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HomeMy WebLinkAbout2017-02-06 City Council Agenda PacketCity Council 1 MATERIALS RELATED TO AN ITEM ON THIS AGENDA SUBMITTED TO THE CITY COUNCIL AFTER DISTRIBUTION OF THE AGENDA PACKET ARE AVAILABLE FOR PUBLIC INSPECTION IN THE CITY CLERK’S OFFICE AT PALO ALTO CITY HALL, 250 HAMILTON AVE. DURING NORMAL BUSINESS HOURS. February 6, 2017 Special Meeting Council Chambers 5:00 PM Agenda posted according to PAMC Section 2.04.070. Supporting materials are available in the Council Chambers on the Thursday 10 days preceding the meeting. PUBLIC COMMENT Members of the public may speak to agendized items; up to three minutes per speaker, to be determined by the presiding officer. If you wish to address the Council on any issue that is on this agenda, please complete a speaker request card located on the table at the entrance to the Council Chambers, and deliver it to the City Clerk prior to discussion of the item. You are not required to give your name on the speaker card in order to speak to the Council, but it is very helpful. TIME ESTIMATES Time estimates are provided as part of the Council's effort to manage its time at Council meetings. Listed times are estimates only and are subject to change at any time, including while the meeting is in progress. The Council reserves the right to use more or less time on any item, to change the order of items and/or to continue items to another meeting. Particular items may be heard before or after the time estimated on the agenda. This may occur in order to best manage the time at a meeting or to adapt to the participation of the public. To ensure participation in a particular item, we suggest arriving at the beginning of the meeting and remaining until the item is called. HEARINGS REQUIRED BY LAW Applicants and/or appellants may have up to ten minutes at the outset of the public discussion to make their remarks and up to three minutes for concluding remarks after other members of the public have spoken. Call to Order Public Comments: Members of the public may speak to the Closed Session item(s); three minutes per speaker. 1.CONFERENCE WITH LABOR NEGOTIATORS This item will not be heard this evening and will be rescheduled. 2. 1A. CONFERENCE WITH CITY ATTORNEY-POTENTIAL LITIGATIONSignificant Exposure to Litigation Under Govt. Code Section 54956.9(d)(2) (One Potential Case, as Defendant/Respondent)429 University Avenue; Appeal of Director of Planning and Community Environment's Architectural Review Approval of a Development Application REVISED Vice Mayor Kniss will be participating remotely from 1058 Main Street, Cotuit, MA 02635 Closed Session 5:00-7:00 PM THIS ITEM HAS BEEN MOVED TO THE END OF THE AGENDA. Study Session 2 February 6, 2017 MATERIALS RELATED TO AN ITEM ON THIS AGENDA SUBMITTED TO THE CITY COUNCIL AFTER DISTRIBUTION OF THE AGENDA PACKET ARE AVAILABLE FOR PUBLIC INSPECTION IN THE CITY CLERK’S OFFICE AT PALO ALTO CITY HALL, 250 HAMILTON AVE. DURING NORMAL BUSINESS HOURS. Agenda Changes, Additions and Deletions City Manager Comments 7:00-7:10 PM Oral Communications 7:10-7:20 PM Members of the public may speak to any item NOT on the agenda. Council reserves the right to limit the duration of Oral Communications period to 30 minutes. Minutes Approval 7:20-7:25 PM 3.Approval of Action Minutes for the January 23, 2017 Council Meeting Consent Calendar 7:25-7:30 PM Items will be voted on in one motion unless removed from the calendar by three Council Members. 4.Review and Acceptance of the Annual Report on Development Impact Fees for Fiscal Year 2016 5.Adoption of a Budget Amendment Closing the Fiscal Year 2016 Budget and Capital Projects, and Approval of the Fiscal Year 2016 Comprehensive Annual Financial Report (CAFR) 6.Finance Committee Recommendation That the City Council Adopt a Resolution to Continue the Palo Alto CLEAN Program: (1) for Local Non-solar Resources, at a Price of 8.4 ¢/kWh to 8.5 ¢/kWh With no Capacity Limit; and (2) for Local Solar Resources, at a 16.5 ¢/kWhPrice That Drops to Avoided Cost at 3 MW; and Approval of Associated Program Rules and Agreements 7.203 Forest Avenue [14PLN-00472]: Appeal of the Planning and Community Environment Director's Denial of an Architectural Review Application for a 4,996 Square Foot Residential Addition Above an Existing 4,626 Square Foot Commercial Building. Environmental Assessment: Not a Project. Pursuant to Section 15270, California Environmental Quality Act (CEQA) Does not Apply to Disapproved Projects. Zoning District: Downtown Commercial (CD-C (GF)(P)) District 8.Fiscal Year 2017 Mid-year Budget Review, Approval of Budget Amendments in Various Funds and Approval of Amendments to ThreeSalary Schedules 9.Approval to Issue a Contract Change Order to Contract Number C16163847 With Wadsworth Golf Construction Company in the Amount of $198,850 for the Construction of a Prefabricated On-course Restroom at the Palo Alto Municipal Golf Course MEMO 3 February 6, 2017 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. Action Items Include: Reports of Committees/Commissions, Ordinances and Resolutions, Public Hearings, Reports of Officials, Unfinished Business and Council Matters. 7:30-7:40 PM 10.PUBLIC HEARING: On Objections to Weed Abatement and Adoption of Resolution Ordering Weed Nuisance Abated 7:40-9:40 PM 11.PUBLIC HEARING: 429 University Avenue [14PLN-00222]: To Consider a Continued Appeal of the Director of Planning and Community Environment’s Architectural Review Approval of a 31,407 Square-foot, Four Story, Mixed use Building With Parking Facilities on two Subterranean Levels on an 11,000 Square-foot Site. Environmental Assessment: the Mitigated Negative Declaration was Circulated on November 17, 2014 to December 12, 2014. Zoning District: CD-C (GF)(P). The Council Previously Considered This Appeal on November 30, 2015 and Remanded it to the Architectural Review Board for Redesign and Further Review Based on Council’s Direction 12.PUBLIC HEARING: Review and Adoption of an Ordinance Amending Chapter 18 (Zoning) of the Palo Alto Municipal Code to Update Code Sections Regarding Accessory Dwelling Units. STAFF REQUESTS THIS ITEM BE CONTINUED TO MARCH 6, 2017. Inter-Governmental Legislative Affairs Council Member Questions, Comments and Announcements Members of the public may not speak to the item(s) Adjournment AMERICANS WITH DISABILITY ACT (ADA) Persons with disabilities who require auxiliary aids or services in using City facilities, services or programs or who would like information on the City’s compliance with the Americans with Disabilities Act (ADA) of 1990, may contact (650) 329-2550 (Voice) 24 hours in advance. Study Session 2. Update on Stanford University's General Use Plan (GUP) Application to Santa Clara County 9:40-10:40 PM MEMO MEMO 4 February 6, 2017 MATERIALS RELATED TO AN ITEM ON THIS AGENDA SUBMITTED TO THE CITY COUNCIL AFTER DISTRIBUTION OF THE AGENDA PACKET ARE AVAILABLE FOR PUBLIC INSPECTION IN THE CITY CLERK’S OFFICE AT PALO ALTO CITY HALL, 250 HAMILTON AVE. DURING NORMAL BUSINESS HOURS. Additional Information Standing Committee Meetings Finance Committee Meeting Cancellation February 7, 2017 Schedule of Meetings Schedule of Meetings Tentative Agenda Tentative Agenda Informational Report City of Palo Alto Investment Activity Report for the Second Quarter, Fiscal Year 2017 Update on Negotiations With Pets In Need Regarding Animal Care Services and Intention to Advance Prior City Council Direction Regarding Facility Construction or Rehabilitation Public Letters to Council Set 1 City of Palo Alto (ID # 7331) City Council Staff Report Report Type: Study Session Meeting Date: 2/6/2017 City of Palo Alto Page 1 Summary Title: Stanford University 2018 General Use Permit Application Title: Update on Stanford University’s General Use Permit (GUP) Application to Santa Clara County From: City Manager Lead Department: Planning and Community Environment Recommendation This is a study session to allow the City Council to receive and discuss a presentation regarding Stanford University’s proposal for an updated General Use Permit (GUP) from Santa Clara County. No action is recommended. The City Council will have the opportunity to review and provide direction regarding a formal comment letter from the City to the County on March 6, 2017. Executive Summary On November 28, 2016, Stanford University submitted an application to Santa Clara County for a major modification of their current General Use Permit (GUP). If approved, the updated GUP would govern land use and development on the Stanford campus, which is located in unincorporated Santa Clara County, starting in 2018. At this evening’s meeting, representatives of Stanford University have agreed to present their proposal to the City Council and answer questions from the Council. An Environmental Impact Report (EIR) will be required prior to County approval of the University’s proposal, and the County has issued a Notice of Preparation, which is included as Attachment A. The notice contains a brief description of the proposal and topics to be analyzed in the EIR. Stanford’s application, which includes substantial additional information on a wide variety of topics, is available on line at https://www.sccgov.org/sites/dpd/Programs/Stanford/Pages/CurrentProjects.aspx. County staff has granted the City’s request for additional time to comment on the scope of the EIR, and the City Council will discuss a draft comment letter at their meeting on March 6, 2017. Background City of Palo Alto Page 2 Stanford University is located within unincorporated Santa Clara County and is governed by the County’s general plan and zoning. Specifically, there is a “community plan” within the County’s general plan which was adopted in 2000 and establishes land use policies and implementation measures specific to Stanford. The University’s current GUP also dates to 2000, and is currently being used as the basis for development on campus. The University is now proposing to update the GUP and submitted an application to the County in November 2016. Santa Clara County requires every applicant to hold a public outreach meeting following filing of an application and Stanford held their meeting on January 25, 2017 at the Mitchell Park Community Center. The County has also taken the first step in the environmental review process for this proposal, which is issuance of a Notice of Preparation (NOP), indicating that the County will be complying with the California Environmental Quality Act (CEQA) by preparing an Environmental Impact Report (EIR). The City will submit written comments on the environmental document, and Council questions and comments at this evening’s study session will help inform preparation of that letter. The Council will have an opportunity to review the draft letter at its March 6, 2017 meeting. Next Steps Written comments on the scope of the EIR are due to the County in early March. (The City requested and received an extension of time from the original due date of February 17, 2017.) On March 6th, the City Council will be considering a draft of the City’s comment letter, which is expected to address issues of potential concern, including at a minimum:  Traffic and transportation issues affecting the campus and its surroundings, including:  linkages to local and regional bicycle and pedestrian facilities,  opportunities for enhanced and consolidated transit (including shuttle) services,  additional peak hour traffic congestion/delays anticipated and the effectiveness of Stanford’s “no net trips” policy  potential lengthening of the peak hours  spill over parking in Palo Alto neighborhoods  impacts on safe routes to schools  Public service needs associated with the anticipated growth in housing, students, faculty, and staff including impacts on recreational facilities, fire services, and more  Impacts on local schools from the addition of housing and school age population  Storm water detention and potential for increasing or decreasing the risk of downstream flooding  The ability to assess potential impacts on historic resources, the urban canopy, and aesthetics generally without specificity on building locations and other site changes  The desire for the County to assume a share of the City’s Regional Housing Needs Allocation (RHNA) for the next housing cycle if significant development (non-residential and residential) is approved adjacent to the City boundaries City of Palo Alto Page 3 County environmental staff anticipates that the preparation of the EIR for this project will take 10 months to a year. Attachments:  Attachment A: Notice of Preparation Stanford University 2018 General Use Permit County of Santa Clara Department of Planning and Development County Government Center, East Wing 70 West Hedding Street, 7th Floor San Jose, California 951l0 NOTICE OF PREPARATION OF AN ENVIRONMENTAL IMPACT REPORT FOR THE STANFORD UNIVERSITY "2OI.S GENERAL USE PERMITOO Project Applicant: Stanford University File Number: 1165-I6P-16GP-162-l6BlPt Application For: Major Modification to Stanford University's General Use Permit, Community Plan Amendment, Zoning Amendment As the Lead Agency, the County of Santa Clarawill prepare an Environmental Impact Report (EIR) for the proposed project and would like your views regarding the scope and content of the environmental information to be included in the EIR. On November 21,2016, Stanford University submitted an application to the County to update its General Use Permit (hereafter collectively referred to as the *2018 General Use Permit"), amend the Stanford Community Plan, and amend zoningdesignations for some parcels to conform to existing conditions on the ground. A brief description of the proposed project, its site boundary, and a summary of the potential environmental effects are attached. The EIR may be used by your agency when considering approvals for the project. The County will make the ultimate determination regarding what level and type of development is approved under the project and what conditions of approval and mitigation measures and/or project alternatives may be imposed. A Public Scoping/Community Meeting to solicit comments for the Notice of Preparation will be held at the Palo Alto Arts Center auditorium located at l3l3 Newell Road, Palo Alto, on Wednesday, February 8th,2017, from 6:00 p.m. and 8:00 p.m. The deadline for your response is February l7th. However, an earlier response, if possible, would be appreciated. Please send your response to: County of Santa ClaraPlanning Office Attention: David Rader County Government Center 70 West Hedding, 7th Floor, East Wing, San Jose CA 95110 E-mail : david.rader@Fln. sccgov.org Prepared by: David Rader, Senior Planner Sígnature Approved by: Manira Sandhir, Principal Planner, AICP Sígnøture Board of Supervisors: Mike Wasserman, Cindy Chavez, Dave Cortese, Ken Yeager, S. Joseph Simitian County Executive: Jeffrey V. Smith t^;/ rr, ,/à-/sn ¡þ/rd/7 bøe tlz lz.t. bøtb Stanford University 2018 General Use Permit Notice of Preparation Page 2 County of Santa Clara Introduction The purpose of an Environmental Impact Report (EIR) is to inform decision-makers and the general public of the environmental effects of a proposed project that an agency may implement or approve. The EIR process is intended to provide information sufficient to (a) evaluate a proposed project and it’s potential for significant impacts on the environment, (b) to examine methods of reducing adverse impacts; and (c) to consider alternatives to the project. The EIR for the proposed project will be prepared and processed in accordance with the California Environmental Quality Act (CEQA) of 1970, as amended. In accordance with the requirements of CEQA, the EIR for the Stanford University 2018 General Use Permit and related approvals will include the following: • A summary of the project; • A project description; • A description of the existing environmental setting, potential environmental impacts, and mitigation measures; • A cumulative impact discussion; • Alternatives to the proposed project; and • CEQA required environmental consequences, including (a) any significant environmental effects which cannot be avoided if the project is implemented; (b) any significant irreversible and irretrievable commitment of resources; (c) the growth inducing impacts of the proposed project; and (d) effects found not to be significant. Project Location Stanford University (Stanford) is located on the San Francisco Peninsula, approximately 35 miles southeast of San Francisco, and 20 miles northwest of San Jose (see Figure 1). Stanford owns approximately 8,180 contiguous acres across six governmental jurisdictions, including unincorporated areas of Santa Clara County and San Mateo County, and the cities of Palo Alto, Menlo Park, Portola Valley and Woodside (see Figure 2). The proposed 2018 General Use Permit would apply only to the 4,017 acres of Stanford lands that are located within unincorporated Santa Clara County, and thus, subject to the land use jurisdiction and regulatory authority of the County of Santa Clara (see Figure 3). As shown in Figure 3, the project area is generally located southeast of Sand Hill Road, southwest of El Camino Real, northwest of Stanford Avenue and Page Mill Road, north of Arastradero Road, and east of Alpine Road. Stanford’s core campus area, including academic and academic support facilities and housing, is concentrated north of Junipero Serra Boulevard and located within Stanford’s Academic Growth Boundary. The largely undeveloped Stanford lands within the foothills south of Junipero Serra Boulevard are located outside of Stanford’s Academic Growth Boundary. Project Description Background The County of Santa Clara regulates land uses on the Stanford lands within its jurisdiction through several mechanisms, including the General Use Permit adopted in 2000 (hereafter referred to as the 2000 General Use Permit), the Stanford Community Plan (adopted in 2000 as part of the Santa Clara County General Plan), the County Zoning Code, and the 1985 Land Use Policy Agreement between the County of Santa Clara, City of Palo Alto and Stanford University. Stanford University 2018 General Use Permit Notice of Preparation Page 3 County of Santa Clara Stanford University 2018 General Use Permit Notice of Preparation Page 4 County of Santa Clara The Stanford Community Plan serves as the General Plan for the campus and maps the goals, strategies, and policies for Stanford lands in unincorporated Santa Clara County. It is guided by six core principles: • compact urban development; • academic growth boundary for minimum of 25 years; • conservation of natural resources; • housing concurrent with academic development; • flexibility and accountability; and • goal of no net new commute trips. The General Use Permit is the implementation document that permits additional academic facilities and housing units, and establishes conditions of approval, consistent with the goals, strategies, and policies of the Community Plan. Stanford University 2018 General Use Permit Notice of Preparation Page 5 County of Santa Clara The 2000 General Use Permit as amended allowed the construction of 2,035,000 net new square feet1 of new academic and academic support uses, 3,018 net new housing units/beds for students, faculty and staff, 2,300 net new parking spaces, and associated infrastructure. In May 2016, the County authorized an additional 1,450 housing units to be constructed under the 2000 General Use Permit (for a total of 4,468 housing units/beds authorized under the 2000 General Use Permit). Stanford estimates that approximately 1.4 million net square feet of the academic and academic support uses, and all of the housing, allowed in the 2000 General Use Permit has been built or approved; and that all remaining authorized development under the 2000 General Use Permit will be exhausted between 2018 and 2020. Proposed 2018 General Use Permit On November 21, 2016, Stanford submitted an application to the County to update its General Use Permit (hereafter referred to as the 2018 General Use Permit). The 2018 General Use Permit application, as well as relevant plans, reports and other documents, are located on the County’s website at: https://www.sccgov.org/sites/dpd/Programs/Stanford/Pages/Stanford.aspx The proposed 2018 General Use Permit would authorize an increment of campus growth and land use development, anticipated to take place over a period that would extend from approximately 2018 through 2035. The requested amount of growth corresponds to the 2035 Moderate Growth Scenario included in Stanford’s Sustainable Development Study, approved by the County in 2009. Table 1 presents a summary of existing authorized development and parking at Stanford, and additional development and parking proposed under the 2018 General Use Permit. TABLE 1: Summary of Existing Authorized Development and Parking at Stanford University, and Additional Development and Parking Proposed Under the 2018 General Use Permit Development Academic and Academic Support Space (Net Square Feet) Housing (Units/Beds) Parking Authorized Prior to 2000 General Use Permit 8,220,000 9,832 19,351 Authorized Under 2000 General Use Permit 2,035,000 4,468a 2,300 Additional Proposed under 2018 General Use Permit 2,275,000 3,150 0b Total 12,530,000 17,450 21,651 a Revised as of May 2016. b See, however, proposed 2000-space parking reserve discussed under Proposed Parking, below. Source: Stanford LRBE LUEP, 2016 Proposed Development Similar to the 2000 General Use Permit, the proposed 2018 General Use Permit would apply to all land uses within unincorporated Santa Clara County that would require a conditional use permit, Architecture and Site Approval (ASA), or Planning Commission approval under the County Zoning Code. The 2018 General Use Permit would not apply to uses on Stanford lands that are permitted by right under the County Zoning Code. Under the 2018 General Use Permit, Stanford proposes new academic and academic support space, and housing subject to the following development limits: • 2,275,000 net new square feet of net new academic and academic support facilities; and • 3,150 net new housing units/beds, of which up to 550 units would be available for faculty, staff, postdoctoral scholars, and medical residents. 1 Refers to gross square footage pursuant to Government Code Section 65995-65998. Stanford University 2018 General Use Permit Notice of Preparation Page 6 County of Santa Clara The proposed academic and academic support space and housing units would be constructed on vacant land, infill sites and redevelopment sites within the Academic Growth Boundary (see Figure 3). No site- specific projects and locations have been identified for development under the 2018 General Use Permit. Each individual building or project that would be developed under the 2018 General Use Permit would require submittal of an application to the County at the time proposed, and may be subject to additional review prior to consideration of approval by the County. Stanford proposes that any remaining unbuilt academic and academic support space square footage that was authorized by the 2000 General Use Permit would be carried over to the 2018 General Use Permit in the event that Stanford does not receive approval for construction of all the remaining square footage by the time the 2018 General Use Permit takes effect. In the 2000 General Use Permit Stanford identified development districts to estimate the distribution of development within the campus. Figure 4 presents the proposed distribution of academic and academic support space and housing that is proposed to occur under the 2018 General Use Permit, by development district. Stanford proposes modifications to the district boundaries to better comport to existing zoning boundaries and conditions on the ground. In addition, Stanford proposes minor amendments to Community Plan and zoning designations on some parcels to conform to existing conditions on the ground. Housing Linkage As with the 2000 General Use Permit, under the proposed 2018 General Use Permit the development of academic and academic support space would be linked to the development of housing units. Table 2 presents the proposed housing linkage under the 2018 General Use Permit, and proposed interim milestones for development.2 Interim milestones would be required to be met for each increment of 500,000 square feet of academic and academic support space to ensure proposed housing keeps pace with academic and academic support facility growth. Similar to the 2000 General Use Permit Condition F.7, under the 2018 General Use Permit, Stanford seeks a condition that would allow it to build additional housing beyond the proposed development limit of 3,150 housing units/beds, subject to additional environmental review and approval by the Planning Commission. 2 As shown in Table 2, under the proposed project, Stanford would use the same housing linkage ratio as was identified in Condition F.8 in the 2000 General Use Permit. Stanford University 2018 General Use Permit Notice of Preparation Page 7 County of Santa Clara TABLE 2: 2018 General Use Permit Housing Linkage Academic and Academic Support Space (Net New Square Feet) Housing Units/Beds at 1/826 (Net New Square Feet) Cumulative # of Housing Units/Beds 0 – 0.5 M 605 605 0.5 – 1.0 M 605 1,210 1.0 – 1.5 M 605 1,815 1.5 – 2.0 M 605 2,240 2.0 - 2.275 M 333 2,753 Note: This table represents the minimum housing required per the housing linkage ratio. However, the 2018 General Use Permit proposes a greater number of housing units/beds (3,150) than that required by the housing linkage ratio. Source: Stanford LRBE LUEP, 2016 Stanford has proposed that certain specific types of development not be counted towards the proposed development limits. This exempted development would include 40,000 net new square feet of child care and community center space. Stanford also proposes to continue to be allowed to utilize up to 50,000 net new square feet of construction surge space that was authorized in the 2000 General Use Permit. Surge space is used to temporarily house uses that may be displaced during a construction project. As proposed, the 2018 General Use Permit would also accommodate construction of campus infrastructure improvements to support development proposed under the 2018 General Use Permit, including, but not limited to, utilities and circulation improvements. Proposed Parking Under the 2018 General Use Permit the authorized amount of parking would be unchanged from the limits established by the 2000 General Use Permit. Stanford proposes to exempt certain types of parking at the campus from inclusion in its authorized parking limit, including parking associated with trip- reduction programs, electric vehicles, police and fire department use, and high-density faculty and staff housing. In addition, Stanford University proposes that the 2018 General Use Permit include an option to allow Stanford to construct a 2,000-space parking supply reserve, subject to Planning Commission review and approval, if any one of the following conditions apply: 1) Stanford is achieving its No Net New Commute Trip goal; 2) such parking would not result in a substantial increase in peak-hour commute trips; or 3) unforeseen circumstances occur due to changes in background conditions would require provision of additional parking. County Approvals Stanford seeks the following approvals from the County: • Certification of the 2018 General Use Permit EIR; • Adoption of a new 2018 General Use Permit; • Approval of amendments to the County Zoning Map (zoning designation changes are proposed for specific parcels within the campus); and • Approval of amendments to the Stanford Community Plan. Potential Environmental Effects of the Project The County will prepare a program level EIR for the proposed 2018 General Use Permit pursuant to CEQA Guidelines Section 15168. It should be noted that project-specific CEQA review may be required for individual buildings or other projects that would be developed pursuant to the proposed 2018 General Use Permit. Prior to consideration of approval, the County would examine each individual development at Stanford University 2018 General Use Permit Notice of Preparation Page 8 County of Santa Clara the time they are proposed to determine whether the environmental effects of the specific project were disclosed in the 2018 General Use Permit EIR. The EIR will identify the significant environmental effects anticipated to result from implementation of the proposed 2018 General Use Permit. Specific environmental topics addressed will include: • Aesthetics – The EIR will describe the existing visual and aesthetic conditions of the project site and the study area, and will evaluate the effect of the proposed changes envisioned by the proposed project on scenic views, visual character and quality, and light and glare. Mitigation measures will be identified to reduce any potential significant aesthetic impacts will be identified and analyzed, as appropriate. • Air Quality. The air quality analysis presented in the EIR will discuss current air quality conditions and air-pollutant sensitive land uses or activities in the vicinity of the project area; describe the regulatory context for air pollution in the Bay Area; and assess the potential for the project to conflict with the Clean Air Plan, violate any air quality standards, result in cumulatively considerable increase in criteria pollutants, cause emissions of substantial pollutant concentrations, or create objectionable odors. Stanford University has submitted an Air Quality Technical Report for the proposed project, which will be peer-reviewed and, if appropriate, included in the Air Quality section. As needed, mitigation measures to reduce any potential significant air quality impacts will be identified and analyzed. • Biological Resources – The EIR will present information on applicable biological resources in the project area, including special-status wildlife and plant species, natural communities, and wetlands; describe the regulatory framework for biological resources; and evaluate potential for implementation of the proposed project to impact biological resources and/or conflict with Stanford’s Habitat Conservation Plan. As needed, mitigation measures to reduce any potentially significant biological resource impacts will be identified and analyzed. • Cultural Resources –The EIR will present relevant cultural resources information, including data from Stanford’s Archaeological Resources Map and other sources; and will assess the potential for the proposed project to cause a substantial adverse change in the significance of historical resources, archaeological and unique paleontological resources, tribal cultural resources, or potential disturbance of human remains. In addition, Stanford University has submitted an Historic Resources Survey for the proposed project, which will be peer-reviewed and, if appropriate, included in the Cultural Resources section. As needed, mitigation measures to reduce any potentially significant impacts to historic and archaeological resources will be identified and analyzed. • Energy Conservation –Consistent with CEQA Guidelines Appendix F, the EIR will evaluate the potential energy impacts of operation, construction, and transportation associated with the proposed 2018 General Use Permit. Stanford has submitted an Energy Technical Analysis for the proposed project, which will be peer-reviewed and, if appropriate, included in the Energy Conservation section. If needed, mitigation measures that would avoid or reduce the wasteful, inefficient, and unnecessary consumption of energy will be identified and analyzed. • Geology and Soils – The EIR will present relevant information on existing soils and geologic conditions at Stanford. The EIR will address the potential for implementation of the proposed 2018 General Use Permit to result in soil erosion or exacerbate conditions related to unstable soils or slopes. If needed, mitigation measures to reduce any potential significant impacts related to geology and soils will be analyzed and described. • Greenhouse Gas Emissions – The EIR will report greenhouse gas (GHG) emissions associated with implementation of the proposed 2018 General Use Permit, and will assess any conflict with applicable policies or regulations adopted for the purpose of reducing emissions of GHGs. As needed, relevant Stanford University 2018 General Use Permit Notice of Preparation Page 9 County of Santa Clara policies and features that may serve to minimize GHG emissions will be identified. Stanford University has submitted a GHG Emissions Technical Report for the proposed 2018 General Use Permit, which will be peer-reviewed and, if appropriate, included in the GHG Emissions section of the EIR. If needed, mitigation measures to reduce any potential significant impacts related to GHG emissions will be identified and analyzed. • Hazards and Hazardous Materials – The EIR will discuss existing conditions as it relates to the potential past releases of hazardous materials within the General Use Permit area, describe existing hazardous materials and waste use, storage, and disposal operations at the campus, and discuss the regulatory requirements governing these operations. The EIR will assess whether implementation of the proposed project would have the potential to emit hazardous emissions, exacerbate hazard conditions through ground disturbance, or interfere with emergency evacuation plans. If needed, mitigation measures to reduce any potential significant impacts related to hazards and hazardous materials will be identified and analyzed. • Hydrology and Water Quality – The EIR will generally describe the hydrology and water quality conditions in and around the General Use Permit area, and describe the applicable regulatory agencies and regulations governing water resources at the campus. The EIR will address the potential for implementation of the proposed project to substantially degrade water quality or violate water quality standards, deplete groundwater supplies or substantially interfere with groundwater recharge, substantially increase surface runoff or erosion, or exacerbate flooding hazards from new development. Stanford has prepared a draft Water Supply Assessment for the proposed 2018 General Use Permit, which will be peer-reviewed and, if appropriate, included in the Hydrology and Water Quality section of the EIR. If needed, mitigation measures to reduce any potential significant impacts related to hydrology and water quality will be identified and analyzed. • Land Use – The EIR will describe existing land uses and development trends within the project area; discuss potential inconsistencies of the proposed 2018 General Use Permit with relevant County and other applicable planning documents; analyze potential programmatic land use changes that could occur, and evaluate the compatibility with neighboring land uses. If needed, mitigation measures to reduce any potential significant impacts related to land use will be identified and analyzed. • Noise and Vibration. The EIR will describe the existing ambient noise environment in and around the General Use Permit area; identify applicable noise guidelines and regulations; assess the noise compatibility of the proposed project with existing land uses, and assess construction and operational noise and vibration impacts on existing and proposed future land uses. If needed, mitigation measures to reduce any potential significant impacts related to noise and vibration will be identified and analyzed. • Population and Housing – The EIR will describe the magnitude of potential changes in population and housing associated with the proposed 2018 General Use Permit. The EIR will describe whether the housing demand associated with increased campus population under the proposed project would be met by the existing or future housing supply. The EIR will evaluate if implementation of the proposed project would displace housing and population, from both the Stanford campus and, indirectly, from nearby areas. If needed, mitigation measures to reduce any potential significant impacts related to population and housing will be identified and analyzed. • Public Services – The EIR will describe local police and fire services, as well as primary and secondary schools in districts serving the General Use Permit area and surrounding communities; and assess whether implementation of the proposed 2018 General Use Permit would require the construction of new or expanded public facilities that would result in substantial adverse physical impacts. If needed, Stanford University 2018 General Use Permit Notice of Preparation Page 10 County of Santa Clara mitigation measures to reduce any potential significant impacts related to public services will be described. • Recreation –The EIR will describe the environmental setting for parks and recreation; discuss the potential for the anticipated population increases and proposed 2018 General Use Permit development to result in a corresponding increases in the use of non-Stanford recreational facilities such that substantial impacts could occur; and assess whether the construction of any proposed recreational facilities would have a significant effect on the environment. Stanford University has submitted a Parks and Recreation Facilities Analysis for the proposed project, which will be peer reviewed and, if appropriate, included in the EIR Recreation section. If needed, mitigation measures to reduce any potential significant impacts related to recreation will be identified and analyzed. • Transportation & Circulation –The EIR will describe existing multi-modal transportation and circulation conditions at study intersections, on freeways, and transit facilities, as well as transit service and bicycle/pedestrian facilities; describe Stanford’s current and proposed transportation demand management programs; present forecasted future conditions using the VTA/CCAG travel demand model; estimate trip generation, trip distribution and vehicle miles traveled associated with the 2018 General Use Permit; and analyze near-term and cumulative transportation conditions with and without the proposed 2018 General Use Permit. Stanford University is submitting a Traffic Impact Study for the proposed 2018 General Use Permit, which will be peer reviewed and, if appropriate, included in the EIR Transportation & Circulation section of the EIR. If needed, mitigation measures to reduce any potential significant impacts related to transportation and circulation will be identified and analyzed. • Utilities and Services Systems –The EIR will describe existing utilities and service systems, including water, wastewater and solid waste services that serve Stanford, calculate increased demand for water and generation of wastewater and solid waste under the proposed 2018 General Use Permit; and assess whether implementation the proposed project would require new or expanded public utilities, the construction or operation of which would have a substantial adverse impact on the environment. The EIR will also consider whether the proposed project would comply with applicable regulations related to solid waste. The evaluation of water demand will be based on a draft Water Supply Assessment prepared by Stanford for the proposed 2018 General Use Permit, and peer reviewed and ultimately approved by the County. The EIR will evaluate if there are sufficient water supplies available to serve the project from existing entitlements and resources. If needed, mitigation measures to reduce any potential significant impacts related to utilities and service systems will be identified and analyzed. • Cumulative Impacts. The EIR will evaluate, issue by issue, the potential for the proposed project, when combined with other development identified in the cumulative setting, to either result in new, or contribute to existing, cumulatively considerable adverse effects on the environment. • Alternatives. CEQA requires that an EIR describe a range of reasonable alternatives to a project (or project location) that feasibly attain most of the objectives, but could avoid or reduce at least one environmental impact (see CEQA Guidelines Section 15126.6). • Growth Inducement. This section will qualitatively evaluate the project’s potential to induce growth and any subsequent environmental impacts that would occur (pursuant to CEQA Guidelines Section 15126[d]). CITY OF PALO ALTO OFFICE OF THE CITY CLERK February 6, 2017 The Honorable City Council Attention: Finance Committee Palo Alto, California Approval of Action Minutes for the January 23, 2017 Council Meeting Staff is requesting Council review and approve the attached Action Minutes. ATTACHMENTS:  Attachment A: 01-23-17 DRAFT Action Minutes (DOCX) Department Head: Beth Minor, City Clerk Page 2 CITY OF PALO ALTO CITY COUNCIL DRAFT ACTION MINUTES Page 1 of 8 Special Meeting January 23, 2017 The City Council of the City of Palo Alto met on this date in the Council Chambers at 5:03 P.M. Present: DuBois, Filseth, Fine, Holman, Kniss, Kou, Scharff, Tanaka, Wolbach Absent: Closed Session 1. CONFERENCE WITH REAL PROPERTY NEGOTIATORS Authority: Government Code Section 54956.8 Property: Plum Tree Apartments, 3020-3038 Emerson Street, Palo Alto, CA Agency Negotiators: James Keene, Lalo Perez, Hamid Ghaemmaghami, Hillary Gitelman Negotiating Parties: Palo Alto Housing and City of Palo Alto Under Negotiation: Option to Purchase – Price, Affordability Restrictions and Terms of Payment. MOTION: Council Member DuBois moved, seconded by Council Member Kou to go into Closed Session. MOTION PASSED: 9-0 Council went into Closed Session at 5:03 P.M. Council returned from Closed Session at 5:39 P.M. Mayor Scharff announced no reportable action. Study Session 2. Presentation by the Santa Clara Valley Transportation Authority (VTA) Regarding the Next Network Initiative and its Impacts on Bus Service in Palo Alto. DRAFT ACTION MINUTES Page 2 of 8 City Council Meeting Draft Action Minutes: 1/23/17 Special Orders of the Day 3. Proclamation Expressing Appreciation to Annie Folger for Outstanding Public Service on her Retirement. Agenda Changes, Additions and Deletions None. Minutes Approval 4. Approval of Action Minutes for the January 3 and 9, 2017 Council Meetings. MOTION: Council Member Fine moved, seconded by Council Member Kou to approve the Action Minutes for the January 3 and 9, 2017 Council Meetings. MOTION PASSED: 8-0-1 Kniss abstain Consent Calendar MOTION: Vice Mayor Kniss moved, seconded by Mayor Scharff to approve Agenda Item Numbers 5-11. Council Member Holman registered a no vote on Agenda Item Number 11- 900 N. California Avenue [15PLN-00155]… MOTION: Council Member Wolbach moved, seconded by Council Member Holman, third by Council Member DuBois to pull Agenda Item Number 11- 900 N. California Avenue [15PLN-00155]… to be heard at a date uncertain. 5. Authorization to Establish a Supplemental Pension Trust With the Public Agency Retirement Service (PARS) and Approve Budget Amendments in the General Fund and the General Benefits Fund. 6. Approval of a Contract With Altec Industries Inc., in the Amount of $335,213 for the Purchase of an Altec Hydraulic Telescoping Crane and Approval of a Budget Amendment in Various Funds. 7. Approval of Amendment Number Two to Contract Number C14153485 With Canopy, for an Additional Amount of $81,552 for a Total Amount Not-to-exceed $481,182 to Administer a Crowdsourced Tree Data Platform to Advance Programmatic Initiatives in the Urban Forest Master Plan, and Continue Basic Contract Services Through a Three- month Extension to June 30, 2017. DRAFT ACTION MINUTES Page 3 of 8 City Council Meeting Draft Action Minutes: 1/23/17 8. Approval of a Contract With Altec Industries Inc., in the Amount of $496,278 for the Purchase of Three 40-Foot Altec Aerial Trucks and Approval of Budget Appropriation Amendments in the Electric Utility Fund and the Vehicle Replacement and Maintenance Fund. 9. Resolution 9661 Entitled, “Resolution of the Council of the City of Palo Alto Expressing Appreciation to Dennis Burns Upon His Retirement.” 10. Resolution 9662 Entitled, “Resolution of the Council of the City of Palo Alto Expressing Appreciation to Bob Beacom Upon His Retirement.” 11. 900 N. California Avenue [15PLN-00155]: Denial of the Appeal of the Planning and Community Environment Director's Architectural Review Approval of Three new Single-Family Homes, one With a Second Unit. Environmental Review: Categorically Exempt per California Environmental Quality Act (CEQA) Guidelines Section 15303(a) (New Construction or Conversion of Small Structures), Zoning District: R-1 (Continued From January 9, 2017). MOTION FOR AGENDA ITEM NUMBERS 5-10 PASSED: 9-0 Action Items 12. Discussion and Direction to Staff to Implement a One-year Traffic Safety Pilot Project Along Middlefield Road Between the Menlo Park City Limits and Forest Avenue, Find the Project Exempt From the California Environmental Quality Act (CEQA) and Approve a Budget Amendment in the General Fund. Council Member Holman advised she will not participate in this Agenda Item because she has a real property interest near the project. She left the meeting at 8:05 P.M. MOTION: Vice Mayor Kniss moved, seconded by Council Member Fine to: A. Identify Alternative Concept Plan 7A as the preferred alternative to implement as a one-year pilot project; and B. Amend the Fiscal Year 2017 Budget Appropriation for: i. The General Fund to: a. Increase the transfer to the Capital Fund in the amount of $200,000; and DRAFT ACTION MINUTES Page 4 of 8 City Council Meeting Draft Action Minutes: 1/23/17 b. Decrease the Planning and Transportation Contingency in the amount of $200,000; and ii. The General Capital Improvement Fund to: a. Increase the transfer from the General Fund in the amount of $200,000; and b. Increase the appropriation to Transportation and Parking Project (CIP PL-12000) by $200,000; and C. Find the preferred Alternative Concept Plan exempt from environmental review as a minor change to existing roadways that would not result in significant environmental impacts. INCORPORATED INTO THE MOTION WITH THE CONSENT OF THE MAKER AND SECONDER to add to the Motion, “direct Staff to define clear metrics for level of impacts that will determine success or failure, so that Council can evaluate this pilot with data at the conclusion.” (New Part D) MOTION AS AMENDED RESTATED: Vice Mayor Kniss moved, seconded by Council Member Fine to: A. Identify Alternative Concept Plan 7A as the preferred alternative to implement as a one-year pilot project; and B. Amend the Fiscal Year 2017 Budget Appropriation for: i. The General Fund to: c. Increase the transfer to the Capital Fund in the amount of $200,000; and d. Decrease the Planning and Transportation Contingency in the amount of $200,000; and ii. The General Capital Improvement Fund to: c. Increase the transfer from the General Fund in the amount of $200,000; and d. Increase the appropriation to Transportation and Parking Project (CIP PL-12000) by $200,000; and DRAFT ACTION MINUTES Page 5 of 8 City Council Meeting Draft Action Minutes: 1/23/17 C. Find the preferred Alternative Concept Plan exempt from environmental review as a minor change to existing roadways that would not result in significant environmental impacts; and D. Direct Staff to define clear metrics for level of impacts that will determine success or failure, so that Council can evaluate this pilot with data at the conclusion. MOTION AS AMENDED PASSED: 8-0 Holman absent 13. PUBLIC HEARING: Resolution 9663 Entitled, “Resolution of the Council of the City of Palo Alto for the Creation of a new Residential Preferential Parking (RPP) Program in the Evergreen Park and Mayfield Neighborhoods Bounded by Park Boulevard, Caltrain Rail Corridor, Oregon Expressway, Page Mill Road and El Camino Real and Finding of Exemption Under the California Environmental Quality Act (CEQA).” Vice Mayor Kniss advised she will not participate in this Agenda Item because she owns real property in the proposed boundaries. She left the meeting at 9:29 P.M. Council took a break from 9:29 P.M. to 9:36 P.M. Council Member Holman returned to the meeting at 9:32 P.M. Public Hearing opened at 9:57 P.M. Public Hearing closed at 10:59 P.M. MOTION: Council Member Filseth moved, seconded by Mayor Scharff to: A. Adopt a Resolution to implement the Evergreen Park-Mayfield Residential Preferential Parking (RPP) Program as a one-year pilot and direct Staff to make corresponding changes to the RPP Administrative Guidelines; and B. Find the program exempt from review under the California Environmental Quality Act (CEQA). AMENDMENT: Council Member DuBois moved, seconded by Council Member Holman to add to the Motion, “direct Staff to schedule a Council discussion six months after the RPP launches for a review.” AMENDMENT FAILED: 4-4 DuBois, Fine, Holman, Kou, no, Kniss absent DRAFT ACTION MINUTES Page 6 of 8 City Council Meeting Draft Action Minutes: 1/23/17 AMENDMENT: Council Member DuBois moved, seconded by Council Member Filseth to add to the Motion, “to consider a phase out of business permits when the new California Avenue parking garage opens.” AMENDMENT WITHDRAWN BY THE MAKER AMENDMENT: Council Member DuBois moved, seconded by Council Member Filseth to add to the Motion, “direct Staff to propose a limit to daily hangtags per employer.” (New Part C) AMENDMENT PASSED: 6-2 Scharff, Tanaka no, Kniss absent AMENDMENT: Council Member Wolbach moved, seconded by Mayor Scharff to add to the Motion, “remove 2755 El Camino Real (former VTA Parking Lot) from this RPP Program.” (New Part D) AMENDMENT PASSED: 8-0 Kniss absent INCORPORATED INTO THE MOTION WITH THE CONSENT OF THE MAKER AND SECONDER to add to the Motion, “replace in Resolution Section 4.A.c. ‘two employee’ with ‘three employee’ and replace in Section 4.B.1 and 4.B.2, ‘resident living’ with ‘residence.’” (New Part E) AMENDMENT: Council Member Tanaka moved, seconded by Council Member Fine to add to the Motion, “the Mayfield area will be designated opt- in.” AMENDMENT FAILED: 4-4 DuBois, Holman, Kou, Scharff no, Kniss absent AMENDMENT: Council Member Tanaka moved, seconded by Council Member DuBois to add to the Motion, “refer review of this RPP Program to the Planning and Transportation Commission prior to Council’s review.” (New Part F) AMENDMENT PASSED: 7-0-1 Filseth abstain, Kniss absent AMENDMENT: Council Member Fine moved, seconded by Council Member Tanaka to reduce the number of permits residents can obtain from 5 to 4. AMENDMENT FAILED: 4-4 DuBois, Filseth, Holman, Kou no, Kniss absent AMENDMENT: Council Member Fine moved, seconded by Council Member DuBois to add to the Motion, “direct Staff to investigate ways to streamline purchasing of parking garage permits and consider valet parking.” (New Part G) DRAFT ACTION MINUTES Page 7 of 8 City Council Meeting Draft Action Minutes: 1/23/17 AMENDMENT PASSED: 7-0-1 Holman not participating, Kniss absent AMENDMENT: Council Member Fine moved, seconded by Council Member Holman to add to the Motion, “allow employee permits to be shared between employees of the same business.” (New Part H) AMENDMENT PASSED: 8-0 Kniss absent AMENDMENT: Council Member Holman moved, seconded by Council Member Tanaka to add to the Motion, “direct Staff to investigate ways for businesses to share permits within the Business District.” (New Part I) AMENDMENT PASSED: 5-3 DuBois, Fine, Scharff no, Kniss absent AMENDMENT: Mayor Scharff moved, seconded by Council Member XX to add to the Motion, “increase the number of permits for medical and dental serving employers to 50 based on location.” AMENDMENT RESTATED: Mayor Scharff moved, seconded by Council Member XX to add to the Motion, “increase the number of permits for medical services and dental offices along El Camino Real to 50.” AMENDMENT FAILED DUE TO THE LACK OF A SECOND AMENDMENT: Mayor Scharff moved, seconded by Council Member Holman to add to the Motion, “direct Staff to schedule a Council Agenda Item relating to the creation of a California Avenue Transportation Management Association (TMA) or expansion of the Downtown TMA.” (New Part J) AMENDMENT PASSED: 8-0 Kniss absent MOTION AS AMENDED RESTATED: Council Member Filseth moved, seconded by Mayor Scharff to: A. Adopt a Resolution to implement the Evergreen Park-Mayfield Residential Preferential Parking (RPP) Program as a one-year pilot and direct Staff to make corresponding changes to the RPP Administrative Guidelines; and B. Find the program exempt from review under the California Environmental Quality Act (CEQA); and C. Direct Staff to propose a limit to daily hangtags per employer; and D. Remove 2755 El Camino Real (former VTA Parking Lot) from this RPP Program; and DRAFT ACTION MINUTES Page 8 of 8 City Council Meeting Draft Action Minutes: 1/23/17 E. Replace in Resolution Section 4.A.c. “two employee” with “three employee” and replace in Sections 4.B.1 and 4.B.2, “resident living” with “residence”; and F. Refer review of this RPP Program to the Planning and Transportation Commission prior to Council’s review; and G. Direct Staff to investigate ways to streamline purchasing of parking garage permits and consider valet parking; and H. Allow employee permits to be shared between employees of the same business; and I. Direct Staff to investigate ways for businesses to share permits within the Business District; and J. Direct Staff to schedule a Council Agenda Item relating to the creation of a California Avenue Transportation Management Association (TMA) or expansion of the Downtown TMA. MOTION AS AMENDED PASSED: 8-0 Kniss absent Inter-Governmental Legislative Affairs None. Council Member Questions, Comments and Announcements Council Member Wolbach expressed his appreciation to the City and the Human Relations Commission for their support of the Immigrants and Allies event held last week. The event was presented in Spanish and was well attended. Mayor Scharff announced his appointment to the San Francisco Bay Restoration Authority, which oversees funds generated by the November 8, 2016 Measure A funds. Adjournment: The meeting was adjourned at 11:58 P.M. City of Palo Alto (ID # 7386) City Council Staff Report Report Type: Consent Calendar Meeting Date: 2/6/2017 City of Palo Alto Page 1 Summary Title: Annual Report Development Impact Fees FY16 Title: Review and Acceptance of Annual Report on Development Impact Fees for Fiscal Year 2016 From: City Manager Lead Department: Administrative Services RECOMMENDATION Staff recommends the Council review and approve the annual development impact fee report (Attachment A) and find this action exempt from the California Environmental Quality Act (CEQA) under Section 15378(b)(4) of the CEQA Guidelines. BACKGROUND State law (Government Code Section 66006) requires that each local agency that imposes development impact fees prepare an annual report providing specific information about those fees. This requirement is part of the law commonly referred to as AB 1600. It codifies the legal requirement that fees on new development must have the proper nexus to any project on which they are imposed. In addition, AB 1600 imposes certain accounting and reporting requirements with respect to the fees collected. The fees, for accounting purposes, must be segregated from the general funds of the City and from other funds or accounts containing fees collected for other improvements. Interest on each development fee fund or account must be credited to that fund or account and used only for the purposes for which the fees were collected. Government Code Section 66006 contains comprehensive annual reporting requirements for development impact fees. This statute requires that, within 180 days after the close of the fiscal year, the agency that collected the fees must make available to the public the following information regarding each fund or account:  Brief description of the type of fee in the fund.  Amount of the fee.  Beginning and ending balance in the fund. City of Palo Alto Page 2  Amount of fees collected and interest earned.  Identification of each public improvement on which fees were expended and the amount of the expenditure on each improvement, including the total percentage of the cost of the public improvement that was funded with fees.  Identification of an approximate date by which the construction of a public improvement will commence, if the local agency determines that sufficient funds have been collected to complete financing on an incomplete public improvement.  Description of each interfund transfer or loan made from the account or fund, including the public improvement on which the loaned funds will be expended, and in the case of an interfund loan, the date on which the loan will be repaid and the rate of interest that the account or fund will receive on the loan.  Amount of any refunds made due to inability to expend fees within the required time frame. This report must also be reviewed by the City Council at a regularly scheduled public meeting not less than 15 days after the information is made available to the public. In addition, notice of the time and place of the meeting shall be mailed at least 15 days prior to the meeting to any interested party who files a written request with the local agency for such a mailed notice. An early packet consisting of Attachment A only was made available to the public and included in the packet for the December 12, 2016 meeting of the City Council. The law also provides that, for the fifth fiscal year following the first deposit into the fund and every five years thereafter, the local agency shall make findings with respect to any portion of the fee remaining unexpended, whether committed or uncommitted. The finding must:  identify the purpose to which the fee is to be put;  demonstrate a nexus between the fee and the purpose for which it was originally charged; and  identify all sources and amounts of funding anticipated to complete financing of incomplete improvements along with the approximate dates on which the anticipated funding is expected to be deposited into the fund. If the agency no longer needs the funds for the purposes collected, or if the agency fails to make required findings, or to perform certain administrative tasks prescribed by AB 1600, the agency may be required to refund to property owners a prorated portion of the monies collected for that project and any interest earned on those funds. City of Palo Alto Page 3 DISCUSSION The City of Palo Alto development fees covered by AB 1600, and documented in Attachment A, include the following:  Stanford Research Park/El Camino Real traffic impact fees (PAMC Ch. 16.45): Fee for new nonresidential development in the Stanford Research Park/El Camino Real Service Commercial zone, to fund capacity improvements at eight intersections.  San Antonio/West Bayshore Area traffic impact fees (PAMC Ch. 16.46): Fee for new nonresidential development in the San Antonio/West Bayshore area to fund capacity improvements at four intersections.  Housing impact fees imposed on commercial developments (PAMC Ch. 16.47): Fee on commercial and industrial development to contribute to programs that increase the City's low income and moderate-income housing stock.  Parking in-lieu fees for University Avenue Parking District (PAMC Ch. 16.57): Fee on new non-residential development in the University Avenue Parking Assessment District in lieu of providing required parking spaces.  Parks, Community Centers, and Libraries impact fees (PAMC Ch. 16.58): Fee on new residential and non-residential development to provide community facility funds for parks, community centers, libraries, public safety, and general government.  Residential housing in-lieu fees (PAMC Ch. 16.47): Fee on residential developments in- lieu of providing required below-market rate units to low and moderate income households.  Parkland dedication fees (Quimby Act) (California Government Code Section 66477): Fee or parkland dedication imposed on new residential and non-residential development.  Charleston-Arastradero Corridor pedestrian and bicyclist safety fees (PAMC Ch. 16.59): Fee on new development and re-development within the Charleston-Arastradero Corridor to provide for pedestrian and bicyclist improvements.  Citywide Transportation impact fee (PAMC Ch 16.59): Fee on development in all parts of the City to fund transportation projects and programs to reduce congestion.  Public Art fees (PAMC 16.61): Fee on public art for private developments.  Water and sewer capacity fees (California Government Code Section 66000): Fee on developments adding load to water and sewer systems. City of Palo Alto Page 4 AB 1600 requires the City to make specified findings in the event any funds are not expended within five fiscal years of collection and every five years thereafter. While there are several funds containing collected fees that have not been expended in five years, the required statutory carryover findings have already been made for those funds and no further findings are required. RESOURCE IMPACT Council approved the required findings with respect to unexpended fees in fiscal years 2012 and 2013. There were no required findings for fiscal year 2014, and there are none for fiscal years 2015 and 2016. The next finding date will be fiscal year 2017, and the unexpended balances for each fee type are noted at the bottom of each section in Attachment A. Attachments:  Attachment A: Development Impact Fees FY16 Attachment A City of Palo Alto Annual Report on Development Impact Fees for Period Ending June 30, 2016 Stanford Research Park/San Antonio/West FUND El Camino Fund Bayshore Fund Purpose and Authority Traffic impact fees imposed on new Traffic impact fees imposed on new for Collection nonresidential development in the nonresidential development in the Stanford Research Park/El Camino San Antonio/West Bayshore Areas Real CS zone to fund improvements to fund capacity improvements at at eight identified intersections.four identified intersections. PAMC Ch. 16.45 PAMC Ch. 16.46 Amount of the Fee $11.94 per square foot $2.46 per square foot Fund Balance July 1, 2015 $3,183,028 $865,227 Activity in 2015-16 Revenues Fees Collected 0 0 Interest Earnings 60,220 16,373 Unrealized Gain/Loss Investments 36,275 9,619 -------------------------------------------------------------------------------------------------------------------- Total Revenues $96,495 $25,992 -------------------------------------------------------------------------------------------------------------------- Total Expenditures 0 0 -------------------------------------------------------------------------------------------------------------------- Ending Balance June 30, 2016 $3,279,523 $891,219 Other Commitments/AppropriationsReserve for unrealized gain on investments (55,874)(14,656)-------------------------------------------------------------------------------------------------------------------- Net Funds Available $3,223,649 $876,563 Unexpended balance at next finding date (FY 2017-18)$2,343,008 $823,819 USE OF FEES:USE OF FEES: No expenditures have been made from this fund in Fiscal Year 2016. Funds will support intersection improvements at Page Mill Road/Hanover and Page Mill Road/Hansen concurrent with construction of the project at 1050 Page Mill Road under a cooperative agreement currently being negotiated with the developer and the County. No expenditures have been made from this fund in Fiscal Year 2016. Page 1 of 11 Attachment A City of Palo Alto Annual Report on Development Impact Fees for Period Ending June 30, 2016 Commercial Housing University Avenue Parking FUND In-Lieu Fund In-Lieu Fund Purpose and Authority Fees imposed on large commercial Fees collected from non-residential for Collection and industrial development to development within the University Ave. contribute to programs that increase Parking Assessment District in lieu of the City's low income and moderate-providing the required number of income housing stock.parking spaces. PAMC Ch.16.47 PAMC Ch 16.57 Amount of the Fee $19.85 per square foot $65,475 per space Fund Balance July 1, 2015 $14,642,107 $4,963,059 Activity in 2015-16 Revenues Fees Collected 48,156 Prior year fees refunded (209,616) Sale of Property 78,651 Interest Earnings 244,973 81,572 Unrealized Gain/Loss Investments 121,424 54,653 Operating Transfers Transfer from Housing In-Lieu Fund 375,000 Transfer from SUMC 1,720,488 -------------------------------------------------------------------------------------------------------------------- Total Revenues 2,588,692 (73,391) Expenditures Planning (500) Other Contract Services (2,777) Transfer to Capital Projects (1,300,000) Reclassify prior year expense to loan 500,000 -------------------------------------------------------------------------------------------------------------------- Total Expenditures 496,723 (1,300,000) -------------------------------------------------------------------------------------------------------------------- Ending Balance June 30, 2016 $17,727,522 $3,589,668 Other Commitments/Appropriations Reserve for Notes Receivable include:$1,290,000 for 2811 Alma, and $4,137,254 for 801 Alma.(5,427,254) Reserve for Buena Vista (7,700,000) Reserve for Encumbrance (12,278) Reserve for unrealized gain on investments (171,287)(75,110) --------------------------------------------------------------------------------------------------------------------Net Funds Available $4,416,704 $3,514,558 Page 2 of 11 Attachment A City of Palo Alto Annual Report on Development Impact Fees for Period Ending June 30, 2016 Unexpended balance at next finding date (FY 2017-18)7,263,289 $0 USE OF FEES:USE OF FEES: Expenditures of funds have been made in Fiscal Year 2016 for $3K housing nexus study. The $500K previously reported as expenditure for 801 Alma St. in fiscal year 2006 was reclassified to notes receivable. The $7.7 million Reserve for Buena Vista is included for unexpended balance calculation purposes because this was only set aside by council motion. Expenditures of funds have been made in Fiscal Year 2016 for $1.3M to PE-15007 (New Downtown Parking Garage). Page 3 of 11 Attachment A City of Palo Alto Annual Report on Development Impact Fees for Period Ending June 30, 2016 Residential & Non-Residential Housing Residential & Non-Residential Housing Community Facilities Community Facilities FUND Parks Community Centers Purpose and Authority Fees imposed on new residential and Fees imposed on new residential and for Collection non-residential development approved non-residential development approved after Jan 28, 2002 for Parks. after Jan 28, 2002 for Community Centers. PAMC Ch. 16.58 PAMC Ch. 16.58 Amount of the Fee Residential: Single family $11,465/residence (or $17,120/residence larger than 3,000 sq ft); Multi-family $7,505/unit (or $3,794/unit smaller than or equal to 900 sq ft) Residential: Single family $2,972/residence (or $4,450/residence larger than 3,000 sq ft); Multi-family $1,956/unit (or $987/unit smaller than or equal to 900 sq ft) Nonresidential: Commercial/industrial $4,869 per 1,000 sq ft; Hotel/Motel $2,202 per 1,000 sq ft Nonresidential: Commercial/industrial $275 per 1,000 sq ft; Hotel/Motel $124 per 1,000 sq ft Fund Balance July 1, 2015 $3,830,075 $5,222,588 Activity in 2015-16 Revenues Fees Collected 62,771 428,903 Interest Earnings 73,349 105,611 Unrealized Gain/Loss 46,961 64,277 -------------------------------------------------------------------------------------------------------------------- Total Revenues $183,081 $598,791 -------------------------------------------------------------------------------------------------------------------- Total Expenditures 0 0 -------------------------------------------------------------------------------------------------------------------- Ending Balance June 30, 2016 $4,013,156 $5,821,379 Other Commitments/Appropriations Reserve for unrealized gain on investments (66,866)(94,345)--------------------------------------------------------------------------------------------------------------------Net Funds Available $3,946,290 $5,727,034 Unexpended balance at next finding date (FY 2016-17)446,005 $843,809 USE OF FEES:USE OF FEES: No expenditure of funds have been made from this Fund in Fiscal Year 2016. No expenditure of funds have been made from this Fund in Fiscal Year 2016. Page 4 of 11 Attachment A City of Palo Alto Annual Report on Development Impact Fees for Period Ending June 30, 2016 Residential & Non-Residential Housing Residential Housing Community Facilities In-Lieu Fund FUND Libraries Purpose and Authority Fees imposed on new residential and Fees collected from residential for Collection non-residential development approved developments of three or more units in after Jan 28, 2002 for Libraries. lieu of providing the required below- PAMC Ch. 16.58 market rate unit(s) to low and moderate income households. PA Comprehensive Plan and PAMC Chapter 18 Amount of the Fee Residential: Single family $1,038/residence (or $1,545/residence larger than 3,000 sq ft); Multi-family $620/unit (or $341/unit smaller than or equal to 900 sq ft)Varies Nonresidential: Commercial/industrial $262 per 1,000 sq ft or fraction thereof; Hotel/Motel $110 per 1,000 sq ft or fraction thereof Fund Balance July 1, 2015 $803,697 $17,620,964 Activity in 2015-16 Revenues Fees Collected 142,591 2,035,025 Monroe Litigation Settlement 2,801,474 Webster Wood Property Rental 5,650 Interest Earnings 17,481 382,924 Unrealized Gain/Loss Investments 11,060 148,702 -------------------------------------------------------------------------------------------------------------------- Total Revenues $171,132 $5,373,775 Expenditures Legal (36,730) Housing Program Expense (147,698) Interest Expense (7,106) Principal Retired (135,060) Transfer to SUMC (720,220) Transfer to Housing Commerical (375,000) -------------------------------------------------------------------------------------------------------------------- Total Expenditures 0 (1,421,814) -------------------------------------------------------------------------------------------------------------------- Ending Balance June 30, 2016 $974,829 $21,572,925 Other Commitments/Appropriations Page 5 of 11 Attachment A City of Palo Alto Annual Report on Development Impact Fees for Period Ending June 30, 2016 Reserve for Reappropriations (375,000) Reserve for Encumbrances (65,937) Reserve for Buena Vista (6,800,000)Reserve for unrealized gain on investments (15,572)(195,102) Reserve for Notes Receivable include $375,000 for 3053 Emerson, $3,804,850 for Tree House Apts, $68,033 for Oak Manor, $747,734 for Sheridan Apts., $2,285,026 for 801 Alma, $1,000,000 for Palo Alto Housing Project, $600,000 for 2811-2825 Alma St., and $203,561 for Colorado Park Housing.(9,084,204) --------------------------------------------------------------------------------------------------------------------Net Funds Available $959,257 $5,052,683 Unexpended balance at next finding date (FY 2016-17-Residential & Non Residential Housing Communities Facilities Libraries, FY2017-18- Residential Housing In-Lieu)$541,529 $2,316,406 USE OF FEES:USE OF FEES: No expenditure of funds have been made from this Fund in Fiscal Year 2016. Expenditures in Fiscal Year 2016 include $148K to Palo Alto Housing Corp for BMR fees, $135K for Oak Manor Apts. loan forgiveness, $37K for legal fees, and $720K and $375K return of funds to SUMC and Housing Commercial, respectively. The $6.8 million Reserve for Buena Vista is included for unexpended balance calculation purposes because this was only set aside by council motion Page 6 of 11 Attachment A City of Palo Alto Annual Report on Development Impact Fees for Period Ending June 30, 2016 Parkland Dedication Charleston-Arastradero Corridor Pedestrian and Bicyclist Safety FUND Purpose and Authority Fees on parkland dedication imposed Fees collected from new development and for Collection on new residential and non-residential re-development within the Charleston- development Arastradero Corridor to provide for pedest- Govt Code Sec.66477 (Quimby Act) rian and bicyclist safety improvements. PAMC Ch. 16.60 Amount of the Fee Single Family: $58,812 per unit; Multi- Family: $40,103 per unit. This applies only to residential projects that require a subdivision or pacel map. Land dedications is required for subdivisions resulting in more than 50 parcels. Parkland Dedication Fee -Land: Single Family: 531 sq. ft, per unit; Multi-Family: 366 sq. ft. per unit. When parkland dedication applies, park impact fees do not apply. Residential: $1,256 per unit; Commercial: $0.37 per sq ft Fund Balance July 1, 2015 $2,553,156 $254,690 Activity in 2015-16 Revenues Fees Collected 624,270 1,225 Interest Earnings 51,478 4,268 Unrealized Gain/Loss 34,929 357 -------------------------------------------------------------------------------------------------------------------- Total Revenues $710,677 $5,850 Expenditures Operating Transfer to Capital Projects Fund 0 (250,000) -------------------------------------------------------------------------------------------------------------------- Total Expenditures 0 (250,000) -------------------------------------------------------------------------------------------------------------------- Ending Balance June 30, 2016 $3,263,832 $10,540 Other Commitments/ReappropriationsReserve for unrealized gain on investments (49,462)(1,832) --------------------------------------------------------------------------------------------------------------------Net Funds Available $3,214,370 $8,708 Unexpended balance at next finding date (FY 2016-17-Parkland Dedication, FY2017-18-Charleston)$757,744 $0 USE OF FEES:USE OF FEES: No expenditure of funds have been made from this Fund in Fiscal Year 2016. Expenditure have been made in Fiscal Year 2016 for $250K to PL-13011 (Charleston Arastadero). Page 7 of 11 Attachment A City of Palo Alto Annual Report on Development Impact Fees for Period Ending June 30, 2016 New Public Safety Facilities General Government Facilities FUND Purpose and Authority Fees imposed on residential and Fees imposed on residential and non- for Collection non-residential development to fund residential development to fund facilities police and fire facilities (including fire associated with municipal administration. apparatus and vehicles) PAMC Ch. 16.58 Amount of the Fee Residential: Single family $996 per unit; Multi-family $797 per unit Residential: Single family $1,255 per unit; Multi-family $1,004 per unit Nonresidential: Commercial $557 per 1,000 sq ft. or fraction thereof; Industrial $186 per 1,000 sq. ft. or fraction thereof; Hotel/Motel $743 per 1,000 sq ft or fraction thereof Nonresidential: Commercial $702 per 1,000 sq ft. or fraction thereof; Industrial $234 per 1,000 sq. ft. or fraction thereof; Hotel/Motel $937 per 1,000 sq ft or fraction thereof Fund Balance July 1, 2015 $1,596 $2,011 Activity in 2015-16 Revenues Fees Collected 19,139 24,105 Interest Earnings 248 314 -------------------------------------------------------------------------------------------------------------------- Total Revenues $19,387 $24,419 -------------------------------------------------------------------------------------------------------------------- Total Expenditures 0 0 -------------------------------------------------------------------------------------------------------------------- Ending Balance June 30, 2016 $20,983 $26,430 Other Commitments/Reappropriations --------------------------------------------------------------------------------------------------------------------Net Funds Available $20,983 $26,430 Unexpended balance at next finding date FY 2019-20 $1,596 $2,011 USE OF FEES:USE OF FEES: No expenditure of funds have been made from this Fund in Fiscal Year 2016. No expenditure of funds have been made from this Fund in Fiscal Year 2016. Page 8 of 11 Attachment A City of Palo Alto Annual Report on Development Impact Fees for Period Ending June 30, 2016 Citywide Transportation FUND Purpose and Authority Transportation impact fees imposed for Collection on new development in all parts of the City to fund congestion reduction projects. PAMC Ch. 16.59 Amount of the Fee $3,439 per net new PM peak hour trip Fund Balance July 1, 2015 $2,460,395 Activity in 2015-16 Revenues Fees Collected 482,832 Interest Earnings 54,426 Unrealized Gain/Loss Investments 28,085 -------------------------------------------------------- Total Revenues $565,343 -------------------------------------------------------- Total Expenditures 0 -------------------------------------------------------- Ending Balance June 30, 2016 $3,025,738 Other Commitments/Reappropriations Reserve for unrealized gain on investments (46,715)-------------------------------------------------------- Net Funds Available $2,979,023 Unexpended balance at next finding date (FY 2017-18)$1,216,124 USE OF FEES: No expenditure of funds have been made from this Fund in Fiscal Year 2016. Page 9 of 11 Attachment A City of Palo Alto Annual Report on Development Impact Fees for Period Ending June 30, 2016 (INFORMATION ONLY) Public Art Fund FUND Purpose and Authority for collection Fees imposed on new commercial develoments (including mixed use projects), including new construction, remodels, additions and reconstruction that (i) have a floor area of 10,000 square feet or more, and (ii) have a construction value of $200,000, or more, exclusive of costs for architecture, design, engineering, and required studies; and all new residential projects of five or more units to fund public art for private developments. PAMC Ch. 16.61 Amount of the Fee 1% of first $105.21 million construction valuation and .9% of construction valuation for valuation in excess of $105.21 million Fund Balance July 1, 2015 $154,716 Activity in 2015-16 Revenues Fees Collected 141,206 Interest Earnings 8,812 Unrealized Gain/Loss Investments 4,866 Operating Transfer from General Fund 107,000 -------------------------------------------------------- Total Revenues $261,884 Expenditures Salaries and benefits (135,051) -------------------------------------------------------- Total Expenditures (135,051) -------------------------------------------------------- Ending Balance June 30, 2016 $281,548 Reserve for unrealized gain on investments (6,412) --------------------------------------------------------Net Funds Available $275,136 This fund is not subject to AB1600 requirements and is listed only for information purposes Page 10 of 11 Attachment A City of Palo Alto Annual Report on Development Impact Fees for Period Ending June 30, 2016 (INFORMATION ONLY) FUND Water and Wastewater Collection Purpose and Authority Capacity fees charged to developers that for Collection are adding load to the water and sewer systems effective July 1, 2005. California Government Code Sect 66000 Amount of the Fee Water Capacity Fees: 5/8 in., 3/4 in E- Meter. $5,000, 1 in. E-Meter $9,400, 1 1/2 in. E-Meter $18,850, 2 in. E-Meter $56,250 , 4 in. Compound Meter by est. $125/FU (min. 5,000 FU) , 6 in. Compound Meter by est. $125/FU (min. 7,000 FU) Fire Service Capacity Fees: 2 in. $750, 4 in. $9,000, 6 in. $22,530, 8 in. $43,080, 10in. $69,510 Sewer Capacity Charges: 4 in. connection with 5/8 in Water Meter (WM) $5,250, 4 in connection. with 1-in WM $15,750, 4 or 6 in. connection with 1-1/2 in WM $31,668, 6 in. connection with 2 in. WM $94,500, 6 in. and larger connection with 4 in. or larger WM by est. at $210/FU Activity in 2015-16 Capacity Fees Collected Water $641,283 Wastewater Collection 288,206 Total $929,489 USE OF FEES: The fees are used exclusively for water and sewer system improvements Page 11 of 11 City of Palo Alto (ID # 7490) City Council Staff Report Report Type: Consent Calendar Meeting Date: 2/6/2017 City of Palo Alto Page 1 Summary Title: Close FY 2016 Budget and Approve FY 2016 CAFR Title: Adoption of Budget Amendment Closing the Fiscal Year 2016 Budget and Capital Projects, and Approval of the Fiscal Year 2016 Comprehensive Annual Financial Report (CAFR) From: City Manager Lead Department: Administrative Services Recommendation The Finance Committee and Staff recommend that Council:  Amend the Fiscal Year 2016 Budget Appropriation Ordinance for various funds as identified in Attachment B – Exhibit 1 and various capital projects as identified in Attachment B – Exhibit 2; and  Approve the City’s 2016 Comprehensive Annual Financial Report (CAFR), Attachment C to CMR #7383. An electronic copy is available at: www.cityofpaloalto.org/gov/depts/asd/financialreporting, and hard copies are available at the Administrative Services Department upon request. Background As is customary, the City Council is required to close out the City’s financial results at the end of each fiscal year. At its November 15, 2016 meeting, the Finance Committee unanimously approved closing of the 2016 fiscal year (Attachment D). Financial Highlights for FY 2016  General Fund ended FY 2016 with a surplus of $7.7 million when compared to the assumptions used in the development of the FY 2017 Adopted Operating Budget. However, once adjusted for City Council approved uses and current pending staff recommended uses of the Budget Stabilization Reserve (BSR), the remaining surplus balance is approximately $1 million above the level assumed in the FY 2017 Adopted Budget. The surplus was largely a result of higher than estimated expense savings, as well as slight revenue increases in sales and use taxes (approximately $1 million) when compared to the estimated activity levels City of Palo Alto Page 2 assumed in the development of the FY 2017 Adopted Budget. This surplus is recommended to be utilized for the following purposes: o Amendments approved or scheduled for Council consideration ($2.6 million); o Recommended transfer to the Infrastructure Reserve ($4.3 million) for FY 2017 recommended project deferrals and the corresponding deferral of General Fund transfer to the General Capital Fund; and o Recommended reserve of revenues received from the Edgewood Plaza development ($365,000) as a result of fines and a previous penalty for destruction of an historic building. After adjusting for both the funds retained in the BSR for specific purposes ($2.1 million for potential use in a pension trust fund) and deducting amounts summarized above, the ending BSR balance of $42.2 million is 21.7 percent of FY 2017 General Fund budgeted expenditures and operating transfers (approximately $1 million over the FY 2017 Adopted Budget BSR balance of $41.3 million). A revised summary table of the BSR is outlined below in accordance with the changes recommended by the Finance Committee on November 15, 2016. 2016 Year-End Budget Stabilization Reserve (BSR) Summary (000’s) General Fund BSR Balance per CAFR at June 30 2016 $51,582 Reserve: Potentially establish a pension trust fund (FY 2015 year end close $1.3 million; FY 2017 Adopted Budget $750,000) (2,055) BSR Balance, June 30 2016 $49,527 Uses of the FY 2016 Surplus FY 2017 Approved and/or Recommended use of BSR FY 2017 City Manager Reports Budget Amendment - Approved (CMR’s #7065 & 7030) (567) FY 2017 City Manager Reports Budget Amendments - Scheduled (as of October 11, 2016) (735) FY 2016 Recommended Reappropriations (to be considered October 18, 2016) (1,309) Recommended use of Surplus Funds* Transfer to Capital Improvement: FY 2017 Deferred projects (4,327) Reserve: Edgewood Plaza fines and penalty (365) Current Projected FY 2017 BSR Level (June 30, 2017)** $42,224 * If approved, these transactions under “Recommended Use of Surplus Funds” would be completed as part of the FY 2017 Mid-Year Budget Report. ** This value includes $651,000 in returns from the sale of the former City Manager Real Estate Sale which will be retained in the BSR.. City of Palo Alto Page 3  Enterprise Funds ended the year in surplus positions except for Electric Fund, however the ongoing drought is negatively impacting results, most notably affecting the Water and Electric Funds.  The City received a “clean” audit opinion for FY 2016 from the external audit firm, Macias Gini & O’Connell LLP. The City also received the Certificate of Achievement for Excellence in Financial Reporting from the Government Finance Officers Association for its FY 2015 CAFR. Details that were presented at the November 15, 2016 meeting are included in Attachment D. Environmental Review This is not a project for purposes of the California Environmental Quality Act. Attachments:  Attachment A: General Fund Financial Summary  Attachment B: FY 2016 Year End Clean-up Budget Adjustments  Attachment C: CMR #7383, 2016 Comprehensive Annual Financial Report (CAFR)  Attachment D: Excerpt Minutes from November 15, 2016 Finance Committee 1/25/201711:38 AM Final Draft Attachment A Exhibit 2 GENERAL FUND SUMMARY ($000s) FY 2016 FY 2016 FY 2016 FY 2016 FY 2016 FY 2016 FY 2016 Adopted Adjusted CAFR Basis Allocated Encum Actual Actual to Budget Budget Rev/Exp Charges Rev/Exp Adj BudgetVariance Revenues Sales Tax 27,630 28,430 30,018 n/a 30,018 1,588 Property Tax 35,067 35,967 36,607 n/a 36,607 640 Transient Occupancy Tax 18,791 21,991 22,366 n/a 22,366 375 Documentary Transfer Tax 6,852 7,052 6,266 n/a 6,266 (786) Utility Users Tax 11,189 10,489 12,469 n/a 12,469 1,980 Other Taxes and Fines 2,180 2,180 2,238 n/a 2,238 58 Charges for Services 25,399 24,768 23,910 n/a 23,910 (858) Permits and Licenses 8,211 8,211 7,912 n/a 7,912 (299) Return on Investment 824 824 1,104 n/a 1,104 280 Rental Income 15,296 15,299 15,769 n/a 15,769 470 From Other Agencies 1,659 659 3,190 n/a 3,190 2,531 Charges to Other Funds 11,930 11,929 - 11,576 n/a 11,576 (353) Other Revenues 323 1,801 2,591 - n/a 2,591 790 Total Revenues 165,351 169,600 164,440 11,576 n/a 176,016 6,416 Add: Operating Transfers In 18,589 19,141 18,317 n/a 18,317 (824) Prior Year Encum 5,573 5,606 n/a 5,606 33 Contribution from BSR 1,732 11,551 Total Source of Funds 185,672 205,865 182,757 17,182 n/a 199,939 5,625 Expenditures City Attorney 3,101 3,719 2,634 162 390 3,186 533 City Auditor 1,175 1,261 1,057 55 47 1,159 102 City Clerk 1,328 1,373 871 130 57 1,058 314 City Council 455 502 428 2 21 451 51 City Manager 3,431 4,121 3,420 173 499 4,092 28 Administrative Services 7,635 7,957 7,045 452 118 7,615 342 Community Services 24,804 26,517 19,883 4,452 927 25,262 1,256 Fire 27,583 29,223 25,421 3,175 565 29,161 62 Police 36,859 36,924 32,703 2,970 171 35,844 1,080 Human Resources 3,555 4,029 3,324 192 333 3,849 180 Library 8,555 8,971 7,295 665 257 8,217 754 Planning & Community Environment 8,900 11,146 8,371 727 1,814 10,912 234 Development Services 11,901 12,281 9,851 814 207 10,872 1,409 Public Works 15,017 15,828 11,508 2,787 789 15,084 744 Non-Departmental 3,078 1,372 650 - 650 722 Cubberley Lease 5,584 5,584 5,584 - 5,584 (0) Total Expenditures 162,961 170,808 140,045 16,756 6,195 162,996 7,812 Add: Operating Trans Out 1,834 5,548 5,096 - 5,096 452 Transfer to Infrastructure 20,877 29,509 29,365 - 29,365 144 Total Use of Funds 185,672 205,865 174,506 16,756 6,195 197,457 8,408 Net Surplus/(Deficit)- (0) 8,251 426 6,195 2,482 14,032 CAFR Reconciliation:Unrealized gain/loss on investments 1,390 Current year encumbrance 6,195 Prior Year encumbrances (5,606) CAFR Net Income 4,461 C:\Users\jpollar\appdata\local\temp\minutetraq\paloaltocityca@paloaltocityca.iqm2.com\work\attachments\19578 ATTACHMENT B, EXHIBIT 1 Department Category Adjustment Category Adjustment GENERAL FUND (102) Administrative Services Management Development & Training (reallocation to Non-Departmental) This action reallocates departmental management development savings to Non-Departmental to reappropriate funds for city-wide training needs in FY 2018. General Expense (30,000)$ City Attorney's Office Management Development & Training (reallocation to Non-Departmental) This action reallocates departmental management development savings to Non-Departmental to reappropriate funds for city-wide training needs in FY 2018. General Expense (11,000)$ City Clerk's Office Management Development & Training (reallocation to Non-Departmental) This action reallocates departmental management development savings to Non-Departmental to reappropriate funds for city-wide training needs in FY 2018. General Expense (1,000)$ City Manager's Office Management Development & Training (reallocation to Non-Departmental) This action reallocates departmental management development savings to Non-Departmental to reappropriate funds for city-wide training needs in FY 2018. General Expense (7,500)$ Community & Development Services Management Development & Training (reallocation to Non-Departmental) This action reallocates departmental management development savings to Non-Departmental to reappropriate funds for city-wide training needs in FY 2018. General Expense (11,000)$ Community & Development Services Salaries & Benefits This action reallocates departmental salary and benefits savings to Non-Departmental to offset an increase in the transfer from the General Fund to the Public Art Fund in order to fully fund administrative costs in excess of 20% of art fee revenue as required by Ordinance #5226 in FY 2016. Salaries & Benefits (38,500)$ CITY OF PALO ALTO RECOMMENDED AMENDMENTS TO THE CITY MANAGER'S FY 2016 BUDGET Revenues Expenses Attachment B - 1 ATTACHMENT B, EXHIBIT 1 Department Category Adjustment Category Adjustment GENERAL FUND (102) CITY OF PALO ALTO RECOMMENDED AMENDMENTS TO THE CITY MANAGER'S FY 2016 BUDGET Revenues Expenses Development Services Management Development & Training (reallocation to Non-Departmental) This action reallocates departmental management development savings to Non-Departmental to reappropriate funds for city-wide training needs in FY 2018. General Expense (1,000)$ Fire Salary & Benefits (reallocation from Non-Departmental reserve): This action reallocates funding reserved for salary and benefit increases due to pending labor negotiations to the Fire Department for higher than anticipated salary and benefit expenses in FY 2016. These higher than anticipated expenses are due to a number of variables though the primary causes of this reflects higher than budgeted overtime expenses and higher salary and benefit increases as approved by the City Council in April 2016 that were budgeted in the aforementioned reserve. Salaries & Benefits 1,265,000$ Human Resources Management Development & Training (reallocation to Non-Departmental) This action reallocates departmental management development savings to Non-Departmental to reappropriate funds for city-wide training needs in FY 2018. General Expense (104,000)$ Library Management Development & Training (reallocation to Non-Departmental) This action reallocates departmental management development savings to Non-Departmental to reappropriate funds for city-wide training needs in FY 2018. General Expense (3,000)$ Non- Departmental Management Development & Training (reallocation to Non-Departmental) This action reallocates departmental management development savings to Non-Departmental to reappropriate funds for city-wide training needs in FY 2018. General Expense 202,000$ Non- Departmental Salary & Benefits Reserve (reallocation to Fire Department) This action reallocates the reserve for Salaries and Benefits to the Fire Department to provide sufficient funding for final FY2016 Fire Department salary and benefits expenses. Fund Balance/ Reserves (1,265,000)$ Attachment B - 2 ATTACHMENT B, EXHIBIT 1 Department Category Adjustment Category Adjustment GENERAL FUND (102) CITY OF PALO ALTO RECOMMENDED AMENDMENTS TO THE CITY MANAGER'S FY 2016 BUDGET Revenues Expenses Non- Departmental Transfer to the Public Art Fund This action increases the transfer to the Public Art Fund (from $68,500 to $107,000) to provide sufficient funding for administrative costs associated with the Public Art Program in FY 2016. Per Ordinance #5226, administrative costs in excess of 20% of art fee revenue require General Fund support. Operating Transfers 38,500$ Police Management Development & Training (reallocation to Non-Departmental) This action reallocates departmental management development savings to Non-Departmental to reappropriate funds for city-wide training needs in FY 2018. General Expense (8,000)$ Public Works Management Development & Training (reallocation to Non-Departmental) This action reallocates departmental management development savings to Non-Departmental to reappropriate funds for city-wide training needs in FY 2018. General Expense (25,500)$ GENERAL FUND (102) SUBTOTAL -$ -$ Attachment B - 3 ATTACHMENT B, EXHIBIT 1 Department Category Adjustment Category Adjustment GENERAL FUND CAPITAL IMPROVEMENT FUND (471) Capital Capital Improvement Project Adjustments This action reflects the combined impact from adjustments to projects as outlined in Attachment A, Exhibit 4. Other Revenues 45,000$ Capital Improvement 969,823$ Capital Transfer to the Library Debt Service Fund This action establishes a transfer from the General Fund Capital Improvement Fund to the Library Debt Service Fund for defeasance of Library bonds. This is due to project savings of $3,007,702 which was approved in CMR #6993 and $10,784 to transfer the remaining balance in the bond issue bank account to the Debt Service Fund. A corresponding decrease in the fund balance, specifically the Reserve: Library Bond Proceeds is recommended to offset this adjustment. Operating Transfer - Out 3,018,486$ Capital Reserve: Capital Fund Library Bond Proceeds This action decreases the reserve for Library Bond Proceeds to offset actions recommended in this report. Fund Balance/ Reserves (3,018,486)$ Capital Reserve: Capital Fund Infrastructure Reserve This action decreases the fund balance to offset the net changes resulting from the actions recommended in this report. Fund Balance/ Reserves (924,823)$ GENERAL FUND CAPITAL IMPROVEMENT FUND (471) SUBTOTAL 45,000$ 45,000$ CITY OF PALO ALTO RECOMMENDED AMENDMENTS TO THE CITY MANAGER'S FY 2016 BUDGET Revenues Expenses Attachment B - 4 ATTACHMENT B, EXHIBIT 1 Department Category Adjustment Category Adjustment ENTERPRISE FUNDS AIRPORT ENTERPRISE FUND (530) Capital Capital Improvement Project Adjustments This action reflects the combined impact from adjustments to projects as outlined in Attachment A, Exhibit 4. Capital Improvement 25,799$ Public Works Public Work's Salaries & Benefits This action reallocates departmental salaries and benefit savings to Capital Improvement Projects to provide sufficient funding for final FY2016 capital project expenses. Salaries & Benefits (25,799)$ AIRPORT ENTERPRISE FUND (530) SUBTOTAL -$ -$ ELECTRIC FUND (523) Capital Capital Improvement Project Adjustments This action reflects the combined impact from adjustments to projects as outlined in Attachment A, Exhibit 4. Capital Improvement 278$ Capital Adjustment to Reserve for Capital Improvement Projects This action decreases the Capital Improvement Projects Reserve to offset slightly higher capital improvement expenses in FY 2016. Fund Balance/ Reserves (278)$ ELECTRIC FUND (523) SUBTOTAL -$ -$ GAS FUND (524) Capital Capital Improvement Project Adjustments This action reflects the combined impact from adjustments to projects as outlined in Attachment A, Exhibit 4. Other Revenues 70,528$ Capital Improvement 70,528$ GAS FUND (524) SUBTOTAL 70,528$ 70,528$ CITY OF PALO ALTO RECOMMENDED AMENDMENTS TO THE CITY MANAGER'S FY 2016 BUDGET Revenues Expenses Attachment B - 5 ATTACHMENT B, EXHIBIT 1 Department Category Adjustment Category Adjustment ENTERPRISE FUNDS CITY OF PALO ALTO RECOMMENDED AMENDMENTS TO THE CITY MANAGER'S FY 2016 BUDGET Revenues Expenses REFUSE FUND (525) Capital Capital Improvement Project Adjustments This action reflects the combined impact from adjustments to projects as outlined in Attachment A, Exhibit 4. Capital Improvement 74,192$ Public Works Refuse Utility Purchases This action increases the utility purchases expenses to align with FY2016 year end expenses and encumbrances. A corresponding increase in revenues from customer sales offsets these increases expenses. Customer Sales 528,072$ Utility Purchases 528,072$ Capital Adjustment to Rate Stabilization Reserve This action decreases the Rate Stabilization Reserve to offset slightly higher capital improvement expenses in FY 2016. Fund Balance/ Reserves (74,192)$ REFUSE FUND (525) SUBTOTAL 528,072$ 528,072$ WASTEWATER COLLECTION FUND (527) Capital Capital Improvement Project Adjustments This action reflects the combined impact from adjustments to projects as outlined in Attachment A, Exhibit 4. Capital Improvement 105,511$ Adjustment to Reserve for Operations This action decreases the Reserve for Operations to offset slightly higher capital improvement expenses in FY 2016. Fund Balance/ Reserves (105,511)$ WASTEWATER COLLECTION FUND (527) SUBTOTAL -$ -$ WATER FUND (522) Capital Capital Improvement Project Adjustments This action reflects the combined impact from adjustments to projects as outlined in Attachment A, Exhibit 4. Capital Improvement 783,717$ Adjustment to Reserve for Operations This action decreases the Reserve for Operations to offset slightly higher capital improvement expenses in FY 2016. Fund Balance/ Reserves (783,717)$ WATER FUND (522) SUBTOTAL -$ -$ Attachment B - 6 ATTACHMENT B, EXHIBIT 1 Department Category Adjustment Category Adjustment INTERNAL SERVICE FUNDS VEHICLE REPLACEMENT & MAINTENANCE FUND (681) Capital Capital Improvement Project Adjustments This action reflects the combined impact from adjustments to projects as outlined in Attachment A, Exhibit 4. Capital Improvement 24,289$ Adjustment to Fund Balance This action decreases the fund balance to offset slightly higher capital improvement expenses in FY 2016. Fund Balance/ Reserves (24,289)$ VEHICLE REPLACEMENT & MAINTENANCE FUND (681) SUBTOTAL -$ -$ CITY OF PALO ALTO RECOMMENDED AMENDMENTS TO THE CITY MANAGER'S FY 2016 BUDGET Revenues Expenses Attachment B - 7 ATTACHMENT B, EXHIBIT 1 Department Category Adjustment Category Adjustment SPECIAL REVENUE FUNDS HOUSING IN-LIEU/COMMERICAL FUND (234) Transfer from Stanford Medical Development Fund/Ending Fund Balance This action recognizes a transfer from the Stanford Medical Development Fund to the Housing In- Lieu/Commercial Fund for developer impact fees embedded in the SUMC Development Agreement. This is in compliance with the City Attorney's interpretation of the SUMC agreement. A corresponding increase in the fund balance is recommended to offset this adjustment. Operating Transfers-In 1,720,488$ Fund Balance/ Reserves 1,720,488$ HOUSING IN-LIEU/COMMERICAL FUND (234) SUBTOTAL 1,720,488$ 1,720,488$ HOUSING IN-LIEU/RESIDENTIAL FUND (233) Non- Departmental Transfer to Stanford Medical Center Development Fund This action established a transfer from the Housing In- Lieu Residential Fund to the Stanford Medical Center Development Fund for repayment of funds previously transferred in FY 2013. The funds were not needed and have been returned. A corresponding decrease in the fund balance is recommended to offset this adjustment. Operating Transfers 720,220$ Ending Fund Balance This action decreases the fund balance to offset the actions recommended in this report. Fund Balance/ Reserves (720,220)$ HOUSING IN-LIEU/RESIDENTIAL FUND (233) SUBTOTAL -$ -$ LAW ENFORCEMENT SERVICES FUND (248) Police COPS Grant Expenses/State Revenues This action recognizes additional grant revenues and corresponding expense in order to align budget levels with actual FY2016 revenue, expense, and encumbrance levels. State Revenues 12,695$ Contract Services 12,695$ LAW ENFORCEMENT SERVICES FUND (248) SUBTOTAL 12,695$ 12,695$ CITY OF PALO ALTO RECOMMENDED AMENDMENTS TO THE CITY MANAGER'S FY 2016 BUDGET Revenues Expenses Attachment B - 8 ATTACHMENT B, EXHIBIT 1 Department Category Adjustment Category Adjustment SPECIAL REVENUE FUNDS CITY OF PALO ALTO RECOMMENDED AMENDMENTS TO THE CITY MANAGER'S FY 2016 BUDGET Revenues Expenses LIBRARY PROJECTS FUND (370) Non- Departmental Transfer from the General Fund Capital Improvement Fund This action recognizes a transfer from the General Fund Capital Improvement Fund to the Library Debt Service Fund for defeasance of Library bonds. This is due to project savings of $3,007,702 which was approved in CMR#6993 and $10,784 to transfer the remaining balance in the bond issue bank account to the Debt Service Fund. Operating Transfer-In 3,018,486$ Non- Departmental General Expenses This action recognizes additional expenses related to defeasement of bonds resulting in higher than budgeted expenses of $6.1 million. As outlined in CMR #6993, the City opted to use project savings and bond premium to defease $5.1 million in principal payments and $0.9 million in interest payments. General Expenses 6,108,892$ Ending Fund Balance This action decreases the fund balance to offset the actions recommended in this report. Fund Balance/ Reserves (3,090,406)$ LIBRARY PROJECTS FUND (370) SUBTOTAL 3,018,486$ 3,018,486$ PUBLIC ART FUND (207) Community Services Department Transfer from the General Fund/Fund Balance Adjustment This action increases the estimated transfer from the General Fund to account for full funding of administrative costs in excess of 20% of art fee revenue as required by Ordinance #5226. A corresponding increase in expenses is recommended to offset this action. Operating Transfers-In 38,500$ Supplies & Materials; Contract Services 38,500$ PUBLIC ART FUND (207) SUBTOTAL 38,500$ 38,500$ Attachment B - 9 ATTACHMENT B, EXHIBIT 1 Department Category Adjustment Category Adjustment SPECIAL REVENUE FUNDS CITY OF PALO ALTO RECOMMENDED AMENDMENTS TO THE CITY MANAGER'S FY 2016 BUDGET Revenues Expenses PUBLIC SERVICES DONATION FUND (191) Various Expense/Miscellaneous Revenue (donations) This action increases the appropriation for expenses in the Public Services Donation Fund to align with FY2016 year end expense and encumbered funds. Donations were for activities such as animal care services and parks and open space activities. A corresponding increase in the estimate for miscellaneous revenue is recommended to offset this increase and reflects higher than budgeted donations. Miscellaneous Revenue 46,637$ Supplies & Materials; Contract Services 46,637$ PUBLIC SERVICES DONATION FUND (191) SUBTOTAL 46,637$ 46,637$ STANFORD MEDICAL CENTER DEVELOPMENT FUND (260) Non- Departmental Transfer from Housing In-Lieu/Residential Fund/Fund Balance This action recognizes a transfer from the Housing In- Lieu Residential Fund to the Stanford Medical Center Development Fund for repayment of funds previously transferred in FY 2013. The funds were not needed and have been returned. A corresponding increase in the fund balance is recommended to offset this adjustment. Operating Transfer-In 720,220$ Fund Balance/ Reserves 720,220$ Non- Departmental Transfer to Housing In-Lieu/Commercial Fund This action established a transfer from the Stanford Medical Center Development Fund to the Housing In- Lieu Commercial Fund for developer impact fees embedded in the SUMC Development Agreement. This is in compliance with the City Attorney's interpretation of the SUMC agreement. A corresponding decrease in the fund balance is recommended to offset this adjustment. Operating Transfer 1,720,488$ Ending Fund Balance This action decreases the fund balance to offset the actions recommended in this report. Fund Balance/ Reserves (1,720,488)$ STANFORD MEDICAL CENTER DEVELOPMENT FUND (260) SUBTOTAL 720,220$ 720,220$ Attachment B - 10 ATTACHMENT B, EXHIBIT 1 Department Category Adjustment Category Adjustment AGENCY TRUST FUNDS CABLE - JPA FUND (779) Administrative Services General Expenses This action increases the general expense due to higher than budgeted inter agency expenses at the end of FY 2016. A corresponding decrease in transfers to correctly align the budget category and fund balance are recommended to offset this action. -$ General Expense 1,290,571$ Administrative Services Transfer to General Fund This action decreases the appropriation for transfer to the General Fund and re-categorizes it as an interagency expense to accurately align with the appropriate treatment of expenses in this funds as an agency fund. -$ Operating Transfers (824,000)$ Ending Fund Balance This action decreases the fund balance to offset the actions recommended in this report. -$ Fund Balance/ Reserves (466,571)$ CABLE - JPA FUND (779) SUBTOTAL -$ -$ EYERLY TRUST FUND (774) Utilities General Expenses This action increases the general expense due to higher than budgeted expenses specifically for special events in FY 2016. This action aligns the budget with actuals. A corresponding decrease in fund balance is recommended to offset this action. -$ General Expense 6,887$ Ending Fund Balance This action decreases the fund balance to offset the actions recommended in this report. -$ Fund Balance/ Reserves (6,887)$ EYERLY TRUST FUND (774) SUBTOTAL -$ -$ CITY OF PALO ALTO RECOMMENDED AMENDMENTS TO THE CITY MANAGER'S FY 2016 BUDGET Revenues Expenses Attachment B - 11 ATTACHMENT B, EXHIBIT 2 Project Funding Title Number Revenue Expense Source Comments ADDITIONAL APPROPRIATIONS Art Center Auditorium Audio, Visual, and Furnishings AC-14000 $ 365 Infrastructure Reserve Increase to project due to higher than anticipated expenditures Furniture and Technology for Library Projects LB-11000 $ 45,000 $ 45,000 Miscellaneous Revenue Increase revenue and project due to a donation. Highway 101 Pedestrian/Bicycle Overcrossing PE-11011 $ 130,367 Infrastructure Reserve Increase to project due to higher than anticipated expenditures Newell Road Bridge / SFC Bridge Replacement PE-12011 $ 2,569 Infrastructure Reserve Increase to project due to higher than anticipated expenditures Charleston Arastradero Corridor Project PE-13011 $ 288,196 Infrastructure Reserve Increase to project due to higher than anticipated expenditures El Camino Park Restoration PE-13016 $ 76,174 Infrastructure Reserve Increase to project due to higher than anticipated expenditures Fire Station 3 Replacement PE-15003 $ 84,584 Infrastructure Reserve Increase to project due to higher than anticipated expenditures Street Maintenance PE-86070 $ 242,778 Infrastructure Reserve Increase to project due to higher than anticipated expenditures California Avenue Parking District Parking Improvements PF-14004 $ 31,317 Infrastructure Reserve Increase to project due to higher than anticipated expenditures Transportation and Parking Improvements PL-12000 $ 6,765 Infrastructure Reserve Increase to project due to higher than anticipated expenditures El Camino/ Churchill Intersection Improvements PL-14000 $ 21,633 Infrastructure Reserve Increase to project due to higher than anticipated expenditures Embarcadero Road Corridor Improvements PL-15001 $ 75 Infrastructure Reserve Increase to project due to higher than anticipated expenditures Quarry Road Improvements and Transit Center Access Project PL-16000 $ 40,000 Infrastructure Reserve Increase to project due to higher than anticipated expenditures $ 45,000 $ 969,823 ADDITIONAL APPROPRIATIONS Runway & Taxiway Rehabilitation AP-15003 $ 10,206 Increase to project due to higher than anticipated expenditures Airport Perimeter Fencing AP-16003 $ 15,593 Increase to project due to higher than anticipated expenditures $ - $ 25,799 ADDITIONAL APPROPRIATIONS AMR/AMI-Feasibility EL-10008 $ 278 Increase to project due to higher than anticipated expenditures $ - $ 278 CITY OF PALO ALTO RECOMMENDED AMENDMENTS TO THE CITY MANAGER'S FY 2016 CAPITAL IMPROVEMENT PROGRAM CAPITAL PROJECT FUND AIRPORT ENTERPRISE FUND ELECTRIC FUND TOTAL ELECTRIC FUND CIP YEAR-END ADJUSTMENTS TOTAL AIRPORT ENTERPRISE FUND CIP YEAR-END ADJUSTMENTS TOTAL GENERAL FUND CIP YEAR-END ADJUSTMENTS Attachment B - 12 ATTACHMENT B, EXHIBIT 2 Project Funding Title Number Revenue Expense Source Comments CITY OF PALO ALTO RECOMMENDED AMENDMENTS TO THE CITY MANAGER'S FY 2016 CAPITAL IMPROVEMENT PROGRAM ADDITIONAL APPROPRIATIONS Gas System, Customer Connections GS-80017 $ 70,528 $ 70,528 Increase to project due to higher than anticipated expenditures. This project is offset by additional revenue from customers. $ 70,528 $ 70,528 ADDITIONAL APPROPRIATIONS Landfill Closure RF-11001 $ 74,192 Increase to project due to higher than anticipated expenditures $ - $ 74,192 ADDITIONAL APPROPRIATIONS Vehicle Maintenance Facility Upgrade VR-04010 $ 24,289 Increase to project due to higher than anticipated expenditures $ - $ 24,289 ADDITIONAL APPROPRIATIONS Wastewater Collection System Rehabilitation/Augmentation Project 22 WC-09001 $ 176 Increase to project due to higher than anticipated expenditures Wastewater Collection System Rehabilitation/Augmentation Project 24 WC-11000 $ 11,788 Increase to project due to higher than anticipated expenditures Sewer System, Customer Connections WC-80020 $ 93,547 Increase to project due to higher than anticipated expenditures $ - $ 105,511 ADDITIONAL APPROPRIATIONS Water Regulation Station Improvements WS-07000 $ 159,544 Increase to project due to higher than anticipated expenditures Water Main Replacement-Project 25 WS-11000 $ 356,042 Increase to project due to higher than anticipated expenditures Water System, Customer Connections WS-80013 $ 157,955 Increase to project due to higher than anticipated expenditures Water Service Hydrant Replacement WS-80014 $ 110,176 Increase to project due to higher than anticipated expenditures -$ 783,717$ TOTAL WATER FUND CIP YEAR-END ADJUSTMENTS TOTAL WASTEWATER COLLECTION FUND CIP YEAR- END ADJUSTMENTS TOTAL VEHICLE REPLACEMENT & MAINTENANCE FUND CIP YEAR-END ADJUSTMENTS TOTAL REFUSE FUND CIP YEAR-END ADJUSTMENTS TOTAL GAS FUND CIP YEAR-END ADJUSTMENTS WASTEWATER COLLECTION FUND WATER FUND REFUSE FUND VEHICLE REPLACEMENT & MAINTENANCE FUND GAS FUND Attachment B - 13 City of Palo Alto (ID # 7383) Finance Committee Staff Report Report Type: Action Items Meeting Date: 11/15/2016 City of Palo Alto Page 1 Summary Title: Approve FY 2016 CAFR and Approve FY 2016 Budget Amendments in Various Funds Title: Recommendation to Approve the FY 2016 Comprehensive Annual Financial Report (CAFR) and Approve Budget Amendments in Various Funds From: City Manager Lead Department: Administrative Services Recommendation Staff recommends that the Finance Committee forward to the City Council with a recommendation : 1. That the City Council amend the Fiscal Year 2016 Budget Appropriation Ordinance for various funds as identified in Attachment B – Exhibit 1 and various capital projects as identified in Attachment B – Exhibit 2; and 2. Approve the City’s FY 2016 Comprehensive Annual Financial Report (CAFR) (Attachment C). Financial Highlights for FY 2016  General Fund ended FY 2016 with a surplus of $7.7 million when compared to the assumptions used in the development of the FY 2017 Adopted Operating Budget. However, once adjusted for City Council approved uses and current pending staff recommended uses of the Budget Stabilization Reserve (BSR), the remaining surplus balance is $429,000 when compared to the level assumed in the FY 2017 Adopted Budget. The surplus was largely a result of higher than estimated expense savings, as well as slight revenue increases in sales and use taxes (approximately $1 million) when compared to the estimated activity levels assumed in the development of the FY 2017 Adopted Budget. This surplus is recommended to be utilized for the following purposes: o Amendments to the FY 2017 budget appropriation ordinance as approved by or scheduled for Council consideration ($1.3 million); o Recommended FY 2016 Reappropriations to continue FY 2016 activities that were not completed in time for the fiscal year end close ($1.3 million) as reviewed by the City of Palo Alto Page 2 Finance Committee on October 18, 2016; o Recommended transfer to the Infrastructure Reserve ($5.0 million) for  FY 2017 recommended project deferrals and the corresponding deferral of General Fund transfer to the General Capital Fund ($4.3 million)  Recommended transfer of investment returns from the sale of former City Manager property ($651,000); and o Recommended reserve of revenues as a result of the fees received from the Edgewood Plaza development ($365,000). After adjusting for both the funds retained in the BSR for specific purposes ($2.1 million for potential use in a pension trust fund) and deducting amounts summarized above, the ending BSR balance of $41.6 million is 21.4 percent of FY 2017 General Fund budgeted expenditures and operating transfers ($429,000 over the FY 2017 Adopted Budget BSR balance of $41.1 million).  Enterprise Funds, except for the Electric Fund, ended the year in surplus positions, with the ongoing drought continuing to negatively impact results, most notably affecting the Water and Electric Funds.  The City received a “clean” audit opinion for FY 2016 from the external audit firm, Macias Gini & O’Connell LLP. Once again, the City was awarded the prestigious GFOA award for Excellence in Financial Reporting for FY 2015 – the 22nd consecutive year. Background The City’s fiscal year ends on June 30, at which time its financial records are closed for the year and financial reports are prepared. The reports, along with the City’s financial data, are audited by Macias Gini & O’Connell LLP (MGO), Certified Public Accountants, a firm hired by the City Auditor. MGO issues an audit opinion on the financial position of the City’s activities and, together with the City’s financial statements and other information, this comprises the City’s Comprehensive Annual Financial Report. The attachments to this Staff Report provide the necessary documents for closing the FY 2016 Budget. In addition, they provide detailed information on the City’s financial activities for FY 2016 and highlight key fiscal issues affecting the City of Palo Alto. The Management’s Discussion and Analysis (MD&A) section of the CAFR (Attachment C) also provides a discussion and analysis of the City’s current fiscal health, and includes financial statements and analysis that is compared to the prior year, along with capital asset and debt administration data. Discussion Economic Environment: Solid tax revenues and a strong local economy show a rebounding from the Great Recession. A continuously improving economic climate is noted by the majority of national, state, regional, and local economic indicators. Therefore, the City’s most recent forecast and actual collections City of Palo Alto Page 3 reflect the continued gradual growth in economically sensitive revenues such as Property Tax and Transient Occupancy Tax collections. While these results are welcome, rising benefit and other operating costs diminish this more positive outlook over the next ten or so years. The City has been proactively taking steps the past few years to align expenses with revenues through employee compensation savings, service and program cuts, and revenue enhancements. Since the Great Recession, the City Council has approved various strategies to reduce the costs of salaries and benefits. These strategies include: (1) employees paying their own CalPERS contribution except for members of the Fire Chiefs’ Association (currently in negotiations); (2) sharing the cost of health plan costs by shifting to a flat rate contribution instead of a 90/10 split for the majority of the employee groups; (3) creating a second pension tier (and the state implemented a third tier effective January 1, 2013); (4) reducing professional development expenses; (5) cost of living freezes for four years; and (6) terminating the Variable Management Compensation Plan. The City Council adopted a FY 2017 General Fund budget of $194.2 million (including operating transfers), an increase of 4.9 percent from the prior year Adopted Budget. The primary drivers of increased expenditures for FY 2017 are salaries and benefits including pension and health care costs, continued investment in the City’s infrastructure, and targeted position additions in response to community demands and Council priorities. The City is continuing to mitigate the upward trend in pension and health care costs by seeking to increase employee contributions to the PERS retirement plan (Safety and Miscellaneous Plan employees will pay an additional 1 percent) and capping the City’s share of health care premiums through a number of the recently approved labor agreements. In spite of these measures, the City still faces a significant long-term liability for pension and retiree medical costs. The combined unfunded liability according to the most recent actuarial valuations is $495 million. Funded ratios for the Safety and Miscellaneous plans based on June 2015 actuarial valuations are 68.6 percent and 68.5 percent respectively, and 33.5 percent for the retiree medical plan. The City continues to fully fund its annual required contribution for these liabilities. An irrevocable trust fund for retiree medical benefits was authorized by the City Council in May 2007 with initial funding of $32.8 million in March 2008. Subsequent contributions and investment earnings have increased the trust balance to $85.4 million as of September 30, 2016. The irrevocable trust fund balance reduces the City’s unfunded liability for retiree medical. In June 2014 Council approved a $125.8 million Infrastructure Plan, which includes projects such as a new Public Safety Building, replacement of two Fire Stations, a Bike and Pedestrian plan, and two parking garages. Funding for these projects will come from a variety of sources, including TOT revenues, Stanford University Medical Center development agreement, and developer impact fees. This plan was included in the 2017-2021 Adopted Capital Improvement Program and is fully funded, however the plan as adopted did not allow for increases attributable to scope increases, cost escalation, etc. As part of the FY 2017-2021 Adopted Capital Improvement Plan, a reserve of $30 million was included as well as nominal changes in eminent project costs resulting in a revised plan upwards of $160 million over the five-year City of Palo Alto Page 4 period. As part of the FY 2017 Budget Process, the deferral of three capital improvement projects was recommended and approved by the City Council, resulting in a one-time reduction in the transfer from the General Fund to the general Capital Improvement Fund in the amount of $4.3 million. After reviewing the status of current projects and the upcoming pipeline in the context of resource capacity, three projects including the Municipal Services Center A, B, & C Roof Replacement (PF-17000), Ramos Park Improvements (PG-14000); and Rinconada Park Improvements (PE-08001) were deferred for one year, from FY 2017 to FY 2018. However, in anticipation of the FY 2018 General Fund balancing needs, a transfer of $4.3 million from the FY 2016 surplus in the General Fund Budget Stabilization Reserve to the general Capital Improvement Fund is recommended to ensure these three project deferrals are fully funded over the course of the five-year capital improvement plan. A detailed discussion of financial results for FY 2016 is included in the CAFR MD&A. In addition, staff will return to the Finance Committee with further discussions on the financial outlook of FY 2018 and potential strategies to employ during the FY 2018 budget development to address the anticipated gap between revenue and expenses. Results by Fund: General Fund Reserves At the end of the current fiscal year, fund balance of the General Fund was $51.6 million, an increase of $3.4 million from the prior year. The $51.6 million fund balance is comprised of several reserves: the Budget Stabilization Reserve (BSR), encumbrances, notes and loans, inventory, prepaid items, unrealized gain on investments, and reappropriations. As described in the BSR reserve policy approved by Council, any reserve balance in excess of 18.5 percent of expenditures and transfers may be transferred to the Infrastructure Reserve (IR) in the Capital Projects Fund at the discretion of the City Manager. A summary of the General Fund is outlined in Attachment A reflecting budget versus actuals for FY 2016. Over the past five fiscal years, a total of $32.6 million in surplus funds has been transferred to the IR, as shown in the following table. In addition, $4.3 million of FY 2016 surplus has been committed for transfer to the IR in FY 2017. 2012 $ 7,600 2013 8,900 2014 4,000 2015 5,087 2016 (FY2015 surplus) 7,000 32,587 2017 (FY2016 surplus) 4,327 City of Palo Alto Page 5 Total transfers $ 36,914 As part of the development of the FY 2017 Adopted Budget, within the BSR staff assumed a level of excess revenues and additional expenses savings as well as the reserve of funds for potentially establishing a pension trust fund ($2.1 million). Once adjusting for these, the BSR balance was $48.9 million compared to the FY 2017 Adopted Budget targeted level of $41.1 million, a $7.7 million surplus. The chart below outlines the previously approved uses of this surplus, as well as recommended uses. Once all these adjustments are taken into consideration, the remaining BSR would be at $41.6 million, approximately 21.4 percent of the FY 2017 Adopted Expenses of $194.2 million. This level is approximately $5.7 million above the target level of 18.5% or $38.8 million. However, this projected BSR level of $41.6 million is only $429,000 above levels assumed in the FY 2017 Adopted Budget which were assumed at this higher level in order to proactively prepare for the anticipated needs of balancing the FY 2018 budget. 2016 Year-End Budget Stabilization Reserve (BSR) Summary (000’s) General Fund BSR Balance $51,582 Reserve: Potentially establish a pension trust fund (FY 2015 year end close $1.3 million; FY 2017 Adopted Budget $750,000) (2,055) BSR Balance, June 30 2016 $49,527 Uses of the FY 2016 Surplus FY 2017 Approved and/or Recommended use of BSR FY 2017 City Manager Reports Budget Amendment - Approved (CMR’s #7065 & #7030) (567) FY 2017 City Manager Reports Budget Amendments - Scheduled (as of October 11, 2016) (735) FY 2016 Recommended Reappropriations (approved by Finance Committee October 18, 2016) (1,309) Recommended use of Surplus Funds* Transfer to Capital Improvement Fund: FY 2017 Deferred CIP projects (4,327) Transfer to Capital Improvement Fund: Investment Return former City Manager Real Estate Sale (651) Reserve: Edgewood Plaza development fees (365) Current Projected FY 2017 BSR Level (June 30, 2017) $41,573 * If approved, these transfers would be completed as part of the FY 2017 Mid-Year Budget Report. General Fund Revenues General Fund revenues for FY 2016 were $164.4 million, which is $6.8 million or 4.3 percent higher than the prior year. Year over year changes in each of the major tax revenue categories are summarized in the following table. City of Palo Alto Page 6 Category FY 2016 FY 2015 % Change Increase (Decrease) Property tax $ 36,607 $ 34,117 7.3% Sales tax 30,018 29,675 1.1% Utility user tax 12,469 10,861 14.8% Transient occupancy tax 22,366 16,699 33.9% Documentary transfer tax 6,266 10,384 (39.6%) Property tax revenue increased due to higher assessed values as a result of continued robust commercial and residential real estate markets. Each of the fiscal years 2016 and 2015 included one-time receipts of $0.9 million for excess Educational Revenue Augmentation Fund (ERAF) distributions from the County of Santa Clara. Sales tax revenue in total is relatively flat year over year. However, in FY 2015 there was a planned accounting adjustment to align the sales tax accrual with the fiscal year which resulted in a one-time $2.6 million revenue increase. FY 2015 sales tax revenue without this adjustment would have been $27.1 million. The City expected to receive $0.2 million in past due sales tax as a result of a sales tax audit conducted by the City Auditor’s Office, however this amount did arrive in time to be included in FY 2016. We expect to receive and report it in FY 2017. Utility user tax (UUT) revenue increased 14.8 percent from the prior year, almost $2.0 million higher than mid-year projections. The increase is driven by telephone user services due in part to new UUT revenue on prepaid wireless cards and phone plans. Transient occupancy tax (TOT) revenue experienced double digit growth over the prior year as a result of the 2 percent rate increase from 12 percent to 14 percent that became effective January 1, 2015, and the opening of several new hotels. The entire 14 percent TOT rate from new hotels, plus the 2 percent increase from existing hotels, has been allocated to the Infrastructure Plan pursuant to prior City Council direction. Following is a comparative breakdown of the allocation of transient occupancy tax receipts: FY 2016 FY 2015 General Fund: $ 15,187 $ 13,441 Infrastructure Plan: (12 months of receipts) (6 months of receipts) New hotels – 12% 3,982 1,849 All hotels – 2% 3,197 1,409 7,179 3,258 Total TOT Receipts $ 22,366 $ 16,699 Documentary Transfer Tax (DTT) revenues decreased $4.1 million, or 39.6 percent, from prior City of Palo Alto Page 7 year. FY 2015 revenue was extraordinarily high due to two commercial transactions which generated DTT receipts of $3.6 million and $1.4 million, respectively. Other revenues with significant year-over-year changes were as follows:  Charges for services decreased $1.8 million from the prior year due primarily to reduced revenue for Stanford University fire services, and  Other revenue increased $1.7 million due to net sale proceeds from the former City Manager’s house at 2257 Bryant Street. Following is a chart which depicts the relative contribution of each tax category over the past seven years (2010 through 2016), as well as the current budgeted year (2017). General Fund Tax Revenues Actual Fiscal Years 2010 – 2016 Budget Fiscal Year 2017 FY 2017 Budget FY 2016 Actual FY 2015 Actual FY 2014 Actual FY 2013 Actual FY 2012 Actual FY 2011 Actual FY 2010 Actual FY 2017 Budget FY 2016 Actual FY 2015 Actual FY 2014 Actual FY 2013 Actual FY 2012 Actual FY 2011 Actual FY 2010 Actual Property Tax 37,853 36,607 34,117 30,587 28,742 26,494 25,688 25,981 Sales Tax 28,668 29,613 29,675 29,424 25,606 22,132 20,746 17,991 Utility User Tax 11,209 12,469 10,861 11,008 10,861 10,834 10,851 11,295 Trans Occ Tax 23,134 22,366 16,699 12,255 10,794 9,664 8,082 6,858 Doc Transfer Tax 7,532 6,266 10,051 7,811 6,810 4,821 5,167 3,707 City of Palo Alto Page 8 General Fund Expenditures General Fund expenditures for FY 2016, including encumbrances, totaled $163.0 million, an increase of $8.1 million from the prior year. The Original Budget of $163.0 million was increased to the Final Adjusted Budget amount of $170.8 million, primarily due to the expenditure of prior year encumbered and reappropriated balances, increases for several departments throughout the year through various City Manager Reports ($3.6 million), and mid-year increases in department expenses ($1.4 million). Following is a chart which compares actual departmental costs, including encumbrances, over the past seven years and budgeted costs for FY 2017. General Fund Departments Actual Expenditures Fiscal Years 2010 – 2016 (including encumbrances) Budgeted Expenditures Fiscal Year 2017 ($ in thousands) 0 20 40 60 80 100 120 140 160 FY 2017 Budget FY 2016 Actual FY 2015 Actual FY 2014 Actual FY 2013 Actual FY 2012 Actual FY 2011 Actual FY 2010 Actual FY 2017 Budget FY 2016 Actual FY 2015 Actual FY 2014 Actual FY 2013 Actual FY 2012 Actual FY 2011 Actual FY 2010 Actual Public Safety 68,509 65,005 62,459 63,403 61,222 63,879 60,298 57,270 Community Services 25,390 25,262 23,902 23,402 22,279 21,399 20,518 20,846 Admin Depts 20,807 22,059 19,771 19,784 18,544 18,693 16,906 19,219 Public Works 16,054 15,084 14,210 14,138 13,987 13,789 13,842 13,405 Planning & Comm Env 8,843 10,912 9,026 14,637 13,112 11,186 10,416 10,058 Development Svcs 12,169 10,872 11,335 0 0 0 0 0 Library 8,992 8,217 8,144 8,072 7,555 7,714 6,722 6,623 Capital Projects Fund The Capital Projects Fund ended the year with a fund balance of $70.3 million, which is comprised of the following: City of Palo Alto Page 9 Fund Balance Component Amount ($ in millions) Restricted for Library projects $ 711 Reserved for Roth Building rehabilitation 3,954 Reserved for TDR qualified expenditures 656 Reserved for Cubberley expenditures 2,634 Assigned for all other Capital projects 62,395 Total Capital Projects Fund Balance $ 70,350 Restricted for Library projects of $0.7 million is the portion of fund balance dedicated to remaining Library expenditures which, if considered bondable expenses, will be paid for with cash from bond proceeds. Non-bondable expenditures such as salaries and benefits are funded from the Infrastructure Reserve, as established at the time of the bond issuance. Assigned for all other Capital projects of $62.4 million represents the amount of unspent funds associated with Adopted Capital projects other than Library projects and other noted items. Outside funding sources such as grants, donations and future debt issues are not factored into this component of the fund balance until they are actually received. A significant portion of these funds ($29.5 million) were reappropriated from FY 2016 to FY 2017 as part of the FY 2017 Adopted Capital Budget. These reflect projects that have yet to be completed and funds were anticipated to be carried forward to FY 2017 based on estimates of anticipated spending in Fiscal Year 2016. Enterprise Funds At June 30, 2016 the City’s Enterprise Funds reported total net position of $676.9 million, an increase of $12.1 million from the prior year. The change in net position for each of the Enterprise Funds is detailed in the following table. City of Palo Alto Page 10 Enterprise Funds Change in Net Position for the Year Ended June 30 (in Millions) Increase/ Fund Name 2016 2015 (Decrease) Water 4.7$ 5.1$ (0.4)$ Electric (8.3)(11.2)2.9 Fiber Optics 3.0 3.1 (0.1) Gas 3.4 1.7 1.7 Wastewater Collection 1.6 2.4 (0.8) Wastewater Treatment 1.7 2.9 (1.2) Refuse 2.6 4.8 (2.2) Storm Drainage 3.3 2.7 0.6 Airport 0.1 (0.1)0.2 Total Change in Net Position 12.1$ 11.4$ 0.7$ The total Change in Net Assets of $12.1 million is an increase of $0.7 million from the prior year, primarily due to improvement in Electric and Gas Funds. Electric Fund experienced relatively flat revenue and, combined with increased costs for electricity purchases due to lower availability of hydroelectric energy because of the ongoing drought, ended the fiscal year in a loss position of $8.3 million. This is an improvement of $2.9 million from the prior year. Gas Fund improved by $1.7 million due to lower commodity prices. The corresponding reduction in customer revenue (also commodity rate driven) was offset by increased consumption. Refuse Fund net position decreased $2.2 million from prior year. FY 2015 included a one-time increase in operating transfers in of $0.7 due to changes in street sweeping services. The Greenwaste contract cost increased as a result of expanded services, partially offset by a 9 percent increase in residential rates. Effective July 1, 2015, following a Council approved resolution, Reserves Management Practices for the Electric, Gas, Wastewater Collection and Water Utilities were updated. Restructuring of the reserve balances was designed to increase transparency, to make contingency reserves easier to manage from year to year, and to eliminate reserves that are no longer necessary. Guidelines for managing the reserves are contained in the Reserves Management Practices, including actions to be taken when reserve balances are not within the guidelines. Enterprise Fund Rate Stabilization, Operations and other reserve balances are shown in detail in Note 10 of the CAFR. All Enterprise Funds maintained a positive unrestricted reserve balance as of June 30, 2016 except for Wastewater Treatment which is in a deficit position of $2.1 million City of Palo Alto Page 11 due to pension related items and Airport Fund which is in a deficit position of $2.3 million due to life to date operating losses which are currently being funded by advances from the General Fund. Environmental Review This is not a project for purposes of the California Environmental Quality Act. Attachments:  Attachment A: FY16 General Fund (XLSX)  Attachment B: FY 2016 Year End Clean-up Budget Adjustments (PDF)  Attachment C: City of Palo Alto FY2016 - CAFR (PDF) 11/3/20169:23 AM Final Draft Attachment A Exhibit 2 GENERAL FUND SUMMARY ($000s) FY 2016 FY 2016 FY 2016 FY 2016 FY 2016 FY 2016 FY 2016 Adopted Adjusted CAFR Basis Allocated Encum Actual Actual to Budget Budget Rev/Exp Charges Rev/Exp Adj BudgetVariance Revenues Sales Tax 27,630 28,430 30,018 n/a 30,018 1,588 Property Tax 35,067 35,967 36,607 n/a 36,607 640 Transient Occupancy Tax 18,791 21,991 22,366 n/a 22,366 375 Documentary Transfer Tax 6,852 7,052 6,266 n/a 6,266 (786) Utility Users Tax 11,189 10,489 12,469 n/a 12,469 1,980 Other Taxes and Fines 2,180 2,180 2,238 n/a 2,238 58 Charges for Services 25,399 24,768 23,910 n/a 23,910 (858) Permits and Licenses 8,211 8,211 7,912 n/a 7,912 (299) Return on Investment 824 824 1,104 n/a 1,104 280 Rental Income 15,296 15,299 15,769 n/a 15,769 470 From Other Agencies 1,659 659 3,190 n/a 3,190 2,531 Charges to Other Funds 11,930 11,929 - 11,576 n/a 11,576 (353) Other Revenues 323 1,801 2,591 - n/a 2,591 790 Total Revenues 165,351 169,600 164,440 11,576 n/a 176,016 6,416 Add: Operating Transfers In 18,589 19,141 18,317 n/a 18,317 (824) Prior Year Encum 5,573 5,606 n/a 5,606 33 Contribution from BSR 1,732 11,551 Total Source of Funds 185,672 205,865 182,757 17,182 n/a 199,939 5,625 Expenditures City Attorney 3,101 3,719 2,634 162 390 3,186 533 City Auditor 1,175 1,261 1,057 55 47 1,159 102 City Clerk 1,328 1,373 871 130 57 1,058 314 City Council 455 502 428 2 21 451 51 City Manager 3,431 4,121 3,420 173 499 4,092 28 Administrative Services 7,635 7,957 7,045 452 118 7,615 342 Community Services 24,804 26,517 19,883 4,452 927 25,262 1,256 Fire 27,583 29,223 25,421 3,175 565 29,161 62 Police 36,859 36,924 32,703 2,970 171 35,844 1,080 Human Resources 3,555 4,029 3,324 192 333 3,849 180 Library 8,555 8,971 7,295 665 257 8,217 754 Planning & Community Environment 8,900 11,146 8,371 727 1,814 10,912 234 Development Services 11,901 12,281 9,851 814 207 10,872 1,409 Public Works 15,017 15,828 11,508 2,787 789 15,084 744 Non-Departmental 3,078 1,372 650 - 650 722 Cubberley Lease 5,584 5,584 5,584 - 5,584 (0) Total Expenditures 162,961 170,808 140,045 16,756 6,195 162,996 7,812 Add: Operating Trans Out 1,834 5,548 5,096 - 5,096 452 Transfer to Infrastructure 20,877 29,509 29,365 - 29,365 144 Total Use of Funds 185,672 205,865 174,506 16,756 6,195 197,457 8,408 Net Surplus/(Deficit)- (0) 8,251 426 6,195 2,482 14,032 CAFR Reconciliation:Unrealized gain/loss on investments 1,390 Current year encumbrance 6,195 Prior Year encumbrances (5,606) CAFR Net Income 4,461 C:\Users\jpollar\appdata\local\temp\minutetraq\paloaltocityca@paloaltocityca.iqm2.com\work\attachments\18737 ATTACHMENT B, EXHIBIT 1 Department Category Adjustment Category Adjustment GENERAL FUND (102) Administrative Services Management Development & Training (reallocation to Non-Departmental) This action reallocates departmental management development savings to Non-Departmental to reappropriate funds for city-wide training needs in FY 2018. General Expense (30,000)$ City Attorney's Office Management Development & Training (reallocation to Non-Departmental) This action reallocates departmental management development savings to Non-Departmental to reappropriate funds for city-wide training needs in FY 2018. General Expense (11,000)$ City Clerk's Office Management Development & Training (reallocation to Non-Departmental) This action reallocates departmental management development savings to Non-Departmental to reappropriate funds for city-wide training needs in FY 2018. General Expense (1,000)$ City Manager's Office Management Development & Training (reallocation to Non-Departmental) This action reallocates departmental management development savings to Non-Departmental to reappropriate funds for city-wide training needs in FY 2018. General Expense (7,500)$ Community & Development Services Management Development & Training (reallocation to Non-Departmental) This action reallocates departmental management development savings to Non-Departmental to reappropriate funds for city-wide training needs in FY 2018. General Expense (11,000)$ Community & Development Services Salaries & Benefits This action reallocates departmental salary and benefits savings to Non-Departmental to offset an increase in the transfer from the General Fund to the Public Art Fund in order to fully fund administrative costs in excess of 20% of art fee revenue as required by Ordinance #5226 in FY 2016. Salaries & Benefits (38,500)$ CITY OF PALO ALTO RECOMMENDED AMENDMENTS TO THE CITY MANAGER'S FY 2016 BUDGET Revenues Expenses Attachment B - 1 ATTACHMENT B, EXHIBIT 1 Department Category Adjustment Category Adjustment GENERAL FUND (102) CITY OF PALO ALTO RECOMMENDED AMENDMENTS TO THE CITY MANAGER'S FY 2016 BUDGET Revenues Expenses Development Services Management Development & Training (reallocation to Non-Departmental) This action reallocates departmental management development savings to Non-Departmental to reappropriate funds for city-wide training needs in FY 2018. General Expense (1,000)$ Fire Salary & Benefits (reallocation from Non-Departmental reserve): This action reallocates funding reserved for salary and benefit increases due to pending labor negotiations to the Fire Department for higher than anticipated salary and benefit expenses in FY 2016. These higher than anticipated expenses are due to a number of variables though the primary causes of this reflects higher than budgeted overtime expenses and higher salary and benefit increases as approved by the City Council in April 2016 that were budgeted in the aforementioned reserve. Salaries & Benefits 1,265,000$ Human Resources Management Development & Training (reallocation to Non-Departmental) This action reallocates departmental management development savings to Non-Departmental to reappropriate funds for city-wide training needs in FY 2018. General Expense (104,000)$ Library Management Development & Training (reallocation to Non-Departmental) This action reallocates departmental management development savings to Non-Departmental to reappropriate funds for city-wide training needs in FY 2018. General Expense (3,000)$ Non- Departmental Management Development & Training (reallocation to Non-Departmental) This action reallocates departmental management development savings to Non-Departmental to reappropriate funds for city-wide training needs in FY 2018. General Expense 202,000$ Non- Departmental Salary & Benefits Reserve (reallocation to Fire Department) This action reallocates the reserve for Salaries and Benefits to the Fire Department to provide sufficient funding for final FY2016 Fire Department salary and benefits expenses. Fund Balance/ Reserves (1,265,000)$ Attachment B - 2 ATTACHMENT B, EXHIBIT 1 Department Category Adjustment Category Adjustment GENERAL FUND (102) CITY OF PALO ALTO RECOMMENDED AMENDMENTS TO THE CITY MANAGER'S FY 2016 BUDGET Revenues Expenses Non- Departmental Transfer to the Public Art Fund This action increases the transfer to the Public Art Fund (from $68,500 to $107,000) to provide sufficient funding for administrative costs associated with the Public Art Program in FY 2016. Per Ordinance #5226, administrative costs in excess of 20% of art fee revenue require General Fund support. Operating Transfers 38,500$ Police Management Development & Training (reallocation to Non-Departmental) This action reallocates departmental management development savings to Non-Departmental to reappropriate funds for city-wide training needs in FY 2018. General Expense (8,000)$ Public Works Management Development & Training (reallocation to Non-Departmental) This action reallocates departmental management development savings to Non-Departmental to reappropriate funds for city-wide training needs in FY 2018. General Expense (25,500)$ GENERAL FUND (102) SUBTOTAL -$ -$ Attachment B - 3 ATTACHMENT B, EXHIBIT 1 Department Category Adjustment Category Adjustment GENERAL FUND CAPITAL IMPROVEMENT FUND (471) Capital Capital Improvement Project Adjustments This action reflects the combined impact from adjustments to projects as outlined in Attachment A, Exhibit 4. Other Revenues 45,000$ Capital Improvement 929,823$ Capital Transfer to the Library Debt Service Fund This action establishes a transfer from the General Fund Capital Improvement Fund to the Library Debt Service Fund for defeasance of Library bonds. This is due to project savings of $3,007,702 which was approved in CMR #6993 and $10,784 to transfer the remaining balance in the bond issue bank account to the Debt Service Fund. A corresponding decrease in the fund balance, specifically the Reserve: Library Bond Proceeds is recommended to offset this adjustment. Operating Transfer - Out 3,018,486$ Capital Reserve: Capital Fund Library Bond Proceeds This action decreases the reserve for Library Bond Proceeds to offset actions recommended in this report. Fund Balance/ Reserves (3,018,486)$ Capital Reserve: Capital Fund Infrastructure Reserve This action decreases the fund balance to offset the net changes resulting from the actions recommended in this report. Fund Balance/ Reserves (884,823)$ GENERAL FUND CAPITAL IMPROVEMENT FUND (471) SUBTOTAL 45,000$ 45,000$ CITY OF PALO ALTO RECOMMENDED AMENDMENTS TO THE CITY MANAGER'S FY 2016 BUDGET Revenues Expenses Attachment B - 4 ATTACHMENT B, EXHIBIT 1 Department Category Adjustment Category Adjustment ENTERPRISE FUNDS AIRPORT ENTERPRISE FUND (530) Capital Capital Improvement Project Adjustments This action reflects the combined impact from adjustments to projects as outlined in Attachment A, Exhibit 4. Capital Improvement 25,799$ Public Works Public Work's Salaries & Benefits This action reallocates departmental salaries and benefit savings to Capital Improvement Projects to provide sufficient funding for final FY2016 capital project expenses. Salaries & Benefits (25,799)$ AIRPORT ENTERPRISE FUND (530) SUBTOTAL -$ -$ ELECTRIC FUND (523) Capital Capital Improvement Project Adjustments This action reflects the combined impact from adjustments to projects as outlined in Attachment A, Exhibit 4. Capital Improvement 278$ Capital Adjustment to Reserve for Capital Improvement Projects This action decreases the Capital Improvement Projects Reserve to offset slightly higher capital improvement expenses in FY 2016. Fund Balance/ Reserves (278)$ ELECTRIC FUND (523) SUBTOTAL -$ -$ GAS FUND (524) Capital Capital Improvement Project Adjustments This action reflects the combined impact from adjustments to projects as outlined in Attachment A, Exhibit 4. Other Revenues 70,528$ Capital Improvement 70,528$ GAS FUND (524) SUBTOTAL 70,528$ 70,528$ CITY OF PALO ALTO RECOMMENDED AMENDMENTS TO THE CITY MANAGER'S FY 2016 BUDGET Revenues Expenses Attachment B - 5 ATTACHMENT B, EXHIBIT 1 Department Category Adjustment Category Adjustment ENTERPRISE FUNDS CITY OF PALO ALTO RECOMMENDED AMENDMENTS TO THE CITY MANAGER'S FY 2016 BUDGET Revenues Expenses REFUSE FUND (525) Capital Capital Improvement Project Adjustments This action reflects the combined impact from adjustments to projects as outlined in Attachment A, Exhibit 4. Capital Improvement 74,192$ Public Works Refuse Utility Purchases This action increases the utility purchases expenses to align with FY2016 year end expenses and encumbrances. A corresponding increase in revenues from customer sales offsets these increases expenses. Customer Sales 528,072$ Utility Purchases 528,072$ Capital Adjustment to Rate Stabilization Reserve This action decreases the Rate Stabilization Reserve to offset slightly higher capital improvement expenses in FY 2016. Fund Balance/ Reserves (74,192)$ REFUSE FUND (525) SUBTOTAL 528,072$ 528,072$ WASTEWATER COLLECTION FUND (527) Capital Capital Improvement Project Adjustments This action reflects the combined impact from adjustments to projects as outlined in Attachment A, Exhibit 4. Capital Improvement 105,511$ Adjustment to Reserve for Operations This action decreases the Reserve for Operations to offset slightly higher capital improvement expenses in FY 2016. Fund Balance/ Reserves (105,511)$ WASTEWATER COLLECTION FUND (527) SUBTOTAL -$ -$ WATER FUND (522) Capital Capital Improvement Project Adjustments This action reflects the combined impact from adjustments to projects as outlined in Attachment A, Exhibit 4. Capital Improvement 783,717$ Adjustment to Reserve for Operations This action decreases the Reserve for Operations to offset slightly higher capital improvement expenses in FY 2016. Fund Balance/ Reserves (783,717)$ WATER FUND (522) SUBTOTAL -$ -$ Attachment B - 6 ATTACHMENT B, EXHIBIT 1 Department Category Adjustment Category Adjustment INTERNAL SERVICE FUNDS VEHICLE REPLACEMENT & MAINTENANCE FUND (681) Capital Capital Improvement Project Adjustments This action reflects the combined impact from adjustments to projects as outlined in Attachment A, Exhibit 4. Capital Improvement 24,289$ Adjustment to Fund Balance This action decreases the fund balance to offset slightly higher capital improvement expenses in FY 2016. Fund Balance/ Reserves (24,289)$ VEHICLE REPLACEMENT & MAINTENANCE FUND (681) SUBTOTAL -$ -$ CITY OF PALO ALTO RECOMMENDED AMENDMENTS TO THE CITY MANAGER'S FY 2016 BUDGET Revenues Expenses Attachment B - 7 ATTACHMENT B, EXHIBIT 1 Department Category Adjustment Category Adjustment SPECIAL REVENUE FUNDS HOUSING IN-LIEU/COMMERICAL FUND (234) Transfer from Stanford Medical Development Fund/Ending Fund Balance This action recognizes a transfer from the Stanford Medical Development Fund to the Housing In- Lieu/Commercial Fund for developer impact fees embedded in the SUMC Development Agreement. This is in compliance with the City Attorney's interpretation of the SUMC agreement. A corresponding increase in the fund balance is recommended to offset this adjustment. Operating Transfers-In 1,720,488$ Fund Balance/ Reserves 1,720,488$ HOUSING IN-LIEU/COMMERICAL FUND (234) SUBTOTAL 1,720,488$ 1,720,488$ HOUSING IN-LIEU/RESIDENTIAL FUND (233) Non- Departmental Transfer to Stanford Medical Center Development Fund This action established a transfer from the Housing In- Lieu Residential Fund to the Stanford Medical Center Development Fund for repayment of funds previously transferred in FY 2013. The funds were not needed and have been returned. A corresponding decrease in the fund balance is recommended to offset this adjustment. Operating Transfers 720,220$ Ending Fund Balance This action decreases the fund balance to offset the actions recommended in this report. Fund Balance/ Reserves (720,220)$ HOUSING IN-LIEU/RESIDENTIAL FUND (233) SUBTOTAL -$ -$ LAW ENFORCEMENT SERVICES FUND (248) Police COPS Grant Expenses/State Revenues This action recognizes additional grant revenues and corresponding expense in order to align budget levels with actual FY2016 revenue, expense, and encumbrance levels. State Revenues 12,695$ Contract Services 12,695$ LAW ENFORCEMENT SERVICES FUND (248) SUBTOTAL 12,695$ 12,695$ CITY OF PALO ALTO RECOMMENDED AMENDMENTS TO THE CITY MANAGER'S FY 2016 BUDGET Revenues Expenses Attachment B - 8 ATTACHMENT B, EXHIBIT 1 Department Category Adjustment Category Adjustment SPECIAL REVENUE FUNDS CITY OF PALO ALTO RECOMMENDED AMENDMENTS TO THE CITY MANAGER'S FY 2016 BUDGET Revenues Expenses LIBRARY PROJECTS FUND (370) Non- Departmental Transfer from the General Fund Capital Improvement Fund This action recognizes a transfer from the General Fund Capital Improvement Fund to the Library Debt Service Fund for defeasance of Library bonds. This is due to project savings of $3,007,702 which was approved in CMR#6993 and $10,784 to transfer the remaining balance in the bond issue bank account to the Debt Service Fund. Operating Transfer-In 3,018,486$ Non- Departmental General Expenses This action recognizes additional expenses related to defeasement of bonds resulting in higher than budgeted expenses of $6.1 million. As outlined in CMR #6993, the City opted to use project savings and bond premium to defease $5.1 million in principal payments and $0.9 million in interest payments. General Expenses 6,108,892$ Ending Fund Balance This action decreases the fund balance to offset the actions recommended in this report. Fund Balance/ Reserves (3,090,406)$ LIBRARY PROJECTS FUND (370) SUBTOTAL 3,018,486$ 3,018,486$ PUBLIC ART FUND (207) Community Services Department Transfer from the General Fund/Fund Balance Adjustment This action increases the estimated transfer from the General Fund to account for full funding of administrative costs in excess of 20% of art fee revenue as required by Ordinance #5226. A corresponding increase in expenses is recommended to offset this action. Operating Transfers-In 38,500$ Supplies & Materials; Contract Services 38,500$ PUBLIC ART FUND (207) SUBTOTAL 38,500$ 38,500$ Attachment B - 9 ATTACHMENT B, EXHIBIT 1 Department Category Adjustment Category Adjustment SPECIAL REVENUE FUNDS CITY OF PALO ALTO RECOMMENDED AMENDMENTS TO THE CITY MANAGER'S FY 2016 BUDGET Revenues Expenses PUBLIC SERVICES DONATION FUND (191) Various Expense/Miscellaneous Revenue (donations) This action increases the appropriation for expenses in the Public Services Donation Fund to align with FY2016 year end expense and encumbered funds. Donations were for activities such as animal care services and parks and open space activities. A corresponding increase in the estimate for miscellaneous revenue is recommended to offset this increase and reflects higher than budgeted donations. Miscellaneous Revenue 46,637$ Supplies & Materials; Contract Services 46,637$ PUBLIC SERVICES DONATION FUND (191) SUBTOTAL 46,637$ 46,637$ STANFORD MEDICAL CENTER DEVELOPMENT FUND (260) Non- Departmental Transfer from Housing In-Lieu/Residential Fund/Fund Balance This action recognizes a transfer from the Housing In- Lieu Residential Fund to the Stanford Medical Center Development Fund for repayment of funds previously transferred in FY 2013. The funds were not needed and have been returned. A corresponding increase in the fund balance is recommended to offset this adjustment. Operating Transfer-In 720,220$ Fund Balance/ Reserves 720,220$ Non- Departmental Transfer to Housing In-Lieu/Commercial Fund This action established a transfer from the Stanford Medical Center Development Fund to the Housing In- Lieu Commercial Fund for developer impact fees embedded in the SUMC Development Agreement. This is in compliance with the City Attorney's interpretation of the SUMC agreement. A corresponding decrease in the fund balance is recommended to offset this adjustment. Operating Transfer 1,720,488$ Ending Fund Balance This action decreases the fund balance to offset the actions recommended in this report. Fund Balance/ Reserves (1,720,488)$ STANFORD MEDICAL CENTER DEVELOPMENT FUND (260) SUBTOTAL 720,220$ 720,220$ Attachment B - 10 ATTACHMENT B, EXHIBIT 1 Department Category Adjustment Category Adjustment AGENCY TRUST FUNDS CABLE - JPA FUND (779) Administrative Services General Expenses This action increases the general expense due to higher than budgeted inter agency expenses at the end of FY 2016. A corresponding decrease in transfers to correctly align the budget category and fund balance are recommended to offset this action. -$ General Expense 1,290,571$ Administrative Services Transfer to General Fund This action decreases the appropriation for transfer to the General Fund and re-categorizes it as an interagency expense to accurately align with the appropriate treatment of expenses in this funds as an agency fund. -$ Operating Transfers (824,000)$ Ending Fund Balance This action decreases the fund balance to offset the actions recommended in this report. -$ Fund Balance/ Reserves (466,571)$ CABLE - JPA FUND (779) SUBTOTAL -$ -$ EYERLY TRUST FUND (774) Utilities General Expenses This action increases the general expense due to higher than budgeted expenses specifically for special events in FY 2016. This action aligns the budget with actuals. A corresponding decrease in fund balance is recommended to offset this action. -$ General Expense 6,887$ Ending Fund Balance This action decreases the fund balance to offset the actions recommended in this report. -$ Fund Balance/ Reserves (6,887)$ EYERLY TRUST FUND (774) SUBTOTAL -$ -$ CITY OF PALO ALTO RECOMMENDED AMENDMENTS TO THE CITY MANAGER'S FY 2016 BUDGET Revenues Expenses Attachment B - 11 ATTACHMENT B, EXHIBIT 2 Project Funding Title Number Revenue Expense Source Comments ADDITIONAL APPROPRIATIONS Art Center Auditorium Audio, Visual, and Furnishings AC-14000 $ 365 Infrastructure Reserve Increase to project due to higher than anticipated expenditures Furniture and Technology for Library Projects LB-11000 $ 45,000 $ 45,000 Miscellaneous Revenue Increase revenue and project due to a donation. Highway 101 Pedestrian/Bicycle Overcrossing PE-11011 $ 130,367 Infrastructure Reserve Increase to project due to higher than anticipated expenditures Newell Road Bridge / SFC Bridge Replacement PE-12011 $ 2,569 Infrastructure Reserve Increase to project due to higher than anticipated expenditures Charleston Arastradero Corridor Project PE-13011 $ 288,196 Infrastructure Reserve Increase to project due to higher than anticipated expenditures El Camino Park Restoration PE-13016 $ 76,174 Infrastructure Reserve Increase to project due to higher than anticipated expenditures Fire Station 3 Replacement PE-15003 $ 84,584 Infrastructure Reserve Increase to project due to higher than anticipated expenditures Street Maintenance PE-86070 $ 242,778 Infrastructure Reserve Increase to project due to higher than anticipated expenditures California Avenue Parking District Parking Improvements PF-14004 $ 31,317 Infrastructure Reserve Increase to project due to higher than anticipated expenditures Transportation and Parking Improvements PL-12000 $ 6,765 Infrastructure Reserve Increase to project due to higher than anticipated expenditures El Camino/ Churchill Intersection Improvements PL-14000 $ 21,633 Infrastructure Reserve Increase to project due to higher than anticipated expenditures Embarcadero Road Corridor Improvements PL-15001 $ 75 Infrastructure Reserve Increase to project due to higher than anticipated expenditures $ 45,000 $ 929,823 ADDITIONAL APPROPRIATIONS Runway & Taxiway Rehabilitation AP-15003 $ 10,206 Increase to project due to higher than anticipated expenditures Airport Perimeter Fencing AP-16003 $ 15,593 Increase to project due to higher than anticipated expenditures $ - $ 25,799 ADDITIONAL APPROPRIATIONS AMR/AMI-Feasibility EL-10008 $ 278 Increase to project due to higher than anticipated expenditures $ - $ 278 CITY OF PALO ALTO RECOMMENDED AMENDMENTS TO THE CITY MANAGER'S FY 2016 CAPITAL IMPROVEMENT PROGRAM CAPITAL PROJECT FUND AIRPORT ENTERPRISE FUND ELECTRIC FUND TOTAL ELECTRIC FUND CIP YEAR-END ADJUSTMENTS TOTAL AIRPORT ENTERPRISE FUND CIP YEAR-END ADJUSTMENTS TOTAL GENERAL FUND CIP YEAR-END ADJUSTMENTS Attachment B - 12 ATTACHMENT B, EXHIBIT 2 Project Funding Title Number Revenue Expense Source Comments CITY OF PALO ALTO RECOMMENDED AMENDMENTS TO THE CITY MANAGER'S FY 2016 CAPITAL IMPROVEMENT PROGRAM ADDITIONAL APPROPRIATIONS Gas System, Customer Connections GS-80017 $ 70,528 $ 70,528 Increase to project due to higher than anticipated expenditures. This project is offset by additional revenue from customers. $ 70,528 $ 70,528 ADDITIONAL APPROPRIATIONS Landfill Closure RF-11001 $ 74,192 Increase to project due to higher than anticipated expenditures $ - $ 74,192 ADDITIONAL APPROPRIATIONS Vehicle Maintenance Facility Upgrade VR-04010 $ 24,289 Increase to project due to higher than anticipated expenditures $ - $ 24,289 ADDITIONAL APPROPRIATIONS Wastewater Collection System Rehabilitation/Augmentation Project 22 WC-09001 $ 176 Increase to project due to higher than anticipated expenditures Wastewater Collection System Rehabilitation/Augmentation Project 24 WC-11000 $ 11,788 Increase to project due to higher than anticipated expenditures Sewer System, Customer Connections WC-80020 $ 93,547 Increase to project due to higher than anticipated expenditures $ - $ 105,511 ADDITIONAL APPROPRIATIONS Water Regulation Station Improvements WS-07000 $ 159,544 Increase to project due to higher than anticipated expenditures Water Main Replacement-Project 25 WS-11000 $ 356,042 Increase to project due to higher than anticipated expenditures Water System, Customer Connections WS-80013 $ 157,955 Increase to project due to higher than anticipated expenditures Water Service Hydrant Replacement WS-80014 $ 110,176 Increase to project due to higher than anticipated expenditures -$ 783,717$ GAS FUND TOTAL WATER FUND CIP YEAR-END ADJUSTMENTS TOTAL WASTEWATER COLLECTION FUND CIP YEAR- END ADJUSTMENTS TOTAL VEHICLE REPLACEMENT & MAINTENANCE FUND CIP YEAR-END ADJUSTMENTS TOTAL REFUSE FUND CIP YEAR-END ADJUSTMENTS TOTAL GAS FUND CIP YEAR-END ADJUSTMENTS WASTEWATER COLLECTION FUND WATER FUND REFUSE FUND VEHICLE REPLACEMENT & MAINTENANCE FUND Attachment B - 13 2015-2016 Comprehensive Annual Financial Report City of Palo Alto, California FISCAL YEAR ENDED: June 30, 2016 CITY OF PALO ALTO, CALIFORNIA 2015-2016 Comprehensive Annual Financial Report Fiscal Year Ended June 30, 2016 Prepared by: Administrative Services Department CITY OF PALO ALTO  For the Year Ended June 30, 2016  Table of Contents   Page  INTRODUCTORY SECTION:   Transmittal Letter .................................................................................................................................... i   City Officials ........................................................................................................................................... vi   Organizational Structure ....................................................................................................................... vii   Administrative Services Organization .................................................................................................. viii   GFOA Certificate of Achievement for Excellence in Financial Reporting ............................................... ix    FINANCIAL SECTION:   Independent Auditor’s Report .............................................................................................................. 1   Management’s Discussion and Analysis    (Required Supplementary Information – Unaudited) ...................................................................... 5   Basic Financial Statements   Government‐wide Financial Statements:   Statement of Net Position ....................................................................................................... 29   Statement of Activities ............................................................................................................ 31   Governmental Fund Financial Statements:   Balance Sheet .......................................................................................................................... 33  Reconciliation of the Balance Sheet of Governmental Funds to         the Statement of Net Position ‐ Governmental Activities ................................................. 34   Statement of Revenues, Expenditures and Changes in Fund Balances .................................. 35   Reconciliation of the Statement of Revenues, Expenditures and Changes   in Fund Balances of Governmental Funds to the Statement of Activities –          Governmental Activities ................................................................................................... 36   Statement of Revenues, Expenditures and Changes in Fund Balance –    Budget and Actual – General Fund ................................................................................... 37   Proprietary Fund Financial Statements:   Statement of Net Position ....................................................................................................... 38   Statement of Revenues, Expenses and Changes in Fund Net Position ................................... 40   Statement of Cash Flows ......................................................................................................... 42   Fiduciary Fund Financial Statement:   Statement of Fiduciary Net Position ....................................................................................... 44   Index to the Notes to the Basic Financial Statements ................................................................. 45   Notes to the Basic Financial Statements ...................................................................................... 47   Required Supplementary Information:   Schedule of Changes in Net Pension Liability and related Ratios – Miscellaneous Plan ............. 105   Schedule of Contributions – Miscellaneous Plan ......................................................................... 106     CITY OF PALO ALTO  For the Year Ended June 30, 2016  Table of Contents (Continued)   Page  Required Supplementary Information:   Schedule of Changes in Net Pension Liability and Related Ratios – Safety Plan ......................... 107   Schedule of Contributions – Safety Plan ...................................................................................... 108  Supplementary Information:   Non‐Major Governmental Funds:   Combining Balance Sheet ...................................................................................................... 109   Combining Statement of Revenues, Expenditures and    Changes in Fund Balances ............................................................................................... 111   Non‐Major Special Revenue Funds:   Combining Balance Sheet ...................................................................................................... 114   Combining Statement of Revenues, Expenditures and    Changes in Fund Balances ............................................................................................... 116   Combining Schedule of Revenues, Expenditures and    Changes in Fund Balances – Budget and Actual ............................................................. 118   Non‐Major Debt Service Funds:   Combining Balance Sheet ...................................................................................................... 124   Combining Statement of Revenues, Expenditures and    Changes in Fund Balances ............................................................................................... 125   Combining Schedule of Revenues, Expenditures and    Changes in Fund Balances – Budget and Actual ............................................................. 126   Non‐Major Permanent Fund:   Schedule of Revenues, Expenditures and    Changes in Fund Balances – Budget and Actual ............................................................. 128   Internal Service Funds:   Combining Statement of Fund Net Position .......................................................................... 130   Combining Statement of Revenues, Expenses and    Changes in Fund Net Position ......................................................................................... 131   Combining Statement of Cash Flows ..................................................................................... 132   Fiduciary Funds:   Statement of Changes in Assets and Liabilities – All Agency Funds ...................................... 134  STATISTICAL SECTION:   Financial Trends:   Net Position by Component ......................................................................................................... 137   Changes in Net Position ............................................................................................................... 138     CITY OF PALO ALTO  For the Year Ended June 30, 2016  Table of Contents (Continued)   Page  STATISTICAL SECTION:   Financial Trends:   Fund Balances of Governmental Funds ....................................................................................... 140   Changes in Fund Balances of Governmental Funds ..................................................................... 142  Revenue Capacity:   Electric Operating Revenue by Source ......................................................................................... 143   Supplemental Disclosure for Water Utilities ............................................................................... 144   Assessed Value of Taxable Property ............................................................................................ 145   Property Tax Rates, All Overlapping Governments ..................................................................... 146   Property Tax Levies and Collections ............................................................................................ 147   Principal Property Taxpayers ....................................................................................................... 148   Assessed Valuation and Parcels by Land Use .............................................................................. 149   Per Parcel Assessed Valuation of Single Family Residential ........................................................ 150   Debt Capacity:   Ratio of Outstanding Debt by Type .............................................................................................. 151   Computation of Direct and Overlapping Debt ............................................................................. 152   Computation of Legal Bonded Debt Margin ................................................................................ 153   Revenue Bond Coverage .............................................................................................................. 154   Demographic and Economic Information:    Taxable Transactions by Type of Business ................................................................................... 155   Demographic and Economic Statistics ......................................................................................... 156   Principal Employers...................................................................................................................... 157   Operating Information:   Operating Indicators by Function/Program ................................................................................. 158   Capital Asset Statistics by Function/Program .............................................................................. 160   Full‐Time Equivalent City Government Employees by Function .................................................. 162  SINGLE AUDIT SECTION:   Index to the Single Audit Report .................................................................................................. 163  Independent Auditor’s Report on Internal Control Over Financial Reporting and           on Compliance and Other Matters Based on an Audit of Financial Statements            Performed in Accordance With Government Auditing Standards ........................................ 165   Independent Auditor’s Report on Compliance for Each Major Program and                         Report on Internal Control Over Compliance Required by Uniform Guidance .................... 167   Schedule of Expenditures of Federal Awards .............................................................................. 169   Notes to the Schedule of Expenditures of Federal Awards ......................................................... 170   Schedule of Findings and Questioned Costs ................................................................................ 171   Schedule of Prior Years Findings and Questioned Costs ............................................................. 172 Introduction   ………………………………………………….……………………… City of Palo Alto   i   Transmittal Letter…………………………………………………...…  November 2, 2016  THE HONORABLE CITY COUNCIL  Palo Alto, California    Attention:  Finance Committee  COMPREHENSIVE ANNUAL FINANCIAL REPORT  YEAR ENDED JUNE 30, 2016      Members of the Council and Citizens of Palo Alto:    I am pleased to present the Comprehensive Annual Financial Report (CAFR) for the fiscal year ended  June 30, 2016 in accordance with Article III, Section 16 and Article IV, Section 13 of the City of Palo  Alto Charter.  The format and content of this CAFR complies with the principles and standards of  accounting and financial reporting adopted by the Governmental Accounting Standards Board  (GASB), and contains all information needed for readers to gain a reasonable understanding of City of  Palo Alto financial affairs.  Management takes sole responsibility for the completeness and reliability  of the information contained in this report, based upon a comprehensive framework of internal  control that it has established for this purpose.  The objective of internal controls is to provide  reasonable, rather than absolute, assurance that the financial statements are free of any material  misstatements.    The City of Palo Alto’s financial statements have been audited by Macias Gini & O’Connell LLP,  Certified Public Accountants.  The goal of the audit is to obtain reasonable assurance that the  financial statements are free of material misstatements and are fairly presented in conformity with  generally accepted accounting principles (GAAP).  Macias Gini & O’Connell issued an unmodified  opinion for the fiscal year ended June 30, 2016 audit.  Their report is presented as the first  component of the financial section of this report.    In addition, Macias Gini & O’Connell conducted the federally mandated “Single Audit” designed to  meet the special needs of federal grantor agencies.  The standards governing the Single Audit require  the independent auditor to report on the fair presentation of the financial statements, government’s  internal controls and compliance with legal requirements.  These reports are included in the Single  Audit section of the CAFR.     City of Palo Alto Office of the City Manager    Introduction  …………………………………….…………………………………. ii    City of Palo Alto  An overview of the City’s financial activities for the fiscal year is discussed in detail in the  Management’s Discussion and Analysis (MD&A) section of the CAFR. MD&A complements this  transmittal letter and should be read in conjunction with it.        CITY OF PALO ALTO PROFILE  Palo Alto was incorporated in 1894 and named after a majestic coastal redwood  tree which lives along the San Francisquito Creek where early Spanish explorers  settled.  Located between the cities of San Francisco and San Jose, Palo Alto is a  largely built‐out community of approximately 67,000 residents.  Palo Alto  delivers a full range of municipal services and public utilities under the Council‐ Manager form of government, and offers an outstanding quality of life for its  residents.  It covers an area of twenty‐six square miles, and has dedicated almost  one‐half of the area to open spaces of parks and wildlife preserves.  Public  facilities include five libraries, four community centers, a cultural arts center, an  adult and children’s theater, a junior museum and zoo, and a golf course.  The  City provides a diverse array of services for seniors and youth, an extensive continuing education  program, concerts, exhibits, team sports and special events.  The independent Palo Alto Unified  School District (PAUSD) has achieved state and national recognition for the excellence of its  programs.    City Council:   Council consists of nine members elected at‐large for four year staggered terms. At the  first meeting of each calendar year, Council elects a Mayor and Vice‐Mayor from its membership,  with the Mayor having the duty of presiding over Council meetings. Council is the appointing  authority for the positions of City Manager and three other officials, the City Attorney, City Clerk, and  City Auditor, all of whom report to Council.  Effective January 1, 2019, Council will be reduced from  nine to seven members.    Finance Committee and Policy and Services Committee:  While retaining the authority to approve all  actions, Council has established two subcommittees to consider and make recommendations on  matters relating to finance, budget, audits, capital planning and debt.  Each of the subcommittees are  comprised of four Council members.   Staff provides the subcommittees and Council with reports  such as the CAFR, quarterly budget‐versus‐actual results, and investment and performance measure  reports, all of which are utilized in their review of the City’s financial position.    FISCAL/ECONOMIC CONDITIONS AND OUTLOOK  Employment Trends:  The City of Palo Alto is located in the heart of Silicon Valley and is adjacent to  Stanford University, one of the premier institutions of higher education in the nation which has  produced much of the talent that founded many successful high‐tech companies in Palo Alto and  Silicon Valley.  With varied and relatively stable employers such as Stanford University, Stanford  Medical Center, Palo Alto Medical Foundation, Palo Alto Unified School District, Stanford Shopping  Center and businesses such as Hewlett‐Packard, VMware, Tesla, Palantir and Space Systems Loral,  Palo Alto has enjoyed diverse employment and revenue bases. The City’s unemployment rate ended  the year at 2.8 percent, 0.1 percent higher than the prior year.  This compares to Santa Clara  County’s unemployment rate of 4.0 percent, and the state’s unemployment rate of 5.7 percent.    Introduction   ………………………………………………….……………………… City of Palo Alto   iii   Real Estate Market:  In its most recent annual report, the Santa Clara County Assessor’s Office noted  that Santa Clara County’s 2016/2017 assessment roll increased 7.9 percent, from $388 billion to $419  billion ‐ “assessment roll growth during the past four years has exceeded the growth for the  preceding ten years.”   The assessment roll growth was balanced throughout the County, with the  highest growth rates in Santa Clara and Mountain View.  Palo Alto’s assessment roll growth rate was  8.6 percent, compared to 8.1 percent in the prior report.  Property sales and new construction were  the primary factors contributing to the robust growth. With its highly regarded school district, well‐ educated and high‐income population, cultural amenities, and the presence of Stanford University,  the City’s real estate activity continues to experience a pattern of high demand and short supply.   The result of this continued pattern is reflected in the substantial increase in FY 2016 property tax  revenue.    Local Trends:  National, state, regional and local economic indicators point toward continuously  improving economic growth.  Economically sensitive revenue sources such as transient occupancy tax  and documentary transfer tax remain strong, while sales tax revenue has levelled off.  The robust  local economy and job growth are also driving increases in other revenues, such as permit and  license fees.    Looking forward, funding sources are sufficient to cover projected FY 2017 expenses, as written in  the City’s Adopted Budget.  The FY 2017 budget was balanced by utilizing several one‐time solutions,  with the goal of implementing long‐term structural solutions as part of the FY 2018 budgeting  process.   Council adopted a General Fund budget with expenses of $194.2 million for FY 2017, an  increase of $8.5 million, or 4.9 percent, from the prior year Adopted Budget.  The increase is driven  by increased investment in infrastructure, increased salary and benefits, and the addition of staff  positions in response to community initiatives and Council priorities.  In addition, a $2.3 million cost  for streetlight and traffic signal electricity has been shifted to the General Fund to increase alignment  with fund purpose, and a Budget Uncertainty Reserve of $2.0 million was created to provide  flexibility for several capital and operating items that may require additional funding, such as the Golf  Course renovation and rebuild of the Junior Museum and Zoo.      Pension and healthcare costs continue to dominate the conversation about long‐term future costs.   The most recent actuarial valuations show unfunded liabilities for pension and healthcare of $495  million.  The City has proactively taken steps over the past several years to mitigate increased costs  by increasing employee contributions to the CalPERS retirement plan and capping the City’s share of  healthcare premiums.  Implementation of a second tier retirement plan in 2011 and adoption of the  state‐mandated third tier pension benefit plan in 2013 also helps mitigate future pension cost  increases.  New labor agreements include a provision for employees to start paying part of the City’s  share of pension contributions in addition to the employee’s share.  Further pension cost sharing  with employees will be necessary to fund future cost increases.   Council has approved the concept of funding a Section 115 Trust  that is separate from CalPERS and would act as a mitigation  reserve if the City were unable to meet its annual required  contribution due to budget constraints in a given year.   As economic growth continues to flourish in this area of Silicon  Valley, it also exacerbates the challenges of increased traffic and congestion, affordable housing, and  demand for services.  These issues were reflected in the setting of Council priorities for 2016:     Built Environment: Housing, Parking, Livability, Mobility     Introduction  …………………………………….…………………………………. iv    City of Palo Alto   Infrastructure   Healthy City, Healthy Community   Completion of the Comprehensive Plan update    In keeping with these priorities, Council has approved implementation of strategies to address traffic  congestion in the City:  parking management (Residential Preferential Parking program, parking  technology enhancements, garage wayfinding signage), transportation demand management  (Transportation Management Association, enhanced shuttle services, CalTrain GoPass program for  employees), and short and long‐term parking supply strategies (valet parking, construction of new  garages).    Council approved a $125.8 million Infrastructure Plan, which includes projects such as a new Public  Safety Building, replacement of two Fire Stations, a Bike and Pedestrian plan, and two parking  garages.  These projects will be funded partially by debt to be repaid with an increase in the transient  occupancy tax (TOT) rate which went into effect in January 2015, TOT from newly opened hotels, and  from other sources such as impact fees and Stanford University Medical Center development  agreement monies. The Plan was recently updated for scope increases and cost escalations, and a  reserve of $30 million for unanticipated costs and contingencies was added, resulting in a revised  Infrastructure Plan of $160 million.  As a result of sound fiscal management and reserve policies,  General Fund surpluses from FY 2012 through FY 2016 totaling $32.6 million were transferred to the  Infrastructure Reserve.  An additional $4.3 million from the FY 2016 surplus is proposed for transfer  to the Infrastructure Reserve in FY 2017, for a total contribution of surplus funds of $36.9 million  over six years.    Rate increases will take effect in FY 2017 for electric, gas, water, wastewater, storm drain, and refuse  services.  Increases are necessary due to increased costs resulting from the prolonged drought and  water conservation measures, treatment plant rehabilitation costs, and expanded recycling services.    