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HomeMy WebLinkAbout2016-10-04 City Council Agenda PacketCity Council 1 MATERIALS RELATED TO AN ITEM ON THIS AGENDA SUBMITTED TO THE CITY COUNCIL AFTER DISTRIBUTION OF THE AGENDA PACKET ARE AVAILABLE FOR PUBLIC INSPECTION IN THE CITY CLERK’S OFFICE AT PALO ALTO CITY HALL, 250 HAMILTON AVE. DURING NORMAL BUSINESS HOURS. October 4, 2016 Special Meeting Council Chambers 5:00 PM Agenda posted according to PAMC Section 2.04.070. Supporting materials are available in the Council Chambers on the Thursday 10 days preceding the meeting. PUBLIC COMMENT Members of the public may speak to agendized items; up to three minutes per speaker, to be determined by the presiding officer. If you wish to address the Council on any issue that is on this agenda, please complete a speaker request card located on the table at the entrance to the Council Chambers, and deliver it to the City Clerk prior to discussion of the item. You are not required to give your name on the speaker card in order to speak to the Council, but it is very helpful. TIME ESTIMATES Time estimates are provided as part of the Council's effort to manage its time at Council meetings. Listed times are estimates only and are subject to change at any time, including while the meeting is in progress. The Council reserves the right to use more or less time on any item, to change the order of items and/or to continue items to another meeting. Particular items may be heard before or after the time estimated on the agenda. This may occur in order to best manage the time at a meeting or to adapt to the participation of the public. To ensure participation in a particular item, we suggest arriving at the beginning of the meeting and remaining until the item is called. HEARINGS REQUIRED BY LAW Applicants and/or appellants may have up to ten minutes at the outset of the public discussion to make their remarks and up to three minutes for concluding remarks after other members of the public have spoken. Call to Order Closed Session 5:00-6:00 PM Public Comments: Members of the public may speak to the Closed Session item(s); three minutes per speaker. 1.CONFERENCE WITH CITY ATTORNEY Existing Litigation - 1 Matter Authority: Government Code Section 54956.9(d)(1) Eileen Staats v. City of Palo Alto Santa Clara County Superior Court, Case No. 1:15-cv-284956 Study Session 6:00-7:00 PM 2.Potential List of Topics for Joint Meeting With the City Council and the Library Advisory Commission (LAC) Special Orders of the Day 7:00-7:10 pm 3.Appointment of two Candidates to the Planning and Transportation Commission for Terms Ending December 15, 2020 and one Candidate REVISED 2 October 4, 2016 MATERIALS RELATED TO AN ITEM ON THIS AGENDA SUBMITTED TO THE CITY COUNCIL AFTER DISTRIBUTION OF THE AGENDA PACKET ARE AVAILABLE FOR PUBLIC INSPECTION IN THE CITY CLERK’S OFFICE AT PALO ALTO CITY HALL, 250 HAMILTON AVE. DURING NORMAL BUSINESS HOURS. to the Planning and Transportation Commission for an Unexpired Term Ending December 15, 2018 Agenda Changes, Additions and Deletions City Manager Comments 7:10-7:20 PM Oral Communications 7:20-7:35 PM Members of the public may speak to any item NOT on the agenda. Council reserves the right to limit the duration of Oral Communications period to 30 minutes. Minutes Approval 7:35-7:40 PM 4. Approval of Action Minutes for the September 19, 2016 Council Meeting Consent Calendar 7:40-7:45 PM Items will be voted on in one motion unless removed from the calendar by three Council Members. 5. Adoption of a Resolution Authorizing the City Manager or his Designee to Approve a Base Contract for Sale and Purchase of Natural Gas With Sequent Energy Management, LP, and to Purchase a Portion of the City’s Natural Gas Requirements Under Specified Terms and Conditions During Calendar Years 2016 Through 2022 6. Adoption of a Resolution Approving the Standard Form Natural Gas Purchase and Sales Agreement With Special Terms and Conditions (“Standard Form Master Agreement”) 7. Approval of a two Year Professional Services Contract Number C16163563 With Mott MacDonald Group for Rail Program Management Services to Allow for Multiple Specific Task Orders With a Total Not-to- Exceed Amount of $1,614,763 8. Approve and Authorize the City Manager to Execute Contract Number C17165053 With Salas O'Brien, in an Amount Not-to-Exceed $217,800 for Design Services for the Municipal Service Center Mechanical, Electrical, and Lighting Improvements, and Zero Waste Office Renovation Capital Improvements Program Project PF-16006 9. Adoption of a Resolution Amending and Restating the Administrative Penalty Schedule and Civil Penalty Schedules for Certain Violations of the Palo Alto Municipal Code and the California Vehicle Code Established by Resolution Number 9554 9a. Appointment of Utilities General Manager (Director of Utilities)/Assistant City Manager, Approval of Amendment to 3 October 4, 2016 MATERIALS RELATED TO AN ITEM ON THIS AGENDA SUBMITTED TO THE CITY COUNCIL AFTER DISTRIBUTION OF THE AGENDA PACKET ARE AVAILABLE FOR PUBLIC INSPECTION IN THE CITY CLERK’S OFFICE AT PALO ALTO CITY HALL, 250 HAMILTON AVE. DURING NORMAL BUSINESS HOURS. Employment Agreement and Approval of Recommended Staffing Reorganization in the City Manager’s Office and the Utilities Department Action Items Include: Reports of Committees/Commissions, Ordinances and Resolutions, Public Hearings, Reports of Officials, Unfinished Business and Council Matters. 7:45-8:15 PM 10. PUBLIC HEARING: Adoption of Nine Ordinances to Adopt 2016 California Building Codes, Local Amendments, and Related Updates: (1) Repealing Chapter 16.04 of the Palo Alto Municipal Code and Amending Title 16 to Adopt a New Chapter 16.04, California Building Code, California Historical Building Code, and California Existing Building Code, 2016 Editions, and Local Amendments and Related Findings; (2) Repealing Chapter 16.05 of the Palo Alto Municipal Code and Amending Title 16 to Adopt a New Chapter 16.05, California Mechanical Code, 2016 Edition, and Local Amendments and Related Findings; (3) Repealing Chapter 16.06 of the Palo Alto Municipal Code and Amending Title 16 to Adopt a New Chapter 16.06, California Residential Code, 2016 Edition, and Local Amendments and Related Findings; (4) Repealing Chapter 16.08 of the Palo Alto Municipal Code and Amending Title 16 to Adopt a New Chapter 16.08, California Plumbing Code, 2016 Edition, and Local Amendments and Related Findings; (5) Repealing Chapter 16.14 of the Palo Alto Municipal Code and Amending Title 16 to Adopt a New Chapter 16.14, California Green Building Standards Code, 2016 Edition, and Local Amendments and Related Findings; (6) Repealing Chapter 16.16 of the Palo Alto Municipal Code and Amending Title 16 to Adopt a New Chapter 16.16, California Electrical Code, 2016 Edition, and Local Amendments and Related Findings; (7) Repealing Chapter 15.04 of the Palo Alto Municipal Code and Amending Title 15 to Adopt a new Chapter 15.04, California Fire Code, 2016 Edition, and Local Amendments and Related Findings; and (8) Adopt a New Title 16, Chapter 16.18 Private Swimming Pool and Spa Code, 2016 Edition and Local Amendments and Related Findings; (9) Amending Title 16, Chapters 16.36 House Numbering and 16.40 Unsafe Buildings for Local Amendments and Related Findings. Adoption of Categorical Exemptions Under Sections 15305 and 15308 of the CEQA Guidelines 8:15-9:45 PM 11. PUBLIC HEARING: Faircourt #3 and #4 Single Story Overlay (SSO) Rezoning: Request for a Zone Change of the Faircourt #3 and #4 Tracts #1921 and #1816 From R-1 Single Family Residential (8000) to R-1(8000)(S) Single Family Residential With Single Story Overlay (SSO); Environmental Assessment: Exempt From the California 4 October 4, 2016 MATERIALS RELATED TO AN ITEM ON THIS AGENDA SUBMITTED TO THE CITY COUNCIL AFTER DISTRIBUTION OF THE AGENDA PACKET ARE AVAILABLE FOR PUBLIC INSPECTION IN THE CITY CLERK’S OFFICE AT PALO ALTO CITY HALL, 250 HAMILTON AVE. DURING NORMAL BUSINESS HOURS. Environmental Quality Act per Section 15305; Planning and Transportation Commission Recommended Denial of the SSO Request 9:45-10:45 PM 12. Review Options and Provide Direction for Citywide Bike Share System Operated by Motivate, LLC and Finding That the Project is Exempt From Review Under Sections 15061(b)(3) and 15303 of the California Environmental Quality Act Guidelines 10:45-11:00 PM 13. PUBLIC HEARING: Adoption of an Urgency Ordinance Amending the Urgency Interim Ordinance (Ordinance 5325 Extended by Ordinance 5330) Preserving Ground Floor Retail Uses on a Citywide Basis to Allow Educational Uses on the Ground Floor of Parcels Zoned RT-35 Along Alma Street and Finding the Amendment Exempt From Review Under the California Environmental Quality Act (CEQA) Pursuant to State CEQA Guidelines Section 15061(b)(3) Inter-Governmental Legislative Affairs Council Member Questions, Comments and Announcements Members of the public may not speak to the item(s) Adjournment AMERICANS WITH DISABILITY ACT (ADA) Persons with disabilities who require auxiliary aids or services in using City facilities, services or programs or who would like information on the City’s compliance with the Americans with Disabilities Act (ADA) of 1990, may contact (650) 329-2550 (Voice) 24 hours in advance. 5 October 4, 2016 MATERIALS RELATED TO AN ITEM ON THIS AGENDA SUBMITTED TO THE CITY COUNCIL AFTER DISTRIBUTION OF THE AGENDA PACKET ARE AVAILABLE FOR PUBLIC INSPECTION IN THE CITY CLERK’S OFFICE AT PALO ALTO CITY HALL, 250 HAMILTON AVE. DURING NORMAL BUSINESS HOURS. Additional Information Council/Standing Committee Meetings October 3, 2016 COUNCIL MEETING- CANCELLED October 4, 2016 FINANCE COMMITTEE- CANCELLED October 10, 2016 COUNCIL MEETING- CANCELLED October 11, 2016 POLICY AND SERVICES COMMITTEE- CANCELLED Schedule of Meetings Schedule of Meetings Tentative Agenda Tentative Agenda Informational Report Status of the "Plan Bay Area" Update & Preferred Scenario Being Developed by the Metropolitan Transportation Commission (MTC) and the Association of Bay Area Governments (ABAG) Public Letters to Council Set 1 City of Palo Alto (ID # 7268) City Council Staff Report Report Type: Study Session Meeting Date: 10/4/2016 City of Palo Alto Page 1 Summary Title: LAC Joint Study Session Title: Potential List of Topics for Joint Meeting With the City Council and the Library Advisory Commission (LAC) From: City Manager Lead Department: Library The Library Advisory Commission (LAC) will make a brief presentation on the following proposed topics:  Summary of Library Services data - Collections and visitors - Programs and attendees  Summary of Library/LAC involvement  Recommendations for Council support Potential Topics of Discussion could include the following:  Outstanding library services and new programs  Integration with the community  Virtual library and other technology CITY OF PALO ALTO OFFICE OF THE CITY CLERK October 4, 2016 The Honorable City Council Palo Alto, California Appointment of two Candidates to the Planning and Transportation Commission for Terms Ending December 15, 2020 and one Candidate to the Planning and Transportation Commission for an Unexpired Term Ending December 15, 2018 On Monday, October 4, 2016 the Council is scheduled to appoint two candidates to the Planning and Transportation Commission for terms ending December 15, 2020 and one candidate to the Planning and Transportation Commission for an unexpired term ending December 15, 2018. Voting will be by paper ballot. Planning and Transportation Commission Vote to appoint two (2) four-year terms on the Planning and Transportation Commission (PTC) expiring on December 15, 2020 and one (1) unexpired term expiring December 18, 2018. The first two candidates to receive at least five votes (required) will be appointed to the terms ending December 15, 2020. Following these appointments, the first candidate to receive at least five votes (required) will be appointed to the unexpired term ending December 15, 2018. The 15 PTC Candidates are as follows: 1. Eisenberg, Rebecca 2. Ezran, Claude 3. Gardias, Przemek (Incumbent) 4. Hamachek, Brian 5. Hirsch, David 6. Ingle, Frank 7. Kachenko, Natasha 8. Kralik, Gabriel 9. Kraus, Michelle 10. Lauing, Ed 11. Pease, Christian 12. Resmini, Jessica 13. Singh, Reshma 14. Subramanian, Srinivasan 15. Summa, Doria On September 26, 2016, the City Clerk’s Office was notified that Tracy Herrick withdrew his application for the Planning and Transportation Commission. Page 2 Copies of all applications are included in Staff Report ID #7220: http://www.cityofpaloalto.org/civicax/filebank/documents/53993 Some applications may be redacted at the request of the applicant. A full set of non- redacted applications have been provided to Council Members directly. Department Head: Beth Minor, City Clerk CITY OF PALO ALTO OFFICE OF THE CITY CLERK October 4, 2016 The Honorable City Council Attention: Finance Committee Palo Alto, California Approval of Action Minutes for the September 19, 2016 Council Meeting Staff is requesting Council review and approve the attached Action Minutes. ATTACHMENTS:  Attachment A: 09-19-16 DRAFT Action Minutes (DOC) Department Head: Beth Minor, City Clerk Page 2 CITY OF PALO ALTO CITY COUNCIL DRAFT ACTION MINUTES Page 1 of 5 Special Meeting September 19, 2016 The City Council of the City of Palo Alto met on this date in the Council Chambers at 5:06 P.M. Present: Berman arrived at 7:03 P.M., Burt, DuBois, Filseth, Holman, Kniss, Scharff, Schmid, Wolbach Absent: Study Session 1. Study Session on Motor Vehicle Level of Service (LOS), Multimodal Level of Service (MMLOS), Bicycle Level of Traffic Stress, Vehicle Miles Traveled (VMT), and CEQA Changes Related to Transportation Impacts. Special Orders of the Day 2. Selection of Applicants to Interview on September 27, 2016 for the Historic Resources Board, the Parks and Recreation Commission, the Planning and Transportation Commission, and the Storm Drain Oversight Committee. MOTION: Council Member Holman moved, seconded by Council Member Kniss to authorize and request the City Clerk to include the additional applications received for the recruitment and included in the At Place Memorandum, for Council’s consideration for interviews. MOTION PASSED: 9-0 MOTION: Vice Mayor Scharff moved, seconded by Council Member Kniss to interview all applicants for the Historic Resources Board and the Parks and Recreation Commission. DRAFT ACTION MINUTES Page 2 of 5 City Council Meeting Draft Action Minutes: 9/19/16 MOTION PASSED: 9-0 MOTION: Council Member Wolbach moved, seconded by Council Member Schmid to interview all applicants for the Planning and Transportation Commission. INCORPORATED INTO THE MOTION WITH THE CONSENT OF THE MAKER AND SECONDER to add to the end of the Motion, “with 10 minute interviews.” AMENDMENT: Council Member Holman moved, seconded by Council Member XX to replace in the Motion, “10” with “15.” AMENDMENT FAILED DUE TO THE LACK OF A SECOND MOTION RESTATED: Council Member Wolbach moved, seconded by Council Member Schmid to interview all applicants for the Planning and Transportation Commission with 10 minute interviews MOTION AS AMENDED PASSED: 9-0 Agenda Changes, Additions and Deletions None. Minutes Approval 3. Approval of Action Minutes for the August 29 and September 6, 2016 Council Meetings. MOTION: Vice Mayor Scharff moved, seconded by Council Member Berman to approve the Action Minutes for the August 29 and September 6, 2016 Council Meetings including changes to the September 6, 2016 Action Minutes outlined in the Staff Memorandum. MOTION PASSED: 9-0 DRAFT ACTION MINUTES Page 3 of 5 City Council Meeting Draft Action Minutes: 9/19/16 Consent Calendar MOTION: Council Member DuBois moved, seconded by Council Member Kniss to approve Agenda Item Numbers 4-6. 4. Approval of a Contract With Buhler Commercial in the Amount Not-To- Exceed $586,803 for the Lucy Evans Baylands Interpretive Center Improvements; Approve and Authorize the City Manager to Execute Contract Amendment Number 1 to Contract Number C15157772 in the Amount of $60,730 With FOG Studio for Design and Construction Administration Services; Amend the Fiscal Year 2017 Budget Appropriation for the Baylands Interpretive Center Facility Improvements, Capital Improvement Program Project PE-15029; and Find the Project Categorically Exempt From the California Environmental Quality Act Under Section 15301 (Existing Facilities). 5. Approval of the Third Amendment to the Agreement Providing for Implementation of the Santa Clara Valley Urban Runoff Pollution Prevention Program Between Santa Clara County, Santa Clara Valley Water District, and Multiple Santa Clara County Cities to Extend its Term. 6. Approval of the Baylands Boardwalk Feasibility Study Report and Direct Staff to Pursue Replacement of the Boardwalk, Approve and Authorize the City Manager to Execute Contract Number C16163750 in the Amount of $439,992 With Biggs Cardosa Associates, Inc. to Provide Design and Environmental Services and Amend the Fiscal Year 2017 Budget Appropriation for the Baylands Boardwalk Improvements Capital Improvement Program Project PE-14018. MOTION PASSED: 9-0 Council took a break from 7:47 P.M. to 7:57 P.M. Action Items 7. Discuss and Identify a Preferred Alternative for Roadway Improvements to Embarcadero Road Between El Camino Real and Emerson Street and Direct Staff to Complete the Environmental Analysis and Plans, Specifications and Estimates for Construction. DRAFT ACTION MINUTES Page 4 of 5 City Council Meeting Draft Action Minutes: 9/19/16 MOTION: Vice Mayor Scharff moved, seconded by Council Member DuBois to identify Alternative 2 as the preferred alternative for the preparation of an environmental analysis and plans, specifications and estimates for construction for Embarcadero Road between El Camino Real and Emerson Street roadway improvements. SUBSTITUTE MOTION: Mayor Burt moved, seconded by Council Member Berman to identify Alternative 1, with the change to utilize the two-way configuration of Alternative 2 on the North side of Embarcadero Road, from Trader Joe’s to Emerson Street, as the preferred alternative for the preparation of an environmental analysis and plans, specifications and estimates for construction for Embarcadero Road between El Camino Real and Emerson Street roadway improvements. SUBSTITUTE MOTION PASSED: 5-4 DuBois, Holman, Scharff, Schmid, no 8. Review of the Draft Transportation Element Prepared by the Comprehensive Plan Update Community Advisory Committee (Continued From August 15, 2016). NO ACTION TAKEN Inter-Governmental Legislative Affairs None. Council Member Questions, Comments and Announcements Council Member Schmid reported his attendance at the latest Bay Area Water Supply and Conservation Agency (BAWSCA) meeting. At the meeting, the San Francisco Public Utilities Commission (SFPUC) reported the State Water Resources Control Board introduced a suggested 40 percent sustainable flow from January through June along the Tuolumne River. This could reduce the total flow into and out of the Hetch Hetchy Reservoir. Council Member DuBois reported that he and many other Council Members attended the Midtown Residents Annual Ice Cream Social. He thanked Sheri Furman for her efforts in organizing the Social. Vice Mayor Scharff reported that the Association of Bay Area Governments (ABAG) Executive Director, Ezra Rapport resigned, effective September 30. DRAFT ACTION MINUTES Page 5 of 5 City Council Meeting Draft Action Minutes: 9/19/16 ABAG Deputy Executive Director Brad Paul will serve as Acting Executive Director as ABAG merges with the San Francisco Metropolitan Transportation Commission (MTC). Council Member Kniss reported that she also enjoyed attending the Midtown Residents Annual Ice Cream Social. She reminded Council Members that the California League of Cities, Peninsula Division Quarterly Dinner is being held this Thursday. She commented on the Palo Alto Transportation Management Association (TMA) Information Report, noting that the TMA is in need of funding. Council Member Wolbach noted that he was disturbed by some comments posted to a Palo Alto Online article reporting on the September 11 peace walk. He suggested the Council adopt a Resolution condemning Islamophobia in Palo Alto, the United States, and internationally. Mayor Burt reported that Acterra held an electric vehicle event on Saturday. The event was well attended. He suggested a poll of Palo Alto residents be conducted asking what type of vehicle residents plan to purchase when making their next vehicle purchase. He noted the Sustainability and Climate Acton Plan (S/CAP) includes a decrease in gas powered vehicles, however, the City does not have a method of gathering data pertaining to this metric. He predicts that most people do not intend to purchase a gas powered vehicle. Adjournment: The meeting was adjourned at 11:36 P.M. City of Palo Alto (ID # 7253) City Council Staff Report Report Type: Consent Calendar Meeting Date: 10/4/2016 City of Palo Alto Page 1 Summary Title: Gas Master Agreement with Sequent Energy Management Title: Adoption of a Resolution Authorizing the City Manager or his Designee to Approve a Base Contract for Sale and Purchase of Natural Gas with Sequent Energy Management, LP, and to Purchase a Portion of the City’s Natural Gas Requirements under Specified Terms and Conditions During Calendar Years 2016 through 2022 From: City Manager Lead Department: Utilities Recommendation Staff recommends that the City Council: 1. Approve the attached resolution (Attachment A) approving the Base Contract for Sale and Purchase of Natural Gas with Sequent Energy Management, LP (Sequent Master Agreement); 2. Approve the attached resolution (Attachment A) authorizing the City Manager or his designee to purchase a portion of the City’s natural gas requirements from Sequent Energy Management, LP (Sequent) pursuant to specified terms and conditions under the Sequent Master Agreement during calendar years 2016 through 2022, inclusive, subject to the following limitations: a. The date for natural gas delivery for each transaction shall not exceed 36 months from the date the transaction is executed; b. The delivery date for any transaction shall not extend beyond December 2022; c. The maximum aggregate transaction limit under this Master Agreement shall be $100 million; d. All transactions are subject to the Palo Alto Municipal Code; and 3. All transactions are subject to the City’s Energy Risk Management Policy, Guidelines and Procedures; Waive the application of investment-grade credit rating requirement of section 2.30.340(c) of the Palo Alto Municipal Code, which applies to energy companies that do business with the City; and 4. Delegate to the City Manager, or his designee, the authority to execute on behalf of the City the Sequent Master Agreement. City of Palo Alto Page 2 Executive Summary An active set of creditworthy counterparties is essential to ensure that the City of Palo Alto Utilities meets its obligation to meet customers’ natural gas demands. Council approved an ordinance modifying the Municipal Code to streamline the purchase and sale of wholesale utility commodities and services. Subsequently, Council approved a Standard Form Master Agreement available to all financially strong natural gas suppliers for execution with non- substantive changes. Sequent has agreed to become one of the City’s gas counterparties under the Council-approved Standard Form Master Agreement. The proposed Master Agreement with Sequent (Attachment B) is the Council-approved Standard Form Master Agreement with non-substantive negotiated changes and executed by Sequent. The proposed resolution authorizes the City Manager to purchase natural gas under the agreement with Sequent within a maximum expenditure and transaction term limits. Background Approved Counterparties On May 16, 2016, Council approved a set of gas Master Agreements (Staff Report 6802, Resolution 9586) enabling the City to transact for natural gas and gas-related products. The approved Master Agreements are with the following counterparties: 1. BP Energy Company; 2. ConocoPhillips Company 3. Mercuria Energy Gas Trading L.L.C. 4. Powerex Corp; and 5. Shell Energy North America (US), L.P. Under Resolution 9586, Council delegated authority to the City Manager to transact under the Master Agreements subject to certain conditions and restrictions including a $100 million expenditure limit applied to each Master Agreement. The cost of natural gas purchased under the Master Agreements is a function of market prices and the City’s actual gas use. The City’s expected gas commodity cost is $8.3 million in fiscal year (FY) 2017 and is forecasted to increase to $12.6 million by FY 2025, however gas prices are volatile and unpredictable and actual costs incurred and passed through to ratepayers could be different. On August 15, 2016, Council approved an ordinance modifying the Municipal Code to streamline the purchase and sale of wholesale utility commodities and services and to explicitly allow for a Council-approved standard form agreement (August 15 City Attorney Report). A second reading of the ordinance was on August 29, 2016, and it went into effect on September 29, 2016. On October 4, 2016, Council will consider approval of a resolution to approve the Standard Form Master Agreement (Staff Report 7252), which would be available to all financially strong natural gas suppliers for execution with non-substantive changes. City of Palo Alto Page 3 Discussion All transactions under the Master Agreement with Sequent will be executed by staff in accordance with the Council-approved Energy Risk Management Policy. Council is provided with an update of all executed transactions under the Master Agreements in the quarterly Energy Risk Management reports. While Sequent will be the sixth enabled gas supplier, it is likely that most transactions will be executed with the two or three active suppliers. Staff recommends a maximum transaction limit of $100 million for Sequent, the same as each of the City’s other Master Agreements. According to Palo Alto Municipal Code section 2.30.340(c), gas counterparties “shall obtain and maintain during the term of the contract the minimum credit rating established as of the date of the award of the contract of not less than a BBB- credit rating established by Standard & Poor’s and a Baa3 credit rating established by Moody’s Investors Services”. Because the entity with which the City is contracting is not publically rated, a waiver of this requirement is requested. Sequent’s parent company, Southern Company Gas, is investment grade and is providing a parental guarantee for payment. This meets the requirements in the City’s Energy Risk Management Guidelines which state that if the parent of the counterparty meets the financial criteria, then that parent must provide a parent guarantee for potential credit exposure the City may incur with the supplier. Resource Impact Approval of the recommendation will not impact the FY 2017 budget. Policy Implications Authorizing the City Manager to buy and sell natural gas to meet load obligations under the Sequent Master Agreement conforms to the Council-approved Energy Risk Management Policy and the Palo Alto Municipal Code. Further, the recommendation is consistent with the Council- approved GULP Objectives and Utilities Strategic Plan objective to manage supply cost by negotiating supply contracts to minimize financial risk. Environmental Review Council’s approval of the Sequent Master Agreement and authorization for the City Manager to purchase natural gas from Sequent under the Sequent Master Agreement does not meet the definition of a project for the purposes of the California Environmental Quality Act, under Public Resources Code Section 21065 and CEQA Guidelines Section 15378(b)(5), because it is an administrative governmental activity which will not cause a direct or indirect physical change in the environment. Attachments:  Attachment A: RESO Sequent Gas Master Agreement (PDF)  Attachment B: NAESB Base Contract Sequent (PDF)  Attachment C: NAESB Special Provisions Sequent (PDF)  Attachment D: NAESB CSA Sequent (PDF) City of Palo Alto Page 4  Attachment E: Sequent Parental Guarantee (PDF) NOT YET APPROVED 160916 jb 6053828 1 Resolution No. _____ Resolution of the Council of the City of Palo Alto Authorizing the City Manager to Approve a Base Contract for Sale and Purchase of Natural Gas with Sequent Energy Management, LP and to Purchase a Portion of the City’s Natural Gas Requirements from Sequent Energy Management, LP Under Specified Terms and Conditions during Calendar Years 2016 through 2022, Inclusive RECITALS A. On April 23, 2012, the Council adopted Resolution 9244 amending the Gas Utility Long-Term Plan (GULP) Objectives, Strategies, and Implementation Plan to discontinue the laddering purchase strategy and implement gas supply rates that change monthly according to market prices B. In accordance with GULP, the City must purchase and, incidental to purchases, sell gas to meet the needs of its gas customers by contracting for terms varying from less than one month to one month. The City's Energy Risk Management Policies provide that the City will purchase only that quantity of gas meeting its load requirements at the time a transaction is executed. C. By an ordinance adopted August 15, 2016, Council approved changes to the Municipal Code specifically streamlining the purchase and sale of wholesale utility commodities and services and explicitly allowing for standard form master agreements. D. The natural gas standard form master agreement is based on the North American Energy Standards Board, Inc. (NAESB) Base Contract for Sale and Purchase of Natural Gas 2006 version and includes Special Provisions and a Credit Support Addendum (Master Agreement). E. By Resolution 9586 adopted May 16, 2016, Council authorized the City Manager to purchase a portion of the City’s natural gas requirements from certain prequalified natural gas suppliers under specified terms and conditions during calendar years 2016 through 2025, inclusive. F. The City intends to purchase natural gas from one or more prequalified suppliers for delivery during calendar years 2016 through 2022, inclusive, so long as the supplier with whom the City negotiates a specific purchase transaction continues to be qualified and otherwise eligible to transact with the City. ATTTACHMENT A 160916 jb 6053828 2 E. Sequent Energy Management, LP (Sequent) desires to execute a Master Agreement with the City (Sequent Master Agreement) in order to be a supplier for delivery during calendar years, 2016 through 2022, inclusive, so long as Sequent continues to be qualified and otherwise eligible to transact with the City. Sequent is not publically rated and is a subsidiary of Southern Gas Company, an investment grade company. NOW, THEREFORE, the Council of the City of Palo Alto RESOLVES as follows: SECTION 1. The Council hereby approves the Sequent Master Agreement. SECTION 2. The Council hereby authorizes the City Manager or his designee, the Director of Utilities, to purchase a portion of the City’s natural gas requirements from Sequent Energy Management, LP by negotiating one or more individual transactions under the Sequent Master Agreement, including, but not limited to, contracts, addenda, confirmations, and transactions, subject to Section 3. SECTION 3. The purchases negotiated under the Sequent Master Agreement shall conform to the following requirements: a.The maximum expenditures shall be $100 million; b.The maximum term of any individual transaction shall not exceed three years, commencing on the delivery date of the transaction. The sentence preceding notwithstanding, the City may enter into a transaction greater than three years, if the Council grants prior approval to such transaction; and c. No transaction shall extend beyond December 31, 2022. SECTION 4. The Council waives the application of the investment-grade credit rating requirement of section 2.30.340(c) of the Palo Alto Municipal Code, which applies to energy companies that do business with the City. SECTION 5. The Council delegates to the City Manager, or his designee, the authority to execute on behalf of the City the Sequent Master Agreement. SECTION 6. The Council hereby finds and determines that the adoption of this Resolution does not meet the definition of a project for the purposes of the California Environmental Quality Act, under Public Resources Code Section 21065 and CEQA Guidelines / / / / 160916 jb 6053828 3 Section 15378(b)(5), because it is an administrative governmental activity which will not cause a direct or indirect physical change in the environment. INTRODUCED AND PASSED: AYES: NOES: ABSTENTIONS: ABSENT: ATTEST: _____________________________ _____________________________ City Clerk Mayor APPROVED AS TO FORM: APPROVED: _____________________________ ______________________________ Senior Asst. City Attorney City Manager ______________________________ Director of Administrative Services ______________________________ Director of Utilities ATTACHMENT B ATTACHMENT C ATTACHMENT D ATTACHMENT E City of Palo Alto (ID # 7252) City Council Staff Report Report Type: Consent Calendar Meeting Date: 10/4/2016 City of Palo Alto Page 1 Summary Title: Resolution Approving a Standard Gas Transaction Agreement Title: Adoption of a Resolution Approving the Standard Form Natural Gas Purchase and Sales Agreement with Special Terms and Conditions (“Standard Form Master Agreement”) From: City Manager Lead Department: Utilities Recommendation Staff recommends that the City Council adopt the attached resolution (Attachment A) approving the standard form natural gas purchase and sales agreement with special terms and conditions (“Standard Form Master Agreement”). Executive Summary An active set of creditworthy counterparties is essential to ensure that the City of Palo Alto meets its obligation to serve customers’ natural gas demands. To that end, the City has entered into natural gas purchase and sales agreements (Master Agreements) with a number of counterparties to enable the City to purchase gas to serve its customers. However, the historic process to seek and negotiate Master Agreements through formal requests for proposal is lengthy and cumbersome. To streamline the process, Council recently approved an ordinance modifying the Municipal Code. The change allows for the Council to approve a standard form agreement such as the proposed Standard Form Master Agreement. The agreement will be available to all financially strong natural gas suppliers for execution with non-substantive changes. Master Agreements with specific natural gas suppliers including maximum expenditures and transaction term limits will be presented to Council for approval. Background Palo Alto Municipal Code Section 2.30.340 (Contracts for Wholesale Utility Commodities) allows for the use of master agreements to buy and/or sell electricity, gas and related services through various preapproved (“enabled”) suppliers. Contracts or transactions executed under the Council-approved master agreements must be done in accordance with the City’s Energy Risk Management Policy, Guidelines and Procedures. Historically, the process for contracting with wholesale utility suppliers has been to: issue a request for proposals; select multiple City of Palo Alto Page 2 creditworthy suppliers; negotiate terms and conditions with the set of potential suppliers; and seek Council approval and authority to transact. This process took upwards of one year. The current set of counterparties with executed Master Agreements includes: 1. BP Energy Company; 2. ConocoPhillips Company; 3. Shell Energy North America (US), L.P.; 4. Mercuria Energy Gas Trading L.L.C.; and 5. Powerex Corp. On August 15, 2016, Council approved an ordinance modifying the Municipal Code to streamline the purchase and sale of wholesale utility commodities and services and to explicitly allow for a Council-approved standard form master agreement (August 15 City Attorney Report). After a second reading of the ordinance on August 28, 2016, it went into effect on September 29, 2016. The ordinance modified Section 2.30.140 clarifying the process to enable suppliers by specifically allowing the use of a standard form master agreement that contains the City’s minimum contract terms and conditions. Negotiations will be carried out with qualified suppliers on an ongoing basis without the need to issue successive formal requests for proposals or invitations for bids. Execution of standard form master agreements and delegation of authority to transact under the standard form master agreement with specific supplier will remain subject to Council approval. Discussion The proposed Standard Form Master Agreement is based on the North American Energy Standards Board, Inc. (NAESB) Base Contract for Sale and Purchase of Natural Gas 2006 version and includes Special Provisions and a Credit Support Addendum. The proposed Standard Form Master Agreement incorporates the contract terms and conditions required in City of Palo Alto Municipal Code Section 2.30.340 (c): (1) governing law shall be the laws of the state of California; (2) choice of venue shall be the county of Santa Clara; and (3) a counterparty shall obtain and maintain during the term of the contract the minimum credit rating established as of the date of award of contract of not less than a BBB- credit rating established by Standard & Poor’s and a Baa3 credit rating established by Moody's Investors Services. If the proposed resolution is adopted, the Standard Form Master Agreement will be available on the City’s website for all potential natural gas suppliers to consider. If the counterparty meets the City’s financial requirements and executes the Standard Form Master Agreement with only non-substantive changes, the Master Agreement will be presented to Council with a recommendation to authorize execution by the City Manager. Such a request will be accompanied by the maximum expenditure level and transaction term limits. Resource Impact Approval of the recommendation will not impact the FY 2017 budget. City of Palo Alto Page 3 Policy Implications Adoption of the proposed resolution conforms to the Council-approved Energy Risk Management Policy and the Palo Alto Municipal Code. Further, the recommendation is consistent with the Council-approved Gas Utility Long-term Plan and Utilities Strategic Plan objective to manage supply cost by negotiating supply contracts to minimize financial risk. Environmental Review Council’s adoption of the proposed resolution approving a standard form natural gas purchase and sales agreement with special terms and conditions does not meet the definition of a project for the purposes of the California Environmental Quality Act, under Public Resources Code Section 21065 and CEQA Guidelines Section 15378(b)(5), because it is an administrative governmental activity which will not cause a direct or indirect physical change in the environment. Attachments:  Attachment A: Reso Standard Form Gas Master Agreement (PDF)  Attachment B: Base Contract Palo Alto 2016 (PDF)  Attachment C: 2016 Special Provisions to NAESB 2006 Base Contract (PDF) 160912 jb 6053824 ATTACHMENT A NOT YET APPROVED Resolution No. Resolution of the Council of the City of Palo Alto Approving a Standard Form Master Agreement for the Purchase and Sale of Natural Gas RECITALS A. On April 23, 2012, the Council adopted Resolution 9244 amending the Gas Utility Long-Term Plan (GULP) Objectives, Strategies, and Implementation Plan to discontinue the laddering purchase strategy and implement gas supply rates that change monthly according to market prices. B. In accordance with GULP, the City must purchase and, incidental to purchases, sell gas to meet the needs of its gas customers by contracting for terms varying from less than one month to one month. The City's Energy Risk Management Policies provide that the City will purchase only that quantity of gas meeting its load requirements at the time a transaction is executed. C. By the ordinance adopted August 15, 2016, Council approved changes to the Municipal Code specifically streamlining the purchase and sale of wholesale utility commodities and services and explicitly allowing for standard form Master Agreements. D. The standard form Master Agreement is based on the North American Energy Standards Board, Inc. (NAESB) Base Contract for Sale and Purchase of Natural Gas 2006 version and includes Special Provisions and a Credit Support Addendum. E. Negotiated Master Agreements with specific natural gas suppliers will be recommended to Council for approval with maximum expenditure limits and transaction terms. NOW, THEREFORE, the Council of the City of Palo Alto RESOLVES as follows: SECTION 1. The Council hereby approves the attached standard form Master Agreement. SECTION 2. The Council hereby finds and determines that the adoption of this Resolution does not meet the definition of a project for the purposes of the California Environmental Quality Act, under Public Resources Code Section 21065 and CEQA Guidelines Section 15378(b)(5), because it is an administrative governmental activity which will not cause a direct or indirect physical change in the environment. // // // 160912 jb 6053824 INTRODUCED AND PASSED: AYES: NOES: ABSTENTIONS: ABSENT: ATTEST: City Clerk Mayor APPROVED AS TO FORM: APPROVED: Senior Deputy City Attorney City Manager Director of Administrative Services Director of Utilities Copyright © 2006 North American Energy Standards Board, Inc. NAESB Standard 6.3.1 All Rights Reserved September 5, 2006 (Revised by R15003/R15007, April 4, 2016) Base Contract for Sale and Purchase of Natural Gas This Base Contract is entered into as of the following date: ________________________________________________ The parties to this Base Contract are the following: PARTY A [INSERT COUNTERPARTY LEGAL ENTITY NAME] PARTY NAME PARTY B CITY OF PALO ALTO ADDRESS 250 Hamilton Avenue Palo Alto, California 94301 www. BUSINESS WEBSITE www. CONTRACT NUMBER __________ D-U-N-S® NUMBER 17-892-8479  US FEDERAL:  OTHER: TAX ID NUMBERS √US FEDERAL:  OTHER: JURISDICTION OF ORGANIZATION California  Corporation  LLC  Limited Partnership  Partnership  LLP  Other: COMPANY TYPE  Corporation  LLC  Limited Partnership  Partnership  LLP √Other: California chartered municipal corporation GUARANTOR (IF APPLICABLE) N/A Party is a producer, processor, fabricator, refiner, commercial user, or merchandiser of the Gas under this contract: Yes No Not Selected PARTY CFTC CLASSIFICATION Party is a producer, processor, fabricator, refiner, commercial user, or merchandiser of the Gas under this contract: √Yes No Not Selected CONTACT INFORMATION ATTN: TEL#: FAX#: EMAIL: COMMERCIAL ATTN: TEL#: FAX#: EMAIL: ATTN: TEL#: FAX#: EMAIL: SCHEDULING ATTN: TEL#: FAX#: EMAIL: ATTN: TEL#: FAX#: EMAIL: CONTRACT AND LEGAL NOTICES ATTN: TEL#: FAX#: EMAIL: ATTN: TEL#: FAX#: EMAIL: CREDIT ATTN: TEL#: FAX#: EMAIL: ATTN: TEL#: FAX#: EMAIL: TRANSACTION CONFIRMATIONS ATTN: TEL#: FAX#: EMAIL: ACCOUNTING INFORMATION ATTN: TEL#: FAX#: EMAIL: INVOICES PAYMENTS SETTLEMENTS ATTN: TEL#: FAX#: EMAIL: BANK: ABA: ACCT: OTHER DETAILS: WIRE TRANSFER NUMBERS (IF APPLICABLE) BANK: ABA: ACCT: OTHER DETAILS: BANK: ABA: ACCT: OTHER DETAILS: ACH NUMBERS (IF APPLICABLE) BANK: ABA: ACCT: OTHER DETAILS: ATTN: ADDRESS: CHECKS (IF APPLICABLE) ATTN: ADDRESS: ATTACHMENT B Copyright © 2006 North American Energy Standards Board, Inc. NAESB Standard 6.3.1 All Rights Reserved Page 2 of 14 September 5, 2006 (Revised by R15003/R15007, April 4, 2016) Base Contract for Sale and Purchase of Natural Gas (Continued) This Base Contract incorporates by reference for all purposes the General Terms and Conditions for Sale and Purchase of Natural Gas published by the North American Energy Standards Board. The parties hereby agree to the following provisions offered in said General Terms and Conditions. In the event the parties fail to check a box, the specified default provision shall apply. Select the appropriate box(es) from each section: Section 1.2 Transaction Procedure √ Oral (default) OR  Written Section 10.2 Additional Events of Default  No Additional Events of Default (default) √ Indebtedness Cross Default √ Party A: $50,000,000 √ Party B: $50,000,000  Transactional Cross Default Specified Transactions: Section 2.7 Confirm Deadline √ 2 Business Days after receipt (default) OR  Business Days after receipt Section 2.8 Confirming Party  Seller (default) OR  Buyer √ Either Party Section 3.2 Performance Obligation √ Cover Standard (default) OR  Spot Price Standard Section 10.3.1 Early Termination Damages √ Early Termination Damages Apply (default) OR  Early Termination Damages Do Not Apply Note: The following Spot Price Publication applies to both of the immediately preceding. Section 10.3.2 Other Agreement Setoffs √ Other Agreement Setoffs Apply (default)  Bilateral (default) √ Triangular OR  Other Agreement Setoffs Do Not Apply Section 2.31 Spot Price Publication √ Gas Daily Midpoint (default) OR  Section 6 Taxes √ Buyer Pays At and After Delivery Point (default) OR  Seller Pays Before and At Delivery Point Section 7.2 Payment Date  25th Day of Month following Month of delivery (default) OR  Day of Month following Month of delivery √ Net 20 Days from receipt of invoice Section 15.5 Choice Of Law California Section 7.2 Method of Payment √ Wire transfer (default)  Automated Clearinghouse Credit (ACH)  Check Section 15.10 Confidentiality  Confidentiality applies (default) OR √ Confidentiality does not apply Section 7.7 Netting √ Netting applies (default) OR  Netting does not apply √ Special Provisions Number of sheets attached: Insert number of sheets √ Addendum(s): Credit Support Addendum [SIGNATURES ON NEXT PAGE] Copyright © 2006 North American Energy Standards Board, Inc. NAESB Standard 6.3.1 All Rights Reserved Page 3 of 14 September 5, 2006 (Revised by R15003/R15007, April 4, 2016) IN WITNESS WHEREOF, the parties hereto have executed this Base Contract in duplicate. [INSERT COUNTERPARTY LEGAL ENTITY NAME] PARTY NAME CITY OF PALO ALTO Approval by Mayor: By: SIGNATURE By: [Insert Name] PRINTED NAME [Insert Name] [Insert Title] TITLE City Manager, for Mayor ______________________, 2016 DATE ______________________, 2016 CITY OF PALO ALTO Approval as to form: By: [Insert Name] Senior Assistant City Attorney ______________________, 2016 CITY OF PALO ALTO Approval by City Manager: By: [Insert Name] City Manager ______________________, 2016 CITY OF PALO ALTO Approval by Administrative Services Director: By: [Insert Name] Administrative Services Director ______________________, 2016 Copyright © 2006North American Energy Standards Board, Inc. NAESB Standard 6.3.1 All Rights Reserved Page 4 of 14 September 5, 2006 (Revised by R15003/R15007, April 4, 2016) General Terms and Conditions Base Contract for Sale and Purchase of Natural Gas SECTION 1. PURPOSE AND PROCEDURES 1.1. These General Terms and Conditions are intended to facilitate purchase and sale transactions of Gas on a Firm or Interruptible basis. "Buyer" refers to the party receiving Gas and "Seller" refers to the party delivering Gas. The entire agreement between the parties shall be the Contract as defined in Section 2.9. The parties have selected either the “Oral Transaction Procedure” or the “Written Transaction Procedure” as indicated on the Base Contract. Oral Transaction Procedure: 1.2. The parties will use the following Transaction Confirmation procedure. Any Gas purchase and sale transaction may be effectuated in an EDI transmission or telephone conversation with the offer and acceptance constituting the agreement of the parties. The parties shall be legally bound from the time they so agree to transaction terms and may each rely thereon. Any such transaction shall be considered a “writing” and to have been “signed”. Notwithstanding the foregoing sentence, the parties agree that Confirming Party shall, and the other party may, confirm a telephonic transaction by sending the other party a Transaction Confirmation by facsimile, EDI or mutually agreeable electronic means within three Business Days of a transaction covered by this Section 1.2 (Oral Transaction Procedure) provided that the failure to send a Transaction Confirmation shall not invalidate the oral agreement of the parties. Confirming Party adopts its confirming letterhead, or the like, as its signature on any Transaction Confirmation as the identification and authentication of Confirming Party. If the Transaction Confirmation contains any provisions other than those relating to the commercial terms of the transaction (i.e., price, quantity, performance obligation, delivery point, period of delivery and/or transportation conditions), which modify or supplement the Base Contract or General Terms and Conditions of this Contract (e.g., arbitration or additional representations and warranties), such provisions shall not be deemed to be accepted pursuant to Section 1.3 but must be expressly agreed to by both parties; provided that the foregoing shall not invalidate any transaction agreed to by the parties. Written Transaction Procedure: 1.2. The parties will use the following Transaction Confirmation procedure. Should the parties come to an agreement regarding a Gas purchase and sale transaction for a particular Delivery Period, the Confirming Party shall, and the other party may, record that agreement on a Transaction Confirmation and communicate such Transaction Confirmation by facsimile, EDI or mutually agreeable electronic means, to the other party by the close of the Business Day following the date of agreement. The parties acknowledge that their agreement will not be binding until the exchange of nonconflicting Transaction Confirmations or the passage of the Confirm Deadline without objection from the receiving party, as provided in Section 1.3. 1.3. If a sending party's Transaction Confirmation is materially different from the receiving party's understanding of the agreement referred to in Section 1.2, such receiving party shall notify the sending party via facsimile, EDI or mutually agreeable electronic means by the Confirm Deadline, unless such receiving party has previously sent a Transaction Confirmation to the sending party. The failure of the receiving party to so notify the sending party in writing by the Confirm Deadline constitutes the receiving party's agreement to the terms of the transaction described in the sending party's Transaction Confirmation. If there are any material differences between timely sent Transaction Confirmations governing the same transaction, then neither Transaction Confirmation shall be binding until or unless such differences are resolved including the use of any evidence that clearly resolves the differences in the Transaction Confirmations. In the event of a conflict among the terms of (i) a binding Transaction Confirmation pursuant to Section 1.2, (ii) the oral agreement of the parties which may be evidenced by a recorded conversation, where the parties have selected the Oral Transaction Procedure of the Base Contract, (iii) the Base Contract, and (iv) these General Terms and Conditions, the terms of the documents shall govern in the priority listed in this sentence. 1.4. The parties agree that each party may electronically record all telephone conversations with respect to this Contract between their respective employees, without any special or further notice to the other party. Each party shall obtain any necessary consent of its agents and employees to such recording. Where the parties have selected the Oral Transaction Procedure in Section 1.2 of the Base Contract, the parties agree not to contest the validity or enforceability of telephonic recordings entered into in accordance with the requirements of this Base Contract. SECTION 2. DEFINITIONS The terms set forth below shall have the meaning ascribed to them below. Other terms are also defined elsewhere in the Contract and shall have the meanings ascribed to them herein. 2.1. “Additional Event of Default” shall mean Transactional Cross Default or Indebtedness Cross Default, each as and if selected by the parties pursuant to the Base Contract. 2.2. “Affiliate” shall mean, in relation to any person, any entity controlled, directly or indirectly, by the person, any entity that controls, directly or indirectly, the person or any entity directly or indirectly under common control with the person. For this purpose, “control” of any entity or person means ownership of at least 50 percent of the voting power of the entity or person. Copyright © 2006 North American Energy Standards Board, Inc. NAESB Standard 6.3.1 All Rights Reserved Page 5 of 14 September 5, 2006 (Revised by R15003/R15007, April 4, 2016) 2.3. “Alternative Damages” shall mean such damages, expressed in dollars or dollars per MMBtu, as the parties shall agree upon in the Transaction Confirmation, in the event either Seller or Buyer fails to perform a Firm obligation to deliver Gas in the case of Seller or to receive Gas in the case of Buyer. 2.4. "Base Contract" shall mean a contract executed by the parties that incorporates these General Terms and Conditions by reference; that specifies the agreed selections of provisions contained herein; and that sets forth other information required herein and any Special Provisions and addendum(s) as identified on page one. 2.5. "British thermal unit" or "Btu" shall mean the International BTU, which is also called the Btu (IT). 2.6. "Business Day(s)" shall mean Monday through Friday, excluding Federal Banking Holidays for transactions in the U.S. 2.7. "Confirm Deadline" shall mean 5:00 p.m. in the receiving party's time zone on the second Business Day following the Day a Transaction Confirmation is received or, if applicable, on the Business Day agreed to by the parties in the Base Contract; provided, if the Transaction Confirmation is time stamped after 5:00 p.m. in the receiving party's time zone, it shall be deemed received at the opening of the next Business Day. 2.8. "Confirming Party" shall mean the party designated in the Base Contract to prepare and forward Transaction Confirmations to the other party. 2.9. "Contract" shall mean the legally-binding relationship established by (i) the Base Contract, (ii) any and all binding Transaction Confirmations and (iii) where the parties have selected the Oral Transaction Procedure in Section 1.2 of the Base Contract, any and all transactions that the parties have entered into through an EDI transmission or by telephone, but that have not been confirmed in a binding Transaction Confirmation, all of which shall form a single integrated agreement between the parties. 2.10. "Contract Price" shall mean the amount expressed in U.S. Dollars per MMBtu to be paid by Buyer to Seller for the purchase of Gas as agreed to by the parties in a transaction. 2.11. "Contract Quantity" shall mean the quantity of Gas to be delivered and taken as agreed to by the parties in a transaction. 2.12. "Cover Standard", as referred to in Section 3.2, shall mean that if there is an unexcused failure to take or deliver any quantity of Gas pursuant to this Contract, then the performing party shall use commercially reasonable efforts to (i) if Buyer is the performing party, obtain Gas, (or an alternate fuel if elected by Buyer and replacement Gas is not available), or (ii) if Seller is the performing party, sell Gas, in either case, at a price reasonable for the delivery or production area, as applicable, consistent with: the amount of notice provided by the nonperforming party; the immediacy of the Buyer's Gas consumption needs or Seller's Gas sales requirements, as applicable; the quantities involved; and the anticipated length of failure by the nonperforming party. 2.13. "Credit Support Obligation(s)” shall mean any obligation(s) to provide or establish credit support for, or on behalf of, a party to this Contract such as cash, an irrevocable standby letter of credit, a margin agreement, a prepayment, a security interest in an asset, guaranty, or other good and sufficient security of a continuing nature. 2.14. "Day" shall mean a period of 24 consecutive hours, coextensive with a "day" as defined by the Receiving Transporter in a particular transaction. 2.15. "Delivery Period" shall be the period during which deliveries are to be made as agreed to by the parties in a transaction. 2.16. "Delivery Point(s)" shall mean such point(s) as are agreed to by the parties in a transaction. 2.17. "EDI" shall mean an electronic data interchange pursuant to an agreement entered into by the parties, specifically relating to the communication of Transaction Confirmations under this Contract. 2.18. "EFP" shall mean the purchase, sale or exchange of natural Gas as the "physical" side of an exchange for physical transaction involving gas futures contracts. EFP shall incorporate the meaning and remedies of "Firm", provided that a party’s excuse for nonperformance of its obligations to deliver or receive Gas will be governed by the rules of the relevant futures exchange regulated under the Commodity Exchange Act. 2.19. "Firm" shall mean that either party may interrupt its performance without liability only to the extent that such performance is prevented for reasons of Force Majeure; provided, however, that during Force Majeure interruptions, the party invoking Force Majeure may be responsible for any Imbalance Charges as set forth in Section 4.3 related to its interruption after the nomination is made to the Transporter and until the change in deliveries and/or receipts is confirmed by the Transporter. 2.20. "Gas" shall mean any mixture of hydrocarbons and noncombustible gases in a gaseous state consisting primarily of methane. 2.21. “Guarantor” shall mean any entity that has provided a guaranty of the obligations of a party hereunder. 2.22. "Imbalance Charges" shall mean any fees, penalties, costs or charges (in cash or in kind) assessed by a Transporter for failure to satisfy the Transporter's balance and/or nomination requirements. 2.23. “Indebtedness Cross Default” shall mean if selected on the Base Contract by the parties with respect to a party, that it or its Guarantor, if any, experiences a default, or similar condition or event however therein defined, under one or more agreements or instruments, individually or collectively, relating to indebtedness (such indebtedness to include any obligation whether present or future, contingent or otherwise, as principal or surety or otherwise) for the payment or repayment of borrowed money in an aggregate amount greater than the threshold specified in the Base Contract with respect to such party or its Guarantor, if any, which results in such indebtedness becoming immediately due and payable. Copyright © 2006 North American Energy Standards Board, Inc. NAESB Standard 6.3.1 All Rights Reserved Page 6 of 14 September 5, 2006 (Revised by R15003/R15007, April 4, 2016) 2.24. "Interruptible" shall mean that either party may interrupt its performance at any time for any reason, whether or not caused by an event of Force Majeure, with no liability, except such interrupting party may be responsible for any Imbalance Charges as set forth in Section 4.3 related to its interruption after the nomination is made to the Transporter and until the change in deliveries and/or receipts is confirmed by Transporter. 2.25. "MMBtu" shall mean one million British thermal units, which is equivalent to one dekatherm. 2.26. "Month" shall mean the period beginning on the first Day of the calendar month and ending immediately prior to the commencement of the first Day of the next calendar month. 2.27. "Payment Date" shall mean a date, as indicated on the Base Contract, on or before which payment is due Seller for Gas received by Buyer in the previous Month. 2.28. "Receiving Transporter" shall mean the Transporter receiving Gas at a Delivery Point, or absent such receiving Transporter, the Transporter delivering Gas at a Delivery Point. 2.29. "Scheduled Gas" shall mean the quantity of Gas confirmed by Transporter(s) for movement, transportation or management. 2.30. “Specified Transaction(s)” shall mean any other transaction or agreement between the parties for the purchase, sale or exchange of physical Gas, and any other transaction or agreement identified as a Specified Transaction under the Base Contract. 2.31. "Spot Price " as referred to in Section 3.2 shall mean the price listed in the publication indicated on the Base Contract, under the listing applicable to the geographic location closest in proximity to the Delivery Point(s) for the relevant Day; provided, if there is no single price published for such location for such Day, but there is published a range of prices, then the Spot Price shall be the average of such high and low prices. If no price or range of prices is published for such Day, then the Spot Price shall be the average of the following: (i) the price (determined as stated above) for the first Day for which a price or range of prices is published that next precedes the relevant Day; and (ii) the price (determined as stated above) for the first Day for which a price or range of prices is published that next follows the relevant Day. 2.32. "Transaction Confirmation" shall mean a document, similar to the form of Exhibit A, setting forth the terms of a transaction formed pursuant to Section 1 for a particular Delivery Period. 2.33. “Transactional Cross Default” shall mean if selected on the Base Contract by the parties with respect to a party, that it shall be in default, however therein defined, under any Specified Transaction. 2.34. “Termination Option” shall mean the option of either party to terminate a transaction in the event that the other party fails to perform a Firm obligation to deliver Gas in the case of Seller or to receive Gas in the case of Buyer for a designated number of days during a period as specified on the applicable Transaction Confirmation. 2.35. "Transporter(s)" shall mean all Gas gathering or pipeline companies, or local distribution companies, acting in the capacity of a transporter, transporting Gas for Seller or Buyer upstream or downstream, respectively, of the Delivery Point pursuant to a particular transaction. SECTION 3. PERFORMANCE OBLIGATION 3.1. Seller agrees to sell and deliver, and Buyer agrees to receive and purchase, the Contract Quantity for a particular transaction in accordance with the terms of the Contract. Sales and purchases will be on a Firm or Interruptible basis, as agreed to by the parties in a transaction. The parties have selected either the “Cover Standard” or the “Spot Price Standard” as indicated on the Base Contract. Cover Standard: 3.2. The sole and exclusive remedy of the parties in the event of a breach of a Firm obligation to deliver or receive Gas shall be recovery of the following: (i) in the event of a breach by Seller on any Day(s), payment by Seller to Buyer in an amount equal to the positive difference, if any, between the purchase price paid by Buyer utilizing the Cover Standard and the Contract Price, adjusted for commercially reasonable differences in transportation costs to or from the Delivery Point(s), multiplied by the difference between the Contract Quantity and the quantity actually delivered by Seller for such Day(s) excluding any quantity for which no replacement is available; or (ii) in the event of a breach by Buyer on any Day(s), payment by Buyer to Seller in the amount equal to the positive difference, if any, between the Contract Price and the price received by Seller utilizing the Cover Standard for the resale of such Gas, adjusted for commercially reasonable differences in transportation costs to or from the Delivery Point(s), multiplied by the difference between the Contract Quantity and the quantity actually taken by Buyer for such Day(s) excluding any quantity for which no sale is available; and (iii) in the event that Buyer has used commercially reasonable efforts to replace the Gas or Seller has used commercially reasonable efforts to sell the Gas to a third party, and no such replacement or sale is available for all or any portion of the Contract Quantity of Gas, then in addition to (i) or (ii) above, as applicable, the sole and exclusive remedy of the performing party with respect to the Gas not replaced or sold shall be an amount equal to any unfavorable difference between the Contract Price and the Spot Price, adjusted for such transportation to the applicable Delivery Point, multiplied by the quantity of such Gas not replaced or sold. Imbalance Charges shall not be recovered under this Section 3.2, but Seller and/or Buyer shall be responsible for Imbalance Charges, if any, as provided in Section 4.3. The amount of such unfavorable difference shall be payable five Business Days after presentation of the performing party’s invoice, which shall set forth the basis upon which such amount was calculated. Copyright © 2006 North American Energy Standards Board, Inc. NAESB Standard 6.3.1 All Rights Reserved Page 7 of 14 September 5, 2006 (Revised by R15003/R15007, April 4, 2016) Spot Price Standard: 3.2. The sole and exclusive remedy of the parties in the event of a breach of a Firm obligation to deliver or receive Gas shall be recovery of the following: (i) in the event of a breach by Seller on any Day(s), payment by Seller to Buyer in an amount equal to the difference between the Contract Quantity and the actual quantity delivered by Seller and received by Buyer for such Day(s), multiplied by the positive difference, if any, obtained by subtracting the Contract Price from the Spot Price; or (ii) in the event of a breach by Buyer on any Day(s), payment by Buyer to Seller in an amount equal to the difference between the Contract Quantity and the actual quantity delivered by Seller and received by Buyer for such Day(s), multiplied by the positive difference, if any, obtained by subtracting the applicable Spot Price from the Contract Price. Imbalance Charges shall not be recovered under this Section 3.2, but Seller and/or Buyer shall be responsible for Imbalance Charges, if any, as provided in Section 4.3. The amount of such unfavorable difference shall be payable five Business Days after presentation of the performing party’s invoice, which shall set forth the basis upon which such amount was calculated. 3.3. Notwithstanding Section 3.2, the parties may agree to Alternative Damages in a Transaction Confirmation executed in writing by both parties. 3.4. In addition to Sections 3.2 and 3.3, the parties may provide for a Termination Option in a Transaction Confirmation executed in writing by both parties. The Transaction Confirmation containing the Termination Option will designate the length of nonperformance triggering the Termination Option and the procedures for exercise thereof, how damages for nonperformance will be compensated, and how liquidation costs will be calculated. SECTION 4. TRANSPORTATION, NOMINATIONS, AND IMBALANCES 4.1. Seller shall have the sole responsibility for transporting the Gas to the Delivery Point(s). Buyer shall have the sole responsibility for transporting the Gas from the Delivery Point(s). 4.2. The parties shall coordinate their nomination activities, giving sufficient time to meet the deadlines of the affected Transporter(s). Each party shall give the other party timely prior Notice, sufficient to meet the requirements of all Transporter(s) involved in the transaction, of the quantities of Gas to be delivered and purchased each Day. Should either party become aware that actual deliveries at the Delivery Point(s) are greater or lesser than the Scheduled Gas, such party shall promptly notify the other party. 4.3. The parties shall use commercially reasonable efforts to avoid imposition of any Imbalance Charges. If Buyer or Seller receives an invoice from a Transporter that includes Imbalance Charges, the parties shall determine the validity as well as the cause of such Imbalance Charges. If the Imbalance Charges were incurred as a result of Buyer’s receipt of quantities of Gas greater than or less than the Scheduled Gas, then Buyer shall pay for such Imbalance Charges or reimburse Seller for such Imbalance Charges paid by Seller. If the Imbalance Charges were incurred as a result of Seller’s delivery of quantities of Gas greater than or less than the Scheduled Gas, then Seller shall pay for such Imbalance Charges or reimburse Buyer for such Imbalance Charges paid by Buyer. SECTION 5. QUALITY AND MEASUREMENT All Gas delivered by Seller shall meet the pressure, quality and heat content requirements of the Receiving Transporter. The unit of quantity measurement for purposes of this Contract shall be one MMBtu dry. Measurement of Gas quantities hereunder shall be in accordance with the established procedures of the Receiving Transporter. SECTION 6. TAXES The parties have selected either “Buyer Pays At and After Delivery Point” or “Seller Pays Before and At Delivery Point” as indicated on the Base Contract. Buyer Pays At and After Delivery Point: Seller shall pay or cause to be paid all taxes, fees, levies, penalties, licenses or charges imposed by any government authority (“Taxes”) on or with respect to the Gas prior to the Delivery Point(s). Buyer shall pay or cause to be paid all Taxes on or with respect to the Gas at the Delivery Point(s) and all Taxes after the Delivery Point(s). If a party is required to remit or pay Taxes that are the other party’s responsibility hereunder, the party responsible for such Taxes shall promptly reimburse the other party for such Taxes. Any party entitled to an exemption from any such Taxes or charges shall furnish the other party any necessary documentation thereof. Seller Pays Before and At Delivery Point: Seller shall pay or cause to be paid all taxes, fees, levies, penalties, licenses or charges imposed by any government authority (“Taxes”) on or with respect to the Gas prior to the Delivery Point(s) and all Taxes at the Delivery Point(s). Buyer shall pay or cause to be paid all Taxes on or with respect to the Gas after the Delivery Point(s). If a party is required to remit or pay Taxes that are the other party’s responsibility hereunder, the party responsible for such Taxes shall promptly reimburse the other party for such Taxes. Any party entitled to an exemption from any such Taxes or charges shall furnish the other party any necessary documentation thereof. SECTION 7. BILLING, PAYMENT, AND AUDIT 7.1. Seller shall invoice Buyer for Gas delivered and received in the preceding Month and for any other applicable charges, providing supporting documentation acceptable in industry practice to support the amount charged. If the actual quantity delivered is not known by the billing date, billing will be prepared based on the quantity of Scheduled Gas. The invoiced quantity will then be adjusted to the actual quantity on the following Month's billing or as soon thereafter as actual delivery information is available. Copyright © 2006 North American Energy Standards Board, Inc. NAESB Standard 6.3.1 All Rights Reserved Page 8 of 14 September 5, 2006 (Revised by R15003/R15007, April 4, 2016) 7.2. Buyer shall remit the amount due under Section 7.1 in the manner specified in the Base Contract, in immediately available funds, on or before the later of the Payment Date or 10 Days after receipt of the invoice by Buyer; provided that if the Payment Date is not a Business Day, payment is due on the next Business Day following that date. In the event any payments are due Buyer hereunder, payment to Buyer shall be made in accordance with this Section 7.2. 7.3. In the event payments become due pursuant to Sections 3.2 or 3.3, the performing party may submit an invoice to the nonperforming party for an accelerated payment setting forth the basis upon which the invoiced amount was calculated. Payment from the nonperforming party will be due five Business Days after receipt of invoice. 7.4. If the invoiced party, in good faith, disputes the amount of any such invoice or any part thereof, such invoiced party will pay such amount as it concedes to be correct; provided, however, if the invoiced party disputes the amount due, it must provide supporting documentation acceptable in industry practice to support the amount paid or disputed without undue delay. In the event the parties are unable to resolve such dispute, either party may pursue any remedy available at law or in equity to enforce its rights pursuant to this Section. 7.5. If the invoiced party fails to remit the full amount payable when due, interest on the unpaid portion shall accrue from the date due until the date of payment at a rate equal to the lower of (i) the then-effective prime rate of interest published under "Money Rates" by The Wall Street Journal, plus two percent per annum; or (ii) the maximum applicable lawful interest rate. 7.6. A party shall have the right, at its own expense, upon reasonable Notice and at reasonable times, to examine and audit and to obtain copies of the relevant portion of the books, records, and telephone recordings of the other party only to the extent reasonably necessary to verify the accuracy of any statement, charge, payment, or computation made under the Contract. This right to examine, audit, and to obtain copies shall not be available with respect to proprietary information not directly relevant to transactions under this Contract. All invoices and billings shall be conclusively presumed final and accurate and all associated claims for under- or overpayments shall be deemed waived unless such invoices or billings are objected to in writing, with adequate explanation and/or documentation, within two years after the Month of Gas delivery. All retroactive adjustments under Section 7 shall be paid in full by the party owing payment within 30 Days of Notice and substantiation of such inaccuracy. 7.7. Unless the parties have elected on the Base Contract not to make this Section 7.7 applicable to this Contract, the parties shall net all undisputed amounts due and owing, and/or past due, arising under the Contract such that the party owing the greater amount shall make a single payment of the net amount to the other party in accordance with Section 7; provided that no payment required to be made pursuant to the terms of any Credit Support Obligation or pursuant to Section 7.3 shall be subject to netting under this Section. If the parties have executed a separate netting agreement, the terms and conditions therein shall prevail to the extent inconsistent herewith. SECTION 8. TITLE, WARRANTY, AND INDEMNITY 8.1. Unless otherwise specifically agreed, title to the Gas shall pass from Seller to Buyer at the Delivery Point(s). Seller shall have responsibility for and assume any liability with respect to the Gas prior to its delivery to Buyer at the specified Delivery Point(s). Buyer shall have responsibility for and assume any liability with respect to said Gas after its delivery to Buyer at the Delivery Point(s). 8.2. Seller warrants that it will have the right to convey and will transfer good and merchantable title to all Gas sold hereunder and delivered by it to Buyer, free and clear of all liens, encumbrances, and claims. EXCEPT AS PROVIDED IN THIS SECTION 8.2 AND IN SECTION 15.8, ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING ANY WARRANTY OF MERCHANTABILITY OR OF FITNESS FOR ANY PARTICULAR PURPOSE, ARE DISCLAIMED. 8.3. Seller agrees to indemnify Buyer and save it harmless from all losses, liabilities or claims including reasonable attorneys' fees and costs of court ("Claims"), from any and all persons, arising from or out of claims of title, personal injury (including death) or property damage from said Gas or other charges thereon which attach before title passes to Buyer. Buyer agrees to indemnify Seller and save it harmless from all Claims, from any and all persons, arising from or out of claims regarding payment, personal injury (including death) or property damage from said Gas or other charges thereon which attach after title passes to Buyer. 8.4. The parties agree that the delivery of and the transfer of title to all Gas under this Contract shall take place within the Customs Territory of the United States (as defined in general note 2 of the Harmonized Tariff Schedule of the United States 19 U.S.C. §1202, General Notes, page 3); provided, however, that in the event Seller took title to the Gas outside the Customs Territory of the United States, Seller represents and warrants that it is the importer of record for all Gas entered and delivered into the United States, and shall be responsible for entry and entry summary filings as well as the payment of duties, taxes and fees, if any, and all applicable record keeping requirements. 8.5. Notwithstanding the other provisions of this Section 8, as between Seller and Buyer, Seller will be liable for all Claims to the extent that such arise from the failure of Gas delivered by Seller to meet the quality requirements of Section 5. SECTION 9. NOTICES 9.1. All Transaction Confirmations, invoices, payment instructions, and other communications made pursuant to the Base Contract ("Notices") shall be made to the addresses specified in writing by the respective parties from time to time. 9.2. All Notices required hereunder shall be in writing and may be sent by facsimile or mutually acceptable electronic means, a nationally recognized overnight courier service, first class mail or hand delivered. 9.3. Notice shall be given when received on a Business Day by the addressee. In the absence of proof of the actual receipt date, the following presumptions will apply. Notices sent by facsimile shall be deemed to have been received upon the sending party's receipt of its facsimile machine's confirmation of successful transmission. If the day on which such facsimile is received is Copyright © 2006 North American Energy Standards Board, Inc. NAESB Standard 6.3.1 All Rights Reserved Page 9 of 14 September 5, 2006 (Revised by R15003/R15007, April 4, 2016) not a Business Day or is after five p.m. on a Business Day, then such facsimile shall be deemed to have been received on the next following Business Day. Notice by overnight mail or courier shall be deemed to have been received on the next Business Day after it was sent or such earlier time as is confirmed by the receiving party. Notice via first class mail shall be considered delivered five Business Days after mailing. 9.4. The party receiving a commercially acceptable Notice of change in payment instructions or other payment information shall not be obligated to implement such change until ten Business Days after receipt of such Notice. SECTION 10. FINANCIAL RESPONSIBILITY 10.1. If either party (“X”) has reasonable grounds for insecurity regarding the performance of any obligation under this Contract (whether or not then due) by the other party (“Y”) (including, without limitation, the occurrence of a material change in the creditworthiness of Y or its Guarantor, if applicable), X may demand Adequate Assurance of Performance. “Adequate Assurance of Performance” shall mean sufficient security in the form, amount, for a term, and from an issuer, all as reasonably acceptable to X, including, but not limited to cash, a standby irrevocable letter of credit, a prepayment, a security interest in an asset or guaranty. Y hereby grants to X a continuing first priority security interest in, lien on, and right of setoff against all Adequate Assurance of Performance in the form of cash transferred by Y to X pursuant to this Section 10.1. Upon the return by X to Y of such Adequate Assurance of Performance, the security interest and lien granted hereunder on that Adequate Assurance of Performance shall be released automatically and, to the extent possible, without any further action by either party. 10.2. In the event (each an "Event of Default") either party (the "Defaulting Party") or its Guarantor shall: (i) make an assignment or any general arrangement for the benefit of creditors; (ii) file a petition or otherwise commence, authorize, or acquiesce in the commencement of a proceeding or case under any bankruptcy or similar law for the protection of creditors or have such petition filed or proceeding commenced against it; (iii) otherwise become bankrupt or insolvent (however evidenced); (iv) be unable to pay its debts as they fall due; (v) have a receiver, provisional liquidator, conservator, custodian, trustee or other similar official appointed with respect to it or substantially all of its assets; (vi) fail to perform any obligation to the other party with respect to any Credit Support Obligations relating to the Contract; (vii) fail to give Adequate Assurance of Performance under Section 10.1 within 48 hours but at least one Business Day of a written request by the other party; (viii) not have paid any amount due the other party hereunder on or before the second Business Day following written Notice that such payment is due; or ix) be the affected party with respect to any Additional Event of Default; then the other party (the "Non-Defaulting Party") shall have the right, at its sole election, to immediately withhold and/or suspend deliveries or payments upon Notice and/or to terminate and liquidate the transactions under the Contract, in the manner provided in Section 10.3, in addition to any and all other remedies available hereunder. 10.3. If an Event of Default has occurred and is continuing, the Non-Defaulting Party shall have the right, by Notice to the Defaulting Party, to designate a Day, no earlier than the Day such Notice is given and no later than 20 Days after such Notice is given, as an early termination date (the “Early Termination Date”) for the liquidation and termination pursuant to Section 10.3.1 of all transactions under the Contract, each a “Terminated Transaction”. On the Early Termination Date, all transactions will terminate, other than those transactions, if any, that may not be liquidated and terminated under applicable law (“Excluded Transactions”), which Excluded Transactions must be liquidated and terminated as soon thereafter as is legally permissible, and upon termination shall be a Terminated Transaction and be valued consistent with Section 10.3.1 below. With respect to each Excluded Transaction, its actual termination date shall be the Early Termination Date for purposes of Section 10.3.1. The parties have selected either “Early Termination Damages Apply” or “Early Termination Damages Do Not Apply” as indicated on the Base Contract. Early Termination Damages Apply: 10.3.1. As of the Early Termination Date, the Non-Defaulting Party shall determine, in good faith and in a commercially reasonable manner, (i) the amount owed (whether or not then due) by each party with respect to all Gas delivered and received between the parties under Terminated Transactions and Excluded Transactions on and before the Early Termination Date and all other applicable charges relating to such deliveries and receipts (including without limitation any amounts owed under Section 3.2), for which payment has not yet been made by the party that owes such payment under this Contract and (ii) the Market Value, as defined below, of each Terminated Transaction. The Non-Defaulting Party shall (x) liquidate and accelerate each Terminated Transaction at its Market Value, so that each amount equal to the difference between such Market Value and the Contract Value, as defined below, of such Terminated Transaction(s) shall be due to the Buyer under the Terminated Transaction(s) if such Market Value exceeds the Contract Value and to the Seller if the opposite is the case; and (y) where appropriate, discount each amount then due under clause (x) above to present value in a commercially reasonable manner as of the Early Termination Date (to take account of the period between the date of liquidation and the date on which such amount would have otherwise been due pursuant to the relevant Terminated Transactions). For purposes of this Section 10.3.1, “Contract Value” means the amount of Gas remaining to be delivered or purchased under a transaction multiplied by the Contract Price, and “Market Value” means the amount of Gas remaining to be delivered or purchased under a transaction multiplied by the market price for a similar transaction at the Delivery Point determined by the Non-Defaulting Party in a commercially reasonable manner. To ascertain the Market Value, the Non-Defaulting Party may consider, among other valuations, any or all of the settlement prices of NYMEX Gas futures contracts, quotations from leading dealers in energy swap contracts or physical gas trading markets, similar sales or purchases and any other bona fide third-party offers, all adjusted for the length of the term and differences in transportation costs. A party shall not be required to enter into a replacement transaction(s) in order to determine the Market Value. Any extension(s) of the term of a transaction to which parties are not bound as of the Early Termination Date (including but not limited to “evergreen provisions”) shall not be considered in determining Contract Values and Copyright © 2006 North American Energy Standards Board, Inc. NAESB Standard 6.3.1 All Rights Reserved Page 10 of 14 September 5, 2006 (Revised by R15003/R15007, April 4, 2016) Market Values. For the avoidance of doubt, any option pursuant to which one party has the right to extend the term of a transaction shall be considered in determining Contract Values and Market Values. The rate of interest used in calculating net present value shall be determined by the Non-Defaulting Party in a commercially reasonable manner. Early Termination Damages Do Not Apply: 10.3.1. As of the Early Termination Date, the Non-Defaulting Party shall determine, in good faith and in a commercially reasonable manner, the amount owed (whether or not then due) by each party with respect to all Gas delivered and received between the parties under Terminated Transactions and Excluded Transactions on and before the Early Termination Date and all other applicable charges relating to such deliveries and receipts (including without limitation any amounts owed under Section 3.2), for which payment has not yet been made by the party that owes such payment under this Contract. The parties have selected either “Other Agreement Setoffs Apply” or “Other Agreement Setoffs Do Not Apply” as indicated on the Base Contract. Other Agreement Setoffs Apply: Bilateral Setoff Option: 10.3.2. The Non-Defaulting Party shall net or aggregate, as appropriate, any and all amounts owing between the parties under Section 10.3.1, so that all such amounts are netted or aggregated to a single liquidated amount payable by one party to the other (the “Net Settlement Amount”). At its sole option and without prior Notice to the Defaulting Party, the Non-Defaulting Party is hereby authorized to setoff any Net Settlement Amount against (i) any margin or other collateral held by a party in connection with any Credit Support Obligation relating to the Contract; and (ii) any amount(s) (including any excess cash margin or excess cash collateral) owed or held by the party that is entitled to the Net Settlement Amount under any other agreement or arrangement between the parties. Triangular Setoff Option: 10.3.2. The Non-Defaulting Party shall net or aggregate, as appropriate, any and all amounts owing between the parties under Section 10.3.1, so that all such amounts are netted or aggregated to a single liquidated amount payable by one party to the other (the “Net Settlement Amount”). At its sole option, and without prior Notice to the Defaulting Party, the Non-Defaulting Party is hereby authorized to setoff (i) any Net Settlement Amount against any margin or other collateral held by a party in connection with any Credit Support Obligation relating to the Contract; (ii) any Net Settlement Amount against any amount(s) (including any excess cash margin or excess cash collateral) owed by or to a party under any other agreement or arrangement between the parties; (iii) any Net Settlement Amount owed to the Non-Defaulting Party against any amount(s) (including any excess cash margin or excess cash collateral) owed by the Non-Defaulting Party or its Affiliates to the Defaulting Party under any other agreement or arrangement; (iv) any Net Settlement Amount owed to the Defaulting Party against any amount(s) (including any excess cash margin or excess cash collateral) owed by the Defaulting Party to the Non-Defaulting Party or its Affiliates under any other agreement or arrangement; and/or (v) any Net Settlement Amount owed to the Defaulting Party against any amount(s) (including any excess cash margin or excess cash collateral) owed by the Defaulting Party or its Affiliates to the Non-Defaulting Party under any other agreement or arrangement. Other Agreement Setoffs Do Not Apply: 10.3.2. The Non-Defaulting Party shall net or aggregate, as appropriate, any and all amounts owing between the parties under Section 10.3.1, so that all such amounts are netted or aggregated to a single liquidated amount payable by one party to the other (the “Net Settlement Amount”). At its sole option and without prior Notice to the Defaulting Party, the Non-Defaulting Party may setoff any Net Settlement Amount against any margin or other collateral held by a party in connection with any Credit Support Obligation relating to the Contract. 10.3.3. If any obligation that is to be included in any netting, aggregation or setoff pursuant to Section 10.3.2 is unascertained, the Non-Defaulting Party may in good faith estimate that obligation and net, aggregate or setoff, as applicable, in respect of the estimate, subject to the Non-Defaulting Party accounting to the Defaulting Party when the obligation is ascertained. Any amount not then due which is included in any netting, aggregation or setoff pursuant to Section 10.3.2 shall be discounted to net present value in a commercially reasonable manner determined by the Non-Defaulting Party. 10.4. As soon as practicable after a liquidation, Notice shall be given by the Non-Defaulting Party to the Defaulting Party of the Net Settlement Amount, and whether the Net Settlement Amount is due to or due from the Non-Defaulting Party. The Notice shall include a written statement explaining in reasonable detail the calculation of the Net Settlement Amount, provided that failure to give such Notice shall not affect the validity or enforceability of the liquidation or give rise to any claim by the Defaulting Party against the Non-Defaulting Party. The Net Settlement Amount as well as any setoffs applied against such amount pursuant to Section 10.3.2, shall be paid by the close of business on the second Business Day following such Notice, which date shall not be earlier than the Early Termination Date. Interest on any unpaid portion of the Net Settlement Amount as adjusted by setoffs, shall accrue from the date due until the date of payment at a rate equal to the lower of (i) the then-effective prime rate of interest published under "Money Rates" by The Wall Street Journal, plus two percent per annum; or (ii) the maximum applicable lawful interest rate. 10.5. The parties agree that the transactions hereunder constitute a "forward contract" within the meaning of the United States Bankruptcy Code and that Buyer and Seller are each "forward contract merchants" within the meaning of the United States Bankruptcy Code. 10.6. The Non-Defaulting Party's remedies under this Section 10 are the sole and exclusive remedies of the Non-Defaulting Party with respect to the occurrence of any Early Termination Date. Each party reserves to itself all other rights, setoffs, counterclaims and other defenses that it is or may be entitled to arising from the Contract. Copyright © 2006 North American Energy Standards Board, Inc. NAESB Standard 6.3.1 All Rights Reserved Page 11 of 14 September 5, 2006 (Revised by R15003/R15007, April 4, 2016) 10.7. With respect to this Section 10, if the parties have executed a separate netting agreement with close-out netting provisions, the terms and conditions therein shall prevail to the extent inconsistent herewith. SECTION 11. FORCE MAJEURE 11.1. Except with regard to a party's obligation to make payment(s) due under Section 7, Section 10.4, and Imbalance Charges under Section 4, neither party shall be liable to the other for failure to perform a Firm obligation, to the extent such failure was caused by Force Majeure. The term "Force Majeure" as employed herein means any cause not reasonably within the control of the party claiming suspension, as further defined in Section 11.2. 11.2. Force Majeure shall include, but not be limited to, the following: (i) physical events such as acts of God, landslides, lightning, earthquakes, fires, storms or storm warnings, such as hurricanes, which result in evacuation of the affected area, floods, washouts, explosions, breakage or accident or necessity of repairs to machinery or equipment or lines of pipe; (ii) weather related events affecting an entire geographic region, such as low temperatures which cause freezing or failure of wells or lines of pipe; (iii) interruption and/or curtailment of Firm transportation and/or storage by Transporters; (iv) acts of others such as strikes, lockouts or other industrial disturbances, riots, sabotage, insurrections or wars, or acts of terror; and (v) governmental actions such as necessity for compliance with any court order, law, statute, ordinance, regulation, or policy having the effect of law promulgated by a governmental authority having jurisdiction. Seller and Buyer shall make reasonable efforts to avoid the adverse impacts of a Force Majeure and to resolve the event or occurrence once it has occurred in order to resume performance. 11.3. Neither party shall be entitled to the benefit of the provisions of Force Majeure to the extent performance is affected by any or all of the following circumstances: (i) the curtailment of interruptible or secondary Firm transportation unless primary, in-path, Firm transportation is also curtailed; (ii) the party claiming excuse failed to remedy the condition and to resume the performance of such covenants or obligations with reasonable dispatch; or (iii) economic hardship, to include, without limitation, Seller’s ability to sell Gas at a higher or more advantageous price than the Contract Price, Buyer’s ability to purchase Gas at a lower or more advantageous price than the Contract Price, or a regulatory agency disallowing, in whole or in part, the pass through of costs resulting from this Contract; (iv) the loss of Buyer’s market(s) or Buyer’s inability to use or resell Gas purchased hereunder, except, in either case, as provided in Section 11.2; or (v) the loss or failure of Seller’s gas supply or depletion of reserves, except, in either case, as provided in Section 11.2. The party claiming Force Majeure shall not be excused from its responsibility for Imbalance Charges. 11.4. Notwithstanding anything to the contrary herein, the parties agree that the settlement of strikes, lockouts or other industrial disturbances shall be within the sole discretion of the party experiencing such disturbance. 11.5. The party whose performance is prevented by Force Majeure must provide Notice to the other party. Initial Notice may be given orally; however, written Notice with reasonably full particulars of the event or occurrence is required as soon as reasonably possible. Upon providing written Notice of Force Majeure to the other party, the affected party will be relieved of its obligation, from the onset of the Force Majeure event, to make or accept delivery of Gas, as applicable, to the extent and for the duration of Force Majeure, and neither party shall be deemed to have failed in such obligations to the other during such occurrence or event. 11.6. Notwithstanding Sections 11.2 and 11.3, the parties may agree to alternative Force Majeure provisions in a Transaction Confirmation executed in writing by both parties. SECTION 12. TERM This Contract may be terminated on 30 Day’s written Notice, but shall remain in effect until the expiration of the latest Delivery Period of any transaction(s). The rights of either party pursuant to Section 7.6, Section 10, Section 13, the obligations to make payment hereunder, and the obligation of either party to indemnify the other, pursuant hereto shall survive the termination of the Base Contract or any transaction. SECTION 13. LIMITATIONS FOR BREACH OF ANY PROVISION FOR WHICH AN EXPRESS REMEDY OR MEASURE OF DAMAGES IS PROVIDED, SUCH EXPRESS REMEDY OR MEASURE OF DAMAGES SHALL BE THE SOLE AND EXCLUSIVE REMEDY. A PARTY’S LIABILITY HEREUNDER SHALL BE LIMITED AS SET FORTH IN SUCH PROVISION, AND ALL OTHER REMEDIES OR DAMAGES AT LAW OR IN EQUITY ARE WAIVED. IF NO REMEDY OR MEASURE OF DAMAGES IS EXPRESSLY PROVIDED HEREIN OR IN A TRANSACTION, A PARTY’S LIABILITY SHALL BE LIMITED TO DIRECT ACTUAL DAMAGES ONLY. SUCH DIRECT ACTUAL DAMAGES SHALL BE THE SOLE AND EXCLUSIVE REMEDY, AND ALL OTHER REMEDIES OR DAMAGES AT LAW OR IN EQUITY ARE WAIVED. UNLESS EXPRESSLY HEREIN PROVIDED, NEITHER PARTY SHALL BE LIABLE FOR CONSEQUENTIAL, INCIDENTAL, PUNITIVE, EXEMPLARY OR INDIRECT DAMAGES, LOST PROFITS OR OTHER BUSINESS INTERRUPTION DAMAGES, BY STATUTE, IN TORT OR CONTRACT, UNDER ANY INDEMNITY PROVISION OR OTHERWISE. IT IS THE INTENT OF THE PARTIES THAT THE LIMITATIONS HEREIN IMPOSED ON REMEDIES AND THE MEASURE OF DAMAGES BE WITHOUT REGARD TO THE CAUSE OR CAUSES RELATED THERETO, INCLUDING THE NEGLIGENCE OF ANY PARTY, WHETHER SUCH NEGLIGENCE BE SOLE, JOINT OR CONCURRENT, OR ACTIVE OR PASSIVE. TO THE EXTENT ANY DAMAGES REQUIRED TO BE PAID HEREUNDER ARE LIQUIDATED, THE PARTIES ACKNOWLEDGE THAT THE DAMAGES ARE DIFFICULT OR IMPOSSIBLE TO DETERMINE, OR OTHERWISE OBTAINING AN ADEQUATE REMEDY IS INCONVENIENT AND THE DAMAGES CALCULATED HEREUNDER CONSTITUTE A REASONABLE APPROXIMATION OF THE HARM OR LOSS. Copyright © 2006 North American Energy Standards Board, Inc. NAESB Standard 6.3.1 All Rights Reserved Page 12 of 14 September 5, 2006 (Revised by R15003/R15007, April 4, 2016) SECTION 14. MARKET DISRUPTION If a Market Disruption Event has occurred then the parties shall negotiate in good faith to agree on a replacement price for the Floating Price (or on a method for determining a replacement price for the Floating Price) for the affected Day, and if the parties have not so agreed on or before the second Business Day following the affected Day then the replacement price for the Floating Price shall be determined within the next two following Business Days with each party obtaining, in good faith and from non- affiliated market participants in the relevant market, two quotes for prices of Gas for the affected Day of a similar quality and quantity in the geographical location closest in proximity to the Delivery Point and averaging the four quotes. If either party fails to provide two quotes then the average of the other party’s two quotes shall determine the replacement price for the Floating Price. "Floating Price" means the price or a factor of the price agreed to in the transaction as being based upon a specified index. "Market Disruption Event" means, with respect to an index specified for a transaction, any of the following events: (a) the failure of the index to announce or publish information necessary for determining the Floating Price; (b) the failure of trading to commence or the permanent discontinuation or material suspension of trading on the exchange or market acting as the index; (c) the temporary or permanent discontinuance or unavailability of the index; (d) the temporary or permanent closing of any exchange acting as the index; or (e) both parties agree that a material change in the formula for or the method of determining the Floating Price has occurred. For the purposes of the calculation of a replacement price for the Floating Price, all numbers shall be rounded to three decimal places. If the fourth decimal number is five or greater, then the third decimal number shall be increased by one and if the fourth decimal number is less than five, then the third decimal number shall remain unchanged. SECTION 15. MISCELLANEOUS 15.1. This Contract shall be binding upon and inure to the benefit of the successors, assigns, personal representatives, and heirs of the respective parties hereto, and the covenants, conditions, rights and obligations of this Contract shall run for the full term of this Contract. No assignment of this Contract, in whole or in part, will be made without the prior written consent of the non-assigning party (and shall not relieve the assigning party from liability hereunder), which consent will not be unreasonably withheld or delayed; provided, either party may (i) transfer, sell, pledge, encumber, or assign this Contract or the accounts, revenues, or proceeds hereof in connection with any financing or other financial arrangements, or (ii) transfer its interest to any parent or Affiliate by assignment, merger or otherwise without the prior approval of the other party. Upon any such assignment, transfer and assumption, the transferor shall remain principally liable for and shall not be relieved of or discharged from any obligations hereunder. 15.2. If any provision in this Contract is determined to be invalid, void or unenforceable by any court having jurisdiction, such determination shall not invalidate, void, or make unenforceable any other provision, agreement or covenant of this Contract. 15.3. No waiver of any breach of this Contract shall be held to be a waiver of any other or subsequent breach. 15.4. This Contract sets forth all understandings between the parties respecting each transaction subject hereto, and any prior contracts, understandings and representations, whether oral or written, relating to such transactions are merged into and superseded by this Contract and any effective transaction(s). This Contract may be amended only by a writing executed by both parties. 15.5. The interpretation and performance of this Contract shall be governed by the laws of the jurisdiction as indicated on the Base Contract, excluding, however, any conflict of laws rule which would apply the law of another jurisdiction. 15.6. This Contract and all provisions herein will be subject to all applicable and valid statutes, rules, orders and regulations of any governmental authority having jurisdiction over the parties, their facilities, or Gas supply, this Contract or transaction or any provisions thereof. 15.7. There is no third party beneficiary to this Contract. 15.8. Each party to this Contract represents and warrants that it has full and complete authority to enter into and perform this Contract. Each person who executes this Contract on behalf of either party represents and warrants that it has full and complete authority to do so and that such party will be bound thereby. 15.9. The headings and subheadings contained in this Contract are used solely for convenience and do not constitute a part of this Contract between the parties and shall not be used to construe or interpret the provisions of this Contract. 15.10. Unless the parties have elected on the Base Contract not to make this Section 15.10 applicable to this Contract, neither party shall disclose directly or indirectly without the prior written consent of the other party the terms of any transaction to a third party (other than the employees, lenders, royalty owners, counsel, accountants and other agents of the party, or prospective purchasers of all or substantially all of a party’s assets or of any rights under this Contract, provided such persons shall have agreed to keep such terms confidential) except (i) in order to comply with any applicable law, order, regulation, or exchange rule, (ii) to the extent necessary for the enforcement of this Contract , (iii) to the extent necessary to implement any transaction, (iv) to the extent necessary to comply with a regulatory agency’s reporting requirements including but not limited to gas cost recovery proceedings; or (v) to the extent such information is delivered to such third party for the sole purpose of calculating a published index. Each party shall notify the other party of any proceeding of which it is aware which may result in disclosure of the terms of any transaction (other than as permitted hereunder) and use reasonable efforts to prevent or limit the disclosure. The existence of this Contract is not subject to this confidentiality obligation. Subject to Section 13, the parties shall be entitled to all remedies available at law or in equity to enforce, or seek relief in connection with this confidentiality obligation. The terms of any transaction hereunder shall be kept confidential by the parties hereto for one year from the expiration of the transaction. In the event that disclosure is required by a governmental body or applicable law, the party subject to such requirement may disclose the material terms of this Contract to the extent so required, but shall promptly notify the other party, prior to disclosure, Copyright © 2006 North American Energy Standards Board, Inc. NAESB Standard 6.3.1 All Rights Reserved Page 13 of 14 September 5, 2006 (Revised by R15003/R15007, April 4, 2016) and shall cooperate (consistent with the disclosing party’s legal obligations) with the other party’s efforts to obtain protective orders or similar restraints with respect to such disclosure at the expense of the other party. 15.11. The parties may agree to dispute resolution procedures in Special Provisions attached to the Base Contract or in a Transaction Confirmation executed in writing by both parties 15.12. Any original executed Base Contract, Transaction Confirmation or other related document may be digitally copied, photocopied, or stored on computer tapes and disks (the “Imaged Agreement”). The Imaged Agreement, if introduced as evidence on paper, the Transaction Confirmation, if introduced as evidence in automated facsimile form, the recording, if introduced as evidence in its original form, and all computer records of the foregoing, if introduced as evidence in printed format, in any judicial, arbitration, mediation or administrative proceedings will be admissible as between the parties to the same extent and under the same conditions as other business records originated and maintained in documentary form. Neither Party shall object to the admissibility of the recording, the Transaction Confirmation, or the Imaged Agreement on the basis that such were not originated or maintained in documentary form. However, nothing herein shall be construed as a waiver of any other objection to the admissibility of such evidence. DISCLAIMER: The purposes of this Contract are to facilitate trade, avoid misunderstandings and make more definite the terms of contracts of purchase and sale of natural gas. Further, NAESB does not mandate the use of this Contract by any party. NAESB DISCLAIMS AND EXCLUDES, AND ANY USER OF THIS CONTRACT ACKNOWLEDGES AND AGREES TO NAESB'S DISCLAIMER OF, ANY AND ALL WARRANTIES, CONDITIONS OR REPRESENTATIONS, EXPRESS OR IMPLIED, ORAL OR WRITTEN, WITH RESPECT TO THIS CONTRACT OR ANY PART THEREOF, INCLUDING ANY AND ALL IMPLIED WARRANTIES OR CONDITIONS OF TITLE, NON-INFRINGEMENT, MERCHANTABILITY, OR FITNESS OR SUITABILITY FOR ANY PARTICULAR PURPOSE (WHETHER OR NOT NAESB KNOWS, HAS REASON TO KNOW, HAS BEEN ADVISED, OR IS OTHERWISE IN FACT AWARE OF ANY SUCH PURPOSE), WHETHER ALLEGED TO ARISE BY LAW, BY REASON OF CUSTOM OR USAGE IN THE TRADE, OR BY COURSE OF DEALING. EACH USER OF THIS CONTRACT ALSO AGREES THAT UNDER NO CIRCUMSTANCES WILL NAESB BE LIABLE FOR ANY DIRECT, SPECIAL, INCIDENTAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES ARISING OUT OF ANY USE OF THIS CONTRACT. The copyright in this Contract is owned by NAESB, and market participants are encouraged to review NAESB Copyright Policy and Companies with Access to NAESB Standards under the Copyright Policy posted by NAESB on its website at https://www.naesb.org/pdf2/copyright.pdf. Please review this posting and if your company’s name is not listed as having access, please obtain access by contacting the NAESB Office per the contact information in the Copyright Policy. Copyright © 2006 North American Energy Standards Board, Inc. NAESB Standard 6.3.1 All Rights Reserved Page 14 of 14 September 5, 2006 (Revised by R15003/R15007, April 4, 2016) TRANSACTION CONFIRMATION EXHIBIT A FOR IMMEDIATE DELIVERY Letterhead/Logo Date: ____________________________, _____ Transaction Confirmation #: _______________ This Transaction Confirmation is subject to the Base Contract between Seller and Buyer dated ______________________. The terms of this Transaction Confirmation are binding unless disputed in writing within 2 Business Days of receipt unless otherwise specified in the Base Contract. SELLER: _______________________________________________ _______________________________________________ _______________________________________________ Attn: ___________________________________________ Phone: _________________________________________ Fax: ___________________________________________ Base Contract No. ________________________________ Transporter: _____________________________________ Transporter Contract Number: _______________________ BUYER: _______________________________________________ _______________________________________________ _______________________________________________ Attn: ___________________________________________ Phone: _________________________________________ Fax: ___________________________________________ Base Contract No. ________________________________ Transporter: _____________________________________ Transporter Contract Number: _______________________ Contract Price: $ /MMBtu or ______________________________________________________________________ Delivery Period: Begin: , ___ End: , ___ Performance Obligation and Contract Quantity: (Select One) Firm (Fixed Quantity): Firm (Variable Quantity): Interruptible: MMBtus/day MMBtus/day Minimum Up to MMBtus/day EFP MMBtus/day Maximum subject to Section 4.2. at election of Delivery Point(s): ________________________ (If a pooling point is used, list a specific geographic and pipeline location): Special Conditions: Seller: __________________________________________ By: ____________________________________________ Title: ___________________________________________ Date: __________________________________________ Buyer: __________________________________________ By: ____________________________________________ Title: ___________________________________________ Date: __________________________________________ 999014 - 1 - EXHIBIT A SPECIAL PROVISIONS TO BASE CONTRACT FOR SALE AND PURCHASE OF NATURAL GAS - GENERAL TERMS AND CONDITIONS (FORM NAESB Standard 6.3.1-9/5/06 (Revised by R15003/R15007, 4/4/16) BY AND BETWEEN CITY OF PALO ALTO AND ____________________________ DATED: ____________, 2016 SECTION 1.2 [Oral Transaction Procedure], line 13: after “agreed to” add “, in writing,”. SECTION 1.3 shall be amended by deleting subsections (iii) and (iv) of the last sentence and replacing them with the following new subsections: “(iii) the Special Provisions, (iv) the Base Contract, and (v) these General Terms and Conditions”. SECTION 1.4 is amended by adding the following after the third sentence: “Promptly upon request by a party, the other party shall provide a copy of such recording to the party making the request.” SECTION 1.5 is added to SECTION 1, as follows: “City is a municipal utility governed by the City of Palo Alto, by and through its Council, which has all powers necessary and appropriate to a municipal corporation, including but not limited to the authority granted by the City Charter, Article XI, Section 9(a) of the California Constitution, California Government Code Section 39732 and California Public Utilities Code Section 10002, to establish, purchase, and operate public works to furnish its inhabitants with natural gas. Under this authority, City is engaged in the business of delivering natural gas to its residential and commercial customers in Palo Alto, California.” SECTION 1.6 is added to SECTION 1, as follows: “(i) Supplier is either an eligible contract participant or a producer, processor, commercial user of, or merchant handling natural gas that offers or enters into any Transactions hereunder solely for the purposes related to its business as such; (ii) Supplier is, and the City reasonably believes Supplier to be, a commercial party that is offered or enters into Transactions solely for purposes related to its business as such; and (iii) the Transactions are intended to be physically settled for immediate or deferred delivery.” SECTION 2.4, line 1: after “incorporates” add “the Cover Sheet and”. SECTION 2.6 is amended and restated in its entirety, as follows: “’Business Day’ shall mean any Day except Saturday, Sunday, a Day that is a regular holiday declared by City pursuant to Palo Alto Municipal Code Section 2.08.100 or a Day that is a Federal Reserve Bank holiday.” SECTION 2.9 is amended by deleting the “and” before “(iii)”, and inserting at the end of that provision before “.” the following: “and (iv) the Credit Support Addendum to Base Contract for Sale and Purchase of Natural Gas attached hereto as Exhibit B and as subsequently executed by the Parties”. ATTACHMENT C 999014 2 SECTION 2.13 is amended to (i) replace the words “to provide or establish” with the words, “to provide, maintain, or establish”. SECTION 2.23, at the end of the sentence after the words, “immediately due and payable”, the following: “(after giving effect to any applicable notice requirement or grace period)”. SECTION 3.1, line 3: add a third sentence, as follows: “If a transaction is not designated as Firm or Interruptible, the transaction shall be deemed to be Firm.” SECTION 3.2 [Cover Standard], in the last sentence: after “payable” add “within”, and delete “presentation” and replace with “receipt”. SECTION 3.5 is added to SECTION 3, as follows: “Notwithstanding any other provision of this SECTION 3, if a party fails to deliver or receive Gas for three or more consecutive Business Days and such failure is not excused by the terms of the Transaction Confirmation, by Force Majeure, or by the other party’s failure of performance, then upon one Business Day’s prior written Notice and for so long as the non-performing party fails to deliver or receive Gas, the performing party may suspend its performance under such Transaction Confirmation and shall not be obligated to resume its performance until the non-performing party provides two Business Days’ prior written Notice of its intention to perform such obligation (“Notice to Resume Contractual Performance”); provided, however, if the performing party has entered into a replacement contract for a term of 31 Days or less during the suspension period, such performing party may defer its obligation to resume delivering or receiving Gas until after the expiration of the term of the replacement contract; provided further, that the performing party provides written Notice of its execution of such replacement contract to the non-performing party within two Business Days of the performing party’s receipt of the Notice to Resume Contractual Performance.” SECTION 7.1, line 3: after “actual quantity” add “delivered”. SECTION 7.4, line 2: after “it must provide,” add “within 60 Days”; and line 3: delete “without undue delay”. SECTION 7.5, line 3: delete “, plus two percent per annum”. SECTION 8.3 is hereby amended by adding the following sentence to the end of this paragraph: “Neither party shall be obligated to indemnify, defend, or hold the other party harmless to the extent any liability, suit, action, damage, loss or expense arises out of or in connection with any intentional act, negligent act or failure to act on the part of the other party, its officers, agents, or employees.” SECTION 10.1 is amended and restated in its entirety, as follows: “During the term of this Contract, the parties shall comply with the requirements of the Credit Support Addendum to Base Contract for Sale and Purchase of Natural Gas and any subsequent amendments thereto.” SECTION 10.2, line 9: delete “or” before “[(]ix)”; and in line 11, after “Additional Event of Default;” add: 999014 3 “(x) during any 90-Day period on a rolling basis fail to perform a Firm obligation to deliver or receive Gas, as contemplated by Section 3.2, five or more times; or (xi) make any representation or warranty with respect to its financial statements (consolidated or unconsolidated balance sheet, income statement and statement of cash flow) or position that is false or materially misleading;” SECTION 10.3: Insert the following at the end of Section 10.3: “Failure by the Non-Defaulting Party to promptly exercise its rights to terminate and liquidate all transactions upon the occurrence of an Event of Default shall not be deemed to be a waiver of such right.” SECTION 10.3.1 [Early Termination Damages Apply], add a third paragraph, as follows: “The Non-Defaulting Party shall aggregate the costs that the Non-Defaulting party incurs in liquidating and accelerating each Terminated Transaction, or otherwise settling obligations arising from the cancellation and termination of each Terminated Transaction, including brokerage fees, commissions, and other similar transaction costs and expenses reasonably incurred by the Non-Defaulting Party, including costs associated with hedging its obligations, transaction costs associated with obtaining replacement supplies or markets (e.g., brokerage fees, or other such payments), additional transportation balancing or hub services costs, and similar costs incurred in transporting the replacement Gas to or from the replacement Gas seller or buyer, and reasonable attorneys’ fees (at trial and on appeal) and other reasonable litigation and administrative fees and costs incurred in connection with recovering any such costs owed to it by the Defaulting Party under this Contract (collectively ‘Costs’). Notwithstanding the limitation of liability set forth in Section 13, such Costs shall be due and payable by the Defaulting Party to the Non-Defaulting Party within 10 Business Days after receipt by the Defaulting Party of the Non-Defaulting Party’s statement of Costs.” SECTION 10.3.2 [Other Agreement Setoffs Apply; Bilateral Setoff Option], line 3: after the first sentence, add: “Notwithstanding any provision to the contrary herein, any Net Settlement Amount that the Non-Defaulting Party may owe the Defaulting Party shall be equal to zero dollars.”; at the end of the section add: “The obligations of the Non-Defaulting Party and the Defaulting Party under this Contract or otherwise in respect of such amounts shall be deemed satisfied and discharged to the extent of any such setoff. The Non-Defaulting Party will give the Defaulting Party Notice of any setoff effected under this section provided that failure to give such notice shall not affect the validity of the setoff. Nothing in this paragraph shall be deemed to create a charge or other security interest. The rights provided by this Section are in addition to and not in limitation of any other right or remedy (including any right to setoff, counterclaim, or otherwise withhold payment) to which a party may be entitled (whether by operation of law, contract or otherwise). ‘setoff’ as used herein means setoff, offset, combination of accounts, right of retention or withholding or similar right or requirement to which the Non-Defaulting Party is entitled or subject (whether arising under this Contract, another contract, and applicable law or otherwise) that is exercised by, or imposed on, the Non-Defaulting Party.” 999014 4 SECTION 10.3.2 [Other Agreement Setoffs Apply; Triangular Setoff Option], line 3: after the first sentence, add: “Notwithstanding any provision to the contrary herein, any Net Settlement Amount that the Non-Defaulting Party may owe the Defaulting Party shall be equal to zero dollars.”; line 5: delete the rest of the section after “(ii)” and replace with: “any Net Settlement Amount payable to the Defaulting Party against any amount(s) payable by the Defaulting Party to the Non-Defaulting Party and/or its Affiliates under any other agreement or arrangement between the Defaulting Party and/or its Affiliates and the Non-Defaulting Party and/or its Affiliates. The obligations of the Non- Defaulting Party, the Non-Defaulting Party’s Affiliates, if any, and the Defaulting Party under this Contract or otherwise in respect of such amounts shall be deemed satisfied and discharged to the extent of any such setoff. The Non-Defaulting Party will give the Defaulting Party Notice of any setoff effected under this section provided that failure to give such notice shall not affect the validity of the setoff. Nothing in this paragraph shall be deemed to create a charge or other security interest. The rights provided by this Section are in addition to and not in limitation of any other right or remedy (including any right to setoff, counterclaim, or otherwise withhold payment) to which a party may be entitled (whether by operation of law, contract or otherwise). ‘setoff’ as used herein means setoff, offset, combination of accounts, right of retention or withholding or similar right or requirement to which the Non-Defaulting Party is entitled or subject (whether arising under this Contract, another contract, and applicable law or otherwise) that is exercised by, or imposed on, the Non-Defaulting Party.” SECTION 10.4, line 2: delete “, and whether the Net Settlement Amount is due to or due from the Non- Defaulting Party.”; line 8: delete “, plus two percent per annum;”. SECTION 11.5, line 1: after “the other party” add “of the dates on which Force Majeure commenced and terminated; line 3: after “Upon providing” add “such timely”; line 6: add a new sentence, as follows: “If the affected party fails to provide written notice of the event or occurrence to the other party as soon as reasonably possible, the affected party will not be relieved of its obligation to make or accept delivery of Gas to the extent and for the duration of Force Majeure.” SECTION 15.1, line 4: after “either party may” add “without the prior approval of the other party”; line 6: delete clause (ii) and replace with the following through the end of that sentence: “transfer or assign its interest to any Affiliate of such party, so long as such Affiliate’s creditworthiness equals or exceeds that of such assigning party or its Credit Support Provider, as applicable, as of the date the Base Contract is entered into by such party; provided, however, that in each of (i) and (ii), before any such assignment, transfer and assumption becomes effective, any such assignee shall agree, in writing, to be bound by the terms and conditions of this Contract and the assigning party shall agree, in writing, to remain liable for the obligations of the assignee hereof and shall deliver such tax and enforceability assurance as the non- assigning party may reasonably request. Notwithstanding any provision to the contrary, any direct or indirect change of control of either party (whether voluntary or by operation of law) shall be deemed an assignment and shall require the prior written consent of the other party, which consent shall not be unreasonably withheld, conditioned or delayed. Upon request, the party subject to a change of control shall promptly deliver financial statements, information and other evidence satisfactory to the requesting party regarding the proposed change of control and, among other things, creditworthiness of the other party after such change.” 999014 5 SECTION 15.13 is added to SECTION 15, as follows: “With respect to any proceeding in connection with any claim, counterclaim, demand, cause of action, dispute and controversy arising out of or relating to this Contract, the parties hereby consent to the exclusive jurisdiction of the federal courts for the Northern District of the State of California; provided, however, that if such federal courts sitting in the Northern District of the State of California refuse jurisdiction, the parties agree to the exclusive jurisdiction of the state courts sitting in the County of Santa, Clara, State of California, wherever venue may properly be laid.” SECTION 15.14 is added to SECTION 15, as follows: “Notwithstanding California Civil Code § 1654, this Contract shall be considered for all purposes as prepared through the joint efforts of the parties and shall not be construed against one party or the other as a result of the manner in which this Contract was negotiated, prepared, drafted or executed.” SECTION 15.15 is added to SECTION 15, as follows: “The parties do hereby represent and warrant that the General Terms and Conditions of the Base Contract have not been modified, altered, or amended in any respect except for these Special Provisions which are attached to and made a part of the Base Contract.” [SIGNATURES ON NEXT PAGE] 999014 6 IN WITNESS WHEREOF, the parties hereto have executed this Base Contract in duplicate. CITY OF PALO ALTO Approval by Mayor: By: _______________ Name: _______________ Title: _______________ Date: __________ ___, 20__ ____________________ By: _______________ Name: _______________ Title: _______________ Date: __________ ___, 20__ City of Palo Alto Approved as to form: By: _______________ Name: _______________ Title: _______________ Date: __________ ___, 20__ City of Palo Alto Approval by City Manager: By: _______________ Name: _______________ Title: _______________ Date: __________ ___, 20__ City of Palo Alto Approval by Administrative Services Director: By: _______________ Name: _______________ Title: _______________ Date: __________ ___, 20__ City of Palo Alto (ID # 7130) City Council Staff Report Report Type: Consent Calendar Meeting Date: 10/4/2016 City of Palo Alto Page 1 Summary Title: Award of Contract for Rail Program Management Services Title: Approval of Two Year Professional Services Contract C16163563 with Mott MacDonald Group for Rail Program Management Services to Allow for Multiple Specific Task Orders with a Total Not to Exceed Amount of $1,614,763 From: City Manager Lead Department: Planning and Community Environment Recommendation: Staff recommends that the Council approve Professional Services Contract C16163563 (Attachment A) with Mott MacDonald Group Limited in the amount of $1,614,763 for a period of two years for comprehensive rail program management services and find the contract exempt from the California Environmental Quality Act (CEQA) pursuant to Sections 15061(b)(3) and 15306. Services would be authorized by separate task orders, and would include supporting the City Council Rail Committee, convening a Rail Technical Group, representing the City during the California High Speed Rail environmental analysis phase, managing the rail corridor circulation study and context sensitive alternatives analysis, and preparing environmental analyses, Project Study Reports, 15% preliminary designs, and financing plans for the preferred alternative for each railroad grade crossing within the city. Background: On October 13, 2015, the Council re-instituted its Rail Committee for the purpose of advancing proposals for grade-separating the railroad in Palo Alto, monitoring the high-speed rail (HSR) planning process, monitoring development of the 2016 Envision Silicon Valley sales tax measure, and providing recommendations to the full Council for their consideration and adoption. At the same meeting, the Council identified important next steps, including preparation of a grade crossing circulation study, and initiation of a Context Sensitive Solutions (CSS) community engagement process. The transcript is included as Attachment B. At the re-instituted Rail Committee’s first meeting on December 16, 2015, the Committee provided guidance on a letter regarding HSR and requested that the next meeting allow for discussion of engagement with the community and with other Cities regarding railroad grade City of Palo Alto Page 2 separations and for discussion of staff’s proposal to retain a program manager who would support the Committee’s work and coordinate the requested circulation study, community engagement effort, and subsequent tasks needed to advance the City’s goal of grade separating railroad crossings in Palo Alto. The transcript is included as Attachment C. At the January 27, 2016 meeting of the Rail Committee, Staff presented an outline of the proposed Scope of Work for Rail Program Management Services. The transcript is included as Attachment D. After that meeting, a Scope of Work for Rail Program Management Services was incorporated into a Request for Proposals (RFP), which was released on April 29, 2016 and closed on May 31, 2016. The sole proposer was Hatch Mott MacDonald, which has subsequently changed its name to Mott MacDonald. After representatives from the Planning and Community Environment Department, Public Works Department and City Manager’s Office reviewed the proposal, it was decided to invite Mott MacDonald in for an interview in order to clarify certain elements of the proposal. After the interview on June 23, 2016, Staff requested that Mott MacDonald revise their proposed Scope of Work and make some staffing adjustments to better address the needs of the City. After several reviews, a final Scope of Work and Fee Proposal were submitted to the City on August 18, 2016. Both the Scope of Work and Fee Proposal are included as attachments to the Contract. Staff has determined that Mott MacDonald is the most qualified proponent and able to complete the Scope of Work effectively. Discussion: The attached Contract, Scope of Work and Fee Proposal will enable Mott MacDonald to assist the City in further developing concepts for grade separations and to provide rail design and operations expertise to the City during the environmental analysis phase of the San Jose to San Francisco section of the California high-speed rail project as directed by Council. The Scope of Work includes nine discreet tasks that will be released to Mott MacDonald by the City Manager or his designee on a Task Order basis after a final confirmation of task scope and fee estimate. The final executed Scope of Work may not include all nine tasks, but may include additional tasks, depending on the direction given by the Council, Rail Committee and City Manager or his designee. A contingency is included in the Contract to enable the provision of additional services authorized by the City Manager or his designee. The amount invoiced for each task will be based on time and materials expended by Mott MacDonald, while the amounts shown in the Fee Proposal represent a not-to-exceed fee cap. Policy Implications: Advancement of railroad grade separations is consistent with the following Comprehensive Plan goals, policies and projects: • Policy T-7: Support plans for a quiet, fast rail system that encircles the Bay, and for intra- county and transbay transit systems that link Palo Alto to the rest of Santa Clara County and City of Palo Alto Page 3 adjoining counties. • Program T-17: Support Caltrain electrification and its extension to downtown San Francisco. • Program T-21: Study projects to depress bikeways and pedestrian walkways under Alma Street and the Caltrain tracks and implement if feasible. Resource Impact: Funding of $1,614,763 for this Contract is identified for Fiscal Years 2017, 2018 and 2019 in the Fiscal Year 2017 Adopted Capital Budget in CIP PL-17001, Railroad Grade Separation. Fiscal Year 2017 Adopted Budget for PL-17001 is $834,696 with planned budget 0f $1,036,084 in Fiscal Year 2018 and $37,527 in Fiscal Year 2019. Timeline: This three-year Professional Services Contract includes supporting the Rail Committee between September 2016 and June 2018, convening and surporting a Rail Technical Group throughout 2017, representing the City during the California High Speed Rail environmental analysis phase, which is scheduled for completion at the end of 2017, completing the rail corridor circulation study and context sensitive alternatives analysis by the end of 2017, and preparing environmental analyses, Project Study Reports, 15% preliminary designs, and financing plans for the preferred alternative for each railroad grade crossing within the city by June of 2018. Environmental Review: Accepting this Professional Services Contract and the associated expenditure of funds is exempt from the California Environmental Quality Act (CEQA) pursuant to Sections 15061(b)(3) and 15306 in that it can be seen with certainty that the work expected of the consultant, including attendance at meetings, preparing analytical reports and preliminary drawings for study and review by the City Council will not have a signficant effect on the environment. Attachments:  Attachment A: C16163563 Mott MacDonald Rail Program Management Contract (PDF)  Attachment B - Final Transcript City Council Meeting 2015-10-13 (PDF)  Attachment C - Final Transcript Rail Committee Meeting 2015-12-16 (PDF)  Attachment D - Final Transcript Rail Committee Meeting 2016-01-27 (PDF) CITY OF PALO ALTO CONTRACT NO. C16163563 AGREEMENT BETWEEN THE CITY OF PALO ALTO AND MOTT MACDONALD, LLC FOR PROFESSIONAL SERVICES This Agreement is entered into on this 4th day of October, 2016, (“Agreement”) by and between the CITY OF PALO ALTO, a California chartered municipal corporation (“CITY”), and MOTT MACDONALD, LLC, a Delaware Limited Liability Company, authorized to do business in California, located at 181 Metro Drive, Suite 510, San Jose, California, 95110 ("CONSULTANT"). RECITALS The following recitals are a substantive portion of this Agreement. A. CITY is preparing for increases in passenger rail service along the existing Caltrain rail corridor and potential impacts to existing at-grade crossings associated with service increases, (“Project”) and desires to engage a consultant to provide resources to CITY staff and comprehensively manage, coordinate and direct services in connection with the Project (“Services”). B. CONSULTANT has represented that it has the necessary professional experience, qualifications, and capability, and all required licenses and/or certifications to provide the Services. C. CITY desires to engage CONSULTANT to provide the Services as more fully described in Exhibit “A”, attached to and made a part of this Agreement. NOW, THEREFORE, in consideration of the recitals, covenants, terms, and conditions, in this Agreement, the parties agree: AGREEMENT SECTION 1. SCOPE OF SERVICES. CONSULTANT shall perform the Services described at Exhibit “A” in accordance with the terms and conditions contained in this Agreement. The performance of all Services shall be to the reasonable satisfaction of CITY. SECTION 2. TERM. The term of this Agreement shall be from the date of its full execution through September 18, 2018 unless terminated earlier pursuant to Section 19 of this Agreement. SECTION 3. SCHEDULE OF PERFORMANCE. Time is of essence is a material condition in the performance of Services under this Agreement. CONSULTANT shall complete the Services within the term of this Agreement and in accordance with the schedule set forth in Exhibit “B”, attached to and made a part of this Agreement. Any Services for which times for performance are not specified in this Agreement shall be commenced and completed by CONSULTANT in a reasonably prompt and timely manner based upon the circumstances and direction communicated to the CONSULTANT. CITY’s agreement to extend the term or the DocuSign Envelope ID: E2667E34-620D-46CE-A070-E45A25060C5A Professional Services Rev. April 27, 2016 2 schedule for performance shall not preclude the CITY’s right to seek recovery of damages for delay if the extension is required due to the fault of CONSULTANT. SECTION 4. NOT TO EXCEED COMPENSATION. The compensation to be paid to CONSULTANT for performance of the Services described in Exhibit “A” (“Basic Services”), and reimbursable expenses, shall not exceed One Million Five Hundred Four Thousand Three Hundred Ninety Five Dollars ($1,504,395.00). CONSULTANT agrees to complete all Basic Services, including reimbursable expenses, within this amount. In the event Additional Services are authorized, the total compensation for Basic Services, Additional Services and reimbursable expenses shall not exceed One Million Six Hundred Fourteen Thousand Seven Hundred Sixty Three Dollars ($1,614,763.00). The applicable rates and schedule of payment are set out at Exhibit “C-1”, entitled “RATE SCHEDULE,” which is attached to and made a part of this Agreement. Any work performed or expenses incurred for which payment would result in a total exceeding the maximum amount of compensation set forth herein shall be at no cost to the CITY. Additional Services, if any, shall be authorized in accordance with and subject to the provisions of Exhibit “C”. CONSULTANT shall not receive any compensation for Additional Services performed without the prior written authorization of CITY. Additional Services shall mean any work that is determined by CITY to be necessary for the proper completion of the Project, but which is not included within the Scope of Services described at Exhibit “A”. SECTION 5. INVOICES. In order to request payment, CONSULTANT shall submit monthly invoices to the CITY describing the services performed and the applicable charges (including an identification of personnel who performed the services, hours worked, hourly rates, and reimbursable expenses), based upon the CONSULTANT’s billing rates (set forth in Exhibit “C- 1”). If applicable, the invoice shall also describe the percentage of completion of each task. The information in CONSULTANT’s payment requests shall be subject to verification by CITY. CONSULTANT shall send all invoices to the City’s project manager at the address specified in Section 13 below. The City will generally process and pay invoices within thirty (30) days of receipt. SECTION 6. QUALIFICATIONS/STANDARD OF CARE. All of the Services shall be performed by CONSULTANT or under CONSULTANT’s supervision. CONSULTANT represents that it possesses the professional and technical personnel necessary to perform the Services required by this Agreement and that the personnel have sufficient skill and experience to perform the Services assigned to them. CONSULTANT represents that it, its employees and subconsultants, if permitted, have and shall maintain during the term of this Agreement all licenses, permits, qualifications, insurance and approvals of whatever nature that are legally required to perform the Services. All of the services to be furnished by CONSULTANT under this agreement shall meet the professional standard and quality that prevail among professionals in the same discipline and of similar knowledge and skill engaged in related work throughout California under the same or similar circumstances. SECTION 7. COMPLIANCE WITH LAWS. CONSULTANT shall keep itself informed of DocuSign Envelope ID: E2667E34-620D-46CE-A070-E45A25060C5A Professional Services Rev. April 27, 2016 3 and in compliance with all federal, state and local laws, ordinances, regulations, and orders that apply to the performance of the Services or those engaged to perform Services under this Agreement. CONSULTANT shall procure all permits and licenses, pay all charges and fees, and give all notices required by law to enable CONSULTANT to perform its Services. SECTION 8. ERRORS/OMISSIONS. CONSULTANT is solely responsible for costs, including, but not limited to, increases in the cost of Services, arising from or caused by CONSULTANT’s errors and omissions, including, but not limited to, the costs of corrections such errors and omissions, any change order markup costs, or costs arising from delay caused by the errors and omissions or unreasonable delay in correcting the errors and omissions. SECTION 9. COST ESTIMATES. If this Agreement pertains to the design of a public works project, CONSULTANT shall submit estimates of probable construction costs at each phase of design submittal. If the total estimated construction cost at any submittal exceeds ten percent (10%) of CITY’s stated construction budget, CONSULTANT shall make recommendations to CITY for aligning the PROJECT design with the budget, incorporate CITY approved recommendations, and revise the design to meet the Project budget, at no additional cost to CITY. SECTION 10. INDEPENDENT CONTRACTOR. It is understood and agreed that in performing the Services under this Agreement CONSULTANT, and any person employed by or contracted with CONSULTANT to furnish labor and/or materials under this Agreement, shall act as and be an independent contractor and not an agent or employee of CITY. SECTION 11. ASSIGNMENT. The parties agree that the skill and experience of CONSULTANT are material considerations for this Agreement. CONSULTANT shall not assign or transfer any interest in this Agreement nor the performance of any of CONSULTANT’s obligations hereunder without the prior written consent of the city manager. Consent to one assignment will not be deemed to be consent to any subsequent assignment. Any assignment made without the approval of the city manager will be void. SECTION 12. SUBCONTRACTING. Notwithstanding Section 11 above, CITY agrees that subconsultants may be used to complete the Services. The subconsultants authorized by CITY to perform work on this Project are: Economic & Planning Systems, Inc. 1 Kaiser Plaza #1410 Oakland, CA 94612 PWP Landscape Architecture 739 Allston Way Berkeley, California 94710 Michael Baker International 500 Grant Street, Suite 5400 Pittsburgh, PA 15219 DocuSign Envelope ID: E2667E34-620D-46CE-A070-E45A25060C5A Professional Services Rev. April 27, 2016 4 Spokemore Consulting (DBE) 734 Mandana Blvd Oakland, CA 94610 Circlepoint 1814 Franklin Street Suite 1000 Oakland, CA 94612 CONSULTANT shall be responsible for directing the work of any subconsultants and for any compensation due to subconsultants. CITY assumes no responsibility whatsoever concerning compensation. CONSULTANT shall be fully responsible to CITY for all acts and omissions of a subconsultant. CONSULTANT shall change or add subconsultants only with the prior approval of the city manager or his designee. SECTION 13. PROJECT MANAGEMENT. CONSULTANT will assign Chris Metzger as the Principal in Charge to have supervisory responsibility for the performance, progress, and execution of the Services and Richard Davies as the Project Manager to represent CONSULTANT during the day-to-day work on the Project. If circumstances cause the substitution of the project director, project coordinator, or any other key personnel for any reason, the appointment of a substitute project director and the assignment of any key new or replacement personnel will be subject to the prior written approval of the CITY’s project manager. CONSULTANT, at CITY’s request, shall promptly remove personnel who CITY finds do not perform the Services in an acceptable manner, are uncooperative, or present a threat to the adequate or timely completion of the Project or a threat to the safety of persons or property. CITY’s project manager is Joshuah Mello, Chief Transportation Official, Planning & Community Environment Department, Transportation Division, 250 Hamilton Avenue, Palo Alto, CA 94303, Telephone: (650) 329-2136. The project manager will be CONSULTANT’s point of contact with respect to performance, progress and execution of the Services. CITY may designate an alternate project manager from time to time. SECTION 14. OWNERSHIP OF MATERIALS. Upon receipt of payment for, and delivery, all work product, including without limitation, all writings, drawings, plans, reports, specifications, calculations, documents, other materials and copyright interests developed under this Agreement shall be and remain the exclusive property of CITY without restriction or limitation upon their use for the purposes for which the said work product was produced. CONSULTANT agrees that all copyrights which arise from creation of the work pursuant to this Agreement shall be vested in CITY, and CONSULTANT waives and relinquishes all claims to copyright or other intellectual property rights in favor of the CITY. Neither CONSULTANT nor its contractors, if any, shall make any of such materials available to any individual or organization without the prior written approval of the City Manager or designee. CONSULTANT makes no representation of the suitability of the work product for use in or application to circumstances not contemplated by the scope of work . SECTION 15. AUDITS. CONSULTANT will permit CITY to audit, at any reasonable time DocuSign Envelope ID: E2667E34-620D-46CE-A070-E45A25060C5A Professional Services Rev. April 27, 2016 5 during the term of this Agreement and for three (3) years thereafter, CONSULTANT’s records pertaining to matters covered by this Agreement. CONSULTANT further agrees to maintain and retain such records for at least three (3) years after the expiration or earlier termination of this Agreement. SECTION 16. INDEMNITY. 16.1. To the fullest extent permitted by law, CONSULTANT shall protect, indemnify, defend and hold harmless CITY, its Council members, officers, employees and agents (each an “Indemnified Party”) from and against any and all demands, claims, or liability of any nature, including death or injury to any person, property damage or any other loss, including all costs and expenses of whatever nature including attorneys fees, experts fees, court costs and disbursements (“Claims”) to the extent caused by the negligence, recklessness, or willful misconduct of CONSULTANT, its officers, employees, agents or contractors under this Agreement. 16.2. Notwithstanding the above, nothing in this Section 16 shall be construed to require CONSULTANT to indemnify, defend or hold harmless an Indemnified Party from Claims arising from the active negligence, sole negligence or willful misconduct of an Indemnified Party. 16.3. The acceptance of CONSULTANT’s services and duties by CITY shall not operate as a waiver of the right of indemnification. The provisions of this Section 16 shall survive the expiration or early termination of this Agreement. SECTION 17. WAIVERS. The waiver by either party of any breach or violation of any covenant, term, condition or provision of this Agreement, or of the provisions of any ordinance or law, will not be deemed to be a waiver of any other term, covenant, condition, provisions, ordinance or law, or of any subsequent breach or violation of the same or of any other term, covenant, condition, provision, ordinance or law. SECTION 18. INSURANCE. 18.1. CONSULTANT, at its sole cost and expense, shall obtain and maintain, in full force and effect during the term of this Agreement, the insurance coverage described in Exhibit "D". CONSULTANT and its contractors, if any, shall obtain a policy endorsement naming CITY as an additional insured under any general liability or automobile policy or policies. 18.2. All insurance coverage required hereunder shall be provided through carriers with AM Best’s Key Rating Guide ratings of A-:VII or higher which are licensed or authorized to transact insurance business in the State of California. Any and all contractors of CONSULTANT retained to perform Services under this Agreement will obtain and maintain, in full force and effect during the term of this Agreement, identical insurance coverage, naming CITY as an additional insured under such policies as required above. 18.3. Certificates evidencing such insurance shall be filed with CITY DocuSign Envelope ID: E2667E34-620D-46CE-A070-E45A25060C5A Professional Services Rev. April 27, 2016 6 concurrently with the execution of this Agreement. The certificates will be subject to the approval of CITY’s Risk Manager and will contain an endorsement stating that the insurance is primary coverage and will not be canceled, or materially reduced in coverage or limits, by the insurer except after filing with the Purchasing Manager thirty (30) days' prior written notice of the cancellation or modification. If the insurer cancels or modifies the insurance and provides less than thirty (30) days’ notice to CONSULTANT, CONSULTANT shall provide the Purchasing Manager written notice of the cancellation or modification within two (2) business days of the CONSULTANT’s receipt of such notice. CONSULTANT shall be responsible for ensuring that current certificates evidencing the insurance are provided to CITY’s Chief Procurement Officer during the entire term of this Agreement. 18.4. The procuring of such required policy or policies of insurance will not be construed to limit CONSULTANT's liability hereunder nor to fulfill the indemnification provisions of this Agreement. Notwithstanding the policy or policies of insurance, CONSULTANT will be obligated for the full and total amount of any damage, injury, or loss caused by or directly arising as a result of the Services performed under this Agreement, including such damage, injury, or loss arising after the Agreement is terminated or the term has expired. SECTION 19. TERMINATION OR SUSPENSION OF AGREEMENT OR SERVICES. 19.1. The City Manager may suspend the performance of the Services, in whole or in part, or terminate this Agreement, with or without cause, by giving ten (10) days prior written notice thereof to CONSULTANT. Upon receipt of such notice, CONSULTANT will immediately discontinue its performance of the Services. 19.2. CONSULTANT may terminate this Agreement or suspend its performance of the Services by giving thirty (30) days prior written notice thereof to CITY, but only in the event of a substantial failure of performance by CITY. 19.3. Upon such suspension or termination, CONSULTANT shall deliver to the City Manager immediately any and all copies of studies, sketches, drawings, computations, and other data, whether or not completed, prepared by CONSULTANT or its contractors, if any, or given to CONSULTANT or its contractors, if any, in connection with this Agreement. Such materials will become the property of CITY. 19.4. Upon such suspension or termination by CITY, CONSULTANT will be paid for the Services rendered or materials delivered to CITY in accordance with the scope of services on or before the effective date (i.e., 10 days after giving notice) of suspension or termination; provided, however, if this Agreement is suspended or terminated on account of a default by CONSULTANT, CITY will be obligated to compensate CONSULTANT only for that portion of CONSULTANT’s services which are of direct and immediate benefit to CITY as such determination may be made by the City Manager acting in the reasonable exercise of his/her discretion. The following Sections will survive any expiration or termination of this Agreement: 14, 15, 16, 19.4, 20, and 25. 19.5. No payment, partial payment, acceptance, or partial acceptance by CITY DocuSign Envelope ID: E2667E34-620D-46CE-A070-E45A25060C5A Professional Services Rev. April 27, 2016 7 will operate as a waiver on the part of CITY of any of its rights under this Agreement. SECTION 20. NOTICES. All notices hereunder will be given in writing and mailed, postage prepaid, by certified mail, addressed as follows: To CITY: Office of the City Clerk City of Palo Alto Post Office Box 10250 Palo Alto, CA 94303 With a copy to the Purchasing Manager To CONSULTANT: Attention of the project director at the address of CONSULTANT recited above SECTION 21. CONFLICT OF INTEREST. 21.1. In accepting this Agreement, CONSULTANT covenants that it presently has no interest, and will not acquire any interest, direct or indirect, financial or otherwise, which would conflict in any manner or degree with the performance of the Services. 21.2. CONSULTANT further covenants that, in the performance of this Agreement, it will not employ subconsultants, contractors or persons having such an interest. CONSULTANT certifies that no person who has or will have any financial interest under this Agreement is an officer or employee of CITY; this provision will be interpreted in accordance with the applicable provisions of the Palo Alto Municipal Code and the Government Code of the State of California. 21.3. If the Project Manager determines that CONSULTANT is a “Consultant” as that term is defined by the Regulations of the Fair Political Practices Commission, CONSULTANT shall be required and agrees to file the appropriate financial disclosure documents required by the Palo Alto Municipal Code and the Political Reform Act. SECTION 22. NONDISCRIMINATION. As set forth in Palo Alto Municipal Code section 2.30.510, CONSULTANT certifies that in the performance of this Agreement, it shall not discriminate in the employment of any person because of the race, skin color, gender, age, religion, disability, national origin, ancestry, sexual orientation, housing status, marital status, familial status, weight or height of such person. CONSULTANT acknowledges that it has read and understands the provisions of Section 2.30.510 of the Palo Alto Municipal Code relating to Nondiscrimination Requirements and the penalties for violation thereof, and agrees to meet all requirements of Section 2.30.510 pertaining to nondiscrimination in employment. SECTION 23. ENVIRONMENTALLY PREFERRED PURCHASING AND ZERO WASTE REQUIREMENTS. CONSULTANT shall comply with the CITY’s Environmentally Preferred Purchasing policies which are available at CITY’s Purchasing Department, DocuSign Envelope ID: E2667E34-620D-46CE-A070-E45A25060C5A Professional Services Rev. April 27, 2016 8 incorporated by reference and may be amended from time to time. CONSULTANT shall comply with waste reduction, reuse, recycling and disposal requirements of CITY’s Zero Waste Program. Zero Waste best practices include first minimizing and reducing waste; second, reusing waste and third, recycling or composting waste. In particular, CONSULTANT shall comply with the following zero waste requirements: (a) All printed materials provided by CCONSULTANT to CITY generated from a personal computer and printer including but not limited to, proposals, quotes, invoices, reports, and public education materials, shall be double-sided and printed on a minimum of 30% or greater post-consumer content paper, unless otherwise approved by CITY’s Project Manager. Any submitted materials printed by a professional printing company shall be a minimum of 30% or greater post- consumer material and printed with vegetable based inks. (b) Goods purchased by CONSULTANT on behalf of CITY shall be purchased in accordance with CITY’s Environmental Purchasing Policy including but not limited to Extended Producer Responsibility requirements for products and packaging. A copy of this policy is on file at the Purchasing Division’s office. (c) Reusable/returnable pallets shall be taken back by CONSULTANT, at no additional cost to CITY, for reuse or recycling. CONSULTANT shall provide documentation from the facility accepting the pallets to verify that pallets are not being disposed. SECTION 24. COMPLIANCE WITH PALO ALTO MINIMUM WAGE ORDINANCE. CONSULTANT shall comply with all requirements of the Palo Alto Municipal Code Chapter 4.62 (Citywide Minimum Wage), as it may be amended from time to time. In particular, for any employee otherwise entitled to the State minimum wage, who performs at least two (2) hours of work in a calendar week within the geographic boundaries of the City, CONSULTANT shall pay such employees no less than the minimum wage set forth in Palo Alto Municipal Code section 4.62.030 for each hour worked within the geographic boundaries of the City of Palo Alto. In addition, CONSULTANT shall post notices regarding the Palo Alto Minimum Wage Ordinance in accordance with Palo Alto Municipal Code section 4.62.060. SECTION 25. NON-APPROPRIATION 25.1. This Agreement is subject to the fiscal provisions of the Charter of the City of Palo Alto and the Palo Alto Municipal Code. This Agreement will terminate without any penalty (a) at the end of any fiscal year in the event that funds are not appropriated for the following fiscal year, or (b) at any time within a fiscal year in the event that funds are only appropriated for a portion of the fiscal year and funds for this Agreement are no longer available. This section shall take precedence in the event of a conflict with any other covenant, term, condition, or provision of this Agreement. SECTION 26. PREVAILING WAGES AND DIR REGISTRATION FOR PUBLIC WORKS CONTRACTS 26.1 This Project is not subject to prevailing wages. CONSULTANT is not required to pay prevailing wages in the performance and implementation of the Project in accordance with SB 7 if the contract is not a public works contract, if the contract does not DocuSign Envelope ID: E2667E34-620D-46CE-A070-E45A25060C5A Professional Services Rev. April 27, 2016 9 include a public works construction project of more than $25,000, or the contract does not include a public works alteration, demolition, repair, or maintenance (collectively, ‘improvement’) project of more than $15,000. SECTION 27. MISCELLANEOUS PROVISIONS. 27.1. This Agreement will be governed by the laws of the State of California. 27.2. In the event that an action is brought, the parties agree that trial of such action will be vested exclusively in the state courts of California in the County of Santa Clara, State of California. 27.3. The prevailing party in any action brought to enforce the provisions of this Agreement may recover its reasonable costs and attorneys' fees expended in connection with that action. The prevailing party shall be entitled to recover an amount equal to the fair market value of legal services provided by attorneys employed by it as well as any attorneys’ fees paid to third parties. 27.4. This document represents the entire and integrated agreement between the parties and supersedes all prior negotiations, representations, and contracts, either written or oral. This document may be amended only by a written instrument, which is signed by the parties. 27.5. The covenants, terms, conditions and provisions of this Agreement will apply to, and will bind, the heirs, successors, executors, administrators, assignees, and consultants of the parties. 27.6. If a court of competent jurisdiction finds or rules that any provision of this Agreement or any amendment thereto is void or unenforceable, the unaffected provisions of this Agreement and any amendments thereto will remain in full force and effect. 27.7. All exhibits referred to in this Agreement and any addenda, appendices, attachments, and schedules to this Agreement which, from time to time, may be referred to in any duly executed amendment hereto are by such reference incorporated in this Agreement and will be deemed to be a part of this Agreement. 27.8 In the event of a conflict between the terms of this Agreement and the exhibits hereto or CONSULTANT’s proposal (if any), the Agreement shall control. In the case of any conflict between the exhibits hereto and CONSULTANT’s proposal, the exhibits shall control. 27.9 If, pursuant to this contract with CONSULTANT, CITY shares with CONSULTANT personal information as defined in California Civil Code section 1798.81.5(d) about a California resident (“Personal Information”), CONSULTANT shall maintain reasonable and appropriate security procedures to protect that Personal Information, and shall inform City immediately upon learning that there has been a breach in the security of the system or in the security of the Personal Information. CONSULTANT shall not use Personal Information for direct marketing purposes without City’s express written consent. DocuSign Envelope ID: E2667E34-620D-46CE-A070-E45A25060C5A Professional Services Rev. April 27, 2016 10 27.10 All unchecked boxes do not apply to this agreement. 27.11 The individuals executing this Agreement represent and warrant that they have the legal capacity and authority to do so on behalf of their respective legal entities. 27.12 This Agreement may be signed in multiple counterparts, which shall, when executed by all the parties, constitute a single binding agreement DocuSign Envelope ID: E2667E34-620D-46CE-A070-E45A25060C5A 08/18/2016 1 CONTRACT No. C16163563 SIGNATURE PAGE IN WITNESS WHEREOF, the parties hereto have by their duly authorized representatives executed this Agreement on the date first above written. CITY OF PALO ALTO APPROVED AS TO FORM: MOTT MACDONALD, LLC Attachments: EXHIBIT “A”: SCOPE OF SERVICES EXHIBIT “B”: SCHEDULE OF PERFORMANCE EXHIBIT “C”: COMPENSATION EXHIBIT “C-1”: SCHEDULE OF RATES EXHIBIT “D”: INSURANCE REQUIREMENTS DocuSign Envelope ID: E2667E34-620D-46CE-A070-E45A25060C5A Chris Metzger Vice President Craig Velasquez CV 08/18/2016 1 EXHIBIT “A” SCOPE OF SERVICES Project Understanding The City of Palo Alto (CITY) is preparing for increases in passenger rail service along the existing Caltrain rail corridor and potential impacts to existing at-grade crossings associated with service increases. Rail service changes are a result of the Peninsula Corridor Electrification Project and potentially the California High Speed Rail project. CITY is engaging CONSULTANT to provide resources to CITY staff and comprehensively manage, coordinate and direct the completion of the following scope of services under the City of Palo Alto Rail Program. The City of Palo Alto is bisected by the Caltrain rail corridor and enjoys the benefits of rail service, as well as the impacts associated with train noise, traffic congestion around grade crossings, and community safety concerns. These impacts are expected to increase as train service in the corridor increases whether or not the State’s High Speed Rail project comes to fruition. As a result, CITY has been interested in assessing grade separation alternatives. In 2010, the CITY Council initiated the Palo Alto Rail Corridor Study to evaluate land use, transportation and urban design elements of the rail corridor, particularly in response to potential improvements to fixed rail services along the Caltrain tracks. The study, the outcome of the two year process, analyzed those elements and their potential impacts from the range of possible rail improvements, including Caltrain upgrades, such as electrification and/or grade separations, and/or the potential options for the High Speed Rail project. The study was adopted in 2012 by CITY Council. In early 2014, CITY previously retained CONSULTANT, to study conceptual grade separation alternatives for a portion of the Caltrain right-of-way encompassing three existing at-grade crossings (Charleston Rd, Meadow Drive, and Churchill Ave). This study provided preliminary information on the potential impacts and cost of construction (by order of magnitude) for various roadway depression and trenching alternatives. The resulting information was shared with the CITY Council and the public in October 2014 and was intended to facilitate community dialogue on the issue and ultimately to help form a policy position on grade separations. The study was not definitive in determining an ultimate configuration, but provided a starting point for dialogue on the issue, and indicated that roadway depression alternatives would require significant property acquisitions, while trenching alternatives would not. Also, trenching alternatives could maintain turning movements along Alma Street, while not all of the roadway depression alternatives would do so. The following scope of services will be provided by the CONSULTANT to CITY to assist in further developing concepts for grade separations at the noted roadway at-grade crossings, and to provide representation for and expertise to CITY during the Environmental Document Phase of the San Jose to San Francisco section of the High Speed Rail Project. The next sections outline the task orders from 1-9. Each task order is to be released to CONSULTANT on an individual basis after a confirmation of scope and cost estimate. The final content of the project may DocuSign Envelope ID: E2667E34-620D-46CE-A070-E45A25060C5A 08/18/2016 2 not include all tasks or may include modified tasks. The cost for each task is based on time expended and materials consumed by CONSULTANT, with a “not to exceed” expenditure cap. Task 1 | Support Council Rail Committee CONSULTANT will serve as an extension of staff to the CITY, providing primary staff support to the CITY Council Rail Committee. CONSULTANT’s staff will manage internal coordination and communication with involved CITY staff, including the CITY’s Chief Transportation Official. CONSULTANT’s Project Manager will report directly to the CITY Manager or his designee. CONSULTANT will schedule regular team meetings for the purpose of maintaining project coordination. Monthly meetings will be held in person, with additional weekly or bi-weekly phone call meetings, as the project requires, ensuring the work is progressing as intended. The CONSULTANT Deputy Project Manager will also be available to support CONSULTANT’s Project Manager, Council Rail Committee and Chief Transportation Official. CONSULTANT will staff the monthly meetings and special sessions of the Council Rail Committee. We will schedule and coordinate speakers, prepare meeting materials, take notes, prepare staff reports and presentations, and provide updates on relevant projects, plans, and funding sources. Deliverables:  Support and attend up to 24 CITY Council Rail Committee meetings  Prepare the following: - Agendas - Meeting Notes - Staff Reports - Presentations - Project Updates (eg, HSR, Caltrain Electrification)  Provide Communications/ Records/ Document Control electronically  Support and attend regular meetings with CITY Staff Task 2 | Convene and Support the Rail Technical Group CONSULTANT will assist the CITY in assembling a standing Rail Technical Group (RTG), consisting of local rail experts to serve as technical advisors to the Council Rail Committee and CITY Council. The RTG will provide expertise on international best practices in commuter, regional, and high speed rail operations, concerning planning, finance, and engineering. CONSULTANT will staff RTG meetings by preparing meeting materials, taking notes, preparing presentations, and delivering RTG updates to the Council Rail Committee. It is anticipated that the RTG will meet quarterly, with additional meetings contingent on the High Speed Rail Environmental Review schedule and comment periods. DocuSign Envelope ID: E2667E34-620D-46CE-A070-E45A25060C5A 08/18/2016 3 Deliverables:  Support and attend up to 10 RTG meetings  Prepare the following: - Agendas - Meeting Notes - Presentations - RTG Reports & Updates to Council Rail Committee  Provide all Communications/ Records/ Document Control electronically Task 3 | Represent CITY During CHSRA Environmental Analysis Phase CONSULTANT will attend CHSRA EIR meetings and ensure that CITY’s interests are represented during the High Speed Rail environmental analysis process. CONSULTANT will also be available to attend meetings and provide comments on the CHSRA DEIR. This includes attendance of up to three (3) CHSRA public and/or technical meetings. CONSULTANT attendance at related meetings will include up to six (6) general local agency meetings and up to 12 Local Policy Makers Group monthly meetings, for which both CHSRA and PCJPB facilitate and participate in. We understand that the CITY has requested the CHSRA to include grade separations as an essential part of their project description to be evaluated pursuant to CEQA. CONSULTANT will help facilitate a proper dialogue with CHSRA representing CITY’s interest, and develop comments on the DEIR for CITY’s official response thereto. Additional concerns that are identified in the future will be also addressed/ resolved by CONSULTANT’s team including:  Operations Plan (total of 10 trains per direction per peak hour) and resultant potential for road traffic congestion  Safety (fencing along corridor)  Noise (Quiet Zones)  Funding ($500M available for grade separations along the Peninsula corridor)  Potential siting of passing tracks and ROW impacts  CSS process and adequate representation by the CITY on HSR Working Groups. CONSULTANT will assist the CITY in the review of the EIR documents, providing summaries for consultation with CITY staff, Rail Technical Group and the Council Rail Committee. Technical subject matter experts (air quality/greenhouse gas, noise, aesthetics, etc.) will review the EIR for their relevant sections and provide thoughtful comments on the conclusions and mitigation measures recommended for incorporation. The comments will be reviewed with CITY prior to submittal to CHSRA. We will then compile any additional CITY’s comments, concerns and supplemental information for presentation to the CHSRA. DocuSign Envelope ID: E2667E34-620D-46CE-A070-E45A25060C5A 08/18/2016 4 Deliverables:  Attend up to three (3) CHSRA meetings  Attend up to six (6) general local agency meetings  Attend up to 12 Local Policy Makers Group meetings  Provide Summaries, Notes, Reports of CHSRA meetings to CITY  Prepare presentations of CITY comments, concerns and supplemental information to the CHSRA  Provide Communications/ Records/ Document Control electronically Task 4 | Manage and Perform Rail Corridor Circulation Study Data Review CONSULTANT will review data from previous relevant studies, transportation movement, information databases, and available travel demand models. This will include the Comprehensive Plan, the Rail Corridor Study, CHSRA circulation studies, and CITY Traffic Monitoring Count data. The CONSULTANT will then draw up a fully comprehensive inventory of information and carry out a deficit (gap) analysis. This will highlight where new data may need to be collected. The team will then produce a specification for that data collection and approximate cost implications. Particular close liaison will be carried out with the CONSULTANT doing the General Plan Update, notably as far as land-use and transportation is concerned. The CONSULTANT will liaise with the CHSRA CONSULTANT team carrying out the circulation studies for the Environmental document. Existing Documents Other than the documents listed in the RFP, the CONSULTANT will carry out research to ensure other relevant and available information has been included. Particular focus will be placed on pertinent “as built” documentation and recent work by Caltrain and others on the road/ rail crossings in the CITY. Existing Traffic Counts CONSULTANT will collect and examine transportation movement survey data outputs. These need to be cross-sectional, i.e. providing geographical coverage of the area of influence of the options we are testing. There will also be a review of historic growth and identification of change over recent time periods. This is always a worthwhile task, as the historic profile in demand should always be used to validate the reasonableness of a forecast future profile of change in travel demand. The review of existing data will also include that available for both bicycle and pedestrian movements and volumes. This will include counts from hand tallies, VIMOE sensors, bike boulevard counts, public realm counts and observations. Travel Demand Models CONSULTANT will review the outputs of both the regional and local travel demand models and determine what the long range projections for travel by mode are forecast to be. (This will include ridership and boarding/alighting numbers.) Also, the macro statistics from the Travel Models will be reviewed to determine trends in travel behavior. This can be accomplished by comparing total vehicle miles traveled DocuSign Envelope ID: E2667E34-620D-46CE-A070-E45A25060C5A 08/18/2016 5 (VMT) and total vehicle hours for travelers (VHT) by individual modes. This will show whether mode choice is forecast to change in the future. The cross-elasticities in a Travel Demand Models’ modal choice functions are calibrated to travel behavior at the base year. The forecast future modal choice proportions are normally directly related to the level-of-service provided by each mode. For example, if traffic congestion on the highways goes up and travel time by transit improves with better services, then the model will show a change in proportion in transit/auto users. These highly relevant information sources will be extracted from the travel demand model. CONSULTANT will review whatever observed data is available (traffic and/ or ridership volumes) and carry out a validation of the travel demand model to ensure that it can be used with confidence or at what level of confidence it can be used if there is some imprecision . These investigations will cover the items requested in the RFP on Mode Split of Caltrain’s passengers entering and exiting the stations and many other relevant statistics. The following test runs will be carried out with the Demand models (AM, PM and Off-peak hour): 1. Base year validation 2. Future (opening and design) year for Options to include: a. No build with current rail frequencies b. No build with proposed new Caltrain and HSR frequencies c. Up to six (6) alternative grade separation layouts For test b), optimization of the signal controls will also be carried out, with the objective of minimizing road traffic delay. The future year model runs will involve recoding the street network to future year conditions , including programmed infrastructure changes (subject to discussion with CITY), transit services changes, development of complete streets and bicycle facilities. Development Proposals CONSULTANT will collate and review any relevant development proposals within the study area of influence or even outside the area, if the development is likely to create an impact inside the area. The Traffic Impact Analysis reports will be used as the starting point for these analyses. It is worth noting that all too frequently the accumulated effects of Traffic Generation from Developments (i.e. the total generation of several developments aggregated together) are not necessarily documented. CONSULTANT will ensure that each and every development was included and the combined effect considered. Utilities and Right-of-Way Impacts to Utilities and Right-of-Way will be assessed for each viable alternative. Maps of existing conditions (property lines, easements, utility locations) will be developed based on best available record data, including field reconnaissance to verify utilities identifiable in the field are represented on the base maps. Earlier research will be utilized as the initial data set. Research will be performed to understand and reflect any work that has been performed since the earlier studies were performed. DocuSign Envelope ID: E2667E34-620D-46CE-A070-E45A25060C5A 08/18/2016 6 Impacted utilities will be identified, and initial plans for mitigating those impacts developed to allow proper evaluation of costs and potential right-of-way impacts (including additional easements that may be needed or other property rights modifications). Field Observations on Travel Behavioral Patterns CONSULTANT will review the currently available data on observed travel behavioral patterns at the key locations. These will include the stations and the intersections where road traffic and rail services conflict for the same space. Note: The team has developed its own Processes (LIMA- LRT Integrated Modeling Approach) for modeling the optimal integration of signal settings for both road and rail traffic. Collision Data CONSULTANT will assess the record of collision occurrences at the rail crossings and surrounding areas, both for road traffic and rail passengers. These observed occurrences will be compared to comparative average values for similar locations. Grade Crossing Hazards and Gate Downtime This will be assessed from existing records and if necessary fresh data acquired. Evaluation of the Alternatives CONSULTANT will use the model outputs as the input to the evaluation process – it will form a consistent and credible of interpretation of the “performance” of the various options. The performance metrics will include the following: At the Macro Level: 1. Total Vehicle Miles Travelled 2. Total Vehicle Hours consumed 3. Average trip length, trip duration time and highway network speed These statistics will be broken down by mode of travel; this will show changes in modal choice for the options, thus allowing the sustainable planning value to be comparatively judged for each of the alternatives, measured against a base. 4. Total travel user benefits and road accident savings benefits (NPB) over a 20 year time period (for example) from opening that will be compared to a 20 year whole life-cycle cost (PVC), the difference between the two being the Net Present Value (NPV) and also the Benefit-to-Cost ratio NPB/ PVC, so as to rationalize the metric for projects of different cost. At the Detailed Level: 5. Motor vehicle Level of Service (LOS) by intersection 6. LOS by movement at intersections 7. Changes in specific Origin Destination journey times (East – West movements particularly) 8. Delays to transit services DocuSign Envelope ID: E2667E34-620D-46CE-A070-E45A25060C5A 08/18/2016 7 9. Delays to pedestrians and bicycles (particularly those crossing the Rail tracked interchanges) journeys 10. Queue lengths (average and 95th percentile) 11. Delays at individual interchanges by movement All of these performance measures will be available for AM, PM and Off-peak average hours. Task 4 Report The Rail Corridor Circulation Study Report will include a description of all movements for all modes in the study area- Motor Vehicles, Transit (Bus), bikes and pedestrians for current and future (forecast) years. Each separate scenario will be described in terms of impact with movement volumes level-of- service; delays; travel patterns; congestion and recorded accidents. The report will be structured to describe the following scenarios: 1. Existing Conditions: This will be an analysis of the current or very recent movement condition. The data will be drawn from observation and current year model runs. Existing congestion and accident black spots will be identified. 2. Future Year No Build Condition: The Demand Models will be used to review a future forecast year with the current at grade crossings but with future forecast travel demand. This will include the anticipated increased Caltrain and HSR train frequency of 10 per peak hour in each direction. A full appraisal of operational and impact conditions will be included. 3. Alternatives Test conditions: For each grade separation alternative configuration a full evaluation using all of the criteria will be carried, employing the Demand Models as the informational bases. The advantages and disadvantages will be set out as well as a formulation of all the costs and benefits. A cost benefit analysis against the ‘No Build’ will be completed. 4. Comparative Analysis and Preferred Alternative: From the evaluation of the alternatives, a preferred alternative will be selected. The case for the preference and support for its implementation will be constructed, itemizing how the alternative succeeds in the objectives of the most successful grade separation and its relationship to the CITY of Palo Alto Comprehensive Plan objectives and its intended implementation. Community Engagement CONSULTANT will start the comprehensive community engagement, as presented in Task 5, under Task 4. Additionally, environmental scoping meeting(s) as presented under Task 7 may also begin during Task Deliverables:  Technical Memos: - Existing Conditions - Model Calibration and Validation - Alternatives Test  Milestone #1: Rail Corridor Circulation Study DocuSign Envelope ID: E2667E34-620D-46CE-A070-E45A25060C5A 08/18/2016 8  Summary of Community Engagement Efforts to date, as covered in Task 4 and further outlined in Task 5 Task 5 | Manage Context Sensitive Alternatives Analysis CONSULTANT will manage the preparation of a Context Sensitive Alternatives Analysis, a comprehensive community-driven engagement process to identify preferred alternatives for recommended grade separations based on the outcomes from the Rail Corridor Circulation Study. Community Engagement Tasks and Deliverables 1. Community Engagement Plan a. CONSULTANT will develop a comprehensive Community Engagement Plan that will identify key stakeholders, key project materials, desired meeting milestones and outcomes. b. This plan will be action-based, aligning the community engagement activities with the technical effort and deliverables so informed community input is gathered in time to consider and incorporate to the greatest extent possible. c. A Draft Plan will be submitted to the CITY and one round of consolidated comments will be reviewed and incorporated into the Final Plan. d. As a part of this initial effort, we assume one kick-off meeting to confirm roles, deliverables, schedule and other aspects of this scope of work. e. We assume up to 12 project meetings for the planning and coordination of outreach activities. 2. Contact and Inquiry Database – Repository of community comments and stakeholders (via GovDelivery or similar email list manager) a. CONSULTANT will leverage the existing contact list from previous and current efforts to develop one master list. Over the course of the project, CONSULTANT will maintain a database for community comments and key stakeholders. CONSULTANT will add new stakeholders to the database on a regular basis. i. We assume this does not include standard parcel level resident data, but a more strategic set of stakeholders. When parcel level resident and owner data is needed, the CITY will provide the data necessary to mail to a radius mailing. ii. We assume any returns from a parcel-based radius mailing will be handled by the CITY, as that data is directly from the CITY’s resources. CONSULTANT will update returns from the key stakeholder list. 3. Collateral Development - Updates to project webpage, fact sheets, and other outreach materials a. CONSULTANT will also review the existing content and provide recommendations. i. One set of recommended updates to current content will be provided prior to the launch of community-wide outreach activities. b. CONSULTANT will provide regular and ongoing updates to the project webpage as necessary. These updates include ongoing project status updates, adding new project information and public meeting information. DocuSign Envelope ID: E2667E34-620D-46CE-A070-E45A25060C5A 08/18/2016 9 i. Project updates to the website are assumed to be monthly, with CONSULTANT providing text and materials, and the CITY implementing any changes . c. CONSULTANT will develop one (1) 11 x 17 fact sheet to describe the project and provide accompanying visuals. This fact sheet will be updated once upon completion of the Rail Corridor Circulation Study. It may also be used as a mailer to notice public meetings and provide project updates. i. We assume one review loop on design, one on content and one on the final draft, with consolidated comments provided at each phase of review. 4. Online survey a. CONSULTANT will draft up to two online surveys (using Surveymonkey) and distribute the survey via email, posted to the website and noticed using social media to maximize the number of respondents. If appropriate, the survey may also be included in one of the project mailings. CONSULTANT has developed similar surveys for a variety of projects of similar size and scope. b. We anticipate the first survey will be during the early phase of the project to gather early input, identify key issues for further exploration. We assume the second survey will be utilized as we get closer to having more detailed information about the impacts and features of the different alternatives. The survey will focus on gathering specific input on the alternatives. i. We assume all survey responses will be done electronically and no hard copy entries will be necessary. ii. We assume one consolidated round of edits on the survey questions. iii. Survey results will be provided via the compilation and report functions provided by Surveymonkey. Different survey tool options from which the survey will be crafted include: 1) Text-based surveys. CONSULTANT has used Textizen which was recently bought by GovDelivery. This is a simple text-based tool that allows for relatively short, focused text-based surveys or polls. You distribute or post an initial question, then the end user will text in a response (Want to learn about the Rail Project? Text “yes” or “no” to 888-555-1212). Then when the response is sent in, you can program an additional series of survey questions. It is relatively limited by the number of characters in the question and response, as well as the number of questions you ask (to keep people interested). You can send the respondents additional information later, such as a meeting notice, or update. This is a relatively cost-effective, focused, short poll, not lending itself to a nuanced discussion. 2) Survey platforms – such as MetroQuest, CrowdBrite, Neighborland or Civinomics. These are typically a web-based platform that are purchased where one can host a variety of survey-type engagements, including mapping issues, idea generation, and issue prioritization. These cost more and take time to learn the nuances, but can provide a more detailed engagement process thru online engagement over the course of a project. CONSULTANT cost estimate does not currently reflect the higher costs associated with this type of survey; however, we could adjust if the CITY prefers this option. DocuSign Envelope ID: E2667E34-620D-46CE-A070-E45A25060C5A 08/18/2016 10 3) SurveyMonkey – this tool has been significantly updated over the past few years and provides a great deal of flexibility, including the use of images, skip logic, and easy reporting to synthesize and summarize input received. The CONSULTANT has been using this tool for a while and finds the cost/functionality proposition to be one of the best options available. The CONSULTANT cost estimate accommodates the use of Survey Monkey. 5. Up to six (6) project mailings a. Up to six project mailings will be created and distributed to collect information from stakeholders. The project mailings will also be used as a tool to inform the public on project timelines, upcoming meetings, and general project information. The fact sheet can be formatted to serve as a mailer, but this will be determined at a later date. i. We assume each mailing will focus on the communities surrounding the project area and key stakeholders and will not exceed 2,000 pieces. ii. We assume on consolidated round of comments on the content, layout and final draft. 6. Coordination and facilitation of up to six (6) community meetings a. CONSULTANT will coordinate meeting logistics for up to six (6) community meetings. We will reserve the meeting venue based on CITY preference, secure audio and visual equipment if needed, and develop presentation materials in collaboration with the project team, including agendas, PowerPoint presentations, exhibits and handouts. CONSULTANT will also facilitate and staff the community meetings. A summary report will be provided and ultimately folded in to the larger overall summary report. i. A meeting logistics plan will be developed to guide planning activities. ii. We assume one round of consolidated comments on content for meeting materials and one for final layout. Before each outreach meeting the plans, meetings contents and layout will be forwarded to the CITY for comment at least 10 working days before the event is due to be held. We assume that we would receive finalized comments/ suggested amendments at least five (5) days working days before the event. iii. We assume one dry run session with key team members in advance of each public meeting. iv. We assume some portion of the up to six meetings will serve as a “round” of meetings where the same information is provided at different times and locations. For the purpose of this scope, we are planning to conduct public meetings that generally follow the process noted below. During early coordination with the CITY and project team, this will be refined and described in the Community Engagement Plan: 1. First round of meetings – Explore purpose and need, community vision and values, key design factors, impact areas and evaluation criteria. 2. Second round of meetings – Explore how the findings from the first round of meetings present an opportunity to prioritize design features and impact areas, along with aligning community vision and values with potential alternatives. This round will begin to explore specific alternatives in greater detail. 3. Third round of meetings – Evaluate refined alternatives through the lens of community vision, values and previously prioritized evaluation criteria. DocuSign Envelope ID: E2667E34-620D-46CE-A070-E45A25060C5A 08/18/2016 11 7. Community Engagement Summary Report a. Following the conclusion of the community outreach meetings, CONSULTANT will draft and finalize a summary report which details public input. The summary report will be highly visual and help to simplify large quantities of data. i. We assume one round of consolidated comments on the draft report, with a final set of consolidated comments on the final draft. ii. The report will be formatted for printing and for posting to the web. Assumptions Assumptions specific to each task deliverable are included above. All material and contents will be reviewed by the CITY’s Director of Communications. The information to be presented at least 10 working days before release, with full responses returned to the CONSULTANT within at least five (5) working days before the release. More general assumptions are noted below.  Project website updates and hosting will be handled by the CITY. Text and Material will be provided by the CONSULTANT.  No translation of materials or interpretation services are included in this scope. If needed, the costs can be determined and considered or the CITY can provide translation and interpretation services.  All distribution of information via digital channels such as email and social media will be handled by the CITY.  Community meetings will be no longer than (3) hours  CONSULTANT will attend each meeting with up to two (2) staff members  For noticing, we assume no more than 2,000 entries for mailing notices. This also includes mailing project updates, which we plan to integrate into one mailing as much as possible.  For noticing, we assume one paid advertisement in a local newspaper.  For noticing and other event publicity, we assume the CITY will handle media engagement and press releases.  For materials, we assume a PowerPoint presentation of no more than 40 slides for each meeting, including all visuals, boards, sign-in sheets, pens, and comment cards , etc., .  For meeting exhibits (eg, boards showing renderings), we assume no more than 12 exhibits at each meeting, for a total of up to 48 exhibits (with at least two rounds of two meetings covering the same content). Meetings exhibits assumed to be 30” x 42”, mounted and displayed on easels. Alternatives Analysis The alternatives analysis will involve an iterative process to understand the extent of the study area(s) and constraints of railroad track elevation, local circulation needs, and roadway and railroad alignments. The designs for each alternative will incorporate:  Traffic circulation and multi-modal and station access evaluations  Geotechnical investigations DocuSign Envelope ID: E2667E34-620D-46CE-A070-E45A25060C5A 08/18/2016 12  Structural type selections  Hydraulic analysis  Utility conflict evaluations  Railroad regulations and design requirements  Constraints analysis  Preliminary cost analysis  Economic and community impact analysis  Construction phasing impacts  Multi-modal transportation impact analysis. The CONSULTANT will develop presentation materials and reports to clearly convey the conceptual designs at a relatively high level for community engagement activities. The CONSULTANT will prepare drawings of park/ public space concepts for the grade separation alternatives to be used in the community meetings. We will structure the presentations to illustrate the concepts and impacts to the community and illustrate the impacts to travel circulation patterns. Each alternative will consider future Caltrain Electrification and High Speed Rail projects. A discussion of the potential construction methods and techniques will be considered, including advantages and disadvantages. CONSULTANT’s work will entail high level construction cost estimates and identify key evaluation factors and metrics, such as:  End result benefits  Safety impacts  Downtown and local/adjacent business impacts  Constructability and construction impacts  Right-of-way constraints and impacts and costs  Overall project cost estimates and accommodations of Caltrain electrification and high speed rail design and operational requirements. The team will provide a summary matrix of the evaluation, comparing the conceptual designs. Financial/ Economic Analysis of Alternatives CONSULTANT will assess the potential economic and market impacts of the various rail alternatives and investments. In some cases, this analysis will include quantitative estimates of benefits, such as travel time savings, property value impacts, and safety, while others will be more qualitative. For example, some of the economic benefits of various improvements related to improved aesthetics, noise reduction, or even accessibility improvements to key areas of the CITY (e.g. Downtown and Stations) may be difficult to quantify with accuracy but will still warrant consideration. In these cases, the team will describe the economic context and key factors affecting the magnitude of impact from various alternatives, such as quantity and value of affecting properties, relationship to key economic drivers in the CITY, and long-term implications for competitiveness and value enhancement. DocuSign Envelope ID: E2667E34-620D-46CE-A070-E45A25060C5A 08/18/2016 13 Deliverables:  Community Engagement Plan - Draft and Final Community Engagement Summary Report - Updates to project webpage, fact sheets, and other outreach materials - Database of community comments and stakeholders (via GovDelivery or similar e-mail list manager) - Online survey and up to six (6) project mailings - Coordination and facilitation of up to six (6) community meetings  Conceptual Design Presentation Material , with up to 3 per intersection in each case ;- - Site Plans ( 2 plans per alternative crossing location ) - Cross Sections ( up to 3 per intersection alternative ) - Graphic Renderings ( up to 3 per alternative per alternative intersection ) Three-dimensional graphic renderings/ simulations for alternatives. (up to 3 per alternative intersection location ) Note - the graphics would show how the infrastructure proposals would be seen by the community.  Summary Matrix of Conceptual Design Evaluations  Milestone #2: Context Sensitive Alternatives Analysis (Completion by December 31, 2017) Task 6 | Prepare Draft and Final PSRs and 15% Plans CONSULTANT will prepare draft Project Study Reports (PSRs) incorporating the previous tasks and presenting a conceptual design for each of the preferred alternatives for up to four (4) grade crossings. The draft and final PSRs will include a discussion of the data collected in Task 4, the community engagement processes and input from Task 5, the evaluations and analyses of alternatives performed in Task 5 and the evaluation factors and matrix from Task 4. The draft PSRs will also identify future studies, permits, and other special requirements that will be required to advance the project(s), including requirements related to local standards and FRA regulations tied to funding and jurisdictional influence on the project. Based upon feedback from the community and CITY and subject to satisfying FRA and Caltrain requirements, CONSULTANT will update the draft PSRs into Final PSRs. Design development work to support the preparation of the PSR(s) will consist of the following:  Plan development including plans, profiles and cross sections identifying major elements of work; limits of permanent impacts; required utility relocations/modifications; preliminary staging plans reflecting limits of temporary impacts; drainage plans including accommodation of BMP’s for water quality control; Advance Planning Studies for major structures (bridges and critical retaining structures). Work will be developed to the 15% level of design, allowing a PSR level Cost Estimate to be developed DocuSign Envelope ID: E2667E34-620D-46CE-A070-E45A25060C5A 08/18/2016 14  Right-of-Way ( ROW ) Data Sheet preparation to show the impacts on ROW and reflect estimated ROW costs associated with each preferred alternative  Cost Estimates using Caltrans PSR estimating approach. PSRs will follow the Caltrans outline found in the Project Development Procedures Manual (PDPM), modified as appropriate for this scope of work. The final product will include the following sections, as outlined in Appendix L of the PDPM:  Introduction/Project Description  Background  Purpose and Need  Deficiencies  Corridor and System Coordination (discuss Rail corridor in relation to roadway system)  Alternatives (Viable and Rejected)  Community Involvement  Environmental Determination (discuss issues and type of approvals required)  Funding and Estimate (Programming if appropriate)  Delivery Schedule  Risks  Project Personnel  Attachments (Location Map, Alternatives plans, and similar as needed to reflect 15% design development including utilities, drainage and staging information) Deliverables:  Technical memo’s on Utilities, Drainage and Staging of preferred alternatives  Admin Draft and Draft Project Study Reports (PSRs) (Up to 4 grade crossing locations)  Milestone #3: Final Project Study Reports (PSR) and 15% Plan Sets Task 7 | Complete Environmental Analyses for Preferred Alternatives Environmental Document Project Initiation/ Notice of Preparation The CONSULTANT will meet with CITY representatives at an initial kickoff meeting to share project materials, discuss issues, review the project background, and outline expectations for communication, scope, and schedule. Full liaison will be held with all other agencies involved. CONSULTANT will use CEQA Guidelines Appendix G to document CONSULTANT’s assumptions for the final scope of work and prepare CONSULTANT’s review. In addition, because there could be significant unavoidable impacts, CONSULTANT believe that an EIR will be the appropriate document for CEQA compliance, but CONSULTANT will confirm this assumption through the DocuSign Envelope ID: E2667E34-620D-46CE-A070-E45A25060C5A 08/18/2016 15 environmental analysis process. CONSULTANT will draft the Notice of Preparation (NOP) for CITY review. Any final edits will be made to the NOP and the final version will be prepared for CITY distribution. The team will submit the NOP and the Initial Study to the State Clearinghouse on the CITY’s behalf. This meeting though informed by , is independent of the broader outreach effort in that it is focused solely on the requirements of the CEQA process . Public Scoping Meeting The CONSULTANT will facilitate a public scoping meeting at CITY Hall during the NOP review period. CONSULTANT will prepare materials regarding the CEQA review process and the anticipated scope of the EIR. CONSULTANT will work with CITY staff to develop the final agenda for the meeting; however, CONSULTANT shall anticipate a project overview, a discussion of CITY objectives, and ample opportunity for public input. Based on that input, the EIR scope of work may or may not warrant minor modification to respond to environmental concerns which may have been raised. Prepare Administrative Draft EIR (ADEIR) CONSULTANT will prepare the EIR by using the information provided by the CITY, as well as other pertinent data sources. The Introduction will briefly describe the extent of CEQA analysis, environmental resource areas that were scoped out in the environmental analysis process, the purpose of the EIR, its intended uses, and a request that any comments be restricted to the subjects addressed in the current analysis. The Executive Summary will succinctly summarize the environmental analysis, including a brief plan overview, a list of plan objectives, a summary of significant environmental effects, and mitigation measures that would reduce or avoid those effects. Project impacts will be organized in a table format that clearly identifies any mitigation measures, the level of significance after mitigation, and any significant and unavoidable impacts. The Project Description will identify the plan’s location, plan objectives, a list of agencies that are expected to use the EIR, permits and other approvals needed, and other federal and state regulatory requirements, if any. This section will include graphics to illustrate the site and the proposed plan area. The following resource areas are expected to be included in the EIR:  Aesthetics  Air Quality  Biological Resources  Cultural Resources  Greenhouse Gas Emissions  Hazards and Hazardous Materials Noise  Transportation/Traffic Publish Draft EIR (DEIR) Upon receiving comments on the ADEIR, CONSULTANT will meet with CITY staff to go over comments and resolve any outstanding issues. A screencheck DEIR in highlighted text for changes will be provided to confirm DocuSign Envelope ID: E2667E34-620D-46CE-A070-E45A25060C5A 08/18/2016 16 edits with the CITY, along with a clean version (no track changes) for final review. CONSULTANT will produce 15 hard copies for the CITY’s use and an electronic version (in Adobe pdf) for uploading to the CITY’s website. At the CITY’s request, the team can also deliver 15 of the executive summary to the State Clearinghouse with the Notice of Completion to begin the 45-day public review period. CONSULTANT typically provide all technical appendices, as well as a PDF of the document, on a CD included with each printed copy. All documents are suitable for posting on the CITY’s website. Michael Baker will assist in the preparation of the Notice of Availability that will explain the review process of the DEIR pursuant to CEQA. Prepare Response to Comments/Final EIR (FEIR) and Mitigation Monitoring and Reporting Program (MMRP) At the conclusion of the 45-day public review period, the team will scan each comment letter, number each comment, and group common questions or comments and recommend master responses for those groups of comments. CONSULTANT will prepare a summary table identifying persons and agencies that commented, a copy of each comment letter with a code assigned to each comment, a response to each comment, and an errata section containing any text revisions. CONSULTANT will coordinate with CITY staff and technical staff to address public and agency comments. The team will provide an administrative draft Response to Comments/FEIR for CITY review. CONSULTANT will then provide a screen check draft of the FEIR electronically to the CITY for final review. As a related task, the FEIR will include the MMRP, pursuant to Public Resources Code Section 21971.6, as a separate chapter. The MMRP will be completed as mitigation measures are finalized and will identify all reporting and monitoring responsibilities. This scope assumes 50 comment letters of typical detail (two to three pages in length) and an equal number of e-mail comments. Comments in excess of these assumptions will be considered outside of this scope of work and cost estimate. CONSULTANT will work closely with the CITY in drafting responses and revising the DEIR. This scope assumes that no new technical analysis or fieldwork will be required to respond to comments. Findings of Fact/Statement of Overriding Considerations CONSULTANT will prepare the CEQA Findings of Fact and Statement of Overriding Considerations as provided under CEQA Guidelines Sections 15091 and 15093. CONSULTANT will use the CITY’s format for the CEQA Findings of Fact. Deliverables:  Draft Notice of Preparation (electronic copy only in Microsoft Word)  Administrative Draft EIR (electronic copy only in Microsoft Word)  Public Draft EIR (25 hard copies; electronic copy in Adobe Acrobat for uploading to the CITY’s website  Administrative Draft Response to Comments/Final EIR and MMRP (electronic copy only in Microsoft Word) DocuSign Envelope ID: E2667E34-620D-46CE-A070-E45A25060C5A 08/18/2016 17  Public Draft Final EIR and MMRP (25 hard copies; electronic copy in Adobe Acrobat)  Draft Findings of Fact/Statement of Overriding Considerations (electronic copy only in Microsoft Word)  Milestone #4: Environmental Analyses and Documentation Task 8 | Financing Plans CONSULTANT will support the CITY by providing financial advisory services related to financial approaches and models for funding of the grade separations. Working closely with technical experts and CITY staff, CONSULTANT will develop detailed estimates regarding potential revenues/proceeds, use of funds, debt capacity, transaction costs, and impacts on current CITY finances for various financial approaches. The team will review the financing approaches against the unique legal, regulatory, and political procedures of each option to identify the viable options. The funding analyses will relate to the Santa Clara VTA’s grade separation allocation of $700m from the forthcoming ballot measure in November 2016 and the guidelines to be provided by VTA. CONSULTANT will work with CITY staff to develop input from the CITY to the VTA that may help inform the development of the VTA’s guidelines. Each alternative will be assessed separately and the funding available to suit that alternative configuration will be identified. Then an overall strategy will be developed that outlines the process and timeline of each viable option and estimate internal resources required to advance through key milestones in order to meet the capital needs of the grade separation projects. The financing plan will also identify key risks such as interest rate risk, execution risk, and political risk; and describe mitigation measures that can be employed by CITY. CONSULTANT will identify the range of financing options available and the implementation, applicability, and probability of success for each. This analysis will consider site specific funding options (e.g. air rights or value capture), CITY-wide sources (e.g. General Fund revenues, nexus based assessments or impact fees, dedicated sales and/or property taxes), and State and federal programs (e.g. TIFIA , RRIF, Section 190 of the State Streets and Highways Code and Section 130 (23 U.S.C 130, TIGER grants, etc.). For a sub-set of mechanisms deemed as particularly appropriate or viable, the team will estimate the likely revenue potential and timing, based on realistic projections related to growth in key variables (e.g. population, new development, assessed values, sales tax, and other factors). It will be important to link the financing strategy to broader CITY-wide financing programs and objectives, particularly in the context of the Comprehensive Plan Update. In this regard, it is important to note that CONSULTANT has recently been retained by the CITY to provide a thorough Community Infrastructure Funding Analysis as part of the Comprehensive Plan implementation. In this parallel effort, CONSULTANT will review the proposed capital investments envisioned by the Comprehensive Plan Amendment Scenario Alternatives and assess funding options, including the CITY’s existing financial resources, other potential sources of funds, and financing mechanisms that may cover all or a portion of the proposed community improvements and infrastructure (including DocuSign Envelope ID: E2667E34-620D-46CE-A070-E45A25060C5A 08/18/2016 1 growth mitigation projects). The budget estimate provided herein reflects the economies of scale associated with CONSULTANT’s involvement in both efforts. Deliverables:  Financial Models  Financing Plan  Recommendations for elements to be incorporated into the VTA Grade Separation Program Guidelines Task 9 | Additional Tasks Most of the additional tasks noted in the RFP have been incorporated into previous tasks, with the exception of the additional meetings noted below. In addition to meetings noted in Task 1, 2 and 3, CONSULTANT will participate in/ present up to six (6) Planning & Transportation Commission meetings and up to six (6) CITY Council meetings. Additional presentations as requested by CITY will be incorporated as optional tasks. Furthermore, CONSULTANT’s key team members (PM and/ or DPM) will plan to attend monthly project coordination meetings with CITY staff through the duration of the work, and attend up to 10 project coordination meetings with other agencies, including but not limited to:  Caltrain/JPB  CHSRA  Santa Clara County  Santa Clara Valley Transportation Authority  SamTrans  San Mateo County  City of Menlo Park  City of Mountain View  UPRR  CPUC  Utility Providers Deliverables:  Attend up to 22 additional City and agency meetings (Planning & Transportation Commission, CITY Council, stakeholder agencies)  Materials for meetings  Summary notes of all meetings  Identification and documentation of any tasks or parts of tasks that can be reimbursed by the CHSRA under their support program DocuSign Envelope ID: E2667E34-620D-46CE-A070-E45A25060C5A 08/18/2016 2 EXHIBIT “B” SCHEDULE OF PERFORMANCE CONSULTANT shall perform the Services so as to complete each milestone within the number of days/weeks specified below. The time to complete each milestone may be increased or decreased by mutual written agreement of the project managers for CONSULTANT and CITY so long as all work is completed within the term of the Agreement. Milestones Completion No. of Days/Weeks From NTP Task 1: 21 months Support Council Rail Committee Task 2: 24 months Convene Rail Technical Group Task 3: 15 months Represent CITY during CHSR Environmental Analysis Phase Task 4: 6 months Manage Rail Corridor Circulation Study Task 5: 12 months Manage Context Sensitive Solutions Alternatives Analysis Task 6: 12 months Prepare Draft and Final Project Study Reports and 15% Plan Sets Task 7: 18 months Complete Environmental Analysis for Preferred Alternatives Task 8: 24 months Financing Plans Task 9: 24 months Additional Task/Meetings DocuSign Envelope ID: E2667E34-620D-46CE-A070-E45A25060C5A 08/18/2016 3 EXHIBIT “C” COMPENSATION The CITY agrees to compensate the CONSULTANT for professional services performed in accordance with the terms and conditions of this Agreement, and as set forth in the budget schedule below. Compensation shall be calculated based on the hourly rate schedule attached as exhibit C-1 up to the not to exceed budget amount for each task set forth below. CONSULTANT shall perform the tasks and categories of work as outlined and budgeted below. The CITY’s Project Manager may approve in writing the transfer of budget amounts between any of the tasks or categories listed below provided the total compensation for Basic Services, including reimbursable expenses, and the total compensation for Additional Services do not exceed the amounts set forth in Section 4 of this Agreement. BUDGET SCHEDULE NOT TO EXCEED AMOUNT Task 1 $160,685.00 (Support Council Rail Committee) Task 2 $47,961.00 (Convene Rail Technical Group) Task 3 $136,290.00 (Represent CITY during CHSR Environmental Analysis Phase) Task 4 $209,611.00 (Manage Rail Corridor Circulation Study) Task 5 $379,320.00 (Manage Context Sensitive Solutions Alternatives Analysis) Task 6 $239,396.00 (Prepare Draft and Final Project Study Reports and 15% Plan Sets) Task 7 $219,407.00 (Complete Environmental Analysis for Preferred Alternatives) Task 8 $28,899.00 (Financing Plans) Cost of Living Adjustment (COLA) 2017 $23,511.00 (Not to Exceed 3%) DocuSign Envelope ID: E2667E34-620D-46CE-A070-E45A25060C5A 08/18/2016 4 Cost of Living Adjustment (COLA) 2018 $23,864.00 (Not to Exceed 3%) Sub-total Basic Services $1,467,944.00 Reimbursable Expenses/ODC $37,451.00 Total Basic Services and Reimbursable expenses $1,505,395.00 Additional Services (Not to Exceed) $109,368.00 Maximum Total Compensation $1,614,763.00 REIMBURSABLE EXPENSES The administrative, overhead, secretarial time or secretarial overtime, word processing, photocopying, in-house printing, insurance and other ordinary business expenses are included within the scope of payment for services and are not reimbursable expenses. CITY shall reimburse CONSULTANT for the following reimbursable expenses at cost. Expenses for which CONSULTANT shall be reimbursed are as specified in EXHIBIT “C1” Schedule of Rates under Other Direct Cost (ODC). All requests for payment of expenses shall be accompanied by appropriate backup information. Any expense anticipated to be more than $5,000.00 shall be approved in advance by the CITY’s project manager. ADDITIONAL SERVICES The CONSULTANT shall provide additional services only by advanced, written authorization from the CITY. The CONSULTANT, at the CITY’s project manager’s request, shall submit a detailed written proposal including a description of the scope of services, schedule, level of effort, and CONSULTANT’s proposed maximum compensation, including reimbursable expense, for such services based on the rates set forth in Exhibit C-1. The additional services scope, schedule and maximum compensation shall be negotiated and agreed to in writing by the CITY’s Project Manager and CONSULTANT prior to commencement of the services. Payment for additional services is subject to all requirements and restrictions in this Agreement DocuSign Envelope ID: E2667E34-620D-46CE-A070-E45A25060C5A EXHIBIT “C-1” SCHEDULE OF RATES Note 1: Cost assumes up to 24 Council Rail Committee mtgs, 6 Planning & Transportation Commission mtgs, and 6 City Council mtgs Note 2: Cost assumes regular attendance and support of meetings with City Staff Note 3: Cost assumes meetings are held at CITY Council Chambers Labor Category Est Hours Hourly Rate Ext Rate Total Task 2: Convene Rail Technical Group MM Chris Metzger Principal 16 $116.01 $330.45 $5,287.20 Richard Davies Project Manager 40 $104.99 $299.06 $11,962.40 Michele DiFrancia Deputy Project Manager 80 $80.00 $227.84 $18,227.20 Amy Henschke Rail Design Lead 24 $40.92 $116.56 $2,797.44 Mike Canepa Technical Advisor 8 $96.27 $274.22 $2,193.76 Tina Hu Trans Planner/ Admin Support 96 $27.40 $78.05 $7,492.80 ODCs $1,000.00 Total Not-to-Exceed Task 2 $48,960.80 Note 1: Cost assumes up to 10 RTG meetings (dependent on complexity and scope of meetings) Note 2: Cost assumes meetings are held at CITY Council Chambers Labor Category Est Hours Hourly Rate Ext Rate Total Task 1: Support Council Rail Committee MM Chris Metzger Principal 80 $116.01 $330.45 $26,436.00 Richard Davies Project Manager 160 $104.99 $299.06 $47,849.60 Michele DiFrancia Deputy Project Manager 280 $80.00 $227.84 $63,795.20 Amy Henschke Rail Design Lead 60 $40.92 $116.56 $6,993.60 Tina Hu Trans Planner/ Admin Support 200 $27.40 $78.05 $15,610.00 ODCs $1,000.00 Total Not-to-Exceed Task 1 $161,684.40 DocuSign Envelope ID: E2667E34-620D-46CE-A070-E45A25060C5A Labor Category Est Hours Hourly Rate Ext Rate Total Task 3: Represent CITY during CHSR Environmental Analysis Phase MM Richard Davies Project Manager 80 $104.99 $299.06 $23,924.80 Michele DiFrancia Deputy Project Manager 200 $80.00 $227.84 $45,568.00 Amy Henschke Rail Design Lead 64 $40.92 $116.56 $7,459.84 Mike Canepa Technical Advisor 16 $96.27 $274.22 $4,387.52 Bill Baker Railroad Coordinator 40 $74.59 $212.47 $8,498.80 MBI Darcy Kremin Senior CEQA PM 120 $64.00 $184.19 $22,102.80 Florentina Craciun Senior Env Planner 64 $40.01 $115.15 $7,369.34 Seth Myers AQ/GHG and Noise Specialist 40 $40.87 $117.62 $4,704.84 Nichole Jordan-Davis Sr Cultural Resources Mgr 40 $43.27 $124.53 $4,981.12 Joyce Hunting Director of Biological Services 24 $73.56 $211.70 $5,080.81 ODCs $1,000.00 Sub Markup $2,211.95 Total Not-to-Exceed Task 3 $137,289.82 Note 1: Cost assumes up to 3 CHSRA mtgs, up to 6 general agency mtgs, and up to 12 Local Policy Maker Group mtgs Labor Category Est Hours Hourly Rate Ext Rate Total Task 4: Manage Rail Corridor Circulation Study Task 4.1: Data Collection & Review MM Richard Davies Project Manager 8 $104.99 $299.06 $2,392.48 Michele DiFrancia Deputy Project Manager 16 $80.00 $227.84 $3,645.44 Alan Nie Senior Transportation Planner 80 $75.72 $215.68 $17,254.40 Ravi Narayanan Traffic Engineering 60 $66.35 $188.96 $11,337.60 Tina Hu Transportation Planner 100 $27.40 $78.05 $7,805.00 Task 4.2: Preliminary Screening of Alternatives MM Richard Davies Project Manager 20 $104.99 $299.06 $5,981.20 Michele DiFrancia Deputy Project Manager 80 $80.00 $227.84 $18,227.20 DocuSign Envelope ID: E2667E34-620D-46CE-A070-E45A25060C5A Amy Henschke Rail Design Lead 30 $40.92 $116.56 $3,496.80 Mike Canepa Technical Advisor 20 $96.27 $274.22 $5,484.40 Bill Baker Railroad Coordinator 40 $74.59 $212.47 $8,498.80 Leo Trujillo Traffic Design Lead 40 $76.53 $217.99 $8,719.60 Alan Nie Traffic Modeling 120 $75.72 $215.68 $25,881.60 Ravi Narayanan Traffic Engineering 80 $66.35 $188.96 $15,116.80 Tina Hu Transportation Planner 100 $27.40 $78.05 $7,805.00 Spokemore Carol Levine Principal Transportation Planner 40 $68.68 $150.00 $6,000.00 Michelle DeRobertis Principal Transportation Engineer 64 $68.68 $150.00 $9,600.00 EPS Jason Moody Managing Principal 24 $73.76 $265.00 $6,360.00 Walker Toma Project Manager 20 $33.66 $150.00 $3,000.00 Ben Sigman Strategic Advisory 6 $60.09 $225.00 $1,350.00 Jenny Linn Technical/ Admin 2 $27.65 $125.00 $250.00 Circlepoint Ben Strumwasser Principal 11 $87.98 $278.45 $2,940.43 Maily Chu Project Manager 33 $40.31 $127.58 $4,210.14 Lawrence McGuire Project Manager 26 $46.44 $146.98 $3,880.27 Amy Huang Sr. Associate 66 $34.63 $109.60 $7,233.60 Sabrina Morales Coordinator 112 $24.04 $76.09 $8,537.30 Sarah Seward Art Director 26 $50.56 $160.02 $4,224.53 Adrienne Lam Graphic/Web designer 92 $24.42 $77.29 $7,141.60 ODCs (community engagement - see details below) $7,738.50 Other ODCs $1,000.00 Sub Markup $3,236.39 Total Not-to-Exceed Task 4 $218,349.08 Labor Category Est Hours Hourly Rate Ext Rate Total DocuSign Envelope ID: E2667E34-620D-46CE-A070-E45A25060C5A Task 5: Manage Context Sensitive Solutions Alternatives Analysis MM Chris Metzger Principal 60 $116.01 $330.45 $19,827.00 Richard Davies Project Manager 100 $104.99 $299.06 $29,906.00 Michele DiFrancia Deputy Project Manager 140 $80.00 $227.84 $31,897.60 Amy Henschke Rail Design Lead 120 $40.92 $116.56 $13,987.20 Bill Baker Railroad Coordinator 80 $74.59 $212.47 $16,997.60 Mike Canepa Technical Advisor 80 $96.27 $274.22 $21,937.60 Leo Trujillo Traffic Design Lead 60 $76.53 $217.99 $13,079.40 Alan Nie Traffic Modeling 60 $75.72 $215.68 $12,940.80 Ravi Narayanan Traffic Engineering 60 $66.35 $188.96 $11,337.60 Tina Hu Transportation Planner 100 $27.40 $78.05 $7,805.00 Mike Wongkaew Structures Engineer 80 $76.01 $216.48 $17,318.40 Other CADD/Production Support 160 $32.00 $91.14 $14,581.76 Circlepoint Ben Strumwasser Principal 21 $87.98 $278.45 $5,969.97 Maily Chu Project Manager 67 $40.31 $127.58 $8,547.86 Lawrence McGuire Project Manager 54 $46.44 $146.98 $7,878.13 Amy Huang Sr. Associate 134 $34.63 $109.60 $14,686.40 Sabrina Morales Coordinator 228 $24.04 $76.09 $17,333.30 Sarah Seward Art Director 54 $50.56 $160.02 $8,577.07 Adrienne Lam Graphic/Web designer 188 $24.42 $77.29 $14,499.60 MBI Abby Woods Community Engagement Services Mgr 200 $44.24 $127.32 $25,463.92 PWPLA Peter Walker Senior Partner 20 $495.00 $9,900.00 Chris Dimond Management Partner 50 $250.00 $12,500.00 Martin Poirier Design Partner 40 $210.00 $8,400.00 Other Project Landscape Architect 84 $98.00 $8,232.00 Other 3 D Illustrator 30 $98.00 $2,940.00 EPS Jason Moody Managing Principal 26 $73.76 $265.00 $6,890.00 DocuSign Envelope ID: E2667E34-620D-46CE-A070-E45A25060C5A Walker Toma Project Manager 34 $33.66 $150.00 $5,100.00 Ben Sigman Strategic Advisory 8 $60.09 $225.00 $1,800.00 Jenny Linn Technical/ Admin 8 $27.65 $125.00 $1,000.00 ODCs (community engagement - see details below) $15,711.50 Other ODCs $2,500.00 Sub Markup $7,985.91 Total Not-to-Exceed Task 5 $397,531.63 Labor Category Est Hours Hourly Rate Ext Rate Total Task 6: Prepare Draft and Final Project Study Reports and 15% Plan Sets MM Richard Davies Project Manager 40 $104.99 $299.06 $11,962.40 Michele DiFrancia Deputy Project Manager 80 $80.00 $227.84 $18,227.20 Amy Henschke Rail Design Lead 160 $40.92 $116.56 $18,649.60 Bill Baker Railroad Coordinator 40 $74.59 $212.47 $8,498.80 Mike Canepa Technical Advisor 40 $96.27 $274.22 $10,968.80 Leo Trujillo Traffic Design Lead 100 $76.53 $217.99 $21,799.00 Alan Nie Traffic Modeling 60 $75.72 $215.68 $12,940.80 Ravi Narayanan Traffic Engineering 60 $66.35 $188.96 $11,337.60 Tina Hu Transportation Planner 80 $27.40 $78.05 $6,244.00 Mike Wongkaew Structures Engineer 200 $76.01 $216.48 $43,296.00 Other CADD/Production support 160 $32.00 $91.14 $14,581.76 PWPLA Peter Walker Senior Partner 30 $495.00 $14,850.00 Chris Dimond Management Partner 60 $250.00 $15,000.00 Martin Poirier Design Partner 50 $210.00 $10,500.00 Other Project Landscape Architect 130 $98.00 $12,740.00 Other 3 D Illustrator 50 $98.00 $4,900.00 ODCs $1,000.00 Sub Markup $2,899.50 Total Not-to-Exceed Task 6 $240,395.46 DocuSign Envelope ID: E2667E34-620D-46CE-A070-E45A25060C5A Labor Category Est Hours Hourly Rate Ext Rate Total Task 7: Complete Environmental Analysis for Preferred Alternatives MM Richard Davies Project Manager 20 $104.99 $299.06 $5,981.20 Michele DiFrancia Deputy Project Manager 80 $80.00 $227.84 $18,227.20 Amy Henschke Rail Engineer Lead 80 $40.92 $116.56 $9,324.80 Mike Canepa Technical Advisor 20 $96.27 $274.22 $5,484.40 Bill Baker Railroad Coordinator 40 $74.59 $212.47 $8,498.80 Leo Trujillo Traffic Design Lead 40 $76.53 $217.99 $8,719.60 Alan Nie Traffic Modeling 60 $75.72 $215.68 $12,940.80 Ravi Narayanan Traffic Engineering 60 $66.35 $188.96 $11,337.60 Tina Hu Transportation Planner 80 $27.40 $78.05 $6,244.00 Mike Wongkaew Structures Engineer 80 $76.01 $216.48 $17,318.40 MBI Darcy Kremin Senior CEQA PM 100 $64.00 $184.19 $18,419.00 Florentina Craciun Senior Envt Planner 160 $40.01 $115.15 $18,424.00 Abby Reed Asst Envt Planner 200 $25.75 $74.11 $14,822.00 Seth Myers AQ/ GHG & Noise Specialist 160 $40.87 $117.62 $18,819.20 Nichole Jordan-Davis Sr Cultural Resources Mgr 60 $43.27 $124.53 $7,471.80 Joyce Hunting Director of Biological Services 20 $73.56 $211.70 $4,234.00 Margo Nayyar Architectural Historian 80 $29.40 $84.61 $6,768.80 Danya Winchell Biologist 80 $33.39 $96.09 $7,687.20 Jonathan Faoro GIS 60 $31.77 $91.43 $5,485.80 Suzanne Wirth Technical Editor 80 $28.47 $81.94 $6,555.20 Aimee Newman Admin Support 16 $25.00 $71.95 $1,151.20 ODCs $5,000.00 Sub Markup $5,491.91 Total Not-to-Exceed Task 7 $224,406.91 Labor Category Est Hours Hourly Rate Ext Rate Total Task 8: Financing Plans MM DocuSign Envelope ID: E2667E34-620D-46CE-A070-E45A25060C5A Richard Davies Project Manager 8 $104.99 $299.06 $2,392.48 Michele DiFrancia Deputy Project Manager 8 $80.00 $227.84 $1,822.72 Brian Ross Financial Planner 40 $69.72 $198.59 $7,943.60 EPS Jason Moody Managing Principal 26 $73.76 $265.00 $6,890.00 Walker Toma Project Manager 16 $33.66 $150.00 $2,400.00 Ben Sigman Strategic Advisory 22 $60.09 $225.00 $4,950.00 Jenny Linn Technical/ Admin 6 $27.65 $125.00 $750.00 ODCs $500.00 Sub Markup $749.50 Total Not-to-Exceed Task 8 $28,398.30 Labor Category Est Hours Hourly Rate Ext Rate Total Task 9: Additional Tasks/ Meetings MM Chris Metzger Principal 48 $116.01 $330.45 $15,861.60 Richard Davies Project Manager 40 $104.99 $299.06 $11,962.40 Michele DiFrancia Deputy Project Manager 100 $80.00 $227.84 $22,784.00 Amy Henschke Rail Design Lead 80 $40.92 $116.56 $9,324.80 Bill Baker Railroad Coordinator 60 $74.59 $212.47 $12,748.20 Leo Trujillo Traffic Design Lead 40 $76.53 $217.99 $8,719.60 Alan Nie Traffic Modeling 40 $75.72 $215.68 $8,627.20 Ravi Narayanan Traffic Engineering 40 $66.35 $188.96 $7,558.40 Tina Hu Transportation Planner 40 $27.40 $78.05 $3,122.00 Mike Wongkaew Structures Engineer 40 $76.01 $216.48 $8,659.20 ODCs $1,000.00 Total Not-to-Exceed Additional Tasks $110,367.40 Labor Category Est Hours Hourly Rate Ext Rate Total GRAND TOTAL (Tasks 1-9) $1,567,383.80 Notes DocuSign Envelope ID: E2667E34-620D-46CE-A070-E45A25060C5A 1) Covers two year period from approx Sept 2016-Sept 2018 2) Costs do not reflect COLA increase, typically around 3% per year. Approximately: 2017 $23,510.76 2018 $23,863.42 3) Conduct up to 6 public outreach community outreach mtgs 4) Present up to 24 Council Rail Committee mtgs, 6 Planning & Transportation Commission mtgs, and 6 City Council mtgs 5) Attend monthly coordination mtgs with CITY staff (Task 9) 6) Attend project coordination mtgs with other agencies (up to 10 mtgs), such as Caltrain/ JPB, CHSRA, Santa Clara County, Santa Clara VTA, SamTrans, San Mateo County, City of Menlo 7) Additional traffic counts/traffic field data collection is not included Task 5 ODCs Fax/phone/messenger/overnight $50.00 Postage & Printing - 6 mailings to 2,000 entries $12,000.00 Production of Exhibits - 48 @ $150 each $7,200.00 Display Ad Placement - up to 4 @ $350 each $1,400.00 Presentation Materials - 200 copies of meeting handouts per meeting $1,200.00 Refreshments (6 meetings) and A/V (3 meetings) $1,600.00 Labor Category Est Hours Hourly Rate Ext Rate Total Cost/ Data by Firm Total Cost OH Fringe Fee MM $1,055,855.40 105.91% 53.04% 10.00% MBI $179,541.04 161.63% Circlepoint $115,660.20 187.72% PWPLA $99,962.00 NA EPS $40,740.00 194% Spokemore (DBE) $15,600.00 110% ODCs Sub Markup $37,450.00 $22,575.16 Total $1,567,383.80 DocuSign Envelope ID: E2667E34-620D-46CE-A070-E45A25060C5A 08/18/2016 1 EXHIBIT “D” INSURANCE REQUIREMENTS CONTRACTORS TO THE CITY OF PALO ALTO (CITY), AT THEIR SOLE EXPENSE, SHALL FOR THE TERM OF THE CONTRACT OBTAIN AND MAINTAIN INSURANCE IN THE AMOUNTS FOR THE COVERAGE SPECIFIED BELOW, AFFORDED BY COMPANIES WITH AM BEST’S KEY RATING OF A-:VII, OR HIGHER, LICENSED OR AUTHORIZED TO TRANSACT INSURANCE BUSINESS IN THE STATE OF CALIFORNIA. AWARD IS CONTINGENT ON COMPLIANCE WITH CITY’S INSURANCE REQUIREMENTS, AS SPECIFIED, BELOW: REQUIRE D TYPE OF COVERAGE REQUIREMENT MINIMUM LIMITS EACH OCCURRENCE AGGREGATE YES YES WORKER’S COMPENSATION EMPLOYER’S LIABILITY STATUTORY STATUTORY YES GENERAL LIABILITY, INCLUDING PERSONAL INJURY, BROAD FORM PROPERTY DAMAGE BLANKET CONTRACTUAL, AND FIRE LEGAL LIABILITY BODILY INJURY PROPERTY DAMAGE BODILY INJURY & PROPERTY DAMAGE COMBINED. $1,000,000 $1,000,000 $1,000,000 $1,000,000 $1,000,000 $1,000,000 YES AUTOMOBILE LIABILITY, INCLUDING ALL OWNED, HIRED, NON-OWNED BODILY INJURY - EACH PERSON - EACH OCCURRENCE PROPERTY DAMAGE BODILY INJURY AND PROPERTY DAMAGE, COMBINED $1,000,000 $1,000,000 $1,000,000 $1,000,000 $1,000,000 $1,000,000 $1,000,000 $1,000,000 $1,000,000 $1,000,000 YES PROFESSIONAL LIABILITY, INCLUDING, ERRORS AND OMISSIONS, MALPRACTICE (WHEN APPLICABLE), AND NEGLIGENT PERFORMANCE ALL DAMAGES $1,000,000 YES THE CITY OF PALO ALTO IS TO BE NAMED AS AN ADDITIONAL INSURED: CONTRACTOR, AT ITS SOLE COST AND EXPENSE, SHALL OBTAIN AND MAINTAIN, IN FULL FORCE AND EFFECT THROUGHOUT THE ENTIRE TERM OF ANY RESULTANT AGREEMENT, THE INSURANCE COVERAGE HEREIN DESCRIBED, INSURING NOT ONLY CONTRACTOR AND ITS SUBCONSULTANTS, IF ANY, BUT ALSO, WITH THE EXCEPTION OF WORKERS’ COMPENSATION, EMPLOYER’S LIABILITY AND PROFESSIONAL INSURANCE, NAMING AS ADDITIONAL INSUREDS CITY, ITS COUNCIL MEMBERS, OFFICERS, AGENTS, AND EMPLOYEES. I. INSURANCE COVERAGE MUST INCLUDE: A. A PROVISION FOR A WRITTEN THIRTY (30) DAY ADVANCE NOTICE TO CITY OF CHANGE IN COVERAGE OR OF COVERAGE CANCELLATION; AND B. A CONTRACTUAL LIABILITY ENDORSEMENT PROVIDING INSURANCE COVERAGE FOR CONTRACTOR’S AGREEMENT TO INDEMNIFY CITY. C. DEDUCTIBLE AMOUNTS IN EXCESS OF $5,000 REQUIRE CITY’S PRIOR APPROVAL. II. CONTACTOR MUST SUBMIT CERTIFICATES(S) OF INSURANCE EVIDENCING REQUIRED COVERAGE AT THE FOLLOWING URL: https://www.planetbids.com/portal/portal.cfm?CompanyID=25569. III. ENDORSEMENT PROVISIONS, WITH RESPECT TO THE INSURANCE AFFORDED TO “ADDITIONAL INSUREDS” A. PRIMARY COVERAGE WITH RESPECT TO CLAIMS ARISING OUT OF THE OPERATIONS OF THE NAMED INSURED, INSURANCE AS AFFORDED BY THIS POLICY IS PRIMARY AND IS NOT ADDITIONAL TO OR CONTRIBUTING WITH ANY OTHER INSURANCE CARRIED BY OR FOR THE BENEFIT OF THE ADDITIONAL INSUREDS. B. CROSS LIABILITY THE NAMING OF MORE THAN ONE PERSON, FIRM, OR CORPORATION AS INSUREDS UNDER THE POLICY SHALL NOT, FOR THAT REASON ALONE, EXTINGUISH ANY RIGHTS OF THE INSURED AGAINST ANOTHER, BUT THIS ENDORSEMENT, AND THE NAMING OF MULTIPLE INSUREDS, SHALL NOT INCREASE THE TOTAL LIABILITY OF THE COMPANY UNDER THIS DocuSign Envelope ID: E2667E34-620D-46CE-A070-E45A25060C5A 08/18/2016 2 POLICY. C. NOTICE OF CANCELLATION 1. IF THE POLICY IS CANCELED BEFORE ITS EXPIRATION DATE FOR ANY REASON OTHER THAN THE NON-PAYMENT OF PREMIUM, THE CONSULTANT SHALL PROVIDE CITY AT LEAST A THIRTY (30) DAY WRITTEN NOTICE BEFORE THE EFFECTIVE DATE OF CANCELLATION. 2. IF THE POLICY IS CANCELED BEFORE ITS EXPIRATION DATE FOR THE NON-PAYMENT OF PREMIUM, THE CONSULTANT SHALL PROVIDE CITY AT LEAST A TEN (10) DAY WRITTEN NOTICE BEFORE THE EFFECTIVE DATE OF CANCELLATION. VENDORS ARE REQUIRED TO FILE THEIR EVIDENCE OF INSURANCE AND ANY OTHER RELATED NOTICES WITH THE CITY OF PALO ALTO AT THE FOLLOWING URL: HTTPS://WWW.PLANETBIDS.COM/PORTAL/PORTAL.CFM?COMPANYID=25569 OR HTTP://WWW.CITYOFPALOALTO.ORG/GOV/DEPTS/ASD/PLANET_BIDS_HOW_TO.ASP DocuSign Envelope ID: E2667E34-620D-46CE-A070-E45A25060C5A Certificate Of Completion Envelope Id: E2667E34620D46CEA070E45A25060C5A Status: Completed Subject: Please DocuSign: C16163563 Mott MacDonald Rail Program Management.pdf Source Envelope: Document Pages: 42 Signatures: 2 Envelope Originator: Certificate Pages: 5 Initials: 0 Christopher Anastole AutoNav: Enabled EnvelopeId Stamping: Enabled Time Zone: (UTC-08:00) Pacific Time (US & Canada) 250 Hamilton Ave Palo Alto , CA 94301 chris.anastole@cityofpaloalto.org IP Address: 199.33.32.254 Record Tracking Status: Original 9/19/2016 3:55:40 PM Holder: Christopher Anastole chris.anastole@cityofpaloalto.org Location: DocuSign Signer Events Signature Timestamp Chris Metzger chris.metzger@mottmac.com Vice President Security Level: Email, Account Authentication (None)Using IP Address: 38.99.75.17 Sent: 9/19/2016 4:01:09 PM Viewed: 9/19/2016 5:05:53 PM Signed: 9/19/2016 5:09:43 PM Electronic Record and Signature Disclosure: Not Offered via DocuSign ID: Craig Velasquez craig.velasquez@mottmac.com CV Security Level: Email, Account Authentication (None)Using IP Address: 10.102.101.11 Sent: 9/19/2016 5:09:44 PM Viewed: 9/19/2016 5:36:48 PM Signed: 9/19/2016 5:37:45 PM Electronic Record and Signature Disclosure: Not Offered via DocuSign ID: In Person Signer Events Signature Timestamp Editor Delivery Events Status Timestamp Agent Delivery Events Status Timestamp Intermediary Delivery Events Status Timestamp Certified Delivery Events Status Timestamp Carbon Copy Events Status Timestamp Robin Ellner robin.ellner@cityofpaloalto.org Admin Associate III City of Palo Alto Security Level: Email, Account Authentication (None) Sent: 9/19/2016 5:37:46 PM Electronic Record and Signature Disclosure: Accepted: 2/11/2015 9:51:24 AM ID: efb775a7-f39e-4c9f-817a-5ec939666ecf Carbon Copy Events Status Timestamp Jeffery Heckathorn Jeffery.Heckathorn@CityofPaloAlto.org Administrative Associate III City of Palo Alto Security Level: Email, Account Authentication (None) Sent: 9/19/2016 5:37:47 PM Electronic Record and Signature Disclosure: Not Offered via DocuSign ID: Sherry Nikzat Sherry.Nikzat@CityofPaloAlto.org Sr. Management Analyst City of Palo Alto Security Level: Email, Account Authentication (None) Sent: 9/19/2016 5:37:47 PM Electronic Record and Signature Disclosure: Not Offered via DocuSign ID: Notary Events Timestamp Envelope Summary Events Status Timestamps Envelope Sent Hashed/Encrypted 9/19/2016 5:37:47 PM Certified Delivered Security Checked 9/19/2016 5:37:47 PM Signing Complete Security Checked 9/19/2016 5:37:47 PM Completed Security Checked 9/19/2016 5:37:47 PM Electronic Record and Signature Disclosure CONSUMER DISCLOSURE From time to time, City of Palo Alto (we, us or Company) may be required by law to provide to you certain written notices or disclosures. 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By checking the 'I Agree' box, I confirm that: • I can access and read this Electronic CONSENT TO ELECTRONIC RECEIPT OF ELECTRONIC CONSUMER DISCLOSURES document; and • I can print on paper the disclosure or save or send the disclosure to a place where I can print it, for future reference and access; and • Until or unless I notify City of Palo Alto as described above, I consent to receive from exclusively through electronic means all notices, disclosures, authorizations, acknowledgements, and other documents that are required to be provided or made available to me by City of Palo Alto during the course of my relationship with you. CITY OF PALO ALTO CITY COUNCIL TRANSCRIPT Page 1 of 70 Special Meeting October 13, 2015 The City Council of the City of Palo Alto met on this date in the Council Chambers at 6:05 P.M. Present: Berman, Burt arrived at 6:20 P.M., DuBois, Filseth, Holman, Scharff, Schmid, Wolbach arrived at 6:11 P.M. Absent: Kniss Mayor Holman: To mention something ahead of time, we will be adjourning this evening's meeting in honor of Former Mayor Dick Rosenbaum. We received word over the weekend that he passed away on Sunday. We'll hold this meeting in his honor. Oral Communications Mayor Holman: I have one card here for Oral Communications. This is the time when anyone who would like to speak to an item that's not on the agenda may do so. Sea Reddy, you'll have three minutes. Sea Reddy: Thank you, Mayor. I'd like to thank you, Mayor Holman, for coming to College Terrace event we had on Sunday. It was very nice of you to recognize our little community we love. I appreciate you being there and sharing your views and future with Palo Alto. Thank you. The second item is something of interest to all of us, the High Speed Rail. I'm looking a little beyond our Palo Alto, but more towards our geographical area of 24th District for good reasons. Mayor Holman: Do note that is a part of the agendized items, so is this separate from ... Mr. Reddy: No. I just want to say one thing, that I'd like to oppose all of the high rail thing. We don't want to make Palo Alto anything close to having high rail. We need to stay where we are, how we do whatever we do here. I just wanted to say that. The third thing is I'd like Palo Alto to recognize a significant change in the industry. Dell is buying EMC which owns 80 percent of VMware. VMware is a very fine company in this town. I think we need to recognize them for their innovation and intellectual and a TRANSCRIPT Page 2 of 70 City Council Meeting Transcript: 10/13/15 lot of jobs, a lot of revenues for us in the City of Palo Alto. That's all I wanted to say. Thank you. Mayor Holman: Thank you. I see no other—do we have one more card for Oral Communications? I don't have your card to state your name, sir. Roland LeBrun: My name is Roland LeBrun. I'm from San Jose. I just got here on Caltrain. The reason I'm addressing you is not on the agenda. There was a meeting at noon that basically introduced basically the future of rail. The gentleman who was speaking there, I've never met him before. He comes from, I think, Czechoslovakia. He's actually is the chief executive. He runs a company called LEO Express. You can go and Google it right now; you'll find it. His name is Leos (inaudible). I haven't quite caught his last name yet. The bottom line is that gentleman is actually right now running his own trains in four different countries in the Eastern Block. He's actually just started in Ukraine, believe it or not. He's profitable, and he's got investors right behind him. He's here right now. He's on his way, I think it's tomorrow, on a meeting with Jim Hartnett. He's going to ask Jim and say, "Jim, would it be okay if I came and ran my trains here in the Peninsula, and I'm willing to pay you $3 million a year?" Anyway, I thought I'd share that to you tonight. If you hear about this, which no doubt you will hear, you may actually like to go and have a word with Jim. Tell Jim, "Why don't you look at it? This may actually be a jolly good idea." By the way, his trains run on time. Thank you. Mayor Holman: Thank you. We have no other cards for Oral Communications. Stephanie Munoz also would like to speak under Oral Communications. Stephanie Munoz: Thank you. I know that your big thing this evening is going to be how to cope with High Speed Rail. I don't want to interfere with that, but I had a few last thoughts, last ditch efforts, of how it might be possible not to have it inflicted on us. One of the thoughts was this. San Francisco, as you may know, is at the head of the Peninsula. I was born in San Francisco, and I lived there through high school, then I went to college in Seattle. In order to get to Seattle from San Francisco, you have to get on the ferry and go across to Oakland, because there is water in between and you cannot run a railroad track. It seems to me that we might have some allies in the matter of running that railroad around the east of the Bay up through Oakland. We might have some allies with the Senators and Congressmen from the State of Washington and the State of Oregon. Patty Murray is a very influential Senator. These people are not without resources. It just seems to be more useful to have that train go all the way up the Pacific Coast and just end at San Francisco, especially since we TRANSCRIPT Page 3 of 70 City Council Meeting Transcript: 10/13/15 already have a train that goes from San Jose to San Francisco. It's a train that could use the business. If in fact a lot of people are going to take this train, which I kind of doubt, but if in fact a lot do, then we, we the people of Santa Clara and San Mateo County, really could use those passengers to bolster our prices. The other thing is this. I don't know why they can get away with having a project that is obviously more than the voters voted for, but they can. There must be a lot of power there. I wonder if all the rich cities of the Peninsula, and we are rich, could get together and say, "You unions are looking avariciously at $1 billion worth of work to do." Suppose we came up with all of this together, how about a half million dollars at least that we could put together on our resources and Federal and State money. Maybe not State since the Governor seems to be in favor of this train. We could put together enough money to do lots and lots of housing, of low- income housing, that would provide those jobs that seem to be the engine—I don't know. it seems to me that must be the engine that is making this thing go. Thank you. Mayor Holman: Thank you. That concludes Oral Communications. Action Items 1. Discussion and Direction to Staff on: 1) The California High Speed Rail Authority's Plans to Proceed With Environmental Clearance for Their San Francisco to San Jose Segment; 2) Next Steps Regarding Rail Grade Separations in Palo Alto and Authorization for Staff to Pursue Outside Funding for Both Grade Separations and At-Grade Crossing Improvements; and 3) The City’s Interests and Strategies Regarding the Proposed Santa Clara County Transportation Sales Tax Measure, Including a Potential City of Palo Alto Transportation Funding Measure or Other Funding Strategy. Mayor Holman: We move now to our one and only Action Item, which is comprised of three different parts. Council Member Filseth, you have a statement to make. Council Member Filseth: Yes, thank you very much. It happens that I live within 500 feet of a grade crossing in Palo Alto. I have been advised that since it's not clear at this time whether there is an impact on the value of my house if grade separation proceeds, that I should recuse myself from the first two items. I plan to do that. I'll come back for the third. In the meantime, we're going to consult the FPPC for further clarification on this point. Thank you. Somebody, if you'd give me a call when we finish the second item. Council Member Filseth left the meeting at 6:13 P.M. TRANSCRIPT Page 4 of 70 City Council Meeting Transcript: 10/13/15 Mayor Holman: Thank you. We will not forget you. Staff, you have a presentation? Jim, do you have some comments? James Keene, City Manager: Yes. Thank you, Madam Mayor, Council Members. We're here in a Special Meeting tonight for two reasons, two drivers at least. One, of course, last month you heard from the Silicon Valley Leadership Group which was sort of in the lead role along with VTA on exploring what could comprise the 2016 sales tax ballot measure to be used for transportation. Pretty much concurrent with that in September, as the Staff Report indicates, we were all surprised to sort of see High Speed Rail sort of burst back upon the scene. Working with the Mayor and Council's interests overall thought there was some urgency and timeliness to us putting together a Special Session on this so that the Council could not only discuss these issues, but begin to express yourself in the various forums. That's why we're here. I think it'll be clear when the Staff makes its presentation that through both of those matters, both the High Speed Rail issue, of course Caltrain itself, and then your clear interest on any ballot measure and transportation improvements needing to go towards Caltrain that the question of grade separation sort of sits at the center of all of those. It was a good opportunity to do this. I'm going to turn it over to Staff. I think you obviously know Richard and Ed Shikada. I did want to just formally again introduce Joshua Mello who is the City's new Chief Transportation Official. I know he's been out and about as it relates to the Arastradero Project. This is the first specific item and the sole work session on this, and Josh will have a key part in this, so we want to welcome him formally and happily to the City family. Thank you. I'll turn it over to Ed. Ed Shikada, Assistant City Manager: Very good. Thank you, Jim. Once again, Ed Shikada, Assistant City Manager. I and Josh Mello will do the primary upfront briefing for the Council, hopefully not giving any signals that two of your newest Staff members are providing the briefing on an issue that has been around for a few years and clearly has both complexities to it as well as some extensive issues. We will provide that upfront briefing while, obviously, being simply representative of a deeper team as well as, quite frankly, also representing between the two of us decades of experience relating to transportation projects and regional issues. That said, I will provide a brief intro and perhaps set a foundation for the Council's discussion this evening. On our first slide, simply to provide an overview. As was noted, it's one agenda item. We've split it into three specific topics. We'll cover all of them in this presentation, then give the Council an opportunity to discuss perhaps the first two before moving on to the third. The first being Palo Alto's response to the renewed activity on California High Speed Rail Authority's plans to proceed with the segment between San Francisco and San Jose. Second, to seek Council's feedback on next steps TRANSCRIPT Page 5 of 70 City Council Meeting Transcript: 10/13/15 related specifically to the grade separations potential in Palo Alto, both in terms of the resources necessary to proceed to the next steps in the design process as well as the necessity of developing funding strategies for the grade separations as Public Works projects. Third, an overall strategy as it relates to the VTA sales tax proposal and any other proposals that the Council might want to further consider, including local funding measures. Next slide. In terms of the High Speed Rail Authority's San Francisco to San Jose project segment, as the City Manager noted, this is the immediate impetus and rationale for wanting to set up a Council Special Session on this topic. Recently, learned that the High Speed Rail Authority has announced their desire to begin the environmental clearance process with a schedule that would call for the release of a Draft Environmental Impact Report in the winter of 2016 with the potential for finalization of the EIR to be certified in the summer of 2017. This relatively short timeframe does require us to begin our activity and preparation for that to begin immediately, with the blended system, as it's been referred to, of High Speed Rail and Caltrain sharing tracks as the proposed project concept. I would note that in the process of going through the environmental review, there have been a number of unresolved issues that we will need to keep an eye on, including the potential location of a mid-Peninsula station as well as a passing track somewhere along the segment that will once again require ongoing both monitoring as well as potential advocacy as the particulars of the project become clear. Next slide. In terms of the blended system, this had been approved by Caltrain and the High Speed Rail Authority in 2013. There is funding being provided by the High Speed Rail Authority for the Caltrain electrification which is a necessary precursor to the blended operation, and noting that the total cost of the electrification project being $1.7 billion. This is a consequence after a number of different alternatives for the High Speed Rail project were considered. In terms of the implementation of this blended system, the sequence that has been discussed previously and that we are anticipating is that Caltrain, as part of its electrification project, is undergoing a separate environmental review, separate from the High Speed Rail project and separate construction, both processes in this timeframe. At this point, Caltrain has certified its EIR and the again High Speed Rail project is ongoing with the expectation that Caltrain is proceeding with its design/build contract procurement. Next slide. Here in Palo Alto, the prior work in evaluating the potential impacts of the High Speed Rail project in Palo Alto included work in preliminary design for grade separations with last year Hatch Mott MacDonald providing conceptual grade separation alternatives. We do have some graphics that are available should the Council want to get into the particulars of grade separations. There are three particular currently at-grade crossings; Churchill, Meadow and Charleston. Three slides have some tables to them. They're again simply intended to provide some summary information. We can provide more detail TRANSCRIPT Page 6 of 70 City Council Meeting Transcript: 10/13/15 if Council would like to get into it in your discussion. For now, let me just point out a few of the key points on here. On this table, showing the implications of a trench, where the rail tracks would be trenched below grade. A key consideration shown on the first line of trench grade is the maximum slope at which the rail would be accommodated, ultimately a design criteria for the rail system itself. That maximum ranging from a 1 percent maximum grade to a 2 percent. You can see the cost implication in particular of needing to hold to a maximum 1 percent grade being an over $1 billion estimated cost for the trench through Palo Alto at the three crossings. If the alternative, a 2 percent maximum grade, were to be allowed as a part of the design of the trench grade separation, that price would be potentially reduced significantly to about 488 million. Next slide. Another alternative that's been looked at is to lower or depress Alma Street. This table shows a scenario in which the street itself is lowered but the turns are not accommodated, so the right-of-way property acquisition would be reduced by not needing to acquire areas for left and right turns. This would result in estimated costs, as you see, on the three crossings from Churchill to Charleston ranging from $90 to over $100 million each for a total just under $300 million. Also notable that property acquisitions, both full and partial, would total nearly 60 properties. Next slide. This Table 3 indicates a scenario in which Alma is lowered, depressed, but where turn movements are accommodated. Associated additional property acquisitions are necessary. In that case, the total cost for the three crossings approaching $500 million with significantly more properties impacted, totaling about 75 properties in full and partial property acquisition. That covers the specifics of the grade separation concepts. Let me turn it over to Josh Mello to talk a bit about some of the funding options. Joshua Mello, Chief Transportation Official: Thank you. Joshua Mello, Chief Transportation Official. There are some preexisting programs both at the State level and the Federal level that will help fund a portion of both the design work and the construction of grade separations or the improvement of existing at-grade crossings. The first of which we wanted to call your attention to is Section 190. Section 190 is a funding allocation that provides money to local agencies to separate existing at-grade crossings. Every two years there's a call for nominations from the California Public Utilities Commission. That call actually just happened in September, so there's an open call on the street right now for nominations to this program. It does require a 10 percent local match, and this funding is strictly for construction, not for design work. Just a point of interest is San Mateo County actually has dedicated 15 percent of its county sales tax revenue to planning and designing grade separations in order to access this pot of funding. A project is eligible for an allocation up to 15 million over a three-year period; that's 5 million a year per grade separation. If you combine grade separations, you TRANSCRIPT Page 7 of 70 City Council Meeting Transcript: 10/13/15 can actually access up to 20 million over a four-year period. If we elected to submit a nomination form this year, we would need to resubmit every two years until we were ready to construct a project—until we reached the top of the list and we were ready to construct a project. The next pot of funding that we wanted to give you an overview of this evening is Section 130. This is a program that is focused on the reduction of hazards at existing at-grade crossings. It's also administered by the CPUC, but Caltrans plays a role in this as well; they help to scope the project, distribute the funds, and actually administer the projects during construction. In September, our Churchill Avenue crossing was identified as a potential candidate for Section 130 funds. Subsequently we actually met with Caltrans Staff onsite as well as CPUC Staff and looked at some of the issues that are occurring out there. We submitted some video that we had captured of the dismissal at the high school in the afternoon. Some of the major concerns that were identified by the CPUC, much higher than normal bicycle and pedestrian traffic, some of the highest numbers along the entire Caltrain corridor for bicycle and pedestrian traffic. There's regular queuing that's occurring on the tracks themselves of motorists that are traveling eastbound being stopped at the traffic signal at Alma Street with nowhere to queue, and they end up between the gates when the gates come down as a train passes. We're currently developing a scope of work in cooperation with Caltrain that needs to be submitted to CPUC. We've put together some draft recommendations that would deal with both the large number of bicyclists and pedestrians as well as the motorists queuing on the tracks themselves. Some of the things we're looking at are a pre-signal that would actually stop motor vehicles before they get to the track bed, and it would be coordinated with the signal at Alma. We're looking at widening the bicycle and pedestrian crossing on the north side of Churchill that would provide additional queuing space. A lot of the students end up queuing in the track area while they wait for the signal at Alma, so we're hoping to create more of a queuing area for them. Some other improvements related to signal timing and signal phasing at the Alma Street signal. We've scheduled a neighborhood meeting October 22nd to get some community involvement and some neighborhood feedback on some of the preliminary concepts. This project ties in very closely with the Churchill Avenue Phase I project for which we have an adopted concept plan, and we're continuing to advance final design. We'd like to tie the two of them together if possible and create a seamless bicycle and pedestrian, motor vehicle connection along the Churchill Avenue corridor. Mr. Shikada: Then too perhaps focus on the local angle, both countywide as well as locally here in Palo Alto. As City Manager pointed out last month, the Council discussed the concept of the 1/2-cent countywide sales tax that's being discussed by the Silicon Valley Leadership Group and VTA and others and noted at that point that there's an estimate of $6 billion countywide that TRANSCRIPT Page 8 of 70 City Council Meeting Transcript: 10/13/15 could be generated over a 30-year life of a 1/2-cent sales tax. There have been continued discussions of some more specificity, although certainly at this point really perhaps at best giving an indication of what VTA Staff has been thinking in order to start putting together recommendations or proposals for broader feedback. As noted here on this slide, a current discussion of total Caltrain funding in the range of 750 million to 1 billion as a revenue allocation from a countywide sales tax. Once again, I would note that that's really not reflecting any policy direction other than again VTA Staff looking to get some feedback on this among a number of other potential allocations that could be generated by the sales tax. Next slide. Actually perhaps before moving off of VTA, I would note that I believe at places you received a copy of the letter that was transmitted by the ten cities to VTA from the North County and West Valley in order to reflect a desire and expression of the importance of continued comprehensive planning to be part of the funding program as it goes forward. Finally, the last piece of data we wanted to provide to the Council for your consideration is some math behind the potential for local funding. Here noted simply for the purpose of calculation that in general terms that for every $1 million of annual revenue, whatever the source of an annual ongoing revenue was identified for a 30-year period, that there's approximately 14 million that could be generated in net bond proceeds for the purpose of upfront funding of a capital project. As a result, again simply to reflect some math and to give the Council a sense of order of magnitude, Staff took a look at a 30- year 1/2-cent locally within the City would generate between $12 and $13 million annually. Again, extrapolating that out, generate roughly $179 million in bond revenue that could be available for capital projects. Final slide, simply back where we started. To recap items and topics in particular that Staff thought might be helpful to identify areas for Council direction. First, on the City's response and participation on the High Speed Rail environmental process. Second, some of the key next steps that we see as important to position the City in being able to seek funding for grade separation as well as have continued evaluation of options and better sense of the implications of grade separation projects. Finally, the options related to the VTA sales tax, both a legislative advocacy position as well as options that could be considered locally within the City. That concludes our Staff briefing. Turn it back to the City Manager. Mr. Keene: Thank you, Ed and Josh and Richard, for that. If I could just make a couple of follow up points. First of all, we've been scampering to respond to both the re-emergence of High Speed Rail and then the implications or the need to be thinking about cobbling together funding. As you can tell by the Staff Report, we actually put a lot of real estate into the Staff Report related to the Section 190 process and the Section 130 process. Our own assessment at this point, after having really spoken to Caltrain and TRANSCRIPT Page 9 of 70 City Council Meeting Transcript: 10/13/15 also our understanding really is how the process works. It's a two-year sort of cycle process to get a submission on the Section 190 funds. One would take a tremendous amount of work truncated in a short period of time with the fact that to be really eligible to receive it anyway you've got to have a project way further down the road than we are right now. We'd be just resubmitting. Our recommendation to the Council would be to acknowledge that this is a small but necessary funding source that is available to us, but that we would not pursue a nomination right now, but we would not want that in any way to be interpreted as any sort of signal that we're as a community not committed to grade separating our interchanges and pursuing funding in any way. Secondly though, we would say that it's worthwhile to pursue the Section 130 funds, and that's why with the community meetings and all of those things are developed, because they really deal with at-grade crossings and safety improvements that would make things better for our City. Lastly, I just would point out that I think we made a mistake in our report by succumbing a little bit to maybe the initial competition in the VTA measure of all of the different demands that are potentially out there. By buying into it all that, there is a limitation on how much of the sales tax revenue we might be able to achieve as a City. I apologize to the Council for any sense that we are limiting ourselves at this stage. There are too moving factors in the mix as to what the emphasis will be on a VTA tax measure. We don't want to short-cut that. Lastly, Molly, I do believe that we did list the title for this discussion under Number 3 broadly enough that if there are other funding strategies or measures that the Council wants to discuss rather than just either the VTA measure or a local sales tax measure, that this is agendized in such a way to either have those discussions and/or direct us to look at some other options. That's all I have to report. Mayor Holman: Thank you. I see there are some members of the public who want to speak to this item. I have no cards yet. Molly Stump, City Attorney: Madam Mayor, while you're preparing for public comment, may I make a comment? Mayor Holman: Please. Ms. Stump: I often find myself in the position when there are recused Council Members of recalling the Council to their mind that there are members who are not with us because of recusals. This item is agendized with three parts called out. It's agendized as one item to allow the Council a full discretion to cross the issues and address broadly the interlocking aspects of the item. We do believe that to the extent that the Council can address the specific county and other local funding measures as a somewhat TRANSCRIPT Page 10 of 70 City Council Meeting Transcript: 10/13/15 separate item at the end, that would allow Council Member Filseth, who's otherwise recused, to rejoin the Council. I just wished to make that comment. Thank you. Mayor Holman: Took the words right out of my mouth. Council Member Wolbach: (inaudible) Mayor Holman: Council Member Wolbach has a question. Council Member Wolbach: Sorry, just a quick follow-up question about that. Because a significant portion of the discussion around the VTA measure may incorporate discussion about grade separations, is there a way that we can handle that that would still allow Council Member Filseth to return to the conversation? Ms. Stump: Thank you, Council Member Wolbach. The initial conversation around the county measure that the Council had a few weeks ago was at a very high level in terms of looking at a potential county measure and funding for Caltrain generally, which would include a variety of capacity improvements and other safety measures, quality of life measures such as grade separation. At that level of generality, Council Member Filseth could join the conversation. If the Council is at a point where it wishes to be more specific as to particular crossings and discuss trading off different priorities, then the matter looks different and Council Member Filseth will probably not rejoin at this stage. Mayor Holman: I have four cards at this moment with another one or two coming. Martin Sommer to be followed by Stephen Rosenblum. You'll have three minutes each please. Martin Sommer: My name is Martin Sommer. From what I understand, we're still on Item 1, and I had put down Item 2. Should say Item 2 at the top. Mayor Holman: You can speak to any of the—it's one action item, and so you can speak to any of the three parts that you wish. Mr. Sommer: Thank you. Given that. My name is Martin Sommer. I'm a Palo Alto resident. For any of you who do not know or who were not here at the time, I'm actually the originator of the "blended" process. In 2009 Cubberley Center first community meeting, a small group session, I proposed the blended system. I threw it out there. It took root. Here we are six years later. The reason I say that is that I have two other ideas to throw out there. I wanted to show the power of a basic idea and how far it TRANSCRIPT Page 11 of 70 City Council Meeting Transcript: 10/13/15 could really go. Two more ideas. By no means am I proposing this, but if Palo Alto goes in the path of undergrounding the railroad, there's two things that I would propose. Both of them have to do with economy of scale. The first one is that you share one project and all of its associated costs with the three cities, Palo Alto, Menlo Park and Atherton. In essence, undergrounding the railroad from the borderline of Redwood City all the way to the borderline of Mountain View. It's purely economy of scale. The second one is—this is more a negotiation point—to price out, and make sure you hear me right, a two-track underground option, really truly two-track— the ones that High Speed Rail hates—with the option of splitting the costs of a four-track option with High Speed Rail, assuming they decide to contribute money. Cost it out as two, give them the option to split the cost. If they do, make it a four. All of a sudden you're sharing the cost of the endeavor. Again, both of these are economy of scale. I'm just throwing out these ideas for in the future. I encourage you to think about it. Thanks. Bye. Stephen Rosenblum: Hello. My name's Stephen Rosenblum. I'm a Palo Alto resident as well. I've been here many times on issues of Caltrain and High Speed Rail in the past. I'm very happy to see High Speed Rail is coming. I'd also like to commend Council and Staff for their strong support of grade separation. I think it's a critical issue for the future of Palo Alto. Whatever gets built will be with us for 100 years into the future. I don't see Palo Alto with its high real estate values having trains on the surface with more noise and rattling noise, trains running at 110 miles an hour, starting at two trains per hour in each direction. If it's successful, it could be many more, and the gates will be down all the time. We know already from the Caltrain studies for electrification that just adding one more train per hour in the rush hour essentially puts the gates down 90 percent of the time at some of our crossings. When High Speed Rail comes, people won't be able to cross the tracks at all. I think there's no sense in an at-grade High Speed Rail. I think Palo Alto should insist that there be grade separation. I think trenching to me certainly is the best option. The question of whether it's an open trench or a covered trench should be thought about. With a covered trench, you can recover the real estate over the trench. Considering that Palo Alto real estate is $20 million an acre, if that money could be recaptured through some agency and used for commercial or residential development, bicycle paths, something like that, I think that would be really a great improvement to the City's environment rather than more noise and more detriment. Thank you. Neil Shea: I first moved to the City 30 years ago. I work in high tech; I live Downtown here. I want to commend the Council and the Staff for all of your work on grade separations. I think it's very timely. I think we're forming a consensus that we need to have grade separations, both because of the TRANSCRIPT Page 12 of 70 City Council Meeting Transcript: 10/13/15 increasing volume of how we use this vital railroad line and because we want to be able to get across town, both pedestrians and cars. I do think it's important to be cost conscious here. I think some of the ideas suggested are quickly going to go into the billions of dollars. I don't believe that, as much as we need a fair share of any new county tax revenue and as much as it probably doesn't make sense to take expensive BART to Santa Clara, we need to be very cautious and very reasonable. I'm concerned that last year's study explicitly gave instructions not to look at a hybrid crossing option. Where I am, right by the Palo Alto Medical pedestrian crossing, the train runs about 3 feet above grade. Just over the creek in Menlo Park, the train runs about 6 feet above grade. When you start to make scenarios like that, you can very easily get pedestrians under the train at many places. It's very cost effective, and streets can just be depressed a small amount and reducing property takes and reducing costs. I think if we talk to residents of Belmont, San Carlos, people don't really have complaints there. I understand there's a lot of nervousness in town, and there's this strong emotional feeling that if we don't build a billion dollar trench, something terrible will happen. I encourage us to study all alternatives, and particularly to study cost effectively. The idea that we are going to remove the University Avenue undercrossing and the Embarcadero Road undercrossing and replace them with a trench, I think, is not practical. The study last year talks about a 2 percent grade which is not allowed by current conditions, so that $1/2 billion estimate assumes that we're going to get a waiver for that. By the way, I do support High Speed Rail; I think we need more transportation options. I think as our economy grows people want to be taking the trains. I would even encourage us to reconsider someday at the right time having a station in town. I thank you for your work on this. Adina Levin: Good evening, Council Members. Adina Levin with Friends of Caltrain. As many people have said, thank you very much for the attention to this issue and really working on grade separations. I just came up from San Jose and, fortunately, the train that I was on was the first train on time out of Diridon. There were a lot of delays. The need for grade separations is something that affects—it's a safety and security issue and also an issue to having reliable service and over time being able to get more commute service in our corridor over time. I'd like to make three comments starting with the most specific and stepping back to more general. The first question in terms of getting funding from the VTA ballot measure. I do think that there is some concern about making sure that Palo Alto gets a fair share and would like to make a recommendation about how to do that. That would be looking at the process that San Mateo County has been using for 20 years, where they funded seven grade separations over those last 20 years. They have a two-phase process where they have a call where all the different cities will apply and get funding for design. A few years later, when they TRANSCRIPT Page 13 of 70 City Council Meeting Transcript: 10/13/15 have their project lined up, then apply for construction funding. When you have cities like Palo Alto or Mountain View that have more complex projects, that will get everybody at the starting point and at the same place and reduce the risk that Palo Alto will be in the back of the line because of complexity. Number 2, as another member of the public has mentioned, thank you very much for looking at funding sources, bringing in local funding and additional funding to afford a more expensive option. Another mechanism or set of mechanisms to look at might be value capture funding, using the incremental value of additional real estate to help pay for infrastructure, not in the bad old PC zoning way, where we say how much do we want and then what are we willing to put up with, but in the lines of the City's planning process. What does the City want from a community goal, land use goal and then how does that relate to the corridor goal and project goal. Lastly, thank you for supporting a Context Sensitive Solution process. I would hope that Palo Alto can work with other cities and community stakeholder groups. High Speed Rail in doing this planning is saying, "We are willing to be convened by others coming to us." I think that we should take them up on their offer to look at both regional issues like the schedule plan and the business plan for how the blended system will work. Huge questions. How to get the more rail capacity on the line, regional question, not something that an individual city can figure out. Lastly, locally sensitive issues like grade separations and station design where warranted. Thank you very much. Elizabeth Alexis: Good evening, Council. I think this may be the first time I've ever gotten to speak to Council before 7:00 p.m. It is a delight to be here at such an early hour. My name is Elizabeth Alexis, and I wear several hats, but tonight I'm here as a member of CARRD, Californians Advocating Responsible Rail Design. We advocated in the last go around to use Context Sensitive Solutions, which was accepted. I will say that the implementation was really not classic CSS. That doesn't mean that we shouldn't do it again, but there's even more of a need to do it right. Via email earlier, we sent a lengthy update of all sorts of things. I really want to talk about CSS tonight. In the Staff memo, it says there might not be time to do CSS. There's always time to do CSS if you want your project to get to the finish line, especially when you're dealing with a situation like we have here where there's a lot of complexities. In order to make all the pieces fit together, you're probably going to have to change some of the assumptions. CSS is a stakeholder process. It is not a free-for-all stakeholder process. It is not the Palo Alto process. It's a very structured way to get people in the room who need to be in the room talking together. We have this happen during a CEQA process, but we don't talk at the same time. You submit comments. There are various experts who are working on the thing. They reply. Then you reply back. This is a way to get everybody in the room. The most TRANSCRIPT Page 14 of 70 City Council Meeting Transcript: 10/13/15 important thing that happens, as far as I'm concerned, in a CSS process is that you must upfront define success. Caltrain must define success. What does that mean to them, and it has to be in a way that you can go back and say is the project successful. High Speed Rail needs to define success. What are they actually trying to achieve, and it can't be two trains. That's not success. It's a transportation goal of some kind. Palo Alto needs to define what success means for Caltrain from our perspective. It can't just be six trains an hour. Right now with the blended system, you would have three trains every 30 minutes basically. That's not actually very good service. This, I think, is the best way to get to the finish line. It would allow us to go back and look at the freight assumption which is what's driving a $500 million price on grade separations. For instance, right now the assumption is you'd have to be 51 feet under the ground as you cross by Charleston at East Meadow, and that's because you're assuming clearance levels for freight and then you're tacking on some issues with the creeks. If we want to get to a project that can succeed for all of the different goals, the community goals and all the different transportation goals, we are going to have to do this in a really creative, thoughtful way. I think we are up for it. Thanks. Roland LeBrun: Thank you again, Mayor and Council. First of all, I really want to congratulate Staff on their report. It really is excellent. I think all the points have been really highlighted and they've come to the right conclusion, let's go and trench. They actually know where to put the trench in. Why is High Speed Rail back in the Peninsula? Well, it's very simple; they've run out of money in the Central Valley. It's that simple. They know that we, San Francisco, potentially San Mateo and Santa Clara, are about to pass multiple transportation measures which potentially could run up to $15- $20 million. Hello, there they are. Now, these people do not have the exclusive right to obtain environmental clearance of this kind of project. It's very simple that there is no question of ever exceeding 125 miles an hour in the Peninsula. CPUC Section 185032 is very clear; anybody else can get clearance below 125. That includes Caltrain; that includes the VTA. You might say we don't really want to have to deal with VTA. What I really encourage you to do is to look at all the grade separations the VTA did on these sites for BART, and you may be very pleasantly surprised with the numbers these things actually cost. On the Section 190, Staff correctly discovered that the formula is basically the number of cars across a track every day multiplied by a number of trains. It's a little bit more complicated than that, but basically that's it. The trick is to actually combine multiple grade separations. When you do that you end up with an absolutely enormous number. San Mateo is very familiar with this. This is exactly how they managed to get the funding to basically replace four bridges that did not need replacing, because they added up the numbers of all the cars that TRANSCRIPT Page 15 of 70 City Council Meeting Transcript: 10/13/15 were crossing those four bridges. It gets better than that. They are going to spend $200 million grade separating (inaudible) that doesn't get separated. Do you know why? Because they're adding 28th and 31st which do not currently exist. That's how they end up with these enormous numbers, on the future projections of all this traffic that will now be able to cross the tracks, which is not currently crossing because they dead end there. Wrapping up here, if you volunteer for four tracks, you will actually get automatic grade separation, because it's mandatory. You cannot have a level crossing with four tracks. The last point I'd like to make is that whatever you are doing here has got to have precedence over electrification. There is no way that you can build this kind of infrastructure on an electrified track. Thank you very much. Peter Chou: Good evening. I'm 30-plus years resident of here. I really believe that this is a very important issue that affects hundreds of years of our future. I do want to repeat two points that was raised by the second public commenter. The first one is, as I said, this is very important for our future, for years and years to come. I do urge you to spend that extra (inaudible) steps, to explore all the possibility of funding for a trench solution. Secondly, I wanted to also support his idea. I don't know how practical that is, but it's worth exploring, that is to consider housing on top of the cover for trenching. Thank you. Mayor Holman: Thank you very much. To try to move us along here and try to focus as City Attorney had suggested earlier, focus on the first and second parts of this item. In other words, High Speed Rail and that trajectory having to do with the EIR and such, and then also grade separations. Then we'll call Council Member Filseth back for the third part of this. I don't see any lights yet. Can we suggest that we'll have five minutes a piece at least on our first round to ask questions and comments about "1" and "2." Council Members? Council Member Wolbach. Council Member Wolbach: I actually hadn't really collected my thoughts completely yet. I just want to make sure I'm clear about a couple of things. Going through some of the Staff recommendations and making sure I'm clear about what it is that you're looking for from us tonight, beyond any additional guidance we might be offering. I want to make sure—on page 12 and 13 of the Staff Report, you're looking for authorization from us to do further study of a 2 percent grade trench. Is that correct? Mr. Shikada: Perhaps preceding getting into the specifics there would be to give us a sense of the Council interest in proceeding with a City-sponsored engagement of the design team that would be needed in order to do the kind of work we're talking about. On that basis, if the Council agrees that TRANSCRIPT Page 16 of 70 City Council Meeting Transcript: 10/13/15 that would be an appropriate next step, we would do an RFP, come back with a recommendation to engage a consultant team for the purpose of evaluating options, whether it be the 2 percent specifically, other alternatives analysis, in order to advance the grade separation options. Council Member Wolbach: On page 14 of the Staff Report, it looks like you're kind of similarly—if we are interested in going down this line, no pun intended, you're looking for authorization for additional circulation analysis and design studies. Is that correct? Mr. Shikada: Part and parcel again of looking at alternatives, where is the most cost-effective options to proceed with more detailed design. Council Member Wolbach: Part of that is the possibility of perhaps not doing grade separation at Churchill and refocusing on maybe combining that crossing with Embarcadero through redesign of Embarcadero. Obviously you're not coming to us with a plan to do that at this point, so I don't want to suggest that you were. That's an interesting concept. I've heard people in the past discuss the question around whether we want to fully grade separate Churchill or not, whether we close it, make it bike only. There are a lot of options there. Given that it's not too far from Embarcadero, if there was a way to combine that would be effective for improving mobility, I guess I'd be open to that. I want to make sure that I was clear that's kind of part of the discussion or are you looking for really nuanced direction from us on that item in the middle of page 14? Mr. Shikada: Once again, I don't want to not answer the question, but perhaps to just provide the broader context. It's my understanding that in the prior work there was not a great deal of analysis of circulation alternatives as in questioning how best to meet the City's local axis needs overall, perhaps in the context more of a general plan-type analysis than was done to be specifically looking at the grade separation options. If we were to take a step back to look at how and what the City's axis priorities, needs in getting around the City and not limit it to motor vehicles but also for pedestrians, cyclists, other transportation options, that there could be a broader evaluation of options that would be part of the scope. Council Member Wolbach: I guess regarding 190, I understand that it's not your recommendation as Staff that we pursue that aggressively right now, because of the challenges that the City Manager identified earlier. I guess actually I wasn't entirely clear about how much funding 190 could potentially provide. At one point, it says 15 million and then it said up to 80 percent could be provided. I'm sorry if I just missed the—were those two different options within the 190 program? TRANSCRIPT Page 17 of 70 City Council Meeting Transcript: 10/13/15 Mr. Mello: Council Member, it's 5 million per year per grade crossing up to $15 million for one grade crossing. If you do two grade crossings as one project, you can actually access up to 20 million. The 80 percent is—there's 80 percent Section 190 and then the 20 percent needs to be local match, and 10 percent of that local match needs to come from the railroad that owns the corridor. In the case of San Mateo County, the C/CAG actually routes the sales tax revenue—the TA routes the sales tax revenue through Caltrain, and that comprises the 10 percent local match that's provided by Caltrain. Council Member Wolbach: Do you mind if I ask just a quick follow-up? Thank you. I guess I'm still not clear, because $15 million I don't think usually equals 80 percent. Again, maybe I'm just ... Mr. Mello: There was a recently constructed project in San Bruno that accessed Section 190 funding. They received, I believe, 10 million in Section 190. The total project cost was 160 million, so they cobbled together funding from MTC, the regional sales tax and several other sources. Section 190 by no means would cover a large majority of a project of this scale. Council Member Wolbach: The allocation is not coming from the Section— that 80 percent allocation is not coming from Section 190. That explains my confusion. Mr. Mello: It's 80 percent up to $5 million per year. Council Member Wolbach: Thank you