Palo Alto council members voted 6-1 during a special meeting on Wednesday August 10th only two days before the deadline to place a 7.5 cent tax per square foot of office space for all non-exempt businesses above 10,000 square feet. The tax measure includes an annual cap of $500,000 annually, and a flat 2.5% increase per year to be applied to both the monthly rate and the tax cap beginning in 2026.
The tax is set to bring in about $9.6 million a year in revenue, of which city leaders specified (not legally binding) $5.2 million would go towards affordable housing and $3.2 million for public safety.
The Finance Council Subcommittees and City Council originally proposed .20 cents per square foot per month, with no cap, CPI that would have rolled over. This proposal would have raised over $60 million and yet cost individual companies millions of dollars.
The coalition of SVLG, Palo Alto Chamber of Commerce and NAIOP negotiated with the City Council starting in June of 2021. Without the coalition efforts over the last year, the tax amount would have been much higher, and would have impacted businesses and property owners negatively.
We would like to thank those who were a part of the NAIOP SV Subcommittee meetings for the last several months and in particular:
- Tim Steele of Sobrato
- Shawn McGarry of Hudson Pacific
- Charlie Acton of CM Capitol
- Dan Amend of ACRE Investments
- Rhina Bhagwati of CM Capitol Advisors
- Michael Bordini of Stanford
- Byron Renfro of Orchard Commercial Real Estate
- Jason Chow of Sand Hill Properties
- Matt Lituchy of Jay Paul
- Mollie Ricker of Dostart Development Company
Without our members’ participation, our public policy would not have been successful in joining the coalition and negotiating a rate with a cap. The great aspect of the subcommittee was that general members were part of the negotiations and discussions, and their comments and recommendations were forwarded to the Public Policy Committee and the Board. NAIOP’s advocacy made a difference, and our voice was heard by the Palo Alto City Council.
About NAIOP Silicon Valley:
Edesa Bitbadal, Chief Public Policy Strategist for NAIOPSV, prepares the Public Policy Update, like the one above, for our members and partners. To learn more about the various taxes and public policy perspective, please contact Edesa Bitbadal.