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HomeMy WebLinkAbout2026-08-26 Economic Development Summary MinutesECONOMIC DEVELOPMENT COMMITTEE SUMMARY MINUTES Page 1 of 6 Special Meeting August 26, 2026 The Economic Development Committee of the City of Palo Alto met on this date in the Community Meeting Room and by virtual teleconference at 4:33 p.m. Present In-Person: Reckdahl (Chair), Lu, Stone Absent: None Call to Order Chair Reckdahl called the meeting to order. The clerk took the roll and noted all members were present. In-Person Public Comment Guillaame B. supported continuing to explore an entertainment district on Ramona Street and suggested limiting it to the closed portion of the street, where existing barriers could make the area easier to manage. The existing businesses and character of Ramona Street presented an opportunity to create a more cohesive and inviting environment while using design to discourage loitering. Downtown could potentially benefit from a similar approach following review of the California Avenue experience. Music and other positive activities could help improve the atmosphere on the street. Agenda Items 1. Business Retention, Expansion, and Attraction (BRE/A) Strategy Economic Development Manager Alex Andrade reported the Business Retention, Expansion, and Attraction (BRE/A) Strategy advanced the Council priority of enhancing business vibrancy and the goal of government efficiency. The strategy focused on strengthening the tax base, developing Palo Alto’s competitive advantages, leveraging real estate assets, business and community engagement, promotions, marketing, and activation activities. Some implementation actions had begun or been completed. Economic Development monitored sales tax, transient occupancy tax (TOT), and property tax revenues to identify changing trends. Staff planned to formalize a corporate visitation program, including outreach to 3 of the City’s top 25 sales tax generators by the end of the year, and develop a list of financial and nonfinancial incentives to support business retention, expansion, and attraction. Palo Alto’s concentration of venture capital firms, incubators, accelerators, and foreign investment offices provided a competitive advantage in attracting investment. Staff had met SUMMARY MINUTES Page 2 of 6 (Sp.) Economic Development Committee Meeting Summary Minutes: 08/26/2026 with the Consulate General and Innovation Centre of Denmark, was pursuing a meeting with the Japan Innovation Campus, and had contacted Playground Global to develop partnerships and strengthen the innovation and entrepreneurial ecosystem. Staff was working with the Silicon Valley Small Business Development Center and NorCal Small Business Development Center to provide access-to-capital training for small businesses in late September and early October. Relationships with the real estate community provided information about changing market conditions and business needs. Staff planned a real estate broker roundtable that would include Building and Planning representatives to discuss land use, zoning flexibility, and the Retail Vitality Ordinance. Economic Development was piloting opportunities to generate revenue from underutilized City real estate assets. A 3-year license agreement providing Nobu with 20 dedicated valet parking spaces in a City parking garage was expected to generate approximately $300,000 and staff planned to explore similar arrangements with other businesses and hotels. Public-private partnerships and direct business engagement were additional components of the strategy. Staff planned outreach regarding the recently approved Retail Vitality Ordinance, was interested in reassessing a Downtown Business Improvement District, had begun monthly Downtown and University Avenue stakeholder meetings, and proposed office hours on California Avenue and University Avenue to bring Economic Development staff directly to businesses. The California Avenue entertainment zone and Thursday Live events served as a pilot for possible expansion of the entertainment zone to Ramona Street. Staff developed surveys for businesses and the broader community and planned to return to the Committee with results and lessons learned. In response to Chair Reckdahl, Manager Andrade explained staff initially focused on California Avenue to evaluate safety, security, and operations before considering Downtown. Assistant City Manager Kiely Nosé clarified that the existing ordinance provided the enabling framework and could be amended to establish an entertainment zone on Ramona Street or elsewhere Downtown. Staff continued to promote activities intended to create vibrant public spaces, including promoting businesses offering FIFA World Cup match viewing, and was developing innovation and entrepreneurship branding. A destination marketing website in partnership with the Chamber of Commerce was expected to launch by the end of the year and would promote Palo Alto shopping, dining, recreation, and other activities. Manager Andrade concluded by requesting that the Committee recommend Council approval of the BRE/A Strategy. Item 1 Public Comment 1. Steve L. thanked the Economic Development Committee and the City for promoting retail vitality by expanding allowable retail uses and supported applying a similar approach to high-wage job creation, including offices, laboratories, and research and development. Palo Alto faced competition from neighboring cities with greater land availability and Stanford Research Park could provide opportunities for additional high- wage employment. The BRE/A Strategy should consider Stanford’s forthcoming General Use Permit and strengthen the City’s relationship with Stanford given the economic SUMMARY MINUTES Page 3 of 6 (Sp.) Economic Development Committee Meeting Summary Minutes: 08/26/2026 benefits generated by the Shopping Center, hospital, Research Park, sporting events, and other activities. 