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Home My WebLink About2009-07-27 City Council Agenda Packet 1 7/27/09 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. Agenda posted according to PAMC Section 2.04.070. A binder containing supporting materials is available in the Council Chambers on the Friday preceding the meeting. Special Meeting Council Chambers July 27, 2009 7:00 P.M. ROLL CALL SPECIAL ORDERS OF THE DAY 1. Proclamation for the 2009 Summer National Senior Games ATTACHMENT 2. Adoption of a Resolution Expressing Appreciation to Adam Atito for Outstanding Public Service as a Member of the Human Relations Commission ATTACHMENT 3. Adoption of a Resolution Expressing Appreciation to Donald Mendoza for Outstanding Public Service as a Member of the Human Relations Commission ATTACHMENT 4. Adoption of a Resolution Expressing Appreciation to Jeffrey Blum for Outstanding Public Service as a Member of the Human Relations Commission 2 7/27/09 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. ATTACHMENT 5. Appointments for the Planning and Transportation Commission for Two Four Year Terms Ending on July 31, 2013 ATTACHMENT CITY MANAGER COMMENTS ORAL COMMUNICATIONS Members of the public may speak to any item not on the agenda; three minutes per speaker. Council reserves the right to limit the duration or Oral Communications period to 30 minutes. APPROVAL OF MINUTES June 22, 2009 July 06, 2009 CONSENT CALENDAR Items will be voted on in one motion unless removed from the calendar by two Council Members. 6. Approval of a Record of Land Use Action and Conditional Use Permit Application by AT&T on Behalf of Aldersgate Methodist Church for a 45- Foot Mono-Pine Wireless Communications Facility with Concealed Antennas and Associated At-Grade Equipment Cabinets at 4243 Manuela Avenue CMR 320:09 and ATTACHMENTS 7. Approval of Contract with Barry Swenson Builder in the Total Amount Not to Exceed $1,365,988 for the College Terrace Library and Child Care Center Seismic Upgrade and Rehabilitation Project and Approval of Amendment No. 2 to Contract C07117374 with The KPA Group, Inc. to Add $108,940 for a Total Not to Exceed Amount of $429,336 for Construction Administration Services for the College Terrace Library Seismic Upgrade and Rehabilitation Project – Capital Improvement Program Project PE-05010 3 7/27/09 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. CMR 324:09 and ATTACHMENTS 8. 2nd Reading Adoption of an Ordinance Amending Section 2.40.040 of Chapter 2.40 of Title 2 of the Palo Alto Municipal Code Pertaining to Municipal Elections for Web Posting of Campaign Contributions (First reading July 6, 2009 – Passed 8-0 Morton absent) 9. 2nd Reading Adoption of an Ordinance Approving a Development Agreement between Hewlett-Packard Company and the City of Palo Alto (First reading July 13, 2009 – Passed 8-0 Espinosa not participating) 10. 2nd Reading Adoption of an Ordinance Increasing the Utilities Advisory Commission from Five to Seven Members and Amending Section 2.23.010 (Membership), Section 2.23.030 (Term of Office) and Section 2.23.060 (Meetings) of Chapter 2.23 of the Palo Alto Municipal Code (First reading July 13, 2009 –Passed 7-1, Barton no, Morton not participating) CMR 314:09 and ATTACHMENTS 11. Recommendation From the Parks and Recreation Commission to Adopt the Gym Use Policy for the Cubberley Community Center’s Pavilion, Gym A and Gym B CMR 325:09 and ATTACHMENTS 12. Confirmation of Appointment of Curtis Williams as Director of Planning and Community Environment and Approval of At-Will Employment Contract CMR 330:09 and ATTACHMENTS 4 7/27/09 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. 13. Approval of Amendment No.4 to Contract S05108852 with The Ferguson Group, LLC to Extend the Term for an Additional Two Month Period and Add $13,625 for a Total Not to Exceed Amount of $397,014 for FY 2005—FY2009 Federal Legislative and Regulatory Representation CMR 334:09 and ATTACHMENTS AGENDA CHANGES, ADDITIONS, AND DELETIONS HEARINGS REQUIRED BY LAW: Applications and/or appellants may have up to ten minutes at the outset of the public discussion to make their remarks and put up to three minutes for concluding remarks after other members of the public have spoken. OTHER AGENDA ITEMS: Public comments or testimony on agenda items other than Oral Communications shall be limited to a maximum of three minutes per speaker. UNFINISHED BUSINESS 14. Initiation of: (1) a Zone Change from Neighborhood Commercial (CN) District to Planned Community (PC) District at 2180 El Camino Real (The New College Terrace Centre) for a Mixed Use Project Having 61,960 Square Feet of Floor Area Including 8,000 Square Feet of Grocery (Intended for JJ&F Market), 5,580 Square Feet of Other Retail, 14 Affordable One-Bedroom Residential Units, 39,980 Square Feet of Office Use, and Two Levels of Below-Grade and Surface Parking Facilities Providing 227 Parking Spaces, and (2) a Comprehensive Plan Amendment to Assign the Mixed Use Land Use Designation to a Site currently designated as Neighborhood Commercial. (Public Hearing Closed) (continued from July 13, 2009) *Quasi-judicial CMR 304:09 and ATTACHMENTS CITIZENS LETTERS PUBLIC HEARINGS 15. Adoption of an Ordinance Amending Sections 18.10.130 (Historical Review and Incentives), 18.10.060 (Parking), 18.12.140 (Historical Review and Incentives), 18.12.060 (Parking), and 18.13.040(c) (Single-Family and Two-Family Uses) of Title 18 (Zoning), and Sections 21.20.010 (General Provisions) and 21.20.301 (Flag Lots) of Title 21 (Subdivisions) 5 7/27/09 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. of the Palo Alto Municipal Code Regarding Subdivision of One Lot into Two Nonconforming Lots Where Covenants are Provided to Protect Historic Properties CMR 318:09 and ATTACHMENTS REPORTS OF COMMITTEES AND COMMISSIONS 16. Approval of a Trial Implementation of Phase 2 of the Charleston Arastradero Road Corridor Project - Lane Restriping on Arastradero Road CMR 323:09 and ATTACHMENTS CITIZENS LETTERS REPORTS OF OFFICIALS 17. Adoption of a Resolution Authorizing the Issuance and Sale of Water Revenue Bonds, Approving Indenture of Trust, Official Notice of Sale, Notice of Intention to Sell, and Official Statement, Approving the Form and Authorizing Execution of Documents Related to Bond Issuance; and Authorizing Official Actions Related Thereto CMR 328:09 and ATTACHMENTS 18. Council Direction to either Adopt the Initiative Defining Minimum Width of Private Streets or Adoption of a Resolution Placing the Initiative on the Ballot for Consideration by the Electorate CMR 335:09 and ATTACHMENTS CITIZENS LETTERS COUNCIL COMMENTS, ANNOUNCEMENTS, AND REPORTS FROM CONFERENCES Members of the public may not speak to the item(s). ADJOURNMENT 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. CITY OF PALO ALTO PROCLAMATION 2009 SUMMER NATIONAL SENIOR GAMES WHEREAS, Palo Alto will be the host City for the 2009 Summer National Senior Games which will take place in the San Francisco Bay Area, August 1 to August 15, 2009; and WHEREAS, more than 10,000 male and female athletes age 50 and over will compete in a total of 18 medal sports during the Games; and WHEREAS, the City of Palo Alto will serve as the center of the Games, with 16 venues on the campus of Stanford University; and WHEREAS, athletes will also compete at the Palo Alto Municipal Golf Course, and the Palo Alto Lawn Bowls Club; and WHEREAS, the 2009 Senior Games Local Organizing Committee created a Sporting Green Initiative under which the event will operate, inspired by the leadership and commitment of Palo Alto to environmental consciousness and sustainability; and WHEREAS, in the true spirit of Silicon Valley, the world’s first solar-powered torch and cauldron will be introduced and celebrated at a community event at City Hall King Plaza, August 1; and WHEREAS, the 2009 Senior Games will generate an economic impact of $35 million for the region, with dozens of Palo Alto businesses benefiting from the Games; and WHEREAS, these athletes are true role models for healthy, positive lifestyles and living for all of us; and WHEREAS, our special well wishes are extended to all of the competitors who will strive to achieve their personal goals here in Palo Alto and the rest of the Bay Area. NOW, THEREFORE, I, Peter Drekmeier, Mayor of the City of Palo Alto, on behalf of the City Council, welcome the 2009 National Senior Games to Palo Alto and the San Francisco Bay Area. PRESENTED JULY 27, 2009 ______________________________ PETER DREKMEIER MAYOR RESOLUTION OF THE COUNCIL OF THE CITY OF PALO ALTO EXPRESSING APPRECIATION TO ADAM ATITO FOR OUTSTANDING PUBLIC SERVICE AS A MEMBER OF THE HUMAN RELATIONS COMMISSION WHEREAS, Adam Atito served the City of Palo Alto as a member of the Human Relations Commission for six years, from March 2003 to March 2009; and WHEREAS, Adam Atito provided excellent leadership as Chairperson from October 2007 to September 2008; and WHEREAS, Adam Atito served with dedication and distinction on the Community Services Department’s Aging in the Community Committee; and participated in many programs supporting the community such as the Family Resources Ambassador Program; and WHEREAS, Adam Atito gave tirelessly of his time by serving as liaison to the Santa Clara County Human Relations Commission, and to the Palo Alto Police Department, and was a contributor to the Palo Alto Police Department’s Strategic Plan 2005-2010; and WHEREAS, Adam Atito consistently advocated for seniors in all regards and for individuals facing BMR housing issues in our community. NOW, THEREFORE, BE IT RESOLVED, that the City Council of the City of Palo Alto, hereby gratefully records and extends its sincere appreciation and the appreciation of the community to Adam Atito for his personal commitment, efforts and dedication as a member of the Human Relations Commission. . INTRODUCED AND PASSED: JULY 27, 2009 ATTEST: APPROVED: ____________________ ______________________ City Clerk Mayor APPROVED AS TO FORM: ____________________ ______________________ City Attorney City Manager RESOLUTION OF THE COUNCIL OF THE CITY OF PALO ALTO EXPRESSING APPRECIATION TO DONALD MENDOZA FOR OUTSTANDING PUBLIC SERVICE AS A MEMBER OF THE HUMAN RELATIONS COMMISSION WHEREAS, Donald Mendoza served the City of Palo Alto as a member of the Human Relations Commission for three years, from March 2006 to March 2009; and WHEREAS, Donald Mendoza provided excellent leadership as Vice Chair from September 2008 to March 2009; and WHEREAS, Donald Mendoza played a vital role in the guiding development of funding recommendations for the Human Services Resource Allocation Process (HSRAP) Fiscal Year 2009 – 2011, and of the Community Development Block Grant (CDBG) for Fiscal Year 2007-2009; and WHEREAS, Donald Mendoza served with dedication and distinction on the Palo Alto Police Department’s Taser Task Force; and WHEREAS, Donald Mendoza demonstrated a ready willingness to take on Commission projects such as the Resolution Condemning Tactics of U.S. Immigration and Customs Enforcement Agency which was approved by the Commission on April 12, 2007. NOW, THEREFORE, BE IT RESOLVED, that the City Council of the City of Palo Alto, hereby gratefully records and extends its sincere appreciation and the appreciation of the community to Donald Mendoza for his personal commitment, efforts and dedication as a member of the Human Relations Commission. INTRODUCED AND PASSED: JULY 27, 2009 ATTEST: APPROVED: ____________________ ______________________ City Clerk Mayor APPROVED AS TO FORM: ____________________ _______________________ City Attorney City Manager RESOLUTION OF THE COUNCIL OF THE CITY OF PALO ALTO EXPRESSING APPRECIATION TO JEFFREY BLUM FOR OUTSTANDING PUBLIC SERVICE AS A MEMBER OF THE HUMAN RELATIONS COMMISSION WHEREAS, Jeffrey Blum, served the City of Palo Alto as a member of the Human Relations Commission for six years, from April 2002 through April 2008; and WHEREAS, Jeffrey Blum provided excellent leadership in his role as Chairperson from September 2004 through September 2005, and as Vice Chairperson from September 2003 through September 2004; and WHEREAS, Jeffrey Blum played a vital role in the guiding development of funding recommendations of the Community Development Block Grant (CDBG) from 2002-2004; and WHEREAS, in his comprehensive approach to issues, Jeffrey Blum contributed years of legal expertise, knowledge and ideas to the Human Relations Commission as well as giving tirelessly of his time to improve relationships in the community and to improve community awareness of issues; and WHEREAS, Jeffrey Blum acted with conscience to exercise his position as a member of the Human Relations Commission, to influence and improve the larger world we live in, through his efforts to develop and support many Resolutions and Ordinances such as: a Resolution to Support a Death Penalty Moratorium, a Resolution Opposing the United States Patriot Act, the Anti- Discrimination Ordinance, a Resolution in support of the Convention on the Elimination of all Forms of Discrimination Against Women (CEDAW), and a Resolution Opposing Federal Marriage Amendment; and WHEREAS, the City of Palo Alto wishes to acknowledge and thank Jeffrey Blum for his personal commitment and pride in the community, for his significant personal efforts and vision, and for his substantial dedication as a member of the Human Relations Commission. NOW, THEREFORE, LET IT BE RESOLVED that the Council of the City of Palo Alto hereby gratefully records and extends its sincere appreciation and the appreciation of the community to Jeffrey Blum for his faithful and excellent service rendered to the City. INTRODUCED AND PASSED: JULY 27, 2009 ATTEST: APPROVED: _______________________ _________________________ City Clerk Mayor APPROVED AS TO FORM: _______________________ _________________________ City Attorney City Manager July 27, 2009 HONORABLE CITY COUNCIL City of Palo Alto SUBJECT: Appointments for the Planning and Transportation Commission for two four year terms ending on July 31, 2013. Dear Council Members: On Monday, July 27, 2009 the City Council should vote to appoint two four year terms ending on July 31, 2013. The Candidates are as follows: Irvin Dawid Dan Garber Janice Holliday Eduardo Martinez Stephen Sowa Voting will be by paper ballot. Five votes are required to be appointed. The first two candidates that receive at least five votes will be appointed. Respectfully submitted, Ronna Jojola Gonsalves Deputy City Clerk cc: Donna Grider, City Clerk Curtis Williams, Staff Liaison TO: HONORABLE CITY COUNCIL FROM: CITY MANAGER DATE: JULY 27, 2009 REPORT TYPE: CONSENT DEPARTMENT: PLANNING AND COMMUNITY ENVIRONMENT CMR: 320:09 SUBJECT: Approval of a Record of Land Use Action and Conditional Use Permit Application by AT&T on Behalf of Aldersgate Methodist Church for a 45-Foot Mono-Pine Wireless Communications Facility with Concealed Antennas and Associated At-Grade Equipment Cabinets at 4243 Manuela Avenue RECOMMENDATION Staff and the Planning and Transportation Commission (P &TC) recomnlend that the City Council approve the Conditional Use Pennit (CUP), for the AT & T antenna at 4243 Manuela Avenue, based upon the findings and conditions of approval in the revised Record of Land Use '-~Action (Attachnlent A). BACKGROUND On September 30, 2008, AT&T filed an application for a CUP and minor Architectural Review for a 45 foot tall faux pine tree or "mono-pine" wireless communications facility concealing nine cellular antennas and an equipment cabinet enclosure within a landscaped area at the Aldersgate Church site. Staff worked with the applicant to increase the setback of the mono-pine from Foothill Expressway prior to the tentative approval. On May 5,2009, the Planning and Community Development Director (Director) tentatively approved the CUP and Architectural Review application. Neighbors from Palo Alto and Los Altos Hills requested hearings before the Architectural Review Board (ARB) and P&TC, held June 18, 2009 and June 24, 2009, respecti vel y. Subsequent to the P&TC hearing, the Director issued a revised Architectural Review approval letter dated June 30, 2009 (Attachment B), which included the additional ARB-recommended approval conditions and the new mono-pine location discussed during the P &TC hearing as now reflected on the plan set dated July 8,2009. The additional ARB conditions required replacement of seven trees with seven large evergreens for screening, a mono-pine color that is compatible with nearby trees and the use of native vines to screen the fenced equipment area. The new mono-pine location as approved by the Director is set back approximately 241 ' 10" CMR: 320:09 Page 1 of 5 from Foothill Expressway as noted on the site plan of the July 8, 2009 plan set provided to Cou~ci1 merrlbers and also shown on Attachment C. The 14-day appeal period for the revised Architectural Review approval ended July 14, 2009 and no appeal was filed. Further background information can be found in the P&TC report (Attachment D) and arborists' report (Attachment F). The setback is now 241' 10" from Foothill Expressway as noted above. The previous, 2006 Council approval of a CUP for a 45-foot tall mono-pine on the church site had expired one year after the approval, as did the associated Architectural Review approval. These approvals had provided staffwith a framework for the 2009 tentative approvals; however, one condition had changed since 2007. This was the approval and construction of a home on adj acent property in Los Altos Hills, such that the previously approved location proved to be intolerable for the future home owner. BOARD/COMMISSION REVIEW AND RECOMMENDATIONS Architectural Review Board Prior to the ARB meeting, staffmet on site with Mr. Askari, one of the neighbors requesting the ARB and P&TC hearings. Mr. Askari, who is building his new home and guest house on the Los Altos Hills parcel adjacent to the site and Foothill Expressway, suggested relocating the mono-pine to an alternate location in the parking lot between two sets of pine trees (trees #67-73 as shown in the arborist report site map). During the ARB hearing on June 18,2009, staff stated that the alternate location had been studied by staff and the applicant but could not be recommended. The ARB voted 3-1 to recommend conditional approval of the location shown in the project plans they reviewed. The location was 187 feet from the Foothill Expressway property line and 23 feet from the adjacent property whose owner had not objected to the location. The three additional conditions added by the ARB were to: (I) replace seven diseased trees recommended for removal at a one to one ratio in 24" to 36" box sized evergreens placed around the mono-pine for screening in locations to be approved by staff; (2) ensure the color of the mono-pine is a green that is more conlpatible with nearby trees (not blue green); and (3) use native vines of a species approved by staff for screening around the fenced equipment area. The dissenting ARB member suggested a parking lot location east of the trees noted above; however, the location was not supported by the other ARB members, nor by the other neighbors who had requested the hearing, since it did not have adequate vegetative screening and appeared to be closer to Foothill Expressway, given the geometry of the church parcel. During the ARB hearing, Mr. Askari provided images including an aerial showing a photo- montage of a home on his property as being close to the church property line, and a photo- montage of a mono-pine having a height of over 60 feet and located between existing trees on church property and his property line. His photo-montage images were provided to the P&TC. CMR: 320:09 Page 2 of 5 Planning and Transportation Commission For the P&TC's consideration, staff obtained a site plan of Mr. Askari's home. The site plan shows (1) the guest house located 30 feet from the church's side property line and about 107 feet from the ARB-recommended mono-pine location, and (2) the primary home located about 75 feet from the church's side propeliy line. Prior to the P&TC meeting, staffmet on site with the applicant and church representatives to review other possible locations, including the alternate parking lot location and a new non-parking lot location approximately 60 feet farther to the northwest from the ARB recommended location. However, the applicant told staff that the mono-pine would have to be more than 60 feet tall in either location due to the proximity of existing trees, and staff could not recommend this height due to increased visibility. Staff summarized for the P &TC the issues with the alternate parking lot location: (1) it would be more visible as a taller pole (65 ') would be required to get above the 55 foot tall trees; (2) it would be closer to a northerly neighbor who has no screen trees on her property nor any screening vegetation nor space for planting such vegetation along the church parking lot; (3) borings for connections and equipment placement would likely harm near-surface roots of healthy parking lot pine trees; and (4) the mono-pine and associated equipment would have resulted in the loss of four parking spaces and the church is considering future expansion. On June 24, 2009, the P&TC voted unanimously (6-0-1, Commissioner Rosati absent) to approve the CUP for a 45 foot tall mono-pine in the new "suitable location west of the proposed location" as reflected in Attachment C and on the revised plans. This location is subject to additional conditions of approval as reflected in the ROLUA, including an upgrade in the box sizes of the new screen trees (to 36" box and 48" box sizes, up from 24" box and 36" box sizes recommended by the ARB). The attachments to the P&TC report are available on the City's website at http://www.cityofpaloalto.org/knowzone/agendas/planning.asp. During the P&TC hearing, the applicant provided a photo of the site looking toward Mr. Askari's property, and the new location was discussed in some detail. AT&T's engineer described transmission requirements with respect to clearance from trees and stated that trees needed to be located at least 24 feet (the "near field" for the 850 mHz band) from the mono-pine, and that trees within 32 feet (the near field for the 1900 mHz band) needed to remain ten feet shorter than the mono-pine. It was therefore clarified that the mono-pine must be placed 32 feet from tree #10, and that any new screening evergreens to be planted within 32 feet would require ongoing maintenance to ensure their heights renlain no taller than 35 feet. The three neighbors (Mr. Askari, Ms. Rayzman, Ms. Berman) who had requested the hearings spoke to the P&TC. Mr. Askari requested that the P&TC consider requiring the applicant to locate the mono-pine to the parking lot east of trees #71 -73, and plant seven to ten 72" box screen trees on his property. Staff also provided answers to Con1ffiissioner Keller's e-mailed questions (Attachment G). Revised Architectural Review Approval The revised Director's approval of the Architectural Review application, dated June 30, 2009, reflects the P&TC-recommended location. The revised site plan shown on Attachment C and provided to Council members within the plan set dated July 8, 2009 reflects this location. The new location would provide better growing conditions for the seven new evergreens the ARB CMR: 320:09 Page 3 of 5 recommended to be planted around and at least 24 feet from the mono-pine to provide screening of the mono-pine. RESOURCE IMPACT There is no resource impact from the installation of a mono-pine wireless communication facility on privately owned property. POLICY IMPLICATIONS The Federal Communications Commission (FCC) Telecommunications Act of 1996 sets forth regulations for radio frequency emissions. Attachment F includes the Radio Frequency Report submitted by the applicant, which indicates that the project is in compliance with FCC regulations for radio frequency emissions. The proposed telecommunications facility is consistent with Comprehensive Plan Policy B-13 which states that the City supports the development of technologically advanced communications infrastructure and other improvements that will facilitate the growth of emerging telecommunications industries. Staff believes there are no other substantive policy implications. ENVIRONMENTAL REVIEW This project is categorically exempt from the California Environmental Quality Act (CEQA), pursuant to CEQA guidelines Section 15303. This determination is consistent with past approvals of similar wireless communication facility projects. PREPARED BY: Manager of Current Planning DEPARTMENT HEAD: CURTIS WILLI S Director of Planning and Community Environment CITY MANAGER APPROVAL: '1<(2SL. ATTACHMENTS Attachment A: Attachment B: Attachment C: Attachment D: CMR: 320:09 ~~JAMESKEENE ~ City Manager Record of Land Use Action (revised to include P&TC action) Architectural Review approval letter dated June 30,2009 Site Map Showing Revised Mono-Pine Location per P&TC* P&TC Staff Report of June 24, 2009 (w/o attachments) Page 4 of 5 Attachment E: Attachment F: Attachment G: Attachment H: Attachment I: P&TC Excerpt Minutes of June 24, 2009 Arborists' Report of April 7,2009, Arbor Resources* Responses to Commissioner Keller's Questions Location Map Project Plans dated July 8,2009 (Council members only)* *Submitted by the Applicant COURTESY COPIES Dan Askari Marina Chudnovskaya Jackie Berman CMR: 320:09 Page 5 of 5 ATTACHMENT A (DRAFT) Action NOQ 2009-05 RECORD OF THE COUNCIL OF THE CITY OF PALO ALTO LAND USE ACTION FOR 4243 MANUELA AVENUE: CONDITIONAL USE PERMIT [08PLN-00000-00307] (AT&T, APPLICANT) On July 27, 2009, the Council upheld the of Planning and Cormnunity Environment's May 5, 2009 decision to approve a Conditional Use Permit to allow the installation of one telecorrununications facility making the following findings, determination and declarations: SECTION 1. Alto ("City Council") ThedCity Council of the City of Palo , det~erI:rd_nes, and declares as follows: A. On September 30, 2008, AT&T, on behalf of Aldersgate Methodist Church, ied for a Conditional Use Permit and Minor Architectural Review to allow the installation of one telecormnunications facility, comprised of a 45-foot tall monopine (faux tree-pole) with nine panel antennas concealed within the top region of the tree and associated ground-level equipment within a fenced enclosure ("The Project"). On May 5, 2009, the Director of and Corrununity Environment (Director) tentative approval for Architectural and a Conditional Use Permit for the project. B. Upon a timely request for hearing and an filed by neighbors, the project was reviewed on June 18, 2009 by the Architectural Review Board, which voted to recommend Architectural Review approval to the Director with a vote of [3-1J. The Planning and Transportation Corrunission (Corruniss ) reviewed the Condi tional., Use Permit project on June 24, 2009 and voted [6-0-1J to recorrunend that Council uphold the Director's decision to approve the Conditional Use . Permit for the project, subject to revised condi'tions of appr"oval. The Commission's action is contained in meeting minutes provided with " • ~.>I: the CMR: XXXXX, and the revised conditions are included wlthin this Record of Land Use Action. C. The Director issued a sed Architectural Review Approval. on June 30, 2009, incorporating the revised conditions of approval discussed during the Corrunission hearing, as clari by l~:tter fo appellants and applicant on June 7, 2009, and included within this Record of Land Use Action. The appeal period for the revised Architectural Review action by the Director concluded on July 15, 2009 with no appeals filed. Environmental Review. This project is exempt from the of the California Environmental Act per Section 15303 of the CEQA Guidelines. 3 . Archi Review 1 The design and archi tecture of the proposed improvements., as conditioned, furthers the goals and purposes of the ARB Ordinance as it complies with the Standards for Architectural Review as required in PAMC Chapter 18.76.050(d). (1) The design is consistent and compatible with applicable elements of the city's Comprehensive Plan in that the project would meet B-12 which states that the City supports the development of technological advanced communications infrastructure and other improvements that will facilitate the growth of emerging telecommunications industries; (2) The design is compatible with the immediate environment of the site in that the proposed monopine would be and buffered by the existing tall mature trees that are immediately surrounding the project area. Furthermore, the ground level equipment would be screened from public views; (3) The des is appropriate to the function of the project in that the monopine design would blend with the environment of the surrounding existing trees and conditions requiring landscaped screening have been incorporated in the conditions of approval; (5) The promotes harmonious transitions in scale and character in areas between different designated land uses in that the proposed monopole would be buffered by the existing tall mature trees and required new landscaped screening, thereby mitigating the impact to the surrounding uses. The equipment screen/ fencing would be designed to be compatible with the rustic setting of the si te and general vicini (6) The design is compatible wi th approved improvements both on and off the in that the proposed monopine would be buffered by the existing tall mature trees that are immediately surrounding the project area and the equipment screen/fencing would be designed to fit the rustic setting of the s (7) The planning and of the various functions and buildings on the s create an sense of order and provide a desirable environment for occupants, visitors and the general community in that the ect is located in a landscaped area adjacent to the parking lot and would not interfere with the internal circulation of the site and would not pose significant intrusion to the or the surrounding properties; (11) Natural features are appropriately preserved and integrated with the proj ect in that an arborist report has been prepared to analyze project impacts and specific trees identified by a certified arborist and reviewed and approved by the City's Urban Forester would be removed, with the required planting of appropriate replacement trees to assist in screening the monopine. The project is located in 2 an area that benefits from the natural screening of the trees and integrates within the existing landscape; (12) The materials, textures, colors and de~ails of construction and plant material are appropriate expression to the design and function in that they have been chosen to create a less intrusive facility that would be compatible with the adjacent and neighboring structures, landscape elements and functions; (13) The landscape des concept for the as shown by the relationship of plant masses, open space, scale, plant forms and foliage textures and colors create a desirable and functional environment in that the plant material would provide good screening material and the landscape concept depicts an appropriate uni ty wi th the various buildings on the s in that it does not detract from the site; (14) Plant material is suitable and adaptable to the site, capable of being properly maintained on the s ,and is of a variety which would tend to be drought-resistant and to reduce consumptio~ of water in its installation and maintenance; ARB findings 40 8-10 and 15 are not applicable to this project. SECTION 4. Conditional Use Permit Findings 1. The proposed use, at the location approved by the Director in the revised Archi tectural Review Approval and recommended by the Commission and as further describ~d the attached Exhibi t 1, will not be detrimental or injurious to property or improvements in the vicinity, and will not be detrimental to the public health, safety, general welfare, or convenience, in that: The proposed telecommunications use, located on an existing non- residentially developed site, will not negatively impact the project s or the surrounding properties. This new use is ancillary to the primary religious institution use of the site. The project is designed and located to minimize visual impacts from off-site views. The Federal Communications Commission (FCC) rules require transmitting facilities to comply with Radio Frequency exposure guidelines. The limits established in the guidelines are designed to protect the public health with a very large margin of safety. The proposed use shall be conducted in accordance with all the City's regulations (Planning, Building, Fire, etc.) and compl with the FCC regulations andl therefore, will not be detrimental to public health, safety, and welfare~ 2. The proposed use will be located and conducted in a manner in accord with the Palo Al to Comprehens Plan and the purposes of Title 18 of the Palo Alto Municipal Code in that: 3 The proposed telecommunications use is consistent with the Comprehensive Plan Policy B-13. This policy supports the development of technologically advance communications infrastructure and other improvements that will facilitate that growth of emerging telecommunications industries. The proposed use does not conflict wi th the promotion and protection of public health, safety, peace, morals, comfort, convenience, and general welfare. Condi tional Use Permit and Archi tectural Review Conditional Use Permit No. 08PLN-00000-00307 is granted to allow the installation of one telecommunications facili comprised of a 45-foot monopine with nine panel antennas concealed within the top region of the monopine wi th associated ground level equipment cabinets within a wood fence enclosure. SECTION 5. Plan Approval. The plans submitted for Building Permit shall be in substantial conformance with those plans prepared by MSA titled Aldersgate Methodist Church CN3246, dated xxxxx, 2009 and received July 15, 2009. as modified to incorporate the conditions of approval this Record of Land Use Action. A copy of these plans is on file the Department of Planning and Community Development. SECTION 6. Conditions of Approval. Planning Division 1. A complete copy of these Conditions of Approval shall be printed on the second page of the plans submitted for building permits. 2. Any intensification of use shall require an amended Conditional Use Permit and any other entitlements as specified in the Palo Alto Municipal Code. 3. The mono-pine shall be no taller than 45 feet and shall be placed in the landscaped area at location "N" (as noted by staff on an aerial photo during the Commission hearing) approximately 32 feet from tree #10, at the farthest possible point in the north-west direction from Foothill Expressway. 4. Replace the seven trees to be removed at a one to one ratio in 36" to 48" box sized evergreens placed around the mono-pine in locations to be approved by staff to ensure sight I from the neighbors and Foothill Expressway will be adequately screened. 5. Ensure the color of the mono-pine is a green that with nearby trees (not blue green) . more compatible 6. Use native vines of a species approved by staff for screening around the fenced equipment area. The applicant shall submit a I for 4 the wood fence enclosure prior to issuance of building permits for staff approval. The wood shall be 'rustic l in appearance and blend with the surroundings. 7. The applicant and property owner shall comply with all tree protection guidel specified in sections 6.1 and 6.2. of the approved arb6rist report prepared by David L. BabbYI April 71 2009. Sheet T-1 shall be printed on a plan sheet of the-building permit plan set along with the Tree Disclosure Statement with checks marked for inspections #1-6. 8. The entire arborist report shall be incorporated into the building permit plan set. 9. Trees #12 1 13 1 141 15 1 191 28 and 29 as labeled in the arborist report are in the vicinity of the project and shall be removed due to poor condition. 10. The Urban Forester will require that native species of replacement trees and shrubs be planted for landscaped screening of the equipment. A site between the City Urban Forester and the applicant shall occur to submittal of a final landscape plan in order to optimize screening as viewed from Foothill Expressway and from the south side property 11. The building permit plan set shall include a proposed landscape and irrigation plan showing trees proposed for removal and replacement trees required per approval condition #4. The plans shall be prepared by a licensed landscape architect and qualified irrigation consultant. The replacement vegetation shall be irrigated with flexible lines and bubbler heads. Based on the outcome of the meeting between the IS Urban Forester and applicantls arborist l other plantings may be determined by the Urban Forester to be necessary to ensure screening of the mono-pine as required in association with the Conditional Use Permit approval. 12. The landscape plans shall show any other trees l not mentioned under item #5 above I that the applicant/owner proposes to remove. Staff will inform the applicant whether removal of these trees would be approved. 13. All proposed plantings shown on the approved landscape plans shall be planted prior to final inspection approval. 14. Samples of the bark and foliage texture and color shall be submitted and approved prior to construction of the mono-pine. The mono-pine shall resemble a pine tree and its artificial trunk shall resemble a real trunk to the maximum extent . Cables leading to the mono-pine sh~ll be concealed to the maximum extent 15. The antennas shall be painted to match the tree foliage. 5 16. The antennas shall be placed within the fake branches and shall not protrude beyond the limbs. 17. The density of the faux branch and foliage placement of the mono- pine shall have the highest density that the mono-pine structure can support. 18. Prior to granting final building inspection, the applicant shall provide a letter to planning staff indicating the following: (A) owner/operator contact information for reporting maintenance issues and/or complaints. (B) photographs from all angles of the newly installed mono-pine and enclosure for City records. 19. The Director of Planning and Community Environment maintains continuing jurisdiction over this Condi tional Use Permi t. For the life of the project, the City shall retain the right to require the mono-pine, equipment cabinet enclosure, vegetation and any other constructed elements shown in this project application to be maintained consistent wi th the condi tion at the time of granting "final" building inspection. Any violation of maintenance shall be repaired within 30 days of contact by the City. Utilities: Electrical Engineering 20. Power for the proposed equipment shall be supplied from Ci ty of Palo Alto Utility facilities. 21. Applicant is responsible for the cost to upgrade facilities to meet the new electrical demand and the existing electrical demand at 4243 Manuela Avenue. 22. Applicant shall meet with the City's Utilities Dept. to discuss options and requirements prior to sUbmitting building permit drawings. Utilities: Water -Gas -Wastewater 23. Utility vaults, transformers, utility cabinets, concrete bases, or other structures can not be placed over existing water, gas or wastewater mains/services. Maintain 11 horizontal clear separation from the vault/cabinet/concrete base to existing utilities as found in the field. If there is a conflict with existing utilities. Cabinets/vaults/bases shall be relocated from the plan location as needed to meet field conditions. The approved relocation of services, meters, hydrants, or other facilities will be performed at the cost of the person/entity requesting the relocation. 24. The contractor shall contact underground service alert (800) 227- 2600 one week in advance of starting excavation to provide for marking of underground utilities. 6 25. The applicant shall provide protection for utility I subject to damage. utility lines within a pit or trench shall be adequately supported. All exposed water, gas, and sewer lines shall be inspected by the WGW Utilities Inspector prior to backfilling. The contractor shall maintain 12 It clear, above and below, from the existing utilities to new crossing underground facil 26. The applicant shall be responsible for relocating the existing utility mains and/or services as necessary to accommodate new storm with the approval of the Util Department. This responsibility includes all costs associated with the design and construction for the relocation of the util mains and/or services. Sanitary sewer laterals will need to be replaced for the full length of the lateral (if possible) per the Util Standards. Sanitary sewer mains can not be relocated. 27 . The contractor shall maintain 5 I horizontal distance from the exis utilities to new parallel underground facilities. For new water, wastewater or other non-potable water mains the contractor shall meet the separation requirements of the State of California Department of Health. 28. If the Contractor elects to bore new pipes or conduits, the pilot bore hole shall be 24 II clear from any existing crossing ty pipes and all existing utility crossings shall be potholed prior to starting work. 29. The applicant's contractor shall immediately notify the utilities Department (650)496-6982 or 650/329-2413 if the existing water or gas mains are disturbed or damaged. Fire. Department 30. The project shall comply with the 2007 CA Fire Code section 608. Public Works Engineering 31. STORM WATER POLLUTION PREVENTION: "Pollution Prevention included in the building It's Part of plan set. The the Plan" 's full-sized sheet must be Terms of Approval If the Conditional Use Permit is not used within one year of the date of City Council approval, the approval shall become null and void, pursuant to PAMC 18.77.090. PASSED: AYES: 7 NOES: ABSENT: ABSTENTIONS: ATTEST: City Clerk APPROVED AS TO FORM City Attorney PLANS AND DRAWINGS REFERENCED: APPROVED: 'Director of Planning and Community Environment Those plans prepared by MSA titled Aldersgate Methodist Church CN3246, dated XXXXX, 2009 and received xxxxx, 2009. EXHIBIT 1: Location Map Showing Approved Monopine Location 8 June 30, 2009 . AT&T c/o Jacqueline Smart 26 Stoneyford Avenue San Francisco, CA 94112 ATT ACHME~T B City of Palo Alto Department of Planning and Community Environment Subject: 4243 Manuela Avenue [08-PLN-00307] Architectural Review Approval Dear Ms. Smart: On June 18, 2009, the Architectural Review Board (ARB) recommended approval of the application for the installation of a 45 foot tall mono-pine with nine concealed antennas and a fenced enclosure for the seven associated equipment cabinets on the Aldersgate Methodist Church property at 4243 Manuela Avenue, as recommended by staff with additional approval conditions as noted in Attachment B to this letter. On June 24, 2009, the Planning and Transportation Commission (Commission) recommended Council approval of the Conditional Use Pennit (CUP) subject to additional approval conditions as noted in Attachment B. On June 30, 2009, the Director of Planning and Community Environment (Director) approved the Architectural Review component of the application, based upon the findings in Attachment A and subject to the conditions in Attachment B reflecting the ARB's and Commission's recommendation as to height and placement of the mono-pine and associated screening. A revised draft record of land use action reflecting the Commission's recommendation on the CUP will be provided to City Council for action on July 27, 2009, with placement of the item on the Consent Calendar such that, unless three Council members pull the item to set a public hearing date, the modified project CUP would be in effect as of July 27,2009. In accordance with the provisions of Palo Alto Municipal Code (PAMC) Chapter 18.77.070, the Architectural Review approval will become effective 14 days from the postmark date of this letter, unless an appeal is filed in accordance with PAMC 18.77.070(e). Unless an appeal to City Council is filed, this Architectural Review approval shall be effective for one year from July 27, 2009, within which time construction of the project shall have commenced, pursuant to PAMC 18.77.090. Application for extension may be made prior to the expiration on July 27, 2010. The time period for a project may be extended once for an additional year by the Director and shall be open to appeal at that time. In the event the building permit is not secured for the project within the time limits specified above, the Architectural Review approval shall expire and be of no further force or effect. Should you have any questions regarding this action, please do not hesitate to contact Planning Manager Amy French at (650) 329-2336 or amy.french @cityofpaloalto.org. Planning 250 Hamilton Avenue P.O. Box 10250 Palo Alto, CA 94303 650.329.2441 650.329.2154 Transportation 250 Hamilton Avenue P.O. Box 10250 Palo Alto, CA 94303 650.329.2520 650.617.3108 Building 285 Hamilton Avenue P.O. Box 10250 Palo Alto, CA 94303 650.329.2496 2 650.329.2240 Sincerely, Curtis Williams, AICP Interim Director of Planning and Community Environment) Attachments: A. Findings for Architectural Review Approval B. Conditions of Architectural Review Approval (11) Natural features are appropriately preserved and integrated with the project in that an arborist report has been prepared to analyze project impacts and only specific trees identified by a certified arborist and reviewed and approved by the City's Urban Forester would be removed, with the required planting of appropriate replacement trees. The project is located in an area that benefits from the natural screening of the trees and integrates within the existing landscape; (12) The materials, textures, colors and details of construction and plant material are appropriate expression to the design and function in that they have been chosen to create a less intrusive facility that would be cOlnpatible with the adjacent and neighboring structures, landscape elements and functions; (13) The landscape design concept for the site, as shown by the relationship of plant masses, open space, scale, plant forms and foliage textures and colors create a desirable and functional environment in that the existing and new plant vegetation would provide good screening; (14) Plant material is suitable and adaptable to the site, capable of being properly maintained on the site, and is of a variety which would tend to be drought-resistant and to reduce consumption of water in its installation and maintenance; ARB findings 4,8-10 and 15 are not applicable to this project. Planning Division ATTACHMENT B CONDITIONS OF APPROVAL 4243 Manuela Avenue 08PLN-00000-00307 1. A complete copy of these Conditions of Approval shall be printed on the second page of the plans submitted for building permits. 2. Any intensification of use shall require an amended Conditional Use Permit and any other entitlements as specified in the Palo Alto Municipal Code. 3. The mono-pine shall be no taller than 45 feet and shall be placed in the landscaped area at location "N" (as noted by staff on an aerial photo during the hearing) approximately 32 feet from tree #10, at the farthest possible point in the north-west direction from Foothill Expressway. 4. Replace the seven trees to be removed at a one to one ratio in 36" to 48" box sized evergreens placed around the nlono-pine in locations to be approved by staff to ensure sight lines from the neighbors and Foothill Expressway will be adequately screened. 5. Ensure the color of the mono-pine is a green that is more compatible with nearby trees (not blue green). 6. Use native vines of a species approved by staff for screening around the fenced equipment area. The applicant shall submit a detail for the wood fence enclosure prior to issuance of building permits for staff approval. The wood shall be 'rustic' in appearance and blend with the surroundings. 7. The applicant and property owner shall comply with all tree protection guidelines specified in sections 6.1 and 6.2 of the approved arborist report prepared by David L. Babby, April 7, 2009. Sheet T-l shall be printed on a plan sheet of the building permit plan set along with the Tree Disclosure Statement with checks marked for inspections #1-6. 8. The entire arborist report shall be incorporated into the building permit plan set. 9. Trees #12, 13, 14, 15, 19, 28 and 29 as labeled in the arborist report are in the vicinity of the project and shall be removed due to their poor condition. 10. The City Urban Forester will require that specific native species of replacement trees and shrubs be planted for landscaped screening of the equipment. A site meeting between the City Urban Forester and the applicant shall occur prior to submittal of a final landscape plan in order to optimize screening as viewed fronl Foothill Expressway and from the south side property line. 11. The building permit plan set shall include a proposed landscape and irrigation plan showing trees proposeq for removal and replacement trees required per approval condition #4. The plans shall be prepared by a licensed landscape architect and qualified irrigation consultant. The replacement vegetation shall be irrigated with flexible lines and bubbler heads. Based on the outcome of the meeting between the City's Urban Forester and applicant's arborist, other plantings may be determined by the Urban Forester to be necessary to ensure screening of the mono-pine as required in association with the Conditional Use Permit approva1. 12. The landscape plans shall show any other trees, not mentioned under item #5 above, that the applicant/owner proposes to remove. Staff will inform the applicant whether removal of these trees would be approved. 13. All proposed plantings shown on the approved landscape plans shall be planted prior to final inspection approval. 14. Samples of the bark and foliage texture and color shall be submitted and approved prior to construction of the mono-pine. The mono-pine shall resemble a pine tree and its artificial trunk shall resemble a real trunk to the maxinlunl extent feasible. Cables leading to the mono-pine shall be concealed to the maximum extent feasible. 15. The antennas shall be painted to match the tree foliage. 16. The antennas shall be placed within the fake branches and shall not protrude beyond the limbs. 17. The density of the faux branch and foliage placement of the mono-pine shall have the highest density that the mono-pine structure can support. 18. Prior to granting final building inspection, the applicant shall provide a letter to planning staff indicating the following: (A) owner/operator contact information for reporting maintenance issues andlor complaints. (B) photographs from all angles of the newly installed nl0no-pine and enclosure for City records. 19. The Director of Planning and Community Environment maintains continuing jurisdiction over this Conditional Use Permit. For the life of the project, the City shall retain the right to require the mono-pine, equipment cabinet enclosure, vegetation and any other constructed elements shown in this project application to be maintained consistent with the condition at the time of granting "final" building inspection. Any violation of maintenance shall be repaired within 30 days of contact by the City. Fire Department 30. The project shall comply with the 2007 CA Fire Code section 608. Public Works Engineering 31. STORM WATER POLLUTION PREVENTION: The City's full-sized "Pollution Prevention -It's Part of the Plan" sheet must be included in the building permit plan set. \ ' \ I APN: 175-02-46 "" \ \ \ APN: 175-02-47 \ \:------------.//~-----~-----------------------~ I I \ \ \ \ \ \ \ APN: 175-02-45 I APN: 175-02-44 \ ';-- ----------_ _ _ __ _ _ __ _ _ J~P) 12' WIDE AT&T ACCESS EASEMENT \ .-(\ ~ ~ ~ ~~ \ \ \ \ I ----(E) PUBUC UTIUTIES EASEMENT \ - \ ---------------.------------__ L' \~:~~~~INE64812' ~ VAULT I --------===-==.=~~---~-=--:::-~::==-_:::__::__~ ~ -1t ______ .. !!!! -.--e ... -" \, (E)TELCO~ ~_~~---_ ~-______ _~_ 'to ~ % :z. \ \ \ 12..\"C \ \~~ omm.--~um.m=-~_~_~~ --~~~---~~~~~~~~~~~~;»;~~":\~--"-~~.~ .'f1;~ 1,,1 -~ -. -., I (E) AC ~ \ "'J,c, 1 li;-M~H t). [l· --;;; .. :;: -T -. Ii!: -~ .~. ~ \ \ ~-----(E) 43' TO 49' TAlL \\ 'Y,L \ \ SITE PLAN ~r (~I I ~ P1NE TREES. TYP. I;., -L.______ ,--'---• TYP \ I:: -l I -----1"",--"" '-" ±56'-3" . J II ----------.---.... #71 ~(E) 30' TALL OAK TREES. \ /; I Lr=L:J' 1 •• £1 o~ \ 'a b •• r-~ I~ :~.. • I ----=--=-_---=--=------J _\ • I : ; •• ••• \ / « I *-r -----.!.-\\ L 0 -, ~_!_ ______ I #6 ~ -.------l « r;--w\--.-----" .. ;.-~-.~~ __ ,c'O,"L_=_---OO.'~=E~~ .. .. '" /PRO~RTYlINENl8"27·22"W -J I I V Ii PROPERTY lINE--..J • ~ -• _ r'\.. 16.29 gj i .\;'-. S8S50'28"E 71087' --------- Z I ~ i (E) UTILITY POLE WITH I (P) 5' WIOE AT&T POWER, \ '---(E) 35.2' HIGH POWER AND « I I ~-I TRANSFORMER & (P) I EASEMENT WI U G UTILITIES (P) 5 WIDE AT&T TELCO \ TELCO POlE ~ I I AT&T POWER P.O C I EASEMENT I I (El OVERHEAO POWER LINE • " (E) 35.2' HIGH POlE & AT&T I i 0 i tl12 -6 TELCO \ I ! ~ ! APN, 175-03-30 \ I i I I APN: 175-03-29 / APN: 175-03-28 I I I I \ I I I \ i UI ~ PROPOSED AT&T EOUIPMENT@/ I I i & MONOPINE LOCATION. SEE A2 I ! --------ENLARGEO PLAN I I W-_ __ _ __ _ SPRI~~HILL ROAD MSA Ardli:~!:==g~ Inc. San Frandsco,CII 94103 4'5.50','''' fU:4I1s.503.,4I54 s..ntaANi SanDJeogo s.nF,....d:lco www.msu·ap.com ALDERSGATE METHODIST CHURCH CN3246 4243 MANUELA AVENUE PALO AI. TO. CA 94306 SANTA CLARA 7 107/08/091 LEASE AREA RELOCATION 6 106/'5/091 90" ZONING at&t 5 104/06/091 1007. ZONING 4 103/26/091 100'; ZONING 3 101/29/091 MOVE LEASE AREA AT&T Mobility AT&T Mobility SITE PLAN CN3246 CN3246-A 1 ~ -t ~ ::I: 3: m z -t (") TO: FROM: ATTACHMENT D PLANNING &TRANSPORTATION DIVISION STAFF REPORT Planning and Transportation Commission Lata Vasudevan, Contract Planner DEPARTMENT: Planning and Community Environment AGENDA DATE: June 24, 2009 SUBJECT: 4243 Manuela Avenue r08PLN-003071: Request for a hearing on an approved Conditional Use Permit application by AT&T on behalf of Aldersgate Methodist Church for a 45-foot mono-pine with concealed antennas and associated at-grade equipment cabinets. Zone District: R- 1(20,000). Environmental Assessment: Exempt from the California Environmental Quality Act per section 15301. RECOMMENDATION: Staff recommends that the Planning and Transportation Commission (PTC) uphold the Director of Planning and Community Environment (Director)'s decision to approve the Conditional Use Permit (CUP) based on findings and conditions of approval in Section 4 of the draft Record of Land Use Action (Attachment A). BACKGROUND Project Site The project site is an 118,684 square foot through lot with an existing religious institution use. The depth of the lot ranges from 648 feet to 710 feet. The existing buildings are located within the first half of the lot, while the remaining half consists of parking and landscaping. The project area contains many mature trees, comprised mostly of Monterey Pines and including Coast Live Oaks adjacent to the parking area. Single-family homes are adjacent to the project site. The closest home is on parcels 175-03-028 and 175-03-019 within Los Altos Hills; the home is under construction and is located approximately 20 feet from the project site. The closest Palo Alto home is located across Foothill Expressway, approximately 260 feet from the project site. A location map in aerial view is provided as Attachment H. City of Palo Alto Page 1 of5 • Prior Proj ect Approval On December 31, 2004, an application was filed for a CUP and minor Architectural Review by Cingular (now AT&T), for a new wireless communications facility at the Aldersgate Methodist Church site. The Director tentatively approved the application. A PTC hearing for the CUP was requested, but the Architectural Review approval was not appealed. After a public hearing on June 14, 2006, the PTC forwarded the item to the Architectural Review Board (ARB) for discussion of the pros and cons of the visual impacts of a monopole versus a mono-pine (a faux pine tree with concealed wireless antennas). The ARB recommended approval of the 45-foot mono-pine. On July 10, 2006, the City Council upheld the Director's decision to approve the CUP for a 45-foot tall mono-pine with concealed cellular antennas and associated ground level equipment cabinet within a fenced enclosure. The prior approved Record of Land Use Action (ROLUA) is attached (Attachment B) for reference. Pursuant to PAMC 18.77.090, approvals expire twelve months after approval if the proposed use of the site or proposed construction has not yet commenced. The CUP and associated minor Architecture Review approvals expired on July 10, 2007. Current Application A new application by AT&T requesting a CUP and minor Architectural Review for a wireless facility at the Aldersgate Church site was filed on September 30, 2008, showing a mono-pine located approximately ten feet from Foothill Expressway. Staff requested that the applicant relocate the mono-pine and equipment cabinet to the same location as had been previously approved by the City Council, near the rear right side of the parcel, approximately 70 feet back from Foothill Expressway and 13 feet from the side property line. The revised plan set showed the 45-foot tall mono-pine concealing nine cellular antennas and equipment cabinet enclosure located approximately 86 feet from Foothill Expressway and 15 feet from the side property line. On May 5, 2009, the Director granted tentative approvals of the CUP and minor Architectural Review with conditions (Attacbment C) based on the revised plans (received April 14, 2009). The draft ROLUA (Attachment A) includes draft CUP findings in Section 4 and conditions of approval in Section 6. Appeal and Request for Hearing On May 17, 2009, three neighbors sent correspondence (Attachment D) requesting hearings of both components of the application (CUP and Architectural Review requests) and citing a preferred location approximately 360 feet from Foothill Expressway, closer to the church building near an existing utility pole at the side property line. Two of the appellants are residents of the Miranda Green neighborhood in Palo Alto across Foothill Expressway. The third appellant is the owner of adjacent home under construction in Los Altos Hills; this appellant requested placement of the mono-pine on the other side of the parking lot (near the north side property line). The applicant responded that this location would not work since existing trees would block reception. Additional neighbor correspondence in support of the project was also received (Attachment E), and applicant correspondence is provided as Attachment F. SUMMARY OF LAND USE ACTION: The PTC's purview is to conduct a hearing on the CUP and review the project's consistency with the required findings for granting a CUP pursuant to Palo Alto Municipal Code Section City of Palo Alto Page 2 of5 18.76.010(c), which is limited to: 1. Finding that the project will not be detrimental or injurious to property or the public health, safety and welfare, and; 2. Finding that the project is located and conducted in a manner consistent with the City's Comprehensive Plan and zoning. SUMMARY OF KEY ISSUES: Increased Setback and Zoning Compliance In an effort to accommodate the appellants' preference, the applicant has modified the proposal to increase the proposed setback from Foothill Expressway by another 90 feet. The table below indicates the project's compliance with height and setback regulations for the R-1 Zone District: * ** Development standards Proposed project R-1 (20,000) Zone District Standard Front setback Complies 40', Special Setback Rear setback 176' 20'* Side setback 15' 8' Height 45' 65'** This segment of Foothill Expressway, on the westerly side, does not have a special setback, whereas the opposite side of Foothill Expressway has a 60' special setback. PursuanttoPAMC Section 18.42.110(c). The newly proposed location of the equipment enclosure and 45-foot mono-pine would be approximately 176 feet from Foothill Expressway, a dramatic change in setback from the tentatively approved 86 foot setback. This revised location is approximately half the 360 foot distance desired by the appellants. Nonetheless, the applicant has indicated to staff that this is the farthest distance that the proposed wireless facility could be situated from Foothill Expressway because the Church bas plans to expand the rear of its existing building in the future. The proposed revised location of the mono-pine would be adjacent to parcel 175-03-029, where there appears to be many screening trees as shown on the project plans (Attachment 1). Staff recommends the revised location. The draft ROLUA specifies the revised location at approximately 176 feet from the rear property line. Trees At staff's request, the applicant submitted an arborist report reviewing potential impacts to trees and the condition of existing trees in the rear parking area (Attachment G). The report was reviewed by the City's Planning Arborist, who recommended that specific Monterey pines (trees #12-15, 19,28 and 29 as labeled on the arborist report) be removed due to their poor condition and beetle infestation. Staffhas required that specific native species of replacement trees and shrubs be planted for landscaped screening of the equipment. These planting requirements are City of Palo Alto Page 3 of5 included in the draft ROLUA conditions of approval, which also require a meeting with staff prior to submittal of a fina1landscape plan to ensure adequate screening as viewed from.Foothill Expressway and from the south side property line. Additional approval conditions relate to the mono-pine's appearance and maintenance, including but not limited to required replacement of aged or faded plastic foliage. POLICY IMPLICATIONS The Federal Communications Commission (FCC) Telecommunications Act of 1996 sets forth regulations for radio frequency emissions. Attachment F includes the Radio Frequency Report submitted by the applicant, which indicates that the project is in compliance with FCC regulations for radio frequency emissions. The proposed telecommunications facility is consistent with the Comprehensive Plan Policy B- 12 which states that the City supports the development of technologically advanced communications infrastructure and other improvements that will facilitate the growth of emerging telecommunications industries. Staff believes there are no other substantive policy implications. TIMELINE Application Submittal Tentative Approval of CUP and Minor Architectural Review Appeal and request for hearing filing date Architectural Review Board Public Hearing Planning and Transportation Commission Hearing ENVIRONMENTAL REVIEW: September 30, 2008 May 5, 2009 May 17, 2009 June 18,2009 June 24, 2009 This project is categorically exempt from the California Environmental·Quality Act (CEQA), pursuant to CEQA guidelines Section 15303 as construction and location of one new, small structure. ATTACHMENTS A. Draft Record of Land Use Action B. Record of Land Use Action No. 2006-05 C. Minor Architectural Review and Conditional Use Permit Letter, dated May 5, 2009 D. Correspondence (appellants' emails re: appeal of CUP and request for hearings) E. Correspondence (emails supporting proj ect) F. Information Submitted by Applicant and Applicant Response letters* G. Arborist Report, dated April 7, 2009, Arbor Resources* H. Project Location Map and Aerial Photo I. Project Plans (Commission Members only)* *Submitted by the Applicant City of Palo Alto Page 4 of5 COURTESY COPIES: Jacqueline Smart, Cortell LLC Aldersgate Methodist Church (Ed Nieda) Jackie Berman -Dan Askari Marina Chudnovskaya and Gregory Rayzman RohinMay PREPARED BY: Lata Vasudevan, Contract Planner . REVIEWED BY: Amy French, Manager of Current Plannin~ DEPARTMENTIDIVISIONHEAD APPROVAL: ___ {);:J_-_~_· _) _____ _ Curtis Williams, Interim Director City of Palo Alto Page 5 of5 ATTACHMENT E 1 Planning and Transportation Commission 2 Verbatim Minutes 3 June 24, 20Q9 4 5 EXCERPT 6 7 4243 Manuela Avenue*: Request for a hearing on an approved Conditional Use Permit 8 application by AT&T on behalf of Aldersgate Methodist Church for a 45-foot mono-pine with 9 concealed antennas and associated at-grade equipment cabinets. Zone District: R-1 (20,000). 10 Environmental Assessment: Exempt from the California Environmental Quality Act per section 11 15301. 12 13 Ms. Amy French. Current Planning Manager: Oh yes. This hearing as you noted was requested 14 by neighbors challenging the Planning Director's Decision or tentative approval of the 15 Conditional Use Permit and Architectural Review of the faux pine tree, or mono-pine, antenna 16 within a landscaped area on the church property. The neighbors are here tonight to speak. There 17 are three of them and one of them is a future neighbor of a Los Altos Hills property and the other 18 two are Palo Alto neighbors living on Miranda across from Foothill Expressway. 19 20 The Architectural Review Board conducted a hearing last Thursday, so it is hot off the press, and 21 they voted three to one to conditionally approve the mono-pine's location 187 feet from Foothill 22 Expressway. Please note that the Record of Land Use Action, which was sent out the day of the 23 ARB, would need to be amended to include the ARB conditions from last Thursday going 24 forward to Council. 25 26 Please note also in the Staff Report on page 5 it references 176-foot setback from Foothill. This 27 was in error. This was a draft initial estimate that was then corrected with accurate architectural 28 plans that you have before you. 29 30 The proposed mono-pine would be about 23 feet from the adjacent property owned by Miss 31 Robin May who is a Los Altos Hills resident, who has informed Staff she does not object to the 32 proposed location. This is the closest neighbor. It is 62 feet from Mr. Askari's future home 33 property. 34 35 The three additional conditions from the ARB, which I believe got sent to all of you on the 36 Commission some days ago was to replace seven trees on the property at a one-to-one ratio, 24- 37 inch box to 36-inch box size evergreens placed around the mono-pine for screening in locations 38 approved by Staff. This was recommended in conjunction with our Planning Arborist, Dave 39 Dockter. The second condition would be to ensure that the color of the mono-pine is not blue- 40 green but a color that is more compatible with the nearby trees, to use native vines of a species 41 approved by Staff for screening around the fenced enclosure. 42 43 So prior to the ARB meeting Staff had met onsite with Mr. Askari upon his request. He is 44 building his home there adjacent to Foothill Expressway on the south side of the church property. 45 He had suggested at that time that the mono-pine be located in the parking lot between two sets 46 of pine trees, trees 67 to 73 on your Arborist Report and hopefully you have a copy of that. The Page 1 1 other appellants expressed support for that location. So that was brought up to the ARB. Also, 2 the dissenting member of the ARB, who voted no on the project, had also visited with Mr. Askari 3 prior to the ARB meeting and he suggested a parking lot location just due east of the trees, trees 4 71 to 73. 5 6 So during the ARB meeting Mr. Askari provided the same photomontage images to the ARB as 7 were forwarded to the Commission via email earlier this week but with a different statement as 8 to what he wanted. The aerial photo simulation Mr. Askari created shows the construction of his 9 home to be quite close to the property line of the church. Staff had requested a site plan of Mr. 10 Askari's home for the Con1fl1ission's consideration to clarify the actual setbacks and was finally 11 able to get a small image of an approved site plan from the City of Los Altos Hills. The site plan 12 shows the guesthouse located 30 feet from church property on the side. Then his home is located 13 about 75 feet from the church property. I can maybe ask Dave to put up a copy of this for 14 clarification, drawing a line from the comer of the guesthouse to the proposed location itappears 15 that the mono-pine would be approximately 107 feet fron1 Mr. Askari's guesthouse. So if you 16 can make heads or tails ... Dave can you point out? The guesthouse, and then the church property 17 are just to the north. The tree is not really showing on there. 18 19 Dave also has the site plan of the mono-pine. I have done a little drawing on that site plan if you 20 want to put that one up too to clarify. So I drew in based on the site plan I received as best as I 21 could. The guesthouse is 45 feet from that comer of Mr. Askari's property and then it is another 22 62 feet to the monopole, between the comer of Mr. Askari's property to the monopole that is 23 proposed. 24 25 So after the ARB meeting, on Monday of this week, Staff met with the applicant and the church 26 representatives. We looked at the parking lot location amongst the trees that Mr. Askari and the 27 neighbors across Foothill Expressway had requested during the hearing. We discussed that and 28 determined that we are not supportive of that location because it would require a taller pole due 29 to the presence of taller trees. The taller pole would have to be 65 feet to get above the trees. 30 Sixty-five feet is the maximum allowable height for these monopoles and mono-pines. It would 31 also be closer to a Palo Alto neighbor on the north side of this property who is not in the country 32 now to protest. She has no screen trees on here property and there was really not much room on 33 the church property to prove screen trees if that were to be put in that location. 34 35 There are two more reasons. The boring for connections to this location would harm healthy 36 parking lot trees because the roots are closer to the surface than those trees that are in the natural 37 landscaped area. Then also parking spaces would be lost and the church does plan to expand in 38 the future and loss of parking spaces would be detrimental to their future plans. 39 40 The other alternate location Staff had studied onsite with the church on Monday is not in the 41 parking lot. It is just another 55 feet farther west from Foothill Expressway, from the proposed 42 location. We studied that. It was about 124 feet from Mr. Askari's property and 242 feet from 43 Foothill Expressway. However, then we learned that the location again was close to trees, would 44 require the monopole to be about 60 feet to be able to transmit above the height of the trees. Of 45 course 60 feet would be more visible to more people and so that was hard. Now the AT&T Page 2 1 engineer is here tonight to answer questions on heights and transmitting above trees, the 2 technical information. 3 4 Mr. Askari in his statement to the Planning Commission noted now he is interested in having it 5 to the east of trees number 71 to 73. He is asking the Planning Commission to require the 6 applicant to plant seven to ten 72-inch box screen trees on his property. His email statement was 7 forwarded to the applicant for their consideration and the applicant of course is here to provide a 8 response to his request. Also, he has a photo, not a photo simulation, taken fron1 the church site 9 showing the existing vegetation that would buffer from Mr. A.skari' s property the proposed pole. 10 11 Then finally, I wanted to say that Judith Wasserman is here from the ARB, who can represent the 12 ARB. Also, we did get Commissioner Keller's questions today. They are at places with 13 responses. Just briefly the Metro PCS does have an application on file. Metro PCS would co- 14 locate on this mono-pine if approved and they would put their antenna below the antenna for 15 AT &T among the branches. I think I covered n10st of the other questions in my presentation. 16 There was a note about the photo simulation provided. I think Mr. Askari may pass that out to 17 you tonight as well. Staffhad commented on the photo as to the height of the mono-pine relative 18 to the existing vegetation. The vegetation there, the oaks along the property line are 19 approximately 30 to 35 feet, the mono-pine that Mr. Askari shows in his photo simulation looks 20 like about 60 feet and it doesn't show the screening in front of it that is existing. 21 22 Then the other thing is we did ask AT&T to comment on the parking lot suggestion of 176 feet 23 from the rear property line. The Palo Alto neighbors on the other side have stated that they do 24 not support a location closer to Foothill than the ARB recommended 187 feet. 25 26 Finally, the next steps of this are for Planning Comn1ission recomn1endation to Council. The 27 CUP would go to the Council on Consent, it would take three votes to pull it off and schedule a 28 hearing if they wanted to. After this meeting we can make a second ARB decision and then that 29 could be appealed to the City Council again on Consent, three votes to pull it off and potentially 30 schedule it for a public hearing. 31 32 Chair Garber: Thank you for that thorough presentation. Now would be the tin1e for the 33 appellant presentation. I have three cards here, do I understand that these are the appellants Mr. 34 Askari, Ms. Chudnovskaya, and Ms. Berman. 35 36 Ms. French: Technically they are not appellants they are hearing requestors at this point. They 37 have 15 minutes as a group. 38 39 Chair Garber: Okay, so the hearing requestors, are these the three? 40 41 Ms. French: I guess because they are not appellants would the applicant have a chance to go first 42 then? Applicant should go first then. 43 44 Commissioner Keller: Wouldn't it make sense since this sort of like an appeal for the requestors 45 to go first and then for the applicant to respond, and the appellant to have a reply? 46 Page 3 1 Ms. French: Or it could be the applicant presents, the hearing requestors go. 2 3 Chair Garber: There are closing comments by both parties. 4 5 Commissioner Holman: Point of order. 6 7 Chair Garber: Commissioner Holman. 8 9 Commissioner Holman: Our agenda states that after Staff presentation and recommendation the 10 appellant presentation is first not the applicant. 11 12 Chair Garber: But the question of the moment one of definition. Can we refer to these as 13 appellants and therefore they go first. Would the attorney provide some direction, please? 14 '15 Commissioner Holman: If I might as a part of this point of order, in the past if I am not mistaken 16 and perhaps Ms. French can correct me or confirm, in the past we have considered those who are 17 asking for a hearing the same as appellants. Not that it makes any difference but I just think we 18 ought to be consistent in our approach. 19 20 Ms. Tronquet: Why don't we have the people who requested the hearing go first to stay 21 consistent with the process on our agenda but we will clarify that they are not technically 22 appellants, they have requested this hearing. 23 24 Chair Garber: Will the non-technical appellants please rise and address us in the following 25 order. Mr. Askari, Ms. Marina Chudnovskaya, and Ms. Jackie Berman you will each have five 26 minutes totaling 15 minutes. Mr. Askari 27 28 Mr. Dan Askari, Palo Alto: Good evening. I am going to pass out some handouts if it is okay 29 with you. I made copies already prior to knowing that you would have these already but it will 30 be a waste. I sure appreciate it. 31 32 Good evening. My name is Dan Askari. I have lived on Manuel Avenue in Palo Alto for the last 33 ten years. I have had my business in Palo Alto for the last ten or 11 years based here in Palo 34 Alto. Of course I am building my house at 25838 Springhill, Los Altos Hills which backs up to 35 the church's property. The church's parking lot is actually my backyard. 36 37 I should give you a little bit of history. AT&T obtained their permit a few years ago and there 38 was no urgency or no need for them at the time and they just let the permit expire. They come 39 back and when I purchased the vacant land I did it with the understanding that AT&T's tower is 40 not going to be there. Of course they come back and they are not being very sensitive to the 41 issue that the permit has expired and they had their whole argument before that they are totally 42 friendly to neighbors. This is in their report they are 300 feet away from the closest home. Now 43 they have a different tone. They say 20,30,40 feet it is still okay. I beg of you, the past 44 argument should not be based on what they are currently saying. They totally changed their tone 45 as to what they are saying. Whether it is 20 feet or 30 feet or 50 feet based on the Staff Report 46 the cell tower is really about 50 or 60 feet away from my home. Whether it is the guesthouse or Page 4 1 if it is the main house it is from the living area. These fake trees they look fake from 500 feet 2 away. They look more real from 500 feet away but then they are really so close to you they look 3 totally different. 4 5 If I may make a suggestion that when Staff comes and say it is from the nearest Los Altos Hills 6 neighbor I feel absolutely like a second-class citizen. I live in Palo Alto, and I work in Palo Alto, 7 I have my business in Palo Alto. There is no need to have a distinction between a Palo Alto 8 resident or a Los Altos Hills resident. I really don't understand the reason for that. They talk 9 about that, that it is a Palo Alto resident versus the Los Altos Hills resident, if I could say that. 10 11 At the ARB meeting I thought that since there is a cluster of trees, if you look at the Google map 12 in your handout. There is a cluster of trees in the parking lot, which I thought might be a good 13 location for the cell tower to go. Then I guess it wasn't really acceptable to thenl. The parking 14 lot is 95 percent of the time, if you look at the Exhibit F, 95 percent of the time it is vacant. I 15 live on Manuela and I go for a walk every day and I see maybe only on high holidays that it is 16 maybe 30 percent full. So the new location that I have in mind is still 176 feet per Staff 17 recommendation and it will be on the parking lot, which provides some screening from my 18 house, and losing two or three parking spaces is really not that detrimental. They are generating 19 very healthy income of $24,000 a year from AT&T and I am sure they can afford to rearrange a 20 couple of parking spaces for that. I don't think it is really asking too much. This is a two and a 21 half acre property, the church is, and they don't really have to shove it to being so close to the 22 Los Altos Hills neighbor. 23 24 If I could conclude very quickly that I really appreciate the time. I don't think it is really asking 25 too much if they could put it in the middle of the parking lot and have some screening on my 26 side. Not 24-inch boxes, not 36-inch boxes, this is AT&T I don't think they are going to go 27 broke. Why ask for 24 or 36-inch boxes? If I can have some screening on my side I don't think 28 I anl asking too much. I had a discussion with Mr. Dockter here and he also concurred that the 29 middle of the parking lot where I am proposing the new location is not going to be detrimental to 30 the trees. Believe me, if you look at the picture on Exhibit F that shows the parking lot 95 31 percent of the time that is what you see. I really don't think the parking spaces mind looking at 32 the cell tower. Thank you so much again for your time. If I can answer any questions I will be 33 more than happy to. 34 35 Chair Garber: Thank you. Marina Chudnovskaya followed by Jackie Berman. 36 37 Ms. Marina Chudnovskaya, Palo Alto: Good evening and thank you. Our home is on Miranda 38 Green and that is directly across from the Foothill Expressway, about 130 feet from the 39 Aldersgate Church property. It is facing the side of Foothill and the proposed project site, which 40 is clearly visible from my front door. I would like to point out that what is being referred to as a 41 rear area of the parcel or back of the church property throughout the documentation is very much 42 front for us. 43 44 First I would like to thank City Staff and especially Amy French who joined this ongoing 45 discussion about the specific location for this facility fairly recently and was able to listen and Page 5 1 understand our concerns right away. Over the past week Amy has been working with all the 2 parties involved to find the most appropriate solution. 3 4 Now I have a few points to make. First, our preference has been and remains that a suitable 5 location outside the church property could be identified as required by the additional submittal 6 requirements, wireless communication facilities document from the City that I am holding in my 7 hand. The first two points call for detailed statement including documenting efforts to negotiate 8 collocation with existing wireless facilities in the area. Also a detailed statement documenting 9 the consideration of alternative project locations. I just don't believe that this document has been 10 completed. Alternative locations for this project need to be fully explored and one such possible 11 location is northwest comer of the Foothill-Arastradero intersection. There is vacant land there 12 and we discussed that at the ARB hearing. I don't think that that location received all the 13 attention it could have. Another is perhaps upgrading the existing facilities at the VA Hospital 14 that is identified as SF0512 at 3801 Miranda Avenue, which is about 500 feet north of the 15 Foothill-Miranda intersection. The other one is CN3183 at 3401 Hillview Avenue, which is 16 approxinlately a half-mile northwest of Arastradero-Foothill. Therefore, perhaps the 17 Commission could ask for a continuance to identify alternative location that is superior to the 18 one before you. 19 20 Now if no other location outside the church property can be identified then I do believe that 21 placement at 187 feet from the Foothill on the parking lot, like Mr. Askari was suggesting at the 22 hearing, would be the most appropriate to all parties involved. 23 24 Regarding the alternative site that was considered on Monday by City Staff and the church and 25 the applicant and was rejected because AT&T is stated that a 60-foot mono-pine would be 26 required at that location. That is not clear because the ground at that location is higher. So the 27 trees are not taller than those in the location that was approved at the ARB. Only one tree on the 28 entire property that is higher than the rest of them is number 44 according to the Tree Inventory 29 Table in the Arbodst Report. That tree is bordering the church property line at the lowest 30 possible elevation level. Why then would a '15-foot higher polebe required there? Ijust don't 31 understand that. Additionally, I do believe that electromagnetic waves are not obstructed by 32 trees and there shouldn't be a requirement to get above thenl. 33 34 For instance there is another mono-pine tower CA2288H constructed and operated by Nextel in 35 Mitchell Park at 3860 Middlefield Road. It is no taller than surrounding trees of which there are 36 plenty. There is a flat area everywhere that provides no elevation change there. I have 37 photographs of the Nextel mono-pine and sent them to City Staff so you could see for yourself 38 that is it just as high as every tree around it. That's that. 39 40 Now regarding the existing antennas on the Veteran's Hospital. 41 42 Chair Garber: Can you just sum up in a couple of sentences? 43 44 Ms. Chudnovskaya: I am sorry. That is basically all I wanted to say and this project has been in 45 the works for 13 years since the church property first had been chosen in June of 1996. Things 46 have changes dramatically since then and this project has been ever expanding. Prior to 2005 it Page 6 1 was a 40 foot antenna and then it became 45, the amount of antennas increased from 69, the 2 associated equipment, the fence enclosure, future collocations, all of these things, and the one 3 thing that remains constant through several rounds is just that it is on the church property. So I 4 just really sincerely believe that there should be exploration of other locations as required by the 5 City. Thank you very much for your time and consideration. 6 7 Chair Garber: Thank you. Jackie Berman, our last non-technical appellant. 8 9 Ms. Jackie Bemlan, Palo Alto: Thank you very much. I am going to wrap this up quickly. We 10 live on the east of the expressway so the discussion you were having about the Miranda 11 Arastradero intersection, while Miranda Avenue is the entrance to our neighborhood there on the 12 east side of the expressway and the back of the cemetery. So I appreciate all the details you did 13 go into on that issue. 14 15 I too want to say that we in our neighborhood appreciate the hard work and sincere attempt to be 16 responsive to us citizens by Amy French on an issue of where an antenna to provide cell phone 17 reception to our neighborhood can and should be located. As I said at the ARB we are not 18 opposed to cell phones, but it is an appropriate location that is the only issue. At the time I put 19 together these comments there were many different locations kind of floating around so I wasn't 20 sure what I was responding to. So I am just going to make a few conceptual comments. 21 22 One, if a suitable location could be identified outside of the R-l zone such as by upgrading the 23 existing antennas at the Veteran's Hospital and in the Stanford industrial park that would be our 24 first preference. We did today email the representative of AT&T and asked if that could be 25 done. She said that she would consult with the engineers about that question. So in my mind 26 that is still an open question. 27 28 Number two, ifit is not possible to find another location and the only location is the R-l zoned 29 church parking lot then we ask that the antenna be placed no closer than 187 feet, which is what 30 the map there shows from the Foothill Expressway. That is the accurate distance from the 31 expressway. We also ask that the conditions attached by the ARB be supported by members of 32 this Commission so that adequate screening will be provided. 33 34 I do support what my other neighbors said but I tried to sum it up somehow. Good luck. Thank 35 you. 36 37 Chair Garber: Thank you. Is the applicant here to make a presentation? If you would identify 38 yourself when you approach, and you will have 15 minutes. 39 40 Ms. J acgueline Smart, Applicant: Good evening Commissioners. I am here representing AT&T. 41 Ijust wanted to give you the basic objective. The basic objective of this site is to provide 42 cellular coverage along Foothill Expressway from Arastradero down to Edith Avenue, and also 43 in the residential areas along Raquel Avenue, Miranda Avenue, and Escobita. One of the 44 difficulties of providing service in areas like this is that there are little to no buildings or 45 structures to locate these equipments on. We have done extensive research to come up with a 46 location that we are at right now. Page 7 1 2 This is the third location that we have shown to Staff on drawings for this site. The first site was 3 too close to Foothill boulevard so we moved it approximately 80 feet. Then this location that we 4 are at right now we moved it another 90-something feet to make it 186 feet. So we are sensitive 5 to the comments from the neighbors and we are trying to come up with a solution that will best 6 suite both of us, us providing the necessary coverage that we need to provide and to also mitigate 7 any views to the neighbors. 8 9 In considering the current location we really took a look at all the existing screening that was 10 there provided by the 30-foot oak trees that we still think will provide adequate screening of our 11 antennas from Mr. Askari's property. We have also noted to Staff that we are willing to add 12 additional trees along the property line and also around the equipment enclosure. I have also 13 discussed this with the City Arborist and we provided an arborist report showing the existing 14 trees and we have gone with the recommendations of our arborist. 15 16 The new location proposed by Mr. Askari that we received on Tuesday to consider, I have 17 mentioned it to the church and the first thing -they are concerned about losing four parking 18 spaces because they are trying to grow their membership and it would stunt any future expansion 19 that they are considering. It would limit them to this four less parking spaces. This new location 20 too, I believe will be more visible because there are no trees immediately surrounding it to screen 21 it from view from Foothill Expressway. 22 23 I took a photograph of the proposed location from the church's parking lot that I believe will 24 show you the existing oak trees. 25 26 Chair Garber: There is a portable microphone. 27 28 Ms. Smart: Sorry about the glare there it is a glossy photograph. I wanted to point out that this 29 stump here indicates the approximate proposed location of the tree pole and these are the trees 30 bordering the church's property and Mr. Askari's property. 31 32 Mr. Askari's photos that he provided to the Commission I wanted to point out that they are not 33 accurate. This is the photo simulation provided by Mr. Askari. I want to point out that the 34 proposed tree pole is actually on the opposite side of the trees not immediately in front of Mr. 35 Askari' s property. That the utility pole here that we are looking at just to give you a scale, the 36 utility pole here existing is 35 feet and the tree pole we are proposing is 45 feet. The pole shown 37 in Mr. Askari's photo simulation looks twice as tall as this utility pole from the photo simulation. 38 I also wanted to point out that also in one of Mr. Askari's exhibits showing his new home 39 relative to the proposed location, he shows the location here, and in fact it is on the opposite side 40 of the oak trees, which would put the site approximately here. So there is adequate screening 41 existing. Again, we have proposed and agreed to the condition to add more screening between 42 the properties. 43 44 I am here to answer any questions you may have about the project. 45 Page 8 1 Chair Garber: Thank you. Commissioners, this is the time for questions, at which point we will 2 go to the public although I have no cards. Then the applicant will have the opportunity to make 3 any closing comments and the technically non-appellant will have the same opportunity. Before 4 we start however, does the Attorney have any instructions that they would like to give the 5 Commission? 6 7 Ms. Tronguet: The scope of your review tonight is a Conditional Use Permit. The scope of the 8 findings you need to make are on page 3 of your Staff Report. There are two findings. One that 9 the project will not be detrimental or injurious to property or the public health, safety, and 10 welfare, and a finding that the proj ect is located and conducted in a manner consistent with the 11 Comprehensive Plan and zoning. You are also relatively restricted in the extent to which you 12 can limit cellular towers. Cities can only regulate placement, construction, and modification of 13 wireless telecommunication facilities. So the two findings that are described in the requirements 14 for considering Conditional Use Permits sort of frame that scope for you pretty well. It is related 15 to the Comprehensive Plan and zoning and not injurious to the public health, safety, and welfare. 16 I think if you stay within the scope of the CUP requirements tonight you will also be within the 17 requirements for evaluating wireless telecommunication facilities. 18 19 Chair Garber: Thank you. One other background question. Am I recalling correctly that when 20 the Commission first or I should say last heard this item it was approximately four years ago? 21 Three and a half or four years ago? 22 23 Ms. French: Yes, it was 2006. So it expired 2007. 24 25 Chair Garber: So there I think three ofus on the Commission for that at that time that are here 26 now. Commissioner Lippert. 27 28 Commissioner Lippert: I remember the first time we saw this project. We were breaking new 29 ground in terms of some of the state and federal laws regulating this. At that time it was really 30 wide open and I remember we worked with Don to sort of narrow the focus. I think one of the 31 things we did was we actually said we didn't want cell towers in single family zones. I think that 32 was part of the instruction that we had given Staff at the tinle and was part of the regulations that 33 we had drafted. I am just asking this as a question because we allowed it in this particular case 34 but then when it canle back to us on a variety of cases we began to narrow where they could be 35 and we at the time, again I am getting old here and I am trying to recollect what the discussion 36 was, but we had actually looked at preferring it to be where normal utility poles or utility 37 infrastructure would be, which would be in the public right-of-way rather than actually being on 38 an R -1 property. Now, I know that this is a church property that is on an R -1 zone and that is 39 permitted under RLUIP A but this is accessory to that and that would fall under our normal 40 zoning, correct? 41 42 Ms. French: I know Curtis is looking up the zoning. I remember the meeting you are referring 43 to because I believe that was about the faux magnolia over at the Blockbuster site. There was a 44 discussion that was related to the right-of-way versus private property and pole versus tree. I 45 remember very well that discussion. 46 Page 9 1 Commissioner Lippert: Right, I remember that discussion also. In fact, Dr. Dockter was on the 2 news talking about faux trees. 3 4 Ms. French: Steel Magnolia, I think was the title of that article. 5 6 Mr. Curtis Williams, Interim Planning Director: Part of the Zoning Ordinance Update you 7 adopted a section of code on wireless communication facilities. It does not in any way prohibit 8 location in residential zones. What it does is it differentiates when a Conditional Use Permit is 9 required as opposed to when it is permitted without a use permit and just an Architectural 10 Review. So the Architectural Review is if it is a building mounted project that does not exceed 11 the roof height of the building, and a couple of other facilities. Then a Conditional Use Permit 12 and Architectural Review are required for projects that are located on residentially zoned parcels. 13 14 Commissioner Lippert: Maybe that was it. 15 16 Mr. Williams: And located on a parcel with residential use or if it is a standalone wireless 17 communication facility, which this is. So it just differentiates the review criteria and then says 18 that the antenna shall be designed to minimize visibility offsite and shall be of a stealth design, 19 which is what a tree pole is. 20 21 Commissioner Lippert: Yes, I think it is coming back to me now a little bit more. What we 22 adopted at the recommendation of Staff was a CUP and the reason why we picked that as a 23 vehicle is if you take a very large residential area it wouldn't have any other zoning in that area. 24 If you lost cell coverage in terms of the antenna working that I think was the issue. So in this 25 case it is around a bunch of other similar R-l zones so it would be difficult finding another type 26 of zone that you could locate an antenna. Okay, I answered my own question. Thank you. 27 28 Chair Garber: Commissioner Fineberg and then Keller. 29 30 Commissioner Fineberg: In Attachment D from Dan Askari and the other individuals who have 31 requested this hearing, it talks about a requirement to conform with the Palo Alto application 32 process by submitting some additional docunlentation. Can Staff comment on whether the 33 application has been deemed conlpleted and whether or not this additional requirement has been 34 fulfilled or is even a legitimate requirement? 35 36 Ms. French: Well, the application was deemed complete because it was tentatively approved. It 37 would not have been tentatively approved unless the Staff that was working on it had determined 38 the application was complete. There is in the file a radio frequency analysis, a visual on the 39 areas surrounding the site, and coverage with and without the proposed cell site. So there is 40 sonle analysis. It was determined to be complete by the Staff that was processing the 41 application. 42 43 Commissioner Fineberg: Thank you. Then further down on that page there is an assertion that 44 the applicant has failed to consider all other valuable conlmercial sites, and it goes on to name 45 several. Is the applicant under any responsibility? Is there a requirement that they rule out all Page 10 1 other sites or can they through their own internal process pick the best site they want and bring 2 us one site? 3 4 Ms. French: I believe that is the case. They can propose a site and we can accept their analysis 5 or not. 6 7 Commissioner Fineberg: Okay, so there is no requirement under state law or City code that 8 other viable alternatives be ruled out? 9 10 Ms. Tronquet: No. 11 12 Commissioner Fineberg: Thank you. A question for the ARB representative if this might be an 13 appropriate time. It was mentioned earlier that one member, actually let me word it differently. 14 Maybe you would like to represent the majority opinion and then I anl particularly curious about 15 the one member who dissented and voted to deny approval. Could you give us a characterization 16 of what issues came up and why they dissented? Thank you. 17 18 Ms. Judith Wasserman, Architectural Review Board: The majority position was that with the 19 conditions the proposed site was adequate. The dissenting member thought that a place in the 20 parking lot -there were several places in the parking lot that were discussed. In a way this was a 21 little bit of a design charrette rather than a review of an application. We ended up finally 22 reviewing the application and not 17 other sites. But he thought that a site in the parking lot 23 would have been better. The majority felt that the problem with the fake trees is that they look 24 fake and if they are not surrounded with similar type species, like if you put a pine tree among 25 the oaks it looks funny. So because Mr. Dockter had recommended that certain pine trees on the 26 site were failing that they should be removed and replaced with new pine trees. If those were 27 located near the proposed fake pine tree that the whole thing, and then the color too would be 28 better matched than the ones they have, and the whole thing would blend in together. Combined 29 with the oak tree screening that is existing it is a little hard to know exactly what you are going to 30 see unless somebody puts a story pole up there because the sightlines go through the trees and 31 through all kinds of shrubs and screening, and it is a little hard to tell exactly what you are going 32 to see. It was our opinion that surrounding the tree with like type trees would cause it to 33 disappear as much as possible. 34 35 Chair Garber: Perhaps before we go to Commissioner Keller this would be a good time to 36 remind the Commissioners that we are not are you completed? I apologize. I thought you 37 were giving me the nod. 38 39 Commissioner Fineberg: I am sorry I thought you might have wanted to keep the ARB 40 Representative up for other Commissioners. I would be happy to cede if other members have 41 questions but I have one more. 42 43 Chair Garber: Please finish up. 44 45 Commissioner Fineberg: Okay. I don't know if this is more appropriately addressed for Staff or 46 the applicant but could we get some clarification about whether RF signals are blocked by Page 11 1 adjacent trees? I am a bit confused by the desire to have the pole surrounded by trees so that it 2 screens the monopole but then also hearing information that it has to be taller than the adjacent 3 trees. So does it need to be standing alone or does it need to be surrounded? If it needs to be 4 surrounded does it matter whether the trees really are taller than the faux tree? 5 6 Ms. French: This is definitely within the realm of the applicant's engineer who is here. 7 8 Chair Garber: As you approach would you identify yourself? 9 10 Mr. Ali Areefin, Engineer for AT&T: To answer your question antenna radiation pattern clears a 11 near field and a far field. Now for our frequency the near field would be about 20 to 24 feet. We 12 use two different frequency bands one is 1900 megahertz and the other is 850 megahertz. So if 13 trees are within the near field, which is about 24 feet for 1900 and then about 30 feet for 850-. 14 megahertz band, then the signal loss within the near field is much greater than the far field. That 15 is natural loss. Then the fullest loss if the trees at the same length and height within 24 feet the 16 fullest loss is also greater if the trees are in the far field. That is basically electromagnetic wave. 17 That is natural signal loss. 18 19 So the goal is to avoid trees within the near field of antenna. So in our case 24 feet roughly 20 would be the near field tree zone. If we go higher than the tree for something that has vertical 21 radiation pattern and then horizontal radiation pattern, and the vertical pattern also needs to be 22 clear. So any time trees are within the near field and signal traveling through the'trees of course 23 there is higher loss. That is the basic phenomena of signals. 24 25 Commissioner Fineberg: So the proposed location for the antenna, if I understand the drawings 26 right, and forgive me if I am getting confused with three locations being thrown around and 27 different distances. Is the proposed location screened with trees within' 20 feet or the proposed 28 location has the trees more than 20 feet away? 29 30 Mr. Areefin: I have some propagation plots and if you allow me I could share them. I have two 31 locations. One has trees estimated 35 feet but they are not within 20 to 24 feet. They are outside 32 that near field of the antenna. So that would be less problem for signals. The second location I 33 have has about 45-foot tall trees, which are within ten feet of the second location. That would be 34 a problem because trees would be within the near field of the antenna and then the loss would be 35 like I said, signal loss is in the near field itself even without any obstruction it is greater and with 36 trees is even farther. 37 38 Commissioner Fineberg: Is the first location the proposed location, the application? And the 39 second location, is that closer to Foothill or where Mr. Askari wants it in the middle of the 40 parking lot? 41 42 Mr. Areefin: The second location would be farther from Foothill Expressway. 43 44 Commissioner Fineberg: Isn't that the proposed location? 45 46 Chair Garber: Could we get a map so we could know what we are talking about here? Page 12 1 2 Commissioner Fineberg: So my questions don't seem random, what I am trying to figure out is 3 if it is being screened now by trees in the proposed location or if it is clear how that compares 4 with the location proposed by Mr. Askari. So that is where I am trying to go with this. 5 6 Chair Garber: Forgive me, Amy could you focus that a little bit? Would you put like an A, B, 7 and C or something next to these various locations? I think you need to focus the top. The lens 8 itself will only focus the zoom. 9 10 Now if it is possible can we get an arrow and like an A, B, or C? 11 12 Ms. French: So the issue is that we have this site plan that was prepared --- 13 14 Chair Garber: So this is the application as submitted? 15 16 Ms. French: The application that has been submitted shows -this is the site plan on the project 17 plan set. These trees are not quite right. They are small. They are not showing the right canopy 18 and they are not placed as they are in the Arborist Report. 19 20 This is the proposed location. This is location Y and put a Y there. This is the location that Mr. 21 Askari is proposing as of yesterday. This was the location that was proposed at the ARB by the 22 neighbors and Mr. Askari. This is the location that Staff was out at the site on Monday looking 23 at, and the engineer is saying it is too close to this tree. I would think somewhere in this area you 24 could stay away from trees as well and you would have better growing conditions for trees, if 25 you were to screen it, and they could stay away from the pole. So this is the proposed location as 26 recommended by the ARB. This is what Mr. Askari is saying now. This is what he said at the 27 ARB. This is the one Stafflooked at. 28 29 Chair Garber: Just for some further clarification the engineer if I am understanding your 30 description about the limitations or the design constraints for the antenna, if I were to use the 31 antenna as the center of a circle there is a circle that needs to be 24-foot in radius, that there 32 would be no trees that are at the same elevation as the antenna. There is another radius, which is 33 40-feet, am I understanding that correctly? 34 35 Mr. Areefin: It is 24 and 32. 36 37 Chair Garber: So the second radius 32 feet and you would not want to have trees that are higher 38 than 30 feet closer than that 32 feet. Is that correct? 39 40 Mr. Areefin: Anything outside of 32 feet. ... 41 42 Chair Garber: Can be higher than the antenna? 43 44 Mr. Areefin: Then the trees would be in the far field of the antenna. So it is not as bad as -so 45 they can be as high as -yes, still we will lose some signal but ..... 46 Page 13 1 Chair Garber: It is an acceptable loss. 2 3 Mr. Areefin: Some is acceptable there falling within or outside the near field of the antenna. 4 Therefore the loss would be relatively small. 5 6 Chair Garber: Okay. 7 8 Ms. French: I have put up the aerial, which I did my quick work checking back and forth 9 amongst the plans. I believe this X marks the spot of the proposal. 10 11 Chair Garber: Okay, Susan, anything else? 12 13 Commissioner Fineberg: So it is hard to know the height of the trees from an aerial shot but it 14 looks like the distance from side to side on the trees is about the same if you are looking at the 15 proposed location versus what Mr. Askari is looking at. The significant difference is there are 16 sonle trees between Foothill Expressway and the antenna that would block view if you are 17 immediately to the right, which I think translates to east. I am struggling with how it is any 18 worse to put the antenna in middle of the parking lot other than the loss of the four parking 19 spaces. So is there a reason why not to put it in the middle of the parking lot other than those 20 parking spac~s? 21 22 Ms. French: Well if you are going to put a mono-pine there I would argue that it is going to be 23 more naked as a fake pine than if it were surrounded by a grove that had good planting 24 conditions. To plant more trees in parking lot to provide the grove quality the parking lot soil 25 is compacted, there are going to be issues with trying to plant that would be more parking spaces 26 lost to plant such trees. You might as well go with just a monopole as opposed to a monopine if 27 you are going to do that, in my opinion. 28 29 Commissioner Fineberg: What is the distance between the proposed site and the closest three 30 sides? Is that in excess of the 20 or 32 feet? 31 32 Ms. Smart: I am sorry, which trees are you referring to? The trees closest to Mr. Askari's 33 property or to the parking lot? 34 35 Commissioner Fineberg: Again, where I am trying to go with this is if these are more than 20 36 feet and they are not blocking the RF transmission then is there benefit of a visual screen or they 37 are so far away that they are not let me just show the three sides. So I am looking at this. So 38 what is this dimension, this dimension, and that dimension roughly? 39 40 Ms. Smart: The distance between the proposed location and the oak on the property ... 41 42 Commissioner Fineberg: So this one? 43 44 Ms. Smart: This side, well the distance from the site to the property line is 23 feet and those 45 trees are almost on the property line. So that would be an approximate distance that the trees are 46 from the proposed location. However, those trees are oaks that are approximately 30 feet high. Page 14 1 2 Commissioner Fineberg: So they are within that second radius of they are within the 32 but they 3 are lower. 4 5 Ms. Smart: Yes. 6 7 Commissioner Fineberg: Okay. Thank you. 8 9 Chair Garber: Commissioner Keller. 10 11 Commissioner Keller: Thank you. I didn't expect to get so much of an education in RF 12 transmission. I appreciate that, unlike some of the other things, we are not having complaints 13 from the neighbors about RF radiation but we are getting issues about sightlines and such which 14 is within the proper purview of the Commission. 15 16 So if you look over there, if I can point at something. Here is a tree, which is sort of logical east 17 of the location. You have trees over here, you have trees over here, and you have this sort of 18 empty space in the middle here. I am wondering if we move this X to a point that is sort of the 19 centroid of that blank area it seems that it would in fact improve things because it would be 20 further away from trees, it would provide additional opportunities for screening on the perimeter, 21 it wouldn't have problems with respect to the parking lot and the attendant issues there, and it 22 would seem that it would also be further away from Foothill Expressway and therefore not 23 impact the neighbors in the Miranda Green neighborhood, and be further away from Mr. 24 Askari's property. So I am wondering whether that is a feasible solution. 25 26 Ms. French: This is the location that we were looking at with the church and the applicant onsite 27 on Monday. 28 29 Commissioner Keller: But looking at the aerial view here you can sort of see that there is a little 30 bit more clearing over there where I am pointing now with the pointer. Do you have a comment 31 about that? 32 33 Mr. Areefin: Yes, that location in the center would be better than having it all the way to the 34 west close to the tree. So if it is not and if you moved across to the left, moving to the west, 35 somewhere in the middle of that open space that would be in my view RF-wise totally 36 acceptable. The trees to the south, which I understand are about 35 feet, most of the tree line to 37 the south but I think the trees to the northwest those are taller trees. Again, the open space itself 38 is from that cross to that tree to the left is about 60 feet. I saw it on Google. So moving it to the 39 middle would give us approximately 30 feet of open space around it and should be okay. That 40 should still again the signal will travel through the trees and will have to take some loss but it is 41 not going to be as bad as having antennas right next to the tree within ten feet. So it is a tradeoff. 42 It is not an ideal situation we have in the parking lot on that property but something we could 43 probably be able to live with. 44 45 Commissioner Keller: So it seems to me I am seeing nods from the hearing requestors that 46 movement of the mono tree into that location you will have a chance to rebut later. But I am Page 15 1 hearing that they are nodding saying that they seem to prefer that modulo looking at the details 2 of that. So I guess the moral of the story is that if a monopole falls in the forest does it make a 3 sound and obviously it does. 4 5 One thing about this is a question of both the applicant and the arborist. To what extent does it 6 make sense to use larger replacement trees, the seven one-for-one replacement trees if you will 7 you have a certain box requirement there. I am assuming those are going to be smaller than the 8 trees that are being replaced because they are younger. Is that right or are they the same height? 9 10 Mr. Dave Dockter, Planning Arborist: The replacement trees will be approximately 20 feet tall. 11 The 24-inch box, the 36-inch box they would be spaced 20 feet away from the mono-pine too. 12 13 Commissioner Keller: So how tall are the trees that are being replaced? 14 15 Mr. Dockter: those are 45 feet. They are off to the east, the Monterey Pines that would be 16 removed. 17 18 Commissioner Keller: So I am wondering the extent to which it might make sense to use sort of 19 larger box trees on the Aldersgate property to provide screening so that they blend in more with 20 this so that it blends in more quickly than with a smaller box tree, which has less relative height 21 to the monopole. Does that make sense? 22 23 Mr. Dockter: Yes. You could condition it to have a mix of different height trees, 36-inch box 24 and 48-inch box trees would be approximately five years more growth in the next size up box. 25 So you are getting different heights and different age trees day one when you plant them. 26 27 Commissioner Keller: So would that provide a better screening from the get-go? 28 29 Mr. Dockter: Yes, from the get-go you are buying a little bit more mature tree with height and 30 spread. We have recommended Canary Island Pine to be an upright spire type tree that would 31 kind of be context for the new mono-pine. 32 33 Commissioner Keller: And those could be placed in such an arrangement so that they wouldn't 34 interfere with the near field issues that one of the applicant representatives said is that right? 35 36 Mr. Dockter: That is correct. We would work with proper placement with their arborist to fit in 37 the open areas there. 38 39 Commissioner Keller: Does the applicant have any comments about that issue? Are there 40 concerns about that? 41 42 Ms. Smart: One comment I wanted to make was that the majority of the trees that are being 43 proposed to be removed was based on our location before this one, which was closer to FoothilL 44 So the trees that are slated for removal are, excuse nle down at this end. As I was pointing out 45 our current location is here but the trees that are being slated for replacement was based on our Page 16 1 earlier location, which was among these trees right here. So the trees being replaced are down 2 towards Foothill. 3 4 Commissioner Keller: Would they need to be replaced under the new placement? 5 6 Ms. Smart: I defer to Dave. 7 8 Mr. Dockter: If I could speak to that. Where the applicant is finding themselves now is a little 9 bit of a property upgrade. The trees that were recommended for removal for the prior project, 10 even though the footprint doesn't land there anymore are still recommended for removal because 11 they are Monterey Pines that are in decline and have an insect borer problem. It is our opinion 12 that those trees are going to be gone and dead within five years whether there is a project here or 13 not. The applicant has expressed some desire to continue with the removal and replacement of 14 those trees knowing that they were going to do that before. I think I would need to defer to them 15 if they are still willing to do that. It is reconlffiended at this time that they do come out now as a 16 proactive measure while there is an opportunity to properly replace them and plant them in a 17 grove effect for this mono-pine. That would be the right way to approach this whole area. 18 19 Commissioner Keller: Thank you Mr. Dockter. Would it be fair to say that in the near future the 20 screening that is provided on Foothill Expressway by the pines that are in decline basically 21 indicated that nlaintenance of that screening from Foothill Expressway requires that those trees 22 be taken out and new trees providing appropriate screening be placed closer to where the mono- 23 pine is being put in? 24 25 Mr. Dockter: That is correct. It would also give us the opportunity to take the cabinet screening 26 area and adequately screen it too with lower shrubs. So I think the applicant and the landscape 27 plan will adequately screen both the upper story elements and the ground floor elements as seen 28 from Foothill Expressway. The removal of the pines gives the opportunity to do it right. 29 30 Commissioner Keller: Thank you. Does the applicant have anything to add to what Mr. Dockter 31 has said? 32 33 Ms. Smart: No, just that I have discussed this with both the Planner and David that we are 34 willing to replace the trees that were originally slated for removal, and also to add shrubs around 35 the equipment enclosure to further screen our equipment. 36 37 Commissioner Keller: Thank you very much. 38 39 Chair Garber: Commissioner Holman and then Tuma. 40 41 Commissioner Holman: After looking at so many different locations I just want to make sure 42 that we are all on the same page. So the current X that is that X that is the location that we are 43 talking about that is the correct and currently proposed location. 44 Page 17 1 Chair Garber: Would you clarify by going to the map because I believe the X that the 2 Commissioner is pointing at is the one that is in the current application as opposed to the one that 3 is now being proposed. Maybe I am wrong. 4 5 Ms. French: So I believe this is tree 10 that we saw on the site on Monday. We looked at a 6 location 12 feet from it. That was said to be too close and therefore a 60 foot height would be 7 required. I think if it moves over to the center here, this would be N for new, this would be X for 8 proposed. This would be something like 40 feet farther west from the proposed location. That is 9 what I would say is my best guess. 10 11 Commissioner Holman: The location that was discussed with the requestors for the hearing was 12 the location that was further north from that nearer the existing trees. Is that correct? 13 14 Ms. French: Okay, so at the ARB meeting and prior to that the discussion was to put it between 15 this grove of trees basically. There are three trees here and three or four trees up here so 16 somewhere between there was what was discussed. What Mr. Askari proposed recently was this 17 location where there is a light pole. Am I answering the question? 18 19 Commissioner Holman: And your discussion Monday? 20 21 Ms. French: Monday was near tree 10, which is near this new location where the engineer had 22 said we have to put a 60-foot tree so we said 60 feet is kind of tall, maybe not. Tonight he is 23 saying maybe it is okay as long as you have a 20-foot radius. I guess that is what is being said. 24 25 Commissioner Holman: Do we know we have a 20-foot radius at that location? In other words, 26 how are we going to make a determination this evening if we really don't know what the 27 dimensions are? 28 29 Ms. French: Okay. So now I am going to haul out this map. This map I put an X this is the 30 proposed location that the ARB recommended. 31 32 Chair Garber: Amy hold your thought there for a nlonlent. Commissioner Tuma has a thought 33 that might help Commissioner Holman. 34 35 Vice-Chair Tuma: So what if we simply without pinpointing a location conditioned the 36 installation to be - I am just going to use north, south, east, and west looking at this diagram as if 37 X was in the middle. So we said that the location needed to be as far west and north in the grove 38 as possible but to be no closer than 24 feet from the surrounding trees? Does that work is a 39 question for first the applicant. 40 41 Commissioner Holman: If I might? 42 43 Chair Garber: Commissioner Holman. 44 45 Commissioner Holnlan: In theory that works, but if we don't know what the dimensions are 46 north, south, east, west between the trees we don't know if that can be accomplished or not. Page 18 1 2 Vice-Chair Tuma: Well, ifby parameters that I just set out if the answer is it winds up where X 3 is then it is where X is. That is as far west as you can go and still be 24 feet from'the 4 surrounding trees then that is where it is. If it can go further west, great. 5 6 Commissioner Lippert: I think Amy French has it right here that it is approximately 35 to 40 feet 7 if you use the bar scale at the bottom of the drawing. 8 9 Ms. French: When we were out on the site on Monday we measured 75 feet from tree number 10 10 to the proposed location. So in my estimation where we were looking is somewhere here, 11 which was about another 62. It doubled the distance from the comer of Mr. Askari's property. 12 So I would say this is somewhere between 40 and 50 feet this location right here from the 13 propose ARB recommended. So I would say if you are between 40 and 50 feet you would be in 14 the ballpark. 15 16 Vice-Chair Tuma: Now, using the N location as the marker, assuming we are somewhere in that 17 neighborhood, the property that is due south of that is that the person who is out of the country's 18 property? 19 20 Ms. French: The person who is out of the country is this person. 21 22 Vice-Chair Tuma: Okay, we are getting there. At this point I would like Mr. Askari to come to 23 the microphone. Using location N as a potential location and using 36 to 48 inch box pines as 24 screening is that a combination that would serve you reasonably well? 25 26 Mr. Askari: I appreciate it. I should nIention that the original X location that Ms. French is 27 indicating is not correct. They come for two or three minutes. 28 29 Vice-Chair Tuma: Okay, let's leave that. Let's look at the N location. 30 31 Mr. Askari: If the area that you are showing as being N on the picture right here is the area that 32 we were originally asking AT&T to put there and it is closer to the second pole away from 33 Foothill Expressway so that is a good, I should say landmark for you guys to see that this N 34 location it is closer to the second pole away from Foothill Expressway. Second PG&E pole. 35 This area is ideal for them because there are no trees around it. We were surprised when AT&T 36 mentioned to them that they have to go to 60 feet because if you go to the site you see that there 37 is probably ten to 12 percent grade as you go up. 38 39 Vice-Chair Tuma: Okay. So let me just try my question. So is a short way of saying that this 40 would be acceptable? 41 42 Mr. Askari: This would be acceptable ifit is -if you ask me -may I just make a suggestion? If 43 you ask me what my preference is it is the parking lot. 44 45 Vice-Chair TunIa: I understand. 46 Page 19 1 Mr. Askari: Three or four parking spaces believe me is .... 2 3 Vice-Chair Tuma: I understand. 4 5 Mr. Askari: And, but if I am at the mercy of you guys, and I appreciate that, where the N 6 location is which is closer to the second pole that is my second best option. 7 8 Vice-Chair Tuma: Okay. Great. Just to round out if either of other two speakers, folks who 9 have written letters, if you had any comments you wanted to nlake? If you don't have any 10 comnlents, if you are fine with it that is fine, if you do have any comments I would love to hear 11 them at the podium. 12 13 Mr. Askari: May I just be on record to say that based on original 187 feet that they have to this 14 location right here it is another 120 feet. It is not 40 or 50 feet. Please have that on record 15 please. 16 17 Vice-Chair Tuma: Thank you. 18 19 Mr. Askari: Thank you so much everybody. 20 21 Ms. Berman: My only comment is that I am confused because I assumed that the ARB 22 conditions would screen the mono-pine that the trees would be close to the mono-pine. So you 23 wouldn't see the mono-pine so much. Now I am hearing that any tree has to be how many feet? 24 Thirty feet, 20 feet isn't that pretty far? That is standard spacing for .... ? Big trees are 20 feet 25 apart? 26 27 Chair Garber: It is the distance from you to me. 28 29 Ms. Berman: Well, okay if you tell me that that's going to really screen then I won't be 30 confused. 31 32 Vice-Chair Tuma: Well, I am prepared to make a motion. 33 34 Ms. Chudnovskaya: I just want to point out the location N seems the most appropriate except 35 that it is not in the proximity to the current location in the plans that we were reviewing today. 36 The X is actually further to the right if you look at the picture, the actual X. So if we could put 37 that as a condition without the proximity to the current location but write a saying somehow 38 identifying that N is in the middle of the sort of empty area. That would place it probably at 39 about 244 or 245 feet from the property line, fronl Foothill, as opposed to 187. Yes, that would 40 be nluch more acceptable I believe for all parties involved. 41 42 Also, the elevation I would like to point out because I don't think that has been considered 43 before. There is an elevation grade, a significant one, the father from Foothill you go the higher 44 the ground. So the height of the surrounding trees should not be the problem. The tallest ones 45 that are 45 feet and above they are actually further away from that location. They are on the 46 lower ground. Page 20 1 2 Chair Garber: Thank you. Commissioner Tuma we do need to get back to Commissioner 3 Holman. Thank you though. Commissioner Holman and then I believe Commissioner Fineberg 4 has a follow up at which point possibly we can get back to a motion. 5 6 Commissioner Holman: So given the N location, when it gets down to it, it is like how has it 7 taken so long and hard to get to this. Given the N location up there and given the comments 8 made about the grade change, and presuming that it is at least 20 feet away from the other trees I 9 just want to be real clear that if the other trees are as I understood if it is closer to the other trees 10 that are taller what would be the height of this monopole at this N location. What would be the 11 height of the monopole above grade? 12 13 Ms. French: This is what needs to be answered because where we were looking, this is tree 14 number 10, we were looking 15 feet from tree number 10 and that was within 20 feet and that is 15 why it needs to be 60. If it is outside of20 feet I think the engineer could answer for us does it 16 still need to be 60 feet or can now it drop down to ten feet above the highest tree. 17 18 Commissioner Holman: That is a question I would like to have answered. The other thing is the 19 grade question. 20 21 Ms. French: Right. So given the fact that the grade is higher does the tree still need to be from 22 grade to top. 23 24 Commissioner Holman: And how will that height of the monopole relate to the other existing 25 trees given grade shift and proximity to trees or lack thereof? 26 27 Chair Garber: Will the engineer identify themselves? 28 29 Mr. Areefin: Like I said previously we use two frequency bands. One is an 8S0-megahertz band 30 and the other one is the 1900-megahertz band. So we have two different near fields frequency 31 bands. For the 850 it is roughly 32 feet and for the 1900 it is 24 feet for the near field. Thatis 32 the radius. So if we go somewhere in the middle of that open space and for the 850 frequency 33 band expect the trees to be outside of 32 feet because that is the near field for lower frequency, 34 the 850 band that we use. For the 1900 band frequency that we use trees can be outside of 24 35 feet that will be outside of the near field and will cause less signal loss. That is in theory. That is 36 our basic rule of designing cell sites in situations with trees and other cutter. So if we have trees 37 within say 20 feet from the antenna it will result in more signal loss basically. Can we live with 38 it? I would have to do my analysis. 39 40 The height? The antenna rack center has to be ten feet higher if we have trees within the near 41 field the antenna center has to be ten feet higher than the height of the tree. 42 43 Chair Garber: Commissioner Holman, Commissioner Tuma has hopefully a clarifying question. 44 45 Vice-Chair Tuma: Let me just ask the engineer if the pole is no closer than 24 feet to any of the 46 trees in that empty grove there how high does it need to be? Page 21 1 2 Mr. Areefin: Yes, I designed it for 45 feet. That was my original design considering that we 3 don't have trees within 24 feet but that is for frequency band 1900 though. Like I said we have 4 two different bands and two different near field regions. 5 6 Chair Garber: So for the other band how far away do they need to be? 7 8 Mr. Areefin: Thirty-two feet. 9 10 Chair Garber: Thirty-two feet, okay. So there is a diameter of 64 feet that ideally would not be 11 interrupted with the location of a 45-foot pole. 12 13 Mr. Areefin: That is exactly what I am trying to say. 14 15 Chair Garber: Okay. 16 17 Ms. French: I have a drawing from Commissioner Keller. Before I get to that I also wanted to 18 because I have drawn on the Arborist map the tree we are trying to stay away from which is tree 19 10, which is 45 feet tall at present. Tree 9 is 20 feet, tree 8 is 15 feet. So there is that formula to 20 get away from tree 10 is how I would look at it. This is what Commissioner Keller has put up. 21 ,So monopole 24 feet, 32 feet, trees ten feet shorter than monopole in this zone, and then any 22 trees outside of that zone. 23 24 Commissioner Keller: No trees in the inner circle. 25 26 Ms. French: No trees within the 24 foot near field. 27 28 Commissioner Keller: Is that what you are trying to say? 29 30 Mr. Areefin: Yes. 31 32 Commissioner Keller: Sorry to interrupt. So if you stay at least 32 feet from tree number 10 you 33 are happy, right? 34 35 Mr. Areefin: How high is tree number 10? 36 37 Ms. French: Forty-five. 38 39 Mr. Areefin: Okay, should be good. 40 41 Commissioner Keller: So if you are at least 32 feet away from tree number 10 you are happy, 42 right? 43 44 Mr. Areefin: Yes. 45 46 Commissioner Keller: Thank you. Page 22 1 2 Chair Garber: So Commissioner Holman with all that help perhaps you would like to continue 3 your questions. 4 5 Commissioner Holman: So given the grade differential then is that going to be a factor given the 6 relative height of the trees around? 7 8 Ms. French: I would think it would be a good factor in that you wouldn't have to have such a tall 9 fake tree. It could be shorter because the grade has given it a little help at the lower end. It has 10 not been exactly analyzed. 11 12 Commissioner Holman: I think my last question is currently the tree on that side on the drawing 13 up there was 20 feet tall. It is going to grow. So is there going to be a future impact on the 14 monopole's effectiveness let's say? 15 16 Ms. French: I would think if there were trimming of the tree they could keep it where they need 17 it to be. My earlier comment was about the helping grade I was thinking of the trees down slope. 18 The trees up slope of course which are shorter, they are 15 feet and 20 feet. 19 20 Commissioner Holman: But they will grow. 21 22 Ms. French: They will grow, yes depending on the condition of health. I can look at the 23 arborist's report. 24 25 Commissioner Holman: And depending on how far away they are from the monopole. Okay. 26 We have duck soup I think. 27 28 Chair Garber: I am sorry you cannot unless one of the Commissioners calls on you. 29 30 Commissioner Holman: I will. The applicant has been able to speak a lot so I think it is only 31 fair. 32 33 Ms. Chudnovskaya: Just want to point everyone's attention at the current location at the X, it is 34 closer to trees numbered 11, 12, and 13, much closer than the one we are trying to relocate the 35 tower to. Those trees are also 45 feet. I just don't see how is the current location that they were 36 asking for is better than the one you are trying to relocate the tower to. It is not. It does have 37 those trees at 45, 35 feet high. 38 39 Chair Garber: Let nle just ask you, are you arguing to keep the original location? 40 41 Ms. Chudnovskaya: No, no, no I am just saying that what you are looking at now and trying to 42 discuss is much better than the current one. 43 44 Chair Garber: Okay, good. Thank you. 45 46 Ms. French: Public comment has not happened yet other than the ,appellants and applicant. Page 23 1 2 Chair Garber: You are absolutely correct. However I have no cards. Commissioners, are there 3 any other questions? Commissioner Fineberg. 4 5 Commissioner Fineberg: From the tree inventory table there are a couple of Canary Island Pines 6 number 10 and number 11 that are noted to be 45 feet. Does that mean that the new screening 7 trees cannot be planted 20 feet from the faux tree because then you would have a 45 foot pole 8 with 45 foot trees when they are n1ature, so the screening trees would have to be 32 in that 9 second diameter, I believe it was the 32 feet. So where and how does a detailed map get drawn 10 for where the screening trees will go in? Obviously you are not going to be tearing out the old 11 trees from the ARB plan, so what will the folks that requested the hearing know that they are 12 guaranteed to get from a screening plan? 13 14 Mr. Dockter: I will endeavor to answer that. We will place the new screen trees as close to the 15 20-foot radius as possible, 20 and 32-foot radius. I would anticipate that the new screen trees 16 when they grow up, after 20 years or so, that at that point in time I would expect some tipping 17 down and maintaining the size to keep the mono-pine clear. It would be appropriate to begin 18 trimming and keeping those trees checked. Other trees like the oak trees would be left to grow 19 unobstructed and not topped. But these other trees are specifically planted there for the sake of 20 the mono-pine to create some context and we would not want to see those new screen trees grow 21 up to be 100 feet tall and crowd out the mono-pine. So the maintenance would be expected. 22 Does that answer your question? 23 24 Commissioner Fineberg: Yes it does. Is that expected maintenance something that is a 25 requirement in our CUP? What if the interests of the property owner diverged from the interests 26 of AT&T? Do we need to stipulate whose interest prevails? 27 28 Ms. French: They have a private agreement between the church and AT&T. So I imagine that is 29 detailed in their private agreement about paying the church to be on their site. 30 31 Commissioner Fineberg: Okay. My last question then is of Mr. Askari. Without getting into 32 specific architectural detail, if you would like to step up and then answer this. We don't have 33 benefit of vertical elevations of your home. So I have no idea where your windows are. I can 34 presume that in one respect further from your house might feel like it is better but does the new 35 proposed location make the faux tree more visible? So do you have windows on the left side of 36 your house so that if that tree gets moved lef~are you going to be looking at the trunk versus was 37 it sitting off outside a solid wall even if it was closer? 38 39 Mr. Askari: Obviously the further it goes that direction, the further it goes to the left obviously it 40 blocks the view more. So in other words where they are showing location N, which is closer to 41 tree number 10. Showing on the Arborist Report it really does help substantially. It is not 42 perfect I should say. The middle of the parking lot is really truly ideal but life is not perfect. So 43 I am willing to accept that. So much that you go through months of design and all that for the 44 home and it is very unfortunate. 45 Page 24 1 If I could just mention just one last thing. At the ARB meeting I did not ask them to come to my 2 house, the construction site. I happen to see a gentleman walking down the driveway and that 3 happened to be Mr. Alexander Lew. I did not invite him. When he came he saw the site and he 4 was the only one opposed to the project and he is the one on the ARB. So he said I cannot 5 believe they are putting this on residential sites. Please, let's have that on the record. I am just 6 speechless. 7 8 Commissioner Fineberg: So thank you so much for that extra information. What I just want to 9 confirnl then is for instance do you have a gorgeous big picture window that that now is going to 10 be in the line of sight whereas you might not see it here even if it is closer. I am just trying to 11 confirm that we are not making it worse. 12 13 Mr. Askari: To answer your question where you see this area right here. 14 15 Chair Garber: Before you start let me help the Commissioner out. It is perfectly imaginable that 16 we can direct Staff to work with this particular applicant and to work out and screen the 17 appropriate sight lines that open up, etc. We can condition the project in that way. 18 19 Mr. Askari: I appreciate that very nluch. The reason that I asked for the large trees on my side is 20 because they could come and start screening on their side and cut it down and so forth. I have 21 more to say on my side. So if they were to -if you look at his view right here this is exactly 22 where it is the full exposure and I have windows on this side and all this side right here, which 23 is the full exposure to the tree. 24 25 Yes, I am sorry the tree is right here. So the bedrooms ..... 26 27 Commissioner Lippert: Sir that is your garage. 28 29 Mr. Askari: The windows here. Okay. The tree is right here, that is where they are proposing. 30 Am I understanding this right? Yes. 31 32 Chair Garber: Folks, let's keep nl0ving here. 33 34 Mr. Askari: To answer your question yes there are windows that are definitely in direct view of 35 the tree. 36 37 Chair Garber: Fine, thank you. 38 39 Mr. Askari: Thank you very much. 40 41 Chair Garber: Okay. Commissioner Fineberg. 42 43 Commissioner Fineberg: I would agree with Commissioner Holman's suggestion that if one of 44 the conditions is that we ask Staff to evaluate line of sight and make sure screening trees 45 consider the line of sight that I think really answers the problem. 46 Page 25 1 Chair Garber: I think it is important to recognize there are not parts of the code that require any 2 of that to happen. 3 4 Commissioner Holman: It is a Conditional Use Permit though if I might. 5 6 Chair Garber: Exactly, and those things can be worked out to the satisfaction hopefully of all 7 parties. Anything else? 8 9 Commissioner Fineberg: I might disagree with you though in the findings it said not detrimental 10 to property. I would feel that something close to a house that is in the line of sight that isn't 11 screened would be detrimental to the property. So I think that does give us the purview to 12 inlpose those additional conditions. 13 14 Mr. Williams: I took it to be that that's what you said is that it is a condition of approval that 15 you can impose. It is not a specific code requirement to plant trees in this location. 16 17 Chair Garber: Anything else? Let me do this. It is late. I think we have covered most things so 18 forgive me Commissioner Keller I am going to move forward here. We have had a lot of 19 discussion. I am assuming that the applicant and the non-technical appellants have nothing more 20 that they need to say since we have allowed a rather freewheeling meeting on this item. I don't 21 see anyone raising their hand feeling like they have not been heard here. 22 23 So to move forward let us move this back to the Commission. I believe Commissioner Lippert 24 has a motion for us. I will close the public hearing. 25 26 Ms. Tronquet: Do you want to specifically ask the appellants or the other? 27 28 Chair Garber: Do the non-technical appellants wish to make any further comments or rebuttal to 29 any of the comments that have been said? 30 31 Ms. Berman: Just one comment that a 65-foot tree is not acceptable. 32 33 Chair Garber: I am not understanding you. A 65-foot tree? 34 35 Ms. Bemlan: Mono-pine. 36 37 Chair Garber: I see. 38 39 Ms. Berman: So if that is what would be required in the new location. 40 41 Chair Garber: Thank you. The applicants? They are passing on the opportunity. Thank you. 42 Commissioner Lippert a motion. 43 44 MOTION 45 Page 26 1 Commissioner Lippert: I move that we recommend to uphold the Director's decision with the 2 following modifications. Modification number one, that the faux antenna tree be moved west of 3 the originally proposed location to a suitable location that it is within engineered working 4 distance from the adjacent trees. Number two, that the antenna tree remain at 45 feet or below in 5 height. Number three, that there be a plan for the removal of the diseased trees and replacement 6 with new specimen pines 36 and 48-gallon box specimens. 7 8 SECOND 9 10 Comnlissioner Holman: Second. 11 12 Chair Garber: Motion made by Commissioner Lippert and seconded by Commissioner Holman. 13 Would the maker like to speak to their motion? 14 15 Commissioner Lippert: Yes. I think that we have a workable solution here in terms of what we 16 have proposed. I think both the applicant as well as the non-technical appellants will be satisfied 17 with the outcome here. 18 19 What I am a little concerned about are two things. Number one, the applicant had an entitlement 20 on this property for this tree and they didn't perfect that approval previously. That really 21 troubles me. We spend an awful lot of time going through something that we went through three 22 or four years ago with very little variation from what it originally was. That is really is a waste 23 of our time. It is a waste of the applicant's time, and it is a waste of the non-technical appellant's 24 time. 25 26 The other thing that I want to mention and this is really frustrating is that the owner, Mr. Askari 27 purchased this property and at the time there was an application in place and through the 28 property disclosures you should have been notified by your broker and the seller of that property 29 that there was this antenna that was being built at the adjacent site. That is an oversight on their 30 part. I am really sorry that you had to live with that but it really was something that was on file 31 and should have been known to you. So when you bought the property you bought that antenna 32 being adjacent to your property. So with a little more research perhaps you might have found out 33 about it. 34 35 The last thing I want to mention, and again it is a minor aspect but I think it needs to be 36 addressed, Mr. Askari in the beginning of your presentation you did mentioned that you felt as 37 though you were being treated as a second-class citizen. We don't discriminate by where people 38 live. We have done projects to adjacent cities, and we have applicants or appellants come from 39 adjacent cities and present before us. We look at you as being a neighbor. It doesn't make a 40 difference whether you live in Los Altos Hills or whether you live in Mountain View. If you are 41 adjacent to Palo Alto and you have a concern on a project we want to hear from you. You are 42 not a second-class citizen. So I feel deeply offended by hearing that. 43 44 Chair Garber: Let me just temper your final comments in that I believe that the non-technical 45 appellant was sinlply expressing the way that he felt and not necessarily the way that this body or Page 27 1 any other body of the City was treating him. So I will accept that at face value and I don't think 2 we should further that conversation in any way. 3 4 Seconder, comments? 5 6 Commissioner Holman: Yes, it took us a long time to get here and it is a little frustrating but 7 hopefully we have come up with a solution that will actually be workable in the field. I 8 seconded the motion because I agree with the points made. We have arrived at a location that is 9 further away from Foothill Expressway and further away, hopefully with less impact, to the 10 Askari property. So I think we have satisfied the goals. 11 12 I do have three amendments to add. Hopefully they will be acceptable. This is just to confinn 13 what is already intended but I just want to make sure that it is clear. One is to further screen the 14 monopole from Foothill Expressway when trees are removed and replacements proposed. That 15 is maybe just a clarification if not anything else. That reasonable screening from line of sight 16 from the Askari property be added. That the three additional ARB conditions of approval be 17 attached to our motion. 18 19 Commissioner Lippert: I will accept those. 20 21 Commissioner Holman: I have nothing else to say. 22 23 Chair Garber: Commissioners, discussion. Commissioner Keller. 24 25 Commissioner Keller: Thank you. I assume that Commissioner Holman's comment about 26 adding the ARB conditions are as modified by the other conditions. I believe that the 36 and 48- 27 gallon boxes might modify ARB conditions. So I think that is understood. 28 29 I would like to make a textual friendly amendment to rather than referring to moving it west, 30 when west is sort of ambiguous, I would suggest the language read to move away from Foothill 31 Expressway in a direction roughly parallel with the adjacent property line. 32 33 Commissioner Lippert: I think that is too much detail. What I have suggested here I think gives 34 Staff enough direction. 35 36 Commissioner Keller: I will have to vote against it if you west because west is along Foothill 37 Expressway. 38 39 Chair Garber: Can I just ask Staff if they understand where this is going? 40 41 Ms. French: I certainly understand it. I see a compass direction on the site plan and west, 42 whether it is due west or northwest or southwest, we all know what we are talking about. Trying 43 to get it in a place with reception. 44 45 Chair Garber: Can we say location N on the exhibit of the photograph? 46 Page 28 1 Ms. French: I would say approximately in the location ofN because as you saw it was hurried. 2 3 Chair Garber: Yes. Conlffiissioner Keller, would you accept that? 4 5 Commissioner Keller: That would be acceptable to me if it is acceptable to the maker and 6 seconder. 7 8 Commissioner Lippert: It is acceptable to nle. 9 10 Comnussioner Holman: Yes. 11 12 Chair Garber: Okay. Commissioner Keller. 13 14 Commissioner Keller: I have a question for Mr. Dockter. Do you know how many years, based 15 on the 36 and 48 gallon box trees, it will take before the trees might have to be topped? 16 17 Mr. Dockter: At a foot a year, starting at 20 feet, 20 years. 18 19 Commissioner Keller: So 20 years. So I wish to observe that even though plain old telephone 20 system twisted pair technology has basically been around for 150 years cell phone technology 21 has gone through various generations in the last 20 years when it became widely available. It is 22 likely that the cell phone technology will change before the 20 years is up and therefore who 23 knows what the requirements will be 20 years from now when the antennas need to be replaced 24 for whatever cell phones exist at that point in time and whatever technology exists. Therefore it 25 is a complete wildcard what the height requirements will be, and what topping will require, and 26 the radiation blockages, and issues like that. So I think that is essentially an issue that we cannot 27 predict at this time. 28 29 I would like to thank the ARB for looking at this and their suggestions and comments. I would 30 like to thank the applicant and what I would like to refer to as the hearing requestors, and I 31 suggest we use that language instead of the weird language of non-technical appellant and that 32 we call them hearing requestors. I would like to thank the hearing requestors for working 33 cooperatively with this. I realize that there is a preference of some of putting it in the parking lot 34 that would have additional screening issues, and that is in some ways a taking of their parking 35 spaces because they do wish to expand at some point in the future. I understand that may be an 36 issue. So thank you very much to Staff and especially like to thank Amy French for her 37 wonderful finger puppets. 38 39 Ms. French: Thank you. My final conclusion is I wrote 32 feet from tree 10 because as I 40 understood the technical issue, that's where N is approximately. 41 42 MOTION PASSED (6-0-0-1, Commissioner Rosati absent) 43 44 Chair Garber: Commissioners, all in favor? (ayes) Opposed? The motion passes unanimously 45 with Conlffiissioners Keller, Holman, Garber, Tuma, Fineberg, and Lippert voting for and 46 Commissioner Rosati absent and no nays. 47 48 This item is closed. Thank you very much. Page 29 EXCERPT OF PLANNING AND TRANSPORTATION COMMISSION MEETING OF JUNE 14, 2006 1 4243 Manuela Avenue [04PLN-00143]: Request by Cingular Wireless on behalf of 2 Aldersgate Methodist Church for a Conditional Use Pennit to allow the installation of 3 one telecommunications facility, comprised of a 45-foot tall tree-pole with six panel 4 antennas concealed within the top region of the pole and associated equipment cabinets. 5 Zone District: R-1 (20,000). Environmental Assessment: Exempt fonn the California 6 Environmental Quality Act per section 15301. 7 8 Ms. Clare Campbell. Planner: Yes. Good evening Commissioners. As a correction to 9 the item in the report packet there are a few inconsistent references in the report and in 10 the Record of Land Use that reflect the monopole and the tree-pole as the Staffs 11 recommendation. So to clarify this I would like to just restate the recommendation. 12 Staff s recommendation is that the Planning and Transportation Commission recommend 13 that the City Council uphold the Director of Planning and Community Environment's 14 2005 decision to approve a monopole design wireless communication facility. 15 16 The project before you tonight is for a new Cingular Wireless communication facility 1 7 located within the parking lot area of the existing church site. The Commission reviewed 18 this project last year on August 31 and at that meeting the issues that were raised by the 19 speakers primarily focused on the aesthetic qualities of the project. Based on these 20 concerns the Commission directed the project to the Architectural Review Board for 21 Design Review and continue the item. 22 23 On May 18, 2006 the Architectural Review Board discussed the proposed design options 24 for the new facility. The applicant provided four design options: a monopole, a pine tree 25 pole, a palm tree pole, and a light standard. The two options that were considered by the 26 ARB were the standard monopole and the mono-pine. The Board voted three to two in 27 favor of the mono-pine design. 28 29 Now with the feedback from the ARB the Commission can make a decision on which 30 design they prefer either Staffs recommendation for the monopole or the ARB's 31 preference for the tree-pole. Staff is not wholly opposed to the tree-pole but believes that 32 the more modest proposal is more appropriate in this location due to the existing trees 33 that are in that immediate area. 34 35 If the tree-pole design is the Commission's recommendation Staffwill modify the 36 conditions of approval accordingly to assure a quality project. 37 38 For additional background on the site this project site abuts Foothill Expressway, which 39 is a designated scenic route and for the most part has a special setback of 60 feet to help 40 preserve the scenic views from the road. In the immediate area of the project parcel there 41 is no special setback requirement. There are a total of nine R-1 lots that backup to 42 Foothill Expressway and that have the potential of building a 30-foot tall structure 20 feet 43 away from this scenic route. This project proposes a 70-foot setback from Foothill Page 1 1 Expressway and in doing so minimally impacts the visual qualities of the route. Also, an 2 application was filed for another facility in 1996 and that application was denied for not 3 meeting the required findings. Over the ten years that have elapsed since that submittal 4 the telecommunications industry has improved both technologically and aesthetically. 5 Staff was unable to locate a copy of those plans that were submitted at that time but I feel 6 confident in saying that the project before you today is a more attractive project than 7 what was previously proposed. 8 9 Another difference in the decision-making between 1996 and now is that fhere is a more 10 general understanding and acceptance of the impacts and benefits of these types of 11 projects. This concludes Staffs report. Pamela Nobel, the applicant, is here tonight and 12 is ready to make a presentation for you. Thank you. 13 14 Chair Burt: Thank you. Does the Commission have any questions of Staff before 15 hearing from the applicant? Karen. 16 17 Vice-Chair Holman: Yes, an additional clarifying question. In the plans that we have the 18 front page indicates a monopole as I read this and then the third page from the back 19 indicates then the mono-pine. So there is an inconsistency within the plan drawings as 20 well it seem. 21 22 Ms. Campbell: That is right. These plans were the original plans that the Commission 23 saw last year and there are no new plans that have been submitted since that time. What 24 happened in the original conditions of approval is the plan that was submitted reflected 25 the tree-pole and in the conditions of approval it was modified to say that it had to be the 26 monopole. We had a previous submittal so I attached that to the front of the plans that 27 way you would have something to see as a reference of what it would look like. 28 Basically nothing else changes. The siting is exactly the same except the profile would 29 be different -the elevation would be different. 30 31 Chair Burt: Thank you, Clare. So at this time the applicant has up to 15 minutes to make 32 a presentation. Welcome. 33 34 Ms. Pamela Nobel, Applicant: Good evening Chairman Burt and Commissioners. My 35 name is Pamela Nobel. I am a consultant with NSA Wireless representing the applicant, 36 Cingular Wireless Services this evening. 37 38 The project before you this evening was heard by this Board last August as probably all 39 of you remember after it had been initially approved by both Administrative Planning and 40 for Design Review in July 2005. I guess as a result of one letter requesting a public 41 hearing that is how you saw it in August. At the Planning Commission hearing in August 42 from reading, I was not the person that was representing back then, but having reviewed 43 all of the comments and concerns basically it seemed that the major concern was the 44 aesthetics of the project. To that end I guess my understanding is that this body 45 continued the project over to Design Review to work those details out. That has 46 happened, we have had meetings with the Planner, responding to the neighborhood on the Page 2 1 neighbors concerns about the aesthetics and came back to a Design Review meeting in 2 May and presented a number of options that we felt would blend well into the Foothill 3 Expressway and R -1 area that surrounded it. 4 5 We believe that the mono-pine fits in quite graciously with the existing landscaping of 6 the Foothill Expressway. We of course will do the monopole as the Staff ... so you have 7 two sets of drawings there where basically you can see the tree, you see the monopole 8 and that was what was presented as well to the Design Review. I guess as the Staff 9 reported the Design Review voted for the tree. I have here this evening, I know rather 10 than go over a lot of I think pretty much a number of the questions were answered in the 11 last hearing that was held in August. But if there are any questions from a technical 12 standpoint or from a health issue I have an RF engineer here this evening to answer any 13 questions that you may have. I also have someone representing from [Hammet and 14 Edison] that did a RF emissions analysis for the project. We have submitted alternative 15 site analysis, which I believe you reviewed at the last meeting. So basically I think we 16 have responded to the neighbors' concerns. I am hoping that is the case. I am here to 17 answer any questions that you might have to further make a judgment here. 18 19 Chair Burt: Thank you. Do Commissioners have any questions of the applicant at this 20 time? Okay, thank you very much and if we have more we will get back to you. 21 22 Before we hear from the two mernbers of the public perhaps it would be helpful if the 23 City Attorney would review the constraints upon the Commission of federal legislation 24 affecting siting of telecommunications poles. 25 26 Mr. Don Larkin, Senior Deputy City Attorney: As I believe the Commission is aware 27 any decision on whether or not to approve this project can be based only on land use and 28 planning considerations. Radio frequency emissions are not factors that can be 29 considered in denying or approving a wireless project under the Federal 30 Telecommunications Act. 31 32 Chair Burt: Thank you, Don. At this time we have two speakers from the public who 33 can speak up to five minutes each. Our first speaker is Vic Nelson to be followed by 34 Jackie Berman. Welcome. 35 36 Mr. Vic Nelson, Palo Alto: I live on the comer at Moana Court. You can see the 37 proposed project. I can't get wireless cell receiving in my house. I have to go outside to 38 get it. It has been that way for a long time, since 1990 when I got my first cell phone. I 39 have lived there for 30 years. 40 41 In 2004 I had my house remodeled for several hundred thousand dollars. The contractors 42 came in there plus my contractor had to go out in the middle of Moana Court to carry on 43 conversations on their cell phones. 44 45 So what I am doing here tonight is I am asking that you guys get a pole of some kind 46 somewhere so that everybody will approve it. I don't care who it is. I am with Verizon Page 3 1 right now. I just want a pole so I can use my cell phone. I also have a managing business 2 of commercial property and I need that cell phone. I have to leave a message, call me on 3 my land line, leave me a message and if you have to leave me a message you know I am 4 not home so I am probably on my cell phone and you can get me because I will be out 5 where I can get a signal. I got a fax machine. I have an email there, everything. I think 6 this is terrible that we don't have a pole there. 7 8 Now, my neighbor over here, Jackie, is going to disagree. Well, I don't disagree with 9 Jackie. They come up Miranda and they look right where that project is. I come out 10 Moana and I am going down Miranda I am not going to pay any attention to that pole. 11 You can put that pole anywhere I'll never look at it. That's all I have to say. 12 13 Chair Burt: Thank you. Jackie Berman. I don't have any other speaker cards. 14 15 Ms. Jackie Berman, Palo Alto: We do have a very wonderful neighborhood and good 16 friendly relations. Vic has been a loyal servant of Palo Alto as a fireman for many years 17 in the service of our city. We appreciate that. 18 19 I am here on behalf of the neighbors who don't want to look at any old thing that you 20 want to put up, quoting Vic. We oppose it because one, it will be a visual intrusion in our 21 neighborhood and along the Foothill Expressway which is a designated scenic route. In 22 your material I thought it was interesting that in the AT&T papers AT&T calls the 23 Foothill Expressway a freeway. So it is no longer a designated scenic route as far as 24 AT&T is concerned. There have been comments that it will be fully screened by existing 25 trees but the ARB minutes state clearly that the tower must be ten feet higher than the 26 existing trees or the tower won't work. So it won't be screened by existing trees. Also, 27 according to the City Arborist in the ARB minutes the trees are in very bad shape and are 28 going to die soon. So they are going to plant some little ones to take over when these die. 29 So we don't think it will be very effective in terms of screening. 30 31 Some people have said they can't see the tower and some people say they don't care what 32 it looks like but I am here to tell you that we can see it and some of us do care. We are 33 not against cell phones. We are not against antennas. We are not against technology. 34 We are not complaining about the RF. We just think that it could and should be located 35 not in an R-1 area. When you start locating cell towers in R-l areas you are setting a 36 policy for the city and you are going to have to make decisions on a case-by-case basis 37 and what are your criteria going to be? 38 39 We think it can and should be located in the Stanford Industrial Park to the north of 40 Arastradero. Now, the claims in the material you have that they can't 41 consider sites north of Arastradero because, "the applicant is proposing a separate 42 telecommunications site inside the Hillview-Arastradero triangle at Roche Labs." But no 43 one has even asked them what is being planned at that site and why it precludes an 44 antenna somewhere in the same industrial park area where you wouldn't be setting a 45 precedent for R-l. Now, the proposed pole that the Staff continues to recommend in Page 4 1 spite of the ARB recommendation for a mono-pine the Staff goes back to the ugly 2 smokestack-like monopole. We think that is very ugly. 3 4 I have visited the two existing antennas in R -1 zones in the city. One is totally and I 5 might say nicely concealed in the huge cross on the Congregational Church at 6 Embarcadero and Louis Road. The other is a faux pine tree at the end of a very long 7 driveway at the back ~f the Achieve School on Middlefield just north of Charleston. The 8 faux pine is next to the Mitchell Park fence among other tall pine trees. It looks realistic 9 from Middlefield and it is not contiguous to any residential area. The ARB has 10 recommended the faux pine, mono-pine, for the Aldersgate site but the Staff has rejected 11 this and had opted for the industrial-looking monopole. The reason that I could divine 12 from the material is that they think that the branches of the real trees could interfere with 13 the branches of the faux pine. The minutes from the ARB meeting indicate that that 14 argument was rejected by the City Arborist. He said it wouldn't interfere. 15 16 As I have stated we do not want any antenna on this R-l site but if there is to be an 17 antenna forced on us we should be given the same consideration as the other R-l 18 neighborhoods and have as much concealment as possible. We should have just as bushy 19 and realistic a faux pine as the one on Middlefield that borders Mitchell Park. Thank 20 you. 21 22 Chair Burt: Thank you. At this time we will return to the Commission for questions of 23 Staff. Commissioners, who would like to go first? All right, I have a question. Would 24 Staff just share a little bit more of their thinking on why they have the preference for the 25 monopole versus the mono-pine? 26 27 Ms. Campbell: In that immediate area for the location of the pole there are a lot of 28 existing mature trees. When Dave and I were out there looking at the site we felt that the 29 standard monopole would be a better fit just because when you do the construction of the ,30 pole and the new branches won't conflict with the existing natural branches of the trees. 31 In discussions at the ARB Dave did mention that we could carefully review how they do 32 the installation. The applicant is more than willing to work with us on this project to 33 modify the lengths of the limbs of the tree-pole to try to get the best fit for something that 34 will go in there. So that was the general logic behind why we were going with the 35 monopole originally .. 36 37 Chair Burt: Have you had comments from other neighbors on their aesthetic 38 preferences? 39 40 Ms. Campbell: Other than the tree? It has really basically been about the tree. There 41 was a community meeting that the applicant held and they showed the tree-pole at that 42 community. I wasn't there for that meeting but it seemed to be something that they 43 seemed to be more agreeable with. Staff is not opposed to a tree-pole. I just want to 44 reiterate that. The initial recommendation was for a monopole because we thought it 45 would be a better fit for that site. 46 Page 5 1 Ms. Amy French, Current Planning Manager: I was also at the ARB meeting and heard 2 their debate and views on it. We are certainly in support and concur with the ARB as 3 well for the reasons they mentioned. I believe you have the minutes. Certainly if the 4 neighbors are more favorable or seeing the tree as the more protective of their views then 5 we are in support of that as well. 6 7 Chair Burt: I just want to be clear because we only had two neighbors speak tonight, one 8 who really wasn't speaking on the aesthetics. Out of the other neighbor comments that 9 you have received either last year or more recently I think that I understood Clare to be 10 saying that the neighbors seem to be favoring the mono-pine. 11 12 Ms. Campbell: The comments primarily were not in favor of anything but the neighbors 13 were made aware of the mono-pine design by the applicant's community meeting. So 14 what I perceive from the feedback is from the original Staff recommendation for the 15 monopole the reaction was they would prefer the mono-pine versus the monopole. 16 17 Chair Burt: Karen. 18 19 Vice-Chair Holman: The handout that was delivered by Mr. Emslie and prepared by Ms. 20 Berman it says that she is here on behalf of neighbors who oppose the Staff 21 recommendation to construct a 45-foot monopole. I don't know how many neighbors 22 that is. Public comment isn't closed I guess she could comment. It says on behalf of her 23 neighbors. 24 25 Chair Burt: I had one other question. Ms. Berman raised a question as to why the pole 26 could not be located in the Research Park and that evidently the applicant had alluded to 27 something to do with an upcoming pole near the Roche facility. 28 29 Ms. Campbell: Right. The Roche facility had an application in file approximately the 30 same tinle this came through. That was approved and it is probably up and running for 31 some time already. So they already have a site in place for this particular carrier. So I 32 think to answer the question that particular site covers a certain range and it doesn't cover 33 far enough to reach this particular site where we are at Manuela. 34 35 Chair Burt: Does that also nlean that other sites on the southwestern edge of the 36 Research Park are not viable sites to provide the range that is necessary? 37 38 Ms. Campbell: Let me have the applicant speak to that. 39 40 Mr. James , RF Engineer: I am the RF engineer working on this project. In 41 response to the question as to why we can't go further north that would bring us close to 42 other wireless towers and would not provide us with the coverage that we are looking for 43 further south on Foothill Expressway. That is the primary reason -we would not achieve 44 our coverage objective. 45 Page 6 1 Chair Burt: So this neighborhood immediately surrounding the pole might be covered 2 but the intention of this pole is basically to cover a certain radius from the pole and 3 further south would not be covered by a pole at the edge of the Research Park. 4 5 RF Engineer: That is correct. It would not connect with the cell site further to the south 6 on Foothill Expressway. 7 8 Chair Burt: Thank you. Lee. 9 10 Commissioner Lippert: I just wanted to hear from the City Arborist in terms of being 11 able to install this and preserve the existing trees and whether the existing trees are going 12 to be stressed and whether they will need to be replanted. 13 14 Commissioner Garber: I understand we also need to be careful about asking about 15 expertise and bird habitat. 16 17 Mr. Dave Dockter, City Arborist: To respond to Commissioner Lippert's question, the 18 Monterey pine trees are in various stages of health. I made a statement in the ARB 19 meeting that they are probably in the same status they will be there for another 15 years. 20 There may be a tree here and there that does suffer mortality from beetles or other things. 21 We have provided for an arborist assessment and replanting of trees if that does occur 22 whether it is a faux pine or a monopole. So either way I believe it is conditions 14 23 through 19, well several conditions apply to either one. The fate of the pines I think is 24 not something that we can really determine with certainty at this point but we have 25 provided for the replacement if there is one or if there are ten trees then there is provision 26 for replacement. 27 28 Chair Burt: Dave, about how many pines in the vicinity of the 30 to 35-foot height level 29 are nearby to this proposed tower? 30 31 Mr. Dockter: I don't have the number of trees. 32 33 Chair Burt: Just a ballpark. 34 35 Mr. Dockter: The area for the pole is surrounded by Monterey pines and beyond that 36 there is another layer of coast live oaks that is the first barrier that one would see going 37 northbound on Foothill Expressway. 38 39 Chair Burt: Karen. 40 41 Vice-Chair Holman: The ordinance says and I just want clarification on this if I could 42 please, Dave. The ordinance under the conditions of approval says replacement trees, 43 this is presuming some will die off, that replacement trees shall be one of the following: 44 [corcus] species, canary island pine, coast redwood or other approved species. Just for 45 clarity for my own mind, I don't know how invasive the beetle is it is attacks the pine and Page 7 1 you replace pines in there are those pines going to be subject to the same beetle 2 infestation? I trust that the tree pine would not be subject to the infestation. 3 4 Mr. Dockter: The latter is correct. Of the pine trees selected for replacement canary 5 island pine is significantly more resistant to the beetle attack than these Monterey pines. 6 Any new pine also would be required to be replaced with a watering system to it so the 7 new pines would benefit from the irrigation to support that new pine. So that is another 8 resistor against the beetle too. 9 10 Commissioner Lippert: Does that mean that the pine pole is subject to electronic bugs? 11 12 Mr. Dockter: No comment. 13 14 Chair Burt: Dave, I just want to make sure I grasp the essence of what you are saying. 15 So is it correct that while some of those pines may succumb to disease over the next 15 16 years you don't anticipate a wholesale loss of that grove of pines and a wholesale loss of 17 the screening that they provide? 18 19 Mr. Dockter: I would not expect that because if we have an annual report from an 20 arborist assessment which we have provided for that would immediately catch if there 21 were an epidemic of one tree after another falling to the beetle. There are treatments that 22 can be applied to those trees. If the Commission were to condition the project to say even 23 add extra water to the existing pines that could extend the life and survivability of the 24 existing pines. If you added that condition that would be probably appropriate. That 25 could be done very cheaply with a soaker hose or that type of thing. 26 27 Chair Burt: Thank you. Commissioners, any discussion or should we go to a motion? 28 29 MOTION 30 31 Commissioner Bialson: I would be happy to go to a motion because I feel the ARB 32 covered this ground very completely and they also couldn't control themselves and had 33 some jokes in there too. So I feel that the matter has been discussed and I would like to 34 move the recommendation that the Director of Planning and Community Environment's 35 decision to allow a conditional use permit be forwarded with the change that instead of a 36 monopole we would have the tree-pole. 37 38 SECOND 39 40 Commissioner Lippert: I'll second that. 41 42 Commissioner Bialson: I have seen these tree-poles and they need to be pointed out to 43 me when they are within an area that has regular trees. The mind sort of fools itself as it 44 looks at a group of trees and whether they are real or not assumes that they are all real. I 45 think that we are going to be benefiting this area. The conditions already on the approval 46 I think are solid ones. I don't think saving the trees that are there is necessarily Page 8 1 something that we should impose. I think they have a useful life if one wants to look at it 2 that way and some of them are probably reaching the end of those lives. I would like to 3 see different types of trees in there. I think aesthetically that would look better and 4 having that be the obligation of the applicant makes it even more comfortable for myself 5 and I am sure the City and the neighbors. So I would expect that in four or five years 6 time the site will look better than it does today. 7 8 As to having a precedent with regard to an R -1 area I think we are seeing this as an 9 unusual location and one that is necessary. I think that there are places in Palo Alto 10 where we have much like the first speaker mentioned rather poor coverage. Since I stand 11 out in the middle of my street to get any coverage I know of exactly what he speaks. 12 People are asking for these things and I think they are necessary. 13 14 Chair Burt: Would the seconder like to speak? 15 16 Commissioner Lippert: Well, the only reason I seconded actually is because I had made 17 the original motion to refer this to the Architectural Review Board. They have done their 18 work in terms of reviewing this and made their recommendation and I would like to 19 support their recommendation in terms of going forward to Council and also the tree 20 solution I think is the most appropriate solution. They are the arbiters of quality and 21 character in our community and therefore I believe that their recommendation here is 22 important and should be heard by Council. 23 24 I just wanted to say I want to second Annette's comments with regard to flushing out and 25 looking at the R-l regulations and whether we allow these further in the future. I know 26 that Staff is in the process of creating regulations for cell towers, are you not? So with all 27 speed I hope you will come up with your guidelines for that. 28 29 Chair Burt: Phyllis. 30 31 Commissioner Cassel: Annette, would you consider adding the condition to add watering 32 to the existing trees? 33 34 Commissioner Bialson: I would not because as I expressed before I am looking forward 35 to some of those trees that are there reaching the point where they would be necessary to 36 be removed and be replaced by the various trees that Dave has indicated. 37 38 Commissioner Cassel: Okay. I will support the motion anyway. There are a couple of 39 things we should comment about. One is the single-family issue. Even though we have 40 some various faux trees and poles in areas that are comnlercial that doesn't mean that 41 they are necessarily very far from residential spaces. They are often very close but it 42 somehow seems to calm people down just because they are in the commercial space. The 43 situation is the same. They need to be buffered or concealed or placed in a way in which 44 they are not too obvious. The distances are as appropriate by our existing laws that we 45 must be governed by. This particular tower is set way back from the road. You would 46 really have to be looking for it if you were driving down Foothill. It is quite some Page 9 1 distance from any of the other residential areas and there is a considerable amount of 2 buffering for trees in that area. Thank you. 3 4 Chair Burt: Dan. 5 6 Commissioner Garber: I will be supporting the motion. I was simply going to remind 7 the Commission that at the previous hearing in August we had had sonle thorough 8 investigation conversation/discussion on alternative sites. At that time we had become 9 satisfied with the site that was being proposed. 10 11 Chair Burt: Karen. 12 13 Vice-Chair Holman: I am also going to be supporting the motion. I have one question if 14 I might I don't know if it is for Planning Staff or the City Arborist. Other projects that 15 come along similar to this one of the conditions is, as number nine is here, for the first ten 16 years of the life of the project the following tree monitoring project will be in effect or 17 should be implemented. Why just the first ten years? This pole could be there for say 30 18 years. Why just the first ten years? 19 20 Ms. Campbell: I think at the very end of that condition there is an item here that says that 21 after these ten years have passed then we make a decision on whether or not there needs 22 to be continued monitoring on this site. Then if so we would draft a new set of 23 conditions for the site if we had to do that. 24 25 Vice-Chair Holman: Okay. Thank you for that clarification. Now if I could and this is 26 going to sound like wordsmithing but to me it is kind of important and then I might ask 27 the maker of the motion ifit is okay. It probably doesn't need to be in the motion. Nine- 28 D, it is a nit but again it may make a difference depending on who is reading it. For trees 29 determined to be in poor condition and then you go down and it says a replacement tree 30 shall be installed. It doesn't sound like on a one-for-one basis and I am just wondering if 31 that was the intention, a one-for-one basis. 32 33 Ms. Campbell: It would be a one-to-one basis. 34 35 Vice-Chair Holman: It doesn't need to be a part of the motion but maybe a little 36 clarification of that language might be helpful. I am happy to support the motion and 37 also concur with other Commissioners comments about the R-l issues. 38 39 AMENDMENT 40 41 Chair Burt: I also support the motion but I agree with Commissioner Cassel regarding 42 the preference for providing irrigation. I think it is important that we attempt to preserve 43 a full canopy that exists there. We heard the City Arborist indicate that a fairly low cost 44 irrigation will help preserve the vitality of these existing trees and they consequently fend 45 off disease. So that is I think just a constructive approach. I think it is concurrent with 46 what we heard would be the preference or the recommendation of the City Arborist as Page 10 1 well as the one member of the public who spoke. So it would be an amendment to the 2 motion if I have a seconder. 3 4 SECOND 5 6 Commissioner Cassel: I'll second it. 7 8 Chair Burt: Okay, do other Commissioners wish to speak to the amendment or to the 9 motion? 10 11 Commissioner Bialson: I would like to speak to the amendment. 12 13 Chair Burt: Okay. 14 15 Commissioner Bialson: The reason that I would look for a gradual change or turnover in 16 those trees is that I think that you will have them at various states of maturation and it 17 would be less likely that all of those trees that seem to have been planted all at same time 18 will all reach their end point at the same time and then you will not have anything there. 19 So if you allow trees to naturally pass on to greater things and replace those as they come 20 up you will have differing ages of trees and perhaps differing species which I think 21 allows for a canopy to be preserved rather than trying to freeze in place the canopy that 22 now exists. Because there is no provision for putting additional trees there now. So what 23 you would hope for is that you would be able to start replacing those trees that die off and 24 able to have a canopy that has different ages and will expire at different rates of time. 25 26 AMENDMENT PASSED (5-1-0-1, Commissioner Bialson voted no with Commissioner 27 Sandas absent) 28 29 Chair Burt: Okay. So let's call the motion. All those in favor say aye. (ayes) This is 30 the amendment. So the amendment passes five to one with Commissioners Cassel, 31 Garber, Lippert, Holman and Burt in favor and Commissioner Bialson voting nay. 32 33 MOTION PASSED (6-0-0-1, Commissioner Sandas absent) 34 35 So back to the primary motion. Any other discussion? All those in favor? (ayes) That 36 passes unanimously with Commissioner Sandas absent. 37 38 So I think that concludes this item. Thank you all very much for coming. We look 39 forward to better reception and hopefully an aesthetically acceptable environment. Thank 40 you for coming and participating. 41 Page 11 ARBOR RESOURCES. ATTACHMENT F profes510nal consulting arborlsts and tree care A TREE INVENTORY AND REVIEW OF THE THE AT&T MOBILITY CELLULAR EQUIPMENT PROPOSED FOR INSTALLATION AT 4243 MANUELA AVENUE (ALDERSGATE METHODIST CHURCH) PALO ALTO, CALIFORNIA SITE NAME: Aldersgate Methodist Church SITE NUMBER: CN3246 Prepared for: MSA Architecture & Planning, Inc. 301 8th Street, Suite 250 San Francisco, CA 94 ~ 03 Prepared by: David L. Babby Registered Consulting Arborist #399 Board-Certified Master Arborist #WE-4001 B April 7, 2009 Received APR 1 42009 &Departme.nt of Planning Community Environment .t:> .0. box 25295, san mateo. california 94402 II email: arborresources@comc3st.net t:>hone~ 650.654.335 I it fax: 650.240.0777 !I licensed contractor #79G763 · David L. Babby, Registered Consulting Arborist April 7, 2009 TABLE OF CONTENTS SECTION TITLE PAGE 1.0 INTRODUCTION •••..••••••.•••...•••••.•.••••••••••...••••••••..•••••••.•• 1 2.0 TREE COUNT AND COMPOSITION .................................. 2 3.0 REG~ATED TREES •••••..••••••••••••.•••••.•••.••.••••••.••••••.•.••••• 3 4.0 SUITABILITY FOR TREE PRESERVATION .......................... 4 5.0 REVIEW OF POTENTIAL TREE DISPOSITION •.•••••.... ~ ••••••• 5 6 .. 0 TREE PROTECTION GUIDELINES .................................... 6 6.1 Design and Installation Guidelines .................................. ... 6 6.2 Protection Measures before and during Construction ............... 8 7.0 ASSUMPTIONS AND LIMITING CONDITIONS ................... 11 EXHIBITS EXHIBIT TITLE A TREE INVENTORY TABLE B SITE MAP C PHOTOGRAPHS (includes photo index) D FENCING SIGN TEMPLATE 1 David L. Babby, Registered Consulting Arborist April 7, 2009 1.0 INTRODUCTION AT&T Mobility' is planning to install cellular equipmerit at the Aldersgate Methodist Church, 4243 Manuela Avenue, Palo Alto. I have been retained by MSA Architecture & Planning, Inc. to [1] review the preliminary design; [2] inventory and evaluate trees located in close proximity to the proposed equipment, utility locations, parking lot, driveway, and between Foothill Expressway from the equipment area; and [3] provide a tree protection plan for enabling a reasonable assurance of survival for trees being retained. In doing so, specific tasks performed are as follows (intended to comply with those requirements set forth in the Palo Alto Municipal Code Chapter 8.10.030): • Identify all trees that have trunks greater than four iriches in diameter (measured at 12 inches above grade) and are located either on-site or on neighboring properties if they are exposed to potential impacts. • Measure their trunk diameters at approximately 54 inches above grade or as appropriate to obtain the most representative sample of trunk size; all diameters are rounded to the nearest one-half of an inch. Trees with more than one trunk .. diameter listed have multiple trunks. • Estimate tree heights and canopy spreads. • Ascertain each tree's physiological health and structural integrity. • Identify each tree's overall condition (e.g. good, fair, poor or dead). • Rate each tree's suitability for preservation (e.g. high, moderate or low). • Assign numbers to each inventoried tree, and plot these numbers on the map presented in Exhibit B; the map is copy of a Site Plan (Sheet 1), dated 3/26/09, by MSA Architecture & Planning, Inc. • Affix metal tags with corresponding numbers to accessible tree trunks on the subject site (the tags are rOWld aluminum with engraved numbers -they should not / be confused with the rectangular tags found on most trees). • Obtain photographs of each tree; these can be viewed in Exhibit C. • Review the current set of plans. 4243 Manuela Avenue, Palo Alto; Site No. CN3246 MSA Architecture & Planning, Inc. Page 1 qj'll David L. Bobby, Registered Consulting Arborist April 7, 2009 • Identify whether any of the trees are defined as "regulated" by the City of Palo Alto Municipal Code; information regarding "regulated" trees can be viewed on page xiii of the City's Tree Technical Manual. 1 • Provide general guidelines to help avoid or mitigate anticipated impacts to trees that will be retained (i.e. a ''tree protection plan"), to include site inspections required by the City of Palo Alto. 2.0. TREE COUNT AND COMPOSITION Seventy-three (73) trees of four various species were inventoried for this report. They are .sequentially numbered as 1 thru 73, and the following table identifies their names, nwnbers and percentages: %OF NAME TREE NUMBER(S) COUNT TOTAL Canary Island Pine 10,11,53,61,63-73 15 21% Canary Island Date Palm 60 1 1% Coast Live Oak 7-9, 20-27, 37 .. 39, 41 f 45-25 34% 50,56,58,59,62 Monterey Pine 1-6, 12-19,2~36,40,42-32 44% 44,51,52,54,55,57 Total 73 100% As indicated in the above table, the site is populated primarily by Monterey pines, coast live oaks, and Canary Island pines. Specific information regarding each tree is presented within the Tree Inventory Table in Exhibit A. The trees' approximate locations can be viewed on the map in Exhibit B. 1 The T,ree Technical Manual can be viewed at the following website address: www.cityofpaloalto.orglcivicalfilebanklblobdloadasp? BlobID=6436. 4143 Manuela Avenue, Palo Alto; Site No. CN3246 MSA Architecture & Planning, Inc. Page 2 of 11 David L. Babby, Registered Consulting Arborist April 7, 2009· Two trees, #6 and 20, have trunks situated entirely or partially on the neighboring southern property (APN 175~03~29) and are exposed to potential canopy and/or root loss during construction. I found 15 trees to be seemingly missing from the Site Plan; they include #1, 3, 5, 12, 13, 20, 47-49, 53, 55, 68 and 69. Note that their locations shown on the map in Exhibit B (trunk: indicated by a blue dot) are only approximate and should not be construed as being surveyed or necessarily accurate. Also, note that trees shown on the plans but not assigned nutTlbers either do not exist or have trunk: diameters less than four inches at 12 inches high. 3.0 REGULATED TREES The City of Palo Alto regulates specific types of trees on public and private property for the purpose of avoiding their removal or disfigurement without ftrst being reviewed and pennitted by the City's Planning or Public Works Departments. Three categories within the status of regulated trees include protected trees (pAMC 8.10), street trees (pAMe 8.04.020), and designated trees (additional information can be viewed on pages xiii and xiv of the City's Tree Technical Manual). For this project, 20 trees are defmed as protected trees; they include trees #9, 20, 21,23- 27, 37-39, 41, 46, 47, 49, 50, 56, 58, 59 and 62. Each is a coast live oak with a tnmk diameter (at 54 inches above grade) larger than 11.5 inches. None of the trees are regarded as street trees (Le. none are situated within the public right- of-way). The designated tree category can be enacted by the City and applied to any specific tree associated with' a proposed development project. In the event the City qualiftes a speciftc tree to this category, it may become provisioned to be retained. 4243 Manuela Avenue. Palo Alto: Site No. CN3246 MSA Architecture & Planning, Inc. Pa!le 301'1 j David L. Babby, Registered Consulting Arborist April 7, 2009 4.0 SUITABILITY FOR TREE PRESERVATION" Each tree has been assigned a "high," "moderate" or "low" suitability for preservation rating as a IIlethod for cumulatively measuring and considering their physiological health, structural integrity, location, size and species. A description of these ratings with the assjgned tree numbers are presented below; note that the "high" category comprises 27 trees, the "moderate" category 23 trees, and the "low" category also 23 trees. High: These trees have a' high potential of providing long-term contribution to the site, appear in good health, contain seemingly stable structures, and/or are classified as a "protected tree." • Applies to #10, 11, 20·25, 27, 37-39, 41, 45-47, 49, 50, 53, 56, 58, 59, 62, 63, 67, 71 and 73. Moderate: These trees contribute to the site but not at seemingly significant levels. Their longevity and contribution is less than those of high suitability, and more frequent care is needed during their remaining life span. • Applies to #1,·2, 7-9, 16-18,26,30,32,35,40,44,51,57,60,64-66,68, 70 and 72. Low: These trees are predisposed to irreparable health problems and/or structural defects that are expected to worsen regardless of measures employed (i.e. beyond recovery). In several cases, they are already dead or dying. • Applies to #3-6,12-15,19,28,29,31,33,34,36,42,43,48,52,54,55, 6t' and 69. 