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HomeMy WebLinkAboutStaff Report 2602-6024CITY OF PALO ALTO Retail Committee Regular Meeting Wednesday, March 18, 2026 4:15 PM     Agenda Item     3.Business Retention, Expansion, and Attraction (BRE/A) Strategy.Staff Presentation Economic Development Committee Staff Report From: City Manager Report Type: ACTION ITEMS Lead Department: City Manager Meeting Date: March 18, 2026 Report #:2602-6024 TITLE Business Retention, Expansion, and Attraction (BRE/A) Strategy. RECOMMENDATION The Economic Development Committee will receive a presentation on the 2026 Business Retention, Expansion, and Attraction (BRE/A) Strategy and provide feedback to staff. EXECUTIVE SUMMARY At the January 24, 2026, Council Retreat, the Palo Alto City Council reached consensus on adopting a 2026 Economic Development priority titled, “Enhance Business Vibrancy”. The City Council acknowledges the importance of Economic Development and the intersection between a healthy local economy and the City’s long-term fiscal sustainability. The City of Palo Alto continues to build from the current Economic Development Strategy to achieve the City Council’s goals and priorities. The Economic Development team has developed a 2026 Business Retention, Expansion, and Attraction (BRE/A) Strategy to create a sustainable, resilient, and thriving local economy characterized by a strong sense of identity in Silicon Valley. BACKGROUND Economic Development is taking a proactive approach to advocating for Palo Alto’s business and entrepreneurial ecosystem that is reflective of the population it serves. Economic Development is a concerted effort by the City of Palo Alto’s City Council to ensure that the business climate is healthy. As such, the Economic Development team recommends that the Economic Development Ad Hoc Committee (formerly Retail Ad Hoc Committee) receive a BRE/A Strategy presentation and provide feedback to staff. ANALYSIS A Business Retention, Expansion, and Attraction (BRE/A) Strategy will formalize Economic Development’s Work Plan for calendar year 2026. A BRE/A Strategy consists of identifying key industries for retention, expansion, and attraction, proactive business engagement to build strategic partnerships, determining areas where the City of Palo Alto can gain a competitive advantage, and providing support for a favorable business environment that can lead to increased employment opportunities and overall economic prosperity. The BRE/A Strategy will result in preserving and enhancing the local business climate to ensure the City is fiscally stable to provide essential services that the Palo Alto community deserves. Enhance Business Vibrancy: Strengthening the Tax Base Sales Tax, Property Tax, and Transient Occupancy Tax Revenue Bases - Corporate Visitation Program New Investment Opportunities - Financial and Non-Financial Incentives Competitive Advantage Venture Capital, Incubators, and Accelerators - VCs, Incubators/Accelerators and Foreign Direct Investment Business Technical Assistance - Guide Businesses to Build Capacity and Reach Business Goals Real Estate Assets Real Estate Network - Property Owners/Managers and the real estate brokerage and development communities City Real Estate Assets - Leverage the City’s Real Estate Assets for Revenue Generation Engagement and Promotions: Business and Community Engagement Public-Private Partnerships (P3s) - Build Trust/Collaboration for Effective Partnerships Open Container Resolution and Entertainment Zone - Entertainment Zone Ordinance City Council Consideration in Spring 2026 Promotions and Marketing 2026 Activities and Events - Cultivate Vibrant Public Spaces that Attract Investment FISCAL/RESOURCE IMPACT STAKEHOLDER ENGAGEMENT ENVIRONMENTAL REVIEW ATTACHMENTS APPROVED BY: Economic Development Ad Hoc Committee Business Retention, Expansion, and Attraction (BRE/A) Strategy Attachment A Enhance Business Vibrancy • Business Retention, Expansion and Attraction (BRE/A) Strategy – Enhancing Business Vibrancy is a 2026 City Council priority. • Strengthening the Tax Base o Sales tax, property tax, and transient occupancy tax revenue bases - Establish a formal Corporate Visitation Program. Review quarterly data for sales/transient occupancy tax revenues and bi-annually for property tax revenues to identify and respond to changing trends. Performance Metric: Convene up to five of the top twenty-five sales tax generators by the end of 2026 with the goal of retaining businesses that enhance the City’s long-term fiscal sustainability on a quarterly basis. o New Investment Opportunities - Encourage new investments that create economic impact, multiplier effects and sales tax revenue. Performance Metric: Staff will explore financial and non-financial incentives and develop a list to support, retain, and grow business opportunities to drive economic vitality by Quarter 3 2026, and present to the Economic Development Ad Hoc Committee for review and feedback. • Competitive