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City Council
Staff Report
From: City Manager
Report Type: CONSENT CALENDAR
Lead Department: Administrative Services
Meeting Date: May 18, 2026
Report #:2603-6186
TITLE
Adoption of Resolution Suspending the Levy of Assessments on the Downtown Palo Alto Business Improvement District (BID) Assessment for Fiscal Year 2027; CEQA status – not a project.
RECOMMENDATION
Staff recommends that Council adopt the attached resolution suspending the levy of the Palo Alto Downtown Business Improvement District assessment for Fiscal Year (FY) 2027 (Attachment A).
BACKGROUND
The Palo Alto City Council established the Palo Alto Downtown Business Improvement District (BID) in 2004 pursuant to the California Parking and Business Improvement Area Law to maintain economic vitality and physical maintenance of the Palo Alto Downtown business district. The Council appointed the Palo Alto Downtown Business and Professional Association (PADBPA), a non-profit corporation, as the advisory board and administrator of the BID.
PADBPA, acting through its independent Board of Directors, has historically advised the Council on the method and basis for levy of assessments in the BID and has managed the expenditure of revenues derived from the assessments.
In response to organizational changes at PADBPA and changes resulting from the COVID-19 pandemic, and with the concurrence of the City Council, the City allowed the contract with PADBPA to expire on June 30, 2020. The Chamber and PADBPA identified a need to build support for a resumption of the BID assessment within the business community before collecting a new assessment and establishing a new management agreement.
On March 1, 2022, the Finance Committee discussed options for the FY 2023 Business Registry Certificate (BRC) and BID processes (CMR 1390211). The Committee reviewed three options for 1 03/01/2022 Finance Committee, Review the Business Registry Certificate and Business Improvement District FY 2023 Processes and recommendation to City Council on the Renewal Processes
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https://www.cityofpaloalto.org/files/assets/public/agendas-minutes-reports/agendas- minutes/financecommittee/2022/20220301/20220301pfcs-linked.pdf 9 7
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the BRC and BID and forwarded their recommendation to the City Council on April 4, 2022, CMR 1390123, to restore the BRC in the 2022-2023 collection timeframe, using the established structure used in pre-pandemic years, while continuing the pause of BID assessments again in FY 2023. The Palo Alto City Council supported the Finance Committee recommendation and approved a resolution to not levy an assessment for FY 2023. The BID was subsequently paused again in FY 20244, FY 20255, and FY 20266. Staff continues this recommendation for FY 2027.
ANALYSIS
Staff recommends that the Council approve the recommendation for FY 2027 and continue the suspension of the Downtown Business Improvement District assessment for one additional year. This approach remains consistent with prior City Council direction7 and reflects the City’s ongoing work to evaluate the future structure and funding framework for business district support.
In recent years, the City has advanced several related efforts, including the Comprehensive Economic Development Strategy approved by the City Council in August 20238, continued work on the University Avenue Streetscape Project, and expanded economic development resources within the City Manager’s Office. These efforts include ongoing coordination with businesses, property owners, and community stakeholders and support broader City-led initiatives focused on activation of downtown and commercial areas, enhancing public spaces, and consideration of district management approaches. Continuing the waiver for FY 2027 allows this work to progress as the City further develops and evaluates a long-term approach to downtown 3 04/04/2022 City Council, Approve Finance Committee Recommendation for FY 2023 to (a) Return to the Customary Pre- Pandemic Business Registry Certificate Requirement and Fee, and (b) Pause for One Year the Downtown Business Improvement District Assessment Program
https://www.cityofpaloalto.org/files/assets/public/agendas-minutes-reports/agendas-minutes/city-council- agendasminutes/2022/20220404/20220404pccsmamendedlinked1.pdf 4 04/14/2023 City Council, PUBLIC HEARING: Adoption of a Resolution Providing that the City will Not Levy Assessments for the Downtown Business Improvement District for FY 2024
https://cityofpaloalto.primegov.com/meetings/ItemWithTemplateType?id=1974&meetingTemplateType=2 5 05/20/2024 Adoption of Resolution Suspending the Levy of Assessments on the Downtown Palo Alto Business Improvement District (BID) Assessment for Fiscal Year 2025; CEQA status – not a project https://cityofpaloalto.primegov.com/meetings/ItemWithTemplateTypeid=4957&meetingTemplateType=2&compiledMeetingD ocumentId=10006
6 05/27/2025 City Council, Adoption of Resolution Suspending the Levy of Assessments on the Downtown Palo Alto Business Improvement District (BID) Assessment for Fiscal Year 2026; CEQA status – not a Project
https://recordsportal.paloalto.gov/WebLink/DocView.aspx?id=83417&dbid=0&repo=PaloAlto&searchid=3341e503-9252-4292- 958f-d659a44d09a7&cr=1
7 Prior Council Decisions: FY 2021 (CMR 11219) and in FY 2022 (CMR 12255) in response to the pandemic, along with the Finance Committee’s recommendation to not levy assessments for FY 2023 (CMR 13901) and FY 2024 (CMR 2303-1184) and Council in FY 2025 (CMR 2403-2822) and FY 2026 (CMR 2503-4251). 8 08/14/2023 Adoption of a Comprehensive Economic Development Strategy to Guide City Priorities, Initiatives, and Project Outcomes
https://recordsportal.paloalto.gov/WebLink/DocView.aspx?id=82422&dbid=0&repo=PaloAlto 9 7
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economic development, including the future role of the Business Improvement District. Staff continue to hold regular meetings with downtown businesses to engage on business retention, concerns, and future investments. Some downtown businesses have recently expressed interest in enhanced services to address homelessness outreach and cleanliness, so staff anticipate engagement over the upcoming year to determine if the BID might have a role in addressing these issues.
Under the Parking and Business Improvement Area Law of 1989, a public hearing is not required if no assessment is levied. If the City Council elects to resume BID assessments in a future year, a noticed public hearing will be required prior to doing so.
FISCAL/RESOURCE IMPACT
The BID is set up as a separate fund within the City’s budget. In prior years, when active, the BID required a General Fund subsidy as collected assessments fell short of the costs of operating the BID. The subsidy amounted to $70,000 in FY 2020. Historically, the City acts as the collection agent for BID revenues and reimburses PADBPA’s expenses after receipt and verification of invoices. While the BID is paused, an estimated $80,000 in annual revenue will not be collected, and no BID business activities will be provided. In the past, business activities have included the streetlight banner program, Lytton Plaza enhancements, and summer concerts, among others.
In prior years, staffing resources have included staff time from the City Manager’s Office and Administrative Services Department to provide oversight to the BID, administer the contract with HdL (the third-party administrator for both BID and BRC), liaise with stakeholders, and prepare the annual reauthorization.
STAKEHOLDER ENGAGEMENT
Staff continues to discuss the potential options for the future of the BID with downtown business stakeholders, including former leaders of PADBPA and the Chamber of Commerce.
Additionally, Economic Development staff has started to reengage downtown stakeholders (property and business owners) and commenced monthly meetings in April 2026. The May 2026 downtown stakeholders meeting will include a BID agenda item to begin discussions on the assessment district’s future for economic vitality and downtown activation.
ENVIRONMENTAL REVIEW
Council action on this item is not a project as defined by the California Environmental Quality Act because suspending imposition of BID assessments is an organizational or administrative activity that will not result in direct or indirect physical changes in the environment. CEQA Guidelines section 15378(b)(5).
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ATTACHMENTS
Attachment A: Resolution Declaring Intention to Not Levy Assessments APPROVED BY:
Lauren Lai, Administrative Services Director