4243 Manuela Avenue, Palo Alto: Site No. CN3246 MSA Architecture & Planning. Inc. Page 401'1 j David L. Babby, Registered Consulting Arborist April j. 2009 5.0 REVIEW OF POTENTIAL TREE DISPOSITION Implementation of the proposed design is not expected to impact existing· trees that Ii function as a screening element and buffer between Foothill Expressway and the proposed V' equipment area. The anticipated impacts would occur along the southern section of the site, were there are numerous Monterey pines (namely #4, 5 and 12-16) that would be exposed to significant root loss if the proposed routes of the electrical and telco lines are installed via open trenching; note that Monterey pines are very intolerant of root loss and can be expected to decline and possibly die shortly following significant root 10ss/disturbBalce. To avoid subjecting the adjacent pines to their likely demise and instability (or in some instances, hasten a tree's already declining condition), the proposed electrical and telco lines will require being dIrectionally-bored (i.e. twmeled) by at least four feet below existing grade, and the access pits Bald any above-grotmd infrastructure (e.g. splice boxes, meters and vaults) should be established beyond the trees' canopies (except possibly at the ele~trical pole beneath tree #3's canopy). If open trenching is desired in most or all areas, and the exposed pines are not expected to be significantly impacted, the proposed routes require modification (e.g. to the south side of the exposed trees). However, to accurately determine that the route can avoid these significant impacts, it will be essential that the specific route be staked on-site and verified. Construction of the proposed eqUipment area may severely impact the already significantly declining trees #18 and 19 (both Monterey pines, 8.5 and 17 inches, respectively). When considering their current declining condition combined with their poor tolerance of root disturbance, their loss may be an inevitable result of the project. 4243 Manuela Avenue, Palo Alto: Site No. CN3246 MSA Architecture & Planning, Inc. Page 5 of11 David L. Bobby, Registered Consulting Arborist April 7, 2009 6.0 TREE PROTECTION GUIDELINES Recommendations presented within this section are intended to serve as guidelines for achieving the viable mitigation and protection of retained trees, and must be carefully followed and incorporated into the project plans to achiev~ a reasonable assurance of their survival. Note that they are subject to revision upon reviewing the full, revised set of project plans, and I should be consulted if any cannot be feasibly implemented. 6.1 Design and Installation Guidelines 1. For ibis project, the minimum Tree Protection Zone (TPZ) for any given tree should be regarded as the section of unpaved area that is a radial distance from the trunk of 10 times its diameter (e.g. a tree with a 12-inch trunk diameter would have a TPZ of 10 feet in all directions from its trunk); for trees with mUltiple trunks, the largest diameter should be used for determining the TPZ (all distances should be interpreted from a trunk's closest edge). The TPZ is the area where all grading (soil cuts, overcut, fill and fmish-grading), trenching and soil scraping shall be avoided. In areas where this is not feasible, the impacts should be reviewed by the project arborist for determining whether an alternative TPZ can potentially support a tree's longevity and stability. 2. Recommendations presented in the previous section of this report should be considered and followed regarding the proposed routes and installation method( s). 3. If the lines are to be directionally .. bored, I recommend the tunnel is at least four feet below existing grade, the ground above the tunnel( s) remains undisturbed, and the access pits and any above-ground infrastructure (e.g. splice boxes, meters and vaults) established beyond the trees' canopies, except possibly at the electrical pole beneath tree #3' s canopy. 2 The "project arborist" refers to me or another individual that is both certified by the International Society of Arboriculture (ISA) and is a member of the American Society of Consulting Arborists (ASCAj. 4243 Manuela Avenuet Palo Alto; Site No. CN3246 Page 6 of 11 MSA Architecture & Planning, Inc. David L. Babby, Registered Consulting Arborist April 7, 2009 4. Any approved digging required within a tree's TPZ shall be manually performed with great care under the supervision of the project arborist. Roots encountered with diameters of two inches and greater· should be retained and not damaged during the process. Note any approved trench should not require overcut. 5. The existing drainage· pattern must not be modified in a manner than directs the flow of water towards an existing oak tree. Additionally, the drainage design should not require trenching within a TPZ. 6. All existing, unused lines or pipes within a TPZ shall be abandoned and cut off at existing soil grade (rather than being dug up and causing subsequent root damage). 7. Pursuant to City Ordinance, a copy of this report shall be incorporated into the final set of project plans; titled Sheets T -1, T -2, etc. (Tree Protection Instructions); and . referenced on all site-related plans. Also, refer to the following website: www.city.palo-alto.ca.usldeptslplnlplanningJorms.asp for additional forms required bytbe City. 8. Any future plantings should conform to the following additional guidelines: a. Plant material installed within a TPZ should be avoided or highly minimized to avoid conflicts with tree roots and trunks. Note plant material should be established no closer than 48 to 60 inches from the bases of the trunks. b. Plant material installed beneath the oak canopies should be drought-tolerant, limited in amount, and planted at least 48 inches from their trunks. A source for identifying suitable drought-tolerant plant material is as follows: www.californiaoaks.orglExtAssets/CompatiblePlantsUnder&AroundOaks.pdf. c. Irrigation can, overtime, adversely impact the oak trees and should be avoided. Irrigation for any new plant material beneath their canopies should be low- volume, applied irregularly (such as only once or twice per week), and temporary (such as no more than two to three years). Irrigation should not strike the trunks of the pines. d. In the event trenches for irrigation and/or lighting are required within a TPZ .. 4243 Manuela Avenue. Palo Alto; Site No. CN3246 MSA Architecture & Planning. Inc. Page 701'11 David L. Babby, Registered Consulting Arborist April 7, 2009 they shall be installed in a radial direction to the trees' trunks. If this is not . possible, the work may need to be performed using a pneumatic air device (such as an Air-Spade®) to avoid wmecessary root damage. e. StQnes and new fencing should be placed no closer than least two feet from a tree's trunk. Additionally, mulch should not be placed against the trunks. f. Tilling beneath canopies should be avoided, including for weed control. g. Bender board or other edging material proposed beneath the canopies should be established on top of existing soil grade (such as by using vertical stakes). 6.2 Protection Measures before and during Construction 9. Prior to the arrival of heavy equipment, site clearing and construction, an on-site, pre- construction meeting shall be held between the project arborist and contractor (an additional meeting may be necessary prior to construction). The intent is to review work procedures, protection fencing locations, placement of drilling equipment for the tower, trees being removed, procedures for digging beneath or near TPZs, access pit locations, limits of grading, staging area( s), route of access, root zone buffer( s), equipment washout pits, pruning (if necessary), supplemental watering, future plantings, and any other required protection measures. This meeting should be conducted a least two full weeks prior to construction, and the equipment area and limits of grading should be staked prior to the meeting. 10. Tree protective fencing shall be installed prior to any construction activity for the purpose of restricting access, dumping, storing and cleaning into the TPZs. It shall be comprised of five-to six-foot high chain link mounted on eight-foot tall, two-inch diameter steel posts that are driven 24 inches into the ground and established no farther than 10 feet apart. Where the fencing must be established on existing pavement, panels (reserved for the pavement sections) can be erected using metal stands or concrete blocks. All fencing must be maintained throughout construction, and at no time shall it be opened or relocated without direct authorization from the arborist. Note that the specific location of fencing will depend upon which trees remain and the method of utility installation. 4243 Manuela Avenue, Palo Alto; Site No. CN3246 MSA Architecture & Planning, Inc. Page8qf'11 David L. BabbY, Registered Consulting Arbori$t April 7, 2009 11. Unless otherwise approved, all construction activities must be conducted beyond the designated-fenced areas (even after fencing is removed), and beyond the unpaved areas beneath tree canopies, to include, but not limited to, the following: grading, stripping of topsoil, trenching, equipment cleaning, stockpiling/dumping of materials, . and equipment/vehicle operation and parking. Also, tree trunks shall not be used as winch supports or for moving/lifting heavy loads. 12. Tree protection warning signs must be prominently displayed on each fence side facing construction activities, and ·be of a minimum 8-~ by 11 inches in size. See Exhibit D for a template. (dated 7/21/07) derived from the City's following website address: www.city.palo-alto.ca.uslcivicalfilebanklblobdload. asp? BlobID= 2716. 13. Prior to the City issuing a demolition permit, the project arborist is required to prepare a letter verifying tree fencing is correctly established. 14. The project arOOrist must be retained to regularly inspect the project site as outlined on page 2-14 of the Tree Technical Manual (Section 2.30 Inspection Schedule). Inspections shall occur once per month (minimum) and continue through final inspection. A written summary of pertinent observations and recommendations shall coincide with each inspection, and a copy emailed to the City's Planning Arborist. Pertinent measures to promote the longeVity and vigor of retained trees beyond the development period shall also be provided at the end of the project. 15. I recommend the drill rig used for installing the pole is set on existing pavement, as opposed to operating on and compacting exposed soil beneath tree #17's canopy. 16. Prior to construction, if requested by the project arborist, a four-to five-inch layer of coarse wood chips (v..-to %-inches in size) from a local tree service company may be required to be manually spread on unpaved soil beneath ~e canopies of trees in close proximity to the electrical and telco routes, as well as the equipment area. 4243 Manuela Avenue, Palo Alto: Site No. CN3246 MSA Architecture & Planning, Inc. Page 9 QlIl David L. Bobby, Registered Consulting Arborist April 7. 2009 17. The project arborist shall be retained to monitor development activities authorized within a TPZ. Any digging or trenching within a TPZ shall be manually perfonned (i.e. through hand-digging) without using heavy equipment or tractors.. For trenching, roots exposed with diameters of two inches and greater should remain intact and not be damaged (if necessary, tunneled beneath). 18. Recommendations that are presented within Section 6.1 of this report and pertain to actual construction should also be followed. 19. Throughout construction during the. months of May thru October (or as deemed necessary), supplemental water shall be supplied to the retained trees in close proximity to the proposed features. The methodology, frequency and amounts shall be prescribed by the project arborist. 20. The pruning and removal of trees shall be performed by a California state-licensed tree service company (D-49 classification) that has an ISA certified arborist in a supervisory role, carries General Liability and Worker's Compensation insurance, and abides by ANSI Z13:tl-2006 (Safety Operations). Pruning shall also be performed under the direction of the project arborist and in accordance with ANSI A300-20P 1 standards. Any prunitig of trees should be limited to removing deadwood one-inch and greater, clearing encroachments, and reducing heavy limb weight. 21. Any stump being removed within a TPZ shall occur using a stump grinder rather than being pulled up with an excavator or backhoe. 22. Great care must be taken by equipment operators to position their equipment to avoid the trunks and branches of trees. Where a conflict exists, the project arborist should be advised to provide a feasible solution. 23. The disposal of harmful products (such as cement, paint, chemicals, oil and gasoline) is prohibited beneath canopies or anywhere on site that allows drainage beneath or near canopies. Herbicides shomd not be used beneath the trees' canopies; where used on site, they should' be labeled for safe use near trees. 4243 Manuela Avenue. Palo Alto.; Site No. CN3246 MSA Architecture & Planning, Inc. Page 10 qfll David L. Babby, Registered Consulting Arborist April 7,2009 7.0 ASSUMPTIONS AND LIMITING CONDITIONS • All information presented herein covers only those items that were examined and reflects the condition of those items at the time of my observations on March 30, 2009 and April 1, 2009. • My observations were performed visually without probing, coring, dissecting or excavating. I cannot, in any way, asswne responsibility for any defects that could only have been discovered by performing the mentioned services in the specific area(s) where a defect was located .. • The assignment pertains solely to trees listed in Exhibit A. I hold no opinion towards other trees on or surrounding the project area. • I cannot provide a guarantee or warranty, expressed or implied, that deficiencies or problems of any trees or property in question may not arise in the future. • No assurance can be offered that if all my recommendations and precautionary measures (verbal or in writing) are accepted and followed, that the desired results may be achieved. • All information presented on the plans reviewed is assumed to be correct. I cannot guarantee or . be responsible for the accuracy of information provided by others. • I assume no responsibility for the means and methods used by any person or company implementing the reconlmendations provided in this report. • The information provided herein represents my opinion. Accordingly, my fee is in no way contingent upon the reporting of a specified fmding, conclusion, or value. • This report is proprietary to me and may not be copied or reproduced in whole or part without prior written consent. . It has been prepared for the sole and exclusive use of the parties to who submitted for the purpose of contracting services provided by David L. Babby. • The map presented in this report (Exhibit B) is solely intended to show approximate tree locations and numbers and shall not be interpreted as an engineered or architectural drawing. • If any part of this report or copy thereof be lost or altered, the entire evaluation shall be invalid. Prepared By: W {,. h4 David L. Babby Registered Consulting Arborist #399 Board-Certified Master Arborist #WE-4001 B 4243 Manuela Avenue. Paio Alto; Site No. CN3246 MSA Architecture & Planning, Inc. Date: April 7, 2009 Page 110[11 David L. Babby, Registered Consulting Arborist EXHmITA: TREE~NTORYTABLE 4243 Manuela Avenue. Palo Alto: Site No. CN3246 MSA Architecture & Planning. Inc. April 7, 2009 • TREE NO. ARBOR RESOURCES professIOnal consulting arborlsts and tree care TREE INVENTORY TABLE ~"if Q 'i' ~'l ~ :s ~ ~ ~ e~ ~ ·Ib i~ ......, B~ iii 1 . 0 :f3! i~ ..at a~ g 00 s 1~ ~ C) Ib ~~ it .a~ TREE NAME ~ 'a 10 ~~ lf~ Monterey Pine (Pinus rad/ata ' 50% 75% Comments: Adjacent to guy wire high-voltage electrical pole. Monterey Pine Pinus radiala) Comments: Adjacent to guy wire high-voltage electrical pole. Monterey Pine i S~ .~ g :a 5~ ~~ ,6~ (pinus radiata) 25% Poor ~ 'i' I ~ i .~ :: 00 ! s ~ « <2g~ F-i ,e..~ ~ j g Iii t) ~ t, ~ 00 '0 8i. :: Z ..::i ' Comments: Adjacent to high-voltage electrical pole and transformer. Has a one-sided canopy due to its location. Monterey Pine (Pinus radiata 75% Comments: Three trunks originate at grade. Monterey Pine (Pinus radiata) Comments: Appears to be on the neighboring property. Monterey Pine (Pinus radiala 75% Comments: Beneath high-voltage electrical wires. Comments: Two trunks at grade fonn poor attachment. ercus agrifolia) Comments: Two trunks originate at grade and fonn a weak attachment. Site: 4243 Manuela Avenue, Palo Alto; Site No. CN3246 Prepared for: MSA Architecture and Planning, Inc. Prepared by: David L. Sabby 10f8 April 7, 2009 • ; TREE NO. ARBOR RESOURCES professiOnal consulting arborlsts and tree care TREE INVENTORY TABLE TRBENAMB Canary Island Pine (Pinus canariensis) Comments: Canary Island Pine (Pinus canariensis Comments: Comments: Monterey Pine (Pinus radiata 2t'ii ~'a g~ ~i Is:: a~ 1-8 ~~ ~ e 1 ,,-.. 11 e 00 it J ~ Comments: Has codominant leaders. Monterey,Pine (Pinus radiata) Comments: Monterey Pine (Pinus radiata) Comments: Has codominant leaders. Monterey Pine c----~ ~ ~ ~ .t:~ 6~ .~ ;t;..J' lrf s= rs 8t 1~ ~§ g~ ::t!~ ... ooe (Pinus rodiata 75% 'i ge .~ ~ ~~ 8'!ij ]~ 52- Comments: Grows with a slight lean due to crowded growing conditions. Monterey Pine (f'inus radiata) 75% Fair Comments: Sparse canopy and dieback observed. Heavy limb weight. Monterey Pine (Pinus radiata) Comments: Site: 4243 Manuela Avenue, Palo Alto; Site No. CN3246 Prepared tor: MSA Architecture and Planning, Inc. Prepared by: David L. Babby 20(8 ta ~~I s:: I .!! ~ 00 =6' CI 0 -< ~-B] 1 ~ 6 ~~i .d 11 00 j£~ &::: ~ c April 7, 2009 TREE NO. ARBOR RESOURCES professional consultmt;J arborlsts and tree care TREE INVENTORY TABLE TREE NAME Monterey Pine Pinus radiata) ~i I 'f ""':.'0-g~ i] m~ aca ~~ 8a Comments: Dying. --S I ,,-.., 5 ~ ~ ! ~ -C-~ ~ Ul ~ ~ ~~ t:::l II:. 'ih~ o~ !, '.Jj ;a....:-~lf a ~ 8~ 11! -S~ ~ 10 g8 ::B~ ooC Comments: Beneath high "voltage electrical wires and at pole. j II) 8~ '.t,I 8 ~~ o .tJ u~ 18 5~ --~ ~ =~ ~ i H ~§"O "i .€'i 0 iii i J: til&: = Comments: Beneath high-voltage electrical wires. Three leaders form a weak attachment. Coast Live Oak (Quercus agrifolia Coast Live Oak (Quercus agrifolia) 51 s:: 5 .~ 00 ~ ~ 8 « ~ § i-t ~ 0 .§ 0 Z a=: Comments: Beneath high-voltage electrical wires. Two trunks near grade form weak attachment. Comments: Trunks are spaced apart by about three inches. Site: 4243 Manuela Avenue) Palo Alto; Site No. CN3246 Prepared for: MSA Architecture and Planning, Inc. Prepared by: David L. Babby 30'8 April 7, 2009 • TREE NO. ARBOR RESOURCES profes510nal consulting arbOrl5ts and .tree care TREE INVENTORY TABLE TREE NAME Monterey Pine (Pinus radiata) &'iI .. [ "':' e.<' ~§ ;~ ~~ l~ Comments: Declining. Monterey Pine (pinus radiata ) Comments: Declining. Monterey Pine (Pinus radiata Comments: Comments: Declining. Monterey Pine (pinus radiata) Monterey Pine (Pinus radiata) Comments: Declining. Monterey Pine . (Pinus radiata) Comments: Declining. Monterey Pine .....-;-e i '6 ::a .'Z' ! ~ 'i -. ~ II) s, 'i~ c::d~ 1 §~ .g 8 • .p 0 0 0 :a 1""" J1i s~ o ~ 0 00 ut ]1f i~ ~ .s~ ~~ ~ 19 O~ u :fc ooC ~81 ·~'ii :a ~ S rI) ~. &:.~ (Pinus radiata) Low Comments: Grows with a distinct lean. Has two leaders that fonn a weak: attachment. Site: 4243 Manuela Avenue, Palo Altoi Site No. CN3246 Ptepared for: AfSA Architecture and Planning, Inc. Prepared by: David L. Sabby 4018 ta s:: l:l = .~ ~ 0 00 :er e g -< F--i i j 6 Q ~t s 00 ~ "0 ~ .s~ :: Z April 7, 2009 • ARBOR RESOURCES professIOnal c~n51Jltln~ arpoTists and tree care TREE ·INVENTORY TABLE bta 'C' ~ Q.,(I) (I) 9 g! ,!. .~ J.t i' 0 ---~ ~ g~ s 'i~ ~ as Ali I Q)::5 '.a 0 ~jf :a 0 eaQl me:: -. i' 8] gO . iSea s 00 8t ..... 'i 0 TREE l~ i ~ .;3~ ~ 1~ ~;i ~ 18 ~~~ NO. TREE NAME ~ l::i:c ooC o~ oo~ Comments: Small wound at base. Two of three leaders fonn a weak attaclunent. (Quercus a Comments: Comments: Monterey Pine Pinus radiata) Comments: Declining. Comments: Comments: Declining. Monterey Pine (Pinus radiata) Comments: Declining with a chlorotic canopy. Site: 4243 Manuela Avenue, Palo Alto; Site No. CN3246 Prepared for: MSA Archltectul'e and Planning, Inc. Prepared by: David L 8abby 5018 if 5:: i ~ =<1) 00 :s' ~ 8 -< i ~ § ~ ~ 1t ~ ~ .s~ Aprll7, 2009 ARBOR RESOURCES pl"'ofesslonal consultmg ari;;lorlstsand tree care TREE INVENTORY TABLE TREE NAME Comments: Comments: Trunks are stump sprouts. Comments:. Two trunks form a weak attachment. Comments: Monterey Pine Pinus radiata) Comments: Declining. Monterey Pine (Pinus radiata Comments: J)ying. Canary Island Pine Pinus canariensis Comments: Comments: Tree is dead. Site: 4243 Manuela Avenue, Palo Alto; Site No. CN3246 Prepared for: "'SA Architecture and Planning. Inc. Prepared by: David L. Babby 60f8 Apr/IT, 2009 • ARBOR RESOURCES professIOnal consultln~ arborlsts and tree care TREE INVENTORY TABLE TREE NO. TREE NAME Monterey Pine (Pinus radiala b-a Q.CIl .!-'i! ~~ b§ l) ~6: . 6 CI~ 1] ~C Comments: Dying. Comments: Monterey Pine (pinus radiata) Comments: -. S ~ Go) -. 11 e 00 i ~ ::g ~ Comments: Has a buried root collar. Canary Island Date Palm Phoenix canariensis) -C-~ ~ t::: Ib o?f:. ,,,,0 ;a...r t::: ·fJ 8t ~~ ::C ~ ... Comments: Has approximately 1 S brown trunk feet Canary Island Pine (Pinus canariensis ) ~ ~~ 'i~ ~.~ ~lf It ~ Eg ooC Comments: Declining and has a very sparse, chlorotic canopy. Comments: Canary Is1and Pine Pinus canariensis ) Comments: Site: 4243 Manuela Avenue, Palo Alto; Site No. CN3246 Prepared for: MSA Architecture and Plannlng# Inc. Ptepared by: David L. Babby 70t8 s! .'" 8 ~] 8' ~~ b 0 ~2- j ~ ~ d cd ,~ I .B ~ 00 ~ t::: G a :tr < 0"'0 i ~ 5 .e-'i 0 ~il ,.8. il £ 00 '0 .3 0 oo~ :: Z ~ April 7, 2009 • ARBOR RESOURCES professional consulttnt3 arborlsts and tree care TREE INVENTORY TABLE TREE NO, TREE NAME Canary Island Pine Pinus canariensis) ~1 · 'f! "'-:-p" g~ i§ ~s:: iS~ 1-8 H~ / Comments: Tip dieback. Canary Island Pine (Pinus canariensis )' Comments: Declining, Canary Island Pine Pinus canariensis Comments: Declining, Canary Island Pine (pinus canariensis) Comments: Canary Island Pine (Pinus canariensis) ...-:-e i ~ Comments: Sparse canopy. Canary Island Pine Pinus canariensis ...-:-e 1 00 t! ~ C,) Comments: Dying, Has poor trunk taper. Canary Island Pine (Pinus canariensis Comments: Branch dieback. Canary Island Pine (Pinus canariensis Comments: Asymmetrical canopy, Canary Island Pine (Pinus canariensis) Comments: Canary Island Pine (Pinus canariensis) Comments: Site: 4243 Manuela Avenue, Palo Alto; Site No. CN3246 Prepared for: MSA Architecture and Planning, Inc. Prepared by: David L. Sabby 80f8 ~ i ] 0 ~ ~~ §E! §$ '§b8 '.Q :3 '.;:J :a...,J' If ;a 0 CI fi §~ 8~ i~ -s~ ~ 18 8 ~.~ 0:0. 000. ~ ~ 1 1i .~ -CD 00 :t:r . ~ ~ S cSdi -< ~ § .P~ 0 ~ :Set .a it ~ 00 J~~ &:: ~ ..s 0 :: .. tf: April 7, 2009 David L. Babby, Registered Consulting Arborist EXHIBITB: SITE MAP 4243 Manuela Avenue. Palo Alto: Site No. CN3246 MSA Architecture & Planning. Inc. April 7, 2009 -.. _ ... - ~ u:; +:;! is .u.. r·:., ~: ~ ·2~ .................. .... .. --..... -... - " ... --i;; ~ ~:;;. ~._/ / S .,. ~ '" . --.. ,. ~.;; a~ " '. '. . :-" ~ Vi :; "". . rl ;;l .~~~ .... .z. +-z David L. Babby, Registered Consulting Arborist EXHffiITC: PHOTOGRAPHS Page C-l: Tree # 1 thru 9 Page C-2: Trees #10 thru 23 Page C-3: Trees #24 thru 40 Page C-4: Trees #41 thru 56 Page C-5: Trees #56 thru 63 Page C-6: Trees #64 thru 73 Photo Index 4243 Manuela Avenue, Palo Alto; Site No. CN3246 MSA Architecture & Planning, Inc. April 7, 2009 David L. Babby, Registered Consulting Arborist 4243 Manuela Avenue, Palo Alto; Site No. CN3246 MSA Architecture & Planning, Inc. April 7, 2009 Page C-l David L. Babby, Registered Consulting Arborist 4243 Manuela Avenue, Palo Alto; Site No. CN3246 MSA Architecture & Planning, Inc. April 7, 2009 PageC-2 David L. Babby, Registered Consulting Arborist 4243 Manuela Avenue, Palo Alto; Site No. CN3246 MSA Architecture & Planning, Inc. April 7, 2009 PageC-3 David L. Babby, Registered Consulting Arborist 4243 Manuela Avenue, Palo Alto; Site No. CN3246 MSA Architecture & Planning, Inc. April 7, 2009 Page C-4 David L. Babby, Registered Consulting Arborist 4243 Manuela Avenue, Palo Alto; Site No. CN3246 MSA Architecture & Planning, Inc. April 7, 2009 PageC-5 David L. Babby, Registered Consulting Arborist 4243 Manuela Avenue, Palo Alto; Site No. CN3246 MSA Architecture & Planning, Inc. April 7, 2009 PageC-6 David L. Bobby, Registered Consulting Ar-horist EXBffiITD: FENCING SIGN TEMPLATE 4243 Manuela Avenue. Palo Alto: Site No. CN3246 MSA Architecture & Planning, Inc. April 7. 2009 WARNING- -- Tree Protection Zone This fencing shall not be removed without City Arborist approval (650-496-5953). Removal without permission is subject to a $500 fine per day*. ·Palo Alto Municipal Code S'ection 8.10~ 110 ATTACHMENT G Responses to Commissioner Keller's Questions: 1. Please comment on the assertion by an appellant about the need for two separate poles, one by AT&T and the other by Metro PCS. Metro PCS has applied to co-locate an antenna onto AT&T's monopine, should it be approved by Council. 2. (a) Please confirm the issue of visibility of the mono-pole from Dan Askari's parcel. Data The staffreport states that Mr. Askari's home is about 20 feet from the church property. This was based upon an initial visual estimate by the project planner. However, based on a site plan from the approved building permit plans obtained from the City of Los Altos Hills, Mr. Askari's guest house is located 30 feet from the Church property at its closest point, whereas his home is located about 75 feet from the church property. The proposed location of the monopine is 62 feet from the comer of Mr. Askari's property, where a utility pole is located (as shown on the arborist's report Site Map and the project plans Site Plan). The monopine would be 45 feet tall, located approximately 107 feet from Mr. Askari' s guest house. Mr. Askari' s Photo Simulation The photo simulation Mr. Askari provided show his guest home in the foreground, with the property line fence, monopine and fenced equipment area in the middle ground, and trees in the background. The monopine appears closer to Mr. Askari' s property than it would as proposed. The height of the monopine as shown in the photo-simulation appears to be about 60 foot tall, where a 45 foot tall monopine is proposed. Arborist David Babby's report Site Map (Exhibit B) indicates 30 foot tall oak trees bordering the property line, and trees #20 and 21, near the utility pole, are cited by the arborist as 30 feet tall and 35 feet tall, respectively. The existing oak trees in the middle ground between the proposed location (more in the background) and the fenced property line are shown behind the monopine in this sumulation. 2. (b) Please comment on his request for trees to be planted by AT&T on his parcel. The ARB recommendation is to plant 7 additional trees in 24"box and 36" box sizes, as recommended by the City Arborist, on Church property to provide additional screening of the monopine from views from Mr. Askari's property and Foothill Expressway. Staff has forwarded Mr. Askari' s request for 72" box sized trees to the applicant and the ~ 4216 4224 ~ ~ 4260 <:> ~ ~ ~ oIee2. 2009-06-08 13:29:22 4192 4230 fO IG N '<I' ~~~ Zcning D1.lrt~ Plein (\'<:c-mllpllgls$1gl._n~nin;.mdb) (; g '" o §; Ii') N 14850 * 10 ~ Ol ~ oil; N \ \,\ 25638 (0. The City of Palo Alto This map is a pro'duct of the City of Palo Alto GIS ~ --rr 197' ThIs document Is • grephic ~lIIIIon oriy of best Zl'l1IIIebIe SOl The CIty of Palo Alto .......... no """""';bliity for trty -=So 01989 to 2009 CIty of Palo, ~ -f » (1 ~ 3: m z -f :I: TO: HONORABLE CITY COUNCIL FROM: CITY MANAGER DEPARTMENT: PUBLIC WORKS DATE: JULY 27, 2009 CMR:324:09 REPORT TYPE: CONSENT SUBJECT: Approval of Contract with Barry Swenson Builder in the Total Amount not to Exceed $1,365,988 for the College Terrace Library and Child Care Center Seismic Upgrade and Rehabilitation Project and Approval of Amendment No.2 to Contract C07117374 with The KPA Group, Inc. to Add $108,940 for a Total Not to Exceed Amount of $429,336 for Construction Administration Services for the College Terrace Library Seismic Upgrade and Rehabilitation Project -Capital Improvement Program Project PE-05010 EXECUTIVE SUMMARY Staff recommends that Council approve the attached contract for the rehabilitation of the College Terrace Library and a contract amendment for construction oversight services. College Terrace is one of five libraries identified for improvements by the Library Service Model Analysis and Recommendations (LSMAR). The College Terrace Library rehabilitation was not included in the Measure N Bond measure, therefore improvement costs will be provided through General Fund monies. Due to the low bid prices, some of the Capital Improvement Program (CIP) monies will be returned to the Infrastructure Reserve at the midyear budget. RECOMMENDATION Staff recommends that Council: 1. Approve and authorize the City Manager or his designee to execute a contract (Attachment A) with Barry Swenson Builder in the amount of $1,365,988 for construction of improvements at the College Terrace Library and Child Care Center (College Terrace Library). The amount of$I,365,988 includes a base bid of $1,301,490. plus $64,498 for add alternates. 2. Authorize the City Manager or his designee to negotiate and execute one or more change orders to the contract with Barry Swenson Builder for related, additional but unforeseen work which may develop during the project, the total value of which shall not exceed $341,497. 3. Approve and authorize the City Manager or his designee to execute Amendment No.2 (Attachment C) to the contract C07117374 with The KPA Group, Inc., to add $86,940 for Page 1 5 construction administration services, including increased structural engineer and historic architect oversight and $22,000 for related, additional but unforeseen work which may develop during the project, for a total additional amount not to exceed $108,940 and a total contract amount not to exceed $429,336. BACKGROUND The College Terrace Library was constructed in 1936. The building square footage is approximately 4,860 square feet. The main portion of the building is used as a public library while the south wing is leased to a childcare center. The building was originally classified as a Category 4 (some historical significance) historical structure in the City's historical building inventory. The College Terrace Library and Childcare center was identified in the 1996 Adamson Report as needing upgrades to all major building components such as heating, air conditioning, roofing, and electrical systems. In addition to replacing these components, the building will be seismically reinforced and the restrooms will be updated to comply with the Americans with Disabilities Act (ADA) accessibility guidelines. Interior spaces will be reconfigured for accessibility and greater functionality. The adjacent Mayfield Park will also be upgraded with new trees, sod, and park furniture, including a table and bench that will be made from portions of a eucalyptus tree that was removed earlier in the project. The Historic Resources Board reviewed and approved the improvements to both the building and to the park. On February 5, 2007, Council approved a contract with The KPA Group, Inc. for architectural and engineering design services for the College Terrace Library seismic upgrade and rehabilitation project (CMR: 110:07). On January 26, 2009, Council approved an agreement with Nova Partners for construction management services (CMR:119:09) in order to supplement existing staffing levels. An Historic Structures Report (HSR) was prepared for the building which analyzed the character-defining features for relative historic importance. On January 21, 2009, using the information provided by the HSR, the HRB recommended a reclassification of the building to Category 2, "major building," in the City's historic building inventory. This action was later approved by Council on April 7, 2009 (CMR:192:08). The building is now subject to maintenance regulations for historic structures· as set forth in the Palo Alto Municipal Code Section 16.49.080 and must comply with Secretary ofInterior Standards for Rehabilitation. The Transfer of Development Rights (TDR) program allows the City to sell the 2,500 square foot bonus floor area of Category 2 historic buildings. The sale of TDR for the 2,500 square foot bonus area of the Palo Alto Children's Library in March 2006 generated approximately $237,500 ($95 per square foot), which the City used to partially fund construction of the Children's Library. Given the current economic climate, however, that amount would likely be less for the College Terrace Library. As a result, the TDR for the 2,500 square foot bonus area of the College Terrace Library TDRs may be sold at a later date. Page 2 DISCUSSION Project Description During construction, the library will be closed to the public and most staff shifted to other libraries. To help offset the impact of the closure, the hours at the Downtown and Mitchell Park libraries have been expanded by four hours each per week. A trailer will be placed on a nearby vacant lot to serve as a temporary child care center for the duration of construction, which is estimated to be one year. Bid Process Given the size, complexity, and location of the project, staff wanted to ensure that any contractor selected would be capable of completing the project in a high quality and timely fashion. In March 2009, a Request for Prequalification of Bidders was advertised and posted at local Builders' Exchanges. Any contractor who intended to submit a bid was required to complete a questionnaire that presented the company's financial status, ability to obtain bonding and experience on similar structures. Sixteen companies submitted information and twelve were determined to be qualified to submit construction bids. A notice inviting formal bids (lFB) for the College Terrace Library project was sent to twelve prequalified contractors. The bidding period was 42 days. Bids were received from five contractors on June 23, 2009, as listed on the attached bid summary (Attachment B). Bids ranged from a total low bid of$I,365,988 to a high of$I,453,835. Summruy of Bid Process Bid NamefNumber IFB 124683 College Terrace Library improvements Proposed Length of Project 12 months Number of Bids Mailed to 17 (including sub-contractors and suppliers) Contractors Number of Bids Mailed to Builder's 11 Exchanges Total Days to Respond to Bid 42 Pre-Bid Meeting? Yes Number of Company Attendees at 18 Pre-Bid Meeting Number of Bids Received: 5 Bid Price Range * I Low of $1,365,988 to a high of $1 ,453,835 *Bid summary provided in Attachment B Staff has reviewed all bids submitted and recommends that the bid of $1,365,988 submitted by Barry Swenson Builder be accepted and that Barry Swenson Builder be declared the lowest responsible bidder. The bid is 42 percent below the engineer's estimate of $2,350,812. The low bids for this project can largely be attributed to the current significantly depressed economic conditions, which are highly conducive to competitive bidding. The engineer's estimate of $2,356,312 prepared by The KPA Group before the project was advertised for construction bids turned out to be overly conservative. It was, nevertheless, based on their observations of the construction climate since the economy took a significant downturn in the fall of 2008. Staff CMR:324:09 Page 3 of5 believes that it is the uncertainty of the current market and the willingness of contractors to work at or near cost that contributed to the differential between the engineer's estimate and the bids. A contingency amount of 25 percent is requested because of the complexity of the seismic retrofit portion of the work. An additional factor is that staff has recently experienced work on older buildings that have had significant amounts of dry rot, termite and rodent damage uncovered during construction. In addition, and possibly more significantly, this competitive bidding climate has created an environment wherein contractors submit bids with little or no profit or contingency in an effort to simply secure work to keep their crews employed and stay in business. Given the reality of the current bidding environment, staff believes that it is prudent to provide adequate resources to deal with the contract and construction issues that will likely arise, so as to avoid delaying the project and incurring even greater costs. The additional funds requested represent only one-third of the low-bid savings below the project cost estimate. Staff confirmed with the Contractor's State License Board that the contractor has an active license on file. Staff checked references supplied by the contractor for previous work performed and found no major complaints. Consultant Contract Amendment Amendment No.2 to the contract with The KPA group will provide for general construction administration oversight during the construction phase. It will also provide for greater involvement of the structural engineer during the seismic retrofit phase as well as increased oversight by an historic architect. Staff is requesting an Additional Services fee equal to 25 percent of the total Amendment amount in anticipation of possible increased involvement by the architect due to the complexity of the project combined with the competitive bidding environment. RESOURCE IMPACT Funding for the construction contract with Barry Swenson Builder and for construction administration by The KP A Group is included in Capital Improvement Program project PE- 05010. Based on the low construction bids, $1.4 million of the CIP budget will not be needed for construction and will be returned to the Infrastructure Reserve at midyear. The excess appropriation may be used to provide resources for the upcoming construction of temporary facilities for the Mitchell Park Library and Community Center and the Downtown Library (the auditorium of the Cubberley Community Center is currently designated) or fund other Council priority capital projects or Council priorities. The library is also eligible for the sale of Transfer of Development Rights. TDR sold as part of the Palo Alto Children's Library in March 2006 generated approximately $237,500. That amount would likely be less for the College Terrace Library given the current economic climate, so staff is recommending sale at some point in the future, after construction is complete and when economic conditions improve. CMR:324:09 Page 4 of5 POLICY IMPLICATIONS Approval of this contract is consistent with City policies and with prior Council priorities for library improvements. TIMELINE Construction will start shortly after contract approval and is anticipated to be complete within approximately one year. ENVIRONMENTAL REVIEW The design of the improvements is in compliance with the Secretary of the Interior standards for treatment of historic properties. The maintenance, seismic upgrade, repairs and rehabilitation are exempt from the California Environmental Quality Act (CEQA), under CEQA guidelines Section 15331. ATTACHMENTS Attachment A: Construction Contract Attachment B: Bid Summary Attachment C: Amendment No.2 Contract C07117374 with The KP A Group, Inc. PREPARED BY: DEPARTMENT HEAD: CITY MANAGER APPROVAL: CMR:324:09 /~-.---" KAREN BENGARD Senior Engineer ~ ..... &... I., (j..S/t G S. ROBERTs' Director of Pubic Works JAMES KEENE City Manager Page 5 of5 FORMAL CONTRACT (SAMPLE) CONTRACT No. C10131458 (Public Work) Public Works Department ATTACHMENT A SECTION 500 This Contract, number C10131458 dated ________ is entered into by and between the City of Palo Alto, a California Charter City ("City"), and Green Valley Corporation DBA: Barry Swenson Builder ("Contractor"). For and in consideration of the covenants, terms, and conditions (*the provisions*) of this Contract, City and Contractor ("the parties") agree: 1. Term. This Contract shall commence and be binding on the parties on the Date of Execution of this Contract, and shall expire on the date of recordation of the Notice of Substantial Completion, or, if no such notice is required to be filed, on the date that final payment is made hereunder, subject to the earlier termination of this Contract. 2. General Scope of Project and Work. Contractor shall furnish labor, services, materials and eqUipment in connection with the construction of the Project and complete the Work in accordance with the covenants, terms and conditions of this Contract to the satisfaction of City. The Project and Work is generally described as follows: Title of Project: College Terrace Library Seismic Upgrade and Rehabilitation, Invitation for Bids (IFB) Number 131458. Bid: $1,365,988.00 (One million three hundred sixty-five thousand nine hundred elghty-elght dollars) (Total includes Base Bid and all Add Alternate Bid items) 3. Contract Documents. This Contract shall consist of the documents set forth below, which are on file with the City Clerk and are hereby incorporated by reference. For the purposes of construing, interpreting and resolving inconsistencies between and among the provisions of this Contract, these documents and the provisions thereof are set forth in the following descending order of precedence. a. This Contract. b. Invitation for Bid. c. Project Specifications. d. Drawings. e. Change Orders. f. Bid. g. Supplementary Conditions. h. General Conditions. I. City of Palo Alto, Dept. of. Public Works Standard Drawings and Specifications (most current version). j. Certificate of Insurance, Performance Bond, Labor & Materials (Payment) Bond. k. Other Specifications, or part thereof, not expressly incorporated in the Contract Specifications or the City of Palo Alto, Dept. of Public Works Standard Drawings and Specifications (most current version). I. Any other document not expressly mentioned herein which is issued by City or entered into by the parties. 4. Compensation. In consideration of Contractor's performance of its obligations hereunder, City shall pay to Contractor the amount set forth in Contractor's Bid in accordance with the provisions of this Contract and upon the receipt of written invoices and all necessary supporting documentation within the time set forth in the Contract Specifications and the City of Palo Alto, Dept. of Public Works Standard Drawings and Specifications (most current version), or, if no time is stated, within thirty (30) Days of the date of receipt of Contractor's invoices. 5. Insurance. On or before the Date of Execution, Contractor shall obtain and maintain the policies of insurance coverage described in the Invitation For Bid on terms and conditions and in amounts as may be required by the Risk Manager. City shall not be obligated to take out insurance on Contractor's personal property or the personal property of any person performing labor or services or supplying materials or equipment under the Project. Contractor shall furnish City with the certificates of insurance and with original endorsements affecting coverage required under this Contract on or before the Date of Execution. The certificates and endorsements for each CITY OF PALO ALTO CONTRACT C10131458 PAGE 1 OF 7 rev. 12100 FORMAL CONTRACT (SAMPLE) SECTION 500 for each insurance policy shall be signed by a person who is authorized by that insurer to bind coverage in its behalf. Proof of insurance shall be mailed to the Project Manager to the address set forth in Section 16 of this Contract. 6. Indemnification. Contractor agrees to protect, defend, indemnify and hold City, its Council members, officers, employees, agents and representatives harmless from and against any and all claims, demands, liabilities, losses, damages, costs, expenses. liens, penalties, suits, or judgments, arising, in whole or in part, directly or indirectly, at any time from any injury to or death of persons or damage to property as a result of the willful acts or the negligent acts or omissions of Contractor, or which results from Contractor's noncompliance with any Law respecting the condition, use, occupation or safety of the Project site, or any part thereof, or which arises from Contractor's failure to do anything required under this Contract or for doing anything which Contractor is required not to do under this Contract, or which arises from conduct for which any Law may impose strict liability on Contractor in the performance of or failure to perform the provisions of this Contract, except as may arise from the sole willful acts or negligent acts or omissions of City or any of its Council members, officers, employees, agents or representatives. This indemnification shall extend to any and all claims, demands, or liens made or filed by reason of any work performed by Contractor under this Contract at any time during the term of this Contract, or arising thereafter. To the extent Contractor will use hazardous materials in connection with the execution of its obligations under this Contract, Contractor further expressly agrees to protect, indemnify, hold harmless and defend City, its City Council members, officers and employees from and against any and all claims, demands, liabilities, losses, damages, costs, expenses, liens, penalties, suits, or judgments City may incur, arising, in whole or in part, in connection with or as a result of Contractor's willful acts or negligent acts or omissions under this Contract, under the Comprehensive Environmental Response, Compensation and Liability Act (42 U.S.C. 339601-6975, as amended); the Resource Conservation and Recovery Act (42 U.S.C. 336901-6992k, as amended); the Toxic Substances Control Act (15 U.S.C. 332601-2692, as amended); the Carpenter-Presley-Tanner Hazardous Substance Account Act (Health & Safety Code, 3325300-25395, as amended); the Hazardous Waste Control Law (Health & Safety Code, 3325100-25250.25, as amended); the Safe Drinking Water and Toxic Enforcement Act (Health & Safety Code, 3325249.5-25249.13, as amended); the Underground Storage of Hazardous Substances Act (Health & Safety Code, 3325280-25299.7, as amended); or under any other local, state or federal law, statute or ordinance, or at common law. 7. Assumption of Risk. Contractor agrees to voluntarily assume any and all risk of loss, damage, or injury to the property of Contractor which may occur in, on, or about the Project site at any time and in any manner, excepting such loss, injury, or damage as may be caused by the sole willful act or negligent act or omission of City or any of its Council members, officers, employees, agents or representatives. 8. Waiver. The acceptance of any payment or performance, or any part thereof, shall not operate as a waiver by City of its rights under this Contract. A waiver by City of any breach of any part or provision of this Contract by Contractor shall not operate as a waiver or continuing waiver of any subsequent breach of the same or any other provision, nor shall any custom or practice which may arise between the parties in the administration of any part or provision of this Contract be construed.to waive or to lessen the right of City to insist upon the performance of Contractor in strict compliance with the covenants, terms and conditions of this Contract. 9. No Exoneration By Inspection: The City has the right, but not the duty, to inspect Contractor's Work. The right of inspection is solely for the benefit of City. Contractor has the obligation to complete the Work in a satisfactory manner in compliance with Contract requirements. The presence of a City inspector does not shift that obligation to the City or relieve Contractor from its obligations to complete the Work in a satisfactory manner in compliance with the Contract requirements. 10. Compliance with Laws. Contractor shall comply with all Laws now in force or which may hereafter be in force pertaining to the Project and Work and this Contract, with the requirement of any bond or fire underwriters or other similar body now or hereafter constituted, with any discretionary license or permit issued pursuant to any Law of any public agency or official as well as with any provision of all recorded documents affecting the Project site, insofar as any are required by reason of the use or occupancy of the Project site, and with all Laws pertaining to nondiscrimination in employment and hazardous materials. 11. Bonds. As a condition precedent to City's obligation to pay compensation to Contractor, and on or before the Date of Execution, Contractor shall furnish to the Project Manager the Bonds as required under the Invitation for CITY OF PALO ALTO CONTRACTC10131458 PAGE20F7 rev. 12/00 FORMAL CONTRACT (SAMPLE) SECTION 500 Bid. 12. Representations and Warranties. In the supply of any materials and equipment and the rendering of labor and services during the course and scope of the Project and Work, Contractor represents and warrants: a. Any materials and equipment which shall be used during the course and scope of the Project and Work shall be vested in Contractor; b. Any materials and equipment which shall be used during the course and scope of the Project and Work shall be merchantable and fit to be used for the particular purpose for which the materials are required; c. Any labor and services rendered and materials and equipment used or employed during the course and scope of the Project and Work shall be free of defects in workmanship for a period of one (1) year after the recordation of the Notice of Substantial Completion, or. if no such notice is required to be filed, on the date that final payment is made hereunder; d. Any manufacturer's warranty obtained by Contractor shall be obtained or shall be deemed obtained by Contractor for and in behalf of City. e. Any information submitted by Contractor prior to the award of Contract, or thereafter. upon request. whether or not submitted under a continuing obligation by the terms of the Contract to do so, is true and correct at the time such information is submitted or made available to the City; f. Contractor has not colluded. conspired, or agreed, directly or indirectly, with any person in regard to the terms and conditions of Contractor's Bid, except as may be permitted by the Invitation For Bid; g. Contractor has the power and authority to enter into this Contract with City, that the individual executing this Contract is duly authorized to do so by appropriate resolution, and that this Contract shall be executed. delivered and performed pursuant to the power and authority conferred upon the person or persons authorized to bind Contractor; h. Contractor has not made an attempt to exert undue influence with the Purchasing Manager or Project Manager or any other person who has directly contributed to City's decision to award the contract to Contractor; . I. There are no unresolved claims or disputes between Contractor and City which would materially affect Contractor's ability to perform under the Contract; j. Contractor has furnished and will furnish true and accurate statements. records. reports, resolutions, certifications, and other written information as may be requested of Contractor by City from time to time during the term of this Contract; k. Contractor and any person performing labor and services under this Project are duly licensed by the State of California as required by California Business & Professions Code Section 7028, as amended; and I. Contractor has fully examined and inspected the Project site and has full knowledge of the physical conditions of the Project site. 13. Assignment. This Contract and the performance required hereunder is personal to Contractor, and it shall not be assigned by Contractor. Any attempted assignment shall be null and void. 14. Claims of Contractor. All claims pertaining to extra work, additional charges, or delays within the Contract Time or other disputes arising out of the Contract shall be submitted by Contractor to City in writing by certified or registered mail within ten (10) Days after the claim arose or within such other time as may be permitted or requ ired by law, and shall be described in sufficient detail to give adequate notice of the substance of the claim to City. CITY OF PALO ALTO rev. 12100 CONTRACT C10131458 PAGE30F7 FORMAL CONTRACT (SAMPLE) SECTION 500 15. Audits by City. During the term of this Contract and for a period of not less than three (3) years after the expiration or earlier termination of this Contract, City shall have the right to audit Contractor's Project-related and Work-related writings and business records, as such terms are defined in California Evidence Code Sections 250 and 1271, as amended, during the regular business hours of Contractor, or, if Contractor has no such hours, during the regular business hours of City. 16. Notices. All agreements, appointments, approvals, authorizations, claims, demands, Change Orders, consents, designations, notices, offers, requests and statements given by either party to the other shall be in writing and shall be sufficiently given and served upon the other party if (1) personally served, (2) sent by the United States mail, postage prepaid, (3) sent by private express delivery service, or (4) in the case of a facsimile transmission, if sent to the telephone FAX number set forth below during regular business hours of the receiving party and followed within two (2) Days by delivery of a hard copy of the material sent by facsimile transmission, in accordance with (1), (2) or (3) above. Personal service shall include, without limitation, service by delivery and service by facsimile transmission. To City: Copy to: To Contractor: City of Palo Alto City Clerk 250 Hamilton Avenue P.O. Box 10250 Palo Alto, CA 94303 City of Palo Alto Public Works Department Engineering Division 250 Hamilton Avenue P.O. Box 10250 Palo Alto, CA 94303 Attn: Karen Bengard, Project Manager Green Valley Corporation DBA: Barry Swenson Builder 777 North 1st Street, 5th Floor San Jose, CA 95112 Attn: Steve Andrews 17. Appropriation of City Funds. This Contract is subjectto the fiscal provisions of Article III, Section 12 of the Charter of the City of Palo Alto. Any charges hereunder for labor, services, materials and equipment may accrue only after such expenditures have been approved in advance in writing in accordance with applicable Laws. This Contract shall terminate without penalty (I) at the end of any fiscal year in the event that funds are not appropriated for the following fiscal year, or (ii) 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 Contract are no longer available. This Section 17 shall control in the event of a conflict with any other provision of this Contract. 18. Miscellaneous. a. Bailee Disclaimer. The parties understand and agree that City does not purport to be Contractor's bailee, and City is, therefore, not responsible for any damage to the personal property of Contractor. b. Consent. Whenever in this Contract the approval or consent of a party is required, such approval or consent shall be in writing and shall be executed by a person having the express authority to grant such approval or consent. c. Controlling Law. The parties agree that this Contract shall be governed and construed by and in accordance with the Laws of the State of California. d. Definitions. The definitions and terms set forth in Section 1 of the City of Palo Alto, Dept. of Public CITY OF PALO ALTO rev. 12/00 CONTRACT C10131458 PAGE 4 OF 7 FORMAL CONTRACT (SAMPLE) SECTION 500 Works Standard Drawings and Specifications (most current version) of this Contract are incorporated herein by reference. e. Force Majeure. Neither party shall be deemed to be in default on account of any delay or failure to perform its obligations under this Contract which directly results from an Act of God or an act of a superior governmental authority. f. Headings. The paragraph headings are not a part of this Contract and shall have no effect upon the construction or interpretation of any part of this Contract. g. Incorporation of Documents. All documents constituting the Contract documents described in Section 3 hereof and all documents which may, from time to time, be referred to in any duly executed amendment hereto are by such reference incorporated in this Contract and shall be deemed to be part of this Contract. h. Integration. This Contract and any amendments hereto between the parties constitute the entire agreement between the parties concerning the Project and Work, and there are no other prior oral or written agreements between the parties that are not incorporated in this Contract. I. Modification of Agreement. This Contract shall not be modified or be binding upon the parties, unless such modification is agreed to in writing and signed by the parties. j. Provision. Any agreement, covenant, condition, clause, qualification, restriction, reservation, term or other stipulation in the Contract shall define or otherwise control, establish, or limit the performance required or permitted orto be required of or permitted by either party. All provisions, whether covenants or conditions, shall be deemed to be both covenants and conditions. k. Resolution. Contractor shall submit with its Bid a copy of any corporate or partnership resolution or other writing, which authorizes any director, officer or other employee or partner to act for or in behalf of Contractor or which authorizes Contractor to enter into this Contract. I. Severability. If a court of competent jurisdiction finds or rules that any provision of this Contract is void or unenforceable, the provisions of this Contract not so affected shall remain in full force and effect. m. Status of Contractor. In the exercise of rights and obligations under this Contract, Contractor acts as an independent contractor and not as an agent or employee of City. Contractor shall not be entitled to any rights and benefits accorded or accruing to the City Council members, officers or employees of City, and Contractor expressly waives any and all claims to such rights and benefits. n. Successors and Assigns. The provisions of this Contract shall inure to the benefit of, and shall apply to and bind, the successors and assigns of the parties. o. Time of the Essence. Time is of the essence of this Contract and each of its provisions. In the calculation of time hereunder, the time in which an act is to be performed shall be computed by excluding the first Day and including the last. If the time in which an act is to be performed falls on a Saturday, Sunday, or any Day observed as a legal holiday by City, the time for performance shall be extended to the following Business Day. p. Alternative Dispute Resolution. The parties shall endeavor to resolve any disputes or claims arising out of or relating to this Contract by mediation, which, unless the parties agree otherwise, shall be conducted under the auspices of the Judicial Arbitration and Mediation Service (JAMS), San Jose, California. The intent of the parties is that the mediation shall proceed in advance of litigation; however, if any party should commence litigation before the conclusion of mediation. such litigation. including discovery, shall be stayed pending completion of mediation, and by executing this Contract the parties stipulate to mediation in accordance with Santa Clara County Superior Court Local Rule 1.15 or Rule 2- 3(b) of the ADR Local Rules of the U.S. District Court for the Northern District of California, as such rules may be amended from time to time. The parties shall share the cost of the mediation, including the mediator's fee, equally. Any written agreement reached in mediation shall be enforceable pursuant to California Code of Civil Procedure § 664.6, as amended. CITY OF PALO ALTO rev. 12100 CONTRACT C10131458 PAGES OF7 FORMAL CONTRACT (SAMPLE) SECTION 500 q. Venue. Unless the parties mutually agree otheJWise, mediation shall take place in San Jose, Califomia. In the event that litigation is commenced by any party hereunder, the parties agree that such action shall be vested exclusively in the state courts of California in the County of Santa Clara or in the United States District Court for the Northern District of California. r. Recovery of Costs. Each Party shall bear its own costs, including attorney's fees, through the completion of mediation. If the claim or dispute is not resolved through mediation, or if litigation is necessary to enforce a settlement reached at mediation pursuant to California Code of Civil Procedure § 664.6. as amended, then the prevailing party in any subsequent litigation may recover its reasonable costs, including attorney's fees. incurred subsequent to conclusion of the mediation. s. Flow-down. Contractor agrees to include provisions of this Contract relating to Alternative Dispute Resolution, Venue. and Recovery of Costs in any subcontracts or major material purchase agreements which it enters into in connection with this Contract. and to require its subcontractors to include those provisions in any sub-contracts or major material purchase agreements. such that any mediation or litigation of any claim or dispute asserted by a subcontractor or major material supplier will be consolidated with any related claim or dispute between the Contractor and the City. Should the Contractor fail to do so. such that the City is required to defend an action brought by a subcontractor or material supplier inconsistent with the Alternative Dispute and Venue proviSions of this Contract, Contractor shall indemnify City for City's costs of defense, including reasonable attorney's fees. IN WITNESS WHEREOF, the parties have by their duly appointed representatives executed this Contract in the city of Palo Alto, County of Santa Clara. State of California on the date first stated above. APPROVED AS TO FORM: City Attorney APPROVED: Director of Public Works CITY OF PALO ALTO rev. 12100 CITY OF PALO ALTO City Manager CONTRACTOR: By:, ________________________________ __ Name: __________________ _ Title:, _________________ _ CONTRACT C10131458 PAGE60F7 FORMAL CONTRACT (SAMPLE) SECTION 500 CERTIFICATE OF ACKNOWLEDGMENT (Civil Code') 1189) STATE OF __________ _ COUNTY OF __________ . On ,before me, _______________ , a notary public in and for said County, personally appeared personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. WITNESS my hand and official seal. Signature _________________ _ CITY OF PALO ALTO rev. 12100 CONTRACT C10131458 (Seal) PAGE 7 OF7 ATIACHMENT B BID SUMMARY PROJECT: COLLEGE TERRACE LIBRARY SEISMIC UPGRADE PROJECT CIP# PE-05010, IFB # 131458 BID OPENING DATE: JUNE 23, 2009 ~ I ~ == ATTACHMENT C CITY OF PALO ALTO CONTRACT NO. C07117374 AMENDMENT NO. 2 TO CONTRACT NO. C07117374 BETWEEN THE CITY OF PAr,o ALTO AND THE KPA GROUP This Amendment No.2 to contract No. C07117374 ("Contract") is entered into I 2009, by and between the CITY OF PALO ALTO, a Cali City (IICITyn), and The KPA Group I a corporation of the state of California with offices located at 300 Frank H. Ogawa Plaza, Suite 50, Oaklandl CA 94612 ("CONSULTANTII). R E CIT A L S: WHEREAS, the Contract was entered into between the parties for the provision of professional consulting services relating to the rehabilitation and seismic upgrade of College Terrace Library and Daycare Center {"Project")i and WHEREAS, the parties wish increase the scope of services construction; to amend the Contract to and compensation during NOW, THEREFORE, in consideration of the covenants, terms, conditions, and provisions of this Amendment, the parties agree: SECTION 1. Section 1, SCOPE OF SERVICES, is hereby amended to lowing: "The scope of services and deliverables constituting the Project ("Basic Services") will be performed, delivered or executed by CONSULTANT in accordance with the schedule and the requirements of Exhibits "A", "A-I" and "A-2" for additional scope of services./I SECTION 2. Section 4, NOT TO EXCEED COMPENSATIO~, is hereby amended to read as follows: "The compensation to be paid to CONSULTANT for performance of the Services described in Exhibits "A", "A-I" and "A-2", including both payment for professional services and reimbursable expenses, shall not exceed three hundred seventy-eight thousand two hundred nine dollars ($378,209.00). In the event Additional Services are authorized, the total compensation for services and reimbursable expenses shall not exceed four hundred twenty-nine thousand three hundred thirty-six dollars ($429,336.00). The applicable rates and schedule of payment are set out in Exhibits "C", "C-l" and "C 2, entitled "COMPENSATION," which is attached to and made a part of this Agreement. Additional Services, if any, shall be authorized in accordance with and subject to the provisions of Exhibits "C" I "C-l/l and "C-2. 1 S:ATT/USERS/OFFICE FORMS/City Approved Contracts 3/20/07 (REV) CITY OF PALO ALTO CONTRACT NO. C07II7374 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 in Exhibits "A", "A-I" and "A-2"." SECTION 3. The following exhibit(s) to the Contract are hereby set forth asattachment(s) to this Amendment, which are incorporated in full by this reference: EXHIBIT "A-2": ADDITIONAL SCOPE OF SERVICES EXHIBIT "C-2": COMPENSATION 2 S,ATT/USERS/OFFICE FORMS/City Approved Contracts 3/20/07 (REV) CITY OF PALO ALTO CONTRACT NO. C07117374 SECTION 4. 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 I the parties have by their duly authorized representatives executed this Amendment on the date first above written. CITY OF PALO ALTO City Manager APPROVED AS TO FORM: City Attorney 3 S,ATT/USERS/OFFICE FORMS/City Approved Contracts J /20/07 (REV) Attachment \'A-2t1 COLLEGE TERRACE LIBRARY SEISMIC UPGRADE AND REHABILITATION Contract C07117374 Amendment #2 Project Description The project is the seismic upgrade and rehabilitation of the College Terrace Library building" located at 2300 Wellesley Avenue. During the design of the College Terrace Library improvements, it was determined that less visible seismic support systems would be needed to protect the historical integrity of the College Terrace Library. These improvements were reviewed and approved by the Historic Resources Board. The increased complexity of the design, however, will require closer coordination and oversight by theKPA Group (Consultant) and their sub-consultants than was originally anticipated. SCOPE OF SERVICES Construction Administration -Historioal Architect Oversight: Consultant shall provide the services of Garavalgia Architecture in order to ensure that the historical fabric is not compromised. Services shall include: • Assessment of original shelving and woodwork finishes impacted by the renovation and identification of appropriate treatment for refinishing, • Assessment of original plaster wall and ceiling finishes impacted by renovation and recommendation of appropriate treatment methods for refinishing, • Assessment of original exterior stucco wall finishes impacted by renovation and recommendation of appropriate treatment methods for re-installation and replacement of bricks, • On-site consultation with contractor and crew identifying significant character-defining features of building and discussion of protective measures of features, • Attendance at appropriate intervals during construction to determine if the work is proceeding in general accordance with the plans and specifications, including compliance with the Secretary of the Interior1s Standards for Rehabilitation of Historic Structures. City of Palo Alto -Contract C07117374 Amendment Two Page 1 of 2 Attachment "A-2" Mechanical Electl.~ical Pluxnbing Engineering: Attend meetings at appropriate intervals during construction to determine if the work is proceeding in general accordance with the plans and specifications, and that there is no conflict with the seismic work. Architectural/Structural Engineering Services: Additional attendance at appropriate intervals to determine if the work is proceeding in general accordance with the plans and specifications, to include increased oversight services of the design Structural Engineer during the fabrication and installation of the steel moment frame. Reimburseables: Reimburseables include, but not limited to, travel, copying expenses, and overnight delivery services. Additional Services: Additional services are subject to prior written approval from the City's Project Manager. Additional Services shall include, but not limited to, additional construction oversig~t,meetings and or consultation with the contractor. END OF SCOPE City of Palo Alto Contract C07117374 Amendment Two Page 2 of 2 EXHIBIT "C-2" COMPENSATION -AMENDMENT TWO Task Description Not to Exceed Compensation Basis • Garavaglia Architecture: Attendance at appropriate intervals during construction to determine if the work is proceeding in general accordance with the plans and specifications, including compliance with the Secretary of the Interior's Standards for Rehabilitation of Historic Structurers. Garavaglia total: Glumac Mechanical and Electrical Engineering additional attendance at appropriate intervals during construction due to increased design complexity. Glumac total: The KPA Group: Architect and Structural Engineering additional 'attendance at appropriate intervals during construction due to increased design complexity. Prepare site visit reports based on site observations. Consultant coordination (10%) Reimbursables The KPA Group total: Sub-total Additional Services Additional Services (Not to Exceed) Maximum Total Compensation -Amendment Two $7,900 Lump Sum $2,500 Lump Sum $62,100 Lump Sum $8,900 Lump Sum $1,040 Lump Sum $4,500 Lump Sum $76,540 Lump Sum $86,940 $22,000 $108,940 City of Palo Alto -Contract C07117374 Amendment Two Page 1 of 1 MEMORANDUM TO: HONORABLE CITY COUNCIL FROM: CITY MANAGER DEPARTMENT: UTILITIES DATE: JULY 27, 2009 CMR: 314:09 SUBJECT: 2nd Reading: Adoption of an Ordinance Increasing the Utilities Advisory Commission from Five to Seven Members and Amending Section 2.23.010 (Membership), Section 2.23.030 (Term of Office) and Section 2.23.060 (Meetings) of Chapter 2.23 of the Palo Alto Municipal Code Attached is the revised ordinance incorporating the changes to Section 2.23.030 (Term of Office) requested by Council on July 13,2009. The report of the Council subcommittee tasked with reviewing the role of the UAC will follow shortly. Director of Utilities City Manager CMR: 314:09 Page 1 of 1 NOT YET APPROVED Ordinance No. ---- Ordinance of the Council of the City of Palo Alto Increasing the Utilities Advisory Commission from Five to Seven Members and Amending Section 2.23.010 (Membership), Section 2.23.030 (Term of Office) and Section 2.23.060 (Meetings) of Chapter 2.23 of the Palo Alto Municipal Code The Council of the City of Palo Alto does ORDAIN as follows: SECTION 1. Section 2.23 of the Palo Alto Municipal Code is hereby amended to read as follows: Chapter 2.23 UTILITIES ADVISORY COMMISSION Sections: 2.23.010 2.23.020 2.23.030 2.23.040 2.23.050 2.23.060 Membership. Manner of appointment. Term of office. Officers. Purposes and duties. Meetings. 2.23.010 Membership. There is created a utilities advisory commission composed of seven members who shall be appointed by and serve at the pleasure of the city council, but who shall not be council members, officers or employees of the city. Each member of the commission shall be a utility customer or the authorized representative of a utility customer. Six members of the commission shall at all times be residents of the city. 2.23.020 Manner of appointment. The following procedures shall be followed by the city council when filling vacancies on the utilities advisory commission: (a) Following notification of vacancy or pending vacancy on the utilities advisory commission, the city clerk shall advertise the same in a newspaper of general circulation in the city, including the council agenda digest, two times within two weeks; 1 090722 syn 6050900 NOT YET APPROVED (b) Written nominations and applications shall be submitted to the city clerk within such two-week period to be forwarded to the city council for its consideration. Notwithstanding the foregoing, if the nomination or application of an incumbent commission member is not submitted to the city clerk within the period submitted above, said period shall be extended for an additional five days during which the city clerk shall accept written nominations and applications of nonincumbents; (c) The city council shall review all nominations and applications and conduct such interviews as it deems necessary prior to selection; (d) Final selection and appointment shall be made by the city council at a regular city council meeting after the period for submittal of nominations and applications has expired. 2.23.030 Term of office. (a) Term of Office. The term of office of each member shall be three years or until his or her successor is appointed. The initial terms of the feuF.-three members who received the highest number were in the first group of city council votes on July 6, 2009 shall be three years. The initial terms of the two member~ who received the fifth highest nwnber in the second group of city council votes on July 6, 2009 shall be twe-one years. Thereafter, beginning in 2010, the commission appointments shall be staggered so that in each three-year cycle, three-two members are appointed one year, fem--two members are appointed the next year, and ne-three members are appointed the next year. (b) Commencement Date. The terms of the three members who received the highest number of city council votes on July 6,2009 shall commence on July 7, 2009. The terms of the members who received the fourth and fifth highest number of city council votes on July 6, 2009 shall commence on the effective date of this ordinance. 2.23.040 Officers. The commission shall elect one of its members chairperson. The chairperson shall hold office for one year and until his or her successor is elected, unless his or her term as a member of the commission expired earlier. 2.23.050 Purposes and duties. (a) The purpose of the utilities advisory commission shall be to advise the city council on long-range planning and policy matters relating to the electric utility, gas utility, water utility, and the subject of recycled water, excluding daily operations. (b) The utilities advisory commission shall have the following duties: (1) Advise the city council on planning and policy matters pertaining to: 2 090722 syn 6050900 NOT YET APPROVED (A) Acquisition and development of electric utility, gas utility, water utility, and recycled water resources, (B) Joint action projects with other public or private entities which involve electric utility, gas utility, water utility, and recycled water resources, (C) Environmental implications of electric utility, gas utility, water utility, and recycled water projects, (D) Conservation and demand management, and (E) Recycled water matters not otherwise addressed in the preceding subparagraphs (A) through (D). (2) Review and make recommendations to the city council on the consistency with adopted plans and policies of any major electric utility, gas utility, water utility, or recycled water project; (3) Formulate and review legislative proposals regarding the electric utility, gas utility, water utility, and any recycled water operation to which the city is a party or in which the city has an interest; (4) Review the electric utility, gas utility, and water utility capital improvement programs, operating budgets, and rates, and recycled water program, budget, and rate, and thereafter forward any comments to the finance committee or its successor; (5) Provide advice upon such other matters as the city council may from time to time assign. The utilities advisory commission shall not have the power or authority to cause the expenditure of city funds or to bind the city to any written or implied contract. 2.23.060 Meetings. (a) The commission shall establish a regular time and place of meeting and shall hold at least one regular meeting per month. (b) Four of the seven members shall constitute a quorum. (c) The commission may establish rules and procedures governing the conduct of its meetings. (d) The commISSIon shall be subject to the Ralph M. Brown Act, California Government Code Section 54950, et seq. 3 090722 syn 6050900 NOT YET APPROVED SECTION 2. The Council finds that increasing membership of the utilities advisory commission does not meet the definition of a project under the California Environmental Quality Act pursuant to California Public Resources Code Section 21065, and therefore no environmental impact assessment is necessary. SECTION 3. This ordinance shall become effective upon the expiration of thirty (30) days from its passage. INTRODUCED: PASSED: AYES: NOES: ABSTENTIONS: ABSENT: ATTEST: City Clerk Mayor APPROVED AS TO FORM: APPROVED: Deputy City Attorney City Manager - Director of Utilities 4 090722 syn 6050900 CMR: 325:09 Page 1 of 4 TO: HONORABLE CITY COUNCIL FROM: CITY MANAGER DEPARTMENT: COMMUNITY SERVICES DATE: JULY 27, 2009 CMR: 325:09 REPORT TYPE: CONSENT SUBJECT: Recommendation from the Parks and Recreation Commission to Adopt the Gym Use Policy for the Cubberley Community Center’s Pavilion, Gym A and Gym B EXECUTIVE SUMMARY This report conveys to the Council the recommendation of the Park and Recreation Commission (PRC) that the Council adopt the Gym Use Policy for the Cubberley Community Center’s Pavilion, Gym A and Gym B. The purpose of the Gym Use Policy is to ensure that decisions regarding gym usage are in the best interest of the residents of Palo Alto by contributing more of a proportionate amount of usage time to local sports organizations in which Palo Alto residents participate and to ensure that the gyms are scheduled efficiently and effectively. RECOMMENDATION Staff and the PRC recommend that the Council adopt the attached Gym Use Policy (Attachment A) for the Cubberley Community Center’s Pavilion, Gym A and Gym B. The gym use policy represents a direction toward increasing gym space availability for Palo Alto’s recreational, athletic, cultural, educational, and social and community service organizations. BACKGROUND AND COMMISSION RECOMMENDATIONS As described in the attached June 30, 2009 staff report to the Parks and Recreation Commission, the Cubberley gymnasiums, which include the Pavilion, Gym A and Gym B, have had limited availability for Palo Alto youth and adult athletic groups on account of the lease agreement with the Foothill/DeAnza Community College District. Under the District lease, the community college has the exclusive use of the Pavilion and Gym B, and under the lease with the Oshman Family Jewish Community Center (JCC), the JCC has had the exclusive use of Gym A. At the June 30, 2009 regular meeting, the Parks and Recreation Commission reviewed the draft Gym Use Policy. Staff presented the lease history at Cubberley Community Center, the process staff engaged in to develop the policy which involved interviews with current and potential gym stakeholders to understand their gym needs and what they considered fair criteria for allocating limited gym space, and an overview of the draft gym use policy. CMR: 325:09 Page 2 of 4 Based on the information received from the stakeholders, staff recommends brokering gym space based on two methods of prioritization; prime-time and non prim-time. Prime-time hours are those hours that are in high demand among youth sports organizations. During the brokering period, organizations requesting prime-time hours would be prioritized based on the percentage of Palo Alto residents in an attempt to provide much needed gym space for practices and games. Organizations would be limited to three 90-minute sessions each week which would allow for more organizations to have practice and play time. Non prime-time hours will continue to give priority to city programs, organizations with lease agreements, and long-term annual users. The non-prime time criteria will also provide for programs for seniors and long term existing renters. The brokering of the gyms will occur once a year (in the spring) for the upcoming school year (September to August). Any available hours left in the schedule after the broking period for both prime-time and non-prime time would be made available to all gym users, existing and new, on a first-come, first-serve basis. During their hearing, the PRC received comments from seven members of the public. Although comments from the public raised some concerns, all were supportive of the draft policy as a very good start. The public comments were, as follows:  City residents should have more access to City gyms. Currently, 60% of team practice space takes place outside of Palo Alto due to the lack of available gym space.  The number of youth (participants) in a youth athletic organization should be factored in the gym space brokering process.  The ‘Non-Prime Time’ eligibility criteria was too vague. (The language has since been revised to be more specific.)  Ballroom dancing contributes to a healthy community and should be considered favorably when brokering gym space.  Equity between boys and girls sports’ programs should be criteria in the space brokering process.  Space considerations should be given to year-round programs such as ballroom dancing, Senior Friendship Day, and the Cardiac Therapy Program. There was extensive discussion of the draft policy by the Commissioners and staff responded to a number of questions regarding Prime Time eligibility, Non-Prime Time eligibility and the Cubberley Community Center’s room rental process. The PRC’s major concerns were:  Non-Prime Time eligibility criteria was not as specific as the Prime Time criteria.  Year-round programs seemed to be given priority for Non-Prime Time space consideration. If so, what were the benefits to Palo Alto for this consideration?  Some Commissioners felt the PRC needed more time to consider adoption of the Gym Use Policy. To address the concerns of the PRC, staff modified the policy to clarify the terminology of long- term, regular users by including the words “year-round.” Staff recommends giving priority to CMR: 325:09 Page 3 of 4 those organizations that are current Cubberley gym users, over new requests, because these organizations heavily rely on the continuity of their programs to remain economically viable. By doing so, this allows the Cubberley Community Center to continue to offer space to long-term renters that provide continual revenue and offer a variety of programs to residents of Palo Alto. The PRC and stakeholders were generally supportive of the policy, and understand staff will return to the PRC for review and possible revision of the policy in twelve months. With the JCC moving out of the Cubberley Community Center, vacating Gym A, staff needs a policy to allocate gym space among the many who request gym use. The policy provides guidelines and transparency for staff to allocate gym space and is consistent with the Field Allocation Policy approved by Council on October 20, 2008. A motion was made by Commissioner King, seconded by Commissioner Losch, to adopt the Gym Use Policy with a change to the ‘Prime Time’ hours on Saturdays to extend the time period from 8:30 AM to 5:00 PM, and on Sundays 9:00 AM to 4:00 PM. Staff re-stated that after one year, the Gym Use Policy will be discussed and reviewed by the PRC to evaluate effectiveness and possible need for policy changes or adjustments. The chairperson called for the question and the PRC commissioners voted four to three to support the policy and recommend that the City Council adopt the Gym Use Policy for the Cubberley Gymnasiums space allocation process. RESOURCE IMPACT Cubberley Community Center gym rental revenues may increase on account of the increased gym rental usage and better utilization of gym space. The revenue increase will be determined once the gym space brokering process is completed in November 2009. ENVIRONMENTAL REVIEW Approval of the Gym Use Policy does not require review under the California Environmental Quality Act (CEQA), as such action does not meet the definition of “project” pursuant to California Public Resources Code Section 21065. ATTACHMENTS Attachment A: Gym Use Staff Report and Gym Use Policy Attachment B: Park and Recreation Commission Staff Report Attachment C: Park and Recreation Commission Minutes CMR: 325:09 Page 4 of 4 PREPARED BY: ______________________________________________________________ KATHY ESPINOZA-HOWARD Division Manager, Cubberley and Human Services DEPARTMENT HEAD: _______________________________________________________ GREG BETTS Interim Director Community Services CITY MANAGER APPROVAL: _________________________________________________ JAMES KEENE City Manager TO: HONORABLE CITY COUNCIL FROM: CITY MAl~AGER DEPARTMENT: CITY MANAGER'S OFFICE DATE: JULY 27,2009 CMR:330:09 REPORT TYPE: CONSENT SUBJECT: Confirmation of Appointment of Curtis Williams as Director of Planning/Community Environment and Approval of At-Will Employment Contract RECOMMENDATION The City Manager recolmnends that the City Council confirm the appointlnent of CUliis Willialns as Director of Planning/ColTIlnunity Environment and approve the at-will elnploYlnent agreelnent (Attached). BACKGROUND Municipal Code Section 2.08.020 requires that the City Council confinn the City Manager's appoinnnent of City departlnent heads. DISCUSSION The City Manager is recolTIlnending appointlnent of Curtis WillimTIs to replace Steve Elnslie as Director of Planning/Colnmunity Environment. Mr. WillialTIs brings 30 years of professional planning experience to the Director position, prilnarily working at the local govermnent level. He has served Palo Alto as the Interiln Director of Planning for the past 14 Inonths, and was previously the Assistant Director for Inore than two years. Mr. Williams is highly falniliar with the planning and transportation issues facing the City, with the Palo Alto cOlmnunity, boards, cOlTIlnissions, and the City Council. He is a conSUlnmate professional. He holds a Master's Degree in Urban and Regional Planning from UCLA and is a InelTlber of the Alnerican Institute of Certified Planners (AICP). CMR:330:09 Page 10f2 RESOURCE IMPACT The annual control point for the Director Planning/Colmnunity Enviromnent position is $165,630. The attached at-will elnploYll1ent for Mr. Willialns reflects that salary level, and all other tenns are consistent with the at-will agreelnent telnplate that the Council approved in 2004 when it transitioned to an at-will systeln for new departlnent heads. POLICY IMPLICATIONS This recolmnendation is consistent with existing City policies. ATTACHMENT ElnploYlnent Agreelnent Between Curtis Willialns and the City of Palo Alto D~A~MmTHMD: ____ ·~~~~~~~.~/,~·~~~~~ ___ _ Russ Carlsen Director of HUlnan Resources CITY MANAGER APPROVAL:_------;;;\)~"'""'< :;--_Q.:::::::.....;:_~_G ___ · __ ... __ _ J alnes Kee"lle City Manager CMR:330:09 Page 20f2 EMPLOYMENT AGREEMENT BETWEEN CURTIS WILLIAMS AND CITY OF PALO ALTO THIS is between the City of Palo Alto, a California Inunicipal corporation and chartered city ("City") and Curtis Williams, its Director of Planning and Con1munity Environment ("Willian1s"). It is effective on July 28, 2009. This Agreelnent is entered into on the basis of the following facts, among others: A. City, acting by and through its duly appointed City Manager and with the approval of its duly elected City Council, desires to employ Williams as its Director of Planning and Comn1unity Environment subject to the terms and conditions set forth in this Agreement, the Palo Alto Municipal Code and in the Charter of the City of Palo Alto (the "Charter"). B. Williams desires to be employed by the City as its Director of Planning and Community Environment, subject to the terms and conditions set forth in this Agreement, the Palo Alto Municipal Code, and in the Charter. C. City and Williams desire to establish specific terms and conditions relating to compensation and benefits, performance evaluations, and related matters. D. Notwithstanding any provision of the City of Palo Alto Merit System Rules and Regulations, the City desires Williams to serve on an at-will basis, with no expectation of continued employn1ent, and with no right to pre-or post-separation due process or appeal. E. Williams desires a predictable amount of severance notice and severance pay should his employment be terminated with or without cause or notice. BASED UPON THE FOREGOING, CITY AND WILLIAMS AGREE AS FOLLOWS: 1. Employment. City will appoint and employ Willian1s as Director of Planning and Community Environment with the City of Palo Alto and Williams will accept the appointment and employment for the City for an indefinite term to begin on July 28, 2009. In the event Williams does not actually report for or commence work on July 28, 2009, the Elnploytnent Start Date will be the date, if any, as otherwise mutually agreed by the parties. 2. Duties of Williams. Williams shall perfonn the duties established for the Director of Planning and Community Environn1ent by the Charter, Palo Alto Municipal Code, direction of the City Manager, or as otherwise provided by law, ordinance, or regulation. 2.1. Full Energy and Skill. Williams shall devote his full energy, skill, ability, and productive time to the performance of his duties. -1- 090722 mb 8261093 2.2. Willian1s shall not engage in any employment, activity, consulting service, or other enterprise, for compensation or otherwise, which is actually or potentially in conflict with, inimical to, or which interferes with the performance of his duties. Williams acknowledges that he is subject to the various conflict of interest requirements found in the California Government Code and state and local policies and regulations. 2.3. Williams shall not engage in any employn1ent, activity, consulting service, or other enterprise, for compensation or otherwise, without the express, written permission of the City Manager. 3. Compensation. While performing the duties of Director of Planning and COlnn1unity Environment, Williams shall be compensated as provided in this Section 3. 3.1. COlnpensation. Williams shall receive an initial base annual salary of one hundred sixty five thousand six hundred thirty thousand dollars ($165,630.00) commencing on the effective date of the contract. 3.2. Salary Adjustments. Not less than once each year, the City Manager shall meet with Williams for the express purpose of evaluating the performance of Williams. The City Manager will act in good faith in detern1ining whether to increase the salary of WilliaJns, but the ultimate decision in this regard is within the sole discretion of the City Manager. 3.3. Variable Management Compensation. If a Variable Management COlnpensation (HVMC") program is provided in any given year, Williams shall be entitled to receive VMC pursuant to the terms of a City Council approved managen1ent compensation plan. 4. Regular Benefits and Allowances. Williams will be eligible for, and shall receive, all regular benefits (i.e., health insurance, PERS contribution paid by City, etc.) and vacation, sick leave, and management leave as are generally provided to management employees pursuant to the City Council-approved Management Compensation Plan. 4.1 Transportation Allowance. Williams shall receive a transportation allowance as provided in the City Council-approved Management Compensation Plan. 5. Additional Expenses of Employment. City shall pay the following usual and customary employment expenses: 5.1. The cost of any fidelity or other bonds required by law for Williams. 6. Williams understands and agrees that he has no constitutionally protected property or other interest in his employment as Director of Planning and Community Environlnent. He understands that notwithstanding any provision in the Merit Systeln Rules and Regulations, he has no right to pre-or post-disciplinary due process. 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 tilne, with or without cause, upon 30 days written -2- 090722 mb 8261093 notice to Williams. Willimns Inay tern1inate this agreement upon 30 days written notice to the City Manager. 6.1. Severance Pay. If Williarns is asked to resign or is tenninated as Director of Planning and COlnmunity Environlnent, he shall receive a cash severance payment, or payments (without interest) at intervals specified by Williams, equaling 6 months salary and benefits. 6.2. Non-Payment of Severance Under Certain Conditions. If the tennination of Williams is the result of conviction of a felony, he shall not be paid any severance pay. 7. Miscellaneous. 7.1. Notices. Notices given under this Agreement shall be in writing and shall be either: a) served personally; or b) sent by facsilnile (provided a hard copy is mailed within one (1) business day); or c) delivered by first-class United States Inail, certified, with postage prepaid and a return receipt requested; or d) sent by Federal Express, or some equivalent private n1ail delivery service. Notices shall be deen1ed received at the earlier of actual receipt or three (3) days following deposit in the United States Inail, postage prepaid. Notices shall be directed to the addresses shown below, provided that a party may change such party's address for notice by giving written notice to the other party in accordance with this subsection. CITY: WILLIAMS: Attn: City Manager City of Palo Alto 250 Hamilton Avenue Palo Alto, CA 95901 Phone: (650) 329-2226 FAX: (650) 328-3631 Curtis Williams 250 Harnilton Avenue Palo Alto, CA 94301 Phone: (650) 329-2241 FAX: (650) 329-2154 7.2. Entire Agreement/ Amendlnent. This Agreement constitutes the entire understanding and agreen1ent between the parties as to those matters contained in it, and supersedes any and all prior or contemporaneous agreements, representations and understandings of the parties. This Agreement Inay be amended at any time by Inutual agreement of the parties, but any such amendment must be in writing, dated, and signed by the parties and attached hereto. 7.3. Applicable Law and Venue. This Agreement shall be interpreted according to the laws of the State of California. Venue of any action regarding this Agreelnent shall be in the proper court in Santa Clara County. -3- 090722 mb 8261093 7.4. Severability. In the event any portion of this Agreement is declared void, such portion shall be severed frOln this Agreement and the remaining provisions shall remain in effect, unless the result of such severance would be to substantially alter this Agreelnent or the obligations of the parties, in which case this Agreement shall be ilnmediately tenninated. 7.5. Waiver. Any failure of a party to insist upon strict compliance with any term, undertaking, or condition of this Agreement shall not be deemed to be a waiver of such term, undertaking, or condition. To be effective, a waiver must be in writing, signed and dated by the parties. 7.6. Representation by Counsel. Williams and City acknowledge that they each did, or had the opportunity to, consult with legal counsel of their respective choices with respect to the matters that are the subject of this Agreement prior to executing it. 7.7. Section Headings. The headings on each of the sections and subsections of this Agreement are for the convenience of the parties only and do not limit or expand the contents of any such section or subsection. Dated: ---------------------- Dated: ---------------------- Attest: City Clerk Approved as to FOnTI: By: Sr. Deputy City Attorney 090722 mb 8261093 CITY OF PALO ALTO By \).Q-C ~ City Manager DIRECTOR OF PLA1\TNING & COMMUNITY ENVIRONTYIENT Curtis Williams " -4- TO: HONORABLE CITY COUNCIL FROM: CITY MANAGER DEPARTMENT: CITY MANAGER DATE: JULY 27, 2009 CMR: 334:09 REPORT TYPE: CONSENT SUBJECT: Approval of Amendment No. 4 to Contract S05108852 with The Ferguson Group, LLC to Extend the Term for an Additional Two Month Period and Add $13,625 for a Total Not to Exceed Amount of $397,014 for FY 2005 -FY 2009 Federal Legislative and Regulatory Representation RECOMMENDATION Staff recommends that the Council approve and authorize the City Manager or his designee to execute the attached Amendment No. 4 to Contract S05108852 with The Ferguson Group, LLC for federal legislative and regulatory representation to continue services for an additional 2 month period through August 2009 and add $13,625 to cover costs for that period. DISCUSSION The City Manager's Office has utilized The Ferguson Group to represent the City of Palo Alto through the federal legislative process. The Ferguson Group advocates issues within Federal legislative forums and directly with Federal elected officials to support City Council priorities. The current contract has been in place since July 2004. In December 2008, the Council approved an amendment to the existing contract to cover services for FY2008 and to continue the services through the end ofFY2009. The City issued a Request for Proposals in late spring in order to award a new contract for federal legislative representation for FY20 1 O. Due to staff transitions related to management of the City'S legislative program, the selection of the City's federal legislative firm for FY2010 was not completed by the expiration of the current Ferguson Group contract on June 30, 2009. Two rounds of interviews have been held with firms that submitted proposals. Staff are in the final selection phase of the process and anticipate completing the selection by the beginning of August. Extending the Ferguson Group contract through the end of August allows for continuity of federal representation and also provides for transition support should the firm not be selected for the FY20 1 0 contract. CMR:334:09 Page 1 of2 In order to provide continuity of federal legislative services until completion of the selection process for FY20 1 0 agreement, staff is asking for Council approval of a contract amendment with the Ferguson Group to continue services through August 31, 2009. This continuity is important at this time due to the current timing of the federal legislative schedule. The City has submitted several federal appropriations requests for FY2010 and Congress is currently considering legislation that might provide funding for a couple of these requests. The Ferguson Group is tracking these requests and ensuring the City's interests are represented in the process. The Ferguson Group is also assisting the City with the project submittal process for funding projects under new transportation reauthorization legislation. Due to the dynamic nature of Washington, DC, it is important for the City to maintain federal representation during this transition period. RESOURCE IMPACT The Ferguson Group has agreed to extend the contract for two months at a fixed fee of $6,562.50 per month plus reimbursable expenses not to exceed $500 for the two month period. This is consistent with the monthly fee in the current FY2009 agreement. The City Manager's Office budgeted for federal legislative services in FY20 1 O. This budget will accommodate the expenses associated with Amendment No.4 to the Ferguson Group agreement as the firm for FY201 0 has not been selected yet. POLICY IMPLICATIONS The proposed amendment is consistent with prior Council direction. ENVIRONMENTAL REVIEW Approval of the amendment to agreement does not constitute a project under the California Environmental Quality Act (CEQA); therefore, no environmental assessment is required. ATTACHMENTS Attachment A: Amendment No.4 to Agreement No. S05108852 with The Ferguson Group, LLC PREPARED BY: CITY MANAGER APPROVAL: CMR:334:09 h- Kelly Morariu Assistant to the City Manager 'p~ James Keene City Manager Page 2 of2 ~mNDMENT NO. 4 TO AGREEMENT NO. S05108852 BETWEEN THE CITY OF PALO ALTO, a CALIFORNIP.~ CHARTER CITY, AND THE FERGOSON GROUP, LLC. This Amendment No. 4 to Ag.reement No. S05108852 ("Agreement/l) is entered into July 28th, 2009, by and between the CITY OF PALO ALTO ("CITY"), and THE FERGUSON GROUP, LLC., located at 1130 Connecticut Avenue, N.W. Suite 300, Washington D.C. 20036, (PH) 202-331-8500 (nCONTRACTOR"). Eel TAL s: WHEREAS, the Agreement was entered into between the parties for the provision of Federal Legislative and Regulatory Representation; and WHEREAS, the parties wish to amend the Agreement; NOV.], THEREFORE, in consideration of the covenants, terms, conditions, and provisions of this Amendment, the parties agree: SECTION 1. The section entitled "TERMS" is hereby amended to read as follows: "TERMS. The services and/or materials furnished under this Agreement shall commence on July 1, 2004 and shall be completed August 31, 2009./1 SECTION 2. The section entitled "COt-'IPENSATION" is hereby amended, to read as follows: 090723 9000050 COMPENSATION for the full performance of this Agreement~ CITY shall pay "CONTRACTOR": Six thousand ii ve hundred 1 Amcnd.agl ReI'. July 31, 1998 sixty two dollars and fty cents ($6,562.50) month for the period of July, 2007 through l'1arch, 2009; Ohe thousand six hundred s y six dollars and ninety cents ($l,666.90}per month for the period April, 2009 through June, 2009; and Six thousand five hundred two dollars and fifty cents ($6,562.50) per month for the period of July, 2009 through August, 2009. In on the CONTRACTOR shall be paid $512.52 f.or reimbu.rsable expenses for fiscal year 2007/2008, a not to exceed amount of $2,000 in reimbursabl'e expenses for year 2008/2009 ( and a not to exceed amount of $500.00 in reimbursable expenses July, 2009 thtough J\ugust, 2009. Except as herein modified, all other provisions of the Agreement, including any exhibits and subsequent amendments thereto, shall remain in full force and effect. IN WITNESS WHEREOF 1 the ies have by their duly authorized sentatives exec:uted this Arnendmenton the first above written. 090723 9000()50 2 Amend.agt Rey. July ]1,1998 CITY OF PAr,O ALTO APPROVED AS TO FORM: orney APPROVED: Manager 3 090723 9000050 Name: ---"-"'-'-I- Title:~b'~ __ ~Q~, ________ __ By: W !L~(~~ Name:~ j ~U2ef?-· 6,~VfrAJ N Title: irt~(dC11L~f_'_ (Compliance with Corp. Code ) 313 is required if the entity on Ivhose behalf this contract is signed a corporation. In the alternative, a certified corporat.e resolution attesting to the signatory authori ty of i:he indi vidltals signing in their respective is acceptable) Amclld.agt Rev. July 31,1998 CITY OF PALO ALTO Memorandum July 27, 2009 TO: HONORABLE CITY COUNCIL FROM: CITY MANAGER DATE: July 27, 2009 DEPARTMENT: PLANNING AND COMMUNITY ENVIRONMENT CMR: 304:09 SUBJECT: Initiation of: (1) a Zone Change from Neighborhood Commercial (CN) District to Planned Community (PC) District for a mixed use project having 61,960 square feet of floor area, including 8,000 square feet of grocery (intended for JJ&F Market), 5,580 square feet of other retail, 14 affordable one-bedroom residential units, 39,980 square feet of office use, and two levels of below-grade parking facilities and surface parking facilities providing 227 parking spaces located at 2180 EI Camino Real; and (2) a Comprehensive Plan Amendment to assign the Mixed Use land use designation to a site currently designated as Neighborhood Conlmercial BACKGROUND: The item described above was heard by the City Council on July 13,2009. The Council did not complete its review of the item and continued consideration to July 27, 2009. RECOMMENDATION: Staff continues to recommend that the City Council initiate the Planned Community (PC) process, but that the Council forward the proj ect to the Planning and Transportation Commission (PTC) for review and recommendation, to be followed by Architectural Review Board (ARC) review and recommendation, and then review and final action by the City Council. The standard zoning process would require ARB review prior to PTC review, but in this case PTC review may be preferred to allow for more input on the land use and intensity issues of concern in advance of the ARB's design review. The Council may also provide direction to the PTC and ARB regarding development parameters, such as those pertaining to the land use mix, maximum floor area, and parking. Staff responses have been provided to the questions posed by Council member Kishimoto prior to the July 13,2009 City Council hearing (Attachment A). CURTIS WILLIAMS Interim Director of Planning and Community Environment ATTACHMENTS: JAMES KEENE City Manager Attachment A: Staff responses to Council Member Kishimoto' s questions Attachment B: CMR from July 13, 2009 and attachments COURTESY COPIES Linda Poncini, Carrasco Associates Tony Carrasco, Carrasco Associates Patrick Smailey, The Chilcote Trust Andrew Gregg Robin Kennedy William D. Ross Fred Balin Greg Tanaka Susan Rosenberg .. Attachment A Councilmember Kishimoto Questions (7/13/09): 1. What discussion was there over keeping College Terrace frontage as a neighborhood commercial area? Staff Response: There has been a great deal of discussion between staff and the applicant and with the Planning and Transportation Commission over this issue. The site could be redeveloped under the Neighborhood Commercial (CN) regulations but the applicant asserts that if it is developed under the CN zoning the neighborhood grocery store would not be able to afford the rental cost of any newly created retail space and would not be able to return to the site. Many residents of the community have stated that the retention of the neighborhood market is very important. The flexibility of the PC is proposed to allow the higher amount of office as the financial driver to allow the property owner to offer affordable rental rates to the neighborhood market so it could remain on site. The larger amount of office floor area is not typical of the Neighborhood Commercial zoning but with the PC, it is intended to be used to preserve the neighborhood serving grocery store. If the question is more specific to the College Terrace frontage (Staunton Court), the site is probably too narrow to just focus the neighborhood retail along that street and the neighborhood prefers vehicle access from EI Camino. The storefronts would not have good visibility from EI Camino, however, which would also be a detriment. 2. How has Milk Pail in Mountain View worked in terms of the rent they pay) the low-cost structure that houses them) city purview of permits vs. any support from that shopping center? Staff Response: The property is owned by the Milk Pail store owner. They pay no rent. The City of Mountain View has taken no action to discourage or encourage the existence of the store. There is no City program that provides economic assistance to the store. There are only 5 or 6 parking spaces on site and according to the city of Mountain View they are grandfathered for a deficiency of approximately 20 to 40 spaces. There is a private parking agreement between the Milk Pail and the adjacent shopping center, but it is unknown if the Milk Pail provides any financial compensation for the spaces it uses or how many spaces they are allocated through the agreement. Mountain View has no involvement with this agreement. Because the parking deficiency is grandfathered they did not require it. 3. What is their square footage)' any contribution they pay if any towards the common parking? Staff Response: Staff was not able to obtain that information, but will endeavor to have it available at the Council meeting. 4. Please share any other incentive system to recruit or keep groceries. I sent Steve the NYC proposal for Fresh stores. Staff Response: Staff is not aware of other localities that provide incentives for grocery stores, other than financial incentives in redevelopment areas. There is not a reason why, however, Palo Alto could not provide either FAR bonuses for grocery stores or limit housing on CN sites unless a minimum size grocery is provided, or other possible incentives. Most of these, however, would have the effect of intensifying a site, which could be objectionable to area neighbors. 5. Please provide overall zoning map and strategy for that area of town isn't that entire area CN zoned, intending to provide neighborhood services? Staff Response: Please see the zone map image included as Attachment B of the Planning and Transportation Commission staff report, attached to the July 13 CMR. The block that comprises the project area is zoned CN, part of a 4-block stretch ofCN on the west side frontage ofEI Camino Real. A Two Unit Multiple-Family Residential District with a Neighborhood Preservation Combining District (RMD (NP)) is located just behind the project to the northwest. There are CN and R-2 zones across the street on the east side of EI Camino Real and Community Commercial (CC) just to the southeast across EI Camino Real. Commercial Service (CS) zoning is also located in close proximity on EI Camino Real. 6. El Camino guidelines also apply: what is the gist of these? Isn't the 12 foot sidewalk setback required why would it count as rent for JJ&F? Staff Response: The project is subject to meeting the EI Camino Guidelines. The intent of the Guidelines is to assist in the transfonnation of the EI Camino Real from a regional highway to a more attractive suburban arterial. The objectives of the guidelines are to: • Support land uses that locate higher density development adjacent to transit nodes, and provide a compatible mix of uses in aesthetically pleasing, well sited buildings. • Create an identity that is specific to South Palo Alto. • Encourage design that complements the streetscape concept and attracts additional private investment. • Ensure a healthy and vibrant market for new development projects, both large and small. The 12 foot setback is a guideline within the EI Camino Real Guidelines and is not a code requirement. The 12 foot sidewalk is typically imposed as it is on this project. JJ&F or any other grocery market would not be allowed to use any part of the 12 foot wide sidewalk for sales and service and staff assumes would therefore not pay rent for any area of the 12 foot wide sidewalk. The concept as presented at this point has the sidewalk merging right into the open air portion of the proposed market. The market may be asked to pay rent on the open area used for sales and service that is not encumbered by the 12 foot public sidewalk. 7 . Would site and design be part of the process under a mixed use proj ect (as alternative to PC)? Staff Response: No, the Site and Design Process would not be an alternative to the Planned Community (PC) process. The Site and Design process does not allow for changes to the zoning limitations. The project as proposed does not comply with the limitations within the CN zone district, and thus a PC process is necessary. 8. Could there be a deed restriction that would require office workers need to pay separately for parking and/or eco-pass or GO-Pass to be provided? Staff Response: The Planned Community (PC) ordinance may require that Ecopasses or GO-Passes be provided for workers and that such provisions be incorporated into lease agreements and/or CC&Rs (if there are any). A deed restriction generally applies to the land, not to the tenants. A parking cash-out or pay-for-parking requirement could be a requirement of a transportation demand management (TDM) program, if the Council determined to include such a requirement in the PC conditions. 9. Ground-floor retail ordinance -would the grandfathering of required retail go away if this becomes a PC? Staff Response: The CN zoning regulations do not currently "require retail" but rather prevent certain uses, including retail, from being converted to office at the ground floor. The section of the code (Section 18.16.050 Office Use Restrictions) that prevents the conversion of ground floor retail to office would no longer apply since the zone district would be a PC and not CN. As proposed, the PC is designed for a specific amount of retail space within the project. The protection for retail space could be much stronger with the PC than under the current zoning depending on what the Council decides they wish to include in the PC ordinance. 10. CUP for medical or intensive night traffic (regional restaurant, bar) council could keep control over these under all circumstances? Staff Response: Medical office has a higher trip generation rate than office uses and is not proposed in the projects. The PC ordinance will specify permitted and conditionally permitted uses, and medical offices would not be an allowed use. Restaurant use would require a Conditional Use Permit (CUP) for the service of alcohol, but is otherwise a permitted use in the CN zone and as proposed for the PC. The parameters or allowances for any of these uses may be limited by the PC ordinance. CITY OF PALO ALTO Memorandum ATTACHMENT B July 13, 2009 TO: HONORABLE CITY COUNCIL FROM: DATE: SUBJECT: CITY MANAGER July 13,2009 DEPARTMENT: PLANNING AND COMlVIUNITY ENVIRONMENT CMR: 304:09 Initiation of: (1) a Zone Change from Neighborhood Commercial (CN) District to Planned Community (PC) District for a mixed use project having 61,960 square feet of floor area, including 8,000 square feet of grocery (intended for JJ &F Market), 5,580 square feet of other retail, 14 affordable one- bedroom residential units, 39,980 square feet of office use, and two levels of below-grade parking facilities and surface parking facilities providing 227 parking spaces located at 2180 EI Camino Real; and (2) a Comprehensive Plan Amendment to assign the Mixed Use land use designation to a site currently designated as Neighborhood Commercial Staff has received and reviewed the recent (July 8, 2009) submittal information fronl the project applicant, and recommends that Council approve alternative #3 in the City Manager's Report, to initiate the Planned Community zoning and Comprehensive Plan amendments for the project and forward the proposal to the Architectural Review Board with the following direction: 1. Delete six below-market rate units and set aside that area for parking, open space, and/or future expansion of the JJ&F (or other) Market; 2. Provide for on-site parking in compliance with the zoning ordinance, with adjustments only for the remaining affordable housing units and for proximity to transit for the office square footage, and considering "landscape reserve" parking if feasible; and 3. Emphasize the pedestrian nature of the ground floor, sidewalk, outdoor market area, and plaza features along E1 Camino Real to create an exemplary retail frontage on that major boulevard. The applicant's materials address several of the concerns raised by the Planning and Transportation Commission, and include a letter of intent that better insures that the market space will be reserved for and used by JJ &F market, a willingness to accommodate expansions of the market, and increased parking spaces with reduced parking demand. Staff believes that these changes are adequate to move the project on to the ARB, while noting that ARB and Planning and Transportation Commission review is still required and that modifications to the site planning and land use mixes and intensity may be recommended by those bodies prior to final Council consideration of the Planned Community zoning. Other alternatives remain available to the City Council, as noted in the CMR, to either: 1. Accept the Commission's recommendation and vote not to initiate the proposed amendments, requiring the applicant to then submit a new and different application; or 2. Provide direction regarding development parameters, such as those pertaining to land uses and maximum floor area, and suggest that the applicant modify the project and direct the Commission to conduct a second preliminary review of a modified project prior to forwarding the project to the ARB. COURTESY COPIES Linda Poncini, Carrasco Associates Tony Carrasco, Carrasco Associates Patrick Smailey, The Chilcote Trust Andrew Gregg Robin Kennedy William D. Ross Fred Balin Greg Tanaka Susan Rosenberg JAN.iE$KEENE CiJ,)!;Manager TO: FROM: DATE: City of Palo Alto City Manager's Report HONORABLE CITY COUNCIL CITY MANAGER JULY 13,2009 DEPARTMENT: PLANNING AND COMMUNITY ENVIRONMENT CMR: 304:09 REPORT TYPE: PUBLIC HEARING SUBJECT: Initiation of: (1) a Zone Change from Neighborhood Commercial (CN) District to Planned Community (PC) District for a mixed use project having 61,960 square feet of floor area, including 8,000 square feet of grocery (intended for JJ&F Market), 5,580 square feet of other retail, 14 affordable one-bedroom residential units, 39,980 square feet of office use, and two levels of below-grade parking facilities and . surface parking facilities providing 227 parking spaces located at 2180 EI Camino Real; and (2) a Comprehensive Plan Amendment to assign the Mixed Use land use designation to a site currently designated as Neigh borhood Commercial. EXECUTIVE SUMMARY This project entails requests for the initiation of a Planned Community Zone Change from Neighborhood Commercial (CN) to Planned Community (PC) and a Comprehensive Plan Amendment to modify the land use designation from Neighborhood Commercial to Mixed Use for a site located at 2180 EI Camino Real. The proposal includes the construction of a mixed use development with three buildings built over two levels of below grade parking with retail, office and residential uses above. The key issue for consideration is the adequacy of the retention of the neighborhood grocery store as a public benefit to offset the proposed amount of office square footage. The Planning and Transportation Commission recommended denial of both requests at its April 29, 2009 meeting. The City Council has three primary options regarding the action it may take on this item. The Council may: 1) decline to initiate the PC rezone request and the Comprehensive Plan Amendment; or 2) provide direction and return the item back to the Commission for further consideration before moving the item forward to the Architectural Review Board (ARB); or 3) initiate the rezone request and Comprehensive Plan Amendment and forward the application to the ARB. CMR: 304:09 Page 1 of7 RECOMMENDATION The Planning and Transportation Commission (Commission) recommends that the City Council decline to initiate the requested PC Rezone and Conlprehensive Plan Amendment. Staff recommends that the City Council either: 1) Accept the Commission's recommendation and vote not to initiate the proposed amendments and the applicant could then submit a different application; or . 2) Provide direction regarding development parameters, such, as_ t.hQse pertaininK t9 ..land uses and maximum floor area, that the City Council deems app.ropriate, suggest that the applicant modify the project and direct the Commission to conduct a second preliminary" review of a modified project prior to forwarding the project to the ARB; or 3) Initiate both requested anlendments and forward the project to the ARB, with direction to the ARB and applicant regarding suggested changes (if any). COUNCIL REVIEW AUTHORITY Rezoning to a Planned Community (PC) district follows a unique set of procedures and standards described in Chapter 18.38 of the Palo Alto Municipal Code. The Commission first reviews a development program statement, plan, and schedule. If the Commission acts favorably, the development plan, plot plan, landscape plan and design plans are submitted for Architectural Review Board (ARB) review in the same manner as any commercial or mixed-use project. The development plan recommended for approval by the ARB is then returned to the Commission, together with a draft zoning ordinance, for its final review and recommendation to the City Council. The zoning ordinance identifies the permitted and conditionally permitted uses, and site improvements, as well as a schedule for completion of the project. The City Council then reviews the proposal along with recommendations from staff, the ARB and the Commission and determines if it will approve the proposed PC ordinance. In the instance where the Commission does not act favorably and does not initiate the PC rezone request, the request is forwarded to the City Council for review. The Council must then determine if it will approve or deny the request to initiate the PC rezone. If the Council decides to approve the request and initiate the PC rezone, then the application is forwarded to the ARB. The ARB then makes a recommendation to the Commission which makes a final recommendation to the City Council. If the City Council denies the request to initiate the PC rezone, then the process is over and the application does not move forward. The applicant would have the option to redesign the project and submit a new application. PROJECT DESCRIPTION The project includes the demolition of all of the existing buildings on the 1.15 acre site at 2180 EI Camino Real and construction of a mixed use project having 61,960 square feet of floor area, including 8,000 square feet of grocery (intended for JJ&F Market), 5,580 square feet of other retail, 14 affordable one-bedroom residential units, 39,980 square feet of office use, and two levels of below-grade parking facilities and surface parking facilities providing a total of 227 parking spaces. The project includes a request for initiation of a Planned Community Zone, and a Comprehensive Plan Amendment to assign the Mixed Use land use designation to the site which is currently designated as Neighborhood CommerciaL The proposed total floor area ratio (FAR) would be 1.23:1 inclusive of 1.06 non-residential FAR (0.79 FAR office and 0.27 FAR retail). The project site now comprises four parcels with a total area of 50,277 square feet (1.15 304:09 Page 2 of7 acres) containing the 8,712 sq. ft. JJ&F Market, a 4,315 sq. ft. retail building, and a 5,001 sq. ft. office building. Further detail and project analysis is included in the attached April, 29, 2009 staffreport to the Commission (Attachlnent A). COMMISSION REVIEW AND RECOMMENDATION The Commission conducted preliminary reviews ("pre-screenings") of the proposal for a Planned Community (PC) rezone and Comprehensive Plan amendment on February 13, 2008 and October 1,2008. On April 29, 2009, the Commission formally considered the request to initiate the PC rezone and amend the Comprehensive Plan land use designation and voted 6-1 to deny the initiation requests. Comments below from the April 29, 2009 meeting address several of the key issues of concern to the Commission and the public. Grocery The Commission generally agreed that retention of the market is a public benefit. They were concerned however, that 8,000 square feet is not enough retail floor area to ensure that a market would be economically viable if JJ&F did not return. The Commission discussed ideas that would enable the grocery store to expand ifneeded, such as placing additional retail floor area or office space on the ground floor adjacent to the market such that a grocer could expand into that space if and when such space is needed. One idea was to relocate the residential units to the upper floor above the commercial floor area, to allow for additional ground floor retail/office space adjacent to the proposed market to allow for possible future expansion of the market. Housing Most Commissioners expressed support for the inclusion of the Below Market Rate (BMR) housing as part of the proposed public benefits. However, sonle of the Commissioners cited that the proposal includes too much office floor area and does not provide enough housing to be considered a balanced mixed use project. A couple of Commissioners also noted that the residential units could be market rate units to provide greater income through rental or sale of housing units, thereby offsetting loss of income from any reductions in office area. Office Use and Square Footage Most Commissioners agreed the proposal includes too much office space and noted that the anlount of office increased since the previous proposal. Those Commissioners believed that the extensive office space (0.8 FAR) would be well in excess of the allowances for Neighborhood Commercial zoning. Others, however, noted that the office use in this location could benefit not only the market but also the other retail businesses along El Camino Real and within the California Avenue Business District by providing an enhanced custonler base. One of those Commissioners commented that the amount of office is not a concern and that the proportions of the development are reasonable considering the size of the property and its location on El Camino Real. CMR: 304:09 Page 3 of7 Traffic and Parking The Commissioners agreed the location of the parking garage entrance on El Camino Real would avoid additional vehicular traffic entering the College Terrace neighborhood, and would allow for a car coming out of the garage to be level with good sight lines before crossing over the sidewalk. The bus stop location, in relation to the driveway, was noted as a positive feature, since the bus stop would become an effective turning lane for vehicles entering the garage, such that they would not slow traffic on EI Camino Real.. Some were skeptical, however, about the proposed parking reductions (254 spaces required, 227 spaces proposed) and agreed that either additional parking or a strong Transportation Demand Management program (TDM) would be needed. Some Commissioners commended the applicant for proposing two layers of below grade parking in line with City policies. Other Comments Some Commissioners conlmented that they needed to see the applicant's private agreement with JJ &F to feel more comfortable with the proposal. The Commissioners agreed that a deed restriction would be useful to assure continued use for JJ&F or another market. Other Commissioners were less concerned about the private arrangements since the City would have control over the uses through the PC ordinance. One Commissioner noted a benefit to the California Avenue Business District in that the project could provide an anchor for the California Avenue retailers in the form of a customer base and that the project supports the neighborhood by providing a neighborhood grocery store. In addition, the Commission noted that the project land uses should be more integrated and that the project design needs to provide better transition areas at the ground level. It was also noted that breaking the project into separate buildings such that they are less monolithic was a positive revision to the prior plan. Minutes of the April 29th Commission meeting are enclosed as Attachment B. Public Comments Fifteen public speakers appeared at the meeting. Most speakers expressed a desire to retain the JJ&F neighborhood grocery store and to gain a full-service neighborhood market and not a convenience store. Some expressed appreciation for the convenience of the neighborhood market and liked the fact that it is locally owned and provides high quality products. Many were also concerned that the 8,000 sq. ft. grocery space may not be a large enough space to make it desirable for another tenant if JJ&F did not return. Some felt that the grocery use could not be guaranteed and that a vacant tenant space could result. Some recognized that the grocery and other retail uses would benefit the employees of the proposed office space by providing a convenient location to shop and have lunch. Some of the speakers had concerns regarding potential increased traffic into the neighborhood and inadequate parking, while others appreciated the location of the garage driveway on El Camino to help to avoid traffic impacts to the neighborhood. One neighbor cited concerns about noise from the proposed grocery store loading dock area. Another believed that the initiation could not be considered by the Commission without having access to a completed environmental review document and without knowing whether the proposal is consistent with the Comprehensive Plan. CMR: 304:09 Page 4 of7 Another resident noted that regional office space at this location along the EI Camino Real would not be a problem and that it would bring people and vitality to the area, and be an improvement upon what is there now. Another speaker noted that the proposed setback of the grocery store would encourage pedestrian activity. Ultimately, most speakers agreed they wanted a center that would serve the neighborhood. STAFF RECOMENDATION Staff did not make a specific recomnlendation for this project, but identified the key issues for consideration. The fundamental issue for consideration is whether the guaranteed preservation of a neighborhood market in this location is a compelling benefit to allow for the substantial additional office square footage along EI Camino Real. The preservation of the neighborhood market is the most significant element that the community requested be a part of any redevelopment of the site. If the Council determines that the retention of a market on the site justifies the Planned Community Zoning, staff would recommend the PC ordinance specify requirements to assure that the market be operational in advance of the occupancy of any of the other site uses. ALTERNATIVES The City Council may consider any of the following regarding the PC zoning and Comprehensive Plan initiation requests: 1. Adopt the Planning and Transportation Commission's recommendation and decline to initiate the requests for a PC rezone and Comprehensive Plan An1endment; or 2. Provide direction regarding development parameters that the Council deems appropriate to allow a revised proposal to be submitted for Commission review, prior to forwarding to the ARB for consideration; or 3. Initiate the PC rezone and Comprehensive Plan Amendment and forward to the ARB for review, with direction to the ARB and the applicant regarding suggested changes (if any). RESOURCE IMPACT Should the City Council choose to initiate the requested amendments, an analysis of resource impacts would be prepared for consideration by the Commission and City Council. POLICY IMPLICATIONS The April 29, 2009 Commission staff report includes key issues providing the basis for policy discussion. With respect to the Palo Alto Comprehensive Plan, the proposed development is not consistent with the current Neighborhood Commercial land use designation, since the extensive office component and the proposed 1.23: 1 Floor Area Ratio would not be consistent with that land use and prescribed development intensity_ The land use designation that would seem most appropriate in relationship to the proposed development is the Mixed Use land use designation. The definition of the Mixed Use land use designation is provided in the Commission staff report. While the current proposal is not compliant with the current Conlprehensive Plan Land Use Designation, the proposal is compliant with many of the Policies and goals of the Comprehensive Plan. For instance, Policy B-25 says to "Strengthen the commercial viability of businesses alongEI Canlino Real. Encourage development of pedestrian-oriented neighborhood CMR: 304:09 Page 5 of7 retail and office centers along the EI Camino ReaL" This project would implement this policy in many ways. It ensures pedestrian-oriented neighborhood serving retail by preserving the neighborhood market and by providing other retail spaces. It increases the economic viability of the other area businesses by providing an additional customer base with the new office and residential uses. (See the applicable Comprehensive Plan policies in Attachment C of the April 29,2009 Commission staffreport Attachment A). ENVIRONMENTAL IMP ACTS An environmental review has not been conducted for the project since the requested zone change initiation is not considered a project under the CalifoD1ia Environmental Quality Act (CEQA). At this point in the Planned Community application process the project is not yet completely determined as the plans are of a conceptual nature and details and documentation are to be submitted only after the project has been initiated. Upon Councilor Commission initiation of the requested amendments or amendments as may otherwise be initiated, a draft environmental review document would be prepared for ARB and Commission review with final approval by City Council. PREPARED BY: Senior Planner DEPARTMENT HEAD: ClTRTIS WILLIAMS Interim Director of Planning and Community Environn1ent CITY MANAGER APPROVAL: ATTACHMENTS Attachment A: Attachment B: Attachment C: Attachment D: Attachment E: Attachment F: P&TC Staff Report, April 29, 2009 (with attachments except attachment H) P&TC Minutes of April 29, 2009 Public Correspondence Neighborhood survey submitted by applicant (Council members only and available at this link: http://www.cityofpaloalto.org/knowzone/agendas/planning.asp) Applicants project letter July 8, 2009 (Council members only and available at this link: http://www.cityofpaloalto.org/knowzone/agendas/planning.asp) Project Plans (Council members only) COURTESY COPIES Linda Poncini, Carrasco Associates CMR: 304:09 Page 6 of7 Tony Carrasco, Carrasco Associates Patrick Smailey, The Chilcote Trust Andrew Gregg Robin Kennedy William D. Ross Fred Balin Greg Tanaka .. ~ ... ' Susan Rosenberg CMR: 304:09 Page 7 of7 TO: FROM: ATTACHMENT A PLANNING &TRANSPORTATION DIVISION STAFF REPORT PLANNING & TRANSPORTATION COMMISSION Russ Reich, Senior Planner DEPARTMENT: Planning and Conununity Environment AGENDA DATE: April 29, 2009 SUBJECT: 2180 EI Camino Real: Initiation of (1) a Zone Change from Neighborhood Commercial (CN) District to Planned Community (PC) District for a mixed use project having 61,960 square feet of floor area including 8,000 square feet of grocery (intended for JJ&F Market), 5,580 square feet of other retail, 14 affordable one-bedroom residential units, 39,980 square feet of office use, for a total floor area ratio (FAR) of 1.23: 1 inclusive of 1.06 non-residential FAR, and two levels of below-grade parking facilities and surface parking facilities providing 227 parking spaces on the property, and (2) a Comprehensive Plan Amendment to assign the Mixed Use land use designation, allowing for a 1.15:1 non- residential FAR, to a site currently designated as Neighborhood Commercial. Environmental Assessment: A draft initial study is being prepared. RECOMMENDATION Staff recommends that the Planning and Transportation Commission (Commission) consider the proposal to initiate the zone change application from Neighborhood Commercial (CN) to Planned Community (PC) and amend the Comprehensive Plan land use designation from Neighborhood Commercial to Mixed Use to determine whether to forward the conceptual plans to the Architectural Review Board for their review. SUMMARY OF KEY ISSUES The applicant's development proposal for the proposed PC District is provided in Attachment F. Staff has identified the following topics for the Commission's specific consideration and comment: City of Palo Alto Page 1 • Zoning compliance and mix and intensity of land use; • Appropriateness of the proposed Comprehensive Plan land use designation; • Adequacy of the proposed public benefits; • Adequacy of parking facilities; • Conformance with the South EI Camino Real Design Guidelines; and • Contextual relationship of the project to surrounding neighborhoods. The staff report attachments include an aerial photo, a location map, Comprehensive Plan and Zoning compliance tables, and the project review timeline. Planned Community Zone Change The requested PC zone district is for the specific development proposal as described above and as shown on the proposed development plans. Rezoning to a PC district follows a unique set of procedures and standards described in Chapter 18.38 of the Palo Alto Municipal Code. The Commission first reviews a development program statement, plan, and schedule. If the Commission acts favorably, the development plan, plot plan, landscape plan and design plans are submitted for Architectural Review Board (ARB) review in the same manner as any commercial or mixed-use project. The development plan recommended for approval by the ARB is then returned to the Commission, together with a draft zoning ordinance, for its final review and recommendation to the City Council. The zoning ordinance identifies the permitted and conditionally permitted uses, and site improvements, as well as a schedule for completion of the project. The Commission may recommend a PC zone change only if it finds that: (a) The site is so situated, and the use or uses proposed for the site are of such characteristics that the application of general districts or combining districts will not provide sufficient flexibility to allow the proposed development. (b) Development of the site under the provisions of the PC planned community district will result in public benefits not otherwise attainable by application of the regulations of general districts or combining districts. In making the findings required by this section, the Planning and Transportation Commission and City Council, as appropriate, shall specifically cite the public benefits expected to result from use of the planned community district. (c) The use or uses permitted, and the site development regulations applicable within the district shall be consistent with the Palo Alto Comprehensive Plan, and shall be compatible with existing and potential uses on adjoining sites or within the general vicinity. BACKGROUND Project Location The project site is an entire block bounded by EI Camino Real to the east, Staunton Court to the west, Oxford A venue to the north, and College A venue to the south. A project location map is provided as Attachment A. City of Palo Alto Page 2 The project would encompass four parcels with a total area of 50,277 square feet (1.15 acres). There are currently several buildings on the site including the 8,712 sq. ft. JJ&F Market, a 4,315 sq. ft. retail building, and a 5,001 sq. ft. office building. All of the existing buildings would be removed. Prior Review and Community Outreach The City Council has not conducted a preliminary review of the project but directed tbe Commission to conduct a preliminary review of the proposal. The applicant has held a series of community meetings with the adjacent College Terrace neighborhood over the last few years. The Commission conducted preliminary reviews of the proposal on February 13,2008 and on October 1, 2008. The Commission had the following general comments: • There was agreement that preservation of the neighborhood market (JJ&F) would be a public benefit though there were concerns about how the applicant would assure its retention; • There were concerns about traffic and parking; • A greener, more sustainable building design was requested; • There were concerns about building height relative to the others in the area; • There were concerns about the amount of office floor area within the proposed development; and • There were concerns about the overall scale of the project relative to the CN zone district. DISCUSSION The design of the project has changed since the original preliminary review. The proposal now includes 14 BMR units facing the residential portion of the College Terrace neighborhood. The JJ&F market has been relocated to the north east comer of the site for better visibility on El Camino Real. The buildings facing El Camino have been modified from a three story wall into a mixture of two and three story buildings with the third floor being recessed in certain locations to reduce the mass. The driveway entrance to the below grade parking structure was relocated from Staunton Court to El Camino Real. The plans have maintained these changes and have been further developed since the last preliminary review with some floor area changes for the various uses proposed on site. Overview of the Proposed Project The project includes the following components: • The replacement of 18,028 square feet of existing commercial space with 61,960 square feet of new commercial and residential space. The commercial space would include 13,580 square feet of ground floor retail space, and 39,980 square feet of office space; • Fourteen (14) residential below-market-rate (BMR) units, comprising 8,400 square feet; • Underground parking garage containing 216 parking spaces on two levels; • Surface parking lot accommodating 11 parking spaces; • 24 on-street parking spaces around the site's perimeter; • Automobile driveways and on-site circulation elements facilitating organized and efficient ingress and egress of vehicles, pedestrians and deliveries. Access to the below grade parking would be provided from El Camino Real. City of Palo Alto Page 3 Key Issues Discussion Staff has identified the following issues for the Commission's specific consideration and comment. Zoning compliance and mix and intensity of use The proposed development would exceed .the allowed dev.elQP,J11ent standards specified for the CN (Neighborhood Commercial) zone in terms of floor area ratio (FAR). The applicant has stated that, in order to gain an adequate subsidy to retain the neighborhood market, the office floor area must exceed the maximum allowed within the CN zone district. The FAR of the proposed development would exceed the CN zone FAR maximum by 11,683 square feet. The office floor area would exceed the maximum office floor area allowed in the CN zone district by 27,411 square feet. The proposal is for 13,580 square feet of retail floor area with an additional 2,447 square feet of open air market space and 39,980 square feet of office floor area. The 14 below market rate units would add another 8,400 square feet to the floor area total. Floor Area Comparison CN requirements Proposed PC Floor Area Ratio 0.5:1 commercial 1.06:1 (FAR) 0.5:1 residential 0.16:1 (For mixed use) 1 .0: 1 total combined 1.23:1 Comprehensive Plan Land Use Designation The proposed development is not consistent with the parameters of the current Neighborhood Commercial land use designation. The Neighborhood Commercial land use designation is defined as follows: Neighborhood Commercial: Includes shopping centers with off-street parking or a cluster of street front stores that serve the immediate neighborhood. Examples include Alma Plaza, Charleston Center, Edgewood Center, and Midtown. Typical uses include supermarkets, bakeries, drugstores, variety stores, barber shops, restaurants, self-service laundries, dry cleaners, and hardware stores. In some locations, residential and mixed use projects may also locate in this category. 'Non-residential floor area ratios will range up to 0.4. The retail component of the project would be consistent with the typical use and commercial FAR intended for this designation but the office component and the proposed 1.23: 1 FAR would not be consistent. . The land use designation that would seem most appropriate in relationship to the proposed development is the Mixed Use land use designation. The Mixed Use land use designation is defined as follows: City of Palo Alto Page 4 This category includes LivelWork, Retail/Office, ResidentiallRetail and Residential/Office development. Its purpose is to increase the types of spaces available for living and working to encourage a mix of compatible uses in certain areas, and to encourage the upgrading of certain areas with buildings designed to provide a high quality pedestrian-oriented street environment. Mixed Use may include permitted activities mixed within the same building or within separate buildings on the same site or on nearby sites. LivelWork refers to one or more individuals living inJhe same building where they earn their livelihood, usually in professional or light industrial activities. Retail/Office, ResidentiallRetail and Residential/Office provide other variations to mixed use with retail typically on the ground floor and residential on the upper floors. Design standards will be developed to ensure that development is compatible and contributes to the character of the street and neighborhood. Floor area ratios will range up to 1.15, although ResidentiallRetail and Residential/Office development located along transit corridors or near multi-modal centers will range up to 2.0 FAR with up to 3.0 FAR possible in areas resistant to revitalization. The FAR above 1.15 will be used for residential purposes. Adequacy of the proposed Public Benefits The applicant has suggested the following public benefits associated with the proposed pc: • Provision of a subsidized rental rate to ensure a neighborhood-serving grocery market will remain at this location • 10 Below Market Rate housing units The Commission must determine if the proposed project's public benefits are adequate, as required for the establishment of a PC district. The fundamental issue for consideration is whether the guaranteed preservation of a neighborhood market in this location is a compelling benefit to allow for the substantial additional office square footage along EI Camino Real. The preservation of the neighborhood market is the most significant benefit that the community requested be a part of any redevelopment of the site. The PC would require that a portion (8,000 sq. ft.) of the project would be specified for a neighborhood serving grocery use. This is one of the benefits of using the PC process because it can be used to specify specific uses that typical zone districts can not. Traffic/Parking The project would result in the construction of approximately 61,960 square feet of retail, office, and residential space. A Traffic Impact Analysis (TIA) report, by Hexagon Transportation Consultants, Inc. which covers operational level of service analysis and parking analysis, has been prepared. The findings of the report indicate that the project would not result in significant impacts. At this time the proposed entry/exit driveway on EI Camino Real has not been approved by Cal Trans. Once the Environmental document is complete, Cal Trans will act on the request to allow the entry/exit on EI Camino Real. The purpose of relocating the driveway to EI Camino Real is to prevent any increase in traffic volume on the residential side streets and to keep the College Terrace Centre traffic out of the neighborhood. City of Palo Alto PageS Parking Reduction The proposed project includes 216 underground parking spaces and 11 grade level spaces for a total of 227 on-site parking spaces. Chapter 18.52 of the Municipal Code requires 254 on-site spaces for all of the proposed uses. The current proposal for on-site parking spaces is deficient by approximately 27 spaces. The applicant identifies 24 on-street parking spaces around the perimeterof the project. However, the code does not allow on-street parking spaces to be counted towards the r.~quiredamountof parkiQg fOJ the proj~ct. The c9de}~<?$s m,!~e provisions for parking requirement reductions in specific instances such as jojnt use (shared) parking > facilities, affordable housing units, and housing near transit. Eligibility for parking requirement reductions and potential impacts would be further studied by staff but the Commission's input on the parking proposal is encouraged at this time. Conformance with South EI Camino Real Design Guidelines A sidewalk width of 12 feet is encouraged, as stated in the South EI Camino Real Design Guidelines recommended for use by the Architectural Review Board in 2002. The guidelines suggest a 12-foot effective sidewalk width, with the building brought up to the edge of the sidewalk consistent with the Comprehensive Plan policies for EI Camino Real and with context based design requirements for commercial zones in the zoning ordinance. The proposal includes sidewalks that are 12 feet wide along EI Camino Real. The retail/office building would be set back four feet eleven inches to create a 12 foot wide sidewalk along EI Camino Real plus an additional 10 inches. The grocery/office building would be setback 29 feet four inches to provide for the 12 foot wide sidewalk as well as an open air market area at the front of the building. Contextual Relationship to Surrounding Neighborhood The project site is located at the eastern edge of the College Terrace neighborhood. The project faces existing commercial uses to the north, south, and east, and faces residential uses along Staunton Court to the west. The residential uses are comprised of single family dwellings at the comer of Staunton Court and Oxford A venue, and multifamily dwellings along the rest of Staunton Court. The two-story residential units of the proposed project would face the existing single family dwellings across Staunton Court; in effect, creating a transition between the existing residential area and the commercial portions of the proposed project. While the project is located within the College Terrace Neighborhood, it is at the commercial edge along EI Camino Real, which is a significant commercial highway and transit arterial where development of greater intensity is typically more appropriate. The tallest portion of the proposed project would be situated along EI Camino Real, which is characterized by a variety of one-to four-story commercial buildings. While the project is still in the schematic drawing phase, the proposal appears to be compliant with the Context-Based Design Criteria of Section 18.16.090 of the Municipal Code relative to the creation of pedestrian friendly environments, massing and setbacks, open space and parking design, and green building design. The applicant has provided images of several buildings that are located within close proximity to the proposed project to allow conlparison of the height and scale of the proposed buildings to those of existing buildings within the immediate area. City of Palo Alto Page 6 Building Height Relative To Residential Zone Districts On page AO.5 of the project plans, the applicant has shown areas of the project site that are limited to a height of 35 feet due to their proximity within 150 feet of residentially zoned properties. The heights of the proposed buildings in these locations have been adjusted to comply with this limit. A member of the public has noted that the plans do not indicate all of the areas that would be subject to the 35 foot height limit. The Ananda Church across the EI Camino Real is residentially zoned and is located only 125 feet away from the subject property. While ,-, .-''" the church property is zoned 'residential (R-2) it is not a residential use and is not likely to bete--',-".- developed as a residential use under the R-2 zone district regulations. The intent of the height limitation is to limit the height of new buildings in close proximity to lower density residential buildings. There appears to be no conflict here with the proposed height of the building relative to the existing Church structure. It is also not likely that the proposed three story builciing would conflict with any future redevelopment of the Ananda church property across the EI Camino Real. Staff can study this further if the Commission finds this to be an issue. ENVIRONMENTAL REVIEW Staff has determined that an Initial Study is required for this project under the California Environmental Quality Act (CEQA). This first hearing is an initiation of the zone change request so that, an environmental document is not required at this time. A Draft Initial Study would be prepared prior to the formal ARB review and prior to the project's return to the Commission for formal review and recommendation to the City Council. ATTACHMENTS Aerial Photo Site Location Map Comprehensive Plan Policies Zoning Compliance Table Project Timeline Applicant's Development Proposal (Commissioners only)* Public Correspondence Attachment A. Attachment B. Attachment C. Attachment D. Attachment E. Attachment F. Attachment G. Attachment H. Neighborhood Survey and Letter from Chamber of Commerce submitted by Applicant * (Commissioners only and also available at this link: http://'www .cityofpaloalto.orglknowzone/agendas/planning.asp) Attachment I. Plans (Commissioners only)* *Provided by applicant COURTESY COPIES: Linda Poncini, Carrasco Associates Tony Carrasco, Carrasco Associates Patrick Smailey, The Chilcote Trust Robin Kennedy, Manatt, Phelps, Philips William DRoss Fred Balin Greg Tanaka Susan Rosenberg City of Palo Alto Page 7 Prepared by: Russ Reich, Senior Planner Reviewed by: Amy French, Manager of Current Planning D~~mm~~~oo&~~~v~: __ ~~~~··~~~~~~\~O~D~~~~~-~~ ______ _ Curtis Williams, Interim Director City of Palo Alto Page 8 < I- Z w :E ~ CJ < I-~ (D The City of Palo Alto ~ Q) CZl .s ~ o o ~ ,..t:: $:l ~ t:l-t "s ~05~ ~ ~"-"C uQ)~Q) .-~ <: ~~ \0 o 00 ~ ~ o o ~ This map is a product of the City of Palo Alto GIS ® 0' 84' Thb _la • graphic representation only or best available soun:es. The City of Palo AJto assumes no responsibiUty for 8It'J enon;. ClI98910 2008 City of Palo Alto Legend :::11-:.11; 2180 EI Camino Real (Project Site) / Ii.' Stanford Lands c:::::J Zone Districts abc Zone District Labels The City of Palo Alto rrivera, 2008-01-30 15:14:36 (llcc-mapslgls$\glsladmlnlPersonalVrivera.mdb) ATTACHMENT B 2180 El Camino Real Zoning Districts Area Map This map is a product of the City of Palo Alto GIS -. 0' 250' This document I. a graphic represanlaUon only 01 best available sources. The City 01 Palo Allo assumes no responsibility lor any erro", C1989 10 2008 City 01 Palo Alto .. Attachment C Planned Community District-College Terrace Centre 2180 EI Camino Real 07PLN-00000-00327 Applicable Comprehensive Plan Policies ,..; ..J"'. .. .' '--.-.... ..... :_ .... } Land Use and Community Design Element Goal L-1: A well, designed, compact City, providing residents and visitors with attractive neighborhoods, work places, shopping centers, public facilities and open space. Policy L-4: Maintain Palo Alto's varied r~sidential neighborhoods while sustaining the vitality of its commercial areas and public facilities. Use the Zoning Ordinance as a tool to enhance Palo Alto's desirable qualities. Policy L-5: Maintain the scale and character of the City. Avoid land uses that are overwhelming and unacceptable due to their size and scale. Policy L-6: Where possible, avoid abrupt changes in scale and density between residential and non- residential areas and between residential areas of different densities. To·promote compatibility and gradual transitions between land uses, place zoning district boundaries at mid-block locations rather than along streets wherever possible. Policy L-9: Enhance desirable characteristics of mixed use areas. Use the planning and zoning process to create opportunities for new mixed use development. Program L-10: • Develop design standards for all mixed use designations for providing for buildings with one to three stories, rear parking or underground parking, street-facing windows and entries, and zero setback along the street, except that front gardens may be provided for ground-floor residential uses. Policy L-11: Promote increased compatibility, interdependence, and support between commercial and mixed use centers and the surrounding residential neighborhoods. Policy L-12: Preserve the character of residential neighborhoods by encouraging new or remodeled structures to be compatible with the neighborhood and adjacent structures. Goal L-4: Inviting, Pedestrian-scale centers that offer a variety of retail and commercial services and provide focal points and community gathering places for the City's residential neighborhoods and employment districts. Policy L-18: Encourage the upgrading and revitalization of selected Centers in a manner that is compatible with the character of surrounding neighborhoods. Policy L-20: Encourage street frontages that contribute to retail vitality in all Centers. Reinforce street corners with buildings that come up to the sidewalk or that form corner plazas. Policy L-21: Provide all centers with centrally located gathering spaces that create a sense of identity and encourage economic revitalization. Encourage public amenities such as benches, street trees, kiosks, restrooms, and public art. Policy L-22: Enhance the appearance of streets and sidewalks within all Centers through an aggressive maintenance, repair, and cleaning program; street improvements; and the use of a variety of paving materials and landscaping. Goal L-6: Well-designed buildings that create coherent development patterns and enhance City streets and public spaces. Policy L-48: Promote high-quality creative design and site planning that is compatible with surrounding development and public spaces. Policy L-49: Design buildings to revitalize streets and public spaces and to enhance a sense of community and personal safety. Provide an orderly variety of entries, porches, windows, bays and balconies along public ways where it is consistent with neighborhood character; avoid blank or solid walls at street level; and include human scale details and massing. Comprehensive Plan Policy Policy L-50: Encourage high-qualitysignage that is attractive, appropriate for the location, and balances visibility needs with aesthetic needs. Policy L-73: Consider public art and cultural facilities as a public benefit in conjunction with new development projects. Consider incentives for including public art in large development projects. Policy L-75: Minimize the negative physical impacts of parking lots. Locate parking behind buildings or underground wherever possible. .. -'Policy' L -78: Encourage development that creatively integrates parking ·into the project by providing for shared use of parking areas. Transportation Element Goal T-1: Less reliance on single occupancy vehicles. Policy T-1: Make land use decisions that encourage walking, bicycling, and public transit use. Goal T-3: Facilities, services and programs that encourage and promote walking and bicycling. Policy T-19: Improve and create additional, attractive, secure bicycle parking at both public and private facilities, including multi-modal transit stations, on transit vehicles, in City parks, at public facilities, in new private developments, and other community destinations. Goal T-4: An efficient roadway network for all users. Policy T-23: Encourage pedestrian-friendly design features such as sidewalks, street trees, on-site parking, public spaces, gardens, outdoor furniture, art, and interesting architectural details. 0 Goal T-8: Attractive, convenient public and private parking facilities. Natural Environment Element Goal N-3: A thriving "Urban Forest" that provides ecological, economic, and aesthetic benefits for Palo Alto. Policy N-15: Require new commercial, multi-unit, and single-family housing projects to provide street trees and related irrigation systems. Program N-16: Continue to require replacement of trees, including street trees lost to new development, and establish a program to have replacement trees planted off-site when it is impractical to locate therll on site. Policy N-17: Preserve and protect heritage trees, including native oaks and other significant trees, on public and private property. Policy N-18: Protect Palo Alto's groundwater from the adverse impacts of urban uses. Policy N-20: Maximize the conservation and efficient use of water in new and existing residences, businesses and industries. Policy N-21: Reduce non-point source pollution in urban runoff from residential, commercial, industrial, municipal, and transportation land uses and activities. Policy N-22: Limit the amount of impervious surface in new development or public improvement projects to reduce urban runoff into storm drains, creeks and San Francisco Bay. Policy N-23: Reduce the discharge of toxic materials into the City's sanitary sewer collection system by promoting the use of Best Management Practices. Policy N-25: Reduce pollutant levels in City wastewater discharges. April 29, 2009 Page 2 Comprehensive Plan Policy Policy N-27: Reduce emission of particulates from wood burning stoves, construction activity, automobiles and other sources. Policy N-28: Encourage developers of new projects in Palo Alto, including City projects, to provide improvements that reduce the necessity of driving alone. Policy N-42: the City may require proposals to reduce noise impacts of development on adjacent properties . through appropriate. means including, but not limited to the following: ~ ~, "", -~ """'-.. • Construct noise walls when compatible with aesthetic concerns. • Screen and control noise sources such as parking, outdoor activities and mechanical equipment. • Increase setbacks for noise sources from adjacent dwellings. • Whenever, possible, retain fences, walls or landscaping that serve as noise buffers although design, safety and other impacts must be addressed. • Use soundproofing materials and double-glazing windows. • Control hours of operation, including deliveries and trash pickup, to minimize noise levels. Business and Economics Goal 8-1: A thriving business environment that is compatible with Palo Alto's residential character and natural environment. Policy 8-2 Support a strong interdependence between existing commercial centers and the surrounding neighborhoods as a way of encouraging economic vitality. Goal 8-2: A diverse mix of Commercial, Retail, and Professional Service businesses. Policy 8-4: Nurture and support established businesses as well as new businesses. Policy 8-7: Encourage and support the operation of small, independent businesses Goal 8-3: New businesses that provide needed local services and municipal revenues, contribute to economic vitality, and enhance the city's physical environment. Policy 8-9: Encourage new businesses that meet the city's business and economic goals to locate in Palo Alto. Policy 8-17: Where redevelopment is desired, encourage owners to upgrade commercial properties through incentives such as reduced parking requirements, credit for on-street parking, and increases in allowable floor area. Use such incentives only where they are needed to stimulate redevelopment or contribute to housing or community design goals. Policy 8-25: Strengthen the commercial viability of businesses along EI Camino Real. Encourage the development of pedestrian-oriented neighborhood retail and office centers along the EI Camino Real corridor. April 29, 2009 Page 3 Attachment D Planned Comnlunity District-College Terrace Centre 2180 EI Camino Real, 07PLN-00000-00327 Table 1: CONFORMANCE WITH CHAPTER 18.38 (PC DISTRICT) Regulation Required Proposed Conformance* Building Height 50 foot limit Up to 50 Conforms Building Height (Within 35 feet 30 -33'-6" feet Conforms 150' of a residential zone districtl Roof Top Gazebo 40' 5 feet too tall Yard opposite an RM 10 feet 2' -4" Oxfo rd St. Exception may be District (across Oxford required if plan is not Ave and Staunton Ct.) 7' Staunton Ct. modified Table 2: CONFORMANCE WITH CHAPTER 18.52 (Off-Street Parking and Loading) Parking Spaces Required Proposed Conformance Office Spaces @ 1 :250 159.9 Market and Retail 67.9 spaces Spaces @ 1 :200 Residential Units @ 25.6 spaces 1 .5 per unit plus 1 guest space equal to 33% of all units Total 254 spaces 227 spaces (deficient 27 spaces) 11 % reduction requested Bicycles spaces conforms 38 38 *18.52.050 allows a reduction in the required number of parking spaces at the discretion of the Director of Planning and Community Environment. Table 3: COMPARISON OF PROPOSED PC DEVELOPMENT STANDARDS WITH CHAPTER 18.16 (CN NEIGHBORHOOD COMMERCIAL for mixed use) Regulation CN District Regulations Proposed PC Minimum Site specifications Minimum'Sile""'Area None Required 50,277 square feet Min. Site Width None Required 294 feet Min. Site Depth None required 131 feet Minimum Setbacks Front Yard 0-10' to create an 8' -12' 4'-11" effective sidewalk width (4'-2" setback is needed to The proposed setback of 4'-11" provides achieve the reqLlired 12' room for the 12 foot wide sidewalk. sidewalk on EI Camino real) Rear Yard 10' for residential portion; no N/A the lot does not have a rear yard requirement for commercial portion. Rear Yard abutting 10 feet NI A the lot does not have a rear yard residential zone district Interior Side Yard if 10 feet N/A there are no interior side yards abutting residential zone district Street Side Yard 5 feet Oxford setback: 2'-4" Staunton Court setback: 7' res. 18' commer. College Avenue setback 1'-10" Bu ild-To-Lines 50% of frontage bu ilt to setback 30% EI Camino Real 33% of side street built to setback 59% Oxford 45% College 34% Staunton Court Permitted Setback Balconies, awnings, porches, N/A Encroachments stairways, and similar elements may extend up to 6 feet into the setback. Cornices, eaves, fireplaces and similar architectural features (excluding flat or continuous walls or enclosures of interior space) may extend up to 4 feet into the front and rear setbacks and up to 3 feet into interior side setbacks. Maximum Site 50% 47% of the site is covered by buildings Coverage Landscape/Open 35% 18% podium level open space Space Coverage 4% basement planter areas open to above 11 % vegetated roof areas 2% Balconies ----------------------------- Total 35% Useable Open Space Maximum Height Standard 200 sq ft per unit for 5 or fewer units; 150 sq ft per unit for 6 units or more 40 feet (due to EI Camino Real frontage) Within 150 feet of a i 35 feet ;-r..esid_ential,~one '-'_ rr- district (other than --"""", an RM-40 or PC zone) abutting or located within 50 feet of the site. Daylight Plane for lot lines abutting one or more residential zoning districts Residential Density Maximum Residential Flo'or Area Ratio (FAR) Maximum Non Residential Floor Area Ratio (FAR) Total Mixed Use Floor Area Ratio Minimum Mixed Use Ground Floor Commercial FAR Maximum office square footage without CUP (25% of lot size Maximum Office square footage with a CUP Daylight Plane height and slope shall be identical to those of the most restrictive residential zoning district abutting the lot line 15 Dwelling Units Per Acre = 17 units 0.5:1 0.5:1 1:1 0.15:1 25% of the lot = 12,569 sq. ft. Code allows Director Discretion No numeric limit is set. There is 13,027 sq ft of existing ground floor retail. This area may not be converted to ground floor office. Applicant could propose 12,569 sf. ground floor retail and 12,569 sf. second floor office. (This scenario would reduce the ground floor retail but is ok because it is not replaced with ground floor office) This would reach the 0.5:1 FAR cap for Commercial sf. To go beyond the 12,569 sf. of office would require a variance to the FAR limit in addition to the CUP for additional office. 105 square feet per unit HeIght varies up to 50 feet Grocery loffice 30 feet ,.,'" (40, feet tQ tQP gazebo roof) Residential units 33 feet six inches N/A no residential zones directly abut any project lot lines 14 Dwelling Units 0.16:1 1.06:1 1.23:1 0.47:1 38$5 sq. ft. 3l/ CJ80 38,~S sq. ft. ~B;O Attachment E Planned Community District-College Terrace Centre 2180 EI Camino Real 07PLN-00000-00327 Review Timeline Application Received: P&TC Pre screen Review Meeting: Second P&TC Prescreen Review Meeting: P&TC Initial Review Meeting ARB Formal Hearing: P&TC Formal Meeting: Required Action by Council: October 18, 2007 February 13,2008 October 1,2008 April 29, 2009 To Be Determined To Be Determined To Be Determined ARCHITECTS COLLEGE TERRACE CENTRE 2100 EI Camino Real, Palo Alto, California PROJECT DESCRIPTION ATTACHMENT F Department of Planning & Com'rr1'umihJ Enviromnent lUi '''D~J January 14, 2009 College Terrace Centre is a two-and three-story mixed-use office, commercial/retail and residential . develOpment to be located on the · site: bounded by EI Camino Real, Oxford Avenue, Staunton Court and College Avenue. The proposed project is comprised of a neighborhood grocery store, open-air market and retail shops along EI Camino Real, office space on College Avenue and at the 2nd and 3rd floors, and two free-standing townhouse apartment buildings of two-story 1-bedroom units facing Staunton Court. There are 2 basement levels of parking and a small on-grade parking lot to serve the development. College Terrace Centre is designed to be a LEED Silver Building, and incorporates many sustainable features. Included are: Vegetated roof at the 2nd floor; clearstory windows at the 3rd floor to introduce natural light into the center of the building; photovoltaic panels on the sloping roofs of the clearstories; recycled-content materials; highly-energy efficient mechanical, lighting and control systems; EnergyStar roofing; a cistern system for collection and storage of rainwater from the vegetated and other roof areas, in order to recycle the rainwater for landscape irrigation. A PC Zone Amendment is required for this project, as the existing zoning of C, does not allow for the density proposed. A significant public benefit for the PC Zone is providing subsidized ·rent for an 8,000 sq. ft. neighborhood-serving grocery store with an additional 2,447 sq. ft. of open-air market. This market will serve the immediate College Terrace neighborhood, Stanford University residents, and the surrounding areas of Palo Alto from Downtown to Barron Park. In· addition, 14 units of below-market-rate housing are being provided in the 14 rental townhouses which front on Staunton Court. Construction methods to be used on this project include cast-in-place concrete structure below grade for the underground parking (2 levels), and a concrete post-tensioned floor at the grade level which separates the commercial spaces above from the parking garage below. Building construction above the post-tensioned slab will be will be wood construction at the Apartment building and steel construction at the commercial/retail building. There are currently 7 existing buildings on the 50,277 sq. ft. site: JJ & F Market facing College Avenue, some sheds used by the market for storage (facing Staunton Court), a furniture store facing EI Camino (which previously housed a bank, then a bicycle shop), and a commercial building facing Staunton Court which currently houses aneco-friendly tableware cornpany. A small parking lot for JJ & F and the small commercial building is accessed off Staunton, and the furniture store on EI Camino has two parking lots and a drive-through. The proposed project will consist of three buildings over a two-level underground parking garage. The main building is broken into several components, beginning with the 2-story form at the corner of EI Camino and Oxford, which contains the grocery market at the ground floor and offices above. The deep setback from EI Camino allows for the grocery store to have an open air market fronting on EI Camino, bringing more activity and interest to this corner. Three-story elements of the main building are placed beyond the driveway from EI Camino to the underground parking. These elements wrap the corner at EI Camino and College, and are broken down to smaller masses punctuated with a clock tower and an entry' plaza at the corner. The portion of the project which faces Staunton Court includes two 2-story residential townhouse buildings containing 14 below market rate rental units. These units reflect a more residential feeling to reflect the one residential use directly across Staunton. By placing the 3-story mass along EI Camino, the commercial building buffers the residential building from traffic noise. This design also will serve to buffer the College Terrace neighborhood from the EI Camino traffic. The architecture of the project combines elements and massing evocative of a European village, and like man y ~i~@Jl~~a%1Rd ~Q~,SpI~Yd ~~b:'&~~6 a.n~~OJ?}~k~te ~a~}:t~065B~2~~d ~~o .0~~a~!sJ~g,qle2l~~~arrasco .com A Professional Corporation COLLEGE TERRACE CENTRE -PC ZONE APPLICATION 2100 EI Camino Real, Palo Alto, CA DEVELOPMENT PROGRAM STATEMENT 1. Necessity of the application for a PC district r -, l : ~ t ~-- t ~i ~~ " 1 '{- Revised 1/14/2009 The project site is comprised of four legal parcels bounded by EI Camino Real, College Avenue, Staunton Court, and Oxford Avenue, with a total area of 50,277 sq. ft. Existing zoning is CN. This proposal is for a mixed-use commercial/retail and office complex, and 14 residential rental units, all over two levels of underground parking. The site is · so situated and the uses proposed for the site are of such characteristics that the application of the CN district will not provide sufficient flexibility to allow the proposed development. One key element of the development is to provide an 8,000 sq.ft. neighborhood-serving grocery store as well as a. 2,447 sq. ft. open-air market. This development would preserve and enhance an existing market that serves the College Terrace neighborhood as well as other neighborhoods from Downtown to Barron Park, and Stanford University residents. In addition, 14 Below Market Rate one-bedroom for-rent townhouses will be constructed on the site. The proposed project strives to provide not only a rent structure which would retain a small grocery market, and allow it to remain in business, but also 14 units of affordable housing for the community. In order to achieve these public benefit goals, the remainder of the site needs to be developed with new retail and office uses whose higher rents will help to subsidize the lower rent chargeable to a grocery market and BMR housing. In order to gain an adequate subsidy and assume a vacancy and rent risk, the amount of square footage of the new retail and office uses needs to be higher than would normally be permitted for a mixed commercial/residential project in the CN zone. The allowable FAR for a mixed-use commercial/residential project in the CN zone on EI Camino Real would be limited to 0.5 for commercial, limiting the area to 0.5 x 50,277, or 25,139 sq. ft., and 0.5 for residential, also equaling 25,139 sq. ft., for a total of 50,277 sq. ft. and an FAR of 1.0. As proposed, the project consists of 39,980 sq. ft. of office area, 13,580 sq. ft. of commercial/retail space including 8,000 sq. ft. of grocery store space, and an additional 8,400 sq. ft. of residential. The total floor area of the proposed project = 61,960 sq. ft. and a total FAR of 1.232 -just slightly above that which is allowed under eN zoning. This necessitates a PC district, to achieve the needed additional area and FAR. Due to the location of the site along EI Camino Real, and keeping with the guidelines for new development along EI Camino, the buildings would be placed near the property line, with 4 ft. setback for wider sidewalk and street trees. This allows for pedestrian proximity to shop windows, and creates a positive retail shopping experience. For mixed-commercial/residential projects, CN zoning requires a front yard setback of 10ft. and a street side yard setback of 5 ft. These setbacks are too restrictive for the commercial uses; thus, a PC Zone is required to allow for creating a better retail environment with store entrances directly on the sidewalk. 2. Listing of all uses proposed or potentially to be included within the PC district Commercial Retail uses, comprising 13,580 sq. ft. of enclosed space at the 1 st floor: Neighborhood- serving grocery store consisting of 8,000 sq. ft. of indoor retail space and 2,447 sq. ft. of open-air market. Delivery space is located off Oxford Avenue, and recycling areas are adjacent. Other retail spaces for lease total .5,580 sq. ft. Potential retail uses could be a pharmacy, stationery store, shoe repair, hair salon, bookstore, flower shop, toy store, or other neighborhood-serving retail. 2 Office uses, comprising 39,980 sq. ft: Tenant spaces for professional offices and general business offices on the second and third floors totaling 34,661 sq. ft. The first floor also provides offices and lobbies of 5,319 sq. ft. Residential Use: 14 below market rate townhouse-type 1-bedroom rental housing units are located on Staunton Court at the corner with Oxford Avenue. These 2-story, 600 sq. ft. units will be rented at below- market rates to eligible tenants, as determined by the Palo Alto Housing Corporation. Each unit has a small entry garden for private open space, and the space between the two residential buildings will provide additionalcornmon open space: - Parking areas: There is a small on-grade parking lot adjacent to the residential buildings which can be used by residential visitors or retail customers. The two-level underground parking garage is accessed by a ramp from EI Camino Real, to minimize traffic onto Staunton Court. After business hours, the ramp will be secured by a gate with card-reader, so only tenants can. access the garage. Parking exclusively for employees of the office and retail areas will be located on the 2nd level of the garage, and will be secured by card-reader operated grilles. Residents of the 14 living units can park on the 1 st level of the garage. Retail and office clients can park on the 1 st and 2nd levels of the garage, while Grocery Store customers can park on the 1 st level, where there will be grocery cart storage areas and a large elevator to service the market only. Included in the parking garage will be an area for Car Share vehicles, which will be accessible to the public during business hours. Refuse and Recycling area: Refuse and recycling will be located adjacent to the Grocery delivery area and also adjacent to the offices on the first floor for convenience of the office tenants. These areas will be gated and screened from view. PASCO can access the bins directly for easy collection. Bicycle Parking: There will be 23 bicycle parking spaces for the commercial/retail/office uses and 38 spaces for the residential use. Short-term (ST) commercial spaces will be located adjacent to the Grocery Store and near the small on-grade parking lot off Staunton Ct. The remainder of the required spaces for the retail and office uses will be long-term (L T) spaces located in the underground garage. L T bike parking (enclosed, secure parking) for the residences will be placed facing Oxford Ave. adjacent to the residences. 3. Nature of uses and need for differing regulations See description of uses noted above, for general information. The particular needs of the uses on the site, which in some circumstances require differing regulations than what would normally be allowed on this site are as follows: Neighborhood-serving retail/Market: As expressed in public hearings before the Planning Commission, it is important to the community that a neighborhood-serving retail use such as a grocery market'remain in this location. It helps to create a sense of community for the neighborhood. To be viable, however, a small neighborhood market requires a rental rate considerably lower than typical for this type of retail space, particularly given the high quality of the building being proposed. The strong desire to keep a neighborhood retail/market use in business at this location has driven much of the chosen uses and the design of the development proposal. The site itself, even though zoned CN, is a key commercial site along EI Camino in the California Avenue Shopping District. Development of retail uses fronting EI Camino is a desire of the City of Palo Alto. Proximity to Stanford University and several neighborhoods, in addition to College Terrace, presents the opportunity to develop retail shops which can serve the local residents. This is a location to which residents can walk or bike. Proximity of the site to public transit is key. Bus lines 22, 89, 522, and the Dumbarton Express and Stanford Marguerite busses run on EI Camino. Bus line 22 has the highest ridership in Santa Clara county. The California Avenue Cal Train station is a few blocks away. Automobile access is also very convenient, as EI Camino Real (State Route 82) is a major thoroughfare. 3 By placing offices on the upper floors of the building, the opportunity for local residents to walk, take transit, or bike to work is provided. Small (600 s.f.) rental housing units are being proposed to transition from the commercial development to the surrounding neighborhood, and also to provide housing units which are affordable to a wider range of Palo Alto workers. The two residential buildings are located such that they are buffered from the traffic and noise of EI Camino by the new commercial building and are also directly adjacent to the only neighboring residences. These residential structures also provide a transition in-scale from the commercial building and a soft texturE? 1.0 t~is corner of the neighborhood. This project creates a small Village-type community within the site, which will be interactive, lively and a focal point for the College Terrace neighborhood. While providing many public benefits, the areas of the retail and office uses must be sufficient to support the lower rent structure of a neighborhood-serving retail/Market tenant and of below-market rate housing. In a CN Zone, parking requirement for the office users is calculated at 4 spaces per 1,000 sq. ft. For the market and retail spaces, the parking requirement is calculated at 5 spaces per 1,000 sq. ft. Parking for the residential component is calculated at 1.5 spaces per unit plus 33% more spaces for visitors. This results in a total parking requirement of 254 in the CN Zone. For this PC Zone proposal, due to the proximity of public transit and the mixed-use nature of the development, it is felt that the 227 parking spaces provided on-site will be adequate based upon the various uses being able to "share" parking at various times of the day. There is ample on-street parking on EI Camino Real, and there are no other adjacent users, other than Stanford students, which would vie for the on-street parking spaces. The project applicants support the neighborhood's efforts to have the block signed for 2 hour parking. 4. Exemplary Design and Sustainable Features College Terrace Centre will provide a green, sustainable building which will be designed and constructed in conformance with the U. S. Green Building Council's LEED criteria. The project's goal is to achieve LEED Certification, and express the sustainable features as part of the architectural character of the structure and site. A vegetated roof over the 2-story portion of the building will provide a pleasant visual feature for offices on the 3rd floor, as well as serve to collect rainwater which can then be channeled to underground cisterns. Rainwater will also be channeled from other roofs and decks to the cisterns, from which it will be recycled for use in landscape irrigation. Photovoltaic panels will be utilized to generate power. DeSign of the podium landscaping will incorporate native grasses, flowers and plants which are drought tolerant. North-facing clearstory glass at the roof level will bring natural light into the interior of the office spaces. Provision for Car Share space in the parking garage will encourage employees to use alternative transportation This new building will have a smaller energy footprint and will incorporate sustainable, recycled and renewable materials, which will make it a good neighbor and an environmentally-sensitive addition to the City of Palo Alto. 4 SUMMARY OF PUBLIC BENEFITS OF THE PROJECT: 1. Providing a subsidized rental rate to allow a neighborhood-serving Market to remain at the Centre, as a vital neighborhood and community asset. Such a neighborhood-seNing use has proven to be important to the College Terrace neighborhood, and would be an important centerpiece in the fabric of this part of Palo Alto. 2'. 14-unlls-·6f below-markefrate rental housing, located afHle corner of Oxford' Ave. and Staunton Ct. The residential component provides more affordable housing for workers in Palo Alto as well as making a transition from the College Terrace neighborhood to the commercial component facing EI Camino. As the housing is more interior to the site, it is buffered from the traffic noise of EI Camino by the commercial building. 3. Working and shopping space near Public Transportation and within walking distance from the College Terrace neighborhood. 4. Wider sidewalks and more street trees along EI Camino Real. 5. Contribution to median trees along EI Camino. 6. Increased community-serving retail. See attached Development Schedule for projected dates of Public review, Agency approvals, construction permitting, construction duration and occupancy. COLLEGE TERRACE CENTRE ! ! 4/21/2009 I ! I J ! , PHOJi::CT SCt:tEDULi::~~~CC~ER~.1_ED~ __ J ___ 2011--t----1 _h_2OOB 12009 2009 2010---2010 2011 12012 .------------FL-~-------JAN --DEC' TASK IDEC IJAN FEB MAR IAPR MAY Ju~~ AUG SEP IOCT NOV DEC JAN fEB--MAR APR I MAY JUNE IJULY AUG SEP IJAN FEB 'T . --~-----~--....... --Outreach ~.Neighbt:)E_ Meetings_. __ • • -~-~----- Staff Outreach • • • • • Council ()iifrA:::ll'h ._,. ,~ 1 .. · ...... -_· -. - ---------_. ---.' --~--.-"--I',,;, -<, .• ---------_ .. --.. ". ----,,- Planning Comm ,... DONE ... ---.. -_ ...... ,- Ivwne .. ._-- Update Soils Report 'DONE 1 hase I Verify PI DONE i ---Update Traffic Imnad Analysis (TIA) !DRAFT DC Submit Finfjl TIA ••• ••• ••• rciiY-to complete Initial Study (CEQA) , ----'.-••••• •• ...•. -..... -••••••• . .... ---..... ------ILEED ••••• ••••• ••••• ••••• • •••• • •••• ••••• ••••• • •••• ••••• • •••• • •••• In. for PC Zone Staff Report initiates D. . .... ' ..... ! Prepare table ' square ••••• footages with PC and new CN rSubmit table to City •• IP C Zone ••••• ••••• • •••• . .... -.. _. f-••••• • •••• ~+-.. . . ... -. . ..... ,-- ••••• • •••• -.. Scale Model ••••• • •••• Submit to City , •• Det. of 11 ••••• Environ h11pact Rep_()!!. (if any) ••••• ••••• ••••• ••••• ••••• Howed ,1BO days a , . hired by City, paid by Owner) ... PftOJECT ~I:~OM ON c.,.':"'::r In ':.' ... -~- I ... _._n __ 7cr"v,",,'" I ----- I 1 Prepare -•••• ••• • •• ._---- Submit to ARB ~ • --~.--r---I '-,-_ .. _ ... , .. -.... -. .----.~ Planning r.. (PTe) first. i .final .~-~ ,--ARB .1 ;t .2nd City Council .final . .---------Design I (EARL Y risk start) • --r-.... ._--.-,. __ ... __ .-._-_. .---.. _-- Arch, Engr, LA ----1--"-.. _-----._--Arch, Engr, LA Plan Check (Outside Plan Check -early if OK d by City) .. ,.. (and City Depts plan check) -- IGeneral . On the Team, with DIB MEPS - - , .u 1·--'--~ L...~_. -.-.-~ I . _. IBidding (sub bids) ••• with Subs -.. . r ' ... -_ .. .---.... --.-'-'-.---~-- ••• f). . ...... - • (to be obtained by Ownl!L or ,.. .. , -... ... , ... ~ ' .. -_._-,-,''-1--.. . .. ,-, -. -_ .. 1-"-_ ... , _ ... -----, ..... '-_ .... ........ --~-~-----.---._'-.. _-r"'-' .. -. . __ ... -----Start ••••••••••••••••••••••••••••• ! .. _-_. .. -~ .-----.--. _-_ ...... _-.. ~ .. --~. _ ..... r~ .. -:T--._-j---- (18 months duration) to February 20 ---.... ·1·_ .. ,,--.... -~ -1-----'1---,-----~-.... -.. -~-. ~ .. --'---'" ~----- I-:-----.-~-.. -.... -.-... -... -_ ... --.--~ Occupy •• Dick & Karen Da~ian 870 College Avenue Palo Alto, CA 94306 Apri 1 3, 2009 Palo Alto City Council Members Members j Planning & Transportation Commission 250 Hamilton Avenue Palo Alto, CA 94301 ATTACHMENT G Received APRO 6 2009 Department of Planning & Community Environment Dear Honorable Mayor, City Council and Planning & Transportation Commissioners, As folks who have been homeowners in College Terrace and shoppers at JJ& F for 23 years, we are writing to support the College Terrace Centre plans. It has been, as you know, a long and involved process to get to this point. We are pleased with this proposal and hope that you will pass the project at the formal approval hearing on April 29, 2009. Thank you all for the hard work you have done to create a solution that works for everyone involved. We are particularly pleased to read about the affordable housing units as well as the plans for our beloved neighborhood market. ~~ Richard (Dick) Damian Karen S. Damian PAHC Housing Services, LLC 725 Alma Street • Palo Alto, CA 94301 • (650) 321-9709 • Fax (650) 321-4341 April 20, 2009 Pl~nn,i.ng_,and Transpo$tion Commission City of PalQ Alto 250 Hamilton A venue Palo Alto, CA 94301 Re: College Terrace Centre Project Letter of Recommendation Dear Honorable Commission Members: Received APR 2 0 2009 Department of Planning & Community Environment The Palo Alto Housing Corporation, through its affiliate, P AHC Housing Services, LLC, hereby submits this letter of recommendation in support of the proposed planned community, College Terrace Centre, located at 2100 El Camino Real. This project is being proposed by Carrasco and Associates on behalf of the Clara Chilcote Trust. College Terrace proposes 14 Below Market Rate (BMR) one-bedroom rentals of approximately 600 square feet. These spaciously-designed two-story lofts are unique to the BMR Rental Program in that there are no other one-bedroom units with similar design in the current housing inventory, and therefore, will be highly desirable to applicants. Additionally, the amenities, including but not limited to, an individual yard, reserved parking, retail and office spaces, and an onsite neighborhood grocery store make the project ideal for any single person or working professional. There is a current and constant demand for affordable housing in Palo Alto as evidenced by the lengthy BMR rental waiting lists maintained by the property managers. This project will provide some much needed affordable housing to the community. We are most pleased to lend our support to the College Terrace Centre project. Thank you for your consideration. Sincerely, PAHC HOUSING SERVICES, LLC. An Affiliate of Palo Alto Housing Corporation O='~fC.. Jaejeal:g a BMR fIousing Administrator ~nnUez Executive Director 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 ATTACHMENT B EXCERPT FROM PLANNING & TRANSPORTATION COMMISSION MINUTES AGENDIZED ITEM: Wednesday, April 29, 2009 Special Meeting at 6:00 PM Council Chambers, Civic Center, 1st Floor, 250 Hamilton Avenue Palo Alto, California 94301 2. 