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HomeMy WebLinkAbout2020-01-21 City Council Agenda Packet City Council 1 MATERIALS RELATED TO AN ITEM ON THIS AGENDA SUBMITTED TO THE CITY COUNCIL AFTER DISTRIBUTION OF THE AGENDA PACKET ARE AVAILABLE FOR PUBLIC INSPECTION IN THE CITY CLERK’S OFFICE AT PALO ALTO CITY HALL, 250 HAMILTON AVE. DURING NORMAL BUSINESS HOURS. Tuesday, January 21, 2020 Special Meeting Council Chambers 6:00 PM Agenda posted according to PAMC Section 2.04.070. Supporting materials are available in the Council Chambers on the Thursday 11 days preceding the meeting. PUBLIC COMMENT Members of the public may speak to agendized items; up to three minutes per speaker, to be determined by the presiding officer. If you wish to address the Council on any issue that is on this agenda, please complete a speaker request card located on the table at the entrance to the Council Chambers, and deliver it to the City Clerk prior to discussion of the item. You are not required to give your name on the speaker card in order to speak to the Council, but it is very helpful. Public comment may be addressed to the full City Council via email at City.Council@cityofpaloalto.org. TIME ESTIMATES Time estimates are provided as part of the Council's effort to manage its time at Council meetings. Listed times are estimates only and are subject to change at any time, including while the meeting is in progress. The Council reserves the right to use more or less time on any item, to change the order of items and/or to continue items to another meeting. Particular items may be heard before or after the time estimated on the agenda. This may occur in order to best manage the time at a meeting or to adapt to the participation of the public. To ensure participation in a particular item, we suggest arriving at the beginning of the meeting and remaining until the item is called. HEARINGS REQUIRED BY LAW Applicants and/or appellants may have up to ten minutes at the outset of the public discussion to make their remarks and up to three minutes for concluding remarks after other members of the public have spoken. Call to Order Study Session 6:00-7:00 PM 1. Presentation and Review of the Utilities Wildfire Mitigation Plan Oral Communications 7:00-7:15 PM Members of the public may speak to any item NOT on the agenda. Council reserves the right to limit the duration of Oral Communications period to 30 minutes. Action Items Include: Reports of Committees/Commissions, Ordinances and Resolutions, Public Hearings, Reports of Officials, Unfinished Business and Council Matters. 7:15-8:45 PM 2. Connecting Palo Alto Rail Grade Separation: A) Receive an Update and Recommendation From the Expanded Community Advisory Panel (XCAP), and Potential Modification of the List of Grade Separation Alternatives to add up to Three Concepts (Additional Alternatives for Study) at the Churchill, Charleston, and Meadow Grade Crossings; and B) Provide Direction to Staff Regarding Next Steps Including a 2 January 21, 2020 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. Consultant Contract Amendment for Scope, Budget, and Schedule Modifications 8:45-9:45 PM 3. Update and Discussion of the Planning and Development Services Housing Work Plan and Direction to Modify or Direct new Assignments Related to Housing and Other Department Assignments 9:45-10:30 PM 4. Council Appointed Officers Committee Recommendation That Council Discuss and Accept the City Auditor’s Office Organizational Study Report and Provide Direction on Next Steps Adjournment AMERICANS WITH DISABILITY ACT (ADA) Persons with disabilities who require auxiliary aids or services in using City facilities, services or programs or who would like information on the City’s compliance with the Americans with Disabilities Act (ADA) of 1990, may contact (650) 329-2550 (Voice) 24 hours in advance. City of Palo Alto (ID # 10670) City Council Staff Report Report Type: Study Session Meeting Date: 1/21/2020 City of Palo Alto Page 1 Summary Title: Review of Utilities Wildfire Mitigation Plan Title: Presentation and Review of the Utilities Wildfire Mitigation Plan From: City Manager Lead Department: Utilities RECOMMENDATION Staff recommends, pursuant to a 2019 state law related to electric utilities and wildfires, that Council take the following action: 1. Receive a report on the Utilities Wildfire Mitigation Plan, which the City will use to minimize the risk of overhead electric lines causing wildfires. DISCUSSION In 2019, a new law1 mandated that electric publicly owned utilities prepare a wildfire mitigation plan. The new law requires the wildfire mitigation plan incorporate specified information and procedures, as deemed necessary by the electric utility. The mitigation plan must be reviewed by an independent evaluator and presented to Council at a public hearing before January 2020 and updated annually. The attached mitigation plan is a collaborative effort between Utilities, Fire, Public Works – Urban Forestry, Open Space, and Office of Emergency Services departments. Each department performs a critical role in preventing wildfires from occurring and communicating information to the public and outside agencies. Per the new law, the Mitigation Plan concentrates primarily on wildfires associated with overhead electric utility infrastructure but many of the activities overlap with general procedures for each department. The Plan outlines: • Departmental Roles and Responsibilities • Completed Fire Mitigation Tasks • Ongoing Fire Prevention Activities • Proposed Activities • Response to Fires 1 Public Utilities Code 8387, modified by SB 901 (Dodd). City of Palo Alto Page 2 •Community Outreach •Metrics to Measure Success of the Plan The law mandates that electric utilities “contract with a qualified independent evaluator with experience in assessing the safe operation of electrical infrastructure to review and assess the comprehensiveness of its wildfire mitigation plan.”2 In compliance with the new law, this plan was reviewed by an independent evaluator, Navigant Consulting, Inc. (Navigant), in October 2019; and the plan was modified based on Navigant’s evaluation and resubmitted for final review. The Plan was found by Navigant to be comprehensive and meets regulatory objectives. The Plan and Navigant’s report are attached to this staff report. A representative from Navigant will provide a presentation at the meeting to discuss their evaluation process. RESOURCE IMPACT The Utilities Wildfire Mitigation Plan does not have any immediate resource impact. Ongoing and proposed activities listed in the plan are and will be approved annually through the Capital and Operating Budget process. STAKEHOLDER ENGAGEMENT The Wildfire Mitigation Plan and process for independent evaluation was discussed at the September 4, 2019 Utilities Advisory Commission (UAC) meeting3. An excerpt of the minutes from the UAC meeting is attached. ENVIRONMENTAL REVIEW The Council’s receipt of this report is not a project requiring California Environmental Quality Act review, because it is an administrative governmental activity which will not cause a direct or indirect physical change in the environment. Attachments are presented as links to conserve paper: •Attachment A: Utilities Wildfire Mitigation Plan •Attachment B: CPAU Wildfire Management Plan Independent Evaluation •Attachment C: Excerpt of 09-04-19 UAC Minutes •Attachment D: CPAU - Wildfire Mitigation Plan Presentation •Attachment E: Navigant - Presentation CPAU WMP Independent Evaluation 2 Public Utilities Code, section 8387 (c) 3 http://cityofpaloalto.org/civicax/filebank/documents/73184 City of Palo Alto (ID # 10989) City Council Staff Report Report Type: Action Items Meeting Date: 1/21/2020 City of Palo Alto Page 1 Council Priority: Grade Separations Summary Title: Connecting Palo Alto: Project Update and Possible Action on Rail Grade Separation Alternatives Title: Connecting Palo Alto Rail Grade Separation: A) Receive an Update and Recommendation From the Expanded Community Advisory Panel (XCAP) and Potential Modification of the List of Grade Separation Alternatives to add up to Three Concepts (Additional Alternatives for Study) at the Churchill, Charleston, and Meadow Grade Crossings; and B) Provide Direction to Staff Regarding Next Steps Including Consultant Contract Amendment for Scope, Budget, and Schedule Modifications From: City Manager Lead Department: City Manager Recommendations Staff recommends that the City Council: Receive an update and recommendation (Attachment A) from the Expanded Community Advisory Panel (XCAP) and potentially modify the list of grade separation alternatives to add three concepts (additional alternatives for study) at the Churchill, Charleston, and Meadow Grade Crossings; and Provide feedback to XCAP and direct staff to continue evaluation of the three proposed new alternatives and return to Council with a recommended AECOM contract amendment to reflect a revised scope of services, budget, and schedule. Background At its September 9, 2019 meeting, the City Council took the following action regarding the community planning activities related to railroad grade separations: City of Palo Alto Page 2 A. Continue the XCAP and authorize the XCAP to appoint a Chair and Co-Chair, to help shape the agendas, take votes, make recommendations, and provide no less than bi-monthly updates to Council; B. Reiterate the April Motion and allow additional alternatives to be studied including: i. Allow the XCAP to brainstorm some alternatives such as at Embarcadero, Meadow, and Charleston; ii. Ensure the trench alternative minimizes construction impacts; iii. Rank alternatives using established criteria; C. Have the XCAP present preferred alternatives by April 30, 2020; D. Direct Staff to refine scope, purpose and timeline for an [Rail Blue Ribbon Commission] (RBRC) to focus on community awareness and engagement, and surveys, regional cooperation and funding and bring it back to Council prior to December 1, 2019; and E. Staff and Council to continue to work with VTA, Caltrain, Stanford and others on potential funding sources. Following this City Council direction, on October 28, 2019, the City Council received an overview of a potential communications and community engagement strategy to support City Council decision-making on preferred alternatives for further development in Spring 2020. The City Council also received its first verbal update from the Chair of the XCAP. On December 9, 2019, the City Council received another communications and community engagement update with the list of upcoming Town Hall meetings (https://connectingpaloalto.com/wp- content/uploads/2020/01/ConnectingPaloAltoRailGradeDigitalCard.jpg; Attachment D); another update from the Expanded Community Advisory Panel (XCAP) (Attachment B); and also heard an update about the status of the RBRC. The City Council voted to eliminate consideration of the RBRC. Discussion Receive an Update and Recommendation from the Expanded Community Advisory Panel (XCAP) and Potentially Modify the List of Grade Separation Alternatives to add Three Concepts (Additional Alternatives for Study) at the Churchill, Charleston, and Meadow Grade Crossings XCAP Update and Recommendations As shown in the adopted language of the September 9, 2019 City Council meeting, the City Council approved an expanded role and responsibilities for the Expanded Community Advisory Panel (XCAP). The changes allowed the XCAP to elect a Chair and Vice Chair as well as to take votes on recommendations, among other things. In the City of Palo Alto Page 3 motion, the City Council also asked the XCAP to provide updates no less than every other month to the City Council. City Council received the first update on October 28, 2019 (pages 12-25: https://www.cityofpaloalto.org/civicax/filebank/blobdload.aspx?t=59288.75&BlobID=73 855) and the second update on December 9, 2019 (https://connectingpaloalto.com/wp- content/uploads/2019/12/FINAL-Nadia-Dec-9-City-Council-Update-for-Dec-9- 2019.docx). For the January XCAP update (Attachment A), the XCAP Chairperson will be presenting general updates as well as the following XCAP recommendation (passed at their December 18, 2019 meeting): To consider adding the following new ideas to the list of existing seven (7) alternatives for rail grade separation: Table 1: Description of New Ideas as Recommended by XCAP Crossing Impacted Type of Grade Separation New Idea Description and Author Resources for Further Details 1 Churchill Ave. Closure with a viaduct and roundabout Author: Tony Carrasco Description: This concept is a closure of Churchill and replaces the current street overpass at Embarcadero with a roundabout at-grade and rail viaduct overhead. Original Presentation: https://connectingpaloalto.c om/wp- content/uploads/2019/11/It em4-Attachment3- EmbarcaderoTrafficAlternati ve-Tony.pdf Analysis of Alternative: (See next subsection of this report) 2 Churchill Ave. Road under rail Author: Michael Price Description: This concept depresses/lowers Alma and Churchill west of Alma in order to retain traffic connections under the existing tracks. Original Presentation: https://connectingpaloalto.c om/wp- content/uploads/2019/11/It em4-Attachment1-Churchill- Alternativev9-Michael.pdf Analysis of Alternative: (See next subsection of this report) City of Palo Alto Page 4 Crossing Impacted Type of Grade Separation New Idea Description and Author Resources for Further Details 3 Meadow Dr. Charleston Rd. Road under rail with a roundabout near Mumford Author: Elizabeth Alexis Description: This concept has changed since it was originally presented thus the analysis here and the resource information may not reflect the exact current idea. However, as best understood as of Dec. 17, 2019, this concept is to depress/lower the crossing roads under the rail in order to avoid the need for shoofly (temporary) track construction. Both Meadow and Charleston would be depressed and pass under the rail and Alma. This concept requires a roundabout on the east side of Charleston and undetermined modifications on Meadow. Original Presentation: https://connectingpaloalto.c om/wp- content/uploads/2019/11/It em4-Attachment4- Charleston_Meadow- Underpass-Concept- Elizabeth.pdf Follow-up Presentation: https://connectingpaloalto.c om/wp- content/uploads/2019/12/It em5-Charleston_E.- Meadow-Two-Lane- Underpass-Concept- Elizabeth.pdf Analysis of Alternative: (See next subsection of this report) The XCAP Chairperson will be describing each of these ideas in her update to the City Council and will provide details about them (Attachment A). The ideas are concepts and will need to be evaluated further. Evaluation of XCAP Recommendation to add Three Concepts to the List of Alternatives As shown above, the XCAP recommends that the City Council consider adding three (3) new alternatives to the list of seven (7) current alternatives for grade separation in Palo Alto at the Churchill, Charleston, and Meadow Crossings. The current list of City Council-authorized alternatives as of the last action on the alternatives (May 13, 2019) is: - Churchill Avenue: 1. Closure with Traffic Mitigations 2. Viaduct (Rail Fully Elevated Above the Road) - Charleston Road and Meadow Drive: 3. South Palo Alto Tunnel with At-Grade Freight Trains 4. South Palo Alto Tunnel with Passenger and Freight Rail 5. Hybrid (Rail Elevated and Road Lowered) 6. Trench (Rail Below Ground in an Open-Air Trench) City of Palo Alto Page 5 7. Viaduct (Rail Fully Elevated Above the Road) Through an extensive review process, the City Council has been working over the past two years to narrow the grade separation alternatives. To date, they have narrowed down from 37 choices to seven (7) with the help of the City Council Rail Committee as well as feedback from the former Community Advisory Panel (CAP) and community input. The City Council reduced the number of alternatives to have a manageable list of alternatives to study because there is a cost for each alternative that the City considers. When the City Council expanded and changed the CAP into the XCAP, they asked the XCAP to brainstorm some alternatives, such as those at Embarcadero, Meadow, and Charleston, with the expectation that the City Council would have to review those ideas before deciding to expend project funds to further study the ideas. Analysis on the Three XCAP Recommended New Ideas: This subsection provides feedback on the three (3) new ideas to assist the City Council in evaluating the XCAP recommendation. The attached memo (Attachment C) provides high-level, preliminary analysis from AECOM about the three (3) new ideas. Staff revised the attached analysis to focus only those ideas recommended by XCAP. As shown in the attached memo, the key points related to each new idea are: Table 2: Key analysis Points Related to New Ideas Crossing Impacted Type of Grade Separation Key Points Related to New Idea 1 Churchill Ave. (Tony Carrasco New Idea) Closure with a viaduct and roundabout - Requires rail be raised 20+ feet over its current elevation, resulting in rail impacts extending 1,000 feet further north than the Churchill viaduct - The existing rail and road bridges over Embarcadero would be demolished and reconstructed as a roundabout - May have property impacts - Requires evaluation of the relative merit of an Alma/Embarcadero roundabout versus Alma/Embarcadero grade separation on existing traffic issues in the Embarcadero area 2 Churchill Ave. (Michael Price New Idea) Road under rail - Has some traffic flow impacts - Has some right-of-way property impacts - Presents an opportunity to keep Churchill open without having to do a viaduct City of Palo Alto Page 6 Crossing Impacted Type of Grade Separation Key Points Related to New Idea 3 Meadow Dr. Charleston Rd. (Elizabeth Alexis New Idea) Road under rail with a roundabout - This idea has shifted a few times. The AECOM preliminary analysis may not capture all the aspects of this idea to-date. - Has some right-of-way property impacts - Traffic flow needs to be thoroughly analyzed - Physical viability at Meadow uncertain - Presents opportunity to potentially reduce construction timeframe, but will be uncertain until final design A preliminary review by the City’s consultant AECOM is provided in Attachment C, as well as the information presented by the XCAP (Attachment A). Should the City Council direct proceeding with further analysis of the three (3) new ideas, staff will work with our consultants and return to Council with necessary revisions to the workplan, schedule, and budget for a contract amendment. Direct Staff to Take the Three Proposed New Alternatives/Ideas and Return with a Workplan, Revised Schedule, and Necessary Contract Amendments The current timeline for the City Council to decide on a preferred alternative for each crossing is Spring 2020 after receiving feedback from the community through planned community engagement efforts, as well as the XCAP final recommendation (by April 30, 2020). A timeline that details steps from now until a City Council decision can be seen on slide 9 at the link below. The timeline for the steps after a Council decision can be seen on slide 10 in the presentation from the November 7 Community Meeting (https://connectingpaloalto.com/wp-content/uploads/2019/11/20191107- PaloAlto_Community-mtg_v3-Optimized.pdf). Estimated Cost and Timeline to Evaluate New Ideas: To inform the City Council as to the potential costs and time needed to evaluate these three new ideas, staff requested the City’s consultant AECOM to provide estimates of work needed. The following information is a preliminary estimate based on information known today. Staff recommends that the City Council refer any of the XCAP recommendations to City staff to work with AECOM to present a revised schedule, cost, and sequencing approach needed for the overall evaluation. Such direction would also allow staff to prepare any necessary contract amendments. The preliminary estimated costs and schedule implications, according to AECOM, for the additional analysis would be approximately $65,000 to develop conceptual engineering plans, cross-sections, and construction cost estimates for each of the ideas. Additional costs would be incurred to modify the current outreach plan to incorporate these new ideas as well as potentially additional costs for renderings and animation. City of Palo Alto Page 7 The technical work required to evaluate these additional ideas will require several weeks, as will development of communication materials for distribution and community meetings. If all three new ideas are moved forward, reaching the April deadline for the Charleston, Meadow, and Churchill crossings will likely be difficult. Staff is therefore in discussions with AECOM on the potential to sequence the needed analysis to complete work related to Charleston and Meadow first. Among the new ideas presented, the additional work required for Charleston/Meadow at this time can likely be accomplished with minimal schedule impact. Staff will need to work with AECOM to determine a workplan, cost, and schedule and return to Council with that information. Maintaining the Council-directed schedule for the identification of a preferred alternative at Charleston/Meadow will nonetheless require continued focused work by the XCAP to complete its discussion and conclusions regarding the existing alternatives. Resource Impact The following fiscal analysis is based on the City Council’s consideration of adding the new XCAP ideas to the project planning effort. These additonal costs would include traffic analysis and additional community engagement and outreach. Based on the $2,484,786 total contract amount with AECOM (including Amendment #1 from June 2019), and other expenses related to the grade separation planning project, funding for an increase to the AECOM contract can be allocated within existing appropriations, recognizing that the AECOM contract is funded over multiple fiscal years. The Railroad Grade Separation capital project (PL-17001) has an allocation of $4,879,846 in FY 2020 with $1,283,558 encumbered to-date in this fiscal year. The $4,879,846 funding anticipates funding received from VTA Measure B grade separation. The FY 2020 project funds not yet encumbered are expected to be used in the environmental process which would commence after the City Council identifies preferred alternatives. Further funding spent on study is funding that would otherwise be used for the next phase of the project or for doing other street repaving and road projects in town. Stakeholder Engagement The XCAP continues to be engaged in this overall effort. Staff is engaging the community at-large on Connecting Palo Alto and is seeking input to inform the City Council’s decisions. Staff is also collaborating with several transportation agencies on this initiative. For the link to the Community Conversations flyer go here: https://connectingpaloalto.com/wp- content/uploads/2020/01/ConnectingPaloAltoRailGradeDigitalCard.jpg City of Palo Alto Page 8 Attachments: • Attachment A-XCAP City Council presentation #3 FINAL with Resource Slide • Attachment B-FINAL Dec 9 City Council Update for Dec 9 2019-Naik • Attachment C-AECOM Technical Memo • Attachment D-Connecting Palo Alto Rail Flyer EXPANDED COMMUNITY ADVISORY PANEL (XCAP) UPDATE #3 For City Council, January 21, 2020 Presented by Nadia Naik and Keith Reckdahl Attachment A - XCAP Update and Recommendation to Council AGENDA 1. Update on XCAP’s work 2. Presentation of new community generated concepts that XCAP decided have merit and are worthy of Council consideration. a.We are asking City Council to decide whether new ideas warrant further study 3. Council feedback and guidance on what we should include in final XCAP recommendations report to Council 2 WORK COMPLETE TO DATE New iterations/ideas presented to XCAP •Five iterations/ideas passed “pre-screening” •Iteration on South Palo Alto Tunnel (Roland LeBrun) •Iteration on Partial Churchill underpass (Mike Price) •2 Roundabout concepts for Embarcadero/Alma (Tony Carrasco) •Constant Flow Underpass for South Palo Alto (Elizabeth Alexis) •XCAP Technical Group (subcommittee) & volunteer Civil Engineers met with AECOM and City Staff to discuss new ideas and vet them for “fatal flaws” •XCAP received the information and then voted •XCAP recommended 3 concepts should be presented to City Council 3 COUNCIL CONSIDERATIONS FOR NEW CONCEPTS •These are general concepts presented by citizens –not refined designs •They need professional vetting and refinement •They attempt to solve major problems identified in existing alternatives •XCAP pre-screened concepts with the understanding new concept review costs the City money and time •XCAP voted to recommend that the following 3 concepts are worth spending money on 4 QUICK SUMMARY EXISTING ALTERNATIVES South Palo Alto Churchill Hybrid Viaduct Trench South PA Tunnels (2 Alternatives) Closure Viaduct Cost $200-$250M $400-$500M $800-$950M $1,173- $1,827M $50-$65M $300-$400M Construction Time 4 years 2 years 6 years 6 years 2 years 2 years Visual Impacts Elevated 15 ft Elevated 20 ft High Fencing High Fencing at portals/freight on grade No change 20 ft elevated Water/Utilities Impacts Major Utility relocation / pumping