2. John S. encouraged the Committee to revisit the Streetsense study as a foundation for current economic development efforts, noting the extensive staff and community engagement involved and the continued relevance of many recommendations, including events and gathering spaces Downtown. A Business Improvement District should not be established until the City could clearly explain to retailers the additional services and benefits their assessments would fund. Retailers could view cleanliness and safety as services covered by their existing taxes. 3. Alex G. appreciated the City’s increased focus on business retention and noted the Retail Vitality Ordinance had helped expand allowable uses. The BRE/A Strategy contained many positive initiatives. Economic Development staff could provide economic analysis during Planning and Council consideration of proposed actions, including potential return on investment and revenue impacts, to complement information regarding code and legal requirements. Councilmember Lu supported the BRE/A Strategy as a foundation for developing more concrete economic development programs in 2027 and was interested in identifying additional real estate barriers to reinvestment similar to the recently modified Downtown “shrink-wrap rule.” Councilmember Lu expressed concern about reconciling economic development goals with Housing Element programs that could discourage office development in certain areas. Assistant City Manager Nosé acknowledged the tension between housing goals and preserving the City’s economic base. Fiscal impacts should be considered in land use decisions because commercial uses generally generated revenue that helped support services for the residential and employment populations. Staff would evaluate economic and housing policy impacts together as Housing Element programs advanced and ensure coordination between Economic Development and Planning and Development Services. Some future Housing Element programs could be brought to the Economic Development Committee rather than the Planning and Transportation Commission. Manager Andrade noted that the 2022 Economic Development Strategy reflected needs emerging from the pandemic and many of its strategies had been completed or were underway. A future updated strategy could provide a more proactive work plan responsive to the post-pandemic economy and Council priorities. Employment needs extended beyond traditional office space to flex space and other commercial uses and maintaining employment lands was important to the City’s long-term fiscal sustainability. Councilmember Lu was particularly interested in outreach to major businesses and hotels to identify opportunities for hotel development and redevelopment. Hotels contributed TOT revenue, supported retail and restaurants, attracted spending to California Avenue and Downtown, and provided service jobs. Manager Andrade agreed regarding the importance of jobs and revenue. SUMMARY MINUTES Page 4 of 6 (Sp.) Economic Development Committee Meeting Summary Minutes: 08/26/2026 Vice Mayor Stone supported the BRE/A Strategy and encouraged additional activation of shopping districts during the holiday season, including pop-up events and European-style holiday markets on California Avenue or Ramona Street. Manager Andrade reported staff had begun discussions with property owners regarding pop-up retail and continued to monitor business districts throughout Palo Alto. Additional seasonal events could be explored for 2027 to allow time for planning and coordination. Assistant City Manager Nosé noted events such as holiday markets were often organized by business improvement districts or chambers of commerce. The BRE/A Strategy could help demonstrate the value of those activities and facilitate partnerships with the City. Vice Mayor Stone supported further developing and marketing the Palo Alto brand and suggested leveraging the history of Silicon Valley to promote Palo Alto as a destination. Points of interest Downtown could be made easier for visitors to identify and explore. Manager Andrade reported staff had provided Downtown points of interest for a Caltrain promotion highlighting activities near stations. Walking tours presented another opportunity and the Chamber of Commerce destination website would allow visitors to plan activities in Palo Alto. Chair Reckdahl supported additional events and activations and cited the Pride event as a successful use of public space. Manager Andrade reported the Downtown art walk was part of a monthly series through November involving 5 galleries and had received positive feedback. Guillaume Bienaime, owner of The Pro food establishment, explained participating galleries and food service establishments were collaborating to encourage visitors to remain within the area. Large-screen events on Ramona Street were possible but required funding, staffing, permits, and partners. Chair Reckdahl suggested reviewing hotel