2180 EI Camino Real (The New College Terrace Centre)*: Initiation of (l) a Zone Change from Neighborhood Commercial (CN) District to Planned Community (PC) District for a mixed use project having 61,960 square feet of floor area including 8,000 square feet of grocery (intended for JJ&F Market), 5,580 square feet of other retail, 14 affordable one-bedroom residential units, 39,980 square feet of office use, for a total floor area ratio (FAR) of 1.23: 1, and two levels of below-grade parking facilities and surface parking facilities providing 227 parking spaces on the property, and (2) a Comprehensive Plan Amendment to assign the Mixed Use land use designation, allowing for a 1.15: 1 non-residential FAR, to a site currently designated as Neighborhood Commercial. Environn1ental Assessn1ent: A draft initial study is being prepared. Mr. Russ Reich, Senior Planner: Good evening. Thank you Chair Garber and Commissioners. The application before you this evening is for the initiation of a Planned Community rezone to go from Neighborhood Commercial to Planned Community. The application also includes a request for Comprehensive Plan Amendment to amend the land use designation from Neighborhood Commercial to Mixed Use. The proposal includes the construction of a mixed use development containing 14 residential units, roughly 40,000 square feet of office, 5, 580 square feet of retail, and an 8,000 square foot grocery store. This is proposed above a two-story below grade parking structure providing 216 spaces. There are an additional 11 at grade spaces proposed for a total of227 parking spaces. The development is proposed to fit within the context of the surrounding neighborhood. To this end the access to the below grade parking structure has been located on EI Camino Real to remove cars fron1 the residential side streets. Multiple buildings are proposed with varying heights to reduce the overall mass and improve the architectural interest of the buildings. The three-story retail/office building, which is the tallest of the three, is moved up to EI Camino and College A venue adjacent to commercial uses such that it is away from the existing residential uses. The two-story grocery/office building has been placed along EI Camino and Oxford for increased visibility and to improve the viability of the retail grocery store. The two-story residential building has been sited between the proposed commercial building and the existing residential units across the street on Staunton Court to provide an appropriate transition in land uses from the new project to the existing neighborhood. Most of the parking is below grade to 1 reduce vast amounts of paved surfaces. Wide sidewalks, a plaza, and open-air market space are 2 provided to enhance pedestrian activity. 3 4 As part of the PC process the Commission must find that the proposed development will result in 5 public benefits not otherwise attained under the existing regulations of the zone district. The 6 applicant has proposed the two following items for the Commission's consideration: the 7 retention of the neighborhood market and tell below market rate housing units. The applicant is 8 proposing to provide 14 of the units, all of the units, as BMR but s'ince four-of them will be used 9 as the payment for the commerCial housing fee the resulting number is ten. The fundamental 10 issue for consideration is whether the guaranteed preservation of the neighborhood market in this 11 location is a compelling benefit to allow for the additional office square footage. 12 13 Staff has received a multitude of emails and faxes from the public providing comment on the 14 project proposal that expresses opinions of both support and do not support the proposaL From 15 those that do support the project it is clear that the preservation of the market is the most 16 important aspect. From those that do not support the proposal the large amount of proposed 17 office and the associated traffic and scale of the project appear to be of most concern. Being that 18 most of these were received beyond the packet deadline they have been provided to you at 19 places. 20 21 Based on some of the comments there seems to be some confusion about a key aspect of the 22 proposal. If the PC were to be approved it would guarantee the preservation of a neighborhood 23 market. Based on some of the comments it did not seem to be understood by some that this 24 would be the case. One of the benefits of the PC process is that specific land uses can be 25 specified and required as part of the PC Ordinance that is ultinlately approved by CounciL 26 27 Staffhas recommended that the Planning and Transportation Commission consider the proposal 28 to initiate the zone change application from Neighborhood Commercial to Planned Community 29 and amend the Comprehensive Plan land use designation from Neighborhood Commercial to 30 Mixed Use to determine whether to forward conceptual plans to the Architectural Review Board 3 1 for review. The applicant is here to make a brief presentation. Thank you. 32 33 Chair Garber: Thank you. Planning Director? 34 35 Mr. Williams: Chair Garber if I could just add a couple of comments. 36 37 Chair Garber: Please. 38 39 Mr. Williams: Thank you Commissioners. I would just like to emphasize some of Russ' last 40 points there that Staff does not have a specific recommendation before you because we do 41 believe that the key issue here is really the retention or the assurance of a grocery store, a 42 neighborhood commercial type of use. A compelling offset for the extent of the office use in 43 particular that is being proposed. The office use is at a scale and intensity that really is more 44 consistent with a community commercial or regional commercial type of level of office. This is 45 an area that is zoned and designated in the Comprehensive Plan for Neighborhood Conlmercial. 46 On the other hand you have very strong neighborhood conlmercial use as the one component 1 here in the market, and specifically as you have seen in the letters a particular affinity for a JJ&F 2 Market that is there now, which of course we, the City, can't guarantee would be the market to 3 be there. We certainly can assure as Russ said that a market of some kind and some size be part 4 of the project. So again, I just want to emphasize we really see that as being a key issue in terms 5 of whether you are comfortable with proceeding or not. That is really in many ways a 6 community judgment that the PC allows you to make. Thank you. 7 8 . Chair Garber: Would the applicant like to make a presentation? You will have 15 minutes. 9 10 Mr. Patrick Smailey, Applicant: Good evening. I represent the propel1y owner of the College 11 Terrace Centre proposal at 2180 EI Camino Real. I first want to thank this Commission, the 12 College Terrace residents, and other community members who have taken an ongoing and 13 heartfelt interest in our development plans. We are truly grateful for that input and our project is 14 better for it. 15 16 Our vision is to create a village style mixed use development that embraces the College Terrace 17 neighborhood, enables JJ&F to prosper in the future, and also does justice to this portion of Palo 18 Alto's EI Camino Real corridor. College Terrace Centre offers an economically healthy and 19 balanced combination of housing, retail, and office space. We have worked diligently to make 20 certain that our project works well on our EI Camino site and that it also blends seamlessly with 21 our neighbors. I am convinced we have accomplished this objective. 22 23 I also want to be very clear with everyone here tonight. The Garcia Family, John, Dennis, and 24 Lloyd have been and continue to be our partners in this venture. This project is truly built 25 around them and JJ&F Market. I also want to address head on the fiscal realities of this 26 undertaking. Office rents are approximately three to four times that of retail rents. In order to 27 even further discount the retail rents to JJ&F that is paid by the Garcia's and allow them to 28 continue to serve this great neighborhood for another 60 years we need to build this project as it 29 is proposed. . 30 31 In these challenging economic times we are working hard to preserve a valuable community 32 asset and also provide further public benefit in the form of affordable housing. Over one quarter 33 of the total squarefootage of our proposal is dedicated to community space that is 26.5 percent 34 of the total square footage of the project. This is a big number in this and any economic time. 35 36 Lastly and most importantly, we have created a project that works. It works for College Terrace 37 and its residents. It works environmentally. It works from a transit, traffic, and parking 38 perspective. It works for pedestrians and bicyclists. It works for the Garcia's and the JJ&F 39 family. It works for Palo Alto by providing it with an estimated $700,000 in annual tax revenue. 40 It also works, as you will see and I think you all got a copy of this, because we have tremendous 41 community support for the project as designed. 42 43 Our fu'll project team is here this evening to answer any questions and explain the details of the 44 proposal for you. I would like to thank you once again for you tinle. At this moment I would 45 like pass the floor over to Linda Poncini of the Carrasco & Associates, our architect on the 46 project. 1 2 Ms. Linda Poncini, Carrasco & Associates: Chair Garber and Commissioners, our planning staff 3 has presented a thorough report on the major project elements and the issues at hand. So I would 4 like to illustrate how Carrasco & Associates has taken great care to ensure that this project fits 5 seamlessly at it site on EI Camino and adjacent College Terrace. 6 7 As you know" we are requesting rezoning of the site to PC. However 1 will demonstrate how 8 College Ternlce Centre has been carefully and specifically designed to meet the context based 9 design criteria of the existing CN zone. The images on the followi1).g slides are taken directly 10 from the City's Zoning Ordinance Section 18.16.090 and illustrate the concepts used in 11 designing College Terrace Centre. 12 13 First, the pedestrian and bicycle environment is created by providing walkability, bicycle 14 friendly circulation plan, and connectivity from transit to shopping, work, and residences. 15 Ground floor retail, outdoor seating and gathering areas, wide sidewalks, awnings at storefront 16 windows, and ample bicycle parking are featured. Also, primary vehicle access to the project 17 from EI Camino means easy access for pedestrians and bicyclists from the College Terrace 18 neighborhood. 19 20 Two, street fac;ades are detailed to provide a strong relationship with each street frontage. That 21 relationship varies as one moves from the commercial fac;ade on EI Camino to the residential 22 units along Staunton Court. The residential units present a further texture and scale, a finer 23 texture and scale, to reflect the adjacent homes and apartments. Projecting eaves and overhangs, 24 balconies, decks, and other architectural elements provide human scale and interest, and enliven 25 the buildings. The exterior of each building is designed with great care and integrity so that the 26 College Terrace Centre does not have a backside. 27 28 Three, massing and setbacks, and four, low density residential transitions have been complied 29 with by carefully modulating the scale of the buildings. The project includes articulation, 30 setbacks, and visual interest on forms that step down fronl the corner of EI Camino and College 31 to lower heights and massing facing the neighborhood. The corner building for the new JJ&F 32 has a unique architectural character, which makes it a feature of College Terrace Centre. It will 33 be easily identified as a very special market and a destination. In keeping with the design criteria 34 the sidewalk is 12 feet on EI Camino Real at the retail spaces and at least eight feet on Oxford, 35 Staunton, and College. A generous setback of29 feet at JJ&F provides additional space for the 36 open-air market. 37 38 Five, project open space consists of private and public open space designed for use by the 39 residents, visitors, and employees at this site. Gathering spaces activate the street fac;ade and 40 provide eyes on the street at Staunton for safety. Both private and common open space areas are 41 buffered from traffic noise by the larger building mass along the EI Camino frontage. 42 Aesthetically open space includes planters, vegetated roofs, mature trees, and textured and 43 colored paved surfaces. 44 45 Six, parking design criteria for the CN zone state that parking should not overwhelm the 46 character of the project or detract from the pedestrian environment. As a result 95 percent of the 1 parking is located below grade. A . large central opening in that parking allows light to flood into 2 both levels, and a landscape courtyard at the lowest level provides the softening effect of 3 bamboo, which is visible at all levels. Notably the one CN zone criteria that we have 4 intentionally not complied with is having primary parking access from side streets. In response 5 to community and Commission input we relocated the garage entrance to EI Camino. 6 7 Seven, this is considered a large site in the CN zone, because of that we had the opportunity to 8 provide physical and visual connectivity throughout the site using a hierarchy of public and 9 private spaces. Within College Terrace Centre there is a diversity of building types, which. 10 reflects the mixed use nature of the Centre. Each building type on the site has been designed to 11 respond to its immediate context. The commercial structures facing EI Camino have a character 12 appropriate to this major thoroughfare. The residential buildings are sited opposite existing 13 single and multifamily residential uses on Oxford and Staunton Court. Commercial use at the 14 corner of College A venue and Staunton Court reflects the commercial uses immediately across 15 these streets. The JJ&F Market forms the corner magnet at Oxford and EI Camino and will be 16 the hub of social interaction. 17 18 Eight, pursuant to sustainability and green building design College Terrace Centre is designed to 19 achieve a minimum ofLEED Silver certification. These sustainably designed buildings are 20 energy efficient, water conserving, durable, and nontoxic with healthy interior environments. 21 Orientation for winter heat gain, summer shading, day lighting, and natural ventilation is key. A 22 large installation of photovoltaic panels is on the roofs of the clearstories, which bring natural 23 light into the center of the building. Onsite storm water management directs rainwater to 24 cisterns, which allows for controlled release and irrigation use. Perhaps our favorite feature of 25 this green project is the vegetated roof. Not only will it manage storm water, provide a cooling 26 effect, and view from the offices, it will also provide an herb garden for JJ&F. The attributes of 27 a LEED certified building are numerous. If you have questions on that I will be glad to answer 28 any of those later in the meeting. 29 30 In summary, I have highlighted the CN zone context based design criteria to illustrate that even 31 though we are requesting a PC zone design of College Terrace Centre closely emulates a CN 32 zone development. We were able to accomplish this because the size and scale of the project 33 coupled with our village style allows the project proposal to work beautifully on the site. I will 34 now turn the presentation over to Tony Carrasco. 35 36 Mr. Tony Carrasco, Carrasco & Associates: Good evening Commissioners, thank you again for 37 reviewing this the third time. As Patrick has mentioned many outreach meetings and your 38 comments have contributed to a walkable, village scale place that fits EI Camino as well as this 39 neighborhood. Since October 2008 when we met for the second time little has changed with the 40 building forms and placement of these bUildings. We have added a small plaza at the College 41 and Staunton corner on the sunny side of this development. We have re-categorized the 42 community room as you suggested as offices, as a result the office space increased by 941 square 43 feet and retail·increased by 55 square feet. 44 45 Nelson Nygaard and Hexagon are here to answer questions about traffic and parking demand. 46 On parking counts, as you know, EI Camino is a transit corridor. It is served by five bus lines 1 and bus rapid transit line, number 22. We have provided 40 cars more than the proposed uses 2 demand. That is by ULI, IT, and our traffic engineer's estimates. We could use the code, which 3 allows landscape reserve, and provide another 16 spaces on the lowest floor. We can add 4 another 50 bicycle spaces, which most people are going to bicycle to this space substituting for 5 six cars or adding six cars more. Our mixed use criteria will allow us more than five, which we 6 morethan exceed at 27-foot space deficit. 7 8 A lot has changed since ourlast meeting.· Palo Alto has decidedto incorporate policies relating 9 to reducing our carbon 'footprint, which will move us more towards this kind of development. 10 Comparisons with buildings I can come back to. As you can see the pinkish areas are the 11 commercial zones and our building fits in very well with the existing buildings already there. 12 Sustainability moves us to build buildings that will last 100 years. So we ask when you consider 13 this development that you imagine the city and a neighborhood as it will exist 100 years from 14 now. Thank you. 15 16 Mr. John Garcia, JJ&F Market: Honorable Commissioners, we have been a Palo Alto 17 neighborhood family market for 60 years. We have operated out of the same facility for every 18 one of those years. When we were first approached about having a new store in the proposed 19 College Terrace Centre we actually considered trying to expand significantly to 15,000 to 20,000 20 square feet. However, after careful reviewing local consumer demands, with consideration given 21 to our local competitors, and the trend in the grocery business for smaller more practical stores 22 we have come to the conclusion that the proposed store size and design is ideal. We are very 23 excited about relocating to a store that is larger, more efficient, and in a new visible and 24 attractive location. The Garcia Family and JJ&F are full partners in the College Terrace Centre 25 development. 26 27 We desperately need a new store and this proposal will provide it. Our current building is 28 obsolete and dilapidated. We believe that it has a useful life of only about two or three more 29 years. This project is our opportunity to survive and compete with chain stores. We have 30 worked out a strong and fair agreement with the property owners that enables us to stay afloat 31 during the construction period and then come back better than ever with an ongoing deeply 32 subsidized rent structure. 33 34 We also care a great deal about our friends and customers. A new store will allow us to stay in 35 the neighborhood that we love for another six decades. Commissioners, I respectfully ask that 36 you initiate the PC rezoning for us, please. Thank you. 37 38 Chair Garber: Commissioners. 39 40 Commissioner Holman: Chair Garber, the last speaker needs to identify himself for the record, 41 please. 42 43 Chair Garber: If you would identify who you are so the Secretary can record it correctly. 44 45 Mr. Garcia: John Garcia. 46 1 Chair Garber: Thanks. Commissioners, let's do a round of questions before we go to the public. 2 Let's limit ourselves to two questions and see if we can get through in one piece. We have 13 3 members of public to speak. Is there a Commissioner that would like to go first? Vice-Chair 4 Tun1a followed by Commissioners Holman and Fineberg. 5 6 Vice-Chair Tuma: A question for Staff and I did give you guys a heads up albeit a little bit late 7 today because of when I received it. We received from the CTRA a memo that has towards the 8 end, and this is towards the back of the packet that was left at places tonight, there is a one-page 9 ·comparison chart and then another entire page of footnotes. My question for Staff is, are there 10 any significant issues within that chart that you. would take issue with, that you disagree with? 11 12 Mr. Reich: Because of the timing of Staff receiving this chart as well we have not had the 13 opportunity to give it incredibly detailed analysis but it doesn't appear that there is anything in 14 here that we would take issue with. 15 16 Vice-Chair Tuma: Okay, great, very helpful. It is from the neighborhood organization CTRA. 17 It is the last two pages of the group that was left at places. That's it for now. 18 19 Chair Garber: Thank you. Commissioner Holman followed by Fineberg. 20 21 Commissioner Holman: Thank you. Is it okay to ask questions of the applicant or just of Staff at 22 this point? 23 24 Chair Garber: Either is fine. 25 26 Commissioner Holman: This is perhaps for either or both. Could there be a restatement of why 27 the market moved from College to Oxford corner and why the office space increased? The FAR 28 now has also increased. 29 30 Mr. Reich: I can speak to the relocation of the market. The other one I would defer to the 31 applicant to talk about. It is my understanding that the market has been relocated such that it has 32 greater visibility on EI Camino, and so it is more economically viable to have that retail use 33 facing EI Camino rather than being hidden away back on College. 34 35 Mr. Carrasco: Commissioner Holman, in discussions with JJ&F it became pretty apparent to us 36 that we needed to change the location of the market from a hidden away location to a very 37 prominent location to capture market share. This grocery store will not only survive on the 38 neighborhood but must attract people who are driving down EI Camino and that is the reason 39 why it creates this outdoor market to attract people as they pass by that market and drive into the 40 parking garage. 41 42 The re-categorization of space and the configuration of the building in order to get the columns 43 lined up and square footages worked out allowed us a plaza on the corner of Oxford and 44 Staunton. It is a sunny corner and we envision uses that spillover into the sidewalks and are used 45 both by the neighborhood and the businesses who locate there. I think that answers the question 46 but I don't know ifit does. 1 2 Commissioner Holman: Kind of a follow up to that, I am well familiar with the businesses on 3 College across from where the market is now. I am afraid to admit that I neglected to get by 4 there to remind myself what the businesses are across the street on Oxford, in other words, across 5 from where the market in the future would be relocated. 6 7 Mr. Smailey: Right now it is a Sleep Train and then behind that is the back of the Stanford 8 Terrace Hotel. So the comer of Oxford and EI Camino is Sleep Train and behind that is the hotel 9 bUilding. Then behind that is a small apartment as well I think there is a little doctor's office or 10 something there. 11 12 Commissioner Holman: Thank you very much. 13 14 Chair Garber: Commissioner Fineberg. 15 16 Commissioner Fineberg: Question for the applicant. In Attachment H as well as your 17 presentation earlier you mentioned that there is approximately $700,000 in annual local tax 18 revenue. What components of the project contribute to the generation of that revenue? 19 20 Mr. Smailey: That would be sales tax revenue generated from the retail tenants projected for the 21 site. 22 23 Commissioner Fineberg: So groceries are not taxable. Would it be the nonfood component of 24 JJ&F? The retail is it services or how did you calculate that if you don't know what the retail 25 uses are? 26 27 Mr. Smailey: We have estimated with JJ&F their increase in sales, which I think if I remember 28 correctly John, was basically a doubling. In addition to that we have an expression of interest in 29 the retail location from other perspective tenants and we asked them for their projections on sales 30 revenues and backed into a sales tax that would flow through to the City. 31 32 Commissioner Fineberg: Okay, thank you. For Staff, is it typical to initiate a zone change 33 before the Draft initial study of the Environmental Impact Report is prepared? Specifically, we 34 have issues where Caltrans has not reviewed or acted upon the EI Camino driveway. Then we 35 have a comment from Mr. William Ross regarding a recent decision of the California Supreme 36 Court. In his letter he nlentions that saying that the analysis should come first. Could Staff, 37 Planning and legal, comment on that please? 38 39 Mr. Williams: Yes, Commissioner Fineberg, we generally do not do the environmental analysis 40 until the item comes back to the Commission. It goes to the ARB and then comes back to the 41 formal process. The intent of the preliminary review is to not incur an extensive, detailed level 42 of cost before getting some direction as to whether the project appears to be feasible at least to 43 move through that review process. So this is the standard. 44 1 The one you saw recently for 801 Alma was a different situation, it was an unusual situation, in 2 that we did have that particularly given the multitude of issues on that project. Typically we do 3 not include that. I don't know from the legal court case what that issue is. 4 5 Ms. Tronquet: Our preliminary review process does make it distinguishable from the case 6 mentioned. This part of the process is preliminary. The environmental review will come when 7 the project is formally considered both by the ARB and the Planning Conlmission again. So it 8 will be considered with the actual decision-making process not just preliminary consideration. 9 10 Chair Garber: Commissioners Keller, Lippert, and then myself. 11 12 Commissioner Keller: Thank you. First a quick clarification about slide six for the applicant. 13 Where it says parking design there are two little sort of looks like brownish or yellowish boxes 14 labeled residential. Is that an error? I am confused by that diagram. 15 16 Ms. Poncini: These are illustrati9ns from the City's Municipal Code. We were just using these 17 to illustrate that the underground parking is our condition and that we are meeting the criteria in 18 the City's ordinance. In this particular instance there wasn't an illustration in the City's Zoning 19 Ordinance that had the residential separate. So that is just the image that we had from the City 20 ordinance. 21 22 Commissioner Keller: Right, so this is not representative of your project. Thank you. 23 24 I am sorry for throwing this out at Staff without having alerted you beforehand, which I try to do. 25 I realize that this project is on the other side ofEI Camino from what would be a PTOD district 26 and somewhat away from it but in some sense this kind of proposed project has some of the feel 27 if you will of a PTOD kind of project. I am wondering if, without giving you advance notice so 28 that you could prepare, if you could sort of compare the general scope of this project with what 29 PTOD would allow. Not that this site is within the PTOD boundary but it gives us another 30 context for comparison. 31 32 Mr. Williams: Yes, Commissioner Keller, the total intensity of the project, the total floor area 33 ratio basically, is roughly consistent with what the PTOD total floor area would allow. However, 34 the PTOD zone requires most of that to be residential. So it really has a residential focus to it. 35 As you recall, we saw a project recently in the PTOD that a little bit more nonresidential than 36 would generally be permitted but even that was more than 50 percent of the floor area ratio was 37 residential, about 65 or 75 percent of it was. 38 39 In this case you have approximately 1.06 of this FAR is commercial and just a .16 or .1 7 FAR is 40 residential. In the PTOD in order to do a project of this intensity you would probably have to 41 almost reverse that' and it would be more like a 1.0 residential and .20 nonresidential. So the mix 42 of uses doesn't really match but the idea of a mixed use project at this approximate intensity and 43 what is the height on this? About 40 feet? So it is approximately in the ballpark also in terms of 44 the height of a PTOD. 45 1 Commissioner Keller: Thank you. Could you address how in an eventual PC Ordinance you 2 would address the guarantee that there would be a grocery store here? Would that be something 3 that we would want in an eventual PC Ordinanc'e? How would we go about guaranteeing that 4 would be the case? 5 6 Mr. Williams: You would probably need to do something similar to what was done with Alma 7 Plaza, which is specify that a grocery store be one of the allowable uses, and what the minimum 8 size isofthat. What we did in that case was we had to have a signed lease in place before any 9 construction of any other of the facilities on the site went forward, and that the grocery store had 10 to be up and occupied before the other uses were occupied. So it put priority on getting the 11 grocery store in place and up and running, and the lease in place, and that kind of thing. 12 13 Commissioner Keller: Thank you. 14 15 Chair Garber: Commissioner Lippert and then myself. 16 17 Commissioner Lippert: I have two questions for the applicant. Can you just briefly explain the 18 orientation of the BMR units and their relationship to the surrounding neighborhood? 19 Specifically how they work with the neighbors across Staunton Court and Oxford Avenue. 20 21 Mr. Carrasco: If you look up at that graphic there the lower building on the top right hand comer 22 of the site faces the residential units across from Staunton and across from Oxford. That is the 23 reason why we placed those residential units in that place, the two stories with a roof that mimics 24 a residential kind of roof. 25 26 Commissioner Lippert: Why not integrate it more with the other building? 27 28 Mr. Carrasco: Which other building? 29 30 Commissioner Lippert: The market and the office building, in other words, I guess on the 31 backside make it more oriented so that it all works together as one piece rather than separated 32 from? 33 34 Mr. Carrasco: We could certainly look at that. I think if you look at the more detailed plans it 35 separates and has windows on both sides of the project. If you orient it the other way it may not 36 have that but it is a good question and we will look at that. 37 38 Commissioner Lippert: Then also with regard to the gazebo and the stairs that you have going to 39 the gazebo, why not have them going to the right so that you go through the residential court 40 between the BMRs and then up the stairs to the gazebo so it is more internal to the development 41 and there is more of a relationship? 42 43 Mr. Carrasco: Another good idea. We oriented it the way we did because we thought people 44 coming out of the grocery store would bring their lunches and so on and walk up those stairs to 45 the gazebo rather than go around the comer to Staunton Court and go up. 46 I Commissioner Lippert: So it could be bi-directional. 2 3 Mr. Carrasco: It could be bi-directional. 4 5 Chair Garber: Commissioner Tuma wanted to ask his second question. 6 7 Vice-Chair Tuma: This is a question for either the applicant or the Garcia family. This is a 8 question I raised last time we were together. Without delving into the details of whatever 9 arrangements and financial details and that sort of thing, given that I agree with the 10 characterization made earlier by our Planning Director that a lot of this turns on the issue of 11 counterbalancing office versus retention of the market and specifically JJ&F, are you willing to 12 share with the public and with the Commission whether an agreement exists that obligates JJ&F 13 to take over the space once it is complete, and also that obligates the owner to allow JJ&F to do 14 that without getting into the details of that? 15 16 Ms. Robin Kennedy, Land Use Attorney: Commissioner Tunla, we have a Letter of Intent and 1 7 we created this memorandum of it so that the Commission could see that it is signed. It is a very 18 brief summary ofa longer agreement. JJ&F is not obligated but it has all of the rights to exercise 19 essentially a one-dollar option to go into this space. So we, as the developer, gave JJ&F the right 20 to choose if it wished to, and you have heard John Garcia tonight express the continuing 21 enthusiasm of the Garcia Family to come into this site. We don't want to force them to do that 22 so if it turned out that by the time we were ready to offer them a full lease they had all won the 23 lottery and gone off to Tahiti they could do that. So that is the answer to that question. 24 25 I would like to take advantage of the fact that I am up here to respond to Commissioner Lippert's 26 question. We are willing to do a deed restriction in addition to whatever the City would impose 27 as a condition of approval to ensure that for the life of the improvements this would be a grocery 28 store. So the City can impose it as a condition but there would also be on the public records, and 29 filed in the Recorder's Office with Santa Clara County, essentially a deed restriction ensuring 30 that so long as that building lasted that there would be a grocery store there. So I hope that 31 responds to that question as well. 32 33 Chair Garber: A couple of questions from me and then Commissioner Rosati, and then we will 34 go to the public. For the applicant, you have proposed pushing back the grocery store and office 35 from El Camino. The EI Camino Guidelines, which are guid.elines not a requirement, 36 recommend a building closer to EI Camino. How would you like the Commission to think about 37 that move relative to that guideline? 38 39 Mr. Carrasco: I think John Garcia will also additionally answer that question. As an architect 40 from the architect side talking to John he needed outdoor kind of exuberant, kind of attractive 41 groceries out there that get people into that space. Additionally there will be a few tables to sit 42 there and eat your lunch at the edge of the grocery store. 43 44 Chair Garber: Actually, as nluch as I am interested in John's description I think the question 45 might be more appropriately answered by you as to what the proposal is that you are asking us to 46 consider here is to tradeoff what the EI Camino Guidelines suggest for something that doesn't do 1 that. So in an urban way and a planning way how is it that you want us to understand the space 2 relative to what the Guidelines suggest should be done there? 3 4 Mr. Carrasco: Yes, I got it now. The intent of these Guidelines as we read them is that you need 5 something active and alive and vibrant at that location. It suggests doors and awnings and so on. 6 These carts and so on replace that activity in the same location, 12 feet away from the curb, to 7 perform the same way as the intention of the building wall. 8 9 Chair Garber: If I am understanding you you are suggesting that the carts of produce, etc. would lObe perceived by the passerby and someone in a car the same way that a fac;ade would of a 11 bUilding. 12 13 Mr. Carrasco: Yes, thank you that is better said. 14 15 Chair Garber: Okay. My next question and actually you may find yourself being the one to 16 answer this one as well. Staff has recognized in their study here that the land use designation 17 that would seem most appropriate in relationship to the proposed development is the mixed use 18 land use designation. Maybe you could walk us through why that isn't appropriate for your 19 proposal. 20 21 Mr. Carrasco: Chairman Garber, I am not familiar enough with the mixed use designation. 22 23 Chair Garber: Okay, fair enough. Would the Planner like to walk us through? 24 25 Mr. Reich: Being that we believe that it is consistent with the mixed use land use designation it 26 would be difficult to say why it isn't. 27 28 Chair Garber: Let me explain myself. What I thought I was understanding here maybe I am not. 29 What you are suggesting is that that land use could be used in lieu of the PC? 30 31 Mr. Reich: No, the current land use designation is Neighborhood Commercial and the proposed 32 project does not fit the parameters in the land use designation within Comprehensive Plan. So 33 the land use designation has to be amended if the project was to be moved forward and approved 34 to a land use designation that does fit the project. In this case mixed use is a land use designation 35 within the Comprehensive Plan that fits what is being proposed here. 36 37 Chair Garber: The underlying. Okay, I got you, thank you. Commissioner Rosati. 38 39 Commissioner Rosati: I have two questions for Mr. Garcia if you would come up. The first 40 question has to do with the relationship between the office space and your business. How do you 41 see that as that is a concern a lot of the people who have responded to the project have? I think 42 that from a business perspective you may see that a benefit and I would like to hear from you 43 how you interpret having that retail location right next to offices impacts your businesses. 44 1 Mr. Garcia: I am very excited to have potential customers just a walk away. I feel we do a great 2 catering business, we do a great lunch business, and whatever offices that are up there are 3 potential business. It sounds like a very great opportunity for us to have those up there. 4 5 Commissioner Rosati: You see that as a good thing. 6 7 Mr. Garcia: Yes, definitely. 8 9 Commissioner 'Rosati: How may your business strategy change after this move? What else 10 would be different from what you have today? How are you planning to be successful and 11 therefore viable after this happens? 12 13 Mr. Garcia: For 60 years we have been doing business of pretty much getting people what they 14 want. They get good quality. 15 16 Commissioner Rosati: I am sorry, let me clarify. There has been a lot of concern about the size 17 of the space that you would be getting in the new development. How is that not going to be an 18 issue and how are you planning to ,be successful and viable? 19 20 Mr. Garcia: Right now our sales space inside the store is about 6,300 square feet and the rest of 21 the area is very jumbled up. It is a lot of boxes and warehouse space that is underutilized and we 22 can't turn it into sales space. With this building we will have a building that is built as a grocery 23 store. We have hundreds of square feet in the store that is walls that don't do us any good 24 because the building that we are in right now is actually three buildings. So with that we are· 25 going to have a very efficient building where right now our building is very inefficient. I think it 26 will be much easier for us to run the business that way. 27 28 Chair Garber: All right. Let's go to the public. We have now 15 cards. Each member will have 29 three minutes a piece. I will call out three names, the first one will speak, the second one will be 30 on deck, and if the third one would approach in anticipation of speaking. We now have 16 cards. 31 We will accept cards until 8:30 or so. 32 33 The first person speaking is Malcolm Slaney, followed William Hurt, and if Pat Robinson would .34 get themselves ready. 35 36 Mr. Malcolm Slaney, Palo Alto: Hi I live about 220 feet from the proposed development. As a 37 neighbor I would like to see a viable development. The proposed development is requesting an 38 increase in office space by a factor of three, a large increase in traffic for the neighborhood, and 39 insufficient parking. In exchange the developer is offering BMR housing and neighborhood 40 grocery. 41 42 My family is a big fan and supporter of the JJ&F Market. My sons, wife, and I walk to JJ's 43 almost every day and we spend almost $1,000 a nl0nth there. I anl looking forward to 44 continuing to shop there. But, my fondness and love for JJ&F does not translate into a blank 45 check for the developer. I am primarily concerned by the nature of the market guarantee. We 46 are not privy to the private agreement between the landowner and the JJ&F family. Therefore, it 1 is incunlbent on you, the Planning Commission, to make sure our neighborhood doesn't suffer. 2 Our neighborhood does not benefit from a mini-market we want to walk to a full-service market. 3 I hope you can do that in the agreement. 4 5 Palo Alto does not have a perfect record when it comes to guaranteeing a long-term public 6 benefit. I am referring of course to the Cafe Riaci and the public space that is no longer public. 7 hope that that happened before you wise folks started to serve on this Commission. 8 9 I worried the developer is not promising enough space for a viable grocery store. Previous 10 discussions here in Palo Alto suggest more space is needed to be viable in the grocery business. 11 I hope John is correct. I want to see a viable business. 12 13 Finally, I am worried about the impact of traffic and parking. I am glad that the primary entrance 14 will be on EI Camino Real but substandard amount of underground parking will drive traffic and 15 parking into the neighborhood. I know I would prefer to park on the street instead of in a dark, 16 narrow garage. Forcing people to park offsite in order to get LEED points is not a win for 17 College Terrace. So I hope you consider the parking issues very carefully. I hope the Planning 18 Commission will consider the needs of our neighborhood and I really appreciate all your time on 19 this proj ect. Thank you. 20 21 Chair Garber: Thank you. William Hurt followed by Pat Robinson, and if Carol Chatfield will 22 approach. 23 24 Mr. William Hurt, Palo Alto: I am 55 years in the neighborhood. I remember when JJ's was 25 little. What John said about it not being an efficient building he is absolutely correct. When they 26 took over the hobby shop that used to be next door they just sort of opened it up partially. If you 27 walk through there we got some roller coasters going on and it doesn't make any sense. It is not 28 an efficient building. I think the consideration for the smaller square footage to what everybody 29 seems to think a grocery store needs is certainly going to be made up, and I have to take his word 30 for it he is in the business. Ifhe thinks he can make the business work he can make the business 31 work. They certainly have done a pretty good job for 60 years. 32 33 I am also the Vice President of the College Terrace Residents Association. I have nothing to say 34 on behalf of the Association. There have been some things apparently distributed that are not 35 authorized by the Association. I think everybody is clear on what those are the significance of 36 those editorials. 37 38 I think that the developer's guarantee or the developer's willingness to put in a deed restriction 39 for a grocery store there is huge. I am also a real estate developer. I think that is extremely 40 generous and I am frankly surprised to hear that they are willing to do that. Anything that the 41 City does can be undone but a deed restriction cannot be undone to the best of my knowledge. 42 think that makes a significant difference and that will solve a lot of problems. Palo Alto chased 43 the All American Market out of Barron Park and I would hate to see that happen to College 44 Terrace. 45 1 I spend a lot more than $1,000 a month at JJ's. I don't know if Mollie Stone's would every let 2 me sign for my lunch. JJ's does. I have never been called by my name in Mollie Stone's. I am 3 repeatedly every time I show up at JJ's. They know the names of my children. Mollie Stone's 4 doesn't know that I have children. 5 6 As far as the public benefit goes I think that JJ's or a grocery store standalone is enough public 7 benefit to merit the zone change. I think the BMRs are a politically correct joke. I think that if 8 the developer can subsidize JJ's a little more by getting full market rent for those apartments that 9 would be a better idea. Thank you very. much. 10 11 Chair Garber: Thank you. So noted, we are passing on Pat Robinson. Before we go to the next 12 person let me just caution the audience as well as the Comn1issioners that we should keep 13 ourselves from applauding or the opposite expression so that we can maintain a fair and unbiased 14 environment here regardless of our feelings one way or the other. The next person to speak is 15 Carol Chatfield followed by Scott Lonergan, and if Ken Kato can approach. 16 17 Ms. Carol Chatfield, Palo Alto: Hi I live in Palo Alto and I work nearby at Stanford University. 18 I want to speak in favor of being able to continue to have a locally owned high quality grocery 19 store in this area. I think if it continues to exist it will add greatly to the pleasure of living and 20 working in this community. I would hate to see it go. Thank you. 21 22 Chair Garber: Thank you. Scott Lonergan followed by Ken Kato, and if Daniel Coffran can 23 approach. 24 25 Mr. Scott Lonergan, Palo Alto: Good evening I have lived in the neighborhood about ten years. 26 My interest is not just this project but kind of looking at that stretch of El Camino more broadly. 27 I think it needs some help. Some decisions may be bad ones in the past but this to me looks like 28 a nice project to kind of help make some improvements on El Camino. I know there is some 29 concern about the density and all the additional office space but when I kind of look at that in the 30 bigger picture there is a lot of it on Stanford Avenue with the Stanford buildings. So I don't see 31 a problem with having "regional" offices in the area that kind of bring some more vitality and 32 people into the area to help kind of make the ecosystem of the retail, which I think is critical, and 33 it has that the grocery store and the other retail that has to be there. I wouldn't want to ever see 34 that leave. So ifhas a couple of layers of offices on top I am okay with that. 35 36 The other key issue I see is driving cars into the neighborhood but because the entrance is on El 37 Camino that is another critical thing to me this works. If those cars were coming into the 38 neighborhood I would have a problem with that. So the driveway on El Can1ino and just kind of 39 some of the things they put into the design of this project I think it works and helps get us going 40 in the right direction on that stretch of El Camino. Thank you. 41 42 Chair Garber: Thank you. Ken Kato followed by Daniel Coffran, and if Ranney Thayer could 43 approach. 44 45 Mr. Ken Kato, Palo Alto: Good evening Con1missioners. I have had a dental office in Palo Alto 46 for over 35 years and I think Palo Alto is very fortunate to have JJ&F wishing to expand and 1 remain in their present location. In today's economy I believe that we must encourage JJ&F to 2 remain a viable part of our community. Therefore I support this project and I hope we can come 3 to a positive action tonight. I would hate to lose the best market in Palo Alto. Thank you. 4 5 Chair Garber: Thank you. Daniel Coffran followed by Ranney Thayer, and if Robbin Lonergan 6 could approach. It looks like we do not have Daniel so we will pass on that. We will go directly 7 to Ranney Thayer followed by Robbin Lonergan, and with Rita Taylor on deck. 8 9 Mr. Ranney Thayer, Palo Alto: Hello I have been in the neighborhood since 1994. I hadn't 10 planned to speak tonight but I just want to go for the record that I am for this project. Anything 11 that can keep JJ&F in business and viable is desirable. I do not have any objection to office 12 space in that area. As long as there is enough parking in this underground garage I think that we 13 have a winner here. I would like to urge the Board to approve the zoning change. 14 15 Chair Garber: Thank you. Robbin Lonergan followed by Rita Taylor, with Lynn Power coming 16 third. I am not seeing Robbin Lonergan so we will go directly to Rita Taylor followed by Lynn 17 Power, and Robert Moss third. No Rita Taylor. We will go to Lynn Power followed by Robert 18 Moss and then Joanne Garcia. 19 20 Ms. Lynn Power, Palo Alto: I have lived in the neighborhood since 1950 and I remember riding 21 down to JJ&F and getting my popsicles and signing for them even though my mother didn't tell 22 me I could. I am in favor of Garcia's. 23 24 As to the Commissioner's question about the setback off ofEI Camino it would seem to me that 25 that is definitely a benefit. Go in front of the mattress store, which is right there on the sidewalk, 26 which actually slopes out to the street. It is really unpleasant as far as walking or riding a bicycle 27 goes. So I think the setback is definitely an improvement over whatever standard you have for 28 EI Camino. 29 30 Chair Garber: Thank you. Robert Moss followed by Joanne Garcia, and then Greg Tanaka~ 31 32 Mr. Robert Moss, Palo Alto: Thank you Chairman Garber and Commissioners. Most of the talk 33 you have heard tonight and previously has been for a specific occupant, JJ&F. You cannot zone 34 for a particular occupant. That is both illegal and stupid. You can zone for a requirement that 35 there be a grocery store but if JJ&F goes out of business or walks away what you will have is a 36 vacant spot with 8,000 square feet that almost no grocery store will ever want to move into. 37 However, you will have 40,000 square feet of office space and the 14 BMR units. So you cannot 38 guarantee that there will be grocery store if you don't have an occupant. 39 40 The PC that you are being offered is a classic PC where the City gets a very sick rabbit and the 41 developer gets a racehorse. Let me give you an example of what happens when you zone for an 42 occupant. Many years ago there was a young couple that bought a very small rundown house in 43 Crescent Park. The woman was pregnant. They wanted to tear it down and build a house that 44 was much, much larger than anybody else in the neighborhood and it violated the zoning and 45 required a number of variances. So they went around and knocked on all the doors of their 46 neighbors and said, we are moving into the neighborhood, we need a bigger house for our 1 family, we are growing so please approve the variances. So the neighbors kindly approved the 2 variance. They got the building permit. They sold the lot for a third more than they paid for it 3 and moved a couple of miles away. That is what happens when you zone for an occupant. 4 5 Now you were told there is was going to be $700,000 in sales tax revenue. The City gets a little 6 over one percent of the nine and one-quarter percent. In order to get $700,000 in sales tax 7 revenue from a grocery store where most of the sales are nontaxable the taxable sales would have 8 to approximately $70 million a year. That works out to about, with an 8,000 square foot 9 building, about $725 per square foot per month. Stanford Shopping Center n1anages to get about 10 $450 per square foot per month. Let me assure you you are not going to get that kind of revenue 11 from a grocery store. 12 13 Finally, speaking as one of the originators of the CN zone the intention of that zone was for the 14 local property that served retail for the neighbors. We intentionally limited the amount of office 15 space because we did not want to make it into a regional draw. Also, you heard about how we 16 are going to have .16 FAR of housing. In the CN zone you would have .5. They are giving you 17 one-third of what would be allowed in the CN zone and the change exchange you are getting 18 more office space. This is a lousy deal. This is not a true PC. It is not appropriate. Kill it. 19 20 Chair Garber: Thank you. Joanne Garcia followed by Greg Tanaka, and then Joan Meyn. We 21 will go to Greg Tanaka followed by Joan Meyn. 22 23 Mr. Greg Tanaka, Palo Alto: Thank you Commissioners. I am the elected President of the 24 College Terrace Residents Association. This evening I am going to read to you what has been 25 approved by the Board and it is a result of countless hours of time that we spent on the Board 26 with the task force, the 2180 Task Force, to come up with the statement. As you can imagine 27 getting consensus among a large number of people is extremely difficult. So we do not have a 28 yes, we do not have no, of do we support or do we not support this project. Rather, we have 29 some things that we would like you to consider as you consider the PC zoning for this project. 30 You have the statement but I will still read it to you. 31 32 The Board of the College Terrace Association adopted the following statement regarding the 33 proposed College Terrace Centre at 2180 EI Camino Real on April 22, 2009. This statement is 34 informed by a CTRA Task Force that has carefully studied the proposed design, debated its 35 merits, and conducted a neighborhood survey to find where alignment exists and does not exist. 36 The detailed survey and its results have been submitted to the Commission. 37 38 This statement is made in terms of neighborhood preferences and values, and not in terms of 39 planning metrics, zoning options, or statistics. We believe the Planning and Transportation 40 Commission is in a better position to translate these preferences into a structure framework for 41 moving forward. 42 43 Here are the seven items that we would support. Nurnber one, a center that will anchor the 44 neighborhood, mirror the neighborhood, and serve the neighborhood. Number two, an 45 enforceable requirement that the center include an honest-to-goodness grocery store, not a 46 convenience store, with sufficient conditions to be economically viable. Third, giving JJ&F first 1 priority in a grocery store lease arrangement and every encouragement to return to our 2 neighborhood service after construction is completed, because of the Garcia Family's roots, ties, 3 and loyalty to the neighborhood. Next, including a strong, verifiable transportation demand 4 management program as part of any proposed reduction in onsite parking requirements, to 5 prevent spillover parking problems. The next one is ingress/egress to underground parking from 6 EJ Camino to help minimize traffic cutting through the neighborhood, followed by retail space 7 and office space designed to attract a diversity of businesses, stores, and restaurants geared to 8 serving the neighborhood. Lastly, a beautiful, walkable, bikeable magnet for commu'nity 9 interaction. 10 11 We are neutral about the BMR units and the prior space for community room. 12 13 We would not support the following three: transfonnation of a neighborhood center into a 14 regional business district; the preponderance of office space to the diminishment of other 15 possible uses; and the level of traffic and parking turnover associated with medical offices. 16 17 In conclusion, we ask you to ensure that any development at the 2180 EI Camino Real location 18 will anchor the neighborhood, mirror the neighborhood, and serve the neighborhood of College 19 Terrace. Thank you. 20 21 Chair Garber: Thank you. Joan Meyn followed by William Ross, and then Annette Ross. Joan? 22 No Joan. William Ross followed by Annette Ross, and then Doria Summa. 23 24 Mr. William D. Ross, Palo Alto: Good evening Mr. Chainnan, Commissioners, members of the 25 pUblic. I am a resident, a business owner, a taxpayer, and on the College Terrace Task Force. 26 The views that I am going express are mine not of the Task Force but I would respectfully 27 suggest that the infonnation assembled by the Task Force results from extensive analysis of the 28 project and that technically it accurately reflects the intensity of what is proposed. 29 30 I have four points I would like to make. First, I believe there has been a change in the type of 31 environmental review and when it is accomplished since the last time this has been before your 32 Commission. The Save the Tara case articulates that when a project has such definition that it is 33 known and it will go forward, and there it was a Menl0randum of Understanding only, it has to 34 be assessed under CEQA. A mere promise or a condition that it is going to be accomplished as 35 is set forth in the Staff Report here today is insufficient. 36 37 Second, you have two quasi-legislative actions, and as a prior speaker noted they are not 38 personal, they run with the land. That relates to the fourth point I am going to make. There 39 really isn't a guarantee here. Let me finish out the second one. These entitlements in this project 40 must be consistent with the general plan. There is no general plan consistency analysis that is 41 consistent with applicable law here. It is on four and four and it is barely a page. It has to be 42 related to both the Housing Element, the Land Use Element, and it must be internally consistent 43 with the entire plan. That is not present. Until that is present I would respectfully suggest that 44 an analysis of public benefits is premature because it is not known whether it is consistent with 45 the general plan. 46 1 The fourth point is assurance as to the continuing grocery store. More than ten n10nths ago I 2 raised the issue saying a private agreement cannot serve as a basis for a land use decision. That 3 case is still good law, save Trancos. There is no development agreement here. There is no 4 owner participation agreement here. There is no development and disposition agreement here. 5 There is an unknown agreement. This is Palo Alto for God's sake. If there is an agreement that 6 obligates and is personal to that point it should be in the record. A Letter of Intent doesn't cut it. 7 There is no assurance. 8 9 I would hope that you would exercise your trustee capacity with respect to the Comprehensive 10 Plan so that in two years I don't have to be here with an intensity of a development with no 11 grocery store and a vacant space. The planning metrics is to be complied with. This PC zone 12 goes beyond it. Thank you. 13 14 Chair Garber: Thank you. Annette Ross followed by Doria Summa, and then Fred Balin. We 15 will stop taking cards at this time. 16 17 Ms. Annette Ross, Palo Alto: I live in the Terrace since 1983. I would like to say tonight that I 18 think it is unfortunate that the discussion around the 2180 project has been characterized as for or 19 against JJ&F. Those of us with concerns about certain aspects of the project are not against 20 JJ&F. In fact, I think it is safe to say that we hope that JJ&F will return. 21 22 I wrote a letter regarding my concerns and I would like to make additional points tonight. The 23 City has a Comprehensive Plan that is designed to protect the City's neighborhoods. Even 24 though there are some enticing features in this project we rely on you to make decisions that are 25 consistent with our Comprehensive Plan. I ask why we even have one if we don't follow it. 26 27 Also, parking is a huge problem in Palo Alto. We have a neighbor that gobbles parking spaces. 28 This project is under-parked. I think at the very least that if you approve this you should require 29 that the new housing units have dedicated 24/7 parking so that at least those people are assured 30 of a parking space. 31 32 Thirdly, I would like to say that the entrance on EI Camino is not approved. Many of the 33 supportive comments that you are hearing tonight hinge on that but that is still something that is 34 an unknown. If you have anything that you can do to promote that that is where. the entrance is I 35 would say that I think many people would appreciate your promoting that. 36 37 F"inally, many of those who are unfortunately characterized as not supportive of the project do 38 support the retention of JJ&F. I am certainly one of those people. We also understand that a 39 market can be a requirement of a PC should it be approved, however the square footage of that 40 market is a concern. If JJ&F cannot return the space available for a market must be big enough 41 to attract an alternative grocer. Thank you. . 42 43 Chair Garber: Thank you. Doria Summa followed by Fred Balin, and then Joy Ogawa. 44 45 Ms. Doria Summa, Palo Alto: Thanks for letting me speak tonight. I live quite close to the 46 proposal. I am on the CTRA Board and also on the 2180 Task Force. I am not in favor of this 1 project as proposed but if you are going to initiate a PC process I would like you to consider the 2 following among or put this in your considerations. 3 4 The overall intensity and size of the development has not changed and it is still way too much. 5 The 39,000 square feet of office space is also just too much. I believe this would cause cut- 6 through traffic in College Terrace and exacerbate the already existing parking and traffic 7 problems that we have, especially if the applicant is not held to a strict standard of parking 8 requirement. 9 10 A grocery store limited to 8,000 square feet with no contiguous retail space in which it could 11 expand may not be large enough to attract other grocers in the event the Garcia Family does not 12 find it desirable or economically feasible to return after a long hiatus. I feel we have no 13 assurance of that. 14 15 I am concerned that this would set a precedent for PC zones in the neighborhood along the 16 eastern boundary and El Camino Real. 17 18 The addition of BMR housing is a good thing for the City in general but lower College Terrace is 19 already very dense and has many small rental units. I think that this addition has only made the 20 overall project more built up, massive, and dense. 21 22 In short, I do not feel that sufficient public benefits as yet have been shown to warrant a change 23 to PC. I think many compromises still need to be made to this proposal to soften its impact on 24 the neighborhood, ensure the usability of both retail and office by the neighborhood, and 25 compromises made to ensure that this development fits in with the historic aspect of the 26 surrounding area. Thank you. 27 28 Chair Garber: Thank you. Fred Balin followed by Joy Ogawa, and our final speaker Colleen 29 King Ney. ' 30 31 Mr. Fred Balin, Palo Alto: Thank you Commissioners.' I am a resident of College Terrace, a 32 member of our Residents Association Task Force that has been evaluating this project as a group 33 for over a year. Individual perspectives vary but we have been dedicated to thoroughly 34 researching the key elements, providing objective materials on the project specifications to our 35 residents, monitoring the process, and gathering neighborhood feedback. One example is our 36 neighborhood survey that was distributed to every household. The material was submitted to 37 you last week in hardcopy with the packet's release. 38 39 The overwhelming topic of conversation related to this project is heartfelt support for JJ&F 40 Market and a desire that it return after any redevelopment, a preference for 88 percent in our 41 survey. But the essence of the matter before you this evening is something different. It is a 42 question. How much need be given away by the Commission and the City Council from the 43 Comprehensive Plan's Neighborhood Conlmercial Land Use Designation and the zoning district 44 of the same name to keep a viable grocery store on this site? The Comprehensive Plan is a 45 thoroughly considered document, the result of a four-year effort. Neither it nor the zoning code, 46 both ordinances, should be regarded lightly. So what is the best process to evaluate this 1 proposal? Two preliminary reviews and tonight's materials have clarified zoning regulations, 2 community benefits that can or cannot be considered, and other technical details. On the core 3 issue of grocery store retention this Commission in two hearings initiated a zone change and an 4 inquiry on this very n1atter as a citywide issue. Then for whatever reasons you paused. But what 5 was deferred then is before you tonight. What was deferred then is before you tonight. And it 6 requires the same thinking that took along the path of last year. Your decision now is not with 7 regard to a general rule but rather to a specific proposal with concrete factual elements that has 8 the added benefit of enabling you to make a more solid decision. 9. 10 This zoning chart, verified against the Staff Report and which you have at places, was part of our 11 neighborhood distribution this week. The shaded column at the right shows the differential 12 between the proposed PC and CN mixed use. Look at the chart and decide what is best for the 13 full community and what should go on this site. The chart, the survey, and the statement of the 14 CTRA Board are a few elements of the careful work undertaken by residents within the 15 neighborhood, and as with the Comprehensive Plan and zoning code should be afforded 16 considerable weight. Thank you. 17 18 Chair Garber: Thank you. Joy Ogawa followed by Colleen King Ney. 19 20 Ms. Joy Ogawa, Palo Alto: Hi. First I want to say that this property is the heart of College 21 Terrace's neighborhood commercial district and it is vitally important to keeping College 22 Terrace a more livable, walkable neighborhood. We value our neighborhood commercial and to 23 change the Con1prehensive Plan designation of this property would severely hann our 24 neighborhood and please don't do that. 25 26 Next I want to address the amount of office. The project proposes 39,980 square feet of office, 27 which is an increase of 941 square feet from October, which is an increase of 544 square feet 28 from February. Now my reaction has always been that this is way too much office but I do 29 recognize that having a guaranteed grocer store would be a benefit to the neighborhood and the 30 community. This is a benefit that may warrant some concession in tenns of increased office 31 space beyond CN zoning limits. But the real tough question is how much more office space? 32 That is a tough question. What I am thinking is that the number we should be focusing on for 33 office is 12,569 square feet because that is the absolute maximum even with a Conditional Use 34 Pennit that is allowed in the CN zone district for this size property. This project exceeds that 35 maximum of 12,569 by 27,411 square feet. 36 37 So the question again is how much more office space is a reasonable tradeoff for an 8,000 square 38 foot grocery store? Well, I guess that depends on what the amount of the subsidy is, which is a 39 difference in rent between the grocery and the other retail, because that is what I understand is 40 what the subsidy is. Somehow I really doubt that the subsidy justifies even a one to one tradeoff, 41 which would be a one square foot of additional office for each square foot of guaranteed grocery. 42 43 We also need to recognize that the retail in this project enhances the value of the office for the 44 property owner. By including a grocery store and other retail the location becomes much more 45 attractive for offices as workers have convenient access to the retail. So including JJ&F in the 1 project is not only a benefit to the neighborhood and the public it is also a benefit to the property 2 owners, although they might not want to admit that. 3 4 So again, what is a reasonable tradeoff? I would say less than one square foot of additional 5 office space for each square foot of grocery. Start with that 12,569 square foot of office. 6 7 Finally, I just urge you to do your best to save College Terrace's neighborhood commercial. 8 Thanks. 9 10 Chair Garber: Thank you. Colleen King Ney, you will be our last speaker. 11 12 Ms. Colleen King Ney, Palo Alto: I have a small private practice business in College Terrace. I 13 want to start off by saying I am a huge supporter of JJ&F. I am definitely for the project. 14 However I do have some considerations that I would like you to take up. JJ&F is a one of a kind 15 store as you know. It has definitely been a major part of my life and fabric of my life for the last 16 ten years. Even though they are not my family I feel like they are. I am really excited about the 17 project, however one of the things that I am concerned about is the noise issues. I notice that 18 there will be an entrance for receiving and also trash across from my office. I am wondering if 19 there are any other options for that in future planning and also wondering if there is any 20 possibility of assistance with soundproofing my office due to the nature of my practice. Thank 21 you. 22 23 Chair Garber: Thank you. That concludes our public speakers. We will keep the public hearing 24 open until after we have completed our work here. Before we start with questions and discussion 25 if I could ask the Planning Staff to outline what the possible outcomes could be in terms of our 26 actions this evening. 27 28 Mr. Reich: Well you could recommend to initiate the PC rezone, in which case the application 29 would be moved forward to the Architectural Review Board. You could recommend to initiate 30 the PC rezone with specific additional conditions, or you could recommend not to initiate the PC 31 rezone. 32 33 Chair Garber: You have split the description of the item into two pieces. Could we move one 34 forward and not the other, meaning move some action on the Comprehensive Plan and not take 35 action on the PC, for instance or the other way around? 36 37 Mr. Williams: Well, first of all the action on the Comprehensive Plan doesn't have to go to the 38 ARB so that would be a recommendation directly the Council to an1end the Comprehensive Plan. 39 If you wanted to split it out that way you could although I would think that what is on the agenda 40 tonight is not to make a recommendation on that but just to initiate it. So it would have to come 41 back for your specific recommendation' on the Comprehensive Plan designation to the Council 42 with the environmental analysis, at that point we would have to have the environmental analysis 43 with that as well because you would be recommending to the Council then. 44 45 As far as the other piece of it, moving the PC forward, you could move the PC to the ARB and 46 have us come back on the Comprehensive Plan either at the time when you see the PC make its 1 way back to you or ahead of them. Ifwe come ahead of that then we would have to have 2 environmental review all prepared for you at that point. They are pretty closely linked. If you 3 move the PC forward the Comprehensive Plan Amendment, this project can't really be done 4 without the Comprehensive Plan Amendment too. So while the Comprehensive Plan 5 Amendment doesn't go to ARB we kind of consider it to be part of the package. 6 7 Chair Garber: So you could move the Comprehensive Plan but you can't move the PC without 8 the Comprehensive Plan. 9 10 Mr. Williams: Right. 11 12 Chair Garber: Commissioner Rosati. 13 14 Commissioner Rosati: I have a question about the transferability of the subsidized rent, if you 15 like. What happens if JJ&F decides not to exercise their option? It is very clear that even in the 16 illustrations that the proposal is to have this rent somewhat very attractive so that they would stay 17 but if they change their mind for whatever reason is that transferable? Do they have the right to 18 transfer it or what else? 19 20 Ms. Kennedy: The way we envision this Commissioner Rosati is that the deed restriction that 21 would include the subsidy would run to whoever the grocery tenant was. So the deed restriction 22 would essentially have two parts. One would be that it would be a grocery store and the second 23 would be that it would be a subsidized grocery store according to a formula that we have not 24 completely worked out yet, and we obviously want to work out with the City to make sure. It 25 could be a percentage of what office rents are from time to time or a certain percentage discount 26 off retail rents but that the subsidy and the grocery would both be part of the deed restriction. 27 28 Chair Garber: Just a caution Commissioner Rosati, and Staff can correct me here, but those sorts 29 of agreements are between the applicant and the owner of the land and have limited purview and 30 opportunity for the City actually to take action on them. Is that fair? 31 32 Ms. Kennedy: Ifwe wanted to do it that way we could do it that way but that is not our 33 intention. Our intention is to provide a deed restriction that satisfies the City's interest and the 34 community's interest in preserving a subsidized grocery store and having language that the City 35 Attorney doesn't bless but reviews and discusses with us until there is language that we are in 36 agreement on. Then it gets recorded in the County Recorder's Office. 37 38 Chair Garber: But the recording is with the landowner the City does not participate in that. 39 40 Ms. Tronquet: That is correct. The portion of it though would come back to the Commission as 41 the PC Ordinance and what we would include in the PC Ordinance is the restriction for grocery. 42 How the property owners decide to execute it would be up to them but they have offered to do 43 the deed restriction though. 44 45 Chair Garber: I am not discounting the offer to work with the City and hence the neighborhood 46 to come to something that makes sense for all but ultimately the legal bind excludes the City. 1 2 Ms. Tronguet: In tenns of the precise rent but the grocery restriction would be part of the PC 3 Ordinance. 4 5 Chair Garber: Understood, but that restriction does not 'link directly to the occupant just to the 6 use of property. 7 8 Ms. Tronquet: Right. 9 10 Chair Garber: First let me ask if Rosati has completed his questions. 11 12 Commissioner Rosati: This is a question to the City and that has to do with is it possible to 13 define or exclude some of the office use as part of this process. I am just asking the question 14 because there have been some concerns about the nature of the office use. Some office use has 15 more traffic than others and I am just curious if that is possible. 16 17 Mr. Reich: That can be defined in the ordinance and the applicant has specified in this particular 18 project that there will be no medical office. Medical 'office has a higher trip generation rate than 19 other office types. Their trip generation analysis did not include medical office as one of the 20 options. So that is off the table as an option so that would be written into the PC Ordinance that 21 it not be medical office. 22 23 Chair Garber: Commissioner Keller and then Tuma. 24 25 Commissioner Keller: To follow up on what Commissioner Rosati asked. I guess this is to 26 Attorney Kennedy. In the event that there is a deed restriction who is the enforcer of the deed 27 restriction? In other words, for whose benefit is the deed restriction and who would be eligible 28 to remove that deed restriction? Do you understand my question? 29 30 Ms. Kennedy: I do understand your question. I think I understand it. The deed restrictions are 31 essentially enforceable by the Attorney General of the state in the sense that once there is a deed 32 restriction in place any citizen can go to the Attorney General and say this is being violated. It is 33 binding on the landowner and so anybody in the City could challenge us if25 years from now we 34 decided to put in a toy store instead of a grocery store. It is also of course binding on any lender, 35 anybody that is junior to the landowner in tenns of what gets recorded. We can also record a 36 memorandum of lease but that would only go for the tenn of the lease. This would be binding 37 just the same way your BMR restrictions are binding such that you can't sell a BMR unit for 38 market rate. So deed restriction is the mechanism by which we enforce long-tenn arrangements 39 for land. Melissa, did you want to say anything more about that? No, okay. 40 41 Commissioner Keller: What I am wondering is if you impose a deed restriction, if the landowner 42 imposed a deed restriction on themselves, can the landowner decide that it no longer wants to 43 abide by that deed restriction and remove it? In other words, what is the good and valuable thing 44 that was received by the landowner in order to get the deed restriction on there? In a sense this is 45 a contract to have the deed restriction so how does the deed restriction get enforced? In other 46 words, can the landowner later on decide I don't want this take it away? 1 2 Chair Garber: Actually,] am going to interrupt just briefly. ] think the question of deeds in 3 general is interesting because it demonstrates the commitment that the applicant has to finding a 4 way to satisfy the interests of the City and the neighborhood. But] think in terms of what this 5 Commission needs to consider the deed is peripheral to the action that we need to take. So as 6 m~ch as ] am interested in the answers here] think we need to get off the question of deeds and 7 get onto how we want to utilize the property. 8 9 Ms. Kennedy: Exactly. So as sort of a companion piece to your ordinance, which is really the 10 enforcement mechanism, but for example if we sold the property it would be subject to that deed 11 restriction. So if the owners of that property sold to a third party it would be burdened by that 12 deed restriction. It runs with the land essentially but the enforcement piece really lies with your 13 ordinance and a violation of the ordinance. 14 15 Commissioner Keller: Well, I am not a lawyer but what] understand is when party A sells a 16 property to party B and applies a deed restriction to it that essentially that it is party A that the 17 deed restriction is in favor of party A and party A is the enforcer. So to the extent that the 18 enforcement can be given powers to the City that the deed restriction is in favor of the City 19 perhaps that is a way of doing it and I would welcome the attorney's comments on that. 20 21 Ms. Tronquet: Well,] think what we are saying here is the important piece is the PC Ordinance 22 because that is what is going to restrict the use. If they have a deed or not they are still going to 23 be required to have that grocery store use there. They are only going to be able to have a grocery 24 tenant there so they are going to have to do whatever they need to do to get the grocery tenant 25 regardless of what their deed restriction says. So the PC Ordinance is what will really address 26 that use issue and that is really what we are talking about tonight. 27 28 . Commissioner Keller: I appreciate that. There are members of the public who pointed out that 29 the open space in a property and further away is now that space, which was a public benefit, is 30 occupied by Riaci restaurant. So there is concern of whether or the extent to which this would be 31 enforced in perpetuity. So understanding the extent to which the deed restriction would actually 32 be enforced is interesting. 33 34 Perhaps this is a question of the architect. I notice that there is a loading dock for the grocery 35 store off of Oxford that is between the grocery store and the BMR units. That loading dock 36 essentially prevents any in other words, on one side of the grocery store you have the driveway 37 from EI Camino and on the other side of the grocery store you have the loading dock so that 38 constraints the size of the grocery store. To what extent does that loading dock present a 39 problem with respect to adjacency for the BMR units? 40 41 Mr. Carrasco: The loading dock firstly is enclosed and the noise issue is contained inside of the 42 loading dock from the noise point of view. From the location point of view there is a walkway 43 that accesses units. So the loading dock dimensions go right up to that wall. Does that answer 44 your question? 45 1 Commissioner Keller: Yes, and also I will take this opportunity to ask do you want to address 2 the comment of the member of the public who talked about noise across the street? 3 4 Mr. Carrasco: Yes. Ms. Ney has expressed this opinion before and we have taken good care not 5 to let the noise come out, the loading dock enclosed a truck with sound doors that shut the 6 loading dock from the street. 7 8 Commissioner Keller: So the sound doors are on the street? 9 10 Mr. Carrasco: Yes. 11 12 Commissioner Keller: Thank you. A question for Staff. At what point in this approval process 13 do rights vest with respect to the applicants or the landowner with respect to this application? 14 You have indicated Attachment E here, at what point does the PC Ordinance get adopted? At 15 what point in time does that vest? Are there further approvals behind this third approval which is 16 to be determined, which is the required action by Council? 17 18 Ms. Tronquet: I am not sure if I entirely understand your question but generally the right to 19 develop vests after building permits are issued. 20 21 Commissioner Keller: Well, what I understood is that there is a process in Alma Plaza for 22 example, just to illustrate. There was an initiation of the PC and then it came back and then 23 Council somehow in the PC Ordinance created some sort of very locked-down kinds of things of 24 what would be in the PC, and then when it came back again too many things were locked-down 25 in that process. I am trying to understand how this process is going to have sufficient number of 26 restrictions in it but on the other hand don't tie your hands so that when something comes down 27 and we realize that this is not quite what we wanted, we learn more about it, we don't have a 28 problem. So I am trying to compare the approval process for this with the approval process for 29 Alma Plaza and understand what the issues are. 30 31 Mr. Williams: Yes, thank you Commissioner Keller, that is a very good question. The Alma 32 Plaza process was different than this process and the standard PC process. That is because in 33 that case they basically appealed the Commission's initiation to the Council. What happened 34 there, rather than going from the Commission to the ARB and through the process, in which case 35 the Commission had laid out some parameters but you would have seen it again, and the whole 36 package would have been before the Commission. In the Alma Plaza case they appealed to the 37 Council and the Council rightly or wrongly adopted the PC Ordinance basically. They didn't 38 adopt the site plan that goes with it and typically in our code there is a site development plan that 39 goes with the PC Ordinance so it is all part of one package that is seen by ARB, the Commission, 40 and the Council. So in that case having gone to the Council the Council adopted a PC Ordinance 41 that did not adopt the site plan but it specified in enough detail all these other criteria in the PC 42 Ordinance itself that it tied the hands to some degree of both the ARB and the Planning and 43 Transportation Commission when that site plan came back through, as well as tying the hands in 44 terms of number of units and all the other criteria. 45 1 So in this case theoretically it could to the Council too in that same way, but we would certainly 2 recommend if that happened that the Council not be specific that they just determine whether to 3 forward it to ARB and start that process. So it is a very different process. This should come 4 back to the Commission after going to ARB with your still full discretion as far as the uses, the 5 intensities, the site layout, all those criteria, plus you would have the environmental document at 6 that time. 7 8 Commis·sioner Keller: Thank you that clarifies things. So to summarize the discussion, 9 essentially if a PTC initiation restrictions are appealed to the Council then the process in some 10 sense needs to be fixed so that the Council does not overly restrict the process in the future. That 11 is something we might want to visit when we look at the PC Ordinance. Thank you. 12 13 Chair Garber: Thank you. Commissioner Tuma and then Fineberg. 14 15 Vice-Chair Tuma: The first question has to do with parking and the possibility for parking 16 reduction under different formulas. As I understand it, there isn't a formal proposal here to 17 reduce parking based on a specific code provision or anything like that it is just general reference 18 to the fact that there isn't enough parking here but there would presumably some entitlements to 19 reductions. Is that sort of a fair characterization of where we are on the parking reduction 20 question? 21 22 Mr. Reich: The applicant has actually provided something today that explains and gives more 23 rationale for their request for the parking reduction. In their traffic analysis they actually 24 provided information as well that leads to looking at that as terms of being rational in terms of 25 the number of spaces they are asking for a reduction for. They are asking for reductions based 26 on shared parking and they reference the Urban Land Institute published methodology in terms 27 of looking at shared parking. So there is a formula if you feed in the various square footages and 28 types of land use it will pop out the anticipated maximum number of parking spaces needed. So 29 they did that work and provided that and 215 parking spaces was the total that was arrived at. 30 Additionally the Institute of Transportation Engineers has published parking generation rates as 31 well and in going through that exercise they come up with 181 parking spaces. So based on 32 those two existing institutions it would look like they are providing ample parking. It may not 33 meet our current standard but according to those institutions they would have enough parking to 34 meet the demand. 35 36 Mr. Williams: If I could just add that we received this today. We have not had a chance to 37 really go through it in some detail and our Transportation people have not either. We think there 38 are some problems with it, which is why we didn't just distribute it to the Commission tonight. 39 Certainly the applicants are here tonight and they indicated they have their traffic consultants 40 with them if you would like to hear more from them on this they are available to discuss it. We 41 want to stress that we have not had any real chance to review and this and see how it dovetails 42 with the reductions in our code, specifically 20 percent for one kind and 30 percent for another, 43 that kind of analysis. 44 1 Vice-Chair Tuma: Okay. The institutions that they referred to those are not institutions or 2 criteria that We have in any way referenced or adopted into our code, so our code would control. 3 These are just other reference points, is that right? 4 5 Mr. Williams: Right. These are professional engineering standard and engineering practice. 6 Our engineers utilize these sources but our code has specific numbers in it and that is what we 7 base our compliance on. 8 9 Vice-Chair Tuma: Okay, so talking about our code for a second, there are reductions for things 10 like in certain mixed use environments there are reductions. We saw a project not too long ago 11 where we applied that. Are there criteria in our code that deal with the type of mixed uses that 12 you have? For example, where you have a project that is half residential and half commercial 13 there is a certain mix there because of the overlap of when people go to work and that sort of 14 thing. Would we look at that differently than a project like this one that is predominantly 15 commercial with a little bit of residential, and would that impact how much reduction we would 16 see? 17 18 Mr. Williams: It certainly would be a different mix and a different type of reduction. The 19 reduction mayor may not come out to be similar. The code doesn't specify exactly how you do 20 that calculation. The code does say you need to do a calculation using sources such as ULI, 21 Urban Land Institute, which I think Russ indicated was one of the sources used. They have 22 standard methodologies that they use. So when you have a retail and an office use they overlap 23 in certain ways like the nighttime uses if there is a restaurant or a grocery store or something like 24 that a lot of the office people would be gone. So maybe some of those peaks would overlap in a 25 way that would allow for reduced parking. In this case you have a residential component that is 26 not very many units first of all, I don't know if the parking for that is sort of dedicated over to 27 that side. If it is, it is not really usable for the retail. If it is not, if it is grouped all together and 28 the parking is all jumbled together then there would be some benefit there, but obviously given 29 the scale of the office· and retail and the minimal amount of residential you wouldn't expect a lot 30 of reduction based on that kind of use. So it depends on the amount of each type of use and this 31 calculation methodology being accepted by our Transportation Staff. 32 33 Vice-Chair Tuma: Okay. Switching topics, several people from the public expressed some 34 concern regarding the size of the grocery store and the viability beyond JJ&F if for whatever 35 reason they did not continue there. The first question is, remind me the approximate size of the 36 market at Alma Plaza. 37 38 Mr. Williams: It was 15,000 square feet. 39 40 Vice-Chair Tuma: Okay. So does Staff have any comment or concern on the size 'of the market 41 that is being proposed here? Not as to whether it would work for JJ&F they seem to be 42 comfortable with that, but whether it is generally a good size for viability long-term. 43 44 Mr. Williams: I don't know if Russ or Amy has seen anything different. I don't think we have 45 an indication that it particularly fits one market model as opposed to another. Our understanding 46 generally is that there is this model now of more smaller neighborhood type markets that even a 1 Safeway is considering and some of the other market chains are considering now, and usually 2 they start at about 10,000 square feet. So in this case I think it is 8,000 but they have the outdoor 3 area too. So I think their point is that it actually gets to be 10,000 but it is kind of on the cusp of 4 the low end of what we have seen from other markets. 5 6 Mr. Reich: In addition to that there is the fact that the market is required. So the actions that the 7 property owner has to take in order to get a tenant in there also impact the viability of that 8 particular market. So for instance if they have a much lower lease rate then that changes things 9 and helps increase the viability, whereas a typical market may need more square footage to have lOa greater volume or whatever other parameters there may be. 11 12 Vice-Chair Tuma: Okay, great, one last question for now. In the Staff Report there is a section 13 that says under Adequacy of Proposed Public Benefits one of the items is the provision of a 14 subsidized rental rate to ensure neighborhood serving grocery market will remain at this location. 15 16 Mr. Reich: Consider that a typo from the previous iterations of the Staff Report. Basically the 17 public benefit would be the assurance that a market remain there not necessarily the rental rates, 18 again because we can't enter into those private agreements but we can ensure in the ordinance 19 that theland use be specified at whatever square footage that it be a market. So that would be 20 amended the next time it goes around. 21 22 Vice-Chair Tuma: Okay. I have a comment that I will hold until we get to the comment period. 23 24 Chair Garber: Commissioner Keller, you had a quick follow up on parking. 25 26 Commissioner Keller: Yes to follow up on Vice-Chair Tuma's comment, looking at the diagram 27 title sheet AO.l I think it is that indicates that the total required commercial parking is 228 spaces 28 and the total required for the residential is 26 spaces. But somehow after you add the residential 29 and the reduction you wind up with 226 spaces at the end. So the amount of spaces required 30 after the reduction is actually less than the commercial requires, which is somehow we get a 31 negative there by mixed use, which seems to be somewhat counterintuitive, let me put it that 32 way. So again when you have percentages off the top and you have skewing as Vice-Chair 33 Tuma pointed out large percentages don't make sense like that. Thank you. 34 35 Chair Garber: Commissioner Fineberg and then Holman. 36 37 Commissioner Fineberg: I have a question for Staff about the logic for the findings of a PC. The 38 findings require that the uses in the site development regulations are consistent with the 39 Comprehensive Plan. Ifwe need to amend the Comprehensive Plan in order to get consistency 40 does that mean that then by definition the project isn't consistent? Otherwise couldn't we go to 41 every site, every parcel, amend the zoning and then make everything consistent w.ith the 42 Comprehensive Plan by changing zoning? So at what point it comes back to one of the 43 questions I asked when I started a couple of years back, does the Comprehensive Plan matter? 44 How do we value the Comprehensive Plan as a document, as a well thought out whole? Ought 45 we be in the business of changing underlying zoning to fit a project? 46 1 Mr. Williams: Well, you certainly can change the Comprehensive Plan at which point it 2 becomes consistent with that. That is your determination whether to do that or not. So whether 3 it,is consistent with the Comprehensive Plan depends on whether you are comfortable with 4 changing the Comprehensive Plan. There are valid reasons to consider a Comprehensive Plan 5 change and if you feel those exist and then that this project fits within those valid reasons then 6 that is fine and you are consistent. 7 8 The other thing I would say is there are a lot of Comprehensive Plan policies and programs. So 9 when it says it is consistent with the Comprehensive Plan it doesn't just mean the 10 Comprehensive Plan land use designation it also means that. So you could find, and I think this 11 case is probably a good example where it is not consistent with the Comprehensive Plan 12 designation, it probably is consistent with quite a few of our policies and about design and design 13 on EI Camino, and access of mixing uses and those kinds of things, but it doesn't fit the 14 designation. So I think one of the points we made in the Staff Report and that I was trying to 15 make early on in the meeting is this an area of EI Camino where it may be appropriate to be 16 looking at some different Comprehensive Plan designation than a Neighborhood Commercial 17 just by the nature of what El Camino we may want to see along El Camino in the future. On the 18 other hand, the Comprehensive Plan is a fundamental planning document. Is it appropriate to be 19 making that change on this parcel before we have had a chance to discuss it sort of up and down 20 EI Camino, which we will be doing to some extent not a real focused extent but to some extent as 21 part of the Comprehensive Plan Update. So those are the kind of things the Commission needs 22 to consider. There are some reasons that sort of commend this towards the direction of a 23 Comprehensive Plan change looking at maybe the longer-term future of EI Camino. On the 24 other hand it is Neighborhood Commercial, there is a neighborhood nearby that is served by this, 25 so there is reason' for arguing sort of both designations. Ultimately if you feel comfortable with 26 that, you have to feel comfortable with that Comprehensive Plan change, and then it becomes 27 consistent but it is not just de facto inconsistent because right now it doesn't meet what the 28 zoning is proposed. That is a long roundabout way to get there but hopefully that is understood. 29 30 Commissioner Fineberg: Thank you. You touched on my next question, which is there have 31 been some discussion up and down the state about the redevelopment of EI Camino. There have 32 been some descriptions of it as a grand boulevard, there have been some plans coming out about 33 how it is going to change regionally. I am sorry I didn't get this to you earlier. Could you 34 characterize just from your sense of this project whether this is consistent with how the EI 35 Camino redesign for the longer scope of it beyond Palo Alto, is this consistent with how that is 36 going or not the way the bigger picture is going? 37 38 Mr. Williams: Well those efforts have two parts to them. One is sort of the public space, the 39 street, the width of the roadway, the way pedestrians or bicyclists can get across the street and 40 making those safer as well as street trees, and just the whole appearance of what is within the 41 right-of-way. Then the second part is the private development along the streets which generally 42 is characterized in most of those plans as higher intensity, mixed use, or residential development 43 that is maybe closer to the street, but for residential maybe not too close to the street. 44 45 I think this does a good job probably of emulating the concepts that are out there as far as 46 particularly having the office space up close, there should be some tiering back and setbacks up 1 upper floors to break up the massing along the street, having the sort of open space feel at the 2 corner there with the market and also at the office, are concepts that are in there as far as trying 3 to bring more public spaces and mixing uses. Those concepts are all part of that EI Camino 4 effort. Again, it is like you said up and down the state. It is a very broad brush approach and 5 there are certainly going to be locations where that isn't appropriate as well. 6 7 Commissioner Fineberg: Thank you. Switching a little bit to some smaller areas. The 14 8 proposedBMRunits, I believe it was 8,400 square feet, so it would be about 600 square feet per 9 unit, one bedroorri. Do we know if there is demand for that? I am sorry, Amy. The'8,400 square 10 feet ofBMR units, 14 units, so they are 600 square foot each. Is there demand for 600 square 11 foot one bedroom BMR units at whatever level of affordability they might be? 12 13 Mr. Reich: In your packet there should be a letter from the Palo Alto Housing Corporation 14 supporting that. They have stated that there is a denland for small low inconle rental housing 15 units for single occupancy. Over time as this property is redeveloped we are actually losing a 16 number of affordable rental units so any additional affordable rental units are appreciated. There 17 are significant waiting lists for people to be in those BMR rentals. 18 19 Comnlissioner Fineberg: Okay, because there have been some conversations about maybe for 20 the larger ones whether at that price point there is a demand. So I was just wondering if that 21 particular kind of product, and there were some they were saying they had to get people outside 22 of Palo Alto. So do we know if that particular size and affordability is a demand or are we 23 building something we will have to import people for? 24 25 Mr. Reich: Right, I have not asked the Housing Coalition that specific question. 26 27 Commissioner Fineberg: All right, thank you. For the applicant about the BMR units, not trying 28 to get to too fine a grain of detail but if the units are 600 square feet and each unit has its own 29 internal stairway that means a large proportion of the unit's square footage is that internal 30 stairway. I was just wondering if there could be any consideration for making it first story units 31 and second story units and one external staircase. Granted, I know the building regulations 32 would be different but consider changing it so that there would be one staircase that could access 33 like four upstairs units and then you wouldn't be eating up so much of the unit on stairs. Just as 34 an idea. 35 36 Then also if this moves forward some consideration for how the tenants in the residential would 37 access their entries from the parking. It looks a little convoluted that they would have to go up 38 into the offices, out a back door, next to a driveway. It doesn't feel residential. 39 40 This is for the applicant. One of the issues a nurrtber of residents have talked about is questions 41 about the size and viability of the grocery store. Is there anything precluding a larger area that is 42 attached if the driver shifted that there could be larger ground floor retail with more flexibility 43 that JJ&F or whatever grocer could be bigger? 44 45 Mr. Carrasco: If you combine that with Lee Lippert's question about can we move the units 46 backwards and provide space, and then Commissioner Keller's question about whether that wall 1 has to be there or not there as an opportunity to move that parking lot to the comer and provide 2 more grocery store space in the future if we need it. So there are options and we will look at 3 them and bring them back to you. 4 5 Commissioner Fineberg: Great. That is it for my questions for now. Thank you. 6 7 Chair Garber: Commissioner Holman and then Rosati and then we will move onto comments. 8 Commissioner Holman. 9 10 Commissioner Holman: Staff probably has the answer to this. What does office space rent for in 11 this general vicinity? 12 13 Mr. Williams: I don't really know. You might have an architect who knows better on the 14 Commission. 15 16 Chair Garber: You want an architect to talk about pricing? 17 18 Mr. Williams: Not about cost of services but of the leasing rates. 19 20 Chair Garber: No comment. 21 22 Commissioner Holman: Would anybody dare say if three dollars is way off target? 23 24 Mr. Williams: I would say it sounds low. 25 26 Ms. Kennedy: About five dollars and twenty-five cents to five dollars and seventy-five cents to 27 six dollars a square foot based on our analysis over the last four weeks. 28 29 Commissioner Holman: Thank you. I might need a moment to change my calculations if 30 somebody else has a question in the meantime. 31 32 Chair Garber: Commissioner Rosati. 33 34 Commissioner Rosati: Yes, I wanted to follow up again with the City on the calculation of the 35 incremental revenue. There was a comment form the public challenging the $700,000 number 36 and I was wondering if we could apply you perspective on that number. Does anybody know 37 how it was calculated and whether the number was within the ballpark or completely off? 38 39 Mr. Reich: That number is not son1ething that Staffhas analyzed. Perhaps the applicant can 40 speak to the calculation they provided. 41 42 Mr. Smailey: The $700,000 total is split between JJ&F. JJ&F would, we assume, double their 43 current tax payments to the City up to $200,000 a year. The remaining retail tenants would 44 generate the other $500,000 a year based on their projections of sales. 45 46 Commissioner Rosati: So the number is a total sales tax. 1 2 Mr. Smailey: I am sorry, total sales tax, yes. 3 4 Commissioner Rosati: So basically the City would be receiving the standard proportion, which 5 is? 6 7 Mr. Williams: It is about one cent of the eight or nine now. 8 9 Commissioner Rosati: Twelve percent of 100 percent of the taxes, something like that. 10 11 Mr. Williams: Something like that, yes. I should point out that there also would be I am sure a 12 property tax increase. Again, we get like nine percent of property taxes that are generated but 13 there should be some fairly significant property tax increase on this property being redeveloped 14 at this level of development given that the existing buildings are very old and have been kept at 15 low property tax levels. 16 17 Commissioner Rosati: So there would be incremental property tax as well. 18 19 Mr. Williams: Yes, but we haven't gotten any numbers on either of those. 20 21 Commissioner Rosati: Are there business taxes from the offices that would be using that as 22 well? 23 24 Mr. Williams: Oh yes. There are not right now, there are not business taxes but the City as you 25 probably know is evaluating the business license tax that may be in effect at the point these come 26 online and may generate some of that as well. 27 28 Commissioner Rosati: Okay. 29 30 Chair Garber: Commissioner Holman. 31 32 Commissioner Holman: Okay, understanding that this doesn't include everything. It doesn't 33 include construction cost. It also doesn't include depreciations. This might be more of a 34 comment but I think it is going to raise a question so I am going to throw it out there. I am being 35 conservative here and I am using five dollars a square foot. Three was really conservative but I 36 didn't know it was that conservative. If there are 39,980 square feet of office here, let's forget 37 the other retail space we are just talking office here. At five dollars a square foot that generates 38 $199,900 a month in rental income. If you look at how much over even a CN CUP would allow 39 in office, which is the 27,411 square feet at five dollars a square foot that is $137,055 a month 40 over the CUP office allowance. 41 42 If you look at, and we have to suppose here, a 30 percent subsidy for the 8,000 square foot 43 grocery store and I am going to use the 8,000 square feet because the outside space is beneficial 44 but it is not the same as having indoor space for a market. It doesn't have the full utility that an 45 indoor space does. So if you use 8,000 square feet at five dollars a square foot we all know 1 groceries really can't support that usually, if you look at a 30 percent subsidy it is a $12,000 a 2 month subsidy, which pales quite a lot to the $137,000 a month or the $199,000 a month. 3 4 I understand that that doesn't include of course the construction costs. I understand that doesn't 5 include also depreciation. So I don't know if Staff or the applicant want to conlment on that but 6 we are sUPPQsed be evaluating public benefit and I am seeing quite a large divergence here in 7 dollars coming in. So if we are weighing how nluch of a public benefit -have I totally 8 confounded everyone? 9 10 Mr. Williams: I think we would suggest that is an applicant question to respond to how that 11 works. I would point out that it is a little bit apples and oranges in terms of -well, what it does 12 is assume that the market rent if you didn't have the subsidy for the grocery store and the office 13 space at the CN with a CUP level is a viable project. I don't know if it is or not. It gives you 14 numbers here and based on then you take out construction cost and operating cost and all that. 15 So we don't have that level of information to kind of analyze that but the applicant may. 16 17 Commissioner Holman: It is one of the difficulties because Palo Alto doesn't do pro formas on 18 projects. It is a difficulty and a challenge that we face because we don't, which I wish we would 19 change. Does the City Attorney have something to add? Applicants want to comment at all? 20 21 Mr. Smailey: There are so many different components that apply here. The cost to build the 22 project is in excess of $50 million. The debt carry on that is an absolute shot in the dark today. 23 Our requirement to provide additional equity is a bigger shot in the dark. The comparison that I 24 think you want to consider is not against office rents but against retail rents that are lower than 25 office. The information that we received by polling two consultants and three brokerage houses 26 indicate that retail rents are probably in the two dollar and twenty-five cent to fifty cent to 27 seventy-five cent range per square foot in today's marketplace at the low end. Office rents are 28 someplace in the six dollar to six dollar and fifty cent range at the high end. Based on that we 29 gave you a comparison of three to four to one depending on a time and market and time of 30 product. So those factors will come into playas you look at an understanding, if you will, of the 31 financial aspects of the project. 32 33 In addition to those construction costs there is an equity carry and a carry of the funds that have 34 already been expended over the last five years to get us to this point. So the responsibilities of a 35 project once completed are frankly enormous at this stage. 36 37 Commissioner Holman: That is why I said I wasn't including the costs of construction. So 38 thank you for that. I really want to ask some pro forma questions but. 39 40 If the Commission were to, I guess since it is a PC we could condition it any way we wanted, so 41 that we could condition it such that whatever size we end up with, whatever project we end up 42 with we could condition it such that CN office uses were the only office uses that were allowed? 43 Okay. 44 45 Mr. Williams: Yes. 46 1 Commissioner Holman: This isn't the most important thing but I was curious about in the Staff 2 Report the Comprehensive Plan policies that were applicable to this. There were a good number 3 of them. This is pretty extensive, it is a little bit more than two and a half pages of 4 Comprehensive Plan polices that would apply to this project. Now they are not saying that the 5 project at this point complies with all of those. You are saying that these are all of the ones that 6 might apply to the project. Do I understand that correctly? 7 8 Mr. Reich: Yes, those are policies that would typically apply to this project based on the scope 9 of what the project is. 10 11 Commissioner Holman: But not ones that you are saying that at this point the project does 12. conform with, because it is unclear how it was submitted in the packet? 13 14 Mr. Reich: I apologize for that. Because we don't know that we have a project yet because the 15 PC has not yet been initiated, normally what we would do is go through each of those policies 16 and explain how the project is in compliance with that. We will certainly do that when the 17 project comes back if it comes back, but that level of detail has not yet been provided for the 18 Commission. 19 20 Commissioner Holman: I carped you a little bit because it wasn't clear but I do want to thank 21 you very much for identifying the other attachments and their authorship. So thank you for that 22 to be absolutely fair. 23 24 The applicant did some of this but could Staff indicate some of the other changes you have seen 25 take place in this project since our last review? 26 27 Mr. Reich: There really have not been a significant nurnber of changes since the last review. 28 There is a little bit more detail provided and information but the parameters of the project are 29 very similar. There were some significant changes from the first time that you saw it to the 30 second time, but there were not a lot of changes from the last time that you saw it. 31 32 Commissioner Holman: That was clarifying my understanding too, so thank you for that. Is 33 there any indication that you have that the property owner would bring forward a subdivision 34 map? 35 36 Mr. Reich: There is every indication that they would not be subdividing the property but they do 37 need a map in order to combine the lots. So there is no intention to condominiumize or do 38 separate and that would not come to the Commission actually. 39 40 Commissioner Holman: What I am interested in is, well we could require the retail to all remain 41 on one parcel, so I that is where I am going with that. 42 43 Mr. Reich: Well, the whole site is going to be built on podium parking so it is al1 one building so 44 it will become on parcel. 45 1 Commissioner Holman: But could we condition it such that they couldn't condominiumize the 2 second retail space if it remained a second retail space? 3 4 Mr. Reich: And sell off those spaces individually? 5 6 Commissioner Holman: Yes so that they are under different control. 7 g Mr'. Williams: I think you probably could condition that as part ,of the PC because you would not 9 see the subdivision given that this is not over two acres in size. The Commission wouldn't see 10 the subdivision unless the residences were to be sold and there were to be a subdivision for that 11 purpose. 12 13 Commissioner Holman: How would Staff like us to proceed in terms of determining if there is 14 enough public benefit here? Do you have any guidance to offer in that regard? 15 16 Mr. Williams: No nlore so than usual. I think it is almost like a pluses and minuses list. I think 17 there are certainly some thing to commend the project in terms of public benefits, the guaranteed 18 market, the BMR units in particular, but how that weighs against the extensive amount of office 19 space. I commend you for trying to fiscally or financially try to make that and it might be 20 something that you ask us as this works its way through the process and then comes back to you 21 that we try to develop a better financial equation for that even though I am sure the developer is 22 not going to open up his books and show us all the details of how they get there. We probably 23 can do some basic analysis along the lines of where you were headed to try to give a better sense 24 of that as we get more into it. 25 26 Commissioner Holman: Chair Garber, I have a couple of other questions. I think you wanted us 27 to finish questions. 28 29 Chair Garber: Yes, I am not seeing any other lights so please. 30 31 Commissioner Holman: Could Staff comment on should we pass this along to ARB we don't 32 have any indication from Caltrain as to whether they are going to allow an entrance there. So 33 would we not be moving forward without any indication as to whether we have viable project 34 here or not? 35 36 Mr. Reich: We actually have to move forward. Caltrans will not weigh in on that until they 37 have an approved environmental document in front of them to review. So the project actually 38 has to be completed in terms of its review process in order to get Caltrans to weigh in the 39 granting of that curb cut. 40 41 Commissioner Holman: Thank you. There was a letter from Susan Rosenberg talking about 42 replacing the nledian trees adjacent to 2180 El Camino Real. Would that be in close enough 43 proxinlity to this project that we could require that as a condition of approval? 44 45 Mr. Reich: Are you referring to the median trees directly out in front of the project? 46 1 Commissioner Holman: Adjacent to 2180, so yes. 2 3 Mr. Reich: I think that there would be a nexus to condition that. 4 5 Commissioner Holman: A question for the applicant. Last time this was here and then this 6 attachment to the Staff Report talks about that a grocer would have opportunity to take over more 7 of the retail space. But as indicated last time it really isn't feasible because it doesn't seem to me 8 feasible because there are real impediments to being able to expand in that space because of the 9 separations. 10 11 Mr. Carrasco: Commissioner Holman, you have an example of a driveway going through a retail 12 zone on Ramona Street right across from City Hall at the project where you have public parking 13 in the basement. That retail doesn't seem to be disrupted. We plan on a similar kind of 14 arrangement in this regard. So we think it will work. 15 16 Commissioner Holman: The Ramona situation that you refer to between University and 17 Hamilton, I am presuming you are speaking? 18 19 Mr. Carrasco: Yes. 20 21 Commissioner Holman: That doesn't have the at grade impediments that within the project 22 sphere that that project does as I read the plan. 23 24 Mr. Carrasco: In our design, which is better I think than Ramona, the Ramona driveway comes 25 right up to the sidewalk. Whereas ours has two car lengths of flat space before you get to the 26 sidewalk so the continuity of retail should be better in our case than it is at Ramona because you 27 can watch and see a pedestrian when a car is horizontal than at an angle. 28 29 Chair Garber: A follow up to that or perhaps something you might consider in your question. 30 The impact of the ramp on Ramona is less relative to the streetscape because it is one small 31 opening in a larger far;ade. Here it is a gap between buildings. Does that change the way that 32 you might want to phrase your question? So perhaps the question is here there isn't a visual 33 continuity between the two building masses that would tend to keep a pedestrian from 34 understanding that those two buildings are actually occupied by the same use and/or the same 35 owner with the same identity. 36 37 Mr. Carrasco: Maybe two different but compatible uses on either side of that driveway. In one 38 case, in this case the grocery store is setback 29 feet from the 12 foot sidewalk so you have these 39 active sidewalk type uses that we spoke about that merge the continuity from one end to the 40 other side. It will probably appear in our next version of our landscape plan where it shows the 41 continuity of those outdoor public uses and how that driveway gets narrowed by those uses to 42 show continuity. 43 44 Chair Garber: Commissioner Holman. 45 1 Con1missioner Holman: I thought I had one more but I am not exactly finding it. I do have 2 comments and concerns. 3 4 Mr. Garcia: Excuse me can I put my two cents? One of the issues is of course the size. I have 5 been to areas, in San Francisco there are some areas like this where the actual store is here and 6 let's say the meat market is the next building over or the next building over, because of how busy 7 it is or whatever. So if I need to expand maybe into a pharmacy or let's say a coffee shop or 8 exparidthe meat department or deli department I· can do it on the other side of the driveway and 9 it still can be utilized with the front area, patio area, or produce area. Do you understand what I lOam saying? 11 12 Commissioner Holman: I do. 13 14 Chair Garber: This was a topic that was brought up in one of our earlier meetings. I think what 15 the tension here is, not to put words in Commissioner Holman's mouth, but in a circumstance 16 where you have let's take the architect's example on Ramona. You can create a project that has 17 a continual image, a continual impact along an entire streetscape and the opportunity to create a 18 continuity of identity for a particular occupant on both sides of that ramp is much greater. Your 19 observation, Mr. Garcia's observation, is that given that you going to have two separate masses, 20 you are going to have these two separate identities. Your strategy for expanding your business 21 would be to create a different type of business that is still owned by you, potentially shares some 22 sort of identity but because it is different, it is not a grocery store, it is a meat market, it is a 23 pharmacy, it is a coffee shop it would have its own separate identity and would support a two 24 building scheme. That is what I am hearing. I am seeing nods of heads over there. 25 Commissioner Holman. 26 27 Commissioner Holman: Just two other things really quickly. To follow onto that with more of a 28 comment, you hear people mention a lot in the retail districts that if there is just a blank 29 storefront that is enough to get people to stop going to the next -it is applicable to this and a 30 double car parking garage entry is even more of an.impact, but just having a vacant storefront is 31 enough to get people to stop going from one store and skip that open space and then go to the 32 next store. So that is the concern. 33 34 Also I brought my Staff Report from when we were looking at Neighborhood Center Zoning in a 35 Study Session. Just for whatever it is worth there is some number offioor area square footages 36 for some of the markets that Commissioners might want to consider. Segona's at Stanford is 37 17,000 and I am rounding these numbers to whatever the closest thousand is, Andronico's at 38 Stanford is 25,000, Whole Foods is 21,000, Mollie Stone's is 23,000, Country Sun we don't have 39 a number, Safeway in Midtown is 19,000, Piazza's is 18,000, Trader Joe's that will be going into 40 Town & Country is 12,000, Alma Plaza you heard is going to 15,000, the Albertson's that was 41 there was 17,000, and the Co-op that was on Middlefield was 18,500. So if that helps to provide 42 any context. 43 44 Chair Garber: Thank you. Commissioner Tuma has a question and Commissioner Rosati did 45 you have more questions as well? Commissioner Tuma and Fineberg have questions and then 46 we will move ourselves towards comments. 1 2 Vice-Chair Tuma: This is a question for Staff to make sure that I understand what we are being 3 asked to do and what we are not being asked to do tonight. I just want to make sure that I 4 understand this. Is it correct that we are not being asked to recommend that the zoning or the 5 Comprehensive Plan designation be changed but we are merely being asked to initiate the 6 change? 7 8 Mr. Williams: That is correct. 9 10 Vice-Chair Tuma: Okay. So likewise we are obviously not recommending approval or not 11 approving the PC? 12 13 Mr. Williams: That is right. 14 15 Vice-Chair Tuma: We are also not recommending whether the public benefit is adequate or 16 whether the parking is adequate or any of these other components as to whether they are 17 adequate or not for purposes of approval tonight. 18 19 Mr. Williams: No you are not although they are certainly considerations in whether you move it 20 forward. Are they in the right direction? 21 22 Vice-Chair Tuma: Right, so it would be appropriate to comment on the adequacy of those things 23 going forward but that is not the determination as to whether we initiate or not. 24 25 Mr. Williams: That is right. 26 27 Vice-Chair Tuma: So what I am left with is that if we recommend initiation tonight of both the 28 zone change and the Comprehensive Plan land designation change that we are essentially 29 sending a signal that this general mix of uses seems to be in the ballpark. Is that sort of a fair 30 characterization of where we are going tonight? 31 32 Mr. Williams: I think that is a good characterization that generally what you are moving forward 33 is this sort of level of mix and intensities but recognizing that the site plan could change, it could 34 be up or down on different types of uses before you see it again, but there is enough here to get it 35 started. Let the ARB take a look at it and get it back to you for your recomnlendation. 36 37 Vice-Chair Tuma: Okay. But all the issues of adequacy of public benefit, adequacy of parking, 38 all those other issues would certainly come back prior to any definition of what the PC would 39 look like let alone approval of that PC. 40 41 Mr. Williams: That is right. 42 43 Vice-Chair Tuma: Okay, thanks. 44 45 Chair Garber: Comnlissioner Fineberg. 46 1 Commissioner Fineberg: This is a question for the applicant and you might consider this the cart 2 before the project. ] am thinking about carts and] am thinking specifically about the Whole 3 Foods in Los Altos on EI Camino and how they handle carts and basements, the parking spaces 4 that were given up, and the mechanisms for getting carts to the basement, getting food to the 5 basement, getting carts back up. As this progresses could you please have Some consideration of 6 carts? I don't know if you have any comments tonight or that will come. 7 8 Mr. Carrasco: The general configuration and the accessJo the elevator very much mimics the 9 Whole Foods in Los Altos in your plans. We will look at that even in more detail when we bring 10 it back to you. 11 12· Commissioner Fineberg: Great. I would also agree with Commissioner Tuma's characterization 13 that we are not making findings tonight regarding adequacy of parking, consistency with 14 Comprehensive Plan, but I do think that our recommendations tonight send a message about our 15 preliminary determination on those items. At several of our meetings] have seen the argument 16 put forward that we ought to initiate an action so that we can have continued discussion. Then at 17 subsequent meetings that logic is sort of used as a well, we brought it forward because we liked 18 it therefore we should progress. I guess I just don't like that line of logic and I think that the 19 consideration tonight should focus on whether the preliminary determinations seem to be in the 20 ballpark and that we not go down a road of if we initiate we can decide later. That just gets into 21 slippery logic. 22 23 Chair Garber: Thank you. ] see no more lights for questions. Commissioner Lippert you 24 wanted to start off our comments. 25 26 Commissioner Lippert: First of all I want to thank the applicant for coming back, and I really 27 appreciate hearing from the neighbors. I think it is real important that the College Terrace 28 neighborhood, especially the Association speak up in support or against the proposal here. 29 30 I am having great difficulty with this project. Part of it is that there is only one benefit that is 31 crucial here and that is the JJ&F Market or having a viable market. I live in Downtown North 32 and I know what it is like to not have a nlarket. We used to have Norm Starlight Market, which 33 was a relative small, almost convenience store size, but 1 think it was maybe about 8,000 square 34 feet. At one point it was bought out and a bank was built there. That bank got bought out by 35 Comerica and Comerica had several banks in the Downtown and they consolidate, and gee you 36 can't eat money. It doesn't work. You want to have viable markets that people can go to and do 37 their neighborhood shopping. I happen to be lucky. I happen to live not very far from another 38 market, Willow Market, which is in walking distance. If I want to I can go to Whole Foods, 39 which is also within walking distance. 40 41 What troubles me here are a couple of things. Number one, economic viability means different 42 things at different times. So while I appreciate Commissioner Holman's analysis and trying to 43 assign dollars per square foot we have seen market trends where office space was the driving 44 factor for development. We have seen times where housing is the driving force for economic 45 development. What is important here is the location of a neighborhood center and the viability 46 of a market in that area. I am not blind to that but I don't see it in this proposal. The BMR units 1 while they are nice and it is generous to have them doesn't make or break the project, it is really 2 the market. The little gazebo on the roof doesn't make or break this project, it is the market. 3 The LEED elements or the sustainability elements or the solar panels on the roof don't make or 4 break the project, in fact, this project is going to have to comply with the green building code no 5 matter what is built there. So it is going to need to comply energy wise and sustainability wise. 6 7 What I do see are a couple of things here. I think that this is particularly important. Number 8 one, the State of California has the Village Development Infrastructure Financing that just went 9 actually went through. It is AB 30338. It just passed through committee. What it does is adds 10 to cities' ability to identify transit villages. The direction the state is actually going in with this is 11 that from a quarter of a mile they are now beginning to expand this out to what they are looking 12 at is half a mile. This market happens to be in half a nlile walking distance of the California 13 Avenue transit center. So it becomes more important in terms of it being transit oriented 14 development. The questions that Commissioner Keller was asking in the beginning with regard 15 to PTOD were actually beginning to get to the meat of what is important in terms of this 16 development. If PTOD could be applied to this that is what is important. 17 18 Now, I did a little bit of calculation here and I think that the amount of office space that is being 19 asked for here is almost obscene. This really needs to be a true mixed use development. Where 20 I see a PC fitting in again is if you were to take the standards for the CN district which would 21 allow for basically 58,000 square feet plus or minus of development. Am I correct? 22 23 Mr. Reich: It is 50,277. 24 25 Commissioner Lippert: Okay. It is 50,000 and change. The point is that if you were to take 26 those 50,000 square feet that would be allowed to be 50 percent residential, 50 percent 27 commercial, and out of that commercial 50 percent of it could be office and 50 percent could be 28 retail. Then you add back into it to make it a PC the market. You get to about 58,000 square 29 feet. So what it does is goes over and above the allowable FAR but it begins to bring things back 30 into perspective in terms of something that is a transit oriented mixed use development. That is 31 really what this needs to be when it is a PC. If you want to add BMR units I think that is fine. It 32 is not sonlething that is required well there are some BMR units that would be required. But to 33 have the mix of residential, office, retail, then you begin to get a mixed use, and then because of 34 ,its transit proximity and the overlapping of different kinds of uses during the day you can begin 35 to look at parking reductions. 36 37 So the way it is right now I would not initiate the rezoning on it. I would not support it as a PC. 38 I think'from a square footage point of view it comes close to what it should be in terms of the 39 amount of square footage but as far as the use and the viability of it in terms of a mixed use 40 development it doesn't even come close. I think that we are just selling the project short. I think 41 that it can be made to work with all of these uses combined. 42 43 Chair Garber: Thank you. Commissioner Keller, you had some comments. 44 45 Commissioner Keller: Thank you. I am sympathetic with a number of the issues that 46 Commissioner Lippert mentioned. I have a slightly different perspective on some of them. I 1 note that under a CN mixed use zoning it says 17 at 15 units per acre. We are getting 14 BMR 2 units. The 17 units with 15 units per acre essentially would be much larger units, which would 3 probably be more family oriented for a site that doesn't really lend itself as much to family 4 oriented. So I don't mind as much having smaller BMR units that gets the 14 units and helps for 5 a number of things towards our Housing Elen1ent. It essentially gets units that help us with the 6 BMR, it gets us the number of units that you could have there anyway in terms of density with 7 lesser impact. So I don't have a problem with that per se. 8 9 With respect to something that Commissioner Holman said I would not be surprised if there were 10 some sort of condo type subdivision in order for the BMR units to not have property tax 11 associated with them as we saw with some of the other projects that came through here. 12 Therefore, conditioning in terms of the nature of the condominiumization, if that is a word, of the 13 retail spaces and the office spaces and such, or the nature of the ownership I think that some 14 restrictions on that do make some sense. 15 16 It is my impression that the owner of the land doesn't want to sell off any parts of it in terms of 17 condos or in terms of any of these units. So some restriction that basically requires that any 18 condominiumization of this property that remain under single ownership would seem be a 19 restriction that I think the applicant would probably be happy with. 20 21 I think that the deed restriction is a very useful addition to this concept. I think it would be 22 helpful to understand that a little bit better so we see the implications of that and how that would 23 be enforced. 24 25 I would be sympathetic with the idea of being able to figure out how JJ&F could expand in some 26 way. I think it is an interesting idea in terms of being able to expand across a driveway. That is 27 kind of intriguing. That trades one kind of retail space for another. I am not sure whether 28 another substitute under the assumption, which is I hope not the case that JJ&F doesn't remain 29 there for a long period of time, I hope it stays there for a long period of time but in the case it 30 doesn't stay there for a long period of time that it would be nice to be able to figure out how to 31 have a retail space that could be more contiguous for a grocery store, larger in terms of what 32 some other grocer might want to have. 33 34 I do think that the idea of the EI Camino Real driveway seems to be useful. What is also 35 interesting here is that the entrance ramp on the EI Camino, the way to get to that driveway is by 36 way of a bus stop, which is actually quite nice because it means that when you are entering and 37 exiting the driveway you can enter it by essentially making your way into the bus stop if there is 38 no bus there. You can make your way out of the driveway having sight lines to be able to make 39 the right turn without being blocked by cars that are parked there so you have to nose your way 40 out and get your front corner of your car dented. So I think that is actually a clever idea that I 41 like. 42 43 There was a series of questions from Chair Garber about the EI Camino Design Guidelines and 44 the idea that you are supposed to do build to lines. I actually went to a talk a year or two ago 45 about EI Camino Design Guidelines. There was this wonderful grand boulevard vision of EI 46 Camino. The wonderful grand vision boulevard vision is that you had these nice buildings that 1 are all lined up along a grand boulevard, and you had the street in the middle, and somehow they 2 are all lined up and look nice. The interesting thing is the wonderful pictures that I saw of the 3 grand boulevard did not have ten or 12 foot sidewalks with the buildings up against the ten or 12 4 foot sidewalks. The grand boulevard vision pictures that I saw basically had much more than 12 5 foot, you had maybe 12 foot sidewalks followed by a lot of greenery, and then behind that you 6 had these buildings. So in some sense what we have for the El Camino Design Gu~delines is 7 actually something that I think is not desirable. I would like to see a little bit more space to 8 paraphrase or quote what Commissioner Holman has said in the past, you don't feel being 9 pushed off away from the buildings and onto the street because of this framework. In some 10 sense opening this up and providing more greenery is my idea of what I saw as a grand 11 boulevard. 12 13 An example of this is I grew up on Brooklyn, New York and there is an ocean parkway is a 14 wonderful example of a grand boulevard there that is three lanes each way, street in the middle, 15 there is then this little greenery on either side, followed by service roads, followed by walkways, 16 sort of pedestrian paths in terms of sidewalks, followed by greenery, followed by buildings. To 17 me that is a grand boulevard. Our El Camino Design Guidelines don't create a grand boulevard 18 for El Camino. So I think the setbacks we have here go more towards what I think a grand 19 boulevard is than the design guidelines indicated. 20 21 I think that we should have some sort of requirement that there be no medical office space here 22 because of the increase of parking and the increase of trip generation. I would like to see a 23 strong transportation demand program that applies to the BMR units, and the office space, and 24 the grocery employees. My favorite throwing in there of Echo Passes is much more affordable 25 when you aggregate it over all of the employees and tenants of this space. There are nice 26 economies of scale with respect to buying Echo Passes. 27 28 I am concerned, the issue to which there is a parking shortfall, I notice that the diagrams here do 29 take into account, do take some credit for or at least observant, I am not sure the extent to which 30 they really take credit, but they do observe the amount of on street parking around this. I do 31 think that on street parking in this area is at a premium so I don't really want to count that. So to 32 the extent that there is insufficient parking that should diminish the amount office space that is 33 used. I do think that the amount-of office space used is somewhat more than I would be -let me 34 put it this way, I would be happier with less office space than we actually have. I am very 35 sympathetic with the idea of having as a condition of approval the median trees on El Camino 36 Real. I am also very sympathetic with the comments made by or the line of questioning made by 37 Comnlissioner Fineberg with respect to having the BMR units be sort of all one story so you 38 have second story units and first story units, and thereby you don't have the internal staircases 39 for each of the 14 units taking up a lot of the space in there. I also think that is it is important to 40 figure out a better way so that the tenants of the BMR units can more easily access the parking 41 and if that is through some other staircase or elevator located on the comer of I guess Staunton 42 and Oxford near the BMR units, something that doesn't require that they go through something 43 else. That might make sense. If you were to do that one thing that might be intriguing is to 44 provide that elevator so that it not only goes to the garage but also goes to the first story and the 45 second story of the BMR units so somebody could actually use the elevator to get to the second 46 story of the BMR units. I don't think that would add much to the elevator cost but it would 1 allow this sort of nice combination of this space in a way that would allow better you wouldn't 2 have as much of a walkup. Let me say that I spend a lot of my formative years on a boulevard in 3 Flatbush A venue, in Brooklyn, New York. I was on top of a retail store that was on the ground 4 floor, and then were two floors of apartments above it. We had one apartment that basically 5 filled an entire piece of that building. It did have some interesting advantages and disadvantages 6 in tenns of living in that environment and I do have some sympathies for the idea of having 7 housing over retail or housing over office. That might be another consideration to think about in 8 tenns of allowing JJ&F to expand further along Oxford, if there is a possibility of doing that and 9 then allowing some of the BMR units above that. If that necessitates reducing the amount of 10 BMR units in order to allow the additional retail space I think that would be a very desirable 11 tradeoff. Thank you. 12 13 Chair Garber: Commissioner Tuma followed by Commissioner Rosati. 14 15 Vice-Chair Tuma: So I like a couple of the previous Commissioners, find myself, I think there is 16 a lot to like about this project and think there are some real concerns that I still have. Lot to like 17 things are like the BMR units, I do like the entrance being on El Camino, retention of a market 18 here is good and I will talk about that a little bit more in a minute, and a lot of the other items 19 that Commissioner Keller so eloquently referred to that are benefits. I do think they are 20 positives. 21 22 I continue to believe that there is too little parking, and whether there are TDM measures that 23 will help, but parking reductions I am going to be very skeptical about parking reductions and 24 counting on street parking in my mind is a non-started. We don't want to dump these cars into 25 the neighborhood. 26 27 Where I am really struggling has to do with what I think was framed in the very beginning, the 28 core issue, which is at one point several people have and I wrote this down, several people have 29 talked about guaranteeing a market here. In my view there is absolutely no way to guarantee a 30 market here. We can guarantee that the space can only be used for a market but that doesn't 31 guarantee that there is going to be a market here. Quite frankly, I feel like the applicant is 32 playing a little bit hide the ball here in terms of how this deal is going to work. Now I know that 33 we are not generally to get into the specifics of the financial arrangements between the parties, 34 however the adequacy of the public henefit, the retention of a market at a below market rate. 35 The retention of the market which has been acknowledged needs to be at a below nlarket rate for 36 us not to know what that arrangement is going to be makes it very difficult in my view to pass on 37 the adequacy. Is it adequate? We are never going to get to a guarantee but how close are we 38 going to get to a guarantee? How close is it going to be to being viable? This is a core, critical, 39 turning point issue for me. Really, without the market there in my view no way are we anywhere 40 close to this amount of office space. So how can we judge whether there is going to be a market 41 there long-term without knowing more about what the arrangements are? It is very, very 42 difficult. I think to talk about what they talk about in the legal world you have opened the door 43 so let's find out about what it is. That is really what this is turning on for me. Ifwe are not 44 closer to sure than we are now that there is going to be a viable market there long-term this 45 project doesn't go forward as far as I am concerned. It just doesn't. There is just way too much 46 office space there. Even with something closer to a guarantee about a viable market it is still a 1 struggle but it is less of a struggle. So as I sit here right now I don't know whether I would 2 support initiating, and I still need to listen to some of the other Commissioners, but without 3 repeating anything that Commissioner Lippert it is all about the market. I don't feel 100 percent 4 or even significantly comfortable that this is necessarily going to happen. So that is kind of 5 where I am right now. 6 7 Chair Garber: Commissioner Rosati. 8 9 Commissioner Rosati: Let me start by stating that in general I view this project positively. 10 echo many of the comments that were made by Commissioner Tuma a minute ago. I also like 11 the aspects such as the BMR units. The fact that there is a significant amount of office space is 12 not a particular concern of mine. I think that the proportions of the development are reasonable 13 for the space. There are many visual aspects that will contribute to the development of a better 14 EI Camino as I can refer to some of the comments that were made by others who have written 15 about this project. I also would say that I am not as keen to understand the private dealings 16 between the parties because I think that we can through our efforts make sure that whatever gets 17 developed is viable regardless of what the private arrangement is between the parties. 18 19 I think that one of the comments that we heard earlier that resonated with me was that we need to 20 be absolutely sure that the development goes forward in a way that is viable with a grocery store 21 regardless of who that grocery store is. I am very concerned about that. I think that the one area 22 of the project that is falling short is the amount of space dedicated to the grocery store. I 23 absolutely do not believe that the 8,000 square feet is sufficient. It may be sufficient for JJ&F 24 but if JJ&F one day decide not to take on that space it will make it very, very hard for the 25 community to have the honest-to-goodness grocery store that they want to have in College 26 Terrace. It will be extremely hard. We have data that was shared by Commissioner Holman 27 about all the grocery stores in the neighborhoods and none of them is that small. Maybe JJ&F 28 has managed to do that over the last 60 years but if they are not around somebody else needs to 29 come in and we need to have a compelling space for them. 30 31 So my single comment is that we must include a much greater allocation, at least 50 percent 32 maybe more I will let the City Planning Department define what that is and make a 33 recommendation, to ensure that there is viable space for full-fledged honest-to-goodness grocery 34 store for that community. In that case, I think personally that the other elements of the project 35 are reasonable and proportioned, and frankly, generally well accepted by the community it 36 appears. 37 38 Chair Garber: Commissioner Holman. 39 40 Commissioner Holman: I agree with many of the comments that have been made, many by 41 Commissioner Lippert except I am not fully in align about the comments having to do with 42 PTOD, but many of the other comments I am in alignment with. I also share many of 43 Commissioner Tuma's comments and a number of Commissioner Keller's. 44 45 This project is 25 percent over what the CN zoning allows. That amount of massing just does 46 not provide compatibility with the neighborhood. This site especially as a full block is going to 1 have a significant impact on the College Terrace neighborhood. It is going to have either a 2 positive impact or a negative impact. I think currently it is not such a positive impact. 3 4 I am disappointed that from our last meeting to this that the applicant has not better responded to 5 the issues and concerns that we raised. The grocery store would be a real wonderful benefit and 6 I as well as many people in the public that you have heard from absolutely support JJ&F, but 7 there is just no assurance. It is not something that I can do in good conscience or feel that I am 8 being responsible to barter away the zoning for a hopeful outcome. 9 10 The grocery store also as just stated before me is not of a significant enough size to really 11 provide a viable grocery store for a broader selection should it be necessary of grocers. I sort of 12 agree with Commissioner Tuma's comments about the private agreement but also feel a little bit 13 like if we can put assurances in maybe even better assurances than at Alma Plaza we might be 14 able to deliver a grocery store but I am a little put off by the presentation that it is a private 15 agreement, and it is between us. A private agreement does not constitute a public benefit. So 16 that approach really doesn't win favor I think, and that is pretty blunt but it is how I view this. 17 18 I would very much be interested in some pro forma numbers from the City Staff. I think that 19 would be very, very helpful with us. It is tempting for everyone and it is also probably a true 20 perspective of people and applicants and proponents and opponents of projects to use labels. 21 This project somewhere or other in the project description was called a village. From my 22 perspective this really isn't a village project. It is an office complex that has some element of 23 housing and retail. Ifwe really want to have a village here we would have a lot more retail that 24 responded to the retail across the street on College and provided neighborhood services that 25 would benefit the neighborhood, and some mix of that with perhaps some BMRs and some 26 office. This level of office not only is it going to create -and we could do other things too. I am 27 going to interrupt myself here because we could do other things like restrict the size of any single 28 office, and that is well and good but it is also very hard to monitor. So that is why when you get 29 office space of this scale it is very troubling. It could have immense traffic implications and 30 parking implications. This neighborhood is already overrun with excessive parking demands not 31 just created within the neighborhood but without. I agree with Commissioner Tuma's comments 32 absolutely having to do with parking with this project. 33 34 I feel like to initiate this project when it is so far away from something that would be supportable 35 from my perspective would be I believe irresponsible because it sends the wrong message. 36 37 Chair Garber: Commissioner Fineberg. 38 39 Commissioner Fineberg: There are a number of things about this project that I find very 40 exciting, and that I like. I like the mixed use. I like that it has the BMR units. I like the 41 retention of a grocery store, of specifically JJ&F. I like the idea that people can walk from 42 Caltrain, work in the office park, shop locally, and patronize the retail stores. I wish it had come 43 back with less office space. I am stuck on that. I believe the Commission gave pretty clear 44 indicators that at our last hearing that the intensity of use and the anlount of office space was just 45 too much. I can't get past that. 46 1 There are a number of other things I believe could be tweaked as the design moves forward, 2 things like increasing the square footage of the grocery dedicated space, possibly reconfiguring 3 the BMRs to be one story units, that I think would give some additional public benefit because 4 then those BMRs could be handicap spaces. There is also a lack of private open space for the 5 BMR units. Frankly, there is a lack of what I would consider comfortable outdoor space or just 6 unpaved space on the entire parcel. I understand the green roof. I understand there is a gazebo, 7 but I don't necessarily know that people want to be in sunny, windy, noisy spaces. 8 9 The facility is under-parked. If the office space was reduced-thafwould reduce the demand for 10 parking and it could be easily adequately parked. The sole most important public benefit is the 11 retention of the grocery store, and I would say more specifically the retention of JJ&F. If that 12 8,000 square feet turns into a 7-11 it is a bad tradeoff that we get what is it 40,000 square feet of 13 office space for a 7-11 or other quickie mart. It is not a benefit to the public in that scenario. 14 15 So let me go back a minute to some of the other things I think are really good about this but I 16 would not be able to support it in its current incarnation. I would not be able to support the PC 17 zoning change. I think the way it treats EI Camino is wonderful, creating a vital public walkable 18 space, having the setback even if it is not consistent with EI Camino Guidelines, I think creates 19 vitality at the street front. The driveway, I would agree that the flat space makes it safer rather 20 than sort of a gaping mouth into the basement. If there could be some way that the two halves of 21 the project could work together rather than the driveway being an impediment. It comes down to 22 decrease the office space and one could rationalize it in the way Commissioner Lippert said, that 23 it would be consistent with zoning ordinances but right now there is no way I can get there. I 24 can't say it looks like a CN. I can't say it looks like something that would be a PTOD if we 25 imagined it went further. The inconsistencies with the Comprehensive Plan are too broad at this 26 point. Thank you. 27 28 Chair Garber: That leaves me. This is really hard but let me ask just a couple of quick questions 29 before I get to some of my comments. First of all, for. Staff the BMR units renting versus being 30 available for purchase, does that create any issues for the City one way or the other in terms of 31 management or ongoing? 32 33 Mr. Williams: No, it doesn't. We can handle it either way. 34 35 Chair Garber: In a brief response to Commissioner Keller's comments regarding the EI Camino 36 Guidelines. I won't argue one way or the other whether the buildings are closer or further away 37 from the street. I think what is important though about the Guidelines is what they present and 38 what they are trying to accomplish, the intent of them, is that they create continuity along EI 39 Camino, which it lacks. One of the problems of this project is that it presents building masses 40 that are both close and far away so that continuity is not sustained or maintained, and does not 41 give direction to the buildings that would be or could be on the adjacent sites to it. So it is not 42 supporting one interpretation or another if you follow me. Those are just nits. 43 44 One other question regarding Commissioner Fineberg's concern about inertia versus 45 detem1ination. If the Commission were to move forward with the initiation of a PC conditioned 46 in some way what happens if the next time it comes to us, after going through ARB, there is 1 certainly an expectation because of the inertia of the process that the applicant would have that 2 they are sort of on the right road, but if it came back to us and the Commission decided not to 3 support it what happens? Does the process simply start over at that point? 4 5 Mr. Williams: You mean after ARB reviews it and it comes back to you? 6 7 Chair Garber: Right. 8 9 Mr. Williams: It goes onto the Council. 10 11 Chair Garber: Oh, at point it does not come back to us? 12 13 Mr. Williams: Once it has gone to the ARB and it comes to you, you make a recommendation to 14 the City Council. So Council ultimately decides yes or no. 15 16 Chair Garber: Okay. So I think what I am hearing from the sense of the Commissioners here is 17 that they would be far more convinced to support the project if there was more or a larger 18 grocery store, and they would be more compelled to accept more office space. The other sense 19 that I an1 getting very clearly is that if there is a finer understanding of the economics behind the 20 grocery store that that may be the way to convince the Commission that there is a reasonable 21 argument therefore to accept a higher or greater amount of office space. 22 23 In my mind, I don't believe that is true. I believe that that is a red herring because fundamentally 24 the project needs to operate on a use basis, on a square footage basis, and support the 25 community. So I think we could get into the economics but I don't think it is going to actually 26 answer the land use questions that we need to struggle with. 27 28 I think one of the conundrums that the applicant has had and is germane to this site, and we have 29 talked about it in our previous meetings, is not surprisingly the parking. I commend them for 30 putting in two levels of parking below grade. That is an expense that is significant and it buries a 31 lot of problems that we would otherwise had. The big problem of course is you have to get out 32 of that hole. You had presented to us, and I forget which iteration this was, a ramp that goes up 33 through the side~ which allows you to create a much larger grocery store space. Am I correct in 34 remembering that? 35 36 Mr. Reich: The ramp used to come off of Staunton. Not off the side but the back. 37 38 Chair Garber: So we had more space along El Camino. 39 40 Mr. Reich: Which was not supported by the community due to traffic. 41 42 Chair Garber: The ramp would present additional traffic into the neighborhood and we said that 43 is the wrong thing. Get the ramp out of there. So the ramp could go to the comers but then it 44 wouldn't meet code or it wouldn't meet traffic safety requirements. So the only other place to 45 put it is in the center. If you want to keep it out of the neighborhood it ends up in the middle of 46 El Camino at which point you end up subdividing the retail space. Short of invoking the fourth 1 dimension there is very little way around that. There are strategies around that that the occupant, 2 not the owner in this case, but the occupant has suggested which doesn't seem to be getting much 3 traction with the Commission. 4 5 So the problem is that we don't, and I say we in the royal we meaning the Commission, the 6 Planning Department because as this is one of the few times that the Planning Department has 7 come before us without a recommendation, and frankly I think the applicant has not figured out 8 this puzzle yet. We don't know what this piece of property is supposed to be doing for the City. 9 10 So I have been trying to think here over the last couple of minutes, what is wrong with it now? 11 Now, the first thought going through your head is, wait a minute, is he proposing that we do 12 nothing? I am not but let's go through the thought exercise here. JJ&F is providing services to 13 the community, which are highly valued at the size that they are now just as they have been. 14 They have been doing it at some pain to themselves. Does the property support the EI Camino 15 Guidelines, i.e., the way that the City would like to see that piece of property that supports the 16 Comprehensive Plan? Not quite. Does the property right now support the ultimate vision of the 17 Comprehensive Plan? Not quite either. We could do things that would improve that, that would 18 get us closer to what the vision of the City is. But the project isn't one thing or another, and 19 unfortunately this is one of those places where I suspect you can't answer everything in one 20 solution and you are going to have to pick one way of dealing with this, and that has to be 21 compelling enough to get us over the hump of all the other problems. 22 23 You tried that once when you first came in here and you had a very large project that covered the 24 site, and there was some significant pushback on that. lam not suggesting you go back to that. 25 Let me pull back here for a minute. Not that I am going to lead you to a solution but] have been 26 struggling to try and find another way of thinking about this property. I do think it is about the 27 property, and where it is, how it operates in that part of the city, and what it is supposed to be 28 doing. This piece of property is unique I think for the following reasons. One, it is at the end of 29 a shopping and retail district known as California Avenue. I keep wanting to bend it so it 30 actually is on California Avenue. It isn't but it is there. It also is in many ways the terminus of 31 this neighborhood. Now there are other neighborhoods that exist on that side of EI Camino but 32 this is the only neighborhood that exists on that side of EI Camino that has a direct relationship to 33 California A venue. So there is in my mind an argument that is being presented to us, which is 34 that despite the intelligence of the Comprehensive Plan there is an opportunity here to both 35 support California Avenue as well as the community that exists behind in a way that doesn't 36 exist other places along EI Camino. The very improvement of this property supports not just the 37 needs of the residential community but also supports how it is, what it does, and what it can do to 38 improve California Avenue. That by the very improvement of that, by the enlargement of the 39 space even slightly will allow it to operate as the anchor, the other side of California Avenue. I 40 think that argument needs to be made much more directly because the only argument that we 41 have really heard in terms of how this piece of property is supposed to operate for the City is to 42 anchor the residential community back behind it. If you can show us how this operates not just 43 for the residential community but also for how it supports the California retail district I am 44 hoping that there is a solution in there that will become more obvious and easier for the 45 Commission, hence the City, to accept. 46 1 So what is wrong with it now? In some ways nothing. What is the opportunity? A variety of 2 things. Certainly for the owner, which is not the occupant, but for the owner there is an 3 opportunity to get a higher use, a better use out of that piece of property. There are certainly 4 opportunities for the current occupant to reoccupy that site and make better use and have a better 5 business or a better space that supports their business. I think it is very important though that the 6 residential community behind there recognize that there is a larger opportunity that supports not 7 only them but the way that this piece of property can support a larger piece of the city, and that is 8 just one part of the puzzle. We have sort of solely focused on what is west as opposed to what 9 this frankly, very unique circumstance, the only other time that that really occurs where you have 10 something on the other side of EI Camino, and I welcome corrections here, is when you get to 11 University Avenue, when you get to Stanford where you have another reason to get across El 12 Camino like that. It doesn't really happen that way at the Stanford Mall. The Stanford Mall is 13 all back there and is sort of divorced from the rest of the city in that way. So in my mind I think 14 seeing that piece of property differently might lead us to a better solution, a more obvious 15 solution, and one that would cause the Commission to say, you know what, it doesn't answer 16 these things, I don't like the way it is doing it, but you know what, it is doing something more 17 and better. It is the one plus one is five or six as opposed to two and a half. I don't know if that 18 makes sense to anybody else. 19 20 Let me see if anyone would like to attempt .... 21 22 Mr. Williams: Chair Garber? 23 24 Chair Garber: Yes. 25 26 Ms. Tronguet: I just want to remind you that the applicant has not had their opportunity yet to 27 make their closing comments and you still have the public hearing open. 28 29 Chair Garber: Thank you. We will hear the applicant and then we will close the public hearing. 30 Would the applicant like to address the Conlmission? 31 32 Mr. SmaiIey: If I may, I think I have three minutes and I would like to split that between myself 33 and the representative from Nelson Nygaard to address some of the parking issues. 34 35 Chair Garber: Please. 36 37 Ms. Jessica Trochoud, Nelson Nygaard: Commissioners, I would just like to start by saying that 38 1 support Commissioners Lippert and Fineberg in that this is a fairly transit oriented 39 development. We are right on EI Camino routes, VT A routes, 22, 522. They are extremely 40 productive from VT A's perspective. We are within easy walking distance off Caltrain. As we 41 know it is within easy biking distance of Stanford University. A lot of people walk and bike to 42 this site that is why we think the parking requirements are too high for this property. 43 44 We will be sharing parking and the shared parking alone will reduce the parking demand below 45 what can be supplied onsite. So just keep that in mind. We also have car sharing being proposed 46 or it will be incorporated into the project. Two car-sharing vehicles will be proposed. The 38 1 bicycle parking spaces will be incorporated but an additional 50 bicycle spaces can be provided 2 if there is a need. In all this is a very transit oriented and mixed use location where most people 3 will walk and bike to, and the parking will not be a big issue here. That is what I would like to 4 say. Thanks. 5 6 Mr. Smailey: To continue on that vein before I read a statement here, the history on the project 7 is we have had commercial tenants whom have occupied the Staunton location. The majority of 8 those tenants have had employees that do not drive to work. The current tenant on that site has ~, 9 over 60 percent of his employees that do not drive to work. 10 11 A few things that I would like to address. The floor sales area for JJ&F in the proposed 12 development is 50 to 60 percent larger than their current location. They have 60 years of 13 experience in running a grocery store. They are convinced and confident that they will be able to 14 use that new configuration to their benefit going forward. I would also like to point out that Sun 15 Country is a much smaller store than the current JJ&F. Lastly, the BMR units, and when we 16 reviewed those unit designs and square footages with the folks from the housing authority they 17 were one, impressed with the size. They considered them large one-bedroom units. Secondly, 18 they were very impressed with the design because they thought it was something unique and 19 would be very desirable in the marketplace. So they appreciate the loft configuration for the 20 designs we are proposing. 21 22 The statement that I had prepared. Our team has worked very hard on the College Terrace 23 Centre proposal for over five years now. We are quite proud of the project that we presented to 24 you this evening. We have made many changes over time not the least of which the original 25 project was proposed I think ten percent larger than our current configuration. We now have a 26 project that we think is beneficial to the neighborhood, to the City, and can be financially viable. 27 This project is balanced and fair. We are proud of how it works, we are proud of how it mixes, 28 and how it fits into the community. You have been provided with I think a substantial amount of 29 feedback from the community. We have over 140 signatures from College Terrace residents 30 who are in favor of the project. We have over 30 signatures from businesses immediately 31 adjacent to the project indicating that this new building will bring them new business and new 32 opportunities for growth. 33 34 I do need to be very clear about one thing. I am not prepared to divulge the financial information 35 I know about JJ&F. We have worked long and hard to ensure them of a financially feasible 36 structure. I can assure you that the way we have designed the project and the components that 37 we have in it are necessary for its feasibility and viability. I do pledge to you that we will be 38 delivering to you a quality product. It is a product I think you will be pleased with and proud of. 39 I think it would be beneficial to the City long-term and I ask you to please approve the PC 40 process to move forward this evening. Thank you very much. 41 42 Chair Garber: Thank you. Clarification, Attorney. When do I close the public hearing and what 43 relationship does that have to closing the item? 44 1 Ms. Tronquet: You would close the public hearing after all of the public comment and the 2 applicant, and if there is an appellant, appellant commentis complete. Then after you take action 3 on the item the item would be closed. 4 5 Chair Garber: So we will now close the public hearing. As much as I would like to find a way 6 to move this forward I suspect I am going to be well let's find out where we go. 7 Commissioners Lippert, Keller, Holman, and then Tuma. 8 9 Commissioner Lippert: I am not going to repeat myself. I am just going to add some additional 10 comments for my colleagues to deliberate on. I have been hard pressed to find an example 11 where a driveway entrance separates retail spaces and has been successful. The one that comes 12 to mind is Plaza Ramona where that entire block is bisected by two elements, the retail of course 13 you have at the comer and then there is a plaza, and there is Fass clothing store, and then there is 14 a driveway entrance that goes down into the basement. Then immediately to that right is Nola. 15 That block is vibrant and works particularly well. So'that doesn't really deter me very much 16 having the driveway aspect bisecting the building like that. In fact Plaza Ramona and the Birge 17 Clark original building along that Ramona block function almost as one complete building and 18 people think it is one building that goes all the way around the block. 19 20 The other comment I wanted to make is again regarding the whole idea of PTOD. I think it was 21 a misnomer for me to us PTOD but where it is lacking in the smart growth and livable 22 communities aspect is it falls short in the three D's and the T's, Density, Diversity, Design, and 23 Transit. It is on the edge of the transit center sphere of influence. The state legislature is going 24 to expand that to half a mile, it isn't there yet. Where it falls short is in the diversity that it is 25 very, very heavy in the office use. What I am afraid is going to happen is that its partner 26 building is really the building that is south of California Avenue on EI Camino Real that houses 27 Bank of America, which is a multistory office building adjacent to the soccer fields. It is about 28 the same distance away, it has office spaces, and it has retail on the ground floor. Actually it is a 29 bank on the ground floor. The point is that is what I am afraid is going to happen with this 30 building is that it is going to really be a major office use and the other uses associated with the 31 building are really just secondary. It is the preservation of the market and that is what is 32 inlportant here but I think that it is going to be a deadly building. 33 34 Chair Garber: Commissioner Keller and then Holman. 35 36 Commissioner Keller: Thank you. First let me observe to underscore what Comnlissioner 37 Lippert said, it was earlier mentioned that there was this driveway, which in some sense bisected 38 buildings. The driveway on Ranlona actually is at the edge of that particular property. Nola's is 39 a separate building next to it. They are sort of glued together and in some sense it is at the edge 40 of that property but it is a long and much larger block for whatever that is worth. 41 42 I don't have an architectural license and I don't want one, just like I don't want a lawyer's 43 license. So let me make a couple of observations. The first observation is that I think that there 44 is a strong sentiment on the Commission that the office space is too large for the kind of property 45 that is basically greatly overrated in terms of office. 46 1 I have heard a nurnber of comments from the Commission and some comments from members of 2 the public. First of all we are very happy that there the opportunity to continue JJ&F in this 3 location. But in some sense being risk managers is a part of what we have to do here. We have 4 to take into account what happens if JJ&F for some reason or other is not able to continue 5 indefinitely maybe the next generation will retire at some point, maybe the generation beyond 6 that won't be able to stay, and whatever. We do think of this as a building that is going to be 7 there for quite a long period of time and perhaps we should think of that in tern1S of a century 8 long orat least 50 years long. I would assume that the next generation of JJ&F that is going to 9 take over is probably going to be there for say 30 years. So we do have to think in terms of the 10 timeframe of what happens when JJ&F doesn't stay as a family-owned store as it is now or even 11 with the next generation. With that regard I think that there has been a consideration of if that 12 were to come to pass, and a grocery store wanted to come in that said we can't do it in 8,000 13 square feet we need 12 or 13,000 or whatever square feet. There is no way to expand except 14 across a driveway. I think the idea of putting a meat n1arket on one side is a creative idea but 15 then you also need a separate set of cashiers, etc. 16 17 So let me just throw some ideas at you to think about in terms of this. For example, suppose 18 what you did was extended the grocery store building along Oxford so it continued all the way to 19 Staunton Court, and that was sort of a continuous building. I wouldn't even n1ind, in some sense 20 and just throwing an idea out, if you put office space down there that could be replaced by a 21 market if a market needed to expand. Suppose some of that office space was taken away from 22 the second story above the market and you extended the BMR units on the second story sort of 23 against that corner and further back? I don't know whether the nature of the loading dock 24 arrangement would be such that you could actually make a continuous sort ofU-shaped store or 25 whether it would be too weird or whatever. That is why I don't have an architect's license. That 26 is the kind of thing you can think about. It is sort of this creative idea of allowing for contiguous, 27 expandable store for which if it came to pass some day in the future that in order to retain the 28 grocery store we needed to be able to expand it, allowing for expansion room without tearing 29 down buildings or without having this weird solution of a driveway separating the same store 30 doesn't make as much sense. It makes more sense to me to be able to allow for that expansion 31 without having that be separated across a driveway. 32 33 So I am basically suggesting that you be a little bit more creative. I think that you have been 34 rather creative in tern1S of coming back to us and I appreciate the thoughts that you have put in 35 here. I think in some ways that the design here is creative and attractive and has some benefits to 36 it but I would be inclined to give you a little bit more crack at doing a design precisely because 37 of the comments made especially by Commissioner Fineberg. 38 39 That is if we do initiate the PC zone that even though there isn't a sense of entitlement that 40 comes from the PC zone there is a great sense of inertia that comes from n10ving forward with 41 the process. One of the things that is important to me about the failures of the Palo Alto process 42 is not spending enough time at the beginning of a project to get the concept right. I think if we 43 spend enough time at the beginning of a project to get the concept right that when it comes 44 through and comes back to us it should be accepted. Where the Palo Alto process fails is where 45 there is not enough time at the beginning and then when it comes back to us we say that is not 46 what we wanted anyway, start over again, and that is too late. It is a lot more time and money 1 spent by everybody in that process. So] quote my boss in college, he had this sign which says 2 why is there never enough time to do it right but always enough time to do it over? ] would 3 rather have the tweaking done at the front end before it goes to the ARB than trying to tweak it at 4 the end where there has been a lot more architectural design. So] am not going to make a 5 motion but that is basically what my thinking is, and the kind of changes that] think would be 6 helpful, and would make the project have more longevity and more flexibility in the future. 7 Thank you. 8 9 Chair Garber: Commissioner Homan and then Tuma. 10 11 Commissioner Holman: ] will be pretty brief here. There are several things to like about the 12 project.] mentioned several things earlier that] thought really needed some work. The things] 13 like about the project are that it is broken up into different buildings so that you don't have one 14 long, monolithic building. That I think is a positive. ] actually think it is a good thing that there 15 are BMR units here. 16 1 7 Where] think it is challenged are the things that you have heard before. ] think this can be a 18 more creative project in that] think it can be a more integrated project. The ground level, there 19 really do need to be better transition areas at the ground level. What is absolutely key for me is 20 not only the grocer store but being able to have other retail space. Perhaps one solution is to 21 expand the grocery store into or towards Staunton Court and make those second floor units. That 22 would solve some of these issues. It is possible or maybe not to move the entry on EI Camino 23 one direction or the other, not at the comer of course, but maybe just move it one direction or the 24 other to provide better flow and access to the other retail space. The way it is now is really 25 problematic for me. The other thing, ] have to mention this, is usable open space needs to be 26 better. The one thing that, as ] read the specs, on College A venue] know the setback is not 27 followed there and yet there is a three story building on that street face. It is exactly the kind of 28 thing that the public just hates to see in projects. It is what they respond to so negatively about 29 projects on EI Camino and this is three story on College at less than the required setback. So that 30 is really an alaml for nle as well. So those are my only comments. 31 32 Chair Garber: Commissioner Tuma. 33 34 Vice-Chair Tuma: Just one topic and there has been a lot of discussion tonight among 35 Commissioners about the appropriate size of a grocery store. We heard a list of sizes read off of 36 what others are and they are mostly in the teens and above. ] think one of the things we have to 37 keep in mind here is that because there is a subsidy being proposed perhaps a smaller grocery 38 store maybe perhaps this is why JJ&F is saying that it is viable at a smaller size because they 39 have lower overhead. They have a subsidized rent. So maybe an 8,000 square foot plus some 40 number of square feet on the pathway in front maybe that is viable because they don't have to 41 pay as high of a rent. So at the risk of being accused of throwing out another red herring, I do 42 think that the magnitude of the subsidy goes directly to the viability of a smaller space. So 43 maybe a smaller space is just fine because the overhead is lower. So] think perhaps there is a 44 way to not have to expand the size of the grocery store, still make it viable, make it something 45 that is acceptable, and will be there long-term because they have a lower rent. This is why it 1 continues to be difficult for me to get to being comfortable with the viability of a smaller store 2 without having that information. 3 4 Chair Garber: Commissioner Rosati. 5 6 Commissioner Rosati: I don't think it is worth raising the point. I think that I withdraw my 7 point. 8 9 Chair Garber: Commissioner Holman. 10 11 Commissioner Holman: Just real quickly as a reminder that we can't assume it is going to be 12 JJ&F there. That is our hope but we have to make sure that any zoning thatwe do here needs to 13 account for the fact that over time there may well be a different grocer there. 14 15 Chair Garber:-We cannot put into zoning or the Comprehensive Plan that the space is to be 16 subsidized. To take the words of some of our other Commissioners, we can zone for what we 17 want, which could be a grocery store that is 8,000 square feet and then it is incumbent on 18 whoever ends up taking that deal to make it work for them. If it is a subsidy that is one way to 19 do it. Let me leave it there. Commissioner Lippert and then Keller. 20 21 Commissioner Lippert: I don't want to retread what I said previously but I do want to reiterate 22 one thing which is that the PC might take a profile of the 50/50 floor area, which is 50,000 23 square feet plus in addition to that the 8,000 square feet of grocery store space. So just in 24 looking at that alone it provides a significant amount of bump up and benefit. The question is 25 whether it becomes financially viable for the applicant to look at being able to have only 25,000 26 square feet of commercial, and that would be divided between office and retail, then an 27 additional 8,000 square feet of grocery store, and in addition to that being able to have say 28 another 25,000 square feet of housing which would be permitted under the CD zoning. 29 30 Chair Garber: Would you outline that again so I get it through my head? 31 32 Commissioner Lippert: The way it works is that right now under the zoning they are allowed to 33 have a 1: 1 FAR. The 1: 1 FAR works out to be half of that is residential, which would be 25,000 34 square feet and then out of that 25,000 square feet would be what would be called commercial. 35 Ifwe were to again divide that commercial because the ground floor would need to be retail, 36 12,000 of that would have to be ground floor retail space. Now looking at that just as a base to 37 begin with for the CN zoning and add to that another 8,000 square feet of retail for the grocery 38 store that brings you to 58,000 square feet of FAR. Now they could, because they only have to 39 have that 12,000 square feet of ground floor retail that grocery store figures into that mix. They 40 could take the additional 4,000 square feet and shiftthat up to second floor office space. That 41 gives them a significant additional bonus there also. It is just a question of whether they can 42 make the residential units sell to balance out the equation. 43 44 Chair Garber: I apologize Commissioner Lippert. The total number you are working with is 45 58,000? 46 1 Commissioner Lippert: Correct, but out of the existing zoning, the CN zoni~g, they can only 2 have 50,000 square feet of building. That is the underlying zoning that they have. 3 4 Chair Garber: So you are saying that 50,000 that is allowed in the zoning you would divide that 5 in half. Half of that is .residential, right? 6 7 Commissioner Lippert: Correct, .50: 1. 8 9 Chair Garber: Right, and then half of that is commercial, which is composed of half of that is 10 grocery store and then retaiL 11 12 Commissioner Lippert: No, I am saying retail and then office. .f, 13 14 Chair Garber: Retail and office. 15 16 Commissioner Lippert: Then I am saying let's give them a bonus FAR of another 8,000 square 17 feet for the grocery store. So that brings it up to 58,000. Now on the ground floor they are 18 required to have the ground floor have 12,500 square feet of retail and the grocery store could 19 figure into that. 20 21 Chair Garber: Planning Director. 22 23 Mr. Williams: I appreciate where you are headed but I think getting into this detail of square 24 footage is well beyond sort of the concept of whether to move this along. The point I take from 25 this is that you are looking for a balance of residential, nonresidential, a balance between the 26 retail and office, and maybe giving some kind of credit for the grocery store to help as a bonus. 27 That is the fundamental thing, which is very far away from where the applicant is at this point on 28 the project. If that an idea the Commission wants to indicate might be a direction to go that is 29 fine but trying to get down to understanding number is a little bit too much detail right now. 30 31 Chair Garber: I appreciate your comments and thank you for the summary. 32 33 Commissioner Lippert: Just in closing, I am not deterred by the 60,000 square feet of building 34 that they are looking for. I think the massing is great. It boils down to the use and the diversity 35 of the use. 36 37 Chair Garber: Commissioner Fineberg and then Keller, and Rosati. 38 39 Commissioner Fineberg: Just to follow up to Commissioner Lippert's comment in his scenario 40 the kind of mental granting of that 8,000 square foot bonus because of the grocery store. It 41 basically reduces the property by about 3,000 square feet under what the applicant has proposed 42 now. So I would agree with him that the mix needs to be tweaked, but I think the intensity, the 43 height along the southern portion is still too great. 44 45 One of the other thoughts that came to me in thinking about that driveway splitting the parcel 46 along EI Camino we keep talking about what it feels like along that EI Camino front and we are 1 not considering the College front. While College is really the retail district that it is a part of the 2 face along College on the first floor right now is penciled in as office space. So if I were to be 3 across the street let's say at Common Ground there would be nothing that would visually or no 4 retail that would draw me to come across to the parcel. In the same way, if I were at JJ&F there 5 is nothing that would draw me over to the other spaces on College. So it led me to think should 6 it operate respecting the retail and commercial uses on College and is there a way to tie that 7 together so that parcels are connected, and it is not so much of an island. That was it. 8 9 Chair Garber: Planning Director. 10 11 Mr. Williams: I am a bit concerned. It is 11: 15 and we are designing the project. I think we 12 have heard pretty close to a consensus of the Commission having some concerns about the 13 project and maybe not being able to move it forward although that is yet to be voted on. I am 14 just concerned about getting into this. Everybody has their own ideas we are hearing about 15 designing and there may be great ideas or merit to a number of those but that is ultimately up to 16 the applicant. The question before you is whether to move this proposal forward and if not, you 17 have indicated some of those ideas. They can take those back and decide whether they want to 18 come back to you with a modified proposal or whether they want to move onto Council. 19 20 Chair Garber: I very much want to get to an action here as well. I have been letting this draw 21 out to see if we could find a way to get there. I think what I am hearing is the Commissioners 22 trying to find a way at least in my mind potentially condition a motion that would forward it. 23 Because my sense here is that if we were to create a motion to support the initiation of the zone it 24 would likely not be passed without finding some conditions that the entire Commission can 25 support. Is that a fair statement, Commissioners? No. No it is not. Well in that case let's see if 26 we can get to a motion. I am happy to hear one. Commissioner Rosati. 27 28 Commissioner Rosati: There was a lot of discussion around the amount of office spaces being 29 excessive. As I mentioned earlier I actually don't agree and I want to explain Why. I think that 30 39,000 square feet of office space in that location, which is prime office space, very expensive, 31 would allow for a higher quality building, really high quality finish. That is my assumption 32 based on what I see. This will attract high quality tenants. High quality tenants tend to use the 33 space very differently. They like to have a lot of space. They like to have less dense 34 environments and lots of meeting rooms. My assumption is that it actually would be a good 35 thing. I remain of the opinion that the office space is not the problem and I just wanted to share 36 that perspective with the other Commissioners. 37 38 Chair Garber: Commissioner Keller and then Lippert. 39 40 Commissioner Keller: So let me make a few observations. I am sympathetic with what 41 Commissioner Lippert said in terms of the balance and I think Commissioner Fineberg said in 42 terms of the balance. The way that I see it is that in some sense two tradeoffs have been done. 43 One tradeoff that has been done is the tradeoff that Commissioner Lippert said of add 8,000 44 square feet of office space because of the grocery store. I wouldn't be surprised if that was the 45 kind of thing that we would have done if we had created the G-Overlay to basically allow some 46 sort of bonus FAR of some sort like that. I see that in some sense there has been conversion of 1 residential space for office space of two types. One is conversion of residential space to office 2 space in order to create the BMR units, which are rentals instead of for sale. I think that one of 3 the reasons that there is a lack of desire for sale is that I think that the applicant doesn't really 4 want to sell units that will essentially encumber the property like this and sort of encumber 5 the ... my sense is that the applicant wants to own the entire thing in perpetuity and not subdivide 6 it in such a way that other people own pieces of it. So in some sense the BMR units are a way of 7 sort of trading off money to sort of subsidize the BMR units for housing. 8 9 The next thing that is going on is that there is a subsidy of the grocery store. There isn't a formal 10 mechanism for subsidizing a BMR grocery store like there is a formal mechanism for having 11 BMR rental housing. Essentially what we have is a BMR grocery store. That is some of the 12 conversion of the housing to office space is to provide that BMR grocery store. The problem is 13 in some sense we are being in some ways asked to take that BMR grocery store on faith. I 14 understand the business reasons for wanting to do that, but in some sense we are being asked to 15 do faith based zoning. 16 17 The other thing that is interesting is in some sense I have heard from Commissioner Rosati and 18 Commissioner Lippert that a 58,000 square foot building mass is more appropriate in terms of if 19 I take these things together. Commissioner Rosati doesn't seem to mind exactly how big it is. 20 Commissioner Lippert says a little bit smaller down to 58,000 square feet. What is interesting to 21 me is in some sense lowering the office space a little bit so that if you had lowering it by several 22 thousand square feet, bringing it down a little bit, would make the parking issue a little bit better. 23 I think that some of the other tweaks that I talked about might help to make it more likely that we 24 can see a path for the future for when the JJ&F generations decide to retire and maybe the next 25 might or might not want to do it, maybe somebody would buy it maybe not. I think there is 26 enough uncertainly in the life of this project that being able to reconfigure does make some 27 sense. I think that we have given you enough input and I don't think we need to give you any 28 more input in terms of this project. 29 30 MOTION 31 32 I am going to make the motion to deny the initiation of the PC zone. I would like you to tweak 33 it. Come back to us pretty soon. I think we have given you a lot of input to think about. There 34 has not been unanimity on the Commission in terms of the feelings on this but I think that there 35 is enough feedback that you can come up with a better project and bring it back to us. I would 36 rather have the gatekeeper function occurring at this end rather than conditionally moving it 37 forward in a way that we have no idea what we will get after it goes through the ARB process 38 and comes back to us. 39 40 Chair Garber: Commissioner Keller, make the motion and then you can comment. 41 42 Commissioner Keller: Okay, I have made the motion. 43 44 SECOND 45 46 Commissioner Lippert: I will second that although I might have stated it a little differently. 1 2 Chair Garber: Thank you. The motion has been made by Commissioner Keller and seconded by 3 Commissioner Lippert. Would the maker like to speak to his motion? 4 5 Ms. Tronquet: Chair Garber, part of the recommendation was on the Comprehensive Plan 6 Amendment as well. 7 8 Commissioner Keller: I think that the idea is we don't go forward with the Comprehensive Plan 9 Amendment fulfil' the PC initiation happens. So we are not doing either of them at this point. 10 11 Chair Garber: Seconder? 