Long Range Financial Forecast:  The City produces a 10 year General Fund Long Range Financial  Forecast (LRFF) annually.  This comprehensive report analyzes local, state, and federal economic  conditions, short and long‐term revenue and expense trends, and addresses challenges such as  funding long‐term pension and healthcare liabilities and infrastructure needs.  The forecast is  designed to highlight finance issues which the City can address proactively.  Moreover, it is a tool  that allows policymakers an opportunity to prioritize funding needs over time.  It sets the tone for  the annual budget process and is one of the many tools and reports that Council uses for financial  planning.    The most recent LRFF indicates a financial shift downward for FY 2017 and out years due to rising  pension and healthcare costs and increasing costs for Infrastructure Plan projects. The City maintains  a General Fund Budget Stabilization Reserve (BSR) level of 15 to 20 percent of the General Fund  operating budget, with a targeted goal of 18.5 percent.  Council approval is required to set this  reserve balance lower than 15 percent.  As of June 30, 2016 the BSR balance is $51.6 million, of  which $2.1 million has been approved by Council to set aside for establishment of a pension trust  fund.  Staff will bring forward recommendations for a further $7.9 million of proposed BSR uses as  part of the FY 2016 year‐end close process.  The remaining balance of $41.6 million represents 21.4  percent of FY 2017 expenditures, and is $5.7 million more than the 18.5 percent target balance for  the BSR.      Introduction   ………………………………………………….……………………… City of Palo Alto   v   Both Moody’s and Standard and Poor’s (S&P) awarded their highest credit rating of Triple A to the  City’s general obligation debt.  This rating has been awarded to only a few cities in California.    SIGNIFICANT EVENTS AND ACCOMPLISHMENTS    The City of Palo Alto is a community dedicated to meeting the social, cultural,  recreational, educational, commercial and retail needs of its citizens and  businesses.  As such, open space, education, recreational facilities, cultural  events and safe streets and neighborhoods are important aspects of the  community and the City has been recognized for its accomplishments with a  wide variety of awards and recognitions over the past year.  Following is a  sampling of those awards:     Awarded gold level status as a Bicycle Friendly Community by the League of American  Bicyclists based on a strong commitment to bicycling evidenced by major streets with bike  lanes, high ratio of bike network mileage to road network mileage,  and Bike to Work events;   Earned a spot on the national Top 10 utility solar list compiled by the Smart Electric Power  Alliance in recognition of third place for “Watts per Customer” installed in 2015; and   Awarded Tree Line USA award by the National Arbor Day Foundation in recognition of the  Utilities exceeding the standard criteria for quality tree care, annual worker training, tree  planting and public education, a tree‐based energy conservation program, and an Arbor Day  celebration.    Awards:  During the past year, the City received an award for the prior fiscal year CAFR from the  Government Finance Officers Association (GFOA) for “excellence in financial reporting.”  The 2016  CAFR will be submitted to the GFOA award program to be considered for this distinguished financial  reporting award.   Acknowledgments:  This CAFR reflects the hard work, talent and commitment of the staff members  of the Administrative Services Department.  This document could not have been accomplished  without their efforts and each contributor deserves sincere appreciation.  Management wishes to  acknowledge the support of Laura Kuryk, Accounting Manager, and the entire accounting staff for  their high level of professionalism and dedication.  Management would also like to express its  appreciation to Macias Gini & O’Connell, the City’s independent external auditors, who assisted and  contributed to the preparation of this Comprehensive Annual Financial Report.    Special acknowledgment must be given to City Council and the Finance and Policy and Services  Committees for their dedication to directing the financial affairs of the City in a responsible,  professional and progressive manner.   Respectfully submitted,  LALO PEREZ, JAMES KEENE,  Chief Financial Officer                                                                                     City Manager     Introduction  …………………………………….…………………………………. vi    City of Palo Alto  City of Palo Alto City Officials ………………………….…………                                                                                Finance Committee  Eric Filseth, Chair  Karen Holman  Greg Schmid  Cory Wolbach Policy and Services Committee    Tom DuBois, Chair  Marc Berman  Liz Kniss  Gregory Scharff  Council‐Appointed Officers    City Manager  James Keene    City Attorney  Molly Stump    City Clerk  Beth Minor    City Auditor  Harriet Richardson  City Council    Patrick Burt, Mayor  Gregory Scharff, Vice‐Mayor  Marc Berman  Tom DuBois  Eric Filseth  Karen Holman  Liz Kniss  Greg Schmid  Cory Wolbach    Introduction   ………………………………………………….……………………… City of Palo Alto   vii   Assistant City Managers (2)   Edward K. Shikada  Vacant (1) City Attorney  Molly Stump  City Manager James Keene  City Auditor Harriet Richardson  City Clerk Beth Minor  City of Palo Alto Organization ……………………………………                                                                            Palo Alto Residents City Council Community Services  Rob DeGeus, Director  Administrative Services   Lalo Perez, Chief Financial Officer  Fire  Eric Nickel, Chief  Human Resources   Rumi Portillo, Director  Police  Dennis Burns, Chief Planning & Community Environment   Hillary Gitelman, Director  Utilities   Edward K. Shikada, Acting Director  Public Works   Mike Sartor, Director  Library  Monique le Conge‐Ziesenhenne,  Director  Development Services   Peter Pirnejad, Director  Chief Communications Officer  Claudia Keith  Office of Emergency Services Kenneth Dueker, Director  Office of Sustainability  Gil Friend, Chief Sustainability Officer  Information Technology   Jonathan Reichental,   Chief Information Officer     Introduction  …………………………………….…………………………………. viii    City of Palo Alto  Administrative Services Organization ……… Administrative Division Treasury Division  Accounting Division Budget Division  Purchasing Division Real Estate Division  Mission Statement    To provide proactive administrative and technical support to  City departments and decision makers, and to safeguard and  facilitate the optimal use of City resources.  Administrative Services Department  Introduction   ………………………………………………….……………………… City of Palo Alto   ix   Government Finance Officers Association of the United States and Canada – Award …… Century City Los Angeles Newport Beach Oakland Sacramento San Diego San Francisco Walnut Creek Woodland Hills www.mgocpa.com Macias Gini & O’Connell LLP 2121 N. California Boulevard, Suite 750 Walnut Creek, CA 94596 1  Independent Auditor’s Report Honorable Mayor and the Members of the City Council of City of Palo Alto, California Report on the Financial Statements We have audited the accompanying financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Palo Alto, California (City), as of and for the year ended June 30, 2016, and the related notes to the financial statements, which collectively comprise the City’s basic financial statements as listed in the table of contents. Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor’s Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. 2  Opinions In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City as of June 30, 2016, and the respective changes in financial position, and, where applicable, cash flows thereof and the respective budgetary comparison for the General Fund for the year then ended in accordance with accounting principles generally accepted in the United States of America. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis, the schedules of changes in the net pension liability and related ratios and the schedules of contributions, as listed in the table of contents, be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City’s basic financial statements. The introductory section, combining and individual nonmajor fund financial statements and schedules, statistical section and the schedule of expenditures of federal awards, as required by Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards,, are presented for purposes of additional analysis and are not a required part of the basic financial statements. The combining and individual nonmajor fund financial statements and schedules and the schedule of expenditures of federal awards are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the combining and individual nonmajor fund financial statements and schedules and the schedule of expenditures of federal awards are fairly stated, in all material respects, in relation to the basic financial statements as a whole. The introductory and statistical sections have not been subjected to the auditing procedures applied in the audit of the basic financial statements, and accordingly, we do not express an opinion or provide any assurance on them. 3  Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated November 2, 2016 on our consideration of the City’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City’s internal control over financial reporting and compliance. Walnut Creek, California November 2, 2016 4  This page is left intentionally blank.                                        Management’s Discussion and Analysis  ………………………………………………………..……….……………………………………… City of Palo Alto 5 Management’s Discussion and Analysis  Management’s Discussion and Analysis (MD&A) provides an overview of the City of Palo Alto’s financial  performance for the fiscal year ended June 30, 2016. To obtain a complete understanding of the City’s financial  condition, this document should be read in conjunction with the accompanying Transmittal Letter and Basic  Financial Statements.  Financial Highlights  The assets and deferred outflows of resources of the City of Palo Alto (City) exceeded its liabilities and deferred inflows of resources at the close of Fiscal Year (FY) 2016 by $1,190.8 million.  Of this amount, $200.7 million represents unrestricted net position, which may be used to meet the government’s ongoing obligations to citizens and creditors. At the close of FY 2016, the City’s governmental funds reported combined fund balances of $245.7 million, an increase of $21.1 million from prior year.  Approximately 21.0 percent of this amount, or $51.6 million, is unassigned fund balance and available for spending at the government’s discretion. At the end of the current fiscal year, unrestricted fund balance (the total of the committed, assigned and unassigned components of fund balance) for the General Fund was $59.8 million, or 33.3 percent of total general fund expenditures, including transfers. The City’s total outstanding long‐term debt decreased by $11.4 million during the current fiscal year due to scheduled debt retirement in the amount of $6.3 million and defeased debt of $5.1 million. OVERVIEW OF THE COMPREHENSIVE ANNUAL FINANCIAL REPORT (CAFR)  The CAFR is presented in six sections:  An introductory section that includes the Transmittal Letter and general information Management’s Discussion and Analysis The Basic Financial Statements that include the Government‐wide and Fund Financial Statements, along with the Notes to these statements Supplemental Information Statistical Information Single Audit Management’s Discussion and Analysis  ……….…………………………………………………………………..…………………………… City of Palo Alto 6 Basic Financial Statements  The Basic Financial Statements contain the Government‐wide Financial Statements, the Fund Financial  Statements and the Notes to these financial statements.  This report also includes supplementary information  intended to furnish additional detail to support the Basic Financial Statements.    For certain entities and funds, the City acts solely as a depository agent. For example, the City has several  Assessment Districts for which it produces fiduciary statements detailing the cash balances and activities of  these districts. These entities are independent, and their balances are excluded from the City’s government‐ wide financial statements.   Government‐wide Financial Statements  The Government‐wide Financial Statements provide a longer‐term view of the City’s activities as a whole.   They include the Statement of Net Position and the Statement of Activities.      The Statement of Net Position includes the City’s capital assets and long‐term liabilities on a full accrual basis  of accounting similar to that used by private sector companies. Over time, increases or decreases in net  position may serve as a useful indicator of whether the financial position of the City is improving or  deteriorating.      The Statement of Activities provides information about the City’s revenues and expenses on a full accrual  basis, with an emphasis on measuring net revenues or expenses for each of the City’s programs. The  Statement of Activities explains in detail the change in net position for the year.  All changes in net position  are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of  related cash flows.      The amounts in the Statement of Net Position and the Statement of Activities are separated into  Governmental and Business‐type Activities in order to provide a summary of each type of activity.     Governmental Activities ‐ All of the City’s basic services are considered to be governmental activities. Included  in basic services are the City Council, City Manager, City Attorney, City Clerk, City Auditor, Administrative  Services, Human Resources, Public Works, Planning and Community Environment, Development Services,  Public Safety, Community Services, and Library. These services are supported by general City revenues such  as taxes, and by specific program revenues such as fees and grants.     The City’s governmental activities also include the activities of the Palo Alto Public Improvement Corporation,  which is a separate legal entity financially accountable to the City.     Business‐type Activities ‐ All of the City’s enterprise activities are reported as business‐type activities,  including Water, Electric, Fiber Optics, Gas, Wastewater Collection, Wastewater Treatment, Refuse, Storm  Drainage and Airport. Unlike governmental services, these services are intended to recover all or a significant  portion of their costs through user fees and charges, except for the Airport which is currently supported by a  long‐term advance from the General Fund, as discussed in Note 4.    The Government‐wide Financial Statements can be found on pages 29‐31 of this report.  Management’s Discussion and Analysis  ……………………………….…………..…………………………………………………………… City of Palo Alto 7 Fund Financial Statements  The Fund Financial Statements provide detailed information about each of the City’s most significant funds,  called major funds. The concept of major funds, and the determination of which are major funds, was  established by Governmental Accounting Standards Board (GASB) Statement No. 34 and replaced the concept  of combining like funds and presenting them in total. Therefore, each major fund is presented individually,  with all non‐major funds combined in a single column on each fund statement. Subordinate schedules display  these non‐major funds in more detail. Major funds present the major activities of the City for the year.  The  General Fund is always considered a major fund, but other funds may change from year to year as a result of  changes in the pattern of City activities.     The Fund Financial Statements display the City’s operations in more detail than the Government‐wide  Financial Statements. Their focus is primarily on the short‐term activities of the City’s General Fund and other  major funds such as Capital Projects, Water Services, Electric Services, Fiber Optics, Gas Services, Wastewater  Collection Services, Wastewater Treatment Services, Refuse Services and Storm Drainage Services.    Budget and actual financial comparison information is presented only for the General Fund.     Fund Financial Statements include Governmental, Enterprise, Internal Service and Agency Funds.    Governmental Funds  Governmental Fund Financial Statements are prepared on the modified accrual basis of accounting, which  means they measure only current financial resources and uses. Capital assets and other long‐lived assets,  along with long‐term liabilities, are presented only in the Government‐wide Financial Statements. In FY 2016,  the City had two major governmental funds, the General Fund and the Capital Projects Fund.  Data from the  other governmental funds are combined into a single aggregated presentation.  Individual fund data for each  of these non‐major governmental funds is provided in the Supplemental section of this report.     Because the focus of governmental funds is narrower than that of the Government‐wide Financial Statements,  it is useful to compare the information presented for governmental funds with similar information presented  for governmental activities in the Government‐wide Financial Statements.  By doing so, readers may better  understand the long‐term impact of the government’s near‐term financing decisions.  Both the Governmental  Fund Balance Sheet and the Governmental Fund Statement of Revenues, Expenditures and Changes in Fund  Balances provide a reconciliation to facilitate this comparison between governmental funds and governmental  activities.    The Governmental Fund Financial Statements can be found on pages 33‐37 of this report.    Proprietary Funds  Enterprise and Internal Service Fund Financial Statements are prepared on the full accrual basis of accounting,  similar to that used by private sector companies. These statements include all of their assets, deferred  outflows and inflows of resources, and liabilities, both current and long‐term.     Since the City’s Internal Service Funds provide goods and services exclusively to the City’s governmental and  business‐type activities, their activities are only reported in total at the fund level.  Internal Service Funds,  such as Technology and General Benefits, cannot be considered major funds because their revenues are  derived from other City funds. Revenues between funds are eliminated in the Government‐wide Financial    Management’s Discussion and Analysis  …………………………..……….…………………………………………………………………… City of Palo Alto 8 Statements, and any related profits or losses in Internal Service Funds are returned to the activities in which  they were created, along with any residual net assets of the Internal Service Funds.  The Proprietary Fund Financial Statements can be found on pages 38‐43 of this report.  Fiduciary Funds  The City is the fiduciary agent for certain assessment districts such as the University Avenue Area Off‐Street  Parking Assessment District.  In this role, the City holds money collected from property owners and awaiting  transfer to the districts’ bond trustees. The City’s fiduciary activities are reported in the separate Statement  of Fiduciary Net Position and the supplemental Agency Funds Statement of Changes in Assets and Liabilities.  These activities are excluded from the City’s other financial statements because the City cannot utilize these  assets to finance its own operations.  The Fiduciary Fund Financial Statements can be found on page 44 of this report.  Notes to the Financial Statements  The Notes provide additional information that is necessary to acquire a full understanding of the data provided  in the Government‐wide and Fund Financial Statements.  The Notes to the financial statements can be found  on pages 47‐103 of this report.  Other Information  The Required Supplementary Information related to the City’s pension plans is included after the Notes to the  Financial Statements on pages 105‐108. The combining statements referred to earlier in connection with non‐ major Governmental Funds and Internal Service Funds are presented immediately following the Required  Supplementary Information.  Combining statements and individual fund statements and schedules can be  found on pages 109‐134 of this report.  Management’s Discussion and Analysis  ………………………………….…………………………………………………………………… City of Palo Alto 9 Financial Analysis of Government‐wide Financial Statements  This section focuses on the City’s net position and changes in net position of its governmental and business‐ type activities for the fiscal year ending June 30, 2016.  As noted earlier, the City’s total assets and deferred  outflows of resources exceed total liabilities and deferred inflows of resources by $1,190.8 million at the end  of the fiscal year, an improvement in net position of $59.1 million.   STATEMENT OF NET POSITION As of June 30, 2016 (in millions)  2016 2015 2016 2015 2016 2015 Cash and investments 295.0$   280.9$    244.7$    253.7$    539.7$        534.6$        Other assets 62.3 57.2 35.3 39.2 97.6            96.4            Capital assets 496.0 485.2 576.8 558.5 1,072.8 1,043.7  Total Assets 853.3      823.3      856.8      851.4      1,710.1       1,674.7       Unamortized loss from refunding ‐             ‐             0.3           0.4           0.3               0.4               Pension related 21.2        19.2        9.4           8.1           30.6            27.3            Total Deferred Outflows of Resources 21.2        19.2        9.7           8.5           30.9            27.7            Net pension liabilities 230.1      208.8      89.5         81.1         319.6          289.9          Long‐term debt 71.5 78.8 68.1 72.2 139.6 151.0 Other liabilities 48.1 54.3 24.0 24.7 72.1 79.0 Total Liabilities 349.7      341.9      181.6      178.0      531.3          519.9          Pension related 13.7        36.7        5.1           14.1         18.8            50.8            Total Deferred Inflows of Resources 13.7        36.7        5.1           14.1         18.8            50.8                      Net Position           Net investment in capital assets 425.2 405.9 512.9 490.9 938.1 896.8 Restricted 47.9 56.0 4.1 4.1 52.0 60.1 Unrestricted 37.9 2.0 162.8 172.8 200.7 174.8 Total Net Position 511.0$   463.9$    679.8$    667.8$    1,190.8$    1,131.7$    Governmental Activities Business‐type Activities Government‐wide Totals   The largest portion of the City’s net position (78.8 percent) is its investment in capital assets such as land,  buildings, infrastructure and vehicles, less any related outstanding debt that was used to acquire those assets.   The City uses these capital assets to provide a variety of services to its citizens.  Accordingly, these assets are  not available for future spending.  Although the City’s investment in capital assets is reported net of related  debt, it should be noted that the resources used to repay this debt must be provided from other sources, since  the capital assets themselves cannot be used to liquidate these liabilities.  Management’s Discussion and Analysis  ……….…………………………………………………………………………………..…………… City of Palo Alto 10 The restricted portion of the City’s net position (4.4 percent) represents resources that are subject to external  restrictions on how they may be used.  The remaining balance of $200.7 million, representing 16.8 percent of  the City’s net position, is unrestricted and may be used to meet the government’s ongoing obligations to its  citizens and creditors.    At the end of the current fiscal year, the City is able to report positive unrestricted net positions both for the  government as a whole and for its separate governmental and business‐type activities, except for the  following three funds:   Wastewater Treatment Fund $2.1 million deficit due to pension related items;   Airport Fund $2.3 million deficit due to cumulative operating losses; and   Printing and Mailing Services Fund $0.3 million deficit due to pension related items.     Components of the $59.1 million increase in total net position are discussed in the following sections for  governmental activities and business‐type activities.    Governmental Activities – Net Position  The following analysis focuses on the net position and changes in net position of the City’s Governmental  Activities, presented in the Government‐wide Statement of Net Position and Statement of Activities.      GOVERNMENTAL ACTIVITIES Net Position at June 30 (in millions) Increase/  2016 2015 (Decrease) Cash and investments 295.0$    280.9$    14.1$       Other assets 62.3        57.2        5.1            Capital assets 496.0      485.2      10.8          Total Assets 853.3      823.3      30.0         Pension related 21.2        19.2        2.0            Total Deferred Outflows of Resources 21.2        19.2        2.0           Net pension liabilities 230.1      208.8      21.3         Long‐term debt 71.5        78.8        (7.3)          Other liabilities 48.1        54.3        (6.2)          Total Liabilities 349.7      341.9      7.8           Pension related 13.7        36.7        (23.0)        Total Deferred Inflows of Resources 13.7        36.7        (23.0)             Net Position     Net investment in capital assets 425.2      405.9      19.3         Restricted 47.9        56.0        (8.1)          Unrestricted 37.9        2.0           35.9         Total Net Position 511.0$   463.9$   47.1$       Management’s Discussion and Analysis  ………………………………….…………………………………………………………………… City of Palo Alto 11 The City’s Governmental Activities total net position increased $47.1 million to $511.0 million as of June 30,  2016. This increase was a result of the following:   Cash increased $14.1 million due to a higher cash position in the Capital Projects Fund as a result of  higher operating transfers in and lower capital expenditures due to completion of major Library  projects in the prior year.   Capital assets net of depreciation increased $10.8 million due to major capital projects such as El  Camino Park improvements, and street and sidewalk improvements throughout the City.   Long‐term debt decreased $7.3 million due to scheduled debt repayments of $2.2 million, and  defeased payments of $5.1 million on the General Obligation Bonds using funds from bond premium  and project savings.   Other liabilities decreased $6.2 million due to lower accounts payable balances because of completion  of Library projects, and to current year reduction of deposits held for Transfer Development Rights.   Net investment in capital assets increased $19.3 million to $425.2 million.  Restricted net position  decreased $8.1 million to $47.9 million due primarily to expenditure of remaining bond proceeds for  Library project expenses and defeasance of bonds. Unrestricted net position increased by $35.9  million to $37.9 million as a result of lower capital expenditures in the Capital Projects Fund and  increased fund balance of $7.7 million in the Housing‐in‐Lieu Funds.   Unrestricted net position  represents current net assets available to finance subsequent year operations and other expenditures  approved by City Council.    Management’s Discussion and Analysis  ………………………………………………………………………………………………………… City of Palo Alto 12 Governmental Activities – Revenues  The table below shows that Governmental Activities revenues totaled $193.3 million in FY 2016, an increase  of $7.5 million from prior year revenues of $185.8 million.   GOVERNMENTAL ACTIVITIES Revenues for the Year Ended June 30 (in millions) Increase/ Revenues by Source 2016 2015 (Decrease) Program Revenues: Charges for services 67.4$      63.5$      3.9$         Operating grants and contributions 2.2 5.3 (3.1) Capital grants and contributions 0.3 0.6 (0.3) Total Program Revenues 69.9        69.4        0.5           General Revenues: Property tax 41.2 38.8 2.4 Sales tax 30.0 29.7 0.3 Utility user tax 12.4 10.9 1.5           Transient occupancy tax 22.4 16.7 5.7 Documentary transfer tax 6.3 10.4 (4.1) Other tax 1.6 1.5 0.1 Investment earnings 8.6 5.0 3.6 Rents and miscellaneous 0.9 3.4 (2.5) Total General Revenues 123.4 116.4 7.0 Total Revenues 193.3$   185.8$   7.5$             Program Revenues such as charges for services, operating grants and contributions, and capital grants and  contributions are generated from or restricted to each activity.  Total Program Revenues increased $0.5  million from the prior year.    General Revenues increased $7.0 million, or 6.0 percent, from the prior year primarily due to increased  General Fund tax revenues.  Further analysis of general revenues can be found in the Financial Analysis of  Governmental Funds section of the MD&A.  Management’s Discussion and Analysis  …………………………………….………………………………………………..………………… City of Palo Alto 13 Governmental Activities – Revenues by Source  The chart below presents revenues by source for Governmental Activities. General Revenues are composed  of taxes and other revenues not specifically generated by, or restricted to, individual activities. All tax revenues  and investment earnings are included in General Revenues.     Program Revenues 36% Property Tax 21% Sales Tax 16% Utility User Tax 6% Transient Occupancy Tax 12% Documentary Transfer Tax 3% Other 6% Management’s Discussion and Analysis  …………………………….………………………………………………………..………………… City of Palo Alto 14 Governmental Activities – Expenses  The table below presents a comparison of FY 2016 and FY 2015 expenses by function, along with interest and  other expense.  Total Governmental Activities functional expense was $164.9 million in FY 2016, an increase  of $13.5 million.    GOVERNMENTAL ACTIVITIES Expenses and Change in Net Position for the Year Ended June 30 (in millions) Increase/ Activities 2016 2015 (Decrease) City Council 0.4$        0.3$        0.1$         City Manager 2.7 2.2 0.5 City Attorney 2.5 1.8 0.7 City Clerk 0.6 0.7 (0.1) City Auditor 0.4 0.4 0.0 Administrative Services 10.6 10.0 0.6 Human Resources 2.2 1.4 0.8 Public Safety 56.6 58.7 (2.1) Planning and Community Environment 10.2 8.4 1.8 Development Services 11.2 10.4 0.8 Public Works 24.6 21.1 3.5 Community Services 28.5 24.7 3.8 Library 10.8 7.7 3.1 Interest and Other Expense 3.6 3.6 0.0 Total Functional Expense 164.9 151.4 13.5 Increase in Net Position    before Transfers 28.4 34.4 (6.0) Transfers in 18.7 16.4 2.3 Change in Net Position 47.1 50.8 (3.7) Net Position, Beginning 463.9  413.1   50.8   Net Position, Ending 511.0$   463.9$   47.1$       Management’s Discussion and Analysis  ……………………………………………………………………..………………………………… City of Palo Alto 15 In addition to the variances at the fund level which are explained in the Financial Analysis of Governmental  Funds section of the MD&A, year over year variances in Functional expenses at the government‐wide level  are due to the following:   Change in pension related adjustments to defer current year contributions and expense prior year  contributions as required by GASB 68 ($0.4 million);   Allocation of the Internal Service Funds net position ($1.8 million);   Capital asset activities such as depreciation and asset retirements ($0.5 million); and   Repayment of excess bond funds to University Avenue Area Off‐Street Parking Assessment District  ($1.8 million).      Governmental Activities – Functional Expenses  The functional expenses chart below includes only current year expenses. It does not include capital outlays,  as those are added to the City’s capital assets.  Functions which comprise 1 percent or less of total expenses  are combined into the All Other category in the chart below.  All Other includes City Council, City Manager,  City Attorney, City Clerk, City Auditor and Human Resources.      Administrative  Services 7% Public Works 15% Interest and Other 2% Planning and  Community  Environment 6% Development Svcs 7% Public Safety 34% Community Services 17% Library 7% All Other 5% Management’s Discussion and Analysis  ………………………………………………………………………………………………………… City of Palo Alto 16 Business‐type Activities – Net Position  The following analysis focuses on the net position and changes in net position of the City’s Business‐type  Activities presented in the Government‐wide Statement of Net Position and Statement of Activities.  Increase/ 2016 2015 (Decrease) Cash and investments 244.7$    253.7$    (9.0)$        Other assets 35.3 39.2 (3.9) Capital assets 576.8 558.5 18.3 Total Assets 856.8   851.4      5.4     Unamortized loss from refunding 0.3           0.4       (0.1)          Deferred pension contribution 9.4           8.1       1.3            Total Deferred Outflows of Resources 9.7       8.5          1.3     Net pension liabilities 89.5 81.1 8.4 Long‐term debt 68.1 72.2 (4.1) Other liabilities 24.0 24.7 (0.7) Total Liabilities 181.6   178.0      3.6     Difference between expected and actual earnings on investments 5.1           14.1    (9.0)          Total Deferred Outflows of Resources 5.1       14.1        (9.0)    Net Position Net investment in capital assets 512.9 490.9 22.0 Restricted 4.1 4.1 0.0 Unrestricted 162.8 172.8 (10.0) Total Net Position 679.8$   667.8$   12.0$       BUSINESS‐TYPE ACTIVITIES Net Position at June 30 (in millions) The City’s Business‐type Activities total net position increased $12.0 million to $679.8 million as of  June 30, 2016.   Cash and investments decreased $9.0 million primarily due to Electric Fund decrease in net position of $8.3  million.  Management’s Discussion and Analysis  ………………………………………………………………………………………………………… City of Palo Alto 17 Capital assets increased $18.3 million to $576.8 million in FY 2016 primarily due to capital improvements in  the Gas Fund. This infrastructure improvement, in addition to the $4.1 million reduction in long‐term debt by  Enterprise Funds, created the increase of $22.0 million in the net investment in capital assets to $512.9 million.     Unrestricted net position of $162.8 million, a decrease of $10.0 million from the prior year, represents liquid  assets available to finance day‐to‐day operations and other expenditures approved by Council. The amount  includes rate stabilization reserves (RSR) of $44.7 million and operations reserves of $49.9 million, along with  the Electric special projects (Calaveras) reserve of $51.8 million, and the hydro stabilization reserve of $11.4  million.  The positive balances in these reserves are offset by the GASB 68 adjustment pension reserve of $85.1  million.  Additional detail is included in Note 10.  Business‐type Activities – Revenues  The table below presents the revenues for each of the City’s Business‐type Activities or Enterprise Funds. The  City operates the Water, Electric, Fiber Optics, Gas, Wastewater Collection, Wastewater Treatment, Refuse,  Storm Drainage and Airport Funds.    BUSINESS‐TYPE ACTIVITIES Revenues for the Year Ended June 30 (in millions) Increase/ Revenues by Source 2016 2015 (Decrease) Program Revenues: Charges for services 272.9$    270.9$    2.0$          Operating grants and contributions 0.7           0.5           0.2 Capital grants and contributions 1.1 2.1 (1.0) Total Program Revenues 274.7      273.5      1.2            General Revenues: Investment earnings 7.3 4.9 2.4 Total General Revenues 7.3 4.9 2.4 Total Revenues 282.0$    278.4$    3.6$          Business‐type Activities revenues totaled $282.0 million, an increase of $3.6 million from the prior year.   Program revenues increased $1.2 million year over year.  Revenues for all funds were relatively flat year over  year with the exception of Water Fund which had increased revenue of $1.7 million due to rate increases in  July and September.     Investment earnings increased due to the unrealized gain which resulted from adjusting investments to  market value at year‐end, as required by GASB 31.    Management’s Discussion and Analysis  ……….……………………………………………………………………………………………..… City of Palo Alto 18 Business‐type Activities – Expenses  The table below presents a comparison of the FY 2016 and FY 2015 expenses for the City’s Business‐type  Activities. Encumbrances and reappropriations are not included.  BUSINESS‐TYPE ACTIVITIES Expenses and Change in Net Position for the Year Ended June 30 (in millions) Increase/ Business‐type Activities 2016 2015 (Decrease) Water 35.1$      33.2$      1.9$          Electric 120.3 122.4 (2.1) Fiber Optics 2.1 1.9 0.2 Gas 20.9 23.5 (2.6) Wastewater Collection 15.2 14.6 0.6 Wastewater Treatment 22.5 21.6 0.9 Refuse 30.4 28.0 2.4 Storm Drainage 3.7 3.7 0.0 Airport 1.0 1.0 0.0 Total Functional Expense 251.2 249.9 1.3 Increase in Net Position    before Transfers 30.7 28.4 2.3 Transfers out (18.7) (16.4) (2.3)     Change in Net Position 12.0 12.0 0.0 Net Position, Beginning 667.8      655.8      12.0 Net Position, Ending 679.8$    667.8$    12.0$       Business‐type Activities expenses increased $1.3 million for a total of $251.2 million. Year over year expenses  were significantly affected by the following events:   Water Fund expenses increased $1.9 million due to increased wholesale water rates to cover the cost  of upgrades and improvements to the water supply distribution system.   Electric Fund expenses decreased $2.1 million due to decreased energy purchase costs.  The  availability of hydroelectric energy resources is lower than average due to the ongoing drought, which  necessitates higher than average electricity purchases at market rates, but lower than expected  market rates drove total purchase costs lower.   Gas Fund expenses decreased $2.6 million due to lower commodity prices.  Refuse Fund expenses increased $2.4 million due to the cost of providing expanded services for  recycling and composting as a means to accomplish zero waste and reduced greenhouse gas emissions  goals. Management’s Discussion and Analysis  ………………………………………………………..……….……………………………………… City of Palo Alto 19 FUND FINANCIAL STATEMENTS   Financial Analysis of Governmental Funds  As noted earlier, the City uses fund accounting to ensure and demonstrate compliance with finance‐related  legal requirements.    Governmental Funds  The focus of the City’s Governmental Funds is to provide information on near‐term inflows, outflows, and  balances of spendable resources.  Such information is useful in assessing the City’s financing requirements.  In  particular, the unassigned fund balance may serve as a useful measure of a government’s net resources  available for discretionary use as it represents the portion of fund balance not yet limited to use for a particular  purpose by either an external party, the City itself, or an entity that has been delegated authority by the City  Council to assign resources for use.    As of June 30, 2016, the City’s Governmental Funds reported combined fund balances of $245.7 million, an  increase of $21.1 million from the prior year.  Approximately 21.0 percent, or $51.6 million, constitutes  unassigned fund balance, which is available for spending at the government’s discretion.  The remainder of  the fund balance is either non‐spendable, restricted, committed, or assigned to indicate that it is: 1) not in  spendable form ($8.6 million); 2) restricted for particular purposes ($47.1 million); 3) committed for particular  purposes ($65.7 million); or 4) assigned for particular purposes ($72.7 million).    Governmental Fund revenues increased $7.4 million, or 4.0 percent, from prior year to $191.9 million.   Revenues in the General Fund increased $8.3 million and Capital Projects Fund revenue increased $0.8 million.   Other Governmental Funds revenue decreased by $1.8 million due to reduced developer impact and housing‐ in‐lieu fees.    Governmental Fund expenditures were $186.2 million, a decrease of $2.9 million from the prior year. General  Fund expenditures increased $6.4 million, Capital Projects Fund expenditures decreased by $15.7 million, and  Non‐major Fund expenditures increased by $6.4 million.  Details of significant changes are discussed in the  following sections.  General Fund   Balance Sheet  The General Fund is the primary operating fund of the City.  At the end of the current fiscal year, fund balance  of the General Fund was $66.9 million, compared to $62.5 million in the prior year.  The fund balance has  been classified as $7.1 million non‐spendable, $8.3 million assigned, and $51.6 million unassigned.  The  unassigned amount of $51.6 million is designated by the Council for budget stabilization.  Proposed uses are  as follows:   $1.3 million for FY 2017 Budget Amendment Ordinances approved to date;   $1.3 million for Council approved reappropriations for various City departments;   $2.1 million to fund a Council approved pension trust fund; and   $5.3 million for transfer to Capital Projects Fund for deferred projects and reserved uses.    The remaining balance of $41.6 million represents 21.4 percent of FY 2017 expenditures and operating  transfers, which is $5.7 million above the target reserve guideline of 18.5 percent set by Council.  Staff will  bring forward further recommendations as part of the year‐end close process.        Management’s Discussion and Analysis  ……….…………………………………..…………………………………………………………… City of Palo Alto 20 Statement of Revenues, Expenditures and Changes in Fund Balance  Revenues  The City’s General Fund revenues totaled $165.8 million in FY 2016. This represents an increase of $8.3 million,  or 5.3 percent, compared to the prior year.  The year over year change in significant revenue sources is noted  in the following table.        GENERAL FUND Revenues for the Year Ended June 30 (in millions) Increase/ Revenues by Source 2016 2015 (Decrease) Property tax 36.6$      34.1$      2.5$          Sales tax 30.0 29.7 0.3 Utility user tax 12.5 10.9 1.6 Transient occupancy tax 22.4 16.7 5.7 Documentary transfer tax 6.3 10.4 (4.1) Charges for services 23.9 25.9 (2.0) Permits and licence 7.9 7.1 0.8 Rental income 15.8 14.9 0.9 All other 10.4 7.8 2.6 Total Revenues 165.8$    157.5$    8.3$              Property tax revenue increased by $2.5 million, or 7.3 percent, due to increased property assessment roll  growth.    Utility user tax revenue increased $1.6 million from prior year due to increased telephone utility user receipts.      Transient occupancy tax (TOT) ended the year $5.7 million, or 34.1 percent, higher than prior year due to  higher room rates, newly opened hotels that performed better than expected, and a new revenue stream  from Airbnb rentals.  Also, FY 2016 reflects a full year of the Council approved two percent increase in the TOT  rate from 12 percent to 14 percent, compared to FY 2015 which only included six months of the increase that  took effect January 1, 2015.      Documentary transfer tax decreased $4.1 million to $6.3 million due to the unusually high dollar commercial  property transactions that occurred in FY 2015.     All other revenue increased from prior year by $2.6 million primarily due to $1.7 million in net proceeds from  the sale of the former City Manager’s house.         Management’s Discussion and Analysis  ……….……………………………………………………………………………………………… City of Palo Alto 21 Expenditures  General Fund expenditures totaled $145.2 million for FY 2016 compared to $138.8 in the prior year.  This  amount excludes encumbrances and reappropriations.  The year over year change for major functions is noted  in the following table:      GENERAL FUND Expenditures for the Year Ended June 30 (in millions) Increase/ Expenditures by Function 2016 2015 (Decrease) Administrative Services 3.5$        3.7$        (0.2)$        Public Works 12.3 11.4 0.9            Planning and Community Environment 9.1 7.4 1.7 Development Services 10.6 11.1 (0.5) Police 35.2 34.1 1.1 Fire 28.3 27.1 1.2 Community Services 24.3 23.0 1.3 Library 8.0 8.0 0.0 Non‐Departmental 5.7 5.6 0.1 All other 8.2 7.4 0.8 Total Expenditures 145.2$   138.8$   6.4$             Planning and Community Environment expenses increased $1.7 million due to the addition of three full‐time  equivalent positions ($0.5 million) and increased contract services expense  related to initiatives such as  Shuttle Service program enhancements, parking management, and Transportation Management Association  initialization.     Police expenses increased $1.1 million due to $0.4 million increased salaries and benefits, and increased  expenditures for training, travel and equipment.    Fire expenses increased $1.2 million due to $0.7 million overtime and $0.4 million in allocated charges.     Community Services expenses increased $1.3 million due to increased salaries and benefits of $0.4 million,  increased expenses for class activities, and increased allocated charges.    Statement of Revenues, Expenditures and Changes in Fund Balance ‐ Budget and Actual    Original budget compared to final budget  Revenues were originally budgeted at $153.4 million and were revised upward by $4.3 million.  Revenue  categories that were adjusted are shown in the table below.  Management’s Discussion and Analysis  ……………………………………………….……………………………………………………..… City of Palo Alto 22 GENERAL FUND Budgeted Revenues for the Year Ended June 30 (in millions) Adopted Final Increase/ Budgeted Revenues Budget Budget (Decrease) Property tax 35.1$        36.0$      0.9$        Sales tax 27.6 28.4 0.8 Utility user tax 11.2 10.5 (0.7) Transient occupancy tax 18.8 22.0 3.2 Documentary transfer tax 6.8 7.0 0.2 All other 53.9 53.8 (0.1) 153.4 157.7 4.3 Charges to other funds 11.9 11.9 ‐    Prior year encumbrances and appropriations ‐  5.6 5.6 Total Budgeted Revenues 165.3$      175.2$   9.9$         Adjustments to the Adopted Budget were based on the following:  Sales tax was increased by $0.8 million due to higher than expected receipts. Property tax was increased by $0.9 million due to receipt of excess funds from the Educational Revenue Augmentation Fund (ERAF). Transient occupancy tax was increased by $3.2 million due to higher than expected receipts driven by higher room rates, newly opened hotels performing above expectations, and a new revenue stream from Airbnb rentals. Documentary transfer tax was increased by $0.2 million based on year‐to‐date receipts tracking slightly higher than anticipated. Actual revenues of $164.4 million were $6.8 million higher than final budgeted revenues of $157.7 million due  to the following:  $1.7 million net proceeds from the sale of former City Manager’s house; $0.9 million revenue from Cable Joint Powers Authority budgeted in operating transfers in; $2.0 million higher than expected utility user tax; and $1.6 million higher than anticipated sales tax revenue. Expenditures were originally budgeted at $162.9 million and were revised upward by $7.9 million, including  prior year encumbrances of $5.6 million, for a final budgeted amount of $170.8 million.  Current year budgeted expenditures and operating transfers include a draw of $11.5 million from FY 2015  surplus that was approved in November 2015 as part of the FY 2015 year‐end close City Manager Report  #6251, and was incorporated into the FY 2016 mid‐year budget changes.   Management’s Discussion and Analysis  ……………………………………………………………………………………………………..… City of Palo Alto 23 The approved items are:   $1.0 million transfer to Technology Fund for the Radio Infrastructure Replacement Fund;   $6.0 million transfer to Capital Improvement Fund;   $1.0 million transfer to Capital Improvement Fund for Roth Building rehabilitation reserve;   $2.6 million to fund FY 2016 expenditures.  GENERAL FUND Budgeted Expenditures for the Year Ended June 30 (in millions) Adopted Final Increase/ Actuals, plus Budgeted Expenditures Budget Budget (Decrease) Encumbrances Community Services 24.8$         26.5$      1.7$         25.3$                  Police 36.8  36.9 0.1 36.1 Fire 27.6  29.1 1.5 28.9 Library 8.6  9.0 0.4 8.2 Planning and Community Environment 8.9 11.1 2.2 10.9 Public Works 15.0 15.9 0.9 15.1 Development Services 11.9 12.3 0.4 10.9 Non‐departmental 8.7 7.0           (1.7) 6.2 All other 20.6 23.0 2.4 21.4 Total Budgeted Expenditures 162.9$      170.8$    7.9$         163.0                  Less: Charges to Other Funds (11.6)                   Less: Encumbrances (6.2) Net General Fund Expenditures 145.2$                    The final budgeted expenditure amount of $170.8 million compares to the actual expenditures plus  encumbrances of $163.0 million, a difference of $7.9 million, of which $6.2 million is encumbrances carried  forward to FY 2017.  The lower than budgeted expenditures were primarily due to vacancy and benefits  savings higher than expected.    Transfers out were originally budgeted at $22.7 million, with the final budget number at $35.0 million, an  increase of $12.3 million.  The increase was due primarily to the additional $8.0 million transferred to the  Capital Improvement and Technology Funds as noted above, $2.3 million additional TOT transferred to the  Capital Improvement Fund, $0.5 million additional to Residential Parking Fund, and $0.5 million to the Vehicle  Maintenance Fund.  Actual transfers out for the year were $34.5 million, a difference of $0.5 million from final  budget due to reclass of the Airport Fund transfer to interfund advance at year‐end.    Capital Projects Fund  Capital Projects Fund expenditures and other uses were $26.2 million in FY 2016, a decrease of $15.8 million  from the prior year driven by reduced construction and renovation costs for Library projects that were  completed in FY 2015. This level of expenditure is consistent with the City’s effort to rehabilitate and maintain  its existing infrastructure.      Management’s Discussion and Analysis  ……….…………………………………………………………………………..…………………… City of Palo Alto 24 Non‐major Funds  These funds are not presented separately in the Basic Financial Statements, but are individually presented as  Supplemental Information.  Financial Analysis of Enterprise Funds   At June 30, 2016, the City’s Enterprise Funds reported total net position of $676.9 million, an increase of $12.1  million or 1.8 percent from the prior year. The increase was primarily from the Electric and Gas Funds.  Further  analysis is noted in the following section.  Unrestricted net position for the Enterprise Funds totaled $159.9  million, a 5.8 percent decrease from FY 2015. Following is a table which compares the year over year change  in net position for each of the Enterprise Funds:  ENTERPRISE FUNDS Change in Net Position for the Year Ended June 30 (in millions) Increase/ Fund Name 2016 2015 (Decrease) Water 4.7$           5.1$        (0.4)$        Electric (8.3) (11.2) 2.9 Fiber Optics 3.0 3.1 (0.1) Gas 3.4 1.7 1.7 Wastewater Collection 1.6 2.4 (0.8) Wastewater Treatment 1.7 2.9 (1.2) Refuse 2.6 4.8 (2.2) Storm Drainage 3.3 2.7 0.6 Airport 0.1 (0.1) 0.2 Total Change in Net Position 12.1$        11.4$      0.7$         The most significant factors in the year over year change in net position for Enterprise Funds are as follows:  Electric change in net position increased $2.9 million.  Revenue was flat and the continued drought necessitated the purchase of electricity due to lower hydroelectric generation, but on peak energy prices were lower than prior year, resulting in lower overall costs. Gas change in net position increased $1.7 million from the prior year due to lower commodity prices. The corresponding reduction in customer revenue (also commodity rate driven) was offset by increased consumption. Wastewater Collection decreased its change in net position by $0.8 million.  A rate increase to customers was offset by reduced revenue from service connections and increased administrative expenses. Wastewater Treatment decreased its change in net position by $1.2 million due to significant operating expenses for bypass and emergency work, as well as engineering costs and chemical supplies. Management’s Discussion and Analysis  …………………………………………..…………………………………………………………… City of Palo Alto 25  Refuse Fund change in net position decreased $2.2 million from prior year.  A residential rate increase  was offset by reduced miscellaneous revenues and increased expense for expanded contract services  for yard trimmings and food scraps.    CAPITAL ASSETS  GASB 34 requires that the City record all its capital assets, including infrastructure and intangible assets.   Infrastructure includes roads, bridges, signals and similar assets used by the entire population.  The table  below shows capital assets and the amount of accumulated depreciation for these assets for Governmental  and Business‐type Activities.  Further detail can be found in Note 6 to the financial statements.    Increase/  2016 2015 (Decrease) Governmental Activities Capital Assets Land and improvements 78.5$      79.0$      (0.5)$        Street trees 15.1 15.1 0.0 Construction in progress 46.5 39.3 7.2 Buildings and improvements 220.9 221.7 (0.8) Intangible assets 3.8 3.8 0.0 Equipment 12.9 12.3 0.6 Roadway network 308.6 299.2 9.4 Recreation and open space network 33.1 27.6 5.5 Less accumulated depreciation (239.8) (228.2) (11.6) Internal Service Fund Assets   Construction in progress 1.8 1.4 0.4 Equipment 55.4 53.5 1.9 Less accumulated depreciation (40.8) (39.5) (1.3) Total Governmental Activities 496.0$   485.2$   10.8$       Business‐type Activities Land 5.0$        5.0$         ‐$           Construction in progress 93.9 89.9 4.0 Buildings and improvements 56.9 53.5 3.4 Transmission, distribution and treatment systems 746.7 717.6 29.1 Less accumulated depreciation (325.7) (307.5) (18.2) Total Business‐type Activities 576.8$   558.5$   18.3$       CAPITAL ASSETS AT JUNE 30 (in millions) Governmental Activities’ capital assets net of depreciation increased by $10.8 million from the prior year.  The  increase was primarily due to El Camino Park improvements, and street and sidewalk improvements  throughout the City.  Management’s Discussion and Analysis  …………………………………………………………….………………………………………… City of Palo Alto 26 Council approved a $125.8 million Infrastructure Plan in June 2014, which includes projects such as a new  Public Safety Building, replacement of two Fire Stations, a Bike and Pedestrian plan, and two parking garages.   Funding for these projects will come from a variety of sources, including TOT revenues, Stanford University  Medical Center development agreement, and developer impact fees.  The Plan was recently updated for cost  escalations, scope increases and a $30 million contingency reserve, resulting in a revised Infrastructure Plan  of $160 million.  In the past five years, General Fund surpluses totaling $32.6 million have been transferred to  the Capital Projects Infrastructure Reserve, with an additional $4.3 million committed from FY 2016 surplus  funds.    Major Governmental Activities’ capital projects that are currently in progress, including the remaining capital  commitment of each, are as follows:   Golf Course reconfiguration and Baylands Athletic Center ‐ $10.2 million   Lucie Stern Buildings mechanical and electrical upgrades ‐ $2.8 million   Bicycle and pedestrian transportation plan ‐ $2.6 million  Business‐type Activities’ capital assets net of depreciation increased by $18.3 million over FY 2015.  The  increase is due primarily to Gas infrastructure improvements.    Major Business‐type Activities’ capital projects that are currently in progress, including the remaining capital  commitment of each, are as follows:   Seismic water system upgrades for Water Fund ‐ $4.4 million   Channing Avenue/Lincoln Avenue storm drain improvement ‐ $3.6 million   Wastewater Collection Fund rehabilitation/augmentation project ‐ $9.2 million    The City depreciates its capital assets over their estimated useful lives, as required by GASB 34.  The purpose  of depreciation is to spread the cost of a capital asset over the years of its useful life so that an allocable  portion of the cost of the asset is borne by all users. Additional information on capital assets and depreciable  lives are in Note 6.    Management’s Discussion and Analysis  ………………………………………………………………………………………………………… City of Palo Alto 27 DEBT ADMINISTRATION  Each of the City’s debt issues is discussed in detail in Note 7 to the financial statements.  At June 30, 2016, the  City’s debt was comprised of the following:  LONG‐TERM DEBT AT JUNE 30 (in millions) Increase/  2016 2015 (Decrease) Governmental Activities General Long‐Term Obligations Certificates of Participation  2002B Downtown Parking Improvements 1.1$         1.3$         (0.2)$        General Obligation Bonds      2010 48.1 51.5 (3.4) 2013A 17.1 20.3 (3.2) 2011 Lease Purchase Agreement 1.3 1.6 (0.3)  Add: unamortized premium 3.9 4.1 (0.2) Total Governmental 71.5$      78.8$      (7.3)$        Business‐type Activities Enterprise Long‐Term Obligations Utility Revenue Bonds       1995 Series A2.4$         2.9$         (0.5)  1999 Refunding 9.7 10.3 (0.6) 2009 Series A29.7         30.7         (1.0) 2011 Refunding 12.3         13.3         (1.0) Add: unamortized premium 0.8           0.9           (0.1) Energy Tax Credit Bonds 2007 Series A0.6           0.7           (0.1) Less: unamortized discount (0.1) (0.1)‐              State Water Resources Loan 2007 5.9           6.3           (0.4) 2009 6.8           7.2           (0.4) Total Business‐type 68.1$      72.2$      (4.1)$        Long‐term debt decreased a total of $11.4 million due to scheduled debt repayments of $6.3 million, and  defeasance payments of $5.1 million on the General Obligation Bonds.  As noted in the Statistical Section of  the CAFR, the combined direct debt ratio to assessed valuation for the General Fund is 0.25 percent compared  to the allowable legal debt margin of 15 percent. Management’s Discussion and Analysis  ………………………………………………………………………………………………………… City of Palo Alto 28 SPECIAL ASSESSMENT DISTRICT DEBT  Special assessment districts throughout different parts of the City have also issued debt to finance  infrastructure and facilities construction exclusively in their districts. As of June 30, 2016, the City had no  special assessment district debt with City commitment outstanding.    ECONOMIC OUTLOOK  The economy of the City is discussed in the accompanying Transmittal Letter.  CONTACTING THE CITY’S FINANCIAL MANAGEMENT  The CAFR is intended to provide citizens, taxpayers, investors, and creditors with a general overview of the  City’s finances. Questions about this report should be directed to the Administrative Services Department, at  250 Hamilton Avenue, 4th Floor, Palo Alto, California. The Department can also be contacted by email at:  adminsvcs@cityofpaloalto.org.  This report and other financial reports can be viewed on the City of Palo Alto  website at: www.cityofpaloalto.org. On the home page, select Departments, select Administrative Services,  and select Financial Reporting. Within Financial Reporting, there are links to reports by title and reporting  date.   CITY OF PALO ALTO Statement of Net Position June 30, 2016 (Amounts in thousands) Governmental Business‐Type  Activities Activities Total ASSETS: Cash and investments available for operations (Note 3)294,051$           240,570$           534,621$             Receivables, net: Accounts and intergovernmental 15,985              29,251              45,236                 Interest receivable 1,363 1,053 2,416  Notes and loans receivable (Note 5)19,243              ‐ 19,243                 Internal balances (Note 4)(680)680 ‐ Net OPEB asset (Note 12)21,662              ‐ 21,662                 Due from other government agencies ‐3,900 3,900  Inventory of materials and supplies, prepaids and deposits 4,732 374 5,106  Restricted cash and investments with fiscal agents (Note 3)959 4,115 5,074  Capital assets (Note 6): Nondepreciable 145,481            98,943              244,424               Depreciable, net of accumulated depreciation 350,506            477,864            828,370               Total assets 853,302            856,750            1,710,052            DEFERRED OUTFLOWS OF RESOURCES: Unamortized loss from refunding ‐324 324 Pension related 21,181              9,414 30,595                 Total deferred outflows of resources 21,181              9,738 30,919                 LIABILITIES: Accounts payable and accruals 7,272 15,348              22,620                 Accrued salaries and benefits 4,346 1,986 6,332  Unearned revenue 1,895 ‐ 1,895  Accrued compensated absences (Note 1): Due in one year 4,936 ‐ 4,936  Due in more than one year 6,286 ‐ 6,286  Claims payable (Note 14): Due in one year 5,237 ‐ 5,237  Due in more than one year 18,142              ‐ 18,142                 Landfill post‐closure liability (Note 9): Due in more than one year ‐6,618 6,618  Net pension liabilities (Note 11):230,122            89,500              319,622               Long‐term debt (Note 7): Due in one year 2,224 4,198 6,422  Due in more than one year 69,295              63,915              133,210               Total liabilities 349,755            181,565            531,320               DEFERRED INFLOWS OF RESOURCES: Pension related 13,737              5,084 18,821                 NET POSITION (Note 10): Net Investment in capital assets 425,179            512,918            938,097               Restricted for: Transportation, infrastructure and other 42,547              ‐ 42,547                 Debt service 3,855 4,115 7,970  Nonexpendable ‐ Eyerly Family 1,505 ‐ 1,505  Total restricted net position 47,907              4,115 52,022                 Unrestricted 37,905              162,806            200,711               Total net position $           510,991 $           679,839  $        1,190,830  See accompanying notes to the basic financial statements. 29 30  This page is left intentionally blank.    CITY OF PALO ALTO Statement of Activities For the Year Ended June 30, 2016 (Amounts in thousands) Net (Expense) Revenue and Program Revenues Changes in Net Position Operating Capital Charges for Grants and Grants and Governmental Business‐Type Functions/Programs Expenses Services Contributions Contributions Activities Activities Total Governmental Activities: City Council 352$                   ‐$                   ‐$                   ‐$                   (352)$                  ‐$                   (352)$            City Manager 2,662                  ‐                     ‐                    ‐                    (2,662)                ‐                     (2,662)         City Attorney 2,472                  ‐                     ‐                    ‐                    (2,472)                ‐                     (2,472)         City Clerk 582                     ‐                     ‐                    ‐                    (582)                   ‐                     (582)             City Auditor 414                     ‐                     ‐                    ‐                    (414)                   ‐                     (414)             Administrative Services 10,637                9,444                 ‐                    344                   (849)                   ‐                     (849)             Human Resources 2,224                  ‐                     ‐                    ‐                    (2,224)                ‐                     (2,224)         Public Works 24,613                599                    733                   ‐                    (23,281)              ‐                     (23,281)       Planning and Community Environment 10,208                9,071                 605                   ‐                    (532)                   ‐                     (532)             Development Services 11,158                12,570               ‐                    ‐                    1,412                 ‐                     1,412           Public Safety 56,653                13,945               765                   ‐                    (41,943)              ‐                     (41,943)       Community Services 28,547                21,551               43                     ‐                    (6,953)                ‐                     (6,953)         Library 10,825                198                    18                     ‐                    (10,609)              ‐                     (10,609)       Interest on long‐term debt 3,552                  ‐                     ‐                    ‐                    (3,552)                ‐                     (3,552)         Total Governmental Activities 164,899              67,378               2,164                344                   (95,013)              ‐                     (95,013)       Business‐Type Activities: Water 35,120                37,588               637                   641                   ‐                     3,746                 3,746           Electric 120,319              120,743             ‐                    ‐                    ‐                     424                    424              Fiber Optics 2,107                  4,505                 ‐                    ‐                    ‐                     2,398                 2,398           Gas 20,879                30,212               ‐                    ‐                    ‐                     9,333                 9,333           Wastewater Collection 15,199                16,496               ‐                    288                   ‐                     1,585                 1,585           Wastewater Treatment 22,546                23,825               ‐                    ‐                    ‐                     1,279                 1,279           Refuse 30,370                32,169               12                     ‐                    ‐                     1,811                 1,811           Storm Drainage 3,735                  6,520                 ‐                    ‐                    ‐                     2,785                 2,785           Airport 970                     826                    95                     132                   ‐                     83                      83                Total Business‐Type Activities 251,245              272,884             744                   1,061                 ‐                     23,444                23,444         Total 416,144$            340,262$           2,908$               1,405$               (95,013)              23,444                (71,569)       General Revenues: Taxes: Property tax 41,189               ‐                     41,189         Sales tax 30,018               ‐                     30,018         Utility user tax 12,469               ‐                     12,469         Transient occupancy tax 22,366               ‐                     22,366         Documentary transfer tax 6,266                 ‐                     6,266           Other taxes 1,602                 ‐                     1,602           Investment earnings 8,639                 7,282                 15,921         Miscellaneous 894                    ‐                     894              Transfers (Note 4)18,705               (18,705)               ‐               Total general revenues and transfers              142,148 (11,423)               130,725      Change in net position 47,135               12,021                59,156         Net position, beginning of year 463,856             667,818              1,131,674   Net position, end of year 510,991$            679,839$            1,190,830$  See accompanying notes to the basic financial statements. 31 32  This page is left intentionally blank.    CITY OF PALO ALTO Governmental Funds Balance Sheet June 30, 2016 (Amounts in thousands) Capital Other Total General Projects Governmental Governmental Fund Fund Funds Funds ASSETS: Cash and investments available for operations (Note 3)53,113$          71,461$          89,433$           214,007$         Receivables, net: Accounts and intergovernmental 15,676           163                31                   15,870             Interest receivable 640                ‐                 382                 1,022               Notes and loans receivable (Note 5)513                ‐                 18,730            19,243             Advance to other fund (Note 4) 2,211              ‐                 ‐                  2,211               Inventory of materials and supplies 4,364             ‐                 ‐                  4,364               Restricted cash and investments with fiscal agents (Note 3)‐                 711                248                 959                  Total assets 76,517$          72,335$          108,824$         257,676$         LIABILITIES AND FUND BALANCES: Liabilities: Accounts payable and accruals 3,832$            1,809$            354$                5,995$             Accrued salaries and benefits 3,859             176                46                   4,081               Unearned revenue 1,895             ‐                 ‐                  1,895               Total liabilities 9,586             1,985             400                 11,971             Fund balances (Note 10): Nonspendable: Notes and loans receivable 513                ‐                 ‐                  513                  Inventories 4,364             ‐                 ‐                  4,364               Advance to other fund 2,211             ‐                 ‐                  2,211               Eyerly family ‐                 ‐                 1,505              1,505               Restricted for:  Transportation mitigation ‐                 ‐                 10,841            10,841             Federal revenue ‐                 ‐                 4,569              4,569               Street improvement ‐                 ‐                 1,308              1,308               Local law enforcement ‐                 ‐                 180                 180                  Library bond project ‐                 711                ‐                  711                  Public benefit ‐                 ‐                 25,649            25,649             Debt service ‐                 ‐                 3,855              3,855               Committed for: Roth Building Rehabilitation ‐                 3,953             ‐                  3,953               Cubberley Improvements ‐                 2,634             ‐                  2,634               Developer impact fees ‐                 ‐                 14,169            14,169             Housing in‐lieu ‐                 ‐                 41,251            41,251             Special districts ‐                 ‐                 3,704              3,704               Downtown business ‐                 ‐                 34                   34                    Assigned for: Unrealized gains on investments 2,066             ‐                 1,358              3,424               Capital projects ‐                 63,052           ‐                  63,052             Other general government purposes 6,195             ‐                 1                      6,196               Unassigned for: Budget Stabilization 51,582           ‐                 ‐                  51,582             Total fund balances 66,931           70,350           108,424          245,705           Total liabilities and fund balances 76,517$          72,335$          108,824$         257,676$         See accompanying notes to the basic financial statements. 33 CITY OF PALO ALTO Reconciliation of the Balance Sheet of Governmental Funds to  the Statement of Net Position ‐ Governmental Activities June 30, 2016 Total fund balances reported on the governmental funds balance sheet 245,705$      Amounts reported  for governmental activities in the statement of net position are different from those reported in the governmental funds balance sheet because of the following: Deferred outflows and inflows of resources in governmental activities are not  financial resources and, therefore, are not reported in the governmental funds. Deferred outflows of resources 21,181           Deferred inflows of resources (13,737)         Capital assets used in governmental activities are not current assets or financial  resources and therefore are not reported in the governmental funds (Note 6)495,987        Internal service funds are used by management to charge the costs of activities  such as insurance, equipment acquisition and maintenance, and certain  employee benefits to individual funds.  The assets and liabilities of the  internal service funds are therefore included in governmental activities in  the statement of net position (excludes capital assets, deferred outflows   of resources, deferred inflows of resources and net pension liabilities reported herein)64,766           Some liabilities, including bonds payable, are not due and payable in the  current period and therefore are not reported in the governmental funds: Interest payable (1,270) Net pension liabilities (Note 11)(230,122)       Long‐term debt (Note 7)(71,519)         Net position of governmental activities 510,991$      (Amounts in thousands) See accompanying notes to the basic financial statements. 34 CITY OF PALO ALTO Governmental Funds Statement of Revenues, Expenditures and Changes in Fund Balances For the Year Ended June 30, 2016 (Amounts in thousands) Capital Other General Projects Governmental Fund Fund Funds Total REVENUES: Property tax 36,607$          ‐$                4,582$             41,189$           Special assessments ‐                 ‐                 100                   100                  Sales tax 30,018           ‐                 ‐                   30,018            Utility user tax 12,469           ‐                 ‐                   12,469            Transient occupancy tax 22,366           ‐                 ‐                   22,366            Documentary transfer tax 6,266             ‐                 ‐                   6,266              Other taxes and fines 2,238             ‐                 1,570               3,808              Charges for services 23,910           ‐                 ‐                   23,910            From other agencies 3,190             861                 366                   4,417              Permits and licenses 7,912             ‐                 3,316               11,228            Investment earnings 2,494             1,102             2,898               6,494              Rental income 15,769           ‐                 6                      15,775            Other revenue 2,591             3,596             7,640               13,827            Total revenues 165,830         5,559             20,478             191,867          EXPENDITURES: Current: City Council 330                 ‐                 ‐                   330                  City Manager 2,567             ‐                 ‐                   2,567              City Attorney 2,212             ‐                 ‐                   2,212              City Clerk 488                 ‐                 ‐                   488                  City Auditor 313                 ‐                 ‐                   313                  Administrative Services 3,545             ‐                 203                   3,748              Human Resources 1,843             ‐                 ‐                   1,843              Public Works 12,315           ‐                 797                   13,112            Planning and Community Environment 9,059             ‐                 663                   9,722              Development Services 10,643           ‐                 ‐                   10,643            Police 35,247           ‐                 225                   35,472            Fire 28,312           ‐                 ‐                   28,312            Community Services 24,280           ‐                 1,231               25,511            Library 7,960             ‐                 ‐                   7,960              Non‐Departmental 5,680             1,790             598                   8,068              Capital outlay ‐                 24,457           ‐                   24,457            Debt service: Principal 395                 ‐                 6,735               7,130              Interest and fiscal charges 36                   ‐                 4,230               4,266              Total expenditures 145,225         26,247           14,682             186,154          EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES 20,605           (20,688)          5,796               5,713              OTHER FINANCING SOURCES (USES): Transfers in (Note 4)18,317           36,702           6,816               61,835            Transfers out (Note 4)(34,461)          (3,018)            (9,013)              (46,492)           Total other financing sources (uses) (16,144)          33,684           (2,197)              15,343            Change in fund balances 4,461             12,996           3,599               21,056            FUND BALANCES, BEGINNING OF YEAR 62,470           57,354           104,825           224,649          FUND BALANCES, END OF YEAR 66,931$          70,350$          108,424$         245,705$         See accompanying notes to the basic financial statements. 35 CITY OF PALO ALTO Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances  of Governmental Funds to the Statement of Activities ‐ Governmental Activities For the Year Ended June 30, 2016 Net change in fund balances ‐ total governmental funds 21,056$        Amounts reported for governmental activities in the statement of activities are different from those reported in the governmental funds because of the following: Governmental funds report capital outlays as expenditures. However, in the statement of activities, the costs of these assets are capitalized and allocated over their estimated useful lives and reported as depreciation expense.  Therefore, the activities associated with  capital assets are as follows: Capital outlay added back to fund balance for current year additions 24,694          Depreciation expense is deducted from fund balance (depreciation expense is net of  internal service fund depreciation of $2,525 (Note 6), which has already been allocated through the internal service fund activities below (14,539)        Disposal of capital assets (508)              Pension contribution made subsequent to the measurement date is an expenditure in the  governmental funds, but reported as a deferred outflows of resources in the  government‐wide financial statements 18,516          Pension expenses reported in the statement of activities do not require the use of current  financial resources and, therefore, are not reported as expenditures in governmental funds (15,320)        Principal payments on long‐term liabilities are reported as expenditures in governmental funds when paid.  The governmental activities, however, report principal payments as  a reduction of long‐term debt on the statement of net position.  Interest accrued on  long‐term debt and amortization of premiums do not require the use of current financial  resources and therefore are not reported as expenditures in governmental funds.  Therefore,  the activities associated with long‐term debt are as follows: Principal paid during the year 7,130            Change in interest payable 556               Amortization of bond premium 158               Internal service funds are used by management to charge the costs of activities, such  as insurance, equipment acquisition and maintenance, and employees benefits to  individual funds.  The portion of the net revenue of these internal service  funds arising out of their transactions with governmental funds is reported with  governmental activities.5,392            Change in net position of governmental activities 47,135$        (Amounts in thousands) See accompanying notes to the basic financial statements. 36 Variance with Budgeted Amounts Final Budget Actual, plus Positive Adopted Final Encumbrances (Negative) 27,630$      28,430$      30,018$       1,588$          35,067        35,967        36,607         640               18,791        21,991        22,366         375               Documentary transfer tax 6,852          7,052          6,266           (786)              11,189        10,489        12,469         1,980            2,180          2,180          2,238           58                 25,399        24,768        23,910         (858)              8,211          8,211          7,912           (299)              824             824             1,104           280               15,296        15,299        15,769         470               1,659          659             3,190           2,531            323             1,801          2,591           790               153,421     157,671     164,440      6,769            11,930        11,929        11,576         (353)              ‐              5,573          5,606           33                 165,351     175,173     181,622      6,449            3,101          3,719          3,186           533               1,175          1,261          1,159           102               1,328          1,373          1,058           315               455             502             451              51                 3,431          4,121          4,092           29                 7,635          7,957          7,615           342               24,804        26,517        25,262         1,255            Police 36,859        36,924        36,096         828               27,583        29,223        28,909         314               3,555          4,029          3,849           180               8,555          8,971          8,217           754               8,900          11,146        10,912         234               Development Services 11,901        12,281        10,872         1,409            15,017        15,828        15,084         744               8,662          6,955          6,234           721               162,961     170,807     162,996      7,811            2,390          4,366          18,626         14,260          18,589        19,141        18,317         (824)              (22,711)      (35,057)      (34,461)       596               (4,122)         (15,916)      (16,144)       (228)              (1,732)$       (11,550)$     2,482           14,032$       Unrealized gain/loss on investments 1,390            Current year encumbrances 6,195            Prior year encumbrances (5,606)           4,461            62,470          66,931$        REVENUES: CITY OF PALO ALTO General Fund Statement of Revenues, Expenditures and Changes in Fund Balance ‐ Budget and Actual For the Year Ended June 30, 2016 (Amounts in thousands) Charges to other funds Sales tax Property tax Transient occupancy tax Utility user tax Other taxes, fines and penalties Charges for services Permits and licenses Investment earnings Rental income From other agencies Other revenues Fire Prior year encumbrances Total revenues EXPENDITURES: Current: City Attorney City Auditor City Clerk City Council City Manager Administrative Services Community Services Total other financing sources (uses) Human Resources Library Planning and Community Environment Total expenditures EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES OTHER FINANCING SOURCES (USES):  Transfers in Transfers out Public Works Non‐Departmental FUND BALANCE AT BEGINNING OF YEAR, GAAP BASIS FUND BALANCE AT END OF YEAR, GAAP BASIS EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES, BUDGETARY BASIS Adjustment to Budgetary Basis: CHANGE IN FUND BALANCE, GAAP BASIS See accompanying notes to the basic financial statements. 37 Fiber Water Electric Optics Gas ASSETS: Current assets: Cash and investments available for operations (Note 3)35,832$          100,414$       25,069$          25,289$            Accounts receivable, net of allowance of $478 5,337             13,008           864                  2,105                Interest receivable 159                 462                 102                  105   Due from other government agencies ‐ ‐ ‐  ‐   Inventory of materials and supplies ‐ ‐ ‐  ‐   Restricted cash and investments with fiscal agents (Note 3)3,299             ‐ ‐  816   Total current assets 44,627           113,884         26,035           28,315              Noncurrent assets: Due from other government agencies ‐ ‐ ‐  ‐   Deposit ‐ 49 ‐  ‐   Prepaid expense 108                 ‐ ‐  ‐   Capital assets (Note 6): Nondepreciable 18,832           24,244           1,719             3,066                Depreciable, net 101,398         163,415         6,195             99,469              Net OPEB asset (Note 12)‐ ‐ ‐  ‐   Total noncurrent assets 120,338         187,708         7,914             102,535            Total assets 164,965         301,592         33,949           130,850            DEFERRED OUTFLOWS OF RESOURCES: Unamortized loss from refunding 129                 ‐ ‐  168  Pension related 1,218             3,173             201                  1,327                Total deferred outflows of resources 1,347             3,173             201                  1,495                LIABILITIES: Current liabilities: Accounts payable and accruals 5,082             4,242             418                  829  Accrued salaries and benefits 265                 696                 40 279  Accrued compensated absences (Note 1)‐ ‐ ‐  ‐   Current portion of long term debt (Note 7)1,510             100                 ‐  575  Accrued claims payable (Note 14)‐ ‐ ‐  ‐   Total current liabilities 6,857             5,038             458                  1,683                Noncurrent liabilities: Accrued compensated absences (Note 1)‐ ‐ ‐  ‐   Accrued claims payable (Note 14)‐ ‐ ‐  ‐   Advance from other fund (Note 4)‐ ‐ ‐  ‐   Landfill post‐closure liability (Note 9)‐ ‐ ‐  ‐   Net pension liabilities (Note 11)12,100           28,893           1,777             12,941              Long term debt, net of  unamortized discounts/premiums (Note 7)34,780           468                 ‐  6,682                Total noncurrent liabilities 46,880           29,361           1,777             19,623              Total liabilities 53,737           34,399           2,235             21,306              DEFERRED INFLOWS OF RESOURCES: Pension related 727                 1,564             85 752  Total deferred inflows of resources 727                 1,564             85 752  NET POSITION (Note 10): Net Investment in capital assets 84,069           187,091         7,914             95,446              Restricted for debt service 3,299              ‐ ‐  816  Unrestricted (deficit)24,480           81,711           23,916           14,025              Total net position 111,848$       268,802$       31,830$          110,287$         Some amounts reported for Business‐type Activities in the statement of net position are different because certain Internal Service Fund net positions are included with Business‐type Activities Net position reported in Business‐type Activities Business‐Type Activities‐Enterprise Funds CITY OF PALO ALTO Proprietary Funds Statement of Net Position June 30, 2016 (Amounts in thousands) See accompanying notes to the basic financial statements. 38 Governmental Activities ‐ Wastewater Wastewater Storm Internal Service Collection Treatment Refuse Drainage Airport Totals Funds 14,718$           13,757$           14,511$          10,562$          418$                240,570$       80,044$            1,922               2,021               3,273              674                 47                   29,251           115                   66                     57                     60                    41                   1                      1,053             341                   ‐                         300                   ‐                        ‐                       ‐                       300                 ‐                         ‐                         ‐                         ‐                        ‐                       ‐                       ‐                       368                   ‐                         ‐                         ‐                        ‐                       ‐                       4,115             ‐                         16,706             16,135             17,844            11,277           466                 275,289         80,868             ‐                         3,600               ‐                        ‐                       ‐                       3,600             ‐                         ‐                         ‐                         ‐                        ‐                       ‐                       49                   ‐                         ‐                         217                   ‐                        ‐                       ‐                       325                 ‐                         26,002             10,978             2,524              10,526           1,052             98,943           1,829               53,386             29,962             2,768              21,271           ‐                       477,864         14,637             ‐                         ‐                         ‐                        ‐                       ‐                       ‐                       21,662             79,388             44,757             5,292              31,797           1,052             580,781         38,128             96,094             60,892             23,136            43,074           1,518             856,070         118,996           ‐                         ‐                         ‐                        27                   ‐                       324                 ‐                         723                   1,930               429                  309                 104                 9,414             1,440               723                   1,930               429                  336                 104                 9,738             1,440               938                   654                   2,759              264                 162                 15,348           7                        149                   385                   87                    58                   27                   1,986             265                   ‐                          ‐                          ‐                         ‐                        ‐                        ‐                       4,936               85                     1,318                ‐                        610                 ‐                       4,198             ‐                         ‐                         ‐                         ‐                        ‐                       ‐                       ‐                       5,237               1,172               2,357               2,846              932                 189                 21,532           10,445             ‐                         ‐                         ‐                        ‐                       ‐                       ‐                       6,286               ‐                         ‐                         ‐                        ‐                       ‐                       ‐                       18,142             ‐                         ‐                         ‐                        ‐                       2,211             2,211             ‐                         ‐                         ‐                         6,618              ‐                       ‐                       6,618             ‐                         7,255               18,042             4,987              3,050             455                 89,500           12,675             734                   15,895             ‐                        5,356             ‐                       63,915           ‐                         7,989               33,937             11,605            8,406             2,666             162,244         37,103             9,161               36,294             14,451            9,338             2,855             183,776         47,548             418                   1,013               334                  182                 9                      5,084             725                   418                   1,013               334                  182                 9                      5,084             725                   78,569             27,627             5,292              25,858           1,052             512,918         16,466             ‐                         ‐                         ‐                        ‐                       ‐                       4,115             ‐                         8,669               (2,112)              3,488              8,032             (2,294)            159,915         55,697             87,238$           25,515$           8,780$            33,890$          (1,242)$           676,948         72,163$            2,891              679,839$        Business‐Type Activities‐Enterprise Funds See accompanying notes to the basic financial statements. 39 Fiber Water Electric Optics Gas OPERATING REVENUES: Sales to:  Customers 33,967$     104,458$    3,532$       27,555$      City departments 1,602        3,127         855            1,110         Service connection charges and miscellaneous 903            2,756         86               961             Charges for services ‐                 ‐                   ‐                  ‐                  Other 1,116        10,402       32               586             Total operating revenues 37,588      120,743     4,505         30,212       OPERATING EXPENSES: Retail purchase of utilities 17,626      73,440       ‐                  8,127         Administrative and general 4,813        6,395         363            3,329         Engineering (operating)409            1,592         ‐                  426             Resource management and energy efficiency 594            5,765         ‐                  1,037         Operations and maintenance 5,440        11,524       1,360         4,153         Rent 1,677        4,991         71               568             Depreciation and amortization 2,719        7,607         328            2,795         Claims payments and changes in estimated self‐insurance liability ‐                 ‐                   ‐                  ‐                  Refund of charges for services ‐                 ‐                   ‐                  ‐                  Compensated absences and other benefits ‐                 ‐                   ‐                  ‐                  Total operating expenses 33,278      111,314     2,122         20,435       Operating income (loss)4,310        9,429         2,383         9,777         NONOPERATING REVENUES (EXPENSES): Investment earnings 1,144        3,126         726            712             Interest expense (1,822)       (8,889)        ‐                  (249)           Gain on disposal of capital assets ‐                 ‐                   ‐                  ‐                  Loss on disposal of capital assets (70)             (74)              ‐                  (187)           Other nonoperating revenues 637            ‐                   ‐                  ‐                  Total nonoperating revenues (expenses)(111)          (5,837)        726            276             Income (loss) before transfers and capital contributions 4,199        3,592         3,109         10,053       Capital contributions 641            ‐                   ‐                  ‐                  Transfers in (Note 4)222            259             ‐                  ‐                  Transfers out (Note 4)(364)          (12,110)      (121)           (6,670)        Change in net position 4,698        (8,259)        2,988         3,383         NET POSITION (DEFICIT), BEGINNING OF YEAR 107,150    277,061     28,842       106,904     NET POSITION (DEFICIT), END OF YEAR 111,848$   268,802$    31,830$     110,287$    Some amounts reported for Business‐type Activities in the statement of activities are different because certain  Internal Service Fund activities are included with Business‐type Activities Change in net position reported in Business‐type Activities Business‐Type Activities‐Enterprise Funds CITY OF PALO ALTO Proprietary Funds Statement of Revenues, Expenses and Changes in Fund Net Position For the Year Ended June 30, 2016 (Amounts in thousands) See accompanying notes to the basic financial statements. 40 Governmental Activities‐ Wastewater Wastewater Storm Internal Service Collection Treatment Refuse Drainage Airport Totals Funds 15,572$     14,759$      27,763$     5,961$      459$         234,026$    ‐$  76               8,818          787           364          ‐                16,739       ‐  506            ‐ ‐‐                ‐                5,212         ‐  ‐ ‐ ‐‐                ‐                ‐85,810            342            248              3,619        195          367          16,907       37  16,496       23,825        32,169       6,520       826          272,884     85,847            8,770         ‐ 16,251       ‐                ‐                124,214     ‐  1,205         ‐ 1,794        669          705          19,273       12,743            347            2,056          208           407          ‐                5,445         ‐  ‐ ‐ ‐290          ‐                7,686         ‐  2,635         16,962        8,962        1,212       231          52,479       25,287            293            ‐ 2,452        39             ‐                10,091       ‐  1,933         2,958          77              743          ‐                19,160       2,525              ‐ ‐ ‐‐                ‐                ‐3,132              ‐ ‐ ‐‐                ‐                ‐54  ‐ ‐ ‐‐                ‐                ‐42,538            15,183       21,976        29,744       3,360       936          238,348     86,279            1,313         1,849          2,425        3,160       (110)         34,536       (432)                475            370              426           293          10             7,282         2,156              (47)             (497)            (565)          (373)         (38)           (12,480)      ‐  ‐ ‐ ‐‐                ‐                ‐185                  (5)               ‐ ‐‐                ‐                (336)           ‐  ‐ ‐ 12              ‐                95             744             40  423            (127)            (127)          (80)           67             (4,790)        2,381              1,736         1,722          2,298        3,080       (43)           29,746       1,949              288            ‐ ‐‐                132          1,061         ‐  ‐ ‐ 356           234          ‐                1,071         5,888              (396)           (12)               (97)            (6)             ‐                (19,776)      (2,526)             1,628         1,710          2,557        3,308       89             12,102       5,311              85,610       23,805        6,223        30,582     (1,331)      66,852                                  87,238$     25,515$      8,780$      33,890$    (1,242)$    72,163$          (81)               12,021$       Business‐Type Activities‐Enterprise Funds See accompanying notes to the basic financial statements. 41 Fiber Water Electric Optics Gas Cash flows from operating activities: Cash received from customers 34,553$     107,967$   3,991$        28,734$      Cash refunds to customers ‐              ‐             ‐               ‐               Cash payments to suppliers for goods and services (23,779)     (99,593)     (1,408)         (14,864)       Cash payments to employees (5,100)       (6,921)       (384)             (3,560)         Internal activity‐ receipts (payments) from (to) other funds 1,602         3,127         855              1,110           Other receipts 1,116         10,402      32                586              Net cash provided by operating activities 8,392         14,982      3,086           12,006        Cash flows from noncapital financing activities: Receipt of loans from other funds ‐             ‐             ‐               ‐               Operating grants and contributions 111            ‐             ‐               ‐               Interest subsidy received from Build America Bonds 526            ‐             ‐               ‐               Transfers in 222            259            ‐               ‐               Transfers out (364)           (12,110)     (121)             (6,670)         Net cash flows provided by  (used in) noncapital financing activities 495            (11,851)     (121)             (6,670)         Cash flows from capital and related financing activities: Acquisition and construction of capital assets (9,085)       (14,127)     (634)             (3,298)         Proceeds from sale of capital assets ‐             ‐             ‐               ‐               Capital grants and contributions 641            ‐             ‐               ‐               Principal paid on long‐term debt (1,457)       (100)           ‐               (553)             Interest paid on long‐term debt (1,822)       (8,888)       ‐               (248)             Net cash flows used in capital and related financing activities (11,723)     (23,115)     (634)             (4,099)         Cash flows from investing activities: Interest received 1,146         3,211         715              719              Net cash flows provided by investing activities 1,146         3,211         715              719              Net change in cash and cash equivalents (1,690)       (16,773)     3,046           1,956           Cash and cash equivalents, beginning of year 40,821      117,187    22,023        24,149        Cash and cash equivalents, end of year $      39,131 $    100,414  $      25,069  $      26,105  Financial statement presentation: Cash and investments available for operations 35,832$     100,414$   25,069$      25,289$      Restricted cash and investments with fiscal agent 3,299         ‐             ‐               816              Cash and cash equivalents, end of year 39,131$     100,414$   25,069$      26,105$      Reconciliation of operating income (loss) to  net cash provided by operating activities: Operating income (loss)4,310$       9,429$       2,383$        9,777$        Adjustments to reconcile operating income (loss) to  net cash provided by operating activities: Depreciation and amortization 2,719         7,607         328              2,795           Other ‐             ‐             ‐               ‐               Change in assets and liabilities: Accounts receivable (317)           753            373              218              Inventory of materials and supplies ‐             ‐             ‐               ‐               Deposit 9                 65              ‐               ‐               Net OPEB asset ‐             ‐             ‐               ‐               Deferred outflow of resources ‐ pension plans (171)           (459)           (20)               (176)             Accounts payable and accruals 1,958         (2,346)       23                (553)             Accrued salaries and benefits (9)               102            5                   47                Accrued compensated absences ‐             ‐             ‐               ‐               Unearned revenue ‐             ‐             ‐               ‐               Accrued claims payable ‐             ‐             ‐               ‐               Net Pension liabilitty 1,076         2,789         185              1,183           Deferred inflow of resources ‐ pension plans (1,183)       (2,958)       (191)             (1,285)         Net cash provided by operating activities $        8,392 $      14,982  $        3,086  $      12,006  Business‐Type Activities‐Enterprise Funds CITY OF PALO ALTO Proprietary Funds Statement of Cash Flows For the Year Ended June 30, 2016 (Amounts in thousands) See accompanying notes to the basic financial statements. 42 Governmental Activities‐ Wastewater Wastewater Storm Internal Service Collection Treatment Refuse Drainage Airport Totals Funds 16,522$      15,719$      27,823$     5,883$       838$           242,030$   86,230$                ‐                ‐               ‐             ‐             ‐             ‐             (54)                         (11,621)       (18,988)       (27,152)     (1,935)       (163)           (199,503)   (25,986)                 (1,256)         (332)             (1,881)       (732)           (737)           (20,903)     (54,853)                 76                8,818           787            364            ‐             16,739      (3,589)                   342              248              3,971         195            462            17,354      40                           4,063          5,465           3,548         3,775         400            55,717      1,788                     ‐               ‐               ‐             ‐             516            516            ‐                         ‐               ‐               ‐             ‐             ‐             111            ‐                         ‐               ‐               ‐             ‐             ‐             526            ‐                         ‐               ‐               356            234            ‐             1,071         5,888                     (396)             (12)               (97)             (6)               ‐             (19,776)     (2,526)                   (396)             (12)               259            228            516            (17,552)     3,362                     (5,305)         (3,020)         (2,139)       (1,086)       (670)           (39,364)     (3,713)                   ‐               ‐               ‐             ‐             ‐             ‐             221                        288              300              12              ‐             132            1,373         ‐                         (82)               (1,283)         ‐             (575)           ‐             (4,050)       ‐                         (44)               (496)             (565)           (372)           (38)             (12,473)     ‐                         (5,143)         (4,499)         (2,692)       (2,033)       (576)           (54,514)     (3,492)                   474              373              418            287            9                 7,352         2,133                     474              373              418            287            9                 7,352         2,133                     (1,002)         1,327           1,533         2,257         349            (8,997)       3,791                                  15,720        12,430        12,978      8,305         69              253,682    76,253                    $      14,718  $      13,757 $      14,511 $      10,562 $            418 $    244,685  $               80,044  14,718$      13,757$      14,511$     10,562$     418$           240,570$   80,044$                ‐               ‐               ‐             ‐             ‐             4,115         ‐                         14,718$      13,757$      14,511$     10,562$     418$           244,685$   80,044$                1,313$        1,849$        2,425$       3,160$       (110)$         34,536$     (432)$                     1,933          2,958           77              743            ‐             19,160      2,525                     ‐               ‐               ‐             ‐             95              95              40                           444              960              60              (12)             379            2,858         665                        ‐               ‐               ‐             ‐             ‐             ‐             2                             ‐               16                ‐             ‐             ‐             90              ‐                         ‐               ‐               ‐             ‐             ‐             ‐             1,209                     (73)               (280)             (40)             (43)             (42)             (1,304)       (298)                       424              14                1,073         13              68              674            (1,634)                   77                72                14              6                 5                 319            77                           ‐               ‐               ‐             ‐             ‐             ‐             466                        ‐               ‐               ‐             (66)             ‐             (66)             ‐                         ‐               ‐               ‐             ‐             ‐             ‐             (739)                       668              1,695           400            273            64              8,333         1,174                     (723)             (1,819)         (461)           (299)           (59)             (8,978)       (1,267)                    $        4,063  $        5,465 $        3,548 $        3,775 $            400 $      55,717  $                 1,788  Business‐Type Activities‐Enterprise Funds See accompanying notes to the basic financial statements. 43 Agency Funds ASSETS: Cash and investments available for operations (Note 3)2,647$          Restricted cash and investments with fiscal agents (Note 3)2,550            Account receivable 505                Interest receivable 12 Total assets 5,714$          LIABILITIES: Due to bondholders 4,565$          Due to other governments 1,149            Total liabilities 5,714$          CITY OF PALO ALTO Statement of Fiduciary Net Position June 30, 2016 (Amounts in thousands) See accompanying notes to the basic financial statements. 44 CITY OF PALO ALTO  Index to the Notes to the Basic Financial Statements   For the Year Ended June 30, 2016    45   Page  1.Summary of Significant Accounting Policies ........................................................................... 47 2.Budgets and Budgetary Accounting ........................................................................................ 56 3.Cash and Investments ............................................................................................................. 56 4.Interfund Transactions ............................................................................................................ 62 5.Notes and Loans Receivable .................................................................................................... 64 6.Capital Assets .......................................................................................................................... 70 7.General Long‐Term Obligations .............................................................................................. 75 8.Special Assessment Debt ......................................................................................................... 81 9.Landfill Post‐Closure Maintenance ......................................................................................... 81 10.Net Position and Fund Balances .............................................................................................. 82 11.Pension Plans ........................................................................................................................... 85 12.Retiree Health Benefits ........................................................................................................... 92 13.Deferred Compensation Plan .................................................................................................. 95 14.Risk Management .................................................................................................................... 96 15.Joint Ventures .......................................................................................................................... 97 16.Commitments and Contingencies ......................................................................................... 100 Notes are essential to present fairly the information contained in the overview level of the basic financial  statements.  Narrative explanations are intended to communicate information that is not readily apparent  or cannot be included in the statements themselves, and to provide additional disclosures as required by  the Governmental Accounting Standards Board.    46   This page is left intentionally blank.  CITY OF PALO ALTO  Notes to the Basic Financial Statements  For the Year Ended June 30, 2016    47   NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES  The City of Palo Alto (the City) was incorporated in 1894 and operates as a charter city, having had its first  charter granted by the State of California in 1909.  The City operates under the Council‐Manager form of  government and provides the following services: public safety (police and fire), public works, electric, fiber  optics, water, gas, wastewater, storm drain, refuse, airport, golf course, planning and zoning, general  administration services, library, open space and science, recreational and human services.  (a) Reporting Entity  The City is governed by a nine‐member council, elected by City residents.  The City is legally  separate and fiscally independent, which means it can issue debt, set and modify budgets and  fees, and sue or be sued.  The accompanying basic financial statements present the financial  activities of the City, which is the primary government presented, along with the financial  activities of its component unit, which is an entity for which the City is financially accountable.   Although a separate legal entity, a blended component unit is, in substance, part of the City’s  operations and is reported as an integral part of the City’s financial statements.  The City’s  component unit described below is blended.  The Palo Alto Public Improvement Corporation (the Corporation) provides financing of public  capital improvements for the City through the issuance of Certificates of Participation (COPs), a  form of debt that allows investors to participate in a stream of future lease payments.  Proceeds  from the COPs are used to construct projects that are leased to the City.  The lease payments are  sufficient in timing and amount to meet the debt service requirements of the COPs.  The Board of  Directors of the Corporation is composed of the same members as the City Council. The  Corporation is controlled by the City, which performs all accounting and administrative functions  for the Corporation.  The financial activities of the Corporation are included in the Downtown  Parking Improvement Debt Service Fund.  Financial statements for the Corporation may be obtained from the City of Palo Alto,  Administrative Services Department, 4th Floor, 250 Hamilton Avenue, Palo Alto, CA  94301.  (b) Basis of Presentation   The City’s basic financial statements are prepared in conformity with accounting principles  generally accepted in the United States of America.  The Governmental Accounting Standards  Board (GASB) is the acknowledged standard setting body for establishing accounting and financial  reporting standards followed by governmental entities in the United States.  These standards require that the financial statements described below be presented:  Government‐wide Statements: The Statement of Net Position and the Statement of Activities  display information about the primary government and its component unit.  These statements  include the financial activities of the overall City government, except for fiduciary activities.   Eliminations have been made to minimize the double counting of internal activities.  However,  interfund goods and services transactions have not been eliminated in the consolidation process.   These statements distinguish between the governmental and business‐type activities of the City. CITY OF PALO ALTO  Notes to the Basic Financial Statements  For the Year Ended June 30, 2016    48   NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)  (b) Basis of Presentation (Continued)  Governmental activities generally are financed through taxes, intergovernmental revenues, and  other non‐exchange transactions.  Business‐type activities are financed in whole or in part by fees  charged to external parties.  The Statement of Activities presents a comparison between direct expenses and program  revenues for each segment of the business‐type activities of the City and for each function of the  City’s governmental activities.  Direct expenses are those that are specifically associated with a  program or function and, therefore, are clearly identifiable to a particular function.  Program  revenues include: (a) charges paid by the recipients for goods and services offered by the  programs, (b) grants and contributions that are restricted to meeting the operational needs of a  particular program, and (c) fees, grants and contributions that are restricted to financing the  acquisition or construction of capital assets.  Revenues that are not classified as program  revenues, including all taxes, are presented as general revenues.  Fund Financial Statements: The fund financial statements provide information about the City’s  funds, including fiduciary funds and its blended component unit.  Separate statements for each  fund category – governmental, proprietary and fiduciary – are presented.  The emphasis of fund  financial statements is on major individual governmental and enterprise funds, each of which is  displayed in a separate column.  All remaining governmental and internal service funds are  aggregated and reported as non‐major funds.  Proprietary fund operating revenues, such as utilities sales and charges for services, result from  exchange transactions associated with the principal activity of the fund.  Exchange transactions  are those in which each party receives and gives up essentially equal values.  Nonoperating  revenues, such as subsidies and investment earnings, result from non‐exchange transactions or  ancillary activities.  Operating expenses for enterprise funds and internal service funds include the cost of sales and  services, administrative expenses, and depreciation on capital assets.  All expenses not meeting  this definition are reported as nonoperating expenses.  (c) Major Funds and Other Funds  The City’s major governmental and enterprise funds need to be identified and presented  separately in the fund financial statements.  All other funds, called non‐major funds, are combined  and reported in a single column, regardless of their fund type.  Major funds are defined as funds that have assets and deferred outflows of resources, liabilities  and deferred inflows of resources, revenues or expenditures/expenses equal to at least 10  percent of their fund type total and at least 5 percent of the grand total.  The General Fund is  always a major fund.  The City may also select other funds it believes should be presented as major  funds on a qualitative basis.  CITY OF PALO ALTO  Notes to the Basic Financial Statements  For the Year Ended June 30, 2016    49   NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)  (c) Major Funds and Other Funds (Continued)  The City reported the following major governmental funds in the accompanying financial  statements:  General Fund – This is the City’s primary operating fund.  It accounts for all financial resources of  the general government, except those required to be accounted for in another fund.  Capital Projects Fund – This fund accounts for resources used for the acquisition and construction  of capital facilities by the City, with the exception of those assets financed by proprietary funds.  The City reported the following enterprise funds as major funds in the accompanying financial  statements:  Water Services Fund – This fund accounts for all financial transactions relating to the City’s water  service.  Services are on a user‐charge basis to residents and business owners located in the City.  Electric Services Fund – This fund accounts for all financial transactions relating to the City’s  electric service.  Services are on a user‐charge basis to residents and business owners located in  the City.  Fiber Optics Fund – This fund accounts for all financial transactions relating to the City’s fiber  optics service.  Services are on a user‐charge basis to licensees located in the City.  Gas Services Fund – This fund accounts for all financial transactions relating to the City’s gas  service.  Services are on a user‐charge basis to residents and business owners located in the City.  Wastewater Collection Services Fund – This fund accounts for all financial transactions relating  to the City’s wastewater collection service.  Services are on a user‐charge basis to residents and  business owners located in the City.  Wastewater Treatment Services Fund – This fund accounts for all financial transactions relating  to the City’s wastewater treatment.  Services are on a user‐charge basis to residents and business  owners located in the City.  Refuse Services Fund – This fund accounts for all financial transactions relating to the City’s refuse  service.  Services are on a user‐charge basis to residents and business owners located in the City.  Storm Drainage Services Fund – This fund accounts for all financial transactions relating to the  City’s storm drainage service.  Services are on a user‐charge basis to residents and business  owners located in the City.  CITY OF PALO ALTO  Notes to the Basic Financial Statements  For the Year Ended June 30, 2016    50   NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)    (c) Major Funds and Other Funds (Continued)    The City also reports the following funds:    Airport Fund – This non‐major enterprise fund accounts for all financial transactions relating to  the Palo Alto Airport (PAO).  The City assumed control over operation of PAO from the County of  Santa Clara, effective August 11, 2014.    Internal Service Funds – These funds account for fleet replacement and maintenance, technology,  central duplicating, printing and mailing services, administration of compensated absences and  health benefits, and the City’s self‐insured workers’ compensation and general liability programs,  all of which are provided to other departments on a cost‐reimbursement basis.  Also included is  the Retiree Health Benefits Internal Service Fund, which accounts for benefits to retirees.    Vehicle Replacement and Maintenance – This fund accounts for the maintenance and  replacement of vehicles and equipment used by all City departments.  The source of revenue is  from reimbursement of fleet replacement and maintenance costs allocated to each department  by usage of vehicle.    Technology – This fund accounts for replacement and upgrade of technology, and covers four  primary areas used by all City departments: desktop, infrastructure, applications, and technology  research and development.  The source of revenue is from reimbursement of costs for support  provided to other departments.    Printing and Mailing Services – This fund accounts for central duplicating, printing and mailing  services provided to all City departments.  The source of revenue for this fund is from  reimbursement of costs for services and supplies purchased by other departments.    General Benefits – This fund accounts for the administration of compensated absences and health  benefits.    Workers’ Compensation Insurance Program – This fund accounts for the administration of the  City’s self‐insured workers’ compensation program.    General Liability Insurance Program – This fund accounts for the administration of the City’s self‐ insured general liability program.    Retiree Health Benefits – This fund accounts for retiree health benefits.    Fiduciary Funds – These funds account for assets held by the City, an agent for assessment  districts, and members of the Cable Joint Powers Authority.  These funds are custodial in nature  and do not involve measurement of results of operations.  The City maintains three agency funds.   The financial activities of these funds are excluded from the government‐wide financial  statements, but are presented in separate fiduciary fund financial statements.  Agency funds  apply the accrual basis of accounting but do not have a measurement focus.    CITY OF PALO ALTO  Notes to the Basic Financial Statements  For the Year Ended June 30, 2016    51   NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)    (c) Major Funds and Other Funds (Continued)  California Avenue Parking Assessment District – This fund accounts for the receipts and  disbursements associated with the 1993 Parking District No. 92‐13 Assessment Bonds.    Cable Joint Powers Authority – This fund accounts for the activities of the cable television system  on behalf of the members.    University Avenue Area Off‐Street Parking Assessment District – This fund accounts for the  receipts and disbursements associated with the 2012 Limited Obligation Refunding Improvement  Bonds.     (d) Basis of Accounting    The government‐wide and proprietary fund financial statements are reported using the economic  resources measurement focus and the full accrual basis of accounting.  Revenues are recorded  when earned and expenses are recorded at the time liabilities are incurred, regardless of when  the related cash flows take place.    Governmental funds are reported using the current financial resources measurement focus and  the modified accrual basis of accounting.  Under this method, revenues are recognized when  measurable and available.  The City considers revenues susceptible to accrual reported in the  governmental funds to be available if the revenues are collected within ninety days after year‐ end, except for property taxes, which are available if collected within sixty days after year‐end.    Expenditures are recorded when the related fund liability is incurred, except for principal and  interest on general long‐term debt, claims and judgments, and compensated absences, which are  recognized as expenditures to the extent they have matured.  General capital asset acquisitions  are reported as expenditures in governmental funds.  Proceeds of general long‐term debt and  acquisitions under capital leases are reported as other financing sources.      Revenues susceptible to accrual include taxes, intergovernmental revenues, interest and charges  for services.    Grant revenues are recognized in the fiscal year in which all eligibility requirements are met.   Under the terms of grant agreements, the City may fund certain programs with a combination of  cost‐reimbursement grants, categorical block grants, and general revenues.  Thus, both restricted  and unrestricted net position may be available to finance program expenditures.  The City’s policy  is to first apply restricted grant resources to such programs, followed by general revenues if  necessary.    Certain indirect costs are included in program expenses reported for individual functions and  activities.  Transactions representing the exchange of interfund goods and services have also been  included.     CITY OF PALO ALTO  Notes to the Basic Financial Statements  For the Year Ended June 30, 2016    52   NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)  (e)  Cash and Cash Equivalents  Restricted and unrestricted pooled cash and investments held in the City Treasury, and other  unrestricted investments invested by the City Treasurer, are considered cash equivalents for  purposes of the statement of cash flows because the City’s cash management pool and funds  invested by the City Treasurer possess the characteristics of demand deposit accounts. Other  restricted and unrestricted investments with maturities of less than three months at the time of  purchase are considered cash equivalents for purposes of the statement of cash flows.  (f)  Investments  The City’s investments are carried at fair value, and its fair value measurements are categorized  within the fair value hierarchy established by generally accepted accounting principles.  (g)  Inventory of Materials and Supplies  Materials and supplies are held for consumption and are valued at average cost.  The consumption  method is used to account for inventories.  Under the consumption method, inventories are  recorded as expenditures at the time inventory items are used, rather than purchased.    (h) Prepaid items  Prepaid items are recorded at cost.  Using the consumption method, prepaid items are recorded  as expenditures over the period that service is provided.  (i) Compensated Absences   The liability for compensated absences includes the vested portion of vacation, sick leave, and  overtime compensation pay.  The City’s liability for accrued compensated absences is recorded in  the General Benefits Internal Service Fund.  The fund is reimbursed through payroll charges to all  other funds.  Earned but unpaid vacation and overtime compensation pay are recognized as an  expense or expenditure in the proprietary and governmental fund types when earned because  the City has provided financial resources for the full amount through its budgetary process.   Vested accumulated sick pay is paid in the event of termination due to disability and, under certain  conditions, is specified in employment agreements.  During the fiscal year ended June 30, 2016, changes to the compensated absences liabilities were  as follows (in thousands):  Beginning balance 10,756$       Additions 6,133            Payments (5,667)          Ending balance 11,222$       Current portion 4,936$         CITY OF PALO ALTO  Notes to the Basic Financial Statements  For the Year Ended June 30, 2016    53   NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)     (j) Property Tax    Santa Clara County (the County) assesses properties and bills, collects, and distributes property  taxes to the City.  The County remits the entire amount levied and handles all delinquencies,  retaining interest and penalties.    The County assesses property values, levies bills and collects taxes as follows:    Secured Unsecured Lien Dates January 01 January 01 Levy Dates October 01 July 01 Due Dates 50% on November 01 Upon receipt of billing 50% on February 01 Delinquent after December 10 (for November)August 31 April 10 (for February)    The term “unsecured” refers to taxes on personal property other than real estate, land and  buildings.  These taxes are secured by liens on the property being taxed.  Property tax revenues  are recognized by the City in the fiscal year they are assessed, provided they become available as  defined previously within sixty days after year‐end.    (k) Deferred Outflows of Resources and Deferred Inflows of Resources  A deferred outflow of resources is the consumption of net position that is applicable to a future  reporting period. A deferred inflow of resources is defined as an acquisition of net position  applicable to a future reporting period.     (l) Pensions    For purposes of measuring the net pension liability and deferred outflows/inflows of resources  related to pensions and pension expense, information about the fiduciary net position of the City’s  California Public Employees’ Retirement System (CalPERS) Plans and additions to/deductions from  the Plans’ fiduciary net position have been determined on the same basis as they are reported by  CalPERS. For this purpose, benefit payments (including refunds of employee contributions) are  recognized when due and payable in accordance with the benefit terms. Investments are reported  at fair value.   (m) Rounding    All amounts included in the basic financial statements and footnotes are presented to the nearest  thousand.     CITY OF PALO ALTO  Notes to the Basic Financial Statements  For the Year Ended June 30, 2016    54   NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)  (n) Effects of New Pronouncements     As of July 1, 2015, the City implemented the following GASB Statements:    In February 2015 GASB issued Statement No. 72, Fair Value Measurement and Application. This  Statement provides guidance for determining fair value measurement for financial reporting  purposes and for applying fair value to certain investments, and requires disclosures to be made  about fair value measurements, the level of fair value hierarchy, and valuation techniques. It also  requires additional disclosures regarding investments in certain entities that calculate net asset  value per share (or its equivalent). See Note 3 for more information.     In June 2015 GASB issued Statement No. 73, Accounting and Financial Reporting for Pensions and  Related Assets that are not within the Scope of GASB Statement No. 68 and amendments to certain  provisions of GASB Statements No. 67 and 68. This Statement establishes requirements for  defined benefit pensions that are not within the scope of Statement No. 68 as well as for the  assets accumulated for purposes of providing those pensions. It amends certain provisions of  Statement No. 68 for pension plans and pensions that are within its scope. The Statement also  clarifies the application of certain provisions of Statement No. 68. This Statement is effective for  the City’s fiscal year ending June 30, 2016, except for those provisions that address employers  and government nonemployer contribution entities for pensions that are not within the scope of  Statement No. 68, which are effective for the City’s fiscal year ending June 30, 2017. The  Statement did not have a significant impact on the City’s financial statements.    GASB issued Statement No. 76, The Hierarchy of Generally Accepted Accounting Principles for  State and Local Governments, which supersedes Statement No. 55. This statement is effective for  the City’s fiscal year ending June 30, 2016. The Statement did not have a significant impact on the  City’s financial statements.    In December 2015, the GASB issued Statement No. 79, Certain External Investment Pools and Pool  Participants. The statement addresses accounting and financial reporting for certain external  investment pools and pool participants. This statement is effective for the City’s fiscal year ending  June 30, 2016. The Statement did not have a significant impact on the City’s financial statements.    The City is currently analyzing its accounting practices to determine the potential impact on the  financial statements for the following GASB Statements:    In June 2015, GASB issued Statement No. 74, Financial Reporting for Postemployment Benefit  Plans Other Than Pension Plans. This statement addresses reporting by OPEB plans that  administer benefits on behalf of governments. This statement is effective for the City’s fiscal year  ending June 30, 2017.        CITY OF PALO ALTO  Notes to the Basic Financial Statements  For the Year Ended June 30, 2016    55   NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)  (n) Effects of New Pronouncements (Continued)     In June 2015, GASB issued Statement No. 75, Accounting and Financial Reporting for  Postemployment Benefits Other Than Pensions. This statement addresses reporting by  governments that provide OPEB to their employees and for governments that finance OPEB for  employees of other governments. This statement is effective for the City’s fiscal year ending  June 30, 2018.    In August 2015 GASB issued Statement No. 77, Tax Abatement Disclosures. The Statement defines  tax abatement agreements and requires certain disclosures regarding the tax abatement in its  financial statements. This statement is effective for the City’s fiscal year ending June 30, 2017.    In December 2015, the GASB issued Statement No. 78, Pensions Provided through Certain  Multiple‐Employer Defined Benefit Pension Plans. The objective of this statement is to address a  practice issue regarding the scope and applicability of Statement No. 68 associated with pensions  provided through certain cost‐sharing multiple‐employer defined benefit pension plans and to  state or local governmental employers whose employees are provided with such pensions.  Such  plans are not considered a state or local government pension plan and are used to provide  benefits to both employees of state and local governments and employees of employers that are  not state or local governments. This statement is effective for the City’s fiscal year ending  June 30, 2017.    In January 2016, the GASB issued Statement No. 80, Blending Requirements for Certain  Component Units—an amendment of GASB Statement No. 14. The objective of this statement is  to improve financial reporting by clarifying the financial statement presentation requirements for  certain component units. This statement amends the blending requirements established in GASB  Statement No. 14, The Financial Reporting Entity, as amended. This statement is effective for the  City’s fiscal year ending June 30, 2017.    In March 2016, the GASB issued Statement No. 81, Irrevocable Split‐Interest Agreements. The  statement provides recognition and measurement guidance for situations in which a government  is a beneficiary of these agreements. This statement is effective for the City’s fiscal year ending  June 30, 2018.    In March 2016, the GASB issued Statement No. 82, Pension Issues – An Amendment of GASB  Statements No. 67, No. 68 and No. 73. The Statement addresses issues raised with respect to  GASB Statements No. 67, 68 and 73, regarding: (1) the presentation of payroll‐related measures  in required supplementary information; (2) the selection of assumptions and the treatment of  deviations from the guidance in an Actuarial Standard of Practice for financial reporting purposes;  and (3) the classification of payments made by employers to satisfy employee (plan member)  contribution requirements. This is effective for the City’s fiscal year ending June 30, 2017, except  for the requirements for selection of assumptions which will be effective during the City’s fiscal  year ending June 30, 2018.     CITY OF PALO ALTO  Notes to the Basic Financial Statements  For the Year Ended June 30, 2016    56   NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)   (o)  Use of Estimates  The accompanying basic financial statements have been prepared on the modified accrual and  accrual basis of accounting in accordance with generally accepted accounting principles.  This  requires management to make estimates and assumptions that affect the amounts reported in  the financial statements and accompanying notes. Actual results could differ from those  estimates.  NOTE 2 – BUDGETS AND BUDGETARY ACCOUNTING   1.The City Manager submits proposed operating and capital budgets to the City Council for the fiscal year commencing the following July 1.  The operating budget includes proposed expenditures and the means of financing them. 2.Public hearings are conducted to obtain comments on the proposed budgets. 3.The Budget is approved with the adoption of a budget ordinance for all funds except Agency Funds. 4.Per the Palo Alto Municipal Code, only the City Manager is authorized to reallocate funds from contingency accounts maintained in the General Fund.  Additional appropriations to departments in the General Fund, or to total appropriations for all other budgeted funds, or transfers of appropriations between funds, require approval by the City Council.  Amendments to budgeted revenue and expenditures are added to or subtracted from the Adopted Budget and the resulting totals are reflected as Final Budget amounts. 5.As defined in the Palo Alto Municipal Code, expenditures may not exceed budgeted appropriations at the department level for the General Fund, and at the fund level for Enterprise, Special Revenue and Debt Service Funds. 6.Budgets for governmental funds are adopted on a basis consistent with generally accepted accounting principles (GAAP), except that unrealized gains or losses are not recognized as investment earnings on a budgetary basis and encumbrances are treated as budgetary expenditures when incurred. 7.Expenditures for the Capital Projects Fund are budgeted and maintained at a project level for the life of the project.  Budget to actual comparisons for these expenditures have been excluded from the accompanying financial statements. NOTE 3 – CASH AND INVESTMENTS  The City pools cash from all sources and all funds, except restricted bond proceeds with fiscal agents, and  invests its pooled idle cash according to State of California law and the City’s Investment Policy.  The basic  principles underlying the City’s investment philosophy are to ensure the safety of public funds, ensure  that sufficient funds are available to meet current expenditures, and achieve a reasonable rate of return  on investments.  CITY OF PALO ALTO  Notes to the Basic Financial Statements  For the Year Ended June 30, 2016    57   NOTE 3 – CASH AND INVESTMENTS (Continued)    Policies  The City invests in individual investments and in investment pools.  Individual investments are evidenced  by specific identifiable securities instruments, or by an electronic entry registering the owner in the  records of the institution issuing the security, called the book entry system.  In order to increase security,  the City employs the trust department of a bank as the custodian of certain City managed investments.    Classification  Cash and investments are classified in the financial statements as shown below, based on whether or not  their use is restricted under the terms of City debt instruments or agency agreements (in thousands):    Governmental Business‐Type Fiduciary Activities Activities Funds Total Cash and investments: Available for operations 294,051$         240,570$         2,647$              537,268$          Held with fiscal agents 959                    4,115                2,550                7,624                 Total cash and investments 295,010$         244,685$         5,197$              544,892$              Investments Authorized by the City’s Investment Policy and Debt Agreements  The table below identifies the investment types that are authorized by the California Government Code  (Code) and the City’s Investment Policy.  The table also identifies certain provisions of the City’s  Investment Policy that address interest rate risk, credit risk and concentration of credit risk.  The table  addresses investment of debt proceeds held by bond trustees that are governed by the provisions of debt  agreements of the City, rather than the general provisions of the City’s Investment Policy.    The City must maintain required amounts of cash and investments with trustees under the terms of  certain debt issues.  These funds are unexpended bond proceeds or are pledged as reserves to be used if  the City fails to meet its obligations under these debt issues.  The Code requires these funds to be invested  in accordance with City ordinance, bond indentures or state statute.  All of these funds have been invested  as permitted under the Code and the investment policy approved by the City Council.       CITY OF PALO ALTO  Notes to the Basic Financial Statements  For the Year Ended June 30, 2016    58   NOTE 3 – CASH AND INVESTMENTS (Continued)    Maximum  Maturity  Minimum  Credit Quality  Maximum  Percentage  of Portfolio Maximum  Investment in  One Issuer U.S. Government Securities 10 years (*) N/A No Limit No Limit U.S. Federal Agency Securities (C) 10 years (*) N/A No Limit (A) No Limit Certificates of Deposit 10 years (*) N/A 20% 10% of the par  value of  portfolio Bankers Acceptances 180 days (D) N/A (D) 30% $5 million Commercial Paper 270 days A‐1 15% $3 million (B) Local Agency Investment Fund N/A N/A No Limit $50 million per  account Short‐Term Repurchase Agreements 1 year N/A No Limit No Limit City of Palo Alto Bonds N/A N/A No Limit No Limit Money Market Mutual Funds N/A N/A (E) No Limit No Limit Mutual Funds (F) N/A N/A 20% 10% Negotiable Certificates of Deposit 10 years (*) N/A 10% $5 million Medium‐Term Corporate Notes 5 years AA 10% $5 million 10 years (*) AA/AA2 10% No Limit (A) (B) The lesser of $3 million or 10% of outstanding commercial paper of any one institution. Debt Agreements: (C)  (D) (E) (F) (*)The maximum maturity is based on the Investment Policy that is approved by the City Council and is less  restrictive than the California Government Code.  Utility Revenue Bonds 2011 Refunding, General Obligation Bonds 2010 and 2013A, and University Avenue Parking  Bond 2012 are allowed to invest in the California Asset Management Program. Authorized Investment Type Bonds of State of California  Municipal Agencies Callable and multi‐step securities are limited to no more than 25% of the par value of the portfolio, provided that:  1) the potential call dates are known at the time of purchase, 2) the interest rates at which they "step‐up" are  known at the time of purchase, 3) the entire face value of the security is redeemable at the call date. Utility Revenue Bonds 2011 Refunding and 1999 Refunding allow general obligations of states with a minimum  credit quality rating of A2/A by Moody's and Standard & Poor's. Utility Revenue Bonds 2011 Refunding and 1999 Refunding require a minimum credit quality rating of A‐1/P‐1 by  Moody's and Standard & Poor's and maturing after no more than 360 days.  Utility Revenue Bonds 1995 Series A  limit the maximum maturity to 365 days. Water Revenue Bonds 2009 Series A, Utility Revenue Bonds 2011 Refunding and 1999 Refunding require a  minimum credit quality rating of AAAm or AAAm‐G by Standard & Poor's.      CITY OF PALO ALTO  Notes to the Basic Financial Statements  For the Year Ended June 30, 2016    59   NOTE 3 – CASH AND INVESTMENTS (Continued)  Fair Value Measurements  The City categorizes its fair value measurements within the fair value hierarchy established by generally  accepted accounting principles.  The hierarchy is based on the valuation inputs used to measure fair value  of the assets.  Level 1 inputs are quoted prices in an active market for identical assets; Level 2 inputs are  significant other observable inputs; and Level 3 inputs are significant unobservable inputs.  All of the  investments are measured using level 2 inputs, except for investments in money market mutual funds,  California Asset Management Program and Local Agency Investment Fund, which are not subject to the  fair value hierarchy.   Investment securities classified in Level 2 of the fair value hierarchy are valued using prices determined  by the use of matrix pricing techniques maintained by the pricing vendors for these securities.  Matrix  pricing is used to value securities based on the securities relationship to benchmark quoted prices.  The following is a summary of the fair value measurements of the City as of June 30, 2016:  Type of Investment June 30, 2016 Level 2 Investments by fair value hierarchy U.S. Federal Agency Securities 382,730$    382,730$      U.S. Treasury Notes 11,607       11,607         Local Government Bonds 32,408      32,408         Negotiable Certificates of Deposit 34,273      34,273         Corporate Bonds 15,571      15,571         Total investments by fair value hierarchy 476,589     476,589$      Investment not subject to fair value hierarchy Money Market Mutual Funds 6,754         California Asset Management Program 3,247         Local Agency Investment Fund 57,487       Total investments not subject to fair value hierarchy 67,488        Total investments measured at fair value 544,077$      Local Agency Investment Fund  The City is a participant in the Local Agency Investment Fund (LAIF) that is regulated by California  Government Code Section 16429 under the oversight of the Treasurer of the State of California.  LAIF  management calculates the fair value and cost of the entire LAIF pool.  The City adjusts its cost basis  invested in LAIF to fair value based on this ratio.  The fair value of the City’s position in the pool is the  same as the value of the pool share. The balance available for withdrawal on demand is based on  accounting records maintained by LAIF, which are recorded on an amortized cost basis.  At June 30, 2016,  LAIF had a weighted average maturity of 167 days.  CITY OF PALO ALTO  Notes to the Basic Financial Statements  For the Year Ended June 30, 2016    60   NOTE 3 – CASH AND INVESTMENTS (Continued)  California Asset Management Program  The City is a voluntary participant in the California Asset Management Program (CAMP).  CAMP is an  investment pool offered by the California Asset Management Trust (the Trust).  The Trust is a joint powers  authority and public agency created by the Declaration of Trust and established under the provisions of  the California Joint Exercise of Powers Act (California Government Code Sections 6500 et seq., or the  “Act”) for the purpose of exercising the common power of its participants to invest certain proceeds of  debt issues and surplus funds.  The City’s investments are limited to investments permitted by  subdivisions (a) to (n), inclusive, of Section 53601 of the California Government Code.  The City reports its  investments in CAMP at the fair value amounts provided by CAMP, which is the same as the value of the  pool share.  At June 30, 2016, the fair value approximated the City’s cost. CAMP had a weighted average  maturity of 45 days at June 30, 2016.  Fidelity Institutional Asset Management  Money market mutual funds are available for withdrawal on demand and at June 30, 2016, had a weighted  average maturity of 34 days.  Interest Rate Risk  Interest rate risk is the risk that changes in market interest rates may adversely affect the fair value of an  investment.  Normally, the longer the maturity of an investment, the greater the sensitivity its fair value  is to changes in market interest rates.  Type of Investment Less Than  One Year  One to  Three Years  Three to  Five Years Over  Five Years Total U.S. Federal Agency Securities 66,280$       116,905$    77,049$       122,496$    382,730$      U.S. Treasury Notes ‐  8,589     3,018  ‐  11,607     Local Government Bonds ‐ 263   9,025 23,120 32,408     Corporate Bonds ‐ 2,915    12,656     ‐ 15,571     Money Market Mutual Funds 6,754   ‐   ‐     ‐ 6,754       Negotiable Certificates of Deposit 246 9,751    15,262     9,014   34,273     California Asset Management Program 3,247   ‐   ‐     ‐ 3,247       Local Agency Investment Fund 57,487 ‐   ‐     ‐ 57,487     Total Investments 134,014$     138,423$     117,010$     154,630$     544,077        Cash in bank and on hand 815     Total Cash and Investments 544,892$      Maturities CITY OF PALO ALTO  Notes to the Basic Financial Statements  For the Year Ended June 30, 2016    61   NOTE 3 – CASH AND INVESTMENTS (Continued)  Investment with Fair Values Highly Sensitive to Interest Rate Fluctuations  At June 30, 2016, the City’s investments (including investments held by bond trustees) include U.S. Federal  Agency Callable Securities in the amount of $107.4 million that are highly sensitive to interest rate  fluctuations (to a greater degree than already indicated in the information provided in the previous page).   These securities are subject to early redemption at par in a period of declining interest rates.    Credit Risk  Credit risk is the risk that an issuer of an investment will not fulfill its obligation to the holder of the  investment.  This is measured by the assignment of a rating by a nationally recognized statistical rating  organization.  Presented below is the actual rating as provided by Standard & Poor’s investment rating  system as of June 30, 2016, for each investment type (in thousands):  Type of Investment Rating Total U.S. Federal Agency Securities AA+ 382,730$          Corporate Bonds AAA 15,571      Local Government Bonds AAA 32,408      Money Market Mutual Funds AAAm 6,754     Total Investments 437,463   Not Applicable:  U.S. Treasury Notes 11,607      Not Rated: California Asset Management Program 3,247     Local Agency Investment Fund 57,487      Negotiable Certificates of Deposit 34,273      Cash in bank and on hand 815     Total Cash and Investments 544,892$          Concentration of Credit Risk  Investments in any one issuer, other than U.S. Treasury securities, mutual funds, and external investment  pools, that represent 5 percent or more of total City portfolio investments are as follows at June 30, 2016  (in thousands):   Investments Reporting Type  Fair Value at Year‐End  Federal Home Loan Bank U.S. Federal Agency Securities 120,065$       Federal Agricultural Mortgage Corporation U.S. Federal Agency Securities 104,357   Federal National Mortgage Corporation U.S. Federal Agency Securities 44,843     Federal Farm Credit Bank U.S. Federal Agency Securities 72,407     Federal Home Loan Mortgage Corporation U.S. Federal Agency Securities 27,354     CITY OF PALO ALTO  Notes to the Basic Financial Statements  For the Year Ended June 30, 2016    62   NOTE 3 – CASH AND INVESTMENTS (Continued)  Custodial Credit Risk  California law requires banks and savings and loan institutions to pledge government securities with a  market value of 110 percent of the City’s cash on deposit or first trust deed mortgage notes with a value  of 150 percent of the deposit as collateral for these deposits.  Under California Law, this collateral is  considered held in the City’s name and places the City ahead of general creditors of the institution.  The  City has waived collateral requirements for the portion of deposits covered by federal deposit insurance.  The custodial credit risk for investments is the risk that, in the event of the failure of the counterparty to  a transaction, the City will not be able to recover the value of its investment or collateral securities that  are in the possession of another party.  The City’s Investment Policy limits its exposure to custodial credit  risk by requiring that all security transactions entered into by the City be conducted on a delivery‐versus‐ payment basis.  Securities are to be held by a third‐party custodian.  NOTE 4 – INTERFUND TRANSACTIONS   Transfers Between Funds  With Council approval, resources may be transferred from one City fund to another.  The purpose of the  majority of transfers is to subsidize a fund.  Less often, a transfer may be made to open or close a fund.   Transfers between City funds during FY 2016 were as follows (in thousands):   Fund Making Transfer Amount  Transferred General Fund Nonmajor Governmental Funds 422$                  A Electric Services Fund 11,659               A Gas Services Fund 6,194                 A Internal Service Funds 42 A Capital Projects Fund General Fund 30,367               B Nonmajor Governmental Funds 5,674                 B Water Services Fund 113       B Electric Services Fund 273       B Fiber Optics Fund 17 B Gas Services Fund 101       B Wastewater Collection Fund 58 B Refuse Services Fund 69 B Internal Service Funds 30 B Nonmajor Governmental Funds General Fund 946       A Capital Projects Fund 3,018                 F Nonmajor Governmental Funds 2,816                 A Water Services Fund 5            A Electric Services Fund 12                       A Fiber Optics Fund 1            A Gas Services Fund 4            A Wastewater Collection Fund 2            A Internal Service Funds 12                       A Subtotal 61,835   Fund Receiving Transfer CITY OF PALO ALTO  Notes to the Basic Financial Statements  For the Year Ended June 30, 2016    63   NOTE 4 – INTERFUND TRANSACTIONS (Continued)  Fund Making Transfer Amount  Transferred Water Services Fund Gas Services Fund 111$     B Wastewater Collection Fund 111    B Electric Services Fund General Fund 33   D Fiber Optics Fund 102    D Internal Service Funds 124    C Refuse Services Fund General Fund 40   D Nonmajor Governmental Funds 101    D Internal Service Funds 215    C Storm Drainage Services Fund General Fund 234    C Internal Service Funds General Fund 2,841   E Water Services Fund 247    B Electric Services Fund 166    B Fiber Optics Fund 1   B Gas Services Fund 260    B Wastewater Collection Fund 224    B Wastewater Treatment Fund 12   B Refuse Services Fund 28   B Storm Drainage Services Fund 6   B Internal Service Funds 2,103   E Subtotal 6,959    Total 68,794$       The reasons for these transfers are set forth below: (A) Transfer to fund governmental funds for services provided. (B) Allocation of funds to construct, purchase or maintain capital assets. (C) Transfer to refund replacement charges. (D) Transfer to fund Utility funds for services provided. (E) Transfer to fund Internal Service funds for services provided. (F) Transfer remaining bond proceeds to debt service. Fund Receiving Transfer Long‐Term Interfund Advance  On December 6, 2010, the City Council accepted an Airport Business Plan of the Palo Alto Airport (PAO)  and approved creation of the Airport Enterprise Fund to facilitate the transition of PAO control from  County of Santa Clara to the City. Council approved the following General Fund advances to the Airport  Fund:  $ 610,000 Due June 2019  325,000 Due July 2023  760,000 Due July 2024  516,000 Due July 2025  All advances bear interest equal to the average return yield on the City’s investment portfolio.  As of  June 30, 2016, the total outstanding principal amount is $2.2 million.   CITY OF PALO ALTO  Notes to the Basic Financial Statements  For the Year Ended June 30, 2016    64   NOTE 4 – INTERFUND TRANSACTIONS (Continued)    Internal Balances  Internal balances represent the net interfund receivables and payables remaining after the elimination of  all such balances within governmental and business‐type activities.        NOTE 5 – NOTES AND LOANS RECEIVABLE     At June 30, 2016, the City’s notes and loans receivable totaled (in thousands):    Palo Alto Housing Corporation: Oak Manor Townhouse 68$                   Tree House Apartments 5,343              Emerson Street Project 375                  Alma Single Room Occupancy Development 2,222              Barker Hotel 2,111              Sheridan Apartments 2,222              Oak Court Apartments, L.P. 7,834              Mid‐Peninsula Housing Coalition: Palo Alto Gardens Apartments 100                  Community Working Group, Inc.1,280              Opportunity Center Associates, L.P.750                  Home Rehabilitation Loans 52                    Executive Relocation Assistance Loans 513                  Below Market Rate Assessment Loans 54                    Oak Manor Townhouse Water System 114                  Lytton Gardens Assisted Living 101                  Emergency Housing Consortium 75                    Alma Gardens Apartments 1,150              2811‐2825 Alma Street Acquisition 1,890              Palo Alto Family Housing, 801 Alma Street 6,422              Palo Alto Senior Housing Project ‐ Stevenson House, LLC 1,000              Colorado Park Housing Corporation 204                  Total Notes and Loans 33,880            Less: Valuation Allowance (14,637)          Total Notes and Loans, Net 19,243$            Housing Loans  The City engages in programs designed to encourage construction or improvement in low‐to‐moderate  income housing or other projects.  Under these programs, grants or loans are provided under favorable  terms to homeowners or developers who agree to spend these funds in accordance with the City’s terms.   These loans have been offset by restricted or committed fund balances, as they are not expected to be  repaid immediately.      CITY OF PALO ALTO  Notes to the Basic Financial Statements  For the Year Ended June 30, 2016    65   NOTE 5 – NOTES AND LOANS RECEIVABLE (Continued)    Some of these loans contain forgiveness clauses that provide for the amount loaned to be forgiven if the  third party maintains compliance with the terms of the loan and associated regulatory agreements.  Since  some of these loans are secured by trust deeds that are subordinated to other debt on the associated  projects or are only repayable from residual cash receipts on the projects, collectability of some of the  outstanding balances may not be realized.  As a result of the forgiveness clauses and nature of these  housing projects and associated cash flows, a portion of the outstanding balances of the loans has been  offset by a valuation allowance.    Oak Manor Townhouse  On January 7, 1991, the City loaned $2.1 million to Palo Alto Housing Corporation Apartments, Inc. to  assist in the acquisition of an apartment complex to be used to provide rental housing for low and very  low income households.  This loan bears interest at 3 percent, is due in annual installments until 2017 and  is collateralized by a subordinated deed of trust.  Under the terms of the loan agreement, annual loan  payments are forgiven if the Corporation meets the objective of this project.  During the year ended  June 30, 2016, the objective was met and the annual loan payment was forgiven.     Tree House Apartments  In March 2009, the City agreed to loan $2.8 million to Tree House Apartments, L.P. (THA) for the purchase  of the real property located at 488 West Charleston Road. The loan accrues simple interest at the rate of  3 percent per annum. The loan was funded with $1.8 million of Community Development Block Grant  (CDBG) funds and $1.0 million of residential housing funds. An additional development loan in the amount  of $2.5 million was approved by the City on October 18, 2010.  As of June 30, 2016, the outstanding  balance for THA in aggregate is $5.3 million. Principal and interest payments will be deferred, however if  the borrower has earned extra income, and if it is acceptable to the other entities providing final  permanent sources of funds, payment of interest and principal based on the City’s proportionate share of  the project’s residual receipts from net operating income shall be made by the borrower.  In no event  shall full payment be made by the borrower later than concurrently with the expiration or earlier  termination of the loan agreement, which is December 31, 2067.    Emerson Street Project  On November 8, 1994, the City loaned $375,000 to Palo Alto Housing Corporation (PAHC) for expenses  necessary to acquire an apartment complex for the preservation of rental housing for low and very low  income households in the City.  This loan is collateralized by a second deed of trust.  The loan bears interest  at 3 percent.    Alma Single Room Occupancy Development  On December 13, 1996, the City loaned $2.2 million to Alma Place Associates, L.P. for development of a  107‐unit single room occupancy development.  This loan bears interest at 3 percent and is collateralized  by a subordinated deed of trust.  The principal balance is due in 2041.         CITY OF PALO ALTO  Notes to the Basic Financial Statements  For the Year Ended June 30, 2016    66   NOTE 5 – NOTES AND LOANS RECEIVABLE (Continued)    Barker Hotel  On April 12, 1994, the City loaned a total of $2.1 million for the preservation, rehabilitation and expansion  of a low‐income, single occupancy hotel.  This loan was funded by three sources: $400,000 from the  Housing In‐Lieu Fund, $1 million from HOME Investment Partnership Program Funds, and $670,000 from  CDBG funds.  All three notes bear no interest and are collateralized by a deed of trust, which is  subordinated to private financing.  Loan repayments are deferred until 2035.    In July 2004, the City agreed to loan up to $41,000 to PAHC to rehabilitate the interior of the Barker Hotel.   The loan was funded with CDBG funds and is collateralized by a deed of trust on the property.  Annual  loan payments are deferred until certain criteria defined in the loan agreement are reached.  The loan will  be forgiven if the borrower satisfactorily complies with all terms and conditions of the loan agreement.    Sheridan Apartments  On December 8, 1998, the City loaned $2.5 million to PAHC for the purchase and rehabilitation of a 57‐ unit apartment complex to be used for senior and low‐income housing.  The loan was funded with $1.6  million in CDBG funds, and $825,000 of Housing In‐Lieu funds.  The note bears interest at 9 percent when  available surplus cash from the project equals or exceeds 25 percent of interest calculated using 9 percent.   When available surplus cash falls below this level, the note bears interest at 3 percent.  The note is  collateralized by a second deed of trust and an affordability reserve account held by PAHC. As of June 30,  2016, principal payments totaling $228,000 have been made, and interest has also been paid.  The  remaining principal balance is due in 2033.    Oak Court Apartments, L.P.  On August 18, 2003, in connection with the loan to Oak Court Apartments, L.P. discussed in the next  section, the City loaned $5.9 million to PAHC for the purchase of land on which Oak Court Apartments,  L.P. constructed a 53‐unit rental apartment complex for low and very low income households with  children.  The note bears interest of 5 percent and is secured by a deed of trust.  Note payments are due  annually after 55 years, or beginning in 2058, unless PAHC elects to extend the note until 2102, as defined  in the regulatory agreement.    On August 18, 2003, the City loaned $1.9 million to Oak Court Apartments, L.P. for the construction of a  53‐unit rental apartment complex for low and very low‐income households with children, which was  completed in April 2005.  The note bears no interest until certain criteria defined in the note are satisfied,  at which time the note will bear an interest rate not to exceed 3 percent.  The note is secured by a  subordinate deed of trust.  The principal balance is due in 2060.    Palo Alto Gardens Apartments  On April 22, 1999, the City loaned $1 million to Mid‐Peninsula Housing Coalition (the Coalition) for the  purchase and rehabilitation of a 155‐unit complex for the continuation of low‐income housing.  The loan  was funded with $659,000 of CDBG funds and $341,000 of Housing In‐Lieu funds. The two notes bear  interest at 3 percent and are secured by second deeds of trust and a City Affordability Reserve Account  held by the Coalition. Principal and interest payments began in FY 2008.  The principal balance of $100,000  is due in 2039.   CITY OF PALO ALTO  Notes to the Basic Financial Statements  For the Year Ended June 30, 2016    67   NOTE 5 – NOTES AND LOANS RECEIVABLE (Continued)    Community Working Group, Inc.  On May 13, 2002, the City loaned $1.3 million to Community Working Group, Inc. for predevelopment,  relocation and acquisition of land for development of an 89‐unit complex and homeless service center for  very low income households.  The loan was funded with $1.3 million of CDBG funds.  The note bears no  interest and is secured by a first deed of trust.  No repayment of the $1.3 million will be required, provided  that compliance with the City’s agreement is maintained.  After 89 years of compliance with the regulatory  agreement, the City’s loan would convert to a grant and its deed of trust would be re‐conveyed.    Opportunity Center Associates, L.P.  On July 19, 2004, the City loaned $750,000 for a 55‐year term to Opportunity Center Associates, L.P. for  construction of 89 units of rental housing for extremely low‐income and very low‐income households.   The loan was funded with $750,000 of residential housing funds.  The note bears 3 percent interest and  is secured by a deed of trust. The loan remains outstanding and becomes due at the end of the 55‐year  term.     Home Rehabilitation Loans  The City administers a closed housing rehabilitation loan program initially funded with CDBG funds.  Under  this program, individuals with incomes below a certain level are eligible to receive low interest loans for  rehabilitation work on their homes.  These loans are secured by deeds of trust, which may be subordinated  to subsequent encumbrances upon said real property with the prior written consent of the City.  The loan  repayments may be amortized over the life of the loans, deferred, or a combination of both.     Executive Relocation Assistance Loans  The City Council may authorize a mortgage loan as part of a relocation assistance package to executive  staff.  The loans are secured by first deeds of trust, and interest is adjusted annually based on the rate of  return of invested funds of the City for the year ended June 30 plus one‐quarter of 1 percent.  Principal  and interest payments are due bi‐weekly.  Employees must pay any outstanding balance on their loans  within a certain period after ending employment with the City.  As of June 30, 2016, the City had one  outstanding home loan from the current City Manager.      The original purchase cost for the current City Manager’s home was $1.9 million and the City holds a 75  percent equity share.  The loan balance owed as of June 30, 2016 is $403,000.  During FY 2011, the Council  authorized a capital improvement loan of $125,000.  Loans for capital improvements are made on a dollar  for dollar matching basis, with an equal equity contribution made by the City Manager.  The loan balance  owed as of June 30, 2016 was $110,000.    Below Market Rate Assessment Loans  In December 2002, the City loaned $53,000 to below market rate homeowners with low incomes and/or  very limited assets for capital repairs, special assessments and improvements of their properties.  The  loans bear interest at 3 percent and are secured by a deed of trust on each property.  Loan payments are  deferred until 2032.  In 2016, the City did not receive interest payments.       CITY OF PALO ALTO  Notes to the Basic Financial Statements  For the Year Ended June 30, 2016    68   NOTE 5 – NOTES AND LOANS RECEIVABLE (Continued)  Oak Manor Townhouse Water System  On May 12, 2003, the City Council approved an allocation of $114,000 to Palo Alto Housing Corporation  Apartments, Inc (PAHCA, Inc) to replace the water pipes. Repayment of the loan will not be required unless  the property is sold, the program is terminated or purpose of the program is changed without City’s  approval prior to July 1, 2033. The loan for this project is subordinated to the existing City loan with  PAHCA, Inc dated January 7, 1991 for the acquisition of the project site, which is discussed earlier in this  section.   Lytton Gardens Assisted Living  In June 2005, the City loaned $101,000 to Community Housing, Inc. to upgrade and modernize the existing  kitchens at the senior residential facility known as Lytton Gardens Assisted Living.  The loan was funded  with CDBG funds, and bears simple interest of 3 percent.  Principal and interest payments are deferred  until July 1, 2035, as long as the borrower continues to comply with all terms and conditions of the  agreement.  Emergency Housing Consortium  In November 2005, the City agreed to loan up to $75,000 to Emergency Housing Consortium to cover  architectural expenses that will be incurred in rehabilitating and expanding the property.  The loan was  funded with CDBG funds, and bears simple interest of 3 percent.  Principal and interest payments are  deferred until July 1, 2035, as long as the borrower continues to comply with all terms and conditions of  the agreement.  Alma Garden Apartments  In March 2006, the City agreed to loan up to $1.2 million to Community Working Group, Inc. to acquire a  10‐unit multi‐family housing complex known as Alma Garden Apartments.  The loan was funded with  CDBG funds.  Principal and interest payments are deferred until July 1, 2061 as long as the borrower  complies with all terms and conditions of the agreement.  2811‐2825 Alma Street Acquisition  On October 9, 2011, the City agreed to loan $1.3 million to PAHC Properties Corporation (PAHC) to acquire  properties on Alma Street for the purpose of developing an affordable rental housing project.  On June  29, 2015, the City loaned PAHC an additional $0.6 million, and entered into an Amended and Restated  Acquisition and Development Agreement which combined the two loans for a total loan of $1.9 million.  The loan term expires on December 8, 2066 with an option to extend the term for an additional 44 years.  The loan bears simple interest of 3 percent, however in the event of default interest will accrue at the  lesser of 8 percent or the highest rate permitted by law. Principal and interest payments are payable  during the term of the agreement on a “residual receipt” basis as described in the agreement. All principal  and interest is due in the event of an unauthorized transfer, a default or the expiration of the term. As of  June 30, 2016, the outstanding balance was $1.9 million.  CITY OF PALO ALTO  Notes to the Basic Financial Statements  For the Year Ended June 30, 2016    69   NOTE 5 – NOTES AND LOANS RECEIVABLE (Continued)  Palo Alto Family Housing, 801 Alma Street  On February 14, 2011, the City agreed to loan Palo Alto Family, LP up to $9.3 million for the purposes of  predevelopment expenses and acquiring certain real property for the Alma Street Affordable Multi‐Family  Rental Housing Project. The loan bears simple interest of 3 percent. Principal and interest are due and  payable during the term of the agreement on a “residual receipt” basis as described in the agreement.  Except in the case of default, all remaining principal and interest shall be payable on the Restriction  Termination Date as defined in the agreement. As of June 30, 2016, the outstanding amount is $6.4  million.  Palo Alto Senior Housing Project  On October 1, 2015, the City entered into an affordable housing fund loan agreement with PASHPI  Stevenson House LP, a California limited partnership, in the principal amount of $1 million to assist in the  rehabilitation of the Stevenson House. The loan bears simple interest of 3 percent. The loan remains  outstanding and is due at the end of the 55‐year term.  Colorado Park Housing Corporation  On September 8, 2014, the City entered into an affordable housing fund loan agreement with Colorado  Park Housing Corporation (CPHC), a California nonprofit public benefit corporation, in the principal  amount of $204,000. The loan bears no interest except in the event of default. The principal and any  accrued interest is due and payable on the earlier of (a) expiration of the term, or (b) a default by CPHC  which has not been cured as provided for in the agreement.  CITY OF PALO ALTO  Notes to the Basic Financial Statements  For the Year Ended June 30, 2016    70   NOTE 6 – CAPITAL ASSETS  Valuation  Capital assets are valued at historical cost or estimated historical cost if actual historical cost is not  available.  Contributed capital assets are valued at their estimated fair value on the date contributed.  The  City’s policy is to capitalize all assets when costs are equal to or exceed $5,000 and the useful life exceeds  one year.  Infrastructure assets are capitalized when costs are equal to or exceed $100,000.  Proprietary fund capital assets are recorded at cost including significant interest costs incurred under  restricted tax‐exempt borrowings, which finance the construction of capital assets.  These interest costs,  net of interest earned on investment of proceeds of such borrowings, are capitalized and added to the  cost of capital assets during the construction period.  Maintenance and repairs are expensed as incurred.  The City has recorded all its public domain capital assets, consisting of roadway and recreation and open  space, in its government‐wide financial statements.  GASB Statement No. 34 requires that all capital assets  with limited useful lives be depreciated over their estimated useful lives.  Alternatively, the “modified  approach” may be used for certain capital assets.  Depreciation is not provided under this approach, but  all expenditures on these assets are expensed unless they are additions or improvements.  The City has  elected to use the depreciation method for its capital assets.  The purpose of depreciation is to spread the  cost of capital assets equitably among all users over the life of those assets.  The amount charged to  depreciation expense each year represents that year’s pro rata share of the cost of capital assets.  Depreciation of capital assets is charged as an expense against operations each year and the total amount  of depreciation taken over the years, called accumulated depreciation, is reported on the statement of  net position as a reduction in the book value of capital assets.  Depreciation is calculated using the straight line method, which means the cost of the asset is divided by  its expected useful life in years, and the result is charged to expense each year until the asset is fully  depreciated.  The City has assigned the useful lives listed below to capital assets.  