for clarifying that for me. Yeah, I think that that's it for my questions for right now. Thank you very much. By the way, welcome to the gauntlet. Mayor Holman: Vice Mayor Schmid and then other Council Members. Vice Mayor Schmid: Just a couple of comments and thoughts. The three elements we're looking at tonight are so intertwined it's hard to separate them, one from another. Let me just make some simple points and talk about the context. We talked about Context Sensitive Solutions, and one of the players there has to be Palo Alto. Presumably what we say is helping define what the Palo Alto context is as we approach this decision. The Census Bureau has just come out with a new study of ratio of commuters to residents in the job market. Palo Alto comes in fourth in the country of all cities over 50,000 with the highest ratio. Right above Palo Alto is Manhattan. Right below Palo Alto is Washington, DC. There are no other California cities on the list of top 20, not San Francisco, not Santa Clara. Note that Palo Alto has some unique geography. You go to the east, there's TRANSCRIPT Page 18 of 70 City Council Meeting Transcript: 10/13/15 a Bay. We don't have a bridge leading from Palo Alto to the East Bay. You go to the west, there's mountains and foothills that are protected as open land. That means our commuting corridors are north and south in a fairly narrow band. We know they are congested including now the rail corridor. Last week, I think we spent three hours looking at an east-west route, Charleston-Arastradero. We scratched our head and say, "This is crowded too, people trying to cross." There are so few corridors that can penetrate the rail lines coming through town. This is one of them. It's not just to get people to their jobs, but it's to get kids to the schools, people to the libraries, to community facilities, to shopping. We had an estimate that in the near term we're likely to see a 15 to 55 percent increase in east-west traffic. That means we're extremely sensitive as a community to what takes place on the north-south, that every increase in that north-south traffic has an impact on our City life, quality of life in our City. The only suggestion given in here, alternative, to deal with grade separation is a sales tax. Sales tax has two critical limitations. It's a regressive tax. Lower income, middle income people spend more than others—just the note on it. Looking at the numbers, there's only what? Between 10 and maybe 40 percent at the maximum we could get to pay for grade separation. I look at the context of Palo Alto and what we can do, what we should be doing to deal with this. I see only three principles that are important. Number one, relieve in-town traffic congestion by grade separating the rail lines. Number two, slow the rate of growth of new commuter jobs over new residential units. Three, come back with taxes or fees on business to pay for grade separation, not asking residents who are the ones who suffer from it to actually pay rather than those who benefit from it to pay. Mayor Holman: Thank you, and timed very well even. Council Member Scharff. Council Member Scharff: I guess I had a couple of things. One, are we going to look at our Guiding Principles? Is that part of the role tonight? Look at our statement where we—our official statement is to oppose High Speed Rail, is that one of the things we're supposed to be talking about? Mr. Keene: Council Member Scharff, our sense was that that needed to be in here as background, also because we have new members of Council. I don't think we had any specific changes or anything we were thinking about. It's really up to the Council as to whether or not you think they either need discussion or are there any principles that might need changing. Council Member Scharff: I guess I would sort of throw it back at Staff. I was intimately involved in it obviously at the time of putting these together. When you read them now, they start to feel a little dated frankly. Time has TRANSCRIPT Page 19 of 70 City Council Meeting Transcript: 10/13/15 moved on. I mean, we might want to talk about having principles that High Speed Rail shouldn't restrict Caltrain capacity. They're about to come out, I thought, with a new business plan and funding plan. We talk about the revised HSR business and funding plans. I'm not sure we have to do that yet, but I think we should start thinking about if we're going to have a statement, making sure that it's relevant. There may come a time when High Speed Rail is so far along, if it gets along, that our position shouldn't be that it should be terminated. After they spend so much money on it, it may not make sense to be terminating it. I think we may want to start thinking about where that goes and at least look at that situation as we progress through this. I do think on an overarching thought what we really need to do is to come up with a plan. I'm all for authorizing Staff to spend what it needs to make circulation work. I really liked it when the Assistant City Manager, I think it was, Ed Shikada said we could look at circulation. I was thinking about that a little bit. If you look at the costs that we have for some of this stuff, about whether or not to maintain the turn movements. Turning right on Alma is really not a problem. I mean, you can always find a way to turn. It's that left turn at rush hour on Alma; you simply can't do it without a light. I drive up to Churchill and make my left there to get onto Alma. Getting onto Alma anywhere else—I mean, getting on Alma off Page Mill doesn't really work with that left; there's no light there. If you're anywhere there and you want to get onto Alma, you have to basically, I think, go to one of the crossings where you have that. That doesn't mean that we couldn't put a light somewhere. It doesn't have to actually be at those places. It doesn't mean we couldn't fix Oregon to allow people to get on there. I'm just thinking there should be some good circulation plan that works. I think that's where we have to think about it. I think, at like Churchill for instance, it may make sense to do the cheaper alternative, if that's what happens, where we do just a depressed roadway for 90 million or it may makes sense to do the 184 million where we maintain the turn movements. I'm just not sure with those three property acquisitions; we need to look at that. I think it's too early in the process to say what to do without a lot of Staff work. I guess what I'm looking for is how do we authorize Staff to come up with a circulation plan that makes sense. I think without a plan it's very hard to evaluate what to do. I think when I read this, it's pretty clear that if we did a trench, for instance, the trench doesn't go as far as Churchill. It's really those two. Therefore, what do we do about the Churchill crossing and possible others? I think it's really all about circulation on this and maintaining Caltrain capacity and maintaining east- west movement. The other thing, I guess, I wanted to say is I think we have more time than we think a little bit in some of this stuff. I was having a conversation last week with the Director of Planning for San Francisco. We had a long discussion regarding when are they going to get Caltrain down to the transbay terminal. He said the current EIR process and the route they TRANSCRIPT Page 20 of 70 City Council Meeting Transcript: 10/13/15 have for it to—I guess it goes in some sort of "S" curve or something through there—doesn't really work. We need to re-look at this. We need to say—there's new boring technologies that may make this better and may make it much more practical. He said we're probably at a minimum of 15 years away from getting that portion done. I was thinking to myself we also may have better boring technologies and technology may actually change where things could be different. I don't know how long this process really takes. I think that's something we need to think about as well. I think this is a very difficult question on where to go next on this stuff. I do think that circulation and coming up with a plan for that probably makes the most sense. Mr. Keene: Thank you. Mayor Holman: Did Staff have any response to that? Any comments about boring for instance? Mr. Keene: I don't know on the boring side. Obviously I think Council Member Scharff was responding to really what is the Staff recommendation as it relates to studying the circulation components. We also do have recommendations related to more detailed study on the grade separation concepts themselves. I mean, for example, to make a 2 percent grade an actual possibility, we've got to have much more detailed analysis and work done on that. I think we've had some preliminary feedback that indicates from some of our partners that they would welcome that more detailed information. Obviously if we were to trench and we were to move from 1 to 2 percent, I mean we've cut our costs right there in half for the project. If we look at the circulation components, that starts to give you other choices, not only as far as quality of life but—I'm assuming that these things are going to be different variables that are going to play in different combinations, both the circulation and the approach that we use. We are saying that we don't have the information we need right now to drive towards taking control over our own fate. What we are pointing towards is that's a key piece of the recommendations, I think, that are here today. (crosstalk). Council Member Scharff: When we do that bike and pedestrian tunnel, like at Churchill for instance, even if we don't depress the road, it would make a huge difference if we got those bicycles off going on that. Mayor Holman: Council Member Burt. Council Member Burt: First, I'd like to say that I agree with Council Member Scharff especially on the point that we shouldn't be reacting so much to what High Speed Rail has been thrusting forward and have that dictate our TRANSCRIPT Page 21 of 70 City Council Meeting Transcript: 10/13/15 own sense of timing and process. I think that what they are planning to do is a prescription for failure. It is the sort of process that resulted in the horrendous backlash on the Peninsula previously. Now, we need to recognize that this is not a four-track system, a full four-track system. It's a hybrid, blended system eventually, so the impacts are not as great, but they're making the same process errors. An 18-month cycle time for this complexity of an EIR is not realistic. Part of what we need to do is not do what the Staff Report has kind of driven us to, which is how do we contend with this 18-month period. We need to strongly, clearly oppose it and rally the support of the other cities on the Peninsula to share this. I can tell you at the Local Policy Maker Group meeting, which is the one representative from each city advising Caltrain modernization, that group was completely caught off guard by the High Speed Rail EIR action. The only reason it actually came before the Local Policy Maker Group was because I was alerted by CARRD members that the last High Speed Rail Board meeting in August had in fact authorized this, and Caltrain was not bringing it before that body on their own. They didn't bring it before the technical working group which preceded it by days. This goes to we've had a process that started off with real shortcomings in transparency by High Speed Rail on multiple fronts. They may be starting to try to correct themselves, but I think they're taking partial measure to correct themselves. They said, "We'll incorporate some CSS-like components to the process." That's not going to cut it. We and other cities need to be real clear. Part of the problem is we've had a real turnover in many of the electeds and Staff members who were engaged in this, not only in Palo Alto but throughout the Peninsula, since we had our heavy lifting on this from 2009 to 2012. There's going to be a re-education process for Staffs, electeds and the public. We will also see kind of awhile for this to actually percolate in terms of the concern level, I believe anyway. It's going to take a little while for people to absorb what are the potential consequences to this. We need to be clear in terms of what High Speed Rail is proposing. They're proposing up to a total of 20 trains per hour, four trains per hour per direction from High Speed Rail and six trains per hour per direction from Caltrain. Twenty trains per hour, one train every three minutes with what amount of downtime and recovery at the signals. We would have virtual gridlock with that amount of trains. They are proposing zero dollars from High Speed Rail for grade separations. They are suggesting that they will help fund quad gates, and that's their intended solutions. We have a big disconnect between what they're proposing and what is at all feasible. Also, they're saying that the CEQA process will address the impacts on us. As we know from the Caltrain electrification EIR, there's a State and a Federal environmental exemption for the impacts of additional trains, under the notion that they're a progressive improvement to transportation and, therefore, you can't squawk about those impacts. It's false when High Speed Rail has claimed that we're going to be protected by TRANSCRIPT Page 22 of 70 City Council Meeting Transcript: 10/13/15 the EIR process just like it was false when previous High Speed Rail representatives made those same claims. I'm going to want to revisit in the next go round what we should do and what actions we should take from this point forward. Council Member Berman: Thank you very much. I agree 100 percent with Council Member Burt in regards to the inadequacy of the process and the accelerated EIR timeline and the unnecessariness of it. As we've seen from recent articles, High Speed Rail is nowhere near obtaining the funding they need to get anywhere close to the Bay Area and the Peninsula. We should push back as forcefully as we can. I think kind of taking a look at what process we took before I was on Council in terms of working with other cities to get critical mass and get everybody educated and hopefully on the same page in terms of what type of collaborative reaction we should have to High Speed Rail to let them know that both the process that they've taken in terms of letting folks know about this and really springing it on all of us and the process they want to take moving forward isn't sufficient. I have a couple of questions. I guess first a couple of comments. In terms of the approach that the City wants to take and the Staff proposed in terms of Section 190 funding and Section 130 funding, to the extent you're looking for us to say we agree, I agree. You guys made a pretty good case for both of those. I have a question about how you guys—I guess first question is in regards to the cost for the grade separations, did those include the cost of the property acquisition? It does, so Richard is telling me yes. I just wanted to make sure. For the cost of the trenching, I just don't recall from the discussion we had on this last year. Was that an open trench or a closed trench or is there not a huge difference in the cost? Richard Hackmann, Management Analyst: Thank you, Council Member Berman. It was an open trench. Just to clarify on the parcel acquisitions, the figure that Hatch Mott MacDonald used in their development of the cost figures was $2 million for a full parcel and $1 million for a partial parcel take. I'll leave it to you as to whether or not you think those are accurate of the real estate prices we're dealing with today. Council Member Berman: Obviously a lot of this will have to be updated. What's that? Mr. Keene: It's two years old. Council Member Berman: Yeah. It probably also depends on the size of the parcel, while we're at it. That's understandable. It was an open trench. Do we recall was it a lot more expensive to do a closed trench? I don't remember; I don't expect you to. TRANSCRIPT Page 23 of 70 City Council Meeting Transcript: 10/13/15 Mr. Hackmann: Here's what I can tell you. There's actually a 2011 Hatch Mott MacDonald study that looked at some two and four-track options. The issue with the closed trench is once you cover more than 700 feet in length, you need emergency exits and HVAC systems that make it a lot more complicated. Covering less than a 700-foot segment for an open space area or some sort of pedestrian crossing doesn't greatly increase the cost. When you talk about covering the full length, it would be a significant increase. Council Member Berman: 700 feet, so 230 yards. I'll do some math on my own while other people are talking. I'm not sure. Then the question would be how much open space do you need in between each 700-foot ... Mr. Hackmann: I don't recall the exact amount, but it's at least 100 feet. Council Member Berman: Which isn't that bad. I'm curious to know what could one accomplish over 700 feet. I bet you could build a pretty nice dog park, but are there other things that you could do. And bike trails and running trails and that kind of thing. Where did we get the calculation that a 30-year 1/2-cent sales tax measure would generate 179 million of bond revenue for Palo Alto? The reason I ask is—obviously they're not directly correlated—Palo Alto makes up 3 1/2 percent of the population of the county, and 179 million out of 6 billion is only 3 percent of the total sales tax revenue that the County is estimating would be generated by a 1/2-cent 30- year sales tax measure. I thought for sure we generated more than our kind of population's share. That just seemed low to me. I could very much be missing something. Mr. Shikada: I was just going to comment that we've looked at it in a number of different ways. That was not one of them. I think the reality checking of the cost estimates really should be an ongoing effort. This was our preliminary guess at this point. Mr. Keene: I think we'd need to run some more analyses, because the obvious 30-year yield in a kind of pay-as-you-go period is actually more than that $179 million. That's based on thinking about having the money right off the bat (crosstalk) bond it. The discount rate—obviously we're getting into the present value of money. It's actually a lower figure, but if we factored that in over time, they start to equalize. Council Member Berman: What is the County's calculation? I thought they were doing the same upfront bonding the money, but maybe I'm wrong on that. Mr. Keene: I think they were just running what a straight yield would be over the time period, which would be very different. TRANSCRIPT Page 24 of 70 City Council Meeting Transcript: 10/13/15 Council Member Berman: That would explain a lot of that. Mr. Keene: I mean, if you even just took it the way we calculated it, the straight yield over the period is what? Something like $384 million. Council Member Berman: My time's up. Mayor Holman: Yeah. We'll circle back around. Council Member DuBois: I'd like to touch on three areas, I think, goals, funding and then, if I have time, kind of definition and scope. I might could come back to that. I have to say I see the three topics as really one comprehensive solution. Council Member Schmid talked about this rail corridor that cuts Palo Alto in half. Congestion at grade crossings is a concern. I don't think people have really mentioned safety and noise along the entire track. Now we see a lot of graffiti; it's now visible. The other point is whether High Speed Rail comes or not. I think if High Speed Rail doesn't come, Caltrain will expand and we're going to be at that 20 crossings an hour. Marc started to touch on the cost of the alternatives, and seizing homes doesn't seem to be any real good alternative. Even the lower cost one of seizing some homes but no turns off of Alma, I think then Alma starts to become more of an expressway. I'm definitely in favor of a trench. If you look around the Bay Area, we've got tunnels in San Jose, in San Francisco. Reno built a train trench downtown about 2 miles long. There's a 10-mile trench in LA along Alameda Avenue down there. I'd really like to see us learn from examples of how did other cities and areas kind of pull these things off. Maybe if we do further study, that can be part of it, really kind of looking at other successful projects. I think we really need to think big, and we're going to have to consider all sources of funding and cobble everything together we can. Should we do minor changes on Churchill under Section 130? Sure. I'd like to see us think big. I'd like to see us really think about a mid-Peninsula trench that could really impact a lot of people. I think it should be supported by our businesses, by Stanford. It would really contribute to the vitality of Silicon Valley which is a big part of the GDP in California, which is a big part of the GDP in the country. I think we need to frame it that way. When I say thinking big, I'm really thinking multicity, multicounty. I would start including Mountain View and Redwood City, all the way through. I'd like to understand if there are economies of scale. When we get to the 2 percent/1 percent part of that, that grade is driven by how long that trench is. There might be some economies of scale. Also, I think the longer trench is really the best long-term solution. If you start to look at amortizing these costs over 50 or 100 years, then it also starts to look a lot more reasonable. I really think we are talking about a 50, 100-year kind of solution. The Staff Report listed kind of six constraints. TRANSCRIPT Page 25 of 70 City Council Meeting Transcript: 10/13/15 It said we need to stop trenching. I'd like to challenge you guys to really get creative. If we were to go for a larger thing, could we break through some of those constraints? Lowering the boarding stations to below grade could create some new opportunities, both above and below grade. I think working with Menlo Park could be a positive. It's not necessarily a negative. I don't think we want this thing to be a rollercoaster, kind of going up and down. The freight train is an issue we haven't really talked about but we need to resolve. If there are creative solutions there, it might resolve the closed/open trench discussion too. I think that's an area where technology might be changing. In terms of funding, like I said, I think the answer is all of the above. I think we really need to pitch this as something that would be suitable for Federal funding, for State funding, for regional funding. Employers need to get involved. As mentioned, value capture. Again, I think we need to look at is there a way we could capture additional revenue opportunities, like the way San Jose is doing with their BART stations. Again, is there even a way that High Speed Rail would produce (inaudible). I think if we did have a trench, a lot of those objections might disappear. I think the big thing is really looking at a financing plan that could potentially include multiple cities, multiple counties and can we build that kind of coalition. I think Council Member Scharff was saying we need to have a plan. I think it's a plan for financing before we even get to the engineering. In terms of definition and scope, I wonder if some of the things that the previous consultant report didn't investigate, I've heard second hand, is it possible to actually build a trench leaving the tracks in place. Some people suggest that it is. Another idea was also could you potentially move the tracks so they're partially under Alma in kind of a long-term configuration. I have one quick question, and I'll stop. Was this the kind of thing where we'd consider kind of a design/build RFP all at once or is there a reason we would kind of split it apart? Mr. Shikada: I suspect it's premature. We haven't really got into it at this point, but would certainly be something that could be considered as we go further down the process. Mr. Keene: This would be our advocacy for a particular position, obviously. Mayor Holman: Thank you. A question for City Attorney. High Speed Rail is wanting to go forward with the EIR and move ahead with this, but there are an awful lot of lawsuits pending. I guess, how can an entity even propose to move ahead with other EIRs with so many lawsuits pending? There's the potentiality of just having a patchwork system, which has been talked about before, a patchwork system. Here we are again in another, it seems to me, patchwork scenario. TRANSCRIPT Page 26 of 70 City Council Meeting Transcript: 10/13/15 Ms. Stump: Thank you, Mayor Holman. Your question is a very broad one. The Staff Report identifies a number of different lawsuits. They concern different legal theories, different statutes, and different segments of the line. The High Speed Rail Authority has determined that they are able to issue this initial draft and get this process started. I have no doubt that various concerned parties up and down the line will be looking at those processes and asking if the environmental rules and other laws are being complied with at each stage. It could be that some challenges are brought. I think at this point they've looked at it, and they feel they're able to take this initial step. Mayor Holman: In the bigger picture though, even if they can take this initial step, the potentiality still exists. I guess it's more of a comment. It seems to me more of a potentiality exists certainly for a patchwork kind of system, which has been one of the concerns all along. In terms of wanting to expend some funds for drawings, we're going to need them whether it's HSR or whether it's Caltrain. We're still going to need the drawings for the community to understand and decision makers to better understand what we're looking at visually. Nothing tells a story better than a picture. I would support some funding on that. I also would like to suggest that we might be able to find very similar circumstances with other cities fairly near to us that we could share the cost even of that with other cities. I also agree with some of the comments that have been made about comprehensive solutions and about not letting the High Speed Rail Authority try to tell us what we're going to do and when we're going to do it. It isn't the elephant in the room, because it's been identified as an elephant a long time ago. That doesn't mean, though, that we have to be whip-sawed by it. I think Council Member DuBois was talking about looking at a broader scheme with other cities north south. I think that's true. When it comes to both north-south, the letter that the Mayors and City Managers that you have in front of you we talked about comprehensive solutions. Vice Mayor Schmid commented about this too, comprehensive solutions. While we are pretty much driven by the Caltrain line and 101 and 280, that's all north-south, but we do need to have some more comprehensive discussions about east-west migration as well. That also means cooperation with other cities. I'm going to stop there. I think there were at least three other Council Members who wanted to have a second round of comments. Why don't we try to see if we can make this second round, let's try to do three minutes. If we need another round, then we'll do that. Questions and comments still. Council Member Scharff. Council Member Scharff: I obviously would be thrilled if we had a comprehensive solution along the lines of what Council Member DuBois said. One of the things I think we have to think a little bit about is that the regional agencies which should be driving those, which are basically the Caltrain Board and VTA, have shown no inclination to do this. Whereas, I TRANSCRIPT Page 27 of 70 City Council Meeting Transcript: 10/13/15 would love to just go along with Council Member DuBois' points on this, I don't want us to end up doing nothing because we want the pie in the sky solution that doesn't make sense in terms of a regional trench that we can't get support for, which goes from Redwood City through Mountain View. I do think we need to think about practically how we get circulation. In terms of the practicalities, when Staff looks at the circulation which I hope we'll do, that's what I really hope the direction we move in is, we also ask ourselves questions where we've said that we don't want an elevated track, but when we said we don't want an elevated track, we're thinking 10, 15 feet in the air. I mean, if you elevated the track 3 feet and had to take 30 less homes, I would make that tradeoff, because it's an aesthetics and noise issue. That's what we need to understand. What I think we really need to do is to understand how we can get circulation to work here, and also the timing of all this stuff so that it works. I don't want us to just spend all of our energy on a regional trench or something like that. I mean, obviously I think a shorter trench makes a lot of sense. I just think without VTA and Caltrain, we're probably not going to make that work. Who knows? Mayor Holman: I don't see a light but remember Council Member Burt had something else. Council Member Burt. Council Member Burt: I don't think that we're in a position to begin to tackle what major alternative or alternatives we should pursue. I do like the portion of the Staff recommendation that we move forward with additional analysis of circulation. However, this shouldn't be a purely Staff-driven process. We have made the case to the High Speed Rail Authority, and we made it successfully, actually to Caltrain and the High Speed Rail Authority when we had the previous version of the Peninsula rail program, this commitment to Context Sensitive Solutions. Those of you who have not had a chance to read through some of the materials on what this would mean or hear what Elizabeth described about it, it's a real problem-solving methodology. We should not be demanding that Caltrain and High Speed Rail adopt that process, and then we as a City go about a different process. We will do a better process within Palo Alto and as Palo Alto relates to these other matters through adopting a methodology like this. It's iterative, so it doesn't mean that we go through the whole Context Sensitive Solution process before we begin to gather additional information, for instance, on the circulation. What we do on that study may very well be informed and be a better study as a result of engagement with stakeholders and the community. I think we want to adopt CSS as our process. If we look at our Guiding Principles, I think we already actually have it there. We want to have some specific requests of High Speed Rail and Caltrain. Caltrain is a part of this, and they can't be left off the hook and say, "This is High Speed Rail's fault, and we don't really have much to do with it." There are TRANSCRIPT Page 28 of 70 City Council Meeting Transcript: 10/13/15 representatives on this corridor, and they need to stand up and insist on the right process and the right amount of time to begin to figure out what are the right solutions. The EIR should not be an 18-month EIR. They should agree to fully recommit themselves to Context Sensitive Solutions as the process, and that they should commit to full transparency. Right now the High Speed Rail Authority has been going down the same trap of believing that they can succeed by withholding whatever information they have to a great extent from the public and from the cities that are affected. We need to insist otherwise. It really is misguided on their behalf. It's sort of this ramming it forward and lack of transparency is the very way that this will blow up again. Then they'll be calling people NIMBYs and whatever name- calling they want to do, because they are not embracing a constructive process that is designed toward problem solving and really coming up with best solutions. I would like to just add one other thing along the lines of what Council Member DuBois was talking about. We really should be thinking in terms of a 50 to 100-year timeframe. I was recently thinking about in the 1930s in Palo Alto, which was then North Palo Alto, we constructed three major interchanges, and in 1960 a fourth one. We have the Embarcadero underpass. We have the University Avenue underpass. We have a trench of El Camino Real that goes under University Avenue. This was done in the Great Depression without the resources that we have in Silicon Valley today. Our business leaders and other political leaders in this region have taken a mindset that we can't possibly do it right. Yet, in that era we could. Eighty years later, we're still deriving the benefits of those investments. Mr. Keene: Madam Mayor, may I just ask a follow-up question of Council Member Burt on his comments? What I heard were two things. One, as it relates to the City pursuing its own circulation study, but asking us to do so within the Context Sensitive Solutions approach. A separate issue, though, related to CSS and the High Speed Rail EIR and this conversation on engaging Caltrain on our behalf on that. Correct? Council Member Burt: Correct. The third part is to insist that the timeframe to accomplish the EIR and CSS be driven not by whatever timeframe they're interjecting without telling anyone why. Instead, it be driven by what's the right amount of time necessary to do the process correctly. Mayor Holman: Council Member DuBois. Council Member DuBois: I agree we can't rely on VTA or Caltrain to lead on this. (inaudible) VTA of Santa Clara County only. I think Caltrain would need to be involved, but they aren't impacted the way the cities are. I think we'd have to form kind of a new multicity trench organization that would TRANSCRIPT Page 29 of 70 City Council Meeting Transcript: 10/13/15 lead on this. Again, I mean, you look at BART in Berkeley. BART did not lead that effort. Berkeley had to fight tooth and nail to get a tunnel. I think that's just expected. I don't think those are the organizations that would lead on this. Again, just in terms of funding sources, regionally I think we are going to have to probably cobble together lots of different sources. I think we may need to look at some kind of train assessment district or a business tax, transportation tax. Thanks for the comments on the Staff Report. If the only contribution VTA was going to make to grade seps was the number that was in the Staff Report, I think that would strongly influence me to more seriously considering a City sales tax. I mean, I think—we're going to talk about Item 3 a little bit later. We're going to have to negotiate hard. Unfortunately, I think it is a zero-sum game when it comes to funding these projects. I just want to say I support CSS. I think that's critical. Again, we would use that process to explore some of these alternatives. Before we constrain ourselves, I'd like to start thinking big. It may not be practical, but I think that's where CSS would helps us flesh that out. Mayor Holman: Thank you. Council Member Berman. Council Member Berman: I like the idea also of having a CSS process for us with hopefully the goal being us actually coming up with a position that we've taken of what we want. There are a lot of different ways that we can go, and a lot of different options. Having a community-involved discussion of all the tradeoffs and all the benefits and all the costs to actually come to what the City's policy is, I think would be really helpful. Council Member Burt alluded to the fact that the High Speed Rail Authority hasn't really given any reason for their 18-month EIR process. Are you guys aware of anything that he might not be or we might not be? Are they really not being very forthright? Mr. Mello: What they've said publicly is they want it to align with the schedule for the Gilroy to Merced segment. Mr. Keene: I would conclude that they haven't given a—I would agree with Council Member Burt. That is not sufficient explanation. Council Member Berman: What's the rush? It's baffling, and it really does lead to a lot of distrust from our end, which was something that I thought they were trying to work to remedy after what happened previously. This is obviously going in the opposite direction with no real reason stated as to why they're doing it. We don't need to get into this kind of stuff now, but as we look, as Council Member Scharff was talking about, to revising our Guiding Principles, I do think that we need to be open-minded to any and all TRANSCRIPT Page 30 of 70 City Council Meeting Transcript: 10/13/15 different revenue sources possible. I know one thing that we say here is these improvements must be funded by Caltrain, High Speed Rail and/or other external funding sources. One thing I absolutely think is that High Speed Rail, I mean they're really trying to get away scot free without having to provide any funding for mitigating these impacts. I don't know if we should maybe be a little—I don't know if we want to be that prescriptive in terms of what funding sources we have. As that comes back, it's something that maybe we should look at. I also agree with Council Member Scharff, I think, and maybe others in talking about the hybrid crossing option at Churchill. If it is 3 feet or 4 feet or 5 feet elevated, what the tradeoffs of that are, I think, is something that we should really consider. That could be part of the conversation. I like Council Member DuBois'—I mean it's something that I had written, partner with other cities. It might not happen, but I think it's a conversation that we should have to see what kind of willingness there is in other surrounding communities and what that might mean in terms of economies of scale on a bigger trenching option. I'll reach out to some friends who are on Councils in Mountain View and Menlo Park and other cities. I would encourage Staff to do the same to their colleagues. Council Member Wolbach: My thoughts on some of the things that have been said. I just want to let my colleagues know where I am at among these issues. Definitely yes, I'm supportive of enabling Staff to go out and do more study and to start really studying circulation options and studying grade separation options and outreach to other cities to explore whether linking up with other cities is an idea that has a lot of receptivity or is a non- starter and we should focus on a more modest proposal. I definitely agree with Council Member Scharff that we don't want to abandon doing something very significant aiming for the perfect. We don't want the perfect to be the enemy of the good. If there are things that we can do, partnering with other cities, that actually give us cost savings, I'm definitely not going to say we should rule them out in advance. We'd be crazy to do so. I agree about the importance of Context Sensitive Solutions, and the importance of pressing gently but pressing Caltrain to be very clear and join us in demanding the transparency and realistic timelines and Context Sensitive Solutions, all the things Council Member Burt has highlighted. On the question of grade separations and thinking about our priorities as that goes, I guess the way I would list my priorities when it comes to grade separations are safety first; then circulation, improving the flow of people whether they're on bike, pedestrian, cars, etc; third, cost, finances; fourthly, aesthetics. I don't think aesthetics are unimportant; they certainly are, but I think that safety, circulation and cost are more important than the aesthetics. Coming out of this, there are a couple of things that I think we need to not lose sight of. One, we actually heard it mentioned earlier by, I think, Adina Levin from Friends of Caltrain mentioned it, value capture is something that we should TRANSCRIPT Page 31 of 70 City Council Meeting Transcript: 10/13/15 definitely—another gentleman in the audience also mentioned this. I think value capture in a way that is driven by our community priorities and land use priorities is something we should absolutely include in further studies and discussion. I also think that frankly, given that aesthetics is the fourth priority after safety, circulation and costs, I don't think that some degree of elevated tracks should be completely ruled out at the outset. I know that we haven't been supportive of that in the past. If that's the way to get grade separation throughout Palo Alto, I think we should have a serious, honest conversation about it. It's done in other cities on the Peninsula. There might be other ways to do it here more effectively. If it gives us the safety, mobility improvements and is more cost effective, I wouldn't rule it out. I just want to make sure that as we're doing really thorough discussions in the community and as we're doing thorough studies, whether it's Staff or consultants or both, and as we're considering this conversation, I want to make sure that we're keeping our options open. Vice Mayor Schmid: I support Council Member Burt's notion that we need time and serious discussion around the range of issues that are involved here before committing to a time table. I do have a couple of questions about Context Sensitive Solutions. I guess I'm concerned a little bit about stakeholders as participants. I'm worried that the stakeholders involved are the ones who define the issues, who limit the boundaries of discussions, who set the costs and benefits, who benefits, who pays, and sometimes in there secondary impacts can get lost. I think as representatives of community and other communities around us need to have their clear voice in whatever process we get involved in. Mayor Holman: Just a couple of things. One is a question for the Staff perhaps. When would we start the CSS process? When would we start that? When would be the appropriate time to start it? Mr. Keene: Thank you for that, Madam Mayor. I'm assuming maybe we're getting close to sort of a conclusion of the Council's discussion on this "1" and "2" part. If I could speak a little more expansively in response to your question, because I think it's connected to a number of different things. By the way, I would just add our voice on the Staff just listening to you talk to the community members who spoke that this is a kind of sort of pivot point, I think, for the City from where we had been in reacting to High Speed Rail and in some ways maybe even just reacting to the Santa Clara tax measure to really being proactive about how we move forward. If I could use a metaphor, maybe it's not completely apt, but it's almost like we're reaching a point of adaptation as we would in facing an important systems problem. We've got to adjust to climate change, and we've got to face those issues and take them on. In this same, whether it's High Speed Rail or not, we've TRANSCRIPT Page 32 of 70 City Council Meeting Transcript: 10/13/15 got Caltrain which is vital. We have to adapt to the reality of that over a long period of time and take our destiny, I mean, much more in our own hands than ... That's what I see happening here. Here were the different things that we've talked about and that the Council has commented on. We need some more circulation analysis and study as a key component, and that you want us to pursue that within a Context Sensitive Solution approach. We also need at some point more detailed engineering work done. The question of what the scope of that engineering work would be, whether it's just within the City or in a broader kind of context, and we also need a financial analyses and strategies. We have these other issues of reframing the timeframe with High Speed Rail and enlisting Caltrain on our behalf in relation to that in advocacy for CSS and those approaches. As Council Member Scharff brought off, all of those things do start to beg the question of the need to reform or amend some of our policies now, because there are some different directions you're going to be giving us. My thought is we need to come back with a little bit more meat on the bone about what these processes involve. I would like to get from the Council a little more clarity, before we come back with that report, how you see the sequence of the circulation piece, the engineering and the financing pieces. Are they sequential in some way or do you want us to come back with some options as it relates to all of those? That's my way of saying I don't think we could tell you right at this moment what the timeframe would be on the circulation piece and the CSS. I think we'll huddle and we'll be able to give you a date for when we could come back with a bigger sense of what it will take to do this further analysis. Now that said, as it related to the timeframe and the Caltrain role, I had already spoken with Caltrain Director Jim Hartnett last week about the fact that we were going to be having this meeting, and that our Council was interested in us being able to meet very directly at the highest level with Caltrain on this. I think that much more immediately even we could begin to have some talk about the timeframe on High Speed Rail and Caltrain's role. I would just offer the Mayor, you might want to think about if you want to appoint any reps from the Council to work with us on that. I hope I was clear in answering your question. I do think just a little bit more sense of if we bring back a summary report about what our next steps would be like. I think we're clear on the circulation and CSS. I'm not as clear as to whether or not there's a consensus on the Council about sequence or how far you want us to go on the engineering and financing pieces. Thank you. Mayor Holman: Thank you. Just a couple of comments here. There was a pretty strong request sent to VTA to work on a comprehensive solution, a regional plan for transportation. That was from what? Like 11 cities. VTA said thanks but no thanks. If we can't rely on VTA to do that, then it seems like as a part of this we might consider partnering with the other cities on TRANSCRIPT Page 33 of 70 City Council Meeting Transcript: 10/13/15 our own to get that kind of a study and plan done. It needs to be done. VTA said, "We just don't have time." For something that's going to be in place for not only decades but decades upon decades, there's not time not to do it. That's one. We can look at what the right time is to start that, but we probably shouldn't tarry too long. I did want to respond to something that Council Member Wolbach said. In terms of prioritizing safety, costs and cosmetics, aesthetics, I really would not prioritize them. Of course, safety is the number one. Of course, that one's a no brainer. The others I would not put them in a hierarchical fashion because they're all equally important. That's why CEQA, for instance, requires them all to be studied, evaluated and mitigated, if not eliminated. I really wouldn't put them, duly respected, I wouldn't put them in that kind of an order in case that happens to catch on with any other colleagues. I think that may be—I think I can stop there. Council Member Burt, you have a motion. Council Member Burt: Yes. First, before the specific points in my motion, I did want to say that regardless of whether High Speed Rail does or doesn't come to the Peninsula, the nearer term, longer term, ever, we're going to see a need for a greater number of trains on the Peninsula. The challenges remain whether they're coming or not. It really behooves us to re-engage on this and begin trying to take the bull by the horns ourselves, so that we really are moving as much as possible away from a reactive mode. One of the ways that we were engaging this in a real significant way before was our Rail Committee. We've wanted to try to minimize ad hoc committees or even standing committees in this case as much as possible. I think it's pretty clear that we need to reappoint and re-engage our City Council Rail Committee. My first component of the motion is to have the Mayor reappoint the City Council Rail Committee. Second, for the Council to direct Staff to return in the near future with a preliminary plan for a Context Sensitive Solutions process, long term and near term for Palo Alto, to address rail impacts and the future of rail in Palo Alto. For Staff to also return with a recommendation for a first phase circulation study. I'll just say as an aside, not part of the motion, that I don't think this is an iterative process. Just like what we did over a year ago on the grade separation analysis, it's not the end all, it's not the full design, but we need to get going. Returning to the motion, in addition for the Council to direct Staff and our Mayor representing us to convey clearly to both the High Speed Rail Authority and to Caltrain the following: the full Context Sensitive Solutions should be retained as the process for High Speed Rail on the Peninsula; the timeline for the High Speed Rail EIR on the Peninsula should be adjusted for adequate timing for the EIR and for full integration with the CSS process. Council Member DuBois: I would second. TRANSCRIPT Page 34 of 70 City Council Meeting Transcript: 10/13/15 Mayor Holman: I think you have numerous seconds. I think I heard Council Member Scharff second it first, I believe. MOTION: Council Member Burt moved, seconded by Council Member Scharff to: A. Have the Mayor reappoint the City Council Rail Committee; and B. Direct Staff to return in the near future with a preliminary plan for a Context Sensitive Solution (CSS) approach to address rail impacts and the future of rail in Palo Alto; and C. Direct Staff to return with a first phase Circulation Study; and D. Direct Staff and the Mayor representing the Council to convey, clearly to both the California High Speed Rail Authority and Caltrain: i. The full Context Sensitive Solutions approach should be retained for the process of High Speed Rail along the Peninsula; and ii. The timeline for the Environmental Impact Report (EIR) along the Peninsula should be adjusted to include adequate timing for the EIR and adjusted for time needed to fully integrate CSS in the process. Mayor Holman: Council Member Burt, would you care to speak to your motion? Council Member Burt: I've really spoken to most of it already. I would say the only other thing that I want to add, but I didn't want to have it as a directive of the motion, is that as the Mayor spoke about the challenges of having VTA partner with the North County cities and other collaboration challenges, we're going to really need to engage with our elected officials at the State and County level. Assembly Member Gordon and State Senator Hill as well as County Supervisor Simitian who represents us and has a great deal of experience with this issue, we need to ask them to re-engage on this just as we're re-engaging and to come and have support, and also to have them be—I'm sorry, I'm not asking for this part to be in the motion. Have them really help pull together a collaboration of cities on the Peninsula. Mayor Holman: Council Member Scharff, care to speak to your second? Council Member Scharff: Yes, just briefly. I think this basically captures what we discussed as a Council, and I think it captures it well. I guess the only other thing I would say is I do think this is going to be a long slog, and it's going to take intense focus. That's why I'm really glad that we're TRANSCRIPT Page 35 of 70 City Council Meeting Transcript: 10/13/15 reappointing the City Council Rail Committee. It takes that kind of focus, frankly, on a monthly-type basis to move these things forward. I think it's a really good motion, and I thank Council Member Burt for it. Mayor Holman: Council Member DuBois. Council Member DuBois: I think it's a well-crafted motion. I've already said I think this is a really critical structure for the long term. I'm willing to personally dedicate a lot of my own personal time, reach out to officials in other cities. We also have an incredibly knowledgeable and smart community. I'd love to hear ideas and hear from people who are willing to contribute their time on this effort. I would offer a minor friendly amendment to "B," that we include an option for kind of a mid-Peninsula solution. I would offer "to address rail impacts and the future of rail in Palo Alto and the mid-Peninsula." Mayor Holman: Council Member Burt? Council Member Burt: Yes. Just simply add "and the mid-Peninsula." Is that what you're saying? Council Member DuBois: Yeah. I mean I understood what you were saying. You were including reaching out to elected officials (crosstalk). Council Member Burt: Yeah, I understand. I just wanted to be clear on what you were saying. It's simply under "B." After it says "in Palo Alto," say "and the mid-Peninsula." That's great. If that's okay with the seconder. Council Member Scharff: That's fine. Mayor Holman: Council Member Scharff, okay. Good. INCORPORATED INTO THE MOTION WITH THE CONSENT OF THE MAKER AND SECONDER to add to the Motion at the end of Part B, “and the Mid-Peninsula.” Mayor Holman: Anything else Council Member DuBois? Council Member Wolbach. Council Member Wolbach: I'll definitely be supporting the motion. Thank you for crafting it. I think it's direct, it's to the point. I just want to ask colleagues and also Staff if we should include anything about the Section 190 or Section 130 in this motion, just to knock it all out together, and if Staff needs any direction in this motion regarding Sections 190 or 130. Mayor Holman: Jim. TRANSCRIPT Page 36 of 70 City Council Meeting Transcript: 10/13/15 Mr. Keene: I don't think we need direction on 190 really. I mean we're just not going to pursue that at this point in time, so I don't think you need that. We probably can proceed with the 130 piece without your motion. If you want to ensure that we do, then you can go ahead and make that. Council Member Burt: I think it's appropriate that we go ahead and add an "F" then, that is direct Staff to pursue interim grade crossing safety measures through Proposition 190 and through other means. Council Member Wolbach: Do we want to ... Mayor Holman: 130 (crosstalk). Council Member Burt: 130, 130. Mayor Holman: 130, David. Council Member Burt: Everybody got me on that one. Council Member Wolbach: If I could just speak a little bit more. Mayor Holman: Council Member Scharff, are you good with that? Council Member Scharff: I'm good with that. INCORPORATED INTO THE MOTION WITH THE CONSENT OF THE MAKER AND SECONDER to add to the Motion, “direct Staff to pursue interim grade crossing safety measures through U.S. Code Title 23, Section 130 (Railway-Highways Crossing Program) funding and through other means.” Council Member Burt: Let me just add to that that interim safety measures are a real need for us, and they're not to be confused with a longer-term solution. Both are needed, and there may be some measure that really could provide significantly greater safety than what we have today. Mayor Holman: Council Member Wolbach, back to you. Council Member Wolbach: Thanks. Thank you for that addition. Kind of taking off something—just a quick comment on this. Responding to something, I think, Council Member Burt said about taking the bull by the horns. I think it's important that we're really taking the initiative. I think this is really important as far as how Palo Alto comes together to focus on our future and to focus on the core challenges we're facing. I'm really excited about this. I'm really excited about us even recognizing that this is going to be a heck of a job. It's a funding nightmare. It's a logistical TRANSCRIPT Page 37 of 70 City Council Meeting Transcript: 10/13/15 nightmare. It's a construction nightmare. It's a lot of challenges, but it's critically important that we're united around seeing it as a challenge but recognizing that we can't wait forever to do it. We're not going to wait for somebody else to do it. That gives me a lot of hope. Mayor Holman: Vice Mayor Schmid. Vice Mayor Schmid: I'm supporting, especially the notion of the Rail Committee reforming since this does take intensive work. Just a couple of clarification questions. "B" mentions the Context Sensitive Solution. The first step in the Context Sensitive Solution is to get a shared stakeholder vision. I guess I'd like to add some idea of who the stakeholders are who would be committing to build the shared vision. Council Member Burt: Are you asking the maker? They didn't make the motion. Vice Mayor Schmid: The maker or ... Council Member Burt: Part of this process is essentially the opposite of your fear in the Context Sensitive Solutions. It is intended to be a broad, inclusive group of stakeholders. If you kind of look through the materials, this is why it's been successful. Context Sensitive Solutions came about on major highway systems in response to the traditional method where a state highway agency would want to build a freeway down the middle of a town, and they literally had an acronym for that. It was DAD, design attack defend. That was the process. Very interestingly, the lead project engineer for this system, High Speed Rail on the Peninsula, has recently come onboard here when at the LPMG meeting when I brought up Context Sensitive Solutions, he said, "I think it's great. I've worked with it extensively at Caltrans. It is a very effective process." You look at communities that have participated in it, and grass roots membership in communities. It really has been extremely effective starting with defining the issues. Let's not get ahead of ourselves of asking who they are specifically. The intention is to be extremely inclusive and deliberate. Vice Mayor Schmid: Good. I guess we're just asking for it to come back. When it comes back, we'll have some places to look for its success. Second question. On the circulation study, I guess I noted last week in the Maybell-Arastradero, there was a mention of "we have a new Palo Alto traffic model that came up with surprising results." I suppose that the first phase of the circulation study will share insights from the new traffic model, what it's based on, what kind of numbers are generated, what assumptions are in it. Is that where we're headed? TRANSCRIPT Page 38 of 70 City Council Meeting Transcript: 10/13/15 Mr. Mello: We could use the model to look at different alternatives, different circulation alternatives. It would be a very effective tool to look at motor vehicle circulation. Vice Mayor Schmid: Is there anything else we have that would look at ... Mr. Mello: There's the regional travel demand model which looks at it at a larger scale. We have some fairly significant sets of data that we collected through the Bike Boulevard program that look at bicycle and pedestrian activity along some of the corridors, some of which cross the Caltrain corridor. Vice Mayor Schmid: I guess just as a Council Member, what we have to look at is the existing conditions report. When you come back with the first phase of the circulation study, it might be good to lay out the alternatives and what differences come out, depending on the assumptions you're making. Mayor Holman: Council Member Berman. Council Member Berman: Thank you. I support the motion. If you think about it, this is the biggest undertaking, the biggest project this City will take on at least in the next decade. I don't want to guess what's going to happen after that. This is massive. We all know that the status quo isn't sufficient for our future needs, possibly even for our current needs. The motion and this process gives this issue the attention, the time, the broad community input, the Staff time, the Council time, the Council expertise that it needs to do it right. We can't afford to do it wrong. I think it's definitely time that this get elevated towards the top of our priority list of things that we really spend a lot of time on. The sooner we do it and the sooner we come up with a more concrete idea of what we want as a community, the sooner we can start dictating to other agencies what's acceptable and what's not. This lets us get to that point. I think it puts us in a much better position of starting to get the decisions that we want from other agencies and the resources that we want from other kind of measures that we'll need to be able to fully fund this. I mean, I think it's exciting. Personally, I'm very energized by the conversation we've had and the future of this. As others have mentioned, this is the next 50 to 75 to 100 years of mass transit on the Peninsula. It's going to impact so many different people and walks of life and communities. Let's make sure that we actually do it in a way that makes sense for 75 years from now. Mayor Holman: I have a question, perhaps it's for the Staff before it's a question for the maker of the motion. We've had this conversation this evening, and we've had conversations prior to this evening about circulation TRANSCRIPT Page 39 of 70 City Council Meeting Transcript: 10/13/15 and about comprehensive planning. In the past, it was a City Council Rail Committee. I'm wondering if this point in time it really should be a City Council Rail and Circulation Committee. I want to ask Staff that, because is that going to be so big that it's going to be unwieldy for the Committee. I think of the housing committee. We didn't deal with just affordable housing; we dealt with all manner of housing having to do with the State mandate. I'd actually like Staff's opinion first. These things are so interrelated, and I don't want the Committee's hands to be tied by not talking about a variety of things that you can imagine might come up. Mr. Keene: Thank you, Madam Mayor. It's a good point. One, I would be concerned that rail and circulation could be confusing; somebody might think that its charge was circulation beyond just the rail issue. Secondly, anticipating your other point, I'm assuming that at some point these questions about either a deeper dive in circulation or these engineering analyses or the financing plan strategies would be also things that would be in the wheelhouse of the reconstituted Rail Committee. I don't think you're going to move things ahead with just the circulation component. That's going to be used to inform those next stages, unless I'm not seeing it correctly. That's the way I would see it. I would think you would not want to be trying to limit what you mean when you say you're reconstituting the Rail Committee. I think clearly your motion here already anticipates some of the first work we'll be doing will be on circulation as it informs rail matters, Caltrain matters. Mayor Holman: Thank you for the input. That's why I wanted to ask Staff first. With that, the motion on the floor is A, have the Mayor reappoint the City Council Rail committee; B, direct Staff to return in the near future with a preliminary plan for a Context Sensitive Solution to address rail impacts and the future of rail in Palo Alto and the mid-Peninsula; C, direct Staff to return with a first phase circulation study; D, in two parts, direct Staff and Mayor representing the Council to convey clearly to both the High Speed Rail Authority and Caltrain that (1) the full Context Sensitive Solution should be retained for the process of High Speed Rail along the Peninsula, and (2) the timeline for the EIR along the Peninsula should be adjusted for adequate timing for the EIR and adjusted for time needed to fully integrate CSS in the process; and finally E, direct Staff to pursue interim grade crossing safety measures through Section 130 and through other means. With that, vote on the board please. That passes unanimously with Council Member Kniss absent and Council Member Filseth not participating. MOTION AS AMENDED PASSED: 7-0 Kniss absent, Filseth not participating TRANSCRIPT Page 40 of 70 City Council Meeting Transcript: 10/13/15 Mayor Holman: Jim, did you have something to add? Mr. Keene: Yes, Madam Mayor. We are going to be coming back soon with a report on the motion and what we'll be doing. Can I get the attention of the whole Council? I want to be sure that we understood that you are not right now directing us to getting into further detailed engineering work on options or really on any kind of strategic financing plan linked to those options, because those things are interconnected. That is down the line a little bit. Right? Mayor Holman: I don't read those into the motion. Council Member Burt? Mr. Keene: Good, just want to be sure. Council Member Burt: Correct, but not too far down the line. Mayor Holman: With that, shall we take, like, a three minute break and call Council Member Filseth back to our midst? Council Member Scharff: (inaudible) Mayor Holman: We'll take about a three minute break. Council took a break from 8:24 P.M. to 8:33 P.M. Council Member Filseth returned to the meeting at 8:33 P.M. Mayor Holman: Council Members. Council Member Filseth has rejoined us for Item Number 3 or Portion Number 3 of our only item on today's agenda. If we can call back to order. Staff, do you have any additional comments to make before we proceed? Mr. Keene: No, Madam Mayor. Mayor Holman: If we could get the public's attention too please. Staff. Mr. Keene: No, I think you're good. I don't know if we need to read the title again. I mean, I think you know what the subject is here. The City's interests and strategies regarding the proposed Santa Clara County transportation sales tax measure, including a potential City of Palo Alto transportation funding measure or other funding strategy. Mayor Holman: Council Member Filseth, you missed the first part of the conversation, but I would imagine that you were listening in. We are ready to talk about the funding measure as City Manager Keene just described. Council Members, why don't we do the same thing this time as we did last. TRANSCRIPT Page 41 of 70 City Council Meeting Transcript: 10/13/15 If we could go through in a five-minute sequence of questions and comments. Council Member DuBois. Council Member DuBois: I have a quick question for Staff. When County Commissioner Joe Simitian was here, there was some discussion—actually I guess it was Carl Guardino—about who put the ballot on the measure and who would manage the funds. Does Staff think it would make a difference to what would benefit Palo Alto the most, whether it was VTA or the County Commissioners? (crosstalk) if you want. Mr. Keene: No, I don't think we should—I think we just need to observe and study that just a little bit more right now, before we could give you that answer. Council Member DuBois: I had a question about the 179 million which I think we addressed. I would just say whenever we're doing this financial plan, let's really look at the timing of the funds. There's no way we could spend all that money upfront, so we wouldn't have to incur all that interest, fees and things. I think that was the difference. It was basically a lot of financing. Mr. Keene: (inaudible) Council Member DuBois: I sort of stated it before, but I think we need to be really hardnosed and clear about what we want in a sales tax measure. If you look at the San Mateo and Alameda County recent transportation measure, I think they specified the percentage of the bond that would go to different transportation projects. I think that's what we need to get. Not some vague promises, but that a certain percentage will be spent on grade separation, on local streets, on highways, whatever the different categories are. So far I haven't really heard VTA talking quite that way. I mean, they did talk about a cap on BART which is great, but I think we should really push for a percentage of the bond for each category. Again, I think this isn't just about Palo Alto residents; it's about Palo Alto and North County as a major job center for the entire county. A lot of these projects would benefit a lot of people. I'm really interested in what my colleagues have to say about kind of the difference between the County or the City. I don't think we want to do both, and I think that was kind of one of the options in the Staff packet. I kind of see them as either/or. If we were going to do our own, there's a lot of work to do, a lot of polling, to determine kind of exactly what we would do. We're kind of running out of time. That's it. Short comments, but I'm really interested in what my colleagues have to say. Council Member Wolbach: Just a couple of things to start out with. On the top of page 20 of the Staff Report, it references—it starts on page 19 and TRANSCRIPT Page 42 of 70 City Council Meeting Transcript: 10/13/15 goes to page 20—it lists the suggestions from Staff about the future of advocacy. I had a tweak I wanted to make on one of those, but I wanted to check are we using those criteria, those principles in our communication. If I had a qualm with one of them, should I ignore it because they're not being used anymore anyway? This is bottom of page 19, top of page 20. Mr. Shikada: I think at this point, the discussions that Staff has had with VTA have attempted to reflect these general principles. At the same time, VTA's really simply trying to flesh out interests. It really hasn't gotten to the point of these being directly, I'll say, operational in terms of our advocacy. Council Member Wolbach: There's one at the start of page 20 that I wanted to identify. Where it says any roadway expansion should prioritize high occupancy vehicle or HOV lanes, I would suggest that as a City we adopt something similar to that, which is any roadway expansion should prioritize HOV lanes but even that only as a second choice to single occupancy vehicle trip reduction measures such as transportation demand management. I think we should be clear that if there has to be a roadway expansion, it should focus on HOV lanes. Roadway expansion is not our first priority particularly with roads in Palo Alto, such as Page Mill Road. Our priority as a City, and it seems very clear Stanford's priority as well, is not to spend a lot of money on roadway widening in advance of doing TDM. Perhaps we invest significantly in TDM, and then if we also needed to look at roadway expansions, we can do that. This does not relate to—you know what I'm talking about here—does not relate to improving intersections or things like that. I think that we should be clear about that. When we had the County here, they seemed pretty clear to me that they thought they had one tool in their toolbox, and that was widening roads. I think it's important that we send a message that we expect that transportation planning in Santa Clara County will be more sophisticated than to look at every problem as a nail just because we only have a hammer in our hands. Another thing I wanted to mention on this. There was some discussion earlier, I think, from the public about how we make sure that if there's a pot money in the VTA sales tax measure for grade separations, how do we make sure that that is equitable, that we can have access to that in Palo Alto, that we don't miss out on that. I think it is important that they don't just allocate that money based on who has their projects ready to go the day after election day or on January 1st following the election. There should be perhaps an 18-month or 24-month time period following the passage of the measure before people could put in their applications. If there are more applications than there's funding, it should be clear what criteria will be used to prioritize, highlighting the need and key elements of need being safety and circulation necessities. Those are a couple of my top priorities for things we should be thinking about here. TRANSCRIPT Page 43 of 70 City Council Meeting Transcript: 10/13/15 Council Member Filseth: Thank you. Folks, I wanted to ask a question about some numbers in the Staff Report here. On page 19 in the discussion of the VTP 2040 process, it says an estimated $40 billion in projects and programs were submitted for an estimated $20 billion in potential funding including future grant funds as well as sales tax funding. Most of the numbers we've seen about the sales tax funding are over 30 years it'll raise $6 billion. Am I reading this correctly that the implication is that if the County raises $6 billion, they think they can get another $14 billion in Federal and State grants? Is that where that number comes from? Mr. Keene: Correct, that's what Staff is saying. Council Member Filseth: When the Silicon Valley Leadership Group was here a couple or three weeks ago, I remember one of the questions we asked them was if you look at past transportation tax measures that raised money here in the county that were augmented by Federal and State funding, how much Federal and State funding did we get. I believe Mr. Guardino's answer was over the last four transportation tax measures, that had been augmented by about 25 percent. $14 billion relative to $6 billion is about 200 percent more. Is there any more detail on why this one will raise such vastly larger amounts of Federal and State funding than the last four transportation tax measures? Is there any more detail on that, that we've been given? Mr. Mello: I would just like to state that we have the latest list of projects that were submitted to VTA. The total request was actually $48 billion. I would guess that a significant number of those projects may have funding already dedicated in the regional TIP, Federal and State funding. There's also the new cap and trade funding that's available directly from the State. We're being joined by Jim Lightbody who may have a little more information on that. James Lightbody: I just wanted to add that that 14 billion includes the 2000 measure which is raising about $7 billion. That's a big chunk of it. Council Member Filseth: Is that right? The 2000 measure which is raising another $7 billion, that's not allocated to projects and that's available for these projects? Mr. Lightbody: It is allocated to projects, but those projects are in the 40 to 50 list of projects. They're trying not to double count it. Council Member Filseth: One of the things that's going to be of interest to this Council is sort of how money is going to be available for things like TRANSCRIPT Page 44 of 70 City Council Meeting Transcript: 10/13/15 grade separations and so forth. Whether it's 6 billion plus 25 percent or 20 billion, it's going to make a significant difference. Thanks very much. Vice Mayor Schmid: I guess just a follow up on the leveraging issue. We're presented with the transportation sales tax measure, and this has been the source of County funds for the last 30 years and will be an important source of the future, but it is a limited source. For our needs, grade separations, trenching and so on, we need leveraged funds which go well beyond what we could get from this measure. What is the connection between this measure and being able to get State, Federal grants? Mr. Keene: Maybe before you guys answer, it's not just the measure itself; it would be the particular projects or purposes within the measure have some impact on what sources can be leveraged. Right? I mean if we've got transit dollars, that's going to be potentially leveraged or matched by Federal transit dollars, which is going to be a different situation than Federal highway funds and those sorts of things. Mr. Mello: Just to cite one example of a grade separation that cobbled together multiple funding sources, the recently completed project in San Bruno accessed Section 190 funds, it's maximum allowance for Section 190. There was also a one-time infusion into the Section 190 program from Proposition 1B; that was $150 million in bond funding that was infused just at one point in time into Section 190. Something similar could occur in the future. MTC programmed Federal rail funding for the grade separation. San Mateo TA was able to contribute its dedicated stream of revenue that it has dedicated to grade separation. It was a $160 million project; the funding was split out among many different programs. I think any large project is going to need to include multiple sources of funding. The County sales tax revenue would just be one piece of that. Vice Mayor Schmid: I guess the amount we would get from this is a small portion of what we need if we're going down the grade separation route. The question is then is it too early for us to start trying to put together packages of funding that we need to have a sense of who would participate in what way. I think it's clear our issue deals with intense commuting activity along the corridor. Clearly it benefits jobs in the City more than residents. How do we get the business community to participate in the cost of making this effective in the future, either through fees or taxes or some way. It seems to me that we have to put together financing ideas, packages of which the sales tax might be a portion, but probably a minor portion of the total. Is it premature for us to be committing to a County tax for the next 30 years before we have a clear notion of our needs, the cost of our TRANSCRIPT Page 45 of 70 City Council Meeting Transcript: 10/13/15 needs and the participation rates of the various parties in that? That would be the base question I would have. Mr. Shikada: I think as has been somewhat discussed previously, the fact is likely that we're into an iterative process in identifying some initial options for further evaluation including the County's sales tax, any potential City- level measure. Based upon the Council's priorities and, as you point out, issues of who pays, whether it be sales tax, other funding measures and ultimately to what extent it reflects the Council's policy priorities there, that we come back, evaluate options and take another round based on further feedback down the road. Vice Mayor Schmid: I guess the only question is can we get up and ask people to approve a sales tax which they will start paying and will be paying for 30 years before we can say it will be shared in this way or that way. Might we be in a better position six months from now, nine months from now, a year from now to tell people vote for this and we're more likely to get that. Mr. Keene: I'm sorry, I had a parallel comment I was going to make, Madam. Mayor Holman: All right. Thank you. Council Member Burt. Mr. Keene: Before we do that, could I raise ... Mayor Holman: Sure. Mr. Keene: I think this is an interesting tack that has materialized here about this leveraging of, say, Federal funding. We're looking at it at a gross level without being able to say how much are in these different funding categories like FTA versus FAG, all of those things. Even just assuming that it was sort of straight, what Jim was saying was out of the 20 billion with the $6 billion County sales tax, 14 billion of which half he's saying really belongs to the prior measure. That's, again, in a gross way saying half of it is leveraged by this new measure. That's almost one to one. Again, all of this is at a gross level. If we're 7 percent of the sales tax generation even in the County, which is correct, out of $6 billion that's $420 million, unless I'm doing the math wrong. If we had a 1:1 leverage ratio that we also would somehow want to factor into having a better understanding, suddenly there's a lot more money there. It goes to the comment Council Member DuBois made earlier about if we had this very small pool of money, then why would we even think about a County sales tax. We might look at a different option. I think we ought to pay careful attention to what the potentials are on the County sales tax. Even though there are a lot of other funding TRANSCRIPT Page 46 of 70 City Council Meeting Transcript: 10/13/15 sources we want to explore, we do have some deadlines to meet as it relates to our strategy for the County sales tax. It's one year to the election on that right now. I mean, I still think that ought to be sort of the first priority of what we're doing, and then these other directions come in if our estimates are wrong or whatever it is. I don't think we should right yet assume that the sales tax can't generate some meaningful money for us, at least based on if we can leverage other money. Mayor Holman: I'll come back to you. Council Member Burt. Council Member Burt: I'll just follow on with a few quick comments first on the potential leveraging dollars. One is something we discussed when Carl Guardino was here. Briefly we discussed I should say. We shouldn't just look at what is the necessary or fair share of this tax measure to the North County and Palo Alto. It's really what's the fair share out of the last several tax measures. They were overwhelmingly for BART to San Jose. BART and Caltrain are really the big transit backbones of the Santa Clara County. I would argue that Caltrain is significantly more important than BART. That certainly has not been how the tax dollars have been allocated. There's really a need for a readjustment, that this measure should be predominantly toward Caltrain and enough money to complete the BART measure. They're talking about $1 1/2 billion for just the BART measure. VTA is talking about some fraction of that for Caltrain after Caltrain got nothing out of the previous two measures. I think we haven't framed it quite correctly. I think that's how we should do it. As Vice Mayor Schmid has alluded to, the dollars that are spent here on transit predominantly serve the workers from throughout the county who work here and have to commute to get here. It's not principally local residents who will utilize those benefits. It's the workers who will use that system and free the other roadways between San Jose and here and elsewhere. If we don't have more use of Caltrain, we'll have even worse and worse gridlock on our freeways. I look forward to the Mayor sharing if there's been any response by the nine North County cities to the poor response that the VTA gave to their unified letter. I'd also like to just comment on my own thoughts about where we're headed on some of these other leveraged funds. We've always had major transit projects be a combination of funding sources. Not always all the buckets, but from Federal and State and regional and local. Some combination has been what's been necessary. There's hardly a project that's ever all one of those buckets, and very few that get to dive into all of them, but a good number. The big one that I see on the horizon of new money is the cap and trade. In part, it's going to be a lot of dollars either way, and growing dollars every year is the anticipation. We also have the question of whether High Speed Rail will hold onto those dollars. They're being challenged on two different levels legally. One, whether spending it on a system that will have no TRANSCRIPT Page 47 of 70 City Council Meeting Transcript: 10/13/15 benefit at all toward greenhouse gases before 2020 and nominal after that. It should be 25 percent of all cap and trade dollars, and that's being challenged legally. The second was whether it was adopted properly when it was adopted as a fee rather than a tax. We'll see what happens on both those fronts. That's not up to us to decide, but those are wide open questions. Even if High Speed Rail holds onto those dollars, these are billions and billions of dollars per year that should be going toward real projects that will reduce greenhouse gases. I think we're going to want to seek a clear commitment to the Caltrain funding from VTA, and we want to rally our other cities and the business community. Frankly, we've heard that the Leadership Group has been supportive of Caltrain, but we continue to believe that it is disproportionate support for its importance in comparison to BART. I also want to get talking in the next go-round about our local tax measure. We've talked about a local sales tax measure as an alternative to the County one, but I think what we really should be talking about is a long- term funding source for local transit. Not to fund Caltrain predominantly, but to fund our entire TDM program and the potential of a business license tax based on number of employees. Council Member Berman: Council Member Burt brought up something that triggered something I was trying to look up. I'll do it in a little bit. A couple of questions. Mayor Holman: Do you want to take that time, and I could call on Council Member Scharff next? It's your call since you have the order. Council Member Berman: No, that's okay. Appreciate it. The first thing is on packet page 19, the Council adopted the following priorities in regards to the tax measure. It seemed off, and I just checked with the Minutes. We had actually deleted—right now, one says dedicated funding for Caltrain grade separations in Palo Alto or North Santa Clara County. We deleted the "or North Santa Clara County." That should not be in there. In "3," better first and last mile service particularly in North Santa Clara County, we deleted the "particularly in North Santa Clara County." I won't bother restating the reasons for that. I'm the one who proposed those, so that's why it stuck out to me. Those shouldn't be in our priorities. I have a question. Number 5 on packet page 20, the local street and road pavement maintenance allocations with a possible provision of unencumbered local funds if an adequate pavement maintenance level is achieved, does anybody remember what that amount was going to be approximately? Mr. Mello: The list that was released last week at the VTA/TAC meeting currently shows 1.2 billion for local street maintenance. TRANSCRIPT Page 48 of 70 City Council Meeting Transcript: 10/13/15 Council Member Berman: Do you happen to know what that would mean for—I mean, will that be allocated on a per capita basis or on a road miles per city basis? What's the allocation? Mr. Mello: We have a chart that shows historic allocations by jurisdiction on other tax measures. Palo Alto was between 2.6 percent and 3.5 percent on that table. Council Member Berman: What was the table? Mr. Mello: The table is a breakdown of the 2014 Measure X allocation, the vehicle registration fee allocation, population share, OBAG guaranty and 1996 Measure B. They all had varying percentages that range from 2.6 to 3.5. Council Member Berman: I guess one thing to consider is I'm assuming that our pavement condition index will be above the maintenance level that they set to unencumber the funds. Mr. Keene: I mean right now we're going to hit ... Council Member Berman: We're at 79, right? Mr. Keene: Yeah. We're going to hit—what was our target again? 85. Council Member Berman: 85 by 2019. Mr. Keene: Yeah, we were going to hit that by 2019. Council Member Berman: The goal was initially 2021. That could be a source of funds that we could use for other projects. I'm not sure what that 1.2 billion would lead to on an annual basis or on a total basis or anything like that, but hopefully something that could help us chip away a little more at that total project cost for grade separations, if that was what we chose to put it towards. I agree 100 percent with Council Member Burt that we should start talking to our State legislators about possible ways to obtain cap and trade funding for grade separations in particular. I don't know if money is going towards Caltrain improvements in general. We should also figure out which cities are looking at grade separations and how many different legislators there are that represent those cities, and see if a coalition could be developed to start pushing that goal. The thing that I was thinking about, that I'll do a little more digging into, is we have a lot of big companies in Palo Alto, Menlo Park, Mountain View, along the Caltrain corridor that are probably members of the Silicon Valley Leadership Group, and Stanford University. Why don't we start reaching out to those folks to TRANSCRIPT Page 49 of 70 City Council Meeting Transcript: 10/13/15 start emphasizing to them the importance that Caltrain plays in their workforce and what an important opportunity this tax measure could be to make some critical improvements to Caltrain that will benefit their workforce for decades and how maybe they should start speaking up a little bit on the importance that Caltrain plays to them as businesses and hopefully emphasize more to the county as a whole the importance that Caltrain plays and how long term it should be getting equal attention and over the past two tax measures it's gotten a miniscule amount in comparison to BART funding. That could be another way to just emphasize to folks, VTA and SVLG, the importance of Caltrain and the need to allocate more funding towards it. I also think that—I've heard nothing but good things about the approach that San Mateo County has taken in terms of how they allocated their tax funds to grade separations and then the process for communities to obtain some of those funds. Unless Staff is aware or other folks are aware of complaints about that process, it seemed to have been a process that worked pretty well and one that we should look into emulating for San Mateo County's tax measure as well. Did San Mateo County allocate a specific percentage of their tax measure to grade separations in particular? Mr. Mello: Yes, they allocate 15 percent which is a total of about 250 million. Council Member Berman: For them. Mr. Mello: For them, yes. Council Member Berman: For us, would it be about a billion just for grade separations? That would give cities the kind of guaranty they need. I think that's an interesting concept that we should consider. Mayor Holman: Council Member Scharff. Council Member Scharff: Thanks. A couple of thoughts on this. First of all, I agree with Council Member Burt on the issue of the funding. I'm hoping they'll limit BART to 1 1/2 billion. I think if they give BART more than 1 1/2 billion, I think it'll be hard to support that frankly. The bigger difficulty is, as Staff said, 750 million to 1 billion is what they're thinking about for Caltrain. I think we should be at that 1 1/2 billion to make up for Caltrain. The question is how do we leverage to get there, what does that take, what does that mean. First of all, I think it's really hard to get a transportation measure on the ballot in the county. I don't want to screw that up. I'm going to say that to start with. I think, Tom, you started it with the question of do we want the Supervisors to put it on or VTA. I believe the Supervisors didn't put it on initially the last go-round; VTA did because they needed four out of five Supervisors and they couldn't agree. They may not agree this TRANSCRIPT Page 50 of 70 City Council Meeting Transcript: 10/13/15 time and getting four out of five Supervisors to agree. It's actually really difficult to get the transportation measure on. I think what we want to do is try and advocate for a measure we can support. If there's a measure we can't support, we could frankly put on a countermeasure of a 1/2-cent sales tax which would probably kill their measure. I mean, if people had a choice of voting for our measure or their measure, they may not get two-thirds to support their measure. If you're thinking about leverage on the measure, putting on our own measure really makes it unlikely their measure will pass, if we do a 1/2-cent for instance at that. That whole train of thought in my mind is how do we get there, how do we get what we want. The other thing I'm thinking a little bit about is the San Mateo process. If we did our own mini San Mateo process, I guess I'm going to ask Staff this, and basically went for 1/4-cent sales tax increase and dedicated that purely to grade separation stuff, it only generates—what is it? $6 1/2 or $6.8 million a year. I suppose that probably increases as our sales tax increases. Does that provide the base funding where we can go out then and do the work that we need to do to seek those other funding sources, State, local and Federal funding sources, that allows us to do our own San Mateo-type process to move that forward because we'd have $7 million a year roughly towards grade separations. Is that something that's worth pursuing or does that make no sense? If we're not going to compete with the current transportation measure, we don't have to put it on now, because that 1/4- cent will still survive. We could think about that and put it on later, or we could put it on in a June election. We could do other things. I'll ask Staff what they think about that, if that's a worthwhile approach. Mr. Keene: (inaudible) I think we want to look at this (inaudible) looking at. Council Member Scharff: If we wanted you to look at that, we'd just direct you to go ahead and look at something like that I suppose. Mr. Keene: I mean, it's just sort of run some combinations of the numbers under these different scenarios. I mean, this is funding that would be used in conjunction with other funding. Council Member Scharff: Obviously that's not enough to do grade sep. I mean $7 million a year or $6 million are not going (inaudible), but it may do all the design work that you need to do and some matching funds. I don't know. Sometimes these matching funds, from what I understand, they only require you to put in 10 percent, right? Obviously 10 percent of $7 million gets you—if you had $70 million up there, that actually starts to be some serious moving the—I like that—moves the needle. I don't think we really have enough information at this point to be wanting to put on our own measure. I fear that we'll never have enough information, because it'll be a TRANSCRIPT Page 51 of 70 City Council Meeting Transcript: 10/13/15 moving target of what the actual measure is going to look like. We may want to think about if it's not a measure that we can live with, are we going to oppose it. Are we going to be—I guess it depends on how much money goes to Caltrain and other things. I think as a Council we probably need to think about that, so we're not in a reactive mode. I mean, if it comes back and Caltrain is only getting $750 million, are we going to support that measure? I think we need to start thinking about that beforehand and maybe even take positions on what we think we need in that measure to support it. Thanks. Mayor Holman: A few things here. I can't imagine that the full hand is going to be played out before the election. There's going to be a smorgasbord of things that funding could go to. The public isn't really going to know what they're voting on before the election. If Staff has any different opinion on that, I'd really like to hear it. I don't see anybody jumping forward. How project prioritization is going to happen too. I've been advocating for jobs density as being one of the ways to prioritize, because in the past it's always been housing density. Really what we have and where the ridership comes from is jobs density. Are we even going to know before the measure what the criteria is going to be to determine funding? Sort of akin to what Council Member Scharff was saying, I've told a number of people that I think 25 percent of a new tax measure for BART is too much, especially when you consider that that's more money than is being considered for Caltrain. One of the numbers that I don't know is what BART ridership in Santa Clara County is compared to Caltrain ridership in Santa Clara County. If somebody has that, it would be good to know that too. It's another way to rationalize what the investment should be. It sounds like maybe Tom or Pat have that number. Essentially because of the importance of Caltrain, the ridership and because the past two measures lion's share has gone to BART, I think 25 percent is still too high. A comment about Palo Alto and not road widening. Our Comprehensive Plan talks about not widening roadways, so I think we're fairly covered there. I still think, and you heard from the other cities, that a comprehensive study before the bond measure would be ideal to determine how the money should be spent. I don't know if there's any rational way to require a study to be done prior to any determination of allocation of funds, but a study needs to be done. I mean, that's just clear. Congestion relief such as was in the eleven city letter, extending up to San Francisco, down to San Jose and beyond and East Bay as well, because we're all a coordinated—I shouldn't necessarily say coordinated. We're all in interlocking transportation, roadways and systems. We need to know what the best way to spend the money is to get the best congestion relief. Without a study, we don't really know that. Council Member Burt asked a question about what other Mayors have said about VTA's response. We haven't had another meeting; we're going to TRANSCRIPT Page 52 of 70 City Council Meeting Transcript: 10/13/15 have another one soon. In just running into various events some of the Mayors, I won't name names at this point in time, not that I could remember necessarily or specifically or inclusively, but the response has been pretty much as you would expect. It's like they aren't listening, because the letter was pretty emphatic about the study. I don't think that there's been any commitment either. It's just the possibility of allocation of funds to those cities who have actually made great improvements on their roadway surfacing, the pavement maintenance. There hasn't been any commitment to that yet. It's just one of the things they're considering doing, right? Mr. Shikada: That is correct. There's been no commitment. It is one of the issues that has been discussed. I will tell you that in informal discussions among Staff from the North County cities, there's a recognition that since our—a bit of a dilemma here. In one sense, since our pavement conditions are typically better than in, say, San Jose, that having a set aside for pavement maintenance that can be used for other purposes is a good thing. On the other hand, having a large allocation for pavement maintenance then takes away from, let's say, an allocation that could be used for other big things, such as regional Caltrain programming. It's a bit of a dilemma for a city to say we like having local flexibility, but the likelihood is that the larger the allocation for that purpose, the less that's available for major regional projects that might be of importance to all cities. Mayor Holman: There's where the rub comes in because how the allocation has been misdistributed in the past affects the desire of the cities as well. I have one last question. Timing, should the City want to put its own tax measure on. If you back the timing out, is there time? When would we have to get all the paperwork done, all the filings done and do the necessary leg work leading up to it? Mr. Shikada: I think the timeframe that we've been operating under is for a November 2016 countywide measure or City measure that the final action and definitions on ballot language would need to occur in early August. Now, for something of the complexity of a countywide measure, VTA is headed toward a spring discussion and pretty well nailing down what the priorities would need to look like in that timeframe. I think actually for a local measure we have a little more time to, I'll say, reach both consensus as well as the action into the spring/summer timeframe. In general, we'd be expecting a pretty clear statement to occur on the countywide measure in the spring time. Mayor Holman: Yeah, I think they've been talking about March. Maybe you can come back later with what the timing might be practically speaking for TRANSCRIPT Page 53 of 70 City Council Meeting Transcript: 10/13/15 the City if we decided to go forward with one. A second round, let's see if we can do three minutes on a second round. Council Member Filseth. Council Member Filseth: I was just going to comment a little bit on the previous discussion about the other 14 billion. It sounds like there's something there, but it's sort of not clear how much of it is in which buckets and how much is committed to which things already and so forth. For us to sort of assume that maybe there's another $14 billion out here that we could get some of is probably a risky assumption. To Council Member Scharff's sort of posing the question of how could we support a countywide measure, what would put us in a position to be able to do that, just throwing out ideas here. It seems like a couple offhand that are worth considering. One is sort of the allusion to maybe a significantly increased commitment to Caltrain, which would allow us to fund some of this stuff that needs to get done. I agree with some of the people that said we really need to be taking a long-term view here. We need to be taking a 50 or 100-year view of what this is going to look like as opposed to let's try to do a couple of tactical projects for the least amount of money we can possibly do and then regret it 30 or 40 years from. One would be a significantly increased commitment to Caltrain which essentially says the County is going to lead this effort. Alternatively, if there were a robust return to source provision of some kind, potentially our City and some other cities, we could lead it up here in conjunction with other cities around here. Either of those might conceivably work. Council Member Wolbach: A few thoughts. First, I really want to commend Mayor Holman and Staff for working together to bring together the majority of the cities in the county to write that letter. I want to make sure that's not lost. That represents well over half of the cities in the county, and that it was treated kind of dismissively is very disappointing. I think it's very important that we not allow ourselves to be divided and conquered which can be done by appealing to either our—dividing and conquering can be done geographically and also temporally by appealing to our provincial and our short-term needs. Actually I think I'm going to agree with one of the things Council Member Filseth said, but disagree with the other. I actually don't support the return to sender. If it's all just coming back to us, let's just do a 1/4-cent sales tax for the County and then just let each city do its own 1/4-cent sales tax on top of that. I do think, though, that we should focus on things that are very long term, absolutely agree with that. We should focus on things that are going to have the biggest bang for the buck. That's why the four priorities that we laid out several weeks back are all big picture impacts. I do think it's important that we not allow ourselves to be divided and conquered and we do focus on big impact, shared vision stuff. There's something that's probably going to raise some eyebrows from my TRANSCRIPT Page 54 of 70 City Council Meeting Transcript: 10/13/15 colleagues. Staff identified on page 20 some of the things where it looks like funding is going to go. One thing mentioned in page 20, Item 4, was San Antonio and US 101 interchange improvements. This just raises the question for me whether we should put our new planned bike/pedestrian bridge on hold while we see what they're doing there. If the new San Antonio interchange is getting redone and they're going to improve bike and pedestrian access through the San Antonio bridge, it calls into question whether we want to be spending our money on a potentially escalating cost, big project with our own bridge. I know that's not going to be a popular comment either on this dais or in the community, but I'm curious to hear more about what's going on with that bridge. I'm curious what's happening with Item 4 on our list of our top priorities, which is we want to support something that VTA said they were putting in themselves. I'm curious how much traction it's getting. That is, for VTA to really focus on supporting transit management associations and other TDM measures around the county. Also, I'd like to point out if we do pass our own, say, 1/2-cent sales tax and the County passes its own, Staff points this out, the Legislature could pass a bill allowing us locally, and Santa Clara County, to go above the overall cap. I didn't check if it was signed or not, but there was a bill from Senator Hill for San Mateo and Santa Cruz Counties to do that. They could do that for us whether that was something we wanted them to do or whether it's advocating for that. As far as what it takes to get our support, one other thing I think we should maybe be clear about—I'll just wrap up real quickly. As far as getting the businesses in North County to support us in spreading the message about how important Caltrain is, we're really starting to get a handle on the future of our planning. The traffic issues, the housing issues, etc., trying to get a balance on the future of our community and the future of our area. The lack of balance has really been driving a lot of the anti-business climate locally. That's raised a lot of concerns among folks like the Leadership Group. Frankly, if they think there's been an anti- business sentiment recently in North County, they should see what it'll look like if Caltrain doesn't get the grade separations and the other improvements that we're going to need. I hope that that's not lost on the business community at large in the region. Council Member DuBois: On San Antonio, I think we've seen the County plans. I think that was mainly things like entryway for cars to go south on San Antonio. Is that right? Anyways, I think it was part of the County highway plan. I think they showed plans for that. It wasn't Complete Street or anything; it was a freeway. Talking about money for Caltrain, I don't want it to get lost that Caltrain requested about $700 million for other improvements, nothing to do with grade seps. I don't think those go away. That was electric engines, longer platforms, certain bridges and other improvements, maintenance. When we talk about 700 to $1 billion for TRANSCRIPT Page 55 of 70 City Council Meeting Transcript: 10/13/15 Caltrain, I think 700 million of that is for these other projects. Again, I think as a City we should advocate for certain percentages of the sales tax to be allocated to categories. I think grade seps needs to be its own, not just part of the Caltrain amount. If there was something like 1 1/2 billion, 700 million for all of these improvements, 800 for grade seps, we have four of nine crossings, so that's about $400 million. That's pretty close to the percentage of sales tax we generate, 420 million. As the City Manager said, if we could leverage that, that would pay for the trenching option, and so we're kind of there. I think we need to really advocate for that pretty clearly in terms of what we want. I just want to point out to Staff, on page 21 there's a comment that the roadway submersion is much less than the trench, and that's what we'd most likely get allocated. It really compares one roadway submersion to the trench, which was comparing 184 million to 488 million. Really, if you look at the two roadway submersions, it's 327 million versus 480 million. If you update the property costs that we'd have to seize and you think about the political cost of seizing those homes plus lawsuits, I think you get pretty close. We should be really careful about these kind of numbers, because that's not the right comparison. Those are my comments. Mayor Holman: I don't see any other lights at this moment. If we have no other questions or comments, we'd entertain a motion for direction to Staff. No one's eager to do that it seems. Council Member Scharff. Council Member Scharff: I actually thought Council Member DuBois made a good point, that we need to clearly advocate for grade separations in this money. I don't know how far we'll get for it, but I definitely think we should advocate for it. I think we should advocate for that 1 1/2 billion. I also think that Staff should come back to us as soon as there's a clear sense of what the funding measure looks like it's shaping up for. If you think it's in the spring and check in with us, then we should see what we want to do. I guess I also wanted to ask Staff if that's what we want to do, if we want to advocate strongly to put 1 1/2 billion towards Caltrain, include money for grade separations in that, I mean just a broad direction to Staff to go do that and then come back to us as soon as the measure starts shaping up and check in with us, is that sort of the right direction? Does that make sense or am I missing stuff that should be in there? Mr. Mello: I would just say based on the current discussion that's occurring, we would need a little clarity on specifically what improvements to Caltrain you would like to be included in that. Grade separation is one component of Caltrain improvements. There's also new rolling stock, signalization, station improvements. Currently it looks like some of that stuff might be combined. I would like a little more direction as to ... TRANSCRIPT Page 56 of 70 City Council Meeting Transcript: 10/13/15 Council Member Scharff: My understanding is that Caltrain has asked for about 750 million for which to do—other people in the room may have a better sense of that than me—things like what you said, level boarding, longer platforms, I don't remember what else they want. There's a bunch of rolling stock. There's a bunch of stuff that they've asked for. Obviously we would support what they've asked for, because they've done the studies. What I was really getting out of Council Member DuBois' thoughts on that was that we should put in there specifically for grade separations, which is not in there. That's really not on the table in terms of going into this funding measure on a countywide basis. I think we should have general direction. What I'm thinking of—I'll probably put that in a motion—$1 1/2 billion with money for grade separations. Caltrain would get to decide what the rest of it is. I'm open to whatever my colleagues think about it. I want to know if that's enough direction to Staff or do you need more clarification than that. Mr. Keene: I guess one thought is how we arrive at the figure. I mean, are we thinking about trying to pay attention to grade separating essentially all of Santa Clara County, is what we're sort of advocating, which is one sort of fair way to start about it. Council Member Scharff: Right. We've got to think about all of ... Mr. Keene: Whatever that number shakes out to. For whatever it’s worth, I mean, I think at this stage, middle of October, the best direction we would have is for the Council to give a very clear message about what you think is absolutely most important. Not to get in an argument with our Staff here, these other components of Caltrain are dealing with long-term carrying capacity, which can't really work without grade sep themselves. Grade sep is even a bigger issue than just capacity for us. I think the Council has made that statement about long-term quality of life and the long-term view. I think that's a good position to ask us as a starting point to be clear about where we are. Right now we've just been responding a little bit and listening to folks. For you to say something even after your first meeting would be helpful. I'll be curious if you would agree. I'd feel even better when we go up to talk to Caltrain about some of these issues, about where the Council is. Council Member Scharff: I'd move that we direct Staff to advocate for and support putting in the countywide funding measure that's being considered money for countywide grade separation on the order of at least 750 million. Council Member Berman: I'll second. Council Member Scharff: I'd say at least. TRANSCRIPT Page 57 of 70 City Council Meeting Transcript: 10/13/15 Council Member Filseth: It's probably a lot more actually. If you calculate the rest of the county. Council Member Scharff: Right. Most of these grade separations are actually here and then some other places. Mr. Keene: You were talking about Caltrain grade separation? Council Member Scharff: Yeah, Caltrain grade separation. Council Member Berman: I'll second. Mayor Holman: Council Member Scharff, did you say 700 or 750? Council Member Scharff: I said 750 would ... Mayor Holman: 750 million. Actually I think I heard Council Member DuBois on the left, I think I heard you second it first. MOTION: Council Member Scharff moved, seconded by Council Member DuBois to: A. Direct Staff to advocate for and support putting in the Countywide funding measure, funding for countywide Caltrain grade separation in the order of $750 million; and B. To check in with Council when the Measure starts to take shape. Mayor Holman: Do you want to speak to your motion? Council Member Scharff: The other part of that would be to check in with us when the measure starts to take shape and then to come back to Council. Mayor Holman: Council Member DuBois, do you want to speak to your second? Council Member DuBois: Yes. I think these things are done based on estimated sales tax. I was going to propose that something like approximately 15 percent of the thing be spent on grade seps, which would be 900 million as a starting point. I'm expecting that to go down. Yeah, 15 percent with San Mateo County. I think doing it as a percentage is just a little clearer. Council Member Scharff: I'm good with doing it as a percentage. I think that may actually be better. TRANSCRIPT Page 58 of 70 City Council Meeting Transcript: 10/13/15 Mayor Holman: Could you clarify the language for the Clerk please? Council Member DuBois. Council Member DuBois: Funding for Caltrain on the order of 15 percent of the bond measure. INCORPORATED INTO THE MOTION WITH THE CONSENT OF THE MAKER AND SECONDER to replace in Motion Part A, “$750 million” with “15 percent.” Council Member DuBois: Again I think you just totally separate it from the other Caltrain requests. They shouldn't even be tied together. Just a separate category of grade separations. Mayor Holman: A question for the maker and seconder of the motion. I know it is, but to be clear, does this need to be clarified that it's in addition to the already considered Caltrain allocation? Council Member Scharff: Sure, let's put it in there. Why not? Then it's clear. Mayor Holman: David, this is "in addition to ... Council Member Burt: It's "separate from." Council Member Scharff: "Separate" as opposed to "addition." I agree with you. Mayor Holman: "Separate from" is better. INCORPORATED INTO THE MOTION WITH THE CONSENT OF THE MAKER AND SECONDER to add to the end of Motion Part A, “separate from other Caltrain enhancements.” Mayor Holman: Council Member DuBois, did you have other comments you wanted to make to your second? Council Member DuBois: I wanted to ask the maker. It's been brought up a couple of times about the process the money will be allocated under the bond. Do we want to speak to that at all in terms of ... Council Member Scharff: I'm sorry. Say that again. Council Member Berman: The process. TRANSCRIPT Page 59 of 70 City Council Meeting Transcript: 10/13/15 Council Member DuBois: We've talked a couple of times about is it going to be first project ready gets the money or what's the process for allocation. Do we want to direct Staff to advocate for a different process? Council Member Scharff: What did they do in San Mateo County? We've talked about how that seemed to be a fair process. I think we thought that was. We have one of the most complicated grade separations, so we won't be the first projects to be ready. We want to think about what's a fair process, so that if it takes us longer, we still get money. Mr. Mello: In San Mateo County, they used a very similar process to what the State uses for Section 190 prioritization. They have a host of criteria, average daily traffic, collision history, safety concerns, number of trains per hour, a whole host of other measures. They use those to prioritize all the requests by the different municipalities. Council Member Scharff: What did you say? Mayor Holman: Needs based. Council Member Burt: It's need based, not ... Council Member Scharff: Why don't we do a need based—why don't we put that in there? If you have language you think might be good, why don't you suggest it? Mayor Holman: Council Member—I'm sorry, Josh. Mr. Mello: Just one more point. They also fund design as a first step, and then you enter into construction if you make it through the design phase. Mayor Holman: Council Member DuBois, are you complete? Okay. Council Member Burt, you are next. Council Member Burt: Just following up on including something about the criteria for selection of priorities. I would put as maybe a new "B" and drop "C" down that "the criteria for allocating funds to specific grade separations be driven by need factors." Council Member Scharff: That's accepted. Mayor Holman: Council Member DuBois, are you agreeable with that? Council Member DuBois: I'm not sure why we want to say just grade seps. Council Member Burt: That's all we're addressing here for one thing. TRANSCRIPT Page 60 of 70 City Council Meeting Transcript: 10/13/15 Council Member DuBois: This is having Staff talk about the tax measure in general, right? Council Member Burt: This might be as referring to the content of "A" which is the only concrete recommendation we've made here. Council Member DuBois: I accept it, but I ... Council Member Burt: It'd be a separate subject how you want to talk about allocation of the other elements of the tax measure. This is just focusing on the grade sep issue. If you want to add something about other elements, then that's a different subject, to my mind. INCORPORATED INTO THE MOTION WITH THE CONSENT OF THE MAKER AND SECONDER to add to the Motion, “that the criteria for allocating funds to specific grade separations be driven by need factors.” Council Member Burt: I wanted to just add a couple of other things then. This really addresses one of the main problems. We touched on it earlier with the High Speed Rail, but it really pertains to Caltrain. We look at what Caltrain has asked from the County. First, they're double dipping on their asks. The rolling stock and electrification, they don't have a $750 million shortfall for that. What they don't have in their current—they have a what? 200 million or so shortfall, and they've been pursuing it through cap and trade dollars and they just had a large delegation to DC. They're looking at any pot they can. They're putting the full amount here as well as pursuing the full amount in other directions. That's fine; that's how this whole wish list got so big from everyone. It's interesting that Caltrain doesn't prioritize grade separations. In fact, they simply say, "We will support your efforts and your funding for grade separations, but we won't own responsibility for it." Just as High Speed Rail does. Basically, we have these two rail agencies that are externalizing the impacts of more trains. They are treating it as if their whole business is running the trains on the tracks, and they have no responsibility for the related impacts of that action. That's just wrong. Now, we can understand why in an era of limited dollars, especially toward transit, they're going to be tempted to fight for the dollars for the things that occur right on their tracks basically. Overall, it's just a wrong approach. We shouldn't allow for it, and we should be very clear, and other cities should be very clear, to Caltrain that "as our representative, you have to share an ownership for this, and you should be fighting as hard for dollars on grade separations as you are for every other measure." Finally, the Mayor asked earlier about comparing riders in Santa Clara County on BART to Caltrain. We can't quite do that, because there's no BART to Santa Clara County yet. There are projected riderships. The metric is not how many riders. It's how TRANSCRIPT Page 61 of 70 City Council Meeting Transcript: 10/13/15 many riders per $1 billion spent. On that metric, Caltrain scores way ahead of the BART to San Jose. The BART to San Jose, not all those dollars are being spent within our county. They had to come from Fremont on down all the way to San Jose and Santa Clara, they think. Anyway, that's the sort of metric that we should be looking at. It's if we had spent $2 billion on Caltrain or $3 billion on a fully grade separated Caltrain or who knows what, where would be in that system. We've allowed others to frame how we ought to be talking about this. We've allowed it for 20-plus years on the BART to San Jose question. It's a lot of money to have a partially tunneled BART to San Jose. They have a tunnel under a lake. I mean, we're talking about not even being allowed to consider an open trench, and BART to San Jose has a tunnel under a lake. We just need kind of a realistic comparison and not allow others to dictate the narrative. Mayor Holman: Could I ask did you want to add as a "D" that Staff develop metrics comparing Caltrain to BART? Council Member Burt: No. We have a whole bunch of things that are part of our arguments. I don't think we need to put it in the motion. Mr. Keene: Madam Mayor? Mayor Holman: Yes. Mr. Keene: Not trying to intercept any other motions or directives, but I think you have a really nice, clear focus right now. "C" even makes it clear to check in when the measure starts to take shape. It'd be much better for us to be messaging what our Council's focus is. Everybody else will be talking about the other components. We could come back to you and be better informed before you would start saying. In one sense, you almost dilute from your focus right now, and it's not really necessary, would be my thought. It'd be great to even have time of us out there repeating this refrain that this is the focus. If we have a chance to weigh in on other factors that are within the measure, we can do that with you. That's my thought. Mayor Holman: Council Member Berman. Council Member Berman: Taking that into account and also taking into account Council Member Burt's points about what is the real funding need for the other Caltrain improvements, do we want to—I'm perfectly content if the answer is no because I'm glad that we have a percentage set for grade separations just like San Mateo County did. Do we want to say anything about the additional Caltrain funding and how that should be either commensurate with BART funding or $700 million or anything like that? Just TRANSCRIPT Page 62 of 70 City Council Meeting Transcript: 10/13/15 to make sure that they don't then come back and say here's 900 million for grade seps and 200 million for the rest of Caltrain funding or something like that. It's something that we've talked—up until this point, we've been talking about Caltrain funding should be commensurate with BART funding. Do we still want to have that in here or just kind of make a policy statement on grade seps only and not other things? Mayor Holman: I think it's likely a good clarification. I also see City Manager's got his light on. Mr. Keene: I was just going to say your earlier directive tonight asked you to reconstitute the Rail Committee. I'm assuming we're going to have a Rail Committee meeting pretty soon. There are a bunch of these kinds of issues that might be best taken up at that point in time. We might have already had a preliminary meeting with Caltrain ourselves. Just up to you. Mayor Holman: I think Council Member Berman—I don't disagree with City Manager, but I think Council Member Berman, your point is a good one to make this discrete and in addition to. If you wanted to add that. Council Member Scharff: I probably wouldn't accept it, just to be clear. I think the reason is that other people are going to be going—I mean, Caltrain's going to be fighting for their 700 million no matter what. We don't need to put that in there. Other people will fight that battle. It'll dilute what we're doing, and we'll gain nothing from it. No one's going to come back and say Caltrain gets 200 million and we do 750 million for grade seps. That's not going to happen. I don't think us putting it in there is going to make it any better and less likely to happen. I think we should focus on this, keep the focus on grade separations, and it'll be the most powerful thing we can do. Mayor Holman: Council Member Berman, you still have the floor. What is your thinking? Council Member Berman: That it's just been pulled out from under me. Mayor Holman: I would second. Council Member Berman: I don't know, to be honest. That's kind of why I brought it up the way I did. I'll leave my comment as a comment, and see if other folks want to take it up. Mayor Holman: Council Member Burt, I will put you in line here. You can come back to that. Council Member Wolbach. TRANSCRIPT Page 63 of 70 City Council Meeting Transcript: 10/13/15 Council Member Wolbach: I'm actually going to propose two amendments. Actually I know one of them won't be taken as friendly, because we just heard that. I'll run with that one. I'll just do that one first, and I'll come back to my second one. I propose an amendment that at the end of the third line of "A" add "in addition to the 700 million already requested by Caltrain for other Caltrain improvements." Mayor Holman: We know Council Member Scharff will not accept it as an amendment. I would second it. It is 750, I believe. Council Member DuBois: I think it's 700. Mayor Holman: Is it 700? I thought it was 750. Council Member Wolbach: We can say approximately. Council Member Scharff: We don't know. They're asking for between 750 and a million. Council Member DuBois: I have a list; I don't know if it's up to date. Council Member Wolbach: Then we can get rid of the numbers and we can say "in addition to the funding separately requested by Caltrain for other improvements to the system." Council Member Scharff: We already have that. Council Member Wolbach: I'll speak to it in a second. Mayor Holman: Council Member Scharff. I would still second that. Mayor Holman: Do you want to speak to your amendment? Council Member Wolbach: Yeah, I would. There are a couple of things. One, I fully respect the idea, as was said before, that nobody's going to say if we spend money on Caltrain grade separation, we're not going to spend money on the other Caltrain improvements. Council Member Scharff: I don't have a problem with (crosstalk). Mayor Holman: Council Member Scharff, you don't have the floor. Council Member Scharff: I would accept this. You didn't ask me if I would accept it or not. Mayor Holman: You had already said you wouldn't. TRANSCRIPT Page 64 of 70 City Council Meeting Transcript: 10/13/15 Council Member Scharff: No, I said I wouldn't accept his motion and I wouldn't accept putting a number in it. You then changed it. I said it pretty much says that, but if you want to add that, I would accept that. Council Member Berman: You hurt my feelings. Council Member Scharff: It's actually a very different motion. Council Member Wolbach: All right. I'll just ask the seconder I guess. Mayor Holman: As the amendment stands, it is "in addition to the funding already requested by Caltrain for other Caltrain improvements." Council Member Scharff now says he will accept that as an amendment to the original motion. Council Member DuBois? Council Member DuBois: Is that replacing the "separate from other Caltrain enhancements"? Mayor Holman: No. He said at the end of that. It's after. Council Member Wolbach: Yeah, I think we would get rid of "separate from other Caltrain enhancements." It's essentially clarifying that. Would that still be okay with the maker? Council Member DuBois: Yeah, I think that's fine. Mayor Holman: Wouldn't it be "separate from and in addition to"? You're just losing "other Caltrain enhancements." Council Member Wolbach: I just want to make sure we're not getting too redundant with all the wordsmithing. Council Member DuBois: Sorry. I think it should say "15 percent of the total tax measure" to be clear on what percentage we're talking about. Council Member Wolbach: Yes. As far as I'm concerned, we can add that too. Council Member DuBois: Council Member Scharff, does that make sense? Mayor Holman: Hang on just a second. "A" would now read ... Council Member Scharff: I'm waiting for them to finish it. Mayor Holman: "A" would now read theoretically "countywide Caltrain grade separations in the order of 15 percent separate from," need to lose the word TRANSCRIPT Page 65 of 70 City Council Meeting Transcript: 10/13/15 "other," "and in addition to the funding already requested by Caltrain for other Caltrain improvements." Is that your intention, Council Member Wolbach? Council Member Wolbach: Yes. As Council Member DuBois points out, before "separate" and after the word "percent," so after "15 percent" it should say something like "15 percent of funds raised by the ballot measure." Mayor Holman: Council Member Scharff, is that still agreeable to you to accept? Council Member Scharff: That is. Mayor Holman: Council Member DuBois? Okay. INCORPORATED INTO THE MOTION WITH THE CONSENT OF THE MAKER AND SECONDER to replace in the Motion Part A, “separate from other Caltrain enhancements” with “of funds raised by the ballot measure separate from and in addition to the funding already requested by Caltrain for other Caltrain improvements.” Mayor Holman: Council Member Wolbach, you still had the floor. You had something else you said. Council Member Wolbach: Yes. Thank you both to the maker and the seconder for accepting that. The second one, I wanted to suggest adding a little bit more clarity to Item B here, about the need factors. Again, the point here is we want to make sure that we don't miss out on opportunities to actually use this funding even if it gets included in the ballot measure. What I would suggest adding is in "B,"—we might end up deleting some stuff—for now I'm suggesting as a friendly amendment that "cities have until the end of 2018 to submit applications." I'm open to tweaking the timeline or that we keep an open-ended timeline, but that there be some gap in time is the point here. This is your rough draft; we can work with it. I'm hearing some mumblings, so we can tweak it more. Mayor Holman: Council Member Scharff? Council Member Wolbach: There's a couple more pieces. One, that cities have until the end of 2018 to submit applications. Two, that funds from the tax measure could be used to fund design. Three, that—the third part would actually go right after need factors. It would say "need factors primarily traffic and safety concerns." You either want a semicolon or break it into a subpoint. TRANSCRIPT Page 66 of 70 City Council Meeting Transcript: 10/13/15 Mayor Holman: Council Member Scharff? Council Member Wolbach: That's the suggestion. Council Member Scharff: (inaudible) Mayor Holman: You would need a separate second. I am not hearing one or seeing one. AMENDMENT: Council Member Wolbach moved, seconded by Council Member XX to add to the Motion at the end of Part B, “primarily traffic and safety concerns; cities have until the end of 2018 to submit applications.” AMENDMENT FAILED DUE TO THE LACK OF A SECOND Mayor Holman: Do you have anything else? We'll revert to the original. Yes, thank you, David. Council Member Wolbach, do you have anything else? Council Member Wolbach: I'll leave it to my colleagues to consider other ways we can make sure that, whether it's in this motion or in future direction from Council or from Staff, that we're very clear that we don't want those who control the money after this ballot measure hopefully passes hopefully with extra funding for Caltrain grade separations, we want to make sure that those in control of the money don't just for any reason give it to cities who might already have their plans done in November 2016 which would leave us empty- handed. Mayor Holman: Council Member Filseth and then Council Member Burt. Council Member Filseth: I just wanted to ask the City Manager's advice on whether there ought to be a timeframe component explicit in this, because things are moving here. Mr. Keene: I think our reaction right now is it's not clear to me what advantage it really provides us right now. We will certainly be back before the Council in a regular fashion or on an as-needed basis if things start to shift when we get it down. I just sort of hate at the end of a four-hour period to be—I understand and appreciate the intent, but I just think a little more reflection would be good for us right now. That's my sense. Mayor Holman: Council Member Burt. Council Member Burt: I've been thinking about essentially the point that Council Member Scharff raised on we need to be the advocates for grade separations. We have seen no indication that Caltrain places a priority on that. I'll point out that Caltrain in their advocacy, they didn't put in equal grade TRANSCRIPT Page 67 of 70 City Council Meeting Transcript: 10/13/15 separations and their other priorities. They put all of their other priorities ahead of grade separations. We're going back, and we're putting their other priorities on equal ground with grade separations. This 700 million, we haven't had any in-depth discussion. My understanding—maybe Adina knows this better—that's, I think, three purposes. It's to fill a gap in electrification. It's rolling stock, and it's platform lengthening. Presumably the platform lengthening would be just our county's portion of it. The rolling stock and the electrification shortfalls are not county shortfalls. They're for the three county system, and they're coming and asking Santa Clara County to make up that shortfall. We're saying we're going to put that essentially on equal footing with our priority for grade separations. In our good guy approach of supporting Caltrain and wanting to see them modernized, we are—they're not going to bat for us and we're going to bat for them. I would encourage us—actually I'll offer substitute language that we engage with Caltrain to determine what specific needs they have for the prospective County transportation tax measure and return to Council with that information so that Council can make a further determination of its advocacy. Council Member Wolbach: That'd be replacing the last two lines (inaudible)? Council Member Burt: Yeah, it would basically replace the last two lines of "A" with this language. I'm not saying no to this, but as of what I know right now, I'm not quite sure that this is necessary. As I mentioned earlier, they're going after these same dollars from other pots. Not only are these dollars to serve the three counties coming out of our funds, but they're going after them elsewhere. I'm not at all convinced they're going to need this. They have a lot of funding sources. They have State at cap and trade. They have Federal dollars they're seeking, have regional dollars they're seeking. They don't have to come out of our limited Santa Clara County dollars, which are probably the most meaningful pot that is going to fund grade separations long term. Mayor Holman: Could I ask a clarifying question before I look to Council Member Scharff for acceptance or not? Council Member Burt, you said that Caltrain's looking to fill the funding gap in Santa Clara County or from Santa Clara County for the rolling stock even though that rolling stock serves two other counties. Council Member Burt: It's both. My understanding is it's both rolling stock and electrification shortfalls. It's both those things, or the whole system. Mayor Holman: Do we know if it's proportional or if it is the gap? Council Member Burt: To my knowledge, they're not going to the other two counties for these dollars. They're going to the State, MTC and the Federal government; they're not going to the other counties. This is all the more reason why I'm not saying don't do it. I'm saying we need to go back and have TRANSCRIPT Page 68 of 70 City Council Meeting Transcript: 10/13/15 better information. If we get clarification that this is justified and we support it, then by all means we can support it, but we don't have that information now. Mayor Holman: City Manager. Mr. Keene: I think that that would be good. Again, I just want to be sure that the various assumptions that we're using, I mean that we get a chance to validate those too. Just a little bit of extra time. I don't see what's gained by just being a little step-by-step here. Mayor Holman: Council Member Scharff, do you accept the amendment? Council Member Scharff: Yes, the answer is yes. Mayor Holman: Council Member DuBois? Council Member DuBois: This is replacing what? I would just point out that when you read Measure A as is, I don't think it's advocating support for Caltrain at all. It's just clarifying that we want 15 percent separate from anything that Caltrain says. When I read "A," I don't read that as Palo Alto supporting Caltrain. Council Member Burt: It says "in addition to." Council Member DuBois: In addition, I guess, but that's not strong support, I would say. I have no problem with your change either. Mayor Holman: The amendment is accepted by both maker and seconder of the motion. Thank you, Council Member Burt. INCORPORATED INTO THE MOTION WITH THE CONSENT OF THE MAKER AND SECONDER to replace in the Motion Part A, “separate from and in addition to the funding already requested by Caltrain for other Caltrain improvements” with “and engage with Caltrain to determine what specific needs they have for the prospective County tax measure and return to Council with this information to make further determination of this tax measure.” Mayor Holman: Do you have anything else, Council Member Burt? Council Member Berman. Council Member Berman, are you good? Council Member Berman: Yes, ma'am. Mayor Holman: Council Member DuBois, I see your light's on again. Nothing? Okay. The motion as it stands on the floor right now is that Council Member Scharff moved, seconded by Council Member DuBois, to direct Staff to advocate for and support putting in the Countywide funding TRANSCRIPT Page 69 of 70 City Council Meeting Transcript: 10/13/15 measure funding for countywide Caltrain grade separations in the order of 15 percent of funds raised by the ballot measure; and to engage with Caltrain to determine what specific needs they have for the prospective County tax measure; and Staff to return to Council with this information to make further determination of this tax measure. That's getting really hmm. Can we break this up? Direct Staff to advocate for and support putting in the countywide funding measure—can we do an "A" here? Funding for countywide Caltrain grade separations in the order of 15 percent of funds raised by the ballot measure and "B." "B" then would be engage with Caltrain. B, engage with Caltrain to determine what specific needs they have for the prospective County tax measure and return to Council with this information. Would we need anything after "information"? Do we need anything after "this information"? Pat, you had suggested this language. We'll do with it what we know we need to do with it. Council Member Burt: No, this is fine. Mayor Holman: After "with this information," delete "to make further." INCORPORATED INTO THE MOTION WITH THE CONSENT OF THE MAKER AND SECONDER to remove from the Motion Part A, “to make further determination of this tax measure.” Mayor Holman: That the criteria for allocating funds to specific grade separations be driven by need factors; and C, to check in with Council when the measure starts to take shape. Council Member Wolbach, you had a question? Council Member Wolbach: I was just going to say the sub-A should be rejoined with the first "A." The "B" should just be a separate "B." It doesn't need to be a sub, because the "B" here isn't something that goes in the ballot measure. It's separate direction to Staff. That can go up a level. That would make more sense. Mayor Holman: That does make more sense. I see lights from Council Member Filseth. Council Member Filseth: This may have answered my question actually. Is it crystal clear that the 15 percent of funds goes to grade separation and is not sort of modifiable by the outcome of this engagement with Caltrain? That we come back and say 10 percent for grade separation, 5 percent for painting trains and so forth. Mayor Holman: I think it's clear. Council Member DuBois, you have your light on. TRANSCRIPT Page 70 of 70 City Council Meeting Transcript: 10/13/15 Council Member DuBois: I haven't touched it. Mayor Holman: It just automatically pops up. I think we have a motion in front of us that we can vote on. That passes unanimously with Council Member Kniss absent. MOTION AS AMENDED PASSED: 8-0 Kniss absent Mayor Holman: Not bad, it's 10:02. That concludes our agenda items. I had said earlier that I would like to adjourn this meeting in honor of Former Mayor Dick Rosenbaum. Council Member Rosenbaum passed away this weekend at the age of 81. He was on the City Council from 1971 to 1975 and again from 1992 to 1999. He served as Mayor in 1998. To add to his years of community service, he also served on the Utilities Advisory Commission from 2000 to 2009. He also served in a number of other roles on nonprofit boards in the community. Just in elected and appointed roles and official roles, he had 20 years of community service. I would like to close this meeting in his honor. Adjournment: The meeting was adjourned at 10:03 P.M. in memory of Former Mayor Richard Rosenbaum who passed away on October 11, 2015. CITY COUNCIL RAIL COMMITTEE TRANSCRIPT Page 1 of 40 Special Meeting Tuesday, December 16, 2015 Chairperson Burt called the meeting to order at 8:31 A.M. in the Community Meeting Room, 250 Hamilton Avenue, Palo Alto, California. Present: Berman, Burt (Chair), DuBois, Scharff Absent: Oral Communications Chair Burt: At this time, we provide the public an opportunity to comment on items that are not otherwise on the agenda. We do not have any speaker cards. Agenda Items 1. Rail Committee Recommissioning & Discussion on Rail Issues/Next Steps. Chair Burt: We'll move to the next item which is the recommissioning of the Rail Committee and a discussion of rail issues and next steps. I don't know if the Staff wanted to make some comments. Ed Shikada, Assistant City Manager: Yes, we do have a brief presentation perhaps just for the purpose of organizing some of the material and some thoughts in preparation for the Committee's discussion and organizing work. With that, perhaps Richard, do you want to walk through it? Richard Hackman, Management Analyst: Sure. Thank you, Chair Burt and Council Members. I apologize for my voice, but I'll do the best I can. Just quickly to walk you through most of which was in your Staff Report is a brief presentation going over sort of how we got to where we are today and some proposed next steps where we would welcome your direction as we move forward with the recommissioning of the Rail Committee and a lot of the policy decisions that we have to make regarding the future of rail in our TRANSCRIPT Page 2 of 40 Rail Committee Special Meeting December 16, 2015 community. With that, just to remind everyone how we got here. On October 13, 2015 the Palo Alto City Council made two Motions related to rail. A key element of one of those Motions was the recommissioning of the Palo Alto Rail Committee. Outlined in this presentation and the Staff Report is Staff's proposal of how to address the elements—there were nine of them— of the Motions that Council passed on October 13th. Following the presentation, Staff would welcome the Rail Committee's direction on how to proceed with a number of things. Just to bring everyone up to speed and remind everyone. We use a lot of acronyms in here, a few, CEQA, CHSRA, CSS, EIR, HSR; that's what they mean. For anyone in the public, there are handouts available. If you'd like to follow along, you can use the key there. Broken down for you in the PowerPoint are the two Motions by category. We tried to take the nine different elements of the two Motions and put them into categories based on their current status. Parts of the Motion that have been completed or in the process of being completed are the Mayor who's reappointed the Rail Committee obviously; we're here today. Staff is pursuing interim grade separation safety measures through Section 130 funding. Work is underway at the Staff level with the California Public Utilities Commission regarding enhancements at the Churchill crossing. These are mostly going to be striping and signaling changes. We were approved for that funding, and we're working to do some moderate safety improvements there to help with the number of daily bicycle and pedestrian crossings we have at those two locations. Joining me now is Josh Mello from Planning who can also comment on this if you have any updates beyond that. No, okay. Joshua Mello, Chief Transportation Official: No, I don't. I'm getting up to speed. Section 130, yeah, we did come to agreement on a scope with Caltrain and the California Public Utilities Commission. That was submitted in October. Mr. Hackman: Parts of the Motion that Staff is currently addressing are Staff is working through regional groups and with Caltrain in advocating for funding of Caltrain grade separations on the order of 15 percent of the funds raised by a potential County Sales Tax Measure. Also, Staff is working, advocating really that the criteria for allocating funds to specific grade separation be driven by need factor instead of a, for example, first-come- first-serve process. We want to make sure that if we are able to obtain that 15 percent or even if it's less or even if it's more, that the funds go to the projects that need it most, not necessarily those that are fully designed or proposed first. Parts of the Motion that Staff is proposing additional Staff for in the form of a Program Manager is developing a first phase circulation TRANSCRIPT Page 3 of 40 Rail Committee Special Meeting December 16, 2015 study which Council directed Staff to do. The second is developing a preliminary plan for a context sensitive solution approach to addressing rail impacts and the future of rail in Palo Alto. This would include using the CSS approach for CEQA analysis related to the High Speed Rail Authority's proposal to do environmental clearance on the San Francisco to San Jose project segment and also preliminary design for grade separations in Palo Alto. For those of you who don't know, CSS, context sensitive solutions, as defined by the organization's website is a collaborative interdisciplinary holistic approach to the development of transportation projects. The CSS approach, which is specific, is guided by four core principles: strive towards a shared stakeholder vision to provide a basis for decisions; demonstrate a comprehensive understanding of context; foster continuing communication and collaboration to achieve consensus; exercise flexibility and creativity to shape effective transportation solutions while preserving and enhancing community and natural environments. Council gave clear direction that they felt that if this approach was applied to—I won't say problems, but I'll say the issues facing Palo Alto related to rail, specifically grade separations. We feel that it's likely this could result in the best outcome for our community. Just to be clear on one issue. Under the current California High Speed Rail Authority timeline, which I'll touch on later in the presentation, it would effectively be infeasible for CSS to be applied with what they've proposed. In terms of a Program Manager, which would manage the circulation study and the CSS process for grade separations which Staff is proposing, we're currently in the process of developing an RFP for the program management expertise. It says—excuse me—to retain an individual or firm with rail expertise to take the lead on these items and other activities needed to advance grade separations in Palo Alto. This is whether or not High Speed Rail proceeds. There's a strong feeling amongst Staff and also I know a number of Council Members have expressed both through our last meeting and through Study Sessions that we really need grade separations whether or not High Speed Rail comes. I hope that's not an earthquake. Parts of the Motion that Staff recommends would be addressed through a letter which was included in your agenda packet are that the full CSS approach process be used by the High Speed Rail Authority. That letter would go to both the CEO of Caltrain and the CEO of the High Speed Rail Authority. Also in that letter would be a recommendation that the time line for the EIR for the San Francisco to San Jose segment of the High Speed Rail project include adequate time for the CSS process. In terms of discussion topics for today, timing and amount of funding recommendations. Funding would be specifically related to the Program Manager which we have proposed. Scope of services; what the Program Manager's role would be; how you envision context sensitive solutions for Palo Alto's grade separations working; what TRANSCRIPT Page 4 of 40 Rail Committee Special Meeting December 16, 2015 different advocacy roles different members of the Palo Alto community would take on; what advocacy role would the Rail Committee have; what advocacy role would the City Manager have, a Program Manager, etc., in terms of approach to stakeholder engagement; adjacency issues; how working with our neighboring cities can enhance our ability to achieve our objectives; and how we can use regional coordination and coalition building to accomplish some of what we're trying to do here today. We'd also like to make sure that we're developing and using value capture in the best interests of the City. We'd like to do all this in the context of the Comprehensive Plan CAC. Just in terms of what the California High Speed Rail Authority CEQA next steps are. They plan to release a Draft EIR in the winter of 2016, so one year from now. They plan to ... Chair Burt: No, no. Months from now. I'm sorry. You said in the winter of 2016 for ... Mr. Hackman: The draft. Chair Burt: ... the draft. So that ... Council Member Berman: Depends on how you define winter of 2016. Mr. Hackman: They've pushed back their timeline slightly. Chair Burt: Winter of 2016 isn't a year from now. Council Member Berman: Winter of 2016-2017. (crosstalk). Mr. Hackman: Yes. I should say December of 2016. December of 2016 was what I was implying there with the Final EIR certification coming in December of 2017. Basically one year for the draft, two years for the final. That is noted at the bottom. It's for the San Francisco to San Jose program segment. Chair Burt: I'm sorry, Richard. Is this a recent update? Mr. Hackman: The recent update was on the Final EIR. They had originally said that they were hoping to have it done by the summer of 2017. They've since dropped that back to what they're calling winter of ... TRANSCRIPT Page 5 of 40 Rail Committee Special Meeting December 16, 2015 Chair Burt: When and how did they announce that? Mr. Hackman: I read it on the—they had a link to the Caltrain website, and I read it on there. Chair Burt: They haven't notified cities of this? Mr. Hackman: The City of Palo Alto has not received that in writing to my knowledge. Finally, Motion elements that Staff recommends should be addressed in the future. This one's pretty straightforward—is to check back with the Council when the sales tax measure starts to take shape, just in terms of where the sales tax measure stands. As of now, December 2015, the MTC is analyzing and modeling the unconstrained project list. In August 2016, we have the deadline to put a sales tax measure on the November 2016 ballot. In November of 2016, 11 months from now, it's likely that a sales tax ballot measure will go to the voters. With that, we welcome your questions and comments. Chair Burt: Let me first ask just in terms of our agenda. Agenda Items 1 and 2, it's not clear how we distinguish between them. We just had a report that—kind of on all this background. Does Staff have any clarification on the distinction? Mr. Shikada: It actually really relates to Number 2 more so than Number 1. Perhaps we should have waited on making that presentation. Chair Burt: In that case, should we go ahead and hear from a couple of members of the public who wanted to speak to "1," but really we have essentially one blended topic today. Does that sound fine? Our first speaker is Mike Brady, to be followed by Adina Levin. You'll have three minutes. Mike Brady: Good morning. My name is Mike Brady. I've been a lawyer with Ropers, Majeski, Kohn in Redwood City for 48 years. I'm also a mediator and arbitrator with ADR Services in San Francisco and San Jose. I have been the—congratulations on reactivating your Committee. I've met over the years many times with Mr. Burt, Mr. Filseth, Mr. DuBois about the rail matter. I'm the original attorney in the Tos lawsuit centered in Kings County. That's the lawsuit that seeks to prevent the construction of the entire statewide High Speed Rail project. That lawsuit was filed almost five years ago and is set for trial in February 11, in a couple of months. I'm here today also with Paul Jones, the Chairman of the Atherton Rail Committee. TRANSCRIPT Page 6 of 40 Rail Committee Special Meeting December 16, 2015 I've met with that committee for almost five years on a regular basis to update High Speed Rail on the Peninsula. I hope to interest you in joining with Atherton in a potential lawsuit to prevent High Speed Rail from coming to the Peninsula. My existing lawsuit is centered in Kings County because that's where the project was going to start. Now you're rather upset to hear they're trying to rush through the EIR and so forth for High Speed Rail on the Peninsula. You know the reason for that? Perhaps you don't. Very recently it was discovered that for 25 months, the High Speed Rail Association has concealed from Congress, the State Legislature and from all the cities that the cost of the project is going to be $9 billion higher. Their own contractor advised them of this and also said it's almost impossible for you to get under or over the mountains in southern California. When they face that difficulty, you might see southern California abandoned for a long time. Where does the focus then go? To the Peninsula. Watch out. Be very careful. I look forward to meeting with you. I'd be happy to brief you on our lawsuit. One of the main difficulties about the legalities of High Speed Rail on the Peninsula is this. They never submitted a funding plan for the Peninsula. They did for the Central Valley. Proposition 1A, our lawsuit is entirely based on Proposition 1A. Proposition 1A says no money can be appropriated for a project unless a funding plan is first submitted to the Legislature. None was ever submitted for the Peninsula. One was submitted for the Valley. That's a huge legal problem. No money can be given to you for anything until that is satisfied. The mood in the Legislature has changed. High Speed Rail is not as popular as it was in 2008 when it was passed. The Governor, of course, is still strongly in support of it, but it would be very interesting to see what funding plan would pass on a statewide basis. Finally, I would just mention that there are three initiatives which are currently getting stamped and approved to go out for signatures statewide. One would repeal the whole project. Two of them would take the existing money in the High Speed Rail bond fund, $8 1/2 billion, and give it to state water projects. Chair Burt: Thank you. Mr. Brady: Thank you. Chair Burt: Our next speaker is Adina Levin, to be followed by Herb Borock. Welcome. Adina Levin: Good morning, Council Members. Glad that the Rail Committee is reconvening to deal with the many issues and opportunities TRANSCRIPT Page 7 of 40 Rail Committee Special Meeting December 16, 2015 relating to rail at this time. One of the things that I'd like to mention with regard to the potential scope of the Committee relates to some renewed activity about Dumbarton Rail and the Dumbarton Corridor. There has been—even though this project has gotten killed a couple of times in the last few years, there's really a very strong interest, particularly in West Bay communities, to bring this back. Most recently Facebook has generously offered $1 million to study transportation options on the Dumbarton Corridor starting with the segment from Redwood City to Menlo Park, East Palo Alto by Facebook, and then potentially continuing over the bridge. There has been some expressions of interest in private operators to do a public-private partnership utilizing that rail corridor which has interesting implications for the region and would need scrutiny for the aspects of the business plan and also for the constellation of risks and benefits that you want to have a public-private partnership to get the best balance of public and private benefits. There's a next step here. The SamTrans Board is going to be accepting the offer and kicking off managing the analysis of transportation options on the corridor in their January Board Meeting. To take a step back, one of the opportunities would be to have connections from the bridge into Palo Alto where many people do come and work here from the East Bay as well as there's been some interest from large corporations in Mountain View to bring people over from there. One issue and risk is that in order to study the bridge apparently this needs to go back through the Alameda County Transportation Commission which is the entity that has killed this project three times in the last few years. Any political connections, they're doing some investigation to find out any points of leverage and would be happy to talk to Staff or any Council Members regarding that after this meeting. That is something that the Council may wish to include as part of the agenda. Lastly, for the agenda, there are issues relating to Downtown extension and its funding. That would be a beneficial project for Palo Alto and the rest of the community. That may be another item to be able to include in scope. Chair Burt: Thank you. Our next speaker is Herb Borock, to be followed by Roland LeBrun. Herb Borock: Good morning, Chair Burt and Committee Members, and also one, two, three, three members of the Policy and Services Committee. The Committees are advisory to the Council. In looking at the agenda, it's hard to tell whether, the way it's been formed, it's seen by Staff as a Committee that makes recommendations to the Council or talks to Staff about how they're implementing Council direction. Even such a simple thing as discussing a spokesperson, that's only something that the Council itself can determine. In regard to the draft letter from the Mayor reflecting adopted TRANSCRIPT Page 8 of 40 Rail Committee Special Meeting December 16, 2015 Council policy from its October 13th meeting, I would recommend that the language on context sensitive solutions be expanded. The reason is the High Speed Rail Authority is committed to context sensitive solutions for the design of more intensive development around High Speed Rail train stations. It's the policy of the City Council to be opposed to a High Speed Rail station in Palo Alto. In looking back at the Californians Advocating Responsible Rail Design site for the discussions on CSS in 2010, there were a number of different issues related to High Speed Rail besides the station environment for CSS solutions. I would think it would be important to mention those various issues that you would use that for, so that High Speed Rail doesn't turn around and say, "We're already doing that. It's in a project." In regard to an Environmental Impact Report schedule, the agenda materials for the Authority's Finance and Audit Committee meeting this month contains the detailed schedules for the Environmental Impact Reports for the various sections including precise dates for when they think those things will be occurring. Finally in terms of a possible VTA measure, one of the things that's been discussed by a number of people including Supervisor Simitian was that the thing that would probably defeat that measure would be Bus Rapid Transit. I'm concerned of people chasing after money for grade separations on the Peninsula in exchange for support for that, that somehow that would slip through. Whereas, the proper thing to do there would have language in the measure that would prohibit the Bus Rapid Transit. Thank you. Chair Burt: Thank you. Our final speaker is Roland LeBrun. Anyone else who wishes to speak needs to bring their card forward. Roland LeBrun: Can you hear me? Is this working? Season's greetings. I'm happy to see you all back, and I'm glad that we're finally reforming after the hiatus here. I'd like to touch on three things, the grade separations, the environmental clearance and then some of the items Herb and Adina touched on. On the grade separation and the funding, you have to be realistic. We're talking about millions and potentially reaching much over a billion dollars worth for Caltrain. You cannot expect the VTA to basically take in this money and dumping it down basically the Caltrain High Speed Rail money pit. You have to be realistic about that. This would be a tough sale. I'd like to suggest you use a different approach. You reach out to the VTA and explain to them what you're trying to do, and then ask them to take you to the East Bay and show you what they did for BART. They did four grade separations for Union Pacific over there. They know how to do this with a light railway. They can show you the approaches that they took, the engineering and also the causeway. On the environmental clearance TRANSCRIPT Page 9 of 40 Rail Committee Special Meeting December 16, 2015 and the context sensitive solutions, the key here is that the Peninsula will be below 125 miles an hour, which means that the High Speed Rail Authority do not have exclusive rights to get environmental clearance. Anybody can get it. That's VTA, SamTrans, Caltrain or whatever. One approach you should be looking at is maybe the VTA should be assuming responsibility for getting environmental clearance independently. The key is 125 miles an hour. You keep it below, anybody can do this. Just to clarify the dates on the environmental clearance, they're talking about scoping comments in two to three months for or about the draft in the winter. That's probably where the confusion arose. In closing, on the points that Adina made, this is actually a joint effort between Facebook and Stanford. I don't know if you know that Stanford are about to basically start a new campus in Redwood City. It's a joint effort with them. Right now, it's primary focus is coming from San Francisco, so it's basically linking the (inaudible) of Transbay and basically go directly to Facebook. I don't know if you're familiar with this. We have a potential project on a ballot measure which is called a VTA Sprinter project which is going to be basically providing additional traffic from the south. It might draw as far as Diridon (inaudible) and going as far as Blossom Hill. It goes up to Alviso, when it turns back. It goes back and forth. Once Dumbarton reopens, I assure you we're never going to reopen this bridge. It'll be a tunnel; it'll be a high speed tunnel, minimum 125 miles an hour, probably keep it to 124 so somebody else can get the environmental clearance. Then we'll have a potential to have a loop that starts from the south and go to Diridon. One train will go to the East Bay, go across Dumbarton, come back down to Diridon. The other train will go up the Peninsula and come back down the other way. We'll have a loop for the Sprinter system. That's it. Thank you. Chair Burt: Thank you. That's ... Yoriko Kishimoto: Mr. Chair ... Chair Burt: I'm sorry. You are going. Yoriko Kishimoto: Good morning. As a former member of the Rail Committee, I'm delighted it's reopened up again. Just three quick comments. One is on CSS. The way I like to think about it is really kind of rail and community, how do you move a lot of people through the community, so it's not really just an obstacle to High Speed Rail. It is kind of give-and-take between the community and getting people through. I always think of it as do you want to have more transit going through by TRANSCRIPT Page 10 of 40 Rail Committee Special Meeting December 16, 2015 bike/ped or do you want to have more auto traffic going through, especially with the traffic getting so bad recently. I think people do realize there are tradeoffs to be made and how do we minimize impacts. I wanted to reinforce Adina's comment about Dumbarton Rail. There is a very exciting new possibilities coming up. It's similar to the fiber optics discussion where there's kind of open access network plus kind of public or private service providers. There's a service provider who is kind of exploring the possibility of Dumbarton Rail. That's very exciting. As you know, I was involved in the Peninsula Cities Consortium. I just wanted to reinforce the point that it is very powerful to have cities work together and speak with one voice. I serve on the Mid-Pen Regional Open Space. Unfortunately, there is no Mid- Pen transit. There are transportation agency. In a way the Rail Committee or the regional consortiums working together can have that role. Chair Burt: Thank you. Now returning to our agenda. (crosstalk) get through the best way for us to begin to have discussion. We have maybe two different categories. Anything that requires guidance in the nearer term and then essentially trying to work out a work plan for the coming year. Maybe because the work plan is a deeper subject, should we make sure that we cover today the actions in the nearer term? Council Member Berman: Mm-hmm. Council Member DuBois: It seems like another way to do it would be by category, this A, B and C, talk about grade seps and High Speed Rail and the sales tax. Chair Burt: If we did it that way, trying to cover these things in the next 55 minutes could bog us down. Then we might risk that we didn't have time to address some of the things that are most immediate. I don't know. I'll go by your preferences. Thoughts? Council Member Berman: I wonder if we should let the calendar dictate the discussion. As you were saying, things that need a little more direction to Staff earlier next year should be discussed today. When we reconvene earlier next year, we can see what hasn't been covered. We definitely want to cover more timely issues. Chair Burt: I would hope that today we'll at least be able to have a preliminary discussion on the work plan. I'm not saying that it's one or the other, but I would want to make sure that we get done what has timeliness TRANSCRIPT Page 11 of 40 Rail Committee Special Meeting December 16, 2015 associated with it. Amongst the things that have time constraints, it seems that the letter to the Rail Authority is timely. Richard, on the VTA sales tax, do we have any real update since the Council had a last discussion on it? Mr. Shikada: Sure. Why don't I take a shot at that? Josh, you may want to reinforce it as well. Primarily the activity of late has been among the committees and specifically the technical advisory committee which is made up of staff of various agencies throughout the County. There has been discussion of the criteria and, I think, at this point fair to describe it as being VTA staff floating some concepts of how funding would be allocated among different categories of transportation whether it be grade separations, highway, street maintenance and the like. Those conversations are ongoing. Among other agencies, the City of Palo Alto has been talking with North County, West Valley cities in order to try to maintain a sort of ... Council Member Berman: Unified front. Mr. Shikada: ... unified front or a collective position. At this point, it has focused largely on the need to perhaps de-emphasize BART as a central component or primary component of the measure and also a desire to look beyond the street maintenance, that specific program, opening the door to more multimodal both planning as well as investment. The next steps there will be some additional conversations involving the staff as well as the VTA Board Members representing North County and West Valley. Expect that that will extend into January. Chair Burt: You mentioned that they're floating some alternatives on how the funding allocations. Can you share elements of that we've expressed and the Council expressed our position on, foremost the grade seps and secondarily other multimodal funding? Mr. Shikada: It's been fairly fluid. Josh, do you have any specifics in that area? Mr. Mello: Yeah, I do. The last TAC meeting was actually canceled. It was scheduled to occur on Friday. VTA actually asked the North County and the West Valley cities to attend a specially called meeting at VTA. It seems like everyone's kind of coming around to the fact that this supplemental mobility study needs to be done for the North County, West Valley on a pretty accelerated schedule. They actually circulated a draft scope of work for that study. It's also appearing as though there is somewhat of a consensus TRANSCRIPT Page 12 of 40 Rail Committee Special Meeting December 16, 2015 forming around the fact that Santa Clara County and VTA need to have a similar program to what is done in San Mateo County around grade separations, where there's dedicated funding and a competitive process that uses objective criteria to fund the advancement of grade separations. I think 15 percent of the total funding is the last table that I saw, very initial number. I think there is kind of consensus forming around the fact that some type of grade separation program needs to be created. Council Member DuBois: They were working on a process with evaluation criteria and scoring. They have all those projects that were submitted. Are they actually talking about going away from that or are they still proceeding with that process? Mr. Mello: The other update is the unconstrained project list for the County sales tax was submitted by VTA to MTC to do modeling and analysis. They have to do air quality modeling and traffic impact analysis. That's underway right now. I don't expect that they'll be able to model grade separation projects. There's certain categories of projects that just don't fit into the standard modeling. That's kind of what's underway now. They'll be presenting kind of the performance of the individual projects to us probably in early 2016. Council Member DuBois: It sounds almost like a dual process, like they're continuing with what they had done, but starting to talk about maybe a study. It's not clear that this idea of funding projects based on need versus kind of first-come-first-serve—has that been talked about? Mr. Mello: The unconstrained project list is fairly large. I think it captures— there's some categorical, program-type submittals that are in there. I think there's some ability to modify that unconstrained project list to meet what may come out of this North County, West Valley study and other initiatives. Chair Burt: Tom was raising this question of whether projects will be ultimately prioritized based upon first-come-first-serve like even amongst the grade seps or—I forget how you described it in the first part of your comments. Mr. Shikada: A carve-out, a set-aside in effect of dollars without a specific decision on which grade separations. Chair Burt: Yeah, basically so. TRANSCRIPT Page 13 of 40 Rail Committee Special Meeting December 16, 2015 Council Member Berman: Like the San Mateo County (crosstalk). Council Member DuBois: Like categories. Mr. Mello: Yeah, competitive. San Mateo County uses a similar process to what the State uses for the Section 190 program which looks at the amount of rail traffic, a history of collisions, a whole host of different factors, to kind of prioritize grade separation. San Mateo County uses a similar formula to award the funds through their program. I think that's kind of the way the wind is blowing, but there are a lot of grade separations in Santa Clara County that are further along than ours. I think one of the criteria may be has environmental documentation be completed. I think it's still in our best interest to get moving and catch up to some of the ones that are—even if it is purely objective. Chair Burt: Yes. I think that even while we may begin to accelerate our progress, we've already taken a position—I think, if we need to, we can discuss that further—where we believe it's critical that it be based on the objective criteria and not just a sequential "whichever is furthest along gets funded" and which is maybe most in need or most important does not. Council Member Scharff: Pat, are you advocating that we continue to move forward to make it shovel-ready, what we're looking at doing? I was unclear. I agree with what you said, but I was unclear what that means in a practical application in terms of going forward or not, moving things along. Chair Burt: I would say that the important immediate thing is that we advocate that the criteria be set up based on objective criteria, not who's most shovel-ready. One of the things as we go into the grade separation is I expect that based on the Council discussion recently we will begin the process of defining our requirements better. That's going to take some time. Council Member Scharff: I also see us having a bit of a conundrum on this in terms of there are grade separations and there's this notion of a trench that we're talking about. If you're moving grade separation forward, it can be different than looking at a trench in terms of there could—I mean, if we're going to do a trench, it's different than grade separating a particular intersection. I think everyone else is grade separating a particular intersection. How do we separate Churchill or how do we separate Charleston? We're looking at doing a trench. I think there's some sort of TRANSCRIPT Page 14 of 40 Rail Committee Special Meeting December 16, 2015 sense of how do we put that together so that happens as opposed to focusing on a particular intersection. Chair Burt: Whatever we may come up with as our design recommendations for the City, they're quite a ways away. If we have the set of criteria be adopted that are based upon who's farthest along, it affects us the same way. I don't know that we have that conundrum. That would be part of what we'd dive into as we have a deeper analysis of our alternatives. In my mind, either way we need to make sure that the selection criteria are set up based upon the objective basis rather than where anyone stands on being shovel-ready. That seems to me our most immediate need. That opens the door for the additional considerations. Council Member DuBois: I do think we should be careful with our language. Maybe for now we should say "trench/grade separations." I think when you only say one, you're not saying the other. Council Member Scharff: I do think when we say grade separation, the rest of the world out there thinks a typical grade separation project. Council Member Berman: Either under or over. Council Member Scharff: Right, either under or over. Council Member Berman: I really think (crosstalk) it altogether. Council Member DuBois: Until we decide, maybe we should say both. Council Member Berman: (crosstalk) Council Member DuBois: I think we started talking—I don't know if we're ready to go back to the letter. I guess I'm not really sure how we're attacking this today. Chair Burt: The letter is on the High Speed Rail subject, so let's first make sure that we're aligned on the direction on the VTA tax. Council Member Berman: I think we are. I think even what Greg was saying was that that's an important first step, making sure that we continue TRANSCRIPT Page 15 of 40 Rail Committee Special Meeting December 16, 2015 to advocate for the San Mateo County approach, I'll call it for ease of words, and not first-come-first-serve, not first-ready-first-serve. Council Member DuBois: Again, we were talking about grade seps, but I think we're talking more generally that the sales tax would allocate money to categories and that those categories would be prioritized based on need. I'm a little bit concerned that they're far down the road on a different process which was scoring all these projects, and some that criteria was how ready the projects were. I don't know if they're really changing or not. Chair Burt: I think we're clear because we had discussed this as Council as well, that we want the criteria certainly within the dollars for grade separations—two things. One, they don't preclude other options. They're dollars toward respective places where there are grade crossings. Second, that it be based on objective criteria rather than who's most shovel-ready. Do we have consensus on that? Council Member Scharff: Yeah. Council Member Berman: Yeah. Chair Burt: Great. We want to make sure on that. The second thing that Tom is raising is how are they proceeding on this huge bucket of every project that they asked anybody to submit on and where does that fit in with where they are now. Mr. Mello: I think the answer I would give you is we're not quite clear on what the discussion is going to be once the results of the modeling and analyses are done. I imagine it'll be a collaborative, back-and-forth process between the different jurisdictions, advocating for their individual projects. With a focus on objective criteria, hopefully ... Council Member DuBois: There's been a lot of work done. They've come up with a set of objective criteria, and I think they were working on a scoring mechanism. Again, there seemed to be a lot of momentum already, like those criteria were developed over a period of time. Chair Burt: I guess the good news about that is if they're using objective criteria for selection of the other projects, that would support our position TRANSCRIPT Page 16 of 40 Rail Committee Special Meeting December 16, 2015 that they should use objective criteria for which grade separations are done and when. Council Member Scharff: When we say "they," there's MTC, there's VTA and there's Caltrain. Who's making this decision? Chair Burt: VTA. This is the VTA measure. Council Member Scharff: Right. On the VTA measure, will Caltrain make the decision of which or will VTA actually make the decision of which grade separations? Mr. Mello: The particulars of how the program would operate have not yet been determined. Right now, it's just kind of let's put some money in a bucket for grade separations and let's emulate the San Mateo County process where they award it based on objective criteria. The conversation hasn't gotten to the point of how those decisions would be made. I would imagine it would be VTA using some type of criteria. Chair Burt: That's my understanding as well. It's VTA's dollars, our dollars through VTA, and they would be doing that. I would certainly think that that would also be in collaboration with both the cities and Caltrain, but I think that decision authority is with them. NO ACTION TAKEN 2. Discussion of Priorities and Work Plan for the Rail Committee, Specifically Regarding the Following: A. Grade Separations: i. Resources Required; ii. Circulation Study; iii. Community Engagement. B. High Speed Rail Advocacy: TRANSCRIPT Page 17 of 40 Rail Committee Special Meeting December 16, 2015 i. Methods and Spokesperson(s); ii. Next Steps. C. VTA Sales Tax Advocacy: i. Methods and Spokesperson(s); ii. Next Steps. Council Member Burt: The way we had this structured, we actually moved kind of from the speakers who are speaking to Item 1, and now we're on "2." Even though there's some crossover there, we have a speaker who wanted to speak to Item 2C, Adina Levin. Why don't we go ahead and do that? Adina. Adina Levin: Good morning. Speaking specifically on "2C" and the VTA measure. Thank you for supporting the program versus project approach to grade separations. Language that might be able to actually spur in their think tank vision for VTA and communication with execs is trying to enhance this concept of having more program-based funding rather than specific project-based funding. That's language that might be used and recognized. With regard to the focus of the Caltrain-related funding, having substantial funding for grade separations is important, but I am wondering whether shifting the focus from mixed capacity improvements to 100 percent grade separations is something that would be accepted and raised by other cities, by the employers like Stanford and Google and Linked In that really deeply depend on Caltrain being able to create more passengers and by the Silicon Valley Leadership Group which doesn't have the same micromanaging role that they did before but will still be influential in getting it passed. I suspect that the rail rider and the company constituency including capacity is going to wind up being important. Two more thoughts. The idea of return to source, if you have good pavement condition, use the money for a local need instead, is a good idea and might get some traction. Lastly on the concept of program versus project. Palo Alto was the first to pioneer thinking about its proposed expressway project as instead a program and being able to solve its congestion on Page Mill utilizing transportation demand management, not just road widening. There are other cities that are interested in using this approach in areas in their jurisdiction. There are some governance issues relating to really being able to make that transition. That may be something that Palo Alto as the pioneer might speak up for and TRANSCRIPT Page 18 of 40 Rail Committee Special Meeting December 16, 2015 also potentially work with other cities including San Jose that are interested in that sort of transition where some of the expansion-only methods don't work for them either. Chair Burt: Thank you. Council Member DuBois: Just one quick comment, if I could? Council Member Burt: Okay. Council Member DuBois: As we're talking with VTA, I think we want to treat grade separations as a separate category from Caltrain improvements. I don't think we should—I mean, obviously there's going to be more projects than money, but we don't want to have that be the same category. Chair Burt: Is it correct that if they're using the San Mateo County model, they had the 15 percent toward grade separations, and then they could have a different discussion of what dollars would go for other capacity like platform lengthening. We have one more speaker, and that's it. Roland LeBrun. Roland LeBrun: Thank you. To give you a little bit of a (crosstalk) you've been asking. You need to look at the Envision Silicon Valley process and the website is envisionsv.org. You're going to see what the current thinking is in terms of how they're going to break up the $6 billion. Right now, it looks like $1 1/2 billion for BART and $800 million for Caltrain. When they say Caltrain, you've really got to also understand some of that money is going to be going to Diridon, because we're going to have to do some massive changes at Diridon for the BART interface. It's going to be a combination of BART and Caltrain funding that's going to go into the (inaudible) thing. With regard to the question that you had about grade separations, the only role Caltrain has in this is basically to provide input. I have actually seen two projects which supposedly are Caltrain projects at San Carlos and West Virginia. I can assure you these projects have nothing to do with Caltrain; they actually are pushing grade separation for High Speed Rail. The reason they're doing this is that right now they've got two tracks, and one of those two tracks is a Union Pacific track. Union Pacific has flatly told them, "You're not going to electrify this." They have got to build a third track. Right now, they're talking about grade separations on either side of Highway 280, and nobody knows where the funding for the bridge is going to come from for TRANSCRIPT Page 19 of 40 Rail Committee Special Meeting December 16, 2015 the third track that crosses Highway 280. That's probably $100-$150 million. Just to give you some context about what's going on. Chair Burt: Thank you. Have we addressed the VTA issue well enough? Okay. Let's go ahead. On the High Speed Rail advocacy, we have the issue of this draft letter. Let me just share—I shared at the Council meeting on this that State Senator Jerry Hill facilitated a meeting between himself, Dan Richard and me, now probably close to two months ago, which was as a follow-up to issues I had been raising as this EIR was proceeding about both how rapidly it was scheduled to be done, the communication or lack thereof with cities and what process should be used going forward. One of the things that we discussed was—I should add that the High Speed Rail Authority had a webinar call for local elected officials back—what? Three months ago, Tom? Council Member DuBois: Yeah. Chair Burt: Tom and Richard and others from—I don't know if Ed was in on it. Ed Shikada, Assistant City Manager: (inaudible) Chair Burt: Several of us, where Palo Alto was pretty well represented. I was up there at the PB office in the City and had a chance to speak with Rail Authority representatives before and after and made these same points that this very accelerated process, even as just an EIR process for such a complicated EIR, was unrealistic and would be kind of ramrodding this going forward. Also, that the High Speed Rail Authority had actually made a commitment back in the, I think, 2009 Business Plan to use CSS as the process for developing a plan at that time for the full four-track system on the segment that the Peninsula is part of. It was the only segment in the state that they've made that commitment for. That process was moving forward with imperfections in it. When the blended system went through, the need for that went by the wayside for the time being. They have argued under the technicality that they brought this back forward. I said this should be CSS again. They said, "Technically we only approved it for that Peninsula rail program which was the four-track system." Dan Richard ended up agreeing that he was open to a dialog on that and agreeing to hold an upcoming meeting with Palo Alto officials to discuss a process going forward without agreeing to CSS in advance. That's some important background to this. I'd also say that in terms of whoever we may address this to, at the TRANSCRIPT Page 20 of 40 Rail Committee Special Meeting December 16, 2015 High Speed Rail Authority Jeff Morales is the CEO; but I would say that Dan Richard is not only the Chairman of the Board, he is the Executive Chairman meaning that the CEO of the Authority reports to the Executive Chairman in all practical purposes. Dan Richard was appointed by the Governor and reports directly to the Governor and is engaged with him. He's the most important figure in this rather than the CEO who is more responsible for execution than for policy. In that context, I think Dan Richard is the most important person to address this to, but we certainly want to include the others. Did folks want to wade in on the letter? There was a comment that under CSS, I really think that we need to convey a bit of the history of this and its value and purpose and not assume that everybody understands why it's important and what was agreed to in the past. I can tell you that the High Speed Rail representatives, the staff level, they have a team for this section that is now out of San Jose. The head of the team is Ben Trapisas. Council Member DuBois: Traposis. Chair Burt: Traposis. He was formerly San Jose's lead on transportation and the High Speed Rail. They've hired Bruce Facucci [phonetic] who we know, who has worked with the City of Palo Alto and had worked on the CSS process before when it was proceeding back in the '09 to 2011 period, I think it was. Guy Preston, who is I think the lead engineer on this, a former CalTrans person who, when I raised this issue at the Caltrain Local Policymaker Group and he was the High Speed Rail representative there, spoke up and said, "I didn't know it was part of this segment in the past." He had worked with CSS through CalTrans and thought it was an outstanding program and was supportive of that. I think that did not represent yet a position of the High Speed Rail Authority, but I would just say that we have two of the key staff people on this region who think highly of it. Dan Richard had actually worked with something like that with BART and had seen great success, but he has trepidation on whether CSS is somehow a way to derail their initiatives. In reality, it's an open process; it doesn't predetermine outcomes one way or another. Tom. Council Member DuBois: I had two thoughts on this letter. One small one which is I think we should primarily address this to the High Speed Rail Authority in the way it's kind of Caltrain and High Speed Rail. I want to flip it, if we want to keep Caltrain as part of the letter. The second thing is in terms of timing. As much as possible, I really think this should be a multicity discussion. It would be great if this was a multicity letter. If we don't feel like we have time to do that, maybe we go ahead and send a Palo TRANSCRIPT Page 21 of 40 Rail Committee Special Meeting December 16, 2015 Alto letter, but we would also maybe reach out to other cities' rail committees. I'm not sure if that's something that Staff can do easily. I think in a lot of these things around rail, it may be good for us elected officials to actually reach out to our counterparts and do some of this work more than having Staff do everything. Those are my kind of two high-level thoughts on this. Council Member Burt: Ed. Mr. Shikada: If I might add to perhaps your thinking on the specifics of the letter. Certainly agree, Council Member DuBois' point that having a couple of options. One is since we already do have a venue for discussion certainly of the North County, West Valley cities, that's an easy conversation or topic to bring to that conversation. As it relates to other cities and specifically on High Speed Rail, I would agree that having elected involvement would be very important. One additional point for consideration in the letter that the discussion brings up is given that they're now in the phase of scoping the environmental document, the question of the project description itself will be very important. It may be useful to make reference to the trench as an element of that project description as they're entering in. There will obviously be more detailed elements of the project that we'll want to communicate back to High Speed Rail Authority, but at the highest level and in the essence of the project description itself, there may be an element that you want to address at this point. Council Member DuBois: There's a little bit of a strategy discussion here. I mean, if we're trying to get them to commit to CSS and we bring up the trench, again do they feel like we're expanding the scope too early? Chair Burt: Let me add to that. I did discuss that with Dan Richard. Frankly, over the last year-plus we had had discussions over a year ago with Carl Guardino as the Leadership Group was putting together or considering putting this VTA tax on the last ballot. Over a year ago Carl's response was he thought that seemed very unreasonable. It's now becoming recognized that objective criteria need to include different physical environments at different areas where grade crossings need to occur. Where they're very constrained, whether Palo Alto or elsewhere, design alternatives such as trenching need to be part of the consideration. Not the conclusion, but the consideration. Dan Richard did not express kind of a "that's a non-starter" concept at all. It was an acknowledgement that the objective circumstances of different locations on the corridor mattered. TRANSCRIPT Page 22 of 40 Rail Committee Special Meeting December 16, 2015 Council Member DuBois: I'm just concerned that calling out one solution in this letter, if the real purpose is to get the ... Chair Burt: I'm sorry. Does it have that? Council Member DuBois: No, it doesn't. What I heard Ed say was maybe we should add trenching to the letter. I think if the focus is to get them to agree to CSS, that may or may not be a good idea. Chair Burt: I agree. Council Member Scharff: Did you have language, Pat, that you thought we should add to this CSS to give them more (crosstalk). Chair Burt: Rather than specific language, I would say that following kind of the numbered requests, I think there should be a third one around communication, that we give a bit of a background, not a long one, that CSS had been agreed to by the Rail Authority for this segment under the PRP, and that it was our understanding and our belief that it would, whatever future iteration came forward respective of High Speed Rail on the Peninsula, it would follow the same process. Second, briefly about why it's valuable. This is something that really Dan Richard acknowledged. He basically said in terms of the timeline for the EIR that they would not ram it through, that they would take as long as it took to do it right. He asserted a lot of pride in the EIRs that they have done in Central Valley and asserted his belief that they had taken the time and done them very thoroughly. A thorough EIR is quite different from a CSS process. They've argued they could do them in parallel. To a great degree the CSS informs the EIR. You can't have the one follow the other. They've kind of talked about CSS and those different things. I think that we should assert why CSS is the best way to not have a highly contentious outcome from their process and to problem solve without predetermining what those solutions may be. Those would be the two portions of that. If I might just add on the communication. This surfacing that they were moving forward with this EIR on a rapid scale came about because members of CARRD notified me that back in the August Board Meeting this had been on their agenda and had moved forward. It made no engagement and did not communicate this to the cities up and down the Peninsula. They had their own plan that they were beginning to figure they were going to have these public meetings. They had three, actually four, San Francisco, Burlingame, San Jose and Morgan Hill. Nothing between Burlingame and San Jose. They just were doing all these things in a TRANSCRIPT Page 23 of 40 Rail Committee Special Meeting December 16, 2015 vacuum. I requested that Caltrain agendize it for the Local Policymaker Group meeting. They brought Guy Preston to that meeting, and we engaged on that. Part of the issue that I've raised a number of times is we shouldn't be blindsided by these important changes; they should be communicating them. They agreed. Now, on the one hand it's good to hear that they're modifying their most aggressive timeline on the EIR. It's disappointing that the way we find out about it is because somebody saw something on a website rather than them just going and communicating clearly that they had that intention. Naturally, it would be, I think, that they'd say before they take it to their Board, they'd let our Staff know that they intended to propose such a thing to the Board. I think we should emphasize that there needs to be strong and transparent communication going forward on this. Yeah, Josh. Joshua Mello, Chief Transportation Official: If I could just echo Ed's point about the scoping and the project description. I do think that's a rather immediate item that we need to pay very close attention to, the project description, and we need to ensure that the project description itself does not preclude grade separations being included as part of the High Speed Rail project. I actually attended the Burlingame meeting. The comments that the HSRA staff made led the public in attendance to believe that grade separations could possibly become part of the project itself. That's what they were telling the public at the meeting. I think we need to make sure that the project description—we need to make sure that the grade separations don't just become kind of an afterthought, mitigation measure that's identified for somebody else to complete, that it is possible for those to be included in the project description if they're appropriate. Council Member DuBois: We've heard different comments on that. That very first call three months ago, when we asked about grade separations, they said that there was perhaps funding for quad gates. Again, the initial discussion about the EIR was that they'd not want to change anything, because they want to use the electrification EIR. I think you're right, it's really critical that we watch how this project is described. Chair Burt: I'm just pulling up all my notes from that. I went back and listened to that—I recorded it, so I listened to that webinar. Ben had said that they had funding for quad gates. He also said—I'm trying to remember his exact wording—they certainly would work collaboratively with cities around grade separations but didn't make any commitment that they could or would fund them or be a portion of the funding. They've also said that TRANSCRIPT Page 24 of 40 Rail Committee Special Meeting December 16, 2015 they're working with San Mateo on something along those lines. They haven't been entirely transparent with everybody else of exactly what that means. Dan Richard acknowledged that grade separations would be an necessity ultimately whether it be High Speed Rail. He and I agreed that if High Speed Rail never came to the Peninsula, Caltrain would need to be expanding its number of trains per hour in a way very similar and ultimately have a comparable requirement for grade separations. At that level, there was an acknowledgement that ultimately grade separations will need to occur. As others even this audience know well that High Speed Rail Authority has great funding challenges even without looking at how to fund grade separations on the Peninsula. I should add one other important thing I think I mentioned at the Council meeting. There's been a lot of discussion and probably several different valid explanations of why this Peninsula EIR suddenly got back on the table. Now, the High Speed Rail Authority has asserted that it was in their last Business Plan to begin this process in this timeframe. All the rest of their program is delayed, and it was to be a segment that would be following the southern California segment. Instead, without forewarning and with what was initially an 18-month timeframe, it raced forward. I probed a lot on that. Finally, it was explained to me at the Parsons Brinckerhoff meeting that the High Speed Rail Authority in October would be presenting to their Board the expressions of interest by the prospective private parties in the project. They expected that those would be very strong and accelerate the whole High Speed Rail program in the state and that potentially the construction of the blended system on the Peninsula would move forward from what they had previously put as a 2029 completion date. Whereas, many of us had been thinking it was more likely it would be pushed out. When those expressions of interest came out at the—that's not the correct title on them. I forget what they're called. At the October High Speed Rail Board meeting, they were not what Ben had indicated they expected them to be; they were the other way. There was no substantive financial commitments. Actually Dan Richard and the Governor's lead guy, Mike Rossi who's a finance guy, really said these are not positive developments at all. The premise for this racing forward, as it was expressed to me, was around the potential private funding along with the leveraging of the cap and trade dollars. They intended to be able to bond those. They can't bond them unless they're extended beyond what the Legislature currently has committed to, which I think is 2020. That will be a very important upcoming legislative matter. If the Legislature gives long-term commitment of those dollars to—the 25 percent of them to High Speed Rail Authority which they currently have, then those would be significant dollars that the Authority could then bond. TRANSCRIPT Page 25 of 40 Rail Committee Special Meeting December 16, 2015 Council Member Berman: Can I ask a question? Chair Burt: Sure. Council Member Berman: Can the Legislature even do that before those lawsuits are settled about the whole cap-and-trade system on the whole? Chair Burt: There are actually several legal problems that are based around the cap and trade. One is whether this is a proper use of those funds, because the—is it Prop, what's the cap and ... Mike Brady: 32. Chair Burt: Prop 32 has specific requirements for how those would be used. It's being challenged whether this project meets those requirements. There is another challenge as to whether the cap and trade, which was adopted by the Legislature as a fee, was properly a fee. I forget if there was a third issue. I'm not sure of the intersection of that. The Legislature could act, and there conceivably could still be legal challenges to their action. I think the recent developments from the High Speed Rail Authority have—the problems that have come out in the press in recent months have gone from kind of the Legislature not really being very engaged and the public had kind of died down and the press had died down in their attention to now there's a great deal of attention. I think that there's a very good chance that the Legislature in their oversight role and the upcoming Business Plan which is the plan that is supposed to really be substantive on where they are going forward, that intersects with some of the other lawsuits. This coming winter they're supposed to unveil. I think by summer the Legislature is supposed to act on it. That's a big deal. The Business Plan, the funding for cap and trade are two big actions by the Legislature that will have real bearing on this. As is obvious, this is always a very complex issue. Are we fine with giving direction to Staff on this letter to expand on the background and the purpose of CSS? I would also advocate that we make a third point on what we are looking for in transparent and strong communication. Council Member Scharff: Maybe you could elaborate on the transparent and strong communication, just so Staff has a sense of what would go in there. Chair Burt: I think it's that they should communicate to not only Palo Alto but all the effected cities and parties any changes in intentions as they are considered or known, and they will also seek input from those parties. TRANSCRIPT Page 26 of 40 Rail Committee Special Meeting December 16, 2015 Those are things that they've actually orally committed to doing. Now, they've gone back and done it again. Council Member DuBois: I guess the other changes were to change who the letter is address to. Again, I think we should have High Speed Rail first and Caltrain second. Mr. Shikada: One procedural question. Whether the Committee feels this is something should go to the full Council for information and that that direction come from the Council or whether that would happen here at the Committee. Chair Burt: On these changes? Mr. Shikada: On the letter itself. Council Member Scharff: I think it should go to the full Council on Consent. Chair Burt: Sounds good. Council Member Berman: Does holding off on this for four weeks change anything? Chair Burt: We don't have another meeting. Council Member DuBois: What about the idea of trying to do it for multiple cities? Should we get ours out on our own? Chair Burt: Yes, I think we should get ours on our own in parallel. In fact, that template can be one that we could carry to other cities and use to try and get alignment there. Council Member DuBois: On this Consent item, do we want to specify that it should go to other cities? How are we going to do that? Council Member Berman: I think that's something that Staff can just do. I don't know that Council needs to approve that element. If we are going to wait until mid-January, we'd want other cities to start working on it before TRANSCRIPT Page 27 of 40 Rail Committee Special Meeting December 16, 2015 then. If we have to wait for Council approval to have that be part of the strategy, then ... Council Member DuBois: If it goes cold to other Councils, I don't know how they would interpret it. Chair Burt: On an informal basis, there wouldn't be anything that would constrain members of the Council from encouraging colleagues as they engage with them in other cities and kind of begin to get that consciousness going while we're preparing to adopt this, I guess, on the 4th of January. Council Member Berman: One thing that I wanted to ask earlier that reminded me. So that we can do that and do our advocacy role with colleagues in other cities, is there a list of members of other rail committees in other cities or certain Council Members that are taking point on some of these things? Just so we know who most accurately to target. If that doesn't exist, then no problem. If it does ... Chair Burt: I think what's happened is that as the interest in this has died down, just like in Palo Alto those efforts have. We have the representatives on the Local Policymaker Group to Caltrain. Those would be certain point people. We have representatives on the VTA transportation measure. Those are probably a couple of lists that would give us a better sense of who's most engaged. Council Member DuBois: I think Menlo Park and Atherton have active rail committees. I think there are a couple of Mountain View Council Members who could help us. Council Member Berman: Could Richard circulate that to us? Richard Hackman, Management Analyst: I can put together a list that's as comprehensive as possible. Council Member Berman: That'd be great. Don't spend a lot—I mean, just easy picking. Mr. Hackman: Yeah, who's doing rail for who. Council Member Berman: Thanks. TRANSCRIPT Page 28 of 40 Rail Committee Special Meeting December 16, 2015 Council Member DuBois: I'm kind of watching the clock. We kind of touched on grade separations. If we're done with High Speed Rail, could we spend a few minutes on trench/grade separations? I think Staff was also asking about the timing and funding on a project (inaudible). I don't know if we need to comment on that. Chair Burt: In addition to these things, I also had jotted down Dumbarton. We really want to begin to also look at how we leverage our community resources. That was a great part of our rail initiative previously. Pardon me. I think that's going to be something that we also want to look at, how do we pull our community resources into this process in some way formally or informally, whether it's a citizen advisory committee to Staff or to who. Ultimately if we have CSS, then it would take a form there. In the interim, I think we want to re-engage these great community resources we have. Council Member DuBois: I guess part of that is we're talking about CSS in the context of High Speed Rail, but we're also kind of talking about it more generally. Do we start a CSS process around grade separation options just on our own now and not tie it to High Speed Rail? The other thing is I'd like to see us focus on this grade separation issue. There is a private entrepreneur who's looking at Dumbarton Rail. I would personally not want to spend a lot of time on Dumbarton Rail. I think they're both very large projects. Again, I'd like to see us spend some mental capacity on this idea of the grade separations. Mr. Shikada: If I might also add. For that purpose, as the Committee is considering this issue of grade separations, part of our next step is in the context of midyear budget consideration that will be coming back to the Council and our thoughts as to what the scope of any requests might be that we'd bring forward to Council. Clearly the project management resource is a part of that mix. To the extent that CSS is something that we can get started as a part of that same timeframe goal, we'll want to take the Committee's feedback in formulating our recommendations there. Council Member DuBois: One final comment. Before we get too far down the road, I'd really like to see if this could be a multicity effort. This idea of us starting CSS with a Program Manager before we get there—again we talked about getting these interested rail people from other cities, but I think we should talk a little bit about how we do some evangelism and discussion and determine whether it could be a multicity effort or not. TRANSCRIPT Page 29 of 40 Rail Committee Special Meeting December 16, 2015 Chair Burt: Certainly Mountain View and Menlo Park are the two cities that we would have the strongest potential interaction with. Council Member DuBois: I did see recently Atherton spending some money on some short-term improvements. I think we should we reach out to them pretty quickly as well, before they get too far down the road. Chair Burt: Let's figure out how we might pull this altogether. On the future discussion of grade separations, Staff has basically recommended a position. Where again—in your report, Richard, where is that? Council Member DuBois: Slide 12. Chair Burt: I'm sorry. On Slide 12. Mr. Hackman: It's page 3 of the Staff Report or Slide 12. Really it's .. Mr. Mello: If it's appropriate, I'd love to go into a little more detail on our thinking since the October 13th meeting where we received direction from the full Council. We kind of were looking at a three-pronged approach to financing grade separations in the City of Palo Alto. The first and foremost would be to get some expertise onboard. We envision a Program Manager, maybe part-time, full-time, could be in-house Staff, could be consultant. We're kind of leaning towards a consultant-type position. This would be someone who had years, decades of rail experience, experience with EIRs and CEQA documents for large rail projects, ideally an engineer who could really help us talk through the trenching option and the different options for grade separations and provide that kind of in-house civil and rail engineering experience that we don't currently have. They would also help us initiate the context sensitive solution discussion around both. At the October 13 meeting, we also got direction that you wanted us to look at circulation across the Rail Corridor and look at each of the different grade crossings separately and together to see how they function now, how they could function in the future possibly. That would kind of be the first step for this Program Manager, to initiate that circulation study, have a community-wide discussion about the functions of the different grade crossings and then move into the public engagement process for the context sensitive solutions around what the individual grade separations or grade crossing would be, and have that full community-wide discussion. At the same time, this person could potentially serve as our advocate for the EIR process that's moving through High Speed Rail. They would have the expertise that we TRANSCRIPT Page 30 of 40 Rail Committee Special Meeting December 16, 2015 need to kind of go toe-to-toe with the High Speed Rail Authority, review the project description, the mitigation measures, the impacts, look at noise, traffic impacts. They would serve as our go-to person. I think they'd also perform a valuable service in being able to support the Rail Committee in its work. Chair Burt: I would say that I think that this sounds like a good approach. I want to make sure that you're familiar with and those who weren't with our City back when we had a very active program on these topics—I alluded earlier to community resources. In addition to what I think is probably a necessary Staff position, Program Manager role, we have expertise in this community that will probably greatly surprise you on these issues, in this community and in the subregion. I think that we need at the outset to understand the value of that and make sure that they are very much part of the resources that we're referring to. We had one speaker, Adina Levin, who wanted to speak on "2B." I'll go ahead and allow that. I just want to make clear ordinarily when we have a topic, we have one opportunity to speak on the agenda item, not each sub-item. I'll go ahead and use the discretion. Go ahead, Adina. Ms. Levin: Really briefly, I think that the idea of getting other cities' support on context sensitive solutions is a really valuable and healthy thing, particularly some of the cities that have a history of supporting High Speed Rail and not just the cities that have a history of opposing High Speed Rail, so that High Speed Rail will perceive this not as a "here's the cities that are trying to stop a project," but these are cities that have issues and want to work collaboratively. That may include the City of San Francisco where they have a really big problem with their 16th and 7th Street grade separation, like figuring out what to do in less than a year is basically impossible. In San Jose, issues with the design of Diridon Station, where that timeline may be difficult for San Jose. That's one key item. Another item in thinking about the scope of working with High Speed Rail, as we mentioned, grade separations as a critical topic. Other important topics for other cities are going to include those station changes, but also potentially a Mid-Peninsula station which has some significant tradeoffs. In the (inaudible) days, High Speed Rail was talking about airport-style parking which isn't appropriate on the Mid-Peninsula. High Speed Rail has kind of changed their tune on that and thinking about more transit-oriented. There will certainly be drawbacks, but there will potentially be benefits in terms of having commute capacity. That's a key topic. TRANSCRIPT Page 31 of 40 Rail Committee Special Meeting December 16, 2015 Chair Burt: Thank you. I'm sorry, but we actually were planning on adjourning the meeting at 10:00, so I'm not accepting speaker cards after ... Mr. LeBrun: Ten seconds? Chair Burt: Ten seconds. Mr. LeBrun: I strongly support the notion of reaching out to other cities. You mentioned a list on the (inaudible), absolutely. The letter should be addressed to Dan Richard and to California High Speed Rail Corp., not Morales. Chair Burt: Thanks. Let's try to see if we can wrap up. On this issue of a Program Manager, do we want to have Staff go to the Council with and do we support that? Council Member Scharff: I want to understand the Program Manager. Are we hiring someone? Is this a consultant? How much money is this going to cost? Council Member Berman: From where? Council Member Scharff: I'm not going to just say let's go hire someone. Chair Burt: Should we have this discussion—have a January Rail Committee meeting and have that discussion? Council Member Scharff: I think that's probably good. Staff needs to flesh it out. I need a Staff Report. I need to understand what we're talking about. Council Member Berman: Yep. Chair Burt: We've hit the three major topic areas. Let's talk about anything that we need to kind of wrap up. Marc. Council Member Berman: Thanks. It was encouraging to hear from Pat that some of the important players are becoming more open to the idea of a trench. I've heard from some people that they kind of dismiss it out of hand. It would be helpful if Staff could start accumulating a list of some of TRANSCRIPT Page 32 of 40 Rail Committee Special Meeting December 16, 2015 the arguments that people are making as to why it's completely impossible and infeasible, so that we can begin to address those. It's for our information also; I think it would be helpful. Chair Burt: If I might add, some of those arguments have been around the costs. We had our Hatch Mott MacDonald preliminary grade separation/trenching analysis. It looked at a couple of different scenarios. One of the things that I did discuss with Dan Richard and he was attuned to is that the grade at which a trench at level surface goes into a trench very much affects the necessary length of the trench and the cost. We saw that a 1 percent grade had a billion dollar price or thereabouts. A 2 percent under the scenario that Hatch Mott looked at, which is not the only scenario that's possible, it halved it roughly. The cost difference in that case when we looked at conventional grade separations and the cost of land acquisition excluding the political impact of having to acquire 50 homes or something in our community very much narrowed to a difference, I think, between $330 million versus $510, if I recall the numbers correctly. A 3 percent grade separation, if the freight type was modified or freight requirements on the Peninsula were changed, could further narrow the differences in those costs. Suddenly, it becomes much more feasible. That goes into a topic for January that I'd like to spend a little more time on, whether we want some additional scenarios to be evaluated by Hatch Mott MacDonald using the preliminary work they did; it's not like starting from scratch. That probably is the biggest opposition. I think if the cost is not a significant difference, people don't object. Council Member Berman: That was my—sorry. To follow up real quick. That was my kind of question. I mean, there's costs, and I think that's all decisions that we make. There's also just are we going to run into a creek, are we going to run into things that that would really ... Chair Burt: That is part of the cost, and that's what determines it. Those two things are very intersecting. Council Member Scharff: I think we really need to understand the freight and how that works and what rights they have and ... Council Member Berman: We need approval (crosstalk). Chair Burt: That's right. TRANSCRIPT Page 33 of 40 Rail Committee Special Meeting December 16, 2015 Council Member Scharff: If a 3 percent grade is completely never going to happen, then it may not be worth it. Chair Burt: I don't think that is necessarily the case (crosstalk). Council Member Scharff: It may not be. Like I said, I think we need to understand the regulatory structure. Chair Burt: I'll just say that at the time of the Peninsula rail program, the 2009-'11 period, the freight issue was emerging as a discussion with— there's a difference between who has the current freight rights and their customer base and the freight users group. Council Member Scharff: I'm just saying we really need to understand the issue. Chair Burt: Absolutely. Dan Richard and I discussed this and the need to really pursue what are the freight alternatives as being critical to all these other decisions. Council Member DuBois: I think the order here is critical. Before we run off talking to other cities and having them just say, "You guys are crazy," if there's a way that we could quickly at a very high level look at potential funding sources, again what a multicity effort would look like. It's difficult, but the high level of some of these engineering issues. I think that would go a long way before we start to reach out too much, so that we're talking somewhat informed. I want to thank Adina. There was a value capture thing by the MTC up in Oakland two days ago. I wasn't able to go, but she grabbed some extra packets. Looking at all the methods available to us in terms of sources of funding, all the different special districts and things that are possible, capturing air rights, I think we need to have kind of a basic set of talking points, so that we can be more convincing and can have something that seems feasible. Chair Burt: That sequencing is important. It seems like we may be able to have enough that we can explain to people why the full set of options should be considered as, at this point in time, not precluded. Then the CSS process itself brings these people together. I mean, the freight people would be in that process and (crosstalk). TRANSCRIPT Page 34 of 40 Rail Committee Special Meeting December 16, 2015 Council Member DuBois: Before we get there, though, I see it largely falling on us to do kind of some early PR ... Chair Burt: I understand. Council Member DuBois: ... or evangelism. Chair Burt: I'm saying there's both elements. NO ACTION TAKEN Future Meetings and Agendas Chair Burt: I think we've evolved into what do we have on January. What we have going to the Council is the letter. Let's briefly try and wrap up with what we want to discuss in greater depth in January. It sounds like one is ... Council Member Berman: Position. Sorry. Chair Burt: Further discussion of a Program Manager role, but also what Tom just brought up which is our engagement and the basis for it with other cities and parties on the Peninsula. Council Member Berman: Just on the strategy for moving forward? Chair Burt: Yeah. Let's see. Council Member Dubois: This sales tax is going to be here before we know it. Chair Burt: Yeah, that update. Council Member Scharff: When do they have to put that on the ballot? It's August, right? Council Member Berman: Yeah. Richard Hackman, Management Analyst: Is the last (crosstalk). TRANSCRIPT Page 35 of 40 Rail Committee Special Meeting December 16, 2015 Council Member Scharff: It's the last time. Mr. Hackman: I've heard they've been thinking about June. Council Member Berman: Putting it on the June ballot? Mr. Hackman: No. Council Member Berman: Approving it by June. Council Member Scharff: Approving it. Mr. Hackman: Before summer break basically. Chair Burt: I guess the other topic I'd like to have is more discussion on our own community engagement and kind of citizen advisory role. I'll just repeat some of what I said before. When we went through this before, we did not have anywhere near the bandwidth or the in-house expertise to know everything about all this stuff. Our ability to be knowledgeable and effective was greatly expanded by leveraging our community members. Council Member DuBois: I kind of see that as part of the engagement strategy. Are you seeing that as different? Chair Burt: No, we could break it up, so that engagement topic could then have maybe two major parts, how we engage with surrounding cities and how we engage with community partners. Does that sound good? Great. Mr. Hackman: May I just ask? If we're going to put the letter on Consent for January, do you mind making a Motion on that? Chair Burt: Not at all. It begs the question does the Committee want to delegate someone to review it with Staff before it goes before the Council so that we make sure it looks good? Council Member Scharff: Don't we pretty much have the wording? Staff's going to make changes in the wording at the communication part we talked about. TRANSCRIPT Page 36 of 40 Rail Committee Special Meeting December 16, 2015 Council Member Berman: There were a couple of pieces. Ed Shikada, Assistant City Manager: (crosstalk) CSS. Council Member Berman: CSS. Chair Burt: Communication and expansion on CSS, those are the main things. Mr. Hackman: (crosstalk) Council Member Scharff: I think it's fine if you want—if the Chair would like to .. Chair Burt: I wouldn't mind. Yeah, yeah. Council Member Berman: Yeah. Chair Burt: Anyone want to make a quick Motion? Council Member Scharff: I'll make the Motion. I'll make the Motion that we forward the letter to Council, that the Chair reviews the letter just before it goes to Council and that, if it is a unanimous vote amongst us, then it would go on Consent. Chair Burt: And the letter incorporate the changes we discussed? Council Member Scharff: The letter incorporate the changes we discussed. Council Member Berman: Second. MOTION: Council Member Scharff moved, seconded by Council Member Berman to direct Staff to revise the draft letter to the California High Speed Rail Authority and Caltrain per the Committee’s direction and place the Item on the City Council Consent Calendar for approval following Chair Burt’s review and approval of the revisions to the draft letter Staff was directed to prepare. Chair Burt: Any other discussion? TRANSCRIPT Page 37 of 40 Rail Committee Special Meeting December 16, 2015 Council Member Berman: Huh-uh. Chair Burt: All in favor. All right. MOTION PASSED: 4-0 Chair Burt: Does that conclude it today? Council Member Berman: Works for me. Chair Burt: All right, great. Thank you all very much. Date of our next meeting? We will need to have appointments to Committees by the incoming Mayor. Council Member Scharff: I think we should leave it up to the (crosstalk). Chair Burt: Yeah. Council Member Scharff: I think for us to choose a date without knowing who's on the Committee isn't appropriate. Suzanne Mason, Assistant City Manager: This Committee is not going to change. That's already been established. Council Member Scharff: It has? Ms. Mason: It was established that this Committee is a Committee for 2016. Council Member Scharff: When did that get established? How did that get established? I mean, the Mayor makes the choice, so how did that get established? Ms. Mason: I don't know. I asked, and that's what I was told before we came in here. Council Member Berman: That would make sense. Council Member Scharff: It would make sense, and I don't disagree. TRANSCRIPT Page 38 of 40 Rail Committee Special Meeting December 16, 2015 Chair Burt: How about if we—a date I don't think is dependent on who's on the Committee. If we're assuming that, kind of as good faith, we're going to have the incoming Mayor continue the composition, same composition of the Committee, let's just use those as working assumptions. Council Member DuBois: Wednesday morning, at this time? Chair Burt: One thing about Wednesday morning is we have Staff that, for instance last night had, not to mention us, late night meetings. I can do the 8:30, but I kind of wanted to make sure. I know Ed comes from San Jose. Mr. Shikada: It's okay. Chair Burt: He was up here late. You're okay? Mr. Shikada: No problem. Chair Burt: Wednesdays. Council Member Scharff: What are we looking at for January? We're looking at the third Wednesday, is that the plan? Council Member Berman: It'd be the 20th. Council Member Scharff: Works for me. Council Member Berman: I'll move my dentist appointment. Mr. Shikada: We actually have the NCPA strategic issues conference. Council Member Scharff: We do? On the 20th? Chair Burt: I might be in China. Council Member Scharff: Let's not do the 20th then. Chair Burt: How does the 13th sound? TRANSCRIPT Page 39 of 40 Rail Committee Special Meeting December 16, 2015 Council Member Scharff: The 13th doesn't work for me. Council Member DuBois: The 27th? Chair Burt: Is that waiting too long if we go to the 27th? Council Member Berman: Should we not do it Wednesday? Council Member DuBois: It's just with the holiday, I think do it sooner. Council Member Scharff: The 27th works. Council Member Berman: Is that too long for some of this stuff, like the letter? Chair Burt: The letter's separate. Council Member Scharff: The 19th works. We could do it Tuesday. Anyone stuck on Wednesdays? Chair Burt: No, but I don't know whether I'm going to be traveling. What about the week before? Council Member Scharff: The 12th? Chair Burt: The week of the 12th or (crosstalk). Council Member Scharff: The 12th works. The actual 12th works. Chair Burt: How does it work for folks? Council Member Berman: You're talking about January 12th? Chair Burt: Yeah. Council Member Berman: I can't. I could 'til 9:30. Council Member DuBois: What was wrong with the 27th? TRANSCRIPT Page 40 of 40 Rail Committee Special Meeting December 16, 2015 Council Member Scharff: The 27th works for me. Council Member Burt: It would work for me too. We can do that. Council Member Berman: I can do that. Ms. Mason: 8:30? Chair Burt: Yes. Council Member Berman: Yeah. Mr. Shikada: We may be doing the Policy and Services the night before. Council Member DuBois: That's good. It motivates us to keep it short. Chair Burt: We're tentatively on for the 27th at 8:30. Council Member Berman: Just for planning purposes. Is the plan for these meetings to go from 8:30 to 10:00? Just for making schedules for the day and stuff. Council Member Scharff: I think that's the plan, but I'd basically not do anything until 10:30. Council Member Berman: I'll put it in my calendar until 10:30. Council Member Scharff: It's an aspirational goal. Chair Burt. Thank you all. Meeting's adjourned. ADJOURNMENT: Meeting was adjourned at 10:19 A.M. CITY COUNCIL RAIL COMMITTEE TRANSCRIPT Page 1 of 41 Special Meeting Wednesday, January 27, 2016 Chairperson Burt called the meeting to order at 8:33 A.M. in the Council Chambers, 250 Hamilton Avenue, Palo Alto, California. Present: Berman (Chair), Burt, DuBois, Scharff Absent: Oral Communications Herb Borock: Good morning Chair Berman, committee members. On Monday, I had advised you about an initiative measure that will receive this title and summary from the Attorney General's office. There was a second one that receives this title and summary by the same proponents of the first one. This is a measure for a water bond storage, which includes reallocation of $8 Billion of higher-speed rail funds to water bond storage purposes. I'm concerned that having the same components of both measures, they may just use High Speed rail opposition to collect signatures for the water bond initiative and never turn in the High Speed rail one. My second concern is that I believe the water bond proposal violates the constitution's prohibition on more than one subject in an initiative because it's essentially telling people if they're waiting to defund a High Speed Rail they have to support the water bond funds and if you want to support the water bond funds you'll also want to support defunding High Speed Rail and that would then essentially coerce people to sign the initiative to get the one thing they wanted and to vote for the measure to get the one thing they wanted and forcing them to vote for the other one, and therefore that I think would be an invalid initiative. I provided the clerk with a copy of the title and summary and the Fiscal Affect Impact report. Unlike the previous one, I didn't bother to copy the text of the initiative, it's twenty-five pages long and if you wanted to take a look at it it's on the Attorney General's website. Thank you. Michael Brady: Good morning. For those of you who don't know me I'm Michael Brady from Redwood City, I'm an attorney. I wanted to bring you up-to-date on some very pertinent things that are going on. I'm the attorney that file the proposition 1A Lawsuit against High Speed Rail TRANSCRIPT Page 2 of 41 Rail Committee Transcript January 27, 2016 Association five years ago and I've been working against High Speed Rail on the Peninsula and in the State for nine years. Our case goes to trial in two weeks, Sacramento Superior Court. If we win our case, High Speed Rail project will be stopped in the State of California, so that's the significance. That's two weeks from now. The second thing I wanted to tell you about, in all of your deliberations, consider Union Pacific railroad very importantly. What I want to tell you is that in 2006 & 7, I studied in detail, the legal contracts between Union Pacific and Sam Trans. Sam Trans, theoretically, owns the right-of-way between San Jose and San Francisco, but Union Pacific, under those contract agreements, has all the powers and rights of an owner of property. The Union Pacific Railroads can veto, entirely, the entrance of High Speed Rail on the Peninsula; veto it. Or can set any conditions that it desires. High Speed Rail cannot enter the peninsula unless Union Pacific gives its full written consent. Please consider that and you better talk to Union Pacific before you make any particular plans. Thirdly, as the previous speaker mentioned, these initiatives have now been approved by the Attorney General to go out for signatures. These initiatives, which I fully support, do two important things; abolish the High Speed Rail project; abolish it. Secondly, you take all the money, which remains in the bond for High Speed Rail, $8.5 Billion, and you transfer it to California Water Projects. A great measure. You've seen the recent polls that people that turn against High Speed Rail; they certainly support water relief for drought-stricken California. And lastly I want to tell you something that just happened that is humiliating for the High Speed Rail authority. Last week, the Los Angeles Times published an article saying they are just about to abandon Southern California, so all of you people in Palo Alto that have sat back and said "We'll never see High Speed Rail during our lifetime", well, wake-up. They decided to go to San Jose rather than to Los Angeles. They're going to switch. The IOS South will be abandoned, IOS North will be chosen and the Peninsula will be impacted. So this will be with us. If these initiatives pass, the High Speed Rail project will be dead in 10 months, that's the way to get rid of it and prevent from coming to the peninsula. Thank you. Agenda Items 1. Railroad Grade Separation: Background, Program Manager, and Community Engagement. Chair Berman: Thank you Mr. Brady and now Richard, I apologize for interrupting you a second ago. TRANSCRIPT Page 3 of 41 Rail Committee Transcript January 27, 2016 Richard Hackmann, Management Analyst: No problem. Thank you Chair Berman and council members. Richard Hackman, City of Palo Alto Management Analyst. Just wanted to briefly recap sort of how we got here today. In December we had a Rail Committee meeting after it was re- commissioned by the City Council. At that meeting there were a number of requests; one of them was from staff which was to discuss bringing on board a Rail Program Manager following the presentation by Mike Canepa of Hatch Mott McDonald, our engineering consultant. Josh Mellow, the Transportation Manager for Planning will give that presentation on the program manager and we can take your recommendation. However, we did receive some questions at that meeting regarding the history of the Great Separation Analysis work that had been done by the city. Hatch Mott McDonald has been working with the city since 2011. They're most recent presentation to the City Council was in late 2014 where they presented their findings, including the financial figures many of us had been using, such as, approximately $500 Million for two percent Grade trench that would go below Meadow and Charleston and so we reached out to Mike, who's with us today. He not only is going to represent for both you and the community the findings of that analysis, but he also pulled some comparative figures of Great Separation projects that are occurring in the region and will present those as well to put what we're looking to do in context with what other cities have already moved forward with or are in the process of moving forward with. And from there we hope that information will help you make an informed decision regarding the Project Manager that we're proposing. So with that, I will hand it over to Mike. Mike Canepa, Senior Project Manager, Hatch Mott McDonald: Okay, the Rail analysis that we have performed the design criteria we used was for Caltrain electrification, and for their current tracks, UP's current design criteria, and High-Speed Rail through the area. The design criteria took--you can see there that we used a preferred maximum grade of 1% grade for rail grade and then we also looked at a 2% grade at the request of the city for the rail going under the road waste. The cost comparisons that we ran; the 1% rail trench, 2% rail trench, and then various configurations of roads going under the existing rail line. As you can see the 1% rail grade came up to about $1 Billion for rail trench through the area and then the 2% came out to about $500 Million. Also with the rail trench, the right-away impacts were quite a bit less to the area. There was none to residential areas. The rail--the roadways, excuse me, going under the existing rail line had various degrees of right-away impacts to existing parcels. This is the grade separation [Churchill] once you go under the exist grade, sorry, the existing railroad and the parcels that it would impact and the dash circles there are also the TRANSCRIPT Page 4 of 41 Rail Committee Transcript January 27, 2016 traffic impacted areas. Also we looked not just taking Churchill under, but keep a connection to Alma, which would depressed Alma down and basically move the intersection below grade with retaining walls coming up. As you can see, the impact is quite a bit more on the surrounding community here and on the traffic part. Mr. Hackmann: Just to clarify one thing, the difference between the slide that you see here and the previous slide, was this slide right here shows the impact if we submerge the roadway below Alma and we no longer have turning movements to and from Alma. This slide here, is if we maintained turning movements and the reason the footprint is expending so much as Mike just said, is because you have to depressed Alma in order to maintain those turning movements. So I just want to clarify why the footprint's larger. Mr. Canepa: Next one was the same analysis for Meadow with Meadow going under Alma and the railroad and then that would be Alma depressed to meet Meadow underneath. This is the same analysis for Charleston. And then we also looked at keeping Alma depressed all the way from Charleston through Meadow with both roadways submerged with keeping the intersections together and this is the impact to the area on that one. This is the start of where the one percent trench would start being depressed. This is for the rail trench only, so the rail going underneath the roadways. One of the main issues we have here is that Oregon Expressway would be impacted and need to be raised back to grade by taking the rail trench underneath. And then one of the issues we have either with, especially with the 1 percent, is trying to get underneath each of the creeks and maintain a clearance underneath, so it does drive the depth of the trench quite deep. This is where we started work with the two percent trench. It's actually at 1.75 coming down because we started out the creek to mellow out the slope a little bit, so we didn't have to go down to a maximum of two, but with the two percent maximum, which would require a variance in UPRR permission to do so through the area. It's not standard for them, but has been done in certain places. It does get it down underneath and we can go over the creek so we don't have to keep it down underneath it and there's quite a bit of cost savings; about half by going to two percent instead of one percent grade. The target with getting both of them down, was Baring Creek and then underneath Meadow, underneath Charleston and Adobe Creek and then coming back up. With the two percent grade, we can get up about at San Antonio interchange. With the one percent, train carries all the weight (Rainstorve), so there would have to be some partnering with Mountainview. Also just the cost comparison we did. Now these have happened in various TRANSCRIPT Page 5 of 41 Rail Committee Transcript January 27, 2016 stages. Some have been built, some have not been built, some are still in the planning stage, some have been studied for years and to death. The San Bruno Grade Separation that we've just completed in April 2014, which is an elevated railway, over three at Grade streets. The approximate cost was a $155 Million. That one was sponsored by Caltrain itself. The mission warrant Grade Separation, which is a Bart SPRT project that the VTA was working on, where the roadway goes under the rail, which would be similar to the depressed streets that you saw was a $151 Million. Currently in design and planning is the City of San Mateo is looking to elevate the railway over, at grade roadway, which is about $165 Million. Rainstorve, which is the one I referenced earlier that has been studied quite a bit is a roadway under using a rail bridge. That was estimated $45 Million, but that was approximately 12 years ago that one was studied. I know there's been some updates to it, but I don't think I've seen a re-costing of that sense then. Broadway, in the City of Burlingame is still under alternative considerations, so I've summarized and these costs are approximate. They're still in the study phase also as we are. Broadway with a split, which means an elevated railway on a berm and them lowering the partially the roadways underneath. That alternative was $260 Million. Broadway grade separation in a rail trench, similar to what we were looking out here, was about 400 to $600 Million. Broadway with roadway modification, which means the roadways would go underneath the rail and not elevating the rail at all, so it's completely underneath, would be 210 to $250 Million. And then an elevated railway on a berm over at Grade roadways would be a 180 to $240 Million. Mr. Hackmann: So with that, we welcome any questions or comments you have for Mike. Chair Berman: Great. Thank you, very much. So in the interest of time and the in the interest of the fact that agenda Item Number 1, there are kind of a couple of different elements to it that create complicated if we save council member questions and comments for all at once. Let's go to the public for comments on item number one and then come back to the committee for questions and comments at the same time. And then, we're going to move on to the next element, which is the program manager and community engagement piece after we ask questions for this. I'd like to ask the public and my colleagues to keep in mind that we are in a bit of a time crunch this morning and there's a lot that we're trying to get to, so if everyone could keep their comments as brief as possible, but we'll stick with three minutes for the members of the public. The first member of the public TRANSCRIPT Page 6 of 41 Rail Committee Transcript January 27, 2016 to speak is Herb Borock and that will be followed by Stephen Rosenblum and then Adina Levi. Herb Borock: Thank you Chair Berman. I believe that the consultant Hatch Mott McDonald has a potential conflict of interest because of they work for High Speed Rail. I mean, normally, it is the project proponent for a project under the California Environmental Quality Act that is required to prepare a complete and adequate EIR and that would include all of the mitigation that are required and identify who's going to do the mitigations and do these kinds of studies and that is the agency that should be paying for them. And in the same situation is for (council members), so I do have a concern both with the process as to where and what stage the studies are being done and under which agency is doing it, who is taking the responsibility for funding them as well as the fact, as I previously brought to the predecessor rail committee that I thought this particular consultant was both a funder of Proposition 1A and repaid and contracts a hundredfold after it was approved is somehow also our consultant. I think that's a conflict. The second concern I have is with Grade Separations is something that also brought up with road widening. We have congestion; some people say, well, we should widen the roads and then the response says, well, that's just draw more traffic. And the question is with Grade Separations that will facilitate a traffic movement, to what extent is that then tied to more intensive development within Palo Alto itself? And so as you proceed on that in the council, it seems to me that's something one has to bear in mind that you can do that piece meal. You can't be talking about Grade Separations separate from the impacts that would have on future development within the city. Thank you. Chair Berman: Thank you, Mr. Borock. And our next speaker is Stephen Rosenblum and that will be followed by Adina Levi. Thank you. Stephen Rosenblum: Good morning Members of Rail Committee. I've spoken many times before the council and the predecessor of this rail committee about the importance of grade separation for Caltrain and eventually for High Speed Rail to the future of Palo Alto. This is a decision that's going to face the council, which will affect the ecstatic’s and cohesiveness of the community for the next century at least. I think the council and the rail committee are pursuing a correct path on this to figure on their own what they would like to happen, to come up with a well substantiated concept about what they would like to see so that when Caltrain and High Speed Rail come back to us with their counter proposals, which presumably will involve spending much less money and having more impact on our residential lots. We'll be able to say look, this is doable and TRANSCRIPT Page 7 of 41 Rail Committee Transcript January 27, 2016 we should consider it doing it that way. I fully support staff's recommendation of hiring Rail Project Manager. As I say, I think this is a crucial subject for the future of Palo Alto and people will look back at this council as having made the decision, which will affect the way Palo Alto looks in the 22nd century. I envision a community where people in bicycles and cars can cross the train tracks whenever they want and that we don't have train noise or other problems of suicides on the tracks, which plagues us now. It is also opportune--if I can speak for a moment on Item 2, that the Santa Clara County sales tax allocates money to Grade Separation for Caltrain. I think this is a nice confluence of events and will allow us to have some synergy in our efforts. Thank you very much. I wish you well in your deliberations. Chair Berman: Thank you, Mr. Rosenblum. And our next speaker will be Adina Levi, followed by Roland Lebrun. Adina Levi: Good morning Council Members. Adina Levi (Inaudible) Counseling. Thank you very much for working on this Grade Separation including the next item, which is bringing in a consultant to work on a context sensitive solution with the community regarding the desires of the community and also really grappling with some of the design and cost and revenue issues. With regard to the specifics here of the study, a couple of things. Burlingame had a city council meeting reviewing the various different alternatives about a week ago and we're leaning toward the split option, which had the least side effects in terms of enabling the station to be restored, which the trench should not actually do for them and having better access to side properties and side streets and had the lowest relative costs in the 210 to $260 Million range. It's not a done deal and there's questions in San Mateo County because they're running out of their pot of funds. Lastly, in terms of the Grade, one of the issues and opportunities is with freight because there's a potential that if there was a different freight operator that might be able better to tolerate the 1 percent Grade and at the local policy maker working group where all the different cities will be getting together and talking to High Speed Rail, that might be an opportunity starting on Thursday, tomorrow, to get different cities to work together to get High Speed Rail and potentially this may meet our representatives in Congress to be able to work on freight and see if we might be able to get changes that would allow the less impactful and less costly project. Thank you. Chair Berman: Thank you, very much. And next up is Roland Lebrun. TRANSCRIPT Page 8 of 41 Rail Committee Transcript January 27, 2016 Roland Lebrun: Yes, good morning Committee Members. So there's a couple of things I want to touch on. First is the issue of cost and second is where are we going to find funding to do this and the one to two percent is really important as far as that is concern. The first thing I like to touch on is I entirely agree with the comment Borock made, which is a conflict of interest between Hatch Mott McDonald and High Speed Rail Authority, and this is how you end up with having those preposterous proposals over the quieting the noise, for instance the San (Inaudible) brand new Caltrain station, you know, that's somehow buried in that cost. You're about to get the same situation in Hills (Inaudible) when we (Grade upgraded), by the way, we do not need Grade upgraded. We're going to blow $200 Million someday to have a brand new Hills (Inaudible) station, so we can develop Hills ([Inaudible) of Santana. That's got to stop. We need to bring some new people in. Now with regard to Bart, we took the worst case, which is mission warrant, okay. My advice to you is to look at the (Cato) Road, Dixie Landing, Cierra Landing, which are going to be a lot closer to what you're trying to do in Palo Alto. You're going to find out, you're probably closer to $50 Million of Grade Separation. To wrap up, one thing you may want to look at is actually four tracks and the reason you want to do that is because- -actually, building a trench and keeping the line open is really, really, really difficult. You're going to have (shoefly) and God knows what else. You might just as well go for four tracks, but the kicker there is that if you do agree to four tracks, Grade Separation now become mandatory, so whoever wants to put four tracks, they have to provide Grade Separation, that's a rule. Three tracks, yes, you can have Grade Crossing; four tracks, no. So to wrap up on the funding, you may want to look at a fast act. You know, there's a lot of funding in there for transportation, which mean you need to look at one percent and basically be ready to have more freight going to the Peninsula. The kicker is that you have to be ready to start construction in 18 months. And the last thing I like to look at is the AB1591 by assemblymen (Inaudible) here, is got $1.3 Billion in there for freight corridors. Once again, if you somehow figure out a way to have more freight going to the Peninsula, you're going to have massive funding coming in there. Thank you. Chair Berman: Thank you very much and I'd like to now turn over to colleagues for questions and comments for Mr. Canepa and then we'll move on to the program manager and community engagement piece. Any takers? Mayor Burt: Sure. This is really the process going forward on evaluating alternatives. First a question. You referred to the one percent as the preferred max grade. Preferred by whom? TRANSCRIPT Page 9 of 41 Rail Committee Transcript January 27, 2016 Mr. Canepa: That's by Caltrain, but UP requirements are different. Mayor Burt: Why do you say Caltrain prefers it? Mr. Canepa: Well, the flatter the slopes, the better it is for the trains. Mayor Burt: Yeah, but Caltrain also has shares, concerns on communities how to best design grade separations. I've had those discussions with Caltrain, so I guess I just say that I'm not sure at all that's their preference. That may be what they believe is somewhat a constraint, but not a preference. Mr. Canepa: And that's true. It's because they are a shared carrier, it's a shared rail line with UP. Mayor Burt: Okay. So I just want to make sure we get clarification. Mr. Canepa: That's true. It is their criteria, which covers UP run. Mayor Burt: And it's not--I can tell you, it's not High Speed Rail’s preference either. Mr. Canepa: Correct. Mayor Burt: So we had studied in this, what we engaged with you a year plus ago, several scenarios. One of the things going forward we'll need to look at as a committee is what, if any, additional variations or scenarios we want to have evaluated and what would be the best process to try to identify them. We've talked a lot about how much we value the CSS process. We've wanted High Speed Rail to do it, and for Caltrain to do it, but it's a process that would be prospectively valuable for us to utilize on perhaps a narrow focus basis to begin to identify kind of what are the alternatives that might be available for us and which of those we might want to have evaluated at and to what degree in near terms versus one that we may then, at a later date, kind of iterative process look at certain other alternatives. So for instance, we saw a drastic reduction in trenching cost when we went from one percent to two percent. Three percent is more challenging with freight and certainly would need their consent, but it's not off the table, and that is something I'd be very interested in is seeing at a three percent Grade, what would be the length of that and what would be the estimated cost and how TRANSCRIPT Page 10 of 41 Rail Committee Transcript January 27, 2016 close do we get in cost of conventional Grade Separations with land taking-- the cost of land taking versus if we had a three percent Grade trench and set aside for the moment the almost unattainable political ramification of trying to take the neighborhood of 50 residences to put in conventional steps here. So there's that added dimension, but I suspect we'll see at least a significant narrowing of the difference in cost between those two scenarios and maybe a narrow limitation, but we don't know, until we've done that. But there's other possibilities as well and so we've developed in this community last half dozen years a whole bunch of folks who are both either residents or neighbors who have engaged in this, developed their own expertise and they're own insights. This why CSS has Stakeholders involved, so I think that's something we want to consider not only what we want to have evaluated but the process by which we narrow those options and get best thinking on it. Chair Berman: Thank you. Greg. Vice Mayor Scharff: I think we really need to figure out if a two percent Grade is possible. Not only possible, but whether or not it's politically feasible, whether or not we can get done cause if so why are we only talking about a one percent grade? I mean, if that works, let's look--I agree with Pat, we should evaluate a three percent grade, but I mean don't know what's the constraint on a two percent. I understand is it--primarily a UP constraint, isn't it? Mr. Hackmann: Correct. Vice Mayor Scharff: So I mean, how do we move forward from here and say, you know, obviously, we rather do a two percent or possibly even a three percent, but how do we, you know, get that sense that two percent works? I mean, obviously given the constant, I think we should, I think we need to figure that issue out. That seems like almost the number one issue to figure out frankly on moving forward. I frankly don't see any of these scenarios where we take huge amounts of properties. I'm not sure if it's even worth spending a lot of time on this scenario on which we take 14 properties here--I don't have it in front of me--I mean, if you look at each individual crossings, you start looking at this, it's a huge number of individual properties on a lot of these--yeah, here we go--so yeah, on the Churchill for instance, where we take 16 properties on the full take, I just don't see that. I also, what would that look like? I mean, when you see on the thing that say impacted area? So what visually would you look like when TRANSCRIPT Page 11 of 41 Rail Committee Transcript January 27, 2016 you drive through there? I mean, that's a huge part of that neighborhood goes away, so I don't know. Is there a reason to be looking at these really large takes? I mean, that's just going to get people really concerned. Mr. Hackmann: Thank you for raising that point. If I may, the reason we looked at these in the past was because that's the "traditional" method of Grade Separation, submerging the roadway below the tracks. The Palo Alto is unique compare to some of our northern neighbors in San Mateo County in that our neighborhoods are built very close to the corridor and, so you're exactly right that up north, you have El Camino running parallel to the Caltrain corridor many places, which allows a lot of these Grade Separations to occur in commercial districts, not residential neighborhoods and that leads to your point why there's such a large takers. Vice Mayor Scharff: The question is, if we take the large takes off the table and say, we're not going to do that, what does that do to traffic flow? That means you lose what on the turning rates on the partial takes, you lose the turning connections to Alma. I have that right, right? Joshuah Mello, Chief Transportation Official: Yes. Vice Mayor Scharff: So why couldn't you look at putting--turning right on Alma is not a problem ever. I mean, you could always do that. You don't have to go down Churchill, you can always go down one of the other streets. The hard part is turning left on Alma during--so why couldn't we put a light somewhere else rather than do all that taking? Well, the light is basically just a left hand turn, where you turn left on Alma. Mr. Hackmann: In the scenario where Alma's left at Grade, that removes all turning movements and that still requires 16 full partial takes and 4 partials. The one that contains all turning movements requires 33 parcel takings and three partials, so if we did a solution where we maintain some turning movements, it would be somewhere between that 16 and 33 figure. Mr. Mello: And if I can jump in to clarify. The option that has Alma at Grade would look similar to the embarcadero under cross where there's actually no connection between Embarcadero and Alma without using side streets. That's why the turning lane movements are removed. Vice Mayor Scharff: So it would look like embarcadero? TRANSCRIPT Page 12 of 41 Rail Committee Transcript January 27, 2016 Mr. Mello: Yeah. Vice Mayor Scharff: At Churchill? Mr. Mello: And the other one would look like Oregon, more or less. Vice Mayor Scharff: So if all of that is unacceptable, what do we do at Churchill? No, but I mean, right, we talked about the tunneling, which goes up to--it doesn't go to Churchill. I think it goes--I mean the train stops where? Somewhere around Oregon, it come up--? Mr. Mello: So I think you'll see in my presentation about the program manager. I think these are some of the questions that we need to answer in the next year or so through our contact sensitive solution process. I'll tallk a little bit about how we see the process in my presentation. Chair Berman: That's a good point, thank you. So let's try--for this, and this is a complicated item because there's numerous different pieces. For now, let's just try to keep the questions maybe for Mr. Canepa and then some of the bigger kind of questions, we can take up in the same item, which is the next section, if that makes sense. Mayor Burt: May I just add something. I don't think if we try to weigh in to determine design alternatives at this time, we don't have that. That's really part of why we should look at process perhaps to identify that we think that there are other alternatives, but not attempt to preliminarily design it. Vice Mayor Scharff: Right, but I do think that the notion that we're going to do with all those properties, that could make the process very difficult. I mean, I think in some ways if you take off the table most extreme versions of things, you often get a better process because you don't have people really freaking out and so that's really what I'm asking is, is there a way to streamline the process a little bit so that we don't go through huge community inks if we're not going to do something. Is that extreme? Mayor Burt: Richard mentioned basically a referenced point and I think we haven't done a good enough job identifying that's not one of our preferred alternatives, but just a reference point if we didn't do one of the alternatives, this is what we'll be left with as opposed to this is the directions we're headed. So I think that's a good point, that we need to make sure TRANSCRIPT Page 13 of 41 Rail Committee Transcript January 27, 2016 even if we still need and value a reference point, it's not misconstrued as to what it is. Vice Mayor Scharff: I mean, I think for me, there's several things. I think we need to move this process forward where we start cause the context solution is going to take a long time and we have the most complicated, I think at the Grade septs in the area, so other cities will be moving forward lighting up, getting the money. I know we've asked that we don't think whoever get it done first should get the money first, right. But you know, just because we say that, doesn't mean it actually goes that way. So I think, \you know, on the two percent, the one percent, it seems fairly obvious that if we can do a two percent Grade, rather than a one percent grade, that's the decision we should make and move forward. And I'm not saying we should look at three percent, but then we should stop talking about and one percent, but that may not be possible, so how do we get through that road walk? How do we figure that out so that we can actually move the process forward? I mean, a lot--that’s where outside the context seemed the solution question, that's the question of how do we actually do that? Are we going to be able to achieve that or not? I don't know. Maybe you think it's within the context, that seems the solution, but-- Mayor Burt: And CSS is not--it's an iterative process, so I would envision that whatever's the next phase of an analysis we do, is not after we complete the CSS, it is part of the CSS, so there'd be perhaps some preliminary alternative analysis that would feed in to what we might want to have technical studies done and then iterates. Chair Berman: I don't mean to interrupt, but let's--I think we're going to have that discussion in 10 minutes. I want to let (Inaudible) get a chance to get his presentation once we get--everybody gets a chance to ask questions of Mr. Canepa. Greg, you have any more questions? Vice Mayor Scharff: No, I'm good. Council Member DuBois: Without designing a solution, I'm really interested in understanding where there's option, maybe anything that's change in terms of construction techniques, in terms of the assumptions and maybe I can suggest a couple of areas I'm interested in hearing about. You know, we have several creeks, are there any improvements to tunneling or trenching under creeks, you know, boring versus trenching, you know, is there any innervations in borings? And also, the idea of shoeflies, is there TRANSCRIPT Page 14 of 41 Rail Committee Transcript January 27, 2016 construction techniques where the tracks could remain in place for a period of time while work was proceeding around them and below them? And then lastly, if we were to advance the idea of Silicon Valley trench that was significantly longer, and extended state Menlo Park or (Inaudible), would change your approach in any way or are there economy of scale to dealing with a larger project or is it really just continue what you're doing but further distance? And the last question on the property takes, if you know, did you guys look at always to minimize? Are there any construction techniques where there would enable us not to take as many properties? Mr. Canepa: The construction technique--I mean some of these properties that we're looking at for takes are because the driveways are gone. Now, when you take a piece of property, there would be a way to reconfigure it, but you'd have to take out what is existing to their access to the home. That's the problem. So in the 10 percent design, we look at if you're taking out somebody's driveway and access, then it's a full take. Partial take means, we're kind of--you can still get to the property, but we have to encroach into their frontend, so that was the difference. Now, where that property can be redeveloped is something that's a different story. It's not like it's just going to stay there dormant, I'm sure. The problem is the retaining walls and we can go down with the streets at about eight percent, but we also need to get the pedestrians through to at five percent because of ADA restrictions, so it kind of lengthens it. Now, we did in the study looked what happens if we raised the rail and there was analysis of what happened if we start raising up the rail Grade to how many properties that save, and it wasn't significant, let's put it that way. I mean, there's a couple, but it wasn't dramatically decreased that. As to your question on the shoefly, the one item that is not included in this study wasn't considered at the time because it was done a little over a year ago, was the electrification. At that time, the assumption was that the rail trench would be build, it would be set up for Caltrain to come through and electrify, so that was not considered in the cost. I did talk to our system folks and the additional cost is probably, because you do have to build the electrification when you shoefly, if it's electrified before you start construction is approximately another $4 Million a mile to go through that, which is basically you got to rebuild the system. Council Member DuBois: Is there any way to leave the tracks in place and start to build? Mr. Canepa: Not really. We did to our internal group and that's part of what our company's known for, to get underneath the--the tunneling and TRANSCRIPT Page 15 of 41 Rail Committee Transcript January 27, 2016 structure folks--what this is based on is actually driving C-camp pile type piles down so you don't have an excavation that goes out at one to one or two to one, that deep. So what it does is drive the piles down with a (slurry) mixture and then you can trench out in between that. So the shoefly, what that saves is pushing it further into Alma Street, so you can probably keep Alma open partially while the shoefly is in place and while the trench is getting excavated. To go underneath the creeks, now granted, this was just a 10 percent concept design, but we did talk to our tunneling folks on that too. They can get a structure underneath with only five feet of clearance from the bottom of the structure without disturbing it. That was our rule of thumb on that. Otherwise, we'd have to brace or rebuild the creeks. So one of the things that we wanted to do is stay out of the creeks because that launches a whole environmental process that could get very sticky, so that was the rule of thumb for us, to stay five feet below the invert and they can get a structure going. Council Member DuBois: And then the idea perhaps a longer trench. Mr. Canepa: The longer trench, what it does do--I have worked with contractors, it does--there is economy to scale, but you still have to stage it in areas, so you still have the shoeflies and everything else. Cost wise, you'd have to look at a bigger contract to do that and the procurement strategy, the feeder design build, or design bid build or in the packaging in phasing, that would have some ramifications on it, I'm sure. What it is, I couldn't tell you at this time. Council Member DuBois: And then, again, find out if the question can address here, but this issue of Union Pacific, you know, I think the rail system (Inaudible) some issues with the economy, but I don't know who talks to Union Pacific, if the city's ever talked to them, but sounds like we need to talk to them to understand this two percent rate issue. Chair Berman: Thank you, Tom. Greg, you have a follow up? Vice Mayor Scharff: We looked at raising the train, putting the train in the air? Mr. Canepa: I'm sorry, raising the grade of the--? Vice Mayor Scharff: No, just putting the tracks in the air? Elevating the train? TRANSCRIPT Page 16 of 41 Rail Committee Transcript January 27, 2016 Mr. Canepa: Not fully, no. Mr. Hackmann: If I may speak to that. In San Bruno, for example, excuse me, San Carlos, they have sort of a Hybrid approach, where the tracks are slightly elevated and the road is slightly submerged. That's how they achieved their grade separation, so in Palo Alto, I said--when Mike and I was just talking briefly, do we achieve anything if we raise the grade by three feet or so, you know, a moderate increase like that, and it just wasn't--the parcels are so closed to the corridor, that the raise of the corridor has to increase so much to achieve sort of the parcel saving we would want to that it doesn't really fit with our vision or the Rail Committee and Council stated vision of how they want the corridor to look in the community. So three foot, six-foot raise of the grade doesn't achieve much in terms of partial savings. Vice Mayor Scharff: So I guess I'm going to say that I'm going to say that I don't think running embarcadero or the expressway like grade separations through our residential neighborhoods is my vision of the community either. Chair Berman: Thank you. So love your questions, love your comments and I agree with Greg that--if staff were to come back to us what is the process for determining whether or not we can get approval on two percent, and to Tom's point, who do we talk to? Do we need to talk to UP during, you know--that would just be helpful to--and that's kind of the high level issue we need answered before we really know what our options are? Does the estimates that involved takings--do those include the cost--we talked about this a year and a half ago, it does include the cost of taking as of a year and a half ago? Mr. Canepa: Yes. That was assumed it’s on--there's actually a second page to the--as the right of way in it. Chair Berman: Okay. To that point, can we--and Richard, you and I talked about this whole last night, is it possible to get this presentation electronically to the council members? Mr. Hackmann: We can have it post online. It can't be emailed because it's so large, but will have it posted online. Chair Berman: Okay. If that's possible, that's great. And then, quick comment, to Greg's point, I said this a year and a half ago. I was looking at TRANSCRIPT Page 17 of 41 Rail Committee Transcript January 27, 2016 my quote, I was quoted in the paper where I said, taking the 50 parcels is an absolute non-starter. It would be devastating to the community, that hasn't changed in a year and a half. So, I do agree that you should have it out there as, you know, what would happen if we were to use that alternative. We should make it clear that it's really not one that we're seriously considering, which is why it’s all the more important we figure out what the process is on getting approval on two percent and studying the possibility of three percent. So let's move on to Joshua and his presentation so we can talk about the program manager and the engagement piece of this. Thank you. Mr. Mello: Good morning. I'm going to give you a brief overview of our proposal to bring on a Rail Program Manager. Back in October, City Council made two motions related to rail in Palo Alto and outlined in this presentation, I'm going to talk about how we addressed some of the elements of that. You remember at our last community meeting, we talked about some of the other elements of that motion from October 13, and how staff was working to address those. And then following the presentation, we'll take your directions on how to proceed, you know, with or without a Rail Program Manager. So the part of the motion on October 13, that were aiming to address with the Rail Program Manager, is to develop a first phase circulation study and also develop a preliminary plan for a CSS approach to addressing the rail impacts and the future of Palo Alto and the mid- Peninsula. An overview of our recommendation is that we developed an RFP immediately following this meeting for a Rail Program Manager and we hope to retain an individual or a firm with rail expertise to take the lead on these items and I'll go through the tasks that we envision for this Program Manager. The goal would be to find someone who is, you know, both experienced in the intricacies in rail engineering, but also have effectively managed large infrastructure planning, community engagement projects and ideally does not have a conflict of interest with High Speed Rail, which could be, you know, a tough sell, but we'll do our best to find appropriate candidate. The first task that we envisioned for the Rail Program Manager would be the staff the City Council Rail Committee, so this person would prepare agendas, take notes, prepare presentations and then provide you with updates on Grade Separations, High Speed Rail and the Envision Silicon Valley sales tax measure. The second, and this comes directly from direction that you gave us from the last rail committee meeting. The second task would be to convene a rail technical group and this would be a standing group of local rail experts to serve as technical advisors to both the program manager and the rail committee. And the Rail Program Manager would manage this group, prepare agendas, take notes, prepare presentations, TRANSCRIPT Page 18 of 41 Rail Committee Transcript January 27, 2016 convene regular meetings of this technical advisory group and bring, you know, issues such as the grade of the rail corridor and technical issues like that to our local experts. The Rail Manager would also give you updates on those meetings as they were necessary. Task three would be to manage a Grade Crossing Circulation Study. So our vision of this Grade Crossing Circulation Study and we would welcome your comments on whether we've kind of scope this appropriately, but based on your directions on October 13th, I think this would be a step back for Palo Alto, where we look at every single grade, existing grade crossing within the city and we analyze you know, how important is it to maintain motor vehicle, bicycle and pedestrian circulation and each one of those if we did not have, you know, a circulation for motor vehicles, bicycles, pedestrians, what would that--how would that impact the remaining grade crossing in the city circulations at work and the ultimate outcome of this circulation study would be kind of a prioritization of our grade crossings. How important are they, how important is grade separation at Churchill versus Meadow and Charleston and what does Churchill looks like future? Does it become a bike pedaling crossing? If so, how does that impact, you know Embarcadero and Charleston? This would be a community driven process, it would be a community conversation and managed by the Rail Program Manager, but likely conducted by a separate consultant that specializes in these type of studies. So the Rail Program Manager would serve as the kind of the program manager while other, more specialized consultants would actually conduct the work of the circulation study. Task four would be to manage the context sensitive solution process, so feeding directly out of the circulation study would be a focus on specific grade crossings so, you know, the priority crossings that were identified from the circulation study, those would immediately feed into a larger community conversation around what the impacts would be of different alternatives to separate those grade crossings. If we are seeking state and federal funding, ultimately, we need to follow, you know the SEQR and NEPA process, which you know, require that we look at all feasible alternatives and then twiddle those alternatives down onto the, you know, the community preferred alternative to locally prefer alternative and that would be this process. So we would put everything on the table with the understanding that some alternative would have impacts that are just not acceptable to the community as a whole and those would quickly be rolled out to through the environmental process. Just to clarify, the Rail Program Manager would be preparing the RFP to procure a well skilled community engagement consultant that is trained in context sensitive solutions to conduct to that CSS study. So I see kind of concurrent with the CSS study, we would also be working on preliminary engineering so council may have heard, you mentioned that's an interactive process. One of the things we're TRANSCRIPT Page 19 of 41 Rail Committee Transcript January 27, 2016 going to need moving through the process is to be able to look at the impact of different design decisions, so the goal would be to have a rail engineering firm onboard that could do some preliminary engineering and also start work on a project study report, which is kind of the first step at getting the project moving forward in California, typical transportation project and we would wrap up kind of this first phase with a preparation of environmental impact report. Another important task that we envision for the Rail Program Manager is to represent the interest of the city during the High Speed Rail environmental clearance phase, so this Rail Program manager, you know, ideal would be someone who could talk the talk, you know as the ERR progresses and High Speed Rail starts to look at some of these, you know, issues around noise and community impacts and this would be somebody, we would have somebody on board that can go toe to toe with the High Speed Rail Authority. Review documents in detail, comment on them, prepare information for you to consider at your meetings related to that environmental process. And we've done kind of the back of the envelope a good estimate what all of this would cost. It's about $1.8 Million over two years, two and half years. The Rail Program Manager would likely be at half time to three quarter time position. We don't see it full time. It would likely be a contract position. We could probably find enough work for someone if it was full time, but based on kind of a half to three quarter time estimate, we think it would be about a $100,000 per year. We have 50,000 reserve from our transportation contingency this fiscal year to cover the--if we were to bring somebody onboard immediately, we have $50,000 to cover between now and June 30th. We have asked for a $1000,000 next fiscal year and the following fiscal year to fund that position. Our back of the envelop estimate for the Grade Crossing Circulation Study is 100,000 to $200,000. We've submitted a request in CIP funding for fiscal year 2017 to cover those cost. And then the Context Sensitive Solution Process would run somewhere around $500,000. That's for a very robust community engagement process, lots of public meetings, lots of back and forth about what the appropriate solutions are and we've also requested $500,000 in CIP funding and FY 7 gene for that and then the final piece would be the preliminary engineering project study report and the environmental impact report. Our best guess at that is about $1 Million and we've requested CIP funding and FY 18 for that, so basically a year and a half out. We have not looked beyond that. I think we would need to have a discussion about what occurs after we wrapped up the environmental study, but this is the first step as we envisioned of getting Grade Separation moving along the appropriate path. Chair Berman: Thank you very much. Now I'll open it up to colleagues for questions and comments. TRANSCRIPT Page 20 of 41 Rail Committee Transcript January 27, 2016 Council Member DuBois: Just real quick, I think I understand the surplus for study, but it sounds like it would look like changes in traffic based on changes to configurations. Is that correct? Mr. Mello: It would look at, you know, how the current Grade Crossing are operating. How important are they as a connection for motor vehicles transit, bicycles and pedestrians and then you, know, I can see looking at what happens if it’s closed? What happens if it’s converted to just bike pad only? What is, you know, it's four lanes today, became two lanes in the future? What does that--you know, that may save money, but it may not handle the traffic demand and then it would seek to prioritize based on how valuable the Grade Crossings are to the community, you know, which one should we be focusing on in order to wisely invest in Grade Separations. Council Member DuBois: I think one item of concern there would just be that we really look at impacts on side streets and maybe not immediately, you know, sometimes it seems like we look at that subset at the intersection site. I think everyone who’s here feel really strong at bottom up modeling piece Palo Alto condition, not using kind of top down regional forecast, but take a look if we shut down Churchill cars, you know, what happens at Embarcadero? Would people have to cut through side streets to get to Stanford, for example. On the manager, right now, we're covering some of the work going to High Speed Rail meetings and keeping with kind of train activity. Who does that work now and are they going to be freed up to do other things? Mr. Mello: Currently Richard, myself, Assistant City Manager Ed Shikada and Hillary have kind of been sharing the burden, but to be honest with you, I don't feel like we're able to give it the attention that it deserves and I think we really need to get a program manager on board to help, especially as the environmental work for high speed rails starts to ramp up. Council Member DuBois: Okay. And it sounds like--one of the questions I have is kind of full time, part time. Sounds like you're thinking it's kind of half time. Mr. Mello: That's our thinking. The RFP would have a scope of work and it would really be up to the consultant to propose what their work plan would be to deliver that scope of work. TRANSCRIPT Page 21 of 41 Rail Committee Transcript January 27, 2016 Council Member DuBois: One of the decisions here is whether we're really hiring an individual or a firm and I think that's a big topic for discussion. There could be a phase approach where the consulting firm, because we have a lot of work here, over a long period of time, I'm not sure what we're going to do. Hillary Gitelman, Director for Planning and Community Environment: I thank you Council Member Dubois. That's a point I wanted to interject. We're in a really tight hiring market right now. Also a lot of transportation expertise and firms around the state have been focused on getting work on High Speed Rail and obviously, we want to find someone who is not conflicted in a material way. I think we would be opened to either hiring an individual or a firm and if it is a firm or a collected of individuals who bid on this, they can potentially do some of the work and save us a step of having to procure additional services. And we'd be really open to either solution. I think the tight hiring