Minor utility relocation Major utility relocation and Creek and ground water impacts Major utility relocation and Creek and ground water impacts Pumping of Bike/ped crossing Minor utility relocation 5 3 NEW CONCEPTS Constant Flow Underpass for Charleston and Meadow (Elizabeth Alexis) Churchill Partial Underpass (Mike Price) Re-think Embarcadero at Alma (Tony Carrasco and others) 6 7 Constant Flow Underpass for Charleston and Meadow Existing Alternatives have significant drawbacks: •Viability: Tunnel and Trench have potentially significant groundwater impacts •Neighborhood Impacts: Elevated-rail solutions are unpopular with many residents •Cost: All existing alternatives are very expensive •Hybrid likely very under-costed –limited Caltrain work windows = more $$ •Complicated, busy corridor and limited design work to date means prices are likely to increase further •Long Construction period: Existing alternatives require •Alma detours, lane reductions •Construction will disrupts traffic network for years •Existing Alternatives do not improve circulation: •Missed opportunity to improve bike/ped travel •Bikes/peds bunch together waiting for cars at Alma 8 SHORTCOMINGS OF EXISTING ALTERNATIVES Constant Flow Underpass for Charleston/Meadow CONSTANT FLOW UNDERPASS(CHARLESTON / MEADOW) 9 Meadow is similar but with bike/ped crossing on the South side of Meadow •Alma and tracks remain at current elevation •Charleston is lowered to pass under Alma and tracks •Construction is localized •Design takes advantage of Fairmeadow’s lack of driveways onto Charleston/Meadow •Bikes/peds have separated lane with dedicated tunnel WESTBOUND CHARLESTON TRAFFIC FLOW •Westbound traffic passes through roundabout, then continues under Alma •Northbound traffic passes through roundabout, then turns right onto northbound Alma •Southbound traffic passes through roundabout, then turns left onto southbound Alma 10 EASTBOUND CHARLESTON TRAFFIC FLOW •Southbound traffic passes under the tracks and takes a right directly onto southbound Alma •Eastbound traffic passes under Alma, continuing through roundabout •Northbound traffic passes under Alma, reverses direction at roundabout, then turns right onto northbound Alma 11 NORTHBOUND ALMA TRAFFIC FLOW •Northbound traffic continues straight on Alma •Eastbound traffic turns right onto eastbound Charleston, passing through roundabout •Westbound traffic turns right onto Charleston, reverses direction at roundabout, and continues west under Alma 12 SOUTHBOUND ALMA TRAFFIC FLOW •Southbound traffic continues straight on Alma •Eastbound traffic turns left onto eastbound Charleston, passing through roundabout •Westbound traffic turns left onto Charleston, reverses direction at roundabout, continuing west under Alma 13 KEY DESIGN FEATURES Goal -Minimize length, width and depth of underpass to: •Minimize property impacts •Maximize bike/ped facilities •Maintain neighborhood feel •Road and bike/ped go under tracks and Alma •Minimize car bike/ped (ideally separated completely) •Cost saving design features: •Only one lane in each direction under Alma/train •Thin bridge deck design reduces depth •Low design speed allows steeper slopes to reduce footprint and cost •Similar to Jefferson Ave in Redwood City (which is 20 mph) Innovative design: •Bikes and peds in separate two-way tunnel (north side of Charleston, south side of Meadow) •Dedicated turn lane from Eastbound Charleston to Alma South (similar to Oregon Expressway with longer merge) •All turns are allowed, but some turns require doubling-back (at a turnback or roundabout) east of Alma 14 Constant Flow Underpass for Charleston/Meadow FLAWS IN 2014 HMM STUDY TO CAUSE ROAD UNDERPASS TO BE REJECTED •Road Underpass studied in 2014 by consultant (HMM) –two variations considered: 1.Lower Alma and Charleston -same intersection as today but sunken 2.Just lower Charleston, no turns allowed •HMM’s assumptions would have created unneeded extra capacity and cost •Assumed VERY thick Caltrain bridge •Forced the road to dip down much deeper than needed •Caused a larger footprint and increased cost •Wider road assumptions had significant impacts to houses along Charleston/Meadow because of driveway access 15 Constant Flow Underpass for Charleston/Meadow DESIGN VARIATIONS THAT NEED REFINEMENT §Additional design aspects that need further study: §Further investigate innovative construction methods like those used on Long Island Rail Road (NY) §Minimize construction time §Cut cost §Eliminate shoo-fly tracks §Consider limiting auto access to Wright Place §Limits cut-throughs and improves safety of two-way bike/ped lane §Determine exact location of turnaround and method of weaving traffic streams §Different access options on/off of Park Blvd §Meadow intersection similar to Charleston -less traffic but less room 16 Constant Flow Underpass for Charleston/Meadow JACKED BOX CONCEPT –LIRR 17 Constant Flow Underpass for Charleston/Meadow IAEG2006 Paper number 62 6 design of the headwall and reception pit strutting and supports facilitated an efficient and timely passage of the tunnelling shield both into and out of the embankment. Figure 5. Subway box half way into embankment A purpose designed steel cellular shield, with three compartments on two levels, was rigidly attached to the leading end of the box. The shield was designed to be thrust into the face to ensure face stability whilst permitting safe working access for miners to carry out the excavation. Didcot was the first application of the proprietary wire rope ADS. This comprised 13mm diameter wire ropes placed at 26mm centres across the full width of the box roof. A single 1200 tonne working capacity jacking rig was used to develop the required jacking thrust which was dissipated into the soft to firm clay ground via adhesion on the underside of the jacking base, and shear/adhesion on the jacking pit side walls. Performance achieved Once the jacking pit headwall had been entered the tunnelling operation took 5 days to complete without distress to the railway or interference to its operations. Ground movements were so well controlled that it was found necessary to fettle the tracks only twice in order to maintain the rails within operational tolerances for the reduced line speeds. The maximum recorded aggregate ground settlement was 75mm and maximum recorded aggregate horizontal displacement of the ground in the direction of jacking was 25mm. The monolithic box resulted in a simple tunnelling operation and a tunnel alignment within 25mm of line and 55mm of level. Silver Street Railway Station, London Project To construct a 44m long section of vehicular underpass beneath the platforms and railway tracks of Silver Street railway station in Edmonton, north London comprising two boxes placed side by side each 12.5m wide and 10.5m high. Ground conditions comprise made ground overlying water bearing gravel, which in turn overlies London Clay beneath which there is a layer of water bearing sand. The ground water table is situated just above the top of the proposed underpass. •Tunnel was constructed next to the rail, then inserted under the tracks over a weekend •Videos of the construction are available on YouTube ITALIAN ROUNDABOUT 18 •Located outside of Venice, Italy (45°30'33.9"N 12°13'32.2"E) •Via Paccagnella roadway is lowered to pass under Via Pionara and railroad •Intersection requires some turns to double-back at roundabout ITALIAN ROUNDABOUT •A single lane in each direction is lowered under the tracks •The turning lanes (on the right side) remain at the original elevation •Traffic turning under the tracks uses the roundabout to reverse direction 19 WEAKNESSES & STRENGTHS Potential Weaknesses •Seems more circuitous until people grasp the constant flow concept that makes it work •Does not require any property acquisitions, but acquisition of 1-2 may improve design Potential Strengths •No visual impacts –train stays as today •Safety improvement -access to tracks would be fenced •Area of construction very localized •Potentially significantly cheaper –tracks not moved, potentially no shoo-fly •Significantly less construction time and impacts -many months or years less than fastest alternatives •Only alternative consistent with initial VTA criteria 20 Constant Flow Underpass for Charleston/Meadow 21 Churchill Partial Underpass CONCEPTS FOR CHURCHILL REVIEWED TO DATE Hybrid Design (eliminated by City Council) •Involves significant full property impacts Close Churchill Avenue (under consideration) •Only separates Bikes and Peds at location –diverts 9,500 cars elsewhere daily •Some Southgate residents are opposed to closing Churchill Avenue. Churchill-only Viaduct (under consideration) •Opposed by many adjacent to the tracks for privacy, views, overall quality of life •Elevated structure viewed as radical transformation of visual landscape •Concerns about noise radiating outward 22 CH U R C H I L L P A R T I A L U N D E R P A S S Overhead View (looking straight down) of the Intersection The above illustration is a bird’s-eye view of the Alm a/Churchill intersection. Tra-c on W est Churchill from El Cam ino and much of Southgate enters from the bottom. There are two lanes on Churchill as it approaches Alma: one for turning left and onefo r tu rn in g rig h t. N o tra -c can cross Alm a to the other side. Tra-c heading w est on Churchill from the east side of A lm a (e n te rin g fro m th e to p ) ca n o n ly tu rn rig h t o n A lm a , h e a d in g n o rth . T h e re is n o a cce ss to so u th b o u n d A lm a o r th e o th e r sid e o f Churchill from East Churchill. Churchill Caltrain Crossing Page 4 of 16 Michael Price - 2019/10/24 Caltrain tracks Caltrain property fence bike/pedestrian overpass bike trail Churchill overpass bike trail Churchill (east) bike/pedestrian tunnel entrance ramps 23 Old Palo Alto Southgate Overview of the Intersection The illustration below is a perspective view looking down at the intersection from the northeast. Most of Alma drops down to the Churchill underpass. West Churchill goes under the Caltrain tracks which remain at grade level.East Churchill also rem ains at grade and connects to one northbound lane of Alm a. Bikes and pedestrians cross Alm a on a bridge, then follow the ram ps to a tunnel under Caltrain. The bike trail crosses Churchill on a bridge. The intersection will need a tra-c light, to allow left turns o7 A lm a a n d to a llo w C h u rc h ill tra -c to turn onto A lm a. Churchill Caltrain Crossing Page 7 of 16 Michael Price - 2019/10/24 bike/pedestrian tunnel entrance ramps bike trail bike trail bridge over Churchill northbound Alma lane (at grade level) Caltrain property fenceCaltrain property fence C h u r c h ill A v e n u e 24 Southgate VIEW FROM NORTHEAST CORNER OF CHURCHILL/ALMA CH U R C H I L L P A R T I A L U N D E R P A S S Below isaperspectiveview oftheintersectionlookingsouthalongAlm a. ThisillustrationshowstheintersectionandunderpassatChurchill,about21feetbelow gradelevel.Therighthandnorthbound Alm alane(ontheleftsideoftheillustrationabove)continuesatgradelevelprovidingaccesstoEastChurchillandthepropertiesalong Alm a.Southbound lanesm overightto providespaceforanorthbound leftturn lane.Thelanestodayalsomoveslightlyrighttomakeroom fortheleftturnlaneatChurchill,butthatturnhasbeeneliminated.Therightturnlanehas also been elim inated,since no carsneed to queue fora rightturn. BikesandpedestrianscrossAlm ausingtheoverpassbridge. Churchill Caltrain Crossing Page 8 of 16 Michael Price - 2019/10/24 25LOOKING SOUTHBOUND ON ALMA JUST NORTH OF CHURCHILL SouthgateOld Palo Alto CH U R C H I L L P A R T I A L U N D E R P A S S This illustration is a perspective view looking north along Alm a toward the Alm a/Churchill intersection. Both southbound lanes and one northbound lane are lowered to allow connection to the Churchill Ave underpass. The right-hand northbound lane stays at grade level to provide access for the drivew ays along Alm a and to East Churchill Avenue. Churchill Caltrain Crossing Page 9 of 16 Michael Price - 2019/10/24 26LOOKING NORTHBOUND ON ALMA JUST SOUTH OF CHURCHILL Southgate PALY Old Palo Alto CH U R C H I L L P A R T I A L U N D E R P A S S 27PERSPECTIVE VIEW FROM PALO ALTO HIGH SCHOOL CH U R C H I L L P A R T I A L U N D E R P A S S Old Palo Alto Thisillustrationisaperspectiveview oftheAlm a/Churchillintersectionlookingdownfrom abovethePaloAltoHighschool. ThebiketrailalongtheHighSchoolcontinuestoabridgeoverChurchillandconnectstoM ariposa.Thetrailalsocontinues along Churchillto the Palo Alto H igh Schoolentrance atCastilleja.The bike and pedestrian bridge overAlm a entersthe tunnelundertheCaltrain viaaram p and reem ergeson theothersideofthetracksw ith aram p connecting to thebiketrail. Churchill Caltrain Crossing Page 14 of 16 Michael Price - 2019/10/24 A l m a (n o r t h b o u n d ): l e f t l a n e Churchill (right turn lane) b i k e t r a i l bike trail bridge over Churchill ramp to bike/pedestrian tunnel under tracks A l m a (n o r t h b o u n d ):r i g h t l a n e ramp to bike/pedestrian tunnel under tracks Palo Alto High School CHURCHILL PARTIAL UNDERPASS OBJECTIVES 1.Separate Caltrain tracks from Churchill Avenue 2.Take no private properties 3.Allow vehicular access to Alma from Churchill Avenue 4.Improve bike and pedestrian safety while crossing Alma 5.Minimize train grade changes •FEATURES 1.Separates Caltrain from Churchill Avenue 2.Requires no property takings 3.Partially closes Churchill Avenue, but preserves access to Alma –allowing residents West of Alma to access Downtown and South Palo Alto 4.Prevents use of Churchill as a cut-through to Embarcadero, thereby reducing traffic congestion on Churchill east of Alma (Churchill East). 5.Keeps Caltrain at grade level –i.e., no raising or lowering of tracks 6.Separates bicycle and pedestrian traffic crossing Alma from car traffic 7.Provides a bridge over Churchill Avenue to the bike trail next to Palo Alto High School 8.All infrastructure is at or below grade level, so it doesn't create an eyesore like that of a viaduct 28 IMPLEMENTATION ISSUES There are three issues that need further study: 1.Will Caltrain permit the encroachment onto their right-of-way for the ramp leading to the tunnel under the tracks> 2.Splitting the lanes on Alma to prevent taking properties introduces some safety issues, such as an abutment between the two lanes that could be a hazard. This needs to be investigated, but there are mitigations for the safety issues. There are many examples of this configuration elsewhere in California. 3.The bike/pedestrian ramp will extend onto the Palo Alto High School property on the Alma side. The high school will need to be consulted. 29 C H U R C H I L L P A R T I A L U N D E R P A S S 30 Re-think Embarcadero WHY RE-THINK EMBARCADERO WHEN THE TRAIN CROSSING BEING CONSIDERED IS AT CHURCHILL? Viaduct at Churchill •Expensive: $300M - $400M (more than the cost of the cheapest solution for Meadow/Charleston which is two crossings for $200M -$250M) •Would improve current congestion at Churchill, but could inadvertently induce cut thru traffic to Old Palo Alto 31 •Traffic studies show relationship between Embarcadero and Churchill •Churchill used more for traffic turning to go North/South on Alma •Embarcadero used more for traffic traveling East/West •The existing grade separation is a hybrid that has limited turns and unsignalized movements onto Alma •Embarcadero runs at an angle to Alma, making it harder to correct the design issues created by the old hybrid •Closure of Churchill requires significant mitigations at Embarcadero (and other places) which has residents concerned given the area is already very congested 32 RE-THINK EMBARCADERO RE-THINK EMBARCADERO •Mitigations for closure of Churchill require altering the existing grade separation: •widening the Embarcadero overpass along Alma •removing the Stanford Game Day Station •removing the stairs used by students coming to and from PALY and Castilleja on South side •Embarcadero grade separation is the oldest in the City (1936) and may need seismic retrofits or full replacement in the future •Area near the grade separation was previously earmarked for bike/ped improvements to make it safer •What if, we started with a clean slate in that area –what would we choose to build? Two main concepts: •What is the best way to separate the trains from the cars at Embarcadero and Alma? •What is the best way to deal with the flow of all modes of traffic when a new separation is built?33 RE - TH I N K E M B A R C A D E R O Design Option 25 Note, this does not include the cycle track designs. Those are possible and would come later in the design process. 34 RE-THINK EMBARCADERO 35 Existing Property Lines Town & Country Palo Alto High School Emba r c a d e r o Emba r c a d e r o Roundabout Viad u c t Alma S t r e e t Alma S t r e e t Bike/Ped Paths RE - TH I N K E M B A R C A D E R O 36DUTCH ROUNDABOUT Vi a d u c t ALL MODES SEPARATED Train solution: Viaduct at Embarcadero – •Would stretch to Churchill where it would be up about 5 ft high –making it possible to make a bike/ped tunnel that’s less steep than the one proposed (like Homer tunnel) •Could also be a better designed Hybrid, instead of a viaduct –taking advantage of existing dug out areas Road Solution: Roundabout •Returning streets to grade makes area more walkable and bikeable •Rebuilding the grade separation allows us to redraw all car/ped/bike routes to fit our needs •Could consider adding more exits to the roundabout to be able to enter Town & Country from corner near Trader Joe’s or enter Palo Alto High school •Could also be designed as a regular intersection or any other appropriate traffic interchange 37 RE-THINK EMBARCADERO Potential Weaknesses •Cost could be significant due to construction phasing and need for shoo-fly tracks •Construction phasing and impacts could be a fatal flaw in executing this concept •May not be eligible for Measure B Funding •Potential Strengths •More pedestrian and bike friendly –fits into Comp Plan goals •Exciting urban design is more “Palo Alto” than current configuration •Design knits together neighborhoods, Town & Country and PALY into a more cohesive area 38 RE-THINK EMBARCADERO XCAP WOULD LIKE TO HEAR: Any council feedback or guidance? What should XCAP include in their final recommendations report to Council? 39 FUTURE XCAP MEETING PRESENTERS •Sebastian Petty –Caltrain •Norm Matteoni –Eminent Domain Attorney 40 November 7, 2019 * Total Preliminary Construction Costs in 2018 dollars with escalation to 2025 (Subject to Change).Improvement Impact Meadow / Charleston Churchill Evaluation Criteria Trench Hybrid Viaduct South Palo Alto Tunnel Passenger and Freight South Palo Alto Tunnel with At-Grade Freight Closure Viaduct A Facilitate movement across the corridor for all modes of transportation Meadow Dr and Charleston Rd will be grade separated from the railroad for all modes and will remain open. Meadow Dr and Charleston Rd will be grade separated from the railroad for all modes and will remain open. Meadow Dr and Charleston Rd will be grade separated from the railroad for all modes and will remain open. Viaduct provides opportunities for additional crossings for all modes. Meadow Dr and Charleston Rd will be grade separated from the railroad for all modes and will remain open Meadow Dr and Charleston Rd will be grade separated from the railroad for all modes and will remain open Churchill Ave will be closed to vehicles at the railroad tracks. Churchill Avenue will be grade separated from the railroad for all modes and will remain open. Viaduct provides opportunities for additional crossings for all modes. B Reduce delay and congestion for vehicular traffic at rail crossings With construction of the grade separation, the railroad crossing gates and warning lights at Meadow Dr and Charleston Rd will be removed. Thus, the traffic will not be interrupted by railroad crossing gates. With construction of the grade separation, the railroad crossing gates and warning lights at Meadow Dr and Charleston Rd will be removed. Thus, the traffic will not be interrupted by railroad crossing gates. With construction of the grade separation, the railroad crossing gates and warning lights at Meadow Dr and Charleston Rd will be removed. Thus, the traffic will not be interrupted by gates coming down. With construction of the grade separation, the railroad crossing gates and warning lights at Meadow Drive and Charleston Road will be removed. Thus, the traffic will not be interrupted by gates coming down. With construction of the grade separation, the railroad crossing gates and warning lights at Meadow Drive and Charleston Road will be removed. Thus, the traffic will not be interrupted by railroad crossing gates. With closure of Churchill Ave, the traffic at nearby intersections will be impacted; however, this can be mitigated. With construction of the grade separation, the railroad crossing gates and warning lights at Churchill Ave will be removed. Thus, the traffic will not be interrupted by railroad crossing gates. C Provide clear, safe routes for pedestrians and cyclists crossing the rail corridor, separate from vehicles Pedestrians/cyclists will be separated from train traffic and bike lanes will be added to Charleston Rd. Pedestrians/cyclists will be separated from train traffic and bike lanes will be added to Charleston Rd. Pedestrians/cyclists will be separated from train traffic and bike lanes will be added to Charleston Rd. Pedestrians/cyclists will be separated from train traffic.Pedestrians/cyclists will be separated from passenger train traffic only.Pedestrians/cyclists will be separated from train traffic and vehicles.Pedestrians/cyclists will be separated from train traffic. D Support continued rail operations and Caltrain service improvements A temporary railroad track will be required, and a crossover track located north of the San Antonio Caltrain Station will be relocated. With the pump stations, there will be potential risks to train operations from flooding. A temporary railroad track will be required, and a crossover track located north of the San Antonio Caltrain Station will be relocated. New railroad tracks can be built without a temporary track, and a crossover track located north of the San Antonio Caltrain Station will be relocated. A temporary railroad track will be required at the boring pit areas to the north and south. A siding track will be relocated north of the California Avenue Caltrain Station. Due to the pump stations, there will be potential risks to train operations due to flooding. A temporary railroad track will be required at the boring pit areas to the north and south. A siding track will be relocated north of the California Avenue Caltrain Station. Due to the pump stations, there will be potential risks to train operations due to flooding. A temporary railroad track will not be required.A temporary railroad track will be required. Stanford game day station will be eliminated due to grade issues. E Finance with feasible funding sources The trench will require greater levels of local funding in the form of fees, taxes or special assessments, the feasibility of which are still being studied in the context of overall citywide infrastructure funding needs. The hybrid would require lower levels of local funding, with a substantial portion of capital costs covered by Regional, State and Federal sources. The viaduct would require substantial local funding resources more than the hybrid alternative, but less than the trench alternative. The tunnel will require the greatest levels of local funding in the form of fees, taxes or special assessments, the feasibility of which are still being studied in the context of overall citywide infrastructure funding needs. The tunnel will require the greatest levels of local funding in the form of fees, taxes or special assessments, the feasibility of which are still being studied in the context of overall citywide infrastructure funding needs. However, this alternative would not be eligible for grade separation funding as the at-grade crossing for freight would remain. The closure would require lower levels of local funding, with a substantial portion of capital costs covered by Regional, State and Federal sources. The viaduct would require substantial local funding resources significantly above the closure alternative. F Minimize right-of-way acquisition Subsurface acquisitions will be required for the ground anchors for the trench retaining walls and right-of-way acquisitions will be required to construct pump stations. No acquisition of private properties is required; however, driveway modifications will be required. No acquisition of private properties is required.Subsurface acquisitions will be required for the ground anchors for the trench retaining walls and right of way acquisitions will be required to construct pump stations. Subsurface acquisitions will be required for the ground anchors for the trench retaining walls and right of way acquisitions will be required to construct pump stations. No acquisition of private properties is required; however, there will be impacts to Palo Alto High School property and potentially Caltrain. There also may be some parking loss on the east side of Churchill Ave for the pedestrian/bike