Governmental Activities Years Buildings and structures 20 ‐ 30 Equipment: Computer equipment 3 ‐ 5 Office machinery and equipment 5 Machinery and equipment 5 ‐ 30 Intangible assets ‐ software 5‐20 Roadway network: 5 ‐ 40 Recreation and open space network: 25 ‐ 40 Business‐type Activities Buildings and structures 25 ‐ 60 Vehicles and heavy equipment 3 ‐ 10 Machinery and equipment 10 ‐ 50 Transmission, distribution and treatment systems 10 ‐ 100 Includes pavement, striping and legends, curbs, gutters and sidewalks, parking lots,  traffic signage, and bridges Includes major park facilities, park trails, bike paths and medians CITY OF PALO ALTO  Notes to the Basic Financial Statements  For the Year Ended June 30, 2016    71   NOTE 6 – CAPITAL ASSETS (Continued)    General Capital Assets  Changes in the City’s general capital assets during the year ended June 30, 2016 were (in thousands):     Balance Balance July 1, 2015 Additions Retirements Transfers June 30, 2016 Governmental activities Nondepreciable capital assets: Land and improvements 79,047$          ‐$                      (566)$              ‐$                     78,481$               Street trees 15,077             ‐                        ‐                       ‐                       15,077                 Intangible assets ‐ Easement 3,567               ‐                        ‐                       ‐                       3,567                   Construction in progress 39,333             24,361             (349)                (16,818)           46,527                 Total nondepreciable capital assets 137,024          24,361             (915)                (16,818)           143,652               Depreciable capital assets: Buildings and structures 221,696          25                     (1,898)             1,087              220,910               Intangible assets ‐ Software 279                   ‐                         ‐                        ‐                       279                      Equipment 12,265             308                    ‐                       286                  12,859                 Roadway network 299,242           ‐                         ‐                       9,330              308,572               Recreation and open space network 27,632              ‐                        (669)                6,115              33,078                 Total depreciable capital assets 561,114          333                   (2,567)             16,818            575,698               Less accumulated depreciation: Buildings and structures (76,179)           (6,020)              2,974               ‐                       (79,225)               Intangible assets ‐ Software (206)                 (59)                    ‐                        ‐                       (265)                     Equipment (7,944)              (426)                 ‐                       ‐                       (8,370)                  Roadway network (134,027)         (7,069)              ‐                       ‐                       (141,096)             Recreation and open space network (9,908)              (965)                 ‐                       ‐                       (10,873)               Total accumulated depreciation (228,264)         (14,539)            2,974              ‐                       (239,829)             Depreciable capital assets, net 332,850          (14,206)            407                  16,818            335,869               Internal service fund capital assets Construction in progress 1,350               3,704               ‐                       (3,225)             1,829                   Equipment 53,419             9                       (1,241)             3,225              55,412                 Less accumulated depreciation (39,454)           (2,525)              1,204               ‐                       (40,775)               Net internal service fund capital assets 15,315             1,188               (37)                   ‐                       16,466                 Governmental activities capital assets, net 485,189$       11,343$          (545)$             ‐$                     495,987$               CITY OF PALO ALTO  Notes to the Basic Financial Statements  For the Year Ended June 30, 2016    72   NOTE 6 – CAPITAL ASSETS (Continued)    Business‐type Capital Assets  Changes in the City’s enterprise fund capital assets during the year ended June 30, 2016 were  (in thousands):    Balance Balance July 1, 2015 Additions Retirements Transfers June 30, 2016 Business‐type activities Nondepreciable capital assets: Land and improvements 4,973$             ‐$                     ‐$                            ‐$                       4,973$                 Construction in progress 89,909             39,088            (1,566)                    (33,461)             93,970                 Total nondepreciable capital assets 94,882             39,088            (1,566)                    (33,461)             98,943                 Depreciable capital assets: Buildings and structures 53,505             ‐                       ‐                              3,424                56,929                 Transmission, distribution and treatment systems 717,669          269                  (1,323)                    30,037              746,652               Total depreciable capital assets 771,174          269                  (1,323)                    33,461              803,581               Less accumulated depreciation: Buildings and structures (10,606)           (970)                 ‐                              ‐                         (11,576)               Transmission, distribution and treatment systems (296,917)         (18,210)           986                         ‐                         (314,141)             Total accumulated depreciation (307,523)         (19,180)           986                         ‐                         (325,717)             Depreciable capital assets, net 463,651          (18,911)           (337)                       33,461              477,864               Business‐type activities capital assets, net 558,533$       20,177$         (1,903)$                 ‐$                       576,807$           Capital Asset Contributions  Some capital assets may be acquired using federal and state grant funds, or they may be contributed by  developers or other governments. Generally accepted accounting principles require that these  contributions be accounted for as revenues at the time the capital assets are contributed.    Depreciation Allocation  Depreciation expense was charged to functions and programs based on their usage of the related assets.   The amount allocated to each function or program is as follows (in thousands):    Governmental Activities Business‐type Activities City Manager 37$                  Water 2,743$             City Attorney 3                      Electric 7,601               Administrative Services 2                      Fiber Optics 328                   Community Services 1,814              Gas 2,827               Public Safety 334                  Wastewater Collection 1,932               Public Works 9,863            Wastewater Treatment 2,956              Planning and Community Environment 166                  Refuse 77                     Library 2,320              Storm Drainage 716                   Internal Service Funds 2,525              19,180$           17,064$             CITY OF PALO ALTO  Notes to the Basic Financial Statements  For the Year Ended June 30, 2016    73   NOTE 6 – CAPITAL ASSETS (Continued)    Construction In Progress  Construction in progress as of June 30, 2016 is comprised of the following (in thousands):  Governmental Activities  Expended to June 30, 2016  California Avenue‐Transit Hub Corridor 6,703$                           City Hall First Floor Renovation 4,307                             Magical Bridge Playground 3,554                             Traffic Signal Upgrades 2,529                             Furniture/Technology for Library Bond Project 2,324                             Highway 101 Pedestrian/Bicycle Overpass 1,918                             Telephone Infrastructure and Network 1,582                             Transportation and Parking Improvements 1,413                             Safe Routes To School 1,148                             Bicycle Boulevards Implementation Project 1,127                             Golf Reconfig and Baylands Athletic Center 1,119                             Curb & Gutter Repairs 1,104                             Charleston/Arastradero Corridor 1,023                             Park Trails 960                                 Parks Master Plan 852                                 Eleanor Pardee Park Imp 739                                 Newell Road Bridge/SFC Bridge Replacemen 719                                 Library & Comm Center Temp Facilities 657                                 Benches/Signage/Fencing/Walkways 596                                 Interior Finishes Construction 584                                 Temporary Main Library 536                                 Other Construction In Progress 12,862                           Total Governmental Activities Construction In Progress 48,356$                        Business‐type Activities Expended to         June 30, 2016 Water system extension replacements and improvements 10,928$                        Gas system extension replacements and improvements 2,184                             Sewer system rehabilitation and extensions 6,765                             Electric distribution system improvements 7,753                             Water quality control plant equipment replacement and lab facilities 3,612                             Storm drainage structural and water quality improvements 3,097                             Other electrical improvements projects 1,430                             Other construction in progress 58,201                           Total Business‐type Activities Construction In Progress 93,970$                             CITY OF PALO ALTO  Notes to the Basic Financial Statements  For the Year Ended June 30, 2016    74   NOTE 6 – CAPITAL ASSETS (Continued)    Construction In Progress  Allocations of business‐type activity administration and general expenses of $12.0 million have been  capitalized and included in amounts expended to June 30, 2016.    Major governmental capital projects that are currently in progress, and the remaining capital commitment  of each, are as follows:   Golf Course reconfiguration and Baylands Athletic Center ‐ $10.2 million   Lucie Stern Buildings mechanical and electrical upgrades ‐ $2.8 million   Bicycle and pedestrian transportation plan ‐ $2.6 million    Major business‐type capital projects that are currently in progress, and the remaining capital commitment  of each, are as follows:   Seismic water system upgrades for Water fund ‐ $4.4 million   Channing Avenue/Lincoln Avenue storm drain improvement ‐ $3.6 million   Wastewater Collection Fund rehabilitation/augmentation ‐ $9.2 million    Vehicle Registration Fees (VRF)  In FY 2016, the City received VRF funds from the Santa Clara Valley Transportation Authority and  expended the full amount on capital expenditures for Alma/Middlefield Resurfacing Project (Project PE‐ 86070).:    Starting VRF balance July 1, 2015 ‐$                          VRF revenue 406,022             VRF interest 4,300                  VRF expense (410,322)            Ending VRF balance June 30, 2016 ‐$                                     CITY OF PALO ALTO  Notes to the Basic Financial Statements  For the Year Ended June 30, 2016    75   NOTE 7 – GENERAL LONG‐TERM OBLIGATIONS  Long‐Term Obligations  Bond premiums and discounts of long‐term debt issues are amortized over the life of the related debt.   The City’s long‐term debt issues and transactions, other than special assessment debt discussed in Note 8,  are as follows (in thousands):  Original Balance Balance Current Issue Amount July 1, 2015 Additions Retirements June 30, 2016 Portion Governmental Activities Debt: General Long‐Term Obligations:  2002B Downtown Parking Improvements, Certificates of Participation, 6.50%, due 03/01/2022 3,555$         1,285$        ‐$         150$      1,135$           160$         2010 General Obligation Bonds, 3.25% ‐ 5%, due 08/01/2040 55,305   51,470     ‐    3,380    48,090   1,110    2011 Lease‐Purchase Agreement 3,222    1,643    ‐    395      1,248     406     2013A General Obligation Bonds, 2 ‐ 5%, due 08/01/2041 20,695   20,325     ‐     3,205  17,120   390      Add: Unamortized Premium ‐   4,084    ‐    158      3,926     158   Total Governmental Activities Debt 82,777$        78,807$        ‐$       7,288$      71,519$        2,224$     Original Issue  Amount  Balance  July 1, 2015 Additions Retirements Balance  June 30, 2016 Current  Portion Business‐type Activities Debt: Enterprise Long‐Term Obligations: Utility Revenue Bonds 1995 Series A,  5.00‐6.25%, due 06/01/2020 8,640$           2,860$           ‐$            505$               2,355$                 535$             1999 Refunding,  3.25‐5.25%, due 06/01/2024 17,735   10,345        ‐         665         9,680   700          2009 Series A,  1.80‐5.95%, due 06/01/2035 35,015     30,700        ‐    955    29,745        990          2011 Refunding,  3‐4%, due 06/01/2035 17,225     13,320        ‐    1,005       12,315        1,045         Add: Unamortized Premium ‐        840      ‐       70      770       ‐    Energy Tax Credit Bonds 2007 Series A, 0%, Due 12/15/2021 1,500     700     ‐        100        600       100         Less: Unamortized Discount ‐        (38)         ‐       (5)       (33)   ‐    State Water Resources Loans 2007, 1.02%, due 06/30/2029 9,000     6,300         ‐        450        5,850   450         2009, 2.6%, due 11/30/2030 8,500       7,200          ‐    369    6,831   378     Total Business‐type Activities Debt 97,615$         72,227$               ‐$            4,114$           68,113$               4,198$               CITY OF PALO ALTO  Notes to the Basic Financial Statements  For the Year Ended June 30, 2016    76   NOTE 7 – GENERAL LONG‐TERM OBLIGATIONS (Continued)    Description of Long‐Term Debt Issues    2002B Downtown Parking Improvements Project Certificates of Participation (COPs) – On  January 16, 2002, the City issued $3.6 million of COPs to finance the construction of certain improvements  to the non‐parking area contained in the City’s Bryant/Florence Garage complex.  Principal payments are  due annually on March 1 and interest payments semi‐annually at 6.5 percent on March 1 and September  1, and are payable from lease revenues received by the Corporation from the City’s available funds.    2010 General Obligation Bonds (GO bonds) – On June 30, 2010, the City issued $55.3 million of GO bonds  to finance costs for constructing a new Mitchell Park Library and Community Center, as well as making  substantial improvements to the Rinconada Library and the Downtown Library. Principal payments are  due annually on August 1 and interest payments semi‐annually on February 1 and August 1 from 3.25  percent to 5 percent, and are payable from property tax revenues.    On June 28, 2016, the City defeased $2.3 million of 2010 GO bonds using funds from bond premiums  received at time of issue by depositing the amount in an irrevocable trust account.  The trust account  assets and the liability for the defeased bonds are not included in the City’s financial statements. The  economic gain associated with interest savings is estimated at $0.9 million.  The City legally remains the  primary obligor on the $2.3 million of defeased bonds until they are paid on August 1, 2020.      2013A General Obligation Bonds (GO bonds) – On June 30, 2013, the City issued $20.7 million of GO  bonds to finance costs for constructing a new Mitchell Park Library and Community Center, as well as  making substantial improvements to the Rinconada Library and the Downtown Library. Principal  payments are due annually on August 1 and interest payments semi‐annually on February 1 and August 1  from 2 percent to 5 percent, and are payable from property tax revenues.    On June 28, 2016, the City defeased $2.8 million of 2013A GO bonds using funds remaining at completion  of the project by depositing the amount in an irrevocable trust account  The trust account assets and the  liability for the defeased bonds are not included in the City’s financial statements.  The economic gain  associated with interest savings is estimated at $0.7 million.  The City legally remains the primary obligor  on the $2.8 million of defeased bonds until they are paid on August 1, 2023.      The City’s 2010 and 2013A GO bonds are payable from pledged ad valorem property taxes until the final  maturity dates of the bonds on August 1, 2040 and August 1, 2041 respectively. For the fiscal year ended  June 30, 2016, the City received $4.6 million in ad valorem property taxes for principal of $1.4 million and  interest of $3.2 million for both 2010 and 2013A GO bonds.     2011 Lease‐Purchase Agreement – On August 2, 2011, the City entered into a master lease‐purchase  agreement with JP Morgan Chase Bank, N.A. to finance redemption of the 1998 Golf Course COPs.  The  lease is secured by a first priority security interest in twenty‐one Fire Department emergency vehicles.   Lease proceeds were $3.2 million.  Principal payments are due annually on September 1 and interest  payments are due semi‐annually on September 1 and March 1 at a rate of 2.49 percent, payable from  General Fund revenues.    CITY OF PALO ALTO  Notes to the Basic Financial Statements  For the Year Ended June 30, 2016    77   NOTE 7 – GENERAL LONG‐TERM OBLIGATIONS (Continued)    1995 Utility Revenue Bonds, Series A – The City issued $8.6 million of Utility Revenue Bonds on  February 1, 1995 to finance certain extensions and improvements to the City’s Storm Drainage and  Surface Water System.  The Bonds are special obligations of the City payable solely from and secured by  a pledge of and lien upon the revenues derived by the City from the funds, services and facilities of all  Enterprise Funds except the Refuse Services Fund, Fiber Optics Fund and Airport Fund. Principal payments  are payable annually on June 1 and interest payments semi‐annually on June 1 and December 1. A $2.9  million 6.3 percent term bond is due June 1, 2020.    As required by the Indenture, the City established a debt service reserve fund for the Bonds (the “Reserve  Account”), with a minimum funding level requirement in the Reserve Account (the “Reserve  Requirement”).  At the time it issued the Bonds, the City satisfied the Reserve Requirement with a deposit  into the Reserve Account of a surety bond (the “Surety Bond”) in the amount of $685,340 issued by Ambac  Indemnity Corporation (renamed to Ambac Assurance Corporation in 1997).    The pledge of future Net Revenues for the above bonds ends upon repayment of the $2.4 million principal  and $0.4 million interest as the remaining debt service on the bonds, which is scheduled to occur in FY  2020. For FY 2016, Net Revenues, including operating revenues and non‐operating interest earnings,  amounted to $241.5 million; operating costs, including operating expenses but not interest, depreciation  or amortization, amounted to $186.8 million. Net Revenues available for debt service amounted to $54.7  million, which represented coverage of 80 times over the $0.7 million in debt service.     1999 Utility Revenue and Refunding Bonds – The City issued $17.7 million of Utility Revenue Bonds on  June 1, 1999, to refund the 1990 Utility Revenue Refunding Bonds, Series A and the 1992 Utility Revenue  Bonds, Series A, and to finance rehabilitation of two Wastewater Treatment sludge incinerators.  The 1990  Utility Revenue Refunding Bonds, Series A and the 1992 Utility Revenue Bonds, Series A, were  subsequently retired.    The 1999 Bonds are special obligations of the City payable solely from and secured by a pledge of and lien  upon certain net revenues derived by the City’s sewer system and its storm and surface water system (the  “Storm Drain System”). As of June 30, 2001, the 1999 Bonds had been allocated to and were repayable  from net revenues of the following enterprise funds: Wastewater Collection (10.2 percent), Wastewater  Treatment (64.6 percent) and Storm Drainage (25.2 percent). Principal payments are payable annually on  June 1 and interest payments semi‐annually on June 1 and December 1. A $3.1 million 5.3 percent term  bond and a $5.1 million 5.3 percent term bond are due June 1, 2021 and 2024, respectively.     As required by the Indenture, the City established a debt service reserve fund for the Bonds (the “Reserve  Account”), with a minimum funding level requirement in the Reserve Account (the “Reserve  Requirement”).  At the time it issued the Bonds, the City satisfied the Reserve Requirement with a deposit  into the Reserve Account of a surety bond (the “Surety Bond”) in the amount of $1,647,300 issued by  Ambac Indemnity Corporation (renamed to Ambac Assurance Corporation in 1997).  CITY OF PALO ALTO  Notes to the Basic Financial Statements  For the Year Ended June 30, 2016    78   NOTE 7 – GENERAL LONG‐TERM OBLIGATIONS (Continued)    The pledge of future Net Revenues for the above bonds ends upon repayment of the $9.7 million principal  and $2.7 million interest as the remaining debt service on the bonds, which is scheduled to occur in FY  2024. For FY 2016, Net Revenues, including operating revenues and non‐operating interest earnings,  amounted to $48.0 million; operating costs, including operating expenses but not interest, depreciation  or amortization, amounted to $34.9 million. Net Revenues available for debt service amounted to $13.1  million, which represents coverage of 10.8 times over the $1.2 million in debt service.    2007 Electric System Clean Renewable Energy Tax Credit Bonds, Series A – In October 2007, the City  issued $1.5 million of Electric Utility Clean Renewable Energy Tax Credit Bonds (CREBs), 2007 Series A, to  finance the City’s photovoltaic solar panel project. The CREBs do not bear interest. In lieu of receiving  periodic interest payments, bondholders are allowed annual federal income tax credits in an amount  equal to a credit rate for such CREBs multiplied by the outstanding principal amount of the CREBs owned  by the bondholders. The CREBs are payable solely from and secured solely by a pledge of the Net Revenues  of the Electric system and the other funds pledged under the Indenture.    The pledge of future Electric Fund Net Revenues ends upon repayment of the $0.6 million remaining debt  service on the bonds, which is scheduled to occur in FY 2022. For FY 2016, Net Revenues, including  operating revenues and non‐operating interest earnings, amounted to $123.9 million; operating costs,  including operating expenses but not interest, depreciation or amortization, amounted to $103.7 million.  Net Revenues available for debt service amounted to $20.2 million, which represented coverage of  202 times over the $0.1 million in debt service.    2009 Water Revenue Bonds, Series A – On October 6, 2009, the City issued $35.0 million of Water  Revenue Bonds to finance certain improvements to the City’s water utility system. Principal payments are  due annually on June 1, and interest payments are due semi‐annually on June 1 and December 1 from  1.80 percent to 5.95 percent. The 2009 Revenue Bonds are secured by net revenues generated by the  Water Services Fund. The 2009 Bonds were issued as bonds designated as “Direct Payment Build America  Bonds” under the provisions of the American Recovery and Reinvestment Act of 2009 (“Build America  Bonds”). The City expects to receive a cash subsidy payment from the United States Treasury equal to 35  percent of the interest payable on the 2009 Bonds. The lien of the 1995 Bonds on the Net Revenues is  senior to the lien on Net Revenues securing the 2009 Bonds and the 2011 Bonds. The City received subsidy  payments amounting to $526 thousand, which represents 32.6 percent of the interest payments due on  December 1 and June 1.    The pledge of future Net Revenues for the above bonds ends upon repayment of the $29.7 million  principal and $19.0 million interest as the remaining debt service on the bonds, which is scheduled to  occur in FY 2035. For FY 2016, Net Revenues, including operating revenues and non‐operating interest  earnings, amounted to $38.7 million; operating costs, including operating expenses but not interest,  depreciation or amortization, amounted to $30.6 million. Net Revenues available for debt service  amounted to $8.1 million, which represented coverage of 3.19 times over the $2.6 million in debt service.     CITY OF PALO ALTO  Notes to the Basic Financial Statements  For the Year Ended June 30, 2016    79   NOTE 7 – GENERAL LONG‐TERM OBLIGATIONS (Continued)    2011 Utility Revenue Refunding Bonds – On September 8, 2011, the City issued $17.2 million in Lease  Revenue Bonds (2011 Bonds) to refund the outstanding 2002 Series A Utility Revenue Bonds (2002 Bonds)  on a current basis. The 2002 Bonds were issued to finance improvement to the City’s municipal water  utility system and the natural gas utility system. Principal of the 2011 Bonds is payable annually on June  1, and interest on the 2011 Bonds is payable semi‐annually on June 1 and December 1. The 2011 Bonds  are secured by net revenues generated by the Water Services and Gas Services Funds.     The pledge of future Net Revenues of the above bonds ends upon repayment of the $12.3 million principal  and $2.3 million interest as remaining debt service on the bonds, which is scheduled to occur in FY 2035.  For FY 2016, Net Revenues, including operating revenues and non‐operating interest earnings, amounted  to $69.7 million; operating costs, including operating expenses but not interest, depreciation or  amortization, amounted to $48.2 million. Net Revenues available for debt service amounted to $21.5  million, which represented coverage of 14.7 times over the $1.5 million in debt service.    2007 State Water Resources Loan – In October 2007, the City approved a $9 million loan agreement with  State Water Resources Control Board (SWRCB) to finance the City’s Mountain View/Moffett Area  reclaimed water pipeline project. Under the terms of the contract, the City has agreed to repay $9 million  to the State in exchange for receiving $7.5 million in proceeds to be used to fund the Project. The  difference of $1.5 million between the repayment obligation and proceeds represents in‐substance  interest on the outstanding balance. Principal payments are payable annually on June 30.     Concurrently with the loan, the City entered into various other agreements including a cost sharing  arrangement with the City of Mountain View. Pursuant to that agreement, City of Mountain View agreed  to finance a portion of the project with a $6 million loan repayable to the City. This loan has been recorded  as “Due from other government agencies” in the accompanying financial statements.    2009 State Water Resources Loan – In October 2009, the City approved an $8.5 million loan agreement  with SWRCB to finance the City’s Ultraviolet Disinfection project. Principal and interest payments are  payable annually on November 30.    Debt Service Requirements (in thousands):  Debt service requirements are shown below for all long‐term debt.    For the Year Ending  June 30 Principal Interest Total Principal Interest Total 2017 2,066$             3,032$           5,098$            4,198$           2,818$               7,016$             2018 2,156               2,942             5,098              4,363            2,656                7,019               2019 2,251               2,844             5,095              4,533            2,484                7,017               2020 1,920               2,758             4,678              4,713            2,300                7,013               2021 1,985               2,674             4,659              4,899            2,118                7,017               2022‐2026 10,355             12,045           22,400            23,204          7,704                30,908             2027‐2031 12,775             9,296             22,071            12,569          4,382                16,951             2032‐2036 15,920             6,108             22,028            8,895            1,361                10,256             2037‐2041 17,615             2,050             19,665            ‐                ‐                    ‐                        2042‐2046 550                  11                   561                  ‐                  ‐                      ‐                        Total 67,593$          43,760$         111,353$       67,374$         25,823$             93,197$           Governmental Activities Business‐Type Activities   CITY OF PALO ALTO  Notes to the Basic Financial Statements  For the Year Ended June 30, 2016    80   NOTE 7 – GENERAL LONG‐TERM OBLIGATIONS (Continued)    Debt Call Provisions  Long‐term debt as of June 30, 2016 is callable on the following terms and conditions:    Initial Call Date Governmental Activities Long‐Term Debt 2002B Certificates of Participation 03/01/11 (2) 2010 General Obligation Bonds $6.595 million due 08/01/2032 08/01/31 (3) $4.890 million due 08/01/2034 08/01/33 (3) $17.725 million due 08/01/2040 08/01/35 (3) Business‐Type Activities Long‐Term Debt Utility Revenue Bonds 1999 Refunding 06/01/09 (1) 2011 Refunding 06/01/21 (1)     (1)  Callable in inverse numerical order of maturity at par plus a premium of 2 percent beginning on the  initial call date. The call price declines subsequent to the initial date.   (2)  Callable in any order specified by the City at par plus a premium of 1 percent beginning on the initial  call date. The call price declines subsequent to the initial date.   (3)  Callable in any order specified by the City at par value plus any accrued interest beginning on the  initial call date.    Leasing Arrangements  COPs and Capital Leases are issued for the purpose of financing the construction or acquisition of projects  defined in each leasing arrangement. Projects are leased to the City for lease payments which, together  with unspent proceeds of the leasing arrangement, will be sufficient to meet the debt service obligations  of the leasing arrangement. At the termination of the leasing arrangement, title to the project will pass to  the City.    Leasing arrangements are similar to debt in that they allow investors to participate in a share of  guaranteed payments made by the City. Because they are similar to debt, the present value of the total  payments to be made by the City is recorded as long‐term debt. The City’s leasing arrangements are  included in long‐term obligations discussed above.    Conduit Financing  On December 15, 1996, the City acted as a financial intermediary in order to assist Lytton Gardens Health  Care Center in issuing Insured Revenue Refunding Bonds. The Bonds are payable solely from revenues  collected by Lytton Gardens Health Care Center. The City has not included these bonds in its basic financial  statements since it is not legally or morally obligated for the repayment of the bonds. At June 30, 2016,  the amount of bonds outstanding was $1.2 million.  CITY OF PALO ALTO  Notes to the Basic Financial Statements  For the Year Ended June 30, 2016    81   NOTE 8 – SPECIAL ASSESSMENT DEBT  Special Assessment Debt with no City Commitment  The California Avenue Parking Assessment District No. 92‐13 issued Assessment Bonds of 1993, but the  City has no legal or moral liability with respect to the payment of this debt, which is secured only by  assessments on the properties in this District. Therefore, this debt is not included in Governmental  Activities long‐term debt of the City.  At June 30, 2016, the debt has been fully paid off.  On February 29, 2012, the University Avenue Area Off‐Street Parking Assessment District issued Limited  Obligation Refunding Improvement Bonds (2012 Bonds), but the City has no legal or moral liability with  respect to the payment of this debt, which is secured only by assessments on properties in this District.  Therefore, this debt is not included in Governmental Activities long‐term debt of the City. At  June 30, 2016, the District’s outstanding debt amounted to $25.1 million. The proceeds from the 2012  Bonds, combined with available Assessment Funds, were used to redeem the outstanding University  Avenue Area Off‐Street Parking Assessment District Series 2001‐A and Series 2002‐A Bonds. On June 28,  2016, the District defeased $1.6 million of the 2012 Bonds using funds remaining from completion of the  project.  The defeased debt will be paid on September 2, 2022.    NOTE 9 – LANDFILL POST‐CLOSURE MAINTENANCE  The 126 acre Palo Alto Refuse Disposal Site (Palo Alto Landfill) was filled to capacity and stopped accepting  waste in July 2011.  State and federal laws and regulations require the City to construct a final cover to  cap the waste, and to perform certain post‐closure maintenance and monitoring activities at the site for  a minimum of thirty years after closure. As of November 2015, the Palo Alto Landfill has been fully capped  and subsequently converted to a pastoral park (Byxbee Park) that is open to the public.  A final post‐ closure maintenance plan and cost estimate for the thirty year post‐closure related activities was  approved by state and local regulatory agencies in 2014. This cost estimate is adjusted annually for  inflation at a percentage provided by the State. Landfill post‐closure liabilities as of June 30, 2016 are $6.6  million. The City is required by state and federal laws and regulations to fund post‐closure maintenance  activities by pledging future revenue received from Refuse customers through rate fees.  CITY OF PALO ALTO  Notes to the Basic Financial Statements  For the Year Ended June 30, 2016    82   NOTE 10 – NET POSITION AND FUND BALANCES    Net Position  Net Position is the excess of the City’s assets and deferred outflows of resources over its liabilities and  deferred inflows of resources. Net position is divided into three categories that are described below:    Net Investment in Capital Assets describes the portion of net position, which is represented by current net  book value of the City’s capital assets, less the outstanding balance of any debt issued to finance these  assets.    Restricted describes the portion of net position that is reduced by liabilities related to restricted assets.  Generally a liability relates to restricted assets if the asset results from a resource flow that also results in  the recognition of a liability or if the liability will be liquidated with the restricted assets reported.    Unrestricted describes the portion of net position which is not restricted as to use.    Fund Balances  As prescribed by GASB Statement No. 54, governmental funds report fund balances in classifications based  primarily on the extent to which the City is bound to honor constraints on the specific purposes for which  amounts in the funds can be spent. Fund balances for governmental funds are made up of the following:    Nonspendable – This category is comprised of amounts that are: (a) not in spendable form, or (b) legally  or contractually required to be maintained intact. The “not in spendable form” criterion includes items  that are not expected to be converted to cash, for example: prepaid items. The corpus of the permanent  fund is contractually required to be maintained intact.    Restricted – This category is comprised of amounts that can be spent only for the specific purposes  stipulated by external resource providers, constitutionally or through enabling legislation. Restrictions  may effectively be changed or lifted only with the consent of resource providers.    Committed – This category is comprised of amounts that can only be used for the specific purposes  determined by the action that constitutes the most binding constraint (i.e. ordinance) of the City’s highest  level of decision‐making authority, the City Council. Commitments may be changed or lifted only by the  City taking the same formal action that imposed the constraint originally.      Assigned – This category is comprised of amounts intended to be used by the City for specific purposes  that are neither restricted nor committed. Intent is expressed by the City Council or the City Manager, to  whom the City Council has delegated the authority to assign amounts to be used for specific purposes.    Unassigned –This category is the residual classification for the General Fund and includes all amounts not  contained in the other classifications. Unassigned amounts are technically available for any purpose.  Other governmental funds may report negative unassigned fund balance, which occurs when a fund has  a residual deficit after allocation of fund balance to the nonspendable, restricted or committed categories.     CITY OF PALO ALTO  Notes to the Basic Financial Statements  For the Year Ended June 30, 2016    83   NOTE 10 – NET POSITION AND FUND BALANCES (Continued)    The fund balances of all governmental funds are presented by the above mentioned categories on the  face of the financial statements.  In circumstances when an expenditure is made for a purpose for which  amounts are available in multiple fund balance categories, fund balance is depleted in the order of  restricted, committed, assigned, and unassigned.    The General Fund Budget Stabilization Reserve (BSR) is established by authority of the General Fund  Reserve Policy, which is approved by the City Council and included in the City’s annual adopted budget.  The BSR is maintained in the range of 15 to 20 percent of General Fund expenditures and operating  transfers, with a target of 18.5 percent.  Any reserve level below 15 percent requires City Council approval.   At the discretion of the City Manager, a reserve balance above 18.5 percent may be transferred to the  Infrastructure Reserve within the Capital Projects Fund.  The purpose of the General Fund BSR is to fund  unbudgeted, unanticipated one‐time costs.  The BSR is not meant to fund ongoing, recurring General Fund  expenditures.    As of June 30, 2016 total outstanding encumbrances related to governmental activities were $6.2 million  for the General Fund, $30.6 million for the Capital Projects Fund, and $0.5 million for the Special Revenue  Funds.  General Fund encumbrances are reserved for the following governmental activities:  Planning &  Community Environment $1.8 million, Development Services $0.1 million, Public Works $0.8 million,  Community Services $0.9 million, Fire $0.6 million, Library $0.3 million, and the remaining City  departments $1.7 million.    Enterprise Funds  At June 30, 2016, Enterprise Fund unrestricted net position (in thousands) were as follows:    Water Electric Fiber Optics Gas Wastewater  Collection Wastewater  Treatment Refuse Storm  Drainage Airport Total Unrestricted Rate stabilization Supply ‐$                      9,011$            ‐$                     409$            ‐$                   ‐$                  ‐$               ‐$              ‐$             9,420$             Distribution 1,877                ‐                        24,329            5,610          342                (2,365)          6,147         1,760       (2,393)     35,307             1,877                9,011               24,329            6,019          342                (2,365)          6,147         1,760       (2,393)     44,727             Operations Supply ‐                         15,642            ‐                        ‐                   ‐                      ‐                     ‐                   ‐                 ‐                15,642             Distribution 14,607             6,208               ‐                        10,296        3,211             ‐                     ‐                   ‐                 ‐                34,322             14,607             21,850            ‐                        10,296        3,211             ‐                     ‐                   ‐                 ‐                49,964             Emergency plant replacement ‐                         ‐                        1,000               ‐                   ‐                      1,980            ‐                   ‐                 ‐                2,980                Electric special projects ‐                         51,838            ‐                        ‐                   ‐                      ‐                     ‐                   ‐                 ‐                51,838             Reappropriations 10,530             6,239               158                  5,346          1,842             12,225         43               5,210       18             41,611             Commitments 6,349                5,209               91                     909              9,246             2,614            1,203         3,985       442          30,048             Underground loan ‐                         729                  ‐                        ‐                   ‐                      ‐                     ‐                   ‐                 ‐                729                   Notes and loans ‐                         ‐                        ‐                        ‐                   ‐                      559               ‐                   ‐                 ‐                559                   Landfill corrective action ‐                         ‐                        ‐                        ‐                   ‐                      ‐                     719            ‐                 ‐                719                   Hydro stabilization reserve ‐                         11,400            ‐                        ‐                   ‐                      ‐                     ‐                   ‐                 ‐                11,400             Public benefit program ‐                         1,839               ‐                        ‐                   ‐                      ‐                     ‐                   ‐                 ‐                1,839                Central Valley Project ‐                        ‐                        ‐                   ‐                      ‐                     ‐                   ‐                 ‐                ‐                         CIP reserve 2,726                880                  ‐                        3,820          978                ‐                     ‐                   ‐                 ‐                8,404                Geng Road Reserve ‐                         ‐                        ‐                        ‐                   ‐                      ‐                     268            ‐                 ‐                268                   GASB 68 Pension reserve (11,609)            (27,284)           (1,662)             (12,365)      (6,950)           (17,125)        (4,892)       (2,923)     (361)         (85,171)            Total 24,480$           81,711$          23,916$          14,025$      8,669$          (2,112)$        3,488$      8,032$    (2,294)$   159,915$              CITY OF PALO ALTO  Notes to the Basic Financial Statements  For the Year Ended June 30, 2016    84   NOTE 10 – NET POSITION AND FUND BALANCES (Continued)  The City Council has set aside unrestricted net position for general contingencies, and future capital and  debt service expenditures including operating and capital contingencies for unusual or emergency  expenditures.  Internal Service Funds  At June 30, 2016, Internal Service Funds unrestricted net position (in thousands) were as follows:  Vehicle  Replacement  and  Maintenance Technology Printing and  Mailing  Services General  Benefits Workers'  Compensation  Insurance  Program General  Liabilities  Insurance  Program Retiree Health  Benefits Total Unrestricted net position: Commitments 3,088$              2,317$              13$             239$           7$        37$             ‐$           5,701$               Future catastrophic losses ‐      ‐   ‐       ‐    2,913  3,263      ‐       6,176       Retiree health care ‐      ‐   ‐       ‐    ‐       ‐    25,750        25,750     Capital projects 4,849         3,774      ‐       ‐    ‐       ‐    ‐       8,623       GASB68 pension reserve (2,589)        (9,080)     (292)    ‐    ‐       ‐    ‐       (11,961)    Available 3,573         15,537    9  2,289       ‐       ‐    ‐       21,408     Total 8,921$              12,548$           (270)$        2,528$             2,920$       3,300$              25,750$            55,697$            Commitments represent the portion of net position set aside for open purchase orders.   Future catastrophic losses represent the portion of net position to be used for unforeseen future losses.  Retiree health care represents the portion of net position set aside to defer future costs of retiree health  care coverage.   Capital projects represent the portion of net position set aside for adopted capital projects.  GASB68 pension reserve is the portion of net position required to be set aside to meet defined benefit  pension obligations.   CITY OF PALO ALTO  Notes to the Basic Financial Statements  For the Year Ended June 30, 2016    85    NOTE 11 – PENSION PLANS  (a)        General Information about the Pension Plans     Plan Descriptions ‐ Substantially all permanent City employees are eligible to participate in the City’s  separate Safety (police and fire) and Miscellaneous (all other) Plans, agent multiple‐employer defined  benefit pension plans  administered by California Public Employees’ Retirement System (CalPERS), which  acts as a common investment and administrative agent for its participating member employers. Benefits  provisions under the Plans are established by State statute and City resolution. CalPERS issues publicly  available reports that include a full description of the pension plans including benefits provisions,  assumptions and membership information. The reports can be found on the CalPERS website at:   <http://www.calpers.ca.gov/index.jsp?bc=/about/forms‐pubs/calpers‐reports/actuarial‐ reports/home.xml>    Benefits Provided ‐ CalPERS provides retirement and disability benefits, annual cost of living adjustments  and death benefits to Plan members, who must be public employees and beneficiaries. Benefits are based  on years of credited service (equal to one year of full‐time employment), age at retirement and final  compensation. The death benefit is one of the following: the 1959 Survivor Benefit, or the pre‐retirement  option 2W Death Benefit for local fire members only.     The Plans’ provisions and benefits in effect at June 30, 2016, are summarized in the following table.   Contribution rates are based on the Actuarial Valuation Report as of June 30, 2013.    Safety Plan Fire Fighters,  Fire Chief  Association,  Police Officers,  Fire Fighters,  Fire Chief Association Police Officers, Police Management Fire Fighters,  Fire Chief  Association,  Police Officers,  Hire Date Prior to June 8, 2012 On or after June 8,  2012 On or after Dec. 8,  2012 On or after Jan 1,  2013 Benefit formula1 3% at 55 3% at 55 3% at 50 2.7% at 57 Benefit vesting schedule 5 years service 5 years service 5 years service 5 years service Benefit payment monthly for life monthly for life monthly for life monthly for life Retirement age 50 551 551 571 Monthly benefit as % of eligible compensatio 3%3%3%2.7% Actuarially determined contribution rate ‐ EE 9%9%9%11.25% Actuarially determined contribution rate ‐ ER 41.932%41.932%41.932%41.932% Hire Date Prior to July 17, 2010 On or after July 17,  2010 On or after Jan 1,  2013 Benefit formula 2.7% at 552 2% at 602 2% at 623 Benefit vesting schedule 5 years service 5 years service 5 years service Benefit payments monthly for life monthly for life monthly for life Retirement age 552 602 623 Monthly benefit as % of eligible compensatio 2.70%2.0% ‐ 2.418%2% Actuarially determined contribution rate ‐ EE 8%7%6.25% Actuarially determined contribution rate ‐ ER 27.694%27.694%27.694% 1 Employees can retire at age 50 with reduced benefits of 2.4% ‐ 2.88% if hired before Jan 1, 2013, or 2.0% ‐ 2.6% if hired on or    after Jan 1, 2013. 2 Employees can retire at age 50 with reduced benefits of 2.0% ‐ 2.56% if hired before July 17, 2010, or 1.092% ‐ 1.874% if hired on or    after July 17, 2010. 3 Employees can retire at age 52 with reduced benefits of 1.0% ‐ 1.9% Miscellaneous Plan   CITY OF PALO ALTO  Notes to the Basic Financial Statements  For the Year Ended June 30, 2016    86   NOTE 11 – PENSION PLANS (Continued)    Employees Covered – Based on the Actuarial Valuation Report as of June 30, 2015, the following  employees were covered by the benefits terms for each Plan:   Miscellaneous Plan Safety Plan Inactive employees or beneficiaries currently receiving benefits 1,027                        414                            Inactive employees entitled to but not yet receiving benefits 714                           98                              Active employees 796                           179                            Total 2,537                        691                            Contributions –Section 20814(c) of the California Public Employees’ Retirement Law requires that the  employer contribution rates for all public employers be determined on an annual basis by the actuary and  shall be effective on the July 1 following notice of a change in the rate.  Funding contributions for the Plans  are determined annually on an actuarial basis as of June 30 by CalPERS.  The actuarially determined rate  is the estimated amount necessary to finance the costs of benefits earned by employees during the year,  with an additional amount to finance any unfunded accrued liability.  The City is required to contribute  the difference between the actuarially determined rate and the contribution rate of employees.    Further detail can be found in the Required Supplemental Information Schedule of Contributions.  (b)       Net Pension Liability    The City’s net pension liability for both Plans is measured as the total pension liability, less the plan’s  fiduciary net position.  Net pension liability is measured as of June 30, 2015 (measurement date), using  the Actuarial Valuation Report as of June 30, 2014 rolled forward to June 30, 2015 using standard update  procedures. At June 30, 2016, the City reported a net pension liability of $319.6 million for both plans. A  summary of principal assumptions and methods used to determine the net pension liability is as follows:      CITY OF PALO ALTO  Notes to the Basic Financial Statements  For the Year Ended June 30, 2016    87   NOTE 11 – PENSION PLANS (Continued)    Actuarial Assumptions ‐ The total pension liabilities were determined using the following actuarial  assumptions in the Accounting Valuation Report:  Miscellaneous Plan Safety Plan Valuation Date June 30, 2014 June 30, 2014 Measurement Date June 30, 2015 June 30, 2015 Actuarial Cost Method Entry Age Normal Entry Age Normal Actuarial Assumptions: Discount Rate 7.65% 7.65% Inflation 2.75% 2.75% Payroll Growth 3.00% 3.00% Investment Rate of Return1 7.50%7.50% Retirement Age Mortality2 1 Net of pension plan investment and administrative expenses, including inflation. 2 Mortality table used was developed based on CalPERS Experience Study for period   1997 to 2007. Pre‐ and post‐retirement mortality rates include 5 years of projected   mortality improvement using Scale AA published by the Society of Actuaries. Further details of the Experience Study can be found on the CalPERS website. Derived using CalPERS membership data  for all funds. Probabilities of retirement are based on  the 2010 CalPERS Experience Study for  the period 1997 to 2007.     Change in Assumptions ‐ GASB 68, paragraph 68 states that the long‐term expected rate of return should  be determined net of pension plan investment expense but without reduction for pension plan  administrative expense. The discount rate of 7.50 percent used for the June 30, 2014 measurement date  was net of administrative expenses. The discount rate of 7.65 percent used for the June 30, 2015  measurement date is without reduction of pension plan administrative expense.   Discount Rate – The discount rate used to measure the total pension liability was 7.65 percent for each  Plan. To determine whether the municipal bond rate should be used in the calculation of a discount rate  for each Plan, CalPERS stress tested plans that would most likely result in a discount rate that would be  different from the actuarially assumed discount rate. Based on the testing, none of the tested plans ran  out of assets. Therefore, the current 7.65 percent discount rate is appropriate and the use of the  municipal bond rate calculation is not deemed necessary. The long term expected discount rate of 7.65  percent is applied to all plans in the Public Employees Retirement Fund for the June 30, 2015  measurement date.  The stress test results are presented in a detailed report that can be obtained from  the CalPERS website under GASB Statement No. 68 section.     CITY OF PALO ALTO  Notes to the Basic Financial Statements  For the Year Ended June 30, 2016    88   NOTE 11 – PENSION PLANS (Continued)    The long‐term expected rate of return on pension plan investments was determined using a building‐ block method in which best estimate ranges of expected future real rates of return (expected returns, net  of pension plan investment expense and inflation) are developed for each major asset class.    In determining the long‐term expected rate of return, CalPERS took into account both short‐term  and long‐term market return expectations as well as the expected pension fund cash flows. Such cash  flows were developed assuming that both members and employers will make their required contributions  on time and as scheduled in all future years. Using historical returns of all the funds’ asset classes,  expected compound geometric returns were calculated over the short‐term (first ten years) and the  long‐term (11‐60 years) using a building‐block approach. Using the expected nominal returns for both  short‐term and long‐term, the present value of benefits was calculated for each fund. The expected rate  of return was set by calculating the single equivalent expected return that arrived at the same present  value of benefits for cash flows as the one calculated using both short‐term and long‐term returns.  The expected rate of return was then set equivalent to the single equivalent rate calculated above  and rounded down to the nearest one quarter of one percent.    The table below reflects the long‐term expected real rate of return by asset class for both Miscellaneous  and Safety Plans.  The rate of return was calculated using the capital market assumptions applied to  determine the discount rate and asset allocation.  These rates of return are net of administrative  expenses.     Asset Class New Strategic Allocation Real Return Years 1 - 101 Real Return Years 11+2 Global Equity 51.0% 5.25% 5.71% Global Fixed Income 19.0 0.99 2.43 Inflation Sensitive 6.0 0.45 3.36 Private Equity 10.0 6.83 6.95 Real Estate 10.0 4.50 5.13 Infrastructure and Forestland 2.0 4.50 5.09 Liquidity 2.0 (0.55) (1.05) 1 An expected inflation of 2.5% used for this period. 2 An expected inflation of 3.0% used for this period.        CITY OF PALO ALTO  Notes to the Basic Financial Statements  For the Year Ended June 30, 2016    89   NOTE 11 – PENSION PLANS (Continued)   (c)  Changes in the Net Pension Liability  The following table is based on the GASB 68 Accounting Valuation Report and shows the changes in the  net pension liability for the Miscellaneous Plan (in thousands):  Total Pension  Liability Plan Net  Position Net Pension  Liability Balances calculated at July 1, 2015 663,471$     476,363$     187,108$      Changes for the year: Service cost 12,183   ‐  12,183    Interest on total pension liability 49,345   ‐  49,345    Differences between expected and actual  experiences 3,507   ‐  3,507    Changes in assumptions (11,552)   ‐  (11,552)    Contributions from employer ‐  18,610   (18,610)    Contributions from employees ‐  5,730   (5,730)    Net investment income ‐  10,597   (10,597)    Benefit payments, including refunds of  employee contributions (32,980)   (32,980)   ‐   Administrative expense ‐  (538)   538   Net changes 20,503   1,419   19,084    Balances reported at June 30, 2016  $     683,974  $     477,782  $     206,192  The following table is based on the GASB 68 Accounting Valuation Report and shows the changes in the  net pension liability for the Safety Plan (in thousands):  Total Pension  Liability Plan Net  Position Net Pension  Liability Balances calculated at July 1, 2015 367,403$          264,579$      102,824$      Changes for the year: Service cost 5,959   ‐   5,959   Interest on total pension liability 27,047   ‐   27,047    Differences between expected and actual  experiences 75   ‐   75   Changes in assumptions (6,327)   ‐   (6,327)    Contributions from employer ‐  8,617  (8,617)    Contributions from employees ‐  2,047  (2,047)    Net investment income ‐  5,774  (5,774)    Benefit payments, including refunds of  employee contributions (21,148)   (21,148)  ‐    Administrative expense ‐  (290)  290    Net changes 5,606   (5,000)  10,606    Balances reported at June 30, 2016  $     373,009  $      259,579  $     113,430  CITY OF PALO ALTO  Notes to the Basic Financial Statements  For the Year Ended June 30, 2016    90   NOTE 11 – PENSION PLANS (Continued)   Sensitivity of the Net Pension Liability to Changes in the Discount Rate ‐ The following table presents the  net pension liability of the Plans as of the measurement date, calculated using the discount rate of 7.65  percent, compared to a discount rate that is 1 percentage point lower (6.65 percent) or 1 percentage  point higher (8.65 percent). Amounts shown below are in thousands:   Discount Rate ‐ 1% (6.65%) Current Discount Rate  (7.65%) Discount Rate + 1% (8.65%) Miscellaneous Plan: Plan's Net Pension Liability/(Asset) 293,361$         206,192$       133,730$         Safety Plan: Plan's Net Pension Liability/(Asset)160,809$         113,430$       74,244$           Plan Fiduciary Net Position – Detailed information about the Plan’s fiduciary net position is available in  the separately issued CalPERS financial report: Schedule of Changes in Fiduciary Net Position by Rate Plan.   (d)       Pension Expenses and Deferred Outflows/Inflows of Resources Related to Pensions  For the year ended June 30, 2016, the City recognized a pension expense of $14.7 million and $7.9 million  for the Miscellaneous and Safety Plan respectively.  At June 30, 2016, the City reported pension related  deferred outflows of resources and deferred inflows of resources from the following sources (in  thousands):  Deferred  Outflows of Resources Deferred  Inflows of Resources Pension contributions subsequent to     measurement date 28,203$       ‐$        Change of assumptions ‐   12,168   Difference between expected and actual experience 2,392   ‐   Net difference between projected and actual earnings  on plan investments ‐6,653     Total 30,595$       18,821$       The $28.2 million reported as deferred outflows of resources relates to contributions paid by the City from  July 1, 2015 through June 30, 2016 which is subsequent to the City’s measurement date of June 30, 2015  for both the Miscellaneous and Safety Plans.  This amount will be recognized as a reduction of the net  pension liability in the year ended June 30, 2017.   CITY OF PALO ALTO  Notes to the Basic Financial Statements  For the Year Ended June 30, 2016    91   NOTE 11 – PENSION PLANS (Continued)     The net differences reported as deferred outflows of resources and deferred inflows of resources related  to pensions will be recognized in future pension expense as follows (in thousands):       Year Ended June 30,  Miscellaneous  Plan Safety Plan Total 2017 (5,732)$               (3,623)$               (9,355)$                2018 (5,732) (3,623) (9,355) 2019 (3,050) (2,519) (5,569) 2020 5,053 2,797 7,850                    (9,461)$               (6,968)$               (16,429)$                         CITY OF PALO ALTO  Notes to the Basic Financial Statements  For the Year Ended June 30, 2016    92    NOTE 12 – RETIREE HEALTH BENEFITS    In addition to providing pension benefits, the City participates in the California Public Employees’ Medical  and Health Care Act program to provide certain health care benefits for retired employees. Employees  who retire directly from the City are eligible for retiree health benefits if they retire on or after age 50  with 5 years of service and are receiving a monthly pension from CalPERS. Details of benefits provided to  retirees are noted in the following tables:       Unit Hired  Before Retiree  Coverage1 Dependent  Coverage Retired on  or After Retiree  Contribution Management & Professional2 1/1/2004 100% 100% 5/1/2011 Flat rate4 Police Management2 1/1/2004 100% 100% 6/1/2012 Flat rate5 Fire Fighters2 1/1/2004 100% 100% 12/1/2011 10% Fire Chiefs Association2 1/1/2004 100% 100% 1/1/2013 10% SEIU 1/1/2005 100% 100% 5/1/2011 Flat rate4 Police Officers3 1/1/2006 100% 100% 4/1/2015 10% Utilities Managers & Professional2 1/1/2004 100% 100% 5/1/2011 10% 2 Effective 1/1/2007 plan capped at the second highest CalPERS Bay Area Basic plan premium. 3 Effective 7/1/2014 plan capped at the second highest CalPERS Bay Area Basic plan premium. 4 Effective 4/1/2014 City pays $688 for employee, $1,375 for employee +1, $1,788 for family.  Effective 1/1/2015 City pays      $708 for employee, $1,415 for employee +1, $1,840 for family. 5 Effective 1/1/2015 City pays $708 for employee, $1,415 for employee +1, $1,840 for family.  Effective 1/1/2016 City pays      $743 for employee, $1,485 for employee +1, $1,931 for family. Unit Hired on or  After Retiree  Coverage1 Dependent  Coverage2 Management & Professional 1/1/2004 50%‐100% Max. 90% Police Management 1/1/2004 50%‐100% Max. 90% Fire Fighters 1/1/2004 50%‐100% Max. 90% Fire Chiefs Association 1/1/2004 50%‐100% Max. 90% Utilities Managers & Professional 1/1/2004 50%‐100% Max. 90% SEIU 1/1/2005 50%‐100% Max. 90% Police Officers 1/1/2006 50%‐100% Max. 90%    specified employer contribution, with the City portion increasing by 5% for each additional year of service credit.  2 Maximum of 90% once employee completes 20 years of service. 1 100% of benefits if the employee has five years CalPERS service credit and the employee retired from the City. 1 Employees with ten years  of CalPERS service, at least five of which are at the City of Palo Alto, receive 50% of the Retiree contributions for units with the following hire dates are determined by Government Code   Section 22893, 20 year graduated schedule: CITY OF PALO ALTO  Notes to the Basic Financial Statements  For the Year Ended June 30, 2016    93   NOTE 12 – RETIREE HEALTH BENEFITS (Continued)    In FY 2008, the City elected to participate in an irrevocable trust to provide a funding mechanism for  retiree health benefits. The Trust, California Employers’ Retirees Benefit Trust (CERBT), is administrated  by CalPERS and managed by a separately appointed board, which is not under control of the City Council.  This Trust is not considered a component unit of the City.    Funding Policy and Actuarial Assumptions  The City’s policy is to prefund these benefits by accumulating assets in the Trust Fund discussed above  pursuant to City Council Resolution. The annual required contribution (ARC) was determined as part of a  June 30, 2013 actuarial valuation using the entry age normal actuarial cost method. This is a projected  benefit cost method, which takes into account those benefits that are expected to be earned in the future  as well as those already accrued. The actuarial assumptions include: (a) 7.6125 percent investment rate  of return, (b) 3.25 percent projected annual salary increase, (c) market value of assets, (d) inflation rate  of 3 percent, and (e) health care cost trend data as noted in the following table:     Year Non‐Medicare Medicare 2015 8.0% 8.3% 2016 7.5% 7.8% 2017 7.0% 7.2% 2018 6.5% 6.7% 2019 6.0% 6.1% 2020 5.5% 5.6% 2021+ 5.0% 5.0%    The actuarial methods and assumptions used include techniques that smooth the effects of short‐term  volatility in actuarial accrued liabilities and the actuarial value of assets. Actuarial calculations reflect a  long‐term perspective and actuarial valuations involve estimates of the value of reported amounts and  assumptions about the probability of events far into the future. The calculations are based on the types  of benefits provided under the terms of the substantive plan at the time of each valuation and on the  pattern of sharing costs between the City and Plan members to that point. Actuarially determined  amounts are subject to revision at least biennially as results are compared to past expectations and new  estimates are made about the future. The City’s unfunded actuarial accrued liability for retiree health  benefits is being amortized as a level percentage of projected payroll using a 30 year closed amortization  period.  CITY OF PALO ALTO  Notes to the Basic Financial Statements  For the Year Ended June 30, 2016    94   NOTE 12 – RETIREE HEALTH BENEFITS (Continued)    Generally accepted accounting principles permit assets to be treated as other post employment benefit  (OPEB) assets and deducted from the actuarial accrued liability when such assets are placed in an  irrevocable trust or equivalent arrangement. During the year ended June 30, 2016, the City made  contributions and amortized the Net OPEB asset to fund the current year annual required contribution  (ARC). As a result, the City has calculated and recorded the Net OPEB Asset, representing the difference  between the ARC, amortization and contributions, as presented below (in thousands):    Annual required contribution 14,767$            Amortization of the Net OPEB Asset 2,183                Interest on the Net OPEB Asset (1,658)               Annual OPEB Cost 15,292              Contributions made: Contributions to OPEB Trust 2,442                Contributions to Retirees 7,921                Implicit rate subsidy 2,102                City portion of current year premiums paid*1,618                Total contributions made 14,083              Change in Net OPEB Asset (1,209)               Net OPEB Asset, beginning of year 22,871              Net OPEB Asset, end of year 21,662$              * FY 2016 premiums for 920 retirees.    Shortly after year‐end, the City contributed an additional $2.8 million to the Trust.    The Plan’s annual OPEB cost and actual contributions for the past three years ended June 30 are set forth  below (in thousands):  Fiscal Year Annual OPEB  Cost Actual  Contribution Percentage  of OPEB Cost Net OPEB  Obligation  (Asset) June 30, 2014 13,255$         14,014$         106% (22,610)$         June 30, 2015 14,773            15,034          102% (22,871)          June 30, 2016 15,292            14,083          92% (21,662)             CITY OF PALO ALTO  Notes to the Basic Financial Statements  For the Year Ended June 30, 2016    95   NOTE 12 – RETIREE HEALTH BENEFITS (Continued)  The Schedule of Funding Progress presents multi‐year trend information about whether the actuarial  value of plan assets is increasing or decreasing over time relative to the actuarial accrued liability for  benefits. Trend data from the actuarial studies is presented below (in thousands):  Valuation Date Entry Age  Accrued  Liability Value of  Assets Unfunded  Liability Funded  Ratio Annual  Covered  Payroll Unfunded  Liability as a  % of Payroll June 30, 2011 168,053$         44,774$          123,279$    26.6% 80,664$        152.8% June 30, 2013 203,642    60,070    143,572  29.5% 81,785  175.5% June 30, 2015 234,795    78,578    156,217  33.5% 87,586  178.4% NOTE 13 – DEFERRED COMPENSATION PLAN  City employees may defer a portion of their compensation under City sponsored Deferred Compensation  Plans created in accordance with Internal Revenue Code Section 457. Under these Plans, participants are  not taxed on the deferred portion of their compensation until distributed to them. Distributions may be  made only at termination, retirement, death or in an emergency as defined by the Plans.  The laws governing deferred compensation plan assets require plan assets to be held by a Trust for the  exclusive benefit of plan participants and their beneficiaries. Since the assets held under these plans are  not the City’s property and are not subject to City control, they have been excluded from these financial  statements.  CITY OF PALO ALTO  Notes to the Basic Financial Statements  For the Year Ended June 30, 2016    96   NOTE 14 – RISK MANAGEMENT    Coverage  The City provides dental coverage to employees through a City plan, which is administered by a third party  service agent. The City is self‐insured for dental claims.    The City has a workers’ compensation insurance policy with coverage up to the statutory limit set by the  State of California. The City retains the risk for the first $500,000 in losses for each accident and employee  under this policy.    The City also has public employee dishonesty insurance with a $5,000 deductible and coverage up to  $1.0 million per loss.  The Chief Financial Officer and City Manager each have coverage up to $4.0 million  per loss.     The City’s property, boiler, and machinery insurance policy has various deductibles and coverage based  on the type of property.    The City is a member of the Authority for California Cities Excess Liability (ACCEL), which provides excess  general liability insurance coverage, including auto liability, up to $100 million per occurrence. The City  retains the risk for the first $1.0 million in losses for each occurrence under this policy.    ACCEL was established for the purpose of creating a risk management pool for central California  municipalities. ACCEL is governed by a Board of Directors consisting of representatives of its member  cities. The board controls the operations of ACCEL, including selection of claims management, general  administration and approval of the annual budget.    The City’s deposits with ACCEL equal the ratio of the City’s payroll to the total payroll of all entities. Actual  surpluses or losses are shared according to a formula developed from overall loss costs and spread to  member entities on a percentage basis after a retrospective rating.    During the year ended June 30, 2016, the City paid $0.9 million to ACCEL for current year coverage.    Audited financial statements are available from ACCEL at 100 Pine Street, 11th Floor, San Francisco,  California 94110.    Claims Liability  The City provides for the uninsured portion of claims and judgments in the General Liabilities insurance  program funds. Claims and judgments, including a provision for claims incurred but not reported, and  claim adjustment expenses are recorded when a loss is deemed probable of assertion and the amount of  the loss is reasonably determinable. As discussed above, the City has coverage for such claims, but it has  retained the risk for the deductible or uninsured portion of these claims.    CITY OF PALO ALTO  Notes to the Basic Financial Statements  For the Year Ended June 30, 2016    97   NOTE 14 – RISK MANAGEMENT (Continued)  The City’s liability for uninsured claims is limited to dental, general liability, and workers’ compensation  claims, as discussed above. Dental liability is based on a percentage of current year actual expense.   General and workers’ compensation liabilities are based on the results of actuarial studies, and include  amounts for claims incurred but not reported as follows as of June 30 (in thousands):  2016 2015 Beginning balance 24,118$           26,753$            Liability for current and prior fiscal years claims  and claims incurred but not reported (IBNR)2,850    574     Claims paid (3,589)     (3,209)      Ending balance 23,379$           24,118$            Current portion 5,237$             5,317$        Year Ended June 30 The City has not incurred a claim that has exceeded its insurance coverage limits in any of the last three  years, nor have there been any significant reductions in insurance coverage. NOTE 15 – JOINT VENTURES  General  The City participates in joint ventures through Joint Powers Authorities (JPAs) established under the Joint  Exercise of Powers Act of the State of California. As separate legal entities, these JPAs exercise full powers  and authorities within the scope of the related Joint Powers Agreement, including the preparation of  annual budgets, accountability for all funds, the power to make and execute contracts and the right to  sue and be sued. Obligations and liabilities of the JPAs, including the long‐term debt in which the City  participates in repayment, are not obligations and liabilities of the City, and are not reported on the City’s  financial statements.  Each JPA is governed by a board consisting of representatives from each member agency. Each board  controls the operations of its respective JPA, including selection of management and approval of operating  budgets, independent of any influence by member agencies beyond their representation on the Board.  Northern California Power Agency  The City is a member of Northern California Power Agency (NCPA), a joint powers agency which operates  under a joint powers agreement among fifteen public agencies. The purpose of NCPA is to use the  combined strength of its members to purchase, generate, sell and interchange electric energy and  capacity through the acquisition and use of electrical generation and transmission facilities. Each agency  member has agreed to fund a pro rata share of certain assessments by NCPA and enter into take‐or‐pay  power supply contracts with NCPA. While NCPA is governed by its members, none of its obligations are  those of its members unless expressly assumed by them.  CITY OF PALO ALTO  Notes to the Basic Financial Statements  For the Year Ended June 30, 2016    98   NOTE 15 – JOINT VENTURES (Continued)    During the year ended June 30, 2016, the City incurred expenses totaling $73.4 million for purchased  power and assessments earned by NCPA.    The City’s interest in NCPA projects and reserves, as computed by NCPA, was $7.8 million at June 30, 2016.  This amount represents the City’s portion of funds, which resulted from the settlement with third parties  of issues with financial consequences and reconciliations of several prior years’ budgets for programs. It  is recognized that all the funds credited to the City are linked to the collection of revenue from the City’s  ratepayers, or to the settlement of disputes relating to electric power supply and that the money was  collected from the City’s ratepayers to pay power bills. Additionally, the NCPA Commission identified and  approved the funding of specific reserves for working capital, accumulated employees’ post‐retirement  medical benefits, and billed property taxes for the geothermal project. The Commission also identified a  number of contingent liabilities that may or may not be realized, the cost of which in most cases is difficult  to estimate at this time. One such contingent liability is the steam field depletion, which will require  funding to cover debt service and operational costs in excess of the expected value of the electric power.  The General Operating Reserve (GOR) is intended to minimize the number and amount of individual  reserves needed for each project, protect NCPA’s financial condition and maintain its credit worthiness.  There are no funds on deposit with NCPA as a reserve against these contingencies identified by NCPA.    Members of NCPA may participate in an individual project of NCPA without obligation for any other  project. Member assessments collected for one project may not be used to finance other projects of NCPA  without the member’s permission.    Geothermal Projects  A purchased power agreement with NCPA obligated the City for 6.2 percent and 6.2 percent, respectively,  of the operating costs and debt service of the two NCPA 110‐megawatt geothermal steam‐powered  generating plants, Project Number 2 and Project Number 3.    The City’s participation in the Geothermal Project was sold to Turlock Irrigation District in October 1984.  Accordingly, the City is liable for payment of outstanding geothermal related debt only in the event that  Turlock fails to make specified payments. Total outstanding debt of the NCPA Geothermal Project at  June 30, 2016 is $78.9 million. The City’s participation in this project was 6.2 percent, or $4.9 million.    Calaveras Hydroelectric Project  In July 1981, NCPA agreed with Calaveras County Water District to purchase the output of the North Fork  Stanislaus River Hydroelectric Development Project and to finance its construction. Debt service payments  to NCPA began in February 1990 when the project was declared substantially complete and power was  delivered to the participants. Under its power purchase agreement with NCPA, the City is obligated to pay  22.9 percent of this Project’s debt service and operating costs. At June 30, 2016, the book value of this  Project’s plant, equipment and other assets was $435 million, while its long‐term debt totaled  $356 million and other liabilities totaled $70 million. The City’s share of the Project’s long‐term debt  amounted to $81.5 million at that date.     CITY OF PALO ALTO  Notes to the Basic Financial Statements  For the Year Ended June 30, 2016    99   NOTE 15 – JOINT VENTURES (Continued)    Geothermal Public Power Line  In 1983, NCPA, the Sacramento Municipal Utility District, the City of Santa Clara and the Modesto Irrigation  District (Joint Owners) initiated studies for a Geothermal Public Power Line (GPPL), which would carry  power generated at several existing and planned geothermal plants in The Geysers area to a location  where the Joint Owners could receive it for transmission to their load centers. NCPA has an 18.5 percent  share of this Project and the City has an 11.1 percent participation in NCPA’s share. In 1989, the  development of the proposed Geothermal Public Power Line was discontinued because NCPA was able to  contract for sufficient transmission capacity to meet its needs in The Geysers.    However, because the project financing provided funding for an ownership interest in a Pacific Gas &  Electric (PG&E) transmission line, a central dispatch facility and a performance bond pursuant to the  Interconnection Agreement with PG&E, as well as an ownership interest in the proposed GPPL, NCPA  issued $16 million in long‐term, fixed‐rate revenue bonds in November 1989 to defease the remaining  variable rate refunding bonds used to refinance this project. The City is obligated to pay its 11.1 percent  share of the related debt service, but debt service costs are covered through NCPA billing mechanisms  that allocate the costs to members based on use of the facilities and services.    At June 30, 2016, the book value of this Project’s plant, equipment and other assets was zero, and its long‐ term debt totaled zero.     NCPA’s financial statements can be obtained from NCPA, 180 Cirby Way, Roseville, CA 95678.    Transmission Agency of Northern California (TANC)  The City is a member of a joint powers agreement with 14 other entities in Transmission Agency of  Northern California (TANC). TANC’s purpose is to provide electrical transmission or other facilities for the  use of its members. While governed by its members, none of TANC’s obligations are those of its members  unless expressly assumed by them. The City was obligated to pay 4 percent of TANC’s debt‐service and  operating costs. However, a Resolution was approved authorizing the execution of a Long‐Term Layoff  Agreement (LTLA) between the Cities of Palo Alto and Roseville. These two agencies desired to “layoff”  their entitlement rights to the California‐Oregon Transmission Project (COTP) (and Roseville’s South of  Tesla entitlement rights) for a period of 15 years to those acquiring members (Sacramento Municipal  Utility District, Turlock Irrigation District, and Modesto Irrigation District). The effective date of this  Agreement was February 1, 2009. As a result, the City is not obligated to pay TANC’s debt‐service and  operating costs starting February 1, 2009, for a period of fifteen years.     TANC’s financial statements can be obtained from TANC, P.O. Box 15129, Sacramento, CA 95851.       CITY OF PALO ALTO  Notes to the Basic Financial Statements  For the Year Ended June 30, 2016    100   NOTE 15 – JOINT VENTURES (Continued)    Bay Area Water Supply and Conservation Agency (BAWSCA)   The City is a member of a regional water district with 26 other entities, the Bay Area Water Supply and  Conservation Agency (BAWSCA).  BAWSCA was created on May 27, 2003 to represent the interests of 24  cities and water districts and two private utilities in Alameda, Santa Clara and San Mateo counties that  purchase water on a wholesale basis from the San Francisco regional water system.  It has the power to  issue debt and plan, finance, construct, and operate water supply, transmission, reclamation, and  conservation projects on behalf of its members.      In 2013 the City participated in a debt issuance by BAWSCA.  The debt was issued to repay certain long‐ term costs associated with the San Francisco Public Utilities Commission (SFPUC) water supply contract.   During the fiscal year, the City paid its share of the annual debt service of $1.9 million, which will vary  based on annual water purchases of the City compared to other BAWSCA agencies.     BAWSCA’s financial statements can be obtained from BAWSCA, 155 Bovet Road, Suite 650, San Mateo,  California 94402.        NOTE 16 – COMMITMENTS AND CONTINGENCIES    Palo Alto Unified School District – The City leases a portion of the former Cubberley School site and twelve  extended day care sites from Palo Alto Unified School District (PAUSD). The lease is part of a larger  agreement, which includes a mechanism for a joint planning process between the City and PAUSD to  develop a long‐term master plan for the Cubberley site.  The City will pay $1.86 million annually into a  separate fund to be used for repairing, renovating and/or improving the infrastructure at the Cubberley  site. The lease term expired on December 31, 2014, and the City exercised its option to extend for 5 years,  with a new expiration date of 12/31/2019. The lease provides for one more five‐year option to extend  from 1/1/2020 to 12/31/2024. The City’s rent and infrastructure payment for the facilities is $7.3 million  per year plus insurance, repairs and maintenance. The rent may vary from year to year depending on the  actual number of days used.  Should any new law or regulation require the expenditure of work in excess  of $250,000, per the terms of the lease, the City and PAUSD may renegotiate the lease. This lease is  cancelable upon 90 days’ written notice in the event funds are not appropriated by the City. In addition,  the lease is contingent upon authorization by the Palo Alto electorate if it exceeds the City’s Proposition  4 (GANN) appropriations limitation in any fiscal year. Lease expenditures for the year ended June 30,  2016amounted to $7.4 million. Future minimum annual lease and infrastructure payments are as follows  (in thousands):  Year Ending June 30 Payment 2017 7,565$             2018 7,736              2019 7,912              2020 4,001              27,214$               CITY OF PALO ALTO  Notes to the Basic Financial Statements  For the Year Ended June 30, 2016    101   NOTE 16 – COMMITMENTS AND CONTINGENCIES (Continued)    GreenWaste of Palo Alto – GreenWaste of Palo Alto is the City’s contractor for waste collection,  transportation, and processing services. The agreement expires June 30, 2021. The base compensation  for GreenWaste is adjusted annually based on CPI indicators stipulated in the contract. In FY 2016  payments to GreenWaste were $10.5 million.    City of Palo Alto Regional Water Quality Control Plant – The cities of Palo Alto, Mountain View and Los  Altos (the Partners) participate jointly in the cost of maintaining and operating the City of Palo Alto  Regional Water Quality Control Plant and related system (the Plant). The City is the owner and  administrator of the Plant, which provides the transmission, treatment and disposal of sewage for the  Partners. The cities of Mountain View and Los Altos are entitled to use a portion of the capacity of the  Plant for a specified period of time. Each partner has the right to rent unused capacity from/to the other  partners. The expenses of operations and maintenance are paid quarterly by each partner based on its  pro rata share of treatment costs. Additionally, joint system revenues are shared by the partners in the  same ratio as expenses are paid. The amended agreement has a term of fifty years beginning from the  original signing in October 1968, but may be terminated by any partner upon ten years’ notice to the other  partners. All sewage treatment property, plant and equipment are included in the Wastewater Treatment  Enterprise Fund’s capital assets balance. If the City initiates the termination of the contracts, it is required  to pay the other partners their unamortized contribution towards the capital assets.    Solid Waste Materials Recovery and Transfer Station (SMaRT Station) – On June 9, 1992, the City, along  with the City of Mountain View, signed a Memorandum of Understanding (MOU) with the City of  Sunnyvale (Sunnyvale) to participate in the construction and operation of the SMaRT station, which  recovers recyclable materials from the municipal solid waste delivered from participating cities. Per the  MOU, the City has a capacity share of 21.3 percent of this facility and reimburses its proportionate capacity  share of design, construction and operation costs to Sunnyvale.    On December 1, 1992, the Sunnyvale Financing Authority issued $24.6 million in revenue bonds to finance  the design and construction costs of the SMaRT Station. In the fiscal year ended June 30, 2003, the 1992  bonds were refunded by issuing the 2003 Solid Waste Revenue Bonds in the amount of $20.6 million. Even  though these bonds are payable from and secured by the net revenues of Sunnyvale’s Utilities Enterprise,  the City is obligated to reimburse Sunnyvale 21.3 percent of total debt service payments related to these  bonds. The City’s portion of remaining principal balance for SMaRT revenue bonds as of June 30, 2016, is  $0.4 million. During the year ended June 30, 2016, the City paid $0.4 million as its portion of current debt  service.    In FY 2008, the members agreed to finance an Equipment Replacement Project from existing reserves and  proceeds from the Solid Waste Revenue Bond, Series 2007. The City has committed to repay 27.8 percent  of the remaining debt service on the Bonds. The City’s portion of the Bonds amounts to $0.9 million as of  June 30, 2016. During the year ended June 30, 2016, the City paid $0.2 million as its portion of current  debt service.     CITY OF PALO ALTO  Notes to the Basic Financial Statements  For the Year Ended June 30, 2016    102   NOTE 16 – COMMITMENTS AND CONTINGENCIES (Continued)    UTILITIES ENERGY RESOURCE MANAGEMENT    Electric Power Supply Purchase Agreements – The City has numerous power purchase agreements with  power producers to purchase capacity and energy to supply a portion of its load requirements. As of  June 30, 2016, the approximate minimum obligations for the contracts, assuming the energy is delivered  over the next five years, are as follows:    Fiscal Year Projected Obligation  2017 $64.7 million  2018 $64.2 million  2019 $64.7 million  2020 $65.3 million  2021 $66.1 million    Contractual Commitments beyond 2021 (Electricity) – Several of the City’s purchase power and  transmission contracts extend beyond the five‐year summary presented above. These contracts expire  between 2021 and 2051 and provide for power under various terms and conditions.  The City estimates  that its annual minimum commitments under the contracts, assuming the energy is delivered, ranges  between $67.3 million in 2022 and $48.9 million in 2043.  The City’s largest single purchase power source  is the Western Base Resource contract, whereby the City receives 12.31 percent of the amount of energy  made available by Western, after meeting Central Valley Project use requirements, in any given year after  2014 at a 12.31 percent share of their revenue requirement.  The Western contract expires on December  31, 2024.  The City expects the Western contract to be extended for another 20 years beyond 2024,  although likely at a slightly lower percent share of the total energy output.    Gas Accord V – The City is a party to the Gas Accord V, a natural gas transportation contract between  Pacific Gas and Electric Company (PG&E) and its gas transportation customers.  New rates are determined  through a proceeding at the California Public Utilities Commission.  A final CPUC decision on Pacific Gas  and Electric Company’s (PG&E) Gas Transmission and Storage Case was issued June 2016.  Although  several appeals are underway, Palo Alto’s gas transmission rates increased by 230% and Palo Alto’s local  transmission rates increased by $2 million on August 1, 2016.      San Francisco Public Utilities Commission – The City purchases water to deliver to the customers of its  water utility from the San Francisco Public Utilities Commission (SFPUC) under a contract terminating in  2034.  The City’s wholesale water rate under this contract is determined by a ratemaking process under  the authority of the SFPUC, with contractual limitations on the types of costs that may be allocated to  wholesale water purchasers like the City.  The City is prohibited from purchasing from other water  suppliers under this contract, though it is not prohibited from using ground water.  The City’s cost of water  under this contract is projected to increase by 74% by 2021 as the SFPUC completes an upgrade to its  regional water system facilities under its Water System Improvement Program (WSIP).         CITY OF PALO ALTO  Notes to the Basic Financial Statements  For the Year Ended June 30, 2016    103   NOTE 16 – COMMITMENTS AND CONTINGENCIES (Continued)  Litigation   The City is subject to litigation arising in the normal course of business. In the opinion of the City Attorney,  there is no pending litigation, claims or assessments that are likely to have a materially adverse effect on  the City’s financial condition.  A class action lawsuit for refund of telephone users tax was filed against the City in August 2015.  At this  time, the City Attorney is of the opinion that a potential loss is neither probable nor can it be reasonably  estimated.   A class action lawsuit for refund of allegedly illegal charges to gas and electrical customers was filed  against the City in October 2016.  At this time, the City Attorney is of the opinion that a potential loss is  neither probable nor can it be reasonably estimated.  Grant Programs  The City participates in Federal and State grant programs. These programs have been audited by the City’s  independent auditors in accordance with the provisions of the Federal Single Audit Act amendments of  1996 and applicable State requirements. No costs were questioned as a result of these audits; however,  these programs are still subject to further examination by the grantors and the amount, if any, of  expenditures which may be disallowed by the granting agencies cannot be determined at this time. The  City expects such amounts, if any, to be immaterial.      104   This page is intentionally left blank.    CITY OF PALO ALTO  Required Supplemental Information (Unaudited)  For the Year Ended June 30, 2016    105   I. SCHEDULE OF CHANGES IN NET PENSION LIABILITY AND RELATED RATIOS – MISCELLANEOUS PLAN  (Calculated as of June 30, 2015 and reported as of June 30, 2016, in thousands)  Fiscal year 2015‐16 2014‐15 Measurement Period 2014‐15 2013‐14 Total pension liability Service cost 12,183$     12,442$      Interest 49,345   46,963    Changes of assumptions (11,552)   ‐   Difference between expected and actual experience 3,507   ‐   Benefit payments, including refunds of employee contributions (32,980)   (31,781)   Net change in total pension liability 20,503   27,624    Total pension liability ‐ beginning 663,471  635,847   Total pension liability ‐ ending (a)683,974$     663,471$      Plan fiduciary net position Contributions ‐ employer 18,610$     17,400$      Contributions ‐ employee 5,730   6,345    Net investment income 10,597   70,989    Benefit payments, including refunds of employee contributions (32,980)   (31,781)   Administrative expense (538)   ‐   Net change in fiduciary net position 1,419   62,953    Plan fiduciary net position ‐ beginning 476,363  413,410   Plan fiduciary net position ‐ ending (b)477,782$     476,363$      Plan net pension liability/(asset) ‐ Ending (a) ‐ (b) 206,192$     187,108$      Plan fiduciary net position as a percentage of total pension liability 69.9% 71.8% Covered‐employee payroll 69,837$     66,373$      Plan net pension liability/(asset) as a percentage of covered employee payroll 295.2% 281.9% Notes to Schedule: Benefit changes ‐ The figures above do not include any liability that may have resulted from plan changes  which occurred after the June 30, 2013 valuation date. This applies for voluntary benefit changes as well as any offers of two years additional service credit (Golden Handshake). Changes in assumptions ‐ The discount rate was changed from 7.5 percent (net of administrative expense) to  7.65 percent CITY OF PALO ALTO  Required Supplemental Information (Unaudited)  For the Year Ended June 30, 2016    106   II. SCHEDULE OF CONTRIBUTIONS– MISCELLANEOUS PLAN  (Paid as of June 30, 2016 and deferred to June 30, 2017, in thousands)    Fiscal Year 2015‐16 2014‐15 2013‐14 Contractually required contribution (actuarially determined)18,808$               17,958$               16,209$                Actual contribution (18,808)                (17,958)                (16,209)                 Contribution deficiency/(excess)‐$                          ‐$                          ‐$                           Covered‐employee payroll 70,415$               68,744$               65,889$                Contributions as percentage of covered‐employee payroll 26.71%26.12%24.60%   Notes to Schedule: The actuarial methods and assumptions used to set the actuarially determined contributions for fiscal year 2016 contribution rates are as follows:  Valuation date June 30, 2013 Actuarial cost method Entry age normal Amortization method/period For details, see June 30, 2013 Actuarial Valuation Report Asset valuation method Actuarial Value of Assets. For details, see June 30, 2013 Actuarial Valuation Report Inflation 2.75% Salary increases Varies by entry age and service Payroll growth 3.00% Investment rate of return 7.50% net of pension plan investment and administrative expense, includes inflation Retirement age Probabilities of retirement are based on the 2010  CalPERS experience study of the period 1997 to 2007 Mortality Probabilities of mortality are based on the 2010 CalPERS  experience study of the period 1997 to 2007. Pre‐ and  post‐retirement mortality rates include 5 years of  projected mortality improvement using Scale AA  published by the Society of Actuaries.        CITY OF PALO ALTO  Required Supplemental Information (Unaudited)  For the Year Ended June 30, 2016    107   III. SCHEDULE OF CHANGES IN NET PENSION LIABILITY AND RELATED RATIOS – SAFETY PLAN   (Calculated as of June 30, 2015 and reported as of June 30, 2016, in thousands)    Fiscal Year 2015‐16 2014‐15 Measurement Period 2014‐15 2013‐14 Total pension liability Service cost 5,959$          6,221$           Interest 27,047          26,113           Changes of assumptions (6,327)            ‐                      Difference between expected and actual experience 75                   ‐                      Benefit payments, including refunds of employee contributions (21,148)        (19,985)         Net change in total pension liability 5,606            12,349           Total pension liability ‐ beginning 367,403        355,054         Total pension liability ‐ ending (a)373,009$     367,403$      Plan fiduciary net position Contributions ‐ employer 8,617$          7,616$           Contributions ‐ employee 2,047            2,762             Net investment income 5,774            40,033           Benefit payments, including refunds of employee contributions (21,148)        (19,985)         Administrative expense (290)              ‐                      Net change in fiduciary net position (5,000)           30,426           Plan fiduciary net position ‐ beginning 264,579        234,153         Plan fiduciary net position ‐ ending (b)259,579$     264,579$      Plan net pension liability/(asset) ‐ Ending (a) ‐ (b) 113,430$     102,824$      Plan fiduciary net position as a percentage of total pension liability 69.59% 72.01% Covered‐employee payroll 21,912$        21,896$         Plan net pension liability/(asset) as a percentage of covered employee payroll 517.66% 469.60% Notes to Schedule: Benefit changes ‐ The figures above do not include any liability that may have resulted from plan changes which occurred after the June 30, 2013 valuation date. This applies for voluntary benefit changes as well as any offers of two years additional service credit (Golden Handshake). Changes in assumptions ‐ the discount rate was changed from 7.5 percent (net of administrative expense) to  7.65 percent.               CITY OF PALO ALTO  Required Supplemental Information (Unaudited)  For the Year Ended June 30, 2016    108   IV.SCHEDULE OF CONTRIBUTIONS – SAFETY PLAN (Paid as of June 30, 2016 and deferred to June 30, 2017, in thousands) Fiscal Year 2015‐16 2014‐15 2013‐14 Contractually required contribution (actuarially determined)9,395$      9,036$     8,323$       Actual contribution (9,395)   (9,036)  (8,323)   Contribution deficiency/(excess)‐$     ‐$      ‐$       Covered‐employee payroll 23,229$      22,860$     24,886$       Contributions as percentage of covered‐employee payroll 40.45%39.53%33.44% Notes to Schedule: The actuarial methods and assumptions used to set the actuarially determined contributions for fiscal year 2016 contribution rates are as follows:  Valuation Date June 30, 2013 Actuarial cost method Entry age normal Amortization method/period For details, see June 30, 2013 Actuarial Valuation Report Asset valuation method Actuarial Value of Assets.  For details, see June 30, 2013 Actuarial Valuation Report Inflation 2.75% Salary increases Varies by entry age and service Payroll growth 3.00% Investment rate of return 7.50% net of pension plan investment and administrative expense, includes inflation Retirement age Probabilities of retirement are based on the 2010  CalPERS experience study of the period 1997 to 2007 Mortality Probabilities of mortality are based on the 2010 CalPERS  experience study of the period 1997 to 2007. Pre‐ and  post‐retirement mortality rates include 5 years of  projected mortality improvement using Scale AA  published by the Society of Actuaries. Special Debt Revenue Service Permanent Funds Funds Fund Total ASSETS: Cash and investments: Available for operations 84,373$       3,561$         1,499$          89,433$        Cash and investments with fiscal agents ‐                   248              ‐                    248               Receivables, net: Accounts 7                  24                ‐                    31                 Interest 354              22                6                   382               Notes 18,730        ‐                   ‐                    18,730         Total assets 103,464$    3,855$         1,505$          108,824$     Liabilities: Accounts payable and accruals 354$            ‐$                  ‐$                   354$             Accrued salaries and benefits 46                ‐                   ‐                    46                 Total liabilities 400              ‐                   ‐                    400               Fund balances: Nonspendable Eyerly family ‐                   ‐                   1,505           1,505           Restricted Transportation mitigation 10,841        ‐                   ‐                    10,841         Federal revenue 4,569          ‐                   ‐                    4,569           Street improvement 1,308          ‐                   ‐                    1,308           Local law enforcement 180              ‐                   ‐                    180               Debt service ‐                   3,855          ‐                    3,855           Public benefit 25,649        ‐                   ‐                    25,649         Committed Developer impact fee 14,169        ‐                   ‐                    14,169         Housing In‐Lieu 41,251        ‐                   ‐                    41,251         Special districts 3,704          ‐                   ‐                    3,704           Downtown business 34                ‐                   ‐                    34                 Assigned Unrealized gain on investment 1,358          ‐                   ‐                    1,358           Other general government 1                  ‐                   ‐                    1                   Total fund balances 103,064      3,855          1,505           108,424       Total liabilities and fund balances 103,464$    3,855$         1,505$          108,824$     LIABILITIES AND FUND BALANCES: CITY OF PALO ALTO Non‐major Governmental Funds Combining Balance Sheet June 30, 2016 (Amounts in thousands) 109   110   This page is intentionally left blank.  Special Debt Revenue Service Permanent Funds Funds Fund Total REVENUES: Property tax ‐$                  4,582$         ‐$                   4,582$          Special assessments 100              ‐                   ‐                     100               Other taxes and fines 1,570          ‐                   ‐                     1,570           From other agencies: Community Development Block Grants 240              ‐                   ‐                     240               State of California 126              ‐                   ‐                     126               Permits and licenses University Avenue Parking 2,309          ‐                   ‐                     2,309           California Avenue Parking 214              ‐                   ‐                     214               Other permits and licenses 793              ‐                   ‐                     793               Investment earnings 2,727          127              44                  2,898           Rental income 6                  ‐                   ‐                     6                   Other: Housing In‐Lieu ‐ residential 5,554          ‐                   ‐                     5,554           Other fees 2,086          ‐                   ‐                     2,086           Total revenues 15,725        4,709          44                  20,478         EXPENDITURES: Current: Administrative Services 203              ‐                   ‐                     203               Public Works 797              ‐                   ‐                     797               Planning and Community Environment 663              ‐                   ‐                     663               Police 225              ‐                   ‐                     225               Community Services 1,231          ‐                   ‐                     1,231           Non‐Departmental 559              32                7                    598               Debt service: Principal retirement ‐                   6,735          ‐                     6,735           Interest and fiscal charges ‐                   4,230          ‐                     4,230           Total expenditures 3,678          10,997        7                    14,682         EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES 12,047        (6,288)         37                  5,796           OTHER FINANCING SOURCES (USES): Transfers in 3,564          3,252          ‐                     6,816           Transfers out (9,013)         ‐                   ‐                     (9,013)          Total other financing sources (uses)(5,449)         3,252          ‐                     (2,197)          Change in fund balances 6,598          (3,036)         37                  3,599           FUND BALANCES, BEGINNING OF YEAR 96,466        6,891          1,468            104,825       FUND BALANCES, END OF YEAR 103,064$    3,855$         1,505$          108,424$     CITY OF PALO ALTO Non‐major Governmental Funds Combining Statement of Revenues, Expenditures and Changes in Fund Balances For the Year Ended June 30, 2016 (Amounts in thousands) 111     112   This page is intentionally left blank.      113   NON‐MAJOR GOVERNMENTAL FUNDS  SPECIAL REVENUE FUNDS   Street Improvement   This fund accounts for revenues received from state gas tax. Allocations must be spent on the construction  and maintenance of the road network system of the City.  Federal Revenue  This fund accounts for grant funds received under the Community Development Act of 1974 and HOME  Investment Grant Programs, for activities approved and subject to federal regulations.  Housing In‐Lieu  This fund accounts for revenues from commercial and residential developers to provide housing under  the City’s Below Market Rate program.  Special Districts  This fund accounts for revenues from parking permits and for maintenance of various parking lots within  the City’s parking districts.  Transportation Mitigation  This fund accounts for revenues from fees or contributions required for transportation mitigation issues  encountered as a result of City development.  Local Law Enforcement  This fund accounts for revenues received in support of City’s law enforcement program.  Asset Seizure  This fund accounts for seized property and funds associated with drug trafficking. Under California  Assembly Bill No. 4162, the monies are released to the City for specific expenditures related to law  enforcement activities.  Developer Impact Fee  This fund accounts for fees imposed on new developments to be used for parks, community centers and  libraries.  Downtown Business Development District  The Downtown Business Development District Fund was established to account for the activities of the  Palo Alto Downtown Business Development District, which was established to enhance the viability of the  downtown business district.  Public Benefit  This fund accounts for the activities of the Stanford University Medical Center (SUMC) Development  Agreement (DA) whereby SUMC will enhance and expand their facilities and the City will grant SUMC the  right to develop the facilities in accordance with the DA.  Street Federal Housing Special Improvement Revenue In‐Lieu Districts ASSETS: Cash and investments: Available for operations 1,327$           455$               27,021$          3,796$            Receivables: Accounts ‐                     ‐                     ‐                      ‐                       Interest 6                    ‐                     101                 12                    Notes ‐                     4,165             14,565           ‐                       Total assets 1,333$           4,620$           41,687$          3,808$            Liabilities: Accounts payable and accruals ‐$                    47$                 35$                  76$                  Accrued salaries and benefits ‐                     4                    ‐                      28                    Total liabilities ‐                     51                  35                   104                  Fund balances: Restricted Transportation mitigation ‐                     ‐                     ‐                      ‐                       Federal revenue ‐                     4,569             ‐                      ‐                       Street improvement 1,308             ‐                     ‐                      ‐                       Local law enforcement ‐                     ‐                     ‐                      ‐                       Public benefit ‐                     ‐                     ‐                      ‐                       Committed Developer impact fee ‐                     ‐                     ‐                      ‐                       Housing In‐Lieu ‐                     ‐                     41,251           ‐                       Special districts ‐                     ‐                     ‐                      3,704               Downtown business ‐                     ‐                     ‐                      ‐                       Assigned Unrealized gain on investment 25                  ‐                     401                 ‐                       Other general government ‐                     ‐                     ‐                      ‐                       Total fund balances 1,333             4,569             41,652           3,704               Total liabilities and fund balances 1,333$           4,620$           41,687$          3,808$            LIABILITIES AND FUND BALANCES: CITY OF PALO ALTO Non‐major Special Revenue Funds Combining Balance Sheet June 30, 2016 (Amounts in thousands) 114 Downtown Business Transportation Local Law Asset Developer Development Public  Mitigation Enforcement Seizure Impact Fee District Benefit Total 11,136$          173$                3$14,349$       86$26,027$          84,373$       ‐ 7 ‐‐‐‐ 7 50 1 ‐59                ‐125                 354              ‐ ‐ ‐‐‐‐ 18,730        11,186$          181$                3$14,408$       86$26,152$          103,464$     146$                ‐$ ‐$‐$50$‐$ 354$             ‐ ‐ ‐6 ‐8 46                146 ‐ ‐6 50 8 400              10,841 ‐ ‐‐‐‐ 10,841        ‐ ‐ ‐‐‐‐ 4,569           ‐ ‐ ‐‐‐‐ 1,308           ‐ 178 2 ‐‐‐ 180              ‐ ‐ ‐‐‐25,649 25,649        ‐ ‐ ‐14,169        ‐‐ 14,169        ‐ ‐ ‐‐‐‐ 41,251        ‐ ‐ ‐‐‐‐ 3,704           ‐ ‐ ‐‐34 ‐ 34                199 3 ‐233              2 495 1,358           ‐ ‐ 1 ‐‐‐ 1 11,040 181 3 14,402        36 26,144 103,064      11,186$          181$                3$14,408$       86$26,152$          103,464$     115 Street Federal Housing Special Improvement Revenue In‐Lieu Districts REVENUES: Special assessments ‐$                      ‐$                      ‐$                      ‐$                      Other taxes and fines 1,461              ‐                       ‐                       109                  From other agencies: Community Development Block Grants ‐                      240                  ‐                        ‐                       State of California ‐                       ‐                       ‐                        ‐                       Permits and licenses University Avenue Parking ‐                       ‐                       ‐                       2,309              California Avenue Parking ‐                       ‐                       ‐                       214                  Other permits and licenses ‐                       ‐                       ‐                       793                  Investment earnings 46                    ‐                      956                   91                    Rental income ‐                      ‐                      6                      ‐                       Other: Housing In‐Lieu ‐                      ‐                      5,554               ‐                       Other fees ‐                      365                 ‐                       4                      Total revenues 1,507             605                 6,516               3,520              EXPENDITURES: Current: Administrative Services ‐                      ‐                      ‐                       203                  Public Works ‐                      ‐                      ‐                       797                  Planning and Community Environment ‐                      444                 (449)                 668                  Police ‐                      ‐                      135                   ‐                       Community Services ‐                      ‐                      ‐                       22                    Non‐Departmental ‐                      34                   165                   249                  Total expenditures ‐                      478                 (149)                 1,939              EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES 1,507             127                 6,665               1,581              OTHER FINANCING SOURCES (USES): Transfers in ‐                      ‐                      2,095               642                  Transfers out (1,724)            ‐                      (1,095)              (532)                Total other financing sources (uses)(1,724)            ‐                      1,000               110                  Change in fund balances (217)               127                 7,665               1,691              FUND BALANCES, BEGINNING OF YEAR 1,550             4,442             33,987             2,013              FUND BALANCES, END OF YEAR 1,333$            4,569$            41,652$           3,704$             CITY OF PALO ALTO Non‐major Special Revenue Funds Combining Statement of Revenues, Expenditures and Changes in Fund Balances For the Year Ended June 30, 2016 (Amounts in thousands) 116 Downtown Business Transportation Local Law Asset Developer Development Public Mitigation Enforcement Seizure Impact Fee District Benefit Total ‐$                       ‐$                       ‐$                      ‐$                     100$                 ‐$                      100$             ‐                         ‐                         ‐                        ‐                       ‐                       ‐                       1,570            ‐                         ‐                         ‐                        ‐                       ‐                       ‐                       240                ‐                        126                    ‐                        ‐                       ‐                       ‐                       126                ‐                         ‐                         ‐                        ‐                       ‐                       ‐                       2,309            ‐                         ‐                         ‐                        ‐                       ‐                       ‐                       214                ‐                         ‐                         ‐                        ‐                       ‐                       ‐                       793                353                   6                       1                      419                 3                     852                  2,727            ‐                         ‐                         ‐                        ‐                       ‐                       ‐                       6                    ‐                        ‐                        ‐                       ‐                      ‐                      ‐                       5,554            274                   ‐                        ‐                       1,443             ‐                      ‐                       2,086            627                   132                   1                      1,862             103                 852                  15,725          ‐                        ‐                        ‐                       ‐                      ‐                      ‐                       203                ‐                        ‐                        ‐                       ‐                      ‐                      ‐                       797                ‐                        ‐                        ‐                       ‐                      ‐                      ‐                       663                ‐                        90                     ‐                       ‐                      ‐                      ‐                       225                ‐                        ‐                        ‐                       135                 ‐                      1,074              1,231            ‐                        ‐                        ‐                       ‐                      111                 ‐                       559                ‐                        90                     ‐                       135                 111                 1,074              3,678            627                   42                     1                      1,727             (8)                    (222)                12,047          ‐                        ‐                        ‐                       107                 ‐                      720                  3,564            (1,550)              ‐                        ‐                       ‐                      ‐                      (4,112)             (9,013)           (1,550)              ‐                        ‐                       107                 ‐                      (3,392)             (5,449)           (923)                 42                     1                      1,834             (8)                    (3,614)             6,598            11,963             139                   2                      12,568           44                   29,758            96,466          11,040$           181$                 3$                    14,402$          36$                  26,144$           103,064$     117 Street Improvement Federal Revenue Variance Variance Actual, plus Positive Actual, plus Positive Budget Encumbrances (Negative) Budget Encumbrances (Negative) REVENUES: Special assessments ‐$               ‐$                   ‐$               ‐$                ‐$                   ‐$               Other taxes and fines 1,416       1,461           45             ‐                ‐                    ‐                From other agencies: Community Development Block Grants ‐               ‐                   ‐               442           240               (202)          State of California ‐               ‐                   ‐               ‐                ‐                    ‐                Permits and licenses University Avenue Parking ‐               ‐                   ‐               ‐                ‐                    ‐                California Avenue Parking ‐               ‐                   ‐               ‐                ‐                    ‐                Other permits and licenses ‐               ‐                   ‐               ‐                ‐                    ‐                Investment earnings 13            46                33            ‐                ‐                    ‐                Rental income ‐               ‐                   ‐               ‐                ‐                    ‐                Other: Housing In‐Lieu ‐ residential ‐               ‐                   ‐               ‐                ‐                    ‐                Other fees ‐               ‐                   ‐               136           365               229           Total revenues 1,429       1,507           78            578           605               27             EXPENDITURES: Current: Administrative Services ‐               ‐                   ‐               ‐                ‐                    ‐                Public Works ‐               ‐                   ‐               ‐                ‐                    ‐                Planning and Community Environment ‐               ‐                   ‐               625           483               142           Police ‐               ‐                   ‐               ‐                ‐                    ‐                Community Services ‐               ‐                   ‐               ‐                ‐                    ‐                Non‐Departmental ‐               ‐                   ‐               ‐                34                 (34)            Total expenditures ‐               ‐                   ‐               625           517               108           Excess (deficiency) of revenues  over (under) expenditures 1,429       1,507           78            (47)            88                 135           OTHER FINANCING SOURCES (USES): Transfers in ‐               ‐                   ‐               ‐                ‐                    ‐                Transfers out (1,724)     (1,724)         ‐               ‐                ‐                    ‐                Total other financing sources (uses)(1,724)     (1,724)         ‐               ‐                ‐                    ‐                Change in fund balances, budgetary basis (295)$        (217)             78$           (47)$           88                 135$          Adjustment to Budgetary Basis: Current year encumbrances/reappropriations ‐                   39                  (217)             127                FUND BALANCES, BEGINNING OF YEAR, GAAP BASIS 1,550           4,442             FUND BALANCES, END OF YEAR, GAAP BASIS 1,333$         4,569$           CHANGE IN FUND BALANCE, GAAP BASIS (Amounts in thousands) CITY OF PALO ALTO Non‐major Special Revenue Funds Combining Schedule of Revenues, Expenditures and Changes in Fund Balances ‐  Budget and Actual For the Year Ended June 30, 2016 118 Housing In‐Lieu Special Districts Transportation Mitigation Variance Variance Variance Actual, plus Positive Actual, plus Positive Actual, plus Positive Budget Encumbrances (Negative) Budget Encumbrances (Negative) Budget Encumbrances (Negative) ‐$                ‐$ ‐$               ‐$              ‐$‐$              ‐$               ‐$‐$               ‐‐‐43             109              66            ‐                ‐‐ ‐‐‐‐‐‐‐                ‐‐ ‐‐‐‐‐‐‐                ‐‐ ‐‐‐1,695        2,309           614          ‐                ‐‐ ‐‐‐195           214              19            ‐                ‐‐ ‐‐‐508           793              285          ‐                ‐‐ 274            956                682            27             91 64            172          353                181           9                 6 (3)               ‐‐‐‐                ‐‐ 5,085         5,554             469            ‐‐‐‐                ‐‐ ‐‐‐‐4 4               1,717       274                (1,443)      5,368         6,516             1,148         2,468        3,520           1,052       1,889       627                (1,262)      ‐‐‐205           203              2               ‐                ‐‐ ‐‐‐998           896              102          ‐                ‐‐ 2,592         (371)               2,963         1,456        878              578          ‐                ‐‐ ‐135                (135)           ‐‐‐‐                ‐‐ ‐‐‐26             22 4               ‐                ‐‐ 378            165                213            166           249              (83)           ‐                ‐‐ 2,970         (71)                 3,041         2,851        2,248           603          ‐                ‐‐ 2,398         6,587             4,189         (383)          1,272           1,655       1,889       627                (1,262)      ‐2,095             2,095         642           642              ‐‐                ‐‐ ‐(1,095)           (1,095)       (532)          (532)             ‐(1,550)     (1,550)           ‐ ‐1,000             1,000         110           110              ‐(1,550)     (1,550)           ‐ 2,398$       7,587             5,189$       (273)$        1,382           1,655$      339$         (923)               (1,262)$     78 309              ‐ 7,665             1,691           (923)                33,987          2,013           11,963           41,652$        3,704$         11,040$         119 Local Law Enforcement Asset Seizure Variance Variance Actual, plus Positive Actual, plus Positive Budget Encumbrances (Negative) Budget Encumbrances (Negative) REVENUES: Special assessments ‐$               ‐$                   ‐$               ‐$                ‐$                   ‐$               Other taxes and fines ‐                ‐                   ‐               ‐                ‐                    ‐                From other agencies: Community Development Block Grants ‐               ‐                   ‐               ‐                ‐                    ‐                State of California 106          126              20            ‐                ‐                    ‐                Permits and licenses University Avenue Parking ‐               ‐                   ‐               ‐                ‐                    ‐                California Avenue Parking ‐               ‐                   ‐               ‐                ‐                    ‐                Other permits and licenses ‐               ‐                   ‐               ‐                ‐                    ‐                Investment earnings ‐               6                  6               ‐                1                   1                Rental income ‐               ‐                   ‐               ‐                ‐                    ‐                Other: Housing In‐Lieu ‐ residential ‐               ‐                   ‐               ‐                ‐                    ‐                Other fees ‐               ‐                   ‐               ‐                ‐                    ‐                Total revenues 106          132              26            ‐                1                   1                EXPENDITURES: Current: Administrative Services ‐               ‐                   ‐               ‐                ‐                    ‐                Public Works ‐               ‐                   ‐               ‐                ‐                    ‐                Planning and Community Environment ‐               ‐                   ‐               ‐                ‐                    ‐                Police 143          156              (13)           ‐                ‐                    ‐                Community Services ‐               ‐                   ‐               ‐                ‐                    ‐                Non‐Departmental ‐               ‐                   ‐               ‐                ‐                    ‐                Total expenditures 143          156              (13)           ‐                ‐                    ‐                Excess (deficiency) of revenues  over (under) expenditures (37)           (24)               13            ‐                1                   1                OTHER FINANCING SOURCES (USES): Transfers in ‐               ‐                   ‐               ‐                ‐                    ‐                Transfers out ‐               ‐                   ‐               ‐                ‐                    ‐                Total other financing sources (uses)‐               ‐                   ‐               ‐                ‐                    ‐                Change in fund balances, Budgetary basis (37)$          (24)               13$           ‐$               1                   1$              Adjustment to Budgetary Basis: Current year encumbrances/reappropriations 66                ‐                     42                1                    FUND BALANCES, BEGINNING OF YEAR, GAAP BASIS 139              2                    FUND BALANCES, END OF YEAR, GAAP BASIS 181$             3$                  CHANGE IN FUND BALANCE, GAAP BASIS (Amounts in Thousands) CITY OF PALO ALTO Non‐major Special Revenue Funds Combining Schedule of Revenues, Expenditures and Changes in Fund Balances ‐  Budget and Actual For the Year Ended June 30, 2016 120 Developer Impact Fee Downtown Business Improvement District Public Benefit Variance Variance Variance Actual, plus Positive Actual, plus Positive Actual, plus Positive Budget Encumbrances (Negative) Budget Encumbrances (Negative) Budget Encumbrances (Negative) ‐$               ‐$ ‐$               100$         100$             ‐$              ‐$               ‐$‐$               ‐‐‐‐‐‐‐                ‐‐ ‐‐‐‐‐‐‐                ‐‐ ‐‐‐‐‐‐‐                ‐‐ ‐‐‐‐‐‐‐                ‐‐ ‐‐‐‐‐‐‐                ‐‐ ‐‐‐‐‐‐‐                ‐‐ 215            419                204            2                3 1               663          852                189           ‐‐‐‐‐‐‐                ‐‐ ‐‐‐‐‐‐‐                ‐‐ 1,569         1,443             (126)           ‐‐‐‐                ‐‐ 1,784         1,862             78              102           103              1               663          852                189           ‐‐‐‐‐‐‐                ‐‐ ‐‐‐‐‐‐‐                ‐‐ ‐‐‐‐‐‐‐                ‐‐ ‐‐‐‐‐‐‐                ‐‐ 136            135                1                 ‐‐‐1,318       1,075             243           ‐‐‐136           124              12            ‐                ‐‐ 136            135                1                 136           124              12            1,318       1,075             243           1,648         1,727             79              (34)            (21)               13            (655)         (223)               432           69              107                38              ‐‐‐‐                720                720           ‐‐‐‐‐‐(2,392)     (4,112)           (1,720)      69              107                38              ‐‐‐(2,392)     (3,392)           (1,000)      1,717$       1,834             117$          (34)$          (21)               13$           (3,047)$    (3,615)           (568)$         ‐13 1 1,834             (8)(3,614)            12,568          44 29,758           14,402$        36$               26,144$         121   122   This page is left intentionally blank.      123   NON‐MAJOR GOVERNMENTAL FUNDS  DEBT SERVICE FUNDS   Downtown Parking Improvement  This fund accounts for revenues received from the General Fund to provide payment of principal and  interest associated with the 2002B Downtown Parking Improvement Certificates of Participation as they  become due.  Library Projects  This fund accounts for revenues received from property taxes to provide payment of principal and interest  associated with the 2010 and 2013A General Obligation Bonds as they become due.  CITY OF PALO ALTO Non‐major Debt Service Funds Combining Balance Sheet June 30, 2016 (Amounts in thousands) Downtown Parking Library Improvement Projects Total ASSETS: Cash and investments: Available for operations 14$                  3,547$            3,561$             Cash and investments with fiscal agents 237                 11                    248                   Receivables: Accounts ‐                      24                    24                     Interest ‐                      22                    22                     Total assets 251$               3,604$            3,855$             FUND BALANCES: Debt service 251$               3,604$            3,855$             124 CITY OF PALO ALTO Non‐major Debt Service Funds Combining Statement of Revenues, Expenditures and Changes in Fund Balances For the Year Ended June 30, 2016 (Amounts in thousands) Downtown Parking Library Improvement Projects Total REVENUES: Property tax ‐$4,582$            4,582$             Investment earnings ‐127 127 Total revenues ‐4,709             4,709               EXPENDITURES: Current: Non‐Departmental ‐32 32 Debt service: Principal retirement 150 6,585             6,735               Interest and fiscal charges 84 4,146             4,230               Total expenditures 234 10,763           10,997             (DEFICIENCY) OF REVENUES (UNDER) EXPENDITURES (234)               (6,054)            (6,288)              OTHER FINANCING SOURCES (USES): Transfers in 234 3,018             3,252               Total other financing sources (uses)234 3,018             3,252               Change in fund balances ‐(3,036)            (3,036)              FUND BALANCES, BEGINNING OF YEAR 251 6,640             6,891               FUND BALANCES, END OF YEAR 251$               3,604$            3,855$             125 Downtown Parking Improvement Library Projects Variance Variance Actual, plus Positive Actual, plus Positive Budget Encumbrances (Negative) Budget Encumbrances (Negative) REVENUES: Special assessments ‐$              ‐$                 ‐$              4,655$      4,582$         (73)$          Investment earnings ‐               ‐                   ‐               ‐                127              127           Total revenues ‐               ‐                   ‐               4,655       4,709           54             EXPENDITURES: Current: Non‐Departmental ‐               ‐                   ‐               ‐                32                 (32)            Debt service: Principal retirement 150          150             ‐               1,445       6,585           (5,140)      Interest and fiscal charges 93            84                9              3,210       4,146           (936)         Total expenditures 243          234             9              4,655       10,763         (6,108)      Excess (deficiency) of revenues  over (under) expenditures (243)        (234)            9              ‐                (6,054)          (6,054)      OTHER FINANCING SOURCES (USES): Transfers in 243          234             (9)             ‐                3,018           3,018       Total other financing sources (uses)243          234             (9)             ‐                3,018           3,018       Change in fund balances, Budgetary basis ‐$              ‐                   ‐$              ‐$               (3,036)          (3,036)$     ‐                   (3,036)           FUND BALANCES, BEGINNING OF YEAR 251             6,640            FUND BALANCES, END OF YEAR 251$            3,604$          CHANGE IN FUND BALANCE, GAAP BASIS (Amounts in thousands) CITY OF PALO ALTO Non‐major Debt Service Funds Combining Schedule of Revenues, Expenditures and Changes in Fund Balances ‐  Budget and Actual For the Year Ended June 30, 2016 126   127   NON‐MAJOR GOVERNMENTAL FUNDS  PERMANENT FUND  Eyerly Family  This fund accounts for the revenues received from assets donated by Mr. and Mrs. Fred Eyerly for the City  and or its citizenry.  Eyerly Family Permanent Fund Variance Actual, plus Positive Budget Encumbrances (Negative) REVENUES: Investment earnings 27$              44$               17$               Total revenues 27                44                 17                  EXPENDITURES: Current: Non‐Departmental ‐                   7                   (7)                  Total expenditures ‐                   7                   (7)                  Excess (deficiency) of revenues  over (under) expenditures 27                37                 10                  Change in fund balance 27$              37                 10$               37                  FUND BALANCE, BEGINNING OF YEAR 1,468           FUND BALANCE, END OF YEAR 1,505$          CHANGE IN FUND BALANCE, GAAP BASIS (Amounts in thousands) CITY OF PALO ALTO Non‐major Permanent Fund Schedule of Revenues, Expenditures and Changes in Fund Balance ‐  Budget and Actual For the Year Ended June 30, 2016 128   129   INTERNAL SERVICE FUNDS  INTRODUCTION  Internal Service Funds are used to finance and account for special activities and services performed by a  designated department for other departments in the City on a cost reimbursement basis.  Vehicle Replacement and Maintenance  This fund accounts for the maintenance and replacement of vehicles and equipment used by all City  departments. The source of revenue is from reimbursement of fleet replacement and maintenance costs  allocated to each department by usage of vehicle.  Technology  This fund accounts for replacement and upgrade of technology, and covers four primary areas used by all  City departments: desktop, infrastructure, applications, and technology research and development. The  source of revenue is from reimbursement of costs for support provided to other departments.  Printing and Mailing Services  This fund accounts for central duplicating, printing and mailing services provided to all City departments.  Source of revenue for this fund is from reimbursement of costs for services and supplies purchased by  other departments.  General Benefits  This fund accounts for the administration of compensated absences and health benefits.  Workers’ Compensation Insurance Program  This fund accounts for the administration of the City’s self‐insured workers’ compensation programs.  General Liabilities Insurance Program  This fund accounts for the administration of the City’s self‐insured general liability programs.  Retiree Health Benefits  This fund accounts for the retiree health benefits.  Vehicle Printing Workers' General Replacement and Compensation Liabilities Retiree and Mailing General Insurance Insurance Health Maintenance Technology Services Benefits Program Program Benefits Total ASSETS: Current Assets: Cash and investments: Available for operations 11,134$      22,403$      24$             12,977$      21,231$      8,203$         4,072$         80,044$       Accounts receivable, net 34               ‐‐33              48              ‐ ‐115             Interest receivable 46              91              ‐62              92              34 16 341             Inventory of materials and supplies 368             ‐‐‐‐‐ ‐368             Total current assets 11,582       22,494       24              13,072       21,371       8,237           4,088           80,868        Noncurrent Assets: Capital assets: Nondepreciable 247            1,582         ‐‐‐‐ ‐1,829          Depreciable, net 13,006       1,631         ‐‐‐‐ ‐14,637        Net OPEB asset ‐‐‐‐‐‐ 21,662         21,662        Total noncurrent assets 13,253       3,213          ‐‐‐‐ 21,662         38,128        Total assets 24,835       25,707       24              13,072       21,371       8,237           25,750         118,996      DEFERRED OUTFLOWS OF RESOURCES: Deferred pension contribution 357            1,053         30               ‐‐‐ ‐1,440          Total deferred outflows of resources 357            1,053         30               ‐‐‐ ‐1,440          LIABILITIES: Current Liabilities: Accounts payable and accruals ‐644            ‐(792)           155            ‐ ‐7 Accrued salaries and benefits 64              196            3 2 ‐‐ ‐265             Accrued compensated absences 8 26              ‐4,902         ‐‐ ‐4,936          Accrued claims payable ‐ current ‐‐‐146            3,181         1,910           ‐5,237          Total current liabilities 72              866            3 4,258         3,336         1,910            ‐10,445        Noncurrent liabilities: Accrued compensated absences ‐‐‐6,286         ‐‐ ‐6,286          Accrued claims payable ‐‐‐‐15,115       3,027           ‐18,142        Net pension liabilities 2,807         9,565         303            ‐‐‐ ‐12,675        Total noncurrent liabilities 2,807         9,565         303            6,286         15,115       3,027            ‐37,103        Total liabilities 2,879         10,431       306            10,544       18,451       4,937            ‐47,548        DEFERRED INFLOWS OF RESOURCES: Pension Related 139            568            18              ‐‐‐ ‐725             Total deferred inflows of resources 139            568            18               ‐‐‐ ‐725             NET POSITION: Net Investment in capital assets 13,253       3,213          ‐‐‐‐ ‐16,466        Unrestricted 8,921         12,548       (270)           2,528         2,920         3,300           25,750         55,697        Total net position 22,174$      15,761$      (270)$          2,528$        2,920$        3,300$         25,750$       72,163$       CITY OF PALO ALTO Internal Service Funds Combining Statement of Fund Net Position June 30, 2016 (Amounts in thousands) 130 Vehicle Printing Workers' General Replacement and Compensation Liabilities Retiree and Mailing General Insurance Insurance Health Maintenance Technology Services Benefits Program Program Benefits Total OPERATING REVENUES: Charges for services 7,325$         13,334$      1,296$         46,925$      2,189$         2,398$          12,343$      85,810$       Other ‐                   ‐                   ‐                   ‐                   282             (245)              ‐                    37                Total operating revenues 7,325          13,334        1,296          46,925        2,471          2,153            12,343         85,847         OPERATING EXPENSES: Administrative and general 1,777          6,820          905             176             831             1,638            596              12,743         Operations and maintenance 3,594          6,155          377             789              ‐                    ‐                     14,372         25,287         Depreciation and amortization 2,046          479             ‐                   ‐                   ‐                    ‐                     ‐                    2,525           Claim payments and change in estimated self‐insured liability ‐                   ‐                   ‐                   1,572          1,349          211                ‐                    3,132           Refund of charges for services 46               8                   ‐                   ‐                   ‐                    ‐                     ‐                    54                Compensated absences and other benefits ‐                   ‐                   ‐                   42,538        ‐                    ‐                     ‐                    42,538         Total operating expenses 7,463          13,462        1,282          45,075        2,180          1,849            14,968         86,279         Operating income (loss)(138)            (128)            14               1,850          291             304               (2,625)          (432)             NONOPERATING REVENUES (EXPENSES): Investment earnings 311             630             (1)                241             638             234               103              2,156           Gain on disposal of capital assets 185              ‐                   ‐                   ‐                   ‐                    ‐                     ‐                    185              Other nonoperating revenues 40                ‐                   ‐                   ‐                   ‐                    ‐                     ‐                    40                Total nonoperating revenues (expenses)536             630             (1)                241             638             234               103              2,381           Income (loss) before transfers 398             502             13               2,091          929             538               (2,522)          1,949           Transfers in 1,306          2,480          ‐                   ‐                   ‐                    ‐                     2,102           5,888           Transfers out (367)            (57)               ‐                   (2,102)         ‐                    ‐                     ‐                    (2,526)          Change in net position 1,337          2,925          13               (11)              929             538               (420)             5,311           NET POSITION, BEGINNING OF YEAR 20,837        12,836        (283)            2,539          1,991          2,762            26,170         66,852         NET POSITION, END OF YEAR 22,174$      15,761$      (270)$           2,528$         2,920$         3,300$          25,750$      72,163$       CITY OF PALO ALTO Internal Service Funds Combining Statement of Revenues, Expenses and Changes in Fund Net Position For the Year Ended June 30, 2016 (Amounts in thousands) 131 Vehicle Printing Workers' General Replacement and Compensation Liabilities Retiree and Mailing General Insurance Insurance Health Maintenance Technology Services Benefits Program Program Benefits Total Cash flows from operating activities: Cash received from customers 7,629$         13,334$      1,296$        46,937$      2,288$        2,403$         12,343$       86,230$       Cash refunds to customers (46)              (8)               ‐‐‐‐ ‐(54)              Cash payments to suppliers for goods and services (3,304)          (7,049)        (142)           (2,328)         ‐‐ (13,163)       (25,986)      Cash payments to employees (2,132)          (5,702)        (1,150)        (42,877)     (758)           (1,638)          (596)            (54,853)      Cash payments for judgments and claims ‐‐‐(1,572)        (1,904)        (113)              ‐(3,589)         Other cash receipts 40                ‐‐‐‐‐ ‐40                Net cash flows provided by (used in)  operating activities 2,187           575            4 160            (374)           652              (1,416)          1,788          Cash flows from noncapital financing activities: Transfers in 1,306           2,480         ‐‐‐‐ 2,102           5,888          Transfers out (367)            (57)             ‐(2,102)        ‐‐ ‐(2,526)         Net cash flows provided by (used in) noncapital financing activities 939             2,423          ‐(2,102)         ‐‐ 2,102           3,362          Cash flows from capital and related financing activities: Acquisition of capital assets (2,709)          (1,004)        ‐‐‐‐ ‐(3,713)         Proceeds from sale of capital assets 221             ‐‐‐‐‐ ‐221             Net cash flows (used in)  capital and related financing activities (2,488)          (1,004)         ‐‐‐‐ ‐(3,492)         Cash flows from investing activities: Interest received 313             624            (1)               229            630            229              109             2,133          Net cash flows provided by investing activities 313             624            (1)               229            630            229              109             2,133          Net change in cash and cash equivalents 951             2,618         3 (1,713)        256            881              795             3,791          Cash and cash equivalents, beginning of year 10,183         19,785       21               14,690       20,975       7,322           3,277           76,253        Cash and cash equivalents, end of year  $      11,134 $      22,403 $              24 $      12,977 $      21,231  $         8,203  $         4,072 $      80,044  Reconciliation of operating income (loss) to net cash flows provided by (used in) operating activities: Operating income (loss)(138)$          (128)$          14$             1,850$        291$           304$            (2,625)$       (432)$           Adjustments to reconcile operating income (loss)  to net cash provided by (used in) operating activities: Depreciation 2,046           479            ‐‐‐‐ ‐2,525          Other 40                 ‐‐‐‐‐ ‐40                Change in assets and liabilities: Accounts receivable 304             ‐‐12               99               250              ‐665             Inventory of materials and supplies 2 ‐‐‐‐‐ ‐2 Net OPEB asset ‐‐‐‐‐‐ 1,209           1,209          Deferred outflows of resources ‐ pension plans (77)              (217)           (4)               ‐‐‐ ‐(298)            Accounts payable and accruals ‐448            ‐(2,155)        73               ‐ ‐(1,634)         Accrued salaries and benefits 19                69               (2)               (9)               ‐‐ ‐77                Accrued compensated absences ‐5 (1)               462            ‐‐ ‐466             Accrued claims payable ‐‐‐‐(837)           98                 ‐(739)            Net pension liability 288             859            27                ‐‐‐ ‐1,174          Deferred inflows of resources ‐ pension plans (297)            (940)           (30)             ‐‐‐ ‐(1,267)         Net cash flows provided by (used in)  operating activities 2,187$         575$           4$                160$           (374)$          652$            (1,416)$       1,788$         CITY OF PALO ALTO Internal Service Funds Combining Statement of Cash Flows For the Year Ended June 30, 2016 (Amounts in thousands) 132   133   FIDUCIARY FUNDS  INTRODUCTION  Fiduciary Funds are used to account for assets held by the City acting in a fiduciary capacity for other  entities and individuals. The funds are operated to carry out the specific actions required by the trust  agreements, ordinances and other governing regulations.  Fiduciary Funds are presented separately from the Citywide and Fund financial statements.  Agency Funds are custodial in nature and do not involve measurement of results of operations. The City  maintains three agency funds, as follows:  California Avenue Parking Assessment District  This fund accounts for receipts and disbursements associated with the 1993 Parking District No. 92‐13  Assessment Bonds.  Cable Joint Powers Authority  The fund was established to account for the activities of the cable television system on behalf of the  members.  University Avenue Area Off‐Street Parking Assessment District  The fund accounts for the receipts and disbursements associated with the Series 2012 Limited Obligation  Refunding Improvement Bonds.  CITY OF PALO ALTO All Agency Funds Statement of Changes in Assets and Liabilities For the Year Ended June 30, 2016 Balance Balance California Avenue Parking Assessment District June 30, 2015 Additions Deletions June 30, 2016 ASSETS: Cash and investments available for operations 175$                  ‐$                        175$                   ‐$                         LIABILITIES: Due to bondholders 175$                  ‐$                        175$                   ‐$                         Cable Joint Powers Authority ASSETS: Cash and investments available for operations 660$                  ‐$                        9$                        651$                   Accounts receivable 503                   ‐                         8                         495                     Interest receivable 3                        ‐                         ‐                          3                          Total assets 1,166$               ‐$                        17$                     1,149$                LIABILITIES: Due to other governments 1,166$               ‐$                        17$                     1,149$                ASSETS: Cash and investments available for operations 2,192$               ‐$                        196$                   1,996$                Cash and investments with fiscal agents 2,543                7                        ‐                          2,550                  Accounts receivable 9                        1                        ‐                          10                        Interest receivable 9                        ‐                         ‐                          9                          Total assets 4,753$               8$                       196$                   4,565$                LIABILITIES: Due to bondholders 4,753$               ‐$                        188$                   4,565$                Total Agency Funds ASSETS: Cash and investments available for operations 3,027$               ‐$                        380$                   2,647$                Cash and investments with fiscal agents 2,543                7                        ‐                          2,550                  Accounts receivable 512                   1                        8                         505                     Interest receivable 12                      ‐                         ‐                          12                        Total assets 6,094$               8$                       388$                   5,714$                LIABILITIES: Due to bondholders 4,928$               ‐$                        363$                   4,565$                Due to other governments 1,166                ‐                         17                       1,149                  Total liabilities 6,094$               ‐$                        380$                   5,714$                (Amounts in thousands) University Avenue Area  Off‐Street Parking Assessment District 134   135   STATISTICAL SECTION  The statistical section contains comprehensive statistical data, which relates to physical, economic, social  and political characteristics of the City. It is intended to provide users with a broader and more complete  understanding of the City and its financial affairs than is possible from the financial statements and  supporting schedules included in the financial section.  In this section, readers will find comparative information related to the City’s revenue sources,  expenditures, property tax valuations, levies and collections, general obligation bonded debt, utility  revenue debt service, and demographics. Where available, the comparative information is presented for  the last ten fiscal years.  In addition, this section presents information related to the City’s legal debt margin computation, principal  taxpayers, notary and security bond coverages, and other miscellaneous statistics pertaining to services  provided by the City.  In contrast to the financial section, the statistical section information is not usually subject to independent  audit.  Financial Trends  These schedules contain trend information to help the reader understand how the City’s financial  performance and well‐being have changed over time:  Net Position by Component Changes in Net Position Fund Balances of Governmental Funds Changes in Fund Balances of Governmental Funds Revenue Capacity  These schedules contain information to help the reader assess the City’s most significant local revenue  sources, property tax and electric charges:  Electric Operating Revenue by Source Supplemental Disclosure for Water Utilities Assessed Value of Taxable Property Property Tax Rates, All Overlapping Governments Property Tax Levies and Collections Principal Property Taxpayers Assessed Valuation and Parcels by Land Use Per Parcel Assessed Valuation of Single Family Residential Debt Capacity  These schedules present information to help the reader assess the affordability of the City’s current levels  of outstanding debt and the City’s ability to issue additional debt in the future:  Ratio of Outstanding Debt by Type Computation of Direct and Overlapping Debt Computation of Legal Bonded Debt Margin Revenue Bond Coverage   136   STATISTICAL SECTION    Demographic and Economic Information  These schedules offer demographic and economic indicators to help the reader understand the  environment within which the City’s financial activities take place:   Taxable Transactions by Type of Business   Demographic and Economic Statistics   Principal Employers    Operating Information  These schedules contain service and infrastructure data to help the reader understand how the  information in the City’s financial report relates to the services the City provides and the activities it  performs:   Operating Indicators by Function/Program   Capital Asset Statistics by Function/Program   Full‐Time Equivalent City Government Employees by Function    Sources  Unless otherwise noted, the information in these schedules is derived from the Comprehensive Annual  Financial Reports for the relevant year.    2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Governmental Activities Investment in capital assets 326,411$        343,537$         356,657$        369,499$        364,747$        370,111$         378,047$        386,696$        405,921$        425,179$         Restricted 32,576             27,428             36,632             34,323             16,437             52,934             71,717             68,331             55,963            47,907              Unrestricted 127,190          130,460           118,133          102,199          134,722          142,102           165,810          187,386          1,972              37,905              Total Governmental Activities Net Position 486,177$        501,425$         511,422$        506,021$        515,906$        565,147$         615,574$        642,413$        463,856$        510,991$         Business‐type Activities Investment in capital assets 342,922$        370,303$         384,313$        399,317$        416,418$        437,151$         446,597$        473,795$        490,874$        512,918$         Restricted 1,732               1,732                1,732               4,300                ‐                         ‐                        4,060               4,166               4,142              4,115                Unrestricted 230,912          226,539           208,025          232,420          253,740          262,602           269,926          266,794          172,802          162,806           Total Business‐type Activities Net Position 575,566$        598,574$         594,070$        636,037$        670,158$        699,753$         720,583$        744,755$        667,818$        679,839$         Primary Government Investment in capital assets 669,333$        713,840$         740,970$        768,816$        781,165$        807,262$         824,644$        860,491$        896,795$        938,097$         Restricted 34,308             29,160             38,364             38,623             16,437             52,934             75,777             72,497             60,105            52,022              Unrestricted 358,102          356,999           326,158          334,619          388,462          404,704           435,736          454,180          174,774          200,711           Total Primary Government Net Position 1,061,743$     1,099,999$     1,105,492$     1,142,058$     1,186,064$     1,264,900$     1,336,157$     1,387,168$     1,131,674$    1,190,830$      Source:  Annual Financial Statements, Statement of Net Position Fiscal Year Ended June 30 CITY OF PALO ALTO Net Position by Component Last Ten Fiscal Years (Amounts in thousands) (Accrual basis of accounting) $0 $100,000 $200,000 $300,000 $400,000 $500,000 $600,000 $700,000 $800,000 $900,000 $1,000,000 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 $ Th o u s a n d s Primary Government Investment in capital assets Restricted Unrestricted 137 PROGRAM REVENUES 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Governmental Activities Charges for services City Attorney 13$ 16$               12$               53$               ‐$ ‐$ ‐$ ‐$ ‐$ ‐$  City Clerk ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐  City Auditor ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐  Administrative Services 835 870               726               984               2,889            1,647            15,629            4,055              5,460              9,444             Human Resources 11 ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐  Public Works 968 1,310            1,169            1,258            2,419            1,008            1,314              1,093              1,209              599                Planning & Community Environment 6,267               5,498            4,704            4,813            7,237            31,491          28,768            12,896            8,090              9,071             Development Services3 ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ 12,019            12,570           Public Safety 13,789             13,692          14,670          14,337          15,274          15,658          16,139            14,902            15,726            13,945           Community Services 9,128               10,314          8,522            8,729            7,724            11,365          13,808            20,882            20,912            21,551           Library 146 176               177               199               480               1,600            187                 166                 137                 198                Operating grants and contributions 5,642               4,029            3,599            4,829            2,884            3,441            5,038              5,360              5,300              2,164             Capital grants and contributions 1,756               1,930           3,810          1,280          1,903          1,064          515               917                 619                344              Total Governmental Activities Program Revenues 38,555             37,835          37,389          36,482          40,810          67,274          81,398            60,271            69,472            69,886           Business‐type Activities Charges for services Water 23,495             26,510          27,120          26,259          26,624          31,467          37,746            40,291            35,847            37,588           Electric 102,549           103,833       119,320       121,900       122,109       118,886       121,805          121,916          120,842          120,743        Fiber Optics1 ‐ ‐ 3,336            3,105            3,322            3,662            4,382              4,485              4,627              4,505             Gas 42,221             49,021          47,838          44,450          43,584          41,774          34,633            35,737            30,751            30,212           Wastewater Collection 14,848             15,102          14,486          15,136          15,094          14,942          16,077            15,599            16,182            16,496           Wastewater Treatment 16,957             22,889          28,425          16,915          18,830          22,200          21,528            18,460            24,120            23,825           Refuse 25,532             28,805          29,101          28,568          30,469          30,645          30,583            30,297            31,576            32,169           Storm Drainage 5,181               5,450            5,505            5,647            5,796            5,892            6,053              6,183              6,281              6,520             Airport ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ 683                 826                External Services 789 112               ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐  Operating grants and contributions ‐ ‐ ‐ 361               610               605               572                 549                 534                 744                Capital grants and contributions 756 1,594           639             475             3,004          1,526          2,224            2,005              2,080             1,061           Total Business‐type Activities  Program Revenues 232,328           253,316       275,770       262,816       269,442       271,599       275,603          275,522          273,523          274,689        Total Primary Government  Program Revenues 270,883$         291,151$     313,159$     299,298$     310,252$     338,873$     357,001$       335,793$       342,995$       344,575$      EXPENSES Governmental Activities City Council 180$                323$             394$             455$             15$               345$             94$                 387$               271$               352$              City Manager 1,760               2,273            2,085            2,399            1,842            1,960            1,237              2,180              2,155              2,662             City Attorney 2,390               2,653            2,575            2,621            953               1,656            1,642              1,797              1,759              2,472             City Clerk 900 1,241            1,098            1,369            803               908               330                 641                 680                 582                City Auditor 838 1,379            2,053            2,601            138               235               464                 489                 362                 414                Administrative Services2 6,419               15,477          17,784          17,893          9,888            10,100          7,614              11,388            9,980              10,637           Human Resources 2,472               2,806            3,448            3,707            1,346            1,071            1,420              1,346              1,464              2,224             Public Works 16,645             18,565          21,270          18,658          19,357          14,568          20,816            24,577            21,075            24,613           Planning & Community Environment 12,929             16,388          12,940          12,114          15,031          12,074          13,549            14,926            8,423              10,208           Development Services3 ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ 10,449            11,158           Public Safety 43,391             50,126          52,487          55,799          58,996          62,817          59,452            62,883            58,660            56,653           Community Services 15,729             17,736          19,862          17,171          22,845          21,915          22,705            23,822            24,688            28,547           Library 5,347               6,321            6,244            6,143            6,920            7,323            7,319              7,758              7,721              10,825           Non‐departmental2 12,133              ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐  Interest on long term debt 477 438              404             370             2,742          2,575          2,562            3,367              3,658             3,552           Total Governmental Activities Expenses 121,610           135,726       142,644       141,300       140,876       137,547       139,204          155,561          151,345          164,899        Business‐type Activities Water 16,794             18,842          20,271          21,037          24,268          29,093          30,707            31,593            33,205            35,120           Electric 99,294             108,032       122,268       107,910       100,130       102,030       106,438          113,004          122,499          120,319        Fiber Optics1 ‐ ‐ 1,284            1,407            1,561            1,489            1,437              1,661              1,891              2,107             Gas 30,690             37,211          34,603          32,498          32,051          28,878          26,749            26,869            23,525            20,879           Wastewater Collection 10,085             12,023          14,875          10,696          12,275          14,825          14,313            13,235            14,595            15,199           Wastewater Treatment 15,901             18,902          36,896          13,466          19,731          20,712          20,635            21,018            21,553            22,546           Refuse 25,372             28,827          37,217          28,119          30,684          31,900          28,542            28,413            27,974            30,370           Storm Drainage 2,517               3,202            2,943            2,491            3,229            3,103            3,703              3,644              3,721              3,735             Airport ‐ ‐ ‐ ‐ 31                 153               246                 466                 1,004              970                External Services 767 984              ‐‐‐‐‐ ‐ ‐‐ Total Business‐type Activities Expenses 201,420           228,023       270,357       217,624       223,960       232,183       232,770          239,903          249,967          251,245        Total Primary Government Expenses 323,030$         363,749$     413,001$     358,924$     364,836$     369,730$     371,974$       395,464$       401,312$       416,144$      CITY OF PALO ALTO Changes in Net Position Last Ten Fiscal Years (Accrual basis of accounting) (Amounts in thousands) Fiscal Year Ended June 30 138 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 NET (EXPENSE)/REVENUE Governmental Activities (83,055)$         (97,891)$      (105,255)$    (104,818)$    (100,066)$    (70,273)$      (57,806)$        (95,290)$        (81,873)$        (95,013)$       Business‐type Activities 30,908             25,293         5,413          45,192        45,482        39,416        42,833          35,619            23,556           23,444         Total Primary Government Net (Expense)/Revenue (52,147)$         (72,598)$      (99,842)$      (59,626)$      (54,584)$      (30,857)$      (14,973)$        (59,671)$        (58,317)$        (71,569)$       GENERAL REVENUES AND OTHER CHANGES IN NET ASSETS Governmental Activities Taxes Property tax 21,466$           23,084$       25,432$       25,981$       29,156$       30,104$       31,929$          35,299$          38,750$          41,189$        Sales tax 22,194             22,623          20,089          17,991          20,746          22,132          25,606            29,424            29,675            30,018           Utility user tax 9,356               10,285          11,030          11,295          10,851          10,834          10,861            11,008            10,861            12,469           Transient occupancy tax 6,709               7,976            7,111            6,858            8,082            9,664            10,794            12,255            16,699            22,366           Other taxes 6,293               6,261            3,364            4,055            8,156            8,173            10,504            9,660              11,867            7,868             Investment earnings 8,747               12,313          8,525            6,514            3,500            6,238            (1,228)             5,859              5,010              8,639             Rents and miscellaneous 13,670             11,896          15,682          12,729          12,377          14,943          518                 2,575              3,428              894                Transfers 15,754             18,701         24,020        13,994        17,083        17,426        19,249          17,103            16,405           18,705         Total Governmental Activities 104,189           113,139       115,253       99,417          109,951       119,514       108,233          123,183          132,695          142,148        Business‐type Activities Investment earnings 11,910             16,416          14,103          10,769          5,722            7,605            (2,754)             6,379              4,857              7,282             Transfers (15,754)            (18,701)       (24,020)      (13,994)      (17,083)      (17,426)      (19,249)        (17,103)          (16,405)          (18,705)       Total Business‐type Activities (3,844)              (2,285)          (9,917)          (3,225)          (11,361)        (9,821)          (22,003)          (10,724)          (11,548)          (11,423)         Total Primary Government 100,345$         110,854$     105,336$     96,192$       98,590$       109,693$     86,230$          112,459$       121,147$       130,725$      CHANGE IN NET POSITION Governmental Activities 21,134$           15,248$       9,998$          (5,401)$        9,885$          49,241$       50,427$          27,893$          50,822$          47,135$        Business‐type Activities 27,064             23,008         (4,504)        41,967        34,121        29,595        20,830          24,895            12,008           12,021         Total Primary Government Change in Net Position 48,198$           38,256$       5,494$          36,566$       44,006$       78,836$       71,257$          52,788$          62,830$          59,156$        Notes:1Prior to 2009, Fiber Optics was included in Electric. 2Beginning in 2008, includes Non‐departmental expenses. 3The Development Services Department was formed in FY15. Source: Annual Financial Statements, Statement of Activities Fiscal Year Ended June 30 139 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 General Fund Nonspendable 5,002$       7,286$       6,476$       6,581$       6,085$       6,007$       5,749$       6,188$       6,296$       7,088$        Assigned 6,855         4,851         6,100         7,295         6,235         6,400         5,415         5,432         7,976         8,261          Unassigned 27,551       30,278       30,648       27,581       31,859       29,616       30,913       36,690       48,198       51,582        Total General Fund 39,408$     42,415$     43,224$     41,457$     44,179$     42,023$     42,077$     48,310$     62,470$     66,931$      Source: Annual Financial Statements, Balance Sheet Fiscal Year Ended June 30 CITY OF PALO ALTO Fund Balances of Governmental Funds (General Fund) Last Ten Fiscal Years (Modified accrual basis of accounting) (Amounts in thousands) $0 $10,000 $20,000 $30,000 $40,000 $50,000 $60,000 $70,000 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 $ Th o u s a n d s Nonspendable Assigned Unassigned 140 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 All Other Governmental Funds Nonspendable ‐$                731$          1,308$       1,402$        1,422$        11,112$     18,189$     14,869$     1,468$        1,505$         Restricted 1,540         1,406         1,412         55,400        50,646        61,324        84,688        68,468        59,650        47,113         Committed 22,883       15,207       22,043       16,962        24,775        14,284        20,400        27,145        48,434        65,745         Assigned 41,684       44,116       36,629       38,538        20,114        33,264        45,514        55,211        52,627        64,411         Total All Other Governmental Funds 66,107$    61,460$    61,392$    112,302$   96,957$     119,984$   168,791$   165,693$   162,179$   178,774$    Source: Annual Financial Statements, Balance Sheet Fiscal Year Ended June 30 CITY OF PALO ALTO Fund Balances of Governmental Funds (All Other Governmental Funds) Last Ten Fiscal Years (Modified accrual basis of accounting) (Amounts in thousands) $0 $20,000 $40,000 $60,000 $80,000 $100,000 $120,000 $140,000 $160,000 $180,000 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 $ Th o u s a n d s Nonspendable Restricted Committed Assigned 141 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Revenues Property tax 21,466$      23,084$      25,432$      25,981$      29,248$      30,216$      32,040$      35,393$      38,836$      41,289$       Sales tax 22,194        22,623        20,089        17,991        20,746        22,132        25,606        29,424        29,675        30,018         Other taxes and fines 26,215        27,385        24,843        25,063        27,890        29,231        32,141        35,305        41,576        44,909         Charges for services 19,929        19,610        19,837        19,775        22,311        46,273        38,976        23,962        25,973        23,910         From other agencies 3,448          4,300          5,984          3,035          1,614          1,116          4,109          5,700          7,727          4,417           Permits and licenses 4,711          4,761          4,033          4,408          5,433          7,136          8,218          8,990          9,179          11,228         Interest and rentals 17,750        20,507        19,183        19,045        16,553        18,583        12,136        18,445        18,658        22,269         Other revenue 7,503          4,713          6,223          4,724          8,624          12,739        17,570        7,471          12,837        13,827         Total Revenues 123,216      126,983      125,624      120,022      132,419      167,426      170,796      164,690      184,461      191,867       Expenditures Administration1 14,399        16,250       16,002      17,353      8,351        9,412        8,291         9,961          10,806       11,501       Public Works 9,256          10,072        10,064        9,787          11,317        11,304        11,489        12,439        12,276        13,112         Planning and Community Environment 11,874        9,861          10,462        9,480          10,309        11,966        13,474        14,761        8,628          9,722           Development Services3 ‐ ‐‐                 ‐                 ‐                 ‐                 ‐                  ‐ 11,152       10,643       Public Safety 42,451        48,650        48,957        51,022        58,874        62,418        59,537        62,028        61,447        63,784         Community Services2 16,533        17,138       17,451      16,451      20,029      20,860      21,661       22,644        23,553       25,511       Library2 5,260          6,219         5,985        5,900        6,509        7,072        6,902         7,340          7,980         7,960         Non‐departmental 12,122        14,089        10,765        10,149        7,352          6,819          4,567          8,135          6,180          8,068           Special revenue and capital projects 17,478        21,626        21,485        22,006        35,486        29,154        29,542        37,035        41,754        24,457         Debt service ‐ principal payments 850              885              800              840              870              1,743          1,489          1,524          1,948          7,130           Debt service ‐interest and fiscal fees 489              451              416              382              1,815          2,757          2,659          3,196          3,404          4,266           Payment to bond refunding escrow ‐ ‐ ‐ ‐ ‐ 586              540              ‐ ‐ ‐  Total Expenditures 130,712      145,241      142,387      143,370      160,912      164,091      160,151      179,063      189,128      186,154       Excess (Deficiency) of Revenues Over (Under) Expenditures (7,496)         (18,258)       (16,763)       (23,348)       (28,493)       3,335          10,645        (14,373)       (4,667)         5,713           Other Financing Sources (Uses) Transfers in 27,701        33,437        39,903        34,835        30,323        47,200        50,343        41,683        45,137        61,835         Transfers out (15,882)       (16,819)       (22,399)       (21,415)       (14,352)       (29,782)       (33,833)       (24,175)       (29,824)       (46,492)        Other ‐ ‐ ‐ ‐ (101)            ‐ ‐ ‐ ‐ ‐  Proceeds from long term debt ‐ ‐ ‐ 59,071        ‐ 3,222          21,706        ‐ ‐ ‐  Payments to refund bond escrow ‐ ‐ ‐ ‐ ‐ (3,104)         ‐ ‐ ‐ ‐  Total Other Financing Sources (Uses)11,819        16,618        17,504        72,491        15,870        17,536        38,216        17,508        15,313        15,343         Net Change in Fund Balances 4,323$        (1,640)$       741$           49,143$      (12,623)$    20,871$      48,861$      3,135$        10,646$      21,056$       Debt Service as a Percentage of Non‐Capital Expenditures 1.2% 1.1% 1.0% 1.0% 2.2% 3.5% 3.2% 3.3% 3.7% 7.1% Notes: 2Prior to 2005, Library was included in Community Services. 3The Development Services Department was formed in FY15. Source: Annual Financial Statements, Governmental Funds, Statement of Revenues, Expenditures and Changes in Fund Balances 1Comprised of the following departments: City Council, City Manager, City Attorney, City Clerk, City Auditor, Administrative Services and Human Resources. Fiscal Year Ended June 30 CITY OF PALO ALTO Changes in Fund Balances of Governmental Funds Last Ten Fiscal Years (Modified accrual basis of accounting) (Amounts in thousands) 142 Fiscal Commercial & City of Year Residential Industrial Palo Alto Total 2007 15,150$                         68,214$                   2,466$               85,830$                  2008 16,109                           72,632                     2,571                 91,312                     2009 17,939                           83,710                     2,823                 104,472                  2010 19,898                           89,315                     2,890                 112,103                  2011 19,848                           88,076                     2,991                 110,915                  2012 20,328                           85,895                     3,352                 109,575                  2013 19,951                           86,998                     3,265                 110,214                  2014 18,744                           88,419                     3,225                 110,388                  2015 17,404                           88,257                     3,234                 108,895                  2016 18,191                           86,715                     3,127                 108,033                  529 Bryant Street LLC Technology City of Palo Alto Municipal Communications & Power Industries (CPI)Research Hewlett‐Packard Company Computer Hewlett‐Packard Enterprise Computer Space Systems/Loral Satellite & Satellite Systems Stanford Hospital & Clinics Hospital Varian Medical Systems, Inc.Manufacturing Veterans Admin Hospital Hospital   VMware, Inc.Computer Number Kilowatt‐hour of Customers Sales (kWh)Revenue2 Residential 25,372                           150,111,759           18,191$              Commercial 3,715                             589,091,303           68,953                Industrial 91                                   168,141,493           17,762                CPA 126                                29,812,407             3,127                  Total 29,304                          937,156,962         108,033$          City of Palo Alto Power Purchase  Western Area Power Administration Hydroelectric 27% Forward Market Purchases 29% Wind Energy 11% Landfill Gas Energy 10% Solar Energy 9% Northern California Power Agency Hydroelectric 11% Short‐Term Market 3% Source: City of Palo Alto, Utilities and Accounting Departments Customer (alphabetical order)Type of Business 1The top ten customers accounted for approximately 37.5% of total kWh consumption (351,514,504 kWh)  and 33.7% of revenue ($38,108,715). The largest customer accounted for 8.7% of total kWh consumption  and 7.7% of revenue. The smallest customer accounted for 1.8% of total kWh consumption and 1.5% of  revenue. Revenue used to determine top ten electric customers includes metered and non‐metered  charges, adjustments, surcharges, and discounts. Revenue does not include Utility Users Tax (UUT) and  deposits. 