HomeMy WebLinkAboutStaff Report 14501
City of Palo Alto (ID # 14501)
City Council Staff Report
Meeting Date: 6/13/2022 Report Type: Action Items
City of Palo Alto Page 1
Title: Supplemental Information: Revenue-Generating Ballot Measures
(Affirmation of the Natural Gas Utility Transfer and New Business Tax):
Direction to Staff on Key Policy Questions and Measure Characteristics, and
Direction to Return with Final Documents for Placement of Ballot Measure(s)
on the November 2022 Election and a Non-Binding Resolution for Intended
Use of Business Tax Proceeds
From: City Manager
Lead Department: Administrative Services
A staff report for this item was published as part of the City Council packet that was released on
June 2, 2022 (CMR 13983, packet p. 221), which includes staff’s recommendation that Council
provide direction on key policy questions and ballot measure characteristics and direction to
return with final documents for placement of ballot measure(s) on the November 2022
Election, including a resolution stating Council’s intended uses for Business Tax proceeds.
This supplemental memorandum transmits additional exhibits:
1. A draft of the ballot question and ordinance for a Business Tax (Attachment B)
2. A draft resolution to inform the public of Council’s intentions regarding use of Business
Tax Proceeds (Attachment C)
3. Summary results of the 3rd round of polling (Attachment H)
Attachments:
• Attachment B: Draft Business Tax Ordinance, Ballot Question
• Attachment C: Business Tax Resolution
• Attachment H: Palo Alto Ballot Measure Survey Analysis & Tracking
Attachment B
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Ballot Measure Approving a Palo Alto Business Tax
Ballot Question
Shall the measure to raise funds for improving public safety,
affordable housing, rail crossing safety, homeless services,
economic revitalization and general city services, by
levying a tax on businesses in the City of Palo Alto at an
annual rate of ______ cents/square foot occupied by the
business, with annual adjustments for inflation and
exemptions for grocery stores and all businesses under
5,000 square feet, raising approximately $___ million
annually until ended by voters, be adopted?
YES
NO
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Ordinance
Uncodified provisions
1. The new tax imposed by this ordinance will go into effect on January 1, 2023.
2. Notwithstanding sections 090, 100, and 110 of the codified part of this ordinance,
the tax imposed by this ordinance will initially be due on the following schedule:
(a) For businesses [describe the category] the initial tax payment for the tax
that has accrued since January 1, 2023 will be due on _______ and will be delinquent 30
days later if not paid.
(b) For businesses [describe the category] the initial tax payment for the tax
that has accrued since January 1, 2023 will be due on _______ and will be delinquent 30
days later if not paid.
(c) For businesses [describe the category] the initial tax payment for the tax
that has accrued since January 1, 2023 will be due on _______ and will be delinquent 30
days later if not paid.
(d) With its initial tax payment, each business shall provide the following
information:
(1) The name of the business and the address or addresses at which it
will be operating in the city.
(2) The nature of the business’s activities.
(3) The square footage in which the business will be operating in the
city;
(4) If the business operator claims an offset under section 080,
sufficient information and documentation to establish the
business’s right to the offset and the amount of the offset;
(5) Any other information required by the Tax Administrator; and
(6) The amount of tax due based on the square footage of the business.
(e) A business that begins operating for the first time after January 1, 2023,
must submit its initial tax payment and initial information by the date provided in this
uncodified section or by the date provided in codified section 090, whichever is later.
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Codified Provisions
010 Title
This chapter is the “City of Palo Alto Business Tax Ordinance.”
020 Definitions
The definitions in this section apply to the words and phrases used in this chapter unless
the context clearly indicates otherwise.
(a) “Business” means any commercial enterprise, trade, calling, art, vocation, profession,
occupation, or means of livelihood, whether or not carried on for gain or profit.
(b) “Business operator” means a person who transacts, maintains, manages, operates,
controls, engages in, conducts, carries on, or owns a business in the city. It does not
include the employee of a business who is not an owner or proprietor of the business.
(c) “Calendar year” means the year beginning January 1 and ending December 31.
(d) “City” means the City of Palo Alto.
(e) “CPI Index” means the Consumer Price Index—All Urban Consumers for All Items for
the San Francisco-Oakland-Hayward Area or any successor to that index designated by
the Federal Bureau of Labor Statistics or the city council.
(f) “Fiscal year” means the year beginning July 1 and ending June 30.
(g) “Fixed place of business” means a place of business located in the city boundaries and
occupied for the particular purpose of operating a business. For the business of renting or
leasing real property, the real property being rented or leased is part of the fixed place of
business.
(h) “Grocery store” means a business that exists for the primary purpose of selling a range of
food items to consumers for consumption off site, such as canned foods; dry goods; fresh
produce; fresh meats, fish, and poultry; and any area that is not separately owned within
the store where food is prepared and served, including a bakery, deli, and meat and
seafood departments, or as otherwise defined in 14 CCR Section 18982(a)(3), provided
that any store that combines grocery items with other retail products or services is a
grocery store for the purpose of this chapter only if two-thirds or more of the occupied
space is designated to the sale of grocery items as listed in this section.
(i) “Hotel” has the meaning provided in section 2.33.010.
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(j) “Operate” means to conduct a business and includes all stages of conducting a business
from initial planning to the wind-down of a business, whether or not a profit is being
made.
(k) “Person” means any individual, firm, partnership, joint venture, association, corporation,
limited liability company, estate, trust, receiver, syndicate or other group or combination
acting as a unit and includes the plural as well as the singular number.
(l) “Quarter” means the three-month quarter of the fiscal year. The “first quarter” is the
months of July, August, and September; the “second quarter” is the months of October,
November, and December; the “third quarter” is the months of January, February, and
March; and the “fourth quarter” is the months of April, May, and June. The term “same
quarter of the previous fiscal year” means the quarter of the same number in the previous
fiscal year.
(m) “Square footage” means the rentable square footage used by a business as specified in a
business’s lease or, if the business floor space is owned by the business, as calculated in
the same manner as if the area was rented using commonly accepted standards of
measurement for leasing purposes such as the Standard Methods of Measurement
published by the Building Owners and Managers Association (BOMA). Any method of
measurement used must meet the following minimum standards:
(1) It shall be computed by measuring to the inside finish of permanent outer building
walls and shall include space used by columns and projections necessary to the
building.
(2) It shall include both the area used by the business and a proportionate share of the
building service areas such as lobbies, corridors and other common areas in a
building unless assigned to another business for tax calculation purposes or unless
agreed otherwise between the landlord and tenant.
(3) It shall not include vertical penetrations through the building such as stairs,
elevators, or heating, ventilation, air conditioning, utility, or telephone systems,
except on the lowest floor of stairs and elevators.
(4) For the business of renting or leasing residential property, area used exclusively
for residential purposes, areas solely for individual or family
sleeping/living/cooking/hygiene are not part of the square footage, but areas used
for the business operator’s offices, operational facilities, or to provide commercial
services to residents including common areas such as lobbies, are part of the
square footage.
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(4) Square footage for businesses with multiple locations will be measured and tax
assessed will be calculated based on the aggregate square footage for the business
for all locations in the City.
(n) “Tax Administrator” means the Director of Administrative Services, or successor
position, or their designee.
(o) “Transient” has the meaning provided in section 2.33.010.
(p) “Transient Occupancy Tax” means the tax imposed under section 2.33.020.
(q) “Transitory business” means a business that operates in the city for less than 90 days in
the course of one calendar year (such as seasonal sale lots, special events,
concerts/performances/circuses, filming, and party rentals).
(r) “Vacant” is to mean a severable portion of the physical location that a business is
operating, such as an entire floor, a building, or a portion of a floor with independent
entrance/exits, that is free from any use, fixtures, furniture, and equipment, and is
available for immediate use by a new tenant.
030 Obligation to Pay Business Tax
(a) It is unlawful for any business operator, either for themselves or for any other person, to
operate in the city any business taxed under this chapter without paying all business tax
required by this chapter.
(b) If a business has more than one business operator, then the payment of the business tax
by one business operator excuses any other business operators from the obligation to pay
the business tax for that period for which the tax has been paid.
(c) The requirement to pay business tax is in addition to and separate from the requirement to
obtain a business registration certificate under section 4.60.030.
(d) The payment of business tax does not authorize the doing of any act which the person or
business paying the business tax is not otherwise entitled to do and does not excuse the
business from complying with other applicable Code requirements.
040 Imposition of Business Tax
Any business operator operating a business at a fixed place of business in the city must
pay a business tax at the following rates:
(a) Beginning January 1, 2023, the tax shall be imposed at the rate of $0.05 per month per
square foot of square footage occupied or used by the business at the beginning of the
quarter, with no tax being imposed for the first 5,000 square feet.
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(b) Beginning January 1, 2025, the tax shall be imposed at the rate of $0.10 per month per
square foot of square footage occupied or used by the business at the beginning of the
quarter, with no tax being imposed for the first 5,000 square feet. This rate shall be
adjusted annually by the CPI Index as provided in section 050.
050 Annual CPI Adjustment of Tax Rate
(a) Beginning with the 2026-27 fiscal year, and each fiscal year thereafter, the tax rate shall
be automatically increased by a percentage equal to the percentage increase in the CPI
Index in the previous calendar year (“the CPI Increase).”