12 13 Commissioner Lippert: I will accept that as well, even though I wouldn't have stated it that way. 14 15 Chair Garber: Would the maker like to speak to their motion? 16 17 Commissioner Keller: Yes. So I am hoping that we will be able to have improvements to the 18 design. I think that I would rather have a gatekeeper function at the beginning where we have a 19 design that makes more sense, satisfies more of the Commission's concerns, and then goes 20 through the ARB process and comes back to us, rather than the last minute kind of we don't like 21 this let's change it again later on. I would rather make sure that it is a design that a clear 22 majority of the Commission can support before it goes forward to the ARB. Thank you. 23 24 Chair Garber: Seconder, comments? 25 26 Commissioner Lippert: Yes. If I were to restate the motion I would just simply say that I would 27 not support a recomn1endation having the zoning or the Comprehensive Plan Amendment move 28 forward at this time. I believe that the applicant is on the right track it is really the 29 implementation and getting the right mix there in terms of what they are trying to do. The 30 preservation of the JJ&F Market or any market in that area is viable. I think that the square 31 footage is viable. I think it works particularly well. It is really the mix of the use that is really 32 the sticking point for me. I think with a little tweaking they might be able to come forward with 33 another proposal that will address a lot of the comments that my colleagues have brought up as 34 well as myself. 35 36 Chair Garber: Commissioner Fineberg and then Holman and then Keller. 37 38 Commissioner Fineberg: Can I get a clarification from Staff, please? Ifwe vote in favor of this 39 motion what are the applicant's potential next steps? Would they then be able to appeal this 40 directly to Council and what could their actions be? 41 42 Mr. Williams: The applicant's choices would be to redesign something and resubmit back to you 43 for another initiation request, to walk away entirely, or to appeal it to the City Council. If it is 44 appealed to the City Council the Council could either deny the request or they could initiate the 45 project either as proposed or with some conditions to it and forward that to ARB to begin the 46 process, in which case it would then come back to you and onto the Council. 1 2 There is out there a chance they could do what happened on Alma Plaza too, which is that they 3 could develop the skeleton of the ordinance with some of those criteria in it. I can tell you that 4 we will certainly recommend against that arid I very strongly doubt that they would go that 5 direction. I think if they wanted the project to move forward they would just move it forward en 6 masse to the ARB and let it work its way back through the process. 7 8 Commissioner Fineberg: Would it benefit us to attach some sort of condition on this motion in 9 front of us if the applicant appeals to Council that they not approve the PC Ordinances at that 10 time? How might we fend off that? 11 12 Mr. Williams: Maybe the City Attorney can add to this but you can't essentially deny it with the 13 condition that you something. You could deny the request and then make comments that it is 14 your hope that if the Council does proceed forward with it that they would forward the package 15 and not constrain the review of it as it moved through the process or something to that effect. 16 17 Commissioner Fineberg: So those comments would need to be.made before the motion is voted 18 on? 19 20 Mr. Williams: No, they wouldn't be part of the motion. They would be comments, yes before 21 the motion. 22 23 Commissioner Fineberg: Okay, great. Could we take what you just said and consider that my 24 comment, please? 25 26 Chair Garber: Well said, Commissioner Fineberg. Commissioner Keller you had something 27 quick. 28 29 Commissioner Keller: Yes. I will adopt Commissioner Lippert's motion, which was basically to 30 do the denials. I am assuming the issue about mixes and stuff like that is actually commentary 31 and not part of the motion that you proposed, is that correct? 32 33 Commissioner Lippert: That is correct. 34 35 Commissioner Keller: Then I will amend my motion to use Commissioner Lippert's wording. 36 37 Chair Garber: Seconder? I am assuming you agree. 38 39 Commissioner Lippert: Of course I agree. 40 41 Chair Garber: Commissioner Holman. 42 43 Commissioner Holman: I am going to be support the motion but as the commentary that I heard 44 from both maker and seconder of the motion I heard the word 'tweaking' used. I think this 45 project needs a little more than tweaking based on the comments that I have heard from even the 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 maker and the seconder. I don't think the word 'tweaking' applies. S6 I just want to get that out there. A PC project as a standalone needs to be a good project. It needs to respond to its context, uses, and built environment, and at the same time provide significant public benefit. This project has a ways to go to achieve those ends. I think the applicant has heard much this evening that will give them a lot to consider in revising this project. ' Chair Garber: A couple of comments from myself. I, like Cominissioner'Rosati, don't have as many fears about having heavier office use because I think the office and/or a different mix begins to talk to the project operating differently for the City and supporting growth along EI Camino and beginning to anchor the California Avenue business district. I can't imagine that as a public benefit but I think understanding how the property operates in this larger mode helps us understand what its potential benefit is beyond simply providing the immediate functions, and helps us make an argument that addresses some of the larger Comprehensive Plan issues and how it fits into the city. Then of course I have my recurring comment about the El Camino Guidelines but you have heard that. MOTION PASSED (6-1-0-0, Commissioner Rosati opposed) ! With that Commissioner, shall we vote on the motion? All those in favor? (ayes) All those opposed? (nay) One opposed. So the motion passes with Commissioners Holman, Keller, Garber, Tuma, Fineberg,and Lippert voting aye and Commissioner Rosati opposed. With that we w.ill close the item. U~144'LUUJ ~U.~L u~uru •• uu~ 84/22/2~89 16:19 6563241215 , lOAM) UF I RlC10RS eMil' -.y, ft .... Stffll MIIn;~ c:~ 'iat CMIJt. )CoffaA> ~Je ~ tt1JId" os HoIplraI carta..-E_~ IQiI a 0IIlIIff tSBC8111'\k .,.. "',.,. ~I PrM. of BiIlIk ~!Id Tn t COIllp811Y tar, ......... P..Jr: • .\Ifo COOImlri Child Care .1Xrac:Ias ~CH StJnfomtlaS aI'~ '''~ "Jainl wi ~1ItNS ,.. .,.,... o lerialiP.k t..h .Ci ...... h itemlon" WI 1ft P8/D AltQ iii ,., ..... Go'de c_ Hoell Ncllaedricll ROd!c alA AIm at MIrt· ~ .. 1IIt CRt: Ih 140101 & '" ~d 1'010* S .)~ '" '11 OftImS Of (oj aid MlmBn JdtlCdl:v _ford Sh ~ Center ..... ~ i •• v.IlItIV Ik 11m lmmal .II ~UtCOWn Stan sd Onlwl'llly If .,~ HeWu4'IC Itd~ I lJIit PadeS' Pi! "AIle 61t (tit f~Oft Joel.,.. A_w Mol lilge tanking ... S4.InF ..... Stll1I Mort I!JI! CCMnp.any lftow"~ Acam lin t)ewlopmenI ~IIIC. PACe 'ATTACHMENT C April ~2, 2009 . Dan Garber, Chair Palo Alto Plannina a TnmspQrtation Commission. City of Palo Alto 2'0 Hamilton Alia. Palo Alto, CA 94301 Dear Chair Garber. A.t the April 14, 2009 Palo Alto CUmber GovaDl\Ulftt Action Committee meeting, representatives ofth. Conege Terrace Center project made a pm;entatloo. olcho current iteration of the project. The (lAC voted to endoJ'Se the project's request for rezQning fttun eN to pc. Ofpartioular appeal WQ the retention oflonl-ter.m grocery store, JJ&F and the addition of other retail~ Appreci.tioft wa given by the Committee for the inclusion ofBMR, one bedroom apartmCDU and parking ingress and qress ii'om 81 CaJ;nino hal. Thank YCJ\I for your consideration. ~ Paula Sandas Pfesident/CEO PAGE 01 College Terrace Residents' Association STATEMENT FROM THE BOARD OF DIRECTORS · TO THE PLANNING AND TRANSPORTATION COMMISSION The Board of the College Terrace Residents' Association (CfRA) adopted the following statement regarding the proposed College Terrace Centre at 2180 EI Camino Real on April 22, 2009. This statement is informed by a CTRA Task Force that has carefully studied the proposed design, debated its merits, and conducted a neighborhood survey to find where alignment exists and does not exist. The detailed survey and its results have been submitted to the Commission. This statement is made in terms of neighborhood preferences and values, and not in terms of planning metrics, zoning options, or statistics. We believe the Planning and Transportation Commission is in a better position to translate these preferences into a structured framework for moving forward. We would support • A center that will anchor the neighborhood, mirror the neighborhood, and serve the neighborhood. • An enforceable requirement that the center include an honest-to-goodness grocery store, not a convenience store, with sufficient conditions to be economically viable. • Giving JJ&F first priority in grocery store lease arrangements and every encouragement to return to neighborhood service after construction is completed, because of the Garcia family's roots, ties, and loyalties to the neighborhood. • Including a strong, verifiable transportation demand management program as part of any proposed reduction in on-site parking requirements, to prevent spillover parking problems. • Ingress/Egress to underground parking from EI Camino Real to help minimize traffic cutting through the neighborhood. • Retail space and office space designed to attract a diversity of businesses, stores, and restaurants geared to serving the neighborhood. • A beautiful, walkable, bikeable magnet for community interaction. We are neutral about • The BMR units. • The prior offer of space for a community room. We would not support • The transformation of a neighborhood center into a regional business district. • The preponderance of office space to the diminishment of other possible uses. • The level of traffic and parking turnover associated with medical offices. IN CONCLUSION, we ask you to ensure that any development at the 2180 'EI Camino Real location will anchor the neighborhood, mirror the neighborhood, and serve the neighborhood of College Terrace. Page 1 of~ Betten, Zariah From: LONERGAN [scobbin@sbcglobal,net] Sent: Wednesday, April 29, 20096:11 PM To: Planning Commission Subject: 2180 EI Camino Project Hello, I've been living in College Terrace for 10 years and wanted to pass along my views on the 2180 EI Camino Real project currently under discussion: Overall, I am in favor of the project as it is being proposed. The critical elements for retaining my support of this project are that it retains these features: > The car access be from of EI Camino (not through the neighborhood streets). > The bottom floor of the project be neighborhood retail in perpetuity. If either of the above critical elements were removed I would withdraw my support. It would seem that the primary disagreement that many have expressed with the project is that it allows a zoning change to include 'regional offices'. I don't see a problem with this as there are many regional offices (e.g. Stanford Ave) in the area and they add vitality to the local businesses and possibly even a job or two to locals. EI Camino Real suffers from poor decisions in the past -look at the state of many of the businesses in the area! This project is being propo$ed by a long-term owner/trustees that I believe they will improve the area with a quality project with long-term goals (not just a spec builder looking to make short-term gains). Best Regards, Scott Lonergan 2090 Cornell St. 4/30/2009 Dr. and Mrs. 'ruing Schulman 836 Mayfield Ruenua Stanford, eft 94315 We haue been residents for 31 years, one mile from 'dJ~F, and customers of the Garcia family since our arriual. dd&F is a unique market in the areB. It is uery small, compact and packed. Despite the size of the store. thay manage to stock just about euerything the custorners want.. Rnd If they don't haue it, they will try to get it. There is no other store as conueniently located, and if you haDe done any comparison shopping, you know that dd&F pricing is more than fair. ddDF's most unique quality is their relationship with their customers. They are our neighbors and friends" I III bet there is no other market here or anywhere that was eDer gluen an anniuersary party by their patrons! For those of you who weren1t here in 199& or didn't hear about it, the streets around JJ&F were closed, and some 388 neighbors and customers celebrated .Jd&F's '8th year In business I We want to keep dd&F. They need more and better space and they are willing to sacrifite to get It. The new facility would be a blessing for J .. DF, their tUllomers, and those who are lucley enough to gel one of those low-tost apartments. The Garcia family has done a great deal for our community and we should show our appreciation. Thank you for your consideration. .April 11~ 2009 Virginia Spean-Berger 'SO Matadero Ave Palo Alto, CA ,43Oti 650-4'3--58'& Palo Alto Planning and Transportation Commi.ssion Palo Alto City Hall Palo Alto, CA 94306 Subject; New CQllege Terrace Centre Dear Commissioners, I write to support authorization of the New College Terra~ Center. This New College Terrace Center plan is well designed. It includes much needed moderate income housjng. It supports public transit and pedestrian movement Tbe design is the tesultofbroad, bigb...quatity and creative public consultation. Particularly, the Garcia Family is an important part of our community. 'They are rooted here and are committed to community service. This family leadership should be supported by all of us. Thank you for consideration of my com.ments in support of the New Col1ege Terrace Center proposal. Betten, Zariah Subject: FW: JJ&F Market I College Terrace Centre -WE NEED YOUR SUPPORT!! From: Ann Hayashi [mailto:ann_hayashi@yahoo.com] Sent: Wednesday, April 29, 2009 9:54 AM To: TOHV, LLC Cc: Reich, Russ Subject: RE: JJ&F Market I College Terrace Centre -WE NEED YOUR SUPPORT!! As a long time patron of JJ&F, I wholeheartedly support the JJ&F Market/College Terrace Centre. In this time offaceless owners of big box stores, the-family and community feel of JJ&F is what brings me back to the market. The Garcia family has been an asset to the College Terrace area and this new project promises to better serve the residents of the area and those of us who travel from nearby to support them. Ann Hayashi ---On MOD, 4/27/09, TOHV, LLC <info@210011c.com>wrote: From: TOHV, LLC <info@210011c.com> Subject: RE: JJ&F Market 1 College Terrace Centre -WE NEED YOUR SUPPORT!! To: "ann_hayashi@yahoo.com" <ann_hayashi@yahoo.com> Date: Monday, April 27, 2009, 11 :56 AM Good Afternoon, There are two options for providing your support: 1. You may reply directly to this message and we will forward it on your behalf to City Staff 2. You may send your message directly to Planning.Commission@CityofPaloAlto.org; we would ask that you also 'cc' Russ Reich russ.reich@cityofpaloalto.org who is the staff member directly involved with this project If you have any additional questions please do not hesitate to contact us. Your efforts are greatly appreciated! From: Ann Hayashi [ann_hayashi@yahoo.com] Sent: Monday, April 27, 2009 11:44 AM To: TOHV, LLC Subject: Re: JJ&F Market I College Terrace Centre -WE NEED YOUR SUPPORT!! I'm unable to attend the meeting but would love to send a support email. Could you send me the link? Thanks, Ann ---On Fri, 4/24/09, TOHV, LLC <info@21 OOllc.com> wrote: I From: TOHV, LLC <info@210011c.com> Subject: JJ&F Market 1 College Terrace Centre -WE NEED YOUR SUPPORT!! To: "fagrant3@yahoo.com" <fagrant3@yahoo.com>, "ann_hayashi@yahoo.com" <ann_hayashi@yahoo.com>, "ericivers@gmail.com" <ericivers@gmail.com>, "ebandu@aol.com" <ebandu@aol.com> Date: Friday, April 24, 2009, 6:03 PM Good Evening, 4/29/2009 Betten, Zariah From: Sent: To: Michelle Oberman [moberman@scu.edu] Wednesday, April 29, 2009 1 :30 PM Planning Commission Subject: College Terrace development Dear commissioners, I am not able to attend tonight' s meeting, so I am sendir'lg this note to you as a way of· registering my opinion regarding the proposed development at the intersection of Stanford Ave and EI Camino Real. As a neighborhood resident, I want to register my strong opposition to the proposed zone change on the 2100 block of EI Camino from CN to PC. Knowing that compromises often are necessary in such cases, I want to make known my sense that the most offensive of the proposed changes is the over-delegation of office space, which would necessarily change the character of the community because of the downstream consequences needed to support the tenants of such offices. Thank you for your consideration in this matter, Michelle Oberman (Dartmouth Street resident) Michelle Oberman Professor of Law Santa Clara University School of Law 500 EI Camino Real Santa Clara, CA 95050 Tel: 408-551-7104 http://www .scu.edu/law/faculty/profile/oberman-michelle.cfm http://ssrn.com/author=232686 1 Page 1 of 1 Betten, Zariah From: Paula Sandas [paula_sandas@yahoo.com] Sent: Tuesday, April 28, 20094:34 PM To: Planning Commission Subject: College Terrace Center Dear Chair Garber and Commissioners - I am writing to express my appreciation for the work done by the developers of the College Terrace Center and some residents of College Terrace on the College Terrace Center. Since the project Was first introduced, there has been a lot of forward movement to make the project work for the neighborhood. There are elements of the project that are worth consideration in rezoning the block from CN to PC. 1. The valuable retention of JJ&F Market at a size that is both potentially profitable for JJ&F and can fully serve College Terrace and the growing Stanford residential community. While I was a member of the P&TC, the retention of local, independent business was a significant factor in considering development projects. Not only will JJ&F Market open in a more visible location from the one it's in now, the family represented by the developer and JJ&F's Garcia family have worked cooperatively to create the best set of circumstances under which JJ&F can be redeveloped, and hope to re-open as a profitable market. 2. The placement of the ingress/egress to College Terrace Center on EI Camino instead of inside the College Terrace neighborhood is a key improvement. Avoiding spillover parking into College Terrace residential streets is a welcome relief for the neighborhood. 3. The consideration given by the developer for low-income, single bedroom apartments that should not impact the school system shows sensitivity to a broader set of issues faced by the community. The apartments are placed on the block facing existing residential across Staunton Court, "stitching the seam" of residential to residential. 4. Finally, the family that owns the land on which the College Terrace Center is to be built demonstrates their long-term commitment to the legacy of a neighborhood grocery store, and the character of College Terrace while developing a project that will stand as a legacy for the next hundred years. Thank you for your consideration - Paula Sandas Paula Sandas paula_sandas@yahoo.com 4/29/2009 Page 1 of~ Betten, Zariah From: Karlette Warner [karlette46@sbcglobal.net] Sent: Tuesday, April 28, 2009 8:04 PM To: Planning Commission Cc: CTRA Board; input@2180ecrtaskforce.org Subject: Comments for April 29, 2009, meeting regarding 2180 EI Camino Real (College Terrace Centre project) To the City of Palo Alto Ptam'ling Gommission: . I am unable to attend the April 29 meeting and am therefore sending my comments on the subject project via email. I am a 30-year resident of College Terrace. One of the primary attractions of living in this neighborhood is its proximity to shopping, transportation, and other services. Like many of my neighbors, I appreciate being able to walk to my local grocery store. I shop almost daily at JJ&F and never have to use my car! . I strongly support the retention of a grocery store (preferably JJ&F) in the neighborhood. While I am not enthusiastic about additional office space and BMR housing in the proposed project, I nevertheless would support the project, if only to guarantee a grocery store at or near its current location. Thank you for your consideration. Karlette Warner 981 College Avenue 4/29/2009 Page 1 of 1 Betten, Zariah From: Fred Balin [fbalin@sbcglobal.net] Sent: Tuesday, April 28, 2009 9:39 PM To: Planning Commission Subject: Item 2: Ass't City Attorney: "Subsidy ... Not ... Appropriate as a Community Benefitll On page 5, the Staff Report reads as follows: The applicant has suggested the following public benefit assQciatt?d with the proposed PC: • Provision of a subsidized rental rate to ensure a neighborhood-serving grocery market will remain at this location • 10 Below Market Rate Units The JJ&F "subsidy" (part of a private agreement between landlord and tenant) was discussed at the October 1 hearing, and I believe clarified with the following response from the Assistant City Attorney: Ms. Silver: The subsidy of a private for profit corporation would not be appropriate as a community benefit to designate a specific grocery store. However, the retention of a grocery store through the PC zone would be considered a community benefit. -10/1/08 P&TC Minutes p. 45 -Fred Balin 2385 Columbia Member, CTRA 2180 EI Camino Real Task Force Page 1 of 1 Betten, Zariah From: Joy Ogawa[joy.ogawa@usa.net] Sent: Wednesday, April 29, 2009 9:06 AM To: Planning Commission Subject: 2180 EI Camino Real Dear Planning & Transportation Commissioners: ~"."':"~~. Here is a short list of some ofth~ maj9r issues I have concerning the proposed project: o 1) Please maintain the Comprehensive Plan land use designation of Neighborhood Commercial for this property. The project should be brought into conformance with the existing Neighborhood Commercial land use designation; the land use designation should not be changed to conform with the proposed project! 2) The current proposal includes too much office (941 sq. ft. increase from October 2008 proposal; 1,485 sq. ft. increase from Feb. 2008 proposal). 3) The project's retail uses need to be better connected. In the current proposal, the driveway still divides the grocery from the other retail uses. 4) The project should have a prominent retail component on and facing College Avenue that provides better coooection with the other existing neighborhood-serving businesses along College Avenue in the CN zone. -->Don't let College Avenue tum into a big office complex, which it seems to be iIi eminent danger of becoming. This would make a mockery of the purpose of the Neighborhood Commercial zone and the Comprehensive Plan goals of liveable, walkable neighborhoods. 5) The proposed 8,000 sq. ft. of designated grocery store floor area is smaller than even the current (8,712 sq. ft.) JJ&F market. All the residents I have spoken to are concerned that this is too small to accommodate another honest- to-goodness grocery store if JJ&F decides not to return. 6) The size and scale of the project are too big and not consistent with the Comprehensive Plan. Reduce the amount of office floor space and reduce the proj ect' s size and scale. Sincerely, Joy Ogawa 4/29/2009 Anna Fankhauser EmestRegua 567 Oxford Ave. Palo Alto, Ca., 94906 Palo·A1to Ci~ Council Members Members, Planning &. Transportation Commission . 250 Hatnilton Avenue Palo Alto, Ca., 94301 Dear Honorable Mayor, City Council and .Planning &. Transportation Commissioners, As residents in the College Terrace neighborhood and JJ &. F Store, we are wri.ti.ns to support the College Terrace Center plans. We are pleased to see that the new facilities for the Jl &. P Store will brina. ~ur neighborheod and . the City of Palo Alto a larger assortment of non-chain del i specialties. fresh local products and a varlet)' of food. We cherish this family owned business~ as they have always supported our community. They have been a valued member of the businesses on California Ave. The store is loved by families, stud~ts, longtime residents. schools, businesses and offices. We are al~o pleased to see the 14 one-bedroom housinS units rented at affordable rates, which will be an enrichment to OUt neighborhood. The green-vinage style development design with 1ivi~g roof and LEBO certification ;1 an important step in the direction of green building. The new office space Will provide the sUlTOunding neighborhoods with new custom.ers, which we all welcome during these challenging economic tim.es. Thank you for aU your efforts to brina an improved value to Out' neighbothood and community. We hope yon will pass the project at the formal approval hearing on Wednesday~ April 29, 2009. Page 1 of ~ Betten, Zariah From: Joy Ogawa Uoy.ogawa@usa.net] Sent: Monday, April 27, 2009 1 :55 PM To: Williams, Curtis Cc: Planning Commission Subject: 2180 EI Camino Real_ question about office floor area Dear Curtis: I have been reading the staff report for the 2180 EI Camino Real preliminary review which is on the agenda for the Planning Commission's April 29 meeting. I am confused by what appears to be a discrepancy in the proposed floor area for office use. The body of the staff report says that the proposal includes 39,980 square feet of office use. However, when I look at Attachment D, the Zoning Compliance Table, the table indicates that the Proposed PC project proposes 38,495 square feet of office floor area (see the third page of Attachment D). Could you please explain this discrepancy and/or let me know which is the correct figure (or have one of your staff do so --I don't have Russ Reich's e-mail address). Thanks, Joy 4/28/2009 Betten. Zariah From: Robert Phillips [robert.phillips@nomissolutions.com] Sent: Tuesday, April 28, 2009 8:48 AM To: Planning Commission Subject: No Zone Change for 2180 EI Camino Real Dear Planning and Transportation Committee: I have lived on Yale St in College Terrace for almost 20 years. I have serious -concerns regarding the PFOje:ct proposed for::2180 . EI Camino Real. Specifically, I am concerned that the proposed project is simply too large for the neighborhood and would set a terribel precedent for further development in the area, destroying the original intent of the CN Zoning. Some of my major concerns are with the traffic and parking impacts that a commercial building of the size proposed would place on an already stressed neighborhood. My preference would be for the zoning to remaining unchanged. However, if the zoning is to be changed or a variance granted that would allow a larger development, I believe it is critically important that approval be contingent on three items: 1. That the primary entrance to the facility be on EI Camino --which would require the granting of a curb cut. 2. That the building not contain medical offices which generate between 2 and 3 times the daily traffic as standard commercial offices. 3. That on-site parking be provided in an amount consistent with city code. Please feel free to contact me if I can answer any questions. Best regards, Robert Phillips 2290 Yale st. Palo Alto, CA (650) 858-2920 robert.phillips@nomissolutions.com 4/28/2009 ..&. "-too::;' ....... ..&. 'J.L .a. Betten, Zariah From: Eileen Stolee [estolee@comcast.net] Sent: Tuesday, April 28, 2009 11 :04 AM To: Planning Commission Cc: Fred Balin Subject: 2180 EI Camino Proposal Hello, •.•.. 'j:- I have lived in the College Terrace neighborhood since 1975 with my husband and two adult children and have been shopping at JJ&F all these years. When John Garcia came around on Tuesday, April 21st. with a petition to sign for support of a project that includes a market for JJ&F I signed it because of my love ofJJ&F and my need for a functional market in our neighborhood. However, after some reflection I emailed the developer on April 23rd (illfo@210011c.con1) and asked that my name be removed. I'm assuming this was done in time for the Planning meeting on April 29th. There are several reasons why I do not feel comfortable signing a blanket support for this project at this time. 1. Currently there is an agreement with JJ&F for a subsidized market of 8,000 sf. My concern is that if JJ&F does not return in two years, for whatever reason, can another small market (like JJ&F) survive in that small space? As far as I know the developer does not have to pass on the rent subsidy to the next tenant since it is not considered as a public benefit. The space seams too small in its current configuration to support a market other than JJ &F and I fear we will not have one in the end. I would like to see the grocery and retail spaces side by side so that if a larger market were needed in the future it could happen. This is not reflected in the current design 2. The entrance on El Camino could cause back-up traffic on EI Camino going south and really big problems trying to tum left going north on El Camino after exiting the underground garage. Cars are going to try and cross all lanes of traffic to make a U-tum at an already difficult comer. I would like to see the entrance to the underground parking either on the first street before College or Stanton Avenue. Doing that will allow for more space for a grocery store by connecting to the retail space. For me this really isn't just about JJ&F. it is about keeping a viable market within walking distance of our lovely neighborhood of College Terrace. JJ&F or not. . Sincerely, Eileen Stolee 984 S. California Avenue Palo Alto, CA 94306 4/28/2009 Betten, Zariah From: Sent: To: Subject: Dear Commissioners - Pria Graves [priag@birkeUhouse.com] Monday, April 27, 2009 4:02 PM Planning Commission 2180 EI Camino I once again have another commitment on Wednesday evening al')d am unable to participqte in_>YOIl~ discussion of the proposed development at 2180 EI Camino Real. Despite minor improvements in the proposed project I I still remain very concerned about the massive scale and several other aspects. Neighborhood Commercial zoning is intended to provide a cort:'fortable transition space between the busier, more commercial uses on EI Camino and the quieter and smaller scale residential uses behind. This large-scale office development utterly fails in this regard. It creates the potential for the type of interface difficulties that have plagued College Terrace for years along its border with the Research Park: incompatible uses make uncomfortable neighbors. The eXisting streetscape along this part of EI Camino consists of single and two-story buildings. Inserting a massive office block into the middle of our neighborhood will undoubtedly be used as future justification for all future development to be as big and imposing. The neighborhood commercial character of the existing frontage will vanish. This poses an especially alarming threat to the historic church building directly across EI Camino from the 2180 site. I also continue to have huge concerns with respect to traffic and parking issues around this project. Although I applaud the decision to move the access to the underground parking from Staunton to EI Camino, I still anticipate an increase of traffic and congestion along Stanford Avenue. I also predict that much of the traffic destined for the site will cut through on Yale and Oxford when the Stanford/EI Camino intersection is busy. Other steps are needed to control the behavior of these drivers (such as a partial closure of Yale at Oxford plus a center island on Oxford to direct the turning cars). These measures should be funded by the developer. In addition, since many people do not like to drive into underground parking lots, the development will increase the pressure on surface parking on nearby neighborhood streets. Although the soon-to- be-implemented permit program will provide us with some protection from building staff parking in the neighborhood, the two hour "free" parking window will allow those coming to visit the building to park at will on our streets, causing more traffic as well as depriving residents of parking. I am also extremely concerned about the noise which will result from the project. I believe there will be unacceptable noise both from the construction and permanently, an increase in ambient noise levels from the air conditioners which appear to be located on top of this three-story monster. Our experience with air conditioning units in the Research Park is that the noise from them can travel a considerable distance into our quiet neighborhood I disrupting our night-time 1 peace and quiet. The City's noise ordinance addresses only noise impacts at or near the property line and at street level, not the impact on neighbors blocks away who are the victims of noise passing over the top of the intervening buildings. Once a building is in place, it is extremely difficult to get any satisfaction should there be a noise problem of this kind. With respect to the construction, I am particularly concerned about the excavation and compaction needed to create the below grade parking structure. During the recent construction of the basements under the two small Llnits at 550 College, the noise inside my home was utterly intolerablel·· Though almost inaudible outside, the vibration WQS, transmitted through, the rock layer under the soil into my house. Again, Palo Alto's noise ordinance does not address this kind of problem and with the much larger scale of this project, I'm frankly terrified as to the potential impact of this construction. I remain convinced that this proposal is too big and has too many impacts on our neighborhood. The proposed IIbenefit" of BMR housing offers nothing to the neighborhood. And while we all want J J & F to remain, the question is at what cost to those who live here? Regards, Pria Graves 2130 Yale 2 ANNETTE PORTELLO .ROSS Apri129, 2009 Planning and Transportation Commission 250 Hamilton Avenue Palo Alto, California 94301 Re: 2180 El Camino Real/College Terrace Centre Dear Commissioners, 2103 Amherst Street Palo Alto, California 94306 650-493-3760 I have lived in College Terrace since 1983. For the past year I have been an active member of the College Terrace Task Force studying this project. This letter is from me individually; it is not written on behalf of the Task Force. The applicant for the College Terrace Centre project is requesting a zoning change that, if granted, would have significant impact on College Terrace. To gamer support for the zoning change the applicant has been engaged in a campaign to convince College Terrace residents and City decision- makers that supporting this project is the same as supporting JJ&F, and that JJ&F will return when the project is complete but only if the zoning change is granted. This strikes me as an incongruous position to take towards an anchor tenant with a proven client base and broad community support, but that is where we are. I want to see JJ&F return but I am concerned that the outcome will be a development that, despite the Commission's previous request that the project be scaled back, is still nearly three times what is allowed for office space under existing neighborhood zoning but with no requirement or guarantee for a neighborhood-serving grocery store, be it JJ&F or not. I do not think that the project, as submitted, has sufficient community benefits to warrant sacrificing the protections of the current Neighborhood Commercial ("CN") zoning. My reasons follow. 1. The square footage dedicated to a grocery store in the current plan is 8,000sf; a size that is smaller than JJ&F is now. There is the promise of 2,400sf outdoors, but that cannot be included in the floor area calculation for a grocery because it is not covered. 2. In Palo Alto alone JJ&F faces competition from Safeway, Whole Foods, Piazza's, Andronico's, Mollie Stones, Country Sun, the weekly Farmer's Market and, soon, Trader Joe's. 3. Although we do not know when the developer will break ground (and that could be a critical detail) there will be a construction hiatus that could easily last 18 -24 months. That is a long time for a grocer to have no claim on market share while once loyal customers are forced to shop elsewhere. 4. As currently designed, the College Terrace Centre is 64.5% office, 13.6% residential, 12.9% grocery, 9% other retail and under-parked by 27 spaces. We are told that JJ&F has a confidential agreement with the developer that may offset certain economic realities. I hope it is very favorable to JJ&F. However, if the cost of being out of business for an extended period of time plus the cost of tenant improvements plus the cost of the new lease plus the incalculable cost of lost market share preclude the return of JJ&F, where does that leave the neighborhood? I think the answer is clear:. College Terrace will find itself with a 61,960sf, three story under-parked development with 14 new housing units but no JJ&F and possibly no neighborhood-serving grocery store at all. 5. JJ&F has stated that they intend to return and they must know that the store is smaller than what they now have. Presumably, the store will be designed in a way that maximizes the utility of the useable space, but 8,000sf is still much smaller than what most other--grocers would require. On .. lin~ research suggests Jhat 1 O,OOOsf under roof is the minimum area needed (e.g. Fresh & Easy) but 12,000 )5,000.sfis a more common minimum area needed for a grocery to be competitive. While JJ&F is uniquely positioned with the promise of a subsidized lease rate and a dedicated client base to make it in an 8,000sf store, it is unlikely that another grocer would be attracted to the space if JJ&F were not able to return. Whatever decision is made, I think it would be prudent to require that the space be designed in such a way that sufficient contiguous under-roof square footage is dedicated for a neighborhood-serving grocery so that the space is viable to other groceries should JJ&F not return. 6. The requested zoning change from CN to Planned Community ("PC") would be inconsistent with the City's Comprehensive Plan and would eliminate the protections of CN zoning while a smaller project under CN Mixed Use zoning could achieve much of what the developer seeks and preserve the neighborhood. 7. Granting a zoning change to PC would set a precedent for doing the same thing along the EI Camino Real border of College Terrace and this project alone presents uses and intensities that do not comply with the Comprehensive Plan's requirement for preserving neighborhoods. Land use decisions should, I think, be based on the merits of the application and compatibility with the City's Comprehensive Plan. I urge you to not approve the application in its current fonn but to instead consider alternative development options that are consistent with the City's Comprehensive Plan and that preserve the College Terrace neighborhood. Sincerely, Annette Portello Ross Betten, Zariah From: Sent: To: Subject: Larry Kavinoky [lkavinoky@stanfordalumnLorg] Sunday, April 26, 20099:16 PM Planning Commission 2180 EI Camino (aka JJ &F Centre) I believe the major community benefit of this project is a viable grocery store. To that end I would like you to approve the zoning change to PC with enforceable provisions that .,,·,~the.size, rent and other terms be specified by.you ... and·,Y0ur-s1::aff, no·t"the· current· _.-A landlord and tenant. I am sure that in the last 10 years with Alma Plaza your staff knows what the industry needs for a viable grocery store in perpetuity. Perhaps the size for a neighborhood store is 5-10-15 thousand square feet. Perhaps the rent is 25-50-75% of "average retail" or some other bench mark. Perhaps the developer should be required to provide a "turn key" project meaning that all the grocery store furnishings and fixtures are provided in the rent. Perhaps in the future the rents or terms will have to be adjusted to keep a grocery store viable. If JJ&F or another local grocery store is willing to pay the requested rent, then it is viable. If not, then something has to be adjusted to work in a changed environment. We all love JJ&F so please remember that when we speak of JJ&F you will hear in your official planning capacity "grocery store". My family has been associated with the JJ&F folks since before they/we moved to Palo Alto. It should be of no concern to any of us what the current landlord and tenant have agreed to for now and in the future when you establish the exact definition of "viable grocery store" for this project. Also remember that when you see the public's support for this project, much of it really means they are supporting JJ&F and not the specifics of the rest of the project. Please move this project along and don't make us wait another 10 years for a newer and better grocery store. In my mind there is no II subsidy" here. The term just obscures the economics of the project. The developer has costs to meet LEEDS standards, earthquake standards, parking standards, grocery requirements, etc. They then will collect rents from the grocery store, retail, office, and other tenants. If your restrictions are too severe, the project will not move forward. Please work with the developer to allow him enough rent, including the grocery store, to make this project viable for the owners. Perhaps your staff has some idea of how much income it will take to recover the anticipated costs. If that means exceeding your normal limits on "office space" or other metrics, please weigh that against the community benefit of the viable, walkable, neighborhood grocery store. Remember also that Stanford is adding many new housing units within a quarter mile of this project. I live directly across the street from this proposed project and I urge you to take the necessary action to be sure we have a viable grocery store. I do not believe it is in the community's best interest to drag this out as has been done with the Alma Plaza development or Ricky's. I believe that approving changes in zoning, etc in order to get the tremendous community benefit of a grocery store that would otherwise be forced to close is a great message to send to the citizens and developers of this city. "The city is prepared to adjust its normal metrics when necessary for a particular site and benefit." Please pass this project along to the next step. Larry Kavinoky 550 Oxford Ave, #4 1 Betten, Zariah From: Sent: To: Cc: Subject: Attachments: Fred Balin [fbalin@sbcglobal.net] Tuesday, April 28, 2009 7:44 AM Planning Commission CTRA Boardmembers; 2180ECRTaskforce Item 2: Neighborhood-wide Distribution from CTRA 2180 ECR Task Force TaskForceDistribution_27 Apr09.pdf TaskForceDistributi on 27Apr09 .... -Commissioners, FYI. Members of our Task Force began distribution yesterday of the materials in the ~ttached PDF (8 pages, 8.5 x 14 legal size) to all doorsteps in College Terrace to further update neighbors on the proposal before you on Wednesday evening and to encourage informed participation. Fred Balin Member, CTRA 2180 EI Camino Real Task Force 2385 Columbia Street 1 The CTRA 2180 EI Camino Real Task Force Requests Your Careful Consideration of This Neighborhood-wide Distribution Then express your views to the Planning & Transportation Commission ASAP via email (to planning.commission@cityofpaloaito.org) and/or in person at the public hearing Meeting begins at 6 pm, this Wednesday, April 29 However 2180 El Camino Real is Agenda Item No 2 We do not expect it to start before 7 pm Monday, April 27, 2009 Dear College Terrace Neighbor, On Wednesday evening, the Planning & Transportation Commission will decide whether or not to initiate a zone change on the 2100 block ofEl Camino Real from Neighborhood Commercial (CN) to Planned Community (PC) for the current project proposal and to change the corresponding Comprehensive Plan land use designation. This packet includes: Project-applicant floor plans with task-force annotations in the margin, • Chart comparing the proposed PC with current CN guidelines, • Task force editorials cautioning about a petition and exposing a false choice, and This information letter. As a group and since the beginning of 2008, the task force has been carefully studying the project. Members share a commitment to carefully research proposals, disseminate thoroughly objective information, gather input, and monitor the process. (Key task force distributions can be found at www.2180ecrtaskforce.org). Near the end of last year, the task force developed a survey packet and then distributed it to all College Terrace households. The results were made available by Christmas. Recently, the project was updated with minor changes that have little or no impact on the survey. You will find the survey results within the floor plan margins. Part 1 of2 Part 2 Last Wednesday, the CTRA Board approved a statement to the Planning & Transportation Commission. The statement is a skillfully crafted document. It is informed by the survey results but is expressed "in terms of preferences and values not in terms of planning metrics, zoning options, or statistics. " It also defers ultimate ju4gment to the commission, citing that "the Planning & Transportation Commission is in a better position to translate these preferences into a structuredframeworkfor movingforward." In several areas, the statement speaks to a broader vision of a neighborhood-centered environment and concepts that would enhance it and those that would dimini~h it. The full text can be found in Saturday's eNews and via the web at www.ctra.org. The task force recommends that you read it. . Now you have another important opportunity to let your voice be heard: Planning & Transportation Commission (planning.commission@cityofpaloalto.org) or in person at the hearing CTRA Board (board@ctra.org) Task Force (input@2180ecrtaskforce.org) Thank you for your interest and participation, 2180 EI Camino'Real Task Force Member [Task Force: Fred Balin, Maggie Heath, Larry Kavinoky, Emily Marshall, Annette Ross, William Ross, Doria Summa] Task Force Editorial JJ&F Store Petition: Understand What You Sign Did you see. the petition at JJ&F Market? Did someone bring one to your door? If you sign this petition, you become an important part of a promotional campaign, orchestrated by the 2180 El Camino Real developer, in stating that you are "wholeheartedly supporting" the approval of his proposal, in its current form, as it comes before the Planning & Transportation Commission for consideration on Wednesday, April 29. As per the City's Staff Report, the proposal is not consistent with either the current Neighborhood Commercial zoning or the Palo Alto Comprehensive Plan. Both would need to change to permit a development with more than twice the commercial space allowed under the current zoning and dominated with offices geared to a regional not a neighborhood business district. A significant, increase in parking requirements and traffic generation, in addition to a potential precedent for similar projects on both sides of the site are among other possible side effects. If you are comfortable with all aspects of the project, then endorsing the petition is fine. But if you thought you were signing on for something else, for example, a simple heartfelt show of support for JJ &F Market and a desire that it return after redevelopment - a preference for 88% of our neighborhood survey responses then you have been misled. The petition reads, "We have reviewed the plans for the proposed project ... " What plans were you given for review? Did they discuss trade-offs as well as benefits? If you wish now to correct matters, send an email to the Planning & Transportation Commission (Planning.Commission@cityofpaloalto.org), which has received all signed petitions submitted by last Wednesday, stating that you want your name removed. If you did not sign the petition but are disturbed by this tactic, you can also help by saying so in an email to the commission. In your email, whether you signed the petition or not, you may wish to consider contrasting this form of "outreach and input" to the detailed, objective material generated by the task force and the thoughtful, multi-faceted considerations reflected in the recent statement on the project proposal by the CTRA Board. Task Force Editorial The False Choice Within 2180 EI Camino Real Since the initial proposal for redeveloping the 2100 block ofEI Camino Real, discussions in the neighborhood have been dominated by the future of a market, and specifically JJ&F. JJ&F has been on the site for six decades, with one lease after another, in good times and bad, with.no city requirement for a grocery store, and under the continuing land ownership of the same family. So why the heightened anxiety surrounding the proposals? It is fueled in large part by a pair of misleading assumptions linked as a false choice. Misleading Assumption #1 The applicants say that if the Planned Community (PC) is denied, JJ&F would be forced to leave. It is misleading to make this assertion. If the PC is denied, JJ&F will not continue on the site only if(l) the landlord refuses to offer a new lease, (2) the rent offered is more than JJ&F can afford to pay, or (3) JJ&F decides not t~ return for other reasons. Misleading Assumption #2 The applicants say that if the zone change to PC is approved together with the project as is, JJ&F will return to business on the site after th~ redevelopment. This is not assured. Eighteen months to two years is a long time to be out of business and then start back up again. People form new habits and connections are lost. Declaring this assumption as' fact is misleading. The False Choice . The choice is notmerely between one of these two mi~leading assumptions. A third option is for approval of a zone change to PC, with as few or as many conditions on the proposal as the Planning & Transportation Commission recommends and the City Council decides to impose. N ••.• "'1. . ~. ) --:j-l--·-~:~~ ... _._ ~~~s ~l -.... '\..,_IV ~.i(~ __ e A I.. o R. o GROCERY STORE o OFFICE o o o S TAU N TON C 0 U R T / ) Ground Floor 2180 EI Camino Real Proposal Retail Use -North Building Grocery Store (JJ&F or other) as public benefit / -8,000 sf enclosed -2,447 sf of open-air market extending 28 feet back from 12-foot sidewalk on EI Camino Neighborhood Survey Results: • Full-service grocery as condition of approval is important to 90%; that the condition of approval should exist in perpetuity, important to 75%. • If ground-floor retail spaces between the two buildings are not directly connected and if JJ&F does not return, 64% agreed that the potential to attract another market will be signif!cantly reduced. Retail Use -South Building 5,580 sf enclosed space Total Retail: 13,580 sf + 2,447 open air market Neighborhood Survey Results • 42% concerned that proposed retail space (16,000 sf including 2,400 sf open-air) is not sufficient Parking Garage Driveways -Off EI :Camino between retail buildings (Requires Caltrans approval) Neighborhood Survey Results: • Over two-thirds agreed on the importance that parking: garage driveways are on EI Camino. Surface':On-Site Parking -11 spaces off Staunton (shared by day, for residences otherwise) (ContinJed at end of Second Floor margin material) o 2ND flOOR OfFICE o OECK& ' VEGETATED ROOf S TAU N TON N o 'C",;,i' ~",:,:;;,,/J,c _~/ 12 4 l.. '1",,\, R o o 2ND flOOR OffICE o o o o o o o o OPEN TO PARKING BElOW o o o C 0 U R T / ) o Second Floor 2180 EI Camino Real Proposal Offices , -27,888 sf across north and south buildings I _ Two buildings connected at this level Housing -Top floor of 14 BMR housing units (CQntinued from end of Ground Floor margin,) Below Market Rate CBMR) Housing 14)one-bedroom, 600 sf, two-story units: - 4 units to pay for commercial impact fees -10 units as public benefit Neighborhood Survey Results • Responses fairly evenly distributed between "agree," "neutral," and "disagree" on importance of BMR housing Office Uses 6,051 sf, includes: -Offices in south building -Lobby, stairs, and elevator in both buildings Community Room -Not included (was 1,600 sf off-hours office) Neighborhood Survey Results • Responses fairly evenly distributed, but slightly more favorably than for BMR housing N '\;\ .... ;\{K/·~\;-.. ·_i)J' ... ,~ .. ~~, .. I? II I .. ".I\.) ----~ . f A I.. \~::.;~:fi.i' ... o o o :lRD FLOOR OFFICE o o o o o o S TAU N TON C 0 U R T D Third Floor 2180 El Camino Real Proposal Office usb -South Building -12,092 sf Total Office Use (of all three floors) -39,980 sf Neighborhood Survey Results • 80% concerned, amount of office space proposed is three times the maximum allowed under CN zoning. • 73% concerned, office use seems geared to a business district rather than to a neighborhood. • 61 % concerned, medical offices might be permitted on the project site. Building Heights North Building (2 stories): 30 ft (40 ft to gazebo roof. Gazebo is square area at end of walkway) South Building (3 stories): varies up to 50 feet Housing Units (2 stories): 33 ft 6 in Building Setbacks (from property line) -to EI Camino: 4 ft 11 in (to create required 12 ft sidewalk) - to Oxford: 2 ft 4 in - to Staunton: 7 ft opposite residential; 18 ft opposite commerc,ial - to College: 1 ft lOin Ii I' « __ !~r_ ... ) PARKING AND LOADING PLAN -BASEMENT LEVEL A ~~ETAlUOFFICE.SHAAEO = PARKING AND LOADING PLAN -BASEMENT LEVEL B TOTAl.. PARKING· BASEMENT LEVa. 1 E the parking garage driveways are on EI Camino. 1st Level (A) 105 spaces provided 40 for Grocery Basement Levels of 2180 EI Camino Real Proposal 65 shared between residential, retail, and office Total Parking On-Site Parking Provided 227 spaces (l05 + III + 11) Parking Required by Parking Code: 254 spaces Applicant cites to areas of code for exceptions up to 20% permitted at the discretion of the Planning Director Neighborhood Survey Results: 59% of all responses agreed it was important that the city does not permit a parking reduction on the project site unless the applicant's justification is clearly permitted within the curent municipal code. 2d Level (B) III spaces provided all for offices Basement Levels, Overall Parking and Traffic Generation 2180 EI Camino Real Proposal Traffic Generation As per the latest Transportation Impact Analysis from the applicant's consultant, the project: -would increase the projected number of daily vehicle trips to and from the site, from an estimated 897 to 1590, an increase of 693 trips (or 77%) . -would not create significant impacts as defined by standard metrics, related to delays at intersections and traffic increases onto residential streets. Neighborhood Survey Results Just over 70% agreed that they were concerned about the amount of additional non-resident traffic on TOTAl.. {ALL Of ACE PARKING) . Stanford and California Avenues and ;} via interior street cut through even if Surface Level Parking 11 spaces shared by day for residences at other times Zoning Comparison Chart: 2180 EI Camino Real Proposal Created by CTRA 2180 EI Camino Real Task Force for Neighborhood Distribution (4/27/09) A B C D E EXISTING Lots and Uses ~ under CN Choice 1: ALLOWED Under CN Choice 2: PROPOSED by Applicant via DIFFERENTIAL (D vs. C) Neighborhood Commercial (CN») Neighborhood Commercial (CN) Change to Planned Community , Between Proposed PC and Non-Residential Standards Mixed Use Standards (pC)2 District ' Existing CN Mixed~Use Standards Lots 1 Sizes 4 lots, 50,277 sf (1.15 acres): 1 lot, 50,277 sf (1.15 acres): Combines 4 lots into 13 520 College: -10,200 sf 2180 EI Camino Real: 50,277 sf 2155 Staunton -6,900 sf : 2121 Staunton: -11,200 sf 2180 El Camino: -22,000 sf Non-Residential Sections: Total Floor Area 18,028 sf 20,111 sf 25,138.5 sf 53,560 sf + 28,421 sf Floor Area Ratio 0.36 to 1 0.4 to 1.0 0.5 to 1.08 1.065 to 1 + 0.565 to I Retail 13,027 sf, including: 10,055 sf "protected"S 12,569 sf "protected,,9 13,580 sf, including: + 1011 sf -JJ&F: 8,712 sf' -JJ&F or other market, 8,000 sflO II -Futon Shop: 4,315 sf Other retail, 5,580 sf , -Offices 5,001 sf: 10,055 sf 12,569 sf 39,980 sf + 27,411 sf -World Centric ) -Other Other permitted uses6 Other permitted uses Other conditional uses 7 Other conditional uses Residential Sections No residential permitted Total Floor Area 0 25,138.5 sf 8,400 sf -16,"(38.5 sf Floor Area Ratio 0 0.5 to 1.0 0.167 to 1.0 -0333. to 1 Units 1 Density 0 17 units 1 15 per acre 14 unitsl2 -Junits Non-Res Plus Res Sections Total Floor Area 18,028 sf 20,111 sf 50,277 sf 61,960 sf + 11;683 Floor Area Ration 0.36 to 1 0.4 to 1.0 1.0 to 1.0 1.23 to 1.0 +0.23 Heights: Up to 40,13 South bldg: varies, up to 50ft IS f' -Generally 1 story Up to 25' 1 2 stories up tolO' o Within 150' of residential 1 and 2 story Up to 25' I 2 stories Up to 35' 14 BMR units 33 '6; " ~1'6" North bldg: 30'; 40' gazebo rooftop ,1 + 5' at g~ebotOotop Lot Coverage ?% for each of 4 lots Up to 50% of the total sf of the lot Up to 50% of the total sf of the lot 47% covered by buildings -3%' .::. Landscape IOpen Space ? 35% 35% ? l ? On-Site Parking 47 surface spots Up to 10016 Up to 16511 227 proposed; 254 requiredl8 not applicable Setbacks Front (EI Camino) ? • 4'2" to 10' 19 • 4'2" to 10' • 4' 11" +0' 9" Side Street (College) ? • 20' • 5' • l' 10" -3' 2" Side Street (Oxford) ? ,20' • 5' • 2' 4" -2'8" Side Street (Staunton) ? • 20' 05' • 7' at residential; 18" at commercial +2';+13' Zoning Comparison Chart: 2180 EI Camino Real Proposal Created by CTRA 2180 EI Camino Real Task Force for Neighborhood Distribution (4/27/09) 1 Purposes of Neighborhood Commercial (CN) District: " ... fntended to create and maintain neighborhood shopping areas primarily accommodating retail sales, personal service, eating and drinking, and office uses of moderate size serving the immediate neighborhood, under regulations that will assure maximum compatibility with surrounding residential areas;" (PAMC 18.16.010 (a» 2 Specific purposes of Planned Community (PC) District: " ... intended to accommodate developments for residential, commercial, professional, research, administrative, industrial, or other activities, including combinations of uses appropriately requiring flexibility under controlled conditions not otherwise attainable under other districts. The planned community district is particularly intendedfor unified comprehensively planned developments which are of substantial public benefit, and which conform with and enhance the policies and programs of the Palo Alto Comprehensive Plan (Palo Alto Municipal Code 18.38.010) 3 Minor subdivison, i.e., combining of 4 lots or less, requires approval by the planning director. (PAMC Chapter 21) 4 Current JJ&F space of8,712 sf consists of6,459 sf sales area and 2,253 sf for other uses. 5 Under CN, existing ground-floor retail space cannot be replaced by offices on the ground floor (PAMC 18. 16.050(a». However the total could be reduced via offices on tQe second floor, which can.. expand up to 25% of the site without a conditional use permit. If the maximum floor area on the site of 20, 111 sf (i.e, 0.4 x 50,277) were evenly split between office on the second floor and retail on the ground floor, total floor area for each would be 10,055 sf (Based on methodology in 4/29/09 Staff Report, Attachment D, Table 3, last item.) 6 Pennitted uses include retail services; neighborhood business services; personal services; eating and drinking services; churches and religious institutions; animal care, excluding boarding and kennels; day care centers; family day care homes; small adult day care homes; and reverse vending machines 7 Conditional uses include medical offices, spaces over 25% of the lot size; private educational facilities; private clubs; recycling centers; commercial and outdoor recreation; liquor stores; ambulance services; automobile service stations; convalescent facilities; large 'adult day care homes; banks and financial services; mortuaries; fanner's markets; and temporary parking facilities. 8 For CN mixed-use sites on El Camino Real, non-residential FAR may increase to a maximum ofO.5 to 1; otherwise it is 0.4 to 1 (PAMC 18.16.060 (b) (8» 9 As stated in footnote 5, under CN, the existing ground-floor retail space cannot be replaced by offices on the ground floor. (PAMC 18.16.050(a» However the total could be reduced via offices on the second floor, which can expand up to 25% of the site without a conditional use permit. If the maximum non-residential floor area on the site of25, 138 sf (i.e, 0.5 x 50,277) were evenly solit betlNeen office on second floor and retail on ground floor, total floor area for each would be 12,569 sf (as per 4129/09 Staff Report, Attachment D, Table 3, last item). 10 Proposed additional 2,447 sf for open-air market is not counted in floor area if it does not have a permanently covered roof (as per City Planner Russ Reich at 1011108 P&TC hearing.) II Proposed public benefit: requirement for a grocery story in the PC. Note: A grocery store is a permitted, but not a required use in the CN. 2d Note: a private agreement, such as a lease with a subsidized rent cannot be considered as a public benefit in regard to approving a PC (as per Assistant City Attorney at 10/1108 Preliminary Review). 12 Proposed public benefit: 10 of the 14 one-bedroom below market rate units. Remaining four units to cover mandated housing fees for commercial development above what currently exists on the site. 13 For CN mixed-use sites on El Camino Real, heights may increase to a maximum of 40 feet (from the standard 35-foot 14 For CN mixed use sites within 150 feet of a residential zone district abutting or located within 50 feet of the site, the maximum height drops to 35 feet (PAMC 18.16.060, Table 4). This stipulation encompasses two nearby residential zones, the RM-30 zone along part of Oxford and the RMD (NP) zone surrounding the Oxford-Staunton corner and impacts about 40% of the site. 15 PC requirements stipulate a maximum height of 35 ft for portions of the site within 150 ft of residential districts (PAMC 18.38.150 (b). In addition to the two sites noted in the previous footnote, this stipulation would also include a third residential zone, the Ananda Church, R-2 zoned site on the east side ofEI Camino. (See also 4/29/09 Staff Report Page 7 discussion of Ananda site). 16 Intensive retail at 5 spaces per 1,000 sf; office at 4 spaces per 1,000 sq ft. (PAMC 18.53.040). If entire site is intensive retail, 511 000 x 20,000 sf = 100 spaces max. If 10,055 sf (protected) is retail and balance is office, (5/1000 x 10,055) + (4/1000 x 10,055) = 50.2 + 40.2 = 90 spaces. 17 Intensive retail at 5 spaces per 1,000; office at 4 spaces per 1,000 sf; 2-bedroom multi-family units at 2.33 spaces per unit. (PAMC 18.53.040) If all non-residential is intensive retail, 5/1000 x 25,000 = 125 spaces non-residential max; if all 17 residential units (i.e., 15 * 1.15 acres) are 2-bedroom units or more, 2.33 x 17 = 40 residential spaces max. 125 + 40 = 165 spaces max. 18 "Code does make provisions for parking requirement reductions in specific instances such as joint use (shared) parking facilities, affordable housing units, and housing near transit." (4/29/09 Staff Report p. 6) Add the discretion of the Planning Director, code allows up to 20% reduction in each ofthese areas (PAMC 18.52.050 Table 4). 19 Minimum of 4' 2" setback is required to create 12' sidewalk on El Camino Real as required by PAMC 18.16.060 (b) (8). Susan Rosenberg ________________ 1425 Stanford Ave. April 23, 2009 To: Palo Alto Planning and Transportation Commission 'LR.e: 218CfEI Camino Real Palo Alto, CA 94306 Spawned by the Trees for EI Camino Project, and with a grant from Caltrans, the City of Palo Alto developed the El Camino Real Design Master Plan in 2003. The plan was the result of the inconsistencies that exist with having a California State Highway running smack dab through the middle of Palo Alto. The project before you effects an entire block on EI Camino Real, the adjacent College Terrace neighborhood, Evergreen Park neighborhood, and an expanding Escondido Village, and therefore the goals reached in the EI Camino Real Design Master Plan should have bearing on your decision regarding this project. Briefly, the vision for EI Carnino Real that was developed during this process of public participation is: -To change the character from a highway to a road safe for walkels, bicyclists and vehicles -To become a center of community activity rather than a barrier -To become an aesthetically attractive corridor -To improve the quality of life along EI Camino Real while protecting adjacent neighborhoods The vision becomes reality with this project in some of the following ways: -A comprehensive traffic, parking, transit, bicycle and pedestrian program would enhance safety over what exists -The return of JJ&F market and additional neighborhood serving retail coupled with the comprehensive safety program would draw consumers -A well designed project would replace buildings that are architectural "tired" and seismically unsound -The location of housing along Staunton provides a "step" into the neighborhood I believe this project would greatly assist in bringing the vision of a better EI Camino Real to reality, and would benefit my neighborhood and my community as a whole. It is truly a forward- looking project for Palo Alto. Given my interest that the Trees for EI Camino Project continue to flourish, I would have the developer replace the median trees adjacent to 2180 EI Camino Real consistent with the Trees for EI Camino Project as a condition of approval. Sincerely Susan Rosenberg Cc: Curtis Williams, Russ Reich 2 ') William D. Ross Kypros G. Hostetter Karin A. Briggs ChiragShah Of Counsel Law Offices of William D. Ross A Professional Corporation 520 South Grand Avenue, Suite 300 Los Angeles, CA 90071-2610 Telephone: (213) 892-1592 Facsimile: (213) 892-1519 April 29, 2009 VIA FACSIMILE & ELECTRONIC MAIL (650) 617-3108 planning. commission@cityofPaloalto.org The Honorable Daniel Garber, Chairperson and Members of the Planning & Transportation Commission City of Palo Alto 250 Hamilton Avenue Palo Alto, CA 94301 Palo Alto IOffice: 400 Lambert Street Palo Alto, California 94306 Telephone: (650) 843-8080 Facsimile: (650) 843-8093 Re: Commission Meeting Date: April 29, 2009 Public Hearing No.2; 2180 El Camino Real Dear Chairperson Garber and Commission Members: This communication comments as a resident and homeowner within College Terrace and a business owner and taxpayer within the City who has both a personal and business account with JJ&F Market ("JJ&F"), a portion of the proposed project before your Commission. Although I anl a member of the College Terrace Task Force, the views set forth in this communication are mine and are repetitive of previous requests made to your Commission in communications dated October 1, 2008 and February 12, 2008 respectively, copies of which are enclosed. It is again requested that the Commission consider a less dense alternative then that which is now proposed by the Applicant as the effect of initiating the requested Zone Change and General Plan Amendment is to initiate a process by the Planned Community ("PC") zoning, which will amend the Comprehensive Plan ofN eighborhood Commercial Land Use Designation on a piecemeal basis. The Honorable Daniel Garber, Chairperson and Menlbers of the Planning & Transportation Commission City of Palo Alto April 29, 2009 Page 2 ~. Further, despite numerous representations concerning the Project, there is no guarantee that JJ&F Market will return to the site, and in fact, there is no guarantee that a neighborhood serving market could be maintained at the site. 1 The personal observations set forth in this communication concerning the College Terrace area and JJ&F do constitute substantial evidence as to how the proposed Project could affect the College Terrace neighborhood. See. Orofino Gold Mining Corp. v. County ofEI Dorado 225 Cal.App.3d 872,882 (1990). THE PROJECT DESCRIPTION The Project is defined in the Staff Report under the designation "SUBJECT" and is supplemented by Appendix F "Applicant's Development Proposal" dated January 14,2009 accomplished by Carrasco & Associates, Architects. ISSUES FOR ANALYSIS A review of the presently proposed Project indicates that the following issues need to be clarified before your Commission makes a recommendation. 1. The environmental analysis of the Project should exist presently prior to your decision because of a recent decision of the California Supreme Court. 2. The Project configuration, which now contains a General Plan Amendment, has not been sufficiently analyzed with respect to its internal consistency with the balance of a Comprehensive Plan,2 or its consistency with the Comprehensive 1 Your Commission's action to initiating a G Combining District and Neighborhood Center Zoning at your June 12,2008 meeting would have lead to more assurance that a neighborhood serving grocery store was possible at the Project site. 2 See, Government Code section 65300.5. The Honorable Daniel Garber, Chairperson and Members of the Planning & Transportation Commission City of Palo Alto April 29, 2009 Page 3 Plan Housing Element, a document which is subject to periodic review,for its legal sufficiency by the State Department of Housing and Community Development. 3. The consistency of the PC Zone with the Comprehensive Plan should be analyzed first . before determining whether there are "substantial public benefits" associated with the Project. 4. There is still no guarantee that JJ&F will return to the Project site, or that the site will be adequately restricted so that a Neighborhood Commercial grocery store use would in fact remaIn. With respect to the environnlental review of the Project, it is initially noted that since last reviewed by the Commission, the California Supreme Court has clarified the obligations of a lead agency (like the City here) with respect to ~~e,!._(;l,!l~lysis of the environmental impact of a project as required by the California Environmental Quality Act (Public Resources Code section 21000 et seq., "CEQA") is to be accomplished. In Save Tara v. City afWest Hollywood 45 Ca1.4th 116 ("Save Tara") the California Supreme Court, among other things, clarified what constitutes a project and when evaluation of a project should commence. More specifi~ally, the Supreme Court held that when an action is taken by a public agency in the land use context that: ... commits the public agency as a practical matter to the project, the simple insertion of a CEQA compliance condition will not save the action from being considered and approval requiring environmental review. Save Tara, supra, 45 Ca1.4th at 132. Stated differently, there is substantial legal authority that the CEQA analysis should be accomplished now, before the Commission makes the decision. This can be directly The Honorable Daniel Garber, Chairperson and Members of the Planning & Transportation Commission City of Palo Alto . April 29, 2009 Page 4 -felated-to this .Projeet~ ·:rhis is particularly appropriate in .. this case as the adoption of a PC Zone sets·the stage for cumulative PC Zones on adjacent property. In other words, the City has an obligation to presently consider the cumulative environmental effects of its action before a project gains irreversible momentum. City of Antioch v. City Council 187 Cal.App.3d 1325 (1986) found that the construction of infrastructure would have a cumulative impact of opening the way for future development. City of Antioch, supra, 187 Cal.App.3d at 1333-1334. The same type of cumulative impact could be present here for PC Zoning on adjacent properties. CONCLUSION First, the revised proposed Project has not been established as being consistent with the Comprehensive Land Use Designation of Neighborhood Commercial and several of the Comprehensive Plan Element Goals and Policies, as well as the Comprehensive Plan Housing Element to ensure that they would fulfill the nlandatory requirement of City implementation of those goals and policies. Second, until the Comprehensive Plan Analysis has been accomplished, it is uncertain as to whether there is any public benefit associated with the Project components supported by substantial evidence as required under the PC Zone criteria. Finally, because the exact terms and conditions of the private agreement between JJ&F and the Applicant has still not been disclosed as to whether and how it would return to the property, the potential misuse of the PC Zone for accomplishing an intense mixed-use development along EI Camino persists, which should more appropriately be accomplished as a part of the Comprehensive Plan periodic revision, rather than by piecemeal PC Zoning. Very truly yours, t~'2:.·~ William D. Ross WDR:lla Enclosures: October 1, 2008 letter to the Planning & Transportation Commission February 12, 2008 letter to Planning & Transportation Commission Willi:un n. Russ K)'pl'us (;. Hustetter KllI'in :\, Bli~~s ( 'him:! Shllh Of ClItIIlsel VIA FACSIMILE (650) 617-3108 Law Offices of William D. Ross A Professional Corporation 520 South Graml Avenue, Suite 300 Los Angeles, CA 90071-2610 Telephone: (213) 892-1592 Facsimile: (213) 892-1519 October 1, 2008 The Honorable Daniel Garber, Chairperson and Members of the Planning & Transportation Commission City of Palo Alto 250 Hamilton Avenue Palo Alto, CA 94301 Palo Alto IODice: 400 Lambert Street Palo Alto, California 94306 Telephone: (650) 843-8080 Facsimile: (650) 843-8093 File No: ·l/HY' ~. -----, Re: Agenda Item No.2; Public Hearing 2180 El Camino Real (College Terrace Center) Dear Chairperson Garber and Commission Members: As a member of the College Terrace Task Force on the proposed developlnent, in addition to the issues presented to you by Staff, the following concerns should be considered and addressed, In making these comments, it is acknowledged that the Developer has seemingly addressed some of the concerns previously raised before your Commission. However, the essential issue that raised public concern was the potential elimination of the JJ&F Market and the continued provision for a neighborhood grocery store consistent with the COlnprehensive Plan. The modified proposal for the involved property raises two principal concerns. First, the proposal is contingent upon a confidential agreement between the Garcia Family and the Developer. The agreement evolved after a long litigated rent dispute between the Garcia Family and the Developer. The idea that there can be a confidential agreement in association with this Project is a misuse of the land use approval process. There are 110 trade secrets such as a formula for a soft drink or an intellectual property " The Honorable Daniel Garber, Chairperson and Members of the Planning & Transportation Commission City of Palo Alto October 1, 2008 Page 2 program~ involve& What is involved is' a grocery' ~toT~~=which >until· 'the confidential- agreement ~ pruts ofwhich have been discussed and irrreality actually suppressed discussion about a continued grocely store use on the subject property -do not involve trade secrets. This type of agreement cannot serve as the basis for a land use decision. In Trancas jJroper(y ()wners Ass'n v. City qj'Malibu (2006) 138CaLApp.4th 172, 186-187, the Court of Appeal exanlined whether a settlement involving land use authorizations in a litigation settlement could serve as the basis for a particular type and kind of development going forward. The litigation settlement was not made public and was discussed in Closed Session of the involved City Council. The Court of Appeal held that even the confidentiality provisions of the Brown Act could not shield the settlement from a public hearing. The public and your Commission is presented with a similar situation here, You are asked to initiate a proceeding with the understanding that there is a settlement between the Garcia F aJni ly and the Developer which calIDot be disclosed, but implies it is in the public's interest with the Project now proposed. Regardless of the merits of this proposed Project as may be c1ailned by the Developer, and without the anticipated analysis of the Project at a public hearing before your Commission an initial step must be disclosure of the confidential agree1nent. Relnarkably, in Palo Alto which prides itself on openness and thoroughness of process, it is unacceptable that a land use decision should proceed forward with one conlponent being a confidential agreement between the parties. A second issue which is advanced by the CWTent proposal for development is the use of the PC Zone. It can be justifiably stated that the current proposal is once again just too big for the subject property and offers no guarantee to the original concern of the neighborhood for the property. There is no guarantee for a neighborhood grocery store, there is no guarantee for a neighborhood commercial use as designated by the Comprehensive Plan. Will the COlnprehensive Plan along College Terrace on EI Camino be compromised by one PC Zone after the other? That cel1ainly would be the precedent if this development proposalls allowed to proceed. Pragmatically, it is recognized that JJ&F may choose not to be in the grocery business, but the concern that there be a permanent restriction for a grocery use consistent with the COlnprehensive Plan is not furthered by this development proposal. ._ ..: _... ;;lb. '~.- The Honorable Daniel Garber, Chairperson and Metnbers of the Planning & Transportation Commission City of Palo Alto October 1, 2008 Page 3 Your C01ll.1Uissioll should-takestepsto address The original public concem'rc'garding- this property -assuring that a tleighbol~hood' grocery store will be present. VelY truly yours, f./~ 2).~ William D. Ross WDR:lla cc:' CoJ1ege Ten"ace Task Force Members Williml! I), Ross Law Offices of I~nll'ns (:, Hustetft'r I..: .... in .\. B.'if!!S William D. Ross ( 'hinl~ l'ihnh A Professiomll CorpOI"ation orC'lIIll1s('1 520 South Gnmd A,'enue, Suite 300 Los Angeles, CA 90071-2610 TeJellhone: (213) 892-1592 F~lcsimile: (213) 892-1519 Februaty 12, 2008 VIA ELEC'TRONIL' & U.I.\". MAIL planning. cOlnniission@cityoipaloalto.org The Honorable Karen Holman, Chairperson and Mernbers of the PlalUling & Transportation Commission City of Palo Alto 250 Hanlilton Avenue Palo Alto, CA 94301 Palo Alto IOffice: 401.1 Lumbert Sfl'eef Pul" Alto, Califonua 94306 Telt' phone: (650) 843-8080 Fncsollile: (650) 843-8093 File No: 1/10 Re: Agenda lteln No.3, FebrualY 13, 2008 Regular Meeting; Commission PreJiininaty Review of Concept Plans for Development of66,] 33 Square Foot Three-Stoty Retai1l0ffice Building with Two Levels of Below Grade Parking and Rezoning frOl11 Neighborhood Commercial (CM) District to Planned Conlnlunity (PC) Dear Chairperson Holman and Conunissiol1 Members: This corrununication conunents as a resident and homeowner within College Terrace and a business owner and taxpayer within the City on the above-referenced matter on your Regular Meeting Agenda of February 13, 2008. The C011l.111ents are based upon review of the Project Applicants' file based on a public records request (GovenunentCode section 6250 et seq.) Accordingly, SOlne Applicants' doculnents vv'hich \vere not lncluded in the Staff Report Attachments to your Commission are referenced. The Honorable Karen Holman, Chairperson and fvlelnbers of the Planning & Transpoliation Commission City of Palo Alto Februmy 12, 2008 Page 2 1. SUMMARY OF COMMENTS Unti I the Project is completely defined with reference to the ultimate uses proposed, and a]] needed developlnent approvals Prelilninaty Review by the Comlnission is premature. Flllther, the proposal as described in the Applicants' Development Program Statement (Staff Repoli, Attaclunent G) is inconsistent with the Palo Alto Comprehensive Plan Designation for the Project site, Neighborhood Commercial, I and unless the proposed development includes a Plan Amendment, the Project should be found inconsistent with the COlnprehensive Plan by your Commission precluding further consideration until consistency has been achieved. NOh;vithstanding the lack of consistency with the Comprehensive Plan, the allegations of public benefit for the Planned Community (PC) Zone are superficial and inconsistent with actual facts as presented by the Applicants. Finally, the Applicants' Development Program Statement is inconsistent with representations Inade in a meeting with members of the public and business owners within the Project area \vhere it was indicated that the Applicants I·f/ould presenJe the JJ&F Market throughout the process of developnlent of the propelty and that the square footage would be increased upon conclusion to between 12 and 14,000 square feet. II. \VHAT IS THE PROJECT FOR WHICH PRELIMINARY REVIEW IS REQUESTED? The Applicants' Development Program Statement, Staff Report, Attachment G, represents that a three-stolY mixed office and commercial retail development would be located 011 the Project site, that the Project proposed would be a LEED certified building (of unspecified categolY), that a PC Zone District is necessary because of the intensity of use proposed to increase three tilnes2 the existing square footage on the subject property. 1 See, Palo Alto Comprehensive Plan, 1998-2010, Land Use and Circulation Map, Revised through 2003 (the "Comprehensive Plan"). 2 18,028 square feet of commercial space exists currently, 66,133 square feet is proposed. Staff Report, Attachment C, The Honorable K.aren Holman, Chairperson and Melllbers of the Planning & Transportation Commission City of Palo A1to FebruaIY 12, 2008 Page 3 A review of the entire Statement does not list tneneed forComprenenslve Plan Atnendmellt tioln tbe existing designation ofNeighb6rhodd Commercial to Service Cotnnlercial or RegionaIlCOI11D1Unity Conunercial to achieve required General Plan consistency,;! The Statelnent references potential use on the second and third floors of 38,967 square feet of tnedical offices which is also referenced as a public benefit of the Project (Staff Report, Attachment G, p. 4, ItelTI No.7). In the Project Applicants' file, in a document entitled "Environmental Assessment W orksheef' the following is set forth which clearly contemplates other Project approvals: 7. Application for: Minor Subdivision Site and Design.x Parcel Map ARB Review~ Use Pennit-=-Zone Change PC Zone EIA, EIR.x * for Tenant use by Medical Offices in future Additionally, several Staff communications indicate as proposed conditions to the PC zone that a Parcel or Final Map shall be submitted for review until the ()ffsite Plans have been submitted, and that a Subdivision Agreement is required to cause cotnpliallce with a conditionaillse approval and security of improvements onsite and offsite. See, for example, a December 21, 2007 communication to Can'asco & Associates regarding the Project from Russ Reich, City Planner. Assullling for the lTIOlnent only, that General Plan consistency is not an issue or would be subject to saIne type of Plan AnlendInent in the future, notwithstanding the holding of Lesher, .\'uj.Jra, the question remains as to what the actual Project is in telms of requested pennits? 1t is reasonably to conclude that because of the need to both combine ~ 1t has been accepted case law in California that all development Project approvals or entitlements musl he COllsi,\'tent with the adopted General Plan, here the Comprehensive Plan. See, I.esher ('ommllnicaliotls, Inc. v. Walnut (. 'reek (1990) Ca1.3d 5 31, 540, 544 (,<Lesher"). Stated succinctly, £Illy suhordinate land U:'ie action such as a zoning ordinance, e.g.. the PC zone designation, that is not consistent with the current General Plan is "invalid at the time it i,..,' pa.\·sed. ,. Lesher, slIpra. (Emphasis added) The City Municipal Code confirms this requirement as developed il~fiYl. The Honorable Karen Holman, Chairperson and ivletnbers of the Planning & Transportation Commission City of Palo Alto February 12, 2008 Page 4 existing parcels~lnd oecause'ofthe possibiliti'of existing airspace because'bftlre medical otllce cOllllnercial use is proposed on the second and third floors that the Project should no/ he considered for Preliminruy Review unt~l it is acknowledged that a Plan A.tl1endnlent, subdivision and conditional use pennit application for medical office space is a palt of the Project. Such a position by your Commission would be consistent with applicable lavv, all10ng other things, the Califolnia Environmental Quality Act (Public Resources Code section 21000 et seq., '~CEQA") as "segmentation~' or ~~chopping up of a Project" is prohibited under the concept that the decision-tuakers would be misled by assessing anything less than the whole of a Project from the outset as opposed to addressing its cOlnponents on a piecenleal basis, sonlething which is proposed here. See, 811rhank-(jlendale-/)asadena Airport Authority v. Hensler (1991) 233 Ca1.App.3d 577, 592. The prohibition against segmentation was applied to a shopping center mixed use proposal111 (";/;zcn.\' Associationji)r Sensible Develop (?lBishop A rea v. County (~f1nyo (1985) 172 Ca1.App.3d 151, 165 where the COUlt invalidating the use of two separate Negative Declarations for a single shopping center proposal requiring both legislative and q uasi-adjlldicatolY pennits exactly what is proposed here, PC Zoning (legislative pennits) followed by a review and a subsequent conditional use permit and Subdivision approval (qllasi-a.djud1catolY pennits) for luedical office facilities. In sununmy, both the ('0111n11ss1011 and the public are entitled to a cOfllprehensive Project Description of what is proposed. The advancelnent of a LEED SOllcture with cUlTently unspecified tenants should not be lIsed as a rouse to avoid conlpliance with either Genera1 Plan consistency or adequate envlfolUllental review. In SU111111aIY, until the Project is completely defined as consistent with what the apparent eventual intent of the Applicants is, Preliminary Review is inappropriate. / III. THE PROPOSED DEVELOPMENT IS INCONSISTENT WITH THE COMPREH.ENSIVE PLAN As noted earlier~ under Lesher,· supra, and under the Municipal Code, zoning ordinances I7Ulsl he in co}?/i)nnity (It'ith) and promote the objective policies and programs of the COlnprehensive Plan. Municipal Code section 18.0l.020(a). Indeed~ a PC Zoning District 1111181 be of~~substantial public benefit and ... C(H?ti)l"111 lJoi/h and enhance the policies and progran'lS (~lthe ... Con1prehensive Plan" The Honorab1e Karen H01man~ Chairperson and Menlbers of the Planning & Transpo11ation Commission City of Palo A Ito February 11. 2008 Page 5 Muni'cipal Co(le section-18.38.0 10:' (Emphasis added) The Staff Report does not provide a consistency analysi s of the Applicants' proposal. The standard for detellnining General Plan consistency is that of the (Jeneral Plan (luidelines 2003, p. 164: An action, progralu or project is consistent with the General Plan if, considering all aspects, it will fUliher the objectives and policies of the General Plan and not obstruct their attainment. This tnethod of detennining consistency has been judicially confinned. See, ( '()rono-Norco { InUied Schoo/})is!. v. City (~lC()rona ([993) 17 Cal.App.4th 985, 994. As noted earlier, the Applicants' request proposed development of the property is the PC Zone. Fronl the outset, the PC Zone designation is inconsistent with the Neighborhood COlnmercial Designation of the COlnprehensive Plan. Separate and apat1 from that initial and controlling inconsistency~ the proposed Project 1 s inconsistent with several Comprehensive Plan Policies and Goals. The Project a.s proposed H'ill "ohstruct" COluprehensive Plan Goals and P01icies. With respect to land use and cOlnnlunity design, the Project cannot be consistent with Goal L-I in mal11tainjng an attractive neighborhood when it proposes a three-fold increase in density which again is inconsistent with the Plan Designation. The Project would be violative of Policy L-6 as it would create an abrupt change in scale and density between residential and non-residential areas. Likewise Goal L-4 creating and inviting pedestrians to a COll1tnercial area is not achieved jf the principal use of the building is as a medical office f~lCility and no real grocery market is maintained. 5 Goa] L-4 the repetitive land use and -t Consistency is also required for Site and Design Review, Municipal Code section IS.30(G).OIO andConditional Use Permits section 18.76.010(c)(2). :-The idea that a medical center can be neighhorhood serving is directly contrary to several of the means for providing medical services. Proximity to "neighborhoods" of medical ottices does not cause demand for medical use -medical insurance for a specifIc type of provider The Honorable Karen Holman, Chairperson and Melnbers of the Planning & Transportation Commission City of Palo Alto Februaty '2, 2008 Page 6 develop111ent policy of the City of neighborhood preservation and neighborhood comJnerclal serving uses is not fU11hered by luedical offices and the lack of a real grocery store. A vei1ed presentation of the Project as allowing for a grocery store with less square footage than what actna11y exists at the JJ&F lllarket presently is contralY to the public representati 011 prolllised by the developers in the previously referenced public meeting and in reality is nothing Inore than a sandwich shop. With respect to the COlnprehensive Plan Transpo11ation Element, Goal T -1 it will be violated as tnedical office space will encourage sing1e occupancy vehicle use. Likewise, Policy T -1 will not be fU11hered in that what is encouraged in telms of walking and bicycling from College Ten'ace to an existing ful1 service grocely store cannot be accOlnpIished because of the practical elimination of that use. Finally, the proposed Project does nothing to encourage and support the operation of small, independent businesses (Policy B-7), if the Project results in the elin1ination of a neighborhood grocery Inarketand the elimination of JJ&F.6 Accordingly, employing the consistency analysis of the (Jeneral Plan CJuidelines, as judicially confiImed, absent a change in the Project proposal to 111ake it consistent with the original development representation of the Applicants -to preserve JJ&F and actually increase the amollnt of square footage grocely store -along with a Plan Amendment, the Project is inconsistent with the COlnprehensive Plan. The Conunission should refuse fUl1her Project review until a development proposal that is consistent with the Comprehensive Plan is presented. IV. LACK OF PUBLIC BENEFIT ASSOCIATED WITH THE PROPOSED PC ZONE As previously stated, the Applicants' Development Statement sets forth claitned public benefits of the Project. Given the inconsistency of the Project with the COlnprehenslve Land Use Plan Designation for the Project site, each of these public benefits shou1d be questioned froin the outset. determines use. (, It is noted that in the Phase) Environmental Review, a document in the City Application tile, for this Project, that a grocery store has existed on the JJ&F site since] 936. The Honorable Karen Holnlan, Chairperson (lnd Metnbers of the Planning & Transpoltation Com.mission City of Palo A1to February 12~ 2008 Page 7 ProposedPubfic Benefit No. I provides: A subsidized rental rate to encourage a neighborhood-serving Inarket to locate at the Centre, as a convenience to the neighborhood and conununity. Such a neighborhood-serving use has proven to be impoltant to the College Terrace neigh borhood, and has long been an important piece of the fabric of this PaIt of Palo Alto. This supposed "public benefit" tests credibility. There is presently no need for a subsidized rental rate on other portions of the property to maintain the viability of JJ&F. It is certainly not a function of the City's police power through land use regulation to guarantee a fixed profit or desired market retmTI to a property owner. It sounds as jf planning for the area is to be set aside aIld an economic return for the developer's proposal is the principal consideration that should be reviewed by the COlnmission for approval of the Project. This nlethod of ana1ysis of the Project would turn land use law on its head what is planned for an area would no long~r control, rather the developer's economic retunl would control. This statelnent of public benefit should also be questioned as even the developer acknowledged in the referenced public meeting that an increase in the square footage for a grocery store, and for JJ&F in particular, would anow a greater alnount of grocely market goods to be available to the neighborhood. As it is now with the restricted 7200 square foot presentation at best, a sandwich shop would result. This concept of public benefit also relates to the issue of General Plan consistency if an overriding development policy of the City is to preserve neighborhoods and to also Inake a Neighborhood Comnlercial uses available to seniors, such as the undersigned, how is that facilitated if fu]} service grocely stores are 1110re than mile and a half away and located on the other side of EI Camino Real, a thoroughfare that has been characterized in several environnlental documents of the City as a Inajor iJupediment to bicycle and pedestrian clailned crossing? Public Benefit No.2 providing an active Public Plaza at the location also should be questioned. Both the College Terrace Librmy and the four parks over the tin1e span of 20 years by persona} observation have provided that function on a velY regular basis to The Honorable Karen Holman, Chairperson and MeHlbers of the Planning & Transportation Commission City of Palo Alto February 12, 2008 Page 8 the College -Terrace neighborhood. There is no delnonstrated need for an increase.7 The olJen landscape Plaza as a '"'"quiet space to sit read or relax" as it 'is buffered from the traffic noise of E1 Call1ino is also hard to understand in view of the access off Stanton Couli for both parking and loading for the proposed stIucture, which will present considerable noise and congestion -sOlnething that exists presently with one-third of the mnount of cOlnlnercial use, The fourth benefit of wider sidewalks and more street trees along El Camino Real is offset by the restricted sidewalks and nl0dified setbacks proposed for the balance of the structure. A COllUllOn sense question might be, how is a wider sidewalk on El Camino conducive to pedestrian and bicycle traffic which would all becoming from the College Ten'ace neighborhood to the other exposures of the property?l( The Staff Repoli also analyzes confonnance with the South El Camino Real Design Guidelines (Attaclunent C, unnunlbered page 4) suggesting that this is a benefit to the proposed configuration of the Project and that it is consistent with COlnprehensive Plan Pollcies. which are not re.fe.renced, for El Caln100 Real. First it is unique that the Applicallts~ cunent proposal for development is analyzed by Staff with respect to ( ;lIidelines for develop111ent but not with respect to the 1'('{/uirel17el1ts of the land use provisions of Neighborhood Conltnercial of the C0111prehellsive Plan, Secondly. it luust be questioned whether this is really a policy of the City, inasnutch as a review of another project~ the three-story office building at 2825 EI Calnino (less than a mile froll1 the Project) has direct access to El C31nino less th311 100 feet froll1 one of the olajor intersections in the City -El Camino and Page Mill. 7 1t is noted that the writer's personal observations as we)) as other residents of College Terrace and customers ofJJ&F do constitute substantial evidence as to how the proposed Project could atfect the College Terrace neighborhood. l'lee, Oro Fino Gold Iv'filling (YOf]). v. COllntyof XI l.)orado ( 1990) 225 Cal.App.3d 872, 882. If anything, the existing parks in College Terrace are under utilized. x \Vith the proposed Stanford Mayfield Development it can only be assumed that the pedestrian and bicycle trank would be increased to the proposed site {f a grocery store as originally represented by the developer (12 to 14,000 square feet) were maintained. ,. The Honorable Karen Hohnan, Chairperson. and Melllbers of the Planning & Transportation COlnmission City of Palo AJto Februmy 12. 2008 Page 9 v. CONCLUSION Again, until the Project is completely defined with reference to all of the pennits that would be needed for development, which have already been discussed and analyzed by City Staff with the Applicants -conditional use permit subdivision approval- Prelilninary Revievv by your Conunission is premature. Second, the clllTently proposed Project is inconsistent with the Comprehensive Plan Land Use Designation of Neighborhood Commercial and several of the COlnprehensive Plan Element Goals and Policies, which at a minimum, should be analyzed by Staff, as to whether this Project itllplements those Goals and Policies.9 Third, analysis of the clailued benefits of the PC Zone for the property are also questionable under the CutTent presentation of the Project as College Ten"ace is presently adequately served by four existing parks and the College Terrace Libraty for places of public assenlbly. cllllong other things. Lastly, the r\pplicants' statelnent at a previous public 111eeting that JJ&F market was to be 111aintained during the entire construction process and would in fact be enJarged should be considered in the context of what is advanced as benefits under the PC Zone and the lack of a Plan Amendment for the cutTent proposal as to whether the current proposal actually is '·t~eighborhood serving" to the College Terrace Neighborhood. Thank you for your review and consideration of the matters set forth in this c01n.nlunicati on. Vety truly yours, /v~D~ Willianl D. Ross \VDR:Ua I) A mandatory duty under Government Code section 651 03(a). Reich, Russ From: Williams, Curtis Sent: Wednesday, July 08, 2009 11 :03 AM To: Reich, Russ; French, Amy Subject: FW: JJ&F Market/PC Zone change fyi From: Emslie, Steve Sent: Wednesday, July 08, 2009 11:00 AI"1 To: Williams, Curtis Subject: FW: JJ&F Market/PC Zone change From: winter dellenbach [mailto:wintergery@earthlink.net] Sent: Wednesday, July 08, 2009 9:55 AM To: Council, City Subject: JJ&F Market/PC Zone change Dear Council Member: Page 1 of2 I have one main concern re: the JJ&F block development -the size and continuity of the market Public Benefit. I recognize that you are under a lot of pressure from the developer and market owners because you don't want to loose a market. However, if you approve of the current size market proposal, it is as good as lost anyway within a few years. So don't give into the pressure. I have reviewed many Planned Community (PC) zoning ordinances and found a surprising number contain Public Benefits that were never produced or the on-going use simply dropped after a few years, completely canceling the benefit to the public as required by the PC ordinance. I have recently filed 3 complaints with Code Enforcement on 3 PC zoned properties based on discontinuance or complete non-compliance with PC Public Benefit requirements. I see with this current proposal before offering yet another potential Public Benefit (JJ&F Market) that will likely vanish within years of City approval of the PC zone change. Points: -This market is tiny by any standard but for convenience stores such as 7 -Eleven (average size approximately 3000 square feet). -While a new design may make the store space for efficient, it is not a magic bullet that actually makes very small space significantly larger. -The owners are retirement age and very well may try to sell the market in the not distant future. -At the current size proposed (about 8000 square feet) it is reasonable to expect that in a few years the market will become nothing more than a large convenience-type store without fresh produce, meat, dry-goods, etc. In other words, not a market at all, and near useless to local residents. -It frustrates the intention of our zoning laws if the City Council approves a PC with a Public Benefit that is not viable in the short and long run. Recommendation: 7/8/2009 Page 2 of2 -The market must be larger to be viable beyond the current owners. -Your standard for evaluation should be not only what current market owners are satisfied with, but also what seems reasonably practicable for the future viability of real market. Winter Dellenbach 859 Barron Park, Palo Alto resident & JJ&F customer 7/8/2009 TO: FROM: DATE: HONORABLE CITY COUNCIL CITY MANAGER JUL Y 27, 2009 DEPARTMENT: PLANNING AND COMMUNITY ENVIRONMENT CMR: 318:09 REPORT TYPE: PUBLIC HEARING SlTBJECT: Adoption of Ordinance Amending Sections 18.10.130 (Historical Review and Incentives), 18.10.060 (Parking), 18.12.140 (Historical Review and Incentives), 18.12.060 (Parking), and 18.13.040(c) (Single- Fanlily and Two-Family Uses) of Title 18 (Zoning), and Sections 21.20.010 (General Provisions) and 21.20.301 (Flag Lots) of Title 21 I (Subdivisions) of the Palo Alto Municipal Code Regarding Subdivision of One Lot into Two Nonconforming Lots Where Covenants are Provided to Protect Historic Properties EXECUTIVE SUMMARY The proposed ordinance would allow owners of property developed with two existing residences, at least one of which is deemed historic, to subdivide the property into two lots smaller than standard for the zone district (and one of which may be a flag lot in zone districts where flag lots are not currently permitted) using the City's standard parcel map process, where the homes are to be maintained via historic preservation covenants. Both staff and the Planning and Transportation Commission recon1IDend approval of the ordinance. RECOMMENDATION Staff and the Planning and Transportation Commission (P&TC) recommend that the City Council adopt the attached Ordinance (Attachment A) amending: 1. The Palo Alto Municipal Code (PAMC) Title 18, Zoning, Sections 18.10.130,18.12.140, and 18.13.040(c) to allow subdivision ofa single parcel containing two residences into two parcels of at least 4,000 square feet each if only one residence is historic, and of at least 2,000 square feet each if both residences are historic, and to provide covenants are provided to preserve the historical integrity of existing residences (listed as Categories 1 to 4 on the City's Historic Inventory, contributing structures to the Professorville National Register Historic District, or for other National or California Register eligible structures) and Sections 18.10.060 and 18.12.060 allowing for continuation of existing, legal non- conforming parking facilities for such proj ects, and CMR: 318:09 Page 1 of 4 2. PAMC Title 21 (Subdivisions and Other Divisions of Land), Sections 21.20.010 (Generally) and 21.20.301 (Flag lots), to allow the creation of flag lots within the R-1 District via a Parcel Map without an Exception process, to allow the creation of lots having less than minimum lot area, lot dimensions, and non-conforming lot configurations (in accordance with the proposed lot sizes in the zoning code amendments), and to allow flag lot access (via easement or "flagpole") for subdivisions including residence(s) on the City'S Historic Inventory, where covenants are provided to preserve the historical integrity of the residence(s). BACKGROUND The impetus for the proposed ordinance was the Council approval of a two-unit Planned Community District zoning at 449 and 451 Addison (Addison PC) on February 19. 2008. The Addison PC allowed for the submittal and approval of a Parcel Map to subdivide a 10,000 square foot parcel previously zoned R-2 (two family residential) and developed with two historic homes into two fee simple, less than minimum size lots (5,000 square feet where the R-2 district required 6,000 square feet minimum lot size). The project included a flag lot accessed by a 100- foot-long access drive across the front parcel via a ten-foot-wide access easement (rather than via a "flagpole" as required currently in Title 21). The Addison PC approval allowed for the proposed substandard access width and non-conforming easement (rather than "flagpole") to allow the historic home to remain in place and provide a minimum 5,000 square feet for each parcel. When the P&TC considered the Addison PC, the P&TC noted the inherent limitations of the existing historic preservation ordinance in ensuring preservation and maintaining neighborhood character, and stated that it would be worthwhile to evaluate revisions to the Zoning Ordinance to allow such projects in the future without the need for a Planned Community zone designation. As part of the Council discussion on February 19, 2008 on the PC zone change, staff and the P &TC were directed to evaluate the potential to amend the zoning ordinance to allow these types of projects when historic structures are preserved. The ordinance changes were intended to encourage public and private upkeep and preservation of resources that have historic merit, including residences listed in the Historic Inventory, by providing subdivision incentives connect~d to the retention and rehabilitation of buildings having historic merit. The attainment of Comprehensive Plan goals has also been cited as important, to help with: (1) rehabilitation of deteriorating or substandard residential properties, (2) retention and preservation of existing legal, non-conforming cottages and duplexes, and (3) preservation of the existing fabric of neighborhoods. COMMISSION REVIEW AND RECOMMENDATION On June 24, 2009, the P&TC voted unanimously (5-0-1-1) to approve the attached ordinance on consent calendar, with one absence (Rosati) and one abstention (Holman). Public hearings before the P &TC on the ordinance were held on both January 28, 2009 and May 13, 2009. At the May meeting, the P &TC appointed a subcommittee, comprised of Commissioners Lippert and Holman, to meet with staff to finalize changes to the ordinance prior to the June 24,2009 hearing, thereby allowing it to be placed on the Consent Calendar. The subcommittee met with staff on June 8, 2009 and the group agreed to the ordinance changes. The minutes from the May CMR: 318:09 Page 2 of4 13th and June 24th P&TC meetings and the staffreport for the June 24th P&TC meeting are attached to this report for reference. RESOURCE IMPACT The proposed ordinance would have no impact on the City's General Fund. Preparation of all legal documents would be the responsibility of the applicant and subject to review by the City Attorney's Office. All staffwork involved in processing future applications would be recovered by fees and deposits charged to the applicant. If the Council adopts the or,dinance, the City's Fee Schedule will be revised to reflect the new application and resultant fees. POLICY IMPLICATIONS The proposed ordinance supports several Conlprehensive Plan policies. It promotes the rehabilitation of deteriorating or substandard residential properties (H-8) by ensuring that the structures are properly maintained. It preserves the existing legal, non-conforming cottages and duplexes currently located in the R-1 and R-2 residential areas of Palo Alto, which represent a significant portion of the City's affordable housing supply (H-10) by providing an incentive for retention and preservation of these units. It preserves the character of residential neighborhoods (L-12) by retaining the existing fabric of the neighborhoods. It encourages public and private upkeep and preservation of resources that have historic merit, including residences listed in the Historic Inventory (L-51) and it develops incentives for the retention and rehabilitation of buildings with historic merit in all zones (L-57). ENVIRONMENTAL IMPACTS This action is categorically exempt fronl the provisions of CEQA pursuant to CEQA guidelines Sections 15305 and 15308 as the ordinance involves minor alterations to land use limitations in accordance with the Secretary of Internal Standards for historic preservation, and can be seen to have no significant environmental impacts, and is an action taken by the city to assure maintenance and protection of the environment. PREPARED BY: Manager of Current Planning DEPARTMENT HEAD: CURTIS WILLIAMS Interim Director Planning and Community Environment CITY MANAGER APPROVAL: ( . ~Q~ y~ JAMES KEENE City Manager CMR: 318:09 Page 3 of4 ATTACHMENTS Attachment A: Attachment B: Attachment C: Attachment D: CMR: 318:09 Subdivision Incentive for Historic Preservation Ordinance P&TC Excerpt Minutes of May 13, 2009 P&TC Staff Report of June 24,2009 (without attachments) P&TC Excerpt Minutes of June 24, 2009 Page 4 of4 ATTACHMENT A NOT YET APPROVED Ordinance No. ---Ordinance of the Council of the City of Palo Alto Amending Sections 18.10.130 (Historical Review and Incentives), 18.10.060 (Parking), 18.12.140 (Historical Review and Incentives), 18.12.060 (Parking), and 18.13.040(c) (Single- Family and Two-Family Uses) of Title 18 (Zoning), and Sections 21.20.010 (General Provisions) and 21.20.301 (Flag Lots) of Title 21 (Subdivisions) of the Palo Alto Municipal Code Regarding Subdivision of One Lot into Two Nonconforming Lots Where Covenants are Provided to Protect Historic Properties The Council of the City of Palo Alto does ORDAIN as follows: SECTION 1. Findings. The City Council finds as follows: A. The proposed ordinance would establish a process that would encourage preservation and maintenance of the City's historic housing stock without the need for a Planned Community zone designation or variance approval and allowing for Preliminary Parcel Map without exception process to create nonconforming size parcels and nonconforming flag lots; and B. The proposed ordinance is in the public interest and will promote the public health, safety and welfare as hereinafter set forth; and C. Modification of the existing zoning ordinance and subdivision ordinance to permit the subdivision of residentially zoned property for the benefit of preserving existing historically designated residences is consistent with the Palo Alto Comprehensive Plan. In particular, the following Comprehensive Plan policies support the subdivision: 090721 syn 8261083 i. PolicY.H-8: Promote the rehabilitation of deteriorating or substandard residential properties; ii. Policy H-10: Preserve the existing legal, non-conforming rental cottages and duplexes currently located in the R-1 and R-2 residential areas of Palo Alto, which represent a significant portion of the City's affordable housing supply; iii. Policy L-12: Preserve the character of residential neighborhoods; 1 NOT YET APPROVED' IV. Policy L-51: Encourage public and private upkeep and preservation of resources that have historic merit, including residences listed in the Historic Inventory; v. Policy L-57: Develop incentives for the retention and rehabilitation of buildings with historic merit in all zones; D. The proposed uses under the proposed zoning shall include only housing consistent with the current zoning and adjacent uses; E. The use permitted and the site development regulations applicable within the district are consistent with the Palo Alto Comprehensive Plan and are compatible with existing and potential uses on adjoining sites or within the general vicinity. SECTION 2. Section 18.10.130 (Historical Review and Incentives) of the Palo Alto Municipal Code is hereby amended to read as follows: 18.10.130 Historical Review Incentives UU Historic home review, as required in Chapter 16.49 of Title 16 of the Municipal Code, is required in the R-E, R-2, and RMD low density residential districts for alterations or nl0difications to any residence designated on the City's Historic Inventory as a Category 1 or Category 2 historic structure as defmed in Section 16.49.020 of this code or any contributing structure located within a locally designated historic district." Dil Exemptions to gross floor area requirements are available for historic residences pursuant to the definition of gross floor area in Section 18.04.030 (65)(D)(vii). Home improvement exceptions provide for additional square footage and certain other exceptions for historic homes pursuant to Section 18.12.120 (R-1 Chapter). (c) Notwithstanding other provisions of this chapter, existing parcels in the R-2 or RMD districts containing two residences may be subdivided into two ownerships, where all of the following circumstances exist: (1) At least one residence is designated on the City'S Historic Inventory as a Category 1, Category 2, Category 3, or Category 4 historic structure as defined in Section 16.49.020 of this code or are contributing structures located within a locally designated historic district or are eligible for listing on the California or National Registers; and (2) No increase in the total number of residences on the site is proposed; and (3) Separate lots are proposed to be created, each with a minimum lot size not less than 4,000 square feet if only one residence is historic: if both residences are historic and subject to a covenant, the allowable minimum lot size is 2,000 square feet: and 2 090713 syn 8261083 NOT YET APPROVED (4) The resultant parcel lines-may create less than minimum lot size (no less than the area stated in item (3) of this section), site width and depth, setback and daylight plane encroachments, floor area and site coverage exceeding the maximum allowable for existing development ,with respect to each new parcel, without the need for approval of a Variance or Home Improvement Exception, but would not generally increase any existing non-complying building features however, minor additions for functional improvements may be allowed at the discretion of the Director of Planning and Community Environment: and (5) The Historic Resources Board has determined that at least one existing residence on the property has historic integrity and qualifies for listing on the City's Historic Inventory. (6) A covenant is recorded to run with the land in perpetuity, assuring that the historic residence(s) will be preserved and maintained consistent with the Secretary of the Interior's Standards for Historic Rehabilitation through compliance with Historic Resources Board review and recommendations. The covenant will stipulate that HRB review is required for all major projects on the site including significant changes to any non-historic residence. Any modifications to a non-historic residence must be compatible with the historic residence and satisfy the Secretary of Interior's Standards for Historic Compatibility. (7) The two residences on the property were in existence as of January 28,2009. (8) Application of the state Historic Building Code is available for use on any eligible building. (9) Residences subject to a covenant must meet all government health, life and safety codes." SECTION 3. Section 18.10.060 (Parking) of the Palo Alto Municipal Code is hereby amended to read as follows: Section 18.10.060 Parking· Off-street parking and loading facilities shall be required for all permitted and conditional uses in accord with Chapters 18.52 and 18.54 of this title. The following parking requirements apply in the R-E, R-2 and RMD districts. These requirements are included for reference purposes only, and in the event of a conflict between this Section 18.1 0.060 and any requirement of Chapters 18.52 and 18.54, Chapters 18.52 and 18.54 shall apply, except in the case of parcels created pursuant to section 18.1 0.130(c) (subdivision incentive for historic preservation). . 3 090713 syn 8261083 NOT YET APPROVED (a) Parking Requirements for Specific Uses Table 3 shows the minimum off-street automobile parking requirements for specific uses. Table 3 Parking Requirements for R-E, R-2, and RMD Uses Two family (R2 & RMD districts) Second dwelling unit, attached or detached: >450 sf in size :S450 sf in size Other Uses (b) Parking and Driveway Surfaces 3 spaces total, of which at least two must be covered 2 spaces per unit~ of which one must be covered 1 space per unit, which may be covered or uncovered See Chapter 18.40 Parking and driveway surfaces may have either permeable or impermeable paving. Materials shall be those acceptable to Public Works Department standards. Gravel and similar loose materials shall not be used for driveway or parking surfaces within 10 feet of the public right of way. ( c) Parking in Yards (1) No required parking space shall be located in a required front yard. (2) No required parking space shall be located in the first ten feet adjoining the property line of a required street side yard. (d) Tandem Parking Tandem parking shall be permitted for single-family uses and for single-family uses with a permitted second dwelling unit. Tandem parking is permitted for two-family uses where both spaces in tandem (front space and tandem space) are designated for use by the same unit. ( e) Bicycle Parking For two family uses, at least one Class I bicycle parking space shall be required. (f) Design of Parking Areas Parking facilities shall comply with all applicable regulations of Chapter 18.83 (Parking Facility Design Standards). 4 090713 syn 8261083 NOT YET APPROVED (g) Parking Facilities on Lots Created Pursuant to Section 18.10.130(c) (subdivision incentive for historic preservation) Legal non-conforming parking facilities existing prior to the subdivision of a parcel having a historic residence(s) may be maintained as existing non-complying facilities or may be improved to greater compliance with parking requirements, as approved by the Director of Planning and Community Environment or hislher designee. Preservation covenants nlay allow non-historic residences to be remodeled; however, floor area expansions shall be subject to the Director's discretionary action regarding improvements to on-site parking conditions associated with such increased floor area and when floor area over 400 square feet is proposed to be added to a non-historic residence having legal non-complying parking facilities prior to subdivision, parking facilities shall be brought into greater compliance with Chapter 18.52, wherever feasible. A subdivided property having no existing on-site parking facilities prior to subdivision may be permitted to continue as such as long as preservation covenants allowing for this continuance and any associated access easements have been recorded. SECTION 4. Subsection 18.12.140 (Historical Review and Incentives) of Chapter 18.12 (R-l Single Family Residential) of Title 18 (Zoning) of the Palo Alto Municipal Code is hereby amended to read as follows: fuL Historic residence review, as required in Chapter 16.49 of Title 16 of the Palo Alto Municipal Code, is required in the R-l district and R-l subdistricts for alterations or modifications to any residence designated on the city's Historic Inventory as Category 1 or Category 2 historic structure as defmed in Section 16.49.020 of this code or any contributing structure located within a locally designated historic district. The Category 1 or Category 2 designation process for becoming a historic structure is contained in Chapter 16.49 of Title 16 of the Municipal Code. iliL Exemptions to gross floor area requirements are available for historic residences pursuant to the definition of gross floor area in Section 18.04.030(65)(C)(ii). Home improvement exceptions provide for additional square footage and certain other exceptions for historic homes pursuant to Section 18.12.120. !£L Notwithstanding other provisions of this chapter, existing parcels containing two residences may be subdivided into more than one ownership, where all of the following circumstances exist: (1) At least one residence is designated on the City'S Historic Inventory as a Category 1, Category 2, Category 3, or Category 4 historic structure as defined in Section 16.49.020 of this code or are contributing structures located within a locally designated historic district or are eligible for the National or California Registers; and (2) No increase in the total number of residences on the site is proposed; and 5 090721 syn 8261083 NOT YET APPROVED (3) Separate lots are proposed to be created. each with a minin1un110t size not less than 4,000 square feet in the R-l district if only one residence is historic or 80% of the minimum lot size for the R-l subdistricts; if both residences are historic and subject to a covenant the allowable minimum lot size is 2.000 square feet: and ( 4) The resultant parcel lines may create less than minimum lot size (no less than the area stated in item (3) of this section). site width and depth, setback and daylight plane encroachments, floor area and site coverage exceeding the maximum allowable for existing development with respect to each new parcel, without the need for approval of a Variance or Home Improvement Exception, but would not generally increase any existing noncomplying building features; however, minor additions for functional improvements may be allowed at the discretion of the Director of Planning and Community Environment; and (5) The historic Resources Board has determined that at least one existing residence on the property has historic integrity and qualifies for listing on the City's Historic Inventory. (6) A covenant is recorded to run with the land in perpetuity, assuring that the historic residences will be preserved and maintained consistent with the . Secretary of the Interior's Standards for Historic Rehabilitation through compliance with Historic Resources Board review and recommendations. The covenant will stipulate that HRB review is required for all major projects on the site including significant changes to any non-historic residence. Any modifications to a non-historic residence must be compatible with the historic residence and satisfy the Secretary of Interior's Standards for Historic Compatibility. (7) The two residences on the property were in existence as of January 28, 2009. (8) Application of the state Historic Building Code is available for use on any eligible building. (9) Residences subject to a covenant must meet all government health, life and safety codes. SECTION 5. Section 18.12.060 (Parking) of the Palo Alto Municipal Code is hereby amended to amend to read as follows: 18.12.060 Parking Off-street parking and loading facilities shall be required for all permitted and conditional uses in accord with Chapters 18.52 and 18.54 of this title. The following parking requirements apply in the R-E, R-2 and RMD districts. These requirements are included for reference purposes only, and in the event of a conflict between this Section 18.10.060 and any requirement of Chapters 18.52 and 18.54, Chapters 18.52 and 18.54 shall apply, except in the case of parcels created pursuant to Section 18.10.130(c) (subdivision incentive for historic preservation). 6 090713 syn 8261083 NOT YET APPROVED (a) Parking Requirements for Specific Uses Table 4 shows the minimum off-street automobile parking requirements for specific uses within the R-l district. Table 4 shows the minimum off-street automobile parking requirements for specific uses. Table 4 Parking Requirements for Specific R-l Uses Single-family residential use (excluding second dwelling units) 2 spaces per unit, of which one must be covered. Second dwelling unit, attached or detached 2 spaces per unit, of which one must be covered Other Uses See Chs. 18.52 and 18.54 (b) Parking and Driveway Surfaces Parking and driveway surfaces may have either permeable 9r impermeable paving. Materials shall be those acceptable to public works department standards. Gravel and similar loose materials shall not be used for driveway or parking surfaces within 10 feet of the public right of way. (c) Parking in Yards (1) No required parking space shall be located in a required front yard. (2) No required parking space shall be located in the first ten feet adjoining the property line of a required street side yard. (d) Tandem Parking Tandem parking shall be permitted for single-family uses and for single-family uses with a permitted second dwelling unit. ( e) Underground Parking Underground parking is prohibited for single-family uses, except pursuant to a variance granted in accordance with the provisions of Chapter 18.76, in which case the area of the underground garage shall be counted in determining the floor area ratio for the site. (f) Design of Parking Areas 7 090713 syn 8261083 NOT YET APPROVED Parking facilities shall comply with all applicable regulations of Chapter 18.54 (Parking Facility Design Standards). SECTION 6. Subsection 18.13.040(c) (Single-Family and Two-Family Uses) of the Palo Alto Municipal Code is hereby amended to read as follows: (c) Single-Family and Two-Family Uses (1) The regulations in chapter 18.12 that apply to the R-l district shall apply to sites in single-family use in the multiple-family residence districts. The regulations in Chapter 18.10 that apply to the R-2 district may be applied, at the applicant's discretion to sites in two-family use in the multiple-family residence districts, in lieu of the multi-family standards. (2) The Individual Review provisions of Section 18.12.110 of the Zoning Ordinance shall be applied to any single-family or two-family residence in the multi-family districts, to those sides of a site that share an interior side lot line with the interior side or rear lot line of a property zoned for or used for single-family or two-family dwellings. The Individual Review shall not be applied to adjacent uses other than single-family and two-family uses. (3) Notwithstanding other provisions of this chapter. existing two-family residential development in mUltiple family residential districts may be divided into two separate ownership parcels where all of the following circumstances exist: (A) At least one residence is designated on the City's Historic Inventory as a Category 1, Category 2. Category 3. or Category 4 historic structure as defined in Section 16.49.020 of this code or are contributing structures located within a locally designated historic district or are eligible for the National or California Registers; and (B) No increase in the total number of residences on the site is proposed; and (C) Separate lots are proposed to be created, each with a minimum lot size not less than 4,000 square feet if only one residence is historic; if both residences are historic and subject to a covenant, the allowable minimum lot size is 2,000 sguare feet and CD) The resultant parcel lines may create less than minimum lot size (no less than the area stated in item (C) of this section), site width and depth, setback and daylight plane encroachments, floor area and site coverage exceeding the maximum allowable for existing development with respect to each new parcel. without the need for approval of a Variance or Home Improvement Exception, but would not generally increase any existing non-complying building features; however, minor additions for functional improvements may be allowed at the discretion of the Director of Planning and Community Environment: and 8 090713 syn 8261083 NOT YET APPROVED eEl The Historic Resources Board has determined that at least one existing residence on the property has historic integrity and qualities for listing on the City's Historic Inventory. (F) A covenant is recorded to run with the land in perpetuity. assuring that the historic residences will be maintained consistent with the Secretary of the Interior's Standards for Historic Rehabilitation through compliance with Historic Resources Board review and recommendation. The covenant will stipulate that HRB review is required for all major projects on the site including significant changes to any non-historic residence. Any modifications to a non-historic residence must be compatible with the historic residence and satisfy the Secretary of Interior's Standards for Historic Compatibility. (Gl The two residences on the property were in existence as of January 28,2009. (Hl Application of the state Historic Building Code is available for use on any eligible bUilding. (I) Residences subj ect to a covenant must meet all government health, life and safety codes. SECTION 7. Section 21.20.010 (Generally) of the Palo Alto Municipal Code is hereby amended to read as follows: The provisions of this chapter shall govern the design of all subdivisions. The provisions of this chapter shall be incorporated in any subdivision approval unless the city council, or director of planning in the case of a preliminary parcel map, finds that due to the particular circumstances these design criteria are not necessary or that alternative designs are preferable; provided, that any modifications to the lot size, dimensions, location or configuration standards shall only be made upon request for and approval of exceptions to said standards, except when each nonconforming lot to be created contains a residence with recorded preservation covenants, where no request for nor approval of exceptions to said standards shall be required. Design of all subdivisions shall include such facilities for the handicapped as may be required by federal, state or local law. SECTION 8. . Section 21.20.301 (Flag Lots) of the Palo Alto Municipal Code is hereby amended to read as follows: 21.20.301 Flag lots. (a) The director of planning may approve, pursuant to a preliminary parcel map, not more than one flag lot, as defined in Title 18 of this code, under the following conditions: (1) The flag lot shall be used only for single-family residential use; (2) The flag lot shall meet all of the requirements of the zone district within which it is located and, in addition, shall have an area which exceeds the lot area requirement of the zone district by not less than twenty percent exclusive of any portion of the lot used for access to a public street, aB4-except when the flag lot to be created contains a residence with recorded 9 090713 syn 8261083 NOT YET APPROVED preservation covenants, where the flag lot area is not required to exceed the lot requirenlent of the zone district and no request for nor approval of exceptions to said standards shall be required: and (3) Access from the flag lot to a public street shall not be over an easement but over land under the same ownership as the flag lot. Such access shall have a minimum width of fifteen feet and shall have a paved way not less than ten feet in width:-, except when the flag lot to be created contains a residence with recorded preservation covenants. where the flag lot access may be over an easement or land under the same ownership, the access shall have a minimum width of twelve feet for a maximum length no more than 100 feet, and shall have a paved way not less than ten feet in width, and no request for nor approval of exceptions to said standards shall be required. (b) Notwithstanding the foregoing, the creation of flag lots, as defined in Title 18 of this code, shall be prohibited in the R-1 single-family residence district, and no exceptions shall be granted therefore; provided, however, that: (1) Flag lots may be created in the R-1 zone district pursuant to Title 18 as long as the residence thereon has a recorded preservation covenant; and QL !Flag lots validly existing in the R -1 district as of the effective date of said prohibition shall, nonetheless, be recognized as legal lots for purposes of this Title 21 only. Development of such existing flag lots shall be subject to all applicable provisions of Title 18 of this code as of the date of any such proposed development. SECTION 9. Severability. If any section of this ordinance, or part hereof, is held by a court of competent jurisdiction in a final judicial action to be void, voidable or unenforceable, such section, or part hereof, shall be deemed severable from the remaining sections of this ordinance and shall in no way affect the validity of the remaining sections hereof. SECTION 10. The Council hereby finds this ordinance is categorically exempt from the requirements of the California Environmental Quality Act ("CEQA") pursuant to Sections 15305 and 5308 of the CEQA Guidelines because it is an action taken by a regulatory agency for the protection of the environment. II II II II II II 10 090713 syn 8261083 NOT YET APPROVED SECTION 11. This ordinance shall be effective on the thirty-first day after the date of its adoption. INTRODUCED: PASSED: AYES: NOES: ABSTENTIONS: NOT PARTICIPATING: ABSENT: ATTEST: City Clerk APPROVED AS TO FORM: Deputy City Attorney 090713 syn 8261083 11 APPROVED: Mayor City Manager Director of Planning and Community Environment Planning and Transportation Commission Verbatim Minutes May 13,2009 EXCERPT All ACHMENl B 1 Zoning Ordinance Amendment: Review and Recommendation to City Council to: (1) Adopt 2 an Ordinance Amending Sections 18.10 (Low Density Residential Districts), 18.12 (R-l Single 3 Family Residential Districts), and 18.13 (Multiple Family Residential Districts) of Title 18 4 (Zoning) of the Municipal Code (P AMC) , and (2) Adopt an Ordinance amending P AMC Title 5 21 (Subdivisions and Other Divisions of Land), Chapter 21.20 (Design), Section 21.20.301 (Flag 6 lots), regarding subdivision incentives for historic preservation. 7 8 Ms. Caporgno: Thank you Chair Garber. Amy and I are both going to share this presentation 9 because we kind of shared this process. First of all you will probably remember that when we 10 came to you in January there were some main components of this concept that we were trying to 11 address that is an outgrowth of a project that you had seen before you on 449-451 Addison that 12 was a PC. So what we were trying to do is codify that type of development so that it would 13 enable substandard subdivisions to be allowed so that we could preserve historic units on the 14 property. So the nlain components that we were addressing as I said were a lot of substandard 15 subdivision in all residential districts. There must be at least one historic unit on the existing 16 parcel would require evaluation of the integrity of the historic structUre or structures. It requires 17 a covenant to preserve and maintain the unit or units. Would not allow any increase in the 18 number of units on the parcel. There wouldn't be any increase once the parcelization had been 19 completed in noncompliance. Then it would restrict the parcel size. 20 21 At your January 28 meeting your direction to us was that you wanted the concept to address 22 subdivision of two or more parcels and for parcels where you are only going to create two 23 parcels one parcel had to have an historic unit. For sites where you are going to create more than 24 two parcels you wanted all parcels that would result to have an historic unit. Then you identified 25 that you wanted to have some ability for functional improvements to be nlade to these units. 26 That was your exact language. So that even though they were nonconforming structures and 27 they may not be able to meet the existing zoning standards ifin fact you had to remodel a 28 bathroom or that sort thing you wanted the ability to have that be able to be done. 29 30 Then you wanted the minimum lot size of 2,000 square feet. We provided some data for you and 31 I think we have given you the same data with a few more lots involved that show the historic 32 parcels that have these types of parcels on them. The asterisked ones are the ones that have only 33 one parcel with only two units. So they would be able to be divided into two parcels. Then you 34 wanted the structures to have to have been in existence as of the date that we first brought this to 35 you, which was January 28. 36 37 Then you also stated that you wanted modifications to say the non-historic units must be 38 compatible with historic units so that you don't affect the integrity of the historic property with 39 the non-historic by any sort of renovations to the non-historic property. 40 Page 1 1 The other direction you had given to us too was that you wanted us to identify the correct process 2 that this would undergo and also if there were any subdivision changes that were required. At 3 the time we came to you we only talked about changes to the Zoning Ordinance. 4 5 So we discussed this further and we decided that there would be two types of ordinance changes. 6 We would have to amend the Zoning Ordinance as well as the Subdivision Ordinance. So Amy 7 is going to talk about the Subdivision Ordinance in a few minutes. 8 9 So after that meeting we made some further changes to what had been the direction you had 10 given us because the City Attorney, who is here to speak to this issue, indicated that when we 11 were kind of grappling with how we deal with this particularly for the cottage clusters that the 12 type of mechanism we would have to employ in order to subdivide these that we would have to 13 do a condominium map because there were common spaces in most of these if not all of them. 14 So therefore subdivisions of more than two parcels would conflict with the condo conversion 15 ordinance. Then the other issue, and Amy is going to speak to that a little bit, is that we felt 16 particularly if we were going back to just looking at creating two units that there was going to be 17 a problem with the smaller parcels in some of these larger R-l areas. So what we were 18 suggesting and the information that you have before you is that we would be able to create 19 parcels without exceptions and it would go through Director's Hearing for reSUlting parcels of 20 4,000 square feet or nlore. If they were going to be less than 4,000 square feet then they would 21 have to go through a parcel with exception process and that would come through the Planning 22 Commission and go to City Council. So it would be an improvement over the current practice of 23 the PC because you don't have to provide a public benefit and you don't have to go through so 24 many hoops but at the same time for these smaller ones we would be able to look at where they 25 are located and it would be reviewed by the Planning Comnlission and City Council. 26 27 So what you have before you in the ordinance and what we tried to do --I know it probably got 28 somewhat incomprehensible maybe or indecipherable but in the ordinance itself we have 29 underlining or bold, and highlighted areas. Those are areas that we changed since last time you 30 saw it to address either the subdivision process or these changes that I have mentioned and I will 31 go through here in more detail. We have addressed the subdivision to two parcels only. Two 32 parcels with one parcel having an historic unit. We have eliminated subdivision for anything 33 greater than two parcels. We still allow the functional improvements. We have increased it from 34 2,000 square feet to 4,000 square feet but as I said 2,000 square feet would be allowed it just 35 would be that you would have to go through this other process. Then the structures would have 36' been in existence since January 28, 2009 and the modifications still would be required to be 37 compatible with the historic unit. 38 39 So we think that probably the biggest question that has come out of here and what we have been 40 seeing in the few letters or emails that we received and then just in the discussion that we had 41 with the Chair, Vice-Chair, and Commissioner Holman on Monday evening was this 2,000 42 versus 4,000 minimum lot size issue. Again, what we are suggesting is not to eliminate the 43 possibility of a 2,000 square foot lot but it would have to go through a more rigorous process. 44 45 ,Amy, do you want to discuss the subdivision. 46 Page 2 1 Chair Garber: One question. Comnlissioner Holnlan. 2 3 Commissioner Holman: A clarification on that because I believe the ordinance reads such that it 4 is a 4,000 square foot minimum but in the R-1 districts it would have to be a minimum of 80 5 percent. It reads 'or' and the subdivision would have to be 80 percent of the standard lot size. 6 7 Ms. Amy French, Current Planning Manager: For the sub-districts meaning the larger, the ones 8 that go beyond the 6,000 square foot minimum lot size. 9 10 Commissioner Holman: Right. 11 12 Ms. French: So where the lot sizes are 10,000 or 20,000 square foot minimunl then you would 13 start looking at that 80 percent rather than the 4,000 square feet. It all kind of gets relative to 14 how large the minimum lot size is. So in the straight R-1 district 4,000 is what is proposed. 15 16 Commissioner Holman: Okay. 17 18 Ms. French: I hope that clarifies that. 19 20 Chair Garber: Please, Amy. 21 22 Ms. French: So since a picture is worth 1,000 words. 23 24 Chair Garber: What are we looking at? 25 26 Commissioner Holman: Is this available to put on the screen by chance? 27 28 Ms. French: No. We could pin it up on the board there if you want to turn it around. 29 30 Commissioner Holman: There might be merrlbers of the public that might want to see this too. 31 32 Ms. French: What I thought I would do is use this as an example. This of course is the reason 33 we are here, the Margot Schmidt PC that resulted in this Preliminary Parcel Map. Because it was 34 a PC that said it is okay to do this lot division. 35 36 Chair Garber: Just for clarity the Margot Schmidt property is 449 and 451 Addison. 37 38 Ms. French: Yes, and contains two historic structures and a garage. The lot size was 10,000 39 square feet. The.PC proposed to subdivide this lot to make a landlocked parcel with an easement 40 across the front property less than the required easement or flagpole size to reach the back 41 property. So Ms. Schmidt went through upgrading her historic status. First of all, I think it was 42 her first process. Then she came through with a PC, and then she came through with this 43 Preliminary Parcel Map. We didn't do a Preliminary Parcel Map with exceptions, which you 44 would have seen, and then the Council would have acted upon because the PC set in motion that 45 it was okay to do this abnormal thing. 46 Page 3 1 So one of the things that I think is good about this as far as illustration is that there was a garage 2 that was providing complying parking for the two homes, the one covered space per unit. The 3 line that was being proposed was chopping it in two but the resulting would still provide one 4 covered parking space per unit so it didn't change a complying parking situation. So I just 5 thought that this was interesting. First of all it is the reason why this all started and second of all 6 it is a good visual because it has some of the issues that were contained in my component of this 7 report which was looking at the subdivision code ordinance changes and the issue of the flag lot. 8 9 So in the subdivision code currently you cannot create a flag lot in the R-1 district. This 10 ordinance would change that when there are historic homes involved. It would also provide 11 some wiggle room for the flag lot currently. To create a flag lot in another residential zone you 12 need to have the actual pole. You can't do this with the easement, and the pole has to be 15 feet 13 wide. So the proposed changes, speaking with the Fire Department to make sure what the bare 14 minimum is, we went with a 13 foot minimum in the proposed ordinance. That would be the 15 bare minimum for this new ordinance section and that you could do it with an easement rather 16 thanjust a pole. So this creates a 5,000 square foot lot. If there was a pole obviously that pole 17 area would belong to the back lot and it would make a smaller lot in front given that the 18 easement is now no longer belonging. 19 20 So I just wanted to rattle off a few more things here. Regarding a parcel map process just to 21 make sure we are on an even playing field of understanding, the preliminary parcel map 22 currently goes through a Director's Hearing. We, I, typically the Hearing Officer has 50 days to 23 take action on one of those maps. I could defer that to the Planning Commission and Council for 24 action if it seemed important to do so. That can be appealed if somebody is aggrieved to the 25 Council via the Planning Commission. So if somebody is aggrieved by a decision made at a 26 Director's Hearing or subsequent to a Director's Hearing then the person could come through 27 and ask to appeal the project. It would come to the Planning Commission first and then Council 28 with 30 days and 30 days. So then if there is a parcel map with exceptions -this is in P AMC 29 Section 21.32.03 - I think Commissioner Holman may have had a question of where that resides 30 in the Municipal Code. That section does not allow the Planning Director to grant any 31 exceptions when doing a parcel map. So this ordinance, by setting the zoning regulations at a 32 smaller lot size, voila, no longer is that a parcel map with exceptions because the lot size meets 33 the new minimum for those historic situations. That is the 4,000 square feet or 80 percent when 34 we are talking the larger R-1 nlinimum lot size. 35 36 Then the other part I wanted to mention was the condo conversion, which is P AMC Section 37 21.40 if anyone wants to write that down. That I think was one of the questions you asked 38 earlier today, Commissioner Holman, what are the findings for exceptions to the parcel map? 39 Those are similar to Variance findings. I have them here I can read them off at some point if you 40 would like. Then also for the condo conversions there are exceptions. The condo conversion 41 policy applies to three or more units, so multifamily housing not two family housing. There are 42 ways of going about doing that even for three or more units but there is a list of things that has to 43 happen. We can enlighten you on that too. I have the copy that talks about a vacancy rate, it 44 talks about BMR units, etc., and you can get around that. Again that is a separate process. 45 Page 4 1 So basically Section 5 of the new ordinance addresses the whole subdivision. So there are two 2 sections. There is the design section, which has a general statement saying you have to do an 3 exception if you have any changes to lot size, dimension, location, configuration, and so I 4 thought it would be good to throw something in there. Whether it is worded correctly I don't 5 know. Section 6 talks about that flag lot change. Again, both of those talk about historic homes 6 perhaps that could be better worded because when you are creating the flag lot situation I think 7 we are saying only one of those homes has to be historic. So maybe the front home is historic 8 and the back home on the flag lot is not historic so there is some wording tweaking that could 9 happen with that. I think it references historic homes on the flag lot. 10 11 I think the rest is probably best with questions. 12 13 Ms. Caporgno: I would just like to make sure the Commission is aware that we received two 14 sets of questions today. One from Commissioner Fineberg and one from Commissioner Holman. 15 You have received them all at places. Maybe it would be easier but it is up to the Commission if 16 you want us to just go through those or if you want the individual Commissioners to ask us. 17 Some of them I think we may have addressed in the comments that we have made in the 18 presentation but it is really up to Chair Garber how he wants us to deal with them. 19 20 Chair Garber: I would just as soon have Julie walk through them if that is all right with 21 Commissioners. 22 23 Ms. Caporgno: The first one is and actually it is to Don. 24 25 Mr. Donald Larkin, Assistant City Attorney: I assume we are starting with Commissioner 26 Fineberg's questions. The question was to explain the determination that any subdivision of a 27 parcel with more than two existing units would violate the City's condominium conversion 28 ordinance and is in a subdivision with fee simple lots and no common interests is a different 29 legal process than a condo conversion and the answer is yes. I think just to clarify we are going 30 to want to revisit other ways to deal with the cottage clusters when we start looking practically at 31 how we would be able to subdivide the cottage clusters. The ones that we looked at couldn't be 32 done without creating some sort of a common interest. We use the word condo fairly loosely. 33 Our ordinance applies to any conversion from rental housing to a common interest development, 34 which includes not just condos, but also any development that includes common area. So if there 35 is a common driveway or common access that would be subject to our condo conversion 36 ordinance. There may be cottage clusters that would not require common access or common 37 driveways or any common area but we are not aware of those. So it is something that because 38 we have gotten Council direction to do the first part, which is the two unit subdivisions, we 39 thought it would be best to come with that and get that on the books, and then go back and look 40 at whether or not we can make revisions to our conversion ordinance or if there are sufficient 41 cottage clusters that would not be subject to the condo conversion ordinance to make it 42 worthwhile to do an ordinance to allow those. 43 44 The second question is why can't owner-occupied or vacant cottage clusters quality for 45 subdivision under the proposed ordinance? The distinction between owner-occupied and vacant. 46 Owner-occupied would mean that each unit of that cottage cluster would be required to be Page 5 1 occupied by the owner, which means the owner has to sleep there. So theoretically if you had a 2 cottage cluster with six owners as joint tenants and each of them lived in one of the units and 3 slept there that might be a possibility. Again, we are not aware of any of those. Then vacancy is 4 a little bit different because under our ordinance if it is rental housing and even if the entire 5 cottage cluster was to be vacant but our overall residency vacancy rate was not above the 6 threshold then that would not be eligible for conversion because I think the idea would be that 7 landlords are just keeping it vacant so they can condonlinimize it. 8 9 Rather than going back and forth because Karen's question number six is related and this is 10 about describing the application of the condo conversion ordinance to projects such as 639 11 Homer where six units were supposed to be removed and replaced with three for sale units and a 12 similar project also on Homer. There were three rental units that were removed and replaced 13 with three for sale units. This is kind of an unfortunate irony competing between state law and 14 our condo conversion ordinance. The Ellis Act, which is relatively recent state law, precludes us 15 from requiring that landlords stay in business as landlords. What that means is that a landlord is 16 free to go out of business and when they go out of business they are free to redevelop their 17 property into anything they want. What the state court decided is that condo conversion is not 18 the same and they have said condo conversion ordinances are enforceable. So that creates this 19 unfortunate circumstance where if you have a cottage cluster, which I think is something that I 20 think is policy we said we want to maintain, it is in our Comprehensive Plan we want to maintain 21 them, you are allowed to demo them under state law but you are not allowed to convert them 22 because our condo conversion ordinance precludes it. I think just to mention it there is one thing 23 that could lessen the desirability to do that and that is CEQA still applies where there is a 24 discretionary action on historic structures. Common ones are if there are IR reviews involved or 25 if there is demo delay involved the property owner is going to be required to go through CEQA. 26 In most cases be required to do an EIR, and it would require a Statement of Overriding 27 Consideration if the EIR determines it would result in the demolition of historic property, and the 28 Council would have to adopt a Statement of Overriding Consideration before the demo would be 29 allowed. I think that is going to help stop some of the redevelopment of cottage clusters that are 30 in that historic category. So that answers my share of the questions. 31 32 Ms. French: Following on that it won't stop 639 Homer for instance because the existing 33 structures on the site holding six units were built in 1961. So they are not historic. 34 35 So the answers that I was going to tackle. Number three, Commissioner Fineberg's question 36 about should the Director's approval of minor additions be for only specific functional 37 improvements? How is minor defined, should the ordinance call out specific examples like 38 bathrooms, kitchens, closets, ADA compliance, or universal design? I will answer in reverse, no. 39 And, how is minor defined? Not defined, it leaves some discretion to the Director and his 40 designee, which we appreciate and enjoy. Then each case by case we have the ability to discuss 41 that with the applicant and hopefully in this case it is an historic home that we are talking about 42 and not the other home. It gets a little weird when you get into the nonconforming structure that 43 isn't historic, and then it goes to that kind of nonconforming or non-complying facility regulation 44 in the zoning code where you can't increase the degree of nonconformity. So in one case you 45 have an historic situation where you still have to meet the Secretary of the Interior's Standards 46 with what you are doing functionally or minor. Then on the other side is you might have a non- Page 6 1 historic structure that is non-complying and they want to make it further non-complying and this 2 kind of thing. So we just want to be able to have the flexibility to interpret our codes rather than 3 narrowly defme it. 4 5 Then as far as Commissioner Holman's questions or do you want to go? 6 7 Ms. Caporgno: I will probably hand this back to you. The last question of Commissioner 8 Fineberg's I think we have addressed it. She may want to follow up with some additional 9 questions but I think we have explained why we have taken the position we are taking as far as 10 the 2,000 versus the 4,000 square feet. 11 12 The first question of Commissioner Holman regarding the list of inventory properties. We did 13 give that to you atplaces. Then did Staff do any research to identify what California National 14 Register Eligible properties where this nlight apply? There are only four that Dennis had an 15 ' opportunity to identify and I added them to the list that you had received previously. So it is at 16 the end of that list and there are three of them that would be allowed to be subdivided into two 17 parcels with what we are currently proposing the ordinance include. 18 19 Amy, I think this next one is yours. The Staff Report at the bottom of the page references where 20 compliant parking facilities are ... 21 22 Ms. French: I wanted to follow up on Commissioner Holman's list of 47 homes. I thought I 23 would mention I was looking through there and it seems that over 65 percent of the 47 are 24 greater than 4,000 square feet. So two-thirds of the ones on that list would qualify for the parcel 25 map without exception process and then one-third of them are less than 4,000. So that just struck 26 me as oh well, at least we got two-thirds of those into the queue. 27 28 Chair Garber: Commissioner Holman, you had a follow up? 29 30 Commissioner Holman: Some of these I do believe are I wasn't doing it this way when I did 31 the analysis for the Addison project but sonle of these are in the R-1929. So it wouldn't matter if 32 they were 4,000 or 5,000. 33 34 Ms. French: Okay. Let's see then number three, question of Commissioner Holman's. Page one 35 of the Staff Report says that where non-complying parking facilities are provided. Yes, that has 36 not been referenced in the draft ordinance. Perhaps, and I think this originated from a question at 37 the January 28 meeting where I believe in the minutes·there was some discussion towards the 38 end when we were all getting tired about garages or conforming parking. You start to think 39 about these things and then like the example here of the PC where you are putting a lot line 40 through and now does that mean you are going to have to remove the garage because now you 41 have a lot line running through it? Are you going to remove parking? You should have to 42 continue providing the conforming parking that you have. So that was the original thought. 43 Then as I am looking at it and considering your question perhaps a better way to say that or what 44 I am trying to get at is where non-complying parking facilities should not be created with the 45 subdivision and perhaps the corollary, which is that the existing conforming parking shall be Page 7 1 maintained or continue in perpetuity or however legally that should be said. So that is where that 2 was trying to go. 3 4 Ms. Caporgno: Then number five, I am interpreting this as you are asking if this is acceptable to 5 use the term 'historic residences' in the ordinance. 6 7 Commissioner Holman: I am because there is a switching back and forth between units and a 8 variety of different terminologies that are used. So it is not consistent. 9 10 Ms. Caporgno: I don't think Staffhas a problem with changing. We would definitely like to be 11 consistent so using the term historic residences is fine with us. 12 13 Number six the City Attorney responded to. 14 15 Number seven, I think that from a Staffperspective adding the HRB review for major projects 16 would be fine and we can include that. That could be a requirement of the covenant also. 17 18 Then I think we have talked about this minimum lot size issue. It is something that you probably 19 will want to discuss further. 20 21 Preliminary parcel map with exceptions, we can make reference to that if in fact that is the way 22 we go. We can make reference to that in the ordinance itself. That was an oversight. 23 24 Then the final question from Commissioner Holman is reference to accessory structures we can 25 add that in also. 26 27 That takes care of the comments that we received from Commissioners. 28 29 Chair Garber: Commissioners we have one card from the public. Shall w.e go directly to that 30 and then we can come back to additional questions, comments, etc.? Sallie Strong, would you 31 please take the microphone. You will have three minutes. 32 33 Ms. Sallie Strong, Palo Alto: I own the historic property at 381 Lincoln. It used to be number 34 two on this subdivision incentive for historic preservation house. The house was owned by the 35 same three generations when I purchased it about eight or nine years ago. The family had 36 established the first Stanford bookstore. Behind it is a cottage. My house is on the comer of 37 Lincoln and Waverley. The cottage faces Waverley. It is not a flag. It is a separate entity. It 38 was a bam and it was developed into a cottage probably tum of the century. My house was built 39 in 1895. So I heartily endorse this ordinance. The sooner the better. I just happen to see this 40 email from Edwina Toledo to Zariah Betten and I presume you have all read it. I endorse this. 41 There would be no impact on the neighbors, on the neighborhood. There would be nothing but a 42 line drawn. I hope this can happen soon. Thank you. 43 44 Chair Garber: Thank you. Commissioners? Commissioner Lippert followed by Fineberg. 45 Page 8 1 Commissioner Lippert: I have just one question or concern. That has to with whether we are 2 drawing condo lines or property lines and its relationship to the building code. As you know the 3 building code doesn't allow for, especially in residential zones, anything that is noncombustible 4 to come within five feet of the property line unless it has already been there. The new code is 5 five feet now. So a lot of historic houses are built within that five-foot setback. They are already 6 grandfathered in and archaic materials allow for that to be kept and nlaintained. When you put in 7 a new property line it would increase the nonconlpliance. So my concern is from a planning 8 point of view putting in something that life safety would later trump. Particularly looking at this 9 example where we have a garage that straddles the property line, obviously if it was a condo line 10 it wouldn't be as problematic but if it was a hard and fast property line I think it could be 11 somewhat problematic in terms of Building then imposing life safety requirements on historic 12 structures. 13. 14 Mr. Larkin: Thank you for much more clearly articulating what I tried to articulate to some 15 people earlier about why we had difficulty with the cottage cluster concept. I think that you are 16 exactly right and I think we will have to be careful with how we draw those lines. The problem 17 with doing it as condos is that as you will recall just a year and a half ago we prohibited two unit 18 condos in the R-2 and RMD districts. I think we would have the same issues with two unit 19 condos in the R-l. So I think more likely that would create a parcel map with exceptions 20 situation. If it is an outright violation of the building code then we are going to have to figure 21 out where else we can put those property lines. 22 23 Commissioner Lippert: I think what you will find is that the smaller the lot gets the more 24 problematic the property lines are going to become. So that is where ..... 25 26 Mr. Larkin: That is exactly right. I think that is one of the reasons that we are looking at making 27 it easy for the larger, 4,000 square foot parcels. I think it should be easy to find a place to put the 28 property line. When you start getting smaller than that it is going to be more difficult. That is 29 why I think a parcel map with exception process makes more sense because it will require a 30 closer look at where those property lines get put. 31 32 Chair Garber: Commissioner Holman, you had a comment. 33 34 Commissioner Holman: I was just going to respond to at least what happened with the Addison 35 proj ect. As you know I am very familiar with that. What happened was that garage was not in 36 good repair so it actually got restored. There was a demising wall that was put in the middle of 37 the garage. That is the safety feature that was added there. 38 39 Commissioner Lippert: I assumed that that is what occurred but even still I think we just need to 40 be careful about there really needs to be a level of review by Building that doesn't undermine the 41 intent of the ordinance. 42 43 Ms. French: I would like to respond to that. Back to the 449 Addison project, again that is a 44 garage, kind of easier to throw in a one hour-or two hour-or however-many-hour-wall in 45 between to create two separate garages if you will. I think the thing is when we have a parcel 46 map we have a Development Review Committee meeting, we route the plans to Building, so Page 9 1 Building will have the opportunity to comment upon the proximity of existing structures to the 2 proposed line, etc., and weigh in prior to anything going to a hearing for a parcel map without 3 exc~ptions. I don't know how we could throw something into the ordinance that references the 4 Uniform Building Code such that we wouldn't want to see a property line introduced that would 5 violate the Uniform Building Code. 6 7 Mr. Larkin: I think the Uniform Building Code already covers that. So it may be worth a 8 reference so that people pulling the ordinance will know that is an issue. 9 10 Commissioner Lippert: The issue I think you have is, and I have experienced this I have worked 11 with DRC on sonle of my projects, and Building doesn't pick up on these things early enough. 12 Then they throw it back at when it comes forward for a permit. So I don't know how you deal 13 with that. That is an internal thing. However, I think that there has to be language written in 14 here that in a residential zone a new property line cannot be drawn closer than five feet from a 15 noncombustible wall. You can create that as a development regulation as part of this ordinance. 16 17 Ms. French: I think this is good because it is really for educational purposes for the applicants 18 who are considering whether to do this so they understand. This is language Planning can use 19 with them rather than like you say until it is actually a going concern submitted for Building 20 review. So I would like to somehow have that as a cautionary statement somewhere. 21 22 Commissioner Lippert: I have another question but I will come back that after this round. 23 24 Chair Garber: Commissioner Fineberg. 25 26 Commissioner Fineberg: We have a handout titled, Subdivision Incentives for Historic 27 Preservation, Potential Square Footage Outcomes for Selected Subdivided Historic Inventory 28 Properties in Categories 3 and 4. Who prepared the first part of it and how comprehensive is this 29 list? 30 31 Ms. Caporgno: This is the one that has the HRB meeting January 21 Study Session? 32 33 Commissioner Fineberg: It says item three so I think it came from Staff. The third page of it is 34 the Karen Holman list of ..... 35 36 Ms. Caporgno: I was looking at the wrong one. It was done by Dennis Backlund our Historic 37 Preservation Planner. He had given you this one previously. The one you received today is just 38 a little bit more comprehensive than the one that was distributed in the last meeting. Dennis 39 Backlund had prepared that subsequent to the January 21 meeting with the Historic Resources 40 Board. 41 42 Commissioner Fineberg: Okay. It would be helpful to have it identified and dated. The reason I 43 am asking that is I received this at places tonight. So forgive me this is not a complete and 44 exhaustive review of it. In skimming through it I am not finding a single property listed that 45 would yield more than one 4,000 square foot lot. So if we are using this as our sample, unless I 46 missed one or I am misreading this or misunderstood it, there would be no subdivisions of 4,000 Page 10 1 square foot minimum lot that would be not subject to additional exception process. Correct me if 2 I am wrong. 3 4 Ms. Caporgno: Parcels with exceptions. 5 6 Commissioner Fineberg: So this goes to my question four, the last part, how many parcels 7 would meet the criteria for the subdivision with a minimum lot size of 4,000 square feet? If this 8 is telling me that there aren't any in this sample why are we crafting language for a situation that 9 won't exist? 10 11 Ms. Caporgno: I don't know if that is true that it won't exist because what can happen is that 12 there probably are historic properties our there potential California Register Eligible properties 13 that have not gone through review to determine their historic significance. They could come 14 forward and be placed on our inventory. That is what enables. The parcels that would be 15 eligible for this have to be either on our inventory, National or California Register or Eligible, or 16 contributing structures in Professorville. We know what the contributing structures are in 17 Professorville but there could be and there probably are many parcels out there that have homes 18 on them that are eligible for the California Register or the National Register or could be placed 19 on our inventory. The property owner would have to go through that process to place them on 20 the inventory then they would be eligible to utilize this process. 21 22 Commissioner Fineberg: Okay, so if they are not on the inventory they would not be eligible. 23 24 Ms. Caporgno: At this time. 25 26 Commissioner Fineberg: From what we have on the inventory at a quick glance none of them 27 appear to qualify at the 4,000 minimum. Am I correct that if let's say for instance the first 28 property the lot size would vary at 2,500 to 4,000 square feet so that would require the exception 29 process. 30 31 Ms. Caporgno: Correct. 32 33 Commissioner Fineberg: So if everyone listed here has no multiple properties that are at least 34 4,000 square feet they would all require an exception process. We are writing an ordinance that 35 doesn't solve any problems. 36 37 Ms. Caporgno: Well it does solve the problem of the PC. 38 39 Commissioner Fineberg: But nothing would qualify for it. 40 41 Ms. Caporgno: We wouldn't be requiring them to go through the PC process, which is what 449 42 and 451 Addison went through. So now they would at least be eligible to go through a Planning 43 Commission and Council process, which would be preferable than the PC process. They don't 44 have to demonstrate community benefit and they don't have to go through the ARB hoop and the 45 referral back for public hearings. I think that is the real issue for the Commission to grapple with 46 is do you feel comfortable with these smaller parcels going through the Director's Hearing. This Page 11 1 other process that we are describing is more of a safeguard for the community. So we felt that 2 that would be something that the Commission would feel comfortable with. There may be ones 3 out there that would be like the Addison property. The Addison property, neither of those units 4 was designated on the inventory until they came through the PC process. So there could be lots, 5 there could be a few, there could be none, but we are anticipating that there will be others that 6 will be eligible to go through that same process. 7 8, Commissioner Fineberg: So the exception process would be the standard process that we would 9 see most of the time and the process with no exception review would only occur if somebody 10 added something to the historic inventory that would meet the criteria. 11 12 Ms. Caporgno: There may be National California Registry Eligible ones out there. Dennis just 13 gave us those ones that he knew of offhand. For him to have come up with an entire list looking 14 at all of the California or National Register Eligible properties was going to be somewhat of a 15 task and he didn't have time for it. So that is why he gave us those four at the end that he knew 16 would fall under this. I think they are all ones that would have to go through the exception 17 process but he didn't give us the entire list of properties where you could subdivide them into 18 two that are eligible for the California Registry. 19 20 Commissioner Fineberg: Okay. So you talk about those four on the National Registry. If I 21 understand this properly I think two small dwelling units in staggered arrangements with a 22 garage behind the rear dwelling on an approximately 6,250 square foot lot. So that would be 23 3,125 each parcel so it would have to go through the exception process. 24 25 Ms. Caporgno: It would have to go through the exception process, yes. 26 27 Commissioner Fineberg: So we don't know .... 28 29 Ms. Caporgno: I know the Roble Ridge Road project. I looked at the historic forms for that and 30 it is a larger parcel. It is just that it didn't identify the actual parcel size. 31 32 Commissioner Fineberg: But it is, okay. So there may be some out there. Okay, thank you. 33 34 Commissioner Keller: I think that is a residential estate district. 35 36 Ms. Caporgno: Yes. 37 38 Commissioner Keller: One acre or more. 39 40 Ms. Caporgno: Yes. 41 42 Commissioner Keller: I have a quick follow up on that. 43 44 Chair Garber: Commissioner Lippert. 45 Page 12 1 Commissioner Lippert: What about historic districts? If you had a large area like say 2 Professorville and there was a parcel in Professorville that you didn't really know about but the 3 historic district trumps anything that is built there in terms of it makes it automatically historic. 4 5 Ms. Caporgno: We identified them as contributing structures. I would say most of the parcels in 6 Professorville have contributing structures on them. For ins~ance there are some new homes in 7 Professorville that obviously they would not qualify for this process. 8 9 Chair Garber: Anything else? A couple of questions and this may be for the Commissioners as lOwell. Does it matter which parcel is historic? I don't even know if this exists but I am thinking 11 of a circumstance but if there is a parcel that is not seen, it is in the back part of the lot but the 12 front is not historic should we be considering those sorts of circumstances? Commissioner 13 Holman. 14 15 Commissioner Holman: I would say so because there are any nunlber of ways for the public to 16 still enjoy that property. It may not always be that it is the most visible from the street front but 17 there are other reasons the public can enjoy it. Also, it is a piece of our history that we are 18 preserving. So I would say so. 19 20 Chair Garber: Okay, Commissioner Fineberg, a comment related to that. 21 22 Commissioner Fineberg: My understanding is that if it is R-l both must be historic. 23 24 Commissioner Holman: No. That is what I would say is an error. That is one of the errors that I 25 found in the ordinance. 26 27 Commissioner Fineberg: As I read it, it said in R-l both must be historic. 28 29 Ms. Caporgno: When we modified the language in here it was an oversight. It was intended that 30 in all three different types of residential districts it would be the same. You only have to have 31 one unit on the property that is historic. That was your direction from the last time. We would 32 have changed that no matter what for the subdivision into two. 33 34 Chair Garber: I am seeing a reference to the R-l District on page 6 in Section 6 and that's not it. 35 Commissioner Holman. 36 37 Commissioner Holman: Are you looking for where it says two and then the reference to the R-l 38 District that we should take out? On page 1 of the ordinance in the ordinance description on the 39 fifth line from the bottom it says, in the case of two homes having historic covenants. So that is 40 an error, right? Or that is intended? 41 42 Ms. Caporgno: Where are you? 43 44 Commissioner Holman: In the capital letters, fifth line up, third word in, case of two homes 45 having historic covenants and it should be a minimum of one, perhaps is the better language. 46 Page 13 1 Commissioner Fineberg: One of which has a historic. 2 3 Commissioner Holman: Yes, that is best, thank you. Commissioner Fineberg where did you 4 find the other reference of that? 5 6 Commissioner Fineberg: I really have to find it. 7 8 Chair Garber: It continues to say allow for the creation of flag lots in the R -1 zoned district. 9 10 Ms. French: So now my badly worded section on flag lots. Are we on that now? Page 6, flag 11 lots. 12 13 Chair Garber: Well, it mentions it on page 1 and we can go to page 6, sure. 14 15 Ms. French: I had noted in my presentation that on page 6, A-2, first paragraph, in gray, except 16 when the flag lot to be created contains an historic home with recorded preservation covenants. 17 So that is an error because that is assuming that the rear lot is the one with the historic home and 18 we don't know which one is the one with the historic home. So that needs to be reworded 19 similarly down below in that whole shaded area in that section or at least A -3 as well. 20 21 Ms. Caporgno: Again, Amy and I wrote this together but separately. So the two existing units 22 on nonconforming sites for any of the zones to preserve the historic integrity of one unit. That 23 was the intent for all the three different types of residential districts. So we could go in and clean 24 that up and make sure that it is clear. 25 26 Chair Garber: Another sort of very general question here. Amy, you had spoken about 27 noncomplying that you would not want to create a circumstance that creates a further 28 noncompliance in regards to parking. Right? Then the inverse of that is that the existing parking 29 that is compliant shall be sustained and/or continued. So what about circumstances, which are 30 noncomplying now? For instance there is just one covered what would happen in a circumstance 31 like that? Maybe there is not a real answer here so I am just wondering if there is some latitude 32 here for you to figure that out going forward? Then there is another circumstance I could 33 imagine and again, it may not actually exist in real life or even in Palo Alto for that matter, 34 where you would have two covered spots but they are only accessible by one parcel. Thoughts 35 on either of those? 36 37 Ms. French: Not very clear ones. I guess with the minimum lot size requirement they are 38 looking for where to put that line and they are going to put it where they can have that minimum 39 lot size to avoid the parcel map with exception process. Then where that garage falls -I suppose 40 then the consideration of is that garage a detached garage that is historic or is it expendable and 41 they can just wipe it clean and come up with two separate parcels. They could improve the 42 degree of noncompliance by providing an additional space or they could maintain that existing 43 degree of noncompliance so that one home would continue to have a covered parking space and 44 the other home would not. 45 Page 14 1 Chair Garber: So is there enough or as little text as there needs to be in the ordinance to address 2 that sort of latitude that your staff would probably need to address this? 3 4 Ms. French: I think there is less text in the ordinance than there needs to be. 5 6 Chair Garber: One more thing. I just was confirming that the way that this ordinance is 7 currently written it is just addressing parcels that are singular and going to two and that verbiage 8 is called out on page 2, under subsection C. Is that where that is defined specifically? Okay. So 9 there is a follow up by Commissioner Lippert and then Keller. However, the City Attorney first. 10 11 Mr. Larkin: I was just going to say that we do need to add some language on that 12 nonconforming parking and we will develop something if you will give us the concept. 13 14 Ms. French: It would also have to do with the uncovered spaces as well not just garage or 15 covered spaces. I just want to make that clear. 16 17 Chair Garber: Commissioner Lippert. 18 19 Commissioner Lippert: Just in thinking out loud about this clean up of it might be the State 20 Historic Building Code allows for looking at alternatives. Therefore, the planning code, the 21 Zoning Ordinance could allow for looking at alternatives. What I am thinking of is that in 22 commercial districts we allow for offsite parking agreements. In this case what you might be 23 able to do is between the two lots when they are split apart one of the covenants that would be 24 written would be an offsite parking agreement where the parking is on one of the parcels for both 25 parcels. That would be written in as some sort of an easement or allowance. 26 27 Then the same thing, you were talking about driveways and with the driveways having to be 13 28 feet wide because of the fire issue. If you couldn't achieve that 13 feet and say you could only 29 get a normal driveway, which is ten feet again with the Fire Departnlent we may be able to work 30 an alternative, which would be that the house in the rear would then have to be sprinklered or 31 they would have to put in a residential hydrant onsite. 32 33 Those are the kinds of things that I am looking at to try to facilitate I guess allowing the 34 ordinance to move forward even though there would be aspects that wouldn't comply with all the 35 rules. 36 37 Mr. Larkin: We have done those things as conditions of approval on parcel maps in the past. So 38 that is how we would probably address this ordinance as well. 39 40 Commissioner Lippert: Okay. Then there is one more follow up in this. You are not really 41 changing anything in terms of increasing the noncompliance even though you are splitting both 42 lots apart. Utility easenlents as well as ingress/egress easements have to be looked at because 43 you are traversing somebody's property in terms of driveway but you are also traversing in terms 44 of utilities. That would also need to be written into the ordinance. 45 Page 15 1 Ms. French: I think right now that is maybe one of the reasons why flag lots in the current code 2 have to have a pole because then you don't need those kinds of easements. However, as case in 3 point, and in other cases, we have done parcel maps that have the easements and those all have to 4 be shown on the preliminary parcel map prior to approval. 5 6 Chair Garber: Commissioner Keller. 7 8 Commissioner Keller: Two not very large issues. The first issue is that these various sections 9 refer to two structures on the property were in existence as of January 28, 2009. Do you mean 10 the two residential structures? 11 12 Ms. French: Yes. 13 14 Commissioner Keller: Because there might also be accessory structures such as garages. 15 16 Then with respect to garages as it is one parcel one can build essentially structures, accessory 17 structures or garages and things like that, roughly anywhere within the setbacks. However, once 18 you put in a lot line you suddenly get additional setbacks between the two parcels where the lot 19 line is. I am wondering what intention you want to have with respect to the internal setbacks that 20 are created as a result of the new lot lines. 21 22 Ms. French: Well, the idea would be that on page 3 of the ordinance, the resulting parcel lines 23 may create less than minimum lot size and site width and depth, setback and daylight plane 24 encroachment. So it may create those situations. Then it says, floor area and site coverage 25 exceeding the maximum allowable for existing development with respect to each new parcel 26 without the need for approval of a Variance or a Home Improvement Exception. 27 28 So I was trying to allow somebody to throw in the lot line and oops now you have a less then 29 standard front yard on the flag lot. So if you are going to introduce a new garage I guess that 30 would be the question. But if there is an existing structure there that becomes nonconforming 31 because of the lot line I think we would allow you to do that without having to go through the 32 parcel map with exception or a Variance. 33 34 Commissioner Keller: But you can't add a new structure that creates a new nonconformance. 35 36 Ms. Caporgno: Correct. 37 38 Ms. French: You would have to have a Home Improvement Exception or Variance. 39 40 Ms. Caporgno: The intent was that whatever resulted after the lot lines were placed that would 41 be acceptable but then if there was anything new introduced then that would require either an 42 exception process or wouldn't be allowed. 43 44 Commissioner Keller: I think when a document is prepared that describes the process it should 45 point out the restrictions on the possible development of the new parcels that are imposed by Page 16 1 creating the new lot line. People might not realize that would be imposed and it is worth 2 pointing out. 3 4 Chair Garber: Commissioner Holman, you had a comment. 5 6 Commissioner Holman: I had a few things actually. On page 5, Section 5, the first paragraph, 7 the provisions, the last sentence of it, design of all subdivisions shall include such facilities for 8 the handicapped as may be requested by federal, state, or local law. 9 10 Ms. French: That was not an add -it was there. 11 12 Commissioner Holman: I understand it was there but do we have to have that? Again, these are 13 existing facilities. This isn't like new construction, which this law would typically apply to. Are 14 we really asking -we didn't require Margot Schmidt for instance on 449 Addison to make her 15 project handicapped accessible and I think that is an unreasonable request. 16 17 Ms. French: I was noticing it says 'as may be requested by federal, state, or local law .' That 18 might be a typo that might be 'required.' 19 20 Mr. Larkin: I would say it should be 'required.' In some circumstances there may be 21 requirements that it be brought up to code for accessibility. It is not going to apply to most of 22 these. 23 24 Commissioner Holman: Again there is the State Historic Building Code. 25 26 Chair Garber: Commissioner Lippert. 27 28 Commissioner Lippert: The State Historic Building Code designates a door that is two feet, nine 29 inches as being handicap accessible. 30 31 Mr. Larkin: It is only going to apply if stat~ law requires it. 32 33 Chair Garber: Conunissioner Holman. 34 35 Commissioner Holman: But state law is also the State Historic Building Code. So what I am 36 suggesting and I think Commissioner Lippert is supporting is that this language ifit is possible to 37 remove it because again we are not talking new construction we are talking existing facilities. 38 Weare not talking .... 39 40 Mr. Larkin: There are circumstances in which existing, and I am not an expert on the State 41 Historic Building Code and Commissioner Lippert I know is more than I am, but my 42 understanding is there are circumstances in which the state will come in and require that facilities 43 be upgraded. It may not require replacement of doors. It may be able to be done compatibly 44 with historic building and the Secretary's Standards. If the addition of a ramp is required or 45 something like that or some things that we want to make clear the state is requiring it and we are 46 going to let them do it. Page 17 1 2 Chair Garber: I was going to simply state that particular law being a state law is no different 3 than the building code. They would have to require it whether you have it in here or not. 4 5 Ms. French: Honestly, I think this really applies more to commercial properties not to 6 residential. 7 8 Ms. Caporgno: In fact it just says as may be required. Obviously if it is not required you don't 9 have to do it, and if it is required it is required. Our putting it in here or not putting it in here 10 isn't going to make any difference. 11 12 Chair Garber: Commissioner Holman, anything else? 13 14 Commissioner Holman: Yes. I still would like to see that come out if it is possible because as 15 you are saying that if it mostly is intended to apply to commercial and then it doesn't represent 16 the state building code I think it is going to send fear waves through people who might read this 17 and oh, I would have to do that if I subdivided. So that is one thing. 18 19 Chair Garber: Commissioner Holnlan, actually I think Commissioner Keller had a comment. 20 21 Commissioner Keller: Yes. This paragraph is designed for all subdivisions. Correct me if I am 22 wrong. There is a sentence in there referencing historic subdivisions. Therefore to the extent 23 that you wanted to modify this last sentence, ftrst of all it has to be there for all other 24 subdivisions. To the extent that you want to reference historic building code for the subdivisions 25 where it makes sense but you cannot remove this because of the situation that most of applies to 26 non-historic subdivisions. 27 28 Commissioner Holman: Is that true, City Attorney? 29 30 Mr. Larkin: I am looking for the provision. Yes, that is correct. This provision is not limited 31 solely to historic subdivisions. 32 33 Commissioner Holman: I understand that. 34 35 Mr. Larkin: The reason that I wouldn't want to necessarily make a reference I think the way it 36 is written is the way we want it to be written which is 'as required by state law' because I think 37 state law changes. If it is not required by state law we are not going to require it but if state law 38 is going to require it then we are going to require it. 39 40 Commissioner Holman: Well then at a minimum there also needs to be reference to the State 41 Historic Building Code because that is also state law. 42 43 Mr. Larkin: I don't think that is required because the State Historic Building Code does not 44 preclude retrofttting of other buildings that are not historic. 45 46 Chair Garber: Commissioner Tuma. Page 18 1 2 Vice-Chair Tuma: It seems to me that all this sentence is saying is that you have to comply with 3 the law. In terms of giving people notice it is better to remind them of something that they may 4 not otherwise see along the lines of what Commissioner Lippert was talking about before. So I 5 think having it in here sort of reminds people. It may in fact have a chilling effect but it is better 6 that they know that they are going to have to comply with these other laws than they get down 7 the road and say, well it didn't say anything about that. So I think taking out would be a mistake. 8 9 Commissioner Holman: So let me make one more push on this. The State Historic Building 10 Code has to be made available to owners of historic buildings. So if this has to stay then I would 11 argue that application of the State Historic Building Code would be available to the owners of 12 these properties. Otherwise many of them will not know. We have had battles with the Building 13 Department in the past because they have not made it available and have not made people aware 14 that it even exists. So I think just so there is an historic record I think that adding it here would 15 be very helpful, educational, and it would help property owners. 16 17 Chair Garber: Commissioner Lippert. 18 19 Commissioner Lippert: Where the rub is is that the use of the State Historic Building Code is ; 20 optional by the owner. The owner doesn't have to use the State Historic Building Code and it 21 can't be forced on them. I don't know why an owner would not use the State Historic Building 22 Code. The issue is that a property owner may very well say I don't want to use the State Historic 23 Building Code. The only caveat in that is that if a building is categorized as historic it is subject 24 to the purview and review of our local Historic Resources Board in terms of exterior alterations. 