2Revenue includes metered and non‐metered charges and revenue adjustments. Revenue does not  include California Energy Commission (CEC) surcharges, Utility Users Tax (UUT), Primary Voltage and Rate  Assistance (RAP) discounts and deposits. Parts of this schedule are provided as required by the Continuing  Disclosure Agreement for the City's Utility Revenue Bond and are not required by Governmental  Accounting Standards Board (GASB).  CITY OF PALO ALTO Electric Operating Revenue by Source Last Ten Fiscal Years (Amounts in thousands) Top Ten Electric Customers by Revenue1 143 The top ten customers total consumption is 747,045 CCF with revenue of $6,347,933. This amount accounts for approximately 19.6% of total consumption and 17.2% of total revenue. The largest customer (other than the City of Palo Alto) accounted for 4.5% of  consumption and 3.3% of revenue. The smallest customer accounted for 0.7% of consumption and 0.7% of revenue. Revenue used to determine top ten water utility  customers includes metered and non‐metered charges, adjustments, surcharges  and discounts. Revenue does not include Utility Users Tax (UUT) and deposits. Note: Source:City of Palo Alto, Utilities Department CITY OF PALO ALTO Supplemental Disclosure for Water Utilities Fiscal Year 2016 Top Ten Largest Water Utility Customers (alphabetical order) City of Palo Alto Hewlett‐Packard Company VMware Inc. This schedule is provided as required by the Continuing Disclosure Agreement for the City's Utility Revenue  Bond and is not required by Governmental Accounting Standards Board (GASB).  Palo Alto Hills Golf & Country Club Palo Alto Unified School District Oak Creek Apartments Stanford Hospital & Clinics Stanford West Management Veterans Admin Hospital Space Systems/Loral, Inc. 144 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Net Local Secured Roll Land 8,725,485$         9,497,746$         10,420,139$       11,007,650$       11,011,160$       11,352,993$       12,255,515$       13,357,851$       14,409,837$       15,718,665$        Improvements 8,915,623           9,453,436           10,527,617         10,752,671         10,962,928         11,703,597         12,381,306         12,984,735         13,633,986         14,998,502          Personal property 213,154              228,875              303,688              288,148              241,280              257,436              287,296              307,499              290,590              310,929               17,854,262         19,180,057         21,251,444         22,048,469         22,215,368         23,314,026         24,924,117         26,650,085         28,334,413         31,028,096          Less: Exemptions net of state aid (1,639,856)          (1,797,327)          (1,871,292)          (1,809,119)          (1,757,241)          (2,346,728)          (2,589,653)          (2,610,521)          (2,761,495)          (3,409,836)           Total Net Local Secured Roll 16,214,406         17,382,730         19,380,152         20,239,350         20,458,127         20,967,298         22,334,464         24,039,564         25,572,918         27,618,260          Public utilities 3,923 3,174 2,573 2,573 2,573 2,573 2,573 2,573 2,573 2,573  Unsecured property 1,391,284           1,536,584           1,702,884           1,638,436           1,495,574           1,516,837           1,355,970           1,493,922           1,622,636           1,794,921            Total Assessed Value 17,609,613$       18,922,488$       21,085,609$       21,880,359$       21,956,274$       22,486,708$       23,693,007$       25,536,059$       27,198,127$       29,415,754$        Total Direct Tax Rate 1%1%1%1%1%1%1%1%1%1% Note: The State Constitution requires property to be assessed at 100% of the most recent purchase price, plus an increment of no more than 2% annually,  plus any local over‐rides. These values are considered to be full market values. Source:  County of Santa Clara Assessor's Office CITY OF PALO ALTO Assessed Value of Taxable Property Last Ten Fiscal Years (Amounts in thousands) Fiscal Year Ended June 30 $13,000,000 $15,000,000 $17,000,000 $19,000,000 $21,000,000 $23,000,000 $25,000,000 $27,000,000 $29,000,000 $31,000,000 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 $ Th o u s a n d s Total Assessed Value 145 Basic County Total County County Hospital City Library Santa Clara Direct and Fiscal Wide Retirement G.O. Bond G.O. Bond Valley Water School Community Midpeninsula Overlapping Year Levy Levy (Measure A)1 (Measure N)2 District District College Open Space3 Rates 2007 1.00       0.0388          ‐ ‐ 0.0072             0.0720        0.0346            1.15              2008 1.00       0.0388          ‐ ‐ 0.0071             0.0702        0.0113            1.13              2009 1.00       0.0388          ‐ ‐ 0.0061             0.0674        0.0123            1.12              2010 1.00       0.0388          0.0122             ‐ 0.0074             0.0686        0.0322            1.16              2011 1.00       0.0388          0.0095             0.0171             0.0072             0.0751        0.0326            1.18              2012 1.00       0.0388          0.0047             0.0155             0.0064             0.0742        0.0297            1.17              2013 1.00       0.0388          0.0051             0.0129             0.0069             0.0718        0.0287            1.16              2014 1.00       0.0388          0.0035             0.0177             0.0070             0.0655        0.0290            1.16              2015 1.00       0.0388          0.0091             0.0159             0.0065             0.0657        0.0276            1.16              2016 1.00       0.0388          0.0088             0.0148             0.0057             0.0604        0.0240            0.0008            1.15              Notes:1The County General Obligation Bond (Measure A) was passed in 2008 to fund the seismic upgrade of the Santa Clara Valley Medical Center. Rates were first levied for the 2009‐10 fiscal year. 2The City of Palo Alto General Obligation Bond (Measure N) was passed in 2008 to fund the construction and  renovation of three of the City's libraries. Rates were first levied for the 2010‐11 fiscal year. 3The Midpeninsula Regional Open Space District Bond Issue and Property Tax, Measure AA, passed in 2014. Source: County of Santa Clara, Tax Rates and Information CITY OF PALO ALTO Property Tax Rates All Overlapping Governments Last Ten Fiscal Years  $1.10  $1.12  $1.14  $1.16  $1.18  $1.20 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Rate per $100 of Assessed Value 146 Fiscal Year Total Tax Percentage Collections in Percentage of Ended June 30 Levy1 for FY Amount of Levy Subsequent Years2 Amount Levy 2007 21,466            21,466         100%‐                              21,466       100% 2008 23,084            23,084         100%‐                              23,084       100% 2009 25,432            25,432         100%‐                              25,432       100% 2010 25,981            25,981         100%‐                              25,981       100% 2011 25,688            25,688         100%‐                              25,688       100% 2012 26,494            26,494         100%‐                              26,494       100% 2013 28,742            28,742         100%‐                              28,742       100% 2014 30,587            30,587         100%‐                              30,587       100% 2015 34,117            34,117         100%‐                              34,117       100% 2016 36,607            36,607         100%‐                              36,607       100% Notes: Source:Annual Financial Statements, Government Funds, Statement of Revenues, Expenditures and  Changes in Fund Balances. 1During fiscal year 1995, the County of Santa Clara began providing the City 100% of its tax levy  under an agreement which allows the county to keep all interest and delinquency charges  collected. 2Effective fiscal year 1994, the City is on the Teeter Plan, under which the County of Santa Clara  pays the full tax levy due. All prior delinquent taxes were also received in that fiscal year. CITY OF PALO ALTO Property Tax Levies and Collections Last Ten Fiscal Years (Amounts in thousands) Collected within the  Fiscal Year of the Levy Total Collections to Date 147 Taxable Assessed  Value Rank Percentage of  Total Taxable  Assessed Value Taxable  Assessed  Value Rank Percentage of  Total Taxable  Assessed Value Leland Stanford Jr. University 3,952,158$            1 13.4%2,632,853$   1 15.0% Loral Space & Communications 215,180 2 0.7%180,779         2 1.0% Google Inc.158,245 3 0.5% PPF OFF 3301 Hillview Avenue LP 130,150 4 0.4% EOSII Palo Alto Technology Center LLC 121,692 5 0.4% Whisman Ventures, LLC 112,001 6 0.4% SI 43 LLC 76,823 7 0.3% BVK Hamilton Ave LLC 69,290 8 0.2% Ronald & Ann Williams Charitable Foundation 62,685 9 0.2% PPC Forest Towers LLC 56,610 10 0.2% Agilent Technologies 81,285           3 0.5% Harbor Investment Partners 52,165           4 0.3% EOP‐Embarcadero Place, LLC 40,000           5 0.2% Hamilton Associates 38,843           6 0.2% California Pacific Commercial Corp.37,339           7 0.2% Palo Alto Town & Country Village Inc.36,306           8 0.2% Pacific Hotel Dev Venture LP 32,796           9 0.2% Thoits Bros Inc.29,751           10 0.2% Total 4,954,834$            16.7%3,162,117$   18.0% Total City Taxable Assessed Value: FY 2016 29,415,754$           FY 2007 17,609,613$           Source: California Municipal Statistics, Inc. Fiscal Year 2016 Fiscal Year 2007 Taxpayer CITY OF PALO ALTO Principal Property Taxpayers Current Year and Nine Years Ago (Amounts in thousands) 148 2015‐16 No. of Assessed % of No. of % of Taxable % of Valuation1 Total Parcels Total Parcels Total Non‐Residential: Agricultural/forest 32,729,878$            0.12 % 49           0.24 % 31           0.16 % Commercial 1,532,265,585         5.55 454         2.20 450         2.34 Professional/office 3,344,356,151         12.11 536         2.60 519         2.70 Industrial/research & development 1,863,968,386         6.75 179         0.87 175         0.91 Recreational 34,692,318              0.13 14           0.07 12           0.06 Government/social/institutional 149,945,877            0.54 115         0.56 46           0.24 Miscellaneous 7,121,330 0.03 18         0.09 17           0.09 Subtotal Non‐Residential 6,965,079,525$      25.22 % 1,365      6.62 % 1,250      6.50 % Residential: Single family residence 16,457,914,524$    59.59 % 14,968   72.57 % 14,922   77.55 % Condominium/townhouse 2,117,116,117         7.67 3,033      14.71 2,027      10.53 Mobile Home 71,060 0.00 7             0.03 7             0.04 2‐4 Residential units 423,208,249            1.53 506         2.45 506         2.63 5+ Residential units 1,434,539,561         5.19 336         1.63 321         1.67 Subtotal Residential 20,432,849,511$    73.98 % 18,850   91.39 % 17,783   92.41 % Vacant Parcels 220,331,113$          0.80 % 410         1.99 % 210         1.09 % Total 27,618,260,149$    100        % 20,625   100         % 19,243   100 % Notes: This schedule is provided as required by the Continuing Disclosure Agreement for the City's General Obligation 2010 and 2013A Bonds and is not required by Governmental Accounting Standards Board (GASB). Therefore, ten years of comparison data is not presented. 1Local secured assessed valuation, excluding tax‐exempt property. Source: California Municipal Statistics, Inc. CITY OF PALO ALTO Assessed Valuation and Parcels by Land Use As of June 30, 2016 149 No. of Taxable Average Parcels1 Assessed Valuation Single Family Residential 14,922 $1,102,930 No. of % of Cumulative % of Cumulative Taxable Total % of Total Total Total % of Total Parcels1 Parcels Parcels Valuation Valuation Valuation 1,334       8.94       8.94             105,594,792$            0.64         0.64              1,802       12.08  21.02         249,254,241 1.51         2.16             854 5.72       26.74           212,390,602 1.29         3.45              738 4.95       31.68           256,832,299 1.56         5.01              673 4.51       36.19           303,279,249 1.84         6.85              745 4.99       41.19           409,892,140 2.49         9.34              660 4.42       45.61           427,407,181 2.60         11.94            583 3.91       49.52           435,859,453 2.65         14.59            597 4.00       53.52           509,043,262 3.09         17.68            640 4.29       57.81           607,105,607 3.69         21.37            605 4.05       61.86           635,783,858 3.86         25.23            507 3.40       65.26           582,031,906 3.54         28.77            465 3.12       68.38           582,887,097 3.54         32.31            438 2.94       71.31           590,918,861 3.59         35.90            444 2.98       74.29           642,860,649 3.91         39.81            395 2.65       76.93           612,251,107 3.72         43.53            364 2.44       79.37           599,972,971 3.65         47.17            327 2.19       81.56           572,303,695 3.48         50.65            301 2.02       83.58           556,091,276 3.38         54.03            241 1.62       85.20           470,501,131 2.86         56.89            2,209       14.80  100.00 7,095,653,147         43.11       100.00 14,922     100.00  16,457,914,524$       100.00      Notes: Source: California Municipal Statistics, Inc. This schedule is provided as required by the Continuing Disclosure Agreement for the City's General  Obligation 2010 and 2013A Bonds and is not required by Governmental Accounting Standards Board  (GASB). Therefore, ten years of comparison data is not presented. 1Improved single family residential parcels. Excludes condominiums and parcels with multiple family  units. $1,900,000‐1,999,999 $2,000,000 and greater Total $1,800,000‐1,899,999 $700,000‐799,999 $800,000‐899,999 $900,000‐999,999 $1,000,000‐1,099,999 $1,100,000‐1,199,999 $1,200,000‐1,299,999 $1,300,000‐1,399,999 $1,400,000‐1,499,999 $1,500,000‐1,599,999 $1,600,000‐1,699,999 $1,700,000‐1,799,999 $600,000‐699,999 $16,457,914,524 $815,747 2015‐2016 Assessed Valuation $0‐99,999 $100,000‐199,999 $200,000‐299,999 $300,000‐399,999 $400,000‐499,999 $500,000‐599,999 Assessed Valuation Assessed Valuation CITY OF PALO ALTO Per Parcel Assessed Valuation of Single Family Residential As of June 30, 2016 2015‐2016 Median 150 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 9,175$      8,405$      7,605$      6,765$      5,895$      1,685$      1,560$      1,430$      1,285$      1,135$       ‐                 ‐                 ‐                55,305      55,305      54,540      74,235      73,215      71,795      65,210       115           ‐                 ‐                 ‐                 ‐                 ‐                 ‐                 ‐                 ‐                 ‐                 2011 Lease‐Purchase Agreement ‐                 ‐                 ‐                 ‐                 ‐                2,764        2,400        2,026        1,643        1,248         Add: unamortized premium ‐                 ‐                 ‐                3,766        3,640        3,514        4,400        4,242        4,084        3,926         ‐‐‐ (571)          ‐‐‐‐‐‐  9,290        8,405        7,605        65,265      64,840      62,503      82,595      80,913      78,807      71,519       41,859      40,334      38,744      72,104      69,551      65,879      63,104      60,224      57,224      54,095       Energy Tax Credits ‐                1,400        1,300        1,200        1,100        1,000        900           800           700           600            State Water Resources Loan ‐                5,629        9,000        13,080      16,696      15,900      15,109      14,309      13,500      12,681       (972)          (1,053)       (2,479)       (2,737)       (229)          580           543           867           803           737            40,887      46,310      46,565      83,647      87,118      83,359      79,656      76,200      72,227      68,113       Outstanding Debt 50,177$    54,715$    54,170$   148,912$151,958$145,862$162,251$157,113$ 151,034$139,632$ 1.51% 1.53% 1.50% 4.48% 4.10% 3.61% 3.80% 3.39% 3.09% 2.67% Population 62,615      63,367      64,484      65,408      64,417      65,544      66,368      66,861      66,029      66,968       0.80$        0.86$        0.84$        2.28$        2.36$        2.23$        2.44$        2.35$        2.29$        2.09$         Notes: Sources: 2016 Official City Data Set (population) California Department of Transportation Long‐Term Socio‐Economic Forecasts (personal income) Annual Financial Statements, Note 7 General Long‐Term Obligations and Note 8 Special Assessment Debt Debt Per Capita 1See the schedule of Demographic and Economic Statistics for personal income data. Per capita personal income is only available for Santa Clara  County, therefore personal income is the product of the countywide per capita amount and the City's population. County of Santa Clara (assessed valuation) Percentage of Personal Income1 Certificates of Participation General Obligation Bonds Special Assessment Debt Less: unamortized discount/     issuance costs Total Governmental Activities Business‐type Activities Utility Revenue Bonds Less: unamortized discount/     issuance costs Total Business‐type Activities Total Primary Government Governmental Activities CITY OF PALO ALTO Ratio of Outstanding Debt by Type Last Ten Fiscal Years (Amounts in thousands) Fiscal Year Ended June 30 $0 $20,000 $40,000 $60,000 $80,000 $100,000 $120,000 $140,000 $160,000 $180,000 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 $ Th o u s a n d s Total Governmental Activities Total Business‐type Activities 151 2015‐2016 Assessed Valuation 29,415,753,627$       Percentage Amount Applicable Applicable Total Debt to City of to City of Outstanding Palo Alto1 Palo Alto Santa Clara County 792,585,000$            7.58%60,085,869$                Foothill‐DeAnza Community College District 584,782,455              22.09% 129,155,053                Palo Alto Unified School District 306,673,766              87.20% 267,431,791                Fremont Union High School District 365,975,088              0.01%40,257  Los Gatos‐Saratoga Joint Union High School District 70,320,000                0.01%9,142  Mountain View‐Los Altos Union High School District 59,156,005                1.12%661,956  Cupertino Union School District 292,848,688              0.02%55,641  Los Altos School District 73,555,000                1.33%976,810  Mountain View‐Whisman School District 189,475,000              0.92%1,748,854  Saratoga Union School District 33,775,241                0.03%9,457  Whisman School District 19,357,334                2.50%483,933  City of Palo Alto 70,345,000                100%70,345,000                  El Camino Hospital District 136,280,000            0.09% 118,564 Midpeninsula Regional Open Space District 45,000,000              13.05% 5,870,250 City of Palo Alto Special Assessment Bonds 25,130,000              100% 25,130,000                Santa Clara Valley Water District Benefit Assessment District 99,060,000              7.58% 7,509,739 Total Direct and Overlapping Tax and Assessment Debt 569,632,316              683,441,121              7.58% 51,811,671                              367,118,349 7.58%                27,831,242  6,380,000 7.58%483,668  9,723,341 22.09%2,147,497  6,260,000 0.01%814  2,415,000 1.12%27,024  4,600,000 0.03%1,288  City of Palo Alto General Fund Obligations 2,383,453 100%2,383,453  2,890,000 7.58%219,091  Midpeninsula Regional Open Space Park District General Fund Obligations 122,305,886            13.05%                15,954,803  $            100,860,551  27,766,974  $              73,093,577   $            642,725,893  Ratio to  Assessed Valuation Total Direct Debt 0.25%72,728,453$                Total Overlapping Debt 1.94%569,997,440                Total Direct and Overlapping Debt 2.18%642,725,893$            2 Notes: 1Percentage of overlapping agency's assessed valuation located within boundaries of the city. 2Excludes tax and revenue anticipation notes, enterprise revenue, mortgage revenue and tax allocation bonds and  non‐bonded capital lease obligations. Source: California Municipal Statistics, Inc. Santa Clara County Pension Obligations Santa Clara County Board of Education Certificates of Participation Foothill‐DeAnza Community College District Certificates of Participation Los Gatos‐Saratoga Joint Union High School District Certificates of Participation Santa Clara County General Fund Obligations CITY OF PALO ALTO Computation of Direct and Overlapping Debt As of June 30, 2016 Direct and Overlapping Tax and Assessment Debt Direct and Overlapping General Fund Debt Mountain View‐Los Altos Union High School District Certificates of Participation Saratoga Union High School District Certificates of Participation Less: Santa Clara County supported obligations Total Net Direct and Overlapping General Fund Debt Overlapping debt is the financial obligations of one political jurisdiction that also falls partly on a nearby jurisdiction. The amount of debt of each  unit applicable to the reporting unit is arrived at by 1) determining what percentage of the total assessed value of the overlapping jurisdiction  lies within the limits of the reporting unit, and 2) applying this percentage to the total debt of the overlapping jurisdiction.   Santa Clara County Vector Control District Certificates of Participation Total Gross Direct and Overlapping General Fund Debt Total Combined Debt 152 Assessed  Valuation: Secured property assessed value, net of exempt real property 29,415,754$        Bonded Debt Limit (3.75% of Assessed Value) 1 1,103,091  Direct Debt: Certificates of Participation 1,135 Lease Purchase Agreement 1,248 General Obligation bonds 65,210                Total Direct Debt 67,593                Less: Amount of Debt Not Subject to Limit 2 2,383  Total Net Debt Applicable to Limit 65,210 Legal Bonded Debt Margin 1,037,881$                Total Bonded Total Net Debt Legal Total Net Debt Ratio of Net General Fiscal Assessed Debt Limit Applicable to Bonded Debt Applicable to the Debt to Bonded Debt Year Value (AV)(3.75% of AV)Limit Margin Population Debt as a %Assessed Value Per Capita 2007 17,609,613          660,360               ‐660,360             62,615 0.00%‐0.00 2008 18,922,488          709,593                ‐709,593             63,367 0.00%‐0.00 2009 21,085,609          790,710               ‐790,710             64,484 0.00%‐0.00 2010 21,880,359          820,513               55,305 765,208             65,408 6.74%0.0025 0.85 2011 21,956,274          823,360               55,305 768,055             64,417 6.72%0.0025 0.86 2012 22,486,708          843,252               54,540 788,712             65,544 6.47%0.0024 0.83 2013 23,693,007          888,488               74,235 814,253             66,368 8.36%0.0031 1.12 2014 25,536,058          957,602               73,215 884,387             66,861 7.65%0.0029 1.10 2015 27,198,127          1,019,930            71,795 948,135             66,029 7.04%0.0026 1.09 2016 29,415,754          1,103,091            65,210 1,037,881          66,968 5.91%0.0022 0.97 Notes: Source: CITY OF PALO ALTO Computation of Legal Bonded Debt Margin As of June 30, 2016 (Amounts in thousands) 1California Government Code, Section 43605 sets the debt limit at 15% of the assessed value of all real and personal property of the City. Because this  Code section was enacted when assessed value was 25% of market value, the limit is calculated at one‐fourth, or 3.75%. This legal debt margin applies  to General Obligation debt. Prior year limits have been adjusted to conform to the current year methodology. 2In accordance with California Government Code Section 43605, only the City's General Obligation bonds are subject to the legal debt limit of 15%.  Annual Financial Statements, Assessed Value of Taxable Property and Note 7 General Long‐Term Obligations 153 Less: Net Revenue Fiscal Gross Direct Operating Available for Year Revenue Expenses2 Debt Service Principal Interest3 Total Coverage Ratio 2007 203,146            151,196                51,950 1,465            2,147            3,612            14.38                   2008 219,801            173,620                46,181 1,525            2,088            3,613            12.78                   2009 242,693            180,880                61,813 1,590            2,024            3,614            17.10                   2010 230,308            171,320                58,988 1,755            1,954            3,709            15.90                   2011 234,278            151,641                82,637 2,655            3,261            5,916            13.97                   2012 235,160            169,777                65,383 2,945            2,959            5,904            11.07                   2013 237,842            173,510                64,332 2,875            3,167            6,042            10.65                   2014 239,948            176,718                63,230 2,980            3,073            6,053            10.45                   2015 234,025            188,276                45,749 3,100            2,954            6,054            7.56  2016 235,386            186,793                48,593 3,230            2,823            6,053            8.03  Notes:1Airport, Refuse and Fiber Optics funds have no debt and are therefore excluded from this schedule. 2Excludes depreciation and amortization expense. 3Excludes joint venture debt service and federal interest subsidy. Source: City of Palo Alto, Accounting Department Debt Service CITY OF PALO ALTO Revenue Bond Coverage Business‐type Activities1 Last Ten Fiscal Years (Amounts in thousands) $0 $10,000 $20,000 $30,000 $40,000 $50,000 $60,000 $70,000 $80,000 $90,000 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 $ Th o u s a n d s Net Revenue Available for Debt Service Total Debt Service 154 Fiscal Year 2007 2,751             2,486                  1,109           1,485          374             602            203            5,075                7,139             21,224           2008 2,685             2,566                  1,685           1,497          349             622            405            4,682                6,797             21,288           2009 2,251             2,443                  1,431           1,258          315             493            214            4,284                6,635             19,324           2010 2,215             2,418                  1,402           1,254          343             549            219            4,458                5,556             18,414           2011 2,374             2,621                  1,564           1,292          381             630            242            4,873                6,322             20,299           2012 2,445             2,937                  1,590           1,492          387             722            257            5,049                7,034             21,913           2013 2,478             3,160                  1,465           1,656          424             765            259            4,056                13,729          27,992           2014 2,097             3,541                  1,555           2,041          392             772            444            4,845                9,890             25,577           2015 2,398             3,894                  1,672           1,708          435             699            265            3,674                11,253          25,998           2016 2,250             4,134                  1,410           1,694          448             582            257            4,949                12,423          28,147           Source: California State Board of Equalization, compiled by MuniServices LLC Sales Tax Rates for the Fiscal Year ended June 30, 2016 State Rate:7.50% Special District Tax Rates: Santa Clara County Transit District (SCCT) 0.50% Santa Clara County Valley Transportation Authority (SCVT) 0.50% Santa Clara VTA BART Operating and Maintenance Transactions and Use Tax (SVTB)0.125% Santa Clara Retail Transactions and Use Tax (SCCR)0.125% Total Sales and Use Tax Rate:8.750% Source: California State Board of Equalization Food  Markets Service  Stations Drug  Stores Other Retail All Other Apparel  Stores CITY OF PALO ALTO Taxable Transactions by Type of Business Last Ten Fiscal Years (Amounts in thousands) Total ECONOMIC SEGMENT Department  Stores Restaurants Furniture/  Appliance Department Stores 8% Restaurants 15% Furniture/ Appliance 5% Apparel Stores 6% Food Markets 2% Service Stations 2%Drug Stores 1% Other Retail 17% All Other 44% Fiscal Year 2016 155 Santa Clara Santa Clara City of Palo Alto City of Palo Alto Santa Clara City Population County Total County Per Capita Fiscal City of Palo Alto Unemployment School County as a Percentage of Personal Income Personal Income Year Population Rate Enrollment Population County Population (in thousands)(in thousands) 2007 62,615                    2.6%11,056                   1,808,056                  3.46% 95,200,000           *52,653                     * 2008 63,367                    3.5%11,329                   1,837,075                  3.45% 102,300,000         *55,686                     * 2009 64,484                    6.5%11,329                   1,857,621                  3.47% 101,800,000         *54,801                     * 2010 65,408                    6.2%11,565                   1,880,876                  3.48% 95,000,000           *50,508                     * 2011 64,417                    5.3%12,024                   1,781,427                  3.62% 101,700,000         *57,089                     * 2012 65,544                    4.7%12,286                   1,816,486                  3.61% 112,800,000         *62,098                     * 2013 66,368                    3.6%12,396                   1,842,254                  3.60% 124,800,000         *67,743                     * 2014 66,861                    2.8%12,483                   1,868,558                  3.58% 130,600,000         *69,893                     * 2015 66,029                    2.7%12,532                   1,889,638                  3.49% 139,800,000         *73,982                     * 2016 66,968                    2.9%12,488                   1,927,888                  3.47% 150,600,000         *78,117                     * Note: Data on personal income and per capita personal income is only available for Santa Clara County. Source: Beginning in 2015 population is sourced from the US Census Bureau Community Survey (via the City of Palo Alto's Official City Data Set). State Employment Development Office (unemployment rate) Palo Alto Unified School District (school enrollment) * California Department of Transportation Long‐Term Socio‐Economic Forecasts (personal income). Forecasts from prior years are updated annually. CITY OF PALO ALTO Demographic and Economic Statistics Last Ten Fiscal Years  60,000  61,000  62,000  63,000  64,000  65,000  66,000  67,000  68,000 City Population  10,000  10,500  11,000  11,500  12,000  12,500  13,000 School Enrollment 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0%City Unemployment Rate 156 Number of  Employees Rank Percentage of Total  City Employment Number of  Employees Rank Percentage of Total  City Employment Stanford University3 11,500        1 9.0% 9,821          1 7.0% Stanford Health Care3 5,000          2 3.9% 5,025          2 3.6% Lucile Packard Children's Hospital3 4,700          3 3.7% 3,326          4 2.4% Veteran's Affairs Palo Alto Health Care System 3,900          4 3.0%3,500          3 2.5% VMware Inc.3,500          5 2.7% SAP 3,500          6 2.7% Space Systems/Loral 2,800          7 2.2%1,700          7 1.2% Hewlett‐Packard Company 2,500          8 1.9%2,001          5 1.4% Palo Alto Medical Foundation 2,200          9 1.7%2,000          6 1.4% Varian Medical Systems 1,400          10 1.1% Wilson Sonsini Goodrich & Rosati 1,500          8 1.1% Palo Alto Unified School District 1,304          9 0.9% City of Palo Alto 1,074          10 0.8% Total 41,000      31.9% 31,251       22.3% Estimated Total City Day Population: FY 2016 128,282       FY 2008 140,000       Notes: Source:   1Comparable data was not available until FY 2008.  2016 Official City Data Set (total City day population); AtoZ databases; Stanford website. CITY OF PALO ALTO Principal Employers Current Year and Eight Years Ago FY 20162 FY 20081 Employer 2Available data sources are limited and may be unreliable. The City does not affirm the validity of this data. 2016 numbers are  rounded. 3Includes employees not located within City limits. 157 2006 2007 2008 2009 Governmental activities Community Services Number of theater performances 183  171  166  159   Total hours of athletic field usage2 65,791 70,769 63,212  45,762  Number of rounds of golf 76,000  76,241  74,630  72,170   Enrollment in recreation classes (includes summer camps)14,768  14,460  13,851  13,091   Planning and Community Environment Planning applications completed 408  299  257  273   Building permits issued 3,081 3,136 3,046 2,543  Caltrain average weekday boarding3 3,876 4,132 4,589 4,407 Police Calls for service 56,211  60,079  58,742  53,275   Total arrests 2,530 3,059 3,253 2,612  Parking citations issued 56,502  57,222  50,706  49,996   Animal Services Number of service calls 2,861 2,990 3,059 2,873  Number of animals handled 3,839 3,578 3,532 3,422  Fire Calls for service 6,897 7,236 7,723 7,549  Number of fire incidents 211  221  192  239   Number of fire inspections 899  1,021 1,277 1,028  Library  Total number of cardholders 55,909  53,099  53,740  54,878   Total number of items in collection 260,468                  270,755                  279,403                  293,735                   Total checkouts 1,280,547              1,414,509              1,542,116              1,633,955               Public Works Street resurfacing (lane miles)20  32  27  23   Number of potholes repaired 1,049 1,188 1,977 3,727  Sq. ft. of sidewalk replaced or permanently repaired 126,574                  94,620  83,827  56,909   Number of trees planted 263  164  188  250   Total tons of waste landfilled 59,276  59,938  61,866  68,228   Tons of materials recycled or composted 56,013  56,837  52,196  49,911   Business‐type activities Electric Number of customer accounts 28,653  28,684  29,024  28,527   Residential MWH consumed 161,202                  162,405                  162,680                  159,899                   Gas Number of customer accounts 23,353  23,357  23,502  23,090   Residential therms consumed 11,745,883            11,759,842            11,969,151            11,003,088             Water Number of customer accounts 19,645  19,726  19,942  19,422   Residential water consumption (CCF)2,647,758              2,807,477              2,746,980              2,566,962               Wastewater collection Number of customer accounts 21,784  21,789  21,970  21,210   Millions of gallons processed 8,972 8,853 8,510 7,958  Notes: 2According to the department, this measure was not accurately tracked during FY13 or FY14. Source: FUNCTIONS/PROGRAMS CITY OF PALO ALTO Operating Indicators by Function/Program Last Ten Fiscal Years1 City of Palo Alto Performance Report (formerly the Service Efforts and Accomplishments Report); 2015 Official City Data Set  (Caltrain) 3Prior‐year data has been updated based on annual counts revised by Caltrain. Beginning 2015, data source is Official City Data  Set. 1Ten most recent years available. Fiscal Year Ended June 30 158 2010 2011 2012 2013 2014 2015 174  175  175  184  108  172   41,705  42,687  44,226  ‐‐47,504  69,791  67,381  65,653  60,153  46,527  42,048   12,880  12,310  11,703  11,598  11,997  12,586   226  238  204  307  310  335   2,847 3,559 3,320 3,682 3,624 3,844  4,359 4,923 5,730 6,763 7,564 8,294  55,860  52,159  51,086  54,628  58,559  59,795   2,451 2,288 2,212 2,274 2,589 3,273  42,591  40,426  41,875  43,877  36,551  41,412   2,692 2,804 3,051 2,909 2,398 2,013  3,147 3,323 3,379 2,675 2,480 2,143  7,468 7,555 7,796 7,904 7,829 8,548  182  165  186  150  150  135   1,526 1,807 1,654 2,069 1,741 1,964  51,969  53,246  60,283  51,007  46,950  51,792   298,667                  314,101                  306,160                  277,749                  361,103                  429,460                   1,624,785              1,476,648              1,559,932              1,512,975              1,364,872              1,499,406               32  29  40  36  36  31   3,149 2,986 3,047 2,726 3,418 2,487  54,602  71,174  72,787  82,118  74,051  120,776                   201  150  143  245  148  305   48,955  38,524  43,947  45,411  47,088  43,730   48,811  56,586  51,725  47,941  49,594  50,546   29,430  29,708  29,545  29,299  29,338  29,065   163,098                  160,318                  160,604                  156,411                  153,190                  145,284                   23,724  23,816  23,915  23,659  23,592  23,461   11,394,712            11,476,609            11,522,999            10,834,793            10,253,776            8,537,754               20,134  20,248  20,317  20,043  20,037  20,061   2,415,467              2,442,415              2,513,595              2,521,930              2,496,549              2,052,176               22,231  22,320  22,421  22,152  22,105  21,990   8,184 8,652 8,130 7,546 7,186 6,512  Fiscal Year Ended June 30 159 2007 2008 2009 2010 2011 FUNCTION/PROGRAM Public Safety Fire: Fire Stations Operated 8               8               8               8                 8                Police: Police Stations 1                 1                 1                 1                 1                  Police Patrol Vehicles 30              30              30              30              30               Community Services Acres ‐ Downtown/Urban Parks2 157          157          157          157            157           Acres ‐ Open Space2 3,744       3,744       3,744       3,744         3,744        Acres ‐ Parks and Preserves2 ‐                ‐                ‐                ‐                  ‐                 Acres ‐ Open Space2 ‐                ‐                ‐                ‐                  ‐                 Parks and Preserves 36              36              36              36              36               Golf Course 1                 1                 1                 1                 1                  Tennis Courts 51              51              51              51              51               Athletic Center 4                 4                 4                 4                 4                  Community Centers 4                 4                 4                 4                 4                  Theaters 3                 3                 3                 3                 3                  Cultural Center/Art Center 1                 1                 1                 1                 1                  Junior Museum and Zoo 1                 1                 1                 1                 1                  Swimming Pools 1                 1                 1                 1                 1                  Nature Center 3                 3                 3                 3                 3                  Libraries Libraries 5                 5                 5                 5                 5                  Public Works: Number of Trees Maintained 34,556      35,058      34,991      35,025      34,977       Electric Utility1 Miles of Overhead Lines 194            193            193            193            193             Miles of Underground Lines 252            253            253            253            253             Water Utility Miles of Water Mains 217            217            214            214            214             Gas Utility Miles of Gas Mains 207            207            207            205            205             Waste Water Miles of Sanitary Sewer Lines 202            202            207            207            207             Note: Source: City of Palo Alto CITY OF PALO ALTO Capital Asset Statistics by Function/Program Last Ten Fiscal Years  2Beginning in 2016 park acreage is sourced from the Official City Data Set. 1The City of Palo Alto Utilities Department recently completed the conversion of its electric system maps  to a GIS mapping system database. Therefore, the distances reported for FY 11/12 and forward are more  accurate than the distances reported in previous years. Fiscal Year Ended June 30 160 2012 2013 2014 2015 2016 7                 7                7               7               7                  1                 1                 1                 1                 1                  30              30              30              30              30               157            157            157            157            ‐                   3,744         3,744         3,744         3,752         ‐                   ‐                  ‐                  ‐                  ‐                  3,921          ‐                  ‐                  ‐                  ‐                  4,489          36              36              36              36              36               1                 1                 1                 1                 1                  51              51              51              51              51               4                 4                 4                 4                 4                  4                 4                 4                 4                 4                  3                 3                 3                 3                 3                  1                 1                 1                 1                 1                  1                 1                 1                 1                 1                  1                 1                 1                 1                 1                  3                 3                 3                 3                 3                  5                 5                 5                 5                 5                  34,874      34,907      34,741      34,636      34,683       223            222            223            223            222             245            246            249            262            268             234            233            236            236            235             210            210            214            211            209             217            217            217            217            216             Fiscal Year Ended June 30 161 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Governmental Funds General Fund: Administrative 99       98       98        89       83        83        85        83        84        86         Community Services 97       96       97        94       74        74        74        74        76        77         Development Services6 ‐           ‐           ‐            ‐           ‐            ‐            ‐            ‐           38        38         Fire 127     127     127      123     121      122      119      116      107      107       Library 44       44       44        42       41        41        41        42        44        48         Office of Emergency Services5 ‐           ‐           ‐            ‐           ‐            ‐            ‐           3          3          3           Planning and Community Environment6 53       53       53        49       44        43        48        49        28        31         Police 163     163     164      161     157      157      154      155      155      155       Public Works1 68       68       69        64       59        56        57        56        53        54         Subtotal General Fund 651     649     652      622     579      576      578      578      588      599       All Other Funds: Capital Projects Fund 20       20       21        24       24        24        26        27        27        28         Special Revenue Fund 1          1          1          1          2          2          2          9          10        9           Total Governmental Funds 672     670     674      647     605      602      606      614      625      636       Enterprise Funds Public Works2 113     113     113      115     115      115      104      99        100      95         Utilities3 235     235     238      242     251      251      254      255      258      256       External Services4 6          6          ‐           ‐          ‐           ‐           ‐           ‐           ‐           ‐            Total Enterprise Funds 354     354     351      357     366      366      358      354      358      351       Internal Service Funds Printing and Mailing 4          4          4          4          2          2          2          2          2          2           Technology 30       30       31        31       30        30        31        32        32        34         Vehicle Replacement 16       16       16        16       16        16        17        17        17        17         Total Internal Service Funds 50       50       51        51       48        48        50        51        51        53         Total 1,076 1,074 1,076 1,055 1,019 1,016 1,014 1,019  1,034  1,040   Notes: 1Fleet and Facilities Management 2Refuse, Storm Drainage, Wastewater Treatment Numbers adjusted for rounding purposes. Source:  City of Palo Alto ‐ Fiscal Year 2016 Adopted Operating Budget 6ln FY15, staff was moved from Planning and Community Environment (PC&E), Public Works and Fire to create  Development Services. 5In 2014, emergency services and disaster preparation activities have been removed from the Fire Department and are now  shown in newly created Office of Emergency Services. 4In 2009, External Services was dissolved. 5 FTEs were eliminated and 1 FTE was transferred to the Technology Fund. CITY OF PALO ALTO Full‐Time Equivalent City Government Employees by Function Last Ten Fiscal Years Full Time Equivalent Employees as of June 30 3Electric, Gas, Wastewater Collection, Water 0 200 400 600 800 1,000 1,200 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Fu l l  Ti m e  Eq u i v a l e n t s Governmental Funds Enterprise Funds Internal Service Funds 162 CITY OF PALO ALTO  Index to the Single Audit Report  For the Year Ended June 30, 2016  163  Page  Independent Auditor’s Report on Internal Control Over Financial Reporting   and on Compliance and Other Matters Based on an Audit of Financial   Statements Performed in Accordance With Government Auditing Standards ..................................... 165  Independent Auditor’s Report on Compliance for Each Major Federal Program and  Report on Internal Control Over Compliance Required by Uniform Guidance ..................................... 167  Schedule of Expenditures of Federal Awards ........................................................................................... 169  Notes to the Schedule of Expenditures of Federal Awards ...................................................................... 170  Schedule of Findings and Questioned Costs ............................................................................................. 171  Schedule of Prior Years Findings and Questioned Costs ........................................................................... 172  164  This page is intentionally left blank.  Century City Los Angeles Newport Beach Oakland Sacramento San Diego San Francisco Walnut Creek Woodland Hills www.mgocpa.com Macias Gini & O’Connell LLP 2121 N. California Boulevard, Suite 750 Walnut Creek, CA 94596 165  Independent Auditor’s Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance With Government Auditing Standards Honorable Mayor and the Members of the City Council of the City of Palo Alto Palo Alto, California We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States, the financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Palo Alto, California (City), as of and for the year ended June 30, 2016, and the related notes to the financial statements, which collectively comprise the City’s basic financial statements, and have issued our report thereon dated November 2, 2016. Internal Control Over Financial Reporting In planning and performing our audit of the financial statements, we considered the City’s internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the City’s internal control. Accordingly, we do not express an opinion on the effectiveness of the City’s internal control. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. 166  Compliance and Other Matters As part of obtaining reasonable assurance about whether the City’s financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. Purpose of this Report The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the entity’s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose. Walnut Creek, California November 2, 2016 Century City Los Angeles Newport Beach Oakland Sacramento San Diego San Francisco Walnut Creek Woodland Hills www.mgocpa.com Macias Gini & O’Connell LLP 2121 N. California Boulevard, Suite 750 Walnut Creek, CA 94596 167  Independent Auditor’s Report on Compliance for Each Major Federal Program and Report on Internal Control Over Compliance Required by Uniform Guidance Honorable Mayor and the Members of the City Council of the City of Palo Alto Palo Alto, California Report on Compliance for Each Major Federal Program We have audited the City of Palo Alto’s, California (City) compliance with the types of compliance requirements described in the OMB Compliance Supplement that could have a direct and material effect on the City’s major federal program for the year ended June 30, 2016. The City’s major federal program is identified in the summary of auditor’s results section of the accompanying schedule of findings and questioned costs. Management’s Responsibility Management is responsible for compliance with federal statutes, regulations, and terms and conditions of its federal awards applicable to its federal programs. Auditor’s Responsibility Our responsibility is to express an opinion on compliance for the City’s major federal program based on our audit of the types of compliance requirements referred to above. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and the audit requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Those standards and the Uniform Guidance require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about the City’s compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion on compliance for the major federal program. However, our audit does not provide a legal determination of the City’s compliance. Opinion on the Major Federal Program In our opinion, the City complied, in all material respects, with the types of compliance requirements referred to above that could have a direct and material effect on its major federal program for the year ended June 30, 2016. 168  Report on Internal Control Over Compliance Management of the City is responsible for establishing and maintaining effective internal control over compliance with the types of compliance requirements referred to above. In planning and performing our audit of compliance, we considered the City’s internal control over compliance with the types of requirements that could have a direct and material effect on the major federal program to determine the auditing procedures that are appropriate in the circumstances for the purpose of expressing an opinion on compliance for the major federal program and to test and report on internal control over compliance in accordance with the Uniform Guidance, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the City’s internal control over compliance. A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance. Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses. However, material weaknesses may exist that were not identified. The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of Uniform Guidance. Accordingly, this report is not suitable for any other purpose. Walnut Creek, California November 2, 2016 Grantor Federal Identifying CFDA Passed Through Grantor/Pass‐Through Grantor/Program Title Number Number  Expenditures  to Subrecipients  U.S Department of Housing and Urban Development Direct B‐13‐MC‐06‐0020 CDBG ‐ Entitlement Grants Cluster B‐14‐MC‐06‐0020 Community Development Block Grants/Entitlement Grants B‐15‐MC‐06‐0020 14.218 478,193$               411,453$                 U.S Department of Interior Direct ARRA ‐ Water Reclamation and Reuse Program R10AP20003 15.504 111,014                 ‐  U.S. Department of Justice Direct Bulletproof Vest Partnership BA‐3A00S‐SM01 16.607 9,286 ‐  U.S. Department of Transportation Direct 3‐06‐0182‐009‐2014 Airport Improvement Program 3‐06‐0182‐010‐2015 20.106 244,070                 ‐  Pass‐through from State of California Office of the Traffic Safety Minimum Penalties for Repeat Offenders for Driving While Intoxicated  PT16113 20.608 15,487 ‐  Highway Safety Cluster State and Community Highway Safety  PT16113 20.600 4,835 ‐  National Priority Safety Program PT1618 20.616 14,813 ‐  Subtotal Highway Safety Cluster 19,648 ‐  Subtotal 35,135 ‐  Pass‐through from State of California Department of Transportation Highway Planning and Construction BRLS‐5100(017)132,457                  Highway Planning and Construction CML‐5100(018)20.205 148,978                 ‐  Subtotal 281,435                 ‐  Pass‐through from Dept of Resources Recycling & Recovery (CalRecycle) Highway Planning and Construction TRPS‐14‐0073 20.205 63,000 ‐  Pass‐through from State of California Department of Water Resources Highway Planning and Construction 4600010471 20.205 44,330 ‐  Total Highway Planning and Construction 388,765                 ‐  Total U.S. Department of Transportation 667,970                 ‐  Institute of Museum and Library Services Pass‐through from California State Library MA‐10‐14‐0431‐14 Museums for America MA‐11‐15‐02014‐15 45.301 51,858 ‐  TOTAL FEDERAL FINANCIAL AWARDS 1,318,321$           411,453$                 CITY OF PALO ALTO Schedule of Expenditures of Federal Awards For the Year Ended June 30, 2016 169 CITY OF PALO ALTO  Notes to the Schedule of Expenditures of Federal Awards  For the Year Ended June 30, 2016 170  NOTE 1 – REPORTING ENTITY  The schedule of expenditures of federal awards (the Schedule) includes expenditures of federal awards  for the City of Palo Alto, California (City), and its component unit as disclosed in the notes to the basic  financial statements.  NOTE 2 – BASIS OF ACCOUNTING  Basis of accounting refers to when revenues and expenditures or expenses are recognized in the  accounts and reported in the financial statements, regardless of measurement focus applied. All  governmental funds are accounted for using the modified accrual basis of accounting. All proprietary  funds are accounted for using the accrual basis of accounting. Expenditures of federal awards reported  in the Schedule are recognized when incurred and all eligibility requirements have been met. Such  expenditures are recognized following the cost principles contained in 2 CFR 200, Subpart E (Cost  Principles), wherein certain types of expenditures are not allowable or are limited as to reimbursement.  The City did not elect to use the 10% de minimis cost rate as covered in 2 CFR 200.414(F&A) costs.   NOTE 3 – DIRECT AND INDIRECT (PASS‐THROUGH) FEDERAL AWARDS  Federal awards may be granted directly to the City by a federal granting agency or may be granted to  other government agencies which pass‐through federal awards to the City. The Schedule includes both  of these types of federal award programs when they occur.  NOTE 4 – RELATIONSHIP TO FEDERAL FINANCIAL REPORTS  Amounts reported in the Schedule agree to or can be reconciled with the amounts reported in the  related federal financial reports.  NOTE 5 – RELATIONSHIP TO BASIC FINANCIAL STATEMENTS  Federal awards and expenditures agree to or can be reconciled with the amounts reported in the City’s  basic financial statements.   CITY OF PALO ALTO  Schedule of Findings and Questioned Costs  For the Year Ended June 30, 2016  171  Section I ‐ Summary of Auditor’s Results  Financial Statements  Type of auditor’s report issued on the   basic financial statements of the City: Unmodified  Internal control over financial reporting:  Material weakness(es) identified? No   Significant deficiency(ies) identified? None reported  Noncompliance material to the financial statements  noted? No  Federal Awards  Internal control over major programs:  Material weakness(es) identified? No   Significant deficiency(ies) identified? None reported  Type of auditor’s report issued on compliance for  major programs: Unmodified  Any audit findings disclosed that are required to be  reported in accordance with Uniform Guidance? No  Identification of Major Programs: CFDA No. 14.218 Community Development  Block Grant  Dollar threshold used to distinguish between type A  and type B programs: $750,000  Auditee qualified as a low‐risk auditee? Yes  Section II – Financial Statements Findings  No findings reported.  Section III ‐ Federal Award Findings and Questioned Costs  No findings reported.  CITY OF PALO ALTO  Schedule of Prior Years Findings and Questioned Costs  For the Year Ended June 30, 2016 172  Financial Statement and Federal Award Findings   No financial statement nor federal award findings were reported for the year ended June 30, 2015.  ……….…………………………...……………………………………. City of Palo Alto 173 AMERICANS WITH DISABILITIES ACT STATEMENT In compliance with Americans with Disabilities Act (ADA) of 1990, this document may be provided in other accessible formats. For information contact: ADA Coordinator 250 Hamilton Avenue (650) 329-2550 ADA@cityofpaloalto.org Spanish explorers named the area for the tall, twin- trunked redwood tree they camped beneath in 1769. Palo Alto incorporated in 1894 and the State of California granted its first charter in 1909. The City has long been known for its innovative people and its exploration of ideas that have changed the world. In Palo Alto, our history has always been about the future. City of Palo Alto 250 Hamilton Avenue, Palo Alto, CA 94301 P 650.329.2100 W cityofpaloalto.org                  Finance Committee Excerpt Minutes Page 1 of 28 Finance Committee Action Minutes November 15, 2016   Special Meeting Tuesday, November 15, 2016 Chairperson Filseth called the meeting to order at 6:06 P.M. in the Community Meeting Room, 250 Hamilton Avenue, Palo Alto, California. Present: Filseth (Chair), Holman, Schmid, Wolbach Absent: Oral Communications None. 2. Recommendation to Approve the FY 2016 Comprehensive Annual Financial Report (CAFR) and Approve Budget Amendments in Various Funds Chair Filseth: Okay, in that case we will proceed to Item 2, which is the CAFR. Are there any members of the public who wish to speak to this item? With no public comments, let’s proceed. Welcome. (inaudible) David Ramberg, Assistant Director of Administrative Services Department: Good evening Chair and members of the Finance Committee. My name is David Ramberg. I’m the Assistant Director of the Administrative Services Department. Myself and Laura are going to run through slides on the Fiscal Year 2016 year-End Financial Report. I’m going cover a couple of overview points and then we’re going to get into the details. On the overview, the Fiscal Year 2016 continued where sort of 2015 left off. We had some increasing positive indicators in some of our major revenue sources, so that’s a good news story for 2016 which we’re closing out, and you’re going to see some of those numbers in detail in a moment. We do have some additional positive expense controls reflected as well, where we’re keeping expenses within budget and coming in under budget in some cases; however, there still are the large unfunded liabilities that are out there, which we’ve already touched upon a little bit tonight in addition to the TRANSCRIPT    Page 2 of 28 Finance Committee Transcript November 15, 2016   additional liability of infrastructure funding. As also has been mentioned tonight, the City received a clean audit and we’re very happy for that and we’re also happy for the Government Finance Officers’ Association (GFOA) award, the Government Finance Officer’s Aware of Excellence for our Comprehensive Annual Financial Report for Fiscal Year 2015. A little bit of foreshadowing here, coming up on December 6 the Finance Committee will start having a very preliminary look at the upcoming Fiscal Year 2018 budget, which will be informed in large part by the numbers you’re seeing coming out of 2016 tonight. So just sort of keep that in mind as you look ahead to that Finance Committee meeting. So with those opening remarks, I’d like to turn it over to Laura Kuryk, our Accounting Manager. Laura Kuryk, Accounting Manager: Good afternoon Finance Committee members. I’m Laura Kuryk, the Accounting Manager. So I would like to go into a little more detail on the financial numbers. I would like to refer you to Packet Page 82. This is the revenue and expense summary that I think you’re probably most familiar with looking at. So referring to this summary, we can see that revenues exceeded our final budget by $6.4 million for the year and that’s primarily due to higher revenue for UUT and sales tax, as well as the proceeds we received from the sale of the former City Manager house. On the expense side, we ended up with expenses $7.8 million lower than final budget. These were savings due to vacancies and also benefits savings higher than expected. You can see we are carrying forward $6.2 million of encumbrances to Fiscal Year 2017. At the end of the year, on a budgetary basis, we have a surplus of $2.5 million after expending $10.6 million from our Fiscal Year 2015 surplus funds and these amounts were approved in CMR 6251, when we closed out the Fiscal Year ’15 year end. Next slide gives you a picture of our past three years of revenue from tax sources compared to how we’re looking for the ’17 budget, so you can see that sales tax is remaining fairly flat, property tax is ascending, transient occupancy tax is higher starting in ’15 because of the tax rate increase from 12 to 14 percent, documentary transfer tax has leveled off and Utility User’s Tax (UUT) as well is consistent year over year. Council Member Holman: Do you want questions during or at the end? James Keene, City Manager: … more relevant. Council Member Holman: So if I could please then, the Document Transfer Tax, given that Property Tax has gone up so significantly, why has the Document Transfer Tax, why did it take a pretty steep dive in ’16? TRANSCRIPT    Page 3 of 28 Finance Committee Transcript November 15, 2016   Lalo Perez, Chief Financial Officer: So what happened was in Fiscal Year ’15 we had several large properties on the commercial side change hands. There was a 50-year lease on the El Camino, Page Mill corner property, I can’t think of the name of it, El Camino Square, and they had five properties in that transaction including that one, and there were a couple of others, the hotel down the street, the hotel, Epiphany, yeah, and so what happens is that we will have one-time transactions, so we track them. It’s difficult to predict when they are going to come through. We think those are really exceptions, but I think we discussed here maybe in the year you were mayor, because I think that’s when we had gone through it that it does have a residual in a positive way on the property tax itself because it gets reset to the market value. But those were the drivers and what we’ re seeing now in property transactions is a slowdown. On the residential side we’re seeing properties stay longer for sale, less transactions, so it’s an area where we’re a bit cautious and a bit concerned as rates are moving up as well, as you have been hearing. Rates are now in the 4 percent level for 30 years, which they have been below 4 for quite some time. It’s something that will be interesting to see how it influences the potential on the fence buyers. Council Member Holman: Thank you for that and also what about ’14? So I understand the spike in ’15, but what about ’14, because we’re still quite a bit below ’14 as well. Mr. Perez: Yeah, I think we were coming out of the wait and see and people starting putting their houses on the market after the downturn and so we saw that trend. So it was quite a flurry of activity for Palo Alto, and then including too the commercial side. I think what we’re seeing is a slowdown and we’re trying to stay in communication with real estate agents and brokers that can help us, give us a gauge on what they’re seeing and what’s coming. Mr. Keene: Yeah, we just recall that, I mean obviously we were in the recession years, or post-recession years, but at that point in time we were running 3, 4, at best $5 million a year, so even these almost $7 million numbers are still, I mean, anywhere from 25 to 50 percent more than we had in some other years. Ms. Kuryk: Next slide. Oh sorry. Council Member Schmid: The Transient Occupancy Tax (TOT) is just given as a tax, but we have identified a portion if that which is to be used for TRANSCRIPT    Page 4 of 28 Finance Committee Transcript November 15, 2016   infrastructure. Can you give me an idea of how much is targeted funds rather than available funds? Mr. Perez: That’s a good question and we are earmarking all of those funds to assure you we’re not using them for anything else and then this current Fiscal Year we’re projecting $8 million from the combination of the increase of the rate from 12 to 14 percent and three new hotels. Council Member Schmid: Yeah, I think it’s important when we look at salary and benefits that we make sure that we are identifying funds that are available to spend on salary and benefits. Ms. Kuryk: If you look at Packet Page 76, at the bottom of the page you’ll see how we have broken out where the TOT goes, how it’s split between the general fund and the infrastructure plan. Council Member Schmid: Can you tell me the page. Ms. Kuryk: Packet Page 76. Council Member Schmid: I don’t have that Packet Page here. Mr. Perez: Page 6 of the Report, Report 7383. Council Member Schmid: Page 6? Mr. Perez: Page 6, yeah. So it shows you, so I gave you the 2017 number so what Laura has pointed out for the 2016 number is $7.2 million in actuals. Ms. Kuryk: It’s in the CMR, not the CAFR, it’s in the CMR Page 6. Council Member Schmid: Yeah, I don’t have my Packet Page on there. Mr. Perez: Do you have the 7383? Council Member Schmid: Yeah. Ms. Kuryk: There it is. Mr. Perez: It should be… TRANSCRIPT    Page 5 of 28 Finance Committee Transcript November 15, 2016   Chair Filseth: Page 6. Council Member Schmid: Got it, okay. Good, thank you very much. Mr. Keene: While we’re on that figure though, could I make another statement? We rarely are pleased at all with growth in our town of late, and I would just say that if we did not have the new hotels, if we did not have the increase in the rate and if we did not have a lot of economic activity and actually high room rental rates, we’d be in real trouble right now. I mean, it was not long ago we were collecting about $6 or $7 million a year here, and we’re now collecting $23 or $24 million. You could just imagine, take the earmark out, I’m glad we’re not balancing the FY’18 budget without TOT being in the mix. Mr. Perez: Let me give you a couple of other points of reference, just so you understand the vibrancy of the TOT. When we compare Fiscal Year ’17 to Fiscal Year ’16, the month of September, I’ll just pick that one, the average room rate in ’16 was $257, the average room rate now was $267. The average occupancy the year before was 77.7, 83.3. This is just telling you there is still a lot of activity. We believe it’s because we’re a destination point, Stanford and the business community and, obviously, residents that have relatives that stay. And this includes Airbnb and I think we mentioned to you in our prior report, now we’re getting the on-line outlets contributing to the TOT as well. Council Member Holman: Is there any way to know, two things, did you say the room rate went down in 2017? Mr. Perez: No, it went up from comparison last year in September it went up roughly $9. Council Member Holman: Okay, I was hearing it the other way around. Okay. And is there any way to know what the Airbnb for instance, impact has on hotel occupancy? Do you have any kind of…? Mr. Perez: Well, since it’s a mix, you know, we would have to pull it out. The problem is that we, it’s in the numbers on the average room rate, but it’s not on the occupancy percentage because we don’t have any data from them. We do not receive anything. My gut would be that at this point there is not a negative impact from what I can tell and looking at these numbers, but I don’t have sufficient data to firmly state that. TRANSCRIPT    Page 6 of 28 Finance Committee Transcript November 15, 2016   Council Member Holman: Is that sort of based on like what you see neighboring cities, what their occupancy rates are, is that one criteria you use. Mr. Perez: Well, it’s something that I would need to, we haven’t had a chance to meet with our neighboring cities. We meet every other month, and there has been some transition so we haven’t met. I’ll have to explore that, but it’s definitely one of the key areas of indicators that we looked at. The trend has been that we’ve all been building more hotels, the demand is high, the area here has been a leading area for the state in terms of demand and build and just reading, there are still more hotels coming on line because the demand is there. Mr. Keene: Yeah, if you look at that chart on Page 7 of the Report, I mean it’s $6.8 million we collected in Transient Occupancy Tax in 2010 and now we’re catching up with, I mean, we’ re getting in the sales tax revenue collection levels. Ms. Kuryk: Okay, moving on to the next slide, the expense side of the equation. Fiscal Year 2016 expenses ended $7.8 million lower than the final budget. We had funds remaining in the non-departmental salary reserve as well as higher than expected expense saving. A couple of highlights, Community Services $1.3 million under, Police Department $1.1 million under, and Development Services $1.4 million under. And again, this is detailed in your Attachment A. Next slide, looking at the Budget Stabilization Reserve(BSR), we started Fiscal Year ’16 with a balance of $48,198 million. The addition for the year net of revenues, expenses and our previously committed monies from the Fiscal Year ’15 surplus means that we can add $3.3 million to the BSR, so our ending balance as of 06/30/2016 is going to be $51.582 million. Of that $51.582 million we’ve made certain commitments already, as to what we’re going to spend that on. So we have a reserve set aside for pension trust fund of $2,055 million. 2017 budget amendments that have already been approved $2,611 million and then recommended uses for Capital Improvement Program (CIP) projects, real estate sale proceeds and fines from Edgewood Plaza, we’ve set aside $5.3 million. That will leave us with a BSR level of $41.673 million, and that represent 21.4 percent of our 2017 adopted budget expenditures. Next Slide, Enterprise Funds. All of the enterprise funds were in a surplus position for Fiscal Year 2016 except for electric and again, electric is in a deficit position for the year due to repercussions of the drought conditions. The rate stabilization balances for all of the Enterprise Funds is in a positive position at the year end, except for wastewater treatment and airport. If we go to the next Slide, you’ll see that wastewater treatment has a negative Rate Stabilization Reserve (RSR) balance of $2.3 million because we had to TRANSCRIPT    Page 7 of 28 Finance Committee Transcript November 15, 2016   increase the reappropriations due to plant upgrades. This negative RSR will be restored as we recover those replacement costs from the partners. The airport continues in a negative position. They are continuing operating losses which are funded by the general fund and on a cumulative basis their loss position is $2.4 million. Any questions? Council Member Wolbach: Yeah, just maybe a quick reminder. I’m just not recollecting if we talked about it earlier and I apologize for that. Do we have an anticipation that over the next few years that the airport losses will be mitigated or reversed? Mr. Perez: That’s the plan. I call it a plan. It’s a good question, because it’s something important that's coming up. You may recall the City entered into a 50-year agreement with the County. The County came back a few years ago and said we don’t want it, back to you. That 50-year agreement is ending I want to say April of 2017, so we get an opportunity to enter into current market leases versus some leases that were really not favorable to the County whatsoever. One of the reasons why they wanted to get out. So we believe that if we go into these market rate leases, that it will generate a positive revenue. It will go from tens of thousands to a million plus potentially, based on what we’re looking at in terms of the revenue, so that’s a big swing. But there’s a lot of work that needs to be done to the airport, the facilities themselves. The prior real property manager told me in tongue- in-cheek that the reason the buildings are still up is because the termites are hold hands. So, you know, we definitely need some infrastructure. We have some infrastructure needs that we need to address. Nevertheless, we believe that with the current tie-downs available for us and the opportunity to enter into these new agreements we can go into a positive cash flow. So the question will be, what are going to be the needs for the operations of the airport, what are going to be the capital needs. Currently you have to make a deal with the Federal Aviation Administration (FAA). They are more than willing, if there is funding available, to provide you with 90 percent of the capital funding for a specific need, so I’ll give you an example. Earlier this year you approved, I believe in the summertime, around August, an expenditure for the fencing to be replaced because the FAA wanted new fencing. So they gave us 90 percent, we had to put up the other 10 percent. So there is an amount of money you have to put in, then once you do that and accept that 90 percent then you’re in bed with them for another 20 years. It just keeps triggering that, right. So what we have to look at is what kind of business plan we can formulate from this this, determine the cash flows, determine at what point we can stop lending them money from the general fund and where is the payback of the loans for the general fund. So that’s in the works, but I think we are seeing a window of a better future post April of 2017. TRANSCRIPT    Page 8 of 28 Finance Committee Transcript November 15, 2016   Council Member Wolbach: I appreciate that, sorry for the diversion. Chair Filseth: None of that is contingent on us increasing the number or length of runways, right? Mr. Perez: My understanding is that we’re limited and that’s primarily driven by that levy, so that’s the end of the road, so we are limited to the type of jet planes that can land to a small type of plane. Council Member Holman: My primary question also had to do with the airport. So this is for good reason a sensitive topic in the community, so runway length is one thing, but I am also understanding that there are new craft capabilities that can use larger planes landing on shorter runways. So when you’re talking about extrapolating costs out in the future and new leases, that was the terminology used, new leases as opposed to renewed leases, is that anticipation being with new users at higher rates that might create other impacts to the community? Are you talking about existing users or, what’s our latitude so we don’t end up with maybe a positive cash flow, but a negative community quality? Mr. Perez: Yeah, all of that has to be put forward and then need discussion and plans so there would be discussions with the stakeholders and input, but you know, I’m kind of out of my league. I haven’t earned my wings yet on that, but in meetings that I have attended and things that we’re going to brief the City Manager on for getting ready to formulate a plan, all of that is being put into play because it’s important we understand that is sensitive in the community. Council Member Holman: Then also you were saying, you know, about the fencing you said, “and then you’re in bed with the FAA for 20 years”, so how do you mean that? So let’s just say if there’s a building that’s needs to be restored or replaced, how does that impact the future? So if they pay 90 percent of the cost, what’s that mean for the next 20 years? Mr. Perez: That means that you must operate the airport for 20 more years from the date you took that grand funding. It just resets every time you accept funds, so every year that there is funding available. So… Mr. Keene: We’re not adding a new 20-year period on top of the 20-year period, we’re just extending. It’s 2016 and then we have 20 years and so we’re 2036, and then if we take another grant in 2018, it’s another 20 years, so it’s 2038. TRANSCRIPT    Page 9 of 28 Finance Committee Transcript November 15, 2016   Council Member Holman: So is it possible and maybe this is not an appropriate question for here, just it is a matter of concern for the community, so is it possible to have fewer leases at a higher rate. I mean, has there been any extrapolation of possibilities there? Mr. Perez: So what we did is we hired an expert to help us assess what we could potentially charge because we’re not privy to the existing leases, because they are privately held, so part of the homework, if you will, that we tasked the consultant to do is to compare to other airports. So one of the things that we have to be sensitive about is that if we push too hard, we may push somebody out of Palo Alto and into a neighboring airport. Now, there’s a certain demand to be in Palo Alto and we understand that, but trying to figure out where that is, since we have just taken over, it’s a fine line for us to look at, but we’re definitely looking at all the alternatives, all the possible ways we could do this, and keeping in mind the stakeholders, because the aviators also and the schools and all that also don’t want to have huge disruptions or challenges. It’s a heavy task for the Palo Alto Staff that is managing this project. Council Member Holman: It’s also a push/pull because even if we had fewer operators at our airport, at least going out of our airport, we have some control over paths, some control. Mr. Perez: That’s out of my league, I’m sorry. Council Member Holman: We don’t need to go there. So on the Slide 6, it doesn’t read right to me, so help me understand this one. Slide 6, the next to last row there, “recommended uses”, now these are expenditures so CIP projects, of course, those are expenditures. I don’t understand City Manager real estate sale and Edgewood Plaza fines. Why those are expenses. Mr. Perez: It’s funny, the City Manager asked me the same question, why are you confusing me. Mr. Perez: So now we have two. Council Member Holman: Two smart people, you understand. And I take it the City Manager real estate sale is the Bennett’s house? Mr. Perez: Yes. Council Member Holman: Well, why is it an expense? TRANSCRIPT    Page 10 of 28 Finance Committee Transcript November 15, 2016   Mr. Keene: I think it’s, as I understand it, it’s not, so I think the hard part is the term “recommended uses”. We have some pools of revenues and those are the three things that are being identified, and then the use is actually in one sense, the use is unspoken. It has to go towards carrying forward and balancing things. Kiely Nose, Budget Manager: So if you guys look on CMR, Page 5, what we are seeing on the Slide is we are trying to abbreviate it to fit on the Slide. Mr. Keene: City Manager’s Report (CMR) Page 5 Ms. Nose: Packet Page 75, thank you. You actually see a breakout of what those three items are and so the reason why we say uses because from a very technical budgetary term and we should probably get out of that, we’re transferring these funds to the Capital Improvement Fund is the recommendation. Mr. Keene: That’s what I was saying. Ms. Nose: Yeah, exactly. So from a General Fund standpoint, it’s a use in terms of it’s a transfer, so we can refine the language. Council Member Holman: So it’s money that’s come in, but it’s being recommended to be put out as a transfer to CIP funds? Ms. Nose: Correct. Council Member Holman: So we didn’t have a conversation, I don’t remember us having a conversation about where we wanted the, either the Edgewood Plaza development fees or the... About where we wanted them to go. Mr. Keene: So let me jump in. So there are two things. This is both a report on things that have happened and actually recommendations for action for you to recommend to the Council, so that’s one thing we will be doing without saying how we would like to… Council Member Holman: Tonight? Mr. Keene: Yes. And the Edgewood Plaza development fees, in my sense here, right, is this just says it is set up as a reserve. So it’s really not saying, what it’s really saying is we’re not spending this money. We’re going to set it TRANSCRIPT    Page 11 of 28 Finance Committee Transcript November 15, 2016   up as a reserve, so it’s available for some future designated use as opposed to just treating it as a part of the revenue flow into the General Fund in some way that could be then spent. Council Member Holman: Okay, then one other question, if it’s okay, one other question is we had a little bit of conversation about the LOS ALTOS TREATMENT PLANT (LATP) site and charging rent on the users of that land and some of that coming into the General Fund. Has that been looked at at all? Mr. Perez: We have, we have actually been doing that and we have been splitting the rent, because as you may recall it is 50/50 ownership between the Refuse Fund and the General Fund. We had been using it for staging, so some of our own contractors, but mainly from utilities have been in need for a staging area, so that’s been one use. The second use had been for the shuttles that go around the City with the happy faces. They had been parking there. Recently Public Works Staff has asked us to do a switch and waste management is moving out of the Geng Roads area because we need the site for the Fire Station 3, so we’re moving waste management into the 50 percent site of the LATP and that’s taken the majority of that, so the shuttles are moving to the remaining part of Geng Road, so we’re renting that smaller space at Geng Road because it wouldn’t make sense to charge rent to waste management because all it would do is turn around with the inflator on top of that and charge us right back, so there’s no rent charged there. Mr. Keene: If I can sort of put into perspective what we’re trying to do here today, because we are in a few weeks, we will start larger discussions about the City’s budget situation and the implications for the next Fiscal Year. I mean for the most part what we’re doing is we’ve got the CAFR Report on our performance in 2016 and in a sense we’ve closed the books on 2016, so this is really primarily addressing for the most part what recommendations do we have with the outcomes of the performance of our budgets and our financial statements in 2016, and what should we do with those funds. There’s a whole host of other items and issues like we were just starting to talk about that will be more prospective about what we do. So I think it would be, actually I think it’s, given the nature of this Report, it would be appropriate to try to stay in the track of the CAFR and budget amendments recommendations as the Staff’s putting forward. Council Member Holman: Thank you for that and I just, sometimes it gets a little bit like, because there are fine lines you don’t want to miss an opportunity, it’s like, oh, we’ve already talked about that, so fine lines sometimes, so thanks. TRANSCRIPT    Page 12 of 28 Finance Committee Transcript November 15, 2016   Council Member Schmid: Keeping in line with the historical perspective, the CAFR is the only place that has these numbers, and that’s on Page 150, no 149, it’s the… Mr. Perez: Packet Page 262. Council Member Schmid: As we saw in the slides, the property tax is by far our most valuable tax and forecasted to continue. What this sheet says is that the nonresidential side is paying 25 percent of that tax and if you compare it to the 2010 Report, it used to be 31, so each year it’s going down by about one percentage point. This is during a secure period where office growth has been three times the size of employed residents in town, so it’s a very, very striking number that office space is going up, but their payment of local taxes is going down. So who pays all those property taxes? If you look at the Page 150, it gives the notion there of tax changes by property value and if you again compare it to 2010, it’s very clear that there are about 300 homes turning over each year that account for the bulk of the increase in property tax payments. That is, we are getting our local funding from 300 new residents who are paying escalating rates, and… Chair Filseth: (inaudible)Council Member Schmid: Yeah, the increase above the base 1 or 2 percent is taking place among the 300 who are moving up, the property’s moving up. And they are all residences, virtually all the increase comes from residents, so as we look at our future budgets, it’s important to keep in mind who it is that we’re drawing on general funds, who it is who is paying. The CAFR provides a very valuable insight for us. Mr. Keene: Well and I would, I don’t know what data we have. I would imagine that the majority of those 300 would tend to be new residents of town, rather than somebody maybe moving up, but I could be mistaken. I know from my own neighbors, when they have sold their houses, well this is great, I’ve made a lot of money off of it, but I can’t afford to buy a new house in Palo Alto, you know. It is interesting to see this, because I remember what the numbers were back in 2009 and ’10. We still have 27 percent though of our housing stock valued at $300,000 or less. That’s a, as I look at that, is that correct? Cumulative percentage total of parcels, 26.74 percent at $299,000? Here, 26 percent of our parcels are under $300,000 assessed valuation. Council Member Schmid: Maybe Lalo can help with this. The ones that don’t turn over, even though the residents might change are if you have a trust family, family trust or something. Any ideas how many properties in Palo Alto are under a family trust? TRANSCRIPT    Page 13 of 28 Finance Committee Transcript November 15, 2016   Mr. Perez: We don’t have that data. The discussions we’ve been having is how many homes have now, you know, so the… We’re trying to search how we can get information. We’re even talking to companies that do data mining for short-term rentals and trying to figure out from there which ones are being residents moving out and converted to short-term rentals, because the return on that is much better than the stock market and the bond market, so what it does is it fixes the asset at the low assessed valuation, as Jim’s talking about those percentages. Our concern is that then that doesn’t flip, it stays there and it’s not really adding to the tax base of the impacts of these short-term rentals that are occurring, so we’re trying to find out ways, how do we do that because what we were using is that to Jim’s point, somebody passes, the property is too expensive for one of the heirs to take over so it’s sold and distributed, the proceeds are distributed. Now there’s an opportunity to consider it as maybe an income property, not just for short- term rentals, but just in general rentals, because Palo Alto is in such high demand. So we’re trying to find ways to data mine that type of information, and it’s not easy. Council Member Schmid: Yeah, it’s extremely important though that you are looking at that because that could really affect in the long run what we get from our property taxes. Mr. Keene: On other interesting thing, I just, I mean it’s an indication of some of the drivers, I guess, some of our local conversations, if the median house price, the single-family house price here now is $2.4 million or something, just under 15 percent of our parcels are valued at $2 million or greater. Council Member Schmid: Have been sold at that rate, yeah. Mr. Keene: No this isn’t just sold, this is what I see as the… Council Member Schmid: But they only get revalued when they are sold. Mr. Keene: Right, that’s what I mean. I mean there’s only 15 percent of the people who are paying taxes on a $2 million or more property, and yet anybody who wanted to go out and buy an average typical place is going to be in that mix. Chair Filseth: A lot more that 15 percent. Mr. Keene: Yeah, so you can kind of really understand why Palo Alto is out of reach for Palo Alto, let alone the rest of the world. TRANSCRIPT    Page 14 of 28 Finance Committee Transcript November 15, 2016   Chair Filseth: Well, you have to consider too, I mean this is a mix of single family homes and multi units are on a dramatically different scale (inaudible) Mr. Keene: One other thing, just for the public who may not be as attuned to this, your comments on the commercial side, so we have two factors here. One, right, typically the commercial properties do not change ownership at the same frequency, especially in our town it seems. And the other thing is, we don’t have any discretion, these are all set by the State or by the voters, what the rates are and what the laws are. If we were in another state, Council could have the ability to readjust the commercial real estate property values to address these things, but it’s out of the Council’s purview to be able to make those remedies. Council Member Schmid: Yeah, you pointed out with the documentary transfer taxes, there was a gigantic sale, but it was the sale only of the lease. The property itself didn’t get revalued. Chair Filseth: On the single family home thing again, I think again, I think the scale, the irony is you’ve got some of these you know, $299,000 properties that are probably single family homes that haven’t been sold since the 60’s or something like that, right, and yet if you look at the City, I mean, we’ve got 17,000 single family homes here, and that number hasn’t changed in decades, right, materially. All the interesting action, activity is going on in multi units, right, which is where the rest of this stuff is. Council Member Holman: No other questions. Are you looking for a Motion and would the Motion include…? Chair Filseth: I think so. What kind of Motion are you looking for here? Mr. Perez: We’re looking for you to, let me make sure I’m looking at the right report, sorry. Mr. Keene: We want you to approve the CAFR. Mr. Perez: Right. Chair Filseth: That’s Number 2 here, right? Council Member Holman: Mm-hmm. TRANSCRIPT    Page 15 of 28 Finance Committee Transcript November 15, 2016   Mr. Perez: And then to amend the Fiscal Year 2016 Budget Appropriation Ordinance for the various funds as identified in Exhibit B, excuse me, Attachment B, Exhibit 1 and various capital projects identified in Attachment B, Exhibit 2. Yes, and then in addition, we have at your places a memo tonight where we want to make a correction and that’s the memo dated today, labeled Number 2, which is “increase of funding for the Quarry Road Improvement Project Transit Center by $40,000” as a result of an encumbrance that was incorrectly booked. So that, along with the other recommendations I just stated. What I can also tell you is, let me try to see if I can put it in perspective that you can grasp at a high level and it will help you as we discuss later in December, future budgets. So the bottom line is you end up with a budget, I’m looking at Slide 6 by the way of the presentation, you end up with a Budget Stabilization Reserve of $41.5 million, or 21.4 percent. That’s with the assumption that you agree with us to send that money to the CIP for the couple of projects we put off, right. So then that still gives you, if you look back at your policy that you approved, you have the 18.5 target, that leaves you about a $5.7 million discretionary use of the funds as of the end of ’16. So what we’re recommending to you is that you let that go for now, until you look at your ’18 numbers that we give you, and any other needs that you may have already in the unfunded category, and you have a plethora of projects that you are interested in, either acquiring or getting to, and so for that reason we are not making a recommendation for you to do anything else with those funds. To let it stay in the budget, still it’s in reserve, as you have more information and you make an informed decision. So what we’re saying basically is, let’s take care of these projects you said you wanted, you said we can’t get to them, now we think we can get to. Chair Filseth: Don’t rush out and spend the 3.5 percent. Mr. Perez: Yeah, let’s leave that money there because you have more information, more data sets to come and decisions to be made in the future. Chair Filseth: Okay, were you going to make a Motion? Council Member Holman: Let me understand one other thing here too. So it happens to be on Slide 6 of the presentation, so the third from the bottom row there, “2017 earmarked use of Budget Stabilization Reserve (BSR) via budget amendments”. So it’s one of the things I’ve mentioned a few times, and it’s one of the things that’s like puzzling and a little troubling to me. It’s like we adopt a budget before the end of June. It’s only November and yet we’re $2.6 million… I find that really frustrating. That’s a lot of money and I don’t know how we can avoid that to that degree. I mean, that’s a lot of money and it’s troubling and disturbing and frustrating and I could go on. TRANSCRIPT    Page 16 of 28 Finance Committee Transcript November 15, 2016   Mr. Perez: Well I think you won’t get an argument from the City Manager and myself. I think it’s going to be an important discussion on the 6th on how we go forward, because that is the challenge that if we do one offs throughout the year, it doesn’t leave you a lot of room for the strategic part, and if we have limited resources but a big list of needs, it makes it more challenging. Some of these are directs responses to Council directives, I would say predominantly the majority of them. We could probably go through them really quick to give you a flavor of what they are, but that’s the nature of how we operated here since I’ve been here. It’s not just this Council, you know, but it’s something that I think it should be part of our thinking of how we want to go forward, because with the challenges that we have ahead and we talked about pension and we’re going to have a lot more discussions about that and the unfunded liability. We didn’t even discuss our unfunded retire medical liability, but you mention the combined number of $500 million. Mr. Keene: $800 million if you extrapolate. Mr. Perez: I don’t want to go there yet. But you know, I think it’s an excellent point and it’s something that we need to team up with Staff and Council and with the community, because we need to reset our expectations to what we can really afford, because in some census you know, in looking at some of the potential data, excuse me, land acquisitions it will be great, but then it may restrict us from doing other projects or developing projects that are already on hand, land is on hand, so it’s something where we need to bring you that data, and that’s why I was cautious tonight and say, hey, let’s not make any decisions on these reserves, because we need to give you more information so you can have this data set and then make those informed decisions. We wholeheartedly agree with you that we need to work together on having a plan, and hopefully we can start next month. Council Member Holman: One of the things I would find helpful and which I also mentioned before, is when we get a Budget Amendment Ordinance (BAO) that comes before us, I don’t often notice in there, it’s like, here’s what happens in the big picture. It seems to be kind of like, here’s a BAO for, I’ll just make up a number, for $320,000, but it doesn’t have a section in the Staff Report that also includes, here’s what the cumulative impact is if we do three BAO’s, what the cumulative impact is to, you know, our budget, because there is a cumulative impact and that’s what we here in the 2.6. Mr. Perez: I think we can definitely work on reporting format, because if that’s what’s going to help us get… TRANSCRIPT    Page 17 of 28 Finance Committee Transcript November 15, 2016   Mr. Keene: If that’s going to help you guys from spending money, I’m happy to do it. Council Member Holman: Well, it may not keep us from spending money, but it’s going to help us see how much is left in the checkbook before we spend it. Mr. Keene: I think we do put stuff in, but I think you’re point is, I mean, it’s much more like if funding is available in the reserve or whatever, and you know, we’re still guided by some policies. In other words, if we’re going to drop to levels below any established policies, then we wouldn’t say that funding is available. But I think to go back to what Lalo says, is to, and your points, okay, yes, but as we inch along over the year that accumulates, and then even more so given the fact that we have these other competitors out there, say for Fiscal Year ’18 that the Council could say, gosh, if I had known that we couldn’t do this other thing next year because we’re spending money right now, I would have maybe thought about the decision differently. Council Member Holman: And I look at this and it’s like we’re five-twelves of the way through this year. I mean it’s scary as the dickens. Mr. Keene: Well, we’re going to try to do our best to see about how we put the kybosh on the midyear budget process. Actually, we’ll be back in two weeks. Council Member Holman: Will Alec Baldwin be playing what character at that meeting? Chair Filseth: Okay Council Member Holman: Well, I’ll move the Staff recommendation, but I also want to know, is this the time though when we, given what I just said, I do want to set aside the City Manager real estate sale funding, the income from that, and the Edgewood Plaza project fines, use to be determined. Mr. Keene: So this recommendation does set the Edgewood Plaza fines, and of course the estimate we have right here is just on the old yield. Council Member Holman: On what page was that. I lost the page that was on the breakdown. TRANSCRIPT    Page 18 of 28 Finance Committee Transcript November 15, 2016   Mr. Perez: Page 5 of the Report or Page 75 of your Packet. Mr. Keene: And what we would be doing, of course is taking the Finance Committee recommendation to the Council, so it will be on the Council’s Report and just so that we’re clear I would think we should change this reserve recommendation not tied just to the 365 but for the future revenue stream that we continue to collect. Would that be your thinking? Do you know what I mean, as we’re increasing this thing five-fold or whatever? Council Member Holman: Yeah, so if we can set that aside and let the use of that or the purpose of that TBD and the investment return for the former City Manager real estate sale, we’re not selling your house out from under you Jim, set that aside. I don’t know how specific you want to be, but my preference, and I know one non-Finance Committee member at least, would like to set that money aside for future real estate transactions or purchase. Mr. Keene: So that one’s a little bit different on the Staff recommendation. Maybe the Staff can speak to how you positioned it. Council Member Holman: In other words, we don’t want to be selling land and then not getting land back. Mr. Perez: Right, it would be different than our recommendation, but we don’t have, that’s your policy decision. What I’m hearing you say is, set it aside for potential land acquisition. Do not use it for CIP projects? Council Member Holman: Absolutely. Mr. Perez: If that’s the direction you give us, that’s what we’ll do. Mr. Keene: So what’s the impact on CIP projects? Mr. Perez: It gives you that much less for your projects, you know, and it’s a transaction, you know, that eventually we would come back to you at mid-year with this actual transaction and say this is the direction you gave us. Right now we’re looking at March for mid-year? Sorry, January or February for that. So you would make a decision before you would have the proposed budget in front of you. So, you know, at this point it would just give us $650,000 less for the CIP projects. Council Member Holman: So I would argue that it might, it would, not might, it would give use $650,000 less for CIP projects, but it will give us $650,000 TRANSCRIPT    Page 19 of 28 Finance Committee Transcript November 15, 2016   more latitude in what we might do in the future having do to with some other project or purchase, if that money was earmarked. So that would be my argument and my Motion. Mr. Keene: Can I complicate things here Lalo. So I’m having trouble with the math. The proceeds were $1.7 million, but we’re only allocating in our recommendation $651,000 of it? Mr. Perez: Right. The majority of the funding came from the general fund operating budget to initiate the transaction, so basically we’re reimbursing the majority of the funds to the general fund operating and the majority of the net proceeds we were sending to the capital. Mr. Keene: Just so we’re clear, Council Member Holman’s recommendation would say, the entire $1.7 million would be set aside for land acquisition, future land acquisition, so it wouldn’t be just the $651,000 is what I’m hearing. Council Member Holman: I’m sorry, I usually do that. Because originally the general fund purchased the property, so it was a reimbursement of the original purchase, and that’s why it’s reduced down to $651,000. Do I get that right? Mr. Perez: Right. We’re basically saying the majority of the return on investment we’re sending to the capital and giving the general fund back its money. Chair Filseth: $1.1 million from the General Fund, sold the property for $1.7, we made $600,000. That’s the $600,000 and hereafter put the 1.1 back into the general fund. That’s what you’re saying right? Mr. Perez: The concern we would have if you were to pull the 1.1, now you don’t 5.7, you have 4.6 in the budget stabilization reserve, so it takes it away from the budget stabilization reserve if we were to do the whole 1.7. Council Member Holman: I could live with the ROI being set aside, but I don’t know what my colleagues think. Mr. Keene: And I want to be clear what Staff is saying though, which is they are more saying, we can do this and we’re just sort of staying alive, because what it is going to say is that ultimately the Council is going to be revisiting some of these choices when you look at the FY’18 budget, not just in two TRANSCRIPT    Page 20 of 28 Finance Committee Transcript November 15, 2016   weeks, but as you adopt the budget. And you could end up changing your mind and you know, in other words you could end up saying, we really needed that $650,000 for this capital project and I know we recommended saving it for future land acquisitions, but we want you to use it. I just want to say just be clear that’s part of the reason that the Staff is saying it’s fungible, because we’re really not spending any of this money and allocating it at this point. Council Member Holman: I do understand that, but if we don’t set it aside and earmark it, it tends to get fungible and almost absorbed. It’s harder to track, so… Mr. Keene: And I think, may I? Council Member Holman: Sure. Mr. Keene: May I just say I think that’s fine, but I’m kind of going back to your comment about when we have these Staff Reportss and we’re not really be clear about the cumulative impact on the cost. This is sort of a one- off sort of recommendation, and I just think it’s okay, except for the fact that the whole Council may need to feel that they can clearly freely revisit, this isn’t a sacred earmark, you know what I mean. Because otherwise it maybe is a larger policy discussion we should have, what it should be going for. Council Member Holman: And what I want to have is the policy discussion, because if we just pass this the way it is and say, okay, fine, it’s just going to get, you know, lumped in here. So the policy discussion is what I want to have, and I think it’s an important policy discussion and so that’s why I appreciate the comments, but I would still maintain that the 650… Mr. Keene: Maybe a better way to handle that, I’m not saying I want to be overly linear about it, one way to handle it would be say, you don’t want this allocated at all right now, the $651,000. Just leave it in the budget stabilization reserve rather than recommending it be allocated to CIP, because for example, when we get to the budget you would like to be able to talk about using that to set it aside for… Council Member Holman: Yes, I would, yes that is the place I assumed it would be is in the BSR but also called out as a line item. Mr. Perez: Just so we don’t confuse you, what Jim said is correct, but the books are done, right, so I can’t call out in the books that are done. That’s TRANSCRIPT    Page 21 of 28 Finance Committee Transcript November 15, 2016   why we are saying we would come back with the subsequent action. So the 651, assuming that the Committee approves this, the 651 is in the BSR and it would stay there is what I’m hearing, and as you move forward, to repeat what Jim said, just because it is important, if you change your mind, you would have the ability to use it. It’s not going to be designated for anything else. Council Member Holman: Yes, but I just want to make sure though, so I need to be redundant here, yes it would be in the BSR, but would the budget stabilization reserve come to us as, you know, a big number like this and the 651 not be called out so, you know, the source. Mr. Perez: So let me go through the steps to assure you. So let’s say you get that Motion and it’s approved. It goes to Council for approval and consent. When we come back with the mid-year, we will come back and earmark that 651 as you directed and the Council approved within the BSR. Council Member Holman: Okay, I appreciate that. And a policy comment just quickly, and then I will hush on this, but the policy, I mean there’s nothing that has greater value in this town than land, and so if we let the 651 just go to, you know, building toilets in parks, just to make up something silly here, you know, it’s not the same value, it’s not the same return, it’s not the same asset building from my perspective, and so that’s why I’m really committed to wanting to have the policy discussion about this at the larger level as well as this level. Chair Filseth: Can I try the neg case on that? I mean, if I understand what we’re saying is you’re saying you would really like to have a discussion about land acquisition in general, okay. And then in this case we’re talking about $650,000, which from a land acquisition perspective is not very much, so then the question is, you know, the added complexity of earmarking this little piece for this as opposed to the discussion we’re going to start having in a couple of weeks, which is going to be much more sweeping, right. I mean, does it really add anything to sort of add that level of sort of complication, although it’s not very much. Okay, that’s the negative and the aff case is going to be, well, is doing this going to que up the discussion that you want, which is, you know, how much land should the City be buying, whether it’s post office land or parcels for parks or whatever, right. And then the question is, is that $650,000 really going to que up that discussion. And that seems to me like the two sides. Council Member Holman: So what this partly stems from is this particular and specific matter. I’m sorry we’re spending so much time on this, but I TRANSCRIPT    Page 22 of 28 Finance Committee Transcript November 15, 2016   think it is a really important one. Is we have also in the past, to my great frustration, although not in the last probably couple of years, we have sold off, we have identified and declared some land to be surplus, but we haven’t taken those funds from those sales of surplus lands and put them into any kind of reserve for land acquisition, and so I think it is a policy discussion we need to have, and determine whether or decide whether it’s a… Mr. Keene: Can I interject though. I don’t know what land we declared surplus and sold. We identified the potential to do that, but we haven’t done that. The Council has raised, like you and other Council members… Council Member Holman: Two parcels on Almon near Churchill, just a few years ago, for instance. Mr. Keene: We sold them? Council Member Holman: Yup. Mr. Keene: Okay, so the other question I want to make…, I’m sort of splitting hairs here but this is a housekeeping action that we’re taking here today. We’re closing the books. We’re identifying some surplus funds. For the most part we’re saying, when you balanced the budget last year we kind of pulled back on some capital projects. You’ve already sort of given us policy direction, and we’re now saying we would rededicate that funding to policy directions you’ve already made. This is a new policy direction, this idea of, let’s start earmarking some money for future acquisition. Everything else we’re doing here is responding to already other directions that the Council made, whether it was clear or not. You know, we’re not interjecting new things really, and I just wonder if this is, when we’re doing this on an annual basis, this cleanup, whether you want to put in, well I’d like to establish a new practice for how we allocate our funding. Should we really be doing that as part of this process versus separately. And I know it sounds very hair splitting, but if all of a sudden everybody started saying, yeah, well I’d like to put another thing here and there, we would definitely say this is not the time to do it. You know, this could easily just say, nope, we’re not going to put that in the CIP, it’s going to stay in the BSR, and then we have this other discussion about what’s the best use. Because I guarantee you, I know it sounds good right now, but that allocation could be in conflict with something else that you want to do, and shouldn’t you have that at the point in time you have the conflict, rather than, I mean, it just seems like it’s going counter to what you had just asked us to do about being more specific about the financial impacts, every time we make a decision. TRANSCRIPT    Page 23 of 28 Finance Committee Transcript November 15, 2016   Chair Filseth: You’re proposing, basically you’re proposing a new policy that we don’t sell land and put the money in the general fund. Council Member Holman: Well, and I did understand earlier in this conversation that, yes, that is something we would bring up tonight, so I was following on that track. And the other thing is, if we wait and have the conversation later, then, well the 651 is already committed, so… Mr. Keene: What we are definitely saying is you could take this recommendation out about the transfer to the capital fund, and just leave it in the BSR. You could do that. Chair Filseth: She wants a policy that says… Council Member Holman: No, I want to recommend a policy for the Council to discuss, so… Mr. Keene: So I’m just saying my sense is this kind of doesn’t fit in with what we’re trying, what we’re generally trying to do here. You should have that discussion and we leave the funds completely fungible by not transferring it to the infrastructure. We’re recommending leaving it in the BSR, and you can do that in the future. Chair Filseth: So I think I’m going to side with the City Manager on this, but you’re free to make a Motion. Council Member Holman: Oh, you didn’t have your mike on. Chair Filseth: Sorry, so I think I lean towards the City Manager’s interpretation. So we should make a Motion either with or without that thing. Council Member Holman: So the Motion would be to approve, or to amend the Fiscal 2016 Budget Appropriation Ordinance for various funds identified in Attachment B, Exhibit 1 and various capital projects identified in Attachment B, Exhibit 2 with corrections provided at places which I’ve lost track of, with corrections provided in an at places memo, and approve the City’s 2016 Comprehensive Annual Financial Report or CAFR Attachment C with the two amendments. One would be to, I guess it’s one amendment really, to keep the investment return from former City Manager real estate sale and Edgewood Plaza development fees in the BSR. TRANSCRIPT    Page 24 of 28 Finance Committee Transcript November 15, 2016   Council Member Holman: Okay, and Lalo will help us track those funds. Okay, that’s agreeable. Mr. Keene: And I promise you when we are discussing the budget, if you somehow forgot this, we will bring up the fact that that 651 had been identified as the possible use towards seed funding towards I promise you we won’t forget it. We’re just going to have ten other things you’re going to have to balance against it. Council Member Holman: Well you have a long arm. So I’m looking for a second on that. Council Member Schmid: Yeah, clarification. Number 1 says that we are approving the funds in Attachment B, Exhibit 1 and Exhibit 2. There’s a lot of funds in there. Have each of these been approved by Council before, or brought to Council before, or is this all new. Ms. Nose: Thank you Council Member Schmid. So what’s in Attachment B is actually cleanup of FY’16, so this is based on, and this is to my understanding something that we have historically done. This is based on actual activity. Some of the budgets weren’t adjusted correctly and so once accounting closed the books, once we went through all the audits, went through everything. All the i’s were dotted, t’s were crossed, these were areas where we were out of balance between the actuals and what the budget appropriations were. Council Member Schmid: I thought we did that a month ago and closed… Ms. Nose: That was the reappropriations, so what that did was actually looked at these ending numbers and said, okay, out of those numbers, here are the gaps. We didn’t spend say $100,000 and I want to move that from ’16 to ’17. Council Member Schmid: And what are these? Ms. Nose: This is actually just cleaning up that FY’16 alone. So this is actually going the other direction sometimes, where maybe we misbudgeted between categories or departments or transfers, and we actually overspent what the budget authority was, so now we’re bringing up to what the actuals were. A really good example of one of the really big dollar values is we actually went through and defeased the bonds for a lot of those CIP projects, so we had earmarked those funds in a reserve, but we weren’t sure when we would actually make the financial transaction, so this is adjusting the budget TRANSCRIPT    Page 25 of 28 Finance Committee Transcript November 15, 2016   to clean up that financial transaction. You guys have already given us authority to clean up those and to defease the bonds, but we just weren’t sure on the timing. The timing happened to work out, and so we are just retroactively adjusting the budget accordingly. So it’s truly technical. Council Member Schmid: Let me just ask another one, to make sure I understand. On Page 10, Stanford Medical Center, operating transfer in (inaudible) yes, it’s B1, $1.7 million transfer to housing in-lieu commercial fund? Ms. Nose: So I know a little bit about this one, but not we’re on Attachment B, Page 8 of Attachment B. Council Member Schmid: Packet Page? Ms. Nose: Oh, I don’t know the Packet Page. Hold on one second. Council Member Schmid: Yeah, I’m on Page 10 of Attachment B. Mr. Perez: Packet Page 92. Mr. Keene: So it says Attachment B10. Ms. Nose: Yeah. So what this is, this is just an alignment with the Stanford Development Agreement that we were supposed to move these funds from the Stanford Medical Fund, or Development Fund to the residential in-lieu fund. Council Member Schmid: And why don’t we want to do it? Ms. Nose: I’m sorry? We are doing it. So we did the financial transaction. We’re just catching the budget up to the finances. Mr. Perez: Maybe I can help you. This is to, technically we can’t move the funds ourselves as Staff, but you’ve give us direction or we have a general understanding to do it, so this is the technical authority to go ahead and finalize that move of all these transactions. A lot of those are that, and as Kiley said, you know if there is say a department was short and because it’s within the general fund and we can make it balance within all of the departments, then we move money around and then we, that’s what we call clean up and we come to you and we close that out. So the bottom line is that the general fund came in as an excess. We have savings and TRANSCRIPT    Page 26 of 28 Finance Committee Transcript November 15, 2016   expenditures. We’re just doing movements from one bucket to the other and technically we can’t do them because the charter or the muni code says that the City Manager only has ability to move within the departments. So if we move within other departments, then we have to ask you for authority. Council Member Schmid: Yeah, I guess I just want to make sure there’s no big surprises in the newspaper tomorrow, look and say, oh, they just transferred $700,000 to you know, X, Y or Z. Mr. Keene: Right. We’re just moving stuff from one fund to another fund. Mr. Perez: And in some instances we have that from one fund to another. Mr. Keene: It’s what I see, we’re moving from (inaudible) to the specific housing in lieu fund. The City Attorney says the interpretation is that that’s a requirement of the Stanford agreement that we have. Council Member Schmid: But we weren’t in compliance for the last 18 months if we have to do it all of a sudden. Do my colleagues see any number that jumps out at them? Chair Filseth: All the stuff looks to me like housekeeping stuff. It doesn’t escalate the level of … Council Member Schmid: Okay, I guess the biggest one was that $1 million one. There is a $1.2 salary and benefit reserve, Fire Department. Ms. Nose: I’m sorry, what Page is that? Council Member Schmid: B2, last one on the bottom, $1.2 million. Anything special on that? Ms. Nose: It’s also housecleaning. So what happened is by the end of the year the Fire Department overtime expenses were higher than we had budgeted. There are a number of factors associated with that. One of them is we had budgeted all of the potential labor negotiation increases in that salary reserve, and because all the negotiations didn’t happen until, frankly we were way down staffed in the middle of budget season, we never distributed the reserve to cover the additional costs, so it’s one of the, a big driver, and so we’re just cleaning that up, moving it. TRANSCRIPT    Page 27 of 28 Finance Committee Transcript November 15, 2016   Council Member Schmid: That we have heard. On B9 there is a $6 million general expenses? Mr. Perez: The bonds defeasance. Ms. Nose: Correct, that’s us defeasing the bonds. Mr. Perez: So you gave us the authority earlier. Council Member Schmid: Right. Mr. Perez: We’re just formalizing the transaction. Council Member Schmid: Okay, thank you. So I will second the Motion. Council Member Holman: Thank you. MOTION: Council Member Holman moved, seconded by Council Member Schmid to recommend the City Council: A. Amend the Fiscal Year 2016 Budget Appropriation Ordinance for various funds as identified in Attachment B – Exhibit 1 and various capital projects as identified in Attachment B – Exhibit 2 of the Staff Report; and B. Approve the City’s FY 2016 Comprehensive Annual Financial Report (CAFR) (Attachment C of Staff Report) C. Increase funding for the Quarry Road Improvements and Transit Center Access Project (PL-16000) by $40,000 as a result of an encumbrance that was incorrectly booked to another project. D. Remove the recommended transfer to the Capital Improvement Fund of the Investment Return from the former City Manager Real Estate Sale so that those funds remain in the Budget Stabilization Reserve. MOTION PASSED: 4-0 Chair Filseth: Do you care to speak to your Motion? Council Member Holman: I think I’ve spoken plenty. TRANSCRIPT    Page 28 of 28 Finance Committee Transcript November 15, 2016   Chair Filseth: Care to speak to your second? Council Member Schmid: No. MOTION PASSED: 4-0 City of Palo Alto (ID # 7604) City Council Staff Report Report Type: Consent Calendar Meeting Date: 2/6/2017 City of Palo Alto Page 1 Council Priority: Environmental Sustainability Summary Title: Palo Alto CLEAN Program Updates and Extension Title: Finance Committee Recommendation That the City Council Adopt a Resolution to Continue the Palo Alto CLEAN Program: (1) For Local Non -Solar Resources, at a Price of 8.4 ¢/kWh to 8.5 ¢/kWh With no Capacity Limit; and (2) For Local Solar Resources, at a 16.5 ¢/kWh Price That Drops to Avoided Cost at 3 MW; and Approval of Associated Program Rules and Agreements From: City Manager Lead Department: Utilities Recommended Motion (Finance Committee Recommendation) I move that Council adopt a resolution (Attachment A) to make the following changes to the Palo Alto Clean Local Energy Accessible Now (Palo Alto CLEAN) Program and amend the Palo Alto CLEAN Program Eligibility Rules and Regulations accordingly: 1. Continue the Palo Alto CLEAN program for local solar energy resources at the current price of 16.5 cents per kilowatt-hour (¢/kWh) for a 20-year or 25-year contract term up to the current 3 MW program capacity limit, and for any capacity over 3 MW, reduce the price to the avoided cost of such energy (currently 8.9 ¢/kWh for a 20-year contract term, or 9.1 ¢/kWh for a 25-year contract term); and 2. Raise the Palo Alto CLEAN program price for local non-solar eligible renewable energy resources to the updated avoided cost of such energy (8.4 ¢/kWh for a 20-year contract term, or 8.5 ¢/kWh for a 25-year contract term), from the prior price (8.1 ¢/kWh for a 20-year contract term, or 8.2 ¢/kWh for a 25-year contract term), and remove the program limit of 3 MW for local non-solar eligible renewable resources. Recommendation The Finance Committee (4-0) and the Utilities Advisory Commission (UAC) (4-1) recommend that the City Council adopt a resolution (Attachment A) to: City of Palo Alto Page 2 1. Continue the Palo Alto CLEAN program for local solar energy resources at the current price of 16.5 cents per kilowatt-hour (¢/kWh) for a 20-year or 25-year contract term up to the current 3 MW program capacity limit, and for any capacity over 3 MW, reduce the price to the avoided cost of such energy (currently 8.9 ¢/kWh for a 20-year contract term, or 9.1 ¢/kWh for a 25-year contract term); and 2. Raise the Palo Alto CLEAN program price for local non-solar eligible renewable energy resources to the updated avoided cost of such energy (8.4 ¢/kWh for a 20-year contract term, or 8.5 ¢/kWh for a 25-year contract term), from the prior price (8.1 ¢/kWh for a 20-year contract term, or 8.2 ¢/kWh for a 25-year contract term), and remove the program limit of 3 MW for local non-solar eligible renewable resources. The attached resolution incorporates the above recommendations. The amended Palo Alto CLEAN Eligibility Rules and Requirements, which implement the above recommendations, are shown in Exhibit A-1 of the resolution. As noted above, staff also seeks approval of an amended PPA (Attachment B), which incorporates the above recommendations to the contract rates in Exhibit PPA-A. Council has previously delegated authority to the City Manager to execute eligible agreements, and to make additional changes to the Palo Alto CLEAN Program PPA that are approved by the City Attorney’s office as may be otherwise necessary to implement the recommendations that are approved by Council. Staff requests the same authority be extended to recommendations approved by Council as part of this staff report. The recommendation from the Finance Committee is identical to the recommendation made by the UAC at its November 2, 2016 meeting. However, both recommendations differed from the staff recommendation, which was that all solar capacity installed under the CLEAN program in excess of the 3 MW program cap be compensated according to a tiered schedule that gradually reduces the CLEAN price for solar energy to the avoided cost of that energy once the program has 6 MW of installed capacity. Executive Summary In March 2012 the Council adopted the Palo Alto CLEAN program (also commonly referred to as a feed-in tariff, or FIT, program). The program was designed to address the Long-term Electric Acquisition Plan (LEAP) objective to enhance supply reliability through the pursuit of local generation opportunities, and to complement the City of Palo Alto Utilities’ (CPAU’s) existing PV Partners solar rebate program. Palo Alto CLEAN created an additional alternative for property owners by enabling them to build a new solar system on their property and sell the energy to CPAU under a long-term, fixed-rate, standardized contract rather than use the energy on site. Though solar developers expressed interest in Palo Alto CLEAN in 2012, the initial contract price (14 ¢/kWh for a 20-year term) proved insufficient to facilitate the most common business model used by project developers, which involves a third-party investor leasing roof space from City of Palo Alto Page 3 a property owner. Council increased the Palo Alto CLEAN price to 16.5 ¢/kWh in December 2012, and has maintained it at that level ever since (last reaffirming it in March 2016). In May 2015, Council added a 25-year contract term option, and expanded the program to include non- solar eligible renewable energy resources, setting their contract prices at the avoided cost level. Although at the start of the year it had just received its first project application, the CLEAN program appears to be about to reach the 3 MW program capacity limit for solar resources. In the first two months of this year, Komuna Energy executed CLEAN contracts for five projects that would account for about 1.4 MW of capacity. And staff has received word from one of the City’s large commercial customers that it plans to submit an application for a CLEAN project that could consume the remaining 1.6 MW of program capacity—and potentially much more than that amount. The customer is awaiting Council determination of the CLEAN price for any capacity over the 3 MW cap before finalizing the size of a system for which it would submit a CLEAN program application. At its November 2 meeting, the UAC voted (4-1) to recommend that all solar capacity installed under the CLEAN program in excess of the 3 MW program cap—including that portion of the large commercial customer’s system that exceeds the cap—be compensated at the avoided cost for such energy. This motion differed from the staff recommendation that solar capacity installed under the CLEAN program in excess of the 3 MW program cap be compensated according to a tiered schedule that gradually reduces the CLEAN price for solar energy to the avoided cost of that solar energy after the program has 6 MW of installed capacity. At its December 6 meeting, the Finance Committee voted unanimously (4-0) to support the UAC recommendation rather than staff’s proposal. Additionally, the Finance Committee, the UAC, and staff all agree that the CLEAN price for non- solar projects should remain at the avoided cost amount, which would increase from the current price of 8.1 ¢/kWh and 8.2 ¢/kWh for a 20-year and 25-year contract term, respectively, to 8.4 ¢/kWh and 8.5 ¢/kWh for a 20-year and 25-year contract term, respectively. Committee Review and Recommendation The UAC considered staff’s recommendation at its November 2, 2016 meeting. After discussion, the UAC voted 4-1, with two commissioners absent, to reject the staff recommendation with respect to local solar resources, and instead to recommend reducing the CLEAN program price from 16.5¢/kWh to the avoided cost level for all capacity in excess of the 3 MW cap. In addition, the UAC unanimously (5-0) supported the staff recommendation with respect to local non-solar resources participating in the CLEAN program. The excerpted minutes from the UAC’s discussion at its November 2, 2016 meeting are provided as Attachment D. At its December 6, 2016, meeting, the Finance Committee discussed the UAC’s and staff’s recommendations. The Finance Committee staff report (Staff Report 7438), which contains a detailed discussion of the CLEAN program’s background and a review of the changes in the value of locally generated renewable energy, is provided as Attachment C. Staff described the City of Palo Alto Page 4 program’s history, including previous annual updates made to the program since its inception and the five projects that have applied to the program since the beginning of this year. Staff also described how the value of local solar and non-solar renewable energy has declined significantly over the past few years, and reviewed the various cost components that make up these values. Finance Committee members commented on the annual excess cost associated with continuing to offer the 16.5 ¢/kWh rate to solar resources ($380,000 per year for 3 MW of solar resources), and how this differs from the cost of purchasing solar energy from large-scale facilities outside the City. Committee members noted that this is a challenging budget year for the City and questioned the prudency of extending the program further by increasing the excess cost (from $380,000 per year to $535,000 per year) as proposed by staff. The Finance Committee members also commented on the lack of participation in the program by local non- solar resources, and questioned why customers would choose to participate in the CLEAN program instead of the net energy metering (NEM) program. After discussion, the Finance Committee voted unanimously (4-0) to recommend that the Council adopt a resolution reducing the CLEAN program price for local solar resources to the avoided cost of such energy (8.9 ¢/kWh for a 20-year contract term, or 9.1 ¢/kWh for a 25-year contract term) once the 3 MW participation cap is reached; continuing the CLEAN program for local non-solar renewable energy resources at the updated avoided cost of such energy (8.4 ¢/kWh for a 20-year contract term, or 8.5 ¢/kWh for a 25-year contract term) and eliminating the 3 MW participation cap for both types of resources. The excerpted action minutes from the Finance Committee’s discussion of the Palo Alto CLEAN program at its December 6, 2016 meeting are provided as Attachment E. Resource Impact Staff estimates that the current cost of buying energy from solar resources outside of Palo Alto is 8.9 ¢/kWh (including transmission and capacity) for a 20-year contract, or 9.1 ¢/kWh for a 25- year contract. Purchasing the energy generated by local solar projects at this avoided cost level is therefore not expected to impact the cost to the Utility. Likewise, purchasing the energy generated from 3 MW of local, non-solar renewable energy projects at the avoided cost level is not expected to impact the cost to the Utility. On the other hand, purchasing the output from 3 MW of local solar projects at a contract price of 16.5 ¢/kWh would cost about $380,000 per year more than buying the same energy outside of Palo Alto. This is equivalent to a 0.32% increase in the electric utility’s costs. If the program increased costs by $380,000 per year, staff has determined that the system average electric rate would have to increase by 0.04¢/kWh. This is equivalent to a bill impact of $1.85 per year for the median residential customer using 410 kWh/month, or $2.80 per year for a residential customer using 650 kWh/month. City of Palo Alto Page 5 Aside from the excess costs described above, staff time is associated with marketing the CLEAN program and project review. The project review can be absorbed with existing staff over the life of the program, and costs will be recovered through project review fees. Policy Implications The recommendation to continue the Palo Alto CLEAN program supports the City’s carbon neutral electric supply portfolio policy, the Local Solar Plan, and the LEAP Objective to enhance supply reliability through the pursuit of local generation opportunities. Environmental Review Adoption of the attached resolution and the associated amendment of the Palo Alto CLEAN Program Eligibility Rules and Requirements is not subject to California Environmental Quality Act (CEQA) review because adoption of this resolution and associated amendment of CLEAN Program rules is an administrative government activity that will not result in any direct or indirect physical change to the environment as a result (CEQA Guidelines section 15378(b)(5)). Attachments:  Attachment A: Resolution Continuing the Palo Alto CLEAN Program (with Exhibit A-1 Revised Program Rules)  Attachment B: Updated Palo Alto CLEAN Power Purchase Agreement  Attachment C: Finance Committee Staff Report 7438, CLEAN Program Update (without attachments)  Attachment D: Excerpted Final Minutes of the November 2 UAC Meeting  Attachment E: Final Action Minutes of the December 6 Finance Committee Meeting *NOT YET APPROVED* Resolution No. _________ Resolution of the Council of the City of Palo Alto Continuing the Palo Alto Clean Local Energy Accessible Now Program at the Contract Rate of 16.5 ¢/kWh for Local Solar Resources until Reaching 3 MW of Program Capacity and then Reducing the Contract Rate to the City’s Avoided Cost Value; and Increasing the Contract Rate for Non-solar Renewable Energy Resources to 8.4 ¢/kWh to 8.5 ¢/kWh Based on the Avoided Cost of Local Renewable Energy and Amending Associated Program Rules R E C I T A L S A. On March 5, 2012, the City approved the Palo Alto Clean Local Energy Accessible Now (CLEAN) Program (or feed-in tariff). Under the Palo Alto CLEAN Program, participants who build a new solar generating system in Palo Alto may obtain a long-term, fixed-price contract with the City to sell the energy from the system to the City’s electric utility. B. Council extended the program beyond its original termination date of December 31, 2012 and has periodically reviewed the contract price and program cap. C. On March 28, 2016, Council approved Resolution 9580 (as amended for clarification by Resolution 9618 (8/22/16)), which continued Palo Alto CLEAN at the contract price of 16.5 cents per kilowatt-hour (¢/kWh) for local solar resources, and reduced the contract prices for local non-solar renewable energy resources to 8.1 ¢/kWh for a 20-year term or 8.2 ¢/kWh for a 25-year term. The contract rates for non-solar resources were set to be equal to the then current estimated avoided cost of the energy generated by these resources. The resolution further continued the separate program caps of 3 megawatts (MW) of generating capacity for both the solar and non-solar resources. D. In the past year, the City has received five CLEAN Program project applications for local solar facilities, which together will total 1.43 MW of capacity, or 47.6% of the 3 MW program cap. E. The City wants to continue to encourage the development of distributed renewable energy resources within its territory; however, it also wishes to minimize the impact of these projects on ratepayers. F. The City wants to continue the CLEAN program for solar resources at the current contract price of 16.5 ¢/kWh until the program reaches the 3 MW cap, and extend the program after reaching the 3 MW cap, but reduce the contract price to the City’s avoided cost of such energy (currently 8.9 ¢/kWh for a 20-year contract term, or 9.1 ¢/kWh for a 25-year contract term) for all additional capacity. Therefore, the 3 MW program cap is eliminated since the contract price after 3 MW of capacity is reached is equal to the City’s avoided cost of energy such that there is no rate impact. G. Additionally, the City wants to raise the contract prices available to local non- solar eligible renewable resources to 8.4 ¢/kWh for a 20-year term or 8.5 ¢/kWh for a 25-year ATTACHMENT A *NOT YET APPROVED* term for such resources, which is equal to the current estimated avoided cost of energy generated by these resources. For local non-solar resources, the 3 MW cap is eliminated since there is no rate impact when the contract price is equal to the avoided cost of energy for these resources. The Council of the City of Palo Alto (“City”) RESOLVES: SECTION 1. The Council adopts revised Palo Alto CLEAN Program Eligibility Rules Requirements, set forth in Exhibit 1 attached to this Resolution. SECTION 2. The Council authorizes the City Manager or his designee to sign contracts for the output of one or more solar, or other non-solar eligible renewable energy resource meeting the CLEAN Program Eligibility Rules and Requirements described in Section 1. SECTION 3. The Council finds that the adoption of this resolution and the associated amendment of CLEAN Program Eligibility Rules and Requirements is not subject to California Environmental Quality Act (CEQA) review because adoption of this resolution and associated amendment of CLEAN Program rules is an administrative government activity that will not result in any direct or indirect physical change to the environment as a result (CEQA Guidelines section 15378(b)(5)). INTRODUCED AND PASSED: AYES: NOES: ABSENT: ABSTENTIONS: ATTEST: ___________________________ _______________________ City Clerk Mayor APPROVED AS TO FORM: APPROVED: ___________________________ _______________________ Senior Deputy City Attorney City Manager ___________________________ Director of Utilities ___________________________ Director of Administrative Services PALO ALTO CLEAN (CLEAN LOCAL ENERGY ACCESSIBLE NOW) PROGRAM ELIGIBILITY RULES AND REQUIREMENTS Effective __________ A. PARTICIPATION ELIGIBILITY: The Palo Alto Clean Local Energy Accessible Now Program (the “CLEAN Program”) is open to participation by any Eligible Renewable Energy Resource, as defined in Section D.4, that satisfies these Program Eligibility Rules and Requirements. B. TERRITORIALITY REQUIREMENT: In order to be eligible to participate in the CLEAN Program, an Eligible Renewable Energy Resource must be located in and generating electricity from within the utility service area of the City of Palo Alto. C. PRICES AND TERM FOR ELIGIBLE RENEWABLE RESOURCES: The following purchase prices shall apply to the electricity produced by an Eligible Renewable Energy Resource participating in the Program, except as provided in Section D.5. Solar Energy Resources: Total Solar Capacity Reserved Contract Term Contract Price 0-3 MW 20 or 25 years $0.165 / kWh More than 3 MW 20 years $0.089 / kWh More than 3 MW 25 years $0.091 / kWh Solar Energy Resources that straddle multiple pricing tiers shall receive a weighted-average purchase price based on the amount of their capacity that is contained in each tier. Non-Solar Eligible Renewable Energy Resources: Contract Term Contract Price 20 years $0.084 / kWh 25 years $0.085 / kWh D. ADDITIONAL RULES AND REQUIREMENTS: 1. The owner of the Eligible Renewable Energy Resource shall enter into an Eligible Renewable Energy Resource Power Purchase Agreement (“PPA”) with the City of Palo Alto prior to delivering energy to the City. 2. An application for participation in the CLEAN Program to sell output to the City (the “Application”) may be submitted at any time. Applications will be considered in the order received. 3. Eligible Renewable Energy Resource means an electric generating facility that: (a) is PALO ALTO CLEAN (CLEAN LOCAL ENERGY ACCESSIBLE NOW) PROGRAM ELIGIBILITY RULES AND REQUIREMENTS Effective __________ defined and qualifies as an “eligible renewable energy resource” under California Public Utilities Code Section 399.12(e) and California Public Resources Code Section 25471, respectively, as amended; and (b) meets the territoriality requirement set forth in Section B. 4. The California Energy Commission’s (“CEC”) certification of the Eligible Renewable Energy Resource shall be required within six (6) months of the commercial operation date of the generating facility; the facility’s owner shall provide written notice of the CEC’s certification to the City within ten (10) business days of receipt of said certification. If the City agrees, in its sole discretion, to take delivery of the generating facility’s electricity prior to the CEC’s certification, then, as the facility’s electricity cannot be considered in fulfillment of the City’s RPS requirements, the price that the City will pay for the generating facility’s electricity (the “Pre-Certification Price”) will be set to $0.076 per kWh (for a 20-year contract term) or $0.08 per kWh (for a 25-year contract term), based on the estimated levelized cost of brown power over a 20-year or 25-year period, respectively. Upon the CEC’s certification of the generating facility and the provision of notice of such certification to the City in accordance with this section, the City will pay the Price set forth in Section C of these CLEAN Program Rules and Requirements and the PPA (collectively referred to as the “Contract Price”) for the generating facility’s electricity delivered on and after the date of the CEC’s certification. The City will, in its sole discretion, “true-up”, as appropriate, the difference between the Contract Price and the Pre-Certification Price for any electricity received and paid for by the City, effective as of the date of certification of the Eligible Renewable Energy Resource. 5. If an Eligible Renewable Energy Resource is authorized to participate in the CLEAN Program, then that Resource shall not be entitled to receive any rebate or other incentive from the City’s Photovoltaic (PV) Partners Program or any other similar incentive program funded by the City’s ratepayers. To the extent any rebate or incentive is paid to the owner of the Resource, that rebate or incentive shall be disgorged and refunded to the City upon 30 days’ notice, if the Eligible Renewable Energy Resource continues to participate in the CLEAN Program. If a rebate or an incentive has been paid to the Eligible Renewable Energy Resource, then that Resource shall be ineligible to participate in the CLEAN Program. 6. All electricity generated by the Eligible Renewable Energy Resource shall be delivered only to the City. No portion of the electricity may be used to offset any load of the generating facility (other than incidental loads associated with operating the generating facility). 7. A metering and administration fee will be charged to each Eligible Renewable Energy Resource that participates in the CLEAN Program. See Utilities Rate Schedule E-15 (Electric Service Connection Fees). 040914 jrm 0180042 1 POWER PURCHASE AGREEMENT ELIGIBLE RENEWABLE ENERGY RESOURCE (Palo Alto Clean Local Energy Accessible Now Program) This Power Purchase Agreement - Eligible Renewable Energy Resource, dated, for convenience, , 20 (the “Effective Date”), is entered into by and between the CITY OF PALO ALTO, a California chartered municipal corporation, and , a corporation (individually, a “Party” and, collectively, the “Parties”). RECITALS 1.The Buyer has adopted and implemented its CLEAN Program, which allows an owner of a qualifying electric generation system to sell to the Buyer the power output of a small-scale distributed generation Eligible Renewable Energy Resource, subject to the CLEAN Program’s rules and requirements. 2.The Seller owns or operates and desires to interconnect its Facility in parallel with Buyer’s Distribution System and sell the Energy produced by its Facility, net of Station Service Load, directly to the Buyer in furtherance of the CLEAN Program. 3.The Parties do not intend this Agreement to constitute an agreement by the Buyer to provide retail electrical service to the Seller. 4.The Parties wish to enter into a power purchase agreement for the sale and purchase of the Output of the Facility. The Parties will enter into a separate “Interconnection Agreement” in connection with this Agreement. NOW THEREFORE, in consideration of the foregoing recitals and the following covenants, terms and conditions, the Parties agree, as follows: AGREEMENT 1.1 DEFINITIONS The initially capitalized terms, whenever used in this Agreement, have the meanings set forth below, unless they are otherwise herein defined. The terms “include,” “includes,” and “including,” when used in this Agreement, shall mean, respectively, “include, without limitation,“ “includes, without limitation” and “including, without limitation.” “Agreement” means this Power Purchase Agreement – Eligible Renewable Energy Resource between the Buyer and the Seller. “Business Day” means any day except a Saturday, Sunday, or a day that the City observes as a regular holiday under Palo Alto Municipal Code section 2.08.100(a). “Buyer” refers to the City of Palo Alto, California, with a principal place of business at 250 Hamilton Avenue, Palo Alto, California 94301. “Buyer’s Distribution System” means the wires, transformers, and related equipment used by the Buyer to deliver electric power to the Buyer’s retail customers, typically at sub-transmission level voltages or lower. “CAISO” means the California Independent System Operator Corporation, or successor entity. “CAISO Tariff” means the CAISO FERC Electric Tariff, as amended. “Capacity” means the ability of a generator at any given time to produce Energy at a specified rate, as ATTACHMENT B 040914 jrm 0180042 2 measured in megawatts (“MW”) or kilowatts (“kW”), and any reporting rights associated with it. “Capacity Attributes” means any current or future defined characteristic, certificate, tag, credit, or ancillary service attribute, whether general in nature or specific as to the location or any other attribute of the Facility, intended to value any aspect of the Contract Capacity of the Facility to produce Energy or ancillary services, including contributions towards Resource Adequacy (including those requirements defined in Section 40 of the CAISO Tariff) or reserve requirements (if any), and any other reliability or power attributes. “CEC” means the California Energy Resources Conservation and Development Commission, or successor agency. “Certificate of RPS Eligibility” means a certificate issued by the CEC as evidence of RPS Certification of the Facility. “City” means the government of the City of Palo Alto, California. “CLEAN Program” refers to the Palo Alto Clean Local Energy Accessible Now Program, a renewable energy program established by the City by adoption of resolution number , dated , of the Palo Alto City Council, whereby the Buyer will purchase from the Seller the Output of Eligible Renewable Energy Resources that meet specified criteria set forth in the City’s applicable ordinances and resolutions. “Commercial Operation” means the period of operation of the Facility, once the Commercial Operation Date has occurred. “Commercial Operation Date” means the date specified in the Commercial Operation Date Confirmation Letter, which the Parties execute and exchange in accordance with this Agreement. “Contract Capacity” means the installed electrical Capacity available upon the Commercial Operation Date of the Facility in an amount, as specified in Exhibit “PPA-A.” “Contract Capacity” is measured at the Buyer’s revenue meter at the Delivery Point and is net of any Station Service Loads, any applicable Facility step-up transformer losses, and distribution losses on Buyer’s Distribution System up to the Delivery Point. “Contract Price” means the price paid by the Buyer to the Seller for the Output generated at the Facility and received by the Buyer, as set forth in Exhibit “PPA-A.” “CPUC” means the California Public Utilities Commission, or successor agency. “Delivery Point” means the point of interconnection to Buyer’s Distribution System, where the Buyer accepts title to the Output. “Delivery Term” has the meaning set forth in Section 14.2 hereof. “Eligible Renewable Energy Resource” means an electric generating facility that is defined and qualified as an “eligible renewable energy resource” under California Public Utilities Code Section 399.12(e) and California Public Resources Code Section 25471, respectively, as amended. “Energy” means electrical energy generated from the Facility and delivered to Buyer’s Distribution System with the voltage and quality required by the Buyer, and measured in megawatt-hours (“MWh”) or kilowatt- hours (“kWh”), as metered at the Delivery Point. “Facility” means the qualifying renewable energy generation equipment and associated power conditioning and interconnection equipment that deliver the Output to the Buyer at the Delivery Point. “FERC” means the Federal Energy Regulatory Commission, or successor agency. 040914 jrm 0180042 3 “Forced Outage” means an unplanned outage of one or more of the Facility’s components that results in a reduction of the ability of the Facility to produce Capacity. “Force Majeure” means an event or circumstance, which prevents a Party from performing its obligations under this Agreement, and which is not in the reasonable control of, or the result of negligence of, the Party claiming Force Majeure, and which by the exercise of due diligence is unable to overcome or cause to be avoided. “Force Majeure” shall include: (a) An act of nature, riot, insurrection, war, explosion, labor dispute, fire, flood, earthquake, storm, lightning, tidal wave, backwater caused by flood, act of the public enemy, terrorism, or epidemic; (b) Interruption of transmission or generation services as a result of a physical emergency condition (and not congestion-related or economic curtailment) not caused by the fault or negligence of the Party claiming Force Majeure and reasonably relied upon and without a reasonable source of substitution to make or receive deliveries hereunder, civil disturbances, strike, labor disturbances, labor or material shortage, national emergency, restraint by court order or other public authority or governmental agency, actions taken to limit the extent of disturbances on the electrical grid; or (c) Other similar causes beyond the control of the Party affected, which causes such Party could not have avoided by the exercise of due diligence and reasonable care. A Party's financial incapacity, the Seller’s ability to sell the Output at a more favorable price or under more favorable conditions, or the Buyer’s ability to acquire the Output at a more favorable price or under more favorable conditions or other economic reasons shall not constitute an event of Force Majeure. “Force Majeure” does not include a Forced Outage to the extent such event is not caused or exacerbated by an event of Force Majeure, as described above, and does not include the Seller’s inability to obtain financing, permits, or other equipment and instruments necessary to plan for, construct, or operate the Facility. “Good Utility Practice” means those practices, methods and acts that would be implemented and followed by prudent operators of electric energy generating facilities in the western United States, similar to the Facility, during the relevant time period, which practices, methods and acts, in the exercise of prudent and responsible professional judgment in the light of the facts known at the time the decision was made, could reasonably have been expected to accomplish the desired result consistent with good business practices, reliability, and safety. The Seller acknowledges that its use of Good Utility Practice does not exempt it from performing any of its obligations arising under this Agreement. “Good Utility Practice” includes, at a minimum, those professionally responsible practices, methods and acts described in the preceding paragraph that comply with manufacturers’ warranties, restrictions in this Agreement, the interconnection requirements of Buyer, the requirements of governmental authorities, and WECC and NERC standards. “Good Utility Practice” also includes the taking of reasonable steps to ensure that: (a) Equipment, materials, resources, and supplies, including spare parts inventories, are available to meet the Facility’s needs; (b) Sufficient operating personnel are available at all times and are adequately experienced and trained and licensed as necessary to operate the Facility properly and efficiently, and are capable of responding to reasonably foreseeable emergency conditions at the Facility and emergencies whether caused by events on or off the Facility’s site; (c) Preventive, routine, and non-routine maintenance and repairs are performed on a basis that ensures reliable, long-term and safe operation of the Facility, and are performed by knowledgeable, trained, and experienced personnel utilizing proper equipment and tools; (d) Appropriate monitoring and testing are performed to ensure equipment is functioning as designed; and (e) Equipment is not operated in a reckless manner, in violation of manufacturer’s guidelines or in a manner unsafe to workers, the general public, or the connecting utility’s electric system or contrary to environmental laws, permits or regulations or without regard to defined limitations such as, flood conditions, safety inspection requirements, operating voltage, current, volt ampere reactive (VAR) loading, frequency, rotational speed, polarity, synchronization, and control system limits; and equipment and components are designed and manufactured to meet or exceed the standard of durability that is generally used for electric energy generating facilities operating in the western United States and will function properly over the full range of ambient temperature and weather conditions reasonably expected to occur at the Facility site and under both normal and emergency conditions. 040914 jrm 0180042 4 “Green Attributes” refers to the definition set forth in the Standard Terms and Conditions, Appendix A-2, as amended, Decision D.07-02-011, as modified by D.07-05-057, of the CPUC, which incorporates the definition of “Environmental Attributes” set forth in the Standard Terms and Conditions, Appendix A-1, as amended, D. 04-06-014. “Green Attributes” includes any and all credits, benefits, emissions reductions, environmental air quality credits, offsets, and allowances, howsoever entitled, attributable to the generation from the Facility, and its displacement of conventional energy generation, whether existing now or arising in the future. “Green Attributes” includes RECs, as well as (1) any avoided emissions of pollutants to the air, soil or water, such as sulfur oxides (“SOx”), nitrogen oxides (“NOx”), carbon monoxide (“CO”) and other pollutants; (2) any avoided emissions of carbon dioxide (“CO2”), methane (“CH4”), nitrous oxide, hydrofluorocarbons, perfluorocarbons, sulfur hexafluoride, and other greenhouse gases (“GHGs”) that have been determined by the United Nations Intergovernmental Panel on Climate Change, or otherwise by law, to contribute to the actual or potential threat of altering the Earth’s climate by trapping heat in the atmosphere; and (3) the reporting rights to these avoided emissions such as Green Tag Reporting Rights and RECs. “Green Tag Reporting Rights” are the right of a Green Tag Purchaser to report the ownership of accumulated Green Tags in compliance with federal or state law, if applicable, and to a federal or state agency or any other party at the Green Tag Purchaser’s discretion, and include those Green Tag Reporting Rights accruing under Section 1605(b) of the Energy Policy Act of 1992 and any present or future federal, state, or local law, regulation or bill, and international or foreign emissions trading program. Green Tags are accumulated on a kWh basis and one Green Tag represents the Green Attributes associated with one (1) MWh of Energy. “Green Attributes” do not include (i) any Energy, Capacity, reliability, or other power attributes of the Facility, (ii) production or investment tax credits associated with the construction or operation of the Facility and other financial incentives in the form of credits, grants, reductions, or allowances associated with the Facility that are applicable to a state or federal income taxation obligation, (iii) fuel-related subsidies or “tipping fees” that may be paid to Seller to accept certain fuels, or local subsidies received by the generator for the destruction of particular pre-existing pollutants or the promotion of local environmental benefits, or (iv) emission reduction credits encumbered, used or created by the Facility for compliance with or sale under local, state, or federal operating and/or air quality permits or programs. If the Facility is a biomass or landfill facility and the Seller receives any tradable Green Attributes based on the Facility’s greenhouse gas reduction benefits or other emission offsets attributed to its fuel usage, the Seller shall provide the Buyer with sufficient Green Attributes to ensure that there are zero net emissions associated with the production of electricity from the Facility. “Green Attributes” includes any other environmental credits or benefits recognized in the future and attributable to Energy generated by the Facility during the Term that may not be represented by Green Tag Reporting Rights or RECs, unless otherwise excluded herein. Any Green Attributes provided under this Agreement shall be documented by RECs, or any other representation of the environmental benefits of the Output, the monthly cumulative total of which shall be provided to the Buyer, as specified herein. “Interconnection Agreement” refers to the agreement between the Buyer and the Seller, specific to the interconnection of the Facility to Buyer’s Distribution System. “NERC” means the North American Electric Reliability Corporation, or successor organization. “NCPA” means Northern California Power Agency, a California joint action agency, or successor agency. “Output” means all Capacity associated with Contract Capacity and associated Energy made available from the Facility, as well as any Capacity Attributes, Green Attributes, or other attributes existing now or in the future associated with Contract Capacity and/or associated Energy. “Output” does not include production or investment tax credits associated with the construction or operation of the Facility and other financial incentives in the form of credits, grants, reductions, or allowances associated with the Facility that are applicable to a state or federal income taxation obligation. “Planned Outage” means an outage, scheduled in advance, of one or more of the Facility’s components that results in a reduction of the ability of the Facility to produce Capacity. 040914 jrm 0180042 5 “Pre-Certification Price” means the contract price to be paid for all Energy delivered to the Buyer prior to the RPS Certification Date, as specified in Exhibit “PPA-A”. “Renewable Energy Credit” or “REC” has the meaning set forth in Section 399.12(h)(1) and (2) of the California Public Utilities Code, and includes a certificate of proof that one unit of electricity was generated by an Eligible Renewable Energy Resource. Currently, RECs are used to convey all Green Attributes associated with electricity production by a renewable energy resource. RECs are accumulated on a kWh basis and one REC represents the Green Attributes associated with the generation of 1 MWh (1,000 kWhs) from the Facility. For purposes of this Agreement, the term REC shall be synonymous with the term Green Tag, green ticket, bundled or unbundled renewable energy credit, tradable renewable energy certificates, or any other term used to describe the documentation that evidences the renewable and Green Attributes associated with electricity production by an Eligible Renewable Energy Resource. “Renewables Portfolio Standard” or “RPS” means the standard adopted by the State of California pursuant to Senate Bill 2 1st Extraordinary Session (SBX1 2, Chapter 1, Statutes 2011-12), and California Public Utilities Code Sections 399.11through 399.31, inclusive, as may be amended, setting minimum renewable energy targets for local publicly owned electric utilities. “Reservation Deposit” means the monetary deposit submitted by the Seller (or the Facility sponsor on behalf of the Seller) to secure a reservation of the CLEAN Program’s prices. The Reservation Deposit is set forth in Exhibit “PPA-A.” “Resource Adequacy” means a requirement by a governmental authority or in accordance with its FERC- approved tariff, or a policy approved by a local regulatory authority, that is binding upon either Party and that requires that Party to procure a certain amount of electric generating capacity. “RPS Certification” means certification by the CEC that the Facility qualifies as an Eligible Renewable Energy Resource for RPS purposes, and that all Energy produced by the Facility qualifies as generation from an Eligible Renewable Energy Resource, as evidenced by a Certificate of RPS Eligibility. “RPS Certification Date” means the date on which the RPS Certification begins, as specified in the Certificate of RPS Eligibility. “Seller” means with a principal place of business at , , . “Station Service Load” means the electrical loads associated with the operation and maintenance of the Facility, which may at times be supplied from the Facility’s Energy. “Term” has the meaning set forth in Section 14.1 hereof. “WECC” means the Western Electricity Coordinating Council, the regional entity responsible for coordinating and promoting regional bulk electric system reliability in the Western Canada and the United States, or any successor organization. 2.0 SELLER’S GENERATING FACILITY, PURCHASE PRICE AND PAYMENT 2.1 Facility. This Agreement governs the Buyer’s purchase of the Output from the Facility, as described in Exhibit “PPA-A.” The Seller shall not modify the Facility to increase or decrease the Contract Capacity after the Commercial Operation Date. 2.2 Products Purchased. During the Delivery Term, the Seller shall sell and deliver, or cause to be delivered, and the Buyer shall purchase and receive, or cause to be received, the Output from the Facility. The Seller shall not have the right to procure the Output from sources other than the Facility for sale or delivery to the Buyer under this Agreement or to substitute the Output. 040914 jrm 0180042 6 2.3 Delivery Term. The Delivery Term shall commence on the Commercial Operation Date under this Agreement, and shall continue for an uninterrupted period of twenty (20) years. This period will commence on the first day of the calendar month immediately following the Commercial Operation Date. As evidence of the Commercial Operation Date, the Parties shall execute and exchange the “Commercial Operation Date Confirmation Letter,” attached hereto as Exhibit “PPA-B.” The Commercial Operation Date shall be the date on which the Parties acknowledge, in writing, that the Facility starts operating and is otherwise in compliance with applicable interconnection and system protection requirements, including the final approvals by the City’s building department official. 2.4 Payment for Products Purchased. 2.4.1 Deliveries Prior to RPS Certification Date. Once the Facility has achieved Commercial Operation, if the CEC has not issued a Certificate of RPS Eligibility for the Facility or the Facility has not been registered with the appropriate entity for the tracking of Green Attributes, the Buyer will pay the Seller for the Output by multiplying the Pre-Certification Price by the quantity of Energy. 2.4.2 Deliveries After RPS Certification Date. Once the Facility has achieved Commercial Operation, the CEC has issued a Certificate of RPS Eligibility for the Facility, and the Facility has been registered with the appropriate entity for the tracking of Green Attributes, the Buyer shall pay the Seller for all Output on or after the RPS Certification Date by multiplying the Contract Price by the quantity of Energy. 2.4.3 True-up Upon Issuance of Certificate of RPS Eligibility. Once the Facility has achieved Commercial Operation, the CEC has issued a Certificate of RPS Eligibility for the Facility, and the Facility has been registered with the appropriate entity for the tracking of Green Attributes, the Buyer will pay the Seller an amount equal to the difference between the Contract Price and the Pre-Certification Price for the Output (a) that was delivered on or after the RPS Certification Date and (b) for which the Seller has already received payment at the Pre- Certification Energy Price. 2.4.4 Energy in Excess of Contract Capacity. The Seller shall not receive payment for any Energy or Green Attributes delivered in any hour to the Buyer in excess of the following amount of energy (in kilowatt-hours): 110% of the Contract Capacity (in kilowatts) multiplied by one hour. Any payment in excess of this amount shall be refunded to the Buyer, on demand. 2.5 Billing. The Buyer shall pay the Seller by check or electronic funds transfer, on a monthly basis, within thirty (30) days of the meter reading date. 2.6 Title and Risk of Loss. Title to and risk of loss related to the Output shall be transferred from the Seller to the Buyer at the Delivery Point. The Seller warrants that it will deliver to the Buyer the Output free and clear of all liens, security interests, claims, encumbrances or any interest therein or thereto by any person, arising prior to the Delivery Point. 2.7 No Additional Incentives. The Seller warrants that it has not received any other incentives funded by the Buyer’s ratepayers and it further agrees that, during the Term, it shall not seek additional compensation or other benefits from the Buyer pursuant to the following programs of the Buyer: (a) Photovoltaic (PV) Partners Program; (b) Power from Local Ultra-Clean Generation Incentive (PLUG- In) Program; or (c) other similar programs that are or may be funded by the Buyer’s ratepayers. 040914 jrm 0180042 7 3.0 RPS CERTIFICATION; GREEN ATTRIBUTES 3.1 CEC Certification. The Seller, at its own cost and expense, shall obtain the RPS Certification within six (6) months of the Commercial Operation Date. The Seller shall maintain the RPS Certification at all times during the Delivery Term. The foregoing provision notwithstanding, the Seller shall not be in breach of this Agreement and the Buyer shall not have the right to terminate this Agreement, if the Seller’s failure to obtain or maintain the RPS Certification is due to a change in California law, occurring after the Commercial Operation Date, so long as the Seller has used commercially reasonable efforts to obtain and maintain the RPS Certification and the Seller’s actions or omissions did not contribute to its inability to obtain and maintain the RPS Certification. 3.2 Obligation to Deliver Green Attributes. The Seller shall sell and deliver to the Buyer, and the Buyer shall buy and receive from the Seller, all right, title, and interest in and to Green Attributes associated with Energy, produced by the Facility and delivered to the Buyer at the Delivery Point, whether now existing or that hereafter come into existence during the Term, except as otherwise excluded herein; provided, the Buyer shall not be obligated to purchase and pay the Seller for any Green Attributes associated with any amount of the Output, that is generated by any fuel which is not renewable and which cannot be counted for the purpose of the production of Green Attributes. The Seller agrees to sell and make all such Green Attributes available to the Buyer to the fullest extent allowed by applicable law, in accordance with the terms and conditions of this Agreement. The Seller warrants that the Green Attributes provided under this Agreement to the Buyer shall be free and clear of all liens, security interests, claims and encumbrances. 3.3 Conveyance of Green Attributes. The Seller shall provide Green Attributes associated with the Facility, which shall be documented and conveyed to the Buyer in accordance with the procedure described in Exhibit “PPA-D.” 3.4 Additional Evidence of Green Attributes Conveyance. At the Buyer’s request, the Seller shall provide additional reasonable evidence to the Buyer or to third parties of the Buyer’s right, title, and interest in the Green Attributes and any other information with respect to Green Attributes, as may be requested by the Buyer. 3.5 Modification of Green Attributes Conveyance Procedure. The Buyer may unilaterally modify Exhibit “PPA-D” in order to reflect changes necessary in the Green Attributes conveyance procedures, so that the Buyer may be able to receive and report the Green Attributes, purchased under this Agreement, as belonging to the Buyer. 3.6 Reporting of Ownership of Green Attributes. The Seller shall not report to any person or entity that the Green Attributes sold and conveyed to the Buyer belong to any person other than the Buyer. The Buyer may report under any applicable program that Green Attributes purchased by the Buyer hereunder belong to it. 3.7 Greenhouse Gas Emissions. The Seller shall comply with any laws and/or regulations regarding the need to offset emissions of GHGs by delivering to the Buyer the Energy from the Facility with a net zero GHG impact. 4.0 CONVEYANCE OF CAPACITY ATTRIBUTES 4.1 Conveyance of Resource Adequacy Capacity. The Seller shall not report to any person or entity that the Resource Adequacy Capacity, as defined in the CAISO Tariff) associated with the Facility, if any, belongs to a person other than the Buyer, which may report that Resource Adequacy Capacity purchased hereunder belongs to it to fulfill the Resource Adequacy requirements, as defined in Section 40 of the CAISO Tariff, as amended, or any successor program. The Seller shall take those actions described in Section 6.0 hereof, as applicable, to secure recognition of Resource Adequacy Capacity by the CAISO. 4.2 Conveyance of Other Capacity Attributes. In addition to the obligations imposed on the 040914 jrm 0180042 8 Seller under Section 4.1, the Seller will undertake any and all actions reasonably needed to enable the Buyer to effect the recognition and transfer of any Capacity Attributes in addition Resource Adequacy, to the extent that such Capacity Attributes exist now or will exist in the future; provided, if such actions require any actions beyond the giving of notice by the Seller, then the Buyer shall reimburse all out-of- pocket costs and charges of such actions. 4.3 Reporting of Ownership of Capacity Attributes. The Seller shall not report to any person or entity that the Capacity Attributes sold and conveyed to the Buyer belong to any person other than the Buyer. The Buyer may report under any such program that such Capacity Attributes purchased hereunder belong to it. 5.0 METERING AND OPERATIONS 5.1 Timing of Outages. The Seller may not schedule or take any Planned Outage from 12:00 p.m. through 7:00 p.m. Pacific Time during the months of June through October. 5.2 Outage Reporting. 5.2.1 Buyer Request. The Seller is not required to report any Planned Outage or Forced Outage, unless the Buyer first submits a written request to the Seller to commence Outage reporting. Upon receipt of such a request, the Seller shall report all subsequent Planned Outages and the Forced Outages according to the procedures described in subsections 5.2.2 and 5.2.3, and shall continue such reporting until (a) the termination of this Agreement for any reason, or (b) the Buyer subsequently provides written notice to the Seller that the Seller may cease such reporting in the future. 5.2.2 Planned Outage Notifications. The Seller shall notify the Buyer at least 72 hours in advance of any Planned Outage that would result in a reduction in the effective Output of the Facility during the period over which the Planned Outage is scheduled. Notification shall be provided by e-mail to the e-mail address (or addresses) set forth in Exhibit “PPA-F.” 5.2.3 Forced Outage Notifications. Within 24 hours of the occurrence of a Forced Outage of the Facility that impacts the ability of the Facility to produce Energy, the Seller shall notify the Buyer of the Forced Outage, including the Capacity of the Facility that is impacted, and the expected duration of the Forced Outage. Within 24 hours of the return of the Facility to service following the Forced Outage, the Seller shall notify the Buyer of the return-to-service details. Notification shall be made by e-mail to the address (or addresses) set forth in Exhibit “PPA-F.” 5.3 Metering. The Buyer shall furnish and install one or more standard watt-hour meters to read Energy generated by the Facility, and it will charge a meter fee to the Seller to cover the costs associated with the meter’s purchase and installation. As requested, the Seller shall provide and install a meter socket in accordance with the Buyer’s metering standards. The Buyer reserves the right to install additional metering equipment at its sole cost and expense. 6.0 PARTICIPATING GENERATORS 6.1 Applicability. This Section 6.0 shall apply if the Facility meets the definition of a “Participating Generator,” as may be defined by the CAISO Tariff. This Section 6.0 shall not apply if the definition applies to the Facility only upon the election by the Seller. For the purposes of this Section 6.0, all special terms not otherwise defined in Section 1.0 are defined in the CAISO Tariff. 6.2 Participating Generator Agreement. The Buyer will notify the CAISO of the Seller’s interconnection to Buyer’s Distribution System. If the CAISO requires it, the Seller, at its own expense, shall negotiate and enter in to two contracts, a “Participating Generator Agreement” and a “Meter Services Agreement for CAISO Metered Entities,” with the CAISO. 040914 jrm 0180042 9 6.3 Scheduling Coordination. If the CAISO requires the Seller to enter in to a Participating Generator Agreement, then the Seller shall designate NCPA as the Buyer’s scheduling coordinator. The Buyer, acting in its sole discretion, may replace NCPA as the scheduling coordinator for the Facility. If NCPA ceases to be the scheduling coordinator for the Facility and the Buyer has not, upon fourteen (14) days’ prior written notice of inquiry from the Seller, appointed a replacement scheduling coordinator, then the Seller shall have the right to appoint a replacement scheduling coordinator on the Buyer’s behalf. Thereafter, the Buyer shall enter into all reasonable and appropriate agreements with such replacement scheduling coordinator at its own costs. 6.4 Scheduling Procedure. The Buyer may require the Seller to provide the Buyer with Energy forecasts on a periodic basis, as may be necessary for the Buyer to account for expected Facility generation in its daily power scheduling process. The requirements are set forth in Exhibit “PPA-C.” 6.5 Modification of Scheduling and Outage Notification Procedure. The Buyer may unilaterally modify Exhibit “PPA-C” to reflect changes necessary in the scheduling and Outage notification procedures. The Buyer shall give the Seller reasonable notice of any such changes. 6.6 Provision of Other Equipment. If the Seller is required to enter into a Participating Generator Agreement with the CAISO, then the Seller, at its own cost and expense, shall provide and maintain data transmission-grade phone line and telecommunications equipment at the meter location that complies with applicable requirements of the CAISO, the Buyer, and NCPA. Any meter installed by the Seller shall comply at all times with the CAISO’s metering requirements. If the Seller fails to provide or maintain any such required equipment or data connection, then the Buyer shall acquire, install and maintain the same at the Seller’s sole cost and expense. 6.7 Designation as Resource Adequacy Resource. The Buyer may submit a written request to the Seller to obtain the CAISO’s designation of the Facility as a Resource Adequacy Resource. Upon receipt of such request, the Seller shall provide such information and undertake such steps as may be required by the CAISO in order to complete such an assessment. If the Buyer makes such a request, then the Buyer shall be responsible for the following: (1) any costs charged to the Seller by the CAISO as a condition of applying for or receiving designation as a Resource Adequacy Resource, including any deposits required during the study process or the cost of any related studies or deliverability assessments performed by the CAISO; (2) the capital, installation, and maintenance costs of any additional equipment required by the CAISO as a condition of receiving designation as a Resource Adequacy Resource; (3) the costs of any Network Upgrades, as defined in the CAISO Tariff, as may be required by the CAISO, provided, the Buyer shall receive any subsequent repayments from the CAISO or the Participating Transmission Owner related to such upgrades; and (4) any charges or penalties assessed by the CAISO as a consequence of the Facility’s designation as a Resource Adequacy Resource. 6.8 CAISO Charges. The Buyer shall be solely responsible for paying all costs and charges associated with the receipt of Energy under this Agreement, at the Delivery Point, and for the transmission and delivery of Energy from the Delivery Point to any other point downstream of the Delivery Point, including transmission costs and charges, competition transition charges, applicable control area service charges, transmission congestion charges, inadvertent energy flows, any other CAISO charges related to the transmission of such Energy by the CAISO and any charge assessed or collected in the future pursuant to any utility tariff or rate schedule, however defined, for transmission or transmission-related service rendered by or for any transmission-owning or operating entity. The Seller will undertake any and all actions reasonably needed to allow the Buyer to comply with any obligations, and minimize any potential liability, under the CAISO tariff. If and to the extent that the Seller fails to comply with the notice provision in Exhibit “PPA-C,” concerning Outages, or with its obligations as outlined in the previous sentence, the Seller shall be wholly responsible for all imbalances, deviations, or any other CAISO charges or penalties associated with such Outage or other CAISO Tariff obligation. 