market right now in recruiting talent--the fact that's so difficult is going to end up informing which direction we go. Council Member DuBois: How quickly do you think we would get somebody. Is this going to be nine months before we-- Ms. Gitelman: Well, we see this as really urgent. The Committee wanted to see the scope of work, but if you’re okay with it, this is a City Manager kind of administrative decision to release a request for proposals. We would get that out as soon as we could and try and get someone on board as quickly as possible. Council Member DuBois: Question about the rail technical group in terms of how necessary it is and I'd like to hear from my colleagues on that, but I'm thinking that we could have a lot of local expert's participate in this meeting and you know, could we do it all as part of the Rail Committee or do we need a separate technical group. There's also some comments on here that focused down Palo Alto would be easier to manager and I get that, but I really think there's an opportunity here and a lot of benefit to starting off with a larger view of the regional effort and I understand that's harder, but I believe it's really important. We shouldn't just give up on that right away. If you want to comment, you can. I think a multi city effort potentially between Santa Clara and San Mateo Counties. It's really looking at, again, improving the rail corridor in the heart of the Peninsula potentially from Mountain View to Atherton and Redwood City. We could do something to TRANSCRIPT Page 22 of 41 Rail Committee Transcript January 27, 2016 solve our own problems, but I think we could maybe come up with a streamline solution that would involve other cities. Ms. Gitelman: Thank you for proposing that question. I think this is something we would really like to hear from the full committee on and potentially the full council. I think, you know, we as professionals, do feel like if we broaden this to try and solve the problems of the Peninsula, we're not going to make the kind of progress that we could make if we focus like a laser on Palo Alto Grade Separations and so, you know, this becomes kind of a policy and a strategic call I think the full council would have to make and I don't know whether now is the right moment to pose that question or whether it’s at some point once we start in on the circulations study. Council Member DuBois: I agree, it's a full council, but I want see us push on it before we just default to Palo Alto only. As I was thinking through the consultant, I think some goals, for me, a goal is a regional solution. I think, again, a quick path to being shovel ready is to see who's going to get funds. I think we need to keep that in mind and to Council Member Scharff's point, you know, if we could eliminate options because they're not palpable, that will save time. I think we need to be focused on that. That should be made clear in the RFP. Leveraging funding, you know, we have a electrification coming, but I think the cost on that is rising. It's not clear when that's going to start, so if we're able to do work once and you know, not be going back and redoing electrification, for example, that would be great. I think another point though that was embedded in here with the consultant, is the ability to write grants and secure funding and didn't really come out, but there was a lot of engineering in there, but I think ability to go out after federal grants and look at things like maybe some of the freight opportunities like those in the trench, that would be pretty interesting. Thanks. Mayor Burt: Thank you. Pat. Chair Berman: Just a couple of comments. When Josh spoke a couple of times on in the circulation evaluation looking at whether we need to retain everything we have. But actually, i want to make sure we add we're considering where we might be able to improve circulation, in particular if we have a trench, that opens up a lot of alternatives in particular biking. Ped crossings, we've had a long term goal to have a grade separating crossing in South Palo Alto roughly between East Meadow and Oregon, and so I'd certainly would want to have that on the table as a consideration. TRANSCRIPT Page 23 of 41 Rail Committee Transcript January 27, 2016 Falling on what Tom had talked about on grants, also I think that in particular, the EIR aspect of this and maybe more would be potentially eligible for funding or reimbursement from the VTA tax measures if that go through and having the buckets of funding that we're hoping to see. The CSS process funding strikes me as high having gone through this with fair amount of work on looking at what it would entail for the whole Caltrain system five years ago. I know that (Nadia Niak) from Card did a great deal of work and really brought in experts on this so we can begin the draw for that. And then we are going to have a dilemma finding firms that don't have a conflict. I mean, in particular High Speed Rail when Prop 18 went through, the organization pushing that ballot measure basically insisted that virtually every perspective contractor in sub-contractor contribute to funding the ballot measure and then most of those have subsequently worked directly or indirectly for High Speed Rail sense and there aren't a whole bunch of experts sitting out there who aren't in the category unfortunately. So we're going to have that challenge. Chair Berman: Thanks Pat. Greg. Vice Mayor Scharff: So I do think that the way we scope out the circulation, you're planning on bringing that back to the committee before you move forward on that? Mr. Mello: We could that. I think we can also write the scope of work broadly enough that we could, you know, after we retained a firm that we feel is qualify, we could help shape the work plan with them. Vice Mayor Scharff: I thought Tom had some good points on the circulation study. I also thought, for instance, if we return Churchill into a bike and pedestrian only, then what we may want do to is on Embarcadero, make sure it goes four lanes all the way through because right now, it turns to three, bottom of the bridge. I mean, I'd like to see those kind of things in the study determine how do we improve circulation because I agree, the goal should be to improve circulation, you know, everywhere. I think that circulation study is really important. I had some concerns about the hiring manager. I guess I totally got the sense you haven't quite thought it through yet in terms of--so you're thinking of hiring a part time person, right, that's what you said, three quarters, have time person or a firm, but assume you hire a person for now. Is that right, three quarters, half time? TRANSCRIPT Page 24 of 41 Rail Committee Transcript January 27, 2016 Ms. Gitelman: Yeah. I think we're talking about bringing in a rail expert. Someone who's worked in this field who has time to contract with us (Crosstalk) Vice Mayor Scharff: They wouldn't be an employee; they'd be an independent contractor? Ms. Gitelman: They'd be a contractor. Vice Mayor Scharff: Okay. That's an important distinction. So they're an independent contractor--so what you're doing is hiring a firm or an individual consultant. Mr. Mello: I'm sorry if there's confusion around that. The number that I presented, was just a best guess based on, you know, what the billing rate would be for someone working not full time, but somewhere around half or three quarters. Vice Mayor Scharff: So there'd be no benefits. They wouldn't be a city employee. They'd be a consultant on an hourly based. Ms. Gitelman: Contractor, yes. Vice Mayor Scharff: And then you'd look for someone who, you know, this is a multiyear process. Right? So you really want someone who commits over the multiyear process for this. And so the notion is if we get out an RFP, were you thinking of going to full council to get authority to get the RFP out or--I heard something about, well the city manager can get that out. Ms. Gitelman: I think we're interested in committee's input on the scope of work, but then we would issue the RFP and the contract would come to the council. Vice Mayor Scharff: Okay. I think if we're really going to do this, I agree with you, we need a hiring manager. I mean, I think that's--cause frankly how this actually works, will have a lot to do with who you hire as the hiring manager and how that process is run. And are they going to be doing the Context Sensitive Solution as well or is that going to be someone separate? I mean, I'm thinking about the skills. All the skills that you need, I mean, there's a big difference between understanding rail and having the technical TRANSCRIPT Page 25 of 41 Rail Committee Transcript January 27, 2016 expertise and how to handle the community engagement. This strikes me as a-- Mr. Mello: If they end up being an individual, I think from that perspective, our ideal candidate would be someone retiring, you know, who just worked on the central subway project in San Francisco, for example. Someone with, you know, a boat load of experience with large infrastructure projects. If it ended up being an individual, I think they would need to contract out the Context Sensitive, so they would prepare an RFP and you know, find a firm that could assist them with the Context Sensitive Solutions. If it ends up being a larger firm, that's not conflicted, which would be pretty hard to find in California, then they may have the ability to the circulation study and the CSS work in house and we would be contracting with the firm. So I think, as Hilary mentioned, we probably have to leave it open because of the way the market is today. We don't know who's out there, we don't know if we'll get a candidate like the one, you know, the preferred candidate that we'd like to get. Vice Mayor Scharff: And I just wanted to comment on Tom's notion of making it broader in Palo Alto. I don't really understand it to be honest. We can talk about it more offline maybe, but I think we need to immediately move this forward and have a laser focus on Palo Alto on our Grade Separations. I wasn't quite sure what you wanted to achieve on that, so--my big concern is that we don't achieve anything and that we don't move forward quickly enough and we don't get our share of funds, while going through a long process frankly. I think if we open it up--I don't quite see how you open it up to the community, talk about other people's Grade Separation and broadly in the community, so I would just, for now, advocate for definitely keeping incentive in Palo Alto, focusing on that. Chair Berman: Thank you. If it's quick yeah, and then let's kind of assume we're going to put that to a further conversation amongst the council. Council Member DuBois: I'd definitely like to talk to you offline, but a big part of my thinking is set in terms of national, state level funding solving Palo Alto's problems, whether or not it rises to that level. (Inaudible) in Silicon Valley's problem, again considering changes in the economy, the freight on the Peninsula, but also just the transportation issue along the entire (Inaudible). We might actually tap into much bigger set of funding and I just want to consider that. The piece meal solution, the train TRANSCRIPT Page 26 of 41 Rail Committee Transcript January 27, 2016 potentially going up and down as it goes to different cities doesn't seem like a good solution. Let's talk about it more, Chair Berman: In the interest of moving this along, I'll save any questions I have for the next time this comes back up whenever and what they are, but you know, I think the need is clear and obviously, one of the biggest issues on whether or not we're regional or laser focus is timing and what that would mean in terms of and what we might jeopardize the longer this process takes. So staff was looking for I guess comments and suggestions. Do you need anything more from us at this point or--I mean, is the plan to come back to-- Ms. Gitelman: I think we've got the input we needed. I guess there's one outstanding question, which is Council Member Boise pose this question about whether we really want the scope to include this additional outreach committee, you know, technical committee. Chair Berman: Is that something that would have to be determine early on or is that something that could be-- Ms. Gitelman: I guess we could put in the scope and request for proposals and then if we decide to defer to later, we can. Chair Berman: Yeah, I think that makes sense. I mean I think a lot of colleagues all comments on that, but we don't necessarily have a time to address it right now. You guys don't need anything else from us on this item? Vice Mayor Scharff: You don't need any motions or anything? You're just going to go ahead and do the RFP? Ms. Gitelman: On this one, I think we just appreciate the committee's input and we'll proceed. Chair Berman: Do you agree with that? Council Member DuBois: Well, before I make a motion, I have a strong preference for a firm if we can find one. Chair Berman: Understanding the challenges of-- TRANSCRIPT Page 27 of 41 Rail Committee Transcript January 27, 2016 Mr. Mello: I think thinking about how we structure it, I think we'd have to release two separate RFPs; one for an individual with a descript scope of work and for a firm and we'd have to see what kind of responses we got. Mayor Burt: So what staff's next step based on what has occurred today? Ms. Gitelman: We will work prepare the balance scope of work and get an RFP out on the street. Then when we get responses, we'll be able to determine, you know, which approach makes more sense and bring in a contract to the council. Mayor Burt: I don't know if we're ready to support that based on the amount of discussions we've been able to have and I'm just wondering whether we should continue this to our next rail meeting. It would me we lose a month, but I found this interesting, informative, but it's--and certainly going out for the RFP doesn't bind us, but I just don't know if we're ready to have authorized direction of the RFP to the extent that-- Vice Mayor Scharff: I guess I understood it that we really weren't authorize it, we were going to let them go do it. We could stop it, I supposed, but we weren't going to take a vote or anything like that. They were just going to go to it and then if we had a real problem with it, we could obviously pull back. I guess I'm not seeing any really other alternatives to having somebody run the rail program. I think we should move forward, do the RFP. but if you think about it, you come back and (Inaudible) do it and say, you know, here's another approach, but I don't really see a viable--I mean, staff told us they can't do it. That's what I've heard. Mayor Burt: And I'm not saying I'm opposed to the concept. I'm just questioning whether we're ready to give our support to staff moving ahead based on what has been thought through today and maybe it's fine, I just have that concern. Council Member DuBois: I'd like to get moving on the circulation study. I think it likely be phased, but--that's my two cents. We should move forward. Chair Berman: Do colleagues want to vote on this or are we okay with just kind of saying all right-- TRANSCRIPT Page 28 of 41 Rail Committee Transcript January 27, 2016 Vice Mayor Scharff: Pat, you're okay with moving forward if we-- Mayor Burt: Yeah, I supposed so. I sort of thing I want to--I prefer to think more about--we didn’t' get really chance to either have information, discuss it much in advance, so. Chair Berman: We haven't talked about it. Our committee meetings schedule, but this is something that we can come back in early February if folks need more time to get comfortable with it. I mean, I guess-- Mayor Burt: Well, it sounds like I'm the one who has the undefined reservations. So I'm okay with them going ahead with an understanding that we may come up with questions or so in the upcoming weeks. Chair Berman: Perfect. Thank you. So we're going to move on then to item number two, which is Envision Silicon Valley County Sales Tax Measure; North County and West Valley Cities Position Advocacy. Now a quick time check, Council member DuBois has mentioned that he has a hard stop at 10, which is in five minutes. But obviously this is something that's timely, so I don't know, Tom if you have a-- Council Member DuBois: I just pushed it back to 10:30. Chair Berman: Perfect. So let's have the staff presentation then. I know we have currently three members of the public who want to speak to this. If any member of the public wants to speak to this item please turn in your speaker guard as soon as possible, so that we have an ability--we all have a hard stop at 10:30, so there will be no going past 10:30. Thank you. NO ACTION TAKEN 2. Envision Silicon Valley County Sales Tax Measure: North County and West Valley Cities Position Advocacy. Joshuah Mello, Chief Transportation Official: Great, thank you. I will keep my presentation extremely brief because I think you're all relatively familiar with what's transpired recently. I don't have a presentation; I'm going to walk through the staff report that was prepared. Basically, back in August 17, 2015 City Council gave staff direction as to which projects to submit for the upcoming Envision Silicon Valley Sales Tax Initiative. And then in TRANSCRIPT Page 29 of 41 Rail Committee Transcript January 27, 2016 October 13th we had another follow-up meeting where we presented the status of the Envisioned Sales Tax Discussion; Envision Silicon Valley Sales Tax Discussion and you gave us direction to advocate for and support putting in the county-wide funding measure, funding for county-wide Caltrain Grade Separation in the order of 15% and that was a minimum that you set. And that was separate from any additional funding that was requested from Cal Train for the sales tax revenue. And you also asked us to check in with you when the measures started to take shape and there's been some recent developments and thus, we did want to check in with you at this time. On January 8th, Mayor Burt, City Manager Jim Keene, Assistant City Manager Ed Shikada, and myself attended a meeting of the North County and West Valley Cities at Mountainview City Hall. And at that meeting there was a draft framework for purposed allocations under the Envision Silicon Valley Sales Tax that was presented to the group. This framework was based on, kind of discussions that have had occurred over the last several months between the North County and West Valley cities. There were minor modifications made to this framework at the meeting on January 8th. And the end of that meeting it was kind of confirmed that each of the North County and West Valley cities that were open to it would bring it back to their respective City Councils and get direction on this framework, so on page five of the staff report we have included a table which shows what that, you know, what the allocations are within that framework. And since that January 8th meeting, Mountain View City Council has endorsed this framework that occurred on January 19th. Campbell and (Cooperation) have scheduled council meetings to consider approving this framework for February 2nd. (Sunnyvale) is also going to consider this framework but they have not set a council date. And (Mosquitos) has a study session on February 22nd, where they will also consider this framework. And I'll just briefly give you a quick overview of what the proposed allocation includes. There will be a ceiling of $1.2 billion established for Bart to San Jose. Cal Train improvements would be allocated $400 million. A comprehensive county-wide Railroad Grade Separation Program, similar to what's in place in San Mateo County, would be allocated $900 million which is 15%. That meets the threshold that you established for staff on October 13th. The Congestion Relief Transit Mode shift category, which would basically implement the recommendations of the regional transportation study that was requested by the North Country, West Valley cities would be allocated $500 million. And then expressways; County Expressways and key highway interchanges would receive $1 billion. Street and highways; 500 million, and then the local streets and roads Formula Program, which would be flexible for cities that have a high pavement condition index; they will be able to flex that funds to other uses, like bicycle and pedestrian improvements; would TRANSCRIPT Page 30 of 41 Rail Committee Transcript January 27, 2016 be allocated $1 billion. And then finally, there is a line item for bicycle and pedestrian improvements, which is shown at $500 million. The direction that we received at the meeting of the North County and West Valley cities was just to bring this forward to City Council and see if you are willing to, you know, establish this framework as our advocacy position related to allocations under the Envision Silicon Valley Sales Tax. Chair Berman: Okay, thank you very much. We're now going to the members of the public, and I apologize because I hate doing this, but due to the time constraints we're going to do two minutes for public comment, as opposed to three minutes. The first speaker is Herb Borock. Herb Borock: Yes, Chair Berman. My first comment is "I'm surprised this is before the committee". Mello said-- summarized what the council did; they wanted staff to come back to council. When the council reformed the rail committee it didn't change the (preview) of the committee. This was originally a High Speed Rail Committee and then the committees’ recommendation it was expanded to be the Rail Committee (plus) the committee also wanted to be also discussing Cal Train. And so, while there are a bunch of rail issues in the (VTA) tax proposal, they're not all about rail. And if the committee wants it's (preview) extended it can recommend that to the Council, and if the staff wants to do that; the staff can recommend that. But just because there is a committee existing and they want to get four people to go along with something, I don't think you just bring it to the committee. My second comment is you do have the advocacy position that's being recommended, but I suggest you look back earlier in the report where it says the discussion on bark is also possibly to Santa Clara. When Carl Guardino was before the council, he neglected to say anything about Santa Clara, just talking about money to San Jose, so I think that should be firmer especially sense the money is fungible. Finally, I think the measure should legislative component and that is having no bus rapid transit in the North County. I believe the north and west cities can agree to that. How it's phrase in the language legislator language, such as would there be a specific time period or what we require for the future vote are details. But a supervisor subcommittee adviser you, the one thing that could probably defeat the CVA sales tax measure is the concerns about bus rapid transit and therefore, I think it would be worthwhile as an advocacy position to include language in the measure that would prohibit that for a period of time. Thank you. TRANSCRIPT Page 31 of 41 Rail Committee Transcript January 27, 2016 Chair Berman: Thank you very much. Next up we have Adina Levin follow up by Roland Lebrun. I don't see Adina here. She is here? She's out so let's move on to Roland Lebrun. Roland Lebrun: Thank you and another CEI supporter (Inaudible), but you've got to be realistic and $400 Million is basically a drop in the bucket, is a down payment. I hope you'll give me a little bit of leeway because I'd like to then follow up with what you discussed earlier. I support Mayor Burt's concern earlier. You really got to wait until February to decide what you want to do. This is potentially going to be a game changer. When you get to that, at the end of the day, you got to ask what are we trying to do here and people are going to say, well you can't possibly go from San Jose to San Francisco in 30 minutes, which is what they're planning and that's a fact. That's what's going to be transpiring in court and having listened to your members here, your concern on impacts on Palo Alto, you should actually consider working with both the north and the south because if you do that at that point, you can actually have tunnel all the way from Sunnyvale to Redwood Johnson. It's going to cost you a $1.5 Billion, but then add up all the Grade Separation for the others, you know, it might actually be cost effective. The only problem you got, now you can do 140 a line in the tunnel, okay, you can run Churchill in either direction. The problem is you don't have any stations anymore, okay. It's going to go Zoom and in Palo Alto, you're never hear it, you'll never see it. If you own a station at that point, it's going to be $0.5 Billion. Now you've got to start thinking about Mountainview. This is the reason why you want a rail technical group because we need more than two or three minutes to address you and propose alternate solutions that you might want to consider. Thank you. Chair Berman: Thank you very much. Our last speaker is Chris Lepe. Chris Lepe: Hello good morning. Did everyone received--I sent a letter a couple of days or yesterday. Did everybody receive the letter? I have a few extra copies if you like one. So I just wanted to refer a letter from myself and several Palo Alto residents and I just want to start off by noting that this is--what's obvious here is this is a huge opportunity here, which really only comes around every 15 to 20 years. Given the population growth and the strain on the existing system and existing demand and other social environmental consideration like climate change, this is a really important process and I like to thank the City of Palo Alto for its advocacy thus far and really pushing more funding for transit and really looking at other innovative ways then just widen up our roads as a way to address traffic congestion and population growth. We know that you can't widen your way out of TRANSCRIPT Page 32 of 41 Rail Committee Transcript January 27, 2016 traffic congestion based on what we've seen. Other cities have embraced similar concepts in Mountainview, actually, just a little bit of a note about the mountain view council meeting, other they did recommend continue to work with other cities on existing proposal, they did also say that they wanted to put more money for transit and less for expressway highway category, which is one of our recommendations. So you'll see in the report that we have a recommendation today to reduce the funding in that pot and increase funding in the pot for transit outside of Caltrain and Bart because there are huge amount of needs outside the Caltrain and Bart corridors, including for example increasing the frequency of the VTA Transit Network outside of--or in the areas of greatest needs and demand. Some of the other recommendations are including a complete street requirement for local streets and roads paving to make sure that there are multi-level benefits with the investments that we make. Maximizing benefits across multiple social and environmental goals and allowing for flexibility use of the express way funding. Thank you. Chair Berman: Thank you and Chris, can you have a copy of the letter? I mean to print it out, but forgot. So I'd like to always have a copy, so with that, I'm going to turn it back to--is there any other comments to go over to colleagues and some of you folks might have updates on certain meetings I've attended? Mayor Burt: Let me start with a couple of comments and framing. One is that this proposal is likely part of an ongoing initiative process and we don't want to have it misunderstood that we're assuming that there won't be back and forth and there're really three principles, four principle parties involved; the VTA, the County Board Advisors, the local cities and Silicon Valley Leadership Group. So we want to continue to have just ongoing discussions and moving forward on that. We've heard that, I think Josh had shared with us and we've heard otherwise the leadership group has concerned that north and west county cities had gone forward with a specific proposal as Josh explained as going before various council for their support without engaging with leadership group. Out of fairness, the leadership group had been engaging with the cities and to some extent had modify their original proposal from both a year ago and a few months ago. So I think that's something we'd want to bear in mind and collaborate on even while we recognize that each of these parties, you're not going to have identical interest, nor identical proposals. I do think that we're going to want to think about how at a high level to make a stronger case for why the interest of Caltrain improvements are as strong as we believe they are. I think they can be centered around three arguments that we frankly haven’t heard for a TRANSCRIPT Page 33 of 41 Rail Committee Transcript January 27, 2016 long while from San Jose and the leadership group. They basically acknowledge that Caltrain has importance and they support additional funding for Caltrain, we just happen to think it's more important, so on a comparative basis, if there is a third measure for which Bart has had major focus then previous ones, overwhelming focus, and that is Caltrain, for the capital dollars that would be invested in the Bart extension and the Caltrain improvements, the number of passenger miles you get per capital dollar invested or additional passengers, whichever metric you want to use. The second is the economic value to silicon valley and the region of each of these and (Inaudible) council a year and a half ago when they reached out to the corporate community and Sanford was involved in this, made a strong case for how the percentage of patents that are generated in the Caltrain corridor and the whole bunch of other arguments that were very persuasive about the importance of Caltrain and I think it actually is much stronger than the importance of Bart to San Jose, although we've agreed that Barto San Jose is an important element of the regional transportation system and it needs to be completed and we've supported that. And then we've heard from the leadership group several times that the poling support shows even greater support for the Bart completion to San Jose then for the Caltrain improvements and I think one of the things we haven’t really talked about is that there has been 20 years of basically marketing around the value of the Bart extension with millions, and millions, and millions of dollars promoting a series of ballot measures to convince the public of the importance and no comparable campaign around the importance of Caltrain. So I think that’s another comparison. I also just want to say that I think that the fifth item on Expressways--if I recall correctly, there was discussion at the north and west county meeting that Josh mentioned about congestion relief around Expressways and I think we should expand what we're supporting on that item of the perspective billion dollars, which came from some of these items were basically acknowledged in the interest of other parties. We weren't driving this, but as we had discussed in our council meeting with the VTA, we want to see those dollars be able to be used toward expressway congestion relief in the broad sense of traffic management and TDM measures rather than merely expressway expansions in capacity. I think that would be important to add. Thank that covers most of my comments. Chair Berman: Thank you, Tom. Council Member DuBois: So I was hoping Pat, you would explain a little where these percentages came from because that's pretty murky to me and I think it's a pretty huge decision in terms of relative funding in these different categories. TRANSCRIPT Page 34 of 41 Rail Committee Transcript January 27, 2016 Mayor Burt: Well, they're not decisions. Essentially, you can think of them as bargaining positions that the North and West County cities are taking at this point and time. And there's an acknowledgement that, that's--this is going to be somewhat of a bargaining process, so don't think of them as-- Council Member DuBois: Okay. (Crosstalk) other cities were having their councils pass these percentage allocations. Mayor Burt: But in the context that I just described. Council Member DuBois: I'd like to comment on these. I'd like to see a relationship between (Inaudible) usage amount of funding and you know, I think it would be useful to look at San Mateo Alameda, which had recent tax measures where they broke it down into categories. I just think it's a useful comparison. Not that we're identical by any means, but in terms of relative magnitude of categories. Mayor Burt: I should have added one other thing if I can because it's important for the context or our conversation. There was an acknowledgment by all those cities in attendance that we can take this back and each council come up with their own variation and undermine the consensus. Council Member DuBois: Okay. Mayor Burt: And so the notion was for us to not at this point in time, the city's try to put our variations on it, but to recognize that this isn't the end of the process. Council Member DuBois: Okay. But we need the comments from the community about shift and priorities and-- When you look at this and Pat, I'm sure you're going to disagree, but the bike amount seems very high. It's higher than the amount for Caltrain, what surprised me. Most of the numbers are actually fairly inline. If you look at, for example, San Mateo, they have 30 percent for transit, we have 27 percent if you add Bart and Caltrain together, they had 15 percent for Grade septs, we have 15 percent for Grade septs. They had one percent for congestion, we had eight. They had 27.5 percent for expressway streets and highways, we have 25 percent and they had 22 percent for local streets, we have 17 and they had three for bikes, we had eight. So they're fairly borderline, maybe some minor shift, I understand that may change during negotiation. I would like to say when TRANSCRIPT Page 35 of 41 Rail Committee Transcript January 27, 2016 we talked about the county plan for the expressway, that was as study session we didn't take a vote. I think it's still a very dangerous situation at 280 (Inaudible) cars backed up to the freeway and I supported the county plan with the bike improvements. Again, I think it really changes the flow more than capacity to get people off the freeway. So we never did really vote on that and I would actually support that and I think increasing congestion relieve to eight percent is a good amount. TDM programs are cheaper than construction, so. The other part of this was in terms of maintaining consensus with other cities. I think that's a good goal, I am concerned about how realistic that is given everybody's different situation. Our focus on Caltrain where perhaps (Inaudible) has different priorities. I think we should have that as a goal, but you know, I would like to see us maintain our focus on Grade Separations, you know, and again, we would remain online and we get this change to the tax, but we still have potential conversation about, you know, if we don’t' get money for grants substance for Palo to do something different. Mayor Burt: I should add that this concern over whether, we'll call West Valley City's that aren't on the Caltrain Corridor, whether they're interest are align with the Caltrain cities. It's important to acknowledge that they actually ended up supporting this proposal that has a lot less in it for the West Valley cities and has a Caltrain emphasis. When you say it's $400 Million for Caltrain, it's actually $1.3 Billion because the Grade Separations are Caltrain. Council Member DuBois: Yeah, but again, looking at other counties, they have separated trains improvement from Grade Separation, so. I think the right (Inaudible) is in there. The last comment I have is just I think we should bring this advocacy direction to the full council as an action item. Mayor Burt: I thought that was what is being proposed to us. Mr. Mello: This is just a recommendation to full council. If I could just clarify one item, the Bart to San Jose line item. That's purposely written as Bart to San Jose. Bart to Santa Clara, the estimated funding gap, you know, that was presented by the Silicon Valley Leadership Group is $1.4 Billion. So $1.4 Billion was the gap to go all the way to Santa Clara. In our current proposal, we have Bart to San Jose, $1.2 Billion. I just want to make sure the Committee understands that if they elect to move this forward. TRANSCRIPT Page 36 of 41 Rail Committee Transcript January 27, 2016 Vice Mayor Scharff: I also support the idea, but I'll make it clear this is not an endorsement of the DRT. Mayor Burt: One quick thing Josh. Whether it 1.2 or 1.4, do you know if that takes into account the reason announcement of the gas tax shortfall and the cut back on the state transportation authority funding? Mr. Mello: The funding for the Bart to Santa Clara extension that was outlined to me did not include gas tax revenue. It was cap and trade funding the $1.4 Billion projective sales tax revenue and then the (Inaudible) by the USDOT to provide new start funding and also $1.1 Billion in cost saving from the various Bart Extension. So my understand is that there was not any gas tax revenue allocated, but we can check on that before the council meeting. Vice Mayor Scharff: Josh, I just want to confirm that the $1.2 would get Bart to San Jose built and the extra $200 Million is purely to go from San Jose to Santa Clara? Mr. Mello: It's $1.4 Billion to go (Inaudible) to Santa Clara, that's the funding gap when you've taking all the identified funding and subtract that from the total cost. I don't have a cost estimate on just getting to San Jose, but the argument against the $1.2 Billion will be that it can get us all the way to Santa Clara and I think the logical response to that is go to San Jose with $1.2 Billion and then, you know, find additional funding to go to Santa Clara. We could change that to just Bart to San Jose/Santa Clara, which I think was in the Mountainview proposal, but I think it's up to the committee to decide how to structure the Bart allocation. Vice Mayor Scharff: Do we have the stats? I never really understood the benefits and the offset--and that's not --of going to Santa Clara, I mean-- some people have said it's closer to the airport, but I've never seen anyone actually lay it out the argument of why it’s important to go to Santa Clara. Do you understand what the arguments of what's--? Mr. Mello: I don't, but we can look into that before the council meeting too if you like and we can include that in the updated staff report. Vice Mayor Scharff: I would like to understand that. I attended this meeting with Carl Gardino yesterday and a bunch of representatives from the North County, West Valley cities, and I think where they are seemed to TRANSCRIPT Page 37 of 41 Rail Committee Transcript January 27, 2016 be somewhat flux and I will say that Carl took a very collaborative approach to wanting to work with the North County and the West Valley cities. I think that this is influx with their point of view, I mean, at least they were there advocating that they definitely agree that we should put Grade Separations for Palo Alto, Mountainview and Sunnyville in the ballot and that should be to the tune of $600 Million, so I viewed that as a real positive step forward. It was unclear to me though how all that money breaks out because of a lot of the focus was on how much money are going to the North County and West Valley and Carl's indication was he thought it was somewhere in the order of 38 percent of the ballot money and went through that we're only at 37 percent of the vote, 20 percent of the voters, that kind of thing. And so we're actually doing better on that. I think this is a fluid and--I sort of see this as Pat said, iterative process. I see we talking about this, I see the Leadership Group looking, recalibrating their numbers, and the different cities talking about--one of the things that Carl did talk about up there, which I thought was interesting was a line item of $250 Million for the West Valley cities for undefined transportation improvements, which is not on here. And the other number, which I think they had in their original numbers, which he was asking about why it's not on here, was $300 for mass transit, which I take to be bus and stuff for seniors, disabled, and workers I think was the way it was phrased. So there was some of that there. There was a lot of discussion of, you know, Bart meets $1.4 Billion and there was some representative from Sunnyville that indicated that they couldn’t' support this without $1.4 for Bart. Male: From Sunnyvale? Vice Mayor Scharff: Yes, form Sunnyvale. I think that--I guess the question is some timing issue. When do we bring this to Council? When are we going to have an updated publicly release numbers or whatever, how this breaks down that we can talk about at the Leadership Group is putting force and responses because what I heard seemed very different to what they had before. Pat correct me if I'm wrong, I don't remember them having $600 Million for Grade septs at all. I remember there being zero in for Grade sept. At least that's my recollection of it. And I didn't remember the West Valley think. I think that's new. So I'd like to see them break down the categories where they are now. I think this has to do a lot with timing when we go to council. I think we can go to council prematurely, but it may improve our bargaining position to go to council sooner. I think those sort of things need to be thought about and I don't really have good answers for that. I was going to sort of turn it back to Pat a little bit, talk about, you TRANSCRIPT Page 38 of 41 Rail Committee Transcript January 27, 2016 know, the timing and the process you might want to see on this. What you think works. Chair Berman: Sure. I just want to flag for colleagues that it's 10:26. Mayor Burt: Well I think the consensus among the North and West Valley cities was to get it to the council right away so that basically it would be then be out there as a joint bargaining position and that's what's its primary focus was. So I would say we want to get it to the council as soon as possible. Vice Mayor Scharff: So when are we thinking about going to council? That’s really the question. Mr. Mello: We were shooting for February 8th currently. Vice Mayor Scharff: I also do not want to see us add in frankly to Tom's point about where we are on the expressways or anything into this. I may very well be supporting the county plan in my mind, with where I'm on this. I have to think about it a little bit, but I think it muddies the waters on this and creates us moving away from here's our bargaining position, here's what we want in terms of it. I think we can if you want, but I think that opens up (Crosstalk). Mayor Burt: So my suggestion language would not bind us in any way. It just gives us more latitude to how cities and the county might use that expressway related dollars. It doesn't make that determination. Vice Mayor Scharff: I'm not sure about that, I'll have to think about it. It may, but it may actually undermine the plan. There's like three components to that plan; there's you know, the 280 interchange, which I fully and absolutely support, I think we need to fix that 280 interchange. I think that's like $300 million or something of numbers. Then there's the page mill to (Inaudible), there's another stretch of it. I'd have to have delve into the details to understand it a little better before I'm willing to say what we should do. I don’t; necessarily think I want to mix all that up as we move. i think it's a complicated issue. What was the other? Council Member DuBois: I just heard the $600 Million versus the $900 Million in Grade septs. From a negotiating position, should we actually be TRANSCRIPT Page 39 of 41 Rail Committee Transcript January 27, 2016 asking for more than $900 Million if we're going to negotiate down. I mean, it sounds like at a max $900 (Crosstalk.) Vice Mayor Scharff: Well, the $600 Million--it was interesting, the $900 Million was for a countywide. They were talking about was $600 Million just for our three cities and I don't know how the numbers break out. I have no idea. Chair Berman: One of the question is what are the needs of the other parts of the county? So I mean, if I can weigh in here. So it's 10:28, you know, clearly there's a lot of questions, there are still a lot of unknowns. Pat, correct me if I'm wrong, but the goal is to kind of set an early marker on this is generally what the North County, West Valley cities support knowing that it's going to change. I'm comfortable doing that at this point. i agree that, you know, at some point there needs to be, you know, more definition on expressways and streets an highways and the fact that that's just railway expansion, but it is transportation demand management, other transportation management initiatives. If there's a need for all of North County, West Valley cities to kind of show a unified front, at this stage, knowing fully that this is not written in stone, I'm comfortable with that. I do think we need to clearly schedule more time on this at council. Let's keep in mind this is something we all have issues about. There's no way I can sum up my comments in the next now zero seconds we have for this time and so let's make sure that we have enough time to have a good conversation about it, but I don’t' want us to necessarily stop the progress. Vice Mayor Scharff: So let's recommend moving this forward to council. MOTION: Vice Mayor Scharff moved, seconded by Council Member DuBois to recommend the City Council: 1. Approve advocacy direction to City representatives regarding the proposed Santa Clara County sales tax, including general funding levels within expenditure categories, as developed in coordination with other North County and West Valley cities. 2. Authorize the City Manager to engage with VTA and other stakeholders and refine the City’s position and maintain consensus with other cities while supporting maximum regional funding for rail grade separations and non-automobile transportation improvements. TRANSCRIPT Page 40 of 41 Rail Committee Transcript January 27, 2016 Vice Mayor Scharff: I do think we should have a council discussion. I think this is useful. I think this will actually move the Leadership Group substantially and I think we should move forward to council. Chair Berman: I think Josh had a question. Mr. Mello: Just so the direction is clear before you vote. Typically, an item forwarded from the Committee would go on the Consent Agenda. I'm hearing you want it to be an action item? Vice Mayor Scharff: Absolutely. Mr. Mello: Okay. Vice Mayor Scharff: Well, the motion is for this council. It doesn't actually set-- Chair Berman: As an action Item. Mayor Burt: I'll just add that right about the table it says it's recommended as advocacy position, so I just want to make sure once again that it's understood that we don't have to-- Council Member DuBois: Once again, that's worded strongly. Again, if at some point, we differ, I guess we're reserving the right to advocate for Palo Alto? Mayor Burt: Yeah, but one of the things that need to--I mentioned it before, this proposal is--compared to what San Jose's interest would be and compared to what West Valley's interest would be, even though this may not be everything that we think would be are greatest preference for say the Caltrain, it's more than what is in the narrow interest to West Valley, for instance and it's different from what San Jose perceives to be in their interest, which may be different from their interest. Vice Mayor Scharff: And let me just follow up with that. I think Pat is really right. I'd say it even stronger than that. I'd say, this--and I know Pat, you’re really involved during this. This is a really positive West Valley, North County Palo Alto proposal compared--we would never do better than this really in my view the way the whole--I think we should strongly support as TRANSCRIPT Page 41 of 41 Rail Committee Transcript January 27, 2016 close as we could get to this as possible and I think that when you write this to staff report to the council, I think that what Pat's been trying to say and what I'm advocating well and I think that's our little push back is that, if we all sit here and say, you know, I think we should have $250 for bike pad and an extra $250 for Caltrain, I actually might think that. What we'll do is we'll undermine the entire negotiating position and we have to be really careful about that. Mountainview passed that as it, to my recollection. Cupertino, I suspect will pass as is and I don't know what Campbell is, but that's sort how I think that's going. And so I think we need to basically move forward on this without nick picking it. Chair Berman: I think that's good perspective and definitely correct. One quick comment on what you mentioned earlier Greg about Carl's point of we'd be getting 38 percent of the funding, but only 20 percent of the voters, you can't just pick and choose which ballot issue you want to talk about, so let's talk about all of them if we're going to be doing that, not just this one. So there's not a lot of weight there. Vice Mayor Scharff: Excellent point. I wasn't during an advent sale, more reporting out. Chair Berman: I totally understand. So, if we're already to vote, all in favor. That passes unanimously, thank you. MOTION PASSED: 4-0 Future Meetings and Agendas Chair Berman: And with that, do we have--we can schedule another meeting via email or something like that. Richard Hackmann, Management Analyst: We can work it with the clerk for our next meeting. ADJOURNMENT: The meeting was adjourned at 10:33 A.M. City of Palo Alto (ID # 7237) City Council Staff Report Report Type: Consent Calendar Meeting Date: 10/4/2016 City of Palo Alto Page 1 Summary Title: MSC Design Services Title: Approve and Authorize the City Manager to Execute a Contract with Salas O'Brien, in an Amount Not-to-Exceed $217,800 for Design Services for the Municipal Service Center Mechanical, Electrical, and Lighting Improvements, and Zero Waste Office Renovation Capital Improvements Program Project PF-16006 From: City Manager Lead Department: Public Works Recommendation Staff recommends that Council approve and authorize the City Manager or his designee to execute Contract No. C17165053 with Salas O’Brien (Attachment A), in a not-to-exceed amount of $217,800 for design services for the Municipal Services Center Mechanical, Electrical, and Lighting Improvements, and Zero Waste Office Renovation (Capital Improvement Program project PF-16006), including $198,000 for basic services and $19,800 for additional services. Background The Municipal Service Center (MSC) is located at 3201 East Bayshore Road in Palo Alto and occupied by numerous City departments and workgroups, including Parks, Facilities, Utilities, Public Services, Operations Traffic, Fleet Services, Animal Shelter, Repair Shops, and Zero Waste. The MSC site is on the bay side of East Bayshore Road and consists of three main buildings, Building A, Building B, and Building C, all of which were constructed in 1966. The buildings are low, one and two story tilt-up concrete structures with concrete roof framing. Building A is approximately 15,730 square feet, Building B 23,935 square feet, and Building C 32,720 square feet. Seismic bracing was installed on all three buildings in 1998. City of Palo Alto Page 2 Discussion Project Improvements The mechanical and electrical systems at MSC buildings have reached the end of their useful life expectancy. Various renovations and the use of many areas in the facility have changed over the years without adequate upgrades to the existing systems. The scope of this project is to: (1) Upgrade the mechanical and electrical systems and their components servicing all three buildings that have reached the end of their useful life expectancy and/or efficiency, and address design proficiency, energy savings, code compliance, and aesthetics; (2) renovate the City’s Zero Waste group’s offices; and (3) provide structural upgrades associated with the proposed mechanical system, electrical system, and office renovation. The project will implement strategies for electrification of mechanical systems in conjunction with the City’s Sustainability and Climate Action Plan (S/CAP) to reduce greenhouse gas emissions in support of the City’s climate protection goals. Consultant Solicitation A Request for Proposals (RFP 165053) for design services for the Municipal Services Center Mechanical, Electrical, and Lighting Improvements, and Zero Waste Office Renovation was sent to prospective consultants and posted online on July 12, 2016. The scope of work outlined in the RFP included  Task 1: Study existing mechanical, electrical, and lighting systems;  Task 2: Zero Waste office renovation design, construction documents and bid documents;  Task 3: Schematic design of the mechanical, electrical, and lighting systems; Task 4: Design development of the mechanical, electrical, and lighting systems;  Task 5: Construction documents and permit package for the mechanical, electrical, and lighting systems;  Task 6: Bid documents for the mechanical, electrical, and lighting systems; and  Task 7: Bid and construction administration assistance for the mechanical, electrical, and lighting systems. City of Palo Alto Page 3 Bids were received from two contractors on August 2, 2016. Summary of Solicitation Process Proposal Description/Number Design Services for MSC Mechanical, Electrical, & Lighting Improvements, and Zero Waste Office Renovation Number of firms notified via email 417 Total Working Days to Respond to Proposal 16 Number of Proposals Received 2 Pre-Bid Meeting Yes Company Name Location (City, State) Salas O’Brien San Jose, CA Advance Design Consultants, Inc. San Jose, CA Range of Proposal Amounts Submitted $193,644 to $198,000 An evaluation committee consisting of representatives from Public Works Engineering Services reviewed the proposals. The committee carefully reviewed each firm's qualifications and submittal in response to the criteria identified in the RFP. Salas O’Brien was selected by the evaluation committee based on the depth and quality of their experience that includes past project experience with the City and on the MSC, exceptional qualifications of their proposed project design team, and the strength of their proposed project design approach. Timeline The design work is scheduled to be completed in ten months. The MSC buildings will remain functional during the course of the project. Work will be planned in close coordination with the personnel who use the MSC buildings and construction will be sequenced to minimize impact on the occupants. Resource Impact Funding for the Municipal Service Center Mechanical, Electrical, and Lighting Improvements, and Zero Waste Office Renovation is available in Capital Improvement Program (CIP) project PF-16006. Policy Implications City of Palo Alto Page 4 This recommendation does not represent any change to existing City policies. Environmental Review This project is expected to be categorically exempt from the provisions of the California Environmental Quality Act (CEQA) under Section 15301 of the CEQA Guidelines as repair, maintenance or minor alteration of an existing facility. Attachments:  Attachment A: C17165053- Salas O'Brien- Final-signed (PDF) CITY OF PALO ALTO CONTRACT NO. C17165053 AGREEMENT BETWEEN THE CITY OF PALO ALTO AND SALAS O’BRIEN ENGINEERS INC. dba SALAS O’BRIEN FOR PROFESSIONAL SERVICES This Agreement is entered into on this 4th day of October, 2016, (“Agreement”) by and between the CITY OF PALO ALTO, a California chartered municipal corporation (“CITY”), and SALAS O’BRIEN ENGINEERS INC. dba SALAS O’BRIEN, a California corporation, located at 305 South 11th Street, San Jose, CA 94112 ("CONSULTANT"). RECITALS The following recitals are a substantive portion of this Agreement. A. CITY intends to upgrade and improve the building services at the Municipal Service Center (MSC) located at 3201 East Bayshore Road, Palo Alto.(“Project”) and desires to engage a consultant to provide architectural, mechanical, and electrical consultant services, including study, recommendations, cost estimate, and design services to in connection with the Project (“Services”). B. CONSULTANT has represented that it has the necessary professional expertise, qualifications, and capability, and all required licenses and/or certifications to provide the Services. C. CITY in reliance on these representations desires to engage CONSULTANT to provide the Services as more fully described in Exhibit “A”, attached to and made a part of this Agreement. NOW, THEREFORE, in consideration of the recitals, covenants, terms, and conditions, in this Agreement, the parties agree: AGREEMENT SECTION 1. SCOPE OF SERVICES. CONSULTANT shall perform the Services described at Exhibit “A” in accordance with the terms and conditions contained in this Agreement. The performance of all Services shall be to the reasonable satisfaction of CITY. Optional On-Call Provision (This provision only applies if checked and only applies to on-call agreements.) Services will be authorized by CITY, as needed, with a Task Order assigned and approved by CITY’s Project Manager. Each Task Order shall be in substantially the same form as Exhibit A- 1. Each Task Order shall designate a CITY Project Manager and shall contain a specific scope of work, a specific schedule of performance and a specific compensation amount. The total price of all Task Orders issued under this Agreement shall not exceed the amount of Compensation set forth in Section 4 of this Agreement. CONSULTANT shall only be compensated for work performed under an authorized Task Order and CITY may elect, but is not required, to authorize work up to the maximum compensation amount set forth in Section 4. DocuSign Envelope ID: 85B728CD-9248-489D-9C47-F378E50F5A9D Professional Services Rev. April 27, 2016 2 SECTION 2. TERM. The term of this Agreement shall be from the date of its full execution through October 3, 2019 unless terminated earlier pursuant to Section 19 of this Agreement. SECTION 3. SCHEDULE OF PERFORMANCE. Time is of the essence in the performance of Services under this Agreement. CONSULTANT shall complete the Services within the term of this Agreement and in accordance with the schedule set forth in Exhibit “B”, attached to and made a part of this Agreement. Any Services for which times for performance are not specified in this Agreement shall be commenced and completed by CONSULTANT in a reasonably prompt and timely manner based upon the circumstances and direction communicated to the CONSULTANT. CITY’s agreement to extend the term or the schedule for performance shall not preclude recovery of damages for delay if the extension is required due to the fault of CONSULTANT. SECTION 4. NOT TO EXCEED COMPENSATION. The compensation to be paid to CONSULTANT for performance of the Services described in Exhibit “A” (“Basic Services”), and reimbursable expenses, shall not exceed One Hundred Ninety Eight Thousand Dollars ($198,000). CONSULTANT agrees to complete all Basic Services, including reimbursable expenses, within this amount. In the event Additional Services are authorized, the total compensation for Basic Services, Additional Services and reimbursable expenses shall not exceed Two Hundred Seventeen Thousand Eight Hundred Dollars ($217,800). The applicable rates and schedule of payment are set out at Exhibit “C-1”, entitled “HOURLY RATE SCHEDULE,” which is attached to and made a part of this Agreement. Any work performed or expenses incurred for which payment would result in a total exceeding the maximum amount of compensation set forth herein shall be at no cost to the CITY. Additional Services, if any, shall be authorized in accordance with and subject to the provisions of Exhibit “C”. CONSULTANT shall not receive any compensation for Additional Services performed without the prior written authorization of CITY. Additional Services shall mean any work that is determined by CITY to be necessary for the proper completion of the Project, but which is not included within the Scope of Services described at Exhibit “A”. SECTION 5. INVOICES. In order to request payment, CONSULTANT shall submit monthly invoices to the CITY describing the services performed and the applicable charges (including an identification of personnel who performed the services, hours worked, hourly rates, and reimbursable expenses), based upon the CONSULTANT’s billing rates (set forth in Exhibit “C- 1”). If applicable, the invoice shall also describe the percentage of completion of each task. The information in CONSULTANT’s payment requests shall be subject to verification by CITY. CONSULTANT shall send all invoices to the City’s project manager at the address specified in Section 13 below. The City will generally process and pay invoices within thirty (30) days of receipt. SECTION 6. QUALIFICATIONS/STANDARD OF CARE. All of the Services shall be performed by CONSULTANT or under CONSULTANT’s supervision. CONSULTANT represents that it possesses the professional and technical personnel necessary to perform the Services required by this Agreement and that the personnel have sufficient skill and experience to perform the Services assigned to them. CONSULTANT represents that it, its employees and DocuSign Envelope ID: 85B728CD-9248-489D-9C47-F378E50F5A9D Professional Services Rev. April 27, 2016 3 subconsultants, if permitted, have and shall maintain during the term of this Agreement all licenses, permits, qualifications, insurance and approvals of whatever nature that are legally required to perform the Services. All of the services to be furnished by CONSULTANT under this agreement shall meet the professional standard and quality that prevail among professionals in the same discipline and of similar knowledge and skill engaged in related work throughout California under the same or similar circumstances. SECTION 7. COMPLIANCE WITH LAWS. CONSULTANT shall keep itself informed of and in compliance with all federal, state and local laws, ordinances, regulations, and orders that may affect in any manner the Project or the performance of the Services or those engaged to perform Services under this Agreement. CONSULTANT shall procure all permits and licenses, pay all charges and fees, and give all notices required by law in the performance of the Services. SECTION 8. ERRORS/OMISSIONS. CONSULTANT is solely responsible for costs, including, but not limited to, increases in the cost of Services, arising from or caused by CONSULTANT’s errors and omissions, including, but not limited to, the costs of corrections such errors and omissions, any change order markup costs, or costs arising from delay caused by the errors and omissions or unreasonable delay in correcting the errors and omissions. SECTION 9. COST ESTIMATES. If this Agreement pertains to the design of a public works project, CONSULTANT shall submit estimates of probable construction costs at each phase of design submittal. If the total estimated construction cost at any submittal exceeds ten percent (10%) of CITY’s stated construction budget, CONSULTANT shall make recommendations to CITY for aligning the PROJECT design with the budget, incorporate CITY approved recommendations, and revise the design to meet the Project budget, at no additional cost to CITY. SECTION 10. INDEPENDENT CONTRACTOR. It is understood and agreed that in performing the Services under this Agreement CONSULTANT, and any person employed by or contracted with CONSULTANT to furnish labor and/or materials under this Agreement, shall act as and be an independent contractor and not an agent or employee of CITY. SECTION 11. ASSIGNMENT. The parties agree that the expertise and experience of CONSULTANT are material considerations for this Agreement. CONSULTANT shall not assign or transfer any interest in this Agreement nor the performance of any of CONSULTANT’s obligations hereunder without the prior written consent of the city manager. Consent to one assignment will not be deemed to be consent to any subsequent assignment. Any assignment made without the approval of the city manager will be void. SECTION 12. SUBCONTRACTING. Option A: No Subcontractor: CONSULTANT shall not subcontract any portion of the work to be performed under this Agreement without the prior written authorization of the city manager or designee. DocuSign Envelope ID: 85B728CD-9248-489D-9C47-F378E50F5A9D Professional Services Rev. April 27, 2016 4 Option B: Subcontracts Authorized: Notwithstanding Section 11 above, CITY agrees that subconsultants may be used to complete the Services. The subconsultants authorized by CITY to perform work on this Project are: Mesiti-Miller Engineering, Inc. CONSULTANT shall be responsible for directing the work of any subconsultants and for any compensation due to subconsultants. CITY assumes no responsibility whatsoever concerning compensation. CONSULTANT shall be fully responsible to CITY for all acts and omissions of a subconsultant. CONSULTANT shall change or add subconsultants only with the prior approval of the city manager or his designee. SECTION 13. PROJECT MANAGEMENT. CONSULTANT will assign Jeffry Gosal, PE as the Project Manger to have supervisory responsibility for the performance, progress, and execution of the Services and to represent CONSULTANT during the day-to-day work on the Project. If circumstances cause the substitution of the project director, project coordinator, or any other key personnel for any reason, the appointment of a substitute project director and the assignment of any key new or replacement personnel will be subject to the prior written approval of the CITY’s project manager. CONSULTANT, at CITY’s request, shall promptly remove personnel who CITY finds do not perform the Services in an acceptable manner, are uncooperative, or present a threat to the adequate or timely completion of the Project or a threat to the safety of persons or property. CITY’s project manager is Matt Raschke, Public Works Department, Engineering Division, 250 Hamilton Ave, Palo Alto, CA 94301, Telephone: 650-496-5937. The project manager will be CONSULTANT’s point of contact with respect to performance, progress and execution of the Services. CITY may designate an alternate project manager from time to time. SECTION 14. OWNERSHIP OF MATERIALS. Upon delivery, all work product, including without limitation, all writings, drawings, plans, reports, specifications, calculations, documents, other materials and copyright interests developed under this Agreement shall be and remain the exclusive property of CITY without restriction or limitation upon their use. CONSULTANT agrees that all copyrights which arise from creation of the work pursuant to this Agreement shall be vested in CITY, and CONSULTANT waives and relinquishes all claims to copyright or other intellectual property rights in favor of the CITY. Neither CONSULTANT nor its contractors, if any, shall make any of such materials available to any individual or organization without the prior written approval of the City Manager or designee. CONSULTANT makes no representation of the suitability of the work product for use in or application to circumstances not contemplated by the scope of work. SECTION 15. AUDITS. CONSULTANT will permit CITY to audit, at any reasonable time during the term of this Agreement and for three (3) years thereafter, CONSULTANT’s records pertaining to matters covered by this Agreement. CONSULTANT further agrees to maintain and retain such records for at least three (3) years after the expiration or earlier termination of this Agreement. SECTION 16. INDEMNITY. DocuSign Envelope ID: 85B728CD-9248-489D-9C47-F378E50F5A9D Professional Services Rev. April 27, 2016 5 [Option A applies to the following design professionals pursuant to Civil Code Section 2782.8: architects; landscape architects; registered professional engineers and licensed professional land surveyors.] 16.1. To the fullest extent permitted by law, CONSULTANT shall protect, indemnify, defend and hold harmless CITY, its Council members, officers, employees and agents (each an “Indemnified Party”) from and against any and all demands, claims, or liability of any nature, including death or injury to any person, property damage or any other loss, including all costs and expenses of whatever nature including attorneys fees, experts fees, court costs and disbursements (“Claims”) that arise out of, pertain to, or relate to the negligence, recklessness, or willful misconduct of CONSULTANT, its officers, employees, agents or contractors under this Agreement, regardless of whether or not it is caused in part by an Indemnified Party. [Option B applies to any consultant who does not qualify as a design professional as defined in Civil Code Section 2782.8.] 16.1. To the fullest extent permitted by law, CONSULTANT shall protect, indemnify, defend and hold harmless CITY, its Council members, officers, employees and agents (each an “Indemnified Party”) from and against any and all demands, claims, or liability of any nature, including death or injury to any person, property damage or any other loss, including all costs and expenses of whatever nature including attorneys fees, experts fees, court costs and disbursements (“Claims”) resulting from, arising out of or in any manner related to performance or nonperformance by CONSULTANT, its officers, employees, agents or contractors under this Agreement, regardless of whether or not it is caused in part by an Indemnified Party. 16.2. Notwithstanding the above, nothing in this Section 16 shall be construed to require CONSULTANT to indemnify an Indemnified Party from Claims arising from the active negligence, sole negligence or willful misconduct of an Indemnified Party. 16.3. The acceptance of CONSULTANT’s services and duties by CITY shall not operate as a waiver of the right of indemnification. The provisions of this Section 16 shall survive the expiration or early termination of this Agreement. SECTION 17. WAIVERS. The waiver by either party of any breach or violation of any covenant, term, condition or provision of this Agreement, or of the provisions of any ordinance or law, will not be deemed to be a waiver of any other term, covenant, condition, provisions, ordinance or law, or of any subsequent breach or violation of the same or of any other term, covenant, condition, provision, ordinance or law. SECTION 18. INSURANCE. 18.1. CONSULTANT, at its sole cost and expense, shall obtain and maintain, in full force and effect during the term of this Agreement, the insurance coverage described in Exhibit "D". CONSULTANT and its contractors, if any, shall obtain a policy endorsement naming CITY as an additional insured under any general liability or automobile policy or policies. 18.2. All insurance coverage required hereunder shall be provided through carriers with AM Best’s Key Rating Guide ratings of A-:VII or higher which are licensed or DocuSign Envelope ID: 85B728CD-9248-489D-9C47-F378E50F5A9D Professional Services Rev. April 27, 2016 6 authorized to transact insurance business in the State of California. Any and all contractors of CONSULTANT retained to perform Services under this Agreement will obtain and maintain, in full force and effect during the term of this Agreement, identical insurance coverage, naming CITY as an additional insured under such policies as required above. 18.3. Certificates evidencing such insurance shall be filed with CITY concurrently with the execution of this Agreement. The certificates will be subject to the approval of CITY’s Risk Manager and will contain an endorsement stating that the insurance is primary coverage and will not be canceled, or materially reduced in coverage or limits, by the insurer except after filing with the Purchasing Manager thirty (30) days' prior written notice of the cancellation or modification. If the insurer cancels or modifies the insurance and provides less than thirty (30) days’ notice to CONSULTANT, CONSULTANT shall provide the Purchasing Manager written notice of the cancellation or modification within two (2) business days of the CONSULTANT’s receipt of such notice. CONSULTANT shall be responsible for ensuring that current certificates evidencing the insurance are provided to CITY’s Chief Procurement Officer during the entire term of this Agreement. 18.4. The procuring of such required policy or policies of insurance will not be construed to limit CONSULTANT's liability hereunder nor to fulfill the indemnification provisions of this Agreement. Notwithstanding the policy or policies of insurance, CONSULTANT will be obligated for the full and total amount of any damage, injury, or loss caused by or directly arising as a result of the Services performed under this Agreement, including such damage, injury, or loss arising after the Agreement is terminated or the term has expired. SECTION 19. TERMINATION OR SUSPENSION OF AGREEMENT OR SERVICES. 19.1. The City Manager may suspend the performance of the Services, in whole or in part, or terminate this Agreement, with or without cause, by giving ten (10) days prior written notice thereof to CONSULTANT. Upon receipt of such notice, CONSULTANT will immediately discontinue its performance of the Services. 19.2. CONSULTANT may terminate this Agreement or suspend its performance of the Services by giving thirty (30) days prior written notice thereof to CITY, but only in the event of a substantial failure of performance by CITY. 19.3. Upon such suspension or termination, CONSULTANT shall deliver to the City Manager immediately any and all copies of studies, sketches, drawings, computations, and other data, whether or not completed, prepared by CONSULTANT or its contractors, if any, or given to CONSULTANT or its contractors, if any, in connection with this Agreement. Such materials will become the property of CITY. 19.4. Upon such suspension or termination by CITY, CONSULTANT will be paid for the Services rendered or materials delivered to CITY in accordance with the scope of services on or before the effective date (i.e., 10 days after giving notice) of suspension or termination; provided, however, if this Agreement is suspended or terminated on account of a default by CONSULTANT, CITY will be obligated to compensate CONSULTANT only for that DocuSign Envelope ID: 85B728CD-9248-489D-9C47-F378E50F5A9D Professional Services Rev. April 27, 2016 7 portion of CONSULTANT’s services which are of direct and immediate benefit to CITY as such determination may be made by the City Manager acting in the reasonable exercise of his/her discretion. The following Sections will survive any expiration or termination of this Agreement: 14, 15, 16, 19.4, 20, and 25. 19.5. No payment, partial payment, acceptance, or partial acceptance by CITY will operate as a waiver on the part of CITY of any of its rights under this Agreement. SECTION 20. NOTICES. All notices hereunder will be given in writing and mailed, postage prepaid, by certified mail, addressed as follows: To CITY: Office of the City Clerk City of Palo Alto Post Office Box 10250 Palo Alto, CA 94303 With a copy to the Purchasing Manager To CONSULTANT: Attention of the project director at the address of CONSULTANT recited above SECTION 21. CONFLICT OF INTEREST. 21.1. In accepting this Agreement, CONSULTANT covenants that it presently has no interest, and will not acquire any interest, direct or indirect, financial or otherwise, which would conflict in any manner or degree with the performance of the Services. 21.2. CONSULTANT further covenants that, in the performance of this Agreement, it will not employ subconsultants, contractors or persons having such an interest. CONSULTANT certifies that no person who has or will have any financial interest under this Agreement is an officer or employee of CITY; this provision will be interpreted in accordance with the applicable provisions of the Palo Alto Municipal Code and the Government Code of the State of California. 21.3. If the Project Manager determines that CONSULTANT is a “Consultant” as that term is defined by the Regulations of the Fair Political Practices Commission, CONSULTANT shall be required and agrees to file the appropriate financial disclosure documents required by the Palo Alto Municipal Code and the Political Reform Act. SECTION 22. NONDISCRIMINATION. As set forth in Palo Alto Municipal Code section 2.30.510, CONSULTANT certifies that in the performance of this Agreement, it shall not discriminate in the employment of any person because of the race, skin color, gender, age, religion, disability, national origin, ancestry, sexual orientation, housing status, marital status, familial status, weight or height of such person. CONSULTANT acknowledges that it has read and understands the provisions of Section 2.30.510 of the Palo Alto Municipal Code relating to DocuSign Envelope ID: 85B728CD-9248-489D-9C47-F378E50F5A9D Professional Services Rev. April 27, 2016 8 Nondiscrimination Requirements and the penalties for violation thereof, and agrees to meet all requirements of Section 2.30.510 pertaining to nondiscrimination in employment. SECTION 23. ENVIRONMENTALLY PREFERRED PURCHASING AND ZERO WASTE REQUIREMENTS. CONSULTANT shall comply with the CITY’s Environmentally Preferred Purchasing policies which are available at CITY’s Purchasing Department, incorporated by reference and may be amended from time to time. CONSULTANT shall comply with waste reduction, reuse, recycling and disposal requirements of CITY’s Zero Waste Program. Zero Waste best practices include first minimizing and reducing waste; second, reusing waste and third, recycling or composting waste. In particular, CONSULTANT shall comply with the following zero waste requirements: (a) All printed materials provided by CCONSULTANT to CITY generated from a personal computer and printer including but not limited to, proposals, quotes, invoices, reports, and public education materials, shall be double-sided and printed on a minimum of 30% or greater post-consumer content paper, unless otherwise approved by CITY’s Project Manager. Any submitted materials printed by a professional printing company shall be a minimum of 30% or greater post- consumer material and printed with vegetable based inks. (b) Goods purchased by CONSULTANT on behalf of CITY shall be purchased in accordance with CITY’s Environmental Purchasing Policy including but not limited to Extended Producer Responsibility requirements for products and packaging. A copy of this policy is on file at the Purchasing Division’s office. (c) Reusable/returnable pallets shall be taken back by CONSULTANT, at no additional cost to CITY, for reuse or recycling. CONSULTANT shall provide documentation from the facility accepting the pallets to verify that pallets are not being disposed. SECTION 24. COMPLIANCE WITH PALO ALTO MINIMUM WAGE ORDINANCE. CONSULTANT shall comply with all requirements of the Palo Alto Municipal Code Chapter 4.62 (Citywide Minimum Wage), as it may be amended from time to time. In particular, for any employee otherwise entitled to the State minimum wage, who performs at least two (2) hours of work in a calendar week within the geographic boundaries of the City, CONSULTANT shall pay such employees no less than the minimum wage set forth in Palo Alto Municipal Code section 4.62.030 for each hour worked within the geographic boundaries of the City of Palo Alto. In addition, CONSULTANT shall post notices regarding the Palo Alto Minimum Wage Ordinance in accordance with Palo Alto Municipal Code section 4.62.060. SECTION 25. NON-APPROPRIATION 25.1. This Agreement is subject to the fiscal provisions of the Charter of the City of Palo Alto and the Palo Alto Municipal Code. This Agreement will terminate without any penalty (a) at the end of any fiscal year in the event that funds are not appropriated for the following fiscal year, or (b) at any time within a fiscal year in the event that funds are only appropriated for a portion of the fiscal year and funds for this Agreement are no longer available. This section shall take precedence in the event of a conflict with any other covenant, term, condition, or provision of this Agreement. DocuSign Envelope ID: 85B728CD-9248-489D-9C47-F378E50F5A9D Professional Services Rev. April 27, 2016 9 SECTION 26. PREVAILING WAGES AND DIR REGISTRATION FOR PUBLIC WORKS CONTRACTS 26.1 This Project is not subject to prevailing wages. CONSULTANT is not required to pay prevailing wages in the performance and implementation of the Project in accordance with SB 7 if the contract is not a public works contract, if the contract does not include a public works construction project of more than $25,000, or the contract does not include a public works alteration, demolition, repair, or maintenance (collectively, ‘improvement’) project of more than $15,000. OR 26.1 CONSULTANT is required to pay general prevailing wages as defined in Subchapter 3, Title 8 of the California Code of Regulations and Section 16000 et seq. and Section 1773.1 of the California Labor Code. Pursuant to the provisions of Section 1773 of the Labor Code of the State of California, the City Council has obtained the general prevailing rate of per diem wages and the general rate for holiday and overtime work in this locality for each craft, classification, or type of worker needed to execute the contract for this Project from the Director of the Department of Industrial Relations (“DIR”). Copies of these rates may be obtained at the Purchasing Division’s office of the City of Palo Alto. CONSULTANT shall provide a copy of prevailing wage rates to any staff or subcontractor hired, and shall pay the adopted prevailing wage rates as a minimum. CONSULTANT shall comply with the provisions of all sections, including, but not limited to, Sections 1775, 1776, 1777.5, 1782, 1810, and 1813, of the Labor Code pertaining to prevailing wages. 26.2 CONSULTANT shall comply with the requirements of Exhibit “E” for any contract for public works construction, alteration, demolition, repair or maintenance. SECTION 27. MISCELLANEOUS PROVISIONS. 27.1. This Agreement will be governed by the laws of the State of California. 27.2. In the event that an action is brought, the parties agree that trial of such action will be vested exclusively in the state courts of California in the County of Santa Clara, State of California. 27.3. The prevailing party in any action brought to enforce the provisions of this Agreement may recover its reasonable costs and attorneys' fees expended in connection with that action. The prevailing party shall be entitled to recover an amount equal to the fair market value of legal services provided by attorneys employed by it as well as any attorneys’ fees paid to third parties. 27.4. This document represents the entire and integrated agreement between the parties and supersedes all prior negotiations, representations, and contracts, either written or oral. This document may be amended only by a written instrument, which is signed by the parties. DocuSign Envelope ID: 85B728CD-9248-489D-9C47-F378E50F5A9D Professional Services Rev. April 27, 2016 10 27.5. The covenants, terms, conditions and provisions of this Agreement will apply to, and will bind, the heirs, successors, executors, administrators, assignees, and consultants of the parties. 27.6. If a court of competent jurisdiction finds or rules that any provision of this Agreement or any amendment thereto is void or unenforceable, the unaffected provisions of this Agreement and any amendments thereto will remain in full force and effect. 27.7. All exhibits referred to in this Agreement and any addenda, appendices, attachments, and schedules to this Agreement which, from time to time, may be referred to in any duly executed amendment hereto are by such reference incorporated in this Agreement and will be deemed to be a part of this Agreement. 27.8 In the event of a conflict between the terms of this Agreement and the exhibits hereto or CONSULTANT’s proposal (if any), the Agreement shall control. In the case of any conflict between the exhibits hereto and CONSULTANT’s proposal, the exhibits shall control. 27.9 If, pursuant to this contract with CONSULTANT, CITY shares with CONSULTANT personal information as defined in California Civil Code section 1798.81.5(d) about a California resident (“Personal Information”), CONSULTANT shall maintain reasonable and appropriate security procedures to protect that Personal Information, and shall inform City immediately upon learning that there has been a breach in the security of the system or in the security of the Personal Information. CONSULTANT shall not use Personal Information for direct marketing purposes without City’s express written consent. 27.10 All unchecked boxes do not apply to this agreement. 27.11 The individuals executing this Agreement represent and warrant that they have the legal capacity and authority to do so on behalf of their respective legal entities. 27.12 This Agreement may be signed in multiple counterparts, which shall, when executed by all the parties, constitute a single binding agreement DocuSign Envelope ID: 85B728CD-9248-489D-9C47-F378E50F5A9D Professional Services Rev. April 27, 2016 11 CONTRACT No. C17165053 SIGNATURE PAGE IN WITNESS WHEREOF, the parties hereto have by their duly authorized representatives executed this Agreement on the date first above written. CITY OF PALO ALTO City Manager (Contract over $85k) Purchasing Manager (Contract over $25k) Contracts Administrator (Contract under $25k) APPROVED AS TO FORM: City Attorney or designee (Contract over $25k) Contracts Administrator (Checklist Approval) SALAS O’BRIEN ENGINEERS INC. dba SALAS O’BRIEN Officer 1 By: Name: Title: Officer 2 (Required for Corp. or LLC) By: Name: Title: Attachments: EXHIBIT “A”: SCOPE OF SERVICES EXHIBIT “B”: SCHEDULE OF PERFORMANCE EXHIBIT “C”: COMPENSATION EXHIBIT “C-1”: HOURLY RATE SCHEDULE EXHIBIT “D”: INSURANCE REQUIREMENTS DocuSign Envelope ID: 85B728CD-9248-489D-9C47-F378E50F5A9D Jeffry Gosal Principal Mike Prusty Secretary Professional Services Rev. April 27, 2016 12 EXHIBIT “A” SCOPE OF SERVICES Work Plan Salas O’Brien (CONSULTANT), scope of services for the Municipal Service Center (MSC) mechanical, electrical, and lighting improvements, and Zero Waste office renovations project consists of seven (7) Tasks: 1 Task 1: Study of Mechanical, Electrical, and Lighting Systems 2 Task 2: Zero Waste Office Renovation (Schematic through Bid Documents and Bidding Services) 3 Task 3: Schematic Design – Mechanical, Electrical, and Lighting Systems Upgrades 4 Task 4: Design Development – Mechanical, Electrical, and Lighting Systems Upgrades 5 Task 5: Construction Documents (90% CDs) and Permit Package – Mechanical, Electrical, and Lighting Systems Upgrades 6 Task 6: Bid Documents (100% CDs) – Mechanical, Electrical, and Lighting Systems Upgrades 7 Task 7: Bid Support and Construction Phase Services – Mechanical, Electrical, and Lighting Systems Upgrades The deliverables required by the CONSULTANT varies per task and recommended improvements to the Mechanical, Electrical, Lighting systems upgrades. The CONSULTANT shall attend at minimum one review meeting with City staff for Tasks 1-6 where the City can provide comments. Task 1: Study of Mechanical, Electrical, and Lighting Systems The CONSULTANT understands that the MSC is an occupied facility and will remain so during the entire design process and through the completion of construction. The CONSULTANT will be responsible for surveying all the various departments and end-users that will be utilizing the buildings to effectively address their desired needs and concerns. The study shall identify strategies and alternatives that will provide maximum benefit to end-users and optimize the functionality and usefulness of the work spaces. The analysis and resulting recommendations shall take into account feasibility and economics as well as accomplishing with minimum downtime and minimum disruption to the occupants. 1.1 The CONSULTANT shall work with the City’s Project Manager to develop the survey strategy, identify the existing conditions and needs, and develop recommended modifications to meet the critical needs. DocuSign Envelope ID: 85B728CD-9248-489D-9C47-F378E50F5A9D Professional Services Rev. April 27, 2016 13 1.2 CONSULTANT shall perform a field investigation of the project site and all existing conditions that may impact the scope of work. Review all available existing plans and documentation. 1.3 CONSULTANT shall survey the adequacy of the existing mechanical, electrical, and lighting systems, and adequacy of each system’s structural support, and note/rectify any deficiencies while evaluating the condition and required upgrades for each of the systems. 1.4 CONSULTANT shall survey all the various departments and end-users that will be utilizing the buildings to effectively address their desired needs and concerns. 1.5 The study shall include strategies and alternatives to replace or retrofit the existing systems and shall describe the feasibility of retrofitting the systems while operating the occupied facility. The analysis and resulting recommendations shall take into account both feasibility and economics. 1.6 CONSULTANT shall explore opportunities to conserve energy through consultations with City’s energy consultant. 1.7 CONSULTANT shall identify implementation methodologies for the renovation to assist in accommodating existing occupants. Relocation alternatives, rebuilding on a “fast- track” basis, and other alternatives proposed by CONSULTANT shall be considered during this phase to accomplish the work with the least cost and/or minimum disruption to the occupants. 1.8 CONSULTANT shall prepare a draft Study Report summarizing the findings and recommendations of the work in Task 1. CONSULTANT shall present the Study Report to the City’s Project Manager and appropriate departmental managers in the affected work areas for review and comment. Once a decision on the approach, alternates, and recommendations is approved by the City, the work in Task 3 shall commence. 1.9 Meetings: One (1) Review meeting and One (1) Presentation meeting. 1.10 Deliverables: Electronic PDF and Microsoft Word files of the draft Study Report Task 2: Zero Waste Office Renovation The City of Palo Alto Zero Waste Group currently occupies different areas in building MSC-C. The office renovation consolidates the Zero Waste Group to one location within building MSC- C. The CONSULTANT shall prepare design drawings (schematic through construction documents), technical specifications, estimated construction costs, project schedule, permit and bid packages. CONSULTANT shall evaluate all parameters and observations in preparing the design to accomplish the City’s objectives. DocuSign Envelope ID: 85B728CD-9248-489D-9C47-F378E50F5A9D Professional Services Rev. April 27, 2016 14 2.1 CONSULTANT shall perform a field investigation of the project site and all existing conditions that may impact the scope of work. Review all available existing plans and documentation. 2.2 CONSULTANT shall design improvements to conform to all applicable codes, laws and regulations including the California Building Code, Mechanical, Plumbing, Electrical, Fire code, California Green Building Code, and ADA standards. 2.3 The CONSULTANT’s service shall include the services of an architect, structural engineer, mechanical engineer, plumbing engineer, electrical engineer, lighting designer, and quality controller. 2.4 CONSULTANT shall provide a proposed schedule for completing the renovations during time periods of least impact to the functions of the building occupants; along with refining the full scope of the project. 2.5 CONSULTANT shall coordinate and meet with the City and department representatives, as required. 2.6 Schematic Design Deliverables: CONSULTANT shall provide schematic design drawing package, including demolition drawings, preliminary construction estimate, and project schedule including time for permits for City review and approval. Preliminary construction estimate shall be used to aid the City in determining the final scope of work. Provide electronic PDF files of the deliverables for City review. 2.7 Design Development Deliverables: CONSULTANT shall provide design development drawing package, including items listed in 2.6, design drawings, specifications, furniture plan, finish plan, schedules, updated construction estimate, and updated project schedule including time for permits for City review and approval. Provide electronic PDF files of the deliverables for City review. 2.8 Construction Document Deliverables: CONSULTANT shall provide construction document drawing package, including items listed in 2.6, 2.7, drawings, details, schedules, specifications, updated construction estimate, and updated project schedule including time for permits for City review and approval. Provide electronic PDF files of the deliverables for City review. 2.9 CONSULTANT shall provide a permit package, including calculations, to describe the project in sufficient detail to obtain permits and to publically bid the Zero Waste Office Renovation. CONSULTANT shall prepare and incorporate any revisions and responses required by the Building plan check and Fire Department plan check and resubmit the necessary number of stamped and signed plans. 2.10 CONSULTANT shall provide bidding services. During the bidding phase of the project the CONSULTANT shall provide assistance to City staff (e.g. pre-bid meeting with prospective bidders, issuance of addenda, responding to requests for information or clarification, etc.) and shall assist the City with evaluation of the bids. DocuSign Envelope ID: 85B728CD-9248-489D-9C47-F378E50F5A9D Professional Services Rev. April 27, 2016 15 2.11 Upon award of a construction contract to a general contractor, the City will negotiate with the CONSULTANT an appropriate scope of work for construction phase services to be provided (e.g. assistance with Requests for Information, review of contractor submittals, review of change order requests, periodic site inspections, preparation of record drawings, etc.). Construction phase services will be added to the CONSULTANT’s contract at the City’s discretion via a contract amendment. 2.12 At project completion, contractor will provide “as-built” information for the CONSULTANT to prepare final record drawings. CONSULTANT shall verify the data provided before preparing the record drawings. Record drawings shall be provided in AutoCAD 2013, PDF format, as well as one set of reproducible drawings 2.13 Meetings: Three (3) review and coordination meetings. TASK 3: Schematic Design – Mechanical, Electrical, and Lighting Systems Upgrades CONSULTANT’S third task shall be to prepare preliminary design drawings, estimated construction costs and project schedule for the City’s review and comment at 100% schematic design as early as possible for presentation to the City. CONSULTANT shall evaluate all parameters and observations in preparing a schematic design to accomplish the City’s objectives as outlined Task 1. CONSULTANT shall begin quality control and peer review of the design in this phase. 3.1 CONSULTANT shall design a modern mechanical and electrical system for energy efficiency, if feasible, and replace/retrofit outdated equipment such that the building systems get an extended life of 30 or more years. CONSULTANT shall provide a life- cycle analysis of new major pieces of equipment and proposed energy efficient equipment. CONSULTANT will recommend equipment changes and options in change-out while accommodating existing occupants. 3.2 The CONSULTANT’s service shall include the services of a structural engineer, mechanical engineer, plumbing engineer, electrical engineer, lighting designer. 3.3 The CONSULTANT shall include in the design, structural modifications associated with the mechanical and electrical upgrade and improvements. 3.4 CONSULTANT shall provide a proposed methodology and project schedule for completing the renovations during time periods of least impact to the functions of the building occupants; along with refining the full scope of the project. The project schedule shall identify all major tasks, key milestones, submittal dates, review periods for City review and comment, and permitting. 3.5 CONSULTANT shall design improvements to conform to all applicable codes, laws and regulations including the California Building Code, Mechanical, Plumbing, Electrical, Fire code, California Green Building Code, and ADA standards. DocuSign Envelope ID: 85B728CD-9248-489D-9C47-F378E50F5A9D Professional Services Rev. April 27, 2016 16 3.6 CONSULTANT shall coordinate and meet with project team, as needed, including Public Works Engineering, Fire, Planning, Building and Utilities Engineering. 3.7 Meetings: One (1) coordination meeting prior to submission and one (1) review meeting with City after submission. 3.8 Deliverables: Schematic Design package, including design drawings, demolition drawings; Project schedule; Preliminary engineer’s estimate of the construction costs to aid the City in determining the final scope of work; Finalized Study Report (Task 1) incorporating the recommendations and/or modifications and as discussed with the City. Provide electronic PDF files of the deliverables for City review. TASK 4: Design Development – Mechanical, Electrical, and Lighting Systems Upgrades The Design Development phase shall further develop the design components of Task 3 and incorporate all City provided design review comments. CONSULTANT shall prepare detailed construction documentation, including drawing and details for each discipline, equipment schedules, and technical specifications. CONSULTANT shall provide an updated project schedule for review, and comment. CONSULTANT shall include quality control systems in this phase. Quality control will be a third party review of the plans to determine completeness, constructability, and accuracy. 4.1 CONSULTANT shall prepare Design Development documents based on refinement and further development of the approved schematic design and City’s review of the Schematic Design package. 4.2 CONSULTANT shall update the engineer’s estimate of construction costs. 4.3 Drawings shall include site plans and floor plans for all disciplines, preliminary equipment schedules, and preliminary single line diagrams 4.4 CONSULTANT shall prepare technical specifications, identifying the major materials and systems. 4.5 CONSULTANT shall prepare preliminary Title 24 and energy calculations. 4.6 Deliverables: Design Development drawing package, technical specifications, updated cost estimate, and updated project schedule. Provide electronic PDF files of the deliverables for City review. 4.7 Meetings: One (1) coordination meeting prior to submission, as needed, and one (1) review meeting with the City after submission. DocuSign Envelope ID: 85B728CD-9248-489D-9C47-F378E50F5A9D Professional Services Rev. April 27, 2016 17 TASK 5: Construction Documents (90%) and Permit Package – Mechanical, Electrical, and Lighting Systems Upgrades The 90% Construction Documents phase shall include the incorporation of the City’s Design Development review comments and development of the project to permit plan check, and complete back check comments. CONSULTANT shall prepare all construction drawings, technical specifications, and include all known design components for the project. CONSULTANT shall provide an engineer’s estimate, and updated project schedule for review, and comment. CONSULTANT shall include quality control systems in this phase. 5.1 CONSULTANT shall prepare and submit a 90% Construction Document package updated project schedule to the City at 90% Construction Documents completion for review and comment. Provide electronic PDF files of the deliverables. Provide both electronic PDF and Microsoft Word files for the specifications. 5.2 CONSULTANT shall provide Permit package, drawings, technical specifications and documents to be issued for permit. The CONSULTANT shall assist the City in obtaining all building permits, and other permits as applicable, required for implementation of the work. Five to seven sets of signed and stamped plans are typically required for building permit submittal. 5.3 CONSULTANT shall prepare and incorporate any revisions and responses required by Building permit plan check and Fire Department plan check and resubmit the necessary number of stamped and signed plan sets. 5.4 CONSULTANT shall provide a construction estimate and a detailed construction schedule to the City. The construction schedule will include, but not limited to, equipment lead times for major equipment purchases, any tenant relocations, and temporary equipment and staging as required which minimizes disruptions to building occupants. 5.5 Deliverables: Provide sets and documentation as required from City Building Department and Fire Department for plan check reviews and plan check resubmittals for permit approval. 5.6 Following approval for permit, CONSULTANT shall provide permitted construction drawings and specification for the City’s use. 5.7 Meetings: One (1) coordination meeting prior to submission, as needed. TASK 6: Bid Documents (100% Construction Documents) – Mechanical, Electrical, and Lighting Systems Upgrades The Bid Documents phase shall incorporate all City review comments and plan check comments, and finalization of all documents to be issued for bid. CONSULTANT shall provide an DocuSign Envelope ID: 85B728CD-9248-489D-9C47-F378E50F5A9D Professional Services Rev. April 27, 2016 18 engineer’s construction cost estimate, and construction schedule. CONSULTANT shall include quality control systems in this phase. 6.1 CONSULTANT shall provide Bid package, drawings, technical specifications and documents to be issued for bid. 6.2 Deliverables: Provide sets and documentation as required for Bid. TASK 7: Bid Support Services and Construction Phase Services – Mechanical, Electrical, and Lighting Systems Upgrades During the bidding phase of the project the CONSULTANT shall provide assistance to City staff (e.g. pre-bid meeting with prospective bidders, issuance of addenda, responding to requests for information or clarification, etc.) and shall assist the City with evaluation of the bids. Upon award of a construction contract to a general contractor, the City will negotiate with the CONSULTANT an appropriate scope of work for construction phase services to be provided (e.g. assistance with Requests for Information, review of contractor submittals, review of change order requests, periodic site inspections, preparation of record drawings, etc.) including project closeout. Construction phase services will be added to the CONSULTANT’s contract at the City’s discretion via a contract amendment. At project completion, contractor will provide “as-built” information for the CONSULTANT to prepare final record drawings. CONSULTANT shall verify the data provided before preparing the record drawings. Record drawings shall be provided in AutoCAD 2013, electronic PDF format, and one set of reproducible drawings. DocuSign Envelope ID: 85B728CD-9248-489D-9C47-F378E50F5A9D Professional Services Rev. April 27, 2016 19 EXHIBIT “B” SCHEDULE OF PERFORMANCE CONSULTANT shall perform the Services so as to complete each milestone within the number of days/weeks specified below. The time to complete each milestone may be increased or decreased by mutual written agreement of the project managers for CONSULTANT and CITY so long as all work is completed within the term of the Agreement, as set forth in Section 2 of the Agreement. CONSULTANT shall provide a detailed schedule of work consistent with the schedule below within 2 weeks of receipt of the notice to proceed. Upon issuance of Notice to Proceed (NTP), the CONSULTANT shall complete Tasks 1 and 2 within the project schedule below unless otherwise directed by the City. Upon issuance of Notice to Proceed (NTP), the CONSULTANT shall complete Tasks 3,4,5,6, 7a and 7b within the project schedule below after completion and approval of Task 1 unless otherwise directed by the City. The City may request that certain high-priority components be completed within 60 calendar days after issuance of the Notice to Proceed. Milestones Completion No. of Weeks From NTP Task 1 – Study of Mech, Elec, Lighting systems 7 weeks Task 2 – Zero Waste Renovation Submit Task 2 Schematic Design 12 weeks Submit Task 2 Design Development 18 weeks Submit Task 2 Permit Package 24 weeks Bid Assist Services 30 weeks Total Task 2 : 30 weeks from NTP Submit Task 3 – Schematic Design Mech, Elec, Lighting systems 17 weeks Submit Task 4 – Design Development Mech, Elec, Lighting systems 24 weeks Submit Task 5 – 90% CDs and Permit Package Mech, Elec, Lighting systems 34 weeks Submit Task 6 – Bid Package 38 weeks Task 7a – Bid Support Services 43 weeks DocuSign Envelope ID: 85B728CD-9248-489D-9C47-F378E50F5A9D Professional Services Rev. April 27, 2016 20 Task 7b – Construction Phase Services TBD Total Task 3,4,5,6, & 7a: 43 weeks from NTP DocuSign Envelope ID: 85B728CD-9248-489D-9C47-F378E50F5A9D Professional Services Rev. April 27, 2016 21 EXHIBIT “C” COMPENSATION The CITY agrees to compensate the CONSULTANT for professional services performed in accordance with the terms and conditions of this Agreement, and as set forth in the budget schedule below. Compensation shall be calculated based on the hourly rate schedule attached as exhibit C-1 up to the not to exceed budget amount for each task set forth below. CONSULTANT shall perform the tasks and categories of work as outlined and budgeted below. The CITY’s Project Manager may approve in writing the transfer of budget amounts between any of the tasks or categories listed below provided the total compensation for Basic Services, including reimbursable expenses, and the total compensation for Additional Services do not exceed the amounts set forth in Section 4 of this Agreement. BUDGET SCHEDULE NOT TO EXCEED AMOUNT Task 1 $27,225 Study of Mechanical, Electrical, and Lighting Systems Task 2 $28,050 Zero Waste Office Renovation Task 3 $28,050 Schematic Design – Mechanical, Electrical, and Lighting Systems Upgrades Task 4 $31,350 Design Development – Mechanical, Electrical, and Lighting Systems Upgrades Task 5 $44,550 Construction Documents (90%) and Permit Package – Mechanical, Electrical, and Lighting Systems Upgrades) Task 6 $33,000 Bid Documents (100% Construction Documents– Mechanical, Electrical, and Lighting Systems Upgrades) Task 7 $5,775 a. Bid Support – Mechanical, Electrical, and Lighting Systems Upgrades b. Construction Phase Services TBD DocuSign Envelope ID: 85B728CD-9248-489D-9C47-F378E50F5A9D Professional Services Rev. April 27, 2016 22 Sub-total Basic Services $198,000 Reimbursable Expenses $0 Total Basic Services and Reimbursable expenses $198,000 Additional Services (Not to Exceed) $19,800 Maximum Total Compensation $217,800 REIMBURSABLE EXPENSES The administrative, overhead, secretarial time or secretarial overtime, word processing, photocopying, in-house printing, insurance and other ordinary business expenses are included within the scope of payment for services and are not reimbursable expenses. CITY shall reimburse CONSULTANT for the following reimbursable expenses at cost. Expenses for which CONSULTANT shall be reimbursed are: A. Travel outside the San Francisco Bay area, including transportation and meals, will be reimbursed at actual cost subject to the City of Palo Alto’s policy for reimbursement of travel and meal expenses for City of Palo Alto employees. B. Long distance telephone service charges, cellular phone service charges, facsimile transmission and postage charges are reimbursable at actual cost. All requests for payment of expenses shall be accompanied by appropriate backup information. Any expense anticipated to be more than $0 shall be approved in advance by the CITY’s project manager. ADDITIONAL SERVICES The CONSULTANT shall provide additional services only by advanced, written authorization from the CITY. The CONSULTANT, at the CITY’s project manager’s request, shall submit a detailed written proposal including a description of the scope of services, schedule, level of effort, and CONSULTANT’s proposed maximum compensation, including reimbursable expense, for such services based on the rates set forth in Exhibit C-1. The additional services scope, schedule and maximum compensation shall be negotiated and agreed to in writing by the CITY’s Project Manager and CONSULTANT prior to commencement of the services. Payment for additional services is subject to all requirements and restrictions in this Agreement Work required because the following conditions are not satisfied or are exceeded shall be considered as additional services: DocuSign Envelope ID: 85B728CD-9248-489D-9C47-F378E50F5A9D Professional Services Rev. April 27, 2016 23 EXHIBIT “C-1” HOURLY RATE SCHEDULE EFFECTIVE JANUARY 1 THROUGH DECEMBER 31, 2016 Salas O’Brien Labor Category Hourly Rate Principal $225 Vice President / Director $205 Architect / Professional Engineer / Telecom Engineer $165 Design Engineer / Project Engineer $155 Construction Project Manager $160 Design Manager / Program Manager / Drafting Manager (CADD) $140 Program Specialist / Coordinator / Drafter (CAD) $115 Program / Project Assistant $85 Court Testimony / Deposition $450 Senior Consultant $275 Energy Consultant $190 Instruction / Seminar / Training $195 Mesiti-Miller Engineering, Inc. Labor Category Hourly Rate Engineer I $105 Engineer II $120 Engineer III (Licensed P.E.) $140 Engineer IV (Licensed P.E.) $160 Engineer V (Licensed P.E.) $180 Principal Engineer $190 Expert Witness Services $325 Administrative Assistant $75 CAD Technician I $80 CAD Technician II $100 Field Technician I $95 Field Technician II $120 DocuSign Envelope ID: 85B728CD-9248-489D-9C47-F378E50F5A9D Professional Services Rev. April 27, 2016 24 EXHIBIT “D” INSURANCE REQUIREMENTS CONTRACTORS TO THE CITY OF PALO ALTO (CITY), AT THEIR SOLE EXPENSE, SHALL FOR THE TERM OF THE CONTRACT OBTAIN AND MAINTAIN INSURANCE IN THE AMOUNTS FOR THE COVERAGE SPECIFIED BELOW, AFFORDED BY COMPANIES WITH AM BEST’S KEY RATING OF A-:VII, OR HIGHER, LICENSED OR AUTHORIZED TO TRANSACT INSURANCE BUSINESS IN THE STATE OF CALIFORNIA. AWARD IS CONTINGENT ON COMPLIANCE WITH CITY’S INSURANCE REQUIREMENTS, AS SPECIFIED, BELOW: REQUIRED TYPE OF COVERAGE REQUIREMENT MINIMUM LIMITS EACH OCCURRENCE AGGREGATE YES YES WORKER’S COMPENSATION EMPLOYER’S LIABILITY STATUTORY STATUTORY YES GENERAL LIABILITY, INCLUDING PERSONAL INJURY, BROAD FORM PROPERTY DAMAGE BLANKET CONTRACTUAL, AND FIRE LEGAL LIABILITY BODILY INJURY PROPERTY DAMAGE BODILY INJURY & PROPERTY DAMAGE COMBINED. $1,000,000 $1,000,000 $1,000,000 $1,000,000 $1,000,000 $1,000,000 YES AUTOMOBILE LIABILITY, INCLUDING ALL OWNED, HIRED, NON-OWNED BODILY INJURY - EACH PERSON - EACH OCCURRENCE PROPERTY DAMAGE BODILY INJURY AND PROPERTY DAMAGE, COMBINED $1,000,000 $1,000,000 $1,000,000 $1,000,000 $1,000,000 $1,000,000 $1,000,000 $1,000,000 $1,000,000 $1,000,000 YES PROFESSIONAL LIABILITY, INCLUDING, ERRORS AND OMISSIONS, MALPRACTICE (WHEN APPLICABLE), AND NEGLIGENT PERFORMANCE ALL DAMAGES $1,000,000 YES THE CITY OF PALO ALTO IS TO BE NAMED AS AN ADDITIONAL INSURED: CONTRACTOR, AT ITS SOLE COST AND EXPENSE, SHALL OBTAIN AND MAINTAIN, IN FULL FORCE AND EFFECT THROUGHOUT THE ENTIRE TERM OF ANY RESULTANT AGREEMENT, THE INSURANCE COVERAGE HEREIN DESCRIBED, INSURING NOT ONLY CONTRACTOR AND ITS SUBCONSULTANTS, IF ANY, BUT ALSO, WITH THE EXCEPTION OF WORKERS’ COMPENSATION, EMPLOYER’S LIABILITY AND PROFESSIONAL INSURANCE, NAMING AS ADDITIONAL INSUREDS CITY, ITS COUNCIL MEMBERS, OFFICERS, AGENTS, AND EMPLOYEES. I. INSURANCE COVERAGE MUST INCLUDE: A. A PROVISION FOR A WRITTEN THIRTY (30) DAY ADVANCE NOTICE TO CITY OF CHANGE IN COVERAGE OR OF COVERAGE CANCELLATION; AND B. A CONTRACTUAL LIABILITY ENDORSEMENT PROVIDING INSURANCE COVERAGE FOR CONTRACTOR’S AGREEMENT TO INDEMNIFY CITY. C. DEDUCTIBLE AMOUNTS IN EXCESS OF $5,000 REQUIRE CITY’S PRIOR APPROVAL. II. CONTACTOR MUST SUBMIT CERTIFICATES(S) OF INSURANCE EVIDENCING REQUIRED COVERAGE AT THE FOLLOWING URL: https://www.planetbids.com/portal/portal.cfm?CompanyID=25569. III. ENDORSEMENT PROVISIONS, WITH RESPECT TO THE INSURANCE AFFORDED TO “ADDITIONAL INSUREDS” A. PRIMARY COVERAGE WITH RESPECT TO CLAIMS ARISING OUT OF THE OPERATIONS OF THE NAMED INSURED, INSURANCE AS DocuSign Envelope ID: 85B728CD-9248-489D-9C47-F378E50F5A9D Professional Services Rev. April 27, 2016 25 AFFORDED BY THIS POLICY IS PRIMARY AND IS NOT ADDITIONAL TO OR CONTRIBUTING WITH ANY OTHER INSURANCE CARRIED BY OR FOR THE BENEFIT OF THE ADDITIONAL INSUREDS. B. CROSS LIABILITY THE NAMING OF MORE THAN ONE PERSON, FIRM, OR CORPORATION AS INSUREDS UNDER THE POLICY SHALL NOT, FOR THAT REASON ALONE, EXTINGUISH ANY RIGHTS OF THE INSURED AGAINST ANOTHER, BUT THIS ENDORSEMENT, AND THE NAMING OF MULTIPLE INSUREDS, SHALL NOT INCREASE THE TOTAL LIABILITY OF THE COMPANY UNDER THIS POLICY. C. NOTICE OF CANCELLATION 1. IF THE POLICY IS CANCELED BEFORE ITS EXPIRATION DATE FOR ANY REASON OTHER THAN THE NON-PAYMENT OF PREMIUM, THE CONSULTANT SHALL PROVIDE CITY AT LEAST A THIRTY (30) DAY WRITTEN NOTICE BEFORE THE EFFECTIVE DATE OF CANCELLATION. 2. IF THE POLICY IS CANCELED BEFORE ITS EXPIRATION DATE FOR THE NON-PAYMENT OF PREMIUM, THE CONSULTANT SHALL PROVIDE CITY AT LEAST A TEN (10) DAY WRITTEN NOTICE BEFORE THE EFFECTIVE DATE OF CANCELLATION. VENDORS ARE REQUIRED TO FILE THEIR EVIDENCE OF INSURANCE AND ANY OTHER RELATED NOTICES WITH THE CITY OF PALO ALTO AT THE FOLLOWING URL: HTTPS://WWW.PLANETBIDS.COM/PORTAL/PORTAL.CFM?COMPANYID=25569 OR HTTP://WWW.CITYOFPALOALTO.ORG/GOV/DEPTS/ASD/PLANET_BIDS_HOW_TO.ASP DocuSign Envelope ID: 85B728CD-9248-489D-9C47-F378E50F5A9D DocuSign Envelope ID: 85B728CD-9248-489D-9C47-F378E50F5A9D DocuSign Envelope ID: 85B728CD-9248-489D-9C47-F378E50F5A9D City of Palo Alto (ID # 7279) City Council Staff Report Report Type: Consent Calendar Meeting Date: 10/4/2016 City of Palo Alto Page 1 Summary Title: Administrative Penalty Schedule Update 2016 Title: Adoption of a Resolution Amending and Restating the Administrative Penalty Schedule and Civil Penalty Schedules for Certain Violations of the Palo Alto Municipal Code and the California Vehicle Code Established by Resolution Number 9554 From: City Manager Lead Department: City Attorney Recommendation Based on input from City departments that exercise code enforcement responsibilities, the City Attorney’s Office recommends that the Council adopt the attached resolution amending the administrative penalty schedule to update the penalty amounts for certain violations of the Palo Alto Municipal Code (Attachment A). Background California Government Code section 53069.4 allows cities, by ordinance, to make any violation of its ordinances subject to an administrative fine or penalty. In 1999, the City Council adopted an ordinance amending Chapters 1.12 and 1.16 of the Palo Alto Municipal Code (“PAMC”) to establish administrative citations, penalties and remedies for Municipal Code violations. At the same time, the City Council enacted a resolution setting the administrative penalty schedule for those violations. Personnel in various City departments, including parking enforcement officers, park rangers, and planning code enforcement officers, use the civil penalty schedule as one tool that may be used to gain compliance with rules. Approximately once each year the City Attorney’s Office coordinates an update to the penalty schedule to reflect Council activity and recommendations from these departments based on their enforcement experience. The amendments generally fall into three categories: (1) establishing penalties for code sections that had not been included in previous penalty schedules; (2) adding penalties for new PAMC sections that were added to the Municipal Code since the penalty schedule was last revised, or deleting penalties for sections no longer in the PAMC; or (3) amending penalty amounts for violations of certain code provisions where departments feel changes would provide better support for their enforcement activities. City of Palo Alto Page 2 The proposed changes to the penalty schedule for 2016 are shown in redline/strikeout in the attached resolution. Discussion The recommended administrative penalty schedule remains relatively unchanged for 2016. The sole amendments are alternative penalty structures for violations of Planned Community zoning and Transportation Demand Management conditions. The City Attorney’s Office has reviewed these proposed changes with the Planning Department and supports the recommendations. Currently, violations of the Zoning Code (Title 18 of the PAMC) carry a default penalty of $500 for the first offence, $750 for the second offense, and $1,000 for the third and subsequent offenses, with each day of violation eligible to be treated as a separate offense. Different penalties may apply to specific offenses within Title 18, as noted in the administrative penalty schedule. The Planning Department recommends adoption of an alternative penalty structure for violations of Planned Community zoning and Transportation Demand Management conditions. Under the proposed penalty structure, a penalty would not be applied for the first six months following the issuance of a notice of violation while the department works with the violator to achieve compliance. If the violation remains unabated after six months, however, the department could impose $2,000 penalty for each day until the property comes into compliance. As with all administrative penalties, the City would retain discretion on whether to apply these penalties depending on the nature of the violation, the responsiveness of the party involved, and the potential for the penalties to spur compliance. This recommendation is consistent with the Planning Department’s Code Enforcement policy of encouraging voluntary compliance. The Planning Code Enforcement team is able to achieve voluntary compliance in most cases, which saves staff resources and allows the team to effectively prioritize the investigations and enforcement activities they undertake. The six month period recommended in the proposed changes is based on the precedent established by the City Council’s agreement regarding the College Terrace Center Planned Community zoning ordinance. The $2,000 penalty would double the current penalty being assessed to the developer of the Edgewood Plaza Planned Community zoning ordinance. Resource Impact Any potential revenue estimate impacts from changes in these penalties, if approved by the City Council, will be evaluated as part of the development annual budgets and mid-year budget reviews. Policy Implications These recommendations provide the City’s code enforcement officers with a tool they may use to enforce City rules when necessary to promote the safety and welfare of Palo Alto residents and visitors. City of Palo Alto Page 3 Environmental Review Approval of penalties for violations of the PAMC is not a project subject to review under the California Environmental Quality Act. Attachments:  Attachment A: Resolution Updating Admin Penalty Schedule 2016 (PDF) NOT YET APPROVED 1 160831 sh 2016-08-30 (Reso) Admin Penalty Schedule Reso Update 2016 Resolution No. _____ Resolution of the Council of the City of Palo Alto Amending and Restating the Administrative Penalty Schedule and Civil Penalty Schedules for Certain Violations of the Palo Alto Municipal Code and the California Vehicle Code Established by Resolution No. 9554 The Council of the City of Palo Alto RESOLVES as follows: SECTION 1. Administrative Penalties. The administrative penalty schedule for violations of the Palo Alto Municipal Code established by Resolution No. 9554 is hereby amended and restated to read as follows: Standard penalty unless otherwise indicated below. $50 Second violation within 36 month period 150% of listed penalty (unless otherwise specified) Third & subsequent violations within 36 month period. 200% of listed penalty (unless otherwise specified) Delinquency penalty. 10% per month, simple interest, on delinquent amount 4.04.020 License or permit required. 300 4.04.100 Display of license or permit. 300 4.10.045 License fees for pushcart vendors. 300 4.10.050 Regulations for solicitors and peddlers. 350 4.10.055 Identification cards for solicitors. 250 4.10.057 Regulations for pushcart vendors. 300 4.10.070 License required - circus etc. 300 4.10.120 Arcade prohibited. 250 4.10.200 Pawn brokers prohibited. 250 4.10.230 Daily report of second hand dealers. 250 4.10.240 Maintaining reports - second hand dealers. 250 4.10.260 Failure to make report - second hand dealers. 250 4.10.270 Second hand goods held for inspection. 250 4.18.040 Unlawful dog or cat kennel. 250 4.30.010 Soliciting without a permit. 250 4.30.100 Conduct of solicitations. 250 4.32.020 Soliciting without a permit. 250 4.32.060 Investigation of records of solicitor. 250 4.32.090 Acts required during solicitation. 250 4.32.100 Restriction of solicitation. 250 4.32.110 Hours of solicitation. 250 4.34.020 Permit required - closing out sale. 250 4.39.030 Audible alarms. 250 4.39.040 Limitation on automatic dialing devices. 250 4.39.060 Registration of alarm. 250 4.39.110 Alarm violations. 100 4.42.020 Certificate of public convenience. 1000 4.42.085 Controlled substance and alcohol testing. 500 4.42.090 Taxi owners permit. 250 NOT YET APPROVED 2 160831 sh 2016-08-30 (Reso) Admin Penalty Schedule Reso Update 2016 4.42.100 Taxi driver’s permit expired. 250 4.42.130(b) Taxi driver’s permit not displayed. 250 4.42.160 Unauthorized pickup of passengers. 250 4.42.190 Taximeters. 500 4.42.200 Taxi cab operating regulations. 250 4.42.210(a) Interference with inspection. 500 4.42.210(b) Inspection of vehicles. 500 4.42.220 Operating regulations. 500 4.42.230 Maintenance of vehicles. 500 4.51.030 License required - bingo. 250 4.51.050 Minors restricted - bingo. 50 4.51.080 Staffing and operations - bingo. 250 4.51.110 Physical presence required - bingo. 250 4.52.020 License required - billiards and bowling. 1000 4.52.040 Minors restricted - billiards and bowling. 250 4.52.060 Offensive conduct - billiards and bowling. 250 4.52.070 Interference w/emerg. Access -billiards/bowling. 250 4.54.030(a) Permit required - massage establishment. 1000 4.54.060(a) Permit required - massage tech. 250 4.54.110 Massage establishment facilities. 250 4.54.130 Business name - massage. 250 4.55.030 License required - adult entertainment. 1000 4.56.030 License required - hot tub and sauna. 1000 4.56.060 Employee permit required - hot tub and sauna. 250 4.56.100 Hot tub/sauna establishment and operations. 250 4.56.120 Business name - hot tub and sauna. 250 4.56.150 Display of permit - hot tub and sauna. 250 4.56.200 Employment of persons < 18 - hot tub and sauna. 250 4.57.020 Permit required - firearms sales. 1000 4.57.095 Firearms dealers – business and security. 500 4.58.020 Minors restricted - narcotics paraphernalia shop. 750 4.58.030 Regulations - narcotics paraphernalia shop. 750 4.59.010 Pet shop requirements. 250 4.59.020 Pet shop sanitation. 250 4.59.030 Pet shop food. 250 4.59.040 Pet shop notification. 250 4.59.050 Pet shop - sale of dangerous or wild animals. 250 4.59.070 Dead animals. 250 4.59.080 Permit required - pet shop and kennel. 250 4.59.090 Permit required - grooming shop. 250 4.59.095 Sales of kittens and puppies. 250 4.59.100 Sales of raccoons. 250 4.59.105 Sales of rabbits, chicks, ducklings. 250 4.60.030 Business registration required 250 4.60.060 Business registry application required 250 4.60.120(a) Business registry fee delinquency 50% of registry fee if 1-30 days late 100% of fee or 31+ days late 5.12.010 Permit required - refreshment stand. 250 5.20.030 Discarding solid waste. 100 5.20.040 Accumulation of garbage. 250 5.20.050 Unauthorized bins, boxes, containers-first violation. 500 Second and subsequent violations. 1000 5.20.080 Number of containers required. 250 5.20.130 Maintenance of bins and boxes- first violation. 250 NOT YET APPROVED 3 160831 sh 2016-08-30 (Reso) Admin Penalty Schedule Reso Update 2016 Second and subsequent violations. 500 5.20.160 Spillage or leakage of solid waste. 250 5.20.180 No accumulation of solid waste. 250 5.20.190 No burning, burial, or dumping of solid waste. 250 5.20.200 Hazardous waste. 500 5.20.220 Scavenging prohibited. 100 5.20.230 No trespassing in city landfill. 250 5.30.020 Polystyrene & Non-Recyclable Plastic. 500 5.35.020 Bags at retail establishments. 500 5.35.030 Bags at supermarkets. 500 6.08.020(b) Interference with animal control officer. 250 6.16.010 No dog license. 50 6.16.080 Number of dogs allowed. 100 6.16.100 Leash Law. 100 6.20.010 Animals at large. 100 6.20.020 Animals on unenclosed premises. 100 6.20.030 Animals kept in enclosures. 100 6.20.035 Tying animals to bicycle racks or trees. 100 6.20.040 Nuisance on sidewalk. 100 6.20.045 Animal waste removal - first offense. 25 6.20.045 Animal waste removal - second offense. 50 6.20.045 Animal waste removal - third offense. 125 6.20.055 Animals in vehicles. 250 6.20.060 Bees close to property line. 100 6.20.080 Permit required - livestock. 100 6.20.090 Maintaining birds, goats, pigs and rabbits. 100 6.20.110 Number of cats kept. 100 6.20.120 Permit required - breeding animals. 100 6.20.130 Cat or dog in heat. 100 6.20.140 Barking dogs. 100 6.20.150 Vaccination required - animals. 100 6.20.160 Sanitary enclosures. 100 6.20.170 Slaughter of animals. 500 6.24.020 Permit required - construction of stable. 250 6.24.050 Maintenance of stable. 250 6.28.040 Possession of dangerous or wild animals. 500 6.32.010 Keeping diseased animals. 500 6.32.020 Confining animals with rabies. 500 6.32.050 Dead animals in public. 500 6.36.010 Sales of certain animals. 250 8.04.020 Permit required - tree work. 500 8.04.080 Interference with tree enforcement. 500 8.08.010 Weeds as public nuisance. 250 8.10.050 Protected trees. 500 8.10.070 Care of protected trees. 500 8.10.080(b) Development conditions. 500 9.04.010 Open container in business district. 100 9.04.020 Open container in City parking lot. 100 9.04.030 Open container near liquor store. 100 9.04.040 Social host. First violation 250 Second violation 500 Third & subsequent violation 1000 9.08.010 Discharge of firearms/fireworks. 1000 9.09.010(a) Urinating/defecating on street or public place. 250 NOT YET APPROVED 4 160831 sh 2016-08-30 (Reso) Admin Penalty Schedule Reso Update 2016 9.09.010(b) Igniting or maintaining outdoor fire. 250 9.10.030 Residential property noise limits. 100 9.10.040 Commercial property noise limits. 100 9.10.050 Public property noise limits. 100 9.10.060(b) Construction noise signs. 250 9.10.060(c) Construction noise. 250 9.10.060(d) Construction equipment noise. 100 9.10.060(e) Residential power equipment noise. 100 9.10.060(f) Leaf blower noise- first violation. 100 Leaf blower noise- second violation 150 Leaf blower noise- third and subsequent violation 300 9.10.060(g) Street sweeping noise. 100 9.10.060(h) Refuse collection noise. 100 9.10.060(i) Safety device noise. 100 9.10.060(k) Public parking lot cleaning noise. 100 9.10.060(l) Business district street cleaning noise. 100 9.12.010 Loudspeakers. 150 9.14.020 Smoking prohibited - enclosed places. 250 (2nd violation in 1 year: $300; 3rd and subsequent violations in 1 year: $500) 9.14.025 Smoking prohibited - unenclosed areas. 250 (2nd violation in 1 year: $300; 3rd and subsequent violations in 1 year: $500) 9.14.030 Smoking prohibited - city cars. 250 (2nd violation in 1 year: $300; 3rd and subsequent violations in 1 year: $500) 9.14.035 Smoking prohibited – public parks and public events 250 (2nd violation in 1 year: $300; 3rd and subsequent violations in 1 year: $500) 9.14.040 Smoking prohibited - child care facilities. 250 (2nd violation in 1 year: $300; 3rd and subsequent violations in 1 year: $500) 9.14.050 Smoking prohibited – commercial areas and public events. 250 (2nd violation in 1 year: $300; 3rd and subsequent violations in 1 year: $500) 9.14.080 Location of tobacco vending machines. 1000 9.14.090 Display of tobacco products. 500 9.14.100 Failure to post “No Smoking” signs. 50 9.22.010 Impersonating public officials. 500 9.26.020 False representation as police officer. 250 9.28.010 Hotel guest register required. 250 9.28.020 Use of false name by hotel guest. 50 9.40.020 Landing aircraft at other than airport. 1000 9.44.010 Solicitation prohibited - public parking lot. 100 9.48.010 Displaying goods on sidewalk. 50 9.48.025 Sitting or lying on University Avenue sidewalks. 100 9.48.030 Operation of sidewalk elevator. 500 9.48.040 Throwing rubbish on streets. 250 9.48.050 Obligation to clean sidewalk. 200 9.50.010 Graffiti prohibited on public property. 500 9.56.030 Abatement of public nuisance. 500 unless otherwise specified 9.56.030(a)(5) Thirty-five foot site triangle. 200 NOT YET APPROVED 5 160831 sh 2016-08-30 (Reso) Admin Penalty Schedule Reso Update 2016 9.56.030(a)(8) Foliage/branch obstruction. 200 9.56.030(a)(10) Excessive planting strip vegetation height. 150 9.60.030 Blocking entrances to City Hall. 500 9.60.050 Placing signs or climbing on City Hall. 500 9.60.060 Bicycles and skateboards at City Hall. 50 9.60.070 Alcoholic beverages prohibited - City Hall. 100 9.64.010 Overnight use of community facilities 250 9.74.030 Discrimination in housing. 250 9.78.020 Mosquito breeding places. 500 9.79.100 News rack violations. 100 12.08.010 Permit required - public right of way. 500 12.08.100 Removal of City Engineer monuments. 500 12.12.010 Building on public easement without permit. 1000 12.16.030 Overhead wires in underground districts. 500 12.16.090 Property owner responsibility. 500 12.20.010 Utility rules and regulations 500 unless otherwise specified 12.20.010 Emergency water conservation regulations 100 (2nd violation in 1 year: $250; (Reso. Nos. 9509, 9460, 9449) 3rd and subsequent violations in 1 year: $500) 12.20.020 Providing false information to City Utilities. 500 12.32.010 Water use regulation. 100 15.04.110 Violations of Uniform Fire Code. 500 unless otherwise specified 15.04.012 Failure to abate a hazard. 1000 16.04.010 Violations of California Building Code as amended. 500 16.05.010 Violations of California Mechanical Code as amended500 16.06.010 Violations of California Residential Code as amended.500 16.08.010 Violations of California Plumbing Code as amended. 500 16.09.030 Limitations on point of discharge. 1000 16.09.035 General Discharge Prohibitions. 1000 16.09.040 Specific Discharge Prohibition - Standards. 1000 16.09.045 Additional Copper Limitations for Industrial Waste. 1000 16.09.050 Grease Disposal Prohibited. 1000 16.09.055 Prohibited Discharge of Unpolluted Water. 1000 16.09.065 Best Management Practices (BMPs). 1000 16.09.070 Trucker's Discharge Permit. 1000 16.09.075 Food Service Establishment Requirements. 1000 16.09.080 Industrial Waste Discharge Permit Required. 1000 16.09.085 Modification, Suspension or Revocation of Industrial Wastes Discharge. 1000 16.09.090 Requirements for Facilities Affected by National Pretreatment Standards. 1000 16.09.105 Waste Sampling Locations. 1000 16.09.110 Discharger Monitoring. 1000 16.09.115 Prohibition against Dilution. 1000 16.09.120 Discharger Self-Monitoring. 1000 16.09.125 Maintenance and Operation of Pollution Control and Monitoring Equipment. 1000 16.09.130 Compliance with the Pretreatment Requirements. 1000 16.09.135 Reporting Requirements for all Permitted Dischargers.1000 NOT YET APPROVED 6 160831 sh 2016-08-30 (Reso) Admin Penalty Schedule Reso Update 2016 16.09.140 Requirements for Reporting Noncompliance, Increased Loading, Slug Discharges, Accidental Discharges. 1000 16.09.145 Certification of Reports. 1000 16.09.150 Falsification of Information. 1000 16.09.160 Retention of Records. 1000 16.09.165 Storm Drain System - Prohibited Discharges. 1000 16.09.170 Requirements for Construction Operations. 1000 16.09.175 General Prohibitions and Practices. 1000 16.09.180 Requirements for Newly Constructed, Remodeled or Converted Multi-Residential, Commercial and Industrial Facilities. 1000 16.09.185 Personnel Orientation. 1000 16.09.190 Accidental Discharges Prevention. 1000 16.09.195 Storage of Hazardous Materials Above Sinks. 1000 16.09.200 Zinc Containing Floor Finishes. 1000 16.09.205 Requirements for Cooling Systems, Pools, Spas, Fountains, Boilers and Heat Exchangers. 1000 16.09.210 Root and Pest Control Chemicals. 1000 16.09.215 Requirements for Photographic Materials Processing.1000 16.09.220 Requirements for Dental Facilities that Remove or Place Amalgam Fillings. 1000 16.09.225 Requirements for Vehicle Service Facilities. 1000 16.09.230 Requirements for Machine Shops. 1000 16.10.020 Construction of private sewer system. 750 16.10.050 Permit required - private sewage system. 500 16.14.040 Violations of California Green Building 500 Standards Code as amended 16.14.260 Failure to meet diversion requirements. $50 per ton of waste not diverted or $1000, whichever is greater 16.14.370 Failure to meet diversion requirements. $50 per ton of waste not diverted or $1000, whichever is greater 16.16.010 Violations of California Electrical Code as amended. 500 16.17.010 Violation of California Energy Code as amended. 500 16.20.020 Design review required - signs. 500 16.20.090 Prohibited signs. 250 16.20.100 Prohibited locations - signs. 250 16.20.110 Fuel price signs required. 250 16.20.210 Non-compliance with sign ordinance. 250 16.20.230 Abandoned signs. 250 16.20.250 Parking of advertising vehicles. 250 16.24.080 Fence violation. 250 16.28.060 Permit required - excavation and grading. 500 16.28.330 Protection of adjacent property. 500 16.28.340 Deposits of earth, rock, etc. 500 16.32.010 Permit required - moving a building. 250 16.36.050 Curb painting without a permit. 100 16.36.060 House numbering required. 100 16.38.020 Certificate of occupancy – community housing. 500 16.40.040 Dangerous and substandard buildings. 500 16.40.090 Non-compliance with order of building official. 500 16.40.180 Interference with repair or demolition work. 500 16.42.090 Failure to submit seismic report. 250 NOT YET APPROVED 7 160831 sh 2016-08-30 (Reso) Admin Penalty Schedule Reso Update 2016 16.45.070 Failure to pay fee - Stanford Research Park. 250 16.46.060 Failure to pay fee - San Antonio - West Bayshore. 250 16.47.050 Failure to pay housing impact fee. 250 16.49.080 Maintenance of downtown historic structure. 500 16.49.090 Demolition of downtown historic structure. 1000 16.52.070 Construction - flood hazards. 500 16.59.090 Failure to pay fee- Citywide Transportation Impact. 250 16.60.090 Failure to pay fee- Charleston/Arastradero. 250 16.62.020 Maintenance of expired building permit 200 for 31st through 60th day 400 for 61st through 120th day 800 for 121st day and thereafter 17.04.020 Violations of hazardous materials storage. 500, unless otherwise specified 17.04.030 Specific obligation - hazardous materials. 500 17.10.010 General obligation - underground storage tanks. 750 unless otherwise specified 17.10.040 Permit required - underground storage. 500 17.10.140 Financial responsibility - underground storage. 500 17.10.150 Monitoring underground storage tanks. 1000 17.10.170 Unlawful abandonment - underground storage tanks.1000 17.12.010 Permit required - hazardous materials storage. 750 17.12.020 New hazardous materials storage facilities. 750 17.12.060 Hazardous materials storage facilities. 750 17.16.010 Hazardous materials management plan. 250 17.20.010 Hazardous materials inventory statement. 250 17.24.010 Hazardous materials discharge report. 750 17.32.010 Permit required - storage of hazardous materials. 1000 18.01.080 Violation of zoning laws. 500 18.16.060(d)Hotel stay in excess of 30 days. 200 18.18.060(d)Hotel stay in excess of 30 days. 200 18.38.020 Planned Community zoning 2000 for 181th day following notice of violation and thereafter (unless otherwise specified in PC ordinance) 18.42.060(a)Incompatibility of home occupations. 200 18.42.060(b) Employees of home occupation. 200 18.42.060(c) On site advertising of home occupation. 200 18.42.060(d) Floor area of home occupation. 200 18.42.060(e) Traffic related to home occupation. 200 18.42.060(f) Home occupation as nuisance. 200 18.42.060(g) Outdoor storage related to home occupation. 200 18.42.070 Servicing vehicles in residential zone. 250 18.44.040 Green building requirements. 500 18.52.050 Transportation demand management conditions 2000 for 181th day following notice of violation and thereafter 18.84.200 Temporary uses. 250 22.04.030 Compliance with park rules. 250 22.04.040 Failure to obtain use permit. 300 22.04.150(a) Resident and guests only - Foothills Park. 50 22.04.150(b) Entrance to park - Foothills Park. 50 22.04.150(c) Person in park after hours - Foothills Park. 250 22.04.150(d) Speed limit 20MPH - Foothills Park. 250 22.04.150(e) Vehicles in Foothills Park after hours. 100 22.04.150(f) Skateboards and motorcycles - Foothills Park. 250 22.04.150(g) Smoking on trails - Foothills Park. 1000 22.04.150(h) Fires in Foothills Park. 1000 22.04.150(i) Use of trails - Foothills Park. 100 NOT YET APPROVED 8 160831 sh 2016-08-30 (Reso) Admin Penalty Schedule Reso Update 2016 22.04.150(l) Unleashed dog - Foothills Park. 250 22.04.155 Restraint of dogs in City parks. 250 22.04.160 Permit required - sales in parks. 250 22.04.170 Violation of park use permit. 250 22.04.180 Sound in parks. 250 22.04.190 Unauthorized golf and other games in parks. 250 22.04.200 Unauthorized models and kites in parks. 100 22.04.210 Parking in parks. 100 22.04.215 Launch and takeout from ramp or dock. 250 22.04.220 Bicycle not permitted on trails. 250 22.04.230 Dumping in park. 1000 22.04.240 Interference with park use permit. 250 22.04.250 Park regulations . 250 unless otherwise specified 22.04.260 Discharge of weapons in park. 500 22.04.270 Removal of flora or fauna. 500 22.04.280 Removal of turf or soil. 500 22.04.290(a) Damaging, defacing, etc., property. 1000 22.04.290(b) Marking, writing or printing on property. 1000 22.04.290(c) Attaching sign, etc., without permit. 500 22.04.290(d) Entering, etc., structure after posted hours. 250 22.04.290(e) Bringing portable tables without a permit. 100 22.04.300 Unlawful fire in city park. 1000 22.04.310 Enid Pearson Arastradero, Esther Park closure. 250 22.04.315 Byxbee Park and Baylands closed. 250 22.04.320 Parks closed. 250 22.04.321(a)Skateboarding in park after hours. 50 22.04.322 Trespass at Rinconada Park pool. 50 22.04.330 Alcohol in Cogswell Park. 250 22.04.331 Alcohol in Lytton Plaza. 250 22.04.332 Alcohol in Johnson Park. 250 22.04.333 Alcohol in Boulware Park. 250 22.04.334 Alcohol in Scott St. Minipark. 250 22.04.335 Alcohol in Greer Park. 250 22.04.336(a)Alcohol in Rinconada Park. 250 22.04.337 Alcohol in Mitchell Park. 250 22.04.338 Alcohol in Robles Park. 250 22.04.339 Alcohol in Hopkins Park. 250 22.04.340 Vehicles in park. 250 22.04.341 Alcohol in El Palo Alto Park. 250 22.04.342 Alcohol in Heritage Park. 250 22.04.343 Alcohol in Pardee Park. 250 22.04.350 Consumption of alcoholic beverage in vehicles. 250 22.04.360 Open container in park - alcoholic beverage. 250 22.04.370 Reckless driving in park. 250 22.04.380 Unlawful riding and towing in parks. 250 22.04.390 Duck pond. 100 SECTION 2. Municipal Code Civil Penalties. The civil penalty schedule for violations of the Palo Alto Municipal Code established by Resolution No. 9554 is hereby amended and restated to read as follows*: Standard penalty unless otherwise indicated below. $46 10.36.020 No parking in parkways. 46 10.36.030(a)Storage on the street (72 hours). 86 NOT YET APPROVED 9 160831 sh 2016-08-30 (Reso) Admin Penalty Schedule Reso Update 2016 10.36.040(a)(1)Vehicle for sale on street. 46 10.36.040(a)(2)Repairing vehicle on street. 46 10.36.050 Not w/in 18” of left curb--One-way street. 46 10.36.090 Removal of chalk markings. 111 10.40.020(a)(1)Parking violation – red curb. 46 10.40.020(a)(4)Parking violation – green curb. 46 10.40.020(a)(5)Parking violation – blue curb. 308 10.40.020(b)Parking in violation of sign (except blue curb). 46 10.40.020(b)Unlawful disabled parking - signs (blue curb). 308 10.40.040(b)Commercial vehicle double parking. 46 10.40.050 Unlawful parking in yellow loading zone. 46 10.40.060 Unlawful parking in passenger loading zone. 46 10.40.070 Unlawful alley parking. 46 10.40.100(g)Parking in a bus zone. 46 10.44.010(b)Overtime parking (limited time zone). 41 10.44.010(c)Additional violation of time limited or no 44 parking zones. 10.44.020(a)Oversized vehicle parking in residential or 46 public facilities zones 2am-6am. 10.44.040(b)Not in space marking. 46 10.44.050(b)Parking violation--temporary sign. 46 10.44.060 Dealers--parking for sale or repair. 46 10.44.070(b)Parking in violation of posted sign. 46 10.44.080 Vehicle obstruction of roadway or lot. 46 10.44.090 Unattended vehicle, engine running. 111 10.45.110 Parking in on-street valet parking space. 46 10.46.110 Overtime residential parking permit (CT) 53 10.48.030 Truck route violation. 211 10.50.100(a)Violation of posted RPP permit sign 53 10.60.070(c)Permit not properly displayed. 41 10.60.070(d)Overtime permit parking in City lot. 41 10.60.070(e)Parking without permit in permit area. 46 22.04.150(e)In Foothills Park after hours. 111 22.04.210 Parking in parks. 111 Late payment penalty. 35 Collection cost penalty. 35% of listed penalty *All penalties include state-mandated assessments pursuant to Gov’t. Code 76000, S.B 1407(2008), and Government Code 76000.3 (S.B. 857, 2008) totaling $12.50. SECTION 3. Vehicle Code Civil Penalties. The civil penalty schedule for violations of the California Vehicle Code established by Resolution No. 9554 is hereby amended and restated to read as follows*: 5200 No front license plate. $78 (If corrected within 31 days) 10 (state mandated) 5204(a) No registration tabs on license plate. 78 (If corrected within 31 days) 10 (state mandated) 21113(a) Parking on public grounds. 46 22500(a) Parking in an intersection. 46 22500(b) Parking in a crosswalk. 46 22500(d) Parking w/in 15 feet--fire station driveway. 46 NOT YET APPROVED 10 160831 sh 2016-08-30 (Reso) Admin Penalty Schedule Reso Update 2016 22500(e) Blocking driveway. 46 22500(f) Parking on sidewalk. 46 22500(g) Parking or stopping--excavation site, etc. 46 22500(h) Double parking on roadway. 46 22500(i) Parking in a bus zone. 261 22500(l) Parking in front of accessible curb. 303 22500.1 Parking in a fire lane (public or private). 46 22502 Right hand wheels not w/in 18” of rt. curb. 46 22505(b) Parking on state highway violation. 46 22507.8(a-b)Unlawful parking in handicapped space. 303 22507.8(c)(1-2)Straddling Lines/Cross hatched, disabled. 303 22511.57(a) Parking/standing of vehicle in disabled parking $753 stall or space with invalid license/placard. 22511.57(b) Unauthorized use of license/placard for vehicle $753 parking/standing in disabled parking stall or space. 22511.57(c) Parking/standing of vehicle in disabled parking $753 stall or space with counterfeit, forged, altered or mutilated license/placard for disabled. 22514 Parking within 15 feet of fire hydrant. 46 22515 Unattended vehicle, engine running. 111 22516 Person locked in vehicle. 111 22521 Parking within 7 1/2 feet of railroad tracks. 46 22522 Parking near sidewalk access ramp. 303 22523(a) Unlawful abandonment of vehicle on highway. 131 22523(b) Abandoned vehicle--public/private property. 131 22526 Entering/blocking intersection – anti-gridlock. 131 22951 No street, alley parking--patron vehicles. 46 *All penalties include state-mandated assessments pursuant to Gov’t. Code 76000, S.B 1407(2008), and Government Code 76000.3 (S.B. 857, 2008) totaling $12.50. // // // // // // // // // // NOT YET APPROVED 11 160831 sh 2016-08-30 (Reso) Admin Penalty Schedule Reso Update 2016 SECTION 4. The Council finds that the adoption of this resolution does not constitute a project for purposes of the California Environmental Quality Act, and, therefore, no environmental assessment is required. INTRODUCED AND PASSED: AYES: NOES: ABSTENTIONS: ABSENT: ATTEST: APPROVED: __________________________ ____________________________ City Clerk Mayor APPROVED AS TO FORM: ____________________________ City Manager __________________________ ____________________________ Senior Deputy City Attorney Police Chief City of Palo Alto (ID # 7362) City Council Staff Report Report Type: Consent Calendar Meeting Date: 10/4/2016 City of Palo Alto Page 1 Summary Title: Director of Utilities appointment Title: Appointment of Utilities General Manager (Director of Utilities)/ Assistant City Manager, Approval of Amendment to Employment Agreement and Approval of Recommended Staffing Reorganization in the City Manager’s Office and the Utilities Department From: City Manager Lead Department: Human Resources Recommended Motion Staff recommends that Council consider the following motion: Move to approve the appointment of Ed Shikada as Utilities General Manager (Director of Utilities)/Assistant City Manager; approve an amendment to his employment agreement; authorize the addition of a Utilities Chief Operating Officer; authorize restructuring of the City Manager’s Office and direct the City Manager to return to Council with conforming changes to the Table of Organization. Recommendation The City Manager recommends that the City Council: 1)Confirm the appointment of Ed Shikada as Utilities General Manager (Director of Utilities)/Assistant City Manager; and 2)Approve Amendment 1 to Shikada’s employment agreement (Attachment A) to reflect the new position title and an annual salary of $285,000, which is within the existing range of the Director of Utilities; and 3)Authorize the addition of a Utilities Chief Operating Officer with an annual salary range of $147,347 to $221,000, and direct the City Manager to return to Council with conforming changes to the Table of Organization; and 4)Authorize restructuring of the City Manager’s Office staffing to delete one Assistant City Manager and the Economic Development Director and add two Deputy City Managers and two Assistant to the City Manager positions, with salary ranges of $135,845 to $203,757 for Deputy City Manager and $101,547 to 9a City of Palo Alto Page 2 $152,318 for Assistant to the City Manager, and direct the City Manager to return to Council with conforming changes to the Table of Organization. Executive Summary The Palo Alto Municipal Code requires that Council approve the City Manager’s appointment of most Department Directors and the Assistant City Manager, approve employment terms and benefits that are not already included in the Compensation Plan for Management/Professional Personnel and to approve changes to titles, salaries and number of positions in the City’s Table of Organization. Background Upon the retirement of the City’s Director of Utilities in December 2015, the City retained the services of two executive recruiting firms and engaged industry experts and stakeholders in the search for a suitable replacement for the Director position. The first national recruitment concluded with an insufficient pool of candidates and a second national recruitment yielded two finalists from out of state. The finalists’ potential requirements included, in addition to the City’s management benefits package, a salary of $300,000+, deferred compensation contributions, auto allowance, relocation expenses and ongoing housing assistance. As the City Manager reviewed the potential for an effective match with the City, he turned to interim Director Ed Shikada, to see if he was interested in serving in the position in a permanent capacity. After careful consideration of the finalists’ experience, adaptability to the City of Palo Alto and suitability for the position, the City withdrew further consideration of the finalists and the recruitment process was terminated without a selection. Mr. Keene engaged in discussion with Mr. Shikada regarding the permanent position. Discussion Mr. Shikada, a highly experienced executive with more than 25 years of government expertise, was hired by the City of Palo Alto as the Assistant City Manager in April 2015 and has served as Interim Director of Utilities since January 2016. With extensive background in transportation, public works and executive management, Mr. Shikada was recruited by Palo Alto after serving as the City Manager of San Jose, the 10th largest city in the United States. Mr. Shikada’s skills are highly transferrable to the position of Director of Utilities and he has been encouraged to accept this position by Utilities experts in the region. City of Palo Alto Page 3 In conjunction with assuming the role of Utilities General Manager, Mr. Shikada also will continue to function as Assistant City Manager, overseeing specific critical projects throughout the City organization and as available, assisting the City Manager with overall executive oversight at his direction. Mr. Shikada’s time will be allocated 75% to Utilities General Manager and 25% to Assistant City Manager. An amendment to Mr. Shikada’s employment agreement (Attachment A) has been prepared to reflect the new position title and an annual salary of $285,000, which is within the existing range of the Director of Utilities. All other terms and conditions of employment will remain the same. In tandem with the appointment of Mr. Shikada, the City Manager is initiating some reorganization within the Utilities Department including the addition of a Utilities Chief Operating Officer, to provide greater oversight of department-wide day-to-day operations. (The Utilities Chief Operating Officer may be titled Chief Operating Officer or Assistant General Manager in other Utilities agencies.) Mr. Shikada will use the working title of General Manager to reflect the strategic and executive focus of the role, as well as the enhanced operational management role of the new Chief Operating Officer. Staff will return to Council with conforming amendments to the Table of Organization. In addition, staff would like to advise the Council of a related action to be taken under the City Manager’s authority. An identified priority for the Utilities Department is an update to the department’s strategic plan. The current strategic plan was completed in 2011. Given the rapid pace of change within the utility industry and the City of Palo Alto’s sustainability and climate action goals, this is an ideal time to review and reestablish the department’s strategic priorities and activities. Assistant Director Jane Ratchye will initiate this effort. In addition, as Ms. Ratchye has announced an intention to retire from City service at the end of the fiscal year, an internal recruitment will begin for a successor Assistant Director – Resource Management. In the City Manager’s Office, one Assistant City Manager position has been held vacant since July 2016 and Mr. Shikada’s appointment to the Director of Utilities position will result in an additional .75 FTE vacancy. The Economic Development Manager position is also vacant. The three vacant positions provide an opportunity for a restructure of the City Manager’s Office to better meet workload demands and to fulfill the priorities of the Council and community. After considering a number of restructure options, the City Manager recommends that the vacancies be replaced with two Deputy City Managers and two Assistant to the City Manager positions. The Deputy City Manager positions are at a lower level than the existing Assistant City Manager vacancies, but at a level that is expected to draw interest and exceptional talent to the City. The Assistant to the City Manager positions are suitable for working on a variety of projects, analysis, policy, public reports and presentations. Staff will return to Council with amendments to the Table of Organization to reflect these changes. City of Palo Alto Page 4 All positions discussed in this report are “at will”, which means the individuals newly appointed or promoted into these positions serve at the pleasure of the City Manager and can be terminated or asked to resign at any time. In addition, all positions discussed in this report will be assigned to the unrepresented Managers and Professionals unit, with terms and conditions of employment established by the Managers and Professionals Compensation Plan. Consultations with the Utilities Managers and Professionals Association of Palo Alto (UMPAPA) may occur as appropriate. Resource Impact  Budget implications: 1) On an ongoing basis, Mr. Shikada will serve 75% of his time as General Manager (Director of Utilities) and 25% as Assistant City Manager. His position will be charged to the Enterprise Utility Departmental Funds and General Fund City Manager’s Office accordingly. 2) The addition of a Utilities Chief Operating Officer is anticipated to be offset with vacancy savings by holding authorized positions vacant and vacancy savings from the 25% of the Director of Utilities that is currently budgeted at 100% but will be filled at 75%. A review of the staffing is anticipated to take place with formal adjustments recommended subsequent to this report and following consultations with labor groups, as required. 3) The proposed restructure in the City Manager’s Office from two Assistant City Managers and one Economic Development Manager to two Deputy City Managers and two Assistant to the City Manager positions will result in a net add of 1.25 FTE and a net total compensation cost of approximately $233,000 on an ongoing basis - for the current Fiscal Year (FY 2017), this amount will be absorbed from vacancy savings. For future fiscal years, the new funding would be included as part of the recommended base budget for Council consideration. Staff will provide a revised Table of Organization and updated salary schedules to implement changes in titles and salaries for Council adoption on October 24, 2016, or sooner if possible. Policy Implications These recommendation is consistent with existing City Policies. Attachments:  Attachment A - Shikada Employment Agmt Amendment One - Oct 2016 final (PDF)  Attachment B - Shikada Employment Agreement 2015 (PDF) AMENDMENT NO. FIVE TO EMPLOYMENT AGREEMENT BETWEEN THE CITY OF PALO ALTO AND EDWARD SHIKADA This Amendment No. ONE to EMPLOYMENT AGREEMENT BETWEEN THE CITY OF PALO ALTO AND EDWARD SHIKADA (“Agreement”) is entered into on October __, 2016, by and between the CITY OF PALO ALTO, a California chartered municipal corporation (“City”), and EDWARD SHIKADA (“Shikada”), an individual, located at 250 Hamilton Avenue 7th Floor, Palo Alto, CA. R E C I T A L S: WHEREAS, the original EMPLOYMENT AGREEMENT BETWEEN THE CITY OF PALO ALTO AND EDWARD SHIKADA, attached hereto and incorporated herein as Exhibit “A” was entered into between the parties for the services of City Manager on or about October 5, 2015; and WHEREAS, the parties wish to amend the Agreement to revise SHIKADA’s title, duties and compensation to reflect a revised position of Utilities General Manager (Utilities Director)/Assistant City Manager; NOW, THEREFORE, in consideration of the covenants, terms, conditions, and provisions of this Amendment, the parties agree: SECTION 1: Section 1 of the Agreement, Employment, is hereby amended to read as follows: 1. Employment. Shikada has been serving as its Assistant City Manager since June 15, 2015 (“Employment Start Date”). Effective October 24, 2016, the City appoints Shikada as its Utilities General Manager (Utilities Director)/Assistant City Manager. Except as otherwise provided herein, Shikada’s employment with the City shall be governed by the City Council-adopted Compensation Plan for Management and Professional Personnel and Council Appointees, as it currently exists and may be changed from time to time. SECTION 2: Section 2 of the Agreement, Duties of the Assistant Manager, is hereby amended to read as follows: 2. Duties of the Utilities General Manager (Utilities Director)/Assistant City Manager. Shikada will perform the duties of the Utilities General Manager (Utilities Director)/Assistant City Manager in accordance with the City of Palo Alto Charter and City of Palo Alto Municipal Code, by direction given by the City Manager, and as otherwise provided by law, ordinance, or regulation. Shikada agrees to comply with all federal, state and local laws, ordinances, rules and regulations applicable to or associated with these duties. SECTION 3: Section 3 of the Agreement, Salary, is hereby amended to read as follows: 3.1 Salary. Upon appointment to Utilities General Manager (Utilities Director)/Assistant City Manager, Shikada will receive a base salary within the range for Utilities Director, as provided by the City Council-approved Compensation Plan for Management and Professional and Council Appointees, as it currently exists and may be changed from time to time. Shikada will receive an initial gross base annual salary of two hundred thirty-two thousand, six hundred sixty-eight dollars ($232,668), beginning on the Employment Start Date. Commencing on and continuing from the pay period including October 24, 2016, Shikada’s annual base salary shall be increased to Two Hundred Eighty Five Thousand and No/100 Dollars ($285,000), prorated and paid on the City’s normal paydays. 3.2 Payroll. Salary is subject to authorized or required deductions and witholdings, prorated and paid on City’s regular paydays. Shikada is an exempt employee under applicable wage and hour law and his base annual salary shall be compensation for all hours worked. The City agrees that the amount of Shikada’s base annual salary will not decrease, except as part of a permanent decrease that is consistent with the Fair Labor Standards Act. SECTION 4: Section 7 of the Agreement, Duration of Employment, is hereby amended to read as follows: 7. Duration of Employment. Shikada understands and agrees that he has no constitutionally protected property or other interest in his employment as Utilities General Manager (Utilities Director)/Assistant City Manager. Shikada waives any and all rights, if any, under the Merit System Rules and Regulations, including without limitation, the right to pre-or post-disciplinary due process. Shikada understands and agrees that he works at the will and pleasure of the City Manager and that he may be terminated or asked to resign at any time, with or without cause. Shikada may terminate this agreement (terminating all employment) upon 30 days written notice to the City Manager. SECTION 5: Except as herein modified, all other provisions of the Contract, including any exhibits and subsequent amendments thereto, shall remain in full force and effect. IN WITNESS WHEREOF, the parties have by their duly authorized representatives executed this Amendment on the date first above written. ATTEST: CITY OF PALO ALTO City Clerk Pat Burt, Mayor Date: APPROVED AS TO FORM: CITY MANAGER: City Attorney James. R. Keene, City Manager Date: SHIKADA: Edward Shikada Date: City of Palo Alto (ID # 7016) City Council Staff Report Report Type: Action Items Meeting Date: 10/4/2016 City of Palo Alto Page 1 Summary Title: Public Hearing - Adoption of Ordinances for 2016 Building Standards Title: PUBLIC HEARING: Adoption of Nine Ordinances to Adopt 2016 California Building Codes, Local Amendments, and Related Updates: (1) Repealing Chapter 16.04 of the Palo Alto Municipal Code and Amending Title 16 to Adopt a New Chapter 16.04, California Building Code, California Historical Building Code, and California Existing Building Code, 2016 Editions, and Local Amendments and Related Findings; (2) Repealing Chapter 16.05 of the Palo Alto Municipal Code and Amending Title 16 to Adopt a New Chapter 16.05, California Mechanical Code, 2016 Edition, and Local Amendments and Related Findings; (3) Repealing Chapter 16.06 of the Palo Alto Municipal Code and Amending Title 16 to Adopt a New Chapter 16.06, California Residential Code, 2016 Edition, and Local Amendments and Related Findings; (4) Repealing Chapter 16.08 of the Palo Alto Municipal Code and Amending Title 16 to Adopt a New Chapter 16.08, California Plumbing Code, 2016 Edition, and Local Amendments and Related Findings; (5) Repealing Chapter 16.14 of the Palo Alto Municipal Code and Amending Title 16 to Adopt a New Chapter 16.14, California Green Building Standard Code, 2016 Edition, and Local Amendments and Related Findings; (6) Repealing Chapter 16.16 of the Palo Alto Municipal Code and Amending Title 16 to Adopt a New Chapter 16.16, California Electrical Code, 2016 Edition, and Local Amendments and Related Findings; (7) Repealing Chapter 15.04 of the Palo Alto Municipal Code and Amending Title 15 to Adopt a new Chapter 15.04, California Fire Code, 2016 Edition, and Local Amendments and Related Findings; and (8) Adopt a New Title 16, Chapter 16.18 Private Swimming Pool and Spa Code, 2016 Edition and Local Amendments and Related Findings; (9) Amending Title 16, Chapters 16.36 House Numbering and 16.40 Unsafe Buildings for Local Amendments and Related Findings. Adoption of Categorical Exemptions under Sections 15305 and 15308 of the CEQA Guidelines. From: City Manager City of Palo Alto Page 2 Lead Department: Development Services Department Recommendation Staff recommends that the City Council conduct a public hearing and then adopt the attached nine ordinances, amending Title 16 of the Palo Alto Municipal Code. Seven of the ordinances adopt by reference and make local amendment to the various parts of the 2016 California Building Standards Code (CBSC), Title 24 of the California Code of Regulations (described further in the “Background” section of this report), along with the necessary findings of fact supporting each local amendment. An additional ordinance adopts a new Chapter 16.18 Private Swimming Pool and Spa Code, 2016 Edition and Local Amendments. The final ordinance makes minor amendments to Chapter 16.36 (House Numbering) and Chapter 16.40 (Unsafe Buildings) to conform with state law. Staff recommends adoption of categorical exemptions under sections 15305 and 15308 of the CEQA Guidelines. Executive Summary Every three years, the State of California adopts new building standards that are codified in Title 24 of the California Code of Regulations, referred to as the California Building Standards Code. Upon publication of the new Building Standards Code, local jurisdictions are allowed 180 days within which to amend the model State codes to enact more stringent local building standards. Such local amendments to the model State codes must be supported with findings that are based on unique local climatic, geologic and topographic conditions. To adopt the model State codes and local amendments, a public hearing must be held after which the various ordinances containing the proposed local amendments and findings for each part of the Building Standards Code can be passed. This report explains the process for adoption of the 2016 California Building Standards Code that will become effective statewide on January 1, 2017 and summarizes the proposed local amendments. The Private Swimming Pool and Spa Code, 2016 edition, is a model code published by the International Code Council, the same entity that develops the building codes on which the Title 24 Regulations are based. Background The nine ordinances are described below: 1. Ordinance repealing Chapter 16.04 of the Palo Alto Municipal Code and amending Title 16 to adopt a new Chapter 16.04, California Building Code, California Historical Building Code, and California Existing Building Code, 2016 Editions, and Local Amendments and Related Findings – The California Building Code (CBC) is the fundamental building code within the State of California that regulates most new building construction and is based on the 2015 International Building Code (IBC), written by the International Code Council (ICC), as amended by the California Building Standards Commission. The 2016 California City of Palo Alto Page 3 Historical Building Code (CHBC) is unique to California and prescribes building standards for designated historic structures aimed at balancing the goals of historic preservation with life, safety and accessibility concerns when the provisions of the regular building code cannot be achieved. The 2016 California Existing Building Code (CEBC) is based on the 2015 International Existing Building Code, also written by the ICC, as amended by the Building Standards Commission. Similar to the CHBC, the CEBC prescribes alternative building standards for repairs to existing structures when the provisions of the regular code cannot be achieved. 2. Ordinance repealing Chapter 16.05 of the Palo Alto Municipal Code and amending Title 16 to adopt a new Chapter 16.05, California Mechanical Code, 2016 Edition, and Local Amendments and Related Findings – The California Mechanical Code (CMC) is based on the 2015 Uniform Mechanical Code (UMC), written by the International Association of Plumbing & Mechanical Officials (IAPMO), as amended by the Building Standards Commission, and prescribes standards for mechanical heating, ventilating and cooling systems, and appurtenant equipment, within buildings. 3. Ordinance repealing Chapter 16.06 of the Palo Alto Municipal Code and amending Title 16 to adopt a new Chapter 16.06, California Residential Code, 2016 Edition, and Local Amendments and Related Findings – The California Residential Code (CRC) is based on the 2015 International Residential Code (IRC) which is written by the International Code Council, as amended by the Building Standards Commission. The Residential Code is a simplified version of the Building Code and prescribes building standards for low-rise (one and two-story), detached single and two-family dwelling units, and townhouses not more than three stories in height. 4. Ordinance repealing Chapter 16.08 of the Palo Alto Municipal Code and amending Title 16 to adopt a new Chapter 16.08, California Plumbing Code, 2016 Edition, and Local Amendments and Related Findings – The California Plumbing Code (CPC) is based on the 2015 Uniform Plumbing Code (UPC), also written by the IAPMO, as amended by the Building Standards Commission, and prescribes standards for water and wastewater distribution systems, and appurtenant equipment, within buildings. 5. Ordinance repealing Chapter 16.14 of the Palo Alto Municipal Code and amending Title 16 to adopt a new Chapter 16.14, California Green Building Standard Code, 2016 Edition, and Local Amendments and Related Findings – The California Green Building Standard Code (Cal Green) is unique to California. It is not based upon a model code nor adopted by reference. The purpose of Cal Green is to improve public health, safety and general welfare through enhancement of design and construction of buildings using building concepts reducing negative impacts or having positive environmental impacts and encouraging sustainable construction practices. As such, Cal Green along with City of Palo Alto amendments applies to planning, design, operation, construction, use and occupancy of residential and non-residential construction. City of Palo Alto Page 4 6. Ordinance repealing Chapter 16.16 of the Palo Alto Municipal Code and amending Title 16 to adopt a new Chapter 16.16, California Electrical Code, 2016 Edition– The 2016 California Electrical Code (CEC) is based on the 2014 National Electrical Code, written by the National Fire Protection Agency (NFPA), as amended by the Building Standards Commission, and prescribes standards for electrical supply and operating systems and appurtenant equipment within buildings. 7. Ordinance repealing Chapter 15.04 of the Palo Alto Municipal Code and amending Title 15 to Adopt a new Chapter 15.04, California Fire Code, 2016 Edition – The 2016 California Fire Code is based on the 2015 International Fire Code. The 2016 code improves upon the 2013 Standards for reducing hazards, increasing fire life safety, and property preservation. Most local amendments are derived from the collaborative efforts of the County Fire Marshal’s Association 8. Ordinance to adopt a new Chapter 16.18, Private Swimming Pool and Spa Code, 2016 Edition– The Private Swimming Pool and Spa Code is based on the 2015 International Swimming Pool and Spa Code (ISPSC) to regulate private residential swimming pools and spas. Although the Private Swimming Pool and Spa Code is not adopted as a statewide code in Title 24, it was developed to harmonize with the existing international building codes. 9. Ordinance amending Chapters 16.36, House Numbering, and 16.40, Unsafe Buildings – The proposed amendments to Chapter 16.36 would harmonize Palo Alto’s local ordinance on house numbering with related requirements in the California Building Code. The proposed amendments to Chapter 16.40 Unsafe Buildings would ease administrative enforcement and adopt an expanded definition of Substandard Residential Building to include mold, consistent with Health & Safety Code 17920 – 17928 and AB 655. Discussion Typically, a new edition of the CBSC is published and adopted by the State of California every three years, based substantially on the model uniform codes. Palo Alto last adopted new building codes in 2013. This year, the Building Standards Commission adopted and published a new edition of the CBSC based on the 2015 IBC and updated versions of other model codes. The new CBSC will become effective statewide on January 1, 2017, as published, unless local jurisdictions adopt more stringent amendments in accordance with State law. Generally, the local amendment process requires local authorities to make specific findings to support each local amendment, based on climatic, geologic or topographic conditions that are unique to each jurisdiction. For Palo Alto’s proposed local amendments, these findings of fact are attached to each Ordinance where applicable. City of Palo Alto Page 5 Many of the proposed local amendments to the 2016 California Building and Residential Codes are administrative in nature and are intended to maintain consistency with other provisions of the Municipal Code and reflect the City’s current policies and practices dealing with building code enforcement. The proposed local amendments that are technical in nature have been developed in concert with building officials, fire chiefs and code consultants from throughout the region to promote consistency across jurisdictions. A number of these amendments address aspects of the CBC or IRC that would otherwise allow less restrictive building design and construction practices than what currently exists, particularly with respect to structural analysis and seismic safety. Additionally, new repair and reconstruction standards are proposed for incorporation into the Building Code to meet the Federal Emergency Management Agency’s (FEMA’s) eligibility requirements for post-disaster funding assistance for repairs to public and private non-profit-owned buildings damaged in disasters. Other amendments to both the Building and Residential Codes ensure consistency with provisions of the 2016 California Fire Code that is being adopted concurrent with these codes. A few local amendments are proposed to the 2016 California Electrical and Mechanical Codes that take into account climatic and geological uniqueness of Palo Alto while several are proposed to the Plumbing Code. These Plumbing Code amendments are intended to promote consistency with Palo Alto’s Sewer Use Ordinance (PAMC Chapter 16.09) and support the City’s efforts to reduce copper and other heavy metal discharges from the Wastewater Treatment Plant, in addition to water conservation, (e.g. the prohibition of single-pass cooling systems). The development of the Cal Green Code is intended to, cause a reduction in greenhouse gas emissions from buildings; (2) promote environmentally responsible, cost-effective, healthier places to live and work; and (3) reduce energy and water consumption. Local amendments to the Cal Green code have been developed into the Green Building ordinance with collaboration from the Green Building Advisory Group. Significant technical changes to the Green Building ordinance were adopted previously by Council on April 20, 2015. The local amendments proposed for the upcoming code cycle contain several administrative updates to coordinate with new industry standards. In addition, the local ordinance contains a new deconstruction survey with the intent of increasing the amount of building deconstruction occurring within Palo Alto. All single-family dwelling units that are required to obtain a demolition permit must also complete a deconstruction survey. The survey will include a list of materials that are reusable in the project as well as the value of such materials. Development Services is collaborating with local building reuse organizations to create an educational opportunities related to deconstruction for the community. Local amendments to the 2016 California Fire Code are recommended primarily in the areas of provision of site maps for fire permit final, clarifications relating to smoke detectors and fire sprinklers. City of Palo Alto Page 6 The adoption for the 2015 International Swimming Pool and Spa Code incorporates the latest in pool safety standards, including envelopes and diving equipment requirements, as well as ladder, stair, and deck requirements. Local amendments to the California Building Code, California Residential Code, California Electrical Code, California Mechanical Code, California Plumbing Code, Cal Green Code and the International Swimming Pool and Spa Code were presented to the Development Center Advisory Group, DCAG and to the internal Interdisciplinary city departments, e.g., Planning, Public Works, Utilities, Fire, for their review and comments, that have been incorporated. Amendments to the Unsafe Buildings code was amended to include to revised definition of Substandard Buildings from the California Health and Safety Code and Assembly Bill AB 655 to include visible mold growth as determined by a health officer or code enforcement officer, excluding the presence of mold that is minor and found on surfaces that can accumulate moisture as part of their properly functioning and intended use. According to the Building Standards Commission, adoption of the new state model codes will maintain the ISO Class I status from the insurance industry’s Building Code Effectiveness Grading for California communities, which insurance companies can then use to grant premium credits for buildings constructed and enforced under the latest codes. These ratings were downgraded in prior years because California had not adopted the latest model codes. Conclusion Consistent with State law, the California Codes will go into effect in Palo Alto on January 1, 2017, unless amended by local ordinance adopted prior to January 1. Thus, Palo Alto’s local amendments will be effective on January 1, 2017, when the model codes will otherwise go into effect statewide. Prior to the effective date, Building Division staff will undergo comprehensive training on the new codes and an outreach and public education effort aimed at the design and construction sectors that regularly work in Palo Alto will be implemented. Resource Impact Resource impacts from the adoption of these ordinances are limited to staff training costs, purchasing copies of the new codes and implementation of public outreach efforts. Policy Implications The State of California mandates enforcement of the updated California Building Standards Code and it will go into effect regardless of the City’s action or lack of action. The City does have discretion to adopt local amendments to the CBSC, which must be effective by January 1, 2017. These local amendments to building codes adhere to and are consistent with the City of Palo Alto’s S/CAP (Sustainability/ Climate Action Plan) and the Comprehensive Plan. City of Palo Alto Page 7 In December 2007, the City Council amended its Green Building Policy for City Facilities to require that new City buildings over 5,000 square feet be designed to achieve LEED Silver or an equivalent rating system certification (CMR 436:07). In evaluating the Green Building and Energy Reach Code requirements that are recommended for adoption in this code cycle, the City’s green building consultant found that Palo Alto’s local amendments to the 2016 codes will substantially meet the current LEED Silver requirements in almost all areas. Accordingly, staff has determined that compliance with the 2016 codes and local amendments currently represents a level of green building design equivalent to LEED Silver and may apply these standards in lieu of LEED Silver for new City facilities. Environmental Review This action is exempt from the California Environmental Quality Act, CEQA Guidelines, Section 15308 (Class 8) Actions by Regulatory Agencies for Protection of the Environment and Section 15305 (Class 5) Minor alterations in Land Use Limitations and Section 15061 of the CEQA Guidelines, because it can be seen with certainty that there is no possibility that the local amendments adopted will have a significant effect on the environment. Attachments:  Attachment A: ORD Amending Ch 16.04 Building Code (PDF)  Attachment B: ORD Amending Ch 16.14 Green Building Stds Code (PDF)  Attachment C: ORD Amending Ch 16.08 2016 Plumbing Code 8-25-16 (PDF)  Attachment D: ORD Amending Ch 16.06 2016 Residential Code 8-25-16 (PDF)  Attachment E: ORD Amending Ch 16.16 2016 Electrical Code 8-25-16 (PDF)  Attachment F: ORD Amending Ch 16.05 Mechanical Code (PDF)  Attachment G: ORD Amending Ch 15.05 2016 Fire Code (PDF)  Attachment H: ORD Amending Ch 16.18 2015 Intl Pool Code 8-29-16 (PDF)  Attachment I: ORD Amending Chs 16.36 House Numbering and 16.40 Unsafe Bldgs 8-29- 16 (PDF) NOT YET APPROVED 1 160831 sh 016/Dev Services/2016 Code Cycle/Final Codes/2016-08-25 (2016 Code Cycle) ORD Amending Ch 16.04 Building Code Ordinance No. ____ Ordinance of the Council of the City of Palo Alto Repealing Chapter 16.04 of the Palo Alto Municipal Code and Amending Title 16 to Adopt a New Chapter 16.04, California Building Code, California Historical Building Code, and California Existing Building Code, 2016 Editions, and Local Amendments and Related Findings The Council of the City of Palo Alto does ORDAIN as follows: SECTION 1. Chapter 16.04 of the Palo Alto Municipal Code is hereby amended by repealing in its entirety and adopting a new Chapter 16.04 to read as follows: 16.04.010 2016 California Building Code adopted. The California Building Code, 2016 Edition, Title 24, Part 2 of the California Code of Regulations, together with those omissions, amendments, exceptions and additions thereto, is adopted and hereby incorporated in this Chapter by reference and made a part hereof the same as if fully set forth herein. Unless superseded and expressly repealed, references in City of Palo Alto forms, documents and regulations to the chapters and sections of the former California Code of Regulations, Title 24, 2013, shall be construed to apply to the corresponding provisions contained within the California Code of Regulations, Title 24, 2016. Ordinance No. 5216 of the City of Palo Alto and all other ordinances or parts of ordinances in conflict herewith are hereby suspended and expressly repealed. Wherever the phrases “California Building Code” or “Building Code’ are used in this code or any ordinance of the City, such phrases shall be deemed and construed to refer and apply to the California Building Code, 2016 Edition, as adopted by this chapter. One copy of the California Building Code, 2016 Edition, has been filed for use and examination of the public in the Office of the Building Official of the City of Palo Alto. 16.04.020 2016 California Building Code Appendix Chapters adopted. The following Appendix chapter and section of the California Building Code, 2016 Edition, are adopted and hereby incorporated in this Chapter by reference and made a part hereof the same as if fully set forth herein: A. Appendix I – Patio Covers B. Section J109.4 – Drainage across Property Lines (Appendix J) // ATTACHMENT A NOT YET APPROVED 2 160831 sh 016/Dev Services/2016 Code Cycle/Final Codes/2016-08-25 (2016 Code Cycle) ORD Amending Ch 16.04 Building Code 16.04.030 Cross - References to California Building Code. The provisions of this Chapter contain cross-references to the provisions of the California Building Code, 2016 Edition, in order to facilitate reference and comparison to those provisions. 16.04.040 Section 1.11.2.1.1 Duties and powers of the enforcing agency/Enforcement. Section 1.11.2.1.1 of Chapter 1, Division I of the California Building Code is amended to read: 1.11.2.1.1 The responsibility for enforcement of building standards adopted by the State Fire Marshal and published in the California Building Standards Code relating to fire and panic safety and other regulations of the State Fire Marshal shall, except as provided in Section 1.11.2.1.2, be as follows: 1. The city, county or city and county with jurisdiction in the area affected by the standard or regulation shall delegate the enforcement of the building standards relating to fire and panic safety and other regulations of the State Fire Marshal as they relate to Group R-3 occupancies, as described in Section 310.1 of Part 2 of the California Building Standards Code, to both enforcement divisions specific to their areas of enforcement disciplines: 1.1 The chief of the fire authority of the city, county or city and county, or an authorized representative and; 1.2. The chief building official of the city, county or city and county, or an authorized representative. 16.04.050 Violations -- Penalties. Any person, firm or corporation violating any provision of this chapter is guilty of a misdemeanor and upon conviction thereof shall be punished as provided in subsection (a) of Section 1.08.010 of this code. Each separate day or any portion thereof during which any violation of this chapter occurs or continues shall be deemed to constitute a separate offense, and upon conviction thereof shall be punishable as provided in this section. When the building official determines that a violation of this chapter or chapters 16.05, 16.06, 16.08, 16.14, 16.16 or 16.17 of this code has occurred, he/she may record a notice of pendency of code violation with the Office of the County Recorder stating the address and owner of the property involved. When the violation has been corrected, the building official shall issue and record a release of the notice of pendency of code violation. 16.04.060 Enforcement -- Citation authority. The employee positions designated in this section may enforce the provisions of this chapter by the issuance of citations; persons employed in such positions are authorized to exercise the authority provided in Penal Code section 836.5 and are authorized to issue citations for violations of this chapter. The designated employee positions are: (1) chief building official; (2) building inspection supervisor; and (3) code enforcement officer. NOT YET APPROVED 3 160831 sh 016/Dev Services/2016 Code Cycle/Final Codes/2016-08-25 (2016 Code Cycle) ORD Amending Ch 16.04 Building Code 16.04.70 Local Amendments. The provisions of this Chapter shall constitute local amendments to the cross-referenced provisions of the California Building Code, 2016 Edition, and shall be deemed to replace the cross- referenced sections of said Code with the respective provisions set forth in this Chapter. 16.04.080 Section 105.1.3 Demolition permits. Section 105.1.3 of Chapter 1, Division II of the California Building Code is added to read: 105.1.3 Demolition permits. In addition to other requirements of law, every person seeking a permit to demolish a unit used for residential rental purposes shall furnish an affidavit or declaration under penalty of perjury that the unit proposed to be demolished is vacant, or that notice to vacate has been given to each tenant lawfully in possession thereof as required by law or by the terms of such tenancy. No work or demolition shall begin upon any portion of such a unit until each and every portion has been vacated by all tenants lawfully in possession thereof. 16.04.85 Section 105.3.2 Time limitation of application. Section 105.3.2 of Chapter 1, Division II of the California Building Code is amended to read: Section 105.3.2 Time limitation of application. An application for a permit for any proposed work shall be deemed to have been abandoned 365 days after the date of filing, unless such application has been pursued in good faith or a permit has been issued; except that the building official is authorized to grant one or more extensions and/or reactivations for additional periods not exceeding 90 days each. The extension shall be required in writing and justifiable cause demonstrated. 16.04.90 Section 105.5 Expiration. Section 105.5 of Chapter 1, Division II of the California Building Code is amended to read: 105.5 Expiration. Every permit issued shall become invalid unless the work on the site authorized by such permit is commenced within 180 days after its issuance, or if the work authorized on the site by such permit is suspended or abandoned for a period of 180 days after the time the work is commenced. For the purpose of this section, failure to progress a project to the next level of required inspection shall be deemed to be suspension of the work. The chief building official is authorized to grant, in writing, no more than three extensions and reactivations of permits that would otherwise expire or reactivations of expired permits, for periods not more than 180 days each and may require: 1) that the construction documents be revised to partially or fully comply with current codes; and 2) payment of a fee; and NOT YET APPROVED 4 160831 sh 016/Dev Services/2016 Code Cycle/Final Codes/2016-08-25 (2016 Code Cycle) ORD Amending Ch 16.04 Building Code 3) payment of a penalty pursuant to Chapter 16.62 of the Palo Alto Municipal Code, as it may be amended from time to time. Extensions and reactivations shall be requested in writing and justifiable cause demonstrated. Additional extensions or reactivations beyond three may only be granted with the approval of the City Council. 105.5.1 Term Limit for Permits. All work associated with a building permit must be completed, and final inspection issued, within 48 months of permit issuance. 16.04.100 Section 109.6 Refunds. Section 109.6 of Chapter 1, Division II of the California Building Code is amended to read: 109.6 Refunds The building official or the permit center manager may authorize the refund of any fee paid hereunder which was erroneously paid or collected. The building official or the permit center manager may authorize the refund of not more than eighty percent (80%) of the Permit Fee paid when no work has occurred under a permit issued pursuant to this Chapter. The building official or the permit center manager may authorize the refund of not more than eighty percent (80%) of the Plan Review Fee paid when a permit application is withdrawn or canceled before any plan review work has started. 16.04.110 Section 109.7 Re-Inspection Fees. Section 109.7 of Chapter 1, Division II of the California Building Code is added to read: 109.7 Re-Inspection Fees. A Re-Inspection Fee may be assessed/authorized by the building official or the building inspection supervisor for each re-inspection required when work for which an inspection is requested is not ready for inspection or when required corrections noted during prior inspections have not been completed. A “Re- Inspection Fee” may be assessed/authorized when; 1. The inspection record card is not posted or otherwise available on the work site, 2. The approved plans are not readily available for the inspector at the time of inspection, 3. The inspector is unable to access the work at the time of inspection, or; 4. When work has substantially deviated from the approved plans without the prior approval of the building official. 5. When a Re-Inspection Fee is assessed, additional inspection of the work will not be performed until the fee has been paid. 16.04.115 Section 110.2.1 Preliminary accessibility compliance inspection. Section 110.2.1 of Chapter 1, Division II of the California Building Code is added to read: 110.2.1 Preliminary accessibility compliance inspection. Before issuing a permit, the building official or designee is authorized to examine or cause to be examined the pre- NOT YET APPROVED 5 160831 sh 016/Dev Services/2016 Code Cycle/Final Codes/2016-08-25 (2016 Code Cycle) ORD Amending Ch 16.04 Building Code construction accessibility compliance conditions of the buildings, structures, and sites for which an application has been filed. 16.04.120 Section 110.3.3 Lowest Floor Elevation. Section 110.3.3 of Chapter 1, Division II of the California Building Code is amended to read: 110.3.3 Lowest Floor Elevation. In flood hazard areas, upon placement of the lowest floor, including the basement, and prior to further vertical construction, the elevation certification shall be submitted to City Public Works Engineering for inspection approval prior to foundation inspection by City Building Inspection. 16.04.130 Section 111.1 of Division II – Use and occupancy. Section 111.1 of Chapter 1, Division II of the California Building Code is amended to read: 111.1 Use and occupancy. No building or structure shall be used or occupied, and no change in the existing occupancy classification of a building or structure or portion thereof shall be made, until the building official has issued a certificate of occupancy therefor as provided herein. Issuance of a certificate of occupancy shall not be construed as an approval of a violation of the provisions of this code or of other ordinances of the jurisdiction. Exception: Certificates of occupancy are not required for: 1. Work exempt from permits under Section 105.2 and: 2. Group R – Division 3 occupancies 3. Group U occupancies 111.1.1 Change of occupancy or tenancy. Each change of occupancy, official name or tenancy of any building, structure or portion thereof, shall require a new certificate of occupancy, whether or not any alterations to the building are required by this code. If a portion of any building does not conform to the requirements of this code for a proposed occupancy, that portion shall be made to conform. The building official may issue a new certificate of occupancy without requiring compliance with all such requirements if it is determined that the change in occupancy or tenancy will result in no increased hazard to life or limb, health, property or public welfare. When application is made for a new certificate of occupancy under this section, the building official and fire chief shall cause an inspection of the building to be made. The inspector(s) shall inform the applicant of those alterations necessary, or if none are necessary, and shall submit a report of compliance to the building official. NOT YET APPROVED 6 160831 sh 016/Dev Services/2016 Code Cycle/Final Codes/2016-08-25 (2016 Code Cycle) ORD Amending Ch 16.04 Building Code Before any application for a new certificate of occupancy is accepted, a fee shall be paid by the applicant to cover the cost of the inspection of the building required by the change of occupancy or tenancy. 16.04.140 Section 111.3 of Division II – Temporary occupancy. Section 111.3 of Division II of the California Building Code is amended to read: 111.3 Temporary occupancy. The building official is authorized to issue a temporary certificate of occupancy before the completion of the entire work covered by the permit, or as otherwise required, provided that such portion or portions shall be occupied safely. The building official shall set a time period during which the temporary certificate of occupancy is valid. 16.04.150 Section 111.5 Posting. Section 111.5 of Chapter 1, Division II of the California Building Code is added to read: 111.5 Posting. The certificate of occupancy shall be posted in a conspicuous, readily accessible place in the building or portion of building to be occupied and shall not be removed except when authorized by the building official. 16.04.153 Section 115 Stop Work Order. Section 115 of Chapter 1, Division II of the California Building Code is amended to read: SECTION 115 STOP WORK ORDER 115.1 Authority. Whenever the building official finds any work regulated by this code being performed in a manner that is contrary to the provisions of this code, without a permit, beyond the scope of the issued permit, in violation of the Palo Alto Municipal Code or Zoning Ordinance, or dangerous or unsafe, the building official is authorized to issue a stop work order. 115.2 Issuance. The stop work order shall be in writing and shall be posted in a visible location near the location where the work is being conducted. If the owner or owner’s agent is not on site at the time of posting, a notice advising the reasons for the stop work order issuance shall be hand delivered or mailed first-class to the owner of the property involved, or to the owner’s agent, or to the person doing the work. Upon issuance of a stop work order, the cited work shall immediately cease. The stop work order shall state the reason for the order, the conditions under which the cited work will be permitted to resume, and the name and contact information of the official or agency issuing the order. 115.3 Unlawful Continuance. Any person who continues to engage in any work after having been served with a stop work order, except such work as that person is directed to perform to remove a violation or unsafe condition, shall be guilty of a misdemeanor. NOT YET APPROVED 7 160831 sh 016/Dev Services/2016 Code Cycle/Final Codes/2016-08-25 (2016 Code Cycle) ORD Amending Ch 16.04 Building Code 115.4 Removal of Posted Stop Work Order. Any person who removes a posted stop work order without written consent of the Building Official shall be guilty of a misdemeanor. 115.5 Response Required. Violators receiving a stop work order are required to respond to the Building Division within five (5) business days of the issued notice to receive instructions on how to rescind the order. 115.6 Permit Application Required. A building permit application with construction or demolition plans and supporting (structural calculations, energy calculations, accessible access) documents must be submitted for approval within fifteen (15) working days following response to the Building Division. Plans will be reviewed and correction letters issued or permit application approved by the Building Division. A response to any correction letter must be submitted within fifteen (15) working days of the date of the correction letter. Ten working days will be required to review this second submission and a permit approved for issuance. Permits ready for issuance must be issued within 5 working days thereafter. All construction must be inspected as work progresses and signed off by all (affected) departments within 180 days of building permit issuance. 115.7 Stop Work Order Penalty. The Building Official may impose Stop Work Order Penalties in accordance with Section 1.14.050 of this code and/or other applicable law. 16.04.155 Section 501.2 Address identification. Section 501.2 of Chapter 5 of the California Building Code is amended to read: 501.2 Address identification. New and existing buildings shall be provided with approved address numbers or letters. Each character shall be not less than 4 inches (102 mm) in height and not less than 0.5 inches (12.7 mm) in width. They shall be installed on a contrasting background and be plainly visible from the street or road fronting the property. When required by the fire code official, address numbers shall be provided in additional approved locations to facilitate emergency response. Where access is by means of a private road and the building address cannot be viewed from the public way, a monument, pole or other approved sign or means shall be used to identify the structure. Address numbers shall be maintained. 501.2.1 Address illumination. Address identification required by Section 501.2 shall be illuminated. 501.2.2 Address identification size. Address numbers and letters shall be sized as follows: 1. When the structure is between thirty-six (36) and fifty (50) feet from the road or other emergency means of access, a minimum of one-half inch (0.5”) stroke by six inches (6”) high is required. NOT YET APPROVED 8 160831 sh 016/Dev Services/2016 Code Cycle/Final Codes/2016-08-25 (2016 Code Cycle) ORD Amending Ch 16.04 Building Code 2. When the structure is fifty (50) or more feet from the road or other emergency means of access, a minimum of one inch (1”) stroke by nine inches (9”) high is required. 3. Numbers shall be contrasting to the adjacent surfaces. 16.04.160 Section 702A Definitions – Wildland-Urban Interface Fire Area. Section 702A of Chapter 7A of the California Building Code is amended include the following definition of “Wildland-Urban Interface Fire Area”: WILDLAND-URBAN INTERFACE FIRE AREA is a geographical area identified by the State of California as a “Fire Hazard Severity Zone” in accordance with Public Resources Code Sections 4201 through 4202 and Government Code Sections 51175 through 51189, or other areas designated by the enforcing agency to be at a significant risk from wildfires. Within the city limits of the City of Palo Alto, “Wild Land-Urban Fire Interface Area” shall also include all areas west of Interstate 280, and all other areas recommended as a “Very High Fire Hazard Severity Zone” by the Director of the California Department of Forestry. 16.04.170 Section 902.1 Definitions. Section 902.1 of Chapter 9 the California Building Code is amended to include the following definitions: DUAL SENSOR PHOTOELECTRIC/IONIZATION SMOKE DETECTOR OR ALARM. A smoke alarm or detector that utilizes both photoelectric and ionization methods in a single device. DUAL SENSOR CARBON MONOXIDE AND SMOKE ALARM. A combination carbon monoxide and smoke alarm or detector that senses both smoke and CO in a single device. PHOTOELECTRIC SMOKE DETECTOR OR ALARM. A smoke alarm or detector that uses a light-source to detect the presence of smoke. 16.04.180 Section 903.2 – Automatic Sprinkler Systems, Where Required. Section 903.2 of Chapter 9 the California Building Code is amended to read as follows: 903.2 Automatic sprinkler systems, where required. Approved automatic sprinkler systems in new buildings and structures and in existing modified buildings and structures, shall be provided in the locations described in this section. Automatic fire sprinklers shall be installed per the requirements set forth in Sections 903.2.1 through 903.2.18 and as follows, whichever is the more restrictive: 1. An automatic sprinkler system shall be provided throughout all new buildings and structures. NOT YET APPROVED 9 160831 sh 016/Dev Services/2016 Code Cycle/Final Codes/2016-08-25 (2016 Code Cycle) ORD Amending Ch 16.04 Building Code Exception: New non-residential occupancies, buildings or structures that do not exceed 350 square feet of building area. 2. An automatic sprinkler system shall be provided for all existing buildings or structures where modifications have been determined by the Building Official to trigger requirements for seismic retrofit. 3. An automatic sprinkler system shall be provided throughout all existing buildings when modifications are made that create conditions described in Sections 903.2.1 through 903.2.18, or that create an increase in fire area to more than 3600 square feet or when the addition is equal or greater than 50% of the existing building square footage whichever is more restrictive. 4. An automatic sprinkler system shall be provided throughout all new basements regardless of size and throughout existing basements that are expanded by more than 50% or is conditioned for use. If the addition is only the basement, then only the basement is required to be fire sprinkler protection. 5. An automatic sprinkler system shall be installed throughout when either the roof structure or exterior wall structure have been removed and/ or replaced by at least 50% of the existing structure. 6. An automatic sprinkler system shall be installed throughout when any change in use or occupancy creating a more hazardous fire/life safety condition, as determined by the Fire Chief. 16.04.190 Section 903.3.1.1 NFPA sprinkler systems. Section 903.3.1.1 of Chapter 9 of the California Building Code is amended to read as follows: 903.3.1.1 NFPA 13 sprinkler systems. Where the provisions of this code require that a building or portion thereof be equipped throughout with an automatic sprinkler system in accordance with this section, sprinklers shall be installed throughout in accordance with NFPA 13 and State and local requirements except as provided in Section 903.3.1.1. 1. For new buildings having no designated use or tenant, the minimum sprinkler design density shall be Ordinary Hazard Group II. 2. Where future use or tenant is determined to require a higher density, the sprinkler system shall be augmented to meet the higher density. 16.04.200 Section 903.3.1.2 – NFPA 13R sprinkler systems. Section 903.3.1.2 of Chapter 9 of the California Building Code is amended to read as follows: NOT YET APPROVED 10 160831 sh 016/Dev Services/2016 Code Cycle/Final Codes/2016-08-25 (2016 Code Cycle) ORD Amending Ch 16.04 Building Code 903.3.1.2 NFPA 13R sprinkler systems. Where allowed in buildings of Group R Occupancies, up to and including four stories in height, automatic sprinkler systems shall be installed throughout in accordance with NFPA 13 and State and local standards. 16.04.210 Section 903.3.1.3 – NFPA 13D sprinkler systems. Section 903.3.1.3 of Chapter 9 of the California Building Code is amended to read as follows: 903.3.1.3 NFPA 13D sprinkler systems. Where allowed, automatic sprinkler systems installed in one-and two-family detached dwellings and townhouses shall be installed throughout in accordance with NFPA 13D and State and local standards. 16.04.220 Reserved 16.04.230 Reserved 16.04.240 Section 903.4.3 - Floor control valves. Section 903.4.3 of the California Building Code is amended to read as follows: 903.4.3 Floor control valves. Automatic sprinkler systems serving buildings two (2) or more stories in height shall have valves installed so as to control the system independently on each floor including basements. 16.04.250 Section 907.2.11 - Single- and multiple-station smoke alarms. Section 907.2.11 of Chapter 9 of the California Building Code is amended to read as follows: 907.2.11 Single- and multiple-station smoke alarms. Listed single- and multiple-station smoke alarms complying with UL217 shall be installed in accordance with Sections 907.2.11.1 through 907.2.11.5 and manufacturers’ installation and use instructions. Smoke alarms and smoke detectors shall be in compliance with this code or subject to the provisions of the Health and Safety Code, they shall also be listed and approved for rapid response to smoldering synthetic materials. All smoke alarms or detectors shall be of the photoelectric type or shall have equivalent detection capabilities in compliance with UL 217. Exception: A combination photoelectric/ionization smoke alarm or detector may be used if located no closer than 20 feet to a kitchen, bathroom, fireplace or woodburning appliance. 16.04.255 Section 1203.6 Ventilation of weather-exposed enclosed assemblies. Section 1203.6 of Chapter 12 of the California Building Code is added to read: NOT YET APPROVED 11 160831 sh 016/Dev Services/2016 Code Cycle/Final Codes/2016-08-25 (2016 Code Cycle) ORD Amending Ch 16.04 Building Code 1203.6 Ventilation of weather-exposed enclosed assemblies. Exterior projecting elements and appurtenances exposed to the weather and sealed underneath, including but not limited to balconies, landings, decks, and stairs, shall have cross ventilation for each separate enclosed space by ventilation openings protected against the entrance of rain and snow. Blocking and bridging shall be arranged so as not to interfere with the movement of air. The net free ventilating area shall not be less than 1/150th of the area of the space ventilated. Ventilation openings shall comply with Section1203.2.1. An access panel of sufficient size shall be provided on the underside of the enclosed space to allow for periodic inspection. Exceptions: 1. An access panel is not required where the exterior coverings applied to the underside of joists are easily removable using only common tools. 2. Removable soffit vents of at least four inches (4”) in width can be used to satisfy both ventilation and access panel requirements. 16.04.260 Section 1206.3.4 – Roof guardrails at interior courts. Section 1206.3.4 of Chapter 12 of the California Building Code is added to read: 1206.3.4 Roof guardrails at interior courts. Roof openings into interior courts that are bounded on all sides by building walls shall be protected with guardrails. The top of the guardrail shall not be less than 42 inches in height above the adjacent roof surface that can be walked on. Intermediate rails shall be designed and spaced such that a 12 inch diameter sphere cannot pass through. Exception: Where the roof opening is greater than 600 square feet in area. 16.04.265 Section 1404.13 Projections exposed to weather. Section 1404.13 of Chapter 14 of the California Building Code is added to read: 1404.13 Projections exposed to weather. Floor projections exposed to the weather and sealed underneath, including but not limited to balconies, landings, decks, and stairs shall be constructed of naturally durable wood, preservative-treated wood, corrosion-resistant (e.g. galvanized) steel, or similar approved materials. 16.04.270 Section 1503.2.1 Flashing Locations. Section 1503.2.1 of Chapter 15 of the California Building Code is amended to read: 1503.2.1 Locations. Flashing shall be installed at wall and roof intersections, gutters, wherever there is a change in roof slope or direction, and around roof openings. Where flashing is of metal, the metal shall be corrosion resistant with a thickness of not less than 0.019 inches (0.483 mm) (e.g. no. 26 galvanized sheet) and shall be primed and painted. // NOT YET APPROVED 12 160831 sh 016/Dev Services/2016 Code Cycle/Final Codes/2016-08-25 (2016 Code Cycle) ORD Amending Ch 16.04 Building Code 16.04.275 Section 1616.10.15 ASCE 7, Section 13.1.4 Section 1616.10.15 of Chapter 16 of the California Building Code is amended to include the following: 13.1.4 Exemptions. The following nonstructural components are exempt from the requirements of this section: [. . .] 6. [. . .] c. Flexible connections are provided at seismic separation joints and between the component and associated ductwork, piping, and conduit; and one of the following applies: [. . .] or iii. The component weights 200 lb (890N) or less and is suspended from roof/floor or mounted on wall. 16.04.280 Section 1612.1.1 - Palo Alto Flood Hazard Regulations. Section 1612.1.1 of Chapter 16 of the California Building Code is added to read: 1612.1.1 Palo Alto Flood Hazard Regulations. Notwithstanding the provisions of Section 1612.1, all construction or development within a flood hazard area (areas depicted as a Special Flood Hazard Area on Flood Insurance Rate Maps published by the Federal Emergency Management Agency) shall comply with the City of Palo Alto Flood Hazard Regulations (Palo Alto Municipal Code Chapter 16.52). Where discrepancies exist between the requirements of this code and said regulations, the provisions of said regulations shall apply. 16.04.290 Section 1705.3 Concrete Construction. Section 1705.3 of Chapter 17 of the California Building Code is amended to read: 1705.3 Concrete construction. The special inspections and verifications for concrete construction shall be as required by this section and Table 1705.3. Exception: Special inspections shall not be required for: 1. Isolated spread concrete footings of buildings three stories or less above grade plane that are fully supported on earth or rock, where the structural design of the footing is based on a specified compressive strength, f’c, no greater than 2,500 pound per square inch (psi). 2. Continuous concrete footings supporting walls of buildings three stories or less above grade plane that are fully supported on earth or rock where: 2.1. The footings support walls of light-frame construction; 2.2. The footings are designed in accordance with Table 1809.7; or 2.3. The structural design of the footing is based on a specified compressive strength, f ′c, no greater than 2,500 pounds per square inch (psi) (17.2 NOT YET APPROVED 13 160831 sh 016/Dev Services/2016 Code Cycle/Final Codes/2016-08-25 (2016 Code Cycle) ORD Amending Ch 16.04 Building Code MPa), regardless of the compressive strength specified in the construction documents or used in the footing construction. 3. Nonstructural concrete slabs supported directly on the ground, including pre- stressed slabs on grade, where the effective pre-stress in the concrete is less than 150 psi (1.03 MPa). 4. Concrete foundation walls constructed in accordance with Table 1807.1.6.2. 5. Concrete patios, driveways and sidewalks, on grade. 16.04.300 Table 1809.7 Prescriptive Footings Supporting Walls of Light-Frame Construction. Table 1809.7 of Chapter 18 of the California Building Code is amended to read: TABLE 1809.7 Prescriptive Footings Supporting Walls of Light-Frame Constructionabcd Number of Floors Supported by the Footing e Thickness of Foundation Wall (inches) Width of Footing (inches) Thickness of Footing (inches) Depth of Foundation Below Natural Surface of Ground or Finish Grade (inches) 1&2 8 15 8 20 3 8 18 8 30 Group U Occupancies 8 12 8 12 a. The ground under the floor shall be permitted to be excavated to the elevation of the top of the footing. b. Interior stud-bearing walls shall be permitted to be supported by isolated footings. The footing width and length shall be twice the width shown in this table, and footings shall be spaced not more than 6 feet on center. c. See Section 1905 for additional requirements for concrete footings of structures assigned to Seismic Design Category C, D, E or F. d. All foundations as required in the above Table shall be continuous and have a minimum of three #4 bars of reinforcing steel, except for one story, detached accessory buildings of Group U occupancy where two bars are required. e. Footings shall be permitted to support a roof in addition to the stipulated number of floors. Footings supporting roof only shall be as required for supporting one floor. 16.04.310 Section 2308.9.3 Bracing. Section 2308.9.3 of Chapter 23 of the California Building Code is amended to read: NOT YET APPROVED 14 160831 sh 016/Dev Services/2016 Code Cycle/Final Codes/2016-08-25 (2016 Code Cycle) ORD Amending Ch 16.04 Building Code 2308.9.3 Bracing. Braced wall lines shall consist of braced wall panels that meet the requirements for location, type and amount of bracing as shown in Figure 2308.9.3, specified in Table 2308.9.3(1) and are in line or offset from each other by not more than 4 feet (1219 mm). Braced wall panels shall start not more than 121/2 feet (3810 mm) from each end of a braced wall line. Braced wall panels shall be clearly indicated on the plans. Construction of braced wall panels shall be by one of the following methods: 1. Wood boards of 5/8 inch (15.9 mm) net minimum thickness applied diagonally on studs spaced not over 24 inches (610 mm) o.c. 2. Wood structural panel sheathing with a thickness not less than 3/8 inch (9.5 mm) for 16-inch (406 mm) or 24-inch (610 mm) stud spacing in accordance with Tables 2308.9.3(2) and 2308.9.3(3). 3. Fiberboard sheathing panels not less than 1/2 inch (12.7 mm) thick applied vertically or horizontally on studs spaced not over 16 inches (406 mm) o.c. where installed with fasteners in accordance with Section 2306.6 and Table 2306.6. 4. Particleboard wall sheathing panels where installed in accordance with Table 2308.9.3(4). 5. Portland cement plaster on studs spaced 16 inches (406 mm) o.c. installed in accordance with Section 2510. 6. Hardboard panel siding where installed in accordance with Section 2303.1.6 and Table 2308.9.3(5). For cripple wall bracing, see Section 2308.6.6.2 . For all methods above, each panel must be at least 48 inches (1219 mm) in length, covering three stud spaces where studs are spaced 16 inches (406 mm) apart and covering two stud spaces where studs are spaced 24 inches (610 mm) apart. 16.04.315 Table 2308.6.1 – footnote c amended. Footnote “c” of table 2308.6.1 of Chapter 23 of the California Building Code is amended to read: c. Method GB, gypsum wallboard is prohibited in Seismic Design Categories D & E. 16.04.317 Table 2308.6.3(1) Bracing Methods. Table 2308.6.3(1) – Bracing Methods of Chapter 23 of the California Building Code is amended to add footnote “c” as follows: Table 2308.6.3(1) BRACING METHODS METHODS, MATERIAL MINIMUM THICKNESS FIGURE CONNECTION CRITERIAa,c Fasteners Spacing c. Method GB, gypsum wallboard is prohibited in Seismic Design Categories D & E. 16.04.320 Section 2308.12.5 Attachment of sheathing. Section 2308.12.5 of Chapter 23 of the California Building Code is amended to read: NOT YET APPROVED 15 160831 sh 016/Dev Services/2016 Code Cycle/Final Codes/2016-08-25 (2016 Code Cycle) ORD Amending Ch 16.04 Building Code 2308.12.5 Attachment of sheathing. Fastening of braced wall panel sheathing shall not be less than that prescribed in Table 2308.12.4 or 2304.9.1. Wall sheathing shall not be attached to framing members by adhesives. All braced wall panels shall extend to the roof sheathing and shall be attached to parallel roof rafters or blocking above with framing clips (18 gauge minimum) spaced at maximum 24 inches on center with four 8d nails per leg (total eight-8d nails per clip). Braced wall panels shall be laterally braced at each top corner and at maximum 24 inch intervals along the top plate of discontinuous vertical framing. 16.04.325 Section 3304.1 Excavation and fill. Section 3304.1 of Chapter 33 of the California Building Code is amended to read: 3304.1 Excavation and fill. Excavation and fill for buildings and structures shall be constructed or protected so as not to endanger life or property. Stumps and roots shall be removed from the soil to a depth of not less than 12 inches (305mm) below the surface of the ground in the area to be occupied by the building. Wood forms that have been used in placing concrete, if within the ground or between foundation sills and the ground, shall be removed before a building is occupied or used for any reason. Wooden stakes shall not be embedded in concrete. Before completion, loose or casual wood shall be removed from direct contact with the ground under the building. 16.04.330 2016 California Existing Building Code Adopted. The California Existing Building Code, 2016 Edition, Title 24, Part 10, which provides alternative building regulations for the rehabilitation, preservation restoration or relocation of existing buildings is adopted and hereby incorporated in this Chapter be reference and made a part hereof the same as if fully set forth herein. One copy of the California, 2016 Edition, has been filed for use and examination of the public in the Office of the Building Official of the City of Palo Alto. 16.04.335 2016 California Existing Building Code and International Existing Building Code Appendix Chapters Adopted. The following Appendix Chapters of the California Existing Building Code (CEBC), 2016 Edition, and International Existing Building Code (IEBC), 2015 Edition, are adopted and herby incorporated in this Chapter be reference and made a part hereof the same as if fully set forth herein: A. CEBC Appendix A1 – Seismic Strengthening Provisions for Unreinforced Masonry Bearing Wall Buildings B. IEBC Appendix Chapter A2 – Earthquake Hazard Reduction in Existing Reinforced Concrete and Reinforced Masonry Wall Buildings with Flexible Diaphragms. C. CEBC Appendix A3 – Prescriptive Provisions for Seismic Strengthening of Cripple Walls and Sill Plate Anchorage of Light, Wood-Frame Residential Buildings NOT YET APPROVED 16 160831 sh 016/Dev Services/2016 Code Cycle/Final Codes/2016-08-25 (2016 Code Cycle) ORD Amending Ch 16.04 Building Code D. CEBC Appendix A4 – Earthquake Risk Reduction in Wood-Frame Residential Buildings with Soft, Weak or Open Front Walls E. IEBC Appendix A5 – Earthquake Hazard Reduction in Existing Concrete Buildings 16.04.340 Section 403.13 – Suspended ceiling systems. Section 403.13 of the California Existing Building Code, Title 24, Part 10 is added to read: 403.13 Suspended ceiling systems. In existing buildings or structures, when a permit is issued for alterations or repairs, the existing suspended ceiling system within the area of the alterations or repairs shall comply with ASCE 7-10 Section 13.5.6. 16.04.345 Section 404.2.1 – Seismic Evaluation and Design Procedures for Repairs. Section 404.2.1 of the California Existing Building Code, Title 24, Part 10 is amended to read: 404.2.1 Evaluation and design procedures. The building shall be evaluated by a registered design professional, and the evaluation findings shall be submitted to the code official. The evaluation shall establish whether the damaged building, if repaired to its pre-damage state, would comply with the provisions of this code for wind and earthquake loads. Evaluation for earthquake loads shall be required if the substantial structural damage was caused by or related to earthquake effects or if the building is in Seismic Design Category C, D, E or F. The seismic evaluation and design shall be based on the procedures specified in the building code, ASCE 41 Seismic Evaluation and Upgrade of Existing Buildings. The procedures contained in Appendix A of the International Existing Building Code (IEBC) shall be permitted to be used as specified in Section 404.2.1. Wind loads for this evaluation shall be those prescribed in Section 1609. 404.2.1.1 CEBC level seismic forces. When seismic forces are required to meet the building code level, they shall be one of the following: 1. One hundred percent of the values in the building code. The R factor used for analysis in accordance with Chapter 16 of the building code shall be the R factor specified for structural systems classified as "Ordinary" unless it can be demonstrated that the structural system satisfies the proportioning and detailing requirements for systems classified as "intermediate" or "special". 2. Forces corresponding to BSE-1 and BSE-2 Earthquake Hazard Levels defined in ASCE 41. Where ASCE 41 is used, the corresponding performance levels shall be those shown in Table 404.2.1.1. NOT YET APPROVED 17 160831 sh 016/Dev Services/2016 Code Cycle/Final Codes/2016-08-25 (2016 Code Cycle) ORD Amending Ch 16.04 Building Code TABLE 404.2.1.1 ASCE 41 PERFORMANCE LEVELS RISK CATEGORY (BASED ON CBC TABLE 1604.5) PERFORMANCE LEVEL FOR USE WITH ASCE 41 BSE-1 EARTHQUAKE HAZARD LEVEL PERFORMANCE LEVEL FOR USE WITH ASCE 41 BSE-2 EARTHQUAKE HAZARD LEVEL * I Life Safety (LS) Collapse Prevention (CP) II Life Safety (LS) Collapse Prevention (CP) III Damage Control Limited Safety IV Immediate Occupancy (IO) Life Safety (LS) * Only applicable when Tier 3 procedure is used. 404.2.1.2 Reduced CEBC level seismic forces. When seismic forces are permitted to meet reduced building code levels, they shall be one of the following: 1. Seventy-five percent of the forces prescribed in the building code. The R factor used for analysis in accordance with Chapter 16 of the building code shall be the R factor as specified in Section 404.2.1.1. 2. In accordance with the California Existing Building Code and applicable chapters in Appendix A of the International Existing Building Code, as specified in Items a. through e. below. Structures or portions of structures that comply with the requirements of the applicable chapter in Appendix A shall be deemed to comply with the requirements for reduced building code force levels. a. The seismic evaluation and design of unreinforced masonry bearing wall buildings in Risk Category I or II are permitted to be based on the procedures specified in CEBC Appendix Chapter A1. b. Seismic evaluation and design of the wall anchorage system in reinforced concrete and reinforced masonry wall buildings with flexible diaphragms in Risk Category I or II are permitted to be based on the procedures specified in IEBC Appendix Chapter A2. c. Seismic evaluation and design of cripple walls and sill plate anchorage in residential buildings of light-frame wood construction in Risk Category I or II are permitted to be based on the procedures specified in CEBC Appendix Chapter A3 d. Seismic evaluation and design of soft, weak, or open-front wall conditions in multi-unit residential buildings of wood construction in Risk Category I or II are permitted to be based on the procedures specified in CEBC Appendix Chapter A4. e. Seismic evaluation and design of concrete buildings and concrete with masonry infill buildings in all risk categories are permitted to be based on the procedures specified in IEBC Appendix Chapter A5. NOT YET APPROVED 18 160831 sh 016/Dev Services/2016 Code Cycle/Final Codes/2016-08-25 (2016 Code Cycle) ORD Amending Ch 16.04 Building Code 3. Those associated with the BSE-1 Earthquake Hazard Level defined in ASCE 41 and the performance level as shown in Table 404.2.1.1. Where ASCE 41 is used, the design spectral response acceleration parameters SXS and SX1 shall not be taken less than seventy-five percent of the respective design spectral response acceleration parameters SDS and SD1 defined by the California Building Code and its reference standards. 16.04.350 2016 California Historical Building Code adopted. The California Historical Building Code, 2016 Edition, Title 24, Part 8 (authorized by Health and Safety Code Sections 18950 through 18961), which provides alternative building regulations for the rehabilitation, preservation, restoration, or relocation of designated historic buildings, is adopted and hereby incorporated in this Chapter by reference and made a part hereof the same as if fully set forth herein. One copy of the California Historical Building Code, 2016 Edition, has been filed for use and examination of the public in the Office of the Building Official of the City of Palo Alto. SECTION 2. The Council adopts the findings for local amendments to the California Building Code, 2016 Edition, attached hereto as Exhibit “A” and incorporated herein by reference. SECTION 3. Section 16.62.030 (Penalty for expired permits) of Chapter 16.62 (Expired Permits for Residential Construction and Demolition) of Title 16 (Building Regulations) of the Palo Alto Municipal Code is amended to read: A property owner shall be subject to the following penalties for violation of section 16.62.020: Time from Permit Expiration Penalty 0 to 30 days $0 31st day through 60th day $200.00 per day (i.e., $6,000.00 maximum penalty applicable to this 30-day period) 61st day through 120th day $400.00 per day (i.e., $24,000.00 maximum penalty applicable to this 60-day period) 121st day and every day thereafter $800.00 per day (a) For purposes of this section, if a renewed permit expires and the property owner has not advanced a project to the next level of required inspection, the calculation of penalties shall relate back to the date of the previous permit expiration. (b) The chief building official may reduce or waive a penalty accrued under this chapter upon finding that the property owner acted in good faith and either: (1) the delay was attributable to circumstances beyond the property owner’s control; or (2) imposition of NOT YET APPROVED 19 160831 sh 016/Dev Services/2016 Code Cycle/Final Codes/2016-08-25 (2016 Code Cycle) ORD Amending Ch 16.04 Building Code the full accrued penalty would harm the public interest, provided, however, that and reduction or waiver of more than $10,000 must be approved by the City Manager. SECTION 4. The Council finds that this ordinance is exempt from the provisions of the California Environmental Quality Act (“CEQA”), pursuant to Section 15061 of the CEQA Guidelines, because it can be seen with certainty that there is no possibility that the amendments herein adopted will have a significant effect on the environment. SECTION 5. This ordinance shall be effective on the thirty-first day after the date of its adoption. INTRODUCED: PASSED: AYES: NOES: ABSENT: ABSTENTIONS: ATTEST: ____________________________ ____________________________ City Clerk Mayor APPROVED AS TO FORM: APPROVED: ____________________________ ____________________________ Senior Deputy City Attorney City Manager ____________________________ Director of Development Services ____________________________ Director of Administrative Services NOT YET APPROVED 20 160831 sh 016/Dev Services/2016 Code Cycle/Final Codes/2016-08-25 (2016 Code Cycle) ORD Amending Ch 16.04 Building Code Exhibit A FINDINGS FOR LOCAL AMENDMENTS TO CALIFORNIA BUILDING CODE AND CALIORNIA EXISTING BUILDING CODE Section 17958 of the California Health and Safety Code provides that the City may make changes to the provisions of the California Building Standards Code. Sections 17958.5 and 17958.7 of the Health and Safety Code require that for each proposed local change to those provisions of the California Building Standards Code which regulate buildings used for human habitation, the City Council must make findings supporting its determination that each such local change is reasonably necessary because of local climatic, geological, or topographical conditions. Local building regulations having the effect of amending the uniform codes, which were adopted by the City prior to November 23, 1970, were unaffected by the regulations of Sections 17958, 17958.5 and 17958.7 of the Health and Safety Code. Therefore, amendments to the uniform codes which were adopted by the City Council prior to November 23, 1970, and have been carried through from year to year without significant change, need no required findings. Also, amendments to provisions not regulating buildings used for human habitation do not require findings. Code: CBC Section Title Add Amended Justification (See below for keys) 501.2 Address Identification  T 702A Wild Land-Urban Interface Fire Area  T 902.1 Definition (Dual Sensor Carbon Monoxide and Smoke Alarm)  T 903.2 Where Automatic Sprinklers Required  T 903.3.1.1 NFPA 13 Sprinkler Systems  T 903.3.1.2 NFPA 13R Sprinkler Systems  T 903.3.1.3 NFPA 13D Sprinkler Systems  T 903.4.3 Floor Control Valves  T 907.2.11 Single- and Multiple-Station Smoke Alarms  T 1203.6.1 Ventilation of Weather-Exposed, Enclosed Assemblies  G, T 1206.3.4 Roof Guardrails at Interior Courts  T 1404.13 Projections Exposed to Weather  G, T 1503.2.1 Flashing Locations  T NOT YET APPROVED 21 160831 sh 016/Dev Services/2016 Code Cycle/Final Codes/2016-08-25 (2016 Code Cycle) ORD Amending Ch 16.04 Building Code 1612.1.1 Palo alto Flood Hazard Regulations  C, T 1616.10.15 ASCE 7 Sec. 13.1.4  G 1705.3 Concrete Construction  G Table 1809.7 Prescriptive Footings Supporting Walls of Light Frame Construction  G 2308.9.3 Bracing  G Table 2306.1 & Table 2308.6.3(1) Wall Bracing in Seismic Design Categories D & E  G 2308.12.5 Attachment of Sheathing  G 3405.2.1 Evaluation and Design Procedures   T Appendix I Patio Covers  C Appendix J; section J109.4 Drainage Across Property Lines  T Code: CEBC Section Title Add Amended Justification (See below for keys) 403.13 Excavation and fill  G 404.2.1 Suspended Ceiling Systems   G CEBC Appendix A1 Seismic Strengthening Provisions for Unreinforced Masonry Bearing Wall Buildings  G IEBC Appendix A2 Earthquake Hazard Reduction in Existing Reinforced Concrete and Reinforced Masonry Wall Buildings with Flexible Diaphragms.  G CEBC Appendix A3 Prescriptive Provisions for Seismic Strengthening of Cripple Walls and Sill Plate Anchorage of Light, Wood- Frame Residential Buildings  G CEBC Appendix A4 Earthquake Risk Reduction in Wood- Frame Residential Buildings with Soft, Weak or Open Front Walls  G IEBC Appendix A5 Earthquake Hazard Reduction in Existing Concrete Buildings  G NOT YET APPROVED 22 160831 sh 016/Dev Services/2016 Code Cycle/Final Codes/2016-08-25 (2016 Code Cycle) ORD Amending Ch 16.04 Building Code Key to Justification for Amendments to Title 24 of the California Code of Regulations This amendment is justified on the basis of a local climatic condition. The seasonal climatic conditions during the late summer and fall create severe fire hazards to the public health and welfare in the City. The hot, dry weather frequently results in wild land fires on the brush covered slopes west of Interstate 280. The aforementioned conditions combined with the geological characteristics of the hills within the City create hazardous conditions for which departure from California Building Standards Code is required. C G T This amendment is justified on the basis of a local geological condition. The City of Palo Alto is subject to earthquake hazard caused by its proximity to San Andreas fault. This fault runs from Hollister, through the Santa Cruz Mountains, epicenter of the 1989 Loma Prieta earthquake, then on up the San Francisco Peninsula, then offshore at Daly City near Mussel Rock. This is the approximate location of the epicenter of the 1906 San Francisco earthquake. The other fault is Hayward Fault. This fault is about 74 mi long, situated mainly along the western base of the hills on the east side of San Francisco Bay. Both of these faults are considered major Northern California earthquake faults which may experience rupture at any time. Thus, because the City is within a seismic area which includes these earthquake faults, the modifications and changes cited herein are designed to better limit property damage as a result of seismic activity and to establish criteria for repair of damaged properties following a local emergency. The City of Palo Alto topography includes hillsides with narrow and winding access, which makes timely response by fire suppression and emergency response vehicles difficult. Palo Alto is contiguous with the San Francisco Bay, resulting in a natural receptor for storm and waste water run-off. Also the City of Palo Alto is located in an area that is potentially susceptible to liquefaction during a major earthquake. The surface condition consists mostly of stiff to dense sandy clay, which is highly plastic and expansive in nature. The aforementioned conditions within the City create hazardous conditions for which departure from California Building Standards Code is warranted. NOT YET APPROVED 1 160830 sh 016/Dev Services/2016 Code Cycle/Final Codes/2016-08-25 (2016 Code Cyle) ORD Amending Ch 16.14 Green Building Stds Code Ordinance No. ______ Ordinance of the Council of the City of Palo Alto Amending and Restating Chapter 16.14 of the Palo Alto Municipal Code, California Green Building Standards Code 2016 Edition, and Local Amendments and Related Findings The Council of the City of Palo Alto does ORDAIN as follows: SECTION 1. Chapter 16.14 of the Palo Alto Municipal Code is hereby amended by repealing in its entirety Chapter 16.14 and adopting a new Chapter 16.14 to read as follows: 16.14.010 2016 California Green Building Standards Code adopted. The California Green Building Standards Code, 2016 Edition, Title 24, Part 11 of the California Code of Regulations, together with those omissions, amendments, exceptions and additions thereto, is adopted and hereby incorporated in this Chapter by reference and made a part hereof the same as if fully set forth herein. Unless superseded and expressly repealed, references in City of Palo Alto forms, documents and regulations to the chapters and sections of the former California Code of Regulations, Title 24, shall be construed to apply to the corresponding provisions contained within the California Code of Regulations, Title 24, 2016. Ordinance No. 5324 of the City of Palo Alto and all other ordinances or parts of ordinances in conflict herewith are hereby suspended and expressly repealed. Wherever the phrases “California Green Building Standards Code” or “Cal Green” are used in this code or any ordinance of the City, such phrases shall be deemed and construed to refer and apply to the California Green Building Standards Code, 2016 Edition, as adopted and amended by this chapter. One copy of the California Green Building Standards Code, 2016 Edition, has been filed for use and examination of the public in the Office of the Building Official of the City of Palo Alto. 16.14.020 2016 California Green Building Standards Code Appendix Chapters adopted. The following Appendix Chapters of the California Green Building Standards Code, 2016 Edition, are adopted and hereby incorporated in this Chapter by reference and made a part hereof the same as if fully set forth herein: A. Appendix A4 - Residential Voluntary Measures (Tier 1 and Tier 2) B. Appendix A5 - Nonresidential Voluntary Measures (Tier 1 and Tier 2) ATTACHMENT B NOT YET APPROVED 2 160830 sh 016/Dev Services/2016 Code Cycle/Final Codes/2016-08-25 (2016 Code Cyle) ORD Amending Ch 16.14 Green Building Stds Code 16.14.030 Cross - References to California Green Building Standards Code. The provisions of this Chapter contain cross-references to the provisions of the California Green Building Standards Code, 2016 Edition, in order to facilitate reference and comparison to those provisions. 16.14.040 Violations – Penalties. Any person, firm or corporation violating any provision of this chapter is guilty of a misdemeanor and upon conviction thereof shall be punished as provided in subsection (a) of Section 1.08.010 of this code. Each separate day or any portion thereof during which any violation of this chapter occurs or continues shall be deemed to constitute a separate offense, and upon conviction thereof shall be punishable as provided in this section. 16.14.050 Enforcement -- Citation authority. The employee positions designated in this section may enforce the provisions of this chapter by the issuance of citations; persons employed in such positions are authorized to exercise the authority provided in Penal Code section 836.5 and are authorized to issue citations for violations of this chapter. The designated employee positions are: (1) chief building official; (2) building inspection supervisor; (3) Director of Development Services, and (4) Code enforcement officer. 16.14.060 Local Amendments. The provisions of this Chapter shall constitute local amendments to the cross-referenced provisions of the California Green Building Standards Code, 2016 Edition, and shall be deemed to replace the cross-referenced sections of said Code with the respective provisions set forth in this Chapter. 16.14.070 Section 202 amended – Definitions added. Section 202 of the California Green Building Standards Code is amended to include the following definitions: CPAU: The City of Palo Alto Utilities Department. CALGREEN MANDATORY: Calgreen mandatory requirements are triggered for projects outlined in Section 301.1 Scope of the code, as amended. Projects that trigger only Calgreen mandatory measures are not required to fulfill Calgreen Tier 1 or Tier 2 as listed in Appendix A4 and A5. CALGREEN “TIER 1”: To achieve Tier 1 status, a project must comply with the requirements identified in Appendix A4, Division A4.601.4 for residential projects and NOT YET APPROVED 3 160830 sh 016/Dev Services/2016 Code Cycle/Final Codes/2016-08-25 (2016 Code Cyle) ORD Amending Ch 16.14 Green Building Stds Code Appendix A5.601.2 for non-residential projects. The local adaptations to these appendices are identified in this ordinance. Projects subject to Tier 1 must fulfill on Calgreen mandatory measures and Calgreen Tier 1 prerequisite measures. Tier 1 projects must also select the minimum amount Calgreen elective measures required for Tier 1. CALGREEN “TIER 2”: To achieve Tier 2 status, a project must comply with the requirements identified in Appendix A4, Division A4.601.5 for residential projects and Appendix A5.601.3 for non-residential projects. The local adaptations to these appendices are identified in this ordinance. Projects subject to Tier 2 must fulfill on Calgreen mandatory measures and Calgreen Tier 2 prerequisite measures. Tier 2 projects must also select the minimum amount of Calgreen elective measures required for Tier 2. CALGREEN “TIER 1” AND “TIER 2” PREREQUISITE MEASURES: Projects subject to Calgreen Tier 1 or Tier 2 must fulfill the minimum prerequisites as described within Appendix A4, Division A4.6 for Residential projects and Appendix A5.6 for Non- Residential Projects, and local amendments within this ordinance. Tier 1 and Tier 2 prerequisite and elective measures are generally preceded by an “A”. CALGREEN “TIER 1” AND “TIER 2” ELECTIVE MEASURES: Projects subject to Calgreen Tier 1 or Tier 2 must fulfill the minimum number of electives as described within Appendix A4, Division A4.6 for Residential projects and Appendix A5.6 for Non- Residential Projects, and local amendments within this ordinance. Tier 1 and Tier 2 prerequisite and elective measures are generally preceded by an “A”. DEDICATED IRRIGATION METER. A dedicated irrigation meter is a water meter that exclusively meters water used for outdoor watering and irrigation, and is completely independent from the meter used for indoor water use. CALGREEN PLANS EXAMINER: A Calgreen Plans Examiner is an individual certified through the International Code Council (ICC) for demonstrating knowledge and application of Green Building concepts during plan review. For projects that require a Calgreen Plans Examiner verification, the Examiner must be contracted directly with the owner and may not be a contractor or employee of the design or construction firm. CALGREEN INSPECTOR: A Calgreen Inspector is an individual certified through the International Code Council (ICC) for demonstrating knowledge and application of Green Building concepts during inspection. For projects that require a Calgreen Inspector verification, the Inspector must be contracted directly with the owner and may not be a contractor or employee of the design or construction firm. NOT YET APPROVED 4 160830 sh 016/Dev Services/2016 Code Cycle/Final Codes/2016-08-25 (2016 Code Cyle) ORD Amending Ch 16.14 Green Building Stds Code GREEN POINT RATER: A GreenPoint Rater is an individual rated by Build It Green—a professional non-profit membership organization whose mission is to promote healthy, energy- and resource-efficient buildings in California. For projects that require Green Point Rater verification, the Green Point Rater must be contracted directly with the owner and may not be a contractor or employee of the design or construction firm. The city shall maintain a list of pre-approved Special Inspectors in accordance with Chapter 7, section 702.2 Special Inspection. INVASIVE PLANTS. Invasive plants are both indigenous and non-indigenous species with growth habits that are characteristically aggressive. Invasive plants that are of concern and may be prohibited by this code are defined as such in the “Water Use Classification of Landscape Species (WUCOLS), A Guide to the Water Needs of Landscape Plants,” from the University of California Cooperative Extension. MODEL WATER EFFICIENT LANDSCAPE ORDINANCE. The California Department of Water Resources Model Water Efficient Landscape Ordinance (or “Model Water Ordinance) ordinance regulating new construction and rehabilitated landscape project design, installation and maintenance. The Model Water Ordinance assigns a Maximum Applied Water Allowance (MAWA) based on landscaped area and climatological parameters. The City of Palo Alto has adopted more stringent compliance regulations in this code than the Model Water Ordinance; however, the Model Water Ordinance is referenced as the guiding document for water use calculations, irrigation system design, and water waste prevention. PROCESS WATER. Process water means untreated wastewater, uncontaminated by toilet discharge or an unhealthy bodily waste, which is not a threat from unhealthful processing, manufacturing or operating wastes. SALVAGE. Salvage means the controlled removal of construction or demolition debris/ material from a building, construction, or demolition site for the purpose of on- or off- site reuse, or storage for later reuse. Examples include air conditioning and heating systems, columns, balustrades, fountains, gazebos, molding, mantels, pavers, planters, quoins, stair treads, trim, wall caps, bath tubs, bricks, cabinetry, carpet, doors, ceiling fans, lighting fixtures, electrical panel boxes, fencing, fireplaces, flooring materials of wood, marble, stone or tile, furnaces, plate glass, wall mirrors, door knobs, door brackets, door hinges, marble, iron work, metal balconies, structural steel, plumbing fixtures, refrigerators, rock, roofing materials, siding materials, sinks, stairs, stone, stoves, toilets, windows, wood fencing, lumber and plywood. SQUARE FOOTAGE. For application of green building requirements, square footage means all new and replacement square footage, including basement areas (7 feet or NOT YET APPROVED 5 160830 sh 016/Dev Services/2016 Code Cycle/Final Codes/2016-08-25 (2016 Code Cyle) ORD Amending Ch 16.14 Green Building Stds Code greater in height) and garages, except that unconditioned garage space shall only count as 50% . Areas demolished shall not be deducted from the total new construction square footage. Square footage may also apply to landscapes, in which case it is the total surface area of the site not covered by impervious surfaces. 16.14.080 Section 301 amended – voluntary tiers added. Section 301 of the California Green Building Standards Code is amended to read: SECTION 301 GENERAL 301.1 Scope. Buildings shall be designed to include the green building measures specified as mandatory in the application checklists contained in this code and any applicable local amendments. In addition, the City requires the use of Voluntary Tiers, as provided in Sections A4.601 and A5.601, for certain residential and nonresidential new construction, additions, and alterations. 301.1.1 Residential additions and alterations. [HCD] The mandatory provisions of Chapter 4 shall be applied to additions or alterations of existing residential buildings where the addition or alteration increases the building's conditioned area, volume, or size. The requirements shall apply only to and/or within the specific area of the addition or alteration. Tier 1 adopted. All residential building additions or alterations exceeding 1000 square feet must meet California Green Building Standards Code Mandatory plus Tier 1 requirements, as amended by this Chapter and as applicable to the scope of work. Note: On and after January 1, 2014, residential buildings undergoing permitted alterations, additions or improvements shall replace noncompliant plumbing fixtures with water-conserving plumbing fixtures. Plumbing fixture replacement is required prior to issuance of a certificate of final completion, certificate of occupancy or final permit approval by the local building department. See Civil Code Section 1101.1, et seq., for the definition of a noncompliant plumbing fixture, types of residential buildings affected and other important enactment dates. 301.2 Low-rise and high-rise residential buildings. [HCD] The provisions of individual sections of CALGreen may apply to either low-rise residential buildings, high-rise residential buildings, or both. Individual sections will be designated by banners to indicate where the section applies specifically to low-rise only (LR) or high-rise only (HR). NOT YET APPROVED 6 160830 sh 016/Dev Services/2016 Code Cycle/Final Codes/2016-08-25 (2016 Code Cyle) ORD Amending Ch 16.14 Green Building Stds Code When the section applies to both low-rise and high-rise buildings, no banner will be used. 301.3 Nonresidential additions and alterations. [BSC] The provisions of individual sections of Chapter 5 apply to building nonresidential additions of 1,000 square feet or greater, and/or building alterations with a permit valuation of $200,000 or above (for occupancies within the authority of California Building Standards Commission). Code sections relevant to additions and alterations shall only apply to the portions of the building being added or altered within the scope of the permitted work. A code section will be designated by a banner to indicate where the code section only applies to newly constructed buildings [N] or to additions and alterations [AA]. When the code section applies to both, no banner will be used. Tier 1 adopted. Nonresidential alterations (including tenant improvements or renovations) of 5,000 square feet that include replacement or alteration of at least two of the following: HVAC system, building envelope, hot water system, or lighting system, must comply with Mandatory California Green Building Standards Code plus Tier 1 requirements, as amended by this Chapter and as applicable to the scope of work. Tier 2 adopted. Nonresidential additions of 1000 square feet or greater must comply with California Green Building Standards Code Mandatory plus Tier 2 requirements, as amended by this Chapter and as applicable to the scope of work. 301.4 Residential new construction – Tier 2 adopted. All newly constructed Residential Buildings must meet California Green Building Standards Code Mandatory plus Tier 2 requirements, as amended by this Chapter and as applicable to the scope of work. 301.5 Non-residential new construction – Tier 2 adopted. All new nonresidential construction must meet California Green Building Standards Code Mandatory plus Tier 2 requirements, as amended by this Chapter and as applicable to the scope of work. 301.6 Special Inspector Requirements. Residential project owners subject to Calgreen Mandatory plus Tier 1 or Tier 2 requirements shall contract a special inspector in accordance with section 702.2 of this code, as amended. 16.14.090 Section 702.2 Special Inspection. Section 702.2 of the California Green Building Standards Code is amended to read: 702.2 Special Inspection. When required by the enforcing agency, the owner or responsible entity acting as the owner’s agent shall employ one or more special NOT YET APPROVED 7 160830 sh 016/Dev Services/2016 Code Cycle/Final Codes/2016-08-25 (2016 Code Cyle) ORD Amending Ch 16.14 Green Building Stds Code inspectors to provide inspection or other duties necessary to substantiate compliance with this code. Special inspectors shall demonstrate competence to the satisfaction of the enforcing agency for the particular type of inspection or task to be performed. In addition to other certifications or qualifications acceptable to the enforcing agency, the following certifications or education may be considered by the enforcing agency when evaluating the qualifications of a special inspector. The city shall maintain a list of pre- approved Special Inspectors in accordance with this section. The owner shall contract a Special Inspector meeting one of the following; 1)Certification by a national or regional green building program: ICC Certified Plans Examiner and ICC Certified Calgreen Inspector: Contract a Calgreen Plans Examiner and Calgreen Inspector to provide third-party verification of compliance prior to Permit Issuance and prior to Final Inspection. This Special Inspector may fulfill both requirements if the individual, or company, maintains both the Calgreen Plans Examiner and Calgreen Inspector designation. 2) Other programs acceptable to the enforcing agency. When required by the enforcing agency, the owner or responsible entity acting as the owner’s agent shall employ one or more special inspectors to provide inspection or other duties necessary to substantiate compliance with this code. Special inspectors shall demonstrate competence to the satisfaction of the enforcing agency for the particular type of inspection or task to be performed. In addition, the special inspector shall have a certification from a recognized state, national or international association, as determined by the local agency. The city shall maintain a list of pre-approved Special Inspectors in accordance with this section. Note: Special inspectors shall be independent entities with no financial interest in the materials or the project they are inspecting for compliance with this code. 16.14.100 Section 303.1.2 Cumulative construction. Section 303.1.2 is added to the California Green Building Standards Code to read: 303.1.2 Cumulative construction. Cumulative construction over any two-year period, or a project completed in phases, shall be considered as a single project, subject to the highest level of green building requirements for that project, unless exempted by the Director of Development Services as impractical for compliance. If a project is developed in phases, such as a core and shell development following by a tenant improvement, regardless of ownership each phase will be subject to the green building requirements which apply to the scope of work constructed as part of that phase. NOT YET APPROVED 8 160830 sh 016/Dev Services/2016 Code Cycle/Final Codes/2016-08-25 (2016 Code Cyle) ORD Amending Ch 16.14 Green Building Stds Code 16.14.110 Residential Projects. Chapter 4 Preface: Green building requirements for project type and scope. A preface is added to Chapter 4 of the California Green Building Standards Code to read: Preface - Green Building Requirements for Project Type and Scope For design and construction of residential projects, the City requires compliance with the mandatory measures of Chapter 4, in addition to use of Tier 1 and Tier 2 as specified in Palo Alto Municipal Code Chapter 16.14. See Section 202 for definitions on Calgreen mandatory, Tier 1 prerequisites and electives, and Tier 2 prerequisites and electives. All elective measures are adopted as written under Appendix A4 unless otherwise indicated in this Section. 16.14.120 Section A4.104 Site Preservation. Section A4.104.1 is adopted as a Tier 1 and Tier 2 elective and is amended to read: A4.104.1 Supervision and Education by a Special Inspector. Individuals with oversight authority on the project, as defined in 16.14.090 of this code, who have been trained in areas related to environmentally friendly development, can teach green concepts to other members of the builder’s staff and ensure training and written instruction has been provided to all parties associated with the development of the project. Prior to the beginning the construction activities, all the builder shall receive a written guideline and instruction specifying the green goals of the project. Note: Lack of adequate supervision and dissemination of the project goals can result in negative effects on green building projects. If the theme of green building is not carried through the project, the overall benefit can be substantially reduced by the lack of knowledge and information provided to the various entities involved with the construction of the project. 16.14.130 Section A4.105.1 and A4.105.2 Deconstruction and Reuse of Existing Materials. Sections A4.105.1 and A4.105.2 are adopted as Tier 1 and Tier 2 elective measures and are amended to read: A4.105.1 General. Existing buildings on the site are deconstructed and the salvaged materials are reused. Reused materials or products must comply with the current building standards requirements or be an accepted alternate method or material. Salvaged materials may be reused onsite or for a different project. The Chief Building NOT YET APPROVED 9 160830 sh 016/Dev Services/2016 Code Cycle/Final Codes/2016-08-25 (2016 Code Cyle) ORD Amending Ch 16.14 Green Building Stds Code Official may require documentation confirming that salvageable materials have been reused. A4.105.2 Reuse of materials. Non-hazardous materials which can be easily reused include but are not limited to the following: 1.Light fixtures 2.Plumbing fixtures 3.Doors and trim 4.Masonry 5.Electrical devices 6.Appliances 7.Foundations or portions of foundations Note: Reused material must be in compliance with the appropriate Title 24 requirements. 16.14.135 Section A4.105.3 Deconstruction Survey. Section A4.105.3 is added as mandatory to read: A4.105.3 Deconstruction Survey. All single family residential dwelling units required to obtain a demolition permit shall complete a deconstruction survey provided by third party approved by the Chief Building Official. The survey shall include a list of materials that are reusable in the project, as well as the values of such materials. 16.14.140 Reserved. 16.14.150 Section A4.106.8 Electric Vehicle (EV) Charging for New Construction. Section A4.106.8 is not adopted as a Tier 1 and Tier 2 elective measure. Projects must comply with the mandatory electric vehicle supply equipment (EVSE) requirements stated in Section 4.106.4, as amended. 16.14.160 Section A4.106.9 Bicycle Parking. Section A4.106.9 is not adopted as a Tier 1 and Tier 2 elective measure. Projects must comply with the bicycle parking requirements in the Palo Alto Municipal Code. // NOT YET APPROVED 10 160830 sh 016/Dev Services/2016 Code Cycle/Final Codes/2016-08-25 (2016 Code Cyle) ORD Amending Ch 16.14 Green Building Stds Code 16.14.170 Section A4.106.10 Light Pollution Reduction. Section A4.106.10 is adopted as a Tier 1 and Tier 2 elective measure for all covered projects and is amended to read: A4.106.10 Light pollution reduction. Outdoor lighting systems shall be designed and installed to comply with the following: 1.The minimum requirements in the California Energy Code for Lighting Zones 1-4 as defined in Chapter 10 of the California Administrative Code; and 2.Backlight, Uplight and Glare (BUG) ratings as defined in IES TM-15-11; and 3.Allowable BUG ratings not exceeding those shown in Table A4.106.10; or 4.Comply with a local ordinance lawfully enacted pursuant to Section 101.7 of this code, whichever is more stringent. Projects may use an approved equal reference standard for light fixtures where BUG ratings are unavailable. Exceptions: 1.Luminaires that qualify as exceptions to the California Energy Code. 2.Emergency lighting. 3.One- and two-family dwellings. 16.14.180 Section A4.203.1 Performance Approach for Newly Constructed Buildings. Sections A4.203.1 is not adopted as a Tier 1 and Tier 2 elective measure. Projects shall comply with Chapter 16.17 of the Palo Alto Municipal Code (Energy Reach Code). 16.14.190 Reserved. 16.14.200 Reserved. 16.14.210 Reserved. 16.14.220 Section A4.304.2.1 Irrigation Metering Device. Section A4.304.2.1 is adopted as a Tier 1 and Tier 2 prerequisite and is amended to read: NOT YET APPROVED 11 160830 sh 016/Dev Services/2016 Code Cycle/Final Codes/2016-08-25 (2016 Code Cyle) ORD Amending Ch 16.14 Green Building Stds Code A4.304.2.1 Irrigation Metering Device. Dedicated irrigation meters are to be installed in all new construction and rehabilitated landscapes when the landscape is greater than 1,000 square feet. 16.14.230 Section A4.305 Water Reuse Systems. Sections A4.305.1 through A4.305.3 are adopted as Tier 1 and Tier 2 electives and are amended to read: A4.305.1 Graywater. Alternative plumbing piping is installed to permit the discharge from the clothes washer and other fixtures (except toilets and kitchen sinks) to be used for an irrigation system in compliance with the California Plumbing Code. A4.305.2 Recycled Water Piping. Based on projected availability, dual water piping is installed for future use of recycled water at the following locations: 1.Interior piping for the use of recycled water is installed to serve all water closets, urinals, and floor drains. 2.Exterior piping is installed to transport recycled water from the point of connection to the structure. Recycled water systems shall be designed and installed in accordance with the California Plumbing Code. A4.305.3 Recycled water for landscape irrigation. Recycled water is used for landscape irrigation. Section A4.305.4 is added and adopted as Tier 1 and Tier 2 prerequisite and shall read as follows: A4.305.4 Additions and alterations. All multifamily residential additions and alterations must install recycled water infrastructure for irrigation when the landscape area exceeds 1,000 square feet. Section A4.305.5 is added and adopted a Tier 2 prerequisite and shall read as follows: A4.305.5 Laundry to Landscape Infrastructure. Newly constructed Residential Buildings with a landscape area of any size shall install an independent plumbing drainage system including a trap and vent that shall begin near the interior laundry fixtures and will terminate at the exterior of the home. This piping system will be capped at all outlets and will assist in the future installation of a “Laundry-to-Landscape” irrigation system. A NOT YET APPROVED 12 160830 sh 016/Dev Services/2016 Code Cycle/Final Codes/2016-08-25 (2016 Code Cyle) ORD Amending Ch 16.14 Green Building Stds Code complete irrigation system installation shall meet the requirements of the California Plumbing Code 1502.1.1, Clothes Washer System. Exception: Laundry fixtures located below grade. A4.305.5.1 Identification. Independent laundry to landscape capable system shall be labeled as "LAUNDRY-TO-LANDSCAPE CABABLE" and be readily visible to the user. 16.14.240 Section A4.403.1 Frost Protection Foundation Systems. Sections A4.203.1 is not adopted as a Tier 1 and Tier 2 elective measure. 16.14.250 Section A4.403.2 Reduction in cement use. Section A4.403 is not adopted as a Tier 1 and Tier 2 prerequisite. Section A4.403 is adopted as a Tier 1 and Tier 2 elective measure and shall read as: A4.403.2 Reduction in cement use. As allowed by the enforcing agency, cement used in foundation mix design shall be reduced as follows: Tier 1. Not less than a 20 percent reduction in cement. Tier 2: Not less than a 25 percent reduction in cement. Note: Products commonly used to replace cement in concrete mix designs include, but are not limited to: 1. Fly ash 2. Slag 3. Silica fume 4. Rice hull ash 16.14.260 Section A4.408.1 Enhanced Construction Waste Reduction. Section A4.408.1 is adopted as mandatory and is amended to read: A4.408.1 Enhanced Construction Waste Reduction. Nonhazardous construction and demolition debris generated at the site is diverted to recycle or salvage incompliance with the following: NOT YET APPROVED 13 160830 sh 016/Dev Services/2016 Code Cycle/Final Codes/2016-08-25 (2016 Code Cyle) ORD Amending Ch 16.14 Green Building Stds Code Tier 1 and Tier 2. At least a 80-percent reduction. Any mixed recyclables that are sent to mixed-waste recycling facilities shall include a qualified third party verified facility average diversion rate. Verification of diversion rates shall meet minimum certification eligibility guidelines, acceptable to the local enforcing agency. A4.408.1.1 Documentation. Documentation shall be provided to the enforcing agency which demonstrates compliance with all construction and demolition waste reduction requirements. 16.14.270 Section A4.504.3 Thermal insulation. Section A4.504.3 is not adopted as a Tier 1 and Tier 2 prerequisite. Section A4.403 is adopted as a Tier 1 and Tier 2 elective measure. 16.14.280 Non-Residential Projects: Chapter 5 Preface Green Building Requirements for Project Type and Scope. A Preface is added to Chapter 5 of the California Green Building Standards Code to read: Preface – Green Building Requirements for Project Type and Scope. For design and construction of non-residential projects, the City requires compliance with the mandatory measures of Chapter 5, in addition to use of Tier 1 and Tier 2 as specified in Palo Alto Municipal Code Chapter 16.14. See Section 202 for definitions on Calgreen mandatory, Tier 1 prerequisites and electives, and Tier 2 prerequisites and electives. All elective measures are adopted as written under Appendix A5 unless otherwise indicated in this Section. 16.14.290 Section 5.106.1.1 Local storm water pollution prevention. Section 5.106.1.1 Local ordinance is amended to read: 5.106.1.1 Local ordinance. Newly constructed projects and additions shall comply with additional storm water pollution prevention measures as applicable. (See Chapter 16.11, Storm Water Pollution Prevention, of the Palo Alto Municipal Code.) 16.14.295 Section 5.106.8 Light pollution reduction Section 5.106.8 Light pollution reduction is amended to read: 5.106.8 Light pollution reduction. Outdoor lighting systems shall be designed and installed to comply with the following: NOT YET APPROVED 14 160830 sh 016/Dev Services/2016 Code Cycle/Final Codes/2016-08-25 (2016 Code Cyle) ORD Amending Ch 16.14 Green Building Stds Code 1. The minimum requirements in the California Energy Code for Lighting Zones 1-4 as defined in Chapter 10 of the California Administrative Code; and 2. Backlight, Uplight and Glare (BUG) ratings as defined in IES TM-15-11; and 3. Allowable BUG ratings not exceeding those shown in Table A4.106.10; or 4. Comply with a local ordinance lawfully enacted pursuant to Section 101.7 of this code, whichever is more stringent. Projects may use an approved equal reference standard for light fixtures where BUG ratings are unavailable. Exceptions: 1. Luminaires that qualify as exceptins in Section 140.7 of the California Energy Code. 2. Emergency lighting. 3. Building façade meeting the requirements in Table 140.7-B of the California Energy Code, Part 6. 4. Custom lighting features as allowed by the local enforcing agency, as permitted by Section 101.8 Alternate materials, designs, and methods of construction. 16.14.300 Section 5.303.5 Dual Plumbing. Section 5.303.5 Dual plumbing is added as mandatory and is amended to read: 5.303.5 Dual plumbing. New buildings and facilities shall be dual plumbed for potable and recycled water systems for toilet flushing when recycled water is available. All building projects for which CPAU recycled water service is available must install dual Plumbing and use recycled water for toilet and urinal flushing when the building area is greater than 10,000 square feet or where installation of 25 or more toilets and urinals is proposed. All projects for which CPAU recycled water service is not yet available must install dual plumbing for use of recycled water for toilet and urinal flushing when the building area exceeds 100,000 square feet or where installation of 100 or more toilets and urinals is proposed. 16.14.310 Reserved. 16.14.320 Reserved. 16.14.330 Reserved. NOT YET APPROVED 15 160830 sh 016/Dev Services/2016 Code Cycle/Final Codes/2016-08-25 (2016 Code Cyle) ORD Amending Ch 16.14 Green Building Stds Code 16.14.340 Reserved. 16.14.350 Section 5.304.5 Potable water elimination. Section 5.304.5 Potable water elimination is adopted as mandatory and amended to read: 5.304.5 Potable water elimination. Recycled water infrastructure for irrigation systems is required for all projects for which CPAU recycled water service is available. All projects for which CPAU recycled water service is not yet available must install recycled water infrastructure for irrigation when the landscape area exceeds 1,000 square feet. Dedicated irrigation meters are to be installed in all new construction and rehabilitated landscapes when the landscape is greater than 1,000 square feet. 16.14.360 Section 5.304.6 Invasive species prohibited. Section 5.304.6 is added as mandatory to read: 5.304.6 Invasive species prohibited. All nonresidential new construction, additions, and alterations shall not install invasive species in a landscape area of any size. 16.14.365 Section 5.305.1 Non-residential enhanced water budget. Section 5.305.1 Non-residential enhanced water budget is added as mandatory to read: 5.305.1 Non-residential enhanced water budget. Non-residential buildings anticipated to use more than 1,000 gallons of water a day shall complete an Enhanced Water Budget Calculator as established by the Chief Building Official. 16.14.370 Section A5.408 Construction Waste, Reduction, Disposal and Recycling. Section A5.408.3.1.1 Enhanced Construction Waste Reduction is adopted at Tier 2 (80% construction waste reduction) as a mandatory requirement for all nonresidential construction, including new construction, additions, and alterations, as long as the construction has a valuation exceeding $25,000. Nonresidential projects with a lower valuation shall remain subject to California Green Building Code Chapter 5 mandatory requirements. 16.14.380 Section 5.410.4.6 Energy STAR portfolio manager. Section 5.410.4.6 Energy STAR portfolio manager is added as mandatory to read: NOT YET APPROVED 16 160830 sh 016/Dev Services/2016 Code Cycle/Final Codes/2016-08-25 (2016 Code Cyle) ORD Amending Ch 16.14 Green Building Stds Code 5.410.4.6 Energy STAR portfolio manager. All nonresidential projects exceeding $100,000 valuation must provide evidence of an Energy STAR Portfolio Manager project profile prior to Permit Issuance, acquire an Energy STAR Portfolio Manager Rating, and submit the rating to the City of Palo Alto once the project has been occupied after 12 months. 16.14.390 Section 5.410.4.7 Performance reviews – energy. Section 5.410.4.7 Performance reviews - energy is added to read: 5.410.4.7 Performance reviews – energy. All projects over 10,000 square feet. The City reserves the right to conduct a performance review, no more frequently than once every five years unless a project fails review, to evaluate the building's energy use to ensure that resources used at the building and/or site do not exceed the maximum allowance set forth in the rehabilitation or new construction design. Energy use reviews may be initiated by the Building Division or as a coordinated effort between the City's Utilities Department and/or its designated contractors. Following the findings and recommendations of the review, the City may require adjustments to the energy usage or energy-using equipment or systems if the building is no longer compliant with the original design. Renovation or rehabilitation resulting from such audit activity shall be considered a project, and shall be subject to applicable documentation submittal requirements of the City. This section is effective only for those projects for which a building permit was issued after January 1, 2009. 16.14.400 Section 5.410.4.8 Performance reviews – water. Section 5.410.4.8 Performance reviews - water is added to read: 5.410.4.8 Performance reviews – water. All sites greater than one acre: The City reserves the right to conduct performance reviews, no more frequently than once every five years unless a project fails review, to evaluate water use to ensure that resources used at the building and/or site do not exceed a maximum allowance set forth in the rehabilitation or new construction design. Water use reviews may be initiated by the Building Division, or as a coordinated effort between the City's Utilities Department and the Santa Clara Valley Water District (SCVWD), or as part of SCVWD's established water conservation programs. Following the findings and recommendations of the review, the City may require adjustments to irrigation usage, irrigation hardware, and/or landscape materials to reduce consumption and improve efficiency. Renovation or rehabilitation resulting from such audit activity shall be considered a project, and shall be subject to applicable documentation submittal requirements of the City. NOT YET APPROVED 17 160830 sh 016/Dev Services/2016 Code Cycle/Final Codes/2016-08-25 (2016 Code Cyle) ORD Amending Ch 16.14 Green Building Stds Code 16.14.420 Section A4.106.8 Electric Vehicle (EV) Charging. Section A4.106.8 of the California Green Building Standards Code is added as mandatory and amended to read: A4.106.8 Electric Vehicle (EV) Charging for Residential Structures. Newly constructed single family and multifamily residential structures, including residential structures constructed as part of a mixed use development, shall comply with the following requirements for electric vehicle supply equipment (EVSE). All parking space calculations under this section shall be rounded up to the next full space. The requirements stated in this section are in addition to those contained in Section 4.106.4 of the California Green Building Standards Code. In the event of a conflict between this section and Section 4.106.4 of the California Green Building Standards Code, the more robust EV Charging requirements shall prevail. A4.106.8.1 Definitions. For the purposes of this section, the following definitions shall apply: (a) Level 2 EVSE. “Level 2 EVSE” shall mean an EVSE capable of charging at 30 amperes or higher at 208 or 240 VAC. An EVSE capable of simultaneously charging at 30 amperes for each of two vehicles shall be counted as two Level 2 EVSE. (b) Conduit Only. “Conduit Only” shall mean, at minimum: (1) a panel capable to accommodate a dedicated branch circuit and service capacity to install a 208/240V, 50 amperes grounded AC outlet; and (2) raceway or wiring with capacity to accommodate a 100 ampere circuit; terminating in (3) a listed cabinet, box, enclosure, or NEMA receptacle. The raceway shall be installed so that minimal removal of materials is necessary to complete the final installation. (c) EVSE-Ready Outlet. “EVSE-Ready Outlet” shall mean, at minimum: (1) a panel capable to accommodate a dedicated branch circuit and service capacity to install a 208/240V, 50 amperes grounded AC outlet; (2) a two-pole circuit breaker; (3) raceway with capacity to accommodate 100-ampere circuit; (4) 50 ampere wiring; terminating in (5) a 50 ampere NEMA receptacle in a covered outlet box. (d) EVSE Installed. “EVSE Installed” shall mean an installed Level 2 EVSE. NOT YET APPROVED 18 160830 sh 016/Dev Services/2016 Code Cycle/Final Codes/2016-08-25 (2016 Code Cyle) ORD Amending Ch 16.14 Green Building Stds Code A4.106.8.2 Single Family Residences. The following standards apply to newly constructed detached and attached single family residences. (a) In general. The property owner shall provide Conduit Only, EVSE-Ready Outlet, or EVSE Installed for each residence. (b) Location. The proposed location of a charging station may be internal or external to the dwelling, and shall be in close proximity to an on-site parking space consistent with City guidelines, rules, and regulations. A4.106.8.3 Multi-Family Residential Structures. The following standards apply to newly constructed residences in a multi-family residential structure, except as provided in section A4.106.8.4. (a) Resident parking. The property owner shall provide at least one EVSE-Ready Outlet or EVSE Installed for each residential unit in the structure. (b) Guest parking. The property owner shall provide Conduit Only, EVSE-Ready Outlet, or EVSE Installed, for at least 25% of guest parking spaces, among which at least 5% (and no fewer than one) shall be EVSE Installed. (c) Accessible spaces. Projects shall comply with the 2016 California Building Code requirements for accessible electric vehicle parking. (d) Minimum total circuit capacity. The property owner shall ensure sufficient circuit capacity, as determined by the Chief Building Official, to support a Level 2 EVSE in every location where Circuit Only, EVSE-Ready Outlet or EVSE Installed is required. (e) Location. The EVSE, receptacles, and/or raceway required by this section shall be placed in locations allowing convenient installation of and access to EVSE. In addition, if parking is deed-restricted to individual residential units, the EVSE or receptacles required by subsection (a) shall be located such that each unit has access to its own EVSE or receptacle. Location of EVSE or receptacles shall be consistent with all City guidelines, rules, and regulations. A4.106.8.4 Exception – Multi-Family Residential Structures with Individual, Attached Parking. The property owner shall provide Conduit Only, EVSE-Ready Outlet, or EVSE Installed for each newly constructed residence in a multi-family residential structure featuring: (1) a parking space attached to the residence; and NOT YET APPROVED 19 160830 sh 016/Dev Services/2016 Code Cycle/Final Codes/2016-08-25 (2016 Code Cyle) ORD Amending Ch 16.14 Green Building Stds Code (2) a shared electrical panel between the residence and parking space (e.g., a multi-family structure with tuck-under garages). 16.14.430 Section A5.106.5.3 Electric Vehicle (EV) Charging for Non-Residential Structures. Section A5.106.5.3 of the California Green Building Standards Code is added as mandatory and amended to read: A5.106.5.3 Electric Vehicle (EV) Charging for Non-Residential Structures. New non- residential structures shall comply with the following requirements for electric vehicle supply equipment (EVSE). All parking space calculations under this section shall be rounded up to the next full space. The requirements stated in this section are in addition to those contained in Section 5.106.5.3 of the California Green Building Standards Code. In the event of a conflict between this section and Section 5.106.5.3, the more robust EV Charging requirements shall prevail. A5.106.5.3.1 Definitions. For the purposes of this section, the following definitions shall apply: (a) Level 2 EVSE. “Level 2 EVSE” shall mean an EVSE capable of charging at 30 amperes or higher at 208 or 240 VAC. An EVSE capable of simultaneously charging at 30 amperes for each of two vehicles shall be counted as two Level 2 EVSE. (b) Conduit Only. “Conduit Only” shall mean, at minimum: (1) a panel capable to accommodate a dedicated branch circuit and service capacity to install at least a 208/240V, 50 amperes grounded AC outlet; and (2) raceway or wiring with capacity to accommodate a 100 ampere circuit; terminating in (3) a listed cabinet, box, enclosure, or NEMA receptacle. The raceway shall be installed so that minimal removal of materials is necessary to complete the final installation. (c) EVSE-Ready Outlet. “EVSE-Ready Outlet” shall mean, at minimum: (1) a panel capable to accommodate a dedicated branch circuit and service capacity to install at least a 208/240V, 50 amperes grounded AC outlet; (2) a two-pole circuit breaker; (3) raceway with capacity to accommodate a 100-ampere circuit; (4) 50 ampere wiring; terminating in (5) a 50 ampere NEMA receptacle in a covered outlet box. (d) EVSE Installed. “EVSE Installed” shall mean an installed Level 2 EVSE. NOT YET APPROVED 20 160830 sh 016/Dev Services/2016 Code Cycle/Final Codes/2016-08-25 (2016 Code Cyle) ORD Amending Ch 16.14 Green Building Stds Code A5.106.5.3.2 Non-Residential Structures Other than Hotels. The following standards apply newly constructed non-residential structures other than hotels. (a) In general. The property owner shall provide Conduit Only, EVSE-Ready Outlet, or EVSE Installed for at least 25% of parking spaces, among which at least 5% (and no fewer than one) shall be EVSE Installed. (b) Accessible spaces. Projects shall comply with the 2016 California Building Code requirements for accessible electric vehicle parking. (c) Minimum total circuit capacity. The property owner shall ensure sufficient circuit capacity, as determined by the Chief Building Official, to support a Level 2 EVSE in every location where Circuit Only, EVSE-Ready Outlet or EVSE Installed is required. (d) Location. The EVSE, receptacles, and/or raceway required by this section shall be placed in locations allowing convenient installation of and access to EVSE. Location of EVSE or receptacles shall be consistent with all City guidelines, rules, and regulations. A5.106.5.3.3 Hotels. The following standards apply newly constructed hotels. (a) In general. The property owner shall provide Conduit Only, EVSE-Ready Outlet, or EVSE Installed for at least 30% of parking spaces, among which at least 10% (and no fewer than one) shall be EVSE Installed. (b) Accessible spaces. Projects shall comply with the 2016 California Building Code requirements for accessible electric vehicle parking. (c) Minimum total circuit capacity. The property owner shall ensure sufficient circuit capacity, as determined by the Chief Building Official, to support a Level 2 EVSE in every location where Circuit Only, EVSE-Ready Outlet or EVSE Installed is required. (d) Location. The EVSE, receptacles, and/or raceway required by this section shall be placed in locations allowing convenient installation of and access to EVSE. Location of EVSE or receptacles shall be consistent with all City guidelines, rules, and regulations. SECTION 2. The Council adopts the findings for local amendments to the California Green Building Standards Code, 2016 Edition, attached hereto as Exhibit “A” and incorporated herein by reference. NOT YET APPROVED 21 160830 sh 016/Dev Services/2016 Code Cycle/Final Codes/2016-08-25 (2016 Code Cyle) ORD Amending Ch 16.14 Green Building Stds Code SECTION 3. If any section, subsection, clause or phrase of this Ordinance is for any reason held to be invalid, such decision shall not affect the validity of the remaining portion or sections of the Ordinance. The Council hereby declares that it should have adopted the Ordinance and each section, subsection, sentence, clause or phrase thereof irrespective of the fact that any one or more sections, subsections, sentences, clauses or phrases be declared invalid. SECTION 4. The Council finds that this project is exempt from the provisions of the California Environmental Quality Act (“CEQA”), pursuant to Section 15061 of the CEQA Guidelines, because it can be seen with certainty that there is no possibility that the amendments herein adopted will have a significant effect on the environment. SECTION 5. This ordinance shall be effective on the thirty-first day after the date of its adoption. INTRODUCED: PASSED: AYES: NOES: ABSENT: ABSTENTIONS: ATTEST: ____________________________ ____________________________ City Clerk Mayor APPROVED AS TO FORM: APPROVED: ____________________________ ____________________________ Senior Deputy City Attorney City Manager ____________________________ Director of Development Services ____________________________ Director of Administrative Services NOT YET APPROVED 22 160830 sh 016/Dev Services/2016 Code Cycle/Final Codes/2016-08-25 (2016 Code Cyle) ORD Amending Ch 16.14 Green Building Stds Code Exhibit A FINDINGS FOR LOCAL AMENDMENTS TO CALIFORNIA GREEN BUILDING STANDARD CODE, 2016 EDITION Section 17958 of the California Health and Safety Code provides that the City may make changes to the provisions in the uniform codes that are published in the California Building Standards Code. Sections 17958.5 and 17958.7 of the Health and Safety Code require that for each proposed local change to those provisions in the uniform codes and published in the California Building Standards Code which regulate buildings used for human habitation, the City Council must make findings supporting its determination that each such local change is reasonably necessary because of local climatic, geological, or topographical conditions. Local building regulations having the effect of amending the uniform codes, which were adopted by the City prior to November 23, 1970, were unaffected by the regulations of Sections 17958, 17958.5 and 17958.7 of the Health and Safety Code. Therefore, amendments to the uniform codes which were adopted by the City Council prior to November 23, 1970, and have been carried through from year to year without significant change, need no required findings. Also, amendments to provisions not regulating buildings used for human habitation, including amendments made only for administrative consistency, do not require findings. Code: Cal Green Section Title Add Deleted Amended Justification (See below for keys) 301 Voluntary tiers added   C & E 303.1.2 Cumulative Construction  C & E 4.105 Deconstruction Survey  C & E 4.304 Outdoor Water Use   C 5.105.1 Salvage  E 5.106.1.1 Local ordinance  C 5.106.8 Light pollution reduction  E 5.303.5 Dual Plumbing  C 5.304.5 Potable Water Elimination  C 5.304.6 Invasive Species  E 5.305.1 Non-residential enhanced water budget  C 5.410.4.6 Energy STAR portfolio manager  C & E 5.410.4.7 Performance reviews – energy  C & E 5.410.4.8 Performance reviews – water  C & E 702.2 Special Inspection  E Appendix A4 Residential Voluntary Measures   C & E Appendix A5 Non-Residential Voluntary Measures   C & E NOT YET APPROVED 23 160830 sh 016/Dev Services/2016 Code Cycle/Final Codes/2016-08-25 (2016 Code Cyle) ORD Amending Ch 16.14 Green Building Stds Code Key to Justification for Amendments to Title 24 of the California Code of Regulations C This amendment is justified on the basis of a local climatic condition. The seasonal climatic conditions during the late summer and fall create severe fire hazards to the public health and welfare in the City. The hot, dry weather frequently results in wild land fires on the brush covered slopes west of Interstate 280. The aforementioned conditions combined with the geological characteristics of the hills within the City create hazardous conditions for which departure from California Building Standards Code is required. Failure to address and significantly reduce greenhouse gas (GHG) emissions could result in rises in sea level, including in San Francisco Bay, that could put at risk Palo Alto homes and businesses, public facilities, and Highway 101 (Bayshore Freeway), particularly the mapped Flood Hazard areas of the City. Energy efficiency is a key component in reducing GHG emissions, and construction of more energy efficient buildings can help Palo Alto reduce its share of the GHG emissions that contribute to climate change. The burning of fossil fuels used in the generation of electric power and heating of buildings contributes to climate change, which could result in rises in sea level, including in San Francisco Bay, that could put at risk Palo Alto homes and businesses 1 public facilities, and Highway 101. Due to decrease in annual rain fall, Palo Alto experiences the effect of drought and water saving more than some other communities in California. E Green building enhances the public health and welfare by promoting the environmental and economic health of the City through the design, construction, maintenance, operation and deconstruction of buildings and sites by incorporating green practices into all development. The green provisions in this Chapter are designed to achieve the following goals: (a) Increase energy efficiency in buildings; (b) Increase water and resource conservation; (c) Reduce waste generated by construction and demolition projects; (d) Provide durable buildings that are efficient and economical to own and operate; ( e) Promote the health and productivity of residents, workers, and visitors to the city; (f) Recognize and conserve the energy embodied in existing buildings; (g) Encourage alternative transportation; and (h) Reduce disturbance of natural ecosystems. G This amendment is justified on the basis of a local geological condition. The City of Palo Alto is subject to earthquake hazard caused by its proximity to San Andreas fault. This fault runs from Hollister, through the Santa Cruz Mountains, epicenter of the 1989 Loma Prieta earthquake, then on up the San Francisco Peninsula, then offshore at Daly City near Mussel Rock. This is the approximate location of the epicenter of the 1906 San Francisco earthquake. The other fault is Hayward Fault. This fault is about 74 mi long, situated mainly along the western base of the hills on the east side of San Francisco Bay. Both of these faults are considered major Northern California earthquake faults which may experience rupture at any time. Thus, because the City is within a seismic area which includes these earthquake faults, the modifications and changes cited herein are designed to better limit property damage as a result of seismic activity and to establish criteria for repair of damaged properties following a local emergency. T The City of Palo Alto topography includes hillsides with narrow and winding access, which makes timely response by fire suppression vehicles difficult. Palo Alto is contiguous with the San Francisco Bay, resulting in a natural receptor for storm and waste water run-off. Also the City of Palo Alto is located in an area that is potentially susceptible to liquefaction during a major earthquake. The surface condition consists mostly of stiff to dense sandy clay, which is highly plastic and expansive in nature. The aforementioned conditions within the City create hazardous conditions for which departure from California Building Standards Code is warranted. NOT YET APPROVED 1 160831 sh 016/Dev Services/2016 Code Cycle/Final Codes/2016-08-25 (2016 Code Cyle) ORD Amending Ch 16.08 Plumbing Code Ordinance No. ____ Ordinance of the Council of the City Of Palo Alto Repealing Chapter 16.08 of the Palo Alto Municipal Code and Amending Title 16 to Adopt a New Chapter 16.08, California Plumbing Code, 2016 Edition, and Local Amendments and Related Findings The Council of the City of Palo Alto does ORDAIN as follows: SECTION 1. Chapter 16.08 of the Palo Alto Municipal Code is hereby amended by repealing in its entirety and adopting a new Chapter 16.08 to read as follows: 16.08 CALIFORNIA PLUMBING CODE 16.08.010 2016 California Plumbing Code adopted. The California Plumbing Code, 2016 Edition, Title 24, Part 5 of the California Code of Regulations together with those omissions, amendments, exceptions and additions thereto, is adopted and hereby incorporated in this Chapter by reference and made a part hereof the same as if fully set forth herein. Unless superseded and expressly repealed, references in City of Palo Alto forms, documents and regulations to the chapters and sections of the former California Code of Regulations, Title 24, 2013, shall be construed to apply to the corresponding provisions contained within the California Code of Regulations, Title 24, 2016. Ordinance No. 5219 of the City of Palo Alto and all other ordinances or parts of ordinances in conflict herewith are hereby suspended and expressly repealed. Wherever the phrases "California Mechanical Code" or "Mechanical Code" are used in this code or any ordinance of the City, such phrases shall be deemed and construed to refer and apply to the California Mechanical Code, 2016 Edition, as adopted by this Chapter. One copy of the California Plumbing Code, 2016 edition, has been filed for use and examination of the public in the Office of the Building Official of the City of Palo Alto. 16.08.020 2016 California Plumbing Code Appendix Chapters adopted. The following Appendix Chapters of the California Plumbing Code, 2016 Edition, are adopted and hereby incorporated in this Chapter by reference and made a part hereof the same as if fully set forth herein: A. Appendix A – Recommended Rules for Sizing the Water Supply System // NOT YET APPROVED 2 160831 sh 016/Dev Services/2016 Code Cycle/Final Codes/2016-08-25 (2016 Code Cyle) ORD Amending Ch 16.08 Plumbing Code 16.08.030 Cross - References to California Plumbing Code. The provisions of this Chapter contain cross-references to the provisions of the California Plumbing Code, 2016 Edition, in order to facilitate reference and comparison to those provisions. 