(b) Notwithstanding subdivision (a) of this section, in any year in which the CPI Increase is
more than 5%, the increase in the tax rate will be limited to 5%, and the amount of the
CPI Increase that exceeds 5% (“the Excess CPI Increase”) shall be added to the following
fiscal year’s CPI Increase under subdivision (a) of this section.
(c) If the addition of a previous fiscal year’s Excess CPI Increase to a current fiscal year’s
CPI Increase exceeds 5%, then the increase in the tax rate will again be limited to 5%,
and the amount that the combination of the CPI Increase and the previous fiscal year’s
Excess CPI Increase exceeds 5% will create a new “Excess CPI Increase” to be added to
the following fiscal year’s CPI Increase under subdivision (a) of this section.
060 Disposition of Tax Revenue
The tax imposed by this chapter is for the purpose of raising revenue for the general
governmental purposes of the city. All of the proceeds from the tax imposed by this chapter shall
be placed in the city’s general fund.
070 Exemptions from Tax
(a) The following businesses are exempt from the tax imposed by this chapter:
(1) Any business exempt from the tax by the laws of the United States or the State of
California;
(2) Grocery stores;
(3) Businesses that occupy or use 5,000 square feet or less in the city; and
(4) Transitory businesses.
(b) If a business operator operates a single integrated business that has two or more parts, one
or more of which could be exempt from the tax imposed by this chapter if operated as a
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separate business, the city may, at its discretion, exempt from the tax any part of the
business that would be exempt if operated as a separate business, provided the business’s
square footage can be reasonably allocated between the parts. If the city determines that
the square footage cannot be reasonably allocated between the different parts of the
business, then the entire business shall be taxed, unless to do so would violate a law of
the United States or the State of California.
080 Business Tax Offsets
(a) A business operator that operates a hotel in the city may deduct from the business tax it
owes for a quarter for the business of operating the hotel an amount equal to the total
transient occupancy tax collected and remitted to the city in the same quarter of the
previous fiscal year from transients staying at the hotel.
(b) The business operator of a business that has discretion to determine the location of the
place of sale, place of use or principal place of negotiation for sales or use tax purposes
and which exercises that discretion and designates the city as the place of sale, place of
use, or principal place of negotiation for sales or use tax purposes which results in the
city receiving sales or use tax revenues that it would not otherwise have received, but for
the business’s exercise of its discretion to designate the city as the place of sale, place of
use or principal place of negotiation for sales or use tax purposes (“Discretionary Sales or
Use Tax Sales”) may deduct from the business tax it owes for a quarter an amount equal
to one half of the total sales tax or use tax received by the city from the Discretionary
Sales or Use Tax Sales of that business in the same quarter of the previous fiscal year.
This offset can offset up to, but no more than, __% of the business’s quarterly business
tax.
(c) A business operator of a business that has rights to property due to property ownership, a
ground lease, or a lease that permits subleasing, and that is offering that property for sale
or rent, may deduct from the business tax owed for the business an amount equal to the
business tax associated with the square footage being offered for sale or rent, provided
that the area to be sold or rented is completely vacant and available for immediate
occupancy.
(d) A business claiming an offset under this section must claim the offset with its tax filing
for the quarter for which the offset is claimed.
(1) If the information necessary for a business to claim an offset is not available, the
business may defer claiming an offset for up to one year.
(2) The Tax Administrator may require a business claiming an offset to submit
additional information to support the claim of the offset. The request for
additional information must be made in writing and the information must be
provided within thirty (30) days.
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(3) If the Tax Administrator determines that an offset claimed by a business is
incorrect, the Tax Administrator may make and Initial Determination of the
amount, if any, of the offset and the amount of tax due under section 150(a).
090 Quarterly Tax Payments
(a) The tax imposed by this chapter shall be paid quarterly. The tax for each quarter is due
the first day of the following quarter and is delinquent thirty (30) days later.
(b) For the first quarter in which a business begins operating in the city, the business’s tax
shall be prorated for the number of days that the business was operating in the quarter.
(c) For the last quarter in in which a business operates in the city before closing, the
business’s tax shall be prorated for the number of days that the business was operating in
the quarter.
100 Business Tax Filing for a New Business
(a) When a business begins operating in the city for the first time, the business operator must
provide the Tax Administrator with the following information, verified by the business
operator as true and correct under penalty of perjury of the laws of the State of California,
before beginning the operation of the business in the city:
(1) The name of the business and the address or addresses at which it will be
operating in the city;
(2) The date on which the business will begin operating;
(3) The nature of the business’s activities;
(4) The square footage in which the business will be operating in the city; and
(5) Any other information required by the Tax Administrator; and
110 Quarterly Tax Returns
With each quarterly tax payment, a business operator must submit a quarterly tax return
which contains the following information, verified by the business operator as true and correct
under penalty of perjury of the laws of the State of California:
(a) The name of the business and the address or addresses at which it will be operating in the
city.
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(b) The nature of the business’s activities.
(c) The square footage in which the business will be operating in the city;
(d) If the business operator claims an offset under section 080, sufficient information and
documentation to establish the business’s right to the offset and the amount of the offset;
(e) Any other information required by the Tax Administrator; and
(f) The amount of tax due based on the square footage of the business.
120 Agreements for Installment Payments
The Tax Collector may enter into an agreement with a business operator to allow a
business operator to pay the tax on a more or less frequent basis.
130 Businesses Operating in the Same Location
(a) All business operators operating businesses in the same square footage are obligated to
pay business tax measured by that square footage..
(b) The payment of business tax by a business operator absolves any other business operator
from having to pay business tax measured by the same square footage.
(c) Two or more business operators that are operating businesses in the same square footage
may contractually agree which business will pay the business tax measured by that square
footage.
(d) If two or more business operators are operating businesses in the same square footage and
one of the business operators is exempt from paying business tax measured by that square
footage then no business tax shall be owed on the square footage in which the exempt
business is operating.
140 Delinquent Taxes (Penalties and Interest)
(a) When a tax becomes delinquent, a penalty of 10% of the amount of the delinquent tax
will be added to the amount of tax due. If the tax remains unpaid sixty (60) days after
becoming delinquent, an additional penalty of 25% of the amount of the delinquent tax
(excluding accrued interest and the initial penalty) will be added to the amount of tax due.
(b) On the first of each month that a tax is delinquent, interest in the amount of 1.5% of the
delinquent amount, excluding penalties and interest, will be added to the amount of tax
due.
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(c) A business operator may apply to the Tax Administrator for a reduction or waiver of any
accrued penalties or interest, and the Tax Administrator may reduce or waive any accrued
penalties or interest upon a finding of good cause.
150 Administrative Procedure to Assess or Correct Tax
(a) If the Tax Administrator determines that a business operator has incorrectly reported any
information to the city or has not paid all or any of the tax, penalties, or interest that are
due, the Tax Administrator may, using any information available to the Tax
Administrator, issue an Initial Determination stating what the Tax Administrator believes
to be the correct information and, if new or additional tax, penalties, or interest are due,
how much tax, penalties, or interest are due. An Initial Determination must be issued
within five (5) years of the last day of the quarter to which the Initial Determination
applies, except in the case of an audit conducted under section 210, in which case it must
be issued within ninety (90) days of the completion of the audit and can apply to any of
the quarters that were subject to the audit. The Initial Determination shall be served on
the business operator either personally or by U.S. mail to the most recent address for the
business operator in the Tax Administrator’s records. Service is effective upon deposit of
the Initial Determination in the U.S. Mail.
(b) A business operator affected by an Initial Determination may within fifteen (15) days of
service of an Initial Determination contest the Initial Determination and request a hearing
before the Tax Administrator by filing with the Tax Administrator a written request for a
hearing. The further accrual of penalties and interest shall be tolled upon the filing of a
request for a hearing. If a business operator does not contest an Initial Determination and
request a hearing with the Tax Administrator within fifteen (15) days of service of the
Initial Determination, the Initial Determination shall become final and cannot be
appealed.
(c) If a business operator timely contests an Initial Determination and requests a hearing, the
Tax Administrator shall set a hearing within thirty (30) days of the filing of the request
for a hearing. Notice of the hearing shall be served on the business operator either
personally or by U.S. mail to the most recent address for the business operator in the Tax
Administrator’s records.
(d) At the hearing the business operator may present evidence and argument regarding the
Initial Determination to show why the Initial Determination is incorrect and to show what
the determination of the Tax Administrator should be. Within sixty (60) day after the
close of the hearing, the Tax Administrator shall serve a Final Determination, setting
forth the Tax Administrator’s determination of the facts and issues that were the subject
of the Initial Determination. The Final Determination shall be served on the business
operator either personally or by U.S. mail to the most recent address for the business
operator in the Tax Administrator’s records. Service is effective upon deposit of the Final
Determination in the U.S. Mail. Unless an appeal of a Final Determination is filed under
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section 170, any penalties or interest tolled under subdivision (b) of this section will
resume accruing ten (10) days after the service of the Final Determination.