6.9 Inclusion in Metered Subsystem. At the option of the Buyer, the Facility may be included within NCPA’s metered sub-system in connection with the scheduling of power over the CAISO grid and related functions; provided, however, that such inclusion shall have no adverse effect on the Facility’s operations or the Seller (or any such effect shall be fully mitigated by the Buyer). The Seller will undertake any and all actions reasonably needed to allow the Buyer to comply with any obligations, and 040914 jrm 0180042 10 minimize any potential liability, under the CAISO Tariff; provided, that if such actions require any actions beyond the giving of notice to be provided by the Buyer, then the Buyer shall reimburse the Seller for all out-of-pocket costs and charges of such actions. 7.0 COMMERCIAL OPERATION DATE; REFUND OF RESERVATION DEPOSIT 7.1 Commercial Operation Date. The Facility shall achieve Commercial Operation by the Commercial Operation Date deadline (the “Deadline”), which is one (1) year from the Effective Date. 7.2 Reservation Deposit. The Buyer acknowledges that, as of the Effective Date or other date established by the Buyer, the Seller has provided the Reservation Deposit to the Buyer. 7.2.1 If the Commercial Operation Date occurs on or prior to the Deadline, the Buyer shall refund to the Seller the Reservation Deposit without interest. 7.2.2 If the Commercial Operation Date commences within seventy (70) days of the Deadline, the Seller, as liquidated damages and not as a penalty, shall relinquish its claim to a ten percent (10%) portion of the amount of the Reservation Deposit for every full week transpiring between the Deadline and the Commercial Operation Date, but the total amount to be relinquished to the Buyer shall not exceed 100% of the Reservation Deposit. 7.2.3 If the Facility has not achieved Commercial Operation within seventy (70) days of the Deadline, then the Buyer may terminate this Agreement without liability of either Party to the other Party by giving written notice of termination to the Seller. 7.2.4 If the Seller gives notice of termination to terminate the Agreement before Commercial Operation occurs, then the Buyer shall refund a percentage of the Reservation Deposit equal to the following: the percentage to be refunded will equal A/B, where A equals the number of days between the date of the Seller’s notice of termination, received by the Buyer, and the Deadline, and B equals the number of days between the Effective Date and the Deadline. 7.3 Return of Reservation Deposit. The Buyer shall return to the Seller the Reservation Deposit, without interest, in the event that (a) the Buyer furnishes written notice of the costs of interconnection (defined in the Interconnection Agreement to include the costs related to the Interconnection Facilities and Distribution Upgrades) to the Seller and (b) within thirty (30) days of receipt of the notice regarding costs of interconnection, the Seller provides the Buyer with written notice that the Seller does not intend to sign the Interconnection Agreement and does intend to proceed with the project. 8.0 REPRESENTATION AND WARRANTIES; COVENANTS 8.1 Representations and Warranties. On the Effective Date, each Party represents and warrants to the other Party that: 040914 jrm 0180042 11 8.1.1 It is duly organized, validly existing and in good standing under the laws of the jurisdiction of its formation; 8.1.2 The execution, delivery and performance of this Agreement is within its powers, have been duly authorized by all necessary action and do not violate any of the terms and conditions in its governing documents, any contracts to which it is a party or any law, rule, regulation, order or the like applicable to it; 8.1.3 This Agreement and each other document executed and delivered in accordance with this Agreement constitutes its legally valid and binding obligation enforceable against it in accordance with its terms; 8.1.4 It is not bankrupt and there are no proceedings pending or being contemplated by it or, to its knowledge, threatened against it which would result in it being or becoming bankrupt; 8.1.5 There is not pending or, to its knowledge, threatened against it or any of its affiliates, if any, any legal proceedings that could materially adversely affect its ability to perform its obligations under this Agreement; and 8.1.6 It is acting for its own account, has made its own independent decision to enter into this Agreement and as to whether this Agreement is appropriate or proper for it based upon its own judgment, is not relying upon the advice or recommendations of the other Party in so doing, and is capable of assessing the merits of, and understands and accepts, the terms, conditions and risks of this Agreement. 8.2 General Covenants. Each Party covenants that, during the Term: 8.2.1 It shall continue to be duly organized, validly existing and in good standing under the laws of the jurisdiction of its formation; 8.2.2. It shall maintain (or obtain from time to time as required, including through renewal, as applicable) all regulatory authorizations necessary for it to legally perform its obligations under this Agreement; and 8.2.3 It shall perform its obligations under this Agreement in a manner that does not violate any of the terms and conditions in its governing documents, any contracts to which it is a party or any law, rule, regulation, order or the like applicable to it. 8.3 Covenant by Seller. The Seller covenants that, during the Term: 8.3.1 If the Eligible Renewal Energy Resource or the Facility is considered an ‘eligible qualifying facility’ under applicable law and has a net power production capacity of greater than one (1) megawatt, then the Seller covenants and agrees that, within thirty (30) days of the Effective Date or longer period allowed by law, it will complete and file Form No. 556 or other similar form with FERC as the same may be required by law.” 9.0 GENERAL CONDITIONS 9.1 Facility Care and Interconnection. During the Delivery Term, the Seller shall execute and maintain an “Interconnection Agreement” with the Buyer, whereby the Seller shall pay and be responsible for designing, installing, operating, and maintaining the Facility in accordance with all applicable laws and regulations and shall comply with all applicable Buyer, WECC, FERC, and NERC requirements, including applicable interconnection and metering requirements. The Seller shall also comply with any modifications, amendments or additions to the applicable tariff and protocols. The Seller also shall arrange and pay independently for any and all necessary costs under the Interconnection Agreement with the Buyer. 040914 jrm 0180042 12 9.2 Standard of Care. The Seller shall: (a) operate and maintain the Facility in a safe manner in accordance with its existing applicable interconnection agreements, manufacturer’s guidelines, warranty requirements, Good Utility Practice, industry norms (including standards of the National Electrical Code, Institute of Electrical and Electronic Engineers, American National Standards Institute, and the Underwriters Laboratories, and in accordance with the requirements of all applicable federal, state and local laws and the National Electric Safety Code, as such laws and code norms may be amended from time to time; (b) obtain any governmental authorizations and permits required for the construction and operation thereof. The Seller shall make any necessary and commercially reasonable repairs with the intent of optimizing the availability of electricity to the Buyer. The Seller shall reimburse the Buyer for any and all losses, damages, claims, penalties, or liability that the Buyer incurs as a result of the Seller’s failure to obtain or maintain any governmental authorizations and permits required for the construction and operation of the Facility throughout the Term. 9.3 Access Rights. The Buyer, its authorized agents, employees and inspectors shall have the right to inspect the Facility on reasonable advance notice during normal business hours and for any purposes reasonably connected with this Agreement or the exercise of any and all rights secured to the Buyer by law, including, without limitation, its ordinances, resolutions, tariffs, utility rate schedules or utilities rules and regulations. The Buyer shall make reasonable efforts to coordinate its emergency activities with the safety and security departments, if any, of the Facility’s operator. The Seller shall keep the Buyer advised of current procedures for communicating with the Facility operator’s safety and security departments. 9.4 Protection of Property. Each Party shall be responsible for protecting its own facilities from possible damage resulting from electrical disturbances or faults caused by the operation, faulty operation, or non-operation of the other Party’s facilities and such other Party shall not be liable for any such damages so caused. 9.5 Insurance. During the Term, the Seller shall obtain and maintain and otherwise comply with the insurance requirements, as set forth in Exhibit “PPA-E.” 9.6 Buyer’s Performance Excuse; Seller Curtailment. 9.6.1 Buyer Performance Excuse. The Buyer shall not be obligated to accept or pay for the Output during Force Majeure that affects the Buyer’s ability to accept Energy. 9.6.2 Seller Curtailment. The Buyer may require the Seller to interrupt or reduce deliveries of Energy: (a) whenever necessary to construct, install, maintain, repair, replace, remove, or investigate any of its equipment or part of the Buyer’s Distribution System or facilities; or (b) if the Buyer determines that curtailment, interruption, or reduction is necessary due to a System Emergency, as defined in the CAISO Tariff, an unplanned outage on Buyer’s Distribution System, Force Majeure, or compliance with Good Utility Practice. 9.7 Notices of Outages. Whenever possible, the Buyer shall give the Seller reasonable notice of the possibility that interruption or reduction of deliveries may be required. 9.8 No Additional Loads. The Seller shall not connect any loads not associated with Station Service Loads at the location of the Facility in a manner that would reduce Energy provided from the Facility to the Buyer hereunder. The Seller shall obtain separate retail electric service under the Buyer’s rate schedules for the service of such additional loads. 10.0 FORCE MAJEURE 10.1 Effect of Force Majeure. A Party shall be excused from its performance under this Agreement to the extent, but only to the extent, that its performance hereunder is prevented by Force Majeure. A Party claiming Force Majeure shall exercise due diligence to overcome or mitigate the effects 040914 jrm 0180042 13 of Force Majeure; provided, that nothing in this Agreement shall be deemed to obligate the Party affected by Force Majeure (a) to forestall or settle any strike, lock-out or other labor dispute against its will; or (b) for Force Majeure affecting the Seller only, to purchase electric power to cure Force Majeure. 10.2 Remedial Action. A Party shall not be liable to the other Party if the Party is prevented from performing its obligations hereunder due to Force Majeure. The Party rendered unable to fulfill an obligation by reason of Force Majeure shall take all action necessary to remove such inability with all due speed and diligence. The nonperforming Party shall be prompt and diligent in attempting to remove the cause of its failure to perform, and nothing herein shall be construed as permitting that Party to continue to fail to perform after that cause has been removed. Notwithstanding the foregoing, the existence of Force Majeure shall not excuse any Party from its obligations to make payment of amounts due hereunder. 10.3 Notice of Force Majeure. In the event of any delay or nonperformance resulting from Force Majeure, the Party directly impacted by Force Majeure shall, as soon as practicable under the circumstances, notify the other Party, in writing, of the nature, cause, date of commencement thereof and the anticipated extent of any delay or interruption in performance. 10.4 Termination Due to Force Majeure. If a Party will be prevented from performing its material obligations under this Agreement for an estimated period of twelve (12) consecutive months or longer due to Force Majeure, then the unaffected Party may terminate this Agreement, without liability of either Party to the other, upon thirty (30) Days’ prior written notice at any time during Force Majeure. 11.0 INDEMNITY 11.1 Indemnity by the Seller. The Seller shall indemnify, defend, and hold harmless the Buyer, its elected and appointed officials, directors, officers, employees, agents, and representatives against and from any and all losses, claims, demands, liabilities and expenses, actions or suits, including reasonable costs and attorney’s fees, resulting from, or arising out of or in any way connected with claims by third parties associated with (A) (i) Energy delivered at the Delivery Point; (ii) the Seller’s operation and/or maintenance of the Facility; or (iii) the Seller’s actions or inactions with respect to this Agreement, and (B) any loss, claim, action or suit, for or on account of injury, bodily or otherwise, to, or death of, persons, or for damage to or destruction of property belonging to the Buyer or other third party, excepting only such loss, claim, action or suit as may be caused solely by the willful misconduct or gross negligence of the Buyer, its agents, employees, directors or officers. 11.2 Indemnity by the Buyer. The Buyer shall indemnify, defend, and hold harmless the Seller, its directors, officers, employees, agents, and representatives against and from any and all losses, claims, demands, liabilities and expenses, actions or suits, including reasonable costs and attorney’s fees resulting from, or arising out of or in any way connected with claims by third parties associated with acts of the Buyer, its officers, employees, agents, and representatives, relating to: (A) Energy delivered by the Seller under this Agreement after the Delivery Point, and (B) any loss, claim, action or suit, for or on account of injury, bodily or otherwise, to, or death of, persons, or for damage to or destruction of property belonging to the Seller or other third party, excepting only such loss, claim, action or suit as may be caused solely by the willful misconduct or gross negligence of the Seller, its agents, employees, directors or officers. 12.0 LIMITATION OF DAMAGES EXCEPT AS OTHERWISE PROVIDED IN THIS AGREEMENT THERE IS NO WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, AND ANY AND ALL IMPLIED WARRANTIES ARE DISCLAIMED. LIABILITY SHALL BE LIMITED TO DIRECT ACTUAL DAMAGES ONLY, SUCH DIRECT ACTUAL DAMAGES SHALL BE THE SOLE AND EXCLUSIVE REMEDY AND ALL OTHER REMEDIES OR DAMAGES AT LAW OR IN EQUITY ARE WAIVED UNLESS EXPRESSLY HEREIN PROVIDED. NEITHER PARTY SHALL BE LIABLE FOR CONSEQUENTIAL, INCIDENTAL, PUNITIVE, EXEMPLARY OR INDIRECT DAMAGES, LOST PROFITS OR OTHER BUSINESS INTERRUPTION DAMAGES, BY STATUTE, IN TORT OR 040914 jrm 0180042 14 CONTRACT, UNDER ANY INDEMNITY PROVISION OR OTHERWISE. UNLESS EXPRESSLY HEREIN PROVIDED, AND SUBJECT TO THE PROVISIONS OF SECTION 11 (INDEMNITY), IT IS THE INTENT OF THE PARTIES THAT THE LIMITATIONS HEREIN IMPOSED ON REMEDIES AND THE MEASURE OF DAMAGES BE WITHOUT REGARD TO THE CAUSE OR CAUSES RELATED THERETO, INCLUDING THE NEGLIGENCE OF ANY PARTY, WHETHER SUCH NEGLIGENCE BE SOLE, JOINT OR CONCURRENT, OR ACTIVE OR PASSIVE. 13.0 NOTICES Notices shall, unless otherwise specified herein, be given, in writing, and may be delivered by hand delivery, United States mail, overnight courier service, facsimile or electronic messaging (e-mail) to the addresses set forth in Exhibit “PPA-F.”. Whenever this Agreement requires or permits delivery of a “notice” (or requires a Party to “notify”), the Party with such right or obligation shall provide a written communication in the manner specified below. A notice sent by facsimile transmission or electronic mail will be recognized and shall be deemed received on the Business Day on which such notice was transmitted if received before 5 p.m. Pacific Time (and if received after 5 p.m., on the next Business Day) and a notice by overnight mail or courier shall be deemed to have been received two (2) Business Days after it was sent or such earlier time as is confirmed by the receiving Party unless it confirms a prior oral communication, in which case any such notice shall be deemed received on the day sent. A Party may change its addresses by providing notice of same in accordance with this provision. A Party may request a change to Exhibit “PPA- F” as necessary to keep the information current. 14.0 TERM, TERMINATION EVENT AND TERMINATION 14.1 Term. The Term shall commence upon the execution by the duly authorized representatives of each of the Parties, and shall remain in effect until the conclusion of the Delivery Term, unless terminated sooner pursuant to the terms and conditions of this Agreement. All indemnity rights shall survive the termination of this Agreement for twelve (12) months. 14.2 Delivery Term. The Delivery Term of the Agreement is _______ years and is defined as the period of time from the Commercial Operation Date through the expiration or early termination of this Agreement. 14.3 Termination Event. 14.3.1 The Buyer shall have the right, but not the obligation, to terminate this Agreement upon the occurrence of any of the following, each of which is a “Termination Event”: (a) The Facility has not achieved Commercial Operation within seventy (70) days following the Deadline; (b) After the Commercial Operation Date, the Seller has not sold or delivered Energy from the Facility to the Buyer for a period of twelve (12) consecutive months; (c) If the Facility does not obtain RPS Certification within six (6) months of the Commercial Operation Date and maintain RPS Certification as required by Section 3.2; or (d) The Seller breaches any other material obligation of this Agreement. 14.3.2 The Seller shall have the right, but not the obligation, to terminate this Agreement upon the occurrence of any of the following, each of which is a “Termination Event”: (a) The Buyer fails to make a payment due and payable under this Agreement within thirty (30) days after written notice that such payment is due; or (b) The Buyer breaches any other material obligation of this Agreement. The preceding sentence notwithstanding, the Seller may terminate this Agreement without cause at any time prior to the Commercial Operation Date, subject to the provisions of Section 7 of this Agreement. 14.4 Time to Cure. None of the events described in Section 14.2.1 and 14.2.2 shall constitute a Termination Event if the Buyer or the Seller cures the event, failure, or circumstance within thirty (30) days after receipt of written notification sent by the other Party, seeking termination, or such longer period as may be necessary to cure so long as the Party subject to the Terminating Event is exercising diligent efforts to cure. 14.5 Termination. 040914 jrm 0180042 15 14.5.1 Declaration of a Termination Event. If a Termination Event has occurred and is continuing, the Party with the right to terminate shall have the right to: (a) send notice, designating a day, no earlier than thirty (30) days after such notice is deemed to be received (as provided in Section 13), as an early termination date of this Agreement (the “Early Termination Date”), unless the Seller has timely communicated with the Buyer and the Parties have agreed to resolve the circumstances giving rise to the Termination Event; (b) accelerate all amounts owing between the Parties; and (c) terminate this Agreement and end the Delivery Term effective as of the Early Termination Date. 14.5.2 Release of Liability for Termination Event. Upon termination of this Agreement pursuant to this section neither Party shall be under any further obligation or subject to liability hereunder, except with respect to the indemnity provision in Section 11 hereof, which shall remain in effect for a period of 12 months following the Early Termination Date. 14.6 No Limitation on Damages. Nothing in this Agreement shall be deemed or construed to limit a Party’s right to recover damages from the other Party, except as otherwise provided in this Agreement. 15.0 RELEASE OF DATA Except as may be exempt from disclosure under applicable law, the Seller authorizes the Buyer to release to any regulatory authority having jurisdiction over the Facility or a Party, or to any request made pursuant to the California Constitution or the California Public Records Act, information regarding the Facility, including the Seller’s name and location, operational characteristics, the Term of this Agreement, the Facility resource type, the scheduled Commercial Operation Date, the actual Commercial Operation Date, the Contract Capacity, payments made to the Seller and Energy production information. The Seller acknowledges that this information may be made publicly available. 16.0 ASSIGNMENT Neither Party shall assign this Agreement or its rights hereunder without the prior written consent of the other Party, which consent shall not be unreasonably withheld. 16.1 Upon the written request of the Seller, the Buyer will execute a “Lender Consent and Agreement” between the Seller and the Seller’s lender(s), if any, in the form acceptable to the Parties; provided, for illustration purposes only, an exemplar is attached hereto as Exhibit “PPA-G.” 16.2 Notwithstanding the foregoing, no Consent and Agreement shall be required for: 16.2.1 Any assignment or transfer of this Agreement by the Seller to an affiliate of the Seller, provided that such affiliate’s creditworthiness is equal to or better than that of Seller, as reasonably determined by the non-assigning or non-transferring Party; or 16.2.2 Any assignment or transfer of this Agreement by the Seller or the Buyer to a person succeeding to all or substantially all of the assets of such Party, provided that such person’s creditworthiness is equal to or greater than that of such Party, as reasonably determined by the non-assigning or non-transferring Party. 16.2.3 Notification of any assignment or transfer of this Agreement under Section 16.2.1 or 16.2.2 shall be given to the non-assigning or non-transferring Party in accordance with Exhibit “PPA-F.” 17.0 APPLICABLE LAW, VENUE, ATTORNEYS’ FEES, AND INTERPRETATION This Agreement will be governed by and construed in accordance with the laws of the State of California. The Parties will comply with applicable laws pertaining to their obligations arising under this 040914 jrm 0180042 16 Agreement. In the event that an action is brought, the Parties agree that trial of such action will be vested exclusively in the state courts of California or in the United States District Court for the Northern District of California in the County of Santa Clara, State of California. The prevailing party in any action brought to enforce the provisions of this Agreement may recover its reasonable costs and attorneys' fees expended in connection with that action. If a court of competent jurisdiction finds or rules that any provision of this Agreement, the Exhibits, or any amendment thereto is void or unenforceable, the unaffected provisions of this Agreement, the Exhibits, or any amendment thereto will remain in full force and effect. The Parties agree that the normal rule of construction to the effect that any ambiguity is to be resolved against the drafting party will not be employed in the interpretation of this Agreement or any Exhibit or any amendment thereof. 18.0 SEVERABILITY If any provision in this Agreement is determined to be invalid, void or unenforceable by any court having jurisdiction, such determination shall not invalidate, void, or make unenforceable any other provision, agreement or covenant of this Agreement and the Parties shall use their best efforts to modify this Agreement to give effect to the original intention of the Parties. 19.0 COUNTERPARTS; INTERPRETATION OF CONFLICTING PROVISIONS This Agreement may be executed in one or more counterparts, each of which shall be deemed an original and all of which shall be deemed one and the same Agreement. Delivery of an executed counterpart of this Agreement by facsimile or portable document format (“PDF”) transmission will be deemed as effective as delivery of an originally executed counterpart. Each Party delivering an executed counterpart of this Agreement by facsimile or PDF transmission will also deliver an originally executed counterpart, but the failure of any Party to deliver an originally executed counterpart of this Agreement will not affect the validity or effectiveness of this Agreement. In the event of a conflict between the Agreement and any, some or all of the Exhibits, the document imposing the more specific duty or obligation will prevail. 20.0 GENERAL No amendment to or modification of this Agreement shall be enforceable unless reduced to writing and executed by both Parties. This Agreement shall not impart any rights enforceable by any third party other than a permitted successor or assignee bound to this Agreement. Waiver by a Party of any default by the other Party shall not be construed as a waiver of any other default. The headings used herein are for convenience and reference purposes only. // // // // // // 040914 jrm 0180042 17 21. EXHIBITS The following exhibits shall be deemed incorporated in and made a part of this Agreement. Exhibit “PPA-A” - Facility Description, Prices, and Reservation Deposit Exhibit “PPA-B” - Commercial Operation Date Confirmation Letter Exhibit “PPA-C” - Scheduling and Outage Notification Procedure Exhibit “PPA-D” - Green Attributes Reporting and Conveyance Procedures Exhibit “PPA-E” - Insurance Requirements Exhibit “PPA-F” - Notices Exhibit “PPA-G” - Form of Lender Consent and Agreement IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly executed by their authorized representatives as of the Effective Date. CITY OF PALO ALTO SELLER APPROVED AS TO FORM Senior Deputy City Attorney APPROVED City Manager Director of Utilities 040914 jrm 0180042 18 EXHIBIT “PPA-A” Facility Description, Rates, and Reservation Deposit Program Rates Contract Term: Twenty (20) or twenty-five (25) years Contract rate: $0.165 per kWh for solar resources, 20- or 25-year contract term (up to 3 MW program capacity) $0.089 per kWh for solar resources, 20-year contract term (beyond 3 MW) $0.091 per kWh for solar resources, 25-year contract term (beyond 3 MW) $0.084 per kWh for non-solar resources, 20-year contract term $0.085 per kWh for non-solar resources, 25-year contract term Pre-certification rate: $0.08 per kWh Reservation Deposit Reservation Deposit ($20/kW of Contract Capacity) $ Service address: Facility Description: Contract Capacity: kW (CEC-AC), based on solar array rating (Panel rated output at PV USA test conditions x inverter efficiency) Facility primary fuel/technology: 040914 jrm 0180042 19 EXHIBIT “PPA-B” Commercial Operation Date Confirmation Letter In accordance with the terms of the Power Purchase Agreement (Palo Alto CLEAN), dated (the “Agreement”) by and between the City of Palo Alto, as the Buyer, and , as the Seller, this Confirmation Letter serves to document the Parties’ agreement that (i) the conditions precedent to the occurrence of the Commercial Operation Date have been satisfied, and (ii) the Buyer has received Energy, as specified in the Agreement, as of , . The actual installed Contract Capacity is kW. This Confirmation Letter shall confirm the Commercial Operation Date, as defined in the Agreement, as of the date referenced in the preceding sentence. IN WITNESS WHEREOF, each Party has caused this letter to be duly executed by its authorized representative as of the date of last signature provided below: Buyer Seller By: By: Name: Name: Title: Director of Utilities Title: Date: Date: In recognition of the Commercial Operation Date relative to the Effective Date of the Agreement by and between the Buyer and the Seller, the Seller hereby calculates the amount to return, if any, of the Seller’s deposit, as follows: Original Reservation Deposit Amount: $ Commercial Operation Date Deadline: □ Commercial Operation Date is prior to Deadline □ Commercial Operation Date occurred weeks following the Deadline, meaning that % of the Reservation Deposit is relinquished by Seller per Section 7.2.2 of the Power Purchase Agreement. Amount (if any) of Reservation Deposit to return to the Seller is: $ 040914 jrm 0180042 20 EXHIBIT “PPA-C” Scheduling and Outage Notification Procedure C.1 Applicability. This Exhibit” PPA-C” shall apply if the Facility is subject to Section 6.0 of this Agreement. C.2 Annual Operations Forecast C.2.1 By the tenth (10th) day September of each calendar year, the Seller will provide NCPA with an annual operations forecast detailing hourly expected generation and all proposed planned Outages for the next calendar year. The annual operations forecast for the calendar year shall be provided by not later than ninety (90) days prior to the scheduled Commercial Operation Date of the Generating Facility. C.2.2 NCPA may request modifications to the annual operations forecast at any time, and the Seller shall use good faith efforts to accommodate the requested modifications. C.2.3 The Seller shall not conduct Planned Outages at times other than as set forth in its annual operations forecast, unless approved in advance by NCPA, which approval shall not be withheld or delayed unreasonably. C.2.4 The Seller shall not schedule or conduct Planned Outages from 12:00 p.m. through 7:00 p.m. Pacific Time during the months of June through October. C.3. Short Term Operations Forecasts C.3.1. Quarterly Operations Forecast C.3.1.1 By the fifth (5th) day of January, April and July of each Contract Year, the Seller shall provide a calendar quarter-operations forecast by hour of expected generation and all proposed Planned Outages for the next full calendar quarter and the twelve (12) months following that calendar quarter. As an example, by January 5, 2014, the Seller would provide a calendar quarter-operations forecast by hour of expected generation for the period, April 1, 2014 through June 30, 2014, and identify all proposed Planned Outages for the period, April 1, 2014 through June 30, 2015. C.3.1.2 NCPA will approve or require modifications to the proposed calendar quarter-operations forecast within ten (10) days of receipt of the forecast. C.3.1.3 If required by NCPA, the Seller will provide a modified calendar quarter-operations forecast within seven (7) days after receipt of required modifications from NCPA. C.3.2 Weekly Update C.3.2.1 By 14:00 of each Wednesday, the Seller shall provide an electronic update, in a format specified by NCPA, to the calendar quarter-operations forecast for the following seven (7) days (Thursday through the next Wednesday). C.3.2.2 The weekly update shall include hourly expected generation and all proposed planned Outages for the relevant seven (7) day period. C.4 Outage Detail for Annual and Short Term Operations Forecasts. Outage information provided by the Seller shall include, at a minimum, the start time and stop time of the Outage, capacity out of service (kW), the equipment that is or will be out of service, and the reason for the Outage. 040914 jrm 0180042 21 C.5 General Scheduling Protocols C.5.1 Daily Modifications to Forecasts. Unless otherwise mutually agreed, the Seller may make changes to the weekly update to the calendar quarter-operations forecast by providing such changes to NCPA prior to 08:00 of the day that is two (2) Business Days before the active scheduling day as determined by the WECC prescheduling calendar. Example: For power that is scheduled for generation or delivery on Friday, March 29, 2014, changes must be submitted to NCPA by 08:00 on Wednesday, March 27, 2014. C.5.2 Hourly Modifications to Active Schedules. Unless otherwise mutually agreed, the Seller may request changes to active schedules by providing such changes to NCPA with a minimum of four (4) hours’ notice prior to the applicable CAISO market deadline (e.g. Hour Ahead Scheduling Process (“HASP”) Scheduling deadline, as defined in the CAISO Tariff). Active day Schedule changes are not binding. Changes to active Schedules are limited to two (2) changes per day, excluding forced Outages, unless otherwise agreed to between the Parties. One request for a Schedule change, of one-hour or multiple-hours duration, constitutes one Schedule change. Example: For power that is scheduled for generation or delivery in hour ending 15:00 (for the period from 14:01 to 15:00), changes must be submitted to NCPA by 10:00. C.5.3. Unforeseen Circumstances. At the Seller’s request, NCPA may, but is not required to, modify the Schedules for the Generation Facility Output due to unforeseen circumstances in accordance with the above scheduling timeline constraints described in this Exhibit PPA-C. C.5.4. Absence of Forecasts. In the absence of forecasts and schedules as required by this Agreement or this Exhibit, NCPA shall utilize the most current information the Seller provides in the development and submission of Schedules. C.6 Outage Reporting Protocols C.6.1. Notification. The Seller shall notify NCPA of all planned or forced Outages of the Generating Facility to ensure compliance with the CAISO Outage Coordination and Enforcement Protocols. C.6.1.1 Outage information provided by the Seller shall include, at a minimum, the start time and stop time of the Outage, Capacity out of service (kW), equipment out of service, and the reason for the Outage. C. 6.1.2 Seller shall provide the Planned Outages not included in the annual operations forecast, the calendar quarter-operations forecast, or the weekly update, to NCPA at least four (4) Business Days prior to the start of the requested outage. C. 6.1.3 At any time prior to the start of a Planned Outage, the CAISO may deny the Outage due to a System Emergency (as defined in the CAISO Tariff) or as otherwise permitted under the CAISO Tariff. If NCPA receives notice that the CAISO has denied an Outage in accordance with the CAISO Tariff, NCPA will notify the Seller as soon as possible and the Seller shall modify the planned Outage as required by the CAISO. C.6.2 Commencement of an Outage. The Seller shall not begin any Planned Outage without the prior approval of NCPA and the CAISO. C.6.3 Forced Outages C.6.3.1 The Seller shall report the Forced Outages to NCPA within twenty (20) 040914 jrm 0180042 22 minutes of such Outages. C.6.3.2 The Seller’s notice of a Forced Outage sent to NCPA shall include the reason for the Outage (if known), expected duration of the Outage, and the Capacity reduction. C.6.3.3 By the end of the next Business Day following the day on which a Forced Outage has occurred, the Seller shall provide to NCPA a detailed written report, specifying the reason for the Outage, expected duration of such Outage, capacity reduction, and actions taken to mitigate such Outage. C.6.4 Return to Service. The Seller shall notify NCPA as soon as possible, but in any case before the Generating Facility is returned to service. C.7 Notices. All Scheduling notices and Schedules shall be submitted to NCPA by phone, fax or email, or other means as may be mutually agreed by the Parties, to the persons designated in Exhibit “PPA-F.” C.8 Changes in Scheduling and Outage Procedure. The Buyer shall revise Exhibit “PPA-C,” or, as appropriate, give written notice to the Seller regarding the revision, and issue a new Exhibit “PPA-C,” which shall then become part of the Agreement to reflect changes in the scheduling and outage notification procedure. 040914 jrm 0180042 23 EXHIBIT “PPA-D” Green Attributes Reporting and Conveyance Procedures D.1 Additional Definitions for the Conveyance of Green Attributes D.1.1 “Certificate Transfers” means the process, as described in the WREGIS Operating Rules, whereby a WREGIS account holder may request that WREGIS Certificates from a specific generating unit shall be directly deposited to another WREGIS account. D.1.2 “WREGIS Certificates” means a certificate created within the WREGIS system that represents all Renewable and Green Attributes from one MWh of electricity generation from an Eligible Renewable Energy Resource that is registered with WREGIS. D.1.3 “WREGIS Operating Rules” means the document published by WREGIS that governs the operation of the WREGIS system for registering, tracking, and conveying, among others, RECs produced from Eligible Renewable Energy Resources that shall be registered with WREGIS. D.1.4 “WREGIS” means Western Renewable Energy Generation Information System. D.2 RECs. Green Attributes shall be conveyed by the Seller to the Buyer through RECs, which shall be registered tracked and conveyed to the Buyer, using WREGIS. D.3 WREGIS Registration. Prior to the Commercial Operation Date, the Buyer will register the Facility in the Buyer’s WREGIS account on behalf of the Seller. The Buyer shall charge back to the Seller any costs of registering and maintaining the registration of the Facility with WREGIS. The Seller shall provide to the Buyer any documents required by WREGIS and assign the Seller’s rights to register the Facility in WREGIS, using agreements provided by WREGIS. D.4 B u yer ’s W REGI S Acco unt . The Buyer shall, at its sole expense, establish and maintain the Buyer’s WREGIS account sufficient to accommodate the WREGIS Certificates produced by the output of the Facility. The Buyer shall be responsible for all expenses associated with (A) establishing and maintaining the Buyer’s WREGIS Account, and (B) subsequently transferring or retiring WREGIS Certificates. D.5 Qualified Reporting Entity. The Buyer shall be the Qualified Reporting Entity (as such term is defined by WREGIS) for the Facility, and shall be responsible for providing the metered Output data to WREGIS. D.6 Reporting of Environmental Attributes. In lieu of the Seller’s transfer of the WREGIS Certificates using Certificate Transfers from the Seller’s WREGIS account to the Buyer’s WREGIS account, the Buyer shall report the Facility as being held directly in its WREGIS account, which will preclude the Seller from reporting the Facility in its own WREGIS account. D.6.1 By avoiding the use of Certificate Transfers, there will be no transaction costs to the Seller or the Buyer for the Certificate Transfers that would otherwise be used. D.6.2 WREGIS Certificates for the Facility will be created on a calendar month basis in accordance with the certification procedure established by the WREGIS Operating Rules in an amount equal to the Energy generated by the Project and delivered to the Buyer in the same calendar month. D.6.3 WREGIS Certificates will only be created for whole MWh amounts of energy generated. Any fractional MWh amounts (i.e., kWh) will be carried forward until sufficient generation is accumulated for the creation of a WREGIS Certificate and all such accumulated 040914 jrm 0180042 24 MWh of Environmental Attributes will then be available to Buyer. D.6.4 If a WREGIS Certificate Modification (as such term is defined by WREGIS) will be required to reflect any errors or omissions regarding the Green Attributes from the Facility, then the Buyer will manage the submission of the WREGIS Certificate Modification. D.6.5 Due to the expected delay in the creation of WREGIS Certificates relative to the timing of invoice payments under Section 2, the Buyer will normally be making an invoice payment for the Output for a given month in accordance with Section 2 before the WREGIS Certificates for such month may be created in the Buyer’s WREGIS account. Notwithstanding this delay, the Buyer shall have all right and title to all such WREGIS Certificates upon payment to the Seller in accordance with Section 2. D.7 Changes in Green Attributes Reporting and Conveyance Procedures. The Buyer shall revise this Exhibit “PPA-D,” as appropriate, give written notice to the Seller regarding the revision, and issue a new Exhibit “PPA-D,” which shall then become part of this Agreement in the event that: D.7.1 WREGIS changes the WREGIS Operating Rules (as defined by WREGIS) after the Effective Date or applies the WREGIS Operating Rules in a manner inconsistent with this Exhibit “PPA-D” after the Effective Date; or, D.7.2 WREGIS is replaced as the primary method that the Buyer uses for conveyance of Green Attributes, or additional methods to convey all Green Attributes, are required. 040914 jrm 0180042 25 EXHIBIT “PPA-E” Insurance Requirements CONTRACTORS TO THE CITY OF PALO ALTO (CITY), AT THEIR SOLE EXPENSE, WILL FOR THE TERM OF THE CONTRACT OBTAIN AND MAINTAIN INSURANCE IN THE AMOUNTS FOR THE COVERAGE SPECIFIED BELOW, AFFORDED BY COMPANIES WITH A BEST’S KEY RATING OF A-:VII, OR HIGHER, LICENSED OR AUTHORIZED TO TRANSACT INSURANCE BUSINESS IN THE STATE OF CALIFORNIA. AWARD IS CONTINGENT ON COMPLIANCE WITH CITY’S INSURANCE REQUIREMENTS, AS SPECIFIED, BELOW: REQUIRED TYPE OF COVERAGE REQUIREMENT MINIMUM LIMITS EACH OCCURRENCE AGGREGATE YES YES WORKER’S COMPENSATION AUTOMOBILE LIABILITY STATUTORY STATUTORY YES COMMERCIAL GENERAL LIABILITY, INCLUDING PERSONAL INJURY, BROAD FORM PROPERTY DAMAGE BLANKET CONTRACTUAL, AND FIRE LEGAL LIABILITY BODILY INJURY PROPERTY DAMAGE BODILY INJURY & PROPERTY DAMAGE COMBINED. $1,000,000 $1,000,000 $1,000,000 $2,000,000 $2,000,000 $2,000,000 YES COMPREHENSIVE AUTOMOBILE LIABILITY, INCLUDING, OWNED, HIRED, NON-OWNED BODILY INJURY - EACH PERSON - EACH OCCURRENCE PROPERTY DAMAGE BODILY INJURY AND PROPERTY DAMAGE, COMBINED $1,000,000 $1,000,000 $1,000,000 $1,000,000 $1,000,000 $1,000,000 $1,000,000 $1,000,000 $1,000,000 $1,000,000 NO PROFESSIONAL LIABILITY, INCLUDING, ERRORS AND OMISSIONS, MALPRACTICE (WHEN APPLICABLE), AND NEGLIGENT PERFORMANCE ALL DAMAGES $1,000,000 YES THE CITY OF PALO ALTO IS TO BE NAMED AS AN ADDITIONAL INSURED: PROPOSER, AT ITS SOLE COST AND EXPENSE, SHALL OBTAIN AND MAINTAIN, IN FULL FORCE AND EFFECT THROUGHOUT THE ENTIRE TERM OF ANY RESULTANT AGREEMENT, THE INSURANCE COVERAGE HEREIN DESCRIBED, INSURING NOT ONLY PROPOSER AND ITS SUBCONSULTANS, IF ANY, BUT ALSO, WITH THE EXCEPTION OF WORKERS’ COMPENSATION, EMPLOYER’S LIABILITY AND PROFESSIONAL INSURANCE, NAMING AS ADDITIONAL INSURES CITY, ITS COUNCIL MEMBERS, OFFICERS, AGENTS, AND EMPLOYEES. I. INSURANCE COVERAGE MUST INCLUDE: A. A PROVISION FOR A WRITTEN THIRTY DAY ADVANCE NOTICE TO CITY OF CHANGE IN COVERAGE OR OF COVERAGE CANCELLATION; AND B. A CONTRACTUAL LIABILITY ENDORSEMENT PROVIDING INSURANCE COVERAGE FOR CONTRACTOR’S AGREEMENT TO INDEMNIFY CITY – SEE, SAMPLE AGREEMENT FOR SERVICES. II. SUBMIT CERTIFICATE(S) OF INSURANCE EVIDENCING REQUIRED COVERAGE, OR COMPLETE THIS SECTION AND IV THROUGH V, BELOW. A. NAME AND ADDRESS OF COMPANY AFFORDING COVERAGE (NOT AGENT OR BROKER): B. NAME, ADDRESS, AND PHONE NUMBER OF YOUR INSURANCE AGENT/BROKER: 040914 jrm 0180042 26 C. POLICY NUMBER(S): D. DEDUCTIBLE AMOUNT(S) (DEDUCTIBLE AMOUNTS IN EXCESS OF $5,000 REQUIRE CITY’S PRIOR APPROVAL): III. AWARD IS CONTINGENT ON COMPLIANCE WITH CITY’S INSURANCE REQUIREMENTS, AND PROPOSER’S SUBMITTAL OF CERTIFICATES OF INSURANCE EVIDENCING COMPLIANCE WITH THE REQUIREMENTS SPECIFIED HEREIN. IV. ENDORSEMENT PROVISIONS, WITH RESPECT TO THE INSURANCE AFFORDED TO “ADDITIONAL INSURES” A. PRIMARY COVERAGE WITH RESPECT TO CLAIMS ARISING OUT OF THE OPERATIONS OF THE NAMED INSURED, INSURANCE AS AFFORDED BY THIS POLICY IS PRIMARY AND IS NOT ADDITIONAL TO OR CONTRIBUTING WITH ANY OTHER INSURANCE CARRIED BY OR FOR THE BENEFIT OF THE ADDITIONAL INSURES. B. CROSS LIABILITY THE NAMING OF MORE THAN ONE PERSON, FIRM, OR CORPORATION AS INSURES UNDER THE POLICY SHALL NOT, FOR THAT REASON ALONE, EXTINGUISH ANY RIGHTS OF THE INSURED AGAINST ANOTHER, BUT THIS ENDORSEMENT, AND THE NAMING OF MULTIPLE INSUREDS, SHALL NOT INCREASE THE TOTAL LIABILITY OF THE COMPANY UNDER THIS POLICY. C. NOTICE OF CANCELLATION 1. IF THE POLICY IS CANCELED BEFORE ITS EXPIRATION DATE FOR ANY REASON OTHER THAN THE NON-PAYMENT OF PREMIUM, THE ISSUING COMPANY SHALL PROVIDE CITY AT LEAST A THIRTY (30) DAY WRITTEN NOTICE BEFORE THE EFFECTIVE DATE OF CANCELLATION. 2. IF THE POLICY IS CANCELED BEFORE ITS EXPIRATION DATE FOR THE NON-PAYMENT OF PREMIUM, THE ISSUING COMPANY SHALL PROVIDE CITY AT LEAST A TEN (10) DAY WRITTEN NOTICE BEFORE THE EFFECTIVE DATE OF CANCELLATION. V. PROPOSER CERTIFIES THAT PROPOSER’S INSURANCE COVERAGE MEETS THE ABOVE REQUIREMENTS: THE INFORMATION HEREIN IS CERTIFIED CORRECT BY SIGNATURE(S) BELOW. SIGNATURE(S) MUST BE SAME SIGNATURE(S) AS APPEAR(S) ON SECTION II, ATTACHMENT A, PROPOSER’S INFORMATION FORM. Firm: Signature: Name: (Print or type name) Signature: Name: (Print or type name) 040914 jrm 0180042 27 NOTICES SHALL BE MAILED TO: PURCHASING AND CONTRACT ADMINISTRATION CITY OF PALO ALTO P.O. BOX 10250 PALO ALTO, CA 94303. 040914 jrm 0180042 28 EXHIBIT “PPA-F” Notices Contract Administration BUYER: SELLER: City of Palo Alto Utilities Resource Management 250 Hamilton Avenue Palo Alto, CA 94301 Ph: 650-329-2689 Email: UtilityCommoditySettlements@CityofPaloAlto.Org Billing and Settlements BUYER: SELLER: City of Palo Alto Utilities Resource Management 250 Hamilton Avenue Palo Alto, CA 94301 Ph: 650-329-2689 Email: UtilityCommoditySettlements@CityofPaloAlto.Org Forecasting and Outage Reporting under Section 6 of this Agreement Planned Outages: BUYER: SELLER: Northern California Power Agency Real- Time Dispatch 651 Commerce Drive Roseville, CA 95678 Ph: 916-786-3518 Forced Outages BUYER: SELLER: Northern California Power Agency Real- Time Dispatch 651 Commerce Drive Roseville, CA 95678 Ph: 916-786-3518 Forecasting and Scheduling BUYER: SELLER: Northern California Power Agency Operations and Pre-Scheduling 651 Commerce Drive Roseville, CA 95678 Ph: 916-786-0123 040914 jrm 0180042 29 EXHIBIT “PPA-G” Form of Lender Consent and Agreement This CONSENT AND AGREEMENT (this “Consent”), dated as of , 20 , is entered into by and among the CITY OF PALO ALTO, a California chartered municipal corporation (the “City”), , a corporation (the “Lender),” by its agent, (the “Administrative Agent”), and , a corporation (the “Borrower”) (collectively, the “Parties”). Unless otherwise defined, all capitalized terms have the meaning given in the Contract (as hereinafter defined). RECITALS A. Borrower intends to develop, construct, install, test, own, operate and use an approximately MW electric generating facility located in the city of Palo Alto in the State of California, known as the Project (the “Project”). B. In order to partially finance the development, construction, installation, testing, operation and use of the Project, Borrower has entered into that certain financing agreement dated as of (as amended, amended and restated, supplemented or otherwise modified from time to time, the “Financing Agreement”), among Borrower, the financial institutions from time to time parties thereto (collectively, the “Lenders”) , and Administrative Agent for the Lenders, pursuant to which, among other things, Lenders have extended commitments to make loans and other financial accommodations to, and for the benefit of, Borrower. C. The City and Borrower have entered into that certain Power Purchase Agreement, dated as of (attached hereto and incorporated herein by reference, as amended, amended and restated, supplemented or otherwise modified from time to time in accordance with the terms thereof and hereof, the “Power Purchase Agreement”). D. The City and Borrower have entered into that certain Interconnection Agreement, dated as of _ (attached hereto and incorporated herein by reference, as amended, amended and restated, supplemented or otherwise modified from time to time in accordance with the terms thereof and hereof, the “Interconnection Agreement”). E. Pursuant to a security agreement executed by Borrower and Administrative Agent for the Lenders (as amended, amended and restated, supplemented or otherwise modified from time to time, the “Security Agreement”), Borrower has agreed, among other things, to assign, as collateral security for its obligations under the Financing Agreement and related documents (collectively, the “Financing Documents”), all of its right, title and interest in, to and under the Power Purchase Agreement and Interconnection Agreement to Administrative Agent for the benefit of itself, the Lenders and each other entity or person providing collateral security under the Financing Documents. F. It is a requirement under the Financing Agreement that the Parties hereto execute this Consent. AGREEMENT NOW THEREFORE, for good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, and intending to be legally bound, the Parties agree, as follows: 1. CONSENT TO ASSIGNMENT. The City acknowledges the assignment referred to in Recital E above, consents to an assignment of the Power Purchase Agreement and Interconnection Agreement pursuant thereto, and agrees with Administrative Agent, as follows: (a) Administrative Agent shall be entitled (but not obligated) to exercise all rights and to cure any 040914 jrm 0180042 30 defaults of Borrower under the Power Purchase Agreement or Interconnection Agreement, as the case may be, subject to applicable notice and cure periods provided in the Power Purchase Agreement and Interconnection Agreement. Upon receipt of notice from Administrative Agent, the City agrees to accept such exercise and cure by Administrative Agent if timely made by Administrative Agent under the Power Purchase Agreement or Interconnection Agreement, as the case may be, and this Consent. Upon receipt of Administrative Agent's written instructions and to the extent allowed by law, the City agrees to make directly to such account as Administrative Agent may direct the City, in writing, from time to time, all payments to be made by the City to Borrower under the Power Purchase Agreement or Interconnection Agreement, as the case may be, from and after the City’s receipt of such instructions, and Borrower consents to any such action. The City shall not incur any liability to Borrower under the Power Purchase Agreement, Interconnection Agreement, or this Consent for directing such payments to Administrative Agent in accordance with this subsection (a). (b) The City will not, without the prior written consent of Administrative Agent (such consent not to be unreasonably withheld), (i) cancel or terminate the Power Purchase Agreement or Interconnection Agreement, or consent to or accept any cancellation, termination or suspension thereof by Borrower, except as provided in the Power Purchase Agreement or Interconnection Agreement and in accordance with subparagraph 1(c) hereof, (ii) sell, assign or otherwise dispose (by operation of law or otherwise) of any part of its interest in the Power Purchase Agreement or Interconnection Agreement, except as provided in the Power Purchase Agreement or Interconnection Agreement, or (iii) amend or modify the Power Purchase Agreement or Interconnection Agreement in any manner materially adverse to the interest of the Lenders in the Power Purchase Agreement and Interconnection Agreement as collateral security under the Security Agreement. (c) The City agrees to deliver duplicates or copies of all notices of default delivered by the City under or pursuant to the Power Purchase Agreement or Interconnection Agreement to Administrative Agent in accordance with the notice provisions of this Consent. The City shall deliver any such notices concurrently with delivery of the notice to Borrower under the Power Purchase Agreement or Interconnection Agreement. To the extent that a cure period is provided under the Power Purchase Agreement or Interconnection Agreement, Administrative Agent shall have the same period of time to cure the breach or default that Borrower is entitled to under the Power Purchase Agreement or Interconnection Agreement, except that if the City does not deliver the default notice to Administrative Agent concurrently with delivery of the notice to Borrower under the Power Purchase Agreement or Interconnection Agreement, then as to Administrative Agent, the applicable cure period under the Power Purchase Agreement or Interconnection Agreement shall begin on the date on which the notice is given to Administrative Agent. If possession of the Project is necessary to cure such breach or default, and Administrative Agent or its designee(s) or assignee(s) declare Borrower in default and commence foreclosure proceedings, Administrative Agent or its designee(s) or assignee(s) will be allowed a reasonable period to complete such proceedings so long as Administrative Agent or its designee(s) continue to perform any monetary obligations under the Power Purchase Agreement or Interconnection Agreement, as the case may be. The City consents to the transfer of Borrower's interest under the Power Purchase Agreement and Interconnection Agreement to the Lenders or Administrative Agent or their designee(s) or assignee(s) or any of them or a purchaser or grantee at a foreclosure sale by judicial or nonjudicial foreclosure and sale or by a conveyance by Borrower in lieu of foreclosure and agrees that upon such foreclosure, sale or conveyance, the City shall recognize the Lenders or Administrative Agent or their designee(s) or assignee(s) or any of them or other purchaser or grantee as the applicable party under the Power Purchase Agreement and Interconnection Agreement (provided that such Lenders or Administrative Agent or their designee(s) or assignee(s) or purchaser or grantee assume the obligations of Borrower under the Power Purchase Agreement and Interconnection Agreement, including, without limitation, satisfaction and compliance with all credit provisions of the Power Purchase Agreement and Interconnection Agreement, if any, and provided further that such Lenders or Administrative Agent or their designee(s) or assignee(s) or purchaser or grantee has a creditworthiness equal to or better than 040914 jrm 0180042 31 Borrower, as reasonably determined by City). (d) In the event that either the Power Purchase Agreement or Interconnection Agreement, or both is rejected by a trustee or debtor-in-possession in any bankruptcy or insolvency proceeding, and if, within forty-five (45) days after such rejection, Administrative Agent shall so request, the City will execute and deliver to Administrative Agent a new power purchase agreement or interconnection agreement, as the case may be, which power purchase agreement or interconnection agreement shall be on the same terms and conditions as the original Power Purchase Agreement or Interconnection Agreement for the remaining term of the original Power Purchase Agreement or Interconnection Agreement before giving effect to such rejection, and which shall require Administrative Agent to cure any defaults then existing under the original Power Purchase Agreement or Interconnection Agreement. Notwithstanding the foregoing, any new renewable power purchase agreement or interconnection agreement will be subject to all regulatory approvals required by law. The City will use good faith efforts to promptly obtain any necessary regulatory approvals. (e) In the event Administrative Agent, the Lenders or their designee(s) or assignee(s) elect to perform Borrower's obligations under the Power Purchase Agreement and Interconnection Agreement, succeed to Borrower’s interest under the Power Purchase Agreement and Interconnection Agreement, or enter into a new power purchase agreement or interconnection agreement as provided in subparagraph 1(d) above, the recourse of the City against Administrative Agent, Lenders or their designee(s) and assignee(s) shall be limited to such Parties’ interests in the Project, and the credit support required under the Power Purchase Agreement and Interconnection Agreement, if any. (f) In the event Administrative Agent, the Lenders or their designee(s) or assignee(s) succeed to Borrower's interest under the Power Purchase Agreement and Interconnection Agreement, Administrative Agent, the Lenders or their designee(s) or assignee(s) shall cure any then-existing payment and performance defaults under the Power Purchase Agreement or Interconnection Agreement, except any performance defaults of Borrower itself, which by their nature are not susceptible of being cured. Administrative Agent, the Lenders and their designee(s) or assignee(s) shall have the right to assign all or a pro rata interest in the Power Purchase Agreement and Interconnection Agreement to a person or entity to whom Borrower’s interest in the Project is transferred, provided such transferee assumes the obligations of Borrower under the Power Purchase Agreement and Interconnection Agreement and has a creditworthiness equal to or better than Borrower, as reasonably determined by the City. Upon such assignment, Administrative Agent and the Lenders and their designee(s) or assignee(s) (including their agents and employees) shall be released from any further liability thereunder accruing from and after the date of such assignment, to the extent of the interest assigned. 2. REPRESENTATIONS AND WARRANTIES. The City hereby represents and warrants that as of the date of this Consent: (a) It (i) is duly formed and validly existing under the laws of the State of California, and (ii) has all requisite power and authority to enter into and to perform its obligations hereunder and under the Power Purchase Agreement and Interconnection Agreement, and to carry out the terms hereof and thereof and the transactions contemplated hereby and thereby; (b) the execution, delivery and performance of this Consent, the Power Purchase Agreement and the Interconnection Agreement have been duly authorized by all necessary action on its part and do not require any approvals, material filings with, or consents of any entity or person which have not previously been obtained or made; (c) each of this Consent, the Power Purchase Agreement, and the Interconnection Agreement is in full force and effect; 040914 jrm 0180042 32 (d) each of this Consent, the Power Purchase Agreement, and the Interconnection Agreement has been duly executed and delivered on its behalf and constitutes its legal, valid and binding obligation, enforceable against it in accordance with its terms, except as the enforceability thereof may be limited by (i) bankruptcy, insolvency, reorganization or other similar laws affecting the enforcement of creditors’ rights generally and (ii) general equitable principles (whether considered in a proceeding in equity or at law); (e) there is no litigation, arbitration, investigation or other proceeding pending for which the City has received service of process or, to the City’s actual knowledge, threatened against the City relating solely to this Consent, the Power Purchase Agreement, or the Interconnection Agreement and the transactions contemplated hereby and thereby; (f) the execution, delivery and performance by it of this Consent, the Power Purchase Agreement, and the Interconnection Agreement, and the consummation of the transactions contemplated hereby, will not result in any violation of, breach of or default under any term of any material contract or material agreement to which it is a party or by which it or its property is bound, or of any material requirements of law presently in effect having applicability to it, the violation, breach or default of which could have a material adverse effect on its ability to perform its obligations under this Consent; (g) neither the City nor, to the City’s actual knowledge, any other party to the Power Purchase Agreement or Interconnection Agreement, is in default of any of its obligations thereunder; and (h) to the City’s actual knowledge, (i) no Force Majeure Event exists under, and as defined in, the Power Purchase Agreement or Interconnection Agreement and (ii) no event or condition exists which would either immediately or with the passage of any applicable grace period or giving of notice, or both, enable either the City or Borrower to terminate or suspend its obligations under the Power Purchase Agreement or the Interconnection Agreement. Each of the representations and warranties set forth herein shall survive the execution and delivery of this Consent and the consummation of the transactions contemplated hereby. 3. NOTICES. All notices required or permitted hereunder shall be given, in writing, and shall be effective (a) upon receipt if hand delivered, (b) upon telephonic verification of receipt if sent by facsimile and (c) if otherwise delivered, upon the earlier of receipt or three (3) Business Days after being sent registered or certified mail, return receipt requested, with proper postage affixed thereto, or by private courier or delivery service with charges prepaid, and addressed as specified below: If to the City: [ ] [ ] [ ] Telephone No.: [ ] Facsimile No.: [ ] Attn: [ ] If to Administrative Agent: [ ] [ ] [ ] Telephone No.: [ ] Facsimile No.: [ ] Attn: [ ] 040914 jrm 0180042 33 If to Borrower: [ ] [ ] [ ] Telephone No.: [ ] Facsimile No.: [ ] Attn: [ ] Any party shall have the right to change its address for notice hereunder to any other location within the United States by giving thirty (30) days written notice to the other parties in the manner set forth above. 4. ASSIGNMENT, TERMINATION, AMENDMENT. This Consent shall be binding upon and benefit the successors and assigns of the Parties hereto and their respective successors, transferees and assigns (including without limitation, any entity that refinances all or any portion of the obligations under the Financing Agreement). The City agrees (a) to confirm such continuing obligation, in writing, upon the reasonable request of (and at the expense of) Borrower, Administrative Agent, the Lenders or any of their respective successors, transferees or assigns, and (b) to cause any successor-in-interest to the City with respect to its interest in the Power Purchase Agreement or Interconnection Agreement to assume, in writing and in form and substance reasonably satisfactory to Administrative Agent, the obligations of City hereunder. Any purported assignment or transfer of the Power Purchase Agreement or Interconnection Agreement not in conjunction with the written instrument of assumption contemplated by the foregoing clause (b) shall be null and void. No termination, amendment, or variation of any provisions of this Consent shall be effective unless in writing and signed by the parties hereto. No waiver of any provisions of this Consent shall be effective unless in writing and signed by the party waiving any of its rights hereunder. 5. GOVERNING LAW. This Consent shall be governed by the laws of the State of California applicable to contracts made and to be performed in California. The federal courts or the state courts located in California shall have exclusive jurisdiction to resolve any disputes with respect to this Consent with the City, Assignor, and the Lender or Lenders irrevocably consenting to the jurisdiction thereof for any actions, suits, or proceedings arising out of or relating to this Consent. 6. COUNTERPARTS. This Consent may be executed in one or more duplicate counterparts, and when executed and delivered by all the parties listed below, shall constitute a single binding agreement. 7. SEVERABILITY. In case any provision of this Consent, or the obligations of any of the Parties hereto, shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions, or the obligations of the other Parties hereto, shall not in any way be affected or impaired thereby. 8. ACKNOWLEDGMENTS BY BORROWER. Borrower, by its execution hereof, acknowledges and agrees that neither the execution of this Consent, the performance by the City of any of the obligations of the City hereunder, the exercise of any of the rights of the City hereunder, or the acceptance by the City of performance of the Power Purchase Agreement by any party other than Borrower shall (1) release Borrower from any obligation of Borrower under the Power Purchase Agreement or Interconnection Agreement, (2) constitute a consent by the City to, or impute knowledge to the City of, any specific terms or conditions of the Financing Agreement, the Security Agreement or any of the other Financing Documents, or (3) except as expressly set forth in this Consent, constitute a waiver by the City of any of its rights under the Power Purchase Agreement or Interconnection Agreement. Borrower and Administrative Agent acknowledge hereby for the benefit of City that none of the Financing Agreement, the Security 040914 jrm 0180042 34 Agreement, the Financing Documents or any other documents executed in connection therewith alter, amend, modify or impair (or purport to alter, amend, modify or impair) any provisions of the Power Purchase Agreement. CITY OF PALO ALTO ADMINISTRATIVE AGENT APPROVED AS TO FORM Senior Deputy City Attorney BORROWER APPROVED City Manager Director of Utilities City of Palo Alto (ID # 7438) Finance Committee Staff Report Report Type: Action Items Meeting Date: 12/6/2016 City of Palo Alto Page 1 Council Priority: Environmental Sustainability Summary Title: Palo Alto CLEAN Program Updates Title: Recommendation to the Finance Committee to Recommend That the City Council Adopt a Resolution to Continue the Palo Alto Clean Local Energy Accessible Now (CLEAN) Program, Including: (1) For Local Non-Solar Resources, Utilities Advisory Commission (UAC) and Staff Supported Updates to a Price of 8.4 ¢/kWh to 8.5 ¢/kWh With No Capacity Limit; and (2) For Local Solar Resources, Either a 16.5 ¢/kWh Price that Drops to Avoided Cost at 3 MW Recommended by the UAC, or a Tiered Pricing Structure that Declines from 16.5c/kWh to Avoided Cost Over 6 MW Recommended by Staff; and Approval of Associated Program Rules and Agreements From: City Manager Lead Department: Utilities Recommendation The Utilities Advisory Commission (UAC) requests that the Finance Committee recommend that the City Council adopt a resolution (Attachment A) to: 1.Continue the Palo Alto CLEAN program price for local solar energy resources at the current price of 16.5 cents per kilowatt-hour (¢/kWh) for a 20-year or 25-year contract term up to the current 3 MW program capacity limit, and for any capacity over 3 MW, reduce the price to the avoided cost of such energy (currently 8.9 ¢/kWh for a 20-year contract term, or 9.1 ¢/kWh for a 25-year contract term); and 2.Raise the Palo Alto CLEAN program price for local non-solar eligible renewable energy resources to the updated avoided cost of such energy (8.4 ¢/kWh for a 20-year contract term, or 8.5 ¢/kWh for a 25-year contract term), from the prior price (8.1 ¢/kWh for a 20-year contract term, or 8.2 ¢/kWh for a 25-year contract term), and to remove the program limit of 3 MW for local non-solar eligible renewable resources. Staff requests that the Finance Committee recommend that the City Council adopt a resolution (Attachment B) to: ATTACHMENT C City of Palo Alto Page 2 1.Establish a tiered schedule for the Palo Alto CLEAN program price for local solar energy resources as follows: a.For the first 3 MW, maintain the current price of 16.5 cents per kilowatt-hour (¢/kWh) for a 20-year or 25-year contract term; b.For the next (fourth) MW, reduce the price to 14 ¢/kWh for a 20-year or 25-year contract term; c.For the next (fifth) MW, reduce the price to 12 ¢/kWh for a 20-year or 25-year contract term; d.For the next (sixth) MW, reduce the price to the greater of the avoided cost or 10 ¢/kWh for a 20-year or 25-year contract term; and e.For any capacity over 6 MW, reduce the price to the avoided cost of such energy (currently 8.9 ¢/kWh for a 20-year contract term, or 9.1 ¢/kWh for a 25-year contract term); and 2.Raise the Palo Alto CLEAN program price for local non-solar eligible renewable energy resources to the updated avoided cost of such energy (8.4 ¢/kWh for a 20-year contract term, or 8.5 ¢/kWh for a 25-year contract term), from the prior price (8.1 ¢/kWh for a 20-year contract term, or 8.2 ¢/kWh for a 25-year contract term), and to remove the program limit of 3 MW for local non-solar eligible renewable resources. In addition, staff requests that the Finance Committee recommend that the City Council approve the attached amended CLEAN program Power Purchase Agreement (PPA) (Attachment C) to implement the recommended changes to the contract rates in Exhibit PPA-A. The two resolutions included as part of this Staff Report incorporate the above recommendations (Attachment A for the UAC recommendation and Attachment B for the staff recommendation). The amended Palo Alto CLEAN Eligibility Rules and Requirements, which implement the above recommendations, are shown in Exhibit A-1 and Exhibit B-1 attached to each resolution. As noted above, the amended PPA (Attachment C) included with this staff report, incorporates the above recommendations to the contract rates in Exhibit PPA-A. Council has previously delegated authority to the City Manager to make additional changes to the CLEAN Program PPA that are approved by the City Attorney’s office as may be otherwise necessary to implement the recommendations that are approved by Council. The attached resolutions continue this delegation of authority. Executive Summary In March 2012 the Council adopted the Palo Alto CLEAN program (also commonly referred to as a feed-in tariff, or FIT, program). The program was designed to address the Long-term Electric Acquisition Plan (LEAP) objective to enhance supply reliability through the pursuit of local generation opportunities, and to complement the City of Palo Alto Utilities’ (CPAU’s) existing PV Partners solar rebate program. Palo Alto CLEAN created an additional alternative for property owners by enabling them to build a new solar system on their property and sell the energy to CPAU under a long-term, fixed-rate, standardized contract rather than use the energy on site. City of Palo Alto Page 3 Though solar developers expressed interest in Palo Alto CLEAN in 2012, the initial contract price (14 ¢/kWh for a 20-year term) proved insufficient to facilitate the most common business model used by project developers, which involves a third-party investor leasing roof space from a property owner. Council increased the Palo Alto CLEAN price to 16.5 ¢/kWh in December 2012, and has maintained it at that level ever since (last reaffirming it in March 2016). In May 2015, Council added a 25-year contract term option, and expanded the program to include non- solar eligible renewable energy resources, setting their contract prices at the avoided cost level. Although at the start of the year it had just received its first project application, the CLEAN program appears to be about to reach the 3 MW program capacity limit for solar resources. In the first two months of this year, Komuna Energy executed CLEAN contracts for five projects that would account for about 1.4 MW of capacity. And staff has received word from one of the City’s large commercial customers that it plans to submit an application for a CLEAN project that could consume the remaining 1.6 MW of program capacity—and potentially more than that amount. The customer is awaiting Council determination of the CLEAN price for any capacity over the 3 MW cap before finalizing the size of a system for which it would submit a CLEAN program application. At its November 2 meeting, the UAC voted to recommend that all solar capacity installed under the CLEAN program in excess of the 3 MW program cap—including that portion of the large commercial customer’s system that exceeds the cap—be compensated at the avoided cost for such energy. However, staff recommends that all solar capacity installed under the CLEAN program in excess of the 3 MW program cap be compensated according to a tiered schedule that gradually reduces the CLEAN price for solar energy to the avoided cost of that solar energy after the program has 6 MW of installed capacity. Both staff and the UAC agree that the CLEAN price for non-solar project remain at the avoided cost amount, which would increase from the current price of 8.1 ¢/kWh and 8.2 ¢/kWh for a 20-year and 25-year contract term, respectively, to 8.4 ¢/kWh and 8.5 ¢/kWh for a 20-year and 25-year contract term, respectively. Background CPAU has a long history of supporting solar power. It initiated the PV Partners program in 1999 to provide rebates to residential and commercial customers who install solar for their own use, and in 2007 the program was expanded to meet the requirements of the State’s Million Solar Roofs Bill (Senate Bill 1 (SB1), 2006). CPAU was mandated by SB1 to offer rebates through the PV Partners until the total SB1 program budget of $13 million was exhausted, which occurred in April 2016, when all rebate funds for commercial solar PV systems were reserved. All residential rebate funds were reserved as of August 2014. In March 2012, the City expanded its support for local distributed generation by launching Palo Alto CLEAN (Clean Local Energy Accessible Now) with a price of 14 ¢/kWh for a 20-year contract City of Palo Alto Page 4 (Staff Report 2548, Resolution 9236). The program, which was set to expire in December 2012, expanded the options available to property owners by enabling them to sell energy directly to CPAU under a standardized long-term contract instead of using the energy on site. After receiving no response to the program, in December 2012, Council extended the CLEAN program and increased the rate to 16.5 ¢/kWh for a 20-year contract (Staff Report 3316, Resolution 9308). In February 2014, Council extended the CLEAN program again at the rate to 16.5 ¢/kWh for a 20-year contract, and increased the program capacity limit to 3 MW (Staff Report 4378, Resolution 9393). In April 2014, the City Council adopted the Local Solar Plan (Staff Report 4608, Resolution 9402), which set the overarching goal of meeting 4% of the City’s total energy needs from local solar by 2023 and unified the City’s approach toward local solar and described a set of diverse strategies for meeting the 4% target in a cost-effective manner that does not create a burden on non-solar customers. Prior programs, incentives, and policies involving solar installed in the City—including specifically PV Partners, net energy metering, and Palo Alto CLEAN—are integrated into the Local Solar Plan strategies. The 3 MW of solar PV expected from the CLEAN program plays an integral role in achieving the Local Solar Plan goal, contributing about 0.5% of the City’s total energy needs. In May 2015, the Council voted to: extend the CLEAN program again at the rate of 16.5 ¢/kWh for a 20-year contract for solar resources; add a 25-year contract term option at the same rate; and expand the program to include non-solar eligible renewable energy resources—setting contract prices for such resources at the level of their avoided cost, which at the time was 9.3 ¢/kWh for a 20-year contract or 9.4 ¢/kWh for a 25-year contract, and setting a separate 3 MW program capacity limit on such resources (Staff Report 5849, Resolution 9552). In March 2016, after the Finance Committee voted unanimously to reduce the contract rate for solar resources to the avoided cost level (8.9 ¢/kWh for a 20-year contract or 9.0 ¢/kWh for a 25-year contract), the Council voted to continue the CLEAN program again at the rate of 16.5 ¢/kWh for solar resources (Staff Report 6641, Resolution 9618). At the same time, Council also voted to reduce the price for local non-solar eligible renewable energy resources to the updated avoided cost estimate for such energy (8.1¢/kWh for a 20-year contract term, or 8.2¢/kWh for a 25-year contract term) and continue with a separate program limit of 3 MW for local non-solar eligible renewable resources. The energy generated by 3 MW of local solar projects will supply about 0.5% of the City’s total electricity needs. Table 1 below shows the history of the Palo Alto CLEAN price since the program began as well as the rate impact of the CLEAN price based on the difference between the price and the avoided cost of local solar generation. City of Palo Alto Page 5 Table 1 – History of Palo Alto CLEAN Program Prices and Avoided Cost for Local Solar Council Approval Avoided Cost of Local Solar Generation * (¢/kWh) CLEAN Price (¢/kWh) Annual Excess Cost (Rate Impact) Total Excess Cost over 20- year Term March 2012 13.6 14.0 $15,000 (0.01%) for 2 MW cap $300,000 December 2012 11.6 16.5 $160,000 (0.10%) for 2 MW cap $3.2 million February 2014 9.9 16.5 $332,500 (0.27%) for 3 MW cap $6.45 million May 2015 10.3 16.5 $310,000 (0.26%) for 3 MW cap $6.2 million March 2016 8.9 16.5 $380,000 (0.32%) for 3 MW cap $7.6 million * The cost of buying remote solar energy outside of Palo Alto and transmitting it to Palo Alto. When establishing the CLEAN price of 16.5 ¢/kWh in December 2012, Council reviewed the market value of local solar energy and determined that, beyond the value of the energy itself, there were additional financial and environmental benefits to increasing local solar generation. In March 2016, when Council reaffirmed the 16.5 ¢/kWh price, staff estimated the cost of buying remote solar energy outside of Palo Alto and transmitting it to Palo Alto was 8.9 ¢/kWh (including renewable energy value, transmission and capacity) for a 20-year contract. Therefore, purchasing the energy generated from 3 MW of local solar projects at 16.5 ¢/kWh was expected to cost about $380,000 per year more than buying the same energy outside of Palo Alto (and having it transported to Palo Alto). This extra cost is equivalent to a 0.32% increase in the electric utility’s costs. Discussion Updated Value of Local Renewable Solar Energy In April 2015, the City released an RFP for renewable energy projects that would deliver energy to the City starting in 2021. In March 2016, the Council approved a Power Purchase Agreement (PPA) with Hecate Energy resulting from this RFP, at a contract rate of 3.676 ¢/kWh for a 25- year term (Staff Report 6637, Resolution 9578). However, this price was a bit of an outlier in the RFP; the average proposed price of the 10 highest-ranking proposals was 5.4 ¢/kWh. Using this more conservative value as the estimated value of renewable energy in California and adding on the cost to deliver that energy to Palo Alto, combined with the capacity related benefits that local solar would provide, yields a total value of local solar energy of 8.9 ¢/kWh for a 20-year term, as illustrated in Figure 1. Over a 25-year term, the levelized delivery- and capacity-related cost is slightly higher, yielding a total value of local solar energy of 9.1 ¢/kWh. These avoided cost values are the same as determined last year (as shown in Table 1 above). City of Palo Alto Page 6 Figure 1 – Avoided Cost Components of Local Solar Energy (20-Year Term) Updated Value of Local Renewable Non-Solar Energy For non-solar local eligible renewable energy resources, the estimated avoided cost experienced a slight increase compared to last year’s estimate, even though the renewable energy price it was based on was the same as last year (i.e., the results of the City’s 2015 renewable energy RFP). This was due to an updated analysis of the relative value of energy produced with a “baseload” generation profile (i.e., operating at a fairly constant high capacity, around-the-clock) versus energy produced with a typical solar generation profile. The energy generated by 3 MW of local non-solar renewable energy projects would supply about 2.2% of the City’s total electricity needs (assuming that the projects are “baseload” resources). For these resources, the current estimated avoided costs are 8.4 ¢/kWh for a 20-year term, and 8.5 ¢/kWh for a 25-year term—up from 8.1 ¢/kWh and 8.2 ¢/kWh, respectively, in March 2016. Table 2 compares the current proposal to the price offered since May 2015 when non-solar resources were first eligible for the Palo Alto CLEAN program. Since the price is set equal to the avoided cost, the excess cost and rate impact are zero. Therefore, both the UAC and staff propose removing the 3 MW program cap for local non-solar renewable energy projects. City of Palo Alto Page 7 Table 2 – Palo Alto CLEAN Program Prices for Local Non-Solar Eligible Renewables Council Approval Avoided Cost of Local Non- Solar Renewable Generation * (¢/kWh) CLEAN Price (¢/kWh) Annual Excess Cost (Rate Impact) Total Excess Cost over 20- year Term May 2015 9.3 9.3 $0 (0%) for 3 MW cap $0 March 2016 8.1 8.1 $0 (0%) for 3 MW cap $0 Current Proposal 8.4 8.4 $0 (0%) for 3 MW cap $0 * The cost of buying remote baseload renewable energy and transmitting it to Palo Alto. CLEAN Program Activity At the end of 2015, the City received the first application for a project under the CLEAN program (for a 113 kW project at the Unitarian Universalist Church of Palo Alto, which would be owned by Komuna Energy, a commercial solar developer). In the first two months of 2016, Komuna Energy executed CLEAN contracts for four additional projects on City-owned parking garages, which bring the total reserved program capacity to 1.4 MW. These projects are now actively engaged in the permitting process with the Planning Department. Staff has also received word that one of the City’s large commercial customers is planning to submit a CLEAN application for a solar project that would consume the remaining 1.6 MW of program capacity—and potentially up to 1.4 MW in excess of the program cap. That customer is awaiting Council’s decision on how the portion of its project that would exceed the CLEAN program’s 3 MW capacity cap would be compensated before deciding what size project to pursue under the program. Proposed Structures and Alternatives UAC Proposal – Avoided Cost after 3 MW Cap Reached The UAC proposes that the 3 MW participation cap for local solar resources at the 16.5 ¢/kWh contract rate be strictly enforced, with an unlimited amount of participation be allowed at the avoided cost level after the 3 MW cap is reached. This approach honors the Council’s desire, when it last updated the CLEAN program price for solar projects in March 2016, to limit the excess costs and rate impact to the initial 3 MW level. However, staff does not expect any projects to be developed at this time if they are compensated at the avoided cost level, but if such projects become feasible in the future as solar costs fall it would be in the City’s interest to enable them to be developed. Staff Proposal – Tiered Stepdown Price Schedule Staff proposes that the CLEAN price beyond the current 3 MW cap for solar projects be stepped down in an orderly fashion to provide certainty for project developers until projects with a total of 6 MW of capacity are installed. After the 6 MW cap, any additional projects would be compensated at the avoided cost for local solar projects: currently 8.9 ¢/kWh for a 20-year City of Palo Alto Page 8 term or 9.1 ¢/kWh for 25-year term. While this option does continue having an annual excess cost after the initial 3 MW cap is reached, the excess cost decreases over time. This approach, where the contract price steps down in a scheduled manner as certain capacity levels are achieved, is used by a number of utilities with feed-in tariff programs, including the Los Angeles Department of Water and Power (LADWP) and Marin Clean Energy (MCE). Below, for example, is MCE’s price schedule for various types of eligible renewable energy resources in their seven-tier program. (According to MCE’s website, they are currently about halfway through the capacity limit of Tier 2.) Table 3 – Marin Clean Energy Feed-in Tariff Tiered Price Schedule Tier Level Capacity Reserved (MW) Solar Price (¢/kWh) Wind Price (¢/kWh) Baseload Price (¢/kWh) 1 0-2 13.766 10.057 11.649 2 2-4 12.0 9.5 10.5 3 4-6 11.5 9.0 10.0 4 6-8 11.0 9.0 9.5 5 8-10 10.5 9.0 9.5 6 10-12 9.5 9.0 9.5 7 12-15 9.0 9.0 9.0 Staff proposes that the Palo Alto CLEAN program price would be stepped down as more capacity is added as shown in Table 4. For the first 3 MW, the 16.5 ¢/kWh price is maintained and the price steps down as capacity is reserved in 1 MW chunks until 6 MW is installed, when the price goes to the avoided cost value. Project applications that straddle two or more of these tier levels would receive a capacity-weighted average contract price based on the amount of capacity they have in each of the tier levels they straddle. Table 4 – Proposed Palo Alto CLEAN Tiered Price Schedule Tier Level Capacity Reserved (MW) Solar Price (¢/kWh) Annual Excess Cost [1] (Rate Impact) Total Excess Cost over 20-year Term 1 0-3 16.5 $380,000 (0.32%) for 3 MW $7.6 million 2 3-4 14.0 $87,000 (0.07%) for 1 MW $1.75 million 3 4-5 12.0 $53,000 (0.04%) for 1 MW $1.05 million 4 5-6 10.0 $15,000 (0.01%) for 1 MW $0.3 million 5 Over 6 Avoided cost $0 $0 Total $535,000 (0.45%) $10.7 million 1 Assumes the avoided cost (the cost of buying remote solar energy outside of Palo Alto and transmitting it to Palo Alto) is equal to 8.9 ¢/kWh for 20-year term. City of Palo Alto Page 9 In addition to the UAC’s and staff’s recommended proposals, staff evaluated the following three alternatives: 1. Strictly enforce the current 3 MW program cap on local solar resources that received the 16.5 ¢/kWh price, ending the program once that cap is reached; 2. Compensate the entire “last project in” (the one that pushes the program over the 3 MW cap) at 16.5 ¢/kWh, then compensate everything after that at the avoided cost; and 3. Remove or raise the 3 MW program cap, while continuing to offer the 16.5 ¢/kWh price to all local solar resources. Option 1 – Strict 3 MW Program Cap This approach, which reflects a literal interpretation of the current program rules, was rejected for two reasons. First, it would be impractical to try to enforce a precise 3 MW cut-off line; as the program approaches its capacity limit there will almost certainly be an application for a project that would push slightly over the limit. Second, this approach could leave value on the table for the City. If a project is capable of being developed at a contract rate equal to (or less than) the City’s avoided cost for that energy, it would be in the City’s interest to accept that project into the program, regardless of the amount of capacity already participating. Option 2 – Avoided Cost after Last Project In This option is similar to the recommended proposal, except it would allow the final project accepted into the program to be compensated at the 16.5 ¢/kWh price, regardless of how far beyond the 3 MW capacity limit this project pushes the program. The problem with this approach is evident in the situation with the large commercial customer that recently submitted a CLEAN program application that would cause the total program capacity to reach 4.4 MW. When Council reapproved the program in March 2016, Council set a 3 MW program capacity limit that would result in an excess cost of $380,000 (a 0.32% rate impact). If the program capacity reaches 4.4 MW (with all of that capacity being compensated at 16.5 ¢/kWh), the cost would be $560,000 per year for 20 or 25 years (a 0.47% rate impact), and would exceed those prior Council established parameters. Option 3 – Remove 3 MW Program Cap In this option, the 3 MW cap to receive the 16.5 ¢/kWh price would be increased, or even eliminated. This approach would certainly promote greater participation in the CLEAN program, and might go a long way towards helping the City meet the overall goals established in the Local Solar Plan. However, if the cap was removed altogether, it would expose the City to virtually unlimited excess costs. Table 5 below presents the UAC’s and staff’s proposed program structures along with the various alternatives described above. City of Palo Alto Page 10 Table 5 – Potential Program Structures for Local Solar after 3 MW Capacity Limit Alternatives Capacity at 16.5 ¢/kWh CLEAN Price after reaching 3 MW cap (¢/kWh) Annual Excess Cost (Rate Impact) Total Excess Cost over 20- year Term UAC Recommendation – avoided cost after 3 MW 3 8.9 $380,000 (0.32%) $7.6 million Staff Recommendation – gradual price step down 3 14 for 4th MW, 12 for 5th MW, 10 for 6th MW, then avoided cost (8.9) $535,000 (0.45%) $10.7 million Option 1 – Strict 3 MW limit, then close program 3 N/A $380,000 (0.32%) $7.6 million Option 2 – 16.5 ¢/kWh for Last Project In * ~4.4 16.5 $560,000 (0.47%) $10.9 million Option 3 – No Cap Unlimited 16.5 Unlimited Unlimited * Assumes that the capacity for the last project is 3 MW (1.4 MW over the 3 MW cap). Recommendations Staff recommends that the current CLEAN price of 16.5 ¢/kWh for solar projects continue until the program reaches the 3 MW capacity limit, after which additional capacity would receive a contract price that gradually steps down as described above until the City’s avoided cost for such energy (currently 8.9 ¢/kWh for a 20-year contract term, or 9.1 ¢/kWh for a 25-year contract term) is reached. The UAC recommends that the current CLEAN price of 16.5 ¢/kWh for solar projects continue until the program reaches the 3 MW capacity limit, after which additional capacity would receive a contract price equal to the avoided cost for such energy (currently 8.9 ¢/kWh for a 20- year contract term, or 9.1 ¢/kWh for a 25-year contract term). In addition, the UAC and staff recommend continuing to offer non-solar eligible renewable energy resources a CLEAN price equal to the avoided cost of the energy produced by those resources, which is currently estimated at 8.4 ¢/kWh for a 20-year term, and 8.5 ¢/kWh for a 25-year term. Finally, the UAC and staff recommend removing the program cap of 3 MW for local non-solar renewable resources. Commission Review and Recommendation The UAC considered staff’s recommendation at its November 2, 2016 meeting. Some commissioners had concerns about the excess cost of the program, noting the other uses that amount of ratepayer funds could be put to, and expressed a desire not to expand those excess costs any further. Vice Chair Danaher expressed a desire to reduce the capacity being offered the 16.5 ¢/kWh contract price from 3 MW to 2 MW, or to the amount of capacity that has already applied to the program. However, Commissioner Forssell indicated she felt an obligation to honor the 3 MW capacity limit at the 16.5 ¢/kWh price, given that one of the City’s City of Palo Alto Page 11 large customers is planning to submit a CLEAN application based on that limit. Commissioner Johnston asked if local solar provides resilience or reliability for the local electric distribution system. Vice Chair Danaher noted that Commissioner Ballantine has indicated that the common inverters used do not allow the system to remain energized and producing energy when there is an outage on the distribution system. After its discussion, the UAC voted 4-1 (with Chair Cook, Vice Chair Danaher, and Commissioners Forssell and Trumbull voting yes, Commissioner Johnston voting no and Commissioners Ballantine and Schwartz absent) to recommend that the City Council: 1. Continue the Palo Alto CLEAN program price for local solar energy resources at the current price of 16.5 cents per kilowatt-hour (¢/kWh) for a 20-year or 25-year contract term up to the current 3 MW program capacity limit, and for any capacity over 3 MW, reduce the price to the avoided cost of such energy (currently 8.9 ¢/kWh for a 20-year contract term, or 9.1 ¢/kWh for a 25-year contract term); and 2. Raise the Palo Alto CLEAN program price for local non-solar eligible renewable energy resources to the updated avoided cost of such energy (8.4 ¢/kWh for a 20-year contract term, or 8.5 ¢/kWh for a 25-year contract term), from the prior price (8.1 ¢/kWh for a 20-year contract term, or 8.2 ¢/kWh for a 25-year contract term), and to remove the program limit of 3 MW for local non-solar eligible renewable resources. Commissioner Johnston said he voted no as he supported the staff recommendation of reducing the price in tiers until 6 MW of capacity was reached before moving to a price based on the avoided cost. The draft notes from the UAC’s November 2, 2016 meeting are provided as Attachment D. Resource Impact Staff estimates that the current cost of buying energy from solar resources outside of Palo Alto is 8.9 ¢/kWh (including transmission and capacity) for a 20-year contract, or 9.1 ¢/kWh for a 25- year contract. Purchasing the energy generated by local solar projects at this avoided cost level is therefore not expected to impact the cost to the Utility. Purchasing energy at rates higher than these avoided costs would impact the cost to the Utility, by the amounts listed above in Table 5. Likewise, purchasing the energy generated from 3 MW of local, non-solar renewable energy projects at the avoided cost level is not expected to impact the cost to the Utility. Aside from the excess costs described above, staff time is associated with marketing the CLEAN program and project review. The project review can be absorbed with existing staff over the life of the program, and costs will be recovered through project review fees. City of Palo Alto Page 12 Policy Implications The recommendation to continue the Palo Alto CLEAN program supports the City’s carbon neutral electric supply portfolio policy, the Local Solar Plan, and the LEAP Objective to enhance supply reliability through the pursuit of local generation opportunities. Environmental Review Adoption of the attached resolution and the associated amendment of the CLEAN Program Eligibility Rules and Requirements is not subject to California Environmental Quality Act (CEQA) review because adoption of this resolution and associated amendment of CLEAN Program rules is an administrative government activity that will not result in any direct or indirect physical change to the environment as a result (CEQA Guidelines section 15378(b)(5)). Attachments:  Attachment A: Resolution Continuing the Palo Alto CLEAN Program per UAC Recommendation (with Exhibit A-1 Revised Program Rules) (PDF)  Attachment B: Resolution Continuing the Palo Alto CLEAN Program per Staff Recommendation (with Exhibit B-1 Revised Program Rules) (PDF)  Attachment C: Updated Palo Alto CLEAN Power Purchase Agreement (PDF)  Attachment D: Excerpted Minutes of Nov 2, 2016 UAC Meeting (PDF) NOT YET APPROVED 161116 jm/UTL/PA Clean Program Resolution No. _________ Resolution of the Council of the City of Palo Alto Continuing the Palo Alto Clean Local Energy Accessible Now Program at the Contract Rate of 16.5 ¢/kWh for Local Solar Resources until Reaching 3 MW of Program Capacity and then Reducing the Contract Rate to the City’s Avoided Cost Value; and Increasing the Contract Rate for Non-solar Renewable Energy Resources to 8.4 ¢/kWh to 8.5 ¢/kWh Based on the Avoided Cost of Local Renewable Energy and Amending Associated Program Rules R E C I T A L S A. On March 5, 2012, the City approved the Palo Alto Clean Local Energy Accessible Now (CLEAN) Program (or feed-in tariff). Under the Palo Alto CLEAN Program, participants who build a new solar generating system in Palo Alto may obtain a long-term, fixed-price contract with the City to sell the energy from the system to the City’s electric utility. B. Council extended the program beyond its original termination date of December 31, 2012 and has periodically reviewed the contract price and program cap. C. On March 28, 2016, Council approved Resolution 9580 (as amended for clarification by Resolution 9618 (8/22/16)), which continued Palo Alto CLEAN at the contract price of 16.5 cents per kilowatt-hour (¢/kWh) for local solar resources, and reduced the contract prices for local non-solar renewable energy resources to 8.1 ¢/kWh for a 20-year term or 8.2 ¢/kWh for a 25-year term. The contract rates for non-solar resources were set to be equal to the then current estimated avoided cost of the energy generated by these resources. The resolution further continued the separate program caps of 3 megawatts (MW) of generating capacity for both the solar and non-solar resources. D. In the past year, the City has received five CLEAN Program project applications for local solar facilities, which together will total 1.43 MW of capacity, or 47.6% of the 3 MW program cap. E. The City wants to continue to encourage the development of distributed renewable energy resources within its territory; however, it also wishes to minimize the impact of these projects on ratepayers. F. The City wants to continue the CLEAN program for solar resources at the current contract price of 16.5 ¢/kWh until the program reaches the 3 MW cap, and extend the program after reaching the 3 MW cap, but reduce the contract price to the City’s avoided cost of such energy (currently 8.9 ¢/kWh for a 20-year contract term, or 9.1 ¢/kWh for a 25-year contract term) for all additional capacity. Therefore, the 3 MW program cap is eliminated since the contract price after 3 MW of capacity is reached is equal to the City’s avoided cost of energy such that there is no rate impact. G. Additionally, the City wants to raise the contract prices available to local non- solar eligible renewable resources to 8.4 ¢/kWh for a 20-year term or 8.5 ¢/kWh for a 25-year ATTACHMENT A NOT YET APPROVED 161116 jm/UTL/PA Clean Program term for such resources, which is equal to the current estimated avoided cost of energy generated by these resources. For local non-solar resources, the 3 MW cap is eliminated since there is no rate impact when the contract price is equal to the avoided cost of energy for these resources. The Council of the City of Palo Alto (“City”) RESOLVES: SECTION 1. The Council adopts revised Palo Alto CLEAN Program Eligibility Rules Requirements, set forth in Exhibit A attached to this Resolution. SECTION 2. The Council authorizes the City Manager or his designee to sign contracts for the output of one or more solar, or other non-solar eligible renewable energy resource meeting the CLEAN Program Eligibility Rules and Requirements described in Section 1. SECTION 3. The Council finds that the adoption of this resolution and the associated amendment of CLEAN Program Eligibility Rules and Requirements is not subject to California Environmental Quality Act (CEQA) review because adoption of this resolution and associated amendment of CLEAN Program rules is an administrative government activity that will not result in any direct or indirect physical change to the environment as a result (CEQA Guidelines section 15378(b)(5)). INTRODUCED AND PASSED: AYES: NOES: ABSENT: ABSTENTIONS: ATTEST: ___________________________ _________________________ City Clerk Mayor APPROVED AS TO FORM: APPROVED: ___________________________ __________________________ Senior Deputy City Attorney City Manager __________________________ Director of Utilities ___________________________ Director of Administrative Services PALO ALTO CLEAN (CLEAN LOCAL ENERGY ACCESSIBLE NOW) PROGRAM ELIGIBILITY RULES AND REQUIREMENTS Effective __________ A. PARTICIPATION ELIGIBILITY: The Palo Alto Clean Local Energy Accessible Now Program (the “CLEAN Program”) is open to participation by any Eligible Renewable Energy Resource, as defined in Section D.4, that satisfies these Program Eligibility Rules and Requirements. B. TERRITORIALITY REQUIREMENT: In order to be eligible to participate in the CLEAN Program, an Eligible Renewable Energy Resource must be located in and generating electricity from within the utility service area of the City of Palo Alto. C. PRICES AND TERM FOR ELIGIBLE RENEWABLE RESOURCES: The following purchase prices shall apply to the electricity produced by an Eligible Renewable Energy Resource participating in the Program, except as provided in Section D.5. Solar Energy Resources: Total Solar Capacity Reserved Contract Term Contract Price 0-3 MW 20 or 25 years $0.165 / kWh More than 3 MW 20 years $0.089 / kWh More than 3 MW 25 years $0.091 / kWh Solar Energy Resources that straddle multiple pricing tiers shall receive a weighted-average purchase price based on the amount of their capacity that is contained in each tier. Non-Solar Eligible Renewable Energy Resources: Contract Term Contract Price 20 years $0.084 / kWh 25 years $0.085 / kWh D. ADDITIONAL RULES AND REQUIREMENTS: 1. The owner of the Eligible Renewable Energy Resource shall enter into an Eligible Renewable Energy Resource Power Purchase Agreement (“PPA”) with the City of Palo Alto prior to delivering energy to the City. 2. An application for participation in the CLEAN Program to sell output to the City (the “Application”) may be submitted at any time. Applications will be considered in the order received. 3. Eligible Renewable Energy Resource means an electric generating facility that: (a) is PALO ALTO CLEAN (CLEAN LOCAL ENERGY ACCESSIBLE NOW) PROGRAM ELIGIBILITY RULES AND REQUIREMENTS Effective __________ defined and qualifies as an “eligible renewable energy resource” under California Public Utilities Code Section 399.12(e) and California Public Resources Code Section 25471, respectively, as amended; and (b) meets the territoriality requirement set forth in Section B. 4. The California Energy Commission’s (“CEC”) certification of the Eligible Renewable Energy Resource shall be required within six (6) months of the commercial operation date of the generating facility; the facility’s owner shall provide written notice of the CEC’s certification to the City within ten (10) business days of receipt of said certification. If the City agrees, in its sole discretion, to take delivery of the generating facility’s electricity prior to the CEC’s certification, then, as the facility’s electricity cannot be considered in fulfillment of the City’s RPS requirements, the price that the City will pay for the generating facility’s electricity (the “Pre-Certification Price”) will be set to $0.076 per kWh (for a 20-year contract term) or $0.08 per kWh (for a 25-year contract term), based on the estimated levelized cost of brown power over a 20-year or 25-year period, respectively. Upon the CEC’s certification of the generating facility and the provision of notice of such certification to the City in accordance with this section, the City will pay the Price set forth in Section C of these CLEAN Program Rules and Requirements and the PPA (collectively referred to as the “Contract Price”) for the generating facility’s electricity delivered on and after the date of the CEC’s certification. The City will, in its sole discretion, “true-up”, as appropriate, the difference between the Contract Price and the Pre-Certification Price for any electricity received and paid for by the City, effective as of the date of certification of the Eligible Renewable Energy Resource. 5. If an Eligible Renewable Energy Resource is authorized to participate in the CLEAN Program, then that Resource shall not be entitled to receive any rebate or other incentive from the City’s Photovoltaic (PV) Partners Program or any other similar incentive program funded by the City’s ratepayers. To the extent any rebate or incentive is paid to the owner of the Resource, that rebate or incentive shall be disgorged and refunded to the City upon 30 days’ notice, if the Eligible Renewable Energy Resource continues to participate in the CLEAN Program. If a rebate or an incentive has been paid to the Eligible Renewable Energy Resource, then that Resource shall be ineligible to participate in the CLEAN Program. 6. All electricity generated by the Eligible Renewable Energy Resource shall be delivered only to the City. No portion of the electricity may be used to offset any load of the generating facility (other than incidental loads associated with operating the generating facility). 7. A metering and administration fee will be charged to each Eligible Renewable Energy Resource that participates in the CLEAN Program. See Utilities Rate Schedule E-15 (Electric Service Connection Fees). NOT YET APPROVED 161116 jm UTL/PA Clean Program Resolution No. _________ Resolution of the Council of the City of Palo Alto Continuing the Palo Alto Clean Local Energy Accessible Now Program at the Contract Rate of 16.5 ¢/kWh for Local Solar Resources with a Tiered Pricing Structure that Declines to the City’s Avoided Cost Value upon Reaching 6 MW of Program Capacity; and Increasing the Contract Rate for Non-solar Renewable Energy Resources to 8.4 ¢/kWh to 8.5 ¢/kWh Based on the Avoided Cost of Local Renewable Energy and Amending Associated Program Rules R E C I T A L S A. On March 5, 2012, the City approved the Palo Alto Clean Local Energy Accessible Now (CLEAN) Program (or feed-in tariff). Under the Palo Alto CLEAN Program, participants who build a new solar generating system in Palo Alto may obtain a long-term, fixed-price contract with the City to sell the energy from the system to the City’s electric utility. B. Council extended the program beyond its original termination date of December 31, 2012 and has periodically reviewed the contract price and program cap. C. On March 28, 2016, Council approved Resolution 9580 (as amended for clarification by Resolution 9618 (8/22/16)), which continued Palo Alto CLEAN at the contract price of 16.5 cents per kilowatt-hour (¢/kWh) for local solar resources, and reduced the contract prices for local non- solar renewable energy resources to 8.1 ¢/kWh for a 20-year term or 8.2 ¢/kWh for a 25-year term. The contract rates for non-solar resources were set to be equal to the then current estimated avoided cost of the energy generated by these resources. The resolution further continued the separate program caps of 3 megawatts (MW) of generating capacity for both the solar and non- solar resources. D. In the past year, the City has received five CLEAN Program project applications for local solar facilities, which together will total 1.43 MW of capacity, or 47.6% of the 3 MW program cap. E. The City wants to encourage the development of distributed renewable energy resources within its territory while providing project developers certainty regarding the revenues these projects can expect to earn and minimizing the impact of these projects on ratepayers. F. The City wants to continue the CLEAN program for solar resources at the current contract price of 16.5 ¢/kWh until the program reaches the 3 MW cap, and extend the program after reaching the 3 MW cap, but reduce the contract price gradually in steps according to the following schedule: the fourth MW of capacity would receive a contract price of 14 ¢/kWh, the fifth MW of capacity would receive a contract price of 12 ¢/kWh, the sixth MW of capacity would receive a contract price of 10 ¢/kWh, and all additional capacity would receive a contract price equal to the City’s avoided cost of such energy (currently 8.9 ¢/kWh for a 20-year contract term, or 9.1 ¢/kWh for a 25-year contract term). Therefore, the 3 MW program cap is eliminated since the contract price after 6 MW of capacity is reached is equal to the City’s avoided cost of energy such that there is no rate impact. ATTACHMENT B NOT YET APPROVED 161116 jm UTL/PA Clean Program G. Additionally, the City wants to raise the contract prices available to local non-solar eligible renewable resources to 8.4 ¢/kWh for a 20-year term or 8.5 ¢/kWh for a 25-year term for such resources, which is equal to the current estimated avoided cost of energy generated by these resources. For local non-solar resources, the 3 MW cap is eliminated since there is no rate impact when the contract price is equal to the avoided cost of energy for these resources. The Council of the City of Palo Alto (“City”) RESOLVES: SECTION 1. The Council adopts revised Palo Alto CLEAN Program Eligibility Rules Requirements, set forth in Exhibit B attached to this Resolution. SECTION 2. The Council authorizes the City Manager or his designee to sign contracts for the output of one or more solar, or other non-solar eligible renewable energy resource meeting the CLEAN Program Eligibility Rules and Requirements described in Section 1. SECTION 3. The Council finds that the adoption of this resolution and the associated amendment of CLEAN Program Eligibility Rules and Requirements is not subject to California Environmental Quality Act (CEQA) review because adoption of this resolution and associated amendment of CLEAN Program rules is an administrative government activity that will not result in any direct or indirect physical change to the environment as a result (CEQA Guidelines section 15378(b)(5)). INTRODUCED AND PASSED: AYES: NOES: ABSENT: ABSTENTIONS: ATTEST: ___________________________ _______________________ City Clerk Mayor APPROVED AS TO FORM: APPROVED: ___________________________ _______________________ Senior Deputy City Attorney City Manager ___________________________ Director of Utilities ___________________________ Director of Administrative Services PALO ALTO CLEAN (CLEAN LOCAL ENERGY ACCESSIBLE NOW) PROGRAM ELIGIBILITY RULES AND REQUIREMENTS Effective __________ A. PARTICIPATION ELIGIBILITY: The Palo Alto Clean Local Energy Accessible Now Program (the “CLEAN Program”) is open to participation by any Eligible Renewable Energy Resource, as defined in Section D.4, that satisfies these Program Eligibility Rules and Requirements. B. TERRITORIALITY REQUIREMENT: In order to be eligible to participate in the CLEAN Program, an Eligible Renewable Energy Resource must be located in and generating electricity from within the utility service area of the City of Palo Alto. C. PRICES AND TERM FOR ELIGIBLE RENEWABLE RESOURCES: The following purchase prices shall apply to the electricity produced by an Eligible Renewable Energy Resource participating in the Program, except as provided in Section D.5. Solar Energy Resources: Total Solar Capacity Reserved Contract Term Contract Price 0-3 MW 20 or 25 years $0.165 / kWh 3-4 MW 20 or 25 years $0.140 / kWh 4-5 MW 20 or 25 years $0.120 / kWh 5-6 MW 20 or 25 years $0.100 / kWh More than 6 MW 20 years $0.089 / kWh More than 6 MW 25 years $0.091 / kWh Solar Energy Resources that straddle multiple pricing tiers shall receive a weighted-average purchase price based on the amount of their capacity that is contained in each tier. Non-Solar Eligible Renewable Energy Resources: Contract Term Contract Price 20 years $0.084 / kWh 25 years $0.085 / kWh D. ADDITIONAL RULES AND REQUIREMENTS: 1. The owner of the Eligible Renewable Energy Resource shall enter into an Eligible Renewable Energy Resource Power Purchase Agreement (“PPA”) with the City of Palo Alto prior to delivering energy to the City. PALO ALTO CLEAN (CLEAN LOCAL ENERGY ACCESSIBLE NOW) PROGRAM ELIGIBILITY RULES AND REQUIREMENTS Effective __________ 2. An application for participation in the CLEAN Program to sell output to the City (the “Application”) may be submitted at any time. Applications will be considered in the order received. 3. Eligible Renewable Energy Resource means an electric generating facility that: (a) is defined and qualifies as an “eligible renewable energy resource” under California Public Utilities Code Section 399.12(e) and California Public Resources Code Section 25471, respectively, as amended; and (b) meets the territoriality requirement set forth in Section B. 4. The California Energy Commission’s (“CEC”) certification of the Eligible Renewable Energy Resource shall be required within six (6) months of the commercial operation date of the generating facility; the facility’s owner shall provide written notice of the CEC’s certification to the City within ten (10) business days of receipt of said certification. If the City agrees, in its sole discretion, to take delivery of the generating facility’s electricity prior to the CEC’s certification, then, as the facility’s electricity cannot be considered in fulfillment of the City’s RPS requirements, the price that the City will pay for the generating facility’s electricity (the “Pre-Certification Price”) will be set to $0.076 per kWh (for a 20-year contract term) or $0.08 per kWh (for a 25-year contract term), based on the estimated levelized cost of brown power over a 20-year or 25-year period, respectively. Upon the CEC’s certification of the generating facility and the provision of notice of such certification to the City in accordance with this section, the City will pay the Price set forth in Section C of these CLEAN Program Rules and Requirements and the PPA (collectively referred to as the “Contract Price”) for the generating facility’s electricity delivered on and after the date of the CEC’s certification. The City will, in its sole discretion, “true-up”, as appropriate, the difference between the Contract Price and the Pre-Certification Price for any electricity received and paid for by the City, effective as of the date of certification of the Eligible Renewable Energy Resource. 5. If an Eligible Renewable Energy Resource is authorized to participate in the CLEAN Program, then that Resource shall not be entitled to receive any rebate or other incentive from the City’s Photovoltaic (PV) Partners Program or any other similar incentive program funded by the City’s ratepayers. To the extent any rebate or incentive is paid to the owner of the Resource, that rebate or incentive shall be disgorged and refunded to the City upon 30 days’ notice, if the Eligible Renewable Energy Resource continues to participate in the CLEAN Program. If a rebate or an incentive has been paid to the Eligible Renewable Energy Resource, then that Resource shall be ineligible to participate in the CLEAN Program. 6. All electricity generated by the Eligible Renewable Energy Resource shall be delivered only to the City. No portion of the electricity may be used to offset any load of the generating facility (other than incidental loads associated with operating the generating facility). PALO ALTO CLEAN (CLEAN LOCAL ENERGY ACCESSIBLE NOW) PROGRAM ELIGIBILITY RULES AND REQUIREMENTS Effective __________ 7. A metering and administration fee will be charged to each Eligible Renewable Energy Resource that participates in the CLEAN Program. See Utilities Rate Schedule E-15 (Electric Service Connection Fees). 040914 jrm 0180042 1 POWER PURCHASE AGREEMENT ELIGIBLE RENEWABLE ENERGY RESOURCE (Palo Alto Clean Local Energy Accessible Now Program) This Power Purchase Agreement - Eligible Renewable Energy Resource, dated, for convenience, , 20 (the “Effective Date”), is entered into by and between the CITY OF PALO ALTO, a California chartered municipal corporation, and , a corporation (individually, a “Party” and, collectively, the “Parties”). RECITALS 1.The Buyer has adopted and implemented its CLEAN Program, which allows an owner of a qualifying electric generation system to sell to the Buyer the power output of a small-scale distributed generation Eligible Renewable Energy Resource, subject to the CLEAN Program’s rules and requirements. 2.The Seller owns or operates and desires to interconnect its Facility in parallel with Buyer’s Distribution System and sell the Energy produced by its Facility, net of Station Service Load, directly to the Buyer in furtherance of the CLEAN Program. 3.The Parties do not intend this Agreement to constitute an agreement by the Buyer to provide retail electrical service to the Seller. 4.The Parties wish to enter into a power purchase agreement for the sale and purchase of the Output of the Facility. The Parties will enter into a separate “Interconnection Agreement” in connection with this Agreement. NOW THEREFORE, in consideration of the foregoing recitals and the following covenants, terms and conditions, the Parties agree, as follows: AGREEMENT 1.1 DEFINITIONS The initially capitalized terms, whenever used in this Agreement, have the meanings set forth below, unless they are otherwise herein defined. The terms “include,” “includes,” and “including,” when used in this Agreement, shall mean, respectively, “include, without limitation,“ “includes, without limitation” and “including, without limitation.” “Agreement” means this Power Purchase Agreement – Eligible Renewable Energy Resource between the Buyer and the Seller. “Business Day” means any day except a Saturday, Sunday, or a day that the City observes as a regular holiday under Palo Alto Municipal Code section 2.08.100(a). “Buyer” refers to the City of Palo Alto, California, with a principal place of business at 250 Hamilton Avenue, Palo Alto, California 94301. “Buyer’s Distribution System” means the wires, transformers, and related equipment used by the Buyer to deliver electric power to the Buyer’s retail customers, typically at sub-transmission level voltages or lower. “CAISO” means the California Independent System Operator Corporation, or successor entity. “CAISO Tariff” means the CAISO FERC Electric Tariff, as amended. “Capacity” means the ability of a generator at any given time to produce Energy at a specified rate, as ATTACHMENT C 040914 jrm 0180042 2 measured in megawatts (“MW”) or kilowatts (“kW”), and any reporting rights associated with it. “Capacity Attributes” means any current or future defined characteristic, certificate, tag, credit, or ancillary service attribute, whether general in nature or specific as to the location or any other attribute of the Facility, intended to value any aspect of the Contract Capacity of the Facility to produce Energy or ancillary services, including contributions towards Resource Adequacy (including those requirements defined in Section 40 of the CAISO Tariff) or reserve requirements (if any), and any other reliability or power attributes. “CEC” means the California Energy Resources Conservation and Development Commission, or successor agency. “Certificate of RPS Eligibility” means a certificate issued by the CEC as evidence of RPS Certification of the Facility. “City” means the government of the City of Palo Alto, California. “CLEAN Program” refers to the Palo Alto Clean Local Energy Accessible Now Program, a renewable energy program established by the City by adoption of resolution number , dated , of the Palo Alto City Council, whereby the Buyer will purchase from the Seller the Output of Eligible Renewable Energy Resources that meet specified criteria set forth in the City’s applicable ordinances and resolutions. “Commercial Operation” means the period of operation of the Facility, once the Commercial Operation Date has occurred. “Commercial Operation Date” means the date specified in the Commercial Operation Date Confirmation Letter, which the Parties execute and exchange in accordance with this Agreement. “Contract Capacity” means the installed electrical Capacity available upon the Commercial Operation Date of the Facility in an amount, as specified in Exhibit “PPA-A.” “Contract Capacity” is measured at the Buyer’s revenue meter at the Delivery Point and is net of any Station Service Loads, any applicable Facility step-up transformer losses, and distribution losses on Buyer’s Distribution System up to the Delivery Point. “Contract Price” means the price paid by the Buyer to the Seller for the Output generated at the Facility and received by the Buyer, as set forth in Exhibit “PPA-A.” “CPUC” means the California Public Utilities Commission, or successor agency. “Delivery Point” means the point of interconnection to Buyer’s Distribution System, where the Buyer accepts title to the Output. “Delivery Term” has the meaning set forth in Section 14.2 hereof. “Eligible Renewable Energy Resource” means an electric generating facility that is defined and qualified as an “eligible renewable energy resource” under California Public Utilities Code Section 399.12(e) and California Public Resources Code Section 25471, respectively, as amended. “Energy” means electrical energy generated from the Facility and delivered to Buyer’s Distribution System with the voltage and quality required by the Buyer, and measured in megawatt-hours (“MWh”) or kilowatt- hours (“kWh”), as metered at the Delivery Point. “Facility” means the qualifying renewable energy generation equipment and associated power conditioning and interconnection equipment that deliver the Output to the Buyer at the Delivery Point. “FERC” means the Federal Energy Regulatory Commission, or successor agency. 040914 jrm 0180042 3 “Forced Outage” means an unplanned outage of one or more of the Facility’s components that results in a reduction of the ability of the Facility to produce Capacity. “Force Majeure” means an event or circumstance, which prevents a Party from performing its obligations under this Agreement, and which is not in the reasonable control of, or the result of negligence of, the Party claiming Force Majeure, and which by the exercise of due diligence is unable to overcome or cause to be avoided. “Force Majeure” shall include: (a) An act of nature, riot, insurrection, war, explosion, labor dispute, fire, flood, earthquake, storm, lightning, tidal wave, backwater caused by flood, act of the public enemy, terrorism, or epidemic; (b) Interruption of transmission or generation services as a result of a physical emergency condition (and not congestion-related or economic curtailment) not caused by the fault or negligence of the Party claiming Force Majeure and reasonably relied upon and without a reasonable source of substitution to make or receive deliveries hereunder, civil disturbances, strike, labor disturbances, labor or material shortage, national emergency, restraint by court order or other public authority or governmental agency, actions taken to limit the extent of disturbances on the electrical grid; or (c) Other similar causes beyond the control of the Party affected, which causes such Party could not have avoided by the exercise of due diligence and reasonable care. A Party's financial incapacity, the Seller’s ability to sell the Output at a more favorable price or under more favorable conditions, or the Buyer’s ability to acquire the Output at a more favorable price or under more favorable conditions or other economic reasons shall not constitute an event of Force Majeure. “Force Majeure” does not include a Forced Outage to the extent such event is not caused or exacerbated by an event of Force Majeure, as described above, and does not include the Seller’s inability to obtain financing, permits, or other equipment and instruments necessary to plan for, construct, or operate the Facility. “Good Utility Practice” means those practices, methods and acts that would be implemented and followed by prudent operators of electric energy generating facilities in the western United States, similar to the Facility, during the relevant time period, which practices, methods and acts, in the exercise of prudent and responsible professional judgment in the light of the facts known at the time the decision was made, could reasonably have been expected to accomplish the desired result consistent with good business practices, reliability, and safety. The Seller acknowledges that its use of Good Utility Practice does not exempt it from performing any of its obligations arising under this Agreement. “Good Utility Practice” includes, at a minimum, those professionally responsible practices, methods and acts described in the preceding paragraph that comply with manufacturers’ warranties, restrictions in this Agreement, the interconnection requirements of Buyer, the requirements of governmental authorities, and WECC and NERC standards. “Good Utility Practice” also includes the taking of reasonable steps to ensure that: (a) Equipment, materials, resources, and supplies, including spare parts inventories, are available to meet the Facility’s needs; (b) Sufficient operating personnel are available at all times and are adequately experienced and trained and licensed as necessary to operate the Facility properly and efficiently, and are capable of responding to reasonably foreseeable emergency conditions at the Facility and emergencies whether caused by events on or off the Facility’s site; (c) Preventive, routine, and non-routine maintenance and repairs are performed on a basis that ensures reliable, long-term and safe operation of the Facility, and are performed by knowledgeable, trained, and experienced personnel utilizing proper equipment and tools; (d) Appropriate monitoring and testing are performed to ensure equipment is functioning as designed; and (e) Equipment is not operated in a reckless manner, in violation of manufacturer’s guidelines or in a manner unsafe to workers, the general public, or the connecting utility’s electric system or contrary to environmental laws, permits or regulations or without regard to defined limitations such as, flood conditions, safety inspection requirements, operating voltage, current, volt ampere reactive (VAR) loading, frequency, rotational speed, polarity, synchronization, and control system limits; and equipment and components are designed and manufactured to meet or exceed the standard of durability that is generally used for electric energy generating facilities operating in the western United States and will function properly over the full range of ambient temperature and weather conditions reasonably expected to occur at the Facility site and under both normal and emergency conditions. 040914 jrm 0180042 4 “Green Attributes” refers to the definition set forth in the Standard Terms and Conditions, Appendix A-2, as amended, Decision D.07-02-011, as modified by D.07-05-057, of the CPUC, which incorporates the definition of “Environmental Attributes” set forth in the Standard Terms and Conditions, Appendix A-1, as amended, D. 04-06-014. “Green Attributes” includes any and all credits, benefits, emissions reductions, environmental air quality credits, offsets, and allowances, howsoever entitled, attributable to the generation from the Facility, and its displacement of conventional energy generation, whether existing now or arising in the future. “Green Attributes” includes RECs, as well as (1) any avoided emissions of pollutants to the air, soil or water, such as sulfur oxides (“SOx”), nitrogen oxides (“NOx”), carbon monoxide (“CO”) and other pollutants; (2) any avoided emissions of carbon dioxide (“CO2”), methane (“CH4”), nitrous oxide, hydrofluorocarbons, perfluorocarbons, sulfur hexafluoride, and other greenhouse gases (“GHGs”) that have been determined by the United Nations Intergovernmental Panel on Climate Change, or otherwise by law, to contribute to the actual or potential threat of altering the Earth’s climate by trapping heat in the atmosphere; and (3) the reporting rights to these avoided emissions such as Green Tag Reporting Rights and RECs. “Green Tag Reporting Rights” are the right of a Green Tag Purchaser to report the ownership of accumulated Green Tags in compliance with federal or state law, if applicable, and to a federal or state agency or any other party at the Green Tag Purchaser’s discretion, and include those Green Tag Reporting Rights accruing under Section 1605(b) of the Energy Policy Act of 1992 and any present or future federal, state, or local law, regulation or bill, and international or foreign emissions trading program. Green Tags are accumulated on a kWh basis and one Green Tag represents the Green Attributes associated with one (1) MWh of Energy. “Green Attributes” do not include (i) any Energy, Capacity, reliability, or other power attributes of the Facility, (ii) production or investment tax credits associated with the construction or operation of the Facility and other financial incentives in the form of credits, grants, reductions, or allowances associated with the Facility that are applicable to a state or federal income taxation obligation, (iii) fuel-related subsidies or “tipping fees” that may be paid to Seller to accept certain fuels, or local subsidies received by the generator for the destruction of particular pre-existing pollutants or the promotion of local environmental benefits, or (iv) emission reduction credits encumbered, used or created by the Facility for compliance with or sale under local, state, or federal operating and/or air quality permits or programs. If the Facility is a biomass or landfill facility and the Seller receives any tradable Green Attributes based on the Facility’s greenhouse gas reduction benefits or other emission offsets attributed to its fuel usage, the Seller shall provide the Buyer with sufficient Green Attributes to ensure that there are zero net emissions associated with the production of electricity from the Facility. “Green Attributes” includes any other environmental credits or benefits recognized in the future and attributable to Energy generated by the Facility during the Term that may not be represented by Green Tag Reporting Rights or RECs, unless otherwise excluded herein. Any Green Attributes provided under this Agreement shall be documented by RECs, or any other representation of the environmental benefits of the Output, the monthly cumulative total of which shall be provided to the Buyer, as specified herein. “Interconnection Agreement” refers to the agreement between the Buyer and the Seller, specific to the interconnection of the Facility to Buyer’s Distribution System. “NERC” means the North American Electric Reliability Corporation, or successor organization. “NCPA” means Northern California Power Agency, a California joint action agency, or successor agency. “Output” means all Capacity associated with Contract Capacity and associated Energy made available from the Facility, as well as any Capacity Attributes, Green Attributes, or other attributes existing now or in the future associated with Contract Capacity and/or associated Energy. “Output” does not include production or investment tax credits associated with the construction or operation of the Facility and other financial incentives in the form of credits, grants, reductions, or allowances associated with the Facility that are applicable to a state or federal income taxation obligation. “Planned Outage” means an outage, scheduled in advance, of one or more of the Facility’s components that results in a reduction of the ability of the Facility to produce Capacity. 040914 jrm 0180042 5 “Pre-Certification Price” means the contract price to be paid for all Energy delivered to the Buyer prior to the RPS Certification Date, as specified in Exhibit “PPA-A”. “Renewable Energy Credit” or “REC” has the meaning set forth in Section 399.12(h)(1) and (2) of the California Public Utilities Code, and includes a certificate of proof that one unit of electricity was generated by an Eligible Renewable Energy Resource. Currently, RECs are used to convey all Green Attributes associated with electricity production by a renewable energy resource. RECs are accumulated on a kWh basis and one REC represents the Green Attributes associated with the generation of 1 MWh (1,000 kWhs) from the Facility. For purposes of this Agreement, the term REC shall be synonymous with the term Green Tag, green ticket, bundled or unbundled renewable energy credit, tradable renewable energy certificates, or any other term used to describe the documentation that evidences the renewable and Green Attributes associated with electricity production by an Eligible Renewable Energy Resource. “Renewables Portfolio Standard” or “RPS” means the standard adopted by the State of California pursuant to Senate Bill 2 1st Extraordinary Session (SBX1 2, Chapter 1, Statutes 2011-12), and California Public Utilities Code Sections 399.11through 399.31, inclusive, as may be amended, setting minimum renewable energy targets for local publicly owned electric utilities. “Reservation Deposit” means the monetary deposit submitted by the Seller (or the Facility sponsor on behalf of the Seller) to secure a reservation of the CLEAN Program’s prices. The Reservation Deposit is set forth in Exhibit “PPA-A.” “Resource Adequacy” means a requirement by a governmental authority or in accordance with its FERC- approved tariff, or a policy approved by a local regulatory authority, that is binding upon either Party and that requires that Party to procure a certain amount of electric generating capacity. “RPS Certification” means certification by the CEC that the Facility qualifies as an Eligible Renewable Energy Resource for RPS purposes, and that all Energy produced by the Facility qualifies as generation from an Eligible Renewable Energy Resource, as evidenced by a Certificate of RPS Eligibility. “RPS Certification Date” means the date on which the RPS Certification begins, as specified in the Certificate of RPS Eligibility. “Seller” means with a principal place of business at , , . “Station Service Load” means the electrical loads associated with the operation and maintenance of the Facility, which may at times be supplied from the Facility’s Energy. “Term” has the meaning set forth in Section 14.1 hereof. “WECC” means the Western Electricity Coordinating Council, the regional entity responsible for coordinating and promoting regional bulk electric system reliability in the Western Canada and the United States, or any successor organization. 2.0 SELLER’S GENERATING FACILITY, PURCHASE PRICE AND PAYMENT 2.1 Facility. This Agreement governs the Buyer’s purchase of the Output from the Facility, as described in Exhibit “PPA-A.” The Seller shall not modify the Facility to increase or decrease the Contract Capacity after the Commercial Operation Date. 2.2 Products Purchased. During the Delivery Term, the Seller shall sell and deliver, or cause to be delivered, and the Buyer shall purchase and receive, or cause to be received, the Output from the Facility. The Seller shall not have the right to procure the Output from sources other than the Facility for sale or delivery to the Buyer under this Agreement or to substitute the Output. 040914 jrm 0180042 6 2.3 Delivery Term. The Delivery Term shall commence on the Commercial Operation Date under this Agreement, and shall continue for an uninterrupted period of twenty (20) years. This period will commence on the first day of the calendar month immediately following the Commercial Operation Date. As evidence of the Commercial Operation Date, the Parties shall execute and exchange the “Commercial Operation Date Confirmation Letter,” attached hereto as Exhibit “PPA-B.” The Commercial Operation Date shall be the date on which the Parties acknowledge, in writing, that the Facility starts operating and is otherwise in compliance with applicable interconnection and system protection requirements, including the final approvals by the City’s building department official. 2.4 Payment for Products Purchased. 2.4.1 Deliveries Prior to RPS Certification Date. Once the Facility has achieved Commercial Operation, if the CEC has not issued a Certificate of RPS Eligibility for the Facility or the Facility has not been registered with the appropriate entity for the tracking of Green Attributes, the Buyer will pay the Seller for the Output by multiplying the Pre-Certification Price by the quantity of Energy. 2.4.2 Deliveries After RPS Certification Date. Once the Facility has achieved Commercial Operation, the CEC has issued a Certificate of RPS Eligibility for the Facility, and the Facility has been registered with the appropriate entity for the tracking of Green Attributes, the Buyer shall pay the Seller for all Output on or after the RPS Certification Date by multiplying the Contract Price by the quantity of Energy. 2.4.3 True-up Upon Issuance of Certificate of RPS Eligibility. Once the Facility has achieved Commercial Operation, the CEC has issued a Certificate of RPS Eligibility for the Facility, and the Facility has been registered with the appropriate entity for the tracking of Green Attributes, the Buyer will pay the Seller an amount equal to the difference between the Contract Price and the Pre-Certification Price for the Output (a) that was delivered on or after the RPS Certification Date and (b) for which the Seller has already received payment at the Pre- Certification Energy Price. 2.4.4 Energy in Excess of Contract Capacity. The Seller shall not receive payment for any Energy or Green Attributes delivered in any hour to the Buyer in excess of the following amount of energy (in kilowatt-hours): 110% of the Contract Capacity (in kilowatts) multiplied by one hour. Any payment in excess of this amount shall be refunded to the Buyer, on demand. 2.5 Billing. The Buyer shall pay the Seller by check or electronic funds transfer, on a monthly basis, within thirty (30) days of the meter reading date. 2.6 Title and Risk of Loss. Title to and risk of loss related to the Output shall be transferred from the Seller to the Buyer at the Delivery Point. The Seller warrants that it will deliver to the Buyer the Output free and clear of all liens, security interests, claims, encumbrances or any interest therein or thereto by any person, arising prior to the Delivery Point. 2.7 No Additional Incentives. The Seller warrants that it has not received any other incentives funded by the Buyer’s ratepayers and it further agrees that, during the Term, it shall not seek additional compensation or other benefits from the Buyer pursuant to the following programs of the Buyer: (a) Photovoltaic (PV) Partners Program; (b) Power from Local Ultra-Clean Generation Incentive (PLUG- In) Program; or (c) other similar programs that are or may be funded by the Buyer’s ratepayers. 040914 jrm 0180042 7 3.0 RPS CERTIFICATION; GREEN ATTRIBUTES 3.1 CEC Certification. The Seller, at its own cost and expense, shall obtain the RPS Certification within six (6) months of the Commercial Operation Date. The Seller shall maintain the RPS Certification at all times during the Delivery Term. The foregoing provision notwithstanding, the Seller shall not be in breach of this Agreement and the Buyer shall not have the right to terminate this Agreement, if the Seller’s failure to obtain or maintain the RPS Certification is due to a change in California law, occurring after the Commercial Operation Date, so long as the Seller has used commercially reasonable efforts to obtain and maintain the RPS Certification and the Seller’s actions or omissions did not contribute to its inability to obtain and maintain the RPS Certification. 3.2 Obligation to Deliver Green Attributes. The Seller shall sell and deliver to the Buyer, and the Buyer shall buy and receive from the Seller, all right, title, and interest in and to Green Attributes associated with Energy, produced by the Facility and delivered to the Buyer at the Delivery Point, whether now existing or that hereafter come into existence during the Term, except as otherwise excluded herein; provided, the Buyer shall not be obligated to purchase and pay the Seller for any Green Attributes associated with any amount of the Output, that is generated by any fuel which is not renewable and which cannot be counted for the purpose of the production of Green Attributes. The Seller agrees to sell and make all such Green Attributes available to the Buyer to the fullest extent allowed by applicable law, in accordance with the terms and conditions of this Agreement. The Seller warrants that the Green Attributes provided under this Agreement to the Buyer shall be free and clear of all liens, security interests, claims and encumbrances. 3.3 Conveyance of Green Attributes. The Seller shall provide Green Attributes associated with the Facility, which shall be documented and conveyed to the Buyer in accordance with the procedure described in Exhibit “PPA-D.” 3.4 Additional Evidence of Green Attributes Conveyance. At the Buyer’s request, the Seller shall provide additional reasonable evidence to the Buyer or to third parties of the Buyer’s right, title, and interest in the Green Attributes and any other information with respect to Green Attributes, as may be requested by the Buyer. 3.5 Modification of Green Attributes Conveyance Procedure. The Buyer may unilaterally modify Exhibit “PPA-D” in order to reflect changes necessary in the Green Attributes conveyance procedures, so that the Buyer may be able to receive and report the Green Attributes, purchased under this Agreement, as belonging to the Buyer. 3.6 Reporting of Ownership of Green Attributes. The Seller shall not report to any person or entity that the Green Attributes sold and conveyed to the Buyer belong to any person other than the Buyer. The Buyer may report under any applicable program that Green Attributes purchased by the Buyer hereunder belong to it. 3.7 Greenhouse Gas Emissions. The Seller shall comply with any laws and/or regulations regarding the need to offset emissions of GHGs by delivering to the Buyer the Energy from the Facility with a net zero GHG impact. 4.0 CONVEYANCE OF CAPACITY ATTRIBUTES 4.1 Conveyance of Resource Adequacy Capacity. The Seller shall not report to any person or entity that the Resource Adequacy Capacity, as defined in the CAISO Tariff) associated with the Facility, if any, belongs to a person other than the Buyer, which may report that Resource Adequacy Capacity purchased hereunder belongs to it to fulfill the Resource Adequacy requirements, as defined in Section 40 of the CAISO Tariff, as amended, or any successor program. The Seller shall take those actions described in Section 6.0 hereof, as applicable, to secure recognition of Resource Adequacy Capacity by the CAISO. 4.2 Conveyance of Other Capacity Attributes. In addition to the obligations imposed on the 040914 jrm 0180042 8 Seller under Section 4.1, the Seller will undertake any and all actions reasonably needed to enable the Buyer to effect the recognition and transfer of any Capacity Attributes in addition Resource Adequacy, to the extent that such Capacity Attributes exist now or will exist in the future; provided, if such actions require any actions beyond the giving of notice by the Seller, then the Buyer shall reimburse all out-of- pocket costs and charges of such actions. 4.3 Reporting of Ownership of Capacity Attributes. The Seller shall not report to any person or entity that the Capacity Attributes sold and conveyed to the Buyer belong to any person other than the Buyer. The Buyer may report under any such program that such Capacity Attributes purchased hereunder belong to it. 5.0 METERING AND OPERATIONS 5.1 Timing of Outages. The Seller may not schedule or take any Planned Outage from 12:00 p.m. through 7:00 p.m. Pacific Time during the months of June through October. 5.2 Outage Reporting. 5.2.1 Buyer Request. The Seller is not required to report any Planned Outage or Forced Outage, unless the Buyer first submits a written request to the Seller to commence Outage reporting. Upon receipt of such a request, the Seller shall report all subsequent Planned Outages and the Forced Outages according to the procedures described in subsections 5.2.2 and 5.2.3, and shall continue such reporting until (a) the termination of this Agreement for any reason, or (b) the Buyer subsequently provides written notice to the Seller that the Seller may cease such reporting in the future. 5.2.2 Planned Outage Notifications. The Seller shall notify the Buyer at least 72 hours in advance of any Planned Outage that would result in a reduction in the effective Output of the Facility during the period over which the Planned Outage is scheduled. Notification shall be provided by e-mail to the e-mail address (or addresses) set forth in Exhibit “PPA-F.” 5.2.3 Forced Outage Notifications. Within 24 hours of the occurrence of a Forced Outage of the Facility that impacts the ability of the Facility to produce Energy, the Seller shall notify the Buyer of the Forced Outage, including the Capacity of the Facility that is impacted, and the expected duration of the Forced Outage. Within 24 hours of the return of the Facility to service following the Forced Outage, the Seller shall notify the Buyer of the return-to-service details. Notification shall be made by e-mail to the address (or addresses) set forth in Exhibit “PPA-F.” 5.3 Metering. The Buyer shall furnish and install one or more standard watt-hour meters to read Energy generated by the Facility, and it will charge a meter fee to the Seller to cover the costs associated with the meter’s purchase and installation. As requested, the Seller shall provide and install a meter socket in accordance with the Buyer’s metering standards. The Buyer reserves the right to install additional metering equipment at its sole cost and expense. 6.0 PARTICIPATING GENERATORS 6.1 Applicability. This Section 6.0 shall apply if the Facility meets the definition of a “Participating Generator,” as may be defined by the CAISO Tariff. This Section 6.0 shall not apply if the definition applies to the Facility only upon the election by the Seller. For the purposes of this Section 6.0, all special terms not otherwise defined in Section 1.0 are defined in the CAISO Tariff. 6.2 Participating Generator Agreement. The Buyer will notify the CAISO of the Seller’s interconnection to Buyer’s Distribution System. If the CAISO requires it, the Seller, at its own expense, shall negotiate and enter in to two contracts, a “Participating Generator Agreement” and a “Meter Services Agreement for CAISO Metered Entities,” with the CAISO. 040914 jrm 0180042 9 6.3 Scheduling Coordination. If the CAISO requires the Seller to enter in to a Participating Generator Agreement, then the Seller shall designate NCPA as the Buyer’s scheduling coordinator. The Buyer, acting in its sole discretion, may replace NCPA as the scheduling coordinator for the Facility. If NCPA ceases to be the scheduling coordinator for the Facility and the Buyer has not, upon fourteen (14) days’ prior written notice of inquiry from the Seller, appointed a replacement scheduling coordinator, then the Seller shall have the right to appoint a replacement scheduling coordinator on the Buyer’s behalf. Thereafter, the Buyer shall enter into all reasonable and appropriate agreements with such replacement scheduling coordinator at its own costs. 6.4 Scheduling Procedure. The Buyer may require the Seller to provide the Buyer with Energy forecasts on a periodic basis, as may be necessary for the Buyer to account for expected Facility generation in its daily power scheduling process. The requirements are set forth in Exhibit “PPA-C.” 6.5 Modification of Scheduling and Outage Notification Procedure. The Buyer may unilaterally modify Exhibit “PPA-C” to reflect changes necessary in the scheduling and Outage notification procedures. The Buyer shall give the Seller reasonable notice of any such changes. 6.6 Provision of Other Equipment. If the Seller is required to enter into a Participating Generator Agreement with the CAISO, then the Seller, at its own cost and expense, shall provide and maintain data transmission-grade phone line and telecommunications equipment at the meter location that complies with applicable requirements of the CAISO, the Buyer, and NCPA. Any meter installed by the Seller shall comply at all times with the CAISO’s metering requirements. If the Seller fails to provide or maintain any such required equipment or data connection, then the Buyer shall acquire, install and maintain the same at the Seller’s sole cost and expense. 6.7 Designation as Resource Adequacy Resource. The Buyer may submit a written request to the Seller to obtain the CAISO’s designation of the Facility as a Resource Adequacy Resource. Upon receipt of such request, the Seller shall provide such information and undertake such steps as may be required by the CAISO in order to complete such an assessment. If the Buyer makes such a request, then the Buyer shall be responsible for the following: (1) any costs charged to the Seller by the CAISO as a condition of applying for or receiving designation as a Resource Adequacy Resource, including any deposits required during the study process or the cost of any related studies or deliverability assessments performed by the CAISO; (2) the capital, installation, and maintenance costs of any additional equipment required by the CAISO as a condition of receiving designation as a Resource Adequacy Resource; (3) the costs of any Network Upgrades, as defined in the CAISO Tariff, as may be required by the CAISO, provided, the Buyer shall receive any subsequent repayments from the CAISO or the Participating Transmission Owner related to such upgrades; and (4) any charges or penalties assessed by the CAISO as a consequence of the Facility’s designation as a Resource Adequacy Resource. 6.8 CAISO Charges. The Buyer shall be solely responsible for paying all costs and charges associated with the receipt of Energy under this Agreement, at the Delivery Point, and for the transmission and delivery of Energy from the Delivery Point to any other point downstream of the Delivery Point, including transmission costs and charges, competition transition charges, applicable control area service charges, transmission congestion charges, inadvertent energy flows, any other CAISO charges related to the transmission of such Energy by the CAISO and any charge assessed or collected in the future pursuant to any utility tariff or rate schedule, however defined, for transmission or transmission-related service rendered by or for any transmission-owning or operating entity. The Seller will undertake any and all actions reasonably needed to allow the Buyer to comply with any obligations, and minimize any potential liability, under the CAISO tariff. If and to the extent that the Seller fails to comply with the notice provision in Exhibit “PPA-C,” concerning Outages, or with its obligations as outlined in the previous sentence, the Seller shall be wholly responsible for all imbalances, deviations, or any other CAISO charges or penalties associated with such Outage or other CAISO Tariff obligation. 6.9 Inclusion in Metered Subsystem. At the option of the Buyer, the Facility may be included within NCPA’s metered sub-system in connection with the scheduling of power over the CAISO grid and related functions; provided, however, that such inclusion shall have no adverse effect on the Facility’s operations or the Seller (or any such effect shall be fully mitigated by the Buyer). The Seller will undertake any and all actions reasonably needed to allow the Buyer to comply with any obligations, and 040914 jrm 0180042 10 minimize any potential liability, under the CAISO Tariff; provided, that if such actions require any actions beyond the giving of notice to be provided by the Buyer, then the Buyer shall reimburse the Seller for all out-of-pocket costs and charges of such actions. 7.0 COMMERCIAL OPERATION DATE; REFUND OF RESERVATION DEPOSIT 7.1 Commercial Operation Date. The Facility shall achieve Commercial Operation by the Commercial Operation Date deadline (the “Deadline”), which is one (1) year from the Effective Date. 7.2 Reservation Deposit. The Buyer acknowledges that, as of the Effective Date or other date established by the Buyer, the Seller has provided the Reservation Deposit to the Buyer. 7.2.1 If the Commercial Operation Date occurs on or prior to the Deadline, the Buyer shall refund to the Seller the Reservation Deposit without interest. 7.2.2 If the Commercial Operation Date commences within seventy (70) days of the Deadline, the Seller, as liquidated damages and not as a penalty, shall relinquish its claim to a ten percent (10%) portion of the amount of the Reservation Deposit for every full week transpiring between the Deadline and the Commercial Operation Date, but the total amount to be relinquished to the Buyer shall not exceed 100% of the Reservation Deposit. 7.2.3 If the Facility has not achieved Commercial Operation within seventy (70) days of the Deadline, then the Buyer may terminate this Agreement without liability of either Party to the other Party by giving written notice of termination to the Seller. 7.2.4 If the Seller gives notice of termination to terminate the Agreement before Commercial Operation occurs, then the Buyer shall refund a percentage of the Reservation Deposit equal to the following: the percentage to be refunded will equal A/B, where A equals the number of days between the date of the Seller’s notice of termination, received by the Buyer, and the Deadline, and B equals the number of days between the Effective Date and the Deadline. 7.3 Return of Reservation Deposit. The Buyer shall return to the Seller the Reservation Deposit, without interest, in the event that (a) the Buyer furnishes written notice of the costs of interconnection (defined in the Interconnection Agreement to include the costs related to the Interconnection Facilities and Distribution Upgrades) to the Seller and (b) within thirty (30) days of receipt of the notice regarding costs of interconnection, the Seller provides the Buyer with written notice that the Seller does not intend to sign the Interconnection Agreement and does intend to proceed with the project. 8.0 REPRESENTATION AND WARRANTIES; COVENANTS 8.1 Representations and Warranties. On the Effective Date, each Party represents and warrants to the other Party that: 040914 jrm 0180042 11 8.1.1 It is duly organized, validly existing and in good standing under the laws of the jurisdiction of its formation; 8.1.2 The execution, delivery and performance of this Agreement is within its powers, have been duly authorized by all necessary action and do not violate any of the terms and conditions in its governing documents, any contracts to which it is a party or any law, rule, regulation, order or the like applicable to it; 8.1.3 This Agreement and each other document executed and delivered in accordance with this Agreement constitutes its legally valid and binding obligation enforceable against it in accordance with its terms; 8.1.4 It is not bankrupt and there are no proceedings pending or being contemplated by it or, to its knowledge, threatened against it which would result in it being or becoming bankrupt; 8.1.5 There is not pending or, to its knowledge, threatened against it or any of its affiliates, if any, any legal proceedings that could materially adversely affect its ability to perform its obligations under this Agreement; and 8.1.6 It is acting for its own account, has made its own independent decision to enter into this Agreement and as to whether this Agreement is appropriate or proper for it based upon its own judgment, is not relying upon the advice or recommendations of the other Party in so doing, and is capable of assessing the merits of, and understands and accepts, the terms, conditions and risks of this Agreement. 8.2 General Covenants. Each Party covenants that, during the Term: 8.2.1 It shall continue to be duly organized, validly existing and in good standing under the laws of the jurisdiction of its formation; 8.2.2. It shall maintain (or obtain from time to time as required, including through renewal, as applicable) all regulatory authorizations necessary for it to legally perform its obligations under this Agreement; and 8.2.3 It shall perform its obligations under this Agreement in a manner that does not violate any of the terms and conditions in its governing documents, any contracts to which it is a party or any law, rule, regulation, order or the like applicable to it. 8.3 Covenant by Seller. The Seller covenants that, during the Term: 8.3.1 If the Eligible Renewal Energy Resource or the Facility is considered an ‘eligible qualifying facility’ under applicable law and has a net power production capacity of greater than one (1) megawatt, then the Seller covenants and agrees that, within thirty (30) days of the Effective Date or longer period allowed by law, it will complete and file Form No. 556 or other similar form with FERC as the same may be required by law.” 9.0 GENERAL CONDITIONS 9.1 Facility Care and Interconnection. During the Delivery Term, the Seller shall execute and maintain an “Interconnection Agreement” with the Buyer, whereby the Seller shall pay and be responsible for designing, installing, operating, and maintaining the Facility in accordance with all applicable laws and regulations and shall comply with all applicable Buyer, WECC, FERC, and NERC requirements, including applicable interconnection and metering requirements. The Seller shall also comply with any modifications, amendments or additions to the applicable tariff and protocols. The Seller also shall arrange and pay independently for any and all necessary costs under the Interconnection Agreement with the Buyer. 040914 jrm 0180042 12 9.2 Standard of Care. The Seller shall: (a) operate and maintain the Facility in a safe manner in accordance with its existing applicable interconnection agreements, manufacturer’s guidelines, warranty requirements, Good Utility Practice, industry norms (including standards of the National Electrical Code, Institute of Electrical and Electronic Engineers, American National Standards Institute, and the Underwriters Laboratories, and in accordance with the requirements of all applicable federal, state and local laws and the National Electric Safety Code, as such laws and code norms may be amended from time to time; (b) obtain any governmental authorizations and permits required for the construction and operation thereof. The Seller shall make any necessary and commercially reasonable repairs with the intent of optimizing the availability of electricity to the Buyer. The Seller shall reimburse the Buyer for any and all losses, damages, claims, penalties, or liability that the Buyer incurs as a result of the Seller’s failure to obtain or maintain any governmental authorizations and permits required for the construction and operation of the Facility throughout the Term. 9.3 Access Rights. The Buyer, its authorized agents, employees and inspectors shall have the right to inspect the Facility on reasonable advance notice during normal business hours and for any purposes reasonably connected with this Agreement or the exercise of any and all rights secured to the Buyer by law, including, without limitation, its ordinances, resolutions, tariffs, utility rate schedules or utilities rules and regulations. The Buyer shall make reasonable efforts to coordinate its emergency activities with the safety and security departments, if any, of the Facility’s operator. The Seller shall keep the Buyer advised of current procedures for communicating with the Facility operator’s safety and security departments. 9.4 Protection of Property. Each Party shall be responsible for protecting its own facilities from possible damage resulting from electrical disturbances or faults caused by the operation, faulty operation, or non-operation of the other Party’s facilities and such other Party shall not be liable for any such damages so caused. 9.5 Insurance. During the Term, the Seller shall obtain and maintain and otherwise comply with the insurance requirements, as set forth in Exhibit “PPA-E.” 9.6 Buyer’s Performance Excuse; Seller Curtailment. 9.6.1 Buyer Performance Excuse. The Buyer shall not be obligated to accept or pay for the Output during Force Majeure that affects the Buyer’s ability to accept Energy. 9.6.2 Seller Curtailment. The Buyer may require the Seller to interrupt or reduce deliveries of Energy: (a) whenever necessary to construct, install, maintain, repair, replace, remove, or investigate any of its equipment or part of the Buyer’s Distribution System or facilities; or (b) if the Buyer determines that curtailment, interruption, or reduction is necessary due to a System Emergency, as defined in the CAISO Tariff, an unplanned outage on Buyer’s Distribution System, Force Majeure, or compliance with Good Utility Practice. 9.7 Notices of Outages. Whenever possible, the Buyer shall give the Seller reasonable notice of the possibility that interruption or reduction of deliveries may be required. 9.8 No Additional Loads. The Seller shall not connect any loads not associated with Station Service Loads at the location of the Facility in a manner that would reduce Energy provided from the Facility to the Buyer hereunder. The Seller shall obtain separate retail electric service under the Buyer’s rate schedules for the service of such additional loads. 10.0 FORCE MAJEURE 10.1 Effect of Force Majeure. A Party shall be excused from its performance under this Agreement to the extent, but only to the extent, that its performance hereunder is prevented by Force Majeure. A Party claiming Force Majeure shall exercise due diligence to overcome or mitigate the effects 040914 jrm 0180042 13 of Force Majeure; provided, that nothing in this Agreement shall be deemed to obligate the Party affected by Force Majeure (a) to forestall or settle any strike, lock-out or other labor dispute against its will; or (b) for Force Majeure affecting the Seller only, to purchase electric power to cure Force Majeure. 10.2 Remedial Action. A Party shall not be liable to the other Party if the Party is prevented from performing its obligations hereunder due to Force Majeure. The Party rendered unable to fulfill an obligation by reason of Force Majeure shall take all action necessary to remove such inability with all due speed and diligence. The nonperforming Party shall be prompt and diligent in attempting to remove the cause of its failure to perform, and nothing herein shall be construed as permitting that Party to continue to fail to perform after that cause has been removed. Notwithstanding the foregoing, the existence of Force Majeure shall not excuse any Party from its obligations to make payment of amounts due hereunder. 10.3 Notice of Force Majeure. In the event of any delay or nonperformance resulting from Force Majeure, the Party directly impacted by Force Majeure shall, as soon as practicable under the circumstances, notify the other Party, in writing, of the nature, cause, date of commencement thereof and the anticipated extent of any delay or interruption in performance. 10.4 Termination Due to Force Majeure. If a Party will be prevented from performing its material obligations under this Agreement for an estimated period of twelve (12) consecutive months or longer due to Force Majeure, then the unaffected Party may terminate this Agreement, without liability of either Party to the other, upon thirty (30) Days’ prior written notice at any time during Force Majeure. 11.0 INDEMNITY 11.1 Indemnity by the Seller. The Seller shall indemnify, defend, and hold harmless the Buyer, its elected and appointed officials, directors, officers, employees, agents, and representatives against and from any and all losses, claims, demands, liabilities and expenses, actions or suits, including reasonable costs and attorney’s fees, resulting from, or arising out of or in any way connected with claims by third parties associated with (A) (i) Energy delivered at the Delivery Point; (ii) the Seller’s operation and/or maintenance of the Facility; or (iii) the Seller’s actions or inactions with respect to this Agreement, and (B) any loss, claim, action or suit, for or on account of injury, bodily or otherwise, to, or death of, persons, or for damage to or destruction of property belonging to the Buyer or other third party, excepting only such loss, claim, action or suit as may be caused solely by the willful misconduct or gross negligence of the Buyer, its agents, employees, directors or officers. 11.2 Indemnity by the Buyer. The Buyer shall indemnify, defend, and hold harmless the Seller, its directors, officers, employees, agents, and representatives against and from any and all losses, claims, demands, liabilities and expenses, actions or suits, including reasonable costs and attorney’s fees resulting from, or arising out of or in any way connected with claims by third parties associated with acts of the Buyer, its officers, employees, agents, and representatives, relating to: (A) Energy delivered by the Seller under this Agreement after the Delivery Point, and (B) any loss, claim, action or suit, for or on account of injury, bodily or otherwise, to, or death of, persons, or for damage to or destruction of property belonging to the Seller or other third party, excepting only such loss, claim, action or suit as may be caused solely by the willful misconduct or gross negligence of the Seller, its agents, employees, directors or officers. 12.0 LIMITATION OF DAMAGES EXCEPT AS OTHERWISE PROVIDED IN THIS AGREEMENT THERE IS NO WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, AND ANY AND ALL IMPLIED WARRANTIES ARE DISCLAIMED. LIABILITY SHALL BE LIMITED TO DIRECT ACTUAL DAMAGES ONLY, SUCH DIRECT ACTUAL DAMAGES SHALL BE THE SOLE AND EXCLUSIVE REMEDY AND ALL OTHER REMEDIES OR DAMAGES AT LAW OR IN EQUITY ARE WAIVED UNLESS EXPRESSLY HEREIN PROVIDED. NEITHER PARTY SHALL BE LIABLE FOR CONSEQUENTIAL, INCIDENTAL, PUNITIVE, EXEMPLARY OR INDIRECT DAMAGES, LOST PROFITS OR OTHER BUSINESS INTERRUPTION DAMAGES, BY STATUTE, IN TORT OR 040914 jrm 0180042 14 CONTRACT, UNDER ANY INDEMNITY PROVISION OR OTHERWISE. UNLESS EXPRESSLY HEREIN PROVIDED, AND SUBJECT TO THE PROVISIONS OF SECTION 11 (INDEMNITY), IT IS THE INTENT OF THE PARTIES THAT THE LIMITATIONS HEREIN IMPOSED ON REMEDIES AND THE MEASURE OF DAMAGES BE WITHOUT REGARD TO THE CAUSE OR CAUSES RELATED THERETO, INCLUDING THE NEGLIGENCE OF ANY PARTY, WHETHER SUCH NEGLIGENCE BE SOLE, JOINT OR CONCURRENT, OR ACTIVE OR PASSIVE. 13.0 NOTICES Notices shall, unless otherwise specified herein, be given, in writing, and may be delivered by hand delivery, United States mail, overnight courier service, facsimile or electronic messaging (e-mail) to the addresses set forth in Exhibit “PPA-F.”. Whenever this Agreement requires or permits delivery of a “notice” (or requires a Party to “notify”), the Party with such right or obligation shall provide a written communication in the manner specified below. A notice sent by facsimile transmission or electronic mail will be recognized and shall be deemed received on the Business Day on which such notice was transmitted if received before 5 p.m. Pacific Time (and if received after 5 p.m., on the next Business Day) and a notice by overnight mail or courier shall be deemed to have been received two (2) Business Days after it was sent or such earlier time as is confirmed by the receiving Party unless it confirms a prior oral communication, in which case any such notice shall be deemed received on the day sent. A Party may change its addresses by providing notice of same in accordance with this provision. A Party may request a change to Exhibit “PPA- F” as necessary to keep the information current. 14.0 TERM, TERMINATION EVENT AND TERMINATION 14.1 Term. The Term shall commence upon the execution by the duly authorized representatives of each of the Parties, and shall remain in effect until the conclusion of the Delivery Term, unless terminated sooner pursuant to the terms and conditions of this Agreement. All indemnity rights shall survive the termination of this Agreement for twelve (12) months. 14.2 Delivery Term. The Delivery Term of the Agreement is _______ years and is defined as the period of time from the Commercial Operation Date through the expiration or early termination of this Agreement. 14.3 Termination Event. 14.3.1 The Buyer shall have the right, but not the obligation, to terminate this Agreement upon the occurrence of any of the following, each of which is a “Termination Event”: (a) The Facility has not achieved Commercial Operation within seventy (70) days following the Deadline; (b) After the Commercial Operation Date, the Seller has not sold or delivered Energy from the Facility to the Buyer for a period of twelve (12) consecutive months; (c) If the Facility does not obtain RPS Certification within six (6) months of the Commercial Operation Date and maintain RPS Certification as required by Section 3.2; or (d) The Seller breaches any other material obligation of this Agreement. 14.3.2 The Seller shall have the right, but not the obligation, to terminate this Agreement upon the occurrence of any of the following, each of which is a “Termination Event”: (a) The Buyer fails to make a payment due and payable under this Agreement within thirty (30) days after written notice that such payment is due; or (b) The Buyer breaches any other material obligation of this Agreement. The preceding sentence notwithstanding, the Seller may terminate this Agreement without cause at any time prior to the Commercial Operation Date, subject to the provisions of Section 7 of this Agreement. 14.4 Time to Cure. None of the events described in Section 14.2.1 and 14.2.2 shall constitute a Termination Event if the Buyer or the Seller cures the event, failure, or circumstance within thirty (30) days after receipt of written notification sent by the other Party, seeking termination, or such longer period as may be necessary to cure so long as the Party subject to the Terminating Event is exercising diligent efforts to cure. 14.5 Termination. 040914 jrm 0180042 15 14.5.1 Declaration of a Termination Event. If a Termination Event has occurred and is continuing, the Party with the right to terminate shall have the right to: (a) send notice, designating a day, no earlier than thirty (30) days after such notice is deemed to be received (as provided in Section 13), as an early termination date of this Agreement (the “Early Termination Date”), unless the Seller has timely communicated with the Buyer and the Parties have agreed to resolve the circumstances giving rise to the Termination Event; (b) accelerate all amounts owing between the Parties; and (c) terminate this Agreement and end the Delivery Term effective as of the Early Termination Date. 14.5.2 Release of Liability for Termination Event. Upon termination of this Agreement pursuant to this section neither Party shall be under any further obligation or subject to liability hereunder, except with respect to the indemnity provision in Section 11 hereof, which shall remain in effect for a period of 12 months following the Early Termination Date. 14.6 No Limitation on Damages. Nothing in this Agreement shall be deemed or construed to limit a Party’s right to recover damages from the other Party, except as otherwise provided in this Agreement. 15.0 RELEASE OF DATA Except as may be exempt from disclosure under applicable law, the Seller authorizes the Buyer to release to any regulatory authority having jurisdiction over the Facility or a Party, or to any request made pursuant to the California Constitution or the California Public Records Act, information regarding the Facility, including the Seller’s name and location, operational characteristics, the Term of this Agreement, the Facility resource type, the scheduled Commercial Operation Date, the actual Commercial Operation Date, the Contract Capacity, payments made to the Seller and Energy production information. The Seller acknowledges that this information may be made publicly available. 16.0 ASSIGNMENT Neither Party shall assign this Agreement or its rights hereunder without the prior written consent of the other Party, which consent shall not be unreasonably withheld. 16.1 Upon the written request of the Seller, the Buyer will execute a “Lender Consent and Agreement” between the Seller and the Seller’s lender(s), if any, in the form acceptable to the Parties; provided, for illustration purposes only, an exemplar is attached hereto as Exhibit “PPA-G.” 16.2 Notwithstanding the foregoing, no Consent and Agreement shall be required for: 16.2.1 Any assignment or transfer of this Agreement by the Seller to an affiliate of the Seller, provided that such affiliate’s creditworthiness is equal to or better than that of Seller, as reasonably determined by the non-assigning or non-transferring Party; or 16.2.2 Any assignment or transfer of this Agreement by the Seller or the Buyer to a person succeeding to all or substantially all of the assets of such Party, provided that such person’s creditworthiness is equal to or greater than that of such Party, as reasonably determined by the non-assigning or non-transferring Party. 16.2.3 Notification of any assignment or transfer of this Agreement under Section 16.2.1 or 16.2.2 shall be given to the non-assigning or non-transferring Party in accordance with Exhibit “PPA-F.” 17.0 APPLICABLE LAW, VENUE, ATTORNEYS’ FEES, AND INTERPRETATION This Agreement will be governed by and construed in accordance with the laws of the State of California. The Parties will comply with applicable laws pertaining to their obligations arising under this 040914 jrm 0180042 16 Agreement. In the event that an action is brought, the Parties agree that trial of such action will be vested exclusively in the state courts of California or in the United States District Court for the Northern District of California in the County of Santa Clara, State of California. The prevailing party in any action brought to enforce the provisions of this Agreement may recover its reasonable costs and attorneys' fees expended in connection with that action. If a court of competent jurisdiction finds or rules that any provision of this Agreement, the Exhibits, or any amendment thereto is void or unenforceable, the unaffected provisions of this Agreement, the Exhibits, or any amendment thereto will remain in full force and effect. The Parties agree that the normal rule of construction to the effect that any ambiguity is to be resolved against the drafting party will not be employed in the interpretation of this Agreement or any Exhibit or any amendment thereof. 18.0 SEVERABILITY If any provision in this Agreement is determined to be invalid, void or unenforceable by any court having jurisdiction, such determination shall not invalidate, void, or make unenforceable any other provision, agreement or covenant of this Agreement and the Parties shall use their best efforts to modify this Agreement to give effect to the original intention of the Parties. 19.0 COUNTERPARTS; INTERPRETATION OF CONFLICTING PROVISIONS This Agreement may be executed in one or more counterparts, each of which shall be deemed an original and all of which shall be deemed one and the same Agreement. Delivery of an executed counterpart of this Agreement by facsimile or portable document format (“PDF”) transmission will be deemed as effective as delivery of an originally executed counterpart. Each Party delivering an executed counterpart of this Agreement by facsimile or PDF transmission will also deliver an originally executed counterpart, but the failure of any Party to deliver an originally executed counterpart of this Agreement will not affect the validity or effectiveness of this Agreement. In the event of a conflict between the Agreement and any, some or all of the Exhibits, the document imposing the more specific duty or obligation will prevail. 20.0 GENERAL No amendment to or modification of this Agreement shall be enforceable unless reduced to writing and executed by both Parties. This Agreement shall not impart any rights enforceable by any third party other than a permitted successor or assignee bound to this Agreement. Waiver by a Party of any default by the other Party shall not be construed as a waiver of any other default. The headings used herein are for convenience and reference purposes only. // // // // // // 040914 jrm 0180042 17 21. EXHIBITS The following exhibits shall be deemed incorporated in and made a part of this Agreement. Exhibit “PPA-A” - Facility Description, Prices, and Reservation Deposit Exhibit “PPA-B” - Commercial Operation Date Confirmation Letter Exhibit “PPA-C” - Scheduling and Outage Notification Procedure Exhibit “PPA-D” - Green Attributes Reporting and Conveyance Procedures Exhibit “PPA-E” - Insurance Requirements Exhibit “PPA-F” - Notices Exhibit “PPA-G” - Form of Lender Consent and Agreement IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly executed by their authorized representatives as of the Effective Date. CITY OF PALO ALTO SELLER APPROVED AS TO FORM Senior Deputy City Attorney APPROVED City Manager Director of Utilities 040914 jrm 0180042 18 EXHIBIT “PPA-A” Facility Description, Rates, and Reservation Deposit Program Rates Contract Term: Twenty (20) or twenty-five (25) years Contract rate: $0.165 per kWh for solar resources, 20- or 25-year contract term (up to 3 MW program capacity) $0.089 per kWh for solar resources, 20-year contract term (beyond 3 MW) $0.091 per kWh for solar resources, 25-year contract term (beyond 3 MW) $0.084 per kWh for non-solar resources, 20-year contract term $0.085 per kWh for non-solar resources, 25-year contract term Pre-certification rate: $0.08 per kWh Reservation Deposit Reservation Deposit ($20/kW of Contract Capacity) $ Service address: Facility Description: Contract Capacity: kW (CEC-AC), based on solar array rating (Panel rated output at PV USA test conditions x inverter efficiency) Facility primary fuel/technology: 040914 jrm 0180042 19 EXHIBIT “PPA-B” Commercial Operation Date Confirmation Letter In accordance with the terms of the Power Purchase Agreement (Palo Alto CLEAN), dated (the “Agreement”) by and between the City of Palo Alto, as the Buyer, and , as the Seller, this Confirmation Letter serves to document the Parties’ agreement that (i) the conditions precedent to the occurrence of the Commercial Operation Date have been satisfied, and (ii) the Buyer has received Energy, as specified in the Agreement, as of , . The actual installed Contract Capacity is kW. This Confirmation Letter shall confirm the Commercial Operation Date, as defined in the Agreement, as of the date referenced in the preceding sentence. IN WITNESS WHEREOF, each Party has caused this letter to be duly executed by its authorized representative as of the date of last signature provided below: Buyer Seller By: By: Name: Name: Title: Director of Utilities Title: Date: Date: In recognition of the Commercial Operation Date relative to the Effective Date of the Agreement by and between the Buyer and the Seller, the Seller hereby calculates the amount to return, if any, of the Seller’s deposit, as follows: Original Reservation Deposit Amount: $ Commercial Operation Date Deadline: □ Commercial Operation Date is prior to Deadline □ Commercial Operation Date occurred weeks following the Deadline, meaning that % of the Reservation Deposit is relinquished by Seller per Section 7.2.2 of the Power Purchase Agreement. Amount (if any) of Reservation Deposit to return to the Seller is: $ 040914 jrm 0180042 20 EXHIBIT “PPA-C” Scheduling and Outage Notification Procedure C.1 Applicability. This Exhibit” PPA-C” shall apply if the Facility is subject to Section 6.0 of this Agreement. C.2 Annual Operations Forecast C.2.1 By the tenth (10th) day September of each calendar year, the Seller will provide NCPA with an annual operations forecast detailing hourly expected generation and all proposed planned Outages for the next calendar year. The annual operations forecast for the calendar year shall be provided by not later than ninety (90) days prior to the scheduled Commercial Operation Date of the Generating Facility. C.2.2 NCPA may request modifications to the annual operations forecast at any time, and the Seller shall use good faith efforts to accommodate the requested modifications. C.2.3 The Seller shall not conduct Planned Outages at times other than as set forth in its annual operations forecast, unless approved in advance by NCPA, which approval shall not be withheld or delayed unreasonably. C.2.4 The Seller shall not schedule or conduct Planned Outages from 12:00 p.m. through 7:00 p.m. Pacific Time during the months of June through October. C.3. Short Term Operations Forecasts C.3.1. Quarterly Operations Forecast C.3.1.1 By the fifth (5th) day of January, April and July of each Contract Year, the Seller shall provide a calendar quarter-operations forecast by hour of expected generation and all proposed Planned Outages for the next full calendar quarter and the twelve (12) months following that calendar quarter. As an example, by January 5, 2014, the Seller would provide a calendar quarter-operations forecast by hour of expected generation for the period, April 1, 2014 through June 30, 2014, and identify all proposed Planned Outages for the period, April 1, 2014 through June 30, 2015. C.3.1.2 NCPA will approve or require modifications to the proposed calendar quarter-operations forecast within ten (10) days of receipt of the forecast. C.3.1.3 If required by NCPA, the Seller will provide a modified calendar quarter-operations forecast within seven (7) days after receipt of required modifications from NCPA. C.3.2 Weekly Update C.3.2.1 By 14:00 of each Wednesday, the Seller shall provide an electronic update, in a format specified by NCPA, to the calendar quarter-operations forecast for the following seven (7) days (Thursday through the next Wednesday). C.3.2.2 The weekly update shall include hourly expected generation and all proposed planned Outages for the relevant seven (7) day period. C.4 Outage Detail for Annual and Short Term Operations Forecasts. Outage information provided by the Seller shall include, at a minimum, the start time and stop time of the Outage, capacity out of service (kW), the equipment that is or will be out of service, and the reason for the Outage. 