16.08.040 Violations -- Penalties. Any person, firm or corporation violating any provision of this chapter is guilty of a misdemeanor and upon conviction thereof shall be punished as provided in subsection (a) of Section 1.08.010 of this code. Each separate day or any portion thereof during which any violation of this chapter occurs or continues shall be deemed to constitute a separate offense, and upon conviction thereof shall be punishable as provided in this section. 16.08.050 Enforcement -- Citation authority. The employee positions designated in this section may enforce the provisions of this chapter by the issuance of citations; persons employed in such positions are authorized to exercise the authority provided in Penal Code section 836.5 and are authorized to issue citations for violations of this chapter. The designated employee positions are: (1) chief building official; (2) building inspection supervisor; and (3) code enforcement officer. 16.08.060 Local Amendments. The provisions of this Chapter shall constitute local amendments to the cross-referenced provisions of the California Plumbing Code, 2016 Edition, and shall be deemed to replace the cross-referenced sections of said Code with the respective provisions set forth in this Chapter. 16.08.070 Section 306.3 Palo Alto Sewer Use. Section 306.3 is added to the California Plumbing Code to read: 306.3 Palo Alto Sewer Use. All non-domestic waste shall comply with the City of Palo Alto Sewer Use Ordinance (Palo Alto Municipal Code Chapter 16.09). Where discrepancies exist between the requirements of this code and said ordinance, the provisions of said ordinance shall apply. 16.08.080 Reserved. 16.08.090 Section 701.1, Part 4 Materials. Section 701.1, Part 4 of the California Plumbing Code is amended to read: NOT YET APPROVED 3 160831 sh 016/Dev Services/2016 Code Cycle/Final Codes/2016-08-25 (2016 Code Cyle) ORD Amending Ch 16.08 Plumbing Code 701.1 (4) Copper, copper alloys, lead and lead alloys, including brass, shall not be used for building sanitary sewer systems except for domestic waste sink traps and short lengths of associated connecting pipes where alternate materials are not practical. Where permitted by the building official, copper tube for drainage and vent piping shall have a weight of not less than that of copper drainage tube type DWV. 16.08.100 Table 701.1 Materials for Drain, Waste, Vent Pipe and Fittings. Footnote 1 is amended to Table 701.1 to read as follows: 1 For limitations on the use of Brass and Copper (Type DWV) refer to Section 701.1, Part 4. 16.08.110 Section 710.1 Backflow Protection. Section 710.1 of the California Plumbing Code is amended to read: 710.1 Backflow Protection. Fixtures installed on floor levels that are considered ground level or lower shall be protected from backflow of sewage by installing an approved type of backwater valve. Fixtures on such floor levels that are considered second floor or higher shall not discharge through the backwater valve. Cleanouts for drains that pass through a backwater valve shall be clearly identified with a permanent label stating “backwater valve downstream”. Backflow protection shall be installed under the following conditions: 1. All new construction 2. On remodels where plumbing fixtures are added to the property, and/or more than fifty percent of the structure is being remodeled. 3. When any replacement or repair is made to the sanitary sewer lateral. 4. When property has been damaged by the blockage of the city sanitary sewer main. 5. On all structures where a pump is used to lift sewage to the sanitary sewer lateral and city sanitary sewer main. The backflow relief device shall be located to protect the structure from damage in the event the pump is pumping against a closed backflow device. 6. Buildings where the elevation of any floor is at or below the invert of the city sanitary sewer main, or where a condition may exist where a plug in the city sanitary sewer main will cause the hydraulic grade line to rise above the lowest floor level. Failure of the owner to install a backflow prevention device for or as a result of any of the above conditions shall relieve the city of any and all responsibilities for any and all subsequent damage caused by sanitary sewer overflows. NOT YET APPROVED 4 160831 sh 016/Dev Services/2016 Code Cycle/Final Codes/2016-08-25 (2016 Code Cyle) ORD Amending Ch 16.08 Plumbing Code 16.08.120 Reserved. 16.08.130 Section 719.7 Cleanouts. Section 719.7 is added to the California Plumbing Code to read: 719.7 A cleanout shall be provided at the point of connection between the building sewer and the city lateral and an approved fitting shall be used to bring the cleanout riser to grade. Where sewer cleanouts are to be connected to existing city laterals, such connections shall be accomplished by use of an approved fitting. 16.08.140 Section 808.2 Cooling Water. Section 808.2 of the California Plumbing Code is added to read: 808.2 Single Pass Cooling Water Systems Prohibited. Clean running water used exclusively as a cooling medium in an appliance, device, or apparatus is prohibited. 16.08.160 Section 1014.1.3 Food Waste Disposal Units and Dishwashers. Section 10.14.1.3 of the California Plumbing Code is amended to read: 1014.1.3 Food Waste Disposal Units and Dishwashers. Unless specifically required or permitted by the Authority Having Jurisdiction, no dishwasher shall be connected to or discharge into any grease interceptor. Commercial Food Waste Disposal Units are prohibited. 16.08.170 Section 1101.3 Material Uses. Section 1101.3 of the California Plumbing Code is amended to read: 1101.3 Material Uses. Rainwater piping placed within the interior of a building or run within a vent or shaft shall be of cast iron, galvanized steel, wrought iron, Schedule 40 ABS DWV, Schedule 40 PVC DWV, stainless steel 304 or 316L (stainless steel 304 pipe and fittings shall not be installed underground and shall be kept not less than six (6) inches (152 mm) aboveground), or other approved materials, and changes in direction shall conform to the requirements of Section 706.0. ABS and PVC DWV piping installations shall be installed in accordance with IS 5 and IS 9. Except for individual single-family dwelling units, materials exposed within ducts or plenums shall have a flame-spread index of a maximum of twenty-five (25) and a smoke-developed index of a maximum of fifty (50), when tested in accordance with the Test for Surface-Burning Characteristics of the Building Materials (see the Building Code standards based on ASTM E 84 and UL 723.). ABS or PVC installations are limited to not more than two stories of areas of residential accommodation. NOT YET APPROVED 5 160831 sh 016/Dev Services/2016 Code Cycle/Final Codes/2016-08-25 (2016 Code Cyle) ORD Amending Ch 16.08 Plumbing Code 16.08.180 Section 1105.1.2 Roof Drains (Materials). Section 1105.1.2 of the California Plumbing Code is amended to read: 1105.1.2 Roof drains and conductor/leader’s shall be of cast iron, plastic or other approved materials. SECTION 2. The Council adopts the findings for local amendments to the California Plumbing Code, 2016 Edition, attached hereto as Exhibit “A” and incorporated herein by reference. SECTION 3. The Council finds that this project is exempt from the provisions of the California Environmental Quality Act (“CEQA”), pursuant to Section 15061 of the CEQA Guidelines, because it can be seen with certainty that there is no possibility that the amendments herein adopted will have a significant effect on the environment. SECTION 4. This ordinance shall be effective on the commencement of the thirty- first day after the date of its adoption. INTRODUCED: PASSED: AYES: NOES: ABSENT: ABSTENTIONS: ATTEST: ____________________________ ____________________________ City Clerk Mayor APPROVED AS TO FORM: APPROVED: ____________________________ ____________________________ City Attorney City Manager ____________________________ Director of Development Services ____________________________ Director of Administrative Services NOT YET APPROVED 6 160831 sh 016/Dev Services/2016 Code Cycle/Final Codes/2016-08-25 (2016 Code Cyle) ORD Amending Ch 16.08 Plumbing Code Exhibit A FINDINGS FOR LOCAL AMENDMENTS TO CALIFORNIA PLUMBING CODE, 2016 EDITION Section 17958 of the California Health and Safety Code provides that the City may make changes to the provisions in the uniform codes that are published in the California Building Standards Code. Sections 17958.5 and 17958.7 of the Health and Safety Code require that for each proposed local change to those provisions in the uniform codes and published in the California Building Standards Code which regulate buildings used for human habitation, the City Council must make findings supporting its determination that each such local change is reasonably necessary because of local climatic, geological, or topographical conditions. Local building regulations having the effect of amending the uniform codes, which were adopted by the City prior to November 23, 1970, were unaffected by the regulations of Sections 17958, 17958.5 and 17958.7 of the Health and Safety Code. Therefore, amendments to the uniform codes which were adopted by the City Council prior to November 23, 1970, and have been carried through from year to year without significant change, need no required findings. Also, amendments to provisions not regulating buildings used for human habitation, including amendments made only for administrative consistency, do not require findings. Code: CPC Section Title Add Deleted Amended Justification (See below for keys) 306.3 Palo Alto Sewer Use  C 701.1, Part4 Materials  T Table 701.1 Materials for Drain, Waste, vent Pipe and Fittings  T 710.1 Backflow Protection  T 719.7 Cleanouts  T & G 808.2 Cooling Water  C & T 1014.1.3 Food Waste Disposal Units and Dishwashers  T 1101.3 Material Uses  G T 1105.1.2 Roof Drains (Materials)  T Appendix A Recommended Rules for Sizing the Water Supply System  C & T NOT YET APPROVED 7 160831 sh 016/Dev Services/2016 Code Cycle/Final Codes/2016-08-25 (2016 Code Cyle) ORD Amending Ch 16.08 Plumbing Code Key to Justification for Amendments to Title 24 of the California Code of Regulations This amendment is justified on the basis of a local climatic condition. The seasonal climatic conditions during the late summer and fall create severe fire hazards to the public health and welfare in the City. The hot, dry weather frequently results in wild land fires on the brush covered slopes west of Interstate 280. The aforementioned conditions combined with the geological characteristics of the hills within the City create hazardous conditions for which departure from California Building Standards Code is required. C G T This amendment is justified on the basis of a local geological condition. The City of Palo Alto is subject to earthquake hazard caused by its proximity to San Andreas fault. This fault runs from Hollister, through the Santa Cruz Mountains, epicenter of the 1989 Loma Prieta earthquake, then on up the San Francisco Peninsula, then offshore at Daly City near Mussel Rock. This is the approximate location of the epicenter of the 1906 San Francisco earthquake. The other fault is Hayward Fault. This fault is about 74 mi long, situated mainly along the western base of the hills on the east side of San Francisco Bay. Both of these faults are considered major Northern California earthquake faults which may experience rupture at any time. Thus, because the City is within a seismic area which includes these earthquake faults, the modifications and changes cited herein are designed to better limit property damage as a result of seismic activity and to establish criteria for repair of damaged properties following a local emergency. The City of Palo Alto topography includes hillsides with narrow and winding access, which makes timely response by fire suppression vehicles difficult. Palo Alto is contiguous with the San Francisco Bay, resulting in a natural receptor for storm and waste water run-off. Also the City of Palo Alto is located in an area that is potentially susceptible to liquefaction during a major earthquake. The surface condition consists mostly of stiff to dense sandy clay, which is highly plastic and expansive in nature. The aforementioned conditions within the City create hazardous conditions for which departure from California Building Standards Code is warranted. NOT YET APPROVED 1 160831 sh 016/Dev Services/2016 Code Cycle/Final Codes/2016-08-25 (2016 Code Cycle) ORD Amending Ch 16.06 Residential Code Ordinance No. ____ Ordinance of the Council of the City of Palo Alto Repealing Chapter 16.06 of the Palo Alto Municipal Code and Amending Title 16 to Adopt a New Chapter 16.06, California Residential Code, 2016 Edition, and Local Amendments and Related Findings The Council of the City of Palo Alto does ORDAIN as follows: SECTION 1. Chapter 16.06 of Palo Alto Municipal Code is hereby amended by repealing the Chapter in its entirety and adopting a new Chapter 16.06 to read as follows: 16.06.010 2016 California Residential Code adopted. The California Residential Code, 2016 Edition, Title 24, Part 2.5 of the California Code of Regulations, together with those omissions, amendments, exceptions and additions thereto, is adopted and hereby incorporated in this Chapter by reference and made a part hereof the same as if fully set forth herein. Unless superseded and expressly repealed, references in City of Palo Alto forms, documents and regulations to the chapters and sections of the former California Code of Regulations, Title 24, 2013, shall be construed to apply to the corresponding provisions contained within the California Code of Regulations, Title 24, 2016. Ordinance No. 5218 of the City of Palo Alto and all other ordinances or parts of ordinances in conflict herewith are hereby suspended and expressly repealed. Wherever the phrases "California Residential Code" or "Residential Code" are used in this code or any ordinance of the city, such phrases shall be deemed and construed to refer and apply to the California Residential Code, 2016 Edition, as adopted by this Chapter. One copy of the California Residential Code, 2016 Edition, has been filed for use and examination of the public in the Office of the Building Official of the City of Palo Alto. 16.06.020 2016 California Residential Code Appendix Chapters adopted. The following Appendix Chapters of the California Residential Code, 2016 Edition, are adopted and hereby incorporated in this Chapter by reference and made a part hereof the same as if fully set forth herein: A. Appendix H – Patio Covers B. Appendix K – Sound Transmission C. Appendix V – Swimming Pool Safety Act ATTACHMENT D NOT YET APPROVED 2 160831 sh 016/Dev Services/2016 Code Cycle/Final Codes/2016-08-25 (2016 Code Cycle) ORD Amending Ch 16.06 Residential Code 16.06.030 Cross - References to California Residential Code. The provisions of this Chapter contain cross-references to the provisions of the California Residential Code, 2016 Edition, in order to facilitate reference and comparison to those provisions. 16.06.040 Section 1.11.2.1.1 Duties and powers of the enforcing agency/Enforcement is amended with the following language: Section 1.11.2.1.1 Duties and powers of the enforcing agency/Enforcement The responsibility for enforcement of building standards adopted by the State Fire Marshal and published in the California Building Standards Code relating to fire and panic safety and other regulations of the State Fire Marshal shall, except as provided in Section 1.11.2.1.2, be as follows: 1. The city, county or city and county with jurisdiction in the area affected by the standard or regulation shall delegate the enforcement of the building standards relating to fire and panic safety and other regulations of the State Fire Marshal as they relate to Group R-3 occupancies, as described in Section 310.1 of Part 2 of the California Building Standards Code, to both enforcement divisions specific to their areas of enforcement disciplines: 1.1 The chief of the fire authority of the city, county or city and county, or an authorized representative and; 1.2. The chief building official of the city, county or city and county, or an authorized representative. 16.06.050 Violations -- Penalties. Any person, firm or corporation violating any provision of this chapter is guilty of a misdemeanor and upon conviction thereof shall be punished as provided in subsection (a) of Section 1.08.010 of this code. Each separate day or any portion thereof during which any violation of this chapter occurs or continues shall be deemed to constitute a separate offense, and upon conviction thereof shall be punishable as provided in this section. When the building official determines that a violation of this chapter or chapters 16.04, 16.05, 16.08, 16.14, 16.16 or 16.17 of this code has occurred, he/she may record a notice of pendency of code violation with the Office of the County Recorder stating the address and owner of the property involved. When the violation has been corrected, the building official shall issue and record a release of the notice of pendency of code violation. 16.06.060 Enforcement -- Citation authority. The employee positions designated in this section may enforce the provisions of this chapter by the issuance of citations; persons employed in such positions are authorized to exercise the authority provided in Penal Code section 836.5 and are authorized to issue citations for NOT YET APPROVED 3 160831 sh 016/Dev Services/2016 Code Cycle/Final Codes/2016-08-25 (2016 Code Cycle) ORD Amending Ch 16.06 Residential Code violations of this chapter. The designated employee positions are: (1) chief building official; (2) building inspection supervisor; and (3) code enforcement officer. 16.06.070 Local Amendments. The provisions of this Chapter shall constitute local amendments to the cross-referenced provisions of the California Residential Code, 2016 Edition, and shall be deemed to replace the cross-referenced sections of said Code with the respective provisions set forth in this Chapter. 16.06.080 Reserved. 16.06.090 Section R105.1.2 Demolition permits is added to read: Section R105.1.2 Demolition Permits. In addition to other requirements of law, every person seeking a permit to demolish a unit used for residential rental purposes shall furnish an affidavit or declaration under penalty of perjury that the unit proposed to be demolished is vacant, or that notice to vacate has been given to each tenant lawfully in possession thereof as required by law or by the terms of such tenancy. No work or demolition shall begin upon any portion of such a unit until each and every portion has been vacated by all tenants lawfully in possession thereof. 16.04.100 Section R105.5 Expiration is amended to read: R105.5 Expiration. Every permit issued shall become invalid unless the work on the site authorized by such permit is commenced within 180 days after its issuance, or if the work authorized on the site by such permit is suspended or abandoned for a period of 180 days after the time the work is commenced. The chief building official is authorized to grant, in writing, one or more extensions of time, for periods not more than 180 days each and may require; 1) that the construction documents be revised to partially or fully comply with current codes, and 2) payment of a fee. Extensions shall be requested in writing and justifiable cause demonstrated. For the purpose of this section, failure to progress a project to the next level of required inspection shall be deemed to be suspension of the work. 16.06.110 Section R108.5 Refunds is amended to read: R108.5 Refunds. The building official or permit center manager may authorize the refund of any fee paid hereunder which was erroneously paid or collected. The building official or permit center manager may authorize the refund of not more than eighty percent (80%) of the permit fee paid when no work has occurred under a permit issued NOT YET APPROVED 4 160831 sh 016/Dev Services/2016 Code Cycle/Final Codes/2016-08-25 (2016 Code Cycle) ORD Amending Ch 16.06 Residential Code pursuant to this Chapter. The building official or permit center manager may authorize the refund of not more than eighty percent (80%) of the Plan Review Fee paid when a permit application is withdrawn or canceled before any plan review work has started. 16.06.120 Section R109.1.3 Floodplain Inspection is amended to read: R109.1.3 Floodplain Inspections. In flood hazard areas, upon placement of the lowest floor, including the basement, and prior to further vertical construction, the elevation certification shall be submitted to City Public Works Engineering for inspection approval prior to foundation inspection by city building inspection. 16.06.130 Section R109.5 Re-Inspection Fees Assessed/Authorized is added to read: R109.5 Re-Inspection Fees. A Re-Inspection Fee may be assessed/authorized by the building official or building inspection supervisor for each re-inspection required when work for which an inspection is requested is not ready for inspection or when required corrections noted during prior inspections have not been completed. A “Re-Inspection Fee” may be assessed/authorized when; 1. The inspection record card is not posted or otherwise available on the work site, 2. The approved plans are not readily available for the inspector at the time of inspection, 3. The inspector is unable to access the work at the time of inspection, or; 4. When work has substantially deviated from the approved plans without the prior approval of the building official. 5. When a Re-Inspection Fee is assessed, additional inspection of the work will not be performed until the fee has been paid. 16.06.140 Section R110.1 Use and Occupancy is amended to read: R110.1 Use and Occupancy. No building or structure shall be used or occupied, and no change in the existing occupancy classification of a building or structure or portion thereof shall be made, until the building official has issued a certificate of occupancy therefor as provided herein. Issuance of a certificate of occupancy shall not be construed as an approval of a violation of the provisions of this code or of other ordinances of the jurisdiction. Exception: Certificates of occupancy are not required for work exempt from permits under Section 105.2: 1. Group R - Division 3 occupancies 2. Group U occupancies 16.06.150 Section R202 amended – Definitions added. Section R202 of the California Residential Code is amended to include the following definitions: NOT YET APPROVED 5 160831 sh 016/Dev Services/2016 Code Cycle/Final Codes/2016-08-25 (2016 Code Cycle) ORD Amending Ch 16.06 Residential Code DUAL SENSOR PHOTOELECTRIC/IONIZATION SMOKE DETECTOR OR ALARM. A smoke alarm or detector that utilizes both photoelectric and ionization methods in a single device. DUAL SENSOR CARBON MONOXIDE AND SMOKE ALARM. A combination carbon monoxide and smoke alarm or detector that senses both smoke and CO in a single device. PHOTOELECTRIC SMOKE DETECTOR OR ALARM. A smoke alarm or detector that uses a light-source to detect the presence of smoke. WILDLAND-URBAN INTERFACE FIRE AREA is a geographical area identified by the State of California as a “Fire Hazard Severity Zone” in accordance with Public Resources Code Sections 4201 through 4202 and Government Code Sections 51175 through 51189, or other areas designated by the enforcing agency to be at a significant risk from wildfires. Within the city limits of the City of Palo Alto, “Wildland-Urban Fire Interface Area” shall also include all areas west of Interstate 280, and all other areas recommended as a “Very High Fire Hazard Severity Zone” by the Director of the California Department of Forestry. 16.06.160 Table 301.2(1) Climatic and Geographic Design Criteria: Section Table 301.2(1) of the California Residential Code is added to read: TABLE R301.2(1) CLIMATIC AND GEOGRAPHIC DESIGN CRITERIA GROUND SNOW LOAD WIND DESIGN SEISMIC DESIGN CATEGORY SUBJECT TO DAMAGE FROM Speed (mph) Topographic effects Weathering Frost line depth Termite 0 85 No D1 thru E Negligible 5” Very High WINTER DESIGN TEMP. (OF) ICE BARRIER UNDERLAYEMENT REQUIRED FLOOD HAZARDS AIR FREEZING INDEX MEAN ANNUAL TEMP. (OF) 40 No See Footnotes n thru p 0 55 n The City of Palo Alto entered National Flood Insurance Program in 1979. o The effective date of the current Flood Insurance Study and Flood Insurance Rate Map is May 18, 2009. p The panel numbers and dates of all currently effective FIRMs and FBFMs: 06085CIND0A, 06085C0010H, 06085C0015H through 06085C0019H, 06085C0030H, 06085C0036H , 06085C0038H , 06085C0180H , 06085C0185H ( May 18, 2009 for all) NOT YET APPROVED 6 160831 sh 016/Dev Services/2016 Code Cycle/Final Codes/2016-08-25 (2016 Code Cycle) ORD Amending Ch 16.06 Residential Code 16.06.170 Section R310.2.3.3 Window Well Fall Protection: Section R310.2.3.3 of the California Residential Code is added to read: R310.2.3.3 Window Well Fall Protection. Window wells with a vertical depth greater than 30 inches shall have guards on all sides. The guards shall be provided in accordance with Section R312.1. Openings shall comply with Section R312.1.3. Access ladder shall comply with Section R310.2.1 and shall extend from the bottom of the well to the top of the guard. 16.06.180 Section R310.4.1 Security Bars: Section R310.4.1 of the California Residential Code is added to read: R310.4.1 Security Bars. Fire Department plan check review and approval of all security bar submittals shall be required prior to the issuance of a Building Permit. 16.06.190 Section R313.2 One- and two-family dwellings automatic fire sprinkler systems. Section R313.2 of the California Residential Code is amended to read: R313.2 One- and two-family dwellings automatic fire sprinkler systems. Approved automatic sprinkler systems in new buildings and structures and in existing modified buildings and structures, shall be provided in the locations described in this section. Automatic fire sprinklers shall be installed per the requirements set forth in Sections 903.2.1 through 903.2.18 and as follows, whichever is the more restrictive: 1. An automatic sprinkler system shall be provided throughout all new buildings and structures. Exception: New residential occupancies, buildings or structures that do not exceed 350 square feet of building area. 2. An automatic sprinkler system shall be provided for all existing buildings or structures where modifications have been determined by the Building Official to trigger requirements for seismic retrofit. 3. An automatic sprinkler system shall be provided throughout all existing buildings when modifications are made that create an increase in fire area to more than 3600 square feet or when the addition is equal or greater than 50% of the existing building square footage whichever is more restrictive. NOT YET APPROVED 7 160831 sh 016/Dev Services/2016 Code Cycle/Final Codes/2016-08-25 (2016 Code Cycle) ORD Amending Ch 16.06 Residential Code 4. An automatic sprinkler system shall be provided throughout all new basements regardless of size and throughout existing basements that are expanded by more than 50% or is conditioned for use. If the addition is only the basement, then only the basement is required to be fire sprinkler protection. 5. An automatic sprinkler system shall be installed throughout when either the roof structure or exterior wall structure have been removed and/ or replaced by at least 50% of the existing structure. 6. An automatic sprinkler system shall be installed throughout when any change in use or occupancy creating a more hazardous fire/life safety condition, as determined by the Fire Chief. 16.04.193 Section R313.1.1 – Design and installation Section R313.1.1 of the California Residential Code is amended to read as follows: R313.1.1 Design and installation. Where allowed, automatic sprinkler systems installed in townhouses shall be installed throughout in accordance with NFPA 13D and State and local standards. 16.04.195 Section R313.2.1 – Design and installation Section R313.2.1 of the California Residential Code is amended to read as follows: R313.2.1 Design and installation. R313.2.1 Design and installation. Where allowed, automatic sprinkler systems installed in one-and two-family detached dwellings shall be installed throughout in accordance with NFPA 13D and Stat and local standards. 16.06.200 Section R314.1– Smoke detection and notification. Section R314.1 of the California Residential Code is amended to read: R314.1 Smoke detection and notification. Listed single- and multiple-station smoke alarms complying with UL 217 shall be installed in accordance with the California Fire Code Sections 907.2.11.1 through 907.2.11.5 and manufacturer’s installation and use instructions. Smoke alarms and smoke detectors shall be in compliance with this code or subject to the provisions of the Health and Safety Code, they shall also be listed and approved for rapid response to smoldering synthetic materials. All smoke alarms or detectors shall be of the photoelectric type or shall have equivalent detection capabilities in compliance with UL 217. NOT YET APPROVED 8 160831 sh 016/Dev Services/2016 Code Cycle/Final Codes/2016-08-25 (2016 Code Cycle) ORD Amending Ch 16.06 Residential Code Exception: A combination photoelectric/ionization smoke alarm or detector may be used if located no closer than 20 feet to a kitchen, bathroom, fireplace or woodburning stove. 16.06.205 Section R319.1 Address Numbers. The following subsections are added to Section R319.1 of the California Residential Code: R319.1.1 Address illumination. Address identification required by Section R319.1 shall be illuminated. R319.1.2 Address identification size. Address numbers and letters shall be sized as follows: 1. When the structure is between thirty-six (36) and fifty (50) feet from the road or other emergency means of access, a minimum of one-half inch (0.5”) stroke by six inches (6”) high is required. 2. When the structure is fifty (50) or more feet from the road or other emergency means of access, a minimum of one inch (1”) stroke by nine inches (9”) high is required. 16.06.210 Section R322.1 – General. The following paragraph is added to Section R322.1 of the California Residential Code: Palo Alto Flood Hazard Regulations. Notwithstanding the provisions of this section, all construction or development within a flood hazard area (areas depicted as a Special Flood Hazard Area on Flood Insurance Rate Maps published by the Federal Emergency Management Agency) shall comply with the City of Palo Alto Flood Hazard Regulations (Palo Alto Municipal Code Chapter 16.52). Where discrepancies exist between the requirements of this code and said regulations, the provisions of said regulations shall apply. 16.06.220 Section R327.1.5 Vegetation management compliance. Section R327.1.5 of the California Residential Code is amended to read: R327.1.5 Vegetation management compliance. Prior to building permit final approval, the property shall be in compliance with the vegetation management requirements prescribed-in California Fire Code section 4906, including California Public Resources Code 4291 or California Government Code Section 51182. Acceptable methods of compliance inspection and documentation shall be determined by the enforcing agency and may include any of the following: 1. Local, state, or federal fire authority or designee authorized to enforce vegetation management requirements. 2. Enforcing agency - City of Palo Alto Fire Inspection shall inspect the aforementioned NOT YET APPROVED 9 160831 sh 016/Dev Services/2016 Code Cycle/Final Codes/2016-08-25 (2016 Code Cycle) ORD Amending Ch 16.06 Residential Code requirements and indicate compliance prior to building division final inspection sign- off. 3. Third party inspection and certification authorized to enforce vegetation management requirements. 4. Property owner certification authorized by the enforcing agency. 16.06.230 Section R403.1.3 Seismic Reinforcing. Section R403.1.3 of the California Residential Code is amended to read: R403.1.3 Seismic reinforcing. Concrete footings located in Seismic Design Categories D0, D1 and D2, as established in Table R301.2.2.1.1 , shall have minimum reinforcement of at least three continuous longitudinal reinforcing bars, one top and two bottom and not smaller than No. 4 bars. Bottom reinforcement shall be located a minimum of 3 inches (76 mm) clear from the bottom of the footing. In Seismic Design Categories D0, D1 and D2 where a construction joint is created between a concrete footing and a stem wall, a minimum of one No. 4 bar shall be installed at not more than 4 feet (1219 mm) on center. The vertical bar shall extend to 3 inches (76 mm) clear of the bottom of the footing, have a standard hook and extend a minimum of 14 inches (357 mm) into the stem wall. In Seismic Design Categories D0, D1 and D2 where a grouted masonry stem wall is supported on a concrete footing and stem wall, a minimum of one No. 4 bar shall be installed at not more than 4 feet (1219 mm) on center. The vertical bar shall extend to 3 inches (76 mm) clear of the bottom of the footing and have a standard hook. In Seismic Design Categories D0, D1 and D2 masonry stem walls without solid grout and vertical reinforcing are not permitted. 16.06.240 Section R403.1.8 – Foundations on expansive soils. Section R403.1.8 of the California Residential Code is amended to read: R403.1.8 Foundations on expansive soils. Foundations and floor slabs for buildings located on expansive soils shall be designed in accordance with Section 1808.6 or Table 1809.7 of the California Building Code. Table 1809.7 of the California Building Code is added and amended to read: // // NOT YET APPROVED 10 160831 sh 016/Dev Services/2016 Code Cycle/Final Codes/2016-08-25 (2016 Code Cycle) ORD Amending Ch 16.06 Residential Code TABLE 1809.7 Prescriptive Footings Supporting Walls of Light-Frame Constructionabcd Number of Floors Supported by the Footing e Thickness of Foundation Wall (inches) Width of Footing (inches) Thickness of Footing (inches) Depth of Foundation Below Natural Surface of Ground or Finish Grade (inches) 1&2 8 15 8 20 3 8 18 8 30 Group U Occupancies 8 12 8 12 a) The ground under the floor shall be permitted to be excavated to the elevation of the top of the footing. b) Interior stud-bearing walls shall be permitted to be supported by isolated footings. The footing width and length shall be twice the width shown in this table, and footings shall be spaced not more than 6 feet on center. c) See Section 1905 of California Building Code for additional requirements for concrete footings of structures assigned to Seismic Design Category C, D, E or F. d) All foundations as required in the above Table shall be continuous and have a minimum of three #4 bars of reinforcing steel, except for one story, detached accessory buildings of Group U occupancy where two bars are required. e) Footings shall be permitted to support a roof in addition to the stipulated number of floors. Footings supporting roof only shall be as required for supporting one floor. 16.06.245 Section R504.3.1 Projections exposed to weather. Section R504.3.1 of the California Residential Code is amended to read: R504.3.1 Projections exposed to weather. Floor projections exposed to the weather and sealed underneath, including but not limited to balconies, landings, decks, and stairs shall be constructed of naturally durable wood, preservative-treated wood, corrosion-resistant (e.g. galvanized) steel, or similar approved materials. // NOT YET APPROVED 11 160831 sh 016/Dev Services/2016 Code Cycle/Final Codes/2016-08-25 (2016 Code Cycle) ORD Amending Ch 16.06 Residential Code 16.06.250 Table R602.10.3(3) – Bracing Requirements Based on Seismic Design Category. Footnote e is added to Table R602.10. 3(3) to read as follows: e. In Seismic Design Categories D0, D1 and D2, Methods GB and PCP are not permitted. 16.06.253 Section R703.8.5.1 Locations. Section R703.8.1 of the California Residential Code is added to read: R703.8.5.1 Locations. Flashing shall be installed at wall and roof intersections, gutters, wherever there is a change in roof slope or direction, and around roof openings. Where flashing is of metal, the metal shall be corrosion resistant with a thickness of not less than 0.019 inches (0.483 mm) (e.g. no. 26 galvanized sheet) and shall be primed and painted. 16.06.255 Section R806.6 Ventilation of weather-exposed enclosed assemblies. Section R806.6 of the California Residential Code is added to read: R806.6 Ventilation of weather-exposed enclosed assemblies. Exterior projecting elements and appurtenances exposed to the weather and sealed underneath, including but not limited to balconies, landings, decks, and stairs, shall have cross ventilation for each separate enclosed space by ventilation openings protected against the entrance of rain and snow. Blocking and bridging shall be arranged so as not to interfere with the movement of air. The net free ventilating area shall not be less than 1/150th of the area of the space ventilated. Ventilation openings shall comply with Section R806.1 . An access panel of sufficient size shall be provided on the underside of the enclosed space to allow for periodic inspection. Exceptions: 1. An access panel is not required where the exterior coverings applied to the underside of joists are easily removable using only common tools. 2. Removable soffit vents 4 inches minimum in width can be used to satisfy both ventilation and access panel requirements. 16.06.260 Section R902.1.4 – Roofing requirements in a Wildland-Urban Interface Fire Area. Section R902.1.4 of the California Residential Code is amended to read: R902.1.4 Roofing requirements in a Wild Land-Urban Interface Fire Area. The entire roof covering on new structures and existing structures on which more than 50 percent of the total roof area is replaced within any one-year period, and any roof covering applied in the alteration, repair or replacement of roofs on existing structures, shall be a fire-retardant roof covering that is at least Class A. Roofing requirements for structures located in a Wildland-Urban Interface Fire Area shall also comply with Section R327.5. // NOT YET APPROVED 12 160831 sh 016/Dev Services/2016 Code Cycle/Final Codes/2016-08-25 (2016 Code Cycle) ORD Amending Ch 16.06 Residential Code 16.06.270 Section R1003.9.2.1 – Repairs, replacements and alterations. Section R1003.9.2.1 is added to the California Residential Code to read: R1003.9.2.1 Repairs, replacements and alterations. When any repair, replacement or alteration to the roof of an existing structure is performed, a spark arrester shall be installed on the existing chimney in accordance with Section R1003.9.2. SECTION 2. The Council adopts the findings for local amendments to the California Residential Code, 2013 Edition, attached hereto as Exhibit “A” and incorporated herein by reference. SECTION 3. The Council finds that this project is exempt from the provisions of the California Environmental Quality Act (“CEQA”), pursuant to Section 15061 of the CEQA Guidelines, because it can be seen with certainty that there is no possibility that the amendments herein adopted will have a significant effect on the environment. SECTION 4. This ordinance shall be effective on the thirty-first day after the date of its adoption. INTRODUCED: PASSED: AYES: NOES: ABSENT: ABSTENTIONS: ATTEST: ____________________________ ____________________________ City Clerk Mayor APPROVED AS TO FORM: APPROVED: ____________________________ ____________________________ Senior Deputy City Attorney City Manager ____________________________ Director of Development Services ____________________________ Director of Administrative Services NOT YET APPROVED 13 160831 sh 016/Dev Services/2016 Code Cycle/Final Codes/2016-08-25 (2016 Code Cycle) ORD Amending Ch 16.06 Residential Code Exhibit A FINDINGS FOR LOCAL AMENDMENTS TO CALIFORNIA RESIDENTIAL CODE (CRC) Section 17958 of the California Health and Safety Code provides that the City may make changes to the provisions of the California Building Standards Code. Sections 17958.5 and 17958.7 of the Health and Safety Code require that for each proposed local change to those provisions of the California Building Standards Code which regulate buildings used for human habitation, the City Council must make findings supporting its determination that each such local change is reasonably necessary because of local climatic, geological, or topographical conditions. Code: CRC Section Title Add Deleted Amended Justification (See below for keys) R 202 Definition (Dual Sensor Carbon Monoxide and Smoke Alarm)  T Table R301.2(1) Climatic and Geographic Design Criteria  C, G, T R310.2.3.3 Window Well Fall Protection  T R 310.4.1 Security Bars  T R313.1.1 Design and installation  T R 313.2 One and Two Family Dwellings Automatic Spr. Syst.  T R313.2.1 Design and installation  T R313.3.1.1 Required sprinkler locations  T R 314.1 Smoke Detection and Notification  C, T R 319.1 Address Identification  T R 322.1 Flood Hazard Regulations  T R 327.1.5 Vegetation Management Compliance  T R403.1.3 Seismic Reinforcing  G R 403.1.8 Foundation on expansive Soils  G, T R 504.3.1 Projections exposed to weather  G, T Table R602.10.3(3) Bracing Requirements Based on Seismic Design Category  G R 703.8.5.1 Flashing Locations  T R 806.6 Ventilation of Weather-Exposed, Enclosed Assemblies  G, T R902.1.4 Roofing Requirements in Wildland- Urban Interface Fire Area  T NOT YET APPROVED 14 160831 sh 016/Dev Services/2016 Code Cycle/Final Codes/2016-08-25 (2016 Code Cycle) ORD Amending Ch 16.06 Residential Code R1003.9.2.1 Repairs, Replacements and Alterations  T Appendix H Patio Covers  C Appendix K Sound Transmission  C Appendix V Swimming Pool Safety Act  C, G Key to Justification for Amendments to Title 24 of the California Code of Regulations This amendment is justified on the basis of a local climatic condition. The seasonal climatic conditions during the late summer and fall create severe fire hazards to the public health and welfare in the City. The hot, dry weather frequently results in wild land fires on the brush covered slopes west of Interstate 280. The aforementioned conditions combined with the geological characteristics of the hills within the City create hazardous conditions for which departure from California Building Standards Code is required. C G T This amendment is justified on the basis of a local geological condition. The City of Palo Alto is subject to earthquake hazard caused by its proximity to San Andreas fault. This fault runs from Hollister, through the Santa Cruz Mountains, epicenter of the 1989 Loma Prieta earthquake, then on up the San Francisco Peninsula, then offshore at Daly City near Mussel Rock. This is the approximate location of the epicenter of the 1906 San Francisco earthquake. The other fault is Hayward Fault. This fault is about 74 mi long, situated mainly along the western base of the hills on the east side of San Francisco Bay. Both of these faults are considered major Northern California earthquake faults which may experience rupture at any time. Thus, because the City is within a seismic area which includes these earthquake faults, the modifications and changes cited herein are designed to better limit property damage as a result of seismic activity and to establish criteria for repair of damaged properties following a local emergency. The City of Palo Alto topography includes hillsides with narrow and winding access, which makes timely response by fire suppression vehicles difficult. Palo Alto is contiguous with the San Francisco Bay, resulting in a natural receptor for storm and waste water run-off. Also the City of Palo Alto is located in an area that is potentially susceptible to liquefaction during a major earthquake. The surface condition consists mostly of stiff to dense sandy clay, which is highly plastic and expansive in nature. The aforementioned conditions within the City create hazardous conditions for which departure from California Building Standards Code is warranted. NOT YET APPROVED 1 160830 sh 016/Dev Services/2016 Code Cycle/Final Codes/2016-08-25 (2016 Code Cyle) ORD Amending Ch 16.16 Electrical Code Ordinance No. ____ Ordinance of the Council of the City of Palo Alto Repealing Chapter 16.16 of the Palo Alto Municipal Code And Amending Title 16 to Adopt a New Chapter 16.16, California Electrical Code, 2016 Edition, and Local Amendments and Related Findings The Council of the City of Palo Alto does ORDAIN as follows: SECTION 1. Chapter 16.16 of the Palo Alto Municipal Code is hereby amended by repealing in its entirety 16.16 and adopting a new Chapter 16.16 to read as follows: 16.16 CALIFORNIA ELECTRICAL CODE 16.16.010 2016 California Electrical Code adopted. The California Electrical Code, 2016 Edition, Title 24, Part 4 of the California Code of Regulations together with those omissions, amendments, exceptions and additions thereto, is adopted and hereby incorporated in this Chapter by reference and made a part hereof the same as if fully set forth herein. Unless superseded and expressly repealed, references in City of Palo Alto forms, documents and regulations to the chapters and sections of the former California Code of Regulations, Title 24, 2013, shall be construed to apply to the corresponding provisions contained within the California Code of Regulations, Title 24, 2016. Ordinance No. 5221 of the City of Palo Alto and all other ordinances or parts of ordinances in conflict herewith are hereby suspended and expressly repealed. Wherever the phrases "California Electrical Code" or "Electrical Code" are used in this code or any ordinance of the City, such phrases shall be deemed and construed to refer and apply to the California Electrical Code, 2016 Edition, as adopted by this Chapter. One copy of the California Electrical Code, 2016 edition, has been filed for use and examination of the public in the Office of the Building Official of the City of Palo Alto. 16.16.020 2016 California Electrical Code Annex Chapters adopted. The following Annex Chapters of the California Electrical Code, 2016 Edition, are adopted and hereby incorporated in this Chapter by reference and made a part hereof the same as if fully set forth herein: A. Annex B – Application Information for Ampacity Calculations B. Annex C – Conduit and Tubing Fill Tables for Conductors and Fixture Wires of the Same Size C. Annex I – Unit Recommended Tightening Torque Tables from UL Standard 486A-B ATTACHMENT E NOT YET APPROVED 2 160830 sh 016/Dev Services/2016 Code Cycle/Final Codes/2016-08-25 (2016 Code Cyle) ORD Amending Ch 16.16 Electrical Code 16.16.030 Cross - References to California Electrical Code. The provisions of this Chapter contain cross-references to the provisions of the California Electrical Code, 2016 Edition, in order to facilitate reference and comparison to those provisions. 16.16.040 Section 89.102.2.3 Third Party Field Evaluation. Section 89.102.2.3 is added to read: 89.102.2.3 Third-Party Field Evaluation. City of Palo Alto approved applications for Third-Party Field Evaluators shall be submitted for each project submitting evaluation reports on Electrical Systems and others as required for these types of reports. Educational background, training experience, professional licenses, registrations or certificates, and other applicable qualifications for each key personnel shall include information as required and defined in NFPA 790 and 791 including but not limited to: a. Technical Manager, direct Supervisor of FEB operations, and individual(s) managing the management system, minimum competency for personnel completing Field Evaluation projects, including educational background, experience, training, and professional registration. b. Provide information on the basic evaluation process to the building official in determining the adequacy and completeness of submitted evaluations and evaluation reports. 16.16.050 Section 110.13 Mounting and Cooling of Equipment. Section 110.13 (A) (1) is added to read: 110.13 (A) (1) Slab-On-Grade Supporting Electrical Equipment. When electrical equipment is proposed to be installed, including temporary electrical for construction, in locations where the deleterious effects of the environment may create adverse maintenance issues with ground mounted electrical equipment a concrete slab-on- grade shall be installed to elevate, protect, and attach equipment to per City of Palo Alto Electrical Utilities Standards or approved engineering design. 16.16.060 Violations -- Penalties. Any person, firm or corporation violating any provision of this chapter is guilty of a misdemeanor and upon conviction thereof shall be punished as provided in subsection (a) of Section 1.08.010 of this code. Each separate day or any portion thereof during which any violation of this chapter occurs or continues shall be deemed to constitute a separate offense, and upon conviction thereof shall be punishable as provided in this section. // NOT YET APPROVED 3 160830 sh 016/Dev Services/2016 Code Cycle/Final Codes/2016-08-25 (2016 Code Cyle) ORD Amending Ch 16.16 Electrical Code 16.16.070 Enforcement -- Citation authority. The employee positions designated in this section may enforce the provisions of this chapter by the issuance of citations; persons employed in such positions are authorized to exercise the authority provided in Penal Code section 836.5 and are authorized to issue citations for violations of this chapter. The designated employee positions are: (1) chief building official; (2) building inspection supervisor; and (3) code enforcement officer. 16.16.080 Local Amendments. The provisions of this Chapter shall constitute local amendments to the cross-referenced provisions of the California Electrical Code, 2016 Edition, and shall be deemed to replace the cross-referenced sections of said Code with the respective provisions set forth in this Chapter. SECTION 2. The Council adopts the findings for local amendments to the California Electrical Code, 2016 Edition, attached hereto as Exhibit “A” and incorporated herein by reference. SECTION 3. The Council finds that this project is exempt from the provisions of the California Environmental Quality Act (“CEQA”), pursuant to Section 15061 of the CEQA Guidelines, because it can be seen with certainty that there is no possibility that the amendments herein adopted will have a significant effect on the environment. // // // // // // // // // // // NOT YET APPROVED 4 160830 sh 016/Dev Services/2016 Code Cycle/Final Codes/2016-08-25 (2016 Code Cyle) ORD Amending Ch 16.16 Electrical Code SECTION 4. This ordinance shall be effective on the commencement of the thirty- first day after the date of its adoption. INTRODUCED: PASSED: AYES: NOES: ABSENT: ABSTENTIONS: ATTEST: ____________________________ ____________________________ City Clerk Mayor APPROVED AS TO FORM: APPROVED: ____________________________ ____________________________ City Attorney City Manager ____________________________ Director of Development Services ____________________________ Director of Administrative Services NOT YET APPROVED 5 160830 sh 016/Dev Services/2016 Code Cycle/Final Codes/2016-08-25 (2016 Code Cyle) ORD Amending Ch 16.16 Electrical Code Exhibit A FINDINGS FOR LOCAL AMENDMENTS TO CALIFORNIA ELECTRICAL CODE, 2016 Section 17958 of the California Health and Safety Code provides that the City may make changes to the provisions of the California Building Standards Code. Sections 17958.5 and 17958.7 of the Health and Safety Code require that for each proposed local change to those provisions of the California Building Standards Code which regulate buildings used for human habitation, the City Council must make findings supporting its determination that each such local change is reasonably necessary because of local climatic, geological, or topographical conditions. Local building regulations having the effect of amending the uniform codes, which were adopted by the City prior to November 23, 1970, were unaffected by the regulations of Sections 17958, 17958.5 and 17958.7 of the Health and Safety Code. Therefore, amendments to the uniform codes which were adopted by the City Council prior to November 23, 1970, and have been carried through from year to year without significant change, need no required findings. Also, amendments to provisions not regulating buildings used for human habitation do not require findings. Code: CEC Section Title Add Justification (See below for keys) 110.13 (A) Mounting and Cooling of Equipment  C Annex B Application Information for Ampacity Calculations  G Annex C Conduit and Tubing Fill Tables for Conductors and Fixture Wires of the Same Size  G Annex I Unit Recommended Tightening Torque Tables from UL Standard 486A-B  G NOT YET APPROVED 6 160830 sh 016/Dev Services/2016 Code Cycle/Final Codes/2016-08-25 (2016 Code Cyle) ORD Amending Ch 16.16 Electrical Code Key to Justification for Amendments to Title 24 of the California Code of Regulations This amendment is justified on the basis of a local climatic condition. The seasonal climatic conditions during the late summer and fall create severe fire hazards to the public health and welfare in the City. The hot, dry weather frequently results in wild land fires on the brush covered slopes west of Interstate 280. The aforementioned conditions combined with the geological characteristics of the hills within the City create hazardous conditions for which departure from California Building Standards Code is required. C G T This amendment is justified on the basis of a local geological condition. The City of Palo Alto is subject to earthquake hazard caused by its proximity to San Andreas fault. This fault runs from Hollister, through the Santa Cruz Mountains, epicenter of the 1989 Loma Prieta earthquake, then on up the San Francisco Peninsula, then offshore at Daly City near Mussel Rock. This is the approximate location of the epicenter of the 1906 San Francisco earthquake. The other fault is Hayward Fault. This fault is about 74 mi long, situated mainly along the western base of the hills on the east side of San Francisco Bay. Both of these faults are considered major Northern California earthquake faults which may experience rupture at any time. Thus, because the City is within a seismic area which includes these earthquake faults, the modifications and changes cited herein are designed to better limit property damage as a result of seismic activity and to establish criteria for repair of damaged properties following a local emergency. The City of Palo Alto topography includes hillsides with narrow and winding access, which makes timely response by fire suppression vehicles difficult. Palo Alto is contiguous with the San Francisco Bay, resulting in a natural receptor for storm and waste water run-off. Also the City of Palo Alto is located in an area that is potentially susceptible to liquefaction during a major earthquake. The surface condition consists mostly of stiff to dense sandy clay, which is highly plastic and expansive in nature. The aforementioned conditions within the City create hazardous conditions for which departure from California Building Standards Code is warranted. NOT YET APPROVED  1  160831 sh 016/Dev Services/2016 Code Cycle/Final Codes/2016-09-14 (2016 Code Cycle) ORD Amending Ch 16.05 Mechanical Code Ordinance No. ____  Ordinance of the Council of the City of Palo Alto Repealing Chapter  16.05 of the Palo Alto Municipal Code and Amending Title 16 to Adopt a  New Chapter 16.05, California Mechanical Code, 2016 Edition, and Local Amendments and Related Findings  The Council of the City of Palo Alto does ORDAIN as follows:  SECTION 1. Chapter 16.05 of the Palo Alto Municipal Code is hereby amended by  repealing in its entirety 16.05 and adopting a new Chapter 16.05 to read as follows: 16.05    CALIFORNIA MECHANICAL CODE  16.05.010 2016 California Mechanical Code adopted.  The California Mechanical Code, 2016 Edition, Title 24, Part 4 of the California Code of Regulations  together with those omissions, amendments, exceptions and additions thereto, is adopted and  hereby incorporated in this Chapter by reference and made a part hereof the same as if fully set  forth herein.  Unless superseded and expressly repealed, references in City of Palo Alto forms, documents and  regulations to the chapters and sections of the former California Code of Regulations, Title 24,  2013, shall be construed to apply to the corresponding provisions contained within the California  Code of Regulations, Title 24, 2016. Ordinance No. 5217 of the City of Palo Alto and all other  ordinances or parts of ordinances in conflict herewith are hereby suspended and expressly  repealed.  Wherever the phrases "California Mechanical Code" or "Mechanical Code" are used in this code  or any ordinance of the City, such phrases shall be deemed and construed to refer and apply to  the California Mechanical Code, 2016 Edition, as adopted by this Chapter.  One copy of the  California Mechanical Code, 2016 edition, has been filed for use and examination of the public in  the Office of the Building Official of the City of Palo Alto.  16.05.020 2016 California Mechanical Code Appendix Chapters adopted.  The following Appendix Chapters of the California Mechanical Code, 2016 Edition, are adopted  and hereby incorporated in this Chapter by reference and made a part hereof the same as if fully  set forth herein:  A.Appendix B – Procedures to be Followed to Place Gas Equipment in Operation B.Appendix C – Installation and testing of Oil (Liquid) Fuel‐Fired Equipment C.Appendix F – Sizing of Venting Systems Attachment F NOT YET APPROVED   2    160831 sh 016/Dev Services/2016 Code Cycle/Final Codes/2016-09-14 (2016 Code Cycle) ORD Amending Ch 16.05 Mechanical Code       16.05.030 Cross ‐ References to California Mechanical Code.    The provisions of this Chapter contain cross‐references to the provisions of the California  Mechanical Code, 2016 Edition, in order to facilitate reference and comparison to those  provisions.    16.05.040  Violations ‐‐ Penalties.      Any person, firm or corporation violating any provision of this chapter is guilty of a  misdemeanor and upon conviction thereof shall be punished as provided in subsection (a) of  Section 1.08.010 of this code. Each separate day or any portion thereof during which any  violation of this chapter occurs or continues shall be deemed to constitute a separate offense,  and upon conviction thereof shall be punishable as provided in this section.        16.05.050  Enforcement ‐‐ Citation authority.       The employee positions designated in this section may enforce the provisions of this chapter by  the issuance of citations; persons employed in such positions are authorized to exercise the  authority provided in Penal Code section 836.5 and are authorized to issue citations for  violations of this chapter. The designated employee positions are: (1) chief building official; (2)  building inspection supervisor; and (3) code enforcement officer.    16.05.060 Local Amendments    The provisions of this Chapter shall constitute local amendments to the cross‐referenced  provisions of the California Mechanical Code, 2016 Edition, and shall be deemed to replace the  cross‐referenced sections of said Code with the respective provisions set forth in this Chapter.     SECTION 2. The Council adopts the findings for local amendments to the  California Mechanical Code, 2016 Edition, attached hereto as Exhibit “A” and incorporated  herein by reference.     SECTION 3. The Council finds that this project is exempt from the provisions of  the California Environmental Quality Act (“CEQA”), pursuant to Section 15061 of the CEQA  Guidelines, because it can be seen with certainty that there is no possibility that the  amendments herein adopted will have a significant effect on the environment.    //    //    //    NOT YET APPROVED   3    160831 sh 016/Dev Services/2016 Code Cycle/Final Codes/2016-09-14 (2016 Code Cycle) ORD Amending Ch 16.05 Mechanical Code      SECTION 4. This ordinance shall be effective on the commencement of the thirty‐ first day after the date of its adoption.    INTRODUCED:       PASSED:        AYES:    NOES:    ABSENT:    ABSTENTIONS:    ATTEST:           ____________________________    ____________________________  City Clerk       Mayor    APPROVED AS TO FORM:    APPROVED:    ____________________________    ____________________________  Senior Deputy City Attorney    City Manager            ____________________________  Director of Development Services            ____________________________          Director of Administrative Services       NOT YET APPROVED   4    160831 sh 016/Dev Services/2016 Code Cycle/Final Codes/2016-09-14 (2016 Code Cycle) ORD Amending Ch 16.05 Mechanical Code     Exhibit A  FINDINGS FOR LOCAL AMENDMENTS  TO CALIFORNIA MECHANICAL CODE, 2016    Section 17958 of the California Health and Safety Code provides that the City may make  changes to the provisions of the California Building Standards Code.  Sections 17958.5 and  17958.7 of the Health and Safety Code require that for each proposed local change to those  provisions of the California Building Standards Code which regulate buildings used for human  habitation, the City Council must make findings supporting its determination that each such  local change is reasonably necessary because of local climatic, geological, or topographical  conditions.    Local building regulations having the effect of amending the uniform codes, which were  adopted by the City prior to November 23, 1970, were unaffected by the regulations of Sections  17958, 17958.5 and 17958.7 of the Health and Safety Code.  Therefore, amendments to the  uniform codes which were adopted by the City Council prior to November 23, 1970, and have  been carried through from year to year without significant change, need no required findings.   Also, amendments to provisions not regulating buildings used for human habitation do not  require findings.      Code: CMC  Section Title Add Justification  (See below for  keys)  Appendix B Procedures to be Followed to Place Gas  Equipment in Operation   G  Appendix C Installation and testing of Oil (Liquid) Fuel‐Fired  Equipment   G  Appendix F Sizing of Venting Systems  C         NOT YET APPROVED   5    160831 sh 016/Dev Services/2016 Code Cycle/Final Codes/2016-09-14 (2016 Code Cycle) ORD Amending Ch 16.05 Mechanical Code     Key to Justification for Amendments to Title 24 of the California Code of Regulations     This amendment is justified on the basis of a local climatic condition. The seasonal climatic  conditions during the late summer and fall create severe fire hazards to the public health and  welfare in the City. The hot, dry weather frequently results in wild land fires on the brush  covered slopes west of Interstate 280. The aforementioned conditions combined with the  geological characteristics of the hills within the City create hazardous conditions for which  departure from California Building Standards Code is required.    C        G                          T                This amendment is justified on the basis of a local geological condition. The City of Palo  Alto is subject to earthquake hazard caused by its proximity to San Andreas fault. This  fault runs from Hollister, through the Santa Cruz Mountains, epicenter of the 1989 Loma  Prieta earthquake, then on up the San Francisco Peninsula, then offshore at Daly City near  Mussel Rock. This is the approximate location of the epicenter of the 1906 San Francisco  earthquake. The other fault is Hayward Fault. This fault is about 74 mi long, situated  mainly along the western base of the hills on the east side of San Francisco Bay. Both of  these faults are considered major Northern California earthquake faults which may  experience rupture at any time. Thus, because the City is within a seismic area which  includes these earthquake faults, the modifications and changes cited herein are designed  to better limit property damage as a result of seismic activity and to establish criteria for  repair of damaged properties following a local emergency.    The City of Palo Alto topography includes hillsides with narrow and winding access, which  makes timely response by fire suppression vehicles difficult. Palo Alto is contiguous with the  San Francisco Bay, resulting in a natural receptor for storm and waste water run‐off.   Also the  City of Palo Alto is located in an area that is potentially susceptible to liquefaction during a  major earthquake. The surface condition consists mostly of stiff to dense sandy clay, which is  highly plastic and expansive in nature. The aforementioned conditions within the City create  hazardous conditions for which departure from California Building Standards Code is  warranted.    NOT YET APPROVED 1 160830 sh 016/Dev Services/2016 Code Cycle/Final Codes/2016-08-25 (2016 Code Cyle) ORD Amending Ch 15.04 Fire Code Ordinance No. ____ Adoption of an Ordinance Repealing Chapters 15.04 and 15.05 and Reenacting Chapter 15.04 of the Palo Alto Municipal Code to Adopt the 2016 Edition of the California Fire Code, With Local Amendments and Related Findings The Council of the City of Palo Alto does ORDAIN as follows: SECTION 1. Title 15 of the Palo Alto Municipal Code is hereby amended by repealing in their entirety Chapters 15.04 and 15.05 and enacting a new Chapter 15.04 to read as follows: 15.04 CALIFORNIA FIRE CODE 15.04.010 Adoption of the California Fire Code. The California Fire Code, 2016 Edition, as adopted by the California Code of Regulations Title 24, Part 9, and Appendices B, C, D, E, F, G, H, and K is adopted as herein amended. One copy of the California Fire Code is on file and open to public inspection in the Office of the City Clerk. Additional copies of the secondary codes set forth within the California Fire Code, and the amendments set forth in this chapter, are on file and open to public inspection in the fire department administrative office. Whenever the phrase “California Fire Code” appears in this code or in any ordinance of the city, such phrase shall be deemed and construed to refer to and apply to the “California Fire Code, 2016 Edition” as adopted by the California Code of Regulations Title 24, Part 9 and as adopted and amended by this chapter. 15.04.015 Section 102.5 amended – Application of residential code. Section 102.5 of the California Fire Code is amended to read as follows: 102.5 Application of residential code. Where structures are designed and constructed in accordance with the California Residential Code, the provisions of this code shall apply as follows: 1.Construction and design provisions: Provisions of this code pertaining to the exterior of the structure shall apply including, but not limited to, premises identification, fire apparatus access and water supplies. Provisions of this code pertaining to the interior of the structure shall apply when specifically required by this code including, but not limited to, Sections 903.2 through 903.3.7 and Section 907.2.10. Where interior or exterior systems or devices are installed, construction permits required by Section 105.7 of this code shall also apply. 2.Administrative, operational and maintenance provisions: all such provisions of this code shall apply. ATTACHMENT G NOT YET APPROVED 2 160830 sh 016/Dev Services/2016 Code Cycle/Final Codes/2016-08-25 (2016 Code Cyle) ORD Amending Ch 15.04 Fire Code TYPE OF GAS AMOUNT (cubic feet)2 X 0.0283 for m3 Corrosive 200 Flammable (except cryogenic and liquefied petroleum gases) 200 Highly toxic Any amount Inert and simple asphyxiant 6,000 Irritant 200 Moderately toxic 20 Other health hazards 650 Oxidizing (including oxygen) 504 Pyrophoric Any amount Radioactive Any amount Sensitizer 200 Toxic Any Amount Unstable (reactive) Any amount 15.04.017 Section 103.2 deleted. Section 103.2 of the California Fire Code is deleted. 15.04.020 Sections 105.3.9 and 105.3.10 added- Permits/Permit fees. Sections 105.3.9 and 105.3.10 are added to the California Fire Code to read as follows: 105.3.9 Permits/Permit fees. All permit fees shall be established by the City Council as set forth in the municipal fee schedule. 105.3.10 Operational Permits. Operational permits are valid for one year at which time they must be renewed by paying a fee specified in the municipal fee schedule. 15.04.030 Table 105.6.8 amended - Permit amounts for compressed gases. Table 105.6.8 of the California Fire Code is amended to read as follows: TABLE 105.6.8 PERMIT AMOUNTS FOR COMPRESSED GASES1 For SI: 1 cubic foot = 0.02832m3. 1 Refer to Chapters 27, 30, 32, 35, 37, 40 and 41 for additional requirements and exceptions. 2 Cubic feet measured at normal Temperature and pressure. // // NOT YET APPROVED 3 160830 sh 016/Dev Services/2016 Code Cycle/Final Codes/2016-08-25 (2016 Code Cyle) ORD Amending Ch 15.04 Fire Code 15.04.040 Table 105.6.20 amended - Permit amounts for hazardous materials. Table 105.6.20 of the California Fire Code is amended to read as follows: TABLE 105.6.20 PERMIT AMOUNTS FOR HAZARDOUS MATERIALS1 TYPE OF MATERIAL AMOUNT Carcinogens 10 pounds Combustible liquids See Section 105.6.16 Corrosive materials: Gases Liquids Solids See Section 105.6.8 55 gallons 500 pounds Cryogens See Section 105.6.10 Explosive materials See Section 105.6.14 Flammable materials: Gases Liquids Solids See Section 105.6.8 See Section 105.6.16 10 pounds Highly toxic materials: Gases Liquids Solids Any amount Any amount Any amount Moderately toxic gas 20 cubic feet Organic peroxides: Liquids: Class I-IV Liquids: Class V Solids: Class I-IV Solids: Class V Any Amount No Permit Required Any Amount No Permit Required Oxidizing materials: Gases Liquids Solids: 504 Cubic Feet Any amount Any amount Other health Hazards: Liquids 55 gallons 500 pounds Pyrophoric materials: Gases Liquids Solids Any amount Any amount Any amount NOT YET APPROVED 4 160830 sh 016/Dev Services/2016 Code Cycle/Final Codes/2016-08-25 (2016 Code Cyle) ORD Amending Ch 15.04 Fire Code Radioactive materials: Gases Liquids Solids Any Amount See Section 105.6.47 See Section 105.6.47 Toxic materials: Gases Liquids Solids Any amount Any amount Any amount Unstable (reactive) materials: Gases Liquids Solids Any amount Any amount Any amount Water reactive materials: Liquids Solids Any amount Any amount For SI: 1 gallon = 3.785 L, 1 pound = 0.454kg. a. 20 gallons when Table 2703.1.1(1) Note k applies and hazard identification signs in accordance with Section 2703.5 are provided for quantities of 20 gallons or less. b. 200 pounds when Table 2703.1.1(1) Note k applies and hazard identification signs in accordance with Section 2703.5 are provided for quantities of 200 pounds or less. 15.04.050 Sections 105.6.48 and 105.6.49 added – Permits required. Sections 105.6.48 and 105.6.49 are added to the California Fire Code to read as follows: 105.6.48 Radioactive materials. To store or handle at any installation more than one microcurie (37,000 becquerel) of radioactive material not contained in a sealed source or more than 1 millicurie (37,000,000 becquerel) of radioactive material in a sealed source or sources, or any amount of radioactive material for which a specific licenses from the Nuclear Regulatory Commission is required. 105.6.49 Day Care Permit. To operate a day care facility for more than six children or adults. 15.04.060 Sections 105.7.19 and 105.7.20 added. Sections 105.7.19 and 105.7.20 are added to the California Fire Code to read as follows: 105.7.19 Cryogenic fluids. Except where federal or state regulations apply and except for fuel systems of the vehicle, to produce, store or handle cryogens in NOT YET APPROVED 5 160830 sh 016/Dev Services/2016 Code Cycle/Final Codes/2016-08-25 (2016 Code Cyle) ORD Amending Ch 15.04 Fire Code excess of the amounts listed in Table 105.6.10, to install a cryogenic vessel or piping system for the storage or distribution of cryogens. See Chapter 32. 105.7.20 Underground Fire Service Lines, installation or modification. A construction permit is required for the installation, modification or removal from service of underground fire service lines. Maintenance performed in accordance with this code that does not affect the pipe restraints nor have the potential of introducing debris into the piping system is not considered to be a modification and does not require a permit. 15.04.070 Sections 105.8.1 and 105.8.2 added – Fire and life safety. Subsections 105.8.1 and 105.8.2 are added to the California Fire Code to read as follows: 105.8.1 Fire and life-safety plan review. Fire and life-safety plan review of all new construction, all remodels, and all additions shall be performed by the Fire Chief or his designee. 105.8.2 Site Map and Floor plans. The Fire Chief or fire code official may require as a condition of final permit approval, a site map including the use of standard or approved Palo Alto Fire Department symbols. Features would include interior floor plans, on-site hydrant locations, FDC locations, key safe locations, alarm panel locations, electrical panel locations, stairwell and elevator locations, water shut off locations, hazardous materials locations, and other significant design elements or fire service features. The site map is to be provided in a format compatible with the City’s Geographic Information System (GIS) at time of construction. This requirement applies to newly constructed buildings, facilities where hazardous materials are used or stored in quantities exceeding permit amounts in Section 105, additions or permitted remodels when in the opinion of the fire code official a site map is warranted. 15.04.080 Section 105.9 added – Certified Unified Program Agency Fees. Section 105.9 is added to the California Fire Code to read as follows: 105.9 Certified Unified Program Agency (CUPA) Fees. Pursuant to the Participating Agency Agreement between the County of Santa Clara and the City of Palo Alto dated July 1, 1997, or as amended, the Fire Department is authorized to collect fees associated with the CUPA programs. The CUPA fees will be collected on an annual basis or as specified in the Palo Alto Fire Department Fee Schedule. // // // NOT YET APPROVED 6 160830 sh 016/Dev Services/2016 Code Cycle/Final Codes/2016-08-25 (2016 Code Cyle) ORD Amending Ch 15.04 Fire Code 15.04.090 Section 106.1 amended – Inspection authority. Section 106.1 of the California Fire Code is amended to read as follows: 106.1 Inspection authority. The fire code official is authorized to inspect, as often as necessary, buildings and premises, including such other hazards or appliances designated by the fire code official for the purposes of ascertaining and causing to be corrected any conditions which would reasonably tend to cause fire or contribute to its spread, result in an unauthorized discharge of hazardous materials, or any violation of this code or any other law or standard affecting fire and life safety. 15.04.100 Section 109.1.2 added - Enforcement/citation authority. Section 109.1.2 is added to the California Fire Code to read as follows: 109.1.2 Enforcement/citation authority. The following designated employee positions may enforce the provisions of this chapter by the issuance of citations. Persons employed in such positions are authorized to exercise the authority provided in Penal Code Section 836.5 and are authorized to issue citations for violations of this chapter. The designated employee positions are: Fire Chief, Deputy Fire Chief, Fire Marshal, Fire Inspector, Hazardous Materials Specialist and Hazardous Materials Inspector. 15.04.110 Section 109.3 amended – violations and penalties. Section 109.3 of the California Fire Code is amended to read as follows: Any person, firm or corporation violating any provision of this Title 15 shall be deemed guilty of a misdemeanor and upon conviction thereof shall be punished as provided in subsection (a) of Section 1.08.010 of the Palo Alto Municipal Code. Each separate day or any portion thereof during which any violation of the fire code occurs or continues shall be deemed to constitute a separate offense, and upon conviction thereof shall be punishable as herein provided. 15.04.120 Definitions added to section 202 The following definitions are added to Section 202 of the California Fire Code to read as follows: DEVICE. Device is, for the purpose of Exhibit “A,” an appliance or piece of equipment that plays an active part in the proper functioning of the regulated systems. Examples include, but are not limited to the following: smoke detectors, heat detectors, flame detectors, manual pull stations, horns, alarms, bells, warning lights, hydrants, risers, FDCs, standpipes, strobes, control NOT YET APPROVED 7 160830 sh 016/Dev Services/2016 Code Cycle/Final Codes/2016-08-25 (2016 Code Cyle) ORD Amending Ch 15.04 Fire Code panels, transponders, and other such equipment used to detect, transmit, initiate, annunciate, alarm, or respond according to the system design criteria. DUAL SENSOR CARBON MONOXIDE AND SMOKE ALARM. A combination carbon monoxide and smoke alarm or detector that senses both smoke and CO in a single device. CARCINOGEN. A carcinogen is a substance that causes the development of cancerous growths in living tissue. A chemical is considered a carcinogen if: 1. It has been evaluated by the International Agency for Research on Cancer and found to be a carcinogen or potential carcinogen, or 2. It is listed a s a carcinogen or potential carcinogen in the latest edition of the Annual Report on Carcinogens published by the National Toxicology program, or 3. It is regulated by OSHA as a carcinogen. CONTINUOUS GAS DETECTION SYSTEM. A continuous gas detection system is a gas detection system where the analytical instrument is maintained in continuous operation and sampling is performed without interruption. Analysis is allowed to be performed on a cyclical basis at intervals not to exceed 30 minutes. In occupied areas where air is re-circulated and not exhausted to a treatment system (e.g. breathing zone), the fire code official may require a cyclical basis at intervals not to exceed 5 minutes. The gas detection system shall be able to detect the presence of a gas at or below the permissible exposure limit in occupiable areas and at or below ½ IDLH (or 0.05 LC 50 if no established IDLH) in unoccupiable areas. CORROSIVE LIQUID. A corrosive liquid is: 1. any liquid which, when in contact with living tissue, will cause destruction or irreversible alteration of such tissue by chemical action; 2. any liquid having a pH of 2 or less or 12.5 or more; 3. any liquid classified as corrosive by the U.S. Department of Transportation; or 4. any material exhibiting the characteristics of corrosivity in accordance with Title 22, California Code of Regulations §66261.22. FALSE ALARM. The willful, knowing, or negligent initiation or transmission of a signal, message, or other notification of an event of fire when no such danger exists. MODERATELY TOXIC GAS. A moderately toxic gas is a chemical or substance that has a median lethal concentration (LC50) in air more than 2000 parts per million but not more than 5000 parts per million by volume of gas or vapor, when administered by continuous inhalation for an hour, or less if death occurs within one hour, to albino rats weighing between 200 and 300 grams each. NOT YET APPROVED 8 160830 sh 016/Dev Services/2016 Code Cycle/Final Codes/2016-08-25 (2016 Code Cyle) ORD Amending Ch 15.04 Fire Code MAXIMUM THRESHOLD QUANTITY (MAX TQ). Maximum threshold quantity is the maximum quantity of a moderately toxic or toxic gas, which may be stored in a single vessel before a more stringent category of regulation is applied. The following equation shall be used to calculate the Max TQ: Max TQ (pounds) = LC50 (ppm) x 2 lb. MODERATELY TOXIC GAS. Moderately toxic gas is a chemical or substance that has a median lethal concentration (LC50) in air more than 2000 parts per million but not more than 5000 parts per million by volume of gas or vapor, when administered by continuous inhalation for an hour, or less if death occurs within one hour, to albino rats weighing between 200 and 300 grams each. OTHER HEALTH HAZARD MATERIAL. Other health hazard material is a hazardous material which affects target organs of the body, including but not limited to, those materials which produce liver damage, kidney damage, damage to the nervous system, act on the blood to decrease hemoglobin function, deprive the body tissue of oxygen or affect reproductive capabilities, including mutations (chromosomal damage), sensitizers or teratogens (effect on fetuses). PHOTOELECTRIC SMOKE DETECTOR OR ALARM. A smoke alarm or detector that uses a light-source to detect the presence of smoke. SECONDARY CONTAINMENT. Secondary containment is that level of containment that is external to and separate from primary containment and is capable of safely and securely containing the material, without discharge, for a period of time reasonably necessary to ensure detection and remedy of the primary containment failure. SENSITIZER. A sensitizer is a chemical that causes a substantial proportion of exposed people or animals to develop an allergic reaction in normal tissue after repeated exposure to the chemical. SMOKE DETECTOR OR ALARM. A smoke alarm or detector that uses a light- source to detect the presence of smoke. SPILL CONTROL. Spill control is that level of containment that is external to and separate from the primary containment and is capable of safely and securely containing the contents of the largest container and preventions the materials from spreading to other parts of the room. WILDLAND-URBAN INTERFACE FIRE AREA. Wildland-urban interface fire area is a geographical area identified by the state as a “Fire Hazard Severity Zone” in NOT YET APPROVED 9 160830 sh 016/Dev Services/2016 Code Cycle/Final Codes/2016-08-25 (2016 Code Cyle) ORD Amending Ch 15.04 Fire Code accordance with the Public Resources Code Sections 4201 through 4204 and Government Code Sections 51175 through 51189, or other areas designated by the enforcing agency to be at a significant risk from wildfires. See Article 86B for the applicable referenced sections of the Government Code and the Public Resources Code. The Wildland-Urban Interface Fire Area shall be defined as all areas within the City of Palo Alto as set forth and delineated on the map entitled "Wildland-Urban Interface Fire Area” which map and all notations, references, data and other information shown thereon are hereby adopted and made a part of this chapter. The map properly attested, shall be on file in the Office of the City Clerk of the City of Palo Alto. WORKSTATION. A workstation is a defined space or independent principal piece of equipment using hazardous materials with a hazard rating of 3 or higher as ranked by NFPA 704 where a specific function, laboratory procedure, or research activity occurs. Approved or listed hazardous materials storage cabinets, flammable liquid storage cabinets or gas cabinets serving a workstation are included as part of the workstation. A workstation is allowed to contain ventilation equipment, fire protection devices, electrical devices, and other processing and scientific equipment. 15.04.200 Section 316.7 added - Roof guiderails at interior courts. Section 316.7 of the California Fire Code is amended to read as follows: 316.7 Roof Guardrails at Interior Courts. Roof openings into interior courts that are bounded on all sides by building walls shall be protected with guardrails. The top of the guardrail shall not be less than 42 inches in height above the adjacent roof surface that can be walked on. Intermediate rails shall be designed and spaced such that a 12-inch diameter sphere cannot pass through. Exception: Where the roof opening is greater than 600 square feet in area. 15.04.205 Section 401.5 amended – Making false report. Section 401.5 of the California Fire Code is amended to read as follows: 401.5 Making false report. A person shall not give, signal, or transmit a false alarm. Initiation or transmission in a twelve-month period of three or more signals, messages, or other notifications of an event of fire when no such danger exists shall be presumed negligent. 15.04.210 Section 605.13 added - Immersion Heaters. Section 605.13 is added to the California Fire Code to read as follows: 605.13 Immersion Heaters. All electrical immersion heaters used in dip tanks, sinks, vats and similar operations shall be provided with approved over- temperature controls and low liquid level electrical disconnects. Manual reset of required protection devices shall be provided. NOT YET APPROVED 10 160830 sh 016/Dev Services/2016 Code Cycle/Final Codes/2016-08-25 (2016 Code Cyle) ORD Amending Ch 15.04 Fire Code 15.04.220 Definitions added to section 902.1. The following definitions are added to Section 902.1 of the California Fire Code to read as follows: DUAL SENSOR CARBON MONOXIDE AND SMOKE ALARM. PHOTOELECTRIC SMOKE DETECTOR OR ALARM. SMOKE DETECTOR OR ALARM. 15.04.230 Section 903.2 amended – Automatic Sprinkler Systems, Where Required. Section 903.2 of the California Fire Code is amended to read as follows: 903.2 Automatic sprinkler systems, where required. Approved automatic sprinkler systems in new buildings and structures and in existing modified buildings and structures, shall be provided in the locations described in this section. Automatic fire sprinklers shall be installed per the requirements set forth in Sections 903.2.1 through 903.2.18 and as follows, whichever is the more restrictive: 1. An automatic sprinkler system shall be provided throughout all new buildings and structures. Exception: New non-residential occupancies, buildings or structures that do not exceed 350 square feet of building area. 2. An automatic sprinkler system shall be provided for all existing buildings or structures where modifications have been determined by the Building Official to trigger requirements for seismic retrofit. 3. An automatic sprinkler system shall be provided throughout all existing buildings when modifications are made that create conditions described in Sections 903.2.1 through 903.2.18, or that create an increase in fire area to more than 3,600 square feet or when the addition is equal or greater than 50% of the existing building square footage whichever is more restrictive. 4. An automatic sprinkler system shall be provided throughout all new basements regardless of size and throughout existing basements that are expanded by more than 50%. If the addition is only the basement, then only the basement is required to be sprinklered. 5. An automatic sprinkler system shall be installed throughout when either the roof structure or exterior wall structure have been removed and/or replaced in at least 50% of the existing structure. NOT YET APPROVED 11 160830 sh 016/Dev Services/2016 Code Cycle/Final Codes/2016-08-25 (2016 Code Cyle) ORD Amending Ch 15.04 Fire Code 6. An automatic sprinkler system shall be installed throughout when any change in use or occupancy creating a more hazardous fire/life safety condition, as determined by the Fire Chief. 15.04.240 903.1.1.1 amended – NFPA 13 sprinkler systems. Section 903.1.1.1 of the California Fire Code is amended to read as follows: 903.1.1.1 NFPA 13 sprinkler systems. Where the provisions of this code require that a building or portion thereof be equipped throughout with an automatic sprinkler system in accordance with this section, sprinklers shall be installed throughout in accordance with NFPA 13 and State and local requirements except as provided in Section 903.3.1.1. 1. For new buildings having no designated use or tenant, the minimum sprinkler design density shall be Ordinary Hazard Group II / 1500 square feet. 2. Where future use or tenant is determined to require a higher density, the sprinkler system shall be augmented to meet the higher density. 15.04.250 Section 903.3.1.2 amended – NFPA 13R sprinkler systems. Section 903.3.1.2 of the California Fire Code is amended to read as follows: 903.3.1.2 NFPA 13R sprinkler systems. Where allowed in buildings of Group R, up to and including four stories in height, automatic sprinkler systems shall be installed throughout in accordance with NFPA 13 and State and local standards. 15.04.260 Section 903.3.1.3 amended – NFPA 13D sprinkler systems. Section 903.3.1.3 of the California Fire Code is amended to read as follows: 903.3.1.3 NFPA 13D sprinkler systems. Where allowed, automatic sprinkler systems installed in one-and two-family dwellings and townhouses shall be installed throughout in accordance with NFPA 13D and State and local standards. 15.04.270 Section 903.4.3 amended - Floor control valves. Section 903.4.3 of the California Fire Code is amended to read as follows: 903.4.3 Floor control valves. Automatic sprinkler systems serving buildings two (2) or more stories in height shall have valves installed so as to control the system independently on each floor including basements. 15.04.275 Section 907.2.11 amended - Single- and multiple-station smoke alarms. Section 907.2.11 of the California Fire Code is amended to read as follows: NOT YET APPROVED 12 160830 sh 016/Dev Services/2016 Code Cycle/Final Codes/2016-08-25 (2016 Code Cyle) ORD Amending Ch 15.04 Fire Code 907.2.11 Single- and multiple-station smoke alarms. Listed single- and multiple- station smoke alarms complying with UL217 shall be installed in accordance with Sections 907.2.11.1 through 907.2.11.5 and manufacturers’ installation and use instructions. Smoke alarms and smoke detectors shall be in compliance with this code or subject to the provisions of the Health and Safety Code, they shall also be listed and approved for rapid response to smoldering synthetic materials. All smoke alarms or detectors shall be of the photoelectric type or shall have equivalent detection capabilities in compliance with UL 217. Exception: A combination photoelectric/ionization smoke alarm or detector may be used if located no closer than 20 feet to a kitchen, bathroom, fireplace or wood burning appliance. 15.04.280 Section 3304.8 added - Fire Walls. Section 3304.8 is added to the California Fire Code to read as follows: 3304.8 Fire Walls. When firewalls are required, the wall construction shall be completed (with all openings protected) immediately after the building is sufficiently weather-protected at the location of the wall(s). 15.04.290 Section 3311.1 amended - Stairways Required. Section 3311.1 of the California Fire Code is amended to read as follows: 3311.1 Stairways Required. Each level above the first story in new multi-story buildings shall be provided with at least two usable exit stairways after the floor decking is installed. The stairways shall be continuous and discharge to grade level. Stairways serving more than two floor levels shall be enclosed (with openings adequately protected) after exterior walls/windows are in place. Exit stairs in new and in existing, occupied buildings shall be lighted and maintained clear of debris and construction materials at all times. Exception: For new multi-story buildings, one of the required exit stairs may be obstructed on not more than two contiguous floor levels for the purposes of stairway construction (i.e., installation of gypsum board, painting, flooring, etc.). 15.04.295 Section 3311.1.1 added - Required Means Of Egress. Section 3311.1.1 is added to the California Fire Code to read as follows: 3311.1.1 Required Means Of Egress. All new buildings under construction shall have a least one unobstructed means of egress. All means of egress shall be identified in the Fire Protection Plan. // NOT YET APPROVED 13 160830 sh 016/Dev Services/2016 Code Cycle/Final Codes/2016-08-25 (2016 Code Cyle) ORD Amending Ch 15.04 Fire Code 15.04.300 Section 4902.1 amended – Definition of wildland-urban interface area. The definition of “wildland-urban interface fire area” in Section 4902.1 is amended to read as follows: WILDLAND-URBAN INTERFACE FIRE AREA is a geographical area identified by the state as a “Fire Hazard Severity Zone” in accordance with the Public Resources Code Sections 4201 through 4202 and Government Code Sections 51175 through 51189. In addition, within the limits of the City of Palo Alto, wildland-urban fire interface area shall include all areas west of Highway 280 and all other areas recommended as Very High Fire Hazard Severity Zone by the director of Cal Fire. 15.04.305 Sections 4903.1 through 4903.4 added – General Requirements for wildland- urban interface fire areas. Sections 4903.1 through 4903.4 are added to the California Fire Code to read as follows: 4903.1 General. When required by the fire code official, a fire protection plan shall be prepared. 4903.2 Content. The plan shall be based upon a site-specific wildfire risk assessment that includes considerations of location, topography, aspect, flammable vegetation, climatic conditions and fire history. The plan shall address water supply, access, building ignition and fire-resistance factors, fire protection systems and equipment, defensible space and vegetation management. 4903.3 Cost. The cost of fire protection plan preparation and review shall be the responsibility of the applicant. 4903.4 Plan retention. The fire protection plan shall be retained by the fire code official. 15.04.307 Sections 4907.1 through 4907.2 amended - Defensible space. Sections 4070.1 through 4907.2 are added to the California Fire Code to read as follows: 4907.1 General. Persons owning, leasing, controlling, operating or maintaining buildings or structures in, upon or adjoining the Wildland-Urban Interface Fire Area and persons owning, leasing or controlling land adjacent to such buildings or structures, shall at all times: 1. Maintain an effective defensible space by removing and clearing away flammable vegetation and combustible growth from areas within 30 feet (9144 mm) of such buildings or structures. Exception: Single specimens of trees, ornamental shrubbery or similar NOT YET APPROVED 14 160830 sh 016/Dev Services/2016 Code Cycle/Final Codes/2016-08-25 (2016 Code Cyle) ORD Amending Ch 15.04 Fire Code plants used as ground covers, provided that they do not form a means of rapidly transmitting fire from the native growth to any structure. 2. Maintain additional effective defensible space by removing brush, flammable vegetation and combustible growth located 30 feet to 100 feet (9144 mm to 30480 mm) from such buildings or structures, when required by the fire code official due to steepness of terrain or other conditions that would cause a defensible space of only 30 feet (9144 mm) to be insufficient. Exception: Grass and other vegetation located more than 30 feet (9144 mm) from buildings or structures and less than 18 inches (457 mm) in height above the ground need not be removed where necessary to stabilize the soil and prevent erosion. 3. Remove portions of trees, which extend within 10 feet (3048 mm) of the outlet of a chimney. 4. Maintain trees adjacent to or overhanging a building free of deadwood. 5. Maintain the roof of a structure free of leaves, needles or other dead vegetative growth. 6. Remove flammable vegetation a minimum of 10 feet around liquefied petroleum gas tanks/containers. 7. Firewood and combustible materials shall not be stored in unenclosed spaces beneath buildings or structures, or on decks or under eaves, canopies or other projections or overhangs. The storage of firewood and combustible material within the defensible space shall be located a minimum of 30 feet (6096 mm) from structures and separated from the crown of trees by a minimum horizontal distance of 15 feet (4572 mm). Exception: Firewood and combustible materials not for consumption on the premises shall be stored as approved by the fire code official. 8. Clear areas within 10 feet (3048 mm) of fire apparatus access roads and driveways to of non-fire-resistive vegetation growth. Exception: Grass and other vegetation located more than 30 feet (9144 mm) from buildings or structures and less than 18 inches (457 mm) in height above the ground need not be removed where necessary to stabilize the soil and prevent erosion. 4907.2 Corrective Actions. The executive body is authorized to instruct the fire code official to give notice to the owner of the property upon which conditions regulated by Section 4907.1 exist to correct such conditions. If the owner fails to correct such conditions, the executive body is authorized to cause the same NOT YET APPROVED 15 160830 sh 016/Dev Services/2016 Code Cycle/Final Codes/2016-08-25 (2016 Code Cyle) ORD Amending Ch 15.04 Fire Code to be done and make the expense of such correction a lien upon the property where such condition exists. 15.04.310 Section 5001.1.2 added – Lithium ion battery storage and handling. Section 5001.2.12 is added to the California Fire Code to read as follows: 5001.1.2 Lithium ion battery storage and handling. Rooms or areas where lithium ion batteries are stored or handled shall comply with the following: 1. Rooms or areas where lithium ion batteries are stored or handled shall be protected throughout with an approved smoke detection system. 2. Indoor storage of lithium ion batteries in excess of 6,000 pounds shall be confined to a Group H Division 2 Occupancy designed and constructed in accordance with the Building Code. 15.04.320 Section 5001.2.1.1 added – Gas mixtures. Section 5001.2.1.1 is added to the California Fire Code to read as follows: Section 5001.2.1.1 Gas mixtures. For gas mixtures containing one or more toxic, highly toxic or moderately toxic components, LC50 shall be calculated using CGA Standards P-20 and P-23. 15.04.330 Section 5001.2.2.2 amended - Health Hazards. Section 5001.2.2.2 of the California Fire Code is amended to read as follows: 5001.2.2.2 Health Hazards. The material categories listed in this section are classified as health hazards. A material with a primary classification as a health hazard can also pose a physical hazard. 1. Highly toxic, toxic and moderately toxic. 2. Corrosive materials 3. Moderately toxic gas. 4. Other health hazards 15.04.335 Section 5001.5.2.1 added – HMIS Exemptions. Section 2701.5.2.1 is added to the California Fire Code to read as follows: Section 5001.5.2.1 HMIS Exemptions. The following hazardous materials uses are found to not represent a sufficient degree of hazard in of themselves to justify the filing of a HMMP or HMIS. SMALL COMPRESSED GAS CYLINDER EXEMPTION A facility using compressed gas cylinders containing any of the following hazardous materials used for the purpose specified and stored at each facility NOT YET APPROVED 16 160830 sh 016/Dev Services/2016 Code Cycle/Final Codes/2016-08-25 (2016 Code Cyle) ORD Amending Ch 15.04 Fire Code in quantities not exceeding the thresholds specified below shall be exempted from the requirements of Chapter 6.95 Section 25501 (p) of the California Health and Safety Code: (a) Non refrigerated or non-cryogenic helium compressed gas in quantities of not more than 1000 cubic feet at standard temperature and pressure for the purpose of filling party balloons. (b) Non-refrigerated or non-cryogenic carbon dioxide and nitrogen compressed gases used for carbonation of beverages and stored in quantities of not more than 6000 cubic feet at standard temperature and pressure. (c) Refrigerated or cryogenic carbon dioxide compressed gas used for carbonation of beverages and stored in quantities of not more than 6000 cubic feet (116 gallons) at standard temperature and pressure. SMALL PROPANE GAS TANK EXEMPTION Commercial facilities, restaurants and RV hookup stations that handle 300 gallons or less of propane gas in stationary tanks outside of buildings used exclusively for heating, cooling, or cooking shall be exempted from the requirements of Chapter 6.95 Section 25501 (p) of the California Health and Safety Code. This exception does not include sites that dispense propane. CLOSED COOLING SYSTEM EXEMPTION Closed cooling systems containing group A1 refrigerants, including fluorocarbons, chlorocarbons and chlorofluorocarbons used for air conditioning and refrigeration shall be exempted from the requirements of chapter 6.95 Section 25501 (p) of the California Health and Safety Code. CLOSED FIRE SUPPRESSION SYSTEM EXEMPTION Closed fire suppression systems shall be exempted from the requirements of Chapter 6.95 Section 25501 (p) of the California Health and Safety Code. COMPRESSED AIR EXEMPTION Compressed air in cylinders and bottles shall be exempted from Chapter 6.95 Section 25501 (p) of the California Health and Safety Code. 15.04.340 Section 5003.1.3.1 added - Toxic, Highly Toxic, Moderately Toxic gases and similarly used or handled materials. Section 5003.1.3.1 is added to the California Fire Code to read as follows: 5003.1.3.1 Toxic, Highly Toxic, Moderately Toxic gases and similarly used or handled materials. The storage, use and handling of toxic, highly toxic and moderately toxic gases in amounts exceeding Table 60004.2 or 60004.3 shall be in accordance with this chapter and Chapter 60. Any toxic, highly toxic or moderately toxic material that is used or handled as a gas or vapor shall be in NOT YET APPROVED 17 160830 sh 016/Dev Services/2016 Code Cycle/Final Codes/2016-08-25 (2016 Code Cyle) ORD Amending Ch 15.04 Fire Code accordance with the requirements for toxic, highly toxic or moderately toxic gases. 15.04.350 Section 5003.1.5 added - Other Health Hazards Including Carcinogens, Irritants and Sensitizers. Section 5003.1.5 is added to the California Fire Code to read as follows: 5003.1.5 Other Health Hazards Including Carcinogens, Irritants and Sensitizers. The storage, use and handling of materials classified as other health hazards including carcinogens, irritants and sensitizers in amounts exceeding 810 cubic feet for gases, 55 gallons for liquids and 5,000 pounds for solids shall be in accordance with this Section 5003. 15.04.355 Section 5003.1.6 added – Additional Secondary Containment Requirements. Section 5003.1.6 is added to the California Fire Code to read as follows: 5003.1.6 Additional Secondary Containment Requirements. In addition to the requirements set forth in Section 5004.2, an approved containment system is required for any quantity of hazardous materials that are liquids or solids at normal temperature and pressure (NTP) where a spill is determined to be a plausible event and where such an event would endanger, people, property or the environment. The approved containment system may be required to include a combination of spill control and secondary containment meeting the design and construction requirements set forth in section 5004.2. 15.04.357 Section 5003.1.7 added – Other health hazards. Section 5003.1.7 is added to the California Fire Code to read as follows: 5003.1.7 Other Health Hazards Including Carcinogens, Irritants and Sensitizers. The storage, use and handling of materials classified as other health hazards including carcinogens, irritants and sensitizers in amounts exceeding 810 cubic feet for gases, 55 gallons for liquids and 5,000 pounds for solids shall be in accordance with this chapter. 15.04.360 Section 5003.2.2.1 amended - Design and Construction. Section 5003.2.2.1 of the California Fire Code is amended to read as follows: 5003.2.2.1 Design and Construction. Piping, tubing, valves, fittings and related components used for hazardous materials shall be in accordance with the following: 1. Piping, tubing, valves, fittings and related components shall be designed and fabricated from materials compatible with the material to be contained and shall be of adequate strength and durability to withstand the pressure, structural and seismic stress, and exposure to which they are subject. NOT YET APPROVED 18 160830 sh 016/Dev Services/2016 Code Cycle/Final Codes/2016-08-25 (2016 Code Cyle) ORD Amending Ch 15.04 Fire Code 2. Piping and tubing shall be identified in accordance with ASME A13.1 and the Santa Clara County Fire Chiefs Marking Requirements and Guidelines for Hazardous Materials and Hazardous Waste to indicate the material conveyed. 3. Readily accessible manual valves or automatic remotely activated fail-safe emergency shutoff valves shall be installed on supply piping and tubing at the following locations: a. The point of use. b. The tank, cylinder or bulk use. 4. Manual emergency shutoff valves and controls for remotely activated emergency shutoff valves shall be identified and the location shall be clearly visible accessible and indicated by means of a sign. 5. Backflow prevention or check valves shall be provided when the backflow of hazardous materials could create a hazardous condition or cause the unauthorized discharge of hazardous materials. 6. Where gases or liquids having a hazard ranking of: Health hazard Class 3 or 4, Flammability Class 3 or 4, or Reactivity Class 4 in accordance with NFPA 704 are carried in pressurized piping above 15 pounds per square inch gauge (psig)(103 Kpa), an approved means of leak detection, emergency shutoff and excess flow control shall be provided. Where the piping originates from within a hazardous material storage room or area, the excess flow control shall be located within the storage room or area. Where the piping originates from a bulk source, the excess flow control shall be located as close to the bulk source as practical. Exceptions: a. Piping for inlet connections designed to prevent backflow. b. Piping for pressure relief devices. 7. Secondary containment or equivalent protection from spills or leaks shall be provided for piping for liquid hazardous materials and for highly toxic and toxic corrosive gases above threshold quantities listed in Tables 6004.2 and 6004.3. Secondary containment includes, but is not limited to double- walled piping. Exceptions: a. Secondary containment is not required for toxic corrosive gases if the piping is constructed of inert materials. b. Piping under sub-atmospheric conditions if the piping is equipped NOT YET APPROVED 19 160830 sh 016/Dev Services/2016 Code Cycle/Final Codes/2016-08-25 (2016 Code Cyle) ORD Amending Ch 15.04 Fire Code with an alarm and fail-safe-to-close valve activated by a loss of vacuum. 8. Expansion chambers shall be provided between valves whenever the regulated gas may be subjected to thermal expansion. Chambers shall be sized to provide protection for piping and instrumentation and to accommodate the expansion of regulated materials. 15.04.365 Section 5003.2.2.2 amended - Additional Regulation for Supply Piping for Health Hazard Materials. Section 5003.2.2.2 of the California Fire Code is amended to read as follows: 5003.2.2.2 Additional Regulation for Supply Piping for Health Hazard Materials. Supply piping and tubing for gases and liquids having a health hazard ranking of 3 or 4 in accordance with ASME B31.3 and the following: 1. Piping and tubing utilized for the transmission of toxic, highly toxic, or highly volatile corrosive liquids and gases shall have welded or brazed connections throughout except for connections within an exhausted enclosure if the material is a gas, or an approved method of drainage or containment is provided for connections if the material is a liquid. 2. Piping and tubing shall not be located within corridors, within any portion of a means of egress required to be enclosed in fire-resistance-rated construction or in concealed spaces in areas not classified as Group H Occupancies. Exception: Piping and tubing within the space defined by the walls of corridors and the floor or roof above or in concealed space above other occupancies when installed in accordance with Section 415.8.6.3 of the California Building Code as required for Group H, Division 5 Occupancies. 3. All primary piping for toxic, highly toxic and moderately toxic gases shall pass a helium leak test of 1x10-9 cubic centimeters/second where practical, or shall pass testing in accordance with an approved, nationally recognized standard. Tests shall be conducted by a qualified “third party” not involved with the construction of the piping and control systems. // // // // // NOT YET APPROVED 20 160830 sh 016/Dev Services/2016 Code Cycle/Final Codes/2016-08-25 (2016 Code Cyle) ORD Amending Ch 15.04 Fire Code 15.04.370 Section 5003.3.1 amended - Unauthorized Discharges. Section 5003.3.1 of the California Fire Code is amended to read as follows: 5003.3.1 Unauthorized Discharges. When hazardous materials are released in quantities reportable under state, federal or local regulations or when there is a threatened release that presents a threat to health, property or the environment, the fire code official shall be notified immediately in an approved manner and the following procedures required in accordance with Sections 5003.3.1.1 through 5003.3.1.4. 15.04.380 Section 5003.5.2 added - Ventilation Ducting. Section 5003.5.2 is added to the California Fire Code to read as follows: 5003.5.2 Ventilation Ducting. Product conveying ducts for venting hazardous materials operations shall be labeled with the hazard class of the material being vented and the direction of flow. 15.04.385 Section 5003.5.3 added - “H” Occupancies. Section 5003.5.4 is added to the California Fire Code to read as follows: 5003.5.3 “H” Occupancies. In “H” occupancies, all piping and tubing may be required to be identified when there is any possibility of confusion with hazardous materials transport tubing or piping. Flow direction indicators are required. 15.04.390 Section 5003.9.11 added - Fire Extinguishing Systems for Workstations Dispensing, Handling or Using Hazardous Materials. Section 5003.9.11 is added to the California Fire Code to read as follows: 5003.9.11 Fire Extinguishing Systems for Workstations Dispensing, Handling or Using Hazardous Materials. Combustible and non-combustible work stations which dispense, handle or use hazardous materials shall be protected by an approved automatic fire extinguishing system in accordance with Section 1803.10. Exception: Internal fire protection is not required for Biological Safety Cabinets that carry NSF/ANSI certification where quantities of flammable liquids in use or storage within the cabinet do not exceed 500 ml. // // // NOT YET APPROVED 21 160830 sh 016/Dev Services/2016 Code Cycle/Final Codes/2016-08-25 (2016 Code Cyle) ORD Amending Ch 15.04 Fire Code 15.04.395 Section 5003.10.4 amended - Elevators utilized to transport hazardous materials. Section 5003.10.4 of the California Fire Code is amended to read as follows: 5003.10.4 Elevators utilized to transport hazardous materials. 5003.10.4.1 When transporting hazardous materials, elevators shall have no other passengers other than in the individual(s) handling the chemical transport cart. 5003.10.4.2 Hazardous materials liquid containers shall have a maximum capacity of 20 liters (5.26 gal). 5003.10.4.3 Toxic, highly toxic, and asphyxiant gases shall be limited to a container of a maximum water capacity of 1 lb. 5003.10.4.4 Means shall be provided to prevent the elevator from being summoned to other floors. 15.04.400 Section 5004.2.1 amended - Spill Control for Hazardous Material Liquids. Section 5004.2.1 of the California Fire Code is amended to read as follows: 5004.2.1 Spill Control for Hazardous Material Liquids. Rooms, buildings or areas used for storage of hazardous material liquids shall be provided with spill control to prevent the flow of liquids to adjoining areas. Floors in indoor locations and similar surfaces in outdoor locations shall be constructed to contain a spill from the largest single vessel by one of the following methods: 1. Liquid-tight sloped or recessed floors in indoor locations or similar areas in outdoor locations. 2. Liquid-tight floors in indoor locations or similar areas provided with liquid-tight raised or recessed sills or dikes. 3. Sumps and collection systems, including containment pallets in accordance with Section 5004.2.3. 4. Other approved engineered systems. Except for surfacing, the floors, sills, dikes, sumps and collection systems shall be constructed of noncombustible material, and the liquid-tight seal shall be compatible with the material stored. When liquid-tight sills or dikes are provided, they are not required at perimeter openings having an open-grate trench across the opening that connects to an approved collection system. // // // // NOT YET APPROVED 22 160830 sh 016/Dev Services/2016 Code Cycle/Final Codes/2016-08-25 (2016 Code Cyle) ORD Amending Ch 15.04 Fire Code 15.04.405 Sections 5004.2.2 and 5004.2.2.2 amended and Table 5004.2.2 deleted - Secondary Containment for Hazardous Material Liquids and Solids. Table 5004.2.2 is deleted in its entirety. Section 5004.2.2 of the California Fire Code is amended to read as follows: 5004.2.2 Secondary Containment for Hazardous Material Liquids and Solids. Buildings, rooms or areas used for the storage of hazardous materials liquids or solids shall be provided with secondary containment in accordance with this section. Section 5004.2.2.2 of the California Fire Code is amended to read as follows: 5004.2.2.2 Incompatible Materials. Incompatible materials shall be separated from each other in independent secondary containment systems. 15.04.410 Section 5004.3 amended – Containment pallets. Section 5004.2.3 of the California Fire Code is amended to read as follows: 5004.2.3 Containment pallets. Combustible containment pallets shall not be used inside buildings to comply with Section 5004.2 where the individual container capacity exceeds 55 gallons (208 L) or an aggregate capacity of multiple containers exceeds 1,000 gallons (3785 L) for liquids or where the individual container capacity exceeds 550 pounds (250 kg) or an aggregate of multiple containers exceeds 10,000 pounds (4540 kg) for solids. Where used as an alternative to spill control and secondary containment for outdoor storage in accordance with the exception in Section 5004.2, containment pallets shall comply with all of the following: 1. A liquid-tight sump accessible for visual inspection shall be provided; 2. The sump shall be designed to contain not less than 66 gallons (250L); 3. Exposed surfaces shall be compatible with material stored; Containment pallets shall be protected to prevent collection of rainwater within the sump of the containment pallet. 15.04.420 Section 5005.4.4 amended - Emergency Alarm. Section 5005.4.4 of the California Fire Code is amended to read as follows: 5005.4.4 Emergency Alarm. When hazardous materials having a hazard ranking of 3 or 4 in accordance with NFPA 704, or toxic gases exceeding 10 cu. ft. and any amount of highly toxic compressed gases are transported through corridors or exit enclosures, there shall be an emergency telephone system, a local manual alarm station or an approved alarm-initiating device at not more NOT YET APPROVED 23 160830 sh 016/Dev Services/2016 Code Cycle/Final Codes/2016-08-25 (2016 Code Cyle) ORD Amending Ch 15.04 Fire Code than 150-foot (45,720 mm) intervals and at each exit and exit-access doorway throughout the transport route. The signal shall be relayed to an approved central, proprietary or remote station service or constantly attended on-site location and shall also initiate a local audible alarm. 15.04.430 Section 5704.2.7.5.8 amended - Overfill Prevention. Section 5704.2.7.5.8 of the California Fire Code is amended to read as follows: 5704.2.7.5.8 Overfill Prevention. An approved means or method in accordance with Section 5704.2.9.7.5 shall be provided to prevent overfill of all Class I, II and IIIA liquid storage tanks. Storage tanks in refineries, bulk plants or terminals regulated by Sections 5706.4 or 5706.7 shall have overfill protection in accordance with API 2350. An approved means or method in accordance with Section 5704.2.9.7.6 shall be provided to prevent the overfilling of Class IIIB liquid storage tanks connected to fuel-burning equipment inside buildings. Exception: Outside aboveground tanks with a capacity of 1320 gallons (5000 L) or less shall comply with Section 5704.2.9.7.5.1 (1.1) 15.04.440 Section 5704.2.7.5.9 added - Automatic Filling of Tanks. Section 5704.2.7.5.9 is added to the California Fire Code to read as follows: 5704.2.7.5.9 Automatic Filling of Tanks. Systems that automatically fill flammable or combustible liquid tanks shall be equipped with an approved overfill protection system that sends an alarm signal to a constantly attended location and immediately stops the filling of the tank. The alarm signal and automatic shutoff shall be tested on an annual basis and records of such Albtesting shall be maintained on-site for a period of five (5) years. 15.04.445 Section 5803.3 added – Mobile fueling of hydrogen vehicles. Section 5803.3 is added to the California Fire Code to read as follows: 5803.3 Mobile fueling of hydrogen vehicles. Mobile fueling of hydrogen vehicles is prohibited except as approved by the fire code official. 15.04.450 Section 6001.3 added - Moderately Toxic Gases with a LC50 Equal to or Less Than 3000 Parts Per Million. Section 6001.3 is added to the California Fire Code to read as follows: 6001.3 Moderately Toxic Gases With A LC50 Equal To Or Less Than 3000 Parts Per Million. Moderately toxic gases with an LC50 less than 3000 parts per million shall additionally comply with the requirements for toxic gases in Section 6004 of this code. NOT YET APPROVED 24 160830 sh 016/Dev Services/2016 Code Cycle/Final Codes/2016-08-25 (2016 Code Cyle) ORD Amending Ch 15.04 Fire Code 15.04.460 Section 6002.1 amended – add definitions The following definition is added to section 6002.1 of the California Fire Code as defined in Chapter 2 of the California Fire Code and local amendments: MODERATELY TOXIC GAS. 15.04.470 Section 6004 amended – Toxic gases including refrigerants. Section 3704 of the California Fire Code is amended to read as follows: Section 6004 HIGHLY TOXIC, TOXIC AND MODERATELY TOXIC GASES INCLUDING THOSE USED AS REFRIGERANTS. 15.04.480 Sections 6004.1.4 through 6004.1.17 added - Controls for toxic gases. Sections 6004.1.4 through 6004.1.17 are added to the California Fire Code to read as follows: 6004.1.4 Automatic Shut-Off Valve. An automatic shut-off valve, which is of a fail-safe to close design, shall be provided to shut off the supply of highly toxic gases for any of the following: 1. Activation of a manual fire alarm system. 2. Activation of the gas detection system. 3. Failure of emergency power. 4. Failure of primary containment. 5. Seismic activity. 6. Failure of required ventilation. 7. Manual activation at an approved remote location. 6004.1.5 Emergency Control Station. Signals from emergency equipment used for highly toxic gases shall be transmitted to an emergency control station or other approved monitoring station, which is continually staffed by trained personnel. 6004.1.6 Maximum Threshold Quantity. Toxic gases stored or used in quantities exceeding the maximum threshold quantity in a single vessel per control area or outdoor control area shall comply with the additional requirements for highly toxic gases of Section 6004 of this code. Moderately toxic gases stored or used in quantities exceeding the maximum threshold quantity in a single vessel per control area or outdoor control area shall comply with the additional requirements for toxic gases of Section 3704 of this code 6004.1.7 Reduced Flow Valve. All containers of materials other than lecture bottles containing Highly Toxic material and having a vapor pressure exceeding 29 psia shall be equipped with a reduced flow valve when available. If a NOT YET APPROVED 25 160830 sh 016/Dev Services/2016 Code Cycle/Final Codes/2016-08-25 (2016 Code Cyle) ORD Amending Ch 15.04 Fire Code reduced flow valve is not available, the container shall be used with a flow- limiting device. All flow limiting devices shall be part of the valve assembly and visible to the eye when possible; otherwise, they shall be installed as close as possible to the cylinder source. 6004.1.8 Annual Maintenance. All safety control systems at a facility shall be maintained in good working condition and tested not less frequently than annually. Maintenance and testing shall be performed by persons qualified to perform the maintenance and tests. Maintenance records and certifications shall be available to any representative of the Fire Department for inspection upon request. 6004.1.9 Fire Extinguishing Systems. Buildings and covered exterior areas for storage and use areas of materials regulated by this Chapter shall be protected by an automatic fire sprinkler system in accordance with NFPA 13. The design of the sprinkler system for any room or area where highly toxic, toxic and moderately toxic gases are stored, handled or used shall be in accordance with Section 2704.5. 6004.1.10 Local Gas Shut Off. Manual activation controls shall be provided at locations near the point of use and near the source, as approved by the fire code official. The fire code official may require additional controls at other places, including, but not limited to, the entry to the building, storage or use areas, and emergency control stations. Manual activated shut-off valves shall be of a fail-safe- to-close design. 6004.1.11 Exhaust Ventilation Monitoring. For highly toxic gases and toxic gases exceeding threshold quantities, a continuous monitoring system shall be provided to assure that the required exhaust ventilation rate is maintained. The monitoring system shall initiate a local alarm. The alarm shall be both visual and audible and shall be designed to provide warning both inside and outside of the interior storage, use, or handling area. 6004.1.12 Emergency Response Plan. If the preparation of an emergency response plan for the facility is not required by any other law, responsible persons shall prepare, or cause to be prepared, and filed with the fire code official, a written emergency response plan. If the preparation of an emergency response plan is required by other law, a responsible person shall file a copy of the plan with the Fire Chief. 6004.1.13 Emergency Response Team. Responsible persons shall be designated the on-site emergency response team and trained to be liaison personnel for the Fire Department. These persons shall aid the Fire Department in preplanning emergency responses, identifying locations where regulated materials are stored, handled and used, and be familiar with the NOT YET APPROVED 26 160830 sh 016/Dev Services/2016 Code Cycle/Final Codes/2016-08-25 (2016 Code Cyle) ORD Amending Ch 15.04 Fire Code chemical nature of such material. An adequate number of personnel for each work shift shall be designated. 6004.1.14 Emergency Drills. Emergency drills of the on-site emergency response team shall be conducted on a regular basis but not less than once every three months. Records of drills conducted shall be maintained. 6004.1.15 Cylinder Leak Testing. Cylinders shall be tested for leaks immediately upon delivery and again immediately prior to departure. Testing shall be approved by the fire code official in accordance with appropriate nationally recognized industry standards and practices, if any. Appropriate remedial action shall be immediately undertaken when leaks are detected 6004.1.16 Inert Gas Purge System. Gas systems shall be provided with dedicated inert gas purge systems. A dedicated inert gas purge system may be used to purge more than one gas, provided the gases are compatible. Purge gas systems inside buildings shall be located in an approved gas cabinet unless the system operates by vacuum demand. 6004.1.17 Seismic Shutoff Valve. An automatic seismic shut-off valve, which is of a fail-safe to close design, shall be provided to shutoff the supply of highly toxic, toxic and moderately toxic gases with an LC50 less than 3000 parts per million upon a seismic event within 5 seconds of a horizontal sinusoidal oscillation having a peak acceleration of 0.3G (1.47m/sec2) and a period of 0.4 seconds. 15.04.490 Section 6004.2 amended – Indoor storage and use of toxic gases. Section 6004.2 of the California Fire Code is amended to read as follows: 6004.2 Indoor Storage and Use. The indoor storage or use of highly toxic, toxic and moderately toxic compressed gases shall be in accordance with Sections 6004.1 through 3704.2.2.10.3.3. The threshold quantity for highly toxic, toxic and moderately toxic gases for indoor storage and use are set forth in Table 6004.2. Table 6004.2 Threshold Quantities for Highly Toxic, Toxic and Moderately Toxic Gases for Indoor Storage and Use Highly Toxic 0 Toxic 10 cubic feet Moderately Toxic 20 cubic feet // // NOT YET APPROVED 27 160830 sh 016/Dev Services/2016 Code Cycle/Final Codes/2016-08-25 (2016 Code Cyle) ORD Amending Ch 15.04 Fire Code 15.04.492 Sections 6004.2.1 through 6004.2.1.1 amended – Applicability of toxic gas regulations. Sections 6004.2.1 through 6004.2.1.1 of the California Fire Code are amended to read as follows: 6004.2.1 Applicability. The applicability of regulations governing the indoor storage and use of highly toxic, toxic, and moderately toxic compressed gases shall be as set forth in Sections 6004.2.1.1 through 6004.2.1.3. 6004.2.1.1 Quantities Not Exceeding the Maximum Allowable Quantity per Control Area. The indoor storage or use of highly toxic, and toxic and moderately toxic gases in amounts exceeding the threshold quantity per control area set forth in Table 6004.2 shall be in accordance with Sections 5001, 5003, 6001, 6004.1 and 6004.2. 15.04.494 Section 6004.2.2 amended – General requirements for use and storage of toxic gases. Section 6004.2.2 of the California Fire Code is amended to read as follows: 6004.2.2 General indoor requirements. The general requirements applicable to the indoor storage and use of highly toxic and toxic compressed gases shall be in accordance with Sections 6004.2.2.1 through 6004.2.2.10.3. Moderately toxic gases with an LC50 less than 3000 parts per million shall comply with the requirements for toxic gases in Sections 6004.2.2.1 through 6004.2.2.10.3. All other moderately toxic gases exceeding the threshold quantity shall comply with the requirements for toxic gases in Sections 6004.2.2.1 through 6004.2.2.7. 15.04.496 Section 6004.2.2.7 amended –Treatment systems. Section 6004.2.2.7 of the California Fire Code is amended to read as follows: 6004.2.2.7 Treatment Systems. The exhaust ventilation from gas cabinets, exhausted enclosures, gas rooms and local exhaust systems required in Section 6004.2.2.4 and 6004.2.2.5 shall be directed to a treatment system. The treatment system shall be utilized to handle the accidental release of gas and to process exhaust ventilation. The treatment system shall be designed in accordance with Sections 6004.2.2.7.1 through 6004.2.2.7.5 and Section 505 of the California Mechanical Code. Exceptions: 1.1 Highly toxic, toxic and moderately toxic gases storage. A treatment system is not required for cylinders, containers and tanks in storage when all of the following are provided: NOT YET APPROVED 28 160830 sh 016/Dev Services/2016 Code Cycle/Final Codes/2016-08-25 (2016 Code Cyle) ORD Amending Ch 15.04 Fire Code 1.2 Valve outlets are equipped with gas-tight outlet plug or caps. 1.3 Hand wheel-operated valves have handles secured to prevent movement. 1.4 Approved containment vessels or containment systems are provided in accordance with Section 6004.2.2.3. 15.04.498 Section 6004.2.2.10.2 amended – Alarms. Section 6004.2.2.10.2 of the California Fire Code is amended to read as follows: 6004.2.2.10.2 Alarms. The gas detection system shall initiate a local alarm and transmit a signal to a constantly attended control station when a short-term hazard condition is detected. The alarm shall be both visual and audible and shall provide warning both inside and outside the area where the gas is detected. The audible alarm shall be distinct from all other alarms. 15.04.500 Section 6004.3 amended – Outdoor storage and use. Section 6004.3 of the California Fire Code is amended to read as follows: 6004.3 Outdoor Storage and Use. The outdoor storage or use of highly toxic, toxic and moderately toxic compressed gases shall be in accordance with Sections 6004.3.1 through 6004.3.4. The threshold quantity for highly toxic, toxic and moderately toxic gases for outdoor storage and use are set forth in Table 6004.3. Table 6004.3 Threshold Quantities for Highly Toxic, Toxic and Moderately Toxic Gases for Outdoor Storage and Use Highly Toxic 0 Toxic 10 cubic feet Moderately Toxic 20 cubic feet 15.04.503 Sections 6004.3.1 and 6004.3.1.1 amended – Applicability of toxic gas regulations. Sections 6004.3.1 and 6004.3.1.1 of the California Fire Code are amended to read as follows: 6004.3.1 Applicability. The applicability of regulations governing the outdoor storage and use of highly toxic, toxic, and moderately toxic compressed gases shall be as set forth in Sections 6004.3.1.1 through 6004.3.1.3. 6004.3.1.1 Quantities not exceeding the maximum allowable quantity per control area. The outdoor storage or use of highly toxic and toxic gases in amounts exceeding the threshold quantity per control area set forth in Table 6004.3 shall be in accordance with Sections 5001, 5003, 6001, 6004.1, and 6004.3. NOT YET APPROVED 29 160830 sh 016/Dev Services/2016 Code Cycle/Final Codes/2016-08-25 (2016 Code Cyle) ORD Amending Ch 15.04 Fire Code Moderately toxic gases with an LC50 less than 3000 parts per million in amounts exceeding the threshold quantity in Table 6004.3 shall comply with the requirements for toxic gases in Sections 5001, 5003, 6001, 6004.1 and 6004.3. Moderately toxic gases in amounts exceeding the threshold quantity in Table 6004.3 shall comply with the requirements for toxic gases in Sections 5001, 5003, 6001, 6004.1 and 6004.3.2.1 through 6004.3.2.5. 15.04.505 Section 6004.3.3 amended – Outdoor storage of tanks and cylinders. Section 6004.3.3 of the California Fire Code is amended to read as follows: 6004.3.3 Outdoor storage weather protection for portable tanks and cylinders. Weather protection in accordance with Section 5004.13 and this section shall be provided for portable tanks and cylinders located outdoors and not within gas cabinets or exhausted enclosures. The storage area shall be equipped with an approved automatic sprinkler system in accordance with Section 5004.5. 15.04.510 Section 6101.4 added – Storage and use of liquefied petroleum gas. Section 6101.4 is added to the California Fire Code to read as follows: 6101.4 Storage and use of liquefied petroleum gas. Storage and use of liquefied petroleum gas (LPG) is prohibited within the City limits of Palo Alto where natural gas mains exist. Exception: The Fire Chief may permit the use of LPG for the following purposes and in the following manner: (1) A single tank of no more than 500-gallon (1892 L) water capacity in connection with portable equipment or devices which are approved for use with LPG. (2) As an emergency standby fuel supply for critical industrial, medical or research equipment. (3) A single tank of no more than 2000-gallon (7570 L) water capacity used in vehicle servicing operations installed in accordance with applicable safety standards. The storage of LPG shall conform to the provisions of applicable state and local Codes and ordinances. 15.04.515 Section 6405.3.1 added – Silane distribution systems automatic shutdown. Section 6405.3.1 is added to the California Fire Code to read as follows: 6405.3.1 Silane distribution systems automatic shutdown. Silane distribution systems shall automatically shut down at the source upon activation of the gas NOT YET APPROVED 30 160830 sh 016/Dev Services/2016 Code Cycle/Final Codes/2016-08-25 (2016 Code Cyle) ORD Amending Ch 15.04 Fire Code detection system at levels above the alarm level and/or failure of the ventilation system for the silane distribution system. 15.04.520 Addition of Chapter 19 – Life safety requirements for existing high rise buildings. Chapter 19 is added to the California Fire Code to read as follows: CHAPTER 19 LIFE SAFETY REQUIREMENTS FOR EXISTING HIGH-RISE BUILDINGS SECTION 1901 GENERAL 1901.1 Purpose. The purpose of this appendix is to provide a reasonable degree of safety to persons occupying existing high-rise buildings by requiring minimum standards for exit corridors, exit stairways and elevator shafts, monitored alarm systems and emergency plans. 1901.2 Scope. The requirements shall apply to all high-rise buildings constructed prior to January 1, 1994 which have floors used for human occupancy located more than 75 feet above the lowest level of approved fire department vehicle access or other physical configuration that qualifies a building as high rise by local ordinance. 1901.3 Permits Required. 1. Building permits shall be obtained as required by the Building Code. 2. Not less than 30 days prior to submitting plans for a building permit, a preplan review meeting shall be held, including the owner’s design team, building official and the chief, to determine the adequacy of the life-safety emergency systems concept for the building. The life-safety emergency systems shall be reflected on the plans for the building and become a permanent part of the building department’s records. The building official and the chief may require sufficient documentation, based upon engineering analysis, that the concept meets the intent of nationally recognized good practices and such guidelines as the building official and chief have published. 1901.4 Enforcement. The provisions of this appendix shall be enforced by the chief. 1901.5 Compliance. All buildings shall be made to conform with the requirements of Section 1902 within the following time periods: 1. Subsections 1902.11, 1902.12 and 1902.13 shall be completed within six months of the adoption date of this Chapter. NOT YET APPROVED 31 160830 sh 016/Dev Services/2016 Code Cycle/Final Codes/2016-08-25 (2016 Code Cyle) ORD Amending Ch 15.04 Fire Code 2. The owners of buildings affected by this appendix or their representatives shall submit plans to the building official showing intended methods of compliance with subsections 1902.1 through 1902.10 on or before June 30, 1990. 3. Subsections 1902.5, 1902.8, and 1902.9 shall be completed on or before January 1, 1991. 4. Subsections 1902.1, 1902.2, 1902.3, 1902.4, 1902.5, 1902.6 and 1902.8 shall be completed on or before April l, 1994. Note: Regardless of any specific compliance date stipulated above, a building shall not be deemed in violation of this Chapter until such date has expired 1901.6 Exceptions. The Fire Chief may grant certain exceptions to the requirements of this Chapter, under the following circumstances: 1. The Fire Chief may allow the use of alternate materials or methods of compliance upon a finding that the use of such alternate materials or methods of compliance will provide levels of fire and life safety equal to or greater than those otherwise required in this Chapter. 2. The Fire Chief may waive individual requirements of this Chapter or grant reasonable extensions of time in which to comply with said requirements upon a finding that such requirements are not practical or possible, or pose an unreasonable hardship. The determination of whether compliance is not practical or possible, or an unreasonable hardship, shall be based upon an overall evaluation of the following factors: (i) The amount of fire and life safety that would be lost if the requirements were waived or deferred; (ii) The cost of complying with the requirements; (iii) The financial hardship and disruption to occupants and users of the building in question; (iv) The type and nature of the use of the building in question; and (v) Such other factors as in the judgment of Fire Chief will result in providing a reasonable degree of safety as required by this Uniform Fire Code, to persons occupying or using the building. // NOT YET APPROVED 32 160830 sh 016/Dev Services/2016 Code Cycle/Final Codes/2016-08-25 (2016 Code Cyle) ORD Amending Ch 15.04 Fire Code 3. The Fire Chief may grant reasonable extensions of time, up to two additional years, within which to comply with the requirements of subsections 1902.1, 1902.2, 1902.3, 1902.4, 1902.6, 1902.7 and 1902.9 of this Chapter, upon making a finding of hardship based upon the factors set forth in subsection (2) of this subsection 1901.6(f), or upon the agreement of the building owner that within said time, the building will be 100% sprinklered, in accordance with NFPA 13. 4. The Fire Chief shall prepare written notice of determination to grant or not to grant exceptions pursuant to this paragraph. The Fire Chief shall distribute the notice of determination in the next available council packet; shall mail notice, postage prepaid, to the affected building owner; and shall publish such notice once in a newspaper of general circulation not later than five (5) days after the distribution of the notice on the city council packet. The notice shall state the address and general description of the subject property and the nature of the determination. The notice shall also state that the details regarding the decision will be available in the Fire Chief’s office, and that an appeal may be taken within ten (10) days after the date of publication of the notice. 1901.7 Appeals. 1. Any person aggrieved or affected by any determination made by the Fire Chief pursuant to subsection 1901.6 of this Chapter may appeal that determination in accordance with this subsection 1901.7. 2. An appeal from the decision of the Fire Chief shall be initiated within ten (10) days after the publication of notice, as provided in Paragraph 1901.6, by the filing at the office of the City Manager of a written, dated appeal, signed by all parties named as appellants, stating the names and official mailing addresses of all appellant(s) participating in the appeal and their relationship to the matter being appealed. 3. The appeal shall contain a statement of all facts supporting the contention of the appellant(s) and all reasons why the decision of the Fire Chief should be reversed, modified or set aside. 4. The appeal shall be accompanied by a fee, as set forth in the Municipal Fee Schedule for Fire Department appeals. 5. Upon receipt of any appeal, the City Manager or designee shall set a date for a hearing. Such hearing shall be held within fifteen (15) days of receipt of the appeal. A notice of the time and place of the hearing shall be given to the appellant(s) by the City Manager or designee in writing. The notice shall be mailed, postage prepaid, addressed to the appellant(s) at the NOT YET APPROVED 33 160830 sh 016/Dev Services/2016 Code Cycle/Final Codes/2016-08-25 (2016 Code Cyle) ORD Amending Ch 15.04 Fire Code address(es) listed on the appeal, or it shall be delivered to the appellant(s) personally, at least ten (10) days prior to the hearing date. If the appellant is other than the building owner, the building owner shall also be notified of the hearing. 6. The City Manager or designee (other than any personnel from the Fire Department), shall hear the appeal. At the time and place set for the hearing, the City Manager or designee shall receive all testimonial, documentary and tangible evidence bearing on the issues. The City Manager or designee may continue the hearing from time to time. The City Manager or designee may approve, modify or disapprove the determination of the Fire Chief. Within three (3) working days of the close of the hearing, the City Manager or designee shall render a decision in writing. The decision shall be mailed, postage prepaid, to the appellant(s) at the address(es) listed on the appeal or delivered to the appellant(s) personally. If the appellant is other than the building owner, the building owner shall also be notified of the decision. 7. The decision of the City Manager or designee shall be final. 1901.8 Penalty. Failure to comply with subsection (e) above is unlawful and any person, firm or corporation, whether as principal, agent, employee or otherwise, violating any provisions of the above requirements shall be guilty of a misdemeanor. Such person, firm or corporation is guilty of a separate offense for each and every day during any portion of which any violation of these requirements is committed, continued or permitted by such person, firm or corporation. 1901.9 Severability. Should any section, subsection, paragraph, sentence, clause or phrase of this appendix be declared unconstitutional or invalid for any reason, such decision shall not affect the validity of the remaining portions of these requirements. SECTION 1902 LIFE SAFETY REQUIREMENTS 1902.1 Automatic Sprinklers. All required exit corridors, stairwells, elevator lobbies, public assembly areas occupied by 100 or more persons and commercial kitchens shall be protected by an approved automatic sprinkler system meeting the design criteria of NFPA 13. One sprinkler head shall be provided on the room side of every corridor opening. Exception: Sprinkler heads may be omitted in stairwells of noncombustible construction. // // NOT YET APPROVED 34 160830 sh 016/Dev Services/2016 Code Cycle/Final Codes/2016-08-25 (2016 Code Cyle) ORD Amending Ch 15.04 Fire Code 1902.2 Corridor Doors. All doors opening into required exit corridors shall be in conformance with the Building Code. Exception: Existing 1-3/8 inch bonded, solid-core wood doors, if equipped with self-closures, need not be replaced. 1902.3 Corridor Openings. All openings into required exit corridor, other than doors, shall be in conformance with the Building Code. 1902.4 Exit Stairways. All high-rise buildings shall have a minimum of two approved exit stairways. The Fire Chief may allow a minimum of one approved stairway upon a finding that additional automatic sprinkler protection is provided that meets the spirit of this Appendix and provides at least the equivalent protection of that prescribed in this Appendix. 1902.5 Exit Stairwell Doors. All stairwell doors which are to be locked from the stairwell side shall automatically unlock, without unlatching, when the alarm system activates. 1902.6 Elevator Lobby Separation. All elevators on all floors shall open into elevator lobbies which are separated from the remainder of the building as is required for corridor construction in the Building Code. The Fire Chief may waive this requirement upon a finding that additional automatic sprinkler protection is provided that meets the spirit of this Appendix and provides at least the equivalent protection of that prescribed in this Appendix. 1902.7 Elevator Recall. All automatic elevators shall be equipped for emergency operation in conformance with the Building Code. 1902.8 Fire Alarm Systems. All high-rise buildings shall have an alarm system meeting the requirements of this section. All required fire alarm systems shall be designed to be heard clearly by all occupants within the building but in no case shall it be less than 60 dB, or 15 dB above ambient noise levels, as measured in the A scale, within all habitable areas of the building. All required alarm systems shall operate automatically by smoke or products of combustion detectors and by manual pull stations as approved by the chief. 1902.9 Fire Alarm Supervision. All fire alarm systems shall be connected to an approved central station or the local fire department dispatch office in conformance with the Fire Code as approved by the chief. // // NOT YET APPROVED 35 160830 sh 016/Dev Services/2016 Code Cycle/Final Codes/2016-08-25 (2016 Code Cyle) ORD Amending Ch 15.04 Fire Code 1902.10 Exit Illumination. Exits shall be illuminated at any time the building is occupied with lights having an intensity of not less than 1 foot-candle at floor level. Such lighting shall have an independent alternate source of supply such as an emergency battery pack. 1902.11 Emergency Plan. The management for all buildings shall establish and maintain a written fire and life safety emergency plan which has been approved by the chief. The chief shall develop written criteria and guidelines upon which all plans shall be based. 1902.12 Posting of Emergency Plan and Exit Plans. Copies of the emergency plan and exiting plans (including elevator and stairway placarding) shall be posted in locations approved by the chief. 1902.13 Fire Drills. The management of all buildings shall conduct fire drills for their staff and employees at least every 120 days. The fire department must be advised of such drills at least 24 hours in advance. A written record of each drill shall be maintained in the building management office and made available to the fire department for review. SECTION 2. The Council adopts the findings for local amendments to the California Fire Code, 2016 Edition, attached hereto as Exhibit "A" and incorporated herein by reference. SECTION 3. The Council finds that this project is exempt from the provisions of the California Environmental Quality Act (“CEQA”), pursuant to Section 15061 of the California Guidelines, because it can be seen with certainty that there is no possibility that the amendments herein adopted will have a significant effect on the environment. // // // // // // // // NOT YET APPROVED 36 160830 sh 016/Dev Services/2016 Code Cycle/Final Codes/2016-08-25 (2016 Code Cyle) ORD Amending Ch 15.04 Fire Code SECTION 4. This Ordinance shall become effective on the commencement of the thirty-first day after the day of its adoption. INTRODUCED: PASSED: AYES: NOES: ABSENT: ABSTENTIONS: ATTEST: ____________________________ ____________________________ City Clerk Mayor APPROVED AS TO FORM: APPROVED: ____________________________ ____________________________ Senior Deputy City Attorney City Manager ____________________________ Director of Human Resources ____________________________ Director of Administrative Services NOT YET APPROVED 37 160830 sh 016/Dev Services/2016 Code Cycle/Final Codes/2016-08-25 (2016 Code Cyle) ORD Amending Ch 15.04 Fire Code EXHIBIT A Findings for Local Amendments to the 2016 California Fire Code The following local amendments to the 2016 California Fire Code make modifications as authorized by the California Health and Safety Code. In accordance with Section 18941.5 of said Code, Findings are hereby made to show that such modifications or changes are reasonably necessary because of local climatic, geological or topographical conditions. PREAMBLE I. Findings of fact: A. Pursuant to Section 17958.5 of the California Health and Safety Code, the report contained herein is submitted as the “Findings of Fact” document with regard to the adoption of the California Fire Code, 2016 Edition, and amendments. Under this adopting ordinance, specific amendments have been established which are more restrictive in nature than those adopted by the State of California (State Building Code Standards, State Housing and Community Development Codes) commonly referred to as California Code of Regulations, Titles 19, 24 and 25. B. These amendments to the California Fire Code, 2016 Edition, have been recognized by the City of Palo Alto (“City”) as tools for addressing the fire problems, concerns and future direction by which the authority can establish and maintain an environment which will afford a level of fire and life safety to all who live and work within the City’s boundaries. C. Under the provisions of Section 17958.5 of the Health and Safety Code, local amendments shall be based upon the following: climatic, geological/geographical, and topographical conditions. The findings of fact contained herein shall address each of these situations and shall present the local situation which, either singularly or in combination, caused the established amendments to be adopted. 1. Climactic Conditions: The City, on an average, experiences an annual rainfall of 16" - 18". This rainfall can be expected between October and April of each year. However, during the summer months there is little, if any, measurable precipitation. During this dry period the temperatures are usually between 70-90 degrees with light to gusty westerly winds. These drying winds, combined with the natural vegetation which is dominant throughout the area, create a hazardous fuel condition which can cause, and has caused in the past, extensive grass and brush land fires. With more and more development encroaching into these wooded and grass covered areas, wind-driven fires could have severe consequences, as has been demonstrated on several occasions in Palo Alto and other areas of the state. Fires in structures can easily spread to the wildland as well as a fire in the wildland into a structure. NOT YET APPROVED 38 160830 sh 016/Dev Services/2016 Code Cycle/Final Codes/2016-08-25 (2016 Code Cyle) ORD Amending Ch 15.04 Fire Code Because of the weather patterns, a normal rainfall cannot always be relied upon. This can result in water rationing and water allocation systems, as demonstrated by the drought years of 1986- 1991. Water shortages can also be expected in the future due to the current water storage capacities and increased consumption. The water supply for the Palo Alto fire department makes use of automatic fire sprinkler systems feasible as a means to reduce our dependency on large volumes of water for fire suppression. 2. Geological & Geographical Conditions Geographical Location. Palo Alto is located at the northern most part of Santa Clara County. Palo Alto is a major focus of the “Silicon Valley,” the center for an expanding and changing electronics industry, as well as pharmaceutical, biomedical, and genetic research. Seismic Location. Palo Alto is situated on alluvial solids between San Francisco Bay and the San Andreas Fault zone. The City’s location makes it particularly vulnerable to damage to taller and older structures caused by seismic events. The relatively young geological processes that have created the San Francisco Bay Area are still active today. Seismically, the city sits between two active earthquake faults (San Andreas and the Hayward/Calaveras), and numerous potentially active faults. Approximately 55% of the City’s land surface is in the high-to-moderate seismic hazard zones. Seismic and Fire Hazards. Fire following an earthquake has the potential of causing greater loss of life and damage than the earthquake itself. The majority of the City’s high-rise structures are located in seismic risk zones. Should a significant seismic event occur, Public Safety resources would have to be prioritized to mitigate the greatest threat, and may not be available for every structural fire. In such event, individual structures, including high-rise buildings, should be equipped to help in mitigating the risk of damage. Other variables may tend to intensify the situation: a. The extent of damage to the water system; b. The extent of isolation due to bridge and/or freeway overpass collapse; c. The extent of roadway damage and/or amount of debris blocking the roadways; d. Climatical conditions (hot, dry weather with high winds); e. Time of day will influence the amount of traffic on roadways and could intensify the risk to life during normal business hours; f. The availability of timely mutual aid or military assistance; NOT YET APPROVED 39 160830 sh 016/Dev Services/2016 Code Cycle/Final Codes/2016-08-25 (2016 Code Cyle) ORD Amending Ch 15.04 Fire Code g. Many high-rise structures are located near areas of high fire danger necessitating special precautions. Transportation. Palo Alto is dissected by a major state highway (El Camino Real) and two major freeways (I-280 and U.S. 101), which potentially could negatively affect response times of fire suppression equipment. Soil Conditions. Palo Alto lies at the southern end of San Francisco Bay and is built atop the alluvial deposits that surround the margins of the Bay. The alluvium was created by the flooding of many streams emptying into the San Francisco Bay depression, and from intermittent sea water inundation that has occurred over the last 2 or 3 million years. The areas closest to the Bay are overlain by unconsolidated fine silty clay, known as Bay Mud which varies in thickness from a few feet to as much as 30 feet. Generally, the older more stable alluvium is to the south and the younger less stable material is to the north. Bedrock lies beneath the area at depths of generally 300' or more. 3. Topographical Conditions: The findings of fact for the topographical element, as would be expected, are closely associated with the geological/geographical element. With the elevation changes within the district, development is of course following the path of least resistance, creating a meandering pattern. This then does not lend itself to a good systematic street and road layout, which would promote easy traffic flow. It has, in fact, resulted in few major crosstown thoroughfares which tend to be heavily congested, primarily during commute hours and seasonal periods of the year. This creates barriers which reduce the response time of fire equipment and other emergency services. The topography of the district is being burdened by major structures. Employment areas are throughout the district. The people who work in these complexes have added to the traffic congestion throughout the city, thereby reducing the fire department’s response time capabilities. Inherent delays caused by the traffic patterns to many of these types of projects, make it necessary to mitigate this problem by requiring additional built-in automatic fire protection systems to provide early detection and initial control until the arrival of the fire department. The topography of the district in much of the commercial and residential zones lies within or near a flood plane. Periodically, heavy rains and high tides cause region-wide flooding which not only delays response but also increases demands on fire personnel. The fire code amendments increase safeguards and initialize early response to help compensate for these physical delays. As a result of the findings of facts which identify the various climatic, geological/geographical and topographical elements, those additional requirements as specified in the amendments to adopting ordinance for the California Fire Code 2013 Edition, by the City of Palo Alto area are NOT YET APPROVED 40 160830 sh 016/Dev Services/2016 Code Cycle/Final Codes/2016-08-25 (2016 Code Cyle) ORD Amending Ch 15.04 Fire Code considered reasonable and necessary modifications. The experience of several disastrous fires within the city in addition to Santa Clara, Monterey, San Mateo, Alameda and Contra Costa counties have demonstrated the need for other fire protection features, the most significant of which was located in the Oakland/Berkeley Hills in which over 3,000 homes were destroyed and 25 human lives were lost. While it is clearly understood that the adoption of such regulations may not prevent the incidence of fire, the implementation of these various amendments to the Code may reduce the severity and potential of loss of life and property. II. Specific Findings for Local Amendments The majority of local amendments (those not specifically listed below) are made strictly to conform to other parts of the Palo Alto Municipal Code (PAMC) and for similar administrative purposes. Based upon the findings of fact described in section I, the City Council also makes the following specific findings regarding local climatic, geological, and topographic conditions related to local amendments to the California and International Fire Codes found in Chapters 15.04 and 15.05 of Title 15 of the Palo Alto Municipal Code (“PAMC”): 1. The local amendments contained in PAMC sections 15.04.030 through 15.04.070 and sections 15.04.325 through 15.04.441 relating to general conditions for hazardous materials are necessary modifications to the California Fire Code flammable and hazardous materials sections because they maintain consistency with the Hazardous Materials Storage Ordinance which has been adopted county-wide since 1983. Requirements include safeguards such as monitoring, secondary containment, separation of non compatibles which prevent incidents should a seismic event, unauthorized release or accident occur. 2. The local amendment contained in PAMC section 15.05.015- Weed removal- is necessary to require weeds to be removed from properties when determined to be a hazard at the expense of the responsible party. Weeds can be a fire hazard that may also contribute to the uncontrolled spread of fire as a result of the climatic, geographical, and topographical conditions described in Findings 1, 2, and 3 above. 3. The local amendments contained in PAMC section 15.05.140 through 15.05.170 set forth measures to limit delays in response time and reduce hazards to firefighters. These measures are necessary to prevent exacerbation of response delays associated with the Climatic, Geographical and Topographical conditions listed in Findings 1, 2 and 3 above. 4. The local amendment contained in PAMC section 15.04.210- Immersion Heaters- is necessary as a fire control measure because it requires additional controls on process heating devices which are often activated when unattended. See Geological Findings 2. // NOT YET APPROVED 41 160830 sh 016/Dev Services/2016 Code Cycle/Final Codes/2016-08-25 (2016 Code Cyle) ORD Amending Ch 15.04 Fire Code 5. The local amendments contained in PAMC 15.04.230 through 15.04.260 relating to fire sprinkler systems are necessary for faster control of fires in the dense populated area of our community to confine a fire to the area of origin rather than spread to neighboring structures. The modifications contained in these amendments provide additional fire extinguishing systems in new construction, major remodels, additions, and occupancy classification changes to help mitigate the problems identified in Findings 1, 2, and 3, above- Climatic, Geographical and Topographical. 6. The local amendment contained in PAMC section 15.04.270 - Floor control valves- is necessary to provide fire extinguishing control devices that allow systems to remain partially in service while repairs or maintenance are ongoing. See Findings 1 and 2 above- Climatic and Geographical. 7. The local amendment contained in Section 15.04.275- Single- and multiple-station smoke alarms- is necessary to alert occupants at the earliest possible stage of smoldering residential fires. This modification requires smoke detection provided in new construction, remodels, additions, rental housing and newly purchased homes to be photoelectric or dual sensor technology to allow greater likelihood of occupants safely escaping residential fires and notifying the fire department during the earliest possible stage of fire growth. This will help mitigate the problems identified in Findings 1, 2, and 3, above- Climatic, Geographical and Topographical. 8. The local amendments contained in PAMC sections 15.04.280 through 15.04.295 provide for additional fire and life safety measures during construction and demolition. See Findings 2 and 3, above- Geographical and Topographical. 9. The local amendments contained in PAMC 15.04.300– Definition of “continuous gas detection system” and sections 15.04.325, 15.04.352 and 15.04.450 through 15.04.502 regarding toxic gases incorporate requirements established by the Model Toxic Gas Ordinance and California Fire Code. Administrative and restrictive measures include changes in definitions, quantities regulated, and utilizes County consensus guidelines established by other regional agencies which share similar climatic, geological/geographical, and topographical conditions. See Findings 1, 2 and 3, above- Climatic, Geographical and Topographical. 10. The local amendment contained in PAMC sections 15.04.310 and 15.04.320- Fire Protection Water Supply System, requires an adequate water supply in areas used for storage of highly combustible organic waste materials. This requirement mitigates the added hazards and limited access conditions described in Findings 1 and 3, above- Climatic and Topographical. // // NOT YET APPROVED 42 160830 sh 016/Dev Services/2016 Code Cycle/Final Codes/2016-08-25 (2016 Code Cyle) ORD Amending Ch 15.04 Fire Code 11. The local amendments contained in PAMC section 15.04.510 - Storage and use of liquefied petroleum gas- place restrictions on liquid petroleum gas where natural gas is provided. These restrictions are appropriate given Palo Alto’s seismically active local geological conditions because they will reduce portable container releases in the event of seismic activity and mitigate the geological risk described in Finding 2, above- Geographical. 12. The local amendments contained in PAMC section 15.04.515 – Silane distribution systems automatic shutdown- place restrictions on silane distribution systems. These restrictions are appropriate given Palo Alto’s seismically active local geological conditions because they will reduce release volume in the event of seismic activity or unauthorized release and mitigate the geological risk described in Finding 2, above- Geographical. 13. The local amendments contained in PAMC sections 15.04.520 through 15.04.588 set forth protections for urban-wildland interface areas that are necessary to mitigate the additional fire risks in the Palo Alto foothills hazardous fire zone. The modifications contained in these amendments provide for additional precautions against fire risks and additional fire extinguishing systems necessitated by the conditions listed in Findings 1, 2, and 3, above- Climatic, Geographical and Topographical. 14. The local amendments contained in PAMC section 15.04.590- Life safety requirements for existing high rise buildings- are designed to provide additional fire and life safety features in existing high-rise buildings given the seismically sensitive geological conditions described in Findings 2 and 3, above- Geographical and Topographical. 15. The local amendments contained in PAMC section 15.05.035- Roofguards at interior courts provides for additional fire and life safety measures for firefighters on buildings with unconventional lightwells. See Findings 2 and 3, above- Geographical and Topographical. NOT YET APPROVED 1 160830 sh 016/Dev Services/2016 Code Cycle/Final Codes/2016-08-25 (2016 Code Cyle) ORD Adding Ch 16.16 Intl Pool Code Ordinance No. ______ Ordinance of the Council of the City of Palo Alto Adding Chapter 16.18 of the Palo Alto Municipal Code, International Swimming Pool and Spa Code The Council of the City of Palo Alto does ORDAIN as follows: SECTION 1. Chapter 16.18 of the Palo Alto Municipal Code is hereby added to read as follows: 16.18.010 2015 International Swimming Pool and Spa Code Adopted in Part and Amended. Chapters 1 through 3 and chapters 7 through 11 of the International Swimming Pool and Spa Code, 2015 Edition, are adopted and hereby incorporated into this Chapter by reference and made a part hereof as if fully set forth herein. The provisions of this Chapter shall constitute local amendments to the referenced provisions of the International Swimming Pool and Spa Code, Edition. One copy of the International Swimming Pool and Spa Code, 2015 Edition, has been filed for use and examination by the public in the Office of the Chief Building Official of the City of Palo Alto. 16.18.020 Violations -- Penalties. Any person, firm or corporation violating any provision of this chapter is guilty of a misdemeanor and upon conviction thereof shall be punished as provided in subsection (a) of Section 1.08.010 of this code. Each separate day or any portion thereof during which any violation of this chapter occurs or continues shall be deemed to constitute a separate offense, and upon conviction thereof shall be punishable as provided in this section. When the building official determines that a violation of this chapter has occurred, he/she may record a notice of pendency of code violation with the Office of the County Recorder stating the address and owner of the property involved. When the violation has been corrected, the building official shall issue and record a release of the notice of pendency of code violation. 16.18.030 Enforcement -- Citation authority. The employee positions designated in this section may enforce the provisions of this chapter by the issuance of citations; persons employed in such positions are authorized to exercise the authority provided in Penal Code section 836.5 and are authorized to issue citations for violations of this chapter. The designated employee positions are: (1) chief building official; (2) building inspection supervisor; and (3) code enforcement officer. ATTACHMENT H NOT YET APPROVED 2 160830 sh 016/Dev Services/2016 Code Cycle/Final Codes/2016-08-25 (2016 Code Cyle) ORD Adding Ch 16.16 Intl Pool Code 16.18.040 References to California Building Codes The International Swimming Pool and Spa Code, 2015 Edition, is hereby amended to refer to those building regulations adopted by the California Building Standards Commission in Title 24 of the California Code of Regulations, as follows: 1. Where the term “International Building Code” is used it shall be replaced with the term “California Building Code.” 2. Where the term “International Residential Code” is used it shall be replaced with the term “California Residential Code.” 3. Where the term “International Plumbing Code” is used it shall be replaced with the term “California Plumbing Code.” 4. Where the term “International Energy Conservation Code” is used it shall be replaced with the term “California Energy Code.” 5. Where the term “International Fire Code” is used it shall be replaced with the term “California Fire Code.” 6. Where the term “International Fuel Gas Code” is used it shall be replaced with the term “California Plumbing Code.” 7. Where the term “International Mechanical Code” is used it shall be replaced with the term “California Mechanical Code.” 8. Where the term “NFPA 70” is used it shall be replaced with the term “California Electrical Code.” 16.18.050 Precedence of California Building Codes. In the event of any conflict between this Chapter and provisions of the California Health and Safety Code or the building regulations adopted by the California Building Standards Commission in Title 24 of the California Code of Regulations, the provisions of the Health and Safety Code and Title 24 shall prevail. 16.18.060 Section 101.1 amended – Title. Section 101.1 of the International Swimming Pool and Spa Code is hereby amended to read: 101.1 Title. These regulations shall be known as the International Swimming Pool and Spa Code of the City of Palo Alto, hereinafter referred to as “this code.” 16.08.070 Section 105.1.1 added – Agreements to build; notice of provisions. Section 105.1.1 of the International Swimming Pool and Spa Code is hereby added to read: 105.1.1 Agreements to build; notice of provisions. Any person entering into an agreement to build a swimming pool or spa, or to engage in permitted work on a pool or spa covered by this article, shall give the consumer notice of the requirements of this code. NOT YET APPROVED 3 160830 sh 016/Dev Services/2016 Code Cycle/Final Codes/2016-08-25 (2016 Code Cyle) ORD Adding Ch 16.16 Intl Pool Code Pursuant to existing law, the California Department of Health Services shall have available on the department's web site, commencing January 1, 2007, approved pool safety information available for consumers to download. Pool contractors are encouraged to share this information with consumers regarding the potential dangers a pool or spa poses toddlers. Additionally, pool contractors may provide the consumer with swimming pool safety materials produced from organizations such as the United States Consumer Product Safety Commission, Drowning Prevention Foundation, California Coalition for Children's Safety & Health, Safe Kids Worldwide, Association of Pool and Spa Professionals, or the American Academy of Pediatrics. [CBC 3109.4.4.4] 16.18.080 Sections 105.6.1 and 105.6.2 deleted. Sections 105.6.1 and 105.6.2 of the International Swimming Pool and Spa Code are hereby deleted in their entireties. 16.18.090 Section 106.1.9.2 Added – Final Approval. Section 106.1.9.2 of the International Swimming Pool and Spa Code is hereby added to read: 106.19.2 Final Approval. Prior to the issuance of any final approval for the completion of permitted construction or remodeling work, the code official shall inspect the drowning safety prevention devices required and if no violations are found, shall give final approval. [CBC 3109.4.4.2] 16.18.100 Section 107 deleted. Section 107 of the International Swimming Pool and Spa Code is hereby deleted in its entirety. 16.18.110 Section 108 Amended – Means of appeal. Section 108 of the International Swimming Pool and Spa Code is hereby amended to read: Section 108 – Means of appeal. A final decision of the Chief Building Official under this code may be appealed pursuant to the provisions of Section 1.8.8 of the California Building Code, as amended. 16.18.120 Section 303.1.3 Added – Operating time. Section 303.1.3 of the International Swimming Pool and Spa Code is hereby added to read: 303.3.1 Operating time. The time switch or other control mechanism shall be installed as part of a pool water circulation control system that will allow all pumps to be set or programmed to run only during off-peak electric demand period, and for the minimum time necessary to maintain the water in the condition required by applicable public health standards. [CEnC 110.4(b)3ii] // // NOT YET APPROVED 4 160830 sh 016/Dev Services/2016 Code Cycle/Final Codes/2016-08-25 (2016 Code Cyle) ORD Adding Ch 16.16 Intl Pool Code 16.18.130 Section 303.4 Amended – Covers. Section 303.4 of the International Swimming Pool and Spa Code is hereby amended to read: 303.4 Covers. Heated pools and outdoor spas shall be provided with a vapor retardant cover. Exception: Where pools or spas deriving at least 60 percent of the annual heating energy from site solar or recovered energy. 16.18.140 Section 305.2 Amended – Outdoor swimming pools and spas. Section 305.2 of the International Swimming Pool and Spa Code is hereby amended to read: 305.2 Outdoor swimming pools and spas. Other than those facilities regulated in Section 305.8, all outdoor pools and spas and indoor swimming pools shall be surrounded by a barrier that complies with Sections 305.2.1 through 305.7. [CBC 3109.4.4.2] 16.18.150 Section 305.8 Added – Private swimming pools. Section 305.8 of the International Swimming Pool and Spa Code is hereby added to read: 305.8 Private swimming pools. Whenever a building permit is issued for construction of a new swimming pool or spa, or any building permit is issued for remodeling of an existing pool or spa, at a private, single-family home, it shall be equipped with at least one of the following seven drowning prevention safety features: 1. The pool shall be isolated from access to a home by an enclosure that meets the requirements of Section 305.8.1. [CBC 3109.4.4.2 #1] 2. The pool shall incorporate removable mesh pool fencing that meets ASTM F 2286 in conjunction with a gate that is self-closing and self-latching and can accommodate a key lockable device. [CBC 3109.4.4.2 #2] 3. The pool shall be equipped with an approved safety pool cover that meets all requirements of the ASTM F 1346. [CBC 3109.4.4.2 #3] 4. The residence shall be equipped with exit alarms on those doors providing direct access to the pool. [CBC 3109.4.4.2 #4] 5. All doors providing direct access from the home to the swimming pool shall be equipped with a self-closing, self-latching device with a release mechanism placed no lower than 54 inches (1372 mm) above the floor. [CBC 3109.4.4.2 #5] 6. Swimming pool alarms that, when placed in pools, will sound upon detection of accidental or unauthorized entrance into the water. These pool alarms shall meet and be independently certified to the ASTM F 2208 which includes surface motion, pressure, sonar, laser and infrared type alarms. For purposes of this section, "swimming pool alarms" shall not include swimming protection alarm devices designed for individual use, such as an alarm attached to a child that sounds when the child exceeds a certain distance or becomes submerged in water. [CBC 3109.4.4.2 #6] NOT YET APPROVED 5 160830 sh 016/Dev Services/2016 Code Cycle/Final Codes/2016-08-25 (2016 Code Cyle) ORD Adding Ch 16.16 Intl Pool Code 7. Other means of protection, if the degree of protection afforded is equal to or greater than that afforded by any of the devices set forth in items 1-4, and have been independently verified by an approved testing laboratory as meeting standards for those devices established by the ASTM or ASME. [CBC 3109.4.4.2 #7] Exceptions: 1. This section does not apply to any facility regulated by the State Department of Social Services even if the facility is also used as a private residence of the operator. Pool safety in those facilities shall be regulated pursuant to regulations adopted therefor by the State Department of Social Services. [CBC 3109.4.4.6] 2. Hot tubs or spas with locking safety covers that comply with the ASTM ES 13- 89. [CBC 3109.4.4.5 #2] 16.18.160 Section 305.9 Added – Enclosure. Section 305.9 of the International Swimming Pool and Spa Code is hereby added to read: 305.9 Enclosure. The enclosure for private swimming pools shall have all of the following characteristics: 1. Any access gates through the enclosure open away from the swimming pool and are self-closing with a self-latching device placed no lower than 60 inches (1524 mm) above the ground. [CBC 3109.4.4.3 #1] 2. A minimum height of 60 inches (1524 mm). [CBC 3109.4.4.3 #2] 3. A maximum vertical clearance from the ground to the bottom of the enclosure of 2 inches (51 mm). [CBC 3109.4.4.3 #3] 4. Gaps or voids, if any, do not allow passage of a sphere equal to or greater than 4 inches (102 mm) in diameter. [CBC 3109.4.4.3 #4] 5. An outside surface free of protrusions, cavities or other physical characteristics that would serve as handholds or footholds that could enable a child below the age of five years to climb over. [CBC 3109.4.4.3 #5] 16.18.170 Section 310.2 Added – Construction Requirements for building a pool or spa. Section 310.2 of the International Swimming Pool and Spa Code is hereby added to read: 310.2 Construction Requirements for building a pool or spa. Whenever a building permit is issued for the construction a new private swimming pool or spa, the pool or spa shall meet all of the following requirements: 1. The suction outlet of the pool or spa for which the permit is issued shall be equipped to provide circulation throughout the pool or spa as prescribed in Paragraph 2. 2. The swimming pool or spa shall have at least two circulation drains per pump that shall be hydraulically balanced and symmetrically plumbed through one or more "T" fittings, and that are separated by a distance of at least three feet in NOT YET APPROVED 6 160830 sh 016/Dev Services/2016 Code Cycle/Final Codes/2016-08-25 (2016 Code Cyle) ORD Adding Ch 16.16 Intl Pool Code any dimension between the drains. Suction outlets that are less than 12 inches across shall be covered with antientrapment grates, as specified in the ASME/ANSI Standard A 112.19.8, that cannot be removed except with the use of tools. Slots of openings in the grates or similar protective devices shall be of a shape, area and arrangement that would prevent physical entrapment and would pose any suction hazard to bathers. 3. Any backup safety system that an owner of a new swimming pools or spa may choose to install in addition to the requirements set forth in subdivisions (1) and (2) shall meet the standards as published in the document, "Guidelines for Entrapment Hazards: Making Pools and Spas Safer," Publication Number 363, March 2005, United States Consumer Products Safety Commission. 4. Whenever a building permit is for the remodel or modification of any existing swimming pool, toddler pool or spa, the permit shall require that the suction outlet of the existing swimming pool, toddler pool or spa be upgraded so as to be equipped with an antientrapment cover meeting current standards of the American Society for Testing and Materials (ASTM) or the American Society of Mechanical Engineers (ASME). Authority: Health and Safety Code Section 18942(b) Reference: Health and Safety Code Section 115928 AB 3305 (Statutes 1996, c.925); AB 2977 (Statutes 2006, c.926); AB 382 (Statutes 2007, c.XXX) 16.18.180 Section 316.2.1 Added – Construction Requirements for building a pool or spa. Section 316.2.1 of the International Swimming Pool and Spa Code is hereby added to read: 316.2.1 Certification and Installation. (a) Certification by manufacturers. Heating systems and equipment shall be certified by the manufacturer that the heating system and equipment complies with the following: 1. Efficiency. A thermal efficiency that complies with the Appliance Efficiency Regulations in Title 20, Division 2, Chapter 4, Article 4 of the California Code of Regulations; and [CEnC 110.4(a)1] 2. Instructions. A permanent, easily readable and weatherproof plate or card that gives instruction for the energy efficient operation of the pool or spa heater and for the proper care of pool or spa water when a cover is used; and [CEnC 110.4(a)3] 3. Electric resistance heating. No electric resistance heating; and Exception 1 to Section 110.4(a)4: Listed package units with fully insulated enclosures, and with tight-fitting covers that are insulated to at least R-6. Exception 2 to Section 110.4(a)4: Pools or spas deriving at least 60 percent of the annual heating energy from site solar energy or recovered energy. [CEnC 110.4(a)4] (b) Installation. Any pool or spa system or equipment shall be installed with all of the following: NOT YET APPROVED 7 160830 sh 016/Dev Services/2016 Code Cycle/Final Codes/2016-08-25 (2016 Code Cyle) ORD Adding Ch 16.16 Intl Pool Code 1. Piping. At least 36 inches of pipe shall be installed between the filter and the heater or dedicated suction and return lines, or built-in or built-up connections shall be installed to allow for the future addition of solar heating equipment. [CEnC 110.4(b)1] 2. Directional inlets. The swimming pool shall have directional inlets that adequately mix the pool water. [CEnC 110.4(b)3i] 16.18.190 Section 504.1 Amended – Emergency shutoff switch. Section 504.1 of the International Swimming Pool and Spa Code is hereby amended to read: 504.1 Emergency shutoff switch. One emergency shutoff switch shall be provided to disconnect power to circulation and jet system pumps and air blowers. Emergency shutoff switches shall be clearly labeled, accessible, located within sight of the spa and shall be located not less than 5 feet (1524 mm) but not greater than 10 feet (3048 mm) horizontally from the inside walls of the spa. [CElecC 686.41] SECTION 2. If any section, subsection, clause or phrase of this Ordinance is for any reason held to be invalid, such decision shall not affect the validity of the remaining portion or sections of the Ordinance. The Council hereby declares that it should have adopted the Ordinance and each section, subsection, sentence, clause or phrase thereof irrespective of the fact that any one or more sections, subsections, sentences, clauses or phrases be declared invalid. SECTION3. The Council finds that this project is exempt from the provisions of the California Environmental Quality Act (“CEQA”), pursuant to Section 15061 of the CEQA Guidelines, because it can be seen with certainty that there is no possibility that the amendments herein adopted will have a significant effect on the environment. // // // // // // // // NOT YET APPROVED 8 160830 sh 016/Dev Services/2016 Code Cycle/Final Codes/2016-08-25 (2016 Code Cyle) ORD Adding Ch 16.16 Intl Pool Code SECTION 4. This ordinance shall be effective on the thirty-first day after the date of its adoption. INTRODUCED: PASSED: AYES: NOES: ABSENT: ABSTENTIONS: ATTEST: ____________________________ ____________________________ City Clerk Mayor APPROVED AS TO FORM: APPROVED: ____________________________ ____________________________ Senior Deputy City Attorney City Manager ____________________________ Director of Development Services ____________________________ Director of Administrative Services NOT YET APPROVED 1 160831 sh 016/Dev Services/2016 Code Cycle/Final Codes/2016-08-25 (2016 Code Cyle) ORD Amending Chs 16.36 and 16.40 Ordinance No. ______ Ordinance of the Council of the City of Palo Alto Amending Chapters 16.36 (House Numbering), and 16.40 (Unsafe Buildings) of the Palo Alto Municipal Code The Council of the City of Palo Alto does ORDAIN as follows: SECTION 1. Section 16.36.060 (Display of numbers required) of Chapter 16.36 (House Numbering) of Title 16 (Building Regulations) of the Palo Alto Municipal Code Unsafe Buildings is hereby amended to read as follows: No owner, occupant, lessee, tenant or subtenant of any building having an entrance which fronts on a public street shall display any number of such building or entrance thereto other than the proper number designated by the building official. Such designated number shall be placed upon or immediately above or to one side of the door, gate, post or entrance to such building or in some other conspicuous location as provided in this Chapter or Chapter 16.04. SECTION 2. Section 16.40.020 (Substandard Residential Building Defined) of Chapter 16.40 (Unsafe Buildings) of Title 16 (Building Regulations) of the Palo Alto Municipal Code Unsafe Buildings is hereby amended to read as follows: The term "substandard residential building" shall mean any residential building including any dwelling unit, guest room, or suite of rooms or the premises on which the same is located, in which any of the following conditions exist to an extent that endangers the life, limb, health, property, safety or welfare of the public or the occupants thereof: (a) Structural unsoundness, including: (1) Weakened or deteriorated footings. (2) Footings of insufficient size to carry imposed loads with safety. (3) Defective or deteriorated flooring or floor supports. (4) Flooring or floor supports of insufficient size to carry imposed loads with safety. (5) Members of walls, partitions, or other vertical supports that split, lean, list, or buckle due to defective material or deterioration. (6) Members of walls, partitions, or other vertical supports that are of insufficient size to carry imposed loads with safety. (7) Members of ceilings, roofs, ceiling and roof supports, or other horizontal members which sag, split, or buckle due to defective material or deterioration. (8) Members of ceilings, roofs, ceiling and roof supports, or other horizontal members that are of insufficient size to carry imposed loads with safety. ATTACHMENT I NOT YET APPROVED 2 160831 sh 016/Dev Services/2016 Code Cycle/Final Codes/2016-08-25 (2016 Code Cyle) ORD Amending Chs 16.36 and 16.40 (9) Fireplaces or chimneys which list, bulge, or settle, due to defective material or deterioration. (10) Fireplaces or chimneys which are of insufficient size or strength to carry imposed loads with safety. (b) Improper materials of construction, including all materials except those specifically allowed or approved by this code. (c) Fire hazard, as defined in Title 15 of this code. (d) Nuisance, as defined in Chapter 9.56 of this code. (e) Improperly weatherproofed, including: (1) Crumbling, loose, or failing plaster. (2) Broken windows or doors. (3) Defective or lack of waterproofing for wood frame walls. (4) Defective or weathered exterior wall covering due to lack of paint or other approved protective coating. (5) Defective or lack of waterproofing for wood frame roofs. (6) Broken, split, decayed, or buckled exterior wall or roof covering. (f) Defective wiring, including all wiring except that which was legally installed in compliance with the Palo Alto Electrical Code in effect at the time of installation and is still maintained in good condition. (g) Defective plumbing, including all plumbing except that which was legally installed in compliance with the Palo Alto Plumbing Code in effect at the time of installation and is still maintained in good condition. (h) Defective heating and ventilation devices and accessory vents and piping, including all such devices and accessory vents and piping except those which: (1) Were legally installed in compliance with this code in effect at the time of installation and are still maintained in good condition; and (2) Are properly vented as required by this chapter. (i) Improper sanitation and safety, including: (1) Lack of one bath, lavatory and water closet in a dwelling unit. (2) Lack of one bath, lavatory and water closet either serving each ten guest rooms, or serving each twenty guests if housed in less than ten guest rooms. (3) Lack of kitchen sink in the kitchen of a dwelling unit. (4) Lack of running water to sink, bath, water closet and lavatory in a dwelling unit. (5) Lack of running water in bath, water closet and lavatory guest rooms. (6) Lack of heating device to provide hot running water for bath and kitchen sink in a dwelling unit. (7) Lack of heating device to provide hot running water for the baths serving guest rooms. (8) Lack of adequate electric lighting. (9) Lack of adequate heating system. (10) Window areas or ventilation less than that required by this chapter. (11) Room areas, ceiling height and cubic air space less than those required by this chapter. NOT YET APPROVED 3 160831 sh 016/Dev Services/2016 Code Cycle/Final Codes/2016-08-25 (2016 Code Cyle) ORD Amending Chs 16.36 and 16.40 (12) Damp, wet rooms used for living purposes. (13) Infestation with insects, vermin and rodents, when so determined by the health officer. (14) General dilapidated condition and not maintained as required by this chapter. (15) Improperly enclosed or unsanitary underfloor area. (16) Improperly ventilated or reduced height of underfloor area. (17) Improperly ventilated cooking facilities. (j) Exits, including: (1) All doors, passageways, stairways, and courts which do not comply with the provisions of this chapter. (2) Lack of access to each dwelling unit, guest room, or suite of rooms without passing through some portion of another dwelling unit, guest room or suite of rooms. (k) Lack of, or defective fire protective equipment, where required by this chapter. (l) Any building which is occupied by a residential occupancy for which it was not designed or intended. (m) Visible mold growth, as determined by a health officer or a code enforcement officer, except mold that is minor and found on surfaces that accumulate moisture as part of their proper functioning and use. (n) Any residential building which constitutes a "dangerous building," as defined in this code. (o) Any residential building which constitutes a substandard building under the California State Housing Law, Section 17920.3, as it may be amended from time to time. SECTION 3. Section 16.40.040 (Dangerous Buildings Declared) of Chapter 16.40 (Unsafe Buildings) of Title 16 (Building Regulations) of the Palo Alto Municipal Code Unsafe Buildings is hereby amended to read as follows: All buildings or portions thereof which are determined by the building official to be dangerous or substandard as defined in this chapter are hereby declared to be public nuisances and shall be abated by repair, rehabilitation, demolition or removal in accordance with the procedure in this Chapter or Chapter 9.56 (Abatement of Nuisances). The procedure provided in this Chapter shall be cumulative and in addition to any other procedure or procedures provided in ordinances of this city or by state law for the abatement of any of the conditions described in this Chapter, and abatement under this chapter shall not prejudice or affect any other action, administrative, civil, or criminal, for the maintenance of any such condition. // NOT YET APPROVED 4 160831 sh 016/Dev Services/2016 Code Cycle/Final Codes/2016-08-25 (2016 Code Cyle) ORD Amending Chs 16.36 and 16.40 SECTION 4. Section 16.40.060 (Notice and Order of Building Official) of Chapter 16.40 (Unsafe Buildings) of Title 16 (Building Regulations) of the Palo Alto Municipal Code Unsafe Buildings is hereby amended to read as follows: (a) Building Official to Commence Proceedings. Whenever the building official has inspected or caused to be inspected any building and has found and determined that such building is a dangerous building, he may commence proceedings to cause the repair or rehabilitation of the building or, if he finds that repairs or rehabilitation are impracticable, to cause the vacation and demolition of the building. (b) Notice and Order - Contents. To commence proceedings under this Section, the building official shall issue a notice and order directed to the record owner of the building and the person, if any, occupying or otherwise in real or apparent charge and control of the building. The notice and order shall contain: (1) The street address and a legal description sufficient for identification of the premises on which the building is located. (2) A statement that the building official has found the building to be dangerous and a public nuisance, with a brief description of the conditions which render the building dangerous and a public nuisance under the provisions of Sections 16.40.010 through 16.40.040 of this chapter, including, whenever an order to vacate and demolish is given, a finding that repair or rehabilitation is impracticable, with a brief statement of the facts upon which such finding is based. (3) An order to secure permits and physically commence elimination of the described conditions within a reasonable timeframe as determined by the building official or, if repair or rehabilitation has been found impracticable, to vacate the building and commence demolition and complete demolition within a reasonable timeframe as determined by the building official. (4) A statement advising that if the required repair or demolition work is not commenced within the time specified, the building official will order the building vacated and posted to prevent further occupancy until the work is completed, and may proceed to cause the work to be done and assess the costs thereof against the property. (5) A statement advising that any person having any record title or interest in the building may appeal from the notice and order, or any action of the building official to the city council, provided the appeal is made in writing as provided in this section, and filed with the building official within fifteen days from the date of service of such notice and order. (c) Persons Served. The notice and order, and any amended notice and order, shall be served upon each person to whom it is directed, and one copy thereof shall be served on each of the following: the holder of any mortgage or deed of trust or other lien or encumbrance of record; the owner or holder of any lease of record; and the holder of any other estate or interest of record in or to the building or the land on which it is located. The failure of the building official to make or attempt NOT YET APPROVED 5 160831 sh 016/Dev Services/2016 Code Cycle/Final Codes/2016-08-25 (2016 Code Cyle) ORD Amending Chs 16.36 and 16.40 service on any person required herein to be served shall not invalidate any proceedings hereunder as to any other person duly served from any duty or obligation imposed on him by the provisions of this section. (d) Method of Service. Service of the notice and order shall be made upon all persons entitled thereto either personally or by mailing a copy of such notice and order by certified mail, postage prepaid, return receipt requested, to each such person at his address as it appears on the last equalized assessment roll of the county or as known to the building official. If no address of any such person so appears or is known to the building official, then a copy of the notice and order shall be so mailed, addressed to such person, at the address of the building involved in the proceedings. The failure of any such person to receive such notice shall not affect the validity of any proceedings taken under this section. Service by certified mail in the manner provided shall be effective on the date of mailing. (e) Proof of service of the notice and order shall be documented at the time of service by a declaration under penalty of perjury executed by the person effecting service, declaring the time and manner in which service was made. The declaration, together with any receipt card returned in acknowledgment of receipt by certified mail shall be affixed to the copy of the notice and order retained by the building official. (f) At the time the notice and order is served the building official shall file in the office of the county recorder a certificate legally describing the property and certifying that the building is a dangerous building and the owner has been so notified. Whenever the corrections ordered shall have been completed or the notice and order reversed, modified or set aside by the city council upon appeal, so that the building no longer exists as a dangerous building on the property described in the certificate, the building official shall file a new certificate with the county recorder that the building has been demolished or removed or is no longer dangerous. SECTION 5. If any section, subsection, clause or phrase of this Ordinance is for any reason held to be invalid, such decision shall not affect the validity of the remaining portion or sections of the Ordinance. The Council hereby declares that it should have adopted the Ordinance and each section, subsection, sentence, clause or phrase thereof irrespective of the fact that any one or more sections, subsections, sentences, clauses or phrases be declared invalid. SECTION 6. The Council finds that this project is exempt from the provisions of the California Environmental Quality Act (“CEQA”), pursuant to Section 15061 of the CEQA Guidelines, because it can be seen with certainty that there is no possibility that the amendments herein adopted will have a significant effect on the environment. // // NOT YET APPROVED 6 160831 sh 016/Dev Services/2016 Code Cycle/Final Codes/2016-08-25 (2016 Code Cyle) ORD Amending Chs 16.36 and 16.40 SECTION 7. This ordinance shall be effective on the thirty-first day after the date of its adoption. INTRODUCED: PASSED: AYES: NOES: ABSENT: ABSTENTIONS: ATTEST: ____________________________ ____________________________ City Clerk Mayor APPROVED AS TO FORM: APPROVED: ____________________________ ____________________________ Senior Deputy City Attorney City Manager ____________________________ Director of Development Services ____________________________ Director of Administrative Services City of Palo Alto (ID # 6938) City Council Staff Report Report Type: Action Items Meeting Date: 10/4/2016 City of Palo Alto Page 1 Summary Title: Council Review of Faircourt Single Story Overlay Title: PUBLIC HEARING: Faircourt #3 and #4 Single Story Overlay (SSO) Rezoning: Request for a Zone Change of the Faircourt #3 and #4 Tracts #1921 and #1816 From R-1 Single Family Residential (8000) to R-1(8000)(S) Single Family Residential With Single Story Overlay (SSO); Environmental Assessment: Exempt From the California Environmental Quality Act per Section 15305; Planning and Transportation Commission Recommended Denial of the SSO Request From: City Manager Lead Department: Planning and Community Environment Recommendation Staff recommends that Council adopt the attached ordinance (Attachment A) to rezone 44 of the 50 Faircourt Tract #3 and #4 properties from R-1 (8,000) to R-1 (8,000)(S) as shown on Attachment B. Executive Summary The recommended action would institute a single story overlay zone (SSO) on 44 parcels within an area of South Palo Alto along Thornwood, Evergreen, and Talisman Drives, and Ross and Louis Roads. With an SSO, the maximum square footage allowed per parcel would not change, but existing single story houses cannot be replaced or remodeled to include a second story. The staff recommendation results from an application filed by neighborhood residents, and differs from the Planning and Transportation Commission (PTC) recommendation for denial. The original Faircourt SSO rezoning proposal was submitted with a 60% owner support level, or 30 owners of 50 properties within the tract boundary. Only 60% support was needed at the time of application, because the tract is subject to Covenants, Codes and Restrictions (CCR) agreement limiting homes in the tract to one-story construction. There was an erosion of owner support prior to the PTC hearings and owners of six properties along the south side of Talisman Drive submitted a petition to remove their properties from the boundary. As a result, the applicant revised the proposed boundary to create a 44-property SSO district proposal and presented this to the PTC. The applicant also submitted evidence that the property owners City of Palo Alto Page 2 adjacent to the removed properties continue to support the downsized SSO. The PTC subsequently voted to recommend denial of the applicant’s request for an SSO. The applicant submitted evidence of 63.6% support for the smaller 44-property boundary as of August 16, 2016. The draft ordinance (Attachment A) is provided in the event Council chooses to approve the proposal for a 44-property SSO boundary within the Faircourt #3 and #4 Tracts. Background The applicant initially proposed an SSO boundary containing all 50 homes within the Faircourt #3 and #4 Tracts. Owners of six properties on the south side of Talisman submitted a counter- petition to remove the properties from the proposed boundary (Attachment I).1 Upon receipt of this petition, the applicant revised the proposal to a 44-property SSO boundary. The applicant’s original signature petition is provided in Attachment G. Additional supportive signatures received in August and June are provided as Attachments D and E, respectively. The applicants’ proposal for reduction to 44 properties is provided as Attachment H. Planning and Transportation Commission At the time of application for a 50-property boundary, the applicants had met the requirement for evidence reflecting a 60% owner support level for residential tracts subject to single-story construction covenants. At the time the PTC recommended denial of the proposed 44-property boundary, the support level within that reduced boundary was 59%. PTC meeting minutes are provided as Attachment C. April 27, 2016 Hearing The PTC continued the first hearing in order to learn whether Council would provide direction on SSOs during its consideration on May 2, 2016 of the Royal Manor SSO proposal. The April 27, 2016 PTC staff report may be viewed at this link: https://www.cityofpaloalto.org/civicax/filebank/documents/52073. May 25, 2016 Hearing The applicant formally proposed a reduced boundary of 44 homes excluding the six properties on the south side of Talisman Drive. Neighborhood support for the reduced boundary declined to 59% on May 25, 2016, when the PTC recommended denial of the application. . The May 25, 2016 PTC staff report may be viewed at this link: https://www.cityofpaloalto.org/civicax/filebank/documents/52512. The images below show the original 50-property proposal and the 44-property, reduced boundary. The green-shaded properties in the 44-property boundary (below image to the right) reflect the current signatures of SSO-support (as of August 16, 2016) and the pink shaded properties indicate non-support of the SSO. 1 While the Code permits property owners from petitioning to withdraw from an existing SSO, it does not contain a process for pre-SSO formation withdrawal. City of Palo Alto Page 3 Original Application 50 Properties Revised 44-Property Boundary Discussion Staff has forwarded the PTC recommendation for Council consideration. Staff received evidence (two new owner signatures of SSO support) following the PTC’s recommendation; this evidence is provided for Council consideration prior to taking action on the proposal. The applicants ask that Council approve the requested rezoning of 44 properties. The proposed SSO boundary is formed by streets (Louis and Ross Roads, and Talisman Drive) and by the tract boundary that separates the Eichler homes fronting Louis and Evergreen from the non-Eichler homes fronting Aspen Way that are part of a different tract. The owners of property along the north side of Talisman Drive did not object to removal of properties on the south side of Talisman Drive, which are adjacent to non-Eichler, two-story homes in the adjacent tract. In order to approve the 44-property boundary, Council would need to find that the proposed amendment is in the public interest and will promote the public health, safety and welfare in that this rezoning is in accord with the purposes of Title 18 of the Palo Alto Municipal Code, and with the particular, stated purpose “to facilitate the creation of a convenient, attractive and harmonious community,” and will further promote and accomplish the Palo Alto Comprehensive Plan objectives, policies and programs. The attached ordinance contains relevant Comprehensive Plan policies and a goal. Council may wish to discuss whether the current support level (63.6% of properties within the 44-property boundary) is relevant to its consideration at this time. The new owner of 3479 Ross Road submitted a signature in support of the SSO on June 14, 2016. The new owner of 879 Talisman provided a signature in support on August 16, 2016. Council Direction While Council voted not to approve the Royal Manor SSO proposal on May 2, 2016, Council did direct staff to return with a preliminary evaluation of Eichler zoning or guidelines, and potential City of Palo Alto Page 4 code changes for processing and evaluating SSOs. No staff time has yet been dedicated to code changes; however, the August 10, 2016 PTC report regarding the Individual Review Program contains a May 23, 2016 memorandum from the Planning Director discussing the estimated effort to produce Eichler guidelines. The memo is viewable as “Attachment B” within the PTC report, at this link: http://www.cityofpaloalto.org/civicax/filebank/documents/53365. On May 31, 2016, Council provided direction to staff at the ‘committee as a whole’ meeting regarding the City’s work program. The work program indicated a contingency fund could be used for a consultant to prepare Eichler design guidelines. Council then approved use of the contingency fund as of June 13, 2016 and staff is currently negotiating a contract with a consultant to provide the services necessary to develop design guidelines and respond to the Council’s request. The Council may decide to approve or deny the proposed rezoning based on the PTC and staff recommendations. If Council denies the proposal, the applicant could not resubmit a rezoning proposal for the same or similar SSO boundary until a year after May 25, 2017. PTC Recommendation The PTC’s recommendation and concerns are contained within the May 25, 2016 PTC meeting minutes (Attachment C). The second part of the PTC’s motion was a recommendation that Council continue to encourage staff to come back with Eichler design guidelines that could potentially complement the current single family review design process. The maker and seconder of the motion expressed SSO process concerns, which are briefly summarized below:  The SSO process is a broken, uncomfortable, and potentially antagonistic process; i.e., compelling neighbors to collect signatures in person from each other. Council should consider a formal, local ballot process instead of a process where neighbors approach neighbors. A notarized signature might encourage people to spend a little bit more time consulting an attorney or other individuals they rely on for advice on matters like this.  It is an offensive notion that a two‐story home is a monstrosity that no two‐story home can get built in this City that's not a monstrosity.  The current level of SSO support is 59%, which is close but is not 60%.  The neighborhood should revive the HOA and resolve these issues via CC&R amendments.  Interpretation of signatures of support regarding the reduced boundary is a concern; an owner could wish to shift support, knowing they're not getting any reciprocal protection. Alternative Recommendations If the Council does not wish to approve the SSO rezoning request, Council may choose to: (1) deny the application following the PTC recommendation; there is no requirement for a resolution or record of land use action to deny a rezoning request, City of Palo Alto Page 5 (2) Send the application back to the PTC for re-consideration, or (3) Continue this item to a date uncertain, so that it can be discussed in conjunction with Council’s earlier direction to explore Eichler zoning or design Guidelines. Policy Implications The proposed SSO is supportable as a standard SSO, and is in accordance with Council direction regarding rezoning of properties to SSO without requiring application fees to process the applications. No additional SSO applications have been filed. While the proposed overlay zone would limit future construction to one story in the subject neighborhood, it does not ensure the retention of Eichler-designed homes. New homes would not be evaluated for architectural or neighborhood compatibility or potential privacy impacts, as they would not be subject to the Individual Review process or another discretionary review process. The attached ordinance (Attachment A) cites relevant Comprehensive Plan policies L-4, L-5 and L-12, as well as the goal L-3 for “Safe, attractive residential neighborhoods each with its own distinct character…” which includes verbiage about how Eichler neighborhoods were designed so homes may serve as private enclaves.” Resource Impact Based on recent Council policy, application for a SSO is not subject to any fees. Other than non- cost recovered staff time used to process these applications and budgeted printing/mailing costs, no additional resources were expended. Environmental Review The proposed rezoning is exempt from the California Environmental Quality Act (CEQA) per State CEQA Guidelines Section 15305 (Class 5: Minor Alterations in Land Use Limitations). Attachments:  Attachment A: Faircourt SSO 44-property Ordinance (PDF)  Attachment B: SSO_Faircourt_Yes_No_VotingMap_20160822 (PDF)  Attachment C: PTC Minutes of April 27 and May 25, 2016 Verbatim Excerpt (PDF)  Attachment D: 879 Talisman Signature in Support (PDF)  Attachment E: 3479 Ross Road Signature of Support (PDF)  Attachment F: Guidelines for SSO circa 2002 (DOC)  Attachment G: Original Petition Signatures (PDF)  Attachment H: Email from Applicants to Reduce Boundary to 44 Properties (PDF)  Attachment I: Late April Talisman Counter-Petition (PDF) NOT YET APPROVED 160919 jb 0131551 1 Ordinance No. ______ Ordinance of the Council of the City of Palo Alto Amending Section 18.08.040 (Zoning Map and District Boundaries) of the Palo Alto Municipal Code to change the classification of 44 properties within the Faircourt #3 and #4 tracts (Tracts #1816 and 1921) from R-1(8000) to R-1 (8000)(S) The Council of the City of Palo Alto does ORDAIN as follows: SECTION 1. Findings and Declarations. The City Council finds and declares as follows: A. The Planning and Transportation Commission, after duly noticed hearings held April 27 and May 25, 2016, recommended denial of the proposal for a Single Story Overlay for Faircourt #3 and #4 tracts. B. The City Council, after due consideration of this recommendation, finds that the proposed amendment is in the public interest and will promote the public health, safety and welfare in that this rezoning is in accord with the purposes of Title 18 of the Palo Alto Municipal Code, and with the particular, stated purpose “to facilitate the creation of a convenient, attractive and harmonious community,” and will further promote and accomplish the Palo Alto Comprehensive Plan objectives, policies and programs; particularly: o Policy L-4: “Maintain Palo Alto’s varied residential neighborhoods; use the zoning ordinance as a tool to enhance Palo Alto’s desirable qualities.” o Policy L-5: “Maintain the scale and character of the City.” o Goal L-3: “Safe, attractive residential neighborhoods each with its own distinct character…” which includes verbiage about how Eichler neighborhoods were designed so homes may serve as private enclaves. o Policy L-12: “Preserve the character of residential neighborhoods by encouraging new or remodeled structures to be compatible with the neighborhood and adjacent structures.” SECTION 2. Section 18.08.040 (Zoning Map and District Boundaries) is hereby amended by changing the zoning of 44 properties within the tracts known as Faircourt #3 and #4, Tracts #1816 and #1921 (the “subject property”), from “R-1” (Single-Family Residence) (8,000)” to “R- 1(8000)(S)” (Single-Family Residential, Single-Story Height Combining). The subject property is shown on the map labeled ‘Exhibit A’ attached hereto and incorporated herein by reference. The properties within the Single Story Overlay boundary include 44 homes within these tracts, addressed as follows: •3479-3519 Ross Road (north side of the street); •North side of Talisman Drive properties (801-879); •Arbutus Drive between Talisman Drive and Thornwood Drive (3502-3532); •Thornwood Drive (821-881); •3500-3580 Louis Road; and •3505 – 3579 Evergreen Drive. Attachment A NOT YET APPROVED 160919 jb 0131551 2 SECTION 3. If any section, subsection, sentence, clause, or phrase of this Ordinance is for any reason held to be invalid or unconstitutional by a decision of any court of competent jurisdiction, such decision shall not affect the validity of the remaining portions of this Ordinance. The City Council hereby declares that it would have passed this Ordinance and each and every section, subsection, sentence, clause, or phrase not declared invalid or unconstitutional without regard to whether any portion of the ordinance would be subsequently declared invalid or unconstitutional. SECTION 4. The Council finds that the adoption of this ordinance is exempt from the provisions of the California Environmental Quality Act pursuant to CEQA Guideline section 15305, Minor Alterations in Land Use Limitations. SECTION 5. This ordinance shall be effective on the thirty-first date after the date of its adoption. INTRODUCED: PASSED: AYES: NOES: ABSENT: ABSTENTIONS: NOT PARTICIPATING: ATTEST: ____________________________ ____________________________ City Clerk Mayor APPROVED AS TO FORM: APPROVED: ____________________________ ____________________________ Deputy City Attorney City Manager ____________________________ Director of Planning & Community Environment T Christine Drive a l i sman Stone Lane Lupine Avenue Thornwood Drive Talisman Drive Arbutus Avenue Ross Road Louis R Aspen Way Evergreen DriveG r eer Roa d CourtBarron Creek Dry Creek 512 35 1 0 756 767 761 7 5 5 795 787 781 775 762 768 774 780 771 775 779 794 842 839 3475 838 3455 834 830 3441 3427 826 3413 875 827 831 772 752 773 765 757 751 758 766 774 7 777 781 3510 3487 3479 3495 3507 3511 3530 3520 801 3519 3532 804 820 845 835 3521 3515 3527 829 3502 35203516 787 783 784 780 788 3580 3584 774 777 791 756 764 760 3582 3583 821 3508 3640 3646 3646A790 782 3649 3592 3616 3608 3600 3598 3575 840 830 3611 3603 3591 3587 3583 3584 3590 3594 3606 3593 3589 3585 3616 3624 3630 3613 3631 3605 3632 3639 3612 3615 3604 3607 3592 3599 3588 3587 3641 3624 3631 3634 3607 3615 3623 3626 3627 3632 3619 855 868 866 859 871 35513550 3540 3450 846 850 854 858 862 864 829 841 835 3517 3525 3531 3520 3530 3543 3509 3580 3579 3568 3563 3536 3547 3524 3535 3500 3505 881 877 865 863 879 868 856 851 844 838 3580 3539 885 877 3499 3538 3460 3510 853 3465 3405 3415 3425 3435 3445 3455 359 3599 360 3611 3625 3617 3633 3596 3602 3610 3618 880 35 788 776 3412 This map is a product of the City of Palo Alto GIS This document is a graphic representation only of best available sources. Legend Signed Petition in support of Single Story Overlay (SSO) SSO Applicants Existing Two Story Structure Proposed Single Story Combining District (44 lots/parcels) 0' 200' Support LevelProposed Single StoryCombining DistrictFaircourt Tractrev. 08/22/16 CITY O F PALO A L TO IN C O R P O RATE D C ALIFOR N IA P a l o A l t oT h e C i t y o f A P RIL 16 1894 The City of Palo Alto assumes no responsibility for any errors ©1989 to 2016 City of Palo Alto RRivera, 2016-08-22 17:13:16 (\\cc-maps\gis$\gis\admin\Personal\RRivera.mdb) T Christine Drive a l i sman Stone Lane Lupine Avenue Thornwood Drive Talisman Drive Arbutus Avenue Ross Road Louis R Aspen Way Evergreen DriveG r eer Roa d CourtBarron Creek Dry Creek 512 35 1 0 756 767 761 7 5 5 795 787 781 775 762 768 774 780 771 775 779 794 842 839 3475 838 3455 834 830 3441 3427 826 3413 875 827 831 772 752 773 765 757 751 758 766 774 7 777 781 3510 3487 3479 3495 3507 3511 3530 3520 801 3519 3532 804 820 845 835 3521 3515 3527 829 3502 35203516 787 783 784 780 788 3580 3584 774 777 791 756 764 760 3582 3583 821 3508 3640 3646 3646A790 782 3649 3592 3616 3608 3600 3598 3575 840 830 3611 3603 3591 3587 3583 3584 3590 3594 3606 3593 3589 3585 3616 3624 3630 3613 3631 3605 3632 3639 3612 3615 3604 3607 3592 3599 3588 3587 3641 3624 3631 3634 3607 3615 3623 3626 3627 3632 3619 855 868 866 859 871 35513550 3540 3450 846 850 854 858 862 864 829 841 835 3517 3525 3531 3520 3530 3543 3509 3580 3579 3568 3563 3536 3547 3524 3535 3500 3505 881 877 865 863 879 868 856 851 844 838 3580 3539 885 877 3499 3538 3460 3510 853 3465 3405 3415 3425 3435 3445 3455 359 3599 360 3611 3625 3617 3633 3596 3602 3610 3618 880 35 788 776 3412 This map is a product of the City of Palo Alto GIS This document is a graphic representation only of best available sources. Legend Signed Petition in support of Single Story Overlay (SSO) SSO Applicants Existing Two Story Structure Proposed Single Story Combining District (44 lots/parcels) 0' 200' Support LevelProposed Single StoryCombining DistrictFaircourt Tractrev. 08/22/16 CITY O F PALO A L TO IN C O R P O RATE D C ALIFOR N IA P a l o A l t oT h e C i t y o f A P RIL 16 1894 The City of Palo Alto assumes no responsibility for any errors ©1989 to 2016 City of Palo Alto RRivera, 2016-08-22 17:13:16 (\\cc-maps\gis$\gis\admin\Personal\RRivera.mdb) City of Palo Alto Page 1 Planning and Transportation Commission 1 Verbatim Minutes 2 April 27, 2016 3 4 EXCERPT 5 6 Recommendation to the City Council for a Request by Jackie Angelo Geist and Roland Finston 7 on Behalf of 60% of Property Owners of the Faircourt #3 and #4 Tracts #1921 and 1816 for a 8 Zone Change of 50 properties from R‐1 Single Family Residential (8000) to R‐1(8000)(S) Single 9 Family Residential with Single Story Overlay.  Environmental Assessment: Exempt from the 10 California Environmental Quality Act per section 15305. 11  12 The proposed zone change reduces the allowed building height for these properties from the 13 current two‐story, 30 feet (33 feet for the flood zone properties) to one‐story limit, 17 feet (20 14 feet for the flood zone properties). The height restrictions apply to new home construction, 15 additions and remodels of existing homes. Existing two‐story homes within the proposed 16 boundary may remain, but any new construction would be subject to the lower height limit. 17 The properties listed below are affected by this change. The 50 properties within the proposed 18 SSO boundary have these addresses, inclusive: 19  20  3479‐3519 Ross Road (north side of the street); 21  801‐879 Talisman Drive between Ross Road and Evergreen Drive; 22  3502‐3532 Arbutus Drive between Talisman Drive and Thornwood Drive; 23  821‐881 Thornwood Drive; 24  3575 Lupine Avenue; 25  3500‐3580 Louis Road (south side of street); and 26  3505 – 3580 Evergreen Drive. 27  28 For more information on the proposed Single Story Overlay, please contact Amy French 29 at amy.french@cityofpaloalto.org.   30  31 Acting Chair Gardias: So welcome back.  It’s 8:13.  We're reconvening so Planning and 32 Transportation Commission (PTC) is back in session.  And so the next topic is recommendation 33 to the City Council for a request by Jackie Angelo Geist and Roland Finston on behalf of 60 34 percent of Property Owners of the Faircourt #3 and #4 Tracts #1921 and 1816 for a zone change 35 of 50 properties from R‐1 Single Family Residential (8000) to R‐1(8000)(S) Single Family 36 Residential with Single Story Overlay (SSO).  And we have staff overview of this topic.  37  38 Amy French, Chief Planning Official: Thank you, yes.  Amy French, Chief Planning Official.  I'm 39 processing the SSOs that have been coming in and on the screen here are the recent, two 40 recently adopted SSOs Los Arboles, 83 homes, and Greer Park North, 72 homes that you were 41 part of that process.  The Council last or two weeks ago nearly continued the review of the 42 Royal Manor tract proposal for a SOO until this coming Monday, May 2nd.  The Greer Park, 43 Royal Manor, and Faircourt tracks are all in the flood zone and so basically a new flood zone 44 home must have a first finished floor that's higher than the 10.5 above sea level feet.  And it 45 City of Palo Alto Page 2 can have a taller maximum height than a standard home in a non‐flood zone.   So I’ll show you 1 on this slide that this is the Faircourt #3 and #4.  Those are two tracks that form this boundary.  2 Its zone is R‐1 (8000) which means that an 8,000 square foot minimum lot size is required for a 3 new lot in that zone.  There are two homes that or properties that are not in the flood zone.  4 The got themselves out of the floods zone and what that means is they can have a basement 5 and they do not get that additional height, maximum that flood zone homes can get.  6  7 The addresses that are affected are on the screen here and in the report.  Some folks that 8 received notices which went to a boundary of 600 feet beyond the affected properties in the 9 boundary sometimes people get confused and think it's going to apply to their property, but it 10 is not.  Only the homes within this boundary on the screen.  11  12 So we did receive this application in February of this year and again all but two homes are in the 13 flood zone.  The tract is bound by Ross and Lewis roads, Baron Creek, and the tract’s southerly 14 edge.  So basically the tract defines an identifiable neighborhood development.  The application 15 did meet the criteria per our municipal code for an application to come in and be forwarded to 16 the PTC.  It's an identifiable tract boundary as the boundary.  90 percent of the homes are one‐17 story.  Only 5 homes are two‐story.  There was evidence in the application that 60 percent of 18 the property owners signed in support of the SSO.  That's 30 of 50 homes and the sixty percent 19 support level was due to the fact that there is a CC&R’s in place for the homes in these tracts 20 limiting construction to one‐story home.  21  22 The lots are moderately sized.  The minimum again is 8,000 square feet an area.  An 8,000 23 square foot lot would allow a home of 3,150 square feet.  There are some larger lots than that 24 and there is a small lot and I'll show this to you.  This is actually smaller than 8,000 square feet.  25 This property owner as of last night at 10:30 or so p.m. submitted a request to withdraw 26 support.  27  28 So moving on; any new construction on the 48 homes is as I said ten foot, 10.5 feet above sea 29 level.  And I should say 4 of the 5 two‐story homes are Eichlers with second floor additions.  30 There is 1 of those 5 two‐story homes that's a new home, not an Eichler.   And that did receive 31 its final inspection at the end of March this year.  32  33 I'm going to show the map here now.  The talisman homes here that are subject of the e mail 34 that came last night there’s six of them: one, two, three, four, five, six.  This is the home as I 35 mentioned that submitted a reversal of support.  This is a two‐story home and several of these 36 homes are near some two‐story homes in this tract.  The tract next door is a non Eichler tract.  37 It’s ranch homes and two‐story homes.   38  39 So again, the green is the 60 percent owner support at the type of application.  This was true 40 until the close of business yesterday.  The email that came last night resulted in a drop of the 41 support to 58 percent.  This was forwarded to the PTC this morning.  And I understand a 42 representative of the group will speak tonight.  I have not seen a card from that representative, 43 but perhaps it was delivered earlier in the evening.  44  45 City of Palo Alto Page 3 Just briefly the purpose and eligibility here again on the screen, the code does not require staff 1 to do a survey of owner support.  It comes in from an applicant that’s an owner in the 2 neighborhood.  The signature page that came in indicating the support or evidence of support 3 noted 2002 SSO guidelines.  I have copies of these.  Those predated the 2005 zoning code 4 change.  And the 2005 zoning code change set the percentages at 60 percent and 70 percent.  5 Whereas the guidelines talked about overwhelming support and didn't have a percentage.  The 6 guidelines also talked about moderate lot sizes whereas the code of 2005 doesn't talk about 7 moderate lot sizes as a requirement.   8  9 Let’s see, then we've covered this before, but for the benefit of those in the audience that 10 haven't heard this there are limitations once a SSO is designated and that means that existing 11 two‐story homes or homes above the 17 feet, 20 feet become non‐complying facilities and 12 there are rules about what you can do with non‐complying facilities.  And then any new two‐13 story home can't be constructed and any one‐story home cannot exceed that height limit of17 14 to 20 feet.  15  16 What their rezoning doesn't do, it doesn't require Eichler design compatibility.  There are no 17 design guidelines for single story homes in the City.  It doesn't ensure that privacy is protected 18 and it doesn't require any discretionary review or notice to the neighborhood if it a one‐story 19 home is proposed.  20  21 Just briefly the applicants did coordinate with some other SSO leaders that have been coming 22 through the process and did gather signatures back in the fall of last year.  And then staff 23 posted this on our website Buildingeye and we mailed notices.  The notices we took care to tell 24 folks about the website where we have information about this particular SSO and SSOs in 25 general, frequently asked questions (FAQ).  We did correspond with a couple of concerned 26 owners before the application came in and after and then recently this email from last night.  27 That concludes staff's presentation.  And I should just say one thing is that as in previous we've 28 mentioned that the PTC can adopt the entire or can recommend that Council adopt the entire 29 boundary as proposed or a reduced boundary of less than 50 homes and that would not require 30 noticing.  If the PTC feels that the boundary should be larger that would require re‐noticing of 31 this hearing. Thank you. 32  33 Acting Chair Gardias: Thank you, Ms. French, for the presentation.  So with this we have nine 34 speaker cards and we going to open the floor to the public and with the same ask as we had 35 before we would like to given the time and number of speakers we would like to limit speakers’ 36 time to three minutes.  37  38 Acting Vice‐Chair Waldfogel: Great, thank you.  I’d like to start with the applicant, Jackie Angelo 39 Geist, and followed by Joe Geist.  40  41 Jackie Angelo Geist: This is the place?  Ok.  Hello to members of the PTC.  I'm Jackie Angelo 42 Geist and I live in, on Evergreen Drive in the Faircourt subdivision.  I don't feel it’s necessary to 43 represent his agenda item because it's been done by Amy French.  Basically we’re asking for a 44 SSO in our stable neighborhood ownership, stable ownership.  There's not a lot of buying and 45 selling going on in our in our tract so we're asking for a SSO for the 50 properties in our tract.  46 City of Palo Alto Page 4  1 I've been involved with informing my neighbors and getting signatures for our SSO petition.  2 Property owners were given materials to read before we personally contacted each household.  3 There was no pressure on anyone to sign.  If one partner of the couple comprising home 4 ownership was against the petition and we do have people like that we accepted that as a no.  5 No friendships were threatened.  Obviously we achieved the required percentage of the owners 6 rather peacefully.  7  8 Property values will not be adversely affected by our SSO.  If anything they will be raised.  9 Green Meadow, one of the most desired Eichler neighborhood in Palo Alto has had the SSO for 10 many years.  The most expensive and well‐kept Eichler homes seem to be in Green Meadow.  11 Families have added square footage to their houses to increase their living area without 12 changing the footprint of the house or adding a second story and that works.  That said, I speak 13 for the SSO on the grounds of preserving our neighborhood as it was intended and to keep it 14 aesthetically uniform.  Eichler’s design offering indoor/outdoor living continues to be desired.  15 Letting the residents enjoy our California lifestyle without exposing ourselves to neighbors next 16 door or behind us.  We chose our Eichler for its design; floor to ceiling windows and naturally 17 lighted rooms with surrounding landscapes bringing nature in.  Let's keep Faircourt as designed 18 adhering to the original CC&R recorded as part of our deeds in the office of the Santa Clara 19 County Recorder.  Thank you. 20  21 Acting Vice‐Chair Waldfogel: Thank you very much.  Joe Geist followed by Alexander Cooper.  22  23 Joe Geist: Good evening.  My name is Joe Geist.  My residence is 3547 Evergreen.  I'm relatively 24 new to the neighborhood.  I've only been there 20 years.  I'm very much in favor of the SSO.  25 The original CC&R’s restricted development to single story homes.  I really don't see the 26 problem.  While I respect the fact that some homes may disagree we do have the consent of 27 the majority of the homes in the two, in the two tract to petition for the adapt, for the adaption 28 of SSO.  I asked the Planning Commission to enforce the original intent and restriction of the 29 CC&R’s and to recommend approval to the City Council for the acceptance of our plan.  Thank 30 you. 31  32 Acting Vice‐Chair Waldfogel: Thank you very much.  Alexander Cooper and then Harold 33 Poskanzer. 34  35 Alexander Cooper: Good evening.  I’m Alexander Cooper representing my family.  We live at 36 877 Thornwood Drive.  So by math, my count we are the second most recent people to move 37 into the neighborhood having moved in last year, but we flipped in the Bay Area, Palo 38 Alto/Mountain View area for many years.  Myself since ’94.  We chose our house on 39 Thornwood Drive in large part because of the architecture because of the neighborhood.  We 40 like the Eichler style, we like the light, the natural light, we like having the yard.  And looking at 41 all of the new houses get built around Palo Alto so many of those are two‐story houses and 42 bringing more of those into the neighborhood would just dramatically change the feel of the 43 neighborhood which and like as I said that's one of the reasons we chose there.  Having big 44 two‐story houses will shade the yard, shade the windows, potentially it’d impact privacy 45 depending on the location.  We like to have a vegetable garden, we have some trees, things like 46 City of Palo Alto Page 5 that that really benefit a lot from sunlight.  So having a sort of a canyon of tall houses next to us 1 would really change what we can do in a house.  It would definitely change the character of the 2 neighborhood.  3  4 We can't easily move.  We bought into this house.  We plan to be here for a long time so we’d 5 really like the neighborhood to stay the way it was when we chose it.  So I hope you will vote in 6 favor of this proposal.  Thank you.  7  8 Acting Vice‐Chair Waldfogel: Sorry, pushed the wrong button.  Thank you.   Harold Poskanzer 9 and then Jerry Huck.  10  11 Harold Poskanzer: Good evening.  My name is Harold Poskanzer.  I live on Thornwood Drive.  12 My wife and I are here tonight to voice our support for the overlay.  The issue for us is primarily 13 one of privacy. When we bought our house 16 years ago the outside space was just as 14 important to us as the inside space and a major factor in the outside space was its privacy.  We 15 spend a lot of time back there.  We put a hot tub back there.  And frankly the thought of a two‐16 story house looming over us as we try to soak is rather upsetting for people who love Eichlers 17 like us and people who love the Eichler lifestyle.  The two‐story houses in the neighborhood 18 would really diminish the value of our lifestyle and diminish the value of property we feel.  19 Thank you very much for time.  20  21 Acting Vice‐Chair Waldfogel: Thank you.  Jerry Huck and then Monique Lombardelli.  22  23 Jerry Huck: Hello, I'm here tonight to speak in support of the proposal to limit the second story 24 additions in our neighborhood.  I've been a resident here for 26 years so I'm kind of in the 25 middle of raising two children with my wife.  My primary reason to support this proposal is to 26 address the building of homes that are too large and invasive for the neighborhood of historic 27 open plan Eichlers.  The citywide zoning rules for daylight plane setbacks, multiple stories, 28 window placements, they're not appropriate for our neighborhood.  The initial homes as 29 indicated before have CC&R’s is to limit this kind of thing and remodels to indicating that there 30 were expectations by the original owners and the builders to keep it a smaller community.  Our 31 neighborhood several, in our neighborhood several of the homes are four to five bedrooms so 32 they have adequate spaces.  They can grow into the lots a little bit without the need to build a 33 buildup.  34  35 There are areas in the City with larger lots and more traditional home designs for those looking 36 for what I would call oversized homes.  The supporters of these plans are not all old and some 37 of the most are active preservationists in our society, young professionals.  And mid‐century 38 modern homes are really highly sought over by Millennials and other buyers.  39  40 And I just realized from the earlier speaker my apricot tree would be in danger if my neighbor 41 builds up.  So I'm going to lose an awful lot of fruit in the, in the weather.  So let's preserve 42 what little is left of a welcoming neighborhood in Palo Alto.  Let's preserve the historic 43 character of our Eichler tract.  And let us keep our ability to look out our windows to see our 44 gardens, the trees, the light, an open sky and move this proposal forward.  45  46 City of Palo Alto Page 6 Acting Vice‐Chair Waldfogel: Thank you.  Monique Lombardelli and then Mark Delman.  1  2 Monique Lombardelli: Hello, thank you so much for letting me speak.  My name is Monique 3 Lombardelli and I represent the younger generation of Eichler enthusiasts fighting for 4 preservation.  I produced a documentary film about Eichler and I saw the huge demand for 5 them nationwide.  Every day people call me and ask for an original Eichler.  They want to live in 6 one.  7  8 After working as a broker specializing Eichlers I have proven data supporting that original 9 Eichlers far exceed altered, remodeled, or second story Eichlers in terms of price per square 10 foot.  The demand for Eichler and original iconic design has never been stronger and the supply 11 is incredibly low.  My goal is to help save these works of art and I hope current owners see the 12 gold that they are sitting on.  13  14 I purchased the rights to original floor plans of Eichlers to increase supply.  And while I have 15 plans with that second story Eichlers done by one of my Eichler’s architects named Claude 16 Oakland after hundreds of inquiries not one buyer has asked about second story plans and 17 none of them have been purchased.   18  19 People want original single story Eichlers and will pay a premium for them.  You can see this 20 evidence in the national press.  They want to be a part of this very special community and this 21 amazing culture and the spirit that is here.  I am asking to please protect this for future 22 generations and also for people that love them and want to preserve this special part of Palo 23 Alto.  Palo Alto is home to the Eichler with more Eichlers here than anywhere in the world with 24 2,700 built here.  We ask that you preserve them and this to us is what really makes Palo A 25 special.  So we thank you. 26  27 Acting Vice‐Chair Waldfogel: Thank you.  Mark Delman and then Frank Viggiano.  28  29 Mark Delman: Hello, my name is Mark Delman.  I live at 829 Thornwood Drive and I oppose the 30 Motion both on principle and because of the specific nature of what's written in there.  Twelve 31 years ago when my wife and I moved here we had an intention of building a second story and I 32 would like to keep that as a right as a homeowner.  It is a right that other people in our 33 neighborhood have already exercised and it is a right that other people in Palo Alto and whole 34 sections of Palo Alto have done.  35  36 A second story is not some kind of unusual thing.  It's a reasonable thing for a homeowner to 37 want and I would like to preserve that right as a homeowner as I had it before.  And I as, as a 38 buyer from me at some point will want as well.  39  40 In addition to the principle of it, the specific of the proposal is simply too draconian.  41 Individuals, properties are not all the same.  They are individual.  And by placing a blanket rule 42 that no house can have a second story it really limits the rights of individuals who will not 43 infringe on the rights of others.  In my particular case the way the house is situated abutting a 44 creek to the back and because of the way the sun rises in the east and sets in the west there 45 will be, I could build a second story on my house and not cast a shadow on anyone, but my own 46 City of Palo Alto Page 7 backyard and potentially into the creek behind me.  In addition it assumes that all second 1 stories are the full length of the building.  That’s not necessarily the case and as a matter of fact 2 a number of years ago my wife and I contemplated and actually had an architect design a 3 second story feature, but it was not over the entire first story.  So again, the proposal doesn’t 4 allow for those thigns nor does it… so basically we have a Planning Commission that looks at 5 things when people decide they want to do a renovation and if there’s some kind of 6 unreasonable intrusion that is looked into at that time.  And so I would say both on the 7 principle of preserving the right to have a second story and on the specific of this being simply 8 too blanket I oppose this measure.  Thank you. 9  10 Acting Vice‐Chair Waldfogel: Thank you.  Frank Viggiano and then Richard Willits. 11  12 Frank Viggiano: Hi, yes.  So I’m here kind of on a narrow focus of the layout of the actual zone.  13 So and I think Amy alluded to this that we, we sent an email yesterday and I contacted her 14 earlier about this also.  But basically they cut off of the zone is not on street boundaries.  So 15 we're just basically the first house on our block.  We're on a block with a variety of different 16 single and two‐story homes.  So in ours, in our case it would just be basically a restriction on us 17 that would do us no benefit at all.  And it says it's the side setbacks.  It's actually our rear that 18 faces the other houses; the side of their house, but the rear of our house.  And I think four out 19 of the six houses there are in that case.  20  21 And let's see so I think whether it's legal or not I don't know, but I think at least on the issue of 22 fairness to say that you can’t put a second story and the person right next to you can doesn't 23 really make sense to me.  I don't know how that, that would play out.  And as far as preserving 24 the look actually the previous owners of our house made it unrecognizable as an Eichler already 25 even though it doesn't have a second story.  It has a peaked roof and they changed the siding.  26 It no longer has Eichler siding on it and got rid of some of the overhangs.  So you know they're 27 again looking at the houses individually you're probably going to find that it's not always a case 28 of preserving Eichler looks.   29  30 And so I basically my, my point is I think the boundaries for an SSO should be on a street or a 31 creek or some recognizable boundary like that rather than just taking the first house on a block 32 and the rest of the block not included in it.  We have, so not surprisingly we have five of the six 33 who are in this situation are opposing and so we would ask that at least we would be removed 34 from the SSO.  Thanks.  35  36 Acting Vice‐Chair Waldfogel: Thank you.  Richard Willits and you'll be the last one.  37  38 Richard Willits: Good evening, Commissioners.  Thank you for taking up this topic tonight.  My 39 name is Richard Willits.  I'm in the Royal Manor which is the next plot over, pardon me.  And I 40 want to just take a couple of words about the process as you've seen a number of these SSO’s 41 going through.  I want to commend staff on the change to putting the FAQs on a website since 42 they are pretty much standard piece of information.  It's made this process simpler.  I also want 43 to commend the applicants and their neighbors on a convivial way of going about doing it 44 including the way everyone is speaking tonight.  There are specific issues that you all can 45 address, but I think that overall this process has been done.  46 City of Palo Alto Page 8  1 I'm speaking in support of this particular SSO.  One thing that's interesting to note about it is 2 again there's only one house in the tract that's not an Eichler.  So even though an SSO doesn't 3 particularly preserve the look it will preserve this as an Eichler neighborhood and I think that's 4 important.    5  6 And finally one other thing we often hear in these discussions is people saying well we're in the 7 flood zone so we can't have a basement.  I just want to note and put in people's minds that 8 Eichlers are built on a slab.  So it's very difficult to bust through that and build a basement in 9 the first place, but also if a basement were put on the two houses that are not in the flood zone 10 here the water tables about five feet down.  So you probably wouldn't have very good results in 11 that anyway.  I just wanted to let, to note that.  Thank you for considering this issue and I hope 12 you will pass this on and recommend it to Council.  13  14 Acting Vice‐Chair Waldfogel: Thank you. 15  16 Acting Chair Gardias: Thank you very much all the speakers.  This concludes our public hearing 17 and with this let’s open this for the floor discussion to, to the PTC.  If so I'd be waiting for my 18 colleagues lights and before I just, I see the first one so I'm going to ask staff this question, just 19 kick it off.   20  21 So this is, this is the second time that we see the withdrawal of the of the support.  And the 22 prior overlay was the indicator where pretty much the support dropped from 70 to 64 at the 23 last Council meeting.  Now we're seeing that with this much smaller neighborhood there was a 24 withdrawal of one of the supports on 804 Talisman I believe, which reduces this to below 60.  25 So question to Ms. French: what are we doing wrong in the process that this is happening and 26 how can we prevent this since here specifically this, this application was submitted at the exact 27 60 percent initially.  There was not 60.8, was exactly sixty percent so, so could you just shed 28 some light what is happening, why does this being withdrawn, what's so wrong with the 29 process if anything?  Thank you.  30  31 Ms. French: Ok is the first question why did the owner at the corner of Ross road and Talisman 32 withdraw the signature when the first time the signatures were obtained it was both the 33 husband and the wife signing in support.  You know and as of last night the husband withdrew 34 his signature.  I don't know the story because I wasn't there.  This is something that came via 35 email and I don't know any more than that.  I haven't looked into it.  So I can't really answer 36 that.  There was a withdrawal.  It was sent to me.  I forwarded it to you and we’re talking about 37 it now.  38  39 The second question, what are we doing wrong?  I don't know.  We are doing what the code 40 tells us to do.  The code tells us to review an application when it comes in, which I did.  I verified 41 that these are the properties, there's only one signature per property as it says in the code, 42 they met the 60 percent.  Because they met the 60 percent that enabled us to bring it to the 43 PTC.  What are we doing wrong?  The code says the tract boundary is, is among one of the 44 choices to, to call out what's an identifiable neighborhood.  The entire tract was brought 45 City of Palo Alto Page 9 forward.  It meets the standard for what the boundary would, could be.  And so that met that 1 standard I brought it forward to you.  So I don't think we did anything wrong there.  2  3 I think what the applicant went out with to get the signatures I don't see that there was a, what 4 was given to them it stated that there was a handout, this Attachment A about the single story 5 guidelines.  Because I didn't see a big FAQ as I had seen in prior applications I took the time to 6 generate a whole summary FAQ’s.  I uploaded that to the website and I called that out on the 7 cards that went out to the to the property owners and surrounding properties so that people 8 could go and do, find out what they need to know off the City's website as an objective way to 9 learn about what this whole process meant.  So I don't know if I’ve answered your question, but 10 I think we've done the job that we are required to do and whether I went beyond that job to set 11 up a web pages and provide additional information.  I'm very quick to respond to anybody that 12 sends correspondence to me.  My name is out there.  My email is out there and anyone can 13 come in and meet with me.  I’m available.  14  15 Acting Chair Gardias: Yes, thank you.  I mean this was not the personal question to you, right?  16 This was about our process and just getting this story behind Royal Manor.  I'm just afraid that 17 once this is going to get to Council there could be another change of mind and then pretty 18 much erosion of the support.  So which will farther complicate the process.  So hopefully this is 19 not going to happen this time, but I think it's a good lesson which we should just take a look at 20 farther, right?  Because these things are changing it means that either there’s public doesn't 21 realize the true consequence of their vote.  Maybe does they, they don't understand or maybe 22 there are some other powers.  So that's just you know for our consideration.  Thank you very 23 much. Commissioner Downing please.  24 MOTION #1 25  26 Commissioner Downing: So in light of the fact that we did have an irregularity in the previous 27 SSO process where people removed their votes and we have not heard from Council how they 28 want to treat such vote removals and given that we also haven't heard from Council any 29 response with regard to the issues raised by the petition process and whether or not people are 30 actually getting proper notice and understanding what it is that they're consenting to given that 31 Council has not responded to those concerns, that that item is continued on the Council 32 schedule I would like to put a Motion on the floor that we also continue this particular item 33 until we get more guidance from Council on how they want to approach these particular issues 34 and we get confirmation that they really are comfortable with this process and want to keep, 35 want us to keep using it.  And I'm really not sure that that's there right now based on the 36 comments that we got from Council, the preliminary comments and questions that we heard 37 last time.  It's a Motion. 38  39 SECOND 40  41 Acting Chair Gardias: So we have a Motion on the floor.  So I think it's clear, right?  Are there 42 any other… So please.  43  44 Commissioner Alcheck: Yes.  I'm a little I'm confused at how we’re supposed to evaluate the 45 sort of changing support to be perfectly honest.  And so I don't know that… the last minute 46 City of Palo Alto Page 10 changes are reflected in what we read before, right?  They’re not, we don't have those counts.  1 I think that's problematic and so I don't… I don't know, I'm, look I don't know if it's I've reached 2 my limit with these SSO’s, but you know I'll just say this.  I love the idea of homeowners, 3 brokers, redevelopers preserving the architectural elements of these Eichlers.  But I'm really 4 struggling with this inclination or obsession with forcing other people to live your property 5 dreams on their property.  And I would if we were going to make recommendations tonight and 6 I am sort of hoping we can I don't even know if there's support for this, but if we were going to 7 make recommendations tonight I would have proposed that recommending that they do not 8 approve this SSO.  And I just think this minority or growing minority I can't buy, I can't 9 participate.  I can't support a process that we're diminishing their rights so significantly.   10  11 And I’ll just say this that I don't know if this is because I'm a Commissioner or if you guys have 12 experienced this, but since these became more popular I’ve had with increasing frequency con 13 conversations with brokers about like the ambiguity, like should prospective home buyers be 14 petitioning neighbors on the street to determine whether there's any there's too many single 15 story homes on the street, should they be asking their neighbors if they would support a 16 process like this before making an offer on a home?  This ambiguity I think has a chilling effect 17 on the market that I think needs to be sort of evaluated.   18  19 And I'll just say this because I don't know if we're going to talk more about it, but if my 20 recommendation sort of stands in the way of your dreams I would encourage you to pursue a 21 private process.  Engage with your neighbor about restrictive covenants.  There is a process in 22 California by which one property owner can promise not to do something on their land in 23 exchange for the same promise or a different promise from their neighbor.  And there is a legal 24 process by which they have to do a number of things including recording it that can create this 25 dream for you, but if this Motion doesn't pass.  Because and this could be the all I say on this 26 topic; if this Motion doesn't pass and we continue to debate this and there is a process for 27 recommending this SSO I would simply say that I, I think we need to have a revalued process.  28  29 Acting Chair Gardias: Very good.  So we have a Motion with, with the second.  Any amendments 30 or… yes. 31  32 Jonathan Lait, Assistant Director: So, thank you Chair.  So I just wanted to offer another 33 perspective that I think it is clear that these applications have created some… I mean I've 34 highlighted a challenge with our code and I think we all recognize that the existing process is 35 not ideal and that there are there is room for improvement and we've identified that in our 36 staff report to the City Council with the Royal Manor item that is pending currently before the 37 Council.  I think that perhaps the Council also has some perspective on some changes that could 38 be made to the process and I would not be surprised if we received some of that guidance on 39 May 2nd.  Even if we receive that guidance we're talking about an ordinance change and that's 40 going to take months to effectuate.   41  42 And so I'm concerned that you've got a pending application that is before you that did meet the 43 submittal standards that were in place with the 60 percent requirement in the two stories and 44 the other criteria.  And so they have met the standard for filing the application that's before 45 you for review.  And on the, on Attachment A you have a record of land use, a draft record of 46 City of Palo Alto Page 11 land use action that sets forth the finding that is what we're looking at.  And I think that while 1 there was perhaps some frustration on the Commission and even amongst staff I would say 2 about the process this is the process and rather than delay this particular application pending a 3 possible resolution of some direction that we may get on May 2nd I think it just this project 4 ultimately has to end up before the City Council anyways.  I think that the Council probably 5 could consider any thoughts or observations they have on May 2nd and apply that to this project 6 when it's before them.  So I would encourage that the Planning Commission consider the merits 7 of the application and forward a recommendation whether to approve, reduce the boundary or 8 deny the application as opposed to a continuance.  Thank you. 9  10 Commissioner Alcheck: Ok, just a point of clarification.  I hold your advice in high esteem.  I 11 don't know that I agree though with that statement that this application currently has 60 12 percent support.  And I find that really problematic and I would if we move forward tonight and 13 I deny the application the suggestion would be that we denied it despite the fact that it has 60 14 percent, which I don’t think is accurate.  I think this application doesn't even succeed to meet 15 the requirements to be currently reviewed by this Commission in which case I guess my point is 16 this continuance is to centrally reevaluate whether this should even be here (interrupted)  17  18 Mr. Lait: Ok.  19  20 Commissioner Alcheck: And it's not 60 percent if it's 59.9.  What are we doing? 21  22 Mr. Lait: So (interrupted)  23  24 Commissioner Alcheck: How did this, how is this process actually legitimate if it's not 60 percent 25 which is (interrupted)  26  27 Mr. Lait: I can answer that for you.  So at the time of the application submittal (interrupted)  28  29 Commissioner Alcheck: Ok, I understand at the time of application submittal, but my point is 30 that this is a local, this we’re at the, we are the, this is the grassroots of government.  And so in 31 my opinion any decision made that ignores a buzzer beating email is completely like conflicting 32 with this… we're not supposed to be responsive only to people who are who communicated to 33 us.  We’re supposed to communicate, we're supposed to be responsive to everything that 34 happened before this meeting.  And my point is, is that if we want to ignore that because on a 35 technicality that seems to me like an illegitimate reason.  We have information that there is less 36 support that changes the numbers in a dramatic way and I just think you can’t ignore that.  37  38 Mr. Lait: So if I could respond to that? 39  40 Acting Chair Gardias: Yes, please. 41  42 Mr. Lait: So thank you for your comments.  I again, I think this highlights some of the 43 shortcomings of the ordinance the way it's currently written.  But it's also I think important for 44 us to we do not interpret this that at the time of recommendation by the Commission or even 45 at time of action by the City Council that the 60 percent in this case because of the CC&R’s 46 City of Palo Alto Page 12 threshold has to be met.  The count this is a legislative action and in fact the City Council could 1 choose to establish a SSO with less than 60 percent or with the other project with less than 70 2 percent.  So this isn't the 60 percent or 70 percent threshold isn't a standard by which to 3 evaluate an SSO at that moment in time before the Commission or the Council.  It is the 4 threshold for which to file an application and that threshold was met.  And so at this point 5 despite the fact that support seems to have dropped below 60 percent at least on the proposed 6 boundaries it's still a valid application for consideration before this body.  Now the Commission 7 may decide that a realignment of the boundaries is appropriate and that may be perfectly 8 appropriate, but I think that's part of the dialogue that should take place.  9  10 Acting Chair Gardias: So just a moment because we have a Motion on the floor and our 11 procedure is pretty much just call for the Motion.  And I totally understand the discussion here 12 and although as the Acting Chair I should be just asking this body just to, to hold off this 13 Motion.  I want to apologize for just, just departing from this procedure because I would like to 14 voice my displeasure that pretty much we’re on the one hand we're just facing imperfect 15 process or pretty much we're not meeting the threshold that we established.  On the on the 16 other hand we are also not meeting of our criteria giving the issue full consideration and just 17 moving to the, to the resolution which may be proper at the end of the discussion.  So with this 18 I would like to just add this comment to the discussion.  So if we have… Yes, if there is comment 19 from if there was a need from Commissioner Downing, please.   20  21 Commissioner Downing: I've been requested to restate the Motion.  The Motion is that we 22 continue this item until after Council has reached final resolution on the Royal Manor SSO and 23 the issues that that raised.  That’s the Motion.   24  25 Man off microphone: Could you state that again louder?  I don’t think any of us could 26 understand what the Motion is. 27  28 Commissioner Downing: My apologies.  The Motion is that we continue this item until fine, until 29 Council gives a final resolution with respect to the Royal Manor SSO and the procedural issues 30 that were raised by that SSO which are quite similar to the ones raised here.   31  32 Acting Chair Gardias: So do we have a… is there a problem with microphone?  Please repeat 33 this.  34  35 Commissioner Downing: Ok to repeat this again, the Motion is that we continue this item until 36 the Council comes to a final resolution on the Royal Manor SSO because the issues the 37 procedural issues that that SSO raised are very similar to these.  And if Council decides to make 38 a change with regard to the process or they make an interpretation of that process then that's 39 what should be applicable here as well.  40  41 Acting Chair Gardias: Thank you.  Do we have a second? 42  43 Commissioner Alcheck: Second. 44  45 Man off microphone: Is it possible for a co‐applicant to speak (interrupted)  46 City of Palo Alto Page 13  1 Acting Chair Gardias: Sorry, sir.  I mean this is, I mean thank you very much for the question, but 2 at this moment PTC is presiding and that's discussion that we are allowed to have.  So we had 3 our public hearing and now is the time for the Commission to, to deliberate. 4  5 Man off microphone: I thought I read on the sign that there was the possibility of co‐applicants 6 to respond. 7  8 Acting Chair Gardias: Sorry, but not at this time. 9  10 Mr. Lait: So (interrupted)  11  12 VOTE 13  14 Acting Chair Gardias: But we understand the point that you're making.  So thank you very much 15 for raising this up, but we would like to proceed with our discussion.  So we have again so we 16 have a Motion that was stated by Commissioner Downing, seconded by Commissioner Alcheck.  17 Can we vote?  So all of those in support please raise your hand.  All against?  Sustaining?  18 Abstaining, I'm sorry, abstaining.  So there are three for, two abstaining.  So Motion passed.  19  20 MOTION PASSED (3‐0‐2‐2, Commissioners Rosenblum, Downing and Alcheck for; 21 Commissioners Waldfogel and Gardias abstaining) 22  23 Mr. Lait: So those three, three to continue… 24  25 Acting Chair Gardias: So the Motion is that pretty much we will continue (interrupted)  26  27 Mr. Lait: Review….   28  29 Acting Chair Gardias: Waiting Council, the Council, City Council guidance on the SSO procedures 30 and then once this is provided to PTC we will pick up this item again.  31  32 Mr. Lait: Ok thank you.  Thank you Acting Chair.  So we have the vote recorded.  We understand 33 what the Commission's actions were.  I just wanted to before we move on to the next item and 34 there's not an opportunity to reconsider the vote I want to just make clear that the Royal 35 Manor item that is before the Council there is no procedural inquiry as to that may get 36 resolved.  What is before the City Council is a request for a SSO.  Now the Commission had a 37 long debate about the vote being the reversals.  That question may not even get answered at 38 the City Council.  They may simply vote on the SSO and all these questions that we've had may 39 not get answered.  And if they don't get answered you're in no better shape than you are right 40 now if we're considering the project.  So if there is this expectation that there's going to be this 41 complete clarity at the end of May 2nd, I don't know that that will be there.  And if that informs 42 anybody on the dais and procedurally you can’t and if you think that a reconsideration is 43 warranted I just wanted to make sure that that was out there for your options before you take 44 up your next item.  45  46 City of Palo Alto Page 14 Acting Chair Gardias: Thank you very much.  Commissioner Alcheck. 1  2 Commissioner Alcheck: Look I don't disagree with you.  I think that we have no idea what the 3 result will be of that meeting, but I do know that the issues are very similar and if they choose 4 to ignore them or not address them then that in and of itself is guidance.  That means that we 5 can ignore them or we cannot ignore them, but it is some form of guidance.  If they determine 6 that reversals are so relevant to their review that it, that it stops that process and they choose 7 not to approve the SSO and they say to the applicants you know what go back address this 8 change in the makeup of your support and then we'll review it then I suggest that we would do 9 the same thing.  I don't know that we want to move something up that has caused them… I've 10 made it, in my opinion from what I've been able to observe has created a challenge for them to 11 sort of complete the process.   12  13 So again, I'm not suggesting we don't take up this issue.  I'm just suggesting that let's see what 14 happens with them because I'm not sure that you believe that there is a process right now by 15 which we could direct staff to go and reevaluate this application as a result of the reversals.  I 16 think that from your perspective that would be a recommendation made to Council.  And I'm 17 wondering if Council does that or if Council makes a decision similar to that at the next meeting 18 then maybe that will, maybe that will be the result of this application as well without even our 19 involvement.  It may make our meeting void.  Moot.  So there are really similar issues and I 20 don't like the idea of being redundant.  21  22 Acting Chair Gardias: Thank you.  Commissioner Rosenblum. 23  24 Commissioner Rosenblum: Yeah, I was troubled in earlier hearings about some of the process 25 issues because I do think that this is a fairly dramatic action in the sense that if you can impose 26 your will on your neighbor who may resist this that feels like a pretty big step to take.  And so 27 the threshold coming in at exactly 60 percent as this one did, did run this danger of withdrawals 28 especially because an earlier similar proposal had that problem with withdrawals.  So coming in 29 exactly at the threshold level I think is the cause of some this consternation.  If it was well 30 above the threshold I think this would be a much easier thing.  As it is even if you follow 31 completely the rules as a buy that in the at the minute of submission they were in compliance, 32 in the minute after submission they were not.  I think we'd still be troubled because of this 33 razor thin margin they came in on something that is a frankly if you're in the minority in this 34 case it's a fairly dramatic effect on your rights.   35  36 And therefore I support the Motion which is this is serious, let's take it seriously.  They, I think 37 that the applicants ran this risk when they came in at the minimum threshold and especially 38 given that this is currently under way with another very similar issue.  So that for that reason I 39 recognize the staff direction and pushback, but I think again these residents will have their 40 chance again with more clarity.  And my personal view I'm very sympathetic to this.  I do agree 41 Eichler is a it's a gem.  It's something that has historic and artistic significance and there's 42 certain lifestyle with it.  I just want make sure we do this properly and we don't regret later that 43 a minority were put through a process that was unclear.  And I think we're almost there, but 44 again I recognize the danger that you brought up.  45  46 City of Palo Alto Page 15 Acting Chair Gardias: Commissioner Waldfogel.  1  2 Acting Vice‐Chair Waldfogel: Yeah, just a request.  I mean I agree with many of the comments 3 made and I also am inclined to support this application when we straighten out how we count 4 the votes.  But something that I would like to hear more about if and when we hear this again is 5 the status of the CC&R’s in this district.  Because there's an existing one‐story CC&R.  It seems 6 that the Homeowners Association (HOA) is dormant.  I’d like to know whether the same goal 7 can be achieved by just reactivating the HOA or whether we need to do this through a 8 legislative process.  Because I think Commissioner Alcheck raises a point that it's possible to do 9 this non‐legislatively.  It appears that that's already incorporated in the deed and yet I don't 10 understand why that's not enforceable?  Why two‐story development has happened in spite of 11 that CC&R.  So something I would really like to understand the status of that.  I don't know who 12 can explain that, whether that's in the purview of the City Attorney's Office or that's something 13 that the applicant should do for us.  But I am inclined to support it because there is a CC&R, but 14 like to know why the CC&R is being ignored.  15  16 Acting Chair Gardias: Thank you.  17  18 Mr. Lait: Thank you Commission for your comments on that.  On my redress I guess.  If it's, if it's 19 ok with the Commission can we at least continue to matter to a date certain, May 11th?  There's 20 two items on the agenda.  That will be after the City Council's discussion on May 2.  That will 21 save us the additional noticing cost and give the folks in the audience a sense for when this will 22 be returning to the Commission.  23  24 Acting Chair Gardias: I think it would be perfect right and in meantime we have if this would be 25 brought to the Council by then? 26  27 Mr. Lait: The Royal Manor one is going on May, Royal Manor SSO is going on May 2.  And then 28 we would request that this item be continued to May 11th, back before the Planning 29 Commission.   30  31 Acting Chair Gardias:  What about the Council’s direction on the not meeting the threshold? 32  33 Mr. Lait: Yeah we will, we will have learned about the Royal Manor conversation on May 2nd. 34  35 Acting Chair Gardias: Very good.  And we're going to have Commissioner Alcheck hopefully 36 presenting to the, to the City Council (interrupted)  37  38 Mr. Lait: At least hearing because I think you had already presented at the last meeting.  39  40 Acting Chair Gardias: That's right, but if you're going to just weave in the issue of the of the 41 losing support and Council direction you may need to have a voice from the Commission and 42 Commissioner Alcheck will be present at the meeting.  So he may just provide our perspective.  43  44 Mr. Lait: Great.  So if you're in support of the May 11 if there could just be a Motion and a vote 45 on that, that would be great.   46 City of Palo Alto Page 16  1 Acting Chair Gardias: I don't know if we need to have a Motion on this unless (interrupted)  2  3 Commissioner Downing: He’s asking for one so yes. 4  5 Mr. Lait: If you don’t we have to renotice it and in fact we're probably already missing our 6 noticing deadline  7  8 Acting Chair Gardias: Ok, very good.  So just following this direction anybody would like to just 9 because (interrupted)  10  11 MOTION #2 12  13 Commissioner Downing:  Yes, so I make a Motion that we continue this item to May 11th.   14  15 SECOND 16  17 Commissioner Rosenblum: Second. 18  19 VOTE 20  21 Acting Chair Gardias: Very good.  So we have a Motion on the floor of continuation on May the 22 11th with the second.  No other comments.  Let’s just have the vote on this.  All for, raise your 23 hands.  So passed unanimously.  So thank you very much.  So we've this we… five minutes 24 break.  Thank you.  25  26 MOTION #2 PASSED (5‐0‐2, Chair Fine and Commissioner Tanaka absent) 27  28 Commission Action: Motion: Continue the item until Council gives a final Resolution, due to 29 the procedural issues (3‐0) 30  31 Approved 5‐0 Motion: Continued to May 11th.  32 City of Palo Alto Page 1 Planning and Transportation Commission 1 Verbatim Minutes 2 May 25, 2016 3 4 EXCERPT 5 6 Faircourt #3 and #4 Single Story Overlay Rezoning: Request by Jackie Angelo Geist and Roland 7 Finston on Behalf of the Property Owners of the Faircourt #3 and #4 Tracts #1921 and #1816 8 for a Zone Change from R‐1 Single Family Residential (8000) to R‐1(8000)(S) Single Family 9 Residential with Single Story Overlay. Environmental Assessment: Exempt from the California 10 Environmental Quality Act per section 15305. Public Hearing Continued from April 27, 2016. 11 For more information, contact Amy French at amy.french@cityofpaloalto.org  12  13  14 Acting Chair Gardias: So with this let's move to the next item, which is, which comes to our 15 agenda again.  This is pretty much a review of the hearing on the Faircourt, Faircourt #3 and #4 16 Single Story Overlay (SSO) rezoning.  And we have Amy French that will be presenting this to us.  17 Thank you very much.  18  19 Amy French, Chief Planning Official: Yes, good evening Chair Gardias and Members.  I would like 20 to note that we do have a slide presentation.  The last time we spoke in this room was April 27th 21 when the Commission did continue this item to a date certain that of May 11th.  It was then 22 continued for lack of quorum to today's date.  At that meeting we did convey the petition we 23 received the night before from the Talisman Drive on the south side folks that wanted to 24 secede if you will from the boundary.  And that was deemed acceptable by the applicant later 25 that night in conversation after the hearing that I had with them.   26  27 Then what also the Commission asked about the covenants, codes, and restrictions that were in 28 place on this tract that allowed the threshold at application to be 60 percent and how 29 enforceable are those.  We did have a paragraph in the staff report that explains the City's lack 30 of enforcement of those.  It is a private matter and it is not enforceable by the City.  So the 31 applicants have requested a rezoning so that the City's rules would apply in this regard.   32  33 The Planning Commission also asked to continue this past the Council's action and 34 consideration of the Royal Manor SSO.  The Council did not approve that SSO for several 35 reasons, one being be less than 70 percent at the time the a, the in that one did not have a 36 Covenants, Conditions, and Restrictions (CC&R) in effect at the time they made their decision.  37 They also asked for staff to return with some evaluation of the ordinance, the method of 38 gathering votes or signatures, staff's involvement in that as per the code, and possibly changing 39 the code to consider an Eichler zone district as well as Eichler design guidelines.  So that is on a 40 tract that is out there.  In any case that particular SSO cannot come back in.  They are interested 41 in coming back in, but they cannot come back in until next year.  The code says they cannot 42 resubmit until a year after their initial submittal.  43  44 So then we have, we have a map showing the nearby SSOs.  Royal Manner is of course this one 45 here, the largest one, and the Faircourt proposal.  So up here on the screen I have the findings 46 City of Palo Alto Page 2 that are required for rezoning and basically it's public health, safety, and welfare is the main 1 finding.  This is found to be supportable by Title 18.  We're looking for a creation of convenient, 2 attractive, and harmonious community and promoting Comp Plan policies, programs, and goals.  3 And we have a goal; safe attractive residential neighborhoods each with its own distinct 4 character and there is verbiage about Eichler neighborhoods designed as private enclaves.  In 5 the Comp Plan we also have a couple of other policies that talk about the scale and character of 6 neighborhoods and areas of the City.  So after April 27th, the last time we were here the 7 applicant did revise the proposal formally to delete the Talisman properties on the south side.  8 This had the effect of removing a two‐story home and a modified home that no longer appears 9 Eichler like.  And Talisman is a legitimate boundary.  It's a street to define a SSO.  10  11 Since just last week we received two reversals of original supportive signatures.  This happened 12 a bit on the Royal Manor project.  So what that means is the current level of support is 59 13 percent for the revised boundary that the applicant requests.  That's 26 out of 44 folks and the 14 applicant has told me just today they have another supporter that they’ve talked to, but we do 15 not have a signature from that supporter as of the moment.  To step on the screen again the 16 original SSO boundary kind of showing this secession of this line of homes on Talisman on the 17 south side, one of the two‐story homes on Ross was one of the withdrawers of their support 18 and the other withdrawal was here on Louis.  I should say the pink homes here the lots are the 19 two‐story homes.  20  21 So here it is with the revised boundary, 44 homes currently at 59 percent and maybe one on 22 the way.  It meets the other criterion that is the number of one‐story homes to form a district.  23 So that's it.  We have few pocket slides if some other topics come up regarding some of these 24 outlying areas.  And I know the applicant would like to speak.  25  26 Acting Chair Gardias: Yes, thank you very much.  So with this we would like to open a public 27 hearing and collect speaker cards.  If anybody from the, from the audience present speaker 28 cards we have, we will allot five minutes to each one of you.  But of course we would like to 29 start with the applicant.  Is applicant present?  Will five minutes be enough? 30  31 Roland Finston: Yes.  Yes, yes it will.  Thank you.  Yes, I want to thank the Commissioners for 32 taking the time to review our request for a SSO.  As Amy has explained to you we currently have 33 26 out of the 44 homes in support of the SSO, which is just one percent below the sixty percent 34 required.  And we have identified a newly owner who acquired the property as a result of a 35 death of a former owner and we believe he will be a supporter, but we don't have his signature 36 tonight.   37  38 I think it's important to recognize that the ability of signers to reverse themselves is very 39 difficult to anticipate.  We only learned of the two reversals that occurred since we last met 40 with you in April we only learned of that on Monday of this week, day before yesterday.  So it's 41 not unreasonable I hope that you would still nonetheless approve the request as it is tonight 42 knowing that we will be very likely to get one more signor and thus go over from 59 to 62 43 percent.  This whole initiative was prompted of course by the tear down of one of the original 44 now 60 year old Eichlers in our Eichler tract.  And this has caused there to be very good support 45 from present Eichler owners of our efforts something on the order of 10 individuals were 46 City of Palo Alto Page 3 actually involved in going around the neighborhood one at a time speaking with other owners 1 and gaining the support that we have presented to you and I thank you very much for 2 considering approving this.  3  4 Acting Vice‐Chair Waldfogel: Sure.  Can you just say your name for the… ? 5  6 Ms. French: This is Roland Finston. 7  8 Acting Vice‐Chair Waldfogel: Ok, perfect.  Thank you.   9  10 Ms. French: One of the two applicants. 11  12 Acting Vice‐Chair Waldfogel: Let’s see, so Alison Cormack followed by Alice Stiebel. 13  14 Alison Cormack: Good evening, my name is Alison Cormack. I live on Ross Road in one of the 15 homes that's affected by this request.  Let me start by saying I love living in my one‐story 16 Eichler and I have no plans to build a two‐story or sell my house; however, I am here tonight to 17 speak against this proposal.  18  19 Regrettably this has become a pretty divisive topic in our neighborhood and also in the City.  I 20 realize my position is not popular, but I would like to respectfully share it.  Retroactively 21 changing the rules about how other homeowners use their property does not seem appropriate 22 to me.  There are much less restrictive ways to preserve the open space feel in our backyards.  23 For example, the two‐story home next to my Eichler is a thoughtful addition that does not 24 affect my backyard or raise any privacy concerns.  Massing might need to be near the front of 25 the lot to accommodate existing home layouts, but it is certainly possible to have a second 26 story without disturbing your neighbors.   27  28 I was encouraged by Council comments about improving the review process after the Royal 29 Manor vote failed.  I should note with more support than the one before you tonight has.  30 Fixing the existing process seems like a much more reasonable way to proceed.  I would 31 specifically ask that you consider removing the Ross Road block from this proposal.  You can see 32 that there isn't sufficient support.  More importantly I don't believe that our block which 33 already has 50 percent of the two‐story homes listed in the amended proposal fits within this.  34 We have seven houses on our side of the street including one that's got a Talisman address and 35 is actually not an Eichler.  Two of them are two‐story, five houses on the other side of the street 36 which are not included this proposal, three of those are two‐story.  Our block of Ross Road is a 37 wide street with mature trees and it already accommodates a variety of heights and 38 architectures.  I encourage you to come visit the area and take a look for yourself. Thank you 39 for serving on this Commission and for listening to everyone's thoughts and concerns.  40  41 Acting Vice‐Chair Waldfogel: Thank you.  Alice Stiebel followed by Marjorie Wechsler. 42  43 Alice Stiebel: Good evening.  We've, we have experienced the effect of no SSO directly.  We've 44 lived at 840 Talisman which is on Talisman the single house that is, that is turquoise.  Right 45 there, right.  So we’ve lived there for 49 years. Nineteen years ago the across the street 46 City of Palo Alto Page 4 neighbor at 2575 Lupine.  Can you show where that, that is?  The pink one.  Pink one right 1 across, right.  They, they built a second story on what had been an Eichler and moved out, sold 2 it for a tidy profit, and moved out.  So it was obviously not for them it was for making money.  