160 General Administrative Remedy
(a) Any person affected by a decision of the Tax Administrator (“the challenger”), except for
decisions under section 150, may challenge that decision by filing a written objection to
the decision with the Tax Administrator. The objection must be filed within fifteen (15)
days of the issuance of the decision being challenged. If the Tax Administrator was
required to provide notice of the decision, then the time to file an objection to the
decision begins to run from the date of service of the notice of the decision. The Tax
Administrator shall serve a written response to the objection within thirty (30) days of the
filing of the objection, which period can be extended by the Tax Administrator for an
additional thirty (30) days. The Tax Administrator’s response to the objection shall be
served on the challenger either personally or by U.S. mail to the most recent address for
the challenger in the Tax Administrator’s records.
(b) The challenger may request a hearing on the Tax Administrator’s response to the
objection by filing a request for a hearing with the Tax Administrator within fifteen (15)
days of service of the response to the objection. If a timely request for a hearing on a
response to the objection is filed with the Tax Administrator, the Tax Administrator shall
set a hearing within thirty (30) days of the filing of the request for a hearing. Notice of
the hearing shall be served on the challenger either personally or by U.S. mail to the most
recent address for the challenger in the Tax Administrator’s records.
(c) At the hearing the challenger may present evidence and argument regarding the decision
being challenged to show why the decision is incorrect and to show what it should be.
Within sixty (60) days after the close of the hearing, which the Tax Administrator may
extend for an additional sixty (60) days, the Tax Administrator shall serve a Final
Determination on the decision, setting forth the Tax Administrator’s determination of the
decision that was challenged. The Final Determination shall be served on the challenger
either personally or by U.S. mail to the most recent address for the challenger in the Tax
Administrator’s records. Service is effective upon deposit of the Final Determination in
the U.S. mail.
170 Appeals
(a) A Final Determination of the Tax Administrator under section 150, subdivision (d), or
section 160, subdivision (c), can be appealed to the City Manager by filing a written
notice of appeal with the City Manager within fifteen (15) days of service of the notice of
the Final Determination being appealed.
(b) Only a business operator who files a timely request for a hearing on an Initial
Determination under section 150 and participates in the hearing or a challenger who files
an objection to a decision and files a request for a hearing on the response to the
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objection under section 160 and participates in the hearing can file an appeal under this
section.
(c) If a timely appeal is filed with the City Manager, the City Manager, or the City
Manager’s designee, shall set a hearing within thirty (30) days of the filing of the appeal,
which may be extended by the City Manager for an additional thirty (30) days. Notice of
the hearing shall be served on the appellant either personally or by U.S. mail to the most
recent address for the challenger in the Tax Administrator’s records. The tolling of the
accrual of penalties or interest under section 150, subdivision (b), shall continue upon the
timely filing of an appeal under this section.
(d) At the hearing the appellant and the Tax Administrator may present evidence and
argument regarding the decision being appealed to show why the decision is correct or
incorrect and to show what it should be. Within sixty (60) days after the close of the
hearing, which the City Manager or the City Manager’s designee may extend for an
additional sixty (60) days, the City Manager or the City Manager’s designee shall serve a
written decision, setting forth the resolution of the appeal. The decision shall be served on
the appellant either personally or by U.S. mail to the most recent address for the appellant
in the City Manager’s records. Service is effective upon deposit of the decision in the
U.S. Mail. Any penalties and interest that were tolled under section 150, subdivision (b),
shall resume accruing ten (10) days after the service of the decision.
(e) A decision of the City Manager, or the City Manager’s designee, served under
subdivision (d) of this section is subject to judicial review under sections 1094.5 and
1094.6 of the Code of Civil Procedure with a writ petition filed in the appropriate court
within ninety (90) days of the service of the written decision. Any tax, penalties, or
interest determined by the decision to be owed to the city by the appellant must be paid to
the city as a precondition to filing a writ petition challenging the decision, but a claim for
a refund under section 200 does not have to be filed before filing a writ petition.
190 Constitutional Apportionment
(a) No tax imposed by this chapter shall be applied to a business operator so as to constitute
an undue burden on interstate commerce or intercity commerce or be violative of the
equal protection or due process clauses of the United States or California constitutions.
(b) A business operator who contends that the application of a tax imposed by this chapter on
the business operator constitutes an undue burden on interstate commerce or intercity
commerce or violates the equal protection or due process clauses of the United States or
California constitutions may apply to the Tax Administrator for an apportionment of the
tax imposed on the business operator that would remove the constitutional violation by
filing a written request with the Tax Administrator that explains the factual and legal
basis for the claimed constitutional violation and proposes a method of apportionment
that would resolve the alleged constitutional violations.
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(c) The Tax Administrator, in consultation with City Attorney, shall review the application
and within sixty (60) days of the filing of the application issue a decision on the
application. The decision on the application shall be served on the business operator
either personally or by U.S. mail to the most recent address for the challenger in the Tax
Administrator’s records. The decision can be challenged under section 160.
200 Refunds
(a) A business operator who believes that any tax, penalty, or interest has been illegally,
erroneously, or mistakenly paid to, collected by, or otherwise received by the city may
file a claim for a refund of the amount of tax, penalty, or interest claimed to have been
improperly received by the city.
(b) The claim must be filed with the Tax Administrator and signed under penalty of perjury
by the business operator. The claim must state:
(1) The legal and factual basis for the refund claim;
(2) The amount of tax, penalty, or interest allegedly improperly received by the city,
(3) The date or dates that the improper payments were made to the city, and
(4) The address of the claimant.
(c) The claim must be filed with the Tax Administrator within one (1) year of the date of the
allegedly improper payment to the city.
(d) The Tax Administrator shall provide a written decision on the claim within thirty (30)
days of the filing of the claim by serving the decision on the claimant either personally or
by U.S. mail to the address provided in the claim. Service is effective upon deposit of the
response in the U.S. Mail.
(e) A claimant may challenge the Tax Administrator’s decision on a refund claim under
section 160.
(f) This section does not apply to:
(1) A claim for a refund arising out of a decision of the Tax Administrator, City
Manager, or City Manager’s designee under sections 150, 160, 170, or 190; or
(2) A claim that could have been asserted by the claimant, but was not, under sections
150, 160, 170, or 190.
210 Audits
(a) The Tax Administrator may conduct an audit of any business operator to ensure proper
compliance with the requirements of this chapter.
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(b) To initiate an audit the Tax Administrator shall provide written notice to the business
operator that is the subject of the audit of the initiation of the audit by serving the notice
personally or by U.S. mail to the most recent address for the business operator in the Tax
Administrator’s records. The notice shall state the period of time subject to the audit.
(c) Notice of the initiation of an audit for a quarter for which either a business tax filing for a
new business or quarterly tax return was submitted under section 100 or section 110 must
be served within five (5) years of the last day of the quarter to which the filing or return
applied.
(d) Notice of the initiation of an audit for a quarter for which neither a business tax filing for
a new business nor a quarterly tax return was submitted under section 100 or section 110,
but for which the business was registered as a business under section 4.60.030, must be
served within seven (7) years of the last day of the quarter for which the filing or return
should have been filed.
(e) Notice of the initiation of an audit for a quarter for which neither a business tax filing for
a new business nor a quarterly tax return was submitted under section 100 or section 110,
and for which the business was not registered as a business under section 4.60.030, must
be served within ten (10) years of the last day of the quarter for which the filing or return
should have been filed.
(f) Upon completion of an audit, the Tax Administrator may make an Initial Determination
under subdivision (a) of section 150 of any taxes, penalties, and interest determined to be
owed and not paid for the audit period. The Initial Determination must be issued within
ninety (90) days of the completion of the audit. If a business operator subject to audit is
unable or unwilling to provide sufficient records to enable the Tax Administrator to
verify compliance with this chapter, the Tax Administrator is authorized to make a
reasonable estimate of the amount of tax due and the reasonable estimate shall be entitled
to a rebuttable presumption of correctness.
220 Maintenance and Review of Records
(a) Business operators must maintain for six (6) years records of square footage and
information necessary to calculate the tax. If the Tax Administrator serves notice of the
initiation of an audit, the information pertinent for the quarters subject to the audit must
be maintained until the conclusion of the audit.
(b) The Tax Administrator may with reasonable notice inspect the premises and records of
the business operator.
(c) The Tax Administrator may request the city council to issue an administrative subpoena
for records of a business operator or other persons with relevant information.
230 Confidentiality of Records
Attachment B
NOT YET APPROVED
15
All documents submitted to the city by a business operator under this chapter and all
documents of a business operator inspected by the Tax Administrator in the conduct of an audit
are presumed to be confidential and will not be subject to public inspection to the fullest extent
allowed by law and must be maintained so that the contents of the documents will not become
known except to persons charged with the administration of this chapter. Confidential documents
may be shared with consultants retained by the city to aid in the administration of this chapter,
provided the consultants agree to maintain the confidentiality of the documents. However,
nothing in this section precludes the city from aggregating information and releasing it in a
manner that does not identify any particular business or connect any information with a
particular business.
240 Action to Collect Delinquent Taxes
(A) Any tax, penalty, and interest imposed on a business operator under this chapter is a debt
owed by the business operator to the city, which may be recovered in an action filed by
the city in a court of competent jurisdiction.