040914 jrm 0180042 21 C.5 General Scheduling Protocols C.5.1 Daily Modifications to Forecasts. Unless otherwise mutually agreed, the Seller may make changes to the weekly update to the calendar quarter-operations forecast by providing such changes to NCPA prior to 08:00 of the day that is two (2) Business Days before the active scheduling day as determined by the WECC prescheduling calendar. Example: For power that is scheduled for generation or delivery on Friday, March 29, 2014, changes must be submitted to NCPA by 08:00 on Wednesday, March 27, 2014. C.5.2 Hourly Modifications to Active Schedules. Unless otherwise mutually agreed, the Seller may request changes to active schedules by providing such changes to NCPA with a minimum of four (4) hours’ notice prior to the applicable CAISO market deadline (e.g. Hour Ahead Scheduling Process (“HASP”) Scheduling deadline, as defined in the CAISO Tariff). Active day Schedule changes are not binding. Changes to active Schedules are limited to two (2) changes per day, excluding forced Outages, unless otherwise agreed to between the Parties. One request for a Schedule change, of one-hour or multiple-hours duration, constitutes one Schedule change. Example: For power that is scheduled for generation or delivery in hour ending 15:00 (for the period from 14:01 to 15:00), changes must be submitted to NCPA by 10:00. C.5.3. Unforeseen Circumstances. At the Seller’s request, NCPA may, but is not required to, modify the Schedules for the Generation Facility Output due to unforeseen circumstances in accordance with the above scheduling timeline constraints described in this Exhibit PPA-C. C.5.4. Absence of Forecasts. In the absence of forecasts and schedules as required by this Agreement or this Exhibit, NCPA shall utilize the most current information the Seller provides in the development and submission of Schedules. C.6 Outage Reporting Protocols C.6.1. Notification. The Seller shall notify NCPA of all planned or forced Outages of the Generating Facility to ensure compliance with the CAISO Outage Coordination and Enforcement Protocols. C.6.1.1 Outage information provided by the Seller shall include, at a minimum, the start time and stop time of the Outage, Capacity out of service (kW), equipment out of service, and the reason for the Outage. C. 6.1.2 Seller shall provide the Planned Outages not included in the annual operations forecast, the calendar quarter-operations forecast, or the weekly update, to NCPA at least four (4) Business Days prior to the start of the requested outage. C. 6.1.3 At any time prior to the start of a Planned Outage, the CAISO may deny the Outage due to a System Emergency (as defined in the CAISO Tariff) or as otherwise permitted under the CAISO Tariff. If NCPA receives notice that the CAISO has denied an Outage in accordance with the CAISO Tariff, NCPA will notify the Seller as soon as possible and the Seller shall modify the planned Outage as required by the CAISO. C.6.2 Commencement of an Outage. The Seller shall not begin any Planned Outage without the prior approval of NCPA and the CAISO. C.6.3 Forced Outages C.6.3.1 The Seller shall report the Forced Outages to NCPA within twenty (20) 040914 jrm 0180042 22 minutes of such Outages. C.6.3.2 The Seller’s notice of a Forced Outage sent to NCPA shall include the reason for the Outage (if known), expected duration of the Outage, and the Capacity reduction. C.6.3.3 By the end of the next Business Day following the day on which a Forced Outage has occurred, the Seller shall provide to NCPA a detailed written report, specifying the reason for the Outage, expected duration of such Outage, capacity reduction, and actions taken to mitigate such Outage. C.6.4 Return to Service. The Seller shall notify NCPA as soon as possible, but in any case before the Generating Facility is returned to service. C.7 Notices. All Scheduling notices and Schedules shall be submitted to NCPA by phone, fax or email, or other means as may be mutually agreed by the Parties, to the persons designated in Exhibit “PPA-F.” C.8 Changes in Scheduling and Outage Procedure. The Buyer shall revise Exhibit “PPA-C,” or, as appropriate, give written notice to the Seller regarding the revision, and issue a new Exhibit “PPA-C,” which shall then become part of the Agreement to reflect changes in the scheduling and outage notification procedure. 040914 jrm 0180042 23 EXHIBIT “PPA-D” Green Attributes Reporting and Conveyance Procedures D.1 Additional Definitions for the Conveyance of Green Attributes D.1.1 “Certificate Transfers” means the process, as described in the WREGIS Operating Rules, whereby a WREGIS account holder may request that WREGIS Certificates from a specific generating unit shall be directly deposited to another WREGIS account. D.1.2 “WREGIS Certificates” means a certificate created within the WREGIS system that represents all Renewable and Green Attributes from one MWh of electricity generation from an Eligible Renewable Energy Resource that is registered with WREGIS. D.1.3 “WREGIS Operating Rules” means the document published by WREGIS that governs the operation of the WREGIS system for registering, tracking, and conveying, among others, RECs produced from Eligible Renewable Energy Resources that shall be registered with WREGIS. D.1.4 “WREGIS” means Western Renewable Energy Generation Information System. D.2 RECs. Green Attributes shall be conveyed by the Seller to the Buyer through RECs, which shall be registered tracked and conveyed to the Buyer, using WREGIS. D.3 WREGIS Registration. Prior to the Commercial Operation Date, the Buyer will register the Facility in the Buyer’s WREGIS account on behalf of the Seller. The Buyer shall charge back to the Seller any costs of registering and maintaining the registration of the Facility with WREGIS. The Seller shall provide to the Buyer any documents required by WREGIS and assign the Seller’s rights to register the Facility in WREGIS, using agreements provided by WREGIS. D.4 B u yer ’s W REGI S Acco unt . The Buyer shall, at its sole expense, establish and maintain the Buyer’s WREGIS account sufficient to accommodate the WREGIS Certificates produced by the output of the Facility. The Buyer shall be responsible for all expenses associated with (A) establishing and maintaining the Buyer’s WREGIS Account, and (B) subsequently transferring or retiring WREGIS Certificates. D.5 Qualified Reporting Entity. The Buyer shall be the Qualified Reporting Entity (as such term is defined by WREGIS) for the Facility, and shall be responsible for providing the metered Output data to WREGIS. D.6 Reporting of Environmental Attributes. In lieu of the Seller’s transfer of the WREGIS Certificates using Certificate Transfers from the Seller’s WREGIS account to the Buyer’s WREGIS account, the Buyer shall report the Facility as being held directly in its WREGIS account, which will preclude the Seller from reporting the Facility in its own WREGIS account. D.6.1 By avoiding the use of Certificate Transfers, there will be no transaction costs to the Seller or the Buyer for the Certificate Transfers that would otherwise be used. D.6.2 WREGIS Certificates for the Facility will be created on a calendar month basis in accordance with the certification procedure established by the WREGIS Operating Rules in an amount equal to the Energy generated by the Project and delivered to the Buyer in the same calendar month. D.6.3 WREGIS Certificates will only be created for whole MWh amounts of energy generated. Any fractional MWh amounts (i.e., kWh) will be carried forward until sufficient generation is accumulated for the creation of a WREGIS Certificate and all such accumulated 040914 jrm 0180042 24 MWh of Environmental Attributes will then be available to Buyer. D.6.4 If a WREGIS Certificate Modification (as such term is defined by WREGIS) will be required to reflect any errors or omissions regarding the Green Attributes from the Facility, then the Buyer will manage the submission of the WREGIS Certificate Modification. D.6.5 Due to the expected delay in the creation of WREGIS Certificates relative to the timing of invoice payments under Section 2, the Buyer will normally be making an invoice payment for the Output for a given month in accordance with Section 2 before the WREGIS Certificates for such month may be created in the Buyer’s WREGIS account. Notwithstanding this delay, the Buyer shall have all right and title to all such WREGIS Certificates upon payment to the Seller in accordance with Section 2. D.7 Changes in Green Attributes Reporting and Conveyance Procedures. The Buyer shall revise this Exhibit “PPA-D,” as appropriate, give written notice to the Seller regarding the revision, and issue a new Exhibit “PPA-D,” which shall then become part of this Agreement in the event that: D.7.1 WREGIS changes the WREGIS Operating Rules (as defined by WREGIS) after the Effective Date or applies the WREGIS Operating Rules in a manner inconsistent with this Exhibit “PPA-D” after the Effective Date; or, D.7.2 WREGIS is replaced as the primary method that the Buyer uses for conveyance of Green Attributes, or additional methods to convey all Green Attributes, are required. 040914 jrm 0180042 25 EXHIBIT “PPA-E” Insurance Requirements CONTRACTORS TO THE CITY OF PALO ALTO (CITY), AT THEIR SOLE EXPENSE, WILL FOR THE TERM OF THE CONTRACT OBTAIN AND MAINTAIN INSURANCE IN THE AMOUNTS FOR THE COVERAGE SPECIFIED BELOW, AFFORDED BY COMPANIES WITH A BEST’S KEY RATING OF A-:VII, OR HIGHER, LICENSED OR AUTHORIZED TO TRANSACT INSURANCE BUSINESS IN THE STATE OF CALIFORNIA. AWARD IS CONTINGENT ON COMPLIANCE WITH CITY’S INSURANCE REQUIREMENTS, AS SPECIFIED, BELOW: REQUIRED TYPE OF COVERAGE REQUIREMENT MINIMUM LIMITS EACH OCCURRENCE AGGREGATE YES YES WORKER’S COMPENSATION AUTOMOBILE LIABILITY STATUTORY STATUTORY YES COMMERCIAL GENERAL LIABILITY, INCLUDING PERSONAL INJURY, BROAD FORM PROPERTY DAMAGE BLANKET CONTRACTUAL, AND FIRE LEGAL LIABILITY BODILY INJURY PROPERTY DAMAGE BODILY INJURY & PROPERTY DAMAGE COMBINED. $1,000,000 $1,000,000 $1,000,000 $2,000,000 $2,000,000 $2,000,000 YES COMPREHENSIVE AUTOMOBILE LIABILITY, INCLUDING, OWNED, HIRED, NON-OWNED BODILY INJURY - EACH PERSON - EACH OCCURRENCE PROPERTY DAMAGE BODILY INJURY AND PROPERTY DAMAGE, COMBINED $1,000,000 $1,000,000 $1,000,000 $1,000,000 $1,000,000 $1,000,000 $1,000,000 $1,000,000 $1,000,000 $1,000,000 NO PROFESSIONAL LIABILITY, INCLUDING, ERRORS AND OMISSIONS, MALPRACTICE (WHEN APPLICABLE), AND NEGLIGENT PERFORMANCE ALL DAMAGES $1,000,000 YES THE CITY OF PALO ALTO IS TO BE NAMED AS AN ADDITIONAL INSURED: PROPOSER, AT ITS SOLE COST AND EXPENSE, SHALL OBTAIN AND MAINTAIN, IN FULL FORCE AND EFFECT THROUGHOUT THE ENTIRE TERM OF ANY RESULTANT AGREEMENT, THE INSURANCE COVERAGE HEREIN DESCRIBED, INSURING NOT ONLY PROPOSER AND ITS SUBCONSULTANS, IF ANY, BUT ALSO, WITH THE EXCEPTION OF WORKERS’ COMPENSATION, EMPLOYER’S LIABILITY AND PROFESSIONAL INSURANCE, NAMING AS ADDITIONAL INSURES CITY, ITS COUNCIL MEMBERS, OFFICERS, AGENTS, AND EMPLOYEES. I. INSURANCE COVERAGE MUST INCLUDE: A. A PROVISION FOR A WRITTEN THIRTY DAY ADVANCE NOTICE TO CITY OF CHANGE IN COVERAGE OR OF COVERAGE CANCELLATION; AND B. A CONTRACTUAL LIABILITY ENDORSEMENT PROVIDING INSURANCE COVERAGE FOR CONTRACTOR’S AGREEMENT TO INDEMNIFY CITY – SEE, SAMPLE AGREEMENT FOR SERVICES. II. SUBMIT CERTIFICATE(S) OF INSURANCE EVIDENCING REQUIRED COVERAGE, OR COMPLETE THIS SECTION AND IV THROUGH V, BELOW. A. NAME AND ADDRESS OF COMPANY AFFORDING COVERAGE (NOT AGENT OR BROKER): B. NAME, ADDRESS, AND PHONE NUMBER OF YOUR INSURANCE AGENT/BROKER: 040914 jrm 0180042 26 C. POLICY NUMBER(S): D. DEDUCTIBLE AMOUNT(S) (DEDUCTIBLE AMOUNTS IN EXCESS OF $5,000 REQUIRE CITY’S PRIOR APPROVAL): III. AWARD IS CONTINGENT ON COMPLIANCE WITH CITY’S INSURANCE REQUIREMENTS, AND PROPOSER’S SUBMITTAL OF CERTIFICATES OF INSURANCE EVIDENCING COMPLIANCE WITH THE REQUIREMENTS SPECIFIED HEREIN. IV. ENDORSEMENT PROVISIONS, WITH RESPECT TO THE INSURANCE AFFORDED TO “ADDITIONAL INSURES” A. PRIMARY COVERAGE WITH RESPECT TO CLAIMS ARISING OUT OF THE OPERATIONS OF THE NAMED INSURED, INSURANCE AS AFFORDED BY THIS POLICY IS PRIMARY AND IS NOT ADDITIONAL TO OR CONTRIBUTING WITH ANY OTHER INSURANCE CARRIED BY OR FOR THE BENEFIT OF THE ADDITIONAL INSURES. B. CROSS LIABILITY THE NAMING OF MORE THAN ONE PERSON, FIRM, OR CORPORATION AS INSURES UNDER THE POLICY SHALL NOT, FOR THAT REASON ALONE, EXTINGUISH ANY RIGHTS OF THE INSURED AGAINST ANOTHER, BUT THIS ENDORSEMENT, AND THE NAMING OF MULTIPLE INSUREDS, SHALL NOT INCREASE THE TOTAL LIABILITY OF THE COMPANY UNDER THIS POLICY. C. NOTICE OF CANCELLATION 1. IF THE POLICY IS CANCELED BEFORE ITS EXPIRATION DATE FOR ANY REASON OTHER THAN THE NON-PAYMENT OF PREMIUM, THE ISSUING COMPANY SHALL PROVIDE CITY AT LEAST A THIRTY (30) DAY WRITTEN NOTICE BEFORE THE EFFECTIVE DATE OF CANCELLATION. 2. IF THE POLICY IS CANCELED BEFORE ITS EXPIRATION DATE FOR THE NON-PAYMENT OF PREMIUM, THE ISSUING COMPANY SHALL PROVIDE CITY AT LEAST A TEN (10) DAY WRITTEN NOTICE BEFORE THE EFFECTIVE DATE OF CANCELLATION. V. PROPOSER CERTIFIES THAT PROPOSER’S INSURANCE COVERAGE MEETS THE ABOVE REQUIREMENTS: THE INFORMATION HEREIN IS CERTIFIED CORRECT BY SIGNATURE(S) BELOW. SIGNATURE(S) MUST BE SAME SIGNATURE(S) AS APPEAR(S) ON SECTION II, ATTACHMENT A, PROPOSER’S INFORMATION FORM. Firm: Signature: Name: (Print or type name) Signature: Name: (Print or type name) 040914 jrm 0180042 27 NOTICES SHALL BE MAILED TO: PURCHASING AND CONTRACT ADMINISTRATION CITY OF PALO ALTO P.O. BOX 10250 PALO ALTO, CA 94303. 040914 jrm 0180042 28 EXHIBIT “PPA-F” Notices Contract Administration BUYER: SELLER: City of Palo Alto Utilities Resource Management 250 Hamilton Avenue Palo Alto, CA 94301 Ph: 650-329-2689 Email: UtilityCommoditySettlements@CityofPaloAlto.Org Billing and Settlements BUYER: SELLER: City of Palo Alto Utilities Resource Management 250 Hamilton Avenue Palo Alto, CA 94301 Ph: 650-329-2689 Email: UtilityCommoditySettlements@CityofPaloAlto.Org Forecasting and Outage Reporting under Section 6 of this Agreement Planned Outages: BUYER: SELLER: Northern California Power Agency Real- Time Dispatch 651 Commerce Drive Roseville, CA 95678 Ph: 916-786-3518 Forced Outages BUYER: SELLER: Northern California Power Agency Real- Time Dispatch 651 Commerce Drive Roseville, CA 95678 Ph: 916-786-3518 Forecasting and Scheduling BUYER: SELLER: Northern California Power Agency Operations and Pre-Scheduling 651 Commerce Drive Roseville, CA 95678 Ph: 916-786-0123 040914 jrm 0180042 29 EXHIBIT “PPA-G” Form of Lender Consent and Agreement This CONSENT AND AGREEMENT (this “Consent”), dated as of , 20 , is entered into by and among the CITY OF PALO ALTO, a California chartered municipal corporation (the “City”), , a corporation (the “Lender),” by its agent, (the “Administrative Agent”), and , a corporation (the “Borrower”) (collectively, the “Parties”). Unless otherwise defined, all capitalized terms have the meaning given in the Contract (as hereinafter defined). RECITALS A. Borrower intends to develop, construct, install, test, own, operate and use an approximately MW electric generating facility located in the city of Palo Alto in the State of California, known as the Project (the “Project”). B. In order to partially finance the development, construction, installation, testing, operation and use of the Project, Borrower has entered into that certain financing agreement dated as of (as amended, amended and restated, supplemented or otherwise modified from time to time, the “Financing Agreement”), among Borrower, the financial institutions from time to time parties thereto (collectively, the “Lenders”) , and Administrative Agent for the Lenders, pursuant to which, among other things, Lenders have extended commitments to make loans and other financial accommodations to, and for the benefit of, Borrower. C. The City and Borrower have entered into that certain Power Purchase Agreement, dated as of (attached hereto and incorporated herein by reference, as amended, amended and restated, supplemented or otherwise modified from time to time in accordance with the terms thereof and hereof, the “Power Purchase Agreement”). D. The City and Borrower have entered into that certain Interconnection Agreement, dated as of _ (attached hereto and incorporated herein by reference, as amended, amended and restated, supplemented or otherwise modified from time to time in accordance with the terms thereof and hereof, the “Interconnection Agreement”). E. Pursuant to a security agreement executed by Borrower and Administrative Agent for the Lenders (as amended, amended and restated, supplemented or otherwise modified from time to time, the “Security Agreement”), Borrower has agreed, among other things, to assign, as collateral security for its obligations under the Financing Agreement and related documents (collectively, the “Financing Documents”), all of its right, title and interest in, to and under the Power Purchase Agreement and Interconnection Agreement to Administrative Agent for the benefit of itself, the Lenders and each other entity or person providing collateral security under the Financing Documents. F. It is a requirement under the Financing Agreement that the Parties hereto execute this Consent. AGREEMENT NOW THEREFORE, for good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, and intending to be legally bound, the Parties agree, as follows: 1. CONSENT TO ASSIGNMENT. The City acknowledges the assignment referred to in Recital E above, consents to an assignment of the Power Purchase Agreement and Interconnection Agreement pursuant thereto, and agrees with Administrative Agent, as follows: (a) Administrative Agent shall be entitled (but not obligated) to exercise all rights and to cure any 040914 jrm 0180042 30 defaults of Borrower under the Power Purchase Agreement or Interconnection Agreement, as the case may be, subject to applicable notice and cure periods provided in the Power Purchase Agreement and Interconnection Agreement. Upon receipt of notice from Administrative Agent, the City agrees to accept such exercise and cure by Administrative Agent if timely made by Administrative Agent under the Power Purchase Agreement or Interconnection Agreement, as the case may be, and this Consent. Upon receipt of Administrative Agent's written instructions and to the extent allowed by law, the City agrees to make directly to such account as Administrative Agent may direct the City, in writing, from time to time, all payments to be made by the City to Borrower under the Power Purchase Agreement or Interconnection Agreement, as the case may be, from and after the City’s receipt of such instructions, and Borrower consents to any such action. The City shall not incur any liability to Borrower under the Power Purchase Agreement, Interconnection Agreement, or this Consent for directing such payments to Administrative Agent in accordance with this subsection (a). (b) The City will not, without the prior written consent of Administrative Agent (such consent not to be unreasonably withheld), (i) cancel or terminate the Power Purchase Agreement or Interconnection Agreement, or consent to or accept any cancellation, termination or suspension thereof by Borrower, except as provided in the Power Purchase Agreement or Interconnection Agreement and in accordance with subparagraph 1(c) hereof, (ii) sell, assign or otherwise dispose (by operation of law or otherwise) of any part of its interest in the Power Purchase Agreement or Interconnection Agreement, except as provided in the Power Purchase Agreement or Interconnection Agreement, or (iii) amend or modify the Power Purchase Agreement or Interconnection Agreement in any manner materially adverse to the interest of the Lenders in the Power Purchase Agreement and Interconnection Agreement as collateral security under the Security Agreement. (c) The City agrees to deliver duplicates or copies of all notices of default delivered by the City under or pursuant to the Power Purchase Agreement or Interconnection Agreement to Administrative Agent in accordance with the notice provisions of this Consent. The City shall deliver any such notices concurrently with delivery of the notice to Borrower under the Power Purchase Agreement or Interconnection Agreement. To the extent that a cure period is provided under the Power Purchase Agreement or Interconnection Agreement, Administrative Agent shall have the same period of time to cure the breach or default that Borrower is entitled to under the Power Purchase Agreement or Interconnection Agreement, except that if the City does not deliver the default notice to Administrative Agent concurrently with delivery of the notice to Borrower under the Power Purchase Agreement or Interconnection Agreement, then as to Administrative Agent, the applicable cure period under the Power Purchase Agreement or Interconnection Agreement shall begin on the date on which the notice is given to Administrative Agent. If possession of the Project is necessary to cure such breach or default, and Administrative Agent or its designee(s) or assignee(s) declare Borrower in default and commence foreclosure proceedings, Administrative Agent or its designee(s) or assignee(s) will be allowed a reasonable period to complete such proceedings so long as Administrative Agent or its designee(s) continue to perform any monetary obligations under the Power Purchase Agreement or Interconnection Agreement, as the case may be. The City consents to the transfer of Borrower's interest under the Power Purchase Agreement and Interconnection Agreement to the Lenders or Administrative Agent or their designee(s) or assignee(s) or any of them or a purchaser or grantee at a foreclosure sale by judicial or nonjudicial foreclosure and sale or by a conveyance by Borrower in lieu of foreclosure and agrees that upon such foreclosure, sale or conveyance, the City shall recognize the Lenders or Administrative Agent or their designee(s) or assignee(s) or any of them or other purchaser or grantee as the applicable party under the Power Purchase Agreement and Interconnection Agreement (provided that such Lenders or Administrative Agent or their designee(s) or assignee(s) or purchaser or grantee assume the obligations of Borrower under the Power Purchase Agreement and Interconnection Agreement, including, without limitation, satisfaction and compliance with all credit provisions of the Power Purchase Agreement and Interconnection Agreement, if any, and provided further that such Lenders or Administrative Agent or their designee(s) or assignee(s) or purchaser or grantee has a creditworthiness equal to or better than 040914 jrm 0180042 31 Borrower, as reasonably determined by City). (d) In the event that either the Power Purchase Agreement or Interconnection Agreement, or both is rejected by a trustee or debtor-in-possession in any bankruptcy or insolvency proceeding, and if, within forty-five (45) days after such rejection, Administrative Agent shall so request, the City will execute and deliver to Administrative Agent a new power purchase agreement or interconnection agreement, as the case may be, which power purchase agreement or interconnection agreement shall be on the same terms and conditions as the original Power Purchase Agreement or Interconnection Agreement for the remaining term of the original Power Purchase Agreement or Interconnection Agreement before giving effect to such rejection, and which shall require Administrative Agent to cure any defaults then existing under the original Power Purchase Agreement or Interconnection Agreement. Notwithstanding the foregoing, any new renewable power purchase agreement or interconnection agreement will be subject to all regulatory approvals required by law. The City will use good faith efforts to promptly obtain any necessary regulatory approvals. (e) In the event Administrative Agent, the Lenders or their designee(s) or assignee(s) elect to perform Borrower's obligations under the Power Purchase Agreement and Interconnection Agreement, succeed to Borrower’s interest under the Power Purchase Agreement and Interconnection Agreement, or enter into a new power purchase agreement or interconnection agreement as provided in subparagraph 1(d) above, the recourse of the City against Administrative Agent, Lenders or their designee(s) and assignee(s) shall be limited to such Parties’ interests in the Project, and the credit support required under the Power Purchase Agreement and Interconnection Agreement, if any. (f) In the event Administrative Agent, the Lenders or their designee(s) or assignee(s) succeed to Borrower's interest under the Power Purchase Agreement and Interconnection Agreement, Administrative Agent, the Lenders or their designee(s) or assignee(s) shall cure any then-existing payment and performance defaults under the Power Purchase Agreement or Interconnection Agreement, except any performance defaults of Borrower itself, which by their nature are not susceptible of being cured. Administrative Agent, the Lenders and their designee(s) or assignee(s) shall have the right to assign all or a pro rata interest in the Power Purchase Agreement and Interconnection Agreement to a person or entity to whom Borrower’s interest in the Project is transferred, provided such transferee assumes the obligations of Borrower under the Power Purchase Agreement and Interconnection Agreement and has a creditworthiness equal to or better than Borrower, as reasonably determined by the City. Upon such assignment, Administrative Agent and the Lenders and their designee(s) or assignee(s) (including their agents and employees) shall be released from any further liability thereunder accruing from and after the date of such assignment, to the extent of the interest assigned. 2. REPRESENTATIONS AND WARRANTIES. The City hereby represents and warrants that as of the date of this Consent: (a) It (i) is duly formed and validly existing under the laws of the State of California, and (ii) has all requisite power and authority to enter into and to perform its obligations hereunder and under the Power Purchase Agreement and Interconnection Agreement, and to carry out the terms hereof and thereof and the transactions contemplated hereby and thereby; (b) the execution, delivery and performance of this Consent, the Power Purchase Agreement and the Interconnection Agreement have been duly authorized by all necessary action on its part and do not require any approvals, material filings with, or consents of any entity or person which have not previously been obtained or made; (c) each of this Consent, the Power Purchase Agreement, and the Interconnection Agreement is in full force and effect; 040914 jrm 0180042 32 (d) each of this Consent, the Power Purchase Agreement, and the Interconnection Agreement has been duly executed and delivered on its behalf and constitutes its legal, valid and binding obligation, enforceable against it in accordance with its terms, except as the enforceability thereof may be limited by (i) bankruptcy, insolvency, reorganization or other similar laws affecting the enforcement of creditors’ rights generally and (ii) general equitable principles (whether considered in a proceeding in equity or at law); (e) there is no litigation, arbitration, investigation or other proceeding pending for which the City has received service of process or, to the City’s actual knowledge, threatened against the City relating solely to this Consent, the Power Purchase Agreement, or the Interconnection Agreement and the transactions contemplated hereby and thereby; (f) the execution, delivery and performance by it of this Consent, the Power Purchase Agreement, and the Interconnection Agreement, and the consummation of the transactions contemplated hereby, will not result in any violation of, breach of or default under any term of any material contract or material agreement to which it is a party or by which it or its property is bound, or of any material requirements of law presently in effect having applicability to it, the violation, breach or default of which could have a material adverse effect on its ability to perform its obligations under this Consent; (g) neither the City nor, to the City’s actual knowledge, any other party to the Power Purchase Agreement or Interconnection Agreement, is in default of any of its obligations thereunder; and (h) to the City’s actual knowledge, (i) no Force Majeure Event exists under, and as defined in, the Power Purchase Agreement or Interconnection Agreement and (ii) no event or condition exists which would either immediately or with the passage of any applicable grace period or giving of notice, or both, enable either the City or Borrower to terminate or suspend its obligations under the Power Purchase Agreement or the Interconnection Agreement. Each of the representations and warranties set forth herein shall survive the execution and delivery of this Consent and the consummation of the transactions contemplated hereby. 3. NOTICES. All notices required or permitted hereunder shall be given, in writing, and shall be effective (a) upon receipt if hand delivered, (b) upon telephonic verification of receipt if sent by facsimile and (c) if otherwise delivered, upon the earlier of receipt or three (3) Business Days after being sent registered or certified mail, return receipt requested, with proper postage affixed thereto, or by private courier or delivery service with charges prepaid, and addressed as specified below: If to the City: [ ] [ ] [ ] Telephone No.: [ ] Facsimile No.: [ ] Attn: [ ] If to Administrative Agent: [ ] [ ] [ ] Telephone No.: [ ] Facsimile No.: [ ] Attn: [ ] 040914 jrm 0180042 33 If to Borrower: [ ] [ ] [ ] Telephone No.: [ ] Facsimile No.: [ ] Attn: [ ] Any party shall have the right to change its address for notice hereunder to any other location within the United States by giving thirty (30) days written notice to the other parties in the manner set forth above. 4. ASSIGNMENT, TERMINATION, AMENDMENT. This Consent shall be binding upon and benefit the successors and assigns of the Parties hereto and their respective successors, transferees and assigns (including without limitation, any entity that refinances all or any portion of the obligations under the Financing Agreement). The City agrees (a) to confirm such continuing obligation, in writing, upon the reasonable request of (and at the expense of) Borrower, Administrative Agent, the Lenders or any of their respective successors, transferees or assigns, and (b) to cause any successor-in-interest to the City with respect to its interest in the Power Purchase Agreement or Interconnection Agreement to assume, in writing and in form and substance reasonably satisfactory to Administrative Agent, the obligations of City hereunder. Any purported assignment or transfer of the Power Purchase Agreement or Interconnection Agreement not in conjunction with the written instrument of assumption contemplated by the foregoing clause (b) shall be null and void. No termination, amendment, or variation of any provisions of this Consent shall be effective unless in writing and signed by the parties hereto. No waiver of any provisions of this Consent shall be effective unless in writing and signed by the party waiving any of its rights hereunder. 5. GOVERNING LAW. This Consent shall be governed by the laws of the State of California applicable to contracts made and to be performed in California. The federal courts or the state courts located in California shall have exclusive jurisdiction to resolve any disputes with respect to this Consent with the City, Assignor, and the Lender or Lenders irrevocably consenting to the jurisdiction thereof for any actions, suits, or proceedings arising out of or relating to this Consent. 6. COUNTERPARTS. This Consent may be executed in one or more duplicate counterparts, and when executed and delivered by all the parties listed below, shall constitute a single binding agreement. 7. SEVERABILITY. In case any provision of this Consent, or the obligations of any of the Parties hereto, shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions, or the obligations of the other Parties hereto, shall not in any way be affected or impaired thereby. 8. ACKNOWLEDGMENTS BY BORROWER. Borrower, by its execution hereof, acknowledges and agrees that neither the execution of this Consent, the performance by the City of any of the obligations of the City hereunder, the exercise of any of the rights of the City hereunder, or the acceptance by the City of performance of the Power Purchase Agreement by any party other than Borrower shall (1) release Borrower from any obligation of Borrower under the Power Purchase Agreement or Interconnection Agreement, (2) constitute a consent by the City to, or impute knowledge to the City of, any specific terms or conditions of the Financing Agreement, the Security Agreement or any of the other Financing Documents, or (3) except as expressly set forth in this Consent, constitute a waiver by the City of any of its rights under the Power Purchase Agreement or Interconnection Agreement. Borrower and Administrative Agent acknowledge hereby for the benefit of City that none of the Financing Agreement, the Security 040914 jrm 0180042 34 Agreement, the Financing Documents or any other documents executed in connection therewith alter, amend, modify or impair (or purport to alter, amend, modify or impair) any provisions of the Power Purchase Agreement. CITY OF PALO ALTO ADMINISTRATIVE AGENT APPROVED AS TO FORM Senior Deputy City Attorney BORROWER APPROVED City Manager Director of Utilities Utilities Advisory Commission Minutes Approved on: Page 1 of 3 UTILITIES ADVISORY COMMISSION MEETING MINUTES OF NOVEMBER 2, 2016 NEW BUSINESS ITEM 1: ACTION: Staff Recommendation that the Utilities Advisory Commission Recommend that the City Council Adopt a Resolution to Continue the Palo Alto Clean Local Energy Accessible Now (CLEAN) Program and Amend Associated Program Rules: (1) for Local Solar Resources with a Tiered Pricing Structure Starting at 16.5 ¢/kWh to a 3 MW Cap Which Declines to the City’s Avoided Cost Value Upon Receiving 6 MW of Program Capacity; and (2) for Local Non-Solar Resources With No Capacity Limit at a Price of 8.4 ¢/kWh to 8.5 ¢/kWh Assistant Director Jane Ratchye provided a presentation summarizing the written report. She noted the history of the Palo Alto CLEAN program, including the Council confirming the 16.5 cents per kilowatt-hour (¢/kWh) price for local solar many times since December 2012. Ratchye noted that the program has received applications this year totally about 1.5 megawatts (MW) and that another customer is interested in the program for a large system. She said that the program cap is 3 MW and that the new customer is determining how big a system to install and could use up the remaining available capacity. That customer is interested in what the program price for capacity in excess of the 3 MW cap. Ratchye noted that since the program was launched in 2012, the avoided cost of local solar (including the cost of the energy, the environmental attributes, local capacity value, transmission and ancillary service value, avoided transmission and distribution system losses, and congestion value) has declined to the current avoided cost of 8.9 ¢/kWh for a 20-year contract. She said that the avoided cost of local non-solar renewable supplies has increased from last year from 8.1 ¢/kWh to 8.4 ¢/kWh for a 20-year contract. Ratchye described staff’s recommendation, which is to continue the 16.5 ¢/kWh price for the first 3 MW of local solar projects, but to expand the program while lowering the price until 6 MW of capacity is reached, then reducing the price to the avoided cost value. She said that the proposal is to reduce the price to 14 ¢/kWh for the 4th MW, 12 ¢/kWh for the 5th MW, and 10 ¢/kWh for the 6th MW. For local non-solar projects, staff recommends that the price continue at the avoided cost, which has increased to 8.4 ¢/kWh for a 20-year contract and 8.5 ¢/kWh for a 25-year contract. The 3 MW cap would be removed for both solar and non-solar projects since there is no rate impact when the price is equal to the avoided cost. Ratchye noted that staff’s recommendation increases the excess cost from $380,000/year to $535,000/year, or $10.7 million over 20 years. Ratchye explained that staff considered several alternatives including the following: 1.Option 1 would end the program when 3 MW is reached. DRAFT ATTACHMENT D Utilities Advisory Commission Minutes Approved on: Page 2 of 3 2. Option 2 would extend the program after 3 MW is reached, but reduce the price to the avoided cost for all capacity after the first 3 MW. 3. Option 3 would end the program when the last project is added which would push the program over the 3 MW limit. 4. Option 4 would eliminate the cap and continue the 16.5 ¢/kWh for an unlimited amount of capacity. Ratchye noted that in Option 3, since applications for projects totally 1.5 MW have already been received, if the last project was sized at 3 MW, the total capacity at 16.5 ¢/kWh could be 4.5 MW, well over the existing program’s 3 MW limit. Public Comment Richard Cassel said that solar system developers and site owners need certainty around the costs they may incur to install a system and that the utility should include a guarantee that the utility will provide the interconnection. Commissioner Forssell asked what the rate that would be provided to solar systems and how this relates to the Net Energy Metering (NEM) program cap, which was recently raised. Ratchye explained that NEM is for energy designed to be used at the building location, but that the CLEAN program is a feed-in tariff program whereby all the energy generated by the solar system is purchased by the City of Palo Alto Utilities (CPAU) under a long-term power purchase agreement (PPA). The rate is the subject of the discussion tonight and is currently 16.5 cents/kWh for a 20- or 25-year PPA term. Commissioner Johnston asked what non-solar local renewable energy options there are in the City. Ratchye indicated that they are unlikely, but could include small wind generators, or an anaerobic digester, for example. Vice Chair Danaher asked why we would the City pay more for solar energy than its pays for solar energy located elsewhere. He recommended that the program limit be reduced to 2 MW and end the program early since there is no carbon benefit given the City’s electric supply portfolio. Chair Cook asked about the process for determining interconnection costs (to address the question from the public). General Manager Shikada said that CPAU is working on the question and expects to be able to figure out a path for ward for the applicant in question. Chair Cook agreed with the commenter that certainty is key for applicants. He said that he understands that remote solar is cheaper and that the avoided cost calculation captures the value of local solar. He said that he is torn about the program or whether there is another incentive for local solar that the City should offer. Vice Chair Danaher noted that the additional $130,000/year per MW in excess cost to extend the incentive beyond 3 MW is not the best use of ratepayer funds and that ratepayer money could be used for other valuable purposes. He noted that applicants are not pounding on the City’s door for this program and that there wouldn’t be a problem with stopping the program. Commissioner Johnston asked if local solar provides resilience or reliability for the local electric distribution system. Vice Chair Danaher noted that Commissioner Ballantine has indicated that Utilities Advisory Commission Minutes Approved on: Page 3 of 3 the common inverters used do not allow the system to remain energized and producing energy when there is an outage on the distribution system. Commissioner Forssell said that the City should not reduce the system cap and should honor the 3 MW cap in the current program. She indicated that she is supportive of reducing the price to the avoided cost after 3 MW is reached. Commissioner Johnston asked if there is a benefit to local solar. He said that if the contract price is reduced to the avoided cost after reaching 3 MW, then that is effectively ending the program after reaching 3 MW. Vice Chair Danaher said that he didn’t believe there are any additional benefits of local solar beyond those captured in the avoided cost calculation. Chair Cook noted that we are still buying non-renewable power. Vice Chair Danaher agreed that this program won’t change that. Non-renewable power will still be needed to balance loads on certain hours, days, and months. Chair Cook said that in normal hydro year, the City doesn’t buy brown power. He suggested designing a program that doesn’t overcommit the renewable energy. Vice Chair Danaher reiterated that he sees better uses for the money than overpaying for local solar energy. ACTION: Chair Cook made a motion that the UAC recommend that Council raise the Palo Alto CLEAN program price for local non-solar eligible renewable energy resources to the updated avoided cost of such energy (8.4 ¢/kWh for a 20-year contract term, or 8.5 ¢/kWh for a 25-year contract term), from the prior price (8.1 ¢/kWh for a 20-year contract term, or 8.2 ¢/kWh for a 25-year contract term), and to remove the program limit of 3 MW for local non-solar eligible renewable resources. Commissioner Trumbull seconded the motion. The motion carried unanimously (5- 0) with Chair Cook, Vice Chair Danaher, and Commissioners Forssell, Johnston, and Trumbull voting yes and Commissioners Ballantine and Schwartz absent. Commissioner Forssell made a motion that the UAC recommend that Council maintain the current CLEAN price of 16.5 cents per kilowatt-hour (¢/kWh) for a 20-year or 25-year contract term for a maximum of 3 MW of capacity and, for any capacity over 3 MW, reduce the price to the avoided cost of such energy (8.9 ¢/kWh for a 20-year contract term, or 9.1 ¢/kWh for a 25- year contract term) and remove the program limit of 3 MW for local solar resources. Chair Cook seconded the motion. The motion carried (4-1) with Chair Cook, Vice Chair Danaher, and Commissioners Forssell and Trumbull voting yes, Commissioner Johnston voting no and Commissioners Ballantine and Schwartz absent. Commissioner Johnston said he voted no as he supported the staff recommendation of reducing the price in tiers until 6 MW of capacity was reached before moving to a price based on the avoided cost. Utilities Advisory Commission Minutes Approved on: Page 1 of 3 UTILITIES ADVISORY COMMISSION MEETING MINUTES OF NOVEMBER 2, 2016 NEW BUSINESS ITEM 1: ACTION: Staff Recommendation that the Utilities Advisory Commission Recommend that the City Council Adopt a Resolution to Continue the Palo Alto Clean Local Energy Accessible Now (CLEAN) Program and Amend Associated Program Rules: (1) for Local Solar Resources with a Tiered Pricing Structure Starting at 16.5 ¢/kWh to a 3 MW Cap Which Declines to the City’s Avoided Cost Value Upon Receiving 6 MW of Program Capacity; and (2) for Local Non-Solar Resources With No Capacity Limit at a Price of 8.4 ¢/kWh to 8.5 ¢/kWh Assistant Director Jane Ratchye provided a presentation summarizing the written report. She noted the history of the Palo Alto CLEAN program, including the Council confirming the 16.5 cents per kilowatt-hour (¢/kWh) price for local solar many times since December 2012. Ratchye noted that the program has received applications this year totally about 1.5 megawatts (MW) and that another customer is interested in the program for a large system. She said that the program cap is 3 MW and that the new customer is determining how big a system to install and could use up the remaining available capacity. That customer is interested in what the program price for capacity in excess of the 3 MW cap. Ratchye noted that since the program was launched in 2012, the avoided cost of local solar (including the cost of the energy, the environmental attributes, local capacity value, transmission and ancillary service value, avoided transmission and distribution system losses, and congestion value) has declined to the current avoided cost of 8.9 ¢/kWh for a 20-year contract. She said that the avoided cost of local non-solar renewable supplies has increased from last year from 8.1 ¢/kWh to 8.4 ¢/kWh for a 20-year contract. Ratchye described staff’s recommendation, which is to continue the 16.5 ¢/kWh price for the first 3 MW of local solar projects, but to expand the program while lowering the price until 6 MW of capacity is reached, then reducing the price to the avoided cost value. She said that the proposal is to reduce the price to 14 ¢/kWh for the 4th MW, 12 ¢/kWh for the 5th MW, and 10 ¢/kWh for the 6th MW. For local non-solar projects, staff recommends that the price continue at the avoided cost, which has increased to 8.4 ¢/kWh for a 20-year contract and 8.5 ¢/kWh for a 25-year contract. The 3 MW cap would be removed for both solar and non-solar projects since there is no rate impact when the price is equal to the avoided cost. Ratchye noted that staff’s recommendation increases the excess cost from $380,000/year to $535,000/year, or $10.7 million over 20 years. Ratchye explained that staff considered several alternatives including the following: 1.Option 1 would end the program when 3 MW is reached. DRAFT ATTACHMENT D Utilities Advisory Commission Minutes Approved on: Page 2 of 3 2. Option 2 would extend the program after 3 MW is reached, but reduce the price to the avoided cost for all capacity after the first 3 MW. 3. Option 3 would end the program when the last project is added which would push the program over the 3 MW limit. 4. Option 4 would eliminate the cap and continue the 16.5 ¢/kWh for an unlimited amount of capacity. Ratchye noted that in Option 3, since applications for projects totally 1.5 MW have already been received, if the last project was sized at 3 MW, the total capacity at 16.5 ¢/kWh could be 4.5 MW, well over the existing program’s 3 MW limit. Public Comment Richard Cassel said that solar system developers and site owners need certainty around the costs they may incur to install a system and that the utility should include a guarantee that the utility will provide the interconnection. Commissioner Forssell asked what the rate that would be provided to solar systems and how this relates to the Net Energy Metering (NEM) program cap, which was recently raised. Ratchye explained that NEM is for energy designed to be used at the building location, but that the CLEAN program is a feed-in tariff program whereby all the energy generated by the solar system is purchased by the City of Palo Alto Utilities (CPAU) under a long-term power purchase agreement (PPA). The rate is the subject of the discussion tonight and is currently 16.5 cents/kWh for a 20- or 25-year PPA term. Commissioner Johnston asked what non-solar local renewable energy options there are in the City. Ratchye indicated that they are unlikely, but could include small wind generators, or an anaerobic digester, for example. Vice Chair Danaher asked why we would the City pay more for solar energy than its pays for solar energy located elsewhere. He recommended that the program limit be reduced to 2 MW and end the program early since there is no carbon benefit given the City’s electric supply portfolio. Chair Cook asked about the process for determining interconnection costs (to address the question from the public). General Manager Shikada said that CPAU is working on the question and expects to be able to figure out a path for ward for the applicant in question. Chair Cook agreed with the commenter that certainty is key for applicants. He said that he understands that remote solar is cheaper and that the avoided cost calculation captures the value of local solar. He said that he is torn about the program or whether there is another incentive for local solar that the City should offer. Vice Chair Danaher noted that the additional $130,000/year per MW in excess cost to extend the incentive beyond 3 MW is not the best use of ratepayer funds and that ratepayer money could be used for other valuable purposes. He noted that applicants are not pounding on the City’s door for this program and that there wouldn’t be a problem with stopping the program. Commissioner Johnston asked if local solar provides resilience or reliability for the local electric distribution system. Vice Chair Danaher noted that Commissioner Ballantine has indicated that Utilities Advisory Commission Minutes Approved on: Page 3 of 3 the common inverters used do not allow the system to remain energized and producing energy when there is an outage on the distribution system. Commissioner Forssell said that the City should not reduce the system cap and should honor the 3 MW cap in the current program. She indicated that she is supportive of reducing the price to the avoided cost after 3 MW is reached. Commissioner Johnston asked if there is a benefit to local solar. He said that if the contract price is reduced to the avoided cost after reaching 3 MW, then that is effectively ending the program after reaching 3 MW. Vice Chair Danaher said that he didn’t believe there are any additional benefits of local solar beyond those captured in the avoided cost calculation. Chair Cook noted that we are still buying non-renewable power. Vice Chair Danaher agreed that this program won’t change that. Non-renewable power will still be needed to balance loads on certain hours, days, and months. Chair Cook said that in normal hydro year, the City doesn’t buy brown power. He suggested designing a program that doesn’t overcommit the renewable energy. Vice Chair Danaher reiterated that he sees better uses for the money than overpaying for local solar energy. ACTION: Chair Cook made a motion that the UAC recommend that Council raise the Palo Alto CLEAN program price for local non-solar eligible renewable energy resources to the updated avoided cost of such energy (8.4 ¢/kWh for a 20-year contract term, or 8.5 ¢/kWh for a 25-year contract term), from the prior price (8.1 ¢/kWh for a 20-year contract term, or 8.2 ¢/kWh for a 25-year contract term), and to remove the program limit of 3 MW for local non-solar eligible renewable resources. Commissioner Trumbull seconded the motion. The motion carried unanimously (5- 0) with Chair Cook, Vice Chair Danaher, and Commissioners Forssell, Johnston, and Trumbull voting yes and Commissioners Ballantine and Schwartz absent. Commissioner Forssell made a motion that the UAC recommend that Council maintain the current CLEAN price of 16.5 cents per kilowatt-hour (¢/kWh) for a 20-year or 25-year contract term for a maximum of 3 MW of capacity and, for any capacity over 3 MW, reduce the price to the avoided cost of such energy (8.9 ¢/kWh for a 20-year contract term, or 9.1 ¢/kWh for a 25- year contract term) and remove the program limit of 3 MW for local solar resources. Chair Cook seconded the motion. The motion carried (4-1) with Chair Cook, Vice Chair Danaher, and Commissioners Forssell and Trumbull voting yes, Commissioner Johnston voting no and Commissioners Ballantine and Schwartz absent. Commissioner Johnston said he voted no as he supported the staff recommendation of reducing the price in tiers until 6 MW of capacity was reached before moving to a price based on the avoided cost. FINANCE COMMITTEE ACTION MINUTES Page 1 of 2 Finance Committee Action Minutes November 15, 2016 Special Meeting Tuesday, December 6, 2016 Chairperson Filseth called the meeting to order at 6:07 P.M. in the Community Meeting Room, 250 Hamilton Avenue, Palo Alto, California. Present: Filseth (Chair), Holman, Schmid, Wolbach arrived at 6:11 P.M. Absent: Oral Communications None. Action Items 1.Fiscal Year 2018 General Fund Financial Status and Budget Development Guidelines. NO ACTION TAKEN 2.Recommendation to the Finance Committee to Recommend That the City Council Adopt a Resolution to Continue the Palo Alto Clean Local Energy Accessible Now (CLEAN) Program, Including: (1) for Local Non- Solar Resources, Utilities Advisory Commission (UAC) and Staff Supported Updates to a Price of 8.4 ¢/kWh to 8.5 ¢/kWh With no Capacity Limit; and (2) for Local Solar Resources, Either a 16.5 ¢/kWh Price That Drops to Avoided Cost at 3 MW Recommended by the UAC, or a Tiered Pricing Structure That Declines From 16.5c/kWh to Avoided Cost Over 6 MW Recommended by Staff; and Approval of Associated Program Rules and Agreements. MOTION: Chair Filseth moved, seconded by Council Member Holman to recommend the City Council adopt a Resolution to: 1.Continue the Palo Alto CLEAN program price for local solar energy resources at the current price of 16.5 cents per kilowatt-hour (¢/kWh) for a 20-year or 25-year contract term up to the current 3 MW program capacity limit, and for any capacity over 3 MW, reduce the ATTACHMENT D ACTION MINUTES Page 2 of 2 Finance Committee Action Minutes December 6, 2016 price to the avoided cost of such energy (currently 8.9 ¢/kWh for a 20-year contract term, or 9.1 ¢/kWh for a 25-year contract term), and remove the program limit of 3 MW for local solar resources; and 2.Raise the Palo Alto CLEAN program price for local non-solar eligible renewable energy resources to the updated avoided cost of such energy (8.4 ¢/kWh for a 20-year contract term, or 8.5 ¢/kWh for a 25- year contract term), from the prior price (8.1 ¢/kWh for a 20-year contract term, or 8.2 ¢/kWh for a 25-year contract term), and to remove the program limit of 3 MW for local non-solar eligible renewable resources MOTION PASSED: 4-0 Future Meetings and Agendas Lalo Perez, Chief Financial Officer, said this is the last Finance Committee meeting of the year. He thanked the members of the Committee, as well as Staff, for all of their hard work. Adjournment: The meeting was adjourned at 8:35 P.M. City of Palo Alto (ID # 7572) City Council Staff Report Report Type: Consent Calendar Meeting Date: 2/6/2017 City of Palo Alto Page 1 Summary Title: 203 Forest Avenue: Appeal of Director's Decision Title: 203 Forest Avenue [14PLN-00472]: Appeal of the Planning and Community Environment Director's Denial of an Architectural Review Application for a 4,996 Square Foot Residential Addition Above an Existing 4,626 Square Foot Commercial Building. Environmental Assessment: Not a Project. Pursuant to Section 15270, CEQA Does not Apply to Disapproved Projects. Zoning District: Downtown Commercial (CD-C (GF)(P)) District From: City Manager Lead Department: Planning and Community Environment Recommendation Staff recommends the City Council uphold the Director’s denial of an Architectural Review application, thereby denying the appeal based on associated findings. Executive Summary The Director denied a proposal to construct a 4,996 square foot (sf) residential addition to an existing office building at 203 Forest Avenue. The applicant proposed to maintain the existing one and a half story building and office use, and construct one new residential unit on the third and fourth floor above the ground floor office use. The applicant intended to subdivide the commercial and residential uses by creating two condominium units. Typically, development under 5,000 sf is reviewed at the staff level. However, the Zoning Ordinance allows for the Director of Planning and Community Environment to elevate such projects to the Architectural Review Board (ARB) when the project will significantly alter the character or appearance of a building or site. The ARB forwards a recommendation to the Director. The ARB reviewed the project on May 21, 2015, September 1, 2016, and November 17, 2016. Following ARB review, and pursuant to ARB recommendation, the Director denied the proposed City of Palo Alto Page 2 project in December 2016. The applicant has appealed this decision to the City Council. The appellant’s reason for the appeal is provided in Attachment C and summarized below with staff’s responses. The City Council may accept this report and adopt the staff recommendation on Consent, thereby denying the appeal and accepting the Director’s decision based on the information contained herein. Alternatively, if three or more City Councilmembers request, the matter may be pulled from the Consent calendar and scheduled for a future noticed public hearing (approximately 6-8 weeks from this Council date). Included with this report are all relevant records, including the Director’s determination letter (Attachment B) and excerpts of the transcripts of the ARB meetings on May 21, 2015, on September 1, 2016, and November 17, 2016. (Attachment G provides links to each ARB staff report, including minutes and videos, and including records from the May 28, 2015 Historic Resources Board review.) Background The proposed project is a 4,996 sf single family addition to an existing office building in downtown Palo Alto. Typically, additions of less than 5,000 sf are reviewed by City staff for conformance with the Context-Based Design Criteria (PAMC 18.18.110), Architectural Review Findings (PAMC 18.76.020(d)), and are processed at staff level in accordance with the Architectural Review Process (PAMC 18.76.020 (b)). However, PAMC Section 18.76.020(b)(2)(I) allows for the Director of Planning and Community Environment to elevate such projects the Architectural Review Board (ARB) when the project will significantly alter the character or appearance of a building or site. The ARB (PAMC 18.76.020(b)(2)(c)) then makes a recommendation for ultimate decision by the Director of Planning and Community Environment. The Director’s decision can be appealed to the City Council. The ARB recommended denial to the Director on November 17, 2016. This recommendation followed three hearings before the ARB on May 21, 2015, September 1, 2016, and November 17, 2016. The Director issued the determination letter on December 14, 2016. The Palo Alto Municipal Code provides 14 days to file an appeal, and a timely appeal was filed by the project applicant. A discussion of the ARB proceedings is provided below. ARB Review and Recommendation The ARB reviewed the project plans and received oral testimony from the applicant at public hearings on May 21, 2015 and on September 1, 2016. The City’s Historic Resource Board also reviewed the project at the May 28, 2015 hearing. Both ARB meetings were used to provide feedback on the design of the project. Staff reports and minutes from these meetings are linked in Attachment G. City of Palo Alto Page 3 The ARB discussed the aesthetic quality of the project, proposed floor plans and massing, access to and from the site and overall purpose of the design. Overall, the Board noted that they could not support the project for two reasons: it does not comply with the City’s zoning ordinance, and the Architectural Review Findings cannot be made. With regard to the zoning ordinance, the ARB identified the following provisions of the Downtown Commercial Community Zoning District with Ground Floor and Pedestrian Combining overlays (CD-C(GF)(P):  Setbacks: Development standards in the zoning district do not include required setbacks from property lines and maximum site coverage, with the exception of a 10 foot rear setback for the residential portion of the building. Balconies/open space are allowed to extend up to 6 feet into this 10 foot setback. The proposed residential unit is set back 10 foot 6 inches from the rear property line. The open terrace/balcony of the residential component on the third floor would extend to the rear property line, with a four foot wide landscaped buffer. However, this landscape buffer is inconsistent with the Zoning Code as proposed. The buffer is a paved surface with landscape planters, which constitutes a continuous balcony and terrace area up to the property line.  Parking: The Zoning Code (Section 18.54.020(b)(2) requires that residential uses provide parking in a garage that has an interior dimension of 10-feet in width. The proposed tandem parking stall is nine-feet-six-inches (9’-6”) wide that would require approval of a variance. Further, Board could not make the Architectural Review Findings in the affirmative for the project. Specifically, the Board found that the project was incompatible with the surrounding environment (Finding #2); and that the massing was larger than it needed to be (Finding #5). The Board also found that the project did not promote a pedestrian friendly or safe design (Finding #10), that the design was not appropriate for the function of the project (Finding #3), and that the design was not sustainable (Finding #15). The Board and staff extended an opportunity to the applicant to revise the plans, but the applicant expressed his desire to maintain the proposed design. The Board requested that the project return with a recommendation for denial; the denial recommendation was made on November 17, 2016. The Director denied the project on December 14, 2016. The Director’s letter (Attachment B) outlines the grounds for denial, which are based on the recommendation of the ARB. Project Description The applicant proposes to maintain the existing building and office use, and construct one new residential unit. The proposed residential gross floor area would be 4,996 sf, which includes an open residential floor plan on the fourth floor, three bedrooms on the third floor, a study area City of Palo Alto Page 4 on the second floor, and the private stair and elevator access to each area. The applicant intends to subdivide the commercial and residential uses by creating two condominium units. The proposed alterations include two new, enclosed parking spaces on the ground level for the new residential unit. These two spaces would be provided in a new tandem garage added to the east side of the building using an existing curb cut and driveway access from Forest Avenue. The existing, one covered parking space for commercial use will remain at the main building entrance with access from the existing driveway. This parking space would be designed to comply with required accessibility standards. The curb cut that currently provides vehicle access onto Emerson Street will be closed and access to the building at that location would be restricted for pedestrian use only. The two existing pedestrian entrances to the commercial space will be maintained. A new stairway is proposed for the residential unit; it will be located between the existing commercial entrances adjacent to Forest Avenue. A new elevator access for the residential tenant will have direct access from Forest Avenue. The proposed building has undergone a redesign since last year, and now consists of a predominately glass window building with a concrete block wall screen at the corner of Forest Avenue and Emerson Street. A board formed concrete tower encloses the three story elevator at the rear portion of the building along Forest Avenue, and a two story garage comprised of translucent glass door and an anodized aluminum canopy are located at the rear of the property. The following discretionary applications are being requested:  Architectural Review – Major (AR): The process for evaluating this type of application is set forth in PAMC 18.77.070. AR applications are reviewed by the ARB and recommendations are forwarded to the Planning & Community Development Director for action within five business days of the Board’s recommendation. Action by the Director is appealable to the City Council if filed within 14 days of the decision. AR projects are evaluated against specific findings. All findings must be made in the affirmative to approve the project. Failure to make any one finding requires project redesign or denial. The findings relative to the Director’s denial are explained in Attachment B.1 1 On December 12, 2016, the City Council adopted Ordinance 5403 which consolidated Architectural Review findings in the Code. These changes were intended to streamline the findings via non-substantive changes. The ordinance did not become effective until January 12, 2017, after the project at 203 Forest had been denied, and thus the new findings are not in use here. If the City Council accepts the appeal, removes the item from consent, and asks staff to notice a public hearing in the future, staff will prepare an analysis using the new findings included in Ordinance 5403. City of Palo Alto Page 5 Discussion A summary of key appeal statements is provided below, followed by information about the issues raised in the appeal and initial staff comments. If the appeal is pulled from the consent calendar, Council would need to schedule this item for a noticed public hearing, at which time the Council would conduct a “de novo” hearing, which means it may consider any of the issues raised by appellants or any other issue related to architectural review. Appeal Comment 1: The appellant states the following: The project successfully promotes harmonious development in the City in that it maintains a scale and character consistent with surrounding uses. The building creates a block-completing structure that mirrors the height and scale of buildings both across the street (northwest corner of Emerson Street and Forest Avenue) and at the other end of the block (northwest and northeast corners of Emerson Street and Hamilton Avenue). Staff Response: The proposed project is subject to the City’s Architectural Review Findings. One such finding requires projects to promote harmonious transitions in scale and character. As noted in Attachment B, the ARB and Director determined the project does not promote a harmonious transition in scale and character. While buildings to the southwest and northeast of the site contain structures that are five and three stories tall, respectively, buildings to the east, northwest, and south are single story. The building located tangential to the site along Forest Avenue is the same height as the existing structure. Therefore, placing a four story building immediately adjacent to a single story building constitutes an abrupt change in the scale and character of the street block. Further, the project contains areas inside the structure that are inaccessible. These inaccessible areas unnecessarily increase the volume, mass, and height of the building, exacerbating the incompatibilities with the height and character of the adjacent structure. Therefore, staff concluded, the project does not promote a harmonious transition in scale and character from buildings along the Emerson Street streetscape. The Architectural Review Board made similar comments during their review in May 2015. Staff sought Board input regarding building massing and transitions. The Board raised concerns regarding the site context and massing of the building. The resubmitted project in June of 2016 did not reduce the mass of the structure and its scale and character did not change to promote a harmonious development pattern. Appeal Comment 2: The appellant states the following: The project is compatible to the greatest extent possible with the immediate environment of the site. The ARB Findings for Denial states: “Buildings surrounding the site consists of more contemporary designs with solid concrete walls and intricate detailing.” It would be difficult for anyone with experience in observing and identifying City of Palo Alto Page 6 architectural styles arrive as this conclusion. The existing building is identified as “mid-century” in style. The adjoining building to the east (along Forest Avenue) is also a mid-century structure, with the same concrete block structure as the proposed Project, and the same repeating window patterns as the project (in fact the width of the proposed window design is based on the width of the windows in the adjoining building). That building was built contemporaneously with ours (the applicant’s). Characterizing this neighbor as “more contemporary” is just an outright misstatement of fact. The adjoining building on the Emerson Street (east) façade, according to its owner, is considerably older than our (the applicant’s)building, although it was modified in the late 1980s with applied moldings and cannot not now be described as belonging to any particular architectural style. As such, it is not possible, nor desirable, to attempt to emulate this architecture. Staff Response: This is an understandable comment since the building to the east of the project along Forest Avenue represents a mid-century design, comprised of a glass and concrete block structure. However, Finding #5 requires that project design promote a harmonious transition in scale. The project proposes a four story building. The site located immediately tangential to the project along Forest Avenue contains a two story building. Similarly, the site immediately adjacent to the project along Emerson Street contains a building that is the same height as the existing structure at 203 Forest. The project would place a third story immediately adjacent to this structure. Therefore, the project does not employ transitions in scale. However, this particular building employs solid concrete block walls and a rhythm of concrete blocks and glass. The proposed project differs from this structure. The project employs an open mesh style of concrete blocks which contrasts the solid concrete blocks. The project actually alters the compatible design of the existing building, which is composed of the same concrete blocks as the neighboring building along Forest Avenue. Further, the first two floors are comprised of mesh concrete blocks followed by glass with a concrete portico and elevator tower. Solid glass walls comprise the façade of the third and fourth floors. This style does not emulate the alternating rhythm of materials found on the building located to the east along Forest Avenue. Therefore, while the building may exhibit a similar architectural theme from a time period, its style is a deviation from the adjacent structure on Forest Avenue. The architecture of the building is incompatible with other structures surrounding the site. The building located tangential to the site along Emerson Street employs concrete walls with a pattern of subdued vertical columns framing windows and a doorway. The building to the north of this is comprised of stone, framed windows, and ivy covered walls. Buildings along the south and east sides of Forest Avenue and southwest of the project site employ a mixture of solid concrete and stucco walls with a pattern of glass windows and cantilevered metal window shades with sloping and peaked roof lines. The proposed features and design constitutes a deviation from these buildings because it employs concrete mesh blocks and solid glass walls City of Palo Alto Page 7 with rectilinear rooflines. These features are incompatible with the materials, architectural details, and detailing of the adjacent buildings. Appeal Comments 3 and 4: The appellant states the following: 3) The proposed project received significant input from several City Departments, including direct input from the Chief Transportation Official and his Staff. They concluded that the proposed parking plan for the project, given the City’s desire to close off the existing Emerson Street driveway (thereby increasing on-street parking), was both workable and recommended. This negates any inconsistency listed in the ARB Findings for Denial related to traffic and parking. Additionally, the ARB itself professed its approval of the parking design in 2015. 4) The items raised in the ARB Findings for Denial relating to design, environment, circulation, traffic, and landscaping, are inconsistent with input received from City and Department Staff on these matters and are in direct conflict with written findings and Department Staff recommendations on these same matters as they pertained to prior (2015) project design, at which time Department Staff found the very same designs to be consistent and worthy of approval. Staff Response: Staff believes the administrative record reflects a clear history of concern expressed to the applicant regarding the proposed parking plan, curb cuts, architectural design, and a variety of other concerns. The administrative record does not contain evidence of an approved parking plan. Staff noted in comments to the applicant on December 23, 2014, that the “at-grade parking facility serving the commercial space does not have sufficient distance from the street so that vehicle (sic) need to back out into or over the street or sidewalk (PAMC 18.54.010(a)(5)).” The correct Code Section is 18.54.020(a)(5). Moreover, staff met with the property owner on various occasions to discuss specific areas of concerns previously expressed by staff and board members. In the final analysis, reviewing the formal application, the ARB unanimously recommended project denial; the director concurred. Attached to this report are minutes from the ARB meetings as well as comment letters transmitted to the applicant (Attachments E and F, respectively). Appeal Comment 5: The appellant states: Staff has been unable or unwilling to provide specific comments on the proposed building designs in a timely fashion and has generally provided no comments whatsoever. The project has been classified at different times as both Major and Minor, notwithstanding that it should be only a Minor Review. The ARB review process is arbitrary and uncertain in the best of circumstances, and the appellant believes that they received a review that was inconsistent with the stated goals and purposes of the Board. In effect, the appellant City of Palo Alto Page 8 has not received the review to which they are legally entitled, both by the Department and from the Architectural Review Board. Staff Response: A Minor review is conducted by staff; a Major review requires ARB review. The municipal code includes a list of projects that are eligible for Minor review. However, the code also stipulates that the Director may determine that a qualifying Minor project may be considered a Major project if it will significantly alter the character or appearance of a building or site. This was the case for the subject application. While initially filed as a Minor application, it became evident after reviewing the plans, that ARB review was desirable. This was communicated to the applicant. The appellant makes other comments asserting that the architectural review process is arbitrary, uncertain, and inconsistent. To the contrary, the process for reviewing architectural review applications is clearly addressed in the municipal code. The review of such projects is subject to specific findings. Staff recognizes, however, that it can be challenging designing an appropriately scaled building when the surrounding context is not consistent with the project objectives. It is further worth noting that most projects get reviewed and recommended for approval from the ARB. However, in instances when the applicant fails to address significant and repeated design concerns, or requests a project denial from the ARB as opposed to working through the issues with the board, one should expect that application to be denied. Such action is not denying the applicant their legally entitled review as stated by the appellant. Rather, the applicant had several opportunities to address the concerns and instead opted out of the process, declining to even show at the last hearing. Environmental Review The subject project has been assessed in accordance with the authority and criteria contained in the California Environmental Quality Act (CEQA), the State CEQA Guidelines, and the environmental regulations of the City. Specifically, the proposal is not a project pursuant to Section CEQA 15270, which states CEQA does not apply to projects which a public agency rejects or disapproves. Should the Council choose to remove the project from consent and continue the hearing to a later date, an updated environmental analysis will be provided. Attachments: Attachment A: Location map (PDF) Attachment B: Director's Denial Letter (PDF) Attachment C: Applicant's Appeal Request (PDF) Attachment D: Comprehensive Plan Analysis (DOCX) Attachment E: Project Review Letter from December 23, 2014 (PDF) Attachment F: Project Correspondence (PDF) Attachment G: Public Hearing Chronology (DOCX) City of Palo Alto Page 9 Attachment H: Project Plans from September 2016 ARB Hearing - SEE COMMENTS (DOCX) 120-27-090 120-27-038 120-27-046 120-27-047 120-27-048 120-27-084 120-27-039 120-27-034 120-27-035 120-27-036 120-27-027 120-27-026 120-27-025 120-27-007 120-27-019 120-27-020 120-27-021 120-27-022 120-27-023 120-27-024 120-27-018 120-27-015 120-27-014 120-27-008 120-27-011 120-61-006 120-61-005 120-61-004 120-61-003 120-61-002 120-61-001 120-61-016120-61-015 120-61-014 120-61-013 120-61-012 120-61-011 120-61-010 120-61-009 120-61-007 120-61-008 120-61-021 120-61-020 120-61-019120-61-018 120-61-017 120-61-029120-61-028 120-61-027 120-61-026 120-61-025 120-61-024 120-61-035120-61-034 120-61-033 120-61-032 120-61-031 120-61-030 120-61-022 120-61-023 120-27-013 120-27-012 120-27-009 120-27-010 120-26-073 120-26-074 120 120-27-075 120-27-074 120-27-073 120-27-085 120-27-070 120-27-066 120-27-071 120-27-072 120-27-049 120-70-009 120-70-008 120-70-007 120-70-006 120-70-005 120-70-004 120- 120-70-002 120-70 120-70-010 120-51-019 120-51-018 120-51-017 120-51-016 120-51-015 120-51-014 120-51-013 120-51-012 120-51-011 120-51-010 120-51-009 120-51-008 120-51-007 120-51-006 120-51-005 120-51-004 120-51-003 120-51-002 120-51-001 1 120-47-0 120-27-064 120-27-063 120 120-27-053 120-27-017 120-27-016 120-27-077 120-27-045 120-28-006120-27-076 01 120-72-002 03 120-72-004 05 120-72-006 E M ERSO N STREET HO M ER HIG H STREET H A MILTO N AVEN UE E M ERSO N STREET EET FOREST A FOREST A VENUE RA M O NA STREET RA M O N A STREET LA NE 7 EAST LA NE 6 EAST 12 W EST LANE 11 W EST HIGH ST REET FOREST A VEN UE LA PC-2967 RM-15 PC-3707C R PF RT-50 C D-S(P) RT-35RT-50 CD-C(P)CD-C(GF)(P) CD-S(GF)(P) 66 643 643 635 635 627 629 631 635 635 685 677 675 655 645 645- 685 666 660 660- 666 620 620180 180 164 164 158 156 624 624 628 628 632 632 636 636 640 640 644 644 617 617 621 621 153 151 151-165 185 175 171 1 71-1 9 5 195 203 203 642 642 640 640 636 636 200 200 623 630 630616 616 208 208 228 228 220 220 238 240 240 547 201 209 209 215 215 225 225 595 595 229 229 231 231 619 611 611-623 625 625-631 538 540 542 536 552 552 548 548 546 54 541 236 230 230-238 734 734723 723 721 721 728 724722 720 718 716 714 730 712 710 708 706 704702 702- 730 242 220 220-244 240 244 239 744 74 701 701 731 731 20 160 160 162 728 728-732 732 250 250 275 275 270 270 7 724 72 651 651 225 221 221-225 223 227 227 668 668 235 235 155 165 137 137 145 145 700 700 744 111 150 150 100 703 703 101 139 139 654 654 695 735 735 707 707 800 800 812 812 818 791 791 153 718 718 774 774 761 761 795 795 745 745 201 201 209 209 225 235 233 231 229 227 223 223-239 726 543 727 727 733 806 806 698 698 161 161159 159 157 157 777 777 247 247 658 658 739 700 700 668 668 730 781 234 151 257 218 218 705 705 600 600 229 229 597 597 This map is a product of the City of Palo Alto GIS This document is a graphic representation only of best available sources. Legend Zoning District: Zone District Subject Site 0'114' 203 Forest Avenue Project Location Map CITY O F PALO A L TO IN C O R P O RATE D C ALIFOR N IA P a l o A l t oT h e C i t y o f A P RIL 16 1894 The City of Palo Alto assumes no responsibility for any errors ©1989 to 2015 City of Palo Altocfong2, 2015-05-13 09:32:46 (\\cc-maps\gis$\gis\admin\meta\view.mdb) Attachment A 14PLN-00472 City of Palo Alto Page 1 of 3 ATTACHMENT D COMPREHENSIVE PLAN ANALYSIS 203 Forest Avenue / File No. 14PLN-00472 Comp Plan Goals and Policies How project adheres or does not adhere to Comp Plan The Comprehensive Plan land use designation for the site is Regional/Community Commercial. The project continues the Regional Commercial land use. Land Use and Community Design Element Goal L-1: A well-designed, compact city, providing residents and visitors with attractive neighborhoods, work places, shopping district, public facilities and open spaces. The project does not maintain the scale and character of the land uses in this area of the City. The project introduces a four story building adjacent to single- and two-story buildings that are immediately northwest of the site. The project does not provide a gradual transition in scale from the commercial buildings to the northwest to the proposed residential use. The project places a residential use on the third and fourth stories immediately adjacent to single-story non- residential uses. The fourth story penthouse exacerbates the proportions of the project relative to other buildings in the area and creates an incompatible sense of scale due to the lack of gradual transitions. Therefore, the project is inconsistent with Policy L-5 and Policy L-6 and does not fulfill Goal L-1 of the Palo Alto Comprehensive Plan. POLICY L-5: Maintain the scale and character of the City. Avoid land uses that are overwhelming and unacceptable due their size and scale. POLICY L-6: Where possible, avoid abrupt changes in scale and density between residential and non- residential areas and between residential areas of different densities. To promote compatibility and gradual transitions between land uses, place zoning district boundaries at mid-block locations rather than along streets wherever possible. Goal L-4: Inviting, pedestrian-scale centers that offer a variety of retail and commercial services and provide focal points and community gathering places for the City’s residential neighborhoods and Employment Districts. The project is not compatible with the character of the surrounding neighborhood nor does it establish an inviting pedestrian-scale or an inviting street corner and pedestrian character. The project proposes a 1950’s architectural design with mesh brick façade and a modern designed building on the third and fourth floors with glass windows. Surrounding buildings consists of stucco and concrete with intricate details sculpted into the buildings’ design. The proposed mesh brick façade on the first two floors and modern third and fourth floor contrast these styles and is POLICY L-18: Encourage the upgrading and revitalization of selected Centers in a manner that is compatible with the character of the surrounding neighborhoods. POLICY L-20: Encourage street frontages that contribute to retail vitality in all Centers. Reinforce street corners with buildings that come up to the sidewalk or that form corner plazas. 14PLN-00472 City of Palo Alto Page 2 of 3 POLICY L-23: Maintain and enhance the University Avenue/Downtown area as the central business district of the City, with a mix of commercial, civic, cultural, recreational and residential uses. Promote quality design that recognizes the regional and historical importance of the area and reinforces its pedestrian character. incompatible with the character of the surrounding neighborhood. The proposed pedestrian areas are located tangential to a vehicle parking space and the trash enclosure. The position of these pedestrian areas creates incompatible uses and does not reinforce a pedestrian character. Further, the proposed seating area does not promote an enhanced corner plaza or pedestrian friendly area because it is not directly accessible from the street. The project proposes to retain the office space which is inconsistent with Policy L-23 because it does not incorporate commercial uses. The project does not incorporate public art as well. Therefore, the project is inconsistent with the respective policies and Goal L-4 of the Palo Alto Comprehensive Plan. POLICY L-24: Ensure that University Avenue/Downtown is pedestrian-friendly and supports bicycle use. Use public art and other amenities to create an environment that is inviting to pedestrians. Goal L-6: Well-designed buildings that create coherent development patterns and enhance city streets and public spaces. The project is inconsistent with Goal L-6 and its supporting policies. The site planning for the project is not compatible with surrounding development and public spaces because vehicles must back out over the curb and into the street to exit the site in two locations. This design compromises safety and compatibility with the surrounding development and public spaces. The project proposes a 1950’s architectural design on the first two floors comprised of a mesh brick façade and a modern style building comprised of glass windows on the third and fourth floor. The project is flanked by intricate stucco and concrete designed buildings and more traditionally designed stucco buildings. These buildings employ arched and setback entries that relate to a human-scale, and have sloped and peaked rooflines. The project proposes a blank solid wall at street level along Forest Street. Further, the four story building does not relate to a human scale and mass. Therefore the project is inconsistent with the Goal and Policies in the Comprehensive Plan requiring well-designed buildings that create coherent development patterns in the City. POLICY L-48: Promote high quality, creative design and site planning that is compatible with surrounding development and public spaces. POLICY L-49: Design buildings to revitalize streets and public spaces and to enhance a sense of community and personal safety. Provide an ordered variety of entries, porches, windows, bays and balconies along public ways where it is consistent with neighborhood character; avoid blank or solid walls at street level; and include human-scale details and massing. Transportation Element Goal T-3: Facilities, services and programs that encourage and promote walking and bicycling. The project improves amenities such as seating, bicycle parking, street trees, and outdoor 14PLN-00472 City of Palo Alto Page 3 of 3 POLICY T-22: Improve amenities such as seating, lighting, bicycle parking, street trees, and interpretive stations along bicycle and pedestrian paths and in City parks to encourage walking and cycling and enhance the feeling of safety. furniture. However, it does not encourage a pedestrian friendly design because it locates pedestrian areas adjacent to incompatible parking uses and proposes vehicle access over the sidewalks in two locations. This design reduces the feeling of pedestrian safety. Further, the project detracts from a pedestrian friendly environment by not providing defined entrances for the office use and residential uses. This is embodied in the project’s positioning of a staircase landing adjacent to the office entrance, and an elevator entrance that is not identified for residential uses. Therefore, the project is inconsistent with Policy T-22 and T-23, and it does not fulfill Goal T-3. POLICY T-23: Encourage pedestrian-friendly design features such as sidewalks, street trees, on-site parking, public spaces, gardens, outdoor furniture, art, and interesting architectural details. Housing Element Goal H-2: Support the construction of housing near schools, transit, parks, shopping, employment, and cultural institutions. The project includes one housing unit, which would create a mixed-use development on the site. This proposal is consistent with Policy H2.2. POLICY H2.2: Continue to support the redevelopment of suitable lands for mixed uses containing housing to encourage compact, infill development, optimize the use of existing urban services and support transit use. December 23, 2014 Ken Group Architects 2657 Spring Street Redwood City, CA 94302 Attn: Ken Hayes Subject: 203 Forest Avenue, Application #14PLN-00472, Minor Architectural Board Review, Notice of Incomplete Dear Mr. Hayes: Your application, referenced above, has undergone review for completeness and consistency with City of Palo Alto policies and regulations and cannot be deemed complete at this time. We have evaluated your project based on the plans and information currently on file. Additional comments may be made at a later time when we receive revised plans and additional information. Corrections/changes/items needed to complete the application: Subdivision 1. Declare the intent of ownership (i.e. one owner; subdivision or condominium) in the project description letter. Development Review 2. Provide the building plans and certified measurements from John Northway as referenced in your application. 3. Provide evidence to show that the office space is a lawfully existing use, such as a Use and Occupancy Permit. 4. Specify proposed site coverage in the site information table on sheet A0.1. 5. Show floor area breakdown of existing office use. 6. Differentiate areas for landscape open space coverage and usable open spaces. These are two separate requirements. 14PLN-00472 City of Palo Alto Page 2 of 5 7. Highlight proposed landscape open space and usable open space on plan and summarize area calculation in the site information table on Sheet A1.1. 8. Proposed planters shall not count toward usable open space as it does not meet the minimum size requirements. 9. Proposed atrium is considered as covered and enclosed space when skylight is in closed position. If an area is covered and enclosed, it shall not count as open space and would count toward gross floor area. 10. Proposed residential attic space is deemed to be usable as it has permanent access and not located on the roof of a building. This area shall count toward gross floor area. 11. Permanently covered and enclosed area devoted to storage or similar use, including all waste disposal and storage facility, irrespective of the waste source or distribution, shall count toward gross floor area. 12. Show details on trash enclosure that may be visible from public right of way. 13. Highlight proposed pedestrian overlay space in area diagrams on Sheet A1.1 and include square footage in the summary table. 14. Two long term and one short term bike parking are required for this proposal. 15. Provide existing building elevations to show the proposed changes and parts to be remained. 16. Existing elevation photographs shall be in larger format to improve readability for design analysis. 17. Show identification signage for ADA parking on site plan. Design 18. Provide justification and rationale on how the project would meet the Context-Based Design Criteria under PAMC 18.18.110. Urban Forestry 19. Two publicly owned specimen oak trees are to be retained and provided with enhanced root growing conditions from their current restricted state. The cork oak is a viable and unique and sizable specimen recognized by the City of Palo Alto, Canopy, and is the subject of local tree walks due to its unique cork bark characteristics and character. The 14PLN-00472 City of Palo Alto Page 3 of 5 holly oak is a healthy tree contributing to the urban canopy. Both specimen oaks are important to the Goals, Policies & Programs of the Comprehensive Plan, Urban Forest Master Plan, Downtown Improvement Plan and Zoning Ordinance. 20. Show both frontages, Emerson and Forest, with extended tree well openings, optimally as a narrow parkway strip to include one new medium size tree (Ginkgo b. ‘Autumn Gold’, Maidenhair Tree) on each frontage at least 10’ from any curb cut or utility. Low growing ground cover with low water irrigation may be added, utilizing large flat step stones for lateral pedestrian crossing. 21. Urban Forestry requests and commits to any design meetings with applicant and City engineering regarding the welfare of the specimen oaks during design review or building permit level revisions. 22. The sidewalk base shall utilize Engineered Soil Mix, 24”-36” depth from the curb to building face or property line for the length of the parkway strip. Plans shall note that: “At time of sidewalk demolition, the project site arborist shall instruct where existing roots diminish to allow depth of a new trench base for the enhanced tree root area. The new sidewalk may be re-poured on top for normal pedestrian passage over the root area. 23. For building permit issuance, the Tree Preservation Report shall be updated to reflect the above and specific oversight of the above and details using the latest plan sets. It shall detail any custom pruning needed for oak clearance from new building construction. 24. Attached are Engineered Soil Mix specs and Handout for dissemination. Please forward also to the civil engineer the pollutant removal document for water quality credit if it is able to be recognized for the project. Historic Review 25. The project includes alteration to an existing structure that is more than 50 years old. To determine whether this is a historical resource under California Environmental Quality Act and to access impacts on a historical resource, a Historical Resource Evaluation Report is required. The scope of work for the Evaluation is attached. PWD Recycling 26. Trash area for commercial and residential uses shall be separated. Residential refuse carts is recommended to be stored in proximity with residential use (i.e. garage or under residential stair). 14PLN-00472 City of Palo Alto Page 4 of 5 Transportation 27. Proposed residential parking does not meet the minimum stall width requirement of 9 foot. 28. At-grade parking facility serving commercial space does not have sufficient distance from the street so that vehicle need to back out into or over a public street or sidewalk (PAMC 18.54.010(a)(5)). It is recommended to maintain the curb facing Emerson Street to ensure safe access in and out this proposed ADA parking space. 29. Provide justification on how proposed building design would provide sufficient sight distance and relief traffic hazards at the (residential) garage exit. Green Building 30. The project is a new R3 single-family dwelling and therefore shall comply with the following requirements for electric vehicle supply equipment (EVSE): a. The property owner shall provide as minimum a panel capable to accommodate a dedicated branch circuit and service capacity to install at least a 208/240V, 50 amperes grounded AC outlet (Level 2 EVSE). The raceway shall terminate in close proximity to the proposed location of the charging system into a listed cabinet, box, enclosure, or receptacle. The raceway shall be installed so that minimal removal of materials is necessary to complete the final installation. The raceway shall have capacity to accommodate a 100-ampere circuit. b. Design. The proposed location of a charging station may be internal or external to the dwelling, and shall be in close proximity to an on-site parking space. The proposed design must comply with all applicable design guidelines, setbacks and other code requirements. PAMC 5263 (Ord. 5228 § 2, 2014) Items for consideration: 1. Community outreach is recommended to address resident concerns prior to resubmittal. 2. Additional comments were provided by Building Inspection, Fire Department, PW Watershed Protection Group, Water, Gas & Wastewater Utilities, PW Electric Utilities, and Green Building Group that need to be addressed in the building permit process (see attachments). 3. Staff has concerns and questions on how the current design would meet the findings of the Context-Based Design Criteria set forth in PAMC 18.18.110. A meeting with staff is recommended prior to resubmittal. Additional comments may be made by PWD Engineering in the nearest future. 14PLN-00472 City of Palo Alto Page 5 of 5 Please contact me at 650-838-2996 or christy.fong@cityofpaloalto.org if you have any questions. Sincerely, Christy Fong Planner Attachments: Urban Forestry - Engineered Soil Mix specs and Handout for dissemination Historic Review – Scope for Historic Resource Evaluation Comments from various departments ATTACHMENT G PUBLIC HEARING CHRONOLOGY 203 Forest Avenue / File No. 14PLN-00472 Date and Hearing Architectural Review Board (ARB) November 17, 2016 Report Link http://www.cityofpaloalto.org/civicax/filebank/documents/54709 Minute Link http://www.cityofpaloalto.org/civicax/filebank/documents/55214 Video Link http://midpenmedia.org/architectural-review-board-52/ Date and Hearing ARB September 1, 2016 Report Link http://www.cityofpaloalto.org/civicax/filebank/documents/53660 Minute Link http://www.cityofpaloalto.org/civicax/filebank/documents/54329 Video Link http://midpenmedia.org/architectural-review-board-48/ Date and Hearing ARB May 21, 2015 Report Link http://www.cityofpaloalto.org/civicax/filebank/documents/47434 Minute Link http://www.cityofpaloalto.org/civicax/filebank/documents/53694 Video Link https://www.youtube.com/ watch?v=37IXeUXyrR4&start=79&width=420&height=315 Date and Hearing Historic Resource Board May 28, 2015 Report Link https://www.cityofpaloalto.org/civicax/filebank/documents/47492 Minute Link http://www.cityofpaloalto.org/civicax/filebank/documents/55647 Video Link http://midpenmedia.org/historic-resources-board-12/ Attachment H Hardcopies of project plans are provided to ARB MembersCity Council. These plans are available to the public by visiting the Planning and Community Environmental Department on the 5th floor of City Hall at 250 Hamilton Avenue. Project Plans These plans are available to the public by visiting the Planning and Community Environmental Department on the 5th floor of City Hall at 250 Hamilton Avenue. Directions to review Project plans online: 1. Go to: https://paloalto.buildingeye.com/planning 2. Search for “203 Forest Avenue” and open the record by clicking on the Blue dot 3. Review the record details and open the “more details” option under the second heading for 203 Forest Avenue 14PLN-00472 4. Use the “Records Info” drop down menu and select “Attachments” 5. Open the attachment named “203 Forest City Council ARB Appeal Submittal 2-6- 2017203 Forest - ARB Resubmittal - full size - 20160609 - FINAL.pdf” Field Code Changed City of Palo Alto (ID # 7656) City Council Staff Report Report Type: Consent Calendar Meeting Date: 2/6/2017 City of Palo Alto Page 1 Summary Title: FY 2017 Mid-Year Budget Report Title: Fiscal Year 2017 Mid-Year Budget Review, Approval of Budget Amendments in Various Funds and Approval of Amendments to Three Salary Schedules From: City Manager Lead Department: Administrative Services Recommendation Staff recommends that the City Council: 1) Amend the Fiscal Year 2017 Adopted Budget for various funds and various capital projects as identified in Attachment A Exhibits 1 and 2 respectively. 2) Amend the salary schedules at Attachment C for: a) Management and Professional employees group (MGMT) to adjust the salary range of two position classifications; b) Service Employees International Union (“SEIU”) to adjust the salary rate for one classification and change the title of one position classification; and c) Limited Hourly (“HRLY”) to adjust the salary rate for one classification and add one new classification. Executive Summary Annually, staff presents the status of revenues and expenditures for major funds and the Capital Improvement Program as of December 31 of the current fiscal year. As part of that status report, staff also brings forward recommendations to adjust the annual adopted budget. Adjustments to the City’s budget may become necessary as revenues and expenditures may vary from the original budget plan. The attached documents document changes to the City’s FY 2017 Adopted Budget and administrative changes to salary schedules. Through the first half of the year, City funds are generally performing within expected FY 2017 budgeted levels. In limited instances, budget actions are recommended in this report to address isolated instances where current year performance is not meeting budgeted estimates. In total, approximately 100 adjustments are recommended in this report, however over 80 percent are to align transfers and allocated charges between funds that were inadvertently misaligned in the adoption of the FY 2017 budget. City of Palo Alto Page 2 Recommended budget adjustments that are generally grouped into four types of transactions (Attachment A, Exhibits 1 and 2): - New requests: These requests are ones that require additional funding to address a very limited number of program needs. These adjustments are brought forward ahead of the annual budget process because the need either cannot or should not wait until later in the year. - Reimbursements and Grants: These actions, which typically have a net-zero impact, adjust grants, reimbursements, and fee revenue and expenditure estimates to align with current year end projected levels as appropriate. - Previous Council Direction: These requests execute previous direction authorized by the City Council. - Technical Clean-ups: These actions are recommended to adjust the budget levels to align with current anticipated year end revenue or expenditure levels or fix inadvertent errors approved in the adopted budget. As noted above, approximately 80 percent of the adjustments in the report fall in this category. This report does not recommend any changes to the Table of Organization, however, it does include clean-up adjustments to the salary schedules for three groups - Management and Professional employees group (MGMT), Service Employees International Union (“SEIU”), and Limited Hourly (“HRLY”). These limited adjustments correct salary rates as well as provide classification title adjustments and a new classification. There is no change to the budget position levels recommended. It is anticipated that a supplemental at places memorandum will be distributed to provide further changes in order to ensure compliance with the minimum wage ordinance adopted by the City Council. Background This report summarizes proposed changes to the FY 2017 Budget and discusses financial activity through December 31, 2016. Where possible, budget change recommendations are brought forward for City Council consideration as part of the approval of the FY 2017 Mid-year Budget Report to consolidate requests and streamline changes to the budget appropriation ordinance. As discussed at the December 6, 2017 Finance Committee, the City has streamlined and slimmed down the Mid-Year Budget Report in light of the anticipated need to tighten financial obligations. As such, this report is being considered by the City Council nearly three months earlier than in previous years. Technical adjustments to the budget, clean-ups of inadvertent errors or revenue backed activities are the vast majority of the recommendations in the report being brought directly to the City Council. It does not include adjustments to major revenue assumptions at this time as it is still early in the year and current projections are within 2 percent of budgeted levels. This report is organized by fund with a primary focus on major changes in the General Fund. Mid-year changes for the Enterprise, Internal Service, and Special Revenue Funds are also included in this report. All adjustments are detailed in Attachment A, Exhibits 1 and 2. City of Palo Alto Page 3 Discussion The following pages provide an overview of the status for the General Fund, Enterprise Funds, and other funds including recommended budget adjustments as they pertain to the City’s FY 2017 Operating and Capital budgets. Operating Budget Under this section of the report, citywide changes to the FY 2017 Adopted Operating Budget are described for the General Fund, Enterprise Funds, Internal Service Funds, and Special Revenue Funds. General Fund After six months experience in the current fiscal year, overall, the General Fund is tracking within budgeted levels and is anticipated to end the year with a one-time budget surplus of approximately $3 million to $5 million as a result of excess revenues and expenditure savings. Revenues forecasted to end the year above budgeted levels include Sales Tax, Transient Occupancy Tax, and Utility User Tax. Expenditure savings may result by year end primarily due to estimated vacancy savings based on staffing levels through December 2016 and will be monitored during the remainder of the year. This estimated one-time surplus reflects less than one percent of the FY 2017 budget. Therefore, staff will continue to monitor financial activity and should the organization continue to track with a one-time budget surplus, that surplus will be factored into the development of the Fiscal Year 2018 Proposed Budget (late April/early May) as well as closing of the Fiscal Year 2017 Budget (November/ December). As described in more detail below and detailed in Attachment A, minor adjustments to the Fiscal Year 2017 General Fund Budget related to new requests, reimbursements, grants, previous Council direction, or technical clean-ups. General Fund Revenue Overall, staff is projecting General Fund revenues will finish the year $2 million or approximately 2 percent above original budgeted projections. Major tax revenue highlights are below: - Sales Tax: Receipts are anticipated to end the year at $30.3 million, an increase of $1.1 million above the FY 2017 Adopted Budget. This change is due to stronger sales tax performance in the 3rd calendar year quarter receipts which reflects activity through September 2016. - Property Tax: Receipts are anticipated to end the year at the FY 2017 Adopted Budget estimate of $39.1 million. This reflects a 6.7% increase from prior year levels of $36.6 million. This year end estimate is informed based on information received from quarterly meetings with the Santa Clara County Assessor’s Office and adjusts for appeals on record with the Assessor’s Office, additions to the roll, and movements in assessed values. - Transient Occupancy Tax (TOT): Receipts are anticipated to exceed the FY 2017 Adopted City of Palo Alto Page 4 Budget levels by $700,000, from $23.1 million to $23.8 million based on actual receipts to date. Of this increase, approximately $300,000 is dedicated for infrastructure spending which is reflected in a transfer from the General Fund to the Capital Improvement Fund. - Documentary Transfer Tax: Collections are anticipated to end the year at or slightly below the FY 2017 Adopted Budget estimate of $6.7 million. As this revenue source is sensitive to upward and downward movements in the real estate market as well as the mix of commercial and residential transactions in any one year collections will continue to be monitored closely. - Utility Users’ Tax (UUT): UUT revenue is based on a 5 percent tax on electric, water, gas and 4.75 percent on telephone usage. Overall receipts are tracking to end the year at or slightly above the FY 2017 Adopted Budget levels of $12.4 million. Although the telephone UUT rate was reduced from 5.0 percent to 4.75 percent in a ballot measure, receipts continue to track higher than expected. Revenues in the remaining categories including Charges for Services, revenue from Other Agencies and Other revenues are generally tracking within adjusted budgeted levels. A net increase of $504,000 in estimated revenues is recommended in this report. These adjustments recognize grants and reimbursements and technical adjustments for inadvertent unbalanced transfers approved in the FY 2017 Adopted Budget. General Fund Expense General Fund expenditures are generally tracking to remain within budgeted expenditures through the end of the fiscal year. Savings may result by year end primarily due to estimated vacancy savings based on staffing levels through December 2016, from $2 million to $3 million. These expenses will continue to be monitored during the remainder of the year and adjustments brought forward as appropriate. As is customary, an overtime analysis for the Fire and Police departments is attached (Attachment B). The Public Safety Overtime Analysis Fiscal Year 2015 - Fiscal Year 2017 compares the net overtime cost for the Fire and Police departments for FY 2015, FY 2016 and the first six months of FY 2017. Net overtime cost represents the Public Safety departments’ modified overtime budgets offset with revenue received to fund overtime along with vacancy savings that are being covered by overtime expenditures. Overtime expenditures for each department are discussed in further detail below. As of December 31, 2016, the Fire Department expended $1.9 million or 136 percent of its FY 2017 Adopted overtime budget, which exceeds the $1.5 million expended for the same period in FY 2016. This is largely attributable to higher wages and having longer term vacancies in FY 2017 (approximately 12 vacancies for six or more months) compared to FY 2016 (approximately 6 vacancies for six or more months). During the first half of Fiscal Year 2017 the Fire Department had four personnel on workers’ compensation paid leave which is slightly less than half the number of positions on workers’ compensation paid leave (10) for the entire Fiscal Year City of Palo Alto Page 5 2016. Stanford has historically reimbursed 30.3% of the Fire Department budget for fire services, including estimates for overtime. In FY 2017 a second extension of a flat rate contractual agreement, inclusive of all services has been approved. Therefore, assumptions for overtime reimbursement have been removed until a finalized agreement is negotiated. After adjusting for vacancies being backfilled with overtime, the net overtime cost is approximately $1.3 million. As of December 31, 2016, the Police Department expended $1.1 million or 74 percent of its annual overtime budget, which is slightly more than the $1.0 million expended during the same period in FY 2016. The higher level of overtime expenditures is attributable to higher wages and having longer term vacancies in FY 2017 (approximately seven vacancies of at least six months) compared to FY 2016 (approximately five vacancies of at least six months through the same time period). Also, during the first half of Fiscal Year 2017 the Police Department had five personnel on workers’ compensation paid leave which is almost half the number of positions on workers’ compensation paid leave (11) for the entire Fiscal Year 2016. Included in this report are a limited number of recommended adjustments. Below summarizes the recommended changes in each of these categories. Additional retails of each recommended adjustment can be found in Attachment A, Exhibit 1. New Requests: These requests are ones that require additional funding to address a very limited number of program needs. These adjustments are brought forward ahead of the annual budget process because the need either cannot or should not wait until later in the year. - Fire Department Recruitment Testing: Approximately $75,000 in additional funds will ensure that the department is able to refresh recruitment promotional lists training ($15,000) and Uniforms and Personal Protective Equipment ($51,000) are funded with the anticipated hire of six new firefighters by year end. - Professional Training: A reallocation of training funds from non-departmental training funds to the City Auditors Office ($25,000) to provide one-time professional training activities. Reimbursements and Grants: These actions, which typically have a net-zero impact, adjust grants, reimbursements, and fee revenue and expenditure estimates to align with current year end projected levels as appropriate. Recommended adjustments include: - Public Safety Reimbursements: Costs of $295,000 associated with Strike team deployments ($174,000), Managed Care Capitation Rate ($95,000), and POST training ($30,000) are recommended to be appropriated in the Fire overtime, general expenses, and Police contractual services departmental budgets respectively. - Golf Course Driving Range: As a result of increased usage of the driving range above expected levels during construction, an increase in revenues of $75,000 and expenses ($64,000) are recommended. This is consistent with the 85 percent, 15 percent split between the vendor and the City respectively. - Various Library Reimbursements: Grants and reimbursements of $22,000 to provide City of Palo Alto Page 6 funding for library services such as costs associated with technology pilots. Previous Council Direction: In CMR #7383 Recommendation to Approve the FY 2016 Comprehensive Annual Financial Report (CAFR) and Approve Budget Amendments in Various Funds (November 15, 2015), a reimbursement of the Capital Improvement Fund in the amount of $4.3 million was approved due to the approved deferral of three projects in the FY 2017 Adopted Budget. As part of the year end CMR report, a transfer to the Capital Improvement Fund ($4.3 million) as approved. Technical Clean-ups: These actions are recommended to adjust the budget levels to align with current anticipated year end revenue or expenditure levels or to realign funding among departments and funds based on updated needs or to fix errors approved in the FY 2017 Adopted Budget. The most significant adjustments are the true-up of allocated charges for utility sales to the City, print and mail services, and rental charges. The City of Palo Alto while running a public utility is also a customer of the same public utility. For the various assets and properties the City owns and operates, we pay service fees to our utility provider. Payments of this nature are budgeted as allocated charges in various departments and funds. Actions outlined in Attachment A, Exhibit 1 adjust these allocated charges to 1) ensure the anticipated customer charges in various Utility Enterprise Funds match the budgeted allocated charges in departments for utility sales which were inadvertently out of alignment in the FY 2017 Adopted Budget and 2) adjust appropriated allocated charges to match current projected usage based on actual activity through December. Other adjustments include: - Adjustment to the anticipated rent received by the General Fund to adjust for rental increases in FY2017 - Adjustments to the Print and Mail Fund allocated charges, to provide funding for the purchase of new postage meter equipment - Adjustments to vehicle allocations to accurately align the allocated charges by department (between Development Services and Fire Departments) Budget Stabilization Reserve The General Fund Budget Stabilization Reserve is anticipated to be at $42.2 million, or 21.7 percent of the FY 2017 Adopted Budget expenditures. This figure reflects that actual FY 2016 year end financial reporting as outlined in CMR #7383 Recommendation to Approve the FY 2016 Comprehensive Annual Financial Report (CAFR) and Approve Budget Amendments in Various Funds (November 15, 2015), any Council approved budget amendments approved subsequent to the budget adoption through December 31, 2016, and recommendations included in this report. This level is approximately $5 million above the Council approved level of 18.5 percent. As part of the development of the FY 2018 Proposed Budget (late April/early May) as well as City of Palo Alto Page 7 closing of the FY 2017 budget (November/December), staff will bring forward recommendations for use of the FY 2017 projected budget surplus. Enterprise Funds While most of the Enterprise Fund mid-year adjustments actions are net zero changes, revenue and expenditures offsets, and budgetary cleanup items, notable mid-year adjustments to the City’s Electric, Gas, and Water Enterprise Funds operating budgets are discussed below. The mid-year transactions for these and other Enterprise Funds: Fiber Optics, Refuse, Storm Drainage, Utilities Administration, Wastewater Collection, and Wastewater Treatment reflect allocated expenses for the sale of Utilities to the City, the reappropriation of capital project savings from FY 2016, and the return of closed out CIP funding. As discussed above, the majority of these adjustments reflect the updating of allocated charges for utility sales as well as print and mail functions. Detail on those funds and all of the Enterprise Fund mid-year adjustments are presented in greater detail in Attachment A, Exhibit 1 including recommendations related to the Enterprise Fund Capital Improvement Program. Major changes are outlined below by fund; funds not outlined are those who only have recommended adjustments for allocated charges for utility sales and print and mail as discussed in more detail in the General Fund section of this report. Electric Fund A net reserve reduction of $4.2 million is recommended primarily due to updated revenue projections as summarized below:  Electric customer sales revenue is recommended to be decreased by $4.4 million due to lower than anticipated consumption levels as a result of increased conservation.  Additional capital project costs of a net $128,000 reflect the net impact of project cancelation and project savings from FY 2016 that was not carried forward as part of the typical annual year end reappropriation process. Additional details can be found in Attachment A, Exhibit 2 or below in the Capital Program section of this report. Refuse Fund A net increase in the fund balance of $20,000 is recommended to reflect the net implications of adjustments to allocated charges and a correction of the transfer level to the Technology Fund. IN addition, a $400,000 increase for revenue and expenses to the GreenWaste services contract are recommended as well. Water Fund A net reduction of $182,000 in the fund balance is recommended to reflect increase costs for Bay Area Water Supple and Conservation Agency membership dues ($48,000) as well as slightly lower (-$129,000) revenues associated with current anticipated city sales of water. City of Palo Alto Page 8 Internal Service Funds & Special Revenue Fund Only recommended changes in allocated charges for Utility sales as well as print and mail allocations are recommended in these funds. Capital Improvement Program Budget Overall, the majority of Capital Improvement projects are anticipated to remain within budgeted levels in FY 2017. Adjustments to the City’s 2017 Capital Improvement Plan for a limited number of projects are noted in Attachment A, Exhibit 2, with specific project adjustments described as well. CIP changes fall into two basic categories: 1) projects having reductions in appropriations and 2) reappropriation of FY 2016 project savings to FY 2017. Adjustments are only recommended in the Electric Fund. Electric Fund Three projects were inadvertently omitted from the reappropriation reconciliation requests as part of the annual process approved by the Finance Committee in November 2016. Adjustments totaling $872,000 fixes that error and restores the previously approved funding for these projects. The elimination of the Electric Pole Replacements for FTTP project reflects the implications of Google Fiber projects which have been placed on hold indefinitely. This project was established specifically to address the Google Fiber project implications. Additional details on these adjustments can be found in Attachment A, Exhibit 2. Salary Schedule Changes No changes to the Table of Organization are recommended in this report, however, clean-up adjustments to three salary schedules are recommended to correct errors and realign salary ranges for a limited number of job classifications. There is no net cost in Fiscal Year 2017 for these position changes, and they will be factored into the development of the Fiscal Year 2018 budget as appropriate.  For Management and Professional, the amendment will adjust the salary range of the Public Safety Communications Manager for recruitment and retention. In addition, amendment will adjust the salary range of the Manager Information Technology Security as the position was not aligned correctly. This amendment will align the Manager Information Technology Security with the Manager Information Technology. The revised salary schedule will reflect this correction.  For SEIU, correct salary rate for the Electrician position. Step 1 pay rate of the classification was inadvertently understated. Also, the amendment will change the classification title for the Utilities System Operator Apprentice to Utilities System Operator In-Training due to the apprenticeship being denied by the state. The revised salary schedule will reflect this correction.  For the Limited Hourly group, amend the salary rates for the Instructor Aide and Recreation Aide; add the General Laborer classification. The updates to these City of Palo Alto Page 9 classifications were overlooked when council adopted the Limited Hourly Salary Schedule (CMR# 7227.) The revised salary schedule will reflect these changes. It is anticipated that a supplemental at places memorandum will be distributed on Thursday February 2, 2017 to provide further changes in order to ensure compliance with the minimum wage ordinance adopted by the City Council. Salary schedules anticipated to be impacted by this include the SEIU Hourly and Limited Hourly groups. Resource Impact Adoption of the attached ordinance will allow for adjustments to the FY 2017 budget, along with amendments to various salary schedules. With the approval of this budget appropriation ordinance, the projected ending balance of the General Fund Budget Stabilization Reserve is $42.2 million or slightly about 21 percent of FY 2017 Adopted Budget expense levels. The projected changes to the fund balance for all other funds including Enterprise Funds, Special Revenue Funds, and Internal Services funds are outlined in Attachment A. Policy Implications These recommendations are consistent with existing City policies. Environmental Assessment This is not a project under Section 21065 for purposes of the California Environmental Quality Act (CEQA). Attachments:  Attachment A: FY 2017 Mid-Year Budget Adjustments  Attachment B - Public Safety Overtime Analysis Q2 2017  Attachment C, Exhibit 1: Management and Professional Employee Salary Schedule  Attachment C, Exhibit 2: SEIU Salary Schedule  Attachment C, Exhibit 3: SEIU Hourly and Limited Hourly Salary Schedule ATTACHMENT A, EXHIBIT 1 Department Adjustment Adjustment GENERAL FUND (102) Administrative Services Facilities Rent Allocated Charges This action increases the estimate for rental income to align estimated revenue from non-general fund departments located in general fund owned City facilities to match the budgeted charges. 107,772$ City Auditor Professional Training This actions adjusts the training funds to provide additional one-time funds for professional training activities in the Auditor's Office. It is offset by a recommended reduction in the city-wide training funds in Non-Departmental. 25,000$ Community Services Golf Course Driving Range Fees This action increases the estimated revenue and fees associated with activities at the City's driving range. Beginning in July 2016, the City's golf course was closed for a rehabilitation and renovation capital improvement project; however, the driving range has remained open and usage has been higher than anticipated when the FY 2017 Adopted Budget was developed. The City currently has an agreement with the vendor to allocate these funds 85 percent to the vendor and 15 percent to the City. 75,000$ 63,750$ Fire Fire Promotional Process This action increases contract service funding and overtime funding in order to complete two promotional exam processes this year. There are currently 12 vacancies in the Fire Department and a number of employees are eligible for retirement. Therefore, this funding will allow the department to hire a consultant to perform two promotional exam processes resulting in a list the department can use to promote internally into vacant positions as well as two to four months of additional overtime to lead this effort. 75,000$ Fire Managed Care Capitation Rate This action increases the estimate for revenue from other agencies and a corresponding increase in appropriated funds for the Fire Department general expenses. The Fire Department participates in a reimbursement program that allows the City to capture additional revenue from the Federal Government for the gap between actual costs and reimbursed costs for medical transports. The City will be reimbursed for upfront funding provided and based upon the actual number of transports for each insurance carrier program, a portion of the revenue pool. 95,000$ 47,000$ CITY OF PALO ALTO RECOMMENDED AMENDMENTS TO THE CITY MANAGER'S FY 2017 BUDGET Revenues Expenses ATTACHMENT A, EXHIBIT 1 Department Adjustment Adjustment GENERAL FUND (102) CITY OF PALO ALTO RECOMMENDED AMENDMENTS TO THE CITY MANAGER'S FY 2017 BUDGET Revenues Expenses Fire Strike Team Reimbursement This action increases revenue from the California Office of Emergency Services for reimbursement for emergency fire services provided on overtime as part of mutual aid for Strike Teams that responded to wildfires burning throughout California during the year. 174,000$ 174,000$ Library Library Foundation Donations This action increases revenue the City has received from the Palo Alto Library Foundation offset by a corresponding expenditure increase to enhance library services offered by the City of Palo Alto. The Palo Alto Library Foundation completed its fundraising and disbanded in Fiscal Year 2015, and this represents the final check that will be received from the Palo Alto Library Foundation. 4,176$ 4,176$ Library Pacific Library Partnership Innovation and Technology Opportunity Grant This action increases grant revenue the City has received from the Pacific Library Partnership (PLP) offset by a corresponding expense increase to fund two technology pilots. Greeter robots in a branch will be used to provide directional assistance to patrons, and a design oriented workstation will be installed to enhance the utility of the Library's existing 3D printers. These two pilots will help position Palo Alto's libraries for the virtual future, increase user satisfaction with 3D printed objects, and provide insight into how patrons perceive interactions with the robotic greeters. 14,000$ 14,000$ Library Pacific Library Partnership Reimbursements This action recognizes $4,021 in additional revenue from the Pacific Library Partnership (PLP) in order to offset costs associated with hardware, broadband networking, connectivity, or installation costs and a corresponding increase in expense. The total amount represents two reimbursements, one associated with the California Library Services Act (CLSA), $1,812, and another associated with funds from a partnership with the Corporation for Education Network Initiatives in California (CENIC), $2,209. In each case, the amount received by the City of Palo Alto represents a proportional share of PLP’s reimbursements. Due to uncertainty with regards to the timing of these remittances from PLP to member agencies, neither was included as part of the development of the FY 2017 Budget. 4,021$ 4,021$ ATTACHMENT A, EXHIBIT 1 Department Adjustment Adjustment GENERAL FUND (102) CITY OF PALO ALTO RECOMMENDED AMENDMENTS TO THE CITY MANAGER'S FY 2017 BUDGET Revenues Expenses Non- Departmental Transfer to Infrastructure This action increases the transfer to the Capital Improvement Fund by $4.3 million as approved in CMR #7383 Recommendation to Approve the FY 2016 Comprehensive Annual Financial Report (CAFR) and Approve Budget Amendments in Various Funds (November 15, 2016). This funding will be assumed in the development of the Fiscal Year 2018 Capital Budget. 4,327,000$ Non- Departmental City-wide Training This action reduces the City-wide funding for training to reallocate $25,000 to the City Auditor's Office. A corresponding increase in the City Auditor's Office is recommended elsewhere in this report. (25,000)$ Police POST Training (reallocation to Non-Departmental) This action recognizes Revenue from Other Agencies and increases the appropriation to the Police Department for reimbursement from the California Commission on Peace Office Standards and Training (POST) for certain courses taken by its employees. In total, $45,000 is anticipated to be utilized for POST training during Fiscal Year 2016. 30,000$ 30,000$ TECHNICAL ADJUSTMENTS Development Services Vehicle Replacement Allocation Realignment (DSD to Fire) This action adjusts the Vehicle Replacement allocation between the Fire and Development Service Departments. In the development of the FY 2017 budget, the allocation to the Development Services Department was too high by $3,585, and these costs should have been allocated to the Fire Department. This actions and a corresponding action in this report appropriately aligns the vehicle replacement charges to where the vehicles will be used. (3,585)$ Fire Vehicle Replacement Allocation Realignment (DSD to Fire) This action adjusts the Vehicle Replacement allocation between the Fire and Development Service Departments. In the development of the FY 2017 budget, the allocation to the Development Services Department was too high by $3,585, and these costs should have been allocated to the Fire Department. This actions and a corresponding action in this report appropriately aligns the vehicle replacement charges to where the vehicles will be used. 3,585$ ATTACHMENT A, EXHIBIT 1 Department Adjustment Adjustment GENERAL FUND (102) CITY OF PALO ALTO RECOMMENDED AMENDMENTS TO THE CITY MANAGER'S FY 2017 BUDGET Revenues Expenses Administrative Services Print & Mail Allocated Charges (Postage Meter Equipment) This actions adjusts the allocated charges for print and mail activities for the purchase of postage meter equipment. 2,311$ City Attorney Print & Mail Allocated Charges (Postage Meter Equipment) This actions adjusts the allocated charges for print and mail activities for the purchase of postage meter equipment. 63$ City Auditor Print & Mail Allocated Charges (Postage Meter Equipment) This actions adjusts the allocated charges for print and mail activities for the purchase of postage meter equipment. 1$ City Clerk Print & Mail Allocated Charges (Postage Meter Equipment) This actions adjusts the allocated charges for print and mail activities for the purchase of postage meter equipment. 51$ City Manager Print & Mail Allocated Charges (Postage Meter Equipment) This actions adjusts the allocated charges for print and mail activities for the purchase of postage meter equipment. 1,642$ Community Services Print & Mail Allocated Charges (Postage Meter Equipment) This actions adjusts the allocated charges for print and mail activities for the purchase of postage meter equipment. 4,971$ Development Services Print & Mail Allocated Charges (Postage Meter Equipment) This actions adjusts the allocated charges for print and mail activities for the purchase of postage meter equipment. 241$ Fire Print & Mail Allocated Charges (Postage Meter Equipment) This actions adjusts the allocated charges for print and mail activities for the purchase of postage meter equipment. 36$ Human Resources Print & Mail Allocated Charges (Postage Meter Equipment) This actions adjusts the allocated charges for print and mail activities for the purchase of postage meter equipment. 27$ Library Print & Mail Allocated Charges (Postage Meter Equipment) This actions adjusts the allocated charges for print and mail activities for the purchase of postage meter equipment. 872$ Planning & Community Environment Print & Mail Allocated Charges (Postage Meter Equipment) This actions adjusts the allocated charges for print and mail activities for the purchase of postage meter equipment. 19,762$ Police Print & Mail Allocated Charges (Postage Meter Equipment) This actions adjusts the allocated charges for print and mail activities for the purchase of postage meter equipment. 3,531$ Public Works Print & Mail Allocated Charges (Postage Meter Equipment) This actions adjusts the allocated charges for print and mail activities for the purchase of postage meter equipment. 201$ Community Services Utility Sales to the City This actions adjusts the allocated charges for various utility purchases. Additional details can be found in the report. (152,423)$ ATTACHMENT A, EXHIBIT 1 Department Adjustment Adjustment GENERAL FUND (102) CITY OF PALO ALTO RECOMMENDED AMENDMENTS TO THE CITY MANAGER'S FY 2017 BUDGET Revenues Expenses Fire Utility Sales to the City This actions adjusts the allocated charges for various utility purchases. Additional details can be found in the report. 8,514$ Library Utility Sales to the City This actions adjusts the allocated charges for various utility purchases. Additional details can be found in the report. 51,755$ Planning & Community Environment Utility Sales to the City This actions adjusts the allocated charges for various utility purchases. Additional details can be found in the report. (2,672)$ Police Utility Sales to the City This actions adjusts the allocated charges for various utility purchases. Additional details can be found in the report. (1,057)$ Public Works Utility Sales to the City This actions adjusts the allocated charges for various utility purchases. Additional details can be found in the report. 36,076$ Non- Departmental Budget Stabilization Reserve This action decreases the General Fund Budget Stabilization Reserve by $4.2 million to offset the actions recommended in this report. This is consistent with the adjustments approved in the CMR #7383 Recommendation to Approve the FY 2016 Comprehensive Annual Financial Report (CAFR) and Approve Budget Amendments in Various Funds (November 15, 2016). (4,208,880)$ GENERAL FUND (102) SUBTOTAL 503,969$ 503,969$ ATTACHMENT A, EXHIBIT 1 Department Adjustment Adjustment GENERAL FUND CAPITAL IMPROVEMENT FUND (471) Capital Transfer from the General Fund This action increases the estimated transfer from the Budget Stabilization Reserve in the General Fund in fiscal year 2017 by $4.3 million as approved in CMR #7383 Recommendation to Approve the FY 2016 Comprehensive Annual Financial Report (CAFR) and Approve Budget Amendments in Various Funds (November 15, 2016). 4,327,000$ Capital Reserve: Capital Fund Infrastructure Reserve This action increases the fund balance to offset the net changes resulting from the actions recommended in this report. 4,327,000$ GENERAL FUND CAPITAL IMPROVEMENT FUND (471) SUBTOTAL 4,327,000$ 4,327,000$ CITY OF PALO ALTO RECOMMENDED AMENDMENTS TO THE CITY MANAGER'S FY 2017 BUDGET Revenues Expenses ATTACHMENT A, EXHIBIT 1 Department Adjustment Adjustment ENTERPRISE FUNDS AIRPORT ENTERPRISE FUND (530) Public Works Print & Mail Allocated Charges (Postage Meter Equipment) This actions adjusts the allocated charges for print and mail activities for the purchase of postage meter equipment. 258$ Public Works Utility Sales to the City This actions adjusts the allocated charges for various utility purchases. Additional details can be found in the report. 20,023$ Public Works Adjustment to Fund Balance This action decreases the fund balance to offset the net changes resulting from the actions recommended in this report. (20,281)$ AIRPORT ENTERPRISE FUND (530) SUBTOTAL -$ -$ ELECTRIC FUND (513 & 523) Capital Capital Improvement Project Adjustments This action reflects the combined impact from adjustments to projects as outlined in Attachment A, Exhibit 4. (4,000,000)$ (4,128,363)$ Utilities Electric Sales This action decreases the revenue and corresponding expenses due to lower than anticipated consumption levels due to increased conservation. Of this, $142,000 of the reduction is the result of lower sales to the City. Therefore, adjustments to the allocated charges in departments for electricity costs are recommended throughout this report. (4,383,000)$ Utilities Print & Mail Allocated Charges (Postage Meter Equipment) This actions adjusts the allocated charges for print and mail activities for the purchase of postage meter equipment. 21,885$ Utilities Utility Sales to the City This action adjusts the allocated charges for various utility purchases. Additional details can be found in the report. 95,467$ 45,766$ Utilities Adjustment to Fund Balance This action decreases the fund balance to offset adjustments recommended in this report. (4,226,821)$ ELECTRIC FUND (513 & 523) SUBTOTAL (8,287,533)$ (8,287,533)$ CITY OF PALO ALTO RECOMMENDED AMENDMENTS TO THE CITY MANAGER'S FY 2017 BUDGET Revenues Expenses ATTACHMENT A, EXHIBIT 1 Department Adjustment Adjustment ENTERPRISE FUNDS CITY OF PALO ALTO RECOMMENDED AMENDMENTS TO THE CITY MANAGER'S FY 2017 BUDGET Revenues Expenses FIBER OPTICS FUND (533) Utilities Print & Mail Allocated Charges (Postage Meter Equipment) This actions adjusts the allocated charges for print and mail activities for the purchase of postage meter equipment. 407$ Utilities Transfer to Information Technology Fund This action eliminates duplicate transfers from the Utilities Enterprise Funds to the Technology Fund for TE-10001, the Utility Customer Billing project. The correct amounts were budgeted separately, but these duplicate transfers inadvertently persisted through the Adoption of the FY 2018 budget. (915)$ Utilities Utility Sales to the City This actions adjusts the allocated charges for various utility purchases. Additional details can be found in the report. (20,286)$ -$ Utilities Adjustment to Fund Balance This action decreases the fund balance to offset adjustments recommended in this report. (19,778)$ FIBER OPTICS FUND (533) SUBTOTAL (20,286)$ (20,286)$ GAS FUND (514 & 524) Utilities Print & Mail Allocated Charges (Postage Meter Equipment) This actions adjusts the allocated charges for print and mail activities for the purchase of postage meter equipment. 7,026$ Utilities Transfer to Information Technology Fund This action eliminates duplicate transfers from the Utilities Enterprise Funds to the Technology Fund for TE-10001, the Utility Customer Billing project. The correct amounts were budgeted separately, but these duplicate transfers inadvertently persisted through the Adoption of the FY 2018 budget. (45,992)$ Utilities Utility Sales to the City This actions adjusts the allocated charges for various utility purchases. Additional details can be found in the report. (38,122)$ (1,490)$ Utilities Adjustment to Fund Balance This action increases the fund balance to offset adjustments recommended in this report. 2,334$ GAS FUND (514 & 524) SUBTOTAL (38,122)$ (38,122)$ ATTACHMENT A, EXHIBIT 1 Department Adjustment Adjustment ENTERPRISE FUNDS CITY OF PALO ALTO RECOMMENDED AMENDMENTS TO THE CITY MANAGER'S FY 2017 BUDGET Revenues Expenses REFUSE FUND (525) Public Works GreenWaste Services This action allocates additional funding for the GreenWaste contract due to higher than expected demolition activity ($140,000) and food scraps compost processing ($260,000) offset by additional user fee revenue ($400,000) for these activities. A stronger than anticipated economy has resulted in a greater number of building renovations and GreenWaste is the City’s hauler and processor of this material. Additionally, the higher than forecasted food scraps compost tonnage is a direct result of the success of new City residential and commercial compost diversion programs leading to the City realizing its zero waste, sustainability, and carbon action plan goals. 400,000$ 400,000$ Public Works Print & Mail Allocated Charges (Postage Meter Equipment) This actions adjusts the allocated charges for print and mail activities for the purchase of postage meter equipment. 7,716$ Public Works Transfer to Information Technology Fund This action eliminates duplicate transfers from various Enterprise Funds to the Technology Fund for TE-10001, the Utility Customer Billing project. The correct amounts were budgeted separately, but these duplicate transfers inadvertently persisted through the Adoption of the FY 2018 budget. (28,719)$ Public Works Utility Sales to the City This actions adjusts the allocated charges for various utility purchases. Additional details can be found in the report. 1,180$ Public Works Adjustment to Fund Balance This action increases the fund balance to offset the net changes resulting from the actions recommended in this report. 19,823$ REFUSE FUND (525) SUBTOTAL 400,000$ 400,000$ ATTACHMENT A, EXHIBIT 1 Department Adjustment Adjustment ENTERPRISE FUNDS CITY OF PALO ALTO RECOMMENDED AMENDMENTS TO THE CITY MANAGER'S FY 2017 BUDGET Revenues Expenses STORM DRAINAGE FUND (528) Public Works Print & Mail Allocated Charges (Postage Meter Equipment) This actions adjusts the allocated charges for print and mail activities for the purchase of postage meter equipment. 1,178$ Public Works Transfer to Information Technology Fund This action eliminates duplicate transfers from various Enterprise Funds to the Technology Fund for TE-10001, the Utility Customer Billing project. The correct amounts were budgeted separately, but these duplicate transfers inadvertently persisted through the Adoption of the FY 2018 budget. (5,970)$ Public Works Utility Sales to the City This actions adjusts the allocated charges for various utility purchases. Additional details can be found in the report. 3,277$ Public Works Adjustment to Fund Balance This action increases the fund balance to offset the net changes resulting from the actions recommended in this report. 1,515$ STORM DRAINAGE FUND (528) SUBTOTAL -$ -$ WASTEWATER COLLECTION FUND (527) Utilities Print & Mail Allocated Charges (Postage Meter Equipment) This actions adjusts the allocated charges for print and mail activities for the purchase of postage meter equipment. 3,035$ Utilities Transfer to Information Technology Fund This action eliminates duplicate transfers from various Enterprise Funds to the Technology Fund for TE-10001, the Utility Customer Billing project. The correct amounts were budgeted separately, but these duplicate transfers inadvertently persisted through the Adoption of the FY 2018 budget. (15,412)$ Utilities Utility Sales to the City This actions adjusts the allocated charges for various utility purchases. Additional details can be found in the report. 1,299$ 103$ Utilities Adjustment to Fund Balance This action increases the fund balance to offset adjustments recommended in this report. 13,573$ WASTEWATER COLLECTION FUND (527) SUBTOTAL 1,299$ 1,299$ ATTACHMENT A, EXHIBIT 1 Department Adjustment Adjustment ENTERPRISE FUNDS CITY OF PALO ALTO RECOMMENDED AMENDMENTS TO THE CITY MANAGER'S FY 2017 BUDGET Revenues Expenses WASTEWATER TREATMENT FUND (526) Public Works Print & Mail Allocated Charges (Postage Meter Equipment) This actions adjusts the allocated charges for print and mail activities for the purchase of postage meter equipment. 1,023$ Public Works Utility Sales to the City This actions adjusts the allocated charges for various utility purchases. Additional details can be found in the report. 352,763$ Public Works Adjustment to Fund Balance This action decreases the fund balance to offset the net changes resulting from the actions recommended in this report. (353,786)$ WASTEWATER TREATMENT FUND (526) SUBTOTAL -$ -$ WATER FUND (522) Utilities Bay Area Water Supply and Conservation Agency (BAWSCA) Membership Dues This action appropriates additional funds for Bay Area Water Supply and Conservation Agency (BAWSCA) membership dues which are approximately $68,000 a quarter. BAWSCA is an agency that represents the interests of 24 cities and water districts, and two private utilities in Alameda, Santa Clara and San Mateo counties that purchase wholesale water from the San Francisco Regional Water System. Increased dues are primarily the result of increased costs due to the drought and a need to restore financial reserve levels. 48,000$ Utilities Print & Mail Allocated Charges (Postage Meter Equipment) This actions adjusts the allocated charges for print and mail activities for the purchase of postage meter equipment. 8,761$ Utilities Transfer to Information Technology Fund This action eliminates duplicate transfers from various Enterprise Funds to the Technology Fund for TE-10001, the Utility Customer Billing project. The correct amounts were budgeted separately, but these duplicate transfers inadvertently persisted through the Adoption of the FY 2018 budget. (27,381)$ Utilities Utility Sales to the City This actions adjusts the allocated charges for various utility purchases. Additional details can be found in the report. (129,002)$ 23,671$ Utilities Adjustment to Fund Balance This action decreases the fund balance to offset adjustments recommended in this report. (182,053)$ WATER FUND (522) SUBTOTAL (129,002)$ (129,002)$ ATTACHMENT A, EXHIBIT 1 Department Adjustment Adjustment INTERNAL SERVICE FUNDS INFORMATION TECHNOLOGY FUND (682) Information Technology Utility Sales to the City This actions adjusts the allocated charges for various utility purchases. Additional details can be found in the report. (2,323)$ Information Technology Print & Mail Allocated Charges (Postage Meter Equipment) This actions adjusts the allocated charges for print and mail activities for the purchase of postage meter equipment. 2$ Adjustment to Fund Balance This action increases the fund balance to offset the net changes resulting from the actions recommended in this report. 2,321$ INFORMATION TECHNOLOGY FUND (682) SUBTOTAL -$ -$ PRINTING & MAILING FUND (681) Administrative Services Postage Meter Equipment This actions adjusts the estimated Charges from Other Funds and a corresponding increase in general expenses for the purchase of postage meter equipment. The current equipment is beyond its useful life and needs replacing. Corresponding increases in allocated charges to departments are recommended through the report to offset this expense. 85,000$ 85,000$ PRINTING & MAILING FUND (681) SUBTOTAL 85,000$ 85,000$ VEHICLE REPLACEMENT & MAINTENANCE FUND (681) Public Works Utility Sales to the City This actions adjusts the allocated charges for various utility purchases. Additional details can be found in the report. (7,452)$ Public Works Adjustment to Fund Balance This action increases the fund balance to offset the net changes resulting from the actions recommended in this report. 7,452$ VEHICLE REPLACEMENT & MAINTENANCE FUND (681) SUBTOTAL -$ -$ CITY OF PALO ALTO RECOMMENDED AMENDMENTS TO THE CITY MANAGER'S FY 2017 BUDGET Revenues Expenses ATTACHMENT A, EXHIBIT 1 Department Adjustment Adjustment SPECIAL REVENUE FUNDS BELOW MARKET RATE FUND (230) Administrative Services Utility Sales to the City This actions adjusts the allocated charges for various utility purchases. Additional details can be found in the report. (470)$ Ending Fund Balance This action decreases the fund balance to offset the actions recommended in this report. 470$ BELOW MARKET RATE FUND (230) SUBTOTAL -$ -$ UNIVERSITY AVENUE PARKING PERMITS FUND (236) Planning & Community Environment Utility Sales to the City This actions adjusts the allocated charges for various utility purchases. Additional details can be found in the report. 25,274$ Ending Fund Balance This action decreases the fund balance to offset the actions recommended in this report. (25,274)$ UNIVERSITY AVENUE PARKING PERMITS FUND (236) SUBTOTAL -$ -$ CALIFORNIA AVENUE PARKING PERMITS FUND (237) Planning & Community Environment Utility Sales to the City This actions adjusts the allocated charges for various utility purchases. Additional details can be found in the report. 3,336$ Ending Fund Balance This action decreases the fund balance to offset the actions recommended in this report. (3,336)$ CALIFORNIA AVENUE PARKING PERMITS FUND (237) SUBTOTAL -$ -$ CITY OF PALO ALTO RECOMMENDED AMENDMENTS TO THE CITY MANAGER'S FY 2017 BUDGET Revenues Expenses ATTACHMENT A, EXHIBIT 2 Project Funding Title Number Revenue Expense Source Comments ADDITIONAL APPROPRIATIONS Underground District 46 - Charleston/El Camino Real EL-12001 $ 582,615 Increase project to adjust for reappropriation that incorrectly omitted during the FY 2016 year end process. Funds were previously approved by the City Council. Upgrade Electrical Estimating System EL-13008 $ 103,650 Increase project to adjust for reappropriation that incorrectly omitted during the FY 2016 year end process. Funds were previously approved by the City Council. Maybell 1&2 4/12kV Conversion EL-14004 $ 185,372 Increase project to adjust for reappropriation that incorrectly omitted during the FY 2016 year end process. Funds were previously approved by the City Council. Total $ - $ 871,637 REDUCTION IN APPROPRIATIONS Electric Pole Replacements for FTTP EL-17006 $ (4,000,000) $ (5,000,000) Connection Charges & Reserves Eliminate project as it was specifically established to address the implications of Google Fiber projects which have been placed on hold indefinitely. Total $ (4,000,000) $ (5,000,000) $ (4,000,000) $ (4,128,363) CITY OF PALO ALTO RECOMMENDED AMENDMENTS TO THE CITY MANAGER'S FY 2017 CAPITAL IMPROVEMENT PROGRAM ELECTRIC FUND TOTAL ELECTRIC FUND CIP YEAR-END ADJUSTMENTS 1/26/2017 Q2 2015 2016 2017 POLICE DEPARTMENT Overtime Expense Adopted Budget $1,500,000 $1,500,000 $1,500,000 Modified Budget 1,500,000 1,539,053 1,500,000 Net Overtime Cost - see below 946,558 836,252 279,378 Variance to Budget $553,442 $702,801 $1,220,622 Overtime Net Cost Actual Expense $1,893,220 $2,019,330 $1,108,740 Less Reimbursements Stanford Communications 62,000 59,821 36,445 Utilities Communications Reimbursement 36,614 32,504 18,872 Local Agencies (A)10,417 12,258 6,274 Police Service Fees 69,570 74,813 46,190 Total Reimbursements 178,601 179,397 107,782 Less Department Vacancies 768,061 1,003,682 721,580 Net Overtime Cost $946,558 $836,252 $279,378 Department Vacancies (number of days)3,223 4,735 2,564 Workers' Compensation Cases 16 11 5 Department Disabilities (number of days)502 710 88 FIRE DEPARTMENT Overtime Expense Original Budget $1,424,414 $1,382,714 $1,413,714 Modified Budget (B)1,608,710 1,559,598 1,413,714 Net Overtime Cost - see below 94,836 1,156,217 1,347,426 Variance to Budget $1,513,874 $403,381 $66,288 Overtime Net Cost Actual Expense $2,171,795 $2,783,510 $1,923,141 Less Reimbursements Stanford Fire Services (C)658,054 - - Cal-Fire/FEMA (Strike Teams)184,296 557,453 - Total Reimbursements 842,350 557,453 - Less Department Vacancies 1,234,609 1,069,840 575,715 Net Overtime Cost $94,836 $1,156,217 $1,347,426 Department Vacancies (number of days)3,712 3,952 2,240 Workers' Compensation Cases 10 10 4 Department Disabilities (number of days)249 461 328 NOTES: (A)Includes Animal Services contract with Los Altos and Los Altos Hills. (B)FY 2017 Does not include Strike Team Reimbursement of $174,000 recommended in the FY 2017 Mid-Year Review. (C )Stanford has historically reimbursed 30.3% of the Fire Department budget for fire services, including estimates for overtime. However, in FY 16 and 17 a flat rate contractual agreement for extension, inclusive of all services, has been approved. Therefore, the overtime figure has been removed from this report until a finalized agreement is negotiated Public Safety Departments Overtime Analysis for Fiscal Years 2015 through 2017 Effective 7/1/2018 (2.5% Increase) Job Code FLSA Status Classifications Grade Codes Min Hourly Rate Mid-Point Hourly Rate Max Hourly Rate Approx Mid-Point Monthly Salary Approx. Mid-Point Annual Salary Min Hourly Rate Mid-Point Hourly Rate Max Hourly Rate Min Hourly Rate Mid-Point Hourly Rate Max Hourly Rate 190 Non-Exempt Accountant 690P $32.89 $41.11 $49.34 $7,125.73 $85,508.80 $33.72 $42.14 $50.57 $34.56 $43.20 $51.84 76 Exempt Administrative Assistant 750P $28.37 $35.46 $42.56 $6,146.40 $73,756.80 $29.08 $36.35 $43.62 $29.81 $37.26 $44.72 115 Exempt Assistant Chief Building Official 405M $46.08 $57.60 $69.12 $9,984.00 $119,808.00 $47.24 $59.04 $70.85 $48.42 $60.52 $72.63 132 Exempt Assistant Chief of Police 100A $75.43 $94.28 $113.14 $16,341.87 $196,102.40 $77.32 $96.64 $115.97 $79.25 $99.06 $118.88 108 Exempt Assistant City Attorney 165A $63.94 $79.92 $95.91 $13,852.80 $166,233.60 $65.54 $81.92 $98.31 $67.18 $83.97 $100.77 109 Exempt Assistant City Clerk 630M $37.21 $46.51 $55.82 $8,061.73 $96,740.80 $38.15 $47.68 $57.22 $39.11 $48.88 $58.66 107 Exempt Assistant City Manager 20E $78.36 $97.94 $117.53 $16,976.27 $203,715.20 $80.32 $100.39 $120.47 $82.32 $102.90 $123.48 2026 Exempt Assistant City Manager / Utilities General Manager 10E $98.47 $123.08 $147.70 $21,333.87 $256,006.40 $100.93 $126.16 $151.40 $103.46 $129.32 $155.19 73 Exempt Assistant Director Administrative Services 120A $64.47 $80.58 $96.70 $13,967.20 $167,606.40 $66.08 $82.60 $99.12 $67.74 $84.67 $101.61 126 Exempt Assistant Director Community Services 150A $61.72 $77.14 $92.57 $13,370.93 $160,451.20 $63.26 $79.07 $94.89 $64.84 $81.05 $97.26 1007 Exempt Assistant Director Human Resources 155A $59.65 $74.56 $89.48 $12,923.73 $155,084.80 $61.15 $76.43 $91.72 $62.68 $78.35 $94.02 2001 Exempt Assistant Director Library Services 160A $59.03 $73.78 $88.54 $12,788.53 $153,462.40 $60.51 $75.63 $90.76 $62.03 $77.53 $93.04 10 Exempt Assistant Director Planning & Community Environment 130A $63.23 $79.03 $94.84 $13,698.53 $164,382.40 $64.81 $81.01 $97.22 $66.44 $83.04 $99.65 143 Exempt Assistant Director Public Works 140A $62.49 $78.11 $93.74 $13,539.07 $162,468.80 $64.06 $80.07 $96.09 $65.67 $82.08 $98.50 168 Exempt Assistant Fleet Manager 585M $39.11 $48.88 $58.66 $8,472.53 $101,670.40 $40.09 $50.11 $60.14 $41.10 $51.37 $61.65 102 Exempt Assistant Manager WQCP 240D $50.52 $63.14 $75.77 $10,944.27 $131,331.20 $51.78 $64.72 $77.67 $53.08 $66.34 $79.61 30 Exempt Assistant to the City Manager 390M $48.82 $61.02 $73.23 $10,576.80 $126,921.60 $50.04 $62.55 $75.06 $51.30 $64.12 $76.95 118 Exempt Chief Building Official 290M $59.99 $74.98 $89.98 $12,996.53 $155,958.40 $61.49 $76.86 $92.24 $63.04 $78.79 $94.55 2008 Exempt Chief Communications Officer 135A $62.89 $78.61 $94.34 $13,625.73 $163,508.80 $64.47 $80.58 $96.70 $66.08 $82.60 $99.12 112 Exempt Chief Planning Official 220D $53.61 $67.01 $80.42 $11,615.07 $139,380.80 $54.96 $68.69 $82.43 $56.33 $70.41 $84.50 95 Exempt Chief Procurement Officer 235D $50.72 $63.39 $76.07 $10,987.60 $131,851.20 $51.99 $64.98 $77.98 $53.29 $66.61 $79.94 2010 Exempt Chief Sustainability Officer 435M $54.75 $68.43 $82.12 $11,861.20 $142,334.40 $56.12 $70.15 $84.18 $57.53 $71.91 $86.30 82 Exempt Chief Transportation Official 204D $56.40 $70.50 $84.60 $12,220.00 $146,640.00 $57.82 $72.27 $86.73 $59.27 $74.08 $88.90 96 Exempt Claims Investigator 660P $34.56 $43.19 $51.83 $7,486.27 $89,835.20 $35.42 $44.27 $53.13 $36.31 $45.38 $54.46 24 Exempt Communication Specialist 615M $37.43 $46.78 $56.14 $8,108.53 $97,302.40 $38.36 $47.95 $57.54 $39.32 $49.15 $58.98 89 Exempt Contracts Administrator 585P $39.11 $48.88 $58.66 $8,472.53 $101,670.40 $40.09 $50.11 $60.14 $41.10 $51.37 $61.65 186 Non-Exempt Coordinator Library Circulation 675M $32.95 $41.18 $49.42 $7,137.87 $85,654.40 $33.77 $42.21 $50.66 $34.62 $43.27 $51.93 191 Exempt Deputy Chief/Fire Marshall 125A $63.71 $79.63 $95.56 $13,802.53 $165,630.40 $65.31 $81.63 $97.96 $66.95 $83.68 $100.42 9 Exempt Deputy City Attorney 480P $45.34 $56.67 $68.01 $9,822.80 $117,873.60 $46.48 $58.09 $69.71 $47.64 $59.55 $71.46 71 Exempt Deputy City Clerk 720M $29.80 $37.25 $44.70 $6,456.67 $77,480.00 $30.56 $38.19 $45.83 $31.32 $39.15 $46.98 55 Exempt Deputy City Manager 115A $65.31 $81.63 $97.96 $14,149.20 $169,790.40 $66.95 $83.68 $100.42 $68.63 $85.78 $102.94 195 Exempt Deputy Director Technical Services Division 200D $63.52 $79.39 $95.27 $13,760.93 $165,131.20 $65.11 $81.38 $97.66 $66.74 $83.42 $100.11 20 Exempt Deputy Fire Chief 110A $66.38 $82.97 $99.57 $14,381.47 $172,577.60 $68.04 $85.05 $102.06 $69.75 $87.18 $104.62 81 Exempt Director Administrative Services/Chief Financial Officer 50E $75.11 $93.88 $112.66 $16,272.53 $195,270.40 $76.99 $96.23 $115.48 $78.92 $98.64 $118.37 72 Exempt Director Community Services 45E $75.68 $94.60 $113.52 $16,397.33 $196,768.00 $77.58 $96.97 $116.37 $79.52 $99.40 $119.28 1012 Exempt Director Development Services 145A $66.45 $83.06 $99.68 $14,397.07 $172,764.80 $68.12 $85.14 $102.17 $69.82 $87.27 $104.73 133 Exempt Director Human Resources/Chief People Officer 55E $71.58 $89.47 $107.37 $15,508.13 $186,097.60 $73.37 $91.71 $110.06 $75.21 $94.01 $112.82 128 Exempt Director Information Technology/Chief Information Officer 25E $78.21 $97.76 $117.32 $16,945.07 $203,340.80 $80.17 $100.21 $120.26 $82.18 $102.72 $123.27 131 Exempt Director Libraries 60E $70.84 $88.54 $106.25 $15,346.93 $184,163.20 $72.61 $90.76 $108.92 $74.43 $93.03 $111.64 2005 Exempt Director Office of Emergency Services 215D $55.58 $69.47 $83.37 $12,041.47 $144,497.60 $56.97 $71.21 $85.46 $58.40 $73.00 $87.60 49 Exempt Director Office of Management and Budget 120A $64.47 $80.58 $96.70 $13,967.20 $167,606.40 $66.08 $82.60 $99.12 $67.74 $84.67 $101.61 City of Palo Alto Management, Professional and Confidential Salary Schedule Effective 7/1/2016 (2.5% Increase)Effective 7/1/2017 (2.5% Increase) Page 1 Effective 7/1/2018 (2.5% Increase) Job Code FLSA Status Classifications Grade Codes Min Hourly Rate Mid-Point Hourly Rate Max Hourly Rate Approx Mid-Point Monthly Salary Approx. Mid-Point Annual Salary Min Hourly Rate Mid-Point Hourly Rate Max Hourly Rate Min Hourly Rate Mid-Point Hourly Rate Max Hourly Rate Effective 7/1/2016 (2.5% Increase)Effective 7/1/2017 (2.5% Increase) 134 Exempt Director Planning & Community Environment 40E $75.86 $94.82 $113.79 $16,435.47 $197,225.60 $77.76 $97.20 $116.64 $79.71 $99.63 $119.56 135 Exempt Director Public Works/City Engineer 30E $76.84 $96.04 $115.25 $16,646.93 $199,763.20 $78.76 $98.45 $118.14 $80.74 $100.92 $121.11 121 Exempt Director Utilities 10E $98.47 $123.08 $147.70 $21,333.87 $256,006.40 $100.93 $126.16 $151.40 $103.46 $129.32 $155.19 2002 Exempt Division Head Library Services 260D $46.36 $57.95 $69.54 $10,044.67 $120,536.00 $47.52 $59.40 $71.28 $48.72 $60.89 $73.07 172 Exempt Division Manager Open Space, Parks & Golf 245D $49.84 $62.29 $74.75 $10,796.93 $129,563.20 $51.08 $63.85 $76.62 $52.36 $65.45 $78.54 1005 Exempt Executive Assistant to the City Manager 705M $32.09 $40.11 $48.14 $6,952.40 $83,428.80 $32.90 $41.12 $49.35 $33.72 $42.15 $50.58 139 Exempt Fire Chief 35E $76.41 $95.51 $114.62 $16,555.07 $198,660.80 $78.32 $97.90 $117.48 $80.28 $100.35 $120.42 163 Exempt Hearing Officer 480M $45.34 $56.67 $68.01 $9,822.80 $117,873.60 $46.48 $58.09 $69.71 $47.64 $59.55 $71.46 101 Exempt Human Resources Representative 735P $29.08 $36.34 $43.61 $6,298.93 $75,587.20 $29.80 $37.25 $44.70 $30.56 $38.19 $45.83 90 Exempt Landscape Architect Park Planner 510M $43.16 $53.94 $64.73 $9,349.60 $112,195.20 $44.24 $55.29 $66.35 $45.35 $56.68 $68.02 2015 Exempt Legal Fellow 755P $37.11 $46.38 $55.66 $8,039.20 $96,470.40 $38.04 $47.54 $57.05 $38.99 $48.73 $58.48 171 Exempt Management Analyst 585M $39.11 $48.88 $58.66 $8,472.53 $101,670.40 $40.09 $50.11 $60.14 $41.10 $51.37 $61.65 79 Exempt Manager Accounting 235D $50.72 $63.39 $76.07 $10,987.60 $131,851.20 $51.99 $64.98 $77.98 $53.29 $66.61 $79.94 2007 Exempt Manager Airport 210D $55.59 $69.48 $83.38 $12,043.20 $144,518.40 $56.98 $71.22 $85.47 $58.41 $73.01 $87.62 2023 Exempt Manager Budget 360M $53.84 $67.29 $80.75 $11,663.60 $139,963.20 $55.19 $68.98 $82.78 $56.57 $70.71 $84.86 38 Exempt Manager Communications 525M $42.11 $52.63 $63.16 $9,122.53 $109,470.40 $43.16 $53.95 $64.74 $44.24 $55.30 $66.36 154 Exempt Manager Community Services 630M $37.21 $46.51 $55.82 $8,061.73 $96,740.80 $38.15 $47.68 $57.22 $39.11 $48.88 $58.66 169 Exempt Manager Community Services Sr Program 585M $39.11 $48.88 $58.66 $8,472.53 $101,670.40 $40.09 $50.11 $60.14 $41.10 $51.37 $61.65 1013 Exempt Manager Development Center 495M $44.24 $55.29 $66.35 $9,583.60 $115,003.20 $45.35 $56.68 $68.02 $46.48 $58.10 $69.72 63 Exempt Manager Economic Development 220D $53.61 $67.01 $80.42 $11,615.07 $139,380.80 $54.96 $68.69 $82.43 $56.33 $70.41 $84.50 44 Exempt Manager Employee Benefits 450M $45.81 $57.26 $68.72 $9,925.07 $119,100.80 $46.96 $58.70 $70.44 $48.14 $60.17 $72.21 45 Exempt Manager Employee Relations & Training 235D $50.72 $63.39 $76.07 $10,987.60 $131,851.20 $51.99 $64.98 $77.98 $53.29 $66.61 $79.94 93 Exempt Manager Environmental Control Program 419M $46.91 $58.63 $70.36 $10,162.53 $121,950.40 $48.08 $60.10 $72.12 $49.29 $61.61 $73.94 1116 Exempt Manager Facilities 445M $46.50 $58.12 $69.75 $10,074.13 $120,889.60 $47.67 $59.58 $71.50 $48.86 $61.07 $73.29 127 Exempt Manager Fleet 255D $46.97 $58.71 $70.46 $10,176.40 $122,116.80 $48.15 $60.18 $72.22 $49.36 $61.69 $74.03 2018 Exempt Manager Human Services 540M $41.08 $51.35 $61.62 $8,900.67 $106,808.00 $42.12 $52.64 $63.17 $43.17 $53.96 $64.76 32 Exempt Manager Information Technology 230D $51.85 $64.81 $77.78 $11,233.73 $134,804.80 $53.16 $66.44 $79.73 $54.49 $68.11 $81.74 2006 Exempt Manager Information Technology Security 420M $47.01 $58.76 $70.52 $10,185.07 $122,220.80 $48.19 $60.23 $72.28 $49.40 $61.74 $74.09 2006 Exempt Manager Information Technology Security 230D $51.85 $64.81 $77.78 $11,233.73 $134,804.80 $53.16 $66.44 $79.73 $54.49 $68.11 $81.74 158 Exempt Manager Laboratory Services 495M $44.24 $55.29 $66.35 $9,583.60 $115,003.20 $45.35 $56.68 $68.02 $46.48 $58.10 $69.72 78 Exempt Manager Library Services 565M $38.61 $48.26 $57.92 $8,365.07 $100,380.80 $39.58 $49.47 $59.37 $40.57 $50.71 $60.86 92 Exempt Manager Maintenance Operations 469M $43.33 $54.16 $65.00 $9,387.73 $112,652.80 $44.42 $55.52 $66.63 $45.53 $56.91 $68.30 26 Exempt Manager Transportation Planning 345M $50.71 $63.38 $76.06 $10,985.87 $131,830.40 $51.98 $64.97 $77.97 $53.28 $66.60 $79.92 51 Exempt Manager Planning 415M $46.96 $58.70 $70.44 $10,174.67 $122,096.00 $48.14 $60.17 $72.21 $49.35 $61.68 $74.02 103 Exempt Manager Real Property 235D $50.72 $63.39 $76.07 $10,987.60 $131,851.20 $51.99 $64.98 $77.98 $53.29 $66.61 $79.94 2011 Exempt Manager Revenue Collections 250D $47.64 $59.55 $71.46 $10,322.00 $123,864.00 $48.84 $61.04 $73.25 $50.06 $62.57 $75.09 160 Exempt Manager Solid Waste 330M $51.30 $64.12 $76.95 $11,114.13 $133,369.60 $52.59 $65.73 $78.88 $53.91 $67.38 $80.86 57 Exempt Manager Treasury, Debt & Investments 235D $50.72 $63.39 $76.07 $10,987.60 $131,851.20 $51.99 $64.98 $77.98 $53.29 $66.61 $79.94 86 Exempt Manager Urban Forestry 436M $45.50 $56.87 $68.25 $9,857.47 $118,289.60 $46.64 $58.30 $69.96 $47.81 $59.76 $71.72 178 Exempt Manager Water Quality Control Plant 205D $57.08 $71.34 $85.61 $12,365.60 $148,387.20 $58.51 $73.13 $87.76 $59.97 $74.96 $89.96 39 Exempt Manager Watershed Protection 330M $51.30 $64.12 $76.95 $11,114.13 $133,369.60 $52.59 $65.73 $78.88 $53.91 $67.38 $80.86 1008 Exempt Office of Emergency Services Coordinator 525M $42.11 $52.63 $63.16 $9,122.53 $109,470.40 $43.16 $53.95 $64.74 $44.24 $55.30 $66.36 2024 Exempt Performance Auditor I 750P $28.37 $35.46 $42.56 $6,146.40 $73,756.80 $29.08 $36.35 $43.62 $29.81 $37.26 $44.72 100 Exempt Performance Auditor II 585M $39.11 $48.88 $58.66 $8,472.53 $101,670.40 $40.09 $50.11 $60.14 $41.10 $51.37 $61.65 Page 2 Effective 7/1/2018 (2.5% Increase) Job Code FLSA Status Classifications Grade Codes Min Hourly Rate Mid-Point Hourly Rate Max Hourly Rate Approx Mid-Point Monthly Salary Approx. Mid-Point Annual Salary Min Hourly Rate Mid-Point Hourly Rate Max Hourly Rate Min Hourly Rate Mid-Point Hourly Rate Max Hourly Rate Effective 7/1/2016 (2.5% Increase)Effective 7/1/2017 (2.5% Increase) 148 Exempt Police Chief 15E $84.96 $106.19 $127.43 $18,406.27 $220,875.20 $87.08 $108.85 $130.62 $89.27 $111.58 $133.90 2021 Exempt Principal Attorney 101A $77.36 $96.70 $116.04 $16,761.33 $201,136.00 $79.30 $99.12 $118.95 $81.28 $101.60 $121.92 2016 Exempt Principal Business Analyst 310M $54.06 $67.57 $81.09 $11,712.13 $140,545.60 $55.41 $69.26 $83.12 $56.80 $71.00 $85.20 2003 Exempt Principal Management Analyst 360M $53.84 $67.29 $80.75 $11,663.60 $139,963.20 $55.19 $68.98 $82.78 $56.57 $70.71 $84.86 2009 Exempt Project Manager 570M $39.36 $49.20 $59.04 $8,528.00 $102,336.00 $40.35 $50.43 $60.52 $41.36 $51.70 $62.04 2012 Exempt Public Safety Communications Manager 540M $41.08 $51.35 $61.62 $8,900.67 $106,808.00 $42.12 $52.64 $63.17 $43.17 $53.96 $64.76 2012 Exempt Public Safety Communications Manager 495M $44.24 $55.29 $66.35 $9,583.60 $115,003.20 $45.35 $56.68 $68.02 $46.48 $58.10 $69.72 166 Exempt Public Safety Program Manager 585M $39.11 $48.88 $58.66 $8,472.53 $101,670.40 $40.09 $50.11 $60.14 $41.10 $51.37 $61.65 117 Exempt Senior Accountant 555M $40.08 $50.10 $60.12 $8,684.00 $104,208.00 $41.09 $51.36 $61.64 $42.12 $52.65 $63.18 152 Exempt Senior Assistant City Attorney 105A $70.33 $87.91 $105.50 $15,237.73 $182,852.80 $72.09 $90.11 $108.14 $73.90 $92.37 $110.85 2013 Exempt Senior Business Analyst - M 420M $47.01 $58.76 $70.52 $10,185.07 $122,220.80 $48.19 $60.23 $72.28 $49.40 $61.74 $74.09 11 Exempt Senior Deputy City Attorney 375M $50.04 $62.55 $75.06 $10,842.00 $130,104.00 $51.30 $64.12 $76.95 $52.59 $65.73 $78.88 187 Exempt Senior Engineer 300M $53.90 $67.37 $80.85 $11,677.47 $140,129.60 $55.25 $69.06 $82.88 $56.64 $70.79 $84.95 106 Exempt Senior Executive Assistant 450M $45.81 $57.26 $68.72 $9,925.07 $119,100.80 $46.96 $58.70 $70.44 $48.14 $60.17 $72.21 157 Exempt Senior Human Resources Administrator 545M $39.93 $49.91 $59.90 $8,651.07 $103,812.80 $40.93 $51.16 $61.40 $41.96 $52.44 $62.93 14 Exempt Senior Management Analyst 465M $45.77 $57.21 $68.66 $9,916.40 $118,996.80 $46.92 $58.65 $70.38 $48.10 $60.12 $72.15 130 Exempt Senior Performance Auditor 510M $43.16 $53.94 $64.73 $9,349.60 $112,195.20 $44.24 $55.29 $66.35 $45.35 $56.68 $68.02 53 Exempt Senior Project Manager 300M $53.90 $67.37 $80.85 $11,677.47 $140,129.60 $55.25 $69.06 $82.88 $56.64 $70.79 $84.95 33 Exempt Senior Technologist 420M $47.01 $58.76 $70.52 $10,185.07 $122,220.80 $48.19 $60.23 $72.28 $49.40 $61.74 $74.09 155 Exempt Superintendent Animal Services 540M $41.08 $51.35 $61.62 $8,900.67 $106,808.00 $42.12 $52.64 $63.17 $43.17 $53.96 $64.76 83 Exempt Superintendent Community Services 480M $45.34 $56.67 $68.01 $9,822.80 $117,873.60 $46.48 $58.09 $69.71 $47.64 $59.55 $71.46 1117 Exempt Superintendent Recreation 480M $45.34 $56.67 $68.01 $9,822.80 $117,873.60 $46.48 $58.09 $69.71 $47.64 $59.55 $71.46 2022 Exempt Supervising Librarian 675M $33.07 $41.33 $49.60 $7,163.87 $85,966.40 $33.90 $42.37 $50.85 $34.75 $43.43 $52.12 161 Exempt Supervisor Facilities Management 600M $38.24 $47.79 $57.35 $8,283.60 $99,403.20 $39.20 $48.99 $58.79 $40.18 $50.22 $60.27 113 Exempt Supervisor Inspection and Surveying 540M $41.08 $51.35 $61.62 $8,900.67 $106,808.00 $42.12 $52.64 $63.17 $43.17 $53.96 $64.76 146 Exempt Supervisor Warehouse 660M $34.56 $43.19 $51.83 $7,486.27 $89,835.20 $35.42 $44.27 $53.13 $36.31 $45.38 $54.46 181 Exempt Supervisor Water Quality Control Operations 525M $42.11 $52.63 $63.16 $9,122.53 $109,470.40 $43.16 $53.95 $64.74 $44.24 $55.30 $66.36 2027 Exempt Utilities Chief Operating Officer 60E $70.84 $88.54 $106.25 $15,346.93 $184,163.20 $72.61 $90.76 $108.92 $74.43 $93.03 $111.64 184 Exempt Veterinarian 555M $40.08 $50.10 $60.12 $8,684.00 $104,208.00 $41.09 $51.36 $61.64 $42.12 $52.65 $63.18 Confidential Classifications Job Code FLSA Status Classifications Grade Codes Min Hourly Rate Mid-Point Hourly Rate Max Hourly Rate Approx Mid-Point Monthly Salary Approx. Mid-Point Annual Salary Min Hourly Rate Mid-Point Hourly Rate Max Hourly Rate Min Hourly Rate Mid-Point Hourly Rate Max Hourly Rate 905 Non-Exempt Human Resources Technician 830C $25.08 $31.34 $37.61 $5,432.27 $65,187.20 $25.71 $32.13 $38.56 $26.36 $32.94 $39.53 903 Non-Exempt Legal Secretary-Confidential 820C $25.70 $32.12 $38.55 $5,567.47 $66,809.60 $26.35 $32.93 $39.52 $27.01 $33.76 $40.52 67 Exempt Secretary to City Attorney 800C $30.55 $38.18 $45.82 $6,617.87 $79,414.40 $31.32 $39.14 $46.97 $32.10 $40.12 $48.15 1004 Non-Exempt Senior Legal Secretary - Confidential 810C $28.37 $35.46 $42.56 $6,146.40 $73,756.80 $29.08 $36.35 $43.62 $29.81 $37.26 $44.72 Page 3 Appendix A -2 To MOA Between City of Palo Alto and SEIU FY16/FY17 Salary Schedule Rate Approx. Monthly Approx. Annual Rate Approx. Monthly Approx. Annual Rate Approx. Monthly Approx. Annual Rate Approx. Monthly Approx. Annual 206 non-exempt Account Assistant 1 $20.92 $21.56 $21.56 $22.21 2 $22.02 $22.69 $22.69 $23.38 3 $23.18 $23.88 $23.88 $24.61 4 $24.40 $25.14 $25.14 $25.90 5 $25.68 $4,451.20 $53,414.40 $26.46 $4,586.40 $55,036.80 $26.46 $4,586.40 $55,036.80 $27.26 $4,725.07 $56,700.80 204 non-exempt Acct Spec 1 $24.44 $25.18 $25.18 $25.94 2 $25.73 $26.51 $26.51 $27.31 3 $27.08 $27.90 $27.90 $28.75 4 $28.51 $29.37 $29.37 $30.26 5 $30.01 $5,201.73 $62,420.80 $30.92 $5,359.47 $64,313.60 $30.92 $5,359.47 $64,313.60 $31.85 $5,520.67 $66,248.00 207 non-exempt Acct Spec-Lead 1 $26.15 $26.96 $26.96 $27.77 2 $27.53 $28.38 $28.38 $29.23 3 $28.98 $29.87 $29.87 $30.77 4 $30.51 $31.44 $31.44 $32.39 5 $32.12 $5,567.47 $66,809.60 $33.09 $5,735.60 $68,827.20 $33.09 $5,735.60 $68,827.20 $34.09 $5,908.93 $70,907.20 294 non-exempt Administrative Associate I 1 $24.05 $24.81 $24.84 $25.60 2 $25.32 $26.12 $26.15 $26.95 3 $26.65 $27.49 $27.53 $28.37 4 $28.05 $28.94 $28.98 $29.86 5 $29.53 $5,118.53 $61,422.40 $30.46 $5,279.73 $63,356.80 $30.51 $5,288.40 $63,460.80 $31.43 $5,447.87 $65,374.40 295 non-exempt Administrative Associate II 1 $26.14 $26.97 $27.00 $27.82 2 $27.52 $28.39 $28.42 $29.28 3 $28.97 $29.88 $29.92 $30.82 4 $30.49 $31.45 $31.49 $32.44 5 $32.09 $5,562.27 $66,747.20 $33.10 $5,737.33 $68,848.00 $33.15 $5,746.00 $68,952.00 $34.15 $5,919.33 $71,032.00 296 non-exempt Administrative Associate III 1 $28.03 $28.90 $28.94 $29.81 2 $29.50 $30.42 $30.46 $31.38 3 $31.05 $32.02 $32.06 $33.03 4 $32.68 $33.71 $33.75 $34.77 5 $34.40 $5,962.67 $71,552.00 $35.48 $6,149.87 $73,798.40 $35.53 $6,158.53 $73,902.40 $36.60 $6,344.00 $76,128.00 277 non-exempt Animal Attendant 1 $23.02 $23.78 $23.86 $24.58 2 $24.23 $25.03 $25.12 $25.87 3 $25.51 $26.35 $26.44 $27.23 4 $26.85 $27.74 $27.83 $28.66 5 $28.26 $4,898.40 $58,780.80 $29.20 $5,061.33 $60,736.00 $29.29 $5,076.93 $60,923.20 $30.17 $5,229.47 $62,753.60 276 non-exempt Animal Control Off 1 $24.66 $25.48 $25.56 $26.32 2 $25.96 $26.82 $26.90 $27.71 3 $27.33 $28.23 $28.32 $29.17 4 $28.77 $29.72 $29.81 $30.71 5 $30.28 $5,248.53 $62,982.40 $31.28 $5,421.87 $65,062.40 $31.38 $5,439.20 $65,270.40 $32.33 $5,603.87 $67,246.40 312 non-exempt Animal Control Off - L 1 $26.39 $27.27 $27.35 $28.18 2 $27.78 $28.70 $28.79 $29.66 3 $29.24 $30.21 $30.31 $31.22 4 $30.78 $31.80 $31.90 $32.86 5 $32.40 $5,616.00 $67,392.00 $33.47 $5,801.47 $69,617.60 $33.58 $5,820.53 $69,846.40 $34.59 $5,995.60 $71,947.20 263 non-exempt Animal Services Spec 1 $24.32 $25.13 $25.20 $25.97 2 $25.60 $26.45 $26.53 $27.34 3 $26.95 $27.84 $27.93 $28.78 4 $28.37 $29.31 $29.40 $30.29 5 $29.86 $5,175.73 $62,108.80 $30.85 $5,347.33 $64,168.00 $30.95 $5,364.67 $64,376.00 $31.88 $5,525.87 $66,310.40 FLSAJob Code Salary Effective 4/16/2016 (PP09:2016)Salary Effective 12/10/2016 (PP26:2016)Salray Effective 7/08/2017 (PP15:2017)Salary Effective 12/9/2017 (PP26:2017)StepsJob Title 1 Appendix A -2 To MOA Between City of Palo Alto and SEIU FY16/FY17 Salary Schedule Rate Approx. Monthly Approx. Annual Rate Approx. Monthly Approx. Annual Rate Approx. Monthly Approx. Annual Rate Approx. Monthly Approx. Annual 275 non-exempt Animal Services Spec II 1 $26.82 $27.71 $27.80 $28.63 2 $28.23 $29.17 $29.26 $30.14 3 $29.72 $30.70 $30.80 $31.73 4 $31.28 $32.32 $32.42 $33.40 5 $32.93 $5,707.87 $68,494.40 $34.02 $5,896.80 $70,761.60 $34.13 $5,915.87 $70,990.40 $35.16 $6,094.40 $73,132.80 244 non-exempt Assoc Buyer 1 $31.32 $32.28 $32.30 $33.27 2 $32.97 $33.98 $34.00 $35.02 3 $34.71 $35.77 $35.79 $36.86 4 $36.54 $37.65 $37.67 $38.80 5 $38.46 $6,666.40 $79,996.80 $39.63 $6,869.20 $82,430.40 $39.65 $6,872.67 $82,472.00 $40.84 $7,078.93 $84,947.20 333 non-exempt Assoc Engineer 1 $38.75 $40.10 $40.29 $41.50 2 $40.79 $42.21 $42.41 $43.68 3 $42.94 $44.43 $44.64 $45.98 4 $45.20 $46.77 $46.99 $48.40 5 $47.58 $8,247.20 $98,966.40 $49.23 $8,533.20 $102,398.40 $49.46 $8,573.07 $102,876.80 $50.95 $8,831.33 $105,976.00 353 non-exempt Assoc Planner 1 $35.94 $37.28 $37.55 $38.68 2 $37.83 $39.24 $39.53 $40.72 3 $39.82 $41.31 $41.61 $42.86 4 $41.92 $43.48 $43.80 $45.12 5 $44.13 $7,649.20 $91,790.40 $45.77 $7,933.47 $95,201.60 $46.10 $7,990.67 $95,888.00 $47.49 $8,231.60 $98,779.20 247 non-exempt Assoc Power Engr 1 $41.25 $42.69 $42.89 $44.18 2 $43.42 $44.94 $45.15 $46.50 3 $45.71 $47.30 $47.53 $48.95 4 $48.12 $49.79 $50.03 $51.53 5 $50.65 $8,779.33 $105,352.00 $52.41 $9,084.40 $109,012.80 $52.66 $9,127.73 $109,532.80 $54.24 $9,401.60 $112,819.20 269 non-exempt Assoc Res Planner 1 $39.78 $40.97 $40.97 $42.20 2 $41.87 $43.13 $43.13 $44.42 3 $44.07 $45.40 $45.40 $46.76 4 $46.39 $47.79 $47.79 $49.22 5 $48.83 $8,463.87 $101,566.40 $50.30 $8,718.67 $104,624.00 $50.30 $8,718.67 $104,624.00 $51.81 $8,980.40 $107,764.80 330 non-exempt Asst Engineer 1 $35.10 $36.32 $36.49 $37.59 2 $36.95 $38.23 $38.41 $39.57 3 $38.89 $40.24 $40.43 $41.65 4 $40.94 $42.36 $42.56 $43.84 5 $43.09 $7,468.93 $89,627.20 $44.59 $7,728.93 $92,747.20 $44.80 $7,765.33 $93,184.00 $46.15 $7,999.33 $95,992.00 256 non-exempt Asst Power Engr 1 $37.25 $38.54 $38.72 $39.89 2 $39.21 $40.57 $40.76 $41.99 3 $41.27 $42.70 $42.91 $44.20 4 $43.44 $44.95 $45.17 $46.53 5 $45.73 $7,926.53 $95,118.40 $47.32 $8,202.13 $98,425.60 $47.55 $8,242.00 $98,904.00 $48.98 $8,489.87 $101,878.40 268 non-exempt Asst Res Planner 1 $35.91 $36.98 $36.98 $38.10 2 $37.80 $38.93 $38.93 $40.11 3 $39.79 $40.98 $40.98 $42.22 4 $41.88 $43.14 $43.14 $44.44 5 $44.08 $7,640.53 $91,686.40 $45.41 $7,871.07 $94,452.80 $45.41 $7,871.07 $94,452.80 $46.78 $8,108.53 $97,302.40 299 non-exempt Bldg Inspector 1 $35.69 $37.33 $37.91 $39.05 2 $37.57 $39.29 $39.91 $41.11 3 $39.55 $41.36 $42.01 $43.27 4 $41.63 $43.54 $44.22 $45.55 5 $43.82 $7,595.47 $91,145.60 $45.83 $7,943.87 $95,326.40 $46.55 $8,068.67 $96,824.00 $47.95 $8,311.33 $99,736.00 Salary Effective 4/16/2016 (PP09:2016)Salary Effective 12/10/2016 (PP26:2016)Salray Effective 7/08/2017 (PP15:2017)Salary Effective 12/9/2017 (PP26:2017)Job Code FLSA Job Title Steps 2 Appendix A -2 To MOA Between City of Palo Alto and SEIU FY16/FY17 Salary Schedule Rate Approx. Monthly Approx. Annual Rate Approx. Monthly Approx. Annual Rate Approx. Monthly Approx. Annual Rate Approx. Monthly Approx. Annual 300 non-exempt Bldg Inspector Spec 1 $38.10 $39.84 $40.48 $41.70 2 $40.11 $41.94 $42.61 $43.89 3 $42.22 $44.15 $44.85 $46.20 4 $44.44 $46.47 $47.21 $48.63 5 $46.78 $8,108.53 $97,302.40 $48.92 $8,479.47 $101,753.60 $49.69 $8,612.93 $103,355.20 $51.19 $8,872.93 $106,475.20 370 non-exempt Bldg Serviceperson 1 $21.10 $21.98 $22.24 $22.90 2 $22.21 $23.14 $23.41 $24.10 3 $23.38 $24.36 $24.64 $25.37 4 $24.61 $25.64 $25.94 $26.71 5 $25.91 $4,491.07 $53,892.80 $26.99 $4,678.27 $56,139.20 $27.30 $4,732.00 $56,784.00 $28.12 $4,874.13 $58,489.60 371 non-exempt Bldg Serviceperson-L 1 $22.59 $23.54 $23.80 $24.52 2 $23.78 $24.78 $25.05 $25.81 3 $25.03 $26.08 $26.37 $27.17 4 $26.35 $27.45 $27.76 $28.60 5 $27.74 $4,808.27 $57,699.20 $28.89 $5,007.60 $60,091.20 $29.22 $5,064.80 $60,777.60 $30.10 $5,217.33 $62,608.00 355 non-exempt Bldg/Plg Technician 1 $29.16 $30.24 $30.45 $31.37 2 $30.69 $31.83 $32.05 $33.02 3 $32.31 $33.51 $33.74 $34.76 4 $34.01 $35.27 $35.52 $36.59 5 $35.80 $6,205.33 $74,464.00 $37.13 $6,435.87 $77,230.40 $37.39 $6,480.93 $77,771.20 $38.52 $6,676.80 $80,121.60 340 non-exempt Business Analyst 1 $48.82 $51.62 $53.04 $54.63 2 $51.39 $54.34 $55.83 $57.51 3 $54.09 $57.20 $58.77 $60.54 4 $56.94 $60.21 $61.86 $63.73 5 $59.94 $10,389.60 $124,675.20 $63.38 $10,985.87 $131,830.40 $65.12 $11,287.47 $135,449.60 $67.08 $11,627.20 $139,526.40 3400 non-exempt Business Analyst - S 1 $48.82 $51.62 $53.04 $54.63 2 $51.39 $54.34 $55.83 $57.51 3 $54.09 $57.20 $58.77 $60.54 4 $56.94 $60.21 $61.86 $63.73 5 $59.94 $10,389.60 $124,675.20 $63.38 $10,985.87 $131,830.40 $65.12 $11,287.47 $135,449.60 $67.08 $11,627.20 $139,526.40 212 non-exempt Buyer 1 $34.49 $35.54 $35.56 $36.61 2 $36.30 $37.41 $37.43 $38.54 3 $38.21 $39.38 $39.40 $40.57 4 $40.22 $41.45 $41.47 $42.71 5 $42.34 $7,338.93 $88,067.20 $43.63 $7,562.53 $90,750.40 $43.65 $7,566.00 $90,792.00 $44.96 $7,793.07 $93,516.80 464 non-exempt Cathodic Protection Tech Assistant 1 $33.56 $35.49 $36.47 $37.57 2 $35.33 $37.36 $38.39 $39.55 3 $37.19 $39.33 $40.41 $41.63 4 $39.15 $41.40 $42.54 $43.82 5 $41.21 $7,143.07 $85,716.80 $43.58 $7,553.87 $90,646.40 $44.78 $7,761.87 $93,142.40 $46.13 $7,995.87 $95,950.40 536 non-exempt Cathodic Tech 1 $41.21 $43.59 $44.77 $46.12 2 $43.38 $45.88 $47.13 $48.55 3 $45.66 $48.29 $49.61 $51.10 4 $48.06 $50.83 $52.22 $53.79 5 $50.59 $8,768.93 $105,227.20 $53.50 $9,273.33 $111,280.00 $54.97 $9,528.13 $114,337.60 $56.62 $9,814.13 $117,769.60 208 non-exempt CDBG Coordinator 1 $38.43 $39.85 $40.15 $41.34 2 $40.45 $41.95 $42.26 $43.52 3 $42.58 $44.16 $44.48 $45.81 4 $44.82 $46.48 $46.82 $48.22 5 $47.18 $8,177.87 $98,134.40 $48.93 $8,481.20 $101,774.40 $49.28 $8,541.87 $102,502.40 $50.76 $8,798.40 $105,580.80 Salray Effective 7/08/2017 (PP15:2017)Salary Effective 12/9/2017 (PP26:2017)Job Code FLSA Job Title Steps Salary Effective 4/16/2016 (PP09:2016)Salary Effective 12/10/2016 (PP26:2016) 3 Appendix A -2 To MOA Between City of Palo Alto and SEIU FY16/FY17 Salary Schedule Rate Approx. Monthly Approx. Annual Rate Approx. Monthly Approx. Annual Rate Approx. Monthly Approx. Annual Rate Approx. Monthly Approx. Annual 408 non-exempt Cement Finisher 1 $30.11 $31.85 $32.75 $33.73 2 $31.69 $33.53 $34.47 $35.50 3 $33.36 $35.29 $36.28 $37.37 4 $35.12 $37.15 $38.19 $39.34 5 $36.97 $6,408.13 $76,897.60 $39.11 $6,779.07 $81,348.80 $40.20 $6,968.00 $83,616.00 $41.41 $7,177.73 $86,132.80 409 non-exempt Cement Finisher Lead 1 $32.21 $34.08 $35.03 $36.08 2 $33.91 $35.87 $36.87 $37.98 3 $35.69 $37.76 $38.81 $39.98 4 $37.57 $39.75 $40.85 $42.08 5 $39.55 $6,855.33 $82,264.00 $41.84 $7,252.27 $87,027.20 $43.00 $7,453.33 $89,440.00 $44.29 $7,676.93 $92,123.20 502 non-exempt Chemist 1 $35.11 $36.20 $36.21 $37.30 2 $36.96 $38.10 $38.12 $39.26 3 $38.90 $40.10 $40.13 $41.33 4 $40.95 $42.21 $42.24 $43.51 5 $43.10 $7,470.67 $89,648.00 $44.43 $7,701.20 $92,414.40 $44.46 $7,706.40 $92,476.80 $45.80 $7,938.67 $95,264.00 239 non-exempt Chf Inspec WGW 1 $38.18 $39.94 $40.56 $41.79 2 $40.19 $42.04 $42.69 $43.99 3 $42.31 $44.25 $44.94 $46.30 4 $44.54 $46.58 $47.31 $48.74 5 $46.88 $8,125.87 $97,510.40 $49.03 $8,498.53 $101,982.40 $49.80 $8,632.00 $103,584.00 $51.30 $8,892.00 $106,704.00 301 non-exempt Code Enforcement Off 1 $34.29 $35.85 $36.41 $37.52 2 $36.09 $37.74 $38.33 $39.49 3 $37.99 $39.73 $40.35 $41.57 4 $39.99 $41.82 $42.47 $43.76 5 $42.09 $7,295.60 $87,547.20 $44.02 $7,630.13 $91,561.60 $44.71 $7,749.73 $92,996.80 $46.06 $7,983.73 $95,804.80 560 non-exempt Code Enforcement Off - L 1 $36.68 $38.36 $38.96 $40.14 2 $38.61 $40.38 $41.01 $42.25 3 $40.64 $42.50 $43.17 $44.47 4 $42.78 $44.74 $45.44 $46.81 5 $45.03 $7,805.20 $93,662.40 $47.09 $8,162.27 $97,947.20 $47.83 $8,290.53 $99,486.40 $49.27 $8,540.13 $102,481.60 306 non-exempt Comm Tech 1 $35.92 $36.99 $36.99 $38.11 2 $37.81 $38.94 $38.94 $40.12 3 $39.80 $40.99 $40.99 $42.23 4 $41.89 $43.15 $43.15 $44.45 5 $44.09 $7,642.27 $91,707.20 $45.42 $7,872.80 $94,473.60 $45.42 $7,872.80 $94,473.60 $46.79 $8,110.27 $97,323.20 702 non-exempt Community Serv Offcr 1 $26.09 $27.33 $27.82 $28.65 2 $27.46 $28.77 $29.28 $30.16 3 $28.90 $30.28 $30.82 $31.75 4 $30.42 $31.87 $32.44 $33.42 5 $32.02 $5,550.13 $66,601.60 $33.55 $5,815.33 $69,784.00 $34.15 $5,919.33 $71,032.00 $35.18 $6,097.87 $73,174.40 320 non-exempt Community Service Officer - Lead 1 $27.89 $29.24 $29.75 $30.65 2 $29.36 $30.78 $31.32 $32.26 3 $30.91 $32.40 $32.97 $33.96 4 $32.54 $34.10 $34.70 $35.75 5 $34.25 $5,936.67 $71,240.00 $35.89 $6,220.93 $74,651.20 $36.53 $6,331.87 $75,982.40 $37.63 $6,522.53 $78,270.40 341 non-exempt Coor Trans Sys Mgmt 1 $36.60 $38.04 $38.38 $39.54 2 $38.53 $40.04 $40.40 $41.62 3 $40.56 $42.15 $42.53 $43.81 4 $42.69 $44.37 $44.77 $46.12 5 $44.94 $7,789.60 $93,475.20 $46.70 $8,094.67 $97,136.00 $47.13 $8,169.20 $98,030.40 $48.55 $8,415.33 $100,984.00 Job Code FLSA Job Title Steps Salary Effective 4/16/2016 (PP09:2016)Salary Effective 12/10/2016 (PP26:2016)Salray Effective 7/08/2017 (PP15:2017)Salary Effective 12/9/2017 (PP26:2017) 4 Appendix A -2 To MOA Between City of Palo Alto and SEIU FY16/FY17 Salary Schedule Rate Approx. Monthly Approx. Annual Rate Approx. Monthly Approx. Annual Rate Approx. Monthly Approx. Annual Rate Approx. Monthly Approx. Annual 3410 non-exempt Coor Trans Sys Mgmt - S 1 $36.60 $38.04 $38.38 $39.54 2 $38.53 $40.04 $40.40 $41.62 3 $40.56 $42.15 $42.53 $43.81 4 $42.69 $44.37 $44.77 $46.12 5 $44.94 $7,789.60 $93,475.20 $46.70 $8,094.67 $97,136.00 $47.13 $8,169.20 $98,030.40 $48.55 $8,415.33 $100,984.00 255 non-exempt Coord Library Prog 1 $33.24 $34.43 $34.62 $35.66 2 $34.99 $36.24 $36.44 $37.54 3 $36.83 $38.15 $38.36 $39.52 4 $38.77 $40.16 $40.38 $41.60 5 $40.81 $7,073.73 $84,884.80 $42.27 $7,326.80 $87,921.60 $42.51 $7,368.40 $88,420.80 $43.79 $7,590.27 $91,083.20 342 non-exempt Coord Pub Wks Proj 1 $34.78 $36.14 $36.46 $37.56 2 $36.61 $38.04 $38.38 $39.54 3 $38.54 $40.04 $40.40 $41.62 4 $40.57 $42.15 $42.53 $43.81 5 $42.70 $7,401.33 $88,816.00 $44.37 $7,690.80 $92,289.60 $44.77 $7,760.13 $93,121.60 $46.12 $7,994.13 $95,929.60 317 non-exempt Coord Rec Prog 1 $29.88 $31.04 $31.32 $32.27 2 $31.45 $32.67 $32.97 $33.97 3 $33.10 $34.39 $34.71 $35.76 4 $34.84 $36.20 $36.54 $37.64 5 $36.67 $6,356.13 $76,273.60 $38.11 $6,605.73 $79,268.80 $38.46 $6,666.40 $79,996.80 $39.62 $6,867.47 $82,409.60 344 non-exempt Coord Utility Proj 1 $37.55 $39.02 $39.38 $40.57 2 $39.53 $41.07 $41.45 $42.70 3 $41.61 $43.23 $43.63 $44.95 4 $43.80 $45.51 $45.93 $47.32 5 $46.11 $7,992.40 $95,908.80 $47.91 $8,304.40 $99,652.80 $48.35 $8,380.67 $100,568.00 $49.81 $8,633.73 $103,604.80 3440 non-exempt Coord Utility Proj - S 1 $37.55 $39.02 $39.38 $40.57 2 $39.53 $41.07 $41.45 $42.70 3 $41.61 $43.23 $43.63 $44.95 4 $43.80 $45.51 $45.93 $47.32 5 $46.11 $7,992.40 $95,908.80 $47.91 $8,304.40 $99,652.80 $48.35 $8,380.67 $100,568.00 $49.81 $8,633.73 $103,604.80 242 non-exempt Coord Zero Waste 1 $33.39 $34.70 $35.02 $36.07 2 $35.15 $36.53 $36.86 $37.97 3 $37.00 $38.45 $38.80 $39.97 4 $38.95 $40.47 $40.84 $42.07 5 $41.00 $7,106.67 $85,280.00 $42.60 $7,384.00 $88,608.00 $42.99 $7,451.60 $89,419.20 $44.28 $7,675.20 $92,102.40 205 non-exempt Court Liaison Officer 1 $33.95 $35.58 $36.20 $37.30 2 $35.74 $37.45 $38.11 $39.26 3 $37.62 $39.42 $40.12 $41.33 4 $39.60 $41.49 $42.23 $43.50 5 $41.68 $7,224.53 $86,694.40 $43.67 $7,569.47 $90,833.60 $44.45 $7,704.67 $92,456.00 $45.79 $7,936.93 $95,243.20 214 non-exempt Crime Analyst 1 $33.95 $35.58 $36.20 $37.30 2 $35.74 $37.45 $38.11 $39.26 3 $37.62 $39.42 $40.12 $41.33 4 $39.60 $41.49 $42.23 $43.50 5 $41.68 $7,224.53 $86,694.40 $43.67 $7,569.47 $90,833.60 $44.45 $7,704.67 $92,456.00 $45.79 $7,936.93 $95,243.20 415 non-exempt Cust Srv Specialist-L 1 $30.55 $31.47 $31.47 $32.40 2 $32.16 $33.13 $33.13 $34.11 3 $33.85 $34.87 $34.87 $35.91 4 $35.63 $36.70 $36.70 $37.80 5 $37.50 $6,500.00 $78,000.00 $38.63 $6,695.87 $80,350.40 $38.63 $6,695.87 $80,350.40 $39.79 $6,896.93 $82,763.20 Salray Effective 7/08/2017 (PP15:2017)Salary Effective 12/9/2017 (PP26:2017)Job Code FLSA Job Title Steps Salary Effective 4/16/2016 (PP09:2016)Salary Effective 12/10/2016 (PP26:2016) 5 Appendix A -2 To MOA Between City of Palo Alto and SEIU FY16/FY17 Salary Schedule Rate Approx. Monthly Approx. Annual Rate Approx. Monthly Approx. Annual Rate Approx. Monthly Approx. Annual Rate Approx. Monthly Approx. Annual 218 non-exempt Cust Svc Represent 1 $25.98 $26.76 $26.76 $27.56 2 $27.35 $28.17 $28.17 $29.01 3 $28.79 $29.65 $29.65 $30.54 4 $30.30 $31.21 $31.21 $32.15 5 $31.89 $5,527.60 $66,331.20 $32.85 $5,694.00 $68,328.00 $32.85 $5,694.00 $68,328.00 $33.84 $5,865.60 $70,387.20 217 non-exempt Cust Svc Spec 1 $28.56 $29.41 $29.41 $30.31 2 $30.06 $30.96 $30.96 $31.90 3 $31.64 $32.59 $32.59 $33.58 4 $33.31 $34.31 $34.31 $35.35 5 $35.06 $6,077.07 $72,924.80 $36.12 $6,260.80 $75,129.60 $36.12 $6,260.80 $75,129.60 $37.21 $6,449.73 $77,396.80 260 non-exempt Desktop Technician 1 $31.13 $32.06 $32.06 $33.03 2 $32.77 $33.75 $33.75 $34.77 3 $34.49 $35.53 $35.53 $36.60 4 $36.31 $37.40 $37.40 $38.53 5 $38.22 $6,624.80 $79,497.60 $39.37 $6,824.13 $81,889.60 $39.37 $6,824.13 $81,889.60 $40.56 $7,030.40 $84,364.80 514 non-exempt Development Project Coordinator I 1 $27.42 $28.67 $29.13 $30.01 2 $28.86 $30.18 $30.66 $31.59 3 $30.38 $31.77 $32.27 $33.25 4 $31.98 $33.44 $33.97 $35.00 5 $33.66 $5,834.40 $70,012.80 $35.20 $6,101.33 $73,216.00 $35.76 $6,198.40 $74,380.80 $36.84 $6,385.60 $76,627.20 515 non-exempt Development Project Coordinator II 1 $31.15 $32.59 $33.10 $34.09 2 $32.79 $34.30 $34.84 $35.88 3 $34.52 $36.10 $36.67 $37.77 4 $36.34 $38.00 $38.60 $39.76 5 $38.25 $6,630.00 $79,560.00 $40.00 $6,933.33 $83,200.00 $40.63 $7,042.53 $84,510.40 $41.85 $7,254.00 $87,048.00 516 non-exempt Development Project Coordinator III 1 $34.36 $35.93 $36.50 $37.60 2 $36.17 $37.82 $38.42 $39.58 3 $38.07 $39.81 $40.44 $41.66 4 $40.07 $41.90 $42.57 $43.85 5 $42.18 $7,311.20 $87,734.40 $44.11 $7,645.73 $91,748.80 $44.81 $7,767.07 $93,204.80 $46.16 $8,001.07 $96,012.80 533 non-exempt Elec Asst I 1 $27.09 $28.22 $28.53 $29.39 2 $28.52 $29.70 $30.03 $30.94 3 $30.02 $31.26 $31.61 $32.57 4 $31.60 $32.90 $33.27 $34.28 5 $33.26 $5,765.07 $69,180.80 $34.63 $6,002.53 $72,030.40 $35.02 $6,070.13 $72,841.60 $36.08 $6,253.87 $75,046.40 267 non-exempt Elec Undgd Inspec 1 $33.84 $35.39 $35.94 $37.03 2 $35.62 $37.25 $37.83 $38.98 3 $37.49 $39.21 $39.82 $41.03 4 $39.46 $41.27 $41.92 $43.19 5 $41.54 $7,200.27 $86,403.20 $43.44 $7,529.60 $90,355.20 $44.13 $7,649.20 $91,790.40 $45.46 $7,879.73 $94,556.80 345 non-exempt Electric Project Engineer 1 $49.43 $51.15 $51.39 $52.93 2 $52.03 $53.84 $54.09 $55.72 3 $54.77 $56.67 $56.94 $58.65 4 $57.65 $59.65 $59.94 $61.74 5 $60.68 $10,517.87 $126,214.40 $62.79 $10,883.60 $130,603.20 $63.09 $10,935.60 $131,227.20 $64.99 $11,264.93 $135,179.20 3450 non-exempt Electric Project Engineer - S 1 $49.43 $51.15 $51.39 $52.93 2 $52.03 $53.84 $54.09 $55.72 3 $54.77 $56.67 $56.94 $58.65 4 $57.65 $59.65 $59.94 $61.74 5 $60.68 $10,517.87 $126,214.40 $62.79 $10,883.60 $130,603.20 $63.09 $10,935.60 $131,227.20 $64.99 $11,264.93 $135,179.20 Job Code FLSA Job Title Steps Salary Effective 4/16/2016 (PP09:2016)Salary Effective 12/10/2016 (PP26:2016)Salray Effective 7/08/2017 (PP15:2017)Salary Effective 12/9/2017 (PP26:2017) 6 Appendix A -2 To MOA Between City of Palo Alto and SEIU FY16/FY17 Salary Schedule Rate Approx. Monthly Approx. Annual Rate Approx. Monthly Approx. Annual Rate Approx. Monthly Approx. Annual Rate Approx. Monthly Approx. Annual 292 non-exempt Electric Underground Inspector - Lead 1 $36.20 $37.84 $38.44 $39.60 2 $38.10 $39.83 $40.46 $41.68 3 $40.10 $41.93 $42.59 $43.87 4 $42.21 $44.14 $44.83 $46.18 5 $44.43 $7,701.20 $92,414.40 $46.46 $8,053.07 $96,636.80 $47.19 $8,179.60 $98,155.20 $48.61 $8,425.73 $101,108.80 527 non-exempt Electrical Equipment Tech 1 $31.85 $32.81 $32.81 $33.80 2 $33.53 $34.54 $34.54 $35.58 3 $35.29 $36.36 $36.36 $37.45 4 $37.15 $38.27 $38.27 $39.42 5 $39.10 $6,777.33 $81,328.00 $40.28 $6,981.87 $83,782.40 $40.28 $6,981.87 $83,782.40 $41.49 $7,191.60 $86,299.20 530 non-exempt Electrician 1 $36.23 $37.72 $38.14 $39.28 2 $38.14 $39.70 $40.15 $41.35 3 $40.15 $41.79 $42.26 $43.53 4 $42.26 $43.99 $44.48 $45.82 5 $44.48 $7,709.87 $92,518.40 $46.31 $8,027.07 $96,324.80 $46.82 $8,115.47 $97,385.60 $48.23 $8,359.87 $100,318.40 529 non-exempt Electrician-Appren 1 $34.30 $35.70 $36.10 $37.18 2 $36.10 $37.58 $38.00 $39.14 3 $38.00 $39.56 $40.00 $41.20 4 $40.00 $41.64 $42.10 $43.37 5 $42.10 $7,297.33 $87,568.00 $43.83 $7,597.20 $91,166.40 $44.32 $7,682.13 $92,185.60 $45.65 $7,912.67 $94,952.00 535 non-exempt Electrician-Lead 1 $38.79 $40.38 $40.83 $42.07 2 $40.83 $42.51 $42.98 $44.28 3 $42.98 $44.75 $45.24 $46.61 4 $45.24 $47.10 $47.62 $49.06 5 $47.62 $8,254.13 $99,049.60 $49.58 $8,593.87 $103,126.40 $50.13 $8,689.20 $104,270.40 $51.64 $8,950.93 $107,411.20 399 non-exempt Emergency Med Svs Data Specialist 1 $28.03 $28.90 $28.94 $29.81 2 $29.50 $30.42 $30.46 $31.38 3 $31.05 $32.02 $32.06 $33.03 4 $32.68 $33.71 $33.75 $34.77 5 $34.40 $5,962.67 $71,552.00 $35.48 $6,149.87 $73,798.40 $35.53 $6,158.53 $73,902.40 $36.60 $6,344.00 $76,128.00 311 non-exempt Eng Tech I 1 $26.50 $27.69 $28.09 $28.94 2 $27.89 $29.15 $29.57 $30.46 3 $29.36 $30.68 $31.13 $32.06 4 $30.90 $32.29 $32.77 $33.75 5 $32.53 $5,638.53 $67,662.40 $33.99 $5,891.60 $70,699.20 $34.49 $5,978.27 $71,739.20 $35.53 $6,158.53 $73,902.40 332 non-exempt Engineer 1 $43.64 $45.17 $45.37 $46.74 2 $45.94 $47.55 $47.76 $49.20 3 $48.36 $50.05 $50.27 $51.79 4 $50.91 $52.68 $52.92 $54.52 5 $53.59 $9,288.93 $111,467.20 $55.45 $9,611.33 $115,336.00 $55.71 $9,656.40 $115,876.80 $57.39 $9,947.60 $119,371.20 323 non-exempt Engr Tech II 1 $28.67 $29.95 $30.40 $31.31 2 $30.18 $31.53 $32.00 $32.96 3 $31.77 $33.19 $33.68 $34.69 4 $33.44 $34.94 $35.45 $36.52 5 $35.20 $6,101.33 $73,216.00 $36.78 $6,375.20 $76,502.40 $37.32 $6,468.80 $77,625.60 $38.44 $6,662.93 $79,955.20 319 non-exempt Engr Tech III 1 $32.02 $33.45 $33.94 $34.96 2 $33.70 $35.21 $35.73 $36.80 3 $35.47 $37.06 $37.61 $38.74 4 $37.34 $39.01 $39.59 $40.78 5 $39.30 $6,812.00 $81,744.00 $41.06 $7,117.07 $85,404.80 $41.67 $7,222.80 $86,673.60 $42.93 $7,441.20 $89,294.40 Salray Effective 7/08/2017 (PP15:2017)Salary Effective 12/9/2017 (PP26:2017)Job Code FLSA Job Title Steps Salary Effective 4/16/2016 (PP09:2016)Salary Effective 12/10/2016 (PP26:2016) 7 Appendix A -2 To MOA Between City of Palo Alto and SEIU FY16/FY17 Salary Schedule Rate Approx. Monthly Approx. Annual Rate Approx. Monthly Approx. Annual Rate Approx. Monthly Approx. Annual Rate Approx. Monthly Approx. Annual 257 non-exempt Environmental Spec 1 $37.67 $39.35 $39.92 $41.13 2 $39.65 $41.42 $42.02 $43.29 3 $41.74 $43.60 $44.23 $45.57 4 $43.94 $45.89 $46.56 $47.97 5 $46.25 $8,016.67 $96,200.00 $48.31 $8,373.73 $100,484.80 $49.01 $8,495.07 $101,940.80 $50.49 $8,751.60 $105,019.20 211 non-exempt Equip Maint Serv Per 1 $22.62 $23.56 $23.83 $24.54 2 $23.81 $24.80 $25.08 $25.83 3 $25.06 $26.10 $26.40 $27.19 4 $26.38 $27.47 $27.79 $28.62 5 $27.77 $4,813.47 $57,761.60 $28.92 $5,012.80 $60,153.60 $29.25 $5,070.00 $60,840.00 $30.13 $5,222.53 $62,670.40 396 non-exempt Equip Operator 1 $27.81 $29.37 $30.13 $31.04 2 $29.27 $30.92 $31.72 $32.67 3 $30.81 $32.55 $33.39 $34.39 4 $32.43 $34.26 $35.15 $36.20 5 $34.14 $5,917.60 $71,011.20 $36.06 $6,250.40 $75,004.80 $37.00 $6,413.33 $76,960.00 $38.11 $6,605.73 $79,268.80 397 non-exempt Equip Operator - Lead 1 $29.75 $31.43 $32.24 $33.21 2 $31.32 $33.08 $33.94 $34.96 3 $32.97 $34.82 $35.73 $36.80 4 $34.70 $36.65 $37.61 $38.74 5 $36.53 $6,331.87 $75,982.40 $38.58 $6,687.20 $80,246.40 $39.59 $6,862.27 $82,347.20 $40.78 $7,068.53 $84,822.40 250 non-exempt Equip Parts Tech 1 $24.31 $25.04 $25.04 $25.81 2 $25.59 $26.36 $26.36 $27.17 3 $26.94 $27.75 $27.75 $28.60 4 $28.36 $29.21 $29.21 $30.10 5 $29.85 $5,174.00 $62,088.00 $30.75 $5,330.00 $63,960.00 $30.75 $5,330.00 $63,960.00 $31.68 $5,491.20 $65,894.40 203 non-exempt Facilities Asst 1 $23.09 $24.44 $25.12 $25.87 2 $24.31 $25.73 $26.44 $27.23 3 $25.59 $27.08 $27.83 $28.66 4 $26.94 $28.50 $29.29 $30.17 5 $28.36 $4,915.73 $58,988.80 $30.00 $5,200.00 $62,400.00 $30.83 $5,343.87 $64,126.40 $31.76 $5,505.07 $66,060.80 374 non-exempt Facilities Carpenter 1 $30.11 $31.85 $32.75 $33.73 2 $31.69 $33.53 $34.47 $35.50 3 $33.36 $35.29 $36.28 $37.37 4 $35.12 $37.15 $38.19 $39.34 5 $36.97 $6,408.13 $76,897.60 $39.11 $6,779.07 $81,348.80 $40.20 $6,968.00 $83,616.00 $41.41 $7,177.73 $86,132.80 375 non-exempt Facilities Elect 1 $30.02 $31.26 $31.61 $32.56 2 $31.60 $32.90 $33.27 $34.27 3 $33.26 $34.63 $35.02 $36.07 4 $35.01 $36.45 $36.86 $37.97 5 $36.85 $6,387.33 $76,648.00 $38.37 $6,650.80 $79,809.60 $38.80 $6,725.33 $80,704.00 $39.97 $6,928.13 $83,137.60 373 non-exempt Facilities Maint-L 1 $38.90 $41.15 $42.29 $43.58 2 $40.95 $43.32 $44.52 $45.87 3 $43.11 $45.60 $46.86 $48.28 4 $45.38 $48.00 $49.33 $50.82 5 $47.77 $8,280.13 $99,361.60 $50.53 $8,758.53 $105,102.40 $51.93 $9,001.20 $108,014.40 $53.49 $9,271.60 $111,259.20 377 non-exempt Facilities Painter 1 $30.11 $31.85 $32.75 $33.73 2 $31.69 $33.53 $34.47 $35.50 3 $33.36 $35.29 $36.28 $37.37 4 $35.12 $37.15 $38.19 $39.34 5 $36.97 $6,408.13 $76,897.60 $39.11 $6,779.07 $81,348.80 $40.20 $6,968.00 $83,616.00 $41.41 $7,177.73 $86,132.80 Job Code FLSA Job Title Steps Salary Effective 4/16/2016 (PP09:2016)Salary Effective 12/10/2016 (PP26:2016)Salray Effective 7/08/2017 (PP15:2017)Salary Effective 12/9/2017 (PP26:2017) 8 Appendix A -2 To MOA Between City of Palo Alto and SEIU FY16/FY17 Salary Schedule Rate Approx. Monthly Approx. Annual Rate Approx. Monthly Approx. Annual Rate Approx. Monthly Approx. Annual Rate Approx. Monthly Approx. Annual 376 non-exempt Facilities Tech 1 $32.57 $33.79 $34.04 $35.07 2 $34.28 $35.57 $35.83 $36.92 3 $36.08 $37.44 $37.72 $38.86 4 $37.98 $39.41 $39.70 $40.90 5 $39.98 $6,929.87 $83,158.40 $41.48 $41.79 $43.05 462 non-exempt Field Service Pers WGW 1 $27.89 $29.51 $30.31 $31.23 2 $29.36 $31.06 $31.91 $32.87 3 $30.91 $32.69 $33.59 $34.60 4 $32.54 $34.41 $35.36 $36.42 5 $34.25 $5,936.67 $71,240.00 $36.22 $6,278.13 $75,337.60 $37.22 $6,451.47 $77,417.60 $38.34 $6,645.60 $79,747.20 383 non-exempt Fleet Svcs Coord 1 $28.97 $29.84 $29.84 $30.73 2 $30.49 $31.41 $31.41 $32.35 3 $32.09 $33.06 $33.06 $34.05 4 $33.78 $34.80 $34.80 $35.84 5 $35.56 $6,163.73 $73,964.80 $36.63 $6,349.20 $76,190.40 $36.63 $6,349.20 $76,190.40 $37.73 $6,539.87 $78,478.40 489 non-exempt Gas System Tech 1 $30.39 $32.14 $33.01 $34.01 2 $31.99 $33.83 $34.75 $35.80 3 $33.67 $35.61 $36.58 $37.68 4 $35.44 $37.48 $38.50 $39.66 5 $37.31 $6,467.07 $77,604.80 $39.45 $6,838.00 $82,056.00 $40.53 $7,025.20 $84,302.40 $41.75 $7,236.67 $86,840.00 463 non-exempt Gas System Tech II 1 $31.91 $33.74 $34.68 $35.72 2 $33.59 $35.52 $36.50 $37.60 3 $35.36 $37.39 $38.42 $39.58 4 $37.22 $39.36 $40.44 $41.66 5 $39.18 $6,791.20 $81,494.40 $41.43 $7,181.20 $86,174.40 $42.57 $7,378.80 $88,545.60 $43.85 $7,600.67 $91,208.00 398 non-exempt Geographic Inform Syst Specialist 1 $40.98 $43.34 $44.53 $45.88 2 $43.14 $45.62 $46.87 $48.29 3 $45.41 $48.02 $49.34 $50.83 4 $47.80 $50.55 $51.94 $53.50 5 $50.32 $8,722.13 $104,665.60 $53.21 $9,223.07 $110,676.80 $54.67 $9,476.13 $113,713.60 $56.32 $9,762.13 $117,145.60 390 non-exempt Heavy Equip Oper 1 $31.49 $33.26 $34.13 $35.15 2 $33.15 $35.01 $35.93 $37.00 3 $34.89 $36.85 $37.82 $38.95 4 $36.73 $38.79 $39.81 $41.00 5 $38.66 $6,701.07 $80,412.80 $40.83 $7,077.20 $84,926.40 $41.90 $7,262.67 $87,152.00 $43.16 $7,481.07 $89,772.80 391 non-exempt Heavy Equip Oper-L 1 $33.68 $35.58 $36.50 $37.60 2 $35.45 $37.45 $38.42 $39.58 3 $37.32 $39.42 $40.44 $41.66 4 $39.28 $41.49 $42.57 $43.85 5 $41.35 $7,167.33 $86,008.00 $43.67 $7,569.47 $90,833.60 $44.81 $7,767.07 $93,204.80 $46.16 $8,001.07 $96,012.80 389 non-exempt HEO/Installer Repairer 1 $34.58 $36.58 $37.57 $38.70 2 $36.40 $38.50 $39.55 $40.74 3 $38.32 $40.53 $41.63 $42.88 4 $40.34 $42.66 $43.82 $45.14 5 $42.46 $7,359.73 $88,316.80 $44.90 $7,782.67 $93,392.00 $46.13 $7,995.87 $95,950.40 $47.52 $8,236.80 $98,841.60 Job Code FLSA Job Title Steps Salary Effective 4/16/2016 (PP09:2016)Salary Effective 12/10/2016 (PP26:2016)Salray Effective 7/08/2017 (PP15:2017)Salary Effective 12/9/2017 (PP26:2017) 9 Appendix A -2 To MOA Between City of Palo Alto and SEIU FY16/FY17 Salary Schedule Rate Approx. Monthly Approx. Annual Rate Approx. Monthly Approx. Annual Rate Approx. Monthly Approx. Annual Rate Approx. Monthly Approx. Annual 508 non-exempt Ind Waste Inspec 1 $31.65 $33.06 $33.54 $34.56 2 $33.32 $34.80 $35.30 $36.38 3 $35.07 $36.63 $37.16 $38.29 4 $36.92 $38.56 $39.12 $40.30 5 $38.86 $6,735.73 $80,828.80 $40.59 $7,035.60 $84,427.20 $41.18 $7,137.87 $85,654.40 $42.42 $7,352.80 $88,233.60 258 non-exempt Ind Waste Invtgtr 1 $35.58 $37.15 $37.69 $38.83 2 $37.45 $39.10 $39.67 $40.87 3 $39.42 $41.16 $41.76 $43.02 4 $41.49 $43.33 $43.96 $45.28 5 $43.67 $7,569.47 $90,833.60 $45.61 $7,905.73 $94,868.80 $46.27 $8,020.13 $96,241.60 $47.66 $8,261.07 $99,132.80 365 non-exempt Industrial Waste Technician 1 $28.58 $29.85 $30.27 $31.19 2 $30.08 $31.42 $31.86 $32.83 3 $31.66 $33.07 $33.54 $34.56 4 $33.33 $34.81 $35.31 $36.38 5 $35.08 $6,080.53 $72,966.40 $36.64 $6,350.93 $76,211.20 $37.17 $6,442.80 $77,313.60 $38.29 $6,636.93 $79,643.20 227 non-exempt Inspector, Field Svc 1 $34.47 $36.05 $36.61 $37.72 2 $36.28 $37.95 $38.54 $39.70 3 $38.19 $39.95 $40.57 $41.79 4 $40.20 $42.05 $42.71 $43.99 5 $42.32 $7,335.47 $88,025.60 $44.26 $7,671.73 $92,060.80 $44.96 $7,793.07 $93,516.80 $46.31 $8,027.07 $96,324.80 308 non-exempt Instrum Elec 1 $34.16 $35.57 $35.96 $37.05 2 $35.96 $37.44 $37.85 $39.00 3 $37.85 $39.41 $39.84 $41.05 4 $39.84 $41.48 $41.94 $43.21 5 $41.94 $7,269.60 $87,235.20 $43.66 $7,567.73 $90,812.80 $44.15 $7,652.67 $91,832.00 $45.48 $7,883.20 $94,598.40 293 non-exempt Junior Museum & Zoo Educator 1 $26.71 $27.76 $28.02 $28.86 2 $28.12 $29.22 $29.49 $30.38 3 $29.60 $30.76 $31.04 $31.98 4 $31.16 $32.38 $32.67 $33.66 5 $32.80 $5,685.33 $68,224.00 $34.08 $5,907.20 $70,886.40 $34.39 $5,960.93 $71,531.20 $35.43 $6,141.20 $73,694.40 503 non-exempt Laboratory Tech Wqc 1 $31.40 $32.37 $32.40 $33.36 2 $33.05 $34.07 $34.10 $35.12 3 $34.79 $35.86 $35.89 $36.97 4 $36.62 $37.75 $37.78 $38.92 5 $38.55 $6,682.00 $80,184.00 $39.74 $6,888.27 $82,659.20 $39.77 $6,893.47 $82,721.60 $40.97 $7,101.47 $85,217.60 413 non-exempt Landfill Technician 1 $34.91 $36.47 $37.01 $38.13 2 $36.75 $38.39 $38.96 $40.14 3 $38.68 $40.41 $41.01 $42.25 4 $40.72 $42.54 $43.17 $44.47 5 $42.86 $7,429.07 $89,148.80 $44.78 $7,761.87 $93,142.40 $45.44 $7,876.27 $94,515.20 $46.81 $8,113.73 $97,364.80 254 non-exempt Librarian 1 $26.84 $27.80 $27.96 $28.79 2 $28.25 $29.26 $29.43 $30.31 3 $29.74 $30.80 $30.98 $31.91 4 $31.30 $32.42 $32.61 $33.59 5 $32.95 $5,711.33 $68,536.00 $34.13 $5,915.87 $70,990.40 $34.33 $5,950.53 $71,406.40 $35.36 $6,129.07 $73,548.80 252 non-exempt Library Associate 1 $24.52 $25.27 $25.27 $26.03 2 $25.81 $26.60 $26.60 $27.40 3 $27.17 $28.00 $28.00 $28.84 4 $28.60 $29.47 $29.47 $30.36 5 $30.11 $5,219.07 $62,628.80 $31.02 $5,376.80 $64,521.60 $31.02 $5,376.80 $64,521.60 $31.96 $5,539.73 $66,476.80 Salray Effective 7/08/2017 (PP15:2017)Salary Effective 12/9/2017 (PP26:2017)Job Code FLSA Job Title Steps Salary Effective 4/16/2016 (PP09:2016)Salary Effective 12/10/2016 (PP26:2016) 10 Appendix A -2 To MOA Between City of Palo Alto and SEIU FY16/FY17 Salary Schedule Rate Approx. Monthly Approx. Annual Rate Approx. Monthly Approx. Annual Rate Approx. Monthly Approx. Annual Rate Approx. Monthly Approx. Annual 253 non-exempt Library Specialist 1 $23.20 $23.90 $23.90 $24.62 2 $24.42 $25.16 $25.16 $25.92 3 $25.71 $26.48 $26.48 $27.28 4 $27.06 $27.87 $27.87 $28.72 5 $28.48 $4,936.53 $59,238.40 $29.34 $5,085.60 $61,027.20 $29.34 $5,085.60 $61,027.20 $30.23 $5,239.87 $62,878.40 541 non-exempt Lineper/Cable Spl 1 $42.81 $44.75 $45.45 $46.83 2 $45.06 $47.11 $47.84 $49.29 3 $47.43 $49.59 $50.36 $51.88 4 $49.93 $52.20 $53.01 $54.61 5 $52.56 $9,110.40 $109,324.80 $54.95 $9,524.67 $114,296.00 $55.80 $9,672.00 $116,064.00 $57.48 $9,963.20 $119,558.40 542 non-exempt Lineper/Cable Spl-L 1 $45.82 $47.90 $48.63 $50.09 2 $48.23 $50.42 $51.19 $52.73 3 $50.77 $53.07 $53.88 $55.51 4 $53.44 $55.86 $56.72 $58.43 5 $56.25 $9,750.00 $117,000.00 $58.80 $10,192.00 $122,304.00 $59.71 $10,349.73 $124,196.80 $61.51 $10,661.73 $127,940.80 531 non-exempt Lineperson/Cable Spl-T 1 $40.78 $42.63 $43.29 $44.59 2 $42.93 $44.87 $45.57 $46.94 3 $45.19 $47.23 $47.97 $49.41 4 $47.57 $49.72 $50.49 $52.01 5 $50.07 $8,678.80 $104,145.60 $52.34 $9,072.27 $108,867.20 $53.15 $9,212.67 $110,552.00 $54.75 $9,490.00 $113,880.00 532 non-exempt Lineperson/Cable Spl-TL 1 $43.61 $45.59 $46.30 $47.69 2 $45.91 $47.99 $48.74 $50.20 3 $48.33 $50.52 $51.30 $52.84 4 $50.87 $53.18 $54.00 $55.62 5 $53.55 $9,282.00 $111,384.00 $55.98 $9,703.20 $116,438.40 $56.84 $9,852.27 $118,227.20 $58.55 $10,148.67 $121,784.00 528 non-exempt Lnper/Cbl Spl-Appren 1 $36.77 $38.45 $39.04 $40.21 2 $38.71 $40.47 $41.09 $42.33 3 $40.75 $42.60 $43.25 $44.56 4 $42.89 $44.84 $45.53 $46.90 5 $45.15 $7,826.00 $93,912.00 $47.20 $8,181.33 $98,176.00 $47.93 $8,307.87 $99,694.40 $49.37 $8,557.47 $102,689.60 213 non-exempt Mailing Svcs Spec 1 $20.48 $21.12 $21.16 $21.78 2 $21.56 $22.23 $22.27 $22.93 3 $22.69 $23.40 $23.44 $24.14 4 $23.88 $24.63 $24.67 $25.41 5 $25.14 $4,357.60 $52,291.20 $25.93 $4,494.53 $53,934.40 $25.97 $4,501.47 $54,017.60 $26.75 $4,636.67 $55,640.00 291 non-exempt Maintenance Mechanic-Welding 1 $33.53 $35.46 $36.44 $37.54 2 $35.29 $37.33 $38.36 $39.52 3 $37.15 $39.29 $40.38 $41.60 4 $39.11 $41.36 $42.50 $43.79 5 $41.17 $7,136.13 $85,633.60 $43.54 $7,546.93 $90,563.20 $44.74 $7,754.93 $93,059.20 $46.09 $7,988.93 $95,867.20 346 non-exempt Management Assistant 1 $30.44 $31.40 $31.45 $32.40 2 $32.04 $33.05 $33.11 $34.10 3 $33.73 $34.79 $34.85 $35.89 4 $35.50 $36.62 $36.68 $37.78 5 $37.37 $6,477.47 $77,729.60 $38.55 $6,682.00 $80,184.00 $38.61 $6,692.40 $80,308.80 $39.77 $6,893.47 $82,721.60 3460 non-exempt Management Assistant - S 1 $30.44 $31.40 $31.45 $32.40 2 $32.04 $33.05 $33.11 $34.10 3 $33.73 $34.79 $34.85 $35.89 4 $35.50 $36.62 $36.68 $37.78 5 $37.37 $6,477.47 $77,729.60 $38.55 $6,682.00 $80,184.00 $38.61 $6,692.40 $80,308.80 $39.77 $6,893.47 $82,721.60 Job Code FLSA Job Title Steps Salary Effective 4/16/2016 (PP09:2016)Salary Effective 12/10/2016 (PP26:2016)Salray Effective 7/08/2017 (PP15:2017)Salary Effective 12/9/2017 (PP26:2017) 11 Appendix A -2 To MOA Between City of Palo Alto and SEIU FY16/FY17 Salary Schedule Rate Approx. Monthly Approx. Annual Rate Approx. Monthly Approx. Annual Rate Approx. Monthly Approx. Annual Rate Approx. Monthly Approx. Annual 216 non-exempt Marketing Eng 1 $43.64 $45.17 $45.37 $46.74 2 $45.94 $47.55 $47.76 $49.20 3 $48.36 $50.05 $50.27 $51.79 4 $50.91 $52.68 $52.92 $54.52 5 $53.59 $9,288.93 $111,467.20 $55.45 $9,611.33 $115,336.00 $55.71 $9,656.40 $115,876.80 $57.39 $9,947.60 $119,371.20 241 non-exempt Meter Reader 1 $24.31 $25.09 $25.14 $25.90 2 $25.59 $26.41 $26.46 $27.26 3 $26.94 $27.80 $27.85 $28.69 4 $28.36 $29.26 $29.32 $30.20 5 $29.85 $5,174.00 $62,088.00 $30.80 $5,338.67 $64,064.00 $30.86 $5,349.07 $64,188.80 $31.79 $5,510.27 $66,123.20 240 non-exempt Meter Reader-Lead 1 $26.01 $26.84 $26.89 $27.71 2 $27.38 $28.25 $28.31 $29.17 3 $28.82 $29.74 $29.80 $30.70 4 $30.34 $31.31 $31.37 $32.32 5 $31.94 $5,536.27 $66,435.20 $32.96 $5,713.07 $68,556.80 $33.02 $5,723.47 $68,681.60 $34.02 $5,896.80 $70,761.60 369 non-exempt Meter Shop Lead 1 $29.29 $30.64 $31.14 $32.07 2 $30.83 $32.25 $32.78 $33.76 3 $32.45 $33.95 $34.50 $35.54 4 $34.16 $35.74 $36.32 $37.41 5 $35.96 $6,233.07 $74,796.80 $37.62 $6,520.80 $78,249.60 $38.23 $6,626.53 $79,518.40 $39.38 $6,825.87 $81,910.40 552 non-exempt Metering Technician 1 $40.36 $42.19 $42.85 $44.14 2 $42.48 $44.41 $45.10 $46.46 3 $44.72 $46.75 $47.47 $48.90 4 $47.07 $49.21 $49.97 $51.47 5 $49.55 $8,588.67 $103,064.00 $51.80 $8,978.67 $107,744.00 $52.60 $9,117.33 $109,408.00 $54.18 $9,391.20 $112,694.40 553 non-exempt Metering Technician – Lead 1 $43.20 $45.16 $45.87 $47.23 2 $45.47 $47.54 $48.28 $49.72 3 $47.86 $50.04 $50.82 $52.34 4 $50.38 $52.67 $53.49 $55.09 5 $53.03 $9,191.87 $110,302.40 $55.44 $9,609.60 $115,315.20 $56.30 $9,758.67 $117,104.00 $57.99 $10,051.60 $120,619.20 384 non-exempt Mobile Service Tech 1 $34.41 $35.44 $35.44 $36.52 2 $36.22 $37.31 $37.31 $38.44 3 $38.13 $39.27 $39.27 $40.46 4 $40.14 $41.34 $41.34 $42.59 5 $42.25 $7,323.33 $87,880.00 $43.52 $7,543.47 $90,521.60 $43.52 $7,543.47 $90,521.60 $44.83 $7,770.53 $93,246.40 381 non-exempt Motor Equip Mech-L 1 $35.06 $36.11 $36.11 $37.21 2 $36.91 $38.01 $38.01 $39.17 3 $38.85 $40.01 $40.01 $41.23 4 $40.89 $42.12 $42.12 $43.40 5 $43.04 $7,460.27 $89,523.20 $44.34 $7,685.60 $92,227.20 $44.34 $7,685.60 $92,227.20 $45.68 $7,917.87 $95,014.40 286 non-exempt Motor Equipment Mechanic I 1 $30.36 $31.27 $31.27 $32.21 2 $31.96 $32.92 $32.92 $33.91 3 $33.64 $34.65 $34.65 $35.69 4 $35.41 $36.47 $36.47 $37.57 5 $37.27 $6,460.13 $77,521.60 $38.39 $6,654.27 $79,851.20 $38.39 $6,654.27 $79,851.20 $39.55 $6,855.33 $82,264.00 287 non-exempt Motor Equipment Mechanic II 1 $32.78 $33.76 $33.76 $34.78 2 $34.50 $35.54 $35.54 $36.61 3 $36.32 $37.41 $37.41 $38.54 4 $38.23 $39.38 $39.38 $40.57 5 $40.24 $6,974.93 $83,699.20 $41.45 $7,184.67 $86,216.00 $41.45 $7,184.67 $86,216.00 $42.70 $7,401.33 $88,816.00 Job Code FLSA Job Title Steps Salary Effective 4/16/2016 (PP09:2016)Salary Effective 12/10/2016 (PP26:2016)Salray Effective 7/08/2017 (PP15:2017)Salary Effective 12/9/2017 (PP26:2017) 12 Appendix A -2 To MOA Between City of Palo Alto and SEIU FY16/FY17 Salary Schedule Rate Approx. Monthly Approx. Annual Rate Approx. Monthly Approx. Annual Rate Approx. Monthly Approx. Annual Rate Approx. Monthly Approx. Annual 230 non-exempt Offset Equip Op 1 $23.22 $23.94 $23.98 $24.70 2 $24.44 $25.20 $25.24 $26.00 3 $25.73 $26.53 $26.57 $27.37 4 $27.08 $27.93 $27.97 $28.81 5 $28.50 $4,940.00 $59,280.00 $29.40 $5,096.00 $61,152.00 $29.44 $5,102.93 $61,235.20 $30.33 $5,257.20 $63,086.40 543 non-exempt Overhead Underground Troubleman 1 $44.98 $47.03 $47.75 $49.18 2 $47.35 $49.50 $50.26 $51.77 3 $49.84 $52.10 $52.91 $54.49 4 $52.46 $54.84 $55.69 $57.36 5 $55.22 $9,571.47 $114,857.60 $57.73 $10,006.53 $120,078.40 $58.62 $10,160.80 $121,929.60 $60.38 $10,465.87 $125,590.40 452 non-exempt Park Maint - Lead 1 $29.79 $30.78 $30.88 $31.82 2 $31.36 $32.40 $32.50 $33.49 3 $33.01 $34.11 $34.21 $35.25 4 $34.75 $35.90 $36.01 $37.10 5 $36.58 $6,340.53 $76,086.40 $37.79 $6,550.27 $78,603.20 $37.91 $6,571.07 $78,852.80 $39.05 $6,768.67 $81,224.00 451 non-exempt Park Maint Person 1 $25.70 $26.55 $26.64 $27.45 2 $27.05 $27.95 $28.04 $28.89 3 $28.47 $29.42 $29.52 $30.41 4 $29.97 $30.97 $31.07 $32.01 5 $31.55 $5,468.67 $65,624.00 $32.60 $5,650.67 $67,808.00 $32.70 $5,668.00 $68,016.00 $33.69 $5,839.60 $70,075.20 281 non-exempt Park Ranger 1 $28.79 $29.66 $29.66 $30.55 2 $30.30 $31.22 $31.22 $32.16 3 $31.89 $32.86 $32.86 $33.85 4 $33.57 $34.59 $34.59 $35.63 5 $35.34 $6,125.60 $73,507.20 $36.41 $6,311.07 $75,732.80 $36.41 $6,311.07 $75,732.80 $37.51 $6,501.73 $78,020.80 570 non-exempt Parking Operations Lead 1 $44.20 $46.31 $47.14 $48.55 2 $46.53 $48.75 $49.62 $51.11 3 $48.98 $51.32 $52.23 $53.80 4 $51.56 $54.02 $54.98 $56.63 5 $54.27 $9,406.80 $112,881.60 $56.86 $9,855.73 $118,268.80 $57.87 $10,030.80 $120,369.60 $59.61 $10,332.40 $123,988.80 460 non-exempt Parks/Golf Crew-Lead 1 $27.96 $28.90 $28.98 $29.86 2 $29.43 $30.42 $30.50 $31.43 3 $30.98 $32.02 $32.11 $33.08 4 $32.61 $33.70 $33.80 $34.82 5 $34.33 $5,950.53 $71,406.40 $35.47 $6,148.13 $73,777.60 $35.58 $6,167.20 $74,006.40 $36.65 $6,352.67 $76,232.00 348 non-exempt Payroll Analyst 1 $29.15 $30.03 $30.03 $30.93 2 $30.68 $31.61 $31.61 $32.56 3 $32.29 $33.27 $33.27 $34.27 4 $33.99 $35.02 $35.02 $36.07 5 $35.78 $6,201.87 $74,422.40 $36.86 $6,389.07 $76,668.80 $36.86 $6,389.07 $76,668.80 $37.97 $6,581.47 $78,977.60 3480 non-exempt Payroll Analyst - S 1 29.15 $30.03 $30.03 $30.93 2 30.68 $31.61 $31.61 $32.56 3 32.29 $33.27 $33.27 $34.27 4 33.99 $35.02 $35.02 $36.07 5 35.78 $6,201.87 $74,422.40 $36.86 $6,389.07 $76,668.80 $36.86 $6,389.07 $76,668.80 $37.97 $6,581.47 $78,977.60 352 non-exempt Planner 1 $38.43 $39.85 $40.15 $41.34 2 $40.45 $41.95 $42.26 $43.52 3 $42.58 $44.16 $44.48 $45.81 4 $44.82 $46.48 $46.82 $48.22 5 $47.18 $8,177.87 $98,134.40 $48.93 $8,481.20 $101,774.40 $49.28 $8,541.87 $102,502.40 $50.76 $8,798.40 $105,580.80 Job Code FLSA Job Title Steps Salary Effective 4/16/2016 (PP09:2016)Salary Effective 12/10/2016 (PP26:2016)Salray Effective 7/08/2017 (PP15:2017)Salary Effective 12/9/2017 (PP26:2017) 13 Appendix A -2 To MOA Between City of Palo Alto and SEIU FY16/FY17 Salary Schedule Rate Approx. Monthly Approx. Annual Rate Approx. Monthly Approx. Annual Rate Approx. Monthly Approx. Annual Rate Approx. Monthly Approx. Annual 347 non-exempt Planning Arborist 1 $41.76 $43.66 $44.35 $45.70 2 $43.96 $45.96 $46.68 $48.10 3 $46.27 $48.38 $49.14 $50.63 4 $48.70 $50.93 $51.73 $53.29 5 $51.26 $8,885.07 $106,620.80 $53.61 $9,292.40 $111,508.80 $54.45 $9,438.00 $113,256.00 $56.09 $9,722.27 $116,667.20 3470 non-exempt Planning Arborist - S 1 $41.76 $43.66 $44.35 $45.70 2 $43.96 $45.96 $46.68 $48.10 3 $46.27 $48.38 $49.14 $50.63 4 $48.70 $50.93 $51.73 $53.29 5 $51.26 $8,885.07 $106,620.80 $53.61 $9,292.40 $111,508.80 $54.45 $9,438.00 $113,256.00 $56.09 $9,722.27 $116,667.20 304 non-exempt Plans Check Engr 1 $42.38 $43.85 $44.07 $45.39 2 $44.61 $46.16 $46.39 $47.78 3 $46.96 $48.59 $48.83 $50.29 4 $49.43 $51.15 $51.40 $52.94 5 $52.03 $9,018.53 $108,222.40 $53.84 $9,332.27 $111,987.20 $54.10 $9,377.33 $112,528.00 $55.73 $9,659.87 $115,918.40 513 non-exempt Plans Examiner 1 $36.22 $37.88 $38.48 $39.63 2 $38.13 $39.87 $40.51 $41.72 3 $40.14 $41.97 $42.64 $43.92 4 $42.25 $44.18 $44.88 $46.23 5 $44.47 $7,708.13 $92,497.60 $46.51 $8,061.73 $96,740.80 $47.24 $8,188.27 $98,259.20 $48.66 $8,434.40 $101,212.80 517 non-exempt Plant Mechanic 1 $34.53 $35.58 $35.58 $36.64 2 $36.35 $37.45 $37.45 $38.57 3 $38.26 $39.42 $39.42 $40.60 4 $40.27 $41.49 $41.49 $42.74 5 $42.39 $7,347.60 $88,171.20 $43.67 $7,569.47 $90,833.60 $43.67 $7,569.47 $90,833.60 $44.99 $7,798.27 $93,579.20 321 non-exempt Police Records Specialist - Lead 1 $27.00 $28.29 $28.79 $29.68 2 $28.42 $29.78 $30.31 $31.24 3 $29.92 $31.35 $31.91 $32.88 4 $31.49 $33.00 $33.59 $34.61 5 $33.15 $5,746.00 $68,952.00 $34.74 $6,021.60 $72,259.20 $35.36 $6,129.07 $73,548.80 $36.43 $6,314.53 $75,774.40 313 non-exempt Police Records Specialist I 1 $23.98 $25.13 $25.57 $26.34 2 $25.24 $26.45 $26.92 $27.73 3 $26.57 $27.84 $28.34 $29.19 4 $27.97 $29.31 $29.83 $30.73 5 $29.44 $5,102.93 $61,235.20 $30.85 $5,347.33 $64,168.00 $31.40 $5,442.67 $65,312.00 $32.35 $5,607.33 $67,288.00 314 non-exempt Police Records Specialist II 1 $25.23 $26.45 $26.91 $27.72 2 $26.56 $27.84 $28.33 $29.18 3 $27.96 $29.30 $29.82 $30.72 4 $29.43 $30.84 $31.39 $32.34 5 $30.98 $5,369.87 $64,438.40 $32.46 $5,626.40 $67,516.80 $33.04 $5,726.93 $68,723.20 $34.04 $5,900.27 $70,803.20 246 non-exempt Power Engr 1 $46.60 $48.22 $48.45 $49.91 2 $49.05 $50.76 $51.00 $52.54 3 $51.63 $53.43 $53.68 $55.30 4 $54.35 $56.24 $56.51 $58.21 5 $57.21 $9,916.40 $118,996.80 $59.20 $10,261.33 $123,136.00 $59.48 $10,309.87 $123,718.40 $61.27 $10,620.13 $127,441.60 270 non-exempt Prod Arts/Sci Prog 1 $32.39 $33.66 $33.97 $34.99 2 $34.09 $35.43 $35.76 $36.83 3 $35.88 $37.29 $37.64 $38.77 4 $37.77 $39.25 $39.62 $40.81 5 $39.76 $6,891.73 $82,700.80 $41.32 $7,162.13 $85,945.60 $41.70 $7,228.00 $86,736.00 $42.96 $7,446.40 $89,356.80 Job Code FLSA Job Title Steps Salary Effective 4/16/2016 (PP09:2016)Salary Effective 12/10/2016 (PP26:2016)Salray Effective 7/08/2017 (PP15:2017)Salary Effective 12/9/2017 (PP26:2017) 14 Appendix A -2 To MOA Between City of Palo Alto and SEIU FY16/FY17 Salary Schedule Rate Approx. Monthly Approx. Annual Rate Approx. Monthly Approx. Annual Rate Approx. Monthly Approx. Annual Rate Approx. Monthly Approx. Annual 232 non-exempt Prog-Analyst 1 $39.44 $41.71 $42.85 $44.14 2 $41.52 $43.91 $45.11 $46.46 3 $43.71 $46.22 $47.48 $48.91 4 $46.01 $48.65 $49.98 $51.48 5 $48.43 $8,394.53 $100,734.40 $51.21 $8,876.40 $106,516.80 $52.61 $9,119.07 $109,428.80 $54.19 $9,392.93 $112,715.20 265 non-exempt Program Assistant 1 $25.00 $25.79 $25.82 $26.62 2 $26.32 $27.15 $27.18 $28.02 3 $27.70 $28.58 $28.61 $29.49 4 $29.16 $30.08 $30.12 $31.04 5 $30.69 $5,319.60 $63,835.20 $31.66 $5,487.73 $65,852.80 $31.71 $5,496.40 $65,956.80 $32.67 $5,662.80 $67,953.60 302 non-exempt Program Assistant I 1 $26.51 $27.35 $27.40 $28.22 2 $27.91 $28.79 $28.84 $29.71 3 $29.38 $30.31 $30.36 $31.27 4 $30.93 $31.91 $31.96 $32.92 5 $32.56 $5,643.73 $67,724.80 $33.59 $5,822.27 $69,867.20 $33.64 $5,830.93 $69,971.20 $34.65 $6,006.00 $72,072.00 303 non-exempt Program Assistant II 1 $28.51 $29.41 $29.44 $30.33 2 $30.01 $30.96 $30.99 $31.93 3 $31.59 $32.59 $32.62 $33.61 4 $33.25 $34.30 $34.34 $35.38 5 $35.00 $6,066.67 $72,800.00 $36.10 $6,257.33 $75,088.00 $36.15 $6,266.00 $75,192.00 $37.24 $6,454.93 $77,459.20 368 non-exempt Program Coordinator 1 $27.96 $29.06 $29.33 $30.21 2 $29.43 $30.59 $30.87 $31.80 3 $30.98 $32.20 $32.49 $33.47 4 $32.61 $33.89 $34.20 $35.23 5 $34.33 $5,950.53 $71,406.40 $35.67 $6,182.80 $74,193.60 $36.00 $6,240.00 $74,880.00 $37.08 $6,427.20 $77,126.40 349 non-exempt Project Engineer 1 $46.99 $48.62 $48.83 $50.30 2 $49.46 $51.18 $51.40 $52.95 3 $52.06 $53.87 $54.11 $55.74 4 $54.80 $56.70 $56.96 $58.67 5 $57.68 $9,997.87 $119,974.40 $59.68 $10,344.53 $124,134.40 $59.96 $10,393.07 $124,716.80 $61.76 $10,705.07 $128,460.80 3490 non-exempt Project Engineer - S 1 $46.99 $48.62 $48.83 $50.30 2 $49.46 $51.18 $51.40 $52.95 3 $52.06 $53.87 $54.11 $55.74 4 $54.80 $56.70 $56.96 $58.67 5 $57.68 $9,997.87 $119,974.40 $59.68 $10,344.53 $124,134.40 $59.96 $10,393.07 $124,716.80 $61.76 $10,705.07 $128,460.80 209 non-exempt Property Evid Tech 1 $26.11 $27.35 $27.84 $28.68 2 $27.48 $28.79 $29.31 $30.19 3 $28.93 $30.31 $30.85 $31.78 4 $30.45 $31.90 $32.47 $33.45 5 $32.05 $5,555.33 $66,664.00 $33.58 $5,820.53 $69,846.40 $34.18 $5,924.53 $71,094.40 $35.21 $6,103.07 $73,236.80 315 non-exempt Public Safety Dispatcher - Lead 1 $40.54 $41.76 $41.76 $43.02 2 $42.67 $43.96 $43.96 $45.28 3 $44.92 $46.27 $46.27 $47.66 4 $47.28 $48.71 $48.71 $50.17 5 $49.77 $8,626.80 $103,521.60 $51.27 $8,886.80 $106,641.60 $51.27 $8,886.80 $106,641.60 $52.81 $9,153.73 $109,844.80 6 $51.02 $52.56 $52.56 $54.14 7 $52.29 $53.86 $53.86 $55.48 298 non-exempt Public Safety Dispatcher I 1 $34.30 $35.33 $35.33 $36.40 2 $36.10 $37.19 $37.19 $38.32 3 $38.00 $39.15 $39.15 $40.34 4 $40.00 $41.21 $41.21 $42.46 5 $42.11 $7,299.07 $87,588.80 $43.38 $7,519.20 $90,230.40 $43.38 $7,519.20 $90,230.40 $44.69 $7,746.27 $92,955.20 6 $43.17 $44.47 $44.47 $45.81 7 $44.25 $45.58 $45.58 $46.95 Rate Approx. Monthly Approx. Annual Rate Approx. Monthly Approx. Annual Rate Approx. Monthly Approx. Annual Rate Approx. Monthly Approx. Annual 316 non-exempt Public Safety Dispatcher II 1 $36.11 $37.21 $37.21 $38.33 2 $38.01 $39.17 $39.17 $40.35 3 $40.01 $41.23 $41.23 $42.47 Job Code FLSA Job Title Steps Salary Effective 4/16/2016 (PP09:2016)Salary Effective 12/10/2016 (PP26:2016)Salray Effective 7/08/2017 (PP15:2017)Salary Effective 12/9/2017 (PP26:2017) Job Code FLSA Job Title Steps Salary Effective 4/16/2016 (PP09:2016)Salary Effective 12/10/2016 (PP26:2016)Salray Effective 7/08/2017 (PP15:2017)Salary Effective 12/9/2017 (PP26:2017) 15 Appendix A -2 To MOA Between City of Palo Alto and SEIU FY16/FY17 Salary Schedule 4 $42.12 $43.40 $43.40 $44.71 5 $44.34 $7,685.60 $92,227.20 $45.68 $7,917.87 $95,014.40 $45.68 $7,917.87 $95,014.40 $47.06 $8,157.07 $97,884.80 6 $45.44 $46.81 $46.81 $48.22 7 $46.58 $47.98 $47.98 $49.42 262 non-exempt Resource Planner 1 $47.19 $48.61 $48.61 $50.07 2 $49.67 $51.17 $51.17 $52.71 3 $52.28 $53.86 $53.86 $55.48 4 $55.03 $56.69 $56.69 $58.40 5 $57.93 $10,041.20 $120,494.40 $59.67 $10,342.80 $124,113.60 $59.67 $10,342.80 $124,113.60 $61.47 $10,654.80 $127,857.60 366 non-exempt Restoration Lead 1 $33.71 $35.60 $36.55 $37.64 2 $35.48 $37.47 $38.47 $39.62 3 $37.35 $39.44 $40.49 $41.71 4 $39.32 $41.52 $42.62 $43.90 5 $41.39 $7,174.27 $86,091.20 $43.71 $7,576.40 $90,916.80 $44.86 $7,775.73 $93,308.80 $46.21 $8,009.73 $96,116.80 554 non-exempt SCADA Technologist 1 $47.94 $50.69 $52.08 $53.66 2 $50.46 $53.36 $54.82 $56.48 3 $53.12 $56.17 $57.71 $59.45 4 $55.92 $59.13 $60.75 $62.58 5 $58.86 $10,202.40 $122,428.80 $62.24 $10,788.27 $129,459.20 $63.95 $11,084.67 $133,016.00 $65.87 $11,417.47 $137,009.60 385 non-exempt Senior Fleet Services Coordinator 1 $33.27 $34.27 $34.27 $35.29 2 $35.02 $36.07 $36.07 $37.15 3 $36.86 $37.97 $37.97 $39.11 4 $38.80 $39.97 $39.97 $41.17 5 $40.84 $7,078.93 $84,947.20 $42.07 $7,292.13 $87,505.60 $42.07 $7,292.13 $87,505.60 $43.34 $7,512.27 $90,147.20 461 non-exempt Sprinkler Sys Repr 1 $26.14 $27.00 $27.08 $27.89 2 $27.52 $28.42 $28.51 $29.36 3 $28.97 $29.92 $30.01 $30.91 4 $30.49 $31.49 $31.59 $32.54 5 $32.09 $5,562.27 $66,747.20 $33.15 $5,746.00 $68,952.00 $33.25 $5,763.33 $69,160.00 $34.25 $5,936.67 $71,240.00 360 non-exempt Sr Buyer 1 $34.87 $35.93 $35.93 $37.02 2 $36.70 $37.82 $37.82 $38.97 3 $38.63 $39.81 $39.81 $41.02 4 $40.66 $41.90 $41.91 $43.18 5 $42.80 $7,418.67 $89,024.00 $44.10 $7,644.00 $91,728.00 $44.12 $7,647.47 $91,769.60 $45.45 $7,878.00 $94,536.00 3600 non-exempt Sr Buyer - S 1 $34.87 $35.93 $35.93 $37.02 2 $36.70 $37.82 $37.82 $38.97 3 $38.63 $39.81 $39.81 $41.02 4 $40.66 $41.90 $41.91 $43.18 5 $42.80 $7,418.67 $89,024.00 $44.10 $7,644.00 $91,728.00 $44.12 $7,647.47 $91,769.60 $45.45 $7,878.00 $94,536.00 224 non-exempt Sr Chemist 1 $39.02 $40.20 $40.23 $41.45 2 $41.07 $42.32 $42.35 $43.63 3 $43.23 $44.55 $44.58 $45.93 4 $45.50 $46.89 $46.93 $48.35 5 $47.89 $8,300.93 $99,611.20 $49.36 $8,555.73 $102,668.80 $49.40 $8,562.67 $102,752.00 $50.89 $8,820.93 $105,851.20 16 Appendix A -2 To MOA Between City of Palo Alto and SEIU FY16/FY17 Salary Schedule Rate Approx. Monthly Approx. Annual Rate Approx. Monthly Approx. Annual Rate Approx. Monthly Approx. Annual Rate Approx. Monthly Approx. Annual 544 non-exempt Sr Industrial Waste Investigator 1 $38.05 $39.75 $40.33 $41.53 2 $40.05 $41.84 $42.45 $43.72 3 $42.16 $44.04 $44.68 $46.02 4 $44.38 $46.36 $47.03 $48.44 5 $46.72 $8,098.13 $97,177.60 $48.80 $8,458.67 $101,504.00 $49.50 $8,580.00 $102,960.00 $50.99 $8,838.27 $106,059.20 512 non-exempt Sr Instrum Elect 1 $37.31 $38.85 $39.27 $40.46 2 $39.27 $40.89 $41.34 $42.59 3 $41.34 $43.04 $43.52 $44.83 4 $43.52 $45.31 $45.81 $47.19 5 $45.81 $7,940.40 $95,284.80 $47.69 $8,266.27 $99,195.20 $48.22 $8,358.13 $100,297.60 $49.67 $8,609.47 $103,313.60 251 non-exempt Sr Librarian 1 $30.48 $31.57 $31.75 $32.70 2 $32.08 $33.23 $33.42 $34.42 3 $33.77 $34.98 $35.18 $36.23 4 $35.55 $36.82 $37.03 $38.14 5 $37.42 $6,486.13 $77,833.60 $38.76 $6,718.40 $80,620.80 $38.98 $6,756.53 $81,078.40 $40.15 $6,959.33 $83,512.00 504 non-exempt Sr. Mech 1 $37.13 $38.24 $39.03 $40.20 2 $39.08 $40.25 $41.08 $42.32 3 $41.14 $42.37 $43.24 $44.55 4 $43.30 $44.60 $45.52 $46.89 5 $45.58 $7,900.53 $94,806.40 $46.95 $8,138.00 $97,656.00 $47.92 $8,306.13 $99,673.60 $49.36 $8,555.73 $102,668.80 361 non-exempt Sr Mkt Analyst 1 $43.30 $44.60 $44.60 $45.94 2 $45.58 $46.95 $46.95 $48.36 3 $47.98 $49.42 $49.42 $50.91 4 $50.50 $52.02 $52.02 $53.59 5 $53.16 $9,214.40 $110,572.80 $54.76 $9,491.73 $113,900.80 $54.76 $9,491.73 $113,900.80 $56.41 $9,777.73 $117,332.80 3610 non-exempt Sr Mkt Analyst - S 1 $43.30 $44.60 $44.60 $45.94 2 $45.58 $46.95 $46.95 $48.36 3 $47.98 $49.42 $49.42 $50.91 4 $50.50 $52.02 $52.02 $53.59 5 $53.16 $9,214.40 $110,572.80 $54.76 $54.76 $56.41 506 non-exempt Sr Operator Wqc 1 $39.40 $40.58 $40.58 $41.80 2 $41.47 $42.72 $42.72 $44.00 3 $43.65 $44.97 $44.97 $46.32 4 $45.95 $47.34 $47.34 $48.76 5 $48.37 $8,384.13 $100,609.60 $49.83 $8,637.20 $103,646.40 $49.83 $8,637.20 $103,646.40 $51.33 $8,897.20 $106,766.40 318 non-exempt Sr Planner 1 $44.39 $46.05 $46.37 $47.76 2 $46.73 $48.47 $48.81 $50.27 3 $49.19 $51.02 $51.38 $52.92 4 $51.78 $53.70 $54.08 $55.71 5 $54.51 $9,448.40 $113,380.80 $56.53 $9,798.53 $117,582.40 $56.93 $9,867.87 $118,414.40 $58.64 $10,164.27 $121,971.20 280 non-exempt Sr Ranger 1 $31.85 $32.81 $32.81 $33.80 2 $33.53 $34.54 $34.54 $35.58 3 $35.29 $36.36 $36.36 $37.45 4 $37.15 $38.27 $38.27 $39.42 5 $39.10 $6,777.33 $81,328.00 $40.28 $6,981.87 $83,782.40 $40.28 $6,981.87 $83,782.40 $41.49 $7,191.60 $86,299.20 Job Code FLSA Job Title Steps Salary Effective 4/16/2016 (PP09:2016)Salary Effective 12/10/2016 (PP26:2016)Salray Effective 7/08/2017 (PP15:2017)Salary Effective 12/9/2017 (PP26:2017) 17 Appendix A -2 To MOA Between City of Palo Alto and SEIU FY16/FY17 Salary Schedule Rate Approx. Monthly Approx. Annual Rate Approx. Monthly Approx. Annual Rate Approx. Monthly Approx. Annual Rate Approx. Monthly Approx. Annual 261 non-exempt Sr Util Field Svc Rep 1 $36.49 $38.58 $39.64 $40.84 2 $38.41 $40.61 $41.73 $42.99 3 $40.43 $42.75 $43.93 $45.25 4 $42.56 $45.00 $46.24 $47.63 5 $44.80 $7,765.33 $93,184.00 $47.37 $8,210.80 $98,529.60 $48.67 $8,436.13 $101,233.60 $50.14 $8,690.93 $104,291.20 501 non-exempt Sr Water Sys Oper 1 $37.55 $38.68 $38.68 $39.84 2 $39.53 $40.72 $40.72 $41.94 3 $41.61 $42.86 $42.86 $44.15 4 $43.80 $45.12 $45.12 $46.47 5 $46.10 $7,990.67 $95,888.00 $47.49 $8,231.60 $98,779.20 $47.49 $8,231.60 $98,779.20 $48.92 $8,479.47 $101,753.60 405 non-exempt St Maint Asst 1 $23.72 $24.84 $25.28 $26.04 2 $24.97 $26.15 $26.61 $27.41 3 $26.28 $27.53 $28.01 $28.85 4 $27.66 $28.98 $29.48 $30.37 5 $29.12 $5,047.47 $60,569.60 $30.50 $5,286.67 $63,440.00 $31.03 $5,378.53 $64,542.40 $31.97 $5,541.47 $66,497.60 392 non-exempt St Sweeper Op 1 $27.76 $29.32 $30.08 $30.98 2 $29.22 $30.86 $31.66 $32.61 3 $30.76 $32.48 $33.33 $34.33 4 $32.38 $34.19 $35.08 $36.14 5 $34.08 $5,907.20 $70,886.40 $35.99 $6,238.27 $74,859.20 $36.93 $6,401.20 $76,814.40 $38.04 $6,593.60 $79,123.20 248 non-exempt Storekeeper 1 $25.45 $26.21 $26.21 $27.00 2 $26.79 $27.59 $27.59 $28.42 3 $28.20 $29.04 $29.04 $29.92 4 $29.68 $30.57 $30.57 $31.49 5 $31.24 $5,414.93 $64,979.20 $32.18 $5,577.87 $66,934.40 $32.18 $5,577.87 $66,934.40 $33.15 $5,746.00 $68,952.00 288 non-exempt Storekeeper-L 1 $27.23 $28.05 $28.05 $28.90 2 $28.66 $29.53 $29.53 $30.42 3 $30.17 $31.08 $31.08 $32.02 4 $31.76 $32.72 $32.72 $33.71 5 $33.43 $5,794.53 $69,534.40 $34.44 $5,969.60 $71,635.20 $34.44 $5,969.60 $71,635.20 $35.48 $6,149.87 $73,798.40 545 non-exempt Street Light, Traffic Signal and Fiber – Apprentice 1 $36.54 $38.19 $38.78 $39.95 2 $38.46 $40.20 $40.82 $42.05 3 $40.48 $42.32 $42.97 $44.26 4 $42.61 $44.55 $45.23 $46.59 5 $44.85 $7,774.00 $93,288.00 $46.89 $8,127.60 $97,531.20 $47.61 $8,252.40 $99,028.80 $49.04 $8,500.27 $102,003.20 547 non-exempt Street Light, Traffic Signal and Fiber – Lead 1 $41.31 $43.19 $43.85 $45.18 2 $43.48 $45.46 $46.16 $47.56 3 $45.77 $47.85 $48.59 $50.06 4 $48.18 $50.37 $51.15 $52.69 5 $50.72 $8,791.47 $105,497.60 $53.02 $9,190.13 $110,281.60 $53.84 $9,332.27 $111,987.20 $55.46 $9,613.07 $115,356.80 546 non-exempt Street Light, Traffic Signal and Fiber Technician 1 $38.61 $40.36 $40.97 $42.21 2 $40.64 $42.48 $43.13 $44.43 3 $42.78 $44.72 $45.40 $46.77 4 $45.03 $47.07 $47.79 $49.23 5 $47.40 $8,216.00 $98,592.00 $49.55 $8,588.67 $103,064.00 $50.31 $8,720.40 $104,644.80 $51.82 $8,982.13 $107,785.60 549 non-exempt Substation Electrician 1 $42.11 $44.03 $44.71 $46.05 2 $44.33 $46.35 $47.06 $48.47 3 $46.66 $48.79 $49.54 $51.02 4 $49.12 $51.36 $52.15 $53.71 5 $51.71 $8,963.07 $107,556.80 $54.06 $9,370.40 $112,444.80 $54.89 $9,514.27 $114,171.20 $56.54 $9,800.27 $117,603.20 Job Code FLSA Job Title Steps Salary Effective 4/16/2016 (PP09:2016)Salary Effective 12/10/2016 (PP26:2016)Salray Effective 7/08/2017 (PP15:2017)Salary Effective 12/9/2017 (PP26:2017) 18 Appendix A -2 To MOA Between City of Palo Alto and SEIU FY16/FY17 Salary Schedule Rate Approx. Monthly Approx. Annual Rate Approx. Monthly Approx. Annual Rate Approx. Monthly Approx. Annual Rate Approx. Monthly Approx. Annual 548 non-exempt Substation Electrician - Apprentice 1 $39.87 $41.68 $42.32 $43.60 2 $41.97 $43.87 $44.55 $45.89 3 $44.18 $46.18 $46.89 $48.30 4 $46.50 $48.61 $49.36 $50.84 5 $48.95 $8,484.67 $101,816.00 $51.17 $8,869.47 $106,433.60 $51.96 $9,006.40 $108,076.80 $53.52 $9,276.80 $111,321.60 550 non-exempt Substation Electrician - Lead 1 $45.06 $47.11 $47.83 $49.29 2 $47.43 $49.59 $50.35 $51.88 3 $49.93 $52.20 $53.00 $54.61 4 $52.56 $54.95 $55.79 $57.48 5 $55.33 $9,590.53 $115,086.40 $57.84 $10,025.60 $120,307.20 $58.73 $10,179.87 $122,158.40 $60.50 $10,486.67 $125,840.00 326 non-exempt Surveying Asst 1 $32.06 $33.53 $34.06 $35.09 2 $33.75 $35.29 $35.85 $36.94 3 $35.53 $37.15 $37.74 $38.88 4 $37.40 $39.11 $39.73 $40.93 5 $39.37 $6,824.13 $81,889.60 $41.17 $7,136.13 $85,633.60 $41.82 $7,248.80 $86,985.60 $43.08 $7,467.20 $89,606.40 325 non-exempt Surveyor, Public Wks 1 $34.89 $36.48 $37.07 $38.18 2 $36.73 $38.40 $39.02 $40.19 3 $38.66 $40.42 $41.07 $42.30 4 $40.69 $42.55 $43.23 $44.53 5 $42.83 $7,423.87 $89,086.40 $44.79 $7,763.60 $93,163.20 $45.50 $7,886.67 $94,640.00 $46.87 $8,124.13 $97,489.60 362 non-exempt Technologist 1 $48.82 $51.62 $53.04 $54.63 2 $51.39 $54.34 $55.83 $57.51 3 $54.09 $57.20 $58.77 $60.54 4 $56.94 $60.21 $61.86 $63.73 5 $59.94 $10,389.60 $124,675.20 $63.38 $10,985.87 $131,830.40 $65.12 $11,287.47 $135,449.60 $67.08 $11,627.20 $139,526.40 3620 non-exempt Technologist - S 1 $48.82 $51.62 $53.04 $54.63 2 $51.39 $54.34 $55.83 $57.51 3 $54.09 $57.20 $58.77 $60.54 4 $56.94 $60.21 $61.86 $63.73 5 $59.94 $10,389.60 $124,675.20 $63.38 $10,985.87 $131,830.40 $65.12 $11,287.47 $135,449.60 $67.08 $11,627.20 $139,526.40 229 non-exempt Theater Specialist 1 $34.65 $36.01 $36.33 $37.42 2 $36.47 $37.90 $38.24 $39.39 3 $38.39 $39.89 $40.25 $41.46 4 $40.41 $41.99 $42.37 $43.64 5 $42.54 $7,373.60 $88,483.20 $44.20 $7,661.33 $91,936.00 $44.60 $7,730.67 $92,768.00 $45.94 $7,962.93 $95,555.20 406 non-exempt Traf Cont Maint I 1 $27.76 $29.08 $29.58 $30.47 2 $29.22 $30.61 $31.14 $32.07 3 $30.76 $32.22 $32.78 $33.76 4 $32.38 $33.92 $34.50 $35.54 5 $34.08 $5,907.20 $70,886.40 $35.70 $6,188.00 $74,256.00 $36.32 $6,295.47 $75,545.60 $37.41 $6,484.40 $77,812.80 412 non-exempt Traf Cont Maint Ii 1 $25.70 $26.92 $27.39 $28.22 2 $27.05 $28.34 $28.83 $29.70 3 $28.47 $29.83 $30.35 $31.26 4 $29.97 $31.40 $31.95 $32.91 5 $31.55 $5,468.67 $65,624.00 $33.05 $5,728.67 $68,744.00 $33.63 $5,829.20 $69,950.40 $34.64 $6,004.27 $72,051.20 407 non-exempt Traf Cont Maint-L 1 $29.70 $31.11 $31.65 $32.60 2 $31.26 $32.75 $33.32 $34.32 3 $32.91 $34.47 $35.07 $36.13 4 $34.64 $36.28 $36.92 $38.03 5 $36.46 $6,319.73 $75,836.80 $38.19 $6,619.60 $79,435.20 $38.86 $6,735.73 $80,828.80 $40.03 $6,938.53 $83,262.40 Job Code FLSA Job Title Steps Salary Effective 4/16/2016 (PP09:2016)Salary Effective 12/10/2016 (PP26:2016)Salray Effective 7/08/2017 (PP15:2017)Salary Effective 12/9/2017 (PP26:2017) 19 Appendix A -2 To MOA Between City of Palo Alto and SEIU FY16/FY17 Salary Schedule Rate Approx. Monthly Approx. Annual Rate Approx. Monthly Approx. Annual Rate Approx. Monthly Approx. Annual Rate Approx. Monthly Approx. Annual 575 non-exempt Traffic Engineering Lead 1 $49.43 $51.15 $51.39 $52.93 2 $52.03 $53.84 $54.09 $55.72 3 $54.77 $56.67 $56.94 $58.65 4 $57.65 $59.65 $59.94 $61.74 5 $60.68 $10,517.87 $126,214.40 $62.79 $10,883.60 $130,603.20 $63.09 $10,935.60 $131,227.20 $64.99 $11,264.93 $135,179.20 435 non-exempt Tree Maint Asst 1 $24.80 $25.77 $26.01 $26.81 2 $26.10 $27.13 $27.38 $28.22 3 $27.47 $28.56 $28.82 $29.70 4 $28.92 $30.06 $30.34 $31.26 5 $30.44 $5,276.27 $63,315.20 $31.64 $5,484.27 $65,811.20 $31.94 $5,536.27 $66,435.20 $32.90 $5,702.67 $68,432.00 434 non-exempt Tree Maintenance Specialist 1 $28.93 $30.07 $30.36 $31.27 2 $30.45 $31.65 $31.96 $32.92 3 $32.05 $33.32 $33.64 $34.65 4 $33.74 $35.07 $35.41 $36.47 5 $35.52 $6,156.80 $73,881.60 $36.92 $6,399.47 $76,793.60 $37.27 $6,460.13 $77,521.60 $38.39 $6,654.27 $79,851.20 430 non-exempt Tree Trim/Ln Clr 1 $28.48 $29.60 $29.89 $30.78 2 $29.98 $31.16 $31.46 $32.40 3 $31.56 $32.80 $33.12 $34.11 4 $33.22 $34.53 $34.86 $35.91 5 $34.97 $6,061.47 $72,737.60 $36.35 $6,300.67 $75,608.00 $36.69 $6,359.60 $76,315.20 $37.80 $6,552.00 $78,624.00 431 non-exempt Tree Trim/Ln Clr-L 1 $30.46 $31.67 $31.98 $32.94 2 $32.06 $33.34 $33.66 $34.67 3 $33.75 $35.09 $35.43 $36.49 4 $35.53 $36.94 $37.29 $38.41 5 $37.40 $6,482.67 $77,792.00 $38.88 $6,739.20 $80,870.40 $39.25 $6,803.33 $81,640.00 $40.43 $7,007.87 $84,094.40 432 non-exempt Tree Trm/Ln Clr Asst 1 $26.84 $27.90 $28.17 $29.01 2 $28.25 $29.37 $29.65 $30.54 3 $29.74 $30.92 $31.21 $32.15 4 $31.31 $32.55 $32.85 $33.84 5 $32.96 $5,713.07 $68,556.80 $34.26 $5,938.40 $71,260.80 $34.58 $5,993.87 $71,926.40 $35.62 $6,174.13 $74,089.60 223 non-exempt Util Acctg Tech 1 $26.41 $27.20 $27.20 $28.03 2 $27.80 $28.63 $28.63 $29.51 3 $29.26 $30.14 $30.14 $31.06 4 $30.80 $31.73 $31.73 $32.69 5 $32.42 $5,619.47 $67,433.60 $33.40 $5,789.33 $69,472.00 $33.40 $5,789.33 $69,472.00 $34.41 $5,964.40 $71,572.80 272 non-exempt Util Comp Tech 1 $41.31 $43.19 $43.85 $45.18 2 $43.48 $45.46 $46.16 $47.56 3 $45.77 $47.85 $48.59 $50.06 4 $48.18 $50.37 $51.15 $52.69 5 $50.72 $8,791.47 $105,497.60 $53.02 $9,190.13 $110,281.60 $53.84 $9,332.27 $111,987.20 $55.46 $9,613.07 $115,356.80 273 non-exempt Util Comp Tech-L 1 $44.19 $46.20 $46.90 $48.31 2 $46.52 $48.63 $49.37 $50.85 3 $48.97 $51.19 $51.97 $53.53 4 $51.55 $53.88 $54.71 $56.35 5 $54.26 $9,405.07 $112,860.80 $56.72 $9,831.47 $117,977.60 $57.59 $9,982.27 $119,787.20 $59.32 $10,282.13 $123,385.60 219 non-exempt Util Credit/Col Spec 1 $31.47 $32.40 $32.40 $33.38 2 $33.13 $34.11 $34.11 $35.14 3 $34.87 $35.91 $35.91 $36.99 4 $36.70 $37.80 $37.80 $38.94 5 $38.63 $6,695.87 $80,350.40 $39.79 $6,896.93 $82,763.20 $39.79 $6,896.93 $82,763.20 $40.99 $7,104.93 $85,259.20 Job Code FLSA Job Title Steps Salary Effective 4/16/2016 (PP09:2016)Salary Effective 12/10/2016 (PP26:2016)Salray Effective 7/08/2017 (PP15:2017)Salary Effective 12/9/2017 (PP26:2017) 20 Appendix A -2 To MOA Between City of Palo Alto and SEIU FY16/FY17 Salary Schedule Rate Approx. Monthly Approx. Annual Rate Approx. Monthly Approx. Annual Rate Approx. Monthly Approx. Annual Rate Approx. Monthly Approx. Annual 310 non-exempt Util Engr Estimator 1 $41.03 $42.45 $42.66 $43.95 2 $43.19 $44.68 $44.90 $46.26 3 $45.46 $47.03 $47.26 $48.69 4 $47.85 $49.51 $49.75 $51.25 5 $50.37 $8,730.80 $104,769.60 $52.12 $9,034.13 $108,409.60 $52.37 $9,077.47 $108,929.60 $53.95 $9,351.33 $112,216.00 486 non-exempt Util Fld Svcs Rep 1 $34.12 $36.09 $37.08 $38.19 2 $35.92 $37.99 $39.03 $40.20 3 $37.81 $39.99 $41.08 $42.32 4 $39.80 $42.09 $43.24 $44.55 5 $41.89 $7,260.93 $87,131.20 $44.30 $7,678.67 $92,144.00 $45.52 $7,890.13 $94,681.60 $46.89 $8,127.60 $97,531.20 480 non-exempt Util Install/Rep 1 $33.27 $35.18 $36.15 $37.24 2 $35.02 $37.03 $38.05 $39.20 3 $36.86 $38.98 $40.05 $41.26 4 $38.80 $41.03 $42.16 $43.43 5 $40.84 $7,078.93 $84,947.20 $43.19 $7,486.27 $89,835.20 $44.38 $7,692.53 $92,310.40 $45.72 $7,924.80 $95,097.60 481 non-exempt Util Install/Rep Ast 1 $28.22 $29.84 $30.66 $31.58 2 $29.70 $31.41 $32.27 $33.24 3 $31.26 $33.06 $33.97 $34.99 4 $32.91 $34.80 $35.76 $36.83 5 $34.64 $6,004.27 $72,051.20 $36.63 $6,349.20 $76,190.40 $37.64 $6,524.27 $78,291.20 $38.77 $6,720.13 $80,641.60 479 non-exempt Util Install/Rep-L 1 $36.31 $38.39 $39.44 $40.64 2 $38.22 $40.41 $41.52 $42.78 3 $40.23 $42.54 $43.71 $45.03 4 $42.35 $44.78 $46.01 $47.40 5 $44.58 $7,727.20 $92,726.40 $47.14 $8,170.93 $98,051.20 $48.43 $8,394.53 $100,734.40 $49.89 $8,647.60 $103,771.20 363 non-exempt Util Key Acct Rep 1 $40.16 $41.35 $41.35 $42.61 2 $42.27 $43.53 $43.53 $44.85 3 $44.49 $45.82 $45.82 $47.21 4 $46.83 $48.23 $48.23 $49.69 5 $49.29 $8,543.60 $102,523.20 $50.77 $8,800.13 $105,601.60 $50.77 $8,800.13 $105,601.60 $52.30 $9,065.33 $108,784.00 3630 non-exempt Util Key Acct Rep -S 1 $40.16 $41.35 $41.35 $42.61 2 $42.27 $43.53 $43.53 $44.85 3 $44.49 $45.82 $45.82 $47.21 4 $46.83 $48.23 $48.23 $49.69 5 $49.29 $8,543.60 $102,523.20 $50.77 $8,800.13 $105,601.60 $50.77 $8,800.13 $105,601.60 $52.30 $9,065.33 $108,784.00 271 non-exempt Util Locator 1 $31.32 $33.13 $34.03 $35.06 2 $32.97 $34.87 $35.82 $36.91 3 $34.70 $36.70 $37.71 $38.85 4 $36.53 $38.63 $39.69 $40.89 5 $38.45 $6,664.67 $79,976.00 $40.66 $7,047.73 $84,572.80 $41.78 $7,241.87 $86,902.40 $43.04 $7,460.27 $89,523.20 215 non-exempt Util Marketing Program Admin 1 $38.15 $39.29 $39.29 $40.48 2 $40.16 $41.36 $41.36 $42.61 3 $42.27 $43.54 $43.54 $44.85 4 $44.49 $45.83 $45.83 $47.21 5 $46.83 $8,117.20 $97,406.40 $48.24 $8,361.60 $100,339.20 $48.24 $8,361.60 $100,339.20 $49.69 $8,612.93 $103,355.20 233 non-exempt Util Rate Analyst 1 $36.77 $37.88 $37.88 $39.02 2 $38.71 $39.87 $39.87 $41.07 3 $40.75 $41.97 $41.97 $43.23 4 $42.89 $44.18 $44.18 $45.51 5 $45.15 $7,826.00 $93,912.00 $46.51 $8,061.73 $96,740.80 $46.51 $8,061.73 $96,740.80 $47.91 $8,304.40 $99,652.80 Job Code FLSA Job Title Steps Salary Effective 4/16/2016 (PP09:2016)Salary Effective 12/10/2016 (PP26:2016)Salray Effective 7/08/2017 (PP15:2017)Salary Effective 12/9/2017 (PP26:2017) 21 Appendix A -2 To MOA Between City of Palo Alto and SEIU FY16/FY17 Salary Schedule Rate Approx. Monthly Approx. Annual Rate Approx. Monthly Approx. Annual Rate Approx. Monthly Approx. Annual Rate Approx. Monthly Approx. Annual 307 non-exempt Util Syst Oper 1 $47.94 $50.11 $50.89 $52.42 2 $50.46 $52.75 $53.57 $55.18 3 $53.12 $55.53 $56.39 $58.08 4 $55.92 $58.45 $59.36 $61.14 5 $58.86 $10,202.40 $122,428.80 $61.53 $10,665.20 $127,982.40 $62.48 $10,829.87 $129,958.40 $64.36 $11,155.73 $133,868.80 322 non-exempt Util Syst Oper Apprentice in Training 1 $45.54 $47.60 $48.35 $49.80 2 $47.94 $50.11 $50.89 $52.42 3 $50.46 $52.75 $53.57 $55.18 4 $53.12 $55.53 $56.39 $58.08 5 $55.92 $9,692.80 $116,313.60 $58.45 $10,131.33 $121,576.00 $59.36 $10,289.07 $123,468.80 $61.14 $10,597.60 $127,171.20 284 non-exempt Utilities Engineer Estimator Lead 1 $43.90 $45.41 $45.64 $47.02 2 $46.21 $47.80 $48.04 $49.49 3 $48.64 $50.32 $50.57 $52.09 4 $51.20 $52.97 $53.23 $54.83 5 $53.89 $9,340.93 $112,091.20 $55.76 $9,665.07 $115,980.80 $56.03 $9,711.87 $116,542.40 $57.72 $10,004.80 $120,057.60 290 non-exempt Utl Install Repair Lead-Welding Cert 1 $37.15 $39.29 $40.37 $41.59 2 $39.11 $41.36 $42.49 $43.78 3 $41.17 $43.54 $44.73 $46.08 4 $43.34 $45.83 $47.08 $48.50 5 $45.62 $7,907.47 $94,889.60 $48.24 $8,361.60 $100,339.20 $49.56 $8,590.40 $103,084.80 $51.05 $8,848.67 $106,184.00 289 non-exempt Utl Install Repair-Welding Cert 1 $34.58 $36.58 $37.57 $38.70 2 $36.40 $38.50 $39.55 $40.74 3 $38.32 $40.53 $41.63 $42.88 4 $40.34 $42.66 $43.82 $45.14 5 $42.46 $7,359.73 $88,316.80 $44.90 $7,782.67 $93,392.00 $46.13 $7,995.87 $95,950.40 $47.52 $8,236.80 $98,841.60 278 non-exempt Veterinarian Tech 1 $25.18 $26.03 $26.12 $26.90 2 $26.51 $27.40 $27.49 $28.32 3 $27.91 $28.84 $28.94 $29.81 4 $29.38 $30.36 $30.46 $31.38 5 $30.93 $5,361.20 $64,334.40 $31.96 $5,539.73 $66,476.80 $32.06 $5,557.07 $66,684.80 $33.03 $5,725.20 $68,702.40 274 non-exempt Volunteer Coord 1 $29.41 $30.55 $30.83 $31.76 2 $30.96 $32.16 $32.45 $33.43 3 $32.59 $33.85 $34.16 $35.19 4 $34.30 $35.63 $35.96 $37.04 5 $36.10 $6,257.33 $75,088.00 $37.51 $6,501.73 $78,020.80 $37.85 $6,560.67 $78,728.00 $38.99 $6,758.27 $81,099.20 482 non-exempt Water Meter Rep Asst 1 $24.06 $25.18 $25.57 $26.34 2 $25.33 $26.50 $26.92 $27.73 3 $26.66 $27.89 $28.34 $29.19 4 $28.06 $29.36 $29.83 $30.73 5 $29.54 $5,120.27 $61,443.20 $30.90 $5,356.00 $64,272.00 $31.40 $5,442.67 $65,312.00 $32.35 $5,607.33 $67,288.00 484 non-exempt Water Meter Repair 1 $26.65 $27.88 $28.33 $29.18 2 $28.05 $29.35 $29.82 $30.72 3 $29.53 $30.89 $31.39 $32.34 4 $31.08 $32.52 $33.04 $34.04 5 $32.72 $5,671.47 $68,057.60 $34.23 $5,933.20 $71,198.40 $34.78 $6,028.53 $72,342.40 $35.83 $6,210.53 $74,526.40 499 non-exempt Water Sys Oper I 1 $28.98 $29.86 $29.86 $30.75 2 $30.50 $31.43 $31.43 $32.37 3 $32.11 $33.08 $33.08 $34.07 4 $33.80 $34.82 $34.82 $35.86 5 $35.58 $6,167.20 $74,006.40 $36.65 $6,352.67 $76,232.00 $36.65 $6,352.67 $76,232.00 $37.75 $6,543.33 $78,520.00 Job Code FLSA Job Title Steps Salary Effective 4/16/2016 (PP09:2016)Salary Effective 12/10/2016 (PP26:2016)Salray Effective 7/08/2017 (PP15:2017)Salary Effective 12/9/2017 (PP26:2017) 22 Appendix A -2 To MOA Between City of Palo Alto and SEIU FY16/FY17 Salary Schedule Rate Approx. Monthly Approx. Annual Rate Approx. Monthly Approx. Annual Rate Approx. Monthly Approx. Annual Rate Approx. Monthly Approx. Annual 507 non-exempt Water Sys Oper II 1 $33.12 $34.11 $34.11 $35.12 2 $34.86 $35.90 $35.90 $36.97 3 $36.69 $37.79 $37.79 $38.92 4 $38.62 $39.78 $39.78 $40.97 5 $40.65 $7,046.00 $84,552.00 $41.87 $7,257.47 $87,089.60 $41.87 $7,257.47 $87,089.60 $43.13 $7,475.87 $89,710.40 500 non-exempt WQC Plt Oper I 1 $30.41 $31.32 $31.32 $32.26 2 $32.01 $32.97 $32.97 $33.96 3 $33.69 $34.70 $34.70 $35.75 4 $35.46 $36.53 $36.53 $37.63 5 $37.33 $6,470.53 $77,646.40 $38.45 $6,664.67 $79,976.00 $38.45 $6,664.67 $79,976.00 $39.61 $6,865.73 $82,388.80 509 non-exempt WQC Plt Oper II 1 $34.74 $35.78 $35.78 $36.86 2 $36.57 $37.66 $37.66 $38.80 3 $38.49 $39.64 $39.64 $40.84 4 $40.52 $41.73 $41.73 $42.99 5 $42.65 $7,392.67 $88,712.00 $43.93 $7,614.53 $91,374.40 $43.93 $7,614.53 $91,374.40 $45.25 $7,843.33 $94,120.00 510 non-exempt WQC Plt Oper Trn 1 $26.77 $27.57 $27.57 $28.41 2 $28.18 $29.02 $29.02 $29.90 3 $29.66 $30.55 $30.55 $31.47 4 $31.22 $32.16 $32.16 $33.13 5 $32.86 $5,695.73 $68,348.80 $33.85 $5,867.33 $70,408.00 $33.85 $5,867.33 $70,408.00 $34.87 $6,044.13 $72,529.60 226 non-exempt Wtr Mtr Crs Cn Tec 1 $27.34 $28.60 $29.07 $29.93 2 $28.78 $30.10 $30.60 $31.51 3 $30.29 $31.68 $32.21 $33.17 4 $31.88 $33.35 $33.90 $34.92 5 $33.56 $5,817.07 $69,804.80 $35.11 $6,085.73 $73,028.80 $35.68 $6,184.53 $74,214.40 $36.76 $6,371.73 $76,460.80 Job Code FLSA Job Title Steps Salary Effective 4/16/2016 (PP09:2016)Salary Effective 12/10/2016 (PP26:2016)Salray Effective 7/08/2017 (PP15:2017)Salary Effective 12/9/2017 (PP26:2017) 23 Limited Hourly 2014‐2017 Salary Schedule  FLSA Steps Rate Steps Rate Steps Rate Steps Rate Step 1 $21.38 Step 1 $21.80 Step 1 $21.80 Step 1 22.24$ Step 2 $22.50 Step 2 $22.95 Step 2 $22.95 Step 2 23.41$ Step 3 $23.68 Step 3 $24.16 Step 3 $24.16 Step 3 24.64$ Step 4 $24.93 Step 4 $25.43 Step 4 $25.43 Step 4 25.94$ Step 5 $26.24 Step 5 $26.77 Step 5 $26.77 Step 5 27.31$ Step 1 $25.52 Step 1 $26.03 Step 1 $26.03 Step 1 26.55$ Step 2 $26.86 Step 2 $27.40 Step 2 $27.40 Step 2 27.95$ Step 3 $28.27 Step 3 $28.84 Step 3 $28.84 Step 3 29.42$ Step 4 $29.76 Step 4 $30.36 Step 4 $30.36 Step 4 30.97$ Step 5 $31.33 Step 5 $31.96 Step 5 $31.96 Step 5 32.60$ Step 1 $21.38 Step 1 $21.80 Step 1 $21.80 Step 1 22.24$ Step 2 $22.50 Step 2 $22.95 Step 2 $22.95 Step 2 23.41$ Step 3 $23.68 Step 3 $24.16 Step 3 $24.16 Step 3 24.64$ Step 4 $24.93 Step 4 $25.43 Step 4 $25.43 Step 4 25.94$ Step 5 $26.24 Step 5 $26.77 Step 5 $26.77 Step 5 27.31$ Step 1 $19.74 Step 1 $20.13 Step 1 $20.13 Step 1 20.54$ Step 2 $20.78 Step 2 $21.19 Step 2 $21.19 Step 2 21.62$ Step 3 $21.87 Step 3 $22.31 Step 3 $22.31 Step 3 22.76$ Step 4 $23.02 Step 4 $23.48 Step 4 $23.48 Step 4 23.96$ Step 5 $24.23 Step 5 $24.72 Step 5 $24.72 Step 5 25.22$ Step 1 $17.31 Step 1 $17.66 Step 1 $17.66 Step 1 18.01$ Step 2 $18.22 Step 2 $18.59 Step 2 $18.59 Step 2 18.96$ Step 3 $19.18 Step 3 $19.57 Step 3 $19.57 Step 3 19.96$ Step 4 $20.19 Step 4 $20.60 Step 4 $20.60 Step 4 21.01$ Step 5 $21.25 Step 5 $21.68 Step 5 $21.68 Step 5 22.12$ Step 1 $13.98 Step 1 $14.27 Step 1 $14.27 Step 1 14.56$ Step 2 $14.72 Step 2 $15.02 Step 2 $15.02 Step 2 15.33$ Step 3 $15.49 Step 3 $15.81 Step 3 $15.81 Step 3 16.14$ Step 4 $16.31 Step 4 $16.64 Step 4 $16.64 Step 4 16.99$ Step 5 $17.17 Step 5 $17.52 Step 5 $17.52 Step 5 17.88$ Step 1 $16.36 Step 1 $16.70 Step 1 $16.70 Step 1 17.03$ Step 2 $17.22 Step 2 $17.58 Step 2 $17.58 Step 2 17.93$ Step 3 $18.13 Step 3 $18.50 Step 3 $18.50 Step 3 18.87$ Step 4 $19.08 Step 4 $19.47 Step 4 $19.47 Step 4 19.86$ Step 5 $20.08 Step 5 $20.49 Step 5 $20.49 Step 5 20.90$ 919 Non-exempt Custodial Assistant 917 Non-exempt Clerical Assistant 918 Non-exempt Custodial Aide 915 Non-exempt Assistant Park Ranger 916 Non-exempt Building Serviceperson Salary Effective 01/01/2016 Salary Effective 07/01/2016 910 Non-exempt Administrative Specialist I 913 Non-exempt Administrative Specialist II Job Code Job Title Salary Effective 1st PP following Council Approval Salary Effective 07/01/2015 Limited Hourly 2014‐2017 Salary Schedule  FLSA Steps Rate Steps Rate Steps Rate Steps Rate Salary Effective 01/01/2016 Salary Effective 07/01/2016Job Code Job Title Salary Effective 1st PP following Council Approval Salary Effective 07/01/2015 Step 1 $16.08 Step 1 $16.41 Step 1 $16.41 Step 1 16.74$ Step 2 $16.93 Step 2 $17.27 Step 2 $17.27 Step 2 17.62$ Step 3 $17.82 Step 3 $18.18 Step 3 $18.18 Step 3 18.55$ Step 4 $18.76 Step 4 $19.14 Step 4 $19.14 Step 4 19.53$ Step 5 $19.75 Step 5 $20.15 Step 5 $20.15 Step 5 20.56$ Step 1 $9.69 Step 1 $9.89 Step 1 $11.00 Step 1 11.24$ Step 2 $10.20 Step 2 $10.41 Step 2 $11.58 Step 2 11.83$ Step 3 $10.74 Step 3 $10.96 Step 3 $12.19 Step 3 12.45$ Step 4 $11.31 Step 4 $11.54 Step 4 $12.83 Step 4 13.10$ Step 5 $11.91 Step 5 $12.15 Step 5 $13.51 Step 5 13.79$ Step 1 $20.20 Step 1 $20.62 Step 1 $20.62 Step 1 21.02$ Step 2 $21.26 Step 2 $21.70 Step 2 $21.70 Step 2 22.13$ Step 3 $22.38 Step 3 $22.84 Step 3 $22.84 Step 3 23.29$ Step 4 $23.56 Step 4 $24.04 Step 4 $24.04 Step 4 24.52$ Step 5 $24.80 Step 5 $25.30 Step 5 $25.30 Step 5 25.81$ Step 1 $24.61 Step 1 $25.10 Step 1 $25.10 Step 1 25.60$ Step 2 $25.90 Step 2 $26.42 Step 2 $26.42 Step 2 26.95$ Step 3 $27.26 Step 3 $27.81 Step 3 $27.81 Step 3 28.37$ Step 4 $28.69 Step 4 $29.27 Step 4 $29.27 Step 4 29.86$ Step 5 $30.20 Step 5 $30.81 Step 5 $30.81 Step 5 31.43$ Step 1 $28.31 Step 1 $28.89 Step 1 $28.89 Step 1 29.46$ Step 2 $29.80 Step 2 $30.41 Step 2 $30.41 Step 2 31.01$ Step 3 $31.37 Step 3 $32.01 Step 3 $32.01 Step 3 32.64$ Step 4 $33.02 Step 4 $33.69 Step 4 $33.69 Step 4 34.36$ Step 5 $34.76 Step 5 $35.46 Step 5 $35.46 Step 5 36.17$ Step 1 $25.98 Step 1 $26.50 Step 1 $26.50 Step 1 27.03$ Step 2 $27.35 Step 2 $27.89 Step 2 $27.89 Step 2 28.45$ Step 3 $28.79 Step 3 $29.36 Step 3 $29.36 Step 3 29.95$ Step 4 $30.30 Step 4 $30.90 Step 4 $30.90 Step 4 31.53$ Step 5 $31.89 Step 5 $32.53 Step 5 $32.53 Step 5 33.19$ Step 1 $19.33 Step 1 $19.73 Step 1 $19.73 Step 1 20.13$ Step 2 $20.35 Step 2 $20.77 Step 2 $20.77 Step 2 21.19$ Step 3 $21.42 Step 3 $21.86 Step 3 $21.86 Step 3 22.30$ Step 4 $22.55 Step 4 $23.01 Step 4 $23.01 Step 4 23.47$ Step 5 $23.74 Step 5 $24.22 Step 5 $24.22 Step 5 24.71$ Librarian 925 Non-exempt Library Clerk 923 Non-exempt Instructor II 982 Non-exempt Instructor III 924 Non-exempt 921 Non-exempt Instructor Aide 922 Non-exempt Instructor I 920 Non-exempt House Manager Limited Hourly 2014‐2017 Salary Schedule  FLSA Steps Rate Steps Rate Steps Rate Steps Rate Salary Effective 01/01/2016 Salary Effective 07/01/2016Job Code Job Title Salary Effective 1st PP following Council Approval Salary Effective 07/01/2015 Step 1 $11.85 Step 1 $12.09 Step 1 $12.09 Step 1 12.34$ Step 2 $12.47 Step 2 $12.73 Step 2 $12.73 Step 2 12.99$ Step 3 $13.13 Step 3 $13.40 Step 3 $13.40 Step 3 13.67$ Step 4 $13.82 Step 4 $14.11 Step 4 $14.11 Step 4 14.39$ Step 5 $14.55 Step 5 $14.85 Step 5 $14.85 Step 5 15.15$ Step 1 $15.56 Step 1 $15.87 Step 1 $15.87 Step 1 16.20$ Step 2 $16.38 Step 2 $16.71 Step 2 $16.71 Step 2 17.05$ Step 3 $17.24 Step 3 $17.59 Step 3 $17.59 Step 3 17.95$ Step 4 $18.15 Step 4 $18.52 Step 4 $18.52 Step 4 18.89$ Step 5 $19.10 Step 5 $19.49 Step 5 $19.49 Step 5 19.88$ Step 1 $15.56 Step 1 $15.87 Step 1 $15.87 Step 1 16.20$ Step 2 $16.38 Step 2 $16.71 Step 2 $16.71 Step 2 17.05$ Step 3 $17.24 Step 3 $17.59 Step 3 $17.59 Step 3 17.95$ Step 4 $18.15 Step 4 $18.52 Step 4 $18.52 Step 4 18.89$ Step 5 $19.10 Step 5 $19.49 Step 5 $19.49 Step 5 19.88$ Step 1 $19.33 Step 1 $19.73 Step 1 $19.73 Step 1 20.13$ Step 2 $20.35 Step 2 $20.77 Step 2 $20.77 Step 2 21.19$ Step 3 $21.42 Step 3 $21.86 Step 3 $21.86 Step 3 22.30$ Step 4 $22.55 Step 4 $23.01 Step 4 $23.01 Step 4 23.47$ Step 5 $23.74 Step 5 $24.22 Step 5 $24.22 Step 5 24.71$ Step 1 $27.98 Step 1 $28.55 Step 1 $28.55 Step 1 29.12$ Step 2 $29.45 Step 2 $30.05 Step 2 $30.05 Step 2 30.65$ Step 3 $31.00 Step 3 $31.63 Step 3 $31.63 Step 3 32.26$ Step 4 $32.63 Step 4 $33.29 Step 4 $33.29 Step 4 33.96$ Step 5 $34.35 Step 5 $35.04 Step 5 $35.04 Step 5 35.75$ Step 1 $21.38 Step 1 $21.80 Step 1 $21.80 Step 1 22.24$ Step 2 $22.50 Step 2 $22.95 Step 2 $22.95 Step 2 23.41$ Step 3 $23.68 Step 3 $24.16 Step 3 $24.16 Step 3 24.64$ Step 4 $24.93 Step 4 $25.43 Step 4 $25.43 Step 4 25.94$ Step 5 $26.24 Step 5 $26.77 Step 5 $26.77 Step 5 27.31$ 938 Non-exempt Project Construction Inspector 939 Non-exempt Project Specialist 936 Non-exempt Open Space Technician 937 Non-exempt Print Shop Assistant 930 Non-exempt Library Page 935 Non-exempt Maintenance Assistant Limited Hourly 2014‐2017 Salary Schedule  FLSA Steps Rate Steps Rate Steps Rate Steps Rate Salary Effective 01/01/2016 Salary Effective 07/01/2016Job Code Job Title Salary Effective 1st PP following Council Approval Salary Effective 07/01/2015 Step 1 $9.69 Step 1 $9.89 Step 1 $11.00 Step 1 11.24$ Step 2 $10.20 Step 2 $10.41 Step 2 $11.58 Step 2 11.83$ Step 3 $10.74 Step 3 $10.96 Step 3 $12.19 Step 3 12.45$ Step 4 $11.31 Step 4 $11.54 Step 4 $12.83 Step 4 13.10$ Step 5 $11.91 Step 5 $12.15 Step 5 $13.51 Step 5 13.79$ Step 1 $9.69 Step 1 $9.89 Step 1 $11.00 Step 1 11.24$ Step 2 $10.20 Step 2 $10.41 Step 2 $11.58 Step 2 11.83$ Step 3 $10.74 Step 3 $10.96 Step 3 $12.19 Step 3 12.45$ Step 4 $11.31 Step 4 $11.54 Step 4 $12.83 Step 4 13.10$ Step 5 $11.91 Step 5 $12.15 Step 5 $13.51 Step 5 13.79$ Step 1 $13.12 Step 1 $13.39 Step 1 $13.39 Step 1 13.64$ Step 2 $13.81 Step 2 $14.09 Step 2 $14.09 Step 2 14.36$ Step 3 $14.54 Step 3 $14.83 Step 3 $14.83 Step 3 15.12$ Step 4 $15.30 Step 4 $15.61 Step 4 $15.61 Step 4 15.92$ Step 5 $16.10 Step 5 $16.43 Step 5 $16.43 Step 5 16.76$ Step 1 $16.32 Step 1 $16.65 Step 1 $16.65 Step 1 16.99$ Step 2 $17.18 Step 2 $17.53 Step 2 $17.53 Step 2 17.88$ Step 3 $18.08 Step 3 $18.45 Step 3 $18.45 Step 3 18.82$ Step 4 $19.03 Step 4 $19.42 Step 4 $19.42 Step 4 19.81$ Step 5 $20.03 Step 5 $20.44 Step 5 $20.44 Step 5 20.85$ Step 1 $15.48 Step 1 $15.79 Step 1 $15.79 Step 1 16.10$ Step 2 $16.29 Step 2 $16.62 Step 2 $16.62 Step 2 16.95$ Step 3 $17.15 Step 3 $17.49 Step 3 $17.49 Step 3 17.84$ Step 4 $18.05 Step 4 $18.41 Step 4 $18.41 Step 4 18.78$ Step 5 $19.00 Step 5 $19.38 Step 5 $19.38 Step 5 19.77$ Step 1 $11.06 Step 1 $11.29 Step 1 $11.29 Step 1 11.50$ Step 2 $11.64 Step 2 $11.88 Step 2 $11.88 Step 2 12.11$ Step 3 $12.25 Step 3 $12.50 Step 3 $12.50 Step 3 12.75$ Step 4 $12.89 Step 4 $13.16 Step 4 $13.16 Step 4 13.42$ Step 5 $13.57 Step 5 $13.85 Step 5 $13.85 Step 5 14.13$ 948 Non-exempt Stock Clerk 949 Non-exempt Swim Instructor/Lifeguard 942 Non-exempt Recreation Leader II 943 Non-exempt Recreation Leader III 940 Non-exempt Recreation Aide 941 Non-exempt Recreation Leader I Limited Hourly 2014‐2017 Salary Schedule  FLSA Steps Rate Steps Rate Steps Rate Steps Rate Salary Effective 01/01/2016 Salary Effective 07/01/2016Job Code Job Title Salary Effective 1st PP following Council Approval Salary Effective 07/01/2015 Step 1 $17.31 Step 1 $17.66 Step 1 $17.66 Step 1 18.01$ Step 2 $18.22 Step 2 $18.59 Step 2 $18.59 Step 2 18.96$ Step 3 $19.18 Step 3 $19.57 Step 3 $19.57 Step 3 19.96$ Step 4 $20.19 Step 4 $20.60 Step 4 $20.60 Step 4 21.01$ Step 5 $21.25 Step 5 $21.68 Step 5 $21.68 Step 5 22.12$ Step 1 $20.20 Step 1 $20.62 Step 1 $20.62 Step 1 21.02$ Step 2 $21.26 Step 2 $21.70 Step 2 $21.70 Step 2 22.13$ Step 3 $22.38 Step 3 $22.84 Step 3 $22.84 Step 3 23.29$ Step 4 $23.56 Step 4 $24.04 Step 4 $24.04 Step 4 24.52$ Step 5 $24.80 Step 5 $25.30 Step 5 $25.30 Step 5 25.81$ Step 1 $24.61 Step 1 $25.10 Step 1 $25.10 Step 1 25.60$ Step 2 $25.90 Step 2 $26.42 Step 2 $26.42 Step 2 26.95$ Step 3 $27.26 Step 3 $27.81 Step 3 $27.81 Step 3 28.37$ Step 4 $28.69 Step 4 $29.27 Step 4 $29.27 Step 4 29.86$ Step 5 $30.20 Step 5 $30.81 Step 5 $30.81 Step 5 31.43$ Step 1 $28.31 Step 1 $28.89 Step 1 $28.89 Step 1 29.46$ Step 2 $29.80 Step 2 $30.41 Step 2 $30.41 Step 2 31.01$ Step 3 $31.37 Step 3 $32.01 Step 3 $32.01 Step 3 32.64$ Step 4 $33.02 Step 4 $33.69 Step 4 $33.69 Step 4 34.36$ Step 5 $34.76 Step 5 $35.46 Step 5 $35.46 Step 5 36.17$ Step 1 $14.35 Step 1 $14.64 Step 1 $14.64 Step 1 14.92$ Step 2 $15.10 Step 2 $15.41 Step 2 $15.41 Step 2 15.71$ Step 3 $15.89 Step 3 $16.22 Step 3 $16.22 Step 3 16.54$ Step 4 $16.73 Step 4 $17.07 Step 4 $17.07 Step 4 17.41$ Step 5 $17.61 Step 5 $17.97 Step 5 $17.97 Step 5 18.33$ Step 1 $9.47 Step 1 $9.66 Step 1 $11.00 Step 1 11.24$ Step 2 $9.97 Step 2 $10.17 Step 2 $11.58 Step 2 11.83$ Step 3 $10.49 Step 3 $10.71 Step 3 $12.19 Step 3 12.45$ Step 4 $11.04 Step 4 $11.27 Step 4 $12.83 Step 4 13.10$ Step 5 $11.62 Step 5 $11.86 Step 5 $13.51 Step 5 13.79$ Step 1 $21.38 Step 1 $21.80 Step 1 $21.80 Step 1 22.24$ Step 2 $22.50 Step 2 $22.95 Step 2 $22.95 Step 2 23.41$ Step 3 $23.68 Step 3 $24.16 Step 3 $24.16 Step 3 24.64$ Step 4 $24.93 Step 4 $25.43 Step 4 $25.43 Step 4 25.94$ Step 5 $26.24 Step 5 $26.77 Step 5 $26.77 Step 5 27.31$ Step 1 $26.46 Step 1 $26.99 Step 1 $26.99 Step 1 22.42$ 955 Non-exempt Zoological Assistant 953 Non-exempt Arts & ScienceTechnician 954 Non-exempt Arts & Science Aide 952 Non-exempt Arts & Science Professional II 983 Non-exempt Arts & Science Professional III 950 Non-exempt Technical Specialist 951 Non-exempt Arts & Science Professional I Limited Hourly 2014‐2017 Salary Schedule  FLSA Steps Rate Steps Rate Steps Rate Steps Rate Salary Effective 01/01/2016 Salary Effective 07/01/2016Job Code Job Title Salary Effective 1st PP following Council Approval Salary Effective 07/01/2015 Step 2 $26.46 Step 2 $26.99 Step 2 $26.99 Step 2 23.60$ Step 3 $26.46 Step 3 $26.99 Step 3 $26.99 Step 3 24.84$ Step 4 $26.46 Step 4 $26.99 Step 4 $26.99 Step 4 26.15$ Step 5 $26.46 Step 5 $26.99 Step 5 $26.99 Step 5 27.53$ Step 1 $21.17 Step 1 $21.60 Step 1 $21.60 Step 1 17.96$ Step 2 $21.17 Step 2 $21.60 Step 2 $21.60 Step 2 18.90$ Step 3 $21.17 Step 3 $21.60 Step 3 $21.60 Step 3 19.89$ Step 4 $21.17 Step 4 $21.60 Step 4 $21.60 Step 4 20.94$ Step 5 $21.17 Step 5 $21.60 Step 5 $21.60 Step 5 22.04$ Step 1 $15.56 Step 1 $15.87 Step 1 $15.87 Step 1 16.20$ Step 2 $16.38 Step 2 $16.71 Step 2 $16.71 Step 2 17.05$ Step 3 $17.24 Step 3 $17.59 Step 3 $17.59 Step 3 17.95$ Step 4 $18.15 Step 4 $18.52 Step 4 $18.52 Step 4 18.89$ Step 5 $19.10 Step 5 $19.49 Step 5 $19.49 Step 5 19.88$ Step 1 $21.38 Step 1 $21.80 Step 1 $21.80 Step 1 22.24$ Step 2 $22.50 Step 2 $22.95 Step 2 $22.95 Step 2 23.41$ Step 3 $23.68 Step 3 $24.16 Step 3 $24.16 Step 3 24.64$ Step 4 $24.93 Step 4 $25.43 Step 4 $25.43 Step 4 25.94$ Step 5 $26.24 Step 5 $26.77 Step 5 $26.77 Step 5 27.31$ Min Max Min Max Min Max Min Max $10 $100 $10 $100 $11 $100 $11.24 $100 Min Max Min Max Min Max Min Max $10 $100 $10 $100 $11 $100 $11.24 $100 TBD TBD General Laborer 963 Non-exempt Technician II 972 TBD Management Specialist 961 Non-exempt Police Reserve II 962 Non-exempt Technician I 960 Non-exempt Police Reserve I City of Palo Alto (ID # 7479) City Council Staff Report Report Type: Consent Calendar Meeting Date: 2/6/2017 City of Palo Alto Page 1 Summary Title: Approve Inclusion of New Restroom in Reconfigured Municipal Golf Course Title: Approval to Issue a Contract Change Order to Contract Number C16163847 With Wadsworth Golf Construction Company in the Amount of $198,850 for the Construction of a Prefabricated On-course Restroom at the Palo Alto Municipal Golf Course From: City Manager Lead Department: Public Works Recommendation Staff recommends that Council direct staff to issue a contract change order to Contract C16163847 with Wadsworth Golf Construction Company in the amount of $198,850 for the construction of a prefabricated on-course restroom at the Palo Alto Municipal Golf Course. Background The original reconfiguration design for the Palo Alto Municipal Golf Course included a new on-course restroom facility to remedy the poor condition and inconvenient location of the existing restroom. The new restroom design is ADA- compliant, includes adequate storage for supplies and cleaning equipment, and is sited to be conveniently accessible for golfers from Holes 4, 11, 12, and 16. Staff received bids for the Golf Course Reconfiguration Project on May 24, 2016. As bids were higher than expected, staff negotiated with the low bidder, Wadsworth Golf Construction Company, for a front-end deductive contract change order, approved by Council June 20, 2016, concurrently with a contract for the golf course reconfiguration project (CMR 7032). Approval of the deductive change order allowed the project to proceed into construction at a cost within the available project budget. City of Palo Alto Page 2 The deductive change order included $249,250 for deferring construction of the new restroom. Installation of sewer, water, and electrical connections to the site of the new restroom was retained in the contract to facilitate construction of the restroom at a later date. Although this cost savings scope was recommended by staff, it was described as moderately impactful in the staff report to Council. Since June, conditions have changed to prompt this change order recommendation. Golf Advisory Committee has voiced concerns about the new restroom omission, the consensus being that multiple opportunities for restroom breaks should be provided in the reconfigured golf course and to that end, the proposed restroom meets the request. Also the water service to the existing restroom would need to be replaced to make the facility usable and the facility would need to be renovated. Additionally, project construction has progressed favorably, with relatively low change order expenses, creating the opportunity to fund the new restroom utilizing previously appropriated funds. Discussion Staff is returning to Council to seek approval to restore the new restroom facility into the construction contract with Wadsworth Golf Construction Company. Several changed conditions have prompted this request. First, staff has received feedback from members of the Golf Advisory Committee expressing concern about the omission of the new restroom. Second, the project construction has progressed favorably to-date, with relatively low change order expenses incurred so far, creating the potential opportunity to fund the new restroom using previously appropriated funding. General consensus feedback from members of the Golf Advisory Committee has been that the reconfigured golf course should provide multiple opportunities for restroom breaks, and that the new restroom is strategically placed for better access from various golf holes. The existing on-course facility is only accessible from Holes 2 and 14. The proposed new restroom provides access from four golf holes, and in combination with the existing clubhouse restroom, golfers will have access to multiple restroom breaks. Staff also believes it would be more cost- effective, efficient, and less disruptive to the newly completed Baylands Golf Links course to construct the new restroom during the ongoing construction. City of Palo Alto Page 3 Council gave the city manager authority to expend up to $1,077,282 in contract change orders to the construction contract with Wadsworth Golf Construction Company when awarding the contract on June 20, 2016. To date, staff has issued change orders in the amount of $109,552 (only 10% of contingency), while completing approximately 24% of the project. Given the benefits of completing the new restroom along with the rest of the golf course, staff has had initial discussions with Wadsworth regarding the cost of adding a restroom back into the existing contract. To minimize costs, staff is pursuing a prefabricated building option which was included as an alternate bid item in the initial solicitation. Wadsworth has agreed to construct a prefabricated restroom at a cost of $198,850. Although the potential for additional, but unforeseen issues exhausting remaining contingency exists, staff is optimistic that the project, including the cost of the new restroom, could be completed within the approved contingency amount. Staff is returning to Council for direction to issue a change order to the contract with Wadsworth Golf Construction Company in the amount of $198,850 to construct a prefabricated on-course restroom and remove the existing restroom. Staff will endeavor to complete the remainder of the golf course reconfiguration using the existing funding, but will return to Council in the event additional appropriation is needed. Timeline The contract change order for the construction of the new restroom and removal of the existing restroom would be issued to Wadsworth Golf Construction Company upon affirmative direction from Council. The new Baylands Golf Links is scheduled to be opened for public use in October 2017. Resource Impact Council direction to install a new restroom using existing contingency will not require additional Council appropriations for the golf course Capital Improvement Program project. However, should unforeseen construction-related issues necessitate funding above the remaining contingency balance, staff will return to Council. At present, the cost of the reconfiguration is being paid by the general fund with a future debt issuance in the form of Certificates of Participation (COPs) for the City of Palo Alto Page 4 construction and to replenish the general fund. Should a need arise for additional appropriation prior to issuance of the COPs, the additional appropriation could be debt financed. Environmental Review An Environmental Impact Report (EIR) was prepared to evaluate the proposed potential impacts of the Palo Alto Municipal Golf Course Reconfiguration Project and identify appropriate mitigation measures in accordance with the provisions of the California Environmental Quality Act (CEQA). Council, acting on behalf of the City of Palo Alto in its role as lead agency for purposes of CEQA, adopted a resolution on February 3, 2014, certifying the final EIR for the project. City of Palo Alto (ID # 7524) City Council Staff Report Report Type: Action Items Meeting Date: 2/6/2017 City of Palo Alto Page 1 Summary Title: Public Hearing on Objections to Weed Abatement and Adoption Title: PUBLIC HEARING: on Objections to Weed Abatement and Adoption of Resolution Ordering Weed Nuisance Abated From: City Manager Lead Department: Fire Recommendation Staff recommends that Council hold a public hearing to hear and consider any objections to the proposed destruction and removal of weeds, and adopt the attached Resolution (Attachment A) ordering the abatement of weed nuisances in the City of Palo Alto. Executive Summary The City of Palo Alto contracts with Santa Clara County Agriculture and Resource Management to remove and destroy weeds, as defined in Palo Alto Municipal Code Chapter 8.08. This hearing allows all those affected and listed on the County’s 2017 Weed Abatement Program Commencement Report (Attachment B) to be heard and have their objections and comments considered by Council before the Council adopts a Resolution ordering the abatement of weed nuisances in the City. Background The Council adopted Resolution XXXX on January 9, 2017 and declared weeds to be a nuisance and ordered the abatement of that nuisance as called for in Palo Alto Municipal Code Chapter 8.08. Resolution XXXX provided for a public hearing date of February 6, 2017 and required notice to interested property owners and the public. Discussion The Santa Clara County Department of Agriculture and Resource Management maintains the contract for abatement of weeds within the City of Palo Alto. Upon notification of the City Council’s January 9, 2017 action declaring weeds to be a nuisance and ordering abatement thereof, the Department of Agriculture and Resource Management took steps to notify each property owner by mail of the proposed weed abatement action on respective properties and posted, on the public notice bulletin board, a list of the properties affected. The Department of City of Palo Alto Page 2 Agriculture and Resource Management has furnished copies of the property listing to the City Clerk and the City Fire Marshal. The City Clerk also posted and published notice of the hearing as required. At this public hearing, property owners may appear and object to the proposed weed destruction or removal. After the hearing and consideration of any objections, the Council may allow or overrule any or all objections. If objections are overruled, the Council is deemed to have acquired jurisdiction to proceed with abatement of weed nuisances upon Council Adoption of the attached Resolution. The County will be asked to perform the abatement work to destroy and remove any weeds. Resource Impact All Charges for the weed abatement services are included as a special assessment on bills for property taxes levied against the respective lots and parcels of land, which are considered liens on these properties. Policy Implications This procedure is consistent with existing City policies and Municipal Code Chapter 8.08. Environmental Review Santa Clara County has determined the Weed Abatement Program to be Categorically Exempt from the California Environmental Quality Act (CEQA) pursuant to CEQA guidelines Sections 15308. Attachments:  Attachment A: RESO_2.Ordering Weed Nuisance Abated  Attachment B: 2017 Palo Alto Weed Abatement Commencment Report Not Yet Adopted 1 Resolution No. ___ Resolution of the Council of the City of Palo Alto Ordering Weed Nuisance Abated R E C I T A L S A. On January 9th, 2017 the Palo Alto City Council adopted Resolution No. ____ declaring weeds to be a nuisance and setting February 6th, 2017 at 6:00 p.m. or as soon thereafter as the matter may be heard, in the Civic Center as the time and place for a hearing of objections to the proposed destruction and removal of weeds; and B. In accordance with said Resolution, notice of such hearing was given in the manner provided by law, as appears from the affidavits on file in the Office of the City Clerk; and C. All persons desiring to be heard were given an opportunity to be heard, and all matters and things pertaining to said weed abatement were fully heard and considered by this Council. NOW, THEREFORE, the Council of the City of Palo Alto RESOLVES as follows: SECTION 1. Any and all objections to the proposed destruction and removal of such weeds are overruled. SECTION 2. The Fire Chief hereby is ordered to do all things necessary and authorized in Chapter 8.08 of the Palo Alto Municipal Code to abate such nuisance, or cause the same to be abated by contract with the County of Santa Clara. // // // // // // // // Not Yet Adopted 2 SECTION 3. The County of Santa Clara as lead agency has determined that this project is exempt from the provisions of the California Environmental Quality Act (“CEQA”) under CEQA Guidelines Section 15308 as an action by regulatory agencies authorized by state or local ordinance to assure the maintenance, restoration, enhancement, or protection of the environment. INTRODUCED AND PASSED: AYES: NOES: ABSENT: ABSTENTIONS: ATTEST: __________________________ _____________________________ City Clerk Mayor APPROVED AS TO FORM: APPROVED: __________________________ _____________________________ Sr. Deputy City Attorney City Manager _____________________________ Fire Chief _____________________________ Director of Administrative Services 2017 WEED ABATEMENT PROGRAM COMMENCEMENT REPORT CITY OF PALO ALTO CITY/STATE 1il9 931 946 258 I)) 435 lll 2225 425 2469 707 743 780 3l0l 609 3489 315 FIFE GUINDA EL CAJON MIDDLEFIELD RAMONA SEALE WASHINGTON ALMA STANFORD LOUIS MORENO COLORADO CLARA MIDDLEFIELD ASHTON COWPER OLIVE OLIVE FERNANDO FERNANDO MATADERO MATADERO 003-21-063 003-34-006 003-52-057 124-02-017 12A-27-063 124-49-029 124-19-106 124-24-001 124-31-027 127-43-472 127-32-043 127-34-101 127-35-030 127-53-007 132-44-102 1 32-05-1 08 132-32-429 132-32-037 1 32-33-050 132-34-012 132-34-019 132-34-025 132-34-032 PALO ALTO PALO ALTO PALO ALTO ROCKLIN SOUTH DOS PALOS PALO ALTO MOLTNTAIN VIEW PALO ALTO PALO ALTO PALO ALTO PALO ALTO PALO ALTO PALO ALTO LTNION CITY PALO ALTO PALO ALTO PALO ALTO CUPERTINO SANTA CLARA EAST PALO ALTO PALO ALTO DALY CITY MOUNTAIN VIEW 94302-0083 94301-3319 94303-3408 95765 9366s 9430 l-3828 94043-20t1 9430 l -3905 94306-1t49 94303-3608 94301-0000 94303-3913 94303-3905 94581 94306-3610 94306-3617 94306 95014 95054 94303 94306-281s 9401s 94040-1415 AV ST WA RD ST AV AV ST AV RD AV AV DR RD AV ST AV AV JUE KENNETH R GOUYET ALBERT AND CALISA C PILLSBURY ALBERT F JRAND HELEN EQUITY SMART INVESTMENTS LP KODA ROSS K TRUSTEE BOWERS THOMAS A TRUSTEE & ET KULKARNI SACHIN AND NARKHEDE LEE STEPHEN AND YVETTE C NICHOLLS MARIE L TRUSTEE SHAMOTO ARLENE SACHIKO LEE MARK J AND WINNIE X TRUSTEE HUANG HSING Y ETAL BANQUE RAYMOND J FISHER LLC DOROTHEA DIANA MC CALLEY RODEzuCK C ET AL SMITH BOYD C AND JILL J TRUSTEE SI 43 LLC LINDA ALLEN REHABILITATION HOUSING GOODzuCH EVELYN LAND GEORGE AJLOL]N ENTERPzuSES LLC RUEHL KARL K AND SIGzuD T POBOX33 93I GUINDA ST 9468L CAJON WAY 57OI LONETREE BLVD LINIT P O BOX 156 435 SEALE AVE 353 WHISMAN STATION DR 2225 ALMAST 425 STANFORD AVE 2469 LOUIS RD 707 MORENO AVE 743 COLORADO AVE 780 CLARA DR 486I SALLYCT 609 ASHTON AVE 3489 COWPER ST 3260 ASH ST I0600 N DE ANZA BL STE 2OO ITOO SPACE PARK DR. I796 BAY RD 23I FERNANDO AVE I86 CAMELIA DR 239I GABRIEL AVE CA CA CA CA CA CA CA CA CA CA CA CA CA CA CA CA CA CA CA CA CA CA CA 325 231 220 290 AV AV AV AV 23 records of 59 Santa Clara County Weed Abatement Program Page 1 2017 WEED ABATEMENT PROGRAM COMMENCEMENT REPORT CITY OF PALO ALTO Situs APN BLV132-34-050 13241-A72 BLV132-43-030 sr 137-42-424 sT '137-05-095 sr'137-06-036 sr 137-06-088 137-11-478 AV '137-14-û69 AV 137-21-434 DR 137-2'1-064 137-24-434 AV '137-25-005 cr '137-25-008 AV 137-25-088 AV 137-26-001 RD 142-16-059 RD 142-16-062 RD '142-16-066 AV 148-02-0A2 RD '148-02-010 DR 148-02-044 RD 148-03-033 3605 405 4060 2321 2250 2195 2120 3700 3747 403 I 795 4146 4175 531 590 4155 3460 349s 3500 4208 295 262 285 PARK CURTNER PARK WELLESLEY COLUMBIA COLUMBIA COLUMBIA EL CAMINO LAGLTNA AMARANTA CEREZA EL CAMINO ALTA MESA IRVEN MAYBELL AMARANTA HILLVIEW DEER CREEK DEER CREEK RUTHELMA CHARLESTON WHITCLEM CHARLESTON BROSZ KAROLYN CURTNER INVESTMENT GROUP LLC VELKOFF VICTOzuA CULPEPPER BENJAMIN J TAGGART KENNETH AND C\'NTHIA EDELMAN ANDREA TRUSTEE HALL LOIS M TRUSTEE KSS INVESTMENT LLC BENES FRANCIS M TRUSTEE BURDETT BONNIE TRUSTEE & ET AL LAMB MARY ELLEN JUAN CHUNG-CHILING AND SU CHEN ALINA MYRNA AND MYRNA ALINA JANUAzuO AMERICO M AND LINDA A VILKIN PETER CORLAY NANCY LELAND STANFORD JRLTNIV THE BD LELAND STANFORD JR LINIV BOARD LELAND STANFORD JR UNIVERSITY SHIU BOON W HE SHUDONG AND CHEN ZHENG VAN ZANT STEVEN L NGUYEN JIM ET AL 3605 PARK BLVD 5526 BIGOAK DR 4060 PARK BLVD 335 PANORAMIC WAY P O BOX 5l 177 2195 COLUMBIA ST I135 HOPKINS AVE I38O MIRAVALLE AVE 3747 LAGLTNA AVE 350 2ND ST STE 2 795 CEREZA DR 6 ATHERTON OAKS LN 4175 ALTA MESA AVE 2422GALLUP DR 673 MAYBELL AVE 4155 AMARANTA AVE IOI CALIFORNIA AVE STE I5O PORTOLA RD 35OO DEERCREEK RD 2478 GEARY BLVD 295 W CHARLESTON RD 262WHITCLEM DR 285 W CHARLESTON RD CTTY/STATE PALO ALTO SAN JOSE PALO ALTO BERKELEY PALO ALTO PALO ALTO PALO ALTO LOS ALTOS PALO ALTO LOS ALTOS PALO ALTO ATHERTON PALO ALTO SANTA CLARA PALO ALTO PALO ALTO SAN FRANCISCO PORTOLA VALLEY PALO ALTO SAN FRANCISCO PALO ALTO PALO ALTO PALO ALTO CA CA CA CA CA CA CA CA CA CA CA CA CA CA CA CA CA CA CA CA CA CA CA 94306-2853 9st29-3t07 94306-3308 94704 94303 94306-1233 94301-3435 94024-5744 94306-262s 94022 94306-3145 94027 94306-3931 95051-1212 94306-3817 94306-3903 94111 94025 94304 941t5-3317 94306-4128 94306-4112 94306-4128 46 records of 59 Santa Clara County Weed Abatement Program Page 2 2017 WEED ABATEMENT PROGRAM COMMENCEMENT REPORT CITY OF PALO ALTO Situs APN CITY/STATE 4179 4t69 849 4243 4103 4110 890 900 895 2946 3lll AV AV AV CT RD RD LN LN LN RD DR DR DR OAKHILL OAKHILL MESA MANUELA OLD TRACE OLD TRACE MOCKINGBIRD MOCKINGBIRD MOCKINGBIRD OLD ADOBE ALEXIS ALEXIS ALEXIS 175-01-025 175-ü-426 175-41-437 175-42-453 175-20-A78 1 75-20-080 175-20-A82 175-20-083 1 75-20-086 175-24-092 182-40-404 182-43-A18 18243-034 PALO ALTO PALO ALTO PALO ALTO LOS ANGEI.ES PALO ALTO PALO ALTO PALO ALTO PALO ALTO PALO ALTO LOS ALTOS PALO ALTO PALO ALTO SAN FRANCISCO 94301 9430t 94302 90071 94306 94306-3727 94306-3719 94306-3719 94306-3719 94022 94304-1301 94304-t306 BACHRACH VIRGINIA R TRUSTEE BACHRACH VIRGINIA R TRUSTEE T.L.T. LLC WEAKLAND ALAN TRUSTEE & ET AL SMITHWICK ALTON D AND URSULA DHALIWAL JASMINE TRUSTEE JOSHI VIVEK TRUSTEE & ET AL LIVINGSTON DANIEL S TRUSTEE WOLF ELIZABETH B TRUSTEE GROVE EVA K TRUSTEE HWANG CHERNG-DAW AND BI- CABACCAN JOSELITO C TRUSTEE HWA GEORGE AND EILEEN I7I EVERETTAVE I7I EVERETT AVE PO BOX 1667 515 S FLOWER ST FLOOR 25 PO BOX 60065 4I IO OLD TRACE RD 890 MOCKINGBIRD LN 9OO MOCKINGBIRD LN 895 MOCKINGBIRD LN I7I MATN ST LTNIT 278 2946 ALEXIS DR 31I1 ALEXIS DR 29 VENTRIS RD 8.4 9/F CA CA CA CA CA CA CA CA CA CA CA CA S 59 records of 59 Santa Clara County Weed Abatement Program Page 3 TO: FROM: DATE: CITY OF PALO ALTO HONORABLE CITY COUNCIL JAMES HENRIKSON, FIRE MARSHALL FEBRUARY 06, 2017 I COUNCIL MEETING~ February 06, 2017 10 [ZJReceived Before Meeting SUBJECT: AGENDA ITEM NUMBER 10-PUBLIC HEARING on Objections to Weed Abatement and Adoption of Resolution Ordering Weed Nuisance Abated The Resolution (Attachment A), was not yet executed at the time this Agenda Item was prepared for the Council Packet. The Council adopted Resol.ution 9657 on January 9, 2017 and declared weeds to be a nuisance and ordered the abatement of that nuisance as called for in Palo Alto Municipal Code Chapter 8.08. Resolution 9657 provided for a public hearing date of February 6, 2017 and required notice to interested property owners and the public. - /;I/ ~/ ~/· / /~ ,/ ,..;? . ,,.....--~- / , I ·/ ~ _}ares Henyik~o;n ./ /Hte MarsK'~ff l_-...--/ ~lire oe'6rtment 1of1 City of Palo Alto (ID # 7376) City Council Staff Report Report Type: Action Items Meeting Date: 2/6/2017 City of Palo Alto Page 1 Summary Title: 429 University Avenue: Appeal of Mixed Use Project Title: PUBLIC HEARING: 429 University Avenue [14PLN-00222]: To Consider a Continued Appeal of the Director of Planning and Community Environment’s Architectural Review Approval of a 31,407 Square-foot, Four Story, Mixed use Building With Parking Facilities on two Subterranean Levels on an 11,000 Square-foot Site. Environmental Assessment: Mitigated Negative Declaration was Circulated on November 17, 2014 to December 12, 2014. Zoning District: CD-C (GF)(P). The Council Previously Considered this Appeal on November 30, 2015 and Remanded it to the Architectural Review Board for Redesign and Further Review Based on Council’s Direction From: City Manager Lead Department: Planning and Community Environment Recommendation: Staff recommends the City Council direct staff to prepare a Record of Land Use Action to either: 1) deny the appeal, approve the Mitigated Negative Declaration (Attachments F-H) and Mitigation and Monitoring Plan (Attachment I) and approve a modified project (Option 1, 2, or 3) with or without conditions, directing staff to return with written findings for adoption; Or 2) uphold the appeal and deny a modified project (Option 1, 2, and 3) based on the Architectural Review Board’s recommendation of October 20, 2016 and a finding that proposed project modifications have not addressed the Council’s previous concerns, directing staff to return with written findings for adoption. [Note: Option 1 is similar to that reviewed by the Architectural Review Board on September 1, City of Palo Alto Page 2 2016 and was revised and resubmitted by the Applicant on October 26, 2016 to address the Board’s comments. Staff believes that with the adjustments discussed below Option 1 best addresses the Council’s previous concerns. Option 2 was reviewed by the Architectural Review Board on October 20, 2016 and recommended for denial. Option 3 is a middle option submitted by the Applicant on December 8, 2016. All of these options can be considered for approval (with or without additional conditions) or denial based on required architectural review findings.] Executive Summary: The applicant is proposing redevelopment of three properties at the southwest corner of University Avenue and Kipling Street. The director’s decision on the project was appealed and the Council remanded the project to the Historic Resources and Architectural Review Boards to address several specific design issues. It has been 18 months since the Council’s initial appeal hearing and 12 months since the Council’s second appeal hearing. In the elapsed time, the applicant has changed architects – and designs – several times, submitting revised project plans and extending the review time required to address Council direction and comments from the HRB and ARB. Most recently, the ARB reviewed the iteration of the project referred to here as Option 2 (Attachment M) on October 20, 2016, and recommended the Council uphold the appeal and deny the project due to an inability to make the required findings. Prior to this recommendation, the ARB had reviewed a set of schematic drawings that reduced the proposed building mass at the fourth floor and resulted in about 3,000 square feet in less building area at a study session on September 1, 2016. Staff believes these plans (referenced in this report as Option 1 and available as Attachment L) were more responsive to Council and Board member comments. However, the applicant did not develop this schematic drawing further until after the ARB’s October 20, 2016 meeting and recommendation. Following ARB’s recommendation, the applicant elected to submit additional information about Option 1, including some of the changes requested by the ARB at their study session. Rather than send the matter back to ARB, staff previously made this supplemental information available to the appellant and, through this report, to the public with the calendaring of this public hearing in front of the Council. Staff continues to have concerns with some elements of the design, which it believes can be remedied through the conditions discussed below, but on balance, the design presented here as Option 1 appears most responsive, compared to all other iterations, to earlier Council comments. Attachment D contains a link to these comments from the City Council meeting on November 30, 2015. A third option (Option 3) was submitted by the applicant in December. According to the applicant, this design is essentially the September 1, 2016 study session proposal with the fourth floor from an earlier submission (discussed by the ARB on August 4, 2016). A summary of the square footages of the three options is provided below: Table 1. Summary of Current Design Options - 429 University Ave. City of Palo Alto Page 3 Option Non Res. Square Footage Res. Square Footage Total Square Footage Res. Dwelling Units Parking Spaces On Site Notes Option 1 20,407 8,140 28,547 3 34 Discussed at ARB Study Session 9/1/16 and subsequently modified to address comments. Option 2 20,407 11,000 31,407 5 38 Recommended for denial by the ARB 10/20/16. Option 3 20,407 10,750 31,157 4 34 Further modification submitted by the applicant 12/8/16 to address ARB and Council concerns. Note: See Attachment E for a more detailed comparison of all three options with code requirements. Source: Palo Alto Planning & Community Environment, January 2017 Background: The subject project has been an active application since its filing in June 2014. The project as approved by the Director in February 2015 complied with the development standards of the code, but was appealed based on compliance with required findings. On November 30, 2015 the Council on 9-0 vote agreed that further refinement was needed to address a variety of concerns related to the project’s mass and scale, transition to other buildings (contextual setting) and nearby historic properties, parking and loading, and other issues. The project takes advantage of provisions in the code that allow a transfer of floor area, or development rights, to this building. Additionally, the project is located in the parking district and relies on parking in downtown garages due to the property owner’s contributions to the parking district. Another concern raised with this project is the lack of an on-site loading space. Consistent with prior downtown approvals, including Council approved projects on appeal, the loading space is not provided on site and relies instead on other loading zone opportunities downtown and the alley immediately behind the building. Council has since directed staff to make changes to the code to clarify conditions when on-site loading is required; the Planning and Transportation Commission recently completed its review of a draft ordinance and the matter will be presented to the City Council in February. Attached to this report (Attachment D) is a chronology of the project from the filing of the application to this appeal hearing. There are links provided within the chronology to all prior staff reports, minutes and videos available. City of Palo Alto Page 4 The architectural review findings and context-based criteria that apply to this project are included for the Council’s reference as Attachments A and B, respectively.1 The city’s downtown urban design guidelines are available online at http://www.cityofpaloalto.org/civicax/filebank/documents/6514; these guidelines may be informative to the Council’s review. A compliance review of the project (Options 1 and 2 and 3) to code development standards is also provided (Attachment E). Finally, to re-familiarize the Council with the project, a detailed project description is included that also reflects the project revisions and various interactions over time (Attachment C). It should be noted that there have been 14 hearings before the ARB, HRB and Council, including the subject hearing, on this project. The applicant has also engaged four architects over the last 18 months, which has complicated reviews and extended the application processing timelines. Additionally, despite the various plan modifications over time, on balance, the project designs have not significantly deviated from the overall mass and size as first reviewed by the City Council in May 2015. Changes have been incremental and not responsive to the volume of information provided in the administrative record. Notwithstanding the above, staff believes there is one conceptual plan concept (Option 1) that was presented to the ARB in September 2016 that, among the various iterations, best responds to Council concerns. Discussion: The City Council last reviewed the project on November 30, 2015. At that time, the Council requested the applicant explore project revisions with the ARB to advance the specific findings and criteria listed below. While the applicant’s proposal has generally been consistent with the Code’s objective development standards, the appellant’s objections have focused on the equally applicable subjective design standards contained in the Code. Due to the applicant’s proposed lot consolidation of two parcels, the University Avenue facing side of the lot serves as a gateway to a vibrant downtown consisting of modestly scaled, but architecturally and historically significant buildings. On the other hand, the Kipling facing side of the building anchors an eclectic grouping of Victorian homes, at least one of which is still in residential use. The Council’s earlier focus on the architectural findings and context-based design criteria summarized below provided guidance on how the proposal could be modified to address this design challenge. Architectural Review Findings: Palo Alto Municipal Code (PAMC) Chapter 18.76.020(d) 1 Please note that on December 12, 2016, the City Council adopted an ordinance which consolidated and clarified the City’s Architectural Review findings without making major, substantive changes. This ordinance became effective on January 12, 2017. While the revised findings will be applicable to the project at 429 University and will be cited in the final Record of Land Use Action, the findings in place at the time of the prior City Council and ARB reviews of this project have been used in this report. Both versions of the findings are included in Attachment A for the Council’s reference. City of Palo Alto Page 5  Finding 4: Architectural Review Findings in relation to design’s compatibility with areas as having a unified design character or historic character  Finding 12: Architectural Review Findings in relation to compatibility and appropriateness in materials, textures, colors, details of construction and plant materials to the project’s function and to adjacent structures, landscape elements and functions Context-Based Design Criteria to Consider: PAMC Chapter 18.18.110  (a)(1)(B): Contextual and Compatibility Criteria – Context: to provide appropriate transitions to those surroundings. "Context" is also not specific to architectural style or design, though in some instances relationships may be reinforced by an architectural response.  (a)(2)(B)(i): Contextual and Compatibility Criteria – Compatibility goal in relation to siting, scale, massing and materials  (a)(2)(B)(iii): Contextual and Compatibility Criteria – Compatibility goal in relation to pattern of roof lines and projections  (b)(2)(B): Context-based Design Considerations and Findings – Street building facades in relation to eaves, overhang, porches and other architectural elements that provide human scale and help break up building mass Option 1 has been the most responsive to concerns about the overall building mass and provides better transitions to neighboring properties than others. Nearly all commercial buildings in the immediate area have flat roof designs with false mansards/parapets facing the street, including the commercial property across Lane 30 on Kipling Street. Most of the commercial buildings have two story volumes or greater in height; the building across the alley being a notable exception. The character for the balance of properties north on Kipling Street has decidedly different architectural styles and building volumes that represent the residential origins of these structures. The pattern of the commercial areas on University Avenue at times and within this area, have a rhythmic 25 foot (approximately) storefront design that contributes to a positive pedestrian experience. However, there are exceptions to this design feature as well. The Option 1 plans attempt to reflect this pattern of development with doorway and glazing spaced roughly 25 feet in width. It has a two-story volume adjacent to both streets and sets back the third floor five feet from both streets. One exception to this statement, however, is the stairway and elevator area adjacent to Kipling Street, which is at the property line. The stairway/elevator has been a repeated concern from Council from the outset and there has been limited adjustment of this design feature, except at the fourth floor. Regarding the fourth floor, the Option 1 plan shows the fourth floor office area as setback between 37 and 40 feet from Kipling Street and University Avenue, respectively. There is the City of Palo Alto Page 6 elevator shaft setback eleven feet from Kipling Street; bathrooms six feet from the adjacent building at University Avenue (but all approximately 55 feet from University Avenue); and, the rear setback at this floor level is close to nineteen feet from the alley. A refinement between the Option 1 plan submitted to the ARB and now presented to the City Council is the addition of a library at the third floor street corner. This is further addressed below along with other recommended conditions of approval for Council consideration, if there is interest in approving this design solution. A challenge for this project is the massing dictated by its modern architectural style and development program. Unlike other older buildings in the area, which have more traditional design features, ornamentation and detailing, the proposal relies on a more modern expression. There has been a lot change on University Avenue and many buildings reflect the historic character of the street, but not all, including some in close proximity to the project site. As previously noted by Council, compliance with the architectural finding regarding the project’s design compatibility with areas having a unified design character remains a discussion point. Approval or denial of the project may suggest there is or is not a unified design character along this portion of University Avenue. Consideration should also be given to the unified design and historic character of Kipling Street and to the extent that character should influence building design on University Avenue. The Historical Resources Board reviewed the project on September 10, 2015, and found that there are no offsite historical resources that would be affected by the project. Additional information, including the staff report and minutes, are linked in Attachment D. Recommended Conditions of Approval Should the Council’s deliberation on this matter conclude that Option 1 warrants approval, staff recommends, in addition to typical conditions of approval, that the following conditions be added:  Applicant shall submit detailed plans that demonstrate compliance with floor area and other applicable development standards The purpose for this condition is to ensure project compliance with development standards. This design solution evolved recently and staff has not had sufficient time to conduct a comprehensive review.  The fourth floor guardrails and planters shall be set back a minimum of five feet from the edge of the third floor roofline (all elevations), as modified by these conditions. The purpose for this condition is to reduce the building mass at that fourth floor. City of Palo Alto Page 7  The ‘library’ shown on the third floor, floor plans, at the street corner, shall be removed. The purpose for this condition is to reduce building mass at the street corner and third floor, provide building articulation and be consistent with the conceptual plans reviewed by the ARB and staff in September 2016.  The third floor roofline above the removed ‘library’ area shall be setback to follow the third floor building footprint; reducing the building mass at the street corner. The purpose for this condition is to reduce building mass at the street corner and third floor, provide building articulation.  A decorative wall design treatment, feature or element, shall be applied to the exterior walls immediately adjacent to the southern property line (project’s south elevation) starting at an elevation equivalent to the building height of the adjacent structure and extending to the roofline of the proposed building, subject to review by the Architectural Review Board. The purpose for this condition is to address the blank wall that will be visible when approaching the site from University Avenue. The intent of this condition is to provide visual interest and minimize the appearance of mass with the understanding that a future development on the adjacent property may someday obscure this design feature. One way to comply with this provision may be to set the building back a couple of inches to create visual relief. Staff proposes that any lost floor area specifically related to this condition, up to 100 square feet, be relocated to the fourth floor to maximize a creative solution without reducing the proposed square footage.  The elevator adjacent to Kipling Street, inclusive of any associated mechanical equipment, shall not exceed fifty feet (50') in height. The purpose for this condition is to reduce building mass and provide a better transition to properties along Kipling Street.  The applicant shall return to the Architectural Review Board for review and recommendation to the Director of Planning and Community Environment for landscape details and plans for all proposed planting, including individual planters, the greenwall, and landscaping near the rooftop elevator. City of Palo Alto Page 8 The project uses landscaping to provide visual interest; however, these have been conceptually discussed and a more focused discussion and review is needed to ensure these concepts can be successfully implemented.  The applicant shall return to the Architectural Review Board for review and recommendation to the Director of Planning and Community Environment of exterior building materials, colors and craftsmanship-related detailing associated with the project. The ARB reviewed only a schematic drawing of Option 1. The intent of this condition is to ensure the ARB reviews the exterior materials and colors and architectural details to improve design linkages, while still preserving the applicant’s intent to construct a contemporary building. The above are staff recommended conditions should the Council find the project (Option 1) compliant with applicable findings, guidelines and other criteria. The City Council may augment or modify the above list as appropriate. One additional condition the Council may want to consider has to do with recessed pedestrian entries. The ARB has consistently sought to improve the pedestrian experience of this building, but there has been little refinement of this feature over the different iterations. In addition, it should be noted that all of the options discussed in this report will be subject to more detailed review for code compliance at the building permit stage, if/when a single design option has been advanced. Options 2 & 3 For the purpose of this appeal hearing, staff agrees with the ARB that the project plans, identified in this report as Option 2, do not meet the required findings, based on the previously stated Council concerns. This plan set is provided to the Council for review and consideration in case there is a different perspective from staff and the ARB. As noted earlier, Option 3 was submitted by the applicant on December 8, 2016 with the intention of reflecting the September 1, 2016 study session version (similar to Option 1), with a fourth floor similar to an earlier design reviewed by the ARB on August 4, 2106. Option 3 plans are included in Attachment N, and links to meeting minutes from the respective hearings are provided in Attachment D. Due to the lateness of the submittal the ARB has not reviewed the plans, nor has staff performed a detailed analysis other than to evaluate the project for code compliance. However, it is noted that the most substantive change between the staff supported Option 1 and Option 3 appears to be the addition of 2,610 square feet of floor area primarily at the upper floor level to accommodate an additional housing unit. The mass and scale of this option is similar to (and 250 square feet less than) Option 2, which was previously reviewed by the ARB. If the City Council is interested in exploring Option 3 further, staff City of Palo Alto Page 9 recommends the Council evaluate the proposal without referring the matter back to the ARB due to the limited progress made and extensive amount of staff time required to process this application. Moreover, this project has experienced an unusually protracted appeal hearing process due in large part to the incremental modifications and applicant-caused delays. Next Steps: Staff recommends that the City Council direct staff to prepare a record of land use action to either approve or deny the project. Further remanding the project to the ARB, which has only three board members to deliberate on this matter due to two recusals, is not viewed by staff to be particularly constructive at this time, particularly in light of the progress made over the last eighteen months. Moreover, staff does not anticipate further continuances to generate a significant project design changes. Accordingly, staff anticipates returning to the City Council in March with a document to memorialize the Council’s action this evening. Environmental Review: The subject project has been assessed in accordance with the authority and criteria contained in the California Environmental Quality Act (CEQA), the State CEQA Guidelines, and the environmental regulations of the City. Pursuant to Section 15270, CEQA does not apply to projects for which a public agency rejects or disapproves. Therefore, no CEQA action may be required if the Council denies the project. However, if the Council elects to approve the project, the Council will have to approve the Initial Study/Mitigated Negative Declaration, which has previously been prepared for the project and is attached to this report. Pursuant to the requirements of the CEQA, a Draft Initial Study and Mitigated Negative Declaration was prepared and circulated along with the required 20-day public review. The public comment period for this project was from November 17, 2014 to December 12, 2014. The Initial Study and Mitigated Negative Declaration (MND) have been updated to include the findings of additional analyses, including the historic resources memorandum, shadow study and the traffic operations study (Attachments F through K). The plan revisions did not result in any additional impacts nor require additional mitigation measures. The original mitigation monitoring program remains the same (Attachment I). Attachments: Attachment A - Architectural Review Findings (DOCX) Attachment B - Context-Based Design Criteria (DOCX) Attachment C - Project Descriptions and Plan Modifications Overtime (PDF) Attachment D - Public Hearing Chronology (DOCX) Attachment E - Development Standards Preliminary Compliance Matrix (PDF) City of Palo Alto Page 10 Attachment F - CEQA 1 Updated - 429 University Initial Study and Mitigated Negative Declaration - 8-15-16 (PDF) Attachment G - CEQA 2 429 University appendicies A-E (PDF) Attachment H - CEQA 3 429 University appendicies F-I (PDF) Attachment I - CEQA 4 Mitigation Monitoring Program (PDF) Attachment J - Landscape Report (PDF) Attachment K - Shadow Study (PDF) Attachment L - Architectural Drawings: Option 1 (DOCX) Attachment M - Architectural Drawings: Option 2 (DOCX) Attachment N - Architectural Drawings: Option 3 (DOCX) ATTACHMENT A ARCHITECTURAL REVIEW FINDINGS Neither the director, nor the city council on appeal, shall grant architectural review approval, unless it is found that: (1) The design is consistent and compatible with applicable elements of the Palo Alto Comprehensive Plan; (2) The design is compatible with the immediate environment of the site; (3) The design is appropriate to the function of the project; (4) In areas considered by the board as having a unified design character or historical character, the design is compatible with such character; (5) The design promotes harmonious transitions in scale and character in areas between different designated land uses; (6) The design is compatible with approved improvements both on and off the site; (7) The planning and siting of the various functions and buildings on the site create an internal sense of order and provide a desirable environment for occupants, visitors and the general community; (8) The amount and arrangement of open space are appropriate to the design and the function of the structures; (9) Sufficient ancillary functions are provided to support the main functions of the project and the same are compatible with the project's design concept; (10) Access to the property and circulation thereon are safe and convenient for pedestrians, cyclists and vehicles; (11) Natural features are appropriately preserved and integrated with the project; (12) The materials, textures, colors and details of construction and plant material are appropriate expression to the design and function and whether the same are compatible with the adjacent and neighboring structures, landscape elements and functions; (13) The landscape design concept for the site, as shown by the relationship of plant masses, open space, scale, plant forms and foliage textures and colors create a desirable and functional environment and whether the landscape concept depicts an appropriate unity with the various buildings on the site; (14) Plant material is suitable and adaptable to the site, capable of being properly maintained on the site, and is of a variety which would tend to be drought-resistant and to reduce consumption of water in its installation and maintenance; (15) The project exhibits green building and sustainable design that is energy efficient, water conserving, durable and nontoxic, with high-quality spaces and high recycled content materials. The following considerations should be utilized in determining sustainable site and building design: (A) Optimize building orientation for heat gain, shading, daylighting, and natural ventilation; (B) Design of landscaping to create comfortable micro-climates and reduce heat island effects; (C) Design for easy pedestrian, bicycle and transit access; (D) Maximize on site stormwater management through landscaping and permeable paving; (E) Use sustainable building materials; (F) Design lighting, plumbing and equipment for efficient energy and water use; (G) Create healthy indoor environments; and (H) Use creativity and innovation to build more sustainable environments. (16) The design is consistent and compatible with the purpose of architectural review as set forth in subsection (a). Updated Architectural Review Findings – Adopted December 12, 2016 Effective January 12, 2017 Neither the director, nor the city council on appeal, shall grant architectural review approval, unless it is found that each of the following applicable findings is met: 1. The design is consistent with applicable provisions of the Palo Alto Comprehensive Plan, Zoning Code, coordinated area plans (including compatibility requirements), and any relevant design guides. 2. The project has a unified and coherent design, that a. creates an internal sense of order and desirable environment for occupants, visitors, and the general community, b. preserves, respects and integrates existing natural features that contribute positively to the site and the historic character including historic resources of the area when relevant, c. is consistent with the context-based design criteria of the applicable zone district, d. provides harmonious transitions in scale, mass and character to adjacent land uses and land use designations, e. enhances living conditions on the site (if it includes residential uses) and in adjacent residential areas. 3. The design is of high aesthetic quality, using high quality, integrated materials and appropriate construction techniques, and incorporating textures, colors, and other details that are compatible with and enhance the surrounding area. 4. The design is functional, allowing for ease and safety of pedestrian and bicycle traffic and providing for elements that support the building’s necessary operations (e.g. convenient vehicle access to property and utilities, appropriate arrangement and amount of open space and integrated signage, if applicable, etc.). 5. The landscape design complements and enhances the building design and its surroundings, is appropriate to the site’s functions, and utilizes to the extent practical, regional indigenous drought resistant plant material capable of providing desirable habitat that can be appropriately maintained. 6. The project incorporates design principles that achieve sustainability in areas related to energy efficiency, water conservation, building materials, landscaping, and site planning. ATTACHMENT B PALO ALTO MUNICIPAL CODE CHAPTER 18.18.110 CONTEXT-BASED DESIGN CRITERIA (a) Contextual and Compatibility Criteria Development in a commercial district shall be responsible to its context and compatible with adjacent development, and shall promote the establishment of pedestrian oriented design. (1) Context (A) Context as used in this section is intended to indicate relationships between the site's development to adjacent street types, surrounding land uses, and on-site or nearby natural features, such as creeks or trees. Effective transitions to these adjacent uses and features are strongly reinforced by Comprehensive Plan policies. (B) The word "context" should not be construed as a desire to replicate existing surroundings, but rather to provide appropriate transitions to those surroundings. "Context" is also not specific to architectural style or design, though in some instances relationships may be reinforced by an architectural response. (2) Compatibility (A) Compatibility is achieved when the apparent scale and mass of new buildings is consistent with the pattern of achieving a pedestrian oriented design, and when new construction shares general characteristics and establishes design linkages with the overall pattern of buildings so that the visual unity of the street is maintained. (B) Compatibility goals may be accomplished through various means, including but not limited to: (i) the siting, scale, massing, and materials; (ii) the rhythmic pattern of the street established by the general width of the buildings and the spacing between them; (iii) the pattern of roof lines and projections; (iv) the sizes, proportions, and orientations of windows, bays and doorways; (v) the location and treatment of entryways; (vi) the shadow patterns from massing and decorative features; (vii) the siting and treatment of parking; and (viii) the treatment of landscaping. (b) Context-Based Design Considerations and Findings In addition to the findings for Architectural Review contained in Section 18.76.020(d) of the Zoning Ordinance, the following additional findings are applicable in the CD district and subdistricts: (1) Pedestrian and Bicycle Environment The design of new projects shall promote pedestrian walkability, a bicycle friendly environment, and connectivity through design elements such as: A. Ground floor uses that are appealing to pedestrians through well-designed visibility and access; B. On primary pedestrian routes, climate and weather protection where possible, such as covered waiting areas, building projections and colonnades, and awnings; C. Streetscape or pedestrian amenities that contribute to the area's streetscape environment such as street trees, bulbouts, benches, landscape elements, and public art; D. Bicycle amenities that contribute to the area's bicycle environment and safety needs, such as bike racks, storage or parking, or dedicated bike lanes or paths; and E. Vehicle access from alleys or sidestreets where they exist, with pedestrian access from the public street. (2) Street Building Facades Street facades shall be designed to provide a strong relationship with the sidewalk and the street(s), to create an environment that supports and encourages pedestrian activity through design elements such as: A. Placement and orientation of doorways, windows, and landscape elements to create strong, direct relationships with the street; B. Facades that include projecting eaves and overhangs, porches, and other architectural elements that provide human scale and help break up building mass; C. Entries that are clearly defined features of front facades, and that have a scale that is in proportion to the size and type of the building and number of units being accessed; larger buildings should have a more prominent building entrance, while maintaining a pedestrian scale; D. Residential units and storefronts that have a presence on the street and are not walled-off or oriented exclusively inward; E. Elements that signal habitation such as entrances, stairs, porches, bays and balconies that are visible to people on the street; F. All exposed sides of a building designed with the same level of care and integrity; G. Reinforcing the definition and importance of the street with building mass; and H. Upper floors set back to fit in with the context of the neighborhood. (3) Massing and Setbacks Buildings shall be designed to minimize massing and conform to proper setbacks through elements such as: A. Rooflines that emphasize and accentuate significant elements of the building such as entries, bays, and balconies; B. Design with articulation, setbacks, and materials that minimize massing, break down the scale of buildings, and provide visual interest; C. Corner buildings that incorporate special features to reinforce important intersections and create buildings of unique architectural merit and varied styles; D. Building facades articulated with a building base, body and roof or parapet edge; E. Buildings set back from the property line to create an effective 12' sidewalk on El Camino Real, 8' elsewhere; F. A majority of the building frontage located at the setback line; and G. No side setback for midblock properties, allowing for a continuous street facade, except when abutting low density residential. (4) Low-Density Residential Transitions Where new projects are built abutting existing lower-scale residential development, care shall be taken to respect the scale and privacy of neighboring properties through: A. Transitions of development intensity from higher density development building types to building types that are compatible with the lower intensity surrounding uses; B. Massing and orientation of buildings that respect and mirror the massing of neighboring structures by stepping back upper stories to transition to smaller scale buildings, including setbacks and daylight planes that match abutting R-1 and R-2 zone requirements; C. Respecting privacy of neighboring structures, with windows and upper floor balconies positioned so they minimize views into neighboring properties; D. Minimizing sight lines into and from neighboring properties; E. Limiting sun and shade impacts on abutting properties; and F. Providing pedestrian paseos and mews to create separation between uses. (5) Project Open Space Private and public open space shall be provided so that it is usable for the residents, visitors, and/or employees of a site. A. The type and design of the usable private open space shall be appropriate to the character of the building(s), and shall consider dimensions, solar access, wind protection, views, and privacy; B. Open space should be sited and designed to accommodate different activities, groups, active and passive uses, and should be located convenient to the users (e.g., residents, employees, or public) C. Common open spaces should connect to the pedestrian pathways and existing natural amenities of the site and its surroundings; D. Usable open space may be any combination of private and common spaces; E. Usable open space does not need to be located on the ground and may be located in porches, decks, balconies and/or podiums (but not on rooftops); F. Open space should be located to activate the street façade and increase "eyes on the street" when possible; G. Both private and common open space areas should be buffered from noise where feasible through landscaping and building placement; H. Open space situated over a structural slab/podium or on a rooftop shall have a combination of landscaping and high quality paving materials, including elements such as planters, mature trees, and use of textured and/or colored paved surfaces; and I. Parking may not be counted as open space. (6) Parking Design Parking needs shall be accommodated but shall not be allowed to overwhelm the character of the project or detract from the pedestrian environment, such that: A. Parking is located behind buildings, below grade or, where those options are not feasible, screened by landscaping, low walls, etc.; B. Structured parking is fronted or wrapped with habitable uses when possible; C. Parking that is semi-depressed is screened with architectural elements that enhance the streetscape such as stoops, balcony overhangs, and/or art; D. Landscaping such as trees, shrubs, vines, or groundcover is incorporated into surface parking lots; E. For properties with parking access from the rear of the site (such as a rear alley or driveway) landscaping shall provide a visual buffer between vehicle circulation areas and abutting properties; F. Street parking is utilized for visitor or customer parking and is designed in a manner to enhance traffic calming; G. For properties with parking accessed from the front, minimize the amount of frontage used for parking access, no more than 25% of the site frontage facing a street should be devoted to garage openings, carports, or open/surface parking (on sites with less than 100 feet of frontage, no more than 25 feet); H. Where two parking lots abut and it is possible for a curb cut and driveway to serve several properties, owners are strongly encouraged to enter in to shared access agreements; and I. Parking is accessed from side streets or alleys when possible. (7) Large (Multi-Acre) Sites Large (in excess of one acre) sites shall be designed so that street, block, and building patterns are consistent with those of the surrounding neighborhood, and such that: A. New development of large sites maintains and enhances connectivity with a hierarchy of public streets, private streets, walks and bike paths (integrated with Palo Alto's Bicycle Master Plan, when applicable); B. The diversity of building types increases with increased lot size (e.g., <1 acre = minimum 1 building type; 1-2 acres = minimum 2 housing types; greater than 2 acres = minimum 3 housing types); and C. Where a site includes more than one housing type, each building type should respond to its immediate context in terms of scale, massing, and design (e.g., Village Residential building types facing or abutting existing single-family residences). (8) Sustainability and Green Building Design Project design and materials to achieve sustainability and green building design should be incorporated into the project. Green building design considers the environment during design and construction. Green building design aims for compatibility with the local environment: to protect, respect and benefit from it. In general, sustainable buildings are energy efficient, water conserving, durable and nontoxic, with high-quality spaces and high recycled content materials. The following considerations should be included in site and building design: A. Optimize building orientation for heat gain, shading, daylighting, and natural ventilation. B. Design landscaping to create comfortable micro-climates and reduce heat island effects. C. Design for easy pedestrian, bicycle, and transit access. D. Maximize onsite stormwater management through landscaping and permeable pavement. E. Use sustainable building materials. F. Design lighting, plumbing, and equipment for efficient energy and water use. G. Create healthy indoor environments. H. Use creativity and innovation to build more sustainable environments. One example is establishing gardens with edible fruits, vegetables or other plants to satisfy a portion of project open space requirements. I. Provide protection for creeks and riparian vegetation and integrate stormwater management measures and open space to minimize water quality and erosion impacts to the creek environment. J. Encourage installation of photovoltaic panels. 102 University Ave., Suite C• Palo Alto, CA 94301 • tel 650 326 0374 • bellomoarchitects.com Date: December 6, 2016 Updated: December 9, 2016 To: City of Palo Alto Planning Department Attn: Adam Petersen Senior Planner Project: 429 University Avenue Subject: City Council January 23, 2017, Submittal We, together with our client Kipling Post LP, present for your review a mixed use building—one with retail, office and residential spaces. The project encourages a walkable, livable and sustainable urban lifestyle. The building unifies commercial and residential life, and celebrates the City of Palo Alto’s tradition and innovation. The building will also provide retail and commercial tenants with cutting-edge spaces for their businesses. This proposed design revision is compatible with the diverse and eclectic buildings in Palo Alto’s vibrant downtown area. These buildings span several generations of development, and with no particular style or building type prevalent. Our goal is to create a building that respects the Downtown Commercial District and the adjacent neighborhood. Program: 1. Basement level 2: Parking for 17 cars 2. Basement Level 1: Parking for 17 cars 3. First Floor: Retail Space 4. Second Floor: Office Space 5. Third Floor: Three Residential Units 6. Fourth Floor: Office Space and One Residence Design responses for the 429 University Avenue Project: 1.Building Square Footage Reduction: • A reduction of 250 square feet of residential area for a total of 10,750 SF where 11,000 square is permitted, while providing four residential units to the Palo Alto housing stock. • The square footage for the proposed building is 31,157 SF where 33,000 SF is permitted; this is a reduction of 1,843 SF less than permitted. 102 University Ave., Suite C• Palo Alto, CA 94301 • tel 650 326 0374 • bellomoarchitects.com 2. Building Massing: The proposed building incorporates upper level setbacks to provide a transition in scale to adjacent buildings and to reduce perceived massing. Increased Building setbacks from property line are as follows: • University Ave: Third Floor: 7’ -8” Fourth Floor: 19’-6” • Kipling St: Third Floor: 7’-8” Fourth Floor: 37’-0” • The Alley: Second and Third Floor: 10’-0” Fourth Floor: 10’-0” to 29’-8” • The West Wall: Third and Fourth walls set back 6’-0” in the center area. Floor Setback: • University Avenue and Kipling Street: Fourth Floor setback 2’-8” • The Alley: Second, Third and Fourth Floor setback 4’-0” Railing Set-back: • On University Avenue and Kipling Street: Third floor: 2’-8” Fourth floor: 3’-5” 3. Staircases: • Staircases are an integrated and celebrated part of this design. • Stairs from the third floor to the fourth floor have been set back 20’-0” from Kipling Street to reduce the building’s “massing effect”. • Elevator tower sets back 11’-0” from Kipling Street for the same reduction to the “massing effect”. 4. Building Corners: • Corner at Kipling and the Alley: Set backs at all three-floor levels. • Corner at University and Kipling: Floor to floor glass walls create visual transparencies. 5. Roof Overhangs: • The roof overhand at the Third Floor is recessed from 7’-0” to 5’-0” at University Avenue and Kipling Street. 102 University Ave., Suite C• Palo Alto, CA 94301 • tel 650 326 0374 • bellomoarchitects.com 6. Storefronts and Pedestrian Enhancement: • The proposed storefront glazing, recessed entrances and canopies, provide for pedestrian friendly streetscape. The amenities such as street trees and ample sidewalk widths, would contribute to the goal of creating an exciting and diverse pedestrian environment. • The University Avenue facade would preserve and follow the existing University Avenue storefront rhythm. 7. HVAC Systems (heating, ventilation, and air conditioning systems): • “State of the art” HVAC equipment will provide substantial reduction in noise for the neighboring building users. • HVAC equipment for third and fourth floor is located in the underground parking area providing additional noise reduction for neighbors plus providing additional energy efficiency. • Design efforts are to locate substantial mechanical equipment in the subterranean parking structure as feasible. 8. Alley: • Beautification of the alley with accentuated garden wall. 9. Sustainable Building materials: • Concrete: 70% replacement of cement with slag (a byproduct of iron extraction process) into concrete mixture for additional concrete strength. Note: cement is a significant emission polluter during refinement. • Cambridge Architectural Stainless Steel exterior screens provide 40% shading coefficient for interior spaces. • Thermo exterior glazing (double insulated low e glazing) • Fleetwood operable doors and windows promote natural light, ventilation as well as excellent acoustical values. • 3 Form exterior cladding on Third and Forth floor walls. 3 Form is a renewable, recyclable manmade material and reduces the building exterior maintenance. 10: West Wall (zero lot line): • A building setback of 6’-0” on the third and fourth floors create relief on the zero lot line building wall. It also allows and provides natural light and ventilation for the residential units. END 102 University Avenue, Unit 3C, Palo Alto, CA 94301 Date: November 8, 2016 To: City of Palo Alto Planning Department Attn: Adam Petersen Senior Planner Project: 429 University Avenue Subject: September 1st ARB Study Session Design Responses. We, together with our client Kipling Post LP, present for your review a mixed use building—one with retail, office and residential spaces. The project encourages a walkable, livable and sustainable urban lifestyle. The building unifies commercial and residential life, and celebrates the City of Palo Alto’s tradition and innovation. The building will also provide retail and commercial tenants with cutting-edge spaces for their businesses. We trust this proposed design revision is compatible with the diverse and eclectic buildings in Palo Alto’s vibrant downtown area. The University Downtown District is comprised of buildings varying in heights from 20’-0” to 50’-0”. These buildings span several generations of development, and with no particular style or building type is prevalent. Our goal is to create a building that respects the Downtown Commercial District and the adjacent neighborhood. Program: 1. Basement level 2: Parking for 17 cars 2. Basement Level 1: Parking for 17 cars 3. First Floor: Retail Space 4. Second Floor: Office Space 5. Third Floor: Three Residential Units 6. Fourth Floor: Office Space Currant design responses for the 429 University Avenue Project: 1.Building Square Footage Reduction: • Total reduction of 2860 square foot of “permitted” residential area by “eliminating all” residential square footage on 4th floor. • The reduction of fourth floor residential area reduces massing and the building’s perception as a three-story building from the pedestrian street level. • Additionally the recessed fourth floor at University Avenue and Kipling Street by 5’-10” reduces the terrace area by 1200 square foot. 102 University Avenue, Unit 3C, Palo Alto, CA 94301 2. Building Massing: The proposed building incorporates upper level setbacks to provide a transition in scale to adjacent buildings and to reduce perceived massing. Increased building setbacks from property line are as follows: • University Ave: 3rd Floor: 7’ -8” 4th Floor: 39’-9” • Kipling St: 3rd Floor: 7’-8” 4th Floor” 37’-0” • The Alley: Walls: 2nd, 3rd: 10’-0”, 4th Floor: 18’-8” Terraces: 4’-0” • The West Wall: 3rd and 4th walls set back 6’-0” in the center area. Increased floor setback: Fourth Floor: At University Avenue and Kipling Street: 5’-10” Increased railing setback on the third and fourth floor • Third floor railing setback: 2’-8” • Fourth floor railing setback: 0’-9” 3. Staircases: • Staircases are an integrated and celebrated part of this design. • Stairs from the third floor to the fourth floor have been set back 20’-0” from Kipling Street to reduce the building’s “massing effect”. • Elevator tower sets back 11’-0” from Kipling Street for the same reduction to the “massing effect”. 4. Building Corners: • Corner at Kipling and the Alley: Set backs at all three-floor levels. • Corner at University and Kipling: Floor to floor glass walls create visual transparencies. 5. Roof Overhangs: • The roof overhand at the Third Floor is recessed from 7’-0” to 2’-0” at University Avenue and Kipling Street. The overhang is kept to minimum required for its function of weather protection. 102 University Avenue, Unit 3C, Palo Alto, CA 94301 6. Storefronts and Pedestrian Enhancement: • The proposed storefront glazing, recessed entrances and canopies, provide for pedestrian friendly streetscape. The amenities such as street trees and ample sidewalk widths, would contribute to the goal of creating an exciting and diverse pedestrian environment. • The University Avenue facade would preserve and follow the existing University Avenue storefront rhythm. 7. HVAC Systems (heating, ventilation, and air conditioning systems): • “State of the art” HVAC equipment will provide substantial reduction in noise for the neighboring building users. • HVAC equipment for third and fourth floor is located in the underground parking area providing additional noise reduction for neighbors plus providing additional energy efficiency. • Design efforts are to locate substantial mechanical equipment in the subterranean parking structure as feasible. 8. Alley: • Beautification of the alley with accentuated garden wall and overlooking garden terraces. 9. Sustainable Building materials: • Concrete: 70% replacement of cement with slag (a byproduct of iron extraction process) into concrete mixture for additional concrete strength. Note: cement is a significant emission polluter during refinement. • Cambridge Architectural Stainless Steel exterior screens provide 40% shading coefficient for interior spaces. • Thermo exterior glazing (double insulated low e glazing) • Fleetwood operable doors and windows promote natural light, ventilation as well as excellent acoustical values. • 3 Form exterior cladding on Third and Forth floor walls. 3 Form is a renewable, recyclable manmade material and reduces the building exterior maintenance. 10: West Wall (zero lot line): • A building setback of 6’-0” on the third and fourth floors create relief on the zero lot line building wall. It also allows and provides natural light and ventilation for the residential units. END 102 University Ave., Suite C• Palo Alto, CA 94301 • tel 650 326 0374 • bellomoarchitects.com Date: September, 21st 20,16 Updated: September 29th, 2016 To: City of Palo Alto Planning Department Attn: Adam Petersen Re: 429 University Avenue We, together with our client Kipling Post LP, present for your review a mixed use building—one with retail, office and residential space—that encourages a walkable, livable and sustainable urban lifestyle. The building unifies commercial and residential life, and celebrates the City of Palo Alto’s traditions and values. The building will also provide its retail and commercial tenants with long-lasting, cutting-edge spaces for their businesses. And finally, the proposed revision is compatible with the diverse and eclectic buildings in Palo Alto’s vibrant downtown area. Program: 1: Basement level 2: Parking for 21 cars 2: Basement Level 1: Parking for 17 cars 3: First Floor: Retail Space 4: Second Floor: Office Space 5: Third Floor: Office space and Two Residential Units 6: Fourth Floor: Three residential units Design Responses: 1. Building Square Footage: Total allowable square footage for the building’s retail and office space is 22,000, but the proposed design has square footage of only 20,407 sq ft—which is 1,593 sq ft less than permitted. 2. Residential Units: Earlier design proposal had four residential units; in contrast, this design proposes five residential units—in the same square footage—better promoting the City’s development goals of more housing. 3. Massing: ARB suggested that there is no need to reduce the square footage provided that 3rd and 4 th floor is set back from the property line to reduce perceived massing of the building. 102 University Ave., Suite C• Palo Alto, CA 94301 • tel 650 326 0374 • bellomoarchitects.com In response, the proposed building’s setbacks are not only compatible with code requirements but certain setbacks are substantially greater than required: The setbacks are as follows: • University Ave: 3rd and 4th Floor: 19’-9” • Kipling: 3rd Floor: 10’-5”; 4th Floor: 10’-5” • Alley: Walls: 2nd, 3rd and 4th Floor: 10’-0” Terraces: 4’-0” • West Wall: 3rd and 4th walls set back 6’-0” in the center area. 4. Roof Overhangs: • As per ARB members’ suggestion, the roof overhangs are eliminated. The proposed revision retains the following features: 5. Staircases: • Staircases are an integrated and celebrated part of this design. • The glass enclosure allows natural light while increasing energy efficiency simultaneously promoting surveillance and safety. • Stairs from the third floor to the fourth floor have been set back 20’-0” from Kipling Street to reduce perceived “massing effect”. • Elevator tower sets back 11’-0” from Kipling Street to further reduce any “massing effect”. 6. Building Corners: • Corner at Kipling and the Alley: Set backs at all floor levels. • Corner at University Ave and Kipling: Floor to floor glass walls create visual transparencies. 7. Concrete Entry Porticos: • Portico on Kipling and University Avenue scaled down to reduce perceived massing effect. 8. Pedestrian Enhancement: • Increased pedestrian overlay (widening the sidewalks) at Kipling Street enhances pedestrian friendly urban environment. 9. HVAC Systems (heating, ventilation, and air conditioning systems): • “State of the art” HVAC equipment will provide substantial reduction in noise for the neighboring building users. • HVAC equipment for third and fourth floor is located in the underground parking area providing additional noise reduction for neighbors plus providing additional energy efficiency. 102 University Ave., Suite C• Palo Alto, CA 94301 • tel 650 326 0374 • bellomoarchitects.com • Design efforts are to locate as much mechanical equipment in the subterranean parking structure as feasible. 10. Alley: • Beautification of the alley with an accentuated garden wall and overlooking terraces. • One retail space opens on alley with outdoor seating area. 11. Sustainable Building Materials: The building will be composed of sustainable building materials with exposed structural composition. • Concrete: 70% replacement of cement with slag (a byproduct of iron extraction process) into concrete mixture making it stronger and environmentally friendly (cement is a significant emission polluter during its refinement process). Slag also makes concrete more impermeable to water. • Cambridge Architectural Stainless Steel exterior screens provide 40% shading coefficient for interior spaces. • Thermo exterior glazing (double insulated low e-glazing) for energy efficiency. • Fleetwood operable doors and windows promote natural light, ventilation as well as excellent acoustical values. 12. West Wall (zero lot line): • A building setback of 6’-0” on the third and fourth floor creates relief on the zero lot line building wall. It also allows and provides natural light and ventilation for the residential units. 13. Glass Façade: • Reduced floor-to-floor glass facades by adding walls, wainscoting and operable windows. 14. Compatibility: • The building facade has a 20’-0” storefront grid pattern in rhythm with the storefronts on University Avenue. • Second and third floor plates follow horizontality of other storefronts on University Avenue. For example, second floor plate follows second story roof line of adjacent property at 423 University Avenue and also the roofline of the second story at the old Apple store at 451 University Avenue. 15. Floor to Floor Height at First Floor: • The design proposal maintains the 15’-0” floor plate height of the existing building. • The earlier proposal, which was recommended by ARB and subsequently approved by Planning Department in Feb 2015 proposed the same height. -- END – 102 University Ave., Suite C• Palo Alto, CA 94301 • tel 650 326 0374 • bellomoarchitects.com Architect Key Dates Retail Office Ret and Off Subtotal Residential Total Area 10/20/16 ARB (S. 9/20/16)7,518 12,889 20,407 11,000 31,407 9/1/16 ARB - Study Session 7,393 13,013 20,406 8,098 28,504 8/4/16 ARB (S. 7/22/16)7,393 13,014 20,407 10,750 31,157 6/16/16 ARB (S. 5/9/16) 7,478 12,929 20,407 11,000 31,407 3/17/16 ARB (S. 2/8/16) vA 7,966 12,441 20,407 11,000 31,407 3/17/16 ARB (S. 2/8/16) vB 8,079 12,328 20,407 11,000 31,407 11/30/15 CC 7,922 12,485 20,407 11,000 31,407 9/17/15 ARB (S. 8/27/15) 9/10/15 HRB S.8/3/15 (no hearing)7,922 12,485 20,407 11,000 31,407 S. 1/26/15 7,935 12,472 20,407 11,000 31,407 2/19/15 ARB 2/25/15 Dir Approval 4/6/16 CC 5/4/15 CC 1/15/15 ARB (S. 12/15/14)7,938 12,469 20,407 11,000 31,407 11/20/14 ARB (S. 11/3/14)7,804 12,603 20,407 11,000 31,407 S. 10/20/14 7,804 12,603 20,407 11,000 31,407 S. 10/9/14 7,804 12,603 20,407 11,000 31,407 S. 8/26/14 11,000 33,000 S. 6/19/14 11,000 33,000 22,000 22,000 Hayes Group Topos Unknown J. Bellomo Project Uses - in Square Feet Attachment K Site Area 11,000 Residential Sq. Ft.Retail and Office Sq. Ft.Total Sq. Ft. PAMC Max SF Allowed 11,000 11,000 22,000 TDR Sq. Ft.9,207 Density Bonus 200 Total Allowed Sq. Ft.11,000 20,407 31,407 Project Sq. Ft.11,000 20,407 31,407 PAMC Permitted FAR*1 to 1 1 to 1 2 to 1* Project FAR 1 to1 1.85 to 1 2.85 to 1 Square Footage and FAR Summary * PAMC permits a max FAR up to 3 to 1 with TDRs and density bonuses ATTACHMENT D PUBLIC HEARING CHRONOLOGY 429 University Avenue / File No. 14PLN-00222 Date and Hearing Architectural Review Board (ARB) October 20, 2016 Report Link http://www.cityofpaloalto.org/civicax/filebank/documents/54326 Minute Link http://www.cityofpaloalto.org/civicax/filebank/documents/54712 Video Link http://midpenmedia.org/architectural-review-board-50/ Date and Hearing ARB September 1, 2016 study session Report Link http://www.cityofpaloalto.org/civicax/filebank/documents/53659 Minute Link http://www.cityofpaloalto.org/civicax/filebank/documents/54329 Video Link http://midpenmedia.org/architectural-review-board-48/ Date and Hearing ARB August 4, 2016 Report Link http://www.cityofpaloalto.org/civicax/filebank/documents/53304 Minute Link http://www.cityofpaloalto.org/civicax/filebank/documents/53664 Video Link http://midpenmedia.org/architectural-review-board-47/ Date and Hearing ARB March 17, 2016 Report Link https://www.cityofpaloalto.org/civicax/filebank/documents/51514 Minute Link http://www.cityofpaloalto.org/civicax/filebank/documents/51757 Video Link http://midpenmedia.org/architectural-review-board-40/ Date and Hearing City Council November 30, 2015 Report Link http://www.cityofpaloalto.org/civicax/filebank/documents/49953 Action Minute Link http://www.cityofpaloalto.org/civicax/filebank/documents/50105 Video Link http://midpenmedia.org/city-council-62/ Date and Hearing ARB September 17, 2015 Report Link https://www.cityofpaloalto.org/civicax/filebank/documents/49028 Minute Link Video Link http://midpenmedia.org/architectural-review-board-29/ Date and Hearing Historic Resources Board (HRB) September 10, 2015 Report Link https://www.cityofpaloalto.org/civicax/filebank/documents/48887 Minute Link Video Link http://midpenmedia.org/historic-resources-board-16/ Date and Hearing City Council May 4, 2015 Report Link http://www.cityofpaloalto.org/civicax/filebank/documents/47015 Action Minute Link http://www.cityofpaloalto.org/civicax/filebank/documents/47340 Video Link http://midpenmedia.org/city-council-35/ Date and Hearing City Council April 6, 2015 Report Link http://www.cityofpaloalto.org/civicax/filebank/documents/46619 Action Minute Link http://www.cityofpaloalto.org/civicax/filebank/documents/46871 Video Link http://midpenmedia.org/city-council-31/ Date and Hearing ARB February 19, 2015 Report Link https://www.cityofpaloalto.org/civicax/filebank/documents/45974 Minute Link http://www.cityofpaloalto.org/civicax/filebank/documents/46922 Video Link http://midpenmedia.org/architectural-review-board-15/ Date and Hearing ARB January 15, 2015 Report Link https://www.cityofpaloalto.org/civicax/filebank/documents/45512 Minute Link http://www.cityofpaloalto.org/civicax/filebank/documents/46921 Video Link http://midpenmedia.org/architectural-review-board-13/ Date and Hearing ARB December 18, 2014 Report Link http://www.cityofpaloalto.org/civicax/filebank/documents/45220 Minute Link http://www.cityofpaloalto.org/civicax/filebank/documents/46950 Video Link http://midpenmedia.org/architectural-review-board-11/ Date and Hearing ARB November 20, 2014 Report Link https://www.cityofpaloalto.org/civicax/filebank/documents/44755 Minute Link http://www.cityofpaloalto.org/civicax/filebank/documents/46948 Video Link http://midpenmedia.org/architectural-review-board-9/ Date and Hearing ARB November 7, 2013 Preliminary Review Report Link http://www.cityofpaloalto.org/civicax/filebank/documents/37588 Minute Link Video Link Page 1 of 7 ATTACHMENT E ZONING COMPARISON TABLE 429 University Avenue, 14PLN-00222 Option 1 Table 1: COMPARISON WITH CHAPTER 18.18 (CD-C(GF)(P) DISTRICT) Mixed-Use Development Standards Regulation Required Existing Proposed Conforms Minimum Building Setback Front Yard None Required 0 ft. 0 ft. Yes Rear Yard 10’ for residential portion; no requirement for commercial portion Not applicable 10’ for residential portion; balconies extend up to 6’ Yes Interior Side Yard None Required 0 ft. 0 ft. Yes Street Side Yard No requirement 0 ft. 0 ft. Yes Maximum Site Coverage (building footprint) None Required 11,633 sf 9,063 sf Yes Landscape Open Space Coverage 20% 2,200 sf 0 sf 61% 6,736 sf Yes Private Open Space 200 sf per unit Total 600 sf 0 sf 2,514 sf Yes Maximum Height 50 ft. 425 University – 23.5 ft. 429 University – 18.5 ft. 50 ft. Yes Daylight Plane for lot lines abutting one or more residential zoning districts or a residential PC district Daylight plane height and slope identical to those of the most restrictive residential zone abutting the lot line 0 0 N/A Residential Density (net) 40 0 11.8 du/ac Yes Maximum Residential Floor Area Ratio (FAR) 1.0:1 FAR 0:1 FAR 0 sf 0.74:1 FAR 8,140 sf Yes Maximum Nonesidential Floor Area Ratio (FAR) 1.0:1 FAR 11,000 sf 1.06:1 FAR 11,633 sf 1.86:1 FAR 20,407 sf Yes* Project conforms with use of Transferrable Page 2 of 7 2.0:1 Max FAR with TDRs 22,000 sf Retail – ~8,800 sf Office – ~2,800 sf Retail – 7,518 sf Office – 12,889 sf Development Rights Total Floor Area Ratio 2.0:1 FAR 22,000 sf 3.0:1 Max FAR with TDRs 33,000 sf 1:1 FAR 11,000 sf 2.59:1 FAR 28,547 sf. Yes* Project conforms with use of Transferrable Development Rights 18.18.100 Performance Standards. In addition to the standards for development prescribed above, all development shall comply with the performance criteria outlined in Chapter 18.23 of the Zoning Ordinance. All mixed use development shall also comply with the provisions of Chapter 18.23 of the Zoning Ordinance. 18.18.110 Context-Based Design Criteria. As further described in a separate attachment, development in a commercial district shall be responsible to its context and compatible with adjacent development, and shall promote the establishment of pedestrian oriented design. See Attachment B Table 2: CONFORMANCE WITH CHAPTER 18.52 (Off-Street Parking and Loading) for Mixed-Use Projects Type Required Existing Proposed Vehicle Parking (within the Downtown Parking Assessment District) 87 spaces 10 onsite 37 parking assessment district 34 spaces Bicycle Parking 8 spaces 3 – short-term 5 – long-term 0 Long Term: 0 Short Term: 6 Loading Space One 12-foot wide by 42-foot long loading zone.* 0 0 The project provides 34 spaces in two subterranean garages. The total number of spaces normally required based on the mix of land uses and floor area is 87 spaces. Accordingly, the project provides four additional spaces beyond code requirements: 87 (required) – 37 (parking assessment) – 20 (parking-exempt TDR) – 34 (provided onsite) = 4 extra parking spaces. Ingress and egress to parking is from Lane 30, which is a one-way alley exiting on Kipling Street. *Loading Area Requirements The project is subject to the loading area requirements in the City’s Zoning Code because it is a mixed-use project with commercial, office and residential uses. The project would need to include one 12-foot wide by 45-foot long loading zone to service the commercial and office Page 3 of 7 related uses. The project provides a loading space off of the alley, but it does not satisfy the entire size requirements. Staff has worked with the transportation division, and it has been determined that the alley provides sufficient loading space for the project. Previous projects in the City have not provided dedicated loading areas onsite. Further, previous iterations of the project provided the same loading space as is currently proposed. Therefore, using the alley is consistent with prior projects reviewed by the City and with previous iterations of the project. Option 2 Table 1: COMPARISON WITH CHAPTER 18.18 (CD-C(GF)(P) DISTRICT) Mixed-Use Development Standards Regulation Required Existing Proposed Conforms Minimum Building Setback Front Yard None Required 0 ft. 0 ft. Yes Rear Yard 10’ for residential portion; no requirement for commercial portion Not applicable 10’ for residential portion; balconies extend up to 6’ Yes Interior Side Yard None Required 0 ft. 0 ft. Yes Street Side Yard No requirement 0 ft. 0 ft. Yes Maximum Site Coverage (building footprint) None Required 11,633 sf 9,063 sf Yes Landscape Open Space Coverage 20% 2,200 sf 0 sf 24% 2,706 sf Yes Private Open Space 200 sf per unit Total 1,000 sf 0 sf 2,581 sf Yes Maximum Height 50 ft. 425 University – 23.5 ft. 429 University – 18.5 ft. 50 ft. Yes Daylight Plane for lot lines abutting one or more residential zoning districts or a residential PC district Daylight plane height and slope identical to those of the most restrictive residential zone abutting the lot line 0 0 N/A Residential Density (net) 40 0 19.8 du/ac Yes Maximum Residential Floor Area Ratio (FAR) 1.0:1 FAR 0:1 FAR 0 sf 1:1 FAR 11,000 sf Yes Page 4 of 7 Maximum Nonresidential Floor Area Ratio (FAR) 1.0:1 FAR 11,000 sf 2.0:1 Max FAR with TDRs 22,000 sf 1.06:1 FAR 11,633 sf Retail – ~8,800 sf Office – ~2,800 sf 1.86:1 FAR 20,407 sf Retail – 7,518 sf Office – 12,889 sf Yes* Project conforms with use of Transferrable Development Rights Total Floor Area Ratio 2.0:1 FAR 22,000 sf 3.0:1 Max FAR with TDRs 33,000 sf 1.06:1 FAR 11,633 sf 2.86:1 FAR 31,407 sf. Yes* Project conforms with use of Transferrable Development Rights 18.18.100 Performance Standards. In addition to the standards for development prescribed above, all development shall comply with the performance criteria outlined in Chapter 18.23 of the Zoning Ordinance. All mixed use development shall also comply with the provisions of Chapter 18.23 of the Zoning Ordinance. 18.18.110 Context-Based Design Criteria. As further described in a separate attachment, development in a commercial district shall be responsible to its context and compatible with adjacent development, and shall promote the establishment of pedestrian oriented design. See Attachment B Table 2: CONFORMANCE WITH CHAPTER 18.52 (Off-Street Parking and Loading) for Mixed-Use Projects Type Required Existing Proposed Vehicle Parking (within the Downtown Parking Assessment District) 92 spaces 10 onsite 37 parking assessment district 37 spaces Bicycle Parking 8 spaces 3 – short-term 5 – long-term 0 Long Term: 16 Short Term: 6 Loading Space One 12-foot wide by 42-foot long loading zone.* 0 0 The project provides 37 spaces in two subterranean garages. The total number of spaces normally required based on the mix of land uses and floor area is 92 spaces. Accordingly, the project provides two additional spaces beyond code requirements: 92 (required) – 37 (parking assessment) – 20 (parking-exempt TDR) – 37 (provided onsite) = 2 extra parking spaces. Ingress and egress to parking is from Lane 30, which is a one-way alley exiting on Kipling Street. Page 5 of 7 *Loading Area Requirements The project is subject to the loading area requirements in the City’s Zoning Code because it is a mixed-use project with commercial, office and residential uses. The project would need to include one 12-foot wide by 45-foot long loading zone to service the commercial and office related uses. The project provides a loading space off of the alley, but it does not satisfy the entire size requirements. Staff has worked with the transportation division, and it has been determined that the alley provides sufficient loading space for the project. Previous projects in the City have not provided dedicated loading areas onsite. Further, previous iterations of the project provided the same loading space as is currently proposed. Therefore, using the alley is consistent with prior projects reviewed by the City and with previous iterations of the project. Option 3 Table 1: COMPARISON WITH CHAPTER 18.18 (CD-C(GF)(P) DISTRICT) Mixed-Use Development Standards Regulation Required Existing Proposed Conforms Minimum Building Setback Front Yard None Required 0 ft. 0 ft. Yes Rear Yard 10’ for residential portion; no requirement for commercial portion Not applicable 10’ for residential portion; balconies extend up to 6’ Yes Interior Side Yard None Required 0 ft. 0 ft. Yes Street Side Yard No requirement 0 ft. 0 ft. Yes Maximum Site Coverage (building footprint) None Required 11,633 sf 9,063 sf Yes Landscape Open Space Coverage 20% 2,200 sf 0 sf 37% 4,142 sf Yes Private Open Space 200 sf per unit Total 800 sf 0 sf 3,235 sf Yes Maximum Height 50 ft. 425 University – 23.5 ft. 429 University – 18.5 ft. 50 ft. Yes Page 6 of 7 Daylight Plane for lot lines abutting one or more residential zoning districts or a residential PC district Daylight plane height and slope identical to those of the most restrictive residential zone abutting the lot line 0 0 N/A Residential Density (net) 40 0 15.8 du/ac Yes Maximum Residential Floor Area Ratio (FAR) 1.0:1 FAR 0:1 FAR 0 sf 0.97:1 FAR 10,750 sf Yes Maximum Nonresidential Floor Area Ratio (FAR) 1.0:1 FAR 11,000 sf 2.0:1 Max FAR with TDRs 22,000 sf 1.06:1 FAR 11,633 sf Retail – ~8,800 sf Office – ~2,800 sf 1.86:1 FAR 20,407 sf Retail – 7,518 sf Office – 12,889 sf Yes* Project conforms with use of Transferrable Development Rights Total Floor Area Ratio 2.0:1 FAR 22,000 sf 3.0:1 Max FAR with TDRs 33,000 sf 1.06:1 FAR 11,633 sf 2.83:1 FAR 31,157 sf. Yes* Project conforms with use of Transferrable Development Rights 18.18.100 Performance Standards. In addition to the standards for development prescribed above, all development shall comply with the performance criteria outlined in Chapter 18.23 of the Zoning Ordinance. All mixed use development shall also comply with the provisions of Chapter 18.23 of the Zoning Ordinance. 18.18.110 Context-Based Design Criteria. As further described in a separate attachment, development in a commercial district shall be responsible to its context and compatible with adjacent development, and shall promote the establishment of pedestrian oriented design. See Attachment B Table 2: CONFORMANCE WITH CHAPTER 18.52 (Off-Street Parking and Loading) for Mixed-Use Projects Type Required Existing Proposed Vehicle Parking (within the Downtown Parking Assessment District) 91 spaces 10 onsite 37 parking assessment district 34 spaces Bicycle Parking Commercial: 8 spaces 3 – short-term 5 – long-term 0 Long Term: 7 Short Term: 6 Page 7 of 7 Residential: 5 spaces 1 – short-term 4 – long-term Loading Space One 12-foot wide by 42-foot long loading zone.* 0 0 The project provides 37 spaces in two subterranean garages. The total number of spaces normally required based on the mix of land uses and floor area is 91 spaces. Accordingly, the project provides two additional spaces beyond code requirements: 91 (required) – 37 (parking assessment) – 20 (parking-exempt TDR) – 34 (provided onsite) = 0 extra parking spaces. Ingress and egress to parking is from Lane 30, which is a one-way alley exiting on Kipling Street. *Loading Area Requirements The project is subject to the loading area requirements in the City’s Zoning Code because it is a mixed-use project with commercial, office and residential uses. The project would need to include one 12-foot wide by 45-foot long loading zone to service the commercial and office related uses. The project provides a loading space off of the alley, but it does not satisfy the entire size requirements. Staff has worked with the transportation division, and it has been determined that the alley provides sufficient loading space for the project. Previous projects in the City have not provided dedicated loading areas onsite. Further, previous iterations of the project provided the same loading space as is currently proposed. Therefore, using the alley is consistent with prior projects reviewed by the City and with previous iterations of the project. Printed on 30% post-consumer recycled material. 429 UNIVERSITY AVENUE PROJECT Initial Study DRAFT RELEASED NOVEMBER 2014 UPDATED JANUARYAUGUST 2015 Printed on 30% post-consumer recycled material. Environmental Checklist City of Palo Alto Department of Planning and Community Environment 429 University Avenue Initial Study Page 1 November 2014, updated JanuaryAugust 2015 TABLE OF CONTENTS PREFACE TO THE INITIAL STUDY I. PROJECT SUMMARY.....................................................................................................2 II. ENVIRONMENTAL CHECKLIST AND DISCUSSION OF IMPACTS .................76 A. AESTHETICS ..................................................................................................... 87 B. AGRICULTURAL RESOURCES ................................................................ 1210 C. AIR QUALITY................................................................................................ 1311 D. BIOLOGICAL RESOURCES ....................................................................... 1614 E CULTURAL RESOURCES ........................................................................... 1816 F. GEOLOGY, SOILS, AND SEISMICITY .................................................... 2218 G. GREENHOUSE GAS EMISSIONS .............................................................. 2420 H. HAZARDS AND HAZARDOUS MATERIALS.......................................... 2621 I. HYDROLOGY AND WATER QUALITY .................................................. 2924 J. LAND USE AND PLANNING ...................................................................... 3126 K. MINERAL RESOURCES .............................................................................. 3328 L. NOISE .............................................................................................................. 3329 M. POPULATION AND HOUSING .................................................................. 3732 N. PUBLIC SERVICES ...................................................................................... 3833 O. RECREATION ............................................................................................... 3934 P. TRANSPORTATION AND TRAFFIC ........................................................ 3934 Q. UTILITIES AND SERVICE SYSTEMS ...................................................... 4540 R. MANDATORY FINDINGS OF SIGNIFICANCE ...................................... 4641 III SOURCE REFERENCES ...........................................................................................4842 SOURCES (CHECKLIST KEY)............................................................................... 4842 REFERENCES CITED .............................................................................................. 4842 IV DETERMINATION ....................................................................................................5044 FIGURES 1 Regional Map 2 Vicinity Map 3 Aerial Map 4 Site Plan 5 Elevations 6 Perspective Renderings Environmental Checklist City of Palo Alto 429 University Avenue Initial Study Page 2 November 2014, updated JanuaryAugust 2015 PREFACE TO THE INITIAL STUDY This Initial Study is an informational document intended to disclose the environmental consequences of approving and implementing the proposed 429 University Avenue Project. The draft Initial Study was circulated for public review beginning on November 17, 2015 and ending on December 12, 2014. The draft Initial Study was considered at a public hearing by the Architectural Review Board on November 2014 to solicit public comments during the public review period. The Architectural Review Board and the public provided input on the proposed project and the project applicant subsequently made revisions to the project plans to address comments received. The Initial Study was also updated to reflect the revised project plans and was brought back to the Architectural Review Board on January 15, 2015. The Architectural Review Board recommended approval of the project and the Initial Study/Mitigated Negative Declaration on February 19, 2015. The project was tentatively approved on February 25, 2015; however, it was appealed to the City Council prior to formal approval and filing of the Notice of Determination. The project was presented at the May 4, 2015 City Council hearing and the City Council requested additional changes to the project plans, as well as clarification to be added to the Initial Study. This Initial Study includes revisions to the text based on comments received from City Council on May 4, 2015. These changes are identified in strikethrough (indicating a deletion) or underlined text (indicating an addition). The City of Palo Alto determined that based on the California Environmental Quality Act (CEQA) Guidelines, Section 15073.5, that the Initial Study need not be recirculated for public review because no substantial revisions were made to the Initial Study. This conclusion is based on the fact that no new, avoidable significant effects have been identified as a result of the text and project changes, no new mitigation measures were added, and revisions to the Initial Study do not raise important new issues about significant effects on the environment. Environmental Checklist City of Palo Alto 429 University Avenue Initial Study Page 3 November 2014, updated JanuaryAugust 2015 I. PROJECT SUMMARY 1. PROJECT TITLE 429 University Avenue 2. LEAD AGENCY NAME AND ADDRESS City of Palo Alto Department of Planning and Community Environment 250 Hamilton Avenue Palo Alto, California 94303 3. CONTACT PERSON AND PHONE NUMBER Christy Fong, Planner City of Palo Alto 650.838.2996 4. PROJECT SPONSOR’S NAME AND ADDRESS Kipling Post LP Contact: Elizabeth Wong PO Box 204 Palo Alto, California 94302 650.323.5295 5. APPLICATION NUMBER 14PLN-00222 6. PROJECT LOCATION 429 University Avenue Palo Alto, California Assessor’s Parcel Numbers (APNs): 120-15-029 and 120-15-028 The 0.25-acre project site is located in the northern section of the City of Palo Alto (City), in the northern part of Santa Clara County, east of State Route 82 (El Camino Real) and west of U.S. Highway 101 (Figure 1, Regional Map). The project site is located on the northwestern corner of University Avenue and Kipling Street, as shown on Figure 2, Vicinity Map, and Figure 3, Aerial Map. All figures are provided at the end of this document. Environmental Checklist City of Palo Alto 429 University Avenue Initial Study Page 4 November 2014, updated JanuaryAugust 2015 7. GENERAL PLAN DESIGNATION The General Plan designation of the project site is Regional/Community Commercial, per the Palo Alto 1998–2010 Comprehensive Plan (Comprehensive Plan; City of Palo Alto 2007). This land use designation includes larger shopping centers and districts that have a wider variety of goods and services than the neighborhood shopping areas. They rely on larger trade areas and include such uses as department stores, bookstores, furniture stores, toy stores, apparel shops, restaurants, theaters, and non- retail services such as offices and banks. Non-residential floor area ratios (FAR) range from 0.35 to 2.0. The project site is part of a Regional/Community Commercial district that extends from Alma Avenue on the south to Webster Street on the north and between Lytton Avenue on the west and Hamilton and Forest Avenues on the east. 8. ZONING The Zoning designation of the project site is Downtown Commercial (CD-C(P)(GF)). This zone’s regulations are set forth in the Palo Alto Municipal Code (PAMC) Chapter 18.18. The CD district provides for a wide range of commercial uses serving city-wide and regional business and service needs, as well as residential uses and neighborhood service needs. The CD-C (community) subdistrict is intended to modify the site development regulations to allow specific variations to the uses and development requirements of the CD district. The project site is also within the pedestrian shopping (P) and ground floor (GF) combining districts. The pedestrian shopping combining district is intended to modify the regulations of the CD in locations where it is deemed essential to foster the continuity of retail stores and display windows and to avoid a monotonous pedestrian environment in order to establish and maintain an economically healthy retail district. The ground floor combining district is intended to modify the uses allowed in the CD district to allow only retail, eating and drinking, and other service-oriented commercial development uses on the ground floor. 9. PROJECT DESCRIPTION This Initial Study has been modified subsequent to public review of the Initial Study and Proposed Mitigated Negative Declaration to reflect revisions made to the project plans in January 2015 in response to issues raised by Architectural Review Board and again in August 2015 in response to issues raised by the City Council at the May 4, 2015 City Council meeting. These revisions provide clarifying information regarding the proposed project but none of the revisions to the Initial Study or project plans result in any new or increased environmental effects. The revisions to this Initial Study do not constitute “significant new information” that would require recirculation of the Initial Study and Proposed Mitigated Negative Declaration. The proposed project involves demolition of two one-story retail buildings located at 425 University Avenue (APN 120-15-029) and 429 University Avenue (APN 120-15-028) totaling 11,633 square feet (4,425 square feet and 7,208 square feet, respectively) on separate parcels, and construction of a new four-story mixed-use building with two levels of underground parking (Figure 4, Site Plan). The two parcels would be combined to create a single 11,000-square-foot parcel. The new building is proposed to be 31,407 square feet in gross floor area and would cover 9,4789,581 square feet of the site in approximately the same location as the existing buildings. The total increase in gross floor area would be 19,774 square feet. The proposed building would provide 20,407 square feet of commercial space (an increase of 8,774 square feet) and 11,000 square feet of residential land uses. A total of four residential apartment units would be provided, for a residential density of 16 units per acre. In addition, the design of the building’s Kipling Street façade would reflect the smaller scale of the existing development along Kipling Street. The third floor of the building would be set back 10 feet from the alley property line, 7 feet, 6 inches from Kipling Street, and 9 feet from University Avenue, resulting in a scale more visually compatible with surrounding buildings. The fourth floor of the building would be set back 10 feet from Environmental Checklist City of Palo Alto 429 University Avenue Initial Study Page 5 November 2014, updated JanuaryAugust 2015 the alley property line, 12 feet, 9 inches from the Kipling Street property line, and 39 feet, 7 inches from the University Avenue property line, resulting in a street façade that would appear as a three-story building. The proposed building plans are provided in Appendix A. The maximum proposed building height is 50 feet and the FAR would be 2.86 (Figure 5, Elevations). The base FAR in the CD-C district is 1.0; however, the FAR may be increased with transfers of development rights (TDRs) and/or bonuses for seismic and historic rehabilitation upgrades, not to exceed a total site FAR of 3.0. The proposed project FAR will be achieved through the transfer of 9,207 square feet of development rights from separate properties, of which 4,207 square feet require parking and 5,000 square feet are exempt from parking requirements. The project is also eligible for a one-time 200-square-foot bonus, which is subject to the City’s parking requirements. Together, these TDRs and bonuses would allow the project to achieve the proposed 2.86 FAR. Building design would include stone, cast concrete, and crystalized glass panels around the University Avenue/Kipling Street corner. The stone framework would be divided into segments that reflect the pattern of facades along the street. The third and fourth floors would be stepped back from the façade to create depth and visual interest, while also providing terraces for residents and guests of the building. The project proposes retail entrances along University Avenue and Kipling Street. The entry lobby for the residential and office uses would be located on Kipling Street. The building would be set back approximately 4 to 6 feet from Lane 30 to allow for pedestrian accessibility in the rear of the building and a raised planter would be located at the corner of the alley to provide a transition to the landscaped frontages along Kipling Street. The proposed project would require 82 81.6 parking spaces for 20,407 square feet of commercial use and 10 9.4 parking spaces for 4 residential units, for a total of 92 91 parking spaces. However, the property was previously assessed and paid in lieu fees for 37 parking spaces in the University Avenue Parking Assessment District and is eligible to receive 5,000 square feet of TDRs exempted from parking (equivalent to 20 parking spaces). Based on these adjustments, the project is required to provide a total of 35 34 vehicle parking spaces. The project proposes to include a total of 40 parking spaces, exceeding the parking requirement by five six spaces. The 40 parking spaces would be provided in the two-level underground parking garage. Seven long-term bicycle parking spaces would also be provided within the underground parking garage, and six short-term bicycle parking spaces would be located near the building entrances on University Avenue and Kipling Street, for a total of 13 bicycle parking spaces. The proposed project is designed in accordance with the City’s Green Building Ordinance, which requires compliance with California Green Building Code Tier 1 and Green Point rater (for the residential portion) with Local Amendments. The project would use both conventional and sustainable building materials, including a concrete frame, high-efficiency glazing systems, cut stone, glass tile, plaster finishes, abundant day-lighting and sun-shading systems, and an energy-efficient cool roof. The project would also include facilities for carpool/clean air vehicles and electric vehicle charging stations. The proposed project would involve the removal of four existing street trees on Kipling Street, and the replacement of these trees with four new street trees on Kipling Street. Both of the two existing street trees on University Avenue would be retained. 