3 As soon as we were informed that the neighbor planned a second story we objected to the City 4 that the second story would invade our privacy.  We were told that we had no standing to 5 object.  So we could not prevent the project from going forward.  We were trying to appeal it, 6 but we were told that we could not.  The result was that this second story looked directly into 7 our family room and kitchen through our large clear story window because of the way that it’s… 8 that our home is designed.  9  10 After already having experienced the invasion of privacy by second story construction in our 11 neighborhood we feel strongly that we especially want our home to be included in any SSO in 12 our tract.  Now in fact what happened was that because we were the only supporters on our 13 side of Talisman we were the south side of Talisman was stripped off, but I would like to have 14 you consider the fact while we're talking about this one other, one other family that might sign 15 on and support it that we in fact did sign on and supported before our side of the street was 16 stripped off.  So I would just like to register that if you're considering whether the 17 neighborhood meets the 59 percent of the 60 percent or not and we are all even, even if we are 18 stripped off we very much support it because we think it's important for the character of the 19 neighborhood and we also want to support the neighbors in what they're doing.  So we would 20 we very much support the proposed overlay to preserve the character of our neighborhood by 21 preventing any second story construction in the future so that our Eichler neighbors will not 22 have the same experience that we did.  Thank you. 23  24 Acting Vice‐Chair Waldfogel: Thank you very much.  Marjorie Wechsler followed by Rivka 25 Sherman‐Gold. 26  27 Marjorie Wechsler: Hi, good evening.  Thank you.  My name is Marjorie Wechsler.  I live on 28 Thornwood Drive and I'd like to express support for the SSO for many of the reasons you hear 29 over and over.  The houses were designed for indoor/outdoor living with private backyards.  30 I've been thinking a lot about property rights since this is what it seems to boil down to and I'd 31 like to say I'd like to retain the right to keep the property that I purchased, which includes a 32 private backyard and clear it includes an expansive view of trees and the sky.  I'm not sure I 33 would have purchased that particular lot if it didn't have those characters and those 34 characteristics and having a second story next door would change my property.  So I just want 35 to urge the Commission to maintain the character of our neighborhood and thank you for your 36 time tonight.  37  38 Acting Vice‐Chair Waldfogel: Thank you.  Rivka Sherman‐Gold and then Dah‐Bin Kao.  39  40 Rivka Sherman‐Gold: Good evening.  I’m Rivka Sherman‐Gold.  My husband, Ervin Gold, lived 41 here and I moved into our home on Arbutus Avenue 30 years ago.  We like our Eichler home 42 and we did some home improvements some years ago keeping the architectural principles of 43 Eichler in mind.  We also have a lovely garden both in front and in back so we like it; however, 44 we are opposing the second story overlay.  45  46 City of Palo Alto Page 5 When we bought our home there was already a two‐story home across the street from us and 1 it was obvious that we will be able to enlarge our home if we choose to do so.  Now we are 2 actually considering doing so because we need a larger house and we want to modernize the 60 3 year old home with updated technology, larger kitchen, more bedrooms, and larger bathrooms.  4 These $2.5 million homes don't meet current standard of living.  As many people do nowadays 5 we work from home and we use two of our bedrooms as studies.  And we just don't have 6 enough room to host family and those two tiny bathrooms are an embarrassment.  So, so much 7 so that we have to put our family when they come to visit us we have to put them in a hotel.  8 And now we don't, we don't drive cars made in the Fifty's and they many of us do not wish to 9 live in the, in the Fifty's houses that stayed in the Fifty's while their inhabitants moved ahead 10 with technology and lifestyle and moved into the 21st Century. 11  12 Of our many years in Palo Alto we have seen many changes.  One of the most significant 13 changes that became evident in the past 10 to 15 years is the need to build taller homes and 14 taller buildings.  This is evident everywhere in Palo Alto.  Just the other day a three‐story 15 building replacing the Olive Garden restaurants was approved.  Many if not most or even all 16 Palo Alto homes that underwent significant remodeling or were replaced by new homes are 17 two‐story homes.  So there is a need.  And I wonder why, why should people everywhere in 18 Palo Alto be allowed to build two‐story homes while our property rights would be restricted by 19 neighbors for reasons that in our view and I'm sorry to say, some of you are my friends, actually 20 I don't know if it has to do with a good neighborhood actually.  21 We are concerned that if the SSO will be approved that neighbors, the neighborhood will 22 undergo significant deterioration and will turn into unattractive area populated by people who 23 object to changes and buy raincoats.  So actually this is because a, this may become a rental 24 housing community.  There are three rented houses next to us.  Two of them are eyesores.  25 One of them is growing weeds that are moving into our yard.  It's quite intolerable and we want 26 to have neighbors not renters.  Limited property right and specifically banning second story 27 limits asset value and will attract more people who purchase homes as renters and don't spend 28 money on improving their home and their gardens, which is bad for the neighborhood. 29  30 In terms of privacy issues we hear a lot about them.  There are ways to deal with privacy issues 31 with shrubs and screens and various means.  And this is now living in the City, we live in the 32 City, we cannot expect full privacy everywhere and about some people talked about the sun in 33 their garden.  The sun in their garden really whether it's a second story home in the 34 neighborhood will actually affect how much time they'll garden has is questionable.  Some will, 35 some will not depending on the house, depending on the direction of the sun, etcetera.  So this 36 we hope cannot drive the decision.  So my husband and I want to say here that we are 37 objecting to the SSO.  Thank you. 38  39 Acting Vice‐Chair Waldfogel: Thank you.  Dah‐Bin Kao and that's the last card that I have.  If 40 anybody else wants to speak then pass a speaker card.  Oh, I’m sorry.   41  42 Dah‐Bin Kao:  Hello, my name is Dah‐Bin Kao.  I live in the two‐story home that has been 43 excluded in this new rezoning.  So I have no vote in this matter.  I only come up to speak 44 because of some of the statements that Miss Stiebel made about my home 3575.  Miss Stiebel 45 lives at 840 across from Lupin.  [Talking off microphone]  I didn’t do, yes.  I, if I, my hearing is 46 City of Palo Alto Page 6 still ok, Miss Stiebel said the previous owner remodeled the home and then immediately sold it 1 for profit.  That was not my understanding.  I believe that house was remodeled in 1996.  When 2 we bought it in 2001 the lady told us that they remodeled five years earlier, now they have 3 gone through a divorce therefore they were selling that house.   4  5 And another point that Miss Stiebel made that from the two‐story home, our home we could 6 see through her living room through a large glass window.  Well my eyesight must be getting 7 old.  I don't see that.  If you look at the map her house faces Talisman.  The large windows all 8 face Talisman.  On the Lupine side we can only see the garage door and no window.  We could 9 see nothing at all.  I hope my eyesight is still good and that's my comment.  Thank you. 10  11 Acting Vice‐Chair Waldfogel: Thank you very much.  I think it's Anke Kiebber and then Richard 12 Willits. 13  14 Anke Kiebber: Good evening.  So I have to apologize.  I’m not prepared to speak at this meeting.  15 I own a house on Louis Road, the one in the corner next to the creek.  It looks to me Louis Road 16 is really changing into a two‐story neighborhood if I drive along Louis Road.  And [by law] 17 Eichler has been totally remodeled and there are really no plans to change and put a second 18 story on our Eichler or offend the neighborhood in any way.  I believe this process is really 19 broken and needs to be revisited.   20  21 I can't predict what my kids are going to do or need to do in 10‐20 years from now.  I don’t 22 want to be restricted by this kind of rule.  And I believe there has to be a way that neighbors get 23 together and are considerate of each other and make plans which is working in the 24 neighborhood.  I had no knowledge that our next door neighbors were the ones who retracted 25 the signature.  I do know they love and want to conserve their Eichler as well.  I totally trust her 26 decisions.  If the day comes when they have to remodel a lot of Eichlers are not in a good state 27 right now.  It’s a flood zone.  Not any Eichler can be restored.  We were lucky ours could get 28 restored, but many are getting really old and I think Palo Alto needs a solution for coming up 29 with a reasonable way to bring them into, into the modern world.  And we are not there yet 30 with this process we are going through.  And I don’t know if it’s possible for Louis Road to be 31 excluded, but I don’t think that would be the solution either.  I think we really should look at 32 design guidelines and the neighborhood in general to come together.  33  34 Acting Vice‐Chair Waldfogel: Thank you.  Richard Willits and that's the last card that I have right 35 now unless somebody else has come forward. 36  37 Richard Willits: Good evening, Commissioners.  I only want to say that the SSO process that 38 we've been going through in the City for now a year and a half is essentially originally designed 39 as a replacement for the single story restriction that this particular tract has in its covenants.  So 40 presumably people when they buy these houses know that there's supposed to be a single 41 story restriction.  Those single story restrictions have had from time to time not been strongly 42 enforced.  The point of bringing the SSO is to in order to essentially normalize the situation back 43 to what it was in a way that fits with the current houses. 44  45 City of Palo Alto Page 7 With regard to what the last speaker mentioned about the quality of the houses one of the 1 things we have consistently noted if you go around the City and look at places where SSOs 2 those have been implemented you'll notice that given the direction that the City is essentially 3 firmly and as Council Member Kniss said objectively deciding with an SSO the homeowners then 4 are free to upgrade their houses in a way that is consistent with the SSO.  Generally those areas 5 that have SSOs the homeowners have invested, they have invested in a way that we call out 6 and not up, which is consistent and which is in harmony with the rest of the neighborhood.  7 And we hope that this SSO in Faircourt 3 and 4 will have the same effect.  8  9 Currently there is no other effective way of controlling this process.  There are things that have 10 been discussed, discussed at the City Council Member potential guidelines.  Those are things 11 that we look forward to working with the City in the future on, but they do not exist.  To protect 12 the neighborhood now it needs to have an SSO.  Thank you. 13  14 Acting Vice‐Chair Waldfogel: Thank you.  That's all the cards.  Are there any additional?  15 Adrienne Duncan.  16  17 Adrienne Duncan: Thank you very much.  I am the original owner of an Eichler and I want you to 18 know that I came from Austria with my husband and two children about to have a child.  And 19 we couldn't find anything we liked real well in San Carlos or Redwood City or etcetera, etcetera.  20 And found Joseph Eichler was building these beautiful little homes in Palo Alto.  And he agreed 21 to give us a second mortgage.  We had the most lovely five bedroom house and I have come to 22 do many things in which I have used this property.  I teach bio intensive farming.  I'm a sculptor 23 for 35 years at the Pacific Art League and I want you to know that there are many places that 24 would come up and shut off the sunlight to my home where I could not have these little tours 25 that go around and instruct people as to how to grow things.  And I know that it's probably not 26 an effective thing to worry about what one person's sunlight has been cut off, but if I suddenly 27 can teach many, many people how to grow bio intensive farming the sunlight will be cut off for 28 many houses.  So I want you to consider this.  It's a beautiful house.  It's a lovely setting and I 29 don't want to have anybody putting up some great monstrosity next to me.  Thank you very 30 much.  31  32 Acting Vice‐Chair Waldfogel: Thank you.  Again that's all the cards that we've received.  Any 33 additional?  Anyone else like to speak?  To thank everyone who has, who has come forward 34 today.  35  36 Acting Chair Gardias: Thank you, Acting Vice‐Chair.  This concludes our public hearing.  Thank 37 you very much all the speakers and presenter.  And so since this is pretty much our second 38 hearing on this topic I would like to come back and remind you about the discussion that we 39 had back then.  And also I know that our colleague Commissioner Alcheck was present at the 40 time when, when the Royal Manor I think was heard by the City Council.  So I would be looking 41 for his comments from the perspective of Council understanding.  So if you remember we 42 passed a Motion where we, which was proposed by Commissioner Downing, where we were 43 looking for guidance from the City Council in this regard.  We were uncomfortable with, with 44 the change of support what happened on the Royal Manor and what happened on this proposal 45 and as we may see it happened again.  And for this reason Commission voted to, to look up to 46 City of Palo Alto Page 8 City Council for, for guidance provisional guidance on how to approach SSOs.  So with this I 1 would like to ask about Cara and Amy if you could just give us having this on mind if you could 2 just give us your understanding what are our options in considering this in lieu of our prior 3 decision and also discussion that, that was City Council that would be very useful.  And then 4 after this I would like to ask our colleague Michael Alcheck to advise us about his perspective 5 and his understanding from the same meeting.  Thank you. 6  7 Ms. Silver: Thank you.  Why don't, why don't I start off and Amy please fill in where needed.  So 8 the Council did not of course make a decision on this particular application.  They heard 9 another application.  There were lots of comments and what they said was that they wanted to 10 have staff do some further analysis and directed us to do some analysis on sort of the balloting 11 procedure in general and also to explore an Eichler specific design criteria and whether that 12 should be incorporated in the zoning code as an overlay or in a separate design code was 13 something that they wanted us to, to further look into.  In that discussion the Council also 14 recognized that this particular matter was still pending and at least one Council Member said 15 that they did not want to discourage the Planning Commission from taking action on, on this 16 particular item, but there was not a formal Motion or action on that particular issue. 17  18 With respect to your options tonight you can, I think you have three options.  You can move the 19 proposal forward with the Talisman piece removed.  You can move it forward with some lesser 20 boundary.  You could make a recommendation to the Council that it be rejected outright.  And 21 then fourth you could make a recommendation that Council I think delay the matter until the 22 more policy oriented questions have been answered.   23  24 Acting Chair Gardias: Thank you.  Commissioner Alcheck. 25  26 Commissioner Alcheck: Ok, so I attended that Council meeting and I mean I'm sure many of us 27 are aware of what was said.  I guess my perspective was that the Council spent a great deal of 28 time going around and the general sense was that the system, this is a, the process is not 29 serving the City well.  And I don't think any of them were particularly comfortable with the 30 notion that the numbers were so close, but yet not quite close enough.  And I think that 31 particular project, that particular application had its own issues that are different than this 32 particular application, but I think a lot of the discussion revolved around sort of the clarity of 33 what the, what this in fact does.  And I think, I think that sort of the biggest takeaway was that 34 the majority of the conversation made by the supporters of the application revolved around 35 Eichler preservation and Council, Members of the Council articulated that this is not an Eichler 36 preservation process.  Nothing about what is, nothing about a SSO preserves Eichlers.   37  38 And so the conversation then pivoted to a discussion about well, what is the likelihood or what 39 would a design specific framework look like if it was an Eichler specific design area and how 40 long and I think they've sort of punted to the staff saying can you come back to us with some 41 relevant discussion on what that would look like.  Maybe an overlay that was design oriented 42 related to Eichler preservation as opposed to SSO.  I think in fact there was a discussion I think 43 even somebody suggested that there are two‐story Eichlers.  So in what regard with those 44 potentially be… you know?  So I think at one point there was this discussion of there was a 45 Motion or a suggestion of Motion to at least implement this on a short term basis, like a one 46 City of Palo Alto Page 9 year SSO, which was rejected.  And I think the ultimate… it’s hard to say there was a consensus 1 because there was a lot of it was very close, but I don't I think that as a majority they weren't 2 comfortable making a decision about SSO mostly because of process issues.  So I don’t want to 3 spend more time talking about that because I think, I think there are other people might have 4 different perspectives of what was said up there.  But that was sort of my takeaway about the 5 general approach to the way they discussed it that night. 6  7 Acting Chair Gardias: Thank you for the summary.  Commission Tanaka.   8  9 Commissioner Tanaka: At this point I don’t have any comments. 10  11 Commissioner Alcheck: Say that again?  I got comments. 12  13 Acting Chair Gardias: Ok.  Sorry, this was Commissioner Waldfogel.   14  15 Acting Vice‐Chair Waldfogel: Sorry, it’s hard to tell which button is which here.  I'd like first of all 16 I'd like to thank all the members of the public who came out to speak tonight.  It’s very helpful 17 in these deliberations.  I’d like to go back to the comment that Mr. Willits made that there is a 18 CC&R in this, in this tract for single story and I’d just like some additional clarification.  I 19 understand there's no Homeowner’s Association (HOA) active in the tract right now, but is this 20 CC&R currently a binding covenant on this tract?  I mean can anybody answer that?  Can 21 anybody answer that question?  Yes, that’s a question to staff.   22  23 Ms. French: This is kind of a legal opinion.  When these are these run with the properties and 24 it's not anything that City staff can have anything to do with.  It's a private matter.   25  26 Acting Vice‐Chair Waldfogel: I fully understand that that's, it’s not enforceable by the City.  27 Because I think the question that's in front of us is whether the City will step in as a provide air 28 cover to enforce.  I mean effectively the SSO is adding a code component that backs up that 29 CC&R, but is it do we have a CC&R in place that is that runs with the property and that's 30 governing? 31  32 Ms. Silver: Thank you.  So yes as Ms. French stated there is a CC&R and for members of the 33 public what that stands for is Covenants, Conditions, and Restrictions and it is a legal document 34 that restricts properties.  It's recorded on title to the property and as Ms. French said runs with 35 the land.  So when somebody sells the property that CC&R placing restrictions will continue to 36 control.  We do not believe that there is an active HOA at this point that will enforce that CC&R.  37 It might be able to be enforced by individual residents, but that generally is not cost effective.  38 We have not seen that take place routinely with these types of CC&Rs, but that is an additional 39 remedy that is available.  And also as Ms. French said since the City is not a party to that CC&R 40 the City cannot enforce it.  41  42 Acting Vice‐Chair Waldfogel: Let me just continue the… may I continue?  So if that's the case are 43 we actually creating tremendous development risk in the tract by not having an SSO because 44 anybody who sets out to build a second story is potentially subject to a lawsuit from a neighbor 45 demanding enforcement of the CC&R?  46 City of Palo Alto Page 10  1 Ms. Silver: I suppose that's one way of looking at it. 2  3 Acting Vice‐Chair Waldfogel: I mean this seems to be a difficult, this is a difficult situation.  And I 4 guess just one final question along this line.  Is there… does the HOA away go away or is the 5 HOA just dormant and in theory the residents in the tract just need to go and elect a new board 6 and start up again?  I mean sort of what's the, does anybody know what the structure of that 7 is? 8  9 Ms. Silver: So we do have a copy of the CC&R is in the file.  I can try to look at that while we 10 proceed with the hearing if you like?  11  12 Acting Vice‐Chair Waldfogel: I may come back to this, but I’ll just defer see if anybody else has 13 comments. 14  15 Acting Chair Gardias: Very good.  Thank you.  I don't see any other comments so… no.  16 Commission Alcheck. 17  18 MOTION 19  20 Commissioner Alcheck: Ok, so I'll share my thoughts on this.  I found many of the arguments 21 that were made before Council and many of the comments that we received especially via 22 email to be very persuasive.  I also think this is a broken process.  One of the comments that I 23 found to be easily the most persuasive was this notion that compelling neighbors to collect 24 signatures in person from each other was a process that maybe this City should not be 25 encouraging its residents to do.  It's an uncomfortable and potentially antagonistic process.   26  27 And one of the… again, one of the most persuasive things I heard was this notion that if you 28 were going to, if you were, if you were going to so significantly affect someone's property rights 29 then maybe a signature should be notarized which would encourage people who are thinking of 30 signing a document like this to maybe spend a little bit more time consulting an attorney or 31 other individuals they rely on for advice on matters like this.  I could, I mean I happen to be an 32 attorney.  I happen to focus my practice was focused on land use issues.  I couldn't agree more 33 with that comment which was made at the Council hearing.  There is such a strong… this 34 process is we’re allowing a public forum to exercise a very private agreement and in doing so I 35 just think we, I think the result has been, has shown itself to be very complicated and I think 36 adding layers of I guess you could call them hurdles I think could really only benefit the City 37 because it can put us in a position of saying look, this was a very thought through decision.  It’s 38 very uncomfortable to have to sort of wonder which of these residents has potentially reneged 39 on their position why and to see a number sort of go from 70 to 60 or from 60 to lower 40 suggests that people weren't entirely sure of what or they did they no longer agree with their 41 decision and this again this is a very important decision. 42  43 I know I'm not the only person tonight that this may not sound diplomatic, but I find it a little 44 offensive this notion that a two‐story home is a monstrosity that no two‐story home can get 45 built in this City that's not a monstrosity.  I don't agree with that position.  If you approach the 46 City of Palo Alto Page 11 notion that any two‐story home is going to be a monstrosity then, then I think there is, there's 1 not a lot of room here for a design review process that will encourage the preservation of two‐2 story Eichlers which doesn't make sense because it's very difficult to understand if we're talking 3 about just a SSO or the preservation of Eichlers and that was an issue that came up with City 4 Council.  5  6  So with respect to this particular application I would support and I will make a Motion that we 7 recommend City Council does not approve it.  And frankly when we first did this which was I 8 think almost a year ago there was a comment at our Commission hearing that the signatures 9 gave the applicant an opportunity be heard by the Commission and by the City Council.  And in 10 this particular sense I don't know that I mean 59 support is very, 59 percent is very close but it's 11 not 60.  I just don't see why we would… if we could stop this process at this point that's what I 12 would do.  Because I don't know that it even makes sense for City Council to do what they did 13 on Monday night or three Mondays ago again.  Maybe they'll be more expedient with their 14 time since this is a very similar scenario in terms of the dropping percentage of support, but I 15 guess to stay on topic here I would I would support a Motion that we encourage them not to 16 approve this application.  I would encourage them to continue the direction they gave staff 17 about a broader discussion about what would it look like to have an Eichler preservation design 18 component to our single family design review process.   19  20 And, and I would, and I would, and I would also encourage them if and I don't know that would 21 that needs to be part of the Motion, I just hope that maybe that will be part of the context of 22 the discussion that they strongly consider a different process.  I know Council Member Berman 23 had mentioned it that night and I'm I don't want to guess who else said it because my memory 24 is not serving me right, but there was this whole discussion about maybe a ballot process where 25 somebody went in and I specifically remember a discussion about maybe, maybe it happens 26 during our voting process so that you apply, it gets put on our local ballot, and when you go 27 into your local polling place if you're in that neighborhood you have an opportunity to sort of 28 vote on it.  Something a little bit more formal and not so, not a process where you are 29 approached by your neighbor maybe multiple times on the same topic.  And I mean there was a 30 whole discussion about they approached one of the residents of the house and that didn't work 31 out so they approached a different… I mean that whole this there is an element to this which I 32 find so unfortunate.   33  34 And I know I’m taking a lot of time here, but this is a bummer.  And you have relationships here 35 that are devolving and I think that process has everything to do with it.  And so we have a lot of 36 common goals here.  There are huge fans of Eichlers and there is a very dedicated community 37 of residents that I remember distinctly on that meeting on Monday night that the Council 38 Members had reflected on how many people for and against suggested how much they love 39 their Eichlers.  So there's clearly consensus on the idea of preservation, but done maybe in a 40 more flexible way.  And I, I hope that by suggesting that they don't approve this application and 41 encouraging them, by recommending the Council not approve this application and also 42 recommending to Council that they continue their effort to investigate an Eichler design 43 component that that actually can become a reality sooner than later so that these this these 44 particular communities that are interested in preserving the architectural style have that 45 opportunity before it's too late. 46 City of Palo Alto Page 12  1 So I'm going to make that Motion now and then if you want to keep on discussing you can.  So 2 I'm going to make a Motion that we recommend that Council does not approve this application 3 and the second part of that Motion will be a recommendation that Council continue to 4 encourage staff to come back with a Eichler design guideline that could potentially complement 5 the current single family review design process. 6  7 Acting Chair Gardias: Thank you Commissioner Alcheck.  So would you mind because we still 8 have a hearing so I would like to hold on this Motion and continue we have a still open question 9 that Cara’s researching so we have a Motion we're going to come back to this Motion, but let's 10 just continue with the hearing.  Let's make sure that we exhaust all the comments and 11 perspectives.  And I have one question from a different perspective two sides to the staff.  Do 12 we have currently any pending applications for any development in this area? 13  14 Ms. French: No two‐story applications. 15  16 Acting Chair Gardias: Do we have any other applications of remodeling or changes? 17  18 Ms. French: I don’t know. 19  20 Acting Chair Gardias: But no notice (interrupted)  21  22 Ms. French: If there are building permits applied for a kitchen remodel I'm not aware of them.   23  24 Acting Chair Gardias: No I was thinking about some additions.  No expansions?  Ok, so that's the 25 second question that I have is since there was a direction from the Council how long will it take 26 to develop guidance as Council requested? 27  28 Ms. French: My understanding is there's a meeting this next week where Council will be the 29 meeting of the committee as a whole will be talking about the work plans.  This thing that they 30 discussed directing Council to return with preliminary ideas evaluation of the program is one of 31 many possible work items on the, on the Department's list of things to do.  So there will be a 32 discussion about that this next week.  And so no one has done an evaluation yet as to how long 33 that’ll take, how much money for a consultant, etcetera.  There's been preliminary discussions 34 in advance of next week's meeting, but nothing prepared to date.  So (interrupted) 35  36 Acting Chair Gardias: But could you give us and the audience some estimates so we’re looking 37 for like what, half a year when this would come back to the Commission with the proposal of 38 the crosstown Eichler preservation guidance or?   39  40 Jonathan Lait, Assistant Director: I think again I don’t have any more to add more than what 41 Amy put forward.  We don’t have a recommended, we don’t have a timeline for that project 42 yet.  So no.  There's a lot of different things on the plate and we're hoping that we’ll get some 43 guidance on how best to sort out those different priorities. 44  45 Acting Chair Gardias: Ok, thank you.  So we have a Commissioner Tanaka. 46 City of Palo Alto Page 13  1 Commissioner Tanaka: I have two quick questions for staff.  So this is first for the City Attorney.  2 So have you actually read the CC&Rs in terms of what it says about the SSO and if so maybe you 3 could comment on that in terms of like, your reading of it.  4  5 Ms. Silver: Sure.  So interpreting CC&Rs is a specialized area of law and so I can tell you what 6 they say.  There may be some particular questions that I cannot answer.  This set of CC&Rs for 7 this tract does as we mentioned have a limitation that only allows single story houses.  A 8 portion of or some of the tracts are also governed by an additional set of CC&Rs that actually 9 limit the size of the house to 1,200 hundred square feet and then also have some additional 10 requirements with respect to setbacks that are separate and apart from the zoning setbacks.  11 And then with respect to the architectural design review committee it's interesting to see these 12 historic documents, but the orig… the doc… the CC&R designates Mr. Eichler as the one of the 13 members of the original design review committee and then does have provisions for appointing 14 other members if the original members were to die or to step down from the position.  So there 15 is a process for reactivating the HOA or design review committee that has apparently been 16 deactivated.   17  18 Also the CC&Rs do contain a provision that states that if the if the a two‐story residence or 19 other residence is built that violate the CC&Rs that if there is no lawsuit that is initiated after 20 the project is completed that there is no further enforcement remedy.  So there is a time that 21 cuts off enforcement, private enforcement under these CC&Rs.  22  23 Commissioner Tanaka: Great.  I have of course great deal of [unintelligible] not being a lawyer 24 actually it’s interpreting that so that’s very helpful.  So it sounds like in layman terms you're 25 saying that there are currently things in that CC&R which are already been violated in terms of 26 square footage, in terms of setbacks, in terms of single story, many other things beyond just 27 single story that's not that's currently being violated, but that the remedy in the CC&Rs is that 28 essentially unless, unless there's a lawsuit that actually commences with the finishing of this 29 construction that’s it.  So there's not a legal overhang on someone’s head for this. 30  31 Ms. Silver: So that's my reading of the CC&Rs.  There may be some additional legal precedent 32 that extends that statute of limitations, but based on the plain reading of the CC&Rs. 33  34 Commissioner Tanaka: Great, thank you. And in your experience I'm sure there's CC&Rs all over 35 the place that were written 100, 200 years ago which may or may not be maybe out of date, 36 quaint, whatever.  What is the, what happens in those kind of situations?  Maybe for instance 37 the sea has risen and there is just water there now.  What happens when you have these like 38 these out of date CC&Rs?  What happens in those cases to the rules and what's a general 39 course of action? 40  41 Ms. Silver: Well I think the most common CC&R that is has been deemed by the courts not to be 42 enforceable is a racial covenant.  So courts have many CC&Rs had a racial covenant in them and 43 the courts have said those are just not legally enforceable.  So you can have certain conditions 44 that are not legally enforceable.  You can have other conditions that may need to be reformed 45 City of Palo Alto Page 14 and as a result of changed circumstances and generally CC&Rs have provisions for modifying 1 the CC&Rs (interrupted)  2  3 Commissioner Tanaka: I guess there's those changes here where maybe in 1950 the value of 4 land in Palo Alto was X and today it's Y.  And so there’s been significant changes in terms of land 5 values, but ok.  So it sounds like it's there's some things that the courts have done, but there's 6 not really a process involved in terms of how to update it unless they reform this committee.  7 Ok, great.  8  9 Ok, and then the second question and maybe this is for you Amy, is: has anyone talked to the 10 folks that changed their, their vote?  Why they changed it and if so could you tell us why? 11  12 Ms. French: I've only spoken with one person who had changed their vote and then I spoke to 13 her when she came to change it back.  She came and visited me at the let's see it was Tuesday, 14 just yesterday, and said she wanted to reconnect with her yes vote.  And so I said I showed her 15 the petition and I showed her the thing that had said she was she was with a handwritten note 16 and so I just made sure she understood what she was doing.  And as far as why she was doing 17 what she was doing and I have the evidence of that right here, but it doesn't have an 18 explanation in writing to say why.  But she was concerned about and she does have a relative 19 that is in the opposition of this and so it's a little bit awkward I think for her to have both sets of 20 circumstances.  In fact the gentleman who is her relative did email the Planning and 21 Transportation Commission (PTC) about this, but it's awkward for her to be in this position 22 where she feels this way and yet she has a relative on the other, in another house, but in the 23 other camp I guess. 24  25 Commissioner Tanaka: Ok, so there wasn’t an explicit reason why the vote was changed?  At 26 least not that you could speak of? 27  28 Ms. French: And not that I feel comfortable talking about.  29  30 Commissioner Tanaka: Ok, so and then what happens in the case when, when let’s say a 31 husband and wife disagree, one person thinks that they should do it and the other person 32 doesn't think.  What happens in that, who what vote wins?   33  34 Ms. French: Well, that's a good question.  I mean we only in the code which is what staff has to 35 deal with it does say one, one vote per property and we do have in this tract one where there 36 was a an initial signature and then there was and it happened at Royal Manor too and there 37 was the spouse and then it was a retraction.  So I think that in those cases we have gotten the 38 original signer says, “Oh yes, and now I agree with my husband” or whatever that might be and 39 now they are together on it by the time the reversal or the reversal of the reversal comes in. 40  41 Commissioner Tanaka: Ok.  So I can understand why Council talked about a notary or some, 42 some other process other than a single person voting.  Ok that's all questions I had Thank you.   43  44 Acting Chair Gardias: Thank you, Commissioner Tanaka.  I have one question also in regards to 45 HOA and how it stands in CCR.  If here for this, for this application we require a 60 percent 46 City of Palo Alto Page 15 what’s the language of the, of the review of the second story in CC&R or HOA?  What’s the 1 majority required to, to approve second story addition?  I would like to compare the language 2 in CC&R with, with our requirements.  3  4 Ms. Silver: So the CC&Rs do not have a particular threshold for voting.  They appoint three 5 members to an architectural control committee and then they just specify the duties of the 6 architectural control committee.  So it doesn't, they don't specify whether the it needs to be a 7 unanimous approval or majority approval. 8  9 Acting Chair Gardias: Ok, so I guess in this relating this to our current situation pretty much the 10 neighborhood which is Tract 3, #3 and Tract #4 they would have to elect their HOA that would 11 be then designating this architectural committee in number of three members and they would 12 be reviewing the projects, right? 13  14 Ms. Silver: That's correct.  15  16 Acting Chair Gardias: So which, which in this case having 60 percent support for this overlay had 17 the citizens or had this neighborhood elected HOA they would have had a majority and they 18 would be able to pretty much restrict by having majority of 59 percent they would be able to 19 restrict second story.  20  21 Ms. Silver: Well I think you're asking two separate questions.  One is what you need to do to 22 amend or reactivate the CC&Rs and that question is more broad.  That it, that requires if you 23 want to, if the community wants to amend the CC&Rs they can do that by a majority vote of 24 current homeowners.  Otherwise the CC&Rs are just renewed every 10 years as is.  So that's 25 one issue.  The second (interrupted)  26  27 Acting Chair Gardias: So CC&R and I’m sorry for interrupting.  So CC&R for clarification so CC&R 28 is not active at the moment.  Is it still enforceable or (interrupted)  29  30 Ms. Silver: The CC&Rs are still enforceable and still active.  It's the design review committee 31 that is inactive.  32  33 Acting Chair Gardias: Right, ok. 34  35 Ms. Silver: So in terms of amending the CC&Rs that is done by a majority vote of the 36 homeowners, the current homeowners, and in terms of if the homeowners were to activate 37 another design review committee the CC&Rs do not specify what type of vote is required to 38 approve a second story or to or to approve any type of development.  39  40 Acting Chair Gardias: So it looks like they have a possible parallel way of just having their 41 perspective besides our SSO. 42  43 Ms. Silver: Absolutely, yes.  The CC&Rs are another vehicle for enforcement.  44  45 City of Palo Alto Page 16 Acting Chair Gardias: Thank you. Any other comments from… no?  Ok, looks like we, we have 1 exchange any comments from this (interrupted)  2  3 Mr. Lait: Well, I don't think we heard a second to the Motion.  So I don’t know if you were 4 (interrupted)  5  6 Acting Chair Gardias: Yes, yes, yes.  Thank you very much for reminding.  I was just waiting to 7 make sure that everybody had a chance to speak.  So we have a Motion on the floor as 8 presented by Commissioner Alcheck.  So let's come back to this.  Do we have a second to 9 support this? 10  11 SECOND 12  13 Acting Vice‐Chair Waldfogel: I will second the Motion.  I’d like to speak to that when it’s 14 appropriate. 15  16 Acting Chair Gardias: Very good.  So Commissioner Alcheck would you like to speak to your 17 Motion?   18  19 Commissioner Alcheck: I think I've said everything I need to say. 20  21 Acting Chair Gardias: Thank you.  Commissioner Waldfogel. 22 Acting Vice‐Chair Waldfogel: Yes, I agree there are process problems although I don't think 23 they're quite as dire as has been discussed tonight and in previous meetings, but the reason 24 why I support this Motion is that I have very strong preference to revive the HOA and resolve 25 these issues via CC&R amendments.  It sounds like the CC&Rs have not been looked at in 60 26 years and they have some it sounds like they have a number of problems that need to get 27 addressed, but I think that that would be a great tool.  I would support an SSO for the entire 28 tract, but at this point I'm actually a little con… I'm conflicted because I don't know how to 29 interpret yes signatures on the petition at the boundary of the revised tract, at the reduced 30 boundary that we're looking at tonight.  I don't know whether somebody who might have been, 31 might be included in a new SSO would shift support if they knew that they're getting a 32 restriction and they're not getting any reciprocal protection.  So that one leaves me a little 33 concerned and for those reasons I would support this this Motion.  34  35 FRIENDLY AMENDMENT #1 36  37 Acting Chair Gardias: Thank you.  Do we have any other comments?  So if you don't mind I 38 would like to propose a Friendly Amendment to your Motion.  So the amendment would be to 39 not to accept second story application till HOA is being reactivated. 40  41 Ms. Silver: So just to clarify is that for this particular application or citywide? 42  43 Acting Chair Gardias: No it’s for this particular application.  We're talking that the Motion was 44 for… 45  46 City of Palo Alto Page 17 Commissioner Alcheck: I think what she means, are you talking about SSO applications. 1  2 Acting Chair Gardias: You know I'm talking about this particular, the Motion was for this 3 particular (interrupted)  4  5 Commissioner Alcheck: Do you mean further SSO applications or do you mean applications to 6 build two‐story homes? 7  8 Acting Chair Gardias: No, for two‐story homes for this neighborhood. 9  10 Commissioner Alcheck: That's what I thought you said. 11  12 Acting Chair Gardias: Yes.   13  14 Commissioner Alcheck: Yes, I do want to just suggest why that may not even be an option.   15  16 Ms. Silver: Yes, so I'm concerned about that particular issue was not agendized for this evening 17 so it's essentially requesting a moratorium against accepting applications for second stories in 18 this, in this area.  And I think that we would have to agendize that for further discussion if you 19 wanted to act on that. 20  21 Acting Vice‐Chair Waldfogel: It sounds to me if the HOA is reactivated and I believe what you 22 told us is that it has recourse on second story until projects are completed, I think that's what 23 you told us, so I think that if an HOA were reactivated or there were some serious direction 24 toward reactivating it, it would make filing a two‐story application pretty risky in this tract 25 whether we proceed down this, this alternate track or not. 26  27 Acting Chair Gardias: But just if I may respond?  My understanding is if there is a HOA and there 28 is a design commission the design commission would review applications, would review any 29 design applications so pretty much they would take action before anything is being built.  So for 30 this reason it's a proactive control of any development in this neighborhood.  So what I was 31 looking for is just to give the homeowners chance to pretty much get organized themselves not 32 to waste their effort that they had on this that they spend for the last year and a half and they 33 would like to just respect pretty much what their accomplishment although it didn't meet the, 34 the boundary, the threshold. 35  36 FRIENDLY AMENDMENT #1 FAILED 37  38 Commissioner Alcheck: I'm not going accept the Friendly Amendment so this is going to be a 39 moot conversation.  I’m not going to accept the Friendly Amendment.  Number one, I don't 40 think we have jurisdiction to even do that.  Number two, when the discussion of a moratorium 41 went up on City Council there was not even a small minority of people who supported the idea 42 of stopping development of second story homes in the last SSO discussion and so I don't think 43 making that recommendation would be prudent. 44  45 City of Palo Alto Page 18 So I appreciate the idea.  I think what you're trying to do is in the interim of this process to 1 come up with a design review you want to protect people from the injustices of two‐story 2 home living and I don't foresee, I don't, I don't accept that as a Friendly Amendment.  You can 3 try to make it as an Unfriendly Amendment, but I think that's I think we should proceed on the 4 vote. 5  6 Acting Chair Gardias: Very good, thank you.  I think that Jonathan wanted to say something. 7  8 Mr. Lait: I thought I had heard and I may be mistaken on this, I just wanted to clarify for the 9 record that the applicant did meet the threshold for filing the application and that's why the 10 matter is before the Commission.  Again, there isn't a process of evaluating reversals or changes 11 in erosion of support.  At the time of filing the applicant did meet the threshold for filing.  So if I 12 just want to make (interrupted) 13  14 Commissioner Alcheck: Actually this is the same scenario that occurred with the last one.  They 15 met the threshold and then fell below it.   16  17 Mr. Lait: Yes.  And I'm not speaking to the thought process of how one may decide on that I just 18 want make sure that we're clear that even though we may not like the process it is consistent 19 with the standards of the code.   20  21 Commissioner Alcheck: You know my, this… I'd like to move on.  I would argue that to some 22 extent it might have been even relevant to know if they had met the threshold from the 23 beginning without any changes of the now new defined zone.  So the zone has, the area has 24 shrunk, right?  And the current percentage is still below the threshold? 25  26 Mr. Lait: Well there’s, well I guess (interrupted)  27  28 Ms. French: There's a report that they're at 62 percent with this new person they think that is 29 supportive, but we don't have the signature as we have on the one yesterday.   30  31 Commissioner Alcheck: I’ll be frank, I don't even like the idea of referring, I don't like… it's a bird 32 in the hand is worth two in the… right?  I don't even like the idea of sort of suggesting that you 33 have, that we have a signature until we have it because my entire problem with this process is 34 the signature process.  35  36 Ms. French: Well, to be fair (interrupted)  37  38 Commissioner Alcheck: So I just want to I guess my question I didn't, I don't want to derail this, 39 but I guess my one comment would have been it might have been relevant to know if they had 40 met the threshold of this smaller area from the beginning. 41  42 Ms. French: Yes, they did meet that smaller threshold from the beginning and they technically if 43 we're talking about signatures I do not have signatures, I have emails from the two that have 44 withdrawn their support.  It's an email from that person.  It's not a handwritten, the only 45 person that I have a signature for is the one that reversed their reversal.  That's a signature. 46 City of Palo Alto Page 19  1 Commissioner Alcheck: No, I just meant about this new homeowner may or may not in fact 2 support (interrupted)  3  4 Ms. French: I mean it's as valid as the other ones that emailed, but they didn't give me a 5 signature.  So if signature is the (interrupted)  6  7 Commissioner Alcheck: Right.  No, ok.  I get it.  I get it.  I guess my question is we don't have any 8 more sort of amendments I'd like the process to sort of move forward judiciously. 9  10 UNFRIENDLY AMENDMENT #1 FAILED, VOTE ON ORIGINAL MOTION 11  12 Acting Chair Gardias: Very good.  Thank you.  So I still would exercise my opportunity and I will 13 propose this as an Unfriendly Amendment.  And we're looking for a second.  I guess I don't have 14 a second.  15  16  So we are going to proceed with the original Motion as it was proposed by Commissioner 17 Alcheck.  So all in favor?  Opposing?  And I’m going to abstain from the vote.  So three for, one 18 abstaining.  3‐0‐1. Thank you very much so Motion passed.   19  20 MOTION PASSED (3‐0‐1‐3, Downing, Fine, and Rosenblum absent, Gardias abstained) 21 Acting Chair Gardias: So with this we're closing, we're closing this topic.  Thank you very much 22 for all those that attending, that attended this hearing.  I’m going to take a few minutes break.  23 We can take a break.  Ok.  Let’s, let’s take a five minutes break.  It will allow us to regroup. 24  25 Commission Action: Commissioners Motioned to forward a recommendation of denial to City 26 Council. 27 Attachment C C:\users\ycervan\appdata\local\temp\minutetraq\paloaltocityca@paloaltocityca.iqm2.com\work\attachments\17527.doc 6/12/2015 9:09:00 AM Single-Story Height Combining District (S) Zone Guidelines The following guidelines are intended to guide City staff and decision-makers in the consideration of zone change requests for application of the Single-Story (S) Height Combining District (overlay) (S) zone. For neighborhoods in which there are no single- story deed restrictions, or where such restrictions exist yet have not been strictly adhered to, applications are to be evaluated through more rigorous use of these guidelines. However, for those neighborhoods that contain and have been developed consistent with a single-story deed restriction, these guidelines are to be treated with a greater degree of flexibility. 1. Level and Format of Owner Support An application for a Single story overlay zone map amendment should meet with "overwhelming" support by owners of affected properties. These owners must demonstrate, by providing documentation that includes a written list of signatures, an understanding that they are co-applicants in a zone map amendment request. 2. Appropriate Boundaries An application for a Single story overlay zone map amendment should be accompanied by a map indicating the address location of those owners who are co-applicants for the rezoning request. Boundaries which may correspond with certain natural or man-made features (i.e. roadways, waterways, tract boundaries, etc.) should define an identifiable neighborhood or development. These boundaries will be recommended to the Planning and Transportation Commission and City Council by the City's Zoning Administrator. 3. Prevailing Single-Story Character An area proposed for a Single story overlay zone map amendment should be of a prevailing single-story character where the vast majority of existing homes are single-story, thus limiting the number of structures rendered noncomplying by the (S) overlay. Neighborhoods currently subject to single-story deed restrictions should be currently developed in a manner consistent with those deed restrictions. Furthermore, it is desirable that homes be similar in age, design and character, ensuring that residents of an area proposed for rezoning possess like desires for neighborhood preservation and face common home remodeling constraints. 4. Moderate Lot Sizes In order to maintain equitable property development rights within a Single story overlay area compared to other sites within the R-1 zone district, an area proposed for an (S) overlay zone map amendment should be characterized by moderate lot sizes with a generally consistent lotting pattern. A moderate lot size is to be defined as 7,000 - 8,000 square feet. Attachment E From:French, Amy To:Ellner, Robin (Robin.Ellner@CityofPaloAlto.org) Subject:FW: Tracts Faircourt 3 and 4 petiion for SSO; discussed by the Planning and Transportation Commiss Date:Wednesday, May 04, 2016 8:43:00 AM I will print below to put in the packet. Please also forward this to the Planning and Transportation Commission. Thanks Robin. From: Jackie Geist [mailto:jackiegeist@sbcglobal.net] Sent: Friday, April 29, 2016 5:52 PMTo: French, AmySubject: Tracts Faircourt 3 and 4 petiion for SSO; discussed by the Planning and Transportation Commiss Dear Amy- Following the withdrawal of 1 of our original 30 signators less than 24 hours before our presentation to the Commission of our petition for the Faircourt SSO, we would like to offer and suggest new facts for their consideration. When presented, the application had the required 60% approval (since there are CCR's in place against second stories). The signatures were collected by various neighbors calling on people they know, about two weeks after written materials were distributed to every house. There was no pressure applied to the prospective signers by the collectors; if one spouse didn’t favor the petition, we calmly accepted that as a NO. We feel that the petition as originally accepted should stand as we followed City guidelines in our process. In the event that the Commission receives from the City Council the recommendation that the time frame for withdrawing a signature in favor of the SSO, which was submitted in February 2016, to be the cause for negating the application, we propose the following: We as co-applicants, would respectfully request the boundary of the overlay as requested in our original application be modified to exclude the five properties on the south side of Talisman and the one property on Lupine. Those houses are somewhat different than the rest of the Tract (44 houses) in that they all back up to houses that are not Eichlers and have no basis for experiencing any reciprocity between neighbors, i.e. to give up their ability to put a second story on their house in exchange for the neighbor accepting the same condition (since those neighbors would not be part of our SSO). If the Commission would consider our revised request, the number of homes involved is now 44. That would bring the approval signatures to 28, making a more than 63% approval ratio. The one family on the south side of Talisman, Alice and Rich Stiebel, agree with this modification in our proposal and prefer the SSO be adopted, even with their home's exclusion. Obviously we prefer the application to stand as submitted, but are willing to accept the decision of the City Council and Planning and Transportation Commission on this matter. Sincerely, Jackie Angelo Geist Roland Finston Co-Applicants for Faircourt 3 and 4 SSO City of Palo Alto (ID # 6997) City Council Staff Report Report Type: Action Items Meeting Date: 10/4/2016 City of Palo Alto Page 1 Summary Title: Provide Direction for Citywide Bike Share System Title: Review Options and Provide Direction for Citywide Bike Share System Operated by Motivate, LLC and Finding That the Project is Exempt From Review Under Sections 15061(b) (3) and 15303 of the California Environmental Quality Act Guidelines From: City Manager Lead Department: Planning and Community Environment Recommendation: Staff recommends that the City Council direct staff to return to the City Council with a contract to implement a 350-bicycle, Social Bicycles (SoBi) smart-bike system, operated by Motivate, LLC as part of the Bay Area Bike Share System (BABS), and structured to allow for the participation of other Peninsula cities and private entities. Staff also recommends Council find the project exempt from review under Sections 15061(b) (3) and 15303 of the California Environmental Quality Act Guidelines. Executive Summary: The City’s first experiment with a bike share program, implemented as part of a regional pilot program, has not yielded the desired ridership numbers, due in large part to the low quantity of bicycles and stations included in the initial system. Together with other cities on the Peninsula, Palo Alto has been assessing opportunities to deploy a new, broader program, with a greater potential for significant ridership using GPS enabled smart-bikes from SoBi. After a concerted effort by Peninsula communities to move forward with an interoperable smart-bike system, Motivate, LLC has agreed to operate SoBi equipment on the Peninsula as part of the regional BABS system. Staff is seeking Council direction to negotiate an agreement with Motivate for a bike share program using SoBi equipment to replace the current system and launch in June 2017. All new bike share equipment would be purchased by the City and ongoing operational costs would be covered by Motivate for the term of the agreement. The total cost to the City for capital equipment and installation is $1,160,803. The rollout of a citywide bike share program is anticipated to require .5 to 1 new full-time employee not anticipated in the fiscal year 2017 budget. City of Palo Alto Page 2 Background: The Metropolitan Transportation Commission (MTC) and Motivate, LLC entered into an agreement on December 31, 2015 that included a large scale expansion of the Bay Area Bike Share system from 700 bikes to 7,055 bikes. Peninsula communities that participated in the pilot program were not included in the privately funded expansion underway in San Francisco, San Jose, Oakland, Emeryville, and Berkeley. Palo Alto, Mountain View and Redwood City were offered the ability to buy into the regional system by purchasing capital equipment, funding ongoing operations, with minimal station-based advertising as the only mechanism to offset ongoing operational fees. At a study session on April 25, 2016, Council discussed bike share in the Peninsula and the findings of a bike share strategic plan written by Toole Design Group on behalf of SamTrans. The staff report (Attachment A) summarized the performance of the Motivate pilot on the Peninsula and analyzed the cost to expand the current system, versus replacing it with a SoBi smart-bike system. The report concluded that GPS-enabled smart-bikes are more cost effective for Peninsula cities and more appropriate for land use patterns on the Peninsula as bikes are not constrained by fixed dock locations. Point-to-point, dock style bike share systems are better suited to high-density areas where stations are located close together. The National Association of City Transportation Officials (NACTO) recommends that bike share stations be located within a three- to five- minute walk of each other. Outside of downtown Palo Alto and the California Avenue business district, this type of station density would be infeasible in Palo Alto. The verbatim minutes from this Council study session are included as Attachment B. On June 20, 2016, the Council approved a Program Agreement to enable the existing Motivate, LLC-operated bike share system to remain in place through November 30, 2016 (Attachment C). Following the April 25, 2016 study session, staff pursued development of a term sheet with SoBi to replace the City’s existing 37-bike system with a fleet of 350 GPS-enabled smart-bikes with approximately 35 hubs located citywide. Since May 2016, staff has been participating in regional discussions with neighboring Peninsula communities in an effort to ensure coordination of an interoperable smart-bike system for the Peninsula. While Motivate was initially reluctant to operate SoBi smart-bikes as part of the regional bike share system, as it became clear that Peninsula communities were moving towards a sub- regional system, and as Motivate had a favorable experience with SoBi equipment in its Portland system, the company reconsidered its position. The Managers’ Mobility Partnership held various meetings to convene staff and City Managers from Menlo Park, Mountain View, Palo Alto and Redwood City to align on bike share and negotiate with Motivate as one entity. Motivate has offered to fully fund the operating costs of a 350 bike SoBi system in Palo Alto. Under the terms of this new proposal, the City would be responsible for up-front capital costs for bicycles and hub equipment provided by SoBi ($1,160,803) (Attachment F) and Motivate City of Palo Alto Page 3 would operate a 350 bike system for the life of the contract. Motivate has agreed to operate SoBi equipment on the Peninsula and will allow neighboring communities to participate under similar terms (Attachment E). Like Palo Alto, neighboring communities would be responsible for capital and installation costs. However, Motivate has committed to two potential funding scenarios to address operating costs in neighboring Peninsula communities. The first scenario is to fully fund up to 350 bikes in each community based on support from the title sponsor, recently announced to be the Ford Motor Company. Motivate has committed to making a decision on this option by October 31, 2016. If Motivate does not fund operations of other Peninsula systems, it has committed to allocating nearly all sponsorship assets to offset operations costs to Peninsula cities (Attachment E). Sponsorship assets include the bicycle, bike basket panels, hub eq uipment, skirt guard and signage at hub locations. The second option would require a $100 per bike monthly operating fee paid by Peninsula cities. Discussion: A Motivate-operated SoBi system would require City funding for upfront capital costs such as bicycles hub equipment, and installation costs. Total capital costs for a 350-bike system are $1,160,803. Of this total capital cost, $171,429 would be covered by a TFCA grant through the Santa Clara Valley Transportation Authority. The City would not be responsible for operational costs, as Motivate, LLC is offering to cover operational costs for up to 350 bicycles for the life of the contract. A second phase, envisioned for 2018, would add an additional 350 bikes to the system using MTC funding to cover 88.53% of the capital costs. The City would then begin to pay $420,000 per year in ongoing operating fees for the additional 350 bicycles. Term Sheet: If directed by Council to enter negotiations with Motivate for an expansion of a new SoBi bike share program, staff will return to City Council in December 2016 with a contract. A six- to seven-month period to launch the bike share system is anticipated from the time of equipment purchase. The launch process would include a public outreach campaign, a suggest-a-hub website, discussions with private property owners, and acquisition of encroachment permits. Existing bike share equipment will remain in place to prevent a gap in service, while moving forward with a full-scale replacement system. Table 1. Estimated Launch Timeline October – December 2016: Negotiation with Vendor & Contract Approval December/January 2016: Purchase Order for Bicycles & Hub Equipment February 2017: Station Siting Website & Public Outreach May 2017: Equipment Testing & Demonstration Hub June 2017: Bike Share Launch Ongoing: Coordination with Private Entities Ongoing: Coordination with Peninsula Communities & MTC 2018 (Upon Grant Award): Implementation of Phase II Source: Palo Alto Planning & Community Environment, September 2016 City of Palo Alto Page 4 Proposed System: The proposed initial system would include 350 smart-bikes distributed at approximately 35 hubs throughout the City. Operations and maintenance would be conducted by Motivate, LLC. Motivate would be responsible for day-to-day operations of the program, which includes repositioning the bikes between hubs, repairs, and maintenance of the bikes. SoBi would be in charge of the web- and application-based membership and reservation system and the revenue collection and remittance. The title sponsor of Bay Area Bike Share, now to be known as Ford GoBike, will likely require a high level of customer service, system utilization and maintenance. Private entities such as Facebook, Google, Stanford University Medical Center, and Stanford Research Park have all expressed an interest in hosting bike share hubs for their employees. Stanford University, a Platinum-level Bicycle Friendly University as designated by the League of American Bicyclists, would be an ideal location for bike share if the university is amenable. The following factors indicate the potential for a successful bike share program in Palo Alto: 1. The City has a high-quality network of bicycle facilities throughout the City, earning it a Gold-level Bicycle Friendly Community designation from the League of American Bicyclists. 2. Palo Alto has an 8.7% bicycle mode share for daily local trips, among the highest in the nation. 3. The City has committed more than $25 million over the next five years to advance significant bicycle and pedestrian infrastructure projects. 4. The City is a major jobs center, with a population that grows from 64,403 to over 150,000 daily. 5. The City has a well-established bicycle culture, with five bicycle shops within the community. Based on the factors listed above, a utilization rate of one trip per-bicycle per-day has been identified as a target goal for the Palo Alto bike share program. This goal will give the City a benchmark to measure success of the program. The City will leverage the data provided to make adjustments to hub locations, number of bicycles available, bicycle parking and bicycle facilities to improve ridership in order to reach this goal. The existing bike share program utilization rate is 0.17 trips per bicycle, per day. Staff believes this is due to an inadequate number of bicycles and hubs resulting in a small coverage area with a low hub density. The selected vendor will report to Council semi-annually with an update on system performance and utilization. Table 2. Capital Cost Estimate Item Quantity Price Per Unit Total Smart Bicycle 350 $1,705 $596,750 City of Palo Alto Page 5 Hub (station) 35 $9,515 $333,025 Program Setup, Shipping N/A N/A $91,028 Station Installation Fee 35 $4,000 $140,000 Total Capital Costs: $1,160,803 Fiscal considerations not included in the table above include: 1. Funding of a City staff position (or a portion of) dedicated to monitoring bike share program; 2. Replacement of stolen, vandalized, or damaged equipment as necessary; 3. Minor work such as pavement markings, concrete work, parklets, bollards, etc., which may be necessary or desirable at popular bike share hubs. 4. Operating costs when the system expands beyond 350 bicycles. Vendor/Operator Selection Process The City of Santa Monica went through an extensive, federally compliant, procurement process that included neighboring jurisdictions to select SoBi equipment for a sub-regional bike share system which was approved by the Santa Monica City Council in 2014. Given the comprehensive review process and similar equipment qualities desired in Palo Alto, staff believes that a new procurement process is unnecessary as it would yield identical results. Palo Alto’s municipal code allows for sole source awards in section 2.30.360, Exemptions from competitive solicitation requirements. Electric Bicycles: Staff has also been approached by the manufacturer of a solar-powered electric bicycle and personal mobility device charging system called Swift Mile, based in San Mateo. Electric bicycles show promise to increase bike share use, particularly in peripheral areas of Palo Alto and also where topography is not well-suited to bike share use. However, Swift Mile’s equipment has not been comprehensively tested and may benefit from further testing and development. Staff has been in communication with Swift Mile regarding a potential small scale demonstration project that could connect Stanford Research Park employees to the Caltrain California Avenue Station. SoBi has also been developing a new e-bike option that will be fully compatible with its system and is currently undergoing product testing. Fare Structure: The Motivate fare has been established in the MTC Agreement with Motivate, LLC (Attachment C) and is $9 per day for unlimited 30 minute rides, $22 for a three day pass, and $149 for an annual pass. A $3 out-of-hub fee is charged to users who lock bicycles to bike racks outside of designated hub areas. Hubs are areas where bike share parking occurs, and a geo-fence may be City of Palo Alto Page 6 created around a hub’s perimeter to enable locking to additional bike racks within a hub with no penalty. Users that pick up a bike from an out-of-hub area and return it to a hub location receive a $3 credit to their account. This incentive helps to rebalance the system and reduces the need for motor vehicle use in daily operations. Some cities have elected to designate entire intersections as hub areas, allowing bike share users to lock bicycles at hubs or public bicycle racks without an added fee. Other jurisdictions have designated entire downtown business districts as a hub, eliminating the out of hub fee for that area. Regional Bike Share Interoperability: A Motivate operated bike share expansion would be fully integrated with the regional Bay Area Bike Share system; however, it would not be immediately compatible with the City of San Mateo’s Bay Bikes system. Motivate and SoBi may be able to establish membership reciprocity to enable customers to use both systems until San Mateo joins the regional system. Bay Area Bike Share Program Agreement: The Bay Area Bike Share system is administered by the Metropolitan Transportation Commission (MTC), and operated by Motivate, LLC. A Program Agreement was entered between Bay Area Motivate, LLC and the MTC on December 31, 2015. The City of San Francisco, City of Berkeley, City of Oakland, City of Emeryville, and City of San Jose all have Continuation Agreements that tier off of the overarching master Program Agreement that contain details of each system. Palo Alto currently has a Program Agreement with Motivate for the existing system, which expires on November 31, 2016. Staff will return to City Council in the fall with a clean agreement that contains terms for a SoBi Peninsula system including a “me-too” clause for neighboring communities with similar terms and pricing. The new agreement will be completely separate from the MTC Program Agreement. This will enable the City to enter a five year agreement, with two, three-year extensions in place of the MTC’s ten year existing agreement. The MTC has also suggested that Peninsula communities enter separate agreements due to the complexity of the existing MTC Program Agreement (Attachment D). Policy Implications: Development of an expanded bike share system is consistent with the following Comprehensive Plan and Bicycle + Pedestrian Transportation Plan goals, policies and projects: Comprehensive Plan:  Goal T-1: Less Reliance on Single-Occupant Vehicles  Policy T-3: Support the development and expansion of comprehensive, effective programs to reduce auto use at both local and regional levels. Bicycle + Pedestrian Transportation Plan:  PR-5 Bike Share Program Bike share is consistent with goals outlined in the draft Sustainability and Climate Action Plan (SCAP) and has emerged as an important area of regional collaboration. Bike share was City of Palo Alto Page 7 discussed at recent meetings of the City Manager’s Mobility Partnership (MMP), which includes Stanford University, the City of Menlo Park, the City of Mountain View, the City of Palo Alto, the City of Redwood City and Joint Ventures Silicon Valley. This has successfully aligned positions on bike share and enabled Palo Alto to negotiate with Motivate of behalf of the Peninsula. Resource Impact: Funding is available for the first year in the Fiscal Year 2017 Adopted Capital Budget for the bike share program capital costs, operational costs, and local match to the MTC bike share capital grant in CIP PL-04010, Bicycle + Pedestrian Transportation Plan Implementation. Bike share is in the planned budget for subsequent years, however, if Council chooses to expand beyond the 350 bikes currently recommended in this report, additional operating budget of approximately $420,000 per year will be needed. A one-time local match of $114,820 for the MTC grant would also be needed, as discussed below. The total up front capital costs for a 350-bike, Motivate/SoBi bike share system is $1,160,803 and includes 350 bicycles, hubs (stations), program setup, and other associated costs. This estimate does not include minor costs to replace stolen, vandalized, or damaged equipment; minor work such as pavement markings, concrete work, parklets, bollards, etc., which may be necessary at some bike share hubs, estimated to be less than $60,000. Sufficient funding is available in CIP PL-04010 to cover these costs, as estimated. Operations & Maintenance: Motivate will be providing free operations and maintenance for up to 350 bicycles in Palo Alto. When the bike share system grows beyond 350 bicycles, the City will reimburse Motivate at a rate of $100 per bicycle, per month for operational costs. At the projected buildout of 700 bikes, the City would be responsible for $420,000 in operating costs annually. These operating costs are not included in the FY 2017 Adopted Operating Budget and expansion from 350 to 700 bikes would require a subsequent action by the City Council if desired after the initial phase. Staff Resources: A large, citywide bike share system will likely need 0.5 to 1.0 new full-time employee at a cost of approximately $100,000 to $200,000 per year as the bike share program grows in size. A bike share system operates similar to a public transit system and a staff position would oversee daily operations, system planning, management of the Motivate contract, grant procurement and management, coordination with private entities participating in the system, and reporting to Council on bike share system performance. Grant Funding: Staff has submitted a Letter of Interest to the Metropolitan Transportation Commission (MTC) Capital Bike Share funding requesting $1,001,050 for a second phase of the system to launch in 2018 with up to 350 additional bikes. The MTC Capital Bike Share grant has an 11.47% local match requirement, which would be $114,820. The City has also been awarded $171,429 in City of Palo Alto Page 8 TFCA funds with a local match of $740,000, for use on bike share expansion in Palo Alto. TFCA grant funds can be used to offset the initial capital costs of bike share, and MTC funds can be used to expand the bike share system in phase two of deployment. Following direction from Council on bike share, staff will process the funding agreement to enable the allocation of TFCA funds in anticipation of submitting a purchase order for smart-bikes and station equipment, which has a manufacturing lead time of up to six months. Environmental Review: The proposed bike share project is exempt from the provisions of the California Environmental Quality Act (CEQA) pursuant to CEQA Guidelines Section 15061(b) (3) because it can be seen with certainty that the project will have no significant effect on the environment. In addition, the project is exempt under Section 15303, which provides a specific exemption for the construction and location of limited numbers of new small facilities or structures. The prevalence of bike share in Palo Alto is expected to improve, rather than detract from environmental conditions, offering an alternative to automobile transport for those who are able to make use of the system. The only physical footprint of the project would consist of the assembly of bike hubs, the majority of which will require little or no physical construction. Attachments:  Attachment A - City Manager Report 6324 Mid-Peninsula Bike Share Study Session April 25, 2016 (PDF)  Attachment B - City Council Meeting Transcript April 25, 2016 (PDF)  Attachment C - City of Palo Alto and Motivate, LLC Program Agreement (PDF)  Attachment D - MTC and Motivate, LLC Bay Area Bike Share Agreement (PDF)  Attachment E - New Motivate Term Sheet with SoBi Bikes (PDF)  Attachment F - Social Bicycles Equipment Cost Proposal (PDF)  Attachment G - SoBi Hardware Overview (PDF) City of Palo Alto (ID # 6324) City Council Staff Report Report Type: Study Session Meeting Date: 4/25/2016 City of Palo Alto Page 1 Summary Title: Update on the Mid-Peninsula Bicycle Sharing System Study Title: Receive and Review the Report on the Mid-Peninsula Bicycle Sharing System Study From: City Manager Lead Department: Planning and Community Environment Recommendation Staff recommends that the City Council receive and review the report on the Mid-Peninsula Bicycle Sharing System Study. This is a study session, and no action is requested. Executive Summary Bike Share is a transportation system which provide a fleet of bicycles for use by anyone within the service area for an established time-based price. Typically, bikes must be picked up and returned to fixed docking stations, but some systems contain onboard locking systems allowing users to leave bikes anywhere within the service area. Bike share providers typically price rides to encourage short trips and funtion as a “last mile” solution for transit riders to reach their destinations which may be inconvenient or too far for walking or by local transit. Bike share systems of varying sizes are currently active across the United States and within Palo Alto and the regional Bay Area Bike Share system. The existing Bay Area Bike Share (BABS) program is a fixed-station system with 700 bicycles variably distributed across five cities: San Francisco, Redwood City, Palo Alto, Mountain View, and San Jose. Five stations and 50 bikes are currently located within the City of Palo Alto. The five city pilot program launced in 2013 under an agreement between the Bay Area Air Qauality Management District and local parter agencies to oversee implementation. Since implemetnation, Motivate, the BABS vendor, monitored system performance and in May 2015 entered into an agreement with the Metropolitain Transportation Commission (MTC) to expand the system within San Francisco, Oakland, Berkeley, and San Jose with no public funding. These cities were selected for expansion based on positive correlations between bike share trips and population density, diversity of land uses, and concentration of bike share stations. City of Palo Alto Page 2 Under the terms of this agreement, the remaining Peninsula cities, including Palo Alto may choose to continue, expand and continue, or discontinue participation in Motivate’s Bay Area Bike Share system. Continuing or expanding the current system includes both capital and ongoing costs. Both of which could be completely or partially offset with advertising and/or increased use based on the terms of the agreement. As the end of the initial pilot period drew near, Palo Alto, Redwood City and Mountain View partnered with SamTrans to conduct a study of the various options for bike share in the Peninsula moving forward. A common desire among all cities is to expand the number of bikes available and increase the number of destinations accessible to users of the system to complement transit as an alternative to driving. However, the various alternatives have differing financial and logistal challenges. Background Bay Area Bike Share Program Pilot The existing Bay Area Bike Share (BABS) pilot program is a 70-station/700-bicycle/1,236- dock fixed -station regional bicycle sharing system operating in the cities of San Francisco, Redwood City, Palo Alto, Mountain View, and San Jose in San Francisco, San Mateo, and Santa Clara Counties. The five-city pilot program was established using federal Congestion Mitigation Air Quality and local Transportation Funds for Clean Air resources totalling $4.29 million. The five city pilot program launced in 2013 under the Bay Area Air Quality Management District (BAAQMD) administering the program with an intergovernmental agreement between the Santa Clara Valley Transportation Authority (VTA), San Mateo County Transit (SamTrans), San Mateo County, and the San Francisco Municipal Transportation Agency (SFMTA). The Air District owns the equipment and the intergovernmetnal agreement outlines the decision-making process for decisions affecting the system. One of the primary and unique goals of the pilot system was to provide a “last mile” connection for transit riders arriving and departing from the Caltrain stations within the service area. Despite the many agencies, the system has universal branding, fee structure, and payment system which allows users to access the system in multiple cities with one membership. Since implementation, results of system data analysis reveal BABS’s strongest performing city is San Francisco, followed by Mountain View, San Jose, Palo Alto, and Redwood City. While the urban form of San Francisco is signficantly different than the other cities, evaluation of performance data from the Bay Area Bike Share-Peninsula Communities Strategic Plan show a combination of factors positively correlate with greater bike share trip counts within smaller systems, such as the Peninsula locations, including: number and of bike share stations, service area, and to a lesser degree land use diversity and bike share station concentraion. The table City of Palo Alto Page 3 below shows the breakdown of bikes and use by city. A key performance metrc used to evaluate bike share systems is the number of trips per bike per day. City System Statistics Ridership Trips / Bike / Day Stations Docks Bikes Trips Percent San Francisco 35 665 350 321,108 90.7% 2.51 Redwood City 7 115 70 2,007 0.6% 0.08 Palo Alto 5 75 50 3,093 0.9% 0.17 Mountain View 7 117 70 9,989 2.8% 0.39 San Jose 16 264 160 17,956 5.1% 0.31 Total 70 1,236 700 326,915 100% 1.39 Ridership Statistics for Bay Area Bike Share (September 1, 2014 to August 31, 2015) Source: Bay Area Bike Share-Peninsula Communities Strategic Plan In response to performance data and projections, Motivate, the current BABS operator and the Metropolitain Transportation Commission (MTC) agreed to expand the existing system to 7,000 bikes within San Francisco, Oakland, Berkeley, and San Jose without public funding. As part of this agreement, the Peninsula cities, including Palo Alto, that participated in the pilot program, may continue the bike share program but must pay a monthly premium to retain the current number of bikes and pay capital and operations costs for system expansion. The costs to continue or expand the existing system are included in Attachment A. If the Peninsula cities elect not to continue to participate in Bay Area Bike Share, the pilot will come to an end on June 30, 2016 and Motivate will remove the five existing stations within Palo Alto during the first week of July. The pilot program has already been extended through agreement from December 31, 2015 to June 30, 2016. Motivate has requested official notification from the Peninsula cities by May 31, 2016. Bay Area Bike Share – Peninsula Communities Strategic Plan In October 2015, the Metropolitan Transportation Commission released funding to SamTrans to help Redwood City, Palo Alto, and Mountain View make a decision on how to move forward with bike share after the end of the Bay Area Bike Share pilot on June 30, 2016. This plan, scheduled for completion in May 2016, provides background information including a summary of how the pilot program performed in the Peninsula cities, an overview of travel behaviors to, from, and within the peninsula, an analysis of the ideal system size and form in each community, and a summary of the Motivate pricing proposal and how that compares to the capital and operating costs of other equipment providers and operators. The first three deliverables from the study are attached as Attachments B, C and D. By analyzing successful bike sharing systems in suburban communities similar to Palo Alto, the consultant identified the characteristics of these systems and mapped the high-demand areas within the City of Palo Alto. Based on this geographic modeling, and a qualitative assessment of trip generators, the ideal bike share system size for Palo Alto was estimated to be 35 stations. These stations would be concentrated in the downtown core, California Avenue business district, Stanford Medical Center, and Stanford Research Park, with the remainder dispersed at major attractions and public facilities throughout the city. City of Palo Alto Page 4 City of San Mateo Pilot Bike Share System In November 2015, the San Mateo City Council approved a contract in the amount of $85,000 to purchase 40 Social Bicycles smart bikes for a pilot bicycle share system. The council staff report is included as Attachment E and the purchase contract is included as Attachment F. The council also approved a service contract with Bikes Make Life Better, Inc. to operate and maintain a 50-bike smart bike system for $90,000 per year. This contract is included as Attachment G. San Mateo was approached by an alternative bike share provider, Social Bicycles (SoBi), to implement a 50-bike pilot bike share program within San Mateo. SoBi operates bike share programs within several North American cities, including Long Beach, Phoenix, Santa Monica, San Ramon, Tampa, and Hamilton, Ontario, and is in the process of launching a new system in Portland, Oregon. The City of Santa Monica went through an extensive procurement process to select SoBi, and, based on this, the City of San Mateo staff recommended a sole- source award of the bike share system to SoBi, which was approved by that city council. San Mateo’s municipal code permits this type of sole source award if staff believes that a new request for proposals will not result in a more favorable proposal. On March 7, 2016, staff submitted an application to the Santa Clara Valley Transportation Authority for funding through the Transportation Fund for Clean Air - Program Manager Funds. The City requested $171,429 in capital funds, with the assumption that the City would identify $911,428 in local funding over the five-year project period. This would enable the City to add three new stations and 30 new bicycles to the existing BABS system. It is also assumed that the City would be able to add five additional privately-funded stations. The application is included as Attachment H. Letters of support were received from both the Stanford Medical Center and Stanford Research Park. The letters are included as Attachments I and J. MTC Bike Share Capital Program The Metropolitan Transportation Commission (MTC) set aside up to $4.5 million for a Bike Share Capital Program in Bay Area communities outside of the BABS expansion area at its May 2015 meeting. The Bike Share Capital Program will award grants over two phases, with the timing of the second phase to be determined following Phase 1. The funding is a one-time funding source to help project sponsors with capital purchase and initial implementation costs and will not be an on-going grant program. It will also not fund operations due to constraints on the federal Congestion Mitigation and Air Quality (CMAQ) funds committed to the program. A memo from MTC outlining the draft program guidelines is included as Attachment K. Discussion With the initial BAAQMD pilot program concluding on June 30, 2016, staff has been considering the following options for the city’s bike share system. Under all expansion alternatives, bike share station locations, number of bikes, and costs would be informed by recommendations in the Bay Area Bike Share – Peninsula Communities Strategic Plan. 1. Continue and modestly expand existing BABS system with eight new stations 2. Implement small new smart bike system with ten hubs 3. Continue and agressively expand existing BABS system with 29 new stations City of Palo Alto Page 5 4. Implement large new smart bike system with 35 hubs Under options two and four, the Bay Area Bike Share – Peninsula Communities Strategic Plan assumes the new equipment vendor would be Social Bicycles as a means to limit complications and confusion from introducing a third vendor to the region. Social Bicycles through Bikes Make Life Better, Inc. is the current equipment vendor for the City of San Mateo’s pilot bike share system and other cities could potentially add on to the Bikes Make Life Better/Social Bicycles agreement. Based on data from the Bay Area Bike Share – Peninsula Communities Strategic Plan, system expansion with more bikes and stations within a smaller system in a suburban setting is projected to result in increased performance. Costs Capital and net operating costs were calculated for each of the scenarios and the following table shows a breakdown of capital (including installation) costs, operating costs, estimates of potential user revenues (from membership and overage fees), and net operating costs for each city and for the collective program. Capital and operating costs are generally well-known and are outlined in the table footnotes. User revenues are more difficult to calculate are a combination of annual and casual membership sales and usage fees. Annual and casual membership sales are calculated as the number of annual or casual members (assumed to grow from existing membership levels in proportion to the number of stations in the system) multiplied by the cost of an annual or casual membership ($88 or $9 respectively). Usage fees are calculated first by estimating the number of annual trips from the equations included in Attachment B (and assuming a station density of eight stations per square mile). Trips are then broken down into annual and casual member trips based on existing ratios in each city. Annual member trips are multiplied by the average overage fee recouped per annual member trip for the pilot program of $0.12 per trip. Casual user trips are multiplied by the average overage fee recouped per casual user trip for the pilot program of $8.79 per trip. STATUS QUO OPTION 1 OPTION 2 OPTION 3 OPTION 4 Existing system, current vendor Minor expansion, current vendor (no gap in service) Minor expansion, new vendors Major expansion, current vendor Major expansion, new vendors CAPITAL Motivate Motivate Social Bicycles Motivate Social Bicycles Capital Cost Number of stations $0 $415,000 $400,000 $1,785,000 $1,075,000 Five existing stations, no new stations Five existing stations, one used station from RWC, seven new stations Ten new hubs Five existing stations, 29 new stations 35 new hubs Total Capital Cost $0 $595,000 $885,000 $5,115,000 $3,225,000 OPERATIONS Motivate Motivate New Operator Motivate New Operator Operations (Revenue) Net Cost $335,000 $290,000 $900,000 $735,000 $101,000 ($115,000) ($115,000) ($565,000) ($565,000) $220,000 $175,000 $335,000 $170,000 City of Palo Alto Page 6 Total Five- year Cost to City $505,000 $1,695,000 $1,760,000 $6,790,000 $4,075,000 TFCA Funding (Application Pending) $0 $171,429* $0 $171,429* $0 Regionwide MTC Funding ($4.5M in FY2017) $0 $0 $500,000* $500,000* $500,000* *Funding not secured. City of Palo Alto must compete regionally for these funding programs. Policy Implications Development of an expanded bike share system is consistent with the following Comprehensive Plan and Bicycle + Pedestrian Transportation Plan goals, policies and projects: Comprehensive Plan: Goal T-1: Less Reliance on Single-Occupant Vehicles Policy T-3: Support the development and expansion of comprehensive, effective programs to reduce auto use at both local and regional levels. Bicycle + Pedestrian Transportation Plan:  PR-5 Bike Share Program Environmental Review This is a study action and exempt from review under the California Environmental Quality Act. Attachments:  Attachment A: BABS Motivate Expansion Proposal Term Sheet (PDF)  Attachment B: BABS Toole Peninsula Cities Plan Deliverable 1 (PDF)  Attachment C: BABS Toole Peninsula Cities Plan Deliverable 2 Draft (PDF)  Attachment D: BABS Toole Peninsula Cities Plan Deliverable 3 Draft (PDF)  Attachment E: San Mateo Council Administrative Report (PDF)  Attachment F: San Mateo-SoBi Purchase Contract (PDF)  Attachment G: San Mateo-BMLB Service Agreement (PDF)  Attachment H: Palo Alto TFCA Application (PDF)  Attachment I: Stanford MC TFCA Support Letter (PDF)  Attachment J: Stanford RP TFCA Support Letter (PDF)  Attachment K: MTC Bike Share Capital Memo (PDF) TO: Administration Committee DATE: May 6, 2015 FR: Executive Director RE: Bike Share Expansion Proposal: Motivate International, Inc. Background At your meeting on April 8, 2015, staff presented a bike share expansion proposal from Motivate International, Inc. (Motivate) which, if approved, would provide 7,000 bikes in Berkeley, Emeryville, Oakland, San Francisco, and San Jose by 2017 at no cost to the taxpayer. While the Committee voted to refer the item to the full Commission in May, staff was directed to report back to this Committee on several issues, including funding alternatives for pilot cities on the Peninsula and other potential expansions of the bike share program. During the robust Committee discussion, there was concern expressed about what options may be available to new communities that become interested in bike share in the future. A similar concern was raised by the Bay Area Air Quality Management District’s (BAAQMD) Mobile Source Committee, which voted to support the transfer of the pilot program and assets to MTC with a request that $4.5 million in funding be set aside to expand bike share to emerging communities beyond the five cities included in the Motivate proposal. This Committee also asked for more detail in the following areas: (1) how the proposal would ensure compliance with the American with Disabilities Act; (2) substantiation of the sole source justification; and (3) options and timing for investing the more than $16 million in federal and state funds that would not be needed to expand bike share should the Commission authorize a contract with Motivate. Staff is therefore submitting this report as an informational item for Committee review in advance of consideration of approval to enter into an agreement with Motivate at the May Commission meeting. National and International Comparison on Bike Share Before providing responses to the issue areas, staff wanted to provide some additional helpful context about successful bike sharing in this country and abroad in hopes of putting a finer point on why Motivate chose to focus on five cities. A 2013 study of fourteen U.S. and international bike share systems shows positive correlation between population density and bike share usage. The chart below displays the average trips per bike per day for cities that have fewer than 5,000 people per square mile, between 5,000 and 15,000 people per square mile, and more than 15,000 people per square mile. For comparison, San Francisco has more than 15,000 people per square mile, and the other four proposed cities each have more than 5,000 people per square mile. The average population density for the entire Bay Area is a little more than 1,000 people per square mile. Attachment B Administration Committee Agenda Item 3 May 6, 2015 Page 2 The following chart compares the five pilot cities to other U.S. and international systems in terms of trips per bike per day: Proposal to Continue Bike Share in Pilot Cities In response to Commissioner feedback and subsequent meetings with staff of the pilot cities, Motivate has offered terms regarding pricing, discounts, and sponsorship for Mountain View, Palo Alto, and Redwood City. Please note that the City of San Mateo has decided not to pursue bike share along these terms at this time. San Mateo officials instead requested consideration to redirect some of the $1.3 million in funding capacity that would have gone into bike share in their community to other elements of their bike and pedestrian program. Administration Committee Agenda Item 3 May 6, 2015 Page 3 The three remaining pilot cities would not be required to purchase new equipment, but would instead pay a monthly premium to cover the cost of retrofitting the existing pilot bikes and stations. If a city wants to expand, new equipment is priced to match the pilot program prices, plus 10%. Ongoing operations and maintenance for new equipment would cost $100 per dock per month. The table below shows the proposed costs for these three cities. City Bikes Docks Cost per dock per month Annual cost Mountain View 54 117 $112.50 $158,000 Palo Alto 37 75 $112.50 $101,000 Redwood City 52 117 $112.50 $158,000 Total 143 309 $112.50 $417,000 If these cities reach agreements with Motivate, there are two primary ways to offset or reduce ongoing operating costs. First, cities will be able to offer recognition for local sponsors on one ad panel at each station, which has been shown to cover approximately half of a station’s annual cost. Second, cities would receive discounts for achieving the ridership levels shown below. Therefore, if a pilot city can attract a sponsor and maintain an average ridership of 1.5 trips per bike per day, it is likely that there would be no public funds required to continue the bike share program. Trips per bike per day Discount 1.0 25% 1.5 50% 3.0 100% The cities have requested up to one year to explore sponsorship options as well as continue to refine service locations to see if they can improve system use before making a decision about whether to continue bike share at the costs noted above. Motivate has agreed to operate the current equipment in these cities through December 31 at no cost, and MTC staff proposes to subsidize the cities through June 30, 2016 for approximately $200,000. Cities wishing to continue must notify Motivate by May 31; for cities that decide not to continue by this time, Motivate will plan to relocate the equipment in July 2016. Terms for Other Interested Bay Area Communities Motivate has established similar terms for any Bay Area community that would like to join the system after the 7,000-bike expansion is completed. The capital cost for new bikes is the same as for the pilot cities. For a typical configuration, full capital costs are approximately $5,600/bike, plus $4,000 per new station for installation activities. For example, five stations with 50 bikes would cost approximately $300,000. Ongoing operations and maintenance would cost $130 per dock per month, or just over $150,000 annually in the five station example. The discount levels described above are available for all Bay Area cities based on ridership, and all cities will be able to capitalize on local sponsorship. In addition, and as described more below under funding, staff is proposing to set aside $4.5 million in funding for capital expenses associated with emerging Administration Committee Agenda Item 3 May 6, 2015 Page 4 communities interested in bike share. This would follow the installation of the 7,000-bike proposed expansion and would be conditioned on communities covering the ongoing annual operating costs through local funds, sponsorship, ridership discounts, or a combination thereof. Compliance with the Americans with Disability Act (ADA) The term sheet has been revised to reflect how Motivate will comply with ADA requirements, including for both physical components of the system and the system website. The website and mobile app will utilize adaptive design and will be accessible and usable on desktop computers, tablets, and mobile devices. Ecommerce functionality will comply with Section 508 of the Rehabilitation Act of 1973. Station positioning protocol and individual station components will also comply with ADA requirements. Sole Source Substantiation To expand on the April discussion of the compelling business reasons for entering into a sole source with Motivate, staff is quantifying the monetary savings for the Bay Area of this approach in the table below, which assumes 80% farebox recovery and no advertising or sponsorship revenue. Bike Share Cost Element Estimated Annual Expenses 10-Year Value (2015 dollars, 3% discount rate) Capital cost for 6,300 expansion bikes / roughly 630 station sites - $37.6 million Annual operating and maintenance Cost above 80% farebox recovery $3.2 million $21.4 million Staff oversight, marketing and contract management $1.0 million $6.7 million Total $4.2 million $65.7 million In addition to the approximately $65 million value of the sole source contract for no public investment over the 10 year time period, the Motivate proposal also offers the opportunity to launch the robust 7,000 bike system quickly within 2.5 years, thereby attracting stronger usage earlier, in line with the Bay Area’s aggressive greenhouse gas reduction targets. A pay-as-you go model at the level of investment to-date would likely require five or more years to complete. Funding As described at the April Administration Committee meeting, fully private funding means that public funds originally intended for bikes and stations can instead be reprogrammed. The $19.1 million that the Commission approved from 2012 to 2014 for the pilot and the continuation and expansion of Bay Area Bike Share includes both federal Congestion Mitigation and Air Quality Improvement (CMAQ) and state Active Transportation Program (ATP) funds as summarized in the table below. Administration Committee Agenda Item 3 May 6, 2015 Page 5 Program Fund Source Unreimbursed Amount ($ in millions) STP/CMAQ Cycle 1: Pilot CMAQ $2.7 STP/CMAQ Cycle 1: Expansion CMAQ $2.7 STP/CMAQ Cycle 2 (OBAG): Expansion CMAQ $6.0 Regional ATP Cycle 1: Expansion ATP $7.7 Total $19.1 The ATP funds have strict timely use of funds as well as competitive process selection requirements. Therefore, to avoid loss of those funds and in line with the last month’s discussion at the Programming and Allocations Committee meeting, staff recommends that $7.7 million be allocated to ready-to-go contingency ATP projects. Additional detail is included in agenda item 4a on today’s Programming and Allocations Committee agenda. Staff further recommends directing $4.5 million to address the concerns raised by several Commissioners as well as the BAAQMD Mobile Source Committee members (this may require a funding exchange given the sole source nature of the agreement with Motivate and federal rules). These funds would be set-aside for capital costs associated with bike share expansion in emerging communities. Staff would conduct a call for projects to solicit interest from communities in a timeframe to allow expansion to begin following installation of the 7,000-bike expansion. This funding level would support acquisition of an additional 750 bikes, roughly the size of the current pilot, in emerging communities. In addition, staff is recommending that $0.5 million in CMAQ be provided to the city of San Mateo to advance its bicycle and pedestrian program. Staff is proposing that the remaining $6.4 million be subject to the broader discussion of priorities for OBAG2 as the Commission considers a draft framework next month at the Programming and Allocations Committee meeting. Other Clarifications Further, based on questions by Commissioners and city staff, the term sheet has been revised to clarify the following areas:  Exclusivity: Motivate has clarified the terms attached to this report to show that the proposed exclusivity provision only applies to public right-of-way in Berkeley, Emeryville, Oakland, San Francisco, and San Jose. Moreover, the exclusivity provision does not apply to an existing pilot electric bike share program, facilitated by City CarShare and planned for Berkeley and San Francisco. The approximately 90 electric bikes at 25 planned stations will be available only to members of City CarShare.  System Size: Motivate has agreed to maintain a 2:1 dock-to-bicycle ratio in Mountain View, Palo Alto, and Redwood City during the extended grace period and continuing forward if those cities decide to continue with their current systems. Under current station configurations, a 2:1 ratio represents 155 bikes across these three cities. This adds 55 bikes to the original proposal for a total of up to 7,055 bikes across eight cities. If fewer than all three Attachment A Page 1 Attachment A Motivate-MTC Proposed Term Sheet This term sheet is intended to be used to facilitate discussions between the Metropolitan Transportation Commission (“MTC”) and Motivate International Inc. (“Motivate”) in order to develop a contract for the acquisition, launch and operation of a bike share system in the Bay Area. Contract Topic Contract Terms Equipment Ownership If required by the FHWA, Motivate will be obligated to purchase the equipment initially acquired with federal funds according to the terms of the FHWA agreement. As currently outlined in the FHWA agreement, any item with a current per-unit FMV of less than $5,000 will be transferred to Motivate at no cost. For items with a current per-unit FMV of more than $5,000, the purchase price will be based on the share of federal funding for the project multiplied by the equipment’s FMV, as established by past sales of comparable equipment. System Size 7,000-7,055 bikes total  4,500 in SF  1,000 in San Jose  1,400 in East Bay (850 in Oakland, 100 in Emeryville, 400 in Berkeley, 50 TBD based on additional system planning analysis)  Between 100 and 155 to be determined: - If Mountain View, Palo Alto, and Redwood City all decide to agree with Motivate and continue bike share, Motivate will provide 155 bikes among the three cities. - If one or two of the three pilot cities listed above decide to continue bike share, Motivate will provide enough bikes to maintain a 2:1 dock to bike ratio with the docks currently stationed in each city. If this is less than 100 bikes, Motivate will deliver enough bikes to another city to reach a program total of at least 7,000. - If none of the three pilot cities listed above decides to continue bike share, 100 bikes to be determined among SF, San Jose, and the East Bay. Launch Dates Sites representing 25% of the total bikes for San Jose, East Bay and San Francisco should be approved and permitted by December 30, 2015. Motivate will install these bikes by June 1, 2016. Attachment A Page 2 Contract Topic Contract Terms Launch Dates (continued) Sites representing an additional 15% of bikes for San Jose, East Bay and SF should be approved and permitted by April 30, 2016. Motivate will install these bikes by October 1, 2016. Sites representing the remaining 60% of bikes for the East Bay should be approved and permitted by July 30, 2016. Motivate will install these bikes by January 1, 2017. Sites representing an additional 30% of bikes for San Jose and SF should be approved and permitted by November 30, 2016. Motivate will install these bikes by April 1, 2017. Sites for the remaining bikes in San Jose and SF should be approved and permitted by May 31, 2017. The remainder of bikes shall be installed no later than November1, 2017. Delays in receiving permitted and approved sites by specified dates will result in extension of the installation dates in an amount equal to the delay. The above dates are based on completion of the contract with the MTC by July 31, 2015. If Motivate is negotiating in good faith and the contract signing occurs after July 31, 2015, the above dates will be extended by a duration equal to the difference between the contract signing date and July 31, 2015. Term 10 year term, reduced to 5 years if Motivate does not achieve the aggregate bike target numbers described above (includes provisions for force majeure and siting issues) or if Motivate is in persistent and material breach of its contractual obligations as of the time renewal is considered in the fourth year. The contract may be extended for two additional five-year terms upon mutual agreement of the MTC and Motivate. If Motivate is in substantial compliance with the terms of the contract, MTC will engage in good faith negotiations to renew the contract on substantially equivalent terms one year prior to the expiration of the current term. MTC will provide notification of non-renewal no later than six months prior to the end of the term. If neither party provides no notice of non-renewal by six months, the contract should be extended for five years on the same terms. Attachment A Page 3 Contract Topic Contract Terms Exclusivity During the Term of this Agreement, Motivate shall have the exclusive right to operate a bike sharing program that utilizes public property and public right of way anywhere within San Francisco, Berkeley, Oakland, San Jose and Emeryville. The exclusivity provision does not apply to an existing pilot electric bike share program, facilitated by City CarShare and planned for Berkeley and San Francisco. The approximately 90 electric bikes at 25 planned stations will be available only to members of City CarShare. System Buy-In San Jose, San Francisco, Berkeley, Emeryville, and Oakland may contribute public funding for additional bikes and stations that are interoperable with the existing system. Costs to cities for purchasing, installing and operating the equipment is as follows:  Capital Equipment: Aggregate pricing for bike share solution as specified in the Air District contract + 10%. Adjusted annually by the producer price index.    Installation: $4,000 per station, including site planning and drawings, growing at CPI.   Operations and maintenance of the equipment: $100 per dock per month, growing at CPI   Motivate is obligated to maintain equipment purchased by the cities in a state-of-good repair throughout the term. At the end of the term, Motivate shall return the equipment to the city in good working order acknowledging that there is expected to be normal wear and tear from use.   San Mateo and existing pilot cities other than San Francisco and San Jose that want to continue and/or expand existing system operations after the expiration of the BAAQMD contract can develop a new service agreement with Motivate using their own sources of funds. Costs to cities for purchasing, installing and operating the equipment is as follows:  Existing equipment upgrade cost: $12.50 per dock per month, growing at PPI.    New capital equipment: Aggregate pricing for bike share solution as specified in the Air District contract + 10%. Adjusted annually by the producer price index.   Installation of new equipment: $4,000 per station, including site planning and drawings, growing at CPI  Operations and maintenance of the equipment: $100 per dock per month, growing at CPI. Attachment A Page 4 Contract Topic Contract Terms System Buy-In (continued) - Price is reduced to $75 per dock, adjusted by CPI, if an average of 1 ride per bike per day citywide occurs for a 12 month period - Price is reduced to $50 per dock, adjusted by CPI, if an average of 1.5 rides per bike per day citywide occurs for a 12 month period - Price is reduced to $0 per dock, adjusted by CPI, if an average of 3 rides per bike per day citywide occurs for a 12 month period  Motivate is obligated to maintain equipment purchased by the cities in a state-of-good repair throughout the term. At the end of the term, Motivate shall return the equipment to the city in good working order, acknowledging that there is expected to be normal wear and tear from use.  Cities are able to raise sponsorship to offset the costs of purchasing and operating the bike share system in their locality. Local sponsorship packages may include recognition of the sponsor on one side of one ad panel on the station. System naming rights, bike branding, and other branding of physical assets will be determined by Motivate in conjunction with title sponsor and in compliance with local advertising regulations. Local sponsors cannot be in the same category as the title sponsor, unless approved by Motivate.   Motivate will operate the current configurations of stations and docks, following the  expiration of the BAAQMD contract, with enough bikes to provide a 2:1 ratio of bikes to docks, at no cost until December 31, 2015.   MTC will pay $100 per dock per month to Motivate from January 1, 2016 through June 30, 2016 to maintain operations in the pilot cities.   Cities must decide whether or not to continue and/or expand bike share by May 31, 2016. Motivate will begin relocating equipment in cities that decide not to continue in July 2016.  Subsequent to deployment of 7,000 bikes within San Francisco, San Jose, Oakland, Berkeley and Emeryville, other cities in the MTC region that want to participate in the regional bike share system can develop a service agreement with Motivate using their own sources of funds. Costs to cities for purchasing, installing and operating the equipment is as follows: Attachment A Page 5 Contract Topic Contract Terms System Buy-In (continued)  New capital Equipment: Aggregate pricing for bike share solution as specified in the Air District contract + 10%. Adjusted annually by the producer price index.  Installation: $4,000 per station, including site planning and drawings, growing at CPI  Operations and maintenance of the equipment: $130 per dock per month, growing at CPI. - Price is reduced to $97.50 per dock, adjusted by CPI, if an average of 1 ride per bike per day citywide occurs for a 12 month period - Price is reduced to $65 per dock, adjusted by CPI, if an average of 1.5 rides per bike per day citywide occurs for a 12 month period - Price is reduced to $0 per dock, adjusted by CPI, if an average of 3 rides per bike per day citywide occurs for a 12 month period  Motivate is obligated to maintain equipment purchased by the cities in a state-of-good repair throughout the term. At the end of the term, Motivate shall return the equipment to the city in good working order, acknowledging that there is expected to be normal wear and tear from use.  Cities are able to raise sponsorship to offset the costs of purchasing and operating the bike share system in their locality. Local sponsorship packages may include recognition of the sponsor on one side of one ad panel on the station. System naming rights, bike branding, and other branding of physical assets will be determined by Motivate in conjunction with title sponsor and in compliance with local advertising regulations. Local sponsors cannot be in the same category as the title sponsor, unless approved by Motivate.  In addition, Motivate has the right to contract with private entities that want to provide funding for stations and bikes that are situated on privately-owned property. Pricing $149 annual pass that can be increased no more than CPI + 2% annually. Annual pass can be paid in 12-monthly installments of no more than $15.00 All other pricing can be set at Motivate’s discretion. Motivate will offer a discounted pass set at 40% of the annual price. The discount will be available to customers who are eligible and enrolled in Bay Area utility lifeline programs. If participation Attachment A Page 6 Contract Topic Contract Terms Pricing (continued) in the discounted program is below expectations, Motivate and MTC may mutually agree on other eligibility criteria so long as the eligibility is determined by a third-party. Revenue Share User Revenue: 5% of user revenue above $18,000,000 earned by Motivate (in accordance with GAAP) in any year will be paid to MTC. Amounts owed will be paid within 120 days of the end of the calendar year. Sponsorship Revenue: 5% of sponsorship revenue in excess of $7,000,000 earned by Motivate (in accordance with GAAP) in any year will be paid to MTC. Amounts owed under the sponsorship revenue share agreement in years 1-5 will be deferred and paid in equal installments in years 6-10. For years 6-10, amounts owed under the sponsorship revenue share agreement will be paid within 120 days of the end of the calendar year. The revenue share hurdle will be adjusted for CPI starting in year 2. Brand Development and Sponsorship Motivate is responsible for identifying sponsors and developing system name, color, logo and placement of system assets. MTC, in consultation with the cities, will have approval rights over title sponsorship and branding. Motivate will abide by cities’ existing guidelines and restrictions with regards to outdoor advertising. Motivate will not choose sponsors that are in age-restricted categories (alcohol, tobacco or firearms), products banned by the local government, or deemed offensive to the general public. Rejection of proposed sponsors by municipalities are limited to the grounds above. Advertising Motivate will have the right to sell advertising on physical and digital assets. Advertising on physical assets are subject to local restrictions on outdoor advertising. Siting Motivate to develop site locations, which will be prioritized based on demand. Motivate will also use city analyses and recommendations already developed where possible. If a city does not approve a proposed site location, they must provide an alternative within one-block. Motivate to provide a 20% minimum placement in communities of concern system-wide. Participating cities may designate other areas for 20% minimum placement instead of communities of concern. Attachment A Page 7 Contract Topic Contract Terms Siting (continued) Motivate will work together with cities on community engagement and outreach as part of the station siting process, including necessary business associations and city meetings. Motivate can relocate or resize underperforming stations while maintaining minimum placements in communities of concern. Motivate will hire planning and engineering firms to minimize the cities’ costs and resources related to planning. Motivate will discuss staff time requirements with each city and determine ways to reduce demands on staff. If staff time exceeds estimates due to errors or omissions or by Motivate or its contractors, Motivate will reimburse cities for reasonable and documented direct staff time related to these issues. Cities to provide estimates on costs of permits within seven days of signing term sheet. If costs of permits are significant, Motivate will seek a waiver on permit costs given the public benefits of the project. If Motivate and Cities cannot reach agreement on a waiver, Motivate may consider reimbursing actual direct costs incurred by the city to provide the permit (e.g, a field visit by an inspector). Security Fund Motivate will provide $250,000 into a Security Fund account controlled by MTC prior to the installation of the first new station. The Security Fund shall serve as security for the faithful performance by Motivate of all obligations under the contract. MTC may make withdrawals from the Security Fund of such amounts as necessary to satisfy (to the degree possible) Motivate’s obligations under this Agreement that are not otherwise satisfied and to reimburse the MTC or cities for costs, losses or damages incurred as the result of Motivate’s failure to satisfy its obligations. MTC shall not make any withdrawals by reason of any breach for which Motivate has not been given notice and an opportunity to cure in accordance with the Agreement. If funds are withdrawn from the Security Fund, Motivate will be required to replenish the Security Fund to an amount equal to $250,000 on a quarterly basis. Interest in account accrues to Motivate. 90 days after the end of the term, any remaining funds will be returned to Motivate. Attachment A Page 8 Contract Topic Contract Terms Liability Motivate shall defend, indemnify and hold MTC and its officers and employees harmless, to the fullest extent permitted by law, etc. Similar indemnities for cities. Default Termination and default clauses include the option to require Motivate to remove equipment, assign or transfer equipment and IP to a third party. IP assignment is limited to the extent needed for a third-party to maintain and operate the system. Data All data owned by Motivate. Cities granted a non-exclusive, royalty free, perpetual license to use all non-personal data. Monthly Reports shall be provided for each of the above KPIs and other system data, to be determined. Responsibilities of Motivate Brand development, station siting, design, permitting, purchase of equipment and software, installation of bikes and stations, station relocation, equipment replacement, bike share safety training, monthly operating meetings with MTC and cities, marketing, sales and sponsorship, operations and maintenance of system including customer service. Station relocation by public agencies will require reimbursement of costs incurred by Motivate. However, if a newly installed station is found to be unsuitable by a city for its location, the city may request within 30 days of installation the relocation of a station at Motivate’s cost. The number of available free station moves is equal to 10% of the installed station base less any prior moves. For example, if a city has 100 stations installed, they have a total of 10 free station moves less any free station moves used to date. If the system grows to 200 stations, they then have 20 station moves less any station moves used to date. Site Design and Planning Motivate will hire a planning and engineering firm with experience in the specific locality to do surveying, site design and permit submission. Motivate will solicit input from each city to help determine its planning and engineering partners. Motivate will hire a community relations firm to assist with organizing and hosting community meetings and to conduct outreach to local residents and businesses. Motivate will use commercially reasonable efforts to subcontract the work to DBEs where possible. Each municipality should provide a point of contact to coordinate the community engagement efforts and the permitting process. Attachment A Page 9 Contract Topic Contract Terms Marketing MTC, in consultation with the cities, has final approval of marketing plans and activities. MTC, in consultation with the cities has approval over marketing and outreach plans for low-income communities, non-native English speaking populations, and disadvantaged communities. Motivate must do outreach and marketing in Spanish, Chinese and Vietnamese. MTC retains the ability to conduct outreach and program support in low-income and Limited English Proficiency neighborhoods. Motivate’s other marketing activities must comply with MTC and local standards for decency and not offend the general public. Motivate will not advertise or promote any products in prohibited categories (tobacco, alcohol, etc.). Parking Meter Revenue Motivate must make best effort to avoid taking metered parking spaces. If a city requires reimbursement of lost parking meter revenue for a given site, the city must also provide an alternative site location within one city block that is not sited in metered parking areas. Motivate can choose to locate in either site. KPIs Key Performance Indicators: 1. Rebalancing: no station will remain full or empty for more than 3 consecutive hours between 6AM and 10PM. 2. Bicycle Availability: the number of bikes available for rent on an average, monthly basis shall be at least 90% of all bikes in service. 3. Station Deactivation, Removal, Relocation, and Reinstallation: as notified by MTC, perform the necessary action within the number of days in the established schedule for each task. 4. Station/Bike Maintenance, Inspection & Cleaning: check each bike and station at least once per month and resolve each issue within a given time frame. 5. Program, Website, and Call Center Functionality: the system, website, and call center shall each be operational and responsive 24/7, 365 days a year. Liquidated damages related to KPIs may not exceed 4% of annual user revenue for the year. Attachment A Page 10 Contract Topic Contract Terms Transition of Project from Bay Air Quality Management District (BAAQMD) to MTC Subject to Air District Board approval, BAAQMD, MTC and Motivate will cooperatively develop a plan to effectuate the transfer of the project from the BAAQMD to MTC. The plan will provide for the implementation of new pricing, the continuation of existing memberships, the transfer of system data, the transfer of assets, and any other provision to ensure a seamless transfer and provide Motivate with the ability to operate the system under the MTC contract. Resolution of Terms with BAAQMD Resolution includes:  Motivate will settle all outstanding claims with the Air District for the amount of $150,000.  Air District agrees to release funds withheld for billed expenses and to pay all legitimate past and documented unbilled expenses totaling $582,872 less the $150,000 settlement amount.  On a go-forward basis, Motivate will be paid for all eligible reimbursable costs per month to the maximum amount of one twelfth of the Annual Operations Fee, or $136,638.67 per month. Cost caps within categories will not be relevant.   This agreement will resolve prior SLA claims and any other prior potential claims that could be asserted through the date of Settlement  Americans with Disability Act (ADA) Provisions In implementing and operating the bicycle sharing system, Motivate shall comply with all applicable requirements of the Americans with Disabilities Act, Section 508 of the Rehabilitation Act of 1973, and all other applicable federal, state and local requirements relating to accessibility for persons with disabilities, including any rules or regulations promulgated thereunder. Such compliance shall extend to the location and design of system equipment and related facilities as well as the system website and any mobile application for the system. April 24, 2015 Hon. Dave Cortese Chair and MTC Commissioner Representing Santa Clara County President, Santa Clara County Board of Supervisors 70 West Hedding Street Tenth Floor – East Wing San Jose, CA 95110 RE: Bay Area Bike Share Expansion Proposal: Motivate International, Inc. Dear Mr. Cortese: On April 2, 2015 the City of Redwood City (City) learned that the Metropolitan Transportation Commission’s Administration Committee planned to discuss, at its April 8 meeting, a proposal received from Motivate International, Inc. The proposal outlines Motivate’s recommendation to expand the existing Bay Area Bike Share pilot system from 700 bicycles to 7,000 bicycles using no public funds. Per the proposal, the current bike share pilot project cities of Redwood City, Palo Alto, and Mountain View are excluded, but may “buy-in” at their own cost. Redwood City and the cities between San Francisco and San Jose form critical links in the Bay Area’s transportation networks, including the Bay Area Bike Share system. This is particularly true for Peninsula cities along the Caltrain line, including the bike share pilot cities of Redwood City, Palo Alto, and Mountain View. As with any transportation system, it’s important to provide access and connections at both the beginning and end of the user’s trip (first and last mile). Up and down the Peninsula, Redwood City and our neighbors to our north and south are bringing significant transit-oriented developments to our city centers, collectively enabling thousands of new residents and employees to connect to local and regional transit. For example, an additional 1,635 apartments are being constructed within a half mile of Redwood City’s Caltrain station. One third of these units are completed, with the balance to be finished and occupied within one year. Additionally, Box, Inc. is moving its corporate headquarters to Redwood City. The new office, currently under construction and adjacent to Redwood City’s Caltrain station, will bring an additional 1,200 employees to downtown Redwood City later this year. The timing of the Bay Area Bike Share pilot was a bit early for Redwood City given our downtown development timeline, but nonetheless the City joined the team and dedicated significant staff time to all phases of the pilot program, including planning, design, development, launch, and ongoing operations. Throughout the 5-year pilot process our staff contributed input, ideas, and feedback to City Hall 1017 Middlefield Road Redwood City, CA 94063 Voice (650) 780-7220 Fax (650) 261-9102 mail@redwoodcity.org www.redwoodcity.org Mayor Jeff Gee Vice Mayor Rosanne Foust Council Members Alicia Aguirre Ian Bain Diane Howard Barbara Pierce John Seybert support the program and help ensure its success, laying the groundwork for other cities to join the post-pilot expansion throughout the Bay Area. Given Redwood City’s considerable investment of resources, and in light of our downtown development schedule (new construction to be completed in early 2016), we ask to remain a bike share partner for one year beyond the end of the pilot program, at no “buy-in” cost to Redwood City. This one-year period is needed to evaluate the options and considerations for moving ahead with the sole-source agreement proposed by Motivate. Given Motivate’s post-pilot target launch date of June 2016 (initial expansion), this should not impact or overlap with the expansion. The proposal being considered is a non-solicited sole-source (non-competitive) proposal received from the current operator of the bike share pilot program. Many challenges, problems, and delays were encountered throughout the design, development, launch, and operation phases of the pilot program. Therefore, we additionally recommend and request that MTC staff coordinate with the pilot partners and the Bay Area Air Quality Management District to ensure that the contract terms build from lessons learned during the pilot program, in order to: • Protect the public interest and investment in the program to date • Identify and address operational shortcomings experienced during the pilot • Outline alternatives for cities who choose to buy into the system, e.g. allow those cities to use sponsor revenue to subsidize local costs We appreciate your attention to this matter and thank you in advance. Sincerely, Jeffrey Gee, Mayor City of Redwood City C: City Council, Redwood City Bob Bell, City Manager MTC Commissioners Steve Heminger, Executive Director, MTC COMMUNITY DEVELOPMENT DEPARTMENT ENGINEERING & TRANSPORTATION 1017 Middlefield Road P.O. Box 391 Redwood City, CA 94064 Telephone: 650.780.7380 Facsimile: 650.780.7309 www.redwoodcity.org April 7, 2015 Steve Heminger (transmitted via email) Metropolitan Transportation Commission 101 Eighth Street Oakland, CA 94607 Subject: MTC Administration Committee Agenda Item 4: Bike Share Expansion Proposal: Motivate International, Inc. Dear Mr. Heminger, Motivate’s proposal to expand bike sharing could be an extraordinary opportunity to establish bike share as a meaningful transit system for the Bay Area. We share MTC’s enthusiasm and support moving ahead with negotiations to expand the regional bike share program. Because we only learned of Motivate’s proposal on April 2, 2015, we are unable to provide detailed input at this time. However, we encourage MTC to address the following points as you refine your term sheet and negotiate a contract with Motivate:  Identify how the key performance indicators and contract terms reflect lessons learned during the pilot program. The staff report includes information on the system costs and number of trips taken, but it does not provide background on the performance of Motivate, previously Alta Bicycle Share, in terms of delivering the service.  Clarify what it means for Motivate to be the ‘exclusive supplier and operator of bike share in the Bay Area.’ Smaller communities, corporate campuses, universities or similar entities may find the cost to buy into this system to be cost-prohibitive, requiring them to pursue a different system within their jurisdictions.  Determine how the current pilot cities (those not selected for the expansion program) can preserve their public investment in the pilot.  Identify the cost and process for the current pilot cities to buy into the system, keeping in mind: o A considerable investment of staff resources have gone into designing, developing, launching, and operating the pilot program and siting existing stations. o Non-expansion, pilot cities wanting to continue service would have the existing equipment sold to Motivate, only to have to pay to have the equipment put back. o Smaller communities’ ability to subsidize capital and/or operating costs could be compromised if Motivate has exclusive rights to sell advertising and is entitled to all sponsorship revenue. o The cost to provide service and the revenues associated with it will depend on usage.  Identify the process by which Bay Area Bike Share members who live or use the system in Redwood City would be notified of its departure and when the system would be removed. Although the current bike share system in Redwood City has not been used as extensively as we would have liked, it is important that our ability to participate in the system is preserved. Similarly, all Bay Area communities should be able to reap the benefits of bike sharing, where and when it may be appropriate – and the contract terms should reflect this. Thank you for your consideration and I look forward to continued communication with your staff to ensure that we leverage our experience in the bike share pilot project to get the best possible bike share system for the Bay Area. Sincerely, Jessica Manzi, PE Senior Transportation Coordinator cc: Administrative Committee members Dr. Robert B. Bell, City Manager - Redwood City Jeff Gee, Mayor - Redwood City Alicia Aguirre, Redwood City Councilmember & MTC Commissioner         MEMORANDUM    This memorandum is the first of a series of memoranda to help Redwood City, Palo Alto, and Mountain  View (referred to as “the peninsula cities”) make their decision on how to move forward with bike share.  It provides background information including a summary of how the pilot program performed in the  peninsula cities, an overview of travel behaviors to, from, and within the peninsula, an analysis of the  ideal system size and form in each community, and a summary of the Motivate pricing proposal and how  that compares to the capital and operating costs of other equipment providers and operators.   1. Program Background The existing Bay Area Bike Share (BABS) pilot program is a 70 station / 700 bicycle / 1,236 dock bike  share system operating in the cities of San Francisco, Redwood City, Palo Alto, Mountain View, and San  Jose in San Francisco, San Mateo, and Santa Clara Counties.   The pilot program was established using federal Congestion Mitigation Air Quality (CMAQ) and local  Transportation Funds for Clean Air (TFCA) funds administered by the Bay Area Air Quality Management  District (BAAQMD – “the Air District”). The Air District programmed $4.29 million that was used to  administer bike share through an Intergovernmental Agreement (IGA) entered into with the San  Francisco Municipal Transportation Agency (SFMTA), San Mateo County Transit (SamTrans), Redwood  City, San Mateo County, and Santa Clara Valley Transportation Authority (VTA). The Air District owns the  equipment and is the administrator and fiscal agent of the system and executes agreements with  vendors to carry out the program. The IGA outlines the decision making process for decisions affecting  Project: Bay Area Bike Share – Peninsula Communities Strategic Plan  Subject: Deliverable 1 – Summary of Pilot Program and Option 1: Buying into the  Motivate Program  Date: December 28, 2015  To: Melissa Reggiardo, SamTrans  From: Sean Co and Adrian Witte, TDG  CC: Peninsula Bike Share Working Group      Bay Area Bike Share  Page | 2  Peninsula Cities Analysis    the system. For issues that are not decided through consensus, each voting member gets one vote with  the Air District retaining the authority to veto a decision as the ultimate provider of the system.  Currently not all IGA partners are voting members with SamTrans acting as the voting member for  Redwood City and the San Mateo County partners collectively.  Equipment and operations were procured through a single RFP process. Alta Bicycle Share was selected  as the operator of the system with a one‐year initial contract term plus four one‐year optional renewal  terms. As part of that contract, equipment was provided by the Public Bike Share Company (PBSC),  including the station hardware (i.e., technical platforms, docking points, kiosks, etc.), bikes, and the  software back‐end (that utilizes the vendor’s own software platform).  Motivate has purchased Alta Bicycle Share and now operates the program and provides equipment  through its own supply chain. Under the initial contract, which now applies to Motivate, the operator is  expected to meet certain performance standards and payment is based on actual expenses incurred up  to a maximum fee established in the contract plus a management fee of 10‐percent of the sum of labor  and direct costs. A new contract is being negotiated between MTC and Motivate for the new expanded  system moving forward.  2. Commuter Behavior The following section provides an overview of commuter flows and mode splits to provide background  on existing travel patterns to, from, and within the peninsula cities.   Intercounty and Intercity Commute Flows   A review of intercounty commute flows obtained from the American Community Survey demonstrates  how residents move between counties on the peninsula (see Table 1). Based on data from 2009 to 2013,  San Mateo County residents (which includes Daly City, South San Francisco, San Mateo, and Redwood  City) have the highest intercounty commute rates with approximately 79,000 (or 23% of San Mateo  County workers) commuting north to San Francisco and approximately 53,000 (15% of San Mateo  County workers) commuting south to Santa Clara County (which includes Palo Alto, Mountain View, and  San Jose). Conversely, San Mateo County sees approximately 45,000 commuters come into the county  from both San Francisco and Santa Clara Counties. Fewer commuters make the longer distance trip  between San Francisco and Santa Clara counties with approximately 11,000 commuters travelling north  from Santa Clara County to San Francisco and 22,000 commuting in the opposite direction.   Table 1 County‐to‐County Commute Flows   San Francisco County San Mateo County Santa Clara County  San Francisco County 340,735 45,216 22,423  San Mateo County 78,720 211,700 52,988  Santa Clara County 11,245 43,128 732,765        Bay Area Bike Share  Page | 3  Peninsula Cities Analysis    Intercity commute flows are calculated in the U.S. Census Bureau’s American Community Survey and are  expressed as the flow of workers aged over 16 between each of the six cities shown in Table 2. Not  surprisingly, a high proportion of people live and work in the same city, though there are significant  intercity commute flows including some cross‐peninsula movement to access employment.   Table 2 shows that the percentage of workers commuting to San Francisco drops off as the distance  increases. The peninsula cities have commuting levels between 2 and 6 percent of workers travelling to  and from San Francisco.   The most significant cross‐peninsula flows are:    16 percent of Mountain View residents work in Palo Alto   9 percent of Redwood City residents work in Palo Alto    6 percent of Palo Alto residents work in Mountain View   6 percent of Redwood City residents work in San Mateo and vice versa   5 percent of Palo Alto residents work in Redwood City  Table 2 Intercity Commute Flows as a Percentage of Total Working Population Over Age 16 (2010)1  RE S I D E N C E      WORKPLACE  San  Francisco   South San  Francisco  City   San Mateo  Redwood  Palo Alto* Mountain  View  San Francisco 76% 2% 1% 1% 1% 1%  South San Francisco 33% 24% 4% 2% 1% < 1%  San Mateo 13% 5% 29% 6% 4% 2%  Redwood City 6% 3% 6% 28% 9% 3%  Palo Alto* 4% 1% 2% 5% 35% 6%  Mountain View 2% 1% 1% 3% 16% 27%  *Includes East Palo Alto  Commuter Mode Split  While driving alone is the most common mode of travel to work, residents of the peninsula cities also  use public transportation, walk, bike, and telecommute (see Table 3). Amongst the cities studied, Palo  Alto has the highest bicycle commute rate at 9 percent, followed by Mountain View with 6 percent,  whereas Redwood City’s bicycle commute rate is 2 percent.2 For the peninsula cities, transit ridership is  highest in Palo Alto and Mountain View at 6 percent with Redwood City recording 4 percent.                                                                1 U.S. Census Bureau, American Community Survey 2006‐2010. Five‐year estimates. Special Tabulation: Census  Transportation Planning. Measures: workers 16 and over, weighted by 2010 working populations per city.   2 2010‐2014 American Community Survey 5‐Year Estimates. Commuting Characteristics by Sex, Accessed Dec. 3,  2015.      Bay Area Bike Share  Page | 4  Peninsula Cities Analysis    Table 3 Commute Trips by Mode by City3    San  Francisco  South San  Francisco  San  Mateo  Redwood  City  Palo  Alto  East Palo  Alto  Mountain  View  Workers 16 years and over  (total)  456,670 32,566 52,404 40,375 31,113 12,978 42,147  Car, truck, or van 44% 82% 82% 84% 72% 85% 81%  Public transportation  33% 11% 8% 4% 6% 4% 6%  Walk 10% 3% 3% 3% 5% 3% 3%  Bicycle 4% 1% 2% 2% 9% 3% 6%  Taxicab, motorcycle, or other  means 4% 1% 2% 2% 9% 3% 6%  Work at home 7% 3% 4% 6% 8% 2% 4%  Transit Access  According to the Caltrain 2014 On‐Board Transit Survey Final Report, 17 percent of passengers access  Caltrain by bike and the same percentage reach their final destination by bike as well.4 According to the  San Francisco Bicycle Coalition, since 2004, the number of passengers bringing their bikes on board  Caltrain has almost quadrupled.5 To meet demand, bike capacity was increased to include two bike cars  for every train in 2009, though passengers are still denied boarding due to limited bike capacity as per  Caltrain’s “first –come, first‐served” policy.6,7 Caltrain explains:   With limited onboard bike space, customers with bikes are encouraged to park them at Caltrain  stations, when feasible. This will eliminate potential delays for cyclists who have to wait for  trains with available onboard bike capacity.  Bike racks, lockers and shared‐access parking  facilities are available at most Caltrain stations for customers who bike to and/or from the  station.8   However, Table 4 shows that secure bike parking is not available at every Caltrain station included in  this analysis. Given the high bicycle access rates, limited secure bicycle parking, and limited space  onboard Caltrain vehicles, there may be an argument to expand bike share access in the peninsula cities.  However, it is noted that in the ‘BABS Membership Survey’ section below, that one of the conclusions of                                                               3 U.S. Census Bureau. 2010 Demographic Profile. Accessed Dec. 3, 2015.   4 Caltrain 2014 On‐Board Transit Survey Final Report.  http://www.caltrain.com/Assets/_MarketDevelopment/pdf/Caltrain+Origin+$!26+Destination+Survey+2014.pdf  5 San Francisco Bicycle Coalition. Caltrain. Accessed Dec. 15, 2015. https://www.sfbike.org/our‐work/regional‐ advocacy/caltrain/   6 Ibid.   7 Caltrain. Bicycle Parking. Updated 2015. Accessed Dec. 15, 2015.  http://www.caltrain.com/riderinfo/Bicycles/BicycleParking.html  8 Caltrain. Bicycle Parking. Updated 2015. Accessed Dec. 15, 2015.  http://www.caltrain.com/riderinfo/Bicycles/BicycleParking.html       Bay Area Bike Share  Page | 5  Peninsula Cities Analysis    the survey team was that Bay Area Bike Share, at least as a pilot program “has not had a sizeable effect  in reducing the number of bikes on Caltrain or BART trains.”9   Table 4 Caltrain Bicycle Parking Availability   Station Bike Rack  Spaces  Bicycle Locker  Spaces  Bicycle  Lockers  Available  Bike Share  Available Other Bike Parking Amenities  San Francisco 6 180 Yes Yes Free Attended Bike Parking Facility   (Monday – Friday, 6:30 a.m. to 8:30 p.m.)  San Mateo 11 12 Yes No City run, on‐demand electronic lockers  www.bikelink.org  Redwood City 18 50 No – full Yes  Palo Alto 178 94 No – full Yes  Mountain View 23 116 No – full Yes City run, shared access bike storage shed  3. System Performance in the Peninsula Cities Bay Area Bike Share in the peninsula cities are each designed as small “mini‐systems” that are  connected to one another and to the rest of the system by Caltrain. Each city includes five to seven bike  share stations centered on the Caltrain station. In this way, bike share is intended to deliver people to  and from transit and act as a first‐ and last‐mile transit connection.   Quantitative Performance Review A breakdown of the number of stations, docks, bikes, and ridership for each of the pilot cities is included  in Table 5 for the one‐year period between September 1, 2014 and August 31, 2015. Month‐by‐month  ridership levels are included in Appendix A. As well, membership information for each of the pilot cities  is included in Table 6 for the period between September 1, 2014 and November 11, 2015.   Table 5: Ridership Statistics for Bay Area Bike Share (September 1, 2014 to August 31, 2015)  City  System Statistics Ridership Trips /  Bike / Day  Annual  Member Trip  Percentage  Casual  Member Trip  Percentage Stations Docks Bikes Trips Percent  San Francisco 35 665 350 321,108 90.7% 2.51 85% 15%  Redwood City 7 115 70 2,007 0.6% 0.08 79% 21%  Palo Alto 5 75 50 3,093 0.9% 0.17 57% 43%  Mountain View 7 117 70 9,989 2.8% 0.39 85% 15%  San Jose 16 264 160 17,956 5.1% 0.31 84% 16%  Total 70 1,236 700 326,915 100% 1.39 85% 15%                                                                 9 OneBayArea Innovation Starts Here. MTC’s Climate Initiatives Program Evaluation, Pilot Bike‐sharing Program,  Bay Area Air Quality Management District.      Bay Area Bike Share  Page | 6  Peninsula Cities Analysis    Table 6: Membership Statistics for Bay Area Bike Share (September 1, 2014 to November 11, 2015)  City  Annual Members Casual Members  Number of Annual  Members   Annual Member Zip  Code (%)1  Number of Casual  Members  Casual Member  Percentage2  San Francisco 2,015 52% 44,488 85%  Redwood City 70 2% 392 1%  Palo Alto 72 2% 1,852 4%  Mountain View 112 3% 1,842 4%  San Jose 238 6% 3,539 7%  Other 1,334 35% ‐  ‐  Total 3,814 100% 3,927 100%  1 Based on billing zip code provided at time of membership purchase.  2 Based on location of membership purchase. Users may have used the system in multiple locations.  The peninsula cities have approximately 27 percent of the stations and 25 percent of the docks in the  system. However, ridership was approximately 15,000 trips in the reported one‐year period,  representing just under five percent of system ridership. The highest performing of the peninsula cities  is Mountain View recording 0.39 trips per bike per day (higher than San Jose and second only to San  Francisco). Palo Alto and Redwood City recorded lower ridership at 0.17 and 0.08 trips per bike per day,  respectively.  Approximately seven percent of annual members have billing zip codes in the peninsula cities and nine  percent of casual members signed up in one of the peninsula cities.  Ridership between Stations Toole Design Group prepared an online map that shows the number of trips per year between all origin‐ destination (O‐D) pairs for stations in the pilot program. The map shows that Caltrain stations are by far  the highest ridership stations on the peninsula. There are 14 O‐D pairs with ridership above 150 trips per  year, and all but one have a Caltrain station at one end (the exception is the O‐D pair between Franklin  at Maple and the Redwood City Public Library which had a ridership of about 300 trips per year). The  other ends of these high‐ridership O‐D pairs tend to be at employment (e.g., Redwood City Medical  Center), transit (e.g., Castro Street & El Camino Real), retail (e.g., Mountain View City Hall), and  educational (e.g., Stanford in Redwood City) destinations.  Mountain View had four O‐D pairs with ridership higher than 1,000 trips per year, the largest being  between the Mountain View Caltrain Station and Mountain View City Hall, which is located on  Downtown Mountain View’s retail and commercial Main Street. Redwood City’s highest ridership pairs  are between the Caltrain station and two different medical centers. Palo Alto’s highest ridership pairs  are between the Caltrain stations and mixed‐use neighborhoods with retail, employment, and higher  density residential uses. Interestingly there is somewhat high ridership between Palo Alto’s two Caltrain  stations (Palo Alto and California Ave), both of which are located in active, mixed‐use neighborhoods.      Bay Area Bike Share  Page | 7  Peninsula Cities Analysis    Individual station ridership is shown in Appendix B along with a table summarizing the characteristics of  the area surrounding each station.   Ridership between Cities Toole Design Group also analyzed ridership between the peninsula cities, shown in Table 7. Intercity  ridership can also be viewed on the station‐to‐station online map. The three cities were designed as  three independent mini‐systems and are generally operating that way with only a small amount of  intercity travel – 496 trips out of 15,089 trips or 3 percent. The highest intercity ridership is 190 trips  between Palo Alto and Mountain View and 50 trips between Palo Alto and Redwood City. Approximately  two‐thirds of all intercity trips are between two and three miles long, with the remaining one‐third  between three and seven miles long.  Table 7: Intercity ridership between pairs of peninsula cities (September 1, 2014 to August 31, 2015)    Mountain View Palo Alto Redwood City  (% of all Mountain View trips) (% of all Palo Alto trips) (% of all Redwood City trips)  Mountain View 9,788 190 2  98% 6% 0%  Palo Alto 190 2,851 50  2% 92% 2%  Redwood City 2 50 1,954  0% 2% 97%  San Francisco 3 2 1  0% 0% 0%  San Jose 6 0 0  0% 0% 0%  Total 9,989 3,093 2,007  100% 100% 100%    BABS Member and Intercept Survey In 2014, Bay Area Bike Share conducted an online member survey and an intercept survey. The online  survey was administered in four rounds—at the end of January, March, June, and August, 2014 and was  sent to all annual members. It received a total of 1,004 responses. The intercept surveys were  conducted at stations only in San Francisco and received a total of 118 responses.10   From the online member survey, a large majority of respondents rated their BABS experience as  excellent or good (93 percent) and recommended the system to friends or family (also 93 percent).11  Sixty annual members with zip codes from the peninsula cities responded to the survey.  When asked                                                               10 Surveys were conducted Market at 4th, Embarcadero at Sansome, San Francisco Caltrain (Townsend at 4th), and  Harry Bridges Plaza (Ferry Building).   11 Ibid.       Bay Area Bike Share  Page | 8  Peninsula Cities Analysis    what one thing they would improve about the system, the most commonly suggested changes were for  more stations, improved rebalancing at existing stations, and equipment changes.12 A breakdown of the  most requested changes is included below:   More stations: 24 respondents (40% of peninsula respondents).   Rebalancing, primarily the availability of bikes or spare docks at the Caltrain stations: 11  respondents (18%).   Equipment changes, such as improved consistency with locking and unlocking bicycles, weight of  bicycles, gearing, etc.: 9 respondents (15%).   Service changes, such as a longer free‐ride period: 5 respondents (8%).   Maintenance such as brake upgrades, more regular cleaning: 3 respondents (5%).   Improved customer service: 3 respondents (5%).   No suggested improvement: 5 respondents (8%).    Note that the annual member survey does not include potential members. There may be people in the  peninsula cities that would use the bike share system if there were more stations or if some other  potential barrier were removed.    Related to bikes on board, the last two of four rounds of the online member survey included a question  about bikes on transit to gauge the potential for BABS to reduce bike crowding on trains by encouraging  people to use bike share to access the train or their destination.   Respondents who said that they were  going to or coming from Caltrain or BART when they used BABS were asked: “If bike share were not  available, would you have brought your own bike on the train, to use at either end of your [Caltrain or  BART] trip?”     This question applied to only 15‐percent of respondents, of whom only a small percentage said that they  would have brought their bike on the train if BABS was not available. Of people who referred to a  Caltrain trip, eight (18‐percent) said that, yes, they would have brought their bike on the train while nine  (20‐percent) said they were not sure or did not know.13 These responses indicate that BABS has not had  a sizeable effect in reducing the number of bikes on Caltrain trains.  Qualitative Performance Review The TDG team conducted interviews with key staff that were involved with the initial pilot program to  assess how the system has worked in the peninsula cities. Staff from Redwood City, VTA, SamTrans, Palo  Alto, Motivate, and the Metropolitan Transportation Commission (MTC) were interviewed.  The Bay Area Bike Share program was started with the idea of the peninsula cities working together to  provide a coordinated bike share system. Prior to that, San Francisco had direction from then Mayor  Newsom in 2007 to implement a bike share system in the city. However, changes in the bike share                                                               12 BABS Ridership Survey Data. 2014.   13 Ibid.      Bay Area Bike Share  Page | 9  Peninsula Cities Analysis    industry had resulted in delays for the system in San Francisco and with the cities of Redwood City, Palo  Alto, Mountain View, San Jose and the Air District expressing interest, San Francisco delayed to work  towards a coordinated system. MTC, a potential choice to manage a regional system, was not interested  in the operations of bike share and so the Air District volunteered to coordinate regional operations. The  system was intended to be a pilot for the rest of the Bay Area but no strategic planning was conducted  to determine a regional strategy for how bike share could work in different communities or where it  should be expanded to (note that MTC started a strategic planning effort in 2014 but that effort was  discontinued once the Motivate offer was made available). As a result, staff felt there needs to be more  time to demonstrate the performance of a larger system. On the Peninsula, the system was intended to  function as a first and last mile solution focused on the Caltrain corridor. There needs to be additional  work to determine if there is additional demand within the individual cities and in particular untapped  demand to Caltrain. Many employers are asking for connections to Caltrain and while they have not  been specific on the mode, bike share could provide this service.  Demand  The staff at Redwood City has seen an increase in intra‐city trips when one of their stations was  relocated to be near a high‐density residential development. The proximity to higher‐density residential  areas within the more suburban cities of the Bay Area may be necessary to increase ridership. Stations  in Redwood City were moved to be non‐competitive with walk trips. Bike share may need to cover  longer distance trips than in urban areas. To increase bike share ridership, low‐stress bicycle  infrastructure is needed on the Peninsula. While San Mateo is proceeding with their own bike share  system, the City of Sunnyvale might be another city that bike share could expand into with significant  demand.  Interoperability  While the city staff and Motivate staff felt that it was important to ensure that bike share memberships  are compatible with different systems, it was undetermined if there was a need for the three peninsula  cities to have interoperability (i.e., where the equipment is compatible for use in different cities). Staff  felt there would be operational advantages and cost savings to having one vendor work in the Peninsula  cities. Motivate staff stated that they would be willing to look into solutions to ensure compatibility with  their equipment even if there was a different system on the Peninsula.   Equipment and Operations  It was recognized that the occurrence of full or empty stations (i.e., either where there is no room to  dock a bike or no bike available for pick‐up) may provide a bad user experience, turning off current and  future customers. The small system size with only a few stations offers no redundancies for people  looking for available bikes or docks. Nevertheless, City staff felt that overall they were pleased with the  service that Motivate provided, but that there were some issues with bikes not docking in stations and a  general lack of marketing. Staff felt that while the Motivate staff were overall responsive, they were not  given the resources necessary to provide a larger outreach effort to attract additional members.  Motivate staff stated that there was individual marketing plans for the three Peninsula cities at the      Bay Area Bike Share  Page | 10  Peninsula Cities Analysis    beginning of the project. Motivate staff also indicated that should a larger system be put in place, their  level of effort with operations and marketing would be commensurate to size of the system.   4. System Planning and Demand Ridership observed in the peninsula cities was compared to that of other suburban cities participating in  larger regional bike share programs. These include Alexandria, VA and Bethesda, Rockville, and Silver  Spring, MD in the Washington D.C. area’s Capital Bikeshare and Brookline and Somerville, MA in the  Boston area’s Hubway system.   Table 8 and Figure 1 show the number of stations, system coverage area, and density of stations in each  city as well as ridership information reported in terms of the number of trips per bike per day recorded  for the most recent year where station‐to‐station data was available14. It shows that total ridership is  generally higher in other suburban cities than in the peninsula cities. However, a deeper analysis of this  data shows that many trips from these cities are external trips. When trips to and from external  destinations are stripped out of the data leaving only internal trips, ridership levels are, in some cases,  very similar to those of the peninsula cities.   Table 8: Comparison of Suburban Bike Share Systems  City    Bike Share  System  Name    Number of  Stations  System  Coverage  Station  Density  Total  Ridership  Internal  Ridership1  (Percentage of  System)  (sq.mi.) (stations /  sq.mi.)  (trips per bike  per day)  (trips per bike  per day)  Mountain  View Bay Area Bike  Share  7 (10%) 1.28 5.5 0.42 0.42  Palo Alto 5 (7%) 0.76 6.6 0.19 0.18  Redwood City 7 (10%) 1.06 6.6 0.09 0.08  Alexandria, VA  Capital  Bikeshare  16 (5%) 2.24 7.1 1.34 1.13  Bethesda, MD 14 (4%) 1.86 7.5 0.85 0.61  Rockville, MD 21 (6%) 5.54 3.8 0.15 0.14  Silver Spring,  MD 17 (5%) 3.12 5.4 0.63 0.54  Brookline, MA  Hubway 4 (3%) 0.94 4.3 1.98 0.32  Somerville, MA 12 (9%) 2.23 5.4 1.30 0.43  1 Includes only bike share trips made within each city.                                                               14 Ridership statistics represent the same 243 day period between April 2nd and November 30th 2013. This  represents the time the Hubway system was open in 2013, the most recent year in which station‐to‐station data is  available on the Hubway website. The Hubway system closed the remainder of 2013 due to winter weather  conditions. Ridership statistics for Bay Area Bike Share and Capital Bikeshare represent the same 243 day period in  2014/2015.       Bay Area Bike Share    Page | 11  Peninsula Cities Analysis        Figure 1: Comparison of System Statistics for Suburban Bike Share Cities.      Bay Area Bike Share  Page | 12  Peninsula Cities Analysis    A comparison of internal ridership levels is shown on Figure 2. Alexandria is a clear outlier. The city is  removed from Washington D.C. and the other bike share jurisdictions and the majority of trips in  Alexandria start or end at one of their Metro stations. Similarly, a lot of trips in Bethesda and Silver  Spring start or end near the Metro stations (though not as many as in Alexandria).15 The results indicate  that the presence of high‐capacity and frequent mass transit is likely to have an impact on bike share  ridership. Land use may also have an impact with cities such as Rockville and Redwood City being more  suburban in nature with more spread‐out land use and easy access to parking.    Figure 2: Comparison of Intra‐City Bike Share Trip Rates for Suburban Bike Share Cities.  The project team explored trends between internal ridership rates and several variables including the  number of stations, service area, station density, population and employment density, land use diversity  (i.e., jobs per household), and network design (i.e., weighted multimodal intersection density) within the  service area.16 Plots of ridership rates against each of these variables are included in Appendix C. There                                                               15 http://eliglazier.com/urban/map.html  16 Population and employment estimates and the land use diversity (jobs per household) and network design  (weighted multimodal intersection density) variables are calculating by using the EPA Smart Location Database,  which contains data from the 2010 Census: http://www.epa.gov/smartgrowth/smart‐location‐mapping#SLD      Bay Area Bike Share  Page | 13  Peninsula Cities Analysis    appears to be clear trends between the level of ridership and the number of stations, the service area,  and to some degree station density and land use diversity. Population density, employment density, city  coverage, and network density were less obvious as to their impact on ridership. This is consistent with  other research that has shown that population and employment density is less of a predictor of transit  and walking rates than factors such as proximity, land use diversity, and network design.17  The number of stations and the service area are closely related, but the service area accounts for where  stations may be closer together and overlap in service area. The well‐fitting relationship between  ridership and service area suggests that as more stations are added and increase the reach of the  system, that overall system ridership also increases.   There appears to be a lesser relationship between ridership and station density, at least in smaller  systems. Analysis conducted by the National Association of City Transportation Officials (NACTO) of the  five largest bike share programs in the United States showed that ridership at individual stations  increases as a function of station density.18 It may be that in smaller systems, balancing coverage area  and density is more important and that systems need to first consider covering a useful area where trips  begin to become too far to walk. At some point in a system’s growth, station density may take over as  the more important function in increasing ridership.  Density is also important to ensure that stations are close enough together to be convenient to potential  users and reachable with a short walk trip. Also, if a station is full or empty, people wishing to return or  check out a bike need to be able to access another station nearby.    To try to incorporate the importance of both service area and station density, the project team  conducted a regression analysis to develop a simple relationship between the two variables that could  help inform the impact of changing one or more of these variables. The analysis removed the results  from Rockville and Alexandria as outliers to the service area and station density analyses (see Appendix  C). The resulting equation is:  R internal = 0.17 * SA + 0.017 * SD  Where:  Rinternal = Internal ridership rate, measured in trips per bike per day,  SA = Service Area, measured in square miles, and  SD = Station Density, measured in stations per square mile.  A plot of the actual and predicted internal ridership rates using this equation is shown on Figure 3. The  analysis resulted in an R‐squared value of 0.91 and an F‐test showed that the regression equation is  useful in predicting ridership. A t‐test was conducted on the coefficients and found that there is some  redundancy in using both service area and station density to estimate ridership, which is logical given                                                               17 Ewing, R. and Cervero, R. Travel and the Built Environment – A Meta‐Analysis. Published in the Journal of the  American Planning Association, Vol. 76, No. 3, Summer 2010.  18 NACTO Bike Share Equity Practitioners’ Paper #1, April 2015.      Bay Area Bike Share  Page | 14  Peninsula Cities Analysis    they are somewhat related. Comparing predicted ridership to actual ridership (see Figure 3) showed that  the equation is reasonably effective at predicting mid‐level ridership but was less accurate at predicting  really low (e.g., Redwood City) and really high (e.g., Alexandria) ridership.     Figure 3: Comparison of Actual Versus Predicted Internal Ridership Rates  The equation can be used to surmise what might happen to system ridership if these variables are  increased. It shows that every square mile added to the system area can expect a return in the order of  0.17 trips per bike per day. As well, if density is increased by 1 station per square mile, the resulting  impact on ridership is smaller, 0.017 trips per bike per day. Again, at some point in a system’s growth,  this may reverse and the impact of station density may take over as a larger driver of ridership, as  suggested by the NACTO analysis.     If the system ridership level of 1.0 rides per bike per day is a goal for a small city (which would also  result in an operating cost reduction of $25 per dock per month – see below), then a system of at  least 5 square miles and a density of at least 8 stations per square mile would be required. This is a  system of approximately 40 stations assuming the current smart dock system configuration.      Bay Area Bike Share  Page | 15  Peninsula Cities Analysis    The next steps will be to create maps of the potential system in each of the peninsula cities based on  proposed system size identified above. One of the traits of a successful bike share system is the ability  for people to walk to a station that is close to transit, retail, employment centers and other key origins  and destinations. MTC’s GIS suitability map and a “walk shed” analysis will be used to determine more  specific station locations.   5. Summary of Option 1 – Buying into the Motivate System As part of the Motivate expansion plan, the peninsula cities were given a cost proposal to “buy into” the  system and continue operations of the existing equipment and to purchase and operate new equipment  in the future. The Motivate proposal to purchase the current and new equipment depends on the size of  the station but ranges from approximately $47,000 to $97,000 per station plus a $4,000 per station cost  to permit and install new stations. These costs are compared in Table 9 with other U.S. cities that  recently signed contracts or received proposals for bike share equipment based on an average station  size of 19 docks and 10 bicycles.   Table 9: Capital Cost Comparison (based on 10 bike and 19 dock station or equivalent)  City Cost Type Technology  Type  Equipment  Provider  Number of  10‐Bike  Stations  Cost per  Station  Cost per Station  (installation)  San Mateo, CA Proposed Smart bike Social  Bicycles  10 $17,0001 $4,600  West  Hollywood, CA  Proposed Smart bike Social  Bicycles  15 $25,1072 $8,760  Portland, OR Proposed Smart bike Social  Bicycles  60 $25,7203 $8,5503  Nextbike Pricing  Request  Smart bike Nextbike n/a $26,500 ‐  Nextbike Pricing  Request  Smart dock Nextbike n/a $29,000 ‐  Long Beach,  CA  Proposed Smart bike Social  Bicycles  50 $35,075 $4,500  Santa Monica,  CA  Proposed Smart bike Social  Bicycles  50 $43,0004 Included  Los Angeles  Metro, CA  Proposed Smart dock B‐cycle 80 $47,5005 Included  Motivate  Proposal  Proposed Smart dock Motivate ‐ $55,503.565 $4,000  1 The City of San Mateo is considering 10 to 12 “hubs” using existing bike racks. Therefore cost estimates do not include capital or installation of  racks, docks, or kiosks. City of San Mateo staff report, November 16, 2015.  2 The City of West Hollywood is considering purchase of 255 custom bike racks for 20 locations to consist of 1 electronic kiosk, 10 large displays,  and 9 small displays. City of West Hollywood Staff report, August 17, 2015.  3 The City of Portland will place bikes at 60 “locations” that include 30 city bike corrals, 19 “hubs” with display panels, and 11 kiosks. Installation  costs include $4,814 per station to be paid by City for system start‐up and $3,736 per station to be paid by vendor for launch expenses.   4 The City of Santa Monica purchased 1,000 custom bike racks for 50 locations to consist of 20 electronic kiosks and 30 large and small displays.  5 All stations include electronic kiosks and map panels.      Bay Area Bike Share  Page | 16  Peninsula Cities Analysis      Table 9 shows that prices vary depending on the size and specifications of the order. Smart bike systems  are generally less expensive to purchase than smart dock systems, although it is noted that as more  electronic kiosks were ordered (e.g., in Santa Monica), the price per station started to approach the  price of a smart dock system. The Motivate equipment is the highest cost of any of the proposals  compared. However, their per station installation costs are in line or lower than the other proposals.   Other costs that are difficult to measure are the “start‐up” and “launch” costs associated with creating a  new bike share program. As well, there are costs associated with delaying the system while a new  program is selected and set up that also need to be accounted for. These are not insignificant costs and  should be explored further if a different equipment vendor or operator is to be considered.  The Motivate cost proposal includes a $112.50 per dock per month operating fee. This is broken into a  $12.50 per dock per month fee to upgrade to the 8D Technologies equipment and $100 per dock per  month to operate and maintain the system. The 8D Technologies equipment upgrade cost is a recurring  cost that will last indefinitely. The latter O&M cost is reduced if the system hits ridership metrics above  1.0 trips per bike per day. Table 10 compares the base operating cost to those observed in several cities  already operating bike share programs and in several cities that have recently received operating cost  proposals.  Table 10: Operating Cost Comparison  City Operating  Cost Type  Equipment and  Operator Type  Operator Name System Size Price (per dock  per month)  Minneapolis, MN Actual (2013) Smart dock  Non‐profit  Nice Ride  Minnesota  1,550 bikes,  3,100 docks  $70.55  San Mateo, CA Proposed Smart bike  Non‐profit  Bikes Make Life  Better  50 bikes, no  specialty docks  $78.951  Boston, MA Actual (2012) Smart dock  Private  Motivate 700 bikes,  1,400 docks  $86.52  Santa Monica, CA Proposed Smart bike  Private  CycleHop 500 bikes,  1,000 racks  $91.26  Denver, CO Actual (2014) Smart dock  Non‐profit  Denver  Bikesharing  700 bikes,  1,250 docks  $99.12  Aspen, CO Actual (2014) Smart dock  Non‐profit  WE‐Cycle 100 bikes, 180  docks  $102.56  Motivate Proposal Proposed Smart dock  Private  Motivate ‐ $112.50  West Hollywood,  CA  Proposed Smart bike  Private  CycleHop 150 bikes, 255  racks  $112.75  Arlington, VA Actual (2014) Smart dock  Private  Motivate 460 bikes, 920  docks  $112.99  Los Angeles Metro,  CA  Proposed Smart dock  Private  Bicycle Transit  Systems  1,000 bikes,  1,900 docks  $115.34      Bay Area Bike Share  Page | 17  Peninsula Cities Analysis    City Operating  Cost Type  Equipment and  Operator Type  Operator Name System Size Price (per dock  per month)  Montgomery  County, MD  Actual (2015) Smart dock  Private  Motivate 500 bikes, 818  docks  $117.43  Alexandria, VA Actual (2015) Smart dock,  Private  Motivate 180 bikes, 250  docks  $124.59  Austin, TX Actual (2014) Smart dock  Non‐profit  Austin B‐cycle 380 bikes, 600  docks  $127.45  Washington D.C. Actual (2015) Smart dock,  Private  Motivate 2,000 bikes,  3,674 docks  $145.00  1 The City of San Mateo is planning to use existing bike racks for this system. For comparison, the per dock per month cost assumes 19 docks for  every 10 bikes.  Table 10 shows that actual operating costs range quite significantly anywhere from approximately $70  to $145 per dock per month. At the lower end, some non‐profits receive in‐kind donations and services  to off‐set some operating expenses (such as free or low‐rent warehouse space, pro‐bono legal costs,  marketing services, etc.). As well, there are often less stringent operating performance standards in  some non‐profit run systems. There is very little information available about the cost to operate smart  bike systems and in any case, most major city smart bike systems have been operating for less than a  year. Operating costs are typically negotiated at the time of contract and will vary greatly depending on  the service levels specified by the program owner. It is difficult to compare across cities without knowing  the service levels that these systems operate at and in many cases, this is not available. It is also unclear  what service levels Motivate is proposing at this cost. This will need further investigation.  Nevertheless, the Motivate proposal is towards the upper end of the range of actual and proposed  operating costs, and within a few dollars of the top of the range of operating costs for private bike share  operators. The Motivate cost proposal will be more competitive if ridership levels reach 1.0 trips per  bike per day in which case it will drop to $87.50 per dock per month compared to $112.50 per dock per  month.     The demand equation and the proposed Motivate costs were used to conduct some scenario planning  to show the link between system costs, system ridership, and productivity. A 40 station / 400 bike / 760  dock system (Scenario 1) and a 60 station / 600 bike / 1,140 dock system (Scenario 2) were modeled and  the results shown in Table 11 in terms of the capital cost per trip (over the five‐year useful life of the  equipment) and the operating cost per trip. Table 11 shows that increasing the average ridership rate  Over the long run, operating costs far outstrip equipment costs and so it is prudent to consider cost  impacts over a longer term. For example, for a 40 station / 760 dock bike share system operating  over a 5 year period, the Motivate system would cost approximately $2.4 million for equipment and  installation and approximately $5.1 million for operations and maintenance (approximately $1  million per year). This would reduce to $4.0 million if ridership can be maintained above 1.0 trips per  bike per day (approximately $800,000 per year).      Bay Area Bike Share  Page | 18  Peninsula Cities Analysis    reduces the per trip capital and operating costs. This impact is enlarged with the reduced operating cost  rates proposed by Motivate when ridership levels of 1.0 and 1.5 trips per bike per day are reached.   Table 11: Comparison of Capital and Operating Cost Scenarios  System Size Lower than Projected  Ridership  Projected Ridership Higher than projected  Ridership  Scenario 1 – 40 stations / 400 bikes / 760 docks (service area = 5.0 sq.mi.; station density = 8 stations / sq.mi.)  Trips per bike per day 0.5 1.0 1.5  Annual trips 73,000 146,000 219,000  Five‐year capital cost $2,400,000 $2,400,000 $2,400,000  Capital cost per trip (over  five‐year useful life of  equipment)  $6.58 $3.29 $2.19  Operating cost rate (per  dock per month)  $112.50 $87.50 $62.50  Operating cost per year $1,026,000 $798,000 $570,000  Operating cost per trip $14.05 $5.47 $2.60  Scenario 2 – 60 stations / 600 bikes / 1,140 docks (service area of 7.5 sq.mi.; station density = 8 stations / sq.mi.)  Trips per bike per day 0.9 1.4 1.9  Annual trips 197,000 307,000 416,000  Five‐year capital cost $3,600,000 $3,600,000 $3,600,000  Capital cost per trip $3.65 $2.35 $1.73  Operating cost rate (per  dock per month)  $112.50 $87.50 $62.50  Operating cost per year $1,540,000 $1,197,000 $855,000  Operating cost per trip $7.81 $3.90 $2.06          Bay Area Bike Share  Page | 19  Peninsula Cities Analysis    Appendix A: Monthly Ridership Rates by City   Trips per Bike per Day  Redwood City Palo Alto Mountain View  September, 2014 0.05 0.20 0.43  October, 2014 0.05 0.19 0.44  November, 2014 0.04 0.15 0.32  December, 2014 0.03 0.07 0.22  January, 2015 0.07 0.15 0.33  February, 2015 0.07 0.12 0.35  March, 2015 0.08 0.14 0.40  April, 2015 0.09 0.15 0.38  May, 2015 0.07 0.16 0.39  June, 2015 0.12 0.22 0.46  July, 2015 0.14 0.27 0.47  August, 2015 0.11 0.21 0.49        Bay Area Bike Share    Page | 20  Peninsula Cities Analysis    Appendix B: Station Characteristics Analysis  Station Jurisdiction Annual Ridership  (trips)1  Station Photo Station Characteristics  Caltrain Station Other Transit High Density  Residential  Commercial / Retail /  Restaurant Activity  Other Attractions Bicycle Facility  Type  Other Notes  Kaiser Hospital  (Old Location)  Redwood City 380    No No No Medical offices Kaiser Permanente  Medical Center  Low‐volume street Station was initially not very visible  located at the back of the medical  center due to construction.  Kaiser Hospital  (New Location)  Redwood City N/A N/A No No No Big box retail Kaiser Permanente  Medical Center  Buffered bike lane Station in a much more visible  location on Veterans Way  Mezes Redwood City 357 N/A No No Yes No No Bike lane Station recently moved to be located  near the new Radius development  Redwood City  Caltrain Station  Redwood City 1,694    Yes Yes No Restaurants / retail  nearby  No None Station has terrific visibility and is  right on the Caltrain platform  Redwood City  Public Library  Redwood City 216      No No No Restaurants neaby Public Library None Very visible station, on library plaza  San Mateo County  Center  Redwood City 314 No No No Restaurants, theater  nearby  Courts, municipal  offices, history museum  Bike Lane Offset 1 block from “main drag”, near  lots of parking lots  Sequoia Hospital Redwood City    No Yes No No Hospital Low‐volume street   Stanford in  Redwood City  Redwood City 872      No Yes No No Hospital None   California Avenue  Caltrain Station  Palo Alto 896      Yes Yes Yes Retail/Restaurant,  “main street”  No Bike lane On side street right by station‐  visibility could be better  Cowper at  University  Palo Alto 1,152    No Yes No Retail/Restaurant,  “main street”  Office buildings None       Bay Area Bike Share    Page | 21  Peninsula Cities Analysis    Palo Alto Caltrain  Station  Palo Alto 2,016    Yes Yes Yes Restuarants  Bike lane Right across from station entrance  Park at Olive Palo Alto 793    No No No Offices  Bike lane   University and  Emerson  Palo Alto 1,329    2.5 blocks Yes No Retail/Restaurant,  “main street”   None Super visible, right on main  commercial street, right outside large  bike shop,  Castro Street at El  Camino Real  Mountain View 2,346    No Yes  Yes Some strip mall retail,  some main‐street style  retail  Offices None   Charleston Park /  North Bayshore  Area  Mountain View   No Yes No Commercial Office park Google Bike lane   Middlefield Light  Rail Station  Mountain View   No Yes No No Suburban office park,  light rail station     Mountain View  Caltrain Station  Mountain View 7,408    Yes Yes No Retail/Restaurant,  “main street”       Mountain View  City Hall  Mountain View 3,307    No Yes Yes Retail/restaurant City Hall, offices None   San Antonio  Caltrain Station  Mountain View 2,104    Yes Yes Yes A few small strip mall  developments  Strip mall offices None   San Antonio  Shopping Center  Mountain View 2,168    No Yes No Big box retail, suburban  office buildings   Low‐volume street   Notes:  1 Trip data is for the period from September 1, 2014 to August 31, 2015 and represents total trips to and from the station.      Bay Area Bike Share  Page | 22  Peninsula Cities Analysis    Appendix C: Comparison of Internal Bike Share Ridership with Service Area Characteristics          Bay Area Bike Share  Page | 23  Peninsula Cities Analysis            Bay Area Bike Share  Page | 24  Peninsula Cities Analysis            Bay Area Bike Share  Page | 25  Peninsula Cities Analysis        MEMORANDUM  Project: Bay Area Bike Share – Peninsula Communities Strategic Plan  Subject: Deliverable 2 – Business Case Analysis and Summary of San Mateo Pilot Program  Date: January 29, 2016  To: Melissa Reggiardo, SamTrans  From: Sean Co and Adrian Witte, Toole Design Group  CC: Peninsula Bike Share Working Group  This memorandum is the second of a series of memoranda to help Redwood City, Palo Alto, and  Mountain View (referred to as “the peninsula cities”) make their decision on how to move forward with  bike share. It includes:  1.A review of the “business case” for bike share in the peninsula cities – summarizing what function bike share can play, who are the most likely users of the system, and how bike share could address different city goals. 2.System planning for expanded programs in each of the peninsula cities and an exploration of population densities, diversity, and income levels in the proposed service areas. 3.A summary of the proposed San Mateo pilot bike share program to explore whether this program may be expandable to the peninsula cities as an alternative to the Motivate program. 4.Possible funding mechanisms that might be available to the peninsula cities including MTC capital funds and a review of funding mechanisms used in San Mateo and other places. 1.Business Case for Bike Share This section builds on the existing conditions review and analysis conducted as part of the first  memorandum to summarize the business case for bike share on the peninsula. It looks at what functions  bike share could play, who would be the expected users of the program, and how bike share might be  able to address different city goals.  Attachment C     Bay Area Bike Share  Page | 2  Peninsula Cities Analysis    Bike Share Functions and Users Bike share in the peninsula cities currently, and will continue to serve primarily a commuting function.  The greatest opportunities are to connect people to mass transit such as Caltrain as part of larger  commute trips or to connect local residents to employment centers within the same city or in nearby  cities. There are particular benefits to Caltrain including increasing the catchment area of stations,  reducing the need for private bicycles to be brought on board, and the opportunity to provide an  integrated transit solution that offers an alternative to private vehicle travel.  The program could also provide some ancillary functions for local residents, e.g., connecting  neighborhood commercial districts, providing recreational riding opportunities, connecting student  housing to city services, etc.   Bike share programs in the peninsula cities are not expected to serve a large tourist or visitor market,  primarily because the number of tourists and visitors to the peninsula is much lower than in other parts  of the Bay Area. This does take away a potential revenue stream from casual users that in other cities  makes up over 50‐percent of user revenues. This means that a greater emphasis on finding alternative  funding sources or better monetizing local users will be important.   Primary Functions of a Peninsula Bike Share Program   A first and last mile connection to transit, particularly to mass transit. Existing ridership  patterns show that the most frequent trips in the pilot program are to and from the Caltrain  stations. Bike share can increase the catchment area of a station (i.e., the bikeable distance  around a station is much larger than the walkable distance). If bike share could be integrated  into the transit fare structure, this would further reduce barriers to using the system and could  provide a full transit solution to compete with private automobile travel.   Reduce demand for long‐term secure bicycle parking and the need to bring private bicycles on  board Caltrain. The 2014 On‐Board Transit Survey Final Report showed that 17‐percent of  passengers access Caltrain by bike.1 Providing a network of public bicycles that users can dock  and “walk away” removes the personal risk of bike theft and could reduce the amount of secure,  long‐term bicycle parking that Caltrain would need to provide at stations. According to the San  Francisco Bicycle Coalition, since 2004, the number of passengers bringing their bikes on board  Caltrain has almost quadrupled.2 Expanding bike share may alleviate some of the demand to  bring bikes on board.3                                                               1 Caltrain 2014 On‐Board Transit Survey Final Report.  http://www.caltrain.com/Assets/_MarketDevelopment/pdf/Caltrain+Origin+$!26+Destination+Survey+2014.pdf  2 San Francisco Bicycle Coalition. Caltrain. Accessed Dec. 15, 2015. https://www.sfbike.org/our‐work/regional‐ advocacy/caltrain/   3 One conclusion of the ‘BABS Membership Survey’ was that the Bay Area Bike Share, at least as a pilot program,  “has not had a sizeable effect in reducing the number of bikes on Caltrain or BART trains.”      Bay Area Bike Share  Page | 3  Peninsula Cities Analysis     Provide a connection to major employment centers, particularly for those commuting from  the same or the next city. There are already some “super‐users” of the pilot program that make  regular commute trips within the same city or to stations on the edge of the next city. As the  system is expanded to cover more employment centers and moves towards the edges of  adjacent cities, there is the potential for more commuting trips, and for associated trip‐making  throughout the day (e.g., running errands, going for lunch, recreational rides, etc.). Bike share  could become a Travel Demand Management (TDM) offering for employment centers in the  peninsula cities, which could also provide a funding opportunity for the system.  Ancillary Functions of a Peninsula Bike Share Program   Introduce new users to bicycling. Bike share provides an easily accessible network of bicycles  useful for those that do not have access to a private bicycle or that are looking to try bicycling.  Bike share systems and bicycling have social elements and social media associated with them  and many people are introduced to bike share through friends and visibility of the program. A  more complete and comfortable infrastructure network may be needed to attract or retain this  group of potential users.   Economic development and increased spending in retail and commercial areas. Bike share can  be a way to connect neighborhood centers and in particular provide access to downtowns and  retail / commercial districts where parking is constrained. Other cities have found bike share to  create additional local spending at businesses located near stations.   Student mobility. Although stations will not be provided on the main Stanford campus, there  will be stations on nearby properties. As well, bike share could be provided at off‐campus  student housing and be a means to connect students to city services, activity centers, and  recreational destinations.   Recreational trip making. This is not expected to be a large group of users, but for certain  station locations, there may be a potential trip type. For example, there is anecdotal evidence  from hospital campuses that have bike share stations that they are used by visitors spending  long hours at the campus and as a stress relief tool. Bike share in general can have a public  health benefit by increasing physical activity.  Minor Functions of a Peninsula Bike Share Program   Tourist and visitor transportation. Bike share is unlikely to serve a large tourist and visitor  function, primarily because there are fewer tourists and visitors than in other parts of the Bay  Area. This is a significant user group and revenue source in many other cities and will need to be  considered in the financial model.  Needs to Support the Bike Share Program   Improved and expanded bikeway network. There are certain users that will use the bike share  system regardless of the amount and type of infrastructure. But there is a large potential user      Bay Area Bike Share  Page | 4  Peninsula Cities Analysis    group that will be more likely to use the program as the peninsula cities continue to provide a  broader and more comprehensive network of comfortable bikeways.   A greatly expanded system. Providing a greater network of stations will improve convenience  and accessibility to the program, increase the number of destinations that can be served, and  bring inter‐city destinations closer together.   Innovative funding models. To overcome the expected revenue shortfall, a broad range of  funding options should be explored including MTC funding opportunities, other grant programs,  TDM program funding, corporate sponsorship and memberships, revenues from transit fare  integration, crowd‐source funding, and other funding opportunities. Minimizing operating costs  and better monetizing annual members and local users may also help fill this shortfall.  Bike Share’s Impact on City Goals At the January 8, 2016 Peninsula Bike Share Working Group meeting, there was discussion on some  common goals for a Peninsula bike share system. While there was much agreement about some  common goals and objectives for the system, this discussion may be premature in the overall  progression of the direction of bike share on the Peninsula. When and if the cities decide they will be  part of the same bike share system, the group goals discussion can be revisited.   To provide background information for city officials on how bike share can best serve city goals, Table 1  illustrates how a bike share system can be used as a tool to help cities achieve their transportation,  climate, health, livability, and economic development goals. The goals are shown with potential  measures and methods to quantify the goals along with how bike share would achieve these goals. The  potential impact that bike share can have on these goals is shown based on qualitative and quantitative  evaluations from other systems in the United States and MTC’s Climate Initiatives Program Evaluation  on Bay Area Bike Share. Although it is premature to set bike share system goals and further discussion  will be required once a clear direction is selected, a draft set of goals is presented in Table 2. This table  will be a starting point for future goals discussions.   Table 1: City Goals Achieved Through Bike Share  City Goals Measures How Achieved Through Bike  Share  Potential Impact  Emissions and  Climate Reduction   GHG emissions Mode shift to bicycle trips Low  Particulate Emissions  (Particulate Matter 2.5 and 10)  Mode shift to bicycle trips Low  Number of single occupant  vehicle (SOV) trips  Mode shift to bicycle trips Low  Vehicle Miles Traveled (VMT) Mode shift to bicycle trips Low      Bay Area Bike Share  Page | 5  Peninsula Cities Analysis    City Goals Measures How Achieved Through Bike  Share  Potential Impact  Increase Mobility  Mode of access to transit Reduces the need for auto  parking  Medium  First and last mile connections Provides additional  transportation option  High  Bicycles on board transit Reduces need for private bicycle  trips to transit  High  Reduced vehicle parking at  Caltrain stations  Reduces the need for auto  parking  Medium  Improvement in  Public Health  Outcomes  Minutes of physical activity Increase in active transportation High  Bicycle mode share Overall increase in all bicycling Medium  Increase in  Economic  Development  Increased spending in retail and  commercial areas  Improves access to retail and  commercial areas  Medium  Trips to commercial areas Improves access to areas where  parking may be constrained  Medium  Connect to major employment  centers  Inclusion of bike share in  employer TDM programs  High  Increase Tourism Increase in visitors and tourists Provides a low‐cost  transportation option  Low    Table 2: Multi‐City Bike Share Goals  Example Goals Example Objectives  Develop a seamless, easy‐to‐use bike share system that  is accessible  Increase participation among a diverse spectrum of  members, regardless of income level, cultural  background, or other demographic factor.  Reduce barriers to membership and usage.  Effectively define bike share and its pricing structure.  Increase personal mobility and establish bike share as  an integral transportation mode in the region  Improve access to jobs, transit, key destinations and  the existing public transport and bike network.  Support a safe, healthy and environmentally sustainable Prioritize safety for all customers      Bay Area Bike Share  Page | 6  Peninsula Cities Analysis    Example Goals Example Objectives  Bay Area Reduce transportation‐related greenhouse gas  emissions and criteria pollutants.  Improve public health.  Create a financially sustainable bike share program  Sustain the system by attracting investment and  minimizing operating costs.  Strengthen the local and regional economy  2. Additional Pilot Program Analysis Toole Design Group analyzed ridership of the Bay Area Bike Share pilot program as part of the first  memorandum. A series of online maps were created to show trends in existing ridership using data from  September 2, 2014 to August 31, 2015. The map below shows a “spider map” of bike share trip demands  between stations and can be accessed online at:  https://erinlise.cartodb.com/viz/41e179a8‐a90c‐11e5‐8b98‐0e787de82d45/embed_map  Since that analysis, Toole Design Group prepared a separate series of online maps that analyze: (1) the  distribution of trips over the course of a typical weekday originating at each station; (2) the most  popular destination stations for trips originating at each station; and (3) the zip code distribution of bike  share trips originating from the San Francisco Caltrain Station (to show how many Peninsula residents  may use bike share at the San Francisco end of their trip). These maps are online at:  https://ennslisa.github.io/BayAreaBikeshare.html  Map (1) Distribution of Weekday Rides by Time of Day  This map shows the average number of weekday bike check‐outs from each station by time of day. The  map shows that most stations observe commuter peaks. Trips from the Caltrain stations have a large  AM peak between 8am and 10am (likely people travelling from the station to work) and a smaller  evening peak between 5pm and 7pm (likely people coming home from work using Caltrain). Most other  stations have a small AM peak (perhaps people travelling to the Caltrain station or to local employment)  and a larger, and earlier PM peak (likely people travelling to the Caltrain station to return home).  Map (2) Station Destination by Start Station  The sidebar in this map shows a list of all stations in the pilot program. When a start station is clicked,  the dots on the map represent the total number of trips taken from the selected start station to the  various end stations (note: the start station is shown in orange and the destination stations are shown in  blue. If there were no trips taken from the selected start station to an end station, it will not appear on  the map). This map is useful in understanding the variety of destinations accessed from each station. For  example, approximately 1,400 trips that originated from the Mountain View Caltrain station were taken      Bay Area Bike Share  Page | 7  Peninsula Cities Analysis    to the Mountain View City Hall station, over 900 to the Castro Street & El Camino Real station, 600 to  the Evelyn Park & Ride station, and even 100 were taken to the San Antonio Shopping Center.   Map (3) Trips starting from San Francisco Caltrain station by member zip code  This map shows the zip code (for Peninsula cities only) of annual members that made a trip originating  from one of the two bike share stations at the San Francisco Caltrain station. What this map proximates  is how many people that use Caltrain to travel from the Peninsula to San Francisco then use bike share  to get to their final destination. There is no way to tell if these users also used bike share to access the  Caltrain station at the Peninsula end of their trip.   It shows that there were a total of 16,658 bike share trips made from the San Francisco Caltrain bike  share stations by annual members residing in the Peninsula cities. This represents approximately 45 trips  per day (and only includes annual members that chose to enter their zip codes). The map provides a  breakdown of that number by zip code, e.g., there were 872 bike share trips taken from the San  Francisco Caltrain bike share stations by annual members that live in zip code 94041 (part of Mountain  View). One of the interesting findings of this map is the number of members that live in San Mateo and  other Peninsula cities that do not currently have bike share.  One of the uses for this map is to understand how many people would be impacted by changes to the  current system, e.g., removing bike share altogether or going with a different system that could not be  integrated with the Motivate system that would require these users to potentially have two bike share  memberships to two different programs.  3. System Planning and Demographic Analysis The analysis documented in the first memorandum recommended a system size of 35 to 40 stations to  increase ridership towards the target of 1.0 trip per bike per day. Based on that recommendation the  project team placed stations at potential locations in Redwood City, Palo Alto, and Mountain View to  reach the target coverage and station density. TDG considered the heat map prepared previously by  MTC, large employment centers, commercial, retail, and entertainment destinations, civic destinations,  and access to transit in placing stations. Note that these locations are intended to be general (e.g., to  the intersection level). Additional work will be required to identify precise locations for each station  considering available right‐of‐way, adjacent property interest, and public feedback. Potential station  locations are shown on the online map accessed at:  https://ennslisa.github.io/BayAreaBikeshareDemographics.html  Based on these stations placements, the service area of the system was calculated by drawing a 1/4 mile  radius circle around each potential bike share station (to approximate the distance that a potential bike  share user would walk to access a station) and joining these circles where there was overlap. A series of  maps were created to explore the following demographics of the proposed service area including: (1)  population density; (2) diversity; and (3) income.      Bay Area Bike Share  Page | 8  Peninsula Cities Analysis    Map (1) Population Density  This map shows population density in the potential service area and was created using ESRI population  estimates for 2015 based on the 2010 census. The map shows that there is potential for an expanded  program to serve higher population density areas of the peninsula cities, which will increase the primary  functions of the program as a connection to transit and a potential commuting option to employment  centers.   Map (2) Diversity  This map shows diversity in the potential service area as calculated by ESRI’s Diversity Index, a measure  of the percentage likelihood that two random people chosen from the same area would be of different  races. The average Diversity Index for Mountain View is 76‐percent, for Palo Alto is 59‐percent, and for  Redwood City is 85‐percent.   Map (3) Income  This map shows median household income in the potential service area. The average household income  in the entire area is approximately $91,000 for Mountain View, $114,000 for Palo Alto, and $64,000 for  Redwood City. Figures are ESRI estimates for 2015 based on the 2010 census.   4. Review of San Mateo Pilot Program The City of San Mateo completed a bike share feasibility study in 2013. The City was originally left out of  the Bay Area Bike Share pilot program and the subsequent Motivate expansion of the program. More  recently, the City was approached by Social Bicycles (SoBi) to implement a pilot program of their own  featuring smart bike technology. Because SoBi had already been vetted through an extensive RFP  process and awarded the contract to establish the City of Santa Monica’s Breeze bike share program,  staff at the City of San Mateo reviewed this information and recommended to Council in November  2015 that they be granted a sole source contract to establish a 50 bicycle smart bike system.   Smart bike systems, as opposed to smart dock systems such as the Motivate program, provide the  locking mechanism on the bicycle itself, which offers greater flexibility in where the bicycle can be  parked. SoBi also offers an a‐la‐carte menu of station options. San Mateo is purchasing only the bicycles  and will use regular bike racks to serve as pseudo‐stations. There are also options to purchase custom  built bike racks to give the station a unique look to other street furniture and an option to purchase  kiosks. Because bikes are reserved via mobile phone or online, there is little need for kiosks except at  stations that are likely to receive high casual usage. Because of these choices, the cost of providing  stations is relatively low meaning that creating more stations is possible for the same or lower price.  About the System Based on discussions with Kathy Kleinbaum at the City of San Mateo and information contained in the  City’s Administrative Report dated November 16, 2015, the following describes some of the key features  of the proposed bike share system:         Bay Area Bike Share  Page | 9  Peninsula Cities Analysis     The pilot will include 50 smart bikes distributed at 10 to 12 hubs.    The program will be named “Bay Bikes” and the system will be branded using a light blue color  that will be distinguishable from the Motivate program.   The City used TDM funding allocated from developers to purchase the bicycles. The City did not  take up the option to purchase custom bike racks or kiosks. They will use regular U‐racks with a  vinyl wrap to distinguish them from other city bike racks.   The City will own the program and its assets. A local non‐profit called Bikes Make Life Better will  operate and maintain the system performing day‐to‐day operations such cleaning the stations,  repairing the bikes, and rebalancing the bikes between stations. SoBi will be responsible for  creating and maintaining the website and mobile phone‐based membership and reservation  system as well as performing revenue collection and disbursement.    The San Mateo program will have a different pricing structure to the Motivate system. Users can  sign up for a membership for $15/month with which they receive one hour of free riding time  per day. For casual users, and annual members exceeding their one hour of riding time, the cost  is $5/hour, prorated to the nearest minute. There is a $3 fee for locking the bike outside a hub  and a $1 credit for returning a bike that is parked outside to a hub. There is also a $100 fee for  parking the bicycle outside of the service area (likely to be the City boundaries).   The City is seeking sponsorship. They are offering the bike basket and online assets to a  potential sponsors. Other bike elements will likely be retained for system branding.   Currently, a user travelling between San Mateo and one of the BABS pilot cities would need to  maintain two separate bike share memberships to be able to use bike share in both cities.   The City is intending to pilot the program for three years and evaluate the program based on  overall usage and customer experience. At the end of the pilot term, the City can decide to  continue the program, expand it, or to terminate it.    The City is hoping to launch the system in May 2016.  Potential for Expansion of the San Mateo Bike Share Program The introduction of a second bike share system to the Peninsula offers some opportunities and some  challenges. There may be an opportunity to expand this system to the other peninsula cities to create a  peninsula region bike share system.   Opportunities   Regional Expansion – San Mateo has kept open the option for regional expansion to other cities.  They have named the program “Bay Bikes” to leave open this possibility and to create a regional  brand. They are also open to different regional governance models including the Cities working  together under an MOU or turning the system over to a non‐profit or some other model.    Cost – the a‐la‐carte nature of SoBi’s pricing structure means that per station capital costs are  lower. The cost per station is reduced by purchasing fewer kiosks and having the flexibility to  use regular bike racks in place of customized docking points.      Bay Area Bike Share  Page | 10  Peninsula Cities Analysis     Flexibility – smart bike systems allow users to park bicycles at or near hubs or at any location  outside of a hub for an additional fee. This provides more flexibility in suburban settings where  destinations are more spread out and would require a large number of stations.   Challenges  The following aspects of the San Mateo system may hinder expansion capabilities.     Inter‐operability – Smart dock bikes cannot be locked at smart bike hubs (as they need a custom  docking point to lock to). However, smart bike systems can be locked at any bike rack in a smart  dock area. Because of the distances between San Mateo and the other systems, it is unlikely to  be an issue that a smart dock bike would be ridden between systems. However, as program  areas expand over time, this may become more of an issue.    System Integration and Different Pricing Structures – Users of the San Mateo system will need  to maintain two memberships if they also use the Bay Area Bike Share program in another city.  SoBi and Motivate may over time offer reciprocal membership where a membership card for  one system may provide access to the other system. However, it will still be necessary for users  to maintain two accounts or be aware of the two different pricing structures. It would also  require some form of revenue sharing agreement between the two companies.   5. Future Funding Opportunities MTC has continued to express interest in funding bike share equipment. It is expected that in the next  few months MTC will release a regional call to fund bike share programs. MTC has $4.5 million in  Congestion Mitigation and Air Quality (CMAQ) funds that can be used to purchase capital equipment for  bike share. As is the case with any bike share program funded under CMAQ, operations and  maintenance funds are not eligible. It is expected that these funds will be released in two phases with  approximately $2.25 available in the first phase. While MTC is currently developing the program, it will  most likely be a competitive program with priority given to communities that have done planning or  feasibility studies. It is expected that a draft of this call will be released in March of 2016.  There is also activity at a national level to clarify funding for bike share programs. The Bike Share Transit  Act, introduced to Congress at the beginning of 2016, would make federal funds for bike share available  through the Federal Transit Administration (FTA) and make it clear that bike share projects and  associated equipment are eligible for federal transit funds and CMAQ. This may change some of the  eligibility of projects and may allow operations and maintenance as an eligible expense.  While the Bay Area Air Quality Management District (BAAQMD) funded the initial Bay Area Pilot  Program, they have not made a clear determination if future Transportation For Clean Air (TFCA) funds  will be available to fund bike share programs. MTC and BAAQMD conducted an evaluation of bike share  under the Climate Initiative Program and bike share had a high cost per ton of CO2 reduced and minimal  reductions of other criteria pollutants. The program evaluates projects based on the cost effectiveness  of improving air quality and while bike share may have other benefits, the Climate Initiatives evaluation      Bay Area Bike Share  Page | 11  Peninsula Cities Analysis    showed high capital costs mostly due to a lack of any other subsidy such as sponsorship and the upfront  capital costs associated with the program.   There are many other funding opportunities that could be explored further. Some of those that have  been successfully implemented elsewhere include:   Travel Demand Management (TDM) and developer traffic impact fees going towards purchase  of bike share equipment, as is being used to fund San Mateo’s pilot program.   Seeking a system sponsor to help fund capital or operations and maintenance. Corporate  memberships could be offered as part of a sponsorship deal or independently.   Integrating bike share stations into other infrastructure improvements as part of other capital  projects such as roadway reconstructions, trail construction, parking improvements, Caltrain  station improvement plans, etc.   Revenue sharing agreement with transit providers that integrate bike share into the transit fare  structure (this has not yet been implemented in the United States).   Crowdsource funding has been used in Kansas City to fund bike share stations in communities  that want to expedite bike share in their neighborhoods.   There may be other grants available to fund different elements or specific programs related to  bike share, e.g., public health and equity partnerships and grants may be available.  MEMORANDUM  Project: Bay Area Bike Share – Peninsula Communities Strategic Plan  Subject: Deliverable 3 – Program Options  Date: March 15, 2016  To: Melissa Reggiardo, SamTrans  From: Sean Co and Adrian Witte, Toole Design Group  CC: Peninsula Bike Share Working Group  This memorandum is the third of a series of memoranda to help Redwood City, Palo Alto, and Mountain  View (referred to as “the peninsula cities”) make their decision on how to move forward with bike share.  It includes:  1.A summary of four potential system options that the peninsula cities could pursue including a streamlined, no‐gap‐in‐service scenario; a streamlined, new vendor scenario; and expanded system options with either the current vendor or a new vendor. 2.A review of procurement options to understand potential gaps in service and how to work regionally if a new vendor or operator is to be procured. 3.A review of potential regional governance options for the peninsula communities to move forward with a coordinated program. 4.Funding options including a review of how cities might be able to fund capital for their systems and short‐ and long‐term operations. 1.Service Scenarios The Peninsula Bike Share Technical Committee discussed possible service options for bike share service  in their communities. Firstly, in the interim, that the current pilot program be “streamlined” in each city.  In Redwood City, staff felt that streamlined service would remove the two lowest performing stations to  operate with fewer, well‐performing stations. In Palo Alto and Mountain View, staff felt that  streamlining the system could occur by relocating under‐performing stations to better performing  locations and/or adding a few new stations at key attractions and destinations.   Attachment D     Bay Area Bike Share  Page | 2  Peninsula Cities Analysis    Longer term, the peninsula cities might look to greatly increase the size of the program to between 30 to  40 stations to add significant utility to the program. This size increase comes with much greater capital  and operating costs. Under any service scenario, any new equipment and operations would need to be  funded by the cities and sources for this funding would need to be identified. The larger scale program  increases this commitment.   The general consensus of the Technical Committee is that there are already two bike share equipment  vendors operating on the peninsula and it seems confusing and challenging to introduce a third (or  more) vendors. That means that the peninsula cities will chose between the Motivate and the Social  Bikes equipment assuming this fits with their procurement protocols. However, the cities can decide  between one of the existing vendors (Motivate or Bikes Make Life Better) or select a new vendor or  vendors to operate their systems.  Distilling all of this information, four service options were considered for cost analysis:  1. Streamlined service, current vendor: streamline the number of stations in each city, purchase  any additional equipment needed, and pay Motivate to continue operations. This option results  in no gap in service. Cost estimates are based on quoted rates from Motivate (assuming less  than 1.0 trip per bike per day).  2. Streamlined service, new vendor: streamline the number of stations in each city, procure a new  equipment vendor (Social Bikes) and operator to take over operations. Cities could add on to the  Bikes Make Life Better operating contract with San Mateo or procure a different operator. Cost  estimates are based on capital costs quoted by Social Bikes and operating costs procured by the  City of San Mateo.  3. Expanded service, current vendor: applying a target size of 35 stations to each city, this scenario  would continue with the current vendor and operator. This option results in no gap in service.  Cost estimates are based on quoted rates from Motivate (assuming less than 1.0 trips per bike  per day).   4. Expanded service, new vendor: applying a target size of 35 stations to each city, this scenario  would procure a new vendor (Social Bikes) and operator. Cities could add on to the Bikes Make  Life Better operating contract with San Mateo or procure a different operator. Cost estimates  are based on capital costs quoted by Social Bikes and operating costs procured by the City of San  Mateo.             Bay Area Bike Share  Page | 3  Peninsula Cities Analysis    System Plans Service areas were developed for each city for the full build‐out scenario by applying stations to meet  target coverage and station densities and then adjusted for key attractions and destinations. City staff  were asked to identify what a streamlined service would look like in each of their cities.  Mountain View, as part of planning for initial Bay Area pilot program had identified 11 station locations  that they took through their internal approval process and proposed to the pilot program. The pilot  launched with only 7 station locations including 2 that were the recommendation of the operator. The  City has since relocated these 2 stations to their preferred locations. A streamlined service in Mountain  View would include the existing 7 locations and add 4 stations as shown on Figure 1.  In Palo Alto, streamlined service would include 13 stations ‐ the 5 existing stations, 5 stations identified  for private funding, and 3 new stations (for which the City of Palo Alto submitted a TFCA grant  application in March 2016). These are shown on Figure 2. The new stations will add density in  Downtown Palo Alto and at the California Avenue Caltrain station and provide stations directly serving  the Stanford Medical Center and the Stanford Research Park.  Staff suggested that the most effective way to streamline service in Redwood City may be to actually  reduce the system to the best performing stations. This would help boost ridership metrics and reduce  operating costs. The streamlined system would reduce to 5 stations as shown on Figure 3. Staff  indicated that they would be willing to talk to Motivate to allow their 2 unused stations to be  transferred to Mountain View and/or Palo Alto.   System Costs Capital and net operating costs were calculated for each of the scenarios describe above. Table 1 shows  a breakdown of capital (including installation) costs, operating costs, estimates of potential user  revenues (from membership and overage fees), and net operating costs for each city and for the  collective program.   Capital and O&M costs are generally well known and are outlined in the table footnotes. User revenues  are more difficult to calculate are a combination of annual and casual membership sales and usage fees.  Annual and casual membership sales are calculated as the number of annual or casual members  (assumed to grow from existing membership levels in proportion to the number of stations in the  system) multiplied by the cost of an annual or casual membership ($88 or $9 respectively). Usage fees  are calculated first by estimating the number of annual trips from the equations developed as part of  Deliverable 1 (and assuming a station density of 8 stations per square mile). Trips are then broken down  into annual and casual member trips based on existing ratios in each city. Annual member trips are  multiplied by the average overage fee recouped per annual member trip for the pilot program of $0.12  per trip. Casual user trips are multiplied by the average overage fee recouped per casual user trip for the  pilot program of $8.79 per trip.        Bay Area Bike Share  Page | 4  Peninsula Cities Analysis      Figure 1: Streamlined (Phase 1) and Full Build‐Out Scenarios for Mountain View Bike Share.      Bay Area Bike Share  Page | 5  Peninsula Cities Analysis      Figure 2: Streamlined (Phase 1) and Full Build‐Out Scenarios for Palo Alto Bike Share.      Bay Area Bike Share  Page | 6  Peninsula Cities Analysis      Figure 3: Streamlined (Phase 1) and Full Build‐Out Scenarios for Redwood City Bike Share.      Bay Area Bike Share  Page | 7  Peninsula Cities Analysis    Table 1: Cost Scenarios (assumes one year of operations)    OPTION 1 OPTION 2 OPTION 3 OPTION 4  Streamlined service,  current vendor  (no‐gap‐in‐service)  Streamlined service,  new vendors  Expanded service,  current vendor  Expanded service,  new vendors  CAPITAL Motivate Social Bikes Motivate Social Bikes  Mountain View  $180,000 $335,000 $1,665,000 $1,075,000  Receive 1 station from  RWC, purchase 3 new  stations  Purchase 11 stations from  new vendor Purchase 28 new stations Purchase 35 new stations  Palo Alto  $415,000 $400,000 $1,785,000 $1,075,000  Receive 1 stations from  RWC, purchase 7 new  stations  Purchase 10 stations from  new vendor Purchase 29 new stations Purchase 35 new stations  Redwood City ‐ $150,000 $1,665,000 $1,075,000  Give 1 station to MV and 1  station to PA  Purchase 5 stations from  new vendor Purchase 29 new stations Purchase 35 new stations  Total Capital  Cost $595,000 $885,000 $5,115,000 $3,225,000  OPERATIONS  (REVENUE)  NET COST  Motivate New Operator Motivate New Operator  Mountain View  $280,000 $250,000 $900,000 $735,000  ($65,000) ($65,000) ($290,000) ($290,000)  $215,000 $185,000 $610,000 $445,000  Palo Alto  $335,000 $290,000 $900,000 $735,000  ($115,000) ($115,000) ($565,000) ($565,000)  $220,000 $175,000 $335,000 $170,000  Redwood City  $130,000 $130,000 $900,000 $735,000  ($20,000) ($20,000) ($285,000) ($285,000)  $110,000 $110,000 $615,000 $450,000  Net Operating  Cost (per year) $545,000 $470,000 $1,560,000 $1,065,000  Notes:  1. Motivate retains ownership of existing stations in the pilot cities, but there is no capital cost to the peninsula cities to retain these stations.  2. New stations cost $55,503.56 per station plus a $4,000 per station installation cost based on Motivate quoted prices for a 19 dock station and  10 bikes per station.  3. All new equipment would be required if Social Bikes was selected. New stations cost $33,550 per station plus $4,000 per station for  installation based on prices quoted by Social Bikes for an equivalent 10 bike hub with 19 customized bike racks and a kiosk. Kiosks provided at  one‐third of stations. A $10,000 start‐up cost for website design is also included in this price.   4. Operating cost of $112.50 per dock per month based on quoted rates from Motivate, assuming less than 1.0 trips per bike per day.  5. Operating costs based on rates procured by the City of San Mateo. This includes a $150 per bike operating cost, plus a $100 per bike per year  allowance for replacement parts, a $2,500 per month software license fee, an $8 per bike per month platform connectivity fee, and a $50 per  kiosk per month kiosk connectivity fee.       Bay Area Bike Share  Page | 8  Peninsula Cities Analysis    2. Procurement Options Staying with Motivate requires no procurement (Options 1 and 3). For this reason there is no gap in  service under these options. For the other service options where a new vendor (either for equipment,  operations, or both) needs to be procured, there is likely to be some downtime between the end of one  service and the start of another.   Cities could procure individually or in some collective format. Equipment and operators could be  procured separately in each city. Procuring separately for equipment could create the scenario of  different, incompatible vendors between cities. However, procuring separate operators could be of  benefit to each city to allow them to prioritize different price points, service levels, and other features.  For example, Mountain View may want to select a private operator with high service levels, but at a  higher price point than Redwood City, who may be prepared to accept lower service levels and a non‐ profit operator for a lower cost.  Based on discussion with staff at the City of San Mateo, the City was able to procure Social Bikes  equipment without having to issue an RFP because of a number of factors. Firstly, another charter city  (Santa Monica) went through a similar evaluation process to select Social Bikes as their vendor;  secondly, the amount of the procurement was relatively low (less than $100,000); and lastly, they had a  cost proposal from Motivate to compare to so the project was not sole source per se. These factors  allowed staff to recommend to Council that the City purchase equipment from Social Bikes. These same  opportunities may exist in the other Peninsula cities too.  Another way to coordinate procurement would be for an agency to lead the procurement with others  joining in. The City of Palo Alto has expressed interest that they would take the lead on procurement if  necessary.   3. Regional Governance Options There are any number of ways for a bike share system to be organized and each city or region evaluates  their specific needs to determine which model works best for the funding, geographical, and political  environments of that area. A series of questions were designed to narrow down the potential  governance options. This flow chart is shown on Figure 4.        Bay Area Bike Share  Page | 9  Peninsula Cities Analysis      Figure 4: Peninsula Bike Share Governance Structure Options Flowchart.          Bay Area Bike Share  Page | 10  Peninsula Cities Analysis    The flow chart shows that there are several viable options to create a regional bike share program in the  Peninsula cities. These include:   Cities work together under a Memorandum of Understanding (MOU) framework. This is the  model used by the Boston area’s Hubway system and for the Capital Bikeshare program in the  Washington, D.C. area. Under this structure, an MOU would be developed between the  participating cities that outlines collective program decisions such as system branding, pricing  structure, revenue collection and distribution, marketing and fundraising responsibilities, etc.   Creating capacity outside of the city structures through the creation of a new non‐profit  organization to take on responsibility for the bike share program. The non‐profit may also take  on operations or contract out these services. This is the model used for Nice Ride Minnesota and  Cincinnati Red Bike (the former operating in multiple cities and the latter operating in multiple  cities across state lines).   Caltrain owned and operated program. This model is similar to the structure being used by LA  Metro in Los Angeles where an agency that spans the entire region takes on the responsibility of  the bike share program. Caltrain, although present in each community, does not have as much  influence over the whole system area as would a regional planning or transit agency. Also, this  model depends on interest and capacity within Caltrain that may not exist. Further discussions  would be needed to pursue this model.  Of the two most likely options, a collective MOU structure is the most expedient, maximizes control and  involvement for each of the cities, and is the most cost‐effective option. However, it relies on all of the  participating cities to be on‐board with this model and commit the necessary staff and financial  resources to operate the program. The peninsula cities have a good history of working together  cooperatively.  The non‐profit model would take the financial and public image risks of the program away from the city  agencies. Non‐profit operators also tend to be able to manage costs and can attract the greatest variety  of funding sources. However, a new non‐profit would take considerable time to establish and would  turn over control of the program. Staff capacity for the non‐profit would need to be built and a funding  source established to build this capacity.  As we have seen in the previous deliverables, the data suggests that the three (or more) systems  working together offers benefits to bike share members on the Peninsula and in the rest of the region.  The decision to work together to provide a unified bike share system ultimately rests with the individual  cities. The Motivate bike share system offers substantial benefits to the Bay Area region with the  possibility of rapid expansion into the East Bay and with large numbers of bikes not previously available  with pubic funds. However the Motivate expansion may have inadvertently caused a fracture in bike  share transportation for the region by causing cities not included in the expansion to examine their own  options for bike share ‐ which may include independent systems. The Bay Area is already burdened with  27 transit operators and regional coordination among them remains challenging. Should the Peninsula      Bay Area Bike Share  Page | 11  Peninsula Cities Analysis    cities decide that a coordinated bike share model does not work, there are options for bike share which  include independent programs and discontinuation of the service.  Independent Programs  Should the timing and coordination of a single regional system not fit into bike share plans for the cities,  individual cities may want to move forward with the implementation of bike share on their own. The  City of San Mateo has already moved forward with a small Social Bike system. The San Mateo system is  independent of the Motivate system requiring members to sign up for the system even if they have a  membership with Motivate. This is less than ideal from a customer service perspective requiring people  that may live in San Mateo but work in San Francisco to carry two membership fobs with different  pricing and different back‐end customer service and membership systems.  Moving independently allowed San Mateo to use available funds to quickly implement a system without  waiting for other cities to come online. This option may become necessary if one or two of the Peninsula  cities decide to discontinue bike share or move with a technology option that is different from each  other.   Discontinuing Bike Share  Should the cities decide that there is not political support or funding available for bike share, the  Motivate program can be discontinued thereby ending the pilot program. Supporters of bike share  including the Silicon Valley Bicycle Coalition and other advocacy groups may continue to lobby for bike  share making that decision a political challenge. If bike share were to be removed, the interest and  momentum would have subsided, making it difficult to bring bike share back at a future date. Funds that  are available for bike share would be spent on other projects and the current regional bike share  expansion funds may not be available in future years.   4. Funding Options Capital Metropolitan Transportation Commission (MTC) Congestion Mitigation and Air Quality (CMAQ)   MTC is in the process of developing guidelines for a standalone CMAQ funded grant program to  specifically fund bike share. It is expected the program will total $4.5 million and will be released in two  calls with the first call expected in the spring of 2016. Since the program is funded with CMAQ it is  expected that it will cover equipment only and not operations and maintenance.   Bay Area Air Quality Management District (BAAQMD) Transportation Fund for Clean Air (TFCA)   The TFCA fund has two parts, the Regional Fund and the County Program Manager Fund. The Air District  is no longer accepting applications for bike share under the Regional Fund as an eligible expense.  However bike share is still eligible under the County Program Manager Fund. To apply to the County  Program Manager Fund, projects are submitted directly to the County Congestion Management      Bay Area Bike Share  Page | 12  Peninsula Cities Analysis    Agencies. Projects must include a cost/effective measure that shows that bike share is able to achieve a  $500,000 per ton reduction for emissions. TFCA funds can be used to fund operations and maintenance  for bike share for up to 5 years. It is worth noting that even though operations and maintenance for bike  share are eligible, it is unlikely these expenses would make the application competitive. The cost  effectiveness calculations are based on the number of bikes for a system. Any additional funds  requested in the application that does not increase the number of bikes reduces the cost effectiveness  number.   Caltrans Active Transportation Program (ATP)  The Active Transportation Program (ATP) is a new funding source in California that can be used to fund  bicycle and pedestrian capital projects and plans. The program is a combination of different federal and  state funding sources including the federal Transportation Alternative Program and Highway Safety  Improvement Program. The state funds are part of the State Highway Account funds. Cycle 2 of the  program was over programmed by $360 million over 3 fiscal years. The call for Cycle 3, which will cover  fiscal years 2019/20 and 2020/21, will have applications due to Caltrans on June 15, 2016. Any grant  requests will cover equipment but will be unlikely to cover ongoing operations and maintenance.   Operations There may be some initial seed money available to either sustain interim operations or start new  service. Given that MTC will no longer be funding the Bay Area Bike Share program, Samtrans and VTA  will receive back their share of user revenues collected from the pilot program. This can be distributed  to the peninsula cities for expenses related to bike share, operations, and capital incurred during the  pilot program. It is expected that there is $281,000 in total and these funds can be used for continuation  of the program. Based on the net operating cost shown in Table 1, this would allow a streamlined  system to continue to operate under the current vendor for approximately 6 months.  Longer‐term, the program would need to find one or more sponsors to fill the expected gap between  operating costs and system revenues. Any shortfall would need to be funded by the program owner  (e.g., the city, a non‐profit, etc.).  5. Next Steps Different equipment and operator scenarios will be discussed at the March committee meeting.  Following that, the cities need to make some decisions about their internal goals and interests for bike  share and decide if they’d like to move forward: (1) with bike share; and (2) as a region or as individual  entities. The decision to move forward with bike share or not will likely come down to each city’s  funding capacity – particularly to meet any operating shortfall. This needs to be tested and  opportunities sought to secure capital and operating funds.  Assuming the cities decide to move forward collectively with bike share, they will need to decide how  they would like to move forward – under what governance structure. The most expedient model would  be to operate under a collective agreement that outlines regional versus local decisions, identifies roles      Bay Area Bike Share  Page | 13  Peninsula Cities Analysis    and responsibilities for each partner, outlines how decisions will be made, and specifies cost and  revenue sharing agreements between the partners. This does not preclude transitioning to a different  model over time. For example, a non‐profit could be formed to take over long‐term operations of the  program if internal capacity or risk become issues.   Once a governance structure is decided, the cities much chose between the existing equipment provider  and operator or whether to go out to bid for a new vendor. A common procurement process will be  necessary – with the ability for one city to lead the process and others to be able to add‐on to the  contract with the selected vendor. The feasibility of this process should be determined with the cities’  procurement departments.  CITY OF SAN MATEO Administrative Report City Hall 330 W. 20th Avenue San Mateo, CA 94403 www.cityofsanmateo.org Agenda Number: 15., Status: New Business TO:City Council FROM:Larry A. Patterson, City Manager PREPARED BY: City Manager’s Office MEETING DATE: Monday, November 16, 2015 SUBJECT: Pilot Bike Share Program Implementation RECOMMENDATION Approve a purchase contract with Social Bicycles and a services agreement with Bikes Make Life Better to develop a pilot bike share program in San Mateo and adopt a Resolution to approve a revision to the Comprehensive Fee Schedule for 2015-2016 to add bike sharing program user fees and authorize the City Manager to execute both documents. .BACKGROUND A bike share system consists of a network of bikes placed at hubs throughout a region that can be used on an hourly basis by system members. Bike sharing is a cost-effective mobility option that assists with last mile connectivity within a transportation system. Bike share programs have been adopted by more than 300 other cities worldwide, including San Francisco, San Jose, and Redwood City in the Bay Area. The City of San Mateo Bicycle Master Plan directs the City to explore the feasibility of implementing a bike share program within the City. In March 2013, the City completed a Bike Share Feasibility Study that determined that a successful program could be established within San Mateo. The City had originally hoped to participate in the regional Bay Area Bike Share program that was organized by the Metropolitan Transportation Commission (MTC). However, the bike share provider for that program, Motivate, has decided to limit their program in the future to just a few larger cities in the region. The City has been approached by an alternative bike share provider, Social Bicycles (SoBi), to implement a 50 -bike pilot bike share program within San Mateo. SoBi operates successful bike share programs within several North American cities, including Long Beach, Tampa, Phoenix, and Hamilton, Canada, and is in the process of launching new systems in Portland and Santa Monica. If successful, the bike share program in San Mateo will be expanded to a regional system, including other Peninsula and Silicon Valley communities. SoBi bicycles has partnered with Bikes Make Life Better, a local bicycle program operator, to operate the bike share program in San Mateo. The City of Santa Monica went through an extensive RFP process to select SoBi. Staff has reviewed their RFP materials and selection criteria and believes that SoBi offers the best fit system for San Mateo. As a result, staff recommends the sole-source award of the bike share system to SoBi. The City has the authority to sole source this contract under Municipal Code Section 3.60.050 which states that a contract can be sole sourced if calling for bids would be unavailing. Given how recently Santa Monica’s RFP was issued and the recent decision of Motivate not to operate on the Peninsula, staff does not believe that an RFP would result in CITY OF SAN MATEO Printed on 2/8/2016Page 1 of 4 powered by Legistar™ Attachment E Agenda Number: 15., Status: New Business a different outcome and would significantly delay the launch of a bike share system in San Mateo. Smart Bike System The SoBi bike share system is a “smart bike” system as opposed to the smart hub system used by the Bay Area Bike Share program. A smart bike system is one where the technology for locating, renting, releasing and locking is on the bikes themselves, as opposed to on the bike racks. This system has significant advantages in that the bikes can be parked at standard bike racks allowing for more flexibility at siting bike hubs, locking bikes mid-reservation, and allowing bikes to be left at non-hub locations at the end of a reservation. Smart bike systems can be implemented at a significantly lower capital cost than smart hub systems since they do not require that a pay kiosk be incorporated into each station. Instead, each bike is capable of accepting payments and releasing the bike-locking mechanism independently via mobile and web-based software that interacts with the smart bike hardware. Smart bike systems are easier to scale and can be successful with a small system such as the one proposed in San Mateo. San Mateo System The proposed San Mateo pilot bike share system will consist of 50 bikes spread out over a total of 10 to 12 hubs. The locations of the hubs have yet to be determined but will follow the guidance provided by the 2013 Bike Share Feasibility Study and will target transit nodes, large employers, retail districts, and high density housing sites. The City intends to use existing bike racks located throughout San Mateo for the program but may supplement some locations with additional bike racks to ensure adequate capacity. A typical hub would have roughly 4 bikes though some hubs will be larger, such as those located at the Caltrain stations. In order to develop and operate this system, the City first needs to purchase the bikes from SoBi and then enter into a services agreement with Bikes Make Life Better and SoBi to operate and maintain the system. Bikes Make Life Better would serve as the prime contractor to the City and SoBi would be a subcontractor under the proposed agreement. Bikes Make Life Better will be responsible for the day-to-day on-the-ground operations of the program, which includes repositioning the bikes between hubs, repairs and maintenance of the bikes. SoBi will be in charge of the web and mobile application-based membership and reservation system and the revenue collection and remittance. The City is intending to pilot the program for a 3-year trial basis and evaluate the program based on overall usage and customer experience. At the end of this term, the City can decide to continue the program, expand it, or to terminate it. The draft purchase contract with SoBi is included as Attachment 2 to this report. The contract is for an amount not to exceed $85,000. Staff is still finalizing negotiations on the language in Section 7, Indemnity and Limitation of Liability with SoBi. If any further modifications are made to this section following the publication of this report, staff will provide an updated contract to City Council at the meeting. Following the execution of the contract, SoBi bikes will place the order for the system bikes. The bikes take roughly 6 months to manufacture. The City hopes to launch the program in May 2016. A rendering of the proposed design for the bike share bikes is included as Attachment 4 to this report. The draft services agreement with Bikes Make Life Better is included as Attachment 3 to this report. The contract amount of $293,000 is based on per bike service fee of $1,800 per year for a three year period plus an additional start-up fee of $23,000 for system implementation. Test Phase Bikes Make Life Better and SoBi will be running a 10-bike test phase in San Mateo that is expected to launch a few months in advance of the implementation of the full system. This program will feature 3 bike hubs at the Downtown Caltrain station, the Hillsdale Caltrain station, and within Bay Meadows at the Nueva School property. This phase will allow the City to test the functionality of the program with a small group of users and to make adjustments to the operating model, as necessary. In addition, having bike share bikes at prominent CITY OF SAN MATEO Printed on 2/8/2016Page 2 of 4 powered by Legistar™ Agenda Number: 15., Status: New Business locations will build interest and awareness in the bike share program. SoBi bikes will be providing the City with the 10 test bikes at no cost and will roll them into the larger 50 bike system. As a result, the City will only have to pay for the purchase of 40 bikes. The City will pay Bikes Make Life Better a nominal fee of $110 per month per bike for operating test phase program which will include repositioning the bikes between the 3 hubs a couple of times a day and maintaining the bikes during this period. User Fees The City worked closely with SoBi to develop program user fees that are consistent with their other bike share programs. The proposed fees are as follows: ·$3 per half hour pay-as-you go use ·$5 per hour for pay-as-you go use ·$15 per month for a monthly membership (which includes 1 hour of use per day) ·$3 fee for locking bikes outside of a bicycle hub ·$100 for locking bikes outside of the bike share system boundaries (likely contiguous with City boundaries). These fees would apply during the 10-bike test phase and throughout the initial roll-out of the program and will be evaluated on an annual basis. The revenues from the user fees will help offset the annual operating costs of the program. In order to implement these bike share use fees, it is necessary to amend the Comprehensive Fee Schedule for 2015-2016. Attachment 1 includes the proposed resolution amending the Comprehensive Fee Schedule and the detailed fee structure. Sponsorships The City intends to seek out sponsors for the bike share system to further offset the annual operating costs. The City plans to approach major employers and property owners within the City. The sponsorships would be available on an annual basis and sponsors would be able to display their logo on the baskets of the bicycles. The City will retain the right to review and approve the sponsors and their logos to ensure appropriateness. BUDGET IMPACT The capital purchase costs and on-going annual operations will be paid from Project 465004 (Citywide Bike and Pedestrian Path Improvements Project). The initial capital costs to set up the bike share program are $85,000. This cost includes the provision of 40 bicycles. The bicycle provider, Social Bicycles, will provide the City with the 10 bikes used for the test phase at no cost. The services agreement with Bikes Make Life Better is for a fee not to exceed $293,000, which includes the start-up implementation expenses and operations for a three-year period. This cost will be offset by revenues from user fees and any sponsorships that the City attains which will be deposited back to Project 465004 to offset the expenses. Staff estimates that system revenues and sponsorships will cover approximately 50% of the operating costs in the first year and will eventually cover the full operating costs once the system reaches a stabilization level. ENVIRONMENTAL DETERMINATION The adoption of a pilot bike share program is categorically exempt pursuant to CEQA Guideline 15061(b)(3) in that it can be seen with certainty that there is no possibility that the activity in question may have a significant effect on the environment. NOTICE PROVIDED All meeting noticing requirements were met. ATTACHMENTS Att 1 - Proposed Resolution Att 2 - Purchase Contract with Social Bicycles Att 3 - Agreement for Services with Bikes Make Life Better CITY OF SAN MATEO Printed on 2/8/2016Page 3 of 4 powered by Legistar™ Agenda Number: 15., Status: New Business Att 4 - Rendering of San Mateo Bike Share bicycle STAFF CONTACT Kathy Kleinbaum, Senior Management Analyst kkleinbaum@cityofsanmateo.org (650)522-7153 CITY OF SAN MATEO Printed on 2/8/2016Page 4 of 4 powered by Legistar™ 1 PURCHASE CONTRACT FOR BIKE SHARE EQUIPMENT FROM SOCIAL BICYCLES INC. This Purchase Contract (the “Contract”), made and entered into this 17th day of November, 2015, by and between the CITY OF SAN MATEO, a municipal corporation existing under the laws of the State of California (the "CITY"), and SOCIAL CYCLES INC, a Delaware Corporation ("VENDOR"). R E C I T A L S: A. The CITY desires to purchase certain smart bicycles hereinafter described for a bicycle sharing program (the “Bicycle Sharing Program”) in the City of San Mateo, California. B. The CITY desires to engage VENDOR to provide these smart bicycles by reason of its qualifications and experience and VENDOR has offered to provide the required goods on the terms and in the manner set forth herein. NOW, THEREFORE, IT IS AGREED as follows: SECTION 1 - PURCHASE The goods to be purchased from VENDOR under this Contract are described in Exhibit A to this Contract, which is attached and incorporated by reference. SECTION 2 – PRICE AND TAXES All prices shall be as stated in this Contract and are firm and not subject to escalation except as stated in Exhibit A. This purchase is subject to all California sales tax. Municipalities are exempt from federal excise and transportation taxes. Prices shall exclude these taxes. SECTION 3 – PAYMENT Payment terms shall be as stated in Exhibit A. Invoices must cite the purchase order number to prevent delay in payment. All invoices must be mailed to City of San Mateo, Attn: Accounts Payable, 330 West 20th Avenue, San Mateo, CA 94403. SECTION 4 – DELIVERY AND PERFORMANCE If delivery of goods cannot be made at the specified time, VENDOR shall promptly notify the CITY of the earliest possible date for delivery. The CITY’S receipt or acceptance of all or part of a non-conforming delivery shall not constitute a waiver of any claim, right, or remedy the CITY has under this Contract or applicable law. Attachment F 2 SECTION 5 – SHIPMENT AND INSPECTION VENDOR assumes full responsibility for all transportation, transportation scheduling, packing, handling, insurance, and other services associated with delivery of all products. No charges for transportation containers, packing, etc., will be allowed unless so specified in this Contract or Exhibit A. All shipments shall be F.O.B. City of San Mateo. Transportation charges shall be shown as a separate item on the invoice. The CITY may revise shipping instructions as to any goods not as yet shipped. The CITY shall have the right to inspect any or all of the goods at VENDOR’s place of business or upon receipt by the CITY. By reason of its failure to inspect the goods, the CITY shall not be deemed to have accepted any defective goods or goods which do not conform to the specifications provided or to have waived any of the CITY’S rights or remedies arising by virtue of such defects or non-conformance. VENDOR shall be responsible for payment of shipping for the return of any defective goods. Shipping documents and invoices must cite the Purchase Order number. SECTION 6 – WARRANTIES VENDOR warrants that the new products delivered hereunder shall be free from defects in workmanship and materials and in conformity with all samples, drawings, descriptions and specifications furnished by VENDOR for (i) thirty-six (36) months from the delivery date in the case of the frames of each bicycle and (ii) twelve (12) months from the delivery date in the case of the locks and all other components and accessories of the products. The warranty excludes damage caused by accidents, misuse, weather events, vandalism, neglect, and improper maintenance. In addition, VENDOR is providing ten (10) used bicycles to the CITY. The CITY expressly acknowledges and agrees that it is acquiring the used bicycles from VENDOR on an “AS IS, WHERE IS” and “WITH ALL FAULTS” basis, without representations, warranties, or covenants of any kind or nature. VENDOR HEREBY EXPRESSLY DISCLAIMS ANY AND ALL OTHER WARRANTIES RELATING TO THE PRODUCTS PROVIDED HEREUNDER OR COMPONENTS THEREOF, WHETHER ORAL OR WRITTEN, EXPRESS, IMPLIED, OR STATUTORY. SECTION 7 – INDEMNITY AND LIMITATION OF LIABILITY VENDOR agrees to hold harmless and indemnify the CITY, its elected and appointed officials, employees, and agents from and against any and all claims, loss, liability, damage, and expense to the extent resulting from or arising out of VENDOR’s delivery of the bicycles under this Contract, except to the extent: (a) caused by the CITY or its employees, officers, agents, contractors, subcontractors, licensees or invitees; or (b) caused by the negligence or willful misconduct of the CITY or its employees, officers, agents, contractors, subcontractors, licensees or invitees. VENDOR agrees to defend the CITY, its elected and appointed officials, employees, and agents against any such claims. 3 SECTION 8 – TERMINATION This Contract may be terminated by mutual consent of both parties or by the CITY at its discretion. The CITY may cancel an order for goods at any time with written notice to VENDOR, stating the extent and effective date of termination. Upon receipt of this written notice, VENDOR shall stop performance under this Contract as directed by the CITY. If the Contract is terminated, VENDOR shall be paid in accordance with the Contract for all work commenced or performed by VENDOR prior to the date of termination that cannot be cancelled, meaning that VENDOR has already incurred costs for such work and such costs cannot be refunded. For any such work, when practicable, VENDOR agrees to use best efforts to assist the CITY in finding a suitable buyer for the goods. SECTION 9 – REMEDIES In the event of VENDOR’s breach of this Contract, the CITY may take any or all of the following actions, without prejudice to any other rights or remedies available to the CITY by law: (a) require Vendor to repair or replace such goods, and upon VENDOR’S failure or refusal to do so, repair or replace the same at VENDOR’S expense; and (b) reject any shipment or delivery containing defective or nonconforming goods and return for credit or replacement at VENDOR’S option, said return to be made at VENDOR’S cost and risk. In the event of the CITY’s breach hereunder, VENDOR’S exclusive remedy shall be VENDOR’S recovery of the goods or the purchase price payable for goods shipped or work commenced or performed prior to such breach. SECTION 10 – COMPLIANCE WITH LAW VENDOR warrants that it will comply with all federal, state, and local laws, ordinances, rules, and regulations applicable to its performance under this Contract. VENDOR shall obtain and maintain throughout the life of the Contract all permits or licenses required in connection with the manufacture, sale, and shipment of the products ordered under this Contract. SECTION 11 – ASSIGNMENT VENDOR shall not delegate or subcontract any duties and services or assign any rights or claims under this Contract without the CITY’S prior written consent. SECTION 12 – ARTWORK, DESIGNS, PATENTS, COPYRIGHTS AND TRADEMARKS VENDOR hereby agrees that the sale, use, or incorporation into manufactured products of all machines, software, hardware, materials and other devices furnished under this Contract are free and clear of infringement of any valid patent, copyright, or trademark. VENDOR shall hold the CITY harmless from any and all costs and expenses, including attorney fees, liability, and loss of any kind growing out of claims, suits, or actions alleging such infringement, and VENDOR agrees to defend such claims, suits, or actions. SECTION 13 – GOVERNING LAW This Contract shall be deemed to be made in the State of California and shall in all respects be construed and governed by the laws of that state. 4 SECTION 14 – VENUE In the event of litigation, venue will be in the County of San Mateo. SECTION 15 – WAIVER The waiver of any term, condition, or provision hereof shall not be construed to be a waiver of any other such term, condition, or provision, nor shall such waiver be deemed a waiver of a subsequent breach of the same term, condition or provision. SECTION 16 - COSTS AND ATTORNEY FEES Attorney fees in an amount not exceeding $85 per hour per attorney, and in total amount not exceeding $5000, shall be recoverable as costs (by the filing of a cost bill) by the prevailing party in any action or actions to enforce the provisions of this Contract. The above $5000 limit is the total of attorney fees recoverable whether in the trial court, appellate court, or otherwise, and regardless of the number of attorneys, trials, appeals, or actions. It is the intent of this provision that neither party shall have to pay the other more than $5000 for attorney fees arising out of an action, or actions to enforce the provisions of this Contract. SECTION 17 - MEDIATION Should any dispute arise out of this Contract, any party may request that it be submitted to mediation. The parties shall meet in mediation within 30 days of a request. The mediator shall be agreed to by the mediating parties; in the absence of an agreement, the parties shall each submit one name from mediators listed by either the American Arbitration Association, the California State Board of Mediation and Conciliation, or other agreed-upon service. The mediator shall be selected by a "blindfolded" process. The cost of mediation shall be borne equally by the parties. Neither party shall be deemed the prevailing party. No party shall be permitted to file a legal action without first meeting in mediation and making a good faith attempt to reach a mediated settlement. The mediation process, once commenced by a meeting with the mediator, shall last until agreement is reached by the parties but not more than 60 days, unless the maximum time is extended by the parties. SECTION 18 - NOTICES All notices hereunder shall be given in writing and mailed, postage prepaid, addressed as follows: To CITY: City of San Mateo Attn.: City Manager 330 West 20th Avenue San Mateo, CA 94403 To VENDOR: Social Bicycles Attn: Ryan Rzepecki, CEO 47 Hall Street, Suite 414 Brooklyn, NY 11205 5 SECTION 19 – MISCELLANEOUS PROVISIONS RELATED TO THE BICYCLE SHARING PROGRAM The CITY acknowledges that a third party will be responsible for the management and operation of the Bicycle Sharing Program contemplated by this Contract, including but not limited to the rental and maintenance of the products; the procurement of all parts, tools, labor, and other requirements associated with maintaining the products; the solicitation and enrollment of subscribed users; the marketing of the Bicycle Sharing Program; the provision of customer service to subscribed users; and the overall delivery of a safe and reliable program. VENDOR will, pursuant to a separate agreement, grant the third party provider a non-transferable, non- sublicensable, non-exclusive, limited right to access and use VENDOR’s software operating platform for the purpose of enabling the rental of bicycles to subscribed users in the Bicycle Sharing Program. SECTION 20 – OWNERSHIP OF INTELLECTUAL PROPERTY RIGHTS The CITY acknowledges that the goods offered hereunder contain and/or incorporate certain intellectual property rights, including but not limited to trademarks, patent, patent application, moral right, trade secret, copyright and any applications or right to apply for registration, computer software programs or applications, tangible or intangible proprietary information, or any other intellectual property rights (the “Intellectual Property Rights”), that the Intellectual Property Rights used in conjunction with the products are proprietary to VENDOR and/or VENDOR’s suppliers, and that VENDOR and/or its suppliers retain exclusive ownership of the Intellectual Property Rights and all copies thereof provided under this Contract. The CITY acknowledges that title to the Intellectual Property Rights will remain with VENDOR and its licensors, notwithstanding anything to the contrary herein, and that the CITY has no rights in the Intellectual Property Rights except those expressly granted by this Contract. When used in reference to the Intellectual Property Rights or in reference to Intellectual Property Rights embedded in the products, the word “purchase” and similar or derivative words are deemed to mean “non- transferable, non-sublicensable, non-exclusive, limited license” to use the Intellectual Property Rights solely to the extent required for the CITY to use the products provided hereunder in accordance with this Contract. The CITY acknowledges that it is not entitled to receive the source code of any software. This limited license shall continue until this Contract is terminated, until the license is terminated in accordance with this Contract, for the useful life of the goods in which the Intellectual Property Rights are embedded, or for the useful life of the Intellectual Property Rights, whichever is shorter. Notwithstanding the above and anything contrary in this Contract, in the event the CITY, in accordance with this Contract and with VENDOR’s prior written approval, transfers title to goods containing or incorporating Intellectual Property Rights, this limited license shall transfer to the CITY’s transferee. Use of Intellectual Property Rights in violation of this Section shall automatically terminate the limited license. All data created and/or processed by the products and VENDOR’s software platforms, including subscribed user data, is and will remain the sole property of VENDOR. The Parties acknowledge that the data in the CITY’s possession may be subject to disclosure under the California Public Records Act. The CITY shall not directly or indirectly: 6 1.1. Sell, lease, license, pledge, sublicense, loan, encumber, or otherwise transfer the Intellectual Property Rights, in whole or in part, to any third party or otherwise make the Intellectual Property Rights available to any third party, and shall keep the same free from any lien or encumbrance, or any other claim by a third party; 1.2. Copy, reproduce, or otherwise infringe the Intellectual Property Rights, in whole or in part, with respect to the goods or other materials developed or provided hereunder by VENDOR; 1.3. Decompile, disassemble, reverse engineer, or otherwise attempt to derive the source code of any portion of the Intellectual Property Rights; 1.4. Write or develop any derivative software or any other software program based on the Intellectual Property Rights; 1.5. Make modifications, corrections, alterations, enhancements, or other additions to the Intellectual Property Rights; 1.6. Use the Intellectual Property Rights or allow someone to use the Intellectual Property Rights otherwise than for the Bicycle Sharing Program; or 1.7. Remove or destroy any Marks, proprietary markings, or proprietary legends placed upon or contained with or on any Goods or any related materials or documentation by VENDOR. Trademarks associated with the CITY and VENDOR are and shall remain the property of the CITY and Vendor, respectively. Notwithstanding the above and subject to the limitations, terms, and conditions set forth in this Contract, neither party shall use the other party’s trademarks without the prior written consent of the other party. SECTION 21 - FORCE MAJEURE Neither party shall be liable to the other party for failure or delay in the performance of a required obligation if such failure or delay is caused by strike, riot, fire, natural disaster, utilities and communications failures, governmental acts or orders or restrictions, failure of suppliers, or any other reason where failure to perform is beyond the reasonable control of and is not caused by the negligence of the non-performing party, provided that such party gives prompt written notice of such condition and resumes its performance as soon as possible. SECTION 22 - CONTRACT CONTAINS ALL UNDERSTANDINGS; AMENDMENT This document represents the entire and integrated agreement between the CITY and VENDOR and supersedes all prior negotiations, representations, and agreements, either written or oral. This document may be amended only by written instrument, signed by both the CITY and VENDOR. 7 IN WITNESS WHEREOF, CITY and VENDOR have executed this Contract the day and year first above written. CITY OF SAN MATEO SOCIAL BICYCLES, INC. _______________________________ _________________________________ Larry A. Patterson, City Manager Ryan Rzepecki, CEO ATTEST: APPROVED AS TO FORM: ________________________________ __________________________________ Patrice Olds, City Clerk Gabrielle Whelan, Assistant City Attorney SMART BICYCLE Quantity Price Total B.1 V3.5 Smart Bicycle 40 1,500 $ 60,000 $ custom paint and decals (Pantone color palette) included onboard real-time GPS and accelerometer tracking included onboard GSM cellular connection included integrated keypad, LCD screen, and RFID technology included solar and dynamo power generators included three-speed hub with shaft drive transmission included B.2 Replacement Parts and Custom Tools 50 100 $ 5,000 $ B.3 Exterior Basket Printed Assets and Design Template 50 50 $ 2,500 $ B.4 Interior Basket Printed Assets and Design Template 50 50 $ 2,500 $ B.5 Additional Sponsorship Printed Assets and Design Template 50 50 $ 2,500 $ B.6 Upgrade to Skirt Guard - 85 $ - $ B.7 Skirt Guard Printed Assets and Design Template - 20 $ - $ B.8 Upgrade to Eight-Speed Hub with Shaft Drive Transmission - 135 $ - $ TOTAL SMART BICYCLE COSTS 72,500 $ TRANSPORT AND CUSTOMS SERVICES Quantity Price Total T.1 Smart Bicycle Delivery Services (Item #B.1)12,500 $ T.2 Docking Point Delivery Services (Item #D.1)- $ T.3 Payment Kiosk Delivery Services (Item #S.1)- $ T.4 Panel Delivery Services (Item #S.2 and #S.3)- $ TOTAL TRANSPORT AND CUSTOMS SERVICES COSTS 12,500 $ Initial Goods Purchase and Setup Cost 72,500 $ Transport and Customs Services 12,500 $ TOTAL UP-FRONT ONE-TIME COSTS 85,000 $ BICYCLES (in United States dollars) EXHIBIT A SUMMARY TERMS TERMS • Fifty percent (50%) of the Total Up-Front One-Time Costs shall be paid by the CITY to VENDOR upon placing a Purchase Order. The remaining fifty percent (50%) of the Total Up-Front One-Time Costs is due on the delivery date of the applicable Goods. • The delivery date of the Goods will be six (6) months after submission of a Purchase Order. Purchase Orders shall be deemed submitted when the CITY’s initial payment and final branding designs are received by VENDOR. • The prices quoted above are valid for ninety (90) days from the effective date of the Contract. Social Bicycles Inc. • Brooklyn, NY -1- AGREEMENT WITH BIKES MAKE LIFE BETTER, INC. FOR BICYCLE MANAGEMENT SERVICES FOR THE SAN MATEO BIKE SHARE PROGRAM This Agreement, made and entered into this 17th day of November, 2015, by and between the CITY OF SAN MATEO, a municipal corporation existing under the laws of the State of California ("CITY"), and Bikes Make Life Better, Inc., a California corporation ("CONTRACTOR"), whose address is 879 Hampshire, San Francisco, California 94110. R E C I T A L S : A. CITY desires certain bike share program establishment and management services hereinafter described. B. CITY desires to engage CONTRACTOR to provide these bike share program services by reason of its qualifications and experience for performing such services and CONTRACTOR has offered to provide the required services on the terms and in the manner set forth herein. NOW, THEREFORE, IT IS AGREED as follows: SECTION 1 - SCOPE OF SERVICES The scope of services to be performed by CONTRACTOR under this Agreement is as described in Exhibit A to this Agreement, which is attached and incorporated by reference. SECTION 2 - DUTIES OF CONTRACTOR CONTRACTOR shall be responsible for the professional quality, technical accuracy and coordination of all work furnished by CONTRACTOR under this Agreement. CONTRACTOR shall, without additional compensation, correct or revise any errors or deficiencies in its work. CONTRACTOR represents that it is qualified to furnish the services described under this Agreement. CONTRACTOR shall be responsible for employing or engaging all persons necessary to perform the services of CONTRACTOR. SECTION 3 - DUTIES OF CITY CITY shall provide pertinent information regarding its requirements for the project. CITY shall examine documents submitted by CONTRACTOR and shall render decisions pertaining thereto promptly, to avoid unreasonable delay in the progress of CONTRACTOR'S work. Attachment G -2- SECTION 4 - TERM The services to be performed under this Agreement shall commence on November 17, 2015, and be completed on or about June 30, 2019. SECTION 5 - PAYMENT Payment shall be made by CITY only for services rendered and upon submission of a payment request upon completion and CITY approval of the work performed. In consideration for the full performance of the services set forth in Exhibit A, CITY agrees to pay CONTRACTOR a fee pursuant to rates stated in Exhibit B. Any amounts due Contractor under this Agreement upon which payment is not received within 30 days of City receiving an invoice shall accrue late fees equal to the lesser of: (i) 3% per month; or (ii) the highest rate allowable by law, in each case compounded monthly to the extent allowable by law. Without limiting Contractor’s other rights or remedies, in the event City is more than 30 days delinquent in their scheduled payments, City agrees that Contractor may, at its choosing, terminate the relationship. In the event City’s account becomes seriously delinquent, Contractor will have no choice but to resort to collection proceedings and City agrees to be responsible for Contractor’s attorney's fees and costs incurred in those proceedings. SECTION 6 – TERMINATION Without limitation to such rights or remedies as CITY or CONTRACTOR shall otherwise have by law, CITY or CONTRACTOR shall have the right to terminate this Agreement or suspend work on the Project for any reason, upon thirty (30) days' written notice to the other party. CONTRACTOR agrees to cease all work under this Agreement upon receipt of said written notice. SECTION 7 - OWNERSHIP OF DOCUMENTS All documents prepared by CONTRACTOR in the performance of this Agreement are and shall be the property of CITY, whether the project for which they are made is executed or not. SECTION 8 - CONFIDENTIALITY All reports and documents prepared by CONTRACTOR in connection with the performance of this Agreement are confidential until released by CITY to the public. CONTRACTOR shall not make any such documents or information available to any individual or organization not employed by CONTRACTOR or CITY without the written consent of CITY before any such release. SECTION 9 - INTEREST OF CONTRACTOR -3- CONTRACTOR covenants that it presently has no interest, and shall not acquire any interest, direct or indirect, financial or otherwise, which would conflict in any manner or degree with the performance of the services under this Agreement. SECTION 10 - CONTRACTOR'S STATUS It is expressly agreed that in the performance of the services required under this Agreement, CONTRACTOR shall at all times be considered an independent contractor as defined in Labor Code Section 3353, under control of the CITY as to the result of the work but not the means by which the result is accomplished. Nothing herein shall be construed to make CONTRACTOR an agent or employee of CITY while providing services under this Agreement. SECTION 11 - INDEMNITY CONTRACTOR agrees to hold harmless and indemnify CITY, its elected and appointed officials, employees, and agents from and against any and all claims, loss, liability, damage, and expense arising out of CONTRACTOR’s performance of this Agreement, except for those claims arising out of CITY’s sole negligence or willful misconduct. CONTRACTOR agrees to defend City, its elected and appointed officials, employees, and agents against any such claims. SECTION 12 - INSURANCE Contractor shall procure and maintain for the duration of the contract the insurance specified in Exhibit C to this Agreement SECTION 13 - NONASSIGNABILITY Both parties hereto recognize that this Agreement is for the personal services of CONTRACTOR and cannot be transferred, assigned, or subcontracted by CONTRACTOR without the prior written consent of CITY. SECTION 14 - RELIANCE UPON_SKILL OF CONTRACTOR It is mutually understood and agreed by and between the parties hereto that CONTRACTOR is skilled in the performance of the work agreed to be done under this Agreement and that CITY relies upon the skill of CONTRACTOR to do and perform the work in the most skillful manner, and CONTRACTOR agrees to thus perform the work. The acceptance of CONTRACTOR's work by CITY does not operate as a release of CONTRACTOR from said obligation. SECTION 15 - WAIVERS The waiver by either party of any breach or violation of any term, covenant, or condition of this Agreement or of any provisions of any ordinance or law shall not be deemed to be a waiver of such term, covenant, condition, ordinance or law or of any subsequent breach or violation of the same or of any other term, covenant, condition, ordinance or law or of any subsequent breach or violation of the same or of any other term, condition, ordinance, or law. The subsequent acceptance by either party of any fee or other money which may become due hereunder shall not -4- be deemed to be a waiver of any preceding breach or violation by the other party of any term, covenant, or condition of this Agreement or of any applicable law or ordinance. SECTION 16 - COSTS AND ATTORNEY FEES Attorney fees in total amount not exceeding $5000, shall be recoverable as costs (by the filing of a cost bill) by the prevailing party in any action or actions to enforce the provisions of this Agreement. The above $5000 limit is the total of attorney fees recoverable whether in the trial court, appellate court, or otherwise, and regardless of the number of attorneys, trials, appeals, or actions. It is the intent of this provision that neither party shall have to pay the other more than $5000 for attorney fees arising out of an action, or actions to enforce the provisions of this Agreement. SECTION 17 - NON-DISCRIMINATION CONTRACTOR warrants that it is an Equal Opportunity Employer and shall comply with applicable regulations governing equal employment opportunity. Neither CONTRACTOR nor any of its subcontractors shall discriminate in the employment of any person because of race, color, national origin, ancestry, physical handicap, medical condition, marital status, sex, or age, unless based upon a bona fide occupational qualification pursuant to the California Fair Employment and Housing Act. SECTION 18 - MEDIATION Should any dispute arise out of this Agreement, any party may request that it be submitted to mediation. The parties shall meet in mediation within 30 days of a request. The mediator shall be agreed to by the mediating parties; in the absence of an agreement, the parties shall each submit one name from mediators listed by either the American Arbitration Association, the State Mediation and Conciliation Service, or other agreed-upon service. The mediator shall be selected by a blind draw. The cost of mediation shall be borne equally by the parties. Neither party shall be deemed the prevailing party. No party shall be permitted to file a legal action without first meeting in mediation and making a good faith attempt to reach a mediated settlement. The mediation process, once commenced by a meeting with the mediator, shall last until agreement is reached by the parties but not more than 60 days, unless the maximum time is extended by the parties. SECTION 19 - LITIGATION CONTRACTOR shall testify at CITY'S request if litigation is brought against CITY in connection with CONTRACTOR'S services under this Agreement. Unless the action is brought by CONTRACTOR, or is based upon CONTRACTOR'S wrongdoing, CITY shall compensate CONTRACTOR for preparation for testimony, testimony, and travel at CONTRACTOR'S standard hourly rates at the time of actual testimony. -5- SECTION 20 - NOTICES All notices hereunder shall be given in writing and mailed, postage prepaid, addressed as follows: To CITY: City of San Mateo Attn: Public Works Director 330 West 20th Avenue San Mateo, CA 94403 To CONTRACTOR: Bikes Make Life Better, Inc. Attn: Amy Harcourt 879 Hampshire San Francisco, CA 94110 SECTION 21 - AGREEMENT CONTAINS ALL UNDERSTANDINGS; AMENDMENT This document represents the entire and integrated agreement between CITY and CONTRACTOR and supersedes all prior negotiations, representations, and agreements, either written or oral. This document may be amended only by written instrument, signed by both CITY and CONTRACTOR. SECTION 22 - GOVERNING LAW AND VENUE This Agreement shall be governed by the laws of the State of California and, in the event of litigation, venue will be in the County of San Mateo. IN WITNESS WHEREOF, CITY and CONTRACTOR have executed this Agreement the day and year first above written. CITY OF SAN MATEO CONTRACTOR Larry A. Patterson, City Manager Amy Harcourt, CEO APPROVED AS TO FORM Gabrielle Whelan, Assistant City Attorney EXHIBIT A SCOPE OF WORK The City of San Mateo continues to support and invest in the role of bicycle transportation. The City is exploring a pilot bicycle share system that could introduce bicycles to new users and further complement the City’s existing multi-modal transportation network. The pilot bicycle share project will include 50 bicycles at ten to twelve locations within the City of San Mateo. Bikes Make Life Better will serve as the prime contractor for this project and will be responsible for the operations and maintenance of the system, including the redistribution of the bicycles. Social Bicycles (Sobi) will be a subcontractor to Bikes Make Life Better and will be responsible for the provision of the bicycles, the bike sharing website portal, and revenue collection and remittance. The Contract team, which includes Bikes Make Life Better and Sobi shall be responsible for all of the following: A. SYSTEM DEVELOPMENT AND INSTALLATION The budget for the installation and launch of the Bike Share system shall be consistent with Exhibit B of this contract. The scope of Work shall include all of the following: 1. System installation. Provide installation of all bicycles, electronics, and system software. 2. Create website. Work with Social Bicycles, and the City to create branding, marketing and public relations. 3. Station Locations. Work with the City of San Mateo to identify and establish station locations. The City will provide an initial list of locations that may be appropriate. The Contract team will assist the City with evaluating the locations and determining the final list. Locations may be adjusted during the term of the contract, based on usage rates and other factors. 4. Launch. Plan and execute a timely and effective system launch within 30 days of delivery of the bikes or within the time from when the bike racks locations are finalized and in place. B. SYSTEM MAINTENANCE AND OPERATION The Bike Share system shall be operated consistent with the budget included in Exhibit B of this contract. The scope of work shall include all of the following: 1. Reporting. Contractor shall submit monthly reports of gross revenues, ridership, and expenses, in a format approved by the City, with revenue broken down into categories of income. At the end of each operating year, the Contractor will be required to submit a detailed income, utilization/ridership, and expense statement for the past year's operation. 2. Open Data. Contractor shall provide open content data that will allow third party developers to provide applications to assist users in finding bicycles, and stations, and comparing travel and usage information consistent with reports from other US systems.. 3. Response to Complaints. All System structures shall contain a conspicuously posted telephone number, to the contractor's customer service operations to which the public may direct complaints and comments, and instructions for filing a complaint. All complaints received by Contractor shall be logged, Contractor shall cooperate with the City in providing a timely response to any such complaints. The Contractor shall provide a shared database in which the City can communicate complaints from the public and from the City, and in which the Contractor can report the resolution of such complaints. 4. Maintenance, Redistribution, and Repair. System maintenance shall include, but is not limited to, inspecting, maintaining, redistributing bikes between station hubs, cleaning, and removing graffiti from System structures on a timely basis, inspection and prompt repair or replacement of the system elements. Contractor shall comply with specified service standards as shown in Exhibit E of this contract. 5. Real-time Communication. Provide system to track bicycle and dock status and populate interactive map with status of bicycles at stations, station locations with optional address and directions, and transit information. 6. Safety information. Safety information shall be provided to all customers. 7. Adaptive Website Design. Provide and correctly display web pages on all major web browsers and mobile devices/formats. 8. Branding, Marketing, Sponsor Fulfillment and Public Relations. Contractor shall work with City to oversee the implementation of all branding, marketing and public relations, and work with City to fulfill all obligations of any grants, sponsorships, advertisers and/or donors including placement of corporate messaging as appropriate on bicycles stations or other locations. 9. Performance Outcomes and Service Level Agreements. Contractor shall meet Service Level Agreements (“SLA") consistent with Exhibit E of this contract. 10. Customer Service. Contractor shall provide responsive and customer-friendly services that encourage repeat use, including timely response to complaints. C. FINANCIAL OPERATIONS 1. Registration. Provide and maintain in full operation a web page to register, submit credit card data, and execute a user agreement. After registration, members should be able to immediately access a bike at any station. Membership of various durations (such as 30 minutes, hourly, daily, Weekly, and/or monthly) shall be available. Rates and durations shall be determined by the City and Contractor. 2. Secure Financial Transactions. Complete secure financial transactions with data input at the web page or mobile device applications. Provide the capability to track whether bicycles are returned during a specified period and accurately assess overtime fees. Financial data must be held securely in a manner that complies with all laws, and only accessed by authorized personnel. The Contractor shall develop a robust security policy. The Contractor must ensure that its security policy is enforced, report any breaches to the City and develop corrective plan to prevent future breaches. The method for protecting financial data, user names, and addresses, must be Payment Card Industry (PCI) compliant and satisfy minimum specifications of the City. 3. Fee Collection. Accurately assess and collect fees for failure to return any bicycle within 24 hours or an established time period and clearly communicate rules to user. 4. Revenue. All revenues, including membership fees, use fees, and revenue from other sources, shall be collected by the Contractor on behalf of the City and returned to the City. The Contractor, as the City's fiduciary with respect to collection and treatment of such revenue, shall be responsible for all revenue from the time it is collected until the time it is deposited to City accounts. 5. Records. Contractor shall maintain records and make them available to the City on appropriate notice for inspection and auditing. 