BY KYLE MARTIN
Daily Post Staff Writer
Palo Alto City Council tonight (Feb. 1) voted to start construction of a $118 million police building, although Vice Mayor Pat Burt and Councilman Greg Tanaka said this isn’t the right time given the economy.
Voting in favor were Alison Cormack, Tom DuBois, Lydia Kou, Greer Stone and Eric Filseth.
Council approved a construction contract with Swinerton Inc. to build the police station at 250 Sherman Ave. in the California Avenue district. Council also accepted City Manager Ed Shikada’s recommendation to finance the project by selling Certificates of Participation, a method of borrowing that doesn’t require voter approval.
The city will mainly use hotel tax revenue to pay back lenders who buy the certificates. The city will have to pay about $5 million a year, and a third of that will be in interest and fees to Wall Street firms.
The new police station is expected to be finished by summer 2023.
But the city will have to scrape to find enough money to pay the new $5 million annual encumbrance. A budget forecast predicts that the city’s hotel tax revenue in the current fiscal year, which runs through June 30, will be $4.75 million.
And the city’s finances are tight. In May, council was forced to “brown out” or partially close fire station No. 2 at 2675 Hanover St., serving the College Terrace neighborhood in order to save $831,555 annually.
It wasn’t clear tonight what budget items the council would cancel in order to make payments on the police station. Burt was concerned that the council also hadn’t had a discussion of its overall capital improvement budget, of which the police station was the biggest element.
Burt and Tanaka wanted to delay the project’s initiation until a later date.
The new police station will be 56,000 square feet and three stories tall, with an additional two levels underground. Covering an entire city block, it will house the Police Department, Fire Department administration, the 911 emergency dispatch center, the Office of Emergency Services and the emergency operations center.
The new building would replace the existing police station that opened in 1970 at 275 Forest Ave. The current station is about 25,000 square feet and doesn’t meet seismic safety standards, according to the city.
Two council members, Tanaka and Stone, said they wanted to see the seismic report that said the police station was unsound. But the city employees participating in the council meeting were unable to produce the report immediately.
The cost of the new police station has doubled since fiscal year 2018, when the city’s capital budget listed it as a $57.8 million project.
“Things have changed since 2018,” Burt said. “The world has changed and our budget has drastically changed. So the notion that we can necessarily have all things that we thought were possible two years ago is not realistic in my mind.”
The city has been setting aside a portion of its hotel tax revenue for the new police station, as well as other projects included in a 2016 infrastructure plan. The funding is coming from an increase in the hotel tax, from 12% to 14%, that Palo Alto voters approved in November 2014. Voters approved another increase in the city’s hotel tax, to 15.5%, in November 2018. Hotel tax is also known as the transient occupancy tax, or TOT.
In addition, two Marriott hotels are expected to open next month, with about 301 rooms combined, and the city will reserve all the hotel tax from those properties for infrastructure, according to a report from Shikada for the council meeting.
To save costs on the building, Burt suggested the city cut out one of two levels of underground parking, but city Public Works Director Brad Eggleston told Burt that change would delay construction by about a year.
Tanaka suggested that instead of saddling the city with new costs, the council rehire more police and firefighters. He said, “people provide the services,” not the building.
He said he’s heard from people in the College Terrace neighborhood that they’re not happy with the fire station brown out, and wished the $5 million were spent on restoring fire and police services.
“It doesn’t do any good to have a new facility if you can’t render emergency services presently during the existing emergency,” Palo Alto resident William Ross told the council during the public comment portion of the meeting.
And Kou agreed with Tanaka. Kou said, “I would rather have personnel.”
“Yes, I would like the building. But it’s about a timing issue right now,” Kou said. “This project is not right for right now. It just seems like there is no choice if we’re going to be going back on our word to the people who came to the table to work with us.”
But then Kou voted to approve the project anyway.
DuBois and Cormack both said the time for the police building is now.
“I do think we’ll end up having to be flexible on other projects as they come up,” DuBois said. “We’ll need to look at where our revenues are and readjust.”
Cormack told the council that if they delay the project any longer, the project’s cost will only increase later.
“I don’t think more analysis will help us or change our mind. I think the mayor laid out perfectly the need, the finance and the timing,” Cormack said. ‘This is the right thing to do and now is the right time to do it.”