undercrossing (Option 2 only). No acquisition of private properties will be required. G Reduce rail noise and vibration Train horn noise and warning bells will be eliminated with the replacement of the at-grade crossings with grade separations. Utilizing electric engines instead of diesel engines will also reduce noise. With the lowered track, train noise could reflect off walls and impact properties farther away, which can be mitigated. Train horn noise and warning bells will be eliminated with the replacement of the at-grade crossings with grade separations. Utilizing electric engines instead of diesel engines will also reduce noise. With the elevated track, train wheel noise could radiate out, which can be mitigated with a sound barrier. Train horn noise and warning bells will be eliminated with the replacement of the at-grade crossings with grade separations. Utilizing electric engines instead of diesel engines will also reduce noise. With the elevated track, train wheel noise could radiate out, which can be mitigated with a sound barrier. Train horn noise and warning bells will be eliminated with the replacement of the at-grade crossings with grade separations. Utilizing electric engines instead of diesel engines will also reduce noise. In the trench section, train noise could reflect off walls and impact properties farther away, which can be mitigated. In the tunnel section, train wheel noise will be contained. Train horn noise and warning bells will remain for the at-grade crossings to accommodate the freight trains. Utilizing electric engines instead of diesel engines will also reduce noise. In the trench section, train noise could reflect off walls and impact properties farther away, which can be mitigated. In the tunnel section, train wheel noise will be contained. Train horn noise and warning bells will be eliminated with the removal of the at-grade crossings with roadway closure. Utilizing electric engines instead of diesel engines will also reduce noise. Train horn noise and warning bells will be eliminated with the replacement of the at-grade crossings with grade separations. Utilizing electric engines instead of diesel engines will also reduce noise. With the elevated track, train wheel noise could radiate out, which can be mitigated. H Maintain access to neighborhoods, parks, and schools along the corridor, while reducing regional traffic on neighborhood streets No diversion of regional traffic with construction of grade separations.No diversion of regional traffic with construction of grade separations.No diversion of regional traffic with construction of grade separations.No diversion of regional traffic with construction of grade separations.Diversion of regional traffic with the permanent lane reduction on Alma Street will impact residential streets. Diversion of regional traffic with Churchill Ave closure will be mitigated.No diversion of regional traffic with construction of a grade separations. I Minimize visual changes along the corridor Railroad tracks will be below grade with high fencing at grade. Landscaping options will be limited to plants with shallow roots in areas where tiebacks are required for the trench retaining walls. Railroad tracks will be approximately 15 feet above grade. Landscaping with trees will be incorporated for screening where feasible. Railroad tracks will be approximately 20 feet above grade. Landscaping with trees will be incorporated for screening where feasible. Railroad tracks will be below grade with high fencing at grade in the trench section. Landscaping options will be limited to plants with shallow roots in areas where ground anchors are required for the trench section. Passenger tracks will be below grade and freight tracks will be at-grade with high fencing. Landscaping options will be limited to plants with shallow roots in areas where ground anchors are required for the trench section. Railroad tracks remain at existing grade. Residual roadway areas from closure provide opportunities for landscaping. Railroad tracks will be approximately 20 feet above grade. Landscaping with trees will be incorporated for screening where feasible. J Minimize disruption and duration of construction Extended road closures at Meadow Dr and Charleston Rd are required. Construction would last for approximately 6 years. Extended lane reductions at Alma St, Meadow Dr, and Charleston Rd will be required. Construction would last for approximately 4 years. The viaduct will have minimal road closures (nights/weekends only). Construction would last for approximately 2 years. Extended lane reductions on Alma Street are required. Construction would last for approximately 6 years. Extended lane reductions on Alma Street are required. Construction would last for approximately 6 years. The closure will have minimal road closures (nights/weekends only). Construction would last for approximately 2 years. Extended lane reductions at Alma St (one lane in each direction) will be required. Construction would last for approximately 2 years. Order of Magnitude Cost $800M to 950M*$200M to $250M*$400M to 500M*$1,218M to $1,827M*$1,173M to $1,759M*$50M to $65M*$300M to $400M* Summary of Evaluation with City Council-Adopted Criteria November 7, 2019 Meadow / Charleston Churchill Engineering Challenges Trench Hybrid Viaduct South Palo Alto Tunnel Passenger and Freight South Palo Alto Tunnel with At-Grade Freight Closure Viaduct L Creek/Drainage Impacts • Requires diversion of Adobe and Barron creeks resulting in the need for pump stations. • Numerous regulatory agency approvals required for creek diversion. • Pump stations also required to dewater the trench. • Increased risk of flooding due to pump stations. • Pump stations required for lowered roadways. • Increased risk of flooding due to pump stations. • No significant creek or drainage impacts.• Requires diversion of Adobe and Matadero creeks resulting in the need for pump stations. • Numerous regulatory agency approvals required for creek diversion. • Pump stations also required to dewater the trench and tunnel. • Increased risk of flooding due to pump stations. • Requires diversion of Adobe and Matadero creeks resulting in the need for pump stations. • Numerous regulatory agency approvals required for creek diversion. • Pump stations also required to dewater the trench and tunnel. • Increased risk of flooding due to pump stations. • Pump station required for lowered pedestrian/bike way. • Increased risk of flooding with pump stations. • Relocation of the pump house at Embarcadero Rd required to accommodate widening of Alma St. • No significant creek or drainage impacts. M Long-Term Maintenance Increased maintenance costs due to: • Pump stations for creek diversions. • Pump stations for trench dewatering. • Below ground railroad alignment. Increased maintenance costs due to: • Pump stations for trench dewatering. • Above ground railroad alignment with embankments and undercrossing structures. Increased maintenance costs due to: • Above ground railroad alignment with embankments and viaduct structures. Increased maintenance costs due to: • Pump stations for creek diversions • Pump stations for trench dewatering • Below ground railroad alignment. Increased maintenance costs due to: • Pump stations for creek diversions • Pump stations for trench dewatering • Below ground railroad alignment as well as at-grade railroad alignment Increased maintenance costs due to: • Pump stations for undercrossing dewatering. Increased maintenance costs due to: • Above ground railroad alignment with embankments and viaduct structures. N Utility Relocations • Major utility relocations for lowered railroad.• Major utility relocations for lowered roadways.• No major utility relocations.• Major utility relocations for lowered railroad.• Major utility relocations for lowered railroad.• Potential utility relocations in Alma St and Churchill Ave for pedestrian/bike undercrossing. • Minor utility relocations for Embarcadero Rd/Alma St improvements. • Minimal impacts to utilities. O Railroad Operations Impacts during Construction • Temporary track (i.e., shoofly) is required.• Temporary track (i.e., shoofly) is required, but a bit shorter than the trench shoofly. • No temporary track (i.e., shoofly) required.• Temporary track (shoofly) is required.• Temporary track (shoofly) is required.• No temporary track (i.e., shoofly) required, only single tracking during nights and weekends. • Temporary track (i.e., shoofly) is required. P Local Street Circulation Impacts during Construction • Removal of right turn lanes on Alma St at Meadow Dr and Charleston Rd; however, traffic will still be able to flow as needed despite lane reduction. • Closes Meadow Dr while Charleston Rd roadway bridges are constructed and visa versa. • Removal of right turn lanes on Alma St at Meadow Dr and Charleston Rd; however, traffic will still be able to flow as needed despite lane reduction. • Alma St, Charleston Rd, and Meadow Dr reduced to 2 lanes. • Reduced lane widths on Alma St, north of Meadow Dr and south of Charleston Rd. • Possible night time closures of Meadow Dr and Charleston Rd. • Alma Street will be reduced to one lane in each direction from south of Oregon Expressway to Ventura Avenue. • From Charleston Road to Ferne Avenue, there will be only one southbound lane on Alma Street. • Alma Street will be reduced to one lane in each direction from south of Oregon Expressway to Ventura Avenue. • Path along Palo Alto High School will temporarily be impacted during construction. • Temporary night and weekend closures of lanes on Churchill Ave, Alma St and Embarcadero Rd. • Alma St, reduced to two lanes. • Removal of right turn lanes on Alma St at Churchill Ave; however, traffic will still be able to flow as needed despite lane reduction. • Temporary night and weekend closures of lanes on Alma St and Churchill Ave. Q Caltrain Design Exceptions Needed 2% grade on track required. Maximum grade allowed by Caltrain is 1%.Temporary vertical clearance of 12 feet at undercrossing structures during construction. Minimum vertical clearance allowed by Caltrain is 15.5 feet. 1.4% grade on track required. Maximum grade allowed by Caltrain is 1%.2% grade on track required. Maximum grade allowed by Caltrain is 1%.2% grade on track required. Maximum grade allowed by Caltrain is 1%.None required.1.6% grade on track required. Maximum grade allowed by Caltrain is 1%. Improvement Impact Summary of Engineering Challenges Other Resource Documents to Support this Update/Report: •The Matrix on the prior slide: https://connectingpaloalto.com/wp- content/uploads/2019/11/PA_Matrices_Nov2019-1.pdf) •Analysis from Technical Working Group on the New Ideas (and the original AECOM Memo that was the precursor to Attachment C to the staff report): https://connectingpaloalto.com/wp-content/ uploads/2019/12/Item3-All-Attachments-Dec.18-XCAP.pdf 1 Memorandum To: XCAP From: Nadia Naik Date: Monday, December 9 2019 Re: Update on Expanded Community Advisory Panel The following work has been completed by the Expanded Community Advisory Panel (XCAP) since the last update presented to the City Council on 10/28/19: 1)Finalized the Guiding Principles and definition of Consensus Recommendations 2)Approved a general Workplan for XCAP in concept a)Created Working Groups (2-3 people) to synthesize questions by domain (leveraging internal/external domain expertise and institutional memory) b)Questions will be turned over to Staff or relevant experts to be answered in written format. c)Domain Reports will be included in Final Recommendations report and will contain assumptions used by XCAP to form the basis of recommendations d)Working Group Domains: i) Safety - Fire/Police, means restrictions ii)Technical Working Group – Engineering and Water (Creeks, Ground Water/Pumping) iii) Traffic/PAUSD - multimodal, El Camino, Safe Routes iv)Caltrain – Technical, Electrification, and Business Plan v)Property Impacts - process, land acquisition vi)Existing Policies – Comp Plan, Rail Corridor Report 3)Volunteer retired Civil Engineers (Edgar Ugarte, Sreedhar Rao, Ron Owes and Joe Teresi) have come forward to assist the Technical Working Group to review work done to date and to “pre-screen” any new iterations/ideas that come forward for any fatal flaws. 4)Invited new iterations/ideas from the public and approved a process for “pre-screening” new ideas judiciously since significant costs may be associated with additional work •Six new iterations/ideas presented: o Iteration on South Palo Alto Tunnel (Roland Lebrun) o Iteration on Churchill underpass (Larry Klein) o Iteration on Churchill underpass with only left/right turns onto Alma (Mike Price) o 2 Roundabout concepts for Embarcadero/Alma (Tony Carrasco) o Underpass Iteration for South Palo Alto (Elizabeth Alexis) •XCAP voted on whether they merit “pre-screening” by volunteer civil engineers and Technical Group – 5 of 6 iterations/ideas passed “pre-screening” Attachment B - Dec. 9 XCAP Update to City Council 2 • Technical Group and Civil Engineers met with AECOM to review new remaining 5 iterations/ideas. • The plan is to have a second meeting to review the work completed to date on existing alternatives. • At the XCAP meeting on December 18, 2019, the Technical Working group will formally announce the summary of the discussions with AECOM and then vote whether to recommend to the City Council that any new ideas/iterations should be studied further. • If XCAP recommends ideas for further study, these recommendations will be made to the City Council in January so the Council could deliberate and take action accordingly. 5) Received Report from Police and Fire about the impacts of closure of Churchill on Emergency Response time 6) Future Presenters known at this time: a) Sebastian Petty of Caltrain (January) b) Norm Matteoni (attorney) to discuss Property Impacts (January/February) c) Safety presentation from either Ken Dueker (PAPD) or Robert Scarpino (Caltrain Operations) Upcoming for Next XCAP Meeting, December 18, 2019: 1) Report back from Technical Working Group / Civil Engineers regarding AECOM meeting and review of new iterations/ideas DRAFT For Discussion Purposes Only 1/6 To: Ed Shikada, City Manager City of Palo Alto 250 Hamilton Avenue Palo Alto, CA 94301 CC: Etty Mercurio, AECOM John Maher,AECOM Peter DeStefano, AECOM Gary Black (Hexagon) AECOM 100 West San Fernando San Jose, CA 95113 aecom.com Project name: Palo Alto Rail Program Management Project ref: 60577356 From: Millette Litzinger Date: December 17, 2019 (Update from 12/5 version) Updated to Include only Excerpts Related to XCAP Recommendation of Three Ideas DRAFT Memo Subject: "New Ideas" from XCAP Technical Working Group •The Expanded Community Advisory Panel (XCAP) received and screened new ideas from the community at their November 13, 2019 Special XCAP meeting. In this meeting, they received New Ideas from five (5) community members. The XCAP voted to push forward ideas from four (4) of the presenters to their Technical Working Group for further review. The New Ideas that were pushed forward are listed below. Full descriptions of the New Ideas can be found under the “November 13, 2019 XCAP Special Meeting” at https://connectingpaloalto.com/presentations-and-reports/. •Embarcadero/Alma Roundabout and Viaduct (Tony Carrasco) •Churchill Crossing Concept (Michael Price) •Charleston/Meadow Underpass Concept (Elizabeth Alexis) Below is a description of the distinguishing characteristics that AECOM used to review each New Idea and notable impacts related to the following categories: •Geometrics/Structures •Right of Way Requirements •Groundwater/Stormwater Impacts •Traffic/Access Circulation •Safe Routes for Ped/Bikes •Cost Effectiveness Attachments: •Churchill Crossing Concept, Typical Section •Churchill Crossing Concept, Layout •Charleston/Meadow Underpass Concept, Typical Section •Charleston/Meadow Underpass Concept, Layout Attachment C: AECOM Memo Memo Palo Alto Rail Program Management DRAFT AECOM DRAFT For Discussion Purposes Only 2/6 Embarcadero/Alma Roundabout and Viaduct (Tony Carrasco) This concept includes a roundabout at the Embarcadero/Alma, allowing all turning movements to/from Embarcadero and Alma. Geometrics/Structures •The rail has to be raised 20+ feet over its current elevation over Embarcadero, creating a 3-level “interchange”. As a result, the rail impacts extend about 1,000 feet further north than the Churchill viaduct. •The existing rail and road bridges over Embarcadero would have to be demolished and reconstructed to accommodate a wider structure needed for a roundabout. •The aforementioned wider structure would likely require lowering of Embarcadero itself (doable, but added cost). Right of Way Requirements •Right-of-way impacts on the west side are likely (at Palo Alto High School and the Town and Country shopping center). Groundwater/Stormwater Impacts •New pump station required at Embarcadero. Traffic/Access Circulation •Queues from the left turns onto Kingsley (from SB Alma) could back up into the circulatory roadway of the roundabout, impacting the roundabout itself, in addition to this being a safety issue too (sudden, unexpected stopping of vehicles). •A private driveway would have to be accessed from the circulatory roadway of the roundabout (done in some cases, but certainly not desirable). •Merging from the roundabout onto WB Embarcadero is problematic (sight distance is limited, plus there’s not much distance to weave into the adjacent lane to make a left turn into the high school). Safe Routes for Ped/Bikes •Big roundabouts are typically difficult for ped/bikes to navigate. Cost Effectiveness •We have another alternative (the intersection at Kingsley/High) to address traffic circulation at Embarcadero/Alma that functions better and costs much less. Memo Palo Alto Rail Program Management DRAFT AECOM DRAFT For Discussion Purposes Only 3/6 Churchill Crossing Concept (Michael Price) This concept partially closes Churchill Avenue, but preserves access to Alma. A typical section and a schematic layout of this concept are attached. Geometrics/Structures •The “split” of the roadway on NB Alma and EB Churchill introduces a fixed object in the road (end of the retaining wall), but we should be able to design this so that it’s not a safety hazard. •The retaining walls on Alma will be tall (~20 feet Max) and will have a tunnel-effect. Providing left and right shoulders would be ideal, especially 8 to 10-foot right shoulders for disabled vehicles. To provide an 8-foot right shoulder on NB Alma St (connecting to Churchill Ave in the underpass), the landscaping strip on the east side of Alma St will have to be removed. This will reduce the setback distance from the curb line for many homes fronting Alma by approximately 9.5 feet. •Need to evaluate a profile on Churchill to see if there’s an impact to the Churchill/Paly/Castilleja intersection. At first glance, it appears we can avoid lowering this intersection. •Since there are no ped/bikes on Alma and Churchill (under the tracks), we can be more aggressive with the road profile and use 10-12% Max. This will help reduce the construction limits and cost. •The bridge geometry and lane configurations need to be hashed out. We’ll need two through lanes on NB Alma. •The sight distance at the T-intersection of Churchill and Alma will be less-than-standard for vehicles making rights/lefts onto Alma from EB Churchill. This is mainly due to very little space available for a right shoulder on SB Alma. Right of Way Requirements •Temporary Construction Easements (TCEs) will be required. •Full acquisitions likely not required, but partial/sliver residential takes potentially needed along Alma St and potentially a home on the east side of Mariposa Ave. •Curb setback distances must be reduced for homes along Alma St, as noted above. •Potential minor relocation of the ped/bike trail on the north side of Churchill (between Castilleja Ave and the railroad). •The far-right lane on SB Alma St will encroach inside Caltrain’s R/W. This will have to be reviewed/approved by Caltrain. Groundwater/Stormwater Impacts •Pump Station will be needed to drain the lowered Churchill/Alma intersection. Traffic/Access Circulation •This concept will create circuitous routes for some and introduce more traffic on residential streets. •Several traffic movements are eliminated... likely to cause driver confusion for those not familiar with the configuration: a.Traffic from WB Churchill must turn right onto NB Alma b.No thru-movement allowed on Churchill c.Traffic from SB Alma cannot make a left onto EB Churchill d.Traffic from NB Mariposa cannot access Churchill (vehicles would have to turn around). Residents on Mariposa (south of Churchill and north of Miramonte) would be forced to travel south, generating more traffic on other Southgate neighborhood streets (Castilleja Ave and Miramonte Ave). Memo Palo Alto Rail Program Management DRAFT AECOM DRAFT For Discussion Purposes Only 4/6 e. One private driveway on Churchill (between Castilleja and Mariposa) will front a one-way “frontage” road (traveling north), which will force them to travel north and make a right onto Mariposa to exit the Southgate neighborhood. f.Left turns not allowed from WB Churchill onto Mariposa (same condition as today). g.The left turn movements to/from Kellogg Ave and Coleridge Ave will have to be prohibited because drivers trying to make a left turn onto Alma will not have adequate sight distance to approaching vehicles traveling on NB and SB Alma St, respectively. A concrete barrier will likely be placed at these locations to prohibit the left-turn movements at each intersection. Safe Routes for Ped/Bikes •Grade separation for motor vehicles is not ped/bike friendly, so need a separate undercrossing for ped/bikes (similar to the current Option 1 for the Churchill closure). Stage Construction •This alternative would likely reduce Alma St to two lanes (one lane in each direction) with no access to the west side of the tracks for a lengthy duration during construction while the underpass and a lowered Alma/Churchill are built. Unless Caltrain accepts top-down construction or some other non-traditional construction method, shoofly tracks will also be required. Cost Effectiveness •This idea is more costly than a closure of Churchill, but potentially less costly than the Churchill viaduct. Memo Palo Alto Rail Program Management DRAFT AECOM DRAFT For Discussion Purposes Only 5/6 Charleston/Meadow Underpass Concept (Elizabeth Alexis) This concept provides a grade separation at Charleston and Meadow without raising the tracks. A typical section and a schematic layout of this concept are attached. Geometrics/Structures •The east/west through movements would pass under two structures (one for the railroad, one for Alma St), similar to Embarcadero today. Right of Way Requirements •The presentation infers no property impacts, but the width needed to accommodate the turning movements (the u-turn bay, for example) for truck/buses will likely require sliver takes (at the very least) or complete property acquisitions. A 2-lane roundabout (~172-foot outside diameter, including sidewalks) would be required to accommodate the additional traffic and turning movements. The roundabout’s footprint would require full property acquisitions. •Slide 8 does not show standard merge distances, so the footprint (along M/C) would likely be much larger than presented on this slide. •The existing width of Charleston on the east side of the tracks (from back of sidewalk to back of sidewalk) is approximately 85 feet. To obtain an adequate cross section of the frontage roads and underpass, we need approximately 95 feet of width, which will require a sliver acquisitions on each side of the road (see x-section). The curb setback distance for the homes on the south side Charleston would be reduced by ~ 16 feet. •The width of Charleston on the west side of the tracks is even more narrow, thus, having greater impact on private properties. •The width of Meadow on the east side of the tracks is only ~ 62 feet (back of sidewalk to back of sidewalk), making the same configuration on Meadow less feasible. Groundwater/Stormwater Impacts •Same as other underpass options... a pump station will be needed to drain the lowered roads. Traffic/Access Circulation •A circuitous route is proposed for EB vehicles on Charleston and Meadow. •Traffic on NB and SB Alma St destined for El Camino Real and other locations on the west side of the tracks would also have to traverse a circuitous route. In the NB direction, drivers will likely opt for Ely Pl to access Charleston via Mumford Pl to avoid any backups on Alma St, thus generating more traffic on residential streets. •Road geometry would have to be hashed out to ensure queuing of vehicles (for the u-turn movement, for example) does not impact through movements. Safe Routes for Ped/Bikes •The “split” of Meadow and Charleston will create a conflict between peds/bikes and motor vehicles, i.e., peds would be on the outside of the road approaching the railroad, but then cross one lane of (moderately high speed) traffic to get to the inside lane (to enter the underpass section of M/C). Memo Palo Alto Rail Program Management DRAFT AECOM DRAFT For Discussion Purposes Only 6/6 Cost Effectiveness •The property impacts will likely make this concept more costly than the Hybrid alternative, and thus, potentially cost prohibitive. 