Declining Revenues Imperil Key South Bay Project

PALO ALTO, CA – Amid declining revenues due to the coronavirus crisis, plans to build a $115 million public safety building have come into question, Palo Alto Weekly reports.

The city had envisioned a building new structure at 250 Sherman Ave. that would become the city’s new Police Department headquarters while housing the 911 dispatch center, the Emergency Operations Center, the Office of Emergency Services and Fire Department administration.

But amid plummeting revenues, city lawmakers are questioning whether constructing a new public safety building is the best use of the city’s limited resources, the report said.

The City Council in June passed a budget based on a projected 40 percent drop in sales tax revenues. Although that figure has turned out to be less bleak than was previously thought, a precipitous drop in hotel occupancy tax revenues is a cause for concern.

Hotel occupancy rates have fallen from above 80 percent before the coronavirus crisis to single digits in subsequent months, triggering a cascade of closures in recent months, the report said.

Hotel revenues were expected to fall around 50 percent in March to an estimated $14.9 million, and the latest projections are far less rosy, pegging additional losses to be in the range $5.5 million to $11 million, the report said.

Uncertainty about the duration of the pandemic and its economic impact is raising questions about the viability of the project, Councilmember Liz Kniss told the publication.

"The perception in the community is, 'Why are we putting up big buildings?'" Kniss said. "Why don't we cut back on some of our infrastructure and put more back into the services that are going into the community? I think we should really listen to that. I think that's really valid."

Read more at Palo Alto Weekly