HomeMy WebLinkAbout0420.092September 10, 199~
THE HONO~LE CITY COUNCIL
Palo Alto, Calif~rnia
Attention! Finance committee
IODNOMtC OUTL?OX COMK1tTEB XEE~rYG or JUNE 17, ~'92
H~rs of the Council:
This is an intormational report; no Council action is necessary.
Report ill Dr 1.4.:
Attached are minutes of the latest Economic Outlook committee (EOC)
meeting. The EOC ~as fo~ed in 1988 by the Finance Director, to
provide insight on issues in the local economy that miqht affect
the City's budget, and to create a forum for business leaders to
provide feedback on City services, The EOC is comprised of city
statf members and business leaders from the local community, The
Committee meets quarterly to discuss topics of economic concern to
local qoverrmlent and businesses, The Finance committee bas
requested that minutes from EOC meetings be transmi tt.ed as an
informdtional item. Topics covered at the J~ne meeting included a
presentation on the City's Economic ResourceS Plan l a review of t.~e
Palo Alto 1992-94 Budget, and a discussion of the upcominq
Comprehensive Plan revision.
Res~ctfully submitted,
~ ~-. , ........ ~~ ..
EMILY SON
~ I Finance
EF _1m
sist~nt Ci~anager
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BCO»OKIC OUTLOOK COKKITTBC XI»UTES
June 17, .1,,2
Attendees: Mi)d Schneider, Spirals; Clement Chen, Holiday Inn;
Dia.ne Healy_ stanford Management Company; Jim Baer, Ware and
Freidenrich; Susan Frank, Palo Alto Chamber of Commerce; Chop
Keenan, JCeenan Land company; David Lonqbine, Stanford Shopping
Center; City of Palo Alto staff: Emily Harrison, Libby Dame, Jim
Staele, Ken schreiber I George Zimmerl!l!a.n, Carel Jam~en, Ted Janus;
Palo Alto cou..'1icilmemhers: Lanie Wheeler, Mike Cobb, Dick Rosenbaum
'.10 Alto'. lcollo.le llesou;'c •• Plap
Carol Jansen talked about the city's Economic Resource Plan, which
is part of a larger corporate planning project that also includes
the Economic OUtlook committee and the Customer servi~e committee.
The City Manager assigned Ks. Jansen to study whe~e the Ci~y might
see itself in the future in terms of improvinq the manner in .-hieb
it deals with the business community to improve relationships.
Ms. Jansen stated that most economic objectives that cities try to
aChieve are already present in Palo Alto: a thrivinq downto';,."n,
extensive open space, utilities, an airport, a research park, and
a good regional shopping center. Therefore, instead of doing
something new, the City wants to focus on improvinq those assets
that it already has. Palo Alto needs to rely on local resources
instead of z'esources from outside sources. The City has limited
flexibility, and is qoverned by stringent City ordinances and
environmental regulations.
The Economic Resources Planning (ERP) project includ~s a five-point
action plan:
1) Initiate aggressive business outreach efforts;
2) Institute a business retentio~ program;
J} Develop a program to help expedite City processes for
existing and new businesses;
4) Explore the possibility of a joint powers agreement with
East Palo Alto to initiate shared revenues for develop
ment; and
5) I::tvestigate the use of t:-adi tional economic tools used by
other communities (e.q., redevelopment aqencies, taxable
bonds, loan guarantees, air right policies, deferred tax
payments, etc.)
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Hs. Jansen believes that the Ci ty needs to be a little more
flexible and willing to taKe risks. In response to this statement,
the qroup had some discussion abo-ut whether ()r not stafr was
getting too far ahead of the Council in terms of being flexible.
Business6~ and developers need to have a better understandin~ of
where the Council stands. councilmember Rosenbaum stated that he
tends to be a residentialist, but that he believes in the forces of
capitalism. One area ot concern he has is that companies could
start playing one city against another in order to gain a business
advantage. Council member Wheeler stated that the group probably
was ahead of both council and the public. Council has the
advantage of being well-edUcated by staft reports, but Council
needs to assu;ne a leadership role to help bring the communit~~
aJong. She does not think staff and businesses should expect an
imcediate, dramatic change, but that changes will occur gradually
over the next few years as part of the C'.:lmprehensive Plan.
councilmember Cobb hopes that the Comprehensive Plan process will
become a strateqic plan which will help get council, staff and the
public on the same track.
