In this issue:
New study of potential 2020 tax ballot measures shows revenues ranging from $1 to $25 million or general bond up to $500 million
Get Up To Speed
Council may turn to a new, “strategic” Rail Blue Ribbon Committee to speed grade separations action
The ongoing saga of deciding how best to separate roadways from the train tracks may see a new player as City Council considers appointing a Rail Blue Ribbon Committee, comprised of former Palo Alto mayors and city council members. On August 19, council will consider staff’s recommendation to appoint a politically savvy group to supplement the work of the Expanded Community Advisory Panel, or XCAP, that took over from the original Community Advisory Panel earlier this year. As proposed, the new group of former electeds may be joined by non-voting representatives from the Palo Alto Chamber of Commerce, Stanford University, Caltrain, Valley Transportation Authority, and the Silicon Valley Leadership Group. The RBRC’s primary role would be to advise council on the selection of grade separation alternatives, but may also extend to development of a funding strategy for implementation – a function of increasing urgency as Palo Alto’s allotment of Measure B grade separation funds may be reduced by a delayed decision, contrary to the expectations of many.
The XCAP (comprised of neighborhood members, and representatives from the Chamber of Commerce, the Planning and Transportation Commission, PAUSD, and Friends of Caltrain), would continue its work to help staff “increase awareness and understanding of the options and complex trade offs that must be considered in the decisions ahead for the city” and ensure that “neighborhood perspectives are reflected in the development and evaluation of grade separation alternatives.
In contrast, the Rail Blue Ribbon Committee, or RBRC, would provide strategic recommendations directly to the council regarding “community-wide benefits and impacts, local and regional political considerations, and financing strategy for implementation.” Looking beyond neighborhood concerns, the RBRC will focus on how to build citywide voter support and compete for regional funding and project commitments. Staff hopes that former electeds will bring an understanding of both “the political environments locally and regionally” that will inform their recommendations regarding the viability of the various alternatives.
Beyond grade separation alternatives, staff recommends a range of RBRC involvement in funding strategy for the selected alternative:
- Limited to making recommendations on dollar amounts to be targeted via a tax ballot measure (regardless of the tax vehicle);
- Recommending a dollar target, timing, and the parameters of a specific tax vehicle; or
- All of option 2 plus design of polling and a community awareness campaign leading to decisions on a ballot measure.
This item is scheduled for council action on August 19, beginning at 9:15 pm. Click here for the staff report.
New study on revenue potential from 2020 tax ballot measures
On August 20, the Council Finance Committee will take a deeper dive into potential Tax Measures to place on the 2020 Ballot. The latest analysis describes the process and revenue potential for a General Bond or a Parcel Tax and a commissioned study on Business Tax measures in the Bay Area over the past 10 years, including comparative research across municipalities and analysis and modeling of the range of potential revenue the city might generate via a business tax vehicle (based on employee head count, square footage, or payroll expenses).
There are a lot of variables that can impact how much revenue a given tax might generate, including potential exemptions and different pricing levels and structures. In selecting an appropriate vehicle, the city must also consider “potential areas of tax leakage” and impacts on the economic environment and tax ecosystem. With further Finance Committee and council direction to narrow the focus, more complex scenarios will be modeled. Meanwhile, In a nutshell, the initial analysis modeled the following including initial, general assessments of impacts on equity, administrability, stability, and economic benefits:
- General Obligation Bonds ranging from $100 to $500 million in debt issuance. These would require 2/3 voter approval.
- Parcel Taxes of either a flat $350 per parcel or a $1 per square foot per eligible parcel, yielding between $7 million and $25 million per year. City parcel taxes typically require 2/3 voter approval.
- Business license taxes, whether based on employee headcount, square footage, or payroll size, could potentially generate $1 million to $15.5 million annually, depending on the tax rate. If the tax is considered a “general tax”, it requires only majority voter approval. If a “special tax” it would require 2/3 voter approval. Whether “general” or “special” depends on the level of specificity regarding what the revenues will be spent on.
Following the Finance Committee meeting, staff will return to City Council with an update and confirm timing for next steps, including polling and stakeholder outreach, with an eye toward a decision about the type of measure to pursue by October/November. Click here for the staff report.
Fry’s site owner reluctant to redevelop even as city’s NVCAP costs may escalate
The North Ventura Coordinated Area Plan will return to City Council for endorsement of an expanded planning process for the 60-acre area surrounding the Fry’s Electronics property. The Fry’s Electronics site, a 12 acre parcel at the core of the study area for the NVCAP is coveted in the city’s Housing Element for its potential for a “realistic yield” of 221 new housing units. Indeed, the potential redevelopment of the site following the upcoming expiration of the Fry’s Electronics lease was a driving factor in initiating the NVCAP to ensure the area evolves into a vibrant, well connected, mixed-use neighborhood. The city received a two-year grant from Caltrans in 2018 to develop the coordinated area plan, with local matching funds provided by the Sobrato organization, the property owners for the Fry’s site.
To accommodate council direction from a March 11 Town Hall meeting, process concerns expressed by NVCAP Working Group members, and an expanded environmental analysis related to the Fry’s site’s historical significance, staff hopes to receive a one-time, two year extension of the project deadline under the Caltrans grant.
