City considering a tax to build affordable housing

In January 2019, Palo Alto City Council approved its first affordable housing project in seven years, at 3703-3709 El Camino Real in Palo Alto. No other affordable projects have been approved since then. Illustration by Pyatok Architects.

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BY SARA TABIN
Daily Post Staff Writer

Palo Alto City Council members just agreed to move forward with a business tax, but they are already talking about a new parcel tax.

Councilwoman Alison Cormack said during Monday’s council meeting that she wants the council’s Finance Committee to look at a parcel tax for the 2022 ballot to raise more money for affordable housing.

She said the city has drained its affordable housing fund and she thinks people who own property should participate in making the city more affordable for everyone.

Developers are supposed to pay into the fund as a condition of receiving permits from the city. But the flow of money has been reduced for a couple of reasons. First, the city has placed a cap on the amount of new office space it will allow, which has diminished applications for new commercial developments. Second, the cost of land has made it too expensive for housing developers to apply to the city to build apartment or condo projects.

Council agreed last week to put a business tax based on number of employees on the November ballot. The tax is supposed to raise $10 million a year, or 5% of the city’s general fund budget. The money will likely fund city transportation projects.

The city reported a $76 million surplus for the 2019 fiscal year.

The $76 million surplus included $22.6 million from Palo Alto’s governmental activities, plus $53.4 million from business-type activities, such as the city’s utilities operations.

The business tax has been discussed as a way to get money for grade separations, or separating the Caltrain tracks from the streets. The city doesn’t know exactly how much that will cost yet since no plan has been finalized, but estimates have been in the tens of millions of dollars.

Housing has been pitched as another place that the funds could go.

Councilwoman Lydia Kou said on Monday that she thinks the money from the business tax should go to affordable housing.

4 Comments

  1. If they get this tax approved, they won’t use it on housing. Council doesn’t keep its promises when it comes to taxes. Remember how they promised that if we passed a hotel tax, we’d get a parking structure at Hamilton and Waverley. Then, once the money started rolling in, they dropped that idea. That killed their credibility. I won’t be voting this fall for a business tax and I won’t support a hotel tax. To council I say, LIVE WITHIN YOUR MEANS!

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