(B) An action under this section shall be filed within three (3) years of an Initial
Determination becoming final under subdivision (b) of section 150, the issuance of a
Final Determination under subdivision (d) of section 150 that is not appealed, the
issuance of a Final Determination under subdivision (c) of section 160 that is not
appealed, or the issuance of a decision under subdivision (d) of section 170.
(C) During the pendency of an action filed under this section, interest will continue to accrue
under subdivision (b) of section 140 until the entry of judgment.
(D) Before filing an action, the city may serve the business operator either personally or by
U.S. mail at the most recent address for the business operator in the Tax Administrator’s
records with notice of the pending action and give the business operator fifteen (15) days
to pay all of the delinquent taxes, penalties, and fees. If all of the of the delinquent taxes,
penalties, and fees are not paid within the fifteen-day period, then an additional penalty of
25% of the amount of the delinquent tax (including accrued penalties and interest) shall
be added to the total delinquency and may be recovered in the action.
250 Errors Not Binding on the City
No error by the Tax Administrator or any other officer, employee, or agent of the city in
the application of this chapter shall prevent, prejudice, or estop the collection by or for the city
of the full amount of tax owed by any person under this chapter.
260 Dates
Attachment B
NOT YET APPROVED
16
If the last day for the performance of any act under this chapter is a Saturday, Sunday, or
holiday recognized by the city, then the date for the performance of that act is extended to the
next day that is not a Saturday, Sunday, or holiday recognized by the city.
270 Rules and Regulations
(a) The Tax Administrator may adopt rules and regulations that are not inconsistent with the
provisions of this chapter as may be necessary to aid in the application and enforcement
of this chapter.
(b) The Tax Administrator may adopt rules providing for the service or filing of any notices,
filings, returns, or submittals required by this chapter. These rules may provide
alternative means for serving or filing any notice, filing, return, or submittal, and may
clarify the method of serving or filing any notice, filing, return, or submittal provided for
in this chapter.
280 City Council Amendments
(a) The city council may amend this chapter in any way it deems necessary without the
approval of the electorate, provided the amendment does not increase the amount of tax
that any person would pay.
(b) Any amendment to this chapter that would reduce the amount of tax any taxpayer would
pay, either temporarily or permanently, must be approved by two-thirds (2/3) of the
members of the city council.
(c) Notwithstanding subdivision (a) of this section, the city council may with the approval of
two-thirds (2/3) of its members and without approval of the electorate reduce, revise, or
eliminate any of the business tax offsets in section 080.
290 Severability
If any word, phrase, sentence, part, section, subsection, or other portion of this chapter, or
any application thereof to any person or circumstance is declared void, unconstitutional, or
invalid for any reason, then such word, phrase, sentence, part, section, subsection, or other
portion, or the prescribed application thereof, shall be severable, and the remaining provisions of
this chapter, and all applications thereof, not having been declared void, unconstitutional or
invalid, shall remain in full force and effect. The People of the City of Palo Alto hereby declare
that they would have passed this ordinance, and each section, subsection, sentence, clause and
phrase thereof, irrespective of the fact that any one or more sections, subsections, sentences,
clauses or phrases had been declared invalid or unconstitutional.
300 Savings Clause
Attachment B
NOT YET APPROVED
17
No section, clause, part, or provision of this chapter shall be construed as requiring the
payment of any tax that would be in violation of the Constitution or laws of the United States of
America or of the Constitution or laws of the State of California.
NOT YET APPROVED
Resolution No. ____
Resolution of the Council of the City of Palo Alto Describing
the Council’s Intentions Regarding Uses of Proceeds of a Business
Tax to be Submitted to the Voters for Approval in November 2022
R E C I T A L S
A.The City of Palo Alto is a safe, healthy, and vibrant community with a wide array of public
services and facilities that support and enhance the lives and experiences of residents, businesses,
workers and visitors to the City. These include a network of neighborhood parks and libraries; excellent
public and private schools and universities; community centers, museums and theater facilities; high-
quality local health care services; walkable, bikeable, safe neighborhoods; an extensive urban forest;
two lively downtown areas with indoor and outdoor dining, live music and shopping opportunities;
world-leading climate protection programs; and more.
B.The City of Palo Alto is a well-run municipality, with a Triple-A bond rating and a reputation
for pro-active fiscal management, strong ongoing investments in public infrastructure, and conservative
financial planning.
C.As Palo Alto looks toward the future, City leaders have determined that the time has come to
seek voter approval to tax businesses that operate in the City, as many neighboring communities do. A
business tax would ensure that organizations that benefit from doing business in Palo Alto do their part
to support the City’s work to meet evolving challenges, provide for new and expanding public needs,
and maintain the high-quality environment that residents, workers, and visitors enjoy.
D.If a business tax is approved by voters, its proceeds will be placed in the City’s general fund
for use on general government services. Each year, Council Members elected by the voters will
determine the uses of those proceeds that best serve the public interest.
E.With this Resolution, the City Council informs voters of its intentions regarding the public
services and programs that would be supported by business tax revenues.
Accordingly the Council of the City of Palo Alto RESOLVES as follows:
SECTION 1. Council hereby adopts the above Recitals as findings of the Council.
SECTION 2. It is the Council’s intention to use proceeds of a business tax—a general tax for general
government uses—to fund new and enhanced services and programs that support safety and quality of
life as the community continues to develop. The following uses, in particular, would be supported by
business tax revenues:
Transportation and Safe Train Crossings. In the coming years, Palo Alto will need to need to invest
substantial local funds in the improvement and safety of train crossings. CalTrain is electrifying and
Attachment C
trains are increasing in number. To maintain traffic flow, bicycle and pedestrian mobility, and safety, the
City’s four at-grade road crossings must be modified and separated from the train right-of-way. It is
estimated that an average investment of $250 million will be needed for the improvements needed at
each crossing. City funds will be used as matching funds to secure additional county, state, and federal
funds for these investments in transportation infrastructure.
Housing Affordability and Services for the Unhoused. A balanced and healthy community welcomes
families and individuals from all walks of life. In Palo Alto, significant investments are needed to bring
housing costs into reach for many moderate earners who work in the City, such as teachers, public
safety employees, and workers in the trades and service industries. With few affordable local housing
options, these workers must travel long distances between home and work, contributing to green-house
gas emissions and traffic congestion. In addition, longtime residents—especially those who rent—are at
risk of losing housing and being forced to relocate to other communities or become unhoused. Those
who are already living in the City without housing need financial support to transition to stable, safe and
clean housing. Substantial funding is needed to advance these goals.
Enhanced Local Services. Rising costs and constrained revenues have limited the City’s ability to
provide services—such as police, fire, emergency services, and rejuvenation of our two downtown
districts—at the level desired by the community. Stable long-term revenues from a business tax will put
highly-valued City services on sound footing for the future.
SECTION 3. The Council finds that adoption of this Resolution is not a project under the California
Environmental Quality Act and, therefore, no environmental impact assessment is necessary.
INTRODUCED AND PASSED:
AYES:
NOES:
ABSTENTIONS:
ABSENT:
ATTEST: APPROVED:
__________________________ ____________________________
City Clerk Mayor
APPROVED AS TO FORM: ____________________________
City Manager
__________________________
City Attorney
Attachment C
220-6398
Key Findings from a Survey of Palo Alto Voters
Conducted May 22-26, 2022
Assessing Support for Potential Finance Ballot Measures
ATTACHMENT H
1
Survey Methodology
Dates May 22-26, 2022
Survey Type Dual-mode Voter Survey
Research Population Likely November 2022 Voters in Palo Alto
Total Interviews 463
Margin of Sampling Error (Full Sample) ±4.9% at the 95% Confidence Level
(Half Sample) ±6.6% at the 95% Confidence Level
Contact Methods
Data Collection Modes
(Note: Not All Results Will Sum to 100% Due to Rounding)
Text
InvitationsTelephone
Calls
Email
Invitations
Telephone
Interviews Online
Interviews
ATTACHMENT H
2
Survey Goals and Approach
Assess voter reactions to two
potential ballot measures,
with draft legal language: a
business tax and a measure to
ratify utility fund transfers.
Business tax and utility
measure rotated to assess
impact of ballot sequence.
Evaluate voters’priorities for
business tax structure.
Gauge the impact of pro and
con messaging on breadth
and intensity of support for
the businesses tas.
Business Tax
Utility Fund Transfer Ratification
Uses of Funds
Pro-BT Messages and Re-Vote
Anti-BT Message and Re-Vote
Business Tax and Utility Questions Rotated
Vote on One, Both, Neither?
BLT Amounts and Exemptions
Demographics
Message Blocks Rotated
ATTACHMENT H
3
Context
ATTACHMENT H
4
Voters in the city are have become more
pessimistic than optimistic about the city’s direction.
Q1.
36%
41%40%43%
61%
39%
35%34%37%
25%25%24%27%
20%
14%
May 2022March 2022202120182016
Right Direction Wrong Track Don’t Know
Would you say that things in Palo Alto are generally headed in the right direction,
or do you feel that things are headed in the wrong direction?