March council direction included study of alternatives for naturalizing Matadero creek, analysis of stronger housing, displacement prevention, and office size limits, and objective accounting to assess impacts of potential zoning changes on both property owners and community amenities.
On Monday August 19, staff will seek council endorsement of a revised overall approach and schedule for the project and staff’s response to Working Group members’ concerns as well as authorization to expand the scope (and cost) of the planning consultant’s contract and add a new contract to study the feasibility of naturalizing the creek.
If approved, the expanded scope of the NVCAP project will escalate costs by 40 percent, including up to $367,112 that will not be covered by the Caltrans grant. In order to fund the expanded scope, staff proposes exploring opportunities to share plan development costs with large property owners in the study area.
Recent indications that the Sobrato organization has little interest in redeveloping the Fry’s site suggests a change of heart since their 2018 investment of $138,000 in the NVCAP planning process. Whether that is due to the direction the NVCAP is heading, a hardening negotiating position, or other factors remains to be seen. However it does complicate the framework for council’s August 19 decision making.
Without redevelopment of the Fry’s property, the NVCAP’s housing potential would be significantly diminished as would opportunities for enhanced neighborhood amenities and mobility across the 60-acre plan area. The city must nonetheless complete the NVCAP within one to three years (depending on extension of the Caltrans grant) or assume responsibility for moneys already paid out of the grant. Adding new investment in the NVCAP, despite diminished expectations regarding the Fry’s site, entails risk. But opting out of the proposed new scope for the project could undermine credibility and limit the future promise of the plan.
This item is scheduled for council action on August 19, beginning at 6:50 pm. Click here for the staff report.
City pushes for fair representation on VTA in response to Civil Grand Jury
In June 2019, the Santa Clara County Civil Grand Jury released a highly critical report regarding the operations and governance of the Valley Transportation Authority and asked cities within the VTA service boundary to respond to specific recommendations regarding VTA Governance. City Council will discuss and approve a draft response on August 19.
The Civil Grand Jury report stated that “year after year, VTA operates one of the most expensive and least efficient transit systems in the country.” Despite a series of critical civil grand jury reports dating back to 2004, the VTA continues to veer from one financial crisis to another, while also perpetuating a structural deficit of $50 to $60 million per year. Regular users represent fewer than 5 percent of the county’s commuters despite continuous, significant increases in operating costs, 90 percent of which are subsidized by taxpayers.
Overall, the jury concluded that radical changes in policy and strategic oversight are needed, but that the VTA Board as currently structured and operated, lacks the capability to accomplish that change. Key findings point to lack of experience, engagement, continuity and leadership on the board; insufficient time investment due to other duties as elected officials; domination of the board by representatives of San Jose and the Santa Clara County Board of Supervisors “in terms of numbers, seniority and influence;” and frequent tension between directors’ fiduciary duties to the VTA and the political demands (and interests) associated with their local elected positions.
Key jury recommendations include calls for the VTA and the county to commission separate studies of successful transportation agency governance structures, reports from each city on its views regarding VTA governance, and consideration of such things as duration of directors’ terms, appointing directors who are not actively serving elected officials, and extending the chairperson’s term to two years.
Palo Alto’s draft response requests that the studies of successful governance include, not just “large city” agencies, but specifically those in metropolitan areas where service boundaries span multiple municipalities. The city cautions that small cities, and especially those without representation on the VTA Board, will need time and resources to meaningfully weigh in on alternative governance structures for the VTA, including strategies to sustainably represent the interests of multiple municipalities. Specifically, the city proposes evaluating VTA governance (and representation) based not only on population distribution, but also such things as employment and sales tax generation (a primary source of VTA revenues) or communities with direct interest in shared permanent transportation issues, such as Caltrain and High Speed Rail. Palo Alto urges that VTA provide funding to an organization such as the Cities Association of Santa Clara County to facilitate that work.
The city is open to participating in legislative reforms pertaining to governance structure, but cautions that they must address the root concerns that lead to underrepresentation of smaller cities, particularly those bordering other counties. In particular, it may be premature to commit to extending the Chairperson’s term prior to resolving issues of fair representation across constituent agencies.
This item is scheduled for council action on August 19, beginning at 7:50 pm. Click here for the staff report.
What just happened?
The Planning and Transportation Commission heard almost four hours of public comment on the Draft Environmental Impact Report for Castilleja’s redevelopment plan, including strong showings from both supporters and opponents of the project. For their part, most commissioners expressed an interest in further impact analysis – particularly around impacts and mitigations related to traffic, especially due to the underground garage. Multiple commissioners suggested adding different Alternative designs that might better facilitate a finding that “overriding considerations” (such as benefits to the community) justify the proposed project’s significant and unavoidable impacts.
Citing a new ordinance in the City of Los Altos imposing a 500-foot setback from schools and a 1,500-foot separation between cell equipment installations among other limits in residential zones, many Palo Alto residents continue to push for stronger local controls.
City Council held a closed-session discussion last week regarding appeal of a court ruling that invalidated over a million dollars in fines charged to Sand Hill Properties and concluded that a requirement for “continued use” of the property for a grocery store did not require the store’s “continued operation.”
Keep your eye out …
- Transportation Work Plan (Tentative: City Council, September 9, 2019)
- Housing Work Plan (Tentative: Policy and Services Committee, September 10, 2019)
- Renter Protections (Tentative: Policy and Services Committee, September 10, 2019)