11' NB Alma St NB LaneSB LaneSB Lane 12' 13' NB Lane NB LaneMT-2 Exist MT-1 Exist Alma St (North of Churchill Ave) Typical Section 10' Ped/Bike Path Sidewalk 5.5' +/-11' 11'8' Shld 10" W (E) 12" W (E) 8" SS (E) 4" Gas (E) R/W Caltrain 1SJDF5ZQJDBM4FDUJPOGPS$IVSDIJMM$PODFQU Price - Churchill Underpass Layout 12' EB Lane 12' EB Lane 5' Sidewalk 6' 5'5' Bike Lane Shld/ Bike Lane Shld/Sidewalk (Back of Exist Sidewalk) Property Line 12' WB Lane 12' WB Lane 5' Sidewalk 6' 5'5' Bike Lane Shld/ Bike Lane Shld/Sidewalk (Back of Exist Sidewalk) Property Line Charleston Rd (East of Alma St) Typical Section "MFYJT5ZQJDBM4FDUJPOGPS$IBSMFTUPO$PODFQU W r ig h t P l M u m f o r d P l Ely Pl Charleston Rd A l m a S t © 2019 Microsoft Corporation © 2019 DigitalGlobe ©CNES (2019) Distribution Airbus DS Alexis - Charleston Underpass and Roundabout Layout Rail Crossing Community Conversations JOIN THE RAIL CONVERSATION TOWN HALLS THURSDAYS @ 6:00-8:00PM Community conversations with structured presentations, question and answer sessions and more Type of Rail Crossing Options Learn more at www.connectingpaloalto.com Read a new blog series on medium at medium.com/paloaltoconnect Email the City attransportation@cityofpaloalto.org FEBRUARY 20 General presentation and topics, including update from the November 2019 community discussion. Mitchell ParkCommunity Center3700 Middlefield Rd, Palo Alto FEBRUARY 27 General presentation plus focus on Meadow/ Charleston Rail Grade Separation Alternatives. Palo AltoElks Lodge4249 El Camino Real, Palo Alto MARCH 12 General presentation plus focus on Churchill Rail Grade Separation Alternatives. Palo AltoHigh School50 Embarcadero Rd, Palo Alto MARCH 19 JLS Middle School (6-8 p.m.)480 E Meadow Dr, Palo Alto APRIL 16 Gunn High School (3-5 p.m.)780 Arastradero Rd, Palo Alto CONNECTINGPALO ALTO SOUTH P A L O ALTO TU N N E L T R ENCH ELE V A T E D RAILRO A D ST R E E T CLOSURE PAR T I A L LY ELEVATE D COMMUNITY CONVERSATIONSTHURSDAYS RAILROA D ? JANUARY 30 Ohlone Elementary (6-8 p.m.)950 Amarillo Ave, Palo Alto Transportation Community Conversations Informal conversations, open-house style with City staff on transportation prioritieslike rail, parking, traffic calming, oversized overnight vehicle parking, etc. City of Palo Alto (ID # 10950) City Council Staff Report Report Type: Action Items Meeting Date: 1/21/2020 City of Palo Alto Page 1 Summary Title: Housing Work Plan Update Title: Update and Discussion of the Planning and Development Services Housing Work Plan and Direction to Modify or Direct New Assignments Related to Housing and Other Department Assignments From: City Manager Lead Department: Planning and Development Services RECOMMENDATION Staff recommends that the City Council review the Planning and Development Services (PDS) Department’s status report on the 2018-2019 housing work plan and Council-directed assignments and provide direction as appropriate. EXECUTIVE SUMMARY This report provides a status update on the City’s housing work plan and other initiatives directed by the City Council. A list of in-progress and pending assignments with task descriptions, relevant updates and notes are provided. The housing work plan includes a number of assignments that balance housing unit preservation, protection and production. Despite the importance of the assigned work, staff is concerned it may not result in near-term housing production without more focused attention on the factors that motivate commercial property owners to file applications for housing developments. Mid- and long-term housing unit production is more encouraging through efforts related to the North Ventura Coordinated Area Plan and other discrete zoning amendments, but these initiatives are only part of the solution needed to produce more housing. BACKGROUND Two years ago, the City Council adopted a housing work plan1 that was prepared in response to a City Council Colleagues’ Memo.2 The Colleagues’ Memo stated the desire for zoning updates to encourage diverse housing near jobs, transit and services, and discussed a number of specific concepts, many of 1 City Council adopted housing work plan: https://www.cityofpaloalto.org/civicax/filebank/documents/63027 2 Colleagues Memo dated November 6, 2017: https://www.cityofpaloalto.org/civicax/filebank/documents/61770 City of Palo Alto Page 2 which were also identified in the City’s Housing Element (adopted November 2014) and the updated Comprehensive Plan (adopted November 13, 2017). This report provides an update on the housing work plan and other housing-related Council-directed initiatives. Council will have an opportunity to make refinements based on any updated priorities and available resources to achieve the City’s housing goals. Many of the conditions that precipitated the Colleagues’ Memo, and which are articulated in the housing work plan, continue. The median sales price for all homes in Palo Alto since the work plan was prepared has increased from $2.24M in November 2017 to $2.72M through November 2019. The sales price of a single family home over the same period increased from $2.77M to $3.01M, though condominium prices fell from $1.53M to $1.37M. Rental housing listings increased from $3,500/month for a two-bedroom unit to $4,280/month.3 The lack of affordable housing at all income levels contributes to other impacts experienced in Palo Alto related to traffic congestion, increased motorist travel time, higher vehicle miles traveled and greater greenhouse gas emissions, among other quality of life issues. Employers have expressed concerns about the challenges of hiring and retaining low wage workers due to the high transportation costs and commute travel times. And, while Palo Alto has taken measures to curb office development in favor of housing production in recent years, the City continues to have a high jobs to housing ratio, and office development continues in other nearby jurisdictions. In terms of housing production, the City has permitted 555 units since 2015. The City’s comprehensive plan has an expressed goal of producing between 3,545-4,420 new housing units from 2015 through 2030. Based on these numbers, the City would need to permit an average of 343 units each year for the remaining ten years to achieve this goal at the mid-range count of 3,982 new units. There are 144 units that have been entitled through the City’s review process, but applicants have not pulled building permits. While some of the applicants are proceeding through plan review to obtain a permit, other applicants have indicated they are not pursuing development at this time due to high construction and labor costs and a lower-than-expected return on investment. Accessory dwelling unit (ADU) building permit activity remains strong with 12, 36, and 62 permits issued in 2017, 2018, and 2019 respectively. The state legislature and Governor recently made additional changes to ADU regulations that became effective on January 1st, which is expected to further incentivize homeowners to increase ADU production.4 Other recent state law changes include statewide renter protections, updates to the state density bonus law, SB 35, among other measures. The more HOMES Act of 2020 (SB 50) has been revised, including a delayed implementation date to allow local jurisdictions time to develop land use policies that reflect a jurisdiction’s interests and that achieve the bill’s goals related to housing density, reduced vehicle miles traveled and fair housing. For SB 50 to advance in the legislature, the measure must move out of the Senate Appropriations Committee by January 24, 2020, where it would go to the Senate floor and must be approved by January 31, 2020. If it advances, it would be subject to the typical bill deadlines for the 2020 session; it is anticipated further amendments will likely to occur as this bill is reviewed in committee. 3 Zillow Home Prices and Values for Palo Alto: https://www.zillow.com/palo-alto-ca/home-values/ 4 On January 13, 2020, City Council adopted an urgency ordinance making changes to the local ordinance to align with state law; the Council staff report is available online: https://www.cityofpaloalto.org/civicax/filebank/documents/74731 City of Palo Alto Page 3 Lastly, at the state level, the Housing and Community Development Department (HCD) has signaled that the upcoming housing element cycle (2022-2030) will result in a higher regional housing needs assessment as it accounts for the region’s percentage of rent-burdened households and overcrowding. HCD is also expected to impose new restrictions on housing opportunity sites, including limits on reusing an opportunity site to account for future housing production if it had previously been identified in two prior housing elements. Palo Alto, like many jurisdictions, has had mixed success meeting its RHNA numbers over the last several housing cycles. The City’s ability to meet its above-moderate housing targets influences the level of affordability required for streamlined review, as mandated by the passage of SB 35 in 2017. Currently, qualifying housing projects that propose 50% of the units at low-income housing levels qualify for streamlined review, as opposed to 10% on-site affordability requirement if the City does not meet its above-moderate numbers. Housing Work Plan The 2018-2019 housing work plan identified a number of near-term actions desired by the Council to advance the City’s housing policies. The tasks were divided into five categories: 1) Ongoing Projects and Initiatives; 2) Comprehensive Plan Implementation and Housing Production Ordinances; 3) 2019 Proposed Ordinance; 4) Economic Analysis to Support BMR Housing; and, 5) Partnerships with Agencies and Organizations. Attachment A includes a summary of the progress made on the Housing Work Plan over the past two years. Much has been completed, including changes to the City’s development standards to encourage more housing development downtown, near California Avenue, and along the El Camino Real commercial corridor. These changes convey greater development potential to a property owner than can be achieved under SB 35 or the state density bonus. Some of these recent changes include the following: City of Palo Alto Page 4 • Streamlined Review. Eliminated the discretionary site and design review application process for housing projects to reduce application processing times, application costs; no longer requires public hearings before the PTC and City Council, unless a project is appealed. • Reduced Parking. On-site parking requirements were reduced greater than 10% and lowered parking-spaces-per-bedroom requirements across all housing types; 100% affordable housing projects are eligible for a 100% reduction in parking based on maximum anticipated demand. A parking exemption was also established for mixed-use housing projects with up to 1,500 square feet of retail. • 100% Affordable Housing Incentives. Further streamlined review by making discretionary development incentives allowable by right for qualifying projects, eliminated the need for legislative action to approve the affordable housing overlay, and exempted projects from the retail preservation ordinance. • Housing Incentive Program. This alternative to SB 35 and the state density bonus law increases residential floor area downtown, in the California Avenue area, and most property along El Camino Real; waives lot coverage restrictions. • Housing Density in Commercial Zones. Residential density restrictions have been eliminated in most commercial zones. • Multi-Family Up-Zoning. RM-15 zoning was increased to RM-20, allowing for greater housing density in these neighborhoods. • Minimum Housing Density. The City now requires a minimum amount of housing units to be built in multi-family residential districts. • Redevelopment of Non-Complaint Housing Sites. Residential properties that exceed permitted unit densities may be redeveloped at the same density. • Rooftop Gardens/Landscaping. Established a uniform requirement for outdoor landscaping and now allow rooftop gardens to count toward a portion of required open space. This allows for a more efficient floor plan design and increased unit density while advancing other sustainability- related interests achieved by greening more rooftops. In addition, the City Council established two combining districts - an affordable housing and workforce housing overlay zones, made changes to the City’s ADU regulations, reserved or dedicated over $23M of affordable housing funds toward a future teacher housing project and Palo Alto Housing’s 100% affordable housing project. Progress has also been made on the North Ventura Coordinated Area Plan. There are other tasks that were scheduled to be to be accomplished last year that remain outstanding. Progress is underway, but not complete, on a review of the City’s inclusionary housing standards and opportunities to possibly expand this program to include more on-site affordability and to extend these requirements to rental housing. This report and recommendation are expected to be transmitted to the PTC in March/April and then forwarded to the City Council. Other work efforts that have not been started and remain outstanding include establishing protections for cottage clusters, exploring a no net- housing loss policy, changes to the City’s pedestrian and transportation-oriented development (PTOD) overlay, residential village zoning, and clearly defining objective development standards related to SB 35, among some other discrete tasks. Comprehensive Plan & Housing Element City of Palo Alto Page 5 In addition to the 2018-2019 Housing Work Plan, the City Council has adopted a number of policy documents that require implementation. The 2017 Comprehensive Plan includes nearly 60 pages of implementation initiatives to be carried out by various City departments. Some of this work is time sensitive. The 2014 Housing Element also has a significant number of implementation policies that must be completed prior to the end of the current housing cycle. The City reports on its progress each year to HCD; the last report is available online5. The next report is scheduled to be presented to Council in March. Colleagues’ Memos On September 10, 2018, the City Council considered a Colleagues’ Memo6 and directed staff work related to a renter protection ordinance to establish relocation standards for tenants facing eviction. This work was completed, but Council also directed staff to present the Colleagues’ Memo to the Policy and Services Committee for review and further consideration of the following: • Review of the City’s existing renter protection ordinance and comparable ordinances in the San Francisco Bay Area; • Evaluate reasonable relocation assistance to be provided for tenants of properties with 2 or more units displaced due to a change of use, sizable rental increases, or eviction without just cause, while protecting the fair rights of property owners; • Strengthen enforcement measures to ensure compliance with and penalties for violations of Palo Alto’s existing requirement to offer an annual lease to tenants; and • Consider other updates to existing renter protection and mediation programs as needed to continue a healthy and diverse community. Another Colleagues’ Memo7 was discussed by the City Council on September 23, 2019, regarding affordable housing and goals to address socio-economic diversity and affordability. At that meeting, Council directed staff to prioritize the following assignments, some of which were previously identified in the Housing Work Plan and others that were new assignments: • Continue prioritizing the City’s work on the Palmer Fix; • Direct staff to do a nexus study for commercial projects; • Direct staff to transmit to Council an informational report on the state and local density bonus Ordinance; • Explore feasibility of in-lieu fees or off-site replacement if existing residential units are removed from the housing stock; • Focus on the Housing Work Plan and Comprehensive Plan language related to low-density zoning such as cottage cluster developments and existing duplexes in the R-1, R-2 RMD and commercial districts; and 5 2018 Annual Comprehensive Plan and Housing Element Report: https://www.cityofpaloalto.org/civicax/filebank/blobdload.aspx?t=60751.24&BlobID=69492 6 Colleagues memo dated September 10, 2018: https://www.cityofpaloalto.org/civicax/filebank/blobdload.aspx?t=65189.46&BlobID=66602 7 Colleagues’ Memo dated September 23, 2019: https://www.cityofpaloalto.org/civicax/filebank/documents/73361 City of Palo Alto Page 6 • Explore citywide protections and regulations to prevent existing housing to be converted to commercial/hotel use. DISCUSSION The following is a list of Council-directed assignments for PDS that are actively being worked on or pending. Each task is sourced to the Council action directing the work, if applicable. The numbered order generally reflects a possible prioritization. Where appropriate, comments are made and/or requests for clarification or direction is needed. Assignments – Currently Resourced and Active 1. North Ventura Coordinated Area Plan (NVCAP) Date Assigned: November 6, 2017 Description: Data-driven public process to develop policies and development standards that reflect Council adopted goals of a mixed-use neighborhood with interconnected, multi-modal connections and which balances diverse community interests. Status: The project publicly started in October 2018 with an initial meeting with the Council- appointed working group members. There have been several working group meetings since then, a community meeting and a joint session with the City Council. Previously directed work by Council and the need to adjust the project scope and costs were supported by Council with an updated and approved scope of services, but Council did not support needed funding to implement these changes. The limited budget has forced staff and the consultants to seek ways to eliminate activities without jeopardizing the core activities of the project. Due to this, some responsibilities have been shifted to the PDS’ on-call planning firms, and some activities (such as studies the City Council requested in April 2019) have been eliminated. The consultant team has prepared three draft plan alternatives. These drafts will be modified with feedback from the community, the PTC, the Architectural Review Board, and other boards and commissions as appropriate. Staff anticipates providing City Council with a preferred plan alternative by May 2020. At that time, the City Council can consider the plan, provide feedback, and identify the preferred plan. The plan documents would then be refined, evaluated for environmental impacts, and return to City Council for adoption in late 2020. Other Considerations: Some members in the working group have signaled their concern that development activity can continue in the plan area before the coordinated area plan is finished; some members have expressed their desire for a moratorium in the project area. Council may want to consider whether such action is warranted at this stage of the planning effort. The City Council is also aware that one of the largest landowners in the area has indicated their interest in retaining the building at 340 Portage (formally Fry’s and other present day uses, such as Global Playground). This building has been identified as an historic resource by the City’s consultant and some community members have expressed their interests in the building’s preservation. Another reason the owner may be interested in retaining the building is due to the existing office space located within the building. Despite being zoned RM-30, the zoning code permits the continued operation of office and other commercial uses at this location. However, City of Palo Alto Page 7 revenue generated from the office use in this building means there is less motivation or interest in providing housing units in the numbers contemplated in the housing element, which is approximately 215 units. While it is envisioned that redevelopment of this area will include commercial uses, and, notwithstanding future consideration of the historic status of the existing structures, the City Council may want to explore whether an amortization study of the 340 Portage Avenue property is warranted to preserve opportunities that maximize housing development at this location. Either a moratorium or amortization of the structure at 340 Portage would require significant additional analysis in coordination with the City Attorney’s Office. 2. Inclusionary Housing Program Changes Date Assigned: February 5, 2018 (Housing Work Plan Tasks 3.10 & 3.11; Colleagues’ Memo 9.23.19) Description: Explore increasing below-market-rate percentage requirements in market-rate development up to 20% and implementing inclusionary housing requirements for rental housing. Status: Staff has hired a consultant and work continues to determine the extent inclusionary requirements can be increased and whether it can be extended to rental housing. Initial findings are expected to be presented to the PTC in March. 3. ADU Regulations Date Assigned: N/A Description: Update the City’s ADU regulations to respond to recent state law changes; revise ADU regulations to streamline and simplify regulations; evaluate other regulations and fees that may present a barrier to ADU production; and, use SB 2 grant funding to develop ADU prototypes and application packages that facilitate over-the-counter approvals. Status: The City Council approved an urgency ordinance on January 13, 2020 to codify state law changes. Work continues on another ordinance to revise the ADU and JADU regulations consistent with the above description. Hearings will be scheduled before the PTC and anticipated to be presented to the City Council before the summer recess. 4. Downtown In-Lieu Parking Study Date Assigned: December 3, 2018 Description: Prepare a detailed study and recommendation regarding whether to continue a one-year ban on allowing commercial office above the ground floor from participating in the downtown parking in-lieu program. Status: Not started. Notes: When reviewing the 2018 housing ordinance, Council debated whether to continue allowing office floor area above the ground floor to participate in the in-lieu parking program. Eliminating this opportunity would be a departure for a long-standing policy, but it is also seen as one of many levers to begin to shift the incentive for housing development downtown over new office growth. In its final action, the City Council concluded that it would suspend the provision for one year and directed the PTC to further evaluate this issue and forward its recommendation to Council prior to April 1, 2020. City of Palo Alto Page 8 Staff has not been able to advance this policy direction due to competing priorities and there is insufficient time to have any significant policy analysis on this topic before the deadline. Staff will present the discussion topic to PTC and hold at least one public hearing to receive public input before returning to the Council with a recommendation to extend or lift the ban before April 1st. 5. EV Chargers & Related Amendments Date Assigned: N/A Description: Existing City parking requirements limit placement of electric vehicle charging stations in commercial and residential areas. This ordinance would align the City’s parking regulations with recently-enacted state legislation and make further refinements that would allow property owners to reduce code-required parking or parking dimensions to the minimum extent necessary to accommodate state-mandated stall dimensions for electric vehicle chargers parking spaces. A variety of other parking-related changes are proposed to address compliance with the American with Disabilities Act and routine repaving of existing parking lots. Status: A public hearing is anticipated before the PTC on January 29th followed by review and possible action by the City Council in March. 6. Safe Parking Pilot Program (Tier 1) Date Assigned: June 10, 2019 (Colleagues Memo) Description: Council assigned this to staff and referred the topic to the Policy and Services Committee: to identify and determine interest in expanding vehicle dwelling management and transition services with local area nonprofits; to identify large commercial lots that could be used for a managed overnight program and possibly seed a program using city-owned land located on Geng Road; and to engage the County of Santa Clara to explore funding assistance and for additional program to support enabling individuals to find employment and housing. Status: The City Council adopted the first reading of an ordinance on January 13, 2020 to establish a Tier 1 pilot program authorizing religious institutions to establish a safe parking program for up to four vehicles per location, in compliance with specific regulations. Remaining staff work includes preparing the second reading of the ordinance, staff training, updating the City’s website, holding a forum with interested properties to explain the pilot program and application requirements, creating a new application, and working with the Chief Communications Officer to publicize the pilot program. 