ATTACHMENT H
5
Voter Views of a
Business Tax
ATTACHMENT H
6
Hypothetical Ballot Language Tested
Shall the measure to raise funds for services such as
improving public safety, affordable housing, rail crossing
safety,homeless services,economic revitalization and
general City services,by levying a tax on businesses in the
City of Palo Alto at an annual rate of (HALF SAMPLE:10)
(HALF SAMPLE:12)cents per square foot occupied by the
business,with annual adjustments for inflation and
exemptions for grocery stores, seasonal businesses and all
businesses under 5,000 square feet,raising approximately
(HALF SAMPLE:$22 million)(HALF SAMPLE:$26 million)
per year until ended by voters, be adopted?
ATTACHMENT H
7Q2 Total. Do you think you would vote yes or no on such a measure?
Definitely yes
Probably yes
Undecided, lean yes
Undecided, lean no
Probably no
Definitely no
Undecided
21%
37%
1%
1%
14%
24%
2%
Total Yes59%
Total No38%
Support for the 12-cent version is no
lower than the 10-cent version, but
backing for both is very tentative.
21%
42%
5%
1%
14%
18%
4%
Total Yes68%
Total No26%
10 cents 12 cents
ATTACHMENT H
8
Three-quarters of Democrats support the
measure; a majority of independents do.
Q2 Total. Do you think you would vote yes or no on such a measure?
Initial Business License Tax Vote (Rates Combined) by Party
75%
55%
20%22%
39%
75%
3%5%5%
Democrats Independents Republicans
Total Yes Total No Undecided
(% of
Sample)(60%)(30%)(10%)
ATTACHMENT H
9
Seven in ten women support the measure.
Q2 Total. Do you think you would vote yes or no on such a measure?
Initial Business License Tax Vote (Rates Combined) by Gender
58%
69%
39%
26%
3%5%
Men Women
Total Yes Total No Undecided
(% of
Sample)(48%)(51%)
ATTACHMENT H
10
Four in five voters under 50 support the
business tax; older voters are more divided.
Q2 Total. Do you think you would vote yes or no on such a measure?
Initial Business License Tax Vote (Rates Combined) by Age
80%
49%55%
17%
47%39%
3%4%6%
18-49 50-64 65+
Total Yes Total No Undecided
(% of
Sample)(41%)(29%)(30%)
ATTACHMENT H
11
Voter Views of a
Utility Fund Measure
ATTACHMENT H
12Q3 Total. Do you think you would vote yes or no on such a measure?
Definitely yes
Probably yes
Undecided, lean yes
Undecided, lean no
Probably no
Definitely no
Undecided
20%
35%
3%
1%
17%
12%
11%
Total Yes59%
Total No30%
Shall the measure affirming the City of Palo Alto’s existing routine budget practice since 1950 ofannually transferring no more than 18%of the gross revenues from the City’s natural gas utility(generated by the City’s retail natural gas rates) to its general fund to support general city servicessuch as library services; climate change reduction; transportation; and police,fire,emergencymedical, and 911 response; providing approximately $7 million annually in existing revenues,be adopted?
The utility measure also has support from
nearly three in five, and backing is also soft.
ATTACHMENT H
13
Nearly two-thirds of Democrats back
the measure, as do almost three in
five independents.
Q3 Total. Do you think you would vote yes or no on such a measure?
Initial Utility Measure Vote by Party
64%58%
37%
22%
36%
59%
14%7%4%
Democrats Independents Republicans
Total Yes Total No Undecided
(% of
Sample)(60%)(30%)(10%)
ATTACHMENT H
14
Two-thirds of business tax supporters also
back the utility measure.
Q3 Total. Do you think you would vote yes or no on such a measure?
Initial Utility Measure Vote by Initial Business Tax Support
66%
47%49%
22%
47%
15%11%6%
36%
Among Business Tax
Supporters
Among Business Tax
Opponents
Among Undecideds
Total Yes Total No Undecided
(% of
Sample)(63%)(32%)(4%)
ATTACHMENT H
15
About half of voters back each measure when
asked to consider them in tandem.
Q4.
If both of these measures were on the same ballot, would you vote
“yes” on both, for just one, or for neither?
15%
33%
17%
18%
17%
Yes, on business tax only
Yes, on both
Yes, on utility fund transfer measure only
No, on both
Don't know
Total Yes on Business Tax48%
Total Yes on Utility Measure50%
Note: the sequence in which the measures were presented did not yield
any meaningful difference in support.
ATTACHMENT H
16
Structuring a
Business Tax
ATTACHMENT H
17Q5 a-g. Not Part of Split Sample
36%
43%
33%
29%
15%
22%
19%
34%
27%
30%
30%
43%
35%
32%
12%
12%
15%
13%
18%
12%
16%
11%
10%
13%
12%
10%
14%
22%
6%
9%
10%
15%
14%
17%
11%
Exempting seasonal businesses that operate less than 90 days per year from the tax
Exempting grocery stores from the tax
Exempting the first 5,000 square feet of each business from the tax
Having the tax remain in place until ended by voters
Phasing in the tax over a 2-year period
Basing the tax on the square footage of a business’s property in Palo Alto
Reducing business tax bills for hotels by the amount they already pay in hotel taxes
Strng. Supp.Smwt. Supp.Don't Know Smwt. Opp.Strng. Opp.Total Supp.Total Opp.
71%17%
69%19%
63%22%
59%28%
58%24%
57%31%
51%33%
I am going to read you a list of some of the major provisions of this measure. Please tell me whether you support or oppose that aspect of the measure.
Voters broadly support a variety of exemptions
and phasing in the tax over two years.
ATTACHMENT H
18Q5 h-m. Split Sample
34%
18%
12%
16%
16%
10%
29%
31%
36%
28%
27%
24%
19%
13%
24%
16%
12%
31%
12%
15%
5%
18%
20%
14%
7%
23%
23%
22%
26%
22%
Limiting the annual increase for inflation to 5%
Charging a tax of 12 cents per square foot per month on current rents, an increase averaging 1.7% per square foot
Charging a tax of 10 cents per square foot per month
Charging a tax of 10 cents per square foot per month on current rents, an increase averaging 1.4%
Automatically adjusting the tax by up to 5% each year to adjust for inflation
Charging a tax of 12 cents per square foot per month
Strng. Supp.Smwt. Supp.Don't Know Smwt. Opp.Strng. Opp.Total Supp.Total Opp.
62%19%
49%38%
49%28%
44%41%
43%45%
34%36%
I am going to read you a list of some of the major provisions of this measure. Please tell me whether you support or oppose that aspect of the measure.
Three in five support a cap on inflation
increases; tax rates are divisive.
ATTACHMENT H
19
Ext./VeryImpt.
64%
60%
58%
56%
55%
47%
35%
Q6. I am going to read you a list of more-specific ways in which funds generated by a tax could be spent. Please tell me how important each item is to you
personally: extremely important, very important, somewhat important, or not too important.
41%
33%
31%
37%
29%
22%
16%
23%
27%
27%
19%
26%
25%
19%
21%
22%
24%
20%
25%
29%
36%
14%
17%
17%
22%
18%
22%
27%
Improving public safety response to violent crime
Improving public safety response to property crime
Providing outreach and supportive services to people experiencing homelessness
Building affordable housing
Building safe crossings for traffic and pedestrians to go over or underCaltrain tracksCreating more vibrant, attractive business districts where streets are closed to allow better pedestrian access
Improving the University and California Avenue business districts
Ext. Impt.Very Impt.Smwt. Impt.Not Too Impt.Don't Know
Among potential uses of money, voters
prioritize improving response to crime.
ATTACHMENT H
20
Impact of Messaging
on the Business Tax
ATTACHMENT H
21
21%
26%
19%
22%
39%
33%
28%
31%
6%
6%
6%
14%
14%
20%
20%
18%
16%
23%
17%
Initial Business Tax Vote
Vote After Positives
Vote After Negatives
Final Business Tax Vote
Def. Yes Prob. Yes Und., Lean Yes Undecided Und., Lean No Prob. No Def. No Total Yes Total No
64%32%
62%32%
50%44%
56%38%
Negative messaging drives support for the
measure down to 50%.
Q2 Total, Q8 Split E, Q8 Split F & Q9 Total. Do you think you would vote yes or no on such a measure?
Positives and Negatives Rotated
Mid-Point Vote Margins of Error +/-6.9%
ATTACHMENT H
22
Segmenting the Electorate by Consistency of
Support for a Business Tax
Consistent
Yes
43%
Swing
33%
Consistent
No
24%
Consistent Yes:Voters who
consistently indicated they would
vote “yes”on the measure
Consistent No:Voters who
consistently indicated they would
vote “no” on the measure
Swing:Voters who do not fall into
any of the other categories –
remaining consistently undecided or
switching positions
The following slide shows demographic
groups that disproportionately fall into
one category or the other.
