2 billion pay for. If $1-2 billion just fell into the City of Palo Alto’s lap, would it be best spent on making it so that the relatively tiny fraction of residents living near the Caltrain line have the unexpected luxury of not seeing the train anymore? Of course, they wouldn’t hear it anymore either … but the new Swiss electric trains will be far quieter, and horns will already be silenced by the far cheaper grade sep alternatives.)
What about tax increment financing? That’s where the windfall of increased property values near the rail line is shared with the city via the County Assessor’s Office in the form of increased assessed value (hence property taxes) to help finance the huge additional cost of the tunnel alternative? Seems fairer than letting the entire windfall of increased property values fall to the residents pushing hardest for a tunnel.