6. Billing and Compensation. The Contractor shall submit invoices for service, operation, maintenance and repairs based on a monthly, per-bike fee. The monthly fee will cover a reasonable number of station relocations per year (up to 5). The Contractor shall submit invoices for compensation for the installation of new stations in additional locations at the price specified in the agreement. 7. Regular Operations Review. Contractor shall perform ongoing review of ridership, fees structure and development of recommendations that promote use of the system and reduce or eliminate any operating deficit. D. SAFETY AND LIABILITY Waiver of Liability Contractor’s registration for all new system users will require agreement to a statement waiving liability and accepting responsibility for use of the City's bikeshare bicycles. The waiver language is subject to City approval prior to implementation. E. SYSTEM EXPANSION, INTEROPERABILITY AND REGIONAL COORDINATION 1. Contractor will work with the City to coordinate with Clipper and provide access to all bike share systems in the San Francisco Bay Area. 2. Contractor shall work with the City to expand the system within the City of San Mateo as directed, subject to an amendment of this contract. 3. Contractor must develop cooperative agreements with other regional bikeshare operators so that users can check out bicycles from bikeshare systems in San Mateo County and Santa Clara County, as feasible. 4. Contractor shall facilitate regional cooperation, interoperability with any other regional bikeshare system and regional fare media, and ongoing partnerships with transit and local businesses. Exhibit B: Budget and Fee Schedule Exhibit C: Insurance Requirements Exhibit D: San Mateo Bike Share Schedule Exhibit E: Service Level Agreements IMPLEMENTATION SERVICES (in United States dollars) SOBI IMPLEMENTATION SERVICES Quantity Price Total A.1 Implementation Services (including expenses) 15,000 A.2 Website Landing Page Design 8,000 $ TOTAL ADDITIONAL PRODUCTS AND SERVICES COSTS 23,000 $ OPERATIONS (in United States dollars) BMLB MONTHLY TURN-KEY OPERATIONS COSTS Quantity Price Total O.1 Per Bicycle Fee (per month) 50 150 $ 7,500 $ TOTAL MONTHLY TURN-KEY OPERATIONS COSTS 7,500 $ TOTAL ANNUAL TURN-KEY OPERATIONS COSTS 90,000$ All prices are for the 50-bike pilot and will be revisited for future expansion Exhibit B -8- EXHIBIT C INSURANCE REQUIREMENTS MINIMUM SCOPE OF INSURANCE Coverage shall be at least as broad as: 1. Commercial General Liability (CGL): Insurance Services Office (ISO) Form CG 00 01 12 07 covering CGL on an “occurrence” basis, including products-completed operations, personal & advertising injury, with limits no less than $2,000,000 per occurrence. If a general aggregate limit applies, either the general aggregate limit shall apply separately to this project/location or the general aggregate limit shall be twice the required occurrence limit. 2. Automobile Liability: ISO Form Number CA 00 01 covering any auto (Code 1), or if Contractor has no owned autos, hired, (Code 8) and non-owned autos (Code 9), with limit no less than $1,000,000 per accident for bodily injury and property damage. 3. Workers’ Compensation: as required by the State of California, with Statutory Limits, and Employer’s Liability Insurance with limit of no less than $1,000,000 per accident for bodily injury or disease. If the contractor maintains higher limits than the minimums shown above, the City requires and shall be entitled to coverage for the higher limits maintained by the contractor. Other Insurance Provisions The insurance policies are to contain, or be endorsed to contain, the following provisions: Additional Insured Status The City, its elected and appointed officials, employees, and agents are to be covered as insureds on the auto policy for liability arising out of automobiles owned, leased, hired or borrowed by or on behalf of the Contractor; and on the CGL policy with respect to liability arising out of work or operations performed by or on behalf of the Contractor including materials, parts or equipment furnished in connection with such work or operations. General liability coverage can be provided in the form of an endorsement to the Contractor’s insurance (at least as broad as ISO Form CG 20 10, 11 85 or both CG 20 10 and CG 20 37 forms if later revisions used). Primary Coverage For any claims related to this contract, the Contractor’s insurance coverage shall be primary insurance as respects the City, its elected and appointed officials, employees, and agents. Any insurance or self-insurance maintained by the City, its elected and appointed officials, employees, or agents shall be excess of the Contractor’s insurance and shall not contribute with it. Notice of Cancellation -9- Each insurance policy required above shall provide that coverage shall not be canceled, except after thirty (30) days’ prior written notice (10 days for non-payment) has been given to the City. Waiver of Subrogation Contractor hereby grants to City a waiver of any right to subrogation which any insurer of said Contractor may acquire against the City by virtue of the payment of any loss under such insurance. Contractor agrees to obtain any endorsement that may be necessary to effect this waiver of subrogation, but this provision applies regardless of whether or not the City has received a waiver of subrogation endorsement from the insurer. Deductibles and Self-Insured Retentions Any deductibles or self-insured retentions must be declared to and approved by the City. The City may require the Contractor to purchase coverage with a lower deductible or retention or provide proof of ability to pay losses and related investigations, claim administration, and defense expenses within the retention. Acceptability of Insurers Insurance is to be placed with insurers with a current A.M. Best’s rating of no less than A:VII, unless otherwise acceptable to the City. Verification of Coverage Contractor shall furnish the City with original certificates and amendatory endorsements or copies of the applicable policy language effecting coverage required by this clause. All certificates and endorsements are to be received and approved by the City before work commences. However, failure to obtain the required documents prior to the work beginning shall not waive the Contractor’s obligation to provide them. The City reserves the right to require complete, certified copies of all required insurance policies, including endorsements required by these specifications, at any time. Social Bicycles: Implementation Schedule November 2015 December 2015 January 2016 February 2016 March 2016 April 2016 May 2016 1st thru 15th 16ththruend 1st thru 15th 16ththruend 1st thru 15th 16ththruend 1st thru 15th 16ththruend 1st thru 15th 16ththruend 1st thru 15th 16ththruend 1st thru 15th 16ththruend Bicycles PL A C E O R D E R F O R 4 0 B I K E S LA U N C H 1 0 B I K E P I L O T P R O G R A M *L A U N C H 5 0 B I K E P R O G R A M Design & Branding Finalized Shipping Testing & Installation Planning & Setup Siting Hubs Permitting Approval Process Network & Website Configurations Branding Assets Design Printing Installation Software Website Production Website Launch Marketing Establishment of Social Media Production of Marketing Materials Membership Drive Operations Hiring Operational Processes Set-up SoBi In-person Training and Exercise EXHIBIT D MAINTENANCE + OPERATIONS Schedule Location Staff Repairs and Adjustments Daily / Weekly On-site BMLB Station and Bicycle Inspection Daily / Weekly On-site BMLB Prevention Maintenance and Tune-ups Quarterly Facility BMLB Cleaning and Litter Removal Daily On-site BMLB Cleaning upon notification Within 48 hours On-site BMLB Address repair upon notification Within 48 hours On-site BMLB Maintenance: 88% of bikes operational Weekly On-site BMLB Replacement parts and bicycles As needed Facility BMLB Web and mobile updates On-going Wireless SoBi Customer Service dispatching to crew Immediately Facility to Site BMLB Redistribution of Bicycles at Priority Hubs (‘Priority’ stations will not be empty more than 8 hours daily) Daily On-Site BMLB Redistribution of Bicycles at 'Auxillary' Hubs (‘Auxillary’ stations will not be empty for more than 24 hours) Daily On-Site BMLB • Adjust fenders and kickstand for damage, and replace if needed • Adjust brake function and gears for alignment, and replace if needed • Brief test ride to ensure overall correct function • Grease shaft drive; check for correct function, and replace if needed • Adjust bottom bracket, pedals, cranks, and replace if needed • Adjust hub or axle tightness, and replace if needed • Adjust for wheels trueness, and replace wheels if needed • Check lock functionality, keypad, enclosure • Check all communications systems • Inspect all stations and bikes for defects • Check fenders and kickstand for damage • Check LED lights (front and rear) for function • Check brake function and gears for alignment • Check seat tightness and seat quick-release • Check handlebar tightness and range of motion Quarterly Prevention Maintenance and Tune-ups • Adjust seat tightness and seat quick-release, and replace if needed • Adjust headset and replace tires if needed • Check tire pressure, basket, bell, headset • Check frame for damage, cracks, dents • Brief test ride to ensure overall correct function • Grease shaft drive; check for correct function • Check bottom bracket, pedals, cranks • Check hub or axle tightness • Check for wheels trueness, and broken spokes • Adjust tire pressure and replace tires if needed Daily / Weekly Repairs, Adjustments, and On-site Inspections Exhibit E - Service Standards • Remove all trash from surrounding area • Clean all visible dirt, ink, paint, litter, graffiti Attachment H Attachment I STANFORD REAL ESTATE 3160 Porter Drive, Suite 200 • Palo Alto, CA 94304 March 7, 2016 Mr. Bill Hough Congestion Management Agency Program Manager Santa Clara Valley Transportation Authority 3331 North First Street San Jose, CA 95134 Dear Mr. Hough, Stanford Real Estate and the undersigned Stanford Research Park companies support the City of Palo Alto's application for Transportation Fund for Clean Air (TFCA) grant funding to expand Bay Area BikeShare in Palo Alto. We are especially enthusiastic about the opportunity to locate BikeShare stations in publicly accessible locations within Stanford Research Park. Stanford Research Park is home to over 150 companies, many of whom offer generous and effective transit subsidies to their employees. BikeShare stations within Stanford Research Park will provide a convenient, low cost and flexible "last mile" connection between Caltrain and major work sites. Machine Zone, Hewlett Packard Enterprise, HP Inc. and Varian Medical Systems are just a few of the companies located within walking distance of Palo Alto’s proposed BikeShare stations. Employees of these companies will welcome BikeShare as an option for both commute and midday trips. The proposed expansion of the BikeShare system will provide the scale and locations necessary to form an effective BikeShare network in Palo Alto. We believe the synergy between Caltrain, BikeShare and Stanford Research Park's Transportation Demand Management Program will attract new transit riders and convert occasional riders to frequent users, thus achieving important trip reduction and air quality benefits. We look forward to working with the City of Palo Alto to realize the full potential of BikeShare in our community. Sincerely, Tiffany Griego Jamie Jarvis Director, Stanford Research Park TDM Manager, Stanford Research Park Bill Roberts Alan Palter VP Real Estate Strategy and Transformation Director Environmental Affairs Hewlett Packard Enterprise Varian Medical Systems Tory Valenzuela Cynthia Rock General Counsel, Machine Zone Head of Global Real Estate, HP Inc. Attachment J S:\PLAN\TRAN\_NEW_PTC & City Council\CMRs\2016\6324 Mid-Peninsula Bike Share Study\Memo- MTC Draft Bike Share Capital Program.docx TO: Active Transportation Working Group DATE: March 13, 2016 FR: Kevin Mulder RE: DRAFT Bike Share Capital Program This memo outlines the plan for the Draft Bike Share Capital Program in advance of the March 2016 Active Transportation Working Group, where staff will solicit feedback on questions listed below. Background/Goals & Objectives Bike sharing has been a mixed success in the Bay Area, as demonstrated by the Bay Area Air Quality Management District’s pilot bike share program, Bay Area Bike Share (BABS). In May 2015, MTC’s Commission approved a privately-funded BABS expansion in Berkeley, Emeryville, Oakland, San Francisco, and San Jose by Motivate Inc. that will add over 6,000 bikes to the system at no public cost. MTC’s Commission also set aside up to $4.5 million for the Bike Share Capital Program in the remaining Bay Area communities at the same May 2015 meeting. The Bike Share Capital Program will award grants over two phases, with the timing of the second phase to be determined following Phase 1. The funding is a one-time funding source to help project sponsors with capital purchase and initial implementation costs and will not be an on-going grant program. It will also not fund operations due to constraints on the federal Congestion Mitigation and Air Quality (CMAQ) funds committed to the program. Program Summary Eligible projects Bike share capital projects in Bay Area communities other than the privately-funded BABS expansion. Typical capital items include: Bicycles, stations, and station components Support/rebalancing vehicles for bicycles Testing equipment & membership cards/readers Planning, engineering, design, & permitting Site prep, installation, & project management Total amount available Up to $2 million in Phase 1 Type of funds Congestion Mitigation and Air Quality Funds (CMAQ) – Federal Funds administered by Caltrans Local Assistance Application Process The Bike Share Capital Program will follow a two-step application and evaluation process. First, MTC will invite interested applicants to submit Letters of Interest (3-page maximum, excluding attachments) to describe proposed projects, anticipated impacts, project readiness, and funding plans. The evaluation Attachment K S:\PLAN\TRAN\_NEW_PTC & City Council\CMRs\2016\6324 Mid-Peninsula Bike Share Study\Memo- MTC Draft Bike Share Capital Program.docx committee will review all LOIs and identify a small number of promising projects. These applicants will be invited to submit a more formal proposal for further evaluation. The evaluation committee will quantitatively evaluate proposals against the following criteria categories:  Potential for impact (including bicycle mode shift, reduced VMT, first/last mile solutions, etc.)  Full funding plan for ongoing operations  Readiness and local support (including feasibility studies, bike facilities, complete streets policies, other engagement, etc.)  Local match share of total project cost  Capability of the project partners to implement the project  Location within a Priority Development Area (PDA), Community of Concern (COC), or Community Air Risk Evaluation (CARE) Program area Schedule & Timeline – all dates are tentative LOI Development & Pre-Application Workshops April – May 2016 LOI Review & MTC Committee Presentation June or July 2016 Full Proposals Development August – September or October 2016 Full Proposals Review October – November 2016 Recommended Program of Projects & Commission Approval December 2016 TIP Revision Approval January 2017 Request for Obligation / E-76 and E-76 Approval from Caltrans June or July 2017 Project Implementation Within 24 months of MTC Commission approval Questions for ATWG  What do you recommend for the minimum and maximum size of the grants?  What share of the total project amount do you anticipate for planning, engineering, and design?  Will you be able to provide a 100% operating funding commitment/plan by September or October of this year?  Do you have other concerns about implementation readiness?  Should a portion of the $4.5 million be redirected to install bicycle facilities instead of bike share?  Would you agree to a condition that poor system usage could result in equipment redistribution after a given period of time? Kevin Mulder Active Transportation Planner Metropolitan Transportation Commission kmulder@mtc.ca.gov 101 8th Street Oakland, CA 94607 510-817-5764 CITY OF PALO ALTO CITY COUNCIL TRANSCRIPT Page 1 of 67 Special Meeting April 25, 2016 The City Council of the City of Palo Alto met on this date in the Council Chambers at 5:01 P.M. Present: Berman, Burt, DuBois, Holman arrived at 5:07 P.M., Scharff, Schmid, Wolbach Absent: Filseth, Kniss Closed Session A. CONFERENCE WITH CITY ATTORNEY—POTENTIAL LITIGATION Significant Exposure to Litigation Under Section 54956.9(d)(2) (One Potential Case, as Defendant) – Palo Alto-Stanford Fire Protection Agreement. Mayor Burt: Our first item is a Conference with the City Attorney regarding potential litigation, significant exposure to litigation, under Section 54956.9(d)(2) with the Palo Alto-Stanford Fire Protection Agreement. I have no speaker cards, and so we'll entertain a motion to go into Closed Session. Vice Mayor Scharff: So moved. Council Member Wolbach: Second. MOTION: Vice Mayor Scharff moved, seconded by Council Member Wolbach to go into Closed Session. Mayor Burt: Motion by Vice Mayor Scharff, seconded by Council Member Wolbach. Please vote on the board. Why don't you raise hands. That passes 6-0 with Council Members Kniss, Holman and Filseth absent. Thank you. We'll now go into Closed Session. MOTION PASSED: 6-0 Filseth, Holman, Kniss absent Council went into Closed Session at 5:03 P.M. Council returned from Closed Session at 6:09 P.M. TRANSCRIPT Page 2 of 67 City Council Meeting Transcript: 4/25/16 Mayor Burt: ... session item. We have no reportable action. Study Session 1. Receive and Review the Report on the Mid-Peninsula Bicycle Sharing System Study. Mayor Burt: We will now move on to a Study Session which is to receive and review the report on the Mid-Peninsula Bicycle Sharing System Study. James Keene, City Manager: I'll turn it over to Josh Mello. I think you'll find this—I think it's a timely, obviously timely and necessary conversation but pretty interesting. Mayor Burt: Welcome, Mr. Mello. Joshuah Mello, Chief Transportation Official: Thank you. Back when I started in September, we had already received notice that the current bike share pilot was coming to an end. I've been in kind of data-gathering mode for the last eight months. There's a lot of moving parts to our existing bike share network as well as what's happening regionally. I'm going to give you a brief overview of kind of where we are today, things that have happened over the last couple of months, and then present a couple of options moving forward for your just consideration. Many of you are probably familiar with what's called a fourth generation bike sharing system. This is different from older bike share systems where bikes were just left leaning against trees. There was no formal membership, and bikes would typically disappear because there was no account set up or any kind of deposit put down. This type of system, the fourth generation bike share system, really took off in Paris, the Velib system, about a decade ago. This is a fleet of kind of automated public bikes that the typical version, the stations themselves have locking mechanisms, and the bikes are locked into the docks. Folks set up memberships where they can check out the bike for a defined period of time. The bikes are highly durable, and they're made to be used and abused by members of the public. They're not typical, off-the shelf bikes that you would own for personal use. These systems have been fairly successful. They have a low rate of loss and damage due to their design. Typically folks have to put a credit card down in order to ensure the bike is returned in time. There's generally two types of fourth generation bike sharing systems that are prevalent in the world today. The first is what's called a smart dock system, and this is what we have in Palo Alto. The two companies that manufacture and operate these systems are Motivate and BCycle. Motivate is the technology that we have with Bay Area Bike Share. The equipment that's used by Motivate is called PBSC, and it was actually invented by the Montreal Parking Authority. The technology is a little bit outdated today. TRANSCRIPT Page 3 of 67 City Council Meeting Transcript: 4/25/16 I'm going to talk a little bit more about that on the next slide. With this system, the majority of the technology is built into the stations themselves, and the bikes are essentially dumb. They're just bikes that interlock into the docking station. This type of system is used in New York, Boston, Downtown Los Angeles (LA), Chicago, many other American cities. Paris and a lot of the European cities also use this type of system. There's also one third brand called Decobike which is used in San Diego and Miami Beach. All of these generally share the same characteristics that there's a computer interface on the station itself. That's how folks sign up for memberships and check out the bikes. A new type of system that's becoming a lot more common in the United States, especially with cities that are just rolling out bike sharing, is what's called a smart bike system. This is where the stations themselves are just typical bike racks, and there's actually no technology built into the stations themselves. All of the technology is on the bikes. In this photograph, the black box that's above the rear wheel on the bikes is a computer processor that's linked via mobile networks to a central computer. When somebody signs up for a membership, they use a smart phone app that they can download very quickly. They select the network they want to use, and then they are given an account number and a pin number after they enter their credit card information. They can actually reserve a bike using the smart phone app. If you're walking very quickly, you need to get to a meeting, and you see there's a bike available a block away, you can reserve that bike using your smart phone app. When you get to the bike, you walk up to the keypad that's on the back, and you type in your account number and your pin number, and the bike is immediately unlocked. You take the yellow, U-shaped lock out there, and you put it onto a little holder on the bike. One of the other benefits of this system is that you can keep a bike checked out. I actually got to use this system in Phoenix, that's where I got this photo about a month ago. I was able to check out a bike at a hub across from my hotel, and then ride to a coffee shop, temporarily lock that bike up in front of the coffee shop outside of a typical bike share station. It charged me an extra dollar for being outside of a hub, but I didn't mind because, when I came out of the coffee shop, the bike was there, and I could jump back on it and ride it to a designated hub. One of the other neat things about this system—Topeka, Kansas, does this— you can create virtual hubs. In the case of Topeka, Kansas, their entire downtown is designated as a bike share hub. Somebody can jump on one of these bikes anywhere outside of downtown, ride to any normal bike rack downtown, lock their bike up, and it's considered returned to a hub. Other folks can use their smart phone apps and navigate to bikes that could be placed anywhere around downtown. They don't necessarily have to be at a fixed station. You can also create these kind of pseudo hubs like you see in the photograph, that are very identifiable. If you're walking down the street, if you're a visitor, you can easily tell that this is a bike share hub TRANSCRIPT Page 4 of 67 City Council Meeting Transcript: 4/25/16 even though it's just typical metal racks with a map kiosk at the end. This system is in use in Santa Monica, Portland, Phoenix, Tampa, Florida, as well as Long Beach, California. There's a couple of other manufacturers that emulate this, but Social Bicycles is the largest manufacturer of this type of technology. The other two are Zagster and nextbike. Nextbike rolled out in Pittsburgh last year. Zagster is mainly on college campuses and office parks and business campuses. Just wanted to touch on—sometimes safety comes up when we talk about bike sharing. A study by the Mineta Institute that actually just came out a couple of months ago looked at the history of collisions on bike shares throughout the United States and determined that they're actually safer than personal bicycles. People tend to take extra care when riding a bike-share bike. That's despite a pretty low helmet usage, because people don't typically carry helmets around with them when they're at work and they're visiting, when people would otherwise use a bike share system. As you know, we're part of the Bay Area Bike Share regional pilot. This was a five-city program that was rolled out in 2013 with 700 bicycles and 70 stations. Palo Alto has five of those 70 stations. It was launched with Transportation Fund for Clean Air monies that were distributed by the Bay Area Air Quality Management District. It was always intended to be a pilot. It was generally envisioned to get something on the ground, get bike share out there, see where it works. It was really about getting something on the ground quickly. The main goal of that program was to serve as last- mile connectivity from Caltrain stations. That's why there are a whole host of stations located along the Caltrain corridor in the Peninsula. Our five stations are mostly concentrated in the areas around the Palo Alto Caltrain station and the California Avenue Caltrain station. Our system was originally envisioned to also include stations on the Stanford campus. That did not occur. There were some issues with the technology as well as the aesthetics that led to the Stanford stations being removed from the original pilot. We were left with three stations kind of along the University Avenue Corridor, and then two stations along the Park Boulevard Corridor. By any measure, this is a pretty poorly designed bike share system. You don't have a density of coverage. You're really limited to traveling just a couple of blocks from the Caltrain stations. As you would expect, our usage has been fairly low. These numbers reflect our trip data from September 1st, 2014 to August 31st, 2015, roughly a one year period. As you can see San Francisco has about two and a half trips per bike per day, while Palo Alto only has 0.17 trips per bike per day. The kind of threshold that a lot of systems look to get to is at least one trip per bike per day. We're not even close to that when we look at this data. However, Redwood City has performed a little bit less successfully than we have. Mountain View is a little bit better; Mountain View has a couple of stations over in the Baylands east of 101. I think that's where a lot of their ridership comes from, folks going from Caltrain to the job centers along the Baylands. It is getting a little better. I pulled data TRANSCRIPT Page 5 of 67 City Council Meeting Transcript: 4/25/16 from February of this year; we're up to about 0.5 trips per day per bike which is pretty good. I think one of the things about bike share is that it takes a little bit of time to attract members and attract the type of usage that we want to see. There also has not been a lot of marketing done of our system. I think whatever we decide to do in the future, we should look at increasing our marketing efforts. One of the interesting things that did come from the data—you'll see this in the attachment to your Staff Report—is there's quite a few folks who have bike share memberships in San Francisco, and they come to Palo Alto and use our system because it's interoperable currently today. That goes to the fact that people are using it as a Caltrain last-mile solution. This is our station data. We have five stations. As you would expect, the Palo Alto Caltrain station has the highest number of trips beginning at that location. That's 99 per month. There's not a lot of trips happening on the weekends. Again, this looks like it's being used by commuters during the week. When you look at the spider map—there's actually a spider map that's released monthly by Metropolitan Transportation Commission (MTC) that shows where the trips are originating and terminating. Our largest trip segment is from the Palo Alto Caltrain station to the bike share station at University and Cowper. That's actually the farthest point you can actually ride from a Caltrain station. I think that's why you see that trip pair. It’s a little bit too far to walk quickly. The other stations are generally clustered around the stations. If we were to move forward, I think if we were able to increase the distance folks can travel from Caltrain, I think we'd see higher performance. As you'd expect when you look down at it, it's really about land use and number of stations within the service area. San Francisco has a huge number of stations in a rather small service area. When folks use bike share, they want to know that they're going to have a station relatively close to where they're going. You're probably just going to walk if you have to park your bike share four blocks away from your destination, and then walk four blocks anyway. Back in 2015 as the pilot was about to start tapering off, MTC and Motivate—that's the current operator of the Bay Area Bike Share—entered into an agreement to dramatically expand the Bay Area Bike Share Program to 7,000 bikes which will make it one of the largest systems in the entire United States. That will be entirely privately funded; however, they're only expanding in San Francisco, Berkeley, Oakland and San Jose. The Peninsula cities were kind of left to fend for ourselves. We were given a term sheet, which is included in your packet, basically outlining the costs that we would need to cover in order for the Bay Area Bike Share system, the current five-station system, to continue operating in Palo Alto. Back in October 2015, MTC allocated some funding to SamTrans to do a Peninsula Bike Share Study. They partnered with Palo Alto, Redwood City and Mountain View to look at what the options are for those three Peninsula cities post-June 30th when the Bay Area Bike Share pilot ends. This study is still underway. A lot of TRANSCRIPT Page 6 of 67 City Council Meeting Transcript: 4/25/16 what's in your Packet is our draft documents from that study. We didn't have time to wait for the study to be finalized, because we have some decisions that we need to make in the coming two months. This Study provided us with a lot of really useful data. They looked at other suburban communities that have bike share, because one of the big questions is can bike share work in suburbia, outside of the urban core. The answer is yes. They looked at Alexandria, Bethesda, Brookline, Rockville, Silver Spring, Maryland, as well as Summerville, Massachusetts. Summerville and Brookline are a little bit denser than Palo Alto, but some of the Maryland and Virginia suburbs are, I think, good peers for us. They basically found that service area is the most important thing. In urban areas, it's really about station density. They found in suburban areas it's actually better to have a larger service area, because destinations are so far out. It's actually better to have a large coverage area, so folks can access a larger number of destinations. Based on the data that they collected in these other suburban communities, they looked at what the characteristics were for the successful stations in those communities. They modeled the densities and the land uses in Palo Alto, Redwood City and Mountain View to determine what the ideal system would look like for each of those cities. I'm going to show you a map of our ideal system, which is a 35-station system generally concentrated west of the U.S. 101 corridor, but covering the majority of the City from north to south and also serving the Stanford Medical Center and the Stanford Research Park. One of the developments in late 2015 was the City of San Mateo approved a 50-bike pilot bike share system. This was back in November. They did an interesting thing. Instead of doing their own procurement process, they just piggy-backed off of an existing contract between the City of Santa Monica and Social Bicycles. They were able to get the price that Social Bicycles offered to the City of Santa Monica for those 50 bikes. Then they found a local nonprofit called Bikes Make Life Better to actually operate the system. Every bike share system requires three ongoing maintenance and operations tasks. The first is repairing the bikes. The bikes will break from time to time; they'll need tires repaired. The second is rebalancing the bikes. A lot of the bikes tend to get clustered in one location. In the morning, everybody would ride to Caltrain, and then there's no bikes left in the outer neighborhoods. The bike share systems typically rebalance the bikes during the day to make sure that there's an equal distribution. Then there's customer service. If somebody calls because their account's not working, somebody has to answer the phone or respond to emails. Those are the three kind of ongoing operations and maintenance costs. City of San Mateo, their 50-bike system is going to cost 85,000 for capital, and then they're going to have about $90,000 a year in operating costs for their 50-bike system. Back in March of 2016, there was a deadline to apply for Transportation Fund for Clean Air funding. They purposely reduced the threshold needed to apply for bike share funding. I TRANSCRIPT Page 7 of 67 City Council Meeting Transcript: 4/25/16 think that was done to get Palo Alto and Mountain View and Redwood City to apply for these funds. We indeed did submit an application in March. We were still unsure as to what the future held, so we left it a little bit open. We projected out costs over five years and came up with a cost benefit that worked out for the funding source. We ended up requesting $171,000 with an assumption that the City would identify $911,000 in local operating funds over five years. By submitting the application, we did not commit ourselves to doing this project or accepting the funds, but we didn't want to leave that funding on the table because it was purposely structured to enable us to apply to continue the operation of our bike share program. There's also another source of funding that's on the horizon, and that's the MTC Bike Share Capital Program. Early last year, the MTC Board set aside $4.5 million in capital funding. They're going to make that available over the next two years in probably two phases to communities that are left out of the Bay Area Bike Share expansion. Everybody but San Francisco, Berkeley, Oakland and San Jose will be able to apply for these funds. We don't know how much will be available per community. We don't know how many communities they're going to fund. The total is 4.5 million. To wrap this discussion up, this presentation up, the BABS, Bay Area Bike Share, pilot program is scheduled to end on June 30th. There is an opportunity for us to go to a month-to-month contract where we would just need to give them 30 days notice when we want to end the program. We could also extend it for another year. Either of those options would require us to bring an agreement back to you in a relatively short time for your approval. The City must provide notification to Motivate on what our decision is by May 31st. We need to let them know whether we want to end the program, extend it on a month-to-month basis or extend it for a longer period of time. There's several decisions that we're going to need to make over the next several months to a year, depending on what we do with the Bay Area Bike Share system. We need to decide if we want to continue with a smart dock system that's more expensive on a per-bike basis or do we want to transition over to the smart bike system that's a little more flexible, seems to be the newer technology and is a lot less costly than the smart dock system. We also need to think about how large we want our system to be. Do we want to continue with a very small or small system like we have today or do we want to move towards that ideal system size where we're going to get the kind of ridership that we'd really like to see? Thirdly, we need to think about an operator. Our current operator is Motivate which is a for-profit company that's very wedded to one technology. We could go to a nonprofit model similar to what the City of San Mateo is doing. There's also several other options out there as far as operations. This is a map showing our ideal system. For the application that we submitted in March, we broke it into two phases. The dark gray areas which are generally Downtown and the California Avenue (Cal. Ave.) Business District as well as the Research Park TRANSCRIPT Page 8 of 67 City Council Meeting Transcript: 4/25/16 and the Medical Center, that's what we called Phase One. Ideally we'd like to get 13 stations in there. For the Transportation Fund for Clean Air (TFCA) grant, we assumed three new publicly funded stations and then five privately funded stations, which would get us up to that 13 number, which we think would work in that dark gray area. The remainder of the area, which is shown in light gray, that would get us to our 35 stations, which is based on the modeling that the consultant did for the Mid-Peninsula study. That's what our ideal system looks like. That's where we're going to get the most benefit for our cost. This is a table that shows the preliminary alternatives and the cost. I want you to take this with a grain salt. This is a little bit "back of the envelope." Until we actually start negotiations, we're not going to have firm numbers. These are based on the term sheet that was provided by Motivate as well as the rate that the City of San Mateo got for Social Bicycles, which is an executed contract. For our very small system, which is five stations, there would be no capital costs for us to continue that, because the stations are already in place. They're owned by Motivate. However, the Motivate term sheet shows that we would need to provide $101,000 a year to keep operating that system. It would work out to a cost per trip of about $33 if we had our current ridership, if we did not move the stations and just left it operating the way it is today. If we went to a small system, which would be a little bit larger than ours, that 13-station system that I mentioned, we would have a capital cost of $415,000, and then an annual operating cost of $220,000, and a five-year total cost to the City of about $1.5 million. That's about $15 per trip if we saw the ridership gains that were modeled by the consultant. The Social Bicycles, same size system, 13 stations, our capital costs would be a little bit lower at 400,000. Keep in mind that would be buying an entirely new fleet of bikes. Even to buy an entirely new fleet of bikes, the Social Bicycles system is still cheaper from a capital perspective than just expanding our existing system. That has an annual operating cost of 175,000 with a total five-year cost to the City of about 1.3 million. The cost per rider goes down a little bit with that one to $13 per rider. The last two would be the large 35-station system. The capital cost for that using the smart dock Motivate system would be about $1.8 million; whereas, it would only be about $1 million if we were to use the Social Bike smart bike system. Our operating costs would be $335,000 with the Motivate system, 170,000 with Social Bicycles. You can see that the Social Bicycles 35-station system, the total five-year cost to the City is only $1.9 million; whereas, the Motivate system would be about $3.5 million. With the Social Bicycles 35-station system, we get the cost per trip down to about three dollars which kind of puts it in line with a typical transit trip. One last point I want to touch on which I don't want it to get lost in the numbers. This is very important, regional integration. One of the benefits of our current system, being part of the Bay Area Bike Share system, is that someone who has a bike share membership in San Jose or San Francisco TRANSCRIPT Page 9 of 67 City Council Meeting Transcript: 4/25/16 can come to Palo Alto, and they can use our system with their membership. They don't have to sign up for yet another layer of transportation memberships or fares. Regardless of the technology that we select, we need to move towards better integration with transit. There is an initiative on the horizon by MTC to create what's called Clipper 2.0, and that could be a couple of years out. Clipper 2.0 could feasibly integrate bike share into the regional fare payment system. Someone who has a Clipper card that's stocked up with $20 could just walk up to the bike share system and not have to go through the whole process of signing up for a membership and just easily check out a bike and jump on and use it like they would any other transit system. As currently structured, the Social Bicycles (SoBi) bicycle technology actually offers a little bit better integration with the Clipper system. You can tie your Clipper card to your membership. When you sign up for a SoBi membership, you can take any Radio Frequency Identification (RFID) card and you can enter the number on the back of the RFID card, and your bike share membership will be tied to that card. If you remember I showed you the SoBi bikes. They have the black box on the back of the bike. There's actually an RFID chip reader in that box too. In lieu of entering your account number and a pin, you can just walk up and scan the RFID card that you had already connected to your account previously. However, you cannot use your Clipper card fare balance to pay for bike shares. It won't actually use the backend payment processing that's attached to Clipper. You would still have to have a separate account with SoBi, but you could use the same card. That option doesn't exist at all with the Motivate system. You have to have an entirely different membership. That concludes my presentation. Thank you. Mayor Burt: Thank you. Colleagues, questions and comments? As a Study Session, we'll be taking no initiatives. Vice Mayor Scharff. Vice Mayor Scharff: Thanks. Thanks for the presentation; it was really great. A couple of things. Do we know at all what Mountain View or Redwood City are going to do? Mr. Mello: Yes. I actually talked to them this week, my counterparts there. They're kind of in a similar stage we are. They're thinking about their options. I know Redwood City, the City Manager is looking at it. Mountain View, they're going to their Council shortly. They're in a similar place to we are. They haven't seen the performance that they expected out of the Bay Area Bike Share pilot. Redwood City has talked about whether they even want to continue any type of bike share program given their low usage. I think they're both open to pursuing an alternative solution. They're kind of waiting to see what we do as well. What's come out of the planning effort with SamTrans is kind of a mutual agreement that we need something that's TRANSCRIPT Page 10 of 67 City Council Meeting Transcript: 4/25/16 a little more tailored to the Peninsula cities and that the Motivate system may not be the best fit. Vice Mayor Scharff: I think what struck me most is how much better than San Jose we do. If you look at our numbers now ... Mr. Mello: (inaudible) Vice Mayor Scharff: Yeah, the current ones. We're at 0.52, and we have a terrible system, as you said. I think that really shows that there's huge demand for this, given how much better we frankly do with horrible station placement. When I look at this, I actually am very optimistic that if we did the ideal system, that it would be widely used throughout Palo Alto. When you look at these, it almost seems to me that there'd be very little reason to stay with Motivate. They're much more expensive to operate, hard to grow the system. When you look at that three dollars a bike ride, that seems to make some sense when you start looking at that. I mean, $33 a bike ride doesn't really seem to feel very economical to us. My thoughts are that I would definitely push for the large system frankly with SoBi. I think that makes the most sense. I mean, I'm not wedded to that obviously, but the Motivate doesn't seem to make a lot of sense given their capital costs and also that frankly they don't really want to do Palo Alto, they don't want to do Redwood City. They've sort of politically been forced to—now they're charging us for it. I understand they don't even really want to do San Jose. They really just wanted to do San Francisco, Berkeley, that area. I definitely think that we should focus on that. How long would it take to—you said we could go month to month. We could go month to month for as long as we want. Is it prorated? Is there any down side? Is it more expensive to go month to month? How quickly can we transition, if we wanted to, to SoBi and then start maybe slightly smaller and then move to a large Phase One and Phase Two as you talked about? Mr. Mello: If we went month to month, it would be a prorated cost based on the $101,000 per year. Vice Mayor Scharff: (inaudible) what is that? 12,000? Mayor Burt: No, 8,000. Mr. Mello: $8,000 a month roughly. That's all inclusive, so we wouldn't have to contribute anything additional. They do all the maintenance and operations. There is an additional cost if we wanted to move the stations to try to get a little better performance out of our existing system. There's an added cost to moving the stations. If we were going to end the Motivate contract eventually, I don't think we'd want to invest in moving the stations. TRANSCRIPT Page 11 of 67 City Council Meeting Transcript: 4/25/16 Your second question about how long it would take, I think we could move— I think each individual city could move relatively quickly. If we wanted to develop a Peninsula solution with Redwood City and Mountain View, I think there'd be an added time that would be required to negotiate something that ... Vice Mayor Scharff: What's the advantage to that? Why not just put our own in and then they'll probably follow suit. If they don't, they don't. Mr. Mello: One of the other strengths of the Social Bicycles, SoBi, system is it's one smart phone app for all of their systems. When I signed up in Phoenix for their system, I could have also signed up for the Tampa system or the Santa Monica system. San Mateo is rolling out a SoBi system, so they'll have the same app in that case. I think if we were to move in that direction, I think we could kind of see some cross-pollination and some integration even if we didn't sit around and wait for a unified system that was all one brand. Vice Mayor Scharff: I'd be concerned with waiting. I'd like to see us move as quickly as possible and get this done, given the traffic situation in Palo Alto. This seems a relatively inexpensive way, especially with the large system, to get this done. I'd be concerned with getting—I mean, I have doubts that Redwood City is going to really spend the money and move on this frankly. I think if we get out there first and start doing this, I think other people then, if they do come online, will follow that. When you look at these numbers, it seems hard to imagine you'd choose Motivate over SoBi just given the numbers. It seems to me that that's where we should go on this. Thanks. Mayor Burt: Council Member DuBois. Council Member DuBois: I guess my understanding is we've basically been on probation for about a year since they basically told us they weren't going to fund it anymore. It doesn't sound like we did much in that last year to really see what we could do. We could have moved the stations, but we didn't do that. I guess my big question is what's it going to take to be successful. I guess the numbers did go up a little bit since that time. You mentioned marketing. Are there other things you think we need to do? Mr. Mello: I think there's two things that we could do, that we haven't done to date. The first is to increase our marketing and make this a recognizable brand that is promoted by the Transportation Management Association (TMA), by the Research Park Transportation Demand Management (TDM) folks, the Medical Center, all of our larger employers. One of the most successful ways to increase bike share usage is to offer corporate TRANSCRIPT Page 12 of 67 City Council Meeting Transcript: 4/25/16 memberships at a discount, so that they're just included for every employee. It gives people an incentive to try it out. They may not buy it own their own, but if they get a corporate membership ... Council Member DuBois: That starts to make a lot of sense to me. I'd definitely want to see that be part of the plan. Mr. Mello: We could also move to a place where bike share becomes a part of the development discussion. When applicants are looking at different TDM measures, perhaps providing bike-share bikes or bike-share hubs becomes one of the tools in their toolbox for trip reduction. Council Member DuBois: It looks like we need to get about three times the usage to get to self-funding, which is a pretty significant increase. Would we actually go and have advertising on the bikes to help defer the cost? Mr. Mello: The operating costs that I showed in the table do not include costs being offset by advertising or sponsorship. If we did secure a sponsor or advertising, that would reduce our operating cost. Council Member DuBois: Do they change or are they permanent for the life of the bike? Mr. Mello: The advertising? Council Member DuBois: The sponsorship, yeah. Mr. Mello: On the SoBi bikes, they have panels on the racks on the front that are changeable. If you go to the first picture I showed where they have a map panel, you can have the map on one side, and then you could actually have an advertisement on the other. They would be changeable as well. Sponsorship would entail kind of wrapping all the bikes in some kind of brand, the corporate colors. That's a little more difficult to change, but those are usually multiyear contracts. Council Member DuBois: I'll just echo Council Member Scharff. I mean, Motivate seems very expensive, and they don't seem very interested really in working with us. Have you talked to San Mateo? Are they interested in collaborating, create a different kind of network with SoBi? Mr. Mello: They are. I can't remember off the top of my head, but they named their system something that's very easily transferrable to ... Council Member DuBois: It's Bay something. TRANSCRIPT Page 13 of 67 City Council Meeting Transcript: 4/25/16 Mr. Mello: Yeah. It's a play off Bay Area Bike Share. I think their intention is to—if other cities want to buy into it and become a part, they'd be open to it. Council Member DuBois: it's pretty, I think, encouraging that—I think there are other forms of integration. We're talking about paying with your phone and Clipper card. I think if we pushed that way, that's very positive as well. Can we get the TFCA funds if we go with SoBi or are those tied with staying with Motivate? Mr. Mello: The grant was written in an interesting way. It said it must be compatible with Bay Area Bike Share. It didn't say it had to be Bay Area Bike Share. Our intent is if we are successful in our grant request and Council elects to go with a different technology, we would just submit a request to use that funding for a different technology. Council Member DuBois: I think we need to—the question about smart bikes versus smart docks, I think, is a really important one. Just reading the report—you're more of an expert than I am—it seems like smaller cities, smart bikes make more sense. This idea of kind of virtual docks or having the entire Downtown be a dock just seems to make more sense in a suburban environment. I really think we've got to factor that in as not just a cost issue, but really what technology is best for our City. I wanted to look at the ideal 35-station slide for a second, if you could pull that back up. I went back and looked, and there were some articles from a couple of years ago where even then, I think, the ARB didn't like the station placement. Even bike advocates were saying they didn't think it was going to work. I think getting the placement right is really critical. I know this came out of some recommendations, but just looking at this, if you think about Mountain View, and you said they're getting a lot of bike usage to Bayshore, we've got a lot of offices along Bayshore and also Embarcadero. They're outside of the proposed region. We actually have empty office space out there. I think thinking about bike share from University station out to Bayshore would be useful. I'm also starting to hear a lot with the RPP about businesses along Middlefield Road and University. They're a little bit far to walk from Caltrain. Instead of kind of this dispersion model, we should actually think more about where the employment centers are. There's kind of two issues: where are the employment areas and where are the residential areas. I think the other thing we need to consider here is the RPP program. If we start to put bike share racks just outside where there's still free parking, we're going to have people driving and parking in the neighborhood and picking up a bike. That's probably not the intended behavior we want. I think if you look at this, the ideal map might actually be more of a doughnut with racks along 101 and on the north side of Bayshore and maybe more stuff in the TRANSCRIPT Page 14 of 67 City Council Meeting Transcript: 4/25/16 Research Park and less stations in the middle of the neighborhoods. If there was a way that those racks in the middle of residential neighborhoods could only be used by residents, I think that would be an interesting use of technology. I would worry about stations in the middle of Old Palo Alto, and you just park there and then ride the bike into Downtown. That's it. Thanks. Mayor Burt: Council Member Berman. Council Member Berman: Council Member DuBois brings up an interesting issue that kind of—before I get to that, has anybody—forgive me if this was in here and I missed it—done an analysis of—what is the benefit to the community if we somehow achieve 112,000 annual bike share trips in a year? Has anybody quantified what that means either in terms of fewer parking spaces or reduced congestion or reduced greenhouse gas emissions or anything like that? Is there a way to even do that, to quantify it? Mr. Mello: Yes. The City of Austin did a survey on its bike share users. They have a pretty popular system. They found that 41 percent of the bike share trips were displacing a single occupant vehicle trip. That's really the only number that I've been able to find as far as trip displacement. Council Member Berman: The question that I had that I thought I'd answered, but then Council Member DuBois' suggestion might blow a doughnut hole in it, was is there that much demand just from commuting employees or to reach that goal of 112,000, do you need to get significant numbers of inner-city trips from residents taking it to go to the grocery store or go Downtown for dinner or that kind of thing as opposed to just people coming in for work. I don't know how this 112,388 was derived. Can you achieve that high usage just with employees or do you need the benefit of residents using it for trips across town? Mr. Mello: That number was extrapolated from all of the peer cities that the consultant looked at, which were mostly suburban in nature with a similar land use pattern as Palo Alto. The assumption was that you would have the coverage of the entire service area... Council Member Berman: For both options essentially. Mr. Mello: ...to generate that 112,000. If we were to just locate them in a doughnut fashion at employment centers in Downtown, the numbers may look different. We would have to re-model that to see how that would perform. TRANSCRIPT Page 15 of 67 City Council Meeting Transcript: 4/25/16 Council Member Berman: Based on the success or lack of success we've had, I was fairly skeptical coming in. Seeing the distributed nature of the stations and the fact that you could get residents to use it for inner-city trips, which make up a lot of our congestion and parking usage at certain times, that appeals to me. I definitely see Council Member DuBois' concerns about how people might manipulate the system, though. These are good questions that we have to think through. I like the fact that it's spread out, and that people can use it in the neighborhoods. I think that could be a great way to get people using their cars less. In terms of the inter-city connectivity and possibly partnering with Mountain View and Redwood City, what's Menlo Park doing? They're kind of a big hole in between us and Redwood City. Mr. Mello: They have not shown an interest in participating in the study to date. Council Member Berman: Jim. Mr. Keene: Can I just jump in as an aside? Interestingly enough, I think I mentioned this to the Council before. The Cities and the City Managers of Redwood City, Menlo Park, Palo Alto, Mountain View and senior leadership at Stanford have been working together and actually working towards at least a sort of City Manager agreement to maximize inter-jurisdictional planning on different transportation issues as much as possible. Even this past week, we had a briefing to the City Managers on this topic that included Menlo Park. To date, they haven't been part of this. As you know, they're in the process of adding bike lanes, for example, along El Camino Real where we don't have them. That's been a topic we've said, "Wait a minute. The interconnect between your town and ours are things we've got to be talking about more explicitly." I would imagine that this would extend to Menlo Park also. Mr. Mello: I think they would be interested to see what we do and maybe want to participate once we get something in the works. Council Member Berman: I guess just lastly I'd agree with my colleagues that I think the SoBi go big option, if we're going to do this, is the right option. I think there are still questions that need to be answered. The small options aren't generating any sort of benefit, so that doesn't make a lot of sense. Mayor Burt: Council Member Schmid. Council Member Schmid: It was good to see the February update. It's important to see that this works in the community over time and builds up a TRANSCRIPT Page 16 of 67 City Council Meeting Transcript: 4/25/16 cadre. I'm a little surprised that this is being pushed in conjunction with Caltrain. I mean, using it for that last mile certainly would save Caltrain loading up bikes on the train. It sort of condemns the system to be used once a day. When you arrive at Caltrain, you go to your workplace, and you put it there. You reserve the bike at 5:00 PM to catch the commute train coming back. These one-way trips or one bike a day trips don't seem to work. Where it really works is where you have dense neighborhood developments like San Francisco, where you can move from neighborhood to neighborhood to house to visit and so on or in a business park where you have three or four meetings over the course of a day and you can pick up a bike in front of each office, drop it off. The bikes move around; they get used five, ten times a day. Palo Alto is designed sort of to be a more walkable community where you get to your workplace and you can walk to your coffee, your lunch, to your comrades who are working across the street. On your map, when you reach out to the neighborhoods, everybody owns a bike. We're putting our efforts into making it easy with bike boulevards for you to use your bike from home to go to various places. I don't quite see how this would fit in. I guess there's a second issue on the cost and the cost tradeoffs. I'm surprised you don't come tonight saying, "Here's what you get for spending hundreds of thousands of dollars on bike. Here's what you might get by investing that in shuttles, in a Marguerite program that moves from Caltrain to a number of businesses during rush hours, that can deal with the suburban densities." We have talked about not just shuttles but ridesharing components where for $100,000, $200,000 a year you can make a big impact on a much wider audience and those who are not just taking that one-mile trip from Caltrain to their job. I would certainly encourage you to look at this in terms of a cost tradeoff with other options. There are places where it makes a lot of sense maybe; the Stanford Research Park jumps out. If you can get a good program running in the Research Park, it might be just the commute and also lunch time and shopping and things like that. You could have a program working back and forth (inaudible). That raises another question of who pays. Why should the General Fund pay if this is primarily work-oriented, how to get people to their workplaces? I notice there are letters in here from Stanford Research Park, from Stanford, from big employers saying, "This is great. Do it." Why aren't they paying the $100,000 and guaranteeing that they would cover whatever cost the program involves? They benefit; they should contribute. One last comment on the placement, on the map you have. The point was made that you've left off some of the big business districts already. I think immediately of something like the Baylands. A station out there on a weekend would entice people who are not regular bicyclists to be able to enjoy the Bay trail. Maybe there's a way of just moving bikes from a Caltrain station which aren't used on the weekend out to the Baylands on the weekends and developing a whole new cadre of users and riders. I think TRANSCRIPT Page 17 of 67 City Council Meeting Transcript: 4/25/16 this is a good program, but we're at a decision point. It would be good to be able to compare this to what other ways can we spend money to solve the problems that have been identified here. Mayor Burt: Council Member Holman. Council Member Holman: Thank you for coming forward with this. Just one quick point. It was good to see the numbers for February. I thought it was interesting that those numbers were up in February; it was pretty rainy. Kind of interesting those numbers were up. Mr. Mello: There was one day, February 8th, that was higher than the others. Council Member Holman: A few things here. I particularly appreciate the comments from Council Members Schmid and DuBois. I share the concerns about some of these stations being in neighborhoods, and people driving to those locations and then riding a bike into the employment centers. It does seem like these ought to be more focused on employment centers. Pun intended here; has there been any interest or any activity to try to peddle this to the hotels? I guess my question—whether it's businesses, whether it's the Research Park, whether it's hotels or whatever, has there been kind of outreach to see if they'd be interested in promoting it, helping sponsor? Has there been any of that kind of outreach that I'm not aware of? Mr. Mello: For the pilot program, the City of Palo Alto is relatively hands off. It was overseen by MTC and then operated by Motivate. I think if we were to advance a different type of system and take more of an ownership role in that system, I think we would definitely need to build those kind of relationships and do some more focused marketing at our target audiences. I think hotel guests and hotels themselves would be a good place to start. Council Member Holman: I agree with the comment about—I'd already had in my notes about hotels. I think the Baylands is quite an attraction. It's been written up nationally. I think it'd be a great place to try to get people to take bikes, pickup bikes out there to ride. I also agree with Council Member Schmid's comment about tradeoffs. What do we get for this many compared to what we'd get for money spent on something else like shuttles? That sort of thing. Going back to the polling here just for a moment. What would come first? An investment and then do some polling and outreach or doing the outreach and then coming forward with the program? That's a question. Mr. Mello: Polling about the system? TRANSCRIPT Page 18 of 67 City Council Meeting Transcript: 4/25/16 Council Member Holman: Polling or outreach or a combination thereof to see what kind of support we would get from the various entities. Mr. Mello: I think when we come back to you, we could look a little more closely at setting some goals on advertising, sponsorship, other things that could offset the direct operating cost to the City. To date, we haven't worked on any of that yet, because we don't really have a direction. We don't have a cost. We don't know what the system's going to look like. I think it's totally appropriate for Council to give us some feedback on what the appetite for sponsorship and advertising and other things that could potentially offset the operating cost would be. Council Member Holman: You touched on what my last comment or question is. It seems like you're looking for direction tonight, but this is a Study Session. I'm hearing comments and questions that sort of lead me to think and your comments also and your presentation seem like you're looking for direction. That's not what we can do in a Study Session. I'm just a little concerned about what you're going to take away from this. Mr. Keene: I think we wanted to surface the issue. We are interested in comments. Josh kind of gave actually a pretty expansive presentation even though in a lot of ways it's—no pun intended—motivated once again by a short-term decision point that we have about do we want to start expending $100,000 to keep the Motivate program in. That's a pretty narrow decision point. Partly for us to just tease out from the Council is there value in keeping the Motivate system the way we have it now. That helps us inform the near-term decision. He presented an alternative with SoBi and everything. When Council Member Schmid talks about shuttles versus SoBi, those are helpful but those would be the kind of things we would have to come back to the Council for actual direction. Even the idea of the maps is just one way to have drawn a map. Obviously in Palo Alto, we would never be able to identify where stations ought to be based on the first go on anybody's map. Clearly we would have to come back. In a lot of ways we're trying to get a sense of do we even hang with the existing program or not, just to get your sense, versus is it worthwhile diving deeper into what we might do with an alternative program or is there no interest in that at all. I haven't heard that, for example. For the most part, I would take away, unless somebody says something differently, there doesn't seem much interest to keep hanging on with the program that we have right now, given the cost and what it is. There could be an interest in this other program which you'd want to see more alternatives, comparisons, etc., before a decision would be made. We'd have to come back. We'd be prepared to do that based on tonight. TRANSCRIPT Page 19 of 67 City Council Meeting Transcript: 4/25/16 Council Member Holman: That's where I am. It's a little misleading when, from my perspective at least, a map is put up there and it says ideal system. It sort of seems like it's almost at proposal stage. I understand that's not what your intention is, but you understand why it leads, at least this Council Member, down that path. I don't think there's much interest, like I said, in keeping the Motivate. It doesn't seem like that's very productive or profitable. I'd need a whole lot more information that you've heard other Council Members mention as well before saying do this, not that. Mayor Burt: Let me just wade in on a few things. First, I like the concept of having some down in the Baylands for two purposes. One, Council Member DuBois' reason of having a route from the train stations down to those work centers. The second is as a beginning and end station for people who might drive to the Baylands but use them recreationally as a result of the bikes. As far as the stations in the neighborhoods, I am concerned about using it for satellite parking for Downtown. On the other hand, people who live in the neighborhoods, who want to take Caltrain, would take it more if they had a convenient way to get to the station. They typically are not going to want to leave their own bikes there. This does go hand in hand with whether we can provide better bike racks and better security at the Caltrain stations. That may give us a better alternative there. Josh, you mentioned that this could be another TDM measure. I actually think that that's one of the strongest reasons for this, to give us a whole other tool in the TDM toolbox. We could begin to—whether this is a requirement of all those tools that we would place on developments as a default or some toolkit remains to be determined. Also, are all these one-speed bikes? In the SoBi in particular. Mr. Mello: They range from three to seven speeds depending on the City's preference. Mayor Burt: Good. In our flats, three are probably fine. If we're talking about serving the Research Park, people are going to maybe want more speeds. As far as the cost effectiveness, I also would like to see that. As I recall, when we've looked at the subsidy per shuttle rider, it's actually considerably higher than this. That's one point of reference; it's not the only one. Higher than, I should say, what we would with the large-scale SoBi. How soon would a SoBi system be able to come online here? Mr. Mello: I would hazard—optimistically, I would say a year, but realistically a year and a half to two years, I would say. I think we could get a small system in place relatively quickly, but the entire 35-station system would take a little while. TRANSCRIPT Page 20 of 67 City Council Meeting Transcript: 4/25/16 Mayor Burt: A first phase might—when you say relatively quickly, say the first phase? Mr. Mello: I think if we were going to continue with our existing system, I'd probably want to do a six-month month to month and then see how quickly we can get a SoBi system in place and see if the other Peninsula cities are interested in coming along. Mayor Burt: A six-month month to month of our existing, you're saying extend that or a new SoBi on a month to month? Mr. Mello: I think we'd want to keep something in place while we got the new system set up. Mayor Burt: That's what I was trying to figure out. Mr. Mello: I don't think we'd want to have a gap in service. There probably are some folks who depend on this to get to work every day, even though it's not a large number of people. Mayor Burt: Following on to these TDM measures, we could have individual developments having these requirements. I can certainly see that we could at the outset put as a condition on any new major development including hotels. That's pretty easy. I'd also be interested in looking at our TMAs, such as the Stanford Research Park. Have we had discussions with them about this specifically? Mr. Mello: Yeah, we've been talking with Jaime and her colleagues over there. They actually submitted a letter of support for the TFCA application that we submitted. They're very open to participating. Mayor Burt: I don't know whether participating means significant financial participation. When we look at our costs, are they open to being significant financial partners in this? Mr. Mello: I think that conversation would come as we started to firm up the plans for the system. The letter they submitted was just kind of a general letter of support. Mayor Burt: I would actually like to see that conversation occur sooner rather than later and just be pretty direct. They're looking for a variety of tools. I would think this would work well. It depends on the location. They have to shuttle folks from the Downtown station to the Research Park, because of the infrequency of our current California Avenue (Cal. Ave.) service on Caltrain. From the lower end of the Research Park to the TRANSCRIPT Page 21 of 67 City Council Meeting Transcript: 4/25/16 University Avenue station with our bike path and essentially Park Boulevard, that's not a bad ride at all. When we look at that, we may want to think about in a Stage One the lower level of the Research Park, Stage Two an upper level which might be served more from Cal. Ave. Caltrain especially when we have expansion there. Also, I had a discussion with Castilleja recently and asked them whether they had used our current system, because they were saying they now have a lot of students who take Caltrain, but then they have a shuttle that they have on their own from the Caltrain station to Castilleja. A pretty short distance, but they don't have their own bikes there. They weren't even very familiar with our existing system. You don't want to probably sign folks up. One, they said that they were interested in sponsoring a Motivate station at or near Castilleja, because they are a commuter school. The final thing is aside from the comparison to alternatives like expanded shuttle, what's our cost avoidance in terms of the value of a parking space, setting aside for the moment the value of reducing traffic congestion? Just on a parking standpoint, what portion of these—if we have 112,000 annual trips under the large-scale SoBi system, that's about 300 trips per day. What portion of those would we assume or project would avoid demand for a $60,000 parking spot plus the maintenance of that parking spot? That's a calculus that, I think, is very important, and I'd be real interested in seeing. I think I concur with my colleagues that we're interested in the SoBi system. I think I heard generally on the larger scale. I would be interested in really pursuing financial partners. If we mandate locations for development, then we avoid both capital and a certain amount of the operating cost expenses. If we have large-scale partners through the TMAs, that also is a significant cost sharing. We might see our proportion of this cost drop significantly. If we are to go forward with a local transportation tax this fall—we're going to have a meeting next week to hear our poll results—then we could have funding of our own to be able to expand support of programs like this. Council Member Wolbach. Mr. Mello: If I could just address one of those points. Most of the bike sharing systems in operation today limit memberships to folks 18 years and older. It could be a challenge for students at Castilleja. That's not saying that there's not an opportunity to have a different age threshold, but most systems in operation today you have to be 18 and older to use the system. Mayor Burt: Interesting, although I wouldn't be surprised if agreements can be struck between an institution where the institution would provide certain guarantees or whatever. Council Member Wolbach. Council Member Wolbach: Thank you very much for the presentation. I concur very much with the comments I've heard from my colleagues. I just want to add my voice to a couple of things. One, we've started to give some TRANSCRIPT Page 22 of 67 City Council Meeting Transcript: 4/25/16 direction to Staff around at least starting to explore some potential pilot programs around housing where you'd have maybe higher density housing near our transit cores decoupled from parking. I think we mentioned it before, but I think now is a good time to mention it again, the idea of perhaps having bike share onsite at residential developments like that or very proximate. As Mayor Burt was just saying, they might even be a funding partner for this. I would lend my voice to that concept as well at least for exploration. I think that this is—as was said before, it's important to recognize all of the potential benefits that come from this and the cost comparisons. Mayor Burt: We have one public speaker, Colin Roche. You have three minutes to speak. Welcome. Colin Roche, Swiftmile: Hello, Council Members. My name's Colin Roche. I'm President and Chief Executive Officer (CEO) of a local company called Swiftmile. We're actually developing something that addresses everything you've stated here today, which is an electric bike share system that's solar- powered, can be deployed anywhere, that's quick to set up. One of the elephants in this room that nobody discussed is you're making it seem by placing more bike stations out there, more people are going to bike. You're actually going to attract the bikers that already bike. What about the 99 percent of the different people out there that actually don't get on a bike? There's new options. There's been an explosion in electric bikes within the last two years that give you the ability for pedal-assist or you can bike just pure biking. You get the best of both worlds. These systems are set up to be completely tracked; they're smart; you can locate them with your smart phone. The system, because they're solar, you can place them in many different locations. We're already deployed at Google; we're down at the Santa Clara Valley Transit Authority as a pilot station right outside their front door. We're also engaged with a lot of companies at Stanford Research Park. Council Member Holman, you mentioned the hotels and resorts. That's actually one of our focuses as well. A lot of them, we've talked to every general manager there. They say people Uber in, and in order to get around locally they either have to walk, which might be too far, or they're going to get in another car, maybe another Uber, and get back on the roads to congest the roads. What about having a system where they could just simply walk out their front door and get on one of these bikes? The other part about bike share, which we love by the way. I'm not saying anything bad about it. To attract non-bikers for the work hours, all studies suggest this: people don't want to sweat to get to work. You talk about Stanford Research Park. Half of those companies up there are up on a hill. That's just another factor that a lot of people decide not to bike. That's just the pure truth. I'm just here today to let you know as a local company, I was TRANSCRIPT Page 23 of 67 City Council Meeting Transcript: 4/25/16 born and raised here. I went to Ohlone, Jordan, Palo Alto High School (Paly). My folks still live here. I know the area well. I would love an opportunity for my company to be considered. I say this with a little tongue in cheek; as compared to two companies that are located on the East Coast. I'm here today to let you know that. Thank you very much. Mayor Burt: Thank you. I'll just ask Josh. Are you also considering electric bike share programs? Mr. Mello: Yes. I've been working with Mr. Roche to try to implement kind of a pilot between the Cal. Ave. Caltrain station and the Research Park. It sounds like he's having a great deal of success. There are a couple of bike share systems in the U.S. that are using electric bikes. I think that's kind of the next phase of bike sharing. Mayor Burt: Thank you. That concludes this item. Thank you, Mr. Mello. That's been an interesting discussion. Special Orders of the Day 2. Building Safety Month Proclamation. Mayor Burt: Our next item is a Special Order of the Day, which is the Building Safety Month Proclamation. Council Member Berman is going to read the Proclamation. Council Member Berman: Thank you, Mayor Burt. This is a Proclamation on Building Safety Month. Council Member Berman read the Proclamation into the record. Mayor Burt: Mr. Pirnejad, you have some comments. Peter Pirnejad, Development Services Director: Thank you very much. That was a mouth full. Thank you, Council Member. Mayor Burt, it's a pleasure and delight to be here today. I'm representing the Development Services Department and the many individuals doing their long days in the office and in the field trying to ensure that the buildings we live, work, worship, shop and play in are safe for everybody that inhabits them. We are bringing before you a Proclamation for Building Safety Month in May. I wanted to just focus on a few highlights, if I may. This flyer, which I'll pass out to you, has a few dates that I just wanted to highlight. The first was May 11th, which I'll get into briefly. It's a demo of a new app that we just launched. This was a press release. Hopefully you picked up on it as Palo Alto inspection request app. Contractors have the ease and convenience of scheduling their inspections with their smart phones, Google or iPhone. TRANSCRIPT Page 24 of 67 City Council Meeting Transcript: 4/25/16 They can also do inspection requests as well as a history of all their permits, get immediate reminders of when those inspections are as well as do multiple inspections at the same time for both fire and building inspections. That's a great innovation that we're offering our applicants. Also, May 16th, we continue our fine work on the Seismic Risk Management Advisory Group. We welcome all those that are interested in looking at our seismic exposure and how we might mitigate that. We welcome them to participate. That's going to be May 16th at Rinconada Park. I'll send this around, if you'd like to take a look. I just wanted to highlight four quick points. The first, as we continue to do the fine work of the Blueprint that was initiated by the Council some years back, we're focused on four real key main areas. The first, not in any particular order, is sustainability. We've brought many initiatives to the Council, our Photovoltaic (PV) Readiness Program, our electric vehicle readiness program. Our green building now exceeds minimum Code. We are a Tier Two city. We exceed the minimum Code requirements identified by the International Code Council (ICC). Energy efficiency is an area that we strive and continue to show leadership in, since 2007. Next week, I'll be bringing before you a Reach Code, which is another way of describing our Energy Reach Code that's going to again exceed both California as well as the nation in energy efficiency. Water efficiency is a focal point as well as indoor air quality and other areas. Lean, predictable, transparent process is a second area of focus for us. The mobile inspection request app is one. We've had improved efficiency using a dashboard that we created some years back. In that dashboard, we've been able to improve transparency within the department to identify how we might improve service to our customers. Keep in mind that the majority of these customers are residents like you and I that are trying to remodel their home, add on to their bathrooms, their kitchens, and make the dream homes that they want to live in and sometimes work in. Our on-time plan checks have improved since 2013. We were on-time 77 percent of the time. I'm pleased to say that as of 2015, we're up to 84 percent of the time. That's a collective average of all the different departments that need to do the reviews. We went from an average of 41 percent of the building permits that came in, the applications, over the counter were being approved. Now over 50 percent of the applications that come to the Development Center as a one-stop shop can be approved the same day. That's a huge benefit for residents that are in a hurry and on a tight time crunch. Transparency and predictability is a big part of what we do. The third item is building safety and resilience. Obviously this is a huge area of focus for us. The International Organization for Standardization (ISO) Class One rating, to give you a sense of perspective, of the 14,000 departments that are rated throughout the nation, there's only nine that have an ISO Class One rating. We are one of them. Of the 297 in California, we're of three others that are rated as a Class One. It's a huge honor plus it provides a benefit of security to our TRANSCRIPT Page 25 of 67 City Council Meeting Transcript: 4/25/16 residents as well as an insurance benefit for home and commercial business. Finally, the last area is accountable and cost-recoverable department. We pride ourselves in being a fee-based department, to not be a drain on the General Fund. We ensure that development pays its own way by setting fees to be in par with the level of service that we set. With that, I'd also send this. If you have an iPhone that you want to download our app on, feel free. It gives you instructions on how to do that. I look forward to continuing to serve the City and to represent the hardworking individuals behind me and behind the scenes, like our new Assistant Chief Building Official, Evon Ballash, sitting in the stands. Again, it's a pleasure to be here and to serve the City of Palo Alto and its fine residents. I hope to continue to do so. Mayor Burt: If you'll hold, I'll bring this down to you. Mr. Pirnejad: Thank you very much. Agenda Changes, Additions and Deletions None. City Manager Comments Mayor Burt: Next item is City Manager Comments. Mr. Keene. James Keene, City Manager: Thank you, Mr. Mayor, Council Members. Silicon Valley at Home is hosting Affordable Housing Week 2016 in Santa Clara County from May 13th to May 20th with a policy breakfast kickoff on Friday, May 13th. There is a full schedule of events including affordable housing tours, workshops and panels on various housing topics. Scheduled events include a Palo Alto affordable housing tour on May 15th and a film screening and discussion featuring a documentary about the Buena Vista Mobile Home Park on May 17th at the Aquarius Theatre in Downtown Palo Alto. A full schedule of events is available at the website siliconvalleyathome.org, and you can look it up under events in Affordable Housing Week on that website. Did want to share that permit applications and parking occupancies in Downtown garages have increased due to the Downtown Residential Preferential Parking (RPP) Phase Two implementation. In particular, the number of commuters using parking at the Cowper- Webster garage, finally, have dramatically increased. Staff has had recent reports from the Police Department and permit holders that indicates all permit spaces are now filled on a daily basis. Given this, we are working with the Valet Assist Program Coordinator, SV Plus, to develop an implementation plan for a valet program at the Cowper-Webster garage similar to programs operating at the High Street and the Bryant Street TRANSCRIPT Page 26 of 67 City Council Meeting Transcript: 4/25/16 garages. The new Council, you may recall, approved expansion of the Valet Assist Program to Cowper-Webster in June 2015. We're going to meet with the contractor this week, and Planning will coordinate with City departments with a goal to initiate the program in the next four to six weeks. Prior to its beginning , we will contact all permit holders at Cowper-Webster to notify them of the program and how to use the service and will post notices at the garage. We did want to, one last time, invite the Council and members of the public to join Mayor Burt and City Staff at the Great Race for Saving Water this Saturday, April 30th. The City is teaming up with Tuolumne River Trust, the Palo Alto Weekly, Project Anybody, KEEN and other partners to host this Earth Day Festival and fun run and 5K run/walk. Community Services, Utilities, Office of Emergency Services, Police, Fire, Public Works and local youth and community organizations at the scenic Baylands for some outdoor recreation, please join them. Again, as I mentioned before, the chance to actually catch the running toilet, free bike repairs and tune- ups will be offered by Repair Café for those who cycle the event. Hope to see some of you there. We'll start at the Baylands Activity Center at 9:00 A.M., and you can register at the cityofpaloalto.org/great race. I do recall, I think, that there is race day registration. I also just wanted to call attention to—I think we have an at-places memo from me to the Council about next week's meeting, May 2nd, that Agenda Item Number Two, which is the receipt of the first poll results on a possible local transportation funding tax measure and direction to Staff. We're just getting the results from the pollster. We're going to talk to them tomorrow. I would expect we will have a Late Packet distribution on this item in your Thursday, April 28th, packet in advance of that meeting. While we are on the meeting for May 2nd, Item Number 12 on the Agenda is the last item scheduled on the Agenda; that's a Colleagues Memo on Evergreen Parking Permit Program. We received some comments. Since there's just a very short time that that is scheduled for discussion, given the fact that you also have the actual petition related to Evergreen Park and Southgate on the following week's Agenda, I discussed with the Mayor this morning the idea of moving that to the first item on the Council Agenda on the 2nd. That should be placed at around the 6:20 P.M. timeframe, before you take up the public hearing again on the Royal Manor single story occupancy. Given that that will be a very short item in comparison to the other, we would put that first on the action schedule. Lastly, we want to acknowledge, as you all heard, on Friday afternoon a young woman in Palo Alto was killed when she was struck by the train at the Palo Alto crossing near Menlo Park. She was a 2014 graduate of Gunn High School. We've been in close touch with the School District and the Project Safety Net collaborative in support of our community. It's a sad time for our community, and our thoughts go out to the young woman's family and friends. Thank you. TRANSCRIPT Page 27 of 67 City Council Meeting Transcript: 4/25/16 Mayor Burt: Thank you. Oral Communications Mayor Burt: Our next item is Oral Communications. We have one individual speaker, and then five speakers who have elected to speak with one representative for up to 10 minutes. Our first speaker is Stephanie Munoz. There we are. Our next speaker will be Christian Pease. Stephanie Muñoz: Good evening, Mayor and Council Members. I've been out of town for a little while. I noticed in the paper that you are going to permit Stanford to raze, that is, tear down, demolish, the living units for about 400 people for a very good purpose, so that they can put in denser housing. Unfortunately—not unfortunately. Stanford has more land in Santa Clara County and San Mateo Counties than all the cities put together have public lands. There's no reason that they cannot build their 2,400 acres, 400 units—housing for that number of people—someplace else on the Stanford lands. We've been telling you for some time, years, not just me but other people have been telling you that if you have jobs and you invite people to move to your community, you have to have a place for them to live. It's gotten worse and worse and worse. A few weeks ago, a month or so ago, there was a case in which a woman didn't want to have any more children; she wanted a tubal ligation. The law said that this hospital where her doctor was performing the operation, which is the beginning of a Caesarean section, didn't have to allow her to have this operation because of one reason or another. I submit that if we are going to live in a society in which people have to have babies, that you have to have a place for them to live. I think you could by eminent domain, if Stanford was unwilling, claim those apartments. It's been done before, not by Palo Alto and not with Stanford, but it is quite common for cities to take what is absolutely necessary for the welfare of the City. I recommend you give it very serious consideration. When we moved the electrical substation so that the single room occupancy housing could be put in, it went over to Stanford. It wasn't done by eminent domain because Stanford didn't want it that way, and that's fine. Stanford can also make an arrangement where it retains control of those apartments. I love Stanford, but—thank you. Mayor Burt: Thank you. Our next speaker is Christian Pease. You have up to 10 minutes to speak. To be followed by our final speaker, Neilson Buchanan. Christian Pease, speaking for five people: Good evening. I'm here tonight representing the Evergreen Parking Permit Committee regarding Planning and Transportation Commission's Staff Report Number 6787. As you know, TRANSCRIPT Page 28 of 67 City Council Meeting Transcript: 4/25/16 this report makes recommendations concerning four requests for Residential Preferential Parking Programs or RPPs. Those are from Crescent Park, Edgewood Plaza and Southgate as well as Evergreen Park. Beginning with our own request, as you know, Evergreen Park is now overwhelmed by private car commuting parking. It's also bounded to the east by the Caltrain rail line, to the west by College Terrace and Stanford, both of which have restricted parking, and to the south by California Avenue, where parking is also restricted, and to the north is Southgate. It's similarly bounded to the east and west, and then hard-stopped by the Palo Alto High School campus, which has now reduced its own limited, restricted parking. Now Southgate is al inundated with commuter parking. Both of our little communities remain fully open and cost free to any commuter parker who can find a space. Last month, Evergreen requested annexation into the existing College Terrace Parking Program, as it was originally intended to be. At first we did the hard work, the parking counts, the mapping, and so on. Our submission was designed to finally align us with what is already in place for California Avenue, College Terrace, Stanford University as well as the nearby Caltrain station and to do so in the least expensive and least complex manner possible. But not so, according to the view of Staff Report 6787. According to its unsubstantiated estimates, our request is the most expensive and complex of the four, with Southgate being second in that regard. We asked how can this be. One line item, Staff costs, at $100,000 for the Evergreen proposal by itself seems to explain it. That's 13-plus times the cost of Crescent Park, ten times more than Edgewood, and four times more than the runner up, Southgate, our immediate neighbor. Again, we asked how could this be. A quick look at the item, called potential implications, seems to answer this question: "While annexation into an existing program would be a simplified approach from a Planning perspective, a shareholder process and community outreach process is recommended to develop a program that provides for residents and employees and could include permits for on-street parking as well as parking management strategies for California Avenue lots and garages to increase supply or evaluation of public/private parking partnerships." Think about what this implies. It's as if little Evergreen is a driving force behind the congestion now entangling the commercial core of the California business district. To us, this seems to be putting the donkey before the cart, to put it mildly. On the contrary, we are just so much collateral damage from the decisions made by you and your predecessors with respect to the development of that business district. That said, we heartily endorse the notion of a comprehensive and competently implemented transportation plan and programs for California Avenue. That seems to be a no-brainer to us, but no such initiative exists or is even contemplated at least as far as we know, which itself seems somewhat astonishing. Nonetheless, it makes no sense to imply that Evergreen's request is an inappropriate vehicle to address that purpose. The sad fact is TRANSCRIPT Page 29 of 67 City Council Meeting Transcript: 4/25/16 each and every commuter who parks on an Evergreen street in route to Stanford or the Caltrain station is now counted in the traffic mitigation win column and duly and erroneously reported as a non-car commuter. If this is not ironic enough, how about this? In the framework of Report 6787, every new commuter who makes a habit of parking on an Evergreen street becomes yet another stakeholder in the adjudication of our request. They get free, unrestricted parking for the duration and a place at the table and a say in the outcome of our request, assuming of course that our request is actually chosen to proceed. Which brings us to the question of scarcity and, by that, we mean not just with respect to parking but to the very processes suggested in this report for each of the requests encompassed by it. Our City Manager Keene and his senior Staff have now blandly informed us that there is only enough money and Staff resources available to deal with one of our requests, and the other three will just have to wait. If what is outlined in Report 6787 comes to stand, two clear and critical messages will be sent to the residents of the City of Palo Alto. The first goes to Palo Alto neighborhoods contemplating an RPP request. You must compete first with your own neighbors. For your trouble and the inevitable acrimony that will ensue, you will still have to wait two years or more for a result. The second is that, the City Council, the City Manager Keene and the senior Staff, despite all the utterances to the contrary, don't actually seem to take this problem very seriously, that all this talk is just so much empty rhetoric. The process is nothing more than window dressing. We asked you when we came here in February to do the right thing for Evergreen Park. Now we're asking you to do the right thing for all of the requesters, for Crescent Park, for Edgewood Plaza, for Southgate, and for Evergreen Park, to make sure all of our submissions are promptly acted upon and judged on their merits. Tonight we ask you to do something else. For you to actually walk your own talk and to prove that our concerns as I have expressed tonight are misplaced. I hope they are. Thank you. Mayor Burt: Thank you. Our final speaker is Neilson Buchanan. Neilson Buchanan: Neilson Buchanan, Bryant Street, Palo Alto. I'm here tonight also to preempt the Planning Commission meeting later on Wednesday for a couple of reasons. One, I physically can't be there. Second, I've come to the conclusion that it's a waste of my time to make these comments to the Planning Commission when the comments really belong to the stewardship of the City Council. April 1st was the opening bell on a new horse race. Four different neighborhoods submitted applications for parking permits. I predict next year open season more neighborhoods will submit applications. I'm here to make an appeal for a better process on how we're going to address the neighborhood quality issues that are inevitably going to arise. Wednesday night, the Planning Commission has a TRANSCRIPT Page 30 of 67 City Council Meeting Transcript: 4/25/16 very imperfect process to handicap four horses. Which horses are they going to pick first, second, win, place, show? I talked to a few Commissioners today, and I don't think anybody has a concept of what criteria is the Planning Commission going to have due diligence on handicapping the horses. It's just one more testimony that the process to take care of neighborhood quality is not perfect. In fact, it's very imperfect. Council stewardship is needed now. The Planning Commission will submit its findings to you. I think you need to direct that the Finance Committee also take a look at how they're going to fund these projects, the permit programs. The Staff Report is silent about where money would be coming from, if it exists at all. I'm going to close and remind you that one of the enormous values of permit parking programs in neighborhood is the catalyst to fund all the mitigation issues. This is an endless circle loop that we've been in on how you're going to solve parking and traffic. One way to stop it is to eliminate the free parking in the neighborhoods. That'll bring everybody to the table for Transportation Management Association funding for free parking studies and all the other litany of things that the Planning Department has presented as a multipronged approach. The truth of the matter is none of the multipronged approaches are even funded. They're pipedreams. How are you going to stop that cycle of (inaudible)? I brought my can, the kicking can award. I didn't bring it up to the podium this time, but next time I'll probably have to bring four cans to know which of the four applications have been kicked down the road or not. In all seriousness, this is a time to grab the issue. City Staff is floundering on how to solve this problem. They don't have the resources. It's really follow the money time. Thank you. Mayor Burt: Thank you. That concludes our Oral Communications. Minutes Approval 3. Approval of Action Minutes for the April 11, 2016 Council Meeting. Mayor Burt: Our next item is Approval of Minutes from the April 11th, 2016 meeting. Do we have a motion to approve? Council Member Schmid: So moved. Council Member Berman: Second. MOTION: Council Member Schmid moved, seconded by Council Member Berman to approve the Action Minutes for the April 11, 2016 Council Meeting. TRANSCRIPT Page 31 of 67 City Council Meeting Transcript: 4/25/16 Mayor Burt: Motion to approve by Council Member Schmid, seconded by Council Member Berman. Please vote on the board. That passes unanimously with Council Members Kniss and Filseth absent. MOTION PASSED: 7-0 Filseth, Kniss absent Consent Calendar Mayor Burt: Our next item is the Consent Calendar. Vice Mayor Scharff: Move approval. Council Member Berman: Second. MOTION: Vice Mayor Scharff moved, seconded by Council Member Berman to approve Agenda Item Numbers 4-6. 4. Approval of an Amendment to Contract Number C1415788 With Finite Matters to Increase the Contract Term by Three Years and $142,225 for a Total Amount Not-to-Exceed of $363,555 for Budget Publishing Software Services and Support. 5. Approval of Amendment Number 4 to Contract Number C13148075 in the Amount of $117,000 With West Coast Arborists Inc., for Tree Pruning and Removal Services for a Total Contract Compensation Not- to-Exceed $1,349,410. 6. Request for Authorization to Amend two Legal Services Agreements With the Law Firm of Rankin Stock & Heaberlin: (1) for Litigation Defense in the Matter of Harney v. City of Palo Alto Police Department, Increase Compensation by $60,000 for a Total Contract Not-To-Exceed Amount of $90,000; and (2) for Litigation Defense in Multiple General Litigation Matters, Increase Compensation by $60,000 for a Total Not- To-Exceed Amount of $190,000. Mayor Burt: Motion to approve by Vice Mayor Scharff, seconded by Council Member Berman. We have no comments. Please vote on the board. That passes unanimously with Council Members Filseth and Kniss absent. We are back on schedule. MOTION PASSED: 7-0 Filseth, Kniss absent TRANSCRIPT Page 32 of 67 City Council Meeting Transcript: 4/25/16 Action Items 7. Fiscal Year 2017 Proposed Budget Overview. Mayor Burt: Our next item is the Fiscal Year 2017 Proposed Budget Overview. Welcome, Director Perez. James Keene, City Manager: While we're waiting and before I kind of kick this off, I thought that I'd let Lalo introduce his Staff here. Mayor Burt: I see we have two Scouts here, who I'm guessing are here for citizenship merit badges. Is that correct? Male: Yeah. Mayor Burt: Welcome. Lalo Perez, Administrative Services Director/Chief Financial Officer: Thank you, Mr. Mayor. Lalo Perez, Chief Financial Officer. Tonight I have with me Kiely Nose, Budget Manager, and Tarun Narayan, Senior Management Analyst. We are going to have the City Manager give you an overview of what's in the proposed budget, have some slides, and then open up the floor. Thank you. Mr. Keene: Again, just for the newer Council Members, I think you're pretty much grounded in how we do this. One of my obligations as the City Manager is to put forward a proposed budget to the Council each year, which we're doing. At this meeting, you might wonder why you didn't get the budget in advance of the meeting. You didn't get it because it wasn't done from the printer until 1:00 P.M. this afternoon. We're getting here about just as soon as you can. I will give an intro and some overview. Then there's the opportunity, whether Lalo and the Staff will orient you to the document at all or just take questions and comments. I know that in talking with the Mayor and Vice Mayor at times there's an interest in some opportunity for Council Members who are not on the Finance Committee, who next week will be diving deep into the budget, to be able to offer comments and that sort of thing. We recognize that you're a little bit handicapped in that you haven't seen the budget document itself. I know my Council really pretty well. You guys actually really prefer to dive deep into the information and the data rather than just winging it and telling us off the top of your head what your thoughts are. We apologize for that. Hopefully we'll give you enough of a sense of the budget here and can talk with the Mayor and Vice Mayor about the upcoming Agendas, if there's any desire to have any ways for other Council Members to give us some feedback. The process we're going to use tonight with the Council is a TRANSCRIPT Page 33 of 67 City Council Meeting Transcript: 4/25/16 reflection of the state of our City. I am going to sort of freelance in the presentation here today. Hopefully we have the slides matched up with the things that I was going to say. We have not had the opportunity to review and prepare for this. I think we were—of course, Kiely as the Budget Manager lives here full time. I was here with her four or five hours on Friday afternoon going just over the transmittal letter. There is a 15-or-so page transmittal letter in the budget. I'll just identify some excerpts from that and hit the highpoints with some slides, and then I'll make a few concluding remarks. Kiely, if you want to put up the first slide. I'll leave that for a second, but give you a little bit of introduction. As you know, in advance of preparing the budget, the Staff presented the Long Range Financial Forecast to the Council and certainly to the Finance Committee. That Forecast does help inform the preparation of the base budget in the upcoming budget cycle. It determines potential fiscal challenges the City may face in the future and project the impact of salary and benefit increases, new programs and changing economic conditions. The Forecast showed emerging challenges for Fiscal Years 2017 and 2018 as well as borderline outcomes in the following three years, when increasing salary and pension contributions are taken into account. The City will have to be prudent as we consider responding to an ambitious community policy agenda and maintenance of our high quality services and the need to attract and retain a well-qualified workforce to provide these services. Understandably, our community has been reluctant to support any significant reductions in scope of what we do as a local government. In fact, the demands and conflicts emerging from our vibrant economy have heightened the intensity of the Palo Alto process with new analyses and data generation demands and deep dives into complex problem-solving with an engaged public process across a wide range of issues. Let's just kind of look at the numbers here. First of all, you see the City-wide expenditure budget up there. The proposed budget is $626 million. That's the all fund budget. That represents an 11 percent increase from the Fiscal Year 2016 Budget of 563 million or roughly $62, $63 million. There are three main areas that were driving that. The Capital Improvement Program (CIP), first of all, increased $43 million or 38 percent for a total 2017 CIP Capital Budget for the upcoming year of $170 million. A lot of that has carryover money from 2016 and that sort of thing. Again, it's a reflection of something we'll talk about as we move through this whole budget about this very active and vibrant infrastructure and capital investment program. Secondly, utility commodity costs increased $7.3 million to a total of almost $144 million over the Operating Budget. Salary and benefits costs increased at $7 million, about a 4.3-percent increase, beginning to adjust salaries for our employees. If we look at the General Fund, go to that chart. The overall General Fund revenues are $193 million plus $4.9 million from the BSR, the Budget Stabilization Reserve. We'll talk about that more. There is an increase of $9.2 million. The largest increase TRANSCRIPT Page 34 of 67 City Council Meeting Transcript: 4/25/16 is in the Transient Occupancy Tax (TOT). I'm sorry, I got the numbers wrong earlier today when I was talking about them. This number is right. A 23 percent increase in the TOT over Fiscal Year '16, a $4.3 million increase. The property tax has a 7.9 percent increase. The sales tax revenues at a 3.8 percent increase, and operating transfers in from other funds a 7.8 percent increase. I think it's worth pointing out—as you can see from this chart which you've seen many times, property taxes still remain the largest funding source in our General Fund. Really, unlike so many other local governments in California, we really have pretty diversified revenue sources. Unlike a lot of places, we're not depending on just one or two or even three revenue sources. The General Fund expenditure budget itself is $198 million. Most of that, of course, 60 percent almost, is in the form of salaries and benefits. The next largest number is 12 percent in the transfer to infrastructure and in a variety of other items. Again, we look at these kind of cost drivers that we have in our budget in general. These large utility and commodity costs, the costs for the employees, obviously, we have—they're providing the services that help the City run—and then these investments in capital and in infrastructure as key issues. Some of the recommendations included on the—I'll come back to that later—capital side. The next item really points to again a concern of the Council and ours. That is the size of the workforce that we have. This budget, even though I'm sure the Council would like to see no new positions added, does recommend an addition of ten positions over last year. That's over all of the various funds. That's just under one percent increase in our staffing. In my view, that's a very conservative recommendation, given the number of requests that I received during the budget process. There are really a net increase in the General Fund, the tax-supported portion, of 3.23 positions. The other positions are two and a half positions in the Enterprise Funds, and 4.25 positions in other funds which include the Internal Service Funds and the Capital Fund. The position changes are two and a half positions in Planning. One Building Technician to cover the front counter at the Development Center. One Program Assistant II to support transportation systems and programs. About a third of that position is funded out of the General Fund, and the rest in other funds. The addition of a half-time Coordinator, transportation system management, to assist with the bicycle capital improvements programs. We combined that with the current half-time Coordinator position to make that a full-time position, so two and a half positions there. There are four positions proposed in Public Works. Three of them are related to the Water Quality Control Plant, funded with the Enterprise Fund there. One is a Senior Engineer for the $200 million renovation at the Regional Water Quality Control Plant, which our partners will pay their fair share. A Senior Engineer for the recycled water program to meet City and State goals for the use of potable water. A Management Analyst in the Environmental Services Division for analytical support related to refuse and wastewater treatment. TRANSCRIPT Page 35 of 67 City Council Meeting Transcript: 4/25/16 Lastly, one Full Time Equivalent (FTE) Street Maintenance Assistant for post- closure maintenance of the landfill. That will be offset by a reduction of almost the same amount in hourly positions, 0.86. Lastly, there is one Program Assistant, one for the Bryant Street Garage Teen Program. That will be offset by a reduction of 0.71 FTE hourly positions. That will be in Community Services. In Libraries, there's the addition of a half-time Senior Librarian, and an increase basically generating on top of another position, a full-time Senior Librarian. We'll be offsetting that with the elimination of an equivalent of the same number, one FTE, of hourly position reductions in Library. There is a proposal for a Senior Human Resources Administrator to manage City-wide workers' compensation activities. When we get into the budget in detail with Finance, we'll talk about why we expect that to be a cost-recovery item. One Desktop Technician to support Help Desk requests Citywide, also offset by a reduction of one FTE hourly position. A net in that area of 10 positions overall. Again, a little over three of them in the General Fund. On the utility rate side, I think we've shared some of these numbers with the Council already before. This is one of the first years that we've actually had an increase of all of our utility rates. I think since I've been here, this is the first time that we have had that. The combinations you can see up there. The yield is a proposed increase in the average residential bill in total of $22.42 a month. My recollection is the Electric Fund, which is the largest here, of 11 percent, of course, very much connected with the drought and the hydro situation and other factors. We have not had an increase in the Electric Fund since 2009, as I recall. If we look at Citywide budget proposals, just trying to pull out some highlights within this budget beyond just these numbers about the revenue and expenditure level changes and the staffing positions we have. One is at this moment the budget includes $1 million in General Fund dollars to continue expenditures for Project Safety Net into Fiscal Year 2017. That will include both the operational costs for the Project Safety Net Executive Director and that support and the potential ongoing costs for maintaining means restriction through 2017. We expect to have some conversations with the Council about alternatives in that area going forward. As of right now, that $1 million is funded in the General Fund. Secondly, there is a $2.3 million hit for the first time on the General Fund. That is a result of the transferring the cost for our street light and traffic signal program from the Electric Fund to the General Fund. Not something that I would say is from the good news department. It's driven by requirements associated with Proposition 26, which was passed—what? Three, four years ago, that actually would direct the reallocation of these charges when there is a change in the rates in the utility. We have not been in this situation up until now. With the increases we have in the Electric Fund, it's driving this $2.3 million which would be an ongoing cost we're going to have to deal with. I mentioned earlier that we have a large Capital Improvement Program. I think as the Committee gets TRANSCRIPT Page 36 of 67 City Council Meeting Transcript: 4/25/16 into it, you'll see that there's a lot to it. There are a lot of projects in the Capital Budget in '17 and '18. I could make the case that it would be unlikely that we could expend the amount of money we have planned or budgeted in any particular year. We will ultimately spend it, but whether we will do so in that year. It was pretty difficult for us given the policy directives and the pressure from the community for advancing on a lot of different fronts, whether it's related to transportation, parking, road improvement, and your own Capital Improvement Program. It was pretty unavoidable for me to not propose a large Capital Improvement Budget. You can see the next line really speaks specifically to the Infrastructure Management Plan. That's the term we're using for the program that the Council specifically adopted to redress a range of issues that the City's been facing for years and coming out of the Infrastructure Blue Ribbon Committee (IBRC). Those include a new Public Safety Building, the Bike/Pedestrian Plan, a new Downtown parking garage, a new California Avenue parking garage, replacement of Fire Station Four, Fire Station Three, the Charleston- Arastradero corridor improvements, the Byxbee Park completion, the Highway 101 Bike and Pedestrian Bridge, and in addition a plan to establish a $30 million reserve in this fund, taking it from $128 to $158 million for anticipated cost increases. Again, those would be matters we'd have to discuss through Finance and with the Council. $6.9 million in all funds for the salary and benefit increased costs in Fiscal Year 2017. Those will continue, and they will grow. A reserve—at least a one-time reserve for now—we're calling a Budget Uncertainty Reserve. This is due to the fact that there are a number of Capital and Operating Budgets still in flux at this time that could require additional funding during the fiscal year. I'm proposing it for 2017 to provide the flexibility to respond during the year to those items. Next slide please. In order to get this year's budget to balance, we had to, for reasons such as the items that I mentioned including things like the street lighting transfer and other things—a series of one-time budget balancing strategies to bridge the gap. I'm not happy with doing this, but we are tapping $4.9 million out of the Budget Stabilization Reserve, which would reduce it to 18 percent level. You've got a target of 18.5 percent but a range of 15-20 percent in your existing policies. We also propose the use of savings from Internal Services Funds such as general benefits, workers' comp, etc., through a one-time reduction in allocated charges; $3.1 million in the General Fund and some other matters. The next slide. This is just a grab-bag of costs or revenues in 2017 and some of them beyond, some of which could carry on in an ongoing way. Others which are not active in the proposed budget, but they are issues that are out there and that we're facing. One obviously, transportation costs to mitigate traffic issues. As we work through the budget, you'll see that there are a number of funding proposals, whether it's on the staffing side or support for capital implementation in traffic and parking issues, to be able to work on the wide TRANSCRIPT Page 37 of 67 City Council Meeting Transcript: 4/25/16 range of issues that you're facing. Of course, you just heard an example of some comments from the public about are we doing enough, fast enough, etc. We have the need to establish a new fire services contract with Stanford University that we're in the process of working through. Longer term, of course, there could be future changes to the pension plan assumptions by the Public Employee Retirement System (PERS). We have not included obviously yet, because hotels are not approved or in existence, but there is a potential for two new hotels. The TOT associated with that is not included in this budget. We have the potential acquisition of the Downtown Post Office that is not included in the CIP itself. We have some issues to work out in the next few years related to the expansion of the Junior Museum and Zoo and, in particular, as it relates to what the operating agreement and the long-term operating costs of the Junior Museum and Zoo are. We've got the Cubberley Center Master Plan, so we both have some near-term issues related to potential loss of rental revenue when Foothills moves out and who we backfill to move back in. We have the question of using some of the existing funding we now have from the change in the Covenant Not to Develop being taken out of the lease and put into a sinking fund for capital investments. We'll be discussing with Finance a few small investments in that area. We have the much larger question as we work through over the next few years with the School District, what is the Master Plan itself for Cubberley and what are the implications for expanded community center facilities and services at that location. The unfunded actuarial liability at this time of $439 million for pension for retiree healthcare trust, $293 million of which is in the General Fund. We have a number of projects in the Capital Improvement Program (CIP) related to parks improvements. Some are in the, like the Byxbee Park improvement, Infrastructure Management Plan. Others are improvements that Community Services Department (CSD) has provided to us. A number of those I've moved out to the outer years of the five year capital plan itself. That's all in advance of even having the completed Parks and Recreation Master Plan. Sometime, once that's completed, Council's going to be having discussions about what to do in that area. We have a number of requests related to City-owned assets operated by not-for-profit organizations, whether that's Avenidas or whoever. I think we've postponed now until 2020 the unknown but potential impacts related to the Cadillac healthcare Federal excise tax. Looking forward, some general comments. One, we've got to manage the expectations of the City Council. I don't mean the Staff doing that, but we do have a role in that too, but the community and the Staff. We have a challenge of ensuring we're a competitive employer of choice. That's just not a cute idea. What we're able to do is dependent upon the workforce that we have, whether it's the routine day-to-day services or doing the analytical work or the community engagement work with neighborhoods and everything on the kind of change efforts that the community and the Council TRANSCRIPT Page 38 of 67 City Council Meeting Transcript: 4/25/16 want to see. The proposed budget does leave us, if it were to be adopted as proposed, with a structural imbalance for Fiscal Year 2018 that we've got to acknowledge that we're going to have to double down on some way and solve and address. Then these other longer-term issues. Just sort of before that, I just wanted to try to put this in perspective, the cost issues, the demand for services, this incredible rebuilding of the City that we've been undertaking with infrastructure, and the Staff environment that we have. This is a can-do budget; it's also a little bit of a "can do everything" budget. In many ways, we are burning the candle at both ends to deliver on this. The question is there. Any budget, we have to make ends meet. Is it sustainable? Is the proposed budget we have sustainable? I can tell you right now it's not even sustainable to 2018. We've got to come back and make some adjustments. An hour and a half ago, I wrote down just a bunch of scribbles here of the kind of things our small City is doing. Kiely said to me when she plopped these budgets down—how many pages are they? 1,300 pages. She came from San Jose. She said, "I've never seen a City this small with this much documentation." This is the truth. Everything we do is like, in many ways, the largest, most sophisticated city with more engagement per capita, I'd argue, than anybody. I've been everywhere, and we're the most hands-on, invested community that I've ever been, which is a great thing. If you just think of big issues we're working on in the area of the environment, directly or indirectly, how we try to finalize the Creek Joint Powers Authority (JPA); all of the work at the Regional Water Quality Control Plant in looking at reclaimed and recycled and purified water; the rising of the dewatering issue as a crisis; the whole Sustainability and Climate Action Plan (S/CAP) itself; Building Codes and electrification; the Urban Forest Master Plan; in mobility, Transportation Demand Management (TDM), Transportation Management Association (TMA), RPP; capital projects; Caltrain; High Speed Rail; grade separations; the Santa Clara County Valley Transportation Authority (VTA) tax; a local business transportation tax; new garages; wayfinding; automatic parking control; paid parking; mobility as a service; shuttles; bike/pedestrian plan; 101 pedestrian bridge; in Planning, the Comp Plan, single story overlay, the development cap, Edgewater Plaza, housing policies, accessory dwelling units, what to do with Airbnb, office density, deep dive on—I can't even read my writing here—development application Code cleanup, Single-Family Individual Review (IR); the Parks and Recreation (Rec) Master Plan; Cubberley Master Plan; fiber; and all the things I mentioned on infrastructure and healthy city; Project Safety Net; airplane noise. On the staffing side, in many ways we have an emerging crisis in staffing. The challenges of our community naturally are playing itself out in our ability to recruit and retain people, housing costs, traffic and commute, and the demands of our environment. The people who work on all of these things have to work harder on more complex issues with more public scrutiny than most of their peers. Right now, we're trying to find a TRANSCRIPT Page 39 of 67 City Council Meeting Transcript: 4/25/16 Utility Director. We just lost our Economic Development Manager. Planning has a number of positions. A Transportation Official left; a Comp Plan Planner left; a young assistant in our office left; OMB, Office of Management and Budget, lost the OMB Director. It's lost the original Budget Manager. It's losing two out of the four OMB Staff. May 6th, as we're going into the budget discussions, we're going to have a couple of Staff people to work on the budget. There's not one single factor that you can point to. There's a combination and different ones for different people. I think we need to realize this is a big budget with big demands. We're going to have holes during the course of the year in our ability to respond to them. I proposed the budget that is designed to be responsive to, as best as we can see, all of the demands from the community and our highly responsive Council to that community to do the very best that we can. This budget gives me no pleasure in presenting to the Council. I'm concerned about what we're going to have to do through this process or next year, in particular. This is in an environment where we're saying revenues are growing. I just think about what happens a few years from now. It's not satisfying to me professionally to not be able to resolve and tie up in a nice package this budget. It's got a lot of choices and some contradictions in it. For that I apologize, but I think it's representative of where we are right now. I do want to thank our folks here so much. Kiely, I have to say this here publicly, you have so risen to the occasion. I can't tell you where we would be without you. When did you come here? Kiely Nose, Budget Manager: November. Mr. Keene: November. Sort of feel like the military or something. Anyway, you've done a tremendous job, and you cannot leave. Thank you. Mr. Perez: I think a couple of quick reference points that we want to give you. As Jim mentioned, the documents came in pretty late. Staff had been working pretty long hours. There's six and a half people in OMB. From a year ago, there's only one left of that group. Outside of Planning, it's probably one of the most challenging areas in the organization to produce the documents that we have. We'll apologize in advance if we have errors; we will fix them. Hopefully there's nothing big. We tried to go over it as best as we could. A couple of points of reference that, I think, are important for our Council and our community to understand. As you know, I've been here quite some time. I think we're doing progressively a lot of wonderful things and a lot of new things from, let's say, 2003. In 2003, we had 1,122 employees Citywide to comparison now of 1,052. That's 70 positions less. We're doing a lot more now than what we were doing then—I'm pretty sure of that—in terms of a lot of the innovation and things. Because we have more diversified revenues, we have opportunities to do more things, TRANSCRIPT Page 40 of 67 City Council Meeting Transcript: 4/25/16 obviously. There's a lot of things to do. Comparing it a little bit closer to 2009. We had 1,075.60 or 23 1/2 positions more in 2009 than we do now. It's addressing the point that Mr. Keene said. Obviously we're very concerned about the pension and healthcare obligations associated with any increase. In order to address the workload issues, we felt it was necessary. One of the things that you'll read in Mr. Keene's message to you and the community is our goal is to try to have these one-time items just be for this year, because we want to have the time to structure a plan that fixes this structurally, with the target being to come back to 18 1/2 in our reserves and to have informed decisions so we don't jeopardize the services to the community abruptly. We've been through that. As you may recall, in 2009 and '10 we started freezing positions. Some of those positions were not necessarily positions we would have frozen under normal conditions. Because of the severity of the downturn, we had to make those difficult choices. With this proposal, it gives us a bit of flexibility to make informed decisions, buy us a little bit of time. With that, we'll turn it back to you. Mayor Burt: Thank you, and thank you for all the hard work that's gone into this. We will now be receiving our books, I take it. We can open it up to Council Members for questions and brief comments. The bulk of the work in the review of the budget is obviously done by the Finance Committee. This evening, we want to give particular opportunity for members of the Council who aren't on the Finance Committee to ask questions and to give any input to the Finance Committee or Staff going forward. If members of the Finance Committee have certain considerations that they want to bring before the Council, this is the opportunity at the preliminary stage to do that. As the City Manager stated, because we are only just now getting the draft budgets before us, we may very well have some follow-up questions or input to the Finance Committee that is subsequent to this meeting. If, at the end of this discussion, we find that Council Members want to have some additional time to provide comments, we can try to schedule that in the next week or two. We do have tight Council meetings, but that's something that we can bring up at the very end of this conversation and see where we need to go. Who would like to go first? I'll kick it off. First a question. This percentage of our budget in absolute dollars that are in the Capital Improvement Program for 2017 strikes me as all-time records on both a percentage basis and absolute dollars. Now this pie graph on page two of the PowerPoint is for the Citywide programs. That's Utilities, Enterprise Funds and regular General Fund. Can you give us some framework? Lalo, I think you sort of alluded to some of this. Compared to, say, 2009 or '10, how much more are we spending on capital improvements versus that timeframe? I'll toss this out knowing that you might need to thumb through things to be able to give an answer to that later in the conversation. If you need time, I can just toss TRANSCRIPT Page 41 of 67 City Council Meeting Transcript: 4/25/16 that out. If you've got a ballpark now, that's fine too. I'm not looking for exact numbers. Mr. Perez: While Kiely looks it up, let me give you some high level areas that we know about. As you are all well aware, you have your $128 million Infrastructure Plan that did not exist in 2009. That's a significant change. What you'll read in the documentation that you'll see, as you start reading through it, is that we're going to transfer $8 million in dedicated money from the hotel tax. This is generated from the two percent from '12 to '14 and the new hotels alone that are going to feed our infrastructure and allow us to finance our infrastructure projects and be able to move much quicker than we have ever been able to do in the past. I can tell you that back in the late '90s to early 2000, we came up with a $100 million Infrastructure Plan for the General Fund. It gives a magnitude of what we were looking at 15, 16 years ago in comparison to now. One of the things that is influencing the numbers a little bit is a change that we made, that I think was requested by the Council and the community, to now include all the projects in our numbers. In other words, we reappropriate everything every year. It carries over the number, and it shows the projects. That's why you see so many pages. That's another factor in there. The Enterprise Funds, we've gone back to our plan; we took a little bit of a hiatus there in a couple of the funds due to some staffing and some other work that needed to be done. I think those are the major influences. We'll try to get the actual dollars. Mayor Burt: Kiely, did you have a number or a ballpark? Ms. Nose: Yeah. Comparatively to your 2008-2009 adopted budget, your Capital Improvement Program was about $80 million. Your actual adopted was $85 million. Eight-five versus ... Mr. Keene: That's the budget for the year. That's the Capital Budget for 2009, right? Ms. Nose: It would be the equivalent in terms of the dollars by category that you're looking at. The one thing to keep in mind in this dollars by category sheet for the Capital Improvement Program are those are the hard costs for the Capital Program. There are also salaries and benefits. When you compare that 158 to your capital CIP, which is about $170 million, that variance is because you have salaries and benefits as part of delivering your capital projects, which are in the table that you're looking at, part of the salary and benefits line item. Mayor Burt: Apples to apples, say, compared to 2009 or '10 to today, what are the ... TRANSCRIPT Page 42 of 67 City Council Meeting Transcript: 4/25/16 Ms. Nose: It's 85 versus 158. Mr. Keene: Twice as much. Mayor Burt: Eight-five versus 158. Ms. Nose: Correct. Mayor Burt: That’s a massive investment. I think the City should be proud and the community proud that we're doing investments in our capital program and our infrastructure that really were discussed for decades as a under-investment for many decades. In recent years, we have increased and increased that investment to this point. That's a great achievement. I would also just note that if you look on the income side on the hotel tax, the Transient Occupancy Tax, we went down to a low point after Hyatt Rickey's closed of somewhere around five million in total. We're now pushing $24 million and rising. Without that additional funding, we really wouldn't be able to do a good portion of this increase in the infrastructure investment. I just wanted to also ask on the Utilities side. We've gone a number of years with very low or in some of the utilities no increases. Now we have all of them going up in one year. Two of them are very impacted by the drought. It was really a three year drought. We, I think, last year kind of deferred an increase on some of these. There's somewhat of a lag, I understand, between the impact of the drought and it catching up on us having to increase these rates on water and electricity. We now have a year in which we are pretty much a normal snow pack. I should say these utility rate increases were computed before we had any confidence that we had a normal year. It doesn't mean we'll have a normal year of snow pack next year. Is there any consideration as to whether, now that we have visibility on our water supply, do we still need the same increases? I appreciate that at least in the case of electricity we basically need to catch up to having drawn down our reserve, as I recall. Mr. Perez: Thank you. Good question. As I understand it in the discussions we've had at Finance, it is necessary at these levels, because we drew down the reserves over the years. For example in electric, as you heard City Manager Keene mention, we hadn't had an increase since 2009. Believe it or not, water also influenced the gas. I hadn't thought about it until Staff told me. Because we were conserving water, you weren't using gas to heat up your—your showers were shorter, you were finding ways to conserve. It also impacted the Gas Fund. Obviously, it's something that they monitor very closely. We talked about, with the Finance Committee, whether the State was going to loosen up the restrictions. That's not definitive yet. The northern part of the state is doing better than the southern part, as you TRANSCRIPT Page 43 of 67 City Council Meeting Transcript: 4/25/16 might have heard. To the best of my knowledge and I'm sure we'll get into the deep details with the Finance Committee, it has been taken into consideration. Mayor Burt: I'll just say I hope we have one more opportunity to do a relook at the rates based upon latest information. I appreciate when these rates started percolating through the Utilities Advisory Commission, we really didn't have the visibility that we have right now on this. As far as positions, I guess I do have one comment. I understand you mentioned that a couple of the positions had to do with our wastewater treatment plant. I support the necessity of moving forward with the engineering positions in that we've really heard for a decade that we had a long series of steps that would result in pretty much a full rebuild of our wastewater treatment plant and modernization of it that will occur over this coming decade approximately. If anything, I think we've been slow to really up that investment. This is the first step in doing that. It's badly needed; that's such a vital function for not only ourselves but our five member partners who will share the cost of that. Mr. Perez: Mr. Mayor? Mayor Burt: Yes. Mr. Perez: If I may add, that share cost is 64 percent. Mayor Burt: We pay 36 percent of whatever the cost is. Mr. Perez: We're looking at financing the project at rates below two percent from State revolving loans. Mayor Burt: The one position that caught my eye was on the Development Center. This is another accomplishment that we've had over the last half dozen years or so which is to greatly improve the performance of our Development Center as we heard last night. It's sort of akin to what we've done in an investment in our streets. We went from what we'll call mediocre streets and a mediocre Development Center to really a high-performing Development Center and the best scoring streets in Santa Clara County. My question is what's driving the need to add more Staff and is it to try to perform even higher? On the commercial side, we see on the horizon not really an increase and maybe a decrease in projects. On the residential side, is that what's driving it? Is there some other performance-based initiative that's driving that one increase that was mentioned there? Mr. Keene: Are you able to answer to that? TRANSCRIPT Page 44 of 67 City Council Meeting Transcript: 4/25/16 Ms. Nose: I think you're talking about when Jim was mentioning the Building Planning Technician. Mayor Burt: Yes. Ms. Nose: What that position is actually doing is trying to make the Planners more efficient. It's actually front desk support. Right now what actually happens is all of the Planners will physically move their desks from their Planning office down to the front desk to staff the front desk. It's about—I don't know—10 percent of their time throughout a given year. What this position is going to do is allow the Planners to actually be Planners and do planning and put that clerical position at that front desk and alleviate that movement of them, so that they can actually focus on true planning activities. Mayor Burt: I hear that, and I'll look for the Finance Committee to scrutinize that one in particular. Finally, we have the issue of the unfunded pension liability which, for all of the great things that we have done over the last years in reforming not only what was an unsustainable financial horizon for the City, but we did that and we have now addressed this incredible backlog in unfunded and reduced our backlog in infrastructure in a really major way. The remaining real great challenge for us is this unfunded pension liability. In this year's budget, refresh me where we stand. The Council gave direction. Refresh for me where we stand and we are in the coming budget. Mr. Perez: We have action from the Finance Committee that needs to come forward to the Council. From the 2015 Fiscal Year close excess funds, we set aside $1.3 million. The Finance Committee is making a recommendation to you, the Council, to start what we call a Section 115 Trust. It's similar to what we did with the retiree medical, as you may recall. We set up a trust, and we put the funds aside. They're irrevocable. The direction is that 1.3 of the General Fund side is for us to look for options or recommendations on how the other funds can also contribute towards their unfunded portion. We have that broken down. We can issue a Request for Proposal (RFP) and have a provider manage the trust and invest the funds for us. Then, the other to do is to look for ways to continue funding that. Obviously we're challenged in '17, so there's not a specific recommendation. There is a desire by the Finance Committee as part of their recommendation that we explore options in '17 as well and to look for a recommendation and funding policy. A quick example I can give you, just so it gives you a flavor of what we're looking at. Anything over the 18 and a half threshold right now in the Budget Stabilization Reserve, the City Manager can send a recommendation to you that it be sent to fund the infrastructure projects. There could be a TRANSCRIPT Page 45 of 67 City Council Meeting Transcript: 4/25/16 split of that, that some of it goes to the unfunded liabilities and some other proportion goes to the infrastructure. Mayor Burt: I would support that direction that the Finance Committee has been discussing. I think it's crucially important that we continue to allocate funds toward this unfunded liability as we're setting up the new program. I would want to see it not less than one million for this fiscal year budget. If it has to come even from one million less toward the infrastructure or one million less in our Budget Stabilization Reserve, whatever it takes, I think we have to have that commitment and continue with it. It's the remaining element in having our finances long term to be sustainable. We've got a debt that we've got to be paying down. Council Member DuBois. Council Member DuBois: Thank you for all the hard work. My bedtime reading for a month now. I had a question about drawing down the BSR. Have we done that in an up economy before? Mr. Perez: We have. Back in the great recession, temporarily we drew down on the reserve ... Mr. Keene: He said in an up time. Mr. Perez: I'm sorry. Council Member DuBois: Specifically when times are good or do we usually do it in a recession? Mr. Perez: In good times, not below the target that I can recall. Council Member DuBois: Hearing the City Manager's comments about a sustainable budget, it's a little bit worrisome. If this isn't it, I think it'd be good to maybe see some scenarios with some hard choices just to see what that means to get to something that feels more comfortable, maybe just to kind of understand the risk involved. I appreciate that it's ambitious, and we're trying to do everything. If you don't believe it, I think maybe some alternate scenarios would be good. In terms of the new FTEs, that's above all kind of open and unfilled positions that exist today? The Public Works FTEs, are those all long-term positions or are they tied to this capital infrastructure plan? Mr. Perez: Not all of them are tied to the—one is specifically tied to the project. I'd imagine that this is going to take us quite some time to complete. We can reassess at the end of that process where we're at. Council Member DuBois: It's like four or five years at least. TRANSCRIPT Page 46 of 67 City Council Meeting Transcript: 4/25/16 Mr. Perez: I would be guessing, but intuitively I would think so. Council Member DuBois: Last year, I think I asked to get an idea of kind of consultant usage and how that's been changing. When you talk about kind of our head count versus 2009, the piece that's really missing is how much of our work has shifted to consultants. I'll make the request again this year. It'd be great to start to track it, so maybe next year we could see how much are we really kind of outsourcing or shifting or doing with kind of non-Staff workers. Mr. Perez: I think one of the challenges we had was the way we capture our data. It's like most companies; capturing the data is not a problem. It's how you pull it out and make it useful. We're working on a project right now to have those analytics come out of our system to be able to tell. What I can tell you is that we have moved some of our services from in-house to contracting, which may be part of what you were mentioning maybe. We've done that for the golf course, parks, custodial, street sweeping, to name a few. There's been a shift, and that impacts those numbers as you're mentioning. Mr. Keene: We've got an upcoming issue with the fleet. Mr. Perez: We have a couple of items coming through the Finance Committee in May on how we administer our supplies for the fleet management. We're looking at a different model that has ... Mr. Keene: Contracting with a private vendor for jus- in-time delivery rather than us managing inventory, that sort of thing. Mr. Perez: We're looking at our swim program as well. Council Member DuBois: Again, I totally believe that we are doing a lot with and stretching people thin. I think it'd be good to recognize we've also shifted and we're leveraging some outsourced work as well. In terms of those unfilled positions, are there positions that have been open for a year or more? Mr. Perez: We purposely have held some positions in the Fire Department as a result of the ongoing discussions with Stanford. Those come to mind. In terms of difficult recruitment, I think we've been having some challenges in some of the utilities, but I can't think of anything that's taken a year, off the top of my head. Council Member DuBois: Shifting away from people, I guess. It'd be great to have ideas for new revenue sources. I think we're talking about parking TRANSCRIPT Page 47 of 67 City Council Meeting Transcript: 4/25/16 revenue potential. I don't know how big it could be. I was talking to Jim the other day of some cities are offering lit fiber services instead of dark fiber; those have been highly profitable. We have this question about business revenue and potential business tax. I think it'd be good to see some of the trends of business revenue versus residential revenue over time to see if we're keeping up. Just to echo the comments about the unfunded liability. I would support trying to find a way to pay into a fund for that. The other part of that that would be really useful is if we just start to report it and track it in a more transparent way. If we had the ability when we're making decisions to know what the long-term cost impacts would be, I think it would keep it more present in the minds of Council. We would be really considering the full cost of decisions we're making. Again, that's not really saying we would necessarily pay it differently. I think just making it more visible would be useful. Just let me check my notes real quick. Just a real quick clarification. The Capital Improvement Budget and the Capital Infrastructure Plan, is one a subset of the other? They're not additive, right? Mr. Perez: That's correct. I think that's a good point to just remind the Council and the community that we segregated the projects and the funding for the infrastructure master plan, which started at $126 million when it was adopted by the Council. As part of a way to report the progress, we call it out. Council Member DuBois: The last point is really back to getting comfortable with the budget. If there are places for cost savings or efficiency projects, using technology to get more efficient, projects that pay for themselves in terms of cost savings, we're a complicated City trying to do a lot. I really think we need to kind of focus on—we're looking at a new ERP system, for instance. Are there ways that we can create efficiencies that actually save us money? Thanks. Mr. Perez: Thank you for the support. We agree. Mayor Burt: Thank you. Council Member Holman. Council Member Holman: I'll be brief since I'm on Finance. I just wanted to give you a heads up. When you come to Finance—I've mentioned this before, but it seems to not happen. I think it'd be really helpful when we get the budget—it's a static document basically. When you come to Finance and following up with the Council, come with information and be able to demonstrate with open data or open gov—I've forgotten what it's called— how we're comparing to prior years. It's just a quick, easy shift from one screen to another. I think that can really help us. The other thing—help us know where we are and help us benchmark ourselves. The other thing is TRANSCRIPT Page 48 of 67 City Council Meeting Transcript: 4/25/16 with some indication of where we've made improvements, where we've gotten efficiencies. I don't know why the one that comes to mind is what we're going to be gaining by charging a percentage for our subcontracting services, which we haven't done before, some improvements along the lines of cost recovery plus. Thanks. Mr. Keene: Before Lalo jumps in, we will do our best. I would respectfully just say also that we're hardly going to have any OMB Staff at the Finance Committee meetings. If the Council would just keep that in mind, that we're down whatever it is, 50 percent of the Staff. We're going to have to triage in the Finance Committee too to be sure we're working on what's most important. If we can do these other things, we will. Mayor Burt: Vice Mayor Scharff. Vice Mayor Scharff: Thanks. Thanks for the excellent presentation. First of all, in general I think I agree with the City Manager's approach to this budget. I agree that next year it has to be a sustainable budget. I think Council Member DuBois was correct, but the big part he left out was the possibility of the new hotel revenue, which is the most likely realistic source as opposed to finding efficiencies somewhere. I'm thinking maybe you could look at that and get a sense of what that would look like in different, reasonable and how that would basically give us confidence that there should be enough revenue plus what we'd normally expect to see if we have sales tax increase. Also, our property taxes usually go up. This year they went up—what? Eight percent. What did they go up the year before, do you know? Mr. Perez: Let us look it up. Tarun has it. Vice Mayor Scharff: What I'm saying is that it doesn't really matter that much. It's more maybe you could give a sense so people get comfortable that this approach is a stop-gap measure for this year. Next year, given where that's going to be, this should play itself out and work out barring having a sudden recession or something like that. My gut sense tells me that it would actually work out, and it will make this work for a sustainable budget for next year, which then gives me comfort for your approach for this year. How many Public Works people are you hiring? Was it ... Mr. Perez: Four. Mr. Keene: I think there's some shedding of some part-time people in the mix. Obviously (crosstalk) cost ... Vice Mayor Scharff: What are they going to do—what are the positions? TRANSCRIPT Page 49 of 67 City Council Meeting Transcript: 4/25/16 Ms. Nose: Two of them are Senior Engineers, and those are the ones for the Regional Water Control Plant and the recycled water program. Vice Mayor Scharff: That will deal with the improvements we're doing. Will that also help with the improvements and manage the improvements to the Water Quality Plant or not? Ms. Nose: Correct. Mr. Keene: We both have the overall planning for the investment design and the retiring ultimately of the incinerator and all that stuff. Then we have the very specific acceleration on the reclaimed/recycled water, even ultimately purified water, discussion to be sure we've got enough staffing to help support that. Vice Mayor Scharff: That's two of the people? Mr. Keene: That's two of them. There's one in refuse and ... Ms. Nose: One of them is a Management Analyst. With Public Works, the multiple divisions, each division has a Management Analyst that helps them with all their analytics and what not. Vice Mayor Scharff: That person goes to refuse or not? Ms. Nose: This person is—yes, for refuse and wastewater treatment. They'll help with both of them, with the oversight of the administrative side of things, hiring, budget, contracts, all of that. The last position is street maintenance assistance to help with the post-closure maintenance of the landfill. Vice Mayor Scharff: I look at this Capital Improvement Fund, and we are doing so much capital improvements next year. $10 million for the Golf Course. We're starting the Public Safety Building. If you just go through it, you see it. There's multiple line items where we're over one million dollars, 1.4 million, 1.5 million and some really big items including some for Rinconada Park improvements and stuff, three million dollars My concern is that we don't actually have the Staff to do that. I actually think if that's true, you should look at putting more Staff there. I don't want us to get to the end of the year, and you've done a third or a half of what you said you were going to do. I guess I want assurance that—I don't know where Jim went. I want assurance from Jim. Jim. Now we can talk about cutting the City Manager's salary to pay for that. Is that the right time? TRANSCRIPT Page 50 of 67 City Council Meeting Transcript: 4/25/16 Mr. Perez: Those are excellent points. We've actually had those discussions. We pushed back when Public Works—is the timing ready for these positions to be added? Are you at the point where you're actually going to need these positions full-time? The answer was yes. To your second point, the way that Mike Sartor, the Public Works Director, has recommended to the City Manager—you'll see something coming up soon here in your Agenda—is to hire project managers and not to add Staff. Vice Mayor Scharff: You think he might outsource this and do it that way? Mr. Perez: Yes. There's going to be a request to do it multiyear. You're absolutely right we have a lot of dollars and a lot of projects. My concern is that we've got to get this Public Safety Building going so we can finance it at the low rates that we have right now. We are pushing for many reasons. You'll see something coming up soon with a proposal for that. Vice Mayor Scharff: I think there's a lot of that. With the low rates, we actually should try and get as much of this stuff going as possible. Mr. Perez: Just to remind the Council, once you borrow, you have three years to build. That's why we can't start until we know that we have a time window. Vice Mayor Scharff: That makes sense. We've obviously got to get the planning and stuff done so we can get it done. The other thing I wanted to highlight that's important to me is the golf course. We're losing money. I don't remember—how much are we losing a year on the golf course right now? Mr. Perez: They're going to come and update you, and it's in the 800,000 range a year that we're probably going to be losing. It looks like we're making progress towards the permit. Vice Mayor Scharff: We don't actually have all the permits yet. I thought we did. Mr. Perez: We have the Fish and Wildlife permit. I haven't had a chance to talk to Staff last week, so I don't know exactly where we're at with the other. My understanding was that we were given some verbal assurances that once we have the Fish and Wildlife, then our chances were going to be better to actually get the next permit. We're updating right now, as we speak, the business model. I've been speaking to the consultant with those discussions with Community Services. The Staff has asked the golf architect to update the projected cost for the project. We're going to come in June— Community Services is—to give you an update and full details on all of that. TRANSCRIPT Page 51 of 67 City Council Meeting Transcript: 4/25/16 Vice Mayor Scharff: Spending the whole $10,291,000 in 2017 sounds optimistic. Mr. Perez: What we would do for this one is we would finance it. You're right; we would not spend all of that. My understanding right now is that it would be a 16-month project. They'll give you an update on specific starts and all of that. Vice Mayor Scharff: When we finance something, we put the whole $10 million in one fiscal year? Is that how that works? Mr. Perez: That number's got a couple of components in it. There's three million that is coming from the JPA for San Francisquito JPA. We have about one million that we collected for accepting dirt at the golf course. That gets knocked down from that 10 million, but the costs have obviously gone up. We're going to update you on all of that. We would issue the ... Vice Mayor Scharff: My question actually was more on timing. The way I read the budget and I read the Capital Improvement Fund, if the money's in 2017, I expect we'll spend it. There's nothing in 2018, which implied to me that we finished the project in 2017. Mr. Perez: No. What we need to do ... Vice Mayor Scharff: Did I read this wrong? Mr. Perez: What we need to do is award the contract. In order to award the contract, we have to have the budget. Vice Mayor Scharff: When I see these numbers, it's awarding the contracts (crosstalk). Mr. Perez: That's correct. Vice Mayor Scharff: That was my major points. I had one minor thing that just caught my eye. I apologize for going down so deep into the weeds. Why is there a number of 88,000 for the temporary Main Library? We have like a very little amount of money in 2016. I thought we had the libraries built; now we have 88,000 for a temporary Main Library. I was just confused what that could possibly be. Mr. Perez: Where are you looking now? Vice Mayor Scharff: If you look on Page 88 of the Capital Improvement Fund, that says temporary Main Library. It shows that in 2016 we spent TRANSCRIPT Page 52 of 67 City Council Meeting Transcript: 4/25/16 $60,000 roughly, 2016 $8,900. For 2017, we have $88,000 budgeted. I couldn't resist asking. Mr. Perez: It was probably to close it down. We'll have to look. Vice Mayor Scharff: You can get back to me on it. I was just curious as to what that was for. Thanks. Mayor Burt: I don't see any other lights. We'll thank the Staff and the Finance Committee in advance for a month of hard work ahead. I know the Staff's been—their hard work on this doesn't start tonight. Maybe the next month is actually easier than the last few months. You have a lot of meetings coming up. Thank you all for this hard work in this coming month. On that note, we will conclude this item. NO ACTION TAKEN 8. Colleagues Memo: Developing City Policy on Acquisition, Use, and Safeguards for Surveillance and Information-Gathering Technologies. Mayor Burt: We'll move on to our final item tonight, which is a Colleagues Memo regarding developing City policies on acquisition, use and safeguards for surveillance and information gathering technologies. Since this is a Colleagues Memo, Council Member Wolbach, are you wanting to take the lead on introducing this? Go right ahead. Council Member Wolbach: I just had a few comments to make about this, just as a matter of process. Should I make those now or should we go to the public, if there's any public comment, first? Mayor Burt: We normally have authors of the Colleagues Memo offer introductory comments on the Memo, and then we can hear from members of the public and then return to the Council for discussion. We currently have five speaker cards. Council Member Wolbach: Also when there's an opportunity to make a Motion, I'd appreciate it if I could do that. This Colleagues Memo is really about beginning the process of establishing a proactive policy to ensure transparency in City government when it comes to technology with surveillance or privacy concerns and about protecting Personally Identifiable Information, PII. This is in the context of rapidly evolving technology, which enables unprecedented opportunities but also potential risks. This is in the context of controversies at the national, state and local level, which Palo Alto should aim to avoid. This is not about regulating private uses of technology, only uses by the City or our contractors or partners. I'd say this is also not TRANSCRIPT Page 53 of 67 City Council Meeting Transcript: 4/25/16 just about our Public Safety Departments but the City as a whole. For example, our Planning Department might have even more cameras than our Police and Emergency Services Department. This is not about a false dichotomy of safety versus privacy. This is about protecting both safety and privacy. As a quick example, if a city were to collect lots of information about residents and not carefully safeguard it against either internal abuse or leaking, then the privacy and the safety of a resident might be jeopardized. Automatic license plate reader, as one example, can provide detailed information about a person's movement and habits, which could be embarrassing if made public. It could be used for blackmail, if obtained by a hacker. Also dangerous physically if a stalker or other nefarious actor obtained it. As highlighted in Attachment C, other communities have seen what happens when surveillance technology is adopted without a good process. It sows distrust in government. Law enforcement, of course, depends on a healthy relationship and the trust of the community, as does every City department. In particular with Public Safety, I think we're blessed to have outstanding professionals in our Public Safety Departments, both rank and file and management, who understand this. Attachment B, the suggestions from the International Association of the Chiefs of Police was actually provided to us by Police Chief Dennis Burns for consideration and offers excellent examples of how to think about this complex question. I want to thank all of the Staff and community members who offered their thoughts prior to us drafting this Memo, and Staff for providing improvements which increased the quality of the language of the Memo. The community really deserves to know that we value their privacy, especially here in the heart of Silicon Valley, that we recognize the complex questions raised by recent and rapidly evolving technology. City Staff deserves to know that the City Council supports their efforts, rather than trying to guess how Council or the community will feel about something they do. The buck stops with the Council, and we should be responsible for authorizing any potentially controversial technology applications by the City. We could try to respond ad hoc to each new technology as it arises. As the coauthors of this Memo, we are of the opinion that we should be proactive. We envision a high-level policy, a standard operating procedure, a checklist for Staff to follow when considering adopting a new technology. Such a checklist would call for standard components, which could be flexibly applied depending on the technology and the need. As a high-level policy, it would not dictate the outcome of the details of future technology adoption or deployment in Palo Alto. It would merely establish a clear, consistent and transparent process by which we would make decisions about technology deployment. Particularly important are collection of data, retention of data and dissemination of data. Along with that, analysis of data and Council authorization. I expect Staff and the Policy and Services Committee will closely study at least three sources of suggestions. First, the American Civil TRANSCRIPT Page 54 of 67 City Council Meeting Transcript: 4/25/16 Liberties Union (ACLU) recommendations in Attachment A. Second, the International Association of Chiefs of Police recommendations that I mentioned before in Attachment B. Also worth noting is—we didn't include as an attachment—the draft ordinance currently being considered by the Santa Clara County Board of Supervisors which is working in parallel to this. I'll watch with interest when it unfolds at the Policy and Services Committee and look forward to recommendations coming back to full Council once there's been considered and thoughtful input from Staff and the community. Mayor Burt: Thank you. Unless anybody has a burning question, we'll go ahead and let members of the public speak. Our first speaker is Adam Schwartz, to be followed by Brian Hofer. Each speaker has up to three minutes to speak. Thank you. Adam Schwartz: Good evening. I'm Adam Schwartz. I'm a resident of Palo Alto; I've got two kids going to Jordan Middle School. I'm also a lawyer at the Electronic Frontier Foundation (EFF). The EFF is a nonprofit group that tries to ensure civil liberties in the new digital frontier. The technologies that are changing our lives, obviously they can do a lot of good. They can make our government more accountable; they can make it more efficient. Sometimes these technologies can diminish our privacy and our civil liberties and even chill our free speech. Every time one of these technologies comes up, these new, powerful surveillance technologies, there is a thicket of complicated questions, including what are their costs and benefits and should they even be adopted and, if so, who will the targets be, and what are the privacy rules going to be. It's the view of the EFF that these are decisions that ought to be made at the top. These are decisions that should be made in consultation or with an opportunity for input from the general public. We think we get better decisions when all of the stakeholders have an opportunity to be heard. The idea here really builds upon two statutes that were enacted this past year in Sacramento, that apply to all police agencies in the entire state, which say that if police want to adopt automatic license plate readers or stingrays, when doing so they need to first get approval from elected officials. They need to at the front end adopt a set of privacy and usage rules that all members of the community will have an opportunity to observe and comment on before they're adopted. What the idea, I think, here says in this bill is that it shouldn't just be these two particular technologies, the stingrays and the license plate readers. There ought to be an across-the-board approach that says all of these new emerging technologies should go through the same kind of process. Without trust between community and police, there can't be public safety. We think that this kind of policy will do a great deal to advance trust. Finally, EFF, ACLU, other groups that are here tonight would be very happy to meet with City officials to assist in this process of crafting appropriate legislation in the TRANSCRIPT Page 55 of 67 City Council Meeting Transcript: 4/25/16 coming months. I really appreciate the opportunity to be heard this evening. Thank you very much. Mayor Burt: Thank you. Our next speaker is Brian Hofer to be followed by Paul George. Welcome. Brian Hofer: Mayor, Honorable Council Members, my name is Brian Hofer. I'm a member of the Oakland Privacy Working Group, and I chaired a Citizens Privacy Advisory Committee at Oakland City Hall, which has now crafted two privacy policies for surveillance equipment. I've also worked with the Alameda County Board and a District Attorney on what I believe is the nation's strongest stingray use policy in the country. I've worked with Supervisor Simitian and the Santa Clara Staff on their current ordinance. I encourage you to go down this path. Everything that I've read in this Colleagues Memo is directly on point. Santa Clara has actually leapfrogged us a little bit. If you're going to look at a model, I do encourage you to look at Supervisor Simitian's draft. They spent over ten months receiving feedback from the Public Defender, District Attorney, Sheriff and others; it's been vetted very well. I want to talk—as we heard from the budget Staff just earlier, one of the obstacles you might face or concerns that you're going to face is Staff time. As someone that's been through the process, I just want to share a little bit of what we went through. For one, if you use Supervisor Simitian's ordinance, the ordinance is drafted. Secondly, while Oakland's annual compliance reports are premature, I can't share those with you. Menlo Park has been doing it on a quarterly basis with their license plate readers. Those reports are two pages long. It's not too much of a burden to produce those. Secondly, what about the underlying use policies themselves if you do get the overarching global ordinance? You're going to be writing individual use policies for equipment that you've approved the use of. Oakland created a very robust policy and procedures. We took a long time with that. Once we created our second policy, it took one hour. We sat down with the helicopter team; it was a thermal imaging camera that the helicopter used. We quizzed them, how to do you intend to use this, what do you need it for, what sort of data sharing might you be doing, how long do you need to retain the data. Then, we modified the template that we already have. You're going to face some of these concerns. I assure you that once you clear that initial burden, that burden is lessened quite a bit. I don't want to make it sound so casual that you're just approving surveillance equipment and policies. The burden really will disappear. It's good government; it leads to transparency. It's not to exclude the Palo Alto Police Department from having a voice, but it allows others to also have input into the self-determination of what is appropriate in Palo Alto. I encourage you to keep doing this. Thanks. TRANSCRIPT Page 56 of 67 City Council Meeting Transcript: 4/25/16 Mayor Burt: Thank you. Our next speaker is Paul George, to be followed by Winter Dellenbach. Welcome. Paul George: Good evening, Council. My name is Paul George. I'm Director of Peninsula Peace and Justice Center, which has been based here in Palo Alto for 34 years. I strongly urge you to support the Colleagues Memo that's before you. Surveillance is on the rise in our society. Unfortunately, transparency with the public is not. We need to find the proper balance between the use of technology—the technology is to keep us safe—and levels of transparency that will assure the public that those same technologies are not being abused, and that our personal data is kept secure. Holding full public hearings and setting the operating and security policies before any such technology is acquired is an absolutely must, I think, in a democratic society. Without those elements, there will be no balance between security and public transparency. As the previous speaker noted, the Colleagues Memo does cite the possibility of significant Staff time required to administer the various reporting programs, etc. I would respond that's the price, a small price actually, an open, free and democratic society must pay to remain free and open. I also applaud Supervisor Joe Simitian for the very strong ordinance he proposed for the County. It has rightfully garnered national and international attention. I came across an article about Joe Simitian in the London Guardian. It was great. Palo Alto should use it as a model to its own ordinance and set the gold standard for cities. Please support the Memo. Thank you very much. Mayor Burt: Thank you. Winter Dellenbach to be followed by our final speaker, Jerry Schwartz. Winter Dellenbach: I hope you refer this to Policy and Services. It's really badly needed. If you're hesitant I suspect it's more a matter of your needing more information rather than it being an unworthy or mistakenly timed, consuming subject, given all the good work that you have to rely on that's come before us. I really hope that this is not an encouragement of "let's just get some policies in place," and then we have all of these toys. I'm hoping that any policies would reflect we only have this technology when there is no other alternative, when we can absolutely justify it, whether we can show that there is an absolute need for it in the town of Palo Alto. It grieves me that we have data, big data mining businesses in Downtown Palo Alto. It grieves me, but we can't do anything about that. We can do, as a town, something about this. We can once again be a leader in trying to put in place something sensible. I want to take the rest of my time to just get personal for a minute. I was the victim of surveillance for five or six years, from 1967 to 1972. It became 24/7, constant surveillance using all technology possible back then. Almost all of it was illegal. It included TRANSCRIPT Page 57 of 67 City Council Meeting Transcript: 4/25/16 burglaries, wire-tapping, video filming, cameras, provocateurs, confidential informants, a whole range of things. I was the founder of the Los Angeles Resistance; I worked with David Harris, former student body president of Stanford University and Joan Baez who founded the Institute for the Study of Nonviolence. We were totally non-violent in urging young men to refuse induction into the army and our opposition to an immoral, illegal war. For that, I was nearly imprisoned twice with planted evidence. I'm about to get 8,000 pages of Federal Bureau of Investigation (FBI) records and Los Angeles Police Department records from a Freedom of Information Act (FOIA) request that has taken years and years. This surveillance business is no messing around. It ruins people. I hope each and every one of you take this really seriously, and let's get on with this and be our best civic self. Thank you. Mayor Burt: Thank you. Our final speaker is Jerry Schwartz. Welcome. Jerry Schwarz: Thank you. I am a Palo Alto resident and the Chair of the Mid-Peninsula Chapter of the ACLU. The proposal before you is a practical, pragmatic way to deal with the matter of great and increasing concern in today's society. The current surveillance technologies are—you know what they are sort of. You know how concerned people are about them. What's coming in the future with artificial intelligence and all kinds of stuff nobody has even thought of yet is even more concerning. The ACLU is not opposed to any particular technology. Our position is that any technology must be adopted with public review, the decision makers must have full information about it, and they must make informed decisions. There needs to be something like what is proposed here so that there are general procedures in place to reach those informed decisions wisely. Finally, two more or less personal notes. One is as a resident of Palo Alto, I am very glad that Palo Alto is again leading the way on something that is of great public interest, at least on the Peninsula. The other is I've heard in the previous remark and from my friends in Oakland that Oakland—I'm sorry, not Oakland. Alameda has the best policy with regard to stingrays. Ain't so. Santa Clara County has the best policy which they will not acquire a stingray. We can thank Joe Simitian for that. He fought very hard for it. Thank you. Mayor Burt: Thank you. We can now return to the Council for discussion and prospective motions. When we go to a motion point, I know that Council Member Wolbach asked if he could have the floor. Council Member Berman. Council Member Berman: Thank you very much to the members of the public for coming to speak today. I spent far too much time reviewing Electronic Frontier Foundation (EFF) white papers when I was writing my law TRANSCRIPT Page 58 of 67 City Council Meeting Transcript: 4/25/16 review note 10 years ago and know the quality of the work that you guys do. Needless to say, that note was not published. More recently, I've been doing some research on kind of best practices for adoption of technology and local public safety. One of the things that I read by a sheriff's association actually was the best process is to have a policy in place before you have a problem. Drafting these processes after there has been some public incident often leads to rushed policies and bad results. I think we have an opportunity now to do our best to put the process in place as we adopt—for technology that we currently have, but also as we adopt new technology as it becomes available. I think that it's important to have that community dialog and community conversation and bring together community stakeholders ahead of time to get everybody's input in a kind of logical, thoughtful process before something goes wrong. I want to commend Council Member Wolbach for all the work he did. I've been a part of a lot of Colleagues Memos, and I think this was one that probably took the longest to actually bring to Council. Council Member Wolbach did a diligent job of getting input and reaching out to Staff ahead of time and providing a lot of data that, I think, was helpful for tonight's conversation and will be helpful when this goes to Policy and Services. Good job. I don't know if this was your first Colleagues Memo that you took point on. No. Then you're a pro at this. It's just important. I'll support kicking this to Policy and Services, so we can have a longer conversation about it there. Thanks. Mayor Burt: Council Member DuBois. Council Member DuBois: I just wanted to say thank you to the members of the public for clarifying the issue. When I originally read this Memo, my initial reaction was the City's already doing a lot of these things. I was thinking about it more generally. Like our Chief Executive Officer (CEO) has come before us and talked about our PII security procedures. The City deals with credit cards, Social Security numbers, a lot of personally identifiable information. We already have a lot of policies in place around that. We can discuss those policies more broadly. In a lot of ways, I think the security around the data is similar. I think we also recently passed a data retention policy, and it was reviewed, I think, by the Legal Staff and the City Staff. I guess you guys really just underlined this is really about surveillance technologies and dissemination policies. If that's the intent, I'm supportive. I think we have some existing policies we can build on. I'd like to keep the focus just narrow on surveillance. When I initially read this, I was thinking it was much more broad. Thanks. Mayor Burt: Now I do see other lights. Council Member Holman. TRANSCRIPT Page 59 of 67 City Council Meeting Transcript: 4/25/16 Council Member Holman: I have one question. I support this going to Policy and Services, but I have one question. There are things that might be deployed as safety or even fire prevention here, there and in the Foothills, that sort of thing, but might be construed to some as surveillance as well. I'm hoping that that will be a part of the conversation when this goes to Policy and Services. When it's appropriate, appropriate use, not appropriate use, and what can be used and what can't be used, I'm hoping that will be a part of the discussion there. James Keene, City Manager: I would just say that I think the report even acknowledges a little bit the existing directive at the Staff level to identify any camera technology or anything that we have in the City and to report on that. It's something that I asked for last year, for us to make sure that we know the base that we have. I think the nice thing about this policy is this idea of having a more detailed framework in advance. As you know, any time we've had an issue, we've actually been publicly discussing it with the Council. If we've got a bike count at a particular location, we've gone in to talk about the actual technology, the fact that it doesn't show photos, all of those kinds of things. I would say this. Our culture right now is on the upfront part of any decision point to discuss this publicly with where we are. I would say for the most part what we have done has forestalled any deployments from anybody coming in and basically saying, "This is Palo Alto. We wouldn't deploy something like this." You may recall some of the Council Members a number of years ago with license plate readers, we were talking about how we might do enforcement. We pretty much had a big discussion about some of the problems with that. We haven't deployed some of those things. Particularly now in a lot of the emergent smart city sensor information, I think pretty much everyone knows. While there could be a lot of interest in how we could collect useful information, not so much surveillance but capturing just data, we really need to have policies in place before we can jump into that. I do want to let you know that on the way to this policy, the Staff mindset is, I think, very attuned to the intentions of the Council and the community in this discussion. Council Member Holman: If there needs to be clarification, my one reference, just as an example, was for instance about drones. We basically don't allow drones to be flown anywhere in Palo Alto. They could be useful perhaps in fire prevention and detection. Mr. Keene: Clearly, I would hope we wouldn't say that there would be no good deployments of technologies that we may not even know exists right now. Again, this process for assessing and vetting and sharing. That is what we hear this is about. TRANSCRIPT Page 60 of 67 City Council Meeting Transcript: 4/25/16 Mayor Burt: Vice Mayor Scharff. Vice Mayor Scharff: I wanted to basically follow up on what the City Manager just said. My view of this is there's lots of great technology that will make Palo Alto a Smart City, that will provide convenience, will give us great data of how to plan. We want all that data. I thought your point about bike counts was really good, but it's not just bike counts. It's car counts. I think we're going to see a lot more of that, and we should see a lot more of that. I actually do want to see a lot more of that. I want people to have confidence that their personally identifiable—when we count bikes, we count cars, we're not counting their license plates. We're not seeing where they move. There's nowhere you can follow them around, but we get the patterns of the big data. That's really what we want. Then, we can do our planning as a City Council and as a community based on good data. I think the more of that we have—I'm actually hoping that what we do is we put policies in place that allow us as a City and a City Staff to feel more comfortable. Every time you put a bike counter up somewhere, the citizens don't have to be concerned because they know we have a strong policy that says it's not personally identifiable. You can with confidence say, "Yes, let's put a bike counter. Let's put car counters." There's all the utilities stuff. As we become a Smart City, all that utility information we're going to have to safeguard. I don't think it would be appropriate for people to know how much water a particular citizen used without having a discussion about things like that or how much electricity they used. I think those raise huge issues of privacy. I think you want to have personally identifiable information to be very safeguarded. The best way to do this is to have a policy beforehand. I think it's not just surveillance. A lot of the smart city stuff—I think it's all about personally identifiable information. I think we should limit Policy and Services to some extent to be looking at personally identifiable information. For drones, there's a lot of uses of drones in utilities. They fly along the lines to make sure there's not a problem with them. They may want to fly along our lines as part of coming in from Northern California Power Agency (NCPA) or something like that. There may be small drones or something that actually go through the sewer pipes or something like that. I think we just want to—there's tons of this kind of technology. We just want to make sure that we're not invading someone's privacy and collecting personally identifiable information. That's my view of it. Mayor Burt: A couple of questions that I have. At a higher level, given that this is potentially a lot of policy elements to look through, without attempting to answer this question tonight, a question I would have is whether we would want to consider breaking this up into categories of either those aspects that are least complicated or least contentious or most TRANSCRIPT Page 61 of 67 City Council Meeting Transcript: 4/25/16 important. Is there a group of them that should be considered and brought back to the Council first, and a second group maybe be in a Phase Two? I don't know the answer to that, but I think it may be a way that we want to look at this, so that we can move forward sooner on the things that are either more important or less contentious. Maybe there aren't things in either of those categories. I was encouraged by hearing more information on what we have going from Santa Clara County and their draft proposal and the consideration that's gone into it and also the reference to the International Association of Chiefs of Police and their policy framework. I wondered, Chief Burns, if you might be able to shed any light on whether you've had a chance to look at this Memo in the context of the International Association of Chiefs of Police (IACP) technology policy framework. Are they roughly aligned? Do you see areas that are different or are they moving in the same direction generally? Dennis Burns, Police Chief: Good evening, Mayor, members of the Council. It's been a while since I read that. Generally, I believe that what you're proposing, Council Member Wolbach's Memo, is consistent. I think the idea of having the conversation in advance, establishing the values of the community and setting standards is very prudent. I encourage you all in considering this, and I hope this moves forward to Policy and Services. Mayor Burt: Thank you. Just had a couple of smaller questions. This may be just verbiage precision. It says the recommendation is to refer this to the Policy and Services Committee to discuss. Ordinarily, it would be to consider and make recommendations. When this comes in the form of a motion, I'd want to see the clarification on what is the intended role of the Policy and Services Committee. Under Item Four, listed under the areas for Policy and Services Committee (P&S) to discuss, there's a reference that the Committee should survey the existing field of regulations. I didn't know whether the intention was the Committee would do that research or the Committee would rely on the Staff research and review it. Of course, Council Members will often do their own supplemental research. What's the primary thrust of that is and the intent? Item Number Five under that, I wasn't really clear about the relationship between what was intended here between the community interest in smart city initiatives, which we've kind of had some discussion about, and security of persons and property. It was a pretty convoluted sentence that didn't link two halves of that. I inferred that there was an intention to reconcile those two directions, but I couldn't gather that from the sentence. I don't need to wordsmith it. I just want to know what's the intent there. When this comes back for a motion, maybe that clarification could come as well. I think that covers the bulk of my questions. I will be interested in understanding how much of this focus is around personally identifiable information and whether that needs to be the TRANSCRIPT Page 62 of 67 City Council Meeting Transcript: 4/25/16 principal focus and to clarify that more. Council Member Wolbach, did you want to bring forward a motion? Council Member Wolbach: Would you like me to respond to some of the questions you just raised before I do that? Mayor Burt: Sure, you're welcome to do that before the motion. Council Member Wolbach: Actually I think a couple of your quibbles—I hate to put you on the spot, Jim. I think they actually came from some of the recommendations that came from Staff to change the Memo somewhat (crosstalk). Mayor Burt: Here's the—just a moment. The Staff makes suggestions to the authors of Colleagues Memos, and then the authors own the Memo. Council Member Wolbach: That is correct. I just wanted to open an opportunity for Staff to weigh in, if they'd like to. Otherwise, I'll (crosstalk). Mr. Keene: We might be missing a couple of words in here for clarity. I think it's handled well enough by a request when we're at the Committee to kind of clarify that in words. Council Member Wolbach: That was my sense as well. On the question of— actually I'll just go forward with the motion. In speaking to the motion, I'll provide it. I'd move that we refer this Colleagues Memo to the Policy and Services Committee to discuss and potentially craft such an ordinance as described in the Memo. Vice Mayor Scharff: I'll second that. Could I suggest a revision? Council Member Wolbach: Sure. Vice Mayor Scharff: I'd suggest that "to discuss and potentially make recommendations to Council regarding this subject." Council Member Wolbach: That's amenable to me. MOTION: Council Member Wolbach moved, seconded by Vice Mayor Scharff to refer this Colleagues Memo to the Policy and Services Committee to discuss and potentially make recommendations to Council. Council Member Wolbach: First, I wanted to address—besides the comments I've already made, I just wanted to provide a couple of clarifications based on questions and things I heard raised. A few members of the public referred to stingrays, but I'm not sure if we had clarification of TRANSCRIPT Page 63 of 67 City Council Meeting Transcript: 4/25/16 what those are. They're essentially cell phone tower emulators. They allow you to gather a substantial amount of information from somebody's cell phone usage. On the question of whether this can be broken up into things that are less controversial and simpler at first versus more controversial and more complex later, I'd like to leave that question open to Policy and Services as they dig into it. I don't have an easy answer, but I'm certainly comfortable with Policy and Services Committee having the discretion to bring forth some recommendations at one point and others at another point, as they see appropriate. If there are minor errors or items that lack clarity, I'd be happy to provide that if it's necessary at this point. Otherwise, I ... Mr. Keene: The Mayor's comment about Committee review, just clarifying. I think that would be something that the Staff would do. I think ... Mayor Burt: The research (crosstalk). Mr. Keene: Research, survey. Council Member Wolbach: Yeah. I think that is correct. Any research beyond what's all provided in the attachments to the Memo, Staff could provide to the Committee Members. Mayor Burt: Vice Mayor Scharff, speaking to your second. Vice Mayor Scharff: Thanks to Cory for putting this together. He did all the heavy lifting on this. I think he deserves a lot of the credit for that. I'm pleased we're doing this for the comments I made earlier. I think it's important to set these policies. I do think, as we start with Policy and Services though, we should make it clear that the charge of Policy and Services and focus is on those technologies that create personally identifiable information. I actually do think in hindsight the Colleagues Memo was a little broader than that. I think that's, at least, what the focus should be to start with. I think that would make the charge for Staff a lot easier when they come up with stuff to us and help us out on this. I don't know if you feel comfortable doing that. Council Wolbach: I think that's kind of assumed. I don't know if it's necessary to incorporate it into the motion. Again, giving the discretion to the Policy and Services Committee to bring forward recommendations in the order and manner that they see fit, I think that would be allowable within that scope. Vice Mayor Scharff: I often think in these things oftentimes it takes them a while to get it to Policy and Services. These things go on. You could have several new Council Members next year, who haven't had this discussion. TRANSCRIPT Page 64 of 67 City Council Meeting Transcript: 4/25/16 When you look at the Colleagues Memo—actually Council Member Burt was the one who really pointed this out to me. I do think it's broader than that. I think it would be good to start there. At least if we have new Council Members, it's clear on that. Council Member Wolbach: If we wanted to add something saying starting with technologies which collect potentially personally identifiable information, I'd be fine with (crosstalk) that. Vice Mayor Scharff: I think we should say that Policy and Services Committee should focus on technology that creates personally identifiable information. Council Member Wolbach: That's fine with me. INCORPORATED INTO THE MOTION WITH THE CONSENT OF THE MAKER AND SECONDER to add to the Motion, “with a focus on technology that collects personally identifiable information.” Mayor Burt: Council Member Schmid. Council Member Schmid: I support the Motion in general. I think the issue has been clearly stated that technologies are proliferating. The concern about security is showing up at every level of government, starting with constitutional issues, but at the Federal level, the State level, the County level, the City level. It's showing up in business, how they conduct themselves. One of the things that I've heard from the Public Safety over the years is whenever there is an issue and a meeting, the first statement of Public Safety is we need trust and support from the residents, from the people. The first step in building that trust and confidence, the sharing of information is the fact that people are confident in the way information is gathered and used appropriately. I think of all those levels of government that are dealing with this issue, the cities are the most critical because there is the place where enforcement takes place, there is the place where the concern of citizens is best met. I guess I like the City policy on video that's on Packet Page 250. It's a good example of the City looking at the details of how to gather information, what information is gathered, what controls on it, what the process is and procedures are investigating. What we're adding here is an element that review by people in a public setting about the security and safety of that information. I'm happy to support the motion. Mayor Burt: Council Member Holman. Council Member Wolbach, did you have some—go ahead? TRANSCRIPT Page 65 of 67 City Council Meeting Transcript: 4/25/16 Council Member Wolbach: I just wanted to add something. I was remiss in not being very clear about this earlier. As the City Manager pointed out, the City of Palo Alto has already taken great steps, and I think does have a very strong culture in this regard. The idea here is really just to institutionalize what's already been a strong culture. Again, my thanks to the City Manager, the City Attorney, and also our Public Safety Staff for their support for this. MOTION RESTATED: Council Member Wolbach moved, seconded by Vice Mayor Scharff to refer this Colleagues Memo to the Policy and Services Committee to discuss and potentially make recommendations to Council, with a focus on technology that collects personally identifiable information. Mayor Burt: Please vote on the board. That passes unanimously with Council Members Filseth and Kniss absent. Thank you to members of the public and to our Staff for participating. MOTION AS AMENDED PASSED: 7-0 Filseth, Kniss absent Inter-Governmental Legislative Affairs Mayor Burt: We have our wrap-up items. Intergovernmental Legislative Affairs, nothing to report. Council Member Questions, Comments and Announcements Mayor Burt: Council Member Questions, Comments and Announcements. Council Member Wolbach. Council Member Wolbach: A couple of things to report on. First, last Thursday I attended the Association of Bay Area Governments (ABAG) General Assembly in Oakland on behalf of the City. This was on April 21st. It was interesting to note that during the breakout session with Council Members representing mid to large cities from the Bay, there was essentially one topic for discussion, which was housing, housing costs, housing supply, housing displacement. Lots of people from other parts of the larger Bay Area region, even as far as away as Marin County or eastward, talked about how people who work in Silicon Valley cities like Palo Alto but can't afford to live here find housing in their neighborhoods, causing displacement there, causing further growth pressures and consternation there. Just further evidence that if we don't pull our own weight addressing the regional housing crisis, the problem doesn't just go away. By refusing to address the challenge here, it means that other communities really have to deal with it. I heard that from a number of other cities. On April 20th, last Wednesday, Joe Simitian—a separate issue—sponsored a County Town Hall in the City of Los Altos Hills on short-term bike and pedestrian improvements to Page Mill TRANSCRIPT Page 66 of 67 City Council Meeting Transcript: 4/25/16 Road and Highway 280 that I wanted to let you all know about. The options they were considering were very limited. Signalization in the nearer term at Page Mill and 280 was not proposed by County Staff. They said that the budget they were working with for the short term wouldn't accommodate it. Most of the attendees seemed very supportive of adding some kind of signalization, especially if it would only stop car traffic when a pedestrian or biker pressed a button. Also, of course, slowing Page Mill Road speeds would help with safety there. County Roads and Airport Staff—I think the same Staff member who presented to us last year—told me when I asked about the long-term plans, separately from the nearer-term discussion, that they wouldn't make any major improvements in the long term to the interchange at Page Mill and 280 unless Page Mill got widened. I pressed her on it, and she said a 20 percent reduction of traffic on Page Mill would suffice. She didn't seem to recognize that that was actually possible through Transportation Demand Management. When I asked if she had any sense of what Stanford was working on regarding Transportation Demand Management at the Research Park, she really hadn't. She clarified for me County Roads and Airports Department can add lanes, bike lanes, High- Occupancy Vehicle (HOV) lanes but not TDM. When I asked her if basically they can do infrastructure but not programs, she confirmed. Essentially County Roads and Airports does hardware; they don't do software. It's a classic example of if every problem you have is—sorry. If all you have in your toolbox is a hammer, every problem looks like a nail. This is important when looking at the expressway proposals, whether locally or regionally, that have been driven by County Roads and Airports. Mayor Burt: Vice Mayor Scharff. Vice Mayor Scharff: A couple of things. I visited our Sister City, Tsuchiura, in Japan. Their Mayor sends his greetings to our Mayor and wishes us well. They were incredibly hospitable. I ran their marathon, and there's lots of pictures and that kind of stuff if anyone wants to see it. The second thing is I was at the ABAG/Metropolitan Transportation Commission (MTC) Administrative Joint Committee, talking about the merger. The committee voted overwhelmingly to consolidate all staff functions of ABAG over at MTC, but have two Boards. The MTC Board would be the primary Board, and ABAG would retain its functions and autonomy and oversight under current statutory policies and would work with the MTC Executive Director. There would be no more ABAG Executive Director. That seems to be the direction that that is moving. Mayor Burt: Council Member Holman. TRANSCRIPT Page 67 of 67 City Council Meeting Transcript: 4/25/16 Council Member Holman: A question. Is there a published list yet of when the Federal Aviation Administration (FAA) meetings are, the air noise meetings and where they are? Vice Mayor Scharff: There is. Council Member Holman: Are those on the City's website and I haven't noticed them yet? James Keene, City Manager: They're on the website. We'll look at how we get the information out. We just got the information last week. Council Member Holman: Thank you. Mayor Burt: I'll just mention that on Saturday I went to the Matadero Creek Bikeway pop-up event, which was pretty interesting. It was basically a one- block length of the Water District right-of-way that was opened up for members of the public to go through and pass through. There were maybe over the course of the time as many as a couple hundred people who showed up. People seemed to be very interested. I guess we'll be hearing feedback on that in coming months. It was actually a well-attended event. Mayor Burt: On that note, the meeting's adjourned. Adjournment: The meeting was adjourned at 9:51 P.M. PROGRAM AGREEMENT TO OPERATE BIKE SHARE IN PALO ALTO This Program Agreement to Operate Bike Share in Palo Alto (this “Agreement”) is entered into as of July 1, 2016 (the “Effective Date”), by and between Bay Area Motivate, LLC, a Delaware limited liability company (the “Operator”), and the City of Palo Alto, a California chartered municipal corporation (the “City”), having an office at 250 Hamilton Avenue, Palo Alto, California 94301. Capitalized terms used herein and not otherwise defined shall have the same meanings as set forth in the MTC Agreement (as defined below). Operator and the City are referred to herein individually as a “Party” and collectively as the “Parties.” RECITALS WHEREAS, the original operator of the Bay Area Bike Share Pilot Program, Alta Bicycle Share, Inc. was acquired in December 2014 by the owner of Bay Area Motivate, LLC; WHEREAS, the Operator and the Metropolitan Transportation Commission (“MTC”) have entered into that Bay Area Bike Share Program Agreement (“MTC Agreement”) as of December 31, 2015, attached hereto as Exhibit A, for the design, build, operation, maintenance and marketing of a network of publicly available bicycles in a pilot bike share program in the Bay Area; WHEREAS, Bay Area Bike Share includes 70 stations and 700 bicycles throughout the San Francisco Bay Area with five stations located in the City of Palo Alto; WHEREAS, simultaneously with the MTC Agreement, Operator and the MTC entered into that Agreement to Continue Pilot Bike Share Program (as amended from time to time, the “Continuation Agreement”) for the continuation of a pilot program of existing bike share operations in certain cities; WHEREAS, the Term of the Continuation Agreement as to the City of Palo Alto will be extended on or before the Effective Date to November 30, 2016; WHEREAS, the City Council of the City of Palo Alto provided direction to approve a Program Agreement with Bay Area Motivate, LLC to maintain and operate the City’s five existing bike share stations that were part of the original Bay Area Bike Share Pilot Program; and WHEREAS, the Operator and the City desire to extend the Pilot Program with respect to bike share operations in Palo Alto. NOW THEREFORE, in consideration of the premises and the mutual covenants herein contained, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: Program Agreement to Operate Bike Share in Palo Alto 2 AGREEMENT 1. Services. Operator shall operate the portion of the System currently in existence in Palo Alto (“Palo Alto System”) according to the terms and conditions of the Continuation Agreement except as otherwise stated herein, during the Term. The size of the Palo Alto System may not be increased during the Term, whether by an increase in the number of Bicycles, Docks, Kiosks, Stations or otherwise. 2. Operating Fee. From the Effective Date to the end of the Term, the City shall pay to Operator, monthly, (i) the “Cost to operate and maintain the Equipment” in the Pilot Cities, and (ii) if Operator upgrades the AD Equipment, the “Cost to upgrade AD Equipment,” each as set forth in Appendix B of the MTC Agreement, to cover Operating Expenses in Palo Alto. Amounts owed by City under this Section 2(ii) will be prorated for the month in which upgrade of the AD Equipment occurs. 3. Payments. Motivate may invoice the City on the first day of each month in advance for the Operating Fee described in Section 2 and any other fees owing and due to Motivate. City shall remit payment by check to Bay Area Motivate, LLC, 5202 Third Avenue, Brooklyn, NY 11220, Attn: Accounts Receivable or by electronic transfer, within thirty (30) days of the date of the invoice for such payment. 4. Term. This Agreement will commence on the Effective Date and remain in effect until November 30, 2016, unless earlier terminated in accordance with the terms hereof (the “Term”). Either Party may terminate the Agreement for convenience upon sixty (60) days’ written notice to the other Party. 5. Expansion Planning. The City shall be solely responsible for any plans, and their associated costs, to expand the Palo Alto System after the expiration of the Term, including the ordering and purchasing of new Equipment. For the avoidance of doubt, Operator’s obligations under this Agreement do not include placement of purchase orders for new Equipment unless otherwise agreed to by the Parties. 6. Sponsorship. The City may secure Sponsorships and place recognition thereof on one side of one Map Frame (as defined in the Continuation Agreement) at each Station in the Palo Alto System, provided that such Sponsorships may not be in the same category as the Title Sponsor. The City will have no rights to determine System naming or branding of Bicycles or any other physical assets besides one side of each Map Frame, or to share in any revenue therefrom. Such naming and branding will be determined by Operator and Title Sponsor in compliance with local advertising regulations, and are subject to change at any time. 7. Notices. Except as otherwise provided herein, all notices, requests, demands and other communications which are required or may be given under this Agreement shall be provided in the manner set forth in this section. Notice to a Party shall be delivered to the attention of the person listed below, or to such other person or persons as may hereafter be designated by that Party in writing. Notice shall be in writing sent by e-mail or regular first class mail. In the case of e-mail communications, valid notice shall be deemed to have been delivered Program Agreement to Operate Bike Share in Palo Alto 3 upon sending, provided the sender obtained an electronic confirmation of delivery. E-mail communications shall be deemed to have been received on the date of such transmission, provided such date was a business day and delivered prior to 4:00 p.m. PST. Otherwise, receipt of e-mail communications shall be deemed to have occurred on the following business day. In the case of regular mail notice, notice shall be deemed to have been delivered on the mailing date and received five business days after the date of mailing. If to City: City of Palo Alto 250 Hamilton Ave Attention: Joshuah Mello, Chief Transportation Official Email: Joshuah.Mello@CityofPaloAlto.org If to Operator: Bay Area Motivate, LLC 5202 Third Avenue Brooklyn, New York 11220 Attention: Justine Lee, Vice President and General Counsel Email: justinelee@motivateco.com Bay Area Motivate, LLC 2200 Jerrold Avenue, Unit J San Francisco, California 94124 Attention: Emily Stapleton, General Manager Email: emilystapleton@motivateco.com 8. Entire Agreement; Amendments and Waivers. This Agreement constitutes the entire agreement between the Parties pertaining to the subject matter hereof and supersedes all prior agreements, understandings, negotiations and discussions, whether oral or written, of the Parties. No supplement, modification or waiver of this Agreement shall be binding unless executed in writing by the Party to be bound thereby. No waiver of the provisions of this Agreement, or any breach thereof, shall constitute a waiver of any prior, concurrent or subsequent breach of the same or any other provisions hereof, or shall be deemed or shall constitute a waiver of any other provision hereof (whether or not similar), nor shall such waiver constitute a continuing waiver unless otherwise expressly provided. 9. Assignment. Operator shall not assign, transfer, convey, sublet, or otherwise dispose of any award, or any or all of its rights, obligations, or interests under this Agreement, without the prior written consent of the City, except the preceding clause shall not limit Operator’s rights to enter into subcontracts for the provision of services hereunder. 10. Governing Law. This Agreement shall be governed in all respects, including validity, interpretation and effect, and construed in accordance with, the laws of the State of Program Agreement to Operate Bike Share in Palo Alto 4 California, irrespective of conflict of laws principles, as applicable to contracts entered into and to be performed entirely within the State of California. 11. Severability. The clauses and provisions of this Agreement are intended to be severable. If any clause or provision is declared invalid, in whole or in part, by any court, agency, commission, legislative body, or other authority of competent jurisdiction, such provision shall be deemed a separate, distinct, and independent portion, and such declaration shall not affect the validity of the remaining portions hereof, which other portions shall continue in full force and effect, but only so long as the essential terms underlying this Agreement are not undermined. 12. Counterparts. This Agreement may be executed in one or more counterparts which, when taken together, shall constitute one and the same. [Signature page follows] Exhibit A to Program Agreement to Operate Bike Share in Palo Alto 6 Exhibit A MTC Agreement See attached. 203193300.19 BAY AREA BIKE SHARE PROGRAM AGREEMENT between METROPOLITAN TRANSPORTATION COMMISSION and BAY AREA MOTIVATE, LLC December 31, 2015 203193300.19 -ii- Table of Contents DEFINED TERMS ................................................................................................... 2 SCOPE OF SERVICES .......................................................................................... 13 PROGRAM AREA AND EXPANSION; PROGRAM SIZE; PROGRAM TIMING .................................................................................... 18 SITING .................................................................................................................... 21 RESERVED ............................................................................................................ 22 IMPROVEMENTS, MAINTENANCE, REPAIR AND OPERATION ................ 22 ADVERTISING AND SPONSORSHIP ................................................................. 23 REVENUE SHARING ........................................................................................... 24 PRICE SCHEDULES. ............................................................................................ 26 MERCHANDISING, LICENSING AND INTELLECTUAL PROPERTY ........ 29 RESERVED .......................................................................................................... 30 RESERVED .......................................................................................................... 30 MARKETING ....................................................................................................... 30 WEBSITE ............................................................................................................. 31 SECURITY FUND ............................................................................................... 32 INDEMNITY ........................................................................................................ 34 INSURANCE ........................................................................................................ 34 TERMINATION AND DEFAULT ...................................................................... 37 RIGHTS OF RECOGNIZED LENDER ............................................................... 41 EMPLOYMENT ................................................................................................... 43 INSPECTION AND AUDIT RIGHTS ................................................................. 44 RESTRICTION AGAINST ASSIGNMENT ....................................................... 44 DISPUTE RESOLUTION PROCESS .................................................................. 45 REPRESENTATIONS AND WARRANTIES OF OPERATOR ......................... 46 MISCELLANEOUS ............................................................................................. 47 203193300.19 iii APPENDICES APPENDIX A KEY PERFORMANCE INDICATORS AND LIQUIDATED DAMAGES APPENDIX B COST OF EQUIPMENT APPENDIX C REPORTING REQUIREMENTS APPENDIX D FUNCTIONAL SPECIFICATIONS ATTACHMENT ATTACHMENT A AGREEMENT TO CONTINUE PILOT BIKE SHARE PROGRAM 203193300.19 -1- BAY AREA BIKE SHARE PROGRAM AGREEMENT THIS BAY AREA BIKE SHARE PROGRAM AGREEMENT (this “Agreement”), has been executed and delivered as of December 31, 2015 (the “Effective Date”) by and between the METROPOLITAN TRANSPORTATION COMMISSION, an agency of the State of California established pursuant California Government Code § 66500 et seq., having an office at 101 Eighth Street, Oakland, California (“MTC”), and BAY AREA MOTIVATE, LLC, a Delaware limited liability company, having any office at 5202 Third Avenue, Brooklyn, New York 11220 (“Operator”). W I T N E S S E T H: WHEREAS, self-service bicycle sharing programs are revolutionizing the way residents commute and tourists travel within cities in Europe and North America, and a regional self-service bicycle sharing program with public access has been determined by MTC and the Participating Cities (as defined below) to be a desirable and valuable mode of alternative public transportation for the San Francisco Bay Area; and WHEREAS, a bike sharing program will provide a 24-hour transportation network that complements existing transit and transportation options, increases multi-modal travel options in the region and encourages bicycle use as a healthy, environmentally friendly and congestion-reducing transportation option; and WHEREAS, MTC authorized its Executive Director to negotiate an agreement with Operator to design, build, operate, maintain and market a network of publicly available bicycles in a bike share system within the cities of Berkeley, Emeryville, Oakland, San Francisco and San Jose (subject to Section 2.16, each a “Participating City”, and collectively, the “Participating Cities”); WHEREAS, accordingly, MTC and Operator have negotiated this Agreement for the design, build, operation, maintenance and marketing of a network of publicly available bicycles in a bike share program in the Participating Cities; WHEREAS, this Agreement also addresses the continuation of the pilot bike share program established in 2013 in San Francisco, Redwood City, Palo Alto, Mountain View and San Jose (the “Pilot Program”; the foregoing cities being the “Pilot Cities”) pursuant to Bike Share Program Agreement dated February 6, 2013 (as amended, the “AD Agreement”) between Alta Bicycle Share, Inc. and The Bay Area Air Quality Management District (the “Air District”); WHEREAS, concurrently with the execution and delivery of this Agreement, Operator, the cities of Emeryville, San Francisco and San Jose, and MTC are executing a Coordination Agreement (“Coordination Agreement”) that sets forth certain rights, liabilities, and responsibilities of each party thereto with respect to the Program, and defines the organizational, management, and operational structure for the successful development of the Program. NOW, THEREFORE, in consideration of the foregoing clauses, which clauses are hereby made a part of this Agreement, and the mutual covenants and agreements herein contained, and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the Parties do hereby covenant and agree as follows: 203193300.19 -2- DEFINED TERMS For purposes of this Agreement and the Appendices and Exhibits, the following terms, phrases, words, and their derivatives shall have the meanings set forth in this Section. 1.1 “AAA” has the meaning given such term in Section 23.1.2. 1.2 “AD Agreement” has the meaning given such term in the Recitals. 1.3 “AD Equipment” shall mean bike share equipment paid for by the Air District or Pilot Cities under the AD Agreement. 1.4 “Adjustment” shall mean permanent or temporary changes to a Station’s size or configuration, and changes to Street Treatments and Street Markings as necessitated by such, without changes to the Station location. 1.5 “Advertising” shall mean any printed matter, including, but not limited to, words, pictures, photographs, symbols, graphics or visual images of any kind, or any combination thereof, promoting or soliciting the sale or the use of a product or service or providing other forms of textual or visual messages or information for the sale or the use of a product or service, but in no event shall it include any textual information that is required to be posted on any Equipment by any federal, state or local law, rule or regulation, or by this Agreement. 1.6 “Advertising Restrictions” has the meaning given such term in Section 7.2. 1.7 “Agents” has the meaning given such term in Section 17.1. 1.8 “Agreed Completion Dates” shall mean, collectively, the Agreed Phase I Completion Date, the Agreed Phase II Completion Date, the Agreed Phase III Completion Date, the Agreed Phase IV Completion Date and the Agreed Phase V Completion Date. 1.9 “Agreed Phase I Completion Date” has the meaning given such term in Section 3.4.1. 1.10 “Agreed Phase II Completion Date” has the meaning given such term in Section 3.4.2. 1.11 “Agreed Phase III Completion Date” has the meaning given such term in Section 3.4.3. 1.12 “Agreed Phase IV Completion Date” has the meaning given such term in Section 3.4.4. 1.13 “Agreed Phase V Completion Date” has the meaning given such term in Section 3.4.5. 1.14 “Agreed Phase I Site Permit Submission Date” has the meaning given such term in Section 3.4.1. 1.15 “Agreed Phase II Site Permit Submission Date” has the meaning given such term in Section 3.4.2. 203193300.19 -3- 1.16 “Agreed Phase III Site Permit Submission Date” has the meaning given such term in Section 3.4.3. 1.17 “Agreed Phase IV Site Permit Submission Date” has the meaning given such term in Section 3.4.4. 1.18 “Agreed Phase V Site Permit Submission Date” has the meaning given such term in Section 3.4.5. 1.19 “Agreed Site Permit Submission Dates” shall mean, collectively, the Agreed Phase I Site Permit Submission Date, the Agreed Phase II Site Permit Submission Date, the Agreed Phase III Site Permit Submission Date, the Agreed Phase IV Site Permit Submission Date and the Agreed Phase V Site Permit Submission Date. 1.20 “Agreement” has the meaning given such term in the Preamble, together with all Appendices and Exhibits, and all amendments or modifications hereof or thereof. 1.21 “Air District” has the meaning given such term in the Recitals. 1.22 “Alcohol Advertising” shall mean Advertising or Sponsorship, the purpose or effect of which is (i) to identify a brand of an alcohol product, a trademark of an alcohol product or a trade name associated exclusively with an alcohol product, or (ii) to promote the use or sale of an alcohol product. 1.23 “Annual Member” shall mean a user having an Annual Membership. 1.24 “Annual Membership” has the meaning given such term in Section 9.2.1. 1.25 “Annual Membership Fee” has the meaning given such term in Section 9.2.1. 1.26 “Annual Membership Fee Cap” has the meaning given such term in Section 9.2.1. 1.27 “Applicable Interest Rate” in effect at any date shall mean the prime rate as most recently published in the Eastern edition of the Wall Street Journal on or prior to such date plus 3%. 1.28 “Assessment Period” has the meaning given such term in Section 2.6.2(b). 1.29 “Back-end Software” designates all Software components of the central application provided by Operator’s Software vendor and stored on the servers of such vendor, used for operation of such vendor’s equipment, and accessible online from a remote location using the Hosted Infrastructure. 1.30 “Bankruptcy Code” means the Bankruptcy Reform Act of 1978, as amended (Title 11 (U.S.C.). 1.31 “Berkeley Effective Date” has the meaning given such term in Section 2.16. 1.32 “Bicycle” shall mean a vehicle with pedals and with 2 wheels held in a frame and aligned one behind the other and steered with a steering wheel as further described in Appendix D. “Bicycle” shall not include motorized vehicles, including scooters or mopeds. For the avoidance of doubt, electric assisted bicycles constitute Bicycles and do not constitute motorized vehicles. 203193300.19 -4- 1.33 “Bicycle Availability” shall mean conformance with the required Bicycle Fleet Level. 1.34 “Bicycle Fleet Level” shall mean the number of Bicycles that are operational, on-the-street and available for public use. 1.35 “Bicycle Maintenance” shall mean, at a minimum, that the following checks are performed on a Bicycle, with deficient elements repaired or replaced as necessary: 1.35.1 Check tire pressure, and add air as may be needed, to recommended Pounds per Square Inch measurement; 1.35.2 Check tightness of handlebars, headset bearings, and full handlebar range of motion (left to right); 1.35.3 Check tightness of seat, seat post quick-release, and see that seat post moves freely in full range of motion (up and down); 1.35.4 Check brake function (front and rear); 1.35.5 Check grips for wear and brake levers for tightness and damage; 1.35.6 Check bell for tightness and correct function; 1.35.7 Check handlebar covers for damage and instruction stickers; 1.35.8 Check front basket for tightness and damage, and check bungee cord for wear; 1.35.9 Check for correct gears and shifter function through all 5 gears; 1.35.10 Check fenders (front and rear) for damage, and clean outside of fenders; 1.35.11 Check tires (front and rear) for damage or wear; 1.35.12 Check wheels (front and rear) for trueness, broken or bent spokes and hub or axle tightness; 1.35.13 Check LED lights (front and rear) for function; 1.35.14 Check reflectors on wheels, seat and basket, to ensure they are present, clean, and undamaged; 1.35.15 Check pedals and cranks for tightness; 1.35.16 Lubricate and clean chain and check chain tensioner for correct function; 1.35.17 Check kickstand for correct function; and 1.35.18 Take brief test ride to ensure overall correct function of Bicycle. 203193300.19 -5- 1.36 “Bikeshare Holdings” shall mean Bikeshare Holdings LLC, a Delaware limited liability company, the sole member of Operator, and its successors. 1.37 “Claims” has the meaning given such term in Section 16.1. 1.38 “Cluster” shall mean, with respect to any Station, the Stations located within one-third of a mile from such Station, unless fewer than 3 other Stations are located within one-third of a mile from such Station, in which case such Station’s Cluster shall mean the 3 other Stations located closest to such Station. 1.39 “Cluster Outage” shall mean an instance when either: 1.39.1 There are no empty, Operable Docks available at any of the Stations in a Cluster; 1.39.2 There are no Bicycles available for use at any of the Stations in a Cluster. (Bicycles Wrenched in Docks are not considered as available for use.) 1.40 “Computer Hardware” electronic component that provides information or controls a mechanical device and that is controlled by local or remote software. 1.41 “Contract Year” has the meaning given such term in Section 8.1.1. 1.42 “Coordination Agreement” has the meaning given such term in the Recitals. 1.43 “CPI” shall mean the Consumer Price Index for the Consolidated Metropolitan Statistical Area covering San Francisco-Oakland-San Jose, as measured by the Consumer Price Index for All Urban Consumers, as published from time to time by the Bureau of Labor Statistics, U.S. Department of Labor. 1.44 “CPI Adjustment” shall mean, with respect to a specific cost, that such cost is subject to annual adjustment each January 1 based on changes in the CPI from the Effective Date to the date of adjustment. 1.45 “Deactivation” shall mean, at a minimum, shut-down of Kiosk (or display of messaging on Kiosk screen indicating that Station is out of service) removal of all Bicycles present, installation of physical barriers on all Docks that prevent docking of Bicycles, and designation of the Station as “Out of Service” on the Program website, app, and all other real-time data sources. A Deactivation event is not over until the Station has been reactivated. 1.46 “Default” has the meaning given such term in Section 18.1. 1.47 “De-Installation” shall mean, at a minimum, (i) the temporary or permanent full removal of the Station and its associated Street Treatments, and, (ii) the designation of the Station as “Out of Service” on, or removal of the Station from, the Program website, app, and all other real-time data sources. 1.48 “Designated Representative” has the meaning given such term in Section 25.1. 1.49 “Discovery” shall mean any Operator employee gaining actual knowledge by personal observation of such employee or by Notification of any defect in the Equipment or Program. 203193300.19 -6- 1.50 “Dispute Resolution Process” has the meaning given such term in Section 23.1. 1.51 “Docks” shall mean the locking mechanisms contained on a Station that are designed to receive a Bicycle for locked storage. 1.52 “Electing City” shall mean a Peninsula Pilot City or other Eligible City that elects, in accordance with Section 3.2, to participate in the Program. 1.53 “Effective Date” has the meaning given such term in the Preamble. 1.54 “Eligible City” shall mean any city located in the MTC Area. 1.55 “Equipment” shall include Stations, Kiosks, Docks and Bicycles, either individually or in any combination thereof. 1.56 “Escrow Agreement” means an escrow agreement to be executed among the vendor of the Software, Operator, and a nationally reputable company that provides escrow deposit services with respect to software and technology, as escrow agent, for the deposit, storage and release of the proprietary source code of Vendor for all of Vendor’s software made available to Operator to operate the Equipment, which agreement shall be in form acceptable to the parties thereto and in form reasonably acceptable to MTC. 1.57 “Event of Force Majeure” shall mean a delay, suspension or interruption due to strike; war or act of war (whether an actual declaration of war is made or not); terrorism; insurrection; riot; injunction; fire, flood or similar act of providence; or other similar causes or events to the extent that such causes or events are beyond the control of the Party claiming an Event of Force Majeure, provided in each case that such Party has taken and continues to take all reasonable actions to avoid or mitigate such delay, suspension or interruption and provided that such Party notifies the other Party to this Agreement in writing of the occurrence of such delay, suspension or interruption within 5 business days, or if not reasonably practicable, as soon thereafter as reasonably practicable, of the date upon which the Party claiming an Event of Force Majeure learns or should have learned of its occurrence. A delay in a decision by a government entity, the approval of which is a condition to an occurrence, shall not constitute an “Event of Force Majeure” unless such delay is beyond the normal period in which such entity generally acts with respect to the type of decision being sought and only if the Party claiming Event of Force Majeure has taken and continues to take all reasonable steps to pursue such decision. The financial incapacity of Operator shall not constitute an Event of Force Majeure. 1.58 “Executive Director” shall mean the Executive Director of MTC, or any successor in function to the Executive Director. 1.59 “Firearms Advertising” shall mean Advertising or Sponsorship, the purpose or effect of which is (i) to identify a brand of firearms or ammunition, a trademark of a firearm or ammunition or a manufacturer of firearms or ammunition, or a trade name associated exclusively with a firearms or ammunition, or (ii) to promote the use or sale of firearms or ammunition. 1.60 “Functional Specifications” shall mean the specifications set forth in Appendix D, subject to Section 6.7. 203193300.19 -7- 1.61 “Hacking” shall mean unauthorized and intentional access to the Computer Hardware for the Program and/or Software. 1.62 “Hosted Infrastructure” means the hosting of the Back-end Software and associated network access designed and controlled by Operator’s Software vendor, which renders the Back-end Software accessible to Operator and its end users; 1.63 “Indemnified Party” and “Indemnified Parties” have the meaning given such terms in Section 16.1. 1.64 “Infill” shall mean the placement of additional Stations within the Program Area in order to address unmet demand or community request. 1.65 “Initial Meeting Date” has the meaning given such term in Section 23.1.1. 1.66 “Initial Ride Period” has the meaning given such term in Section 9.2.3. 1.67 “Initial Term” has the meaning given such term in Section 2.2. 1.68 “Installation Scheduling Permits” shall mean permits required for the scheduling of the installation of Station-related Equipment at Sites proposed for Stations for which a Site Permit has been issued as a check for conflicts with other activities at the same location. The “temporary occupancy permit” issued by the San Francisco Department of Public Works is an example of an Installation Scheduling Permit. 1.69 “Institutional Lender” shall mean any savings bank, a savings and loan association, a commercial bank or trust company (whether acting individually or in a fiduciary capacity), an insurance company organized and existing under the laws of the United States or any state thereof, a religious, educational or eleemosynary institution, a federal, state or municipal employee’s welfare, benefit, pension or retirement fund, any governmental agency or entity insured by a governmental agency, a credit union, trust or endowment fund, or any combination or syndicate of Institutional Lenders or other lenders that is led by an agent that qualifies as an Institutional Lender (in which case such combination or syndicate shall, for purposes of this Agreement, constitute a single Institutional Lender); provided, that each of the above entities (or, in the case of any such combination or syndicate, the agent) shall qualify as an Institutional Lender only if it (a) is subject to service of process within the State of California and (b) has a net worth of not less than $50,000,000 and net assets of not less than $250,000,000. A wholly-owned subsidiary of any of Person that qualifies as an Institutional Lender is also an Institutional Lender. 1.70 “Key Performance Indicators” (or “KPIs”) has the meaning given such term in Appendix A. 1.71 “Kiosk” shall mean the payment terminal that provides Bicycle rental instructions, contains payment equipment (e.g., a credit card device), and includes all other physical means necessary for the rental of Bicycles. 1.72 “KPI Contest Notice” has the meaning given such term in Section 2.6.3(b). 1.73 “KPI Change Request” has the meaning given such term in 2.6.2(a). 203193300.19 -8- 1.74 “KPI Failure Notice” has the meaning given such term in 2.6.3 (a). 1.75 “KPI LD Payment Date” has the meaning given such term in Section 2.6.3(b). 1.76 “Liabilities” has the meaning given such term in Section 16.1. 1.77 “Membership Fee” has the meaning given such term in Section 9.1. 1.78 “MTC” has the meaning given such term in the Preamble, together with any successor thereto. 1.79 “MTC Area” means the 9 counties in the San Francisco Bay Area within MTC’s jurisdiction. 1.80 “MTC/Participating City Property” shall mean the trademarks, logos, servicemarks, and other intellectual property rights of MTC and/or the Participating Cities. 1.81 “Notification” shall mean all information provided by MTC, a Participating City or the general public to Operator about a specific defect or problem concerning the Program, Equipment or operations of the Program by written document, email to Operator’s public information email address for the Program, or telephone call to Operator’s call-in center for the Program. 1.82 “Oakland Effective Date” has the meaning given such term in Section 2.16. 1.83 “Operable Dock” shall mean a Dock that can both rent and receive bicycles from all Program users and is not physically obstructed in a manner that would prevent such use. 1.84 “Operable Station” shall mean a Station at which at least 90 percent of all installed Docks are Operable Docks from which an Annual Member can check out and return a Bicycle. 1.85 “Operator” has the meaning given such term in the Preamble. 1.86 “Operator Property” has the meaning given such term in Section 10.3. 1.87 “Operator Basic Function Software” shall mean software and other intellectual property developed by Operator that is integral to the basic function of the Program (such as mobile apps that allow for the unlocking of Bicycles). As of the Effective Date, no Operator Basic Function Software has been developed. 1.88 “Operator Non-Basic Function Software” shall mean software and other intellectual property developed by Operator that enhances the functionality of the Program but is not necessary for the basic function of the Program (such as the Program website or mobile apps that allow users to identify nearby Stations with available Bicycles or available Docks). 1.89 “Participating City” and “Participating Cities” have the meaning given such terms in the Preamble. 1.90 “Participating City Delay” has the meaning given such term in Section 4.2. 203193300.19 -9- 1.91 “Parties” shall mean MTC and Operator, and “Party” shall mean one of them, as the context requires. The term “parties” shall mean, collectively, Operator, MTC and the Participating Cities. 1.92 “Payment Breach” has the meaning given such term in Section 15.3.1. 1.93 “Peak Hours” has the meaning given such term in Section 2.6.2(b). 1.94 “Peninsula Pilot Cites” shall mean the cities of Mountain View, Palo Alto and Redwood City. 1.95 “PII” has the meaning given such term in Section 2.15. 1.96 “Person” shall mean any human being or any association, firm, partnership, joint venture, corporation, limited liability company, governmental entity or other legally recognized entity, whether for profit or not for profit. 1.97 “Pilot Cities” has the meaning given such term in the Recitals. 1.98 “Phase” shall mean any one of Phase I, Phase II, Phase III, Phase IV and Phase V, as the context requires, and Phases shall mean, collectively, Phase I, Phase II, Phase III, Phase IV and Phase V. 1.99 “Phase I” has the meaning given such term in Section 3.4.1. 1.100 “Phase II” has the meaning given such term in Section 3.4.2. 1.101 “Phase III” has the meaning given such term in Section 3.4.3. 1.102 “Phase IV” has the meaning given such term in Section 3.4.4. 1.103 “Phase V” has the meaning given such term in Section 3.4.5. 1.104 “Phase I Stations” has the meaning given such term in Section 3.4.1. 1.105 “Phase II Stations” has the meaning given such term in Section 3.4.2. 1.106 “Phase III Stations” has the meaning given such term in Section 3.4.3. 1.107 “Phase IV Stations” has the meaning given such term in Section 3.4.4. 1.108 “Phase V Stations” has the meaning given such term in Section 3.4.5. 1.109 “PPI” shall mean the Producer Price Index for the United States, as measured by the Producer Price Index for final demand, as published from time to time by the Bureau of Labor Statistics, U.S. Department of Labor. 1.110 “PPI Adjustment” shall mean, with respect to a specific cost, that such cost is subject to annual adjustment each January 1 based on changes in the PPI from the Effective Date to the date of adjustment. 203193300.19 -10- 1.111 “Program” shall mean Equipment, Sites, website, Backend Software and Computer Hardware and the Services. 1.112 “Program Area” shall mean the entire area of all Participating Cities. 1.113 “Program Fleet” shall mean the total number of Bicycles required to serve the Program Area as specified in Section 3. 1.114 “Program Name” has the meaning given such term in Section 10.2. 1.115 “Program Property” shall mean (a) the Equipment, and (b) all relevant licenses and rights to the Equipment and the Software (excluding Operator Non-Basic Function Software). 1.116 “Program Property Assignment Conditions” shall mean the following: (a) Operator and the purchaser of the Program Property have agreed on the purchase price for the Program Property, which shall be based on the fair market value of the Program Property as an installed system at the time of the purchase, (b) such purchaser has paid Operator the agreed upon purchase price for the Program Property, and (c) such purchaser and Operator have entered into a license agreement with respect to the Operator Basic Function Software, which license agreement shall (i) strictly prohibit use of the Operator Basic Function Software for any other purpose other than the operation of the Program during such purchaser’s tenure as operator of the Program, (ii) strictly prohibit the sale, lease, license, sublicense or other transfer of such software, (iii) strictly prohibit any attempt to derive the source code of such software, (iv) strictly prohibit the development of any derivative software based on such software, and (v) contain such other customary terms and provisions intended to govern the licensing and use of proprietary software by a competitor of the licensor to prevent, or limit the risk of, unauthorized use or infringement of such software by such licensee or any third party, and such other customary terms and provisions intended to protect the licensor from the licensee or any third party obtaining proprietary information for use by such licensee or any third party other than the use specifically authorized in such license agreement. 1.117 “Prohibited Advertising” shall mean outdoor advertising that is prohibited by local laws, regulations or ordinances of the Participating City. 1.118 “Property Damage Breach” has the meaning given such term in Section 15.3.2. 1.119 “Rebalancing” shall mean actions taken by Operator to prevent or rectify Cluster Outages, subject, however, to Section 2.6.2(b). 1.120 “Recognized Lender” shall mean the holder of a Recognized Loan. 1.121 “Recognized Loan” shall mean any loan that is held by an Institutional Lender. 1.122 “Regular Annual Member” has the meaning given such term in Section 9.2.1. 1.123 “Regular Annual Membership” has the meaning given such term in Section 9.2.1. 1.124 “Renewal Term” has the meaning given such term in Section 2.4. 1.125 “Renewal Condition” has the meaning given such term in Section 2.4. 203193300.19 -11- 1.126 “Replacement Agreement” has the meaning given such term in Section 19.4. 1.127 “Revenue Sharing Credit Period” has the meaning given such term in Section 8.2.4. 1.128 “Ridership Revenue” has the meaning given such term in Section 8.1.2. 1.129 “Ridership Revenue Hurdle” has the meaning given such term in Section 8.1.3. 1.130 “Scheduled Phase I Completion Date” has the meaning given such term in Section 3.4.1. 1.131 “Scheduled Phase II Completion Date” has the meaning given such term in Section 3.4.2. 1.132 “Scheduled Phase III Completion Date” has the meaning given such term in Section 3.4.3. 1.133 “Scheduled Phase IV Completion Date” has the meaning given such term in Section 3.4.4. 1.134 “Scheduled Phase V Completion Date” has the meaning given such term in Section 3.4.5. 1.135 “Scheduled Phase V Plus 90 Days Date” has the meaning given such term in Section 8.2.4. 1.136 “Scheduled Phase Completion Date” shall mean any of the Scheduled Phase I Completion Date, the Scheduled Phase II Completion Date, the Scheduled Phase III Completion Date, the Scheduled Phase IV Completion Date or the Scheduled Phase V Completion Date, as the context requires. 1.137 “Security Fund” has the meaning given such term in Section 15.1. 1.138 “Self-Help Situation” has the meaning given such term in Section 15.3.3. 1.139 “Services” shall mean the installation, operation and maintenance of the Stations and the acquisition, placement, maintenance and rental to users of the Bicycles. 1.140 “Site” shall mean a designated area on publicly or privately owned real property, which area contains a Station that conforms to the Siting Criteria. 1.141 “Site Permits” shall mean permits for installation of Station-related Equipment at Sites proposed for Stations (other than Installation Scheduling Permits or Special Traffic Permits). 1.142 “Siting Criteria” has the meaning given such term in the Coordination Agreement. 1.143 “Software” shall means the software and the Equipment it runs on required to operate the Equipment. 1.144 “Special Traffic Permit” shall mean a permit required if installation of Station-related Equipment will interfere with pedestrian, bicycle, transit or vehicular traffic in a material respect. The Special Traffic Permit issued by the San Francisco Municipal Transportation Authority (SFMTA) in accordance with SFMTA’s Regulations for Working in San Francisco Streets is an example of a Special Traffic Permit. 1.145 “Sponsor” means a Person contributing payments for the Program in exchange for acknowledgment of its contribution. 203193300.19 -12- 1.146 “Sponsor Property” has the meaning given such term in Section 10.2. 1.147 “Sponsorship” shall mean an arrangement pursuant to which, in connection with a payment or payments that will be used to help defray the costs of installing or operating the Program, the Person contributing such payment or payments is acknowledged by the Parties for such contribution. 1.148 “Sponsorship Revenue” has the meaning given such term in Section 8.1.4. 1.149 “Sponsorship Revenue Hurdle” has the meaning given such term in Section 8.1.5. 1.150 “State” shall mean the State of California. 1.151 “Station” shall mean a Kiosk (subject to Section 6.5), map module, a variable number of Docks and, when applicable, Street Treatment(s) and Street Markings, designed in accordance with the Functional Specifications set forth in Appendix D. 1.152 “Station Cleaning” shall mean, at a minimum that the following tasks are performed by Operator at a Station: 1.152.1 Removal of litter at the Station; and 1.152.2 As needed power washing of the Docks and Street Treatments comprising a Station and the pavement area on which a Station is situated. 1.153 “Street Marking(s)” shall mean thermoplastic paint markings and/or striping on the pavement for the express purpose of demarcating a Station. 1.154 “Street Treatments” shall mean the three-dimensional objects used to demarcate the Station, and protect it from adjacent parking and moving traffic. Such objects may include, but are not limited to, delineators and wheel stops. 1.155 “Street Treatment Requirements” shall mean a Participating City’s requirements with respect to Street Treatments as set forth in the Siting Criteria for such Participating City. 1.156 “Term” has the meaning given such term in Section 2.2. 1.157 “Title Sponsor” shall mean Operator’s system-wide Sponsor for the entire Program. 1.158 “Tobacco Advertising” shall mean Advertising or Sponsorship that bears a health warning required by federal statute, the purpose or effect of which is to identify a brand of a tobacco product (any substance that contains tobacco, including, but not limited to, cigarettes, cigars, pipe tobacco and chewing tobacco), a trademark of a tobacco product or a trade name associated exclusively with a tobacco product, or to promote the use or sale of a tobacco product. 1.159 “Trips” shall mean the use of a Bicycle from one Station to another Station or back to the initial Station. 1.160 “Vendor” shall mean the company selected by Operator to provide the Software (other than the Operator Software). 203193300.19 -13- 1.161 “Wayfinding Elements” shall mean the maps posted on every Station, showing the location of each Station. 1.162 “Wrench” shall mean the action of locking a Bicycle in a Dock such that it cannot be released by Program users pending action by Operator. SCOPE OF SERVICES 2.1 General Requirements. Operator shall (a) provide the Services in conformance with the terms of this Agreement, (b) provide all of the Equipment and Software required to operate the Program, (c) procure all of the relevant licenses and rights to use the Equipment and Software to operate the Program, (d) procure all licenses and permits from applicable governmental agencies that are required to provide the Services from all applicable governmental agencies, and (e) comply with all applicable laws, rules and regulations of the United States, the State and the Participating Cities. 2.2 Initial Term. The term (the “Term”) of this Agreement shall commence on the Effective Date and shall end on the last day of the calendar month in which the 10th anniversary of the earlier of (a) the date that Phase I is completed, and (b) the Agreed Phase I Completion Date occurs (the “Initial Term”), subject to Section 2.3. 2.3 Reduction of Initial Term. If Operator does not complete 75% of Phase I, Phase II, Phase III, or Phase IV by the Agreed Phase I Completion Date, the Agreed Phase II Completion Date, the Agreed Phase III Completion Date, the Agreed Phase IV Completion Date, respectively, or 100% of Phase V by the Agreed Phase V Completion Date, then MTC shall have the right, by notice to Operator given with 60 days of the respective missed Completion Date, to reduce the Initial Term by 5 years, subject to the rights of the Recognized Lender set forth in Section 19.5. In addition, if on the 4th anniversary of the earlier of (a) the date that Phase I is completed, and (b) the Agreed Phase I Completion Date, a Default exists under Section 18.1.5, then MTC shall have the right, by notice to Operator given with 60 days of such 4th anniversary, to reduce the Initial Term by 5 years, subject to the rights of the Recognized Lender set forth in Section 19.5. Any amounts due pursuant to Section 8.2 shall be due within 120 days after expiration of the Term as reduced pursuant to this Section 2.3. 2.4 Renewal Term. If the Initial Term has not been reduced pursuant to Section 2.3 and Operator is in substantial compliance with the terms of this Agreement one year prior to the expiration of the then current Term (the “Renewal Condition”), then, upon mutual agreement of the Parties, the Term may be extended for 2 5-year renewals terms (each a “Renewal Term”) on substantially equivalent terms applicable to the Initial Term. Subject to Operator’s satisfaction of the Renewal Condition and the mutual agreement of the Parties to extend the Term, MTC and Operator shall engage in good faith negotiations on a mutually acceptable agreement for each Renewal Term commencing one year prior to the expiration of the then current Term with the goal of the Parties entering into an agreement for the respective Renewal Terms prior to the commencement of each Renewal Term. Until such agreement is entered into for the initial Renewal Term, this Agreement shall govern the relationship between the Parties, and until such agreement is entered into for the second Renewal Term, the agreement for the initial Renewal Term shall govern the relationship between the Parties. 203193300.19 -14- 2.5 Non-Renewal. Notwithstanding anything to the contrary contained in Section 2.4, Operator has the right not to renew the Term for either Renewal Term by notice given to MTC not later than 6 months prior to the expiration of the then current Term. If Operator gives MTC a non-renewal notice in accordance with the preceding sentence, then this Agreement shall end upon the expiration of the then current Term. 2.6 Services. 2.6.1 Subject to Events of Force Majeure, following completion of Phase I, Operator shall operate the Program so that it is fully operational at all Stations, consistent with the Key Performance Indicators as set forth in Appendix A, 24 hours per day, seven days per week, every day of each year, during the Term. 2.6.2 Adjustments to KPIs. (a) KPIs in General. Notwithstanding anything to the contrary, if at any time and from time to time either Party in good faith believes that the KPIs should be updated, including by amending, supplementing or replacing them, (a) on account of technological developments incorporated into the Program by Operator, or (b) because the Party seeking changes believes the KPIs are ineffective, or not as effective as the KPIs could be, in strengthening the Program, the customer experience, and Operator’s performance, then the Party seeking changes to the KPIs shall submit proposed changes to the KPIs together with an explanation of how the proposed changes would address the deficiencies in the then existing KPIs (“KPI Change Request”). Within 10 business days thereafter, the other Party shall either accept the KPI Change Request in writing, or reject the KPI Change Request along with the reasons for the rejection. In the case of such rejection, at the request of the Party submitting the KPI Change Request, the matter will be referred to discussion in accordance with Section 23.1.1, except the matter will not be subject to mediation in accordance with Section 23.1.2. If the matter is not resolved within 30 business days of the KPI Change Request, the KPIs shall not be changed pursuant to the KPI Change Request. In lieu of rejecting or accepting a proposed KPI change, the Parties may agree to test trials to test proposed changes and then defer any decision until the conclusion of the trial period. (b) Rebalancing. It is the objective of Operator to maximize the utility of the Program and the customer experience at all times, but particularly during the hours between 6:00 AM and 10:00 PM (“Peak Hours”), in a cost effective manner. Maximizing utility requires that Operator take affirmative steps to address severe imbalances in the demand for and supply of available Bicycles and empty Operable Docks during Peak Hours, which imbalances typically arise from patterns in demand and usage in which Bicycles typically travel in one direction. Operator’s objective is to minimize instances, and minimize the duration of those instances, in a cost effective manner, when the demand for an empty Operable Dock or an available Bicycle at a Station is not met by the available supply at that Station. Achieving this objective is a multistep and collaborative process requiring the involvement, cooperation and flexibility on the part of Operator, MTC and the Participating Cities. To achieve this objective, during the period commencing upon the completion of Phase I and ending 6 months after the completion of Phase V (the “Assessment Period”), the parties will (i) observe demand and use patterns as the Program is being implemented to identify the times and locations that a shortage of empty Operable Docks and/or a shortage of available Bicycles arises and the extent of the shortages at those time and locations; and (ii) assess alternative approaches to alleviating outages, including, by way of example, by (A) enlarging existing Stations or adding new Stations in areas in which there is a shortage, (B) finding and utilizing storage areas located near Stations that experience Bicycle shortages so that additional Bicycles can be 203193300.19 -15- deployed quickly, (C) prioritizing Stations by demand and time of demand so that Operator may, at any particular time, focus more attention on those Stations with the highest demand at that time and less attention on those Stations with weaker demand at that time and have greater flexibility to address those Stations with weaker demand, and (D) identifying the optimal time of day for Operator to transport Bicycles from areas in which there is a shortage of empty Operable Docks to areas in which there is a shortage of Bicycles, which optimality will take into account when it is most efficient for Operator to transport the Bicycles in order to meet the anticipated demand at the transferee Stations. As the parties are developing approaches to alleviating outages during the Assessment Period, the parties shall also reformulate a commercially reasonable KPI for Rebalancing. While Operator will strive to reduce and eliminate Cluster Outages at all times commencing on the completion of a Phase, liquidated damages for the Rebalancing KPI will not be assessed for any Phase until 6 months after the completion of such Phase. The Rebalancing KPI will be refined and reformulated during the Assessment Period, and the KPI, as refined and reformulated, will be fully implemented and effective immediately after the end of the Assessment Period. The parties recognize that as patterns of use and demand, as well as levels of use and demand, change from and after the Assessment Period, different outages may arise, which will also need to be addressed in the manner set forth above. 2.6.3 Subject to Events of Force Majeure, if Operator fails to comply with the KPIs, Operator shall be required to pay MTC liquidated damages as calculated in Appendix A, provided that the maximum aggregate liquidated damages payable by Operator in any calendar year for failure to comply with the KPIs is 4% of Ridership Revenue for such calendar year. (a) MTC is entitled to liquidated damages for failure of Operator to comply with the KPIs by notice (a “KPI Failure Notice”) given to Operator (i) not more frequently than once per quarter, and (ii) not later than 120 days after the occurrence of the related failure, except with respect to the failure to comply with a KPI that is measured on an annual basis, for which the KPI Failure Notice shall be given by March 31 of the following calendar year. Each KPI Failure Notice shall provide specific and detailed information about the failure to comply and the amount of the liquidated damages due in connection therewith. (b) Prior to the later of (a) 30 days after Operator’s receipt of a KPI Failure Notice and (b) the end of the calendar quarter in which such KPI Failure Notice is given (the later of (a) and (b) being the “KPI LD Payment Date”), Operator shall either pay the full amount of liquidated damages set forth in the KPI Failure Notice or 50% of such amount along with a notification to MTC that Operator seeks to contest, in good faith, the assessment of the liquidated damages (a “KPI Contest Notice”). The KPI Contest Notice shall provide specific and detailed information that rebuts or challenges the information contained in the corresponding KPI Failure Notice. After a KPI Contest Notice is given, any disputes relating to the subject matter of the KPI Failure Notice and the KPI Contest Notice shall be resolved in accordance with the Dispute Resolution Process. (c) If Operator does not timely give a KPI Contest Notice in response to a KPI Failure Notice, then interest on the liquidated damages set forth in the KPI 203193300.19 -16- Failure Notice shall accrue at the Applicable Interest Rate in effect from time to time commencing on the KPI LD Payment Date. If Operator does timely give a KPI Contest Notice in response to a KPI Failure Notice and the Dispute Resolution Process results in Operator being required to pay liquidated damages, then Operator shall make such payment within 30 days following the date that the liquidated damages dispute is resolved in accordance with the Dispute Resolution Process, and interest on the liquidated damages shall accrue at the Applicable Interest Rate in effect from time to time commencing on such 30th date. 2.7 [INTENTIONALLY OMITTED] 2.8 Ownership of Equipment. Except as provided in Sections 3.2 and 3.3, all Equipment shall at all times be the property of Operator, subject to the lien thereon by any Recognized Lender. 2.9 Costs of Program. 2.9.1 Except as otherwise provided, each party shall bear its own costs in connection with the Program, if such costs are applicable, including, but not limited to, costs incurred in connection with: negotiating this Agreement and the Coordination Agreement and preparing the Siting Criteria; Site selection; the review required for issuance of Site Permits, Installation Scheduling Permits, Special Traffic Permits and other permits; Equipment installation; exercising enforcement, inspection and audit rights; prosecuting or defending claims arising from the Program, and marketing, to the extent that MTC and/or the Participating Cities choose to undertake marketing. 2.9.2 Except as otherwise provided in Section 2.9.3, MTC and the Participating Cities shall not be obligated to pay or bear any of the costs associated with or expenses incurred for the Equipment, Software, or Services. 2.9.3 Each Participating City may elect, if additional incremental dedicated capital and operating funds becomes available for the Program, to expand the Program within its borders by adding Stations, Docks and Bicycles, provided that such Participating City shall be responsible for securing funds to pay for the cost of purchasing, installing, maintaining and operating the Equipment required for such expansion as set forth in Appendix A of the Coordination Agreement. 2.9.4 Operator shall reimburse a Participating City for any other work performed by such Participating City under this Agreement in furtherance of the Program, provided that prior to performing such work such Participating City shall notify Operator that such work will be performed at the expense of Operator, such Participating City provides an itemized invoice for any such work, and Operator is billed for the actual cost incurred by such Participating City without a markup or premium. Operator shall pay for such work within 30 days following receipt of the itemized invoice therefor. In connection with the installation of a Station, such other work may include, but is not limited to, (i) any necessary changes to signs, parking meters and curb paint, and (ii) installation of any striping, delineators or parking blocks outside the perimeter of a Station if the foregoing items are not installed by Operator. 203193300.19 -17- 2.10 Use of Data. All data generated by the Program will be owned by Operator. Operator will grant MTC and the Participating Cities a non-exclusive, royalty-free, irrevocable, perpetual license to use all data generated by the Program, other than personally-identifiable information that can identify individual users, their addresses, their credit card information and other personal information about users, for non-commercial purposes and on a real-time basis; and MTC and each of the Participating Cities shall have the right to grant to others a sublicense to use all such data for non-commercial purposes. 2.11 [INTENTIONALLY OMITTED] 2.12 [INTENTIONALLY OMITTED] 2.13 No Discrimination. Operator shall not discriminate in the implementation of the Program or in the provision of Services on the basis of race, creed, color, national origin, sex, age, marital status, or real or perceived sexual orientation. 2.14 Accessibility. In implementing and operating the Program, Operator shall comply with all applicable requirements of the Americans with Disabilities Act, Section 508 of the Rehabilitation Act of 1973 and all other applicable federal, state and local requirements relating to persons with disabilities, including any rules or regulations promulgated thereunder. Such compliance shall extend to the location and design of Equipment as well as the Program’s website and any mobile application for the Program. 2.15 Personally Identifiable Information (“PII”). All PII obtained or maintained by Operator in connection with this Agreement shall be protected by Operator from unauthorized use and disclosure. This includes, but is not limited to, the secure transport, transmission and storage of PII used or acquired in the performance of this Agreement. Operator agrees to properly secure and maintain any computer systems (hardware and software applications) or electronic media that it will use in the performance of this Agreement. This includes ensuring all security patches, upgrades, and anti-virus updates are applied as appropriate to secure PII that may be used, transmitted, or stored on such systems in the performance of this Agreement. Operator agrees to comply with the information handling and confidentiality requirements outlined in the California Information Practices Act (Civil Code sections 1798 et.seq.). In addition, Operator warrants and certifies that in the performance of this Agreement, it will comply with all applicable statutes, rules, regulations and orders of the United States and the State of California relating to the handling and confidentiality of PII and, as provided in Section 16, agrees to indemnify MTC against any loss, cost, damage or liability by reason of Operator’s violation of this provision. 2.16 Notwithstanding anything to the contrary contained herein or in the Coordination Agreement, as of the Effective Date, (a) the City of Berkeley and the City of Oakland have not completed the approval processes necessary for such cities to execute the Coordination Agreement and for the Coordination Agreement to be effective as to such cities, (b) neither such city is a Participating City, and (c) the Coordination Agreement and this Agreement do not apply to such cities. Upon completion by each such city of its approval processes, including the adoption by each such city of a franchise ordinance as referenced in Sections 29.1 and 32.4 of the Coordination Agreement, and the execution by each such city of the Coordination Agreement, the Coordination Agreement shall thereupon be effective as to such city, each such city shall thereupon be a Participating City under this Agreement and Coordination Agreement, which agreements shall thereupon apply to such city, and the Program Area shall thereupon be expanded to encompass the entirety of such city (the date thereof, as to Berkeley, being the “Berkeley Effective Date,” and, as to Oakland, being the “Oakland Effective Date”). If either or both of such cities does not approve the execution of the Coordination Agreement, then the Parties shall make appropriate 203193300.19 -18- amendments to this Agreement and the Coordination Agreement to reflect the removal of such city or cities, as applicable, from the Program. In addition, the Parties are anticipating that the Berkeley Effective Date will occur in February, 2016 and the Oakland Effective Date will occur in March, 2016. If either such date does not occur until after March 31, 2016, then the Parties shall amend Sections 3.4 and 4.2 to make appropriate adjustments to the timing of the Program. PROGRAM AREA AND EXPANSION; PROGRAM SIZE; PROGRAM TIMING 3.1 Program Area. As of the Effective Date, the Program Area encompasses the entirety of the cities of Emeryville, San Francisco and San Jose. The Program Area shall also encompass the entirety of the City of Berkeley as of the Berkeley Effective Date and the entirety of the City of Oakland as of the Oakland Effective Date. 3.2 Program Area Expansion. Following expiration of the Pilot Program, each of the Peninsula Pilot Cities may elect, by notice to Operator, to continue the bike share program in such Peninsula Pilot City, provided that the Peninsula Pilot Cities shall be responsible for paying the cost of upgrading, purchasing, installing, maintaining and operating the Equipment in accordance with the schedule applicable to the Peninsula Pilot Cities set forth in Appendix B. Following the completion of Phase V, the other Eligible Cities may elect, by notice to Operator, to develop a bike share program in the Eligible Cities, provided that the other Eligible Cities shall be responsible for paying the cost of purchasing, installing, maintaining and operating the Equipment in accordance with the schedule applicable to the other Eligible Cities set forth in Appendix B. Operator shall be required to maintain the Equipment purchased by an Electing City in a state of good repair throughout the Term, and at the end of the Term, Operator shall return such Equipment to the Electing City in good working order but subject to reasonable wear and tear from use and subject to loss and damage caused directly by users. Each Electing City shall enter into with Operator a separate service agreement to establish the number of Stations, Docks and Bicycles for such city, and the schedule for installation of the Equipment for such city, which agreement will also address, among other matters, (i) Siting Criteria, the Site selection process, Street Treatment Requirements, the protocols and procedures for the submission and review of applications and the issuance of permits and approvals, and the Electing City’s requirements with respect to each of the foregoing, (ii) De-installations, Adjustments and Deactivations, and (iii) advertising and sponsorship. 3.3 Program Size. The Program Fleet for Phases I through V is 7,000 to 7,055, allocated among the Participating Cities as follows: 3.3.1 4,500 in San Francisco; 3.3.2 1,000 in San Jose; 3.3.3 1,400 in East Bay, as follows: (a) 850 in Oakland (b) 100 in Emeryville (c) 400 in Berkeley 203193300.19 -19- (d) 50 to be determined based on additional system planning analysis; 3.3.4 If Palo Alto elects to participate in the Program, 37 Bicycles will be distributed to Palo Alto; if Mountain View elects to participate in the Program, 59 Bicycles will be distributed to Mountain View; and if Redwood City elects to participate in the Program, 59 Bicycles will be distributed to Redwood City; if the sum of the Bicycles to be distributed to the Peninsula Pilot Cities that elect to participate in the Program is less than 100, then Operator will distribute in San Francisco, San Jose and East Bay an additional number of Bicycles equal to the difference between 100 and such sum; and if none of the Peninsula Pilot Cities elect to participate in the Program, then Operator will distribute an additional 100 Bicycles in San Francisco, San Jose and East Bay. 3.3.5 The minimum number of Stations in the Participating Cities is 500. 3.4 Program Timing. The schedule for Operator to obtain Site Permits and to install the Equipment is as follows: 3.4.1 Phase I. Operator shall submit to the Participating Cities complete applications for Site Permits for Stations containing 25% of the total Bicycles for San Jose, East Bay and San Francisco (the “Phase I Stations”) by the date that is 5 months after the Effective Date, such date being subject to extension by Events of Force Majeure or by Participating City Delay (such date, as it may be so extended, being the “Agreed Phase I Site Permit Submission Date”). Operator shall not be obligated to commence installation of fully functional and operational Bicycles and related Equipment at such Sites until the date that is 5 months after the issuance by the Participating Cities of Site Permits for 75% of the Phase I Stations and shall complete such installation for all such Sites by the date that is 5 months after the issuance by the Participating Cities of Site Permits for the remainder of such Stations, such date being subject to extension by Events of Force Majeure or by Participating City Delay (such date, as it may be so extended, being the “Agreed Phase I Completion Date”; the installation of the percentage of total Bicycles and related Equipment as required by this paragraph being “Phase I”). Any AD Equipment that is acquired by Operator will count toward the Bicycles and related Equipment required for Phase I. Based on the schedule set forth in this paragraph, the objective of the Parties is for Operator to complete Phase I by the date that is 10 months after the Effective Date (such date being the “Scheduled Phase I Completion Date”). Notwithstanding anything to the contrary contained in this Agreement, if Operator fails to submit to the Participating Cities complete applications for Site Permits for 75% of the Phase I Stations by the date that is 30 days after the Agreed Phase I Site Permit Submission Date, or if Operator fails to place a purchase order, taking into account AD Equipment to be used by Operator, for 75% of the Phase I Bicycles and 75% of the Phase I Stations, by the date that is 30 days after the issuance by the Participating Cities of Site Permits for 75% of the Phase I Stations, then as the sole remedy of MTC and the Participating Cities under this Agreement for such failures, MTC shall have the right to terminate this Agreement upon 10 days’ notice to Operator without any further right of Operator or any Recognized Lender to remedy such failure. Operator shall provide evidence of such purchase order reasonably promptly following a request by MTC. 203193300.19 -20- 3.4.2 Phase II. Operator shall submit to the Participating Cities complete applications for Site Permits for Stations containing an additional 15% of the total Bicycles for San Jose, East Bay and San Francisco (the “Phase II Stations”) by the date that is 9 months after the Effective Date, such date being subject to extension by Events of Force Majeure or by Participating City Delay (such date, as it may be so extended, being the “Agreed Phase II Site Permit Submission Date”). Operator shall not be obligated to commence installation of fully functional and operational Bicycles and related Equipment at such Sites until the date that is 5 months after the issuance by the Participating Cities of Site Permits for 75% of the Phase II Stations and shall complete such installation for all such Sites by the date that is 5 months after the issuance by the Participating Cities of Site Permits for the remainder of such Stations, such date being subject to extension by Events of Force Majeure or by Participating City Delay (such date, as it may be so extended, being the “Agreed Phase II Completion Date”; the installation of the percentage of total Bicycles and related Equipment as required by this paragraph being “Phase II”). Based on the schedule set forth in this paragraph, the objective of the Parties is for Operator to complete Phase II by the date that is 14 months after the Effective Date (such date being the “Scheduled Phase II Completion Date”). 3.4.3 Phase III. Operator shall submit to the Participating Cities complete applications for Site Permits for Stations containing the remaining 60% of the total Bicycles for East Bay (the “Phase III Stations”) by the date that is 12 months after the Effective Date, such date being subject to extension by Events of Force Majeure or by Participating City Delay (such date, as it may be so extended, being the “Agreed Phase III Site Permit Submission Date”). Operator shall not be obligated to commence installation of fully functional and operational Bicycles and related Equipment at such Sites until the date that is 5 months after the issuance by the Participating Cities of Site Permits for 75% of the Phase III Stations and shall complete such installation for all such Sites by the date that is 5 months after the issuance by the Participating Cities of Site Permits for the remainder of such Stations, such date being subject to extension by Events of Force Majeure or by Participating City Delay (such date, as it may be so extended, being the “Agreed Phase III Completion Date”; the installation of the percentage of total Bicycles and related Equipment as required by this paragraph being “Phase III”). Based on the schedule set forth in this paragraph, the objective of the Parties is for Operator to complete Phase III by the date that is 17 months after the Effective (such date being the “Scheduled Phase III Completion Date”). 3.4.4 Phase IV. Operator shall submit to the Participating Cities complete applications for Site Permits for Stations containing an additional 30% of the total Bicycles for San Jose and San Francisco (the “Phase IV Stations”) by the date that is 16 months after the Effective Date, such date being subject to extension by Events of Force Majeure or by Participating City Delay (such date, as it may be so extended, being the “Agreed Phase IV Site Permit Submission Date”). Operator shall not be obligated to commence installation of fully functional and operational Bicycles and related Equipment at such Sites until the date that is 5 months after the issuance by the Participating Cities of Site Permits for 75% of the Phase IV Stations and shall complete such installation for all such Sites by the date that is 5 months after the issuance by the Participating Cities of 203193300.19 -21- Site Permits for the remainder of such Stations, such date being subject to extension by Events of Force Majeure or by Participating City Delay (such date, as it may be so extended, being the “Agreed Phase IV Completion Date”; the installation of the percentage of total Bicycles and related Equipment as required by this paragraph being “Phase IV”). Based on the schedule set forth in this paragraph, the objective of the Parties is for Operator to complete Phase IV by the date that is 20 months after the Effective Date (such date being the “Scheduled Phase IV Completion Date”). 3.4.5 Phase V. Operator shall submit to the Participating Cities complete applications for Site Permits for Stations containing 30% of the total Bicycles for San Jose and San Francisco (the “Phase V Stations”) by the date that is 22 months after the Effective Date, such date being subject to extension by Events of Force Majeure or by Participating City Delay (such date, as it may be so extended, being the “Agreed Phase V Site Permit Submission Date”). Operator shall not be obligated to commence installation of fully functional and operational Bicycles and related Equipment at such Sites until the date that is 5 months after the issuance by the Participating Cities of Site Permits for 75% of the Phase V Stations and shall complete such installation for all such Sites by the date that is 5 months after the issuance by the Participating Cities of Site Permits for the remainder of such Stations, such date being subject to extension by Events of Force Majeure or by Participating City Delay (such date, as it may be so extended, being the “Agreed Phase V Completion Date”; the installation of the percentage of total Bicycles and related Equipment as required by this paragraph being “Phase V”). Based on the schedule set forth in this paragraph, the objective of the Parties is for Operator to complete Phase V by the date that is 26 months after the Effective Date (such date being the “Scheduled Phase V Completion Date”). 3.5 Failure to Achieve Completion of any Phase. Notwithstanding anything to the contrary in this Agreement, for the avoidance of doubt, the sole remedy of MTC and the Participating Cities against Operator under this Agreement for Operator’s failure to complete Phases I, II, III, IV or V by the Agreed Phase I Completion Date, the Agreed Phase II Completion Date, the Agreed Phase III Completion Date, the Agreed Phase IV Completion Date, and the Agreed Phase V Completion Date, respectively, is to reduce the Initial Term pursuant to Section 2.3, subject to the rights of the Recognized Lender. 3.6 Pilot Program. Attachment A sets forth the terms and conditions pursuant to which MTC and Operator have agreed that Operator will continue operation of the Pilot Program. SITING 4.1 General. The Coordination Agreement, together with the Siting Criteria, sets forth, among other matters, (a) the Siting Criteria and the Site selection process for determination and approval of locations of the Stations in each Participating City, and (b) the protocols and procedures for the submission materials by Operator to each Participating City for, and the issuance by the Participating City of, Site Plan approvals and permits to install the Equipment at each Station. 203193300.19 -22- 4.2 Delays in Approval: The following constitute delay (“Participating City Delay”) for which Operator is entitled to an extension in the Agreed Site Permit Submission Dates and the Agreed Completion Dates: 4.2.1 Identification of Sites. If, notwithstanding fulfillment of Operator’s obligations under the Coordination Agreement regarding community engagement, field work and outreach, Operator fails to identify, by a date that is not less than 2 months prior to the Agreed Site Permit Submission Date for a Phase, 75% of the Sites required for such Phase, such Sites being both viable and acceptable to the Participating Cities and the applicable communities, or Operator fails to identify, by a date that is not less than 1 month prior to such Agreed Site Permit Submission Date, the remaining 25% of the Sites required for such Phase, such Sites being both viable and acceptable to the Participating Cities and the applicable communities, then such Agreed Site Permit Submission Date shall be extended by any reasonably necessary additional period required by Operator to identify a sufficient number of viable and acceptable Sites for such Phase. 4.2.2 Issuance of Site Permits. If Operator timely submits complete applications for the Site Permits for any Phase by the applicable Agreed Site Permit Submission Date but the Participating Cities fail to issue Site Permits for 75% of the Stations by the date that is 3 months prior to the Scheduled Phase Completion Date for such Phase other than on account of errors or omissions by Operator or valid reasons for denial, then such failure shall constitute Participating City Delay and Operator shall have the right to delay submission of applications for Site Permits for the next following Phase until a reasonable period after the Participating Cities issue Site Permits for 75% of the Stations for such Phase. 4.2.3 Installation Scheduling Permits. If the period of time for the Participating Cities to issue Installation Scheduling Permits exceeds, on average, 7 days after final submission of the required materials by Operator, or if more than 25% of the Installation Scheduling Permits are issued 14 days or longer after final submission of the required materials, other than on account of errors or omissions by Operator or valid reasons for denial, then the Agreed Completion Dates shall be extended to reflect any reasonably necessary additional period required by Operator to complete the Phases. RESERVED IMPROVEMENTS, MAINTENANCE, REPAIR AND OPERATION 6.1 Operator shall establish and maintain during the Term prompt and efficient procedures for handling complaints from the public for which Operator receives a Notification. Such procedures shall be consistent with all applicable laws, rules and regulations and the provisions of this Section. Such 203193300.19 -23- procedures shall be set forth in writing and copies thereof shall be maintained at Operator’s office and shall be available to the public and the Participating Cities upon request. 6.2 Operator will operate a primary call center that will answer calls in person 24 hours per day, 7 days per week. Operator shall conspicuously post a notice on each Station and each bicycle advising the general public that they may direct their complaints and comments to Operator’s call center. Such call center shall have a full-time availability to handle calls in English, Spanish and Cantonese, whether by in-house staff or by utilization of a translation service. 6.3 Operator shall maintain written, accurate and complete records of all complaints, and those records shall be available to MTC through appropriate Software or, at MTC’s reasonable advance request, in written form. Such records shall indicate: (i) the specific Equipment, including its identifying number and location at a specific point in time, for which the complaint was made; (ii) the type of complaint; (iii) the date and time of complaint; (iv) if the complaint is in written form (non-electronic) and the information is available, the name, address, and telephone number of the Person filing the complaint; (v) Operator’s action to address the complaint; and (vi) to the extent applicable, the date of resolution of the complaint. All such records shall be retained by Operator throughout the Term. Within 7 business days following a request by MTC, Operator shall provide MTC with records of complaints by location or time period, and statistical reports by type of complaint, location of complaint, Station or Bicycle, and time of complaint. 6.4 Following the Effective Date, MTC may, at its option, request that Operator provide it with a full inventory of Bicycles, including numbers and dates of lease or purchase. 6.5 Operator may, without incurring any liquidated damages or causing a default hereunder, (a) shut down the Program or reduce the number of Bicycles and Stations deployed and/or operating in the Program Area for weather-related or other emergencies for the duration of the emergency in its reasonable discretion, (b) reduce the number of Bicycles and Stations deployed and/or operative in the Program Areas as needed to implement upgrades to the Functional Specifications, and (c) phase-out Kiosks when they have become obsolete on account of the availability and usage of mobile phone apps. 6.6 Operator shall incorporate Wayfinding Elements on each Station as directed and approved by MTC with input from the Participating Cites. 