design standards to ensure they reflected current industry needs. Office and housing policies required balance to support employment opportunities and maintain a diverse community. Chair Reckdahl encouraged outreach to as many of the City’s top sales tax generators as staff capacity allowed. Manager Andrade explained the goal of contacting 3 of the top 25 businesses reflected the limited time remaining in 2026 and noted staff had recently met with SpaceX. Assistant City Manager Nosé emphasized the Economic Development team consisted of 2 staff members responsible for the BRE/A Strategy, Council priorities, and facilitating business applications through the permitting process. Chair Reckdahl supported generating revenue from underutilized City real estate assets and asked about concerns regarding homelessness and crime Downtown. Manager Andrade reported officers funded through a retail theft grant were working in the area and businesses were encouraged to report criminal activity. Assistant City Manager Nosé acknowledged continuing concerns within the business community and stated staff would continue to listen and adapt its response. Police staffing devoted to OSV issues limited resources otherwise available for special projects, while the grant provided additional capacity for Downtown retail enforcement when staffing was available. SUMMARY MINUTES Page 5 of 6 (Sp.) Economic Development Committee Meeting Summary Minutes: 08/26/2026 Chair Reckdahl asked whether Thursday Live and the entertainment zone were benefiting nearby restaurants. Manager Andrade reported California Avenue became increasingly busy later in the events with music attendees and restaurant patrons and attendance had increased with each activation. Businesses indicated the entertainment zone was trending positively. Surveys would provide additional data for the Committee. MOTION: Councilmember Lu moved, seconded by Vice Mayor Stone, to recommend the City Council approve the 2026 Business Retention, Expansion, and Attraction (BRE/A) Strategy. MOTION PASSED: 3-0 2. Economic Development Activity Report August 2026 Economic Development Specialist Ruth Carias reported staff was working with the Chamber of Commerce and hoteliers on destination marketing with implementation anticipated by year- end. The Festival of the Arts had strong attendance. Staff was working with Stanford to better understand the local economic impact of the May BTS concert, which drew 41 percent local and 59 percent non-local attendees. The next Thursday Live event and third entertainment zone activation on California Avenue were scheduled for August 27. Staff would evaluate the entertainment zone for potential use in other business districts. California Avenue repaving was scheduled for September 28 through October 10. Staff was coordinating with businesses regarding construction impacts and implementation of the Outdoor Dining Program guidelines following completion of the repaving. Specialist Carias reported 5 business openings and reviewed labor and unemployment data. Employment decreased between June 2025 and June 2026 and Palo Alto was the 6th largest employer in Santa Clara County. Downtown retail vacancy decreased from 12.9 percent in Q2 2025 to 12.3 percent in Q2 2026 while available retail space decreased. Net absorption was positive. California Avenue retail vacancy decreased from 7.5 percent to 5.4 percent and available retail space decreased from approximately 22,000 square feet to 17,000 square feet. Staff would provide California Avenue asking-rent data at a future meeting. Item 2 Public Comment: None Vice Mayor Stone asked about the economic impact of special events such as the BTS concert and World Cup activities and supported continuing to evaluate their impacts in preparation for future concerts and the Olympics. Economic Development Manager Alex Andrade reported staff was seeking data to quantify the direct, indirect, and induced economic impacts of events. Downtown hotels performed well during the BTS concert and staff could compare monthly TOT data with the same period in the prior year. Staff would contact the Bay Area Host Committee regarding available World Cup data. Councilmember Lu requested that future reports include retail vacancy, net absorption, and asking-rent data for areas beyond Downtown and California Avenue. Chair Reckdahl supported providing comparable data for other Palo Alto business districts and neighboring communities if SUMMARY MINUTES Page 6 of 6 (Sp.) Economic Development Committee Meeting Summary Minutes: 08/26/2026 readily available. Specialist Carias agreed to begin with citywide Palo Alto data and expand from there. MOTION: Vice Mayor Stone moved, seconded by Councilmember Lu, to recommend that the Economic Development Committee receive this Economic Development Activity Report for the month of August 2026. MOTION PASSED: 3-0 Virtual Public Comment None Future Meetings and Agendas Economic Development Manager Alex Andrade reported staff was developing a Downtown parking modernization strategy in coordination with the Office of Transportation and other City departments. Staff anticipated presenting the strategy to University Avenue and Downtown stakeholders in September, followed by the EDC in October. Economic Development would continue engaging the real estate and business communities to identify obstacles to a thriving economy. Adjournment: The meeting was adjourned at 6:03 p.m.