25 When it comes to the inside they could do anything they want. 26 27 Chair Garber: Commissioner Fineberg. 28 29 Commissioner Fineberg: Regarding Commissioner Holman's earlier comment where she talked 30 about referencing the availability of the State Historic Building Code. I am looking in the 31 proposed ordinance on page 2 and it references exemptions to gross floor area requirements are 32 available to historic homes pursuant to the definition of gross floor area. So would your request 33 be satisfied if there were some similar mention that development criteria pursuant to that state 34 code is available? Then it would kind of give notice in the way you are asking. 35 36 Commissioner Holman: Language such as that would be fine by me and it gets the point across 37 and it is a record that lives on. So yes. 38 39 Chair Garber: Anything else? 40 41 Commissioner Holman: Yes. Actually I am going to make a suggestion for one more thing, 42 which is a pretty simple one. The top of page 4, number 1. Throughout here this says all 43 existing units are designated on the City's Historic Inventory, that whole paragraph should be 44 like at the very botton1 of the page A. At least one unit, except for historic residential structure is 45 designated on the City'S Historic Inventory, etc. What one is does is says that all of the units and 46 it uses the word 'units' are on the inventory and it doesn't mention California or National Page 19 1 Register eligibility. Does that make sense? So if you just replace 1 at the top with A at the 2 bottom, and then you change what is eligible and it doesn't use the word 'all.' Then if you 3 change in both A and then the new 1 at least one residential structure is designated. 4 5 Ms. Caporgno: They are diff~rent sections of the code. The one at the top pertains to Subsection 6 18.12.140 and A at the bottom of page 4 pertains to Subsection 18.13.040. 7 8 Commissioner Holman: Could they not be the same though? 9 10 Ms. Caporgno: So they should be exactly the same. 11 12 Commissioner Holman: I am saying that they are not. 13 14 Ms. Caporgno: Okay. 15 16 Commissioner Holman: I am sorry if that wasn't clear. They should be the same. 17 18 Ms. Caporgno: We forgot to add in the eligible for the National and California Registers. It was 19 intended to do that in all three areas. I am sorry. 20 21 Commissioner Holman: There are other changes too but I think Amy got it. 22 23 Other places throughout where 'residential structure' should be used instead of 'structures' 24 alone, and 'historic residences.' I could go through here and do that. One of the suggestions I 25 was going to make is that because this is in several places here that there is a lot of cleanup that 26 maybe the Chair could appoint one or two of us to review this. Hopefully I would be one of 27 those when Staff makes the cleanups for consistency. 28 29 Mr. Larkin: I was going to recommend because I think that is useful for the Commission to 30 discuss concepts but if you have wordsmithing kind of suggestions I don't think it requires a 31 subcommittee. Just send them in and when it comes you will have a chance to look at it and 32 make sure that all those kind of word smithing changes get done, but it is not worth doing in this 33 group. 34 35 Commissioner Holman: That is why I made the suggestion. 36 37 Mr. Larkin: Well you can just do it. I don't think we need a subcommittee. 38 39 Commissioner Holman: Well, I just felt more comfortable ifit was two of us not just one so that 40 is why. 41 42 Chair Garber: Something else? 43 44 Ms. French: I just wanted to go back to something else. You had used that Section 5 to discuss 45 the historic building code but there is a key concept issue there that again I feel compelled to call 46 attention to since I wrote it badly. That is because if you read it you can't create these funky lots Page 20 1 except when a nonconforming lot to be created contains an historic home. That again is 2 assuming that both of the parcels are going to have an historic home when we have said that it is 3 just one parcel. So that gets a little hairy as far as how you write that. I guess historic or 4 contributing or again how do you describe it -that is a concept issue. 5 6 Chair Garber: Commissioner Holman. 7 8 Commissioner Holman: Well if there isn't anything else I am going to make my pitch for the 9 minimum lot size u,nless somebody else has other comments? 10 11 Commissioner Fineberg: I have another question. 12 13 Chair Garber: Commissioner Fineberg. 14 15 Commissioner Fineberg: What happens with a two family home, one structure, left/right? Let's 16 say for example it sits on a 10,000 square foot R-1 zoning. Do we do that and draw the lot line 17 down the middle of the single structure? 18 19 Mr. Larkin: We don't because we don't allow two unit condos so you couldn't do this with a 20 single structure that had two units. You couldn't do this with a duplex. 21 22 Commissioner Fineberg: So you couldn't build a firewall down the middle of it and divide the 23 structure? 24 25 Mr. Larkin: No because you would still have a common wall. If there was a way to split the 26 structures apart maybe but I don't think you could do that and maintain the integrity. 27 28 Chair Garber: Commissioner Holman. 29 30 Commissioner Holman: I was not going to go here because it just seemed like it was more 31 complicated than we needed to get but Commissioner Fineberg asks a good question. There are, 32 and I could go five different directions with this so Chair Garber will help keep me contained on 33 this. There are any number of ways to look at this and I know as probably Julie Caporgno more 34 than anybody knows of my frustration of loss of housing units, rental or otherwise, but basically 35 with me it is housing units. We have situations where a home might be divided into six units. 36 This is like a balance of goals. There might be a home that has been divided up, legally or 37 illegally, often illegally because it was pre-zoning into say six units. Somebody could buy that 38 house and restore it as a single family home. So the situation that Commissioner Fineberg brings 39 up and frankly maybe nobody noticed this, we certainly didn't try to hide it, it was apparent in 40 many of the documents but it is exactly what happened on Addison. The front house was a 41 duplex and the rear house was a single family home. The City let us divide it. I didn't even 42 think of that condominiumization but that is what happened there. So is that a bad thing? 43 44 Just to say one thing about that, if we could and not tonight, but I would like to say that perhaps 45 we should revisit our condominiumization ordinance. I will just say one thing about it. One 46 thing that we could do to prevent the things that are happening I would suppose in the next block Page 21 1 from me where we are losing units is that we could require that they couldn't replace with fewer 2 units. So perhaps there is that reason and other to revisit our condo conversion ordinance. 3 4 Chair Garber: I will accept the comment as a parking lot item. Commissioner Lippert. 5 6 Commissioner Lippert: I would like to weigh in on a couple of things here. The first one has to 7 with the driveway issue. Maybe what you want to do is take a look with the Fire Department in 8 ternlS of rather than it being a factor of the front and back unit but how far the unit is away from 9 the street. So in other words, it becomes more problematic as you get into larger deeper lots. If 10 you were to take the lot size of 4,000 square feet, which is what we might be looking at here, that 11 is really a 50 by 80 foot deep lot. 12 13 Ms. French: I thought I would call attention to the idea that it is a minimum width of 12 feet and 14 a maximum length of 100 feet was what the Fire Department had given us. A 100-foot 15 maximum. 16 17 Commissioner Lippert: Okay, so after 100 feet that would have to be widened to the 13 feet. 18 19 Ms. French: Yes. 20 21 Commissioner Lippert: So at 100 feet. So if it is smaller than that then that width is not 22 necessary. Okay. Then the other thing I was going to say with regard to that is if it is a corner 23 lot like these folks brought here is it really necessary to then regulate the width of that driveway 24 because you have access along the street frontage for both lots. 25 26 Ms. French: In that case they probably wouldn't be creating a flag lot, right? 27 28 Commissioner Lippert: But the question is even though it was a one point one lot would you 29 ever want to have two driveways? 30 31 Ms. French: Sure, but this is regarding a flag lot access. If it is not a flag lot then we don't have 32 this issue. 33 34 Commissioner Lippert: Okay. Then lastly I wanted to just talk a little bit about the idea of a 35 front unit being historic and the back unit being non-historic and the reverse of that where the 36 rear. I think you have more opportunities to develop a lot and do things with a lot if the back 37 unit is not historic. So you would be inclined to keep the historic house in the front and you 38 could always add on to it in the back. Whereas if it were the other way around where you had 39 the historic house in the back and it was a new house in the front I would say maybe that would 40 be a candidate for dividing those up into two lots. Whereas the other way around I would be a 41 little bit more cautious about that. You could demo and add on to that house, enlarge the house, 42 according to the Secretary of the Interior's Standards. 43 44 Ms. Caporgno: I think we had structured it so you would have the opportunity to do it either 45 way. The individual property owner could come in and have the advantage of preserving that Page 22 1 house. There may be special circumstances for different properties but we thought that that was 2 one area that we would provide that flexibility. 3 4 Chair Garber: Commissioner Holman you wanted to speak about minimum lot size. 5 6 Commissioner Holman: Yes, I do. It is driven by my question and further driven by this list. I 7 don't know how many are on the first list. I asked for the first list because I couldn't find nline. 8 9 Ms. Caporgno: Actually that is the first list but it just has more information. 10 11 Commissioner Holman: That is what I thought I understood you to say, all right. Further driven 12 by this list again what we are looking at here is existing conditions and dropping down lot lines. 13 1fwe are creating a situation where the majority of these properties would have to go through an 14 exception process we are creating an ordinance that is actually requiring exceptions for approval. 15 That seems rather odd to me. 16 17 Chair Garber: May I? My understanding is this is Commissioner Fineberg's line of questioning 18 a moment ago. Julie and/or Amy correct me if I am wrong. I believe that the answer that you 19 are offering is that yes it is an exception but it is quicker and more direct than going through a 20 PC route. Maybe you can review why you think then 4,000 square foot is better than the 2,000 21 in this particular case. 22 23 Ms. French: I will try. Well, we have a phenomenon here of front houses being the large house, 24 then the quarters in the back -the second dwelling unit. I would guess it is more of the case that 25 you would fmd the original house or a larger house in the front and a smaller in the rear. So you 26 could see if it was going to be a 2,000 square foot lot you might have a situation where we have 27 encouraged without requiring a Conditional Use Permit people to put second dwelling units, 900 28 square foot maximum detached second dwelling units, in the rear of the property. So you might 29 have the phenomenon of people who maybe built it last year or before this cutoff date coming 30 forward and saying now I can make this second dwelling unit in my backyard that I just built its 31 own separate lot. Then the front lIDit is going to be bigger because I have this 2,000 square foot. 32 So they could have 4,000 square feet in the front and 2,000 square feet on the back and they 33 would not have to go through a parcel map with exception on that. That would just be easy. So 34 do we want that to be easy? That might be one question. Let me see if there is another. 35 36 Ms. Caporgno: I believe when Amy and I talked about it too there was this one about the very 37 large properties where you had - I think one of the problems is if you have a second unit or one 38 of these structures on your property right now maybe you are using it for maids quarters or your 39 in-laws or something. Now you are going to sell it and it is going to introduce a different kind of 40 a concept into the neighborhood. That was one of the thing that we were thinking of that there is 41 possibly more parking. It kind of changes the environment or there is a potential for changing 42 the environment more. So ifit was more consistent with the pattern that is currently there. 43 44 Commissioner Holman had given us a list where she identified the DHS lots but they were all 45 pretty consistent. We are going to be kind of introducing this haphazardly possibly throughout 46 the city. So this way we felt that the 4,000 square foot lot isn't that far off from the minimum Page 23 1 6,000 square foot lot but it does give you a reduction. Then you can go lower than that and that 2 gives the Planning Comnlission and the Council the opportunity to look at that particular parcel 3 and make a determination of is this right for that area. That was kind of the process. 4 5 Ms. French: I have another thing on this too. So you have the new minimum standard, 4,000 6 square feet, and then we have the new substandard of the new minimum, 83 percent of the 4,000 7 and now you are starting to have the new substandard because you have a new minimum 8 standard. So what is interesting there I guess you get in a substandard lot technically you can't 9 do a two-story house it has to be 17 feet maximum. So there is some dynamic there and I 10 thought I would bring that up. So we are talking about a parcel map with exception and we are 11 also talking about creating a substandard lot unless we write something in here about that. So we 12 are saying to keep it at one story. 13 14 Now you might have a situation like in this number 381 Lincoln where you have a two-story 15 house at the back, a converted bam. So if you made that 2,500 it would become a substandard 16 lot and then you wouldn't be able to build a two story house back there because we have that 17 restriction in our code. It happens to already be there. 18 19 Chair Garber: Commissioner Holman and then Lippert. 20 21 Commissioner Holman: So here is the situation. We don't have them in front of us but my 22 understanding is from earlier response was that the parcel map with exceptions findings are 23 similar to Variance findings. So how do you make findings such as those to allow a 2,000 square 24 foot parcel? How do you make those findings? 25 26 As far as substandard lots, if you are splitting off something at the back of a parcel and it is a 27 substandard lot and you can't then add a second story that is a good thing. That is a reason they 28 didn't allow flag lots after.a period of time because they were getting big houses at the back that 29 were intruding on everybody's privacy that was around there. So that is not a bad thing. 30 31 Ms. French: Would you like to hear the exception findings? They are fairly short. Yes? 32 33 Exceptions shall be granted only upon making the following findings. Of course this is the 34 Council making these fmdings. There are special circumstances or conditions affecting the 35 property. Two, the exception is necessary for the preservation and enjoyment of a substantial 36 property right of the petitioner. Three, the granting of the exception will not be detrimental to 37 the public welfare or injurious to the other property in the territory in which the property is 38 situated. Four, the granting of the exception will not violate the requirements, goals, policies, or 39 spirit of the law. That is it. 40 41 Commissioner Holman: Where is that? 42 43 Ms. French: It is Section 21.32.020 44 45 Ms. Caporgno: You don't have this in front of you. 46 Page 24 1 Chair Garber: Commissioner Fineberg. 2 3 Commissioner Fineberg: I am thinking about the same question and I am also thinking about the 4 question of the minimum lot size, and the question of whether or not there should be a 5 requirement that there be legally owned driveways or easements. The way I want to frame the 6 question is what are we trying to accomplish? It is almost funny that this, the nla:tmer we are 7 considering doesn't have a name. In the subject it is a paragraph. On this handout it is called 8 Home Improvement. On this handout it is called Subdivision Incentives for Historic 9 Preservation. What are we trying to accomplish? Ifwe define that in ten words or less, which is 10 generous, we are trying to preserve historic structures that don't conform. We are trying to keep 11 good smaller units. So does the proposed ordinance accomplish that? What I am feeling like is 12 it minimizes the bureaucratic burden but is it accomplishing the purpose of why we are even 13 considering amending the ordinance. In a lot minimum lot size of 4,000 I don't know ifit 14 accomplishes that. I am not trying to get into comments but would a smaller lot size accomplish 15 it more? Then I am hearing the negatives would be greater. Can we have that same conversation 16 about whether allowing flag lots with easements would accomplish that purpose? Is this 17 ordinance going far enough? 18 19 Ms. Caporgno: I think that is a question for all of you to answer but I think our position is that 20 since it is throughout the city it is going to be not consistent in the areas that it is applied. That is 21 why we were recommending that it come through a more rigorous process for these smaller units 22 or these smaller created parcels. Because, even though they are existing and I can appreciate 23 that, you are going to be introducing now a homeowner versus a tenant or possibly probably in 24 many cases someone who is affiliated with that home now. That is the concern. That it is kind 25 of a change in the composition of the neighborhood possibly. So you are going to have two 26 families mainly there and maybe in concept it is nice to purchase a 2,000 square foot parcel but 27 after you get on that parcel and you are next to somebody else it may be more difficult for those 28 two owners to inhabit that area. 29 30 Commissioner Fineberg: Could we come up with a name for this? I didn't mean that as just a 31 joke. 32 33 Chair Garber: With Commissioner Lippert's patience because he is next in line here, may I? 34 35 Commissioner Lippert: Sure. 36 37 Chair Garber: I think in my mind this ordinance is about the preservation of historic homes. 38 When you have two homes on a single lot and one of them happens to be historic, right? And, 39 by making that preservation you then allow for some degree of nonconformance because the 40 preservation of that historic residence has value to the community. Commissioner Lippert. 41 42 Commissioner Lippert: That was one of the points I was trying to nlake with the placement of 43 the historic home as the front property. What happens with the back of the property in terms of 44 the second home doesn't really factor into it because you can demo that and rebuild that square 45 footage as part of that parcel and incorporate it into the home. You could build into the home, 46 you could build it as a garage, or you could build it as an accessory structure. The point that I Page 25 1 am trying to make here is that when Palo Alto was laid out and they did the original tract work 2 for every two parcels we have today it used to be that there were actually three parcels in a lot of 3 locations. That in order to get the minimum lot width everything had to be reapportioned. Not 4 all the homes that are historic actually fall within our current development regulations in terms of 5 setbacks, side yards, etc. When you get into an historic home that is in the front you have a lot 6 more options than you do with an historic home that is in the rear of the property. In fact what 7 happens is that that historic home is landlocked. You have options in terms of, and we did this in 8 SOFA, where there were historic houses and they were actually just picked up and moved a 9 block over and put down into another lot. They were along Bryant and Channing, correct? 10 11 Commissioner Holman: Yes, they were moved from between Homer and Channing to between 12 Channing and Addison on Bryant. 13 14 Commissioner Lippert: Correct, and for all practical purposes the block looks exactly the same. 15 It has only been shifted over one whole block. I think you have many more options when the 16 historic home is in the front as to what to do with that property than when the historic home is 17 locked in the rear of the property and there is a newer house in front of it. 18 19 Chair Garber: Are you suggesting the ordinance be changed to only allow for historic homes 20 that are in the front of the property? 21 22 Commissioner Lippert: You know I just want to be cautionary about that. I don't want to sort of 23 accelerate the process. 24 25 Chair Garber: You are recognizing an operational opportunity should the ordinance go into 26 effect. 27 28 Commissioner Lippert: Correct. 29 30 Chair Garber: Commissioner Tuma. 31 32 Vice-Chair Tuma: So I am trying to think of what the right mechanism here would be. This is 33 on the 4,000 to 2,000 issue. Could we have a process here that both is slightly easier but yet 34 allows some protection? Where we could have the decision be made at the Director's Hearing 35 but that if it is between 2,000 and 4,000 square feet it goes on a Consent Calendar that we don't 36 have yet, and Council Consent. So that it allows it to go through a little bit more easily but yet 37 there is an opportunity for a check if it needs to get checked. 38 39 Mr. Larkin: I think that is a good idea. I think it is not something that the Commission could 40 recommend tonight because that would require a change to our parcel map ordinance and we 41 have not noticed that change. But it is something that if the Commission was to adopt the 42 recommendation that we could add to our parcel map ordinance and I think you could probably 43 initiate that change to the parcel map ordinance or that section of the subdivision ordinance 44 tonight. You can initiate that change and we can come back with those changes in the parcel 45 map section. 46 Page 26 1 Chair Garber: Commissioner Fineberg. 2 3 Commissioner Fineberg: What about a situation where both the front and the rear units on the 4 parcel are historic? Would we want to have an easier process for that? 5 6 Chair Garber: Yes. 7 8 Commissioner Fineberg: That we are not forcing it into the exception process because of the 9 new nonconforming small lot size. 10 11 Ms. French: I was thinking the same thing right before you said that. Perhaps we could have a 12 2,000 to 4,000 square foot range when both homes are historic and will have covenants. 13 14 Commissioner Fineberg: Would that be just R-1? 15 16 Ms. French: That would then not have to go through parcel map with exception. I guess we are 17 talking about R-l. We can look at that -maybe not for the 10,000 or 20,000 square foot lots - 18 but for R-1, RMD, R-2lots. 19 20 Chair Garber: Commissioner Holman and then Lippert. 21 22 Comnlissioner Holman: If he wants to follow up that's fine. 23 24 Commissioner Lippert: That was the point that I was trying to make with moving the historic 25 home that is in the front is that you could actually just re-site it in order to reapportion the lot 26 sizes. As opposed to the house that is in the back where you really can't move it, it is 27 landlocked, and you don't have the ability to reapportion the minimum lot sizes. 28 29 Chair Garber: Commissioner Holman. 30 31 Commissioner Holman: I would say I appreciate the comment but I would not support that 32 because we are talking about the structures already exist in place, and one of the historic 33 elements of historic is its context. So by moving it you are changing its context. 34 35 What happened on Bryant is they moved the whole block so it was not perfect but it moved the 36 whole block so it moved the context sort of at the same time. 37 38 I appreciate Commissioner Tuma's recommendation about the Consent Calendar. I even more 39 appreciate Commissioner Fineberg's comment about ifboth are historic. I just want to say that 40 project did not have to go to the ARB so what I am trying to avoid here is we are trying to make 41 this easier for people. So if people have to go to the Planning Commission and the Council and 42 go through an exception process it is almost as hard as going through the PC process 43 theoretically. So we are trying to encourage people to do this so we need to make it simpler. So 44 I would certainly support, I think it is a good idea to allow the smaller parcels. 45 46 Ms. French: Without exceptions? Page 27 1 2 Commissioner Holman: Without exceptions. 3 4 Ms. Caporgno: I think the Staff will be very supportive of that also. It provides that check that 5 we were concerned about. That is really the issue for us. 6 7 Chair Garber: So Commissioner Holman where were you relative to the parcel map suggestion, 8 which would allow presumably for a more direct process to be pursued and give some latitude 9 presumably to the Planning Director at that hearing? 10 11 Commissioner Holman: I think Commissioner Fineberg has resolved some of this. We would 12 change this so that in the R-l, R-2, and RMD or the R-l subsets to it because that is the vast 13 majority in Professorville and Old Palo Alto where most of these addresses are located, not all 14 but most. So that ifboth of the structures are historic then you can have a parcel at 2,000 square 15 feet. 16 17 Commissioner Fineberg: Can I interj ect something? 18 19 Chair Garber: Commissioner Fineberg. 20 21 Commissioner Fineberg: Historic is defined as the term that you added that it be defined. 22 23 Commissioner Holman: It is in here everyplace, yes. In those cases covenants would have to be 24 added to both structures. So that would satisfy it. 25 26 I do have for the other where both are not historic I am a little bit concerned about the findings as 27 you read them. I think they would be kind of difficult to make for other projects. So I don't 28 know if other Commissioners felt that way but I feel that they would be a challenge. 29 30 Chair Garber: Commissioner Keller. 31 32 Commissioner Keller: Just a quick comnlent. I think you don't mean both are not historic, you 33 mean that one is and one is not. One is historic and one is not. I just want to .... 34 35 Commissioner Holman: Yes. Where both are historic it is 2,000 square feet and when one is 36 historic and one is not historic. 37 38 Commissioner Keller: Right, you said both are not historic. 39 40 Commissioner Holman: I am sorry. One is and one isn't. 41 42 Chair Garber: Can I try a motion? 43 44 Vice-Chair Tuma: Please. 45 46 MOTION Page 28 1 2 Chair Garber: I will likely say this too generally and I will likely miss something so I expect that 3 the motion will be perfected as we go through this. I would like to move that we move the 4 Staff's recommendation that Staff prepare and return a revised ordinance to include the 5 following things. One, to define or refine the verbiage in the text of the ordinance to utilize the 6 words 'residential structures' where appropriate. Two, to replace on page 4, Section 1 at the top 7 of the page be replaced by Section A at the bottom. Commissioner Keller? 8 9 Commissioner Keller: Section 3, paragraph C-l match Section 4, paragraph 3-A. 10 11 Chair Garber: What he said. Three, that the language of the ordinance address Staffhaving 12 latitude to find appropriate parking compliance solutions. Four, that we clean up the language 13 regarding flag lots. Five, that the ordinance clearly state that we are dealing with two structures 14 on the same property. Six, that in the appropriate place in the ordinance we reference the State 15 Historic Building Code. Seven, that in the case of both homes being historic that 2,000 square 16 feet allowed without exception and with a covenant. Finally, that Staff investigate the 17 opportunity to modify the parcel map procedure to facilitate .... 18 19 Mr. Larkin: What you probably want to do is initiate first. 20 21 Chair Garber: Okay. 22 23 Ms. French: Parcel map with an exception procedure? 24 25 Chair Garber: Parcel map with an exception procedure allow the Commission to then initiate a 26 change to the parcel map ordinance allowing that. 27 28 Mr. Larkin: I think you can initiate by directing Staff to do it. 29 30 Ms. French: The direction is to modify the parcel map with exception procedure to allow for a 31 Consent Calendar placement? 32 33 Mr. Larkin: My understanding is that a subdivision would create parcels of 2,000 to 4,000 feet 34 where one of the structures is not historic but it would come to Commission for a procedure that 35 would allow it to be placed on Consent for the Commission. The Commission could choose 36 whether or not to hold a public hearing and either way forward it onto Council where the Council 37 would do the same thing. It would go on Consent and require a certain number of votes to be 38 pulled off Consent. We would do that consistent with how we do other parcel map appeals I 39 would think. 40 41 Chair Garber: Commissioners, any other? 42 43 Commissioner Fineberg: Yes, clarification on that. 44 45 Chair Garber: Actually before you get that let's get a second and then we can come back. 46 Page 29 1 SECOND 2 3 Commissioner Holman: Second. 4 5 Chair Garber: The maker of the motion is passing on his opportunity to speak to the motion. 6 Does the seconder wish to speak before we get to discussion? 7 8 Commissioner Holman: Yes because I have more things to add. 9 10 Chair Garber: Go ahead. 11 12 Commissioner Holman: On your eighth point here might we also revisit the findings for the 13 historic parcel map with exceptions? That was not in your motion but can we do that? 14 15 Chair Garber: You had sort of said it when you stated that one of the two buildings needed to 16 have the historic status. ' 17 18 Mr. Larkin: I think when we come back -the direction is already to amend our parcel map 19 section but we are not going to actually amend it. We are going to come back. So when we 20 come back I think you can make those suggestions but it is harder to do in the abstract without 21 having it in front of you. I think that yes it is something we can look at. 22 23 Commissioner Holman: Okay. The things to add are ... well cottage clusters will come back to us 24 that would be a recommendation. 25 26 Chair Garber: Yes. 27 28 Commissioner Holman: Okay. We would not hold this up for that but cottage clusters will come 29 back. 30 31 Commissioner Fineberg: Is that nine? 32 33 Chair Garber: I think that is just a comment as opposed to part of the motion. Question? 34 35 Commissioner Holman: Other Commissioners have to agree to that either way. That the non- 36 historic structures would have to, whether residential or not, would have to go to the HRB if it is 37 a major project for compatibility review. 38 39 Chair Garber: Would that be implicit in the process already or do we need to ..... 40 41 Commissioner Holman: No, it is not referenced in the ordinance. 42 43 Ms. French: Wait that would be an existing structure. 44 Page 30 1 Commissioner Holman: The reason for that is because it says in the ordinance now that the non- 2 historic structure would have to be compatible with the historic one but it doesn't say what 3 determines historic, what determines compatible. 4 5 Ms. French: To determine that it is compatible. 6 7 Commissioner Holman: Yes. 8 9 Chair Garber: It does not exist ifit does not exist on the City's or the State Historic Register? 10 11 Commissioner Holman: Well, if it is not historic it isn't on any list. We are dealing with the 12 non-historic structures that have to be compatible and have to go to HRB review. Commissioner 13 Lippert. 14 15 Commissioner Lippert: I think the question is whether the non-historic structure would need to 16 be done along with the Secretary of the Interior's Standards. I think that is really what the issue 17 IS. 18 19 Commissioner Holman: It is different than that in that the building wouldn't have to satisfy the 20 Secretary's Standards but the Secretary's Standards do address compatibility and that is what the 21 ordinance is stating but it doesn't say how you arrive at that. 22 23 Chair Garber: Isn't it a prerequisite that you have a historic structure so therefore prior to 24 anyone applying for this they would have to have an historic structure in place? 25 26 Commissioner Holman: No, we are talking about the non-historic building. 27 28 Commissioner Lippert: Okay, but the issue here is if you know what the Secretary of the 29 Interior's Standards are does the building distinguish itself as being different than the historic 30 structure or is it something that is going to compliment in terms of creating maybe false history 31 and a misunderstanding. 32 33 Chair Garber: I am sorry, I am not following here. 34 35 Ms. Caporgno: It may not be clear but I think the intent is that when the covenant, and I think 36 this is getting at Chair Garber's issue that we have already, I think the intent was the that the 37 Historic Resources Board would review these even when it is one structure or two structures on 38 the property because the covenant is going to run with the land. You are going to look at the 39 historic structures but you look at the non-historic structure also in conjunction with that. So 40 maybe we can be clearer regarding that. I think it was the intent that the Historic Resources 41 Board would be reviewing the package. 42 43 Commissioner Holman: Well, but they might come in independently for projects. 44 45 Mr. Larkin: Actually, I was going to say exactly what Julie said but add on your follow up point 46 that the covenant would address what happens to both the historic structure and the non-historic Page 31 1 structure because the covenant would run with both properties. It would not be exclusively with 2 the historic structure. 3 4 Commissioner Holman: So that needs to be clarified in the ordinance. So it would be a 5 covenant on both the historic and non-historic. The historic would have to satisfy the Secretary's 6 Standards itself and the non-historic would have to satisfy Secretary's Standards compatibility 7 requirements. Does that make sense? 8 9 Ms. Caporgno: Yes, and maybe what we can do is we added in 8, well 8 is an example on page 10 3, maybe we move 8 into number 6 so the covenant would be review and recommendation and 11 any modifications to, or somehow put that 'any modifications to a non-historic unit must be 12 compatible with the historic unit,' will be in that same section where it discusses the HRB 13 review. 14 15 Ms. French: You could say a covenant is recorded on both, you could just add 'on both homes,' 16 or what the structure is. 17 18 Commissioner Holman: Is that acceptable to the maker? 19 20 Chair Garber: It is. Commissioner Fineberg had a comment. . 21 22 Commissioner Fineberg: I might have a correction and if Staff agrees it is a cleanup and I will 23 propose it as a friendly amendment. On page 3, number 5, the Historic Resources Board has 24 determined that at least one existing unit on the property has historic integrity and qualifies for 25 listing on the City'S Historic Inventory. What if it is already listed as national or state would that 26 qualify it for findings? 27 28 Chair Garber: Yes. 29 30 Comnlissioner Fineberg: So is that an omission that would be corrected? 31 32 Ms. Caporgno: I think the reason we put that in there was because even if it was originally 33 National or State Register eligible there could have been changes made to it. The HRB really 34 isn't empowered to make a determination whether or not something is National or State eligible. 35 This was more of a check on the property so if it met our requirements then it would be 36 acceptable and that was the reason we put it in that way. Do you follow what I am saying? 37 Somebody could have a property and at one point it may have been determined to be National or- 38 State Register eligible and they have not taken care of it. So to go back to the HRB, and at least 39 ifit was determined to be eligible for our Inventory that would be acceptable and we could place 40 it on our Inventory. 41 42 Chair Garber: Okay, Comnlissioner Holnlan you have two more and then Commissioner Keller 43 has one. 44 45 Commissioner Holman: I have a couple more amendments. We talked about this earlier, add 46 reference to the preliminary parcel map with exceptions so that people know where to find that. Page 32 1 What we have done in most if not all locations where we have dealt with historic we have talked 2 about or added a reference to how to determine historic eligibility. So if that could be a footnote 3 or something to that effect if the nlaker is agreeable to both of those points. 4 5 Chair Garber: That is fine. Staff? 6 7 Ms. Caporgno: That is fine. 8 9 Chair Garber: Fine with the maker on both points. 10 11 Commissioner Holman: I think that is it. 12 13 Chair Garber: Okay. Commissioner Keller. 14 15 Commissioner Keller: Yes. I just have one comment to clarify the wording of the motion. The 16 wording of the motion with respect to 4,000 and 2,000 I want to indicate that with respect to 17 Section 2, paragraph C-3, which mentions the 4,000 and respect to Section 3, paragraph C-3, 18 which mentions 4,000 that that threshold be reduced to 2,000 ifboth residential structures are 19 historic. 20 21 Commissioner Holman: Could you repeat that please? 22 23 Commissioner Keller: All I am saying is on Section 2, paragraph C-3, page 2 bottom of the page 24 where it referenced 4,000 square feet that it is 4,000 square feet unless both residential structures 25 are historic in which case the minimum lot size is 2,000 square feet. The same change being 26 made to Section 3, paragraph C-3, which is on page 4, the same change. I am just trying to 27 tighten the wording of rather than no exceptions or whatever that is exactly where it should 28 happen. 29 30 Chair Garber: That is fine with the maker. Seconder? 31 32 Commissioner Holman: Yes. 33 34 Mr. Larkin: That was part of the original motion. 35 36 Chair Garber: He is just noting the places in the text. 37 38 Commissioner Keller: I am also noting that you said something about without exception and that 39 language is too loosey-goosey. 40 41 Mr. Larkin: The only reason I am saying that is this is coming back to you. If it wasn't coming 42 back to you I think it would be okay to tell us where to put everything but since it is coming back 43 to you we probably shouldn't spend a lot of time on that. 44 45 Chair Garber: If Staff finds a more efficient way of expressing these concepts I suspect they will 46 advise us of those. Commissioner Lippert. Page 33 1 2 Commissioner Lippert: I have two friendly amendments. One is that property lines not be 3 drawn that would allow health and safety Building Code issues to undermine the historic fabric. 4 5 Conmrissioner Holman: Restate that please. 6 7 Commissioner Lippert: I am stating it in a more general way. It was a point that I raised earlier 8 where the property line would be drawn closer than five feet, which would then put the building 9 into noncompliance from a Building Code point of view. So in other words, if you have a Type 10 5 non-rated wood frame building basically and you were to put the property line within five feet 11 of that building you have brought that building into noncompliance from the Building Code and 12 therefore the Building Department would require you to rebuild that wall out of noncombustible 13 material. Thereby you are undermining the historic fabric of the building. It was a point that the 14 City Attorney raised. The reason I didn't use five feet in the terminology is that the code just 15 changed. 16 17 Mr. Larkin: The point is well taken and the point you raised earlier and I agree with it. So we 18 should make some reference in here that they are going to have to meet all the health, life, and 19 safety codes and put them on notice up front. As you pointed out it sometimes comes too late. 20 21 Commissioner Lippert: Right. The problem is that the Building Department chimes in after the 22 fact and then you are stuck. 23 24 Chair Garber: Commissioner Fineberg. 25 26 Commissioner Fineberg: So I think what Commissioner Lippert is saying is set the expectations 27 that the process of parcelizing the smaller lots would not allow an owner to think that I can do 28 this and it doesn't matter if I mess up the building. That the expectation is going to be set that 29 the health and safety issues won't compromise the historic integrity and they know that up front. 30 31 Commissioner Lippert: It is a little more complicated than that. 32 33 Mr. Larkin: Yes, putting them on notice they are going to have to meet the Uniform Building 34 Code regardless of the fact that it is an existing structure that has been there for presumably for a 35 long time. 36 37 Commissioner Lippert: I am suggesting that it just be a little more proactive. 38 39 Chair Garber: Understood and accepted. Seconder? 40 41 Conmlissioner Holman: Clarification of City Attorney's language that it meets all life safety 42 issues because .... 43 44 Mr. Larkin: All of the codes, Uniform Building Code, Uniform Fire Code, all of those codes that 45 it is required to meet and state codes. I think a fallback on that is that may be required by state 46 law. I understand about the historic, the Historic Building Code doesn't trump the five-foot Page 34 1 setback and some of the other things. It is something that you have a problem even though the 2 building has been there for 100 years you put a property line four feet away from it all of a 3 sudden it is dangerous. I understand it doesn't make sense but that is what the Unifonn Building 4 Code says. 5 6 Commissioner Holman: When this comes back can you bring a description? I will accept it but 7 not being an architect I don't have the knowledge of what those specific things are other than the 8 five foot one, which I understand as has been described. 9 10 Commissioner Lippert: Where we are getting into trouble is archaic materials. So let's say a 11 building is done with cedar shakes. Cedar shakes are flammable. 12 13 Chair Garber: And the other issue there is that if you are using the State Historic Building Code 14 significant latitude is actually given to the Building hlspector to allow for exceptions and there 15 are a variety of ways of dealing with those issues. 16 17 Commissioner Holman: Right. I would just like to know what I am including so if you would 18 bring a fuller broad description of that when you come back. 19 20 Mr. Larkin: We will highlight the language. 21 22 Chair Garber: You had a second one? 23 24 Commissioner Lippert: Yes. The second one would be to allow a property owner to use 25 planning alternatives. By that what I mean is in the case of this garage issue that you could for 26 instance use an offsite parking agreement between the two properties in order to make the 27 parking comply with both properties. 28 29 Chair Garber: Julie? Amy? 30 31 Ms. French: Along that line, Lee does that incorporate by reference the idea of the Fire 32 suppression, you can put a sprinkler or a hydrant if you are not going to meet that flagpole 33 requirement? 34 35 Commissioner Lippert: Yes. 36 37 Ms. French: The planning alternatives could be technical alternatives. 38 39 Commissioner Lippert: Yes, the idea is that the same palette that the Building Department uses 40 with the State Historic Building Code it would allow for Planning to do in order to bring things 41 into compliance with the intent of what the ordinance is. It is almost like what you call 42 exceptions. I am just using a different word which is planning alternatives and that is the way 43 the State Historic Building Code is done. 44 45 Chair Garber: In other words, it would allow Staff latitude to say split the garage in this case. 46 Page 35 1 Commissioner Lippert: No, what it would say is put the property line where it needs to be, the 2 garage can be on the adjacent property, but you write a covenant that would say it is an offsite 3 parking agreement for the first house that the parking is on the second property. 4 5 Chair Garber: This is just an example, it could be something else, but you are just getting the 6 latitude to Planning to find a creative way to keep the historic structure in place. 7 8 Commissioner Lippert: Right, rather than having to run the property line through a structure. 9 10 Chair Garber: Okay. Commissioner Fineberg. 11 12 Commissioner Fineberg: 1 was just wondering if that scenario would make it a common interest 13 and it would be a two-unit condo then? 14 15 Mr. Larkin: No not unless the garage was -ifit was a first come first serve either parcel can use 16 it garage then maybe, but 1 think that the way Commissioner Lippert is describing it it is for the 17 exclusive use of the other property. So it is not commonly owned. 18 19 Commissioner Lippert: It is like an lIE, an ingress/egress. 20 21 Mr. Larkin: Yes, it is being provided for the use of only one of the parcels it is not being 22 provided for the use of both parcels equally. It would have to be done that way. 23 24 Ms. French: It is not for living purposes, right? Just for the car we are talking about. 25 26 Chair Garber: Yes. 27 28 Ms. French: We might want to use residential homes, we might want to use that word 'homes' 29 somehow. 30 31 Chair Garber: The Chair accepts the amendment. Seconder? 32 33 Commissioner Holman: Yes and no. 1 can think of situations 1 appreciate what Commissioner 34 Lippert is introducing but 1 am thinking of other situations where actually the situation Sallie 35 Strong has, it is not practical to have an agreement, from my perspective because it is a situation 36 where the only off-street parking is -and 1 can think of another situation where this exists too. 37 The only off-street parking that exists is in front of the second unit. These are comer parcels. So 38 the unit that is on the comer that has the parking to require that a parking place be allocated to 39 the other house is then going to definitely and negatively, severely negatively from my 40 perspective, affect the salability of the other comer house. 41 42 Chair Garber: But in a circumstance such as that you would have to have an owner that is 43 interested in pursuing it. You would have to have the Planning Director be willing to entertain it. 44 45 Commissioner Lippert: 'Right. 46 Page 36 1 Chair Garber: So in a circumstance like that presumably neither of those two things would work. 2 All it does is give latitude for the Planning Direct and the owner to find a way to work through 3 an issue that may otherwise restrict the location of the property line. 4 5 Commissioner Holman: So if it is in relation to property line location I would accept it. But if it 6 is in relation to requiring the parking agreement then I wouldn't accept it. 7 8 Commissioner Lippert: No, I am not say -that is just an example that I was giving. I am not 9 saying that that's what I am prosing be the language. What I am saying is that it allow for the 10 property owner to use Planning alternatives the way the Building Code allows for building code 11 alternatives. 12 13 Commissioner Holman: Okay, so it is not a requirement. You are not calling it a requirement. 14 15 Chair Garber: Right. 16 17 Con1IDissioner Lippert: I used the offsite parking agreement between the two of them because 18 when you subdivide the lot then you can create a covenant that would allow for .... 19 20 Chair Garber: As an example. 21 22 Commissioner Holman: As an example, I understand. 23 24 Commissioner Lippert: Right. One person has the driveway the other one has the parking. 25 26 Chair Garber: So the seconder accepts the amendment. Anything else? 27 28 Commissioner Lippert: No. 29 30 Chair Garber: Commissioner Fineberg. 31 32 Commissioner Fineberg: When this comes back to us can we review it on a Consent Calendar? 33 34 Commissioner Holman: We don't have a Consent Calendar. 35 36 Mr. Larkin: There is nothing that says you can't have a Consent Calendar. In fact your rules 37 provide for a Consent Calendar. So if you would like we can put it on a Consent Calendar. 38 39 Commissioner Fineberg: Can I make a friendly amendment? 40 41 Vice-Chair Tuma: That this come back to us on Consent? 42 43 Commissioner Fineberg: Yes. 44 45 Chair Garber: Sure. I anl happy to accept that because it still allows any Commissioner to pull it 46 out and talk about it. Seconder? Page 37 1 2 Commissioner Fineberg: Two Commissioners or one? 3 4 Mr. Larkin: The way the rules are written one Commissioner can pull it but we can revisit that 5 when we revise the rules. 6 7 Chair Garber: Commissioner Holman. 8 9 Comnlissioner Holman: One last thing. As mentioned earlier I think to expedite the Consent 10 Calendar proposal is that if Chair would appoint a couple of Commissioners to preview this 11 because there are other language errors or inconsistencies or whatever understandably. Then I 12 think that would expedite the Consent Calendar. 13 14 Commissioner Fineberg: Would Commissioner Holman prefer I withdraw my friendly 15 amendment? 16 17 Commissioner Holman: No. 18 19 Chair Garber: The Chair is happy to accept that and happy to accept Commissioner Holman 20 volunteering for it. A second person? 21 22 Commissioner Lippert: Are you appointing me? 23 24 Chair Garber: I am giving you the opportunity. 25 26 Commissioner Lippert: Sure. 27 28 MOTION PASSED (6-0-0-1, Commissioner Rosati absent) 29 30 Chair Garber: Commissioner Lippert will accept the appointment. With that will all 31 Commissioners in agreement with the motion as stated say aye? (ayes) Opposed? The motion 32 passes unanimously with Commissioner Rosati absent. Page 38 TO: FROM: ATTACHMENT C PLANNING & TRANSPORTATION DIVISION STAFF REPORT PLANNING & TRANSPORTATION COMMISSION Julie Caporgno and Amy French DEPARTMENT:: Planning and Community Environnlent AGENDA DATE: June 24, 2009 SUBJECT: Subdivision Incentive for Historic Preservation: Review and recommendation of an ordinance amending subdivision (Title 21) and zoning (Title 18) codes to allow subdivision for ownership purposes where covenants are provided to protect historic properties. RECOMMENDATION: Staff recommends that the Planning and Transportation Commission (PTC) approve on consent the recommendations in this report to forward to the City Council to adopt the attached ordinance (Attachment A) amending: I. The Palo Alto Municipal Code (PAMC) Title 18, Zoning, Sections 18.10.130, 18.12.140, and 18.13.040(c) to allow subdivision of a single parcel containing two residences into two parcels of at least 4,000 square feet each if only one residence is historic, and at least 2,000 square feet each if both residences are historic, and to provide covenants to preserve the historical integrity of existing residences listed as Categories 1 -4 on the City's Historic Inventory, Professorville contributing structures or National or California Register eligible structures, and Sections 18.10.060 and Sections 18.12.060 allowing for continuation of existing, legal non-conforming parking facilities. II. The P AMC Title 21 (Subdivisions and Other Divisions of Land), Chapter 21.20 (Design), Sections 21.20.010 (Generally) and 21.20.301 (Flag lots), only when Inventory-listed historic residences have associated covenants executed to preserve historical integrity, to allow the creation of flag lots within the R-l District via the Parcel Map without Exception process, to allow the creation of lots having less than minimum lot area, lot dimensions, and non-conforming lot configurations (in accordance with the proposed lot sizes in the zoning code amendments), and to allow flag lot access (via easement or "flagpole") having City of Palo Alto Page 1 a minimum width of twelve feet, a maximum length of 100 feet, and a paved way not less than ten feet in width. BACKGROUND: On May 13, 2009, the PTC held its second public hearing on the proposal to provide subdivision incentives for historic preservation. The PTC had first discussed the incentives at its January 28, 2009 meeting and had requested several changes to the proposed incentives. The incentives require changes to the City's zoning and subdivision ordinances to allow separate parcelization and ownership of units on nonconforming size parcels containing historic unite s) with covenants provided to ensure preservation of the historic integrity of the units. The May 13thpTC meeting minutes are attached (Attachment B) for reference. At that meeting, the PTC requested that staff further revise the ordinance to include several additional changes, appointed a two-member subcommittee to work with staff to incorporate those revisions in the draft ordinance and requested the revised ordinance return to the full PTC on consent calendar. The subcommittee met with staff on June 8, 2009 to discuss the revisions. DISCUSSION: The zoning and subdivision ordinances have been modified to incorporate the changes that the PTC requested on May 13th• These include: • Consistently use "residence" throughout the ordinance • Change Section 3, paragraph c-1 to match Section 4, paragraph 3-A • Add text that allows latitude by staff to find appropriate parking compliance solutions. • Modify text regarding flag lots for greater clarity. • State clearly that ordinance is only dealing with two existing residences on the same property. • Reference that use of the state Historic Building Code is allowed. • Allow parcels without exception for residences on new parcels greater 2,000 square feet when covenants are placed on both parcels. • Create "consent calendar" process for subdivision of parcels of2,000 to 4,000 square feet when one of the residences is not historic. • Clarify that allowed development will have to meet all health, life and safety codes. • Enable the property owner to use planning alternatives if necessary and allowed by staff. Initiation of parcel map with exception procedure to allow a consent calendar process for xreation of 2,000-4,000 square foot substandard parcels with one historic unit was not included in changes since that would require renoticingand a public hearing. c POLICY IMPLICATIONS The proposed ordinance supports several Comprehensive Plan policies. It promotes the rehabilitation of deteriorating or substandard residential properties (H -8) by ensuring that the structures are properly maintained. It preserves the existing legal, non-conforming rental cottages and duplexes currently located in the R-1 and R-2 residential areas of Palo Alto, which City of Palo Alto Page 2 represent a significant portion of the City's affordable housing supply (H -10) by providing an incentive for retention and preservation of these units. It preserves the character of residential neighborhoods (L-12) by retaining the existing fabric of the neighborhoods. It encourages public and private upkeep and preservation of resources that have historic merit, including residences listed in the Historic Inventory (L-51) and it develops incentives for the retention and rehabilitation of buildings with historic merit in all zones (L-57). ENVIRONMENTAL REVIEW: This action is categorically exempt (per Section 15305 (Class 5) of the CEQA Guidelines) from the provisions of CEQA as they comprise minor alterations to land use limitations and can be seen to have no significant environmental impacts. ATTACHMENT: Attachment A: Attachment B: Attachment C: PREPARED BY: Draft Ordinance Staffreport for May 13, 2009 PTC meeting PTC Meeting Minutes of May 13,2009 Amy French and Julie Caporgno DEPARTMENTIDNISION HEAD APPROVAL: ___________ _ City of Palo Alto Julie Caporgno Chief Planning and Transportation Official Page 3 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 ATTACHMENT D air Garber: Okay. That concludes the study session on the Housing Element. It will be con' ued with additional discussion on July 8 and will occur before the regularly scheduled mediately into the regularly scheduled session. Chair Garber: As a remin if anyone in the public has received their enda prior to late last week there is an addition. TIl e will be a discussion on the Report Council at the very end of this meeting by the ad hoc comm' ee of the Commissioners sho we have enough time to discuss it. Ms. Tronquet: I just want to clarify that posted in accordance with the Brown Act. at that revised agenda was properly Chair Garber: Great. Thank you. We have al any members of the public could speak to t Commis' on on items not on the agenda this evening. I believe there are no cards. ORAL COMMUNICATIONS. Me ers of the public may spea to any item not on the agenda with a limitation of three (3) mi tes per speaker. Those who des! to speak must complete a speaker request card availab from the secretary of the Commission. e Planning and Transportation Commissi reserves the right to limit the oral communic . ons period to 15 minutes. ES, ADDITIONS AND DELETIONS. The agenda may have a ntil 72 hours prior to meeting time. Chair rber: We will move to our first item, which is the Consent Calendar. Let me first k if ther are any members of the Commission that would like to pull any item from that Consent endar? I am seeing no hands and no lights. Consent: 2. Historic Covenants/Subdivision and Zoning Ordinance Amendments: Review and recommendation of an ordinance amending subdivision (Title 21) and Zoning (Title 18) codes to allow subdivision for ownership purposes where covenants are provided to protect historic properties. Chair Garber: My I hear a motion to move and approve the Consent Calendar as it has been submitted? Ms. Tronquet: Excuse me, Chair Garber actually you should probably ask if there is any public comment on this item. City of Palo Alto June 24,2009 Page 15 of82 1 Chair Garber: All right. Thank you City Attorney as well as Zariah. There is public comment 2 on this item. There is one card. Mr. Borock you will have three minutes. 3 4 Mr. Borock: Thank you Chair Garber and Assistant City Attorney. I have not been following 5 this item recently. However when it was being discussed by the Commission and Staff at the 6 time it was a Staff assignment, I was concerned at that time of whether any Commissioners who 7 might own property that would be affected by this ordinance change regarding the R-2 and RMD 8 second units would have a conflict of interest. Just by word of mouth, I don't recall anything 9 being said at a Commission meeting or any pieces of paper going on was that the advice from the 10 City Attorney's Office, and it was a different attorney then that the one who is here this evening, 11 was that no it was not. My understanding of the conflict of interest law is that the test is as to 12 whether the change would affect a significant segment of the public, a significant segment of the 13 properties that would be affected. By my counting of the number of parcels I concluded that 14 there would be a conflict. 15 16 I don't know what the final item looks like. When I first saw notice for your meeting earlier this 17 year I couldn't tell that it was the same subject. However, the one for this evening it appears to 18 be and I still have not had time to see if it was any different in concept than it was prior at the 19 time it was a Staff assignment. 20 21 I don't like to do this at such a late time and it might have to be when it goes to Council but I 22 want to give everybody fair warning that if it is the same analysis that I had last time I believe it 23 would involve a conflict and that may require doing things again. This is not the fault of any 24 Commissioners. It gets to be the kind of advice you get and the extent to which that kind of 25 analysis is being done by the people who are supposed to be doing it, and the office where it is 26 supposed to be done. I apologize for bringing it up this late but I do want to let you know that it 27 is not going to be something that I just thought of if it is necessary when it comes to the Council. 28 It is just something that it took me a while to realize we are talking about the same thing. I 29 don't' know yet whether it covers the same properties or a smaller number or a larger nUlnber. 30 Thank you. 31 32 Chair Garber: Thank you. Commissioner Holman. 33 34 Commissioner Holman: I had a brief conversation with Mr. Borock a week or so ago. I 35 appreciate you bringing this up. There was some interest in knowing whether I had a conflict of 36 interest. I checked with, I don't remember it may have been Cara or the sitting City Attorney 37 this evening, and it was determined I did not have a conflict of interest. I had misstated the 38 situation to Mr. Borock because I was thinking of prior. We are not including the multifamily 39 zones in this ordinance because we are not addressing the cottage cluster. So this is the R-l, RE, 40 RMD, and R-2. I live in R-2. Most of us probably live in R-l. So I am not exactly clear on 41 what the potential conflict of interest is because it covers that many ,zones. I would like some 42 kind of comment from City Attorney as to whether any of us or all of us are conflicted on this 43 item. 44 45 Chair Garber: City Attorney. 46 City 0/ Palo Alto June 24, 2009 Page 160/82 1 Ms. Tronquet: These particular facts and this particular issue was not brought to my attention. I 2 do trust the Assistant City Attorney's analysis of these things. Ultimately the decision to 3 participate is always up to the individual Commission member. To the extent -I just don't know 4 what your property interests are. We would have to discuss it in more detail. If you have 5 contacted the FPPC or the Assistant City Attorney about it I trust that. 6 7 Commissioner Holman: If it wasn't you it must have been Cara Silver because it was one of the 8 female attorneys. Maybe it would be a question for Mr. Borock so we can perhaps get some 9 clarity here is I am not sure why I would have a conflict where others don't. I think your 10 question had to with because I live in R-2. Could we ask Mr. Borock to clarify? 11 12 Chair Garber: Mr. Borock. 13 14 Mr. Borock: I don't know, Commissioner Holman. You said it was a brief conversation as to 15 whether if you had an R-2 property that would be affected by this ordinance. If not then I don't 16 see it as any problem. If you are in a situation where you were affected then it is a factual 1 7 question of seeing how many properties are affected. . 18 19 Commissioner Holman: Understanding better the question because my property has two houses 20 on it, is that what you are saying? 21 22 Mr. Borock: And whether it is affected by this ordinance specifically since it doesn't apply to all 23 R-2 and RMD properties. As I said I don't know the specific language so I can't say. To the 24 extent that the property is affected by the ordinance then it is a factual question of the number of 25 properties related to the City's housing stock as a whole as to whether a significant segment of 26 properties. 27 28 Commissioner Holman: Appreciate the question. It was a part of the question also I had posed 29 to City Attorney and I am happy not to participate if it causes any cloud over this. I do own a 30 property that has two houses on it. My house, which is a potential California Register, is one of 31 the however many thousand that is. Then there is a cottage on the rear of the property that was 32 built later and is not in a potential category. So it wouldn't be covered by this ordinance because 33 well yes it could potentially, potentially it could. The advice I got was it is not a conflict 34 because there is no known evidence. Again, I am happy not to participate if that takes any cloud 35 off of this. 36 37 Chair Garber: I think the choice is yours. 38 . 39 Ms. Tronquet: The standard generally is if it is reasonably foreseeable or substantially likely that 40 the decision you will make tonight will have an impact on your property. So to the extent that it 41 is not reasonably foreseeable that it is just something that could be out there in the future that 42 may have been a component of her analysis. 43 44 Conlmissioner Holman: That was, and again maybe just in the interest of removing any cloud I 45 just won't participate in a vote on the ordinance. I have participated to this point so does it make 46 any difference actually? City o/Palo Alto June 24, 2009 Page 170/82 1 2 Ms. Tronquet: If you are not participating tonight out of an abundance of caution probably not. 3 4 Commissioner Holman: You are saying it wouldn't make any difference? 5 6 Ms. Tronquet: Not at this point. We have not been able to determine tonight whether you do in 7 fact have a conflict or not. To the extent that you are deciding not to participate simply out of 8 caution, it sounds to me like you may not, but I would have to go into more analysis. You can 9 always decide not to participate even if you don't have a conflict. If you are concerned about it 10 that is perfectly fine. 11 12 Commissioner Holman: I think it is not feasible. It is certainly not in any kind of foreseeable 13 future but I think just in the interest of excessive caution I just won't participate in the vote even 14 though I have participated to this point so it seems kind of odd in that regard. Again, if it helps 15 remove any clouds whatsoever that might exist. 16 17 Chair Garber: Commissioner Lippert, briefly. 18 19 Commissioner Lippert: How would this be different than many of us that live in R-l and doing a 20 legislative act, which is basically coming up with development regulations for the R-l zone? We 21 would all live in that zone. We couldn't simply recuse ourselves and have a bunch of new 22 Commissioners here that live in RM deciding on R-l. 23 24 Ms. Tronquet: It is really difficult to say without having the facts of exactly what you are 25 deciding on. So it is just difficult to say. 26 27 Chair Garber: Attorney, thank you. Commissioner Holman thank you. Let us assume that you 28 are going to recuse yourself from this. May I hear another motion to move approval of the 29 Consent Calendar? 30 31 Commissioner Holman: If I am going to recuse myself I should leave the room. So again just to 32 state for the record I did pursue all of this discussion with City Attorney previously and 33 determined we didn't have a conflict of interest but I will recuse myself on the vote. 34 35 Chair Garber: We will wait for a brief moment. Commissioner Lippert. 36 37 MOTION 38 39 Commissioner Lippert: I move adoption of the Consent Calendar. 40 41 Chair Garber: May I hear a second? 42 43 SECOND 44 45 Commissioner Keller: Second. 46 City of Palo Alto June 24, 2009 Page 18 of 82 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 MOTION PASSED (5-0-1-1, Commissioner Holman recused, Commissioner Rosati absent) Chair Garber: Seconded by Commissioner Keller. All in favor? (ayes) All opposed? That passes with Commissioners Lippert, Fineberg, Tuma, Garber, and Keller with Commissioner Rosati absent and Commissioner Holman not voting. Commissioner Holman is returning and we will move to the next item. As a general announcement to those in attendance the Commission has been in session with its Special Study Session since six o'clock. At eight o'clock we will take a five-minute break. The next item is item number three, the Charleston! Arastradero Corridor Project. This is a review and recommendation on the alternatives to the Arastradero Road restriping trial implementation project. Would Staff please make a presentation? We would like to note with pleasure that it is being made in part by Gayle Likens, as one of her last moments before the Commission. ans ortation Mana er: Good evening Chair Garbe nd members of the Commission. We are e tonight to present our recommendations 0 e second phase of Charleston! Arastradero R Corridor trial, which is the restripin nd implementation of the corridor improvements along astradero Road. hat are seated at the table. Rafael Rius The last time we were before yo 0 discuss the Charlesto astradero Corridor was roughly a year ago, a little bit over a ye ago, when we presented the res s of the Charleston Road Phase 1 trial. At that time we w e recommending permanent retention 0 he striping improvements that were put in place part of that trial on Charleston Road. You rec mended that and the Council approved e permanent retention of those improvements and dire ed us to move forward with P ase 2, and also to implement some improvements at the Gunn igh driveway. 42 So we now coming to you with recommendations on the segment of the corridor 43 Ca 'no Real to Gunn High-School, just the Arastradero Road corridor. I would like to j go 44 efly over some background on the project just to bring everyone up to speed as to the inte 4V this project. 46 City 0/ Palo Alto June 24,2009 Page 190/82 TO: FROM: DATE: HONORABLE CITY COUNCIL CITY MANAGER JUL Y 27, 2009 DEPARTMENT: PLANNING AND COMMUNITY ENVIRONMENT CMR: 323:09 REPORT TYPE: REPORTS OF OFFICIALS SUBJECT: Approval of a Trial Implementation of Phase 2 of the Charleston Arastradero Road Corridor Project -Lane Restriping on Arastradero Road EXECUTIVE SUMMARY In 2003, the City Council directed staff to prepare a plan of transportation, safety, and urban design/landscape improvements for the Charleston Arastradero Road Corridor that would improve the pedestrian and bicyclist conditions, enhance the visual amenities and quality of life, and maintain the current travel times along the corridor. Phase 1 (Charleston Road) ofthe Plan underwent a trial striping phase in 2006, and this project (Phase 2) would incorporate a trial striping plan for Arastradero Road segment. The Hybrid Alternative of the proposed restriping project is recommended for trial implementation for one year, commencing in summer of201O. The Hybrid Alternative includes a mix of three lane and four lane sections and provides for no decrease in travel time through the corridor and improved pedestrian and bicycle safety conditions. The Charleston-Arastradero Stakeholder Committee and the Planning and Transportation Commission have both recommended the Hybrid Alternative. RECOMMENDATION Staff and the Planning and Transportation Commission (PTC) recommend that the City Council: 1. Approve the installation of the Phase 2 trial striping and lane configurations on Arastradero Road consisting of: a. a three-lane cross-section from EI Camino Real to DonaldlTennan, including one travel lane in each direction, a wide striped median and left tum pockets at intersections; b. a four-lane cross-section between DonaldlTennan and Georgia Avenue, including two travel lanes in the westbound direction and one travel lane in the eastbound direction; and CMR: 323:09 Page 1 of6 c. A four-lane cross-section from Georgia Avenue to Gunn High School with two travel lanes in each direction and a narrow striped median. 2. Direct staffto begin working with Caltrans to develop a project to improve the bicycle and pedestrian safety at the intersection ofEl Camino Real and Arastradero Road. BACKGROUND In April 2003, the City Council directed staff to prepare a plan oftransportation, safety and urban design/landscape improvements for the Charleston Arastradero Road Corridor. The corridor serves numerous residential neighborhoods and 11 schools. The objectives ofthe plan included: • Maintain existing travel time on the corridor to minimize diversion to other residential streets • Reduce accidents on the corridor • Improve conditions for pedestrian and bicycle travel • Improve the quality of life on the corridor • Enhance visual amenities along the corridor In January 2004, the City Council approved the Phasing Plan for the Charleston-Arastradero Corridor Improvement Plan. The Charleston-Arastradero Corridor is illustrated in Figure 1 of Attachment C. In 2006, Council authorized Staff to implement the trial in two Phases: • Phase 1 included construction of the intersection and traffic signal modifications at the Arastradero Road/Gunn High driveway, implementation of traffic adaptive signal timing and the striping changes along only East and West Charleston Roads between Fabian and El Camino Real. • Phase 2 included the installation of the three-lane or four-lane striping plan for Arastradero Road, which was to follow the Charleston Road trial. Phase 1 Improvements The Phase 1 plan included the following: • Installation of a new dedicated westbound right tum lane on Arastradero Road at the Gunn High School driveway and associated driveway improvements. • Deployment oftraffic adaptive signal technology along the entire corridor (real-time signal timing adjustments based on actual traffic demand). • Trial of a three-lane section from west of Fabian to Alma Street and from west ofEl Camino Real to east ofthe Gunn High School driveway. • Retention of two travel lanes in each direction at both the east and west approaches of Middlefield, from Alma to El Camino Real. • Permanent retention of changes that were proven to be desirable in the trial (installation of permanent changes including landscaped median islands and frontage improvements, including street trees, median islands, and new street lighting, etc). In May 2008, the Council reviewed the results ofthe Charleston Road Phase One trial project and approved the permanent retention of the lane configurations between Fabian Way and El Camino Real. The Council further directed staffto work with PAUSD officials to implement an CMR: 323:09 Page 2 of6 alternative driveway circulation plan developed by TJKM for Gunn High School that would extend the two inbound driveway lanes approximately 500 feet into the campus to reduce queuing on Arastradero Road. P AUSD and Gunn High administrators agreed to implement a signing and striping trial ofthis configuration in August 2008. An after evaluation study conducted last fall confirmed that the improvements had reduced queuing and were further deemed successful by Gunn High administrators. Phase 2 Improvements After successful completion of modifications to reduce the four through lanes on Charleston Road between Alma and Fabian in 2006 as Phase 1 ofthe Corridor Project, staffbegan analyzing the Arastradero Road portions ofthe corridor. Arastradero Road carries approximately 18.700 vehicles per typical weekday and approximately 11,800 vehicles on a typical weekend day. These volumes are approximately 5,000 more vehicles per day than East Charleston Road. In addition, during the off-peak periods, vehicles exceed the posted speed limits with regularity. The 85th percentile speeds are close to 40 miles per hour, with some vehicles traveling close to 50 miles per hour. Figure 1 of Attachment C illustrates the Charleston-Arastradero Corridor and the segment analyzed in Phase 2 (Segment 4). Over the past year, Transportation staffhas held regular meetings with the Charleston- Arastradero Corridor Stakeholder committee to discuss operational issues arising from the various striping alternatives. The firm of TJKM Transportation consultants was retained to prepare a traffic analysis and recommendations for striping alternatives of Arastradero Road. TJKM initially evaluated a three-lane alternative (two-lanes with left tum lanes) and a four-lane alternative (four lanes plus left tum lanes), and then analyzed a third (hybrid) plan. The Hybrid Alternative is similar to the three-lane alternative east ofDonaldiTerman and has two lanes in the westbound direction, west ofDonaldiTerman, and two lanes in the eastbound direction west of Georgia. The re-striping improvements for each of the alternatives include the addition of left tum pockets, improved pedestrian crossing conditions, and the opportunity for future median islands and landcaping. TJKM performed extensive simulation modeling of the existing conditions and the performance ofthe three striping alternatives (see Attachment C, Arastradero Road Striping Alternatives, Final Report, TJKM June 2009). The study found that the Hybrid Alternative would operate better than the current conditions in terms oftravel time through the corridor, and would improve pedestrian and bicycle safety conditions. The stakeholder committee recommended approval of the trial for the Hybrid Alternative. Additional details of the alternatives studied and accompanying technical information is provided in the PTC staff report (Attachment A) and in the TJKM study (Attachment C). BOARD/COMMISSION REVIEW AND RECOlVIMENDATIONS On June 24th, 2009, the PTC voted unanimously on a 6-0-1 vote (Commissioner Rosati absent) to recommend a) Council approval of staffs recommendation to improve the installation ofthe Phase 2 Trial; and b) that Council direct staffto begin working with Caltrans to develop a project to improve the safety at the intersection ofEI Camino Real and Arastradero Road. The PTC also CMR: 323:09 Page 3 of6 requested that staff consider input from the public when developing the final design plans, to add a member of the PTC to the stakeholders group, and to provide the final design plans to the PTC as an informational item. Eight members of the public addressed the PTC at the June 24th meeting, and there were approximately 18 written comments to submitted to the City prior to the June 24th meeting. In general, most speakers and written comments were in support of the project; however, some concerns were raised, particularly with the existing conditions along the corridor. These included an existing blind spot for vehicles exiting the residential units at 724 Arastradero Road, the narrow sidewalks on the east side of Arastradero near Gunn High School, the potential for cut-through traffic, and the lack of improvements at the intersection ofEI Camino Real and Arastradero Road. The PTC raised a few concerns including preferences for a design that is compatible with emergency vehicles and receiving lanes for vehicles turning out of the side streets. The PTC inquired about enhancing bike connections to the south of Arastradero Road and with the Bol Park Bike path, and the potential for traffic calming measures west of Georgia Avenue. The June 24, 2009 Commission staff report and minutes are attached to this report. POLICY IMPLICATIONS The installation of the Phase 2 Trial Striping and lane configurations for Arastradero Road is consistent with the Council-approved Charleston! Arastradero Corridor Improvement Plan. The project furthers the following Palo Alto Comprehensive Plan Goals: T -1, Less Reliance on Single Occupant Vehicles; T-3, Facilities, Services and Programs that Encourage and Promote Walking and Bicycling; T-5, a Transportation System that Minimizes Impacts on Residential Neighborhoods; and T-6, a High Level of Safety for Motorists, Pedestrians and Bicyclists on Palo Alto streets. RESOURCE IMPACT Capital Improvement Program (CIP) Project PL-05002 provided funding for the implementation of the Charleston!Arastradero Corridor Phase 1 Trial and Gunn High School Driveway and intersection improvements. Remaining funding in the project of approximately $80,000 will be available for development of the detailed striping plan for Arastradero Road. The already planned Street Maintenance CIP Project PE-86070 will fund the majority of the Arastradero Road restriping trial in summer 2010 with approximately $60,000 in additional cost for the striping and signage changes to be paid for by the Charleston! Arastradero Corridor CIP. Funding for the median island on Arastradero Road at the Briones Park will be funded through the Safe Routes to School Project CIP Project PL-00026), with an estimated cost of$15,000. The estimated cost for the complete streetscape and safety improvements along the entire corridor as detailed in the Corridor Plan was approximately $6.2 million. The Charleston!Arastradero Road Pedestrian and Bicycle Traffic Impact Fee is estimated to generate over $800,000 over 10 years. To date, approximately $610,000 has been collected. Approximately $375,000 ofthis amount was budgeted for the Phase 1 and Phase 2 trial improvements. The balance of the estimated impact fee revenues will be available as local match contributions for future federal, state and local grant applications. Potential grant funding sources CMR:323:09 Page 4 include the following grant programs: VTA Local Streets and County Roads fund and Community Design and Transportation, Metropolitan Transportation Commission Transportation for Livable Communities, Caltrans Safe Routes to School, Federal Congestion Management and Air Quality Improvement (CMAQ) and Transportation Enhancements. ENVIRONMENTAL REVIEW The City Council adopted a Mitigated Negative Declaration (MND) pursuant to the California Environmental Quality Act (CEQA) for the Charleston!Arastradero Corridor Plan on January 20, 2004. The plan included mitigation that would reduce the identified environmental impacts to a less than significant level. The MND covered the implementation ofthe full Charleston! Arastradero Corridor proj ect including the Phase 2 trial and Gunn High School intersection improvements. PREPARED BY: DEPARTMENT HEAD: CITY MANAGER APPROVAL: ATTACHMENTS: ~ Transportation Proj ect Engineer CURTIS WILLIAMS Interim Director Planning and Community Environment JAMES KEENE City Manager A. June 24,2009 Planning and Transportation Commission Staff Report (without attachments) B. Concept Plan for Alternative 3 (Hybrid) C. Arastradero Road Striping Alternatives Final Report (June 3, 2009, TJKM Transportation Consultants). ). Technical Appendix may be downloaded from: http://www .cityofpaloalto.orgicivicaifilebankiblobdload.asp?BlobID= 16110 D. June 9, 2009 Community Meeting Notes and Submitted Comments E. Questions from Commissioner Keller for the June 24th P&TC Meeting F. June 24,2009 Planning and Transportation Commission Minutes (Council only) G. Correspondence CMR: 323:09 Page 5 of6 COURTESY COPIES: Charleston! Arastradero Corridor Stakeholders Group Noreen Likins, Principal, Gunn High School Michael O'Neill, Principal, Juana Briones School Carmen Giedt, Principal, Terman Middle School Bob Golton, P AUSD Palo Alto Bicycle Advisory Committee CMR: 323:09 Page 6 of6 TO: ATTACHMENT A PLANNING & TRANSPORTATION DIVISION STAFF REPORT PLANNING & TRANSPORTATION COMMISSION FROM: Rafael Rius DEPARTMENT: Planning and Transportation Project Engineer Community Environment AGENDA DATE: June 24, 2009 SUBJECT: Charleston-Arastradero Corridor Project: Review And Recommendation on the Alternatives for the Arastradero Road Restriping Trial Implementation Project RECOMMENDATION: Staff recommends that the Planning and Transportation Commission (P&TC) recommend to the the City Council to: 1. Approve the Arastradero Road Hybrid striping plan for a one-year trial installation in summer 2010 in conjunction with the Street Maintenance Project. The plan includes: a) A three-lane cross-section from west ofEI Camino Real to east of the TermanIDonald intersection, including one lane in each direction with a wide median midblock and left tum lanes at intersections. b) Retention of two through lanes in each direction and left tum pockets at the TermanIDonald intersection, with a second approach lane on the Donald Drive approach. c) A four-lane cross-section with a narrow center median on Arastradero from west of the Georgia intersection to just east of Gunn High School, including one travel lane in each direction, a wide striped median and left tum pockets at intersections. d) Installation of an enhanced mid-block pedestrian crosswalk with a median refuge area with raised protective curbs. 2. Direct staff to develop detailed design plans and implement the revised striping in conjunction with the re-surfacing of Arastradero Road scheduled for Summer 2010. 3. Direct Staff to continue monitoring of traffic conditions on Arastradero Road after implementation of the revised striping and to provide an update in January 2011. City of Palo Alto Pagel BACKGROUND: In April 2003, the City Council directed staff to prepare a plan of transportation, safety and urban design/landscape improvements for the Charleston Arastradero Road Corridor. The corridor serves numerous residential neighborhoods and 11 schools. The objectives of the plan included: • Maintain existing travel time on the corridor to minimize diversion to other residential streets • Reduce accidents on the corridor • Improve conditions for pedestrian and bicycle travel • Improve the quality of life on the corridor • Enhance visual amenities along the corridor In January 2004, the City Council adopted a Mitigated Negative Declaration and approved the Phasing Plan (CMR: 122:04) for the Charleston Arastradero Corridor Improvement Plan. The Charleston Arastradero Corridor is illustrated in Figure 1. The recommended phasing plan included the following: • Installation of a new dedicated westbound right turn lane on Arastradero Road at the Gunn High School driveway and associated driveway improvements. • Deployment of traffic adaptive signal technology along the entire corridor. • Trial of a three-lane section from west of Fabian to Alma Street and from west ofEl Camino Real to east of the Gunn High School driveway. • Retention of two travel lanes in each direction at both the east and west approaches of Middlefield, from Alma to El Camino Real. • Permanent retention of changes that were proven to be desirable in the trial. • Installation of permanent changes including landscaped median islands and frontage improvements, including street trees, median islands, and new street lighting, etc. In 2006, Council authorized Staff to implement the trial in two Phases: • Phase 1 included construction of the intersection and traffic signal modifications at the Arastradero RoadiGunn High driveway, implementation of traffic adaptive signal timing and the striping changes along only East and West Charleston Roads between Fabian and El Camino Real. • Phase 2 included the installation ofthe three-lane or four-lane striping plan for Arastradero Road, which was to follow the Charleston Road trial. In May 2008, the Council reviewed the results ofthe Charleston Road trial project and approved the permanent retention of the lane configurations between Fabian Way and El Camino Real. The Council further directed staff to work with P AUSD officials to implement an alternative driveway circulation plan developed by TJKM for Gunn High School that would extend the two inbound driveway lanes approximately 500 feet into the campus to reduce queuing on Arastradero Road. P AUSD and Gunn High administrators agreed to implement a signing and striping trial ofthis configuration in August 2008. An after evaluation study conducted last Fall confirmed that the improvements had reduced queuing and were further deemed successful by Gunn High administrators. City of Palo Alto Page 2 Figure 1. Charleston/Arastradero Corridor and Vicinity Map Concept of Road Diets Each improvement in the Charleston! Arastradero corridor has been focused around the theory of "road diets." Four-lane, undivided urban arterial roads have been found to be particularly hazardous to pedestrians and bicyclists, and the general concept is to reduce the number of through lanes to increase the safer operations of turning vehicles, pedestrians, and bicycles. Several of the dangerous characteristics of the current four-lane configuration include: the lack of a dedicated left-turn lane, difficulty for pedestrians to cross four lanes of traffic without safe refuge areas, and promotion of high travel speeds. Road diet treatments can achieve many positive results if implemented carefully, including: • Reduced travel speeds while maintaining total travel times • Reduced collisions of all types • Improved pedestrian and bicycle mobility • Improved aesthetics with landscaped or raised medians City of Palo Alto Page 3 DISCUSSION OF KEY ISSUES After successful completion of modifications to reduce the four through lanes on Charleston Road between Alma and Fabian in 2006 as Phase 1 ofthe Corridor Project, Staffbegan analyzing the Arastradero Road portions ofthe corridor. Arastradero Road carries approximately 18,700 vehicles per typical weekday and approximately 11,800 vehicles on a typical weekend day. These volumes are approximately 5,000 more vehicles per day than East Charleston Road. In addition, during the off-peak periods, vehicles exceed the posted speed limits with regularity. The 85th percentile speeds are close to 40 miles per hour, with the some vehicles traveling close to 50 miles per hour. Figure 1 illustrates the Charleston-Arastradero Corridor and the segment analyzed in Phase 2 (Segment 4). Over the past year, Transportation staffhas held regular meetings with the Charleston! Arastradero Corridor stakeholder committee to discuss operation issues arising from the various striping alternatives. TJKM Transportation Consultants was retained to prepare a traffic analysis and recommendations for striping alternatives of Arastradero Road. TJKM evaluated the two original alternatives and a third (hybrid) plan. The Hybrid Alternative is similar to the three-lane alternative east of Donald/Terman, and has two lanes in the westbound direction, west of Donald/Terman, and two lanes in the eastbound direction west of Georgia. TJKM performed extensive simulation modeling of the existing conditions and the performance of the three striping alternatives (see Attachment C, Arastradero Road Striping Alternatives, Final Report, TJKM June 2009). Gunn High School Entrance Improvements In 2006, the entrance to Gunn High School was improved by adding a right-tum only lane for the westbound approach on Arastradero. Since then, the school has worked with City staff and TJKM to develop modifications within the campus parking lot to further improve the driveway congestion. Improvements to the internal circulation patterns were made and have resulted in improved inbound circulation during the AM inbound peak period. Due to an increase in pedestrian and bicycle ridership to and from Gunn High School, congestion still occurs at the Arastradero entrance; however, there are no longer vehicle queues that extend from the parking lot back to Arastradero Road. Gunn High School is currently working with bicyclists to use alternate entrances to the campus to further alleviate congestion at the Arastradero entrance. Proj ect Description A number of striping alternatives were initially considered, and after various data collection, trials, and field observations, the following alternatives were evaluated • Alternative 1 -Four Lanes + Narrow Median (with left tum lanes, narrow bike lanes, and no parking, Attachment B) • Alternative 2 -Two Lanes + Wide Median (wider bike lanes and parking retained) • Alternative 3 -Hybrid of Four and Two Lanes (two westbound lanes west of Donald/Terman, two eastbound through lanes west of Georgia. Remainder with two lanes + wide median, Attachment A) • Do Nothing -Retain present Four Lane Undivided (with narrow bike lanes and parking) City of Palo Alto Page 4 The evaluation criteria for this corridor are the same as for the Charleston Road, which were adopted by the Palo Alto City Council in 2003 and include: 1. No increase in peak or off-peak corridor travel time 2. No significant increase in delay or critical movement delay at all signalized intersections 3. Reduce off-peak 85th percentile speeds by at least 20 percent 4. Reduce crash rates by at least 25 percent 5. Increase pedestrian volumes by at least 20 percent by 2010 6. Increase bicycle volumes by at least 20 percent by 2010 7. Increase public transit boardings by at least 40 percent by 2010 Arastradero Road Striping Alternatives Analysis For each of the alternatives, there would be two through lanes in each direction at the Donald/Terman intersection, and striping would remain unchanged, between Foothill Expressway and Gunn High School. Left-tum lanes would be provided at each ofthe unsignalized intersections which would reduce the number of rear-end or unsafe speed collisions. Based on the analysis conducted by TJKM, Alternatives 1 and 3 were found to provide the most effective improvements while maintaining acceptable traffic conditions. 1. Alternative 1 with two through lanes in each direction, and left tum lanes at each intersection, would operate at better than existing conditions. However, this alternative would include the removal of on-street parking at all times, along the entire length of Arastradero Road between EI Camino Real and Gunn High School. Although this four- lane alternative would provide slightly better operational conditions than the current conditions, it does not address the pedestrian and bicycle safety concerns nor does it enhance the visual amenities ofthe corridor as a residential Arterial Road. The pedestrian crossing conditions (across Arastradero) at unsignalized intersections would remain about the same or worse, requiring the crossing of up to five lanes of travel without any refuge areas. The bicycle lanes would be the minimum five-foot width; which is made up of three feet of asphalt and two feet of gutter space. 2. Alternative 2 provides far better pedestrian and bicycle safety conditions; however, it would perform the worst of all (including the do-nothing alternative) in terms of vehicle delay, and would result in significant traffic impacts. Due to the estimated increases in travel and intersection delay, Staff does not recommend Alternative 2. 3. The Hybrid or Alternative 3 would operate better than Existing/Do Nothing conditions in terms of travel time through the corridor, and would improve pedestrian and bicycle safety conditions east of Donald/Terman. In the westbound direction, the two travel lanes would merge to one lane, just west ofEI Camino Real, and would widen to two through lanes at the Donald/Terman intersection, and maintain the two westbound lanes through Gunn High School. In the eastbound direction, the two lanes would merge into one lane just east of the Alta Mesa Cemetery. The eastbound direction would temporarily widen to two lanes at the Donald/Terman intersection, and merge back to one through lane, east of the intersection. One drawback of the Hybrid alternative is that the City of Palo Alto Page 5 signalized intersections would need longer cycle lengths to accommodate the reduction in lanes, which would likely result in longer queues and slightly increased average delays. The estimated increase in delays, however, are not anticipated to trigger a significant traffic impact. The traffic analysis model that was used to analyze the alternatives was calibrated by closely matching the modeled existing conditions traffic operations with actual field observations. Additional details ofthe traffic analysis can be found in the Final Report (Attachment C). Tables I and 2 summarize the anticipated change in average speeds and delay per vehicle for the AM and PM peak hours respectively. Table 1: Comparison of Existing and Striping Alternatives (AM Peak) SimTraffic Results % Change ..,"''''"Ull and Alternative Average Speed EB Arastradero 17 10 18 Alternative 1 Westbound 14 Alternati ve 3 6 2 Source: Charleston Arastradero Corridor Trial Improvements-Arastradero Road Striping Alternatives Report, TJKM Transportation Consultants, June 2009. City of Palo Alto Page 6 Table 2: Comparison of Existing and Striping Alternatives (PM Peak) SimTraffic Results % Change Alternative\Existing Direction and Alternative Average Delay/ Average Delay/ Vehicle Vehicle Speed (seconds) Speed (seconds) (mph) (route) (mph) (route) Existing EB Arastradero 19 187 Existing WB Arastradero 26 139 , "",. .'0. : Alternative 1 Eastbound 21 64 111% 34% Alternative 1 Westbound 25 44 96% 32% Alternative 2 Eastbound 17 107 89% 57% Alternative 2 Westbound 24 52 92% 37% Alternative 3 Eastbound 21 69 111% 37% Alternative 3 Westbound 24 52 92% 37% .. Source: Charleston Arastradero Corndor Tnal Improvements-Arastradero Road Strlpmg Alternatives Report, TJKM Transportation Consultants, June 2009. As part of the proposed lane reductions, an operational analysis of the signalized intersections was conducted to determine if the striping alternatives would result in a significant impact. Based on the City of Palo Alto's traffic impact analysis guidelines, a signalized intersection is impacted if its level of service (LOS) deteriorates from LOS D or better to LOS E or F. If an intersection already operates at LOS E or F, then a significant impact is triggered if a more than four second increase in average delay and an increase in the critical volume to capacity ratio (v/c) of greater than 0.01 occurs. For the alternatives analyzed, Alternative 3 would operate without any significant impacts. Although an increase of 30 seconds of average delay would operate at the intersection of Coulombe and Arastradero, this is still considered acceptable and not a significant impact. In addition, this delay could be reduced by reducing the cycle lengths after the peak: school period has passed. For both Alternatives 1 and 2, the Gunn High School Driveway would experience a significant impact; however, this could be eliminated by removing this intersection from the coordinated timing program, and operating as it currently does. By removing coordination, segment travel times may decrease. Tables 3 and 4 summarize the intersection operating conditions for the existing and analyzed alternatives. Table 3: Detailed Travel Time Comparisons of Striping Alternatives (7:00-9:00 am) ID 8 9 10 Existing Alternative 1 Alternative 2 Alternative 3 Intersection Of Arastradero Delay Delay Delay Delay (sec) LOS (sec) LOS (sec) LOS (sec) LOS Coulombe 8.3 A 4.5 A 18.6 B 39.9 D TermanlDonald 71.5 E 45.5 D 99.1 F 38 D Gunn High School 107.6 F 112.1 F 112.1 F 103.3 F .. Source: Charleston Arastradero Corndor Tnal Improvements-Arastradero Road StrIpmg Alternatives Report, TJKM Transportation Consultants, June 2009. City of Palo Alto Page 7 Table 4: Detailed Travel Time Comparisons of Striping Alternatives (4:00-6:00 p.m.) Existing Alternative 1 Alternative 2 Alternative 3 ID Intersection Of Arastradero Delay Delay Delay Delay (sec) LOS (sec) LOS (sec) LOS (sec) LOS 8 Coulombe 3.5 A 4.2 A 6.2 A 11.5 B 9 TermanIDonald 10.5 B 8.4 A 11.8 B 4.8 A 10 Gunn High School 11.2 B 7.7 A 12.3 B 25.7 C .. Source: Charleston Arastradero Corndor Tnal Irnprovernents-Arastradero Road Stnpmg Alternatives Report, TJKM Transportation Consultants, June 2009. Uncontrolled Crosswalk Considerations Based on input from the neighborhood stakeholders and the attempt to make Arastradero a more walkable area, a goal was included to make crossing Arastradero Road at un-signalized locations. Currently, pedestrians crossing away from the signalized intersections need to cross four lanes oftraffic in one movement with no opportunities for refuge in the median. The distance between EI Camino Real and Coulombe Drive is approximately 1,800 feet (1I3 rd mile), and pedestrians travelling from this segment to Briones Park would need to walk approximately five additional minutes to cross at a signalized intersection. Coulumbe and Donald Drive are approximately 1,000 feet apart, and Donald Drive and Gunn High School are approximately 1,800 feet apart. As part of the initial concept design, several uncontrolled crosswalks were planned; however, for the trial phase ofthis project, only the crosswalk at Juana Briones Park (near Clemo Ave.) is recommended and should include a physical median refuge island rather than pavement striping alone. Pedestrians using this crosswalk would have an easier and safer crossing experience by only having to cross one lane of vehicle travel at a time with the ability to take refuge in a protected median. Should this trial be permanently implemented with the installation of permanent raised median islands, additional crosswalks at uncontrolled intersections could be considered at additional locations along this corridor. Status of Implementation of Traffic Adaptive Signal Timing The City's traffic signal system employs McCain advanced traffic signal controllers that are fully capable of traffic adaptive signal timing and coordination. Traffic adaptive signal timing reacts to changing traffic conditions in real time and constantly adjusts cycle-by-cycle to adjust cycle lengths, green times, etc., to optimize the system performance. The City implemented new signal timings last summer along the Charleston! Arastradero Corridor. There have been some technical problems with the signal timing implementation which City staff and the system manufacturer McCain continue to work on. Staff will work with MCain to troubleshoot and reconfigure the system this summer and redeploy the adaptive system before the start of school. When fully operational, the traffic adaptive timing plans are estimated to reduce delay by up to 20% along the corridor. City of Palo Alto Page 8 Emergency Vehicle Circulation One ofthe concerns related to a permanent raised median and one vehicle travel lane is the ability for emergency vehicles to adequately pass vehicles that pull over. During the trial phase, there will not be any raised medians with the exception of the enhanced midblock crosswalk. The midblock crosswalk with raised curbs and any permanent median installations would be designed and installed to meet any necessary emergency vehicle requirements. Staff has consulted with the Fire Department and feels that a permanent, raised median can be designed to satisfy the emergency vehicle needs. The Fire Department also suggests that the traffic signals would need to be upgraded to accommodate emergency vehicle pre-emption if raised medians are installed. June 9th Community Meeting A community meeting was held at Juana Briones School on June 9, 2009. All residents and property owners within ~ mile radius of the Arastradero Road Corridor (over 2000 addresses) were notified of the meeting by mail. Approximately 60 members of the public attended. City staff and Gary Kruger from TJKM presented the background synopsis and a summary of the analysis, findings, and conclusions. In general, the proposed Hybrid (Alternative 3) was preferred; however, several concerns were raised. A summary of the notes taken and written comments collected are included in Attachment D. Additional correspondence received since the community meeting are included in Attachment E. To summarize, the consistently heard comments during the meeting included: • Inclusion of enhanced mid-block crosswalks resulted in mixed opinions (both praised and discouraged). • Most preferred the hybrid alternative; several preferred the four-lane alternative. • The merging from 2 lanes to llane would result in major congestion and would create further inconvenience to the residents that live on Arastradero Road. Several residents had concerns about merging near their homes. • Not allowing left turns into or out ofthe driveways on Arastradero may decrease property values and provide a great inconvenience. • Requests for more detailed accident history for vehicular, bicycle, and pedestrian accidents since 2000 to compare before and after recent developments. • Would like ability to provide feedback after the trial period, but before a permanent decision is made. • Concern related to emergency access for fire trucks and other emergency vehicles. Consideration of a mountable median as an option. • The corridor should utilize "smart" signals (coordinated and/or adaptive signal timing). • Rolled curbs at several residences are very steep and damages cars. • Make a City bus available for students to potentially decrease number of parents and students driving to Gunn/Terman. • Install "KEEP CLEAR" pavement legends at uncontrolled intersections. • Schools should stagger/delay start times. • Bicycle improvements between EI Camino Real and Alta Mesa should be included. • Concern that the westbound merge (west ofEI Camino Real) will be able to handle the high traffic demands. • If significant congestion occurs or U-turns are difficult, then cut-through traffic may increase on Maybell and other streets. City of Palo Alto Page 9 CONCLUSION Based on the analysis conducted of several alternatives, staff recommends the hybrid alternative for a one-year trial installation. The hybrid alternative is the one alternative that improves safety for vehicles, pedestrians, and bicycles, and would continue to operate without resulting in any significant traffic impacts. Staff will be able to revise the concept plans during the final design process, and if necessary, will continue to monitor and make adjustments to address issues without waiting for the conclusion of the trial period. POLICY IMPLICATIONS This request does not represent a change to existing City policies. The recommendations are consistent with the Council-approved Charleston! Arastradero Corridor Improvement Plan. The project furthers Palo Alto Comprehensive Plan Goals, T-l, Less Reliance on Single Occupant Vehicles; T-3, Facilities, Services and Programs that Encourage and Promote Walking and Bicycling; T-5, a Transportation System that Minimizes Impacts on Residential Neighborhoods; and T -6, a High Level of Safety for Motorists, Pedestrians and Bicyclists on Palo Alto streets. RESOURCE IMPACTS Capital Improvement Program (CIP) Project PL-05002 provided funding for the implementation of the Charleston! Arastradero Corridor Phase 1 Trial and Gunn High School Driveway and intersection improvements. Remaining funding in the project of approximately $80,000 will be available for development ofthe detailed striping plan for Arastradero Road. The Street Maintenance CIP Project PE-86070 will fund the Arastradero Road resurfacing and restriping trial in summer 2010. Funding for the median island on Arastradero Road at the Briones Park will be funded through the Safe Routes to School Project CIP Project PL-00026). The estimated cost for the complete streetscape and safety improvements along the entire corridor as detailed in the Corridor Plan was approximately $6.2 million. The Charleston!Arastradero Road Pedestrian and Bicyclist Traffic Impact Fee is estimated to generate over $800,000 over 10 years. To date, approximately $610,000 has been collected. Approximately $375,000 ofthis amount was budgeted for the Phase 1 and Phase 2 trial improvements. The balance ofthe estimated impact fee revenues will be available as local match contributions for future federal, state and local grant applications. Potential grant funding sources include the following grant programs: VT A Local Streets and County Roads fund and Community Design and Transportation, Metropolitan Transportation Commission Transportation for Livable Communities, Caltrans Safe Routes to School, Federal Congestion Management and Air Quality Improvement (CMAQ) and Transportation Enhancements. ENVIRONMENTAL REVIEW The City Council adopted a Mitigated Negative Declaration (NIND) pursuant to the California Environmental Quality Act (CEQA) for the Charleston!Arastradero Corridor Plan on January 20, 2004 (Resolution 8395). The plan included mitigation that would reduce the identified environmental impacts to a less than significant level. The MND covered the implementation of the full Charleston!Arastradero Corridor project including the Phase 2 trial and Gunn High City of Palo Alto Page 10 School intersection improvements. The trial project will not change or worsen traffic conditions to a level of significance and the plan is within the range of conditions covered by the previous CEQA analysis. NEXT STEPS Upon P&TC recommendation for project approval, the project would be forwarded to the City Council for final action. Starting in July, staffwill prepare plans and specifications during the next six months and will hold public meetings to share plans in early 2010. Plans will be revised and prepared for a Public Works bid package in early Spring. Construction will occur in Summer 2010. ATTACHMENTS: A. Concept plan for Alternative 3 (Hybrid) B. Concept plan for Alternative 1 (Four-Lane) C. Arastradero Road Striping Alternatives Final Report (June 3,2009, TJKM Transportation Consultants). Technical Appendix may be downloaded from: http://www.cityofpaloalto.orgicivicaifilebank/blobdload.asp?BlobID= 16110 D. June 9, 2009 Community Meeting Notes and Submitted Comments E. Additional Public Correspondence COURTESY COPIES: CharlestoniArastradero Corridor Stakeholders Group Noreen Likins, Principal, Gunn High School Michael O'Neill, Principal, Juana Briones School Carmen Giedt, Principal, Terman Middle School Bob Golton, PAUSD Palo Alto Bicycle Advisory Committee PREPARED BY: Rafael Rius, Transportation Engineer REVIEWED BY: Gayle Likens, Transportation Manager DEP ARTMENTIDIVISION HEAD APPROVAL: Curtis Williams, Interim Director City of Palo Alto Page II I City .Of Palo Alto -Charleston-Arastradero Trial Traffic Improvements LCenceptual Plan Figure 4a f5 ~:t~ ~~~ , -1.0' ". 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II! f ~ II ! ~y-........... -~~~Sule200 Phc<o_' Fa<II"S_ !IItI..w;~ CITY OF PALO ALTO ARASTRADERO ROAD CONCEPTUAL PLAN ;:::::;::-=-'--11""",,, "". 042-027-55 I .. m 55-2 Of '--__________________________________________________________ L-______ -1I"""'-"'IlI""--"._ ul~~: js("A.f, !' .. 40' I F'ROJ!!cr NO. 0.2-1')21 42-027 -613109 -GK TJKM Transportation Consultants ATTACHMENT C That Moves Your Community FINAL Charleston - Arastradero Corridor Trial Improvements: Arastradero Road Striping Alternatives In the City of Palo Alto June 3, 2009 Pleasanton Fresno Sacramento Santa Rosa www.tjkm.com TJKM Transportation Consultants Vision That Moves Your Community FINAL Charleston -Arastradero Corridor Trial Improvements: Arastradero Road Striping Alternatives In the City of Palo Alto June 3, 2009 www.tjkm.com Prepared by: TJKM Transportation Consultants 3875 Hopyard Road Suite 200 Pleasanton, CA 94588-8526 Tel: 925.463.0611 Fax: 925.463.3690 J:Vurisdia;on\P\Paio Alto\042-02 7 Charleston_Arastradero Trial Plan\Report\june 2009 FINAL \R060309 final accidents.docx Consultants Table of Contents Introduction and Summary ................................................................................................. I Introduction ......................................................................................................................................................... I Summary ............................................................................................................................................................... 2 The Charleston-Arastradero Corridor Improvements Trial Improvements: Striping Alternatives for Arastradero Road ..................................................................................... 4 The Current Traffic Operations and Safety Problems of Arastradero Road ...................................... 4 The Concept of "Road Diets" as Related to Charleston and Arastradero Roads ............................ 5 Arastradero Road Striping Alternatives ....................................................................................................... 7 Alternative I: Four lanes Throughout with Narrow Median + Left Turn Lanes at Signals ........ 7 Alternative 2: One Lane Each Direction + Median/Left Turn Lanes All Intersections ................. 8 Alternative 3: Hybrid of Alts I & 2 (Two Through Lanes DonaldlTerman -7 Gunn) .................. 8 Comparison of Striping Alternatives ............................................................................................................. 9 Additional Considerations Regarding Striping Alternatives ................................................................... 2 0 Effects of Longer Cycle Lengths and Platoons/Queues ...................................................................... 20 Benefits and Additional Problems by Alternative ................................................................................ 20 Recommendations .............................................................................................................. 22 Study Participants ............................................................................................................... 24 TJKM Transportation Consultants ............................................................................................................... 24 City of Palo Alto ............................................................................................................................................... 24 List of Appendices AppendiX A -2006 and 2007 Traffic Volume and Speed Data Appendix B -Simulation Modeling Appendix C -Existing Striping on Arastradero Road List of Figures Figure I: Vicinity Map ............................................................................................................................................ 7 Figure 2a: Conceptual Plan -Alternative I (Four Lane Alternative) ....................................................... 14 Figure 2b: Conceptual Plan -Alternative I (Four Lane Alternative) ..................................................... 15 Figure 3a: Conceptual Plan -Alternative 2 (Three Lane Alternative) .................................................... 16 Figure 3b: Conceptual Plan -Alternative 2 (Three Lane Alternative) .................................................... 17 Figure 4a: Conceptual Plan -Alternative 3 (Hybrid Alternative) ............................................................. 18 Figure 4b: Conceptual Plan -Alternative 3 (Hybrid Alternative) ............................................................ 19 Figure 5: Typical Permanent Median -Arastradero .................................................................................... 23 List of Tables Table I: Comparison of Existing and Striping Alternatives (a.m. Peak) ................................................... 10 Table II: Comparison of Existing and Striping Alternatives (p.m. Peak) ................................................. 10 Table III: Detailed Travel Time Comparisons of Striping Alternatives (7:00-9:00 a.m.) ..................... 12 Table IV: Detailed Travel Time Comparisons of Striping Alternatives (4:00-6:00 p.m.) .................... 13 TJKM Consultants Introduction and Summary Introduction The City of Palo Alto is completing a multi-year effort to address transportation and urban design issues along the Charleston-Arastradero Corridor from San Antonio Road on the east to Foothill Expressway on the west, a distance of approximately 2.5 miles. Charleston Road extends east from EI Camino Real (SR 82) to San Antonio Road and carries approximately 15,500 vehicles daily. Arastradero Road extends west from the Charleston/EI Camino intersection to Foothill Expressway, and carries 18,300 vehicles daily, and east of Donald/T erman this volume has been as high as 20,800 vehicles daily, a volume 18 to 34 percent higher than Charleston Road. Monitoring of volumes from 2003 through late 2008 reveals there has been little change in the daily and peak hour totals. Land uses along the corridor are primarily single-family residential and schools, with commercial uses near Fabian, Middlefield and EI Camino Real. The combination of high traffic volumes with high quality residential uses and major school activity for K-12 children is a setting that implies significant conflicts between mobility, safety, and the quality of life in the corridor. At the outset of this effort in 2003, both roads were four lane undivided streets with signals at major intersections. The Palo Alto City Council authorized a study of potential improvements in this corridor with the following basic objectives: • Improve the quality of bike and pedestrian experience • Enhance school commute safety for K-12 students • Enhance the streetscape environment and quality of life in the corridor • Determine the effects of future traffic growth on the corridor up to 2015 • Minimize traffic shift to adjacent streets Planning work in 2003-2004 resulted in a decision to initiate a trial of redUcing the number of through lanes between signals from four to two on Charleston Road from Fabian to Alma, one through lane in each direction plus a center median with left turn lanes at selected locations. The Palo Alto City Council approved a one-year trial program to assess the performance of the alternative deSigns. The revision of Charleston Road, reducing the four through lanes to two with a striped median, was completed in 2006. It should be noted that two through lanes in each direction are maintained through three major signalized intersections (Alma, Middlefield, Fabian), and then the two lanes merge back to one once past the signal. A specific improvement to the driveway at Gunn High School on the western end of the Arastradero Road segment was the construction of a westbound right turn lane into the Gunn High School driveway, the site of noticeable congestion in the morning and afternoon school peak periods. Additional improvements to the entrance drive into Gunn High School were made in summer 2008, and the driveway congestion has been corrected. However, the increased number of pedestrians and bicycles at the signalized driveway intersection slows westbound traffic making a right turn into the driveway. The increased pedestrian and bicycle traffic is apparently the result of a concerted effort on the part of the school district and PTA to encourage non-vehicle commuting to high school. Observations of traffic on Arastradero Road in the fall of 2008 revealed that westbound congestion still exists from 7:40 a.m. to just after 8:00 a.m., but to a lesser extent than before the change in the driveway configuration. Strategies for eliminating the conflicts between right turning vehicles with pedestrians and bicyclists involve routing bicyclists down the Hetch Hetchy right of Final Report -Charleston-Arastradero Corridor: Arastradero Rd. Striping Alternatives Page I June 3,2009 TJKM Consultants way just east of the school. However, this raises additional community issues that cannot be addressed at this time. In the future, relocation of bicycle access away from the signalized intersection of Gunn High and Arastradero will serve to reduce the remaining congestion at this intersection. Summary Initially, a number of striping alternatives were considered for Arastradero Road between EI Camino Real and Foothill Expressway. During the planning leading to a recommended alternative, a large number of field observations by the consultant, city planning and engineering staff, school officials and the Stakeholders Committee were made along with two weeks of machine counts, manual turn counts of vehicles, pedestrians and bicyclists, and several school starting and ending time observations of the Gunn High School driveway congestion problem. Finally, three striping alternatives other than "Do Nothing" were developed in detail: I. Four Lanes + Narrow Median (narrow bike lanes and complete parking prohibition) 2. Two Lanes + Wide Median (wide bike lanes and most parking retained) 3. Hybrid of Two and Four Lane (two westbound lanes retained west of Donald and Terman, two through lanes east and west at Donald and Terman, otherwise, the Two Lane + Median alternative 4. Do Nothing Retain present Four Lane Undivided (with narrow bike lanes and parking) Evaluation criteria for the entire Charleston-Arastradero Corridor were adopted by the Palo Alto City Council in 2003. Evaluation of the performance of striping alternatives in the corridor are: I. No increase in peak, off-peak corridor travel time 2. No Significant increase in delay or critical movement delay at all nine signalized intersections 3. Reduce off-peak 85th percentile speeds by at least 20 percent 4. Reduce crash rates by at least 25 percent 5. Increase pedestrian volumes by at least 20 percent by 20 10 6. Increase bicycle volumes by at least 20 percent by 20 I 0 7. Increase public transit boardings by at least 40 percent by 20 I 0 The evaluation of the trial striping on Charleston Road found that the reduction in lanes had no significant effect on traffic performance (criteria I and 2) and that speeds had been reduced (criterion 3). The remaining four criteria are for longer term assessments. The Arastradero Road portion of this corridor is far more problematiC, because volumes are higher than on Charleston Road with an average weekday traffic volume of 18,300 to as high as 20,800. There are eleven schools and other traffic generators along this corridor. Pedestrian and bicycle volumes during the morning commute and when schools let out in the afternoon have increased significantly since 2006. The results of detailed traffic operations analysis concluded that peak hour directional volumes are unlikely to rise much above present levels, even if enrollment at Gunn High School increases as planned, and even with new commercial and other development planned in the corridor. The reason is that at the two ends of Arastradero Road, there are Significant bottlenecks at the signalized intersections of Arastradero Road at EI Camino Real (the east end), and at Foothill Expressway (the west end). Final Report -Charleston-Arastradero Corridor: Arastradero Rd. Striping Alternatives Page 2 June 3,2009 TJKr"i Transportation Consultants Any large increase in traffic demand during the peak hours simply cannot get through these two intersection bottlenecks onto Arastradero Road. The most likely outcome in future years will be that some current commute traffic to destinations beyond the corridor will relocate to alternate routes and some discretionary trips by corridor residents will be avoided during the peak hours where traffic congestion will continue to occur at both EI Camino Real and Foothill Expressway. Drivers who have to use the corridor in the peak hours, especially the a.m. peak, will essentially crowd out commuters who have non-local destinations as well as corridor residents who can travel at other times of the day. A detailed traffic operations analysis was completed for the four alternatives (includes the Do Nothing). Of all alternatives. the Hybrid Alternative performs best and is the recommended alternative. Specifically, the Hybrid Alternative has many advantages listed below. • The Hybrid Alternative best realizes the overall goals and objectives for improvements in the Charleston-Arastradero Corridor: o Greatly improved pedestrian and bicycle safety; o Greatly improved pedestrian and bicycle access and mobility with frequent opportunities to cross Arastradero Road between signalized intersections; o A potential 3 to 5 mph reduction in vehicle travel speeds, even in off-peak hours because vehicles will not be able to pass one another along most blocks along Arastradero; o Improved vehicular safety through left turn lanes/two-way left turn lanes for vehicles to get out of the way of oncoming traffic; o Adequate room for parking on the north side, and at night on the south side; o Ultimately, the median will provide an opportunity for landscaping and esthetic improvements along the corridor; o Improved sight distance between pedestrians. bicyclists and vehicles on Donald at the signal; and • The Hybrid Alternative best preserves needed vehicular capacity while buffering pedestrian and bicycle traffic from vehicular traffic, and it is likely that corridor traffic performance will be at least as good as the current four-lane, undivided cross section. Final Report -Charleston-Arastradero Corridor: Arastradero Rd. Striping Alternatives Page 3 June 3,2009 TJKM Consultants The Charleston-Arastradero Corridor Improvements Trial Improvements: Striping Alternatives for Arastradero Road The Current Traffic Operations and Safety Problems of Arastradero Road In the past six years planning for improvements in this corridor has been focused around the concept of "road diets." Four-lane. undivided urban arterial roads have been found to be particularly hazardous to pedestrians as average daily traffic volumes rise above 12.000 vehicles daily. With all segments of both Charleston Road and Arastradero Road having volumes significantly greater than 12,000 vehicles daily. it was obvious that a new approach was necessary. A survey of existing conditions revealed that accidents in the corridor had three primary collision factors. While all the segments had similar patterns, those for Arastradero Road between EI Camino Real and Foothill Expressway show the need for improvements: I. Unsafe speeds 36% 2. Auto right of way 25% 3. Improper turning -I 1% Accident data for a five year period. 1997 through 2002 reveals that the accident rate in the entire Charleston/Arastradero Corridor is 6.2 accidents per million vehicle miles of travel. A "vehicle mile" is one vehicle driving one mile. an indication of exposure to accidents. The statewide average accident rate for four-lane undivided urban arterials is 4.95 accidents per million vehicle miles of travel. Applying statistical analysis we find that the 6.2 rate in the corridor would not be exceeded due to chance variation over 99 percent of the time -in other words, the higher than average accident rate in the corridor is almost certainly not due to random variation, but more due to traffic conditions. Further. out of the 471 accidents over five years, 78 involved injuries. Out of the 24 pedestrian and bicycle accidents in these same five years, 23 involved an injury, or 96 percent of all pedestrian and bicycle accidents were injury accidents, each of which could easily have been fatal. It should also be noted that four lane urban arterials with medians have an average accident rate of only 2.4 accidents per million vehicle miles of travel. and for that of two-lane arterials with a median, the rate is only 2.05 accidents per million vehicle miles of travel. The simple step of adding a median appears to be directly related to a 50 to 60 reduction in all accidents on four lane urban arterials. Of the 471 accidents. 221 were rear end and sideswipe accidents. about 47 percent of all accidents. Unsafe speeds usually indicate rear end accidents at both signalized and unsignalized intersections. On Arastradero. many of these accidents are rear end and sideswipe accidents at unsignalized intersections where a vehicle in the left lane will stop and wait for gaps in oncoming traffic to complete their turn. Because they are in a moving lane, however, these stopped motorists are subject to being hit by traffic following them. Auto right of way usually refers to an accident where a vehicle turning left onto a side street or turning left from a side street is hit by oncoming traffic. Because traffic is relatively heavy there are few safe gaps in traffic for making these maneuvers. Improper turning typically refers to drivers turning from the wrong lane. Perhaps more than half the accidents on Arastradero are related to a lack of left turn lanes coupled with high through volumes and high speeds. The 85th percentile speeds on Arastradero are close to 40 mph with maximum speeds that approach 50 mph by almost 170 vehicles daily. about I percent of all traffic. Detailed data on volumes and speeds are in the appendices. Given the volumes of bicycles and pedestrians, this is a very unsafe combination of traffic conditions. Because of these conditions, the concept of a road diet for both Charleston Road and Arastradero Road became the model for pursuing improvements for all. Final Report -Charleston-Arastradero Corridor: Arastradero Rd. Striping Alternatives Page 4 June 3,2009 Consultants The Concept of "Road Diets" as Related to Charleston and Arastradero Roads The improvements under consideration for Arastradero Road are examples of "road diet" improvements that have been gaining acceptance throughout the world. Four-lane, undivided arterial roads are especially vulnerable to operations and safety problems when average daily traffic volumes are much above 12,000 vehicles daily. In many instances such roads traverse residential areas, or community business centers. As traffic volumes increase, congestion quickly rises, and traffic collisions increase faster than do the traffic volumes. Surveys in many cities with such roads also indicate that livability along the roads deteriorates rapidly. One reason for the congestion is that the left-most through lane becomes a de facto left turn lane because a single left turning vehicle can often block the lane for up to a minute or more as the driver waits for a gap in oncoming traffic to complete the turn. Drivers behind the stopped vehicle trying to make a left turn then merge into the right lane with resulting sideswipe accidents. Likewise. because vehicles stop unexpectedly in the left lane to make a turn, they are more commonly involved in rear end accidents. Of special concern when volumes on a four-lane road increase beyond 12,000 vehicles daily, is that it becomes very difficult to impossible for a pedestrian to find gaps in traffic long enough to safely cross the road. On a 60-foot wide roadway, the pedestrian needs about 15 seconds to make it all the way across. With high traffic volumes, pedestrians become impatient and enter the road regardless, and they try to force the traffic to stop by assuming they have legal right of way. The problem with this is that while one driver in a lane may stop, another may bypass the stopped vehicle and hit the pedestrian as they move across the adjacent lane. Pedestrians cannot always be seen by oncoming motorists when they are hidden by a stopped vehicle. Because of the ambiguity of whether the stopped motorist is waiting for a left turn or stopped for a pedestrian. many bypassing drivers decide that the reason is for a left turn resulting in greatly increased risks for the crossing pedestrian. Because of these congestion and traffic safety problems. many cities have evaluated the feasibility of reducing the four through lanes to two, and adding left turn lanes, bike lanes, on-street parking and improving pedestrian crossings. Additionally. the space not needed for the through lanes can be landscaped, such as landscaped medians. The research to date shows that road diet treatments, if implemented carefully, can achieve many positive results including: • Reductions of 30 to 70 percent of the drivers traveling in excess of the speed limit, and even outright reductions in average speeds; • Reductions in all types of accidents from 10 to 60 percent; • Improved bike mobility; • Improvements in the appearance of the neighborhood through landscaping and amenities for pedestrians. bicyclists and transit; • Better access and mobility into abutting neighborhoods as well as for crossing the arterial street; and • Enthusiastic acceptance by 80 to 90 percent of the residents and businesses along the arterial placed on a road diet. During the planning of the corridor evaluation and trial improvements, the above goals and objectives played a major part in planning for the ultimate design of both Charleston Road and Arastradero Road. Along the way detailed traffic operations issues have emerged since 2004. This report describes the most recent analysis for the Arastradero Road segment. Figure I shows the relationship of Arastradero Road to the entire corridor planned for improvements. Final Report -Charleston-Arastradero Corridor: Arastradero Rd. Striping Alternatives Page 5 June 3,2009 City of Palo Alto -Charleston-Arastradero Trial Traffic Improvements Study Corridor and Segments • LEGEND • Study Intersection 42-027-T19 -3131109 GK Figure OLD MIDDLEFIELD • NOR T H l'>..jot to TJKM Arastradero Road Striping Alternatives The striping alternatives evaluation looked at several preliminary designs, and of those, three have been developed to the conceptual plan level. All alternatives maintain the current lane configuration from the Gunn High School driveway west to Foothill Expressway. East of the Gunn High School driveway, the alternatives are: I. Two lanes each direction with narrow median + left turn lanes at intersections (parking mostly removed on both sides) 2. One lane each direction with median + left turn lanes at intersections (parking mostly retained on both sides) 3. A Hybrid of Alternatives I and 2 with two through lanes each direction at Terman and two through lanes westbound west of Terman and one lane eastbound. East of Terman there is one lane in each direction + left turn lanes at intersections (parking mostly retained on the north side, and at night on the south side) 4. Do Nothing Alternatives I and 3 have been determined to be the more effective improvements. Alternative I, the two through lanes in each direction with a narrow median and left turn lanes at signals will operate better than existing conditions in terms of congestion. With this alternative, parking must be prohibited at all times, however, and problems remain with pedestrians crossing Arastradero between signals. Either Alternative I or 3 is preferable to the Do Nothing Alternative. Alternative 3, the Hybrid Alternative, works better than Existing Conditions in terms of travel time (average speed), and of course is far better in terms of pedestrian and bicycle safety and circulation. Alternative 2 is compromised by the continuing westbound congestion at the Gunn High School driveway in the a.m. peak as well as eastbound congestion at Donald and Terman. This alternative performs the worst of all in terms of delays per vehicle. It was this finding that led to development of the Hybrid Alternative that retains the necessary westbound capacity at Gunn High School during the a.m. peak. Among the earlier alternatives was starting Gunn High School arrival times 30 minutes earlier so that the peak arrival times at Gunn High School and at Terman Middle School had less overlap. This also was found to be ineffective, because by the time congestion eases for Gunn High, it starts again for Terman with congestion lasting for over 90 minutes overall. A second consideration was that the school district would find it very difficult to implement because of the related schedules for extracurricular activities, labor agreements and other considerations. A more detailed description of each alternative follows. Figures 2a through 4b following this discussion provide a graphiC presentation of the alternatives. Alternative I: Four Lanes Throughout with Narrow Median + Left Turn Lanes at Signals In this alternative, some urban design and safety features are added to the present cross section. This is similar to the alternative that was implemented on the western end of Charleston. The improvements include: I. Left turn lanes would be provided at the signalized intersections at Gunn High School, Donald/Terman, and Coulombe. 2. Median between side streets would be 6-feet wide, widening to 10 feet at intersections of side streets, with no or limited tapers. Left turns would be made from I O-foot wide area that is only as long as the width of the cross street. 3. Signals would be timed with adaptive control to reduce Signal delays as much as possible, with shorter cycle lengths generally than the two-lane or hybrid alternatives. Final Report Charleston-Arastradero Corridor: Arastradero Rd. Striping Alternatives Page 7 June 3,2009 Consultants 4. Crosswalks would be provided at selected locations between signalized locations, with the median refuge island treatment shown in Figures 2a and 2b. For the trial installation, only one median refuge island would be constructed as shown in Figure 2b (east of Coulombe). The striped median would provide a pedestrian refuge of sorts at unsignalized intersections for unmarked crosswalks. 5. Capacity improvements would be made at Donald and Terman: a) lengthening the westbound left turn lane on Arastradero; b) restriping southbound Donald to provide one southbound through-right lane and one southbound left turn lane (parking would be prohibited on west side of Donald); and c) not allowing pedestrian movements other than during the exclusive pedestrian phase during the times of peak school bike and pedestrian traffic at Terman Middle School. Alternative 2: One Lane Each Direction + Median/Left Turn Lanes All Intersections In this alternative, the same improvements are proposed for Donald/T erman along with adaptive traffic signal control. I. Left turn lanes would be provided at the signalized intersections at Gunn High School. DonaldlTerman, and Coulombe. 2. A median would be provided between Signalized intersections from east of Gunn High Driveway. 3. Crosswalks would be provided at selected locations between signalized locations, with the median refuge island treatment shown in Figures 3a and 3b. For the trial, only one median refuge island would be constructed as shown in Figure 3b. The striped median would provide a pedestrian refuge of sorts at unsignalized intersections for unmarked crosswalks. 4. Signals would be timed with adaptive control to reduce signal delays as much as possible, but cycle lengths will be longer than they are today, generally. 5. Capacity improvements would be made at Donald and Terman: a) Lengthening the westbound left turn lane on Arastradero; b) Restriping southbound Donald to provide one southbound through-right lane and one southbound left turn lane (parking would be prohibited on west side of Donald); c) not allowing pedestrian movements other than during the exclusive pedestrian phase during the times of peak traffic at Terman Middle School; and d) providing two through lanes eastbound on the approach at Terman, dropping the second lane at Pomona. Alternative 3: Hybrid of Alts 1&2 (Two Through Lanes Donald/Terman ~ Gunn) In this alternative, attributes of Alternatives I and 2 are combined. With one westbound through lane at Donald and Terman, a.m. peak traffic that would reach the Gunn High School driveway queues instead at Donald and Terman and meters traffic into the Gunn signal. However, westbound a.m. peak queues are exchanged for long queues at Donald and Terman that have the potential of reaching McKeller for about 15 to 20 minutes. If two lanes are provided for westbound traffic at this intersection, the queues again shift to the Gunn Signal, but they also extend through Donald and Terman creating difficulties for side street motorists and for pedestrians at the Signal. Therefore, Alternative 3 attempts to offset these negative impacts by providing the same vehicular capacity westbound as before. Westbound and eastbound vehicular capacity with just one through lane in either direction is sufficient at Coulombe. Tables Ithrough IV show the caparisons of traffic performance of each alternative compared with existing conditions Final Report -Charleston-Arastradero Corridor: Arastradero Rd. Striping Alternatives Page 8 June 3,2009 Consuh:ants today for the a.m. and p.m. peaks. At other times of the day there is little difference in performance between the alternatives and existing conditions. Details regarding the Hybrid alternative include: I. Left turn lanes would be provided at the signalized intersections at Gunn High School, DonaldlT erman, and Coulombe. 2. A median would be provided between signalized intersections from east of Gunn High Driveway. 3. Crosswalks would be provided at selected locations between signalized locations, with the median refuge island treatment as shown in Figure 4b. For the trial, only one mid-block crosswalk would be installed. Additional such crosswalks would be installed in the permanent installation if the Hybrid Alternative is approved for permanent installation. The striped median would provide a pedestrian refuge of sorts at unsignalized intersections for unmarked crosswalks. 4. Signals would be timed with adaptive control to reduce signal delays as much as pOSSible, but cycle lengths will be longer than they are today, generally. 5. Capacity improvements would be made at Donald and Terman: a) Lengthening the westbound left turn lane on Arastradero; b) Restriping southbound Donald to provide one southbound through-right lane and one southbound left turn lane (parking would be prohibited on west side of Donald); c) not allowing pedestrian movements other than during the exclusive pedestrian phase during the times of peak traffic at Terman Middle School; and d) providing two eastbound through lanes at Terman, dropping the second lane at Pomona. 6. Provision of two through westbound lanes from east of Donald and Terman through Gunn High School separated from the single eastbound through lane by a 12 foot median. The crosswalk treatment with a median refuge was discussed extensively in an earlier report. It features a crosswalk from the curb (which could be extended out to the bike lane in Alternatives 2 and 3, but not with Alternative I) out to a physical median 10 to 17 feet wide. Rather than have the crosswalk go straight across the entire street, instead crossing the second half of the street would be offset so that pedestrians manage their movements for each direction of traffic separately. In many instances it is pOSSible to have the pedestrian walk facing oncoming traffic in the median, thus reinforCing the need for pedestrians to catch the eye of the drivers that will be stopping for them. For Alternative I, because there are two lanes in each direction, this crosswalk strategy is less safe than the single through lane per direction alternatives 2 and 3. However, because the median island cuts the crossing distance by more than 50 percent, there will be increased safety even with the four-lane alternative over existing conditions. Note that it will be necessary to construct a raised median (and pedestrian fences on the median) rather than just implement modified striping for any of the alternatives excepting Do Nothing. Comparison of Striping Alternatives As with Charleston Road, modifying the number of lanes affects traffic operations, but not to the extent that would be imagined. The assumption is that vehicle capacity is reduced by half, but it is not reduced by much, if at all, because the delays caused by vehicles stopped in the left lanes waiting to make left turns turn those lanes into de facto left turn lanes. On Arastradero this is apparent in comparing operations for existing striping versus the Hybrid Alternative. The Hybrid Alternative is slightly slower eastbound and Significantly faster westbound than existing in the a.m. peak. Table II shows this same comparison for the p.m. peak. Generally, the objective is to have Page 9 Final Report Charleston-Arastradero Corridor: Arastradero Rd. Striping Alternatives June 3, 2009 TJKM Consuitams the percent change greater than 1.00 for average speeds and less than 1.00 for the delay per vehicle in Tables I and II. More detailed traffic operations are shown in Tables III and IV. Direction and Alternative Average Speed (seconds) (mph) (route) Existing EB Arastradero 17 115 Existing WB Arastradero 10 267 Alternative I Eastbound 18 96 Alternative I Westbound 14 164 Alternative 2 Eastbound 17 112 Alternative 2 Westbound 8 348 Alternative 3 Eastbound 16 126 94% 110% Alternative 3 Westbound 12 203 120% 76% The data in Tables I through IV are derived from a traffic operations model that was calibrated, or closely matched to existing traffic operations. By this we mean that the operations model estimates travel times and delays quite close to what actually occurs in the field. The model used is Synchro 6 and SimTraffic 6, an animated micro-simulation model that is Widely used by traffic engineers throughout the nation for these types of analysis. The "Existing" data in these four tables are derived from the Sim Traffic model output, but the model estimates almost duplicate field observations in terms of travel times and delays along the corridor. Table II: Com Direction and Alternative Existing EB Arastradero Existing WB Arastradero Alternative I Eastbound Alternative I Westbound Alternative 2 Eastbound 17 107 89% Alternative 2 Westbound 24 52 92% Alternative 3 Eastbound 21 69 111% Alternative 3 Westbound 24 52 92% i Final Report -Charleston-Arastradero Corridor: Arastradero Rd. Striping Alternatives 57% 37% 37% 37% Page 10 June 3,2009 Consultants The modeling output for existing conditions for the a.m., midday and p.m. peak closely coincides with the GPS floating car studies conducted in May 2007. In the a.m. peak, during the Gunn High School peak from 7:40 a.m. through 8: I 0 a.m., the modeled and observed average speeds agreed within I mph in each direction. During the midday, the observed speeds of 20 mph in either direction are in close agreement with the 19 mph eastbound and 20 mph westbound model estimates. LikeWise, the 23 mph observed eastbound and 21 mph observed westbound p.m. peak speeds are reasonably close to the model estimates of 20 mph eastbound and 19 mph westbound. The model can confidently be used to assess alternative designs. Because the midday peak is non- problematic for all of the alternatives, modeling and simulation results are not detailed in this report. In Tables III and IV, note that additional queuing is expected with the Single lane at Coloumbe, and because of Signal timing changes to make Arastradero flows more efficient, longer eastbound left turn queues are expected at the Gunn High School signal in the a.m. peak. In the p.m. peak the Alternative 3 queues are generally shorter at Gunn High as compared with existing, but again because of the single lane, queues at Coulombe are expected to increase over existing. However, one major change is that the current shared through plus left turns eastbound on Arastradero at Coulombe will be converted to an eastbound through lane plus an eastbound left turn lane with a protected arrow left turn. This has the effect of increasing the average delay for these left turns, but greatly reduces the delays experienced in the existing, eastbound through lane. One major change is the length of the signal cycle for the a.m. peak. It increases to 170 seconds at Donald/Terman while Coulombe and Gunn are half-cycled at 85 seconds. This would occur only from 7:40 a.m. to 8: I 0 a.m., and otherwise, cycle lengths would average approximately 90 to 112 seconds for all other periods. Once adaptive Signal timing is available in the corridor, these cycle lengths should average less than current cycle lengths, and delays will be further reduced. The results in Tables III and IV are based upon time of day coordination. Adaptive Signal timing should reduce the delays by 10 to 30 percent as well as travel times. Final Report -Char/eston-Arastradero Corridor: Arastradero Rd. Striping Alternatives Page I I June 3, 2009 TJKM Consultants Table III: ID Queuing Analysis: SimTraffic, 7:00-9:00 a.m. ID Intersection {Movement Lengths of 9Sth Percentile Queues (in feet @ 2S'/vehicle) Existing Alternative I Alternative 2 7 Arastradero @ ECR L T 125 125 125 i 7 Arastradero @ ECR EBT 425 400 400 8 ArastlCoulombe EBL T 475 (Shared TL) 75 75 8 ArastlCoulombe EBT 400 175 325 8 ArastlCoulombe WBT 200 200 275 9 ArastlDonald EBL T 75 75 75 9 ArastlDonald EBT 300 275 325 9 ArastlDonald WBT 375 325 275 9 ArastIT erman WBL T 175 225 350 10 ArastlGunn EBL T 175 300 300 10 ArastlGunn EBT 275 475 475 10 ArastlGunn WBT 575 550 375 * Total Travel Time, ** Delay IS seconds/vehicle Final Report -Charleston-Arastradero Corridor: Arastradero Rd. Striping Alternatives Alternative 3 150 425 75 550 225 75 275 350 275 300 425 550 Page 12 june 3,2009 I i I i i TJKM Transportation Consultants Table IV: Detailed Travel Time Comparisons of Striping Alternatives (4:00~6:00 p.m.) Intel'$ection Existing Alternative I Alternative 2 Alternative 3 /0 of Delay Delay De/ay De/ay Arastradero (sec) LOS (sec) LOS (sec) LOS (sec) LOS 8 Coulombe 3.5 A 4.2 A 6.2 A 11.5 B 9 Terman/Donald 10.5 B 8.4 A " .8 B 4.8 A 10 Gunn High School " .2 B 7.7 A 12.3 B 25.7 C Segment Travel Times Queuing Analysis: SimTraffic, 4:00~6:00 p.m. /0 Intel'$ection IMovement Lengths of 95th Percentile Queues (in feet @ 25'lvehic/e) Existing Alternative I Alternative 2 7 Arastradero @ ECR L T 125 125 125 7 Arastradero @ ECR EBT 650 325 300 8 ArastlCoulombe EBL T 225 (Shared TL) 75 75 8 ArastlCoulombe EBT 200 150 300 8 ArastlCoulombe WBT 300 250 325 9 ArastlDonald EBL T 75 75 125 9 ArastlDonald EBT 300 250 275 9 ArastlDonald WBT 250 225 350 9 ArastJT erman WBL T 125 125 275 10 ArastlGunn EBL T 150 150 250 10 ArastlGunn EBT 200 250 300 10 ArastlGunn WBT 425 300 225 * Total Travel Time, ** Delay IS seconds/vehicle Final Report Charleston-Arastradero Corridor: Arastradero Rd. 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'oCmesI..il\el" l2"W>lIiESffiIPf 42-017 -6/3/09 • GK ". r-i(i II ~i'/ lei }V /// 'Ncr! j/ Iq /I II ! // CONCEPTUAL PLAN ~T"_.c:........... CITY OF PALO ALTO :;"~CA~Svlle200 ..... ,92'~1FlI<(92')'!>OOOO ARASTRADERO ROAD ematlJQl1@iJCm.OOOI CONCEPTUAL PLAN _ '" 042-027-55 I",.., 88-2 or 0,..,1(: ti-J',{)9 ISC-J,t£: 1" .. 40' PFIOJECT t<>. 1)42-021 TJKM Consult;!nts Additional Considerations Regarding Striping Alternatives Beyond the normal measures of effectiveness in Tables I through IV, modifying the striping on Arastradero Road will also result in other operational effects that are discussed below in the form of benefits and problems with each. E.ffects of Longer Cycle Lengths and Platoons/Queues The conversion to one through lane in each direction results in a lengthening of the average cycle lengths at all times of the day. Longer cycle lengths are needed to enable comparable capacity with the reduction from two lanes to one lane in either direction. The action alternatives do take left turns out of the through traffic lanes, and the improvements at Donald/Terman Significantly improve performance in the entire corridor, because this intersection is the main bottleneck outside of the Gunn High School a.m. inbound peak congestion in the corridor. The longer cycle lengths in each of the alternatives will also result in some higher delays for left turns out of, and even left turns into the side streets, because the resulting platoons and queues will be roughly twice as long and even longer than with the current striping on Arastradero Road. Delays for side street traffic are expected to increase from the current 20 to 35 seconds in the a.m. peak to between 60 and 100 seconds depending upon the location of the various side streets and signals along Arastradero Road. For nearby streets, the queues at the signals prevent reaching the left turn lanes on Arastradero as well as turning left from the side streets due to the much longer queues and platoons. However, adaptive signal coordination will minimize the increases in cycle lengths for most cycles during the day. Benefits and Additional Problems by Alternative Other than longer cycle lengths, the following benefits accrue to the Three-lane and Hybrid alternatives: • These two wide-median alternatives best realize the overall goals and objectives for improvements in the Charleston-Arastradero Corridor: o Greatly improved pedestrian and bicycle safety; o Greatly improved pedestrian and bicycle access and mobility with frequent opportunities to cross Arastradero Road between Signalized intersections; o A potential 3 to 5 mph reduction in vehicle travel speeds, even in off-peak hours because vehicles will not be able to pass one another along most blocks along Arastradero; o Improved vehicular safety through left turn lanes/two-way left turn lanes for vehicles to get out of the way of oncoming traffic; o Adequate room for parking on both sides for Alternative I, and on the north side in Alternative 3 all hours of the day, and at night on the south side; o Ultimately, the median will provide an opportunity for landscaping and esthetic improvements along the corridor; o Improved sight distance between pedestrians, bicyclists and vehicles on Donald at the Signal; and • The Hybrid Alternative best preserves needed vehicular capacity while buffering pedestrian and bicycle traffic from vehicular traffic, and it is likely that corridor traffic performance will be at least as good as the current four-lane. undivided cross section. The Three-lane alternative does not perform as well as existing striping on Arastradero Road. Final Report -Charleston-Arastradero Corridor: Arastradero Rd. Striping Alternatives Page 20 June 3,2009 TJKM Consultants Some of the additional problems that may occur with a three-lane cross section: • Rear-end accidents may rise due to longer queues that surprise motorists; • Motorists have been observed to accept less than adequate gaps after about a 60 second or more delay in turning left into and out of side streets; • Backing from residential driveways will be more difficult due to the long platoons and queues; • Queues blocking side streets near signals will be common for some hours of the day; • An accident or any blockage of the through lane in busy times will lead to extensive queuing and gridlock, and this can also materially affect emergency access times unless the design ensures there is 20 feet clear between the median and curb; and • There is limited capacity for an increase in peak hour volumes. However, the capacity bottlenecks of EI Camino Real and Foothill Expressway ensure that actual peak hour demand volumes probably cannot get to Arastradero, but will most likely queue on the approaches on EI Camino Real and on Foothill Expressway. Some of the benefits of the four-lane median alternative are: • Shorter cycle lengths, and the potential for even better performance because fewer vehicles will block the through lanes waiting for a turn; • Safer, but not ideal storage of vehicles waiting to make a left turn; • Pedestrian refuge in the median island; • Median can be landscaped; • Queues will not be longer than they are today, and can be shorter due to adaptive Signal control and left turn storage at minor intersections. Some of the potential additional problems with the four-lane median alternative are: ~ • Speeds will not be reduced from today's relatively high 85th percentile speeds, especially outside the peak hours and most all hours on weekends; • Bike lanes are extremely narrow and less safe -vehicles may more readily encroach on bike lanes because the vehicle lanes are only 10 feet wide. in fact bike lanes may be less safe than existing lanes; • Many vehicles trying to turn left will not adequately be clear of through lane traffic, and there could actually be an increase in rear-end accidents over today; and • Parking removal is mandatory. Final Report -Charleston-Arastradero Corridor: Arastradero Rd. Striping Alternatives Page 21 June 3,2009 Consultants Recommendations TJKM concludes, on the basis of the extensive set of data collected in this corridor from 2004 through 2008 and with discussions with the Stakeholders Committee and city staff, that the road diet design is valid and should be implemented as a trial on Arastradero Road. TJKM recommends that the Hybrid Alternative be selected for trial installation. The non-signalized pedestrian crosswalk west of Clemo should have a physical median refuge island rather than merely striping. This is different than the trial striping on Charleston where only striping was implemented for the trial. If the trial is ultimately approved, there should be additional, similar crosswalks along the corridor for the permanent installation. At these locations there will need to be a raised, pedestrian refuge island coupled with a crosswalk that is split to two nearby crossing locations at the median rather than having the crosswalk go straight across Arastradero. This is called the "Danish Offset" style of crosswalk. All other features of the Hybrid Alternative should be presented to the Palo Alto City Council for approval, and if approved, final design for signing and striping trial should then be started for the installation within the repaving program in the summer of 20 I O. To minimize potential traffic delay due to the longer queues in the single travel lanes of the hybrid alternative, the city should implement adaptive traffic signal timing plans for appropriate subsystems of signals along Arastradero Road and Charleston Road. Appropriate signal timing plans will maintain efficient traffic flows. At present the city's signal system consists of McCain "BiTran" software. This software system has a proven record with signal coordination in the City of Palo Alto and with other agencies. Once the lane configuration is modified on Arastradero Road, new timing plans configured for adaptive operation should be implemented to obtain maximum benefits. Figure 5 on the following page shows a typical cross section and plan view for the permanent installation of a landscaped median should the trial installation of Alternative 3 prove successful and desired. Final Report Char/eston-Arastradero Corridor: Arastradero Rd. Striping Alternatives Page 22 June 3,2009 City of Palo Alto -Charleston-Arastradero Trial Traffic Improvements Typical Permanent Median -Arastradero 8' 6' 10' 18' 10' 8' Reduce to Three Lanes, 10'/10'/1 0' -Install 18' Median II/Refuges, II/frees/Landscaping -Install Lights/Signs (Bikc Blvd,), Enhanccd Crosswalks \V Residential (Typ.) Lane IllStall 18' Mediall IshUld wiPedestrian Crossing Rdugcs Stripe Aut.o Lanes, 10'/10'/10' 18' Median 1/2 Bulbolll' al i\hjor Intersections (tv".)' Travel Lane Bike Lane/Flex Parking Sign Bike Lanes Both Sides f<)r Programmed Curbside Parking (e,g, 6 pm to 7 am) 42-027 -T19 5112109 GK Figure 5 E Residential (Typ.) • NOR T H NOT to SCrl;e TJKM T ransponation Consuh:ams Study Participants TJKM Transportation Consultants Gary Kruger, P.E. Principal Travis Richards Project Engineer Stephen Au, P.E. Design Engineer Geri Foley Graphics Margie Pfaff Word Processing City of Palo Alto Gayle Likens Steve Emslie Stakeholders Committee Transportation Manager Assistant City Manager i Final Report Charleston-Arastradero Corridor: Arastradero Rd. Striping Alternatives Page 24 June 3,2009 Verbal Comments/questions Arastradero Road Restriping Community Meeting June 9, 2009 Juana Briones School Attachment D -concern expressed that the proposed uncontrolled enhanced crosswalk at Briones Park would be less safe than the existing signalized crosswalk at Coulombe/ Arastradero -don't install uncontrolled crosswalk at Briones Park -traffic volumes on the weekend are lower than weekdays -it is difficult to exit onto Arastradero Road from side streets when vehicles in queues on Arastradero block intersections; there needs to be KEEP CLEAR legends at unsignalized intersections -the Council approved evaluation criteria do not include impact of project alternatives on property values. A landscaped median on Arastradero Road could increase property values of homes on Arastradero; conversely medians which would prevent left turns into driveways could decrease property values -Miranda Green resid6hts need a KEEP CLEAR legend at the Arastradero intersection (eastbound direction). Residents concerned that Hybrid Plan would increase queuing back to Miranda along Arastradero. -will Hybrid plan adequately accommodate emergency vehicles and will access to the fire station at Clemo be maintained? How will signal lane in each direction in the 3-lane sections accommodate emergency vehicle response? -is it possible to adjust the signal timing to reduce the delay for vehicles on Coulombe at the Arastradero Road intersection? -will Hybrid plan accommodate the volume of northbound left turns from EI Camino Real onto westbound Arastradero. Will merge from two lanes to one lane westbound on Arastradero Road cause back ups to EI Camino Real? -what is the age of drivers involved in accidents on Arastradero Road? -concern that if it is difficult to make a U-tum on Arastradero Road, drivers will cut through on Maybell Avenue. -resident's main concern is safety as a pedestrian at intersections on neighborhood streets not on Arastradero Road. -concern from homeowner about the location of the merge from two lanes to one lane eastbound on Arastradero Road just beyond the Alta Mesa cemetery -install diagonal stripes in the painted median islands on Charleston to clarify that the medians are not tum lanes. Submitted Comments Comment 1 -City Bus available for students might decrease number of students and/or parents driving cars to GunniTennan. No Parking within 2 car lengths where access is needed to Arastradero (also Los Robles to EI Camino). Must be cooperation between housing / urban development and school district. Rickey's Garden hotel destroyed by neighborhood association in Wilkie Area must not happen again! More development as Charleston ordered by ABAG / low-income requirements is absurd. Comment 2 The curb on the south side of Arastradero Road is very deep and it scrapes the cars when entering. Please do something about it. Ifnot, please allow some type of solution for that. Comment 3 -Our curb (entrance to house) is very steep! We have damaged the bottom of our cars repeatedly. HELP!! Who do we contact to get it fixed? When will they re-do the Arastradero curbs? Comment 4 -One ofthe major negatives ofthe combination project is emergency access interference. Since the trial is paint, not raised medians, how will this problem really be evaluated? Joe Kott often said smart signals would have the most positive impact on traffic flow. We still don't have them, and this trial won't provide them. Can we get them soon? Comment 5 -Please put crosswalks in between each side street. Cars don't look both ways before entering Arastradero, and rarely stop at the stop sign. Put a cross-walk to prevent future injuries. Comment 6 Hybrid is highly desirable! Comment 7 -Within the hybrid model, you ar asking peple to merge into 1 lane RIGHT IN FRONT of our home / driveway which will create more accidents, inconveniencing us. We cannot make a left tum out of driveway towards Foothill Expressway to get to work which is already a problem currently. There would be an even harder backup to make a right into my driveway and we would not be able to back into our driveway for easier in/out based on a median taking up the lane. In Hybrid Alt, merge past bike path, extend past the houses. Comment 8 Please provide opportunity for us to provide feedback a few months into the 2010-11 school year after the re-striping. Maybe another (community) meeting like this. Comment 9 -Provide accident data since 2002. That was before the end of the dot.com bust, so commuter traffic was down. Also before 180 new homes at Arbor Real, increasing traffic potential. Dubious there is lots of pedestrian mid-block crossing. Those wanting to cross to Briones Park or Briones School can cross at Coulomb light. How many pedestrian crossing accidents since 1998? Comment 10 -Than you for all of your efforts to address our traffic and neighborhoods. I like the idea of helping peds get across Arastradero near the park (Los Palos). It is too far to talk to Terman or El Camino with 3 young kids; there is no safe option now without walking or riding on the sidewalk or riding in the bike lane the wrong way. I would love to have safe bike access and crossings (across) El Camino, so we could switch to more bike trips instead of car travel to Charleston and Middlefield. I like the hybrid plan. I originally hated the Charleston changes and love them now and I encourage the public to try any new striping for a month before commenting. If cars don't fully use merge from lanes, are there educational or "friendly driver" signs that say effectively "use the lanes and alternate to merge" that can be used? I think the area should be landscaped similar to San Antonio with native, low water use plants, to further our knowledge and commitment to sustainability. Comment 11 I attended the presentation at Juana Briones school. The presentation was good and covered the approach and reasons very well. However, I can not agree with the conclusion of hybrid approach. It will not increase pedestrian and bicycle safety. While on the sidewalk and bicycle lanes a one lane, four lanes or hybrid has no effect on pedestrians. I walk Arastradero every day and traffic on Arastradero has no effect on safety. The problems, as I pointed out in the meeting, are people coming out of driveways and side streets planning on turning right. They never look right; only left and sometimes never stop. I am almost (hit?) a couple oftimes a month (not always on Arastradero) to cross the street if drivers fail to stop on the red light to cross the crosswalk. Again, the type of lanes makes no difference. I have never had a problem crossing until returning from the meeting. The walk light was on and we were 1/3 across the street when a single car lurched across the walkway and into the intersection. She continued to illegally talk on her cell phone as she backed up off the crosswalk. If drivers do not follow the law or common sense, type of road will not make any difference. I do agree the approach would almost the 45-50 mph cars. However, I would suggest instead of changing the street line an additional Policeman that patrols the street all the time. This could be probably paid for by the cost of change and tickets. I recommend keeping the street as is. Also the hybrid will cause use of more gas (green environment). From: Arthur Keller [ptc@kellers.org] Sent: Wednesday, June 24, 2009 10:52 AM Subject: Charleston/Arastradero Plan ATTACHMENT E 1. What is the baseline for transit, bicycling, and pedestrian use at Gunn and Terman for this project? will it be the numbers achieved during the 2009-2010 academic year (preceding the project) or some earlier date? 2. Can the traffic lanes on westbound Arastradero Road approaching Gunn High School be safely shifted to allow widening of the sidewalk at the right turn pocket on the north side of the street? Alternatively, can the City arrange to keep the shrubbery at that sidewalk trimmed so as to increase the effective walk width? 3. Should the traffic light at Arastradero Road approaching Gunn High School be modified so there is a right turn green arrow when that traffic is to turn? Or should signage be posted that the turn is a "free" right turn, subject only to giving the right of way to pedestrians? 4. Please discuss the traffic and also bike safety in the Hybrid plan of the merge from two lanes to one on a curve on eastbound Arastradero Road past the cemetery. 5. Please explain whether left or U turns will be prohibited at the street gaps where there is no left turn pocket because there is no street to the left. Drivers destined for houses on the opposite side the street may wish to turn there anyway, blocking the traffic flow and causing accidents that these improvements are intended to address. 6. Please explain whether the entire extent of the improvement should have double-double yellow medians to prevent left turns into driveways except where specifically desired. 7. Please explain the hazards associated with having parking next to a bike lane. Was the recent bike-car accident on Channing due to a bicyclist swerving to avoid a car door being opened? 8. Please comment on whether it is better to have westbound bicyclists destined for Gunn High School to take the new Maybell bike boulevard and enter campus using the Georgia gate or take Arastradero Road and enter at the Gunn High School front driveway entrance. 9. Please comment on the sufficiency of eastbound Arastradero queueing length into Terman without blocking other eastbound traffic. Planning and Transportation Commission Verbatim Minutes June 24, 2009 EXCERPT ATTACHMENT F 1 Charleston/Arastradero Road Corridor Project -Arastradero Road Trial Improvements: 2 Recommendation to City Council regarding proposed Arastradero Road trial improvements for 3 the Charleston-Arastradero Road Corridor project. 4 5 Ms. Gayle Likens, Transportation Manager: Good evening Chair Garber and members of the 6 Commission. We are here tonight to present our recommendations on the second phase of 7 Charleston!Arastradero Road Corridor trial, which is the restriping and implementation ofthe 8 corridor improvements along Arastradero Road. 9 10 I would like to introduce the other members of our team that are seated at the table. Rafael Rius 11 who is my Transportation Project Engineer. Gary Kruger seated to my right is our Project 12 Engineer and consultant from TJKM Associates and has been doing yeoman's work on this 13 project for the last several years. So we are happy to make this presentation tonight. There are 14 copies of the presentation at the back of the room for members of the public as welL 15 16 The last time we were before you to discuss the Charleston! Arastradero Corridor was roughly a 17 year ago, a little bit over a year ago, when we presented the results ofthe Charleston Road Phase 18 1 triaL At that time we were recommending permanent retention of the striping improvements 19 that were put in place as part of that trial on Charleston Road. You recommended that and the 20 Council approved the permanent retention ofthose improvements and directed us to move 21 forward with Phase 2, and also to implement some improvements at the Gunn High driveway. 22 23 So we are now coming to you with recommendations on the segment of the corridor from EI 24 Camino Real to Gunn High School, just the Arastradero Road corridor. I would like to just go 25 briefly over some background on the project just to bring everyone up to speed as to the intent of 26 this project. 27 28 Arastradero Road is about one mile ofthe two and a half mile corridor segment. So let's review 29 the objectives for the project briefly and discuss the progress to date. The Council approved 30 objectives as part of the corridor plan was to improve the quality of pedestrian and bicycle 31 experience in the corridor and improve safety. To enhance safety of the school commute for K 32 through 12 students, and there are 11 public and private schools along the corridor from Fabian 33 to Gunn High SchooL To enhance the streetscape environment and generally the quality of life 34 on the corridor, recognizing that it is a residential arterial and not strictly an arterial corridor. To 35 determine the effects of future traffic demands in the corridor in 2015, and that has been studied 36 and was part of the original project. To minimize traffic shift to adjacent streets, whatever 37 improvements are implemented on this residential arterial corridor should not result in diversion 38 of traffic. The purpose of this is to make the street more livable for the residents without 39 diminishing the travel time it takes for vehicles to travel along the corridor from one end to the 40 other, and generally to reduce speed and improve safety, also to make the corridor easier for Page 1 1 pedestrians both to travel on and bicycles to travel on but also to cross. Shift to adjacent streets 2 is not one of the objectives here. 3 4 Just in background, the trial restriping on Charleston Road began in 2006. I believe you are 5 aware it includes a three-lane segment from Fabian to Alma, four lanes from Alma to EI Camino 6 while maintaining the capacity at all of the major intersections where we typically have two 7 lanes in each direction and a left turn lane. The review in 2000 indicated that we were meeting 8 our objectives. Again, as I mentioned, in May Council approved the permanent retention of the 9 striping improvements on Charleston and also directed us to work closely with Gunn High to see 10 if we could improve the ingress into the campus to create a longer storage capacity on the 11 campus by extending the two lanes into the campus further, which would address some of the 12 queuing that was occurring at the Gunn High driveway entrance especially in the morning 13 commute. We worked with the Gunn High and P A USD staff and project was implemented in 14 August of2008. It was evaluated and deemed quite successful and the circulation improvements 15 on the campus are for all intents and purposes kind of a permanent situation now. 16 17 So we are here tonight to discuss Arastradero Road. We are recommending implementation of 18 one of the three or four alternatives we looked at, which is the hybrid alternative, which we will 19 discuss in more detail during this presentation when Gary begins his part of the presentation. 20 That would be for a one-year trial similar to our Charleston Road but that became a little bit 21 longer trial. Then to direct Staff to develop the detailed striping plans that would be associated 22 with the actual implementation. What you have before you and what is in this report is really a 23 concept plan. It isn't scaled and there may be modifications and details that will need to be 24 addressed in the detailed striping p Ian that we would send to bid. 25 26 The project would be implemented next summer as part ofthe street resurfacing program. 27 Therefore we have enough time to develop the striping plan, to bring it back to the community at 28 large to share it with them, to make some refinements and fine-tune it so it addresses issues that 29 we may not be aware of at this conceptual level, and then bid it in the spring. Public Works will 30 implement it next summer and the trial will begin next August most likely. We would plan to 31 come back in January of 20 11 with kind of a status/interim status report on how the trial is 32 working. Of course we would be monitoring it very closely throughout the year beginning in the 33 fall when school starts. 34 35 So at this point I would like to turn the presentation over to Gary Kruger and he will discuss the 36 alternatives we looked at and especially focusing on the hybrid alternative. Then we will come 37 back with our conclusions and recommendations. 38 39 Mr. Gary Kruger, TJKM Associates: Arastradero is a different animal than Charleston Road. It 40 has higher traffic volumes, sometimes as much as 30-plus percent more than Charleston. So 41 when you are talking about losing a lane in each direction it is much more critical. Actually this 42 is one of the reasons this has taken so long to bring to you after the Charleston Road trial is 43 because there were a lot of considerations that had to be made. 44 45 The westbound traffic is almost 1,100 vehicles per hour or one every three seconds so that is a 46 lot of cars. Then at Gunn High School like most schools there is a surge but Gunn because of its Page 2 1 size is the elephant in the room. So essentially you design for a peak hour but if everybody 2 arrives in 20 minutes that is a problem. So it is equal to about 1,200 entering per hour even 3 though there are only about 350 to 400 making a right tum per hour they do it in 20 minutes. 4 That causes a fairly substantial backup. 5 6 In the eastbound it is also very heavy and a lot oftraffic is delayed at Terman and Donald. That 7 is primarily because there is an all-pedestrian walk phase, which is critically needed. It is a 8 safety thing that can't be eliminated. So we have a lot of capacity constraints in this corridor. 9 One ofthe other things that we found is that the speeds on Arastradero are fairly high, obviously 10 not during the peak hour they are about five miles per hour, but at ten 0' clock in the morning or 11 ten o'clock in the evening or something like that the 85th percentile speeds are almost 40 miles 12 per hour and we have about 150 or 200 cars a day, and this is measured over a 48 hour period, 13 we found a lot of cars going up to almost 50 miles per hour. That is fairly fast on a residential 14 arterial. 15 16 As with anything basically we looked a number of ideas. The stakeholders committee 17 themselves came up with at least five and the traffic engineers came up with a bunch more. 18 Essentially what you are seeing today is there are two final alternatives. Both have compromises 19 but from a traffic engineer, you are going to hear from me that I think either of them is much 20 better than not doing anything, the null alternative. 21 22 We have a four-lane alternative, which is similar to Charleston Road between Alma and El 23 Camino Real. There is no parking, and there would be narrow bike lanes and relatively narrow 24 medians but there would be medians where pedestrians between signals could actually have a 25 place to stand in the middle of the road without getting hit. 26 27 We have a hybrid alternative, which is called a hybrid it is not like a Prius or something like that, 28 but essentially we took elements ofthe four-lane design and the three-lane design and glued 29 them together. So it retains some of the onerous characteristics of Charleston Road east of Alma. 30 In other words, you get four lanes through the intersection and then you have to squeeze back 31 into two lanes on either side ofthe signal. This would happen at Terman and just Terman really, 32 and then at El Camino Real. It features a wider median and bike lanes that are very roomy, and 33 then you don't lose parking. Parking on the north side is all day and all night. Then night 34 parking on the south side. 35 36 The four-lane at the west end looks very much like what you have today except there is a narrow 37 median all the way from Gunn all the way to Terman and beyond. As you can see there are left 38 tum lanes at many ofthe intersections ifnot all of them, and there are places for pedestrians to 39 cross between signals that allows them a refuge area, but the bike lanes themselves are jammed 40 right up against the curb. That is a value-laden word. Essentially they are adjacent to the curb 41 and they are five feet wide. Part of that is a gutter so maintenance requires basically you 42 shouldn't have a lip getting into the street that is going to throw a bicyclist. So a five-foot lane is 43 the narrowest that you really should have and that is one of the compromises. 44 45 Next. On the east end essentially you extend four lanes all the way to El Camino Real and left 46 tum lanes are provided at all the intersections. It is a median so that means that you can't just Page 3 1 tum across the opposing traffic into your driveway. As a residential arterial this implies that 2 there is going to be a need for U-turns for people to get home or they are going to have to 3 reorient their travel to their house so that they enter the street so it is right tum into their 4 driveway and then right tum out, or back out and then go. 5 6 Next. The four-lane benefits basically with an improved signal system and with left tum lanes 7 actually should improve traffic operations from what we see today. Today the left lane is 8 commonly used as a left tum lane. When someone stops and waits for an enormous amount of 9 oncoming traffic you only have one lane in either direction really. Safer left tum storage occurs 10 in the median. There are a lot of left tum accidents and sideswipe accidents on Arastradero. 11 There is a pedestrian refuge. It is six feet wide at some locations and sometimes ten feet wide 12 other locations. The median can be landscaped. You wouldn't put a big tree on a six-foot 13 median but you could landscape it. The queues are no longer than today. Essentially when you 14 reduce lanes you are talking about lengthening the number of cars in line at a traffic signal, for 15 example. With adaptive signal coordination, and this is state-of-the-art, basically it is a way of 16 reducing what normal delay in a coordinated signal system. It is very complicated but it has 17 been proven to work. We expect a reduction in accidents because ofthe median, and because of 18 the left tum lane, and because of the ability for pedestrians to store in the middle of the street. 19 20 Next. The problem with the four-lane is there is no reduction in the excess present speed. You 21 still have -people can pass each other and so there is very little obstruction. They can zoom 22 down that street up to 50 miles per hour, which is what we have seen them do. The narrow lane 23 widths will continue to result in higher than normal sideswipe accidents. Narrow bike lanes will 24 continue bike-related accidents. I have just looked at the bicycle accident statistics through 25 December 31,2008. Most ofthe non-vehicular accidents are bicycle accidents and they are 26 clustered at several intersections, Gunn and Terman being two ofthem out ofthe entire two and 27 a half mile corridor. 28 29 Parking actually would not exist along the entire corridor. A multiple threat, a multiple threat 30 being that if a pedestrian is crossing the street and a car in the left lane or the right lane stops for 31 the pedestrian a car can pass the car not seeing the pedestrian and hit them. So that remains a 32 problem throughout the entire Arastradero segment. 33 34 Next. On the hybrid we retain four lanes. Where we squeeze down to three lanes going east is a 35 subject for final design. But we need the capacity approaching Gunn High. So we have retained 36 that capacity all the way from east of Terman or Donald all the way through Gunn High and then 37 there is actually no change west ofthe Gunn High driveway. East ofthe Gunn High driveway 38 there is a merge to one eastbound lane between the cemetery or someplace around there and 39 essentially the block just west of Terman, which would be maybe Willmar. Then as soon as you 40 get through Terman you squeeze back to that one lane and essentially you have one lane coming 41 into Donald westbound that feeds into two lanes. East of there we show a median that is fairly 42 wide. It could be 14 or 16 feet wide. The bicycle lanes themselves would be up to eight feet on 43 the south side and they would be six feet on the north side with parking adjacent to the bike 44 lanes. Not a great situation but basically that is one ofthe ways of doing it. There is also a 45 raised island, a physical island, and a mid-block crosswalk to get people to and from Biones 46 Park, or it could be at an intersection it doesn't make any difference. Essentially people coming Page 4 1 from the east would be expected otherwise to go to Coulombe and cross to get to the park and 2 that is not reasonable. People don't do that. So essentially we are looking for a crosswalk, this 3 would also occur in the four-lane design, where you cross half the street looking at traffic 4 essentially and then cross the other half of the street when there is a gap in traffic. This has been 5 done in Europe to a great extent and is being adopted in pedestrian oriented towns throughout the 6 United States. 7 8 Next. The hybrid benefit. There are actually a lot of benefits as well as there are a lot of 9 problems. We think there would be a great improvement to pedestrian and bike safety because 10 ofthe wider bike lanes, and the speed reductions. This is real. This is not just some person 11 talking through a straw hat like me. Essentially we have seen speeds go down in actual projects 12 that I have done where we take a lane away. Speeds really go down and especially the highest 13 speeds disappear because you only have one lane to operate in so there is always somebody in 14 front of you even at ten in the evening. That is what we say, it all but eliminates very high- 15 speed. We think pedestrian ability to cross the street would be improved. Vehicular safety I 16 think would be improved substantially. There is adequate room for parking. The median can be 17 landscaped and we expect maybe a 50 percent or more reduction in accidents. I have more 18 information on that. We have found in the two years 2007 and 2008 the accidents went down on 19 Charleston Road 47 percent since the striping for three lanes. However, accidents on 20 Arastradero Road where there has been no changer other than Gunn High have also gone down 21 29 percent. So there has probably been about a 25 percent real reduction in accidents on 22 Charleston Road. In other road diet kinds ofprojects there has been statistically controlled and 23 all that, I mean there are a lot of problems with the statistics with before and after accident 24 studies because it takes so long for before and after, but essentially there have been statistically 25 valid reductions of anywhere from 25 to 60 percent in terms of accidents going from a four-lane 26 undivided road, which is the worst possible cross section in an urban area to a three-lane type of 27 a configuration. We don't expect any significant increase in travel times from today. That is 28 because we are retaining the lanes where we need them, at Terman and at Gunn, and we are also 29 going to adaptive traffic signal control, which will improve the situation over the current 30 operation ofthe signal system out on Arastradero Road. 31 32 The problems. One lane longer lines. Increased side street delays. This is documented and our 33 model suggests this will be true for people trying to get onto Arastradero Road from any ofthe 34 side streets just because it takes longer for a single line of cars to go past a side street than it does 35 for two lanes to handle them. There is actually some place for people to tum into from the side 36 streets so it might be easier to do that. A lot of people don't find that much of an improvement. 37 There is an increased difficulty with driveway access because of the longer queues and the 38 longer lines of cars. The cycle lengths will need to be increased and that is the reason that the 39 side street delay goes up. Ifthe median is raised, but we have actually talked with the Fire 40 Department since then, if we have mountable curbs and everything emergency access is probably 41 not going to be much of a problem with mountable curbs. A lot of raised medians are installed 42 with mountable curbs. I think we are done, right? 43 44 Ms. Likens: These last two graphics depict what the three-lane cross section would look like. I 45 am sorry we don't have a color graphic. This is at the full build out if we were able to also 46 provide some bulb outs at the comers. This is consistent with the original Page 5 1 Charleston! Arastradero Corridor concept where you have a wide median be it 16 or 18 feet that 2 narrows to about a six-foot median at the intersections. You have enhanced crosswalks. You 3 have a left turn storage pocket. One through lane in each direction. We have seven-foot bike 4 lanes on the side of Arastradero now where there is parking prohibited during the daytime and 5 that would go to eight feet. We have 13-foot bike lanes, which are with parking allowed on the 6 north side and we would expand those to 14 feet, which provides a generous parking lane of 7 eight feet and a wide bike lane of six feet, which is wider by at least one foot than what we have 8 out there now. So this would be the striping concept with full build out and landscaped medians. 9 You would have a very nice tree canopy. 10 11 This is the vision of what both Charleston and Arastradero would look like at least in the three- 12 lane option. Even in the modified four-lane with the narrower median you would have some tree 13 canopy and landscape vegetation. 14 15 So our conclusions as Gary discussed were based on all of the analysis and traffic modeling we 16 have done. We are confident to recommend the hybrid as the best alternative for the trial on the 17 corridor. It will reduce speeds. It will eliminate those over 45 miles an hour speeds. It will most 18 likely reduce accidents. It will provide a calmer corridor for walking, bicycling, and driving 19 without disrupting the travel time goals of our project, which is to have a slower steadier speed 20 of traffic traveling from one end ofthe corridor to the other you are not going to be spending 21 more time. It does not disrupt parking that we already allow. We would not be eliminating 22 parking. It would improve the ability to cross the street, which is very important for the adjacent 23 residential neighborhoods and members of our stakeholder team have been very concerned about 24 living along the corridor and having access to cross the street safely. It does lend itselfto better 25 future streetscape and aesthetic improvements on the corridor as well. 26 27 As Gary mentioned, do nothing is really not an alternative because we have the worst of all 28 possible worlds out there now. This hybrid will be far superior to what we have out there now. 29 It preserves the capacity and meets the objectives ofthe corridor plan. With that I will end our 30 presentation. We would be happy to entertain any questions. 31 32 I would note that Commissioner Keller did provide a list of nine questions and we would be 33 happy to go through our responses to those at this time or at a later time, whatever is your desire. 34 35 Chair Garber: I would like to ask the Commissioners to hold their questions so that we can get 36 directly to the public. Commissioner Lippert. 37 38 Commissioner Lippert: Mr. Kruger, initially you had mentioned that on the four-lane concept 39 there is room for landscaping but not for trees, but under the hybrid scheme there would be room 40 for trees. 