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HomeMy WebLinkAboutStaff Report 2609-6716CITY OF PALO ALTO CITY COUNCIL Special Meeting Monday, October 05, 2026 Council Chambers & Hybrid 5:30 PM     Agenda Item     4.Approval of Business Retention, Expansion, and Attraction (BRE/A) Strategy as Recommended by the Economic Development Committee: CEQA – Not a Project City Council Staff Report From: City Manager Report Type: CONSENT CALENDAR Lead Department: City Manager Meeting Date: October 5, 2026 Report #:2609-6716 TITLE Approval of Business Retention, Expansion, and Attraction (BRE/A) Strategy as Recommended by the Economic Development Committee: CEQA – Not a Project RECOMMENDATION The Economic Development Committee and staff recommend approval of the 2026 Business Retention, Expansion, and Attraction (BRE/A) Strategy. EXECUTIVE SUMMARY 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. On January 24, 2026, the City Council reached consensus on adopting a 2026 economic development priority titled, “Enhance Business Vibrancy” at the Council Retreat on values, priorities, and objectives. This reflects the importance of economic development and the intersection between a healthy local economy and the City’s long-term fiscal sustainability. The City continues to build from the current Economic Development Strategy to achieve the City Council’s goals and priorities. 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 Palo Alto City Council to ensure that the business climate is healthy. Originally scheduled in March (deferred to accommodate time critical items), on August 26, 2026, the Economic Development Committee voted unanimously to recommend BRE/A Strategy approval by the City Council. Implementation actions are already well underway. ANALYSIS A Business Retention, Expansion, and Attraction (BRE/A) Strategy has formalized Economic Development’s Work Plan for calendar year 2026. The 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 Competitive Advantage Real Estate Assets Engagement and Promotions: Business and Community Engagement Promotions and Marketing FISCAL/RESOURCE IMPACT STAKEHOLDER ENGAGEMENT th, representatives from the business and real estate communities expressed support for the BRE/A Strategy at the Economic Development Committee meeting. Public comments shared at the meeting included, but is not limited to: support for the Retail Vitality Ordinance and the BRE/A Strategy, interest in Ramona Street placemaking strategies, regional competitiveness, connecting land use and economic development, question the benefits of reactivating the BID, illustrating the return on investment on City Council and Planning and Transportation Commission policies, and seek to integrate economic development consideration into staff and the City’s decision-making bodies. ENVIRONMENTAL REVIEW ATTACHMENTS APPROVED BY: City of Palo Alto - City Council Business Retention, Expansion, and Attraction (BRE/A) Strategy Attachment A The Business Retention, Expansion, and Attraction (BRE/A) Strategy is bounded by two strategic categories: Enhance Business Vibrancy and Engagement and Promotions. The two categories are supported by ten Economic Development focused implementation actions for calendar year 2026, which are summarized below. 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 and transient occupancy tax revenues and bi-annually for property tax revenues to identify and respond to changing trends. Performance Metric: Convene up to three 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 Quarter 3 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 3, establish two office hour events on California Avenue and Downtown for additional business and community engagement opportunities, and reengage with business and property owners via Downtown/University Avenue Stakeholders meetings to address public safety and cleanliness through a Business Improvement District (BID), and University Avenue infrastructure improvements by the end of 2026. o Open Container Resolution and Entertainment Zone - Performance Metric: Economic Development presented 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 Quarter 2 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 (Thursday Live/FIFA World Cup) and promote the hospitality sector (digital/print) during the 2026 sporting and concert events timeframe. o Innovation and Entrepreneurship Branding - Enhance the Palo Alto brand in innovation and entrepreneurship globally. The Palo Alto brand is intrinsically tied to its proximity to technology businesses, world-class institutions, and its creative workforce. Performance Metric: Economic Development will partner with foreign investment offices to strengthen global partnerships through foreign direct investment (FDI) and destination marketing. A destination marketing website will be developed and launched in early Quarter 4 2026 in collaboration with the Chamber of Commerce. 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.