7. PDA / PCAs Applications Date Assigned: January 13, 2019 Description: The City Council directed staff to submit applications to establish a priority development area downtown and two priority conservation areas, one in the Foothills and another in the Baylands. Status: Council approved the filing of PDA and PCA applications to MTC/ABAG on January 13th. Limited additional staff work is anticipated on this item. 8. Wireless Ordinance Date Assigned: April 15, 2019 (Council Motion) City of Palo Alto Page 9 Description: Return to City Council within one year with an updated ordinance that considers hierarchies of preferred locations and antenna types based zoning, local context, and installation type; clearly define the term “infeasibility,” as used in the ordinance; create a list of City-owned buildings that would serve as appropriate antenna sites; recommend distances from homes and schools and between installations to preserve aesthetics; recommend best practices for post-construction wireless communication facilities; conduct federal legislative advocacy related to wireless facilities regulations; and review ordinance effectiveness after one year. Status: Following adoption of the ordinance and accompanying resolution, staff returned on June 17, 2019 to correct an administrative error on the resolution and establish a 300-foot distance of wireless facilities from schools. Another amendment to the resolution was made on August 12, 2019 to address a conflict with street light pole replacement requirements. On December 16, 2019, staff returned with a comprehensive revision to the administrative standards that address a significant component of the above direction to staff. In April, staff will return to Council to present updates to the City’s wireless ordinance that address the balance of items from Council’s direction. 9. Reach Code Follow Up / Substantial Remodel Amendment Date Assigned: September 23, 2019 (Colleagues’ Memo) Description: Direction to return with ordinances that mandate an all-electric service for new construction before the end of 2020, including a plan for electrification of accessory dwelling units. Amend the city’s zoning and building codes as appropriate to define the term “substantial remodel” to specify when a remodeled residential or commercial building becomes new construction and therefore subject to current zoning and building codes, including electrification requirements. Status: Initial staff work is underway; public engagement expected to begin at the start of the second quarter of 2020 (April), with ordinance recommendations to Council near the beginning of the fourth quarter (Sept/Oct). 10. SB 35 Objective Standards Date Assigned: February 5, 2018 (Housing Work Plan Tasks 2.2, 2.3) Description: Develop objective standards based on the City’s existing discretionary review findings and other subjective criteria in the code that would be applied to qualifying SB 35 housing projects and other development as appropriate; use available SB 2 grant funding to help resource consultant services. Status: Staff has hired a consultant to review the code and recommend requisite changes. An initial hearing is scheduled before the Architectural Review Board in March to describe the project and receive feedback. This effort is expected to be completed within two years. Assignments – Pending 11. Increase Commercial Housing Development Impact Fees Date Assigned: September 23, 2019 (Colleagues Memo) Description: Update the City’s nexus study and review Santa Clara County’s recent nexus study to determine the extent to which the City could increase commercial housing development impact fees and return to Council. City of Palo Alto Page 10 Status: Staff is preparing a contract to initiate this work, which is tentatively scheduled to begin in February. 12. Renter Protection Research & Ordinance Date Assigned: September 10, 2018 (Colleagues Memo) Description: Refer the 9/10/18 Colleagues’ Memo to the Policy and Services Committee for review. The review should include at least the following: i. review of the City’s existing renter protection ordinance and comparable ordinances in the San Francisco Bay Area; ii. evaluate reasonable relocation assistance to be provided for tenants of properties with 2 or more units displaced due to a change of use, sizable rental increases, or eviction without just cause, while protecting the fair rights of property owners; iii. strengthen enforcement measures to ensure compliance with and penalties for violations of Palo Alto’s existing requirement to offer an annual lease to tenants; and iv. consider other updates to existing renter protection and mediation programs as needed to continue a healthy and diverse community. Status: Staff is seeking assistance through a challenge grant (below) for supporting resources to advance this policy direction. Applications have already been filed and this work is expected to begin in spring 2020. Notes: Recent state legislation8 has provided some protections that relate to the above direction including caps on rent and requiring just cause to evict a renter. Enforcement is not addressed in the state legislation. PDS has also applied for a challenge grant from the Partnership for the Bay’s Future, which will be managed by the San Francisco Foundation. Palo Alto is one of several jurisdictions that applied for the grant and the Foundation is expected to formally award grants to qualifying applicants. Participation in this effort will supplement staff work with a mid-career fellow, provide access to technical assistance, and peer cohort support. It is expected that once the fellow begins work that it will take approximately 2 years to complete this effort through final Council action. More information about the challenge grant is available online: https://www.baysfuture.org/press-release-challenge-grants/ 13. Protections and Incentives for Cottage Clusters, Duplexes, Triplexes, Fourplexes Date Assigned: February 5, 2018 (Housing Work Plan Task 2.9) Description: Develop protections for cottages and duplexes in the R-1 and R-2 districts and consider zoning changes to allow additional cottage clusters, duplexes and fourplexes where appropriate. Status: Not started. Notes: There are limited options for preserving existing cottage clusters. Offering fee reductions and flexible development standards as noted the housing element implies some form of redevelopment of the property, which could be disruptive and counter to the cottage cluster aesthetic and character. One approach that would encourage preservation of the physical form 8 AB 1482 (Tenant Protections Act of 2019) signed into law on October 8, 2019: https://leginfo.legislature.ca.gov/faces/billTextClient.xhtml?bill_id=201920200AB1482 City of Palo Alto Page 11 and overall layout would be to allow these parcels to be subdivided and sold to individual owners, though further economic analysis would be required, as well as exploring other possible changes to City regulations to ensure there is sufficient incentive and a path to allow the subdivision. Additionally, concerns regarding housing displacement would be analyzed. Exploring incentives, including allowing subdivision of single-family zoned parcels, and fee reductions could be used to spur new cottage housing. 14. PTOD & Village Residential Zoning Amendments Date Assigned: February 5, 2018 (Housing Work Plan Task 2.10) Description: Review pedestrian and transit-oriented development and village residential zoning overlay process to remove constraints/complexity and expand usage. Status: Not started. 15. Safe Parking Pilot Program (Tier 2 and 3) Date Assigned: June 10, 2019 (Colleagues’ Memo) Description: Council assigned this to staff and referred the topic to the Policy and Services Committee: to identify and determine interest in expanding vehicle dwelling management and transition services with local area nonprofits; to identify large commercial lots that could be used for a managed overnight program and possibly seed a program using city-owned land located on Geng Road; and to engage the County of Santa Clara to explore funding assistance and for additional program to support enabling individuals to find employment and housing. Status: The City Council adopted Tier 1 on January 13, 2020. Only preliminary work has begun to expand the pilot program to include more than four vehicles on a private lots (Tier 2) and City- owned property (Tier 3), but resources were shifted to focus on Tier 1. A significant amount of work remains outstanding to advance this project. 16. Housing Element Update Date Assigned: N/A Description: The sixth cycle of the regional housing needs assessment is underway and covers an eight-year timeframe from 2022 through 2030. The state HCD identifies the total number of housing units across all income groups that are needed for the nine county Bay Area. The Association of Bay Area Governments (ABAG) then distributes the allocation to each city and county. Local jurisdictions must then update their housing elements in the comprehensive plan to show how the local entity has planned to meet its share of the region’s housing need. Draft housing allocations are tentatively scheduled to be released in January 2021 and final allocations published July 2021. Housing elements must be updated by December 2022. Status: Not started; staff anticipates making a funding request to secure a consultant for the upcoming housing element update during the next budget cycle in May. 17. Conversations with Stanford Date Assigned: February 5, 2018 (Housing Work Plan Tasks 5.6; 5.6.1; 5.6.2; and, 5.6.3) Description: Initiate conversations with Stanford University regarding potential residential uses at Stanford Research Park; potential residential uses near Stanford University Medical Center, potential residential uses at the Stanford Shopping Center. Status: Not started. City of Palo Alto Page 12 18. Seismic and Resiliency Ordinance Date Assigned: 11/13/2017 Description: Prepare updates to the City’s seismic ordinance Status: On September 15, 2014, the City Council referred to the Policy and Services Committee a discussion on 1) an update of the inventory of soft-story and unreinforced masonry buildings; 2) Staff alternatives regarding how to prioritize the highest risk buildings – if prioritization is feasible; 3) referral of best or strongest practices by other cities to enforce the upgrades; 4) summary of retrofit programs and incentives that exist today; and 5) discussion of any recommendation we have for state legislation to support these initiatives. On December 9, 2014, the Policy and Services Committee recommended the City Council authorize a request for proposal to prepare an update to the City’s Seismic Hazards Identification Program (Ordinance 3666) and update the inventory of structurally deficient buildings in the multi-family, commercial and industrial areas of the City, categorizing building on various typologies. On August 17, 2015, Council approved a contract with Rutherford + Chekene to prepare a study and recommendations on the City’s ordinance. The findings of this report were presented to Council on April 17, 2017. On November 13, 2017, Council authorized staff to begin the process of drafting updates to local regulations, policies, and procedures including an analysis of any potential CEQA requirements. This direction anticipated staff returning to Council for a request to enter into a new contract(s) for technical services and then work with the Policy and Services Committee and ultimately the City Council to review revised language, options, and implications associated with modifications to seismic compliance in our municipal code. Staff anticipates submitting a budget request to Council in the upcoming budget cycle for funds to support this work effort. 19. Co-Housing and Small Units (2.8) Date Assigned: February 5, 2018 (Housing Work Plan Task 2.8) Description: Review and revise allowed uses and permit requirements (i.e., by right, use permits) for small units, co-housing, etc. Status: Not started. 20. Special Needs Housing Date Assigned: February 5, 2018 (Housing Work Plan Task 2.4.7) Description: Review the code and recommend removing any constraints to special needs housing. Status: Not started. 21. No Net-Loss Housing Policy Date Assigned: February 5, 2018 (Housing Work Plan Task 3.3) Description: Explore implementing a ‘no net-loss’ policy when housing is redeveloped. Status: Not started. 22. In-lieu Payment or Off-Site Housing Replacement Date Assigned: September 23, 2019 (Colleagues Memo) City of Palo Alto Page 13 Description: Explore feasibility of in-lieu fees or off-site replacement if existing residential units are removed from the housing stock. Status: Not started. Notes: This is related to no-net loss policy analysis (#21 above). 23. Restrict Loss of Housing to Commercial Uses Date Assigned: September 23, 2019 (Colleagues Memo) Description: Explore citywide protections and regulations to prevent existing housing to be converted to commercial/hotel use. Status: Not started. 24. Incentives to Use TDRs for Residential Development. Date Assigned: February 5, 2018 (Housing Work Plan Task 2.7) Description: Consider changes to transferred development rights (TDR) ordinance to increase its use for residential FAR/density. Status: Not started. Notes: TDR transfers are presently only allowed downtown and in the south of Forest Avenue coordinated area plan. Current law allows TDRs to be used for residential projects but given the return on investment for office development, TDRs are not used for residential floor area. Some possible incentives to encourage more use of TDRs for residential development may include parking reductions or exemptions when applied to housing, or discounting TDR floor area when used for housing by 50%, for example, and possibly a combination of both. The actual reduction has not been tested and is presented for illustration purposes. However, even with these incentives, other constraints are likely to emerge, such as building height, that unless also changed, may not yield significant results. 25. In Lieu Parking Fees for Housing Downtown and California Avenue Date Assigned: February 5, 2018 (Housing Work Plan Task 2.4.5) Description: Allow parking reductions based on payment of parking in lieu fees for housing Downtown and California Avenue. Status: Not started. Notes: Downtown has an in-lieu parking program that currently does not apply to residential uses. If amended to apply, a subsidized rate would be required as the current fee of $106,171 is cost prohibitive for a housing development. A 636-space parking garage is being built in the California Avenue area, but Planning staff is unaware of any discussion that some of these spaces would be earmarked for in-lieu parking. 26. Informational Report on State and Local Density Bonus Law Date Assigned: September 23, 2019 (Colleagues Memo) Description: Direct Staff to transmit to Council an informational report on the state and local density bonus Ordinance. Status: Not started. Notes: While staff has not yet prepared a report, the following links from the League of California Cities provide background on the state law as of October 2016: https://www.cacities.org/Resources-Documents/Member-Engagement/Professional- City of Palo Alto Page 14 Departments/City-Attorneys/Library/2016/Annual-2016/10-2016- Annual_Hutchins_Tiedemann_Not-Just-Density.aspx Here is the accompanying PowerPoint presentation: https://www.cacities.org/Resources-Documents/Member-Engagement/Professional- Departments/City-Attorneys/Library/2016/Annual-2016/10-2016- Annual_Hutchins_Tiedemann_Not-Just-Density.aspx There are some changes in the law since 2016 that are not reflected above links. The City’s local implementation of the density bonus program is also available online: http://library.amlegal.com/nxt/gateway.dll/California/paloalto_ca/title18zoning*/chapter1815r esidentialdensitybonus?f=templates$fn=default.htm$3.0$vid=amlegal:paloalto_ca$anc=JD_Cha pter18.15 27. Annual Office Limit: Four Year Implementation Report Date Assigned: May 21, 2018 Description: In its review of the annual office limit ordinance, Council directed staff to return in two to four years with a report to provide data regarding business development in the areas affected by the annual office limit cap. Staff anticipates returning to Council with a report prior to May 2022. Status: Not started. 28. Request for Funding from HCD to Implement Housing Bills Date Assigned: February 5, 2018 (Housing Work Plan Task 1.6) Description: Transmittal of a request for funding to implement new housing bills to the state HCD. Status: Not started; staff requests this item be removed from the work plan. Other Assignments The above list does not include other initiatives contained in City policy documents, directed by Council, or that require attention for other reasons, including; • implementation of adopted comprehensive plan and housing element programs; • routine work, including quarterly and annual reports to Council and regional entities; • coordination with City departments on other policy initiatives, including implementation of the pedestrian and bicycle master plan, sustainability and climate action plan, green infrastructure, urban forestry master plan, and the Baylands master plan, among other policy documents; • responding to federal and state-legislation, draft bills and implementation as appropriate; • other areas of focus that staff is aware of or regards as important topics requiring study, such as: o Downtown land use and transportation coordinated area plan to address or respond direction regarding grade separation, transit center improvements, housing policy, urban design interests and mobility and parking solutions o Review of parking requirements for California Avenue commercial zones o Working with community partners to explore supportive housing opportunities9 9 As an information note to Council, the Santa Clara County Continuum of Care is in the process of updating its 5-year Community Plan to End Homelessness. The plan seeks to guide governmental actors, nonprofits, and other community members as they make decisions about funding, programs, priorities, and needs. To develop City of Palo Alto Page 15 o Revisit San Antonio Road as a place for more housing opportunities o Review City and regional land use and transportation policies for El Camino Real Department Resources Much of the work directed to staff that was accomplished above occurred despite significant organizational changes, including City Council appointment of a new City Manager and several new department heads. For the planning department, transportation-related functions were separated from planning and turned into the Office of Transportation, whose work is directed by the City Manager. The City’s development services (building permits and inspections) and planning operations were merged. For the past year, vacancies have been a critical challenge for the department. While many positions have since been filled, staff in the long-range planning program, which is principally charged with carrying out the above work, has significant vacancies. This program is resourced to include a planning manager that is supported by four other full-time employees and one hourly employee. At present, three of the five full time positions are vacant including the manager, the City’s housing specialist, and a senior-level policy planner. One new member of the long-range planning team has transitioned from the program responsible for application processing, but has other assignments not related to housing, such as advancing code changes related to wireless communication facilities. These vacancies and work related to merging city department operations has resulted in less progress being made on the Housing Work Plan and the two Colleagues’ Memos. It is anticipated it will take another four to six months to recruit and onboard these outstanding positions, which have been difficult positions to fill. Staff has consultant resources it is using to advance some of this work, but this also requires oversight. The department’s director and assistant director are also taking on some assignments, most notably related to the inclusionary housing expansion and NVCAP, but this competes with other responsibilities required of these positions. ANALYSIS / ALTERNATIVES The above work program has a significant number of assignments that exceeds available resources to complete in a timely manner. Even when fully staffed, the workload is extensive and is not static. Except as may be adjusted by Council, staff will continue to work on these assignments, generally in the order listed above, understanding that things may shift as new Council priorities or interests emerge. The housing-related work plan assignments address the need to protect, preserve and produce housing in Palo Alto, which are the cornerstones to a comprehensive housing strategy. However, the projects a draft plan, a community plan work group, comprised of staff from the County of Santa Clara Office of Supportive Housing, the County Executive's Office, Destination: Home and the City of San Jose, and other community partners, have been gathering feedback from community-based service organizations, local government, philanthropy, business, community members, and people with lived experience through a series of community meetings, surveys, and focus groups. A draft plan is expected to be shared publicly in January 2020 and the workgroup will host another community meeting to gather additional feedback before the final plan is adopted by the Continuum of Care. The Board of Supervisors and city councils will be asked to endorse the plan in early 2020. City of Palo Alto Page 16 listed above, while meaningful and important, are not likely to advance the City toward its aspirational goal of 300 or more new housing units a year. Work related to the NVCAP and possible amendments to the PTOD combining district would likely result in the greatest increase in commercial zoning housing production. However, it is anticipated that changes to parking, floor area and height may be required to encourage more housing. Moreover, these planning efforts that will take at least a year or more to complete. Following Council approval of any legislative action, there is still a considerable amount of time required for property owners and developers to propose and file projects, time to process applications, and time to build the project. Accordingly, it could take at least five years before any housing units are produced as a result of these distinct initiatives and this does not address other areas of the City where housing is desired, such as downtown. If the Council is interested in a timelier production of housing units, it may want to consider allowing for a modified version of the planned community zoning designation – one that eliminates the need for a negotiated public benefit. Staff has had several conversations with property owner representatives who have a range of housing projects they are interested in pursuing, but inevitably are challenged by one or more development standards, typically involving parking, but also floor area and modest adjustments to height. Planned community zoning has received significant criticism for a variety of reasons and Council has indefinitely placed a freeze on any further planned community applications. However, it is worth noting that over the past 20 years, the City entitled approximately 3,330 housing units with planned community zoning and development agreement applications accounting for 39% and 25%, respectively – or nearly 64% (2,120 units) of the combined units produced over this period. As an alternative to the planned community application, the City Council could establish a new housing overlay or housing combining district that could include some of the following attributes: • Allowed only for housing projects, including mixed use housing projects. • No negotiation over public benefits; housing alone, including required affordable housing, would be the public benefit. • A certain percentage of pre-determined on-site affordable units at specified income levels could be mandated based on proposed housing type (rental v. ownership). • For mixed use projects, housing units, sufficient to address any job-related housing needs generated by the project, must be provided on-site. • Cannot exceed any of the City’s office cap limits. • Developers may request to deviate from the zoning code development standards, including but not limited to, parking, floor area, height, unit density, etc. • A prescreening application would be required before the City Council, prior to application submittal and public hearings before the PTC, ARB and City Council. City Council would have final approval authority over any application. To redevelop property, there needs to be sufficient profit incentive for a property owner to build housing that overcomes revenues that can be generated by existing or proposed non-residential uses on property - and sufficient return to attract investors. City regulatory processes, fees, inclusionary requirements and zoning regulations play a key role in what it costs to build in Palo Alto. Combined with City of Palo Alto Page 17 other factors,10 projects in Palo Alto tend to result in a lower return on investment, which discourages lenders or results in an insufficient profit to offset the risk of development. In the past, the City has tried to incrementally increase development incentives to encourage housing while minimizing community impacts. This process, however, takes time. The recently adopted housing incentive program has not yielded any significant projects and it remains to be seen whether the standards were sufficient in the current economic climate. Using the housing combining district potentially creates another tool that allows the City to articulate its housing development expectations and gives property owners and developers an opportunity to present a project and show how those housing goals can be advanced on a project by project basis. POLICY IMPLICATIONS This report transmits an update on the Housing Work Plan and other priority initiatives that are balanced with available staff resources. Many of the tasks on the work plan advance important policy objectives related to housing preservation, protection and production. Concern is expressed in the report that near-term housing production is not anticipated to reach the expressed interest of 300+ units a year. This is due to the length of some of the policy initiatives, but also due to the variability among properties in terms of creating sufficient incentive to motivate an owner to redevelop a site with housing. This document is intended to serve as a status update and to receive direction from Council on updates to the work plan or other areas that require more focus and attention. RESOURCE IMPACT The recommendation in this report does not have any fiscal or budgetary impacts. COMMUNITY ENGAGEMENT The PDS work plan has been developed over time and directed by Council at several public meetings and is largely based on community planning initiatives such as the comprehensive plan and public comment received at various community meetings. ENVIRONMENTAL REVIEW The recommendation in this report is not subject to the provisions of the California Environmental Quality Act as it does not meet the definition of a ‘project’ as defined in Public Resource Code Division 13, Section 21065. Attachments: A: 2018 2019 Housing Work Plan Status Matrix (DOCX) 10 https://ternercenter.berkeley.edu/construction-costs-series Housing Work Plan 2018-2019: Summary Status Update Description Status Notes Ongoing Projects & Initiatives 1.1. Preparation and consideration of a code clean up ordinance with provisions relating to the State Density Bonus Law Completed 4/1/19i 1.2. Preparation and consideration of an ordinance making technical changes to the City’s ADU regulations to conform with new State laws effective January 1, 2018 Completed 2/26/18ii 1.3. A one-year review of the City’s ADU regulations followed by preparation and consideration of an ordinance making desired adjustments Completed 11/5/18iii 1.4. Development of an intake checklist and internal procedures related to implementation of SB 35 (the “by right” housing bill) and changes to the Housing Accountability Act Completed 7/23/19iv 1.5. Preparation and consideration of an ordinance establishing procedures for streamlined review under SB 35 Started, but not complete. Consultant hired to advance project. Relates to tasks 2.1, 2.2, and 2.3. 