41 42 Mr. Kruger: Yes, when you have a six foot median essentially you need two feet of clearance 43 between the curb, this is a design standard that seems to work fairly well, you need two feet 44 either side and with a tree - a six foot median and then a tree grows and essentially you can't 45 maintain that two feet of clearance between a curb and a tree. So in the six-foot sections you 46 probably wouldn't be able to plant a lot of trees. I think your Public Works Department would Page 6 1 have all kinds of heartburn if we tried to recommend that. The wider median provides space for 2 trees without vehicles running into them. 3 4 Commissioner Lippert: Okay, thanks. 5 6 Chair Garber: Any other clarifying questions before we get to the public? Commissioner Keller. 7 8 Commissioner Keller: You had mentioned the idea that the hybrid scheme with respect to the 9 Fire Department if it had mountable curbs that would work. Do mountable curbs preclude trees 10 or could you have trees? If you have trees does that still work with the mountable curb? 11 12 Ms. Likens: Yes it would. We put trees in traffic circles that have mountable curbs. So that is 13 not going to be a problem especially with a very wide median. 14 15 Commissioner Keller: The median would be wide enough in order for the Fire Department to 16 have access going around blocked trees even is there is a tree there. Thank you. 17 18 Chair Garber: We will go to public comments. I will read the current speaker and then the 19 speaker to be in line next so they can stage themselves efficiently. The first speaker is Gavin 20 Tanner followed by Betsy Allyn. Mr. Tanner. 21 22 Mr. Gavin Tanner, Palo Alto: I want to thank the Planning Commission for the opportunity to 23 speak. I live on Arastradero Road next to the elephant in this room. The problem that I have 24 with the Staff proposal is I am very disappointed. I was so in favor of this project having 25 commuted five years in this corridor I experience no delays on the Charleston part. We do need 26 to do something on Arastradero part. I do not think the hybrid solution is anywhere near 27 appropriate but I am pleased to hear that Staffis talking about all the final striping that still could 28 be planned for over this next year. Because unfortunately the conceptual plans as drawn are 29 incomplete. There are two very large for Palo Alto standards multi-residential units on 30 Arastradero Road. Neither one of those units are on the drawing. Additionally, not included on 31 the drawing along with my unit is the blind spot created by the fencing directing in that curve. 32 Every single time I leave the apartment I feel at risk for an accident from very fast westbound 33 traffic. Presently in the hybrid solution the comment is made that it all but eliminates very high- 34 speed except the hybrid solution opens up to two lanes again directly in that blind spot as it hits 35 the comer as if to say to the scofflaws here is where you are allowed to go back to your 50 miles 36 an hour. Believe me please Commissioners that is a slow speed from personal experience 37 observed living there for five years. We are at risk on that comer. The hybrid solution does not 38 make adequate planning for a wide center median so that Arastradero west can tum in and tum 39 out. I also strongly recommend an extremely long right hand tum lane into that elephant. The 40 Gunn program is working much better these days but we still, if we continue to have two lanes in 41 front with the traffic stopped trying to go into Gunn it will not work for us to be able to get out. 42 The plan draws Yingo Way where there are about six houses coming onto Arastradero Road. 43 The conceptual plan does not draw two units where over 60 residents and more than that number 44 of cars are pulling out and in to the corridor every day. I really wish that the conceptual plan 45 would go back and bring those things into consideration. Thank you. 46 Page 7 1 Chair Garber: Thank you. Betsy Allyn followed by Penny ElIson. You will have three minutes. 2 3 Ms. Betsy Allyn, Palo Alto: I live on Willmar Drive in Green Acres II. I am a member of the 4 stakeholders committee. I can't believe we have been doing this for six years but we have. I do 5 support the Staff recommendation of the hybrid and alternatives one to three. I think the four 6 lanes are unacceptable. 7 8 I have had the experience just a few weeks ago of seeing a car go through a red light and hit a 9 child on a bicycle. That is the problem. This is all about safety. This all about safety for the 10 neighborhoods along the corridor and just off of the corridor. It is all about the children going to 11 11 schools and even more childcare centers. It is all about safety for the bicyclist, for the 12 pedestrian, and for quality of life. 13 14 Now sure you are going to have some people say well, my driveway doesn't fit and this doesn't 15 fit, and it takes me ten minutes longer, and I can't back out, and these things. You will always 16 have comments like that in projects that are turned in to you. I don't demean them I just say that 17 the overall importance is safety. 18 19 It has been designated a school and bicycle safety corridor by the City Council twice with good 20 reason. If you would like to see that reason come down to Maybell between 20 to eight and eight 21 in morning and in the afternoon around three. I thought the City did a marvelous job on 22 Maybell, which was probably a year ago. They put in bicycle areas for the children to ride up 23 Maybell and go to Juana Briones or go to Terman. They put speed bumps on Maybell, and a 24 stop sign by the park. It made a lot of difference in the safety for those children. I would like to 25 thank Gayle for that. 26 27 This will not stall traffic, the hybrid will not stall traffic, it just had more control of it. It will 28 have the traffic significance signaling. Without some calming of traffic which is needed to have 29 fewer accidents I think that if we don't get this project now, if we wait to do it another few years 30 we will simply be Page Mill or Oregon Avenue south. The speeds there sometimes are pretty 31 difficult. It is hard for me to get out of Willmar. There are reasons for this but I won't go into it 32 now. I just would like to take a minute to thank Gayle Likens and her staff and the good work 33 they have done with us, teaching us. We learned a lot about traffic management I will tell you 34 that. I thank Gary for teaching us. He was a wonderful teacher and so helpful in having us 35 understand all the problems that presented themselves on this corridor. Thank you. 36 37 Chair Garber: Thank you. Penny Ellson followed by Rich Ellson. 38 39 Ms. Penny Ellson, Palo Alto: Thank you. Good evening. We are Penny and Rich ElIson 40 speaking as Greenmeadow Community Association Representatives to the 41 Charleston! Arastradero Stakeholders Group. Like most people in our neighborhood we use the 42 road regularly as motorists, pedestrians, and bicyclists. We first got involved in this project 43 because Rich was hit by cars twice on Charleston! Arastradero. 44 45 The restriping plan we are reviewing today represents one segment of a two and a half mile 46 residential arterial and City of Palo Alto designated school commute corridor that serves 11 Page 8 1 public and private elementary, middle~ and high schools, multiple preschools, South Palo Alto's 2 only library, three community centers~ six public and private parks~ the Research Park, 3 Arastradero Preserve~ and a neighborhood shopping center. A bicycle/pedestrian friendly 4 Charleston! Arastradero corridor is integral to South Palo Alto design. So much so that the 5 Comprehensive Plan specifically calls out treatment of Charleston! Arastradero for landscaping 6 medians and other visual improvements to distinguish it as a residential street in order to reduce 7 traffic speeds, Program T -41. 8 9 Slide. This slide illustrates how schools are distributed along the corridor. While fewer schools 10 are on the Arastradero segment of the corridor Gunn and Terman have high enrollment, as Gary 11 mentioned~ which translates to greater transportation impacts. What you may not know is that 12 the number of Gunn students who use alternative modes of transportation has been climbing 13 steadily. Slide. At last count in October 2008 600 bikes were counted at Gunn, an historic high 14 since 1985. You might attribute that increase to enrollment growth but this next slide shows the 15 percentage of students biking to school has risen too from 11 percent in 1999 to 31 percent in 16 2008. We are also seeing increases in bus ridership, carpooling and pedestrian activity. We 17 don't expect these trends to abate because Palo Alto elementary and middle school students 18 continue to shift to alternative modes too. These students deserve a safe route to schooL 19 20 Slide. The existing Arastradero striping plan is not working. But some history of the 21 Charleston! Arastradero plan will make it more clear why the plan came into being. ill 2003 22 developer proposals and Housing Site illventory identified almost 1,000 new housing units 23 within the Charleston! Arastradero service area. That was four percent of all Palo Alto 24 households at that time added to one street, a designated City of Palo Alto school commute 25 corridor. 26 27 Slide. The aggregate numbers have not changed much since then though the units have been 28 distributed differently than originally proposed along the corridor. You can see here how big 29 projects like Arbor Real were reduced in size while new projects sort of popped up in the 30 interim. 31 32 Slide. A quarter to one-third increase from the 2003 daily car trips was projected then. We 33 knew that the volume increase could irrevocably change the character of the corridor bifurcating 34 South Palo Alto. 35 36 Slide. A corridor study was undertaken by the City and its outcome was a plan to mitigate 37 aggregate traffic impacts and preserve a safe, functional corridor that would consider the needs 38 of all recognizing high volumes of motorists, bicyclists, and pedestrians, especially school 39 commuting children. We still need this plan. 40 41 Slide. Actually I think I have run out of time. 42 43 Chair Garber: We are combining your time. That is fine. 44 45 Mr. Rich ElIson, Palo Alto: We will tag team. Slide ten. So ifthe existing configuration creates 46 a lot of problems, long crossings~ long distances between signalized intersections, insufficient Page 9 1 gaps for safe crossing, high speeds, narrow bike lanes with gaps in them in some points like EI 2 Camino, uncontrolled turning movements, high crash rates for autos, bikes, and pedestrians, and 3 poor sightlines at un-signalized intersections. 4 5 Next slide. As you heard, speed is key issue on Arastradero. High-speeds lead to high accident 6 rates and high injuries. So if you take away nothing else from this meeting remember that you 7 are twice as likely to be killed by a vehicle moving at 35 than you are by a vehicle moving at 28. 8 That is one of the reasons I am here. The car was not going that fast but it really hurts to get hit 9 by a car. Don't wish it on anybody. The fatality rate is quite high. In fact if you look at rates at 10 37 percent have 31 miles per hour and 83 percent at 44. So higher speeds increasing likelihoods 11 of crashes as well. At faster speeds motorists are both less likely to see pedestrians and less 12 likely to be able to stop to avoid hitting them. 13 14 The study we are reviewing tonight shows that about 1,500 cars were recorded on Arastradero 15 traveling in the 30 to 49 mile per hour range in a single day and this was during school commute 16 hours. So controlling speeds at those times is critically important as well as outside of those 17 times. 18 19 Next slide. The successful Charleston trial demonstrated that a three-lane configuration as 20 engineered to maintain safe speeds, dedicated turning lanes are providing sufficient efficiency to 21 get the cars that are turning out of the way for the through traffic. Dedicated turn lanes also 22 reduce delay and risk caused by uncontrolled turning movements keeping all road users, 23 motorists, bicyclists, and the pedestrians, moving safely and efficiently. The raised medians 24 reduce collisions, provide room for traffic calming landscape, and also for pedestrian refuges. 25 26 Next slide. So I will wrap up. This long-awaited project has been studied by several committees 27 and multiple phases. Both Penny and I have been involved for years on those and really 28 appreciate all the efforts from Staff during that period but now it is time for action. So do not 29 permit any more delay. Let's go ahead with Phase 2 ofthe trial. Please support Staffs 30 recommendation for the hybrid alternative trial. We agree that the hybrid plan provides the best 31 option to achieve the goals that were set for this project and it is critically important for the 32 safety of all of us that use the corridor for our connectivity and the livability of our 33 neighborhoods. Let's go ahead. Thank you. 34 35 Chair Garber: Thank you, nicely done. Betty Lum followed by Joan Marx. 36 37 Ms. Betty Lum, Palo Alto: Thank you Commissioners for the opportunity to speak. I live on the 38 comer of Suzanne and Arastradero. We have been at this comer since 1964 and have seen 39 Arastradero go from a quiet residential street to a practical expressway. Thanks to Gayle and her 40 staff for the excellent work you have done. 41 42 I know and I had heard that there is concern among the residents of Arastradero that they will 43 have a hard time backing out onto Arastradero ifthis plan is implemented. On our daily morning 44 walks with our dog we have witnessed a resident on the west side of Arastradero back out 45 heading west then making a U-turn to head out to EI Camino. So my feeling is that ifthe bicycle Page 10 1 lanes are wide enough people will be able to back out of their driveways that are fronting 2 Arastradero. 3 4 We humans are very reluctant to change. I remember when the Charleston plan was 5 implemented. Doggone two lanes are going to merge into one, but I went there the first few days 6 and noticed that cars merged quite well and I think traffic flows pretty well. Living there on the 7 corner of Suzanne and Arastradero the last 40-some years we really would like to see a change in 8 the traffic flow. I really would like to ask the Commission to approve the hybrid plan. We are 9 hesitant and have concerns yes, but unless we try we will never know if it will work or not. So I 10 hope you will go ahead and approve the plan. Thank you. 11 12 Chair Garber: Thank you. Joan Marx followed by Robert Moss. 13 14 Ms. Joan Marx, Palo Alto: I bike all over Palo Alto daily and I am a co-founder of Go Fast 15 program, which was an alternative traffic program, and an award winning one. I have written a 16 letter to you in support of the hybrid plan. In that letter I urge you however to adopt two 17 additions to the plan. The first addition would be the restoration of the sidewalk, which was cut 18 in half at the beginning ofthe plan. It is just east ofthe Gunn driveway. I wrote you the details 19 in there. This will make it better for the pedestrians who are going to the school. 20 21 The second addition, which I would talk about, is the inclusion of the EI Camino intersection as 22 part ofthe trial design of the corridor. The first objective ofthe CharlestoniArastradero project 23 is to improve bicycle and pedestrian access. The second is to improve the school commute. Yet 24 at the heart of this corridor, at its center, is the E1 Camino crossing, which is a difficult crossing. 25 Extraordinarily no improvements and no design has been setup for this intersection. Essentially 26 we have a bike to nowhere at the center ofthe corridor. 27 28 It is a difficult intersection for adult cyclists and we are asking Terman students for example, 29 there are Terman students who live between Alma and EI Camino, ifthey are going to bike to 30 school they have to bike through this E1 Camino intersection. I talked to an adult cyclist 31 recently, when I was going up and down trying to decide why it was difficult, who bikes from 32 Mountain View to Hillview every day. He uses California, and this is the most difficult part of 33 his commute is that intersection. 34 35 Why has it been omitted? I think the reason is because EI Camino is governed by Caltrans. Yet 36 the City has worked with Caltrans in a number of places. One part ofthis particular intersection 37 about seven years ago where there was a very large free right turn, it was changed. The City is 38 now working with Caltrans on the Stanford Avenue. So I suggest that if you are setting up 39 something where you are encouraging bicyclists and pedestrians to move through a corridor you 40 don't ignore the very center ofthe corridor. Is there time when the work is being done summer 41 of2010? Is it too expensive? I think you have to find out. Certainly there are some changes 42 which could be made just from a layman's point of view looking at one difficulty ofthe crossing 43 for example is that if you are westbound from Charleston and you are looking -if! might just 44 finish this sentence. 45 46 Chair Garber: That's fine. Page 11 1 2 Ms. Marx: If you are looking at Arastradero, if you are standing where a bicyclist would stand to 3 the right of traffic you are facing a sidewalk because the two streets are offset there. Yet, if you 4 put in curbed striping across the street that would help guide the cars where to make that curve. 5 Thank you. 6 7 Chair Garber: Robert Moss followed by our final speaker Martin Freeman, at which point we 8 will take a five-minute break. 9 10 Mr. Robert Moss, Palo Alto: Thank you Chairman Garber. I also think the hybrid approach is 11 preferable but I have some concerns. Let me express them. Recently I saw a report that 12 indicated when the Campus for Jewish Life is occupied say in about a year from now it is going 13 to have a huge impact on traffic at Charleston and Alma. It is going to create some major traffic 14 problems there we don't see today. As Penny ElIson pointed out there are thousands of 15 additional cars that will be going down that corridor, Charleston! Arastradero, as a result of all of 16 the new housing that has been built and is about to be built. So the traffic impacts that you have 17 today are not the same as you are going to have in a couple of years. 18 19 Another problem that concerns me is the increase in the backup at Coulombe at the light there. 20 We have heard about the problems of people getting in and out of their driveways having to go 21 down, make U-turns, and come back, which are going to increase traffic flow on sections of the 22 street just because people are getting into their driveway that normally wouldn't exist. If you 23 look at today's traffic flow those car trips wouldn't exist but when you have the barrier there and 24 they have to go down and make a U-turn to get into their driveway now they do exist. So the 25 number of trips in various segments is going to be significantly more just because people have to 26 get in and out of their driveways. 27 28 Now, none of these by themselves is necessarily a killer. What concerns me is the potential for 29 the combination creating problems that we really can't foresee today. We won't be able to see 30 what is going on until people drive down the street and change their driving habits and their 31 driving patterns. I think one of the results we are going to see is a lot of people are going to be 32 bypassing Arastradero and driving down Maybell all the way down to maybe Georgia or 33 Hubbard or one ofthose other streets. So you are going to end up having a lot of diverted traffic 34 down the residential streets because it is there, it is available. 35 36 So assuming the hybrid approach is adopted, I would like to see some thoughts in advance of 37 what would you do to modify it if some of these problems come up. Would you go to a four- 38 lane for a section say between McKellar and El Camino or between say Coulombe and Cherry 39 Oaks or what would you do? How would you modify it to make the traffic flow better and to 40 give people better access? 41 42 If you had something in mind going in and then we have a problem then you can just apply it. If 43 you have no potential answers then I think we may have problems we can't foresee today. So I 44 think the hybrid approach is better but I think we are going to find we have some potential 45 problems that we are not able to see today. 46 Page 12 1 Chair Garber: Thank you. Our last speaker of the night is Martin Freeman, at which point we 2 will take a five-minute break. When we come back we will give Staff and consultant a chance to 3 speak to some of these issues, and then we will go to the Commission. 4 5 Mr. Martin Freeman, Palo Alto: I have a question. One of the Council adopted objectives is to 6 minimize traffic shift to adjacent streets. In the hybrid plan at the intersection of Donald Drive 7 and Arastradero Road there are three lanes. My question is why are there three lanes and how 8 does this square with minimizing traffic shift to adjacent streets? That is just a question. In 9 other words, the hybrid plan has a sudden three-lane extension or whatever you call it at the 10 intersection of Donald Drive and Arastradero Road. Why is it there? 11 12 It seems to me that it encourages traffic flow and it doesn't minimize the traffic on Donald Drive. 13 14 Chair Garber: Thank you very much. We will take a brief five-minute break and then we will 15 come back to Staff comments and then Commissioner questions and comments. 16 17 Commissioners, let's reconvene. Stafflet's give you an opportunity to respond to any of the 18 comments you would like to. Then if you would, would you please address Commissioner 19 Keller's questions. Then we will start the Commission's questions and comments with Mr. 20 Keller and go from there to Mr. Lippert. 21 22 Ms. Likens: Thank you Chair Garber. I will briefly go over some responses to the comments 23 from the public. I will ask Gary and Rafael to respond in addition. The resident who expressed 24 concern about the multifamily driveway exit near Gunn High School, we cannot as part of the 25 hybrid plan go to a three-lane cross section between Terman and Gunn. We need the capacity. 26 So we are really not changing the existing condition that is out there for this property exiting 27 onto Arastradero or entering onto their property. We will commit to take a look at the striping 28 but there is a 60-foot right-of-way. We need to have the bike lanes and the travel lanes there. 29 What we can do with the centerline striping to perhaps facilitate making left turns out, and that 30 would be a design detail that we would look at in the striping plan. We did similar modifications 31 along Charleston Road between El Camino and Alma. Basically, for capacity reasons we cannot 32 modify the four-lane segment in that section. 33 34 The concerns that were expressed by Joan Marx about the intersection ofEl Camino and 35 Arastradero and Charleston we are very well aware of. We do need to move forward and discuss 36 with Caltrans how we could move forward with a major improvement at that intersection that 37 would allow for the removal of the pork chop islands, necking down the intersection, having 38 through bike lanes in each direction. That is not within the scope of this project and would 39 require a lot of consultation and communication with Caltrans, and a funding plan. It is not a 40 striping improvement. We did explore earlier on in this process, I would say a couple of years 41 ago, what we could do on the Arastradero approach to put bike lanes through to the intersection. 42 We needed to remove the median island that is on Arastradero Road. It is a very narrow island 43 but it has a number of utility boxes and communication boxes and Caltrans was unwilling to 44 modify that island. So a simple striping improvement is not really feasible at this time but we 45 recognize that that's a problem intersection. It is one of the highlighted intersections in our Page 13 1 Bicycle Transportation Plan as a location that needs improvement. We should over the longer- 2 term start a more intense dialogue with Caltrans to do something about that intersection. 3 4 I would comment that the impacts of the Campus for Jewish Life were addressed in the EIR for 5 that project. There were no impacts that I am aware of. I don't recall what the impacts were but 6 I believe that was fully vetted during the EIR process for that project. 7 8 The concern that was expressed about U-turns and additional trips that would be generated by U- 9 turns because of the median island and not allowing left turns into private driveways, I think we 10 have discussed here at the Stafftable, and that is not really a major impact. Basically there will 11 be one trip in the AM and PM for each household. Whether it is going and making a left turn 12 into the driveway or going up to the comer and making a U-turn that is not going to increase any 13 significant level of impact oftraffic on the corridor. 14 15 We are aware that we are going to have to monitor traffic along Maybell Avenue. It is really the 16 parallel corridor. We were explicit in making improvements along the Maybell corridor for the 17 Bicycle Boulevard in advance of having the Arastradero corridor implemented knowing that we 18 would want to have traffic calming and safety measures on that roadway first. We will have to 19 do before counts not only on Maybell but on Donald and Georgia and Willmar to assess if there 20 is a shift to side street traffic that we don't anticipate because we will be maintaining the travel 21 time corridor along Arastradero Road, but we will need to vet that completely in the analysis of 22 the before and after analysis. 23 24 I think the last question has to do with the concern about three lanes at the Donald intersection. I 25 am going to let Gary respond to that. 26 27 Mr. Kruger: The lanes actually Arastradero retains its current cross section at Donald and 28 Terman but on Donald and Terman we actually added two approach lanes on southbound Donald 29 and northbound Terman. 30 31 Chair Garber: Can I ask that you just put that diagram up on the screen? 32 33 Mr. Kruger: We show a southbound through plus right. 34 35 Chair Garber: Gayle, could you enlarge the image for us? Thank you. 36 37 Mr. Kruger: We show a southbound through plus right and then a left tum lane. We show a left 38 tum lane and a northbound through plus right. This actually increases the capacity for Terman 39 and Donald if you kept the same amount of green time for them. This was actually done so we 40 could give more green time to Arastradero without penalizing Donald and Terman. So we are 41 adding to the capacity at this bottleneck and the bottleneck occurs primarily during the school 42 peak commute. During the rest ofthe time essentially it is not that much of a problem. The 43 problem is that for 37 seconds out of every 100 seconds today the intersection shuts down and 44 the kids cross. That is an absolutely essential safety feature for that intersection. There is no 45 consideration that that should ever be terminated. 46 Page 14 1 So essentially, we are not adding to the capacity of Donald and Terman. So the travel time will 2 not improve necessarily and it will not likely have any effect on shoving traffic onto alternate 3 streets. One of the objectives, not the primary objective, is to do all ofthis without shoving 4 traffic or diverting traffic to alternate routes. So the short answer is I don't think there will be 5 any effect. We are doing this to make the hybrid alternative actually perform as good as it can in 6 terms of vehicle travel time. 7 8 Chair Garber: Thank you. If Staff can address Commissioner Keller's questions. 9 10 Yes, we would be happy to. Would you like me to read the questions first and then 11 respond? 12 13 Chair Garber: Sure. 14 15 Ms. Likens: Okay. His first question is, what is the baseline for transit, bicycling, and 16 pedestrian use at Gunn and Terman for this project? Will it be the numbers achieved during the 17 2009-2010 academic year preceding the project or some earlier date? I must preface my 18 comments by saying we got these questions a little bit late in the game and we didn't see them 19 initially when they were sent. Our evaluation criteria for the corridor relate to the entire corridor 20 from Phase 1 inclusive of Phase 2. The original performance measures were based on an earlier 21 implementation of the entire trial project that we would have done this a couple of years ago. So 22 we are not anticipating really doing the full evaluation of all ofthese measures until the end of 23 the trial, which would be in 2011 if we implement in 2010. So we will need to follow up and get 24 back to you with more information at a later date on the baseline for these and then the follow 25 up. 26 27 The second question was can the travellanes on westbound Arastradero Road approaching Gunn 28 High School be safely shifted to allow widening of the sidewalk at the right tum pocket on the 29 north side of the street? Alternatively. can the City arrange to keep the shrubbery at that 30 sidewalk trimmed so as to increase the effective width ofthe sidewalk? This is the same concern 31 that Joan Marx voiced in her comments. This issue was really studied quite extensively during 32 the Gunn High Driveway Signal Improvement Project. That project needed to acquire five feet 33 of width on the north side ofthe street to provide for the right tum lane into the campus. That 34 resulted in the elimination of the landscape median between the sidewalk and the curb staying 35 within the existing basically 60-foot right-of-way curb-to-curb width ofthe street. So it is really 36 not feasible to restore that planter strip without, and I have not even looked into this, some major 37 realignment of Arastradero Road from Foothill all the way around the curb and looking at 38 widening of the road on the south side, on the cemetery side. So that was not included in the 39 scope of the Gunn High Signal Improvement Project and it is not feasible to do in the context of 40 this trial striping project because we are not really changing the Gunn High intersection. 41 Looking at more vigilant monitoring of the landscaping in that section is a code enforcement 42 issue that we can work with our Code Enforcement Staff on. Again, I think this issue was 43 discussed and vetted during the Gunn High Signal Improvement Project. 44 45 Number three, should the traffic like at the Arastradero Road approaching Gunn High School be 46 modified so there is a right tum green arrow when the traffic is to tum? Or should signage be Page 15 1 posted that the turn is a free right turn subject only to giving the right-of-way to pedestrians? I 2 am going to ask Rafael to respond to that question. It is somewhat technical in the nature of the 3 response so be aware of that. 4 5 Mr. Rafael Rius, Transportation Engineer: With respect to a right tum green arrow that would 6 have to occur while the left tum out or exiting the high school. They would overlap and it would 7 require some significant equipment upgrades including pedestrian control. Currently it is just 8 crossing from the sidewalk to the little island is not signal controlled. From a capacity 9 enhancement it is not really needed for the right turn queue. It would be a major investment just 10 for about 20 minutes a day. 11 12 Regarding signage of a free right tum subject to giving only right-of-way to pedestrians that is 13 what is out there right now. It is not signed but that is not typically signed. That is kind of what 14 is assumed in any signal of this configuration. 15 16 Ms. Likens: Number four, please discuss the traffic, and also bike safety in the hybrid plan of 17 the merge from two lanes to one on the curve on eastbound Arastradero past the cemetery. Just 18 quickly, that merge is something that we are going to look at and exactly where that merge 19 occurs in the detailed design. That is the merge on the top of this graphic just east of the Alta 20 Mesa Cemetery where we are merging back to one lane eastbound. It is on a curve. It is not the 21 same type of curve that we have at Charleston just east of Louis or west of Fabian, but it is 22 something we wi11100k at. One ofthe comments the Gunn High administration made was we 23 had this merge earlier closer to Gunn High School before and they were concerned that there 24 needed to be more capacity for all the exiting traffic in the afternoon, getting out of the campus 25 onto eastbound Arastradero so we moved it east. We may need to tinker with that and fine-tune 26 it and make sure it is in the right location. So that is a very good comment. 27 28 Number five, explain whether left or U-turns will be prohibited at the street gaps where there is 29 no left tum pocket because there is no street to tum to the left. Drivers destined for houses on 30 the opposite side of the street may wish to turn there anyway, blocking the traffic flow and 3 1 causing accidents at these improvements. Rafael would you like to respond to that? 32 33 Mr. Rius: This is something we could look at when we get to the final design, ifthere are 34 locations that we feel there would be a lot of U-turns, they can be incorporated in. We might 35 lose a little bit of potential landscaped area but U-turn pockets are possible. 36 37 Ms. Likens: That's great, thank you. Number six, please explain whether the entire extent ofthe 38 improvement should have double-double yellow medians to prevent left turns into driveways 39 except where specifically desired. Again, that is a design detail. The concept of the striping for 40 the hybrid with the median islands is to mimic what a raised median would be like. So what we 41 have done on Charleston is a double-double yellow. However, we did have exceptions to that 42 specifically between Wilkie and El Camino where we put in a single double yellow because the 43 detour for residents to make a left tum was so onerous they would have to go a mile out of their 44 way. We did make some modifications at Hoover School to address tum movements where we 45 put a striped double tum lane. So we will refine this but the overall concept is to mimic in 46 striping what would be like a raised median if we had the funding to implement them. Page 16 1 2 Number seven, please explain the hazards associated with having parking next to the bike lane. 3 Was the recent bike-car accident on Channing due to a bicyclists swerving to avoid the car door 4 being opened? Unfortunately I got this so late I didn't look up that accident but we can follow 5 up for you Commissioner Keller. The larger question Rafael can respond to about bike safety. 6 7 Mr. Rius: Having a bike lane next to parking is not ideal but with the wider lanes that are being 8 proposed as part ofthis it can be made safe. Eight feet of parking and six feet of bike lane is 9 pretty generous. It is not as ideal as no parking at all with a wide bike lane up against a curb but lOwe feel that with appropriate design it can be made safe. 11 12 Ms. Likens: Just another comment. This plan is a tradeoff, one thing for another, and one ofthe 13 things that we are balancing here is the need for residential parking on the street and not 14 eliminating it. So we are actually enhancing the bike lanes in this plan and maintaining parking 15 for the residents in keeping with the residential character of the corridor. 16 17 Number eight, please comment on whether it is better to have westbound bicyclists destined for 18 Gunn High School to take the new Maybell bike boulevard and enter the campus using the 19 Georgia gate or take Arastradero and enter at the Gunn High School front driveway. Basically, 20 Gunn High School is trying to encourage kids to use the back entrances. There are three back 21 entrances. However, Arastradero is a direct route for many people and the whole concept behind 22 this plan is to make it safer to bicycle on the corridor whether you are a student, or a commuter 23 to the Research Park, or a recreational cyclist. So while the Gunn High Green Team and the 24 Commute Alternatives Program is really encouraging people to come in the back way because 25 that would decrease the number of bicyclists in conflict with right turning cars at the main 26 driveway we think this plan is going to improve safety and shouldn't discourage bicyclists from 27 using the corridor. 28 29 The last question, please comment on the sufficiency of eastbound Arastradero queuing length 30 into Terman without blocking other eastbound traffic. That I will ask Gary to respond to. 31 32 Mr. Kruger: Okay. When you go eastbound from Terman and you go to Coulombe basically 33 you are squeezing from two eastbound lanes to one. We have a simulation model, which I have 34 run countless numbers of times, of course you can speed it up, but I have spent maybe 12 to 15 35 hours watching that model work. The essence of the model is it does a pretty good job of 36 estimating what is going on out there today. In other words, it has cars running around the 37 screen and all that. The backups, the travel time, the queuing, and that kind of stuff are fairly 38 close to what we have measured in the field. Traffic from Coulombe is never backed up to 39 Terman in this model during the school morning peak. At other times of the day it is really not 40 much of an issue because the cycle lengths really go down. So I guess the short answer to the 41 question is I don't think that the queuing on Arastradero eastbound will backup as far as Terman 42 and therefore it probably will not affect the operation ofthat intersection. 43 44 Ms. Likens: That was the end of the Commissioner's questions. 45 Page 17 1 Chair Garber: Thank you. Commissioner Keller why don't you follow up? You have had 2 plenty of time maybe there is an opportunity to pull things together for you. 3 4 Commissioner Keller: Sure. Firstly, I think that I was referring to the eastbound towards 5 Terman from Gunn and whether that queuing length is sufficient. I think the broad issue is that 6 we are approving I understand a conceptual plan. Will this come back to us for a detailed plan 7 approval, or will we not approve a detailed plan before it gets implemented? 8 9 Ms. Likens: Typically, it does not come back to you. The Arastradero detailed striping plan did 10 not come back to you. We could provide it as information if you would like to see it. But 11 typically when we go to detail we have not brought these detail plans back in the past. 12 13 Commissioner Keller: That is why I am going through the nitty-gritty details because I assumed 14 it would not come back to us. Therefore I am trying to raise these issues. If it came back to us 15 for a detailed design then we could look at those then. But because this is our main bite of the 16 apple I have to deal with them. So I appreciate the forbearance of the Chair and the other 17 Commissioners in listening to these detailed issues precisely because this is our one opportunity. 18 I would like to see it when it comes back but I realize that that is just for our information. 19 20 A couple issues. First of all, I would like to greatly thank all of the people in the stakeholders 21 group. I would like to thank Staff. I would like to thank the consultants. I don't think this 22 project has done him in but I understand that both Gayle Likens and Gary Kruger are retiring at 23 the end of this project. So I assume that basically you will both consider this the capstone of 24 your career. 25 26 So the first thing about this is that I think that while it would be good to review this in January 27 2011 making a final decision in January 2011 for keeping it is a bad idea because you need to 28 look at the rainy season that comes after where traffic tends to increase because people take 29 bicycle less in the rainy season. So I hope that we will have a mid-course correction and then a 30 review later than that. 31 32 Ms. Likens: May Ijust clarify? That would be a mid-course update. The full year trial would 33 come back to you probably in the summer or fall of2011 with the one-year evaluation. 34 35 Commissioner Keller: Thank you. With respect to Mr. Freeman's comment I am not sure that 36 was handled the way I would think. I think what he was referring to is people going down 37 Maybell, cutting across on Donald, and then going down the two-lane westbound portion 38 because that is essentially the westbound portion and then taking that to Foothill. I think that is 39 what he was understanding and I am not sure if the Staff and consultants actually got that point. 40 I am seeing nods from Mr. Freeman so that confirms that. 41 42 One response that was made with respect to the westbound Arastradero Road pocket lane is 43 actually interesting. This was asked of somebody at a meeting I was at a week ago so I figured I 44 would bring it out. What is interesting about that is you have a lane alignment problem there. 45 So because there is a left turn lane eastbound into Gunn High School if you shift the two 46 westbound lanes they will line up with that left turn lane, which means you have ajog at an Page 18 1 intersection, which is actually a very dangerous condition. That is why you have to shift 2 everything over you can't just shift the two westbound lanes over and the right tum lane because 3 they won't line up with the two westbound lanes on the Foothill side of the Gunn High School 4 intersection. So Ijust want to bring that out, which is that the other half of that question. 5 6 With respect to the signage at the free right tum, my understanding from talking to people is that 7 the students who go to Gunn High School that drive tend not to understand that traffic rule. So 8 while it is a free right tum students basically don't know what to do. They don't realize it is a 9 free right tum, and therefore they get confused. So signage that basically says move, you will 10 have to yield to pedestrian, or figure out some good way of saying that, but that is useful. 11 12 So let me go through a couple of quick things. First of all, it might make sense in terms of 13 striping plan to allow left tum pockets in and out of Arastradero west particularly since that is a 14 four lane each way. Perhaps the five-lane process over there might make sense. 15 16 It might be worthwhile as you finalize this another way of dealing with emergency access fix on 17 the hybrid scheme is to eliminate parking and have wider bike lanes which would eliminate the 18 parking car door and bicycle interaction problem, and allow the emergency access a wider street 19 there. That is something to consider. I am in support of having future projects with El Camino 20 Real. Your comment was that the four-lane doesn't reduce sideswiping. I am assuming a four- 21 lane scheme over the current would reduce it somewhat because you don't have people trying to 22 go around left turners. So it probably ,would reduce it somewhat but I assume not as much as the 23 hybrid scheme. 24 25 Mr. Kruger: That is correct. It is the very narrow lanes that are required with a four-lane. 26 Actually, the hybrid has the same feature west of Terman, but it is the narrow lanes that also 27 yield some sideswipe kinds of accidents but not to extent that we see them today. People will 28 have, in most places, a place to pullout to get out of the stream of traffic to make their left turns. 29 30 Commissioner Keller: So I assume a lot of the sideswipes are people trying to get around a left 31 turner. 32 33 Mr. Kruger: Most of them, yes. 34 35 Commissioner Keller: Thank you. I assume that the TKlCJL projected traffic from the EIR is 36 part of your 2015 projection. So that is how you handle that future traffic. Is that correct? 37 38 Ms. Likens: That is correct. 39 40 Commissioner Keller: Thank you. Is there consideration of lighted crosswalks where you push 41 a button and there is no traffic light but there are flashing lights in the middle of the crosswalks, 42 as I notice have been recently installed on San Antonio Road in Los Altos? So this way it sort of 43 gives additional safety to basically alert. So especially where you have two lanes in each 44 direction so that both lanes realize that there is a pedestrian going across and not merely one car 45 stopped because somebody is turning right or something like that. 46 Page 19 1 Ms. Likens: I will start. We are going to enhance and make an enhanced crosswalk as we talked 2 about at the park. Whether that has lighted features or not we have not discussed. I think that 3 would be in the next phase after the trial. We are committed to putting enhanced lighted 4 crosswalks on at least one or two locations along Charleston now that that is permanent, 5 including at Louis Road and at one or more of the crossings that are marked but are not 6 signalized on Charleston Road. That would be a design detail that we could look at as part of our 7 enhancement of the crosswalks. 8 9 Commissioner Keller: Ijust want to make sure that there is a placeholder for that so that when 10 you apply for grants we will try to do that. 11 12 Ms. Likens: Yes, and we have already applied for a grant through the VTA for enhanced 13 crosswalks. 14 15 Commissioner Keller: Great. In the hybrid scheme is there an issue with right turners blocking 16 traffic so that essentially if somebody is trying to tum right that through traffic gets clogged? 17 18 Mr. Kruger: It is possible but when they are turning right from Arastradero they would yield to 19 pedestrians hopefully, and bicyclists. In either direction you have eight feet going eastbound, 20 which is essentially a bike lane, but people park in bike lanes and they also use them as turning 21 lanes. Going westbound they would use the parking lane plus bike lane, so they could probably 22 get out of traffic. I don't have statistics or even driver behavior research but I assume that most 23 people try to get their vehicle out from being an obstruction to traffic behind them. I don't have 24 any research to that extent. Even though there are a lot of pedestrians and bicyclists in the 25 corridor it is really focused during the AM peak hour, during the school commute. Other times I 26 don't think right turns are really going to block the lane any more than they do on Charleston, 27 although the traffic volumes are higher. 28 29 Commissioner Keller: When you have the four-lane scheme you can sort of go around, there is 30 flow around it. 31 32 Mr. Kruger: Yes. 33 ~4 Commissioner Keller: When you have the hybrid scheme there isn't anywhere to go around. 35 36 Mr. Kruger: You are correct. It is just that the eastbound lane is not adjacent to the curb. It is 37 out away from the curb and the westbound the same way. So there is typically at most locations 38 there should be room for traffic to squeeze around a car that is stopped and yielding to a conflict 39 like a pedestrian or a bicyclist, or even another car that may not be positioned right on the cross 40 street. So we didn't see it in the simulation model but the simulation model is not going to be all 41 that credible in terms of that particular question. 42 43 Commissioner Keller: So one thing to think about in terms of that is how far parking should go 44 approaching intersections so that cars can sort of move into that space. They will have to 45 obviously bypass bicyclists but pedestrians going across they could wait for pedestrians to clear. 46 Okay, well I appreciate the forbearance of my fellow Commissioners in going through a great Page 20 1 extensive list of detailed issues. Obviously I have studied this issue and I have also worked with 2 Gunn High School to try to encourage them to monitor their work internally in terms of 3 promoting transit use in that regard. Also, I have been recently appointed as a member of the 4 Gunn Facilities Steering Committee where I am looking at their internal circulation plans. So I 5 am trying to move this thing along. I assume that that doesn't cause a conflict of interest in 6 terms of that. I see the attorney is saying no. The issue is it obviously doesn't benefit me 7 directly and I am trying to do everything I can to make all this work as well as possible. Thank 8 you. 9 10 Chair Garber: Commissioner Lippert, Tuma, and then Fineberg. 11 12 Commissioner Lippert: I would like to go back to some of the diagrams here. If you could just 13 take a moment and sort of contrast for me and sort of talk a little bit about the elephant in the 14 room, which is the Gunn High School intersection. What I am particularly interested in 15 understanding is really the subtleties between the hybrid and the four-lane alternative at the tum 16 at Gunn High School. 17 18 Ms. Likens: We are not changing the Gunn High intersection at all as part of this plan. The only 19 changes would be so there are four lanes with a left tum pocket into Gunn, and the right tum 20 lane. Nothing is changing basically between Alta Mesa Cemetery and Gunn High School at 21 Foothill Expressway. That is not going to change at all. The striping changes a little bit as we 22 go to the hybrid plan going eastbound from Alta Mesa but the capacity and the lane structure at 23 Gunn High School is not going to change. 24 25 Commissioner Lippert: Okay, but in the four-lane alternative you are showing here I guess four 26 lanes and then a right turning lane. Is that the one that is staying? 27 28 Ms. Likens: Yes. 29 30 Commissioner Lippert: Okay, but in the hybrid plan here you are not showing anything. Ijust 31 don't understand that. 32 33 Ms. Likens: I think that is just a graphic error in the hybrid plan. The correct striping plan for 34 the Gunn High driveway is shown on the four-lane hybrid. 35 36 Mr. Rius: It is really light grey in there but it would stay the same. 37 38 Commissioner Lippert: Okay, because I am looking at this and I am saying in the hybrid plan it 39 is eliminated. 40 41 Ms. Likens: It is just a poor quality graphic on the presentation in the packet. It is really the 42 same right tum lane and two through lanes. 43 44 Commissioner Lippert: Okay. Then for the first speaker that came up who lives in the 45 apartments that are directly across the street from Alta Mesa Cemetery and he was talking about 46 his difficulty in terms of getting out. Are there other things that can be done? I know we are not Page 21 1 doing anything there but can we look at are there things like striping for a "keep clear" right in 2 front, would that help at all? So that if you had a line of cars for students that were turning into 3 Gunn, they are backed up along there and they are just moving along, at least they would keep 4 clear so that the residents would be able to come out of their driveway and make a right hand 5 tum. Would that be something that would help that problem at all? 6 7 Ms. Likens: We look into that type of thing. I thought he was also concerned about left turns 8 out. Gary has reminded me that it is a difficult curve there and making a left tum out is a 9 problem now and this isn't going to change it. Keep clears we typically don't put at private 10 driveways. We put them at intersections. We have done that up and down the corridor and in 11 other corridors in town. It is something we can look at and we can work with them when we get 12 to the detailed striping plan. We will take that out to the community and get feedback and there 13 may need to be some tweaks. So I think we are open to looking at what we might be able to do. 14 15 Commissioner Lippert: Okay. I think he was also concerned about the traffic there where this is 16 traffic calming and we are slowing the traffic and then it seems to pick up when it gets towards 17 Gunn. Is there anything that can be done with speed tables or speed bumps in that area? 18 19 Ms. Likens: Unfortunately no, we do not put those types of traffic calming measures on arterial 20 streets. Maybe Gary can comment but I think our feeling is that the entire corridor is going to be 21 calmed and it won't necessarily mean that this particular segment will experience the same level 22 of speeds that it currently does. I think Gary would like to comment. 23 24 Mr. Kruger: There have been a couple of communities that have actually implemented speed 25 tables on arterials. We did a study in Los Altos, I forget what the street is now, but it runs 26 diagonal down to Foothill Expressway. We had recommended a speed table on a 10,000 car a 27 day road. There is a way to construct a speed table so that you can run an ambulance or fire 28 truck over them at about 15 to 20 without disturbing people. It is still extraordinarily 29 controversial and I would have a feeling that it would not be acceptable from the emergency 30 service providers, the Fire Department, Palo Alto would probably say no. I think the short 31 answer is there is really not much you can do when you have a couple of lanes going towards an 32 expressway and the demand is probably fairly accurate. Once you get through Donald and 33 Terman you have four lanes just like you do today, and you can go just about as fast as you want, 34 but you have less room to go fast. This is not really going to improve his situation much if at all. 35 It won't exacerbate it but it won't improve it. That is just the long and short of it. The reason 36 that we went to two lanes westbound is that every analysis that we were able to do, and believe 37 me we did a lot of analysis, backed traffic up all the way from Gunn through EI Camino Real 38 with just one westbound lane. So the three-lane option that we really wanted to make work just 39 doesn't work given the situation, which is Gunn High. Gunn High now operates fairly well once 40 you get past that right tum but they have been so successful in getting more people to walk and 41 bicycle especially that the bicycles are getting in the way of the right turns. That is Mr. Keller's 42 observation as well. Rafael didn't say everything. They asked me just before this meeting 43 whether I thought it was a good idea to put in a right tum arrow to sort of clean that out. If you 44 had a real long right tum lane you might get a lot of bang for your buck but the right turn lane 45 itself is extraordinarily compromised. You can only fit six or seven cars in that. So after you 46 clean that out the through traffic that is going on towards Foothill and Miranda and all that is still Page 22 1 blocking access to that lane. So the actual payback in tenns of putting that right tum lane in in 2 tenns of capacity is limited because you have a lot more than six or seven cars that want to make 3 that right tum. Two, you have inexpert bicyclists, these are high school students, and you have a 4 bunch of pedestrians on a compromised sidewalk and a very small pork chop island. Even if you 5 put a sign up there or a signal that said don't you dare cross this with this green arrow or 6 whatever it is I have watched kids from Gunn out on Miranda walk all over the place. So no 7 matter what we do, anything that we do, to speed traffic into Gunn High School is 8 counterproductive in tenns of safety. Ofthe bicycle accidents that have occurred in the corridor 9 since 2007 two have been at Gunn High. So I would have great concerns as a traffic engineer 10 trying to facilitate that right tum. One, we don't have the geometry to do it and two, the 11 population that we are running that right tum through doesn't understand traffic rules. So I think 12 it would be a bad idea. So we can't really do anything very effective west of Tennan or west of 13 Donald for westbound traffic on Arastradero. That is the situation. You only have 60 feet. 14 There is only so much you can do. It is frustrating. We wouldn't design it this way if we started 15 but that is what we have. 16 17 Commissioner Lippert: First of all, I just want to say I appreciate what you are trying to do 18 there. I am just trying to look for a way to help the apartments there across the street and making 19 it a little easier and a little more palatable for them to be able to accept the hybrid plan and what 20 we are doing here. 21 22 As a cyclist I do come across, I usually take West Meadow down to EI Camino Way, and then 23 cut across on Coulombe or on Maybell. Then I get out onto Arastradero and head on out towards 24 the foothills that way. So I am quite sensitive to the bicycle lanes that run along Arastradero 25 . Road and I think this is a great improvement. I am more inclined to want to take Arastradero 26 rather than Maybell because this would significantly improve the bicycle path along there. 27 28 I think you identified a very important point, which is that during the peak school commuting 29 hours you do have an increase and you do have the conflict of the automobiles and the cyclists 30 right at that intersection. So that is something that I know isn't addressed in the hybrid plan but 31 it really does need to be dealt with in tenns of the safety of what is being proposed here. So that 32 is another aspect that I think should be looked at as well as the access for the apartment 33 buildings. I think both you and the school district have begun to do that with really promoting 34 students taking Maybell through the back way, but it has also been identified that there are 35 bicycle riders coming from other areas that will need to do that tum. So something has to be 36 done there. I guess that is part of the details that you are going to have to come back to us with 37 that Commissioner Keller had really asked for. 38 39 With regard to the increased bicycle ridership I think the El1son's in their presentation had 40 pointed out what those numbers were. I think it went from 25 to 30 at Gunn High School. My 41 question is whether that is an anomaly in that because of higher gasoline prices last year fewer 42 students chose to drive so they bicycled. Now that the gasoline prices are back down again are 43 more kids inclined to drive again? I think also the number 88 bus was terminated. It was altered 44 a year ago. Again, are those numbers a beneficiary of that anomaly where the 88 bus circulation 45 was changed? I think is really an important question here. While I am on the topic I want to 46 thank the ElIson's for their presentation. I think you did a really great job in talking about Page 23 1 various aspects of the proposed plan. The only thing I have a concern with is that when you 2 were talking about the accidents you were using British and Australian figures and I know that 3 the Brits drive on the wrong side ofthe road. Thank you. 4 5 Chair Garber: Just before Commissioner Tuma, Commissioner Keller you had a follow up. 6 7 Commissioner Keller: Ijust want to point out that instead of speed tables or speed bumps on 8 Embarcadero Road as you leave the overpass over 101 by the gas station there are rows ofBOTS 9 dots. Those would not interfere with emergency vehicles. That is something that could be 10 considered along the four or five lane stretch west of Terman and Donald Drive, and would serve 11 to slow traffic down without impeding it. 12 13 Chair Garber: Commissioner Tuma followed by Fineberg. 14 15 Vice-Chair Tuma: I had a series of questions coming in tonight and you guys answered all of 16 them during the presentation or responses to some ofthe public. So thanks for that. 17 18 Like some ofthe other Commissioners have said I want to recognize sort of what I see as a very 19 good constructive interactive process between the City and the stakeholders. I want to put a little 20 bit of emphasis on this because I think it seems like it was a very constructive and data driven 21 process. I think there is a lot to be learned that goes beyond this process and this project for 22 other project where that sort of engagement happens. I think it is a model and obviously an 23 outcome that is desirable. So whatever we can do to encourage those types of interactions is 24 fantastic. 25 26 I think that what we have here is a conceptual plan. It looks great to me. I think there is a lot of 27 detail that will get driven out in your process. Frankly, I think it is time for us to get out ofthe 28 way and let you do your job. So great job so far and look forward to seeing the results halfway 29 through. 30 31 Chair Garber: Thank you. Commissioner Fineberg followed by Holman and then myself. 32 33 Commissioner Fineberg: I would like to start with a few questions about the Charleston project. 34 The reason I am asking about that is because I think there are some lessons and some issues 35 about schedule that if we can see the answers we have learned from Charleston they also apply in 36 some instances along Arastradero and the striping project we are looking at tonight. 37 38 Can you refresh us on roughly how long it took to go from concept/design to implementation of 39 the striping project and then what stage Charleston is at in terms of have the striping 40 improvements been made permanent? Ifthey are permanent is that with raised curbs or just 41 paint? Then if there will be permanent improvements made, that have not yet been, what is the 42 timeframe when they will be made? 43 44 Ms. Likens: The corridor plan was approved in 2004, I think. We got direction from the 45 Council to move forward with the implementation of the trail in December-January of2006. The 46 project was implemented by August. That was a very accelerated timeline. It was not ideal. It Page 24 1 was so abbreviated that it was extraordinary that it was done in time to have it bid and 2 implemented before school started in the fall of 2006. So that project is not the ideal way to go 3 about it. We would like to have more time to design this project and we are building into this 4 process almost a year to go through a detailed design and do it in a more leisurely deliberate 5 way. The Council did approve the striping plan on a permanent basis last May, in May of 2008. 6 So the next step for us to acquire funding to implement the permanent improvements, which 7 would be the raised medians. Again, we are looking for that funding. We have made overtures 8 to our legislators for funding for that project. That, if the funding were acquired and we based 9 the budget on the full implementation of raised medians, landscaping, enhanced lighting, 10 improved bike lane striping, and enhanced crosswalks again that would go through a detailed 11 design process and if there were issues that needed to be resolved we would deal with it in a 12 detailed design when we had a capital project to implement. 13 14 Commissioner Fineberg: So, on that last piece if money fell from the sky and were able to 15 obtain funding immediately then how long would it until the permanent improvements might be 16 implemented? 17 18 Ms. Likens: I would say it would probably be a design process that would take the best part of a 19 year or less. Depending upon if there were strings attached to the funding, ifit were stimulus 20 funding or something like that, we are committed to implementing it very quickly. I think 18 21 months to two years would be something we would strive for. I can't prejudge what the timeline 22 would be given that it would be a Public Works type ofproject and would have to be built into 23 our Capital Improvement Program budget and would have to be funded, and if there were local 24 match. There are a lot of issues related to how it would get scheduled and implemented within 25 our own workforce and workload responsibilities too. 26 27 Commissioner Fineberg: Okay, so it sounds like if money were to appear miraculously we 28 would be looking at a 2013 implementation that gives us a year for additional implementation 29 maybe 2014 or 2015 if things go longer. The reason I am asking this is that is telling me that 30 from 2004 when you had your plan to 2013 or 2015 it is a ten-year life,just so I get a sense of 31 scale. So if we are looking at that on the Charleston project if that ran on a comparable 32 timeframe plus I padded for that extra year you talked about we would be looking at 33 implementation of permanent improvements ten years from whenever this is moving. 34 35 Ms. Likens: I really can't answer that question. I don't know what the funding would be and I 36 can't speak for Public Works in terms of how we would implement the project. Some of the 37 delay in the Charleston project was related to funding and acquisition of funding to implement 38 the trial. 39 40 Commissioner Fineberg: So I take it back, it might be possibly shorter. All right thank you. 41 That helps greatly in understanding when permanent implementation might come about. 42 43 Onto a slightly different line of questions. Is there anything that can be done about motorists 44 who do not understand or respect the meaning of double-double lines? Throughout the 45 Charleston corridor there are many people who use the islands of double-double as either driving 46 lanes to get to a left turn lane or driving lanes to then make a left tum into their driveway. I see Page 25 1 that happening on the Mountain View segment where people tum left into Charleston Plaza, the 2 other Charleston that isn't Mountain View. I see it all along the corridor between Piazza's and 3 Alma. People use it to pass to get into their left tum lanes, and I have even seen numerous times 4 at El Camino when you are coming from the foothills heading east people drive in the wrong 5 direction. They cross the double lines drive into oncoming traffic ifthere is no car there so they 6 can get to the left tum lane at El Camino to head north on El Camino. So are there measures that 7 can be implemented whether it is rumble strips, MOTS dots, something that tells noncompliant 8 motorists you don't drive on double-doubles. 9 10 Ms. Likens: That is a good question. 11 12 Mr. Kruger: Before I was a consultant I was a City Traffic Engineer in both San Leandro and 13 Campbell. We put in what we call chatter bars in striped islands, medians, etc. There were 14 claims made against the city that were successful because bicyclists were hitting the chatter bars. 15 So essentially the only thing that you generally do is you put in the diagonal or the white stripes 16 in the middle of the island that more or less tell the motorist that this is not a two-way left tum 17 lane. As with anything including income tax or anything else what you are trying to do is cut 18 down the proportion of traffic that does it. So the double-double yellow line cuts down the 19 proportion but until you actually put an island there people are going to do it. When we were 20 researching Hoover School and how do you get people in there I watched a lot of creative 21 driving. Essentially there is less creative driving with those regulations in effect. Most drivers 22 do obey the law. It is the 85th percentile speeds, etc. So the answer to your question is there is 23 no way to do it. If the City tries more aggressive measures they are at risk in terms of tort 24 liability. So I think the double-double yellow lines plus maybe the stripe crosshatches or 25 something like that gives a message to motorists and it will cut down undesirable driving 26 behavior but it won't eliminate it. 27 28 Commissioner Fineberg: Thank you. Are there any or how many intersections in Palo Alto 29 handle 1,200 cars in 20 minutes? Maybe the entrance to Paly? 30 31 Ms. Likens: I doubt that Paly has the same issues because it has more than access point. It 32 actually has access points on three streets El Camino, Embarcadero, and Churchill. The problem 33 with Gunn High School is that there is only one way to get in and out of that campus. So it is all 34 funneled through one driveway. 35 36 Commissioner Fineberg: So would it be a fair assessment that for 20 minutes a day the 37 intersection of Arastradero at the Gunn driveway has the single highest volume of traffic 38 anywhere in the city? 39 40 Ms. Likens: I don't know that because we have other major intersections like Page Mill and 41 Foothill and Page Mill and El Camino. We haven not analyzed that. 42 43 Commissioner Fineberg: Okay. So maybe it is fair to characterize it as one of the top. The 44 reason I am asking that is when one thinks about investment in traffic infrastructure, and I don't 45 know what the correct investment would be or what the correct improvement would be, it seems 46 to me that an intersection that carries the highest volumes of traffic and has one of the greatest Page 26 1 numbers of student commutes flowing through it that that is a place where we would prioritize 2 our investment of capital improvement funds. How to accomplish those improvements I need to 3 leave for others to determine but I don't see logic in saying because it is only 20 minutes it is not 4 important. That is probably one of the 20 most important minutes in city traffic minutes. There 5 are not going to be many other places that have that critical of a 20 minutes. If there is any way 6 that thinking of it in terms of the substantive gain rather than it is only 20 minutes I would 7 encourage that. 8 9 Then another question is what can this Commission do, how can we facilitate our Planning Staff 10 to facilitate the improvements at the intersection of EI Camino and Arastradero and their work 11 with Caltrans? What can we do to help? 12 13 Ms. Likens: I think that you raising the issue would be something if you wanted to include it in 14 your comments to the Council. It is not something we are unaware of, we have been working on 15 this trial striping and I think our next step is to move forward and work more assiduously with 16 Caltrans and trying to move forward with a concept plan for that intersection. That will involve 17 a lot of dialogue with Caltrans. So your support and your interest in this and bringing that to the 18 fore is a good thing. We will need to pursue it in any case. 19 20 Chair Garber: Commissioner Lippert. 21 22 Commissioner Lippert: Just echo Commissioner Fineberg's comment there. We recently 23 reviewed the affordable housing across the street from Arbor Real and we had raised several 24 concerns regarding the intersection ofEI Camino and Charleston and Arastradero in relationship 25 to that development at I think Recording for the Blind. Maybe that might also be added to that 26 comment list in terms of being able to motivate Council to look at that. 27 28 Chair Garber: Commissioner Fineberg. 29 30 Commissioner Fineberg: Thank you for answering the questions I have asked. I would like to 31 echo Vice-Chair Tuma's comments that this is a project waiting to happen. I am excited that it 32 has the potential to create the improvements, enhance pedestrian and bicycle safety, and do it 33 without slowing the throughput of the vehicle traffic. I think that as South Palo Alto grows the 34 demands on that corridor will become greater and greater so I am thrilled to see the work starting 35 to bring about the improvements and the enhanced safety. Thanks. 36 37 Chair Garber: Commissioner Holman. 38 39 Commissioner Holman: Like Commissioner Tuma my questions have really been answered. So 40 I have just a couple of comments. This is not a part ofthe project but I have wished for some 41 good while there was a better way to connect going through the backside and along the edge of 42 Gunn High School to connect that someway going south for a bicycle and pedestrian route to 43 eliminate some car trips whatsoever. If! was sending kids to Gunn High School or if! had 44 opportunity to travel that way myself I would absolutely go through Boll Park and past the 45 donkeys and along the creek. What a wonderful route to take. So if there is ever any Page 27 1 opportunity to explore how we might get a connector going further south across the other side of 2 Arastradero. That would be a really wonderful project to pursue. So that is one comment. 3 4 The other comment is just high, high praise for the ElIson's and all the others who have worked 5 to increase the bike ridership to Gunn. Also at least as high of praise for Ms. Likens and Mr. 6 Kruger because the obvious cooperative enterprise that you have undertaken with the community 7 along the course ofthis project and the way you have communicated with Commissioners this 8 evening with your plain-speaking responses in a highly technical project as transportation and 9 traffic analysis is, is very, very appreciated and highly commended. The importance of it cannot 10 be overstated in any project. It sets a high mark and a great example so thank you very much. 11 12 Chair Garber: So is there anything left to say? People have taken my praise, have taken my 13 questions, have taken my comments. There is nothing left to say. I am sure Commissioner 14 Keller will have something when he gives us a motion. Commissioner Keller. 15 16 MOTION 17 18 Commissioner Keller: Thank you Chair Garber. I move that we recommend Staff 19 recommendation as part one. The second part is we encourage the evaluation ofPTC and public 20 comments as part of the detailed design. The third thing is that a PTC liaison be added to the 21 stakeholder group to seeing the thing going forward. The fourth item is that as a report item, 22 which does not an agenda item but just give us a report to the Commission when the final design 23 is done so we could see it. So just as we got a copy in our most recent packet a final version of 24 the Baylands Master Plan we should get a copy ofthis as it comes out. That is my motion. 25 26 SECOND 27 28 Commissioner Holman: Second. 29 30 Chair Garber: Second heard by Commissioner Holman. Would the maker ofthe motion care to 31 address their motion? 32 33 Commissioner Keller: Well, I have already given some thanks before. With respect to 34 increasing bicycle use at Gunn High School particular thanks should go to Barb Zimmer who has 35 been involved in the Pedal for Prizes effort for the last four years. Her twin daughters who live 36 near me just graduated from Gunn High School. I understand that she has been successful in 37 recruiting a replacement, which is also very important. 38 39 I think that this is a very important project. It has taken a long time. One ofthe reasons for the 40 delay I understand is that there was an effort to accelerate the utility work that was planned for 41 Arastradero Road so that it would precede the repaving and restriping as opposed to follow it. 42 So here we have a situation in which the Utilities and Public Works, and the Transportation 43 Departments are actually working together and that is fantastic. I think we need more of that 44 cross-organizational cooperation and coordination. So that is one of the reasons why there was 45 an extra year delay in there. 46 Page 28 1 Two comments about things that were made earlier. With respect to the reasoning behind a 2 double yellow as opposed to double-double yellow between EI Camino and Wilkie doesn't seem 3 to hold water from my perspective because one could easily go around the block ofEI Camino, 4 EI Camino Way, I believe there is a street through there and I forget what it is called I think it is 5 James, and then you can go Wilkie, and then on Arastradero. So you can go around that block 6 instead of making a left turn in either direction. That to me is no more onerous, in fact it is less 7 onerous than a lot of the left tum difficulty that one has on Charleston east of Alma between 8 Alma and Fabian. So I think I would recommend reconsideration of whether that should be 9 double-double. There is an extremely easy way to go around the block there. 10 11 Also, in tenns of the issue of temporary medians, I notice that there is some sort of temporary 12 median at Louis Road just logical north of Charleston, which is intended to try to slow down 13 traffic as they make that right turn so they don't swerve into oncoming traffic. It is basically 14 these little raised things and similar raised things also exist between the Alma Street service road 15 and main Alma Street. So perhaps those things can be put in the interim in the median before 16 doing a pennanent structure so we can see that it actually works with this kind of confinement on 17 the Charleston portion before we finalize the raised kind of stuff on there. 18 19 So I think that this is a wonderful thing to see move forward. I think that there are obviously a 20 lot of people who worked together, good cooperation between the school district, the community, 21 Staff, consultants, and I think we have a wonderful model project. I am closing by saying I think 22 that the ElIson's have done a great job in tenns of putting a lot of energy into this. Penny ElIson 23 has been PTA Traffic Safety Rep for a number of years. I don't know how many more years she 24 is going to continue doing that but I can say that this will be quite a legacy for her beside the 25 other additional things of increasing bicycle us and pedestrian use at all of the schools. I think 26 that the school district and the City owe a great deal of debt to her for this and other things. 27 Thank you. 28 29 Chair Garber: Would the seconder like to speak to their second? 30 31 Commissioner Fineberg: I have a point of clarification. 32 33 Chair Garber: One moment. Let's let the seconder and then we will go to discussion. 34 35 Commissioner Holman: I have just a friendly amendment to add ifl might. That is to extent that 36 we cannot direct but encourage Staff to undertake the more intense dialogue with Caltrain to 37 improve the EI Camino and CharlestonlArastradero intersection as Staffhad suggested earlier. 38 39 Commissioner Keller: I think that is fine. 40 41 Commissioner Holman: Okay. That is my only amendment. I am happy to support the motion 42 for all the reasons that have been stated. I don't need to go through all of those. Just having to 43 do with the dialogue with Caltrans about this intersection if people are motivated by praise I 44 think you could be launched into entering into those discussions. All praise well deserved. 45 46 Chair Garber: Commissioners, discussion? Commissioner Fineberg. Page 29 1 2 Commissioner Fineberg: In Commissioner Keller's comments about the motion he made several 3 additional recommendations. Are those recommendations simply matters of discussion or were 4 they meant to be part ofthe motion, which was simply recommend to accept Staffs 5 recommendation? 6 7 Commissioner Keller: The motion has now five parts. Move the Staff recommendation. 8 Encourage Staffto evaluate PTC and public comments in the detailed design. To have a PTC 9 liaison to the stakeholder group to report back to the Commission in a report but not an agenda 10 item for the final design. Commissioner Holman's amendment to encourage working with 11 Caltrans to improve the Charleston! Arastradero -E1 Camino intersection. 12 13 Commissioner Fineberg: Thank you. 14 15 Chair Garber: If there is no more discussion the only thing I would add is that if the motion does 16 pass that Commissioner Keller will be volunteered to be the liaison from the Commission. 17 18 Commissioner Lippert: Point of order, I believe with him serving on the Gunn Committee that 19 would be a conflict of interest and double-dipping, which means that he gets to give twice as 20 much comment. 21 22 MOTION PASSED (6-0-0-1, Commissioner Rosati absent) 23 24 Chair Garber: All those in favor? (ayes) All those opposed? The motion passes unanimously 25 with Commissioners Holman, Keller, Garber, Tuma, Fineberg, and Lippert voting yea and no 26 nays. 27 28 Ms. Likens: A point of privilege if! may since this is my last Commission meeting. I wanted to 29 recognize all ofthe members ofthe stakeholder committee. I should have done that at the outset 30 ofthis meeting but Penny ElIson, her husband, the Lum's are still in the audience, there were 31 several other members ofthe stakeholder committee. I am not sure if anybody else is still here. 32 33 Chair Garber: Would you raise your hands please? 34 35 Ms. Likens: They have done yeoman's work. They have stuck with us. They have tested us. 36 They have asked us lots of questions and made us delve deeper into the process, but all due 37 respect to the work that they have done and steadfast support. Thank you. 38 39 Chair Garber: And to you, Gayle for delivering yet one more highly valued project. 40 Commissioner Keller. 41 42 Commissioner Keller: May I recommend that when the Staff Report or CMR goes to Council on 43 this item that the list of stakeholders who worked on this be part ofthat Staff Report. 44 Page 30 1 Chair Garber: Great idea. Gayle there is a card from the Commission to you here in honor of 2 your last meeting. The image that you will find on it is courtesy of Commissioner Lippert, 3 which I suspect you will find very pertinent to your role. Page 31 ATTACHMENT G Betten, Zariah Subject: FW: Arastradero Road Re-striping Plan and Expanding the Scope to Include the EI Camino Real -Arastradero Intersection From: Cedric de La Beaujardiere [maiJto:cedric.bike@gmaiJ.com] Sent: Tuesday, July 14, 2009 9:06 AM To: Rius, Rafael Cc: Paul Goldstein; Swent, Richard Subject: Arastradero Road Re-striping Plan and Expanding the Scope to Include the EI camino Real -Arastradero Intersection To: Palo Alto City Council Re: Arastradero Road Re-striping Plan and Expanding the Scope to Include the EI Camino Real - Arastradero Intersection Honorable members of the Palo Alto City Council: The Arastradero Road Re-striping Plan will come before you on July 27th for discussion and action. PABAC unanimously endorses the Hybrid Alternative of the Charleston-Arastradero Trial Traffic Improvements Conceptual Plan of May 14th, 2009. To make the corridor more bicycle friendly, PABAC has made a number of suggestions which have been incorporated into the Hybrid Alternative. We believe that the Hybrid Alternative provides for the safest bicycle conditions. We extend our thanks to Rafael Rius and to the rest of the city staff for incorporating our suggestions and for all of their hard work on this project. The striping plan does not address the intersection of EI Camino Real and Arastradero, which has significant safety issues for bicyclists young and old. PABAC recommends that the scope of this project be expanded to include the EI Camino Real -Arastradero intersection. Specifically, PABAC unanimously endorsed the following resolution: Whereas there are known major problems at EI Camino Real's intersections with Charleston/Arastradero, Embarcadero Road, and Stanford Avenue, and whereas there is already a plan to address Arastradero Road's striping up to but not including the EI Camino Real intersection, therefore the Palo Alto Bicycle Advisory Committee recommends that the time is propitious to address the EI Camino Real-Arastradero intersection striping, and we urge the City Council to direct Transportation Staff to return to council with a plan and schedule for working with CalTrans to improve the safety of this intersection. PABAC looks forward to reviewing specific improvement plans for this intersection. Thank you for your time and attention, and for your continued support of making Palo Alto a better and safer city for bicycling and walking. Sincerely, Cedric de La Beaujardiere Chair, Palo Alto Bicycle Advisory Comrnittee 7/2112009 TO: HONORABLE CITY COUNCIL FROM: CITY MANAGER DATE: JULY 27, 2009 REPORT TYPE: Reports of Offieials DEPARTMENT: ADMINISTRATIVE SERVICES CMR: 328:09 SUBJECT: Adoption of a Resolution Authorizing the Issuanee and Sale of Water Revenue Bonds, Approving Indenture of Trust, Official Notice of Sale, Notice of Intention to Sell, and Official Statement, Approving the Form and Authorizing Execution of Documents Related to Bond Issuance; and Authorizing Official Actions Related Thereto EXECTIVE SUMMARY The City of Palo Alto does not have enough water to meet normal and emergeney demands if the Heteh Hetehy aqueduct system shuts down. Therefore, as part of the neeessary water system improvements identified in a report prepared for the City in 1999, the City needs to eonstruct a 2.5 million gallon underground water reservoir and pump station in Palo Alto to meet emergency water supply and storage needs. In addition to this water reservoir, the project includes the construction of several emergeney supply wells and the upgrade of five existing wells and the existing Mayfield Pump Station. On March 5, 2007, staff requested conceptual approval f!'Om the Council to move forward with financing of this project through a combination of reserves and bonds. Financing the capital costs over a twenty five year period is recommended to alleviate pressure on ratepayers. Staff is returning to Council for authorization to issue and sell Water Utility Revenue bonds. It is estimated that if bonds are sold as tax-exempt, such issuance will not exceed $35,500,000, or $37,500,000 if sold as taxable "Direct Pay Build America Bonds" (BABs). The bonds may be sold as a combination of tax-exempt and taxable BABs, whichever receives the lowest interest cost bid. Staff also needs Council to approve the required financial documents, and to take all necessary actions related to the bond sale. Proceeds from these bonds will be used over the next three years for extensions and improvements to the City's Water System. RECOMMENDATION: Staffrecommends that the City Council approve the attached resolution (Attachment A), to: I) Authorize staff to issue and sell tax exempt and/or taxable "Direct Pay Build America Bonds" (under the American Recovery and Reinvestment Act of 2009) Water Revenue Bonds, in a total amount not to exeeed $37,500,000, to finance City water system capital improvements. 2) Approve the Indenture of Trust, Official Notice of Sale, Notice of Intention To Sell, and Preliminary Official Statement; and authorize official actions related thereto. BACKGROUND The 1999 Water Wells Regional Storage and Distribution System Study (1999 study) analyzed the impact of a severe emergency on Palo Alto's water distribution system. A large earthquake, for instance, could result in a shutdown of the City's main water supply, the San Francisco Public Utilities Commission (SFPUC) Retch Retchy water system, for as long as 60 days. Coupled with the need to extinguish multiple fires in the hours immediately following such an earthquake, the City's water system would not be able to supply sufficient water to meet demands, even if extensive water conservation measures were implemented during the disaster. The study concluded that the best approach to providing basic water needs would be multifaceted, including the augmentation of the City's emergency water supply by constructing: an underground 2.5 million gallon reservoir with pump station; the rehabilitation of up to 5 existing water wells; construction of3 new wells; and the upgrade of the existing Mayfield Pump Station. Subsequent to the 1999 study, the Utilities Advisory Commission (UAC) and City staff undertook a series of steps to validate the recommendations of the study, including a 2-year review of the projeet, and additional study of alternative emergeney water supply recommendations and reservoir and well loeations. On December 13, 2004, the City Council held a study session on emergency preparedness issues, including the Emergency Water Supply and Storage Project. In February and March 200S, focus group meetings were held with participants from community and neighborhood groups, environmental groups and busin~sses. Ibc purpose of the public meetings was to elicit feedback from the community about the project and the location of potentiall'eservoirand well sites. On January 30, 2006, Council authorized preparation of an Environmental Impact Report (EIR) for the Project. A Notice of Preparation (NOP) and draft Project Description were issued in February of 2006. The UAC held a project scoping puhlic meeting 011 March 8, 2006 in compliance with the California Environmental QUality Act. On November 2, 2006, the City mailed a Notice of Availability (NOA) and advertised the NOA in local papers. The Draft ErR was circulated on November 8, 2006 for public review and comment. The Final Environmental Impact Report (FEIR) with responses to the public comments was circulated on February 8, 2007. Ibe Planning Commission held a public hearing for the FEIR 011 February 14, 2007 and recommended that Council certify the FErR. The Commission also recommended that the Council approve the staff-recommended reservoir and well site locations, the upgrade to the Mayfield pump station and the rehabilitation of up to five existing well sites. On March 5, 2007 (CMR 161:07), Council held a public hearing for the Emergency Water Supply Storage Project at which Council: I) adoptcd a resolution certifying the adequacy of the Environmental Impact Report (EIR); 2) adopted a resolution approving the project and designating the project sites, including El Camino Park as the preferred site for the new underground reservoir, pump station and well; 3) approved Park Improvement Ordinances for El Camino, Eleanor Pardee, Timothy Hopkins, Rinconada and Peers Park; and 4) directed staff to take appropriate steps to place an advisory measure on the ballot for November 6, 2007 for approval of placement of thc reservoir underneath EI Camino Parle Staff also requested conccptual approval from the Council to move forward with financing through a combination of reserves and bonds. Financing the capital costs over a twenty five year period is recommended to alleviate pressure on ratepayers by spreading the cost of these projects over a longer period. On July 9, 2007 (CMR 297:07), Council approved a resolution authorizing staff to place an advisory ballot measure on the November 6, 2007 ballot. The advisory measure asked voters whether an area under EI Camino Park should be used for an undergrotmd water storage reservoir and well to supply the City with water during an emergency, with the existing pump station replaced and all existing park facilities fully restored upon completion of constlUction. On November 7, 2008, the advisory ballot measure was approved by 91.84% of Palo Alto voters. On January 12, 2009, a key project milestone occurred when Council approved (CMR: 104:09) the Agreement to Grant Easements between the City and The Board of Trustees of Leland Stanford Junior University ("the Agreement") for five permanent easements required to move the proposed EI Camino Park Emergency Water Supply Storage Project forward. Owned by Stanford, EI Camino Park is under long-term lease to the City until 2033. The five easements, which will permit the construction, maintenance and operation in El Camino Park, are for: 1) a 2.5 million gallon underground reservoir; 2) a pump station and well; 3) a pipeline connecting the reservGir to the pump station; 4) an overflow pipeline; and 5) a water supply line. The purchase price of the easements under the Agreement is $3 million, which is the appraised fair market value, determined fi'om an appraisal completed by Hulberg and Associates. DISCUSSION Staff is l'etmning to Council for authorization to issue and sell Water Revenue bonds in an amount up to $37,500,000 of tax-exempt and/of taxable BABs, under the pfovisions of the American Recovery and Reinvestment Act of 2009, to approve the required financial documents, and to authorize all necessary actions related to the sale. Proceeds from these bonds will be used over the next three years for capital improvements discussed above, such as building an underground reservoir at EI Camino Park, rehabilitating existing water wells, constructing new wells, and upgrading the existing Mayfield Pump Station. The City expects to reccive bond proceeds in October 2009. The bonds may be issued as traditional tax-exempt bonds and/or as taxable BABs, under the federal provisions of the American Recovery and Reinvestment Act of 2009. Under the federal law which authorizes local agencies to issue BABs, a governmental purpose project that is eligible for tax-exempt financing can also be financed with taxable BABs. In return for issuing taxable bonds with higher interest rates, the City will receive a semi-annual cash subsidy payment from the United States Treasury equal to 35% of the interest payable on the BABs. The City's Financial Advisor recommends the City retain the option to request that bond bidders specify if their bid is for tax-exempt bonds, BABs, or a combination of both types of bonds. After considering the 35 percent federal cash subsidy for BABs, the bidder with the lowest interest cost on the bonds would be awarded the bonds. BABs require minimal paperwork twice a year with the U.S. Treasury for the receipt of the 35 percent of interest payment subsidy. To maximize the quality of the City's bond issuance, and to minimize interest expense, staff will deliver a ratings presentation to Standard and Poor's (S&P) and Moody's on August 31, 2009. The City Manager and staff from the Administrative Services and the Utilities Departments, as well as the City's bond counsel and financial advisor, will participate in the presentation. Information such as the financial condition of the City's water operations, the ability of this enterprise fund to repay debt, the status of the City's water operations contracts and commitments, and the pledges the City makes in its bond covenants will be presented to the ratings agencies. These agencies will be especially interested in the overall strength of the water reserves and the low amount of the City'S existing debt secured by the water enterprise. This information is factored into each agency's credit rating, which investors use in determining whether or not to buy the bonds and the interest rate on the bonds. A high credit rating results in lower interest costs and vice versa. On the 1995, 1999, and 2002 Utility Revenue and Refunding Bonds, the City received an underlying rating from Standard and Poor's (S&P) of AA+, AA-, and AA-, respectively. In April 2009, these bonds received a ratings upgrade from S&P to the highest possible rating (AAA). The utility markets have changed dramatically since the last bond issue, and while the City of Palo Alto's bond issues are looked upon favorably by the investment community, the rating agencies will re-examine the City's financial condition and potential risks. As soon as the ratings are received, staff will relay the results to Council. The covenants in the attached Indenture for the proposed bonds are similar in structure to those used for the 2002 Utility Revenue Bonds issued for water and gas capital improvements (CMR:456:01). The attached (Attachment A, Exhibit A) Indenture of Trust (Section 5.12 and 5.13) outlines the City's financial covenants. III general, the first and foremost guarantee the City is making is that the water system will generate sufficient charges/revenues, combincd with its available Rate Stabilization Reserve, to cover all of its eosts. To further enhance creditworthiness, there is a second assurance in the attached Indenture. It specifies that, in addition to having sufficient net revenue from the water system to pay principal and interest obligations, specific utility reserves (water, electric, and gas systems) will be maintained at a level at least five times the maximum annual debt device on all bonded debt secured by revenues of the City's water, gas, and electric systems. As a result of issuing the proposed 2009 bonds, the water utility will ineur estimated annual debt service of $2.4 million. When combined with current water debt service of $0.77 million, the water fund will have a total of annual debt service $3.17 million. Council approval is required to sell tax-exempt and/or taxablc BABs in an amount not to exceed $37,500,000 million, to finance City water system capital improvements. The City should receive proceeds from that sale in October 2009. The City's financial advisor (Stone & Youngberg) will assist staff in receiving and evaluating bids received from underwriters for thc CMR:328:Q9 bonds and in selecting thc optimal bid. The City utilizes a competitive sale process in which multiple bidders or underwriters submit bond purchase proposals. The underwriter with a bid resulting in the lowest interest cost to the City will be selected. Documents Submitted for Council Approval The Council must approve the attached Resolution before the 2009 Water Revenue bonds can be sold by a competitive sale. By approving this resolution, the City Council authorizes various City officials to sign and execute documents related to the bond sale. The Resolution also approves the following documents: • Preliminary Oflicial Statement containing and discussing information material to the offering and sale of bonds is in nearly final fOlm, but will be subject to changes deemed advisable by the City's financial advisor, disclosure counsel, bond counsel and the City Attorney, and to incorporate fiscal year 2009 financial and statistical information. • Indenture of Trust, between the City and U.S. Bank National Association, as uustee, under which the bonds will be issued, containing the terms of the bond issue, such as interest rates, maturity amounts, redemption features, and the creation of various funds and accounts. • An official Notice of Sale to the investment community seeking bids to be received at the offices of Stone & Youngberg in October 2009 • Notice ofIntention to Sell Bonds RESOURCE IMPACT No additional budget appropriation will be needed. Capital projects utilizing bond proceeds have been approved and incorporated in the 2009-10 Adopted Budget. In addition, Council approved, in concept, proj ects in 20 I 0-11 that will be bond funded. Issuance costs including bond and disclosure cO\ulsel, financial advisor, and rating agency fees will be paid through the sale of the bonds. A detailed cost breakdown is shown in Attachment B. Actual interest rate and precise debt serviee payments will not be known until competitive bids are received from the underwriting firms and a winning bid is determined. As stated above, it is estimated that the total annual debt service will be approximately $2.4 million and the true interest cost will not exceed 6.0 percent. At this time, the current interest rate enviro\U11ent is favorable fol' issuing debt. POLICY IMPLICATIONS This report is consistent with prior policy direction received from Council. TIME LINE August 31,2009 September 2009 CMR:328:09 Ratings presentations to Moody's and Standard and Poor's Ratings commitments received Page 5 of7 September 2009 October 2009 October 2009 November 2009 Bond sale notices published Bids received and bonds priced. Bonds awarded to winning bidder Pre-close and close bond issue. Deliver bond proeeeds Engineering design begins ENVIRONMENTAL REVIEW The issuanee of bonds does not meet the definition of a projeet pursuant to Public Resources Code § 21065, thus California Environmental Quality Act review is not required. On March 5, 2007 (CMR 161:07), Council held a public hearing for the Emergency Water Supply Storage Project at which Council adopted a resolution certifying the adequacy of the Environmental Impact Report (ErR). ATTACHMENTS Attachment A: Exhibit A: Exhibit B: Exhibit C: Exhibit D: Attachment B: CMR:328:09 Resolution of the Council of the City of Palo Alto Authorizing the Issuancc and Sale of Water Revenue Bonds, Approving Indenture of Trust; Official Notice of Sale, Notice of Intention to Sell, and Official Statement, and Authorizing Official Actions Related Thereto Indenture of Trust by and Between the City of Palo Alto and U.S. BanIe National Association as Tmstee Official Notice of Sale Notice ofIntention to Sell Preliminary Official Statement (POS) Containing and Discussing InfOlmation Material to the Offering and Sale of Bonds Sources and Uses.ofFunds Page 6 of7 PREPARED BY: TARUN NARAYAN Senior Financial Analyst g~~ -liOMJC·ANf(JfO'· ~ Senior Project Engineer DEPARTMENT HEAD APPROVAL; CITY MANAGER APPROVAL: CMR:328;09 JAMES KEENE City Manager Page 7 of7 ATTACHMENT A NOT YET APPROVED Resolution No. -=--Resolution of the Council of the City of Palo Alto Authorizing the Issuance and Sale of Water Revenue Bonds, Approving Indenture of Trust, Official Notice of Sale, Notice of Intention to Sell and Official Statement, and Authorizing Official Actions Related Thereto The Council ofthc City of Palo Alto does RESOLVE as follows: SECTION 1. Authority. The City is a chartered city and municipal corporation organized and existing under the constitution and laws of the State of California, and is duly empowered as a chartered city to exercise the powers reserved to it under said constitution with respect to municipal affairs. SECTION 2. Utility Systems. As an exercise of such powe1'8,the City has heretofore adopted the provisions of Chapter 12.28 (commencing with Section 12.28.010) of the Palo Alto Municipal Code (the "Law") which authorize the City, when the public interest and necessity require, by resolution, to issue its revenue bonds for the purpose of fmancing or refinancing the acquisition, construction, extension or improvement of any utility enterprise system or facility of the City. SECTION 3. Bonds Proposed. The City, after due investigation and deliberation, has determined that it is in the public interest of the City at this time to authorize the issuance of its revenue bonds (the "Bonds") under the Law, to (i) finance certain improvements to the City's water system (the "Water System"), (ii) establish a debt service reserve fund for the Bonds, and (iii) pay ecrtain costs of issuing the Bonds. SECTION 4. Bond Sale Documents. Quint & Thimmig, LLP, as disclosure counsel to the City ("Disclosure Counsel") has prepared and submitted to the City a preliminary Official Statement relating to the Bonds, a copy of which is on file with the City Clerk, for distribution to municipal bond broker-dealers, banking institutions and members of the general public who may be interested in purchasing the Bonds, and Jones Hall, A Professional Law Corporation, as bond counsel to the City ("Bond Counsel"), has prepared an official notice of sale of the Bonds (the "Official Notice of Sale") a copy of which is on file with the City Clerk, and a notice of intention to sell the Bonds (the "Notice of Intention"), a copy of which is on file with the City Clerk, for publication as herein provided. SECTION 5. Authorization of Sale. The Bonds may be issued as tax-exempt bonds ("Tax-Exempt Bonds"), as taxable Qualified Direct Payment Build America Bonds under the provisions of the American Recovery and Reinvestment Act of 2009 ("Taxable Build America Bonds") or as a combination of Tax-Exempt Bonds and Taxable Build Americi\ Bonds, if recommended by Stone & Youngberg LLC, the City's financial advisor (the "Financial 1 09()72I,yn605091Z NOT YET APPROVED Advisor"), as being the most cost-effective method of issuing the Bonds, so long as such recommendation is agreed to by the Administrative Services Director of the City. The Director of Administrative Services is hereby authorized to select a time and date at whieh bids will be received for the purchase of the Bonds as described in and subject to the terms and conditions of the Official Notice of Sale. The Director of Administrative Services is hereby authorized to award the sale of the Bonds to the bidder whose responsive bid for the Bonds results in the lowest true interest cost to the City, to be determined in accordance with the Official Notice of Sale; provided that the term of the Bonds shall not exceed 30 years, the true interest eost of the Tax-Exempt Bonds shall not exceed 6%, the true interest cost of the Taxable Build America Bonds (after taking into account any refundable eredits received by the City as a result of issuance of the Taxable Build America Bonds) shall not exceed 6%, and the discount on the Bonds shall not exceed 1.5% .. '111e principal amOlmt of the Tax-Exempt Bonds shall not exceed $35;500,000 and the principal amount of the Taxable Build America Bonds shall not exceed $37,500,000, which principal amounts may be decreased before the giving of notice of the sale of the Bonds as herein provided and the documents referenced in Section 4 hereof shall be revised accordingly. SECTION 6. Notice of Intention. The Director of Administrative Services of the City is authorized and directed to cause to be published the Notice of Intention in substantially the form on file with the City Clerk once in The Bond Buyer, in accordance with Section 53692 ofthe California Government Code. SECTION 7. Indenture of Trust. The Bonds shall be issued pursuant to an Indenture of Trust dated as of October 1, 2009 (the "Indenture"), by and between the City and U.S. Bank National Association, as trnstee (the "Trustee"). As provided in the Indenture, the Bonds shall be secured by the Net Revenues (as that term is defined in the Indenture) of the Water System. The Indenture, in substantially the form on file with the City Clerk, is hereby approved, and the Mayor, the City Manager and the Director of Administrative Services (each, an "Authorized Official") are hereby separately authorized to execute the Indenture when finalized, following the sale of the Bonds, and the City Clerk is hereby authorized and directed to attest said Authorized Official's signature. SECTION 8. Official Statement. The preliminary Official Statement describing the Bonds, in substantially the form submitted to the Council, is hereby approved, subject to whatever additions, deletions and corrections may be deemed advisable by the Authorized Official upon consultation with Disclosure Counsel, the Financial Advisor, Bond Counsel and the City Attorney. The Authorized Official is hereby separately authorized and directed, upon consultation with the Financial Advisor, Disclosure Counsel, Bond Counsel and the City Attomey, to approve such changes to the preliminary Official Statement as shall be necessary to cause such preliminary Official Statement to be brought into the form of a final Official Statement, and the Authorized Official is hereby authorized and direeted to execute and deliver copies of the final Official Statement to the purchaser ofthe Bonds, at the time of delivery of the Bonds. . 2 090121 syn 6050912 NOT YET APPROVED The Council hereby approves, and hereby deems nearly final within the meaning of Rule 15c2-12 of the Securities Exchange Act of 1934 (the "Rule"), the preliminary Official Statement. The Authorized Official is hereby authorized to execute an appropriate certificate stating the Couneil's determination that the preliminary Official Statement has been deemed nearly final within the meaning of the Rule. SECTION 9. Distribution of Official Statement and Official Notice of Sale. The Financial Advisor is hereby authorized and directed to cause copies of the preliminary Official Statement to be printed and mailed to prospective bidders for the Bonds, together with copies of the Official Notice of Sale, which Official Notice of Sale, in substantially the form on file with the City Clerk, is hereby approved. SECTION 10, Preparation of Bonds. The Director of Administrative Services is directed to cause the Bonds to be prepared in accordance with the provisions of the Indenture of Trust approved in Section 7 and to cause their execution by the proper officers of the City and authentication by the Trustee and to cause the Bonds to be delivered when so executed and authenticated to or on behalf of the purchaser or purchasers thereof, upon the receipt of the purchase price therefor. SECTION II. Execution of Documents. The Mayor, Vice Mayor, City Manager, City Clerk, DireCtor of Administrative Services, Director of Utilities, Director of Public Works, City Attorney and any and all other officers of the City are each authorized and directed in the name and on behalf of the City to execute and deliver any and all certificates, requisitions, agreements, notices, consents, warrants and other documents, which they or any of them might deem necessary or appropriate in order to consummate the lawful issuance, sale and delivery of the Bonds to the original purchaser thereof. II II II II II II II II II II 090721 syn 6050912 3 NOT YET APPROVED SECTION 12. Effective Date. This resolntion shall be effeetive upon the date of its adoption. INTRODUCED AND PASSED: AYES: NOES: ABSENT: ABSTENTIONS: ATTEST: City Clerk APPROVED AS TO FORM: Deputy City Attorney JONES HALL, A Professional Law Corporation William H. Madison Bond Counsel 090721 ,y.6050912 APPROVED: Mayor City Manager Direetor of Utilities Direetor of Administrative Services 4 26(l05-62 jHWHM EXHIBIT A INDENTURE OF TRUST by and between the , CITY OF PALO ALTO and U.S. BANK NATIONAL ASSOCIATION, as Trustee Dated as of October 1, 2009 Relating to City of Palo Alto $[Principal Amount] Water Revenue Bonds 2009 Series A 5/5/09 6/10/09 7/6/09 TABLE OF CONTENTS ARTICLE I DEFINITIONS; AUTHORIZATION AND PURPOSE OF SERIES A BONDS; EQUAL SECURITY SECTION 1.01. Definitions ............................................................................................................................. 3 SECTION 1.02. Rules of Construction ............................................ .. . ....................................... 12 SECTION 1.03. Auihorization and Purpose of Series A Bonds .. .. .. ....... 13 SECTI9N 1.04. Equal Security ........................................................ . ......... 13 ARTICLE II ISSUANCE OF SERIES A BONDS SECTION 2.01. Terms of Series A Bonds ...................................................................................................... 14 SECTION 2.02. Redemption of Series A Bonds ............................................................................................ 16 SECTION 2.03. FOTm of Series A Bonds ........................................................................................................ 18 SECTION 2.04. Executiou of SeTies A Bonds ................................................................................................ 19 SECTION 2.05. Transfer of Series A Bonds ................................................................................................... 19 SECTION 2.06. Exchange of Series A Bonds ................................................................................................. 19 SECTION 2.07. Temporary Bonds .................................................................................................................. 19 SECTION 2.08. Bond Regish'ation Books ...................................................................................................... 20 SECTION 2.09. Series A Bopds Mutilated, Lost, Destroyed or Stolen ....................................................... 20 SECTION 2.10. Book Entry System .............................................................................................................. 20 ARTICLE III ISSUE OF SERIES A BONDS; PARITY BONDS SECTION 3.01. Issuance of Series A Bonds ................................................................................................... 23 SECTION 3.02. Application of Proceeds of Sale of Series A Bonds ........................................................... 23 SECTION 3.03. Reserve Account .................................................................................................................... 23 SECTION 3.04. 2009 Water Project Fund ....................................................................................................... 23 SECTION 3.05. Cost of Issuance Fund ........................................................................................................... 24 SECTION 3.06. Issuance of Parity Bonds ....................................................................................................... 24 SECTION 3.07. No Additional Prior Lien Bonds ......................................................................................... 26 SECTION 3.08. Subordinate Debt ................................................................................................................... 26 SECTION 3.09. Validity of Series A Bonds .................................................................................................... 26 ARTICLE IV PLEDGE OF NET REVENUES; FUNDS AND ACCOUNTS SECTION 4.01. Pledge of Net Revenues, Water Revenue Fund ................................................................ 27 SECTION 4.02. Receipt and Deposit of Revenues ........................................................................................ 27 SECTION 4.03. Establishment of Funds and Accounts and Allocation of Revenues Thereto ............... 27 SECTION 4.04. Application of Debt Service Fund ....................................................................................... 28 SECTION 4.05. Application of Reserve Account. ......................................................................................... 29 SECTION 4.06. Application of Redemption Account. ................................................................................. 29 SECTION 4.07. Surplus .................................................................................................................................... 29 SECTION 4.08. Investments ............................................................................................................................ 29 SECTION 4.09. Valuation; Replenishment of Reserve Account; Investments ......................................... 30 • ARTICLE V COVENANTS OF THE CITY; SPECIAL TAX COVENANTS SECTION 5.01. Punctual Payment; Compliance With Documents ........................................................... 32 - i - SECTION 5,02. Against Encumbrances, ... , .............. , ...... , .......... , .............. " .. ," .. " .. ,', .. " .. ,' ... " .. ," '" , .. " .. " .. " .. ,32 SECTION 5,03. Discharge of Claims, ........ , .............. , ...... , .......... ', ................ , .. , ........ ,', ...... , .. , ........ , ................ 32 SECTION 5,04, Acquisition, Construction or Financing of any Improvement to the Water System ... ,32 SECTION 5,05, Maintenance and Operation of Water System in Efficient and Economical Manner.", .. " .. " ............ , ......... , ................... , ............................................................................. 32 SECTION 5.06, Against Sale, Eminent Domain, ........................................................................................... 32 SECTION 5.07. Insurance ..... ,., .......... , .......... ', ............................... , ...................................... , .......................... 33 SECTION 5.08. Records and Accounts. , ..... , .................................................................................... , ............. 34 SECTION 5.09. Protection of Security and Rights of Owners ..................................................................... 34 SECTION 5.10. Against Competitive Facilities ................ ,., .......... ,., ... , ..................... , ........ , ............ ,.,., ......... 34 SECI'ION 5.11. Payment of Taxes, Etc ........................................................................................................... 34 SECTION 5.12, Rates and Charges ..... " ........ , ............ , .................... " ..................................... , .......... ,', ........... 34 SECTION 5.13. Maintenance of Available Reserves; Transfers Thereirom .............................................. 35 SECTION 5.14. No Priority for Additional Obligations .............................................................................. 35 SECTION 5.15. No Arbitrage .. " ........... , ........ , ..................... , ............ , .................. '., ............... , ............ ,., .......... 36 SECTION 5.16. Information Report. .... , ........ , ............ , ........ , .......... ,.,., ................ , ................................ , .......... 36 SECTION 5.17. Private Activity Bond Limitation ........................................................................................ 36 SECTION 5.18. Federal Guarantee Prohibition ............................................................................................ 36 SECTION 5.19. Further Assurances ............................................................................................................... 36 SECTION 5.20. Continuing Disclosure ......................................... , ...................... ' ............... , .............. , .......... 36 SECTION 5.21. Rebate Requirement. ................................. , ............ , .................. , .................. , .................... , ... 36 SECTION 5.22. Maintenance of Tax Exemption ................................................................. , ......................... 36 ARTICLE VI THE TRUSTEE SECTION 6,01. Appointment of Trustee ...................................................................................................... 37 SECTION 6.02. Acceptance of Trusts .......... , .................................................................................................. 37 SECTION 6.03. Fees, Charges and Expenses of Trustee .............................................................................. 39 SECTION 6.04. Notice to Bond Owners of Default ...................................................................................... 39 SECTION 6.05. Intervention by Trustee ....................................................................................................... .40 SECTION 6.06. Removal of Trustee ............................................................................................................. 40 SECTION 6.07. Resignation by Trustee .................................................................................. , ..................... .40 SECTION 6.08. Appointment of Successor Trustee ............................................ , ................. , ..................... .40 SECTION 6.09. Merger or Consolidation, ................................................................................................. , ... 40 SECTION 6.10. Concerning any Successor Trustee ...................................................................................... 41 SECTION 6.11. Appointment of Co-Trustee, ............................................................................................... .41 SECTION 6.12, Indemnification; Limited Liability of Trustee .................................................................. .41 ARTICLE VII MODIFICATION AND AMENDMENT OF THE INDENTURE SECTION 7.01. Amendment by Consent of Bond Owners ......................................................................... 43 SECTION 7.02. Amendment Without Consent of Bondholders ............................................................... ,.43 SECTION 7.03, Disqualified Bonds .............. " ........................................................ , ...................................... .43 SECTION 7.04, Endorsement or Replacement of Series A Bonds After Amendment ............................ ,44 SECTION 7.05, Amendment by Mutual Consent ......................................................................................... 44 ARTICLE VIII EVENTS OF DEFAULT AND REMEDIES OF BOND OWNERS SECTION 8.01. Events of Default and Acceleration of Maturities ............................................................. 45 SECTION 8.02. Application of Funds Upon Acceleration .......................................................................... 46 SECTION 8.03. Other Remedies; Rights of Bond Owners ........................................................................... 46 SEC!ION 8.04. Power of Trustee to Control Proo,edings ............................... , .......................................... 47 -ii- SEcnON 8.05. Appointment of Receivers .. " .. " .. " .. "" .. , ... , ... " .... ,.,." .. " .. " ..... ,"""""""""',." .... ,.,',., ..... , ... , .. 47 SECTION 8.06, Non-Waiver .. ".,., ... , ...... ,',., .. ,', .. ,"""""'",.,., ... "."."""""""""", .. """",.",., .. ,.,.,."".,.,.,.,.,,,,, . .47 SECnON 8.07. Rights and Remedies of Bond Owners ............................. " .................. "".""" ....... ",, ....... .48 SECTION 8,08, Termination of Proceedings. """''''',.""., .. " .. ", .. " .. ", .. " .. " .. """,,,,,,,,,,,,, ...... ,', .. ,""" .. " .. "" .. 48 ARTICLE IX MISCELLANEOUS SECTION 9.01, Limited Liability of City, .. "" ........ ,,, .. ,," , ...... " """ " " ''' ............... " ........ , .. " .. ", ...... "" .... , ....... 49 SECTION 9.02, Benefits of Indenture Limited to Parties .. " " .......... " .. " .................................... " .. ,,,,,,, .. ,, .. .,49 SECTION 9.03, Discharge of Indenture ........... ,,, ..... ,, .. ,.,"" "'" " .. " .. , "" ................ , .. " .. " ...... , .. "" .. ," "" ", , .. "..49 SECTION 9,04, Successor Is Deemed Included in All References to Pt'edecessor. ............. " .... " ... "" ... , .. 50 SECTION 9,05, Content of Certificates, , .. ,: .. "''',, ......... ,'' " ...... , ........ , " " " " ............. ,," .... ,,",,",. , .. ,' ,,,,,,,,,,.,, .. ,,50 SECTION 9,06. Execution of Documents by Bond Owners ... """."" ..... , ..... ,,, .. ,,", ...... ,,,, ... ,, .. ,,,, ........ ,, ...... 51 SECTION 9,07. Waiver of Personal Liability, , .. " ................. """ .. " .......... ,,, .. ,,,,,,,, ................ ,,,, .. ,, .. ,,, .. ,, .. ,,,..5'1 SECTION 9.08. Partial Invalidity, ..... , ............. ", .. " .. ", ... , ... " .. ,., .. " .. ", .. " .. """",.",.""""" .. " .. ", .. "",., .. " ... , .. ",51 SECTION 9,09, Desh'uction of Cancelled Series A Bond8 .. " .................... , ................. " .. " .. " ....................... 52 SECTION 9,10. Funds and Accounts, "',""""""', .. ,., ..... "', .. ,', .. " .. " .. ,', .. ,, .. ,, ... , ... """" .. " .. " .. ", .. " ... " ...... , ..... ,52 SECTION 9,11, Notices, ... , ... , .... , .. ", .. ,"", .. " .. ,""', .. " ... " .. ", .. " .. " ... , ... , .. """"""".,,,,,,,,,,,,,,,,,,,,.,,,,,, .. ,,,,,,,,,, ... ,,.52 SECTION 9,12, Unclaimed Moneys, ''',,'''',,'''' '''''''":,,.,,'''''''' ... "",,., '"''''''''''''" ... ,''''''''''''''''' '''"."" ............ .52 SECTION 9,}3, Execution in Several COllnterpalis ... ,., ........ , ............ , ................. ,"''''''''''''''''" ... ,' ........ , .. , .. .52 SECrrON 9.14. Governing Law, ................ ",,,, '''"."',.,,, ......... , ............ , .... ,,, .... ,, .... ,"""""""''''''''',.,, ...... , ..... .53 SECTION 9,15. Payment on Business Days ... """"",,,, ...... ,,,,, ...... , ...................... ,,, .... ,, .. ,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,.53 EXHIBIT A: EXHIBITB: FORM OF SERIES A BOND DESCRIPTION OF 2009 WATER PROJECT ~ iii - INDENTURE OF TRUST THIS INDENTURE OF TRUST, dated as of October 1, 2009, by and between the CITY OF PALO ALTO, a chartered city and municipal corporation organized and existing under the constitution and laws of the State of California (the "City"), and U.s, Bank National Association, a national banking association organized and existing under the laws of the United States of America, with a co.rporate nust office in San Francisco, California, and being qualified to accept and administer the trusts hereby created, as trustee (the "Trustee"); WITNESSETH: WHEREAS, the City is authorized pm-suant to the proVISIons of Chapter 12.28 (commencing with Section 12.28.010) of the Palo Alto Municipal Code, enacted pursuant to the charter of the City, to issue its revenue bonds for the pm-poses of financing improvements to an enterprise of the City; WHEREAS, the City has heretofore authorized, issued and sold $8,640,000 principal amount of its City of Palo Alto Utility Revenue Bonds, 1995 Series A (the "1995 Bonds"), currently outstanding in the principal amount of $5,320,000 pm-suant to an Indenture of Trust, dated as of August 1, 1990, between the City and the Trustee, as successor trustee to Sccmity Pacific National Bank (the "1990 Indenture"), and a Second Supplemental Indenture of Trust, dated as of February 1, 1995 (the "Second Supplemental Indenture"), between the City and the Trustee, which supplements the 1990 Indenture; WHEREAS, as provided in the 1990 Indenture and Second Supplemental Indenture, the 1995 Bonds are secm-ed by a pledge of the City's Enterprise (the "Enterprise") as that term is defined in the 1990 Indenture, consisting generally of the City's water, gas, electric, wastewater and storm water systems; WHEREAS, the City has heretofore authorized, issued and sold $26,055,000 principal amount of its City of Palo Alto Utility Revenue Bonds, 2002 Series A (the "2002 Bonds"), cU1'l'entiy outstanding in the principal amount of $19,690,000 pursuant to an Indenture of Trust, dated as of January 1, 2002, between the City and the Trustee (the "2002 indenture"); WHEREAS, the proceeds of the 2002 Bonds were expended for improvements to the City's Gas System and WateI'System (as those terms are defined in the 2002 Indenture), and were secured by a pledge of the Net Revenues of the Gas System and Net Revenues of the Water System (as those terms are defined in the 2002 Indenture), subordinate to the pledge of the Net Revenues of the Enterprise to pay debt service on the 1995 Bonds; and WHEREAS, the Sel'ies A Bonds (as herein defined) will be issued on a parity with those 2002 Bonds, the proceeds of which were applied to finance the 2002 Water Project (the "2002 Water Revenue Bonds"); and WHEREAS, the City, after due investigation and deliberation, has determined that it is in the interests of the City at this time to provide for the issuance of its revenue bonds under this Indenture for the purpose of financing certain improvements to the Water System, and to that end the City Council has heretofore adopted its Resolution No. approving and 1 authorizing the issuance of its City of Palo Alto Water Revenue Bonds, 2009 Series A (the "Series A Bonds") for such purposes; WHEREAS, in order to provide for the authentication and delivery of the Series A Bonds, to establish and declare the tel'ms and conditions upon which the Series A Bonds are to be issued and secured and to secure the payment of the principal thereof and of the interest and premium, if any, thereon, the City Council has authorized the execution and delivery of this Indenture; WHEREAS, subject to the prior lien of the 1995 Bonds, all of the Series A Bonds will be secured by a pledge of the Net Revenues, as defined herein, on a parity with the 2002 Water Revenue Bonds, and certain other moneys and securities held by the City and the Trustee hereunder; and WHEREAS, all acts and proceedings required by law necessary to make the Series A Bonds, when executed by the City, authenticated and delivered by the Tmstee and duly issued, the valid, binding and legal special obligations of the City, and to constitute this Indenture a valid and binding agreement for the uses and purposes herein set forth, in accordance with its terms, have been done and taken; and the execution and delivery of this Indenture have been in all respects duly authorized; NOW, THEREFORE, THIS INDENTURE WITNESSETH, that in order to secure the payment of the principal of and the interest and premium (if any) on all Series A Bonds at any time issued and Outstanding under this Indenture, according to their tenor, and to secure the performance and observance of all the covenants and conditions therein and herein set forth, and to declare the terms and conditions upon and subject to which the Series A Bonds are to be issued and received, and in consideration of the premises and of the mutual covenant~ herein contained and of the purchase and acceptsnce of the Series A Bonds by the Owners thereof, and fol' other valuable considerations, the receipt whereof is hereby acknowledged, the City does hereby covenant and agree with the Trustee, for the benefit of the respective Owners from time. to time of the Series A Bonds, as follows: 2 ARTICLE I DEFINITIONS; AUTHORIZATION AND PURPOSE OF SERIES A BONDS; EQUAL SECURITY SECTION 1.01. Definitions. Unless the context otherwise reqnires, the terms defined in this Section shall for all purposes of this Indenture and of any Parity Bonds Instrument and of the Series A Bonds and of any certificate, opinion, request or other documents herein mentioned have the meanings herein specified. H A<:iclitiQ!I<iI Allowance" means an allowance for earnings arising from any increase in the Charges which has become effective prior to the incuning of such additional indebtedness but which, during all or any part of such Fiscal Year or such twelve (12) month period, was not in effect, in an amount equal to the amount by which the Net Revenues would have been increased if such increase in Charges had been in effect during the whole of such Fiscal Year 01' such twelve (12) month period, all as shown in the written report of an Independent Consultant engaged by the City "Authorized Investments" means any of the following, but only to the extent that the same are acquired at Fair Market Value, which at the time of investment are legal investments under the laws of the State of California and permitted under the City's investment policy for the moneys proposed to be invested therein: (a) direct obligations of (including obligations issued or held in book entry form on the books of) the Department of the Treasury of the United States of America; (b) obligations of any of the following federal agencies which obligations represent full faith and credit of the United States of America, including: (i) Export- Import Bank; (il) Farm Credit System Financial Assistance Corporation, (iii) Farmers Home Administration; (iv) General Services Administration; (v) U.S. Maritime Administration; (vi) Small Business Administration; (vii) Government National Mortgage Association (GNMA); (viii) U.S. Department of Housing & Urban Development (PHA's); (ix) Federal Housing Administration and (x) Federal Financing Bank; (c) senior debt obligations rated "Aaa" by Moody's and "AAA" by S&P issued by the Federal National MOl,tgage Association or the Federal Home Loan Mortgage Corporation, and obligations of the Resolution Funding Corporation (REFCORP); (d) U.S. dollar denominated deposit accounts, federal funds and banker's acceptances with domestic commercial banks (including the Trustee and its affiliates) which have a rating on their short term certificates of deposit on the date of purchase of "P_I" by Moody's and "A-1" or "A-l+" by S&P and maturing no more than 360 days after the date of purchase, provided that ratings on holding companies are not considered as the rating of the bank; 3 (e) commercial paper which is rated at the time of pmchase in the single highest classification, "P-1" by Moody's and "A-l+" by S&P, and which matures not more than 270 days after the date of purchase; (f) investments in a money market fund rated "AAAm" 01' "AAAm-G" or better by S&P, including any such money market fund from which the Trustee or its affiliates receive fees for services to such fund; (g) pre-refunded municipal obligations defined as follows: Any bonds or other obligations of any state of the United States of America or of any agency, inshumentality or local govemmental unit of any such state which are not callable at the option of the obligor prior to maturity or as to which irrevocable instructions have been given by the obligor to call on the date specified in the notice; and (i) which are rated, based upon an irrevocable escrow account or fund (the "escrow"), in the highest rating category of Moody's and S&P or any successors thereto; or (ii)(A) which are fully secmed as to principal and interest and redemption premium, if any, by an escrow consisting only of cash or obligations described in paragraph (a) above, which escrow may be applied only to the payment of such principal of and interest and redemption premiUm, if any, on such bonds or other obligations on the maturity date or dates thereof or the specified redemption date or dates pursuant to such irrevocable instructions, as appropriate, and (E) which escrow is sufficient, as verified by a nationally recognized independent ceI'tified public accountant, to pay principal of and interest and redemption premium, if any, on the bonds or other obligations described in this paragraph on the maturity date or dates thereof or on the redemption date or dates speCified in the irrevocable instructions referred to above, as appropriate; (h) general obligations of states with a rating of at least "A2j A" 01' higher by both Moody's and S&P; (i) inveshnent agreements: (1) with financial institutions whose long term rating is at least ; or (2) which are fully collateralized with securities described in paragraphs (a) or (b) of this definition; (j) the Local Agency lnveshnent Fund maintained by the State of California, to the extent any inveshnents of moneys held by the Trustee may be made and withdrawn directly by, and in the name of, the Trustee; and (k) the California Asset Management Program (CAMP). u Authorized Official" means the City Manager, Director of Administrative Services or Assistant City Manager of the City, or any other officer of the City duly authorized by the Council for that purpose. u Available Reserves" means funds held in the City'S: 4 (i) Rate Stabilization Reserve for the Water System, (ii) Distribution Rate Stabilization Reserve for the Electric System, (iii) Distribution Rate Stabilization Reserve for the Gas System, (iv) Supply Rate Stabilization Reserve for the Electric System, (v) Supply Rate Stabilization Reserve for the Gas System, and vi) the Electric System's Calaveras-Stranded Costs I{eserve; and includes the above numerated funds, even though given a different name by the City Council of the City, as well as newly created funds of the City which create reserves for the Systems listed above, and into which monies have been transferred from the above Funds. "Average Annual Debt Service" means the total aggregate Debt Service for the entire period during which the Bonds are Outstanding, divided by the number of Fiscal Years or portions thereof during which the Bonds are Outstanding. "Bond COli.!}!!.!!.!" means any attorney at law or firm of attorneys, of nationally recognized standing in matters pertaining to the federal tax exemption of interest on bonds issued by states and political subdivisions, and duly admitted to practice law before the highest court of any state of the United States of America. "Bond Law" means the charter of the City and the proVISIons of Chapter 12.28 (commencing with Section 12.28.010), of the Palo Alto Municipal Code, all as in effect on the Closing Date. "~.Qnd Registration Books" means the books maintained by the Trustee pursuant to Section 2.08 for the registration and transfer of ownership of the Series A Bonds. "13(}nds" means, collectively, the 2002 Water Revenue Bonds, the Series A Bonds, and any Parity Bonds issued and at any time Outstanding hereunder and under a Parity Bonds lnsh'ument. "Bond Year" means the twelve-month period beginning on the anniversary of the Closing Date in each year and ending on the day prior to the anniversary date of the Closing Date in the following year except that (i) the first Bond Year shall begin on the Closing Date, and (ii) the last Bond Year may end on a redemption date prior to maturity of the Series A Bonds. "Business Day" means any day other than a Saturday, Sunday or a day on which the Tmstee is authorized by law to remain closed. "Certificate of the City" means a certificate in writing Signed by the City Manager, Director of Administrative Services or Assistant City Manager of the City, or by any other officer of the City duly authorized by the Council for that purpose. "Char~es" means fees, tolls, assessments, rates and rentals prescribed under the Bond Law or any other law of the State by the Council for the services and facilities of the Water System furnished by the City. 5 \ "City" means the City of Palo Alto, a chartered city and municipal corporation organized and existing under the Constitution and laws of the State, and any successor thereto. "Closing Date" means the date upon which there is an exchange of the Series A Bonds for the pTOceeds representing the purchase of such Series by the Original Purchaser thereof. "!:()st of Issuance Fund" means the Fund by that name established pursuant to Section 3.05. "Costs of Issuance" means all expenses incurred in connection with the authorization, issuance, sale and delivery of the Series A Bonds, including but not limited to compensation, fees and expenses of the City and the Trustee and their respective counsel, compensation to any finandal consultants and underwriters, legal fees and expenses, filing and recording costs, rating agency fees, costs of preparation and reproduction of documents and costs of printing. "<::ouncil" means the Council of the City or any other legislative body of the City hereafter provided for pursuant to law. "pebt Service" means, during any period of computation, the amount obtained for such period by totaling the following amounts: (a) The principal amount of all Outstanding Bonds payable by their terms in such period, including scheduled sinking fund installments; and (b) The interest which would be due during such period on the aggregate principal amount of Bonds which would be Outstanding in such period if the Bonds are paid or redeemed as scheduled. "Debt Service Fund" means the fund by that name established and held by the Trustee for the Series A Bonds pursuant to Section 4.03. "Defeasance Obligations" means (a) cash, (b) non-callable direct obligations of the United States of America ("Treasuries"), (c) evidences of ownership of pTOportionate interests in future interest and principal payments on Treasuries held by a bank or trust company as custodian, under which the owner of the investment is the real party in interest and has the right to proceed directly and individually against the obligor and the underlying Treasuries are not available to any person claiming through the custodian or to whom the custodian may be obligated or (d) pre-refunded municipal obligations rated "AAA" and "Aaa" by S&P and Moody'S, respectively (or any combination thereof). "Depository" means (a) initially, DTC, and (b) any other Securities Depositories acting as Depository pursuant to Section 2.10. "Depository System Pa~ti<;ipill1t" means any participant in the Depository's book-entry system. "RI(;" means The Depository Trust Company, New York, New York, and its successors and assigns. 6 "Electric Syst~!!1" means the existing electrical system of the City, comprising all facilities for the transmission and distribution of electric energy, "Event of Default" means any of the events described in Section 8,01, "Fair Market Value" means the price at which a willing buyer would purchase the investment from a willing seller in a bona fide, arm's length transaction (determined as of the date the contract to purchase 01' sell the investment becomes binding) if the investment is traded on an established securities market (within the meaning of section 1273 of the Tax Code) and, otherwise, the term uFair Market Value" means the acquisition price in a bona fide arm's length h'ansaction (as referenced above) if (i) the investment is a certificate of deposit that is acquired in accordance with applicable regulations under the Tax Code, (ii) the investment is an agreement with specifically negotiated withdrawal or reinvestment provisions and a specifically negotiated interest rate (for example, a guaranteed investment contract, a forward supply contract 01' other investment agreement) that is acquired in accordance with applicable regulations under the Tax Code, (iii) the investment is a United States Treasury Security--State and Local Govel'11ment Series that is acquired in accordance with applicable regulations of the United States Bureau of Public Debt, or (iv) any commingled investment fund in which the City and I'elated parties do not own more than a ten percent (10%) beneficial interest therein if the return paid by the fund is without regard to the source of the investment. "Federal Securities" means any of the following which at the time of investment are legal investments under the laws of the State for the moneys proposed to be invested therein: (a) direct general obligations of the United States of America (including obligations issued or held in book entry form on the books of the Department of the Treasury of the United States of America); and (b) obligations of any department, agency 01' instrumentality of the United States of America the timely payment of principal of and interest on which are unconditionally and fully guaranteed by the United States of America. "Federal Tax Credit Payments" means all payments received from the u.s. Department of Treasury of the tax credit for those Series A Bonds issued as Direct Payment Build America Bonds provided for in Sections 5 4AA(b) and 6431 of the Tax Code. "Fiscal Year" means the period commencing on July 1 of each year and terminating on the next succeeding June 30. HQJIS System" means the existing gas system of the City, comprising all facilities for the storage, transmission and distribution of gas for public or private uses. "Gross Revenues" means, for any period of computation, all gross charges l'eceived for, and all other gross income and revenues derived by the City from, the ownership 01' operation of the Water System or otherwise arising from the Water System during such period, including but not limited to (a) all Charges received by the City for use of the Water System, (b) all receipts derived from the inveshnent of funds held by the City or the Trustee under this Indenture, (c) transfers from any stabilization reserve funds into the Water Revenue Fund, and 7 (d) all moneys received by the City from other public entities whose inhabitants are served pursuant to contracts with the City. "!mp!()Y~ll1ent" means any addition, extension, improvement, equipment, machinery or other facilities to 01' for any System. "Indenture" means this Indenture of Trust, as originally executed or as it may from time to time be supplemented, modified or amended by any Parity Bonds Instrument pursuant to the provisions hereof. "Independent Certified Public Accountaf\!" means any certified public accountant or firm of such accountants appointed and paid by the City, and who, or each of whom- (a) is in fact independent and not under dOlnination of the City; (b) does not have any substantial identity of interest, direct Or indirect, with the City; and (e) is not and no member of which is connected with the City as an officer or employee of the City, but who may be regularly retained to make annual Or other audits of the books of or reports to the City. "Independent Consultant" means any financial or engineering consultant (including without limitation any Independent Certified Public Accountant) with an established reputation in the field of municipal finance or firm of such consultants appointed and paid by the City, and who, or each of whom- (a) is in fact independent and not under domination of the City; (b) does not have any substantial identity of interest, direct or indirect, with the City; and (c) is not and no member of which is connected with the City as an officer or employee of the City, but who may be regularly retained to make annual or other audits of the books of or reports to the City. "Information Services" means Financial Information, Inc.'s "Daily Called Bond Service", 30 Montgomery Street, 10th Floor, Jersey City, New Jersey 07302, Attention: Editor; Kenny Information Services' "Called Bond Service",55 Broad Street, 28th Floor, New York, New York 10004; Moody's Investors Service "Municipal and Government," 99 Church Street, 8th Floor, New York, New York 10007, Attention: Municipal News Reports; Standard & Poor's Corporation "Called Bond Record," 25 Broadway, 3rd Floor, New York, New York 10004; and, in accordance with then current guidelines of the Securities and Exchange Commission, such other addresses and! or such other services providing information with respect to called bonds as the City may designate in a Request of the City delivered to the Trustee, "Interest Payment Date" means, with respect to the Series A Bonds, June 1 and December 1 in each year, beginning June 1, 2010, and with respect to any Parity Bonds, any 8 date on which interest is due and payable theTeon, and continuing so long as any Bonds or Parity Bonds remain Outstanding. "Interest Reguirement" means, as of any particular date of calculation, the amount equal to any unpaid interest then due and payable, plus an amount which w.ill on the next succeeding Interest Payment Date be equal to the interest to become due and payable on the Bonds on such next succeeding Interest Payment Date. "Mllintenance and Operation Costs" means the reasonable and necessary costs spent or incurred by the City for maintaining and operating the Water System, calculated in accordance with sound accounting p"inciples, including the cost of supply of water, gas and electric energy under contracts or otherwise, the funding of reasonable operating reserves, and all reasonable and necessary expenses of management and repair and other expenses to maintain and preserve the Water System in good repair and working order, and including all reasonable and necessary administrative costs of the City ath'ibutable to the Water System and the Bonds, such as salaries and wages and the necessary contribution to retirement of employees, overhead, insurance, taxes (if any), expenses, compensation and indemnification of the Trustee, and fees of auditors, accountants, attorneys or engineel's, and including all other reasonable and necessary costs of the City or charges required to be paid by it to comply with the terms of the Bonds or of the 1990 Indenture, the Second Supplement to 1990 hldenture or this Indenture, but excluding depreciation, replacement and obsolescence charges or reserves therefor and amortization of intangibles or other bookkeeping enh'ies of a similar nature. "Maximum Annual Debt Service" means, as of the date of calculation, the maximum amount of Debt Service for the current or any future FIscal Year. "MoQ.dy·s" means Moody's hlvestors Service, a corporation duly organized and existing under and by virtue of the laws of the State of Delaware, and its successors or assigns, except that'iI such corporation shall be dissolved or liquidated or shan no longer perform the functions of a securities rating agency, then the term "Moody's" shall be deemed to refer to any other nationally recognized securities rating agency selected by the City. "Net Proceeds" means the gross proceeds from the sale of property or insurance or condemnation award with respect to which that term is used remaining after payment of all expenses (induding attomeys' fees and any extraordinaI-Y expenses of the Trustee) incurred in the collection of such gross proceeds. "Net Revenues" means, with respect to the Water System, for any period of computation, the amount of the Gross Revenues received from the Water System during such period, less the amount of Maintenance and Operation Costs of the Water System becoming payable during such period. "1990 Indenture" means that hldenture of Trust dated as of August 1, 1990, by and between the City and the Prior Trustee. "1995 Bonds" means the $8,640,000 original principal amount of the City of Palo Alto Utility Revenue Bonds, 1995 Series A issued by the City pursuant to the Second Supplement to 1990 Indenture. 9 "Original Purchaser" means the first purchaser of the Series A Bonds from the City. "Outstanding", when used as of any particular time with reference to Series A Bonds, means (subject to the provisions of Section 7.03) all Series A Bonds theretofore executed, issued and delivered by the City under this Indenture except - (a) Series A Bonds theretofore cancelled by the Trustee or surrendered to the Trustee for cancellation; (b) Series A Bonds paid or deemed to have been paid within the meaning of Section 9.03; and (c) Series A Bonds in lieu of or in substitution for which other Series A Bonds shall have been executed, issued and delivered by the City pursuant to this Indenture or any Parity Bonds Instrument. "Owner" or "Bond Owner" or "Bondowner", when used with respect to any Series A Bond, means the person in whose name the ownership of such Bond shall be registered on the Bond Registration Books. "Parity Bonds" means the 2002 Water Revenue Bonds, and all bonds, notes or other obligations (including without limitation long-term conh'acts, loans, sub-leases or other legal financing arrangements) of the City payable from and secured by a pledge of and lien upon any of the Net Revenues, issued or incurred pursuant to Section 3.06. "Parity Bonds Instrument" means the resolution, h'ust indenture or installment sale agreement adopted, entered into or executed and delivered by the City, and under which Parity Bonds are issued. "Principal Installment" means with respect to any particular Principal Installment Date, an amount equal to the sum of (i) the aggregate principal amount of Outstanding Serial Bonds payable on such Principal Installment Date as determined by the applicable Parity Bonds Instrument (but not including Sinking Fund Installments) and (ii) the aggregate of Sinking Fund Installments with respect to all Outstanding Term Bonds payable on such Principal Installment Date as determined hereby and by the applicable Parity Bonds Instrument. "Ptincipal InstaIlment Date" means the date on which Principal Installments are required to be made pursuant to Section 2.01. "Rating Agency" means, as of any date, each of the following rating agencies which then maintains a rating on any of the Series A Bonds: (a) Moody's and (b) S&P. "Record Date" means, with respect to the Series A Bonds, the fifteenth (15th) calendar day of the month immediately preceding an Interest Payment Date or, with respect to any Parity Bonds, any other date established in the applicable Parity Bonds Instrument. "Redemption Account" means the Account by that name established and held by the Trustee pursuant to Section 4.03. 10 "Re£l'~mption Price" means, with respect to any Series A Bond, the principal amount thereof, plus the applicable premium, if any, payable upon redemption thereof pursuant to this Indenture and the Parity Bonds Instrument pursuant to which the same was issued. "Reguest of the City" means a request in writing signed by the City Manager, Director of Administrative Services or Assistant City ManageI' of the City, or by any other officer of the City duly authorized by the Council for that purpose. "Reserve Account" means the Account by that name established and held by the Trustee pursuant to Section 4.03. "Reserve Requirement" means, when used with respect to a Series of Bonds, an amount equal to the lesser of: (i) Maximum Annual Debt Service on such Series of Bonds; (ii) ten percent (10%) of the Outstanding principal amount of the particular Series of Bonds; or (iii) 125% of Avel'age Alillual Debt Service on such Series of Bonds, as may be set forth in a Parity Bonds Instrument pursuant to Section 3.06. "S&P" means Standard & Poor's Corporation, a corporation duly organized and existing under and by virtue of the laws of the State of New York, and its successors or assigns, except that if such corporation shall be dissolved or liquidated or shall no longer perform the functions of a securities rating agency, then the term "S&P" shall be deemed to refCl' to any other nationally recognized securities rating agency selected by the City. "~...!;!cond Supplement to 1990 Indenture" means the Second Supplemental Indenture of Trust, between the City and the Prior Trustee, dated as of February 1, 1995. "l1<!riaI Bonds" means all Series A Bonds other than Term Bonds. "Series" when used with respect to less than all of the Bonds, means and refers to all of the Bonds delivered on original issuance in a simultaneous transaction, regardless of variations in maturity, interest rate or other provisions, and any Bond thereafter delivered in lieu of or substitntion for any of such Bonds pursuant to Sections 2.02{i), 2.05, 2.06, 2.07, 2.09 and 7.04. "Series A Bonds" means the City of Palo Alto Water Revenue Bonds, 2009 Series A, issued and at any time Outstanding hereunder. ".sinking Fund Installment" means, with respect to any particular date, the amount of money required hereby or by or pursuant to a Parity Bonds Instrument to be paid by the City on such date toward the retirement of any particular Term Bonds prior to their respective stated matnrities. "State" means the State of California. "System" means any of the Electric System, the Gas System or the Water System. "IilX Code" means the Internal Revenue Code of 1986 as in effect on the date of issuance of the Series A Bonds or (except as otherwise referenced herein) as it may be amended to apply to obligations issued on the date of issuance of the Series A Bonds, togethCl' with applicable 11 proposed, temporalT and final regulations promulgated, and applicable official public guidance published, under the.Tax Code. "Tax Regulations" means temporary and permanent regulations promulgated under the Tax Code. "Term Bonds" means, with respect to any Series A Bonds or any Parity Bonds, such Series A Bonds or Parity Bonds which are payable prior to their stated maturity by operation of Sinking Fund Installments. "Trust Office" means the corporate trust office of the Trustee at St. Paul, MN, or such other or additional offices as may be specified to the City by the Tmstee in writing. "Trustee" means U.S. Bank National Association, appointed by the City to act as tmstee hereunder pursuant to Section 6.01, and its assigns or any other corporation or association which may at any time be substituted in its place, as provided in Section 6.01. "2002 Water Revenue Bonds" means those 2002 Bonds issued to finance improvements to the Water System and secured by a pledge of Net Revenues Attributable to the Water System (as defined in the 2002 Indenture). On the Closing Date, 2002 Water Revenue Bonds were outstanding in the principal amount of $ _____ _ "2009 Water Project" means certain extensions and improvements to the City's Water System, more particularly described in Exhibit B, or any other capital improvement to the Water System. "2009 Water Proj ect Fund" means the fund by that name established and held by the City pursuant to Section 3.04 of this Indenture. "Water Revenue Fund" means the Fund by that name established and held by the City and referred to in Section 4.02. "Water System" means the existing water system of the City, comprising all facilities for the obtaining, conserving, treating, dish'ibuting, storing and supplying of water for domestic use, irrigation, sanitation, industrial use, fire protection, recreation, or any other public or private uses. SECTION 1.02. Rules of Construction. All references in this Indenture to "Articles," "Sections," and other subdivisions are to the corresponding Articles, Sections or subdivisions of this Indenture; and the words "herein," "hereof," "hereunder," and other words of similar import refer to this Indenture as a whole and not to any particular Article, Section or subdivision hereof. Words of the masculine gender shall be deemed and constmed to include correlative words of the feminine and neuter genders. Unless the context shall otherwise indicate, words importing the singular number shall include the plural number and vice versa, and words importing persons shall include corporations and associations, including public bodies, as well as natural persons. 12 SECTION 1.03. Authorization and Purpose of Series A Bonds. The City has reviewed all proceedings heretofore taken relative to the authorization of the Series A Bonds and has found, as a result of such review, and hereby finds and determines that all things, conditions, and acts required by law to exist, happen and/ or be performed precedent to and in the issuance of the Series A Bonds do exist, have happened and have been performed in due time, form and manner as required by law, and the City is now authorized, as an exercise of the municipal affairs power of the City as a chartered city under the constitution and laws of the State and pursuant to the Bond Law and each and every requirement of law, to issue the Series A Bonds in the manner and form provided in this Indenture. Accordingly, the City hereby authorizes the issuance of the Series A Bonds pursuant to the Bond Law and this Indenture for the purpose of providing funds to acquire and construct the 2009 Project and to pay Costs of Issuance of the Series A Bonds. SECTION 1.04. Equal Security. In consideration of the acceptance of the Series A Bonds by the Owners thereof, this Indenture shall be deemed to be and shall constitute a conti'act among the City, the Trustee and the Owners from time to time of the Series A Bonds; and the covenants and agreements herein set forth to be performed on behalf of the City shall be for the equal and proportionate benefit, security and protection of all Owners of the Series A Bonds without preference, priority or distinction as to security 01' otherwise of any of the Series A Bonds over any of the others by reason of the number or date thereof 01' the time of sale, execution 01' delivery thereof, or otherwise for any cause whatsoever, except as expressly provided therein or herein. 13 ARTICLE II ISSUANCE OF SERIES A BONDS SECTION 2.01. Terms of Series ABonds. The Series A Bonds authorized to be issued by the City under and subject to the Bond Law and the terms of this Indenture shall be designated the "City of Palo Alto Water Revenue Bonds, 2009 Series A", and shall be issued in the original principal amount of Dollars ($[Principal Amount]). The Series A Bonds shall be issued in fully registered form without coupons in denominations of $5,000 or any integral multiple thereof, so long as no Series A Bond shall have more than one maturity date. The Series A Bonds shall mature on June 1 in each of the years and in the amounts, and shall bear interest at the rates, as follows: Maturity Date (funel) Principal Amount Interest Rate Per Annum Interest on the Series A Bonds shall be payable on each Interest Payment Date to the person whose name appears on the Bond Registration Books as the Owner thereof as of the Record Date inunediately preceding each such Interest Payment Date, such interest to be paid by check or draft of the Trustee mailed by first class mail to the Owner or, at the option of any Owner of at least $1,000,000 aggregate principal amount of the Series A Bonds with r<'.sped to which written instructions have been filed with the Trustee prior to the Record Date, by wire transfer, at the address of such Owner as it appears On the Bond Registration Books. Principal of and premium (if. any) on any Series A Bond shall be paid upon presentation and surrender thereof at the Trust Office of the Trustee in St. Paul, Minnesota. Both the principal of and interest and premium (if any) on the Series A Bonds shall be payable in lawful money of the United States of America. The Series A Bonds shall be dated the Closing Date and bear interest based on a 360-day year comprised of twelve 3D-day months from the Interest Payment Date next preceding the date of authentication thereof, unless said date of authentication is an Interest Payment Date, in which event such interest is payable from such date of authentication, and unless said date of authentication is on or before May 15, 2010, in which event such interest is payable from the Closing Date; pn;>vided, however, that if, as of the date of authentication of any Series A Bond, I 14 inteTest thereon is in default, such Series A Bond shall bear interest from the date to which interest has previously been paid 01' made available for payment thereon in full. 15 SECTION 2.02. Redemption of S!!.ri.~.~ .. AJ:l.9nds. (al Optional Redemption. The Series A Bonds maturing on or before June 1, 20_ are not subject to optional redemption prior to maturity, The Series A Bonds maturing on or after June 1, 20_ are subject to redemption prior to their respective maturity dates, at the option of the City, as a whole on any date, or in part in inverse order of maturities and by lot within a maturity on any Interest Payment Date on or after June 1, 20_, from any source of available funds, at the following respective Redemption Prices (expressed as percentages of the principal amount of U,e Series A Bonds to be redeemed), plus accrued interest thereon to the date of redemption: Redemption Periods Redemption Prices The City shaU be required to give the Trustee written notice of its intention to redeem Series A Bonds undel' this subsection (a) at least forty-five (45) days prior to the date fixed for redemption, and shall deposit aU amounts reqUired for such redemption with the Trustee on or prior to the date fixed for such redemption, (b) Mandatory Redemption, (i) M;:tp.datory Sinking Fund Redemption. Series A Bonds maturing on June 1, 20_ are subject to mandatory redemption in part from Sinking Fund Installments to be made by the City on June 1, 20_ and on each June 1 thereafter up to and including June 1, 20--, at a redemption price equal to 100 percent of the principal amount thereof plus accrued interest, if any, to the redemption date without premium, as foUows: Principal Amount (ii) Special Mandatory Redemption From Insurance or Condemnation Proceeds, The Series A Bonds shall also be subject to redemption as a whole on any date, or in part on any Interest Payment Date in inverse order of maturity and by lot within a maturity, to the extent of the Net Proceeds of hazard insurance not used to repair or rebuild the Water System or the Net Proceeds of condemnation awards received with respect to the Water System to be used for such purpose pursuant to Sections 5.06 or 5.07, at a Redemption Price equal to the principal amount of the Series A Bonds plus interest accrued thereon to the date fixed for redemption, without premium, (c) Additional Bonds. Any Parity BondS issued pursuant to Section 3.06 of this Indentme tnay be made subject to redemption prior to maturity, as a whole or in part, at such time or times, and upon payment of the principal amount thereof and accrued interest thereon plus such premium or premiums, if any, as tnay be determined by the City in the applicable Parity Bonds Instrument. (d) Notice of Redemption. Unless waived by any Owner of Series A Bonds to be redeemed, notice of any redemption of Series A Bonds shall be given, at the expense of the City, by the Trustee by mailing a copy of a redemption notice by first class mail at least 30 days and 16 not more than 60 days prior to the date fixed for redemption to the Owner of the Series A Bond or Series A Bonds to be redeemed at the address shown On the Bond Registration Books; provided, that neither the failure to receive such notice nor any immaterial defect in any notice shall affect the sufficiency of the proceedings for the redemption of the Series A Bonds. (e) <;::9!:ltents of Notice. All notices of redemption shall be dated and shall state: (i) the redemption date, (il) the Redemption Price, (iii) if fewer than all Outstanding Series A Bonds are to be redeemed, the identification (and, in the case of partial redemption, the respective princJpaJ amounts) of the Series A Bonds to be redeemed, (iv) that on the redemption date the Redemption Price will become due and payable with respect to each such Series A Bond or portion thereof called fol' redemption, and that interest with respect thereto shall cease to aCCl'ue from and after said date, and (v) the place or places where such Series A Bonds are to be sUl'1'endered for payment of the Redemption Price, which places of payment may include the Trust Office of the Trustee. (f) Deposit of Money. On 01' pl'ior to any redemption date, the aty shall deposit with the Trustee an amount of money sufficient to pay the Redemption Price ·of all the Series A Bonds or portions of Series A Bonds which are to be redeemed on that date. (g) Consequences of Notice. Notice of redemption having been given as aforesaid, the Series A Bonds or portions of Series A Bonds so to be redeemed shall, on the redemption date, become due and payable at the Redemption P"ice therein specified, and from and after such date (unless the City shall default in the payment of the Redemption Price) such Series A Bonds or portions of Series A Bonds shall cease to have interest accrue thereon. Upon surrender of such Series A Bonds for redemption in accordance with said notice, such Series A Bonds shall be paid by the Tmstee at the Redemption Price. Installments of interest due on or prior to the redemption date shall be payable as herein pl'Ovided for payment of interest. Upon surrender for any partial redemption of any Series A Bond, there shall be prepared for the Owner a new Series A Bond or Series A Bonds of the same maturity in the amount of the unredeemed principal. All Series A Bonds which have been redeemed shall be cancelled and destroyed by the Trustee and shall not be redelivered. Neither the failure of any Bond Owner to receive any notice so mailed nor any defect therein shall affect the sufficiency of the proceedings for redemption of any Series A Bonds nor the cessation of accmal of interest thereon. (h) Additional Notice. In addition to the foregoing notice, further notice shall be given by the Tmstee as set out below, but no defect in said further notice no1' any failure to give all or any portion of such further notice shall in any manner defeat the effectiveness of a call for redemption if notice thereof is given as above prescribed: 17 (1) Each further notice of redemption given hereunder shall contain the inf01'mation required above fm an official notice of redemption plus (A) the CUSIP numbers of all Series A Bonds being redeemed; (B) the stated interest rate with respect to each Series A Bond being redeemed; (C) the maturity date of each Series A Bond being redeemed; and (D) any other descriptive information needed to identify accurately the Series A Bonds being redeemed. (2) Each further notice of redemption shall be sent on the date notice is mailed to Bond Owners by registered 01' certified mail or ovemight delivery service to all registered securities depositories then in the business of holding substantial amounts of insbuments of types comprising the Series A Bonds, and, on the date notice is mailed to Bond Owners, to one 01' more Inf01'mation Services. (3) Upon the payment of the Redemption Price of the Series A Bonds being redeemed, each check 01' other transfer of funds issued for such purpose shall bear the CUSIP number identifying, by issue and maturity, the Series A Bonds being redeemed with the proceeds of such check 01' other b·ansfel'. (i) Partial Redemption of Series .. A.. Bonds. In the event only a portion of any Series A Bond is called for redemption, then upon surrender of such Series A Bond redeemed in part only, the City shall execute and the Trustee shall authenticate and deliver to the Owner, at the expense of the City, a new Series A Bond or Series A Bonds, of the same series and maturity, of authorized denominations in aggregate principal amount equal to the unredeemed portion of the SeI'ies ABond 01' Series A Bonds. G) Manner of Redemption. Whenever any Series A Bonds are to be selected for redemption, the Trustee shall determine, by lot, the numbers of the Series A Bonds to be redeemed, and shall notify the City thereof. ' (k) Purchase of Series A Bondsjn lieu of Redemption. In lieu of redemption of Series A Bonds as provided in subsection (a) above, amounts in the Redemption Account of the Debt Service Fund may also be used and withdrawn by the Trustee at any time, upon the Request of the City filed with the Trustee no later than April 15 in any year, fm the purchase of Series A Bonds at public 01' private sale as and when and at such prices (including brokerage and other charges, but excluding accrued interest, which is payable from the Debt Service Fund) as the City may in its discretion determine, but not to exceed the principal amount of such Series A Bonds plus the redemption premium applicable on the next ensuing optional redemption date. The City shall, at the time of any such purchase, pay to the Trustee £01' deposit in the Debt Service Fund the amount of any deficiency in such Fund which may be caused by such purchase. All Sel'ies A Bonds pUl'chased pursuant to this Section shall be cancelled. All Series A Bonds redeemed pursuant to this Section and all Series A Bonds purchased by the City pursuant to this subsection (k) shall be cancelled and destroyed pursuant to Section 9.09. SECTION 2.03. Form of Series A Bonds. The Series A Bonds, the Trustee's certificate of authentication, and the assignment to appear thereon, shall be substantially in the respective forms set forth in Exhibit A attached hereto and by this reference incorporated herein, with 18 necessary or appropriate variations, omissions and insertions, as permitted or required by this Indenture. SECTION 2.04.I\:><&£1,lJion of Series A Bonds. The Series A Bonds shall be signed in the name and on behalf of the City with the manual or facsimile signatures of its Mayor and its Director of Administrative Services and attested by the manual 01' facsimile signature of its City Clerk under the seal of the City. Such seal may be in the form of a facsimile of the City's seal and shall be imprinted or impressed upon the Series A Bonds. 111e Series A Bonds shall then be delivered to the Tl'Ustee for authentication by it. In case any officer who shall have signed any of the Series A Bonds shall cease to be such officer before the Series A Bonds so signed shall have been authenticated or delivered by the Tl'Ustee 01' issued by the City, such Series A Bonds may nevertheless be authenticated, delivered and issued and, upon such authentication, delivery and issue, shall be as binding upon the City as though the individual who signed the same had continued to be such officer of the City. Also, any Series A Bond may be signed on behalf of the City by any individual who on the actual date of the execution of such Series A Bond shall be the proper officer although on the nominal date of such Series A Bond such individual shall not have been such officeI'. Only such of the Series A Bonds as shall bear thereon a certificate of authentication in substantially the form set forth in Exhibit A, manually executed by the Trustee, shall be valid or obligatory for any purpose or entitled to the benefits of this Indenture, and such certificate of the Tl'Ustee shall be conclusive evidence that the Series A Bonds so authenticated have been du Iy authenticated and delivered hereunder and are entitled to the benefits of this Indenture. SECTION 2.05. Transfer of Series A Bonds. Any Series A Bond may, in accordance with its terms, be transferred upon the Bond Registration Books by the person in whose name it is registered, in person or by his duly authorized attorney, upon surrender of such Series A Bond for cancellation, accompanied by delivery of a written instrument of transfer in a form approved by the Trustee, fully executed. Whenever any Series A Bond shall be surrendered for transfer, the City shall execute and the Trustee shall thereupon authenticate and deliver to the transferee a new Series A Bond or Series A Bonds of like tenor, maturity and aggregate principal amount. No Sel'ies A Bonds the notice of redemption of which has been mailed pursuant to Section 2.02( d) shall be subject to transfer pursuant to this Section. SECTION 2.06. Exchange of Series A Bonds. Series A Bonds may be exchanged at the Trust Office of the Trustee, for Series A Bonds of the same tenor and maturity and of other authorized denominations. No Series A Bonds the notice of redemption of which has been mailed pursuant to Section 2.02(d) shall be subject to exchange pursuant to this Section. SECTION 2.07. Temporary Bonds. The Sel'ies A Bonds may be issued initially in temporary form exchangeable for definitive Series A Bonds when ready for delivery. The temporary Series A Bonds may be printed, lithographed or typewritten, shall be of such denominations as may be determined by the City and may contain such reference to any of the provisions of this Indenture as may be appropriate. Every temporary Series A Bond shall be executed by the City and be registered and authenticated by the Trustee upon the same conditions and in substantially the same manner as the definitive Series A Bonds. If the City issues temporary Series A Bonds, it will execute and furnish definitive Series A Bonds without delay, and thereupon the temporary Series A Bonds may be surrendered, foI' cancella.tion, in exchange therefor at the Trust Office of the Trustee, and the Trustee shall authenticate and 19 deliver in exchange for such temporary Series A Bonds an equal aggregate principal amount of definitive Series A Bonds of authorized denominations. Until so exchanged, the tempOl"ary Series A Bonds shall be entitled to the same benefits under this Indenture as definitive Series A Bonds authenticated and delivered hereunder. SECTION 2.08. Bond Regii>tl"ation~Qoks. The Trustee will keep or cause to be kept at its Trust Office sufficient Bond Registration Books for the registration and transfer of the Series A Bonds, which shall at all times during regular business hours be open to inspection by the City; and, upon presentation for such purpose, the Trustee shall, under such reasonable regulations as it may prescribe, register or transfer 01' cause to be registered 01' transferred, on said books, Series A Bonds as hereinbefore provided. SECTION 2.09. Series A Bonds Mutilated, Lost, De§troyed or Stolen. If any Series A Bond shall become mutilated, the City, at the expense of the Owner of said Series A Bond, shall execute, and the Trustee shall thereupon authenticate and deliver, a new Series A Bond of like maturity and principal amount in exchange and substitution for the Sel'ies A Bond so mutilated, but only upon surrender to the Trustee of the Series A Bond so mutilated. Every mutilated Series A Bond so surrendered to the Trustee shall be cancelled by it and delivered to, or upern the order of, the City. If any Series A Bond issued hereunder shall be lost, destroyed or stolen, evidence of such loss, destruction or theft may be submitted to the City and the Trustee and, if such evidence be satisfactory to them and indenmity satisfacterry to them shall be given, the City, at the expense of the Bond Owner, shall execute, and the Trustee shan thereupon ,authenticate and deliver, a new Series A Bond of like maturity and principal amount in lieu erf .and in substitution for the Series A Bond so lost, desh'oyed err sterlen (or if any such Series A Bond shall have matured 01' shall have been called for redemption, instead erf issuing a substitute Series A Bond the Trustee may pay the same without surrender thereof upon receipt of indemnity satisfactory to the Trustee): The City may require payment erf a reasonable fee for each new Series A Bernd issued under this Section and of the expenses which may be incurred by the City and the Trustee. Any Series A Bernd issued under the provisions erf this Sectiern in lieu erf any Series A Bernd alleged to be lost, destreryed or stolen shall constitute an original contractual obligation on the part of the City whether or not the Series A Bond alleged to be lost, destroyed or stolen be at any time enforceable by anyone, and shan be equally and proportionately entitled to the benefits of this Indenture with all other Series A Bonds secured by this Indenture. SECTION 2.10. Book Entry System. (a) Q!:!g!nal Delivery. The Series A Bonds shall be initially delivered in the form of a separate single fully registered Bond (which may be lypewritten) for each.maturity of the Series A Bonds. Upon initial delivery, the ownership of each such Series A Bond shall be registered on the Bond Registration Books maintained by the Trustee pursuant to Section 2.08 hereof in the name of the Nominee. Except as provided in subsection (c), the ownership of all of the Outstanding Bonds shall be registered in the name of the Nominee on sl1ch Bond Registration Books. With respect to Series A Bonds the ownership of which shall be registered in the name of the Nominee, the City and the Trustee shall have no responsibility or obligation to any Depository System Participant or to any person on behalf of which the City holds an interest in the Series A Bonds. Without limiting the generality of the immediately preceding sentence, the 20 City and the Trustee shall have no responsibility or obligation with respect to (i) the accuracy of the records of the Depository, the Nominee or any Depository System Participant with respect to any ownership interest in the Series A Bonds, (ii) the delivery to any Depository System Participant 01' any other person, other than a Bond Owner as shown in the Registration Books, of any notice with respect to the Series A Bonds, including any notice of redemption, (iii) the selection by the Depository of the beneficial interests in the Series A Bonds to be redeemed in the event the City elects to redeem the Series A Bonds in part, (iv) the payment to any Depository System Participant or any other person, other than a Bond Owner as shown in the Registration Books, of any amount with respect to principal, premium, if any, or interest represented by the Series A Bonds or (v) any consent given or other action taken by the Depository as Owner of the Series A Bonds. The City and the Trustee may treat and consider the person in whose name each Series A Bond is registered as the absolute owner of such Series A Bond for the purpose of payment of principal, premium, if any, and interest represented by such Series A Bond, for the purpose of giving notices of redemption and other matters with respect to such Series A Bond, for the purpose of registering transfers of ownership of such Series A Bond, and for all other purposes whatsoever. The Trustee shall pay the principal, interest and premium, if any, represented by the Series A Bonds only to the respective Owners or their respective attorneys duly authorized in writing, and all such payments shall be valid and effective to fully satisfy and discharge all obligations with respect to payment of principal, interest and premium, if any, represented by the Series A Bonds to the extent of the sum or sums so paid. No person other than a Bond Owner shall receive a Series A Bond evidencing the obligation of the City to make payments of principal, interest and premium, if any, pursuant to Illis Trust Indenture. Upon delivery by the Depository to the Nominee of written notice to the effect that the Depository has determined to substitute a new Nominee in its place, 'such new nominee shall become the Nominee hereunder for all purposes; and upon receipt of such a notice the City shall promptly deliver a copy of the same to the Trustee. (b) Representation Letter. In order to qualify the Series A Bonds for the Depository's book-entry system, the City shall execute and deliver to such Depository a letter representing such matters as shall be necessary to so qualify the Series A Bonds. The execution and delivery of such letter shall not in any way limit the provisions of subsection (a) above or in any other way impose upon the City or the Trustee any obligation whatsoever with respect to persons having interests in the Series A Bonds other than the Bond O"vners. Upon the writa'll acceptance by the Trustee, the Trustee shall agree to take all action reasonably necessary for all representations of the Trustee in such letter with respect to the Trustee to at all times be complied with. In addition to the execution and delivery of such letter, the City may take any other actions, not inconsistent with this Trust Indenture, to qualify the Series A Bonds for the Depository's book-entry program. (c) Transfers Outside Book-Enhy System. In the event that either (i) the Depository determines not to continue to act as Depositmy for the Series A Bonds, or (il) the City determines to terminate the Depository as such, then the City shall thereupon discontinue the book-entry system with such Depository. In such event, the Depository shall cooperate with the City and the Trustee in the execution of replacement Series A Bonds by providing the Trustee with a list showing the interests of the Depository System Participants in the Series A Bonds, and by surrendering the Series A Bonds, registered in the name of the Nominee, to the Trustee on or before the date such replacement Series A Bonds are to be issued. The Depository, by accepting delivery of the Series A Bonds, agrees to be bound by the provisions of this subsection (c). If, prior to the termination of the Depository acting as such, the City fails 21 to identify another Securities Depository to replace the Depository, then the Series A Bonds shall no longer be required to be registered in the Registration Books in the name of the Nominee, but shall be registered in whatever name or names the Owners h'ansferring Or exchanging Series A Bonds shall designate, in accordance with the provisions hereof. In the event the City determines that it is in the best interests of the beneficial owners of the Series A Bonds that they be able to obtain certificated Series A Bonds, the City may notify the Depository System Participants of the availability of such certificated Series A Bonds tlU'ough the Depository. in such event, the Trustee will execute, transfer and exchange Series A Bonds as required by the Depository and others in appropriate amountq; and whenever the Depository requests, the Trustee and the City shall cooperate with the DepositOlY in taking appropriate action (y) to make available one or mare separate certificates evidencing tile Series A Bonds to any Depository System Participant having Series A Bonds credited to its account with the Depository, Or (z) to arrange for another Securities Depository to maintain custody of a single certificate evidencing such Series A Bonds, all at the City's expense. (d) Payments to the Nomingg. Notwithstanding any other provision of this indenture to the contrary, so long as any Series A Bond is registered in the name of the Nominee, all payments with respec t to principal, interest and premium, if any, represented by such Series A Bond and all notices with respect to such Series A Bond shall be made and given, respectively, as provided in the letter described in subsection (b) of this Section 01' as otherwisii'instructed by the Depository. 22 ARTICLE III ISSUE OF SERIES A BONDS; PARITY BONDS SECTION 3.01. IssuanC;l'!of Series A Bonds. Upon the execution and delivery of this Indenture, the City shall execute and deliver Series A Bonds in the aggregate principal amount of Dollars ($[Principal Amount]) to the Trustee for authentication and delivery to the Original Purchaser thereof upon the Request of the City. SECTION 3.02. Application of Proceeds of Sale of Series A Bonds. Upon the receipt of payment for the Series A Bonds on the Closing Date in the amount of ~ ____ ................ __ (being an amount equal to the principal amount of the Series A Bonds ($[Principal Amount]), plus Ol'iginal issue premium of less underwriter's discount less the good faith deposit of $ .... held by the City), the Trustee shall apply the proceeds of sale thereof as follows: (a) The Trustee shall deposit in the Reserve Account the amount of $ : and (b) the Trustee shall transfer to the City, for deposit in the 2009 Water Project Fund, the amount of and (c) The Trustee shall deposit in the Cost of Issuance Fund the remainder of such proceeds, in an amount equal to $_ ............... ~~ The Trustee may establish a temporary fund or account in its records to facilitate such deposits and transfers. SECTION 3.03. Reserve Account. On the Closing Date, the Trustee shall deposit to the Reserve Account, from the proceeds of the Series A Bonds, an amount equal to the Reserve Requirement. An amount equal to the Reserve Requirement shaH be maintained in the Reserve Account at all times; and any deficiency therein shall be replenished from available Net Revenues pursuant to Section 4.03(c), The Reserve Requirement for an issue of Parity Bonds may be increased by any Parity Bonds Instrument establishing any Parity Bonds pursuant to Section 3.06. SECTION 3.04. 2009 Water Project Fund. There is hereby created a separate Fund to be known as the "City of Palo Alto Water Revenue Bonds 2009 Water Project Fund", herein referred to as the "2009 Water Project Fund", to be held in trust by the City. The City shall disburse moneys in the 2009 Water Project Fund for the purpose of paying or reimbursing the payment of the costs of acquiring and constructing the 2009 Water Project, including but not limited to all costs incidental to or connected with such acquisition and construction. The City may apply any 01' all of the moneys on deposit in the 2009 Water Project Fund to the financing of any alternative project in place of any component of the 2009 Water Project 23 so long as (1) such substitution will not have any adverse effect on the security for the Series A Bonds, and (2) the alternative project identified will be of benefit to the Water System. Any amounts l'emaining in the 2009 Water Project Fund after the date of completion of the 2009 Water Project shall be transferred by the City, accompanied by written instruction as to amounts and application of deposit to the Trustee, for deposit to the Debt Service Fund, to be applied to the payment of Debt Service, as the same becomes due and payable. All interest earnings and profits or losses on the investment of amounts in the 2009 Watel' Project Fund shall be deposited in 01' charged to the 2009 Water Pl'oject Fund and applied to the purposes thereof. SECTION 3.05. Cost of Issuance Fund. There is hereby created a fund to be known as the "City of Palo Alto Water Revenue Bonds, Series A Cost of Issuance Fund" (the "Cost of Issuance Fund"), which the City hereby covenants and agl'ees to cause to be maintained and which shall be held in trust by the Trustee. The moneys in the Cost of Issuance Fund shall be used in the manner provided by law solely for U1e purpose of the payment of Costs of Issuance upon receipt by the Trustee of Requests of the City therefor, on or aftCl' ilie Closing Date. Any funds remaining in the Cost of Issuance Fund on ___ ._~, shall be transferred by the Trustee to the Debt Service Fund, SECTION 3.06. Issuance of Parity Bonds. In addition to the Series A Bonds, the City may, by Parity Bonds lnsb'ument, issue or incur other loans, advances or indebtedness payable from Net Revenues to be derived from the Water System, to provide financing for the Water System, in such principal amount as shall be determined by ilie City. The City may issue or incur any such Parity Bonds subject to ilie following specific conditions, which are hereby made conditions precedent to the issuance and delivery of such Parity Bonds: (a) The City shall be in compliance wiili all covenants set forth in U1is Indenture. (b) (i) The Net Revenues of the Water System, calculated on sound accounting principles, as shown by the books of the City for the latest Fiscal Year or any more recent twelve (12) month period selected by the City ending not mOl'e than sixty (60) days prior to U1e adoption of the Parity Bonds Instrument pursuant to which such Parity Bonds are issued, as shown by the books of the City, less withdrawals, if any, from the Water System's rate stabilization fund, plus, at the option of ilie City, U1e Additional Allowance, shall at least equal One Hundred percent (100%) of Maximum Annual Debt Service, with Maximum Annual Debt Service calculated on all Bonds to be Outstanding immediately subsequent to the issuance of such Parity Bonds which have a lien on Net Revenues of the Water System; and (ii) The Net Revenues of the Water System, calculated on sound accounting principles, as shown by the books of the City for the latest Fiscal Year or any more recent lwelve (12) month period selected by the City ending not more than sixty (60) days prior to the adoption of the Parity Bonds Instrument pursuant to which such Parity Bonds are issued, as shown by the books of the 24 City, plus, at the option of the City, any 01' all of the items hereinafter in this paragraph designated (A), (B) and (C), shall at least equal One Hundred Twenty- Five percent (125%) of Maximum Annual Debt Service, with Maximum Annual Debt Service calculated on all Bonds to be Outstanding immediately subsequent to the issuance of such Parity Bonds which have a lien on Net Revenues of the Water System. The items any or all of which may be added to such Net Revenues for the purpose of issuing or incurring Parity Bonds hereunder are the following: (A) An allowance for Net Revenues from any additions to or improvements or extensions of the Water System, and also for Net Revenues from any such additions, improvements or extensions which have been made from moneys from any source but in any case which, during all or any part of such Fiscal Year or such twelve (12) month period, were not in service, all in an amount equal to ninety percent (90%) of the estimated additional average annual Net Revenues to be derived from such additions, improvements and extensions for the first thirty-six (36) month period in which each addition, improvement 01' extension is respectively to be in operation, all as shown in the written report of an Independent Consultant engaged by the City; (B) The Additional Allowance; and (C) Funds then on hand in Available Reserves fm the Water System. (c) lbe Parity Bonds Instrument providing for the issuance of such Parity Bonds under this Section 3.06 shaH provide that: (i) The proceeds of such Parity Bonds shall be applied to the acquisition, construction, improvement, financing 01' refinancing of additional facilities, improvements 01' extensions of existing facilities within the Water System, or otherwise for facilities, improvements or property which the CitY determines are of benefit to the Water System, 01' for the purpose of refunding any Bonds in whole or in part, including all costs (including costs of issuing such Parity Bonds and including capitalized interest on such Parity Bonds during any period which the City deems necessalY or advisable) relating thereto; (ii) Interest on such Parity Bonds shall be payable on an Interest Payment Date; (iii) The principal of such Parity Bonds shall be payable on June 1 in any year in which principal is payable; and (iv) Money shall be deposited in a reserve account for such Parity Bonds from the proceeds of the sale of such Parity Bonds or othetwise equal to the Reserve Requirement. 