6.7 Nothing in this Agreement shall limit Operator’s right to upgrade the Functional Specifications. ADVERTISING AND SPONSORSHIP 7.1 Operator is responsible for identifying Sponsors and developing branding for the Program tied to the Sponsors. In no event shall any Sponsor of Operator produce or sell alcohol products, tobacco products, firearms, other products banned by the Participating Cities or products otherwise deemed offensive to the general public. MTC, in consultation with the Participating Cities, shall provide written approval to Operator prior to Operator entering into a Sponsorship agreement with the Title Sponsor, which approval shall not to be unreasonably withheld or delayed. If MTC declines to give consent or 203193300.19 -24- approval referred to hereunder, it will so advise Operator and provide Operator an opportunity to discuss with MTC and an opportunity to attempt to meet MTC’s objections. 7.2 Operator shall not install, or permit to be installed, on any Equipment, any Tobacco Advertising, Alcohol Advertising, Firearms Advertising or other Prohibited Advertising. Advertising on any Equipment, including electronic media, shall be consistent with guidelines adopted by each Participating City for outdoor advertising as set forth in this Agreement. Operator shall not place any Advertising or Sponsorship acknowledgment matter that is indecent, in obvious bad taste, or demonstrates a lack of respect for public morals or conduct. (The prohibitions and restrictions in this Section 7 and in Section 29 of the Coordination Agreement are referred to collectively as the “Advertising Restrictions”.) 7.3 Operator shall comply with all applicable laws, rules and regulations in force as of the Effective Date and which may hereafter be adopted, to the extent not grandfathered under the law, with respect to Advertising and Sponsorship. 7.4 Neither MTC nor any Participating City shall have any liability or obligation with regard to any Advertising or Sponsorship that survives the termination or expiration of this Agreement, except MTC and the Participating Cities, at no cost to MTC or the Participating Cities, shall cooperate with the Recognized Lender to keep the Sponsorship agreement in effect while a replacement operator is being pursued and will continue to cooperate if a replacement operator is selected. REVENUE SHARING 8.1 Definitions. 8.1.1 “Contract Year” shall mean (a) the period commencing on the Agreed Phase I Completion Date and ending on December 31 of the calendar year in which the Agreed Phase I Completion Date falls, which period shall constitute Contract Year 1, and (b) each subsequent calendar year during the Term, the first of which is Contract Year 2 8.1.2 “Ridership Revenue” shall mean all revenues to the extent actually collected by Operator as determined on a GAAP basis as Program membership or user payments (including but not limited to annual, weekly and daily membership payments), and any other Program revenue generated through Bicycle ridership, net of sales taxes or other taxes imposed by law that Operator is obligated to collect and net of credit card fees netted out of amounts due to Operator by the credit company prior to payment to Operator and other billing related charges treated by the party imposing such charges in a similar manner. 8.1.3 “Ridership Revenue Hurdle” shall mean $18,000,000 per calendar year, subject to CPI Adjustment. The Ridership Revenue Hurdle shall be prorated for any Contract Year that is not 365 days. 8.1.4 “Sponsorship Revenue” shall mean all revenues to the extent actually collected by Operator as determined on a GAAP basis as a result of Program advertising and sponsorships, including without limitation revenue generated in connection with (a) 203193300.19 -25- naming rights related to the Program and (b) Sponsorship or Advertising placements on Bicycles, Stations, Equipment, website, mobile applications or other physical or web- based materials, net of sales taxes or other taxes imposed by law that Operator is obligated to collect and net of credit card fees and other billing related charges. 8.1.5 “Sponsorship Revenue Hurdle” shall mean $7,000,000 per calendar year, subject to CPI Adjustment. The Sponsorship Revenue Hurdle shall be prorated for any Contract Year that is not 365 days. 8.2 Within 120 days following the end of each Contract Year during the Term, Operator shall: 8.2.1 Deliver to the MTC a schedule, certified by a senior officer of Operator, setting forth the Ridership Revenue and the Sponsorship Revenue for such Contract Year; and 8.2.2 Pay to MTC an amount equal to 5% of the excess of Ridership Revenue for such Contract Year over the Ridership Revenue Hurdle for such Contract Year, subject to Section 8.2.4. 8.2.3 Pay to MTC an amount equal to 5% of the excess of Sponsorship Revenue for such Contract Year over the Sponsorship Revenue Hurdle for such Contract Year, including all Sponsorship Revenue for the period between the Effective Date and Contract Year 1, provided that Operator may defer payment of any amount owed for Sponsorship Revenue for Contract Years 1 through 5 during the Term until Contract Years 6 through 10 during the Term, subject to Section 8.2.4. Operator shall pay any amounts so deferred in equal monthly instalments during Contract Years 6 through 10 during the Term. If the Term is reduced pursuant to Section 2.3, then Operator shall pay the amounts so deferred within 120 days following the expiration of this Agreement. 8.2.4 Notwithstanding anything to the contrary herein, if Participating City Delay results in an insufficient number of Site approvals for Operator to accommodate 500 Stations (being the minimum number of Stations identified in Section 3.4) by the Scheduled Phase V Completion Date plus 90 days (the “Scheduled Phase V Plus 90 Days Date”), then in lieu of MTC’s share of Ridership Revenue and Sponsorship Revenue being determined in accordance with the 5% amount set forth in Sections 8.2.2 and 8.2.3, such percentage shall be reduced to the product of 5% and a fraction whose numerator is the number of Stations for which a Site approval has been issued by such date and whose denominator is 500, and such reduced amount shall apply retroactively and prospectively until Site approvals for an aggregate of 500 Stations have been issued. Any amounts theretofore paid by Operator to MTC under this Section 8.2 in excess of such amount due to MTC shall be credited against amounts thereafter payable to MTC under this Section 8.2. Notwithstanding the foregoing, if at any time during the period commencing on the Scheduled Phase V Plus 90 Days Date and ending on the date on which Site approvals for an aggregate of 500 Stations have been issued (such period being the “Revenue Sharing Credit Period”) the Ridership Revenue or the Sponsorship Revenue is less than the Ridership Revenue Hurdle or the Sponsorship Revenue Hurdle, respectively, then Operator shall be entitled to a credit against amounts thereafter payable to MTC under this Section 8.2 equal to the sum of (a) the product of (i) the amount by which the Ridership Revenue Hurdle for such period exceeds the 203193300.19 -26- Ridership Revenues during such period, and (ii) the amount by which the percentage above has been reduced from 5% in accordance with the reduction set forth on the first sentence of this paragraph, and (b) the product of (i) the amount by which the Sponsorship Revenue Hurdle for such period exceeds the Sponsorship Revenues during such period, and (ii) the amount by which the percentage above has been reduced from 5% in accordance with the reduction set forth on the first sentence of this paragraph. If the Revenue Sharing Credit Period is less than one year, then the calculations in the preceding sentence shall be pro-rated based on the duration of the Revenue Sharing Credit Period. If the Revenue Sharing Credit Period is longer than one year, then the calculations for any fractional period shall be similarly pro- rated.Any amount not paid to MTC when due under Section 8.2 shall accrue interest on the overdue amount at the Applicable Interest Rate in effect from time to time. 8.3 No acceptance of any payment due pursuant to Sections 8.2 shall be construed as an accord that the payment is the correct amount, nor shall such acceptance of payment be construed as a release of any claim that MTC may have for further or additional sums payable under this Agreement. PRICE SCHEDULES. 9.1 Operator agrees that the amount and terms of the fees it charges users of the Program shall be consistent with the provisions of this Section. Membership Fees and Initial Ride Periods shall be consistent with Section 9.2, the Annual Membership Fee for users eligible for the affordability subscription specified in Section 9.3.1 shall be as described in said Section 9.3.1, the maximum Bicycle usage charge shall be consistent with Section 9.5 and the fees for damaged, lost, stolen or otherwise unreturned Bicycles shall be consistent with Section 9.6 initially charged by Operator shall be consistent with this Section. A “Membership Fee” is an amount that entitles the purchaser of the membership (a “member”, for the period of such purchased membership) to check out (as defined below) one or more Bicycle(s) at a time, for the length of time described below, provided that the member shall be charged a usage fee associated with the time period the Bicycle is checked out beyond the Initial Ride Period. A Bicycle is “checked out” for the period from the time it is removed from a Dock to the time it is returned to a Dock. A member may check out and return a Bicycle from or to any Dock at any Station in the Program, for an unlimited number of times, at any time during the period of the member’s membership, with the usage fee applicable to each such checkout and return sequence being calculated separately (so, for example, a Regular Annual Member may, within the member’s membership period, check out a Bicycle and return it within the first 30 minutes after checkout, and then subsequently check out a Bicycle and return that Bicycle within the first 30 minutes after that checkout, without incurring any usage fee for either checkout period). 9.2 Membership Fees, New Ridership Programs/Arrangements, and Initial Ride Periods: 9.2.1 Operator shall offer an annual membership (“Annual Membership”) for a fee (the “Annual Membership Fee”) in an amount not to exceed the Annual Membership Fee Cap in effect from time to time. The Annual Membership Fee Cap shall be $149 for a one-year period, subject to increase on the first anniversary of the Effective Date and on each subsequent anniversary of the Effective Date by a percentage amount equal to the CPI increase for the trailing 4 calendar quarters preceding each such anniversary 203193300.19 -27- plus 2% (so, for example, if the CPI increase were 1% for the trailing four calendar quarters preceding a particular anniversary of the date hereof, the applicable permitted percentage increase in the Annual Membership Fee Cap as of that anniversary would be 3%). An Annual Member whose Annual Membership Fee is subject to the Annual Membership Fee Cap is sometimes referred to as a “Regular Annual Member” and the corresponding Annual Membership is the “Regular Annual Membership.” The period of an Annual Membership shall run from the day the annual membership is activated until the first anniversary of the date on which the Annual Membership had been activated (but a membership purchased on February 29 shall expire on March 1 of the following year); 9.2.2 Annual Memberships may be paid in 12 equal monthly instalments at a price not greater than 120% of the Annual Membership Fee; 9.2.3 All memberships will include a free period of usage (the “Initial Ride Period”), which is the length of time at the beginning of each individual Trip to which additional usage fees will not be applied. For Regular Annual Memberships and affordability memberships, the Initial Ride Period is 30 Minutes. Usage fees will be applied to all Trips that exceed the Initial Ride Period; and 9.2.4 For monthly, weekly and daily memberships, and for usage of the Program by non- members, Operator will determine the applicable fees, usage fees, and periods of use for members beyond the Initial Ride Period in its sole discretion. 9.2.5 Nothing in the foregoing shall limit the right of Operator to offer premium memberships featuring an Initial Rider Period longer than 30 minutes for an Annual Membership Fee greater than $149. 9.3 Affordability Option: 9.3.1 Notwithstanding the permitted rate for a Regular Annual Membership set forth in Section 9.2.1 (as adjusted pursuant to Section 9.11), Operator shall charge those eligible for an “affordability subscription” no more than $60 per annum (excluding sales tax) as the Annual Membership Fee, or $5.00 per month for a 12-month membership. Such rate is subject to annual CPI increase on the first anniversary of the Effective Date and on each subsequent anniversary of the Effective Date for the trailing 4 calendar quarters preceding each such anniversary plus 2%. 9.3.2 Members of households enrolled in the Utility Lifeline Programs (also known as California Alternative Rates for Energy (CARE)) available in the MTC Area are eligible for affordability memberships. At least 30 days prior to the completion of Phase I, Operator shall propose, for MTC’s review and approval, procedures for verifying enrollment in CARE. In San Francisco, those who meet Muni Lifeline income requirements as determined by the City of San Francisco’s Human Services Agency are also eligible for the affordability membership. Upon mutual agreement of the Parties, eligibility may expand to include other categories of persons so long as the eligibility is determined by third parties. 203193300.19 -28- 9.3.3 Members enrolling through the affordability program shall be entitled to the same rights and privileges as Regular Annual Members. 9.3.4 The usage fees for affordability members shall not exceed the rate charged to Regular Annual Members. 9.4 The checkout period for the purposes of calculating usage fees shall always commence with the time a Bicycle is actually removed from a Dock, and it shall not be based on the time of insertion of a payment or identification card. 9.5 The maximum Bicycle usage charge initially charged with respect to any member shall be $100 per 24 hour period, not including charges for damaged, lost, stolen or otherwise unreturned Bicycles. 9.6 Fees for damaged, lost, stolen or otherwise unreturned Bicycles initially charged shall be (i) $1,200, if not returned, or (ii) if returned, the sum of all direct costs of the repair, including all labor and parts, as determined by Operator in its reasonable discretion, plus a 10% administrative fee; provided, however, that the fees charged to affordability members for unreturned or damaged Bicycles shall be not more than 33% of the fees set forth in the preceding clauses (i) and (ii). Operator shall waive such fees for an any member who is not at fault for the unreturned or damaged Bicycle. 9.7 Operator shall at all times post on all Stations and on Operator’s website a complete and up-to-date fee description that sets forth each and every current membership and usage fee offered by Operator, the methods of purchasing memberships and paying fees, available discounts on such fees, the applicability and terms of such discounts and, to the extent applicable, how to apply for or qualify for such discounts, and fees associated with damaged, lost, stolen or otherwise unreturned Bicycles. Operator shall furnish written copies of such material to the public upon request. 9.8 Operator shall accept credit card and debit card payments online and at all Stations but in the case of debit cards only those that have a Visa or Mastercard logo on them. Operator may employ such other methods of payment as it may determine. 9.9 All required state sales and use taxes with respect to membership and usage fees shall be collected and paid by Operator, as required by applicable law. 9.10 Operator shall be permitted to create Program pricing discount programs, which may be targeted in connection with marketing and outreach efforts, and in connection with Sponsorship or Advertising programs, to expand or enable Program use among different communities or for other lawful purposes. 9.11 At any time and from time to time, Operator shall have the right: 9.11.1 To adjust the amount of the Annual Membership Fee specified in Section 9.2.1 downwards at any time and upwards on each anniversary of the Effective Date by an amount not to exceed the Annual Membership Fee Cap then in effect; 9.11.2 To adjust the amount of the maximum Bicycle usage charge specified in Section 9.5 and the fees for damaged, lost, stolen or otherwise unreturned Bicycles specified in Section 9.6 downwards at any time and upwards on each anniversary of the Effective 203193300.19 -29- Date by a percentage amount equal to the CPI increase for the trailing 4 calendar quarters preceding each such anniversary plus 2% (so, for example, if the CPI increase were 1% for the trailing 4 calendar quarters preceding a particular anniversary of the date hereof, the applicable permitted percentage increase in the Annual Membership Fee Cap as of that anniversary would be 3%); 9.11.3 Any upwards adjustment permitted under this Section 9.11 and not made as of any anniversary date may be made at any time after such anniversary date without derogation of Operator’s right to make any other upwards adjustments permitted under this Section 9.11; 9.11.4 To adjust in its sole discretion all other fees, time periods and charges specified hereunder other than those fees, time periods and charges specified in Section 9.2.1 and Section 9.3; and 9.11.5 To adjust upward the duration of the Initial Ride Period. 9.12 MTC shall have the right to review and approve the initial Program membership waiver and any material changes thereto, which approval shall not be unreasonably withheld. 9.13 At any time and from time to time, Operator may, in its sole discretion, offer discounts and promotions for the Program. MERCHANDISING, LICENSING AND INTELLECTUAL PROPERTY 10.1 [INTENTIONALLY OMITTED] 10.2 Subject to the limitations, terms and conditions as may be imposed by the Sponsor in the Sponsor’s discretion, upon request by MTC and the Participating Cities, Operator shall seek to obtain for MTC and the Participating Cities, or shall assist MTC and the Participating Cities to obtain, for the benefit of MTC, the Participating Cities and their respective business partners and sublicensees, non- exclusive licenses to use during the term of any Sponsorship agreement the Sponsor trademarks, logos, servicemarks, and other similar intellectual property identified for use in connection with the Sponsorship agreement (individually and/or collectively the “Sponsor Property”) to market and promote the Program under the name or title for the Program adopted by Operator for the Program (the “Program Name”), which name shall be subject to the consent of MTC and the Participating Cities, as applicable, to the extent the Program Name consists of MTC/Participating City Property; provided, however, the use of any Sponsor Property by MTC or the Participating Cities shall comply with reasonable quality control measures required by the Sponsorship agreement. To the extent that the Program Name incorporates MTC/Participating City Property, MTC and/or one or more of the Participating Cities, as the case may be, shall own the portion of any Program Name that consists of MTC/Participating City Property. For further clarity, with respect to obtaining the aforementioned licenses, Operator is not the agent of MTC or the Participating Cities and has no authority to enter into agreements on behalf of or otherwise bind MTC or the Participating Cities. 203193300.19 -30- 10.3 Subject to the limitations, terms and conditions as may be imposed by the Sponsor in the Sponsor’s discretion to the extent the Operator Property incorporates any Sponsor Property, including, without limitation, the Sponsor’s consent, Operator hereby grants to MTC and the Participating Cities and their respective business partners and sublicensees a non-exclusive, royalty-free license to use any trademarks, logos, servicemarks, and other similar intellectual property developed by Operator (individually and/or collectively the “Operator Property”) required in connection with marketing and promoting the Program during the Term. 10.4 MTC hereby grants to Operator the exclusive right to use during the Term the name “Bay Area Bike Share” and variations thereof (individually and/or collectively “Bay Area Bike Share”). As part of Operator’s exclusive right to use “Bay Area Bike Share”, Operator shall have the right to sublicense the use of “Bay Area Bike Share” to the Sponsor or any other Person to market or promote the Program. Such rights shall terminate upon expiration or termination of this Agreement, but subject to the rights of the Recognized Lender. 10.5 Notwithstanding the foregoing Sections, the Recognized Lender shall not be precluded from collateralizing any intellectual property of Operator. RESERVED 11.1 [INTENTIONALLY OMITTED] 11.2 [INTENTIONALLY OMITTED] 11.3 [INTENTIONALLY OMITTED] RESERVED 12.1 [INTENTIONALLY OMITTED] 12.2 [INTENTIONALLY OMITTED] 12.3 [INTENTIONALLY OMITTED] MARKETING 13.1 Operator shall create a marketing plan for the Program, subject to approval by MTC, which approval will not be withheld so long as the plan is not in bad taste, offensive, obscene or derogatory to MTC or any Participating City. Following such approval, Operator shall market the Program in accordance with such plan. The marketing budget and the allocation of such budget shall be determined by Operator, in its sole discretion. The marketing plan shall include, at a minimum, demonstrations, 203193300.19 -31- events, social media outreach, programs, partnerships and other efforts to educate residents of the Participating Cities about bike share, to launch the Program and to grow membership and ridership in a financially sustainable manner. 13.2 A portion of Operator’s marketing plan will include marketing and outreach to low-income communities, disadvantaged communities, and communities for which English is not the native language, shall be subject to the approval of MTC and the Participating Cities, shall comply with local requirements regarding language access for each Participating City, shall comply with local standards for decency and not be offensive to the general public. MTC retains the non-exclusive right to conduct marketing and outreach to low-income neighborhoods and limited English proficiency neighborhoods. Operator’s marketing activities shall not violate the Advertising Restrictions. 13.3 [INTENTIONALLY OMITTED] WEBSITE 14.1 Operator shall create and maintain a Program website, subject to the MTC’s prior review. The Program’s website shall include, at a minimum, all of the following elements: 14.1.1 Eligibility requirements; 14.1.2 Subscription information and rate schedules; 14.1.3 Payment and subscription processing information; 14.1.4 Method for subscribers to update required information; 14.1.5 Subscriber agreement and acceptance of terms; 14.1.6 Map of network of Stations and real-time availability of Bicycles at each Station; 14.1.7 Frequently Asked Questions; 14.1.8 Safety requirements and information (including malfunctions and crashes); 14.1.9 News and operational updates; 14.1.10 Special events notices; 14.1.11 Links to other bike programs and events; 14.1.12 Call center contact information; 14.1.13 Real-time information on Bicycles and Docks for app developers (e.g. JSON Feed); 14.1.14 System-wide anonymized historical data; 14.1.15 For individual members, that member’s ridership history; 203193300.19 -32- 14.1.16 For individual members, that member’s payment history; and 14.1.17 Operator’s privacy policy; and 14.1.18 Translation capability to Cantonese, Spanish, and Vietnamese at a minimum. 14.2 Operator shall keep all information on the Program’s website updated. SECURITY FUND 15.1 Prior to installation by Operator of the first new Station, Operator shall deposit with MTC a security deposit (“Security Fund”) in the amount of $250,000.00. Interest on the Security Fund shall accrue in an interest bearing bank account for the benefit of Operator, and all such interest shall be paid annually to Operator on each anniversary of the Effective Date. 15.2 Operator shall maintain $250,000.00 in the Security Fund at all times during the Term and for 90 days after the end of the Term. Upon expiration of the foregoing period, the remaining balance of the Security Fund shall be disbursed to Operator, unless prior to the expiration of such 90-day period MTC commences litigation against Operator, the underlying claim is covered by the Security Fund, and such litigation is not finally resolved prior to the expiration of such period, in which case an amount of the Security Fund equal to the amount of the outstanding claim shall be retained and only until such claim is resolved. Any amounts remaining in the Security Fund that are not being retained in accordance with this paragraph shall be promptly returned to Operator, and MTC shall fully and timely cooperate with the payment of the Security Fund to Operator. 15.3 The Security Fund shall serve as security for the faithful performance by Operator of all terms, conditions and obligations of this Agreement and shall be available for withdrawal under the following circumstances: 15.3.1 If Operator breaches a payment obligation under this Agreement and fails to remedy such breach within 10 business days following notice by MTC to Operator (a “Payment Breach”), other than the payment of liquidated damages under Section 2.6.3, which is addressed in Section 15.3.5. In the event of a Payment Breach, MTC shall be entitled to withdraw from the Security Fund the amount of the money that is due and payable as set forth in such notice, unless within such 10 business day period Operator initiates the Dispute Resolution Process by giving MTC notice stating that it contests the occurrence of such Payment Breach or the amount thereof. This Section 15.3.1 does not cover a Default under Section 18.1.1 (which is covered in Section 15.3.4). 15.3.2 If Operator commits a non-monetary breach under this Agreement that results in damage to any municipal structure or property of MTC or a Participating City, Operator fails to repair such damage within 30 days following notice by MTC to Operator and in response thereto MTC or the applicable Participating City undertakes such repair (a “Property Damage Breach”), in which event MTC shall be entitled to withdraw from the Security Fund the costs incurred by MTC or the applicable Participating City to undertake such repair, provided such costs are reasonable. Notwithstanding MTC’s withdrawal from the Security Fund for a Property Damage Breach, Operator shall have the right to contest 203193300.19 -33- such Property Damage Breach or the costs incurred by initiating the Dispute Resolution Contest, provided that Operator gives MTC notice thereof not later than 30 days after such withdrawal. 15.3.3 If Operator fails to undertake any other non-monetary obligation under this Agreement within the period required under this Agreement and in response thereto MTC or a Participating City exercises self-help to perform such obligation pursuant to a provision of this Agreement that expressly permits self-help or with respect to which self-help is a reasonable response (e.g., a failure of Operator to timely complete a Station De-Installation; or failure of Operator to remove advertising that violates Advertising Restrictions within 24 hours of notice to Operator) (a “Self-Help Situation”), in which event MTC shall be entitled to withdraw from the Security Fund the costs incurred by MTC or the applicable Participating City to undertake such self-help, provided such costs are reasonable. Notwithstanding MTC’s withdrawal from the Security Fund for a Self-Help Situation, Operator shall have the right to contest such Self-Help Situation or the costs incurred by initiating the Dispute Resolution Contest, provided that Operator gives MTC notice thereof not later than 30 days after such withdrawal. This Section 15.3.3 does not cover a breach of Section 16 or matters covered by Section 15.3.2 or 15.3.4. 15.3.4 Operator commits a Default, in which event MTC shall be entitled to withdraw the actual, direct damages arising from such Default unless prior to the expiration of the applicable cure period set forth in Section 18.1 Operator initiates the Dispute Resolution Process by giving MTC notice stating that it contests the occurrence of such Defaults. This Section 15.3.4 does not cover matters covered by Section 15.3.1, 15.3.2, 15.3.3 or 15.3.5. 15.3.5 Operator fails to pay any amount of liquidated damages, and interest, if any due to MTC pursuant to Section 2.6.3 within the time periods provided therein. 15.4 Each notice by MTC to Operator under Section 15.3 of a failure, breach or Default, as applicable, shall provide specific and detailed information about Operator’s non-compliance, together with the amount MTC is intending to withdraw and detailed support for such amount, if then known. Each notice from Operator to MTC under Section 15.3 to contest the occurrence of such non-compliance or the amount to be withdrawn, which notice shall commence the Dispute Resolution Process, shall provide specific and detailed information that rebuts or challenges the information contained in the corresponding notice provided by MTC. Within 2 days following any withdrawal from the Security Fund, MTC shall notify Operator of the date and amount of the withdrawal, together with detailed support for the amount of the withdrawal. 15.5 MTC may not seek recourse against the Security Fund for any cost or damages for which MTC has previously been compensated by Operator or from the Security Fund. The withdrawal of the amounts from the Security Fund shall constitute a credit against the amount of the applicable liability of Operator. 15.6 If a withdrawal from the Security Fund is made, Operator shall be required to replenish the Security Fund by the amount withdrawn within 30 days after receipt of notice of such withdrawal. Notwithstanding the foregoing, if Operator is contesting in good faith MTC’s right to withdraw in accordance with the Dispute Resolution Process, then Operator shall not be obligated to replenish on account of such withdrawal until 30 days after such dispute is finally resolved in accordance with the Dispute Resolution Process. Interest on the amount required to be replenished shall accrue at the Applicable Interest Rate in effect from time to time commencing on such 30th date. 203193300.19 -34- 15.7 The obligation to perform and the liability of Operator pursuant to this Agreement shall not be limited in nature or amount by the acceptance of the Security Fund required by this Section 15. INDEMNITY 16.1 Indemnification. Operator shall defend, indemnify and save harmless MTC, the Participating Cities, and their respective commissioners, officers, agencies, departments, agents, and employees (each, an “Indemnified Party”; and collectively, “Indemnified Parties”) from and against any and all claims, demands, causes of action, proceedings or lawsuits brought by third-parties (“Claims”), and all losses, damages, liabilities, penalties, fines, forfeitures, costs and expenses arising from or incidental to any Claims (including attorneys’ fees and other costs of defense) (collectively, with Claims, “Liabilities”), resulting from, or arising out of, the operation of the Program and the provision of Services, whether such operation or Services is performed or provided by Operator or by Operator’s subcontractors or any other person acting for or on behalf of Operator. 16.2 Notwithstanding the foregoing, the following shall be excluded from Operator’s indemnification and defense obligations contained in the preceding sentence: any Liabilities to the extent resulting from, or arising out of, (i) the gross negligence or willful misconduct of any Indemnified Party, (ii) Operator complying with the written directives or written requirements of a Participating City, if the Operator has previously objected to such written directives or requirements in writing, with respect to (A) the location or configuration of any Station in relation to the street or sidewalk on which such Station is located or to which it adjoins or (B) a Participating City’s Street Treatment Requirements, or (iii) the condition of any public property outside of the perimeter of a Station and not otherwise controlled by Operator (and expressly excluding from this clause (iii) the condition of the Bicycles or other Equipment). If any Claim against Operator includes claims that are covered by clause (iii) of the preceding sentence or claims contesting a Participating City’s authority to issue a permit for a Station, then each Party shall be responsible for its own defense against such claims. 16.3 Upon receipt by any Indemnified Party of actual notice a Claim to which such Indemnified Party is entitled to indemnification in accordance with Sections 16.1 and 16.2, such Indemnified Party shall give prompt notice of such Claim to Operator. Operator shall assume and prosecute the defense of such Claim at the sole cost and expense of Operator. Operator may settle any such Claim in its discretion so long as such settlement includes an unconditional release of the Indemnified Party. INSURANCE 17.1 Minimum Coverages. The insurance requirements specified in this section shall cover Operator’s own liability and the liability arising out of work or services performed under this Agreement by any subconsultants, subcontractors, suppliers, temporary workers, independent contractors, leased employees, or any other persons, firms or corporations that Operator authorizes to work under this Agreement (hereinafter referred to as “Agents”). Operator shall, at its own expense, obtain and maintain in effect at all times during the life of this Agreement the following types of insurance against claims, damages and losses due to injuries to persons or damage to property or other losses that may arise in connection with the performance of work under this Agreement. 203193300.19 -35- 17.2 Operator shall include in every subcontract the requirement that the Agent maintain adequate insurance coverage with appropriate limits and endorsements to cover the risks associated with work to be performed by the Agent. To the extent that an Agent does not procure and maintain such insurance coverage, Operator shall be responsible for any and all costs and expenses that may be incurred in securing such coverage or in fulfilling Operator’s indemnity obligation under Section 16 as to itself or any of its Agents in the absence of such coverage. 17.3 In the event Operator or its Agents procure excess or umbrella coverage to maintain certain requirements outlined below, these policies shall also satisfy all specified endorsements and stipulations, including provisions that Operator’s or its Agent’s insurance, as the case may be, be primary without right of contribution from MTC. 17.3.1 Workers' Compensation Insurance with Statutory limits, and Employer’s Liability Insurance with a limit of not less than $1,000,000 per employee for injury by disease and $1,000,000 for injury for each accident, and any and all other coverage of Operator’s employees as may be required by applicable law. Such policy shall contain a Waiver of Subrogation in favor of MTC. Such Workers’ Compensation & Employer’s Liability may be waived, if and only for as long as Operator is a sole proprietor or a corporation with stock 100% owned by officers with no employees. 17.3.2 Commercial General Liability Insurance for Bodily Injury and Property Damage liability, covering the operations of Operator and Operator’s officers, agents, and employees and with limits of liability which shall not be less than $1,000,000 combined single limit per occurrence with a general aggregate liability of not less than $2,000,000, and Personal & Advertising Injury liability with a limit of not less than $1,000,000. Such policy shall contain a Waiver of Subrogation in favor of MTC. MTC and its commissioners, directors, officers, representatives, agents and employees are to be named as additional insureds. In addition, the entities listed in Section 17.12 and their respective commissioners, directors, officers, representatives, agents and employees are also to be named as additional insureds. Such insurance shall be primary and contain a Separation of Insureds Clause as respects any claims, losses or liability arising directly or indirectly from Operator’s operations. 17.3.3 Business Automobile Insurance for all automobiles owned (if any), used or maintained by Operator and Operator’s officers, agents and employees, including but not limited to owned (if any), leased (if any), non-owned and hired automobiles, with limits of liability which shall not be less than $1,000,000 combined single limit per accident. 17.3.4 Umbrella Insurance in the amount of $4,000,000 providing excess limits over Employer’s Liability, Automobile Liability, and Commercial General Liability Insurance. Such umbrella coverage shall be following form to underlying coverage including all endorsements and additional insured requirements. 17.3.5 Errors and Omissions Professional Liability Insurance for errors and omissions and the resulting damages, including, but not limited to, economic loss to MTC and having minimum limits of $5,000,000 per claim. Such policy shall contain cyber risk coverages including network and internet security liability coverage, privacy liability coverage and media coverage. The policy shall provide coverage for all work 203193300.19 -36- performed by Operator and any work performed or conducted by any subcontractor/consultant working for or performing services on behalf of Operator. Operator may delegate the obligation to maintain Errors and Omissions Professional Liability Insurance to an Agent, but the failure of such Agent to maintain such insurance shall not relieve Operator of its obligation to maintain such insurance. 17.3.6 Property Insurance. Property Insurance covering Operator’s own business personal property and equipment to be used in performance of this Agreement, materials or property to be purchased and/or installed on behalf of MTC (if any), and builders risk for property in the course of construction (if applicable). Coverage shall be written on a "Special Form" policy that includes theft, but excludes earthquake, with limits at least equal to the replacement cost of the property. Such policy shall contain a Waiver of Subrogation in favor of MTC. 17.4 Acceptable Insurers. All policies will be issued by insurers qualified to do business in California and with a Best’s Rating of A-VIII or better. 17.5 Self-Insurance. Operator’s obligation hereunder may be satisfied in whole or in part by adequately funded self-insurance, upon evidence of financial capacity satisfactory to MTC. 17.6 Deductibles and Retentions. Operator shall be responsible for payment of any deductible or retention on Operator’s policies without right of contribution from MTC. Deductible and retention provisions shall not contain any restrictions as to how or by whom the deductible or retention is paid. Any deductible or retention provision limiting payment to the Named Insured is unacceptable. 17.7 In the event that MTC is entitled to coverage as an additional insured under any Operator insurance policy that contains a deductible or self-insured retention, Operator shall satisfy such deductible or self-insured retention to the extent of loss covered by such policy, for any lawsuit arising from or connected with any alleged act of Operator, subconsultant, subcontractor, or any of their employees, officers or directors, even if Operator or subconsultant is not a named defendant in the lawsuit. 17.8 Claims Made Coverage. If any insurance specified above is written on a “Claims-Made” (rather than an “occurrence”) basis, then in addition to the coverage requirements above, Operator shall: 17.8.1 Ensure that the Retroactive Date is shown on the policy, and such date must be before the date of this Agreement or the beginning of any work under this Agreement; 17.8.2 Maintain and provide evidence of similar insurance for at least three (3) years following the expiration or termination of this Agreement, including the requirement of adding all additional insureds; and 17.8.3 If insurance is cancelled or non-renewed, and not replaced with another claims-made policy form with a retroactive date prior to the commencement of any work hereunder, Operator shall purchase “extended reporting” coverage for a minimum of three (3) years after the expiration or termination of this Agreement. 17.9 Failure to Maintain Insurance. All insurance specified above shall remain in force until the expiration or termination of this Agreement. Operator must notify MTC if any of the above required 203193300.19 -37- coverages are non-renewed or cancelled. The failure to procure or maintain required insurance and/or an adequately funded self-insurance program will constitute a material breach of this Agreement. 17.10 Certificates of Insurance. Prior to commencement of any work hereunder, Operator shall deliver to MTC Certificates of Insurance verifying the aforementioned coverages. Such certificates shall make reference to all provisions and endorsements referred to above and shall be signed on behalf of the insurer by an authorized representative thereof. 17.11 Disclaimer. The foregoing requirements as to the types and limits of insurance coverage to be maintained by Operator are not intended to and shall not in any manner limit or qualify the liabilities and obligations otherwise assumed by Operator pursuant hereto, including, but not limited to, liability assumed pursuant to Section 16 . 17.12 Additional Insureds: The following entities are to be named as Additional Insureds under applicable sections of this Section 17 and as Indemnified Parties pursuant to Section 16. 17.12.1 Metropolitan Transportation Commission (MTC) 17.12.2 City of Berkeley 17.12.3 City of Oakland 17.12.4 City of San Francisco 17.12.5 City of Emeryville 17.12.6 City of San Jose TERMINATION AND DEFAULT 18.1 The following events shall be a Default under this Agreement: 18.1.1 A breach by Operator of a payment obligation under Section 8 [Revenue Sharing] and the failure to remedy such breach within 10 business days after receipt by Operator from the Executive Director of written notice of such breach; 18.1.2 A breach by Operator of a material obligation under Section 7 of this Agreement or Section 29 of the Coordination Agreement [Advertising and Sponsorship]; Section 9 [Price Schedules], Section 10 of this Agreement or Section 30 of the Coordination Agreement [Merchandising, Licensing and Intellectual Property]; any separate licensing agreement between Operator (or its affiliate) and MTC and/or a Participating City; Section 31 of the Coordination Agreement [Marketing, Promotions and Reporting]; Section 14 [Website]; Section 15 [Security Fund]; Section 16 [Indemnity]; Section 20 [Employment and Purchasing]; and Section 21 [Inspection and Audit], and the failure to remedy such breach within 10 business days after receipt by Operator from the Executive Director of written notice of such breach; 203193300.19 -38- 18.1.3 A breach by Operator of Section 22 [Assignment]; 18.1.4 A breach by Operation of Section 17 [Insurance] and the failure to remedy such breach within 5 business days after receipt by Operator from the Executive Director of written notice of such breach; 18.1.5 (a) Operator’s chronic Program-wide failures to abide by its obligations under Sections 2, 3, 4 and 6 of this Agreement and Section 22 of the Coordination Agreement, which failures materially and adversely affect the non-pecuniary benefits to be derived by MTC and the Participating Cities under this Agreement, (b) the failure of Operator to submit to MTC and the Participating Cities, within 15 business days following receipt by Operator from the Executive Director of written notice of such failures, a credible business plan for Operator to proactively and comprehensively address Operator’s deficiencies, which plan shall be subject to approval by MTC in consultation with the relevant Participating Cities, and (c) the failure of Operator to take concrete steps to implement such response plan within 30 days of MTC’s approval of such plan; 18.1.6 If the Security Fund balance falls below $50,000 and Operator does not replenish the full amount of the Security Fund within 10 days following notice thereof from the Executive Director. However, if Operator is then contesting one or more prior withdrawals from the Security Fund in accordance with the Dispute Resolution Process and the aggregate amount in dispute exceeds $200,000, then such $50,000 may only be used pursuant to Section 15.3.2 or Section 15.3.3 until such dispute has been finally resolved; 18.1.7 The commencement of any proceeding by Operator under the Bankruptcy Code or relating to the insolvency, receivership, liquidation, or composition of Operator for the benefit of creditors; 18.1.8 The commencement of any involuntary proceeding against Operator under the Bankruptcy Code that has not been stayed or dismissed within 120 days of its commencement; 18.1.9 If Operator or any of its officers, directors or senior management has been convicted after the Effective Date under any state or federal law of any of the matters listed in clauses (a) through (e) of this Section 18.1.9: (x) in connection with a matter that is not directly or indirectly connected with this Agreement or the Program and, in the case of the conviction of an individual, such individual has not been terminated by Operator within 30 days after Operator receives notice of such conviction, or (y) in connection with a matter that is directly or indirectly connected with this Agreement or the Program. The matters referred to above as being listed in clauses (a) through (e) are the following: (a) A criminal offense that is incident to obtaining or attempting to obtain or to performing a public or private contract; (b) Fraud, embezzlement, theft, bribery, forgery, falsification, destruction of records, or receiving stolen property; 203193300.19 -39- (c) A criminal violation of any state or federal antitrust law; (d) Violation of the Racketeer Influence and Corrupt Organization Act, 18 U.S.C. § 1961 et seq., or the Mail Fraud Act, 18 U.S.C. § 1341 et seq., for acts in connection with the submission of bids or proposals for a public or private contract; or (e) Conspiracy to commit any act or omission that would constitute grounds for conviction or liability under any statute described in subparagraph (d) above. 18.1.10 If Operator or any of its officers, directors, partners, managers, 5 percent or greater owners, principals, or other employees or persons substantially involved in its activities (a) are subject to a judgment of civil liability under any state or federal antitrust law for acts or omissions in connection with the submission of bids or proposals for a public or private contract, or (b) intentionally makes or causes to be made any false, deceptive, or fraudulent material statement in any bid, proposal, or application for government work, and the individual responsible for such act, omission or material misstatement, if an employee, has not been terminated by Operator, or if not an employee, the relationship therewith has not been terminated, within 30 days after such judgment is entered into in the case of clause (a) above or after a judgment is entered into that any such material statement was intentionally false, deceptive or fraudulent in the case of clause (b). 18.2 If a Default occurs, then, subject to Sections 3.5 and 18.3, MTC shall, at MTC’s option, have any or all of the following remedies, all cumulative (so exercise of one remedy shall not preclude exercise of another remedy), in addition to such other remedies as may be available at law or in equity or under any other terms of this Agreement. MTC’s remedies include, but are not limited to: 18.2.1 Cause a withdrawal from the Security Fund, pursuant to Section 15, subject to any right of Operator to contest such withdrawal pursuant to the Dispute Resolution Process; 18.2.2 Seek actual, direct damages only from Operator for such Default (and notwithstanding anything to the contrary herein, in no event shall MTC be entitled to special, consequential or punitive damages under this Agreement); 18.2.3 Seek to restrain by injunction the continuation of such Default; 18.2.4 Purchase the Equipment at its then fair market value, subject to the rights of the Recognized Lender not to permit the sale of the Equipment to MTC; 18.2.5 Pursue any other remedy permitted by law or in equity or in this Agreement; or 18.2.6 Terminate this Agreement, subject to the rights of the Recognized Lender. 18.3 Nothing in this Agreement precludes Operator from contesting the existence of such Default or the breach, failure or other occurrence underlying a Default in accordance with this Section 203193300.19 -40- 18.3 and the Dispute Resolution Process. If Operator seeks to contest any of the foregoing, Operator must notify MTC prior to the expiration of the applicable cure period set forth in Section 18.1. Following such notice, the dispute shall be addressed and resolved in accordance with the Dispute Resolution Process. Pending final resolution of such dispute, Operator may continue operating the Program in accordance with the terms of this Agreement, and any exercise by MTC of its remedies hereunder shall be stayed until final resolution of such dispute in accordance with the Dispute Resolution Process. In addition, if such final resolution is against Operator, then MTC shall have the right to terminate this Agreement only if such Default is not cured within the period otherwise provided in the definition of Default to remedy such default, provided that for this purpose the applicable remedy period shall commence upon the final resolution of such dispute. 18.4 Subject to the rights of the Recognized Lender (if any and if applicable), upon termination of this Agreement on account of a Default by Operator, reduction of Initial Term under Section 2.3, or expiration of the Term, Operator shall comply with the following close-out procedures: 18.4.1 Turning over to MTC or its designees copies of all books, records, documents and materials specifically relating to this Agreement and reasonably requested by MTC; 18.4.2 Submitting to MTC, within 120 days, a final statement and report relating to this Agreement that has been reviewed by a certified public accountant or a licensed public accountant; 18.4.3 Providing reasonable assistance to MTC during the transition; and 18.4.4 Continuing to operate the Program in accordance with the terms of this Agreement and to effect an efficient and orderly transition of responsibility with respect to the operation of the Program until the earlier of (i) 180 days after such termination and (ii) the selection of a replacement operator for the Program and such replacement operator commencing operation of the Program; provided, however, that Operator shall have the right to cease operating prior thereto if Operator experiences an operating shortfall during the transition period and MTC fails to compensate Operator for such shortfall. 18.5 Subject to the rights of the Recognized Lender (if any and if applicable), upon termination of this Agreement on account of a Default by Operator, reduction of the Initial Term under Section 2.3, or expiration of the Term, MTC shall have the option to: 18.5.1 require Operator to remove all Equipment at its sole cost and expense; 18.5.2 subject to satisfaction of the Program Property Assignment Conditions, require Operator to assign to MTC (or a third-party operator designated by MTC) the Equipment and Operator’s rights under the Escrow Agreement, in which event Operator shall reasonably cooperate with MTC (or such designee) to obtain the legal right to use the Software (excluding the Operator Basic Function Software and the Operator Non-Basic Function Software) either through an assignment of Operator’s license with the Vendor to MTC (or such designee) or by MTC (or such designee) entering a license agreement for such Software with the Vendor; or 203193300.19 -41- 18.5.3 subject to satisfaction of the Program Property Assignment Conditions, take over operation of the Program, and in connection therewith assign to MTC the Equipment and Operator’s rights under the Escrow Agreement, in which event Operator shall reasonably cooperate with MTC to obtain the legal right to use the Software (excluding the Operator Basic Function Software and the Operator Non-Basic Function Software) either through an assignment of Operator’s license with the Vendor to MTC or by MTC entering a license agreement for such Software with the Vendor. 18.6 Not less than 6 months prior to the expiration of the Term, MTC shall elect either (a) to purchase (or have a designee purchase) the Program Property at the expiration of the Term or (b) to require Operator to remove the Equipment upon expiration of the Term. If MTC elects clause (a), then Operator and MTC shall negotiate a purchase price for the Program Property based on the fair market value of the Program Property as an installed system, and at the expiration of the Term, Operator shall reasonably assign to MTC (or its designee) the Equipment and Operator’s rights under the Escrow Agreement and cooperate with MTC (or its designee) to obtain the legal right to use the Software (excluding the Operator Basic Function Software and the Operator Non-Basic Function Software) either through an assignment of Operator’s license with the Vendor or by MTC (or its designee) entering a license agreement for such Software with the Vendor, subject to satisfaction of the Program Property Assignment Conditions. If MTC elects clause (b), then within 90 days of the expiration of the Term, Operator shall remove all Equipment. 18.7 In the event of a breach of this Agreement by any Party or by any Participating City, the other Party or parties shall act in good faith and exercise commercially reasonable efforts to mitigate any damages or losses that result from such breach. Notwithstanding the foregoing, nothing contained in this Section shall limit in any respect the rights of MTC and the Participating Cities to indemnification pursuant to Section 16. 18.8 No Party shall be liable (including, but not limited to, for payment of liquidated damages) for failure to perform any of its obligations, covenants, or conditions contained in this Agreement, to the extent such failure is caused by the occurrence of an Event of Force Majeure, and such Party’s obligation to perform shall be extended for a reasonable period of time, commensurate with the nature of the event causing the delay, and no breach or default shall exist or liquidated damages be payable with respect to such extended period. RIGHTS OF RECOGNIZED LENDER 19.1 Operator shall have the right to collaterally assign its rights under this Agreement to the Recognized Lender as collateral for the Recognized Loan. Operator or the Recognized Lender shall notify MTC of the existence of the Recognized Loan and the collateral assignment of this Agreement and shall notify MTC of the name and address of the Recognized Lender. In no event shall there be more than one Recognized Lender at any one time. 19.2 MTC shall give the Recognized Lender, at the address of such Recognized Lender and in the manner set forth in Section 25.2 a copy of each notice of default at the same time as it gives notice of 203193300.19 -42- default to Operator. A notice of default to Operator shall not be effective unless a copy thereof is concurrently given to the Recognized Lender. 19.3 The Recognized Lender shall, in the case of any Default by Operator under Section 18.1.1, have a period of 10 days more than is given Operator, to remedy such Default prior to MTC terminating this Agreement on account of such Default, and in the case of a Default by Operator under Section 18.1.2 or 18.1.5, shall have a period of 10 days more than is given Operator to remedy such Default prior to MTC terminating this Agreement on account of such Default, provided that if such Default is not one that can be cured with the payment of money and if the Recognized Lender needs to exercise its remedies and obtain access to its collateral prior to being able to effectuate the cure of any such default, such additional 10-day period shall, so long as the Recognized Lender is diligently and continuously pursuing such cure and has provided written notice to MTC of its intent to cure such Default, be extended for such additional time as is necessary for the Recognized Lender to obtain such access and commence and effectuate such cure. 19.4 If this Agreement terminates on account of a Default, then Operator shall give any Recognized Lender prompt notice thereof. Within 60 days following receipt of such notice, the Recognized Lender may elect to require MTC to enter into a new agreement with a replacement operator designated by the Recognized Lender for the remaining Term of this Agreement, considered as if the Term had not ended on account of such Default and on substantially the same terms as contained in this Agreement (the “Replacement Agreement”). Within 120 days of such notice, the Recognized Lender shall identify a replacement operator and credible business plan for such replacement operator to proactively and comprehensively address Operator’s deficiencies. Such replacement operator and business plan shall be subject to the approval of MTC, which approval shall not be unreasonably withheld or delayed. If MTC approves such replacement operator and business plan, then MTC and such replacement operator shall enter into the Replacement Agreement. If MTC and the Recognized Lender are unable to agree on the replacement operator or the business plan within 150 days following such notice, or if the Recognized Lender does not elect to require MTC to enter into a Replacement Agreement within 60 days following receipt of such notice, then MTC shall have the right to exercise its other remedies under Section 18.5 without regard to the rights of the Recognized Lender. 19.5 If pursuant to Section 2.3, MTC exercises its right to reduce the Initial Term by 5 years, then MTC shall give the Recognized Lender notice thereof. Within 60 days following receipt of such notice, the Recognized Lender may elect to require MTC to enter into a new agreement with a replacement operator designated by the Recognized Lender commencing on the expiration of the Term as reduced pursuant to Section 2.3 for the remaining Term of this Agreement, considered as if the Term had not been reduced pursuant to Section 2.3 and on substantially the same terms as contained in this Agreement. Within 120 days of such notice, the Recognized Lender shall identify a replacement operator and credible business plan for such replacement operator to proactively and comprehensively address Operator’s deficiencies. Such replacement operator and business plan shall be subject to the approval of MTC, which approval shall not be unreasonably withheld or delayed. If MTC approves such replacement operator and business plan, then MTC and such replacement operator shall enter into such replacement agreement. If MTC and the Recognized Lender are unable to agree on the replacement operator or the business plan within 150 days following such notice, or if the Recognized Lender does not elect to require MTC to enter into a replacement agreement within 60 days following receipt of such notice, then the Recognized Lender shall have no further rights arising on account of the reduced Term. 203193300.19 -43- 19.6 MTC and Operator shall not amend or modify any provision of this Agreement if the effect thereof is to reduce the Term, reduce Operator’s rights or increase Operator’s obligations in any material respect, or weaken any of the Recognized Lender’s express rights under this Agreement, including the Recognized Lender’s rights under this Section 19, in each case without the prior written consent of the Recognized Lender. MTC shall not accept a surrender of this Agreement by Operator, nor shall MTC and Operator agree to a termination of this Agreement, without the prior written consent of the Recognized Lender. 19.7 If Operator defaults on the Recognized Loan and as a result thereof the Recognized Lender has a right under the applicable loan documents to foreclose on its Program-related collateral, then without the consent of MTC or any Participating City, the Recognized Lender (or a subsidiary thereof) and/or a third party may succeed to the interest of Operator under this Agreement, so long as (a) the party succeeding to the interest of Operator under this Agreement, or a third party manager designated by such successor, has the experience and expertise to operate a large-scale bikeshare program, (b) such successor succeeds to Operator’s interest in the Bicycles, other Equipment and other collateral, (c) such successor has substantially the same legal right to obtain replacement Bicycles and other Equipment, to utilize the Bicycle patents and other Equipment patents, and to utilize the required Software that Operator has as of the Effective Date; and (d) agrees to comply with all terms of this Agreement. 19.8 The terms and provisions of this Section 19 and the rights of the Recognized Lender hereunder shall survive a termination of this Agreement pursuant to a Default or the expiration of this Agreement pursuant to Section 2.3. EMPLOYMENT 20.1 Operator will pay wages to all of its employees that equal or exceed the living wage in effect as of the date of this agreement under State law or applicable local law. 20.2 Operator shall use reasonable efforts, at its own cost and expense, to conduct outreach for employment purposes to residents of the Participating Cities for the opportunities to be created by the construction, installation, operation, management, administration, marketing and maintenance of the Program. Such recruitment activities shall include provisions for the posting of employment and training opportunities at appropriate Participating City agencies responsible for encouraging employment of Participating City residents. Operator shall ensure the promotion of equal employment opportunity for all qualified Persons employed by, or seeking employment with, Operator. For San Francisco-based entry level job openings with Operator, Operator shall post such openings through San Francisco’s First Source Hiring Program and offer the City of San Francisco the first opportunity to refer qualified candidates to Operator for such openings. 20.3 Operator shall not refuse to hire, train, or employ, bar or discharge from employment or discriminate against any individual in compensation, hours of employment, or any other term, condition, or privilege of employment, including, but not limited to, any promotion, upgrading, demotion, downgrading, transfer, layoff, or termination, on the basis of race, creed, color, national origin, sex, age, handicap, marital status, affectional preference or sexual orientation, in accordance with applicable law. Operator agrees to comply in all respects with all applicable federal, state and local employment discrimination laws and requirements during the Term. 203193300.19 -44- 20.4 Operator shall select, train and employ such number of employees as is necessary or appropriate for Operator to satisfy its responsibilities hereunder. Operator shall be the sole authority to hire, terminate and discipline any and all personnel employed by Operator. INSPECTION AND AUDIT RIGHTS 21.1 MTC shall have the right at reasonable times and upon reasonable notice to inspect the installation, operation, and maintenance of the Program and its associated elements. 21.2 Operator shall open and maintain a facility in each of San Francisco, San Jose and East Bay to support Program operations. 21.3 Operator shall comply with the reporting requirements set forth in Appendix C. 21.4 Throughout the Term, Operator shall maintain complete and accurate books of account and records of the business, ownership and operations of Operator with respect to the Program. 21.5 MTC has the right upon written demand with reasonable notice to Operator under the circumstances, to inspect, examine or audit during normal business hours all documents, records or other information pertaining to Ridership Revenue and Sponsorship Revenue or any other data collected and maintained by Operator to comply with the reporting requirements of Appendix C. All such documents shall be made available at one of Operator’s local offices. All such documents shall be retained by Operator for a minimum of 6 years following the expiration or termination of this Agreement. RESTRICTION AGAINST ASSIGNMENT 22.1 Operator shall not sell, assign or otherwise transfer all or any portion of its interest in this Agreement without the prior written consent of MTC, except as otherwise provided in Sections 19.1 and 19.7. Operator shall notify MTC of any proposed sale, assignment or transfer of this Agreement, in writing, at least 60 days prior to the proposed effective date of such sale, assignment or transfer. In the event that any such sale, assignment or transfer of this Agreement is approved by MTC, the purchaser, assignee or transferee shall agree to be bound by all the covenants of this Agreement required of Operator to the extent arising from and after the effective date of such sale, assignment or transfer. Any purported sale, assignment or transfer without MTC’s approval as required above shall be void and of no force or effect. Nothing in the foregoing shall limit (a) the right of Bikeshare Holdings to sell, assign or otherwise transfer interests in Operator, (b) the right of direct or indirect owners of equity interests in Bikeshare Holdings to sell, assign or otherwise transfer such interests, (c) the right of Bikeshare Holdings to sell, assign or transfer all or substantially all of its assets, including its interest in this Agreement, so long as Operator or, in the case of clause (c), its successor, has the experience and expertise to operate a large- scale bikeshare program and has substantially the same legal right to obtain replacement Bicycles and other Equipment, to utilize the Bicycle patents and other Equipment patents, and to utilize the required Software that Operator has as of the Effective Date. In addition, nothing in the foregoing shall prohibit a merger, reorganization, recapitalization, consolidation or similar transaction involving Bikeshare Holdings or any direct or indirect holder of equity interests in Bikeshare Holdings, so long as the conditions set forth in the preceding sentence are satisfied. 203193300.19 -45- DISPUTE RESOLUTION PROCESS 23.1 In the event of a dispute between the Parties, including, without limitation, a dispute regarding liquidation damages pursuant to Section 2.6.3, a dispute regarding the Security Fund, a dispute regarding a breach of this Agreement or regarding the occurrence or continued existence of a Default, such dispute shall be addressed and resolved in accordance with the following (the “Dispute Resolution Process”): 23.1.1 MTC’s Program Manager assigned to the Program and Operator’s General Manager of the Program, or their respective delegates, shall meet, within 10 days after receipt by one Party of notification from the other Party of such dispute, to negotiate in good faith in order to try to resolve such dispute (the date of the first such meeting, or the expiration of such 10-day period if the meeting is not timely held, being the “Initial Meeting Date”). A KPI Contest Notice shall constitute appropriate notification for a dispute regarding a right to liquidated damages under Section 2.6.3, and a rejection of a KPI Change Request shall constitute appropriate notification for a dispute under Section 2.6.2(a). If such persons fail to resolve such dispute within 15 days after the Initial Meeting Date, then the Executive Director of MTC and the President of Bikeshare Holdings shall meet promptly and negotiate in good faith in order to resolve such dispute. If such persons fail to resolve such dispute within 30 business days after the Initial Meeting Date, then such dispute shall be subject to mediation under Section 23.1.2. As used in this Section 23.2.1, a meeting may be held in person, by conference call or by video conference. By agreement of the Parties, any of the deadlines set forth in this Section 23.1.1 may be extended or shortened. The process described in this Section 23.1.1 shall be confidential and treated as a compromise negotiation for purposes of federal and state rules of evidence. 23.1.2 Unless the Parties otherwise agree, mediation shall be administered by the American Arbitration Association (the “AAA”) in accordance with its Commercial Rules, or similar service. A request for mediation shall be made in writing, delivered to the other Party and filed with the applicable mediation service. Either Party may submit such request. The Parties shall share the mediator’s fee and any filing fees equally. The mediation shall be held in San Francisco. The Parties shall be represented by individuals of their choosing. Agreements reached in mediation shall be binding on the Parties and enforceable in a State or Federal Court of competent jurisdiction sitting in San Francisco County. The mediation process shall be confidential and treated as a compromise negotiation for purposes of federal and state rules of evidence. 23.1.3 For the avoidance of doubt, the Parties shall comply with any settlement agreement regarding any dispute that is the subject of a settlement agreement. 23.1.4 As used in this Agreement, “final resolution” of a dispute or a dispute being “finally resolved” means that (a) the Parties have entered into a settlement agreement to resolve such dispute, or (b) if either Party has initiated a judicial proceeding to contest such dispute, that a final-non- appealable order of a court of competent jurisdiction has been issued for such dispute. 203193300.19 -46- REPRESENTATIONS AND WARRANTIES OF OPERATOR 24.1 In addition to the representations, warranties, and covenants of Operator set forth elsewhere herein, Operator represents and warrants to MTC and the Participating Cities as of the Effective Date: 24.1.1 Operator is a limited liability company, validly existing and in good standing under the laws of the State of Delaware, and it is duly authorized to do business in the State of California; 24.1.2 The sole owner of Operator is Bikeshare Holdings; and 24.1.3 Operator has all requisite power and authority to own or lease its properties and assets, to conduct its business as currently conducted and to execute, deliver and perform this Agreement and all other agreements entered into or delivered in connection with or as contemplated hereby. 24.1.4 The execution, delivery and performance of this Agreement and all other agreements, if any, entered into in connection with the transactions contemplated hereby have been duly, legally and validly authorized by all necessary action on the part of Operator. 24.1.5 This Agreement has been duly executed and delivered by Operator and constitute the valid and binding obligations of Operator, and are enforceable in accordance with their respective terms, subject to equitable legal principles and the laws governing creditors’ rights. Operator has obtained the requisite authority to authorize, execute and deliver this Agreement and to consummate the transactions contemplated hereby and no other proceedings or other actions are necessary on the part of Operator to authorize the execution and delivery of this Agreement and the consummation of the transactions contemplated hereby. 24.1.6 Neither the execution and delivery of this Agreement by Operator nor the performance of its obligations contemplated hereby will: (a) Conflict with, result in a material breach of or constitute a material default under (or with notice or lapse of time or both result in a material breach of or constitute a material default under) (i) any governing document of Operator or to Operator’s knowledge, any agreement among the owners of Operator, or (ii) any statute, regulation, agreement, judgment, decree, court or administrative order or process or any commitment to which Operator is a party or by which it (or any of its properties or assets) is subject or bound; (b) Result in the creation of, or give any party the right to create, any material lien, charge, encumbrance, or security interest upon the property and assets of Operator; or 203193300.19 -47- (c) Terminate, breach or cause a default under any provision or term of any contract, arrangement, agreement, license or commitment to which Operator is a party. 24.1.7 Warranty of Services. In the performance of its services, Operator represents and warrants that it has and will exercise the degree of professional care, skill, efficiency, and judgment of those with special expertise in providing such services, and that it carries and will maintain all applicable licenses, certificates, and registrations needed for the work in current and good standing. 24.1.8 Neither Operator nor any of its officers, directors or senior management has committed or been convicted (where such conviction is a final, non-appealable judgment or the time to appeal such judgment has passed) of any criminal offense, including, but not limited to, bribery or fraud, arising out of or in connection with (a) this Agreement, (b) the award of this Agreement, or (c) any act to be taken pursuant to this Agreement by MTC or its officers, employees or agents, or (d) the business activities and services to be undertaken or provided pursuant to this Agreement. Operator shall promptly terminate its relationship with any office, director or senior management of Operator who is convicted (where such conviction is a final, non-appealable judgment or the time to appeal such judgment has passed) of any criminal offense, including, but not limited to, bribery or fraud, arising out of or in connection with: (i) this Agreement, (ii) the award of this Agreement, (iii) any act to be taken pursuant to this Agreement by MTC or its officers, employees or agents, or (iv) the business activities and services to be undertaken or provided by Operator pursuant to this Agreement. 24.2 All representations and warranties contained in this Agreement shall survive the Term. MISCELLANEOUS 25.1 Operator, MTC and the Participating Cites acknowledge and agree that the nature of the Program requires extensive and ongoing long-term coordination among the Parties and the Participating Cities. Accordingly, no later than 10 business days after the Effective Date, Operator, MTC and, in accordance with the Coordination Agreement, each Participating City, shall designate an employee as its designated representative (the “Designated Representative”) to be the principal contact of such party in its dealings with the other parties in connection with the implementation of the Program. Any party may change its Designated Representative in its sole discretion so long as notice of such change is given to the other parties. 25.2 All notices, demands or requests under this Agreement shall be in writing and shall be sufficiently given if sent by registered or certified mail, return receipt requested, by electronic mail (email), by overnight mail, or by personal delivery, in each case to the address listed below, or to such other location or person as any party may designate in writing from time to time. Any notice, demand or 203193300.19 -48- request under this Agreement intended for the Participating Cities shall be sent to MTC. Any notice, demand or request shall be deemed given on the date of receipt or rejection by the intended recipient. If to MTC: Metropolitan Transportation Commission Joseph P. Bort MetroCenter, Oakland, CA 94607-470 Attention: Executive Director Email: SHeminger@mtc.ca.gov Attention: General Counsel: Email: AWeil@mtc.ca.gov Attention: Designated Representative Email: KMulder@mtc.ca.gov If to Operator: Bay Area Motivate, LLC 5202 Third Avenue Brooklyn, New York 11220 Attention: Jay Walder, President and CEO Email: jaywalder@motivateco.com Attention: Justine Lee, Vice President and General Counsel Email: justinelee@motivateco.com Bay Area Motivate, LLC 2200 Jerrold Avenue, Unit J San Francisco, California 94124 Attention: Emily Stapleton, General Manager and Designated Representative Email: emilystapleton@motivateco.com Notwithstanding the foregoing, any notice required to be given to Operator pursuant to Section 18 for which a cure period is 10 business days or less or any other notice that requires action to be taken within 10 business days or less must be given by email, personal delivery or overnight mail service. 25.3 If Operator receives either a notice of default or a notice of noncompliance from a Sponsor, a lender or a material supplier, it shall notify MTC and supply a copy of the notice of noncompliance within 5 days of receipt. 25.4 Upon request by Operator, MTC shall execute, acknowledge and deliver to Operator (or directly to a designated third party) an estoppel certificate in a form reasonably acceptable to the Parties. MTC shall sign, acknowledge, and return such estoppel certificate within 15 days after request, even if Operator is in default. Any estoppel certificate shall bind MTC to the extent set forth therein. 25.5 This Agreement shall be binding upon and inure to the benefit of the parties and their respective permitted successors and assigns. The Recognized Lender shall be a third party beneficiary of Section 19. 203193300.19 -49- 25.6 No failure on the part of MTC or Operator to exercise, and no delay in exercising, any right hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right preclude any other right, except as provided herein, subject to the conditions and limitations established in this Agreement. The rights and remedies provided herein are cumulative and not exclusive of any remedies provided by law, and nothing contained in this Agreement shall impair any of the rights of any party under applicable law, subject in each case to the terms and conditions of this Agreement. A waiver of any right or remedy by a party at any one time shall not affect the exercise of such right or remedy or any other right or other remedy by such party at any other time. In order for any waiver of any party to be effective, it must be in a writing signed by such party. The failure of MTC to take any action regarding a default by Operator shall not be deemed or construed to constitute a waiver of, or otherwise affect, the right of MTC to take any action permitted by this Agreement at any other time regarding such default. 25.7 The clauses and provisions of this Agreement are intended to be severable. If any clause or provision is declared invalid, in whole or in part, by any court, agency, commission, legislative body, or other authority of competent jurisdiction, such provision shall be deemed a separate, distinct, and independent portion, and such declaration shall not affect the validity of the remaining portions hereof, which other portions shall continue in full force and effect, but only so long as the essential terms underlying this Agreement are not undermined. If, however, the essential terms underlying this Agreement are undermined as a result of any clause or provision being declared invalid, in whole or in part, by any court, agency, commission, legislative body, or other authority of competent jurisdiction, and such declaration is not stayed within 30 days by a court pending resolution of a legal challenge thereto or an appeal thereof, the adversely affected party shall notify the other parties in writing of such declaration of invalidity and the effect of such declaration of invalidity and the parties shall enter into good faith negotiations to modify this Agreement to compensate for such declaration of invalidity. If the parties cannot come to an agreement modifying this Agreement within 120 days (which 120 day period shall be tolled during any stay contemplated above) of such notice, then this Agreement shall terminate with such consequences as would ensue if it terminated pursuant to Section 18, except Operator shall not be liable for any damages. 25.8 If any applicable federal, state, or local law or any regulation or order is passed or issued, or any existing applicable federal, state, or local law or regulation or order is changed (or any judicial interpretation thereof is developed or changed) in any way which undermines the essential terms underlying this Agreement, the adversely affected party shall notify the other parties in writing of such change and the effect of such change and the parties shall enter into good faith negotiations to modify this Agreement to compensate for such change, subject to any necessary approvals of MTC and the Participating Cities. 25.9 The headings contained in this Agreement are to facilitate reference only, do not form a part of this Agreement, and shall not in any way affect the construction or interpretation hereof. Terms such as “hereby,” “herein,” “hereof,” “hereinafter,” “hereunder” and “hereto” refer to this Agreement as a whole and not to the particular sentence or paragraph where they appear, unless the context otherwise requires. The term “may” is permissive; and, the terms “shall,” “must,” and “will” are mandatory, not merely directive. The term “day” means a calendar day, unless otherwise stated herein to be a “business day.” The term year means any period of 365 days, unless otherwise stated herein to be a “calendar year.” All references to any gender shall be deemed to include both the male and the female, and any reference by number shall be deemed to include both the singular and the plural, as the context may require. Terms used in the plural include the singular, and vice versa, unless the context otherwise requires. References 203193300.19 -50- in this Agreement to Sections, Appendices and Exhibits are to Sections, Appendices and Exhibits of this Agreement. 25.10 Operator shall conduct the work to be performed pursuant to this Agreement as an independent contractor and not as an agent of MTC or any Participating City. 25.11 This Agreement shall be governed in all respects, including validity, interpretation and effect, and construed in accordance with, the laws of the State of California, irrespective of conflict of laws principles, as applicable to contracts entered into and to be performed entirely within the State of California. 25.12 Subject to the requirement that disputes be addressed in accordance with the Dispute Resolution Process, each hereby irrevocably submits to the jurisdiction of any State or federal court sitting in San Francisco County, California, over any suit, action or proceeding arising out of or relating to this Agreement. Each party hereby irrevocably waives, to the fullest extent permitted by law, any objection it may now or hereafter have to such venue as being an inconvenient forum. 25.13 Should any party employ an attorney for the purpose of enforcing or construing this Agreement, or any judgment based on this Agreement, in any legal proceeding whatsoever, including insolvency, bankruptcy, arbitration, declaratory relief or other litigation, the prevailing party shall be entitled to receive from the other party or parties thereto reimbursement for all reasonable attorneys’ fees and all costs, including but not limited to service of process, filing fees, court and court reporter costs, investigative costs, expert witness fees and the cost of any bonds, whether taxable or not, and such reimbursement shall be included in any judgment, decree or final order issued in that proceeding. The “prevailing party” means the party in whose favor a judgment, decree, or final order is rendered. 25.14 No provision of this Agreement nor any Appendix or Exhibit shall be amended or otherwise modified, in whole or in part, except by a written instrument, duly executed by the Parties and approved as required by applicable law. 25.15 This Agreement may be executed in one or more counterparts which, when taken together, shall constitute one and the same. 25.16 Time is of the essence with respect to the obligations of the parties under this Agreement and with respect to the deadlines for submitting notices, including, without limitation, a KPI Failure Notice, a KPI Contest Notice or any notice under Section 15.3 or 18.1. 25.17 If Operator publishes a work dealing with any aspect of performance under this Agreement, or of the results and accomplishments attained in such performance, then MTC shall have a royalty-free, non-exclusive and irrevocable license to reproduce, publish, or otherwise use and to authorize others to use the publication, or, in the event that only a portion of the publication deals with an aspect of performance under this Agreement, such portion of the publication. TN WITNESS WHEREOF,MTC and Operator have executed this Agreement as of the Effective Date. METROPOLITAN TRANSPORTATION COMMISSION By: Name:eriiinger Title:Executive Director Signature Page to Program Agreement BAY AREA MOTIVATE,LLC By:______ Name:Jay a1dr Title:Presid nt ahd Chief Executive Officer V Signature Page to Program Agreement 5-2 203193300.19 A-1 Appendix A Key Performance Indicators and Liquidated Damages This Appendix A sets forth the Key Performance Indicators and the liquidated damages assessed against Operator for failing to comply with the Key Performance Indicators. Key Performance Indicators are subject to extension for Events of Force Majeure. Liquidated damages are subject to the annual limitation of 4% of Ridership Revenues. KPI # Title Definition Measurement Tool(s)1 Liquidated Damages 1 Station Cleaning and Inspection Station Cleaning for each Station must occur 2 times per month-- one time between the first and fifteenth days of the month, and one time between the sixteenth and last days of the month. Litter removal needs to occur for on street Stations at least once per week. Additional litter removal to occur on an as-needed basis. Operator records/ databases $75 for each Station that is not cleaned according to schedule. 2 Graffiti Removal (a) Except as required by clause (b) below, Operator shall remove conspicuous graffiti within 72 hours after Notification. (b) Operator shall remove racist and hate graffiti within 4 hours after Notification. Operator records/databases (a) $50 for each 24-hour period (or part thereof) beyond 72 hours. (b) $50 for each 4-hour period (or part thereof) beyond 4 hours. 3 Litter Removal Operator shall remove conspicuous accumulations of litter from Stations within 24 hours after Notification. Operator records/databases $50 for each 4-hour period (or part thereof) beyond 24 hours. 4 Bicycle Maintenance Every Bicycle in the Bicycle Fleet shall receive a Bicycle Maintenance check at least once every two calendar months. Operator records/ databases $25 for each Bicycle that is not subject to a Bicycle Maintenance in any 2-calendar month period. 1 Sources of information used to assess compliance with these service levels may include, but are not limited to, those listed in the “Measurement Tool(s)” column. 203193300.19 A-2 KPI # Title Definition Measurement Tool(s)1 Liquidated Damages 5 Station Deactivation and De-Installation As directed by MTC or a Participating City, Operator must perform: (i) Station Deactivation(s); (ii) Station De-Installation(s); (iii) Station Re-Installation(s); (iv) Station Adjustment(s). (i) Operator will Deactivate a Station within 24 hours after a request from a Participating City, except in instances where the continued presence/activity of the station has been determined to pose a threat to public safety. (ii) Operator will complete a De-Installation of a Station within 72 hours after a request from a Participating City, except in instances where the continued presence/activity of the station has been determined to pose a threat to public safety. (iii, iv) Deactivated Stations must be reactivated within 24 hours of direction from a Participating City. De- Installed or Adjusted Stations must be reinstalled or Readjusted to their original configurations within 72 hours of direction from a Participating City. Notwithstanding the foregoing, the KPIs for De- Installation and reinstallations are limited to 20 in any 72-hour period. The time permitted for larger scale De- Installation and reinstallation will be subject to agreement between Operator and MTC. Electronic communications (i) $75 for each hour of delay (or part thereof) beyond 24 hours for Deactivation. (ii) $75 for each hour of delay (or part thereof) beyond 72 hours for De-Installation. (iii, iv) $50 for each hour of delay (or part thereof) beyond 24 hours for reactivation; $50 for each hour of delay (or part thereof) beyond 72 hours for reinstallation or Readjustment. 203193300.19 A-3 KPI # Title Definition Measurement Tool(s)1 Liquidated Damages 6 Program Functionality The Program must be operational 100% of the time every month (i.e., every hour of every day, 24 hours per day, 7 days per week, measured monthly), so that, at a minimum, all Program users can dock and undock Bicycles at all times, excluding (i) scheduled downtime, and (ii) any period when the Computer Hardware for the Program and/or Software is, and remains, damaged through Hacking. Program Functionality does not apply to hardware malfunctions at individual Stations or to individual Stations that are not Operable Stations. Software System If in any month the Program is operational less than 100% of the time, then $300 for every hour (or part thereof) that the Program is not operational. 7 Station Operability Stations, in the aggregate, must be Operable Stations 99% of the time every month (i.e., every hour of every day, 24 hours per day, 7 days per week, measured monthly), excluding (i) during scheduled downtime, and (ii) any period when a Station is not an Operable Station because the Kiosk or other Equipment located at the Station has been damaged by third-parties. Calculated by taking the sum of the number of hours that each Station was an Operable Station during a month, dividing that sum by the product of the total number of hours in the month and the number of Stations that month. Station Operability does not apply during any period in which the entire Program system is down. Operator records/ databases If in any month the Stations are not Operable Stations 99% of the time, then $100 for every hour that Stations are not Operable Stations below the 99% threshold. 203193300.19 A-4 KPI # Title Definition Measurement Tool(s)1 Liquidated Damages 8 Website Operations The Program website must be operational 100% of the time every year (i.e., every hour of every day, 24 hours per day, 7 days per week, measured annually) excluding (i) scheduled downtime, and (ii) any period when the Computer Hardware for the Program and/or Software is, and remains, damaged through Hacking. Operator records/ databases If in any year the website is not operational 100% of the time, then $50 for every hour each year that the website is not operational. 9 Telephone Answering Time Not less than 80% of telephone calls to Operator’s call center each month must be answered by a person within 90 seconds or less. Operator records/ databases $100 for every percentage point below 80% that telephone calls are not answered in 90 seconds or less in any month. 10 Email Response Time Not less than 95% of emails to Operator’s public information email address must be answered within 1 business day. Operator records/ databases $100 for every percentage point below 95% that emails are not answered within 1 business day or less in any month. 11 Bicycle Availability This Bicycle Availability requirement is met if the monthly average Bicycle Fleet Level, recorded once each Day of the month between the hours of 11:00 AM and 3:00 PM, is not less than 90% of the Program Fleet. Damages are calculated as the sum of Bicycles under the threshold for each Day that the recorded Bicycle Fleet Level is less than the required Bicycle Fleet Level. Software System $15 for each Bicycle that is under the 90% threshold each month. 203193300.19 A-5 KPI # Title Definition Measurement Tool(s)1 Liquidated Damages 12 Rebalancing No station Cluster shall be completely empty of available bikes for use or completely lacking of empty, operable docks for more than 10 consecutive minutes during Peak Hours (i.e., 6:00 am to 10:00 pm). The Rebalancing KPI set forth above is an interim KPI. During the Assessment Period (as defined in Section 2.6.2(b) of the Agreement), the Rebalancing KPI will be assessed and reformulated, and a new Rebalancing KPI will be fully implemented immediately following the Assessment Period. Software System/ Operator records/ databases $1.00 for each minute that a Cluster Outage occurs beyond 10 consecutive minutes during Peak Hours. Liquidated Damages do not apply to the Stations installed as part of a Phase for the first 6 months after the completion of such Phase. 203193300.19 B-1 Appendix B Cost of Equipment PENINSULA PILOT CITIES: • Cost to upgrade AD Equipment: $12.50 per Dock per month, subject to PPI Adjustment. • Cost to purchase new Equipment: As set forth in the New Equipment Price Schedule below. The prices set forth in such schedule are subject to PPI Adjustment. • Cost to install new Equipment (including site planning and drawings): $4,000 per Station, subject to CPI Adjustment • Cost to operate and maintain the Equipment: $100 per Dock per month, subject to CPI Adjustment, and subject to the following reductions: (i) Cost to operate and maintain will be reduced to $75 per Dock per month, subject to CPI Adjustment, during any 12-month period in which there is an average of 1 Trip per Bicycle per day for the entire Bicycle Fleet in such Peninsula Pilot City (subject to Bicycle Availability) (ii) Cost to operate and maintain will be reduced to $50 per Dock per month, subject to CPI Adjustment, during any 12-month period in which there is an average of 1.5 Trips per Bicycle per day for the entire Bicycle Fleet in such Peninsula Pilot City (subject to Bicycle Availability) (iii) Cost is reduced to $0 per dock, adjusted by CPI, if an average of 3 rides per bike per day citywide occurs for a 12 month period OTHER ELIGIBLE CITIES: • Cost to purchase new Equipment: As set forth in the New Equipment Price Schedule below. The prices set forth in such schedule are subject to PPI Adjustment. • Cost to install new Equipment (including site planning and drawings): $4,000 per Station, subject to CPI Adjustment • Cost to operate and maintain the Equipment: $130 per Dock per month, subject to CPI Adjustment, and subject to the following reductions: (i) Cost to operate and maintain will be reduced to $97.50 per Dock per month, subject to CPI Adjustment, during any 12-month period in which there is an average of 1 Trip per Bicycle per day for the entire Bicycle Fleet in such Eligible City (subject to Bicycle Availability) 203193300.19 B-2 (ii) Cost to operate and maintain will be reduced to $65 per Dock per month, subject to CPI Adjustment, during any 12-month period in which there is an average of 1.5 Trips per Bicycle per day for the entire Bicycle Fleet in such Eligible City (subject to Bicycle Availability) (iii) Cost to operate and maintain will be reduced to $0 per Dock per month, subject to CPI Adjustment, during any 12-month period in which there is an average of 3.0 Trips per Bicycle per day for the entire Bicycle Fleet in such Eligible City (subject to Bicycle Availability) • If Operator contracts with a private property owner to locate a publicly-accessible Station on private property in the Eligible City, then the cost to operate and maintain the Equipment will be a matter for agreement between Operator and the private property owner. New Equipment Price Schedule Station Size (No. of Bicycles)No. of Docks Cost (Excluding Sales Tax) 8 15 47,166.98$ 10 19 55,503.56$ 12 23 63,840.15$ 14 27 72,176.74$ 16 31 80,513.33$ 18 35 88,849.92$ 20 39 97,186.51$ 203193300.19 C-1 Appendix C Reporting Requirements MTC shall have real-time, read-only access to data as specified in the Functional Specifications. Operator shall deliver a monthly report, by the 25th day of each month, to MTC, with all of the data described below, and in a form that is acceptable to, and approved by, MTC for the Program. Except for financial information, the data shall reflect all relevant facts as they existed with respect to the immediately preceding calendar month (e.g., the June report would reflect the non-financial data for May), and the reports shall provide cumulative calendar year-to-date totals for each category (as may be applicable). For all financial information, the data shall reflect all relevant facts as they existed with respect to the calendar month that immediately precedes the immediately preceding calendar month (e.g., the June report would reflect the financial data for April), and the reports shall provide cumulative calendar year-to-date totals for each category (as may be applicable). No more frequently than once every six months, Operator may request a meeting with MTC to assess the effectiveness of these Reporting Requirements; upon mutual agreement, the Reporting Requirements below may be adjusted. 1) Membership: • YTD membership counts at the end of the reporting month, by membership type and Participating City; • Number of new members by type and Participating City, who signed up during the reporting month, by day and month; and • Number of cancellations and expirations of registered members, by type and Participating City, during the reporting month. 2) Ridership: • “Trip” shall mean the use of a Bicycle from one Station to another Station or back to the initial Station; • Trips per Day, per Participating City and member type, for the entire Program; and • Total Trips per month, and YTD per Station, Participating City, and member type, for the entire Program. 3) Environmental Impact: • Total and average calories burned per Day/month, by Participating City for the entire Program, based on calculation using total and average Trip durations; and • Carbon offset per month, by Participating City and for the entire Program, based on calculation using total hours of usage. 4) Rebalancing Operations: 203193300.19 C-2 • Number of Bicycles rebalanced per Day; • Bicycles on the street per Day per Participating City; • List of full and empty instances (Station, start time, end time, and date) in excess of 10 consecutive minutes between 6:00 AM and 10:00 PM; • Count of full and empty instances per Station and Participating City by Day and month in excess of 10 consecutive minutes between 6:00 AM and 10:00 PM; • Breakdown of full and empty instances by duration in excess of 10 consecutive minutes between 6:00 AM and 10:00 PM; • List of full and empty instances (Station, start time, end time, and date) between 6:00 AM and 10:00 PM at “priority” Stations (to the extent “priority” Stations have been established); • Count of full and empty instances per Station and Participating City by Day and month between 6:00 AM and 10:00 PM at “priority” Stations (to the extent “priority” Stations have been established); • Breakdown of full and empty instances by duration between 6:00 AM and 10:00 PM at “priority” stations (to the extent “priority” stations have been established); and • Percentage of time Stations are normal, full, or empty. 5) Station Maintenance Operations: • List of Stations cleaned and dates of each cleaning; • Number of active Stations; • List of all Station malfunctions (Station, start and end date and time, and event); and • Percentage of time Stations were available to provide rentals for monthly and annual members by Station and for the entire Program. 6) Bicycle Maintenance Operations: • Count of Bicycles checked per month; • Count of Bicycles repaired per month; • List of Bicycles by unique ID number not checked per month. 7) Incident Reporting: • List of all incidents (crash, vandalism, theft, and police action) with dates and summary of outcomes. 203193300.19 C-3 8) Customer Service Reporting: • Number of calls and emails, with total and broken down by classification; • Average time to answer call; • Average time of call; • Number of refunds and amount given per month; and • Upon call center software availability, number of calls of different types of issues, and average length of call. 9) Customer Outreach: • Web site analytics. 10) Financial Summary: • Fees assessed to bike share users due to lost or damaged bicycles; • Revenue generated from subscriptions, by subscription type; • Revenue generated from usage fees, by subscription type; and • Revenue generated from other sources, including Advertising and Sponsorships. 11) Compliance with KPIs: • Recorded Bicycle Fleet Level for each day as recorded between the hours of 11:00 AM and 3:00 PM. 203193300.19 D-1 Appendix D Functional Specifications Functional Specification Software Billing Product requirements Annual and casual billing Usage charges billing Discounts Refunds Administrative and stolen bike charges Automatic renewal of accounts Opt-in/Opt-out ability for automatic renewal Allow Annual Members to use Clipper Card to access Bicycles in lieu of key fob2 Automatic emails to customers Ability to edit text in emails to customers Automatic emails in the following instances: Upon successful renewal Upon signup Upon failed monthly payment Upon successful monthly payment Upon credit card change Upon credit card expiration Upon account renewal needed (manual billing) Upon upcoming automatic account renewal (automatic billing) Upon successfully account renewal Upon failed account renewal Upon successful bike return (user configurable) Upon missing bike (user and system configurable) Upon incurrence of overage fees Upon system shut down PCI Compliance PCI Compliance of Bike Share Operator and System Remote functionality Ability to shut down system (prevent bikes from being rented) Ability to lock down bikes (with visual indicator) Ability to shut down stations Ability to reboot remotely (when connected) Operational Dashboards (The following dashboards should be available at a minimum) 2To be achieved by the later of 20 months after the Effective Date and completion of Phase IV. 203193300.19 D-2 Subscriptions Number of casual users by subscription type Number of members by subscription type Customer rental activity Number of open rentals and duration of rental Number of trips and rentals completed by casual and registered members Real-Time Dashboards Station status (total, working, out of order, locked, disconnected) Station occupancy (current and recent history of station bike/dock occupancy) Docking point status (total, locked, error, empty, bike docked) Bike status (docked, in rental, defective, other) Private data feed MTC to have access to analytical/reporting databases provided by bikeshare system. Public data feed All public data feeds should cover the following at a minimum: Station Name Station ID Station Status (locked/unlocked) Latitude Longitude # of total docking points # of available docking points # of inoperable docks (w/ and w/o bikes) # of available bikes Last communication time with server Excludes test/warehouse station Product support and redundancy Features for product support include System redundancy Real-time database backups Development and QA will be done separate from the production environment Software escrow A third-party software escrow with the latest major software release must be maintained at all times Hardware Docking mechanism Subscriber can unlock a bike (e.g., via a valid key or card) Locking mechanism that opens within configurable number of seconds Locking mechanism that closes immediately with moderate docking force Defaults to unlocked/open when bike is not present Functional user lock-down capability ("wrench button") with permanent visual 203193300.19 D-3 indicator Visual and audible indication of successful, failed, or in-progress transaction Bike Step through design Hold someone up to 240 pounds Can lock and unlock securely Bell Front and rear flashing lights when bike is moving; stay illuminated for 60 seconds after bike stops Reflective sidewalls on tires Within range, an infinitely adjustable seat height with ergonomic lever/tension adjustment and high-contrast height markings Carrier not susceptible to trash accumulation Wheels greater than or equal to 26" in diameter Fenders for front and rear wheels Front and rear hand brakes Multiple speed drivetrain Scratch- and graffiti-resistant frame finish Reflectors on pedals, spokes, and front and rear of bike Rubber tread on pedals Room for safety messaging on handlebar and front cockpit Tamper-resistant hardware (including hidden cables and custom wrench fittings) Chain guard Kiosk station Short-term user can unlock one or multiple bikes (e.g., via valid ride code or key). Casual users can use single credit card to rent up to 4 bikes Hibernation stage Vandal resistant, replaceable screens Nearby station functionality Multiple languages 203193300.19 Attachment A Agreement to Continue Pilot Bike Share Program 203215669.16 ATTACHMENT A AGREEMENT TO CONTINUE PILOT BIKE SHARE PROGRAM by and between BAY AREA MOTIVATE, LLC and METROPOLITAN TRANSPORTATION COMMISSION 203215669.16 1 Table of Contents RECITALS ..................................................................................................................................... 3 ARTICLE I SCOPE OF SERVICES; TERM ........................................................................... 3 ARTICLE II REVENUES; USER FEES; AND OPERATING EXPENSES ......................... 4 ARTICLE III EMPLOYEE AND EMPLOYMENT MATTERS ............................................ 5 ARTICLE IV OWNERSHIP AND PROPRIETARY RIGHTS .............................................. 7 ARTICLE V TERMINATION .................................................................................................... 7 ARTICLE VI DISPUTE RESOLUTION ................................................................................... 8 ARTICLE VII INSURANCE....................................................................................................... 8 ARTICLE VIII INDEMNIFICATION AND LIMITATION OF LIABILITY .................... 12 ARTICLE IX THIRD PARTY BENEFICIARIES ................................................................. 13 ARTICLE X MISCELLANEOUS ............................................................................................ 13 ARTICLE XI DEFINITIONS ................................................................................................... 17 Attachment A-1, Description of Services ..................................................................................... 21 Attachment A-2, Subscriber Related Fees .................................................................................... 28 Attachment A-3, New Subscriber-Related Fees ........................................................................... 30 203215669.16 2 ATTACHMENT A AGREEMENT TO CONTINUE PILOT BIKE SHARE PROGRAM THIS AGREEMENT TO CONTINUE THE PILOT BIKE SHARE PROGRAM (this “Continuation Agreement”), has an effective date (the “Effective Date”) that is the same as the effective date of the BAY AREA BIKE SHARE PROGRAM AGREEMENT, to which this Continuation Agreement is attached (the “Program Agreement”), by and between the METROPOLITAN TRANSPORTATION COMMISSION, a California public agency established pursuant California Government Code § 66500 et seq., having an office at 101 Eighth Street, Oakland, California (“MTC”), and BAY AREA MOTIVATE, LLC, a Delaware limited liability company, having any office at 5202 Third Avenue, Brooklyn, New York 11220, as Operator of the Bay Area Bike Share Program (“Operator”). RECITALS WHEREAS, Alta Bicycle Share, Inc., an Oregon corporation (“Alta”), and Bay Area Air Quality Management District, a California special district (the “Air District”), entered into a Bike Share Program Agreement having an effective date of February 6, 2013 (the “Pilot Program Agreement”), pursuant to which Operator operated a pilot bike sharing program (the “Pilot Program”) in the cities of San Jose, Palo Alto, Mountain View, Redwood City and San Francisco (each, a “Pilot City” and collectively, the “Pilot Cities”); WHEREAS, on the date hereof, (a) the Air District and Motivate International, Inc., formerly known as Alta (“Motivate”), terminated the Pilot Program Agreement, (b) the Air District and MTC agreed to the conveyance of all of the Air District’s right, title and interest in and to the tangible and intangible property acquired or developed in connection with the Pilot Program from the Air District to MTC, and (c) MTC and Operator agreed to the conveyance of all of MTC’s right, title and interest in and to the tangible property acquired or developed in connection with the Pilot Program (the “Pilot Program Property”) from MTC to Operator ; WHEREAS, the Parties have agreed that Operator will continue to operate the Pilot Program in the Pilot Cities using the Pilot Program Property; and WHEREAS, capitalized terms not otherwise defined when they first appear in this Continuation Agreement are defined in Article XI. NOW, THEREFORE, in consideration of the foregoing clauses, which clauses are hereby made a part of this Continuation Agreement, and the mutual covenants and agreements herein contained, and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the Parties do hereby covenant and agree as follows: ARTICLE I PURCHASE OF PILOT PROGRAM PROPERTY; SERVICES; TERM 1.1 Purchase of Pilot Program Property. On the Effective Date, Operator shall purchase the Pilot Program Property for the purchase price agreed to among Operator, MTC and 203215669.16 3 the Air District, and Operator shall remit payment of the purchase price to MTC not later than the 15th day after the Effective Date. 1.2 Services. Operator shall, during the Term (as defined in Section 1.3), operate and maintain in the Pilot Cities a bike share system that was originally established under the Pilot Program Agreement (the “System”). Operator shall (a) utilize the Sites being used as of the Effective Date from the Pilot Program as well as the Bicycles, Docks, Technical Platforms, Map Frames, Terminals and other Equipment existing as of the Effective Date from the Pilot Program, and Operator shall not be obligated to purchase any Equipment, new or otherwise, that was not Pilot Program Property; (b) subject to Events of Force Majeure, provide the specific services set forth in this Continuation Agreement; (c) provide all technical expertise and qualified personnel to operate the System safely and competently; and (d) correct defective or non-conforming services. All services shall be performed in compliance with this Continuation Agreement and shall be carried out in strict compliance with all applicable federal, state and local laws and regulations. 1.3 Term. This Continuation Agreement shall commence on the Effective Date and shall end (a) for Mountain View, Palo Alto and Redwood City, on June 30, 2016, and (b) for San Francisco and San Jose, upon installation of 75% of the Phase I Stations located in San Francisco and San Jose. Notwithstanding the foregoing, if MTC terminates the Program Agreement pursuant to the second to last sentence of Section 3.4.1 of the Program Agreement, then this Continuation Agreement shall terminate at the same time the Program Agreement terminates, and Sections 5.1D, 5.5 and 5.6 shall apply. The bike share program to be implemented under the Program Agreement is referred to as the “BABS Program.” ARTICLE II REVENUES; USER FEES; AND OPERATING EXPENSES 2.1 Revenues. Operator shall be entitled to collect and retain all System Operating Revenues. 2.2 User Fees. From the Effective Date to June 30, 2016, user fees shall be consistent with the fee schedule set forth in Attachment A-2. After June 30, 2016, Operator shall have the right to institute the fee schedule set forth in Attachment A-3. 2.3 Operating Expenses. 2.3.1 San Francisco and San Jose. Subject to Section 2.3.3, Operator shall be responsible for paying the expenses of operating and maintaining the System in San Francisco and San Jose. 2.3.2 Mountain View, Palo Alto and Redwood City. Subject to Section 2.3.3, from the Effective Date through December 31, 2015, Operator shall be responsible for paying the expenses of operating and maintaining the System in Mountain View, Palo Alto and Redwood City. From January 1, 2016 to the end of the Term, MTC shall pay to Operator $100 per Dock per month for Mountain View, Palo Alto and Redwood City to cover Operating Expenses in those cities. 203215669.16 4 2.3.3 MTC Payment. Subject to the last sentence of this paragraph, MTC shall cover 50% of Operator’s (and Motivate’s) Operating Losses for the period commencing August 29, 2015 and ending on the earlier of the Effective Date and December 31, 2015 (the “Covered Period”). Within 30 days after the end of the Covered Period, Operator shall send MTC a statement setting forth Operator’s (or Motivate’s) Operating Losses, if any, for the Covered Period accompanied by reasonable back-up. Notwithstanding the existence of Operator’s (or Motivate’s) Operating Losses for any particular month, MTC’s obligation under this Section 2.3.3. shall apply only to Operator’s (and Motivate’s) cumulative Operating Losses over the entire Covered Period. MTC shall pay Operator for any such cumulative Operating Losses within 30 days following Operator’s submission of its statement for the Covered Period. MTC’s payment obligation under this paragraph is capped at $100,000. 2.4 Taxes, Dues, and Fees. Operator shall pay all applicable federal, state, and local taxes assessed against, arising out of, and collected from the service operation, including sales, use, license, and/or privilege taxes. Operator shall at all times maintain records evidencing revenue and the taxes collected as are required to substantiate the correctness of the tax returns filed. 2.5 No Tax Exemption. No provision of this Continuation Agreement shall be construed to provide Operator or any of its subcontractors with an exemption, exclusion, deferral, offset or other relief from any assessment, tax, levy, or penalty which is now or which may be hereafter authorized by law. 2.6 Covenant Against Contingent Fees. Operator warrants that it has not employed or retained any company or person, other than a bona fide employee working for Operator, to solicit or secure this Continuation Agreement and that it has not paid or agreed to pay any company or person other than a bona fide employee, any fee, commission, percentage, brokerage fee, gift, or any other consideration, contingent upon or resulting from the award, or formation of this Continuation Agreement. For breach or violation of this warranty, MTC shall have the right to annul this Continuation Agreement without liability, or, at its discretion, to deduct from the agreement price or consideration, or otherwise recover, the full amount of such fee, commission, percentage, brokerage fee, gift, or contingent fee. 2.7 Liquidated Damages. Subject to Events of Force Majeure, the failure of Operator to achieve the service levels described in Section 3 of Attachment A-1 will result in liquidated damages but only if such failure relates to a service level described in such Section 3 for which there is a corresponding “Key Performance Indicator” in Appendix A of the Program Agreement. Operator will have no liability for a failure to achieve a service level described in such Section 3 for which there is no corresponding “Key Performance Indicator” in Appendix A of the Program Agreement. Liquidated damages will be assessed at half of the rate set forth in Appendix A of the Program Agreement. MTC shall notify Operator on a monthly basis of any such failures and the corresponding liquidated damages, but payment of such liquidated damages shall not be due until the completion of Phase I. 203215669.16 5 ARTICLE III EMPLOYEE AND EMPLOYMENT MATTERS 3.1 Project Manager. Each Party shall appoint a project manager to act, except as otherwise specified in this Continuation Agreement, as the primary contact person for purposes of this Continuation Agreement. The provision by Operator of services to operate and maintain the System is subject at all times to inspection and review by MTC Project Manager. 3.2 Fairness Policy. No employee of MTC shall be admitted to any share or part of this Continuation Agreement or to any benefit that may arise therefrom that is not available to the general public. 3.3 Employment Discrimination by Operator Prohibited. During the performance of this Continuation Agreement, Operator agrees as follows: A. Operator shall not discriminate against any employee or applicant for employment because of race, religion, color, sex, national origin, age, disability or any other basis prohibited by state law related to discrimination in employment except where there is a bona fide occupational qualification reasonably necessary to the normal operation of Operator. Operator agrees to post in conspicuous places, available to employees and applicants for employment, notices setting forth the provisions of this nondiscrimination clause. B. Operator, in all solicitations or advertisements for employees placed by or on behalf of Operator, will state that Operator is an Equal Opportunity Employer. C. Notices, advertisements, and solicitations placed in accordance with federal law, rule, or regulation shall be deemed sufficient for the purpose of meeting the requirements of this Section 3.3. D. Operator will comply with the provisions of the Americans with Disabilities Act of 1990 which prohibits discrimination against individuals with disabilities in employment and mandates their full participation in both publicly and privately provided services and activities. E. Operator shall not discriminate against any customer, prospective customer, employee or prospective employee because of race, color, sex, age, religion, or country of origin. 3.4 General Compliance with Laws and Wage Rates. Operator will comply with all federal, state, and local laws and ordinances applicable to the provision of services to operate and maintain the System. This includes compliance with prevailing wage rates and their payment in accordance with California Labor Code section 1775, to the extent applicable. 3.5 Supervision by Operator. Operator shall at all times require strict discipline and good order among Operator’s employees and all subcontractors providing any of the services required hereunder. Operator shall not permit, and shall require all subcontractors not to permit, 203215669.16 6 any employee or other person to provide any service required hereunder unless such employee or other person has demonstrated proficiency in the type of work which such employee or other person is assigned to perform. 3.6 Non-Discrimination. During the performance of this Continuation Agreement, Operator and its subcontractors shall not unlawfully discriminate, harass, or allow harassment against any employee or applicant for employment because of sex, race, color, ancestry, religious creed, national origin, physical disability (including HIV and AIDS), mental disability, medical condition (e.g., cancer), age (over 40), marital status, and denial of family care leave. Operator and subcontractors shall insure that the evaluation and treatment of their employees and applicants for employment are free from such discrimination and harassment. Operator and subcontractors shall comply with the provisions of the Fair Employment and Housing Act (Gov. Code §12990 (a-f) et seq.) and the applicable regulations promulgated thereunder (California Code of Regulations, Title 2, Section 7285 et seq.). The applicable regulations of the Fair Employment and Housing Commission implementing Government Code Section 12990 (a-f), set forth in Chapter 5 of Division 4 of Title 2 of the California Code of Regulations, are incorporated into this Continuation Agreement by reference and made a part hereof as if set forth in full. Operator and its subcontractors shall give written notice of their obligations under this clause to labor organizations with which they have a collective bargaining or other Agreement. 3.7 Subcontractors Restrictions. Operator shall only enter into subcontracts with subcontractors that have clearly demonstrated proficiency in the tasks which are the subject of such subcontracts. Operator is prohibited from hiring or subcontracting with any individuals that participated in the selection of Operator or the development of this Continuation Agreement for a period of 24 months from the date of execution of this Continuation Agreement. ARTICLE IV OWNERSHIP AND PROPRIETARY RIGHTS 4.1 Rights, Authorizations, Licenses, Permits, and Other Permissions. Except as explicitly set forth in Attachment A-1, Operator shall, at its sole cost and expense, obtain all rights, authorizations, licenses, permits, and other permissions, from all federal, state, and local governments, and other entities or persons, necessary for Operator to provide the services required under this Continuation Agreement. MTC’s execution of this Continuation Agreement shall neither constitute nor be deemed to be governmental approval of, or consent to, any rights, authorizations, licenses, permits, and permissions required or needed to be obtained by Operator. 4.2 Use of Seals, Logos, Servicemarks, Trademarks, and Copyrighted Material. Operator shall not use, display, or reproduce the seal, logo, servicemark, trademark, or copyrighted material of the Air District, MTC or any Pilot City without the prior express written authorization of the Air District, MTC or any Pilot City, as applicable. 4.3 Third Party Intellectual Property. Operator covenants to save, defend, hold harmless, and indemnify MTC and the Pilot Cities, and all of their officers, officials, departments, agencies, agents, and employees from and against any and all claims, losses, damages, injuries, fines, penalties, costs (including court costs and attorney's fees), charges, liability, or exposure, however caused, for or on account of any trademark, copyright, patented or 203215669.16 7 unpatented invention, process, or article manufactured, supplied, or used in the performance of this Continuation Agreement, including its use by MTC or any Pilot City. ARTICLE V TERMINATION 5.1 Termination. A. Right of MTC to Terminate. MTC shall have the right to terminate this Continuation Agreement if Operator fails to provide the services required hereunder satisfactorily or if Operator breaches any term, condition, or covenants of any of this Continuation Agreement. B. Failure or Breach. If Operator fails to provide the services required hereunder satisfactorily or if Operator breaches any term, condition, or covenants of any of this Continuation Agreement, then MTC will give Operator written notice of such failure or breach and 30 days to cure such failure or breach. If Operator fails to cure such failure or breach by the expiration of such 30-day period, then MTC shall have the right to give Operator a written notice of termination, including the date when the termination shall be effective (the “Termination Effective Date”). C. Operator’s Contest. If Operator in good faith contests any such failure or breach, then such termination shall be suspended pending the outcome of such contest. D. Termination of Program Agreement. If the Program Agreement terminates for any reason prior to completion of Phase I under the Program Agreement, then this Continuation Agreement shall terminate concurrently, and Sections 5.5 and 5.6 shall apply. 5.2 Stop Work. Unless otherwise directed in writing by MTC, Operator shall stop providing services as of the Termination Effective Date, terminate all vendors and subcontractors effective as of the Termination Effective Date, and settle all outstanding liabilities and claims. 5.3 Compensation. Operator will be entitled to receive compensation as provided in Article II to the Termination Effective Date. 5.4 Sole Remedies. Notwithstanding anything to the contrary herein, other than liquidated damages under Section 2.7, the sole remedy of MTC and the Pilot Cities against Operator for breach of this Continuation Agreement, excluding a breach of Article VIII, or for failure to provide the services satisfactorily, is to terminate this Continuation Agreement in accordance with Article VII. Except for liquidated damages under Section 2.7, in no event shall Operator be liable for damages of any kind for breach of this Continuation Agreement, other than a breach Article VIII, or for failure to provide the services satisfactorily. 5.5 Transition. Upon termination of this Continuation Agreement pursuant to Section 5.1D, Operator shall comply with the following close-out procedures: 203215669.16 8 5.5.1 Turning over to MTC or its designees copies of all books, records, documents and materials specifically relating to this Continuation Agreement and reasonably requested by MTC; 5.5.2 Submitting to MTC, within 120 days, a final statement and report relating to this Continuation Agreement that has been reviewed by a certified public accountant or a licensed public accountant; 5.5.3 Providing reasonable assistance to MTC during the transition; and 5.5.4 Continuing to operate the System in accordance with the terms of this Continuation Agreement and to effect an efficient and orderly transition of responsibility with respect to the operation of the System until the earlier of (i) 180 days after such termination and (ii) the selection of a replacement operator for the System and such replacement operator commencing operation of the System (such earlier date being the “Transition Termination Date”); provided, however, that MTC shall cover 100% of Operator’s Operating Losses for the period commencing upon termination of this Continuation Agreement and ending on the Transition Termination Date (such period being the “Transition Period”), subject to an aggregate cap for the Transition Period equal to the product of (X) the number of months of the Transition Period, (Y) $20 for each Dock, and (Z) the number of Docks. Within 30 days after the end of each month during the Transition Period, Operator shall send MTC a statement setting forth Operator’s Operating Losses, if any, for the preceding month accompanied by reasonable back-up. MTC shall pay Operator for any such monthly Operating Losses within 30 days following Operator’s submission of its statement for such month, subject to a cap calculated on a monthly basis equal to $20 for each Dock. Within 60 days following the end of the Transition Period, the Parties shall reconcile Operator’s cumulative Operating Losses for the entire Transition Period with Operator’s monthly, non-cumulative Operating Losses for the entire Transition Period, and shall also reconcile the aforementioned aggregate cap applied to the cumulative Operating Losses for the entire Transition Period with the aforementioned monthly cap applied to the monthly Operating Losses for the entire Transition Period. If the payment for Operating Losses received by Operator from MTC on a monthly basis exceeds the payment for Operating Losses to which Operator is entitled from MTC on an aggregate basis, then Operator shall reimburse MTC for the difference between the two calculations within 30 days following such calculation; and if the payment for Operating Losses received by Operator from MTC on a monthly basis is less than the payment for Operating Losses to which Operator is entitled from MTC on an aggregate basis, then MTC shall pay Operator the difference between the two calculations within 30 days following such calculation. 5.6 Disposition of the Equipment. Upon termination of this Continuation Agreement pursuant to Section 5.1D, MTC shall have the option to: 5.6.1 require Operator to remove all Equipment at its sole cost and expense; 5.6.2 subject to satisfaction of the Equipment Assignment Conditions, require Operator to assign to MTC (or a third-party operator designated by MTC) the Equipment, in which event Operator shall reasonably cooperate with MTC (or such designee) to obtain the legal right to use the Backend Software and Computer Hardware either through an assignment of 203215669.16 9 Operator’s license with the vendor thereof to MTC (or such designee) or by MTC (or such designee) entering a license agreement for Backend Software and Computer Hardware with such vendor; or 5.6.3 subject to satisfaction of the Equipment Assignment Conditions, take over operation of the System, and in connection therewith require Operator to assign to MTC the Equipment, in which event Operator shall reasonably cooperate with MTC to obtain the legal right to use the Backend Software and Computer Hardware either through an assignment of Operator’s license with the vendor thereof to MTC or by MTC entering a license agreement for Backend Software and Computer Hardware with such vendor. ARTICLE VI DISPUTE RESOLUTION 6.1 In the event of a dispute between the Parties, such dispute shall be addressed and resolved in accordance with the following (the “Dispute Resolution Process”): 6.1.1 The MTC Project Manager assigned to the System and Operator’s General Manager of the System, or their respective delegates, shall meet, within 10 days after receipt by one Party of notification from the other Party of such dispute, to negotiate in good faith in order to try to resolve such dispute (the date of the first such meeting, or the expiration of such 10-day period if the meeting is not timely held, being the “Initial Meeting Date”). If such persons fail to resolve such dispute within 15 days after the Initial Meeting Date, then the Executive Director of MTC and the President of Bikeshare Holdings shall meet promptly and negotiate in good faith in order to resolve such dispute. If such persons fail to resolve such dispute within 30 business days after the Initial Meeting Date, then such dispute shall be subject to mediation. A meeting may be held in person, by conference call or by video conference. By agreement of the Parties, any of the deadlines set forth in this section may be extended or shortened. The process described in this section shall be confidential and treated as a compromise negotiation for purposes of federal and state rules of evidence. 6.1.2 Unless the Parties otherwise agree, mediation shall be administered by the American Arbitration Association (the “AAA”) in accordance with its Commercial Rules, or similar service. A request for mediation shall be made in writing, delivered to the other Party and filed with the applicable mediation service. Either Party may submit such request. The Parties shall share the mediator’s fee and any filing fees equally. The mediation shall be held in San Francisco. The Parties shall be represented by individuals of their choosing. Agreements reached in mediation shall be binding on the Parties and enforceable in a State or Federal Court of competent jurisdiction sitting in San Francisco County. The mediation process shall be confidential and treated as a compromise negotiation for purposes of federal and state rules of evidence. 6.1.3 The Parties shall comply with any settlement agreement regarding any dispute that is the subject of a settlement agreement. 203215669.16 10 6.1.4 If mediation fails to resolve a dispute, then the exclusive forum for resolving such dispute shall be any State or federal court sitting in San Francisco County, California. 6.1.5 As used in this Continuation Agreement, “final resolution” of a dispute or a dispute being “finally resolved” means that (a) the Parties have entered into a settlement agreement to resolve such dispute, or (b) if either Party has initiated a judicial proceeding to contest such dispute, that a final-non-appealable order of a court of competent jurisdiction has been issued for such dispute. ARTICLE VII INSURANCE 7.1 Minimum Coverages. The insurance requirements specified in this section shall cover Operator’s own liability and the liability arising out of work or services performed under this Continuation Agreement by any subconsultants, subcontractors, suppliers, temporary workers, independent contractors, leased employees, or any other persons, firms or corporations that Operator authorizes to work under this Continuation Agreement (hereinafter referred to as “Agents”). Operator shall, at its own expense, obtain and maintain in effect at all times during the life of this Continuation Agreement the following types of insurance against claims, damages and losses due to injuries to persons or damage to property or other losses that may arise in connection with the performance of work under this Continuation Agreement. 7.2 Operator shall include in every subcontract the requirement that the Agent maintain adequate insurance coverage with appropriate limits and endorsements to cover the risks associated with work to be performed by the Agent. To the extent that an Agent does not procure and maintain such insurance coverage, Operator shall be responsible for any and all costs and expenses that may be incurred in securing such coverage or in fulfilling Operator’s indemnity obligation under Article VIII as to itself or any of its Agents in the absence of such coverage. 7.3 In the event Operator or its Agents procure excess or umbrella coverage to maintain certain requirements outlined below, these policies shall also satisfy all specified endorsements and stipulations, including provisions that Operator’s or its Agent’s insurance, as the case may be, be primary without right of contribution from MTC. 7.3.1 Workers' Compensation Insurance with Statutory limits, and Employer’s Liability Insurance with a limit of not less than $1,000,000 per employee for injury by disease and $1,000,000 for injury for each accident, and any and all other coverage of Operator’s employees as may be required by applicable law. Such policy shall contain a Waiver of Subrogation in favor of MTC. Such Workers’ Compensation & Employer’s Liability may be waived, if and only for as long as Operator is a sole proprietor or a corporation with stock 100% owned by officers with no employees. 7.3.2 Commercial General Liability Insurance for Bodily Injury and Property Damage liability, covering the operations of Operator and Operator’s officers, agents, and employees and with limits of liability which shall not be less than $1,000,000 combined single 203215669.16 11 limit per occurrence with a general aggregate liability of not less than $2,000,000, and Personal & Advertising Injury liability with a limit of not less than $1,000,000. Such policy shall contain a Waiver of Subrogation in favor of MTC. MTC and its commissioners, directors, officers, representatives, agents and employees are to be named as additional insureds. In addition, the entities listed in Section 7.13 and their respective commissioners, directors, officers, representatives, agents and employees are also to be named as additional insureds. Such insurance shall be primary and contain a Separation of Insureds Clause as respects any claims, losses or liability arising directly or indirectly from Operator’s operations. 7.3.3 Business Automobile Insurance for all automobiles owned (if any), used or maintained by Operator and Operator’s officers, agents and employees, including but not limited to owned (if any), leased (if any), non-owned and hired automobiles, with limits of liability which shall not be less than $1,000,000 combined single limit per accident. 7.3.4 Umbrella Insurance in the amount of $4,000,000 providing excess limits over Employer’s Liability, Automobile Liability, and Commercial General Liability Insurance. Such umbrella coverage shall be following form to underlying coverage including all endorsements and additional insured requirements. 7.3.5 Errors and Omissions Professional Liability Insurance for errors and omissions and the resulting damages, including, but not limited to, economic loss to MTC and having minimum limits of $5,000,000 per claim. Such policy shall contain cyber risk coverages including network and internet security liability coverage, privacy liability coverage and media coverage. The policy shall provide coverage for all work performed by Operator and any work performed or conducted by any subcontractor/consultant working for or performing services on behalf of Operator. Operator may delegate the obligation to maintain Errors and Omissions Professional Liability Insurance to an Agent, but the failure of such Agent to maintain such insurance shall not relieve Operator of its obligation to maintain such insurance. 7.3.6 Property Insurance. Property Insurance covering Operator’s own business personal property and equipment to be used in performance of this Continuation Agreement, materials or property to be purchased and/or installed on behalf of MTC (if any), and builders risk for property in the course of construction (if applicable). Coverage shall be written on a "Special Form" policy that includes theft, but excludes earthquake, with limits at least equal to the replacement cost of the property. Such policy shall contain a Waiver of Subrogation in favor of MTC. 7.4 Acceptable Insurers. All policies will be issued by insurers qualified to do business in California and with a Best’s Rating of A-VIII or better. 7.5 Self-Insurance. Operator’s obligation hereunder may be satisfied in whole or in part by adequately funded self-insurance, upon evidence of financial capacity satisfactory to MTC. 7.6 Deductibles and Retentions. Operator shall be responsible for payment of any deductible or retention on Operator’s policies without right of contribution from MTC. Deductible and retention provisions shall not contain any restrictions as to how or by whom the 203215669.16 12 deductible or retention is paid. Any deductible or retention provision limiting payment to the Named Insured is unacceptable. 7.7 In the event that MTC is entitled to coverage as an additional insured under any Operator insurance policy that contains a deductible or self-insured retention, Operator shall satisfy such deductible or self-insured retention to the extent of loss covered by such policy, for any lawsuit arising from or connected with any alleged act of Operator, subconsultant, subcontractor, or any of their employees, officers or directors, even if Operator or subconsultant is not a named defendant in the lawsuit. 7.8 Claims Made Coverage. If any insurance specified above is written on a “Claims- Made” (rather than an “occurrence”) basis, then in addition to the coverage requirements above, Operator shall: 7.8.1 Ensure that the Retroactive Date is shown on the policy, and such date must be before the date of this Continuation Agreement or the beginning of any work under this Continuation Agreement; 7.8.2 Maintain and provide evidence of similar insurance for at least three (3) years following the expiration or termination of this Continuation Agreement, including the requirement of adding all additional insureds; and 7.8.3 If insurance is cancelled or non-renewed, and not replaced with another claims-made policy form with a retroactive date to Effective Date, Operator shall purchase “extended reporting” coverage for a minimum of three (3) years after the expiration or termination of this Continuation Agreement. 7.9 Failure to Maintain Insurance. All insurance specified above shall remain in force until the expiration or termination of this Continuation Agreement. Operator must notify MTC if any of the above required coverages are non-renewed or cancelled. The failure to procure or maintain required insurance and/or an adequately funded self-insurance program will constitute a material breach of this Continuation Agreement. 7.10 Certificates of Insurance. On the Effective Date, Operator shall deliver to MTC Certificates of Insurance verifying the aforementioned coverages. Such certificates shall make reference to all provisions and endorsements referred to above and shall be signed on behalf of the insurer by an authorized representative thereof. 7.11 Disclaimer. The foregoing requirements as to the types and limits of insurance coverage to be maintained by Operator are not intended to and shall not in any manner limit or qualify the liabilities and obligations otherwise assumed by Operator pursuant hereto, including, but not limited to, liability assumed pursuant to Article VIII. 7.12 Additional Insureds. The following entities are to be named as Additional Insureds under applicable sections of this Article VII and as Indemnified Parties pursuant to Article VIII of this Continuation Agreement. 7.12.1 Metropolitan Transportation Commission (MTC) 203215669.16 13 7.12.2 City of Mountain View 7.12.3 City of Palo Alto 7.12.4 City of Redwood City 7.12.5 City of San Francisco 7.12.6 City of San Jose ARTICLE VIII INDEMNIFICATION AND LIMITATION OF LIABILITY 8.1 Indemnification. Operator shall defend, indemnify and save harmless MTC, the Pilot Cities, and their respective commissioners, officers, agencies, departments, agents, and employees (collectively, “Indemnified Parties”) from and against any and all claims, demands, causes of action, proceedings or lawsuits brought by third-parties (“Claims”), and all losses, damages, liabilities, penalties, fines, forfeitures, costs and expenses arising from or incidental to any Claims (including attorneys’ fees and other costs of defense) (collectively, with Claims, “Liabilities”), resulting from, or arising out of, the operation of the System and the provision of services, including the condition of the Bicycles or other Equipment, whether such operation or services is performed or provided by Operator or by Operator’s subcontractors or any other person acting for or on behalf of Operator. 8.2 Exclusions. Notwithstanding the foregoing, the following shall be excluded from Operator’s indemnification and defense obligations contained in the preceding sentence: any Liabilities to the extent resulting from, or arising out of, (i) the gross negligence or willful misconduct of any Indemnified Party, (ii) Operator complying with the written directives or written requirements of a Pilot City, if the Operator has previously objected to such written directives or requirements in writing, with respect to (A) the location or configuration of any Station in relation to the street or sidewalk on which such Station is located or to which it adjoins or (B) a Pilot City’s Street Treatment Requirements, or (iii) the condition of any public property outside of the perimeter of a Station and not otherwise controlled by Operator. The exclusion in clause (iii) does not include the condition of the Bicycles or other Equipment. In addition, if any Claim against Operator includes claims that are covered by clause (iii) of the preceding sentence or claims contesting a Pilot City’s authority to issue a permit for a Station, then each Party shall be responsible for its own defense against such claims. 8.3 Notice. Upon receipt by any Indemnified Party of actual notice a Claim to which such Indemnified Party is entitled to indemnification in accordance with Section 8.1, such Indemnified Party shall give prompt notice of such Claim to Operator. Operator shall assume and prosecute the defense of such Claim at the sole cost and expense of Operator. Operator may settle any such Claim in its discretion so long as such settlement includes an unconditional release of the Indemnified Party. 203215669.16 14 ARTICLE IX THIRD PARTY BENEFICIARIES 9.1 Third-Party Beneficiaries Under This Continuation Agreement. Except as provided in Sections 7.13, 8.1, 8.2 and 8.3, this Continuation Agreement does not and is not intended to confer any rights or remedies upon any person or entity other than the signatories to this Continuation Agreement. ARTICLE X MISCELLANEOUS 10.1 Governing Law. This Continuation Agreement shall be governed exclusively by the internal laws of the United States and of the State of California applicable to contracts made, accepted and performed wholly within said State, without regard to application of principles of conflict of laws. Any claim, suit or action arising under or relating to this Continuation Agreement must be brought only in courts located in San Francisco, California. The Parties hereby agree that such courts shall have exclusive personal and subject matter jurisdiction over any such claim, suit or action. 10.2 Survival. All provisions of this Continuation Agreement that by their terms survive the expiration or any termination of this Continuation Agreement, together with all other provisions of this Continuation Agreement that may be reasonably construed as surviving the expiration or any termination of this Continuation Agreement, shall survive the expiration or any termination of this Continuation Agreement. 10.3 Notices. Except as otherwise provided herein, all notices, requests, demands and other communications which are required or may be given under this Continuation Agreement shall be provided in the manner set forth in this section. Notice to a Party shall be delivered to the attention of the person listed below, or to such other person or persons as may hereafter be designated by that Party in writing. Notice shall be in writing sent by e-mail, facsimile, or regular first class mail. In the case of e-mail and facsimile communications, valid notice shall be deemed to have been delivered upon sending, provided the sender obtained an electronic confirmation of delivery. E-mail and facsimile communications shall be deemed to have been received on the date of such transmission, provided such date was a business day and delivered prior to 4:00 p.m. PST. Otherwise, receipt of e-mail and facsimile communications shall be deemed to have occurred on the following business day. In the case of regular mail notice, notice shall be deemed to have been delivered on the mailing date and received five business days after the date of mailing. If to MTC: Metropolitan Transportation Commission Joseph P. Bort MetroCenter, Oakland, CA 94607-470 Attention: Executive Director Email: SHeminger@mtc.ca.gov 203215669.16 15 Attention: General Counsel: Email: AWeil@mtc.ca.gov Attention: Designated Representative Email: KMulder@mtc.ca.gov If to Operator: Bay Area Motivate, LLC 5202 Third Avenue Brooklyn, New York 11220 Attention: Jay Walder, President and CEO Email: jaywalder@motivateco.com Attention: Justine Lee, Vice President and General Counsel Email: justinelee@motivateco.com Bay Area Motivate, LLC 2200 Jerrold Avenue, Unit J San Francisco, California 94124 Attention: Emily Stapleton, General Manager and Designated Representative Email: emilystapleton@motivateco.com 10.4 Entire Agreement; Amendments and Waivers. This Continuation Agreement constitutes the entire agreement between the Parties pertaining to the subject matter hereof and supersedes all prior agreements, understandings, negotiations and discussions, whether oral or written, of the Parties. No supplement, modification or waiver of this Continuation Agreement shall be binding unless executed in writing by the Party to be bound thereby. No waiver of the provisions of this Continuation Agreement, or any breach thereof, shall constitute a waiver of any prior, concurrent or subsequent breach of the same or any other provisions hereof, or shall be deemed or shall constitute a waiver of any other provision hereof (whether or not similar), nor shall such waiver constitute a continuing waiver unless otherwise expressly provided. 10.5 Counterparts; Severability. This Continuation Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. The Parties may rely upon a facsimile copy or scanned copy of any Party’s signature as an original for all purposes. In the event that any one or more of the provisions contained in this Continuation Agreement or in any other instrument referred to herein, shall, for any reason, be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provision of this Continuation Agreement or any other such instrument and the remaining provisions shall remain in full force and effect. To the extent permitted by applicable law, any such provision will be restricted in applicability or reformed to the minimum extent required for such provision to be enforceable. This provision will be interpreted and enforced to give effect to the original written intent of the Parties prior to the determination of such invalidity or unenforceability. 10.6 Construction; Incorporation. The headings of the articles, sections, and paragraphs of this Continuation Agreement are inserted for convenience only and shall not be deemed to constitute part of this Continuation Agreement or to affect the construction hereof. 203215669.16 16 All sections and article references are to this Continuation Agreement, unless otherwise expressly provided. As used in this Continuation Agreement, (a) “hereof”, “hereunder”, “herein” and words of like import shall be deemed to refer to this Continuation Agreement in its entirety and not just a particular section of this Continuation Agreement, and (b) unless the context otherwise requires, words in the singular number or in the plural number shall each include the singular number or the plural number, words of the masculine gender shall include the feminine and neuter, and, when the sense so indicates, words of the neuter gender shall refer to any gender. The Parties acknowledge and agree that: (i) this Continuation Agreement is the result of negotiations between the Parties and shall not be deemed or construed as having been drafted by any one Party, (ii) each Party and its counsel have reviewed and negotiated the terms and provisions of this Continuation Agreement (including, without limitation, any exhibits and schedules attached hereto) and have contributed to its revision, (iii) the rule of construction to the effect that any ambiguities are resolved against the drafting Party shall not be employed in the interpretation of this Continuation Agreement, and (iv) the terms and provisions of this Continuation Agreement shall be construed fairly as to both Parties and not in favor of or against either Party, regardless of which Party was generally responsible for the preparation of this Continuation Agreement. 10.7 Relationship of the Parties. Operator is an independent contractor and neither Operator nor its employees shall, under any circumstances, be considered employees, servants, or agents of MTC, nor shall MTC nor its agents or employees be considered employees, servants, or agents of Operator. At no time during the Term or otherwise shall Operator, its employees, or agents, represent to any person or entity that Operator and its employees are acting on behalf of, or as an agent of, MTC or any of its employees. MTC shall not be legally responsible or liable for any negligence, intentional act, or other wrongdoing by or of Operator, its employees, servants, agents, subcontractors, suppliers, or manufacturers of goods or services provided by Operator pursuant to this Continuation Agreement. MTC will not withhold payments to Operator for any federal or state unemployment taxes, federal or state income taxes, Social Security tax, or any other amounts for benefits to Operator. MTC will not provide to Operator any insurance coverage or other benefits, including Workers' Compensation, normally provided by MTC for its employees. This Continuation Agreement does not constitute and shall not be construed as constituting a partnership or joint venture or grant of a franchise between the Parties. 10.8 Cooperation. The Parties agree to execute such further instruments and to take such further action as may reasonably be necessary or helpful to carry out the intent of this Continuation Agreement. 10.9 Failure or Delay in Performance. Operator shall not be held responsible for failure to perform the duties and responsibilities imposed by this Continuation Agreement if such failure is due to Event of Force Majeure, beyond the control of Operator, that make performance impossible or illegal, unless otherwise specified in this Continuation Agreement; provided that the Operator (in order to not be held responsible for failure to perform) shall have given MTC Project Manager written notification of such failure, event, or occurrence beyond the control of Operator not later than 48 hours after the beginning of such failure, event, or occurrence. 203215669.16 17 10.10 Representations of Operator. Operator hereby represents and warrants to MTC that: 10.10.1Operator is a limited liability company, validly existing and in good standing under the laws of the State of Delaware, and it is duly authorized to do business in the State of California; and 10.10.2Operator has all requisite power and authority to own or lease its properties and assets, to conduct its business as currently conducted and to execute, deliver and perform this Continuation Agreement and all other agreements entered into or delivered in connection with or as contemplated hereby. 10.11 Ethics in Public Contracting. This Continuation Agreement incorporates all local, state, and federal law, regulations and rules related to ethics, conflicts of interest, or bribery. Operator certifies that its offer is made without collusion or fraud and that it has not offered or received any kickbacks or inducements from any other officer, supplier, manufacturer, or subcontractor and that it has not conferred on any public employee having official responsibility for this purchase any payment, loan, subscription, advance, deposit of money, services, or anything of more than nominal value, present or promised unless consideration of substantially equal or greater value was exchanged. 10.12 Remedies. The remedies available to MTC in various sections of this Continuation Agreement shall be deemed to be in addition to, and not in limitation of, any other remedies MTC has or may have under applicable law or in equity arising out of or relating to this Continuation Agreement. 10.13 Assignment. Operator shall not assign, transfer, convey, sublet, or otherwise dispose of any award, or any or all of its rights, obligations, or interests under this Continuation Agreement, without the prior written consent of MTC, except the preceding clause shall not limit Operator’s rights to enter into subcontracts for the provision of services hereunder. 10.14 Prohibition of Expending Local, Agency, State or Federal Funds for Lobbying A. Operator certifies to the best of its knowledge and belief that: i. No state, federal or local agency appropriated funds have been paid, or will be paid by-or-on behalf of Operator to any person for influencing or attempting to influence an officer or employee of any state or federal agency; a Member of the State Legislature or United States Congress; an officer or employee of the Legislature or Congress; or any employee of a Member of the Legislature or Congress, in connection with the awarding of any state or federal contract; the making of any state or federal grant; the making of any state or federal loan; the entering into of any cooperative agreement, and the extension, continuation, renewal, amendment, or modification of any state or federal contract, grant, loan, or cooperative agreement. 203215669.16 18 ii. If any funds other than federal appropriated funds have been paid, or will be paid to any person for influencing or attempting to influence an officer or employee of any federal agency; a Member of Congress; an officer or employee of Congress, or an employee of a Member of Congress; in connection with this Continuation agreement; Operator shall complete and submit Standard Form-LLL, “Disclosure Form to Report Lobbying,” in accordance with its instructions. B. This certification is a material representation of fact upon which reliance was placed when this transaction was made or entered into. Submission of this certification is a prerequisite for making or entering into this transaction imposed by Section 1352, Title 31, US. Code. Any person who fails to file the required certification shall be subject to a civil penalty of not less than $10,000 and not more than $100,000 for each such failure. C. Operator also agrees by signing this Continuation Agreement that it shall require that the language of this certification be included in all lower-tier subcontracts, which exceed $100,000, and that all such sub recipients shall certify and disclose accordingly. ARTICLE XI DEFINITIONS 11.1 Defined Terms. As used herein, the terms below shall have the following meanings. Any of such terms, unless the context otherwise requires, may be used in the singular or plural, depending upon the reference. “Backend Software and Computer Hardware” shall mean an electronic interface enabling, among other things, Stations, Bicycles, subscriber customer service, cellular service, Customer Keys, the website, and call center to function. “Bicycle” shall mean a device propelled solely by human power, upon which a person may ride either on or astride a regular seat attached thereto, having two or more wheels in tandem. “Crash” shall mean every reported incident or event involving a subscriber, Bicycle user, Bicycle, and/or Station resulting in personal injury to the subscriber or others, or property damage to the Equipment, or to the property of others. “Customer Key” shall mean a fare card or fob for rental of Bicycles. “Dock” or “Docking Point” shall mean a locking mechanism contained on a Station designed to receive a Bicycle for locked storage. “Equipment” shall mean all physical components provided by, or used by, Operator so that the System is available for use by the public, including, without limitation Bicycles, Docks, Technical Platforms, Map Frames, Terminals, cables, Station batteries, maintenance trailer, truck, electric bicycle, Customer Keys, trailer, and Bicycle and Station spare parts. 203215669.16 19 “Equipment Assignment Conditions” shall mean the following: (a) Operator and the purchaser of the Equipment have agreed on the purchase price for the Equipment, which shall be based on the fair market value of the Equipment as an installed system at the time of the purchase, and (b) such purchaser has paid Operator the agreed upon purchase price for the Equipment. “Event of Force Majeure” shall mean a delay, suspension or interruption due to strike; war or act of war (whether an actual declaration of war is made or not); terrorism; insurrection; riot; injunction; fire, flood or similar act of providence; or other similar causes or events to the extent that such causes or events are beyond the control of the Party claiming an Event of Force Majeure, provided in each case that such Party has taken and continues to take all reasonable actions to avoid or mitigate such delay, suspension or interruption and provided that such Party notifies the other Party to this Continuation Agreement in writing of the occurrence of such delay, suspension or interruption within five (5) business days, or if not reasonably practicable, as soon thereafter as reasonably practicable, of the date upon which the Party claiming an Event of Force Majeure learns or should have learned of its occurrence. A delay in a decision by a government entity, the approval of which is a condition to an occurrence, shall not constitute an “Event of Force Majeure” unless such delay is beyond the normal period in which such entity generally acts with respect to the type of decision being sought and only if the Party claiming Event of Force Majeure has taken and continues to take all reasonable steps to pursue such decision. In no event will a government entity’s final decision relating to Operator, this Continuation Agreement or the System, whether positive or negative, once made constitute an Event of Force Majeure (the term “final decision” in this sentence shall refer to a decision with respect to which all available appeals have been exhausted or the time period for filing such appeals has expired). The financial incapacity of Operator shall not constitute an Event of Force Majeure. “Fleet” shall mean 100% of the number of Bicycles obtained by Operator from MTC on the Effective Date minus the number of stolen (or otherwise unreturned) and unrepairable Bicycles. “Functional Bicycle” shall mean the condition of a Bicycle, consistent with the technical specifications of the Bicycles to be provided under this Continuation Agreement, to be ridden by an ordinary subscriber using such Bicycle under normal conditions. A Functional Bicycle does not refer to comfort, speed, quality of the riding experience, or minor issues with the Bicycle that does not impede the ability to be ridden. “Functional Station” shall mean a Docking Station, consistent with the technical specifications of the Docking Stations under the Pilot Program, to be used by an ordinary subscriber using such Docking Station under normal conditions. A Functioning Station does not refer to inconvenience or inability of a subscriber to follow directions, provided such directions are provided in a form understandable by an ordinary subscriber. A Functional Station shall have at least one Docking Point containing a Functional Bicycle, at least one empty Docking Point, and all other elements in working condition to be considered a Functional Station. “Hacking” shall mean unauthorized and intentional access to the Computer Hardware for the System and/or Software. 203215669.16 20 “Map Frame” shall mean a two-sided metal informational display unit, including translucent covering and lock. “MTC Project Manager” shall mean an individual appointed by MTC to act as the project officer. “Notification” shall mean all information provided by MTC, a Pilot City or the general public to Operator about a specific defect or problem concerning the System, Equipment or operations of the System by written document, email to Operator’s public information email address for the System, or telephone call to Operator’s call center for the System. “Operable Station” shall mean a Station at which at least 90 percent of all installed Docks are Operable Docks from which an annual member can check out and return a Bicycle. “Operating Expenses” shall mean, with respect to Operator (or Motivate) for any period, the costs expended by Operator (or Motivate) to operate and maintain the System and to provide the specific services set forth in this Continuation Agreement, including, without limitation, personnel costs, software license fees, insurance costs, costs of maintaining service vehicles, costs of leasing and maintaining facilities used for the System. “Operating Losses” shall mean, with respect to Operator (or Motivate) for any period, the amount, if any, by which Operating Expenses for such period exceed System Operating Revenues for such period. “Party” means either MTC or Operator, as the context requires; “Parties” means MTC and Operator. “Service” shall mean the use of the Equipment by the public at large after the Effective Date. “Site” shall mean a designated area on publicly or privately owned real property, which area contains one or more of each of the following items made available by Operator for the System: Bicycles, Docks, Terminal, Technical Platforms, and Map Frame. “Station” shall a designated area of docking Bicycles at which Docks, Terminal, Technical Platforms, and Map Frame are located. “System Operating Revenues” shall mean all funds derived from ridership use of the System, including subscription fees and usage fees. “Technical Platform” shall mean a base component that rests on the ground and supports the Docks, Terminal, and Map Frame. “Terminal” shall mean a kiosk that provides Bicycle rental instructions, contains payment equipment (i.e. credit card device), and includes all other means necessary for the rental of Bicycles. 203215669.16 21 “Trip” shall mean the use of a Bicycle from one Station to another Station or back to the initial Station. [THE REMAINDER OF THIS PAGE HAS BEEN LEFT BLANK INTENTIONALLY.] 203215669.16 A-1-1 Attachment A-1, Description of Services 1. Description of Services Operator shall operate the bike-sharing system in the Pilot Cities that was installed and in place at the termination of the Pilot Program Agreement using the same Sites, Bicycles, Docking Stations, Terminals, Docking Points, Technical Platforms, Customer Keys, Back-end Software and Computer Hardware and other Equipment that was used for the Pilot Program. Operator guarantees the following minimum equipment numbers in Mountain View, Palo Alto, and Redwood City: Mountain View: 7 Stations; 117 Docks; 59 Bicycles Palo Alto: 5 Stations, 75 Docks, 37 Bicycles; Redwood City: 7 Stations; 117 Docks; 59 Bicycles; San Francisco: 35 Stations; 665 Docks; 300 Bicycles; San Jose: 16 Stations; 264 Docks; 110 Bicycles Operator’s responsibilities include: (1) Handle ongoing Equipment maintenance and rebalancing; (2) Manage intellectual property issues related to a program sponsor such as brands and trademarks; (3) Manage all ongoing customer service issues associated with the System (unless otherwise instructed); and (4) Conduct bicycle safety trainings and encourage the use of bicycle helmets. 2. Subscriber Information/Relations. 2.1 Subscriber and Usage Fees. User fees shall be consistent with Attachment A-2, subject to application of Attachment A-3 as provided in Section 2.2 of this Continuation Agreement. 2.2 Age Requirement for Program Subscribers. Subscriptions shall only be issued to individuals 18 years of age and older. 2.3 Subscriber Privacy. Operator shall, at all times, protect the privacy rights of all subscribers. Operator shall strictly comply with all applicable federal, state, and local laws, 203215669.16 A-1-2 ordinances, and regulations concerning the privacy of all subscriber information obtained by Operator in the course of providing services under this Continuation Agreement. 2.4 Subscriber Agreement. Operator shall use the same form of Subscriber Agreement that was used for the Pilot Program with such changes thereto as Operator considers appropriate. Any material changes to the Pilot Program form shall be subject to the review and approval of MTC. The Subscriber Agreement shall address, at a minimum, the following: (1) The rates, fees, and deposits (if any). (2) Confidentiality of personal and financial data and information. (3) Subscriber’s agreement to return the Bicycle in the same condition as it was when rented. (4) Subscriber’s agreement to immediately report to the call center any Crash, as defined in this Continuation Agreement to include any incident or event resulting in personal injury to the subscriber or others or in property damage to the Equipment or to the property of others and agreement to follow any instructions from the call center regarding reporting a Crash to police. (5) Subscriber’s agreement to immediately report to the call center a lost or stolen Bicycle or a lost or stolen Customer Key. (6) Subscriber’s responsibility and liability for any consequences of any kind or nature whatsoever related to a stolen or lost Bicycle or Customer Key. (7) Prohibited uses including, without limitation, no more than one person on a Bicycle at one time. (8) Subscriber’s acknowledgement of and acceptance of responsibility and risk. (9) Prohibition against any person other than the subscriber operating any Bicycle rented from Operator and prohibition against transfer of a Customer Key to anyone in any manner whatsoever. (10) A representation by each subscriber that s/he is physically able to ride a Bicycle without risk to health, knowledgeable about the operation of a Bicycle, and knowledgeable about the laws pertaining to Bicycles operated within the jurisdictions where the Bicycles are to be used. (11) Age limits. (12) Subscriber’s indemnification of MTC and the Pilot Cities, its elected and appointed officers, officials, employees, and agents. (13) Prohibition against use of Bicycle while under the influence of alcohol, drugs, any controlled substance, or any medication that would impair the Bicycle operator’s ability to safely operate the Bicycle. (14) Instructions regarding proper use of Bicycle luggage carrier as to type of contents, weight, or visual obstruction. (15) Prohibition against Bicycle use for any illegal purpose. 2.5 Loss Fees. Operator shall deem a Bicycle as “lost or stolen” if not returned to a Site within 24 hours of being signed out, and charge the subscriber whose account is associated with that sign-out the amount of the “Loss Fee” set forth in Attachment A-2, subject to application of Attachment A-3 as provided in Section 2.2 of this Continuation Agreement, which covers the replacement value of the Bicycle, along with shipping fees and expenses and service charges for placing a new Bicycle into the operational Fleet. Credit accounts will be charged the Loss Fee at the time a loss is determined. Operator shall include all such circumstances in its 203215669.16 A-1-3 monthly report to MTC. Notwithstanding the foregoing, Operator shall waive such fees for stolen Bicycles or Bicycles that are damaged in connection with a crime against the rider or in a collision with a motor vehicle, so long as an appropriate police report is filed for the incident. 2.6 Helmets. Operator shall provide information on the System website and in the subscription agreement about the importance of wearing helmets for safety reasons. Operator will make reasonable best efforts to provide users with information that directs them to nearby bike shops and other locations where subscribers may purchase a helmet and shall display on the System website where discounts are available and at Terminals. 2.7 Subscriber Communications. Upon request from MTC, Operator will send biking related information announcements via electronic mail to all subscribers who do not “opt out’ of receiving such emails. 3. Operations 3.1 Continuous Operation and Management. The System shall commence operating on the Effective Date and shall remain in operation 24 hours per day, 365 days per year. 3.2 Inspection and Maintenance. (1) Operator shall, at all times, follow and strictly comply with the manufacturer’s requirements, warranties, and recommendations for assembly, maintenance, storage and repair of all Equipment. Operator shall not be obligated to purchase any replacement Equipment. (2) Operator shall perform a maintenance check for each Bicycle once every two calendar months consisting of the following checks, with deficient elements repaired or replaced as necessary: Check tire pressure, and add air as may be needed, to recommended Pounds per Square Inch measurement; Check tightness of handlebars, headset bearings, and full handlebar range of motion (left to right); Check tightness of seat, seat post quick-release, and see that seat post moves freely in full range of motion (up and down); Check brake function (front and rear); Check grips for wear and brake levers for tightness and damage; Check bell for tightness and correct function; Check handlebar covers for damage and instruction stickers; Check front basket for tightness and damage, and check bungee cord for wear; Check for correct gears and shifter function through all 5 gears; Check fenders (front and rear) for damage, and clean outside of fenders; Check tires (front and rear) for damage or wear; Check wheels (front and rear) for trueness, broken or bent spokes and hub or axle tightness; Check LED lights (front and rear) for function; 203215669.16 A-1-4 Check reflectors on wheels, seat and basket, to ensure they are present, clean, and undamaged; Check pedals and cranks for tightness; Lubricate and clean chain and check chain tensioner for correct function; Check kickstand for correct function; and Take brief test ride to ensure overall correct function of Bicycle. (3) Operator shall clean each Station two times per month-- one time between the first and fifteenth days of the month, and one time between the sixteenth and last days of the month. Station cleaning shall consist of, at a minimum, litter removal and, as needed, power washing of Docks, Terminal Platforms and pavement. (4) (a) Except as required by clause (b) below, Operator shall remove conspicuous graffiti within 72 hours after Notification; and(b) Operator shall remove racist and hate graffiti within 4 hours after Notification. (5) Operator shall remove conspicuous accumulations of litter from Stations within 24 hours after Notification. (6) The System must be operational 100% of the time every month (i.e., every hour of every day, 24 hours per day, 7 days per week, measured monthly), so that, at a minimum, all System users can dock and undock Bicycles at all times, excluding (i) scheduled downtime, and (ii) any period when the Computer Hardware for the System and/or Software is, and remains, damaged through Hacking. System functionality does not apply to hardware malfunctions at individual Stations or to individual Stations that are not Operable Stations. (7) Stations, in the aggregate, must be Operable Stations 99% of the time every month (i.e., every hour of every day, 24 hours per day, 7 days per week, measured monthly), excluding (i) during scheduled downtime, and (ii) any period when a Station is not an Operable Station because the Terminal or other Equipment located at the Station has been damaged by third-parties. Calculated by taking the sum of the number of hours that each Station was Operable Station during a month, dividing that sum by the product of the total number of hours in the month and the number of Stations that month. Station Operability does not apply during any period in which the entire System is down. (8) The System website must be operational 100% of the time every year (i.e., every hour of every day, 24 hours per day, 7 days per week, measured annually) excluding (i) scheduled downtime, and (ii) any period when the Computer Hardware for the System and/or Software is, and remains, damaged through Hacking. In any circumstances where Operator is required to perform cleaning services under this Continuation Agreement, Operator shall use the most environmentally friendly cleaning solutions and chemicals available for these purposes. 3.3 Availability of Bicycles. Operator shall ensure that at least 90% of bicycles in the Fleet are operational, on-the-street and available for public use. The number of available bicycles will be recorded once each Day of the month between the hours of 11:00 AM and 3:00 PM. 203215669.16 A-1-5 3.4 Distribution of Bicycles. Operator shall re-distribute Bicycles among Sites and place the Bicycles in operable Docks throughout the day from 6 am to 10 pm during each day of operation. Such distribution shall be critically timed to increase the probability that each Site, at all times, contains a sufficient number of empty Docks for Bicycles to be returned and occupied Docks containing Bicycles available for subscribers. All Bicycles placed in operational Docks shall be in acceptable operating condition. Operator shall ensure that, during any day, no Site has all empty Docks or all full Docks for more than three hours between the hours of 6 am and 10 pm. If during any month the average usage of a Site is greater than 2.5 Trips per day per Dock or less than 0.75 Trips per day per Dock, then this service level does not apply for such Site for such month. 3.5 Operator’s Call Center. Operator shall provide to MTC, all subscribers, and the public at large, a toll-free telephone number for Operator’s call center. The call center shall be in continuous operation 24 hours per day, 7 days per week, and 365 days per year. Not less than 80% of telephone calls to Operator’s call center each month must be answered by a person within 90 seconds or less. Operator shall conspicuously post a notice on each Station advising the general public that they may direct their complaints and comments to Operator’s call center. Operator shall ensure that the call center can handle calls in English, Spanish, Mandarin and Cantonese, using operators fluent in those languages. The operators at the call center shall be fully competent and knowledgeable to answer questions and provide information concerning, among other things, subscription process, subscription prices, billing, Crashes, comments, complaints, malfunction problems, location of Sites, directions to nearest Site that has Bicycles available for use and/or available Docks for returns, directions to helmet sales location(s), and instructions on how to fit a helmet. The call center manager shall be knowledgeable about all service areas. The call center operators shall keep accurate and complete written records of each such call in a Customer Service Log as hereinafter required, including the primary reason for each call and the status of the call (e.g., “no further action”, “requires reimbursement”). 3.6 Email Response Time. Not less than 95% of emails to Operator’s public information email address must be answered within 1 business day. 3.7 Comments and Complaints. Operator shall establish and maintain during the Term prompt and efficient procedures for handling complaints from the public for which Operator receives a Notification. Such procedures shall be consistent with all applicable laws, rules and regulations and the provisions of this Section. Such procedures shall be set forth in writing and copies thereof shall be maintained at Operator’s office and shall be available to the public and the Pilot Cities upon request. 3.8 System Website. Operator shall create and maintain a System website the content of which shall address, at a minimum, the following: (1) Eligibility requirements; (2) Subscription information and rate, schedules; (3) Payment information and subscription processing; (4) Method for subscribers to log in, update required information, and track individual usage data compiled by the system; 203215669.16 A-1-6 (5) Subscriber Agreement and acceptance of terms; (6) Map with the entire regional network of Sites and real-time availability of Bicycles at each Site, both for a standard computer screen and mobile phone; (7) Frequently Asked Questions; (8) Safety requirements and information (including notification in the event of malfunction or Crash); (9) Encouragement of helmet use for subscribers and a listing of nearby locations where users may purchase or lease helmets; (10) Merchandise page; (11) Permitted links to other Bay Area based bike programs and events; (12) A listing of nearby bike rental shops, locations and contract information; (13) Safety video (supplied by the Air District or others) addressing safe use of bicycles, helmets, and California Vehicle Code and local laws pertaining to bicycle riders; and (14) A webpage that contains links to MTC- approved information (i.e. links to partner websites and notices). Operator, at all times, shall keep the website information updated, current, and accurate on a regular basis. 3.9 Operator Staffing Levels. Operator, at all times, shall provide sufficient staff to efficiently and promptly provide the services set forth in this Continuation Agreement. 3.10 Personnel and Staffing Requirements. Operator shall deliver to MTC copies of all written personnel policies that, at a minimum, address employee conduct and qualifications. 3.11 Relocation, Resizing, and/or Reconfiguration of Stations. (1) By Operator. In the event that Operator wishes to remove, relocate, resize, and/or reconfigure any Station, other than those Stations whose locations are fixed pursuant to the terms of a grant or sponsorship agreement, due to under- utilization or lack of profitability, it must notify MTC in writing, providing sufficient detail and description of the proposed relocation site and reasons therefore, prior to removal. Assuming that MTC does not disapprove the request within ten business days, Operator may remove, relocate, resize, and/or reconfigure the Station consistent with Operator’s notice of same to MTC and subject to local review and permitting requirements. (2) By MTC. MTC shall provide Operator with 48 hours advance notice of any relocation or reconfiguration of Stations to accommodate construction, special events, or other reasons. The fee payable by MTC (or the applicable Pilot City) to Operator for any such relocation or reconfiguration shall be determined in accordance with Attachment A-4. 3.12 Interruption of Service. (1) Intentional Interruption of Service. If, at any time, Operator intends, or is required, to temporarily interrupt all or a portion of the service, for any reason beyond Operator’s reasonable control, including, without limitation, weather, safety, or other event or circumstance where continued service 203215669.16 A-1-7 would be unsafe, unavailable, impractical, or impossible , then Operator shall contact MTC by telephone and by email at least 24 hours before the interruption of service and specifically describe the reason, proposed duration, Operator’s proposed actions to correct the cause of the interruption (if possible), minimize the interruption, and Operator’s plans to resume service. Operator promptly shall notify the subscribers of the cause and expected duration of the proposed interruption of service by posting notice on the website, via email, and Terminals (electronic message). (2) Unintentional Interruption of Service. If, at any time, a System malfunction or an event or circumstance occurs where continuous service would be unsafe or unavailable for reasons beyond Operator’s reasonable control, and this causes or will cause a temporary interruption of service, then Operator shall immediately contact MTC by telephone and by email and specifically describe the reason, estimated duration, Operator’s proposed actions to correct the cause of the interruption (if possible), efforts to minimize the interruption, and Operator’s plans to resume service. Operator promptly shall notify the subscribers of the cause and expected duration of the interruption of service by posting notice on the website, via email, and Terminals (electronic message). In the case of both Intentional and Unintentional Interruptions of Service, Operator shall be obligated to perform all necessary and appropriate acts to restart the service as soon as possible. 3.13 Safety Training: On at least a quarterly basis, Operator shall provide safety training on proper use of bicycles and applicable rules and regulations of the road to current and/or potential users in each city. 203215669.16 A-2-1 Attachment A-2, Subscriber Related Fees 1. Annual and Monthly Subscription and Usage Fees a) Annual Subscription Fee - One-time payment of $88 b) Annual and Monthly Subscription Usage Fees: i. No charge for up to 30 minute use of a Bicycle per session, ii. $4.00 for 31-60 minutes, iii. $7.00 for each additional 30 minutes A usage fee will be tracked and charged to credit accounts within one hour (or based on normal credit card operating procedures) of any occurrence of continuous usage exceeding thirty (30) minutes. c) Annual Memberships may be purchased at a discounted rate for promotional purposes and may be purchased in bulk at a discounted rate 2. Other Subscription and Usage Fees a) Short-term Subscription Fees i. Three day Subscription fee - $22, ii. One day Subscription fee - $9 b) Other Subscription Usage Fee: a. No charge for up to 30 minute use of a Bicycle per session, b. $4.00 for 31-60 minutes, c. $7.00 for each additional 30 minutes A usage fee will be charged to credit accounts at the time any continuous usage exceeding 30 minutes is determined. 3. Bicycle Loss Fee - $1,200. 4. Operator reserves the right, in its sole discretion, to increase or decrease the fees under 2(a) and 2(b) above. 203215669.16 A-3-1 Attachment A-3, New Subscriber-Related Fees 1. General. At Operator’s election, after June 30, 2016, Membership Fees and Initial Ride Periods shall be consistent with Section 2, the Membership Fee for users eligible for the affordability subscription specified in Section 3 shall be as described in said Section 3, the maximum Bicycle usage charge shall be consistent with Section 4 and the fees for damaged, lost, stolen or otherwise unreturned Bicycles shall be consistent with Section 5 initially charged by Operator shall be consistent with this Section. A “Membership Fee” is an amount that entitles the purchaser of the membership (a “member”, for the period of such purchased membership) to check out (as defined below) one or more Bicycle(s) at a time, for the length of time described below, provided that the member shall be charged a usage fee associated with the time period the Bicycle is checked out beyond the Initial Ride Period. A Bicycle is “checked out” for the period from the time it is removed from a Dock to the time it is returned to a Dock. A member may check out and return a Bicycle from or to any Dock at any Station in the System, for an unlimited number of times, at any time during the period of the member’s membership, with the usage fee applicable to each such checkout and return sequence being calculated separately (so, for example, an annual member may, within the member’s membership period, check out a Bicycle and return it within the first 30 minutes after checkout, and then subsequently check out a Bicycle and return that Bicycle with the first 30 minutes after that checkout, without incurring any usage fee for either checkout period). 2. Membership Fees, New Ridership Programs/Arrangements, and Initial Ride Periods: 2.1 Operator shall offer an annual membership (“Annual Membership”) for a fee (the “Annual Membership Fee”) in an amount not to exceed the Annual Membership Fee Cap in effect from time to time. The Annual Membership Fee Cap shall be $149 for a one- year period. The period of an Annual Membership shall run from the day the annual membership is activated until the first anniversary of the date on which the Annual Membership had been activated (but a membership purchased on February 29 shall expire on March 1 of the following year). At the end of the Term, each member can elect whether to roll his or her Annual Membership into the BABS Program. Such election can be made by contacting the call center. If a member elects not to roll into the BABS Program, then if the Annual Membership Fee has been paid in advance for a full 12 months, the prorated amount for the portion of an Annual Membership period that is beyond the Term shall be reimbursed to or credited to the credit card account of the Annual Member; 2.2 Annual Memberships may be paid in 12 equal monthly instalments at a price not greater than 120% of the Annual Membership Fee; 2.3 All memberships will include a free period of usage (the “Initial Ride Period”), which is the length of time at the beginning of each individual Trip to which additional usage fees will not be applied. For Annual Memberships and Affordability Memberships, the Initial Ride Period is 30 Minutes. Usage fees will be applied to all Trips that exceed the Initial Ride Period; and 203215669.16 A-3-2 2.4 For monthly, weekly and daily memberships, and for usage of the System by non-members, Operator will determine the applicable fees, usage fees, and periods of use for members beyond the Initial Ride Period in its sole discretion. 2.5 Nothing in the foregoing shall limit the right of Operator to offer premium memberships featuring an Initial Rider Period longer than 30 minutes for an Annual Membership Fee greater than $149. 3. Affordability Option: 3.1 Notwithstanding the permitted rate for an Annual Membership set forth in set forth in Section 2.2.1, Operator shall charge those eligible for an “affordability subscription” no more than $60 per annum (excluding sales tax) as the Annual Membership Fee, or $5.00 per month for a 12-month membership. 3.2 Persons who were entitled to affordability memberships under the Pilot Program shall be entitled to affordability memberships for the System. Members of households enrolled in the Utility Lifeline Programs (also known as California Alternative Rates for Energy (CARE)) available in the MTC Area are also eligible for affordability memberships. Within 10 days following the Effective Date, Operator shall propose, for MTC’s review and approval, procedures for verifying enrollment in CARE. In San Francisco, those who meet Muni Lifeline income requirements as determined by the City of San Francisco’s Human Services Agency are also eligible for the affordability membership. Upon mutual agreement of the Parties, eligibility may expand to include other categories of persons so long as the eligibility is determined by third parties. 3.3 Members enrolling through the affordability program shall be entitled to the same rights and privileges as all other Annual Membership holders. 3.4 The usage fees for affordability members shall not exceed the rate charged to general annual members. 4. The checkout period for the purposes of calculating usage fees shall always commence with the time a Bicycle is actually removed from a Dock, and it shall not be based on the time of insertion of a payment or identification card. 5. The maximum Bicycle usage charge initially charged with respect to any member shall be $100 per 24 hour period, not including charges for damaged, lost, stolen or otherwise unreturned Bicycles. 6. Fees for damaged, lost or otherwise unreturned Bicycles initially charged shall be (i) $1,200, if not returned, or (ii) if returned, the sum of all direct costs of the repair, including all labor and parts, as determined by Operator in its reasonable discretion, plus a 10% administrative fee; provided, however, that the fees charged to affordability members for unreturned or damaged Bicycles shall be not more than 33% of the fees set forth in the preceding clauses (i) and (ii). Notwithstanding the foregoing, Operator shall waive such fees for stolen Bicycles or Bicycles that are damaged in connection with a crime against the rider or in a collision with a motor vehicle, so long as an appropriate police report is filed for the incident. 203215669.16 A-3-3 7. Operator shall at all times post on all Stations and on Operator’s website a complete and up-to-date fee description that sets forth each and every current membership and usage fee offered by Operator, the methods of purchasing memberships and paying fees, available discounts on such fees, the applicability and terms of such discounts and, to the extent applicable, how to apply for or qualify for such discounts, and fees associated with damaged, lost, stolen or otherwise unreturned Bicycles. Operator shall furnish written copies of such material to the public upon request. 8. Operator shall accept credit card and debit card payments online and at all Stations but in the case of debit cards only those that have a Visa or Mastercard logo on them. Operator may employ such other methods of payment as it may determine. 9. All required state sales and use taxes with respect to membership and usage fees shall be collected and paid by Operator, as required by applicable law. 10. Operator shall be permitted to create System pricing discount programs, which may be targeted in connection with marketing and outreach efforts, and in connection with Sponsorship or Advertising programs, to expand or enable System use among different communities or for other lawful purposes. 11. At any time and from time to time, Operator shall have the right: 11.1 To adjust the amount of the Annual Membership Fee specified in Section 2 downwards at any time and upwards on each anniversary of the Effective Date by an amount not to exceed the Annual Membership Fee Cap then in effect; 11. 2 To adjust in its sole discretion all other fees, time periods and charges specified hereunder other than those fees, time periods and charges specified in Section 2 and Section 3; and 11.3 To adjust upward the duration of the Initial Ride Period. 203215669.16 A-4-1 ATTACHMENT A-4 FEE SCHEDULE FOR STATION DEACTIVATION, DE-INSTALLATION AND ADJUSTMENT As stated in Section 3.11(2) of Attachment A-1 of this Continuation Agreement, the following is the fee schedule for Station Deactivation, De-Installation, and Adjustments (each as defined below). (Capitalized terms used but not otherwise defined herein shall be defined as provided below.)) Section 1: For Public Works, Other Special Events and Public Safety Emergencies there is no charge to the Pilot City. In addition, for each Pilot City, there is no charge for the first 2 Discretionary Requests by the Pilot City. Section 2: For (a) Private property owners or contractors doing private construction on public or private property, (b) event producers or organizers of For Profit and Political Special Events, and (c) Discretionary Requests by a Pilot City after the first 2 Discretionary Requests by the Pilot City, the following fee schedule applies: 1. Deactivation: Station is deactivated but not removed; Bicycles are removed and cannot be returned by customers: $500/Station + $10/Dock/day of Deactivation. (Each of the foregoing amounts is subject to CPI Adjustment.) 2. De-installation and Reinstallation: Station is completely removed from the location and returned to same location: $1,000/Station + $20/Dock + $10/Dock/day of Deactivation. (Each of the foregoing amounts is subject to CPI Adjustment.) 3. Adjustment: Property owners and utilities may seek permanent or temporary changes to a Station’s size or configuration, and changes to Street Treatments and Street Markings as necessitated by such, without changes to the Station location: $1,000/Station + $20/Dock that is adjusted. (Each of the foregoing amounts is subject to CPI Adjustment.) 4. Temporary Relocation Followed by Reinstallation: Property owners and utilities who need to De- install or Deactivate a Station for a period greater than 15 business days must pay for the temporary relocation of the Station during the event or construction, which allows for continuous operation of the Station, and must also pay for the reinstallation of the Station at the original location after completion of the event or construction: 203215669.16 A-4-2 $5,000/Station + $40/Dock. (Each of the foregoing amounts is subject to CPI Adjustment.) Defined Terms: “Adjustment” shall mean permanent or temporary changes to a Station’s size or configuration, and changes to Street Treatments and Street Markings as necessitated by such, without changes to the Station location. “CPI” shall mean the Consumer Price Index for the Consolidated Metropolitan Statistical Area covering San Francisco-Oakland-San Jose, as measured by the Consumer Price Index for All Urban Consumers, as published from time to time by the Bureau of Labor Statistics, U.S. Department of Labor. “CPI Adjustment” shall mean, with respect to a specific cost, that such cost is subject to annual adjustment each January 1 based on changes in the CPI from the Effective Date to the date of adjustment. “Deactivation” shall mean, at a minimum, shut-down of Terminal (or display of messaging on a Terminal screen indicating that Station is out of service) removal of all Bicycles present, installation of physical barriers on all Docks that prevent docking of Bicycles, and designation of the Station as “Out of Service” on the System website, app, and all other real-time data sources. A Deactivation event is not over until the Station has been reactivated. “De-Installation” shall mean, at a minimum, (i) the temporary or permanent full removal of the Station and its associated Street Treatments, and, (ii) the designation of the Station as “Out of Service” on, or removal of the Station from, the System website, app, and all other real-time data sources. “Discretionary Request” shall mean any De-Installation and/or Re-Installation or Station Adjustment requested by the Pilot City that is not related to Public Works, Other Special Events, or Public Safety Emergencies. “For Profit and Political Special Events” shall mean temporary events permitted by the Pilot City that (i) have entry fees for participation (e.g., road races, cycling tours); or (ii) have the purpose of selling products (e.g., street fairs, food festivals, holiday fairs, film festivals, film shoots); or (iii) have a title sponsor; or (iv) are political events. “Other Special Events” shall mean temporary events permitted by the Pilot City other than For Profit and Political Special Events (e.g., heritage or cultural parades). “Public Safety Emergency” shall mean an instance when (i) Equipment is damaged or in an unsafe state so as to cause an immediate danger to the public; or (ii) circumstances or situations 203215669.16 A-4-3 immediately surrounding Equipment create an imminent danger to the public; or (iii) the area around a Station becomes unsafe or is required by police department or other emergency responders of a Pilot City in order to respond to a natural disaster or avoid a calamity. “Public Works” shall mean all instances where a Pilot City (including a utility owned by a Pilot City) or its contractors (including any private contractors hired by a Pilot City) are undertaking construction, maintenance, repairs or other public improvements. “Street Marking(s)” shall mean thermoplastic paint markings and/or striping on the pavement for the express purpose of demarcating a Station. “Street Treatments” shall mean the three-dimensional objects used to demarcate the Station, and protect it from adjacent parking and moving traffic. Such objects may include, but are not limited to, delineators and wheel stops. WRITTEN CONSENT OF THE SOLE MEMBER OF BAY AREA MOTIVATE, LLC October 1, 2015 The undersigned, being the sole member (the “Member”) of Bay Area Motivate, LLC, a Delaware limited liability company (the “LLC”), does hereby consent to the adoption of, and does hereby adopt, the following resolutions without a meeting pursuant to the Delaware Limited Liability Company Act, as amended: Amendment of LLC Agreement WHEREAS, the Member desires to amend the Limited Liability Company Agreement of the LLC (the “LLC Agreement”); NOW, THEREFORE, BE IT RESOLVED, that the LLC Agreement is hereby amended and restated as set forth on Exhibit A attached hereto. Resignation of Officer FURTHER RESOLVED, that the resignation of the following person as an officer of the Company in the capacity set forth below opposite his name is approved and ratified: Edward Inlow - Vice President—Operations Appointment of Officer FURTHER RESOLVED, that the appointment of the following person to act as an officer of the Company in the capacity set forth below opposite his name until his successor shall be duly elected and qualified or until his earlier death, resignation or removal, be, and hereby, is approved and ratified: Mark Roberts - Vice President—Marketing Omnibus FURTHER RESOLVED, that the officers of the LLC be, and each of them hereby is, acting singly or jointly, authorized, empowered and directed, in the name and on behalf of the LLC, to execute and deliver the LLC Agreement and such other agreements, forms, certificates and other documents as may be contemplated by the LLC Agreement, in such form and containing such terms and conditions as the officer executing the same shall in his or her sole discretion determine to be necessary, appropriate, convenient or proper to effectuate the intent of, Member Consent of BAM, LLC (Officer Change and LLC Agreement Amendment) 2 and the transactions contemplated by, the foregoing resolutions, the execution and delivery thereof by such officer to be conclusive evidence of such approval; FURTHER RESOLVED, that the officers of the LLC be, and each of them hereby is, acting singly or jointly, authorized, empowered and directed, in the name of and on behalf of the LLC, to take or cause to be taken any and all actions, to make all payments, to make any filings or other submissions with any governmental authority, and to negotiate, enter into, execute and deliver any and all agreements, instruments and other documents as may be necessary, appropriate, convenient or proper to effectuate the intent of, and the transactions contemplated by, the foregoing resolutions, such agreements, instruments and other documents to be in such form and to contain such terms and conditions as the officer executing the same shall in his or her sole discretion determine to be necessary, appropriate, convenient or proper, the execution and delivery thereof by such officer to be conclusive evidence of such approval; FURTHER RESOLVED, that all actions previously taken by any officer, agent or attorney of the LLC relating to the foregoing resolutions and the transactions contemplated thereby are hereby adopted, ratified, confirmed and approved in all respects as the acts and deeds of the LLC; and FURTHER RESOLVED, that, for purposes of these resolutions, a facsimile copy or an e-mail of a PDF file containing a copy of the signature page of the person executing these resolutions shall be effective as an original signature and effective as an execution copy thereof. [Signature Page follows] [Exhibit A to BAM, LLC Sole Member Consent (Officer Change and LLC Agreement Amendment)] Exhibit A Amended LLC Agreement See attached. Amended Operating Agreement of BAM, LLC AMENDED LIMITED LIABILITY COMPANY AGREEMENT OF BAY AREA MOTIVATE, LLC This AMENDED LIMITED LIABILITY COMPANY AGREEMENT (this “Agreement”) is made as of October 1, 2015, by and between BAY AREA MOTIVATE, LLC (the “Company”), and BIKESHARE HOLDINGS LLC, as the sole and managing member of the Company (the “Member”). RECITALS WHEREAS, the Certificate of Formation (the “Certificate”) of the Company was filed with the Office of the Secretary of State of Delaware on May 29, 2015; and WHEREAS, the Member desires to be admitted to the Company as a Member on the terms and conditions set forth herein. DEFINITIONS Definitions The following terms used in this Agreement shall have the following meanings. “Act” means the Delaware Limited Liability Company Act, Chapter 434 of Title 6 of the Delaware Code, 6 Del. Code §18-101 et seq., as in effect on the date hereof and as it may be amended hereafter from time to time. “Company” means the limited liability company formed by the filing of the Certificate and governed by this Agreement under the name “BAY AREA MOTIVATE, LLC.” “Treasury Regulation” means the final, temporary and proposed income tax regulations promulgated under the Internal Revenue Code of 1986, as amended from time to time (or any corresponding provisions of succeeding law), as the same may be amended from time to time (including corresponding provisions of succeeding regulations). AGREEMENT 1. Formation. The Company was formed as a limited liability company under the Act by the filing of the Certificate with the Office of the Secretary of State of Delaware on the applicable date referred to in the Recitals to this Agreement. The rights, obligations and liabilities of the Member shall be determined pursuant to the Act and this Agreement and shall be subject to the terms, provisions and conditions set forth therein and herein. To the extent that the rights, obligations or liabilities of the Member are different by reason of any provision of this Agreement than they would be in the absence of such provision, this Agreement shall, to the extent permitted by the Act, control. The purpose of the Company shall be to engage in any lawful activities for which a limited liability company may be organized under the Act. Amended Operating Agreement of BAM, LLC 2 2. Filing. The Member shall accomplish all filing, recording, publishing and other acts necessary or appropriate for compliance with all requirements for operation of the Company as a limited liability company under this Agreement and the Act and under all other laws of the State of Delaware and such other jurisdictions in which the Company determines that it may conduct business. 3. Name. The name of the Company is “Bay Area Motivate, LLC,” as such name may be modified from time to time by the Member as it may deem advisable. 4. Office and Agent. The Company shall continuously maintain an office and registered agent in the State of Delaware as required by the Act. The Delaware office and registered agent for the Company shall be Corporation Service Company, 2711 Centerville Road, Wilmington, DE 19808 or such other Delaware office and/or registered agent as the Member may designate from time to time. The Company also may have such other offices as the Member from time to time may determine or as the business of the Company may require. 5. Addresses for Notices. The address of the Member is set forth in the Company’s records as maintained by the Member. The administrative address of the Company is 5202 Third Avenue, Brooklyn, NY 11220. The Member may change its address by executing a written instrument. Any notice issued in connection with this Agreement shall be in writing and shall be sent to the Company, or the Member, as the case may be, at their respective addresses provided for in this Section 5. 6. Management. The Company shall be managed by the Member. All decisions to be made on behalf of the Company and all actions to be taken on behalf of the Company (including the execution, delivery and performance of any documents) shall be made or taken solely by the Member. Without limiting the foregoing, the Member and all officers shall have the authority to execute and/or deliver, in furtherance of the Company’s business, any deed of trust, promissory note, bill of sale, contract or other instrument purporting to convey, exchange or encumber any Company asset. 7. Officers. The Company may elect to have such officers as are from time to time determined by the Member. Each officer of the Company shall have such authority and shall exercise such powers and perform such duties as may be specified herein or by the Member or as may be inherent in such office. Unless otherwise determined by the Member, the officers of the Company need not be elected for a specified term but shall service at the pleasure of the Member or for such terms as may be agreed in the individual case by each officer and the Company. Each officer shall hold office until his or her successor has been elected or appointed and has qualified, or until his or her earlier death, resignation or removal. Any officer of the Company maybe be removed, either with or without cause, by the Member. Any officer may Amended Operating Agreement of BAM, LLC 3 resign at any time by giving written notice to the Company, either in writing signed by such officer or by electronic transmission. Unless otherwise specified in the notice of resignation, such resignation shall take effect upon delivery, and the acceptance of the resignation shall not be necessary to make it effective. The removal or resignation of an officer shall not affect the rights of the Company under his or her contract of employment, if any. Any vacancy occurring in any office of the Company by death, resignation, removal or otherwise, may be filled by the Member. 8. Events Giving Rise to Dissolution. The Company shall dissolve upon the first to occur of any of the following events or occurrence, and upon no other event or occurrence: (a) any event that makes it unlawful for the business of the Company to be carried on by the Member; or (b) at the election of the Member; or (c) at any time there is no Member of the Company unless the Company is continued in accordance with the Act; or (d) the entry of a decree of judicial dissolution under Section 18-802 of the Act. 9. Liquidation. Upon dissolution of the Company, the assets of the Company shall be liquidated and the proceeds thereof shall be applied in the following order: (a) to the satisfaction (whether by payment or the making of reasonable provision for payment) of the Company’s liabilities to creditors in the order of priority required by law, including the creation of a reasonable reserve for reasonably foreseeable contingent liabilities to be distributed when and as the Manager determines; and (b) thereafter to the Member. 10. Tax Treatment For federal income tax purposes, at all times that the Member owns 100% of the equity interests in the Company, the Company and the Member intend that the Company be disregarded as an entity separate from the Member pursuant to Treasury Regulations Section 301.7701 and corresponding provisions of state law. Accordingly, no election will be made to treat the Company as a corporation for income tax purposes. 11. Amendments. This Agreement may be amended at any time by a written instrument executed by the Member. Amended Operating Agreement of BAM, LLC 4 12. Governing Law; Jurisdiction. This Agreement and the rights of the Member hereunder shall be governed by and interpreted in accordance with the laws of the State of Delaware. Bikeshare Holdings LLC may assign all of its rights and obligations as Member hereunder at any time. 13. Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the Member and its legal representatives, successors and assigns. 14. Counterparts. This Agreement may be executed in counterparts and all such counterparts shall be construed together to form a single document. [Remainder of Page Intentionally Left Blank] 203193300.19 BAY AREA BIKE SHARE PROGRAM AGREEMENT between METROPOLITAN TRANSPORTATION COMMISSION and BAY AREA MOTIVATE, LLC December 31, 2015 203193300.19 -ii- Table of Contents DEFINED TERMS ................................................................................................... 2 SCOPE OF SERVICES .......................................................................................... 13 PROGRAM AREA AND EXPANSION; PROGRAM SIZE; PROGRAM TIMING .................................................................................... 18 SITING .................................................................................................................... 21 RESERVED ............................................................................................................ 22 IMPROVEMENTS, MAINTENANCE, REPAIR AND OPERATION ................ 22 ADVERTISING AND SPONSORSHIP ................................................................. 23 REVENUE SHARING ........................................................................................... 24 PRICE SCHEDULES. ............................................................................................ 26 MERCHANDISING, LICENSING AND INTELLECTUAL PROPERTY ........ 29 RESERVED .......................................................................................................... 30 RESERVED .......................................................................................................... 30 MARKETING ....................................................................................................... 30 WEBSITE ............................................................................................................. 31 SECURITY FUND ............................................................................................... 32 INDEMNITY ........................................................................................................ 34 INSURANCE ........................................................................................................ 34 TERMINATION AND DEFAULT ...................................................................... 37 RIGHTS OF RECOGNIZED LENDER ............................................................... 41 EMPLOYMENT ................................................................................................... 43 INSPECTION AND AUDIT RIGHTS ................................................................. 44 RESTRICTION AGAINST ASSIGNMENT ....................................................... 44 DISPUTE RESOLUTION PROCESS .................................................................. 45 REPRESENTATIONS AND WARRANTIES OF OPERATOR ......................... 46 MISCELLANEOUS ............................................................................................. 47 203193300.19 iii APPENDICES APPENDIX A KEY PERFORMANCE INDICATORS AND LIQUIDATED DAMAGES APPENDIX B COST OF EQUIPMENT APPENDIX C REPORTING REQUIREMENTS APPENDIX D FUNCTIONAL SPECIFICATIONS ATTACHMENT ATTACHMENT A AGREEMENT TO CONTINUE PILOT BIKE SHARE PROGRAM 203193300.19 -1- BAY AREA BIKE SHARE PROGRAM AGREEMENT THIS BAY AREA BIKE SHARE PROGRAM AGREEMENT (this “Agreement”), has been executed and delivered as of December 31, 2015 (the “Effective Date”) by and between the METROPOLITAN TRANSPORTATION COMMISSION, an agency of the State of California established pursuant California Government Code § 66500 et seq., having an office at 101 Eighth Street, Oakland, California (“MTC”), and BAY AREA MOTIVATE, LLC, a Delaware limited liability company, having any office at 5202 Third Avenue, Brooklyn, New York 11220 (“Operator”). W I T N E S S E T H: WHEREAS, self-service bicycle sharing programs are revolutionizing the way residents commute and tourists travel within cities in Europe and North America, and a regional self-service bicycle sharing program with public access has been determined by MTC and the Participating Cities (as defined below) to be a desirable and valuable mode of alternative public transportation for the San Francisco Bay Area; and WHEREAS, a bike sharing program will provide a 24-hour transportation network that complements existing transit and transportation options, increases multi-modal travel options in the region and encourages bicycle use as a healthy, environmentally friendly and congestion-reducing transportation option; and WHEREAS, MTC authorized its Executive Director to negotiate an agreement with Operator to design, build, operate, maintain and market a network of publicly available bicycles in a bike share system within the cities of Berkeley, Emeryville, Oakland, San Francisco and San Jose (subject to Section 2.16, each a “Participating City”, and collectively, the “Participating Cities”); WHEREAS, accordingly, MTC and Operator have negotiated this Agreement for the design, build, operation, maintenance and marketing of a network of publicly available bicycles in a bike share program in the Participating Cities; WHEREAS, this Agreement also addresses the continuation of the pilot bike share program established in 2013 in San Francisco, Redwood City, Palo Alto, Mountain View and San Jose (the “Pilot Program”; the foregoing cities being the “Pilot Cities”) pursuant to Bike Share Program Agreement dated February 6, 2013 (as amended, the “AD Agreement”) between Alta Bicycle Share, Inc. and The Bay Area Air Quality Management District (the “Air District”); WHEREAS, concurrently with the execution and delivery of this Agreement, Operator, the cities of Emeryville, San Francisco and San Jose, and MTC are executing a Coordination Agreement (“Coordination Agreement”) that sets forth certain rights, liabilities, and responsibilities of each party thereto with respect to the Program, and defines the organizational, management, and operational structure for the successful development of the Program. NOW, THEREFORE, in consideration of the foregoing clauses, which clauses are hereby made a part of this Agreement, and the mutual covenants and agreements herein contained, and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the Parties do hereby covenant and agree as follows: 203193300.19 -2- DEFINED TERMS For purposes of this Agreement and the Appendices and Exhibits, the following terms, phrases, words, and their derivatives shall have the meanings set forth in this Section. 1.1 “AAA” has the meaning given such term in Section 23.1.2. 1.2 “AD Agreement” has the meaning given such term in the Recitals. 1.3 “AD Equipment” shall mean bike share equipment paid for by the Air District or Pilot Cities under the AD Agreement. 1.4 “Adjustment” shall mean permanent or temporary changes to a Station’s size or configuration, and changes to Street Treatments and Street Markings as necessitated by such, without changes to the Station location. 1.5 “Advertising” shall mean any printed matter, including, but not limited to, words, pictures, photographs, symbols, graphics or visual images of any kind, or any combination thereof, promoting or soliciting the sale or the use of a product or service or providing other forms of textual or visual messages or information for the sale or the use of a product or service, but in no event shall it include any textual information that is required to be posted on any Equipment by any federal, state or local law, rule or regulation, or by this Agreement. 1.6 “Advertising Restrictions” has the meaning given such term in Section 7.2. 1.7 “Agents” has the meaning given such term in Section 17.1. 1.8 “Agreed Completion Dates” shall mean, collectively, the Agreed Phase I Completion Date, the Agreed Phase II Completion Date, the Agreed Phase III Completion Date, the Agreed Phase IV Completion Date and the Agreed Phase V Completion Date. 1.9 “Agreed Phase I Completion Date” has the meaning given such term in Section 3.4.1. 1.10 “Agreed Phase II Completion Date” has the meaning given such term in Section 3.4.2. 1.11 “Agreed Phase III Completion Date” has the meaning given such term in Section 3.4.3. 1.12 “Agreed Phase IV Completion Date” has the meaning given such term in Section 3.4.4. 1.13 “Agreed Phase V Completion Date” has the meaning given such term in Section 3.4.5. 1.14 “Agreed Phase I Site Permit Submission Date” has the meaning given such term in Section 3.4.1. 1.15 “Agreed Phase II Site Permit Submission Date” has the meaning given such term in Section 3.4.2. 203193300.19 -3- 1.16 “Agreed Phase III Site Permit Submission Date” has the meaning given such term in Section 3.4.3. 1.17 “Agreed Phase IV Site Permit Submission Date” has the meaning given such term in Section 3.4.4. 1.18 “Agreed Phase V Site Permit Submission Date” has the meaning given such term in Section 3.4.5. 1.19 “Agreed Site Permit Submission Dates” shall mean, collectively, the Agreed Phase I Site Permit Submission Date, the Agreed Phase II Site Permit Submission Date, the Agreed Phase III Site Permit Submission Date, the Agreed Phase IV Site Permit Submission Date and the Agreed Phase V Site Permit Submission Date. 1.20 “Agreement” has the meaning given such term in the Preamble, together with all Appendices and Exhibits, and all amendments or modifications hereof or thereof. 1.21 “Air District” has the meaning given such term in the Recitals. 1.22 “Alcohol Advertising” shall mean Advertising or Sponsorship, the purpose or effect of which is (i) to identify a brand of an alcohol product, a trademark of an alcohol product or a trade name associated exclusively with an alcohol product, or (ii) to promote the use or sale of an alcohol product. 1.23 “Annual Member” shall mean a user having an Annual Membership. 1.24 “Annual Membership” has the meaning given such term in Section 9.2.1. 1.25 “Annual Membership Fee” has the meaning given such term in Section 9.2.1. 1.26 “Annual Membership Fee Cap” has the meaning given such term in Section 9.2.1. 1.27 “Applicable Interest Rate” in effect at any date shall mean the prime rate as most recently published in the Eastern edition of the Wall Street Journal on or prior to such date plus 3%. 1.28 “Assessment Period” has the meaning given such term in Section 2.6.2(b). 1.29 “Back-end Software” designates all Software components of the central application provided by Operator’s Software vendor and stored on the servers of such vendor, used for operation of such vendor’s equipment, and accessible online from a remote location using the Hosted Infrastructure. 1.30 “Bankruptcy Code” means the Bankruptcy Reform Act of 1978, as amended (Title 11 (U.S.C.). 1.31 “Berkeley Effective Date” has the meaning given such term in Section 2.16. 1.32 “Bicycle” shall mean a vehicle with pedals and with 2 wheels held in a frame and aligned one behind the other and steered with a steering wheel as further described in Appendix D. “Bicycle” shall not include motorized vehicles, including scooters or mopeds. For the avoidance of doubt, electric assisted bicycles constitute Bicycles and do not constitute motorized vehicles. 203193300.19 -4- 1.33 “Bicycle Availability” shall mean conformance with the required Bicycle Fleet Level. 1.34 “Bicycle Fleet Level” shall mean the number of Bicycles that are operational, on-the-street and available for public use. 1.35 “Bicycle Maintenance” shall mean, at a minimum, that the following checks are performed on a Bicycle, with deficient elements repaired or replaced as necessary: 1.35.1 Check tire pressure, and add air as may be needed, to recommended Pounds per Square Inch measurement; 1.35.2 Check tightness of handlebars, headset bearings, and full handlebar range of motion (left to right); 1.35.3 Check tightness of seat, seat post quick-release, and see that seat post moves freely in full range of motion (up and down); 1.35.4 Check brake function (front and rear); 1.35.5 Check grips for wear and brake levers for tightness and damage; 1.35.6 Check bell for tightness and correct function; 1.35.7 Check handlebar covers for damage and instruction stickers; 1.35.8 Check front basket for tightness and damage, and check bungee cord for wear; 1.35.9 Check for correct gears and shifter function through all 5 gears; 1.35.10 Check fenders (front and rear) for damage, and clean outside of fenders; 1.35.11 Check tires (front and rear) for damage or wear; 1.35.12 Check wheels (front and rear) for trueness, broken or bent spokes and hub or axle tightness; 1.35.13 Check LED lights (front and rear) for function; 1.35.14 Check reflectors on wheels, seat and basket, to ensure they are present, clean, and undamaged; 1.35.15 Check pedals and cranks for tightness; 1.35.16 Lubricate and clean chain and check chain tensioner for correct function; 1.35.17 Check kickstand for correct function; and 1.35.18 Take brief test ride to ensure overall correct function of Bicycle. 203193300.19 -5- 1.36 “Bikeshare Holdings” shall mean Bikeshare Holdings LLC, a Delaware limited liability company, the sole member of Operator, and its successors. 1.37 “Claims” has the meaning given such term in Section 16.1. 1.38 “Cluster” shall mean, with respect to any Station, the Stations located within one-third of a mile from such Station, unless fewer than 3 other Stations are located within one-third of a mile from such Station, in which case such Station’s Cluster shall mean the 3 other Stations located closest to such Station. 1.39 “Cluster Outage” shall mean an instance when either: 1.39.1 There are no empty, Operable Docks available at any of the Stations in a Cluster; 1.39.2 There are no Bicycles available for use at any of the Stations in a Cluster. (Bicycles Wrenched in Docks are not considered as available for use.) 1.40 “Computer Hardware” electronic component that provides information or controls a mechanical device and that is controlled by local or remote software. 1.41 “Contract Year” has the meaning given such term in Section 8.1.1. 1.42 “Coordination Agreement” has the meaning given such term in the Recitals. 1.43 “CPI” shall mean the Consumer Price Index for the Consolidated Metropolitan Statistical Area covering San Francisco-Oakland-San Jose, as measured by the Consumer Price Index for All Urban Consumers, as published from time to time by the Bureau of Labor Statistics, U.S. Department of Labor. 1.44 “CPI Adjustment” shall mean, with respect to a specific cost, that such cost is subject to annual adjustment each January 1 based on changes in the CPI from the Effective Date to the date of adjustment. 1.45 “Deactivation” shall mean, at a minimum, shut-down of Kiosk (or display of messaging on Kiosk screen indicating that Station is out of service) removal of all Bicycles present, installation of physical barriers on all Docks that prevent docking of Bicycles, and designation of the Station as “Out of Service” on the Program website, app, and all other real-time data sources. A Deactivation event is not over until the Station has been reactivated. 1.46 “Default” has the meaning given such term in Section 18.1. 1.47 “De-Installation” shall mean, at a minimum, (i) the temporary or permanent full removal of the Station and its associated Street Treatments, and, (ii) the designation of the Station as “Out of Service” on, or removal of the Station from, the Program website, app, and all other real-time data sources. 1.48 “Designated Representative” has the meaning given such term in Section 25.1. 1.49 “Discovery” shall mean any Operator employee gaining actual knowledge by personal observation of such employee or by Notification of any defect in the Equipment or Program. 203193300.19 -6- 1.50 “Dispute Resolution Process” has the meaning given such term in Section 23.1. 1.51 “Docks” shall mean the locking mechanisms contained on a Station that are designed to receive a Bicycle for locked storage. 1.52 “Electing City” shall mean a Peninsula Pilot City or other Eligible City that elects, in accordance with Section 3.2, to participate in the Program. 1.53 “Effective Date” has the meaning given such term in the Preamble. 1.54 “Eligible City” shall mean any city located in the MTC Area. 1.55 “Equipment” shall include Stations, Kiosks, Docks and Bicycles, either individually or in any combination thereof. 1.56 “Escrow Agreement” means an escrow agreement to be executed among the vendor of the Software, Operator, and a nationally reputable company that provides escrow deposit services with respect to software and technology, as escrow agent, for the deposit, storage and release of the proprietary source code of Vendor for all of Vendor’s software made available to Operator to operate the Equipment, which agreement shall be in form acceptable to the parties thereto and in form reasonably acceptable to MTC. 1.57 “Event of Force Majeure” shall mean a delay, suspension or interruption due to strike; war or act of war (whether an actual declaration of war is made or not); terrorism; insurrection; riot; injunction; fire, flood or similar act of providence; or other similar causes or events to the extent that such causes or events are beyond the control of the Party claiming an Event of Force Majeure, provided in each case that such Party has taken and continues to take all reasonable actions to avoid or mitigate such delay, suspension or interruption and provided that such Party notifies the other Party to this Agreement in writing of the occurrence of such delay, suspension or interruption within 5 business days, or if not reasonably practicable, as soon thereafter as reasonably practicable, of the date upon which the Party claiming an Event of Force Majeure learns or should have learned of its occurrence. A delay in a decision by a government entity, the approval of which is a condition to an occurrence, shall not constitute an “Event of Force Majeure” unless such delay is beyond the normal period in which such entity generally acts with respect to the type of decision being sought and only if the Party claiming Event of Force Majeure has taken and continues to take all reasonable steps to pursue such decision. The financial incapacity of Operator shall not constitute an Event of Force Majeure. 1.58 “Executive Director” shall mean the Executive Director of MTC, or any successor in function to the Executive Director. 1.59 “Firearms Advertising” shall mean Advertising or Sponsorship, the purpose or effect of which is (i) to identify a brand of firearms or ammunition, a trademark of a firearm or ammunition or a manufacturer of firearms or ammunition, or a trade name associated exclusively with a firearms or ammunition, or (ii) to promote the use or sale of firearms or ammunition. 1.60 “Functional Specifications” shall mean the specifications set forth in Appendix D, subject to Section 6.7. 203193300.19 -7- 1.61 “Hacking” shall mean unauthorized and intentional access to the Computer Hardware for the Program and/or Software. 1.62 “Hosted Infrastructure” means the hosting of the Back-end Software and associated network access designed and controlled by Operator’s Software vendor, which renders the Back-end Software accessible to Operator and its end users; 1.63 “Indemnified Party” and “Indemnified Parties” have the meaning given such terms in Section 16.1. 1.64 “Infill” shall mean the placement of additional Stations within the Program Area in order to address unmet demand or community request. 1.65 “Initial Meeting Date” has the meaning given such term in Section 23.1.1. 1.66 “Initial Ride Period” has the meaning given such term in Section 9.2.3. 1.67 “Initial Term” has the meaning given such term in Section 2.2. 1.68 “Installation Scheduling Permits” shall mean permits required for the scheduling of the installation of Station-related Equipment at Sites proposed for Stations for which a Site Permit has been issued as a check for conflicts with other activities at the same location. The “temporary occupancy permit” issued by the San Francisco Department of Public Works is an example of an Installation Scheduling Permit. 1.69 “Institutional Lender” shall mean any savings bank, a savings and loan association, a commercial bank or trust company (whether acting individually or in a fiduciary capacity), an insurance company organized and existing under the laws of the United States or any state thereof, a religious, educational or eleemosynary institution, a federal, state or municipal employee’s welfare, benefit, pension or retirement fund, any governmental agency or entity insured by a governmental agency, a credit union, trust or endowment fund, or any combination or syndicate of Institutional Lenders or other lenders that is led by an agent that qualifies as an Institutional Lender (in which case such combination or syndicate shall, for purposes of this Agreement, constitute a single Institutional Lender); provided, that each of the above entities (or, in the case of any such combination or syndicate, the agent) shall qualify as an Institutional Lender only if it (a) is subject to service of process within the State of California and (b) has a net worth of not less than $50,000,000 and net assets of not less than $250,000,000. A wholly-owned subsidiary of any of Person that qualifies as an Institutional Lender is also an Institutional Lender. 1.70 “Key Performance Indicators” (or “KPIs”) has the meaning given such term in Appendix A. 1.71 “Kiosk” shall mean the payment terminal that provides Bicycle rental instructions, contains payment equipment (e.g., a credit card device), and includes all other physical means necessary for the rental of Bicycles. 1.72 “KPI Contest Notice” has the meaning given such term in Section 2.6.3(b). 1.73 “KPI Change Request” has the meaning given such term in 2.6.2(a). 203193300.19 -8- 1.74 “KPI Failure Notice” has the meaning given such term in 2.6.3 (a). 1.75 “KPI LD Payment Date” has the meaning given such term in Section 2.6.3(b). 1.76 “Liabilities” has the meaning given such term in Section 16.1. 1.77 “Membership Fee” has the meaning given such term in Section 9.1. 1.78 “MTC” has the meaning given such term in the Preamble, together with any successor thereto. 1.79 “MTC Area” means the 9 counties in the San Francisco Bay Area within MTC’s jurisdiction. 1.80 “MTC/Participating City Property” shall mean the trademarks, logos, servicemarks, and other intellectual property rights of MTC and/or the Participating Cities. 1.81 “Notification” shall mean all information provided by MTC, a Participating City or the general public to Operator about a specific defect or problem concerning the Program, Equipment or operations of the Program by written document, email to Operator’s public information email address for the Program, or telephone call to Operator’s call-in center for the Program. 1.82 “Oakland Effective Date” has the meaning given such term in Section 2.16. 1.83 “Operable Dock” shall mean a Dock that can both rent and receive bicycles from all Program users and is not physically obstructed in a manner that would prevent such use. 1.84 “Operable Station” shall mean a Station at which at least 90 percent of all installed Docks are Operable Docks from which an Annual Member can check out and return a Bicycle. 1.85 “Operator” has the meaning given such term in the Preamble. 1.86 “Operator Property” has the meaning given such term in Section 10.3. 1.87 “Operator Basic Function Software” shall mean software and other intellectual property developed by Operator that is integral to the basic function of the Program (such as mobile apps that allow for the unlocking of Bicycles). As of the Effective Date, no Operator Basic Function Software has been developed. 1.88 “Operator Non-Basic Function Software” shall mean software and other intellectual property developed by Operator that enhances the functionality of the Program but is not necessary for the basic function of the Program (such as the Program website or mobile apps that allow users to identify nearby Stations with available Bicycles or available Docks). 1.89 “Participating City” and “Participating Cities” have the meaning given such terms in the Preamble. 1.90 “Participating City Delay” has the meaning given such term in Section 4.2. 203193300.19 -9- 1.91 “Parties” shall mean MTC and Operator, and “Party” shall mean one of them, as the context requires. The term “parties” shall mean, collectively, Operator, MTC and the Participating Cities. 1.92 “Payment Breach” has the meaning given such term in Section 15.3.1. 1.93 “Peak Hours” has the meaning given such term in Section 2.6.2(b). 1.94 “Peninsula Pilot Cites” shall mean the cities of Mountain View, Palo Alto and Redwood City. 1.95 “PII” has the meaning given such term in Section 2.15. 1.96 “Person” shall mean any human being or any association, firm, partnership, joint venture, corporation, limited liability company, governmental entity or other legally recognized entity, whether for profit or not for profit. 1.97 “Pilot Cities” has the meaning given such term in the Recitals. 1.98 “Phase” shall mean any one of Phase I, Phase II, Phase III, Phase IV and Phase V, as the context requires, and Phases shall mean, collectively, Phase I, Phase II, Phase III, Phase IV and Phase V. 1.99 “Phase I” has the meaning given such term in Section 3.4.1. 1.100 “Phase II” has the meaning given such term in Section 3.4.2. 1.101 “Phase III” has the meaning given such term in Section 3.4.3. 1.102 “Phase IV” has the meaning given such term in Section 3.4.4. 1.103 “Phase V” has the meaning given such term in Section 3.4.5. 1.104 “Phase I Stations” has the meaning given such term in Section 3.4.1. 1.105 “Phase II Stations” has the meaning given such term in Section 3.4.2. 1.106 “Phase III Stations” has the meaning given such term in Section 3.4.3. 1.107 “Phase IV Stations” has the meaning given such term in Section 3.4.4. 1.108 “Phase V Stations” has the meaning given such term in Section 3.4.5. 1.109 “PPI” shall mean the Producer Price Index for the United States, as measured by the Producer Price Index for final demand, as published from time to time by the Bureau of Labor Statistics, U.S. Department of Labor. 1.110 “PPI Adjustment” shall mean, with respect to a specific cost, that such cost is subject to annual adjustment each January 1 based on changes in the PPI from the Effective Date to the date of adjustment. 203193300.19 -10- 1.111 “Program” shall mean Equipment, Sites, website, Backend Software and Computer Hardware and the Services. 1.112 “Program Area” shall mean the entire area of all Participating Cities. 1.113 “Program Fleet” shall mean the total number of Bicycles required to serve the Program Area as specified in Section 3. 1.114 “Program Name” has the meaning given such term in Section 10.2. 1.115 “Program Property” shall mean (a) the Equipment, and (b) all relevant licenses and rights to the Equipment and the Software (excluding Operator Non-Basic Function Software). 1.116 “Program Property Assignment Conditions” shall mean the following: (a) Operator and the purchaser of the Program Property have agreed on the purchase price for the Program Property, which shall be based on the fair market value of the Program Property as an installed system at the time of the purchase, (b) such purchaser has paid Operator the agreed upon purchase price for the Program Property, and (c) such purchaser and Operator have entered into a license agreement with respect to the Operator Basic Function Software, which license agreement shall (i) strictly prohibit use of the Operator Basic Function Software for any other purpose other than the operation of the Program during such purchaser’s tenure as operator of the Program, (ii) strictly prohibit the sale, lease, license, sublicense or other transfer of such software, (iii) strictly prohibit any attempt to derive the source code of such software, (iv) strictly prohibit the development of any derivative software based on such software, and (v) contain such other customary terms and provisions intended to govern the licensing and use of proprietary software by a competitor of the licensor to prevent, or limit the risk of, unauthorized use or infringement of such software by such licensee or any third party, and such other customary terms and provisions intended to protect the licensor from the licensee or any third party obtaining proprietary information for use by such licensee or any third party other than the use specifically authorized in such license agreement. 1.117 “Prohibited Advertising” shall mean outdoor advertising that is prohibited by local laws, regulations or ordinances of the Participating City. 1.118 “Property Damage Breach” has the meaning given such term in Section 15.3.2. 1.119 “Rebalancing” shall mean actions taken by Operator to prevent or rectify Cluster Outages, subject, however, to Section 2.6.2(b). 1.120 “Recognized Lender” shall mean the holder of a Recognized Loan. 1.121 “Recognized Loan” shall mean any loan that is held by an Institutional Lender. 1.122 “Regular Annual Member” has the meaning given such term in Section 9.2.1. 1.123 “Regular Annual Membership” has the meaning given such term in Section 9.2.1. 1.124 “Renewal Term” has the meaning given such term in Section 2.4. 1.125 “Renewal Condition” has the meaning given such term in Section 2.4. 203193300.19 -11- 1.126 “Replacement Agreement” has the meaning given such term in Section 19.4. 1.127 “Revenue Sharing Credit Period” has the meaning given such term in Section 8.2.4. 1.128 “Ridership Revenue” has the meaning given such term in Section 8.1.2. 1.129 “Ridership Revenue Hurdle” has the meaning given such term in Section 8.1.3. 1.130 “Scheduled Phase I Completion Date” has the meaning given such term in Section 3.4.1. 1.131 “Scheduled Phase II Completion Date” has the meaning given such term in Section 3.4.2. 1.132 “Scheduled Phase III Completion Date” has the meaning given such term in Section 3.4.3. 1.133 “Scheduled Phase IV Completion Date” has the meaning given such term in Section 3.4.4. 1.134 “Scheduled Phase V Completion Date” has the meaning given such term in Section 3.4.5. 1.135 “Scheduled Phase V Plus 90 Days Date” has the meaning given such term in Section 8.2.4. 1.136 “Scheduled Phase Completion Date” shall mean any of the Scheduled Phase I Completion Date, the Scheduled Phase II Completion Date, the Scheduled Phase III Completion Date, the Scheduled Phase IV Completion Date or the Scheduled Phase V Completion Date, as the context requires. 1.137 “Security Fund” has the meaning given such term in Section 15.1. 1.138 “Self-Help Situation” has the meaning given such term in Section 15.3.3. 1.139 “Services” shall mean the installation, operation and maintenance of the Stations and the acquisition, placement, maintenance and rental to users of the Bicycles. 1.140 “Site” shall mean a designated area on publicly or privately owned real property, which area contains a Station that conforms to the Siting Criteria. 1.141 “Site Permits” shall mean permits for installation of Station-related Equipment at Sites proposed for Stations (other than Installation Scheduling Permits or Special Traffic Permits). 1.142 “Siting Criteria” has the meaning given such term in the Coordination Agreement. 1.143 “Software” shall means the software and the Equipment it runs on required to operate the Equipment. 1.144 “Special Traffic Permit” shall mean a permit required if installation of Station-related Equipment will interfere with pedestrian, bicycle, transit or vehicular traffic in a material respect. The Special Traffic Permit issued by the San Francisco Municipal Transportation Authority (SFMTA) in accordance with SFMTA’s Regulations for Working in San Francisco Streets is an example of a Special Traffic Permit. 1.145 “Sponsor” means a Person contributing payments for the Program in exchange for acknowledgment of its contribution. 203193300.19 -12- 1.146 “Sponsor Property” has the meaning given such term in Section 10.2. 1.147 “Sponsorship” shall mean an arrangement pursuant to which, in connection with a payment or payments that will be used to help defray the costs of installing or operating the Program, the Person contributing such payment or payments is acknowledged by the Parties for such contribution. 1.148 “Sponsorship Revenue” has the meaning given such term in Section 8.1.4. 1.149 “Sponsorship Revenue Hurdle” has the meaning given such term in Section 8.1.5. 1.150 “State” shall mean the State of California. 1.151 “Station” shall mean a Kiosk (subject to Section 6.5), map module, a variable number of Docks and, when applicable, Street Treatment(s) and Street Markings, designed in accordance with the Functional Specifications set forth in Appendix D. 1.152 “Station Cleaning” shall mean, at a minimum that the following tasks are performed by Operator at a Station: 1.152.1 Removal of litter at the Station; and 1.152.2 As needed power washing of the Docks and Street Treatments comprising a Station and the pavement area on which a Station is situated. 1.153 “Street Marking(s)” shall mean thermoplastic paint markings and/or striping on the pavement for the express purpose of demarcating a Station. 1.154 “Street Treatments” shall mean the three-dimensional objects used to demarcate the Station, and protect it from adjacent parking and moving traffic. Such objects may include, but are not limited to, delineators and wheel stops. 1.155 “Street Treatment Requirements” shall mean a Participating City’s requirements with respect to Street Treatments as set forth in the Siting Criteria for such Participating City. 1.156 “Term” has the meaning given such term in Section 2.2. 1.157 “Title Sponsor” shall mean Operator’s system-wide Sponsor for the entire Program. 1.158 “Tobacco Advertising” shall mean Advertising or Sponsorship that bears a health warning required by federal statute, the purpose or effect of which is to identify a brand of a tobacco product (any substance that contains tobacco, including, but not limited to, cigarettes, cigars, pipe tobacco and chewing tobacco), a trademark of a tobacco product or a trade name associated exclusively with a tobacco product, or to promote the use or sale of a tobacco product. 1.159 “Trips” shall mean the use of a Bicycle from one Station to another Station or back to the initial Station. 1.160 “Vendor” shall mean the company selected by Operator to provide the Software (other than the Operator Software). 203193300.19 -13- 1.161 “Wayfinding Elements” shall mean the maps posted on every Station, showing the location of each Station. 1.162 “Wrench” shall mean the action of locking a Bicycle in a Dock such that it cannot be released by Program users pending action by Operator. SCOPE OF SERVICES 2.1 General Requirements. Operator shall (a) provide the Services in conformance with the terms of this Agreement, (b) provide all of the Equipment and Software required to operate the Program, (c) procure all of the relevant licenses and rights to use the Equipment and Software to operate the Program, (d) procure all licenses and permits from applicable governmental agencies that are required to provide the Services from all applicable governmental agencies, and (e) comply with all applicable laws, rules and regulations of the United States, the State and the Participating Cities. 2.2 Initial Term. The term (the “Term”) of this Agreement shall commence on the Effective Date and shall end on the last day of the calendar month in which the 10th anniversary of the earlier of (a) the date that Phase I is completed, and (b) the Agreed Phase I Completion Date occurs (the “Initial Term”), subject to Section 2.3. 2.3 Reduction of Initial Term. If Operator does not complete 75% of Phase I, Phase II, Phase III, or Phase IV by the Agreed Phase I Completion Date, the Agreed Phase II Completion Date, the Agreed Phase III Completion Date, the Agreed Phase IV Completion Date, respectively, or 100% of Phase V by the Agreed Phase V Completion Date, then MTC shall have the right, by notice to Operator given with 60 days of the respective missed Completion Date, to reduce the Initial Term by 5 years, subject to the rights of the Recognized Lender set forth in Section 19.5. In addition, if on the 4th anniversary of the earlier of (a) the date that Phase I is completed, and (b) the Agreed Phase I Completion Date, a Default exists under Section 18.1.5, then MTC shall have the right, by notice to Operator given with 60 days of such 4th anniversary, to reduce the Initial Term by 5 years, subject to the rights of the Recognized Lender set forth in Section 19.5. Any amounts due pursuant to Section 8.2 shall be due within 120 days after expiration of the Term as reduced pursuant to this Section 2.3. 2.4 Renewal Term. If the Initial Term has not been reduced pursuant to Section 2.3 and Operator is in substantial compliance with the terms of this Agreement one year prior to the expiration of the then current Term (the “Renewal Condition”), then, upon mutual agreement of the Parties, the Term may be extended for 2 5-year renewals terms (each a “Renewal Term”) on substantially equivalent terms applicable to the Initial Term. Subject to Operator’s satisfaction of the Renewal Condition and the mutual agreement of the Parties to extend the Term, MTC and Operator shall engage in good faith negotiations on a mutually acceptable agreement for each Renewal Term commencing one year prior to the expiration of the then current Term with the goal of the Parties entering into an agreement for the respective Renewal Terms prior to the commencement of each Renewal Term. Until such agreement is entered into for the initial Renewal Term, this Agreement shall govern the relationship between the Parties, and until such agreement is entered into for the second Renewal Term, the agreement for the initial Renewal Term shall govern the relationship between the Parties. 203193300.19 -14- 2.5 Non-Renewal. Notwithstanding anything to the contrary contained in Section 2.4, Operator has the right not to renew the Term for either Renewal Term by notice given to MTC not later than 6 months prior to the expiration of the then current Term. If Operator gives MTC a non-renewal notice in accordance with the preceding sentence, then this Agreement shall end upon the expiration of the then current Term. 2.6 Services. 2.6.1 Subject to Events of Force Majeure, following completion of Phase I, Operator shall operate the Program so that it is fully operational at all Stations, consistent with the Key Performance Indicators as set forth in Appendix A, 24 hours per day, seven days per week, every day of each year, during the Term. 2.6.2 Adjustments to KPIs. (a) KPIs in General. Notwithstanding anything to the contrary, if at any time and from time to time either Party in good faith believes that the KPIs should be updated, including by amending, supplementing or replacing them, (a) on account of technological developments incorporated into the Program by Operator, or (b) because the Party seeking changes believes the KPIs are ineffective, or not as effective as the KPIs could be, in strengthening the Program, the customer experience, and Operator’s performance, then the Party seeking changes to the KPIs shall submit proposed changes to the KPIs together with an explanation of how the proposed changes would address the deficiencies in the then existing KPIs (“KPI Change Request”). Within 10 business days thereafter, the other Party shall either accept the KPI Change Request in writing, or reject the KPI Change Request along with the reasons for the rejection. In the case of such rejection, at the request of the Party submitting the KPI Change Request, the matter will be referred to discussion in accordance with Section 23.1.1, except the matter will not be subject to mediation in accordance with Section 23.1.2. If the matter is not resolved within 30 business days of the KPI Change Request, the KPIs shall not be changed pursuant to the KPI Change Request. In lieu of rejecting or accepting a proposed KPI change, the Parties may agree to test trials to test proposed changes and then defer any decision until the conclusion of the trial period. (b) Rebalancing. It is the objective of Operator to maximize the utility of the Program and the customer experience at all times, but particularly during the hours between 6:00 AM and 10:00 PM (“Peak Hours”), in a cost effective manner. Maximizing utility requires that Operator take affirmative steps to address severe imbalances in the demand for and supply of available Bicycles and empty Operable Docks during Peak Hours, which imbalances typically arise from patterns in demand and usage in which Bicycles typically travel in one direction. Operator’s objective is to minimize instances, and minimize the duration of those instances, in a cost effective manner, when the demand for an empty Operable Dock or an available Bicycle at a Station is not met by the available supply at that Station. Achieving this objective is a multistep and collaborative process requiring the involvement, cooperation and flexibility on the part of Operator, MTC and the Participating Cities. To achieve this objective, during the period commencing upon the completion of Phase I and ending 6 months after the completion of Phase V (the “Assessment Period”), the parties will (i) observe demand and use patterns as the Program is being implemented to identify the times and locations that a shortage of empty Operable Docks and/or a shortage of available Bicycles arises and the extent of the shortages at those time and locations; and (ii) assess alternative approaches to alleviating outages, including, by way of example, by (A) enlarging existing Stations or adding new Stations in areas in which there is a shortage, (B) finding and utilizing storage areas located near Stations that experience Bicycle shortages so that additional Bicycles can be 203193300.19 -15- deployed quickly, (C) prioritizing Stations by demand and time of demand so that Operator may, at any particular time, focus more attention on those Stations with the highest demand at that time and less attention on those Stations with weaker demand at that time and have greater flexibility to address those Stations with weaker demand, and (D) identifying the optimal time of day for Operator to transport Bicycles from areas in which there is a shortage of empty Operable Docks to areas in which there is a shortage of Bicycles, which optimality will take into account when it is most efficient for Operator to transport the Bicycles in order to meet the anticipated demand at the transferee Stations. As the parties are developing approaches to alleviating outages during the Assessment Period, the parties shall also reformulate a commercially reasonable KPI for Rebalancing. While Operator will strive to reduce and eliminate Cluster Outages at all times commencing on the completion of a Phase, liquidated damages for the Rebalancing KPI will not be assessed for any Phase until 6 months after the completion of such Phase. The Rebalancing KPI will be refined and reformulated during the Assessment Period, and the KPI, as refined and reformulated, will be fully implemented and effective immediately after the end of the Assessment Period. The parties recognize that as patterns of use and demand, as well as levels of use and demand, change from and after the Assessment Period, different outages may arise, which will also need to be addressed in the manner set forth above. 2.6.3 Subject to Events of Force Majeure, if Operator fails to comply with the KPIs, Operator shall be required to pay MTC liquidated damages as calculated in Appendix A, provided that the maximum aggregate liquidated damages payable by Operator in any calendar year for failure to comply with the KPIs is 4% of Ridership Revenue for such calendar year. (a) MTC is entitled to liquidated damages for failure of Operator to comply with the KPIs by notice (a “KPI Failure Notice”) given to Operator (i) not more frequently than once per quarter, and (ii) not later than 120 days after the occurrence of the related failure, except with respect to the failure to comply with a KPI that is measured on an annual basis, for which the KPI Failure Notice shall be given by March 31 of the following calendar year. Each KPI Failure Notice shall provide specific and detailed information about the failure to comply and the amount of the liquidated damages due in connection therewith. (b) Prior to the later of (a) 30 days after Operator’s receipt of a KPI Failure Notice and (b) the end of the calendar quarter in which such KPI Failure Notice is given (the later of (a) and (b) being the “KPI LD Payment Date”), Operator shall either pay the full amount of liquidated damages set forth in the KPI Failure Notice or 50% of such amount along with a notification to MTC that Operator seeks to contest, in good faith, the assessment of the liquidated damages (a “KPI Contest Notice”). The KPI Contest Notice shall provide specific and detailed information that rebuts or challenges the information contained in the corresponding KPI Failure Notice. After a KPI Contest Notice is given, any disputes relating to the subject matter of the KPI Failure Notice and the KPI Contest Notice shall be resolved in accordance with the Dispute Resolution Process. (c) If Operator does not timely give a KPI Contest Notice in response to a KPI Failure Notice, then interest on the liquidated damages set forth in the KPI 203193300.19 -16- Failure Notice shall accrue at the Applicable Interest Rate in effect from time to time commencing on the KPI LD Payment Date. If Operator does timely give a KPI Contest Notice in response to a KPI Failure Notice and the Dispute Resolution Process results in Operator being required to pay liquidated damages, then Operator shall make such payment within 30 days following the date that the liquidated damages dispute is resolved in accordance with the Dispute Resolution Process, and interest on the liquidated damages shall accrue at the Applicable Interest Rate in effect from time to time commencing on such 30th date. 2.7 [INTENTIONALLY OMITTED] 2.8 Ownership of Equipment. Except as provided in Sections 3.2 and 3.3, all Equipment shall at all times be the property of Operator, subject to the lien thereon by any Recognized Lender. 2.9 Costs of Program. 2.9.1 Except as otherwise provided, each party shall bear its own costs in connection with the Program, if such costs are applicable, including, but not limited to, costs incurred in connection with: negotiating this Agreement and the Coordination Agreement and preparing the Siting Criteria; Site selection; the review required for issuance of Site Permits, Installation Scheduling Permits, Special Traffic Permits and other permits; Equipment installation; exercising enforcement, inspection and audit rights; prosecuting or defending claims arising from the Program, and marketing, to the extent that MTC and/or the Participating Cities choose to undertake marketing. 2.9.2 Except as otherwise provided in Section 2.9.3, MTC and the Participating Cities shall not be obligated to pay or bear any of the costs associated with or expenses incurred for the Equipment, Software, or Services. 2.9.3 Each Participating City may elect, if additional incremental dedicated capital and operating funds becomes available for the Program, to expand the Program within its borders by adding Stations, Docks and Bicycles, provided that such Participating City shall be responsible for securing funds to pay for the cost of purchasing, installing, maintaining and operating the Equipment required for such expansion as set forth in Appendix A of the Coordination Agreement. 2.9.4 Operator shall reimburse a Participating City for any other work performed by such Participating City under this Agreement in furtherance of the Program, provided that prior to performing such work such Participating City shall notify Operator that such work will be performed at the expense of Operator, such Participating City provides an itemized invoice for any such work, and Operator is billed for the actual cost incurred by such Participating City without a markup or premium. Operator shall pay for such work within 30 days following receipt of the itemized invoice therefor. In connection with the installation of a Station, such other work may include, but is not limited to, (i) any necessary changes to signs, parking meters and curb paint, and (ii) installation of any striping, delineators or parking blocks outside the perimeter of a Station if the foregoing items are not installed by Operator. 203193300.19 -17- 2.10 Use of Data. All data generated by the Program will be owned by Operator. Operator will grant MTC and the Participating Cities a non-exclusive, royalty-free, irrevocable, perpetual license to use all data generated by the Program, other than personally-identifiable information that can identify individual users, their addresses, their credit card information and other personal information about users, for non-commercial purposes and on a real-time basis; and MTC and each of the Participating Cities shall have the right to grant to others a sublicense to use all such data for non-commercial purposes. 2.11 [INTENTIONALLY OMITTED] 2.12 [INTENTIONALLY OMITTED] 2.13 No Discrimination. Operator shall not discriminate in the implementation of the Program or in the provision of Services on the basis of race, creed, color, national origin, sex, age, marital status, or real or perceived sexual orientation. 2.14 Accessibility. In implementing and operating the Program, Operator shall comply with all applicable requirements of the Americans with Disabilities Act, Section 508 of the Rehabilitation Act of 1973 and all other applicable federal, state and local requirements relating to persons with disabilities, including any rules or regulations promulgated thereunder. Such compliance shall extend to the location and design of Equipment as well as the Program’s website and any mobile application for the Program. 2.15 Personally Identifiable Information (“PII”). All PII obtained or maintained by Operator in connection with this Agreement shall be protected by Operator from unauthorized use and disclosure. This includes, but is not limited to, the secure transport, transmission and storage of PII used or acquired in the performance of this Agreement. Operator agrees to properly secure and maintain any computer systems (hardware and software applications) or electronic media that it will use in the performance of this Agreement. This includes ensuring all security patches, upgrades, and anti-virus updates are applied as appropriate to secure PII that may be used, transmitted, or stored on such systems in the performance of this Agreement. Operator agrees to comply with the information handling and confidentiality requirements outlined in the California Information Practices Act (Civil Code sections 1798 et.seq.). In addition, Operator warrants and certifies that in the performance of this Agreement, it will comply with all applicable statutes, rules, regulations and orders of the United States and the State of California relating to the handling and confidentiality of PII and, as provided in Section 16, agrees to indemnify MTC against any loss, cost, damage or liability by reason of Operator’s violation of this provision. 2.16 Notwithstanding anything to the contrary contained herein or in the Coordination Agreement, as of the Effective Date, (a) the City of Berkeley and the City of Oakland have not completed the approval processes necessary for such cities to execute the Coordination Agreement and for the Coordination Agreement to be effective as to such cities, (b) neither such city is a Participating City, and (c) the Coordination Agreement and this Agreement do not apply to such cities. Upon completion by each such city of its approval processes, including the adoption by each such city of a franchise ordinance as referenced in Sections 29.1 and 32.4 of the Coordination Agreement, and the execution by each such city of the Coordination Agreement, the Coordination Agreement shall thereupon be effective as to such city, each such city shall thereupon be a Participating City under this Agreement and Coordination Agreement, which agreements shall thereupon apply to such city, and the Program Area shall thereupon be expanded to encompass the entirety of such city (the date thereof, as to Berkeley, being the “Berkeley Effective Date,” and, as to Oakland, being the “Oakland Effective Date”). If either or both of such cities does not approve the execution of the Coordination Agreement, then the Parties shall make appropriate 203193300.19 -18- amendments to this Agreement and the Coordination Agreement to reflect the removal of such city or cities, as applicable, from the Program. In addition, the Parties are anticipating that the Berkeley Effective Date will occur in February, 2016 and the Oakland Effective Date will occur in March, 2016. If either such date does not occur until after March 31, 2016, then the Parties shall amend Sections 3.4 and 4.2 to make appropriate adjustments to the timing of the Program. PROGRAM AREA AND EXPANSION; PROGRAM SIZE; PROGRAM TIMING 3.1 Program Area. As of the Effective Date, the Program Area encompasses the entirety of the cities of Emeryville, San Francisco and San Jose. The Program Area shall also encompass the entirety of the City of Berkeley as of the Berkeley Effective Date and the entirety of the City of Oakland as of the Oakland Effective Date. 3.2 Program Area Expansion. Following expiration of the Pilot Program, each of the Peninsula Pilot Cities may elect, by notice to Operator, to continue the bike share program in such Peninsula Pilot City, provided that the Peninsula Pilot Cities shall be responsible for paying the cost of upgrading, purchasing, installing, maintaining and operating the Equipment in accordance with the schedule applicable to the Peninsula Pilot Cities set forth in Appendix B. Following the completion of Phase V, the other Eligible Cities may elect, by notice to Operator, to develop a bike share program in the Eligible Cities, provided that the other Eligible Cities shall be responsible for paying the cost of purchasing, installing, maintaining and operating the Equipment in accordance with the schedule applicable to the other Eligible Cities set forth in Appendix B. Operator shall be required to maintain the Equipment purchased by an Electing City in a state of good repair throughout the Term, and at the end of the Term, Operator shall return such Equipment to the Electing City in good working order but subject to reasonable wear and tear from use and subject to loss and damage caused directly by users. Each Electing City shall enter into with Operator a separate service agreement to establish the number of Stations, Docks and Bicycles for such city, and the schedule for installation of the Equipment for such city, which agreement will also address, among other matters, (i) Siting Criteria, the Site selection process, Street Treatment Requirements, the protocols and procedures for the submission and review of applications and the issuance of permits and approvals, and the Electing City’s requirements with respect to each of the foregoing, (ii) De-installations, Adjustments and Deactivations, and (iii) advertising and sponsorship. 3.3 Program Size. The Program Fleet for Phases I through V is 7,000 to 7,055, allocated among the Participating Cities as follows: 3.3.1 4,500 in San Francisco; 3.3.2 1,000 in San Jose; 3.3.3 1,400 in East Bay, as follows: (a) 850 in Oakland (b) 100 in Emeryville (c) 400 in Berkeley 203193300.19 -19- (d) 50 to be determined based on additional system planning analysis; 3.3.4 If Palo Alto elects to participate in the Program, 37 Bicycles will be distributed to Palo Alto; if Mountain View elects to participate in the Program, 59 Bicycles will be distributed to Mountain View; and if Redwood City elects to participate in the Program, 59 Bicycles will be distributed to Redwood City; if the sum of the Bicycles to be distributed to the Peninsula Pilot Cities that elect to participate in the Program is less than 100, then Operator will distribute in San Francisco, San Jose and East Bay an additional number of Bicycles equal to the difference between 100 and such sum; and if none of the Peninsula Pilot Cities elect to participate in the Program, then Operator will distribute an additional 100 Bicycles in San Francisco, San Jose and East Bay. 3.3.5 The minimum number of Stations in the Participating Cities is 500. 3.4 Program Timing. The schedule for Operator to obtain Site Permits and to install the Equipment is as follows: 3.4.1 Phase I. Operator shall submit to the Participating Cities complete applications for Site Permits for Stations containing 25% of the total Bicycles for San Jose, East Bay and San Francisco (the “Phase I Stations”) by the date that is 5 months after the Effective Date, such date being subject to extension by Events of Force Majeure or by Participating City Delay (such date, as it may be so extended, being the “Agreed Phase I Site Permit Submission Date”). Operator shall not be obligated to commence installation of fully functional and operational Bicycles and related Equipment at such Sites until the date that is 5 months after the issuance by the Participating Cities of Site Permits for 75% of the Phase I Stations and shall complete such installation for all such Sites by the date that is 5 months after the issuance by the Participating Cities of Site Permits for the remainder of such Stations, such date being subject to extension by Events of Force Majeure or by Participating City Delay (such date, as it may be so extended, being the “Agreed Phase I Completion Date”; the installation of the percentage of total Bicycles and related Equipment as required by this paragraph being “Phase I”). Any AD Equipment that is acquired by Operator will count toward the Bicycles and related Equipment required for Phase I. Based on the schedule set forth in this paragraph, the objective of the Parties is for Operator to complete Phase I by the date that is 10 months after the Effective Date (such date being the “Scheduled Phase I Completion Date”). Notwithstanding anything to the contrary contained in this Agreement, if Operator fails to submit to the Participating Cities complete applications for Site Permits for 75% of the Phase I Stations by the date that is 30 days after the Agreed Phase I Site Permit Submission Date, or if Operator fails to place a purchase order, taking into account AD Equipment to be used by Operator, for 75% of the Phase I Bicycles and 75% of the Phase I Stations, by the date that is 30 days after the issuance by the Participating Cities of Site Permits for 75% of the Phase I Stations, then as the sole remedy of MTC and the Participating Cities under this Agreement for such failures, MTC shall have the right to terminate this Agreement upon 10 days’ notice to Operator without any further right of Operator or any Recognized Lender to remedy such failure. Operator shall provide evidence of such purchase order reasonably promptly following a request by MTC. 203193300.19 -20- 3.4.2 Phase II. Operator shall submit to the Participating Cities complete applications for Site Permits for Stations containing an additional 15% of the total Bicycles for San Jose, East Bay and San Francisco (the “Phase II Stations”) by the date that is 9 months after the Effective Date, such date being subject to extension by Events of Force Majeure or by Participating City Delay (such date, as it may be so extended, being the “Agreed Phase II Site Permit Submission Date”). Operator shall not be obligated to commence installation of fully functional and operational Bicycles and related Equipment at such Sites until the date that is 5 months after the issuance by the Participating Cities of Site Permits for 75% of the Phase II Stations and shall complete such installation for all such Sites by the date that is 5 months after the issuance by the Participating Cities of Site Permits for the remainder of such Stations, such date being subject to extension by Events of Force Majeure or by Participating City Delay (such date, as it may be so extended, being the “Agreed Phase II Completion Date”; the installation of the percentage of total Bicycles and related Equipment as required by this paragraph being “Phase II”). Based on the schedule set forth in this paragraph, the objective of the Parties is for Operator to complete Phase II by the date that is 14 months after the Effective Date (such date being the “Scheduled Phase II Completion Date”). 3.4.3 Phase III. Operator shall submit to the Participating Cities complete applications for Site Permits for Stations containing the remaining 60% of the total Bicycles for East Bay (the “Phase III Stations”) by the date that is 12 months after the Effective Date, such date being subject to extension by Events of Force Majeure or by Participating City Delay (such date, as it may be so extended, being the “Agreed Phase III Site Permit Submission Date”). Operator shall not be obligated to commence installation of fully functional and operational Bicycles and related Equipment at such Sites until the date that is 5 months after the issuance by the Participating Cities of Site Permits for 75% of the Phase III Stations and shall complete such installation for all such Sites by the date that is 5 months after the issuance by the Participating Cities of Site Permits for the remainder of such Stations, such date being subject to extension by Events of Force Majeure or by Participating City Delay (such date, as it may be so extended, being the “Agreed Phase III Completion Date”; the installation of the percentage of total Bicycles and related Equipment as required by this paragraph being “Phase III”). Based on the schedule set forth in this paragraph, the objective of the Parties is for Operator to complete Phase III by the date that is 17 months after the Effective (such date being the “Scheduled Phase III Completion Date”). 3.4.4 Phase IV. Operator shall submit to the Participating Cities complete applications for Site Permits for Stations containing an additional 30% of the total Bicycles for San Jose and San Francisco (the “Phase IV Stations”) by the date that is 16 months after the Effective Date, such date being subject to extension by Events of Force Majeure or by Participating City Delay (such date, as it may be so extended, being the “Agreed Phase IV Site Permit Submission Date”). Operator shall not be obligated to commence installation of fully functional and operational Bicycles and related Equipment at such Sites until the date that is 5 months after the issuance by the Participating Cities of Site Permits for 75% of the Phase IV Stations and shall complete such installation for all such Sites by the date that is 5 months after the issuance by the Participating Cities of 203193300.19 -21- Site Permits for the remainder of such Stations, such date being subject to extension by Events of Force Majeure or by Participating City Delay (such date, as it may be so extended, being the “Agreed Phase IV Completion Date”; the installation of the percentage of total Bicycles and related Equipment as required by this paragraph being “Phase IV”). Based on the schedule set forth in this paragraph, the objective of the Parties is for Operator to complete Phase IV by the date that is 20 months after the Effective Date (such date being the “Scheduled Phase IV Completion Date”). 3.4.5 Phase V. Operator shall submit to the Participating Cities complete applications for Site Permits for Stations containing 30% of the total Bicycles for San Jose and San Francisco (the “Phase V Stations”) by the date that is 22 months after the Effective Date, such date being subject to extension by Events of Force Majeure or by Participating City Delay (such date, as it may be so extended, being the “Agreed Phase V Site Permit Submission Date”). Operator shall not be obligated to commence installation of fully functional and operational Bicycles and related Equipment at such Sites until the date that is 5 months after the issuance by the Participating Cities of Site Permits for 75% of the Phase V Stations and shall complete such installation for all such Sites by the date that is 5 months after the issuance by the Participating Cities of Site Permits for the remainder of such Stations, such date being subject to extension by Events of Force Majeure or by Participating City Delay (such date, as it may be so extended, being the “Agreed Phase V Completion Date”; the installation of the percentage of total Bicycles and related Equipment as required by this paragraph being “Phase V”). Based on the schedule set forth in this paragraph, the objective of the Parties is for Operator to complete Phase V by the date that is 26 months after the Effective Date (such date being the “Scheduled Phase V Completion Date”). 3.5 Failure to Achieve Completion of any Phase. Notwithstanding anything to the contrary in this Agreement, for the avoidance of doubt, the sole remedy of MTC and the Participating Cities against Operator under this Agreement for Operator’s failure to complete Phases I, II, III, IV or V by the Agreed Phase I Completion Date, the Agreed Phase II Completion Date, the Agreed Phase III Completion Date, the Agreed Phase IV Completion Date, and the Agreed Phase V Completion Date, respectively, is to reduce the Initial Term pursuant to Section 2.3, subject to the rights of the Recognized Lender. 3.6 Pilot Program. Attachment A sets forth the terms and conditions pursuant to which MTC and Operator have agreed that Operator will continue operation of the Pilot Program. SITING 4.1 General. The Coordination Agreement, together with the Siting Criteria, sets forth, among other matters, (a) the Siting Criteria and the Site selection process for determination and approval of locations of the Stations in each Participating City, and (b) the protocols and procedures for the submission materials by Operator to each Participating City for, and the issuance by the Participating City of, Site Plan approvals and permits to install the Equipment at each Station. 203193300.19 -22- 4.2 Delays in Approval: The following constitute delay (“Participating City Delay”) for which Operator is entitled to an extension in the Agreed Site Permit Submission Dates and the Agreed Completion Dates: 4.2.1 Identification of Sites. If, notwithstanding fulfillment of Operator’s obligations under the Coordination Agreement regarding community engagement, field work and outreach, Operator fails to identify, by a date that is not less than 2 months prior to the Agreed Site Permit Submission Date for a Phase, 75% of the Sites required for such Phase, such Sites being both viable and acceptable to the Participating Cities and the applicable communities, or Operator fails to identify, by a date that is not less than 1 month prior to such Agreed Site Permit Submission Date, the remaining 25% of the Sites required for such Phase, such Sites being both viable and acceptable to the Participating Cities and the applicable communities, then such Agreed Site Permit Submission Date shall be extended by any reasonably necessary additional period required by Operator to identify a sufficient number of viable and acceptable Sites for such Phase. 4.2.2 Issuance of Site Permits. If Operator timely submits complete applications for the Site Permits for any Phase by the applicable Agreed Site Permit Submission Date but the Participating Cities fail to issue Site Permits for 75% of the Stations by the date that is 3 months prior to the Scheduled Phase Completion Date for such Phase other than on account of errors or omissions by Operator or valid reasons for denial, then such failure shall constitute Participating City Delay and Operator shall have the right to delay submission of applications for Site Permits for the next following Phase until a reasonable period after the Participating Cities issue Site Permits for 75% of the Stations for such Phase. 4.2.3 Installation Scheduling Permits. If the period of time for the Participating Cities to issue Installation Scheduling Permits exceeds, on average, 7 days after final submission of the required materials by Operator, or if more than 25% of the Installation Scheduling Permits are issued 14 days or longer after final submission of the required materials, other than on account of errors or omissions by Operator or valid reasons for denial, then the Agreed Completion Dates shall be extended to reflect any reasonably necessary additional period required by Operator to complete the Phases. RESERVED IMPROVEMENTS, MAINTENANCE, REPAIR AND OPERATION 6.1 Operator shall establish and maintain during the Term prompt and efficient procedures for handling complaints from the public for which Operator receives a Notification. Such procedures shall be consistent with all applicable laws, rules and regulations and the provisions of this Section. Such 203193300.19 -23- procedures shall be set forth in writing and copies thereof shall be maintained at Operator’s office and shall be available to the public and the Participating Cities upon request. 6.2 Operator will operate a primary call center that will answer calls in person 24 hours per day, 7 days per week. Operator shall conspicuously post a notice on each Station and each bicycle advising the general public that they may direct their complaints and comments to Operator’s call center. Such call center shall have a full-time availability to handle calls in English, Spanish and Cantonese, whether by in-house staff or by utilization of a translation service. 6.3 Operator shall maintain written, accurate and complete records of all complaints, and those records shall be available to MTC through appropriate Software or, at MTC’s reasonable advance request, in written form. Such records shall indicate: (i) the specific Equipment, including its identifying number and location at a specific point in time, for which the complaint was made; (ii) the type of complaint; (iii) the date and time of complaint; (iv) if the complaint is in written form (non-electronic) and the information is available, the name, address, and telephone number of the Person filing the complaint; (v) Operator’s action to address the complaint; and (vi) to the extent applicable, the date of resolution of the complaint. All such records shall be retained by Operator throughout the Term. Within 7 business days following a request by MTC, Operator shall provide MTC with records of complaints by location or time period, and statistical reports by type of complaint, location of complaint, Station or Bicycle, and time of complaint. 6.4 Following the Effective Date, MTC may, at its option, request that Operator provide it with a full inventory of Bicycles, including numbers and dates of lease or purchase. 6.5 Operator may, without incurring any liquidated damages or causing a default hereunder, (a) shut down the Program or reduce the number of Bicycles and Stations deployed and/or operating in the Program Area for weather-related or other emergencies for the duration of the emergency in its reasonable discretion, (b) reduce the number of Bicycles and Stations deployed and/or operative in the Program Areas as needed to implement upgrades to the Functional Specifications, and (c) phase-out Kiosks when they have become obsolete on account of the availability and usage of mobile phone apps. 6.6 Operator shall incorporate Wayfinding Elements on each Station as directed and approved by MTC with input from the Participating Cites. 