1.6. Transmittal of a request for funding to implement new housing bills to the State Department of Housing and Community Development (HCD) Not started. 1.7. Preparation and consideration of an ordinance to allow for “pilot” projects aimed at providing workforce housing on Public Completed 6/25/18v Facilities (PF) zoned parcels. This initiative also includes a specific proposal on the old VTA parking lot at El Camino Real and Page Mill Road 1.8. Preparation and consideration of an ordinance to create an affordable housing (AH) overlay district that could be used to support housing on Palo Alto Housing’s site at El Camino Real and Wilton Court Completed 5/7/18vi 1.9. Preparation and review of the City’s annual report regarding Housing Element implementation Completed 3/4/19vii 1.10. Adoption of goals/objectives and a schedule for the North Ventura Coordinated Area Plan process, such that a final plan can be considered for adoption at the end of 2019 Completed 3/5/18viii 1.11. Completion of a literature review and data collection regarding parking demand for different housing types/locations in Palo Alto Completed 8/29/18ix Comprehensive Plan Implementation and Housing Production Ordinances 2.1 Identify By Right Project Procedures (SB 35) 2.2. Strengthen objective standards (SB 35) 2.3. Comp Plan and SOFA plan changes to strengthen objective standards (SB 35) Started – ongoing. A consultant has been hired, Lexington Planning, to identify subjective standards in the zoning code and SOFA CAP and to suggest revisions to make these standards clear and objective. Streamlined, by-right, development in accordance with SB35 requires a housing project with at least 2/3rds of the developed dedicated toward housing with 50% of the housing units deed restricted to low income, among other criteria. These thresholds will remain in effect through the remainder of the current RHNA cycle ending in 2023. No qualifying SB35 housing project has been filed to date. This initiative is scheduled to be completed by the end of 2022. 2.4. Provide incentives and remove constraints for multifamily housing in the Downtown (CD-C), Cal Ave., (CC(2)/PTOD) and El Camino Real (CN and CS) districts Completed 4/1/19i Changes in PTOD zoning were not proposed in the 2018 housing ordinance. This district requires a specific study and analysis to review and adjust development standards that facilitate greater housing development consistent with the district’s objectives. 2.4.1. Review and revise development standards (e.g., landscaping, open space) Completed 4/1/19i 2.4.2. Consider eliminating dwelling unit densities and relying on FAR and average unit sizes Completed 4/1/19i 2.4.3. Review and revise permitted uses and use mix (e.g., allow 100% residential w/ retail) Completed 4/1/19i 2.4.4. Review and revise level of permitting and site plan review required Completed 4/1/19i 2.4.5 Allow parking reductions based on TDM plans and on payment of parking in lieu fees for housing (Downtown and Cal Ave.) Partially Completed 4/1/19i TDM plans can be used to reduced parking reductions, including a zero-parking requirement for certain qualifying affordable housing projects. California Avenue does not have an in lieu parking program and to establish one would require direction from Council and is a specific and dedicated assignment. Downtown has an in-lieu parking program that does not apply to residential uses – if amended to apply, a subsidized rate would be required as the current fee of $106,171 is cost prohibitive for a housing development. 2.4.6. Convert some non-residential FAR to residential FAR Completed 4/1/19i 2.4.7. Remove any constraints to special needs housing in particular Started, but deferred A fee waiver was considered in the housing ordinance that would further reduce development costs, but this requires further study and analysis prior to advancing a policy recommendation. Support multifamily housing in the RM districts (2.5): Completed 4/1/19i 2.5.1. Consider establishment of minimum densities in all RM zones 2.5.2. Allow redevelopment (replacement) of existing residential units on sites that are nonconforming because of the number of units or FAR Completed 4/1/19i Provide incentives and remove constraints in all zoning districts (2.6): 2.6.1. Adjust parking requirements to reduce costs (based on study in item 1.11) Completed 4/1/19i 2019 Proposed Ordinance 2.7. Consider changes to TDR Ordinance to increase its use for residential FAR/density Not started 2.8. Review and revise allowed uses and permit requirements (i.e., by right, use permits) for smaller units, co-housing, etc., in all zoning districts Started, but deferred This concept was explored in the 2018 housing ordinance with the introduction of micro units, but recommendations for reduced parking for these units was not supported. Work on co-housing was a concept anticipated to be explored in the NVCAP, but the need to streamline this work effort to align with remining funds is not expected to result in any new policy. 2.9. Develop protections for cottages and duplexes in the R-1 and R-2 districts and consider zoning changes to allow additional cottage clusters, duplexes, and fourplexes where appropriate Not started 2.10. Review PTOD and Village Residential zoning overlay process to remove constraints/complexity, and expand usage Started, but deferred As part of the housing ordinance, staff reviewed the PTOD and Village Residential zoning standards and determined the level of effort to complete this task required a significant work effort and a decision was made to defer this work in order to advance the other Council-directed initiatives. Changes to PTOD and Village Residential zoning relates to items 2.4 and 2.9, respectively. These are two discrete work assignments and should be separated. Economic Analysis to Support BMR Housing 3.1. Explore increasing BMR percentage requirements in market rate development up to 20% Ongoing These two tasks are being prepared concurrently. Initial draft analysis suggests different inclusionary standards may be appropriate for different geographic areas of the City and this is being further vetted with consultant. Early progress on this task required revisions with the passage of the (April 2019) housing ordinance. Further delays incurred due to limited staff resources. Estimated timeline for completion: Report to the PTC in March. Recommendation to Council in April. 3.2. Explore implementing inclusionary BMR program for rental units (“Palmer fix”) Ongoing 3.3 Explore implementing a “no net-loss” policy when housing is redeveloped Not started This is anticipated to be a significant policy initiative involving planning staff and the City Attorney’s office. A preliminary review of no net-loss policies in other jurisdictions did not reveal any existing standards to model. Leveraging City Funds 4.1. Issue a Notice of Funding Availability (NOFA) and solicit proposals from non-profit developers for use of the City’s Commercial and Residential Housing Funds Completedx With the City Council’s action to reserve $3M for a future teacher housing project and its funding commitments to Wilton Court, now totaling $20M, the remaining balance does not warrant issuance of a Notice of Funding Availability – though the objective of task 4.2 has been accomplished. 4.2. Select projects for funding that maximize the use of the City’s funds for development of new affordable units and preservation of existing units that are at risk Partnerships with Agencies and Organizations 5.1. Explore the opportunity for developing housing over parking on City-owned downtown parking lots by participating in the 2019 NAIOP Challenge, a competition between business school students from Stanford and Cal hosted by the Bay Area chapter of a national real estate development association (See www.naiopsfba.org/28th- annual- real-estate-challenge-winner/) Not started No resources are currently planned for or dedicated to this task. 5.2. Work with the County to explore the opportunity for developing housing at the County courthouse site near California Avenue Ongoing The City Council reserved $3 million from the City’s affordable housing fund to support this project. It is anticipated modification to the City’s Workforce Housing ordinance may require modification to accommodate this project. The County is the project lead for any future project. 5.3. Work with PAUSD representatives to explore opportunities for housing as part of the Cubberley Master Plan or at other publicly-owned sites Ongoing A draft concept plan has been released for the Cubberley Center and both the City and the school district have engaged in a discussion regarding their respective visions for the area. 5.4. Support the regional establishment of a coordinated effort to provide shared housing arrangement facilitation Ongoing While efforts to form a County subregion did not materialize, discussions continue about a possible Planning Collaborative to create a forum for regional housing discussions. 5.5. Work with the San Andreas Regional Center to implement an outreach program that informs families in Palo Alto about housing and services available for persons with developmental disabilities Not Started Initiate conversations with Stanford University regarding (5.6): 5.6.1. Potential residential uses at Stanford Research Park Not started 5.6.2. Potential residential uses near Stanford University Medical Center (SUMC) 5.6.3. Potential residential uses at the Stanford Shopping Center 5.7. Maintain an ongoing conversation with the community, regarding the need for affordable housing, the financial realities of acquiring land and building affordable housing, and the reasons that affordable housing projects need higher densities to be feasible developments Ongoing Some discussions have been held by the PTC and the City Council has similarly raised many of these issues. Staff will continue to find opportunities to advance community conversations. i Second Reading Staff Report and Ordinance dated April 1, 2019: https://www.cityofpaloalto.org/civicax/filebank/blobdload.aspx?t=52156.04&BlobID=69992 ii Second Reading Staff Report and Ordinance dated February 26, 2018: https://www.cityofpaloalto.org/civicax/filebank/documents/63523 iii Second Reading Staff Report and Ordinance dated November 5, 2018: https://www.cityofpaloalto.org/civicax/filebank/documents/67438 iv Updated application planning application form: https://www.cityofpaloalto.org/civicax/filebank/documents/73097 v Staff Report and Ordinance, dated June 25, 2018: https://www.cityofpaloalto.org/civicax/filebank/documents/65525 vi Staff Report and Ordinance, dated May 7, 2018: https://www.cityofpaloalto.org/civicax/filebank/documents/64798 vii Staff Report, dated March 4, 2019: https://www.cityofpaloalto.org/civicax/filebank/blobdload.aspx?t=60751.24&BlobID=69492 viii Staff Report, dated March 5, 2018: https://www.cityofpaloalto.org/civicax/filebank/documents/63646 ix Revised parking study presented to PTC; parking study begins on page 42: https://www.cityofpaloalto.org/civicax/filebank/documents/66513 x Teacher Housing Staff Report, dated June 25, 2018: https://www.cityofpaloalto.org/civicax/filebank/documents/65670; Wilton Court Housing $10 Million Commitment Staff Report, dated June 3, 2019: https://www.cityofpaloalto.org/civicax/filebank/documents/71434; an additional $10 Million request will be considered by the City Council on February 13, 2020. City of Palo Alto (ID # 11016) City Council Staff Report City of Palo Alto Page 1 Report Type: Action Items Meeting Date: 1/21/2020 Summary Title: CAO Committee Discussion and Recommendation - City Auditor's Office Title: Council Appointed Officers Committee Recommendation That Council Discuss and Accept the City Auditor’s Office Organizational Study Report and Provide Direction on Next Steps From: Council Appointed Officer's Committee In February 2019, the City Auditor retired after five years of service. Upon the City Auditor’s retirement, Council authorized the engagement of external experts to assist the City with two scopes of work related to the City Auditor’s Office: (1) assist with the continuity of operations and work product in the City Auditor’s Office; and (2) conduct an organizational review of the audit function in Palo Alto. Council approved two contracts: •Senior Consultant Services: After reviewing several firms that provide audit services, the consulting firm of Management Partners was selected to provide a senior consultant to oversee the ongoing work from the City Auditor’s Office. The senior consultant’s assignment began in March 2019 and continued through mid-November 2019, approximately eight months. The senior consultant is no longer available to continue this assignment in Palo Alto because of other obligations and the contract term has ended. In the absence of an external senior consultant, the existing City Auditor staff of three full- time employees are continuing their assignments and providing deliverables in accordance with pre-established workplans. •Organizational Review: The City published a public Request for Proposal (RFP 174966)1 for an Auditor Organizational Review. The RFP invited individuals and firms with the 1 The Auditor Organizational Review was publicly published in accordance with City protocols as RFP 174966, with a submission deadline of April 18, 2019. 4 Packet Pg. 220 City of Palo Alto Page 2 appropriate professional expertise to submit proposals for this work. The Council Appointed Officers (CAO) Committee met in a public session on May 2, 2019 to evaluate and rate the proposals. From this review, Kevin Harper CPA & Associates was selected to perform the organizational review. The scope of work included a final report, which was presented at a public CAO Committee meeting on December 19, 2019. The CAO Committee approved the report to proceed to the City Council as a public agenda item for discussion. As such, the report is on agenda as an Action Item on January 21, 2020, for a discussion and acceptance by the full Council. In accordance with the scope of services, the report for discussion on January 21 includes a comparison of Palo Alto’s City Auditor function to other local governments and industry standards, as well as a comparison of the City’s practices to best industry practices and professional standards. In addition to reviewing and accepting the report, the Council may also wish to discuss and direct additional next steps with respect to the City Auditor function. Attachments: • Attachment4.a: Attachment A: Harper Study • Attachment4.b: Attachment B: ALGA response • Attachment4.c: Attachment C: Article -Auditor Independence 4 Packet Pg. 221 Internal Auditing Practices: City of Palo Alto Relative to Industry Practices Kevin W. Harper CPA & Associates 20885 Redwood Road, Suite 202 Castro Valley, CA 94546 (510) 593-5037 kharper@kevinharpercpa.com December 5, 2019 4.a Packet Pg. 222 Kevin W. Harper CPA & Associates Table of Contents Page I. Purpose and Objectives ................................................................................ 1 II. Scope and Approach ..................................................................................... 2 III. Results of Review and Related Recommendations ....................................... 4 1. Organizational Placement 2. Staffing and Budget 3. Performance Measures 4. City Auditor Qualifications 5. Outsourcing Considerations IV. Other Findings and Recommendations ....................................................... 14 Attachment - Summary of Surveys………………….……………………………..………….…..……A 4.a Packet Pg. 223 Kevin W. Harper CPA & Associates Page 1 I. Purpose and Objectives The City of Palo Alto engaged us to compare certain elements of the City Auditor’s Office to other local governments and industry standards. The review included a survey of the internal audit functions of several California cities and counties, as well as comparison of the City’s practices to best industry practices and professional standards. The objectives of our review were to: 1. Review organizational placement of City Auditor’s Office. 2. Compare staffing and budget to other cities and counties, including comparison of the number of audits and cost per audit. 3. Review objective measures of audit productivity and effectiveness. 4. Provide recommendation on City Auditor minimum qualifications. 5. Provide considerations for outsourcing the internal audit function. 4.a Packet Pg. 224 Kevin W. Harper CPA & Associates Page 2 II. Scope and Approach Following is a summary of the procedures we performed during the review: 1. Met with City officials to understand their concerns, the strengths and weaknesses of current organization, goals/vision for the City Auditor’s Office, and the current staffing and budget. 2. Met with Interim City Auditor and read relevant City documents to gain an understanding of City Auditor’s Office organization, duties, mission, budget, and staffing. Identified and gathered relevant documentation such as Audit Policies and Procedures Manual, organization chart, budget, Fiscal Year 2019 Audit Work Plan, job descriptions, recent audit reports, and key performance measures. 3. Surveyed similar governments (“the Palo Alto survey”) to benchmark internal audit activities such as who the chief audit executive reports to, staffing levels, number of audit completed, annual budget, and measures of productivity/effectiveness used. Survey questionnaires were sent to the Cities of Alameda, Berkeley, Cupertino, Fremont, Fresno, Oakland, Redwood City, Santa Clara, Sunnyvale, the Counties of San Mateo and Santa Clara, and the City & County of San Francisco. 4. Researched professional standards including: • Institute of Internal Auditors (IIA) – International Standards for the Professional Practice of Internal Auditing • American Institute of Certified Public Accountants – Generally Accepted Auditing Standards • Comptroller General of the United States – Government Auditing Standards We also reviewed the results of internal audit surveys and best practices of various organizations, including the Government Finance Officers Association, Moody’s Best Practices in Audit Committee Oversight of Internal Audit, and the American Institute of Certified Public Accountants. 5. Developed findings and recommendations based on our interviews, document reviews, surveys, research of professional standards, knowledge of best practices, and considering the City’s goals and vision. 6. Wrote report that includes: • Objectives of the organizational review. • Scope of project and procedures performed. • Observations related to organizational placement, staffing and budget, performance measures, City Auditor qualifications, outsourcing, and other matters that came to our attention during the review. 4.a Packet Pg. 225 Kevin W. Harper CPA & Associates Page 3 • Recommendations for improvement or consideration. 7. Reviewed findings and recommendations with Mayor and City Manager. 4.a Packet Pg. 226 Kevin W. Harper CPA & Associates Page 4 III. Results of Review and Related Recommendations 1. Organizational Placement IIA Standards The IIA’s International Standards for the Practice of Internal Auditing (“the IIA Standards”) state: 1110 - Organizational Independence The chief audit executive must report to a level within the organization that allows the internal audit activity to fulfill its responsibilities. The chief audit executive must confirm to the board, at least annually, the organizational independence of the internal audit activity. 