ATTACHMENT H
23
Consistent Yes Swing Consistent No
43% of the Electorate 33% of the Electorate 24% of the Electorate
Ages 18-29 Own Palo Alto Business Republican Men
Democratic Women
Ages 18-49 Independent Women Republicans Ages 50+
Democrats Ages 18-49 Women Ages 50+ Republicans
Women Ages 18-49 Democratic Women Ages 50+ Men Ages 50+
Democratic Men Ages 18-49 Independents Ages 18-49 Independents Ages 50+
Non-College Educated Women Ages 30-39 Independent Men
Renters Ages 40-49 ZIP Code 94301
Ages 18-49 Women Ages 75+
Some College or Less Democrats Ages 50+ College-Educated Men
Democratic Women Ages 65+ Ages 65+
Ages 30-39 Independents Homeowners
Non-College Educated Men Asians/Pacific Islanders Ages 50+
Democrats Ages 75+ Men
Men Ages 18-49 Ages 65-74 Ages 50-64
Whites Ages 65-74
Demographic Profile of the Segments
Business License Tax Measure
ATTACHMENT H
24
Q7. I am going to read you some statements from people who support the measure. Please tell me whether you find it very convincing, somewhat convincing,
or not convincing as a reason to support the measure.
(Ranked by Very Convincing)
(FAIR SHARE)Palo Alto currently registers businesses of all sizes for $50.That means a mom-and-pop coffee shop pays the same as a tech company withthousandsofemployees.This measure is a sensible way to ensure largebusinessespaytheirfairsharefortheservicestheCityprovides and that theiremployeesenjoy,like affordable housing and police and fire protection.(COMPARISON)Palo Alto does not have a business tax,unlike most communitiesin California.Several nearby communities have significant taxes on business,such as East Palo Alto’s tax of $2.50 per square foot annually on commercialofficespaceover25,000 square feet and San Francisco’s business tax of $2.85 to$5.60 per $1,000 of gross receipts annually.This tax would align Palo Alto’s taxsystemwiththoseofothercities in the area.(TAX BASE)This measure is not a tax on homeowners or shoppers,but on thecity’s largest businesses.Sales taxes continue to decline in Palo Alto,and bydiversifyingtheCity’s tax base with a thoughtfully designed business tax,we willbebetterabletoweatherfuturefinancial crises without having to raise taxes oneverydayresidents.(ACCOUNTABILITY)This measure will be subject to strict accountabilityprovisions like annual financial audits;full public disclosure of all spending;and arequirement that all funds be spent locally in Palo Alto.This will ensure funds areusedefficiently, effectively,and as promised.(RESOLUTION)Though this measure will be a general tax that can fund any cityneed,the City Council has committed to approving a plan before the election sothatvotersknowexactlyhowit will spend the money:on public safety,affordable housing,homelessness,and improving the safety of rail crossings.
Support Messages Tested ATTACHMENT H
25
Q7. I am going to read you some statements from people who support the measure. Please tell me whether you find it very convincing, somewhat convincing,
or not convincing as a reason to support the measure.
42%
31%
30%
25%
25%
26%
33%
32%
38%
36%
68%
64%
62%
63%
61%
Fair Share
Comparison
Tax Base
Accountability
Resolution
Very Convincing Somewhat Convincing
Describing how the measure would make
business taxes fairer is broadly compelling.
ATTACHMENT H
26
Negative Message Provided
Q9. Having heard this, would you vote yes or no on the measure?
The cost of living is out of control and inflation
is on the rise –now is not the time to be
raising taxes.Local rents and taxes are already
among the highest in the nation, and we can’t
afford another business tax this size. In
addition, this tax has no expiration date on it –
it’s a forever tax that includes an automatic
cost escalator,meaning that the tax will
increase every year,giving the City a blank
check for hundreds of millions of dollars.
ATTACHMENT H
27Q3 Total & Q10. Do you think you would vote yes or no on such a measure?
Definitely yes
Probably yes
Undecided, lean yes
Undecided, lean no
Probably no
Definitely no
Undecided
20%
35%
3%
1%
17%
12%
11%
Total Yes59%
Total No30%
Initial Utility
Measure Vote
16%
41%
2%
2%
16%
12%
11%
Total Yes59%
Total No30%
Final Utility
Measure Vote
After pros and cons on the business tax
measure, support for the utility measure is
holds steady –broad, but soft.
ATTACHMENT H
28
Conclusions
ATTACHMENT H
29
Conclusions
• Skepticism of the electorate continues to grow, as it is in many cities around
the region, with a plurality of voters saying the City is on the wrong track for
the first time.
• With hypothetical measure language, a business tax measure has support
from just under two‐thirds (64% to 32%); after pros and cons, 56% support it.
• At the same time, the measure shows signs of soft support:
– Only one in five say they would “definitely” vote for the measure, both before
and after messaging.
– After exposure to negative messaging, the measure leads by only a narrow 50%
to 44% margin.
• Voters are comfortable with a measure that caps inflation adjustments at 5%.
There is no consistent preference between a 10‐cent and 12‐cent per square
foot rate.
• Voters are most enthusiastic about allocating new funding toward public
safety, affordable housing, and outreach to the unhoused
• A measure ratifying utility fund transfers appears viable; it has support from
three in five voters before and after messaging.
For more information, contact:
Dave@FM3research.com
Dave Metz
Miranda@FM3research.com
Miranda Everitt1999 Harrison St., Suite 2020
Oakland, CA 94612
Phone (510) 451-9521
Fax (510) 451-0384
ATTACHMENT H
MAY 22-26, 2022
CITY OF PALO ALTO BALLOT MEASURE SURVEY
220-6398-WT
N=463
MARGIN OF SAMPLING ERROR ±4.9% (95% CONFIDENCE INTERVAL)
A/B & C/D & E/F SPLITS
Hello, I'm ___________ from _________, a public opinion research company. I am definitely not trying to sell
you anything. We are conducting an opinion survey about issues that interest people living in the City of Palo
Alto and we are only interested in your opinions. May I speak to ______________? (YOU MUST SPEAK
TO THE VOTER LISTED. VERIFY THAT THE VOTER LIVES AT THE ADDRESS LISTED,
OTHERWISE TERMINATE).
A. Before we begin, I need to know if I have reached you on a cell phone, and if so, are you in a place
where you can talk safely without endangering yourself or others? (IF NOT ON A CELL PHONE,
ASK: “Do you own a cell phone?”)
Yes, cell and can talk safely ------------------------------------------------- 82%
Yes, cell but cannot talk safely --------------------------------- TERMINATE
No, not on cell ----------------------------------------------------------------- 18%
(DON’T READ) DK/NA/REFUSED ------------------------- TERMINATE
1.(T*) First, would you say that things in Palo Alto are generally headed in the right direction, or do you
feel that things are headed in the wrong direction?
Right direction ----------------------------- 36%
Wrong direction ---------------------------- 39%
(DON'T READ) DK/NA ---------------- 25%
ATTACHMENT H
FM3 RESEARCH 220-6398-WT PAGE 2
NOW I WOULD LIKE TO ASK YOU A FEW QUESTIONS ABOUT TWO MEASURES THAT MAY
APPEAR ON THE PALO ALTO BALLOT IN THE NOVEMBER ELECTION.
(SPLIT SAMPLE A ONLY: Q2 THEN Q3)
(SPLIT SAMPLE B ONLY: Q3 THEN Q2)
2. The FIRST/SECOND measure might read as follows:
“Shall the measure to raise funds for services such as improving public safety, affordable housing, rail
crossing safety, homeless services, economic revitalization and general City services, by levying a tax
on businesses in the City of Palo Alto at an annual rate of (SPLIT SAMPLE C: ten) (SPLIT SAMPLE
D: twelve) cents per square foot occupied by the business, with annual adjustments for inflation and
exemptions for grocery stores, seasonal businesses and all businesses under 5 thousand square feet,
raising approximately (SPLIT SAMPLE C: 22 million dollars) (SPLIT SAMPLE D: 26 million
dollars) per year until ended by voters, be adopted?”
Do you think you would vote yes or no on such a measure? (IF YES/NO, ASK: “Is that definitely or
just probably?”) (IF UNDECIDED, ASK: Do you lean toward voting yes or no?”)
SPLIT A: SPLIT B: SPLIT C: SPLIT D:
ASKED ASKED 10¢/SQFT 12¢/SQFT
FIRST SECOND /$22M $26M TOTAL
TOTAL YES --------------------------------------------- 64% ------- 64% ------ 59% ---- 68% ------- 64%
Definitely yes --------------------------------------------- 22% ------- 20% ------ 21% ---- 21% ------- 21%
Probably yes ---------------------------------------------- 40% ------- 39% ------ 37% ---- 42% ------- 39%
Undecided, lean yes --------------------------------------1% -------- 4% -------- 1% ------ 5% --------- 3%
TOTAL NO ---------------------------------------------- 34% ------- 30% ------ 38% ---- 26% ------- 32%
Undecided, lean no ---------------------------------------1% -------- 1% -------- 1% ------ 1% --------- 1%
Probably no ----------------------------------------------- 12% ------- 15% ------ 14% ---- 14% ------- 14%
Definitely no ---------------------------------------------- 21% ------- 15% ------ 24% ---- 12% ------- 18%
(DK/NA) ---------------------------------------------------2% -------- 6% -------- 2% ------ 6% --------- 4%
ATTACHMENT H
FM3 RESEARCH 220-6398-WT PAGE 3
(SPLIT SAMPLE A ONLY: Q2 THEN Q3)
(SPLIT SAMPLE B ONLY: Q3 THEN Q2)
3. The FIRST/SECOND measure might read as follows:
“Shall the measure affirming the City of Palo Alto’s existing routine budget practice since 1950 of
annually transferring no more than 18 percent of the gross revenues from the City’s natural gas utility
(generated by the City’s retail natural gas rates) to its general fund to support general city services such
as library services; climate change reduction; transportation; and police, fire, emergency medical, and
9-1-1 response; providing approximately 7 million dollars annually in existing revenues, be adopted?”