City pf Palo Alto Budq.~
Finance Director ErIlily Harrison and Budget Manager Jim Steele
presented the city's 1992-94 budget. On the r-evenue side, staff
assumes that 1991-92 is the bottom of the recession and that normal
revenue growth will reappear by 1993-94. Sales tax levels in the
City have actually declined, although Palo Alto has not suffered as
badly as most ot.her California jurisdictions. Property taxes
continue to be steady. The utility users tax is growinq faster
th3n the economy, and transient occupancy tax levels have continued
to decline. Operating transfers to the General Fund, reflecting i:I
return on equity from the city utilities' assets, have not been
growing, but are expected to increase in 1993-94.
In the discussion of expenditures, Mr~ Steele stated that city
service levels are virtually the same in 1992-93 as they were in
1991-92. He therefore focused on the Capital Improvement Program
(eIP) budgets and the Utilities budgets. For the GenE'.ral Fund, Mr.
Steele revie~ed all the major categori~s of planned capital
improvements. In the Enterprise Funds, BO percent of the ClP
bu~qet is for infrastructure improvements.
Kr. steele then reviewed the individual utilities' rate levels.
The Water Fund will have a 24 per~ent rate incr~ase next year, with
future rates Qependent on continuation of the drouqht~ Wastewater
Fund rates will increase by 10 percent next year, and none in the
second year. GdS Fund rates will increase by 9 percent next year,
and none the follo~ing year. ThE' Electric Fund rates ~ill remain
stable the first year, and will see an S percent increase the
second year. Due to environmental mandates and long-term hauling
contr-acts, refuse rates will increase 1Q percent the first year and
30 percent in the second. He also noted that a demand-side
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management program to reduce electric demand is effectively ~orkinq
with busin~sses. It is hoped that the program will meet up to 43
percent of the city's peak electric demand t~rouqh improved
efficiency, which would help keep rates down.
MS. Harrison commented that there wer-e several items fol." which
costs were not included in the budget, including the Comprehensive
Plan and the Organizational Review st~dy. She also noted that the
state bud~et is of major concern to the Cjty. Until Sacramento
finalizp..s the State budget, cities cannot be sure of the impacts on
local revenues. Also, discussions of 3. "reverse ABS bailout"
(reallocatinq property tax revenues to school districts), and a
proposal to have vehicle license fe2 revenua go to the state
instead of cities, pose a $3 to $5 million threat to our revenue
sources. Ms. Harrison stated that there is also a proposal to
change sales tax allocatio~ from a point-ot-sale hasis to a per
capita basis, which could result in an $8 to $9 million annual loss
to Palo Alto.
Miki Schneider gave an update on the Downtown area, stating that
downtown is suffering right now. There are a few leases of
downtown facilities that have been lying vacant for longer than is
typical. Some resta~ants are also expe=iencing lew revenues. The
downtown area typically provides approximately 13 percent of the
City's sales tax revenue; it probably will not meet that level this
year.
Cqaprehenaive Plan Update
Ken Schreiber talked about the upcoming r~vision to the City's
Comprehensive Plan (Camp Plan). The COIrl.p Plan needs to be revised
to alleviate any potential for litigation sur-r-ounding projects
considered questionable in terms of meeting city zoning and land
use requirements~ Jim Baer mentioned. his concern that all
development will stop duri~g the years it takes to complete the
revi6ion. The group had some discussion about land use planning
and questioned what happens if a proposa.l is developed .for a
specific site that does not r;::;eet the current Comp Plan. :"!r~
schreiber acknowledged that. as proposals diverge from existing
zoning and land use specifications, those projects become harder to
defend~ He encouraged all interested parties to participate in the
Camp Plan revision process to make their views known.
_ext Me.tina
~. Dazt Economic outlook committee meetinq will be beld. after the
elections, OD Friday, .ovember 13, in the Human Resources Conrer
anCia Rooa,. 1st :t~oor, City HalL Topics .41 l:cc:lud.e a status
report on the City's orqanisational Review stUdy, an update OD th.
BcoDoaic a •• ource Plan, and a presentatio~ ot Stanford university'_
budget.
Minutes prepared by Libby Dame, Senior Financial Analyst.
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