25 SECTION 3.07. No Additional Prior Lien Bonds. No additional Bonds shall be issued pursuant to the 1990 Indenture. SECTION 3.08. Subordinate Debt. Nothing in this Indenture shall prohibit or impair the authority of the City to issue bonds 01' other obligations secured by a lien on Net Revenues which is subordinate to the lien established hereunder, upon such terms and in such pl'incipal amounts as the City may determine. SECTION 3.09. Validity of Series A Bond!!. The validity of the authorization and issuance of the Series A Bonds shall not be affected in any way by any proceedings taken by the City for the acquisition 01' construction of the Project, 01' by any contracts made by the City in connection therewith, and the recital contained in the Series A Bonds that the same are issued pursuant to the Bond Law shall be conclusive evidence of their validity and of the regularity of their issuance. 26 ARTICLE IV PLEDGE OF NET REVENUES; FUNDS AND ACCOUNTS SECTION 4.01. Pledge of Net Revenues, Water Revenue Fund. (a) The City hereby transfers, places a charge upon, assigns and sets over to the Trustee, for the benefit of the Owners, the Net Revenues of the Water System, on a parity with the 2002 Water Revenue Bonds. The Net Revenues of the Water System shall not be used fOl' any other purpose while any of the Bonds remain Outstanding, except that out of Net Revenues of the Water System there may be apportioned and paid such sums for such purposes, as are expressly permitted by this Article. Said pledge shall constitute a first, direct and exclusive charge and lien on the Net Revenues of the Water System for the payment of the principal or Redemption Price of and interest on the Bonds in accordance with the te.l·ms thereof, subject only to the lien of the 1995 Bonds. (b) The Net Revenues of the Water System constitute a trust fund for the secUl'ity and payment of the principal or Redemption PI'ice of and intel'est on the Bonds. The general fund of the City is not liable and the credit or taxing power of the City is not pledged for the payment of the principal or Redemption Price of and interest on the Bonds. The Owner of the Series A Bonds shall not compel the exercise of the taxing power by the City or the forfeiture of its property. The principal or Redemption Price of and interest on the Series A Bonds are not a debt of the City, nor a legal or equitable pledge, charge, lien or encumbrance, upon any of its property, or upon any of its income, receipts, or revenues except the Net Revenues of the Water System. SECTION 4.02. Receipt and Deposit of Revenues. The City covenants and agrees that all Gross Revenues, when and as received, will be received and held by the City in trust hereunder and will be deposited by the City in the Water Revenue Fund (which has heretofore been created and now exists in the City Treasury) and will be accounted for through and held in l1'ust in the Water Revenue Fund, and the City shall only have such beneficial right 01' interest in any of such money as in .this Indenture provided. All such Gross Revenues shall be transferred, disbursed, allocated and applied solely to the uses and purposes hereinafter in this Article set forth, and shall be accounted for separately and apart from all other money, funds, accounts or other resources of the City. SECTION 4.03. Establishment of Funds and Accounts and A,U9"ation of Revenues Thereto. The Debt Service Fund, as a special fund, and the Redemption Account and the Reserve Account, as special Accounts therein, are hereby created for the Series A Bonds. The Debt Service Fund and the Redemption Account and the Reserve Account therein shall be held and maintained by the Trustee. All Gross Revenues shall be held in trust by the City in the Water Revenue Fund and shall be applied, transferred, used and withdrawn only for the pUlposes hereinafter authorized in this Article. 27 (a) Operating Costs. The City shall first pay from the moneys in the Water Revenue Fund the budgeted Maintenance and Operation Costs as such Costs become due and payable. (b) Debt Service Fund. On or before the third Business Day prior to each Interest Payment Date, beginning ~~ ... ~~ the City shall transfer from the Water Revenue Fund to the Trustee for deposit in the Debt Service Fund (i) an amount equal to the aggregate amount of interest to become due and payable on all Outstanding Bonds on the next succeeding Interest Payment Date, plus (ii) beginning ..-------' an amount equal to the aggregate amount of Principal Installments (including any Sinking Fund Installments) becoming due and payable on all Outstanding Bonds on the next succeeding Principal Installment Date. All interest eamings and profits or losses on the investment of amounts in the Debt Service Fund shall be deposited in or charged to the Debt Service Fund and applied to the purposes thereof. No tl"ansfer and deposit need be made into the Debt Service Fund if the amount contained therein, taking into account investment earnings and profits, is at least equal to the Interest Requirement or Principal Installments to become due on the next Interest Payment Date or Principal Installment Date upon all Outstanding Bonds. (c) Reserve l\ccQunt. After making the payments, allocations and transfel"s prOVided for in subsection (b) above, if the balance in the Reserve Account is less than the Reserve Requirement for the Series A Bonds, the deficiency shall be restored by transfers from the first moneys which become available in the Water Revenue Fund to the Trustee for deposit in the Reserve Account, such transfers to be made from the sources and during the time period specified in Section 4.09(a). (d) Stll·plus. As long as all of the foregoing payments, allocations and transfers are made at the times and in the matmer set forth above in subsections (2) and (3), inclusive, any moneys remaining in the Water Revenue Fund may at any ·time be treated as surplus and applied as provided in Section 4.07. SECTION 4.04. Appli(!ation of Debt Service Fund. (a) The Trustee shall withdraw from the Debt Service Fund, prior to each Interest Payment Date, an amount equal to the Interest Requirement payable on such Interest Payment Date, and shall cause the same to be applied to the payment of said interest when due and is hereby authorized to apply the same to the payment of such interest by check or draft (01' by wire transfer, as the case may be), as provided in Section 2.01. (b) The Trustee shall withdraw from the Debt Service liund, prior to each Principal Installment Date, an amount equal to the principal amount of the Outstanding Serial Bonds, if any, maturing on said Principal Installment Date, atld shall cause the same to be applied to the payment of the principal of said Series A Bonds when due, and is hereby authorized to apply the same to such payment upon presentation and sUlTender of the Series A Bonds as they become due and payable, as provided in Section 2.01. (c) All withdrawals and transfers under the provisions of subsection (a) or subsection (b) of this Section shall be made not earlier than one (1) day prior to the Interest Payment Date or Principal Installment Date to which they relate, and the amount so withdrawn or transferred shall, for the purposes of this Indenture, be deemed to remain in and be part of the appropriate Account until such Interest Payment Date or Principal Installment Date. 28 SECTION 4.05. Application ofj{eserve Account. (a) In General If at any time there shall not be sufficient amounts in the Debt Service Fund to make payment of Principal Installments 01' Redemption Price of or interest on the Series A Bonds, the Trustee shall provide notice of such fact to the City (by telephone, confirmed in writing, provided that no such notice shall be required to be given with respect to a withdrawal of amounts in excess of the Reserve Requirement or of withdrawals in cOID1ection with the refunding of the Series A Bonds in whole or in part) and withdraw from the Reserve Account and pay into the appropriate Fund or Account the amount of the deficiency. Any amounts in the Reserve Account in excess of the Reserve Requirement (whether derived from interest or gain on investments or otherwise) shall, on June 2 of each year, be paid by the Trustee to the City for deposit in the Water Revenue Fund. SECTION 4.06. Application of Redemption Account. On 01' before the date which is at least forty-five (45) days prior to ,my Interest Payment Date on which Series A Bonds are subject to redemption pursuant to Section 2.02(a) or on which any Parity Bonds are subject to optional redemption pursuant to the provisions of the Parity Bonds Insh'ument authorizing such Parity Bonds, the City shall transfer from the Water Revenue Fund to the Trustee for deposit in the Redemption Account an amount at least equal to the Redemption Price (excluding accrued interest, which is payable from the Debt Service Fund) of such Bonds to be redeemed on such Interest Payment Date. In addition, the City shall transfer to the Trustee for deposit in the Redemption Account all amounts required to redeem any Series A Bonds which are subject to redemption pursuant to Section 2.02 (b) and any Parity Bonds which are subject to redemption pursuant to any similar provision of the Parity Bonds Instrument authorizing such Parity Bonds, when and as such amounts become available. Amount, in the Redemption Account shall be applied by the Trustee solely for the purpose of paying the Redemption Price of Series A Bonds to be redeemed pursuant to Sections 2.02 (a) 01' (b) and to pay the purchase price in the same manner and subject to the same limitation as purchasers of Series A Bonds under Section 2.02(k) 01' the Redemption Price of any Parity Bonds to be redeemed pursuant to similar provisions of the Parity Bonds Instrument au thorizing such Parity Bonds. If after all of the Series A Bonds have been paid or deemed to have been paid, there are moneys remaining in the Redemption Account, such moneys shall be transferred by the Trustee to the City for deposit in the Water Revenue Fund. . SECTION 4.07. Surplul!. Moneys remaining in the Water Revenue Fund after making the payments, allocations and transfers proVided for in subsections (b) and (c) of Section 4.03 shall be applied by the City as required by the city charter. SECTION 4.08. Investment~. All moneys in the Water Revenue Fund may be invested by the City from time to time in any Authorized Investments. All moneys in the Debt Service Fund and Cost of Issuance Fund shall be invested by the Trustee solely in Authorized Investments, as directed pUl'suant to a Request of the City. In the absence of any such Request of the City, the Trustee may (but shall not be l'equ:ired to) invest any such moneys in money market funds meeting the requirements of paragraph (f) of the definition of Authorized Investments, selected by the Trustee, which by their terms mature plioI' to the date on which such moneys are requh'ed to be paid out hereunder. Obligations purchased as an investment of moneys in any Fund or Account shall be deemed to be part of such Fund or Account, and all interest or gain derived from the investment of amounts in any of the Funds or Accounts 29 established hereunder shall be deposited in the Fund or Account from which such investment was made; and shall be accounted for and applied as provided in Section 4.04 (with respect to the Debt Service Fund) and Section 4.05(a) (with respect to the Eeserve Account). For purposes of acquiring any investments hereunder, the Trustee may commingle funds held by it hereunder with the written approval of the City. The Trustee may act as principal or agent in the acquisition of any investment. The Trustee shall incur no liability for losses m'ising from any investments made pursuant to this Section. The City acknowledges that to the extent regulations of the Comptroller of the Currency or other applicable regulatory entity grant the City the right to receive brokerage confirmations of security transactions as they occur, the City will not receive such confirmations to the extent permitted by law. The Trustee will furnish the City periodic cash transaction statements which include detail for all investment transactions made by the Trustee hereunder. The Trustee may make any investments hereunder through its own bond or investment department or trust investment department, or those of its parent or any affiliate. The Trustee or any of its affiliates may act as sponsor, advisor or manager in connection with any investments made by the Trustee hereundet·. The Trustee may rely upon any investment direction of the City as a certification to the Trustee that such investment is a legal investment for purposes of this Indenture. SECTION 4.09. Valuation; Replenishment of Reserve Account; Investments. (a) Method of Valuation, Frequency of Valuation; Eeplenishment of Reserve Account. In computing the amount in any Fund or Account, Authorized Investments shall be valued at the lower of the cost or the market price, exclusive of accrued interest. With respect to all Funds and Accounts, valuation shall occur annually, except in the event of a withdrawal from the Reserve Account, whereupon securities shall be valued immediately after such withdrawal. If amounts on deposit in the Reserve Account shall, at any time, be less than the Eeserve Eequirement, such deficiency shall be made up (i) over a period of not more than foUl' (4) months, in foUl' (4) substantially equal payments, from the Net Eevenues of the Water System received after making the required deposits to the Debt Service Fund, in the event such deficiency resull~ from a decrease in the market value of the Authorized Investments on deposit in the Reserve Account 01' (ii) over a period of not more than twelve (12) months, in twelve (12) substantially equal payments, from Net Revenues of the Water System, in the event such deficiency results from a withdrawal from the Eeserve Account by reason of the City's failure to pay Debt Service. (b) Invg§tm~nt of Amounts Eepl'esenting Accrued Interest. All amounts representing accrued interest shall be held by the Trustee in the Debt Service Fund, pledged solely to the payment of interest on the Series A Bonds and invested only in Federal Securities maturing at such times and in such amounts as are necessary to match the interest payments to which they are pledged. (c) AciciitjQl1aL1imitations. Except as otherwise provided in the following sentence, the City covenants that ail investments of amount.~ deposited in any fund 01' account created by or pursuant to this Indenture, or otherwise containing gross proceeds of the Series A Bonds (within the meaning of section 148 of the Tax Code) shall be acquired, disposed of, and valued (as of the date that valuation is required by this Indenture 01' the Tax Code) at Fair Market Value. Investments in funds or accounts (or portions thereof) that are subiect to a yield 30 restriction under applicable provisions of the Tax Code and (unless valuation is undertaken at least atIDual1y) investments in the Reserve Account shall be valued at their present value (within the meaning of section 148 of the Tax Code). 31 ARTICLE V COVENANTS OF THE CITY; SPECIAL TAX COVENANTS SECTION 5.01. Punclt!ill Payment; Compli'Lnce WitllJ)ocuments. The City shall punctually payor cause to be paid the interest and principal to become due with respect to all of the Series A Bonds in strict conformity with the terms of the Series A Bonds and of this Indenture, and will faithfully observe and perform all of the conditions, covenants and requirements of this Indenture and all Parity Bonds Instruments. SEC"fION 5.02. Ag!linst E.!l~umbrances. The City will not mortgage or otherwise encumber, pledge 01' place any charge upon the Water System or any part thereof, or upon any of the Net Revenues, except as provided in the Indenture; provided, however, that nothing in this Section 5.02 nor elsewhere in this Indenture shall be construed to prevent the City from entering into long-term contracts to finance supplies of water, gas, or electric energy, payments under which are accounted for as Maintenance and Operation Costs under the definition thereof in Section 1.01. SECTION 5.03. Discharge of Claims. The City covenants that in order to fully preserve and protect the priority and security of the Bonds the City shall pay from the Net Revenues and discharge all lawful claims for labor, materials and supplies fU1'l1ished for or in connection with the Water System which, if unpaid, may become a lien or charge upon the Net Revenues prior 01' superior to the lien of the Series A Bonds and impair the security of the Series A Bonds. The City shall also pay from the Net Revenues all taxes and assessments or other governmental charges lawfully levied or assessed upon or in respect of the Water System or upon any part thereof or upon any of the Net Revenues therefrom. SECTION 5.04. Acqui§iJion, Constructil)n or Financing of any Improve111ell! to the Water System. The City will acquire, construct, or finance any Improvement to the Water System to be financed with the proceeds of any Parity Bonds with all practicable dispatch, and such Improvement will be made in an expeditious manner and in conformity with laws so as to complete the same as soon as possible. SEcnON 5.05. l\1ainiE!lliLnCe ancL OperaJJon oL.wate!...§ysJe~j~l1 Effiden!3nd ~Q!!Qmi£ill1Y1ann~~ The City covenants and agrees to maintain and operate the Water System in an efficient and economical marUler and to operate, maintain and preserve the Water System in good repair and working order. SEcnON 5.06. Against Sale, Eminent Domain. (a) The City will not sell, lease or otherwise dispose of the Water System or any part thereof essential to the proper operation of the Water System or to the maintenance of the Net Revenues except as herein expressly permitted. The City will not enter into any lease or <)greement which inlpairs the operation of the Water System or any part thereof necessary to secure adequate Net Revenues for the payment of the interest on and principal or Redemption Price, if any, on the Series A Bonds, or which would otherwise impair the rights of the Holders with respect to the Net Revenues or the operation of the Water System. Any real 0'1: personal property which has become non-operative or which is not needed for the efficient and proper 32 operation of the Water System, or any material 01' equipment which has worn out, may be sold at not less than the market value thereof without the consent of the Holders if such sale will not reduce Net Revenues and if all of the Net Proceeds of such sale are deposited in the Water Revenue Fund. (b) If all or any part of the Water System shall be taken by eminent domain proceedings, the Net Proceeds realized by the City therefrom shall be deposited by the City with the Trustee in a special fund in trust, in an account to be established by the Trustee when deposits are required to be made therein, and applied by the City to the cost of acquiring or constructing or financing Improvements to the Water System if (A) the City first secures and files with the Trustee a Certificate of the City showing (i) the estimated loss in annual Net Revenues, if any, suffered, or to be suffered, by the City by reason of such eminent domain proceedings, (ii) a general description of the Improvements to the Water System then proposed to be acquired 01' constructed by the City from such Net Proceeds, and (iii) an estimate of the additional Net Revenues to be derived from such Improvements; and (B) such Certificate of the City, shall state that such additional Net Revenues will sufficiently offset the loss of Net Revenues, resulting from such eminent domain proceedings so that the ability of the City to meet its obligations hereunder will not be substantially impaired, which determinalion shall be final and conclusive. If the foregoing conditions are met, the City shall then promptly proceed with the acquisition or construction 01' financing of such Improvements substantially in accordance with such Certificate of the City and payments therefor shall be made by the Trustee from such Net Proceeds and from other moneys of the City lawfully available therefor, and any balance of such Net Proceeds not required by the City fO!' the purposes aforesaid shall be deposited in the Water Revenue Fund. If the foregoing conditions are not met, then such Net Proceeds shall be applied by the Trustee pro rata to the redemption O!' purchase of the Series A Bonds of each Series then Outstanding in the proportion which the principal amount of the Outstanding Bonds of each Series bears to the aggregate principal amount of all Series A Bonds then Outstanding. If the Trustee is unable to purchase or redeem Series A Bonds in amounts sufficient to exhaust the available moneys allocable to each such Series, the remainder of such moneys for each such Series shall be held in trust by the Trustee and applied to the payment of the Series A Bonds of such Selies as the same become due by their terms, and, pending such application, such remaining moneys may be invested by the Trustee in the manner pl'ovided in Section 4.08 for the investment of moneys in the Reserve Account. SECTION 5.07. fusurance. The City covenants that it shall at all times maintain such insurance on the Water System as is customarily maintained with respect to works and properties of like character against accident to, loss of 01' damage to such works or properties. If any useful part of the Water System shall be damaged 01' destroyed, such part shall be restored to use. The Net Proceeds of insurance against accident to 01' destruction of tl1e physical Water System shall be used for repairing or rebuilding the damaged or destroyed portions of the Water System, (to the extent that such repair or rebuilding is determined by the City to be useful or of continuing value to the Water System) and to the extent not so applied, shall be applied to the redemption of the Outstanding Bonds issued on a pro rata basis, and for such purpose shall be paid into the Redemption Account. Any such insurance shall be in the form of policies or contmcts for insurance with insurers of good standing and shall be payable to the City, 01' may be in the form of self- insurance by the City. The City shall establish such fund or funds 01' reserves as are necessary to provide for its share of any such self-insurance. The City shall file or cause to be filed with 33 the Trustee, annually within one hundred twenty (120) days after the close of each Fiscal Year, a Certificate of the City (a) setting forth a description in reasonable detail of the insurance then in effect, including any self-insurance fund, maintained pursuant to the requirements of this Section, (b) stating that the City is then in compliance with the requirementq of this Section, and (c) stating whether during the preceding Fiscal Year any loss has been incurred with respect to the Water System and, if so, the amount of Net Pl'Oceeds of insurance, including the Net Proceeds of any self-insurance fund, covering such loss and specifying the reasonable and necessary costs of repair, reconstruction or replacement thereof. SECTION 5.08. Records and Account~. The City covenants that it shall keep proper books of record and accounts of the Water System, separate from all other records and accounts, in which complete and correct entries shall be made of all transactions relating to the Water System. Said books shall, upon reasonable request, be subject to the inspection of the Owners of not less than ten percent (10%) of the Outstanding Bonds or their representatives authorized in wriLing. The City covenants that it will cause the books and accounts of the Water System to be audited annually by an Independent Certified Public Accountant and will make available for inspection by the Bond Owners, upon reasonable request, a copy of the repmt of such Independent Certified Public Accountant. The City covenants that it will cause to be prepared annually, not more than one hundred eighty (180) days after the dose of each Fiscal Year, as a part of its regular alIDual financial report, a summary statement showing the amount of Gross Revenues and the amount of all other funds collected which are required to be pledged or otherwise made available as security for payment of principal of and interest on the Series A Bonds, the disbursements from the Gross Revenues and other funds in reasonable detail, and a general statement of the financial and physical condition of the Water System. The City shall furnish a copy of the statement to the Trustee, and upon written request, to any Bond Owner. 111e Trustee shall have no duty to review such statement. SECTION 5.09. l'Lotection of Security and RightsQfj:)wl1ers. The City will preserve and protect the security of the Bonds and the rights of the Owners, and will warrant and defend their rights against all claims and demands of all persons. From and after the sale and delivery of any Parity Bonds by the City, such Parity Bonds shall be incontestable by the City. SECTION 5.10. Agilil!§LCj:m:!p~titiYl·LFil.eilities. The City will not acquire, construct, operate or maintain any system or utility within the service area of the City that would be competitive with the Water System. SECTION 5.11. Payment of Taxes, Etc. The City will pay and discharge all taxes, assessments and other governmental charges which may hereafter be lawfully imposed upon the Water System or any part thereof or upon any Revenues when the same shall become due. The City will duly observe and conform with all valid requirements of any governmental authority relative to the Water System or any part thereof, and will comply with all requirements with respect to any state or federal grants received to assist in paying for the costs of the acquisition, construction or financing of any Improvements to the Water System. SECTION 5.12. Rates and Charges. 34 (a) The City shall fix, prescribe, revise and collect Charges for the Water System during each Fiscal Year which (together with other funds ITansferred from stabiliza lion reserve funds for the Water System, and which are lawfully available to the City for payment of any of the following amounts during such Fiscal Year) are at least sufficient, after making allowances for contingencies and error in the estimates, to pay the following amounts in the following order: (1) all Maintenance and Operation Costs of the Water System estimated by the City to become due and payable in such Fiscal Year; (2 ) the Debt Service; (3) all other payments required for compliance with this Indentnre and the instruments pursuant to which any Padty Bonds relating to the Water System shall have been issued; and (4) all payments required to meet any other obligations of the City which are charges, liens, encumbrances upon or payable from the Gross Revenues of the Water System or Ihe Net lZevenues of the Water System. (b) In addition, the City shall fix, prescribe, revise and collect Charges for the Water System during each Fiscal Year which, when added to the balance then on hand in Available Reserves for the Wate1' System, are sufficient to yield Net Revenues of the Water System at least equal to one hundred twenty-five percent (125%) of the amounts payable under the preceding clause (a)(2) in such Fiscal Year for Bonds which have a lien on such Net Revenues. (c) To the extent that the City appropriates funds from Gross Revenues into a stabilization reserve fund for the Water System, a deduction shall be made from Gross Revenues of the Water System in the Fiscal Year during which said transfer occurred for purposes of calculations to be made under this Section 5.12 and Section 3.06. To the extent that the City appropriates funds from a stabilization reserve fund for tbe Water System into the Water Revenue Fund, the City may count the funds so h'ansferred as Gross Revenues in the Fiscal Year in which said transfer occurs, for purposes of this Section 5.12 and Section 3.06. SECTION 5.13. Maintenance of Available Reserves; Transfers Therefrom. (A) The City shall maintain the funds on hand in Available Reserve.s in an aggregate amount at least equal to five (5.0) times maximum annual debt service on all outstanding bonded indebtedness secured by Net Revenues of any of the Systems. (B) The City shall transfer from Available Reserves, to the Water System, as needed, amounts sufficient to enable the City to pay all maintenance and operation costs of the Water System, and all debt service on obligations issued to finance imprOVements to the Water System, when and as the same become due and payable. SECTION 5.14. Noi'riority for Addition<l,l Obligations. The City covenants that no additional bonds or other obligatiOns shall be issued or incurred having any priority in payment of principal 01' interest out of the Net Revenues over the Bonds. Nothing in tbis Indenture shall prohibit or impair the authority of the City to issue bonds or other obligations 35 secured by a lien on Gross Revenues or Net Revenues which is subol'dina te to the lien established hereunder, upon such terms and in such principal amounts as the City may determine. SECTION 5.15. No Arbitrage. The City shall not take, nor permit nor suffer to be taken any action with respect to the proceeds of any of the Series A Bonds which would cause any of t1le Series A Bonds to be "arbitrage bonds" within the meaning of the Tax Code. SECTION 5.16. Inforn)ation lkport. The City is hereby directed to assure the filing of an information report for the Series A Bonds in compliance with Section 149 (e) of the Tax Code. SECTION 5.17. !,!ival"--Activity Bond Limitation. The City shall assure that the proceeds of the Series A Bonds are not so used as to cause the Series A Bonds to satisfy the private business tests of section 141(b) of the Tax Code 01' the private loan financing test of section 141 (c) of the Tax Code. SECTION 5.18. Fegera19uar;!ntee Prohibition. The City shall not take any action or permit or suffer any action to be taken if the result of the same would be to cause any of the Series A Bonds to be "federally guaranteed" within the meaning of section 149(b) of the Tax Code. SECTION 5.19. Further Assurances. The City will adopt, make, execute and deliver any and all such further resolutions, instruments and assurances as may be reasonably necessary or proper to cany out the intention or to facilitate the performance of this Indenture, and for the better assuring and confirming unto the Owners of the Series A Bonds the rights and benefits provided in this Indenture. SECTION 5.20. Continuing Disclosure. The City will provide information on the financial condition of the Water System to any Bond Owner or other interested person upon request and with payment of the City-prescribed handling costs thereof. Such information will be limited to financial statements and staff reports which have previously been distributed to the City Council. Additionally, the City will file annually with the Trustee a copy of its audited financial reports. The Trustee shall have no duty to review such repmls. SECTION 5.21. Rebate Requirement. The City shall take any and all actions necessary to assure compliance with section 148(£) of the Tax Code, relating to lIle rebate of excess investment earnings, if any, to the federal government, to the extent that such section is applicable to the Series A Bonds. SECTION 5.22 Mjlmteni!nc~QLIax-Jlxemption. The City shall take all actions necessary to assure the exclusion of interest on t1le Series A Bonds from the gross income of the Owners of the Series A Bonds to the same extent as such-interest is permitted to be excluded from gross income under the Tax Code as in effect on the date of issuance of the Series A Bonds. 36 ARTICLE VI THE TRUSTEE SECTION 6.01. Appointment of Truste~. U.S. Bank National Association, a national banking association organized and existing under and by virtue of the laws of the United States of America. at its corporate trust office in San Francisco, California, is hereby appointed Tmstee by the City for the purpose of receiving all moneys required to be deposited with the Trustee hereunder and to allocate, use and apply the same as provided in this Indenture. The City agrees that it will maintain a Tmstee having a corporate tmst office in San Francisco, California, with a combined capital and surplus of at least One Hundred Million Dollars ($100,000,000), and subject to supervision 01' examination by federal or State authority, so long as any Series A Bonds are Outstanding. If such bank or trust company publishes a report of condition at least annually pursuant to law or to the requirements of any supervising or examining authority above referred to, then for the purpose of this Section 6.01 the combined capital and surplus of such bank or trust company shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. The Trustee is hereby authorized to pay the Series A Bonds when duly presented for payment at maturity, 01' on redemption or pmchase prior to maturity, and to cancel all Series A Bonds upon payment thereof. The Trustee shall keep accurate records of all funds administered by it and of all Series A Bonds paid and discharged. SECTION 6.02. ,'\cceptance of Trusts. The Trustee hereby accepts the trusts imposed upon it by this Indenture, and agrees to perform said trusts, but only upon and subject to the following express terms and conditions: (a) The Trustee, prior to the occurrence of an Event of Default and after curing or waiver of all Events of Default which may have occurred, undertakes to perform such duties and only such duties as are specifically set forth in this Indenture. In case an Event of Default hereunder has occurred (which has not been cured or waived) the Trustee may exercise such of the rights and powers vested in it by this Indenture, and shall use the same degree of care and skill in their exercise, as a prudent and reasonable manwould exercise or use unde!' the circumstances in the conduct of his own affairs. (b) The Trustee may execute any of the trusts or powers hereof and perform the duties required of it hereunder by or through attorneys, agents, or receivers but shall be answerable for the selection of the same in accordance with the standard specified above, and shall be entitled to advice of counsel conce1'11ing all matters of trust and its duty hereunder, and the Trustee shall not be liable for any action taken or not taken by it in good faith reliance upon the advice or opinion of such counseL (c) The Trustee shall not be responsible for any redtal herein, or in the Series A Bonds, or for the validity of this Indenture or any of the supplements thereto or instruments of further assurance, or for the sufficiency of the security for the Series A Bonds issued hereunder 01' intended to be secured hereby and the Trustee shall not be bound to ascertain or inquire as to the observance or performance of any covenants, conditions or agreements on the part ot the City hereunder. The Trustee shall not be 37 responsible or liable for any loss suffered in connection with any investment of funds made by it in accordance with Section 4,08, (d) The Trustee shall not be accountable for the use of any proceeds of sale of the Series A Bonds delivered hereunder, The Trustee may become the Owner of Series A Bonds secured hereby with the same rights which it would have if not the Trustee; may acquire and dispose of other bonds or evidence of indebtedness of the City with the same rights it would have if it were not the Trustee; and may act as a depositary for and permit any of its officers or directors to act as a member of, or in any other capacity with respect to, any committee fOl'med to protect the rights of Owners of Series A Bonds, whether or not such committee shallrepl'esent the Owners of the majOl'ity in principal amount of the Series A Bonds then Outstanding, (e) In the absence of bad faith on its part, the Trustee shall be protected in acting upon any notice, request, consent, certificate, order, affidavit, letter, telegram or other paper or document believed by it to be genuine and correct and to have been signed 01' sent by the propel' person or persons, Any action taken or omitted to be taken by the Trustee in good faith and without negligence pursuant to this Indenture upon the request 01' authority 01' consent of any person who at the time of making such request or giving such authority 01' consent is the Owner of any Series A Bond, shall be conclusive and binding upon all future Owners of the same Series A Bond and upon Series A Bonds issued in exchange therefor or in place thereof. The Trustee shall not be botmd to recognize any person as an Owner of any Series A Bond 01' to take any action at his request unless the ownership of such Series A Bond by such person shall be reflected on the Bond Registration Books, (f) As to the existence or non-existence of any fact 01' as to the sufficiency 01' validity of any instrument, paper 01' proceeding, the Trustee shall be entitled to rely upon a Certificate of the City as sufficient evidence of the facts therein contained and prior to the OCCUl'l'ence of an Event of Default hereunder of which the Trustee has been given notice 01' is deemed to have notice, as provided in Section 6,02(h) hereof, shall also be at liberty to accept a similar certificate to the effect that any particular dealing, transaction 01' action is necessary or expedient, but may at its discretion secure such further evidence deemed by it to be necessary or advisable, but shall in no case be bound to secure the same, The Trustee may accept a Certificate of the City to the effect that an authorization in the form therein set forth has been adopted by the City, as conclusive evidence that such authOl'ization has been duly adopted and is in full force and effect. (g) 1be perml~slve right of the Trustee to do things enumerated in this Indenture shall not be construed as a duty and it shall not be answerable for other than its negligence 01' willful default. The immunities and exceptions from liability of the Trustee shall extend to its officers, directors, employees and agents, (h) The Trustee shall not be required to take notice or be deemed to have notice of any Event of Default hereunder except failme by the City to make any of the payments to the Trustee required to be made by the City pursuant hereto or failure by the City to file with the Trustee any document required by this Indenture to be so filed subsequent to the issuance of the Series A Bonds, unless the Trustee shall be specifically 38 notified in writing of such default by the City or by the Owners of at least twenty-five percent (25%) in aggregate principal amount of the Series A Bonds then Outstanding and all notices or other instruments required by this Indenture to be delivered to the Tl'1Istee must, in order to be effective, be delivered at the Tl'1Ist Office of the Trustee, and in the absence of such notice so delivered the Trustee may conclusively assume there is no Event of Default hereunder except as aforesaid. (i) At any and all reasonable times the Trustee, and its duly authorized agents, attorneys, experts, engineers, accountants and representatives, shall have the right (but not the duty) fully to inspect the Water System, including all books, papers and recOl'ds of the City pel·taining to the Water System and the Series A Bonds, and to take such memoranda from and with regard thereto as may be desired but which is not privileged by statute or by law. G) 1be TlUstee shall not be required to give any bond or surety in respect of the execution of the said trusts and powers or otherwise in respect of the premises. (k) Notwithstanding anything elsewhere in this Indenture with respect to the execution of any Series A Bonds, the withdrawal of any cash, the release of any property, or any action whatsoever within the purview of this Indenture, the Trustee shall have the right, but shall not be required, to demand any showings, certificates, opinions, appraisals or other information, 01' corporate action or evidence thereof, as may be deemed desirable for the purpose of establishing the right of the City to the execution of any Series A Bonds, the withdrawal of any cash, 01' the taking of any other action by the Trustee. (1) Before taking the action referred to in Section 8.03 the Trustee may require that a satisfactory indemnity bond be furnished for the reimbursement of all expenses to which it may be put and to protect it against all liability, except liability which is adjudicated to have resulted from its negligence or willful default in connection with any such action. (m) All moneys received by the Trustee shall, until used or applied or invested as herein provided, be held in trust for the purposes for which they were received but need not be segregated from other funds except to the extent required by law. The Trustee shall not be under any liability for interest on any moneys received hereunder except such as may be agreed upon. SECTION 6.03. Fees,'Charges and Expenses of Trustee. The Trustee shall be paid by the City and reimbursed by the City for reasonable fees for its services rendered hereunder and all advances, counsel fees (including expenses) and other expenses reasonably and necessarily made or incurred by the Trustee in connection with such services. Upon the occurrence of an Event of Default hereunder, but only upon an Event of Default, the Trustee shall have a first lien with right of payment prior to payment of any Series A Bond upon the amounts held hereunder for the foregoing fees, charges and expenses incurred by it respectively, SECTION 6.04. Notice to Bond Owners of Default. If an Event of Default hereunder occurs with respect to any Series A Bonds, of which the Tl'Ustee has been given or is deemed to have notice, as provided in Section 6.02(h) hereof, then the Trustee shall promptly give written 39 notice thereof by first-class mail to the Owner of each such Series A Bond, unless such Event of Default shall have been cured before the giving of such notice; provided, however, that unless such Event of Default consists of the failure by the City to mak.,e any payment when due, the Trustee may elect not to give such notice if and so long as the Trustee in good faith determines that it is in the best interests of the Bond Owners not to give such notice. SECTION 6.05. Intery~ntion by Trustee. In any judicial proceeding to which the City is a party which, in the opinion of the Tl'Ustee and its counsel. has a substantial bearing on the interests of Owners of any of the Series A Bonds, the Tl'Ustee may intervene on behalf of such Bond Owners, and subject to Section 6.02 (I) hereof, shall do so if requested in writing by the Owners of at least twenty-five percent (25%) in aggregate principal amount of such Series A Bonds then Outstanding. SECTION 6.06. Removal of Trustee. The Owners of a majority in aggregate principal amount of the Outstanding Bonds may at any time, and the City may, so long as no Event of Default shall have occurred and then be continuing, remove the Trustee initially appointed, and any successor thereto, by an instrument or concurrent insb'uments in writing delivered to the Trustee (where applicable), whereupon the City or such Owners, as the case may be, shall appoint a successor or succeSSOrS thereto; provided that any such successor shall be a bank or trust company meeting the requirements set forth in Section 6.01 hereof. SECTION 6.07. ResignatiolJ, by Trustee. The Trustee and any successor Trustee may at any time resign by giving thirty (30) days' written notice by registered or certified mail to the City. Upon receiving such notice of resignation, the City shall promptly appoint a successor Trustee. Any resignation 01' removal of the Trustee and appointment of a successor Trustee shall become effective upon acceptance of appointment by the successor Trustee. Upon such acceptance, the City shall cause notice thereof to be given by first class mail to the Bond Owners at their respective addresses set forth on the Bond Registration Books. No resignation of the Trustee shall take effect until a successor is appointed and has accepted. SECTION 6.08. Appointment of Successor Trustee. In the event of the removal or resignation of the Trustee pursuant to Sections 6.06 or 6.07, respectively, the City shall promptly appoint a successor Trustee. In the event the City shall for any reason whatsoever fail to appoint a successor Trustee within forty-five (45) days following the delivery to the Trustee of the instrument described in Section 6.06 or within forty-five (45) days following the receipt of notice by the City pursuant to Section 6.07, the Trustee may apply to a court of competent jurisdiction for the appointment of a successor Trustee meeting the requirements of Section 6.01 hereof. Any such successor Trustee appointed by such court shall become the successor Trustee hereunder notwithstanding any action by the City purporting to appoint a successor Trustee following the expiration of such fOl'ty-five-day period. SECfION 6.09. Merger or Consolidation. Any company into which the Trustee may be merged 01' converted or which it may be consolidated 01' any company resulting from any merger, conversion or consolidation to which it shall be a party or any company to which the Trustee may sell or transfer all or substantially all of its corporate trust business, provided that such company shall be eligible under Section 6.01, shall be the successor to the Trustee and vested with all of the title to the trust estate and all of the trusts, powers, discretions, immunities, privileges and all other matters as was its predecessor, without the execution or filing of any paper or further act, anything herein to the contrary notWithstanding. 40 SECTION 6.10. Concerning any Successor Trustee. Every successor Trustee appointed hereunder shall execute, acknowledge and deliver to its predecessor and also to the City an instrument in writing accepting such appointment hereunder and thereupon such successor, without any further act, deed or conveyance, shall become fully vested with all the estates, properties, rights, powers, trusts, duties and obligations of its predecessors; but such predecessor shall, nevertheless, On the Request of the City, or of its successor, execute and deliver an instrument transferring to such successor all the estates, properties, rights, powers and trusts of such predecessor hereunder; and every predecessOI' Trustee shall deliver all securities and moneys held by it as the Trustee hereunder to its successor. Should any instrument in writing from the City be required by any successor Trustee for more fully and certainly vesting in such successor the estate, rights, powers and duties hereby vested or intended to be vested in the predecessor, any and all such insh'uments in writing shall, on request, be executed, acknowledged and delivered by the City. SECTION 6.11. Appointment of Co-Trustee. It is the purpose of this Indenture that there shall be no violation of any law of any jurisdiction (including particularly the law of the State) denying or restricting the right of banking corporations Or associations to transact business as Trustee in such jurisdiction. It is recognized that in the case of litigation under this Indenture, and in particular in case of the enforcement of the rights of the Trustee on default, or in the case the Trustee deems that by reason of any present or future law of any jurisdiction it may not exercise any of the powers, rights or remedies herein granted to the Trustee or hold title to the properties, in trust, as herein granted, or take any other action which may be desirable or necessary in connection therewith, it may be necessary that the Trustee appoint an additional individual 01' institution as a separate or co-trustee. The following provisions of this Section 6.11 are adopted to these ends. In the event that the Trustee appoints an additional individual or institution as a separate or co-trustee, each and every remedy, power, right, claim, demand, cause of action, immunity, estate, title, interest and lien expressed or intended by this Indenture to be exercised by Or vested in or conveyed to the Trustee with respect thereto shall be exercisable by and vest in such separate or co-h'ustee but only to the extent necessary to enable such separate or co- hustee to exercise such powers, rights and remedies, and every covenant and obligation necessary to the exercise tllereof by such separate or co-trustee shall run to and be enforceable by either of them. Should any instrument in writing from the City be required by the separate trustee or co-trustee so appointed by the Trustee for more fully and celtainly vesting in and confirming to it such properties, rights, powers, trusts, duties and obligations, any and all such instruments in writing shall, on request, be executed, acknowledged and delivered by the City. In case any separate trustee or co-trustee, or a successor to either, shall become incapable of acting, resign or be removed, all the estates, properties, rights, powers, trusts, duties and obligations of such separate trustee or co-trustee, so far as permitted by law, shall vest in and be exercised by the Trustee until the appointment of a new trustee or successor to such separate h'ustee or eo- trustee. SECTION 6.12. IndemnificatiQn; Limited Lillbility of Trustee. The City shall indemnify and hold the Trustee harmllo'.ss from and against all claims, losses, costs, expenses, liabilities and damages including legal fees and expenses arising from the exercise and 41 performance of its duties hereunder. Such indemnity shall survive the resignation or removal of the Trustee hereunder. No provision in this Indenture shall requh<e the Trustee to risk or expend its own funds or otherwise incur any financial liability hereunder if it shall have reasonable grounds for believing repayment of such funds or adequ~te indemnity against such liability or risk is not assured to it. The Trustee shall not be liable for any action taken or omitted to be taken by it in accordance with the direction of a majority (or other percentage provided herein) of the Owners of the principal amount of Bonds Outstanding relating to the exercise of any right, power or action, or the time, method and place of conducting any proceeding or remedy available to the Trustee under this Indenture. 42 ARTICLE VII MODIFICATION AND AMENDMENT OF THE INDENTURE SECTION 7.01. AlllfI.14111f!,~Consent9i BoncLQ!vnfrs. This Indenture and the rights and obligations of the City and of the Owners of the Series A Bonds may be modified or amended at any time by a Parity Bonds Instrument which shall become binding when the written consent of the Owners of a majority in aggregate principal 'amount of the Series A Bonds then Outstanding exclusive of Series A Bonds disqualified as provided in Section 7,03 hereof, are filed with the Trustee. No such modification or amendment shall (a) extend the maturity of or reduce the interest rate on any Series A Bond or otherwise alter 01' impair the obligation of the City to pay the principal, interest 01' redemption premiums at the time and place and at the rate and in the cU1'1'ency provided therein of any Sel'ies A Bond without the express written (;onsent of the Owner of such Series A Bond, (b) reduce the percentage of Series A Bonds required for the written consent to any such amendment or modification, or (c) without its written consent thereto, modify any of the rights 01' obligations of the Trustee. SEC'TION 7.02. AmendmentJ'Vitho!!LCo!1sent2'fJ!ondhoJd~. This Indentul'e and the rights and obligations of the City and of the Owners of the Series A Bonds may also be modified or amended at any time by a Parity Bends Instrument which shall become binding upon execution and delivery, without consent of any Bond Owners, but only to the extent permitted by law and only for anyone or more of the following purposes- (a) to add to the covenants and agreements of the City in this Indenture contained, other covenants and agreements thereafter to be observed, or to limit or surrender any rights or power herein reserved to or conferred upon the City; or (b) to make such provisions for the purpose of curing any ambiguity, or of curing, coneeting or supplementing any defective provision contained in this Indenture, or in any other respect whatsoever as the City may deem necessary or desirable, provided under any circumstances that such modifications or amendments shall not adversely affect tile interests of the Owners of the Series A Bonds; (c) to provide for the issuance of any Parity Bonds, and to provide the terms and conditions under which such Parity Bonds may be issued, including but not limited to the establishment of special funds and accounts relating to such Parity Bonds and any other provisions relating solely to such Parity Bonds, subject to and in accordance with the provisions of Section 3.06; or (d) to make such additions, deletions or modifications as may be necessary or desirable to assure exemption from federal income taxation of interest on the Series A Bonds. SECTION 7.03. Qisquo:t!ifi~<!JJo!1.<ill. Series A Bonds owned or held by 01' for the account of the City (but excluding Series A Bonds held in any employees' retirement fund) shall not be deemed Outstanding for the purpose of any consent or other action or any calculation of Outstanding Bonds in this article provided for, and shaH not be entitled to consent to, or take any other action in Ulis article provided for. 43 SECTION 7.04. Endorsement or Replacement of S~ries A Bonds After Amendment. After the effective date of any action taken as hereinabove provided, the City may determine that the Series A Bonds shall bear a notation, by endorsement in form approved by the City, as to such action, and in that case upon demand of the Owner of any Bond ,Outstanding at such effective date and presentation of his Series A Bond for that pUl'pose at the Trust Office of the Trustee, a suitable notation as to such action shall be made on such Series A Bond. If the City shall so determine, new Series A Bonds so modified as, in the opinion of the City, shall be necessary to conform to such Bond Owners' action shall be prepared and executed, and in that case upon demand of the Owner of any Series A Bond Outstanding at such effective date such new Series A Bonds shall be exchanged at the Tl'Ust Office of the Trustee, without cost to each Bond Owner, for Series A Bonds then Outstanding, upon surrender of such Outstanding Series A Bonds. SECTION 7.05. Amendment by Mutual Consent. The provisions of this Article VII shall not prevent any Bond Owner from accepting any amendment as to the particular Series A Bond held by him, provided that due notation thereof is made on such Series A Bond. 44 ARTICLE VIII EVENTS OF DEFAULT AND REMEDIES OF BOND OWNERS SECTION 8.01. Events of Default and A<eceleration of Maturities. The following events shall be Events of Default hereunder: (a) Default in the due and punctual payment of the principal of any Series A Bond when and as the same shall become due and payable, whether at maturity as therein expressed, by proceedings for redemption, by declaration or otherwise; (b) Default in the due and punctual payment of any installment of interest on any Series A Bond when and as such interest installment shall become due and payable; (c) Default by the City in the observance of any of the covenants, agreements or conditions on its part in this Indenture or in any Parity Bonds Instrument or in the Series A Bonds contained, and such default shall have continued for a period of sixty (60) days after the City shall have been given notice in writing of such default by the Trustee; or (d) The filing by the City of a petition or answer seeking reorganization or arl'angement under the federal bankruptcy laws or any other applicable law of the United States of America, or if a court of competent jurisdiction shall approve a petition, filed with or without the consent of the City, seeking reorganization under the federal bankruptcy laws or any other applicable law of the United States of America, or if, under the provisions of any other law for the relief or aid of debtors, any court of competent jurisdiction shall assume custody or control of the City or of the whole or any substantial part of its property. Upon the occurrence of an Event of Default, the Trustee may, and shall, at the direction of the owners of a majority of the principal amount of the Series A Bonds, by written notice to the City, declare the principal of Ule Series A Bonds to be immediately due and payable, whereupon that portion of the principal of the Series A Bonds thereby coming due and there interest thereon accrued to the date of payment shall, without further action, become and be immediately due and payable, anything in this Indenture or in the Series A Bonds to the contrary notwithstanding. This provision, however, is subject to the condition that if, at any time after the principal of the Series A Bonds shall have been so declared due and payable and before any judgment 01' decree for the payment of the moneys due shall have been obtained or entered, the City shall deposit with the Trustee a sum sufficient to pay all of the principal of and interest on the Series A Bonds having come due prior to such declaration, with interest on such overdue principal and interest calculated at the rate of interest per annum Ulen borne by the Outstanding Bonds, and the reasonable fees and expenses of the Trustee and those of its attorneys, and any and all other defaults known to the Trustee (other than in the payment of the principal of and interest on the Series A Bonds having come due and payable solely by reason of such declaration) shall have been made good or cured to the satisfaction of the Trustee or provision deemed by the Trustee to be adequate shall have been made therefor, then, and in every such case, the Owners of a majority in aggregate principal amount of the Series A Bonds at the time Outstanding may, by wTitten notice to the City and to the Trustee, on behalf 45 of the Owners of all of the Outstanding Bonds, rescind and annul such declaration and its consequences. However, no such rescission and annulment shall extend to or shall affect any subsequent default, or shall impair or exhaust any right or power consequent thereon. SECTION 8.02. Application of Funds Upon Acceleration. All amounts received by the Trustee pursuant to any right given or action taken by the Trustee under the provisions of this Indenture shall be applied by the Trustee in the following order upon presentation of the several Series A Bonds, and the stamping thereon of the amount of the payment if only partially paid, or upon the surrender thereof if fully paid - First, to the payment of the costs and expenses of the Trustee and of Bond Owners in declaring such Event of Default, including reasonable compensation to their agents, attorneys and counsel, and to the payment of the costs and expenses of the Trustee, if any, in carrying out the provisions of this Article Vlll, including reasonable compensation to its agents, attorneys and counsel; and Second, to the payment of the whole amount then owing and unpaid upon the Series A Bonds for interest and principal, with interest on such overdue 'amounts to the extent permitted by law at the rate of interest then borne by the Outstanding Bonds, and in case such moneys shall be insufficient to pay in full the whole amount so owing and unpaid upon the Series A Bonds, then to the payment of such interest, principal and interest on overdue amounts without preference or priority among such interest, principal and interest on overdue amounts ratably in proportion to the aggregate of such interest, principal and interest on overdue amounts. SECTION 8.03. Other Remedies; Rights of Bond Owners. Upon the occurrence of an Event of Default, the Trustee may pursue any available remedy, in addition to the remedy specified in Section 8.01, at law or in equity to enforce the payment of the principal of, premium, if any, and interest on the Outstanding Bonds, and to enforce any rights of the Trustee 1,lnder or with respect to thi~ Indenture. If an Event of Default shall have occurred and be continuing and if requested so to do by the Owners of at least twenty-five percent (25%) in aggregate principal amount of Outstanding Bonds and indemnified as provided in Section 6.02 (I), the Trustee shall be obligated to exercise such one or more of the rights and powers conferred by this Article VIII, as the Trustee, being advised by counsel, shall deem most expedient in the interests of the Bond Owners. No remedy by the terms of this Indenture conferred upon or reserved to the Trustee (or to the Bond Owners) is intended to be exclusive of any other remedy, but each and every such remedy shall be cumulative and shall be in addition to any other remedy given to the Trustee or to the Bond Owners hereunder or now or hereafter existing at law or in equity. No delay or omission to exercise any right or power accruing upon any Event of Default shall impair any such right or power or shall be construed to be a waiver of any such Event of Default or acquiescence therein; such right or power may be exercised from time to time as often as may be deemed expedient. 46 SECTION 8.04. Power of Trustee to Control Proceedings. In the event that the Trustee, upon the happening of an Event of Default, shall have taken any action, by judicial proceedings or otherwise, pursuant to its duties hereunder, whether upon its own discretion or upon the request of the Owners of a majority in principal amount of the Series A Bonds then Outstanding, it shall have full power, in the exercise of its discretion for the best interests of the Owners of the Series A Bonds, with respect to the continuance, discontinuance, withdrawal, compromise, settlement or other disposal of such action; provided, however, that the Trustee shall not, unless there no longer continues an Event of Default, discontinue, withdraw, compromise or settle, or othelwise dispose of any litigation pending at law or in equity, if at the time there has been filed with it a written request signed by the Owners of a majority in principal amount of the Outstanding Bonds hereunder opposing such discontinuance, withdrawal, compromise, settlement or other disposal of such litigation. Any suit, action or proceeding which any Owner of Series A Bonds shall have the right to bring to enforce any right or remedy hereunder may be brought by the Trustee for the equal benefit and protection of all Owners of Series A Bonds similarly situated and the Trustee is hereby appointed (and the successive respective Owners of the Series A Bonds issued hereunder, by taking and holding the same, shall be conclusively deemed so to have appointed it) the b·ue and lawful attorney-in- fact of the respective Owners of the Series A Bonds for the purpose of bringing any such suit, action or proceeding and to do and perform any and all acts and things for and on behalf of the respective Owners of the Series A Bonds as a class or classes, as may be necessary or advisable in the opinion of the Trustee as such attorney-in-fact. SECTION 8.05. Appointment of Receivers. Upon the occurrence of an Event of Default hereunder, and upon the filing of a suit or other commencement of judicial proceedings to enforce the rights of the Trustee and of the Bond Owners under this Indenture, the Trustee shall be entitled, as a matter of right, to the appointment of a receiver or receivers of the Net Revenues and other amounts pledged hereunder, pending such proceedings, with such powers as the court making such appointment shall confer. SECTION 8.06. Non-Waiver. Nothing in this Article VIII or in any other provision of this Indenture, or in the Series A Bonds, shall affect or impair the obligation of the City, which is absolute and unconditional, to pay the interest on and principal of the Series A Bonds to the respective Owners of the Series A Bonds at the respective dates of maturity, as herein provided, out of the Net Revenues and other moneys herein pledged for such payment. A waiver of any default or breach of duty or conb·act by the Trustee or any Bond Owners shall not affect any subsequent default or breach of duty or contract, or impair any rights or remedies on any such subsequent default or breach. No delay or omission of the Trustee or any Owner of any of the Series A Bonds to exercise any right or power accruing upon any default shall impair any such right or power or shall be construed to be a waiver of any such default or an acquiescence therein; and every power and remedy conferred upon the Trustee or Bond Owners by the Bond Law or by this Article VIII may be enforced and exercised from time to time and as often as shall be deemed expedient by the Trustee or the Bond Owners, as the case may be. If a suit, action or proceeding to enforce any right or exercise any remedy is abandoned or determined adversely to the Bond Owners, the City and the Bond Owners shall be restored to their former positions, rights and remedies as if such suit, action or proceeding had not been brought or taken. 47 SECTION 8.07. Rights and Remedies of Bond Owners. No Owne1' of any Series A Bond issued hereunder shall have the right to institute any suit, action or proceeding at law or in equity, for any remedy under or upon this Indenture, unless (a) such Owner shall have previously given to the Trustee written notice of the occurrence· of an Event of Default; (b) the Owners of a majority in aggregate principal amount of all the Series A Bonds then Outstanding shall have made written request upon the Tmstee to exercise the powers hereinbefore granted or to instihlte such action, suit or proceeding in its own name; (c) said Owners shall have tendered to the Trustee indemnity reasonably acceptable to the Trustee against the costs, expenses and liabilities to be incurred in compliance with such l'equest; and (d) the Trustee shall have refused or omitted to comply with such request for a period of sixty (60) days after such written request shall have been received by, and said tender of indemnity shall have been 11141de to, the Trustee, Such notification, request, tender of indemnity and refusal or orruss10n are hereby declared, in every case, to be conditions precedent to the exercise by any Owner of Series A Bonds of any remedy hereunder; it being understood and intended that no one or more Owners of Series A Bonds shall have any right in any manner whatever by his or their action to enforce any right under this Indenrure, except in the manner herein provided, and that all proceedings at law 01' in equity to enforce any pl'Ovision of this Indenrure shall be instituted, had and maintained in the manner herein provided and for the equal benefit of all Owners of the Outstanding Bonds, The right of any Owner of any Series A Bond to receive payment of the principal of and interest and premium (if any) on such Series A Bond as herein pl'Ovided 01' to institute suit for the enforcement of any such payment, shall not be impaired or affected without the written consent of such Owner, notwithstanding the foregoing provisions of this Section or any other provision of this Indenrure. SECTION 8,08. Termination of Proceedings. In case the Trustee shall have proceeded to enforce any right under this Indenture by the appointment of a receiver 01' otherwise, and such proceedings shall have been discontinued or abandoned for any reason, 01' shall have been determined adversely, then and in every such case, the City, the Trustee and the Bond Owners shall be restored to their former positions and rights hereunder, respectively, with regard to the pl'Operty subject to this Indenture, and all rights, remedies and powers of the Trustee shall continue as if no such proceedings had been taken, 48 ARTICLE IX MISCELLANEOUS SECTION 9.01. Limited Liability of City. Notwithstanding anything in this Indenture contained, the City shall not be required to advance any moneys derived from any source of income other than the Net Revenues for the payment of the principal of or interest on the Series A Bonds, or any premiums upon the redemption thereof, or for the performance of any covenahts herein contained (except to the extent any such covenants are expressly payable hereunder from the Gross Revenues). The City may, however, advance funds for any such purpose, provided that such funds are derived from a source legally available for such purpose and may be used by the City for such purpose without incurring indebtedness. SECTION 9.02. Benefits of Indenture Limited to Parties. Nothing in this Indenture, expressed or implied, is intended to give to any person other than the City, the Trustee and the Owners of the Series A Bonds, any right, remedy or claim under or by reason of this Indenture. Any covenants, stipulations, promises or agreements in this Indenture contained by and on behalf of the City shall be for the sale and exclusive benefit of the Trustee and the Owners of the Series A Bonds. SECTION 9.03. Discharge of Indenture. If the City shall pay and discharge any or all of the Outstanding Bonds in anyone or more of the following ways: (a) by well and truly paying or causing to be paid the principal of and interest and premium (if any) on such Series A Bonds, as and when the same become due and payable; (b) by depositing with the Trustee, in h"ust, at or before maturity, money which, together with the available amounts then on deposit in the funds and accounts established pursuant to this Indenture, is fully sufficient to pay such Series A Bonds, including all principal, interest and redemption premiums; or (c) by depositing with a qualified escrow holder, in h'ust, Defeasance Obligations in such amount as the City (verified by an Independent Certified Public Accountant) shall determine will, together with the interest to accrue thereon and available moneys then on deposit in the Funds and Accounts established pursuant to this Indenture, be fully sufficient to pay and discharge the indebtedness on such Series A Bonds (including all principal, interest and redemption premiums, if any) at or before their respective maturity dates; and if such Series A Bonds are to be redeemed prior to the maturity thereof notice of such redemption shall have been mailed pursuant to Section 2.02( d) or provision satisfactory to the Trustee shall have been made for the mailing of such notice, then, at the election of the City, and notwithstanding that any of such Series A Bonds shall not have been surrendered for payment, the pledge of the Net Revenues and other funds provided for in this Indenture with respect to such Series A Bonds, and all other pecuniary obligations of the City under this Indenture with respect to all such Series A Bonds, shall cease and terminate, except only the obligation of the City to payor cause to be paid to the Owners of such Series A Bonds not so 49 surrendered and paid all sums due thereon from amounts set aside for such purpose as aforesaid, and all expenses and costs of the Trustee. Notice of such election shall be filed with the Trustee. Any funds thereafter held by the Trustee, which are not required for said purposes, shall be paid over to the City. Refunding bonds may be issued at any time without regard to whether an Event of Default exists. To accomplish defeasance the City shall cause to be delivered (i) a report of an Independent Certified Public Accountant verifying the sufficiency of the escrow established to pay the Series A Bonds in full on the maturity or earlier redemption date ("Verification"), «ii) an escmw deposit agreement, and (iii) an opinion of nationally recognized bond counsel to the effect that the Series A Bonds are no longer "Outstanding" under this Indenture; each Verification and defeasance opinion shall be acceptable in form and substance, and addressed, to the City and the Trustee. SECTION 9.04. Succes~Qr Is Deemed Incluc\,?d in All ReferencesJ9 Predecessor. Whenever in this Indenture or any Parity Bonds Instrument the City is named or refelTed to, such reference shall be deemed tu include the successor to the powers, duties and functions, with respect to the management, administration and control of the affairs of the City, that are presently vested in the City, and all the covenants, agreements and provisions contained in this Indenture by or on behalf of the City shall bind and inure to the benefit of its successors whether so expressed or not. SECTION 9.05. Content of C",.rtificates. Every certificate with respect to compliance with a condition 01' covenant provided for in this Indenture shall include (a) a statement that the person or persons making or giving such certificate have read such covenant or condition and the definitions herein relating thereto; (b) a brief statement as to the nature and scope of tl1e examination or investigation upon which the statements 01' opinions contained in such certificate are based; (cl a statement that, in the opinion of the signers, they have made or caused to be made such examination or investigation as is necessary to enable them to express an informed opinion as to whether 01' not such covelilant or condition has been complied with; and (d) a statement as to whether, in the opinion of the signers, such condition or covenant has been complied with. Any such certificate made 01' given by an officer of the City may be based, insofar as it relates to legal matters, upon a certificate or opinion of or representations by counsel, unless such officer knows that the certificate or opinion or representations with respect to the matters upon which his certificate may be based, as aforesaid, are erroneous, or in the exercise of reasonable care should have known that the same were erroneous. Any such certificate or opinion or representation made or given by counsel may be based, insofar as it relates to factual matters, on information with l'espect to which is in the possession of the City, upon the certificate or opinion of 01' representations by an officer or officers of the City, unless such counsel knows that the certificate 01' opinion or representations with respect to the matters upon which his certificate, opinion or representation may be based, as aforesaid, are el'l'oneous, or in the exercise of reasonable care should have known that the same were erroneous. 50 SECTION 9.06. J:ixecution of Documents byJlond Owners. Any request, consent or other instrument required by this Indenture to be signed and executed by Bond Owners may be in any number of concurrent writings of substantially similar tenor and may be signed or executed by such Bond Owners in person or by agent or agents duly appointed in writing. Proof of the execution of any such request, consent 01' other insh'ument or of a writing appointing any such agent, shall be sufficient for any purpose of this Indenture and shall be conclusive in favor of the Trustee and of the City if made in the manner provided in this Section 9.06. The fact and date of the execution by any person of any such request, consent or other instrument or writing may be proved by the affidavit of a wiiness of such execution or by the certificate of any notary public or other officer of any jurisdiction, authorized by the laws thereof to take acknowledgments of deeds, certifying that the person signing such request, consent or other instrument or writing acknowledged to him the execution thereof. The ownership of Series A Bonds shall be provided by the Bond Registration Books. Any request, consent or vote of the Owner of any Series A Bond shall bind every future Owner of the same Series A Bond and the Owner of any Series A Bond issued in exchange therefor or in lieu thereof, in respect of anything done or suffered to be done by the Trustee or the City in pursuance of such request, consent or vote. In determining whether the Owners of the requisite aggregate principal amount of Series A Bonds have concurred in any demand, request, direction, consent or waiver under this Indenture, Series A Bonds which are owned or held by or for the account of the City (but excluding Series A Bonds held in any employees' retirement fund) shan be disregarded and deemed not to be Outstanding for the purpose of any such determination, provided, however, that for the purpose of determining whether the Trustee shall be protected in relying on any such demand, I'equest, direction, consent or waiver, only Series A Bonds which the Trustee knows to be so owned or held shall be disregarded. In lieu of obtaining any demand, I'equest, direction, consent or waiver in writing, the Trustee may call and hold a meeting of the Bond Owners upon such notice and in accordance with such rules and obligations as the Trustee considers fair and reasonable for the purpose of obtaining any such action. SECTION 9.07. WaiverQLPersonal Liability. No officer, agent 01' employee of the City shall be individually or personally liable for the payment of the interest on or principal of the Series A Bonds; but nothing herein contained shall relieve any such officer, agent 01' employee from the performance of any official duty pl'Ovided by law. SECTION 9.08. Partial l!:lyaIidity. If anyone or more of the covenants or agreements, or portions thereof, pl'Ovided in this Indenture on the part of the City (01' of the Trustee) to be performed should be contrary to law, then such covenant or covenants, such agreement or agreements, or such portions thereof, shall be null and void and shall be deemed separable from the remaining covenants and agreement~ or portions thereof and shall in no way affect the validity of this Indenture or of the Series A Bonds; but the Bond Owners shall retain all rights and benefits accorded to them under the Bond Law 01' any other applicable provisions of law. The City hereby declares that it would have entered into this Indenture and each and 51 every other section, paragraph, subdivision, sentence, clause and phrase hereof and would have authorized the issuance of the Series A Bonds pursuant hereto irrespective of the fact that anyone or more sections, paragraphs, subdivisions, sentences, clauses or phrases of this Indenture or the application thereof to any person or circumstance may be held to be unconstitutional, unenforceable or invalid. SECTION 9.09. Destruction of Cancelled Series A Bonds. Whenever in this Indentme provision is made for the surrender to the City of any Series A Bonds which have been paid or cancelled pursuant to the provisions of this Indenture, the Trustee shall desb'oy such Series A Bonds and furnish to the City a certificate of such destruction. , SECTION 9.10. Funds and Accounts. Any Fund or Account required by this Indenture to be established and maintained by the City or the Trustee may be established and maintained in the accounting records of the City or the Trustee, as the case may be, either as a Fund or an Account, and may, for the purpose of such records, any audits thereof and any reports or statements with respect thereto, be treated either as a Fund or as an Account. All such records with respect to all such Funds and Accounts held by the City shall at all times be maintained in accordance with geherally accepted accounting principles and all such records with respect to all such Funds and Accounts held by the Trustee shall be at all times maintained in accordance with industry practices; in each case with due regard for the protection of the security of the Series A Bonds and the rights of every Owner thereof. SECTION 9.11. Notices. Any notice, request, complaint, demand, communication or other paper shall be sufficiently given and shall be deemed given when delivered or mailed by registered or certified mail, postage prepaid, or sent by telegram, addressed as follows: if to the City, to City of Palo Alto, City Hall, 250 Hamilton Avenue, Palo Alto, California 94301, Attention: Director of Adminisb'ative Services; and if to the Trustee, at One California Sb'eet, Tenth Floor, Suite 1000, San Francisco, CA 94111, Attention: Corporate Trust Services. The City and the Trustee may designate any further or different addresses to which subsequent notices, certificates or other communications shall be sent. SECTION 9.12. Unclaimed Monevs. Anything in this Indenture to the contrary notwithstanding, any moneys held by the Trustee in bust for the payment and discharge of any of the Series A Bonds which remain unclaimed for one (1) year after the date when such Series A Bonds have become due and payable, either at their stated maturity dates 01' by call for earlier redemption, if such moneys were held by the Trustee at such date, or for one (1) year after the date of deposit of such moneys if deposited with the Trustee after said date when such Series A Bonds become due and payable, shall, at the Request of the City, be repaid by the Trustee to the City, as its absolute property and free from trust, and the Trustee shall thereupon be released and discharged with respect thereto and the Bond Owners shall look only to the City for the payment of such Series A Bonds; provided, however, that before being required to make any such payment to the City, the Trustee shall, at the expense of the City, cause to be mailed to the Owners of all such Series A Bonds, at their respective addresses appearing on the Bond Registration Books, a notice that said moneys remain unclaimed and that, after a date named in said notice, which date shall not be less than thirty (30) days after the date of mailing of such notice, the balance of such moneys then unclaimed will be returned to the City. SECTION 9.13. Execution in Several Counterparts. This Indenture may be executed in any number of counterpaits and each of such counterparts shall for all purposes be deemed to 52 be an original; and all such counterparts, or as many of them as the City and the Trustee shall preserve undesh'oyed, shall together constitute but one and the same instrument. SECTION 9.14. Governing Law. This Indenture shall be governed by and construed in accordance with the laws of the State of California. SECTION 9.15. Payment on Business Days. In any case where the date of the maturity of interest or of principal (and premium, if any) of the Series A Bonds or the date fixed for redemption of any Series A Bonds or the date any action is to be taken pursuant to this Agreement is other than a Business Day; the payment of interest or principal (and premium, if any) or the action need not be made on such date but may be made on the next succeeding day which is a Business Day with the same force and effect as if made on the date required and no interest shall accrue for the period from and after such date. 53 IN WITNESS WHEREOF, the CITY OF PALO AerO has caused this Indenture to be signed in its name by its Director of Administrative Services and its seal to be affixed hereon and attested by its City Oerk, and U.S. Bank National Association, in token of its acceptance of the trust created hereunder, has caused this Indenture to be signed in its corporate name by its officer identified below, all as of the day and year first above written. [SEA LJ Attest: CityOerk 54 CITY OF PALO ALTO By ________________________ __ Director of Administrative Services U.S. Bank National Association, as Trustee By ________ ~~--~~------- Authorized Officer EXHIBIT A Form of Series A Bond 1 EXHIBITB Description of 2009 Water Project EXHlBITB OFFICIAL NOTICE OF SALE $[Principal Amount]* CITY OF PALO ALTO (SANTA CLARA COUNTY, CALIFORNIA) WATER REVENUE BONDS TAX-EXEMIYf 2009 SERIES A AND TAXABLE 2009 SERIES B (DIREct PAYMENT BUILD AMERICA BONDS) NOTICE IS HEREBY GIVEN by the City of Palo Alto (the "City") that electronic hids will he received by the City for the purchase of $ City of Palo Alto Water Revenue Bonds, Tax-Exempt 2009 Series A and/ or Taxable 2009 Series B (Direct Payment Build America Bonds) (together, the "Bonds"). Only electronic bids will be accepted, via PARITY@. No hand delivered or facsimile bids will be accepted. The bids will he received in the manner and up to the time and date specified below: DATE AND TIME: ELECTRONIC BIDS: _~ A.M. Pacific Daylight Time on __ _ 2009, (subject to postponement or cancellation in accordance with this Official Notice of Sale). Bid proposals may only be submitted elech·onically, via P ARITY@, as provided below. See "TERMS OP SALE -Warnings Regarding E1ectr·onlc Bids" herein. The City may postpone the date or change the time of the sale to any subsequent date or any other time by providing notification via Bloomberg Financial Markets or Thomson Municipal Market Monitor (www.tm3.com) at least 24 hours prior to the scheduled date and time of sale. The actual principal amount of the Bonds may vary, higher or lower, as a function of how the actrlal interest rates affect the amount of costs of issuance and the size of the reserve fund and as a function of the aemal discount taken by the successful bidder. The definitive principal amount will be determined on the date of sale. Bidders should refer to the preliminary Official Statement for definitions of terms and credit information regarding the Bonds. TERMS OF THE BONDS ISSUE. The Bonds will be issued ,under an Indenmre of Trust, dated as of November 1- 2009, between U.S. Bank National Association (the "Trustee") and the City (the" Indenmre"), in the aggregate principal amount of approximately $[Principal Amount]* designated "City of Palo Alto Water Revenue Bonds, Tax-Exempt 2009 Series A (the "Series A Bonds") and/or Taxable 2009 Series B (Direct Payment Build America Bonds) (the "Series B Bonds")," consisting • Preliminary, subject to change. 1- of fully-registered bonds, without coupons, executed and delivered in book-enhy only form ,md registered in the name of Cede & Co., as nominee for The Depository Trust Company ("DTC"), in the denorllination of five thousand dollars ($5,000) each or any integral multiple thereof. The City is offering the Series A Bonds as tax-exempt obligations or as taxable Series B Bonds, which the City will elect to designate as Qualified Direct Payment Build America Bonds. A bidder may bid on all of the Bonds as Series A Bonds, or all of the Bonds as Series B Bonds, or a combination of Series A Bonds and Series B Bonds. All of the Bonds of each maturity will be designated as either Series A Bonds or Series B Bonds. A bidder must submit a bid for all of the Bonds. If the Bonds are issued as Series B Bonds, the City will elect to receive direct subsidy payments from the U.s. Department of Treasury. The owners of, and owners of beneficial interestq in, the Series B Bonds will not receive any tax credit with respect to such Bonds. DATE, MATURITIES AND AMOUNTS. The Bonds will be dated their date of delivery, with interest from such date at the rate or rates fixed upon the sale thereof and will mature serially or be paid as Mandatory Sinking Fund Installments on June 1 in each year as set forth in the following table: Maturity Date (Tune 1) Principal Amount * ADIUSTMENLQFPRINCIP AL AMOUNTS. The City reserves the right to increase or decrease the principal amount of any maturity of the Bonds as the City deems advisable in order to accomplish the optimal sizing of the Bond issue, however, the total principal amount will not exceed $ . Notice of such increase or decrease shall be given to the successful bidder within 24 hours of bid opening. No such adjustment will have the effect of altering the basis upon which the best bid is determined; provided, howe1ler, that any such increase or decrease shall result in a pro rata increase or decrease, as the case may be, in the amount of discount or premium on the purchase of the Bonds. In the event of any such adjustment, no re-bidding or re-calculation of the bids submitted will be required or permitted, and the successful bid or bids may not be withdrawn, and the successful bidder will not be permitted to change the interest rate(s) in its bid for the Bonds. The purchaser may elect to combine any number of consecutive maturities of Bonds for which an identical interest rate has been specified to comprise term bonds by indicating such • Preliminary, subject to change. -2- an election on the bid form. The election to create term bonds in such manner will require the creation of a mandatory sinking fund so that the Sinking fund redemption payments shall equal the corresponding serial bond amounts. PRIOR REDEMPTION. (a) Optional Redemption. The Bonds maturing on 01' before June 1, 20~ are not subject to optional redemption prior to maturity. The Bonds maturing on or after June 1, 20_ are subject to redemption prior to their respective maturity dates, at the option of the City, in any order directed by the City, and by lot within a maturity, on any date occurring on 01' after June 1, 20 .. ., from any source of available funds, at the following respective redemption prices (expressed as percentages of the principal amount of the Bonds to be redeemed), plus accrued interest thereon to the date of redemption: Redemption Periods Redemption Prices (b) Optional Redemption at Make-Whole:lSl"demption Price. 1he Series B Bonds are subject to optional redemption prior to their stated maturity, at the option of the City, in whole or in part on any date occurring on 01' before June 1, 20~, but only upon the occul'l'ence of a Fedcral Subsidy Termination Event, at a redemption price equal to the greater of: (1) 100% of the principal amount of the Series B Bonds to be redeemed; 01' (2) the sum of the present values of the remammg scheduled payments of principal and interest on the Series B Bonds to be redeemed (exclusive of interest accrued to thc date fixed for redemption) discounted to the date of redemption on a semialIDual basis (assuming a 360-day year consisting of twelve 3Q-.days months) at the TreasUlY Note Rate (defined below) plus __ basis points; plus in each case, accrued and unpaid interest on the Series B Bonds being redeemed to the date fixed for redemption. For purposes of this subsection (b), the following terms have the following respecti ve meanings: "<:::omparable Treasury Issue" means the United States Treasury security or securities selected by . (or any successor Broker-Dealer) which has an actual or interpolated maturity comparable to the remaining average life of the Series B Bonds to be redeemed, and that would be utilized in accordance with customary financial practice in pricing new issues of debt securities of comparable maturity to the remaining average life of such Series B Bonds. -3- "Comparabl~ .. T'·easury Price" means with respect to any "edemption date, (i) the average of the Reference Treasury Dealer Quotations for such redemption date, after excluding the highest and lowest Reference Treasury Deal Quotntions, 01' (ii) if the City obtains fewer than four such Reference Treasury Dealer Quotations, the average of all such quotations. "Federal Subsidy Termination Event" means the date on which the U.S. Department of Treasury suspends (or announces the suspension of), the direct payment to issuers of Build America Bonds (Direct Payment), of the tax credit provided for in Sections 54AA(b) and 6431 of the Internal Revenue Code of 1986, as amended (the "Code"). "Reference Treasury DealC1J ' means ....... __ (01' any successor Broker-Dealer) and three other firms, specified by the City from time to time, that are primary U.S. Government securities dealers in the City of New York (each a "Primary Treasury Dealer"); provided, Iwwever, that if any of them ceases to be a Primary Treasury Dealer, the City will substitute another Primary Treasury Dealer. "Referen~e Treasury Deal~r Quotations" means, with respect to each Reference Treasury Dealer and any redemption date, the average as determined by the City, of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) quoted in writing to the City by such Reference Treasury Dealer at 3:30 p.m., New York City time, on the third Business Day preceding such redemption date. "Trca"ury Note Rate" means, with respect to any redemption date, the rate pel' annum equal to the semiannual equivalent yield to maturity or interpolated maturity of the Comparable Treasury Issue, assuming that the C'.omparable Treasury Issue is purchased on the redemption date for a price equal to the Comparable Treasury Price. (c) Special Mandatory Redemption From Insurance or Condemnation Proceeds. The Bonds are also subject to redemption as a whole or in part on any date prior to maturity, in inverse order of maturity and by lot within a maturity, to the extent of the net proceeds of hazard insurance not used to repair 01' rebuild the Water System (as herein defined) or the net proceeds of condenmation awards received with respect to the Water System (as herein defined) to be used for such purpose, at a redemption price equal to the principal amount of the Bonds plus interest accrued thereon to the date fixed for redemption, without premium. (d) MapdatorySinking Fund Redemption. The Bonds which mature in the years which are checked in the Bid Form as being Term Bonds are also subject to mandatory redemption in part by lot, on June 1 in each of the years checked under the heading 'Term Bonds" in the Bid Form, from Mandatory Sinking Fund Installments, at a Redemption Price equal to the principal amount thereof to be redeemed, without premium, in the aggregate l'espective principal amounts and in the respective years as set forth in the Bid Form (as adjusted according to the provisions of "ADJUSTMENT OF PRINCIPAL AMOUNTS" above). -4- PAYMENT. Interest on the Bonds is payable semiannually on each June 1 and December 1 (each, and "Interest Payment Date" or "Payment Date"), commencing June 1, 2010. So long as Cede & Co. is the registered holder of the Bonds, principal of and premium, if any, and interest evidenced and represented by the Bonds will be paid by the Trustee at its principal corporate trust office directly to DTC, which will in turn remit such principal, premium, if any, and interest to its participants for subsequent di9bul'sement to the beneficial owners of tlle Bonds. PURPOSE OF ISSUE. The Bonds are to be issued by the City and are authorized pursuant to the charter of the City and the provisions of Chapter 12.28 (commencing with Section 12.28.010), of the Palo Alto Municipal Code, to (i) finance certain improvements to tile City's water system (the "Water System"), (il) establish a debt service reserve fund for the Bonds and (iii) pay certain costs of issuing the Bonds. SECURITY. The City has transferred, placed a charge upon, assigned and set over to tile Trustee, for tile benefit of tile Owners, tile Net Revenues of tlle Water System of the City, as more particularly provided for in the Indenhtre, which is necessary to pay the principal or redemption price of and interest on the Bonds in any Fiscal Year, together with all moneys on deposit in the Debt Service Fund, and such Net Revenues has been irrevocably pledged to the punctual payment of the principal or redemption price of and interest on the Bonds. Such Net Revenues carumt be used for any other purpose while any of the Bonds remain Outstanding, except that out of Net Revenues there may be apportioned and paid such sums for such purposes, as are expressly permitted by the Indenture. Said pledge constitutes a direct charge and lien on such Net Revenues for the payment of the principal or redemption price of and interest on the Bonds and any bonds outstanding 01' issued on a parity therewith, including the City's Utility Revenue Bonds, 2002 Series A, issued on Febl'Uary 7, 2002 in the principal amount of $26,055,000, of which $19,690,000 are presently outstanding and seeUl'ed by a pledge the Net Revenues of the Water System (and certain other revenues), all in accordance witll the terms tIlereof. However, the City'S Utility Revenue Bonds, 1995 Series A (the "1995 Bonds") are cUl'rentiy outstanding in the principal amount of $5,320,000 (as of June 30, 2009), and are secured by a lien on Net Revenues of the City's entire enterprise system, which collectively consists of the Sewer System, the Storm Drain System, the Gas System, the Electric System and the Water System. The lien of the 1995 Bonds on the Net Revenues of the Water System is senior to tile lien on tIlose Net Revenues securing the Bonds. The Net Revenues constitute a trust fund for the security and payment of the principal 01' redemption price of and interest on the Bonds. The general fund of the City is not liable and the credit 01' taxing power of the City is not pledged for the payment of the principal or redemption price of and interest on the Bonds. The owners of the Bonds cannot compel the exercise of the taxing power by the City or the forfeiture of its property. 'Ine principal or redemption price of and interest on tile Bonds are not a debt of the City, nor a legal 01' equitable pledge, charge, lien or encumbrance, upon any of its property, 01' upon any of its income, receipts, or revenues except the Net Revenues of the Water System. Neither the faith and credit nor the taxing power of the City, tile State of California, or any politiCill subdivision thereof is pledged to tile payment of lite Bonds. TIle Bonds are not general obligations of 111£ Citlj, but are limited obligations payable solely from certain funds Ileld pursuant to the -5- Indenture. Neither tile Cih) of Palo Alto liar the State of California s'JaIl be obligated to pay the principal of the Bonds, or tile interest thereon and neitlwr the faith and credit nor the taxing p01ver of the CihJ of Palo Alto, ti,e State of California or any of its politiCf!l subdivisions thereof is pledged to the payment of the principal of or the interest on the Bonds. TAX-EXEMPT STATUS. In the opinion of Jones Hall, A Professional Law Corporation, San Francisco, California, Bond Counsel, subject, however to certain qualifications, under existing law, the interest on the Series A Bonds is excluded from gross income for federal income tax purposes, and is not an item of tax preference for pUlposes of the federal altel'l1ative minimum tax imposed on individuals and corporations. In the event that, prior to the delivery of the Series A Bonds (a) the interest on other obligations of the same type and character shall be declal'ed to be subject to taxation (either at the time of such declaration or at any future date) under any federal income tax laws, either by the terms of such laws or by ruling of a federal income tax authority or official which is followed by the Internal Revenue Service, or by decision of any federal court, or (b) any federal income tax law is enacted which will have a substantial adverse effect upon the owners of the Series A Bonds as such, the successful bidder may, at its option, prior to the tender of the Series A Bonds, be relieved of its obligation to purchase the Series A Bonds, and in such case the deposit accompanying its bid will be returned. EXEMPTION FROM CALI;f'QRNIA INCOMETAX. In the opinion of Bond Counsel, interest on both the Series A Bonds and the Series B Bonds is exempt fmm Calif01'l1ia personal income taxes. LEGAL OPINION. The legal opinion of Jones Hall, A Professional Law Corporation, San Francisco, California, Bond Counsel, appmving the validity of the Bonds and regarding "TAX-EXEMPT STATUS" above will be furnished to tIle successful bidder without cost. FURTHER INFORMATION. A copy of the Preliminary Official Statement describing the Bonds will be furnished upon request to the financial advisor to the City: Stone & Youngberg LLC, One Ferry Building, Suite 275, San Francisco, California 94111, telephone: (415) 445-2300 (the "Financial Advisor"). RATING. The City has applied for and received ratings from Moody's Investor's Service and Standard & Poor's Ratings Services. Information on such ratings may be obtained from the Financial Advisor. The City will pay the fees for such ratings. Any additional nltings desired by the purchaser of the Bonds, as well as any fees associated with such additional ratings, will be tIle sale responsibility of the purchaser. TERMS OF SALE SUBMISSION OF BIDS: All bids must be for not less than all of the Bonds hereby offered for sale. Bidders may submit only one bid, electl'Onically through P ARITY®. All bids must comply with the requirement for a good faith deposit. See "GOOD FAITH DEPOSIT' herein. ELECTRONIC BIDS. Elech'onic bids must conform with the procedures established by PARITY®. Electronic bids will be received exclUSively through PARITY® in accordance with ·6 this Official Notice of Sale until_ a.m. Pacific Daylight Time on the sale date, but no bid will be received after the time specified for receiving bids. To the extent any insh'Uctions or directions set forth in PARITY® conflict with this Official Notice of Sale, the terms of this Official Notice of Sale shall control. For further information about PARITY®, including any fees charged by PARITY®, potential bidders may contact PARITY®, 40 W. 23cd Street, New York, NY 10010, telephone (212) 812-0971. THE CITY RETAINS ABSOLUTE DISCRETION TO DETERMINE WHETHER ANY BID IS TIMELY, LEGIBLE AND COMPLETE. THE CITY TAKES NO RESPONSIBILITY FOR INFORMING ANY BIDDER PRIOR TO THE TIME FOR RECEIVING BIDS THAT ITS BID IS INCOMPLETE, ILLEGIBLE OR NOT RECEIVED. WARNING REGARDING ELECTRONIC BIDS: THE CITY WILL ACCEPT BIDS IN ELECTRONIC FORM SOLELY THROUGH PAmTY®. EACH BIDDER SUBMITTING AN ELECTRONIC BID UNDERSTANDS AND AGREES BY DOING SO THAT IT IS SOLELY RESPONSIBLE FOR ALL ARRANGEMENTS WITH PARITY®, AND THAT PARITY® IS NOT ACTING AS AN AGENT OF THE CITY. INSTRUCTIONS FOR SUBMITTING ELECTRONIC BIDS MUST BE OBTAINED FROM PARITY®, AND THE CITY ASSUMES NO RESPONSIBILITY FOR ENSURING OR VERIFYING BIDDE!, COMPLIANCE WITH THE PROCEDURES OF PARITY®. THE CITY SHALL ASSUME THAT ANY BID RECEIVED THROUGH PARITY® HAS BEEN MADE BY A DULY AUTHORIZED AGENT OF THE BIDDER. THE CITY, THE FINANCIAL ADVISOR AND BOND COUNSEL ASSUME NO RESPONSIBILITY FOR ANY ERROR CONTAINED IN ANY BID SUBMITTED ELECTRONICALLY, OR FOR FAILURE OF ANY BID TO BE TRANSMITTED, RECEIVED OR OPENED AT THE OFFICIAL TIME FOR RECEIPT OF BIDS. THE OFFICIAL TIME FOR RECEIPT OF BIDS WILL BE DETERMINED BY THE CITY AT THE PLACE OF BID OPENING, AND THE CITY SHALL NOT BE REQUIRED TO ACCEPT THE TIME KEPT BY PARITY® AS THE OFFICIAL TIME. FORM OF BIQ;M!NIMUM PURCHASE PRICE: Each proposal must be for not less than all of the Bonds hereby offered for sale. The purchase price to be paid for the Bonds may not be less than __ % of the pal' value thereof. Each bid must be delivered as set forth above, and must be received not later than the date and time of sale set fOlth above. If the City receives multiple bids from a single bidder by any means or combination of means, the City will accept the best of such bids, and each bidder agrees by submitting any bid to be bound by its best bid. In order to comply with the provisions of the American Recovery and Reinvestment Act of 2009 governing the issuance of Build America Bonds, all Series B Bonds of each maturity must be offered to the ultimate purchasers thereof (not including bond houses, brokers or similar persons or organizations acting in the capacity of underwriters or wholesalers) at the price of par, and at least ten percent (10%) of the first Series B Bonds sold in each maturity of the issue will be actually sold at a price not excess of the par amount thereof x .0025 x the number of complete years to maturity from the date of issue of the Series B Bonds to the date of said maturity. -7- DESIGNATION OF INTEREST RATES: Each bidder must specify the rate or rates of interest which the Bonds will bear. Interest on each Bond will be computed from the date of original delivery to its stated maturity at the interest rate specified in the proposal, payable on the Interest Payment Dates as set forth above. A bidder will be permitted to bid different rates of interest for each maturity of Bonds; but: • Each interest rate specified must be in a multiple of 1/20% or 1/8%. • The maximum rate bid on any maturity may not exceed % per annum. • All Bonds maturing at anyone time must bear the same rate of interest. • The rate of interest bid on any maturity of Bonds may not exceed the rate of interest bid on any other maturity of Bonds by more than ~ .. % per annum. • The interest rate bid on any successive maturity of Bonds may not be less than the interest rate 011 the immediately prior maturity. DETEHMINATlON OF B}::ST BIT!: The Bonds will be awarded to the responsible bidder whose bid produces the lowest true interest rate on the Bonds. The true interest rate specified in any bid will be that rate which, when used in computing the present wOlth of all payments of principal and interest to be paid on all Bonds from an assumed dosing date of November ~ 2009, to their respective maturity dates or mandatory sinking fund redemption dates, produces an amount equal to the purchase price specified in such bid. For the Series A Bonds, such interest to be paid on the Series A Bonds will be based on the stated rate, and for Series B Bonds, such interest will be based on the stated nlte, multiplied by 0.65. If two or more bidders offer bids at the same lowest trust interest rate, the City will determine by lot which bidder will be awarded the Bonds. For purposes of computing the true interest rate represented by any proposal, the purchase price specified in such proposal will be equal to the pal' amount of the Bonds, plus any premium or less any discount specified in such proposal, and the true interest rate will be calculated by the use of a semiannual interval of compounding interest based on the Interest Payment Dates for the Bonds. RIGHT OF REJECTION: The City reserves the right, in its discretion, to reject any and all bids and to the extent not prohibited by law to waive any irregularity or informality in any bid. PRQMPT AWARD: The City Council of the City has authorized one of its officers to accept the best responsible bid for the purchase of the Bonds and to accept such bid, for and in the name of the City, by notice to the successful bidder. The Bonds will be awarded, or all bids will be rejected, not later than 24 hours after the expiration of the time prescribed for the receipt of proposals, unless such time of award is waived by the successful bidder; provided, that the award may be made after the expiration of the specified time if the bidder has not notified the City in writing of the withdrawal of such proposal. PLACE OF DELIVERY; (:AN<::ELLAIIQl'I FOR LATE DEUVERY: It is expected that the Bonds will be delivered to DTC for the account of the successful bidder on November ~ 2009. The successful bidder has the right, at its option, to cancel the contract of purchase if the Bonds 8 are not tendered for delivery within 60 days from the date of the sale thereof, and in such event the successful bidder will be entitled to the retum of the deposit accompanying its bid. GOOD FAITH DEPOSIT: A good faith deposit (the "Deposit") in the form of a certified or cashier's check or a Financial Surety Bond in the amount of $ payable to the Ol'der of the City, is required for each bid to be considered. If a check is used, it must be drawn on a Califomia bank and must accompany the bid. If a Financial Surety Bond is used, it must be from an insurance company licensed to issue such a bond in the State of California, and such bond must be submitted to Stone & Youngberg LLC as financial advisor to the City prior to the opening of the bids. The Financial Surety Bond must identify each bidder whose Deposit is guaranteed by such Financial Surety Bond. If the Bonds are awarded to a bidder utilizing a Financial Surety Bond, then such bidder must submit its Deposit to the City in the form of a cashier's check (or wire transfer such amount as instructed by the financial advisor) not later than 12:00 p.m. (noon) California time on the next business day following the award. If such Deposit is not received by that time, the Financial Surety Bond may be drawn by the City to satisfy the Deposit requirement. No interest on the Deposit will accrue to the purchaser. The amount of the I)eposit will be applied as a credit towards the payment of the purchase price by the successful bidder. If after the award of the Bonds, the successful bidder fails to complete its purchase on the terms stated in its pl'Oposal, the full amount of the good faith deposit will be retained by the City. PAYMENT Qr PURCHASE P.RICF: The successful bidder is required to pay the ptll'chase price of the Bonds, reduced by the good faith deposit made pursuant to the preceding paragraph, in funds which are immediately available to the City, or at the direction of the City, the Trustee. Such payment must be made on the date of Ol'iginal delivery of the Bonds by the City to DTC. $TATEMENT OF TRUE INTEREST RATE: Each bidder is requested, but not required, to g. state in its proposal the percentage true interest rate represented by its pTOposal, determined as described above, which will be considered as inf01'mative only and not binding on either the bidder or the City. CERTIFICATION OF REOFFERING PRICE. The successful bidder will, as of the date the Bonds are sold pursuant to this Notice of Sale, certify to the City the prices at which it reasonably expects to initially offer each maturity of the Bonds to the general public (the "Initial Offering Prices"). For this purpose, the general public does not include bond houses, brokers or similar persons or organizations acting in the capacity of underwriters or wholesalers. The successful bidder agrees that, on or prior to the Closing Date, it will actually offer 100% of each maturity of the Bonds to the general public in a bona fide public offering for prices equal to 01' less than the Initial Offering Prices. The successful bidder agrees that, prior to the Closing Date, it will deliver a certificate dated as of the Closing Date in form and substance attsched as Exhibit A and satisfactory to Bond Counsel. -9- SERIFS A BONDS DESIGNATED AS "QUALIFIED TAX-EXEMPT OBLIGATIONS". The Series A Bonds will be designated by the City as "qualified tax-exempt obligations" for purposes of Section 265(b )(3) of the Internal Revenue Code of 1986 as amended. No LITIGATION: There is no litigation pending concerning the validity of the Bonds, the corporate existence of the City or the entitlement of the officers thereof to their respective offices, and the purchaser will be furnished a no-litigation certificate certifying to the foregoing as of and at the time of delivery of the Bonds. CUSIP NUMBERS AND OTHER FEES: It is anticipated that CUSIP numbers will be printed on the Bonds, but neither the failure to print such numbers on any Bonds nor any error with respect thereto will constitute cause for a failure or refusal by the purchaser to accept delivery of and pay for the Bonds in accordance with the terms hereof. All expenses in relation to the printing of CUSlP numbers on the Bonds will be paid for by the City; provided, however, that the CUSIP Service Bureau charge for the assignment of said numbers will be the responsibility of and will be paid for by the purchaser. The successful bidder will also be required to pay all fees required by the Depository Trust Company, Bond Market Association, Municipal Securities Rulemaking Board, and other similar entity imposing a fee in connection with the issuance of the Bonds (including the California Debt and Investment Advisory Commission as described below). CALIFORNIA DEBT.AND INVESTMENT AQV!SORY COMMISSION EEj3S: All fees payable to the California Debt and Investment Advisory Corrunission in connection with the issuance of the Bonds will be the responsibility of the purchaser of the Bonds. OFFICIAL STATl.lMENT: The City has approved a preliminary Official Statement relating to the Bonds. Copies of such preliminary Official Statement will be distributed to any ·:bidder, upon request, prior to the sale in a form "deemed final" by the City for PU1'poses of Rule 15c2- 12 under the Securities Exchange Act of 1934 (the "Rule"). Within seven business days from the sale date, the City will deliver to the purchaser copies of the final Official Statement, executed by an authorized representative of the City and dated the date of delivery thereof to the purchaser, in sufficient number to allow the purchaser to comply with paragraph (b)(4) of the Rule and to satisfy the Municipal Securities Rulemaking Board (the "MSRB") RuleG-32 or any other rules adopted by the MSRB, including information permitted to be omitted by paragraph (b)(I) of the Rule and such other amendments or supplements as are approved by the City (the "Final Official Statement"). The purchaser agrees that it will not confirm the sale of any Bonds unless the confirmation of sale is accompanied or preceded by the delivery of a copy of the Final Official Statement. The City will furnish to the successful bidder, at no charge, not in excess of 100 copies of the Official Statement for use in cOlmection with any resale of the Bonds. CERTIFICATE REGARDING OFFICIAL STATEMENT: A responsible officer of the City will certify to the original purchaser of the Bonds, as a condition of closing, that based on such officer's participation in the preparation of the Official Statement, nothing has come to his or her attention to lead him or her to believe that the Official Statement (except for certain financial statements, statistical data and other information) contains any untrue statement of a material fact Of omits to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. -10 - CONTINUING DISCLOSURE. In order to assist bidders in complying with S.E.C. Rule 15c2-12(b)(5), the City has committed to undertake, pursuant to the Resolution and a Continuing Disclosul'e Certificate, to provide certain annual financial information and notices of the occurrence of certain events, if material. A description of this undertaking is set forth in the preliminary Official Statement and will also be set forth in the final Official Statement. Such Continuing Disclosure Certificate will be a document required to be delivered at closing by the City, and the failure by the City to deliver such document in form and substance acceptable to Bond Counsel and the successful bidder will relieve the successful bidder of its obligation to purchase the Bonds GNEN pursuant to resolution of the Council of the City of Palo Alto adopted __ _ _ ,2009. Dated: _~,2009 -11- By: lsi Administrative Services Director City of Palo Alto EXHIBIT A Reoffering Price Certificate $_- CITY OF PALO ALTO WATER REVENUE BONDS, TAX-EXEMPT SERIES A CERTIFICATE OF PURCHASER The undersigned, on behalf of . , as underwriter (the "Underwriter") of the above-captioned bonds (the "Bonds"), hereby confirms our advice that: (i) Based upon reasonable expectations and actual facts which existed on ___ ~. 2009, being the date upon which the City of Palo Alto (the "Issuer") sold the Bonds to the Underwriter (the "Sale Date"), the Underwriter reasonably expected to sell a substantial amount of earn maturity of the Bonds (being at least 10% of each maturity) to the general public (for plll'poses of this Certificate, "general public" excludes bond houses, brokers 01' similar persons or organiza tions acting in the capacity of underwriters or wholesalers) in a bona fide public offering at the prices, or in the case of obligations sold on a yield basis, at the respective yields (together the "Initial Offering Prices") set forth in Exhibit A attached hereto and by this l'eference incorporated herein (these prices are also shown of the cover of the Official Statement). (ii) The aggregate of the Initial Offering Prices is $~ _____ _ (iii) As of the date hereof, 100% of the Bonds of each Illi1turity were actually offered to the general public in a bona fide public offering for the Initial Offering Prices. (iv) As of the Sale Date, the Underwriter, taking into account market conditions, had no reason to believe any of the Bonds would be initially sold to the general public at prices greater than the Initial Offering Prices. (v) As of the Sale Date, other than the and _____ maturities of the Bonds, at least 10% of each maturity of the Bonds was initially sold to the general public for the respective Initial Offering Prices. (vi) In our opinion, the Initial Offering Prices do not exceed the fair market value of said maturities of the Bonds to the general public as of the Sale Date. Capitalized terms used herein and not . otherwise defined shall have the meanings ascribed thereto in that certain Indenture of Trust, dated as of November 1, 2009, by and between the Issuer and , .... ~ as trustee, authorizing the issuance of the Bonds. A-l- Dated: _______ ~, 2009 as Underwriter By _________________________ _ Name, Title A-2- EXHIBITC NOTICE OF INTENTION TO SELL CITY OF PALO ALTO (Santa Clara County, California) $[Principal Amount} WATER REVENUE BONDS Tax-Exempt 2009 Series A & Taxable 2009 Series B (Direct Payment Build America Bonds) NOTICE IS HEREBY GIVEN by the City of Palo Alto (the "City") that bids will be received vin PARITY@,on ..... __ , November _ ... 2009 At . a.m. Pacific Daylight Time for the purchase of approximately $[Principal Amount] principal amount of Water Revenue Bonds, Tax-Exempt Bonds 2009 Series A (the "Series A Bonds") & Taxable Bonds 2009 Series B Direct Payment Build America Bonds (the "Series B Bonds," and together with the Series A Bonds, the "Bonds"), payable under an Indenture of Trust, dated as of November 1, 2009, between the City and US. Bank National Association. The Series A Bonds will be issued as tax-exempt obligations, and the Series B Bonds will be issued as taxable Direct Payment Build America Bonds. A bidder may bid on all of the Bonds as Series A Bonds, or all of the Bonds as Series B Bonds, or a combination of Series A Bonds and Series B Bonds. Bidders are directed to the Notice of Sale (described below) for information on the City, the City's Water System, the Bonds, the security for the Bonds, and details on bidding on the Bonds. The City may postpone the date or change the time of the sale to any subsequent date or any other time by providing notification via Bloomberg Financial Markets or Thomson Municipal Market Monitor (www.tm.1.com) at least 24 hours prior to the scheduled date and time of sale. The sale of the Bonds will be conducted upon the terms and conditions set forth in the Official Notice of Sale for the Bonds. Such Official Notice of Sale and the preliminary form of the Official Statement describing the Bonds may be obtained from the financial advisor to the City, Stone & Youngberg LLC, One Ferry Building, Suite 275, San Francisco, California 94111, telephone (415) 445-2327, Attention -Sohai! Bengali. Dated: _,2009 PRELIMINARY OFI'ICIAL STATEMENT DATED SEPTEMBER _~ 2009 EXHIBITD NEW ISfH!li-BOOK-ENTRY ONLY RATINGS: Moody's: " __ " s&CP:# " See "RAtiNGS" herein, In the (lpinion of Jones Hall, A Pro(essionaltaw Corpol'<\tion, San Frall.;;:isco, California, Bond COtmsel, subjed, however to certain qUAlifications described herein, under existing Jaw, the interest on the 2009 Bonds issued as Tax-Exempt Bonds is I1Xduded flom gross income for federal income tax purposes and such interest is not nn item of tax preference for purposes of the federnl alronmtive minimum tax imposed on individuals and corporations.ln the opinion of Bond Counsel, subject; however to (;ertain quahfications described he~hl, under existing law, the interest on the 2009 Bonds issued as Build America Bouds is not excluded from gross income for federal income tax purposes. In the further opinion of Bond Counsel, interest on the 2009 Bonds. whether issued <lsTax-Exempt Bonds ox 1\S Build Americiil Bonds. is exempt from California personal income t .. xes. See "LEGAL MATTERS-Tax Mfltters" herein. Dated: Date of Delivery $ CIT:C-Y:-O:-:F::-:P=-A--:L:-O~A-=LTO * (Santa Clara County, California) Water Revenue Bonds, 2009 Series A Due: June 1~ as shown on the inside cover The City of Palo Allor a chartered city <lnd municipal corporation (the "'City"), is issuing its Water Revenue Bonds, 2009 Series A (the "2009 Bonds"), pursuanf Lo an Indenture of Trus~, dated as (If October l~ 2009 (the "Indenture"), by ilnd between the City and U.S. Bank National ASSOciation, as trustee (the "Trustee"), the ¢harter of the City a11d Chapter 12,28 of the Palo Alto Munkipal Code. r It is expected that the 2009 Bonds will be issued as (i) bonds the interest on:w:h;:-i~'~h'j:g:ex:c"l~u~d~edT,f:ro=m::Cg=':""'C::C;:in=oom==.:-;to-r-purposes of federlu lm:olnekUation : ("Tax~Exempt Bonds"), (ii) bonds desigfli1ted as "Direct Payment Build America Bonds" under the provisions of the American Re<:overy and Reinvestment i Act of 2009 ("Build America Bonds"), the interest on which is not excluded frol11 gt()$S incol11e for purposes of federal income taxation, or (lli) a combination of Tax~Exempt Bonds and Build America Bonds, determined at the time of sale of the 2009' Bonds. See "TAX MATrERS" he'ein. 1£ issued as Build America Bonds, the City expects to receive" cash subsidy payment from the United States Treasury equal to 35% of the interest payable on such 2009 Bonds. See "THE 2009 BONDS-Designation ~ 2009 Bonds as Build America Bon~.~c'''~~~~~_ The 2009 Bonds are being issued to (i) finance certain improvements to the City's water utility system {the "Water Syswm"), (ii) establish 01 debt service reServe fund for the 2009 Bonds, (iii) flood capitalized interest for the Bonds through ____ , and (iv) pay cetfain costs of issuing the 2009 Bonds. See "FINANCING PLAN." The 2009 Bonds are special Dbligatiolls £If the City and nre secured by amounts held ffOln rime to time in the Debt Service [lund established under the Indenture and, subject to certnin restrictions set forth in the fndenture; a pledge of and lien on certain net revenues generated by the Water System (the "Net Revenues"). The 2009 B(mds are secured by from Net Revenues on a Pfl.rity, as to payment and security; with the portion of the City's outstanding Utility Revenue Bonds, 2002 Series A (the "2002 Bonds"}, issued to finance certain improvements to the Water Syslem.1he 2002 Bonds are also secured by certain net revenm,s derived from the City's gas system (the "Gas System"), which fite not pledged for the payment of the 2009 Bonds. The City has also agreed to advance moneys from certain rate stabilization reserve fUI\ds (the "AvailabJe Reserves"), if ncressary; fO pay debk service on the 2009 Bonds, The 2002 Bonds and the City's Utility Revenue and Refunding Bonds, 1999 Series A. constitute additional claims on the AVililable Reserves as weJJ as certain other rate stabilization re.sen·e funds. Soo "SECURITY FOR THE 2009 BONDS" herein. The 2009 Bonds will be issued in fuJJy registered form only iUldF when executed and delivered, will be registered in the name of Cede & Co., as nomhme of The Depository Trust Company, New York, New York ("OTe"). DTC will act as securities depositOl'y for the 2009 Bonds. Beneficia! oW1lership interests in the 2009 Bonds mny be purchasad in book-entry forl11 only. Payments of principal and intetest (find premium, if any) win be paid by the Tmstee to DTC for subsequeut disbursements to rrrc Participants who will remit such payments tD the beneficial owners of the 2009 Bonds. See "nlE 2009 BONDS-Book- Entry OnlySystemff herein. nw 2009 Bonds will be issued as fully registered bonds in denommntions of $5,000 or any integral muitiple of $5,000. Interest is payable on each Jlffie 1 and December 1, commencing June 1, 2010. The 2009 Bonds are subject to optional and mandatory redemption prior 10 maturity. The redemption provisions reJating to 2009 Bonds issued flS Tax~ Exempt Donds and 2009 Bonds issued flS Build Amer.lcil Bonds will differ. See "THE 2009 BONDS-RedemptiDn'" herein. The City's Utility Revenue Bonds, 1995 Series A (the "1995 floods"'), are currently outstanding in the principal amount of $5,320,000 ~nd are secured by il lien on net revenues of the City's entire "Enterprise." which consists of the Water System; the Gas System, the City's storm and sl1rface water drainage system (the "Storm Drain System"), the CUy's Mnitary sewer system (the "Sewer Systemfi), and the City's electric utility (the "Electric System"). TiJe lien of tile 1995 Bonds olilfle Net Revenues is senior to tile lien 011 Net ReUeI!fie5 securing the 2009 Bonds lind fhe 2002 BOllds, The 1995 BOnds are also secured by certain net revenueS derived from the Storm Drain System. the Se\ver System find the Electric System which are not pledged for the payment of the 2009 Bonds or the 2002 Bonds. Additional boruls and other indebtedness payable fmm Net Revenues may be issued on a parity with the 2009 Bonds and of Ole portion or the 2002 Bonds payable from Net Revenues (and subordinate 10 the 1995 Bonds), subject to the conditions contained III the Indenture. See "SECURITY FOR mE 2009 BONDS-Limitations on Net Revenue Pledge" herein. NBITHER THE GENERAL FUND, TIlE FULL FAITH AND CREDIT NOT THE TAXING POWER OF THE CITY, THE STATE OF CALIFORNIA OR ANY OF ITS POLlTICALSUBDIVISJONS IS PLEDGED FOR THE PAYMENT OF 1'HE 2009 BONDS. MAIURIIYSCHEDUI Ii SEE INSIDE caVBR Bids fer t1w. purchase 01 the 2009 Bonds will be ~lved by the City oJ:; ~ September -' 2009, until 9:00 A.M., Pacific time,. electnmic!l/(r; <Jllly, through the facilities of the PAlUTY® system. The 2009 Bonds will be sold pursuant to the (eons of sale set forth in the Official Notice of Sale, dtlted Se:plember -' 2009. Each bidder w!ll s ecif .Y its bid is lOr tllx~Exempt Bonds, Build Amerlca Bonds .. ~r both. ... .. __ ~~~~-l This cover page contains information for general reference only. It is nut a snmmary of this issue, Potential purchasers of the 2009 Bonds rae advised [0 read the eotireOffida:i St .. tement to obtttin information esscntial to m<lking 00 informed investment decision, The 2009 Bonds will be offered when, as and if issued and rcceiwd by the UndeJwriter subjed to the approval of legality by Joru>~'l Hall, A Professional Law Corporation, Sflf) Pl<lndsco, California, Bond Counsel. Certain disclosure matters will be passed upon for the City by Quin.t &: Thimmig LLP, San Francisco, California, Dlsdoswe Counsel Certain matters will be passed upon for the City by C,lry M. Bamn, &'1', the City AtfOrney. It is expected that !:he 2009 Bonds, in book-entry form, will be available for delivery on or about October _.J 20{)9, Dated: September __ ~, 2009 *:rrolimmrrry, subje<t to eiumge. Maturity Date 1!.un.n 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Principal Interest Price or bmoun( fuW: Yl&l!! *Prcliminary, ~lubIect to change, ,. $ CITYO::-:-:O::-;F;::-P::':-A:-:L~O:::-:A-::L TO (Santa Clara County, California) Water Revenue Bonds, 2009 Series A MATuRITY SCHEDULE' CUSIP Suffixt Maturity Date (Junel) 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 Principal Amount Interest Price or fuW: Yi<!ld CUSIP J>uffu:t t Copyrighf 2009, AmeriCan Baniwrs Association. CUSTP® Is II registered tl4\demark of the American I:lllnhilt'S Assoch'lfion, eUSIP datil h(>(~in Is provIded by the CUSIP ServJce Bureau, operated by Standard &: Poor's, a division of The M.:<Araw·HilI Companil:!S, Inc. This datl'l is not intended to creale a databllsc Md does not serve ill11ny way as a substitute lor the CUSlP Scrvi«'b Bureau. CUSIP numh/!ffl bave been assigned by an Independen~ compl\fly not affilialed with thp C!ty ,uto. <'Ite induded soiely fur the convenience of the regJstered owners of the 2009 Bonds. The City is not responsible for the seloction or uses of these CU51P numbers, and no representation is made 11$ to (heir correctness on the 2009 Bonds or as included herein, TIm CUSIP [lumber for <'I sp<!'ci.fic mAhlrily Is sublect to bt'ing dlanged IIfler the Issuance of the 201)9 Bonds !l$ " result of vatlo\IS subsequent actions including, but not limited to, a refunding in whole or In pn(t or <'IS a result of the procurument of secondary market portfolio inauranre or other similarcnh,mcemenf by i.p.vestors that is applicable to all or a portion of certam maturities of tht' 2009 Bottds. No dealer, broker, salesperson or any other person has been authorized to give any information or make any representation with respect to the 2009 Bonds, other than as contruned in this Official Statementl and, if given or made, any such information or representation must not be relied upon as having been authorized by the City. This Official Statement does not constitute an offer of any securities other than those described on the cover page or an offer to sell or a solicitation of an offer to buy, nor may there be any sale of the 2009 Bonds by any person in any jurisdiction in which it is unlawful to make such offer, solicitation or sale. This Official Statement is not to be construed as a contract with the purchasers of the 2009 Bonds. The information set forth in this Official Statement has been furnished by the City and other sources which are believed to be reliable, but it is not guaranteed as to accuracy or completeness. The information and expressions of opinion in this Official Statement are subject to change without notice and neither the delivery of this Official Statement nor any sale of the 2009 Bonds will, under any circumstances, create any implication that there has been no change in the affairs of the City since the date of this Official Statement. Summaries and references to statutes and documents in this Official Statement do not purport to be comprehensive or defmitive and are qualified in their entireties by reference to each such statute or document. This Official Statement is submitted in connection with the sale of the 2009 Bonds and may not be reproduced or be used, as a whole or in part, for any other purpose. In connection with the offering of the 2009 Bonds, the Underwriter may over-allot or effect transactions which stabilize or maintain the market price of the 2009 Bonds at a level above that which might otherwise prevail in the open market. Such stabilizing, if commenced, may be discontinued at any time. The Underwriter may offer and sell the 2009 Bonds to certain dealers and dealer banks and banks acting as agent and others at prices lower than the public offering prices stated on the cover page of this Official Statement, and those public offering prices may be changed from time to time by the Underwriter. The 2009 Bonds have not been registered under the Securities Act of 1933, as amended, in reliance upon an exemption contained in that act. The 2009 Bonds have not been registered or qualified under the securities laws of any state. Certain statements included or incorporated by reference in this Official Statement constitute "forward-looking statements" within the meaning of the United States Private Seeurities Litigation Reform Act of 1995, Section 21E of the United States Securities Exchange Act of 1934, as amended, and Section 27 A of the United States Securities Act of 1933, as amended. Such statements are generally identifiable by the terminology used such as "plan/' "expect.," fJestimat:e/' "project/~ Hbudget'l or other similar words. Such forward-looking statements include, but are not limited to, certain statements contained in the information under the caption "THE WATER SYSTEM." The achievement of certain results or other expectations contained in such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause actual results, perfonnance or achievements described to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. The City does not plan to issue any updates or revisions to the forward-looking statements set forth in this Official Statement. CITY OF PALO ALTO CITY COUNCIL MEMBERS Peter Drekmeier, Mayor Jack Morton, Vice May& John Barton, Council Member Patrick Burt, Council Member Sid Espinosa, Council Member Yoriko Kishimoto, Council Member Larry Klein, Council Member Greg Schmid, Council Member Ylaway Yeh, Council Member CITY STAFF James Keene, Cily Manager Steve Emslie, Assistant City Manager Lalo Perez, Director of Administrative Services Joe Sacdo, Deputy Director of Administrative Services Tarun Narayan, Senior Financial Analyst, Adminis/ratio" Seroices Gary M. Baum, Cil1j Attorney Donna G. Rogers, City Clerk Utilities Department Valerie Fong, Direclar of Utilities Tom Auzenne, Assistant Director Of Utilities, Customer Support Services Tomm Marshall, Assistant Director of Utilities, Engineering Jane Ratchye, Assistant Director of Utilities, Resource Management Dean Batchelor, Assis/ant Director of Utilities, Operations SPECIAL SERVICES Bond Counsel Jones Hall A Professional Law Corporation San Francisco, California Disclosure Counsel Quint & Thimmig LLP San Francisco, California Financial Advisor Stone & Youngberg LLC San Francisco, California Trustee U.S. Bank National Association San Francisco, California LOCATION MAP TABLE OF CONTENTS INTRODUCTION " ............. " ..................................... 1 Management Discussion of Operations ............ 31 Balance Sheet ......................................................... 33 THE 2009 BONDS ......... "." ....................... " .... "" ....... 3 Bond Terms ................. "." ..................... " ................ 3 Transfer and Exchange " ..... "." ............................ ..4 2009 Bonds Mutilated, Destroyed, Stolen or Lost .......... " .... " .......... " ....... "." ........ " ............ " ....... 4 Designation of 2009 Bonds as Build America Bonds .............. "."." .................................. " ....... " ... 5 Redemption ........ " .... " ..... "" .. " ................. "" ... ".".,,5 Book-Entry-Only 5ystem." .. " ...... " ...................... ,,8 Historical Operating Results ............................... 34 Projected Operating Results and Debt Service Coverage .............................................................. 35 AVAILABLE RESERVES ........................................ .36 The City's Rate Stabilization Reserves For Its Enterprise Funds ................................................. 36 Rate StabiIi:r.ation Reserve for the Water System ................................................................... 37 Rate Stabilization Reserves for the Electric FINANCING PLAN ......... " .... """ .... ,, ..................... ,,8 Purposes of the Bonds ......................................... ,,8 Estimated Sources and Uses of Funds ................. 9 Annual Debt Service ............... "."." ....................... 9 System ................................................................... 38 Rate Stabilization Reserves for the Gas 5ystem ................................................................... 39 Calaveras-Stranded Costs Reserve .................... .40 SECURITY FOR THE 2009 BONDS ............. " ....... 10 CONSTITUTIONAL LIMITATIONS ON TAXES Pledge of Net Revenues ...... " ......................... " .... 10 AND W ATER RATES AND CHARGES .............. .42 Limitations on Net Revenue Pledge .................. 11 Article XIIlA .......................................................... 42 Rate Covenant ....................................................... 12 Article XIIlB ........................................................... 43 Available Reserves ............................................... 12 Artides XIIlC and XllID ...................................... 43 Parity and Subordinate Bonds ........... " ............... 13 Reserve Account .. " ..... " .. ""."." ......... "." ........ " .... 14 RISK FACTORS RELATING TO THE 2009 BONDS ...................................................................... ,46 THE CITY AND CITY UTILITIES ......................... 14 The City ...... " ........ " ........................... " .. " ......... " .. " 14 City Utilities " ................. "." .................................. 15 Management of the Utilities Department ......... 15 Enterprise Staffing and Technology .................. 17 Limited Obligations .............................................. 46 Sys tern Expenses .................................................. .46 Limited Recourse on Def. ult ............................ ..46 Limitations on Remedies ..................................... 47 Balance of the Available Reserves ...................... 47 Enterprise Management Policy .......................... 17 Rates and Billing .......... "." .................................... 16 Reserve Policies .................................................... 19 Annual Financial Statements and Significant Accoun ting Policies .................. " .... " .................. 20 Initiatives .............................................................. .47 Bankruptcy ............................................................ 48 Tax Exemption of the 2009 Bonds .................... ..48 Additional Obligations ........................................ 48 Seismic Considerations ....................................... .48 THE WATER SYSTEM ............................................ 21 Investment of City Funds ................................... .49 History ................................................................... 21 Service Area ........................................................... 21 Water Storage and Distribution System ............ 21 Sources of Water Supply ..................................... 21 Recycled Water Project ........................................ 24 Water Conservation Policies and Procedures .. 25 LEGAL MATTERS .................................................. .49 Approval of Legal Proceedings ........................ ..49 Absence of Litigation ......................................... ..49 Tax Matters .................................................... , ...... .49 CONTINUING DISCLOSURE ............................... 50 Historical Production and Deliveries ................ 25 RATINGS ................................................................... 51 Environmental Issues Relating to the Water System ............................................................... ".26 Capital Improvement Program Summary ........ 26 Water Rates, Fees and Charges .......................... 28 UNDERWRITING .................................................... 51 MISCELLANEOUS .................................................. 51 Water Demand and Customer Base .................. 29 APPENDIX A -SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE OF TRUST APPENDlX B -GENERAL AND ECONOMIC INFORMATION ABOUT THE CITY AI'PENDIXC-COMPREHENSIVE ANNUAL FINANCIAL REPORT OF THE CITY FOR THE FISCAL YEAR ENDED JUNE 30, 2008 APPENDIX D -PROPOSED FORM OF BOND COUNSEL OPINION APPENDIX E -FORM OF CONTINUING DISCLOSURE CERTIFICATE APPENDIX F -DTC AND THE BOOK-ENTRY ONLY SYSTEM $ * CITY OF PALO ALTO Water Revenue Bonds 2009 Series A INTRODUCTION The purpose of this Official Statement, which includes the cover page and appendices hereto, is to set forth certain information in connection with the sale by the City of Palo Alto (the "City") of its * Water Revenue Bonds, 2009 Series A (the "2009 Bonds"). It is expected that the 2009 Bonds will be issued as (i) bonds the interest on which is excluded from gross income for purposes of federal income taxation ("Tax-Exempt Bonds"), (ii) bonds designated as "Direct Payment Build America Bonds" under the provisions of the American Recovery and Reinvestment Act of 2009 ("Build America Bonds"), the interest on which is not excluded from gross income for purposes of federal income taxation, or (iii) a combination of Tax-E)(empt Bonds and Build America Bonds, determined at the time of sale of the 2009 Bonds. See "TAX MATTERS" herein. If issued as Build America Bonds, the City expects to receive a cash subsidy payment from the United States Treasury equal to 35% of the interest payable on such 2009 Bonds. See "THE 2009 BONDS-Designation of 2009 Bonds as Build America Bonds." Certain capitalized terms used in this Official Statement and not otherwise defined have the meanings set forth under "SECURITY FOR THE 2009 BONDS-Definitions" and APPENDIX A-"SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE OF TRUST." All references to and summaries of provisions of the Indenture are qualified in their entirely by reference to the full Indenture, copies of which are available for inspection at the offices of the City. Authority for Issuance. The 2009 Bonds are being issued pursuant to (a) the charter of the City and the proviSions of Chapter 12.28 (commencing with Section 12.28.010), of the Palo Alto Municipal Code, all as in effect on the Closing Date (the "Bond Law"), (b) the terms and conditions of an Indenture of Trust, dated as of October 1, 2009 (the "Indenture"), by and between the City and U.s. Bank National Association, as trustee (the "Trustee"), and (c) a resolution of the City Council, adopted on July 27, 2009, authorizing the issuance of the 2009 Bonds. Payments of Principal and Interest. Principal of the 2009 Bonds is payable on each June 1 in the years set forth on the cover of this Official Statement. Interest on the 2009 Bonds is payable on each June 1 and December 1 each year, beginning on June 1,2010. See "THE 2009 BONDS- Bond Terms." Purposes. The 2009 Bonds are being issued to (a) finance certain improvements (the "Project") to the City's water utility system (the "Water System"), (b) establish a debt service reserve fund for the 2009 Bonds, (c) fund capitalized interest for the Bonds through ___ _ and (d) pay certain costs of issuing the 2009 Bonds. See "THE FINANCING PLAN." Pledge of Net Revenues. The 2009 Bonds are special obligations of the City and are secured by amounts held from time to lime in the Debt Service Fund established under the Indenture and, subject to certain restrictions set forth in the Indenture, a pledge of and lien on the "Net . PreHminmy, subject tD change. Revenues" generated by the Water System, See "SECURITY FOR THE 2009 BONDS-Pledge of Net Revenues" and "-Limitations on Net Revenue Pledge." Such pledge is on a parity as to payment and security with a portion of the City's Utility Revenue Bonds, 2002 Series A (the "2002 Bonds"), which are currently outstanding in the principal amount of $19,690,000, and is subordinate to a portion of the City's Utility Revenue Bonds, 1995 Series A (the "1995 Bonds"), which are currently outstanding in the principal amount of $5,320,000, Covenant to Maintain and Advance From Available Reserves, The City has established utility rate stabilization reserve funds (collectively, the "Available Reserves") for certain of its utility systems, including the Water System, listed below (collectively, the "Systems"), As additional security for the 2009 Bonds, the City will, if necessary, advance funds to pay debt service On the 2009 Bonds from the Available Reserves, which the City will maintain in an aggregate amount at least equal to five times maximum annual debt service on all outstanding bonded indebtedness secured by net revenues of any of the Systems: , (i) Rate Stabilization Reserve for the Water System, (ii) Distribution Rate Stabilization Reserve for the City's electric utility (the "Electric System"), (iii) Distribution Rate Stabilization Reserve for the Gas System (the "Gas System"), (IV) Supply Rate Stabilization Reserve for the Electric System, (v) Supply Rate Stabilization Reserve for the Gas System, and (vi) the Electric System's Calaveras-Stranded Costs Reserve (the "Calaveras Reserve"), See "SECURITY FOR THE 2009 BONDS-Available Reserves" and " AVAILABLE RESERVES," Other Claims on Available Reserves. The City has also covenanted to advance funds, if necessary, from the Available Reserves, as well as rate stabilization reserve funds established by the City for its wastewater collection system, its wastewater treatment system and its refuse utility, to pay debt service on the City's Utility Revenue and Refunding Bonds, 1999 Series A (the "1999 Bonds"), which are currently outstanding in the principal amount of $13,735,000. The 1999 Bonds are primarily secured by a lien on net revenues of the Wastewater Collection System, the Wastewater Treatment System and the City's storm and surface water system (the "the Storm Drain System"), The City has also covenanted to advance funds, if necessary, from the Available Reserves, as well as rate stabilization reserve funds established by the City for its wastewater collection system, its wastewater treatment system and its refuse utility, to pay debt service on the 2002 Bonds. The 2002 Bonds are secured by a lien on net revenues of the Water System and the Gas System. See "SECURITY FOR THE 2009 BONDS-Other Claims on Available Reserves,1I Limitations on Net Revenue Pledge. The debt service on the 2009 Bonds is payable from Net Revenues generated by the Water System and from moneys advanced from the Available Reserves. See "SECURITY FOR THE 2009 BONDS-Limitations on Net Revenue Pledge." Neither the general fund, the full faith and credit, nor the taxing power of the City, the State of California (the "State") or any other political subdivision thereof is pledged to the payment of the 2009 Bonds. The 2009 Bonds are not secured by a legal or equitable pledge of or charge, lien or encumbrance upon any property of the City or any of its income or receipts except the Net Revenues. Senior Obligations, The 1995 Bonds are secured by a lien on net revenues of all systems. The lien of the 1995 Bonds on the Net Revenues is senior to the lien on Net Revenues securing -2- the 2002 Bonds and the 2009 Bonds. See "SECURITY FOR THE 2009 BONDS-Limitations on Net Revenue Pledge." Parity Bonds. The lien of the 2002 Bonds on the Net Revenues is on a parity with the lien on Net Revenues securing the 2009 Bonds. Additional bonds and other indebtedness payable from Net Revenues may be issued on a parity with the 2009 Bonds and the portion of the 2002 Bonds secured by Net Revenues (and subordinate to the portion of the 1995 Bonds secured by Net Revenues) subject to the conditions of the Indenture. See "SECURITY FOR THE 2009 BONDS-Parity and Subordinate Bonds." Rate CovelUlnt. The City covenants in the Indenture that it will fix, prescribe, revise and collect Charges for the Water System in each Fiscal Year which are: (i) sufficient (along with moneys transferred from the Available Reserve for the Water System) to pay 100% of debt service on all oul<;tanding 2009 Bonds, the portion of the 2002 Bonds payable from Net Revenues and all Parity Bonds payable from Net Revenues, and (Ii) equal, when added to the balance then on hand in the Available Reserve for the Water System, to 125% of principal of and interest payable in that Fiscal Year on all outstanding bonds payable from Net Revenues. See "SECURlTY FOR THE 2009 BONDS-Rate Covenant." Reserve Account. To further secure the payment of the principal of and interest on the 2009 Bonds, the Indenture establishes the Reserve Account to be held by the Trustee. The Indenture defines the Reserve Requirement to be equal to the lesser of (i) Maximum Annual Debt Service on the 2009 Bonds, (ii) 10% of the principal amount of the 2009 Bonds, and (iii) 125% of Average Annual Debt Service on the 2009 Bonds. See "APPENDIX A-"SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE OF TRUST" and "SECURITY FOR THE 2009 BONDS-Reserve Account." THE 2009 BONDS Bond Tenns General. The 2009 Bonds will be dated their date of delivery and are to be issued in the aggregate principal amount, bear interest at the rate per annum and mature on the dates set forth on the cover page of this Official Statement. Interest on the 2009 Bonds is payable on each June 1 and December 1, commencing June 1, 2010. Registered Form. The 2009 Bonds are deliverable in fully registered form in the denomination of $5,000 each or any integral multiple of $5,000, and when issued will be registered in the name of Cede & Co. as nominee of The Depository Trust Company, New York, New York ("DTC"). Beneficial owners of the 2009 Bonds will not receive physical certificates representing the 2009 Bonds purchased, but will receive a credit balance on the books of the nominees of such beneficial owners. So long as Cede & Co. is the registered holder of the 2009 Bonds, principal of and premium, if any, and interest evidenced and represented by the 2009 Bonds will be paid the Trusl-ee directly to DTC, which will in turn remit such principal, premium, if any, and interest to its participants for subsequent disbursement to the beneficial owners of the 2009 Bonds. See "THE 2009 BONDS-Book-Entry-Only System." Principal of and premium, if any, on the 2009 Bonds will be payable at maturity or prepayment upon surrender thereof at the principal corporate trust office of the Trustee. -3- Manner of Payment. Interest on the 2009 Bonds is payable on each Interest Payment Date to the person whose name appears on the Bond Registration Books as of the Record Date immediately preceding the applicable Interest Payment Date, such interest to be paid by check or draft of the Trustee mailed by first class mail to the Owner or, at the option of any Owner of at least $1,000,000 aggregate principal amount of the 2009 Bonds with respect to which written instructions have been filed with the Trustee prior to the Record Date, by wire transfer, at the address of the owner as it appears on the Bond Registration Books. Principal of and premium (if any) on any 2009 Bond will be paid upon presentation and surrender thereof at the corporate trust office of the Trustee in San Francisco, California. Both the principal of and interest and premium (if any) on the 2009 Bonds will be payable in lawful money of the United States of America. So long as Cede & Co., is the registered holder of the 2009 Bonds, references to the holders or owners or registered holders or owners of the 2009 Bonds means Cede & Co. and not the beneficial owners of the 2009 Bonds. Transfer and Exchange Any 2009 Bond may, in accordance with its terms, be transferred upon the Bond Registration Books by the person in whose name it is registered, in person or by his duly authorized attorney, upon surrender of the 2009 Bond for cancellation, accompanied by delivery of a written instrument of transfer in a form approved by the Trustee, duly executed. Whenever any 2009 Bond is so surrendered for transfer, the City will execute and the Trustee will authenticate and deliver to the transferee a new 2009 Bond or 2009 Bonds of like tenor, maturity and aggregate principal amount. If a notice of redemption of any 2009 Bonds has been mailed pursuant to the redemption provisions of the Indenture, those 2009 Bonds will not be subject to transfer. The 2009 Bonds may be exchanged at the Trust Office of the Trustee, for 2009 Bonds of the same tenor and maturity and of other authorized denominations. 2009 Bonds Mutilated, Destroyed, Stolen or Lost If any 2009 Bond becomes mutilated, the City, at the expense of the Owner of that 2009 Bond, will execute, and the Trustee will authenticate and deliver, a new 2009 Bond of like maturity and principal amount in exchange and substitution for the 2009 Bonds so mutilated, but only upon surrender to the Trustee of the 2009 Bond so mutilated. The Trustee will cancel every mutilated 2009 Bond so surrendered, and will deliver those canceled 2009 Bonds to, or upon the order of, the City. If any 2009 Bond is lost, destroyed or stolen, evidence of such loss, destruction or theft may be submitted to the City and the Trustee. If such evidence is satisfactory to them, and indemnity satisfactory to them is given, the City, at the expense of the Owner, will execute, and the Trustee will authenticate and deliver, a new 2009 Bond of like maturity and principal amount in lieu of and in substitution for the 2009 Bond so lost, destroyed or stolen. (If any such 2009 Bond matures or is called for redemption, instead of issuing a substitute 2009 Bond the Trustee may pay the same without surrender thereof upon receipt of indemnity satisfactory to the Trustee). The City may require payment of a reasonable fee for each new 2009 Bond issued and the reimbursement of any expenses incurred by the City or the Trustee. Any 2009 Bond issued in lieu of any 2009 Bond alleged to be lost, destroyed or stolen will constitute an original contractual obligation on the part of the City whether or not the 2009 Bond alleged to be lost, -4- destroyed or stolen is at any time enforceable by anyone, and will be equally and proportionately entitled to the benefits of the Indenture with all other 2009 Bonds secured by the Indenture. Designation of 2009 Bonds as Build America Bonds If any 2009 Bonds are issued as "Direct Payment Build America Bonds" for purposes of the American Recovery and Reinvestment Act of 2009, signed into law on February 17, 2009 (the "Recovery Act"), the City expects to receive a cash subsidy payment from the United States Treasury pursuant to the Recovery Act equal to 35% of the interest payable on such 2009 Bonds on or about each Interest Payment Date. The cash payment does not constitute a full faith and credit guarantee of the United States, but is required to be paid by the Treasury under the Recovery Act. Any cash subsidy payments received by the City will constitute a portion of the Gross Revenues. The City is obligated to make all payments of principal of and interest on the 2009 Bonds whether or not it receives cash subsidy payments pursuant to the Recovery Act. Redemption If the 2009 Bonds are issued as Tax-Exempt Bonds, the folllYWing redemption provisions will apply to such 2009 Bonds: Optional Redemption. The 2009 Bonds maturing on or before June 1,2019, are not subject to optional redemption prior to maturity. The 2009 Bonds maturing on or after June 1, 2020, are subject to redemption prior to their respective maturity dates, at the option of the City, as a Whole, or in part in inverse order of maturities and by lot within a maturity, from any source of available funds, on any Interest Payment Date on or after June 1, 2019, at a Redemption Price equal to the principal amount of the 2009 Bonds to be redeemed, plus accrued interest thereon to the date of redemption, without premium. [To be applicable if the successful bidder of the 2009 Bonds designates certain maturities as term bonds] Sinking Fund Redemption. The 2009 Bonds maturing on June 1, (the "Term Bonds") are subject to mandatory redemption in part from sinking fund payments to be made by the City on June 1, ~ and on each June 1 thereafter up to and including June 1, ~~, at a redemption price equal to 100% of the principal amount thereof plus accrued interest, if any, to the redemption date without premium, as follows: JJme 1 Principal Amount Special Mandato1'1) Redemption from Insurance or Condemnation Proceeds. The 2009 Bonds are subject to redemption as a whole on any date, or in part on any Interest Payment Date in inverse order of maturity and by lot within a maturity, to the extent of the Net Proceeds of hazard insurance not used to repair or rebuild the Water System or the Net Proceeds of condemnation awards received with respect to the Water System to be used for such purpose, at a Redemption Price equal to the principal amount of the 2009 Bonds plus interest accrued thereon to the date fixed for redemption, without premium. -5- If the 2009 Bonds are issued as Build America Bonds, the following redemption prooisions will apply to slIch 2009 Bonds: Optional Redemption. The 2009 Bonds maturing on or before June 1, 2019, are not subject to optional redemption prior to maturity. The 2009 Bonds maturing on or after June 1, 2020, are subject to redemption prior to their respective maturity dates, at the option of the City, as a whole, or in part in inverse order of maturities and by lot within a maturity, from any source of available funds, on any Interest Payment Date on or after June 1, 2019, at a redemption price equal to the principal amount of the 2009 Bonds to be redeemed, plus accrued interest thereon to the date of redemption, without premium. [To be applicable if the successful bidder of the 2009 Bonds designates certain maturities as term bonds] Sinking Fund Redemption. The 2009 Bonds maturing on June 1, _ ..... _ (the "Term Bonds") are subject to mandatory redemption in part from sinking fund payments to be made by the City on June 1, ~ and on each June 1 thereafter up to and including June 1, __ J at a redemption price equal to 100% of the principal amount thereof plus accrued interest, if any, to the redemption date without premium, as follows: Principal AmQunt tMaturity Special Mandatory Redemption from Insurance or Condemnation Proceeds. The 2009 Bonds are subject to redemption as a whole on any date, or in part on any Interest Payment Date in inverse order of maturity and by lot within a maturity, to the extent of the Net Proceeds of hazard insurance not used to repair or rebuild the Water System or the Net Proceeds of condemnation awards received with respect to the Water System to be used for such purpose, at a Redemption Price equal to the principal amount of the 2009 Bonds plus interest accrued thereon to the date fixed for redemption, without premium. Special Optional Redemption upon the Occurrence of a Federal Subsidy Termination Event. The 2009 Bonds are subject to optional redemption prior to their stated maturity, at the option of the City, in whole or in part on any date occurring on or before June 1, 20_, but only upon the occurrence of a Federal Subsidy Termination Event, at a redemption price equal to the greater of: (1) 100% of the principal amount of Ihe 2009 Bonds 10 be redeemed; or (2) the sum of the present values of the remaining scheduled payments of principal and interest on the 2009 Bonds to be redeemed (exclusive of interest accrued to the date fixed for redemption) discounted to the date of redemption on a semiannual basis (assuming a 360-day year consisting of twelve 3O--days months) at the Treasury Note Rate (defined below) plus basis points; plus in each case, accrued and unpaid interest on the 2009 Bonds being redeemed to the date fixed for redemption. -6- (iii) if fewer than all Outstanding 2009 Bonds are to be redeemed, the identification (and, in tile case of partial redemption, the respective principal amounts) of the 2009 Bonds to be redeemed, (iv) that on fue redemption date the Redemption Price will become due and payable wifu respect to each such 2009 Bond or portion thereof called for redemption, and that interest with respect thereto will cease to accrue from and after fue redemption date, and (v) the place or places where such 2009 Bonds are to be surrendered for payment of fue Redemption Price, which places of payment may include the corporate trust office of the Trustee. At least 45 days prior to any redemption date, the City must deposit with the Trustee an amount of money sufficient to pay the Redemption Price of all the 2009 Bonds or portions of 2009 Bonds which are to be redeemed on that date. So long as the 2009 Bonds are held only in the book-entry system of DTC, notice of redemption will be sent to Cede & Co., as nominee for DTC, and will not be sent to the beneficial owners of the 2009 Bonds. Purchase ill Lieu of Optional Redemption. In lieu of optional redemption, amounts in fue Redemption Account of fue Debt Service Fund may be used for the purcl1ase of 2009 Bonds at public or private sale as and when and at sucl1 prices (including brokerage and other charges, but excluding accrued interest, which is payable from the Debt Service Fund) as the City may determine, but not to exceed fue principal amount of such 2009 Bonds plus the redemption premium applicable on the next ensuing optional redemption date. Book-Rntry-Only System While the 2009 Bonds are subject to the book-entry system, the principal, interest and any redemption premium with respect to a 2009 Bond will be paid by the Trustee to The Depository Trust Company, New York, New York ("DTC"), which in tum is obligated to remit such payment to its DTC Participants for subsequent disbursement to Beneficial Owners of the 2009 Bonds, as described in APPENDIX F-"DTC AND THE BOOK-ENTRY ONLY SYSTEM." FINANCING PLAN Purposes of the Bonds The 2009 Bonds are being issued to (a) finance fue Project, which will consist of improvements to the Water System, (b) establish a debt service reserve fund for the 2009 Bonds, (c) fund capitalized interest for,the Bonds through , and (e) pay certain costs of issuing the 2009 Bonds. C See "THE WATER SYSTEM-Capital Improvement Program Summary" for a description of fue water utility facilities to be financed with the proceeds of the 2009 Bonds. -8- Estimated Sources and Uses of Funds The following table sets forth the estimated sources and uses of funds for the 2009 Bonds: Sources of Funds: Principal Amount of 2009 Bonds Plus: Original Issue Premium Less: Underwriter's Discount Total Sources Uses of Funds: Deposit to Project Fund Deposit to Reserve Account Deposit to Debt Service Fund (1) Deposit to Costs of Issuance Fund (1) Total Uses ...... -~.---c---;;-;;-:-; (1) Represents capitalized interest for the Bonds through . (2) Represents amounts to pay fees of rating agencies ... the Trustee, bond counsel, disclosure counsell the finandal advisor, printing and other miscellaneous costs of issuing (he 2009 Bonds, Annual Debt Service Set forth below is the annual debt service on the 2009 Bonds based on the interest rates and maturity schedule set forth on the cover of this Official Statement (assuming no optional redemption). Bond Year Ending June 1 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 20a~ 2034 2035 Principal Interest Bond Year Total -9- Set forth below is the combined annual debt service on the 2()()9 Bonds and the portion of the 2002 Bonds secured by Net Revenues (assuming no optional redemption). Bond Year . Ending June 1 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 Pledge of Net Revenues 2002 Bonds 2009 Bonds .-=---Total SECURITY FOR THE 2009 BONDS General. The 2009 Bonds are special obligations of the City and, pursuant to the Indenture, there is pledged, for the benefit of the Owners of the 2009 Bonds, the Net Revenues on a parity with a lien on the Net Revenues securing the 2002 Bonds. "Net Revenues" are defined in the Indenture to mean, for any period of computation, the amount of the Gross Revenues during such period, less the amount of Maintenance and Operation Costs becoming payable during that period. "Gross Revenues" are defined in the Indenture as, for any period of computation, all gross charges received for, and all other gross income and revenues derived by the City from, the ownership or operation of the Water System or otherwise arising from the Water System during that period, including but not limited to (a) all Charges received by the City for use of the Water System, (b) all receipts derived from the investment of funds held by the Director of Administrative Services or the Trustee under the Indenture, (c) transfers from any related stabilization reserve fund into the Revenue Fund, and (d) all moneys received by the City from other public entities whose inhabitants are served pursuant to contracts with the City. "Maintenance and Operation Costs" are defined in the Indenture as the reasonable and necessary costs spent or incurred by the City for maintaining and operating the Water System, -10· calculated in accordance with sound accounting principles. Maintenance and Operation Costs include the cost of supply of water, gas and electric energy under contracts or otherwise, the funding of reasonable operating reserves, and all reasonable and necessary expenses of management and repair and other expenses to maintain and preserve the Water System in good repair and working order. Maintenance and Operation Costs further include all reasonable and necessary administrative costs of the City attTibutable to the Water System and the 2009 Bonds, such as salaries and wages and the necessary contribution to retirement of employees, overhead, insurance, taxes (if any), expenses, compensation and indemnification of the Trustee, and fees of auditors, accountants, attorneys or engineers, and all other reasonable and necessary costs of the City or charges required to be paid by it to comply with the terms of the 2009 Bonds or the Indenture. Maintenance and Operation Costs do not include depreciation, replacement and obsolescence charges or reserves therefor and amortization of intangibles or other bookkeeping entries of a similar nature. "Charges" is defined in the Indenture as fees, tolls, assessments, rates and rentals prescribed under the Bond Law or any other law of the State by the City Council for the services and facilities of the Water System furnished by the City. Flow of Funds. The City covenants and agrees in the Indenture that all Gross Revenues will be received and held by the City in trust and will be deposited by the City in the Revenue Fund which exlsts in the City Treasury. All Gross Revenues will be transferred, disbursed, allocated and applied solely to the uses and purposes set forth in the Indenture, and will be accounted for separately and apart from all other money, funds, accounts or other resources of the City. Limitations on Net Revenue Pledge Limited Obligations Of the City. The general fund of the City is not liable and the credit or taxing power of the City is not pledged for the payment of the principal or redemption price of and interest on the 2009 Bonds. 111e owners of the 2009 Bonds cannot compel the exercise of the taxing power by the City or the forfeiture of its property. 