Do you think you would vote yes or no on such a measure? (IF YES/NO, ASK: “Is that definitely or
just probably?”) (IF UNDECIDED, ASK: Do you lean toward voting yes or no?”)
SPLIT B: SPLIT A:
ASKED ASKED
FIRST SECOND TOTAL
TOTAL YES ---------------------------------- 59% -------------------- 59% --------------------- 59%
Definitely yes ---------------------------------- 20% -------------------- 20% --------------------- 20%
Probably yes ----------------------------------- 34% -------------------- 37% --------------------- 35%
Undecided, lean yes ---------------------------- 5% ---------------------- 1% ---------------------- 3%
TOTAL NO ----------------------------------- 26% -------------------- 34% --------------------- 30%
Undecided, lean no ----------------------------- 1% ---------------------- 1% ---------------------- 1%
Probably no ------------------------------------ 16% -------------------- 19% --------------------- 17%
Definitely no ----------------------------------- 10% -------------------- 14% --------------------- 12%
(DK/NA) --------------------------------------- 15% ---------------------- 7% --------------------- 11%
4. Next, if both of these measures were on the same ballot, would you vote “yes” on both, for just one,
or for neither? (IF YES ON ONE, ASK: “Which one would you vote “yes” on: the business license
tax or the utility fund transfer measure?”)
Yes, on both ------------------------------------------------- 33%
Yes, on business tax only --------------------------------- 15%
Yes, on utility fund transfer measure only ------------- 17%
No on both --------------------------------------------------- 18%
(DON'T READ) DK/NA --------------------------------- 17%
ATTACHMENT H
FM3 RESEARCH 220-6398-WT PAGE 4
THE REST OF MY QUESTIONS ARE ABOUT THE MEASURE THAT
WOULD ESTABLISH A BUSINESS TAX IN PALO ALTO.
5. First, I am going to read you a list of some of the major provisions of this measure. For each, please
tell me whether you support or oppose that aspect of the measure. (IF SUPPORT/OPPOSE, ASK: “Is
that strongly SUPPORT/OPPOSE or just somewhat?”) (READ RANDOMIZE)
STR SMWT SMWT STR (DK/ TOTAL TOTAL
SUPP SUPP OPP OPP NA) SUPP OPP
[ ]a. Basing the tax on the square
footage of a business’s property
in Palo Alto --------------------------------- 22% ----- 35% ---- 14% ----- 17% ----- 12% 57% 31%
[ ]b. Having the tax remain in place
until ended by voters ---------------------- 29% ----- 30% ---- 12% ----- 15% ----- 13% 59% 28%
[ ]c. Phasing in the tax over a two-
year period ---------------------------------- 15% ----- 43% ---- 10% ----- 14% ----- 18% 58% 24%
[ ]d. Exempting grocery stores from
the tax ---------------------------------------- 43% ----- 27% ---- 10% ------ 9% ----- 12% 69% 19%
[ ]e. Exempting seasonal businesses
that operate less than 90 days
per year from the tax ---------------------- 36% ----- 34% ---- 11% ------ 6% ----- 12% 71% 17%
[ ]f. Exempting the first five
thousand square feet of each
business from the tax ---------------------- 33% ----- 30% ---- 13% ----- 10% ----- 15% 63% 22%
[ ]g. Reducing business tax bills for
hotels by the amount they
already pay in hotel taxes ----------------- 19% ----- 32% ---- 22% ----- 11% ----- 16% 51% 33%
(SPLIT SAMPLE A ONLY)
[ ]h. Automatically adjusting the tax
by up to five percent each year
to adjust for inflation ---------------------- 16% ----- 27% ---- 20% ----- 26% ----- 12% 43% 45%
(SPLIT SAMPLE AE ONLY)
[ ]i. Charging a tax of ten cents per
square foot per month --------------------- 12% ----- 36% ------ 5% ----- 23% ----- 24% 49% 28%
(SPLIT SAMPLE AF ONLY)
[ ]j. Charging a tax of ten cents per
square foot per month on
current rents, an increase
averaging one point four
percent --------------------------------------- 16% ----- 28% ---- 18% ----- 22% ----- 16% 44% 41%
(SPLIT SAMPLE B ONLY)
[ ]k. Limiting the annual increase for
inflation to five percent ------------------- 34% ----- 29% ---- 12% ------ 7% ----- 19% 62% 19%
ATTACHMENT H
FM3 RESEARCH 220-6398-WT PAGE 5
STR SMWT SMWT STR (DK/ TOTAL TOTAL
SUPP SUPP OPP OPP NA) SUPP OPP
(SPLIT SAMPLE BE ONLY)
[ ]l. Charging a tax of twelve cents per
square foot per month --------------------- 10% ----- 24% ---- 14% ----- 22% ----- 31% 34% 36%
(SPLIT SAMPLE BF ONLY)
[ ]m. Charging a tax of twelve cents per
square foot per month on current
rents, an increase averaging one
point seven percent ------------------------ 18% ----- 31% ---- 15% ----- 23% ----- 13% 49% 38%
(RESUME ASKING ALL RESPONDENTS)
6. Next, I am going to read you a list of more-specific ways in which funds generated by a tax could be
spent. After I read each one, please tell me how important each item is to you personally: extremely
important, very important, somewhat important, or not too important. (RANDOMIZE)
EXT VERY SMWT NOT TOO (DK/ EXT/
IMP IMP IMP IMP NA) VERY
[ ]a. Building safe crossings for traffic and
pedestrians to go over or under Caltrain tracks ----- 29% ----- 26% ---- 25% ----- 18% ----- 2% 55%
[ ]b. Building affordable housing ---------------------------- 37% ----- 19% ---- 20% ----- 22% ----- 2% 56%
[ ]c. Providing outreach and supportive services to
people experiencing homelessness -------------------- 31% ----- 27% ---- 24% ----- 17% ----- 1% 58%
[ ]d. Improving the University and California
Avenue business districts ------------------------------- 16% ----- 19% ---- 36% ----- 27% ----- 2% 35%
[ ]e. Improving public safety response to violent
crime ------------------------------------------------------- 41% ----- 23% ---- 21% ----- 14% ----- 2% 64%
[ ]f. Improving public safety response to property
crime ------------------------------------------------------- 33% ----- 27% ---- 22% ----- 17% ----- 1% 60%
[ ]g. Creating more vibrant, attractive business
districts where streets are closed to allow better
pedestrian access ----------------------------------------- 22% ----- 25% ---- 29% ----- 22% ----- 2% 47%
NEXT, HERE ARE SOME STATEMENTS FROM SUPPORTERS AND OPPONENTS OF THE
POTENTIAL BUSINESS TAX WE HAVE BEEN DISCUSSING.
(SPLIT SAMPLE E ONLY: READ Q7 THEN Q8 THEN Q9)
(SPLIT SAMPLE F ONLY: READ Q9 THEN Q7 THEN Q8)
ATTACHMENT H
FM3 RESEARCH 220-6398-WT PAGE 6
7.FIRST/NEXT, I am going to read you some statements from people who support the measure. After
hearing each statement, please tell me whether you find it very convincing, somewhat convincing, or
not convincing as a reason to support the measure. If you do not believe the statement, please tell me
that too. (RANDOMIZE)
VERY SMWT NOT DON'T (DK/ VERY/
CONV CONV CONV BEL NA) SMWT
[ ]a.(RESOLUTION) Though this measure will be
a general tax that can fund any city need, the
City Council has committed to approving a
plan before the election so that voters know
exactly how it will spend the money: on public
safety, affordable housing, homelessness, and
improving the safety of rail crossings. --------------- 25% ----- 36% ---- 22% ----- 13% ----- 5% 61%
[ ]b.(T-ACCOUNTABILITY) This measure will
be subject to strict accountability provisions
like annual financial audits; full public
disclosure of all spending; and a requirement
that all funds be spent locally in Palo Alto.
This will ensure funds are used efficiently,
effectively, and as promised.--------------------------- 25% ----- 38% ---- 16% ----- 17% ----- 4% 63%
[ ]c.(T-COMPARISON) Palo Alto does not have a
business tax, unlike most communities in
California. Several nearby communities have
significant taxes on business, such as East Palo
Alto’s tax of $2.50 per square foot annually on
commercial office space over 25,000 square
feet and San Francisco’s business tax of $2.85
to $5.60 per 1000 dollars of gross receipts
annually. This tax would align Palo Alto’s tax
system with those of other cities in the area. -------- 31% ----- 33% ---- 22% ------ 9% ------ 5% 64%
[ ]d.(T-FAIR SHARE) Palo Alto currently
registers businesses of all sizes for 50 dollars.