6.7 Nothing in this Agreement shall limit Operator’s right to upgrade the Functional Specifications. ADVERTISING AND SPONSORSHIP 7.1 Operator is responsible for identifying Sponsors and developing branding for the Program tied to the Sponsors. In no event shall any Sponsor of Operator produce or sell alcohol products, tobacco products, firearms, other products banned by the Participating Cities or products otherwise deemed offensive to the general public. MTC, in consultation with the Participating Cities, shall provide written approval to Operator prior to Operator entering into a Sponsorship agreement with the Title Sponsor, which approval shall not to be unreasonably withheld or delayed. If MTC declines to give consent or 203193300.19 -24- approval referred to hereunder, it will so advise Operator and provide Operator an opportunity to discuss with MTC and an opportunity to attempt to meet MTC’s objections. 7.2 Operator shall not install, or permit to be installed, on any Equipment, any Tobacco Advertising, Alcohol Advertising, Firearms Advertising or other Prohibited Advertising. Advertising on any Equipment, including electronic media, shall be consistent with guidelines adopted by each Participating City for outdoor advertising as set forth in this Agreement. Operator shall not place any Advertising or Sponsorship acknowledgment matter that is indecent, in obvious bad taste, or demonstrates a lack of respect for public morals or conduct. (The prohibitions and restrictions in this Section 7 and in Section 29 of the Coordination Agreement are referred to collectively as the “Advertising Restrictions”.) 7.3 Operator shall comply with all applicable laws, rules and regulations in force as of the Effective Date and which may hereafter be adopted, to the extent not grandfathered under the law, with respect to Advertising and Sponsorship. 7.4 Neither MTC nor any Participating City shall have any liability or obligation with regard to any Advertising or Sponsorship that survives the termination or expiration of this Agreement, except MTC and the Participating Cities, at no cost to MTC or the Participating Cities, shall cooperate with the Recognized Lender to keep the Sponsorship agreement in effect while a replacement operator is being pursued and will continue to cooperate if a replacement operator is selected. REVENUE SHARING 8.1 Definitions. 8.1.1 “Contract Year” shall mean (a) the period commencing on the Agreed Phase I Completion Date and ending on December 31 of the calendar year in which the Agreed Phase I Completion Date falls, which period shall constitute Contract Year 1, and (b) each subsequent calendar year during the Term, the first of which is Contract Year 2 8.1.2 “Ridership Revenue” shall mean all revenues to the extent actually collected by Operator as determined on a GAAP basis as Program membership or user payments (including but not limited to annual, weekly and daily membership payments), and any other Program revenue generated through Bicycle ridership, net of sales taxes or other taxes imposed by law that Operator is obligated to collect and net of credit card fees netted out of amounts due to Operator by the credit company prior to payment to Operator and other billing related charges treated by the party imposing such charges in a similar manner. 8.1.3 “Ridership Revenue Hurdle” shall mean $18,000,000 per calendar year, subject to CPI Adjustment. The Ridership Revenue Hurdle shall be prorated for any Contract Year that is not 365 days. 8.1.4 “Sponsorship Revenue” shall mean all revenues to the extent actually collected by Operator as determined on a GAAP basis as a result of Program advertising and sponsorships, including without limitation revenue generated in connection with (a) 203193300.19 -25- naming rights related to the Program and (b) Sponsorship or Advertising placements on Bicycles, Stations, Equipment, website, mobile applications or other physical or web- based materials, net of sales taxes or other taxes imposed by law that Operator is obligated to collect and net of credit card fees and other billing related charges. 8.1.5 “Sponsorship Revenue Hurdle” shall mean $7,000,000 per calendar year, subject to CPI Adjustment. The Sponsorship Revenue Hurdle shall be prorated for any Contract Year that is not 365 days. 8.2 Within 120 days following the end of each Contract Year during the Term, Operator shall: 8.2.1 Deliver to the MTC a schedule, certified by a senior officer of Operator, setting forth the Ridership Revenue and the Sponsorship Revenue for such Contract Year; and 8.2.2 Pay to MTC an amount equal to 5% of the excess of Ridership Revenue for such Contract Year over the Ridership Revenue Hurdle for such Contract Year, subject to Section 8.2.4. 8.2.3 Pay to MTC an amount equal to 5% of the excess of Sponsorship Revenue for such Contract Year over the Sponsorship Revenue Hurdle for such Contract Year, including all Sponsorship Revenue for the period between the Effective Date and Contract Year 1, provided that Operator may defer payment of any amount owed for Sponsorship Revenue for Contract Years 1 through 5 during the Term until Contract Years 6 through 10 during the Term, subject to Section 8.2.4. Operator shall pay any amounts so deferred in equal monthly instalments during Contract Years 6 through 10 during the Term. If the Term is reduced pursuant to Section 2.3, then Operator shall pay the amounts so deferred within 120 days following the expiration of this Agreement. 8.2.4 Notwithstanding anything to the contrary herein, if Participating City Delay results in an insufficient number of Site approvals for Operator to accommodate 500 Stations (being the minimum number of Stations identified in Section 3.4) by the Scheduled Phase V Completion Date plus 90 days (the “Scheduled Phase V Plus 90 Days Date”), then in lieu of MTC’s share of Ridership Revenue and Sponsorship Revenue being determined in accordance with the 5% amount set forth in Sections 8.2.2 and 8.2.3, such percentage shall be reduced to the product of 5% and a fraction whose numerator is the number of Stations for which a Site approval has been issued by such date and whose denominator is 500, and such reduced amount shall apply retroactively and prospectively until Site approvals for an aggregate of 500 Stations have been issued. Any amounts theretofore paid by Operator to MTC under this Section 8.2 in excess of such amount due to MTC shall be credited against amounts thereafter payable to MTC under this Section 8.2. Notwithstanding the foregoing, if at any time during the period commencing on the Scheduled Phase V Plus 90 Days Date and ending on the date on which Site approvals for an aggregate of 500 Stations have been issued (such period being the “Revenue Sharing Credit Period”) the Ridership Revenue or the Sponsorship Revenue is less than the Ridership Revenue Hurdle or the Sponsorship Revenue Hurdle, respectively, then Operator shall be entitled to a credit against amounts thereafter payable to MTC under this Section 8.2 equal to the sum of (a) the product of (i) the amount by which the Ridership Revenue Hurdle for such period exceeds the 203193300.19 -26- Ridership Revenues during such period, and (ii) the amount by which the percentage above has been reduced from 5% in accordance with the reduction set forth on the first sentence of this paragraph, and (b) the product of (i) the amount by which the Sponsorship Revenue Hurdle for such period exceeds the Sponsorship Revenues during such period, and (ii) the amount by which the percentage above has been reduced from 5% in accordance with the reduction set forth on the first sentence of this paragraph. If the Revenue Sharing Credit Period is less than one year, then the calculations in the preceding sentence shall be pro-rated based on the duration of the Revenue Sharing Credit Period. If the Revenue Sharing Credit Period is longer than one year, then the calculations for any fractional period shall be similarly pro- rated.Any amount not paid to MTC when due under Section 8.2 shall accrue interest on the overdue amount at the Applicable Interest Rate in effect from time to time. 8.3 No acceptance of any payment due pursuant to Sections 8.2 shall be construed as an accord that the payment is the correct amount, nor shall such acceptance of payment be construed as a release of any claim that MTC may have for further or additional sums payable under this Agreement. PRICE SCHEDULES. 9.1 Operator agrees that the amount and terms of the fees it charges users of the Program shall be consistent with the provisions of this Section. Membership Fees and Initial Ride Periods shall be consistent with Section 9.2, the Annual Membership Fee for users eligible for the affordability subscription specified in Section 9.3.1 shall be as described in said Section 9.3.1, the maximum Bicycle usage charge shall be consistent with Section 9.5 and the fees for damaged, lost, stolen or otherwise unreturned Bicycles shall be consistent with Section 9.6 initially charged by Operator shall be consistent with this Section. A “Membership Fee” is an amount that entitles the purchaser of the membership (a “member”, for the period of such purchased membership) to check out (as defined below) one or more Bicycle(s) at a time, for the length of time described below, provided that the member shall be charged a usage fee associated with the time period the Bicycle is checked out beyond the Initial Ride Period. A Bicycle is “checked out” for the period from the time it is removed from a Dock to the time it is returned to a Dock. A member may check out and return a Bicycle from or to any Dock at any Station in the Program, for an unlimited number of times, at any time during the period of the member’s membership, with the usage fee applicable to each such checkout and return sequence being calculated separately (so, for example, a Regular Annual Member may, within the member’s membership period, check out a Bicycle and return it within the first 30 minutes after checkout, and then subsequently check out a Bicycle and return that Bicycle within the first 30 minutes after that checkout, without incurring any usage fee for either checkout period). 9.2 Membership Fees, New Ridership Programs/Arrangements, and Initial Ride Periods: 9.2.1 Operator shall offer an annual membership (“Annual Membership”) for a fee (the “Annual Membership Fee”) in an amount not to exceed the Annual Membership Fee Cap in effect from time to time. The Annual Membership Fee Cap shall be $149 for a one-year period, subject to increase on the first anniversary of the Effective Date and on each subsequent anniversary of the Effective Date by a percentage amount equal to the CPI increase for the trailing 4 calendar quarters preceding each such anniversary 203193300.19 -27- plus 2% (so, for example, if the CPI increase were 1% for the trailing four calendar quarters preceding a particular anniversary of the date hereof, the applicable permitted percentage increase in the Annual Membership Fee Cap as of that anniversary would be 3%). An Annual Member whose Annual Membership Fee is subject to the Annual Membership Fee Cap is sometimes referred to as a “Regular Annual Member” and the corresponding Annual Membership is the “Regular Annual Membership.” The period of an Annual Membership shall run from the day the annual membership is activated until the first anniversary of the date on which the Annual Membership had been activated (but a membership purchased on February 29 shall expire on March 1 of the following year); 9.2.2 Annual Memberships may be paid in 12 equal monthly instalments at a price not greater than 120% of the Annual Membership Fee; 9.2.3 All memberships will include a free period of usage (the “Initial Ride Period”), which is the length of time at the beginning of each individual Trip to which additional usage fees will not be applied. For Regular Annual Memberships and affordability memberships, the Initial Ride Period is 30 Minutes. Usage fees will be applied to all Trips that exceed the Initial Ride Period; and 9.2.4 For monthly, weekly and daily memberships, and for usage of the Program by non- members, Operator will determine the applicable fees, usage fees, and periods of use for members beyond the Initial Ride Period in its sole discretion. 9.2.5 Nothing in the foregoing shall limit the right of Operator to offer premium memberships featuring an Initial Rider Period longer than 30 minutes for an Annual Membership Fee greater than $149. 9.3 Affordability Option: 9.3.1 Notwithstanding the permitted rate for a Regular Annual Membership set forth in Section 9.2.1 (as adjusted pursuant to Section 9.11), Operator shall charge those eligible for an “affordability subscription” no more than $60 per annum (excluding sales tax) as the Annual Membership Fee, or $5.00 per month for a 12-month membership. Such rate is subject to annual CPI increase on the first anniversary of the Effective Date and on each subsequent anniversary of the Effective Date for the trailing 4 calendar quarters preceding each such anniversary plus 2%. 9.3.2 Members of households enrolled in the Utility Lifeline Programs (also known as California Alternative Rates for Energy (CARE)) available in the MTC Area are eligible for affordability memberships. At least 30 days prior to the completion of Phase I, Operator shall propose, for MTC’s review and approval, procedures for verifying enrollment in CARE. In San Francisco, those who meet Muni Lifeline income requirements as determined by the City of San Francisco’s Human Services Agency are also eligible for the affordability membership. Upon mutual agreement of the Parties, eligibility may expand to include other categories of persons so long as the eligibility is determined by third parties. 203193300.19 -28- 9.3.3 Members enrolling through the affordability program shall be entitled to the same rights and privileges as Regular Annual Members. 9.3.4 The usage fees for affordability members shall not exceed the rate charged to Regular Annual Members. 9.4 The checkout period for the purposes of calculating usage fees shall always commence with the time a Bicycle is actually removed from a Dock, and it shall not be based on the time of insertion of a payment or identification card. 9.5 The maximum Bicycle usage charge initially charged with respect to any member shall be $100 per 24 hour period, not including charges for damaged, lost, stolen or otherwise unreturned Bicycles. 9.6 Fees for damaged, lost, stolen or otherwise unreturned Bicycles initially charged shall be (i) $1,200, if not returned, or (ii) if returned, the sum of all direct costs of the repair, including all labor and parts, as determined by Operator in its reasonable discretion, plus a 10% administrative fee; provided, however, that the fees charged to affordability members for unreturned or damaged Bicycles shall be not more than 33% of the fees set forth in the preceding clauses (i) and (ii). Operator shall waive such fees for an any member who is not at fault for the unreturned or damaged Bicycle. 9.7 Operator shall at all times post on all Stations and on Operator’s website a complete and up-to-date fee description that sets forth each and every current membership and usage fee offered by Operator, the methods of purchasing memberships and paying fees, available discounts on such fees, the applicability and terms of such discounts and, to the extent applicable, how to apply for or qualify for such discounts, and fees associated with damaged, lost, stolen or otherwise unreturned Bicycles. Operator shall furnish written copies of such material to the public upon request. 9.8 Operator shall accept credit card and debit card payments online and at all Stations but in the case of debit cards only those that have a Visa or Mastercard logo on them. Operator may employ such other methods of payment as it may determine. 9.9 All required state sales and use taxes with respect to membership and usage fees shall be collected and paid by Operator, as required by applicable law. 9.10 Operator shall be permitted to create Program pricing discount programs, which may be targeted in connection with marketing and outreach efforts, and in connection with Sponsorship or Advertising programs, to expand or enable Program use among different communities or for other lawful purposes. 9.11 At any time and from time to time, Operator shall have the right: 9.11.1 To adjust the amount of the Annual Membership Fee specified in Section 9.2.1 downwards at any time and upwards on each anniversary of the Effective Date by an amount not to exceed the Annual Membership Fee Cap then in effect; 9.11.2 To adjust the amount of the maximum Bicycle usage charge specified in Section 9.5 and the fees for damaged, lost, stolen or otherwise unreturned Bicycles specified in Section 9.6 downwards at any time and upwards on each anniversary of the Effective 203193300.19 -29- Date by a percentage amount equal to the CPI increase for the trailing 4 calendar quarters preceding each such anniversary plus 2% (so, for example, if the CPI increase were 1% for the trailing 4 calendar quarters preceding a particular anniversary of the date hereof, the applicable permitted percentage increase in the Annual Membership Fee Cap as of that anniversary would be 3%); 9.11.3 Any upwards adjustment permitted under this Section 9.11 and not made as of any anniversary date may be made at any time after such anniversary date without derogation of Operator’s right to make any other upwards adjustments permitted under this Section 9.11; 9.11.4 To adjust in its sole discretion all other fees, time periods and charges specified hereunder other than those fees, time periods and charges specified in Section 9.2.1 and Section 9.3; and 9.11.5 To adjust upward the duration of the Initial Ride Period. 9.12 MTC shall have the right to review and approve the initial Program membership waiver and any material changes thereto, which approval shall not be unreasonably withheld. 9.13 At any time and from time to time, Operator may, in its sole discretion, offer discounts and promotions for the Program. MERCHANDISING, LICENSING AND INTELLECTUAL PROPERTY 10.1 [INTENTIONALLY OMITTED] 10.2 Subject to the limitations, terms and conditions as may be imposed by the Sponsor in the Sponsor’s discretion, upon request by MTC and the Participating Cities, Operator shall seek to obtain for MTC and the Participating Cities, or shall assist MTC and the Participating Cities to obtain, for the benefit of MTC, the Participating Cities and their respective business partners and sublicensees, non- exclusive licenses to use during the term of any Sponsorship agreement the Sponsor trademarks, logos, servicemarks, and other similar intellectual property identified for use in connection with the Sponsorship agreement (individually and/or collectively the “Sponsor Property”) to market and promote the Program under the name or title for the Program adopted by Operator for the Program (the “Program Name”), which name shall be subject to the consent of MTC and the Participating Cities, as applicable, to the extent the Program Name consists of MTC/Participating City Property; provided, however, the use of any Sponsor Property by MTC or the Participating Cities shall comply with reasonable quality control measures required by the Sponsorship agreement. To the extent that the Program Name incorporates MTC/Participating City Property, MTC and/or one or more of the Participating Cities, as the case may be, shall own the portion of any Program Name that consists of MTC/Participating City Property. For further clarity, with respect to obtaining the aforementioned licenses, Operator is not the agent of MTC or the Participating Cities and has no authority to enter into agreements on behalf of or otherwise bind MTC or the Participating Cities. 203193300.19 -30- 10.3 Subject to the limitations, terms and conditions as may be imposed by the Sponsor in the Sponsor’s discretion to the extent the Operator Property incorporates any Sponsor Property, including, without limitation, the Sponsor’s consent, Operator hereby grants to MTC and the Participating Cities and their respective business partners and sublicensees a non-exclusive, royalty-free license to use any trademarks, logos, servicemarks, and other similar intellectual property developed by Operator (individually and/or collectively the “Operator Property”) required in connection with marketing and promoting the Program during the Term. 10.4 MTC hereby grants to Operator the exclusive right to use during the Term the name “Bay Area Bike Share” and variations thereof (individually and/or collectively “Bay Area Bike Share”). As part of Operator’s exclusive right to use “Bay Area Bike Share”, Operator shall have the right to sublicense the use of “Bay Area Bike Share” to the Sponsor or any other Person to market or promote the Program. Such rights shall terminate upon expiration or termination of this Agreement, but subject to the rights of the Recognized Lender. 10.5 Notwithstanding the foregoing Sections, the Recognized Lender shall not be precluded from collateralizing any intellectual property of Operator. RESERVED 11.1 [INTENTIONALLY OMITTED] 11.2 [INTENTIONALLY OMITTED] 11.3 [INTENTIONALLY OMITTED] RESERVED 12.1 [INTENTIONALLY OMITTED] 12.2 [INTENTIONALLY OMITTED] 12.3 [INTENTIONALLY OMITTED] MARKETING 13.1 Operator shall create a marketing plan for the Program, subject to approval by MTC, which approval will not be withheld so long as the plan is not in bad taste, offensive, obscene or derogatory to MTC or any Participating City. Following such approval, Operator shall market the Program in accordance with such plan. The marketing budget and the allocation of such budget shall be determined by Operator, in its sole discretion. The marketing plan shall include, at a minimum, demonstrations, 203193300.19 -31- events, social media outreach, programs, partnerships and other efforts to educate residents of the Participating Cities about bike share, to launch the Program and to grow membership and ridership in a financially sustainable manner. 13.2 A portion of Operator’s marketing plan will include marketing and outreach to low-income communities, disadvantaged communities, and communities for which English is not the native language, shall be subject to the approval of MTC and the Participating Cities, shall comply with local requirements regarding language access for each Participating City, shall comply with local standards for decency and not be offensive to the general public. MTC retains the non-exclusive right to conduct marketing and outreach to low-income neighborhoods and limited English proficiency neighborhoods. Operator’s marketing activities shall not violate the Advertising Restrictions. 13.3 [INTENTIONALLY OMITTED] WEBSITE 14.1 Operator shall create and maintain a Program website, subject to the MTC’s prior review. The Program’s website shall include, at a minimum, all of the following elements: 14.1.1 Eligibility requirements; 14.1.2 Subscription information and rate schedules; 14.1.3 Payment and subscription processing information; 14.1.4 Method for subscribers to update required information; 14.1.5 Subscriber agreement and acceptance of terms; 14.1.6 Map of network of Stations and real-time availability of Bicycles at each Station; 14.1.7 Frequently Asked Questions; 14.1.8 Safety requirements and information (including malfunctions and crashes); 14.1.9 News and operational updates; 14.1.10 Special events notices; 14.1.11 Links to other bike programs and events; 14.1.12 Call center contact information; 14.1.13 Real-time information on Bicycles and Docks for app developers (e.g. JSON Feed); 14.1.14 System-wide anonymized historical data; 14.1.15 For individual members, that member’s ridership history; 203193300.19 -32- 14.1.16 For individual members, that member’s payment history; and 14.1.17 Operator’s privacy policy; and 14.1.18 Translation capability to Cantonese, Spanish, and Vietnamese at a minimum. 14.2 Operator shall keep all information on the Program’s website updated. SECURITY FUND 15.1 Prior to installation by Operator of the first new Station, Operator shall deposit with MTC a security deposit (“Security Fund”) in the amount of $250,000.00. Interest on the Security Fund shall accrue in an interest bearing bank account for the benefit of Operator, and all such interest shall be paid annually to Operator on each anniversary of the Effective Date. 15.2 Operator shall maintain $250,000.00 in the Security Fund at all times during the Term and for 90 days after the end of the Term. Upon expiration of the foregoing period, the remaining balance of the Security Fund shall be disbursed to Operator, unless prior to the expiration of such 90-day period MTC commences litigation against Operator, the underlying claim is covered by the Security Fund, and such litigation is not finally resolved prior to the expiration of such period, in which case an amount of the Security Fund equal to the amount of the outstanding claim shall be retained and only until such claim is resolved. Any amounts remaining in the Security Fund that are not being retained in accordance with this paragraph shall be promptly returned to Operator, and MTC shall fully and timely cooperate with the payment of the Security Fund to Operator. 15.3 The Security Fund shall serve as security for the faithful performance by Operator of all terms, conditions and obligations of this Agreement and shall be available for withdrawal under the following circumstances: 15.3.1 If Operator breaches a payment obligation under this Agreement and fails to remedy such breach within 10 business days following notice by MTC to Operator (a “Payment Breach”), other than the payment of liquidated damages under Section 2.6.3, which is addressed in Section 15.3.5. In the event of a Payment Breach, MTC shall be entitled to withdraw from the Security Fund the amount of the money that is due and payable as set forth in such notice, unless within such 10 business day period Operator initiates the Dispute Resolution Process by giving MTC notice stating that it contests the occurrence of such Payment Breach or the amount thereof. This Section 15.3.1 does not cover a Default under Section 18.1.1 (which is covered in Section 15.3.4). 15.3.2 If Operator commits a non-monetary breach under this Agreement that results in damage to any municipal structure or property of MTC or a Participating City, Operator fails to repair such damage within 30 days following notice by MTC to Operator and in response thereto MTC or the applicable Participating City undertakes such repair (a “Property Damage Breach”), in which event MTC shall be entitled to withdraw from the Security Fund the costs incurred by MTC or the applicable Participating City to undertake such repair, provided such costs are reasonable. Notwithstanding MTC’s withdrawal from the Security Fund for a Property Damage Breach, Operator shall have the right to contest 203193300.19 -33- such Property Damage Breach or the costs incurred by initiating the Dispute Resolution Contest, provided that Operator gives MTC notice thereof not later than 30 days after such withdrawal. 15.3.3 If Operator fails to undertake any other non-monetary obligation under this Agreement within the period required under this Agreement and in response thereto MTC or a Participating City exercises self-help to perform such obligation pursuant to a provision of this Agreement that expressly permits self-help or with respect to which self-help is a reasonable response (e.g., a failure of Operator to timely complete a Station De-Installation; or failure of Operator to remove advertising that violates Advertising Restrictions within 24 hours of notice to Operator) (a “Self-Help Situation”), in which event MTC shall be entitled to withdraw from the Security Fund the costs incurred by MTC or the applicable Participating City to undertake such self-help, provided such costs are reasonable. Notwithstanding MTC’s withdrawal from the Security Fund for a Self-Help Situation, Operator shall have the right to contest such Self-Help Situation or the costs incurred by initiating the Dispute Resolution Contest, provided that Operator gives MTC notice thereof not later than 30 days after such withdrawal. This Section 15.3.3 does not cover a breach of Section 16 or matters covered by Section 15.3.2 or 15.3.4. 15.3.4 Operator commits a Default, in which event MTC shall be entitled to withdraw the actual, direct damages arising from such Default unless prior to the expiration of the applicable cure period set forth in Section 18.1 Operator initiates the Dispute Resolution Process by giving MTC notice stating that it contests the occurrence of such Defaults. This Section 15.3.4 does not cover matters covered by Section 15.3.1, 15.3.2, 15.3.3 or 15.3.5. 15.3.5 Operator fails to pay any amount of liquidated damages, and interest, if any due to MTC pursuant to Section 2.6.3 within the time periods provided therein. 15.4 Each notice by MTC to Operator under Section 15.3 of a failure, breach or Default, as applicable, shall provide specific and detailed information about Operator’s non-compliance, together with the amount MTC is intending to withdraw and detailed support for such amount, if then known. Each notice from Operator to MTC under Section 15.3 to contest the occurrence of such non-compliance or the amount to be withdrawn, which notice shall commence the Dispute Resolution Process, shall provide specific and detailed information that rebuts or challenges the information contained in the corresponding notice provided by MTC. Within 2 days following any withdrawal from the Security Fund, MTC shall notify Operator of the date and amount of the withdrawal, together with detailed support for the amount of the withdrawal. 15.5 MTC may not seek recourse against the Security Fund for any cost or damages for which MTC has previously been compensated by Operator or from the Security Fund. The withdrawal of the amounts from the Security Fund shall constitute a credit against the amount of the applicable liability of Operator. 15.6 If a withdrawal from the Security Fund is made, Operator shall be required to replenish the Security Fund by the amount withdrawn within 30 days after receipt of notice of such withdrawal. Notwithstanding the foregoing, if Operator is contesting in good faith MTC’s right to withdraw in accordance with the Dispute Resolution Process, then Operator shall not be obligated to replenish on account of such withdrawal until 30 days after such dispute is finally resolved in accordance with the Dispute Resolution Process. Interest on the amount required to be replenished shall accrue at the Applicable Interest Rate in effect from time to time commencing on such 30th date. 203193300.19 -34- 15.7 The obligation to perform and the liability of Operator pursuant to this Agreement shall not be limited in nature or amount by the acceptance of the Security Fund required by this Section 15. INDEMNITY 16.1 Indemnification. Operator shall defend, indemnify and save harmless MTC, the Participating Cities, and their respective commissioners, officers, agencies, departments, agents, and employees (each, an “Indemnified Party”; and collectively, “Indemnified Parties”) from and against any and all claims, demands, causes of action, proceedings or lawsuits brought by third-parties (“Claims”), and all losses, damages, liabilities, penalties, fines, forfeitures, costs and expenses arising from or incidental to any Claims (including attorneys’ fees and other costs of defense) (collectively, with Claims, “Liabilities”), resulting from, or arising out of, the operation of the Program and the provision of Services, whether such operation or Services is performed or provided by Operator or by Operator’s subcontractors or any other person acting for or on behalf of Operator. 16.2 Notwithstanding the foregoing, the following shall be excluded from Operator’s indemnification and defense obligations contained in the preceding sentence: any Liabilities to the extent resulting from, or arising out of, (i) the gross negligence or willful misconduct of any Indemnified Party, (ii) Operator complying with the written directives or written requirements of a Participating City, if the Operator has previously objected to such written directives or requirements in writing, with respect to (A) the location or configuration of any Station in relation to the street or sidewalk on which such Station is located or to which it adjoins or (B) a Participating City’s Street Treatment Requirements, or (iii) the condition of any public property outside of the perimeter of a Station and not otherwise controlled by Operator (and expressly excluding from this clause (iii) the condition of the Bicycles or other Equipment). If any Claim against Operator includes claims that are covered by clause (iii) of the preceding sentence or claims contesting a Participating City’s authority to issue a permit for a Station, then each Party shall be responsible for its own defense against such claims. 16.3 Upon receipt by any Indemnified Party of actual notice a Claim to which such Indemnified Party is entitled to indemnification in accordance with Sections 16.1 and 16.2, such Indemnified Party shall give prompt notice of such Claim to Operator. Operator shall assume and prosecute the defense of such Claim at the sole cost and expense of Operator. Operator may settle any such Claim in its discretion so long as such settlement includes an unconditional release of the Indemnified Party. INSURANCE 17.1 Minimum Coverages. The insurance requirements specified in this section shall cover Operator’s own liability and the liability arising out of work or services performed under this Agreement by any subconsultants, subcontractors, suppliers, temporary workers, independent contractors, leased employees, or any other persons, firms or corporations that Operator authorizes to work under this Agreement (hereinafter referred to as “Agents”). Operator shall, at its own expense, obtain and maintain in effect at all times during the life of this Agreement the following types of insurance against claims, damages and losses due to injuries to persons or damage to property or other losses that may arise in connection with the performance of work under this Agreement. 203193300.19 -35- 17.2 Operator shall include in every subcontract the requirement that the Agent maintain adequate insurance coverage with appropriate limits and endorsements to cover the risks associated with work to be performed by the Agent. To the extent that an Agent does not procure and maintain such insurance coverage, Operator shall be responsible for any and all costs and expenses that may be incurred in securing such coverage or in fulfilling Operator’s indemnity obligation under Section 16 as to itself or any of its Agents in the absence of such coverage. 17.3 In the event Operator or its Agents procure excess or umbrella coverage to maintain certain requirements outlined below, these policies shall also satisfy all specified endorsements and stipulations, including provisions that Operator’s or its Agent’s insurance, as the case may be, be primary without right of contribution from MTC. 17.3.1 Workers' Compensation Insurance with Statutory limits, and Employer’s Liability Insurance with a limit of not less than $1,000,000 per employee for injury by disease and $1,000,000 for injury for each accident, and any and all other coverage of Operator’s employees as may be required by applicable law. Such policy shall contain a Waiver of Subrogation in favor of MTC. Such Workers’ Compensation & Employer’s Liability may be waived, if and only for as long as Operator is a sole proprietor or a corporation with stock 100% owned by officers with no employees. 17.3.2 Commercial General Liability Insurance for Bodily Injury and Property Damage liability, covering the operations of Operator and Operator’s officers, agents, and employees and with limits of liability which shall not be less than $1,000,000 combined single limit per occurrence with a general aggregate liability of not less than $2,000,000, and Personal & Advertising Injury liability with a limit of not less than $1,000,000. Such policy shall contain a Waiver of Subrogation in favor of MTC. MTC and its commissioners, directors, officers, representatives, agents and employees are to be named as additional insureds. In addition, the entities listed in Section 17.12 and their respective commissioners, directors, officers, representatives, agents and employees are also to be named as additional insureds. Such insurance shall be primary and contain a Separation of Insureds Clause as respects any claims, losses or liability arising directly or indirectly from Operator’s operations. 17.3.3 Business Automobile Insurance for all automobiles owned (if any), used or maintained by Operator and Operator’s officers, agents and employees, including but not limited to owned (if any), leased (if any), non-owned and hired automobiles, with limits of liability which shall not be less than $1,000,000 combined single limit per accident. 17.3.4 Umbrella Insurance in the amount of $4,000,000 providing excess limits over Employer’s Liability, Automobile Liability, and Commercial General Liability Insurance. Such umbrella coverage shall be following form to underlying coverage including all endorsements and additional insured requirements. 17.3.5 Errors and Omissions Professional Liability Insurance for errors and omissions and the resulting damages, including, but not limited to, economic loss to MTC and having minimum limits of $5,000,000 per claim. Such policy shall contain cyber risk coverages including network and internet security liability coverage, privacy liability coverage and media coverage. The policy shall provide coverage for all work 203193300.19 -36- performed by Operator and any work performed or conducted by any subcontractor/consultant working for or performing services on behalf of Operator. Operator may delegate the obligation to maintain Errors and Omissions Professional Liability Insurance to an Agent, but the failure of such Agent to maintain such insurance shall not relieve Operator of its obligation to maintain such insurance. 17.3.6 Property Insurance. Property Insurance covering Operator’s own business personal property and equipment to be used in performance of this Agreement, materials or property to be purchased and/or installed on behalf of MTC (if any), and builders risk for property in the course of construction (if applicable). Coverage shall be written on a "Special Form" policy that includes theft, but excludes earthquake, with limits at least equal to the replacement cost of the property. Such policy shall contain a Waiver of Subrogation in favor of MTC. 17.4 Acceptable Insurers. All policies will be issued by insurers qualified to do business in California and with a Best’s Rating of A-VIII or better. 17.5 Self-Insurance. Operator’s obligation hereunder may be satisfied in whole or in part by adequately funded self-insurance, upon evidence of financial capacity satisfactory to MTC. 17.6 Deductibles and Retentions. Operator shall be responsible for payment of any deductible or retention on Operator’s policies without right of contribution from MTC. Deductible and retention provisions shall not contain any restrictions as to how or by whom the deductible or retention is paid. Any deductible or retention provision limiting payment to the Named Insured is unacceptable. 17.7 In the event that MTC is entitled to coverage as an additional insured under any Operator insurance policy that contains a deductible or self-insured retention, Operator shall satisfy such deductible or self-insured retention to the extent of loss covered by such policy, for any lawsuit arising from or connected with any alleged act of Operator, subconsultant, subcontractor, or any of their employees, officers or directors, even if Operator or subconsultant is not a named defendant in the lawsuit. 17.8 Claims Made Coverage. If any insurance specified above is written on a “Claims-Made” (rather than an “occurrence”) basis, then in addition to the coverage requirements above, Operator shall: 17.8.1 Ensure that the Retroactive Date is shown on the policy, and such date must be before the date of this Agreement or the beginning of any work under this Agreement; 17.8.2 Maintain and provide evidence of similar insurance for at least three (3) years following the expiration or termination of this Agreement, including the requirement of adding all additional insureds; and 17.8.3 If insurance is cancelled or non-renewed, and not replaced with another claims-made policy form with a retroactive date prior to the commencement of any work hereunder, Operator shall purchase “extended reporting” coverage for a minimum of three (3) years after the expiration or termination of this Agreement. 17.9 Failure to Maintain Insurance. All insurance specified above shall remain in force until the expiration or termination of this Agreement. Operator must notify MTC if any of the above required 203193300.19 -37- coverages are non-renewed or cancelled. The failure to procure or maintain required insurance and/or an adequately funded self-insurance program will constitute a material breach of this Agreement. 17.10 Certificates of Insurance. Prior to commencement of any work hereunder, Operator shall deliver to MTC Certificates of Insurance verifying the aforementioned coverages. Such certificates shall make reference to all provisions and endorsements referred to above and shall be signed on behalf of the insurer by an authorized representative thereof. 17.11 Disclaimer. The foregoing requirements as to the types and limits of insurance coverage to be maintained by Operator are not intended to and shall not in any manner limit or qualify the liabilities and obligations otherwise assumed by Operator pursuant hereto, including, but not limited to, liability assumed pursuant to Section 16 . 17.12 Additional Insureds: The following entities are to be named as Additional Insureds under applicable sections of this Section 17 and as Indemnified Parties pursuant to Section 16. 17.12.1 Metropolitan Transportation Commission (MTC) 17.12.2 City of Berkeley 17.12.3 City of Oakland 17.12.4 City of San Francisco 17.12.5 City of Emeryville 17.12.6 City of San Jose TERMINATION AND DEFAULT 18.1 The following events shall be a Default under this Agreement: 18.1.1 A breach by Operator of a payment obligation under Section 8 [Revenue Sharing] and the failure to remedy such breach within 10 business days after receipt by Operator from the Executive Director of written notice of such breach; 18.1.2 A breach by Operator of a material obligation under Section 7 of this Agreement or Section 29 of the Coordination Agreement [Advertising and Sponsorship]; Section 9 [Price Schedules], Section 10 of this Agreement or Section 30 of the Coordination Agreement [Merchandising, Licensing and Intellectual Property]; any separate licensing agreement between Operator (or its affiliate) and MTC and/or a Participating City; Section 31 of the Coordination Agreement [Marketing, Promotions and Reporting]; Section 14 [Website]; Section 15 [Security Fund]; Section 16 [Indemnity]; Section 20 [Employment and Purchasing]; and Section 21 [Inspection and Audit], and the failure to remedy such breach within 10 business days after receipt by Operator from the Executive Director of written notice of such breach; 203193300.19 -38- 18.1.3 A breach by Operator of Section 22 [Assignment]; 18.1.4 A breach by Operation of Section 17 [Insurance] and the failure to remedy such breach within 5 business days after receipt by Operator from the Executive Director of written notice of such breach; 18.1.5 (a) Operator’s chronic Program-wide failures to abide by its obligations under Sections 2, 3, 4 and 6 of this Agreement and Section 22 of the Coordination Agreement, which failures materially and adversely affect the non-pecuniary benefits to be derived by MTC and the Participating Cities under this Agreement, (b) the failure of Operator to submit to MTC and the Participating Cities, within 15 business days following receipt by Operator from the Executive Director of written notice of such failures, a credible business plan for Operator to proactively and comprehensively address Operator’s deficiencies, which plan shall be subject to approval by MTC in consultation with the relevant Participating Cities, and (c) the failure of Operator to take concrete steps to implement such response plan within 30 days of MTC’s approval of such plan; 18.1.6 If the Security Fund balance falls below $50,000 and Operator does not replenish the full amount of the Security Fund within 10 days following notice thereof from the Executive Director. However, if Operator is then contesting one or more prior withdrawals from the Security Fund in accordance with the Dispute Resolution Process and the aggregate amount in dispute exceeds $200,000, then such $50,000 may only be used pursuant to Section 15.3.2 or Section 15.3.3 until such dispute has been finally resolved; 18.1.7 The commencement of any proceeding by Operator under the Bankruptcy Code or relating to the insolvency, receivership, liquidation, or composition of Operator for the benefit of creditors; 18.1.8 The commencement of any involuntary proceeding against Operator under the Bankruptcy Code that has not been stayed or dismissed within 120 days of its commencement; 18.1.9 If Operator or any of its officers, directors or senior management has been convicted after the Effective Date under any state or federal law of any of the matters listed in clauses (a) through (e) of this Section 18.1.9: (x) in connection with a matter that is not directly or indirectly connected with this Agreement or the Program and, in the case of the conviction of an individual, such individual has not been terminated by Operator within 30 days after Operator receives notice of such conviction, or (y) in connection with a matter that is directly or indirectly connected with this Agreement or the Program. The matters referred to above as being listed in clauses (a) through (e) are the following: (a) A criminal offense that is incident to obtaining or attempting to obtain or to performing a public or private contract; (b) Fraud, embezzlement, theft, bribery, forgery, falsification, destruction of records, or receiving stolen property; 203193300.19 -39- (c) A criminal violation of any state or federal antitrust law; (d) Violation of the Racketeer Influence and Corrupt Organization Act, 18 U.S.C. § 1961 et seq., or the Mail Fraud Act, 18 U.S.C. § 1341 et seq., for acts in connection with the submission of bids or proposals for a public or private contract; or (e) Conspiracy to commit any act or omission that would constitute grounds for conviction or liability under any statute described in subparagraph (d) above. 18.1.10 If Operator or any of its officers, directors, partners, managers, 5 percent or greater owners, principals, or other employees or persons substantially involved in its activities (a) are subject to a judgment of civil liability under any state or federal antitrust law for acts or omissions in connection with the submission of bids or proposals for a public or private contract, or (b) intentionally makes or causes to be made any false, deceptive, or fraudulent material statement in any bid, proposal, or application for government work, and the individual responsible for such act, omission or material misstatement, if an employee, has not been terminated by Operator, or if not an employee, the relationship therewith has not been terminated, within 30 days after such judgment is entered into in the case of clause (a) above or after a judgment is entered into that any such material statement was intentionally false, deceptive or fraudulent in the case of clause (b). 18.2 If a Default occurs, then, subject to Sections 3.5 and 18.3, MTC shall, at MTC’s option, have any or all of the following remedies, all cumulative (so exercise of one remedy shall not preclude exercise of another remedy), in addition to such other remedies as may be available at law or in equity or under any other terms of this Agreement. MTC’s remedies include, but are not limited to: 18.2.1 Cause a withdrawal from the Security Fund, pursuant to Section 15, subject to any right of Operator to contest such withdrawal pursuant to the Dispute Resolution Process; 18.2.2 Seek actual, direct damages only from Operator for such Default (and notwithstanding anything to the contrary herein, in no event shall MTC be entitled to special, consequential or punitive damages under this Agreement); 18.2.3 Seek to restrain by injunction the continuation of such Default; 18.2.4 Purchase the Equipment at its then fair market value, subject to the rights of the Recognized Lender not to permit the sale of the Equipment to MTC; 18.2.5 Pursue any other remedy permitted by law or in equity or in this Agreement; or 18.2.6 Terminate this Agreement, subject to the rights of the Recognized Lender. 18.3 Nothing in this Agreement precludes Operator from contesting the existence of such Default or the breach, failure or other occurrence underlying a Default in accordance with this Section 203193300.19 -40- 18.3 and the Dispute Resolution Process. If Operator seeks to contest any of the foregoing, Operator must notify MTC prior to the expiration of the applicable cure period set forth in Section 18.1. Following such notice, the dispute shall be addressed and resolved in accordance with the Dispute Resolution Process. Pending final resolution of such dispute, Operator may continue operating the Program in accordance with the terms of this Agreement, and any exercise by MTC of its remedies hereunder shall be stayed until final resolution of such dispute in accordance with the Dispute Resolution Process. In addition, if such final resolution is against Operator, then MTC shall have the right to terminate this Agreement only if such Default is not cured within the period otherwise provided in the definition of Default to remedy such default, provided that for this purpose the applicable remedy period shall commence upon the final resolution of such dispute. 18.4 Subject to the rights of the Recognized Lender (if any and if applicable), upon termination of this Agreement on account of a Default by Operator, reduction of Initial Term under Section 2.3, or expiration of the Term, Operator shall comply with the following close-out procedures: 18.4.1 Turning over to MTC or its designees copies of all books, records, documents and materials specifically relating to this Agreement and reasonably requested by MTC; 18.4.2 Submitting to MTC, within 120 days, a final statement and report relating to this Agreement that has been reviewed by a certified public accountant or a licensed public accountant; 18.4.3 Providing reasonable assistance to MTC during the transition; and 18.4.4 Continuing to operate the Program in accordance with the terms of this Agreement and to effect an efficient and orderly transition of responsibility with respect to the operation of the Program until the earlier of (i) 180 days after such termination and (ii) the selection of a replacement operator for the Program and such replacement operator commencing operation of the Program; provided, however, that Operator shall have the right to cease operating prior thereto if Operator experiences an operating shortfall during the transition period and MTC fails to compensate Operator for such shortfall. 18.5 Subject to the rights of the Recognized Lender (if any and if applicable), upon termination of this Agreement on account of a Default by Operator, reduction of the Initial Term under Section 2.3, or expiration of the Term, MTC shall have the option to: 18.5.1 require Operator to remove all Equipment at its sole cost and expense; 18.5.2 subject to satisfaction of the Program Property Assignment Conditions, require Operator to assign to MTC (or a third-party operator designated by MTC) the Equipment and Operator’s rights under the Escrow Agreement, in which event Operator shall reasonably cooperate with MTC (or such designee) to obtain the legal right to use the Software (excluding the Operator Basic Function Software and the Operator Non-Basic Function Software) either through an assignment of Operator’s license with the Vendor to MTC (or such designee) or by MTC (or such designee) entering a license agreement for such Software with the Vendor; or 203193300.19 -41- 18.5.3 subject to satisfaction of the Program Property Assignment Conditions, take over operation of the Program, and in connection therewith assign to MTC the Equipment and Operator’s rights under the Escrow Agreement, in which event Operator shall reasonably cooperate with MTC to obtain the legal right to use the Software (excluding the Operator Basic Function Software and the Operator Non-Basic Function Software) either through an assignment of Operator’s license with the Vendor to MTC or by MTC entering a license agreement for such Software with the Vendor. 18.6 Not less than 6 months prior to the expiration of the Term, MTC shall elect either (a) to purchase (or have a designee purchase) the Program Property at the expiration of the Term or (b) to require Operator to remove the Equipment upon expiration of the Term. If MTC elects clause (a), then Operator and MTC shall negotiate a purchase price for the Program Property based on the fair market value of the Program Property as an installed system, and at the expiration of the Term, Operator shall reasonably assign to MTC (or its designee) the Equipment and Operator’s rights under the Escrow Agreement and cooperate with MTC (or its designee) to obtain the legal right to use the Software (excluding the Operator Basic Function Software and the Operator Non-Basic Function Software) either through an assignment of Operator’s license with the Vendor or by MTC (or its designee) entering a license agreement for such Software with the Vendor, subject to satisfaction of the Program Property Assignment Conditions. If MTC elects clause (b), then within 90 days of the expiration of the Term, Operator shall remove all Equipment. 18.7 In the event of a breach of this Agreement by any Party or by any Participating City, the other Party or parties shall act in good faith and exercise commercially reasonable efforts to mitigate any damages or losses that result from such breach. Notwithstanding the foregoing, nothing contained in this Section shall limit in any respect the rights of MTC and the Participating Cities to indemnification pursuant to Section 16. 18.8 No Party shall be liable (including, but not limited to, for payment of liquidated damages) for failure to perform any of its obligations, covenants, or conditions contained in this Agreement, to the extent such failure is caused by the occurrence of an Event of Force Majeure, and such Party’s obligation to perform shall be extended for a reasonable period of time, commensurate with the nature of the event causing the delay, and no breach or default shall exist or liquidated damages be payable with respect to such extended period. RIGHTS OF RECOGNIZED LENDER 19.1 Operator shall have the right to collaterally assign its rights under this Agreement to the Recognized Lender as collateral for the Recognized Loan. Operator or the Recognized Lender shall notify MTC of the existence of the Recognized Loan and the collateral assignment of this Agreement and shall notify MTC of the name and address of the Recognized Lender. In no event shall there be more than one Recognized Lender at any one time. 19.2 MTC shall give the Recognized Lender, at the address of such Recognized Lender and in the manner set forth in Section 25.2 a copy of each notice of default at the same time as it gives notice of 203193300.19 -42- default to Operator. A notice of default to Operator shall not be effective unless a copy thereof is concurrently given to the Recognized Lender. 19.3 The Recognized Lender shall, in the case of any Default by Operator under Section 18.1.1, have a period of 10 days more than is given Operator, to remedy such Default prior to MTC terminating this Agreement on account of such Default, and in the case of a Default by Operator under Section 18.1.2 or 18.1.5, shall have a period of 10 days more than is given Operator to remedy such Default prior to MTC terminating this Agreement on account of such Default, provided that if such Default is not one that can be cured with the payment of money and if the Recognized Lender needs to exercise its remedies and obtain access to its collateral prior to being able to effectuate the cure of any such default, such additional 10-day period shall, so long as the Recognized Lender is diligently and continuously pursuing such cure and has provided written notice to MTC of its intent to cure such Default, be extended for such additional time as is necessary for the Recognized Lender to obtain such access and commence and effectuate such cure. 19.4 If this Agreement terminates on account of a Default, then Operator shall give any Recognized Lender prompt notice thereof. Within 60 days following receipt of such notice, the Recognized Lender may elect to require MTC to enter into a new agreement with a replacement operator designated by the Recognized Lender for the remaining Term of this Agreement, considered as if the Term had not ended on account of such Default and on substantially the same terms as contained in this Agreement (the “Replacement Agreement”). Within 120 days of such notice, the Recognized Lender shall identify a replacement operator and credible business plan for such replacement operator to proactively and comprehensively address Operator’s deficiencies. Such replacement operator and business plan shall be subject to the approval of MTC, which approval shall not be unreasonably withheld or delayed. If MTC approves such replacement operator and business plan, then MTC and such replacement operator shall enter into the Replacement Agreement. If MTC and the Recognized Lender are unable to agree on the replacement operator or the business plan within 150 days following such notice, or if the Recognized Lender does not elect to require MTC to enter into a Replacement Agreement within 60 days following receipt of such notice, then MTC shall have the right to exercise its other remedies under Section 18.5 without regard to the rights of the Recognized Lender. 19.5 If pursuant to Section 2.3, MTC exercises its right to reduce the Initial Term by 5 years, then MTC shall give the Recognized Lender notice thereof. Within 60 days following receipt of such notice, the Recognized Lender may elect to require MTC to enter into a new agreement with a replacement operator designated by the Recognized Lender commencing on the expiration of the Term as reduced pursuant to Section 2.3 for the remaining Term of this Agreement, considered as if the Term had not been reduced pursuant to Section 2.3 and on substantially the same terms as contained in this Agreement. Within 120 days of such notice, the Recognized Lender shall identify a replacement operator and credible business plan for such replacement operator to proactively and comprehensively address Operator’s deficiencies. Such replacement operator and business plan shall be subject to the approval of MTC, which approval shall not be unreasonably withheld or delayed. If MTC approves such replacement operator and business plan, then MTC and such replacement operator shall enter into such replacement agreement. If MTC and the Recognized Lender are unable to agree on the replacement operator or the business plan within 150 days following such notice, or if the Recognized Lender does not elect to require MTC to enter into a replacement agreement within 60 days following receipt of such notice, then the Recognized Lender shall have no further rights arising on account of the reduced Term. 203193300.19 -43- 19.6 MTC and Operator shall not amend or modify any provision of this Agreement if the effect thereof is to reduce the Term, reduce Operator’s rights or increase Operator’s obligations in any material respect, or weaken any of the Recognized Lender’s express rights under this Agreement, including the Recognized Lender’s rights under this Section 19, in each case without the prior written consent of the Recognized Lender. MTC shall not accept a surrender of this Agreement by Operator, nor shall MTC and Operator agree to a termination of this Agreement, without the prior written consent of the Recognized Lender. 19.7 If Operator defaults on the Recognized Loan and as a result thereof the Recognized Lender has a right under the applicable loan documents to foreclose on its Program-related collateral, then without the consent of MTC or any Participating City, the Recognized Lender (or a subsidiary thereof) and/or a third party may succeed to the interest of Operator under this Agreement, so long as (a) the party succeeding to the interest of Operator under this Agreement, or a third party manager designated by such successor, has the experience and expertise to operate a large-scale bikeshare program, (b) such successor succeeds to Operator’s interest in the Bicycles, other Equipment and other collateral, (c) such successor has substantially the same legal right to obtain replacement Bicycles and other Equipment, to utilize the Bicycle patents and other Equipment patents, and to utilize the required Software that Operator has as of the Effective Date; and (d) agrees to comply with all terms of this Agreement. 19.8 The terms and provisions of this Section 19 and the rights of the Recognized Lender hereunder shall survive a termination of this Agreement pursuant to a Default or the expiration of this Agreement pursuant to Section 2.3. EMPLOYMENT 20.1 Operator will pay wages to all of its employees that equal or exceed the living wage in effect as of the date of this agreement under State law or applicable local law. 20.2 Operator shall use reasonable efforts, at its own cost and expense, to conduct outreach for employment purposes to residents of the Participating Cities for the opportunities to be created by the construction, installation, operation, management, administration, marketing and maintenance of the Program. Such recruitment activities shall include provisions for the posting of employment and training opportunities at appropriate Participating City agencies responsible for encouraging employment of Participating City residents. Operator shall ensure the promotion of equal employment opportunity for all qualified Persons employed by, or seeking employment with, Operator. For San Francisco-based entry level job openings with Operator, Operator shall post such openings through San Francisco’s First Source Hiring Program and offer the City of San Francisco the first opportunity to refer qualified candidates to Operator for such openings. 20.3 Operator shall not refuse to hire, train, or employ, bar or discharge from employment or discriminate against any individual in compensation, hours of employment, or any other term, condition, or privilege of employment, including, but not limited to, any promotion, upgrading, demotion, downgrading, transfer, layoff, or termination, on the basis of race, creed, color, national origin, sex, age, handicap, marital status, affectional preference or sexual orientation, in accordance with applicable law. Operator agrees to comply in all respects with all applicable federal, state and local employment discrimination laws and requirements during the Term. 203193300.19 -44- 20.4 Operator shall select, train and employ such number of employees as is necessary or appropriate for Operator to satisfy its responsibilities hereunder. Operator shall be the sole authority to hire, terminate and discipline any and all personnel employed by Operator. INSPECTION AND AUDIT RIGHTS 21.1 MTC shall have the right at reasonable times and upon reasonable notice to inspect the installation, operation, and maintenance of the Program and its associated elements. 21.2 Operator shall open and maintain a facility in each of San Francisco, San Jose and East Bay to support Program operations. 21.3 Operator shall comply with the reporting requirements set forth in Appendix C. 21.4 Throughout the Term, Operator shall maintain complete and accurate books of account and records of the business, ownership and operations of Operator with respect to the Program. 21.5 MTC has the right upon written demand with reasonable notice to Operator under the circumstances, to inspect, examine or audit during normal business hours all documents, records or other information pertaining to Ridership Revenue and Sponsorship Revenue or any other data collected and maintained by Operator to comply with the reporting requirements of Appendix C. All such documents shall be made available at one of Operator’s local offices. All such documents shall be retained by Operator for a minimum of 6 years following the expiration or termination of this Agreement. RESTRICTION AGAINST ASSIGNMENT 22.1 Operator shall not sell, assign or otherwise transfer all or any portion of its interest in this Agreement without the prior written consent of MTC, except as otherwise provided in Sections 19.1 and 19.7. Operator shall notify MTC of any proposed sale, assignment or transfer of this Agreement, in writing, at least 60 days prior to the proposed effective date of such sale, assignment or transfer. In the event that any such sale, assignment or transfer of this Agreement is approved by MTC, the purchaser, assignee or transferee shall agree to be bound by all the covenants of this Agreement required of Operator to the extent arising from and after the effective date of such sale, assignment or transfer. Any purported sale, assignment or transfer without MTC’s approval as required above shall be void and of no force or effect. Nothing in the foregoing shall limit (a) the right of Bikeshare Holdings to sell, assign or otherwise transfer interests in Operator, (b) the right of direct or indirect owners of equity interests in Bikeshare Holdings to sell, assign or otherwise transfer such interests, (c) the right of Bikeshare Holdings to sell, assign or transfer all or substantially all of its assets, including its interest in this Agreement, so long as Operator or, in the case of clause (c), its successor, has the experience and expertise to operate a large-scale bikeshare program and has substantially the same legal right to obtain replacement Bicycles and other Equipment, to utilize the Bicycle patents and other Equipment patents, and to utilize the required Software that Operator has as of the Effective Date. In addition, nothing in the foregoing shall prohibit a merger, reorganization, recapitalization, consolidation or similar transaction involving Bikeshare Holdings or any direct or indirect holder of equity interests in Bikeshare Holdings, so long as the conditions set forth in the preceding sentence are satisfied. 203193300.19 -45- DISPUTE RESOLUTION PROCESS 23.1 In the event of a dispute between the Parties, including, without limitation, a dispute regarding liquidation damages pursuant to Section 2.6.3, a dispute regarding the Security Fund, a dispute regarding a breach of this Agreement or regarding the occurrence or continued existence of a Default, such dispute shall be addressed and resolved in accordance with the following (the “Dispute Resolution Process”): 23.1.1 MTC’s Program Manager assigned to the Program and Operator’s General Manager of the Program, or their respective delegates, shall meet, within 10 days after receipt by one Party of notification from the other Party of such dispute, to negotiate in good faith in order to try to resolve such dispute (the date of the first such meeting, or the expiration of such 10-day period if the meeting is not timely held, being the “Initial Meeting Date”). A KPI Contest Notice shall constitute appropriate notification for a dispute regarding a right to liquidated damages under Section 2.6.3, and a rejection of a KPI Change Request shall constitute appropriate notification for a dispute under Section 2.6.2(a). If such persons fail to resolve such dispute within 15 days after the Initial Meeting Date, then the Executive Director of MTC and the President of Bikeshare Holdings shall meet promptly and negotiate in good faith in order to resolve such dispute. If such persons fail to resolve such dispute within 30 business days after the Initial Meeting Date, then such dispute shall be subject to mediation under Section 23.1.2. As used in this Section 23.2.1, a meeting may be held in person, by conference call or by video conference. By agreement of the Parties, any of the deadlines set forth in this Section 23.1.1 may be extended or shortened. The process described in this Section 23.1.1 shall be confidential and treated as a compromise negotiation for purposes of federal and state rules of evidence. 23.1.2 Unless the Parties otherwise agree, mediation shall be administered by the American Arbitration Association (the “AAA”) in accordance with its Commercial Rules, or similar service. A request for mediation shall be made in writing, delivered to the other Party and filed with the applicable mediation service. Either Party may submit such request. The Parties shall share the mediator’s fee and any filing fees equally. The mediation shall be held in San Francisco. The Parties shall be represented by individuals of their choosing. Agreements reached in mediation shall be binding on the Parties and enforceable in a State or Federal Court of competent jurisdiction sitting in San Francisco County. The mediation process shall be confidential and treated as a compromise negotiation for purposes of federal and state rules of evidence. 23.1.3 For the avoidance of doubt, the Parties shall comply with any settlement agreement regarding any dispute that is the subject of a settlement agreement. 23.1.4 As used in this Agreement, “final resolution” of a dispute or a dispute being “finally resolved” means that (a) the Parties have entered into a settlement agreement to resolve such dispute, or (b) if either Party has initiated a judicial proceeding to contest such dispute, that a final-non- appealable order of a court of competent jurisdiction has been issued for such dispute. 203193300.19 -46- REPRESENTATIONS AND WARRANTIES OF OPERATOR 24.1 In addition to the representations, warranties, and covenants of Operator set forth elsewhere herein, Operator represents and warrants to MTC and the Participating Cities as of the Effective Date: 24.1.1 Operator is a limited liability company, validly existing and in good standing under the laws of the State of Delaware, and it is duly authorized to do business in the State of California; 24.1.2 The sole owner of Operator is Bikeshare Holdings; and 24.1.3 Operator has all requisite power and authority to own or lease its properties and assets, to conduct its business as currently conducted and to execute, deliver and perform this Agreement and all other agreements entered into or delivered in connection with or as contemplated hereby. 24.1.4 The execution, delivery and performance of this Agreement and all other agreements, if any, entered into in connection with the transactions contemplated hereby have been duly, legally and validly authorized by all necessary action on the part of Operator. 24.1.5 This Agreement has been duly executed and delivered by Operator and constitute the valid and binding obligations of Operator, and are enforceable in accordance with their respective terms, subject to equitable legal principles and the laws governing creditors’ rights. Operator has obtained the requisite authority to authorize, execute and deliver this Agreement and to consummate the transactions contemplated hereby and no other proceedings or other actions are necessary on the part of Operator to authorize the execution and delivery of this Agreement and the consummation of the transactions contemplated hereby. 24.1.6 Neither the execution and delivery of this Agreement by Operator nor the performance of its obligations contemplated hereby will: (a) Conflict with, result in a material breach of or constitute a material default under (or with notice or lapse of time or both result in a material breach of or constitute a material default under) (i) any governing document of Operator or to Operator’s knowledge, any agreement among the owners of Operator, or (ii) any statute, regulation, agreement, judgment, decree, court or administrative order or process or any commitment to which Operator is a party or by which it (or any of its properties or assets) is subject or bound; (b) Result in the creation of, or give any party the right to create, any material lien, charge, encumbrance, or security interest upon the property and assets of Operator; or 203193300.19 -47- (c) Terminate, breach or cause a default under any provision or term of any contract, arrangement, agreement, license or commitment to which Operator is a party. 24.1.7 Warranty of Services. In the performance of its services, Operator represents and warrants that it has and will exercise the degree of professional care, skill, efficiency, and judgment of those with special expertise in providing such services, and that it carries and will maintain all applicable licenses, certificates, and registrations needed for the work in current and good standing. 24.1.8 Neither Operator nor any of its officers, directors or senior management has committed or been convicted (where such conviction is a final, non-appealable judgment or the time to appeal such judgment has passed) of any criminal offense, including, but not limited to, bribery or fraud, arising out of or in connection with (a) this Agreement, (b) the award of this Agreement, or (c) any act to be taken pursuant to this Agreement by MTC or its officers, employees or agents, or (d) the business activities and services to be undertaken or provided pursuant to this Agreement. Operator shall promptly terminate its relationship with any office, director or senior management of Operator who is convicted (where such conviction is a final, non-appealable judgment or the time to appeal such judgment has passed) of any criminal offense, including, but not limited to, bribery or fraud, arising out of or in connection with: (i) this Agreement, (ii) the award of this Agreement, (iii) any act to be taken pursuant to this Agreement by MTC or its officers, employees or agents, or (iv) the business activities and services to be undertaken or provided by Operator pursuant to this Agreement. 24.2 All representations and warranties contained in this Agreement shall survive the Term. MISCELLANEOUS 25.1 Operator, MTC and the Participating Cites acknowledge and agree that the nature of the Program requires extensive and ongoing long-term coordination among the Parties and the Participating Cities. Accordingly, no later than 10 business days after the Effective Date, Operator, MTC and, in accordance with the Coordination Agreement, each Participating City, shall designate an employee as its designated representative (the “Designated Representative”) to be the principal contact of such party in its dealings with the other parties in connection with the implementation of the Program. Any party may change its Designated Representative in its sole discretion so long as notice of such change is given to the other parties. 25.2 All notices, demands or requests under this Agreement shall be in writing and shall be sufficiently given if sent by registered or certified mail, return receipt requested, by electronic mail (email), by overnight mail, or by personal delivery, in each case to the address listed below, or to such other location or person as any party may designate in writing from time to time. Any notice, demand or 203193300.19 -48- request under this Agreement intended for the Participating Cities shall be sent to MTC. Any notice, demand or request shall be deemed given on the date of receipt or rejection by the intended recipient. If to MTC: Metropolitan Transportation Commission Joseph P. Bort MetroCenter, Oakland, CA 94607-470 Attention: Executive Director Email: SHeminger@mtc.ca.gov Attention: General Counsel: Email: AWeil@mtc.ca.gov Attention: Designated Representative Email: KMulder@mtc.ca.gov If to Operator: Bay Area Motivate, LLC 5202 Third Avenue Brooklyn, New York 11220 Attention: Jay Walder, President and CEO Email: jaywalder@motivateco.com Attention: Justine Lee, Vice President and General Counsel Email: justinelee@motivateco.com Bay Area Motivate, LLC 2200 Jerrold Avenue, Unit J San Francisco, California 94124 Attention: Emily Stapleton, General Manager and Designated Representative Email: emilystapleton@motivateco.com Notwithstanding the foregoing, any notice required to be given to Operator pursuant to Section 18 for which a cure period is 10 business days or less or any other notice that requires action to be taken within 10 business days or less must be given by email, personal delivery or overnight mail service. 25.3 If Operator receives either a notice of default or a notice of noncompliance from a Sponsor, a lender or a material supplier, it shall notify MTC and supply a copy of the notice of noncompliance within 5 days of receipt. 25.4 Upon request by Operator, MTC shall execute, acknowledge and deliver to Operator (or directly to a designated third party) an estoppel certificate in a form reasonably acceptable to the Parties. MTC shall sign, acknowledge, and return such estoppel certificate within 15 days after request, even if Operator is in default. Any estoppel certificate shall bind MTC to the extent set forth therein. 25.5 This Agreement shall be binding upon and inure to the benefit of the parties and their respective permitted successors and assigns. The Recognized Lender shall be a third party beneficiary of Section 19. 203193300.19 -49- 25.6 No failure on the part of MTC or Operator to exercise, and no delay in exercising, any right hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right preclude any other right, except as provided herein, subject to the conditions and limitations established in this Agreement. The rights and remedies provided herein are cumulative and not exclusive of any remedies provided by law, and nothing contained in this Agreement shall impair any of the rights of any party under applicable law, subject in each case to the terms and conditions of this Agreement. A waiver of any right or remedy by a party at any one time shall not affect the exercise of such right or remedy or any other right or other remedy by such party at any other time. In order for any waiver of any party to be effective, it must be in a writing signed by such party. The failure of MTC to take any action regarding a default by Operator shall not be deemed or construed to constitute a waiver of, or otherwise affect, the right of MTC to take any action permitted by this Agreement at any other time regarding such default. 25.7 The clauses and provisions of this Agreement are intended to be severable. If any clause or provision is declared invalid, in whole or in part, by any court, agency, commission, legislative body, or other authority of competent jurisdiction, such provision shall be deemed a separate, distinct, and independent portion, and such declaration shall not affect the validity of the remaining portions hereof, which other portions shall continue in full force and effect, but only so long as the essential terms underlying this Agreement are not undermined. If, however, the essential terms underlying this Agreement are undermined as a result of any clause or provision being declared invalid, in whole or in part, by any court, agency, commission, legislative body, or other authority of competent jurisdiction, and such declaration is not stayed within 30 days by a court pending resolution of a legal challenge thereto or an appeal thereof, the adversely affected party shall notify the other parties in writing of such declaration of invalidity and the effect of such declaration of invalidity and the parties shall enter into good faith negotiations to modify this Agreement to compensate for such declaration of invalidity. If the parties cannot come to an agreement modifying this Agreement within 120 days (which 120 day period shall be tolled during any stay contemplated above) of such notice, then this Agreement shall terminate with such consequences as would ensue if it terminated pursuant to Section 18, except Operator shall not be liable for any damages. 25.8 If any applicable federal, state, or local law or any regulation or order is passed or issued, or any existing applicable federal, state, or local law or regulation or order is changed (or any judicial interpretation thereof is developed or changed) in any way which undermines the essential terms underlying this Agreement, the adversely affected party shall notify the other parties in writing of such change and the effect of such change and the parties shall enter into good faith negotiations to modify this Agreement to compensate for such change, subject to any necessary approvals of MTC and the Participating Cities. 25.9 The headings contained in this Agreement are to facilitate reference only, do not form a part of this Agreement, and shall not in any way affect the construction or interpretation hereof. Terms such as “hereby,” “herein,” “hereof,” “hereinafter,” “hereunder” and “hereto” refer to this Agreement as a whole and not to the particular sentence or paragraph where they appear, unless the context otherwise requires. The term “may” is permissive; and, the terms “shall,” “must,” and “will” are mandatory, not merely directive. The term “day” means a calendar day, unless otherwise stated herein to be a “business day.” The term year means any period of 365 days, unless otherwise stated herein to be a “calendar year.” All references to any gender shall be deemed to include both the male and the female, and any reference by number shall be deemed to include both the singular and the plural, as the context may require. Terms used in the plural include the singular, and vice versa, unless the context otherwise requires. References 203193300.19 -50- in this Agreement to Sections, Appendices and Exhibits are to Sections, Appendices and Exhibits of this Agreement. 25.10 Operator shall conduct the work to be performed pursuant to this Agreement as an independent contractor and not as an agent of MTC or any Participating City. 25.11 This Agreement shall be governed in all respects, including validity, interpretation and effect, and construed in accordance with, the laws of the State of California, irrespective of conflict of laws principles, as applicable to contracts entered into and to be performed entirely within the State of California. 25.12 Subject to the requirement that disputes be addressed in accordance with the Dispute Resolution Process, each hereby irrevocably submits to the jurisdiction of any State or federal court sitting in San Francisco County, California, over any suit, action or proceeding arising out of or relating to this Agreement. Each party hereby irrevocably waives, to the fullest extent permitted by law, any objection it may now or hereafter have to such venue as being an inconvenient forum. 25.13 Should any party employ an attorney for the purpose of enforcing or construing this Agreement, or any judgment based on this Agreement, in any legal proceeding whatsoever, including insolvency, bankruptcy, arbitration, declaratory relief or other litigation, the prevailing party shall be entitled to receive from the other party or parties thereto reimbursement for all reasonable attorneys’ fees and all costs, including but not limited to service of process, filing fees, court and court reporter costs, investigative costs, expert witness fees and the cost of any bonds, whether taxable or not, and such reimbursement shall be included in any judgment, decree or final order issued in that proceeding. The “prevailing party” means the party in whose favor a judgment, decree, or final order is rendered. 25.14 No provision of this Agreement nor any Appendix or Exhibit shall be amended or otherwise modified, in whole or in part, except by a written instrument, duly executed by the Parties and approved as required by applicable law. 25.15 This Agreement may be executed in one or more counterparts which, when taken together, shall constitute one and the same. 25.16 Time is of the essence with respect to the obligations of the parties under this Agreement and with respect to the deadlines for submitting notices, including, without limitation, a KPI Failure Notice, a KPI Contest Notice or any notice under Section 15.3 or 18.1. 25.17 If Operator publishes a work dealing with any aspect of performance under this Agreement, or of the results and accomplishments attained in such performance, then MTC shall have a royalty-free, non-exclusive and irrevocable license to reproduce, publish, or otherwise use and to authorize others to use the publication, or, in the event that only a portion of the publication deals with an aspect of performance under this Agreement, such portion of the publication. TN WITNESS WHEREOF,MTC and Operator have executed this Agreement as of the Effective Date. METROPOLITAN TRANSPORTATION COMMISSION By: Name:eriiinger Title:Executive Director Signature Page to Program Agreement BAY AREA MOTIVATE,LLC By:______ Name:Jay a1dr Title:Presid nt ahd Chief Executive Officer V Signature Page to Program Agreement 5-2 203193300.19 A-1 Appendix A Key Performance Indicators and Liquidated Damages This Appendix A sets forth the Key Performance Indicators and the liquidated damages assessed against Operator for failing to comply with the Key Performance Indicators. Key Performance Indicators are subject to extension for Events of Force Majeure. Liquidated damages are subject to the annual limitation of 4% of Ridership Revenues. KPI # Title Definition Measurement Tool(s)1 Liquidated Damages 1 Station Cleaning and Inspection Station Cleaning for each Station must occur 2 times per month-- one time between the first and fifteenth days of the month, and one time between the sixteenth and last days of the month. Litter removal needs to occur for on street Stations at least once per week. Additional litter removal to occur on an as-needed basis. Operator records/ databases $75 for each Station that is not cleaned according to schedule. 2 Graffiti Removal (a) Except as required by clause (b) below, Operator shall remove conspicuous graffiti within 72 hours after Notification. (b) Operator shall remove racist and hate graffiti within 4 hours after Notification. Operator records/databases (a) $50 for each 24-hour period (or part thereof) beyond 72 hours. (b) $50 for each 4-hour period (or part thereof) beyond 4 hours. 3 Litter Removal Operator shall remove conspicuous accumulations of litter from Stations within 24 hours after Notification. Operator records/databases $50 for each 4-hour period (or part thereof) beyond 24 hours. 4 Bicycle Maintenance Every Bicycle in the Bicycle Fleet shall receive a Bicycle Maintenance check at least once every two calendar months. Operator records/ databases $25 for each Bicycle that is not subject to a Bicycle Maintenance in any 2-calendar month period. 1 Sources of information used to assess compliance with these service levels may include, but are not limited to, those listed in the “Measurement Tool(s)” column. 203193300.19 A-2 KPI # Title Definition Measurement Tool(s)1 Liquidated Damages 5 Station Deactivation and De-Installation As directed by MTC or a Participating City, Operator must perform: (i) Station Deactivation(s); (ii) Station De-Installation(s); (iii) Station Re-Installation(s); (iv) Station Adjustment(s). (i) Operator will Deactivate a Station within 24 hours after a request from a Participating City, except in instances where the continued presence/activity of the station has been determined to pose a threat to public safety. (ii) Operator will complete a De-Installation of a Station within 72 hours after a request from a Participating City, except in instances where the continued presence/activity of the station has been determined to pose a threat to public safety. (iii, iv) Deactivated Stations must be reactivated within 24 hours of direction from a Participating City. De- Installed or Adjusted Stations must be reinstalled or Readjusted to their original configurations within 72 hours of direction from a Participating City. Notwithstanding the foregoing, the KPIs for De- Installation and reinstallations are limited to 20 in any 72-hour period. The time permitted for larger scale De- Installation and reinstallation will be subject to agreement between Operator and MTC. Electronic communications (i) $75 for each hour of delay (or part thereof) beyond 24 hours for Deactivation. (ii) $75 for each hour of delay (or part thereof) beyond 72 hours for De-Installation. (iii, iv) $50 for each hour of delay (or part thereof) beyond 24 hours for reactivation; $50 for each hour of delay (or part thereof) beyond 72 hours for reinstallation or Readjustment. 203193300.19 A-3 KPI # Title Definition Measurement Tool(s)1 Liquidated Damages 6 Program Functionality The Program must be operational 100% of the time every month (i.e., every hour of every day, 24 hours per day, 7 days per week, measured monthly), so that, at a minimum, all Program users can dock and undock Bicycles at all times, excluding (i) scheduled downtime, and (ii) any period when the Computer Hardware for the Program and/or Software is, and remains, damaged through Hacking. Program Functionality does not apply to hardware malfunctions at individual Stations or to individual Stations that are not Operable Stations. Software System If in any month the Program is operational less than 100% of the time, then $300 for every hour (or part thereof) that the Program is not operational. 7 Station Operability Stations, in the aggregate, must be Operable Stations 99% of the time every month (i.e., every hour of every day, 24 hours per day, 7 days per week, measured monthly), excluding (i) during scheduled downtime, and (ii) any period when a Station is not an Operable Station because the Kiosk or other Equipment located at the Station has been damaged by third-parties. Calculated by taking the sum of the number of hours that each Station was an Operable Station during a month, dividing that sum by the product of the total number of hours in the month and the number of Stations that month. Station Operability does not apply during any period in which the entire Program system is down. Operator records/ databases If in any month the Stations are not Operable Stations 99% of the time, then $100 for every hour that Stations are not Operable Stations below the 99% threshold. 203193300.19 A-4 KPI # Title Definition Measurement Tool(s)1 Liquidated Damages 8 Website Operations The Program website must be operational 100% of the time every year (i.e., every hour of every day, 24 hours per day, 7 days per week, measured annually) excluding (i) scheduled downtime, and (ii) any period when the Computer Hardware for the Program and/or Software is, and remains, damaged through Hacking. Operator records/ databases If in any year the website is not operational 100% of the time, then $50 for every hour each year that the website is not operational. 9 Telephone Answering Time Not less than 80% of telephone calls to Operator’s call center each month must be answered by a person within 90 seconds or less. Operator records/ databases $100 for every percentage point below 80% that telephone calls are not answered in 90 seconds or less in any month. 10 Email Response Time Not less than 95% of emails to Operator’s public information email address must be answered within 1 business day. Operator records/ databases $100 for every percentage point below 95% that emails are not answered within 1 business day or less in any month. 11 Bicycle Availability This Bicycle Availability requirement is met if the monthly average Bicycle Fleet Level, recorded once each Day of the month between the hours of 11:00 AM and 3:00 PM, is not less than 90% of the Program Fleet. Damages are calculated as the sum of Bicycles under the threshold for each Day that the recorded Bicycle Fleet Level is less than the required Bicycle Fleet Level. Software System $15 for each Bicycle that is under the 90% threshold each month. 203193300.19 A-5 KPI # Title Definition Measurement Tool(s)1 Liquidated Damages 12 Rebalancing No station Cluster shall be completely empty of available bikes for use or completely lacking of empty, operable docks for more than 10 consecutive minutes during Peak Hours (i.e., 6:00 am to 10:00 pm). The Rebalancing KPI set forth above is an interim KPI. During the Assessment Period (as defined in Section 2.6.2(b) of the Agreement), the Rebalancing KPI will be assessed and reformulated, and a new Rebalancing KPI will be fully implemented immediately following the Assessment Period. Software System/ Operator records/ databases $1.00 for each minute that a Cluster Outage occurs beyond 10 consecutive minutes during Peak Hours. Liquidated Damages do not apply to the Stations installed as part of a Phase for the first 6 months after the completion of such Phase. 203193300.19 B-1 Appendix B Cost of Equipment PENINSULA PILOT CITIES: • Cost to upgrade AD Equipment: $12.50 per Dock per month, subject to PPI Adjustment. • Cost to purchase new Equipment: As set forth in the New Equipment Price Schedule below. The prices set forth in such schedule are subject to PPI Adjustment. • Cost to install new Equipment (including site planning and drawings): $4,000 per Station, subject to CPI Adjustment • Cost to operate and maintain the Equipment: $100 per Dock per month, subject to CPI Adjustment, and subject to the following reductions: (i) Cost to operate and maintain will be reduced to $75 per Dock per month, subject to CPI Adjustment, during any 12-month period in which there is an average of 1 Trip per Bicycle per day for the entire Bicycle Fleet in such Peninsula Pilot City (subject to Bicycle Availability) (ii) Cost to operate and maintain will be reduced to $50 per Dock per month, subject to CPI Adjustment, during any 12-month period in which there is an average of 1.5 Trips per Bicycle per day for the entire Bicycle Fleet in such Peninsula Pilot City (subject to Bicycle Availability) (iii) Cost is reduced to $0 per dock, adjusted by CPI, if an average of 3 rides per bike per day citywide occurs for a 12 month period OTHER ELIGIBLE CITIES: • Cost to purchase new Equipment: As set forth in the New Equipment Price Schedule below. The prices set forth in such schedule are subject to PPI Adjustment. • Cost to install new Equipment (including site planning and drawings): $4,000 per Station, subject to CPI Adjustment • Cost to operate and maintain the Equipment: $130 per Dock per month, subject to CPI Adjustment, and subject to the following reductions: (i) Cost to operate and maintain will be reduced to $97.50 per Dock per month, subject to CPI Adjustment, during any 12-month period in which there is an average of 1 Trip per Bicycle per day for the entire Bicycle Fleet in such Eligible City (subject to Bicycle Availability) 203193300.19 B-2 (ii) Cost to operate and maintain will be reduced to $65 per Dock per month, subject to CPI Adjustment, during any 12-month period in which there is an average of 1.5 Trips per Bicycle per day for the entire Bicycle Fleet in such Eligible City (subject to Bicycle Availability) (iii) Cost to operate and maintain will be reduced to $0 per Dock per month, subject to CPI Adjustment, during any 12-month period in which there is an average of 3.0 Trips per Bicycle per day for the entire Bicycle Fleet in such Eligible City (subject to Bicycle Availability) • If Operator contracts with a private property owner to locate a publicly-accessible Station on private property in the Eligible City, then the cost to operate and maintain the Equipment will be a matter for agreement between Operator and the private property owner. New Equipment Price Schedule Station Size (No. of Bicycles)No. of Docks Cost (Excluding Sales Tax) 8 15 47,166.98$ 10 19 55,503.56$ 12 23 63,840.15$ 14 27 72,176.74$ 16 31 80,513.33$ 18 35 88,849.92$ 20 39 97,186.51$ 203193300.19 C-1 Appendix C Reporting Requirements MTC shall have real-time, read-only access to data as specified in the Functional Specifications. Operator shall deliver a monthly report, by the 25th day of each month, to MTC, with all of the data described below, and in a form that is acceptable to, and approved by, MTC for the Program. Except for financial information, the data shall reflect all relevant facts as they existed with respect to the immediately preceding calendar month (e.g., the June report would reflect the non-financial data for May), and the reports shall provide cumulative calendar year-to-date totals for each category (as may be applicable). For all financial information, the data shall reflect all relevant facts as they existed with respect to the calendar month that immediately precedes the immediately preceding calendar month (e.g., the June report would reflect the financial data for April), and the reports shall provide cumulative calendar year-to-date totals for each category (as may be applicable). No more frequently than once every six months, Operator may request a meeting with MTC to assess the effectiveness of these Reporting Requirements; upon mutual agreement, the Reporting Requirements below may be adjusted. 1) Membership: • YTD membership counts at the end of the reporting month, by membership type and Participating City; • Number of new members by type and Participating City, who signed up during the reporting month, by day and month; and • Number of cancellations and expirations of registered members, by type and Participating City, during the reporting month. 2) Ridership: • “Trip” shall mean the use of a Bicycle from one Station to another Station or back to the initial Station; • Trips per Day, per Participating City and member type, for the entire Program; and • Total Trips per month, and YTD per Station, Participating City, and member type, for the entire Program. 3) Environmental Impact: • Total and average calories burned per Day/month, by Participating City for the entire Program, based on calculation using total and average Trip durations; and • Carbon offset per month, by Participating City and for the entire Program, based on calculation using total hours of usage. 4) Rebalancing Operations: 203193300.19 C-2 • Number of Bicycles rebalanced per Day; • Bicycles on the street per Day per Participating City; • List of full and empty instances (Station, start time, end time, and date) in excess of 10 consecutive minutes between 6:00 AM and 10:00 PM; • Count of full and empty instances per Station and Participating City by Day and month in excess of 10 consecutive minutes between 6:00 AM and 10:00 PM; • Breakdown of full and empty instances by duration in excess of 10 consecutive minutes between 6:00 AM and 10:00 PM; • List of full and empty instances (Station, start time, end time, and date) between 6:00 AM and 10:00 PM at “priority” Stations (to the extent “priority” Stations have been established); • Count of full and empty instances per Station and Participating City by Day and month between 6:00 AM and 10:00 PM at “priority” Stations (to the extent “priority” Stations have been established); • Breakdown of full and empty instances by duration between 6:00 AM and 10:00 PM at “priority” stations (to the extent “priority” stations have been established); and • Percentage of time Stations are normal, full, or empty. 5) Station Maintenance Operations: • List of Stations cleaned and dates of each cleaning; • Number of active Stations; • List of all Station malfunctions (Station, start and end date and time, and event); and • Percentage of time Stations were available to provide rentals for monthly and annual members by Station and for the entire Program. 6) Bicycle Maintenance Operations: • Count of Bicycles checked per month; • Count of Bicycles repaired per month; • List of Bicycles by unique ID number not checked per month. 7) Incident Reporting: • List of all incidents (crash, vandalism, theft, and police action) with dates and summary of outcomes. 203193300.19 C-3 8) Customer Service Reporting: • Number of calls and emails, with total and broken down by classification; • Average time to answer call; • Average time of call; • Number of refunds and amount given per month; and • Upon call center software availability, number of calls of different types of issues, and average length of call. 9) Customer Outreach: • Web site analytics. 10) Financial Summary: • Fees assessed to bike share users due to lost or damaged bicycles; • Revenue generated from subscriptions, by subscription type; • Revenue generated from usage fees, by subscription type; and • Revenue generated from other sources, including Advertising and Sponsorships. 11) Compliance with KPIs: • Recorded Bicycle Fleet Level for each day as recorded between the hours of 11:00 AM and 3:00 PM. 203193300.19 D-1 Appendix D Functional Specifications Functional Specification Software Billing Product requirements Annual and casual billing Usage charges billing Discounts Refunds Administrative and stolen bike charges Automatic renewal of accounts Opt-in/Opt-out ability for automatic renewal Allow Annual Members to use Clipper Card to access Bicycles in lieu of key fob2 Automatic emails to customers Ability to edit text in emails to customers Automatic emails in the following instances: Upon successful renewal Upon signup Upon failed monthly payment Upon successful monthly payment Upon credit card change Upon credit card expiration Upon account renewal needed (manual billing) Upon upcoming automatic account renewal (automatic billing) Upon successfully account renewal Upon failed account renewal Upon successful bike return (user configurable) Upon missing bike (user and system configurable) Upon incurrence of overage fees Upon system shut down PCI Compliance PCI Compliance of Bike Share Operator and System Remote functionality Ability to shut down system (prevent bikes from being rented) Ability to lock down bikes (with visual indicator) Ability to shut down stations Ability to reboot remotely (when connected) Operational Dashboards (The following dashboards should be available at a minimum) 2To be achieved by the later of 20 months after the Effective Date and completion of Phase IV. 203193300.19 D-2 Subscriptions Number of casual users by subscription type Number of members by subscription type Customer rental activity Number of open rentals and duration of rental Number of trips and rentals completed by casual and registered members Real-Time Dashboards Station status (total, working, out of order, locked, disconnected) Station occupancy (current and recent history of station bike/dock occupancy) Docking point status (total, locked, error, empty, bike docked) Bike status (docked, in rental, defective, other) Private data feed MTC to have access to analytical/reporting databases provided by bikeshare system. Public data feed All public data feeds should cover the following at a minimum: Station Name Station ID Station Status (locked/unlocked) Latitude Longitude # of total docking points # of available docking points # of inoperable docks (w/ and w/o bikes) # of available bikes Last communication time with server Excludes test/warehouse station Product support and redundancy Features for product support include System redundancy Real-time database backups Development and QA will be done separate from the production environment Software escrow A third-party software escrow with the latest major software release must be maintained at all times Hardware Docking mechanism Subscriber can unlock a bike (e.g., via a valid key or card) Locking mechanism that opens within configurable number of seconds Locking mechanism that closes immediately with moderate docking force Defaults to unlocked/open when bike is not present Functional user lock-down capability ("wrench button") with permanent visual 203193300.19 D-3 indicator Visual and audible indication of successful, failed, or in-progress transaction Bike Step through design Hold someone up to 240 pounds Can lock and unlock securely Bell Front and rear flashing lights when bike is moving; stay illuminated for 60 seconds after bike stops Reflective sidewalls on tires Within range, an infinitely adjustable seat height with ergonomic lever/tension adjustment and high-contrast height markings Carrier not susceptible to trash accumulation Wheels greater than or equal to 26" in diameter Fenders for front and rear wheels Front and rear hand brakes Multiple speed drivetrain Scratch- and graffiti-resistant frame finish Reflectors on pedals, spokes, and front and rear of bike Rubber tread on pedals Room for safety messaging on handlebar and front cockpit Tamper-resistant hardware (including hidden cables and custom wrench fittings) Chain guard Kiosk station Short-term user can unlock one or multiple bikes (e.g., via valid ride code or key). Casual users can use single credit card to rent up to 4 bikes Hibernation stage Vandal resistant, replaceable screens Nearby station functionality Multiple languages 203193300.19 Attachment A Agreement to Continue Pilot Bike Share Program 203215669.16 ATTACHMENT A AGREEMENT TO CONTINUE PILOT BIKE SHARE PROGRAM by and between BAY AREA MOTIVATE, LLC and METROPOLITAN TRANSPORTATION COMMISSION 203215669.16 1 Table of Contents RECITALS ..................................................................................................................................... 3 ARTICLE I SCOPE OF SERVICES; TERM ........................................................................... 3 ARTICLE II REVENUES; USER FEES; AND OPERATING EXPENSES ......................... 4 ARTICLE III EMPLOYEE AND EMPLOYMENT MATTERS ............................................ 5 ARTICLE IV OWNERSHIP AND PROPRIETARY RIGHTS .............................................. 7 ARTICLE V TERMINATION .................................................................................................... 7 ARTICLE VI DISPUTE RESOLUTION ................................................................................... 8 ARTICLE VII INSURANCE....................................................................................................... 8 ARTICLE VIII INDEMNIFICATION AND LIMITATION OF LIABILITY .................... 12 ARTICLE IX THIRD PARTY BENEFICIARIES ................................................................. 13 ARTICLE X MISCELLANEOUS ............................................................................................ 13 ARTICLE XI DEFINITIONS ................................................................................................... 17 Attachment A-1, Description of Services ..................................................................................... 21 Attachment A-2, Subscriber Related Fees .................................................................................... 28 Attachment A-3, New Subscriber-Related Fees ........................................................................... 30 203215669.16 2 ATTACHMENT A AGREEMENT TO CONTINUE PILOT BIKE SHARE PROGRAM THIS AGREEMENT TO CONTINUE THE PILOT BIKE SHARE PROGRAM (this “Continuation Agreement”), has an effective date (the “Effective Date”) that is the same as the effective date of the BAY AREA BIKE SHARE PROGRAM AGREEMENT, to which this Continuation Agreement is attached (the “Program Agreement”), by and between the METROPOLITAN TRANSPORTATION COMMISSION, a California public agency established pursuant California Government Code § 66500 et seq., having an office at 101 Eighth Street, Oakland, California (“MTC”), and BAY AREA MOTIVATE, LLC, a Delaware limited liability company, having any office at 5202 Third Avenue, Brooklyn, New York 11220, as Operator of the Bay Area Bike Share Program (“Operator”). RECITALS WHEREAS, Alta Bicycle Share, Inc., an Oregon corporation (“Alta”), and Bay Area Air Quality Management District, a California special district (the “Air District”), entered into a Bike Share Program Agreement having an effective date of February 6, 2013 (the “Pilot Program Agreement”), pursuant to which Operator operated a pilot bike sharing program (the “Pilot Program”) in the cities of San Jose, Palo Alto, Mountain View, Redwood City and San Francisco (each, a “Pilot City” and collectively, the “Pilot Cities”); WHEREAS, on the date hereof, (a) the Air District and Motivate International, Inc., formerly known as Alta (“Motivate”), terminated the Pilot Program Agreement, (b) the Air District and MTC agreed to the conveyance of all of the Air District’s right, title and interest in and to the tangible and intangible property acquired or developed in connection with the Pilot Program from the Air District to MTC, and (c) MTC and Operator agreed to the conveyance of all of MTC’s right, title and interest in and to the tangible property acquired or developed in connection with the Pilot Program (the “Pilot Program Property”) from MTC to Operator ; WHEREAS, the Parties have agreed that Operator will continue to operate the Pilot Program in the Pilot Cities using the Pilot Program Property; and WHEREAS, capitalized terms not otherwise defined when they first appear in this Continuation Agreement are defined in Article XI. NOW, THEREFORE, in consideration of the foregoing clauses, which clauses are hereby made a part of this Continuation Agreement, and the mutual covenants and agreements herein contained, and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the Parties do hereby covenant and agree as follows: ARTICLE I PURCHASE OF PILOT PROGRAM PROPERTY; SERVICES; TERM 1.1 Purchase of Pilot Program Property. On the Effective Date, Operator shall purchase the Pilot Program Property for the purchase price agreed to among Operator, MTC and 203215669.16 3 the Air District, and Operator shall remit payment of the purchase price to MTC not later than the 15th day after the Effective Date. 1.2 Services. Operator shall, during the Term (as defined in Section 1.3), operate and maintain in the Pilot Cities a bike share system that was originally established under the Pilot Program Agreement (the “System”). Operator shall (a) utilize the Sites being used as of the Effective Date from the Pilot Program as well as the Bicycles, Docks, Technical Platforms, Map Frames, Terminals and other Equipment existing as of the Effective Date from the Pilot Program, and Operator shall not be obligated to purchase any Equipment, new or otherwise, that was not Pilot Program Property; (b) subject to Events of Force Majeure, provide the specific services set forth in this Continuation Agreement; (c) provide all technical expertise and qualified personnel to operate the System safely and competently; and (d) correct defective or non-conforming services. All services shall be performed in compliance with this Continuation Agreement and shall be carried out in strict compliance with all applicable federal, state and local laws and regulations. 1.3 Term. This Continuation Agreement shall commence on the Effective Date and shall end (a) for Mountain View, Palo Alto and Redwood City, on June 30, 2016, and (b) for San Francisco and San Jose, upon installation of 75% of the Phase I Stations located in San Francisco and San Jose. Notwithstanding the foregoing, if MTC terminates the Program Agreement pursuant to the second to last sentence of Section 3.4.1 of the Program Agreement, then this Continuation Agreement shall terminate at the same time the Program Agreement terminates, and Sections 5.1D, 5.5 and 5.6 shall apply. The bike share program to be implemented under the Program Agreement is referred to as the “BABS Program.” ARTICLE II REVENUES; USER FEES; AND OPERATING EXPENSES 2.1 Revenues. Operator shall be entitled to collect and retain all System Operating Revenues. 2.2 User Fees. From the Effective Date to June 30, 2016, user fees shall be consistent with the fee schedule set forth in Attachment A-2. After June 30, 2016, Operator shall have the right to institute the fee schedule set forth in Attachment A-3. 2.3 Operating Expenses. 2.3.1 San Francisco and San Jose. Subject to Section 2.3.3, Operator shall be responsible for paying the expenses of operating and maintaining the System in San Francisco and San Jose. 2.3.2 Mountain View, Palo Alto and Redwood City. Subject to Section 2.3.3, from the Effective Date through December 31, 2015, Operator shall be responsible for paying the expenses of operating and maintaining the System in Mountain View, Palo Alto and Redwood City. From January 1, 2016 to the end of the Term, MTC shall pay to Operator $100 per Dock per month for Mountain View, Palo Alto and Redwood City to cover Operating Expenses in those cities. 203215669.16 4 2.3.3 MTC Payment. Subject to the last sentence of this paragraph, MTC shall cover 50% of Operator’s (and Motivate’s) Operating Losses for the period commencing August 29, 2015 and ending on the earlier of the Effective Date and December 31, 2015 (the “Covered Period”). Within 30 days after the end of the Covered Period, Operator shall send MTC a statement setting forth Operator’s (or Motivate’s) Operating Losses, if any, for the Covered Period accompanied by reasonable back-up. Notwithstanding the existence of Operator’s (or Motivate’s) Operating Losses for any particular month, MTC’s obligation under this Section 2.3.3. shall apply only to Operator’s (and Motivate’s) cumulative Operating Losses over the entire Covered Period. MTC shall pay Operator for any such cumulative Operating Losses within 30 days following Operator’s submission of its statement for the Covered Period. MTC’s payment obligation under this paragraph is capped at $100,000. 2.4 Taxes, Dues, and Fees. Operator shall pay all applicable federal, state, and local taxes assessed against, arising out of, and collected from the service operation, including sales, use, license, and/or privilege taxes. Operator shall at all times maintain records evidencing revenue and the taxes collected as are required to substantiate the correctness of the tax returns filed. 2.5 No Tax Exemption. No provision of this Continuation Agreement shall be construed to provide Operator or any of its subcontractors with an exemption, exclusion, deferral, offset or other relief from any assessment, tax, levy, or penalty which is now or which may be hereafter authorized by law. 2.6 Covenant Against Contingent Fees. Operator warrants that it has not employed or retained any company or person, other than a bona fide employee working for Operator, to solicit or secure this Continuation Agreement and that it has not paid or agreed to pay any company or person other than a bona fide employee, any fee, commission, percentage, brokerage fee, gift, or any other consideration, contingent upon or resulting from the award, or formation of this Continuation Agreement. For breach or violation of this warranty, MTC shall have the right to annul this Continuation Agreement without liability, or, at its discretion, to deduct from the agreement price or consideration, or otherwise recover, the full amount of such fee, commission, percentage, brokerage fee, gift, or contingent fee. 2.7 Liquidated Damages. Subject to Events of Force Majeure, the failure of Operator to achieve the service levels described in Section 3 of Attachment A-1 will result in liquidated damages but only if such failure relates to a service level described in such Section 3 for which there is a corresponding “Key Performance Indicator” in Appendix A of the Program Agreement. Operator will have no liability for a failure to achieve a service level described in such Section 3 for which there is no corresponding “Key Performance Indicator” in Appendix A of the Program Agreement. Liquidated damages will be assessed at half of the rate set forth in Appendix A of the Program Agreement. MTC shall notify Operator on a monthly basis of any such failures and the corresponding liquidated damages, but payment of such liquidated damages shall not be due until the completion of Phase I. 203215669.16 5 ARTICLE III EMPLOYEE AND EMPLOYMENT MATTERS 3.1 Project Manager. Each Party shall appoint a project manager to act, except as otherwise specified in this Continuation Agreement, as the primary contact person for purposes of this Continuation Agreement. The provision by Operator of services to operate and maintain the System is subject at all times to inspection and review by MTC Project Manager. 3.2 Fairness Policy. No employee of MTC shall be admitted to any share or part of this Continuation Agreement or to any benefit that may arise therefrom that is not available to the general public. 3.3 Employment Discrimination by Operator Prohibited. During the performance of this Continuation Agreement, Operator agrees as follows: A. Operator shall not discriminate against any employee or applicant for employment because of race, religion, color, sex, national origin, age, disability or any other basis prohibited by state law related to discrimination in employment except where there is a bona fide occupational qualification reasonably necessary to the normal operation of Operator. Operator agrees to post in conspicuous places, available to employees and applicants for employment, notices setting forth the provisions of this nondiscrimination clause. B. Operator, in all solicitations or advertisements for employees placed by or on behalf of Operator, will state that Operator is an Equal Opportunity Employer. C. Notices, advertisements, and solicitations placed in accordance with federal law, rule, or regulation shall be deemed sufficient for the purpose of meeting the requirements of this Section 3.3. D. Operator will comply with the provisions of the Americans with Disabilities Act of 1990 which prohibits discrimination against individuals with disabilities in employment and mandates their full participation in both publicly and privately provided services and activities. E. Operator shall not discriminate against any customer, prospective customer, employee or prospective employee because of race, color, sex, age, religion, or country of origin. 3.4 General Compliance with Laws and Wage Rates. Operator will comply with all federal, state, and local laws and ordinances applicable to the provision of services to operate and maintain the System. This includes compliance with prevailing wage rates and their payment in accordance with California Labor Code section 1775, to the extent applicable. 3.5 Supervision by Operator. Operator shall at all times require strict discipline and good order among Operator’s employees and all subcontractors providing any of the services required hereunder. Operator shall not permit, and shall require all subcontractors not to permit, 203215669.16 6 any employee or other person to provide any service required hereunder unless such employee or other person has demonstrated proficiency in the type of work which such employee or other person is assigned to perform. 3.6 Non-Discrimination. During the performance of this Continuation Agreement, Operator and its subcontractors shall not unlawfully discriminate, harass, or allow harassment against any employee or applicant for employment because of sex, race, color, ancestry, religious creed, national origin, physical disability (including HIV and AIDS), mental disability, medical condition (e.g., cancer), age (over 40), marital status, and denial of family care leave. Operator and subcontractors shall insure that the evaluation and treatment of their employees and applicants for employment are free from such discrimination and harassment. Operator and subcontractors shall comply with the provisions of the Fair Employment and Housing Act (Gov. Code §12990 (a-f) et seq.) and the applicable regulations promulgated thereunder (California Code of Regulations, Title 2, Section 7285 et seq.). The applicable regulations of the Fair Employment and Housing Commission implementing Government Code Section 12990 (a-f), set forth in Chapter 5 of Division 4 of Title 2 of the California Code of Regulations, are incorporated into this Continuation Agreement by reference and made a part hereof as if set forth in full. Operator and its subcontractors shall give written notice of their obligations under this clause to labor organizations with which they have a collective bargaining or other Agreement. 3.7 Subcontractors Restrictions. Operator shall only enter into subcontracts with subcontractors that have clearly demonstrated proficiency in the tasks which are the subject of such subcontracts. Operator is prohibited from hiring or subcontracting with any individuals that participated in the selection of Operator or the development of this Continuation Agreement for a period of 24 months from the date of execution of this Continuation Agreement. ARTICLE IV OWNERSHIP AND PROPRIETARY RIGHTS 4.1 Rights, Authorizations, Licenses, Permits, and Other Permissions. Except as explicitly set forth in Attachment A-1, Operator shall, at its sole cost and expense, obtain all rights, authorizations, licenses, permits, and other permissions, from all federal, state, and local governments, and other entities or persons, necessary for Operator to provide the services required under this Continuation Agreement. MTC’s execution of this Continuation Agreement shall neither constitute nor be deemed to be governmental approval of, or consent to, any rights, authorizations, licenses, permits, and permissions required or needed to be obtained by Operator. 4.2 Use of Seals, Logos, Servicemarks, Trademarks, and Copyrighted Material. Operator shall not use, display, or reproduce the seal, logo, servicemark, trademark, or copyrighted material of the Air District, MTC or any Pilot City without the prior express written authorization of the Air District, MTC or any Pilot City, as applicable. 4.3 Third Party Intellectual Property. Operator covenants to save, defend, hold harmless, and indemnify MTC and the Pilot Cities, and all of their officers, officials, departments, agencies, agents, and employees from and against any and all claims, losses, damages, injuries, fines, penalties, costs (including court costs and attorney's fees), charges, liability, or exposure, however caused, for or on account of any trademark, copyright, patented or 203215669.16 7 unpatented invention, process, or article manufactured, supplied, or used in the performance of this Continuation Agreement, including its use by MTC or any Pilot City. ARTICLE V TERMINATION 5.1 Termination. A. Right of MTC to Terminate. MTC shall have the right to terminate this Continuation Agreement if Operator fails to provide the services required hereunder satisfactorily or if Operator breaches any term, condition, or covenants of any of this Continuation Agreement. B. Failure or Breach. If Operator fails to provide the services required hereunder satisfactorily or if Operator breaches any term, condition, or covenants of any of this Continuation Agreement, then MTC will give Operator written notice of such failure or breach and 30 days to cure such failure or breach. If Operator fails to cure such failure or breach by the expiration of such 30-day period, then MTC shall have the right to give Operator a written notice of termination, including the date when the termination shall be effective (the “Termination Effective Date”). C. Operator’s Contest. If Operator in good faith contests any such failure or breach, then such termination shall be suspended pending the outcome of such contest. D. Termination of Program Agreement. If the Program Agreement terminates for any reason prior to completion of Phase I under the Program Agreement, then this Continuation Agreement shall terminate concurrently, and Sections 5.5 and 5.6 shall apply. 5.2 Stop Work. Unless otherwise directed in writing by MTC, Operator shall stop providing services as of the Termination Effective Date, terminate all vendors and subcontractors effective as of the Termination Effective Date, and settle all outstanding liabilities and claims. 5.3 Compensation. Operator will be entitled to receive compensation as provided in Article II to the Termination Effective Date. 5.4 Sole Remedies. Notwithstanding anything to the contrary herein, other than liquidated damages under Section 2.7, the sole remedy of MTC and the Pilot Cities against Operator for breach of this Continuation Agreement, excluding a breach of Article VIII, or for failure to provide the services satisfactorily, is to terminate this Continuation Agreement in accordance with Article VII. Except for liquidated damages under Section 2.7, in no event shall Operator be liable for damages of any kind for breach of this Continuation Agreement, other than a breach Article VIII, or for failure to provide the services satisfactorily. 5.5 Transition. Upon termination of this Continuation Agreement pursuant to Section 5.1D, Operator shall comply with the following close-out procedures: 203215669.16 8 5.5.1 Turning over to MTC or its designees copies of all books, records, documents and materials specifically relating to this Continuation Agreement and reasonably requested by MTC; 5.5.2 Submitting to MTC, within 120 days, a final statement and report relating to this Continuation Agreement that has been reviewed by a certified public accountant or a licensed public accountant; 5.5.3 Providing reasonable assistance to MTC during the transition; and 5.5.4 Continuing to operate the System in accordance with the terms of this Continuation Agreement and to effect an efficient and orderly transition of responsibility with respect to the operation of the System until the earlier of (i) 180 days after such termination and (ii) the selection of a replacement operator for the System and such replacement operator commencing operation of the System (such earlier date being the “Transition Termination Date”); provided, however, that MTC shall cover 100% of Operator’s Operating Losses for the period commencing upon termination of this Continuation Agreement and ending on the Transition Termination Date (such period being the “Transition Period”), subject to an aggregate cap for the Transition Period equal to the product of (X) the number of months of the Transition Period, (Y) $20 for each Dock, and (Z) the number of Docks. Within 30 days after the end of each month during the Transition Period, Operator shall send MTC a statement setting forth Operator’s Operating Losses, if any, for the preceding month accompanied by reasonable back-up. MTC shall pay Operator for any such monthly Operating Losses within 30 days following Operator’s submission of its statement for such month, subject to a cap calculated on a monthly basis equal to $20 for each Dock. Within 60 days following the end of the Transition Period, the Parties shall reconcile Operator’s cumulative Operating Losses for the entire Transition Period with Operator’s monthly, non-cumulative Operating Losses for the entire Transition Period, and shall also reconcile the aforementioned aggregate cap applied to the cumulative Operating Losses for the entire Transition Period with the aforementioned monthly cap applied to the monthly Operating Losses for the entire Transition Period. If the payment for Operating Losses received by Operator from MTC on a monthly basis exceeds the payment for Operating Losses to which Operator is entitled from MTC on an aggregate basis, then Operator shall reimburse MTC for the difference between the two calculations within 30 days following such calculation; and if the payment for Operating Losses received by Operator from MTC on a monthly basis is less than the payment for Operating Losses to which Operator is entitled from MTC on an aggregate basis, then MTC shall pay Operator the difference between the two calculations within 30 days following such calculation. 5.6 Disposition of the Equipment. Upon termination of this Continuation Agreement pursuant to Section 5.1D, MTC shall have the option to: 5.6.1 require Operator to remove all Equipment at its sole cost and expense; 5.6.2 subject to satisfaction of the Equipment Assignment Conditions, require Operator to assign to MTC (or a third-party operator designated by MTC) the Equipment, in which event Operator shall reasonably cooperate with MTC (or such designee) to obtain the legal right to use the Backend Software and Computer Hardware either through an assignment of 203215669.16 9 Operator’s license with the vendor thereof to MTC (or such designee) or by MTC (or such designee) entering a license agreement for Backend Software and Computer Hardware with such vendor; or 5.6.3 subject to satisfaction of the Equipment Assignment Conditions, take over operation of the System, and in connection therewith require Operator to assign to MTC the Equipment, in which event Operator shall reasonably cooperate with MTC to obtain the legal right to use the Backend Software and Computer Hardware either through an assignment of Operator’s license with the vendor thereof to MTC or by MTC entering a license agreement for Backend Software and Computer Hardware with such vendor. ARTICLE VI DISPUTE RESOLUTION 6.1 In the event of a dispute between the Parties, such dispute shall be addressed and resolved in accordance with the following (the “Dispute Resolution Process”): 6.1.1 The MTC Project Manager assigned to the System and Operator’s General Manager of the System, or their respective delegates, shall meet, within 10 days after receipt by one Party of notification from the other Party of such dispute, to negotiate in good faith in order to try to resolve such dispute (the date of the first such meeting, or the expiration of such 10-day period if the meeting is not timely held, being the “Initial Meeting Date”). If such persons fail to resolve such dispute within 15 days after the Initial Meeting Date, then the Executive Director of MTC and the President of Bikeshare Holdings shall meet promptly and negotiate in good faith in order to resolve such dispute. If such persons fail to resolve such dispute within 30 business days after the Initial Meeting Date, then such dispute shall be subject to mediation. A meeting may be held in person, by conference call or by video conference. By agreement of the Parties, any of the deadlines set forth in this section may be extended or shortened. The process described in this section shall be confidential and treated as a compromise negotiation for purposes of federal and state rules of evidence. 6.1.2 Unless the Parties otherwise agree, mediation shall be administered by the American Arbitration Association (the “AAA”) in accordance with its Commercial Rules, or similar service. A request for mediation shall be made in writing, delivered to the other Party and filed with the applicable mediation service. Either Party may submit such request. The Parties shall share the mediator’s fee and any filing fees equally. The mediation shall be held in San Francisco. The Parties shall be represented by individuals of their choosing. Agreements reached in mediation shall be binding on the Parties and enforceable in a State or Federal Court of competent jurisdiction sitting in San Francisco County. The mediation process shall be confidential and treated as a compromise negotiation for purposes of federal and state rules of evidence. 6.1.3 The Parties shall comply with any settlement agreement regarding any dispute that is the subject of a settlement agreement. 203215669.16 10 6.1.4 If mediation fails to resolve a dispute, then the exclusive forum for resolving such dispute shall be any State or federal court sitting in San Francisco County, California. 6.1.5 As used in this Continuation Agreement, “final resolution” of a dispute or a dispute being “finally resolved” means that (a) the Parties have entered into a settlement agreement to resolve such dispute, or (b) if either Party has initiated a judicial proceeding to contest such dispute, that a final-non-appealable order of a court of competent jurisdiction has been issued for such dispute. ARTICLE VII INSURANCE 7.1 Minimum Coverages. The insurance requirements specified in this section shall cover Operator’s own liability and the liability arising out of work or services performed under this Continuation Agreement by any subconsultants, subcontractors, suppliers, temporary workers, independent contractors, leased employees, or any other persons, firms or corporations that Operator authorizes to work under this Continuation Agreement (hereinafter referred to as “Agents”). Operator shall, at its own expense, obtain and maintain in effect at all times during the life of this Continuation Agreement the following types of insurance against claims, damages and losses due to injuries to persons or damage to property or other losses that may arise in connection with the performance of work under this Continuation Agreement. 7.2 Operator shall include in every subcontract the requirement that the Agent maintain adequate insurance coverage with appropriate limits and endorsements to cover the risks associated with work to be performed by the Agent. To the extent that an Agent does not procure and maintain such insurance coverage, Operator shall be responsible for any and all costs and expenses that may be incurred in securing such coverage or in fulfilling Operator’s indemnity obligation under Article VIII as to itself or any of its Agents in the absence of such coverage. 7.3 In the event Operator or its Agents procure excess or umbrella coverage to maintain certain requirements outlined below, these policies shall also satisfy all specified endorsements and stipulations, including provisions that Operator’s or its Agent’s insurance, as the case may be, be primary without right of contribution from MTC. 7.3.1 Workers' Compensation Insurance with Statutory limits, and Employer’s Liability Insurance with a limit of not less than $1,000,000 per employee for injury by disease and $1,000,000 for injury for each accident, and any and all other coverage of Operator’s employees as may be required by applicable law. Such policy shall contain a Waiver of Subrogation in favor of MTC. Such Workers’ Compensation & Employer’s Liability may be waived, if and only for as long as Operator is a sole proprietor or a corporation with stock 100% owned by officers with no employees. 7.3.2 Commercial General Liability Insurance for Bodily Injury and Property Damage liability, covering the operations of Operator and Operator’s officers, agents, and employees and with limits of liability which shall not be less than $1,000,000 combined single 203215669.16 11 limit per occurrence with a general aggregate liability of not less than $2,000,000, and Personal & Advertising Injury liability with a limit of not less than $1,000,000. Such policy shall contain a Waiver of Subrogation in favor of MTC. MTC and its commissioners, directors, officers, representatives, agents and employees are to be named as additional insureds. In addition, the entities listed in Section 7.13 and their respective commissioners, directors, officers, representatives, agents and employees are also to be named as additional insureds. Such insurance shall be primary and contain a Separation of Insureds Clause as respects any claims, losses or liability arising directly or indirectly from Operator’s operations. 7.3.3 Business Automobile Insurance for all automobiles owned (if any), used or maintained by Operator and Operator’s officers, agents and employees, including but not limited to owned (if any), leased (if any), non-owned and hired automobiles, with limits of liability which shall not be less than $1,000,000 combined single limit per accident. 7.3.4 Umbrella Insurance in the amount of $4,000,000 providing excess limits over Employer’s Liability, Automobile Liability, and Commercial General Liability Insurance. Such umbrella coverage shall be following form to underlying coverage including all endorsements and additional insured requirements. 7.3.5 Errors and Omissions Professional Liability Insurance for errors and omissions and the resulting damages, including, but not limited to, economic loss to MTC and having minimum limits of $5,000,000 per claim. Such policy shall contain cyber risk coverages including network and internet security liability coverage, privacy liability coverage and media coverage. The policy shall provide coverage for all work performed by Operator and any work performed or conducted by any subcontractor/consultant working for or performing services on behalf of Operator. Operator may delegate the obligation to maintain Errors and Omissions Professional Liability Insurance to an Agent, but the failure of such Agent to maintain such insurance shall not relieve Operator of its obligation to maintain such insurance. 7.3.6 Property Insurance. Property Insurance covering Operator’s own business personal property and equipment to be used in performance of this Continuation Agreement, materials or property to be purchased and/or installed on behalf of MTC (if any), and builders risk for property in the course of construction (if applicable). Coverage shall be written on a "Special Form" policy that includes theft, but excludes earthquake, with limits at least equal to the replacement cost of the property. Such policy shall contain a Waiver of Subrogation in favor of MTC. 7.4 Acceptable Insurers. All policies will be issued by insurers qualified to do business in California and with a Best’s Rating of A-VIII or better. 7.5 Self-Insurance. Operator’s obligation hereunder may be satisfied in whole or in part by adequately funded self-insurance, upon evidence of financial capacity satisfactory to MTC. 7.6 Deductibles and Retentions. Operator shall be responsible for payment of any deductible or retention on Operator’s policies without right of contribution from MTC. Deductible and retention provisions shall not contain any restrictions as to how or by whom the 203215669.16 12 deductible or retention is paid. Any deductible or retention provision limiting payment to the Named Insured is unacceptable. 7.7 In the event that MTC is entitled to coverage as an additional insured under any Operator insurance policy that contains a deductible or self-insured retention, Operator shall satisfy such deductible or self-insured retention to the extent of loss covered by such policy, for any lawsuit arising from or connected with any alleged act of Operator, subconsultant, subcontractor, or any of their employees, officers or directors, even if Operator or subconsultant is not a named defendant in the lawsuit. 7.8 Claims Made Coverage. If any insurance specified above is written on a “Claims-Made” (rather than an “occurrence”) basis, then in addition to the coverage requirements above, Operator shall: 7.8.1 Ensure that the Retroactive Date is shown on the policy, and such date must be before the date of this Continuation Agreement or the beginning of any work under this Continuation Agreement; 7.8.2 Maintain and provide evidence of similar insurance for at least three (3) years following the expiration or termination of this Continuation Agreement, including the requirement of adding all additional insureds; and 7.8.3 If insurance is cancelled or non-renewed, and not replaced with another claims-made policy form with a retroactive date to Effective Date, Operator shall purchase “extended reporting” coverage for a minimum of three (3) years after the expiration or termination of this Continuation Agreement. 7.9 Failure to Maintain Insurance. All insurance specified above shall remain in force until the expiration or termination of this Continuation Agreement. Operator must notify MTC if any of the above required coverages are non-renewed or cancelled. The failure to procure or maintain required insurance and/or an adequately funded self-insurance program will constitute a material breach of this Continuation Agreement. 7.10 Certificates of Insurance. On the Effective Date, Operator shall deliver to MTC Certificates of Insurance verifying the aforementioned coverages. Such certificates shall make reference to all provisions and endorsements referred to above and shall be signed on behalf of the insurer by an authorized representative thereof. 7.11 Disclaimer. The foregoing requirements as to the types and limits of insurance coverage to be maintained by Operator are not intended to and shall not in any manner limit or qualify the liabilities and obligations otherwise assumed by Operator pursuant hereto, including, but not limited to, liability assumed pursuant to Article VIII. 7.12 Additional Insureds. The following entities are to be named as Additional Insureds under applicable sections of this Article VII and as Indemnified Parties pursuant to Article VIII of this Continuation Agreement. 7.12.1 Metropolitan Transportation Commission (MTC) 203215669.16 13 7.12.2 City of Mountain View 7.12.3 City of Palo Alto 7.12.4 City of Redwood City 7.12.5 City of San Francisco 7.12.6 City of San Jose ARTICLE VIII INDEMNIFICATION AND LIMITATION OF LIABILITY 8.1 Indemnification. Operator shall defend, indemnify and save harmless MTC, the Pilot Cities, and their respective commissioners, officers, agencies, departments, agents, and employees (collectively, “Indemnified Parties”) from and against any and all claims, demands, causes of action, proceedings or lawsuits brought by third-parties (“Claims”), and all losses, damages, liabilities, penalties, fines, forfeitures, costs and expenses arising from or incidental to any Claims (including attorneys’ fees and other costs of defense) (collectively, with Claims, “Liabilities”), resulting from, or arising out of, the operation of the System and the provision of services, including the condition of the Bicycles or other Equipment, whether such operation or services is performed or provided by Operator or by Operator’s subcontractors or any other person acting for or on behalf of Operator. 8.2 Exclusions. Notwithstanding the foregoing, the following shall be excluded from Operator’s indemnification and defense obligations contained in the preceding sentence: any Liabilities to the extent resulting from, or arising out of, (i) the gross negligence or willful misconduct of any Indemnified Party, (ii) Operator complying with the written directives or written requirements of a Pilot City, if the Operator has previously objected to such written directives or requirements in writing, with respect to (A) the location or configuration of any Station in relation to the street or sidewalk on which such Station is located or to which it adjoins or (B) a Pilot City’s Street Treatment Requirements, or (iii) the condition of any public property outside of the perimeter of a Station and not otherwise controlled by Operator. The exclusion in clause (iii) does not include the condition of the Bicycles or other Equipment. In addition, if any Claim against Operator includes claims that are covered by clause (iii) of the preceding sentence or claims contesting a Pilot City’s authority to issue a permit for a Station, then each Party shall be responsible for its own defense against such claims. 8.3 Notice. Upon receipt by any Indemnified Party of actual notice a Claim to which such Indemnified Party is entitled to indemnification in accordance with Section 8.1, such Indemnified Party shall give prompt notice of such Claim to Operator. Operator shall assume and prosecute the defense of such Claim at the sole cost and expense of Operator. Operator may settle any such Claim in its discretion so long as such settlement includes an unconditional release of the Indemnified Party. 203215669.16 14 ARTICLE IX THIRD PARTY BENEFICIARIES 9.1 Third-Party Beneficiaries Under This Continuation Agreement. Except as provided in Sections 7.13, 8.1, 8.2 and 8.3, this Continuation Agreement does not and is not intended to confer any rights or remedies upon any person or entity other than the signatories to this Continuation Agreement. ARTICLE X MISCELLANEOUS 10.1 Governing Law. This Continuation Agreement shall be governed exclusively by the internal laws of the United States and of the State of California applicable to contracts made, accepted and performed wholly within said State, without regard to application of principles of conflict of laws. Any claim, suit or action arising under or relating to this Continuation Agreement must be brought only in courts located in San Francisco, California. The Parties hereby agree that such courts shall have exclusive personal and subject matter jurisdiction over any such claim, suit or action. 10.2 Survival. All provisions of this Continuation Agreement that by their terms survive the expiration or any termination of this Continuation Agreement, together with all other provisions of this Continuation Agreement that may be reasonably construed as surviving the expiration or any termination of this Continuation Agreement, shall survive the expiration or any termination of this Continuation Agreement. 10.3 Notices. Except as otherwise provided herein, all notices, requests, demands and other communications which are required or may be given under this Continuation Agreement shall be provided in the manner set forth in this section. Notice to a Party shall be delivered to the attention of the person listed below, or to such other person or persons as may hereafter be designated by that Party in writing. Notice shall be in writing sent by e-mail, facsimile, or regular first class mail. In the case of e-mail and facsimile communications, valid notice shall be deemed to have been delivered upon sending, provided the sender obtained an electronic confirmation of delivery. E-mail and facsimile communications shall be deemed to have been received on the date of such transmission, provided such date was a business day and delivered prior to 4:00 p.m. PST. Otherwise, receipt of e-mail and facsimile communications shall be deemed to have occurred on the following business day. In the case of regular mail notice, notice shall be deemed to have been delivered on the mailing date and received five business days after the date of mailing. If to MTC: Metropolitan Transportation Commission Joseph P. Bort MetroCenter, Oakland, CA 94607-470 Attention: Executive Director Email: SHeminger@mtc.ca.gov 203215669.16 15 Attention: General Counsel: Email: AWeil@mtc.ca.gov Attention: Designated Representative Email: KMulder@mtc.ca.gov If to Operator: Bay Area Motivate, LLC 5202 Third Avenue Brooklyn, New York 11220 Attention: Jay Walder, President and CEO Email: jaywalder@motivateco.com Attention: Justine Lee, Vice President and General Counsel Email: justinelee@motivateco.com Bay Area Motivate, LLC 2200 Jerrold Avenue, Unit J San Francisco, California 94124 Attention: Emily Stapleton, General Manager and Designated Representative Email: emilystapleton@motivateco.com 10.4 Entire Agreement; Amendments and Waivers. This Continuation Agreement constitutes the entire agreement between the Parties pertaining to the subject matter hereof and supersedes all prior agreements, understandings, negotiations and discussions, whether oral or written, of the Parties. No supplement, modification or waiver of this Continuation Agreement shall be binding unless executed in writing by the Party to be bound thereby. No waiver of the provisions of this Continuation Agreement, or any breach thereof, shall constitute a waiver of any prior, concurrent or subsequent breach of the same or any other provisions hereof, or shall be deemed or shall constitute a waiver of any other provision hereof (whether or not similar), nor shall such waiver constitute a continuing waiver unless otherwise expressly provided. 10.5 Counterparts; Severability. This Continuation Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. The Parties may rely upon a facsimile copy or scanned copy of any Party’s signature as an original for all purposes. In the event that any one or more of the provisions contained in this Continuation Agreement or in any other instrument referred to herein, shall, for any reason, be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provision of this Continuation Agreement or any other such instrument and the remaining provisions shall remain in full force and effect. To the extent permitted by applicable law, any such provision will be restricted in applicability or reformed to the minimum extent required for such provision to be enforceable. This provision will be interpreted and enforced to give effect to the original written intent of the Parties prior to the determination of such invalidity or unenforceability. 10.6 Construction; Incorporation. The headings of the articles, sections, and paragraphs of this Continuation Agreement are inserted for convenience only and shall not be deemed to constitute part of this Continuation Agreement or to affect the construction hereof. 203215669.16 16 All sections and article references are to this Continuation Agreement, unless otherwise expressly provided. As used in this Continuation Agreement, (a) “hereof”, “hereunder”, “herein” and words of like import shall be deemed to refer to this Continuation Agreement in its entirety and not just a particular section of this Continuation Agreement, and (b) unless the context otherwise requires, words in the singular number or in the plural number shall each include the singular number or the plural number, words of the masculine gender shall include the feminine and neuter, and, when the sense so indicates, words of the neuter gender shall refer to any gender. The Parties acknowledge and agree that: (i) this Continuation Agreement is the result of negotiations between the Parties and shall not be deemed or construed as having been drafted by any one Party, (ii) each Party and its counsel have reviewed and negotiated the terms and provisions of this Continuation Agreement (including, without limitation, any exhibits and schedules attached hereto) and have contributed to its revision, (iii) the rule of construction to the effect that any ambiguities are resolved against the drafting Party shall not be employed in the interpretation of this Continuation Agreement, and (iv) the terms and provisions of this Continuation Agreement shall be construed fairly as to both Parties and not in favor of or against either Party, regardless of which Party was generally responsible for the preparation of this Continuation Agreement. 10.7 Relationship of the Parties. Operator is an independent contractor and neither Operator nor its employees shall, under any circumstances, be considered employees, servants, or agents of MTC, nor shall MTC nor its agents or employees be considered employees, servants, or agents of Operator. At no time during the Term or otherwise shall Operator, its employees, or agents, represent to any person or entity that Operator and its employees are acting on behalf of, or as an agent of, MTC or any of its employees. MTC shall not be legally responsible or liable for any negligence, intentional act, or other wrongdoing by or of Operator, its employees, servants, agents, subcontractors, suppliers, or manufacturers of goods or services provided by Operator pursuant to this Continuation Agreement. MTC will not withhold payments to Operator for any federal or state unemployment taxes, federal or state income taxes, Social Security tax, or any other amounts for benefits to Operator. MTC will not provide to Operator any insurance coverage or other benefits, including Workers' Compensation, normally provided by MTC for its employees. This Continuation Agreement does not constitute and shall not be construed as constituting a partnership or joint venture or grant of a franchise between the Parties. 10.8 Cooperation. The Parties agree to execute such further instruments and to take such further action as may reasonably be necessary or helpful to carry out the intent of this Continuation Agreement. 10.9 Failure or Delay in Performance. Operator shall not be held responsible for failure to perform the duties and responsibilities imposed by this Continuation Agreement if such failure is due to Event of Force Majeure, beyond the control of Operator, that make performance impossible or illegal, unless otherwise specified in this Continuation Agreement; provided that the Operator (in order to not be held responsible for failure to perform) shall have given MTC Project Manager written notification of such failure, event, or occurrence beyond the control of Operator not later than 48 hours after the beginning of such failure, event, or occurrence. 203215669.16 17 10.10 Representations of Operator. Operator hereby represents and warrants to MTC that: 10.10.1Operator is a limited liability company, validly existing and in good standing under the laws of the State of Delaware, and it is duly authorized to do business in the State of California; and 10.10.2Operator has all requisite power and authority to own or lease its properties and assets, to conduct its business as currently conducted and to execute, deliver and perform this Continuation Agreement and all other agreements entered into or delivered in connection with or as contemplated hereby. 10.11 Ethics in Public Contracting. This Continuation Agreement incorporates all local, state, and federal law, regulations and rules related to ethics, conflicts of interest, or bribery. Operator certifies that its offer is made without collusion or fraud and that it has not offered or received any kickbacks or inducements from any other officer, supplier, manufacturer, or subcontractor and that it has not conferred on any public employee having official responsibility for this purchase any payment, loan, subscription, advance, deposit of money, services, or anything of more than nominal value, present or promised unless consideration of substantially equal or greater value was exchanged. 10.12 Remedies. The remedies available to MTC in various sections of this Continuation Agreement shall be deemed to be in addition to, and not in limitation of, any other remedies MTC has or may have under applicable law or in equity arising out of or relating to this Continuation Agreement. 10.13 Assignment. Operator shall not assign, transfer, convey, sublet, or otherwise dispose of any award, or any or all of its rights, obligations, or interests under this Continuation Agreement, without the prior written consent of MTC, except the preceding clause shall not limit Operator’s rights to enter into subcontracts for the provision of services hereunder. 10.14 Prohibition of Expending Local, Agency, State or Federal Funds for Lobbying A. Operator certifies to the best of its knowledge and belief that: i. No state, federal or local agency appropriated funds have been paid, or will be paid by-or-on behalf of Operator to any person for influencing or attempting to influence an officer or employee of any state or federal agency; a Member of the State Legislature or United States Congress; an officer or employee of the Legislature or Congress; or any employee of a Member of the Legislature or Congress, in connection with the awarding of any state or federal contract; the making of any state or federal grant; the making of any state or federal loan; the entering into of any cooperative agreement, and the extension, continuation, renewal, amendment, or modification of any state or federal contract, grant, loan, or cooperative agreement. 203215669.16 18 ii. If any funds other than federal appropriated funds have been paid, or will be paid to any person for influencing or attempting to influence an officer or employee of any federal agency; a Member of Congress; an officer or employee of Congress, or an employee of a Member of Congress; in connection with this Continuation agreement; Operator shall complete and submit Standard Form-LLL, “Disclosure Form to Report Lobbying,” in accordance with its instructions. B. This certification is a material representation of fact upon which reliance was placed when this transaction was made or entered into. Submission of this certification is a prerequisite for making or entering into this transaction imposed by Section 1352, Title 31, US. Code. Any person who fails to file the required certification shall be subject to a civil penalty of not less than $10,000 and not more than $100,000 for each such failure. C. Operator also agrees by signing this Continuation Agreement that it shall require that the language of this certification be included in all lower-tier subcontracts, which exceed $100,000, and that all such sub recipients shall certify and disclose accordingly. ARTICLE XI DEFINITIONS 11.1 Defined Terms. As used herein, the terms below shall have the following meanings. Any of such terms, unless the context otherwise requires, may be used in the singular or plural, depending upon the reference. “Backend Software and Computer Hardware” shall mean an electronic interface enabling, among other things, Stations, Bicycles, subscriber customer service, cellular service, Customer Keys, the website, and call center to function. “Bicycle” shall mean a device propelled solely by human power, upon which a person may ride either on or astride a regular seat attached thereto, having two or more wheels in tandem. “Crash” shall mean every reported incident or event involving a subscriber, Bicycle user, Bicycle, and/or Station resulting in personal injury to the subscriber or others, or property damage to the Equipment, or to the property of others. “Customer Key” shall mean a fare card or fob for rental of Bicycles. “Dock” or “Docking Point” shall mean a locking mechanism contained on a Station designed to receive a Bicycle for locked storage. “Equipment” shall mean all physical components provided by, or used by, Operator so that the System is available for use by the public, including, without limitation Bicycles, Docks, Technical Platforms, Map Frames, Terminals, cables, Station batteries, maintenance trailer, truck, electric bicycle, Customer Keys, trailer, and Bicycle and Station spare parts. 203215669.16 19 “Equipment Assignment Conditions” shall mean the following: (a) Operator and the purchaser of the Equipment have agreed on the purchase price for the Equipment, which shall be based on the fair market value of the Equipment as an installed system at the time of the purchase, and (b) such purchaser has paid Operator the agreed upon purchase price for the Equipment. “Event of Force Majeure” shall mean a delay, suspension or interruption due to strike; war or act of war (whether an actual declaration of war is made or not); terrorism; insurrection; riot; injunction; fire, flood or similar act of providence; or other similar causes or events to the extent that such causes or events are beyond the control of the Party claiming an Event of Force Majeure, provided in each case that such Party has taken and continues to take all reasonable actions to avoid or mitigate such delay, suspension or interruption and provided that such Party notifies the other Party to this Continuation Agreement in writing of the occurrence of such delay, suspension or interruption within five (5) business days, or if not reasonably practicable, as soon thereafter as reasonably practicable, of the date upon which the Party claiming an Event of Force Majeure learns or should have learned of its occurrence. A delay in a decision by a government entity, the approval of which is a condition to an occurrence, shall not constitute an “Event of Force Majeure” unless such delay is beyond the normal period in which such entity generally acts with respect to the type of decision being sought and only if the Party claiming Event of Force Majeure has taken and continues to take all reasonable steps to pursue such decision. In no event will a government entity’s final decision relating to Operator, this Continuation Agreement or the System, whether positive or negative, once made constitute an Event of Force Majeure (the term “final decision” in this sentence shall refer to a decision with respect to which all available appeals have been exhausted or the time period for filing such appeals has expired). The financial incapacity of Operator shall not constitute an Event of Force Majeure. “Fleet” shall mean 100% of the number of Bicycles obtained by Operator from MTC on the Effective Date minus the number of stolen (or otherwise unreturned) and unrepairable Bicycles. “Functional Bicycle” shall mean the condition of a Bicycle, consistent with the technical specifications of the Bicycles to be provided under this Continuation Agreement, to be ridden by an ordinary subscriber using such Bicycle under normal conditions. A Functional Bicycle does not refer to comfort, speed, quality of the riding experience, or minor issues with the Bicycle that does not impede the ability to be ridden. “Functional Station” shall mean a Docking Station, consistent with the technical specifications of the Docking Stations under the Pilot Program, to be used by an ordinary subscriber using such Docking Station under normal conditions. A Functioning Station does not refer to inconvenience or inability of a subscriber to follow directions, provided such directions are provided in a form understandable by an ordinary subscriber. A Functional Station shall have at least one Docking Point containing a Functional Bicycle, at least one empty Docking Point, and all other elements in working condition to be considered a Functional Station. “Hacking” shall mean unauthorized and intentional access to the Computer Hardware for the System and/or Software. 203215669.16 20 “Map Frame” shall mean a two-sided metal informational display unit, including translucent covering and lock. “MTC Project Manager” shall mean an individual appointed by MTC to act as the project officer. “Notification” shall mean all information provided by MTC, a Pilot City or the general public to Operator about a specific defect or problem concerning the System, Equipment or operations of the System by written document, email to Operator’s public information email address for the System, or telephone call to Operator’s call center for the System. “Operable Station” shall mean a Station at which at least 90 percent of all installed Docks are Operable Docks from which an annual member can check out and return a Bicycle. “Operating Expenses” shall mean, with respect to Operator (or Motivate) for any period, the costs expended by Operator (or Motivate) to operate and maintain the System and to provide the specific services set forth in this Continuation Agreement, including, without limitation, personnel costs, software license fees, insurance costs, costs of maintaining service vehicles, costs of leasing and maintaining facilities used for the System. “Operating Losses” shall mean, with respect to Operator (or Motivate) for any period, the amount, if any, by which Operating Expenses for such period exceed System Operating Revenues for such period. “Party” means either MTC or Operator, as the context requires; “Parties” means MTC and Operator. “Service” shall mean the use of the Equipment by the public at large after the Effective Date. “Site” shall mean a designated area on publicly or privately owned real property, which area contains one or more of each of the following items made available by Operator for the System: Bicycles, Docks, Terminal, Technical Platforms, and Map Frame. “Station” shall a designated area of docking Bicycles at which Docks, Terminal, Technical Platforms, and Map Frame are located. “System Operating Revenues” shall mean all funds derived from ridership use of the System, including subscription fees and usage fees. “Technical Platform” shall mean a base component that rests on the ground and supports the Docks, Terminal, and Map Frame. “Terminal” shall mean a kiosk that provides Bicycle rental instructions, contains payment equipment (i.e. credit card device), and includes all other means necessary for the rental of Bicycles. 203215669.16 21 “Trip” shall mean the use of a Bicycle from one Station to another Station or back to the initial Station. [THE REMAINDER OF THIS PAGE HAS BEEN LEFT BLANK INTENTIONALLY.] 203215669.16 A-1-1 Attachment A-1, Description of Services 1. Description of Services Operator shall operate the bike-sharing system in the Pilot Cities that was installed and in place at the termination of the Pilot Program Agreement using the same Sites, Bicycles, Docking Stations, Terminals, Docking Points, Technical Platforms, Customer Keys, Back-end Software and Computer Hardware and other Equipment that was used for the Pilot Program. Operator guarantees the following minimum equipment numbers in Mountain View, Palo Alto, and Redwood City: Mountain View: 7 Stations; 117 Docks; 59 Bicycles Palo Alto: 5 Stations, 75 Docks, 37 Bicycles; Redwood City: 7 Stations; 117 Docks; 59 Bicycles; San Francisco: 35 Stations; 665 Docks; 300 Bicycles; San Jose: 16 Stations; 264 Docks; 110 Bicycles Operator’s responsibilities include: (1) Handle ongoing Equipment maintenance and rebalancing; (2) Manage intellectual property issues related to a program sponsor such as brands and trademarks; (3) Manage all ongoing customer service issues associated with the System (unless otherwise instructed); and (4) Conduct bicycle safety trainings and encourage the use of bicycle helmets. 2. Subscriber Information/Relations. 2.1 Subscriber and Usage Fees. User fees shall be consistent with Attachment A-2, subject to application of Attachment A-3 as provided in Section 2.2 of this Continuation Agreement. 2.2 Age Requirement for Program Subscribers. Subscriptions shall only be issued to individuals 18 years of age and older. 2.3 Subscriber Privacy. Operator shall, at all times, protect the privacy rights of all subscribers. Operator shall strictly comply with all applicable federal, state, and local laws, 203215669.16 A-1-2 ordinances, and regulations concerning the privacy of all subscriber information obtained by Operator in the course of providing services under this Continuation Agreement. 2.4 Subscriber Agreement. Operator shall use the same form of Subscriber Agreement that was used for the Pilot Program with such changes thereto as Operator considers appropriate. Any material changes to the Pilot Program form shall be subject to the review and approval of MTC. The Subscriber Agreement shall address, at a minimum, the following: (1) The rates, fees, and deposits (if any). (2) Confidentiality of personal and financial data and information. (3) Subscriber’s agreement to return the Bicycle in the same condition as it was when rented. (4) Subscriber’s agreement to immediately report to the call center any Crash, as defined in this Continuation Agreement to include any incident or event resulting in personal injury to the subscriber or others or in property damage to the Equipment or to the property of others and agreement to follow any instructions from the call center regarding reporting a Crash to police. (5) Subscriber’s agreement to immediately report to the call center a lost or stolen Bicycle or a lost or stolen Customer Key. (6) Subscriber’s responsibility and liability for any consequences of any kind or nature whatsoever related to a stolen or lost Bicycle or Customer Key. (7) Prohibited uses including, without limitation, no more than one person on a Bicycle at one time. (8) Subscriber’s acknowledgement of and acceptance of responsibility and risk. (9) Prohibition against any person other than the subscriber operating any Bicycle rented from Operator and prohibition against transfer of a Customer Key to anyone in any manner whatsoever. (10) A representation by each subscriber that s/he is physically able to ride a Bicycle without risk to health, knowledgeable about the operation of a Bicycle, and knowledgeable about the laws pertaining to Bicycles operated within the jurisdictions where the Bicycles are to be used. (11) Age limits. (12) Subscriber’s indemnification of MTC and the Pilot Cities, its elected and appointed officers, officials, employees, and agents. (13) Prohibition against use of Bicycle while under the influence of alcohol, drugs, any controlled substance, or any medication that would impair the Bicycle operator’s ability to safely operate the Bicycle. (14) Instructions regarding proper use of Bicycle luggage carrier as to type of contents, weight, or visual obstruction. (15) Prohibition against Bicycle use for any illegal purpose. 2.5 Loss Fees. Operator shall deem a Bicycle as “lost or stolen” if not returned to a Site within 24 hours of being signed out, and charge the subscriber whose account is associated with that sign-out the amount of the “Loss Fee” set forth in Attachment A-2, subject to application of Attachment A-3 as provided in Section 2.2 of this Continuation Agreement, which covers the replacement value of the Bicycle, along with shipping fees and expenses and service charges for placing a new Bicycle into the operational Fleet. Credit accounts will be charged the Loss Fee at the time a loss is determined. Operator shall include all such circumstances in its 203215669.16 A-1-3 monthly report to MTC. Notwithstanding the foregoing, Operator shall waive such fees for stolen Bicycles or Bicycles that are damaged in connection with a crime against the rider or in a collision with a motor vehicle, so long as an appropriate police report is filed for the incident. 2.6 Helmets. Operator shall provide information on the System website and in the subscription agreement about the importance of wearing helmets for safety reasons. Operator will make reasonable best efforts to provide users with information that directs them to nearby bike shops and other locations where subscribers may purchase a helmet and shall display on the System website where discounts are available and at Terminals. 2.7 Subscriber Communications. Upon request from MTC, Operator will send biking related information announcements via electronic mail to all subscribers who do not “opt out’ of receiving such emails. 3. Operations 3.1 Continuous Operation and Management. The System shall commence operating on the Effective Date and shall remain in operation 24 hours per day, 365 days per year. 3.2 Inspection and Maintenance. (1) Operator shall, at all times, follow and strictly comply with the manufacturer’s requirements, warranties, and recommendations for assembly, maintenance, storage and repair of all Equipment. Operator shall not be obligated to purchase any replacement Equipment. (2) Operator shall perform a maintenance check for each Bicycle once every two calendar months consisting of the following checks, with deficient elements repaired or replaced as necessary: Check tire pressure, and add air as may be needed, to recommended Pounds per Square Inch measurement; Check tightness of handlebars, headset bearings, and full handlebar range of motion (left to right); Check tightness of seat, seat post quick-release, and see that seat post moves freely in full range of motion (up and down); Check brake function (front and rear); Check grips for wear and brake levers for tightness and damage; Check bell for tightness and correct function; Check handlebar covers for damage and instruction stickers; Check front basket for tightness and damage, and check bungee cord for wear; Check for correct gears and shifter function through all 5 gears; Check fenders (front and rear) for damage, and clean outside of fenders; Check tires (front and rear) for damage or wear; Check wheels (front and rear) for trueness, broken or bent spokes and hub or axle tightness; Check LED lights (front and rear) for function; 203215669.16 A-1-4 Check reflectors on wheels, seat and basket, to ensure they are present, clean, and undamaged; Check pedals and cranks for tightness; Lubricate and clean chain and check chain tensioner for correct function; Check kickstand for correct function; and Take brief test ride to ensure overall correct function of Bicycle. (3) Operator shall clean each Station two times per month-- one time between the first and fifteenth days of the month, and one time between the sixteenth and last days of the month. Station cleaning shall consist of, at a minimum, litter removal and, as needed, power washing of Docks, Terminal Platforms and pavement. (4) (a) Except as required by clause (b) below, Operator shall remove conspicuous graffiti within 72 hours after Notification; and(b) Operator shall remove racist and hate graffiti within 4 hours after Notification. (5) Operator shall remove conspicuous accumulations of litter from Stations within 24 hours after Notification. (6) The System must be operational 100% of the time every month (i.e., every hour of every day, 24 hours per day, 7 days per week, measured monthly), so that, at a minimum, all System users can dock and undock Bicycles at all times, excluding (i) scheduled downtime, and (ii) any period when the Computer Hardware for the System and/or Software is, and remains, damaged through Hacking. System functionality does not apply to hardware malfunctions at individual Stations or to individual Stations that are not Operable Stations. (7) Stations, in the aggregate, must be Operable Stations 99% of the time every month (i.e., every hour of every day, 24 hours per day, 7 days per week, measured monthly), excluding (i) during scheduled downtime, and (ii) any period when a Station is not an Operable Station because the Terminal or other Equipment located at the Station has been damaged by third-parties. Calculated by taking the sum of the number of hours that each Station was Operable Station during a month, dividing that sum by the product of the total number of hours in the month and the number of Stations that month. Station Operability does not apply during any period in which the entire System is down. (8) The System website must be operational 100% of the time every year (i.e., every hour of every day, 24 hours per day, 7 days per week, measured annually) excluding (i) scheduled downtime, and (ii) any period when the Computer Hardware for the System and/or Software is, and remains, damaged through Hacking. In any circumstances where Operator is required to perform cleaning services under this Continuation Agreement, Operator shall use the most environmentally friendly cleaning solutions and chemicals available for these purposes. 3.3 Availability of Bicycles. Operator shall ensure that at least 90% of bicycles in the Fleet are operational, on-the-street and available for public use. The number of available bicycles will be recorded once each Day of the month between the hours of 11:00 AM and 3:00 PM. 203215669.16 A-1-5 3.4 Distribution of Bicycles. Operator shall re-distribute Bicycles among Sites and place the Bicycles in operable Docks throughout the day from 6 am to 10 pm during each day of operation. Such distribution shall be critically timed to increase the probability that each Site, at all times, contains a sufficient number of empty Docks for Bicycles to be returned and occupied Docks containing Bicycles available for subscribers. All Bicycles placed in operational Docks shall be in acceptable operating condition. Operator shall ensure that, during any day, no Site has all empty Docks or all full Docks for more than three hours between the hours of 6 am and 10 pm. If during any month the average usage of a Site is greater than 2.5 Trips per day per Dock or less than 0.75 Trips per day per Dock, then this service level does not apply for such Site for such month. 3.5 Operator’s Call Center. Operator shall provide to MTC, all subscribers, and the public at large, a toll-free telephone number for Operator’s call center. The call center shall be in continuous operation 24 hours per day, 7 days per week, and 365 days per year. Not less than 80% of telephone calls to Operator’s call center each month must be answered by a person within 90 seconds or less. Operator shall conspicuously post a notice on each Station advising the general public that they may direct their complaints and comments to Operator’s call center. Operator shall ensure that the call center can handle calls in English, Spanish, Mandarin and Cantonese, using operators fluent in those languages. The operators at the call center shall be fully competent and knowledgeable to answer questions and provide information concerning, among other things, subscription process, subscription prices, billing, Crashes, comments, complaints, malfunction problems, location of Sites, directions to nearest Site that has Bicycles available for use and/or available Docks for returns, directions to helmet sales location(s), and instructions on how to fit a helmet. The call center manager shall be knowledgeable about all service areas. The call center operators shall keep accurate and complete written records of each such call in a Customer Service Log as hereinafter required, including the primary reason for each call and the status of the call (e.g., “no further action”, “requires reimbursement”). 3.6 Email Response Time. Not less than 95% of emails to Operator’s public information email address must be answered within 1 business day. 3.7 Comments and Complaints. Operator shall establish and maintain during the Term prompt and efficient procedures for handling complaints from the public for which Operator receives a Notification. Such procedures shall be consistent with all applicable laws, rules and regulations and the provisions of this Section. Such procedures shall be set forth in writing and copies thereof shall be maintained at Operator’s office and shall be available to the public and the Pilot Cities upon request. 3.8 System Website. Operator shall create and maintain a System website the content of which shall address, at a minimum, the following: (1) Eligibility requirements; (2) Subscription information and rate, schedules; (3) Payment information and subscription processing; (4) Method for subscribers to log in, update required information, and track individual usage data compiled by the system; 203215669.16 A-1-6 (5) Subscriber Agreement and acceptance of terms; (6) Map with the entire regional network of Sites and real-time availability of Bicycles at each Site, both for a standard computer screen and mobile phone; (7) Frequently Asked Questions; (8) Safety requirements and information (including notification in the event of malfunction or Crash); (9) Encouragement of helmet use for subscribers and a listing of nearby locations where users may purchase or lease helmets; (10) Merchandise page; (11) Permitted links to other Bay Area based bike programs and events; (12) A listing of nearby bike rental shops, locations and contract information; (13) Safety video (supplied by the Air District or others) addressing safe use of bicycles, helmets, and California Vehicle Code and local laws pertaining to bicycle riders; and (14) A webpage that contains links to MTC- approved information (i.e. links to partner websites and notices). Operator, at all times, shall keep the website information updated, current, and accurate on a regular basis. 3.9 Operator Staffing Levels. Operator, at all times, shall provide sufficient staff to efficiently and promptly provide the services set forth in this Continuation Agreement. 3.10 Personnel and Staffing Requirements. Operator shall deliver to MTC copies of all written personnel policies that, at a minimum, address employee conduct and qualifications. 3.11 Relocation, Resizing, and/or Reconfiguration of Stations. (1) By Operator. In the event that Operator wishes to remove, relocate, resize, and/or reconfigure any Station, other than those Stations whose locations are fixed pursuant to the terms of a grant or sponsorship agreement, due to under- utilization or lack of profitability, it must notify MTC in writing, providing sufficient detail and description of the proposed relocation site and reasons therefore, prior to removal. Assuming that MTC does not disapprove the request within ten business days, Operator may remove, relocate, resize, and/or reconfigure the Station consistent with Operator’s notice of same to MTC and subject to local review and permitting requirements. (2) By MTC. MTC shall provide Operator with 48 hours advance notice of any relocation or reconfiguration of Stations to accommodate construction, special events, or other reasons. The fee payable by MTC (or the applicable Pilot City) to Operator for any such relocation or reconfiguration shall be determined in accordance with Attachment A-4. 3.12 Interruption of Service. (1) Intentional Interruption of Service. If, at any time, Operator intends, or is required, to temporarily interrupt all or a portion of the service, for any reason beyond Operator’s reasonable control, including, without limitation, weather, safety, or other event or circumstance where continued service 203215669.16 A-1-7 would be unsafe, unavailable, impractical, or impossible , then Operator shall contact MTC by telephone and by email at least 24 hours before the interruption of service and specifically describe the reason, proposed duration, Operator’s proposed actions to correct the cause of the interruption (if possible), minimize the interruption, and Operator’s plans to resume service. Operator promptly shall notify the subscribers of the cause and expected duration of the proposed interruption of service by posting notice on the website, via email, and Terminals (electronic message). (2) Unintentional Interruption of Service. If, at any time, a System malfunction or an event or circumstance occurs where continuous service would be unsafe or unavailable for reasons beyond Operator’s reasonable control, and this causes or will cause a temporary interruption of service, then Operator shall immediately contact MTC by telephone and by email and specifically describe the reason, estimated duration, Operator’s proposed actions to correct the cause of the interruption (if possible), efforts to minimize the interruption, and Operator’s plans to resume service. Operator promptly shall notify the subscribers of the cause and expected duration of the interruption of service by posting notice on the website, via email, and Terminals (electronic message). In the case of both Intentional and Unintentional Interruptions of Service, Operator shall be obligated to perform all necessary and appropriate acts to restart the service as soon as possible. 3.13 Safety Training: On at least a quarterly basis, Operator shall provide safety training on proper use of bicycles and applicable rules and regulations of the road to current and/or potential users in each city. 203215669.16 A-2-1 Attachment A-2, Subscriber Related Fees 1. Annual and Monthly Subscription and Usage Fees a) Annual Subscription Fee - One-time payment of $88 b) Annual and Monthly Subscription Usage Fees: i. No charge for up to 30 minute use of a Bicycle per session, ii. $4.00 for 31-60 minutes, iii. $7.00 for each additional 30 minutes A usage fee will be tracked and charged to credit accounts within one hour (or based on normal credit card operating procedures) of any occurrence of continuous usage exceeding thirty (30) minutes. c) Annual Memberships may be purchased at a discounted rate for promotional purposes and may be purchased in bulk at a discounted rate 2. Other Subscription and Usage Fees a) Short-term Subscription Fees i. Three day Subscription fee - $22, ii. One day Subscription fee - $9 b) Other Subscription Usage Fee: a. No charge for up to 30 minute use of a Bicycle per session, b. $4.00 for 31-60 minutes, c. $7.00 for each additional 30 minutes A usage fee will be charged to credit accounts at the time any continuous usage exceeding 30 minutes is determined. 3. Bicycle Loss Fee - $1,200. 4. Operator reserves the right, in its sole discretion, to increase or decrease the fees under 2(a) and 2(b) above. 203215669.16 A-3-1 Attachment A-3, New Subscriber-Related Fees 1. General. At Operator’s election, after June 30, 2016, Membership Fees and Initial Ride Periods shall be consistent with Section 2, the Membership Fee for users eligible for the affordability subscription specified in Section 3 shall be as described in said Section 3, the maximum Bicycle usage charge shall be consistent with Section 4 and the fees for damaged, lost, stolen or otherwise unreturned Bicycles shall be consistent with Section 5 initially charged by Operator shall be consistent with this Section. A “Membership Fee” is an amount that entitles the purchaser of the membership (a “member”, for the period of such purchased membership) to check out (as defined below) one or more Bicycle(s) at a time, for the length of time described below, provided that the member shall be charged a usage fee associated with the time period the Bicycle is checked out beyond the Initial Ride Period. A Bicycle is “checked out” for the period from the time it is removed from a Dock to the time it is returned to a Dock. A member may check out and return a Bicycle from or to any Dock at any Station in the System, for an unlimited number of times, at any time during the period of the member’s membership, with the usage fee applicable to each such checkout and return sequence being calculated separately (so, for example, an annual member may, within the member’s membership period, check out a Bicycle and return it within the first 30 minutes after checkout, and then subsequently check out a Bicycle and return that Bicycle with the first 30 minutes after that checkout, without incurring any usage fee for either checkout period). 2. Membership Fees, New Ridership Programs/Arrangements, and Initial Ride Periods: 2.1 Operator shall offer an annual membership (“Annual Membership”) for a fee (the “Annual Membership Fee”) in an amount not to exceed the Annual Membership Fee Cap in effect from time to time. The Annual Membership Fee Cap shall be $149 for a one- year period. The period of an Annual Membership shall run from the day the annual membership is activated until the first anniversary of the date on which the Annual Membership had been activated (but a membership purchased on February 29 shall expire on March 1 of the following year). At the end of the Term, each member can elect whether to roll his or her Annual Membership into the BABS Program. Such election can be made by contacting the call center. If a member elects not to roll into the BABS Program, then if the Annual Membership Fee has been paid in advance for a full 12 months, the prorated amount for the portion of an Annual Membership period that is beyond the Term shall be reimbursed to or credited to the credit card account of the Annual Member; 2.2 Annual Memberships may be paid in 12 equal monthly instalments at a price not greater than 120% of the Annual Membership Fee; 2.3 All memberships will include a free period of usage (the “Initial Ride Period”), which is the length of time at the beginning of each individual Trip to which additional usage fees will not be applied. For Annual Memberships and Affordability Memberships, the Initial Ride Period is 30 Minutes. Usage fees will be applied to all Trips that exceed the Initial Ride Period; and 203215669.16 A-3-2 2.4 For monthly, weekly and daily memberships, and for usage of the System by non-members, Operator will determine the applicable fees, usage fees, and periods of use for members beyond the Initial Ride Period in its sole discretion. 2.5 Nothing in the foregoing shall limit the right of Operator to offer premium memberships featuring an Initial Rider Period longer than 30 minutes for an Annual Membership Fee greater than $149. 3. Affordability Option: 3.1 Notwithstanding the permitted rate for an Annual Membership set forth in set forth in Section 2.2.1, Operator shall charge those eligible for an “affordability subscription” no more than $60 per annum (excluding sales tax) as the Annual Membership Fee, or $5.00 per month for a 12-month membership. 3.2 Persons who were entitled to affordability memberships under the Pilot Program shall be entitled to affordability memberships for the System. Members of households enrolled in the Utility Lifeline Programs (also known as California Alternative Rates for Energy (CARE)) available in the MTC Area are also eligible for affordability memberships. Within 10 days following the Effective Date, Operator shall propose, for MTC’s review and approval, procedures for verifying enrollment in CARE. In San Francisco, those who meet Muni Lifeline income requirements as determined by the City of San Francisco’s Human Services Agency are also eligible for the affordability membership. Upon mutual agreement of the Parties, eligibility may expand to include other categories of persons so long as the eligibility is determined by third parties. 3.3 Members enrolling through the affordability program shall be entitled to the same rights and privileges as all other Annual Membership holders. 3.4 The usage fees for affordability members shall not exceed the rate charged to general annual members. 4. The checkout period for the purposes of calculating usage fees shall always commence with the time a Bicycle is actually removed from a Dock, and it shall not be based on the time of insertion of a payment or identification card. 5. The maximum Bicycle usage charge initially charged with respect to any member shall be $100 per 24 hour period, not including charges for damaged, lost, stolen or otherwise unreturned Bicycles. 6. Fees for damaged, lost or otherwise unreturned Bicycles initially charged shall be (i) $1,200, if not returned, or (ii) if returned, the sum of all direct costs of the repair, including all labor and parts, as determined by Operator in its reasonable discretion, plus a 10% administrative fee; provided, however, that the fees charged to affordability members for unreturned or damaged Bicycles shall be not more than 33% of the fees set forth in the preceding clauses (i) and (ii). Notwithstanding the foregoing, Operator shall waive such fees for stolen Bicycles or Bicycles that are damaged in connection with a crime against the rider or in a collision with a motor vehicle, so long as an appropriate police report is filed for the incident. 203215669.16 A-3-3 7. Operator shall at all times post on all Stations and on Operator’s website a complete and up-to-date fee description that sets forth each and every current membership and usage fee offered by Operator, the methods of purchasing memberships and paying fees, available discounts on such fees, the applicability and terms of such discounts and, to the extent applicable, how to apply for or qualify for such discounts, and fees associated with damaged, lost, stolen or otherwise unreturned Bicycles. Operator shall furnish written copies of such material to the public upon request. 8. Operator shall accept credit card and debit card payments online and at all Stations but in the case of debit cards only those that have a Visa or Mastercard logo on them. Operator may employ such other methods of payment as it may determine. 9. All required state sales and use taxes with respect to membership and usage fees shall be collected and paid by Operator, as required by applicable law. 10. Operator shall be permitted to create System pricing discount programs, which may be targeted in connection with marketing and outreach efforts, and in connection with Sponsorship or Advertising programs, to expand or enable System use among different communities or for other lawful purposes. 11. At any time and from time to time, Operator shall have the right: 11.1 To adjust the amount of the Annual Membership Fee specified in Section 2 downwards at any time and upwards on each anniversary of the Effective Date by an amount not to exceed the Annual Membership Fee Cap then in effect; 11. 2 To adjust in its sole discretion all other fees, time periods and charges specified hereunder other than those fees, time periods and charges specified in Section 2 and Section 3; and 11.3 To adjust upward the duration of the Initial Ride Period. 203215669.16 A-4-1 ATTACHMENT A-4 FEE SCHEDULE FOR STATION DEACTIVATION, DE-INSTALLATION AND ADJUSTMENT As stated in Section 3.11(2) of Attachment A-1 of this Continuation Agreement, the following is the fee schedule for Station Deactivation, De-Installation, and Adjustments (each as defined below). (Capitalized terms used but not otherwise defined herein shall be defined as provided below.)) Section 1: For Public Works, Other Special Events and Public Safety Emergencies there is no charge to the Pilot City. In addition, for each Pilot City, there is no charge for the first 2 Discretionary Requests by the Pilot City. Section 2: For (a) Private property owners or contractors doing private construction on public or private property, (b) event producers or organizers of For Profit and Political Special Events, and (c) Discretionary Requests by a Pilot City after the first 2 Discretionary Requests by the Pilot City, the following fee schedule applies: 1. Deactivation: Station is deactivated but not removed; Bicycles are removed and cannot be returned by customers: $500/Station + $10/Dock/day of Deactivation. (Each of the foregoing amounts is subject to CPI Adjustment.) 2. De-installation and Reinstallation: Station is completely removed from the location and returned to same location: $1,000/Station + $20/Dock + $10/Dock/day of Deactivation. (Each of the foregoing amounts is subject to CPI Adjustment.) 3. Adjustment: Property owners and utilities may seek permanent or temporary changes to a Station’s size or configuration, and changes to Street Treatments and Street Markings as necessitated by such, without changes to the Station location: $1,000/Station + $20/Dock that is adjusted. (Each of the foregoing amounts is subject to CPI Adjustment.) 4. Temporary Relocation Followed by Reinstallation: Property owners and utilities who need to De- install or Deactivate a Station for a period greater than 15 business days must pay for the temporary relocation of the Station during the event or construction, which allows for continuous operation of the Station, and must also pay for the reinstallation of the Station at the original location after completion of the event or construction: 203215669.16 A-4-2 $5,000/Station + $40/Dock. (Each of the foregoing amounts is subject to CPI Adjustment.) Defined Terms: “Adjustment” shall mean permanent or temporary changes to a Station’s size or configuration, and changes to Street Treatments and Street Markings as necessitated by such, without changes to the Station location. “CPI” shall mean the Consumer Price Index for the Consolidated Metropolitan Statistical Area covering San Francisco-Oakland-San Jose, as measured by the Consumer Price Index for All Urban Consumers, as published from time to time by the Bureau of Labor Statistics, U.S. Department of Labor. “CPI Adjustment” shall mean, with respect to a specific cost, that such cost is subject to annual adjustment each January 1 based on changes in the CPI from the Effective Date to the date of adjustment. “Deactivation” shall mean, at a minimum, shut-down of Terminal (or display of messaging on a Terminal screen indicating that Station is out of service) removal of all Bicycles present, installation of physical barriers on all Docks that prevent docking of Bicycles, and designation of the Station as “Out of Service” on the System website, app, and all other real-time data sources. A Deactivation event is not over until the Station has been reactivated. “De-Installation” shall mean, at a minimum, (i) the temporary or permanent full removal of the Station and its associated Street Treatments, and, (ii) the designation of the Station as “Out of Service” on, or removal of the Station from, the System website, app, and all other real-time data sources. “Discretionary Request” shall mean any De-Installation and/or Re-Installation or Station Adjustment requested by the Pilot City that is not related to Public Works, Other Special Events, or Public Safety Emergencies. “For Profit and Political Special Events” shall mean temporary events permitted by the Pilot City that (i) have entry fees for participation (e.g., road races, cycling tours); or (ii) have the purpose of selling products (e.g., street fairs, food festivals, holiday fairs, film festivals, film shoots); or (iii) have a title sponsor; or (iv) are political events. “Other Special Events” shall mean temporary events permitted by the Pilot City other than For Profit and Political Special Events (e.g., heritage or cultural parades). “Public Safety Emergency” shall mean an instance when (i) Equipment is damaged or in an unsafe state so as to cause an immediate danger to the public; or (ii) circumstances or situations 203215669.16 A-4-3 immediately surrounding Equipment create an imminent danger to the public; or (iii) the area around a Station becomes unsafe or is required by police department or other emergency responders of a Pilot City in order to respond to a natural disaster or avoid a calamity. “Public Works” shall mean all instances where a Pilot City (including a utility owned by a Pilot City) or its contractors (including any private contractors hired by a Pilot City) are undertaking construction, maintenance, repairs or other public improvements. “Street Marking(s)” shall mean thermoplastic paint markings and/or striping on the pavement for the express purpose of demarcating a Station. “Street Treatments” shall mean the three-dimensional objects used to demarcate the Station, and protect it from adjacent parking and moving traffic. Such objects may include, but are not limited to, delineators and wheel stops. 1 Motivate-Palo Alto Term Sheet August 22, 2016 This term sheet is intended to be used to facilitate discussions between Palo Alto (“PA”) and Motivate International Inc (“Motivate”) in order to develop a contract for the operation of a bike share system that is interoperable with the Bay Area System. Contract Topic Contract Terms Responsibility for Capital Costs The City of Palo Alto will purchase the equipment and provide Motivate with the right to use the equipment for operations of the bike share system. Motivate will be responsible for maintaining and returning the equipment in a state of good repair at the end of the contract term. System Size The City of Palo Alto will initially purchase up to 350 smart- bikes for use in the system. Additional expansion phases to be determined in Palo Alto’s discretion. Launch Date Anticipated launch date Spring 2017, contingent on site approvals, equipment funding and delivery of equipment Supply Agreement In order to create a coordinated and accountable supplier relationship, Motivate will hold a supply agreement with Social Bicycles to govern terms such as software fees (which are paid by Motivate), warranties, spare parts purchasing, service level agreements, and customer support. Term 5-year term with two additional three year renewal terms upon mutual agreement of Palo Alto and Motivate. Operating Fees Motivate will cover the operating costs of the first 350 bikes. Additional bikes will be charged to Palo Alto at the cost of $100 per bike per month, subject to CPI Adjustment. Sponsorship Motivate will have the exclusive right to sell title and secondary sponsorship for the system and receive related revenues. Assets that may include sponsorship recognition include the bikes, kiosks, racks, ad panels, mobile app and docks. 2 Local Station Sponsorships Palo Alto may fund the costs of capital or operations of expansion bikes through selling local station sponsorships Sponsors secured by Palo Alto may be recognized on each station by receiving one sponsorship panel on each station that is sponsored locally. Palo Alto may not sell naming rights or the bike branding to station sponsors. These assets will remain consistent with the broader Bay Area system as part of the title sponsorship package, which will help financially support the Palo Alto system and reduce the need for subsidy. Allocation of Revenue Motivate will keep all title sponsorship, secondary sponsorship and user revenue generated by the system. Palo Alto will keep all funds raised through local station sponsorships. Pricing Annual pricing for the program will match the pricing of the broader program with the MTC and provide access to the bike share program in San Jose, San Francisco, Oakland, Emeryville, and Berkeley : ● $149 annual pass that can be increased no more than CPI + 2% annually. ● Annual pass can be paid in 12-monthly installments of no more than $15.00 ● Pricing for other product types (e.g., day passes, single rides) will be set at Motivate’s discretion Siting and installation Motivate to develop site locations in conjunction and with approval the city. Sites that maximize demand will be prioritized. Motivate will work together with Palo Alto on community engagement and outreach as part of the station siting process, including necessary business associations and city meetings. Motivate will hire planning and engineering firms to develop drawings and submit permits. Palo Alto to waive permit costs. 3 Palo Alto will reimburse Motivate $4,000 per station for the cost to develop site plans, conduct community outreach, and install the station and related street treatments. Interoperability Bike share customers will be able to sign up for the Palo Alto and the MTC system through a single registration process. Bike share members will be able to use a single key to access bikes. Motivate will work with the MTC to allow for the Clipper Card to be used to access bikes across the regional system. Brand Development and Sponsorship Motivate will secure the title sponsor and develop system name, color, and logo. MTC has approval rights over title sponsorship and branding. The sponsor is not in a category that is age- restricted (alcohol, tobacco or firearms), products banned by the local government, or deemed offensive to the general public. PCI Compliance System shall be compliant with the most recent version of the Payment Card Industry Data Security Standard (“PCI- DSS”). Supplier will maintain a full, current, up-to-date Level 2 PCI certification as demonstrated by an Attestation of Compliance. Exclusivity During the Term of this Agreement, Motivate shall have the exclusive right to operate a public bike sharing program in Palo Alto, as defined in the executed contract. Regional Cities Opt-in Other cities can opt in to join the system on similar terms to Palo Alto. Municipalities must fund the equipment costs. Motivate will determine by October 31, 2016 whether it will retain the right to sell physical sponsorship assets including the bikes, racks, kiosks, and ad panels. If Motivate retains these assets for sale, Motivate will be responsible for operations costs for up to 350 bikes in each municipality. For bikes above 350, the cost to the municipality will be $100 per bike per month. If Motivate waives its right to sell sponsorship on the physical system, the local municipality can sell sponsorship on the physical system including the bikes, racks, kiosks, and ad panels. The cost for operations to the 4 municipality will be $100 per bike per month. Since the bike share system is interoperable with the broader regional system, naming rights and the mobile app will be branded with the larger system name and are not available for branding by the local municipality. SUMMARY (in United States dollars) Description Cost Bicycles (350 Smart Bicycles)596,750$ Infrastructure (665 Docking Points, 35 Stations, 0 Kiosks)333,025$ Program Setup 25,000$ Transport and Customs 66,028$ TOTAL UP-FRONT ONE-TIME COST 1,020,803$ Total Total Turn Key Operations (per month)5,300$ TOTAL MONTHLY ONGOING SERVICES COST 5,300$ * Cost proposal assumes Social Bicycles is the system operator MONTHLY ONGOING SERVICES BICYCLES (in United States dollars) SMART BICYCLES Quantity Price Total B.1 V3.5 Smart Bicycle 350 1,500$ 525,000$ B.2 replacement parts and custom tools 350 100$ 35,000$ B.3 exterior basket printed assets and design template 350 15$ 5,250$ B.4 interior basket printed assets and design template 350 15$ 5,250$ B.5 upgrade to skirt guard - 45$ -$ B.6 skirt guard printed assets and design template - 20$ -$ B.7 upgrade to eight-speed hub with shaft drive transmission 350 75$ 26,250$ custom paint and decals (Pantone color palette)included onboard real-time GPS and accelerometer tracking included onboard GSM cellular connection included integrated keypad, LCD screen, and RFID technology included solar and dynamo power generators included TOTAL SMART BICYCLES COST 596,750$ STATIONS (in United States dollars) DOCKING POINTS Quantity Price Total D.1 "Wave" Docking Point 665 400$ 266,000$ D.2 dock printed assets and design template 665 35$ 23,275$ base plate with high durability coating included base plate connectors, end caps, and security bolts included TOTAL DOCKING POINTS COST 289,275$ 94250 PAYMENT STRUCTURES Quantity Price Total P.1 Outdoor Payment Kiosk - 10,000$ -$ custom paint and decals (RAL color palette)included payment terminal with credit card reader included RFID access card dispenser and reader included color LCD touch screen interface included solar and battery power generators included base plate with high durability coating included base plate connectors, end caps, and security bolts included P.2 Indoor Tablet Kiosk - 1,750$ -$ custom decals and design template included payment terminal with credit card reader included color LCD touch screen interface included mounting stand and hardware included TOTAL PAYMENT STRUCTURES COST -$ INFORMATION STRUCTURES Quantity Price Total I.1 Large Advertisement and Info Panel - 2,750$ -$ two-sided panel (72" x 30" printable area per side)included printed assets and design template included base plate with high durability coating included base plate connectors, end caps, and security bolts included I.2 Compact Advertisement and Info Panel 35 1,250$ 43,750$ two-sided panel (43" x 11" printable area)included printed assets and design template included base plate with high durability coating included base plate connectors, end caps, and security bolts included TOTAL INFORMATION STRUCTURES COST 43,750$ SERVICES (in United States dollars) PROGRAM SETUP Quantity Price Total S.1 Implementation Services (including expenses)25,000$ S.2 Website Landing Page Design - 10,000$ -$ S.3 Brand and Logo Design - 5,000$ -$ S.4 RFID Access Cards - 1$ -$ S.5 Printed Map and Ad Assets Design (per station)- 500$ -$ S.6 Site Design and Planning Services (per station)- 1,000$ -$ TOTAL PROGRAM SETUP COST 25,000$ TRANSPORT AND CUSTOMS Quantity Price Total T.1 Bicycle Freight and Customs 51,228$ T.2 Infrastructure Freight and Customs 13,800$ T.3 Accessories Freight and Customs 1,000$ TOTAL TRANSPORT AND CUSTOMS COST 66,028$ OPERATIONS (in United States dollars) MONTHLY ONGOING SERVICES Quantity Price Total M.1 Bicycle Connectivity 350 8$ 2,800$ M.2 Kiosk Connectivity (per kiosk fee) (per month)- 50$ -$ M.3 Software Services (flat fee) (per month)1 2,500$ 2,500$ M.4 Branded Mobile App (per app fee) (per month)- 500$ -$ TOTAL MONTHLY ONGOING SERVICES COST 5,300$ Social Bicycles Hardware Overview CONFIDENTIAL Page 2 www.socialbicycles.com SOCIAL BICYCLES SOCIAL BICYCLES INTEGRATED LOCK Each bicycle is equipped with a robust integrated lock that works with regular bicycle parking racks. The bicycle can be reserved and accessed by web, mobile, an RFID card, or simply by entering an account number and PIN on the bike keypad interface. REAL-TIME GPS Each Social Bicycle is equipped with wireless connectivity and real-time GPS. Unlike other systems, our real-time active GPS is a theft deterrent, a data-gathering technology, and a tool for locating missing or stolen bikes. HOLD FUNCTION Social Bicycles feature a ‘hold’ function that allows the user to park a bike during the trip while maintaining the reservation on the bike. To pause the rental, users simply press the “hold” button and lock the bike to a regular bike parking rack. This innovation improves security and user- experience. REPAIR FUNCTION Social Bicycles feature a ‘repair’ function that allows the user to report a maintenance issue directly on the keypad interface on the bike. If an issue occurs, the user simply pushes the ‘repair’ button, selects the issue type, and locks the bike. The operator will receive an instant alert about the issue. Hardware: Bike *All components secured with custom screws Front basket with ad panel Front lights Full fenders Puncture-resis- tant Kevlar tires Chainless shaft-drive transmission Kickstand Three or eight-speed internally geared hubs Sponsorship and branding space Comfort seat Rust and corrosion resistant aluminium frame with stainless steel components Reliable and intuitive braking Grip bell Step-through frame Hub brakes Real-Time GPS/Accelerometer LCD Screen and Keypad Solar and Rider Powered RFID/NFC Reader Integrated Rear Lighting SOCIAL BICYCLESSOCIAL BICYCLES Page 3www.socialbicycles.com CONFIDENTIAL Specifications: 68 inches Length 23 inches Width 44 inches Height Dimensions: Frame - Aluminum Rear Hub - Shimano Nexus internal 3 or 8 speed Drivetrain - Chainless shaft-drive Pedals - Aluminum w/ rubber grip Brakes - Front & rear hub/drum brakes Wheels/Tires - 26” x 1.75” Kevlar puncture-resistant Kenda w/ reflective sidewalls Front Light - LED white Rear Light - LED red w/ reflector Seat / Post - Adjustable quick release w/ comfort seat, indexed sizing guides, security fasteners Bell - Grip bell Power - Solar panel, dynamo generator, battery pack, dual capacitors Display - LCD screen and keypad Basket - Aluminum basket w/ ad panel mounting Fenders - Full coverage, optional skirt guard available Features: - Integrated lock and GPS tracking - Wireless connectivity - RFID/NFC Reader (optional BLE) - Rear LCD display - Step through frame - Shaft drive - Sponsorship and branding space - Integrated automatic front and rear lights - Integrated basket The Social Bicycle ‘smart bike’ has wireless connectivity and an integrated GPS-equipped locking mechanism embedded on a classic Dutch-frame bike. Hardware: Bike Bike is designed by Social Bicycles, manufactured in China 45 lbs Weight CONFIDENTIAL Page 4 www.socialbicycles.com SOCIAL BICYCLES SOCIAL BICYCLES Select Health & St. Lukes (title sponsor - branding on bikes & stations) Florida Hospital - Station BrandingWebpt sponsorship American Express Bike Branding Nike (title sponsor branding on bikes & stations) Hulu (presenting sponsor branding on bikes) Hardware: Branding SOCIAL BICYCLESSOCIAL BICYCLES Page 5www.socialbicycles.com CONFIDENTIAL Social Bicycles offers custom racks, manufactured with durable powder-coated steel, which require no wiring or electronics. This manufacturing process increases robustness and reduces the cost of stations. The docking points can be equipped with an optional RF beacon to provide physical return detection. When the bike is locked at the station, the bike ID and station ID are matched and sent to the server to indicate a successful return to the station. Racks provide significant branding real-estate, delivering a cohesive feel to the program. We offer a Curved Rack and Square Rack to fit the needs of each program. Specifications: Material - Finish - 29.50 inch Length 27.40 inch Width 1.26 inch Height Base Plate Dimensions: Steel Corrosion resistant powder coat Features: - Large surface for advertising - Mounting pattern allows for multiple rack configurations - Fast and easy installation (see assembly specification) - Optional RF Beacon BIKE SIDE VIEW SIDE VIEW TOP VIEW Bike Rack designed by Social Bicycles, manufactured in US .38 STEEL 27.25 19.10 4.00 18.00 BIKE SIDE VIEW SIDE VIEW TOP VIEW 18.00 inch Length 19.10 inch Width 27.25 inch Height Rack Dimensions: 1.26 .25 29.50 27.40 1.26 .25 29.50 27.40 Hardware: Docks CONFIDENTIAL Page 6 www.socialbicycles.com SOCIAL BICYCLES SOCIAL BICYCLES Hardware: Large Signs The large information panel provides a 58” by 30” double-sided display for station information, maps, way-finding and safety tips, and advertiser or sponsor branding opportunities. The poster is replaceable, and the panel can be standalone or integrated into the kiosk. This modularity increases installation options. Material - Finish - Visual Asset - 29.79 inch Length 4 .00 inch Width 72.33 inch Height Dimensions: Steel Corrosion resistant powder coat 3mm Aluminum Composite Ma- terial with Vinyl 58.00 13.98 29.79 .40 29.79 FRONT / BACK 72.33 4.00 SIDE 4.00 7.50 mounting holes for baseto be bolted into base plate TOP VIEW Specifications: Features: - Large surface for advertising - Mounting pattern allows for multiple configurations - Fast and easy installation (see assembly specification) FRONT / BACK SIDE VIEW Sign structure designed by Social Bicycles, manufactured in US 58.00 13.98 29.79 .40 29.79 FRONT / BACK 72.33 4.00 SIDE 4.00 7.50 mounting holes for baseto be bolted into base plate TOP VIEWTOP VIEW SOCIAL BICYCLESSOCIAL BICYCLES Page 7www.socialbicycles.com CONFIDENTIAL Hardware: Compact Signs 29.00 43.00 40.00 11.50 4.00 2.50 FRONT(FACING OUTSIDE) TOP VIEW BACK(FACING INSIDE) 4.00 SIDE Specifications: Material - Finish - Visual Asset - 11.50 inch Length 2.50/4.00 inch Width 72 inch Height Dimensions: Steel Corrosion resistant powder coat 3mm Aluminum Composite Material with Vinyl Features: - Banner-like surface for advertising - Mounting pattern allows for multiple configurations - Fast and easy installation (see assembly specification) The compact information panel provides a 43” by 11” double-sided display on the metal sign surface. The compact sign is ideal for smaller station locations or for more cost-effective information display. Bike Rack designed by Social Bicycles, manufactured in US 29.00 43.00 40.00 11.50 4.00 2.50 FRONT (FACING OUTSIDE) TOP VIEW BACK (FACING INSIDE) 4.00 SIDE FRONT / BACK SIDE TOP VIEW CONFIDENTIAL Page 8 www.socialbicycles.com SOCIAL BICYCLES SOCIAL BICYCLES Hardware: Kiosks Kiosks are optional with the Social Bicycles system and can be installed on a case-by-case basis only at high-traffic stations to reduce cost. The Social Bicycles kiosk is a POS system for SoBi memberships. The kiosk also features an RFID dispenser that dispenses membership cards as well as an RFID reader that allows members to sync transit cards to their SoBi account. The kiosk features a touch-screen and accepts all major international credit/debit cards. Kiosks are solar powered with backup batteries and are modular to provide multiple installation options. Kiosks can be standalone or adjacent to information panels. Specifications: Material - Finish - Visual Asset - 16.50 inches Length 19.00 inches Width 78.00 inches Height Dimensions: Steel Powder Coat Vinyl Features: - Helmet dispenser - Credit card reader - 12 inch screen - RFID dispenser - RFID reader - PCI certified - Solar powered 8 0 . 0 0 4 2 . 0 0 20.00 28.00 2 8 . 0 0 20.00 Sign structure designed by Social Bicycles, manufactured in US 8 0 . 0 0 4 2 . 0 0 20.00 28.00 2 8 . 0 0 20.00 8 0 . 0 0 4 2 . 0 0 20.00 28.00 2 8 . 0 0 20.00 FRONT / BACK SIDE TOP VIEW SOCIAL BICYCLESSOCIAL BICYCLES Page 9www.socialbicycles.com CONFIDENTIAL Hardware: Station Examples STATION WITH KIOSK STATION WITH LARGE SIGN PANEL STATION WITH KIOSK + LARGE SIGN PANEL STATION WITH COMPACT SIGN PANEL City of Palo Alto (ID # 7286) City Council Staff Report Report Type: Action Items Meeting Date: 10/4/2016 City of Palo Alto Page 1 Summary Title: Retail Urgency Ordinance Amendment Title: PUBLIC HEARING: Adoption of an Urgency Ordinance Amending the Urgency Interim Ordinance (Ordinance 5325 extended by Ordinance 5330) Preserving Ground Floor Retail Uses on a Citywide Basis to Allow Educational Uses on the Ground Floor of Parcels Zoned RT-35 along Alma Street and Finding the Amendment Exempt from Review Under the California Environmental Quality Act (CEQA) Pursuant to State CEQA Guidelines Section 15061(b)(3) From: City Manager Lead Department: Planning and Community Environment Recommendation Staff recommends that the City Council conduct a public hearing and adopt the proposed ordinance amending interim protections for ground floor retail uses to provide a limited exception permitting conversion to private educational facility, and finding the amendments exempt from review under the California Environmental Quality Act. Executive Summary The proposed ordinance would amend temporary restrictions that protect ground floor retail and “retail like” uses from being converted to office space or other uses. Specifically, the amendment would allow educational uses on a limited number of parcels zoned RT-35 along the Alma Street corridor south of Homer Avenue in the South of Forest Area (SOFA). The proposed ordinance would not extend the duration of the temporary restrictions enacted by Ordinance Number 5325 and 5330, which are set to expire on April 30, 2017. The City still intends to enact additional, permanent retail protections prior to this date. Background The City’s land use data shows that there was a loss of approximately 70,000 square feet of retail-type uses in the period from 2008 until early-2015. The loss of retail-type uses coincided with an increase in commercial office rents, such that property owners had an economic City of Palo Alto Page 2 incentive to convert ground floor retail spaces to office use where this was permitted by the City’s zoning regulations. For this reason, the City of Palo Alto enacted Urgency Interim Ordinance 5325 on May 11, 2015 to prevent the conversion of ground floor space to office or other non-retail uses, which was a trend in the City’s commercial districts. This urgency interim ordinance was extended through adoption of Ordinance 5330 on June 15, 2015, and is set to expire on April 30, 2017, before which time, the City intends to adopt permanent retail protections. Since the urgency interim ordinance was adopted, the City has adopted permanent retail protections for the California Avenue business district, and has adopted an ordinance closing a loophole in PAMC Section 18.16.050 that was allowing the loss of retail space along El Camino Real. Permanent zoning restrictions are still being developed for the balance of the City as discussed at a City Council meeting on August 22, 2016. At the same meeting, the City Council heard from property owners who own properties outside of traditional retail areas and who view the preservation of existing retail spaces as a hardship. The City Council considered the specific circumstances of four of these property owners and found that their hardship did not rise to the level of a constitutional taking, and that no waiver was warranted under the terms of the urgency interim ordinance. The owners were encouraged to participate in the public process to develop permanent retail protections, which the City Council indicated should include a path for them to request approval for conversions or retail spaces to other uses without proving there is an economic hardship rising to the level of a constitutional taking. Nonetheless, in response to the property owner requests, the City Council indicated their desire to provide more flexibility for property owners in the RT-35 zoning district during the term of the urgency interim ordinance. The RT-35 zoning district allows private educational facilities as a principally permitted use, and along Alma Street in this district, the City Council would like to allow these uses as an exception to the prohibition on conversion of ground floor retail to office or other uses. At Council’s direction this amendment is being brought forward as an urgency ordinance. Accordingly, the ordinance makes the requisite health and safety findings, is exempt from Planning and Transportations review, and goes into effect immediately upon adoption. An urgency ordinance requires a 4/5 (i.e. 8 members) vote. Policy Implications: The proposed ordinance would amend ground floor retail protections that are consistent with the City’s Comprehensive Plan, which contains a focus on walkable neighborhoods and vital retail enviroments, as evidenced by the following goals and policies: City of Palo Alto Page 3  Goal L-3: Safe Attractive Residential Neighborhoods, each with its own distrinct character and within walking distance of shoping, services, schools, and/or other public gathering places.  Goal L-4: Inviting, Pedestrian-scale Centers the Office a Variety of Retail and Commercial Services and Provide Focal Points and commnity gathering places for the city’s residential neighborhoods and employment districts.  Policy B-6: Maintain distinct neighborhood shoping areas that are attractgive, accessible, and convenient to nearby residents.  Policy B-20: Support and enhance the Univeristy Avenue/Downtown area as a vital mixed use area containing retail, personal service, office, restaurant, and entertainment uses. Recognize the importance of an appropriate retail mix, including small local businesses, to the continued vitality of Downtown. These issues are also addressed in the South of Forest Area (SOFA) Coordinated Area Plan, which includes POLICY L-6: Enhance the vitality and livability of the South of Forest Area by allowing a mixture of residential and neighborhood serving commercial land uses. Resource Impact The proposed ordinance would affect a limited number of parcels, allowing ground floor spaces to convert from retail to educational uses. Likely mpacts on sales tax revenues would be negligible. Environmental Review The proposed ordinance would affect a limited number of parcels, allowing them to be used in a manner that is consistent with the City’s land use regulations during the term of the urgency ordinance. Resulting Individual development proposals, if any, would be subject to separate environmental review during the planning entitlement phase. For these reasons, it can be seen with certainty that the proposed ordinance could not have a significant effect on the environment, and is excluded from review under the California Environmental Quality Act (CEQA) consistent with State CEQA Guidelines Section 15061(b)(3), the “General Rule.” Attachments:  Attachment A: Ordinance Amending Retail Preservation to Allow School Use (PDF) NOT YET APPROVED 150602 cs 0131449 1 Rev. Sept. 12, 2016 Ordinance No. ____ Urgency Interim Ordinance of the Council of the City of Palo Alto Amending Interim Ordinance Nos. 5325 and 5330 to Provide a Limited Exception to the Citywide Limitation on the Conversion of Ground Floor Retail and “Retail Like” Uses FINDINGS A. The City of Palo Alto has long been considered the birth place of Silicon Valley. With its proximity to Stanford University, its international reputation, its deep ties to technology firms, its highly rated public school system and its ample public parks, open space and community centers, Palo Alto continues to serve as a hub for technology based business. B. Palo Alto is considered one of Silicon Valley's most desirable office markets. According to one study Class A office rates have climbed 49 percent since the start of 2010. The same study reported Class B office space increasing by 114.4 % since 2010. C. In particular, average commercial rental rates have gone up significantly from 2013 to 2015. In 2013 the average monthly rental rate citywide for office was $4.57 per square foot. That rate increased to $5.12 in 2015. While retail rents have also increased during this period, retail rents are considerably lower than office rents. The average monthly rental rate for retail in 2013 was $4.21 and in 2015 was $4.88. D. Price increases have been even more significant in the downtown area. In 2013 the average downtown monthly office rent was $6.37. In 2015 the rate increased to $7.33. E. At the end of 2014, Palo Alto’s downtown vacancy rate was a low 2.83 percent, according to a report prepared by Newmark Cornish & Carey. F. These record high monthly rental rates for office and low vacancy rates have created financial incentives to replace current retail use with office use where such conversions are permitted by the City’s zoning ordinance. These economic pressures are more severe in the downtown and California Avenue commercial areas but exist throughout the City. G. The data submitted by the City to support the Valley Transportation Authority’s Congestion Management Plan (CMP) each fiscal year suggests that there has been a loss of approximately 70,000 square feet of retail-type uses in the period from 2008 to the present. The CMP data is broad in the sense that it includes uses like automotive services in the “retail” category even though they are considered separate uses in the City’s zoning ordinance. However any overstatement of the trend towards less retail is likely to be offset by the data’s reliance on a list of discretionary applications processed by the City, since there have also been recent conversions of retail space to office space that did not require discretionary approvals and are not included in the 70,000 square foot number. H. City residents have seen this occurring in the City’s commercial districts as the City’s Architectural Review Board has considered projects like those affecting Spagos restaurant 160912 cs 0131547 2 Rev. Sept. 12, 2016 at 265 Lytton, Inhabiture at 240 Hamilton Ave, Palo Alto Bowl at 4301 El Camino Real, and Club Illusions Restaurant at 260 California Avenue. In addition, familiar retail businesses like the Zibibbo restaurant have closed and their spaces have been acquired and occupied by non- retailers. Likewise the old location for Fraiche Yogurt, which moved from Emerson Street to Hamilton Avenue, was immediately re-purposed as office space. I. Based on these trends, on March 2, 2015, the Palo Alto City Council asked staff to consider whether zoning-based protections for ground floor retail uses need to be strengthened where they currently exist and expanded to areas of the City where they do not. J. This direction is consistent with the City’s existing Comprehensive Plan, which identifies the desirability of neighborhood serving retail (Policy L-16) and envisions inviting, pedestrian-scale “centers” with a mix of uses as focal points for neighborhoods (Goal L-4). Policy L-20 suggests that the City “encourage street frontages that contribute to retail vitality…” and Policy B-5 calls on the City to “maintain distinct business districts within Palo Alto as a means of retaining local services and diversifying the City’s economic base.” K. The City of Palo Alto enacted Urgency Interim Ordinance 5325 on May 11, 2015 to prevent the conversion of ground floor space to office or other non-retail uses, which was a trend in the City’s commercial districts. The ordinance was adopted as an interim ordinance to give the City time to further study the issue and adopt permanent protections if warranted. L. The urgency interim ordinance was extended through adoption of Ordinance 5330 on June 15, 2015, and is set to expire on April 30, 2017, before which time, the City Council desires to adopt permanent retail protections. M. The City’s land use data shows that there was a loss of approximately 70,000 square feet of retail-type uses in the period from 2008 until the urgency interim ordinance was adopted. This loss of retail-type uses coincided with an increase in commercial office rents, such that property owners had an economic incentive to convert ground floor retail spaces to office use where this was permitted by the City’s zoning regulations. N. The economic conditions that favor conversion of retail space to office space remain in place because office rents remain higher than retail rents. O. Since the urgency interim ordinance was adopted, the City has adopted permanent retail protections for the California Avenue business district, and has adopted an ordinance closing a loophole in PAMC Section 18.16.050 that was allowing the loss of retail space along El Camino Real. Permanent zoning restrictions are still being developed for the balance of the City. P. In the same period, the City was approached by property owners who own properties outside of traditional retail areas and who view the preservation of existing retail spaces as a hardship. The City Council considered the specific circumstances of four of these property owners on August 22, 2016, and found that their hardship did not rise to the level of a constitutional taking, and that no waiver was warranted under the terms of the urgency interim 160912 cs 0131547 3 Rev. Sept. 12, 2016 ordinance. The owners were encouraged to participate in the public process to develop permanent retail protections, which the City Council indicated should include a path for them to request approval for conversions or retail spaces to other uses without proving there is an economic hardship rising to the level of a constitutional taking. Q. Nonetheless, in response to the property owner requests, the City Council indicated their desire to provide more flexibility for property owners in the RT-35 zoning district during the term of the urgency interim ordinance to prevent properties from remaining vacant and potentially blighting the immediate area. The RT-35 zoning district allows private educational facilities as a principally permitted use, and along Alma Street in this district, the City Council would like to allow these uses as an exception to the prohibition on conversion of ground floor retail to office or other uses. R. The public’s health, safety and welfare are currently and immediately detrimentally affected as neighborhood-serving retail service and related uses are priced-out by rising rents and replaced by uses that do not provide similar services or activate the street frontage by creating pedestrian activity and visual interest (i.e. shop windows and doors). These changes affect neighborhood quality of life, and mean that local residents have to drive to similar retail destinations in other locations, diminishing the public health benefit when residents can walk to needed services and increasing traffic congestion, vehicle miles traveled and greenhouse gas emissions. In addition, the public’s health, safety and welfare are negatively impacted if properties subject to the moratorium are unable to find retail tenants to occupy the ground floor during the limited period of the moratorium. The proposed amendment strikes a balance between these two competing health, safety and welfare goals. S. Unless abated, the City’s actions to approve conversion of ground floor spaces from retail to other uses will exacerbate the reduction of retail and changes described above, resulting in the need for the proposed interim ordinance. T. The City Council desires on an interim basis to temporarily suspend conversions of retail and retail like uses to office throughout the City as such conversions may be in conflict with the City’s Comprehensive Plan and zoning proposal that the legislative body, planning commission or the planning department is considering or studying or intends to study within a reasonable time. U. This urgency interim ordinance is adopted in accordance with the requirements of Government Code Section 65858 and Palo Alto Municipal Code Section 2.04.270 and is based on the need to protect the public safety, health and welfare as set forth in the above findings. A 4/5 vote is required for adoption. The Council of the City of Palo Alto does ORDAIN as follows: SECTION 1. Section 18.85.103 of Chapter 18.85 of Title 18 of the Palo Alto Municipal Code is hereby amended to read as follows: 18.85.103 Exemptions. The following shall be exempt from this Ordinance: 160912 cs 0131547 4 Rev. Sept. 12, 2016 (a) Pipeline Projects. Any project where a discretionary permit or entitlement application to convert ground floor Retail use to a non-Retail use was submitted to the City on or before March 2, 2015 and is currently pending. For purposes of this Ordinance a “Use and Occupancy” Permit Application shall not constitute a discretionary permit. (b) Vested Rights. Any project for which an applicant has received a valid building permit from the City prior to March 2, 2015 and performed substantial work and incurred substantial liabilities in good faith reliance on such permit as of the date of this Ordinance. (c) RT-35 Zoned Parcels on Alma: Parcels located in the RT-35 zoning district on Alma south of Channing Avenue, shall be allowed to convert to a private educational facility provided they comply with the development standards governing such use in the RT-35 district. SECTION 2. This Ordinance supersedes Ordinance Nos. 5325 and 5330 and any provision of the Palo Alto Municipal Code inconsistent with the provisions of this Ordinance. SECTION 3. Severability. If any provision, clause, sentence or paragraph of this ordinance, or the application to any person or circumstances, shall be held invalid, such invalidity shall not affect the other provisions of this Ordinance which can be given effect without the invalid provision or application and, to this end, the provisions of this Ordinance are hereby declared to be severable. SECTION 4. Effective Date. This ordinance shall be effective immediately and shall expire on April 30, 2017. SECTION 5. CEQA. The City Council finds that this Ordinance falls under the California Environmental Quality Act (CEQA) exemption found in Title 14 California Code of Regulations Section 15061(b)(3) and 15301 because private educational facilities are a permitted use in the RT-35 zone. INTRODUCED: PASSED: AYES: NOES: ABSTENTIONS: ABSENT: ATTEST: APPROVED: ______________________________ ____________________________ City Clerk Mayor 160912 cs 0131547 5 Rev. Sept. 12, 2016 APPROVED AS TO FORM: ____________________________ City Manager ______________________________ Senior Assistant City Attorney ____________________________ Director of Planning and Community Environment City of Palo Alto (ID # 7323) City Council Staff Report Report Type: Informational Report Meeting Date: 10/4/2016 City of Palo Alto Page 1 Summary Title: Plan Bay Area Update Title: Status of the "Plan Bay Area" Update & Preferred Scenario Being Developed by the Metropolitan Transportation Commission (MTC) and the Association of Bay Area Governments (ABAG) From: City Manager Lead Department: Planning and Community Environment Recommendation: This is an informational report and no action is requested. Executive Summary: The Metropolitan Transportation Commission (MTC) and the Association of Bay Area Governments (ABAG) are working together to update the regional plan regarding land use and transportation, referred to as Plan Bay Area. The regional agencies recently released parameters of a “preferred scenario” describing household and job growth expected in the region between 2010 and 2040, and are currently soliciting questions and comments from local jurisdictions. While the City of Palo Alto has articulated concerns regarding past ABAG projections, it does not appear that the current “preferred scenario” deviates from what the City itself expects the future to hold. Specifically, the growth in households and jobs now projected by 2040 is lower than past regional projections, and close to or within the range being analyzed in the City’s EIR for the Comprehensive Plan Update. Table 1. Comparison of the Plan Bay Area “Preferred Scenario” and Association of Bay Area Governments (ABAG) Projections 2013 ABAG Projections 2013 Plan Bay Area Preferred Scenario 2016 Santa Clara County 2010 Households a 604,204 597,100 2040 Households a 818,400 846,600 City of Palo Alto Page 2 2010-2040 Households (% Change) a 35.45% 249,500 (41%) 2010 Jobs 926,270 911,500 2040 Jobs 1,229,520 1,269,700 2010-2040 Jobs (% Change) 32.74% 358,200 (39%) City of Palo Alto 2010 Households a 26,493 26,550 2040 Households a 34,370 29,150 2010-2040 Households (% Change) a 7,877 (29.73%) 2,600 (9.79%) 2010 Jobs 89,690 102,000b 2040 Jobs 119,470 123,200 2010-2040 Jobs (% Change) 29,780 (33.20%) 21,200 (20.78%) Notes: (a) Households are not directly comparable to housing units. Household is defined as an occupied Housing Unit. In Palo Alto, a 5% vacancy rate is assumed on Housing Units to estimate number of Households. (b) Staff will be requesting an explanation of this change in the baseline. Palo Alto Planning & Community Environment, September 2016 Table 2. Comparison of the Plan Bay Area “Preferred Scenario” and Palo Alto’s Comprehensive Plan Update EIR Scenarios Palo Alto Comp Plan EIR Scenarios 1-4a Palo Alto Comp Plan EIR Scenarios 5-6 a Plan Bay Area Preferred Scenario 2016 City of Palo Alto 2010 Households b 26,493 26,493 26,550 2040 Households b 30,013-33,041 31,485-35,856 29,150 2010-2040 Households (% Change) b 3,520-6,548 (13.29-24.72%) 4,992-9,363 (18.84-35.34%) 2,600 (9.79%) 2010 Jobs 89,690 89,690 102,000 2040 Jobs 108,159-119,470 106,318 123,200 2010-2040 Jobs (% Change) 18,469-29,780 (20.59-33.20%) 16,628 (18.54%) 21,200 (20.78%) Notes: (a) To allow an apples-to-apples comparison, Comp Plan EIR scenarios, which include growth projections to 2030 have been extrapolated to 2040. (b) Households are not the same as housing units, which is the metric used in the Comp Plan EIR. In Palo Alto, a 5% vacancy rate is assumed to estimate number of Households. Palo Alto Planning & Community Environment, September 2016 City of Palo Alto Page 3 The current update to Plan Bay Area does not include development of a new Regional Housing Needs Allocation (RHNA), and thus has no immediate effect on the City’s Housing Element. Transportation funding priorities articulated in the plan update are not anticipated to change dramatically, and will continue favoring Priority Development Areas (PDAs), of which the City has one near California Avenue. City staff will continue to monitor the regional agencies’ planning process, and will provide additional information if adjustments to the draft preferred scenario change any of the numbers presented in Table 1 or 2 above. Timeline: Anyone wishing to provide written comments on the draft preferred scenario should do so before October 14, 2016. Staff plans to ask MTC staff a couple of questions, but not to submit written comments. A final preferred scenario is scheduled to be adopted by the regional agencies in November 2016, with a Draft EIR in the Spring 2017, and Final EIR with adoption of the Plan Bay Area update in Summer 2017. Attachments:  Attachment A: 00_09-09-2016_Plan Bay Area PPT (PDF)  Attachment B: 8.30.16_Plan Bay Area Draft Preferred Scenario (PDF) Image Source: https://www.flickr.com/photos/adamrschultz/8810617814 DRAFT PREFERRED SCENARIO:OVERVIEW OF GROWTH PATTERN & INVESTMENT STRATEGY Ken Kirkey, MTC – September 9, 2016Joint MTC Planning Committee with the ABAG Administrative Committee Image Source: https://www.flickr.com/photos/liyanage/5584040007 Plan Bay Area 2040 establishes a 244-4-year regional Plan Bay Area 2040 establishes a 244vision for growth and investment. 2 Our economy is booming – but we’re not building enough housing. 3 Image Source: https://www.flickr.com/photos/swang168/388908005 Jobs added from 2011 through 2015:501,000 Housing units built from 2011 through 2015:65,000 Regionally: 1 house was built for every 8 jobs created Big 3 Cities: 1 housing unit built for every 7 jobs created Bayside Cities and Towns:1 housing unit built for every 15 jobs created Inland, Coastal, Delta Cities and Towns: 1 housing unit built for every 3 jobs created http://www.dof.ca.gov/research/demographic/reports/estimates/e-5/2011-20/view.php 4 Image Source: https://www.flickr.com/photos/swang168/388908005 Source: http://www.trulia.com/blog/trends/elasticity-2016/ City House Price, % Change1996-2016 Housing Units Added, % Change1996-2016 Average Months forBuildingApproval San Jose 295% 20% 6 San Francisco 290% 12% 10 Oakland 223% 17% 11 Source: http://dwtd9qkskt5ds.cloudfront.net/blog/wp-content/uploads/2014/02/TruliaPriceMonitor_Scatterplot_Jan20141.png Low supply and high demand = Our economy is booming – but we’re not building enough housing. This current boom is translating into new pressures on our transportation system – even worse than the “dot com” boom. 5 -20% 0% 20% 40% 60% 80% 100% 2000 2005 2010 2015 % CHANGE SINCE 2000 BART Ridership per-capita Avg. Commute Time Caltrain Ridershipper-capita Source: Vital Signs (MTC 2015; ACS 2014; NTD 2014) Congested Delayper-worker interpolated Transit Ridership per-capita; regional Funding and policies are available to help us tackle transportation challenges… 6 Transportation Strategies Land Use Strategies State/ Federal •Generate new state/federal revenues •Fund projects and programs •Condition existing funding sources Regional Agencies •Prioritize high-performing expansion projects •Fund preservation and operation of system •Generate new regional revenues •Condition existing funding sources •Coordinate multi-county transportation programs •Advocate for Bay Area projects at the state and federal levels Local Agencies •Build transportation projects •Improve efficiency of operations and maintenance activities •Generate new local revenues •Condition local revenues •Advocate for local projects at the regional, state, and federal levels Other •Private Companies: operate private shuttles and provide TNC service … but solving our land use and affordability challenges is much more difficult. 7 Fewer regional policies available today than for transportation Transportation Strategies Land Use Strategies State/Federal •Generate new state/federal revenues •Fund projects and programs •Condition existing funding sources •Reform tax policies (including redevelopment) •Subsidize affordable housing •Streamline regulatory processes (e.g., CEQA reform) Regional Agencies •Prioritize high-performing expansion projects •Fund preservation and operation of system •Generate new regional revenues •Condition existing funding sources •Coordinate multi-county transportation programs •Advocate for Bay Area projects at the state and federal levels •Condition existing funding sources •Implement new regional development fees Local Agencies •Build transportation projects •Improve efficiency of operations and maintenance activities •Generate new local revenues •Condition local revenues •Advocate for local projects at the regional, state, and federal levels •Change zoning •Change fees and subsidies for development •Streamline approval processes •Implement inclusionary policies •Adjust urban growth boundaries •Build infrastructure to support growth (e.g., sewer/water, schools, etc.) Other •Private Companies: operate private shuttles and provide TNC service •Developers:build new residential, commercial, and industrial buildings (both market-rate and affordable) Working within these constraints – and keeping this update limited and focused – we achieve 5 of the 13 ambitious targets. 8 TARGET ACHIEVED (5) Note that target results are subject to change as scenarios are further refined this fall, and as scenarios are ultimately analyzed against the 2040 horizon year. Climate Protection* Adequate Housing Open Space and Agricultural Preservation* Middle-Wage Job Creation Goods Movement/ Congestion Reduction* RIGHT DIRECTION (5) Healthy and Safe Communities Affordable Housing Non-Auto Mode Shift* Road Maintenance* Transit Maintenance WRONG DIRECTION (3) Housing + Transportation Affordability* Displacement Risk* Access to Jobs SUMMARY OF THE DRAFT PREFERRED SCENARIO PERFORMANCE TARGET RESULTS Performance targets highlighted in this presentation are marked with an asterisk (*). Refer to Attachment A of the performance item for detailed results. Image Source: https://www.flickr.com/photos/swang168/388908005; Icon Sources: The Noun Project (Bravo, Galtarossa, Prado, Helbig) PPLANNINGG FORPANNLAGGGROWTH MMAINTAININGMMINAI EEEEXISTINGEIXISSSSYSTEMS SSTRATEGICSS MMMODERNIZATIONMMDEROD& EEEXPANSION KKEYYY SSSOCIALKEYYYSS EEEEEEEEQUITYEQFQQFFINDINGS KKEYPPERFORMANCEPRFOERFFFFFINDINGS The Draft Preferred Scenario combines elements The Draft Preferred Scenario combines elemenof the three scenarios evaluated so far, while of the three scenarios evaluated soof the three scenarios evaluated sobalancing local priorities as well. 9 LLANDD UUUSE TTRANSPORTATION Image Source: https://www.flickr.com/photos/skakos/6421883439 Identifying a feasible pattern for regional Identifying a feasible pattern for regional growth was the first step in crafting the Draft growth was the first growth was the firstPreferred Scenario. 10 •Draft Preferred Scenario • ABAG Land Use Vision • Priority Development Area (PDA) Assessment Refinements AlternativeLand Use Scenarios & Public Feedback • Land Use RepresentationLocal General Plans Plan Bay Area (Adopted in 2013) The Draft Preferred Scenario builds on Plan Bay Area. 11 Main Streets ConnectedNeighborhoods Big Cities Land use strategies influence the location of future housing and jobs. 12 Source: https://www.flickr.com/photos/neighborhoods/4283507357; Icon Sources: The Noun Project (Mint Shirt, Creative Stall, Avery, Boatman, Gomez) The Draft Preferred Scenario has the following key strategies for land use: Keep current urban growth boundaries in place. Apply inclusionary zoning in all cities with PDAs. Assume for-profit housing developments make 10 percent of units deed-restricted in perpetuity. Assign higher densities than currently allowed by cities to select PDAs. Reduce the cost of building in PDAs and TPAs through eased parking minimums and streamlined environmental clearance. Assume subsidies stimulate housing and commercial development within PDAs. Similar to Plan Bay Area, the Draft Preferred focuses growth in the core of the region. 13 25% 75% 24% 33% 43% outside PDA in PDA Inland, Coastal, Delta Bayside Big 3 Cities Inlan Where will the region plan for the 820,000new households?31% 39% 30% 2010:2.6 million households 34% 38% 28% 2040:3.4 million households Fewer strategies exist to encourage shifts in job locations – meaning that the West Bay and South Bay remain primary centers. 14 48% 52% 14% 46% 40% outside PDA in PDA Inland, Coastal, Delta Bayside Big 3 Cities Where will the region plan for the 1.3 million new jobs? Inlan on 33% 41% 26% 35% 43% 22% 2010:3.4 million jobs 2040:4.7 million jobs Accelerating housing production is critical to achieve this vision. 15 65,000 0 50,000 100,000 150,000 200,000 2011-2015 2016-2020 2021-2025 2026-2030 2031-2035 2036-2040 Plan Bay Area 2040 – Housing Trends Actual Production Under Construction Forecasted Increment Local jurisdiction support is critical to realize the goals of Plan Bay Area 2040. 16 Icon Sources: The Noun Project (Medard, Lopez, Luck, Helbig) Big Cities >350,000 people Medium Cities 50,000 – 350,000 Small Cities <50,000 people Towns UnincorporatedAreas 3 cities 43% of growth avg. 3,880 units annually per city 35 cities 40% of growth avg. 310 units annually per city 8 areas 6% of growth avg. 220 units annually per area 53 cities 11% of growth avg. 55 units annually per city 10 towns <1% of growth avg. 15 units annually per town More information for local jurisdictions interested in detailed forecasts is publicly available. 17 County Households 2010 Households 2040 (Forecast) Employment 2010 Employment 2040 (Forecast) Alameda 548,000 725,000 706,000 978,000 Contra Costa 376,000 491,000 360,000 473,000 Marin 104,000 116,000 121,000 138,000 Napa 49,000 56,000 71,000 79,000 San Francisco 347,000 476,000 577,000 888,000 San Mateo 257,000 316,000 343,000 475,000 Santa Clara 597,000 847,000 912,000 1,270,000 Solano 142,000 170,000 130,000 157,000 Sonoma 187,000 231,000 203,000 241,000 Total 2,607,000 3,427,000 3,422,000 4,699,000 The Draft Preferred land use pattern meets our environmental goals, but it does not solve the region’s affordability issues. 18 Goal TARGET NoProject Main Streets Connected Neighbor.BigCities Draft Preferred ClimateProtection 1 Reduce per-capita CO2 emissions -15% Open Space and AgriculturalPreservation 4 Direct development within urbanfootprint 100% Equitable Access 5 Decrease H+T share for lower-income households*-10% Equitable Access 7 Do not increase share ofhouseholds at risk of displacement*+0% -5%-15%-18%-20% 87%91% +14%+13%+13%+13% 100%100% -18% +13% 100% * = indicates that performance results analysis year 2035; final target results will reflect consistent horizon year of 2040 +18%+11%+13%+15%+9% Image Source: https://www.flickr.com/photos/thefatrobot/15095382616 Image Source: https://www.flickr.com/photos/luciuskwok/613513028 The Draft Preferred Scenario supports focused The Draft Preferred Scenario supports fgrowth by prioritizing transportation growth by prioritizing transportation growth by prioritizing transportationoperations, maintenance, and modernization. 19 Fortunately, the region has significant resources for improving our transportation system – especially voter-approved sales taxes. 20 $29B $48B $42B $157B $14B $19B Federal State Regional Local Anticipated 2016 Transportation Ballot Measures $309 billion Year of Expenditure $ Revenue Envelope for Plan Bay Area 2040 Image Source: https://www.flickr.com/photos/beejjorgensen/3495038 All investment categories in the Draft Preferred are contingent on approval of new sales taxes this November. 21 Breakdown of Draft Preferred Scenario Funding $216B $74B $19B Committed Discretionary 2016 Transportation Ballot Measures $171B $27B $18B Operate and Maintain Modernize Expand $48B $19BOperate and Maintain Modernize Expand Operate and Maintain Modernize Expand $8B $7B $9B $3B Due to fiscal constraints, it was not possible to achieve ideal maintenance conditions and to fund all projects submitted. 22 $122B $47B $36B $35B $188B Funding Need Available Revenue Transit Operations Transit Capital (Ideal)Local Streets (Ideal)Highways/Bridges (Ideal)Projects Available Revenue Plan Bay Area 2040 Call for Projects Funding need for all assets at ideal conditions Funding for existing transit operations $309 billion $428 billion The Draft Preferred Scenario allocates over 90 percent of funds towards maintenance and modernization, similar to Plan Bay Area. 23 $158 billion 51% $68 billion 22% $54 billion 17% $29 billion 9% Total Plan Bay Area 2040 Expenditures (in billions of $YOE) Operate and Maintain - Transit Operate and Maintain - Roads/Freeways/Bridges Modernize Expand 91% 9% Operate, Maintain, and Modernize Expand Existing System $226 billion goes directly to operations and “Fix It First”, reflecting the high performance of transit maintenance investments. 24 Strategy 1: Operate and Maintain $226 billion (73%) Includes: •Transit Operations ($122 billion) •Transit Maintenance ($31 billion) •Local Streets Maintenance ($25 billion) •Bridge Maintenance ($14 billion) Operating and maintaining the existing system remains our top priority, despite its high costs. 25 Category Current Conditions (2015)Draft Preferred (2040) Transit Operations Fully funds preservation of current service levels through 2040 Transit Maintenance 29% of transit assets past useful life 12% of transit assets past useful life Local Road Maintenance Pavement condition index of 66 Pavement condition index of 69 Highway Maintenance 20%of highway lane- miles in poor condition 20%of highway lane- miles in poor condition Strategy 1: Operate and Maintain $226 billion (73%) Includes: •Transit Operations($122 billion) •Transit Maintenance ($31 billion) •Local StreetsMaintenance ($25 billion) •Bridge Maintenance($14 billion) Operating and maintaining the existing system remains our top priority, despite its high costs. 26 The Draft Preferred Scenario fully funds existing operations in line with the original Plan Bay Area, increasing transit service by 7.5% over PBA 2013 levels. Annual costs are 25% higher, however. Strategy 1: Operate and Maintain $226 billion (73%) Includes: •Transit Operations($122 billion) •Transit Maintenance ($31 billion) •Local StreetsMaintenance($25 billion) •Bridge Maintenance ($14 billion) Modernization of existing transit system and highways is a high priority as well. 27 Strategy 2: Modernize $54 billion (17%) Includes: •Core Capacity($7 billion) •Bike/Ped Program ($3 billion) •Goods MovementProgram ($3 billion) •Caltrain Electrification ($2 billion) •Mobility and AccessProgram ($2 billion) •BART Metro($1 billion) The share of funding allocated towards expansion projects continues to decline – focusing primarily on high-performers. 28 Strategy 3: Expand $29 billion (9%) Includes: •High Speed Rail in BayArea ($8 billion) •BART to San Jose($5 billion) •Caltrain DowntownExtension($4 billion) •Silicon Valley ExpressLanes: SR-85 + US-101 ($2 billion) The Draft Preferred Scenario includes specific strategies for equity. 29 Source: https://www.flickr.com/photos/kukkurovaca/3847019482; Icon Sources: The Noun Project (naim, Mint Shirt, Hossain) Fund existing bus operations through 2040$62 billion Fund bus service increases and transit improvements$5 billion Fund Lifeline Program and County Access Initiatives$2 billion Assume increases in inclusionary zoning within Priority Development Areas Transportation investments are being targeted to benefit low- income Bay Area residents… 30 Share of Population Share of Investment Benefit Transit Roadway Total Low-Income 24%45% 26%42% Minority 59%58% 52%57% TRANSPORTATION FUNDING ALLOCATIONFOR DRAFT PREFERRED SCENARIO Image Source: https://www.flickr.com/photos/pfsullivan_1056/4487394472; https://www.flickr.com/photos/coolsashy/27398341596 … but ultimately transportation isn’t the primary challenge – rather, it’s finding an affordable place to live. 31 Share of Population Share of Investment Benefit Transit Roadway Total Low- Income 24%45% 26%42% Minority 59%58% 52%57% TRANSPORTATION FUNDING ALLOCATION FOR DRAFT PREFERRED SCENARIO EQUITY MEASURE SUMMARY FOR DRAFT PREFERRED SCENARIO Equity Measure BetterPerformance in Disadvantaged Communities? Disadvantaged Communities Moving in the Right Direction? Access to Jobs Yes Yes Risk of Displacement Yes No Healthy and Safe Communities Same Yes Middle-Wage Job Creation N/A Yes Housing + Transportation Affordability No No Affordable Housing No No Image Source: https://www.flickr.com/photos/pfsullivan_1056/4487394472 Performance results for transportation are generally positive but fall short on several key targets. 32 +14%-22%-14%-35% +2%+2% +46%-66%-9%+15% +3%+4% -28% -16% +3% * = indicates that performance results analysis year 2035; final target results will reflect consistent horizon year of 2040 Image Source: https://www.flickr.com/photos/allaboutgeorge/5391451588 Goal TARGET NoProject Main Streets Connected Neighbor.BigCities Draft Preferred ClimateProtection 1 Reduce per-capita CO2 emissions -15% Economic Vitality 10 Reduce per-capita delay on freightnetwork -20% TransportationSystemEffectiveness 11 Increase non-auto mode share*+10% TransportationSystemEffectiveness 12 Reduce vehicle O&M costs due topavement conditions*-100% -5%-15%-18%-20%-18% Despite its limitations, the Draft Preferred Scenario does perform notably better than the status quo (No Project). 33 Compared to the No Project: •The Draft Preferred Scenario achieves 13 additional percentage points of per-capita greenhouse gas reduction, primarily due to the Climate Initiatives Program. •Nearly 12,000 fewer acres of greenfield lands are developed in the Draft PreferredScenario. •63,000 fewer households are at risk ofdisplacement in PDAs, TPAs, and HOAs in theDraft Preferred Scenario. •The typical driver spends $124 less per car on auto maintenance due to smoother local streets in the Draft Preferred Scenario. Image Source: https://www.flickr.com/photos/gdodge/15336815438 If we really want to address affordability and equity If we really want to address affordability and equity challenges, action is needed by an engaged public and challenges, action is needed by an engaged public andchallengesactionisneededbyanengagedpublicandby all levels of government. Only the most aggressive by all levels of government. Only the most aggressive by all levels of government Only the most aggressivepolicies will be sufficient to deal with our housing crisis. Housing: +12% Housing + Transportation: +13% Transportation:tation:+1% Housing + Housing + Transportation nsportat CostsCosts (as a share of (as a share of income)* * = for lowerer-r-income householdsouseholds 2005 2040 54% of household income 67% of household income 34 Image Source: https://www.flickr.com/photos/arballoimages/9656613352 We want your feedback on how to craft the best We want your feedback on hoPreferred Scenario possible. September • Hold CountyWorkshops withPlanning Directors October • Comments onDraft PreferredDue (October 14) • Revise PreferredScenario Fall • Adopt RevisedPreferred Scenario •Begin CEQAReview Spring 2017 • Release Draft Plan • Release Draft EIR Summer 2017 •Adopt Plan BayArea 2040 • Certify EIR 35 Bay Area Metro Center | 375 Beale Street, Suite 800 | San Francisco, CA 94105-2066 DATE: August 30, 2016 RE: Plan Bay Area 2040 DRAFT Preferred Scenario Dear Colleagues, The Plan Bay Area 2040 Draft Preferred Scenario is now ready for review and MTC and ABAG are seeking the input of local jurisdictions to inform the development of the Final Preferred Scenario slated for adoption in November 2016. As outlined in the attached Introduction, the Draft Preferred Scenario builds upon the current Plan Bay Area adopted in 2013 and represents a projected pattern of household and employment growth in the Bay Area through 2040. Combined with the corresponding transportation investment scenario and incorporating additional refinements based, in part, upon local jurisdictional feedback it will form the core of Plan Bay Area 2040 slated for final adoption in Summer, 2017. For many local communities, the distribution of 2040 employment and household forecasts may be viewed as the most important output of this effort. This draft information is included in Attachment A to the introduction, organized by local jurisdiction and split into PDA and jurisdiction totals. We understand that some adjustments may be necessary as we continue to refine the Draft Preferred Scenario’s assumptions. Regional Agency Staff are currently working with county-level Planning Director organizations and Congestion Management Agencies to schedule staff-level presentations of the Plan Bay Area 2040 Draft Preferred Scenario in each county. Information on the date/time and location of these meetings is available here: http://planbayarea.org/misc/county-planning-directors- meetings.html. Regional agency staff will also be available during the month of September to meet with local planners from individual jurisdictions at the Bay Area Metro Center in San Francisco, via teleconference, or onsite with local jurisdictions to hear feedback as to where and how the Draft Preferred Scenario allocates the region’s growth. This dialogue will be informed by model output, as well as local economics, pipeline projects, proposed policies, local plans and current zoning. Requests for jurisdictional meetings should be directed to Megan Espiritu, mespiritu@mtc.ca.gov. Any written comments on the Draft Preferred Scenario should be submitted no later than October 14, 2016. In response to this upcoming cycle of feedback, MTC and ABAG will make adjustments as appropriate during the month of September and October, with the goal of the MTC Commission and ABAG Executive Board adopting the Final Preferred Scenario on November 17, 2016. Please do not hesitate to contact Ken Kirkey kkirkey@mtc.ca.gov or Miriam Chion miriamc@abag.ca.gov with any questions or comments. We greatly appreciate your involvement and input in the development of Plan Bay Area 2040. Best Regards, Steve Heminger Ezra Rapport MTC, Executive Director ABAG, Executive Director 1 Introduction to the Draft Preferred Scenario for Plan Bay Area 2040 Welcome to Plan Bay Area 2040’s Draft Preferred Scenario. This vision for the nine-county San Francisco Bay Area builds on the groundbreaking Plan Bay Area, adopted by the Association of Bay Area Governments (ABAG) and the Metropolitan Transportation Commission (MTC) in 2013 after extensive analysis and outreach. Plan Bay Area 2040 continues to be guided by Senate Bill 375, requiring California’s metropolitan areas to adopt an integrated long range regional transportation plan (RTP) and sustainable communities strategy (SCS) — a roadmap to reduce per-capita greenhouse gas emissions and house the region’s population at all income levels. Plan Bay Area 2040’s Draft Preferred Scenario largely reflects the foundation established by its predecessor. The Plan creates a blueprint for providing sufficient housing for current residents and newcomers alike, at all income levels. It focuses development toward Priority Development Areas (PDAs) — neighborhoods that are close to public transit and identified by local jurisdictions as being appropriate for smart, compact development. Lastly, it confines growth to established communities, and protects the Bay Area’s legacy of vast and varied open spaces. What is the Draft Preferred Scenario? The Draft Preferred Scenario represents a projected regional pattern of household and employment growth in 2040. Together with the corresponding transportation investment strategy, it forms the core of Plan Bay Area 2040. The Preferred Scenario and transportation investment strategy are evaluated against a set of regionally-adopted performance targets to measure how well the Plan addresses regional goals including climate protection, transportation system effectiveness, economic vitality, and equitable access. Only two targets are mandatory for the region to achieve under Senate Bill 375 – Climate Protection and Adequate Housing. The remaining 11 targets are voluntary, but provide a useful reference point for policymakers and the public to consider. For many local jurisdictions, the distribution of 2040 employment and household forecasts may be viewed as the most important output of this effort. This draft information is included in Attachment A, organized by local jurisdiction, and split into PDA totals. These numbers stem from distributing ABAG’s economic and demographic forecasts through use of an advanced regional land use model. The land use model, UrbanSim, went through an iterative set of adjustments in response to expert reviews, public input, and dialogue with local officials. ABAG regional planners developed a set of targets informed by local dialogue against which the model output could be evaluated. Simply put, the most fundamental challenge faced by MTC and ABAG when developing these forecasts is to create a Plan that supports local plans while accommodating the region’s total forecasted growth and meeting the state mandated sustainability goals. Thus, the Draft Preferred Scenario must assess potential opportunities for new housing and jobs while reflecting local aspirations and numerous local, regional, and state public policy decisions that affect growth and protect our natural areas. The Draft Preferred Scenario does not mandate any changes to local zoning rules, general plans or processes for reviewing projects, nor is it an enforceable direct or indirect cap on development locations or targets in the region. As is the case across California, the Bay Area’s cities, towns 2 and counties maintain control of all decisions to adopt plans and permit or deny development projects. Plan Bay Area 2040 also does not establish new state-mandated Regional Housing Needs Allocation (RHNA) numbers for each jurisdiction. RHNA operates on an eight-year cycle, with the next iteration not due until the 2021 RTP/SCS. Because RHNA numbers are not at stake this cycle, this update to the region’s long-range plan has been characterized as limited and focused. What’s new and different? The Bay Area economy has exploded over the past four years, attracting thousands of new people and jobs. Regional growth forecasts have been revised upward as a result. ABAG forecasts an additional 1.3 million jobs and 2.4 million people and therefore the need for approximately 820,000 housing units between 2010 and 2040. This represents an increase of 15 percent in the projected employment growth and a 25 percent increase in projected household growth, relative to the last Plan. The economic surge has been both a blessing and a challenge, offering employment opportunities unseen since the Bay Area’s dot-com boom, while also clogging freeways and public transit, and triggering an unprecedented housing squeeze, particularly for lower and moderate income workers, many of whom have been displaced or are at risk for displacement. Moving forward, some cities will welcome new residents and housing with open arms, seeing the opportunity to revitalize depressed areas, or to make better use of prime land around transit nodes. For other communities, accommodating future growth may be an acute challenge, practically and/or politically. The Draft Preferred Scenario recognizes the diversity of the region’s communities, and that there is no “one size fits all” in terms of the type of future development desired by our residents. To address the challenges of planning for an increasingly complex region, MTC and ABAG have continued to evolve technical methods for creating regional scenarios. UrbanSim incorporates current zoning for 2 million individual land parcels across the Bay Area, as well as available information about current regional and local economic and real estate market trends. UrbanSim is an ambitious project which compiles a large amount of data at a very detailed geographic resolution. The detailed level of UrbanSim output is used for the analysis of performance measures. UrbanSim builds upon the methodology used by the Agencies in the prior Plan. The prior methodology combined a land use allocation process based on observed historic growth patterns with jurisdictional expectations described in local plans. This time, UrbanSim also incorporates zoning tools, the most recent PDA assessment, and household, business, and developer choice models. The agencies ran the model hundreds of times, testing the effects that different regional strategies could have on affecting the distribution of housing and employment growth. The output was measured against a set of growth targets put together by ABAG regional planners working with planners from local jurisdictions. Overall, the growth allocation results of the UrbanSim model align fairly closely with these growth targets at a summary level as well as for most localities, though, there are substantial differences for some individual localities. The extent of the differences between local plans and the UrbanSim output is a discussion for the agencies, regional stakeholders, and individual jurisdictions. 3 The Draft Preferred Scenario accommodates 100 percent of the needed housing units, and offers a rationale that these units can be built given future market conditions and existing or expected policies to support focused growth at the local, regional or state level. How did we get here? In May 2016, MTC and ABAG released three alternative land use and transportation scenarios illustrating the effects that different housing, land use, and transportation strategies would have on the adopted goals and performance targets. The three scenarios represented a progression of plausible regional futures, from more intense housing and employment growth in the urban core — called the “Big Cities Scenario”; to more evenly apportioned development among PDAs in medium-sized cities with access to rail services — labeled the “Connected Neighborhoods Scenario”; to a more dispersed development pattern, with more relative growth occurring outside of PDAs — known as the “Main Streets Scenario.” The release of the scenarios initiated a public process in May and June 2016 to garner input from the public, stakeholders, community groups, and local officials, via public open houses in each county, an online comment forum as well as an online interactive quiz (the “Build a Better Bay Area” website). By July, MTC and ABAG had received comments from more than 1,100 residents. During this time period, the agencies received direct feedback from the local jurisdictions on the scenarios. Additionally, the results of a 2015 PDA Assessment have also directly informed our confidence in the Draft Preferred Scenario. This assessment examined 65 of the nearly 200 locally identified PDAs. The analysis evaluated the likelihood of housing actually being built in each PDA, by examining local planning and permitting processes; community support for development; market forces, including the attractiveness of the area to investors, developers and builders; the capacity of water and sewer systems and other infrastructure; and the availability of financing. The PDA Assessment was a reality check. It found that under existing conditions — meaning with current zoning laws, policies and market conditions — only about 70 percent of housing allocated to PDAs in Plan Bay Area 2013 would get built with these results being boosted to nearly 90 percent with a range of fairly aggressive policy and investment strategies. The results of the Draft Preferred Scenario align with the results of the PDA Assessment, providing added confidence in the regional forecast’s consideration of both market conditions and local policy. Strategies included in the Preferred Scenario Beyond built-in assumptions on local planning and market conditions, the Draft Preferred Scenario also works to incorporate a number of regional land use strategies, which can affect land use patterns by changing a community’s capacity for new development or incentivizing a particular type or location of growth. This combination of strategies is necessary to create a Draft Preferred Scenario that can achieve or move toward the region’s adopted targets. The land use strategies incorporated in the Draft Preferred Scenario include the following:  Current urban growth boundaries are kept in place.  Inclusionary zoning was applied to all cities with PDAs, meaning that these jurisdictions are assumed to allow below-market-rate or subsidized multi-family housing developments. 4  All for-profit housing developments are assumed to make at least 10 percent of the units available to low-income residents, in perpetuity (via deed restrictions).  In some cases, PDAs were assigned higher densities in the future than are currently allowed.  The cost of building in PDAs and/or Transit Priority Areas (TPAs) is assumed to be reduced by the easing of residential parking minimums and streamlining environmental clearance.  Subsidies are assumed to stimulate housing and commercial developments within PDAs. These measures are not prescriptive— again, there are many potential public policy options that could help the region attain its adopted targets. Rather, these strategies should be considered as illustrations of what it would take to keep the Bay Area an economically vibrant, diverse and sustainable region in the year 2040. Moving Forward Although the levels of new housing and jobs may appear daunting, the challenge becomes much more achievable when viewed through the long-range lens of a 25-year plan. For instance, a medium-sized city of 50,000 residents slated to absorb 1,000 more new housing units by 2040 than previously anticipated would in actuality need to only add 40 units a year to meet the target. That yearly figure could be reached by adding two 10-unit apartment buildings (or one 20-unit building) per year, and creating another 20 accessory dwelling units associated with single- family homes each year. In other words, in nearly all cases, jurisdictions should be able to absorb their housing allotments while fully retaining the character of their communities. It is important to keep in mind that the process of refining the Bay Area’s ideal development pattern is nearly continuous to stay synced with the four-year mandated update cycles— we will revisit all the assumptions in the adopted Preferred Scenario as we launch the next update to Plan Bay Area. We learn more with each cycle, and are able to take those lessons and apply them to the forecasting and modeling as well as our public outreach methods for the next cycle. Such assurances aside, regional planners and policymakers understand that some adjustments may be necessary as we continue to refine the Draft Preferred Scenario’s assumptions. To this end, a careful balancing act regarding future growth patterns is as much an art as a science, and we look forward to working with local planners and policymakers, stakeholders and members of the public in the coming weeks to advance our mutual understanding of the development climate and capacity in various jurisdictions, and to refine and improve this Draft Preferred Scenario. Attachment A: Distribution of 2040 Household and Employment Forecasts Attachment A: Distribution of 2040 Household and Employment Forecasts Plan Bay Area 2040 Draft Preferred Scenario County Jurisdiction Summary Level Households 2010 Household Forecast 2040 Employment 2010 Employment Forecast 2040 Total 30,100 41,700 29,200 39,600 PDA 1,850 6,000 6,900 15,200 Total 7,350 7,850 4,400 5,600 PDA 300 550 2,100 2,450 Total 46,500 55,700 90,300 139,400 PDA 6,700 13,300 28,500 42,000 Total 14,900 23,300 18,100 31,400 PDA 3,100 8,500 5,000 14,000 Total 5,600 14,300 15,850 20,550 PDA 2,400 10,500 13,500 16,850 Total 70,000 89,900 86,200 114,500 PDA 23,000 41,200 38,200 46,000 Total 45,100 53,200 60,900 92,400 PDA 4,350 8,600 7,600 10,300 Total 28,600 30,900 42,600 48,800 PDA 850 2,100 23,800 27,750 Total 12,900 15,450 17,300 25,600 PDA 200 2,150 200 450 Total 157,200 235,000 179,100 257,500 PDA 115,500 190,500 158,200 229,400 Piedmont Total 3,800 3,850 1,800 1,750 Total 24,700 34,600 60,100 69,900 PDA 1,300 8,000 12,500 19,600 Total 30,800 38,500 49,700 66,800 PDA 4,700 11,700 9,750 11,000 Total 20,300 24,200 21,000 30,700 PDA 500 3,450 250 250 Total 50,000 56,300 28,850 33,700 PDA 10,450 12,850 6,850 8,850 Total 548,000 724,700 705,500 978,300 PDA 175,100 319,300 313,400 444,000 Pleasanton Alameda Alameda County Unincorporated Albany Berkeley Dublin Emeryville Fremont Hayward Livermore Newark Oakland San Leandro Union City County Total Alameda August 30, 2016 Attachment A Draft Preferred Scenario County Jurisdiction Summary Level Households 2010 Household Forecast 2040 Employment 2010 Employment Forecast 2040 AlamedaAlameda Total 32,400 41,900 20,200 25,400 PDA 1,400 5,200 2,050 2,300 Brentwood Total 16,800 29,700 11,600 12,150 Clayton Total 3,950 4,050 2,000 2,100 Total 45,000 66,000 54,200 95,200 PDA 4,000 22,200 10,200 41,400 Total 15,300 16,550 11,800 12,450 PDA 1,350 2,000 6,300 6,600 Total 10,300 11,950 5,300 5,750 PDA 750 2,000 3,800 4,550 Total 8,300 10,600 4,850 6,050 PDA 900 2,650 1,150 1,500 Total 9,200 10,750 9,050 9,650 PDA 1,700 2,700 6,650 7,250 Total 14,250 15,450 20,800 26,200 PDA 700 850 6,800 9,650 Total 5,600 5,750 4,500 5,800 PDA 30 40 1,400 1,650 Total 10,600 16,700 3,350 6,050 PDA 800 6,400 1,550 4,050 Total 6,500 7,050 4,850 5,150 PDA 250 550 2,650 2,800 Total 6,550 7,300 6,850 9,000 PDA 350 950 5,250 6,950 Total 19,400 27,400 11,800 16,400 PDA 5,150 8,900 4,600 6,100 Total 13,500 14,000 16,300 19,600 PDA 850 950 5,750 7,100 Total 36,700 56,500 30,800 63,500 PDA 8,600 22,300 13,400 37,000 Total 8,950 9,600 7,400 10,000 PDA 2,000 2,350 4,850 6,700 Total 24,400 31,100 47,900 46,100 PDA 200 5,800 25,650 22,400 Total 30,400 38,200 51,050 54,550 PDA 4,950 9,550 27,400 29,500 Total 57,800 70,700 0 0 PDA 4,400 16,100 0 0 Total 375,900 491,200 360,200 472,700 PDA 38,300 111,500 138,200 209,400 Antioch Concord Contra Costa County Unincorporated Richmond Danville El Cerrito Hercules Lafayette Martinez Moraga Contra Costa Oakley Orinda Pinole Pittsburg Pleasant Hill San Pablo San Ramon Walnut Creek County Total Page 2 of 6 August 30, 2016 Attachment A Draft Preferred Scenario County Jurisdiction Summary Level Households 2010 Household Forecast 2040 Employment 2010 Employment Forecast 2040 AlamedaAlamedaBelvedere Total 900 1,000 300 300 Corte Madera Total 3,900 4,350 6,650 7,450 Fairfax Total 3,400 3,550 1,550 1,700 Larkspur Total 5,850 6,300 7,450 8,800 Mill Valley Total 5,900 8,150 6,000 6,600 Novato Total 20,150 21,350 26,400 29,500 Ross Total 800 900 350 400 San Anselmo Total 5,200 5,450 3,300 3,650 Total 22,550 25,950 43,300 49,100 PDA 1,650 2,750 9,000 10,100 Sausalito Total 4,150 4,500 5,200 5,800 Tiburon Total 3,600 3,850 2,850 2,900 Total 27,450 30,600 17,500 21,350 PDA 1,500 2,050 650 750 Total 103,900 115,900 120,800 137,600 PDA 3,150 4,800 9,650 10,850 Total 5,400 7,000 5,450 8,150 PDA 400 1,500 1,350 1,700 Calistoga Total 2,050 2,400 2,200 2,650 Total 28,100 30,250 34,000 36,500 PDA 350 1,200 5,300 6,300 St. Helena Total 2,400 3,000 5,700 5,650 Yountville Total 1,100 1,200 2,750 2,750 Napa County Unincorporated Total 10,200 11,850 20,550 23,250 Total 49,200 55,700 70,700 79,000 PDA 800 2,700 6,600 8,050 Total 347,100 475,500 576,900 887,800 PDA 184,000 302,300 473,800 765,000 Marin Napa San Francisco San Francisco San Rafael County Total County Total American Canyon Napa Marin County Unincorporated Page 3 of 6 August 30, 2016 Attachment A Draft Preferred Scenario County Jurisdiction Summary Level Households 2010 Household Forecast 2040 Employment 2010 Employment Forecast 2040 AlamedaAlamedaAtherton Total 2,350 2,500 2,150 2,300 Total 8,800 9,600 7,900 10,000 PDA 2,500 2,850 3,500 4,450 Total 1,800 6,300 5,200 17,600 PDA 0 4,400 0 10,900 Total 12,250 13,800 28,000 38,300 PDA 6,950 8,300 11,500 15,700 Total 850 1,250 3,950 4,900 PDA 700 1,050 1,450 1,950 Total 30,700 37,000 18,400 23,150 PDA 8,500 13,500 4,650 5,800 Total 6,950 9,950 5,100 7,000 PDA 800 2,200 950 1,750 Foster City Total 11,900 14,250 15,800 21,800 Half Moon Bay Total 4,200 4,700 4,900 5,200 Hillsborough Total 3,750 3,950 2,100 2,300 Total 12,300 17,800 34,600 45,000 PDA 200 1,050 6,200 7,950 Total 7,950 11,000 5,900 12,900 PDA 600 3,350 2,800 9,100 Pacifica Total 13,900 14,300 5,950 7,300 Portola Valley Total 1,700 1,750 2,700 3,000 Total 27,800 36,000 59,200 85,000 PDA 600 6,700 20,700 27,600 Total 14,600 18,300 12,900 15,350 PDA 3,700 6,750 9,300 11,300 Total 13,200 13,700 16,300 21,700 PDA 50 100 1,200 1,650 Total 37,900 49,200 51,000 67,600 PDA 11,200 19,200 25,300 34,000 Total 20,450 23,450 38,800 55,400 PDA 5,300 7,650 8,250 11,350 Woodside Total 2,050 2,500 1,950 2,150 Total 21,400 24,500 20,600 27,500 PDA 2,400 2,950 3,200 4,100 Total 256,900 315,800 343,300 475,300 PDA 43,500 80,100 99,000 147,600 San Mateo Belmont Millbrae Redwood City County Total South San Francisco Menlo Park San Mateo County Unincorporated San Bruno San Carlos San Mateo Brisbane Burlingame Colma Daly City East Palo Alto Page 4 of 6 August 30, 2016 Attachment A Draft Preferred Scenario County Jurisdiction Summary Level Households 2010 Household Forecast 2040 Employment 2010 Employment Forecast 2040 AlamedaAlameda Total 16,550 18,950 25,200 31,800 PDA 600 1,650 5,250 6,950 Total 20,900 24,450 26,800 53,100 PDA 2,250 4,900 9,800 13,950 Total 14,000 19,600 17,850 20,800 PDA 1,400 3,350 4,500 5,300 Total 10,500 12,000 14,050 16,750 PDA 0 200 2,200 2,650 Los Altos Hills Total 2,850 3,050 1,550 1,750 Los Gatos Total 11,900 12,400 19,000 21,250 Total 19,000 30,800 42,000 56,400 PDA 800 8,800 5,700 9,900 Monte Sereno Total 1,250 1,350 550 550 Total 12,550 15,500 19,250 20,700 PDA 250 900 1,550 1,400 Total 31,800 58,500 48,500 69,600 PDA 5,800 29,300 25,200 39,000 Total 26,550 29,150 102,000 123,200 PDA 500 950 3,850 4,800 Total 297,700 440,600 387,700 502,600 PDA 67,200 201,700 229,200 299,400 Total 42,100 54,900 102,900 189,100 PDA 300 6,200 10,200 13,100 Saratoga Total 10,650 11,000 8,750 9,500 Total 52,600 80,700 65,800 116,000 PDA 6,200 32,000 21,900 29,000 Santa Clara County Unincorporated Total 26,100 33,600 29,500 36,500 Total 597,100 846,600 911,500 1,269,700 PDA 85,300 289,800 319,200 425,500 Santa Clara Campbell Cupertino Gilroy Los Altos Milpitas Morgan Hill Mountain View Palo Alto San Jose Santa Clara Sunnyvale County Total Page 5 of 6 August 30, 2016 Attachment A Draft Preferred Scenario County Jurisdiction Summary Level Households 2010 Household Forecast 2040 Employment 2010 Employment Forecast 2040 AlamedaAlameda Total 10,700 11,800 12,900 18,600 PDA 600 900 2,050 2,050 Total 5,850 6,950 4,850 6,100 PDA 450 550 300 350 Total 34,200 38,700 43,100 51,600 PDA 2,300 5,000 6,450 7,100 Rio Vista Total 3,700 10,400 2,350 2,450 Total 9,000 9,650 2,500 3,000 PDA 1,100 1,550 1,100 1,300 Total 31,000 33,050 29,300 35,000 PDA 850 2,250 4,900 4,950 Total 40,950 45,050 30,900 35,300 PDA 400 1,150 2,600 3,050 Solano County Unincorporated Total 6,900 14,700 4,250 4,400 Total 142,300 170,300 130,200 156,500 PDA 5,700 11,400 17,350 18,800 Total 3,250 5,250 1,750 1,600 PDA 800 2,850 550 500 Total 3,050 3,550 2,700 3,000 PDA 350 700 700 700 Healdsburg Total 4,400 4,700 8,400 9,900 Total 21,800 27,100 30,000 35,700 PDA 500 4,450 3,500 4,050 Total 15,000 21,100 12,050 13,350 PDA 1,300 5,300 4,250 4,900 Total 63,800 78,800 76,400 91,700 PDA 16,800 30,300 41,100 48,600 Total 3,300 5,000 5,000 5,050 PDA 2,050 3,750 4,650 4,650 Sonoma Total 4,900 6,250 7,150 8,050 Total 9,050 10,550 7,600 9,200 PDA 1,100 2,300 900 1,200 Sonoma County Unincorporated Total 58,300 68,600 51,700 63,900 Total 186,800 231,000 202,700 241,400 PDA 23,000 49,700 55,800 64,600 Total 2,607,000 3,427,000 3,422,000 4,698,000 PDA 559,000 1,172,000 1,433,000 2,094,000 Sonoma Regional Total Solano Vacaville Vallejo Cloverdale Cotati Petaluma Benicia Dixon Fairfield Suisun City County Total County Total Rohnert Park Santa Rosa Sebastopol Windsor Page 6 of 6