The Palo Alto city council approves a significant Commercial Linkage Fee increase and is considering a square footage tax!
The pandemic and the slowdown in the economy has not slowed down cities from trying to increase taxes and in particular taxing property owners.
The City of Palo Alto is revisiting tax increases. Prior to COVID, they were exploring a head count tax to all businesses but in the most recent public meetings, they are exploring a square footage tax instead. A square footage tax would either be a property assessment tax based on the property’s square footage or a business tax to a business based on the square footage of the building leased. Either way, the city has given the green light to staff to hire consultants to survey residents and to explore raising up to now $40 million in tax revenue, likely to be at the commercial property owners expense.
The tax increase will need to go before the voters in November of 2022 but there is a considerable amount of work that will need to be done until the city council votes for it in June of 2022. The Public Policy Committee has convened a subcommittee meeting to explore options and means to get our concerns heard by the city council prior to their vote in June of 2022. Edesa Bitbadal, the Chapter’s Chief Public Policy Strategist, has attended all the Palo Alto City Council Finance Sub-Committee and City Council meetings to keep us informed. If you are interested in joining this committee, please contact Edesa at [email protected] or Tim Steele at [email protected] .
Additionally, NAIOP Silicon Valley is represented by Edesa with the newly formed business coalition, which is comprised of the Silicon Valley Leadership Group, Palo Alto Chamber, Stanford, and NAIOP. If you are interested in joining the larger coalition, please contact Edesa.
The immediate next step is for the City Council to review and vote on the polling outline at the City Council meeting.
Commercial Linkage Fee
On October 18, 2021, the Palo Alto City Council passed a significant increase to their commercial linkage fee. The ordinance amended the Municipal Fee Schedule to increase the fee from $39.50 per square foot to $68.50 per square foot for Commercial Impact Fees also called Affordable Housing Commercial Impact Fee. The Council voted 5-2 to pass it (Councilmembers Cormack and Tanaka vote no).