1110.A1 - The internal audit activity must be free from interference in determining the scope of internal auditing, performing work, and communicating results. The IIA defines independence as: Independence is the freedom from conditions that threaten the ability of the internal audit activity to carry out internal audit responsibilities in an unbiased manner. To achieve the degree of independence necessary to effectively carry out the responsibilities of the internal audit activity, the chief audit executive has direct and unrestricted access to senior management and the board. This can be achieved through a dual-reporting relationship. Threats to independence must be managed at the individual auditor, engagement, functional, and organizational levels. The IIA goes on to explain organizational independence as the authority to: • Approve the internal audit charter; • Approve the risk based internal audit plan; • Approve the internal audit budget and resource plan; • Receive communications from the chief audit executive on the internal audit activity’s performance relative to its plan and other matters; • Approve decisions regarding the appointment and removal of the chief audit executive; • Approve the remuneration of the chief audit executive; and • Make appropriate inquiries of management and the chief audit executive to determine whether there are inappropriate scope or resource limitations. Palo Alto’s Current Structure The City’s reporting structure for internal audit is very formal with virtually no involvement by the City Manager, except for being interviewed for risk identification and to receive draft findings and recommendations at the end of each audit. The Audit Policies and Procedures 4.a Packet Pg. 227 Kevin W. Harper CPA & Associates Page 5 Manual is thorough, professional, up-to-date, and is approved by the Policy and Services Committee. The City Auditor’s time sheets are reviewed by Payroll and expense reports are reviewed and approved by the City Manager’s Office. This formal reporting relationship assures internal audit’s independence from the influence of senior City management. However, it also leads to a less cooperative relationship that is important to implement solutions to risks identified by the audits. Analysis The chief audit executive should report to the board of directors or its audit committee for strategic direction, reinforcement, and accountability; and to executive management for assistance in establishing direction, support, and administrative interface. The IIA Standards clearly indicate that the board (usually through its audit committee) must have a prominent role in setting the scope of internal audit activities, but do not explicitly prohibit other reporting relationships as long as the reporting relationship meets the overall criterion of ensuring broad audit coverage, free from any interference in setting the scope of work, the choice of audit procedures, and the free and unfettered communication to any level within the organization needed to ensure adequate attention to the findings and appropriate follow-up action. The audit committee and the internal auditors are interdependent and should be mutually accessible. The board or its audit committee should be responsible for the appointment, removal and compensation considerations of the chief audit executive. It is critical that internal audit be seen by everyone in the organization as an arm of the audit committee. One of the questions that needs to be answered to determine the size, focus and success of an internal audit function is what type of internal audit department do you want. Below is a continuum of the approach used to deliver internal audit services: Internal Audit Operating Continuum • Assurance Provider – delivers objective assessment of the effectiveness of internal controls. Takes little responsibility for cost vs benefit considerations nor implementation of recommendations. • Problem Solver – Brings analysis and perspective on root causes of issues identified in audit findings to help auditees take corrective action. • Trusted Advisor – Provides value-added services and proactive strategic advice well beyond effective execution of the audit plan. The continuum moves left to right from assurance providers that focus on finding and pointing out problems for management to address to trusted advisors who focus on teaching the organization how to identify and address risk. Trusted advisors focus more on the following Assurance Provider Problem Solver Trusted Advisor 4.a Packet Pg. 228 Kevin W. Harper CPA & Associates Page 6 than assurance providers: critical risks and issues the organization is facing, aligning scope and audit plan with stakeholder expectations, promoting quality improvement and innovation, obtaining training and/or sourcing the right level of talent for audit, and leveraging technology effectively in the execution of audit services. It is important for the City to determine where on this continuum it wants its internal audit function to act. This decision has ramifications for everything related to internal audit, including annual budget, staffing, experience of staff, selecting and scoping audits, and working with others in the organization. For example, if the City prefers for Internal Audit to be in the Trusted Advisor level of service, it may be appropriate for Internal Audit to devote significant resources to Control Self Assessment, developing tools and training for departments to assess and report the adequacy of their controls. Recommendation #1 The City should determine where along the internal audit operating continuum it wants its internal audit function to operate. It should consider revisions to its budget, staffing levels and experience, written procedures, and interaction with auditees, as appropriate. It should consider whether to designate a portion of its internal audit efforts to providing management advisory services, while maintaining a portion of its efforts for formal internal audits. The City should follow IIA’s recommendation that internal audit has a dual-reporting relationship, whereby it reports functionally to the audit committee and administratively to the City Manager. All decisions about audits to be conducted; audit scope; audit timing; and City Auditor appointment, termination, evaluation and compensation, should continue to be made by the audit committee. The City Manager should provide administrative oversight, including review of time sheets and expense reports, consultation about timing of audits based on operational considerations, and involvement in discussion of cost vs. benefit decisions of audit recommendations. Additional involvement by the City Manager’s Office may improve cooperation with the City Auditor’s Office and may improve the quality and quantity of implemented recommendations. 2. Staffing and Budget There are no recommended levels of internal audit staffing per industry standards. The IIA Standards advocate a strong system of internal control that is monitored by a well-resourced internal audit activity as a fundamental feature of good governance. The amount of resources that an organization devotes to its internal audit activities varies based on many factors including its industry, the risks it faces, the role of others in the organization to monitor risk and control (e.g., operational management, Risk Management Group, Compliance Officer), and the organization’s risk appetite. 4.a Packet Pg. 229 Kevin W. Harper CPA & Associates Page 7 The results of the Palo Alto survey show the following staffing and budgeting levels for comparable cities: City1 City-wide budget (000s) Internal audit budget (000s) Internal audit budget (% of city- wide budget)2 Internal audit FTEs Average # audits Cost per Audit2 # Audits per FTE2 Berkeley $387,217 $1,600 0.41% 6 5.5 $291,000 0.9 Fresno 655,423 272 0.04% 2 3.5 78,000 1.8 Oakland 1,060,720 2,200 0.21% 10 6.5 338,000 0.7 Santa Clara 907,828 1,238 0.14% 2 3.5 354,000 1.8 Palo Alto $508,426 $1,458 0.29% 5 3.5 $417,000 0.7 1 Survey questionnaires were sent to twelve cities and counties. Responses were received from seven cities and from the City and County of San Francisco. Three of the responding cities do not have dedicated internal audit functions and the City and County of San Francisco is not comparable due to its size. The remaining four cities are included in the table above. 2 Shaded columns represent calculated amounts based on survey results and information from comprehensive annual financial reports. This survey shows: • The City’s internal audit budget as a percent of the city-wide budget is the second highest of the comparable cities. This indicates City has devoted more resources to internal audit than most comparable cities. • The City’s cost per audit is the highest of any of the comparable cities, and the number of audits per full-time equivalent employee is tied for the lowest. This can be caused by many factors such as working on non-audit projects (e.g., National Citizen Survey, Annual Performance Report, Sales Tax Allocation Reviews), larger audits, significant time devoted to administrative activities, or inefficiencies. • The cost per audit calculated at $417,000 above is very high. By comparison, the 2019- 20 budgeted cost for the City’s annual independent financial audit (including audits of the City, its federal grant programs, and several smaller entities managed by the City), which is a more comprehensive audit than most internal audits, is $168,000 per year. 4.a Packet Pg. 230 Kevin W. Harper CPA & Associates Page 8 Following is a list of audits completed by Palo Alto during the last three years: FY 2018-19: • Code Enforcement • ERP Planning - Data Standardization • ERP Planning - Separation of Duties • Business Registry FY 2017-18 • Accuracy of Water Meter Billing • Continuous Monitoring: Overtime • Information Technology and Data Governance FY 2016-17 • Community Service Department: Fee Schedule • Continuous Monitoring: Payments • Green Purchasing Practices • Utilities Department: Cross Bore Inspection Contract Recommendation #2 We understand the City is already in process of transferring responsibility for non-audit services from Internal Audit to other personnel. We also recommend that internal audits generally be scoped with a smaller number of hours in order to increase the number of risk areas they can look into each year. Audits that yield surprising negative results can be expanded. In addition, as discussed in Recommendation #5 below, the City should consider contracting out some of its internal audits. 3. Performance Measures The IIA’s Global Summary of the Common Body of Knowledge compiled the eight most commonly used performance metrics within internal auditing: • Recommendations accepted/implemented • Customer/auditee surveys from audited departments • Reliance by external auditors on the internal audit activity • Cost savings and improvements from recommendations implemented • Number of management requests for internal audit assurance or consulting projects • Number of major audit findings • Budget to actual audit hours • Cycle time from entrance conference to draft report 4.a Packet Pg. 231 Kevin W. Harper CPA & Associates Page 9 It is very important that any metrics used be closely aligned to stakeholder expectations. The goal is to demonstrate that services delivered adds value. When metrics are aligned with what matters most to internal audit’s stakeholders, they help assure that daily operations are focused on what matters most. The City of Palo Alto’s internal audit performance metrics are limited to the average cost per audit, average hours incurred by auditor, and elapsed time to clear findings. Of the four comparable cities listed in the table on page 7, the only performance metrics reported in the survey are audit hours incurred, cost per audit, and number of recommendations implemented. Other common performance metrics for the internal audit function are: • Number of auditors vs total employees or vs total revenue • Actual vs budgeted department costs • Percent of audit plan completed • Number (or percent) of audit findings resolved prior to report issuance • Number (or percent) of audit findings resolved within 30, 60, 90 days • Absence of regulatory or reputation issues/failures • Management/auditee satisfaction survey results • Productive hours vs. admin hours • Percent reduction in risk exposure • Percent of audit plan aligned to enterprise risks • Business process improvements resulting from internal audit • Satisfactory Findings from last external peer review • Number of professional certifications • Percent of staff meeting continuing professional education requirements • Adherence to IIA Standards and City policies and procedures • Turnover of audit personnel • Audit committee meeting attendance • Training sessions or involvement with enhancing internal control/risk management knowledge of the organization • Percent of audits using Computer Assisted Audit Techniques (e.g., data analytics, dashboards, databases, continuous auditing, thought leadership) • Percent of audits using data analytics to drive scoping decisions Recommendation #3 The City should select and track a small number of performance measures that align with stakeholder expectations, are quantifiable and efficiently gathered. A suggested list of appropriate metrics may be: • Recommendations accepted/implemented • Customer/auditee surveys from audited departments 4.a Packet Pg. 232 Kevin W. Harper CPA & Associates Page 10 • Number of management requests for internal audit assurance or consulting projects • Percent of audit plan completed • Absence of regulatory or reputation issues/failures • Productive hours vs. admin hours • Percent of audit plan aligned to enterprise risks The metrics selected should be projected each year, tracked during the year and reported at the end of each year, with explanations for variances between projected and actual results. For any metric falling below projections, the City Auditor should develop an improvement plan and communicate it to stakeholders. 4. City Auditor Qualifications The IIA Standards do not specifically address the chief audit executive’s qualifications, but state that the chief audit executive should possess “the knowledge, skills, and other competencies needed to perform their individual responsibilities.” The IIA’s Model Internal Audit Legislation for State Governments states the chief audit executive shall possess one or more of the following qualifications: • A bachelor’s degree and five years of progressively responsible professional auditing experience as an internal auditor or external auditor, information technology auditor, or any combination thereof; or • A master’s degree and four years of progressively responsible professional auditing experience as an internal auditor, external auditor, information technology auditor, or any combination thereof; or • A certificate as a Certified Internal Auditor (CIA) or Certified Government Auditing Professional (CGAP) and four years of progressively responsible professional auditing experience as an internal auditor, external auditor, information technology auditor, or any combination thereof. In the absence of a CIA certificate or CGAP certificate, consideration should be given to require a Certified Public Accountant (CPA) license or Certified Information Systems Auditor (CISA) credential. Government Auditing Standards, promulgated by the Comptroller General of the United States, do not specifically address the chief audit executive’s qualifications, but state that staff collectively should have the necessary “technical knowledge, skills, and experience.” They provide some specificity by requiring audit staff members to have knowledge of GAO Audit Standards, the audited entity’s specialized areas or industry, and the subject matter under review; along with oral and written communication skills. The American Institute of Certified Public Accountants has guidelines for hiring the chief audit executive and recommends the individual should have a CPA or CIA credential and have significant experience (10 years or more) in a management role, along with strong technical 4.a Packet Pg. 233 Kevin W. Harper CPA & Associates Page 11 skills in accounting and auditing. In addition, the preferred qualifications include an advanced business degree such as an MBA. The Government Finance Officers Association recommends, at a minimum, the head of the internal audit function should possess a college degree and appropriate relevant experience. It also states it is highly desirable that the head of the internal audit function hold some appropriate form of professional certification such as CIA, CPA, or CISA. The minimum qualifications listed in Palo Alto’s City Auditor job description are: • Possession of Bachelor’s degree in accounting or a related field; Master’s of Business Administration preferred. • Certification as a public accountant or internal auditor preferred. • Five years experience in internal audit in a lead or assistant capacity. • Experience in public sector organization preferred. Recommendation #4 We recommend the following set of minimum qualifications for the City Auditor as well as preferred qualifications to be sought: Required Minimum Qualifications • Bachelor’s degree in accounting or related field. • Five years progressively responsible experience conducting or managing one or more of the following: audits, examinations, or program reviews, and, in addition, two years in a supervisory capacity. • Extensive knowledge of professional audit standards. • Demonstrated oral and written communication skills. Preferred Qualifications • Professional certification (CIA, CPA, or CISA). • Master’s degree in accounting, business, public administration, economics, management, or a closely related field to the agency’s service sector. • Extensive knowledge of public sector operations. 5. Outsourcing Considerations The IIA believes a fully internally resourced audit function is most effective and can be supplemented by external experts in specialty knowledge areas. Nevertheless, several sources (including IIA’s Common Body of Knowledge survey) indicate most internal auditing practitioners agree it is appropriate to use a combination of external resources, in cosourcing or outsourcing models, to complete the audit plan. However, there is little agreement on the appropriate amount or allocation of external vs internal resources. 4.a Packet Pg. 234 Kevin W. Harper CPA & Associates Page 12 There are several reasons an internally resourced internal audit function would engage external resources, such as: • Temporary staff shortages • Specialized skill needed (e.g., for audits of information systems, actuarial calculations, police conduct) • Unexpected special project • Supplemental staff to meet tight deadlines Outsourcing alternatives include: • In-house – All resources are employees of the organization with only occasional use of external service providers. External service providers are used to supplement capability (specialist expertise, rather than capacity). • Total outsourcing – 100% of the internal audit services are obtained from external service providers. • Cosourcing through which external resources participate on joint engagements with in- house internal audit staff. • Contracting for a specific engagement or portion of some engagement is performed by an external service provider, typically for a limited time period. Management and oversight of the engagement normally is provided by in-house internal audit staff. In cases where total outsourcing is selected as the method for obtaining internal audit services, oversight and responsibility for the internal audit activity cannot be outsourced. An in-house liaison (designated chief audit executive or optionally a senior management-level employee), should be assigned responsibility for management of the internal audit activity, including selecting and overseeing consultants, clearing roadblocks, creating and maintaining a Quality Assurance and Improvement Program, and assuring compliance with City policies and procedures. If the liaison is a senior management-level employee, qualifications should include knowledge of the government’s systems, procedures and controls, and commitment to improving operations and controls. The benefits of internal resources are that they know the culture of the organization, the people, where to find information, how to use information systems, and the policies and procedures. Local governments often have difficulty maintaining an effective internal audit staff due to the difficulty of providing career path opportunities. The benefits of external resources are that they will have worked with a large number of organizations so have a good understanding of best practices. An experienced external audit firm is more likely to have specialized skills on staff. The cost per audit is usually lower than the cost per audit shown in the Palo Alto survey results on page 7. In some cases, the cost per audit is lower for external firms because there is less scope creep, there are less demands on the time of auditors, or auditors are more experienced with the audit outsourced to them. 4.a Packet Pg. 235 Kevin W. Harper CPA & Associates Page 13 The City Auditor’s Office has not contracted with external service providers except occasionally for certain specialists. The City’s Audit Policies and Procedures Manual contemplates the use of external specialists but does not address outsourcing or cosourcing with external resources. Recommendation #5 The City should consider contracting one or two of its internal audits with external service providers. This will bring the average cost per audit down, and will give the City the opportunity to better assess the costs vs. benefits of outsourcing for future consideration. The Audit Policies and Procedures Manual should be updated to contemplate the use of external service providers in roles other than a specialist. 4.a Packet Pg. 236 Kevin W. Harper CPA & Associates Page 14 IV. Other Findings and Recommendations Unimplemented Audit Findings There are 41 uncleared audit findings. 25 of these uncleared findings are more than a year old, 18 are more than two years old and one is eight years old. Approximately one-third of audit findings of the past few years remain unresolved. Findings frequently take a full business cycle to implement, so findings may legitimately remain unimplemented for up to a year. Uncleared audit findings older than a year are generally due to one of the following: (a) Either internal audit is not making practical cost-beneficial recommendations, or (b) the auditees are not prioritizing implementation of audit recommendations. Determining the reason for uncleared findings is not within the scope of this review. The City Auditor prepares a list of open recommendations as part of the City Auditor’s Quarterly Report and presents it to the Policy and Services Committee and the City Council. Recommendation #6 The City should determine whether the backlog of unimplemented recommendations result from internal audit not making practical cost-beneficial recommendations, or from the auditees not prioritizing implementation of audit recommendations. If the former, then the considerations discussed in Recommendation #1 above can address. If the latter, the City should improve training and understanding of risk and control by managers throughout the City. Auditors should prioritize findings to allow the auditee and the Policy and Services Committee to distinguish significant deficiencies in internal controls, less significant control deficiencies, and improvements to effectiveness or efficiency. Stakeholder Survey Internal audit is a service function and their stakeholders are the audit committee, auditees, and senior City management. A service organization cannot determine their success nor whether their service is improving or deteriorating without getting consistent feedback from stakeholders regarding how well their needs are being met. There has been no formal process to assess stakeholder satisfaction in recent years. In fiscal 2014-15, there was a single-question survey of departments regarding their assessment of the quality of audit services provided. Recommendation #7 The City Auditor should conduct an annual survey or other formal method of stakeholder feedback. The questions asked for each stakeholder group should be tailored to their interactions with internal audit. For example, auditees should not be asked to assess the scoping of audits and the audit committee should not be asked about interactions with departmental staff. Appropriate survey questions will follow after from the decision made in Recommendation #1 above about the approach used to deliver internal audit services. For any survey response that indicates that the City Auditor’s Office is not successful in serving its 4.a Packet Pg. 237 Kevin W. Harper CPA & Associates Page 15 stakeholders, the City Auditor should develop an improvement plan. The results of each stakeholder survey, the related improvement plans, and the resulting performance improvements accomplished should be regularly and proactively shared with stakeholders. Risk Assessment The IIA Standards state: 2010 – Planning The chief audit executive must establish a risk-based plan to determine the priorities of the internal audit activity, consistent with the organization’s goals. 2010.A1 – The internal audit activity’s plan of engagements must be based on a documented risk assessment, undertaken at least annually. The input of senior management and the board must be considered in this process. The City has not conducted an assessment of major risks in several years. There is no formal method to identify new risks as they arise (e.g., electronic payments, pfishing). Without a clear and ongoing understanding of the major risks the City faces, it is not possible for City management to know whether internal controls are adequate to assure that assets are safeguarded, that financial statements are prepared accurately and that likelihood of achieving operations objectives are maximized. Recommendation #8 The City should conduct a City-wide risk assessment annually as part of the annual audit plan. Steps should include: • Identify all key risks affecting the City’s ability to meet its business objectives, safeguard its assets, operate efficiently and effectively, and comply with laws and regulations. This step can be performed via interviews of employee experts or senior management brainstorming. • Prioritize risks based on their likelihood of occurring and the severity if they occur. • Identify controls already in place to manage each key risk identified. • Conclude whether each key risk is adequately controlled. • For each key risk not adequately controlled, develop an improvement plan to improve controls, transfer risk or revise business objectives. • Implement a process to identify new risks as they arise. 