Advantage o Venture Capital, Incubators, and Accelerators - IDA Ireland, Japan Innovation Campus (JIC), Consulate General and Innovation Centre Denmark, Nordic Innovation House, Flanders Investment and Trade (FIT), The Hive, Archimedes Labs, StartX, Venture Dock, etc. Performance Metric: Meet with at least four Venture Capital investment firms, incubators, and accelerators to develop foreign direct investment (FDI) opportunities and continue to cultivate the innovation and entrepreneurial ecosystem by the end of calendar year 2026. o Business Technical Assistance - Performance Metric: Partner with the Silicon Valley Small Business Development Center (SV SBDC), Small Business Administration (SBA), SCORE, Chamber of Commerce, etc. to host two small business (live and virtual) training workshops in 2026. • Real Estate Assets o Real Estate Network - Property Owners, Real Estate Brokerage, Property Managers, and Development Community Network to foment relationships to fill vacant spaces and attract a mix of retail, office, and industrial businesses to enhance diversity of businesses for a broader customer base. Performance Metric: Economic Development will host a Real Estate Broker roundtable by Quarter 4 2026 to learn about new opportunities, market trends, new uses, permit processes, and align development efforts with market needs. o City Real Estate Assets – Leverage City’s real estate assets for revenue generation. Performance Metric: Economic Development will execute a lease with Nobu for the use of 20 valet services parking spaces in Parking Lot Q by April 2026 to generate new revenues for the City. Engagement and Promotions • Business and Community Engagement o Public-Private Partnerships - Engagement fosters trust and collaboration, allowing for effective partnerships that leverage resources for community projects - Performance Metric: Economic Development will promote the Retail Vibrancy Ordinance reflecting flexibility in land use/zoning to the real estate network starting in Quarter 2, and establish two office hour events on California Avenue and Downtown for additional business and community engagement opportunities by Quarter 3 2026. o Open Container Resolution and Entertainment Zone - Performance Metric: Economic Development will present to the Economic Development Ad Hoc Committee to obtain a recommendation for the City Council’s consideration of a California Avenue Entertainment Zone Ordinance in April/May 2026. • Promotions and Marketing o 2026 Activities and Events - Performance Metric: Economic Development will partner with businesses, Palo Alto Recreation Foundation, and Chamber on at least 3 California Avenue activities (3rdThursday/FIFA World Cup) and promote the hospitality sector (digital/print) during the 2026 sporting events (March Madness Tournament/FIFA World Cup) from March through July 2026. The BRE/A Strategy is bounded by two strategic categories: Enhance Business Vibrancy and Engagement and Promotions. The two categories are supported by nine new Economic Development focused implementation actions for calendar year 2026. Economic Development staff will continue to lead, co-lead, and/or monitor 2025 City Council priority projects currently underway including: Retail Vibrancy Ordinance, California Avenue Signage, and California Avenue Outdoor Activation Guidelines. Economic Development staff recommends suspending Car-free street improvements on Ramona Street. And, obtain City Council feedback on March 9, 2026 via the values and priorities agenda item on whether to proceed with the California Avenue Design and Funding project given the lack of financial resources, directly focus on the aforementioned 2025 on-going projects, and the new BRE/A Strategy. The BRE/A Strategy lays a foundation for creating a vibrant, resilient, inclusive, and diversified economic future. Notwithstanding, the BRE/A Strategy highlights the need for a future Economic Development Strategy that serves as a policy document that will guide the City of Palo Alto’s economic development activities for a designated period. Should the City Council consider a new Economic Development Strategy, it would align with the City’s Comprehensive Plan and the Economic Development Element, Sustainability and Climate Action Plan (S/CAP), and other City policy documents. A new Economic Development Strategy will serve as Palo Alto’s road map to grow and diversify the local economy, support businesses and workers, and improve the quality of life for Palo Altans. Business Retention, Expansion & Attraction (BRE/A) Strategy Alex Andrade, Assistant to the City Manager & Economic Development Manager March 18, 2026 Paloalto.gov/Business 1 TITLE 40 FONT BOLD Subtitle 32 font March 18, 2026 •The BRE/A Strategy includes two tactical categories: •Enhance Business Vibrancy •Engagement & Promotions •The BRE/A Strategy develops a formal business retention, expansion, & attraction program: •Strengthening the tax base & developing a competitive advantage •Real