That means a mom-and-pop coffee shop pays
the same as a tech company with thousands of
employees. This measure is a sensible way to
ensure large businesses pay their fair share for
the services the City provides and that their
employees enjoy, like affordable housing and
police and fire protection. ------------------------------ 42% ----- 26% ---- 18% ----- 10% ----- 4% 68%
[ ]e.(T-TAX BASE) This measure is not a tax on
homeowners or shoppers, but on the city’s
largest businesses. Sales taxes continue to
decline in Palo Alto, and by diversifying the
City’s tax base with a thoughtfully designed
business tax, we will be better able to weather
future financial crises without having to raise
taxes on everyday residents. --------------------------- 30% ----- 32% ---- 20% ----- 14% ----- 4% 62%
ATTACHMENT H
FM3 RESEARCH 220-6398-WT PAGE 7
(SPLIT SAMPLE E ONLY: READ Q7 THEN Q8 THEN Q9)
(SPLIT SAMPLE F ONLY: READ Q9 THEN Q7 THEN Q8)
8. Now that you’ve learned more about it, would you vote yes or no on a measure to raise funds for
services such as improving public safety, affordable housing, rail crossing safety, homeless services,
economic revitalization and for general city services, by levying a tax on businesses in the City of Palo
Alto at an annual rate of (SPLIT SAMPLE C: ten) (SPLIT SAMPLE D: twelve) cents per square foot
occupied by the business? (IF YES/NO, ASK: “Is that definitely or just probably?”) (IF
UNDECIDED, ASK: “Do you lean toward voting yes or no?”)
SPLIT E: SPLIT F: SPLIT C: SPLIT D:
ASKED ASKED 10¢/SQFT 12¢/SQFT
FIRST SECOND /$22M $26M TOTAL
TOTAL YES --------------------------------------------- 61% ------- 63% ------ 61% ---- 64% ------- 62%
Definitely yes --------------------------------------------- 25% ------- 28% ------ 29% ---- 24% ------- 27%
Probably yes ---------------------------------------------- 34% ------- 33% ------ 30% ---- 37% ------- 33%
Undecided, lean yes --------------------------------------3% -------- 2% -------- 1% ------ 3% --------- 2%
TOTAL NO ---------------------------------------------- 32% ------- 32% ------ 34% ---- 30% ------- 32%
Undecided, lean no ---------------------------------------2% -------- 2% -------- 2% ------ 2% --------- 2%
Probably no ----------------------------------------------- 15% ------- 14% ------ 13% ---- 16% ------- 14%
Definitely no ---------------------------------------------- 15% ------- 17% ------ 20% ---- 12% ------- 16%
(DK/NA) ---------------------------------------------------7% -------- 5% -------- 5% ------ 7% --------- 6%
ATTACHMENT H
FM3 RESEARCH 220-6398-WT PAGE 8
(SPLIT SAMPLE E ONLY: READ Q7 THEN Q8 THEN Q9)
(SPLIT SAMPLE F ONLY: READ Q9 THEN Q7 THEN Q8)
9.FIRST/NEXT, let me read you a brief statement from opponents.
The cost of living is out of control and inflation is on the rise – now is not the time to be raising taxes.
Local rents and taxes are already among the highest in the nation, and we can’t afford another business
tax this size. In addition, this tax has no expiration date on it – it’s a forever tax that includes an
automatic cost escalator, meaning that the tax will increase every year, giving the City a blank check
for hundreds of millions of dollars.
Having heard this, would you vote yes or no on the measure? (IF YES/NO, ASK: “Is that definitely
or just probably?”) (IF UNDECIDED, ASK: “Do you lean toward voting yes or no?”)
SPLIT F: SPLIT E:
ASKED ASKED
FIRST SECOND TOTAL
TOTAL YES ---------------------------------- 52% -------------------- 48% --------------------- 50%
Definitely yes ---------------------------------- 21% -------------------- 16% --------------------- 19%
Probably yes ----------------------------------- 28% -------------------- 28% --------------------- 28%
Undecided, lean yes ---------------------------- 3% ---------------------- 4% ---------------------- 3%
TOTAL NO ----------------------------------- 44% -------------------- 44% --------------------- 44%
Undecided, lean no ----------------------------- 0% ---------------------- 2% ---------------------- 1%
Probably no ------------------------------------ 14% -------------------- 25% --------------------- 20%
Definitely no ----------------------------------- 29% -------------------- 17% --------------------- 23%
(DK/NA) ----------------------------------------- 4% ---------------------- 8% ---------------------- 6%
Q8/Q9 COMBINED FINAL VOTE AFTER PROS AND CONS
TOTAL YES ------------------------------ 56%
Definitely yes ------------------------------- 22%
Probably yes -------------------------------- 31%
Undecided, lean yes ------------------------- 3%
TOTAL NO -------------------------------- 38%
Undecided, lean no -------------------------- 2%
Probably no --------------------------------- 20%
Definitely no -------------------------------- 17%
(DON'T READ) DK/NA ------------------ 6%
ATTACHMENT H
FM3 RESEARCH 220-6398-WT PAGE 9
10. And let me ask you one last time about the second measure I mentioned earlier, which would affirm the
City of Palo Alto’s existing budget practice of annually transferring no more than 18 percent of the
gross revenues from the City’s natural gas utility to its general fund to support City services such as
homeless services; climate change reduction; transportation; and police, fire, emergency medical, and
911 response. Do you think you would vote yes or no on such a measure? (IF YES/NO, ASK: “Is
that definitely or just probably?”) (IF UNDECIDED, ASK: “Do you lean toward voting yes or no?”)
TOTAL YES ------------------------------ 59%
Definitely yes ------------------------------- 16%
Probably yes -------------------------------- 41%
Undecided, lean yes ------------------------- 2%
TOTAL NO -------------------------------- 30%
Undecided, lean no -------------------------- 2%
Probably no --------------------------------- 16%
Definitely no -------------------------------- 12%
(DON'T READ) DK/NA ---------------- 11%
HERE ARE MY LAST QUESTIONS, AND THEY ARE FOR STATISTICAL PURPOSES ONLY.
11.(T) Do you own a business in Palo Alto?
Yes --------------------------------------------- 7%
No -------------------------------------------- 86%
(DON’T READ) DK/NA ------------------ 7%
12. Do you own or rent your place of residence?
Own ------------------------------------------ 61%
Rent ------------------------------------------ 28%
(DON’T READ) DK/NA ---------------- 12%
13. What was the last level of school you completed?
High school graduate or less --------------- 4%
Some college/vocational school ----------- 8%
College graduate (4 years) --------------- 41%
Post graduate work/
Professional school --------------------- 44%
(DON’T READ) DK/NA ------------------ 4%
ATTACHMENT H
FM3 RESEARCH 220-6398-WT PAGE 10
14. With which racial or ethnic group do you identify yourself: Latino or Hispanic, African American or
Black, White or Caucasian, Asian or Pacific Islander, multiracial, or some other ethnic or racial
background? (IF ASIAN OR PACIFIC ISLANDER, ASK: “Are you Vietnamese, Chinese, South
Asian or East Indian, or of some other Asian background?”)
Latino/Hispanic ------------------------------ 4%
African American/Black -------------------- 2%
Caucasian/White --------------------------- 47%
Vietnamese ------------------------------------ 1%
Chinese ---------------------------------------- 9%
South Asian/East Indian -------------------- 3%
Other Non-Asian/Pacific Islander -------- 1%
Other Asian/Pacific Islander --------------- 7%
Multiracial ------------------------------------ 7%
(DON’T READ) DK/NA ---------------- 20%
THANK AND TERMINATE
GENDER: Male ------------------------------------------ 48%
Female --------------------------------------- 51%
Nonbinary ------------------------------------- 1%
PARTY REGISTRATION: Democrat ------------------------------------ 60%
Republican ---------------------------------- 10%
No Party Preference ----------------------- 27%
Other ------------------------------------------- 3%
FLAGS
P16 ---------------------------- 56%
G16 --------------------------- 73%
P18 ---------------------------- 54%
G18 --------------------------- 74%
P20 ---------------------------- 65%
G20 --------------------------- 85%
R21 --------------------------- 88%
BLANK ------------------------ 5%
AGE
18-24 --------------------------- 8%
25-29 -------------------------- 8%
30-34 -------------------------- 6%
35-39 --------------------------- 5%
40-44 -------------------------- 5%
45-49 -------------------------- 9%
50-54 -------------------------- 9%
55-59 ------------------------- 11%
60-64 -------------------------- 9%
65-74 -------------------------- 15%
75+ --------------------------- 15%
PERMANENT ABSENTEE
Yes ---------------------------- 93%
No ------------------------------ 7%
HSEHLD. PARTY TYPE
Dem 1 ------------------------ 35%
Dem 2+ --------------------- 18%
Rep 1 --------------------------- 5%
Rep 2+------------------------- 2%
Ind 1+ ----------------------- 22%
Mix --------------------------- 18%
MODE
Phone ------------------------- 33%
Online ------------------------ 67%
CONTACT METHOD
Phone ------------------------- 33%
E-mail ------------------------ 55%
Text --------------------------- 12%
ATTACHMENT H