'fl1€ principal or redemption price of and interest on the 2009 Bonds are not a debt of the City, nor a legal or equitable pledge, charge, lien or encumbrance, upon any of its property, or upon any of its income, receipts, or revenues except the Net Revenues. Senior Lien of 1995 Bonds. The pledge of Net Revenues to the 2009 Bonds and to the portion of the 2002 Bonds which financed improvements to the Water System is subordinate to -the lien of the 1995 Bonds, which are secured by a lien on net revenues of all Systems. Therefore, the lien of the 1995 Bonds on the Net Revenues is senior to the lien on the Net Revenues securing the 2009 Bonds and to the portion of the 2002 Bonds which financed improvements to the Water System. It should be noted, however, that unlike the 2009 Bonds, the 1995 Bonds are also secured by net revenues of the Sewer System, the Storm Drain System and the Electric System and the 2002 Bonds are also payable from net revenues of the Gas System and unlike the 2009 Bonds, the 2002 Bonds are also secured by net revenues of the Gas System. The 1995 Bonds mature by their terms on June 1, 2020. The Indenture provides that no additional bonds can be secured by a pledge of Net Revenues that is prior to the lien securing the 2009 Bonds and the portion of the 2002 Bonds which financed improvements to the Water System. -11- Rate Covenant The City has covenanted in the Indenture to fix, prescribe, revise and collect Charges for the Water System during each Fiscal Year which (together with other funds transferred from the stabilization reserve fund for the Water System and which are lawfully available to the City for payment of any of the following amounts during such Fiscal Year) are at least sufficient, after making allowances for contingencies and error in the estimates, to pay the following amounts in the following order: (a) all Maintenance and Operation Costs with respect to the Water System estimated by the City to become due and payable in that Fiscal Year; (b) the principal of and interest on the Outstanding Bonds payable from the Net Revenues becoming due and payable during that Fiscal Year, including the redemption price of Term Bonds subject to sinking fund redemption during such Fiscal Year; (c) all other payments required for compliance with the Indenture and the instruments pursuant to which any Parity Bonds that are issued with respect to the Water System ("Parity Bonds" are defined below under "Parity and Subordinate Bonds"); and (d) all payments required to meet any other obligations of the City which are charges, liens, encumbrances upon or payable from the Gross Revenues or the Net Revenues. In addition, the City has covenanted in the Indenture to fix, prescribe, revise and collect Charges for the Water System during each Fiscal Year which, when added to the balance then on hand in Available Reserve for the Water System, are sufficient to yield Net Revenues at least equal to 125% of the principal of and interest on the Outstanding Bonds payable from the Net Revenues becoming due and payable during such Fiscal Year, including the redemption price of Term Bonds subject to sinking fund redemption during such Fiscal Year. See" Available Reserves" below for a discussion of limitations on the treatment of appropriation of funds from or into a System's related Available Reserve for purposes of satisfying the rate covenant. Available Reserves Covenant to Maintain Aggregate Available Reserves. The City has covenanted in the Indenture to maintain the funds on hand in Available Reserves in an aggregate amount at least equal to five times maximum annual debt service on all outstanding bonded indebtedness secured by net revenues of any of the Systems. Transfers. In addition, the City has covenanted to advance from Available Reserves to the Water System, as needed, amounts sufficient to enable the City to pay all Maintenance and Operation Costs and all Debt Service payable with respect to the Water System, when and as the same become due and payable. See "AVAILABLE RESERVES" below for information about the Available Reserves. ' The Indenture further provides the City will transfer from Available Reserves, to the Water System, as needed, amounts sufficient to enable the City to pay all Maintenance and Operation Costs and all debt service on obligations issued to finance improvements to the Water System, when and as the same become due and payable. Other Claims on Available Reserves. The City has also covenanted to advance funds, if necessary, from the Available Reserves to pay debt service on the 1999 Bonds. The 1999 Bonds -12- are secured by a lien on net revenues of the Wastewater Collection System, the Wastewater Treatment System and the Storm Drain System. The City has also covenanted to advance funds, if necessary, from the Available Reserves to pay debt service on the 2002 Bonds. The 2002 Bonds are secured by a lien on Net Revenues and by a lien on net revenues of the Gas System. Parity and Subordinate Bonds In addition to the 2009 Bonds, the City may issue or incur other loans, advances or indebtedness payable from Net Revenues in a principal amount determined by the City. Parity Bonds. The City may issue or incur any such Parity Bonds subject to the following specific conditions, which are hereby made conditions precedent to the issuance and delivery of such Parity Bonds: (a) TI,e City shall be in compliance with all covenants set forth in the Indenture. (b) (i) The Net Revenues, calculated on sound accounting principles, as shown by the books of the City for the latest Fiscal Year or any more recent twelve (12) month period selected by the City ending not more than sixty (60) days prior to the adoption of the Parity Bonds Instrument pursuant to which such Parity Bonds are issued, as shown by the books of the City, less withdrawals, if any, from the Water System's rate stabilization fund, plus, at the option of the City, the Additional Allowance, shall at least equal one hundred percent (100%) of Maximum Annual Debt Service, with Maximum Annual Debt Service calculated on all Bonds to be Outstanding immediately subsequent to the issuance of such Parity Bonds which have a lien on Net Revenues of the Water System; and (ii) The Net Revenues of the Water System, calculated on sound accounting principles, as shown by the books of the City for the latest Fiscal Year or any more recent twelve (12) month period selected by the City ending not more than sixty (60) days prior to the adoption of the Parity Bonds Instrument pursuant t? which such Parity Bonds are issued, as shown by the books of the City, plus, at the option of the City, any or all of the items hereinafter in this paragraph designated (i), (ii) and (iii), shall at least equal one hundred twenty-five percent (125%) of Maximum Annual Debt Service, with Maximum Annual Debt Service calculated on all Bonds to be Outstanding immediately subsequent to the issuance of such Parity Bonds which have a lien on Net Revenues of the Water System. The items any or all of which may be added to such Net Revenues for the purpose of issuing or incurring Parity Bonds hereunder are the following: (A) An allowance for Net Revenues from any additions to or improvements or extensions of the Water System, and also for Net Revenues from any such additions, improvements or extensions which have been made from moneys from any source but in any case which, during all or any part of such Fiscal Year or such twelve (12) month period, were not in service, all in an amount equal to ninety percent (90%) of the estimated additional average annual Net Revenues to be derived from such additions, improvements and extensions for the first thlrty-six (36) month period in which each addition, improvement or extension is respectively to be in operation, all as shown in the written report of an Independent Consultant engaged by the City; (B) The Additional Allowance; and (C) Funds then on hand in Available Reserves for the Water System. (e) The Parity Bonds Instrument providing for the issuance of such Parity Bonds shall provide that: -13- (il The proceeds of such Parity Bonds shall be applied to the acquisition, construction, improvement, financing or refinancing of additional facilities, improvements or extensions of existing facilities within the Water System, or otherwise for facilities, improvements or property which the City determines are of benefit to the Water System, or for the purpose of refunding any Bonds in whole or in part, including all costs (including costs of issuing such Parity Bonds and including capitalized interest on such Parity Bonds during any period which the City deems necessary or advisable) relating thereto; (Ii) Interest on such Parity Bonds shall be payable on an Interest Payment Date; (iii) The principal of such Parity Bonds shall be payable on June 1 in any year in which principal is payable; and (iv) Money shall be deposited in a reserve account for such Parity Bonds from the proceeds of the sale of such Parity Bonds or otherwise equal to the Reserve Requirement. Subordinate Bonds. The Indenture authorizes the City to issue Bonds secured by Net Revenues of the Water System on a basis subordinate to the pledge of Net Revenues to the 2009 Bonds. Reserve Account General. The Indenture provides for establishment of a Reserve Account. On the date of issuance of the 2009 Bonds, the City intends to satisfy the Reserve Requirement with a cash deposit made from a portion of the proceeds of the 2009 Bonds. Use of the Reserve Account. If at any time there are insufficient amounts in the Debt Service Fund to pay principal and redemption price of or interest on the 2009 Bonds, the Trustee will withdraw from the Reserve Account the amount of the deficiency. Any amounts in the Reserve Account in excess of the Reserve Requirement (whether derived from interest or gain on investments Or otherwise) will, on June 2 of each year, be paid by the Trustee to the City for deposit in the Revenue Fund. THE CITY AND CITY UTILITIES The City The City is located in northern Santa Clara County (the "County"), approximately 35 miles south of the City of San Francisco. The City has a current population of approximately 64,500. It is part of the San Francisco Bay metropolitan area. Partly due to the presence of Stanford University, which is adjacent to the City, the City is considered the birthplace of the high technology industry that has made the County famous worldwide as Silicon Valley. The 630-acre Stanford Research Park includes prestigious and innovative high-tech leaders such as Hewlett-Packard, SAP America, Varian Medical Systems, VMware, Tibco Software, Space Systems Lora!, the Electric Power Research Institute and Communications and Power Industries. The City is also a major employment center, including U.S. Department of Veteran Affairs' Palo Alto Health Care System, Stanford Hospitals and Clinics, Lockheed Martin Missiles and Space, Palo Alto Medical Foundation, Stanford Shopping Center, the law offices of Wilson Sonsini Goodrich and Rosati, and the Xerox Palo Alto Research Center. -14- The City was incorporated in 1894. Its first Charter was granted by the State of California in 1909, and the City continues to operate as a charter dty. Municipal operations are conducted under the Council-Manager form of government. The nine Council Members are elected at large for four-year, staggered terms. The Mayor and Vice Mayor are elected annually at the first Council meeting in January. The Mayor presides over all Council meetings. The City Manager is responsible for the operation of all municipal functions, except the offices of the City Attorney, City C1erk, and City Auditor. These officials are appointed by, and report directly to, the City Council. For general, economic and demographic information regarding the City, see AI'PENDIX B-"GENERAL AND ECONOMIC INFORMATION ABOUT THE CITY." City Utilities The City operates the foJlowing utility systems: • the Sewer System, • the Electric System, • the Gas System, • the Storm Drain System, • the Refuse System, • the Water System, and • the Fiber Optics System. The City's Utilities Deparhnent is in charge of the operation of the Electric System, the Fiber Optics System, the Gas System, the Water System and the Wastewater Collection System (which comprises a portion of the Sewer System) and the City's Public Works Department is in charge of the operation of the Storm Drain System, the Refuse System and the Wastewater Treatment System (which comprises the remaining portion of the Sewer System). As described more completely above (see "SECURITY FOR THE 2009 BONDS"), in addition to Net Revenues, the City will, if Net Revenues are insufficient, advance funds from moneys on deposit from time to time in the Available Reserves to pay debt service on the 2009 Bonds, specifically: (i) Rate Stabilization Reserve for the Water System, (ii) Distribution Rate Stabilization Reserve for the Electric System, (iii) Distribution Rate Stabilization Reserve for the Gas System, (iv) Supply Rate Stabilization Reserve for the Electric System, (v) Supply Rate Stabilization Reserve for the Gas System, and (vi) the Electric System's Calaveras Reserve. The City has covenanted to maintain the aggregate balance of the reserves at an amount at least equal to five times maximum annual debt service on all outstanding bonded indebtedness secured by Net Revenues of any of the Systems. See "THE AVAILABLE RESERVES" below for a discussion of each of the Available Reserves and the City's current policies with respect to each. However, Proposition 218 that may require the City to replenish certain Available Reserves in the event of an advance from an Available Reserve for payment of debt service on the 2009 Bonds. See "CONSTITUTIONAL LIMITATIONS ON TAXES AND WATER RATES AND CHARGES-Articles XIIIC and XIIID." Management of the Utilities Department The Utilities Department is responsible for the operation of four utility systems (the Electric System, the commercial Fiber Optics System, the Gas System, the Water System and the -15- Wastewater Collection System) that serve the City. The City, through its Utilities Department, services customer accounts for all of the City's utilities (including the Storm Drain System, the Refuse System and the Wastewater Treatment System). The Utilities Department is currently staffed by the following individuals, among others: Valerie Fang, Director of Utilities. On October 16, 2006, the City appointed Valerie Fong as Director of Utilities. Ms. Fong began her career with PG&E working on various gas and electric procurement and regulatory matters of increasing responsibility, including working with customers in the company's field offices, testifying in regulatory proceedings, negotiating long- term prOCUrement contracts, and overseeing the development and management of the company's electric and gas core customer procurement portfolios. She was at PG&E for 22 years. Subsequently, she worked for the City of Alameda for over four years, whete she was the Utility Services Manager, and later, the General Manager over the utility's two business lines, the electric and the telecommunications businesses. Ms. Fong earned a Bachelor's Degree in civil engineering from the University of Califomia, Berkeley and is a registered profeSSional engineer in the State of California Tom Auzenne, Assistant Director of Utilities, Customer Support Services. Tom Auzenne has 19 years of utility experience with PG&E, and 14 years with the CPAU. At PG&E he held positions in Gas and Electric Operations, Gas Transmission, Customer Services, Marketing, and Governmental Affairs. At the City, he has been the Utilities Marketing Manager and Assistant Director. The Customer Support Services Division comprises 35 full-time equivalent staff divided into: (a) marketing, which implements efficiency programs, sells fiber optic connectivity, and provides key account management services; (b) customer service, providing call center services, credit and collection activities, meter reading, and utilities billing; and, (c) utilities rates, which provides long-term financial forecasting, and establishes rates and reserve requirements for CPAU's $178 million in annual sales for the water, electricity, natural gas, fiber optic and wastewater collection business lines. Mr. Auzenne received a Bachelor's degree from San Francisco State University. Tomm Marshall, Assistant Director of Utilities, Engineering. Mr. Marshall graduated from Washington State University in 1976 with Bachelors of Science in Electrical Engineering. He began work in distribution engineering with Pacific Gas and Electric Company in 1980. At Pacific Gas and Electric he worked in the Electric Distribution Engineering, System Protection Engineering, Substation and. Transmission Regional Operations, working primarily on capital project justification and implementation, and operational and maintenance issues with the electric system. In 1993, he started a job at the consultant firm of Enertech ConBultants where he worked on research and operational projects related to Electromagnetic Fields. In 1995, he became the Electric Engineering Manager for the City where he was responsible for the planning design and implementation of the capital improvement projects. Currently, as Assistant Director of Engineering for the City, he is responsible for the planning design and implementation of the capital improvement projects for the Electric, Water, Gas and Wastewater Utilities. Jane Ratchye, Assistant Director of Utilities, Resource Mnnagement. Ms. Ratchye first came to the City in 1985 as an account representative advising large customers on how to reduce peak electrical demand and save energy. She then worked on the design and evaluation of efficiency programs and in the supply side resource planning area for water, gas and electricity. She has worked on many areas of supply portfolio management, integration of demand-and supply- side resources, and the initiation of the City's gas and electric commndity risk management program. As Assistant Director for Resource Management, Ms. Ratchye is responsible for the management and contracting of the electric, gas, and water supplies for the City, legislative advocacy, representation in regulatory proceedings, coordination with joint action agencies, and rate setting and financial reserve management for the Utilities Department. Ms. Ratchye holds a Bachelor of Science degree in Mechanical Engineering and a Master of Science degree in Engineering-Economic Systems, both from Stanford University. Dean Batchelor, Assistant Directot of Utilities, Operatiolls. Mr. Batchelor has 27 years of experience in utility operations and holds a Bachelors of Arts degree in Business from Long Beach State. He has extensive experience in telecommunications, gas and electrical operations. From 1982 101997, he worked for Pacific Gas and Electric in the Gas and Electric distribution systems. He joined 'fCII AT&T in 1997 as the operations Manager were he oversaw the installation, construction, maintenance and engineering of many CATV-HSD plants. In 2002, he started with the City of Alameda as the CATV Operational Superintendent including coordinating the work of technicians engaged in construction, maintenance and operation of the plant, head-end and ensuring optimum customer service. In 2005, he became the Operations Manager where he was responsible for electric utility transmission, substations, distribution system and the CATV system. In October of 2008, he joined the City as the Assistant Director of Operations were he is in charge of administrative activities, operations and maintenance planning that include the water, gas, and electric receiving facilities, water transmission facilities, the water, gas and electric distribution systems and the wastewater collection system. Enterprise Staffing and Technology The City employs approximately 229 full-time equivalent employees to operate its utilities. All of these employees, excluding those in the management classification, are represented by Service Employees International Union ("SEIU") in all matters pertaining to wages, benefits and working conditions. The current two-year agreement with this union, which is in the form of a memorandum of understanding, expired on June 30,2009. The City and SEIU are negotiating a new agreement. Management employees receive substantially the same fringe benefit package as the SEIU members. The City's wage and fringe benefits are generally comparable to those offered by other local public agencies. The City covers all of its permanent employees under the Public Employees' Retirement System ("PERS"). Pension costs are co-funded by monthly contributions to PERS by the City and its employees. At June 30, 2006 (the most recent actuarial information available), the total pension benefit obligation for all City employees was $593,960, net assets available for plan benefits were $526,576 and the total pension benefit obligation exceeded the City's net assets available for plan benefits by $67,384. Enterprise Management Policy Treated as enterprise funds, the Electric, Gas, Refuse, Water, Fiber Optics. Sewer and Storm Drain Systems are financed and operated in a manner comparable to private business enterprises. The City utilizes a Strategic Planning process in concert with its annual budget to identify and record progress in meeting benchmark goals and objectives. In addition, business plans are developed on an annual basis for the Water, Gas, Electric and Wastewater Collection Systems. For the Gas and Electric Systemq, separate business plans are developed for the supply and distribution business units. The City uses the accrual basis of accounting with respect to the enterprise funds. Revenues are recognized when earned, and expenses are recognized when incurred. Utility revenues are used to pay operating costs, bond debt service, most capital expenditures, and reserve accumulations. In accordance with City policy, the cost of providing utility services to the general public continues to be funded predominately through user charges. Policies for cash reserves and Utilities Transfers to the City's General Fund (which are transferred from the Gas and Electric Systems only) are established by the City Council in a manner consistent with the -17- voter-approved City Charter. Transfers to the General Fund are based on the approved rate of return for comparable public utilities. The methodology used to calculate the transfers to the General Fund is a "Return on Rate Base" method which requires an annual calculation of the "rate base" for the Electric and Gas Funds. The "rate base" for the Electlic and Gas Funds includes (1) the net asset value of the utility assets as of the latest audited fiscal year; (2) working capital for the supply purchases for the upcoming fiscal year; (3) working capital for non-energy supply operating costs for the upcoming fiscal year; (4) additional capital projects budgeted during the current fiscal year less customer-funded improvements; and (5) depreciation for the current fiscal year. The rate base is adjusted by an appropriate return on equity, equal to PG&E's approved return on equity adjusted downward by 30% to reflect the City's tax-exempt status, and adjusted again by a 15% "risk" adjustment based on the concept that an investment in a municipal utility is less risky than an investment in an investor-owned utility. The Utilities and Public Works Departments are expected to continue meeting all of their financial obligations while charging retail rates to their customers that are comparable to those charged in neighboring cities. Careful budgeting and sound financial planning have been and will continue to be important factors in maintaining competitive rates. The Utilities Department recognizes the importance of minimizing wholesale commodity costs which is the largest expenditure category. Much time and effort are spent in dealing with the various commodity suppliers, regulatory agencies and commissions to help ensure reasonable and economical wholesale commodity costs. Rates and Billing The City Council has full discretion to set utility rates for each utility system. The City's rate-making objectives are "to price utilities competitively, consLstent with sound financial planning, while promoting efficient resource utilization and customer satisfaction." To achieve an appropriate balance between these objectives, the City forecasts all financial obligations and funding sources over a five year planning horizon. In this manner, timely rate adjustments for all utilities are coordinated and alternated to assure adequate funding, minimize consumer impacts, and promote rate stability. To provide for rate stability and to insure funds are available to cover any unforeseen cost contingencies, Rate Stabilization Reserves are funded from surplus net sales revenues and withdrawn in subsequent periods to supplement retail sales revenue as needed. , Compared to industry benchmarks, the City's utilities have low debt and interest expense. This is due to the City's preference since the 19605 to finance major capital improvements on a "pay as you go" basis. This conservative approach to finance additions through rates helps keep rates low, since interest costs associated with long-term finanCing are avoided. The City collects utility charges by means of a single monthly bill to each customer, listing charges for each service provided. Uncollectible accounts for all utilities average approximately 0.16% of the amount billed. In 2007, the City Council approved a project to implement a new utilities customer information system using SAP. The system was successfully implemented in May 2009, and it allows for the billing of utilities customers. It also provides customer service staff with secure online access to customer information and gives customers the choice to pay their bill online. Reserve Policies In 1993, 1998, 2007 and again in 2009, the City Council established new utility rate stabilization reserve' policies and guideline levels, See" AVAILABLE RESERVES" below. On an annual basis, operating reserves are funded, withdrawn, or unchanged depending on the particular circumstances of that utility fund. In 1996, the City Council adopted the Calaveras Reserve Policy, which established a reserve balance to recover potential stranded costs related to outstanding obligations for the Calaveras Hydroelectric Project and other asseta whose costs were above market values such as the California Oregon Transmission Project and the Seattle City Light Energy Exchange Contract. This policy initially required an annual review of the stranded cost issue and an update of the underlying assumptions to calculate stranded costs. An updated cost calculation performed in 1999, which took into account a refinancing of the Calaveras Reserve by the Northern California Power Agency, resulted in a target balance of $65 million to be achieved by December 31, 2001. This target was in fact achieved during Fiscal Year 2000-01. This reserve balance was planned to gradually decline through Fiscal Year 2031-32. Each year, the Calaveras Reserve accrues interest income which is added to the year-end reserve balance. In May 2009, the Council revised the Calaveras Reserve Policy. Under the new policy, the stranded costs are to be reviewed and recalculated annually during the budget process to set a minimum transfer from the Calaveras Reserve to the Electric Supply Operating Budget. The review also includes a recalculation of the stranded cost for the long-term (until 2032 when the Calaveras debt is paid off) of the electric supply portfolio to determine the sufficiency of the Calaveras Reserve balance to cover the amount. To the extent funds are available in excess of long-term stranded cost needs, the Council may consider and approve projects funded by the Calaveras Reserves which will benefit electric ratepayers. Following the electric deregulation in 1997, the City Council unbundled electric rates into the cost components of distribution, power supply, transition, cost recovery and public benefits. Because of the need to recover costs and capture revenues for specific business activities, the rate stabilization reserve for the Electric System was replaced with two separate reserves for distribution and supply services. Similarly, the City Council separated its single rate stabilization reserve for the Gas System into two separate reserves. In 1998, 2001, 2003, 2007, and 2009, the City council adopted various updated guidelines for the rate stabilization reserves. The 2009 rate stabilization reserve guidelines incorporate the following: * For the Electric Distribution and Gas Distribution Rate Stabilization Reserves, the minimum and maximum guideline levels are equal to 15% and 30% of the annual distribution sales revenues respectively; • For the Water and Wastewater collection Rate Stabilization Reserves, the minimum and maximum guidelioe levels equal 15% and 30% of annual sales revenues respectively; • For the Electric Supply Rate Stabilization Reserve, the minimum and maximum guideline levels equal 50% and 100% of supply purchase costs, respectively (unchanged from 2007); • For the Gas Supply Rate Stabilization Reserve, the minimum and maximum guideline levels equal 35% and 70% of supply purchase costs, respectively. -19- Annual Financial Statements and Significant Accounting Policies The City's annual financial statements are audited by Maze & Associates, Accountancy Corporation, Walnut Creek, California, in accordance with generally accepted auditing standards and the standards for financial audits issued by the Comptroller General of the United States. The Maze & Associates audit report contains opinions that the financial statements present fairly the financial position of the various funds maintained by the City. The annual financial statements include certain notes which may not be fully described in this Official Statement, but which constitute an integral part of the audited financial statements. The City's most recent annual financial statement is attached as APPENDIX C- "COMPREHENSIVE ANNUAL FINANCIAL REPORT OF THE CITY FOR THE FISCAL YEAR ENDED JUNE 30, 2008." Copies of prior reports are available on the City's website (http://www.cityofpaloalto.org/depts/asd/financiaLreporting.asp) or upon request to the Administrative Services Department, City of Palo Alto, 250 Hamilton Avenue, Palo Alto, CA 94301. Governmental accounting systems are organized and operated on a fund basis. A fund is defined as an independent fiscal and accounting entity with a self-balancing set of accounts recording cash and other financial resources, together with all related liabilities and residual equities or balances, and changes therein. Funds are segregated for the purpose of carrying on specific activities or attaining certain objectives in accordance with special regulations and restrictions. As indicated above, the various Systems are accounted for as enterprise funds. Enterprise funds are used to account for operations (i) that are financed and operated in a manner similar to private business enterprises (where the intent of the governing body is that the costs and expenses, including depreciation, of providing goods or services to the general public on a continuing basis be financed or recovered primarily through user charges), or (il) where the governing body has decided that periodic determination of revenueS earned, expenses incurred or net income is appropriate for capital maintenance, public policy, management control, accountability or other purposes. The City's enterprise funds are accounted for using the accrual basis of accounting. Each fund's revenues are recognized when they are earned, and their expenses are recognized when they are incurred, except for revenues from utility customers, which are recognized based on cycle billings. Revenues for services provided but not billed at the end of a fiscal period are not material and are not accrued. The City follows those Financial Accounting Standard Board Statements issued before November 30, 1989 that do not conflict with Governmental Accounting Standards Board Statements. The City has not requested nor did the City obtain permission from Maze & Associates to include the audited financial statements as an appendix to this Official Statement. Accordingly, Maze & Associates has not performed any post-audit review of the financial condition or operations of the City. -20- THE WATER SYSTEM History When the City was incorporated in 1894, the majority of its population was served by private water companies that drew their supply from relatively shallow wells. In 1896, a bond issue was approved for purchase by the City of these private water companies. In succeeding years, additional purchases completed the acquisition of privately owned facilities. Deep wells provided water to the gradually increasing population until 1938, when the decline of the groundwater table necessitated the purchase of imported.water. Thereafter, the City's growing demand was met with increasing water supplies from the Public Utilities Commission of the City and County of San Francisco (the "SFPUC"), through a 36-inch pipeline. In 1962, in order to prOVide a very high quality of water to its customers, the City began supplying 100% of its water from the SFPUC. Approximately 85% of the SFPUC supply is derived from snowfield run-off to the Hetch Hetchy Reservoir in Yosemite National Park, and the remaining 15% is derived from rainfall run-off stored in San Francisco's East Bay and Peninsula Reservoirs. Over the years, the City has added three additional SFPUC pipeline connections. As the population grew in the 1930s, 1940s and 19508, the City issued bonds to finance the necessary water distribution system expansions and improvements. This policy was changed in the 1960s to a "pay as you go" funding approach, whereby current revenues were raised to accommodate capital improvement projects. Service Area The City is the primary provider of water service within its incorporated limits and on other land owned or leased by the City. The City's service area encompasses approximately 26 square miles. Water Storage and Distribution System The City's water distribution system distributes potable water throughout the City to meet residential, commercial, industrial, irrigation and other water demands. The City operates five connections or turnouts from the SFPUC's Hetch-Hetchy system. Pursuant to the City's Rule and Regulation 3, the distribution system pressures vary between 30 and 125 pounds per square inch; an average of 50 pounds per square inch will be maintained, with the maximum and minimum pressures being experienced at the lower and higher elevations of the distribution system The City's water system is presently comprised of 214 miles of mains ranging in pipe diameter sizes from 4" to 30" serving nine pressure zones spanning 26 square miles. The City also operates five turnouts with SFPUC, five booster pump stations and six storage reservoirs ranging from 1.0 MG to 4.0 MG. City water is distributed to approximately 19,500 metered connections. Sources of Water Supply The City's current potable water supply consists entirely of purchased water from the SFPUC's Hetch Hetchy system. The City also maintains interconnections with four neighboring water distribution systems, as well as five deep wells, which are available on an emergency basis. The sources of supply are further described below. SFPUC's Hetch Hetchy System. The SFPUC's water supply originates in the Hetch Hetchy reservoir and surrounding watersheds located in and around Yosemite National Park. Water flows by gravity across the California central valley to Sunol, where it is blended with water -21- from local reservoirs, and is then pumped across the Hayward fault and through the Irvington Tunnel. There the SFPUe's Bay Division pipelines Number 1 and 2 carry water across the San Francisco Bay to Redwood City and to the Palo Alto Pipeline, which carries water south to three of the City's water turnouts at Sand Hill Road, Lytton Avenue and California Avenue. SFPUC Bay Division Pipelines Number 3 and 4 carry water arollnd and below the southern end of San Francisco Bay to the City's other two connections to the SFPUC system at Arastradero Road and Page Mill Road. The resulting blend of water represents approximately 85% Belch Betchy water and 15% local reservoir water. The City has two 25-year water delivery contracts with the SFPUC, both of which were executed in June 2009: (i) a "Water Supply Agreement," which is a master agreement between the City and County of San Francisco and the 27 wholesale customers (the "Suburban Purchasers"), and (ii) an Individual "Water Sales Contract." The contracts contain provisions for adjusting wholesale water rates to match changing wholesale revenue requirements of the SFPUC on a periodic basis. The Water Supply Agreement guarantees a maximum supply of 184 million gallons per day (the "Maximum Supply Assurance") collectively to all of the SFPUe's wholesale customerS. In 2009, the SFPUC and the wholesale customers agreed to maintain the existing allocation methodology that divides the Maximum Supply Assurance among the individual Suburban Purchasers. The City's Maximum Supply Assurance share is 17.075 million gallons per day, or 8,333,000 hundred cubic feet (cd) per year'. In Fiscal Year 2007-08, the SFPUC delivered an average of approximately 12.72 million gallons per day to the City, or a total of approximately 6,205,790 hundred cubic feet. The Water Supply Agreement provides that the amount of water made available to the Suburban Purchasers is subject to reductions due to water shortage, drought, earthquakes, other acts of God, or rehabilitation or malfunctioning of the SFPUe's water delivery system. On October 30, 2008, theSFPUC approved the Water System Improvement Program (WSlP), a long-range financial plan and capital improvement plan to address capital improvement needs and priorities for its water enterprise, which are intended to replace old systems or upgrade systems to imj:>rove reliability and meet future customer needs. The WSIP will be debt funded. The total estimated cost of the WSlP, which includes the SPPUC infrastructure to serve the City of San Frandsco and the 27 wholesale customers, including inflation and contingencies, is approximately $4.4 billion. The new contracts specify the repayment method and the amount that is to be borne by the wholesale customers (including the City). The City's cost of water purchased from the SPPUC has increased in recent years as a result of rising operations and maintenance costs of the aging water delivery systems that transport SFPUC water. It is anticipated that purchased water costs will continue to increase as the WSIP is implemented. SFPUC wholesale water rates for Fiscal Year 2007-08 were $1.30 per hundred cubic feet. Recent SFPUC wholesale water rate projections indicate that wholesale rates are expected to increase to $3.57 per hundred cubic feet by Fiscal Year 2015-16. The SFPUC adopted a capital program to repair and upgrade the regional water system that serves the City and other Bay Area communities. The SFPUe's Water System Improvement Program (WSIP) consists of projects that arc designed to increase the reliability of the regional system, especially if subjected to a large earthquake. According to the SFPUC, the objectives of the WSIP include: 1 1 cd equals 748 gallons -22- • • • • • Improve the system to provide high-quality water that reliably meets all current and foreseeable local, State, and Federal requirements. Reduce vulnerability of the water system to damage from eal'thquakes. Increase system reliability to deliver water by providing the redundancy needed to accommodate outages. Provide improvements related to water supply / drought protection. Enhance sustainability through improvements that optimize protection of the natural and human environment. Prior to completion of the WSIP, the SFPUe's studies showed that the service area could be without water for up to 60-days after a major earthquake. The 50 WSIP projects for the regional system include replacement of some sections of pipeline, replacement of pump stations, upgrades to water treatment plants, new pipelines, dam and reservoir improvements, control system upgrades, large valve replacements, and fisheries enhancements. Wholesale water p~ices have increased over the past five years as the SPPUC has started the planning, environmental review and design stage for many of the WSIP projects. The wholesale water rates for the past five years are as follows: Fiscal Year 2005 2006 2007 2008 2009 Rate perCCF $1.13 $1.02 $1.22 $1.30 $1.43 The latest forecast of wholesale water prices from the SPPUC incorporate the expected cost and schedule for the WSlI'. The price forecast is as follows: ElselllYear 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Rate per CCF $1.65 $1.95 $2.28 $2.76 $3.14 $3.41 $3.57 $3.55 $3.57 $3.59 Interconnections with Neighboring Systems. The City maintains interconnections with four neighboring water distribution systems: Mountain View, the Stanford University campus, Purissima Hills Water District, and East Palo Alto. These interconnections are available for use in cases of water distribution system emergencies. Emergency Wells. The City maintains five existing deep wells, which could supply a portion of the service area's needs on an emergency basis. It is anticipated that these existing wells, plus the three new wells the City plans to build over the next five years, could provide a near-normal water supply during all extended SPPUC water supply interruption. -23- Water Wells, Regional Storage and Distribution System Study. Due to tile critical need to ensure sufficient water supplies are provided under emergency conditions, in accordance with City Council Direction, the City is accelerating the implementation of the recommendations of the Water Wells, Regional Storage and Distribution System Study, completed in 1999, over the next five fiscal years. This study identified system deficiencies and recommended capital improvements to improve the operation and reliability of tile City's water distribution system, particularly during emergency situations. The City's five existing wells will be rehabilitated or rebuilt. Three new wells will also be constructed. A new reservoir and pump station at EI Camino Park as well as an augmentation to an existing pump station at Mayfield will be constructed to allow the City to supply near-normal levels of water supply during SFPUC water supply interruptions. Five booster pump stations have been rehabilitated in the Foothills to improve water conveyance efficiency. These planned improvements are projected to maintain the City's water supply capacity at nearly normal llsage levels on a continuous basis for the duration of many long-term emergency scenarios, some lasting 90 days or longer. In addition, the wells could be used as supplemental supplies in protracted drought conditions when conservation efforts and SFPUC supplies were not sufficient to meet demands. Recycled Water Proj ect The City completed a Water Reclamation Master Plan (Master Plan) for the Palo Alto Regional Water Quality Control Plant (RWQCP) in 1992 and an accompanying Final Program Environmental Impact Report (PEIR) in 1995. The Master Plan and the PEIR evaluated the development of a regional water reuse system that could ultimately provide service to the entire RWQCP service area. Benefits of a regional water reuse system include reduced effluent discharge from the RWQCP into San Francisco Bay and reduced reliance on potable 'Vater deliveries from the Hetch Hetchy system. The Master Plan includes a phased approach to the expansion of treatment, distribution, storage and USe of recycled water. Phase 1 of the regional recycled water system has been in operation since 1980. It currently serves the Palo Alto Golf Course, Greer Park, the Emily Renrel Marsh, the Duck Pond, and the RWQCP. Construction of Phase 2, the Mountain View Recycled Water project, is almost complete and the project is scheduled to be online in the next few months. The Palo Alto Recycled Water Project, which would expand the recycled water distribution system to serve additional customers in Palo Alto, is Phase 3 of the RWQCP's ongoing expansion of its regional recycled water system. The City is currently investigating the feasibility of constructing the Phase 3 project. The City completed a market survey in June 2006 to update the cost estimate and potential users for the project. Subsequently, the City completed a Recycled Water Facility Plan in December Z008, which provided further detail regarding potential project cost and potential recycled wa.ter use.· The project would primarily serve irrigation customers within the City, with an initial yield of approximately 900 acre feet per year of recycled water. The Facility Plan identified a target recycled water use area, the Stanford Research Park, and a pipeline alignment for the project that would connect to the Phase 2 project. The projected capital cost estimate for the Phase 3 project is $33 million. The City is preparing the project level environmental document for tile project and has involved stakeholders from the community and the potential end use customers and landowners in the Stanford Research Park. One of the issues identified in the environmental review phase is the salinity of the recycled water, which may negatively impact vegetation that would be irrigated with the recycled water. Another issue is the high cost of the project. The City is investigating many funding options for the project, including state and federal grant and loan programs. The City is currently seeking federal authorization for a grant award of $8.25 million under the Bureau of Reclamation Wastewater and Groundwater Study and Facilities Act of 1992 (Title 16). The City -24- is also applying for a low interest State Revolving Fund (SRF) loan from the State Water Resources Control Board for the project. Under this program, eligible projects can apply for loans with interest rates that are roughly half of the State general obligation bond rate. If the Ci ty is unsuccessful in obtaining an SRF loan, it is possible that the City could finance the Project with a traditional debt issuance. If the City is successful in obtaining an SRF loan, it would be subordinate to the current bond issuance. At this time, the City Council has not decided to go forward with the Phase 3 Recycled Water Project A decision to proceed could be made as soon as the fall of 2009, but many details regarding completion of the environmental document, potential state and federal funding, salinity management, and recycled water rate design remain to be determined. If the project did proceed, potable water sales volumes would decrease and less potable water supplies would be purchased from the SFPUe Since wholesale water costs are only a portion of the total water utility cost, the remaining water utility costs would be borne by fewer customers resulting in upward pressure on retail potable water rates. Recycled water retail rates have not been developed, but are typically set to an amount equal to about 75% of potable water retail rates. Providing a discount for recycled water users may result in a small upward impact on potable water rates, but this is not expected to be a large impact at this time. Water Conservation Policies and Procedures The City Council adopts an Urban Water Management Plan (UWMP) every five years. The latest UWMP was adopted in December 2005. The 2005 UWMP contains the Urban Water Shortage Contingency Plan, which describes what the City would do in case of a water supply shortage. The plan describes a set of activities that would need to be done to implement various stages of a water supply shortage. There are fOllr water shortage stages culminating in Stage IV, a critical water shortage where water supplies are reduced by 35% to 50%. The actions taken to respond to the water shortage stages include outreach campaigns, water audit programs, stepped-up incentive programs for customers to install water efficient appliances, implementation of water use restrictions, modifications of water rate structures or rationing programs, and the use of groundwater as a supplemental supply. In a water shortage situation, the City would select the appropriate mix of actions to respond to the severity of the water shortage. The City has had extensive experience implementing programs to reduce customer use of water in water shortage situations. In the last extended water shortage from 1988 through 1992, the City reduced water consumption by over 35% from pre-drought consumption levels. Water consumption has not retllmed to the levels that existed prior to that water shortage and the City believes that future water reductions are unlikely to be as dramatic in a future drought. Historical I'roduction and Deliveries The follOWing table sets forth a five-year history of water purchased from the SFPUe and delivered to customers in the Water System's service area. Water Supply Water Deliveries • Estimated Table 1 WATER SUPPLY AND DELIVERIES (in hundreds of cubic feet) FiBcal Years 2004-05 through 2008-09 2004-05 5,896,965 5,331,324 2005-06 5,802,911 5,208,903 -25- 2006-07 6,361,100 5,480,603 2007-08 6,205,790 5,526,644 2008-09 5,787,545 * 5,533,352 * Source: City of Palo Alto, Utilities Department. Environmental Issues Relating to the Water System The U tilitie~ Department reports that no environmental issues exist that are anticipated to materially affect the Water System. Capital Improvement Program Summary The City currently projects that it will undertake capital improvements to the Water System for the nextkn fiscal years in the aggregate amount of approximately $85,800,000. The City intends to use a portion of the proceeds of the 2009 Bonds to finance a portion of these projects through fiscal year 2012, together with certain engineering, design and related costs previously incurred with respect to Water System improvements, for a total of approximately $31,150,000. See "FINANCING PLAN." The City currently intends to finance the remaining projects with available Water Fund revenues on a pay-as-you-go basis, and not through the issuance of additional bonds or other debt instruments. The following table displays these projects and highlights those that are intended to be financed from the proceeds of the 2009 Bonds. -26- Table 2 TEN YEAR CAPITAL IMPROVEMENT PROGRAM SUMMARY FiscalYeu Project ~ ~ 2Q1.Q:lJ Zll1!.1.:l Z!ll.2d.> :mu,lf! ~ ~16 WklZ ~917-=-t~ ~ 10Yr_Tptal Existing Well RehabilitatiOn 51,500,000 $1,7S0))OO $1,750))00 $5,000,000 E1 Camino Park Reservoir and Pump Station $2,5(0))00 $7.500,000 $7,500,000 $17,500,000 Reservoir, Pump Station &: Well Land. A;;:quisition $B,2Jl(WOO 58,200,000 Bl Ca.m.ino Park Well $400))00 $1,oo0,{)00 <---$31,150,000 $1,400,000 Maymld Pllrnp Station 1750,000 $4,500,000 15,250,000 Comrnu."1ity Garden Well Site 1400,000 $1,0(0))00 $l,400,000 Eleanor P1ll:dee P1ll:k Well 1400,000 $1,000,000 $1400,000 SUB.TOTAL $9,000 000 "$7,150'{)00 $14,750,000 $9 250,000 $40,150 0 Water Regulation Station Imptovements $320,000 $710,000 $1,(30))00 Arastradcro CreekAcccss Road Paving 524100 $23,133 $24,183 $25,233 $26,283 $27,333 $28,383 $29,433 130,483 $31,533 $32,583 5206,083 Maintenance (annuaL ongoing) WGW Utility GIS Data $40))00 $50,000 $6(),000 570))00 $80,000 590))00 51(0))00 $110,000 1120))00 1130))00 $140))00 $6()Q,000 Water Main Replacements Phase 32 $415JIOO $3,750,000 ""165,000 Water Main Repl<lcements Phase 31 $395))00 53,500))00 $4,045,000 Water Main Replacements Phase 30 $375,000 $3,500))00 $3,925,000 Water Main Replacements Phase 29 $355))00 $3,450,000 $3,805,000 Water rv!ain Replacements Phase 28 S340,000 $3,285))00 $3,625,000 Water Main Rep1ace~ts Phase 21 1325))00 $3,130,000 $3,455))00 Waret Main Replacemer.ts Phase 26 $307,000 $2,980))00 $3,287,000 Water Main Replacements Phase 25 $292,000 12,835,000 $3,127,000 Watet Main Replacement,> Phase 33 $435,000 $435,000 Water Main Replacements Phas.e 21 $2,700,000 $2,700,000 Water Main Replacemertts Phase 22 1233,000 $2,500,000 12,73)))00 Water Main Replacements l'hase23 .$240,000 $2,600,000 $2,840,000 Water Main Replacements Phase 24 $292,000 $2,700..000 $2,99:WOO Seismic Water Tank Valve $250,000 $5&0))00 8800,000 Four S~j R~rvoit Interior and Exttrior Coating 5250,000 11,500,000 $2,050,000 Water System Portable Emergency Generators $134,000 5136))00 113S))OO $140,000 5142.000 $144,000 8834,000 Service and Hydrant Replacement 1146,000 5149,000 1152,000 5155,000 1158,000 $161))00 116>\,000 5167,000 $170,000 $173,000 5176,000 $1,.252,000 Water Meters $197,000 $2(3))00 5209))00 $215,000 $2211000 $227,(0) $2l~))OO $239,000 $245,000 5251))00 $257))00 51,744,000 Distribution System -Customer Design and Connection Services Water System Extel\'>ions $343,000 $353,000 1364,000 $373,800 $384,000 $394,200 $4().l400 $414,600 $424,800 $435,000 $445,200 $3,031,000 Full Reimbursement by Customer (Revenues) (5843'{)00) ($853,000) (5864,000) (1673,800) (1884,000) (1894,200) ($904,400) (1914,600) (1924,800) (1935,000) (1945,200) (17,031,000) Net Subtotal Distribution System -Customer (1500,000) (1500,000) (1500,000) (1500,000) (1500,000) (1500,000) (1$00,000) (1500,000) ($500,000) ($500,000) (15()(),ooO) (14,000,000) DeSi~ and Connedion Services Net ubtotal Distribution System -System 53,212,100 $6,273,133 $6,135,183 $3,247,233 $3,432,283 $3,619,333 $3,665,3$3 $3,870,433 ",,010,453 54,150,533 54,290,583 $45,650,083 Improvements (out'>ide of Bhr emergency) 'fOTAL NET WATER PRO)'Ec:IS $12,212,100 S13@St133 $20,885.183 512,497,233 13,432,283 $3,619,3)3 $3,665,383 $3,870,433 54,010,483 $4,150,533 $4,290,583 185,s0(),ooo Source: City of Palo Alto Utilities Department -27- Water Rates, Fees and Charges Rate Setting Process, Water rates are based entirely on the City's costs of purchased water and operating and maintaining the Water System, Purchased water costs comprise 26% of the Water System's budget. The City receives annual cost projections from its water wholesaler, SFPUC. To establish retail rates, these supply costs are added to other expense requirements related to operation of the water distribution system, including the payment of any outstanding debt and the funding of reserves, Historical and Current Rate Increases, The City has historically adjusted water rates as necessary for each customer class, The most recent increase of 5% was adopted on June 15, 2009 for fiscal year 2010, The following table sets forth a five-year history of water rate increases. Table 3 HISTORIC WATER RATE INCRllASES FOR ALL CUSTOMER CLASSES Year 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 Source: City of Palo Alto, Utilities Department, Increase 10,3% 7% 10% 8°1 ... 5% Water Rate Structure. Water rale schedules are established for residential and non- residential (commercial and industrial) users. Prior to Fiscal Year 2006-07, water rate structures consisted of only a variable (volumetric) water usage charge, Since Fiscal Year 2006-07, both customer classes have both a fixed monthly service charge and a variable water usage charge, The fixed charge is based on the size of the meter serving the customer. The volumetric component of the residential rate schedule consists of rate or usage blocks that ascend in price as consumption increases. The volumetric component of non-residential userS (including public facilities) does not have usage blocks. The following tables set forth the Water System rates for the past five fiscal years. Water Rate Structure (1) shows the volumetric component, and water rate structure (2) sbows the Fixed Charge Component. Fiscal Year 2oo8-09's rate structure was approved on June 9, 2008. The rates shown below are per hundred cubic feet (cd) of water usage. User type and Monthly Rate Block Residential: 0-7 cd over 7 ccf Industrial/Commercial: Table 4 WATER RATE STRUCTURE (1) Volumetric Component Fiscal Years 2004-05 through 2008-09 (per cd) 2004-05 $3,707/ccf $4,025/ccf $4,025/ccf 2005-06 $3.707/cd $4.025/ccf $4,025/ccf 2006-07 $4,04/ccf $4.27/ccf $4.25/ccf Source: City of Palo Aiio-;-Utilities Department. ·28- 2007-08 $3,949/ccf $4.S10/ccf $4,341/ccf 2008-09 $3.949/ccf $5.164/ccf $4.697/ccf Table 5 WATER RATE STRUCTURE (2) Fixed Charge Component In Effect Since Fiscal Year 2007·08 (per meter) Meter Size 5/S-inch meter 3/4 inch meter 1 inch meter 11/2 inch meter 2-jnch meter 3-lnch meter 4-inch meter 6~inch meter 8-inch meter lO-lnch meter Source: City of Palo Alto, Utilities Department. Monthly Customer Charge ($) 5.00 5.00 6.50 12.27 19.37 77.65 130.60 260.43 383.67 383.67 Projected Rates. The City's water rates will increase by 5% in fiscal year 2009-10 and are projected to increase by 7%, 8%, 9% and 9% per year for each of the following 4 years, respectively. These projected rate increases could change depending on the future projections, and will largely depend on the future costs of purchased water. Comparative Monthly Water Rates. The table below shows comparative monthly residential water bills for a usage rate of 14 hundred cubic feet by water suppliers serving neighboring County communities for fiscal year 2008-09. Table 6 COMPARATIVE RATES FOR AVERAGE MONTHLY RESIDENTIAL SERVICE Fiscal Year 2008-09 Water Provider Redwood City Mountain View Palo Alto Santa Clara Menlo Park Average exduding Palo Alto Source: City of Palo Alto, Utilities Department. Average Monthly Rate [lJ $50.72 $43.54 $68.79 $32.27 $54.28 $45.20 [11 Represents rate for typical residential users based on consumption of 14 cd plus a service chal'ge for a 5/8" meter. Water Demand and Customer Base On average, the City's water customers consume 11.3 million gallons of water per day. However, demand rises and falls depending on the season, with the summer months showing high consumption and the fall and winter months lower consumption. In fiscal year 2008-09, the Water System sold approximately 5,533,352 cubic feet of water to approximately 19,359 users. (This amount is lower than water purchased from the SFruc due to water losses in the storage and transmi",~ion systems, billing period differences and unmetered water uses.) -29- The following table sets forth a five-year history of the number of accounts for the Water System. Table 7 NUMBER OF ACCOUNTS As of June 30, 2004-05 through 2008-09 Fiscal Year 2004-05 2005-06 2006-07 2007-08 2008-09 • Source: City of Palo Alto, Utilities Department. "Estimated Number of Accounts 19,208 19,347 19,406 19,336 19,359 The following table shows billing amounts, water consumption in hundred cubic feet by customer type, and water consumption as a percentage of total consumption by type of customer for active water accounts during fiscal year 2008-09. Table 8 SUMMARY OF WATER ACCOUNTS AND USAGE BY USER TYPE Fiscal Year 2008-09' (Doilars in Thousands) _...... User Type Single Family Residence-s--- Aparhnents Commercial/Industrial Other Total Number of Accounts 14,727 2,232 2,005 395 19,359 Source: City of Palo Alto, Utilities Department, ·Estimated Billings $12,561 4,149 7,863 2,451 $27,024 -30- Consumption (in ccf) 2,567,054 841,806 1,614,605 509,887 5,533,352 Consumption as Percent of Total 46.4% 15.2% 29.2% 9,2% 100.0% Largest Water Customers. For 2008, total cd sales were 5.6 million, and total sales revenues were $27.1 million. The ten largest customers accounted for approximately 18% of total sales (1.0 mil cd) and 17.7% of total water revenue ($4.8 million). The largest customer accounts for 5.6% of total sales (317 thousand cd) and 5.6% of total water revenue ($1.5 mil). The smallest customer accounts for .7% of total sales (41 thousand cd) and .7% of total water revenue ($191 thousand). The following tables lists the ten largest customers of the Water System for fiscal year 2007-08: Primary Rank Business Activity 1 Government 2 Medical 3 Recreation 4 Education 5 Medica! 6 Retail 7 High Tech 8 High Tech 9 High Tech 10 High Tech Top Ten Total System Total Table 9 TEN LARGEST CUSTOMERS Fiscal Year 2008-09 Percent Billings of Tota! $1,510,714 815,012 3.00 461,530 1.70 443,019 1.63 415,539 1.53 312,234 1.15 235,503 0.87 231,761 0.85 194,127 0.71 191.754 0.71 4,811,192 12.2056 27,177,604 SOUl'ce: City of Palo Alto, Utilities Depat'tment. Management Discussion of Operations Consumption Percent (in cd) of To!al 316,766 5.61 176,849 3.13 100,489 1.78 91,281 1.62 89,410 1.59 62,409 1.11 49,450 0.88 48,251 0.85 42,070 0.75 ~Al,Q43 J1..Zl 1,018,018 18.05 5,645,037 Utilities Strategic Plan. The City continues to focus on providing a high quality and reliable source of water for its residents and businesses. The four key objectives in the Updated Utilities Strategic Plan that the City Council approved in 2005 are: (1) Enhance customer satisfaction and utility infrastructure; (2) employ balanced envirorunental solutions; (3) provide fair and reasonable returns to the City and competitive rates to customers through municipal ownership, and (4) ensure a safe and engaged workforce. Based on these objectives, seven separate strategies provide a focus for the Utilities Department to meet these objectives while providing flexibility to succeed in a changing environment. The Utilities Strategic Plan is applicable to Water, Gas, Electric, Wastewater Collection, and Fiber Optics operations. Water Supply. With regard to water supply, the City's wholesale supplier, the SFPUC, has provided rate projections indicating that the City's wholesale costs will steadily increase over the next six years. This is due to the construction of seismic upgrades to the SFPUC water delivery system. These costs will be borne by the City and County of San Francisco as well as the SFPUC's wholesale customers, including the City. Sales Revenues. Retail water sales revenue during the past five years grew from $13.3 million in fiscal year 2004-05 to $15.4 million in fiscal year 2008-09. This represents an annual growth rate of 3% over this period. Water rates did not change in fiscal year 2005-06. In fiscal year 2009-10, water retail sales revenue is projected to increase 5% to recover rising wholesale purchase costs and distribution operating costs, including debt service on the 2009 Bonds. Between fiscal year 2009-10 and fiscal year 2013-14, retail water rates are projected to by 7%, 8%, 9% and 9% annually to offset rising wholesale water purchase costs. -31- Rate Stabilization Reserves. [NOTE, THIS SECTION NEEDS TO BE UPDATED ONCE ASD UPDATES THE FINANCIAL TABLE BELOW RE PROJECTED REVENUES AND EXPENSES.] The Water Fund Rate Stabilization Reserve (W-RSR) balance is budgeted to be $9.2 million in Fiscal Year 2009-10 which is slightly over the maximum guideline level of $8.7 million. It is expected that W-RSR will decrease to $9.3 million in Fiscal Year 2010-11 and meet the Council established guidelines level for that year. The W-RSR is expected to continue to decrease to $8.6 million by Fiscal Year 2013-14, which is below the maximum and above the minimum guideline levels for the W-RSR. See" AVAILABLE RESERVES" for a discussion of the minimum and maximum guideline levels established for each reserve fund. Capital Improvements. To improve the operation and reliability of the City's water distribution system, the City's Capital Improvement Program will be accelerated over the next five years. See "THE WATER SYSTEM-Capital Improvement Program Summary" above. The projects identified will ensure that water is available during emergencies and plays a vital role in development of the City's emergency response plans. Emergency Planning was identified as one of the Council's top four priorities for 2006 and 2007. These projects also supports Comprehensive Plan Goal N-10, Protection of Life and Property from Natural Hazards, Including Earthquake, Landslide, Flooding and Fire. -32- Balance Sheet The following table sets forth the balance sheets of the Water System for the last five fiscal years. These numbers are excerpted from the audited financial statements of the City which were prepared in accordance with generally accepted accounting principles. Table 10 BALANCE SHEET Fiscal Years Ended June 30, 2005 through 2009 (Dollars in Thousands) 2004-05 2005-06 2006-07 2007-08 2008-09 ASs,ll,TS CURRENT ASSETS: Cash and Investments 20,868 17,872 20,201 24,424 Accounts Receivable (Net) 3,112 3,191 3,490 4,233 Interest Receivable 239 220 251 272 TOTAL CURRENT ASSETS 24,219 23,942 28,929 NON-CURRENT ASSETS: Property, Plant and Equipment (net) 48,685 52,960 56,636 59,426 TOTAL ASSETS 72,904 74,463 80,.578 88,355 LIABILITIES Accounts Payable and Accrued Liabilities 11,583 11,601 11,068 11,449 Accrued Salaries and Benefits 207 58 192 81 TOTAL LIABILITIES 11,790 11,260 11,.530 EUNPllOUITY Contributed Capital 8,614 8,614 Retained Earnings 52,.500 54,190 69,318 76,825 TOTAL FUND EQUITY 61,114 62,804 69,318 76,825 TOTAL LIABILITIES AND FUND EQUITY 72,904 74,463 80,578 88,355 Source: CitY'(;ip.lo Alto Audited Financial Statements, 2005-2008. Figures lor 2009 are unaudited. -33- Historical Operating Results The following table is a summary of operating results and debt service coverage of the Water System for the last five fiscal years. These results have been derived from the audited financial statements of the City for the four fiscal years ended June 30, 2008. The data for the fiscal year ended June 30, 2009, is unaudited. See APPENDIX C-"COMPREHENSIVE ANNUAL FINANCIAL REPORT OF THE CITY FOR THE FISCAL YEAR ENDED JUNE 30, 2008." Table 11 SUMMARY STATEMENTOF HISTORICAL REVENUES, EXPENSES AND CHANGES IN RETAINED EARNINGS Fiscal Years 2004-05 through 2008-09 (Dollars in Thousands) OPERATING REVENUES: Sales of Utilities: Customers City Departments Service Coru"lcction Olarge & Miscellaneous Other Operating Revenues Total OperaUng Revenues OPERATING EXPENSES: Purchase of Utilities Administration and General Engineering (Operating) Resource Martagement Operations and Maintenance Rent Depreciation and Amortization Total Operating Expenses Operating Income (Loss) OPERATING INCOME NON-OPERATING REVENUES (EXPENSES): Return on [nvestment Contributions Loss 011 Disposal of Fixed Assets Net Non-operating Revenues (Expenses) INCQ.\1E (LOSS) BEFORE OPERATING TRANSFERS Operating Transfers In Operating Transfers (Out) Net Revenue 1995 Bonds (Water System Portion) Net Revenues Available for Debt Service 2002 Bonds (Water System Portion) Debt SeIvice Coverage Source: City of Palo Alto 2004-05 2005-06 $19,630 $19,506 1,017 924 154 228 240 179 21,041 20,837 6,719 6,472 2,362 2,776 189 195 372 464 3,080 2,875 1,368 1,506 916 995 15,006 15,283 6,035 5,554 738 251 (15) (148) 723 103 6,758 5,657 29 20 (3,987) 1,690 24,370 70,479 ·34· 2006-07 $21,826 1,088 315 266 23,495 7,805 2,247 262 396 2,702 1,781 1,132 16,325 7,170 626 1,168 8,338 1,153 (2,977) 6,514 40,918 2007-08 $24,558 1,298 409 245 8,363 2,741 359 350 3,561 1,788 1,134 18,296 8,214 1,844 (109) 1,735 10,356 200 (3,049) 7,507 36,514 2008-09 Projected Operating Results and Debt Service Coverage The following table is a summary of the projected operating results of the Water System for the fiscal years ending June 30, 2010, through June 30, 2014. The financial forecast represents the City's estimate of projected financial results based upon its judgment of the most probable occurrence of certain important future events. Actual operating results achieved during the projection period may vary from those presented in the forecast and such variations may be material. Table 12 SUMMARY STATEMENT OF REVENUES, EXPENSES AND FUND BALANCES Fiscal Years 2007-08 through 2013-14 (Dollars In Thousands) 2008 2009 2010 21111 2012 2013 2Q14 OPERATING REVENUES Sates of Water 25,856 26,606 28,810 30,835 33,323 36,345 39,656 Connection Fees 409 886 920 931 942 886 897 Other Opel'ating Revenues (& Operating Transfers In?) 445 97 97 97 97 97 97 Total Operating Revenues 26,710 27,589 29,827 34,362 37,328 NON-OPBRA TlNG REVENUES Interest I Return on Investment 1,844 1m5 1,161 646 574 561 550 Transfers from Rate SlabiIb:ation Fund 3,166 4,069 110 545 Total Non·operating Revenues 5,010 5,()84 684 1~106 TOTAL GROSS REVENUES 31,720 32,673 30,988 32,509 35,046 38,434 41,224 OPERATING EXPENSES Purcliase of Water 8,363 8,701 10,354 12,067 14,028 16.907 19,059 Admin & General I Enginecrlng J Resource Mgmt I O&M 7,011 9,423 9,801 10,193 10,600 11,024 Rent 1,788 1,919 1,977 2,036 2,097 2,160 Total Operations & Maintenance 17,162 20,043 22,132 24,296 26,725 30,091 32,749 NON-OPERATING EXPENSES General Fund I Other Transfl'ts 3,049 3,798 749 749 749 TOTAL MAINTENANCE AND OPERATION COSTS 20,211 23,841 ~ .. 22,881 27,474 30,840 NET REVENUES 8,832 8,107 7,'572 7,594 2002 DEBT SERVICE 778 778 778 778 778 77B 778 2009 DEBT SERVICE 952 2,376 2,372 2,374 2,375 TOTAL DEBT SERVICE COVERAGE RATIO 14.79x 11.35x 4,69x 2,37x 2.40x 2.41x 2.45x NET REVENUES AFl1lR DEBT SERVICE 10,731 8,054 6,377 4,310 4,422 4A42 4,573 RESERVE BALANCE AS OF YEAREND Plant Replacement 1,595 1,000 1,000 1,000 1,000 1,000 1,000 Rate Stabilization 13,111 9,042 9,248 9,284 9,174 8,629 8,605 Tolal Reserve Balances 14,706 10,042 10,248 10,284-10,174 9,629 9,605 Source: City 01 Palo Alto -35- AVAILABLE RESERVES Set forth below is information, including historical balances, policies and minimum, maximum and target guidelines with respect to each of the Available Reserves. The City's Rate Stabilization Reserves For Its Enterprise Funds Utility Reserve Policy. Based upon a comprehensive review of utility reserves, the City Council adopted a utility reserve policy in 1993 that defined the role of reserves, established a rate stabilization reserve for each utility fund, and identified reserve guidelines. Rate stabilization reserves were created to cover a number of contingencies, induding the need to supplement rates to cover distribution expenses and commodity supply costs. The 1993 reServe policy declared that reserves should be established to finance "extraordinary one-time contingencies." The policy further stated that reserves should not be used to solve long-term financial problems; rather, rates should finance current operating, capital and financial obligations which are of an ongoing nature. In addition, reserves should not be funded to cover major catastrophic disasters; the City maintains insurance for that purpose and other governmental resources can be made available in case of disaster. Finally, if current operating costs exceed current revenues, reserves should be used to cover increased operating costs in the short run, while allowing rates to gradually increase over a reasonable period to meet such cost levels. Thus, the underlying goal of the reserves is to provide rate stability. Based upon a Council approved methodology, reserve level guidelines (minimum and maximum) are set annually to allow reserves to adjust up or down without unduly falling below the minimum or above the maximum. On occasion, reserves have exceeded the maximum level for a short time. Reserve levels are then adjusted in subsequent years, usually through rate changes. The decision to set aside more or less than the minimum or maximum is based upon an assessment of the uncertainties and financial risk facing the utilities. The City notes that reserve levels in excess of "maximum" levels are considered to be consistent with its reserve guidelines. The City Council is notified in the Midyear Financial Report, as well as in the Fourth Quarter Financial Report, of any existing or potential issues known at that time with respect to the reserves. In the absence of direction from the City Council to immediately address disposition of a reserve surplus, the disposition will be addressed in the following year's budget cycle. Disposition may include a rate reduction, customer rebate, application of the surplus in satisfaction of a financial obligation or, if justified, maintenance of the reserve in its surplus position for a specific period of time. The City's policy is to require City Council action to use the reserve; as a result, utility managemt.'I1t is held accountable for operating efficiently and the City Council makes the decisions regarding the use of reserves. Since 1993, deregulation of the electric and gas industries has progressed rapidly. In 1997, the City Council approved several policies related to electric deregulation, including recovery of stranded costs and providing customer choice of supplier and marketing sales to customers residing outside the City's service territory. See " AVAILABLE RESERVES- Calaveras-Stranded Costs Reserve" below. in 1998, Council split the Gas and Electric Fund Rate Stabilization Reserves (RSRs) into Supply and Distribution RSRs when the retail rates in those funds were unbundled into supply and distribution components of the rate. In 1999, the City took similar action by approving a .Direct Access Plan for the Gas System. In 2001, 2003, 2007, and in 2009 Council made various revisions to the guidelines for the Electric and Gas Supply and Distribution RSRs and Water and Wastewater RSRs. -36- Available Reserve Balances History. The table below sets forth a summary of the amounts on hand in the Available Reserves for the prior three fiscal years, debt service of the outstanding bonds with a claim on Available Reserves, and resulting debt service coverage ratios. Table 13 AVAILABLE RESERVE BALANCES Fiscal Years 2007·2009 (Dollars in Tbousands) Rate Stabilization Reserve I'und 2006-07 2007-08 2008-09 Water System Electric System (Distribution) Gas System (Distribution) Electric System (Supply) Gas System (Supply) Calaveras Reserve (for rate increase to pay debt service) Total: Debt Service Debt Service Coverage Ratio Source: City 01 Palo Alto. Rate Stabilization Reserve for the Water System -~ $ 13,I:l1 12,281 8,109 3,868 4,734 64,542 47,309 2,801 7,399 $160,798 $151,059 780 780 The Water System rate stabilization reserve fund is maintained on the basis of the following guidelines; Minimum Guideline Level: Maximunl Guideline Level: 15 percent of budgeted sales revenue for that year plus estimated annual net sales revenue decline due to abnormal weather twice the minimwn level The table below sets forth actual sales revenue, policy guidelines and actual levels of the Water System rate stabilization reserve as of June 30 for the last five fiscal years: Tahle14 RATE STABILIZATION RESERVE FOR THE WATER SYSTEM Fisc.1 Years 2005·2009 (Dollars in Thousands) 2004-05 2005·06 2006-07 2007-08 Actual Sales Revenue $20,771 $20,524 $23,044 $25,975 Minimum Level 7,106 7,435 7,108 4,942 Maximum Level 14,211 14,869 14,215 12~156 Actual Reserve Level 5,217 4,143 16,276 13,111 Source: City of Palo Alto. 2008-09 See also APPENDIX C-"COMPREHENSIVE ANNUAL FINANCIAL REPORT OF THE CITY FOR THE FISCAL YEAR ENDED JUNE 30, 200S." -37- Rate Stabilization Reserves for the Electric System Beginning in 1993, the Electric System had a single Rate Stabilization Reserve that was funded from rate revenues. For fiscal year 2008-09, the balance in the Electric System Rate Stabilization Reserve was approximately $ as of June 30. Following electric deregulation in 1997, the City Council unbundled electric rates into the four cost components of Distribution, Power Supply, Transition Cost Recovery and Public Benefits. The unbundling of rate charges addressed, among other things, a need for the Electric System to account for its distribution business separately from its supply business in a competitive environment. Because of this need to recover costs and capture revenues for specific business activities, the rate stabilization reserve for the Electric System was replaced with separate reserves for distribution services and supply services. The City Council also established a Public Benefits Reserve in the Electric Fund to reserve revenues collected but unspent for Public Benefit programs; however, the Public Benefits Reserve is not pledged as an Available Reserve pursuant to the Indenture. At the time Council created the Electric Supply Rate Stabilization Reserves (E-SRSR) in 1998, the minimum reserve level guideline was set at 30 percent of the budgeted commodity sales revenue. The maximum guideline level was twice the minimum and the target was the midpoint between the minimum and maximum. In 2001, Council revised the guidelines for the E-RSR so that the minimum reserve level guideline was set at 40 percent of the budgeted supply purchase cost. The maximum guideline level was twice the minimum and the target was the midpoint between the minimum and maximum. In 2003, Council revised the guidelines so that the maximum reserve level guideline was set at 103 percerit of the supply purchases costs for Electric Supply. As before, the minimum guideline level was twice the maximum guideline level. In 2007, Council again revised the guidelines so that the minimum reserve level guideline was set at 50 percent of the supply purchase cost for the E-SRSR. The maximum guideline level was twice the minimum guideline level. Similarly for the Electric Distribution Rate Stabilization Reserves, (E-DRSR) the minimum reserve level guideline was set at 15 percent of the distribution sales revenue in 1998. The maximum guideline level was twice the minimum and the target was the midpoint between the minimum and maximum. In 2003, Council revised the guidelines of the E-DRSR so that the minimum reserve level guideline was set at 19 percent of the distribution sales revenue. As before, the maximum guideline level was twice the minimum and the target was the midpoint between the minimum and maximum. In 2007, Council again revised the guidelines for the E-DRSR setting the minimum guideline level to 20% of sales revenue and the maximum guideline level to 50% of sales revenue. And finally in 2009, in the Council's most recent revision to the guidelines, E-DRSR minimum and maximum guidelines were set at 15% and 30% of sales respectively for Fiscal Year 2009-10 and beyond. The current target guidelines for the Electric System Supply Rate Stabilization Reserve are set forth below: Minimum Guideline Level: 40% of budgeted purchase costs M!'!ximum Guideline Level: twice the minimum level -38- The current target guidelines for the Electric System Distribution Rate Stabilization Reserve are set forth below: Minimum Guideline Leyel: 15% of budgeted distribution sales revenue Ma~iIDum Guideline Level: twice the minimum level The table below sets forth actual sales revenue, policy guidelines and actual levels of the Electric System Distribution Rate Stabilization Reserve and Supply Rate Stabilization Reserve as of June 30 for the past five years: Table 15 RATE STABILIZATION RESERVE FOR THE ELECTRIC SYSTEM Fiscal Years 2005-2009 Actual Sales Revenue Minimum Level Maximum Level Actual Reserve Level Source: City of Palo Alto, (Dollars in Thousands) 2004-05 $74,822 24,321 48,641 57,718 2005-06 $84,961 32,669 65,338 76,823 2006-07 $85,417 33,900 67,799 71,111 2007-08 490,833 35,913 75,147 61,277 2008-09 See also APPENDIX C-"COMPREHENSIVE ANNUAL FINANCIAL REPORT OF THE CITY FOR THE FISCAL YEAR ENDED JUNE 30,2008." Rate Stabilization Reserves for the Gas System In 1998, the City Council separated its Single rate stabilization reserve for the Gas System into two separate reserves as Supply and Distribution for the same deregulation-related reasons as it had done previously with the Electrical System. At the time City Council created the Gas Supply Rate Stabilization Reserves (G-SRSR) in 1998, the minimum reserve level guideline was set at 20 percent of the budgeted commodity sales revenue, The maximum guideline level was twice the minimum and the target was the midpoint between the minimum and maximum, In 2001, Council revised the guidelines for the G-RSR so that the minimum reserve level guideline was set at 20 percent of the budgeted supply purchase cost. The maximum guideline level was twice the minimum and the target was the midpoint between the minimum and maximum. In 2003, Council revised the guidelines so that the maximum reserve level guideline was set at 75 percent of the supply purchases costs for Gas Supply. As before, the minimum guideline level was twice the maximum guideline leveL In 2007, Council again revised the guidelines so that the minimum reserve level guideline WaS set at 35 percent of the supply purchase cost for the G-SRSR. The maximum guideline level was twice the minimum guideline leveL And finally in 2009, in the Council's most recent revision to the guidelines, G-SRSR minimum and maximum guidelines were set at 25 percent and 50 percent of gas supply purchase costs respectively, Similarly for the Gas Distribution Rate Stabilization Reserves, (G-DRSR) the minimum reserve level guideline was set at 20 percent of the distribution sales revenue in 1998. The maximum guideline level was, twice the minimum and the target was the midpoint between the minimum and maximum. In 2007, Council again revised the guidelines for the G-DRSR setting the minimum guideline level to 20 percent of sales revenue and the maximum guideline level to ,50 percent of sales revenue. And finally in 2009, in the Council's final revision to the guidelines, -39- G-DRSR minimum and maximum guidelines were set at 15 percent and 30 percent of sales respectively. The current target guidelines for the Gas System Supply Rate Stabilization Reserve are set forth below: Minimum Guideline Level 20% of budgeted purchase costs Maximum Guideline Ley.o.!.: twice the minimum level The current target guidelines for the Gas System Distribution Rate Stabilization Reserve are set forth below: Minimum Guideline Level: 20% of budgeted sales revenue Maximum G\c!id!l!ine Level: twice the minimum level Based on the guidelines applicable in fiscal year ___ , the Gas System guidelines and actual reserve levels are set forth below: Table 16 RATE STABILIZATION RESERVE FOR THE GAS TREATMENT SYSTEM Fiscal Years 2005·2009 (Dollars in Thousands) 2004·05 2005-06 2006·07 2007·08 Actual Sales Revenue $36,433 $41,457 $48,100 Minimum Level 8,393 10,572 13,145 13,150 Maximum Level 16,786 21,145 26,289 29,606 Actual Reserve Level 7,844 6,669 8,406 12,133 ---------------~ ............. - Source: City of Palo Alto. 2008-09 See also APPENDIX C-"COMPREHENSIVE ANNUAL FINANCIAL REPORT OF THE CITY FOR THE FISCAL YEAR ENDED JUNE 30, 2008." Calaveras-Stranded Costs Reserve In 1983, the City Council established the Calaveras Reserve in the Electric Fund to help defray a portion of the annual debt service costs associated with the Calaveras Hydroelectric Project, which wa~ put in service at that time. As originally established, the Calaveras Reserve . policy did not provide for a target balance and depletion of the reserve was anticipated by 2002. California Assembly Bill 1890 was adopted in 1996, which provided for the deregulation of California's electric industry effective January 1, 1998. A key element of deregulation was the provision for Direct Access, which would allow electric customers to choose their electric commodity supplier. The City, along with other California utilities, were faced with the prospect of losing customers and load to Direct Access and being saddled with expensive generation assets purchased or built to serve these customers. In response to such risk, Pacific Gas and Electric Company and other investor-and municipally-owned utilities established stranded cost surcharges to collect funds from ratepayers to cover the amount that these uneconomic assets were projected to cost above their market value in the future (Le., "stranded cost"). -40- Council changed the purpose of the Calaveras Reserve in 1996 and authorized collections from electric ratepayers to cover the amount that certain electric assets' costs were projected to be higher than their market value in the future (Le., stranded cost). In addition, Council approved a new Calaveras Reserve policy linking the reserve balance to an amount sufficient to cover potential stranded costs. The assets identified as stranded included the Seattle City Light Exchange contract, the Calaveras Hydroelectric Project, and the California- Oregon Transmission Project (COTP). In 1999, Council ceased collecting funds for these stranded costs and established the Calaveras Reserve Target and Guidelines with a schedule to draw down the funds and manage electric rates through the end of FY 2032-33. In 1997, Council revised the reserve target level to cover above-market, or "stranded," costs to $93 million by December 31, 2001 to be collected from a stranded cost surcharge imposed on electric rates. When the Calaveras Reserve balance reached $71 million in 1999, stranded costs were deemed fully collected. At that time, Council authorized the cessation of the collection of the stranded cost surcharge and established the Calaveras Reserve Target and Guidelines with a schedule to drawdown the funds and manage electric rates through transfers from the Calaveras Reserve to the Electric Supply Rate Stabilization Reserve (E-SRSR) through the end of Fiscal Year (FY) 2032-33, when the Calaveras Reserve would be exhausted. In 2001, the California electric industry faced an energy crisis triggering wholesale power price spikes and rolling blackouts throughout the state. The crisis was blamed on poor deregulation market design and market manipulation by energy suppliers. As a result, Direct Access was suspended in California for the investor-owned utilities and subsequently, the City suspended its Direct Access program. Further, as a result of changing market conditions and the assignment of certain electric assets, the estimate of the City's stranded cost is lower now than when stranded cost collections stopped in 1999. Since then, electric market prices have increased significantly, reducing the stranded cost associated with the Calaveras Hydroelectric Project. On June 15, 2009, the Council adopted new guidelines to manage the Calaveras Reserve through changes to the existing Calaveras Reserve Target and Guidelines as follows: • Eliminate the existing Calaveras Reserve drawdown schedule; • Require the calculation of the stranded costs for the electric supply portfolio during the annual budget process for the upcoming budget year(s) and set the minimum transfer from the Calaveras Reserve to the Electric Supply Operating Budget equal to this amount; • Require the calculation of the stranded costs for the long-term (until 2032 when Calaveras debt is paid off) of the electric supply portfolio during the annual budget process and ensure that the Calaveras Reserve balance will be sufficient to cover this amount; • Calculate stranded cost based on the above market cost of the Calaveras Hydroelectric Project and the California Oregon Transmission Project; and • To the extent that there are funds available in excess of long-term stranded cost needs, staff will work with the UAC to identify and recommend projects for Council consideration and approval. Such projects shall be to the benefit of electric ratepayers. -41- The approximate balance of the Calaveras Reserve for the last five fiscal years is set forth below: Table 17 CALAVERAS-STRANDED COSTS RESERVE Fiscal Years 2005-2009 (Dollars in Thousands) 2004-05 2005-06 2006-07 2007·08 Balance 72,963 73,163 71,180 70,397 Source: City of Palo AUo Audited Financial Statements. 2008-09 See also APPENDIX C-"COMPREHENSIVE ANNUAL FINANCIAL REPORT OF THE CITY FOR THE FISCAL YEAR ENDED JUNE 30, 2008." CONSTITUTIONAL LIMITATIONS ON TAXES AND WATER RATES AND CHARGES Article XIIIA Article XilIA of the State CQnstitution provides that the maximum ad valorem tax on real property cannot exceed 1% of the "full cash value," which is defined as "the county assessor's valuation of real property as shown on the 1975-76 tax bill under 'full cash value' or, thereafter, the appraised value of real property when purchased, newly constructed, or a change in ownership has occurred after the 1975 assessment", subject to exceptions for certain circumstances of transfer or reconstruction and except with respect to certain voter approved debt. The "full cash value" is subject to annual adjustment to reflect increases, not to exceed 2% per year, or decreases in the consumer price index or comparable local data, or to reflect reduction in property value caused by damage, destruction Or other factors. Article XIIIA requires a vote of two-thirds of the qualified electorate to impose special taxes, while generally precluding the imposition of any additional ad valorem, sales or transaction tax on real property. As amended, Article XIIIA exempts from the 1% tax limitation any taxes above that level required to pay debt service on certain voter-approved general obligation bonds for the acquisition or improvement of real property. In addition, Article XIIIA requires the approval of two-thirds of all members of the State Legislature to change any State laws resulting in increased tax revenues. Under California law, any fee which exceeds the reasonable cost of providing the service for which the fee is charged is a "special tax," which under Article XIIIA must be authorized by a two-thirds vote of the electorate. Accordingly, if a portion of the District's water or wastewater user rates or Capacity Fees were determined by a court to exceed the reasonable cost of providing service, the District would not be permitted to continue to collect that portion unless it were authorized to do so by a two-thirds majority of the voles cast in an election to authorize the collection of that portion of the rates or fees. The reasonable cost of providing wastewater services has been determined by the State Controller to include depreciation and allowance for the cost of capital improvements. In addition, the California courts have determined that fees such as capacity fees will not be special taxes if they approximate the reasonable cost of constructing the water or wastewater capital improvements contemplated by the local agency imposing the fee. See "THE WATER SYSTEM-Water Rates, Fees and Charges." -42- Article XIIIB Article XIIIB of the California Constitution limits the annual appropriations of proceeds of taxes by State and local government entities to the amount of appropriations of the entity for the prior fiscal year, as adjusted for changes in the cost of living, changes in population and changes in services rendered by the entity. User fees and charges are considered proceeds of taxes only to the extent they exceed the reasonable costs incurred by a govemmental entity in supplying the goods and services for which such fees and charges are imposed. To the extent that assessments, fee and charges collected by the City are used to pay the costs of maintaining and operating the Water System and payments due on the 2009 Bonds (including the funding of the Reserve Account), the City believes that such moneys are not subject to the annual appropriations limit of Article XIIlB. Articles XUIC and XUIO On November 5, 1996, the voters of the State approved Proposition 218, a constitutional initiative, entitled the "Right to Vote on Taxes Act" ("Proposition 218"). Proposition 218 added Articles XIIIC and xmo to the California Constitution and contained a number of interrelated provisions affecting the ability of local governments, including the City, to levy and collect both existing and future taxes, assessments, fees and charges. Section 1 of Article XIIIC requires majority voter approval for the imposition, extension or increase of general taxes and Section 2 thereof requires two thirds voter approval for the imposition, extension or increase of special taxes. These voter approval requirements of Article XIIIC reduce the flexibility of the City to raise revenues by the levy of general or special taxes and, given such voter approval requirements, no assurance can be given that the City will be able to enact, impose, extend or increase any such taxes in the future to meet increased expenditure requirements. Section 3 of Article XIIIC expressly extends the initiative power to give voters the power to reduce or repeal local taxes, assessments, fees and charges, regardless of the date such taxes, assessments, fees or charges were imposed. Section 3 expands the initiative power to include reducing or repealing assessments, fees and charges, which had previously been considered administrative rather than legislative matters and therefore beyond the initiative power. This extension of the initiative power is not limited by the terms of Article XIIIC to fees imposed after November 6, 1996, the effective date of Proposition 218, and absent other legal authority could result in the reduction in any existing taxes, assessments or fees and charges imposed prior to November 6, 1996. "Fees" and "charges" are not expressly defined in Article XIIIC or in SB 919, the Proposition 218 Omnibus Implementation Act enacted in 1997 to prescribe specific procedures and parameters for locai jurisdictions in complying with Article XIIIC and Article XIIIO ("SB 919"). However, on July 24, 2006, the California Supreme Court ruled in Bighorn-Desert View Water Agency v. Virji/ (Kelley) (the "Bighorn Decision") that charges for ongoing water delivery are property-related fees and charges within the meaning of Article XIlID and are also fees or charges within the meaning of SeCtion 3 of Article XIIIC. The California Supreme Court held that such water service charges may, therefore, be reduced or repealed through a local voter initiative pursuant to Section 3 of Article xmc. In the Bighorn Decision, the Supreme Court did state that nothing in Section 3 of Article XIIlC authorizes initiative measures that impose voter-approval requirements for future increases in fees or charges for water delivery. The Supreme Court stated that water providers may determine rates and charges upon proper action of the governing body and that the -43- governing body may increase a charge which was not affected by a prior initiative or impose an entirely new charge. The Supreme Court further stated in the Bighorn Decision that it was not holding that the initiative power is free of all limitations and was not determining whether the initiative power is subject to the statlltory provision requiring that water service charges be set at a level that will pay debt service on bonded debt and operating expenses. Such initiative power could be sl\bject to the limitations imposed on the impairment of contracts under the contract clallse of the United Slates Constitution. Additionally, SB 919 provides that the initiative power provided for in Proposition 218 "shall not be construed to mean that any owner or beneficial owner of a municipal security, purchased before or after [the effective date of Proposition 218] assumes the risk of. or in any way consents to, any action by initiative measure that constitutes an impairment of contractual rights" protected by the United States Constitution. No assurance can be given that the voters of the City will not, in the future, approve initiatives which repeal, reduce or prohibit the future imposition or increase of assessments, fees or charges, including the City's water service fees and charges, which are the source of Net Revenues pledged to the payment of debt service on the 2009 Bonds, the applicable potion of the 2002 or any additional Parity Bonds. Notwithstanding the fact that water service charges may be subject to reduction or repeal by voter initiative undertaken pursuant to Section 3 of Article XIIIC, the City has covenanted to levy and charge rates which meet the requirements of the Indenture in accordance with applicable law. Article XmD defines a "fee" or "charge" as any levy other than an ad valorem tax, special tax, or assessment imposed upon a parcel or upon a person as an incident of property ownership, including a user fee or charge for a property-related service. A "property-related service" is defined as "a public service having a direct relationship to a property ownership." In the Bighorn Decision, the California Supreme Court held that a public water agency's charges for ongoing water delivery are fees and charges within the meaning of Article XIIID. Article XmD requires that any agency imposing or increasing any property-related fee or charge must provide written notice thereof to the record owner of each identified parcel upon which such fee or charge is to be imposed and must conduct a public hearing with respect thereto. The proposed fee or charge may not be imposed or increased if a majority of owners of the identified parcels file written protests against it. As a result, the local government's ability to increase such fee or charge may be limited by a majority protest. The City'S water charge is a commodity charge based on the volume of water consumed. The City has ratified prior water rate measures and otherwise complied with the applicable notice and protest procedures of Article XmD for its current water rates and charges. There has not been nor is there any pending challenge to any of the City's water fees and charges approved since the effective date of Proposition 218. While the City Attorney is of the opinion, based upon the judicial precedent in place during the period of these rate increases, that a reviewing court could reasonably uphold the validity of those increases, neither the City nor the City Attorney can predict with certainty the outcome of a challenge to the increases in the City's water rates and charges that were not approved in accordance with the notice and hearing requirements of Article XIIID jf one were brought. In addition, Article XmD also includes a number of limitations applicable to existing fees and charges induding provisions to the effect that (i) revenues derived from the fee or charge shall not exceed the funds required to provide the property-related service; (ii) such revenues shall not be used for any purpose other than that for which the fee or charge was imposed; (iii) the amount of a fee or charge imposed upon any parcel or person as an incident of property ownership shall not exceed the proportional cost of the service attributable to the -44- parcel; and (iv) no such fee or charge may be imposed for a service unless that service is actually used by, or immediately available to, the owner of the property in question. Property-related fees or charges based on potential or future use of a service are not permitted. Article XIIID establishes procedural requirements for the imposition of assessments, which are defined as any charge upon real property for a special benefit conferred upon the real property. Standby charges are classified as assessments. Procedural requirements for assessments under Article XIIID include conducting a public hearing and mailed protest procedure, with notice to the record owner of each parcel subject to the assessment. The assessment may not be imposed if a majority of the ballots returned oppose the assessment, with each ballot weighted according to the proportional financial obligation of the affected parcel. To provide guidance to City staff regarding the conduct of Proposition 218 "property- related fee" protest proceedings, the City Council adopted Resolution No. 4930 on January 16, 2007, establishing additional procedures for submitting protests against proposed increases to water rates, including the provision of notice of a proposed change in water fees to all owners of record on each identified parcel and all water customers of the City as reflected in the billing records of the City at the time the notice is given, and additional procedures for the tabulation of protests against proposed increases to water rates, including guidelines for determining when a valid protest has been submitted. Existing, new or increased assessments are subject to the procedural prOVISIOns of Proposition 218. However, certain assessments existing on November 6, 1996, are classified as exempt from the procedures and approval process of Article XIIID. Expressly exempt assessments include (i) an assessment imposed exclusively to finance capital costs or maintenance and operation expenses for sewers, water, flood control and drainage systems, but subsequent increases are subject to the procedures and approval requirements; (ii) an assessment imposed pursuant to a petition signed by all affected landowners (but subsequent increases are subject to the procedural and approval requirements); (iii) assessments, the proceeds of which are used exclusively to pay bonded indebtedness, where failure to pay would violate the U.S. Constitution's prohibition against the impairment of contracts; and (iv) any assessment which has previously received approval by a majority vote of the voters (but subsequent increases are subject to the procedural and approval requirements). On July 14, 2008, the California Supreme Court ruled in Silicon Valley Taxpayers Association, Inc. v. Santa Clara County Open Space Authority (the "SCCOSA Decision") that the Santa Clara County Open Space Authority's county-wide assessment which was designed to fund the acquisition and maintenance of unspecified open-space lands in the County was invalid under Proposition 218. The Court held that deference should not be accorded to local agencies when Proposition 218 legislative acts are challenged. Under Proposition 218, courts must make an independent review of whether the assessment and formation of an assessment district meet the "special benefit" and proportionality requirements of Article XIIID. Further, while an assessment will not be invalidated because it confers a benefit upon the public at large, the "special benefit" must affect the assessed property in a distinct and particular manner not shared by other parcels and the public at large. Specifically, in the SCCOSA Decision the assessment did not meet the requirements of a "special benefit" and the assessment was not proportional to the special benefits conferred. Fin<)lly, the Court held that the Santa Clara Open Space Authority did not meet the proportionality requirement of Article xmD because it did not specifically identify the improvements to be financed by the assessment and failed to sufficiently connect any costs of and benefits received from the open space assessment to the specific assessed parcels. The City and the City Attorney are of the opinion that current water fees and charges that are subject to Proposition 218 comply with the provisions thereof and that the City will continue to comply with the rate covenant set forth in the Installment Purchase Agreement in -45- conformity with the provisions of Article XmD of the California State Constitution. The City and the City Attorney are also of the opinion that current water capacity fees are not subject to Proposition 218. Should it become necessary to increase the water fees and charges above current levels, the City would be required to comply with the requirements of Article XIIlD in connection with such proposed increase. To date, there have been no legal challenges to water rate increases implemented by the City pursuant Ie Pl'oposltion 218 or otherwise. It is unclear whether under existing standards, rates and charges may be established at levels which would permit deposits to a Rate Stabilization Fund or maintenance of uncommitted cash reserves, The interpretation and application of Proposition 218 will ultimately be determined by the courts or through implementing legislation with respect to a number of the matters described above, and it is not possible at this time to predict with certainty the outcome of such determination or the nature or scope of any such legislation. RISK FACTORS RELATING TO THE 2009 BONDS Payment of principal of and interest on the 2009 Bonds depends primarily upon the revenues derived from operation of the Water System and, if necessary, from moneys on deposit in the Available Reserves. Some of the events which could affect the revenues received by the Water System, as well as issues that could affect the availability of moneys in the Available Reserves, are set forth below. The following discussion of risks is not meant to be an exhaustive list of the risks associated with the purchase of the 2009 Bonds and the order in which the risks are discussed does not necessarily reflect the relative importance of the various risks. Limited Obligations The 2009 Bonds are limited obligations of the City and are not secured by a legal or equitable pledge or charge or lien upon any property of the City or any of it. income or receipts, except the Net Revenues. The obligation of the City to pay debt service on the 2009 Bonds from Net Revenues does not constitute an obligation of the City to levy or pledge any form of taxation or for which the City has levied or pledged any form of taxation. The City is obligated under the Indenture to make debt service payments solely from Net Revenues or from moneys on deposit in the Available Reserves. There is no assuranCe that the City can succeed in operating the Systems such that the Net Revenues in the future will be sufficient for that purpose. See also "Balance of the Available Reserves" and "Right to Vote on Taxes Act" below. System Expenses There can be no assurance that the City's expenses for the Systems will be 'consistent with the descriptions in this Official Statement. Changes in technology, changes in quality standards, loss of large customers, increased or decreased development, increases in the cost of operation, or other expenses could require increases in rates or charges in order to comply with the City's rate covenant in the Indenture. Limited Recourse on De'fault Failure by the City to pay debt service on the 2009 Bonds constitutes an event of default under the Indenture and the Trustee is permitted to pursue remedies at law or in equity to enforce the City's obligation to make such payments. Although the Trustee ,has the right to -46- accelerate the total unpaid principal amount of the debt service on the 2009 Bonds, there is no assurance that the City would have sufficient funds to pay the accelerated amounts. See also "Proposition 218" below. Limitations on Remedies The ability of the City to comply with its covenants under the Indenture and to generate Net Revenues sufficient to pay principal of and interest with respect to the 2009 Bonds may be adversely affected by actions and events outside of the control of the City and may be adversely affected by actions taken (or not taken) by voters, property owners, taxpayers or persons obligated to pay assessments, fees and charges. See "Proposition 218" below. Furthermore, the remedies available to the owners of the 2009 Bonds upon the occurrence of an event of default under the Indenture are in many respects dependent upon judicial actions which are often subject to discrction and delay and could prove both expensive and time consuming to obtain. In addition to the limitations on remedies contained in the Indenture, the rights and obligations under the Indenture may be subject to bankruptcy, insolvency, reorganization, arrangement, fraudulent conveyance, moratorium and other laws relating to or affecting creditors' rights, to the application of equitable principles, to the exercise of judicial discretion in appropriate cases and to limitations on legal remedies against cities in the State of California. The opinion to be delivered by Bond Counsel concurrently with the issuance of the 2009 Bonds will be subject to such limitations and the various other legal opinions to be delivered concurrently with the issuance of the 2009 Bonds will be similarly qualified. See "APPENDIX D-Proposed Form of Bond Counsel Opinion." If the City fails to comply with its covenants in the Indenture or fails to pay principal of and interest due on the 2009 Bonds, there can be no assurance of the availability of remedies adequate to protect the interest of the holders of the 2009 Bonds. Balance of the Available Reserves Although the City has covenanted to maintain the Available Reserves at an aggregate balance equal to five times maximum annual debt service on all ou tstanding bonded indebtedness secured by Net Revenues of any of the Systems, each Available Reserve is primarily intended as a rate stabilization reserve for the applicable City utility System. As a result, extraordinary circumstances may arise that would cause the City to diminish Available Reserves below "minimum" guideline levels or, in the aggregate, below five times Maximum Annual Debt Service. Although the City has covenanted in the Indenture to replenish the Available Reserves to required levels, it will do so only from rates and charges paid by the customers of the various utility systems, which may adversely affect the City's ability to replenish the Available Reserves in a timely fashion. In addition, certain provisions of the California Constitution may require the City to repay any advance from an Available Reserve that is not directly related to the System which the advance benefits. See "CONSTII'UTIONAL LIMITATIONS ON TAXES AND WATER RATES AND CHARGES-Articles XIIIC and XIIID." Initiatives In recent years several initiative measures have been proposed or adopted which affect the ability of local governments to increase taxes and rates. There is no assurance that the electorate Or the State legislature will not at some future time approve additional limitations which could affect the ability of the City to implement rate increases which could reduce Net Revenues and adversely affect the security for the 2009 Bonds. See "Proposition 218" below. -47- Bankruptcy The rights and remedies provided in the Indenture may be limited by and are subject to the provisions of federal bankruptcy laws, to other laws or equitable principles that may affect the enforcement of creditOl's' l'ights, to the exercise of judicial discretion in appropriate cases and to limitations on legal remedies against public agencies in the State of CaJifomia, The various opinions of counsel to be delivered with respect to the 2009 Bonds and the Indenture, including the opinion of Bond Counsel, will be similarly qualified, If the City were to file a petition under Chapter 9 of the Bankruptcy Code, the Owners of the 2009 Bonds and the City could be prohibited from taking any steps to enforce their rights under the Indenture, Tax Exemption of the 2009 Bonds The City has covenanted in the Indenture that it will take all actions necessary to assure the exclusion of interest with respect to the 2009 Bonds that are Tax-Exempt Bonds from the gross income of the Owners of the 2009 Bonds that are Tax-Exempt Bonds to the same extent as such interest is permitted to be excluded from gross income under the Internal Revenue Code of 1986, If the City fails to comply with the foregoing tax covenant, the interest component of the Installment Payments evidenced by the 2009 Bonds that are Tax-Exempt Bonds may be includable in the gross income of the Owners thereof for federal lax purposes, See "TAX MATTERS!' Additional Obligations The Indenture permits the issuance of Bonds secured by Net Revenues on a parity basis or a subordinate basis to the 2009 Bonds, Such additional Bonds would increase debt service payable from Net Revenues and could adversely affect debt service coverage with respect to the 2009 Bonds, In such event, however, the Rate Covenant will remain in effect. See "SECURITY FOR THE 2009 BONDS-Rate Covenant." Seismic Considerations The City, like much of California, is subject to seismic activity that could result in interference with operation of the Systems, There are several major active fault zones transecting the County that could cause "strong ground motion" at the site of the various facilities constituting the Systems during their useful life, Those major fault zones, listed in order of proximity to the City, are the San Andreas, Hayward, Calaveras and San Gregorio faults, If there were to be an occurrence of severe seismic activity in the area of the City, there could be an interruption in the service provided by the Systems resulting in a temporary reduction in the amount of Net Revenues available to pay the principal of and interest on the 2009 Bonds when due. Relevance to Available Reserves. Because Proposition 218 declares that revenues derived from a "fee" or "charge" may not exceed the funds required to provide the "property-related service" and may not be used for any purpose other than that for which the fee or charge was imposed, the City may be required to repay any advance from an Available Reserve that is not directly related to the System which the advance benefits, For example, if the City requires an advance from the Rate Stabilization Reserve for the Sewer System to pay the portion of debt service on the 2009 Bonds attributable to the Water System, the City may be required to repay the Sewer System reserve, Proposition 218 expressly does not apply to revenues of the Electric System or the Gas System and, therefore, does not apply to their Available Reserves. -48- Investment of City Funds Gross Revenues collected by the City will be held and invested by the City in accordance with the provisions of the Indenture. Otherwise, however, moneys held by the City, including Enterprise moneys, will be invested in accordance with the City's adopted investment policies. For more information about the City's investment policy as well as information about recent investment performance of the City's pooled investment funds, see APPENDIX B-"GENERAL AND ECONOMIC INFORMATION ABOUT THE CITY." LEGAL MATTERS Approval of Legal Proceedings The legality of the sale, execution and delivery of the 2009 Bonds is subject to the approval of Jones Hall, A Professional Law Corporation, San Francisco, California, acting as Bond Counsel. A proposed form of such legal opinion is attached heret.o as Appendix D. Quint & Thimmig LLP, San Francisco, California, is acting as disclosure counsel to the City in connection with the issuance of the 2009 Bonds. Payment of the fees and expenses of Jones Hall and of Quint & Thimmig LLP are contingent upon issuance of the 2009 Bonds. Absence of Litigation At the time of delivery of and payment for the 2009 Bonds, the City will certify that there is no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court, regulatory agency, public board or body, pending or, to the knowledge of the City, threatened against the City affecting the existence of the City or the titles of its officers to their respective offices or seeking to restrain or to enjoin the sale or delivery of the 2009 Bonds, the application of the proceeds thereof in accordance with the Indenture, or the collection or application of any Net Revenues provided for the payment of the 2009 Bonds, or in any way contesting or affecting the validity or enforceability of the 2009 Bonds, the Indenture, any action of the City contemplated by any of the said documents, or the collection or application of any revenues provided for the payment of the 2009 Bonds, or in any way contesting the completeness or accuracy of this Official Statement or any amendment or supplement thereto, or contesting the powers of the City or its authority with respect to the 2009 Bonds or any action of the City contemplated by any of those documents. Tax Matters 2009 Bonds Issued as Tax-Exempt Bonds. In the opinion of Jones Hall, A Professional Law Corporation, San Francisco, California, Bond Counsel, subject, however to certain qualifications set forth below, under existing law, the interest on the 2009 Bonds is excluded from gross income for federal income tax purposes, and such interest is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations. The opinions set forth in the preceding paragraph are subject to the condition that the City comply with all requirements of the Internal Revenue Code of 1986 (the "Code") that must be satisfied subsequent to the issuance of the 2009 Bonds in order that such interest be, or continue to be, excluded from gross income for federal income tax purposes. The City has covenanted to comply with each such requirement. Failure to comply with certain of such -49- requirements may cause the inclusion of such interest in gross income for federal income tax purposes to be retroactive to the date of issuance of the 2009 Bonds. If the initial offering price to the public (excluding bond houses and brokers) at which a 2009 Bond is sold is less than the amount payable at maturity thereof, then such difference constitutes "original issue discount" for purposes of federal income taxes and State of California personal income taxes. If the initial offering plice to the public (excluding bond houses and brokers) at which each 2009 Bond is sold is greater than the amount payable at maturity thereof, then such difference constitutes "original issue premium" for purposes of federal income taxes and State of California personal income taxes. De minimis original issue discount and original issue premium is disregarded. Owners of 2009 Bonds with original issue discount or original issue premium, including purchasers who do not purchase in the original offering, should consult their own tax advisors with respect to federal income tax and State of California personal income tax consequences of owning such 2009 Bonds. In the further opinion of Bond Counsel, interest on the 2009 Bonds is exempt from California personal income taxes. Owners of the 2009 Bonds should also be aware that the ownership or disposition of, or the accrual or receipt of interest on, the 2009 Bonds may have federal or state tax consequences other than as described above. Bond Counsel expresses no opinion regarding any federal or state tax consequences arising with respect to the 2009 Bonds other than as expressly described above. A copy of the proposed form of opinion of Bond Counsel is attached hereto APPENDIX D-NPROPOSED FORM OF BOND COUNSEL OPINION." 2009 Bonds Issued as Build America Bonds. In the opinion of Bond Counsel, subject, however to certain qualifications set forth below, under existing law, the interest on the 2009 Bonds is not excluded from gross income for federal income tax purposes. In the further opinion of Bond Counsel, interest on the 2009 Bonds is exempt from California personal income taxes. Owners of the 2009 Bonds should also be aware that the ownership or disposition of, or the accrual or receipt of interest on, the 2009 Bonds may have federal or state tax consequences other than as described above. Bond Counsel expresses no opinion regarding any federal or state tax consequences arising with respect to the 2009 Bonds other than as expressly describc:.>d above. A copy of the proposed form of opinion of Bond Counsel is attached hereto APPENDIX D-NPROPOSED FORM OF BOND COUNSEL OPINION." CONTINUING DISCLOSURE The City has covenanted for the benefit of the holders and beneficial owners of the 2009 Bonds to provide certain financial information and operating data relating to the City (the "Annual Report") by no later than each March 1 following the end of the City's fiscal year (which fiscal year currently ends on June 30), commencing March 1, 2010, with the Annual Report for the 2008-09 Fiscal Year, and to provide notices of the occurrence of certain enumerated events, if material. The City will file, or cause to be filed, the Annual Report with the Municipal Securities Rulemaking Board (the "MSRB") with a copy to the Underwriter. The -50- City will file, or cause to be filed, the notices of material events with the MSRB, with a copy to the Underwriter. The specific nature of the information to be contained in the Annual Report or the notices of material events is set forth in APPENDIX E-"FORM OF CONTINUING DISCLOSURE CERTIFICATE," These covenants have been made in order to assist the Underwriter in complying with S.E,C, Rule lSc2-12(b)(S). The City has never failed to comply, in all material respects, with an undertaking under the Rule. RATINGS Moody's Investors Service, Inc. ("Moody's") has assigned its municipal bond rating of "_" to the 2009 Bonds, and Standard & Poor's Ratings Services, A Division of the McGraw- Hill Companies ("Standard & Poor's"), has assigned its municipal bond rating of " " to the 2009 Bonds. Such ratings reflect only the views of such organizations and an explanation of the significance of such ratings may be obtained from Moody's and Standard & Poor's. There is no assurance that such ratings will continue for any given period of time or that such ratings will not be revised downward or withdrawn entirely by such organizations, if in their judgment circumstances so warrant. Any such downward revision or withdrawal of such ratings may have an adverse effect on the market price of the 2009 Bonds. UNDERWRITING The 2009 Bonds were sold pursuant to competitive sale held on September _, 2009, and were awarded to _ (the "Underwriter"). The 2009 Bonds are being purchased by the Underwriter at a purchase of which represents the aggregate principal amount of the 2009 Bonds plus an original issue premium of $ and less an Underwriter's discount MISCELLANEOUS Insofar as any statements made in this Official Statement involve matters of opinion or of estimates, whether or not expressly stated, they are set forth as such and not as representations of fact. No representation is made that any of the statements will be realized. Neither this Official Statement nor any statement which may have been made verbally or in writing is to be construed as a contract with the owners of the 2009 Bonds. During the initial offering period for the 2009 Bonds, copies of the Indenture may be obtained, upon written request, from the City. After issuance of the 2009 Bonds, copies of such documents may be obtained from the Trustee. -51- The execution and delivery of this Official Statement have been duly authorized by the City Council of the City. CITY OF PALO ALTO By -~~-~ .... ""'C"~~ Director of Administ1'ative Selvices -52- APPENDIX A SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE [TO COME] Appendix A APPENDIXB GENI,lRAL AND ECONOMIC INFORMATION ABOUT THE CiTY General The City is located in northern Santa Clara County (the "County"), approximately 35 miles south of the City of San Francisco. The City has a current population of approximately 64,500. It is part of the San Francisco Bay metropolitan area. Partly due to the presence of Stanford University, which is adjacent to the City, the City is considered the birthplace of the high technology industry that has made the County famous worldwide as Silicon Valley. The GSO-acre Stanford Research Park indudes prestigious and innovative high-tech leaders such as Hewlett-Packard, SAP America, Varian Medical Systems, VMware, Tibco Software, Space Systems Lora\, the Electric Power Research Institute and Communications and Power Industries. The City is also a major employment center, induding U.S. Department of Veteran Affairs' Palo Alto Health Care System, Stanford Hospitals and Clinics, Lockheed Martin Missiles and Space, Palo Alto Medical Foundation, Stanford Shopping Center, the law offices of Wilson Sonsini Goodrich and Rosati, and the Xerox Palo Alto Research Center. The City was incorporated in 1894. Its first Charter was granted by the State of California in 1909, and the City continues to operate as a charter city. Municipal operations are conducted under the Council-Manager form of government. The nine Council Members are elected at large for four-year, staggered terms. The Mayor and Vice Mayor are elected annually at the first Council meeting in January. The Mayor presides over all Council meetings. The City Manager is responsible for the operation of all municipal functions, except the offices of the City Attorney, City Clerk, and City Auditor. These officials are appOinted by, and report directly to, the City Council. Population The following table shows a historical comparison of the respective populations of the City, the County and the State of California since 1970. Sources.: CITY OF PALO ALTO, 8ANT A CLARA COUNTY, AND 8T ATE OF CALIFORNIA Population Companson City of Percent Santa Clara Percent State of Percent Year Palo Alto Change Coun!}' Chanfle California Change 1970 56,040 1,064,714 19,953,134 1980 55,225 -1.5% 1,295,071 2.2% 23,667,902 1.9% 1990 55,900 1.2 1,497;577 15.6 29,758,213 25.7 2000 58,598 4.8 1,682,585 12.4 33,873,086 13.8 2001 60,270 2.9 1,701,385 1.1 34,430,970 1.6 2002 60,326 0.1 1,715,329 0.8 35,063,959 1.8 2003 60,323 0.0 1,726,183 0.6 35,652,700 1.7 2004 60,487 0.3 1,738,654 0.7 36,199,342 1.5 2005 61,464 0.3 1,753,041 0.8 36,676,931 1.3 2006 62,108 1.0 1,771,610 1.1 37,086,191 1.1 2007 62,267 0.3 1,798,242 1.5 37,472,074 1.0 2008 63,098 1.3 1,829,480 1.7 37,883,992 1.1 2009 64,484 2.2 1,857,621 1.5 38,292,687 1.1 U.S. Department of Commerce, Bureau of the Census (1980, 1990 lmd 2000); Slate of Calilornia, Department of Finance, 1l-4 Population Ilstimates for Cities, Counties and the State, 2001-2009, with 2000 Benchmark. Sacramento, CaHfOlniaJ May 2009. AppendixB Pagel History The earliest record of settlement in Palo Alto was dated 1769. The City is named for the tree by the banks of the San Francisquito Creek bordering Menlo Park. Many of the Spanish names in the Palo Alto area represent the local heritage and descriptive terms and former residents. In 1895, Leland Stanford came to the town of Mayfield (in what is now sOllth Palo Alto), interested in founding his university there, and creating a train stop near his schooL However, he had one condition: alcohol be banned from the town. Mayfield rejected his requests for reform. This prompted Stanford to drive the formation of Palo Alto in 1895. Stanford set up his university, Stanford University, and train stop. On J lily 2, 1925, Palo Alto voters approved the annexation of Mayfield and the two communities were officially consolidated on July 6, 1925. Budgetary Polides and Processes The City Manager submits to the City Council a proposed operating budget for the fiscal year commencing the following July 1. The operating budget includes proposed expenditures and the means of financing them. Public hearings are conduded to obtain public comments. The adopted budget is legally enacted through passage of a budget ordinance for all funds except for agency funds. The City Manager is authorized to reallocate funds from a contingent account maintained in the General Fund in conformance with the adopted poliCies set by the City Council. Additional appropriations to departments in the General Fund, or to total appropriations for all other budgeted funds, or transfers of appropriations between funds, require approval by the City Council. Expenditures may not legally exceed budgeted appropriations at the department level for the General Fund, and at the fund level for special revenue and debt service funds. Formal budgetary integration is employed as a management control device during the year in all funds except agency funds and certain debt service funds. Budgets for governmental funds are adopted on a basis consistent with generally accepted accounting principles for all funds, except that General Fund encumbrances are treated as budgetary expenditures when incurred and stores (materials, parts and supplies) transactions inCluded in the General Fund are not budgeted. Expenditures for the City's Capital Projects Fund are budgeted and managed on a project length basis and budget to actual comparisons for these expenditures have been excluded from the accompanying financial statements. Ad Valorem Property Taxes Taxes are levied for each fiscal year on taxable real and personal property which is situated in the County of Santa Clara as of the preceding March 1. For assessment and collection purposes, property is classified either as "secured" or "unsecured," and is listed accordingly on separate parts of the assessment roll. The "secured roll" is that part of the assessment roll containing State-assessed property and property the taxes on which are a lien on real property sufficient, in the opinion of the County Assessor, to secure payment of the taxes. Other property is assessed on the "unsecured roll." Assessed Valuations The valuation of property in the City is established by the Santa Clara County Assessor. Assessed valuations are reported at 100% of the full value of the property, as defined in Article XIIlA of the California Constitution. Prior to 1981-82, assessed valuations were reported at 25% of the full value of property. The California State Legislature adopted two types of State-reimbursed exemptions beginning in the tax years 1969-1970. The first currently provides a credit of $7,000 of the full value of an owner- occupied dwelling for which application has been made to the County Assessor. Revenue estimated to be lost to local taxing agencies due to the above exemptions has in the past been reimbursed from State sources. Reimbursement is based upon total taxes due upon such exemption values and therefore is not reduced by any estimated amount of actual delinquencies. Pursuant to legislation adopted in 1979 (Statutes of 1979, Chapter 1150), business inventories are entirely exempt from taxation in fiscal year 1980-81, and each fiscal year thereafter. This law further provides a formula for reimbursement by the State to cities, counties, spedal districts and school districts . for the amount of tax revenues lost by reason of such exemption, as adjusted for percentage changes in Appendix B Page 2 the population and the cost of living. Under prior State law, the State paid 50% of the taxes that were levied against business inventories. Under Chapter 1150, the State pays, as a subvention, an amount equal to 100% of taxes that would otherwise be due (excluding taxes to pay for voter approved indebtedness) from business inventories commencing with the 1980-81 fiscal year. To compute amounts payable by the State, 1979-80 was established as the base year for business inventory subventions; thereafter, the subventions due are increased based upon increases in population and inflation rather than expanded business inventories. In addition, certain classes of property such as churches, colleges, not-for-profit hospitals and charitable institutions are exempt from property taxation and do not appear on the tax rolls. No reimbursement is made by the State for such exemptions. The following table provides a five-year record of assessed valuations for the City. Fiscal Year 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 CITY OF PALO ALTO ASSESSED VALUATIONS OF TAXABLE PROPERTY 2002-03 through 2007-08 (In Thousands) Secured Public Unsecured Total Assessed Valuation Utility Valuation Value $13,141,986 $3,859 $1,612,179 $13,806,217 13,780,439 3,956 1,582,368 14,170,217 15,018,545 4,150 1,354,310 14,974,966 16,480,816 4,084 1,361,117 16,250,145 17,854,262 3,923 1,391,284 17,609,613 19,180,057 3,174 1,536,584 18,922,488 Source: City of Palo Alto, Certified Annual Financial Report 2007-08 The following two tables set out the amounts of property tax collected in the City and the ten largest property-taxpayers in the City, respectively. Fiscal Year 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 CITY OF PALO ALTO PROPERTY TAX LEVIES AND COLLECTIONS 2001-02 through 2007-08 Gross Tax Levy $13,231 13,821 13,707 16,657 18,731 21,466 23,084 (In Thousands) Current Tax Collections $13,231 13,821 13,707 16,657 18,731 21,466 23,084 Percentage of Current Levy Collected 100% 100 100 100 100 100 100 Delinquent Tax Collections Total Collections $13,231 13,821 13,707 16,657 18,731 21,466 23,084 Source: County of Santa Clara Assessor's Office, as published in the City of Palo Alto, Cedified Annual Financial Report 2007-08 AppendixB Page 3 CITY OF PALO ALTO TEN LARGEST PROPERTY OWNERS Fiscal Year ending June 30, 2008 Company Leland Stanford Jr. University Space Systems/Lorallne. "Vhisman Ventures, LLC Harbor Investments Partners Western Pacific Housing Inc EOP-Embarcadero Place, LLC 505 Hamilton A venue Partners L.P. Pacific Hotel Dev Venture L.P. Palo Alto Town & Country Village Inc California Pacific Comm. Corp. (In Thous.nds) Type of Business University and Ancillary Satellite Design & Manufacturing Offices, Banks and Clinics Offices, Banks and Clinics Housing Development Offices, Banks and Clinics Offices, Banks and Clinics Offices, Banks and Clinics Mall, Shopping Center Offlees, Banks and Clinics Source: City of Palo Alto, Certified Annual Financial Report W07-08 Employment Assessed Property Valuation $2,968,746 169,513 100,470 65,791 60,Da'l 45.000 38,583 38,143 37,031 35,953 The City is home to a strong mix of large, medium and small finns. The City employment opportunities are much sought after and indude: education at Stanford University, high technology at the Stanford Research Park, and health care at two medical facilities of national stature. Numerous institutions that have more than 1,000 employees indude: the University, the Veterans Affairs Palo Health Care facility, the Medical Foundation, Hewlett Packard/Compaq, the Palo Alto Unified School District, and the City. The largest employers in the City of Palo Alto as of June 30, 2008 are as follows: HPLabs CITY OF PALO ALTO TEN LARGEST EMPLOYERS 2007-08 Employer Veteran's Affairs Palo Alto Health Care System V A Palo Alto Health Care Hewlett-Packard Company Palo Alto Medical Foundation Space Systems Loral Wilson Sonsini Goodrich Rosati Packard Children's Hospital City of Palo Alto Roche Palo Alto Number of Employees 7,500 3,500 2,900 2,001 2,000 1,700 1,500 1,300 1,100 1,000 Source: www.RelerenceUSA.com & Palo Alto Weekly, as published in City 01 Palo Alto Certified Annual Financial Report 2007-08 Due to the nature of local industry, with its heavy emphasis on electronics, aerospace and research, Santa Clara has attraded many professional people and industrial workers possessing skills well above the average. The Santa Clara Labor Market, as defined by the State Employment Development Department, includes all cities within Santa Clara County. This area is a highly developed industrial, research, and educational center of employment for a labor force that ranks well above the average in educational attainment and income. The following table presents the annual average wage and salary employment figures by industry classification for the San }ose-Sunnyval.,..Santa Clara Metropolitan Statistical Area for the years 2004 through 2008. AppendlxB Page 4 According to the California Employment Development Department, the County's unemployment rate was 6,0% in 2008, up from 4,7% in 2007, The following table sets forth certain information regarding employment in the City from calendar year 2002 through 2008. SAN lOSE-SUNNYVALE-SANTA CLARA MSA (Sail Benito and Santa Clara Counties) Industry Employment & Labor Force -by Annual Average March 2008 Benchmark 2004 2005 2006 2007 ------ Civilian Labor Force 850,100 844,500 854,300 876,SOO Civilian Employment 794,500 798,600 815,300 834,800 Civilian Unemployment 55,600 45,900 38,900 41,700 Unemployment Rate 6.5% 5.4% 4.6% 4.8% Agricultural 6,700 6,300 6,200 6,700 Natural Resources and Mining 100 200 300 300 Construction 43,000 44,500 46,800 47,200 Manufacturing 167,200 164,900 163,700 166,700 Trade, Transportation and Utilities 130,900 132,800 137,100 139,700 Information 32,600 35,300 37,500 39,600 Financial Activities 35,400 36,300 37,100 37,200 Professional and Business Services 165,600 165,800 172,000 178,300 Educational and Health Services 95,000 96,800 100,400 103,200 Leisure and Hospi tali ty 70,900 72,800 75,200 76,800 Other Services 25,000 24,600 24,800 25,100 Government 96,300 95,900 . 96,400 97,200 Total All Industries 868,700 876,300 897,400 917,900 Source: California BmpJa:ment Development Department, Labor Market Infounation Division. Note: Totals may not a d due to independent rounding. Year 2003 2004 2005 2006 2007 2008 CITY OF PALO ALTO Average Annual Civilian Labor Force Employment and Unemployment Calendar Years 2002-2008 Labor Force 32,000 30,SOO 29,900 29,900 30,400 31,200 32,000 Unemployment Number 1,400 1,400 1,000 800 700 800 1,D00 Source: California Employment Development Department Construction Activity Rate 3.7% 4.5% 3,4% 2,8% 2.3% 2.5% 3.2% 2008 905,200 850,100 55,100 6.1% 6,100 300 44,200 168,000 138,500 41,700 34,800 178,700 107,500 78,200 25,300 97,800 921,200 "Single Family Housing:' includes detached, semi-detached, rowhouse and townhouse units. Rowhouses and townhouses are included when each unit is separated from the adjacent unit by an unbroken ground-to-roof party or fire wall. Condominiums are included in single-family when theyare of zero·lot-line or zero-property-line construction; when units are separated by an air space; or, when units are separated by an unbroken ground-to-roof party or fire wall. "Multi-Family Housing:' includes duplexes, 3-4-unit structures and apartment-type structures with five units or more. Multi-family housing AppendixB PageS also includes condominium units in structures of more than one living unit that do not meet the above single-family housing definition. "Residential Alterations and Additions," means alterations, additions, and conversions to residential structures, excluding spedal installation permits for electrical, plumbing, heating, air-conditioningt Of similar mechanical work,. or installation of fire escapes, elevators, signs, etc. "New Commercial," includes new hotels and 111otels, office and bank buildings, stores and other mercfUltile buildings, parking garages, service stations, and amusement and recreational buHdings, "New Industrial," includes manufacturing plants and affiliated buildings. "Other New Nonresidential," includes churches and religious buildings, hospitals and institutional buildings, schools and educational buHdings, residential garages, public works and utilities buildings, and miscellaneous nonresidential structures. HNonresidential Alterations and AddiHons/' means alterations; additions, and conversions to nonresidential structures, excluding special installation permits for electrical, plumbing, heating, air conditioning, or similar mechanical work, or installation of fire escapesJ elevators and signs, etc. CITY OF PALO ALTO Building Permits and Valuation (Dollars in Thousands) 2004 200S 2006 2007 2008 Permit Valug!iQo: New Single-family $ 28,337 $ 46,957 $ 78,044 $ 82,769 $ 50,213 New Multi-family 22,125 13,911 28,338 81,679 27,827 Res. Alterationsl Additions 32,993 36,943 30,770 34,756 33,897 Total Residential 83,455 97,811 137,152 199,204 111,937 Total Nonresidential 48,393 131,289 168,817 133,547 Total All Building $131,848 $229,101 $303,%9 $332,751 New Dwellinill.!ni!§: Single Family 58 82 147 195 102 Multiple Family 149 83 117 294 125 Total 207 165 264 489 Sources: Construction Industry Research Board: "Building Permit Summary./I Note: Totals may not add due to indepl.)fident rounding. Income The following table, based on data reported in the annual publication "Survey of Buying Power" published by Sales and Marketing Management, summarizes the median household effective buying income for the City, the County of Santa Clara, the State of California and the nation for the years 2004 through 2008. AppendixB Page 6 Source: • Year 2004 2005 2006 2007 2008 CITY, COUNTY, STATE AND UNITED STATES Effective Buying Income Total EHective Median Household Duying Income Effective Area (OOO's Omitted) BuyIng Income Ci ty of Palo Alto $ 2,877,945 $73,411 County of Santa Clara 47476338 62614 California 705,108,410 43,915 United States 5,692,909,567 39,324 City of Palo Alto $ 2,733,365 $74,484 County of Santa Clara 46,910,278 63,293 California 720,798,106 44,681 United States 5,894,663,364 40,529 City of Palo Alto $ 2,839,023 $77,184 County of Santa Clara 49,261,000 65,458 California 764,120,962 46,275 United States 6,107,092,244 41,255 City of Palo Alto $ 3,000,778 $79,273 County of Santa Clara 52,377,985 67,498 California 814,894,438 48,203 United States 6,300,794,040 41,\'92 City of Palo Alto $ 3,088,305 $80,515 County of Santa Clara 53,987,635 68,929 California 832,531,445 48,952 United States 6,443,994,426 42,303 "Survey Buying Power:' Sales and Marketing Management (2004); C1aritas, Inc, (2005-2008), In 2005, Sales and Marketing Management ceased publishing the HSurvey of Buying Power" report; howcvcr/ subsequent years' data has been obtained from Claritas, Inc., who had previously prepared the data each year for the "Survey of Buying Power." Commercial Activity Taxable sales in the City of Palo Alto exceed $1,9 billion annuany. The County Planning Department reports that taxable sales per capita in Santa Clara are the highest of any city in Santa Clara County. The following summary shows Ihe annual volume of taxable sales within the City since 2003. During 2007, relail sales totaled nearly $1,300,000 and lotal taxable sales reached over $1,900,000. AppendixB Page 7 The following table shows annual sales tax revenues for the City for the last five years. CITY OF PALO ALTO Taxable Transactions 2003 2004 2005 2006 2007 (I) Apparel stores 115,793 127,235 129,903 134,920" General merchandise 250,904 276,625 284,186 289,288 301,192 I'oods stores 34,571 34,120 33,726 33,495 31,781 Eating and drinking places 197,266 202,651 208,128 224,276 234,084 Home furnishings and appliances 58,394 59,936 64,308 68,273 75,510 Building materials 16,543 20,159 23,619 26,258 24,437 Automotive Group 201,196 196,341 203,998 202,441 187,342 Service stations 40,983 49,511 56,548 60,078 63,418 All other retail stores 227,027 239,684 248,882 250,153 224,463 Total Retail Outlets 1,142,677 1,200,847 1,250,630 128,465 1,277,147 All other outlets 380,460 419,867 458,491 551,068 629,859 Total All Outlets 1,523,137 1,620,714 1,709,121 1,835,233 1,907,006 Source: California State Board of Equalization, Taxable Sales in California Reports 2003-2007. (1) Latest available full-year data. Education The Palo Alto Unified Sehool District provides publie schooling from kindergarten through high school. The Stanford University is the semnd largest university campus in the world. The University comprises the Schools of lingineering, Law, Medicine,. Education, Business, Earth Sciences and Humanities and Science. Stanford University's teaching hospital and clinks are known for excellence. Community Facilities The City has some of the most outstanding heall:hcare faeilities in California. Most prominent in the community is Stanford Hospital & Clinics, which is part of Stanford University Medical Center. With 611 beds for in-patient treatment, emergeney care and major surgeries, Stanford Hospital is well known for its cancer treatment, oncology an transplant services. Medical groups affiliated with Stanford Hospital & Clinies are Stanford Family Practice, Stanford Medical Group and Menlo Medical Clinic, and also includes the Stanford University School of Medicine and the Lueile Packard Children's Hospital. The Veterans Affairs Palo Alto Health Care System provides the main campus in Palo Alto, a second campus in Menlo Park and a third campus in Livermore. The Palo Alto Health Care System has 913 operating beds induding three nursing homes and a lOO-bed homeless domiciliary on the Menlo Park campus. The Health Care System is affiliated with the Stanford University Sehool of Medidne. The Palo Alto Medical I'oundation is a full-service health-care clinic and research institute. Nearly 250 physicians provide a range of diagnostic and treatment serviees in primary care and most medical specialties. The City's Parks and Recreation Department oversees 34 parks and playgrounds covering nearly one-third of its 26 square miles open space. The City's San Francisco Bay location and natural environment offer the opportunity to enjoy bird and aquatic life in a natural habitat. There is One golf course located in the City, a recently renovated 18-hole championship length course. AppendixB PageS Transporlation The City is served by the Bayshore Freeway (U.S. Highway 101), which runs southeast from San Francisco to Los Angeles and Is the major freeway connecting San Francisco and San Jose; Highway 84 - the Dumbarton Bridge "nd Highway 92, the Hayward-San Mateo Bridge; and Interstate 280, which rUlls north/south to San Francisco and State Highway 82. These freeways link the City to all parts of northern California. Air transportation is available at both the San Francisco International Airport, approximately 40 miles to the north, and the San Jose Airport, approximately 20 miles to the south. Rail service is provided by Union Pacific Railroad, on a north/south track linking San Jose and San Francisco, and Cal Train commuter service to Gilroy and San Francisco. Within the City, commuter rail transportation is conveniently located and the Palo Alto stop is one of the most used in the CalTrain system. Alternative transportation options include numerous bike paths throughout the City and an internal shuttle service is also available. Utilities and Water Supply The City is the only municipal utility in California that operates city-owned utility services that include electric, fiber optic, natural gas, water and wastewater services. Since 1896, the City has been providing quality services to the citizens and businesses of the City. Agriculture • The City still supports a thriving agriculture industry, ranging from crops and wine to Leland Stanford's horse farm and training facilities, the Dixon Stables, Portola Valley Training Center, and Webb Ranch are just a few of the equestrian facilities that live up to the area's rich history. Just a few miles away off Highway 280, traditional ranches such as Hidden Villa continue to grow and distribute quality products. OrganiC grocery stores, such as Whole Foods Market, Piazza's Market and Trader Joe's share the market place with traditional grocery oUllets and fresh fruit and vegetable stands. Local greenhouses and florists prOVide a diverse selection to help residents and business heautify their yards and homes. The area also ieatures a number of machinery and equipment oullets to make agriculture related job feasible. Government and Services The City was incorporated in 1894. Its first Charier was granted by the State of California in 1909, and the City continues to operate as a charter cUy. Municipal operations are conducted under the Council-Manager form of government. The nine Council Members are elected at large for four-year, staggered terms. The Mayor and Vice Mayor are elected annually at the first Council meeting in January. The Mayor presides over all Council meetings. The City Manager is responsible for the operation of all municipal functions, except the offices of the City Attorney, City Oerk, and City Auditor. These officials are appointed by, and report directly to, the City Council. The City prOvides a full range of municipal services and maintains municipal electric, water, gas, wastewater collection, wastewater treatment, storm drainage, and refuse utilities for the benefit of City residents and businesses. The City's parks, recreation and cultural facilities are numerous, and include 35 parks, a golf course, four community centers, a Cultural Center, a Community Theater, a Children's Theater, and a Junior Museum. The City offers a wide array of social, recreational and cultural events, including human services for seniors and youth, subsidized child care, classes, concerts, exhibits, team sports and special events. The City and the Palo Alto Unified School District have an agreement to jointly fund the costs of maintaining and rehabilitating school athletic fields, recognizing the significant recreational use of these facilities by the community. In addition, the City offers a high level of library and public safety services. The City has six libraries and eight fire stations providing services throughout the community. Appendix Il Page 9 APPENDIXC COMPREHENSIVE ANNUAL FINANCIAL REPORT OF THE CITY FOR THE FISCAL YEAR ENDED JUNE 30, 2008 AppendixC APPENDlXD PROPOSED FORM OF BOND COUNSEL OPINION [Letterhead of Jones Hall, A Professional Law Corporation] City of Palo Alto 250 Hamilton Avenue Palo Alto, California 94301 [Closing Da Ie] OPINION: $, ____ ' City of Palo Alto Water Revenue Bonds, 2009 Series A Members of the Council: We have acted as bond counsel in connection with the issuance by the City of Palo Alto (the "City") of the $[Principal Amount] City of Palo Alto Water Revenue Bonds, 2009 Series A (the "Bonds"), pursuant to the charter of the City and the provisions of Chapter 12.28 (commencing with Section 12.28.010) of Ihe Palo Alto Municipal Code (the "Bond Law"), an Indenture of Trust, dated as of October 1,2009, by and between the City and U.S. Bank National Association, as trustee (the "Indenture"), and a resolution of the City (the "Resolution") of the City Council of the City adopted on July 27, 2009. We have examined the law and such certified proceedings and other papers as we deem necessary to render this opinion. As to questions of fact material to our opinion, we have relied upon representations of the City contained in the Indenture and in the certified proceedings and certifications of public officials and others furnished to us without undertaking to verify the same by independent investigation. Based upon the foregoing, we are of the opinion, under existing law, as follows: 1. The City is duly created and validly existing as a municipal corporation and chartered city with the power to enter into the Indenture, perform the agreements on its part contained therein, and issue the Bonds. 2. The Indenture has been duly approved by the City, and constitutes a valid and binding obligation of the City enforceable upon the City in accordance with its terms. 3. Pursuant to the Bond Law, the Indenture creates a valid lien on the Net Revenues of the City's Water System (as defined in the Indenture) pledged by the Indenture for the security of the Bonds, on a parity with the portion of the City's Utility Revenue Bonds, 2002 Series A attributable to improvements to the Water System and currently outstanding in the amount of $ (as of Juue 30, 2009), subject only to a pledge of such Net Revenues (along with other net revenues of other City utilities not pledged for the security of the Bonds) to payment of debt service on the City's outstanding Utility Revenue Bonds, 1995 Series A, currently outstanding in tl,e amount of $5,320,000 (as of June 30,2009) as described in the Indenture. 4. The Bonds have been duly authorized, executed and delivered by the City, and are valid and binding special obligations of the City, payable solely from the sources provided therefor in the Indenture. 5. [If the 2009 Bonds are issued as Tax-Exempt Bonds:] The interest on the Bonds is excluded from gross income· for federal income tax purposes and is not an item of tax preference for purposes of the . Preliminary, subject to change. AppendixD Page 1 federal alternative minimum. tax imposed on individuals and corporations. TIH~ opinions set forth in the preceding sentence are subject to the condition that the City comply with all requirements of the Internal Revenue Code of 1986 that must be satisfied subsequent to the issuance of the Bonds in order that interest thereon be, or continue to be, excluded from gross income for federal income tax purposes. The City has covenanted to comply with each such requirement. Failure to comply with certain of such requirements may cause the inclusion of interest on the Bonds in gross income for federal incOlue tax purposes to be retroactive to the date of issuance of the Bonds. vVe express no opinion regarding other federal tax consequences arising with respect to the Bonds. 5, [If the 2009 Bonds are issued as Build America Bonds:] The interest on the Bonds is not excluded from gross income for federal income tax purposes, We express no opinion regarding other federal tax consequences arising with respect to the Bonds. 6, The interest on the Bonds is exempt from personal income taxation imposed by the State of California. The rights of the owners of the Bonds and the enforceability of the Bonds and the Indenture may be subject to bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors' rights heretofore or hereafter enacted and may also be subject to the exercise of judicial discretion in appropriate cases, Respectfully submitted, A Professional Law Corporation Appendix D Page 2 \ APPENDIXE FORM OF CONTINUING DISCLOSURE CERTIFICATE This CONTINUING DISCLOSURE CERTIFICATE (the "Disclosure Certificate") is executed and delivered by the CITY OF PALO ALTO (the "City") in connection with the issuance by the City of its :;:;:;_:-;,;:-;:;* aggregate principal amount of City of Palo Alto Water Revenue Bonds, 2009 Series A (the "Bonds"). The Bonds are being issued pursuant to an indenture of trust, dated as of October 1, 2009 (the "Indenture"), by and between the City and U.S. Bank National Association, as trustee (the "Trustee"). The City covenants and agrees as follows: Section 1. Purposg . .Q.Ul)e Disclosure Certificate. This Disclosure Certificate is being executed and delivered by the City for the benefit of the holders and beneficial owners of the Bonds and in order to assist the Participating Underwriter in complying with S.E.C. Rule 15c2-12(b)(5). Section 2. Definitjons. In addition to the definitions set forth in the Indenture, which apply to any capitalized term used in this Disclosure Certificate unless otherwise defined in this Section 2, the follOwing capitalized terms shall have the following meanings: "Annual Report" shall mean any Annual Report provided by the City pursuant to, and as described in, Sections 3 and 4 of this Disclosure Certificate. "Beneficial Owner" shall mean any person which (a) has the power, directly or indirectly, to vote or coment with respect to, or to dispose of ownership of, any Bonds (including persons holding Bonds through nominees, depositories or other intermediaries), or (b) is treated as the owner of any Bonds for federal income tax purposes. "Dissemil1fltion Agent" shall mean the City or any successor Dissemination Agent designated in writing by the City and which has filed with the City a written acceptance of such designation. In the absence of such a designation, the City shall act as the Dissemination Agent. "EMMA" or "Electronic Municipal Markel Access" means the centralized on-line repository for documents filed with the MSRB, such as official statements and disclosure information relating to municipal bonds, notes and other securities as issued by state and local governments. "Lisled Events" shall mean any of the events listed in Section 5(a) of this Disclosure Certificate. "MSRB" means the Municipal Securities Rulemaking Board, which has been designated by the Securities and Exchange Commission as the sale repository of disclosure information for purposes of the Rule, or any other repository of disclosure information which may be designated by the Securities and Exchange Commission as such for purposes of the Rule in the future. "Participating Underwriter" shall mean any of the original underwriters of the Bonds required to comply with the Rule in connection with offering of the Bonds. "Rule" shall mean Rule 1Sc2-12(b)(S) adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as the same may be amended from time to time. Section 3. Provision of Annual Reports. (a) Delivery of Annual Report to MSRB. The City shall, or shall cause the Dissemination Agent to, not later than eight months after the end of the City's fiscal year (which currently ends on June 30), commencing with the report for the 2008-2009 Fiscal Year, which is due not later than March 1, 2010, provide to the Participating Underwriter and to file with EMMA, in a readable pdf or other electronic format as prescribed by the MSRB, an Annual Report that is comistent with the requirements of Section 4 • Preliminary, subject to change. AppendixE Pagel of this Disclosure Certificate. The Annual Report may be submitted as a single document or as separate documents comprising a package, and may cross-refe~ence other information as provided in Section 4 of this Disclosure Certificate; provided that the audited financial statements of the City may be submitted separately from the balance of the Annual Report and later than the date required above for the filing of the Annual Report if they are not available by that date. (b) C/Iflllge of Fiscal Yenr. If the City's fiscal year changes, it ~hall give notice of Stich change in the same manner os for a Usted Event under Section 5(d). (c) Delivery of Annual Report to Dissemination Agent. Not later than fifteen (15) Business Days prior to the date specified in subsection (a) for providing the Annual Report to EMMA, the City shall provide the Annual Report to the Dissemination Agent (if other than the City). If by such date, the Dissemina tion Agent has not received a copy, of the Annual Report, the Dissemination Agent shall notify the City. (d) Report of NOlI-Compliance. If the City is unable to provide an Annual Report by the date required in subsection (a), the Dissemination Agent shall send a notice to EMMA in substantially the form attached as Exhibit A. (e) Annual Compliance Certification. The Dissemination Agent shall, if the Dissemination Agent is other than the City, file a report with the City certifying that the Annual Report has been provided pursuant to this Disclosure Certificate, stating the date it was provided. Section 4. Content of Annual Reports. The Annual Report shall contain or incorporate by reference the follOWing: (a) Audited financial statements of the City for the preceding fiscal year, prepared in accordance with the laws of the State and including all statements and information prescribed for inclusion therein by the Controller of the State. If the City's audited financial statements are not available by the time the Annual Report is required to be filed pursuant to Section 3(a), the Annual Report shall contain unaudited financial statements in a format similar to the financial statements contained in the final Official Statement, and the audited financial statements shall be filed in the same manner as the Annual Report when they become available. (b) To the extent not included in the audited final statement of the City, the Annual Report shall also include operating data with respect to the City for preceding fiscal year, substantially similar to that provided in the corresponding tables and charts in the official statement for the Bonds, as follows: (i) Discussion of any changes in the rate and fee structure with respect to the Water System in the most recently completed fiscal year which could have a material affect on the Net Revenues of the Water System; (il) Identification of any withdrawals by the City from the Available Reserves during the most recently completed fiscal year for the purpose of paying debt service on the Bonds; (iii) Identification with respect to each of the Available Reserves (A) the balance as of the end of the most recently completed fiscal year, and (B) any material changes in the applicable reserve policy; and (iv) Description of any Parity Bonds or subordinate debt issued during the most recently completed fiscal year. (c) Any or all of the items listed above may be included by specific reference to other documents, including official statements of debt issues of the City or related public entities, which are available to the public on the MSRB's Internet web site Or filed with the Securities and Exchange Commission. The City shall dearly identify each such other document so included by reference. If the document included by reference is a final official statement, it must be available from EMMA. (d) In addition to any of the information expressly required to be provided under paragraph (b) of this Section 4, the City shall provide such further information, if any, as may be necessary to make the AppendixE Page 2 specifically required statements, in the light of the circumstances under which they are made, not misleading. Section 5.lli:}:>Qr(ing of Significant Eyents. (a) Listed Events. Pursuant to the provisions of this Section 5, the City shall give, 01' cause to be given, notice of the oCCurrence of any of the following events with respect to the Bonds, if material: (il Principal and interest payment delinquencies. (li) Non-payment related defaults. (iii) Unscheduled draws on debt service reserves reflecting financial difficulties. (iv) Unscheduled draws on credit enhancements reflecting financial difficulties. (v) Substitution of credit or liquidity providers, or their failure to perform. (vi) Adverse tax opinions or events affecting the tax-exempt status of the security. (vii) Modifications to rights of security holders. (viii) Contingent or unscheduled bond calls. (ix) Defeasances. (x) Release, substitution, or sale of property securing repayment of the securities. (xi) Rating changes. (b) Determination of Milterlalily of Listed Events. Whenever the City obtains knowledge of the occurrence of a Listed Event, the City shall as soon as possible determine if such event would be material under applicable federal securities laws. (c) Notice to DissemifUltion Agent. If the City has determined that knowledge of the occurrence of a Listed Event would be material under applicable federal securities laws, the City shall promptly notify the Dissemination Agent (if other than the City) in writing. Such notice shall instruct the Dissemination Agent to report the occurrence pursuant to subsection (d). (d) Notice of Listed Events. The City shan file, or cause the Dissemination Agent to file, a notice of the occurrence of a Listed Event, if material, with EMMA, in a readable PDF or other electronic format as prescribed by EMMA, with a copy to the Participating Underwriter. Notwithstanding the foregoing, notice of Listed Events described in subsections (a) (viii) and (ix) (defeasances) need not be given under this subsection any earlier than the notice (if any) of the underlying event is given to Bondholders of affected Bonds. Section 6. Identifying Information for Filings with EMlvIA .. AI! doctunents provided to EMMA under this Disclosure Certificate shall be accompanied by identifying information as prescribed by the MSRB. Section 7. Termination of Reporting Obligation. The City'S obligations under this Disclosure Certificate shall terminate upon the defeasance, prior redemption or payment in fulJ of al! of the Bonds. If such termination occurs prior to the final maturity of the Bonds, the City shan give notice of such termination in the Same manner as for a Listed Event under Section 5. Section 8. Dj~s.~plinatlon Agent. (a) Appointment of Dissemination Agent. The City may, from time to time, appoint or engage a Dissemination Agent to assist it in carrying out its obligations under this Disclosure Certificate, and may discharge any such agent, with or without appointing a successor Dissemination Agent. If the Dissemination Agent is not the City, the Dissemination Agent shall not be responsible in any manner for the content of any notice Or report prepared by the City pursuant to this Disclosure Certificate. The initial Dissemination Agent shall be the City. (b) Compensation of Dissemination Agent. The Dissemination Agent shall be paid compensation by the City for its services provided hereunder in accordance with its schedule of fees as agreed to between the Dissemination Agent and the City from time to time and all expenses, legal fees and advances made or incurred by the Dissemination Agent in the performance of its duties hereunder. The Dissemination Agent shall not be deemed to be acting in any fidUciary capacity for the City, Holders or Beneficial AppendixE Page 3 Owners, or any other party. 'lhe Dissemination Agent may rely and shall be protected in acting or refraining from acting upon any direction from the City Or an opinion of nationally recognized bond counsel. The Dissemination Agent may at any time resign by giving written notice of such resignation to the City. Section 9. Alnendment; \"'aiver. Notwithstanding any other provision of this Disclosure Certificate, the City may omend this Disclosure Certificate (and the Dissemination Agent shall agree to any amendment so requested by the City that does not impose any greater duties or risk of liability on the Dissemination Agent), and any provision of this Disclosure Certificate may be waived, provided that the following conditions are satisfied: (a) Change in Circumstances. If the amendment or waiver relates to the provisions of Sections 3(a), 4 or 5(a), it may only be made in connection with a change in circumstances that arises from a change in legal requirements, change in law, or change in the identity, nature, or status of an obligated person with respect to the Bonds, or the type of business conducted; (b) Compliance flS of Issue Date. The undertaking, as amended or taking into account such waiver, would, in the opinion of a nationally recognized bond counsel, have complied with the requirements of the Rule at the time of the original issuance of the Bonds, after taking into account any amendments or interpretations of the Rule, as well as any change in circumstances; and (c) Consent afHolders; Non-impairment Opinion. The amendment or waiver either (i) is approved by the Bondholders in the same manner as provided in the Indenture for amendments to the Indenture with the consent of Bondholders, or (ii) does not, in the opinion of nationally recognized bond counsel, materially impair the interests of the Bondholders or Beneficial Owners. U this Disclosure Certificate is amended or any provision of this Disclosure Certificate is waived, the City shall describe such amendment or waiver in the next following Annual Report and shall include, as applicable, a narrative explanation of the reason for the amendment or waiver and its impact on the type (or in the case of a change of accounting principles, on the presentation) of financial information or operating data being presented by the City. In addition, if the amendment relates to the accounting principles to be followed in preparing financial statements, (i) notice of such change shall be given in the same manner as for a Listed Event under Section 5(d), and (ii) the Annual Report for the year in which the change is made should present a comparison (in narrative form and abo, if feasible, in quantitative form) between the financial statements as prepared on the basis of the new accounting principles and those prepared on the basis of the former accounting principles. Section 10. Additional Information. Nothing in this Disclosure Certificate shall be deemed to prevent the City from disseminating any other information, using the means of dissemination set forth in this Disclosure Certificate or any other means of communication, or including any other information in any Annual Report or notice of occurrence of a Listed Event, in addition to that which is required by this Disclosure Certificate. If the City chooses to include any information in any Annual Report or notice of occurrence of a Listed Event in addition to that which is specifically required by this Disclosure Certificate, the City shall have no obligation under this Disclosure Certificate to update such information or include Hin any future Annual Report or notice of occurrence of a Listed Event. Section 11. Default. In the event of a failure of the City to comply with any provision of this Disclosure Certificate, any Bondholder or Beneficial Owner may take such actions as may be necessary and appropriate, including seeking mandate or specifiC performance by court order, to cause the City to comply with its obligations under this Disclosure Certificate. The sole remedy under this Disclosure Certificate in the event of any failure of the City to comply with this Disclosure Certificate shall be an action to compel performance. Section 12. Duties. Immunities and Liabilities of Dissemination Agent. The Dissemination Agent shall have only such duties as are specifically set forth in this Disclosure Certificate, and the City agrees to indemnify and save the Dissemination Agent, its officers, directors, employees and agents, harmless against any loss, expense and liabilities which it may incur arising out of or in the exercise or performance of its powers and duties hereunder, including the costs and expenses (including attorneys fees) of defending against any claim of liability, but excluding liabilities due to the Dissemination Agent's AppendixE Page 4 negligence or willful misconduct. The obligations of the City under this Section shall survive resignation or removal of the Dissemination Agent and payment of the Bonds. Section 13. Beneficiaries. This Disclosure Certificate shall inure solely to the benefit of the City, the Dissemination Agent, the Participating Underwriters and Holders and Beneficial Owners from time to time of the Bonds/ and shall create no rights in any other person or entity. Date: [Closing Date] CITY OF PAID ALTO By __________________________ ___ Name Title _______________ _ AppendixE PageS Name of Obligor: Name of Issue: Date of Issuance: EXHIBIT A NOTICE TO MUNICIPAL SECURITIES RULEMAKING BOARD OF FAILURE TO FILE ANNUAL REPORT City of Palo Alto, California City of Palo Alto Water Revenue Bonds, 2009 Series A [Closing Date) NOTICE IS HEREBY GIVEN that the City of Palo Alto has not provided an Annual Report with respect to the above-named Bonds as required by the Continuing Disclosure Certificate dated October _,2009, furnished by the City in connection with the Bond Issue. The City anticipates that the Annual Report will be filed by ____ _ Dated: ______ _ cc: Trustee CITY OF PALO ALTO, CALIFORNIA, as Dissemination Agent By _____________ _ Name Title --------- Appendix E Page 6 APPENDIXF DTC AND THE BOOK-ENTRY ONLY SYSTEM Tlte following descriptioll of the procedures and record keepirlg with respect 10 heneficiol oWllership interests in tile 2009 Bonds, p"yment of principol, redemption premium, if any, and interest with respect to the 2009 Bonds to DTC, its ParUcipnnts or Beneficial Owners, confirmation mId tmnsfers of beneficiol ownership interests in the 2009 Bonds and other reloled transactiolls by and between DTC, its Participants and lire Beneficial Owners is based solely on the understanding of the City of such procedures and record keeping from information provided by DTe. Aerordingfy, no representations con be made conceming these matters and neither DTC, its Participants nor the Beneficial Owners should rely on the foregoing information with respect to such matters, but should instead confirm the some with DTC or its Participants, as the case may be. Tire City, the Trustee and the Underwriter understund that the current "Rules" applicahle to DTC are on file with the Seeuritie.s and Exchange Commission and that the current "Procedures" of DTC to be followed in dealing with PartiCipants are (111 file with DTC. The Depository Trust Company ("mC"), New York, NY, will act as securities depository for the Bonds. The Bonds will be issued as fully-registered securities registered in the name of Cede & Co. (DTC's partnership nominee) or such other name as may be requested by an authorized representative of me. One fully-registered Bond certificate will be issued for each maturity of the Bonds, each in the aggregate principal amount of such maturity, and will be deposited with me. mc, the world's largest depository, is a limited-purpose trust company organized under the New York Banking Law, a "banking organization" within the meaning of the New York Banking Law, a member of the Federal Reserve System, a "dearing corporation" within the meaning of the New York Uniform· Commercial Code, and a "clearing agency" registered pursuant to the provisions of Section 17 A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non-U.s. equity issues, corporate and municipal debt issues, and money market instruments (from over 100 countries) that DTC's participants ("Direct Participants") deposit with DTe. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book-entry transfers and pledges between Direct Participants' accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. mc is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation ("DTCC"). mcc is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Gearing Corporation, all of which are registered dearing agencies. mTC is owned by users of its regulated subsidiaries. Access to the mc system is also available to others such as both U.s. and non-U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly ("Indirect Participants"). DTC has Standard & Poor's highest rating: AAA. The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about mc can be found at www.dta:.com and www.dtc.org. Purchases of the Bonds under the mc system must be made by or through Direct Participants, which will receive a credit for the Bonds on mcs records. The ownership interest of each actual purchaser of each Bond ("Beneficial Owner") is in turn to be recorded On the Direct and Indirect Participants' records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Bonds are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in the Bonds, except in the event that use of the book-entry system for the Bonds is discontinued. To facilitate subsequent transfers, all Bonds deposited by Direct Participants with mc are registered in the name of me s partnership nominee, Cede & Co., Or such other name as may be requested by an authorized representative of me. The deposit of the Bonds with mc and their registration in the name of Cede & Co. or such other DTC nominee do not effect any change in beneficial AppendixF Pagel ownership. DTC has no knowledge of the actual Beneficial Owners of the Bonds; DTC's records reflect only the identity of the Direct Participants to whose accounts such Bonds are credited, which mayor may not be the Beneficial Owners. The Direct and Indi=t Participants will remain responsible for keeping account of their holdings on behalf of their customers. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Di=t Participants and Indirect Participants to Beneficial Owners will be govemed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of the Bonds may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the Bonds, such as redemptions, tenders, defaults, and proposed amendments to the Trust Agreement. For example, Beneficial Owners of the Bonds may wish to ascertain that the nominee holding the Bonds for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses to the registrar and request that copies of notices be provided directly to them. Redemption notices shall be sent to DTC, if less than all of the Bonds within a maturity are being redeemed. DTC's practice is to determine by lot the amount of the interest of each Direct Participant iIl each issue to be redeemed. Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to the Bonds unless authorized by a Direct Participant in accordance with DTC's MMI Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the Issuer as soon as pOSSible after the record date. The Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to those Direct Participants to whose accounts the Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy). Payments of principal of, premium, if any, and interest on the Bonds will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC's practice is to credit Direct Participants' accounts upon DTC's receipt of funds and corresponding detail information from the City, the Authority Or the Trustee, on payable date in accordance with their respective holdings shown on DTC's records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of cllstOlners in bearer form or registered in "street name," and will be the responsibility of such Participant and not of DTC, the Trustee, the City or the Authority, subject to any statutory or regulatory requirements as may be in effect from time to time. Payments of principal of, premium, if any, and interest on the Bonds by Cede & Co (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the City, the Authority or the Trustee, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants. DTC may discontinue providing its services as depository with respect to the Bonds at any time by giving reasonable notice to the City, the Authority or the Trustee. Under such circumstances, in the event that a successor depository is not obtained, Bond certificates are required to be printed and delivered. The Authority may decide to discontinue use of the system of book-entry transfers through DTC (or a successor securities depository). In that event, Bond certificates will be printed and delivered. The foregoing information concerning DTC and DTC's book-entry system has been provided by DTC, and neither the Authority nor the Trustee takes any responsibility for the accuracy thereof. NEITHER THE AUTHORITY NOR THE TRUSTEE WILL HAVE ANY RESPONSIBILITY OR OBLIGATION TO DTC PARTICIPANTS, INDIRECT PARTICIPANTS OR BENEFICIAL OWNERS WITH RESPECT TO THE PAYMENTS OR THE PROVIDING OF NOTICE TO DTC PARTICIPANTS, INDIRECT PARTICIPANTS OR BENEFICIAL OWNERS OR THE SELECTION OF BONDS FOR REDEMPTION. AppcndixF Page 2 Neither the Authority nor the Trustee can give any assurances that DTC, DTC Participants, Indirect Participants or others will distribute payments of principal of, premium, if any, and interest on the Bonds paid to DTC or its nominee, as the registered Owner, or any redemption or other notice, to' the Beneficial Owners or that they will do so on a timely basis or that DTC will serve and act in a manner described in this Official Statement- In the event that the book-entry system is discontinued as described above, the requirements of the Trust Agreement will apply. The City, the Authority and the Trustee cannot and do not give any assurances that DTC, the Participants or others will distribute payments of principal, interest or premium, if any, evidenced by the Bonds paid to DTC or its nominee as the registered owner, or will distribute any redemption notices or other notices, to the Beneficial Owners, or that they will do so on a timely basis or will serve and act in the manner described in this Official Statement Neither the Authority nor the Trustee are responsible or liable for the failure of DTC or any Participant to make any payment or give any notice to a Beneficial Owner with resped to the Bonds or an error or delay relating thereto. Appendix F Page 3 ATTACHMENT B ..... PRELIMINARY SUBJECT TO CHANGE .. ••• City of Palo Alto Water Revenue Bonds -2009 Series A Ratings Assumption: Underlying Triple A (Interest Rates as of June 2009) Sources and Uses of Funds (Prepared by Stone & Youngberg) Sources: Bond Proceeds: Uses: Par Amount Net Original Issue Discount Total Sources Project Fund Other Fund Deposits: Debt Service Reserve Fund (1) Capitalized Interest (2) Delivery Date Expenses: Cost of Issuance (3) Underwriter's Discount (4) Other Uses and Funds: Notes: Miscellaneous Total Uses Tax-Exempt Bonds $ 34,980,000 (125,9631 $ 34,854,037 $ 30,965,000 2,364,795 948,420 3,313,215 225,000 349,800 574,800 1,022 $ 34,854,037 Taxable BABs (5) $ 36,850,000 $ 36,850,000 $ 30,965,000 3,308,250 1,796,438 5,104,688 225,000 552,750 777,750 2,563 $ 36,850,000 (1) Debt Service Reserve Fund (DSRF) sized as the lesser of 10% of Par, Maximum Annual Debt Service, and 125% of Average Annual Debt Service. Assumes DSRF annual eamings of 3%. (2) Capitalized Interest through June 1, 2010. (3) Cost of Issuance estimated; includes financial advisor, bond counsel, disclosure counsel, rating, trustee, printing and other costs associated with the financing. (4) Assumes Underwriter's Discount of 1.0% for Tax-Exempt financing and 1,5% for Taxable financing, (5) BABs" "Direct Pay Build America Bonds" under the American Recovery and Reinvestment Act of 2009 TO: HONORABLE CITY COUNCIL FROM: CITY MANAGER DATE: JULY 27, 2009 DEPARTMENTS: CITY CLERK AND PLANNING AND COMMUNITY ENVIRONMENT CMR: 335:09 REPORT TYPE: REPORTS S SUBJECT: Council Direction to either Adopt the Initiative Defining Minimum Width of Private Streets or to Adopt a Resolution Placing the Initiative on the Ballot for Consideration by the Electorate EXECUTIVE SUMMARY The proposed Initiative to provide minimum widths for private streets (Initiative) has qualified for the November ballot, according to the certification of the Santa Clara County Registrar of Voters on July 15,2009. The Council must direct staff to either: 1) place the item on the ballot, or 2) return with the ordinance exactly as written for adoption. Setting the Initiative for the ballot would result in election costs to the City of approximately $100,000. Staff believes the intent and substance of the Initiative ordinance are reasonable, but has identified some language deficiencies that would prevent effective application to achieve the objectives of the Initiative. Staff therefore recommends that Council direct the preparation of an ordinance, to be considered on September 21, 2009, to precisely reflect the Initiative, but also direct staff to subsequently prepare a new ordinance to address the problems identified, in order to fully achieve the intent of the Initiative. RECOMMENDATION Staff recommends that the City Council direct staff to: 1. Conduct appropriate environmental review for the ordinance; 2. Bring the ordinance with the exact wording proposed in the Initiative back to Council for adoption on September 21,2009; and 3. Prepare additional ordinance changes necessary to carry out the intent ofthe ordinance and bring that ordinance to Council for future adoption. BACKGROUND The proposed Initiative to provide minimum widths for private streets (Initiative) has qualified for the November ballot, according to the certification of the Santa Clara County Registrar of Voters on July 15, 2009. The Notice of Intent to circulate the Initiative was advertised in the Palo Alto Weekly on May 1, 2009, and signatures were gathered prior to submittal to the City Clerk CMR:335:09 Page 1 of5 on July 13,2009. A total of 1,990 signatures (6% ofthe registered voters in the last general municipal election) was required to qualify, a total of 2,308 signatures were submitted, and a total of 2,056 signatures were certified by the County Registrar. City Council Options Pursuant to Article VI, Section 2 of the City Charter, if the petition accompanying the proposed ordinance is signed by qualified and registered electors equal in number to six percentum (6%) of the number of registered voters at the last general municipal election, the Council must either pass such ordinance without alteration or submit the same to the electorate at the next general municipal election that shall occur at any time not less than eighty-eight days from the date of the Clerk's certificate of sufficiency. The City Council must act to do either of the following prior to August 7,2009 (the Council's final meeting before then is August 3), the deadline for setting the election: 1. Place the Initiative on the November ballot; or 2. Adopt the ordinance exactly as presented in the Initiative. The Council's action at this meeting is to direct staff as to which option is preferred. If the ordinance is to be adopted, the Council's direction will require further staff preparation and environmental review subsequent to the deadline date. The implications of and options related to this are discussed further below. If the Council opts to place the Initiative on the November ballot, it must pass the resolution attached as Attachment C. DISCUSSION The intent of the proposed Initiative, as stated, is to address concerns about vehicle circulation on private streets (particularly for fire and garbage trucks), inclusion of streets in determining lot size and floor area, and overflow traffic and parking onto nearby residential streets. The Arbor Real proje¢t is cited as an example of the kind of development with private streets that has resulted in such problems. The specific provisions of the Initiative would amend the Subdivision Ordinance of the City to: • Generally limit private street width to a minimum of 32 feet (as compared to a public street width of 40 feet); • Allow lesser width at a minimum of26 feet where either a) at least a 6-foot parking strip is provided adjacent to the street or b) homes are set back at least 20 feet from the street; • Allow lesser width at a minimum of 22 feet where the street serves 4 or fewer lots; • Provide that all of those widths are "minimums" and the streets must be shown to be adequate to the satisfaction of the Director of Planning and Community Environment and, for widths less than 32 feet, by the City Council; and • Exclude the area of private streets from the calculation of Floor Area Ratio for determining allowable development. Additionally, the definition of "Lot area" would be amended in the Zoning Ordinance to exclude "public or private" street right-of-way (current code interpretations only exclude public right-of- way). This would again further limit the floor area allowed on a site. CMR:335:09 Page 2 of5 Finally, the ordinance indicates an effective date of July 31,2009, although the ballot measure would not occur until November 3,2009. There is a provision that notes that, if the retroactive date is voided or otherwise deemed unenforceable by judicial action, then November 4, 2009 would be the effective date, if passed by the voters. Each of the Council's options is discussed below: Set the Initiative on the Ballot The Council may direct the City Clerk to proceed to schedule the Initiative for the November 3, 2009 election by passing the attached Resolution. Some of the considerations and implications of this action are addressed as follows: • The City Clerk must file with the Registrar of Voters by August 7,2009 the Resolution of the City Council forwarding this Initiative to the ballot. • The deadline to file written arguments for or against a measure not to exceed 300 words is August 12, 2009 in the City Clerk's office. • The deadline to file a rebuttal argument not to exceed 250 words is August 19, 2009 in the City Clerk's office. • The Council may designate up to four Council Members to author the argument in favor of the measure. • The City Attorney should be directed to file an Impartial Analysis with the City Clerk by August 19, 2009. • The estimated cost for this measure would be approximately $100,000. Enact the Ordinance The second potential Council action is to adopt the ordinance exactly as proposed, which would avoid the need to spend City resources to place the measure on the ballot but could result in enforcement difficulties that thwart some of the intent of the Initiative. Some of the considerations and implications of this option are addressed as follows: • There is not presently adequate time to provide public notice and environmental review to adopt the ordinance in advance of the July 27 or August 3 Council dates. If adoption of the ordinance is desired, Council should direct staff to provide public notice and to conduct appropriate environmental review and return after the Council's break in September or October with the ordinance. The direction would need to explicitly provide that the ordinance must be identical in wording to the Initiative in order to preclude the need for the election. • Staffbelieves that the substance of the ordinance changes is reasonable and will help clarify the recent concerns regarding private street width, parking, and floor area. The proposed 32-foot width still provides for flexibility for applicants to use less than the 40- foot public street width, and allows lesser widths under certain circumstances. • Staffhas identified some provisions of the Initiative (and of the City's current Subdivision Ordinance) that would be problematic to implement and confusing to applicants, and are likely to potentially thwart the intent of the Initiative. The applicability and enforceability of the ordinance are discussed in the following section. • Approval of the ordinance on September 21 would result in an effective date on or about November 3,2009, the election date. CMR:335:09 Page 3 of5 Applicability and Enforceability of Ordinance It is the opinion of the City Attorney that the retroactive provision is not legal. In order to avoid the costs of an election, the Council must adopt the Initiative ordinance exactly as written. Thus, the Council would be required to adopt the retroactive provision. The City Attorney has indicated that although the retroactive provision is unenforceable, it would not nullify the ordinance if adopted as written because the ordinance contains a severability clause that would leave all legally enforceable portions of the ordinance intact. Using the City's current defmition of private streets, the Initiative would apply only to non- dedicated streets which are on a "separate parcel ofland used for ingress to or egress from two or more lots which do not have the minimum street frontage" or non-dedicated streets that provide access to one lot that does not meet minimum street frontage "if the parcel of land used for ingress or egress is more than two hundred feet in length." Because this definition predates enactment ofthe Davis-Stirling Common Interest Development Act, it is unlikely that any future development will propose vehicular access in a way that would meet the City's defmition of private streets. As such, absent further clean-up, the Initiative would not have any direct impact on any project currently in the planning or development process. The ordinance will have no impact upon the Alma Plaza development as the tentative map was already passed by the Council long before the Initiative. Due to the improper definition, it is the City Attorney's opinion that the ordinance will have no impact upon any current application including the proposed Palo Alto Bowl project. Potential Revisions to the Ordinance Staffhas met with the Initiative sponsor and believes that a few revisions to the City's subdivision ordinance would allow for effective implementation of the intent of the Initiative. The key changes anticipated in the ordinance would likely include: • Deletion of the reference to "required minimum lot frontage" in the definition of "Private Streets;" • Clarification that "Private Streets" are parcels of land that provide access to "three or more housing units" rather than ''two or more lots" (this would address condominium developments); and • Clarification that "Private Streets" could also be part of a common area, not necessarily designated parcels of land. If the Council directs, subsequent to adoption of the Initiative ordinance, staffwill prepare further subdivision code amendments to make those clarifications to better realize the intent of the Initiative. Staff believes the amendments could be made in a way that does not affect the Initiative ordinance and would not therefore require a public vote. Staff expects to provide those amendments to Council for adoption prior to the end of 2009. POLICY IMPLICATIONS If the Council directs adoption of the ordinance, Comprehensive Plan policies that support that determination will be referenced in the preamble to that ordinance. The Initiative specifically CMR:335:09 Page 4 of5 calls out policies C30, L17, T23, and T25, as well as Programs T33 and T53 of the Comprehensive Plan, which would be enhanced by the ordinance. Staff does not believe that the existing street width allowances necessarily conflict with those policies and programs, but concur that those policies and programs are further supported by the proposed standards. ENVIRONMENTAL REVIEW No environmental review is required if the measure is set for the November ballot If Council directs staff to prepare an ordinance, then environmental review will be necessary prior to adoption. Staff anticipates a Negative Declaration would be prepared. RESOURCE IMPACT The costs of setting the Initiative for election are estimated at $100,000, including costs of the Registrar of Voters and public notices required to be published by the City Clerk. The costs of preparing an ordinance involve staff time, at an estimated cost of $5,000. Such costs probably would have been necessary in the future to prepare a similar ordinance anyway, however. The ongoing costs of private street maintenance are anticipated to be negligible, since the costs of such maintenance will be borne by project developers and subsequent owners and homeowners' associations. D~/;Uv DEPARTMENT HEAD REVIEW: City. Clerk ~\Jj~ CURTIS WILLIAMS irector of Planning and Community Environment CITY MANAGER APPROVAL: ATTACHMENTS A. City Clerk Certificate of Sufficiency of Petition B. Notice of Intent to Circulate Initiative Petition C. Resolution Submitting Initiative to Electorate With Proposed Ordinance COURTESY COPIES Robert Moss CMR:335:09 Page 5 of5 REPORT FROM THE CllY CLERK CERTIFICATE OF SUFFICIENCY OF THE INITIATIVE PETITION REGARDING DEFINING MINIMUM WIDTH OF PRIVATE STREETS I, Donna J. Grider, City Clerk, City of Palo Alto, do hereby certify: 1) that an initiative petition regarding defining minimum width of private streets was received in this office on July 13, 2009; 2) that said petition containing 2,308 was delivered to the Registrar of Voters of Santa Clara County for veri'fication of signatures; 3) that the Registrar of Voters of Santa Clara County has issued his certificate dated July 15, 2009,stating that after examining 2,308 signatures, 2,056 signatures were placed on the petition by registered voters of the City of Palo Alto. 4) that in accordance with Palo Alto City Charter, Article VI, Section 2, Initiative, the proposed petition is signed by six (6) percent of the registered voters as of the last General Municipal Election (363,172 which is 1,990 and therefore, said petition is found to be sufficient in that it contains the qualified signatures. Witness my hand and official seal this 16th day of July 2009 ATT ACHMENT A County of Santa Clara Registrar of Voters 1555 Berger Drive, Building 2 San Jose, California 95112 Mailing Address: P,O. Box 1147, San Jose, CA 95108 (408) 299-VOTB(8683) (866) 430-VOTB (8683) FAX (408) 998-7314 www.sccvote,org July 15, 2009 Ms. Donna J. Grider, MMC City Clerk, City of Palo Alto PO Box 10250 Palo Alto, CA 94303 c ri~.'\'{ CITY G 09 JUL 15 PM 5: 20 RE: Initiative Petition Regarding Defining Minimum Width of Private Streets Dear Ms. Grider: The Initiative Petition Regarding Defining Minimum Width of Private Streets submitted to our office on July 13, 2009, contained 2,308 signatures. The petition needed 1,990 valid signatures to pass, based on the 6% requirement of the registered voters within the proposed boundaries of the City of Palo Alto per your letter dated July 13, 2009. We verified 100% of the total signatures utilizing petition guidelines issued by the Secretary of State. Based upon our verification, the petition had 2,056 valid signatures. Therefore this petition has passed. If you have any questions concerning this matter, please feel free to contact me at (408) 282-3051. Mag y Elec Division Coordinator County of Santa Clara Board of Supervisors: Donald F. Gage, George Shirakawa, Dave Cortese, Ken Yeager, Liz Kniss Acting County Executive: Gary A. Graves JOBc59 CLERK'S CERTIFICATE TO INITIATIVE PETITION I, JESSE DURAZO, Registrar of Voters of the County of Santa Clara, State of California, hereby certify: ThaUhe "Initiative Petition Regarding Defining Minimum Width of Private Streets" has been filed with this office on July 13, 2009. That said petition consists of 74 sections; That each section contains signatures purporting to be the signatures of qualified electors of this county; That attached to this petition at the time it was filed was an affidavit purporting to be the affidavit of the person who solicited the signatures, and containing the dates between which the purported qualified electors signed this petition; That the affiant stated his or her own qualification, that he or she had solicited the signatures upon that section, that all of the signatures were made in his or her presence, and that to the best of his or her knowledge and belief each signature to that section was the genuine signature of the person whose name it purports to be; That after the proponent filed this petition I verified the required number of signatures by examining the records of registration in this county, current and in effect at the respective purportive dates of such of -signing, to determine what number of qualified electors signed the petition, and from that examination I have determined the following facts regarding this petition: 1. Number of unverified signatures filed by proponent (raw count) 2,308 2. Number of signatures verified 2,308 a. b. Number of signatures found SUFFICIENT Number of signatures found NOT SUFFICIENT 1. NOT SUFFICIENT because DUPLICATE 2,056 252 54 IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official seal this 15th day of July, 2009. . (SEAL) Jesse Durazo Registrar of Voters BY~ Petition Result Breakdow._ Job059 City of Palo Alto ~ Private Street Widths JobC59 City of Palo Alto ~ Init Pet RE: Defining Minimum Width of Private Streets RESULTABBR Approved NotReg OutOIDist Duplicate Reg Late RegDiffAdd Cantldntfy NoResAdd NoSig -" .. -- :MR012 -Petition Result Breakdown nted: 7/1512009 1:59:54PM Signatures Required Raw Count Sample Size Sigs Checked Sigs Not Checked Sigs Valid Sigs Invalid Duplicated Non-dupllcate Invalids RESULT DESCRIPTION Approved Not Registered Out of District Signed more than once Registered Late Registered at a Different Address Cannot Identify No Residence Address Given No Signature 1990 2,308 2,308 Percent of Sigs 2,308 Checked 0 2,056 89.1 % 252 10.9% 54 2.0% 198 9.0% 2,056 89.1 % 144 6.2% 3 0.1 % 54 2.3% 1 0.0% 36 1.6% 6 0.3% 6 0.3% 2 0.1 % Percent 01 Sample Size 0.0 % 89.1 % 10.9% 2.3 % 8.6% Page 1 of 1 Notice of Intent to Circulate Initiative Petition Notice is hereby given of the intent of the persons whose names appear hereon to circulate an initiative petition within the city of Palo Alto for the purpose of defining the minimum width of private streets as 32 feet, with a limited exceptions where private streets may be 22 feet or 26 feet in minimum width, removing aU private streets from being included for the purpose of defining allowed Floor Area Ratio (FAR) of buildings. A statement of the reasons of the proposed actions as contemplated in said petition is as follows: Private streets may be as narrow as 20 feet wide with no on-street parking, violating Policies C30, L17, T23, and T25 and Programs T33 and T53 of the Comprehensive Plan. These narrow streets also can be more difficult for fire trucks and garbage trucks to traverse, and can impede responses to public safety emergencies. Developments with 20 foot wide private streets cause serious spillover traffic and parking on adjacent neighborhood streets, and offer inadequate parking for residents and visitors within the developments, adversely impacting both the new developments and adjacent neighborhoods. Private streets, unlike public streets, may be included in lot sizes allowing larger buildings than in neighborhoods with public streets. Prohibiting inclusion of private streets in lot sizes treats all developments the same in regard to FAR, making home sizes more compatible. Arbor Real, the former Hyatt Rickey's site, typifies these problems. The narrow streets and limited guest parking caused overflow traffic and parking onto nearby residential streets. If Arbor Real residents park in "visitor parking" spaces they get tickets. Permitted visitor parking costs $25/month. Wider streets with adequate parking and emergency access are essential for adequate safety and functionality. To be circulated by Bob Moss and numerous citizen volunteers. ATTACHMENT B * * * NOT YET APPROVED * * * Resolution No. Resolution of the Council of the City of Palo Alto Calling a Special Election for November 3, 2009 Submitting to the Electorate for Special Election an Initiative Measure to Amend Palo Alto Municipal Code Sections 18.04.030(a)(85), 21.04.030 and 21.20.240 to SpecifY Minimum Widths for Private Streets, and Ordering Consolidation of Said Election WHEREAS, by Resolution No. 8930, the City Council has called a general municipal election for the election of Council Members for November 3, 2009, pursuant to Article ill, section 3 of the Charter of the City of Palo Alto; and WHEREAS, an initiative petition to amend Palo Alto Municipal Code sections 18.04.030(a)(85), 21.04.030 and 21.20.240 to specify minimum widths for private streets and exclude such streets from floor area ratio calculations has been presented to the City Council in accordance with the requirements of Article VI, section 2 of the Charter of the City of Palo Alto and this Council has concluded that it wishes to submit the initiative to the electorate of the City of Palo Alto, rather than the alternative of adopting it directly; and WHEREAS, elections are held on November 3, 2009, in certain school districts and certain special districts in Santa Clara County; and WHEREAS, pursuant to Education Code section 5342 and Part 30f Division 10 of the Elections Code commencing at section 10400, such elections may be partially or completely consolidated. NOW, THEREFORE, the City Council of the City of Palo Alto does hereby RESOLVE as follows: SECTION 1. Pursuant to Elections Code sections 1405 and 9214 there is called and ordered to be held in the City of Palo Alto, California, on Tuesday, November 3, 2009 a special election. SECTION 2. Pursuant to Article VI, section 2 of the Charter of the City of Palo Alto, this Council submits to the electorate of the City of Palo Alto the following question(s): CITY OF PALO ALTO INITIATIVE MEASURE ----Shall an ordinance be adopted to amend Palo Alto Municipal Code sections 18.04.030(a)(85), 21.04.030 and 21.20.240 regarding private streets to specify minimum widths and to treat private streets the same as public streets by excluding them from floor area ratio calculations? F or the Ordinance Against the Ordinance __ 090723 mb 8261099 1 ATT ACHMENT C * * * NOT YET APPROVED * * * SECTION 3. If a majority of qualified electors voting on such measure shall vote in favor of City of Palo Alto Initiative Measure "_", it shall be deemed ratified and shall read as provided in Exhibit "A" attached hereto. SECTION 4. The Council of the City of Palo Alto requests the Governing Body of any such other political subdivision, or any officers otherwise authorized by law, to partially or completely consolidate such elections and to further provide that the canvass be made by any body or official authorized by law to canvass the returns of the election, except that in accordance with Article III, section 4, of the Palo Alto Charter, the City Council must meet and declare the results of said elections; and that this City Council consents to such consolidation. SECTION 5. Pursuant to section 10002 of the California Elections Code, the Council of the City of Palo Alto hereby requests the Board of Supervisors of Santa Clara County to permit the Registrar of Voters to render services to the City of Palo Alto relating to the conduct of Palo Alto's General Municipal and Special Elections which are called to be held on Tuesday, November 3, 2009. The services shall be of the type normally performed by the Registrar of Voters in assisting the clerks of municipalities in the conduct of elections including, but not limited to, checking registrations, mailing ballots, hiring election officers and arranging for polling places, receiving absent voter ballot applications, mailing and receiving absent voter ballots and opening and counting same, providing and distributing election supplies, and furnishing voting machines. Subject to approval of the Board of Supervisors of Santa Clara County of the foregoing request, the City Clerk is hereby authorized to engage the services of the Registrar of Voters of the County of Santa Clara to aid in the conduct of said elections including canvassing the returns of said election. Further, the Director of Administrative Services is authorized and directed to pay the cost of said services provided that no payment shall be made for services which the Registrar of Voters is otherwise required by law to perform. The City Clerk is directed to submit a certified copy of this resolution to the Board of Supervisors of the County of Santa Clara. SECTION 6. The City Clerk is directed to do all things requested by law to present the measure to the electorate, including required publication and noticing. Further, the City Clerk is directed to forward a copy of this resolution to the City Attorney for preparation of an impartial analysis of the above measure consistent with applicable law. II II II II II 090707 mb 8261099 2 * * * NOT YET APPROVED * * * SECTION 7. The Council finds that this is not a project under the California Environmental Quality Act and, therefore, no environmental impact assessment is necessary. INTRODUCED AND PASSED: AYES: NOES: ABSENT: ABSTENTIONS: ATTEST: City Clerk Mayor APPROVED AS TO FORM: APPROVED: Senior Deputy City Attorney City Manager Director of Planning & Community Environment Director of Administrative Services 090707 mb 8261099 3 PROPOSED ORDINANCE Initiative to Amend Palo Alto Municipal Code Sections 18.04.030(a) 85, 21.040.030 and 21.20.240 Regarding Private Streets to Specify Minimum Widths and to Treat Private Streets the Same as Public Streets by Excluding them from Floor Area Ratio Calculations. Palo Alto Municipal Code Section 18.04.030(a) (85) shall be amended as follows: 18.04.030 (a) Defmitions (85) "Lot area" means the area of a lot measured horizontally between bounding lot lines, but excluding any portion of a flag lot providing access to a street and lying between a front lot line and the street, and excluding any portion of a lot within the lines of any natural watercourse, river, stream, creek, waterway, channel, or flood control or drainage easement and excluding any portion of a lot within a public or private street right-of-way whether acquired in fee, easement, or otherwise. Palo Alto Municipal Code Section 21.040.030 shall be amended as follows: 21.04.030 Definitions. (a) Except where alternate definitions are provided in this title, or the context clearly requires a different usage, the defmitions of words and phrases contained in the "Subdivision Map Act" are hereby adopted for use in this title. As used in the "Subdivision Map Act" the term "general plan" means the Palo Alto comprehensive plan, including all elements, objectives, policies, and programs thereof All references to any section of the Palo Alto Municipal Code or general laws of the state of California mean those sections, as may be hereafter amended, or any successor legislation. References to any officer or employee of the city include any designee of that officer or employee. (b) Except where the context clearly requires a different usage, the following defmitions are hereby adopted for the purposes of this title: (18) "Final map" means a map, other than a parcel map, prepared in accordance with this title and the Subdivision Map Act, designed to be placed on record with the county recorder and thereby finalize a subdivision approved by a tentative map. A final map shall be prepared pursuant to and in conformance with the approved tentative map and shall be based upon an accurate and detailed survey of the property. Final maps typically will be required for major subdivisions creating five or more lots, or five or more condominium, community apartment or stock cooperative units. (30) "Private street" means any parcel ofland not dedicated as a public street which is used for ingress to or egress from two or more lots which do not have the required minimum frontage on a public street, or to or from one lot which does not have the required minimum frontage on a public street if the parcel ofland used for ingress or egress is more than two hundred feet in length. Private streets shall be excluded for the purpose of determining Floor Area Ratio (FAR). Minimum width of "private streets" shall be as defined in 21.20.240(b)(4). Palo Alto Municipal Code Section 21.20.240 shall be amended as follows: 21.20.240 Widths. (a) Streets shown in any master street plan or affected by proceedings initiated or approved by the city council shall have widths as required by such plan or proceedings. (b) All other streets shall have rights-of-way of the following widths, except where the city council detennines that the topography or the small number of lots served and the probable future traffic development are such as to justify a narrowed width. Increased widths may be required where streets are to serve nonresidential property, or where probable traffic conditions warrant such increased widths: (1) Major arterials: eighty-six feet to one hundred feet; (2) Collector streets, local streets, or cul-de-sac streets longer than three hundred fifty feet: sixty feet; (3) Cul-de-sac streets three hundred fifty feet or less in length: fifty feet; (4) Private streets: Such right-of-way as would be required for a comparable public street, except as specified below .. l:Hlless sabsh4der eaR 6emoostrate to the satisfaetioo of the city eOlHleH or difector ofplan.aiB:g aru:l oommtmity eaWOBmem, as awro'(Hiate, facts relating to the Hamre or loeatioo of the proposes street or the Bature of the PFOflosed de:vrelopmeat 'NlHell reaeer sooh rigIlt of 'Nay llllfteoessary for or aeB:iJ.Befttal to the pualie health, safety or vt'elfare. Streets serving five or more lots shall be no less than thirty two feet wide. Streets serving four or fewer lots shall be no less than twenty two feet wide providing that the Director of Planning and Community Environment and the City Council specifically approves the twenty two foot street width. Cb) C 4) Ca) If a building adjacent to a private street has a setback of at least 20 feet between the street and building allowing on-site parking. then the width of the private street may be no less than twenty six feet at the discretion of the Director of Planning and Community environment and the City Council. (b) C 4) (b) If a private street has a public parking strip of at least six feet in width between the street and the building location, then the width of the private street may be no less than twenty six feet at the discretion of the Director of Planning and Community Environment and the City Council. Effective Date: This private street width requirement applies to any project or development that has not obtained a final map. building permit and performed significant construction as of J my 31, 2009. (a) Ifthe effective date of July 31, 2009 is held by a court of competent jurisdiction in a final judicial action to be void, voidable, or unenforceable, then the effective date of this ordinance as it applies to private street width shall be November 4,2009. Severability. If any section of this initiative ordinance, or part hereof, is held by a court of competent jurisdiction in a final judicial action to be void, voidable. or enforceable, such section or part hereof, shall be deemed severable from the remaining sections of this initiative ordinance and shall in no way affect the validity of the remaining sections hereof.