4.a Packet Pg. 238 CITY OF PALO ALTO SUMMARY OF SURVEYS - INTERNAL AUDIT FUNCTION OCTOBER 2019 ATTACHMENT A City of City of City of City of City of City of City & County of City of City of City of City of County of County of Palo Alto Berkeley Fresno Oakland Santa Clara Cupertino San Francisco Alameda Fremont Redwood City Sunnyvale San Mateo Santa Clara SIZE OF MUNICIPALITY:NO RESPONSE DECLINED TO RESPOND NO RESPONSE Population 66,649 121,874 538,330 426,074 129,604 60,091 892,701 78,863 235,439 86,271 Annual Expenses $508,426,000 $387,216,873 $655,422,508 $1,060,720,000 907,827,980 $91,194,554 $10,165,820,000 $226,047,079 $286,065,650 $258,976,774 # Employees 1,059 1,532 3,599 3,418 1,105 193 33,045 531 922 566 SURVEY QUESTIONS:1 Do you have one or more employees or contractors dedicated to management/performance audit activities? No = skip to question 10 Yes Yes Yes Yes Yes No Yes No No No 2 What is the title of the chief internal auditor?City Auditor City Auditor Principal Internal Auditor City Auditor City Auditor NA Chief Audit Executive NA NA NA Is this person an employee or contractor?Employee Elected official Employee Employee Employee NA Employee 3 How many employees in the internal audit function?5 6 2 10 2 NA 34How many contractors in the internal audit function?0 0 0 0 0 Likely <3 varies 4 Supervision of the internal audit function: a. Who prepares the annual audit plan? City Auditor Staff Principal Internal Auditor Asst City Auditor/City Auditor City Auditor CMO w/input from Admin Services Audits Division b. Who approves the annual audit plan? City Council City Auditor Controller City Auditor City Council via Audit Committee Audit Committee (City Council)Chief Audit Executive c. Who evaluates the performance of the chief auditor? City Council Voters every 4 years Controller NA - Elected City Council All the above (CM directly Controller d. Who approves or accepts internal audit reports? City Council City Auditor Council Audit Committee Reports sent to elected officials City Council via Audit Committee CM, Audit Committee Chief Audit Executive e. Who approves the internal audit budget and staffing? City Council City Council City Manager City Council City Council Admin Services Director, CM, CC Board of Supervisors f. Who can revise the scope or timing of internal audits? City Auditor City Auditor Principal Internal Auditor City Auditor City Auditor CM, Audit Committee, CC Chief Audit Executive 5 Are any internal audits or portions thereof contracted?Yes No No Yes Yes Yes (they will be)Yes If yes, describe what is contracted and the approximate costs or FTEs for a typical contracted audit. Periodically, on as-needed basis, a contracted specialist is utilized for an audit where expertise in a particular area is required. Examples include specialists used for a franchise fee audit (approx. $15,000) and for risk assessment of the Utilities Department (approx. $20,000) We have not cntracted out audits that I know of, but we have considered contracting out non-audit reports, like financial condition analysis of city Some audits are contracted if the Office lacks expertise or capacity to perform the audit The internal audit at the City was created in FY 18/19. The current annual contracted budget for the division is approximately $200,000. We plan to outsource the majority of audits to contractors and will look to adjust the budget as we move forward. Scope of services will include initial risk assessment followed by IA testing of city processes/procedures (e.g., credit card program, cash handling @ various sites including golf course All concession, franchise fee and some construction audits are contracted out. Besides the contract costs, 1 Audits Division FTE usually manages the contract and acts as the internal project lead 6 How many management/performance audits do you typically complete each year?3 to 4 5 to 6 3 to 4 5 to 8 3 to 4 3-4 anticipated 7 or more 7 If there is an internal audit function, what is its annual budget? $1,458,175 $1.6 million $272,400 $2.2 million $1,237,543 Currently $50,000, potential increase to $100,000 .2% of the City's budget 8 How do you assess audit quality? To ensure audit quality in accordance with Muni Code, the City Auditors Office performs audits using GAGAS (the Yellow Book). This ensures each audit is independent, objective, well- documented and includes sufficient appropriate evidence to support each finding. Audit quality is also assessed during the peer review every three years. The most recent peer review (2017) praised the Office for many professional certifications and extensive training of the audit staff, the "thorough and well-organized" Policy and Procedures manual, and the fact that the "audit excellence of the organization has been recognized multiple times by the Association of Local Government Auditors (ALGA) Knighton Award. We follow Government Auditing Standards put out by US Government Accountability Office, and all our audit reports state we follow these standards, which includes 80 hours of training every 2 years. We also are peer reviewed by ALGA every 3 years Number of recommendations implemented within a given time period A peer review is conducted every three years See performance measures in the annual adopted budget pages enclosed in Attachment 2 Respect and tact during performance of said prcedures. Thoroughness of review. Clarity and validity of results and findings. Efficiencies identified. Cost/benefit over time. The Audits Division complies with GAGAS and has policies and procedures and quality control systems to ensure its compliance. We hire and train qualified staff, ensure audit teams comprise of staff with knowledge, skills & abilities to perform the audit, and we have a rigorous quality assurance function 4.a Packet Pg. 239 CITY OF PALO ALTO SUMMARY OF SURVEYS - INTERNAL AUDIT FUNCTION OCTOBER 2019 ATTACHMENT A 9 Is the City Council satisfied with the value (effectiveness, efficiency and transparency) of the internal audit function? Both the City's Policy & Services Committee (comprised of Council members) and the full Council review and approve each audit performed by the City Auditor's Office. To my knowledge, every audit presented has been approved. That said, the high degree of satisfaction the Council has with the value of the City's audit function would be best addressed by that body. City Council is generally pleased with our work, even though we don't report to them. They provide suggestions for areas to audit, and have used our reports to create legislation and other guidance for the city. Some have large impact, like creating a reserve fund and trust fund to address unfunded liabilities Yes They are requesting more audits Yes, however, the internal audit function at the City was created in FY 18/19 and it is fairly new NA as of today Yes 10 If your agency has no internal audit function, how does it assess the adequacy of its internal controls? NA NA NA NA NA External audit. City had a comprehensive review of its internal control environment performed by a CPA firm in FY 2018-19 NA External audit Fremont does not have an internal audit function The Financial Services Manager is an ex CPA firm Audit Manager that specialized in municipal audits. He is responsible for supervising Finance Division and ensuring adequate internal controls. Internal controls are also observed and tested annually in conjunction with the annual financial statement audit. 11 Provide copies of the following documents (if they exist): a. Internal audit mission/vision Yes No Yes - website Yes NA Yes NA NA NAb. Annual budget for internal audit Yes Yes Yes, website?Yes Yes c. Annual audit plan Yes No Yes, not provided Yes Yes, websited. List of audits completed in FY 2018-19 and FY 2017-18, along with the estimated number of hours spent on each Yes No Yes, website NA, new function Yes, website e. Written internal audit policies and procedures Yes No Yes, not provided Yes Yes, not provided, being updatedf. Job description of City Auditor (or equivalent)Yes Yes Yes, website Yes Yesg. Performance metrics (e.g., cost per audit, audit hours incurred by auditors, audit hours incurred by auditees, elapsed time to clear findings)Yes No Nothing in writing NA, new function 4.a Packet Pg. 240 Kevin W. Harper CPA & Associates 20885 Redwood Road, Castro Valley, CA 94546 (510) 593-5037 kharper@kevinharpercpa.com January 13, 2020 Council Appointed Officers Committee City of Palo Alto 250 Hamilton Avenue Palo Alto, CA 94301 Dear Committee Members: I have reviewed the Association of Local Government Auditors letter to Members of the Palo Alto City Council dated December 19, 2019 (“the ALGA letter”). I have the following thoughts: 1. Government Auditing Standards, issued by the General Accounting Office, Comptroller General of the U.S., is also known as "the Yellow Book" or "GAS" or "GAGAS". You are required to follow GAS because the writers of the City Charter said that the City Auditor would do so. Otherwise, you would be free to follow any set of standards you want, or even establish your own. Most government internal audit functions choose to follow GAS but some choose Institute of Internal Audit (IIA) International Professional Practices Framework. The two sets of standards are similar in most ways in that they address the most important elements of an effective internal audit function, including independence of the auditor, ethics, documentation requirements, auditor qualifications, organizational placement, quality control, and reporting requirements. The two sets of standards vary in extent such as how independence is defined, whether risk assessment is performed at the audit level or entity level, the frequency of external quality assurance reviews, and the specificity of required continuing professional education. 2. I looked at both GAS and the IIA Standards in forming my recommendations. But I also looked at best practices, the results of the survey, and considered your city's particular situation. If it seems that there are more references to IIA documents than GAS documents in my report, it is because IIA seems to have done more studies that were relevant to the subject. Both sets of standards are relevant for the purposes of my report because they both give insight into best practices. 3. The ALGA letter says that if the City Auditor reports to the city manager in an administrative manner, it would be a significant structural threat. It depends on how you define "in an administrative manner". All decisions about auditing (e.g., areas to be audited, scope, timing and approach) should continue to made only by the Audit Committee and the City Auditor. See the attached article about auditor independence. 4.b Packet Pg. 241 2 4. The advisory/consulting services that I recommended you to consider can be performed as part of the City Auditors Office or can, as we discussed, be provided by another department because independence is not required for those types of services. The ALGA letter states these services can create threats to independence, but the only example it cites is when the City Auditor agrees not to audit an area that had received advisory services; the City Auditor would not and should not agree to such a requirement. The letter concedes that GAS outlines processes for conducting non-audit services and identified safeguards to protect the City Auditor's independence when providing such advisory services. See the attached article about auditor independence. I have attached an article from the Journal of Accountancy that identifies five threats to auditor independence and discusses how to determine an acceptable level of independence risk. You may find it useful while determining changes to the City’s internal audit function. Please let me know if you would like to discuss further. Sincerely, Kevin W. Harper CPA 4.b Packet Pg. 242 A Framework for Auditor Independence BY SUSAN MCGRATH, ARTHUR SIEGEL, THOMAS W. DUNFEE, ALAN S. GLAZER AND HENRY R. JAENICKE December 31, 2000 n November the Independence Standards Board (ISB) issued an exposure draft (ED) of a conceptual framework for auditor independence containing the concepts and basic principles that will guide the board in its standard setting. The framework defines auditor independence as “freedom from those factors that compromise, or can reasonably be expected to compromise, an auditor’s ability to make unbiased audit decisions.” It will help practitioners, investors, regulators and other standard setters understand the significance of auditor independence and provide a common language so that those involved in the ongoing independence debate can contribute to the development of ISB standards. The framework does not provide easy answers to specific independence questions but it supplies a structure and methodology for analyzing issues. This article describes the framework and some of the reasoning behind it. A HODGEPODGE OF REGULATIONS The need for a framework arose from the jumble of confusing independence rules and regulations—many in the form of interpretations issued in response to specific independence questions—that applied to public companies and their auditors. The guidance in those interpretations, issued over the years and under changing circumstances, sometimes conflicted and lacked theoretical consistency. Auditors also faced challenges in applying such guidance if the facts and circumstances of an auditor’s relationship with his or her audit client did not match those in the interpretation. While the independence regulations helped to ensure quality audits and contributed to the high level of financial reporting we enjoy in the United States, in today’s increasingly complex business environment the ISB believes that some revisions are in order. The recent SEC rule on auditor independence (see “SEC Approves Rules on Auditor Independence”) updates many of the independence rules and regulations, but numerous issues remain. The framework is the product of an open process. A task force of academics, lawyers, audit committee members, regulators, auditors and others helped identify the issues and reviewed drafts for clarity and completeness. The group included representatives from international standard setters so board standards could be harmonized where possible with those used in other countries. A board oversight task force provided direction. In addition, many individuals and groups provided comments on the discussion memorandum, which the ISB issued earlier to alert them to a possible ED and to solicit opinions. The board hopes the ED will receive the same level of participation. 4.c Packet Pg. 243 THREE STEPS The framework defines, and identifies the goal of, auditor independence. The model for standard setters is based on three key steps: Identify threats to the auditor’s independence and analyze their significance. Evaluate the effectiveness of potential safeguards, including restrictions. Determine an acceptable level of independence risk—the risk that the auditor’s independence will be compromised. Under the model, the ISB and other standard setters are to analyze the costs and benefits of regulations and consider the views of investors, other users of financial information and additional interested parties. The definition of independence does not require the auditor to be completely free of all the factors that affect the ability to make unbiased audit decisions, but only free from those that rise to the level of compromising that ability. For example, the audit client pays the auditor’s fee, so complete independence is impossible and not necessary to meet the framework’s definition. The framework doesn’t spell out specific examples of what would constitute “rising to the level of compromising” an auditor’s independence, but it does offer a structure that will allow an auditor to analyze whether undue bias exists in a particular situation. Further, independence is defined as more than just compliance with the independence rules. The proposed definition compels the auditor to make a personal assessment of his or her objectivity—to determine if pressures and other factors compromise the ability to make unbiased audit decisions. While this “introspective” evaluation is critical, the definition also calls for an assessment of how activities and relationships with the audit client would appear to others; the guidance explains that the auditor should consider the “rationally based expectations of well- informed investors and other users.” This inclusion of perceptions in the definition reflects the ISB’s belief that The idea that independence is entirely a personal matter, which varies from auditor to auditor in a given set of circumstances, is not useful in setting standards for all auditors. The ability to be objective does not well serve the auditor or the client if no one believes that the auditor can be objective in a given set of circumstances. The goal of independence is “to support user reliance on the financial reporting process and to enhance capital market efficiency.” With this aim, the ISB looks beyond the immediate benefit of the auditor’s independence—unbiased audit decisions—to these broader targets. If standards reduce independence risk slightly but carry unintended consequences that harm the quality of financial reporting or capital market efficiency, they do not serve the public interest. 4.c Packet Pg. 244 THREATS AND SAFEGUARDS The framework, in identifying five types of threats to the auditor’s independence, follows the approach of European standard-setters. These classifications are illustrations only; it is not necessary, under the model, for an auditor to place identified threats into one of these categories: Self-interest. The threat that arises when an auditor acts in his or her own emotional, financial or other personal self-interest. Self-review. The threat of bias arising when an auditor audits his or her own work or the work of a colleague. Advocacy. The threat that arises when an auditor acts as an advocate for or against an audit client’s position or opinion rather than as an unbiased attestor. Familiarity (or trust). The threat that arises when an auditor is being influenced by a close relationship with an audit client. Intimidation. The threat that arises when an auditor is being, or believes that he or she is being, overtly or covertly coerced by an audit client or by another interested party. Some of these categories may overlap. In addition, although some involve conscious acts by an auditor in his or her own self interest, others may result from subconscious biases. Once an auditor identifies such threats and evaluates their significance, he or she should analyze potential safeguards. These include procedures firms can perform to protect auditor independence, such as review by a second partner, consultation with designated professionals in the firm or disclosure to the audit committee. Safeguards also include restrictions on an auditor’s relationships with an audit client, such as prohibitions on owning the stock of an audit client or on assigning to an audit client firm professionals whose family members are employed in certain positions at the client. Standard setters must analyze the significance of threats and the effectiveness of potential safeguards to ensure that their standards sufficiently reduce independence risk. THE APPEARANCE OF INDEPENDENCE The ED, and the discussion memorandum that preceded it, raise some significant issues. For example, one of the most controversial aspects of the auditor independence debate is the role that “appearance” should play in setting standards. The “appearance” concept—though not well defined—is ingrained in the existing independence literature. Indeed, everyone who has taken an introductory auditing course knows that auditors must be independent in both fact and appearance. But what does it mean to “appear” independent? Whose perceptions count? In assessing appearances, the existing literature directs the auditor to consider whether a “reasonable investor knowing all the facts and circumstances” would believe a particular relationship or activity with an audit client might affect the auditor’s independence. Implicit in 4.c Packet Pg. 245 this guidance is the notion that independence lends credibility to the audit process and to the client’s financial reporting process. Some of those who commented on the discussion memorandum, while acknowledging the importance of credibility, point out the difficulties involved in identifying and assessing appearances, the probable lack of consensus about the circumstances and relationships likely to affect the auditor’s independence and the resulting difficulty in determining whose views are “reasonable.” Others ask why standard setters should worry about perceptions. Rules that promote actual auditor independence theoretically should lead to a public perception of the independence of the profession. Standards that promote the appearance of independence without an actual enhancement would be misleading. We suspect that the requirement to consider appearances arose with the recognition that “independence in mind”—actual auditor independence—is impossible for investors and others to assess. In determining whether to avoid a particular activity or relationship, therefore, the auditor should be guided not solely by the effect the activity or relationship would have on his or her objectivity, but by the effect it would be expected to have on most auditors’ objectivity. The literature directs the auditor to consider how investors and others would view the activity or relationship in question. Similarly, a standard setter, charged with working to protect the independence of auditors generally, cannot set standards based on an individual auditor’s state of mind but on situations or relationships that would likely threaten the independence of most auditors. How should the ISB consider appearances in its standard setting today? The discussion memorandum suggested that appearances could be incorporated into the standard-setting process in one of three ways if the board concludes that enhancing financial statement credibility—in addition to financial statement reliability—is an appropriate goal of auditor independence. One method is to solicit the views of all interested parties and develop independence standards that reflect them. If the views of all stakeholders are weighted evenly, this could result in standards “by majority rule.” Another option is to solicit the views that reflect the likely perceptions of a hypothetical group— “reasonable, fully informed users of financial information.” The difficulty with this approach, of course, for the ISB is that it must infer the views of the hypothetical group. A third approach, and the one the board favors, is to solicit the views of all interested parties, but to develop independence standards based on the board’s judgment about how best to meet the goal of auditor independence. The board would neither ignore appearances nor base its decisions solely on the perceptions of interested parties. After all, board members were selected for their judgment, experience and knowledge. They have spent a great deal of time over the past three years educating themselves on the issues and are uniquely positioned to be “fully informed” of both the threats to auditor independence and the systems in place to protect it. As long as the standards are effective (and penalties for noncompliance swift and firm), audit failures related to independence impairments should be minimal, and investors’ belief in the independence of the auditors should reflect that reality. It is noteworthy that the ED, in its discussion of the definition and goal of independence, stresses that the ISB and other standard setters should consider the perceptions of investors and other users of financial information. While the board’s policies require, and the framework principles 4.c Packet Pg. 246 endorse, the board’s consideration of the views of all interested parties in auditor independence, the ED emphasizes that independence is designed to promote the reliability and credibility of financial information for investors and other users. THE RIGHT BALANCE Perhaps the framework’s most significant contribution will be its formal recognition that auditor independence is merely a means to an end—not the ultimate goal. Quality audits and reliable and credible information that contribute to efficient capital markets are the objectives. In other words, the ISB and other standard setters must look at the big picture and at the possible consequences of their regulations. For example, a standard that enhances auditor independence slightly but discourages qualified people from entering the profession may, in the long run, harm audit quality. This thinking is reflected in ISB Standard no. 3, the board’s pronouncement on employment with audit clients. In it, the board concluded that prohibiting former firm partners and other professionals from accepting jobs with audit clients could significantly reduce the profession’s appeal and harm clients seeking to improve their financial management. Mandating safeguards, the board concluded, would achieve the same independence benefits without the adverse consequences. The framework is designed to be the foundation for broad and nuanced independence standards that reflect the complexities of the issues they address. For more information… To obtain a copy of the ISB exposure draft (ED 00-2, A Conceptual Framework for Auditor Independence ), go to the board’s Web site at www.cpaindependence.org or call the ISB at 212- 596-6133. The comment period ends February 28, 2001. 4.c Packet Pg. 247