estate assets •Business & community engagement •Promotions and marketing •Activation activities & events, & other key components Business Retention, Expansion & Attraction (BRE/A) Strategy PaloAlto.gov/Business 2 TITLE 40 FONT BOLD Subtitle 32 font March 18, 2026 Enhance Business Vibrancy: Strengthening the Tax Base •Sales tax, property tax, & transient occupancy tax revenue bases - Corporate Visitation Program •New Investment Opportunities - financial and non-financial incentives Competitive Advantage •Venture Capital, Incubators, & Accelerators - VCs, Incubators/Accelerators & FDI •Business Technical Assistance - support & guide businesses to build capacity & reach goals Real Estate Assets •Real Estate Network - Prop Owners/Mgrs., RE Brokerage, & Development Community •City Real Estate Assets - Leverage City’s real estate assets for revenue generation (Nobu Lease) Engagement & Promotions: Business and Community Engagement •Public-Private Partnerships (P3s) - Build trust & collaboration for effective partnerships •Open Container Resolution & Entertainment Zone - Entertainment Zone Ordinance in spring 2026 Promotions and Marketing •2026 Activities & Events - cultivate vibrant, "sticky" public spaces that attract investment PaloAlto.gov/Business Business Retention, Expansion & Attraction (BRE/A) Strategy 3 TITLE 40 FONT BOLD Subtitle 32 font March 18, 2026 Objective: Sales Tax, Property Tax, & Transient Occupancy Tax Revenue Bases •Establish a formal Corporate Visitation Program •Sales, property, & transient occupancy tax revenues data - respond to changing trends Objective: New Investment Opportunities •Encourage new investments that create economic impact, multiplier effects, & revenue •Explore financial & non-financial incentives to support, retain, and grow business opportunities to drive economic vitality PaloAlto.gov/Business Enhance Business Vibrancy:Strengthening the Tax Base 4 TITLE 40 FONT BOLD Subtitle 32 font March 18, 2026 Objective - Venture Capital, Incubators, & Accelerators •IDA Ireland, Japan Innovation Campus (JIC) & Nordic Innovation House •Consulate General and Innovation Centre Denmark & Flanders Investment and Trade (FIT) •The Hive, Archimedes Labs, StartX, Venture Dock, etc •Develop foreign direct investment (FDI) opportunities & continue cultivation of innovation & entrepreneurial ecosystem Objective - Business Technical Assistance •Technical assistance to support & guide businesses to overcome challenges, build capacity, & achieve specific goals •A favorable business environment can lead to increased employment opportunities & overall economic prosperity PaloAlto.gov/Business Enhance Business Vibrancy - Competitive Advantage 5 TITLE 40 FONT BOLD Subtitle 32 font March 18, 2026 Objective Real Estate Network - Property Owners, Real Estate Brokerage, Property Managers & Development Community Network •Foment relationships to fill vacant spaces & attract mix of retail, office, & industrial bus. •Enhance diversity of businesses for a broader customer base •Economic Development will host a Real Estate Broker roundtable Objective City Real Estate Assets. •Leverage City’s real estate assets for revenue generation •Economic Development will execute a lease with Nobu for use of 20 valet services parking spaces in Parking Lot Q PaloAlto.gov/Business Enhance Business Vibrancy – Real Estate Assets 6 TITLE 40 FONT BOLD Subtitle 32 font March 18, 2026 Objective Public-Private Partnerships (P3) •Engagement fosters trust & collaboration, allowing for effective partnerships that leverage resources for community projects •Promote Retail Vibrancy Ordinance reflecting flexibility in land use/zoning & establish office hour events on Cal Ave & Downtown for additional business/community engagement Objective Open Container Resolution & Entertainment Zone Ordinance •Presentation to the Economic Development Ad Hoc Committee to obtain recommendation for the City Council’s consideration of a Cal Ave Entertainment Zone Ordinance in spring PaloAlto.gov/Business Engagement and Promotions - Business and Community Engagement 7 TITLE 40 FONT BOLD Subtitle 32 font March 18, 2026 Objective 2026 Activities & Events •Activities & events are used to cultivate vibrant, "sticky" public spaces •Attract talent, residents, & investment while boosting local business •These activities & events foster community interaction & social cohesion •Cal Ave activities (4th Thursday of the Month & FIFA World Cup) •Promote the hospitality sector (digital/print) during the 2026 sporting events/concerts: •March Madness Tournament •BTS Concert •FIFA World Cup •March-July 2026 PaloAlto.gov/Business Promotions & Marketing 8 RECOMMENDATION The Economic Development Committee will receive a presentation on the 2026 Business Retention, Expansion, and Attraction (BRE/A) Strategy and provide feedback to staff. PaloAlto.gov/Business 9 Alex Andrade Assistant to the City Manager & Economic Development Manager Alex.Andrade@PaloAlto.gov 650.496.5039 PaloAlto.gov/Business 10