10. SURROUNDING LAND USES AND SETTING As shown on Figures 2 and 3, the project site is located on University Avenue in Downtown Palo Alto. The project site is surrounded by primarily two-story buildings with ground floor retail and restaurant spaces on University Avenue and a mix of small-scale commercial/office as well as residential uses on Environmental Checklist City of Palo Alto 429 University Avenue Initial Study Page 6 November 2014, updated JanuaryAugust 2015 Kipling Street. Located directly across University Avenue from the site is a modern four-story mixed-use office and retail building, with ground floor retail and upper story offices. Larger mixed-use and office buildings are located farther east along University Avenue, including a six-story building and a three-story building on the corner of University Avenue and Cowper Street. The surrounding uses on Kipling Street serve as a transition between the primarily commercial University Avenue and the primarily residential neighborhoods to the north. Lower-intensity commercial/office uses and single-family residential line both sides of Kipling Street. A yoga studio is located behind the project site, accessed from an alley off Kipling Street (the alley is referred to as Lane 30 E). A public surface parking lot is located on Kipling Street, less than a block north of University Avenue, which provides parking for nearby uses. Another public surface parking lot is located on Cowper Street, between University and Hamilton Avenues. Environmental Checklist City of Palo Alto 429 University Avenue Initial Study Page 7 November 2014, updated JanuaryAugust 2015 II. ENVIRONMENTAL CHECKLIST AND DISCUSSION OF IMPACTS EVALUATION OF ENVIRONMENTAL IMPACTS 1) A brief explanation is required for all answers except “No Impact” answers that are adequately supported by the information sources a lead agency cites in the parentheses following each question. (A “No Impact” answer is adequately supported if the referenced information sources show that the impact simply does not apply to projects like the one involved (e.g., the project falls outside a fault rupture zone). A “No Impact” answer should be explained where it is based on project-specific factors as well as general standards (e.g., the project will not expose sensitive receptors to pollutants, based on a project-specific screening analysis).) 2) All answers must take account of the whole action involved, including off-site as well as on-site, cumulative as well as project-level, indirect as well as direct, and construction as well as operational impacts. 3) Once the lead agency has determined that a particular physical impact may occur, then the checklist answers must indicate whether the impact is potentially significant, less than significant with mitigation, or less than significant. “Potentially Significant Impact” is appropriate if there is substantial evidence that an effect may be significant. If there are one or more “Potentially Significant Impact” entries when the determination is made, an EIR is required. 4) “(Mitigated) Negative Declaration: Less Than Significant With Mitigation Incorporated” applies where the incorporation of mitigation measures has reduced an effect from “Potentially Significant Impact” to a “Less than Significant Impact.” The lead agency must describe the mitigation measures, and briefly explain how they reduce the effect to a less than significant level (mitigation measures from Section 17, “Earlier Analysis,” may be cross-referenced). 5) Earlier analysis may be used where, pursuant to the tiering, program EIR, or other CEQA process, an effect has been adequately analyzed in an earlier EIR or negative declaration. Section 15063 (C)(3) (D). In this case, a brief discussion should identify the following: a) Earlier Analysis Used. Identify and state where they are available for review. b) Impacts Adequately Addressed. Identify which effects from the above checklist were within the scope of and adequately analyzed in an earlier document pursuant to applicable legal standards, and state whether such effects were addressed by mitigation measures based on the earlier analysis. c) Mitigation Measures. For effects that are “Less than Significant with Mitigation Measures Incorporated,” describe the mitigation measures which were incorporated or refined from the earlier document and the extent to which they address site-specific conditions for the project. 6) Lead agencies are encouraged to incorporate into the checklist references to information sources for potential impacts (e.g. general plans, zoning ordinances). Reference to a previously prepared or outside document should, where appropriate, include a reference to the page or pages where the statement is substantiated. 7) Supporting Information Sources: A source list should be attached, and other sources used or individuals contacted should be cited in the discussion. 8) The explanation of each issue should identify: a) the significance criteria or threshold, if any, used to evaluate each question; and b) the mitigation measure identified, if any, to reduce the impact to less than significance. DISCUSSION OF IMPACTS The following Environmental Checklist was used to identify environmental impacts, which could occur if the proposed project is implemented. The second column in the checklist lists the source(s) for the answer to each question. The sources cited are identified at the end of the checklist. Discussions of the basis for each answer and a discussion of mitigation measures that are proposed to reduce potential significant impacts are included. Environmental Checklist City of Palo Alto 429 University Avenue Initial Study Page 8 November 2014, updated JanuaryAugust 2015 A. AESTHETICS Issues and Supporting Information Resources Would the project: Sources Potentially Significant Issues Potentially Significant Unless Mitigation Incorporated Less Than Significant Impact No Impact a) Substantially degrade the existing visual character or quality of the site and its surroundings? 1, 2, 3 X b) Have a substantial adverse effect on a public view or view corridor? 1, 3 (Map L4) X c) Substantially damage scenic resources, including, but not limited to, trees, rock outcroppings, and historic buildings within a state scenic highway? 1, 3 (Map L4) X d) Violate existing Comprehensive Plan policies regarding visual resources? 1, 2, 3 X e) Create a new source of substantial light or glare which would adversely affect day or nighttime views in the area? 1, 2 X f) Substantially shadow public open space (other than public streets and adjacent sidewalks) between 9:00 a.m. and 3:00 p.m. from September 21 to March 21? 1, 2 X DISCUSSION The proposed project includes replacing two existing one-story retail buildings with a new four-story mixed-use building. While the proposed project would result in a change in the existing visual character of the site, the project design will be reviewed by the City’s Architectural Review Board to ensure that compatibility concerns are addressed and it does not degrade the existing visual character or quality of the site and its surroundings. The project site is surrounded by primarily mixed-use and commercial buildings along University Avenue, ranging in height from one to six stories. As shown on Figure 5, Elevations, and Figure 6, Perspective Renderings, the proposed building would be larger in scale and mass than some of the adjacent buildings; however, the project would be similar in scale and mass to other buildings in the vicinity along University Avenue in the Downtown area. The use of lighter stone and cast concrete in the building façade and substantial setbacks on the third and fourth floors would help to reduce the apparent massing of the building and improve compatibility with neighboring structures. In addition, the project would not exceed the allowable height (50 feet) for the site. The design of the building’s Kipling Street façade would reflect the smaller scale of the existing development along Kipling Street. The façade would be divided into 25-foot sections consisting of the solid stair element, and the glass entry element with recessed residential terrace, and the secondary grid inside the main building form. The third and fourth floors of the building would set back from the alley property line and the Kipling Street property line resulting in a street façade that would appear as a two- to three-story building. The proposed stair element would be located east of the alley and would be buffered from the alley by a landscaped area near the ground-floor entrance adjacent to the alley. The University Avenue façade is designed to respond not only to the buildings immediately adjacent and west of the subject property but to the taller, higher density development of the University Avenue Commercial District, including the four-story Lululemon Athletica/Accel Partners building located directly across University Avenue. The University Avenue façade would appear to be three stories tall. The fourth floor would be set back 3039 feet, 7 inches from the Environmental Checklist City of Palo Alto 429 University Avenue Initial Study Page 9 November 2014, updated JanuaryAugust 2015 front of the building creating a terrace for use by building occupants and guests. The fourth-floor terracemain three- story building block would extend along the length of the building as would the main three-story building block, giving definition to the street edge and presence to the building when seen in the context of the street. The fourth floor terrace would extend just short of the length of the building, but would be set back in order to reduce visibility from the street. The main rectangular mass of the building would be elevated so the bottom aligns with the first floor openings of the adjacent buildings along University Avenue. Frameless glass would create display windows and entries that would activate the sidewalk through visual and physical connections. Retention of existing trees along the project site’s University Avenue frontage and the planting of new trees along the Kipling Street frontage would soften the views of the new building from public roadways and adjacent uses. The building would be built within the buildable area of the property and no public views or view corridors would be affected by the proposed building. The project site is located in a developed area of the City, is not within a state scenic highway; therefore, it would not damage any scenic resources within a state scenic highway. The Land Use and Community Design Element of the City’s Comprehensive Plan includes several policies related to visual resources, including the following:  Policy L-5: Maintain the scale and character of the City. Avoid land uses that are overwhelming and unacceptable due to their size and scale.  Policy L-6: Where possible, avoid abrupt changes in scale and density between residential and non-residential areas and between residential areas of different densities. To promote compatibility and gradual transitions between land uses, place zoning district boundaries at mid-block locations rather than along streets wherever possible.  Policy L-20: Encourage street frontages that contribute to retail vitality in all Centers. Reinforce street corners with buildings that come up to the sidewalk or that form corner plazas.  Policy L-23: Maintain and enhance the University Avenue/Downtown area as the central business district of the City, with a mix of commercial, civic, cultural, recreational and residential uses. Promote quality design that recognizes the regional and historical importance of the area and reinforces its pedestrian character.  Policy L-48: Promote high quality, creative design and site planning that is compatible with surrounding development and public spaces.  Policy L-49: Design buildings to revitalize streets and public spaces and to enhance a sense of community and personal safety. Provide an ordered variety of entries, porches, windows, bays and balconies along public ways where it is consistent with neighborhood character; avoid blank or solid walls at street level; and include human-scale details and massing. As described above, the proposed project would comply with the height and setback requirements for the project site. In addition, the project has been designed to blend into the existing development on both Kipling Street and University Avenue. The proposed building design recognizes that the uses along Kipling Street are smaller in scale and lower in intensity than those on University Avenue, and the project design responds to the adjacent uses by minimizing the appearance of an abrupt change in scale between the two areas. The University Avenue frontage would create an inviting retail environment and provide a pleasant pedestrian experience, thereby enhancing the University Avenue/Downtown area as the City’s central business district. In addition, as described above, the proposed building design would activate the sidewalk through the use of human-scale architectural details and frameless glass windows on the ground floor. Environmental Checklist City of Palo Alto 429 University Avenue Initial Study Page 10 November 2014, updated JanuaryAugust 2015 The project site is currently developed with retail uses, which include sources of light and glare. Uses associated with the proposed structure would not create a substantial amount of additional lighting and glare. Glare is defined as a light source in the field of vision that is brighter than the eye can comfortably accept. Squinting or turning away from a light source is an indication of glare. Glare can result from sunlight or from artificial light reflecting off building exteriors, such as glass windows or other highly reflective surface materials. Glare is particularly associated with high light intensity. It can be reduced by design features that block direct line of sight to the light source and that direct light downward, with little or no light emitted at high (near horizontal) angles, since this light would travel long distances. Cutoff-type light fixtures minimize glare because they emit relatively low-intensity light at these angles. Glare resulting from sunlight reflecting off building exteriors can be reduced with design features that use low-reflective glass and exterior materials and colors that absorb rather than reflect light. The proposed building would increase the number and surface area of windows compared to the existing building. The Kipling Street frontage faces northeast and has limited direct sunlight exposure, while the University Avenue frontage faces southeast and receives more sunlight exposure. At the street level along these frontages, the project proposes a series of storefront system windows with canopies over the entrances. On the second floor, windows would also be provided on these frontages and would be shaded by canopies to reduce glare. The third floor would be set back from the building façade on the University Avenue frontage and Lane 30 E, creating a large overhang that would shade windows along this side. The fourth floor would be set back even farther along University Avenue, such that glare from windows would not be visible from the street. The Kipling Street frontage would receive less sunlight exposure and the windows on this side of the building are not anticipated to create substantial glare. The primary use of exterior building lighting would be to ensure safety at building entrances. Exterior building lighting is proposed at the rear entrance of the building on Lane 30, as well as within the ramp to the underground parking level. This lighting would be controlled to minimize spillover beyond the project site property lines. The project is also required to meet the City’s lighting standards, including PAMC Section 18.23.030, which establishes that “Exterior lighting in parking areas, pathways and common open space shall be designed to achieve the following: (1) provide for safe and secure access on the site, (2) achieve maximum energy efficiency, and (3) reduce impacts or visual intrusions on abutting or nearby properties from spillover and architectural lighting that projects upward.” PAMC Section 18.23.030 also requires that “lighting of the building exterior, parking areas and pedestrian ways should be of the lowest intensity and energy use adequate for its purpose, and be designed to focus illumination downward to avoid excessive illumination above the light fixture.” Although the project would result in increased building height compared to the existing buildings, which could increase shading, there are no adjacent public spaces other than streets and sidewalks that would be affected by additional shadows. Specifically, the proposed building would increase shading on Kipling Street and Lane 30 E, which are public streets. A shadow study was prepared for the proposed project by jt Architecture + Design in order to evaluate the projected changes in shadow lines relative to existing conditions (see Appendix J). Shadow profiles were determined for the four critical dates of the year: March 21, June 21, September 21, and December 21. As shown in the shadow study, the shadows at winter solstice (worst-case shadow) would cover a similar range under existing and proposed conditions when accounting for the shadows cast by existing trees along Kipling Street, which the project would replace. The shadows would be cast mostly on the alley, parking stalls at the alley, buildings abutting the alley, streets, and rooftops. All of these areas are mostly utility areas, such as trash enclosures or loading zones, as opposed to gardens or residential rooms. In addition, most buildings on the alley do not have windows to the alley that would be impacted by these shadows. Under no scenario would residential buildings be adversely impacted by shadows from the proposed project. Due to the similarity of shadows from the existing building and the proposed building, shading from the project would differ minimally from existing conditions. Environmental Checklist City of Palo Alto 429 University Avenue Initial Study Page 11 November 2014, updated JanuaryAugust 2015 The project is subject to design review and approval by the City through the Architectural Review process, which ensures compliance with City standards to promote visual environments that are of high aesthetic quality and variety and which, at the same time, are considerate of each other. Therefore, for the reasons described above, aesthetic impacts would be less than significant. Mitigation Measures None required. Environmental Checklist City of Palo Alto 429 University Avenue Initial Study Page 12 November 2014, updated JanuaryAugust 2015 B. AGRICULTURAL RESOURCES In determining whether impacts to agricultural resources are significant environmental effects, lead agencies may refer to the California Agricultural Land Evaluation and Site Assessment Model (1997) prepared by the California Dept. of Conservation as an optional model to use in assessing impacts on agriculture and farmland. Issues and Supporting Information Resources Would the project: Sources Potentially Significant Issues Potentially Significant Unless Mitigation Incorporated Less Than Significant Impact No Impact a) Convert Prime Farmland, Unique Farmland, or Farmland of Statewide Importance (Farmland), as shown on the maps prepared pursuant to the Farmland Mapping and Monitoring Program of the California Resources Agency, to non-agricultural use? 1, 3 X b) Conflict with existing zoning for agricultural use, or a Williamson Act contract? 1, 3 (Map L9), 4 X c) Conflict with existing zoning for, or cause rezoning of, forest land (as defined in Public Resources Code section 12220(g)1) or timberland (as defined in Public Resources Code section 45262)? 1, 4 X d) Result in the loss of forest land or conversion of forest land to non-forest use? 1 X e) Involve other changes in the existing environment which, due to their location or nature, could result in conversion of Farmland, to non-agricultural use or conversion of forest land to non-forest use? 1 X X DISCUSSION As reflected in the Comprehensive Plan, the project site is located in a developed urban area in Downtown Palo Alto and does not contain and land designated as Prime Farmland, Unique Farmland, or Farmland of Statewide Importance, as shown on the Santa Clara County Important Farmland map prepared for the Farmland Mapping and Monitoring Program of the California Department of Conservation (2011). The site is not zoned for agricultural use, and is not subject to any Williamson Act contracts. The project site is within a fully developed urban area and does not support forest or timberland. No impacts to agricultural and forestry resources would occur. Mitigation Measures None required. 1 California Public Resources Code 12220(g): “Forest land” is land that can support 10% native tree cover of any species, including hardwoods, under natural conditions, and that allows for management of one or more forest resources, including timber, aesthetics, fish and wildlife, biodiversity, water quality, recreation, and other public benefits. 2 California Public Resources Code 4526: “Timberland” means land, other than land owned by the federal government and land designated by the board as experimental forest land, which is available for, and capable of, growing a crop of trees of any commercial species used to produce lumber and other forest products, including Christmas trees. Commercial species shall be determined by the board on a district basis after consultation with the district committees and others. Environmental Checklist City of Palo Alto 429 University Avenue Initial Study Page 13 November 2014, updated JanuaryAugust 2015 C. AIR QUALITY Issues and Supporting Information Resources Would the project: Sources Potentially Significant Issues Potentially Significant Unless Mitigation Incorporated Less Than Significant Impact No Impact a) Conflict with or obstruct with implementation of the applicable air quality plan? 1, 2, 6 X b) Violate any air quality standard or contribute substantially to an existing or projected air quality violation indicated by the following: i. Direct and/or indirect operational emissions that exceed the Bay Area Air Quality Management District (BAAQMD) criteria air pollutants of 80 pounds per day and/or 15 tons per year for nitrogen oxides (NO), reactive organic gases (ROG), and fine particulate matter of less than 10 microns in diameter (PM10)? 1, 2, 6 X ii. Contribute to carbon monoxide (CO) concentrations exceeding the State Ambient Air Quality Standard of nine parts per million (ppm) averaged over eight hours or 20 ppm for one hour( as demonstrated by CALINE4 modeling, which would be performed when a. project CO emissions exceed 550 pounds per day or 100 tons per year; or b. project traffic would impact intersections or roadway links operating at Level of Service (LOS) D, E or F or would cause LOS to decline to D, E or F; or c. project would increase traffic volumes on nearby roadways by 10% or more)? 1, 2, 6, 17 X c) Result in a cumulatively considerable net increase of any criteria pollutant for which the project region is non-attainment under an applicable federal or state ambient air quality standard (including releasing emissions which exceed quantitative thresholds for ozone precursors)? 1, 2, 6 X d) Expose sensitive receptors to substantial levels of toxic air contaminants? 1, 2 X i. Probability of contracting cancer for the Maximally Exposed Individual (MEI) exceeds 10 in one million? 1, 2 X ii. Ground-level concentrations of non-carcinogenic TACs would result in a hazard index greater than one (1) for the MEI? 1, 2 X Environmental Checklist City of Palo Alto 429 University Avenue Initial Study Page 14 November 2014, updated JanuaryAugust 2015 Issues and Supporting Information Resources Would the project: Sources Potentially Significant Issues Potentially Significant Unless Mitigation Incorporated Less Than Significant Impact No Impact e) Create objectionable odors affecting a substantial number of people? 1, 2 X f) Not implement all applicable construction emission control measures recommended in the Bay Area Air Quality Management District CEQA Guidelines? 1, 2 X DISCUSSION The project site is located in the Santa Clara Valley, which is part of the San Francisco Bay Area Air Basin. The Bay Area Air Quality Management District (BAAQMD) has the primary responsibility for ensuring that the San Francisco Bay Area Air Basin attains and maintains compliance with federal and state ambient air quality standards. The BAAQMD regulates air quality through its permit authority over most types of stationary emissions sources and through its planning and review process. The California ambient air quality standards are generally more stringent than federal standards. The federal and state Clean Air Acts define allowable concentrations of six air pollutants, which are referred to as “criteria air pollutants.” When monitoring indicates that a region regularly experiences air pollutant concentrations that exceed those limits, the region is designated as nonattainment and is required to develop an air quality plan that describes air pollution control strategies to be implemented to reduce air pollutant emissions and concentrations. The San Francisco Bay Area Air Basin is designated nonattainment for the federal 8-hour ozone (O3) standard. The area is in attainment or unclassified for all other federal standards. The area is designated nonattainment for state standards for 1-hour and 8-hour O3, 24-hour coarse particulate matter (PM10), annual PM10, and annual fine particulate matter (PM2.5). To address the region’s nonattainment status, the BAAQMD adopted the Bay Area 2005 Ozone Strategy (BAAQMD 2006) and the Bay Area 2010 Clean Air Plan (BAAQMD 2010a), which is an update to the 2005 document and provides “an integrated, multi-pollutant strategy to improve air quality, protect public health, and protect the climate.” The 2010 plan addresses O3, PM2.5 and PM10, air toxics, and greenhouse gases (GHGs). The 2010 plan identifies a number of control measures to be adopted or implemented to reduce emissions of these pollutants. As the proposed project is consistent with the land use and zoning designations for the project site, it is consistent with the Bay Area 2010 Clean Air Plan. The BAAQMD has adopted California Environmental Quality Act (CEQA) air quality guidelines (2010 BAAQMD Guidelines; BAAQMD 2010b) that establish air pollutant emission thresholds that identify whether a project would violate any applicable air quality standards or contribute substantially to an existing or projected air quality violation. Compared with the previous set of guidelines adopted in 1999, the 2010 BAAQMD Guidelines lower the level of pollutant emissions and health risk impacts that are considered a significant environmental impact. The BAAQMD’s adoption of the thresholds has been challenged in court. However, the litigation is procedural in nature and does not assert that the BAAQMD failed to provide substantial evidence to support its adoption of these thresholds. Because the 2010 thresholds are more conservative than the BAAQMD’s prior thresholds, this impact analysis is based on the 2010 BAAQMD Guidelines. The 2010 BAAQMD Guidelines also establish screening criteria based on the size of a project to determine whether detailed modeling to estimate air pollutant emissions is necessary. Table 1 lists several examples of screening levels set by the 2010 BAAQMD Guidelines. Environmental Checklist City of Palo Alto 429 University Avenue Initial Study Page 15 November 2014, updated JanuaryAugust 2015 Table 1 BAAQMD Screening Criteria Land Use Type Construction Related Screening Size Operational Criteria Air Pollutant Emissions Screening Size* General office building 277,000 sf (ROG) 346,000 sf (NOx) Office park 277,000 sf (ROG) 323,000 sf (NOx) Regional shopping center or strip mall 277,000 sf (ROG) 99,000 sf (NOx) Quality restaurant 277,000 sf (ROG) 47,000 sf (NOx) Single-family residential 114 du (ROG) 325 du (ROG) Apartment, low-rise, or condo/townhouse, general 240 du (ROG) 451 du (ROG) City park 67 acres (PM10) 2,613 acres (ROG) Daycare center 277,000 sf (ROG) 53,000 sf (NOx) Source: BAAQMD 2010b, Table 3-1. Notes: sf = square feet; ROG = reactive organic gas; NOx = oxides of nitrogen; PM10 = coarse particulate matter; du = dwelling units. * If the project size is less than the screening size, the project would have less than significant impacts. If the project size is greater than the screening size, detailed project-specific modeling is required. Construction Emissions The project would result in a net increase of 8,774 square feet of commercial and office space and four new dwelling units; this is substantially below the screening thresholds of 277,000 square feet (office or regional shopping center/strip mall space) and 240 dwelling units (apartment, low-rise or condo/townhouse, general) for construction emissions. While the project size is less than the screening criteria size for construction, the project would require demolition of existing buildings. The BAAQMD 2010 Guidelines recommend that the screening criteria should not be applied to projects that include demolition. Therefore, project-specific modeling of construction emissions has been completed using the California Emissions Estimator Model (CalEEMod) Version 2013.2.2. Table 2 presents the estimated air pollutant emissions for each construction phase; the CalEEMod output results are included as Appendix B. As shown in Table 2, emissions during each construction phase would remain below the BAAQMD threshold, which is 54 pounds per day. Further, the project would implement all of the construction emission control measures as identified in Table 8-2 of the BAAQMD 2010 Guidelines recommended for all proposed projects, as required by the City of Palo Alto standard conditions of approval. Therefore, impacts would be less than significant. Table 2 Proposed Project Construction Emissions by Phase Phase ROG NOx CO PM10 PM2.5 (maximum pounds per day) Demolition 1.62 14.21 10.98 2.56 1.94 Excavation 2.95 35.30 23.50 3.15 1.86 Building construction 1.62 15.25 10.26 1.22 0.99 Parking structure paving 1.29 11.64 8.50 0.90 0.72 Architectural coatings 28.48 2.59 2.11 0.25 0.22 Source: Air Quality Modeling Results (see Appendix B). Notes: ROG = reactive organic gas; NOx = oxides of nitrogen; CO = carbon monoxide; PM10 = coarse particulate matter; PM2.5 = fine particulate matter. Environmental Checklist City of Palo Alto 429 University Avenue Initial Study Page 16 November 2014, updated JanuaryAugust 2015 Operational Emissions The project would result in a total of 20,407 square feet of retail and office space, which is a net increase of 8,774 square feet compared to the existing conditions. In addition, four new dwelling units would be constructed. This total increase in development is substantially below the screening thresholds of 346,000 square feet (office space), 99,000 square feet (regional shopping center or strip mall), and 451 dwelling units (apartment, low rise or condo/townhouse, general) for operational emissions (see Table 1). As the project is substantially smaller than the screening criteria size, emissions of criteria air pollutants associated with operation of the proposed project would remain below the BAAQMD thresholds. Project operation would not result in emissions that violate any applicable air quality standards, contribute substantially to an existing or projected air quality violation, or conflict with the air quality plan; impacts would remain less than significant. Cumulative Impacts As discussed above, the San Francisco Bay Area Air Basin is currently designated as a nonattainment area for state and national O3 standards and state PM10 and PM2.5 ambient air quality standards. The San Francisco Bay Area Air Basin’s nonattainment status is attributed to the region’s development history. Past, present, and future development projects contribute to the region’s adverse air quality impacts on a cumulative basis. As described in the BAAQMD 2010 Guidelines, “by its very nature, air pollution is largely a cumulative impact. No single project is sufficient in size to, by itself, result in nonattainment of ambient air quality standards. Instead, a project’s individual emissions contribute to existing cumulatively significant adverse air quality impacts. If a project’s contribution to the cumulative impact is considerable, then the project’s impact on air quality would be considered significant” (BAAQMD 2010b). Because operation of the proposed project would not result in emissions that violate any applicable air quality standards or contribute substantially to an existing or projected air quality violation, the project would result in a less than significant cumulative impact. Mitigation Measures None required. D. BIOLOGICAL RESOURCES Issues and Supporting Information Resources Would the project: Sources Potentially Significant Issues Potentially Significant Unless Mitigation Incorporated Less Than Significant Impact No Impact a) Have a substantial adverse effect, either directly or through habitat modifications, on any species identified as a candidate, sensitive, or special status species in local or regional plans, policies, or regulations, or by the California Department of Fish and Game or U.S. Fish and Wildlife Service? 1, 2, 3 (Map N1), 11 X b) Have a substantial adverse effect on any riparian habitat or other sensitive natural community identified in local or regional plans, policies, regulations, including federally protected wetlands as defined by Section 404 of the Clean Water Act (including, but not limited to, marsh, vernal pool, coastal, etc.) through direct removal, filling, hydrological interruption, or other means? 1, 2, 3 (Map N1) X c) Interfere substantially with the movement of any native resident or migratory fish or 1, 2 X Environmental Checklist City of Palo Alto 429 University Avenue Initial Study Page 17 November 2014, updated JanuaryAugust 2015 Issues and Supporting Information Resources Would the project: Sources Potentially Significant Issues Potentially Significant Unless Mitigation Incorporated Less Than Significant Impact No Impact wildlife species or with established native resident or migratory wildlife corridors, or impede the use of native wildlife nursery sites? d) Conflict with any local policies or ordinances protecting biological resources, such as a tree preservation policy or as defined by the City of Palo Alto’s Tree Preservation Ordinance (Municipal Code Section 8.10)? 1, 2, 3, 5 X e) Conflict with any applicable Habitat Conservation Plan, Natural Community Conservation Plan, or other approved local, regional, or state habitat conservation plan? 1 X DISCUSSION The proposed project is located on a parcel that is almost entirely developed with existing buildings and paved parking, which would be removed to accommodate the project. Due to its developed nature, the site does not support sensitive habitats and has a very low potential to support candidate, sensitive, and special-status species. The site is not subject to any habitat conservation plans. The project site supports trees protected by Palo Alto’s Tree Preservation and Management Regulations. The PAMC regulates specific types of trees on public and private property for the purpose of avoiding their removal or disfigurement without first being reviewed and permitted by the City. Three categories within the status of regulated trees include protected trees, street trees, and designated trees. As documented in the Tree Survey Report prepared for the site by Davey Resource Group (provided in Appendix A), the site includes six street trees, two in bulb-outs into the parking area along University Avenue and four in the sidewalk along Kipling Street. These trees were determined to be in poor to fair condition. The proposed project includes the retention of the two existing street trees on University Avenue (London plane trees (Platanus x acerifolia)), removal of four existing street trees on Kipling Street (two ornamental pears (Pyrus calleryana) and two carob trees (Ceratonia siliqua)), and the replacement of these trees with four new street trees. Construction of the project could impact the two trees to be retained on University Avenue if the trees are not properly protected. In addition, removal of the four street trees on Kipling Street would result in a significant impact if not completed in accordance with requirements for tree removal and replacement; therefore, mitigation is provided to ensure that these potential impacts remain below a level of significance. Mitigation Measures Mitigation Measure BIO-1: The following measures shall be implemented to reduce impacts to protected trees:  City of Palo Alto (City)-approved Modified Type III fencing shall be installed for the two street trees to be retained along University Avenue. City-approved tree protection signs shall be posted on all fencing.  Soil conditions for the four new trees to be planted along Kipling Street shall be improved by preparing a planting area at least 6 feet square for each tree and installing Silva Cells to reduce compaction. The Silva Cells shall be filled with proper soil amendments and growing medium as determined by the City Arborist.  Unless otherwise approved, each new tree shall be provided with 1,200 cubic feet of rootable soil area, utilizing Standard Drawing #604/513. Rootable soil is defined as compaction less than 90% over the area, not including sidewalk base areas. Environmental Checklist City of Palo Alto 429 University Avenue Initial Study Page 18 November 2014, updated JanuaryAugust 2015  Two bubbler drip irrigation units shall be installed for each new tree to adequately water the new planting area.  New sidewalk shall be installed such that the final planting space opening is at least 5 feet by 5 feet for each new tree.  Kiva tree grates shall be used around each new tree.  Replacement tree size shall be a 36-inch box, properly structured nursery stock.  Based on growth habit and proven performance, Ginkgo biloba “Autumn Gold” is highly recommended for the replacement trees. Other tree species may be approved by the City Arborist.  All work within the Tree Protection Zone, including canopy pruning of protected trees, shall be supervised by a Certified Arborist approved by the City. Significance after Mitigation Less than significant. E. CULTURAL RESOURCES Issues and Supporting Information Resources Would the project: Sources Potentially Significant Issues Potentially Significant Unless Mitigation Incorporated Less Than Significant Impact No Impact a) Directly or indirectly destroy a local cultural resource that is recognized by City Council resolution? 1, 7 X b) Cause a substantial adverse change in the significance of an archaeological resource pursuant to 15064.5? 1, 3 (Map L8), 7 X c) Directly or indirectly destroy a unique paleontological resource or site or unique geologic feature? 1, 3 (Map L8) X d) Disturb any human remains, including those interred outside of formal cemeteries? 1, 3 (Map L8), 7 X e) Adversely affect a historic resource listed or eligible for listing on the National and/or California Register, or listed on the City’s Historic Inventory? 1, 3 (Map L7), 8 X X f) Eliminate important examples of major periods of California history or prehistory? 1, 7, 8 X DISCUSSION The proposed project involves excavation and construction activities within a fully developed and previously disturbed site. The Palo Alto Comprehensive Plan map of archaeologically sensitive areas (Figure L-8, Archaeological Resource Areas) indicates that the project site falls within an area of "Moderate Sensitivity" based on topographic setting, including proximity to major drainages, and potential to encounter undocumented subsurface archaeological deposits. A Northwest Information Center (NWIC) records search records search was conducted by Dudek on September 25, 2014 and found that no cultural resources have been recorded in the project site (see Appendix C). The only archaeological site identified within the 0.5-mile radius of the project site as a result of the records search is CA-SCL-598. This site was first identified in 1922 and was described as a Environmental Checklist City of Palo Alto 429 University Avenue Initial Study Page 19 November 2014, updated JanuaryAugust 2015 “mine” of bones encountered 10 feet below the surface, including the skeleton of one adult human. Because no associated artifacts were reported and no additional details about the find were reported, the context of the find is not clear. An extended history of past disturbance suggests that there is a very low potential for encountering intact subsurface cultural deposits. Based on these findings, potential for the inadvertent discovery of subsurface archaeological or historical resources at the project site is very low. However, there is the potential to discover unknown cultural resources during site excavation. In the event any archaeological or human remains are discovered on the site, impacts would be potentially significant. Implementation of Mitigation Measure CUL-1 would ensure that impacts remain less than significant by ensuring appropriate evaluation, recordation, and protection procedures are undertaken. Historical architectural evaluations were prepared by Preservation Architecture for the existing buildings located on the project site to determine the potential for listing on the California Register of Historical Resources (CRHR) (see Appendix D). The existing building at 429 University Avenue, which was built in 1927, has not been identified as a potential historical resource by the City or the state, nor is the building included in a historic district. Moreover, no architect, engineer, designer or builder of the original building has been identified. The exterior of the building has been extensively altered over time, such that the original façade and storefronts are entirely lost, and the architectural building form has lost its characteristic design and material integrity. The historical evaluation determined that the building does not have historical architectural or historical resource potential and is therefore not eligible for listing on the CRHR. The existing building at 425 University Avenue was constructed circa 1937 and has since been used for office and commercial uses. The original architects of the building at 425 University Avenue, Birge M. Clark and David B. Clark of Palo Alto, are recognized as local masters. However, the exterior of the building has been extensively altered over time, including the complete loss of the original façade and storefront. The building was evaluated for historical resource eligibility and although the building has the potential for significance under the CRHR, the loss of integrity of the structure renders it ineligible for listing on the CRHR. In addition to the historical architectural evaluations prepared by Preservation Architecture, a supplemental review of historic resources was completed by Carey & Co. Inc. Architecture (Appendix D). Carey & Co. responded to the City Council motion from May 4, 2015, which included several clarifying questions regarding historic resources and the proposed project’s potential effects on historic resources. On July 10, 2015, Carey & Co. conducted a walking tour of University Avenue between Cowper Street and Waverley Street, and Kipling Street between University Avenue and Lytton Avenue. During the walking tour, Carey & Co. observed the project site, its relationship to surrounding properties, noted the types of buildings and their architecture, and verified the integrity of historic resources on University Avenue and Kipling Street. Carey & Co. confirmed that the proposed project is not located in a designated historic district recognized by local, state or national historic registers. This statement is supported by the City Council Staff Report (dated April 6, 2015) and the City of Palo Alto’s historic inventory (which only includes National Register-listed Professorville Historic District and Ramona Street Architectural District). Carey and Co. found that a study area larger than the project site may be analyzed in order to evaluate potential direct and indirect impacts to nearby historic resources that are not part of the project site. A total of eight properties are included in the study area. Three historical resources were analyzed by Carey & Co. for potential impacts as a result of the proposed project: 423 University Avenue, 436-452 University Avenue and 443 Kipling Street. 423 University Avenue (Palo Alto Inventory, Category 3) is adjacent to the project site and 436-452 University Avenue (Palo Alto Inventory, Category 2) is located across University Avenue from the project site. 443 Kipling Street (Palo Alto Inventory, Category 3) is located across Kipling Street diagonally from the project site. Carey & Co. found that the proposed project would not have any impacts on 423 University Avenue with the application of standard code regulations for construction activities. Carey & Co. also found that the proposed project would not have any direct impacts on 436-452 University Avenue and 443 Kipling Street since the construction site is separated by streets and all construction activity would take place on the north and west side of the streets, away from these buildings. Environmental Checklist City of Palo Alto 429 University Avenue Initial Study Page 20 November 2014, updated JanuaryAugust 2015 The proposed project’s design, mass, scale, and use of materials could have an indirect impact on the integrity of historic resources. Integrity is the ability of a property to convey its historic significance through the retention of physical characteristics that justify its inclusion in local, state or national registers. There are seven aspects of integrity discussed in detail below: location, design, setting, materials, workmanship, feeling and association. Location Location is the place where the historic property was constructed or the place where the historic event occurred. The relationship between the property and its location is often important to understanding why the property was created or why something happened. The actual location of a historic property, complemented by its setting, is particularly important in recapturing the sense of historic events and persons. 423 University Avenue, 436-452 University Avenue and 443 Kipling Street would remain in their current locations. The proposed project would not have an impact on the location of these properties. Design Design is the combination of elements that create the form, plan, space, structure, and style of a property. It results from conscious decisions made during the original conception and planning of a property (or its significant alteration) and applies to activities as diverse as community planning, engineering, architecture, and landscape architecture. Design includes such elements as organization of space, proportion, scale, technology, ornamentation, and materials. The design of each property would not be affected by the proposed project. Setting Setting is defined as the physical environment of a historic property. The 400 block of University Avenue has changed over time, including previous demolitions and alterations to older buildings, such that the demolition of the subject properties and addition of the proposed project would not change the existing character of the block. University Avenue between Alma Street and Cowper Street is the center and retail core of downtown Palo Alto. Although a number of individual historical resources are located on the avenue, they do not form a historic district. Similar to Kipling Street, the proposed project would not substantially alter the physical environment of the individual historic resources on University Avenue such that their integrity would be compromised to the degree that they would lose their historic significance. Kipling Street serves as a transition between commercial University Avenue and northern residential neighborhoods of Palo Alto. The proposed project would not impact historic resources on Kipling Street directly since they are not immediately adjacent to the project site. However, potential indirect impacts to the setting of the historic properties on Kipling Street are discussed below. The overall setting of Kipling Street is defined by the properties on both sides of the street from the rear of the commercial buildings on University Avenue to Lytton Avenue. The setting of the historic properties has already been compromised in several ways. First, assuming that the street was once lined with residential structures on both the east and west sides of the street, only one altered structure with residential appearance (430 Kipling Street) remains on the west side. Second, the existing parking lot is a major intrusion on the setting of the block having removed buildings and eliminated relationships that buildings on one side of the street had to others on the opposite side. Therefore, the larger setting of the Kipling Street properties has been previously compromised. Third, while the group of buildings on Kipling Street may impart character to the street, as described in the Downtown Urban Design Plan, they do not appear to constitute a potential historic district whose resource setting may be affected by the proposed project. The proposed project would replace an existing commercial building and although larger in scale and height, it would not adversely impact the setting of the existing individual resources on Kipling, including 443 Kipling Street. Additionally, the proposed project would maintain the relationship between the commercial uses on University Avenue and the transitional state of Kipling Street. Environmental Checklist City of Palo Alto 429 University Avenue Initial Study Page 21 November 2014, updated JanuaryAugust 2015 Materials Materials are the physical elements that were combined or deposited during a particular period of time and in a particular pattern or configuration to form a historic property. The choice and combination of materials reveal the preferences of those who created the property and indicate the availability of particular types of materials and technologies. Indigenous materials are often the focus of regional building traditions and thereby help define an area's sense of time and place. A property must retain the key exterior materials dating from the period of its historic significance. The materials associated with each property would not change or be affected by the proposed project. Workmanship Workmanship is the physical evidence of the crafts of a particular culture or people during any given period in history or prehistory. It is the evidence of artisans' labor and skill in constructing or altering a building, structure, object, or site. Workmanship can apply to the property as a whole or to its individual components. It can be expressed in vernacular methods of construction and plain finishes or in highly sophisticated configurations and ornamental detailing. It can be based on common traditions or innovative period techniques. Workmanship is important because it can furnish evidence of the technology of a craft, illustrate the aesthetic principles of a historic or prehistoric period, and reveal individual, local, regional, or national applications of both technological practices and aesthetic principles. The workmanship evidenced in the buildings at 423 University Avenue, 436-452 University Avenue and 443 Kipling Street would remain embodied in the architectural elements and features of these buildings. The proposed project would not have an impact on the workmanship of the buildings. Feeling Feeling is a property's expression of the aesthetic or historic sense of a particular period of time. It results from the presence of physical features that, taken together, convey the property's historic character. The proposed project would not affect the physical features that convey the historic character of 423 University Avenue and 436-452 University Avenue. The same can be said of 443 Kipling Street. In both cases, the properties would continue to express their “aesthetic and historic sense.” Association Association is the direct link between an important historic event or person and a historic property. A property retains association if it is the place where the event or activity occurred and is sufficiently intact to convey that relationship to an observer. Like feeling, association requires the presence of physical features that convey a property's historic character. The historic significance of 423 University Avenue and 436-452 University Avenue is related to the commercial development of downtown Palo Alto, especially along University Avenue. The proposed project will not affect this relationship. 443 Kipling Street maintains a different relationship – that to the development of a residential neighborhood backing up to the commercial properties on University. Although the setting of Kipling Street has changed over time with fewer residential buildings on the street, 443 Kipling Street would continue to retain its residential character and relationship to the earlier residential development that took place on Kipling Street. Since the project site does not include any eligible historical resources or examples of major periods of California history or prehistory, no impacts to historical resources would be less than significantoccur. Environmental Checklist City of Palo Alto 429 University Avenue Initial Study Page 22 November 2014, updated JanuaryAugust 2015 Mitigation Measures Mitigation Measure CUL-1: Prior to commencement of site clearing and project grading, the project applicant shall retain a qualified archaeologist to train construction personnel regarding how to recognize cultural resources (such as structural features, unusual amounts of bone or shell, artifacts, human remains, or architectural remains) that could be encountered during construction activities. If artifacts or unusual amounts of shell or bone or other items indicative of buried archaeological resources or human remains are encountered during earth disturbance associated with the proposed project, the on-site contractor shall immediately notify the City of Palo Alto (City) and the Native American Heritage Commission as appropriate. All soil-disturbing work shall be halted within 100 feet of the discovery until a qualified archaeologist, as defined by the California Environmental Quality Act (CEQA) Guidelines (14 CCR 15000 et seq.) and the City, completes a significance evaluation of the finds pursuant to Section 106 of the National Historic Preservation Act. Any human remains unearthed shall be treated in accordance with California Health and Safety Code, Section 7050.5, and California Public Resources Code, Sections 5097.94, 5097.98, and 5097.99, which include requirements to notify the Santa Clara County Medical Examiner’s office and consult with Native American representatives determined to be the Most Likely Descendants, as appointed by the Native American Heritage Commission. Identified cultural resources shall be recorded on State Department of Parks and Recreation Form 523 (archaeological sites). Mitigation measures prescribed by the Native American Heritage Commission, the Santa Clara County Medical Examiner’s office, and any Native American representatives determined to be the Most Likely Descendants and required by the City shall be undertaken before construction activities are resumed. If disturbance of a project area cultural resource cannot be avoided, a mitigation program, including measures set forth in the City’s Cultural Resources Management Program and in compliance with Sections 15064.5 and 15126.4 of the CEQA Guidelines, shall be implemented. Significance after Mitigation Less than significant. F. GEOLOGY, SOILS, AND SEISMICITY Issues and Supporting Information Resources Would the project: Sources Potentially Significant Issues Potentially Significant Unless Mitigation Incorporated Less Than Significant Impact No Impact a) Expose people or structures to potential substantial adverse effects, including the risk of loss, injury, or death involving: i) Rupture of a known earthquake fault, as delineated on the most recent Alquist-Priolo Earthquake Fault Zoning Map issued by the State Geologist for the area or based on other substantial evidence of a known fault? Refer to Division of Mines and Geology Special Publication 42? 9 X ii) Strong seismic ground shaking? 3 (Map N-10), 9 X iii) Seismic-related ground failure, including liquefaction? 3 (Map N5), 12 X iv) Landslides? 3 (Map N5) X Environmental Checklist City of Palo Alto 429 University Avenue Initial Study Page 23 November 2014, updated JanuaryAugust 2015 Issues and Supporting Information Resources Would the project: Sources Potentially Significant Issues Potentially Significant Unless Mitigation Incorporated Less Than Significant Impact No Impact b) Result in substantial soil erosion or the loss of topsoil? 1, 9 X c) Result in substantial siltation? 1 X d) Be located on a geologic unit or soil that is unstable, or that would become unstable as a result of the project, and potentially result in on- or off-site landslide, lateral spreading, subsidence, liquefaction or collapse? 3 (Map N5), 9 X e) Be located on expansive soil, as defined in Table 18-1-B of the Uniform Building Code (1994), creating substantial risks to life or property? 3 (Map N5), 9 X f) Have soils incapable of adequately supporting the use of septic tanks or alternative waste water disposal systems where sewers are not available for the disposal of waste water? 1 X g) Expose people or property to major geologic hazards that cannot be mitigated through the use of standard engineering design and seismic safety techniques? 2, 9 X DISCUSSION Murray Engineers Inc. (Murray Engineers) prepared a geotechnical investigation report for the project site in September 2013 (see Appendix E). The geotechnical report identifies potential geologic hazards that may affect the project site and presents recommendations for design and construction of the project. Given the project site’s location in a seismically active area, there is potential for severe ground shaking during an earthquake. High levels of ground shaking during potential future earthquakes and soil conditions that may be unsuitable to support construction-related excavations and site improvements are typical issues of concern related to development in seismically active areas. These issues are routinely encountered in California, and there is no evidence that unique or unusual geologic hazards are present on site (e.g., mapped landslide, collapsible soils, lateral spread) that would require additional mitigation beyond what is already required as part of the City’s standard development approval processes. Seismic ground shaking and the presence of adverse soil conditions would be addressed through required compliance with the California Building Code (and local amendments) as well as incorporation of geotechnical recommendations into the project’s construction and design plans. The geotechnical report indicates the project site is located in an area where there have been historical occurrences of earthquake-induced liquefaction and there is the potential for “permanent earthquake-induced ground displacement.” The Association of Bay Area Governments indicates the site is in an area with a moderate chance of liquefaction. However, there are no active or potentially active faults that cross the project site, and the project site is not located within an Alquist-Priolo Fault Zone (USGS 2013). The closest active fault is the San Andreas Fault, which is located approximately 5.7 miles southwest of the site. It is the opinion of Murray Engineers that the potential for fault rupture at the site is very low. The project site is flat and is not located in an area susceptible to landslides. The Environmental Checklist City of Palo Alto 429 University Avenue Initial Study Page 24 November 2014, updated JanuaryAugust 2015 geotechnical report did not indicate that there are expansive soils, corrosive soils, and/or soils subject to settlement present. Soils found on the project site consist of layers of fine- and coarse-grained alluvium to a depth of 45 feet. The upper approximately 5 to 8 feet consist of very stiff to hard surficial silty clay, underlain by 4 to 6 feet of medium dense to very dense gravelly to silty sand, and then underlain by 20 to 25 feet of very stiff silty clay. The clay is underlain by medium dense to very dense clayey to silty sand to a depth of 45 feet. Murray Engineers conducted additional soil testing to determine the likelihood of liquefaction occurring. Based on their analysis, the silty sand was determined to be very dense and therefore likely too dense to be considered liquefiable. In addition, the report concluded the “site should have a sufficiently thick and relatively dense, non-liquefiable layer above the groundwater table capping the potentially liquefiable layers at greater depths to mitigate the potential for sand boils or surface venting during an earthquake.” All new construction is subject to the earthquake design parameters contained in Chapter 16, Section 1613, of the 2013 California Building Code, directed at minimizing seismic risk and preventing loss of life and property in the event of an earthquake. In addition, the City’s standard conditions of approval will ensure that potential impacts on erosion and soil remain less than significant. These conditions require the applicant to submit a final grading and drainage plan subject to review by the Department of Public Works prior to issuance of any grading and building permits. Requirements and standards of adequacy for the grading and drainage plans are contained in the PAMC. The project site would be connected to the City’s sewer system and would not involve use of septic tanks. Impacts to geologic resources and soils and impacts associated with geologic hazards would be less than significant. Mitigation Measures None required. G. GREENHOUSE GAS EMISSIONS Issues and Supporting Information Resources Would the project: Sources Potentially Significant Impacts Potentially Significant Unless Mitigation Incorporated Less Than Significant Impact No Impact a) Generate greenhouse gas emissions, either directly or indirectly, that may have a significant impact on the environment? 2, 6 X b) Conflict with any applicable plan, policy or regulation of an agency adopted for the purpose of reducing the emissions of greenhouse gases? 2, 6 X DISCUSSION In 2006, the State of California enacted Assembly Bill (AB) 32, the Global Warming Solutions Act. AB 32 requires reducing statewide GHG emissions to 1990 levels by 2020. The state’s plan for meeting the reduction target is outlined in the California Air Resources Board (CARB) Climate Change Scoping Plan (2008 Scoping Plan; CARB 2008). CARB’s 2008 Scoping Plan fact sheet states, “This plan calls for an ambitious but achievable reduction in California’s carbon footprint—toward a clean energy future. Reducing greenhouse gas emissions to 1990 levels means cutting approximately 30% from business-as-usual emissions levels projected for 2020, or about 15% from today’s levels. On a per-capita basis, that means reducing annual emissions of 14 tons of carbon dioxide for every man, woman and child in California down to about 10 tons per person by 2020.” CARB’s GHG emissions Environmental Checklist City of Palo Alto 429 University Avenue Initial Study Page 25 November 2014, updated JanuaryAugust 2015 inventory report found the total statewide GHG emissions in 2011 were equivalent to 448.1 million tons of CO2 (CARB 2013). Compared with the emissions in 2001, this is a 6% decrease. As described in Section C, Air Quality, the BAAQMD adopted the BAAQMD 2010 Guidelines, which establish screening criteria based on the size of a project to determine whether detailed modeling to estimate GHG emissions is necessary (BAAQMD 2010b). Projects that are smaller than the GHG screening criteria size are considered to have less than significant GHG emissions and would not conflict with existing California legislation adopted to reduce statewide GHG emissions. Table 3 presents GHG screening level examples taken from the BAAQMD 2010 Guidelines. Table 3 BAAQMD Operational GHG Screening Criteria Land Use Type Operational GHG Screening Size* Single-family residential 56 du Apartment, low-rise or condo/townhouse, general 78 du Apartment, mid-rise 87 du Condo/townhouse, general 78 du Regional shopping center 19 ksf Strip mall 19 ksf Hardware/paint store 16 ksf Daycare center 11,000 sf General office building 53,000 sf Medical office building 22,000 sf Office park 50,000 sf Quality restaurant 9,000 sf Source: BAAQMD 2010b, Table 3-1, Operational-Related Criteria Air Pollutant and Precursor Screening Level Sizes. Notes: GHG = greenhouse gas; du = dwelling unit; sf = square feet. * If the project size is less than the screening size, the project would have less than significant impacts. If the project is greater than the screening size, detailed project-specific modeling is required. The project would result in a net increase of 8,774 square feet of commercial and office space along with four new dwelling units; this is substantially below the BAAQMD screening thresholds of 53,000 square feet (office space), 19,000 square feet (commercial space) and 78 dwelling units (condo/townhouse) for operational GHG emissions. As the project is substantially smaller than the screening criteria size, GHG emissions associated with operation of the proposed project would remain below the BAAQMD thresholds. In addition, the project would comply with the green building requirements identified in Chapter 16.14 of the PAMC, including attainment of a minimum Build It Green score of 70 for the residential portion of the project. Project operation would not result in GHG emissions that would significantly affect the environment or conflict with applicable plans, policies, or regulations adopted for the purpose of reducing GHG emissions. The project would have less than significant impacts related to GHG emissions. Mitigation Measures None required. Environmental Checklist City of Palo Alto 429 University Avenue Initial Study Page 26 November 2014, updated JanuaryAugust 2015 H. HAZARDS AND HAZARDOUS MATERIALS Note: Some of the thresholds can also be dealt with under a topic heading of Public Health and Safety if the primary issues are related to a subject other than hazardous material use. Issues and Supporting Information Resources Would the project: Sources Potentially Significant Issues Potentially Significant Unless Mitigation Incorporated Less Than Significant Impact No Impact a) Create a significant hazard to the public or the environment through the routing transport, use, or disposal of hazardous materials? 1, 2, 10, 11, 12 X b) Create a significant hazard to the public or the environment through reasonably foreseeable upset and accident conditions involving the release of hazardous materials into the environment? 1, 2, 10, 11, 12 X c) Emit hazardous emissions or handle hazardous or acutely hazardous materials, substances, or waste within one-quarter mile of an existing or proposed school? 1, 2 X d) Construct a school on a property that is subject to hazards from hazardous materials contamination, emissions or accidental release? 1 X e) Be located on a site which is included on a list of hazardous materials sites compiled pursuant to Government Code Section 65962.5 and, as a result, would it create a significant hazard to the public or the environment? 1, 2, 10, 11, 12 X f) For a project located within an airport land use plan or, where such a plan has not been adopted, within two miles of a public airport or public use airport, would the project result in a safety hazard for people residing or working in the project area? 1 X g) For a project within the vicinity of a private airstrip, would the project result in a safety hazard for people residing or working the project area? 1 X h) Impair implementation of or physically interfere with an adopted emergency response plan or emergency evacuation plan? 1, 3 (Map N7) X i) Expose people or structures to a significant risk of loss, injury, or death involving wildland fires, including where wildlands are adjacent to urbanized areas or where residences are intermixed with wildlands? 3 (Map N7) X Environmental Checklist City of Palo Alto 429 University Avenue Initial Study Page 27 November 2014, updated JanuaryAugust 2015 Issues and Supporting Information Resources Would the project: Sources Potentially Significant Issues Potentially Significant Unless Mitigation Incorporated Less Than Significant Impact No Impact j) Create a significant hazard to the public or the environment from existing hazardous materials contamination by exposing future occupants or users of the site to contamination in excess of soil and ground water cleanup goals developed for the site? 1, 2, 10, 11, 12 X DISCUSSION Phase I environmental site assessments (ESAs) were prepared for the project site and include a general assessment of the nature and extent of past activities, if any, on the site that could have used hazardous materials, and whether the site appears to have evidence of soils or groundwater contamination. A Phase I ESA was prepared for the commercial buildings located at 429, 435, 441, and 447 University Avenue by Professional Service Industries Inc. in August 1999. In June 2010 an environmental transaction screen (ETS) for buildings located at 429–447 University Avenue was prepared by AEI to identify any potential environmental issues associated with past and present activities in the handling, storage, or disposal of hazardous materials. In addition, a follow-up Phase I ESA was prepared for 425 University Avenue and 450 Kipling Street3 by Transaction Management Corporation (TMC) in April 2014. The Phase I ESAs and ETS are included in Appendix F. Both of the Phase I ESAs and the ETS report indicate that due to the age of the buildings there is the potential for asbestos-containing materials (ACMs) and lead-based paint to be present. TMC recommends preparation of an operations and maintenance plan for ACMs given the potential for occurrence in the 425 University Avenue building. The 2014 Phase I ESA indicates that the property at 425 University Avenue is not on any state or federal list of potentially hazardous sites. In addition, the 2010 ETS and the 1999 Phase I ESA indicate that the project site does not contain a recognized environmental condition, as defined by the American Society for Testing and Materials (ASTM). Both reports conclude there also is no evidence of a recognized environmental condition off site that could impact the project site. In addition, the project site is not listed on the Spills, Leaks, Investigations, and Cleanups database and there was no evidence of soil or groundwater contamination. The project involves the demolition of two buildings and construction of a new building. Demolition activities could release hazardous building materials into the air. Construction equipment accessing the site would use hazardous and/or flammable materials including diesel fuel, gasoline, and other oils and lubricants. During project construction, there is the potential for the short-term use of hazardous materials/fuels; however, the use, storage, transport, and disposal of these materials would be required to comply with all existing local, state, and federal regulations. Operation of the proposed project would not include any uses that would require the transport, handling, or disposal of hazardous materials, other than typical household and landscaping materials. The types and quantities of these common household chemicals would not be substantial and would not pose a health risk to residents of the project or any adjacent uses. Groundwater was identified in the geotechnical investigation at depth of approximately 33.5 to 35 feet below existing grade level. It is not anticipated that construction of the subsurface garage would require dewatering due to the depth of groundwater; however, if required, the project applicant would comply with standard conditions of the City’s architectural review process, which require special procedures for dewatering. Specifically, the City’s Public Works Department, Water Quality Control Plan section, would require that prior to discharge of any water from construction dewatering, the water be tested for volatile organic compounds (VOCs; including ROGs) using U.S. Environmental Protection Agency Method 601/602. The analytical results of the VOC testing shall be transmitted to the San Francisco Bay Regional Water Quality Control Board (RWQCB). If the concentration of any VOC exceeds 5 micrograms per liter (5 parts per billion), the water may not be discharged to the storm drain system and an 3 450 Kipling Street is not part of the project. Environmental Checklist City of Palo Alto 429 University Avenue Initial Study Page 28 November 2014, updated JanuaryAugust 2015 Exceptional Discharge Permit for discharge to the sanitary sewer must be obtained from the RWQCB prior to discharge. Additionally, any water discharged to the storm drain system is required to be free of sediment. Based on the construction date of the existing buildings (1927), it appears that the buildings may contain ACMs and may contain lead-based paints. Lead-based paints could also be present and the light ballasts may be a source of polychlorinated biphenyls (PCBs). Therefore, demolition of the existing buildings could result in hazards related to the release or disposal of these hazardous materials. Mitigation Measure HAZ-1 would require surveys and proper disposal methods to ensure that impacts remain less than significant. There are no existing or proposed schools within one-quarter mile of the project site. The nearest school, Addison Elementary School, is located approximately 0.7 mile southwest of the project site. Therefore, no impacts to schools associated with hazardous materials at the project site would occur. There are no airports within 2 miles of the project site. The nearest airport is the Palo Alto Airport, which is located approximately 3.3 miles northeast of the site. Therefore, no impact related to safety hazards associated with aircraft would occur. The proposed project would not impair or interfere with the City’s Emergency Operations Plan. The nearest evacuation route to the project site is University Avenue. The project would not result in any changes to this evacuation route, would not substantially increase traffic or roadway congestion such that use of the evacuation route would be hindered, and would not otherwise impair implementation of the City’s Emergency Operations Plan. Therefore, no impact related to emergency response or evacuation would occur. The project site is located in a developed urban area that is not identified as a high or medium fire hazard area in the City’s Comprehensive Plan. Therefore, no impact related to fire risks would occur. Mitigation Measures Mitigation Measure HAZ-1: Prior to building demolition, the project applicant shall demonstrate to the satisfaction of the City of Palo Alto that a survey of the existing buildings has been conducted by a qualified environmental specialist who meets the requirements of the current U.S. Environmental Protection Agency regulations for suspected lead-containing materials (LCMs), including lead-based paint/coatings; asbestos containing materials (ACMs); and the presence of polychlorinated biphenyls (PCBs). Any demolition activities likely to disturb LCMs or ACMs shall be carried out by a contractor trained and qualified to conduct lead- or asbestos-related construction work. If found, LCMs and ACMs shall be disposed of in accordance with state and federal regulations, including the EPA’s Asbestos National Emissions Standards for Hazardous Air Pollutants, the Cal-OSHA Construction Lead Standard (CCR Title 8, Section 1432.1), and California Department of Toxic Substances Control and EPA requirements for disposal of hazardous waste. If PCBs are found, these materials shall be managed in accordance with the Metallic Discards Act of 1991 (California Public Resources Code, Sections 42160–42185) and other state and federal guidelines and regulations. Demolition plans and contract specifications shall incorporate any necessary abatement measures in compliance with the Metallic Discards Act, particularly Section 42175, Materials Requiring Special Handling, for the removal of mercury switches, PCB- containing ballasts, and refrigerants. Level of Significance after Mitigation Less than significant. Environmental Checklist City of Palo Alto 429 University Avenue Initial Study Page 29 November 2014, updated JanuaryAugust 2015 I. HYDROLOGY AND WATER QUALITY Issues and Supporting Information Resources Would the project: Sources Potentially Significant Issues Potentially Significant Unless Mitigation Incorporated Less Than Significant Impact No Impact a) Violate any water quality standards or waste discharge requirements? 1, 2, 3, 13, 14 X b) Substantially deplete groundwater supplies or interfere substantially with groundwater recharge such that there would be a net deficit in aquifer volume or a lowering of the local groundwater table level (e.g., the production rate of pre-existing nearby wells would drop to a level which would not support existing land uses or planned uses for which permits have been granted)? 1, 2, 3 (Map N2), 13, 14 X c) Substantially alter the existing drainage pattern of the site or area, including through the alteration of the course of a stream or river, in a manner which would result in substantial erosion or siltation on- or off-site? 1, 2, 13, 14 X d) Substantially alter the existing drainage pattern of the site or area, including through the alteration of the course of a stream or river, or substantially increase the rate or amount of surface runoff in a manner which would result in flooding on- or off-site? 1, 2, 13, 14 X e) Create or contribute runoff water which would exceed the capacity of existing or planned stormwater drainage systems or provide substantial additional sources of polluted runoff? 1, 2, 13, 14 X f) Otherwise substantially degrade water quality? 1, 2, 13, 14 X g) Place housing within a 100-year flood hazard area as mapped on a federal Flood Hazard Boundary or Flood Insurance Rate Map or other flood hazard delineation map? 1, 3 (Map N6) X h) Place within a 100-year flood hazard area structures which would impede or redirect flood flows? 1, 3 (Map N6) X i) Expose people or structures to a significant risk of loss, injury or death involve flooding, including flooding as a result of the failure of a levee or dam or being located within a 100- year flood hazard area? 1, 3 (Map N8) X j) Inundation by seiche, tsunami, or mudflow? 1, 3 (Map N6) X k) Result in stream bank instability? 1, 2 X DISCUSSION The project site is fully developed, and the proposed project would not substantially change the amount of impervious surface area on the project site, nor would the project rely on groundwater for its water supply. With Environmental Checklist City of Palo Alto 429 University Avenue Initial Study Page 30 November 2014, updated JanuaryAugust 2015 the exception of some street trees on University Avenue and Kipling Street, the existing site is composed of buildings and paved surface parking lots and thus is largely impervious. According to the Impervious Area Worksheet for Land Developments (included as Appendix G to this document) prepared for the project, the project site currently contains 11,000 square feet of impervious surface with the existing buildings and parking lot area. The project is proposing to maintain the same development footprint (0.252 acre). The project would not alter existing grades in the area and would not change drainage patterns or lead to increased erosion or sedimentation of nearby waterways. Groundwater was identified at a depth of approximately 33.5 to 35 feet below existing grade level. In addition, stormwater runoff water quality is regulated by the National Pollutant Discharge Elimination System (NPDES) Program to control and reduce pollutants to water bodies from surface water discharge. Locally, the NPDES project is administered by the Bay Area Regional Water Quality Control Board (RWQCB). The RWQCB worked with cities and counties throughout the region to prepare and adopt a Regional Municipal Stormwater Permit. This Regional Permit identifies minimum standards and provisions that the City of Palo Alto, as a permitee, must require of new development and redevelopment projects within the city limits. Compliance with the NPDES Permit is mandated by state and federal statutes. The proposed project would be required to comply with all city, state, and federal standards pertaining to stormwater run-off and water quality. Under the Regional Municipal Stormwater Permit, the San Francisco Bay RWQCB generally requires new development projects to implement Low Impact Design (LID) techniques to treat stormwater runoff. However, the regional permit also allows LID treatment reduction credits for three categories of “smart growth” projects – urban infill, high-density, and transit oriented development projects. These are called “Special Projects” in the regional permit, and are approved for reductions in the requirements for LID treatment in recognition of the fact that smart growth development projects can either reduce existing impervious surfaces or create less “accessory” impervious areas and automobile-related pollutant impacts. The RWCQB recognizes that these types of projects have inherent water quality and other environmental benefits. The project applicant has applied for and obtained a C.3 Special Project Category A determination based on the following: the project would preserve or enhance a pedestrian-oriented type of urban design, would be located in a Commercial downtown zone, would replace less than 0.5 acre of impervious surface area, would have minimal surface parking, and more than 85% of the site would be covered by the proposed building. Due to the small project site and its location in a developed urban commercial corridor, it would not be feasible to construct grassy swales or other LID features to treat stormwater. There is not sufficient space to accommodate biotreatment facilities or to route runoff to an appropriate discharge point. Since the project meets the criteria listed above, the project would receive 100% LID treatment reduction credit and be allowed to treat 100% of the amount of storm water runoff with non-LID treatment measures. Stormwater runoff from the site would be collected and piped to a mechanical device (manufactured by Contech Stormwater Solutions) which is an accepted storm filter treatment facility. The mechanical device would be located onsite and stormwater runoff would be treated prior to flowing by gravity into the street and ultimately into the City’s storm drain system. The applicant would also be required to enter into a maintenance agreement with the City to guarantee that the project provide the required maintenance and/or replacement of the device for the life of the project. By providing approved and appropriate stormwater runoff collection and conveyance, and ensuring long-term maintenance of the collection and conveyance infrastructure, the project would have less than significant impacts related to violating water quality standards or contributing substantial additional sources of polluted runoff. The proposed project includes a subsurface garage with a maximum depth of 27 feet below grade. Reducing the number of exposed parking spaces also reduces the potential for stormwater to carry pollutants such as litter and/or leaking motor fluids. Due to the depth of groundwater, dewatering is not anticipated; however, due to fluctuations in groundwater it is possible that construction activities could encounter groundwater. Since the garage would be designed to be watertight and no permanent dewatering system would be required, it is expected that the impact to groundwater flow would be less than significant. Environmental Checklist City of Palo Alto 429 University Avenue Initial Study Page 31 November 2014, updated JanuaryAugust 2015 The nearest surface water in the vicinity of the project site is San Francisquito Creek, located approximately 0.5 mile west of the site. Stormwater runoff is directed toward storm drain grates located in one covered parking space and in the adjacent alleyway that parallels the northwest boundary of the project site. The project site is located within Zone X on the Flood Insurance Rate Map Panel No. 06085C0010H (FEMA 2009). This indicates that the project site is not in a zone expected to be subject to inundation in a 100-year flood event. Additionally, the project site is not located within an area identified as a dam failure inundation area as shown on maps available from the Association of Bay Area Governments (ABAG 2003). The project site is not subject to flooding or inundation and construction of the project would result in no impacts associated with exposure of people to flood-related hazards. The project site is located in Downtown Palo Alto on relatively flat ground and is not near an open body of water or near a hillside; therefore, there is no risk for seiche, tsunami, or mudflow hazards. No impacts related to these hazards would result from implementation of the proposed project. Additionally, there are no streams within or adjacent to the site, and the project would have no impacts related to streambank stability. Mitigation Measures None required. J. LAND USE AND PLANNING Issues and Supporting Information Resources Would the project: Sources Potentially Significant Issues Potentially Significant Unless Mitigation Incorporated Less Than Significant Impact No Impact a) Physically divide an established community? 1, 2 X b) Conflict with any applicable land use plan, policy, or regulation of an agency with jurisdiction over the project (including, but not limited to the general plan, specific plan, local coastal program, or zoning ordinance) adopted for the purpose of avoiding or mitigating an environmental effect? 1, 2, 3, 4 X c) Conflict with any applicable habitat conservation plan or natural community conservation plan? 1, 2 X d) Substantially adversely change the type or intensity of existing or planned land use in the area? 1, 2, 3, 4 X e) Be incompatible with adjacent land uses or with the general character of the surrounding area, including density and building height? 1, 2 X f) Conflict with established residential, recreational, educational, religious, or scientific uses of an area? 1, 2 X g) Convert prime farmland, unique farmland, or farmland of statewide importance (farmland) to non-agricultural use? 1, 3 X DISCUSSION The proposed project, a 31,407-square-foot, four-story commercial, office, and residential building, is an allowed use as regulated by the City’s Zoning Ordinance and Comprehensive Plan (PAMC; City of Palo Alto 2007). The Environmental Checklist City of Palo Alto 429 University Avenue Initial Study Page 32 November 2014, updated JanuaryAugust 2015 project would replace two single-story buildings currently used for retail with the proposed mixed-use building. The increase from one story to four stories on the site would change the existing scale; however, buildings in the surrounding area include a modern four-story mixed-use office and retail building across the street, with ground floor retail and upper story offices. Larger mixed-use and office buildings are located farther east along University Avenue, including a six-story building and a three-story building on the corner of University Avenue and Cowper Street. The project would increase the existing retail, office, and residential land uses in the immediate vicinity and would not introduce any incompatible land uses. The Comprehensive Plan land use designation of the project site is Regional/Community Commercial, per the Comprehensive Plan. The Comprehensive Plan encourages mixed-use development in the project area through the following policies:  Policy L-4: Maintain Palo Alto’s varied residential neighborhoods while sustaining the vitality of its commercial areas and public facilities. Use the Zoning Ordinance as a tool to enhance Palo Alto’s desirable qualities.  Policy L-9: Enhance desirable characteristics in mixed use areas. Use the planning and zoning process to create opportunities for new mixed use development.  Policy L-19: Encourage a mix of land uses in all Centers, including housing and an appropriate mix of small-scale local businesses.  Policy L-23: Maintain and enhance the University Avenue/Downtown area as the central business district of the City, with a mix of commercial, civic, cultural, recreational and residential uses. Promote quality design that recognizes the regional and historical importance of the area and reinforces its pedestrian character. Since the project proposes a mixed-use development in an area where mixed-uses are encouraged and the project design reflects a pedestrian scale, the project would be consistent with the policies listed above. The zoning designation is Downtown Commercial with Pedestrian and Ground Floor Combining Districts (CD- C(P)(GF)). This zone’s regulations are set forth in PAMC Chapters 18.18 and 18.30. The CD district provides for a wide range of commercial uses serving City-wide and regional business and service needs, as well as residential uses and neighborhood service needs. The project would also include construction of two levels of underground parking and installation of new landscaping. The project is in compliance with the applicable CD-C (community) subdistrict zoning and parking regulations. The maximum proposed building height is 50 feet and the FAR would be 2.86. The maximum building height in this district is 50 feet. The base FAR in the CD-C district is 1.0; however, the FAR may be increased with TDRs and/or bonuses for seismic and historical rehabilitation upgrades, not to exceed a total site FAR of 3.0. The proposed project includes TDRs and bonuses to achieve the maximum allowable FAR of 2.86. The project would not conflict with existing zoning. In addition, the Pedestrian Shopping (P) and Ground Floor (GF) combining district regulations that apply to this site are intended to enhance the pedestrian environment through the continuity of retail stores and design windows in retail districts and allow only service-oriented commercial uses on the ground floor. The proposed project is designed to comply with the combining district regulations with ground-floor retail and façade details to enhance the pedestrian experience. In addition, the project would be consistent with the Context-Based Design Criteria for development in a commercial district, which promotes pedestrian oriented design that is compatible with adjacent development. The project site is surrounded by primarily mixed-use and commercial buildings along University Avenue, ranging in height from one to six stories. As described in Section A., Aesthetics, the proposed building would be larger in scale and mass than some of the adjacent buildings along Kipling Street; however, the project would be similar in scale and mass to other buildings in the vicinity along University Avenue in the Downtown area. In addition, the design of the building’s Kipling Street façade would reflect the smaller scale of the existing development along Kipling Street. The third floor of the building would be set back 10 feet from the alley property line, 7 feet, 6 inches from Kipling Street and 9 feet from University Avenue resulting in a scale more Environmental Checklist City of Palo Alto 429 University Avenue Initial Study Page 33 November 2014, updated JanuaryAugust 2015 visually compatible with surrounding buildings. The fourth floor of the building would be set back 10 feet from the alley property line, and 7 feet,12 feet, 9 inches from the Kipling Street property line, and 39 feet, 7 inches from the University Avenue property line, resulting in a street façade that would appear as a three-story building. The University Avenue façade is designed to respond not only to the buildings immediately adjacent and west of the subject property but to the taller, higher density development of the University Avenue Commercial District. The design of the proposed building is intended to minimize the potential for incompatibility with surrounding uses. In addition, as described in Section A., Aesthetics, the project design will be reviewed by the City’s Architectural Review Board to ensure that compatibility concerns are addressed and it does not degrade the existing visual character or quality of the site and its surroundings. The project would comply with all plans for conservation of biological resources, and would not impact farmland. See Sections B and D for further discussion of these topics. Mitigation Measures None required. K. MINERAL RESOURCES Issues and Supporting Information Resources Would the project: Sources Potentially Significant Issues Potentially Significant Unless Mitigation Incorporated Less Than Significant Impact No Impact a) Result in the loss of availability of a known mineral resource that would be of value to the region and the residents of the state? 1, 3 X b) Result in the loss of availability of a locally-important mineral resource recovery site delineated on a local general plan, specific plan or other land use plan? 1, 3 X DISCUSSION The City has been classified by the California Department of Conservation, Division of Mines and Geology, as a Mineral Resource Zone 1 (MRZ-1). This designation signifies that there are no aggregate resources in the area. The Division of Mines and Geology has not classified the City for other resources. There is no indication in the Comprehensive Plan that there are locally or regionally valuable mineral resources within the City. Therefore, construction and operation of the proposed mixed-use building on the currently developed project site would result in no impacts related to mineral resources. Mitigation Measures None required. L. NOISE Issues and Supporting Information Resources Would the project: Sources Potentially Significant Issues Potentially Significant Unless Mitigation Incorporated Less Than Significant Impact No Impact a) Exposure of persons to or generation of noise levels in excess of standards established in the local general plan or noise ordinance, or applicable standards of other agencies? 1, 2, 3, 15 X Environmental Checklist City of Palo Alto 429 University Avenue Initial Study Page 34 November 2014, updated JanuaryAugust 2015 Issues and Supporting Information Resources Would the project: Sources Potentially Significant Issues Potentially Significant Unless Mitigation Incorporated Less Than Significant Impact No Impact b) Exposure of persons to or generation of excessive ground-borne vibrations or ground-borne noise levels? 1, 2, 15 X c) A substantial permanent increase in ambient noise levels in the project vicinity above levels existing without the project? 1, 2, 15 X d) A substantial temporary or periodic increase in ambient noise levels in the project vicinity above levels existing without the project? 1, 15 X e) For a project located within an airport land use plan or, where such a plan has not been adopted, would the project expose people residing or working in the project area to excessive noise levels? 1, 2 X f) For a project within the vicinity of a private airstrip, would the project expose people residing or working in the project area to excessive noise levels? 1, 2 X g) Cause the average 24-hour noise level (Ldn) to increase by 5.0 decibels (dB) or more in an existing residential area, even if the Ldn would remain below 60 dB? 1, 2, 15 X h) Cause the Ldn to increase by 3.0 dB or more in an existing residential area, thereby causing the Ldn in the area to exceed 60 dB? 1, 2, 15 X i) Cause an increase of 3.0 dB or more in an existing residential area where the Ldn currently exceeds 60 dB? 1, 2, 15 X j) Result in indoor noise levels for residential development to exceed an Ldn of 45 dB? 1, 2, 15 X k) Result in instantaneous noise levels of greater than 50 dB in bedrooms or 55 dB in other rooms in areas with an exterior Ldn of 60 dB or greater? 1, 2, 15 X l) Generate construction noise exceeding the daytime background Leq at sensitive receptors by 10 dBA or more? 1, 2 X DISCUSSION Noise would be generated during the proposed demolition of the existing building and construction of the proposed mixed-use project. The magnitude of the construction noise would depend on the type of construction activity, the noise level generated by various pieces of construction equipment, site geometry (i.e., shielding from intervening structures), and the distance between the noise source and receiver. Construction noise levels are based on a U.S. Environmental Protection Agency study (EPA 1971), which measured average noise levels during construction stages for a variety of typical projects. Sound is measured in decibels (dB), with 0 dB corresponding roughly to the threshold of hearing and 60 dB corresponding roughly to the noise level of a typical conversation. Typically, a weighting system is applied to sound levels to more closely correlate sound levels with human perception, recognizing that humans are less Environmental Checklist City of Palo Alto 429 University Avenue Initial Study Page 35 November 2014, updated JanuaryAugust 2015 sensitive to sounds in frequency ranges below 1,000 hertz (Hz) and above 5,000 Hz. This system is called the A- weighted sound level, and is abbreviated as dBA. As shown in Table 4, average noise levels generated on a construction site could be as high as 89 dBA Leq at a distance of 50 feet during the loudest phases of construction. Typically, construction noise is cyclical in nature and noise levels vary throughout the day. All development in the City, including the proposed construction activities, must comply with the City’s Noise Ordinance (PAMC Chapter 9.10), which restricts the timing and overall noise levels associated with construction activity. Short-term temporary construction that complies with the Noise Ordinance would result in less-than- significant impacts to nearby land uses and sensitive receptors. The project is located in a busy commercial district with an active train station in the vicinity. Although there are residential uses in the project vicinity, the existing noise conditions are not quiet and the temporary construction activities will not create any new significant noise impacts. Table 4 Typical Noise Levels from Construction Activities Construction Activity Average Sound Level at 50 feet (dBA Leq) 1 Standard Deviation (dB) Ground Clearing 84 7 Excavation 89 6 Foundations 78 3 Erection 87 6 Finishing 89 7 Source: EPA 1971 1 Sound level with all pertinent equipment operating. The proposed project would be located on a site that is currently developed with two one-story retail buildings and is surrounded by primarily two-story buildings with ground floor retail and restaurant spaces on University Avenue and a mix of small-scale commercial/office as well as residential uses on Kipling Street. Residential land uses are located approximately 60 feet to the north and northwest. The proposed office building is not anticipated to result in significant levels of on-site noise or traffic noise because of the nature of the proposed land use and the relatively small size (which would generate a less than significant increase in traffic as discussed in Section P., below). The Environmental Noise Study for the project was prepared by Charles M. Salter Associates Inc. (Appendix H). This assessment found that existing noise levels in the project area range from 64 dB to 70 dB during the peak traffic hours and between 63 dB and 73 dB when measured as a day-night-level (DNL), which assigns a penalty to noises generated during nighttime hours to reflect heightened sensitivity to noise in those hours. Policy N-39 of the Palo Alto Comprehensive Plan requires that the average interior noise level in multi-family dwellings be limited to DNL 45 dB. However, the City also states that residences exposed to a DNL of 60 dB or greater should limit maximum instantaneous noise levels to 50 dB in bedrooms and 55 dB in other rooms. Since the existing noise levels in the project area exceed 60 dB, architectural upgrades (as detailed in Mitigation Measures NOI-1 and NOI-2) would be required to meet interior noise standards. Additionally, rooftop mechanical equipment noise from exhaust fans was analyzed, as shown in Table 5, to assess whether the equipment noise would comply with Section 9.19.040 of the City’s Noise Ordinance, which states: Environmental Checklist City of Palo Alto 429 University Avenue Initial Study Page 36 November 2014, updated JanuaryAugust 2015 “No person shall produce, suffer, or allow to be produced by any machine or device, or any combination of same, on commercial or industrial property, a noise level more than eight decibels above the local ambient at any point outside of the property plane.” Table 5 Predicted Mechanical Equipment Noise Levels Property Line Predicted Noise Level (dB) Criteria (dB) At Nearest Receiver At Property Plane North 49 65 57 East 47 58 56 South 48 69 54 West 49 68 54 Currently there are no adjacent receivers at or near the property plane that are 50 feet in height; therefore, adjacent receivers would not be exposed to noise levels in excess of the City’s standard due to rooftop mechanical equipment noise, as shown in Table 5. However, as shown in Table 5, noise levels at the property plane would be above the criteria; therefore, Mitigation Measure NOI-3 is required to reduce this potential impact to below a level of significance. Potential project-related noise effects from traffic were analyzed by comparing existing, future (existing plus cumulative growth), and estimated project-related traffic volumes, as provided by the traffic impact analysis prepared for the project by Hexagon Transportation Consultants (Appendix I). It was determined that the “future with project” traffic noise levels would increase by approximately 1 dBA along University Avenue and 2 dBA along Kipling Street. Based on the Federal Transit Administration noise impact criteria, a 2 dB increase in noise levels due to a project would result in a significant noise impact where the ambient noise levels without the project are in excess of 76 dB. Where noise levels are less than 76 dB, a project-generated noise level increase of more than 2 dB is required for a finding of significant noise impact. Since the ambient noise levels in the project area are less than 76 dB without the project, the maximum noise increase of 2 dBA would result in a less-than-significant impact to noise levels as a result of project generated traffic. The project site is not located within an airport land use plan or in the vicinity of a private airstrip. The closest airport is the Palo Alto Airport, which is located approximately 3.3 miles northeast of the site. There would be no impact associated with noise from planes. Mitigation Measures Mitigation Measure NOI-1: Residential Uses: Window and exterior door assemblies with Sound Transmission Class (STC) rating up to 45 and upgraded exterior walls shall be used in the residential portion of the proposed building to achieve the City’s maximum instantaneous noise guideline for residential uses. The City of Palo Alto shall ensure that these standards are met through review of building plans as a condition of project approval. Commercial Uses: Window and exterior door assemblies for the commercial portions of the building shall have a minimum STC rating of 32 at the corner of University Avenue and Kipling Street, and a minimum STC of 28 at all other commercial locations within the proposed building to comply with the State of California CalGreen noise standards (maximum interior noise level of 50 dB during the peak hour of traffic). The City of Palo Alto shall ensure that these standards are met through review of building plans as a condition of project approval. Mitigation Measure NOI-2: The residential portion of the proposed building shall have a ventilation or air- conditioning system to provide a habitable interior environment when windows are closed. Environmental Checklist City of Palo Alto 429 University Avenue Initial Study Page 37 November 2014, updated JanuaryAugust 2015 Mitigation Measure NOI-3: Noise levels from rooftop equipment shall be reduced to meet the City of Palo Alto Noise Ordinance requirements. An enclosure or other sound-attenuation measures at the exhaust fans shall be provided to reduce rooftop equipment noise is no greater than 8 dB above the existing ambient level at potential future neighboring buildings to meet the property plane noise limit. Use of quieter equipment than assumed in this analysis may support reduced mitigation, which shall be evaluated by a qualified acoustical consultant. Significance after Mitigation Less than significant. M. POPULATION AND HOUSING Issues and Supporting Information Resources Would the project: Sources Potentially Significant Issues Potentially Significant Unless Mitigation Incorporated Less Than Significant Impact No Impact a) Induce substantial population growth in an area, either directly (for example, by proposing new homes and businesses) or indirectly (for example, through extension of roads or other infrastructure)? 1, 2, 3 X b) Displace substantial numbers of existing housing, necessitating the construction of replacement housing elsewhere? 1, 2 X c) Displace substantial numbers of people, necessitating the construction of replacement housing elsewhere? 1, 2 X d) Create a substantial imbalance between employed residents and jobs? 1, 2 X e) Cumulatively exceed regional or local population projections? 1, 2 X DISCUSSION The project would replace two existing one-story retail buildings with a four-story mixed-use building that would include a net increase of 8,774 square feet of commercial and office space and four residential dwelling units. The increase of four residential units would not add substantial population, nor is the increased commercial or office space expected to induce substantial population growth. The addition of four dwelling units in the University Avenue/Downtown area would provide a small amount of housing in the Downtown area, thereby improving the jobs-housing balance in this employment center. The project would not displace any housing or people. Standard conditions of approval require fees to cover any increased need for housing. The City addresses the community’s cumulative affordable housing needs through the Affordable Housing Fund, which is a local housing trust fund that provides financial assistance for the development of housing affordable to very low, low, and moderate-income households within the City. The Affordable Housing Fund is made up primarily of two sub-funds composed of local sources of housing monies: the Commercial Housing Fund and the Residential Housing Fund. The Commercial Housing Fund is funded through fees paid under the requirements of Chapter 16.47 of the PAMC. Under this requirement, the project applicant would be required to pay into the City’s Affordable Housing Fund at the time that building permits are issued. This fee is currently set at $18.44 per square foot for nonresidential development and would be applied only to the new gross square footage of commercial space proposed to be constructed at the site. Environmental Checklist City of Palo Alto 429 University Avenue Initial Study Page 38 November 2014, updated JanuaryAugust 2015 The Residential Housing Fund is funded through the City’s Below-Market-Rate (BMR) Program, as expressed in Policy H-36 of the Housing Element and Chapter 18.14 of the PAMC. The BMR Program is intended to meet the City’s goal of retaining an economically balanced community. Specifically, residential projects with four or fewer dwelling units are exempt from the City’s BMR Program ordinance based on the City’s determination that construction of four or fewer units would not have a significant effect on affordable housing in the City, even in a cumulative context. As the project proposes construction of four residential units, it is exempt from the BMR program. With compliance with the PAMC and standard conditions of approval regarding payment of the Affordable Housing Fee, impacts would be less than significant and no mitigation is required. Mitigation Measures None required. N. PUBLIC SERVICES Issues and Supporting Information Resources Would the project: Sources Potentially Significant Issues Potentially Significant Unless Mitigation Incorporated Less Than Significant Impact No Impact a) Would the project result in substantial adverse physical impacts associated with the provision of new or physically altered governmental facilities, need for new or physically altered governmental facilities, the construction of which could cause significant environmental impacts, in order to maintain acceptable service ratios, response times or other performance objectives for any of the public services: Fire protection? Police protection? Schools? Parks? Other public facilities? 1, 2 1, 2 1, 2 1, 2 1, 2 X X X X X DISCUSSION The proposed project is located in an urban area that is currently served by the City Police and Fire Departments and the four proposed residential units would not cause a substantial increase in population that would demand additional services. In addition, the conditions of approval for the project contain requirements to address all fire prevention measures. Standard conditions of approval require fees to address any increased need for community facilities, schools, and housing. With payment of development impact fees for community facilities, schools, libraries, and parks, the project’s impact would be less than significant and no mitigation is required. Mitigation Measures None required. Environmental Checklist City of Palo Alto 429 University Avenue Initial Study Page 39 November 2014, updated JanuaryAugust 2015 O. RECREATION Issues and Supporting Information Resources Would the project: Sources Potentially Significant Issues Potentially Significant Unless Mitigation Incorporated Less Than Significant Impact No Impact a) Would the project increase the use of existing neighborhood and regional parks or other recreational facilities such that substantial physical deterioration of the facility would occur or be accelerated? 1, 2 X b) Does the project include recreational facilities or require the construction or expansion of recreational facilities which might have an adverse physical effect on the environment? 1, 2 X DISCUSSION The proposed project would construct a new mixed-use building with commercial and office space and four residential units replacing two existing retail buildings. The 8,774-square-foot increase in commercial and office space and the addition of four residential units are not expected to have a significant effect on existing recreational facilities. Development impact fees for parks and community facilities for the increase in floor area and residential units are required per City ordinance. Therefore, no impact would occur and no mitigation is required. Mitigation Measures None required. P. TRANSPORTATION AND TRAFFIC Issues and Supporting Information Resources Would the project: Sources Potentially Significant Issues Potentially Significant Unless Mitigation Incorporated Less Than Significant Impact No Impact a) Cause an increase in traffic which is substantial in relation to the existing traffic load and capacity of the street system (i.e., result in a substantial increase in either the number of vehicle trips, the volume to capacity ratio on roads, or congestion at intersections)? 1, 2, 17 X b) Exceed, either individually or cumulatively, a level of service standard established by the county congestion management agency for designated roads or highways? 1, 2, 17 X c) Result in change in air traffic patterns, including either an increase in traffic levels or a change in location that results in substantial safety risks? 1, 2 X d) Substantially increase hazards due to a design feature (e.g., sharp curves or dangerous intersections) or incompatible uses (e.g., farm equipment)? 1, 2 X Environmental Checklist City of Palo Alto 429 University Avenue Initial Study Page 40 November 2014, updated JanuaryAugust 2015 Issues and Supporting Information Resources Would the project: Sources Potentially Significant Issues Potentially Significant Unless Mitigation Incorporated Less Than Significant Impact No Impact e) Result in inadequate emergency access? 1, 2 X f) Result in inadequate parking capacity? 1, 2 X g) Conflict with adopted policies, plans, or programs supporting alternative transportation (e.g., pedestrian, transit & bicycle facilities)? 1, 2, 3 X h) Cause a local (City of Palo Alto) intersection to deteriorate below Level of Service (LOS) D and cause an increase in the average stopped delay for the critical movements by four seconds or more and the critical volume/capacity ratio (V/C) value to increase by 0.01 or more? 1, 2, 17 X i) Cause a local intersection already operating at LOS E or F to deteriorate in the average stopped delay for the critical movements by four seconds or more? 1, 2, 17 X j) Cause a regional intersection to deteriorate from an LOS E or better to LOS F or cause critical movement delay at such an intersection already operating at LOS F to increase by four seconds or more and the critical V/C value to increase by 0.01 or more? 1, 2, 17 X k) Cause a freeway segment to operate at LOS F or contribute traffic in excess of 1% of segment capacity to a freeway segment already operating at LOS F? 1, 2, 17 X l) Cause any change in traffic that would increase the Traffic Infusion on Residential Environment (TIRE) index by 0.1 or more? 1, 2, 17 X m) Cause queuing impacts based on a comparative analysis between the design queue length and the available queue storage capacity? Queuing impacts include, but are not limited to, spillback queues at project access locations; queues at turn lanes at intersections that block through traffic; queues at lane drops; queues at one intersection that extend back to impact other intersections, and spillback queues on ramps. 1, 2, 17 X n) Impede the development or function of planned pedestrian or bicycle facilities? 1, 2, 3 X o) Impede the operation of a transit system as a result of congestion? 1, 2, 17 X p) Create an operational safety hazard? 1, 2 X DISCUSSION Environmental Checklist City of Palo Alto 429 University Avenue Initial Study Page 41 November 2014, updated JanuaryAugust 2015 Hexagon Transportation Consultants, Inc. prepared the Transportation Impact Analysis for 429 University Avenue Mixed-Use (Transportation Impact Analysis; Hexagon 2014, included in Appendix I). The analysis was completed in a manner consistent with other transportation impact studies in the City of Palo Alto and the Santa Clara Valley Transportation Authority (VTA) Traffic Impact Analysis guidelines. This includes use of the level of service (LOS) methodology described in Chapter 16 of the 2000 Highway Capacity Manual (2000 HCM; TRB 2000) for signalized intersections, use of the LOS methodology described in Chapter 17 of the 2000 HCM for unsignalized intersections, and use of the methodologies and standards described in the VTA 2013 Congestion Management Plan (CMP) for intersections included in the CMP (VTA 2013). The magnitude of traffic generated by the proposed project was estimated by Hexagon by applying applicable trip generation rates to the existing and proposed building. These calculations (see Table 6) are based on the trip generation rates published in the Institute of Transportation Engineers (ITE) Trip Generation Manual, ninth edition (ITE 2012). The project would replace existing retail/restaurant space of the same size; therefore, trip generation from the first floor retail/restaurant space is excluded from the analysis. In addition, the rooftop office/lunchroom is intended for use by office employees and it therefore included in the office space calculation for trip generation purposes only. The trip generation estimates do not reflect potential reductions from the robust transit, bicycle, and pedestrian access at the project location. In this respect, the project trip generation estimates are conservative. Table 6 Project Trip Generation Land Use Type Size Daily Rate Daily Trips AM Peak Hour PM Peak Hour Rate1 In Out Total Rate1 In Out Total General Office 12.603 ksf 6.65 139 1.56 17 2 20 1.49 3 16 19 Apartment 4 du 11.03 27 0.51 0 2 2 0.62 1 1 2 Net Project Trips 166 17 4 22 4 17 21 Source: Hexagon 2014. 1 Trip rates based on ITE 2012, Office (710), Apartment (230). ksf = 1,000 square feet; du = dwelling units The proposed project is calculated to cause 22 new AM peak hour trips and 21 new PM peak hour trips. Hexagon applied the project’s trip generation and trip distribution estimates to each of the study intersections to determine whether the project would result in a significant change in LOS at any location. The Transportation Impact Analysis evaluated the following five intersections: 1. University Avenue and Kipling Street 2. Lytton Avenue and Kipling Street 3. University Avenue and Middlefield Road 4. Lytton Avenue and Middlefield Road 5. Lytton Avenue and Alma Street The project would create a significant adverse impact on traffic conditions at a signalized intersection in the City of Palo Alto if for either peak hour: 1. The level of service at the intersection degrades from an acceptable LOS D or better under no project conditions to an unacceptable LOS E or F under project conditions, or Environmental Checklist City of Palo Alto 429 University Avenue Initial Study Page 42 November 2014, updated JanuaryAugust 2015 2. The level of service at the intersection is an unacceptable LOS E or F under no project conditions and the addition of project trips causes both the critical-movement delay at the intersection to increase by 4 seconds or more and the critical-movement volume-to-capacity ratio (V/C) to increase by .01 or more. An exception to this rule applies when the addition of project traffic reduces the amount of average delay for critical movements (i.e. the change in average delay for critical movements is negative). In this case, the threshold of significance is an increase in the critical V/C value by .01 or more. The results of the LOS analysis are shown in Table 7. Table 7 Project Effects on LOS and Delay Intersection (control) Peak Hour Average Delay (in seconds) and LOS Existing Existing Plus Project ∆ Critical Delay ∆ Critical V/C Cumulative No Project Cumulative Plus Project ∆ Critical Delay ∆ Critical V/C 1. University Avenue and Kipling Street (Signal) AM 9.5 A 9.7 A 0.1 0.003 10.6 B 10.7 B 0.2 0.004 PM 9.9 A 10.6 B 0.1 0.006 10.7 B 11.4 B 0.2 0.008 2. Lytton Avenue and Kipling Street (TWSC) AM 17.6 C 17.7 C -- -- 22.9 C 23.0 C -- -- PM 15.0 B 15.1 C -- -- 18.6 C 19.1 C -- -- 3. University Avenue and Middlefield Road (Signal) AM 28.2 C 28.2 C 0.0 0.001 28.6 C 28.6 C 0.0 0.001 PM 31.3 C 31.3 C 0.0 0.000 260.5 F 260.3 F 0.0 0.000 4. Lytton Avenue and Middlefield Road (Signal) AM 30.6 C 30.6 C 0.0 0.001 36.1 D 36.1 D 0.1 0.001 PM 37.0 D 37.0 D 0.0 0.001 158.5 F 158.8 F 0.1 0.001 5. Lytton Avenue and Alma Street (Signal) AM 18.0 B 18.1 B 0.2 0.002 18.6 B 18.7 B 0.2 0.003 PM 20.9 C 21.0 C 0.2 0.002 23.6 C 23.8 C 0.2 0.002 TWSC = two-way stop control Bold indicates a substandard level of service. The results in Table 7 show that all of the intersections would continue to operate at acceptable levels of service (LOS D or better) during both the AM and PM peak hours of traffic under existing plus project conditions. The results in Table 7 also show that two of the signalized study intersections (University Avenue & Kipling Street and Lytton Avenue & Alma Street) would continue to operate adequately (LOS D or better) under cumulative plus project conditions. Two other signalized intersections (University Avenue & Middlefield Road and Lytton Avenue & Middlefield Road) are expected to operate at unacceptable levels of service (LOS F) under cumulative conditions both with and without the project. The project traffic would not cause a significant impact on the operation of these intersections, based on the significance criteria described above. As shown in Table 7, project traffic would only increase the critical delay by 0.1 second and the critical V/C value by 0.001, which are less than the significance thresholds of 4 seconds and 0.01, respectively. Environmental Checklist City of Palo Alto 429 University Avenue Initial Study Page 43 November 2014, updated JanuaryAugust 2015 Pedestrian, Bicycle, and Transit Facilities The Transportation Impact Analysis conducted by Hexagon also considered impacts to pedestrian, bicycle, and transit facilities. The project location is approximately 0.5 miles from the Caltrain station and transit center and in a pedestrian and bicycle friendly downtown area, and the underground parking garage is proposed to include bike lockers and a shower room for employees. It is reasonable to assume that some employees would utilize transit or bicycles. Due to the project size, it is unlikely to produce significant bicycle trips or pedestrian trips or impact the nearby trains and buses. It is expected that these additional trips could easily be accommodated by the existing bicycle, pedestrian, and transit facilities. Site Access and Onsite Circulation Access to the alley adjacent to the site (Lane 30) would be assisted by breaks in traffic on Waverly Street created by the nearby traffic signals at Lytton Avenue and University Avenue. In the event that a vehicle making a right turn out of the alley onto Kipling Street encountered a significant queue, the driver might choose to make a left turn onto Kipling Street and then onto Lytton Avenue to circle around the block. Such maneuvers are common in downtown settings during commute periods. Based on the estimated traffic generated during the peak periods, it is anticipated that the project’s garage access to and from Lane 30 at Waverly and Kipling Streets, respectively, would operate acceptably and would be typical of a development in an urban setting with underground parking. To ensure safety for vehicles using the parking garage, Mitigation Measure TRANS-1 requires that mirrors and/or a warning light be installed at garage entrance/exit. Truck access and loading would be provided adjacent to the project site via the alley (Lane 30). The alley is 20 feet in width and truck loading requires a width of 10 feet, which leaves the remaining 10 feet available for vehicles to pass in this one-way alley. The alley currently provides adequate truck access for other adjacent businesses, and it is expected that it would provide adequate access for the proposed project as well since the width of the alley would remain the same. Adequate corner sight distance is required at the exit of the alley to ensure that drivers can see approaching vehicles on Kipling Street. Sight distance is typically measured approximately 10 feet back from the traveled way. The proposed project would provide a 4-foot setback from the edge of the alley. The project would also replace the large street tree nearest this corner which would improve the visibility of the roadway. The combination of the setback and the tree removal is expected to provide adequate visibility of other vehicles and pedestrians. Hexagon also prepared a review of traffic operations into and out of the alley adjacent to the site (Lane 30), which is included in Appendix I. Lane 30 runs between Waverley Street and Kipling Street and is designed for one-way traffic, with vehicles entering from Waverley Street and driving eastbound to exit onto Kipling Street. There is a loading zone along a portion of the northern side of the alley near Waverley Street and 18 total parking spaces along the southern side. The available parking is used primarily by employees at the businesses with doors onto the alley. The northern side of the alley has a few dumpsters for the adjacent businesses; these dumpsters still leave at least 15 feet for a traveled way. The total clearspace in the alley varies in width from 20 feet building-to- building near Waverley, to approximately 40 feet along 415-423 University Avenue. Observations of traffic activity in the alley were conducted by Hexagon on Thursday, June 11, 2015 and traffic counts were conducted on Thursday, June 18, 2015. The counts showed that the alley carried 68 cars and light trucks, 7 heavy trucks, 16 bicycles, and 108 pedestrian trips between the hours of 6 AM and 8 PM (daylight hours). Observations showed that between the hours of 9 AM and 4 PM, pedestrians accounted for 56% of trips into and out of the alley, passenger vehicles accounted for 31%, and delivery vehicles accounted for 10%. Both pedestrians and vehicles used the alley as a shortcut (i.e., traveled from one end to the other) as well as to access businesses located off of the alley. While some delivery trucks were observed using the loading zone, several Environmental Checklist City of Palo Alto 429 University Avenue Initial Study Page 44 November 2014, updated JanuaryAugust 2015 double parked to make their deliveries or stopped in the No Parking zone near Kipling Street. Vehicles parked in the No Parking zone generally cut the available width of the alley in half, from 20 feet to 10 feet. While most of the vehicles using the parking spaces along the southern side of the alley entered from Waverley Street and left via Kipling Street, most of the vehicles parking behind the 429-447 University Avenue building entered the alley from Kipling Street, against a One Way sign. Most of the vehicles entering the wrong direction approached the alley from southbound Kipling Street. Coming from that direction, the signage indicating that the alley is one way is not prominent. The entrance to the alley at Waverley Street has good visibility for vehicles turning off of Waverley. Parked cars along the southbound side of Kipling Street were the main factor limiting the visibility of vehicles exiting the alley. Two large street trees adjacent to the curb cut further obstructed drivers’ views onto Kipling Street. The proposed project would include removal of the southern tree, to be replaced by a narrower tree approximately 15 feet back from the property line and curb cut, eliminating the visual obstruction for drivers looking to their right as they exit the alley. The corner of the proposed building would improve the sight lines onto Kipling Street, as the building would obstruct less than the existing street parking and street trees, and visibility of approaching vehicles would be very similar on both the driver’s left and right. Drivers exiting the alley would be likely to be driving down the center of the alley, which gives them about 7 feet of clearance on each side. This clear space allows view of pedestrians on the sidewalk. Despite the sight distance challenges, under existing conditions, drivers appeared to have no difficulty safely turning out of the alley onto Kipling Street. Vehicles entering right-angled parking spaces along the alley have ample space to turn, even with the dumpsters lining some portions of the alley. The proposed project would similarly have ample space for drivers to enter and exit the underground parking garage. The alley would be used by future building tenants accessing the underground parking garage in the same way that it is currently used. There is no potential impact from the proposed building on the operation of the alley, as it would continue to operate as it does currently. The onsite circulation was reviewed in accordance with generally accepted traffic engineering standards. Generally, the proposed plan would provide one main drive aisle that would lead to an underground parking structure. Parking is shown at 90 degrees to the main drive aisle. This drive aisle makes several 90 degree turns to spiral down to the farthest parking spaces. The City parking facility design standards specify a minimum width of 16 feet for two-way underground ramps; 25 feet for two-way drive aisles lined with 8.5 foot wide, 90 degree spaces; and maximum slope of 2% adjacent to accessible parking spaces. Additionally, bike lockers require a five foot aisle in front of the door openings. The proposed parking plan meets these minimum specifications, as well as providing the minimum dimensions for standard, accessible, and van-accessible spaces. However, due to the limited footprint of the underground parking, vehicles are required to navigate tight 90 degree turns near the ends of both ramps and the middle of the lower ramp, where sight lines may be restricted. To ensure safety for vehicles using the parking garage, Mitigation Measure TRANS-2 requires that mirrors be installed in the parking garage to provide adequate site distance. Parking The project was also found to meet the applicable parking requirements of the PAMC. Specifically, the PAMC requires that the project provide one parking space for every 250 square feet of new commercial space and two spaces for each of the residential units plus guest spaces (one space plus 10%). The proposed project would require 82 81.6 parking spaces for 20,407 square feet of commercial use and 10 9.4 parking spaces for four residential units, for a total of 92 91 parking spaces. However, the property was previously assessed and paid in- lieu fees for 37 parking spaces in the University Avenue Parking Assessment District and is eligible to receive 5,000 square feet of TDRs exempted from parking (equivalent to 20 parking spaces). Based on these adjustments, the project is required to provide a total of 35 34 vehicle parking spaces. The project proposes to include a total of Environmental Checklist City of Palo Alto 429 University Avenue Initial Study Page 45 November 2014, updated JanuaryAugust 2015 40 parking spaces, exceeding the parking requirement by five six spaces. The 40 parking spaces would be provided in the two-level underground parking garage. The project would also meet the applicable bicycle parking requirements. PAMC Section 18.52.040 requires 1 bicycle space per 2,500 square feet of gross floor area, with a mix of 80% for long-term parking and 20% for short-term parking. In addition, 4 long-term bicycle spaces (1 per unit) are required for the residential units. The project is required to provide 13 total bicycle parking spaces. As reflected in the site plans, the project proposes to provide 7 long-term bicycle parking spaces within the underground parking garage and 6 short-term bicycle parking spaces near the entrances of the building on University Avenue and Kipling Street. The bicycle parking spaces provided on the project site meet the requirements of Ordinance 18.52.040 and follow layout requirements of PAMC Section 18.54.060. While this project does not include an explicit transportation demand management (TDM) plan, several elements common to TDM are present. Most importantly, the project is located in a transit-rich and pedestrian friendly location. Second, the project proposes to include both bicycle lockers and a restroom with a shower. Both of these features should result in some reduction in automobile trips generated by the project and reduce the amount of parking needed by employees. In addition, the project is in a good location for transit-related TDM strategies that may be implemented by future tenants, such as Caltrain and VTA Go Passes or reimbursement of transit fares. However, due to the small project trip generation, a TDM plan is not necessary to reduce peak hour trips. Mitigation Measures Mitigation Measure-TRANS-1: Mirrors shall be installed at the parking garage driveway to allow drivers to see when a pedestrian or vehicle is approaching in Lane 30. Mitigation Measure-TRANS-2: Mirrors shall be installed at each turn within the parking garage to provide adequate sight distance. Significance after Mitigation Less than significant. Q. UTILITIES AND SERVICE SYSTEMS Issues and Supporting Information Resources Would the project: Sources Potentially Significant Issues Potentially Significant Unless Mitigation Incorporated Less Than Significant Impact No Impact a) Exceed wastewater treatment requirements of the applicable Regional Water Quality Control Board? 1, 2 X b) Require or result in the construction of new water or wastewater treatment facilities or expansion of existing facilities, the construction of which could cause significant environmental effects? 1, 2 X c) Require or result in the construction of new 1, 2 X Environmental Checklist City of Palo Alto 429 University Avenue Initial Study Page 46 November 2014, updated JanuaryAugust 2015 Issues and Supporting Information Resources Would the project: Sources Potentially Significant Issues Potentially Significant Unless Mitigation Incorporated Less Than Significant Impact No Impact storm water drainage facilities or expansion of existing facilities, the construction of which could cause significant environmental effects? d) Have sufficient water supplies available to serve the project from existing entitlements and resources, or are new or expanded entitlements needed? 1, 2 X e) Result in a determination by the wastewater treatment provider which serves or may serve the project that it has inadequate capacity to serve the project’s projected demand in addition to the provider’s existing commitments? 1, 2 X f) Be served by a landfill with sufficient permitted capacity to accommodate the project’s solid waste disposal needs? 1, 2 X g) Comply with federal, state, and local statutes and regulations related to solid waste? 1, 2 X h) Result in a substantial physical deterioration of a public facility due to increased use as a result of the project? 1, 2 X DISCUSSION The proposed project would not significantly increase the demand on existing utilities and service systems, or use resources in a wasteful or inefficient manner. Standard conditions of approval require the applicant to submit calculations by a registered civil engineer to show that the on-site and off-site water, sewer, and fire systems are capable of serving the needs of the development and adjacent properties during peak flow demands. The project would tie into the City’s existing water, wastewater, and storm drain infrastructure and would not require the construction of new water or wastewater treatment facilities. In addition, the project would comply with the green building requirements set forth in the California Green Building Code and the City’s Build It Green program. This would ensure that water conservation and solid waste reduction measures are included in the project to reduce demands for utility services. The project’s impacts on utility services would be less than significant and no mitigation is required. Mitigation Measures None required. R. MANDATORY FINDINGS OF SIGNIFICANCE Issues and Supporting Information Resources Would the project: Sources Potentially Significant Issues Potentially Significant Unless Mitigation Incorporated Less Than Significant Impact No Impact Environmental Checklist City of Palo Alto 429 University Avenue Initial Study Page 47 November 2014, updated JanuaryAugust 2015 Issues and Supporting Information Resources Would the project: Sources Potentially Significant Issues Potentially Significant Unless Mitigation Incorporated Less Than Significant Impact No Impact a) Does the project have the potential to degrade the quality of the environment, substantially reduce the habitat of a fish or wildlife species, cause a fish or wildlife population to drop below self-sustaining levels, threaten to eliminate a plant or animal community, reduce the number or restrict the range of a rare or endangered plant or animal or eliminate important examples of the major periods of California history or prehistory? 1, 2 X b) Does the project have impacts that are individually limited, but cumulatively considerable (“cumulatively considerable” means that the incremental effects of a project are considerable when viewed in connection with the effects of past projects, the effects of other current projects, and the effects of probable future projects)? 1, 2 X c) Does the project have environmental effects which will cause substantial adverse effects on human beings, either directly or indirectly? 1, 2 X DISCUSSION The proposed project would not have an impact on fish or wildlife habitat, nor would it impact cultural or historic resources with mitigation as described in Sections D and E. As described in Section A, Aesthetics, the proposed use is appropriate for the site and although the project would alter the visual character of the site, the building has been designed to ensure that it does not result in an adverse visual impact. The project’s impacts would all be reduced to below a level of significance through implementation of the mitigation measures described in the previous sections. The project would therefore not result in any cumulatively considerable impacts. There is nothing in the nature of the proposed development and property improvements that would have a substantial adverse effect on human beings, or other life or environmental impacts once mitigation is implemented to reduce potential impacts from hazardous materials and noise as described in Sections H and L. Environmental Checklist City of Palo Alto 429 University Avenue Initial Study Page 48 November 2014, updated JanuaryAugust 2015 III SOURCE REFERENCES SOURCES (CHECKLIST KEY) 1. Project Planner’s knowledge of the site and the proposed project. 2. Project Plans, updated 2015 (Appendix A) 3. Palo Alto Comprehensive Plan 1998–2010 (City of Palo Alto 2007) 4. Palo Alto Municipal Code, Title 18, Zoning Ordinance 5. Palo Alto Municipal Code, Section 8.10.030, Tree Technical Manual 6. Air Quality Modeling Results, 2014 (Appendix B) 7. Cultural Resources Memorandum (Appendix C) 8. Historic Architectural Evaluations, 2014, updated 2015 (Appendix D) 9. Geotechnical Investigation, 2013 (Appendix E) 10. Phase I ESA 425 University Avenue and 450 Kipling Street, 2014 (Appendix F) 11. Phase I ESA for the Commercial Buildings, 1999 (Appendix F) 12. Environmental Transaction Screen, 429–447 University Avenue, 2010 (Appendix F) 13. Impervious Area Worksheet for Land Developments, 2014 (Appendix G) 14. Special Projects Worksheet, 2014 (Appendix G) 15. Environmental Noise Study, 2014 (Appendix H) 16. Palo Alto Municipal Code, Section 9.10, Noise Ordinance 17. Traffic Impact Analysis, 2014, updated 2015 (Appendix I) 17.18. Shadow Study, 2015 (Appendix J) REFERENCES CITED 14 CCR 15000–15387 and Appendices A–L. Guidelines for Implementation of the California Environmental Quality Act, as amended. ABAG (Association of Bay Area Governments). 2003. “Dam Failure Inundation Hazard Map for Palo Alto/Stanford.” http://www.abag.ca.gov/bayarea/eqmaps/dfpickc.html. BAAQMD (Bay Area Air Quality Management District). 2006. Bay Area 2005 Ozone Strategy. Adopted January 4, 2006. http://www.baaqmd.gov/~/media/Files/Planning%20and%20 Research/Plans/2005%20Ozone%20Strategy/adoptedfinal_vol1.ashx. BAAQMD. 2010a. Bay Area 2010 Clean Air Plan. September 15, 2010. http://www.baaqmd.gov/~/media/Files/Planning%20and%20Research/Plans/2010%20Clean%20Air%20P lan/CAP%20Volume%20I%20%20Appendices.ashx. BAAQMD. 2010b. Bay Area Air Quality Management District California Environmental Quality Act Air Quality Guidelines. May 2010. http://www.baaqmd.gov/~/media/Files/Planning%20and%20Research/CEQA/Draft_BAAQMD_CEQA_ Guidelines_May_2010_Final.ashx?la=en. California Department of Conservation. 2011. Santa Clara County Important Farmland Map 2010. California Department of Conservation, Division of Land Resource Protection, Farmland Mapping and Monitoring Program. June 2011. California Public Resources Code, Chapter 8, Z’Berg-Nejedly Forest Practice Act of 1973, Article 2, Definitions, Section 4526, “Timberland.” California Public Resources Code, Article 3, Definitions, Section 12220(g), “Forest land.” California Public Resources Code, Sections 42160–42185. Metallic Discards Act of 1991. Environmental Checklist City of Palo Alto 429 University Avenue Initial Study Page 49 November 2014, updated JanuaryAugust 2015 CARB (California Air Resources Board). 2008. Climate Change Scoping Plan: A Framework for Change. December 2008. http://www.arb.ca.gov/cc/scopingplan/document/scopingplandocument.htm. CARB. 2013. “California Greenhouse Gas Emissions for 2000 to 2011 – Trends of Emissions and Other Indicators.” October 2, 2013. http://www.arb.ca.gov/cc/inventory/data/data.htm. City of Palo Alto. 2007. Palo Alto Comprehensive Plan. July 17, 2007. http://www.cityofpaloalto.org/gov/topics/projects/landuse/compplan.asp. EPA (U.S. Environmental Protection Agency). 1971. Noise from Construction Equipment and Operations, Building Equipment and Home Appliances. Prepared by Bolt, et.al., Bolt, Beranek & Newman, Boston, MA. FEMA (Federal Emergency Management Agency). 2009. Flood Insurance Rate Map, Santa Clara County, California. Map Number 06085C0010H. May 18, 2009. PAMC (Palo Alto Municipal Code). http://www.cityofpaloalto.org/gov/depts/clk/municode.asp. USGS (U.S. Geological Survey). 2013. USGS Geologic Hazards Science Center – U.S. Seismic Design Maps webpage with seismic design value application. Accessed September 25, 2013. http://geohazards.usgs.gov/designmaps/us/application.php. REPORT PREPARERS DUDEK 465 Magnolia Avenue Larkspur, California 94939 Heather Martinelli, AICP Katherine Waugh, AICP Christine Kronenberg, AICP Christine Wolfe Environmental Checklist City of Palo Alto 429 University Avenue Initial Study Page 50 November 2014, updated JanuaryAugust 2015 IV DETERMINATION On the basis of this initial evaluation: I find that the proposed project COULD NOT have a significant effect on the environment, and a NEGATIVE DECLARATION will be prepared. I find that although the proposed project could have a significant effect on the environment, there will not be a significant effect in this case because revisions in the project have been made by or agreed to by the project proponent. A MITIGATED NEGATIVE DECLARATION will be prepared. X I find that the proposed project MAY have a significant effect on the environment, and an ENVIRONMENTAL IMPACT REPORT is required. I find that the proposed project MAY have a “potentially significant impact” or “potentially significant unless mitigated” impact on the environment, but at least one effect: 1) has been adequately analyzed in an earlier document pursuant to applicable legal standards, and 2) has been addressed by mitigation measures based on the earlier analysis as described on attached sheets. An ENVIRONMENTAL IMPACT REPORT is required, but it must analyze only the effects that remain to be addressed. I find that although the proposed project could have a significant effect on the environment, because all potentially significant effects (a) have been analyzed adequately in an earlier EIR or NEGATIVE DECLARATION pursuant to applicable standards, and (b) have been avoided or mitigated pursuant to that earlier EIR or NEGATIVE DECLARATION, including revisions or mitigation measures that are imposed upon the proposed project, nothing further is required. ___________________________________ _________________________ Project Planner Date Milpitas SanJose Mountain View PaloAlto Gilroy Campbell SanRamon BlackhawkDanville Moraga Town Alamo Discovery Bay Orinda Lafayette Walnut Creek Clayton Brentwood Pleasant Hill OakleyConcord PrunedaleElkhorn Ho Aptos Hills-Larkin Valley Interlaken Santa Cruz Soquel Aptos Corralitos Felton Day Valley ScottsValley Ben Lomond Boulder Creek Morgan Hill Lexington Hills SanJose Los Gatos Saratoga Cupertino LosAltosHills Los Altos Santa ClaraSunnyvale Portola Valley Woodside Atherton SanCarlosHalfMoon Bay Menlo Park BelmontEl Granada RedwoodCity Montara Hillsborough SanMateo Foster City Burlingame San Bruno Pacifica South SanFrancisco San Francisco Newark Fremont Union City Hayward PleasantonFairview Livermore DublinSanLeandroCastro Valley Alameda Oakland Berkeley Antioch VineHill Richmond BethelIsland Martinez Pittsburg WestPittsburg Pinole Rodeo Hercules Tracy Mill Valley San Rafael Lagunitas-Forest Knolls Lucas Valley- Marinwood Inverness Novato Benicia Vallejo American Canyon Santa C r u z County San MateoCounty San Francisco County Marin County Co n t r a C o s t a Co u n t y S t a n i s l a u s C o Contra Costa C o u n t y nty Marin Count y Sonoma Co u n t y Sacramento County Monter e y County Santa C l a r a C o u n t y S a n t a C l a r a C o u n t y oun t y Santa C r u z C o u n t y Santa Clara County Sa n J o a q u i n C o u n t y Santa Cruz County San Mateo County Alameda Co u n t y Alameda County Al a m e d a C o u n t y Sa n J o a q u i n C o u n t y 35 82 113 24 131 121 29 123 13 61 185 156 25 237 37 17 129 152 12 130 9 160 84 92 4 1 101 101 780 80 205 238 680 280 580 880 FIGURE 1 Regional Map 8576 429 UNIVERSITY AVENUE INITIAL STUDY Pa t h : Z : \ P r o j e c t s \ j 8 5 7 6 0 1 \ M A P D O C \ D O C U M E N T \ I S \ F i g u r e 1 _ R e g i o n a l . m x d 0115.5 Miles Project Site 82 101 FIGURE 2 Vicinity Map 8576 429 UNIVERSITY AVENUE INITIAL STUDY SOURCE: USGS 7.5-Minute Series Palo Alto Quadrangle. Pa t h : Z : \ P r o j e c t s \ j 8 5 7 6 0 1 \ M A P D O C \ D O C U M E N T \ I S \ F i g u r e 2 _ V i c i n t y . m x d 02,0001,000 Feet Project Site FIGURE 3 Aerial Map 8576 429 UNIVERSITY AVENUE INITIAL STUDY SOURCE: BING 2014 Pa t h : Z : \ P r o j e c t s \ j 8 1 9 4 0 1 \ M A P D O C \ M A P S \ I S \ F i g u r e 3 _ A e r i a l _ M a p . m x d 0 200100Feet Project Boundary Site Plan 429 University Avenue Initial Study SOURCE: Kipling Post LP 2015 Da t e : 8 / 5 / 2 0 1 5 - L a s t s a v e d b y : c b a t t l e - P a t h : Z : \ P r o j e c t s \ j 8 5 7 6 0 1 \ M A P D O C \ D O C U M E N T \ I S \ F i g u r e 4 _ S i t e P l a n . m x d FIGURE 4 Elevations 429 University Avenue Initial Study SOURCE: Kipling Post LP 2015 Da t e : 8 / 5 / 2 0 1 5 - L a s t s a v e d b y : c b a t t l e - P a t h : Z : \ P r o j e c t s \ j 8 5 7 6 0 1 \ M A P D O C \ D O C U M E N T \ I S \ F i g u r e 5 _ E l e v a t i o n s . m x d FIGURE 5 Perspective Renderings 429 University Avenue Initial Study SOURCE: Kipling Post LP 2015 Da t e : 8 / 5 / 2 0 1 5 - L a s t s a v e d b y : c b a t t l e - P a t h : Z : \ P r o j e c t s \ j 8 5 7 6 0 1 \ M A P D O C \ D O C U M E N T \ I S \ F i g u r e 6 _ P e r s p e c t i v e _ R e n d e r i n g s . m x d FIGURE 6 APPENDIX A Project Plans D MH: 8.977 D MH: 8.977 D MH: 8.977 D MH: 8.977 D MH: 8.977 D MH: 8.977 D MH: 8.977 D MH: 8.977 D MH: 8.977 D MH: 8.977 C MH: 9 C MH: 9 C MH: 9 C MH: 9 C MH: 9 C MH: 9 C MH: 9 C MH: 9 C MH: 9 C MH: 9 C MH: 9 C MH: 9 B MH: 8 B MH: 8 1.47 2.92 3.28 2.83 3.07 3.26 2.11 0.71 4.89 8.38 9.46 9.56 9.54 9.14 6.52 2.68 8.39 13.13 15.21 16.33 15.89 14.06 10.80 4.92 9.09 13.90 16.16 17.79 17.15 14.71 11.70 6.98 12.25 13.96 13.74 13.98 13.43 9.53 6.48 11.60 13.01 12.66 12.82 12.79 8.94 8.38 13.31 15.48 16.38 16.05 14.49 11.02 9.35 14.18 16.41 18.30 17.54 14.95 12.03 7.31 12.58 14.42 14.37 14.57 13.75 9.91 6.44 11.61 12.94 12.62 12.80 12.76 8.94 8.12 13.17 15.33 15.84 15.69 14.27 10.69 9.55 14.42 16.60 18.31 17.51 14.73 11.91 8.38 14.20 16.04 15.39 14.04 12.34 9.28 8.02 13.91 14.91 11.76 9.09 14.15 14.86 10.37 9.21 13.72 14.05 10.40 6.04 9.93 10.34 6.93 AREA 1 429 UNIVERSITY - PALO ALTO Illuminance (Fc)Illuminance (Fc)Illuminance (Fc)Illuminance (Fc)Illuminance (Fc)Illuminance (Fc)Illuminance (Fc)Illuminance (Fc)Illuminance (Fc)Average = 11.52Average = 11.52Average = 11.52Average = 11.52Average = 11.52Average = 11.52Average = 11.52Average = 11.52Average = 11.52Maximum = 18.31Maximum = 18.31Maximum = 18.31Maximum = 18.31Maximum = 18.31Maximum = 18.31Maximum = 18.31Maximum = 18.31Maximum = 18.31Minimum = 0.71Minimum = 0.71Minimum = 0.71Minimum = 0.71Minimum = 0.71Minimum = 0.71Minimum = 0.71Minimum = 0.71Minimum = 0.71Avg/Min Ratio = 16.23Avg/Min Ratio = 16.23Avg/Min Ratio = 16.23Avg/Min Ratio = 16.23Avg/Min Ratio = 16.23Avg/Min Ratio = 16.23Avg/Min Ratio = 16.23Avg/Min Ratio = 16.23Avg/Min Ratio = 16.23Max/Min Ratio = 25.79Max/Min Ratio = 25.79Max/Min Ratio = 25.79Max/Min Ratio = 25.79Max/Min Ratio = 25.79Max/Min Ratio = 25.79Max/Min Ratio = 25.79Max/Min Ratio = 25.79Max/Min Ratio = 25.79Z = 0 0.03 0.02 0.03 0.03 0.05 0.05 0.06 0.08 0.11 0.01 0.01 0.03 0.04 0.05 0.04 0.05 0.07 0.08 0.11 0.15 0.01 0.01 0.03 0.04 0.06 0.08 0.11 0.09 0.12 0.15 0.22 0.29 0.02 0.03 0.04 0.07 0.09 0.13 0.17 0.26 0.22 0.29 0.42 0.04 0.03 0.05 0.07 0.11 0.14 0.20 0.30 0.51 0.92 0.69 0.76 0.03 0.05 0.07 0.11 0.17 0.25 0.39 0.65 1.16 1.99 1.39 0.03 0.04 0.07 0.12 0.17 0.26 0.42 0.73 1.33 2.57 4.97 0.03 0.04 0.07 0.12 0.18 0.28 0.44 0.78 1.44 2.83 5.80 0.03 0.04 0.07 0.12 0.18 0.29 0.46 0.80 1.48 2.98 6.15 0.03 0.04 0.07 0.12 0.18 0.28 0.45 0.80 1.47 2.91 6.01 0.03 0.04 0.07 0.12 0.18 0.27 0.43 0.75 1.39 2.70 5.41 0.03 0.05 0.07 0.12 0.17 0.26 0.41 0.70 1.27 2.33 4.04 0.03 0.05 0.07 0.11 0.16 0.24 0.32 0.55 0.99 0.82 1.14 0.03 0.05 0.07 0.10 0.13 0.19 0.28 0.25 0.41 0.53 0.77 0.03 0.04 0.06 0.09 0.12 0.09 0.14 0.21 0.27 0.38 0.12 0.03 0.04 0.06 0.05 0.06 0.08 0.09 0.14 0.20 0.05 0.07 0.03 0.02 0.03 0.04 0.05 0.06 0.08 0.11 0.14 0.05 0.10 0.01 0.02 0.02 0.03 0.03 0.05 0.06 0.08 0.03 0.05 0.13 0.01 0.01 0.02 0.02 0.03 0.04 0.05 0.06 0.02 0.04 0.10 0.01 0.01 0.01 0.02 0.02 0.03 0.04 0.01 0.02 0.03 0.08 0.01 0.01 0.01 0.01 0.02 0.02 0.01 0.01 0.02 0.03 0.07 0.01 0.01 0.01 0.01 0.01 0.02 0.01 0.01 0.01 0.03 0.07 0.00 0.01 0.01 0.01 0.01 0.00 0.00 0.01 0.01 0.02 0.06 0.00 0.00 0.01 0.01 0.01 0.00 0.00 0.01 0.01 0.02 0.04 0.00 0.00 0.00 0.01 0.00 0.00 0.00 0.00 0.01 0.01 0.02 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.01 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.01 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.01 0.01 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.01 0.01 9.30 10.53 12.94 13.97 12.51 13.72 8.13 9.27 DOOR 1 429 UNIVERSITY - PALO ALTO Illuminance (Fc)Illuminance (Fc)Illuminance (Fc)Illuminance (Fc)Illuminance (Fc)Illuminance (Fc)Illuminance (Fc)Illuminance (Fc)Illuminance (Fc)Average = 11.30Average = 11.30Average = 11.30Average = 11.30Average = 11.30Average = 11.30Average = 11.30Average = 11.30Average = 11.30Maximum = 13.97Maximum = 13.97Maximum = 13.97Maximum = 13.97Maximum = 13.97Maximum = 13.97Maximum = 13.97Maximum = 13.97Maximum = 13.97Minimum = 8.13Minimum = 8.13Minimum = 8.13Minimum = 8.13Minimum = 8.13Minimum = 8.13Minimum = 8.13Minimum = 8.13Minimum = 8.13Avg/Min Ratio = 1.39Avg/Min Ratio = 1.39Avg/Min Ratio = 1.39Avg/Min Ratio = 1.39Avg/Min Ratio = 1.39Avg/Min Ratio = 1.39Avg/Min Ratio = 1.39Avg/Min Ratio = 1.39Avg/Min Ratio = 1.39Max/Min Ratio = 1.72Max/Min Ratio = 1.72Max/Min Ratio = 1.72Max/Min Ratio = 1.72Max/Min Ratio = 1.72Max/Min Ratio = 1.72Max/Min Ratio = 1.72Max/Min Ratio = 1.72Max/Min Ratio = 1.72Z = 0 2.18 7.40 12.85 13.97 11.69 1.91 6.64 11.84 13.35 10.72 DOOR 2 429 UNIVERSITY - PALO ALTO Illuminance (Fc)Illuminance (Fc)Illuminance (Fc)Illuminance (Fc)Illuminance (Fc)Illuminance (Fc)Illuminance (Fc)Illuminance (Fc)Illuminance (Fc)Average = 9.26Average = 9.26Average = 9.26Average = 9.26Average = 9.26Average = 9.26Average = 9.26Average = 9.26Average = 9.26Maximum = 13.97Maximum = 13.97Maximum = 13.97Maximum = 13.97Maximum = 13.97Maximum = 13.97Maximum = 13.97Maximum = 13.97Maximum = 13.97Minimum = 1.91Minimum = 1.91Minimum = 1.91Minimum = 1.91Minimum = 1.91Minimum = 1.91Minimum = 1.91Minimum = 1.91Minimum = 1.91Avg/Min Ratio = 4.85Avg/Min Ratio = 4.85Avg/Min Ratio = 4.85Avg/Min Ratio = 4.85Avg/Min Ratio = 4.85Avg/Min Ratio = 4.85Avg/Min Ratio = 4.85Avg/Min Ratio = 4.85Avg/Min Ratio = 4.85Max/Min Ratio = 7.31Max/Min Ratio = 7.31Max/Min Ratio = 7.31Max/Min Ratio = 7.31Max/Min Ratio = 7.31Max/Min Ratio = 7.31Max/Min Ratio = 7.31Max/Min Ratio = 7.31Max/Min Ratio = 7.31Z = 0 10.15 14.37 14.39 10.18 3.97 9.76 14.24 14.27 9.88 3.76 0.62 DOOR 3 429 UNIVERSITY - PALO ALTO Illuminance (Fc)Illuminance (Fc)Illuminance (Fc)Illuminance (Fc)Illuminance (Fc)Illuminance (Fc)Illuminance (Fc)Illuminance (Fc)Illuminance (Fc)Average = 9.60Average = 9.60Average = 9.60Average = 9.60Average = 9.60Average = 9.60Average = 9.60Average = 9.60Average = 9.60Maximum = 14.39Maximum = 14.39Maximum = 14.39Maximum = 14.39Maximum = 14.39Maximum = 14.39Maximum = 14.39Maximum = 14.39Maximum = 14.39Minimum = 0.62Minimum = 0.62Minimum = 0.62Minimum = 0.62Minimum = 0.62Minimum = 0.62Minimum = 0.62Minimum = 0.62Minimum = 0.62Avg/Min Ratio = 15.48Avg/Min Ratio = 15.48Avg/Min Ratio = 15.48Avg/Min Ratio = 15.48Avg/Min Ratio = 15.48Avg/Min Ratio = 15.48Avg/Min Ratio = 15.48Avg/Min Ratio = 15.48Avg/Min Ratio = 15.48Max/Min Ratio = 23.21Max/Min Ratio = 23.21Max/Min Ratio = 23.21Max/Min Ratio = 23.21Max/Min Ratio = 23.21Max/Min Ratio = 23.21Max/Min Ratio = 23.21Max/Min Ratio = 23.21Max/Min Ratio = 23.21Z = 0 12.41 11.51 14.12 13.58 12.44 11.56 DOOR 4 TYPICAL 429 UNIVERSITY - PALO ALTO Illuminance (Fc)Illuminance (Fc)Illuminance (Fc)Illuminance (Fc)Illuminance (Fc)Illuminance (Fc)Illuminance (Fc)Illuminance (Fc)Illuminance (Fc)Average = 12.60Average = 12.60Average = 12.60Average = 12.60Average = 12.60Average = 12.60Average = 12.60Average = 12.60Average = 12.60Maximum = 14.12Maximum = 14.12Maximum = 14.12Maximum = 14.12Maximum = 14.12Maximum = 14.12Maximum = 14.12Maximum = 14.12Maximum = 14.12Minimum = 11.51Minimum = 11.51Minimum = 11.51Minimum = 11.51Minimum = 11.51Minimum = 11.51Minimum = 11.51Minimum = 11.51Minimum = 11.51Avg/Min Ratio = 1.09Avg/Min Ratio = 1.09Avg/Min Ratio = 1.09Avg/Min Ratio = 1.09Avg/Min Ratio = 1.09Avg/Min Ratio = 1.09Avg/Min Ratio = 1.09Avg/Min Ratio = 1.09Avg/Min Ratio = 1.09Max/Min Ratio = 1.23Max/Min Ratio = 1.23Max/Min Ratio = 1.23Max/Min Ratio = 1.23Max/Min Ratio = 1.23Max/Min Ratio = 1.23Max/Min Ratio = 1.23Max/Min Ratio = 1.23Max/Min Ratio = 1.23Z = 0 9.2 8 9 . 6 9 1 0 . 1 7 1 0 . 5 5 1 0 . 7 9 1 0 . 8 3 1 0 . 7 2 1 0 . 4 0 9 . 9 7 9 . 6 5 10 . 1 9 1 0 . 6 8 1 1 . 2 9 1 1 . 7 6 1 2 . 0 0 1 2 . 0 7 1 1 . 9 2 1 1 . 5 5 1 1 . 0 4 1 0 . 6 3 11 . 3 6 1 1 . 9 2 1 2 . 6 2 1 3 . 2 0 1 3 . 5 0 1 3 . 6 0 1 3 . 3 9 1 2 . 9 4 1 2 . 3 8 1 1 . 8 6 12 . 6 1 1 3 . 2 4 1 4 . 0 4 1 4 . 6 7 1 4 . 9 9 15 . 0 9 1 4 . 8 5 1 4 . 3 7 1 3 . 7 3 1 3 . 1 4 13 . 8 9 1 4 . 5 9 1 5 . 4 8 1 6 . 1 7 1 6 . 5 4 1 6 . 6 0 1 6 . 3 9 1 5 . 8 9 1 5 . 1 1 1 4 . 4 6 15 . 1 1 1 5 . 9 0 1 6 . 8 9 1 7 . 6 9 1 8 . 1 2 1 8 . 2 3 1 8 . 0 0 1 7 . 4 1 1 6 . 5 2 1 5 . 8 1 16 . 3 5 1 7 . 2 9 1 8 . 3 6 1 9 . 2 3 1 9 . 7 0 1 9 . 8 5 1 9 . 5 9 1 8 . 9 3 1 7 . 9 7 1 7 . 1 5 17 . 6 0 1 8 . 6 9 1 9 . 8 8 2 0 . 7 6 2 1 . 2 7 2 1 . 4 4 2 1 . 1 6 2 0 . 4 6 1 9 . 4 7 1 8 . 5 5 18 . 8 2 2 0 . 0 1 2 1 . 3 6 2 2 . 3 2 22 . 8 1 2 2 . 9 7 2 2 . 6 9 2 1 . 9 2 2 0 . 8 3 1 9 . 8 5 19 . 8 8 2 1 . 1 0 2 2 . 5 6 2 3 . 6 7 2 4 . 2 8 2 4 . 4 2 2 4 . 0 6 2 3 . 2 5 2 2 . 0 7 2 1 . 0 1 20 . 9 0 2 2 . 2 0 2 3 . 7 1 2 4 . 8 6 2 5 . 5 6 2 5 . 7 4 2 5 . 3 8 2 4 . 5 2 2 3 . 2 6 2 2 . 1 0 21 . 9 4 2 3 . 3 6 2 5 . 0 1 2 6 . 1 9 2 6 . 8 7 2 7 . 0 4 2 6 . 6 8 2 5 . 8 5 2 4 . 4 7 2 3 . 1 9 23 . 0 6 2 4 . 6 0 2 6 . 4 1 2 7 . 6 5 2 8 . 3 1 2 8 . 4 5 2 8 . 0 4 2 7 . 1 6 2 5 . 7 5 2 4 . 3 5 23 . 7 4 2 5 . 4 4 2 7 . 3 5 2 8 . 6 6 2 9 . 4 0 2 9 . 5 5 29 . 1 5 2 8 . 2 1 2 6 . 6 4 2 5 . 2 0 24 . 1 0 2 5 . 9 0 2 7 . 8 6 2 9 . 1 7 2 9 . 9 3 3 0 . 1 4 2 9 . 7 1 2 8 . 8 1 2 7 . 2 0 2 5 . 6 5 24 . 4 6 2 6 . 2 8 2 8 . 3 3 2 9 . 6 4 3 0 . 3 8 3 0 . 6 5 3 0 . 2 1 2 9 . 2 3 2 7 . 6 4 2 6 . 0 7 25 . 0 0 2 6 . 9 2 2 9 . 1 4 3 0 . 5 2 3 1 . 2 0 3 1 . 4 3 3 1 . 0 8 3 0 . 0 8 2 8 . 3 6 2 6 . 7 1 25 . 6 0 2 7 . 7 4 3 0 . 1 2 3 1 . 5 9 3 2 . 2 9 3 2 . 4 3 3 2 . 0 9 3 1 . 1 5 2 9 . 3 4 2 7 . 5 2 25 . 7 2 2 7 . 9 5 3 0 . 4 0 3 1 . 8 6 3 2 . 5 7 32 . 7 6 3 2 . 3 8 3 1 . 3 9 2 9 . 6 1 2 7 . 7 5 25 . 2 4 2 7 . 4 5 2 9 . 8 7 3 1 . 3 1 3 2 . 0 2 3 2 . 2 6 3 1 . 9 1 3 0 . 8 9 2 9 . 1 1 2 7 . 2 9 24 . 7 6 2 6 . 9 3 2 9 . 3 1 3 0 . 7 4 3 1 . 4 7 3 1 . 6 7 3 1 . 3 4 3 0 . 3 6 2 8 . 5 4 2 6 . 7 1 24 . 4 3 2 6 . 7 2 2 9 . 1 4 3 0 . 5 5 3 1 . 3 0 3 1 . 5 1 3 1 . 1 5 3 0 . 2 2 2 8 . 3 8 2 6 . 4 4 23 . 8 4 2 6 . 2 9 2 8 . 8 2 3 0 . 1 9 3 0 . 7 7 3 0 . 9 6 3 0 . 7 1 2 9 . 8 7 2 8 . 0 6 2 6 . 0 5 22 . 6 9 2 5 . 0 0 2 7 . 4 5 2 8 . 8 1 2 9 . 2 8 2 9 . 4 0 2 9 . 2 4 28 . 5 1 2 6 . 7 7 2 4 . 8 3 21 . 0 1 2 3 . 1 1 2 5 . 3 1 2 6 . 5 6 2 7 . 1 0 2 7 . 2 2 2 7 . 0 2 2 6 . 3 3 2 4 . 7 5 2 2 . 9 9 19 . 3 2 21 . 1 3 2 3 . 0 9 2 4 . 3 2 2 4 . 9 3 2 5 . 0 9 2 4 . 7 7 2 3 . 9 7 2 2 . 5 8 2 1 . 0 3 16 . 9 9 1 8 . 9 7 2 0 . 6 9 2 1 . 8 2 2 2 . 4 9 2 2 . 6 6 2 2 . 3 7 2 1 . 5 4 2 0 . 2 3 1 8 . 9 2 13 . 7 1 1 6 . 3 9 1 8 . 2 7 1 9 . 2 2 1 9 . 7 7 1 9 . 9 0 1 9 . 6 8 1 9 . 0 2 1 7 . 8 5 1 6 . 7 1 6.03 2.05 7.91 10.31 8.88 11.63 9.51 12.46 9.85 12.91 9.98 13.06 9.95 13.04 9.74 12.78 9.30 12.19 8.74 11.18 7.96 11.59 3.64 5.72 3.76 8.04 2.77 7.83 1.88 5.20 1.44 2.88 1.06 1.46 0.66 0.80 0.10 0.19 0.08 0.08 0.25 0.59 0.76 1.05 1.09 1.77 1.19 2.21 1.01 2.51 5.65 0.51 2.81 7.74 0.41 2.06 6.79 0.42 1.21 5.12 0.40 1.67 5.88 0.41 2.37 7.80 0.40 2.16 7.13 0.41 1.31 5.31 0.41 1.56 5.73 0.41 2.36 7.75 0.36 2.32 7.56 0.26 1.04 6.54 0.14 0.02 0.01 0.01 0.01 0.01 SIDEWALK 429 UNIVERSITY - PALO ALTO Illuminance (Fc)Illuminance (Fc)Illuminance (Fc)Illuminance (Fc)Illuminance (Fc)Illuminance (Fc)Illuminance (Fc)Illuminance (Fc)Illuminance (Fc)Average = 4.28Average = 4.28Average = 4.28Average = 4.28Average = 4.28Average = 4.28Average = 4.28Average = 4.28Average = 4.28Maximum = 13.06Maximum = 13.06Maximum = 13.06Maximum = 13.06Maximum = 13.06Maximum = 13.06Maximum = 13.06Maximum = 13.06Maximum = 13.06Minimum = 0.01Minimum = 0.01Minimum = 0.01Minimum = 0.01Minimum = 0.01Minimum = 0.01Minimum = 0.01Minimum = 0.01Minimum = 0.01Avg/Min Ratio = 428Avg/Min Ratio = 428Avg/Min Ratio = 428Avg/Min Ratio = 428Avg/Min Ratio = 428Avg/Min Ratio = 428Avg/Min Ratio = 428Avg/Min Ratio = 428Avg/Min Ratio = 428Max/Min Ratio = 1306Max/Min Ratio = 1306Max/Min Ratio = 1306Max/Min Ratio = 1306Max/Min Ratio = 1306Max/Min Ratio = 1306Max/Min Ratio = 1306Max/Min Ratio = 1306Max/Min Ratio = 1306Z = 0 15782346 UP DN DN UP DOOR 2 C MH: 9 C MH: 9 C MH: 9 C MH: 9 C MH: 9 C MH: 9 12.69 14.63 13.49 10.81 13.26 11.69 5.68 7.41 6.19 1.53 2.15 1.65 0.36 0.42 0.36 0.12 0.14 0.12 0.07 0.07 0.06 0.06 0.06 0.05 0.06 0.06 0.05 0.10 0.11 0.08 0.31 0.36 0.30 1.39 1.96 1.48 5.42 7.06 5.87 10.41 12.84 11.28 12.23 14.23 13.24 9.93 12.33 10.76 4.86 6.36 5.24 1.32 1.82 1.37 1.01 1.35 1.01 3.95 5.22 4.15 9.08 11.40 9.70 12.16 14.20 13.06 11.15 13.53 11.96 6.45 8.34 6.86 1.96 2.69 2.05 0.37 0.44 0.36 0.11 0.13 0.10 0.05 0.05 0.04 0.03 0.03 0.03 0.03 0.03 0.03 0.04 0.05 0.05 0.14 0.19 0.19 0.42 0.70 0.72 2.31 4.12 4.23 6.19 9.92 10.13 9.21 13.43 13.60 8.88 13.20 13.41 5.85 9.84 10.04 5.27 8.99 9.15 8.12 12.23 12.36 9.83 13.77 13.82 7.83 11.79 11.91 3.71 6.15 6.50 0.79 1.74 2.26 3.97 6.47 7.78 5.85 2.50 0.27 0.57 1.93 6.35 11.32 12.96 10.46 5.02 0.05 0.11 0.37 2.04 7.06 12.54 13.74 11.66 5.80 0.04 0.07 0.28 1.26 5.05 9.65 11.27 8.82 4.09 0.03 0.04 0.17 0.45 1.96 4.33 5.27 3.88 1.52 AREA 2 429 UNIVERSITY - PALO ALTO Illuminance (Fc)Illuminance (Fc)Illuminance (Fc)Illuminance (Fc)Illuminance (Fc)Illuminance (Fc)Illuminance (Fc)Illuminance (Fc)Illuminance (Fc)Average = 5.11Average = 5.11Average = 5.11Average = 5.11Average = 5.11Average = 5.11Average = 5.11Average = 5.11Average = 5.11Maximum = 14.63Maximum = 14.63Maximum = 14.63Maximum = 14.63Maximum = 14.63Maximum = 14.63Maximum = 14.63Maximum = 14.63Maximum = 14.63Minimum = 0.03Minimum = 0.03Minimum = 0.03Minimum = 0.03Minimum = 0.03Minimum = 0.03Minimum = 0.03Minimum = 0.03Minimum = 0.03Avg/Min Ratio = 170Avg/Min Ratio = 170Avg/Min Ratio = 170Avg/Min Ratio = 170Avg/Min Ratio = 170Avg/Min Ratio = 170Avg/Min Ratio = 170Avg/Min Ratio = 170Avg/Min Ratio = 170Max/Min Ratio = 488Max/Min Ratio = 488Max/Min Ratio = 488Max/Min Ratio = 488Max/Min Ratio = 488Max/Min Ratio = 488Max/Min Ratio = 488Max/Min Ratio = 488Max/Min Ratio = 488Z = 0 78 6 UP DN DN UP Luminaire Schedule LED Project: 429 UNIVERSITY - PALO ALTO Symbol Qty Label Arrangement Lum. Watts Lum. Lumens LLF LDD LLD BF Description Filename 2 B SINGLE 8.271 229 0.850 0.900 0.944 1.000 BEGA-3590LED-6.4W 3590LED.ies 10 D SINGLE 103.2 7753 0.850 0.900 0.944 1.000 PHILIPS GARDCO-SFC-5R-105LA-NW SFC-5R-105LA-NW.ies 19 C SINGLE 15.913 972 0.850 0.900 0.944 1.000 ZUMTOBEL BR4DLED16WK35MS4D1 @ 9' AFF BR4DLED-16W-K35-MS45-CS.ies Calculation Summary Project: 429 UNIVERSITY - PALO ALTO Description CalcType Units Avg Max Min Avg/Min Max/Min # Pts AREA 1 Illuminance Fc 11.52 18.31 0.71 16.23 25.79 110 AREA 2 Illuminance Fc 5.11 14.63 0.03 170.33 487.67 172 DOOR 1 Illuminance Fc 11.30 13.97 8.13 1.39 1.72 8 DOOR 2 Illuminance Fc 9.26 13.97 1.91 4.85 7.31 10 DOOR 3 Illuminance Fc 9.60 14.39 0.62 15.48 23.21 11 DOOR 4 TYPICAL Illuminance Fc 12.60 14.12 11.51 1.09 1.23 6 ALL POINTS ON RAMP Illuminance Fc 22.92 32.76 9.28 2.47 3.53 280 SIDEWALK Illuminance Fc 4.28 13.06 0.01 428.00 1306 90 AGI32 VERSION 15.1 AGI (C) 1999-2014 LIGHTING ANALYSTS, INC. 10440 BRADFORD ROAD - UNIT A LITTLETON, CO 80127 * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * SALES REPRESENTATIVE: ALR; CATHY JOHNSON differences will occur between measured values and calculated values. lighting calculations. If the real environment conditions do not match the input data, dimensions, reflectances, furniture and architectural elements significantly affect the variations. Input data used to generate the attached calculations such as room measurement techniques and field conditions such as voltage and temperature tolerances in calculation methods, testing procedures, component performance, Some differences between measured values and calculated results may occur due to Calculations have been performed according to IES standards and good practice. BY: APPLICATIONS ENGINEERING; RAMON ZAPATA PHONE: (510) 638-0158 - FAX (510) 638-2908 OAKLAND, CA 94621 P.O. BOX 2265 7777 PARDEE LANE ASSOCIATED LIGHTING REPRESENTATIVES, INC ALL VALUES SHOWN ARE MAINTAINED HORIZONTAL FOOTCANDLES AT GRADE LAMP, BALLAST, ELECTRICAL, AND SITE CHARACTERISTICS. LAMP, RATINGS, FIELD PERFORMANCE WILL DEPEND ON ACTUAL IS BASED ON ESTABLISHED IES PROCEDURES AND PUBLISHED PHOTOMETRIC DATA USED AS INPUT FOR THESE CALCULATIONS DATE 07.27.20151" = 8'1 OF 1 3 REVSHEETSCALE PROJECT DESCRIPTION DRAWING NO. / INPUT FILE 429 UNIVERISTY PALO ALTO 11808GOT-1ST FLOOR-R2.DWG / XX.A32 A2.8 City of Palo Alto Tree Protection - It’s Part of the Plan! Make sure your crews and subs do the job right! Fenced enclosures around trees are essential to protect them by keeping the foliage canopy and branching structure clear from contact by equipment, materials and activities, preserving roots and soil conditions in an intact and non-compacted state, and identifying the Tree Protection Zone (TPZ) in which no soil disturbance is permitted and activities are restricted, unless otherwise approved.An appoved tree protection report must be added to this sheet when project activity occurs within the TPZ of a regulated tree. For detailed information on Palo Alto's regulated trees and protection during development, review the City Tree Technical Manual (TTM) found at www.cityofpaloalto.org/trees/. T-1Special Tree Protection Instruction Sheet City of Palo Alto All other tree-related reports shall be added to the space provided on this sheet (adding as needed) Include this sheet(s) on Project Sheet Index or Legend Page. A copy of T-1 can be downloaded at www.cityofpaloalto.org/arb/forms 42 9 U N I V E R S I T Y A V E . PA L O A L T O , C A L I F O R N I A T-1 «« 5300 Wellington Branch Drive, Suite 100Gainesville, Virginia 21055 Office 410.774.0024 ● National 800.828.8312 STREET TREE PROTECTION SPECIFICATIONS - SECTION 31 - 31-1 General - Tree protection has three primary functions, 1) to keep the foliage canopy and branching structure clear from contact by equipment, materials and activities; 2) to preserve roots and soil conditions in an intact and non-compacted state and 3) to identify the Tree Protection Zone (TPZ) in which no soil disturbance is permitted and activities are restricted, unless otherwise approved. 31-2 Reference Documents a. Detail 505 - Illustration of situations described below. b. Tree Technical Manual (www.cityofpaloalto.org/trees/) 1.Trenching Restriction Zone s (Section 2.20(C)) 2.Arborist Reporting Protocol (Section 6.30) 3.Site Plan Requirements (Section 6.35) 31-3 Materials a. The Tree Protection Zone (TPZ): A restricted area around the base of the tree with a radius of 10 times the diameter of the tree's trunk or ten feet, whichever is greater, enclosed by fencing. b. Type I Tree Protection: The fence shall enclose the entire area under the canopy dripline or TPZ(whichever is greater) of the tree(s) to be protected throughout the life of the construction project. In someparking areas, if fencing is located on paving or concrete that will not be demolished, then the posts maybe supported by an appropriate grade level concrete base, if approved. c. Type II Tree Protection: For trees situated within a planting strip, only the planting strip and yard sideof the TPZ shall be enclosed with the required chain link protective fencing in order to keep the sidewalk and street open for public use. d. Type III Tree Protection: Trees situated in a tree well or sidewalk planter pit, shall be wrapped with2-inches of orange plastic fencing from the ground to the first branch and overlaid with 2-inch thickwooden slats bound securely (slats shall not be allowed to dig into the bark). During installation of theplastic fencing, caution shall be used to avoid damaging any branches. Major scaffold limbs may alsorequire plastic fencing as directed by the City Arborist. e. Size, type and area to be fenced: All trees to be preserved shall be protected with six (6') foot high chain link fences. Fences are to be mounted on two-inch diameter galvanized iron posts, driven into the groundto a depth of at least 2-feet at no more than 10-foot spacing. f. 'Warning' signs: A warning sign shall be prominently displayed on each fence at 20-foot intervals. Thesign shall be minimum 8.5-inches x 11-inches and clearly state: “WARNING - Tree Protection Zone - This fence shall not be removed and is subject to a fine according to PAMC Section 8.10.110.” 31-4 Execution a. Duration: Tree fencing shall be erected before demolition, grading or construction begins and remain in place until final inspection of the project, except for work specifically allowed in the TPZ. Work or soildisturbance in the TPZ requires approval by the project arborist or City Arborist (in the case of workaround Street Trees). Excavations within the public ROW require a Street Work Permit from PublicWorks. b. During construction 1.All neighbors' trees that overhang the project site shall be protected from impact of any kind. 2.The applicant shall be responsible for the repair or replacement plus penalty of any publicly ownedtrees that are damaged during the course of construction, pursuant to Section 8.04.070 of the PaloAlto Municipal Code. 3.The following tree preservation measures apply to all trees to be retained: a.No storage of material, topsoil, vehicles or equipment shall be permitted within the TPZ. b.The ground under and around the tree canopy area shall not be altered. c.Trees to be retained shall be irrigated, aerated and maintained as necessary to ensure survival. END OF SECTION S: \ N R C C l i e n t s \ W o n g , E l i z a b e t h \ 4 2 9 U n i v e r s i t y , P a l o A l t o , C A \ M a p s \ D a v e y \ D W G s \ D R G _ 4 2 9 U n i v e r s i t y _ P A L O A L T O _ 2 0 1 4 . 0 6 . 1 6 . d w g , T - 1 , 6 / 1 6 / 2 0 1 4 3 : 1 5 : 2 3 P M , H u l s e C , D W G T o P D F . p c 3 , A R C H f u l l b l e e d D ( 2 4 . 0 0 x 3 6 . 0 0 I n c h e s ) , 1 : 1 , D a v e y R e s o u r c e G r o u p four T-5Special Tree Protection Instruction Sheet City of Palo Alto All other tree-related reports shall be added to the space provided on this sheet (adding as needed) Include this sheet(s) on Project Sheet Index or Legend Page. A copy of T-1 can be downloaded at www.cityofpaloalto.org/arb/forms 42 9 U N I V E R S I T Y A V E . PA L O A L T O , C A L I F O R N I A T-5 «« 5300 Wellington Branch Drive, Suite 100Gainesville, Virginia 21055 Office 410.774.0024 ● National 800.828.8312 S: \ N R C C l i e n t s \ W o n g , E l i z a b e t h \ 4 2 9 U n i v e r s i t y , P a l o A l t o , C A \ M a p s \ D a v e y \ D W G s \ D R G _ 4 2 9 U n i v e r s i t y _ P A L O A L T O _ 2 0 1 4 . 0 6 . 1 6 . d w g , T - 5 , 6 / 1 6 / 2 0 1 4 3 : 1 6 : 0 2 P M , H u l s e C , D W G T o P D F . p c 3 , A R C H f u l l b l e e d D ( 2 4 . 0 0 x 3 6 . 0 0 I n c h e s ) , 1 : 1 , D a v e y R e s o u r c e G r o u p APPENDIX B Air Quality Analysis Off-road Equipment - approx construction equip usage Off-road Equipment - approx equip usage Off-road Equipment - Demolition - 1.3 User Entered Comments & Non-Default Data Project Characteristics - Land Use - project site is 11,000 square feet. project would construct 4-story building with 22,000 sq ft office, 4 dwelling units on 11,000 sq ft and underground parkingConstruction Phase - approx construction schedule Off-road Equipment - Off-road Equipment - approx equip usage CO2 Intensity (lb/MWhr) 641.35 CH4 Intensity (lb/MWhr) 0.029 N2O Intensity (lb/MWhr) 0.006 64 Climate Zone 4 Operational Year 2015 Utility Company Pacific Gas & Electric Company 1.2 Other Project Characteristics Urbanization Urban Wind Speed (m/s)2.2 Precipitation Freq (Days) Condo/Townhouse 4.00 Dwelling Unit 0.07 4,000.00 11 Enclosed Parking Structure 45.00 Space 0.07 18,000.00 0 Population General Office Building 22.00 1000sqft 0.11 22,000.00 0 1.1 Land Usage Land Uses Size Metric Lot Acreage Floor Surface Area CalEEMod Version: CalEEMod.2013.2.2 Page 1 of 1 Date: 9/22/2014 10:12 AM 429 University San Francisco Bay Area Air Basin, Summer 1.0 Project Characteristics CH4 N2O CO2eFugitive PM2.5 Exhaust PM2.5 PM2.5 Total Bio- CO2 NBio- CO2 Total CO2 Unmitigated Construction ROG NOx CO SO2 Fugitive PM10 Exhaust PM10 PM10 Total tblProjectCharacteristics OperationalYear 2014 2015 2.0 Emissions Summary 2.1 Overall Construction (Maximum Daily Emission) tblLandUse LotAcreage 0.41 0.07 tblLandUse LotAcreage 0.25 0.07 tblGrading MaterialExported 0.00 18,000.00 tblLandUse LotAcreage 0.51 0.11 tblConstructionPhase PhaseStartDate 3/5/2015 3/17/2015 tblConstructionPhase PhaseStartDate 7/18/2015 7/20/2015 tblConstructionPhase PhaseEndDate 7/7/2015 7/17/2015 tblConstructionPhase PhaseStartDate 8/1/2015 8/3/2015 tblConstructionPhase NumDays 2.00 37.00 tblConstructionPhase NumDays 5.00 10.00 tblConstructionPhase NumDays 100.00 89.00 tblConstructionPhase NumDays 10.00 8.00 tblArchitecturalCoating EF_Residential_Interior 250.00 100.00 tblConstructionPhase NumDays 5.00 15.00 tblArchitecturalCoating EF_Nonresidential_Interior 250.00 100.00 tblArchitecturalCoating EF_Residential_Exterior 250.00 100.00 Table Name Column Name Default Value New Value tblArchitecturalCoating EF_Nonresidential_Exterior 250.00 100.00 Grading - site size, excavation volume Architectural Coating - LEED Silver and Build It Green requirements, paint VOC no greater than 100 g/L 107.5647 54.9618 162.5265 0.4087 2.8100e- 003 171.97880.8038 0.8038 0.8037 0.8037Area 3.0255 0.0787 5.4826 0.0118 Total CO2 CH4 N2O CO2e Category lb/day lb/day PM10 Total Fugitive PM2.5 Exhaust PM2.5 PM2.5 Total Bio- CO2 NBio- CO2 2.2 Overall Operational Unmitigated Operational ROG NOx CO SO2 Fugitive PM10 Exhaust PM10 0.00 0.00 0.00 0.00 0.00 0.000.00 0.00 0.00 0.00 0.00 0.00 NBio-CO2 Total CO2 CH4 N20 CO2e Percent Reduction 0.00 0.00 0.00 0.00 Exhaust PM10 PM10 Total Fugitive PM2.5 Exhaust PM2.5 PM2.5 Total Bio- CO2ROG NOx CO SO2 Fugitive PM10 0.0000 5,958.874 8 5,958.8748 0.3666 0.0000 5,966.57331.9615 1.1897 3.1513 0.7372 1.1255 1.8627Total 28.4773 32.3550 23.5006 0.0590 0.0000 5,958.874 8 5,958.8748 0.3666 0.0000 5,966.57331.9615 1.1897 3.1513 0.7372 1.1255 1.86272015 28.4773 32.3550 23.5006 0.0590 Total CO2 CH4 N2O CO2e Year lb/day lb/day PM10 Total Fugitive PM2.5 Exhaust PM2.5 PM2.5 Total Bio- CO2 NBio- CO2 Mitigated Construction ROG NOx CO SO2 Fugitive PM10 Exhaust PM10 0.0000 5,958.874 8 5,958.8748 0.3666 0.0000 5,966.57331.9615 1.1897 3.1513 0.7372 1.1255 1.8627Total 28.4773 32.3550 23.5006 0.0590 0.0000 5,958.874 8 5,958.8748 0.3666 0.0000 5,966.57331.9615 1.1897 3.1513 0.7372 1.1255 1.86272015 28.4773 32.3550 23.5006 0.0590 Year lb/day lb/day 89 4 Paving Paving 7/20/2015 7/31/2015 5 10 3 Building Construction Building Construction 3/17/2015 7/17/2015 5 8 2 Excavation Grading 1/13/2015 3/4/2015 5 37 End Date Num Days Week Num Days Phase Description 1 Demolition Demolition 1/1/2015 1/12/2015 5 3.0 Construction Detail Construction Phase Phase Number Phase Name Phase Type Start Date 0.00 0.00 0.00 0.00 0.00 0.000.00 0.00 0.00 0.00 0.00 0.00 NBio-CO2 Total CO2 CH4 N20 CO2e Percent Reduction 0.00 0.00 0.00 0.00 Exhaust PM10 PM10 Total Fugitive PM2.5 Exhaust PM2.5 PM2.5 Total Bio- CO2ROG NOx CO SO2 Fugitive PM10 107.5647 1,990.379 2 2,097.9439 0.4906 5.5100e- 003 2,109.95241.3648 0.8473 2.2120 0.3651 0.8444 1.2095Total 4.1395 2.6124 16.3824 0.0324 1,788.201 2 1,788.2012 0.0791 1,789.86151.3648 0.0342 1.3989 0.3651 0.0314 0.3964Mobile 1.1005 2.4123 10.8059 0.0199 147.2163 147.2163 2.8200e- 003 2.7000e- 003 148.11229.3200e- 003 9.3200e- 003 9.3200e- 003 9.3200e- 003 Energy 0.0135 0.1214 0.0939 7.4000e- 004 107.5647 54.9618 162.5265 0.4087 2.8100e- 003 171.97880.8038 0.8038 0.8037 0.8037Area 3.0255 0.0787 5.4826 0.0118 Total CO2 CH4 N2O CO2e Category lb/day lb/day PM10 Total Fugitive PM2.5 Exhaust PM2.5 PM2.5 Total Bio- CO2 NBio- CO2 Mitigated Operational ROG NOx CO SO2 Fugitive PM10 Exhaust PM10 107.5647 1,990.379 2 2,097.9439 0.4906 5.5100e- 003 2,109.95241.3648 0.8473 2.2120 0.3651 0.8444 1.2095Total 4.1395 2.6124 16.3824 0.0324 1,788.201 2 1,788.2012 0.0791 1,789.86151.3648 0.0342 1.3989 0.3651 0.0314 0.3964Mobile 1.1005 2.4123 10.8059 0.0199 147.2163 147.2163 2.8200e- 003 2.7000e- 003 148.11229.3200e- 003 9.3200e- 003 9.3200e- 003 9.3200e- 003 Energy 0.0135 0.1214 0.0939 7.4000e- 004 7.30 20.00 LD_Mix HDT_Mix HHDTBuilding Construction 5 17.00 7.00 0.00 12.40 12.40 7.30 20.00 LD_Mix HDT_Mix HHDT 7.30 20.00 LD_Mix HDT_Mix HHDT Excavation 4 10.00 0.00 2,250.00 Demolition 4 10.00 0.00 53.00 12.40 Worker Trip Length Vendor Trip Length Hauling Trip Length Worker Vehicle Class Vendor Vehicle Class Hauling Vehicle Class Trips and VMT Phase Name Offroad Equipment Count Worker Trip Number Vendor Trip Number Hauling Trip Number Architectural Coating Air Compressors 1 6.00 78 0.48 Paving Tractors/Loaders/Backhoes 1 7.00 97 0.37 Paving Rollers 1 7.00 80 0.38 Paving Pavers 1 7.00 125 0.42 Paving Cement and Mortar Mixers 4 6.00 9 0.56 Building Construction Tractors/Loaders/Backhoes 2 8.00 97 0.37 Building Construction Forklifts 2 6.00 89 0.20 Building Construction Cranes 1 4.00 226 0.29 Excavation Tractors/Loaders/Backhoes 2 6.00 97 0.37 Excavation Rubber Tired Dozers 1 1.00 255 0.40 Excavation Concrete/Industrial Saws 1 8.00 81 0.73 Demolition Tractors/Loaders/Backhoes 2 6.00 97 0.37 Demolition Rubber Tired Dozers 1 1.00 255 0.40 Load Factor Demolition Concrete/Industrial Saws 1 8.00 81 0.73 OffRoad Equipment Phase Name Offroad Equipment Type Amount Usage Hours Horse Power 15 Acres of Grading (Site Preparation Phase): 0 Acres of Grading (Grading Phase): 0 Acres of Paving: 0 Residential Indoor: 8,100; Residential Outdoor: 2,700; Non-Residential Indoor: 60,000; Non-Residential Outdoor: 20,000 (Architectural 5 Architectural Coating Architectural Coating 8/3/2015 8/21/2015 5 608.3072 608.3072 9.7300e- 003 608.51150.2097 0.0350 0.2448 0.0566 0.0322 0.0888Total 0.2073 2.2723 2.1640 6.1500e- 003 100.9183 100.9183 5.4800e- 003 101.03340.0943 8.0000e- 004 0.0951 0.0250 7.4000e- 004 0.0258Worker 0.0451 0.0542 0.6329 1.1600e- 003 0.0000 0.0000 0.0000 0.00000.0000 0.0000 0.0000 0.0000 0.0000 0.0000Vendor 0.0000 0.0000 0.0000 0.0000 507.3889 507.3889 4.2500e- 003 507.47810.1154 0.0342 0.1496 0.0316 0.0315 0.0631Hauling 0.1622 2.2181 1.5311 4.9900e- 003 Total CO2 CH4 N2O CO2e Category lb/day lb/day PM10 Total Fugitive PM2.5 Exhaust PM2.5 PM2.5 Total Bio- CO2 NBio- CO2 Unmitigated Construction Off-Site ROG NOx CO SO2 Fugitive PM10 Exhaust PM10 1,200.638 6 1,200.6386 0.2451 1,205.78611.4396 0.8748 2.3144 0.2180 0.8359 1.0538Total 1.4120 11.9409 8.8138 0.0120 1,200.638 6 1,200.6386 0.2451 1,205.78610.8748 0.8748 0.8359 0.8359Off-Road 1.4120 11.9409 8.8138 0.0120 0.0000 0.00001.4396 0.0000 1.4396 0.2180 0.0000 0.2180Fugitive Dust Total CO2 CH4 N2O CO2e Category lb/day lb/day PM10 Total Fugitive PM2.5 Exhaust PM2.5 PM2.5 Total Bio- CO2 NBio- CO2 3.2 Demolition - 2015 Unmitigated Construction On-Site ROG NOx CO SO2 Fugitive PM10 Exhaust PM10 7.30 20.00 LD_Mix HDT_Mix HHDT 3.1 Mitigation Measures Construction Architectural Coating 1 3.00 0.00 0.00 12.40 12.40 7.30 20.00 LD_Mix HDT_Mix HHDTPaving 7 18.00 0.00 0.00 Total CO2 CH4 N2O CO2ePM10 Total Fugitive PM2.5 Exhaust PM2.5 PM2.5 Total Bio- CO2 NBio- CO2 3.3 Excavation - 2015 Unmitigated Construction On-Site ROG NOx CO SO2 Fugitive PM10 Exhaust PM10 608.3072 608.3072 9.7300e- 003 608.51150.2097 0.0350 0.2448 0.0566 0.0322 0.0888Total 0.2073 2.2723 2.1640 6.1500e- 003 100.9183 100.9183 5.4800e- 003 101.03340.0943 8.0000e- 004 0.0951 0.0250 7.4000e- 004 0.0258Worker 0.0451 0.0542 0.6329 1.1600e- 003 0.0000 0.0000 0.0000 0.00000.0000 0.0000 0.0000 0.0000 0.0000 0.0000Vendor 0.0000 0.0000 0.0000 0.0000 507.3889 507.3889 4.2500e- 003 507.47810.1154 0.0342 0.1496 0.0316 0.0315 0.0631Hauling 0.1622 2.2181 1.5311 4.9900e- 003 Total CO2 CH4 N2O CO2e Category lb/day lb/day PM10 Total Fugitive PM2.5 Exhaust PM2.5 PM2.5 Total Bio- CO2 NBio- CO2 Mitigated Construction Off-Site ROG NOx CO SO2 Fugitive PM10 Exhaust PM10 0.0000 1,200.638 6 1,200.6386 0.2451 1,205.78611.4396 0.8748 2.3144 0.2180 0.8359 1.0538Total 1.4120 11.9409 8.8138 0.0120 0.0000 1,200.638 6 1,200.6386 0.2451 1,205.78610.8748 0.8748 0.8359 0.8359Off-Road 1.4120 11.9409 8.8138 0.0120 0.0000 0.00001.4396 0.0000 1.4396 0.2180 0.0000 0.2180Fugitive Dust Total CO2 CH4 N2O CO2e Category lb/day lb/day PM10 Total Fugitive PM2.5 Exhaust PM2.5 PM2.5 Total Bio- CO2 NBio- CO2 Mitigated Construction On-Site ROG NOx CO SO2 Fugitive PM10 Exhaust PM10 0.0000 1,200.638 6 1,200.6386 0.2451 1,205.78610.8748 0.8748 0.8359 0.8359Off-Road 1.4120 11.9409 8.8138 0.0120 0.0000 0.00000.8078 0.0000 0.8078 0.4221 0.0000 0.4221Fugitive Dust Total CO2 CH4 N2O CO2e Category lb/day lb/day PM10 Total Fugitive PM2.5 Exhaust PM2.5 PM2.5 Total Bio- CO2 NBio- CO2 Mitigated Construction On-Site ROG NOx CO SO2 Fugitive PM10 Exhaust PM10 4,758.236 2 4,758.2362 0.0445 4,759.17011.1538 0.3149 1.4687 0.3151 0.2896 0.6047Total 1.5339 20.4141 14.6868 0.0469 100.9183 100.9183 5.4800e- 003 101.03340.0943 8.0000e- 004 0.0951 0.0250 7.4000e- 004 0.0258Worker 0.0451 0.0542 0.6329 1.1600e- 003 0.0000 0.0000 0.0000 0.00000.0000 0.0000 0.0000 0.0000 0.0000 0.0000Vendor 0.0000 0.0000 0.0000 0.0000 4,657.317 9 4,657.3179 0.0390 4,658.13671.0595 0.3141 1.3736 0.2901 0.2889 0.5789Hauling 1.4887 20.3599 14.0539 0.0458 Total CO2 CH4 N2O CO2e Category lb/day lb/day PM10 Total Fugitive PM2.5 Exhaust PM2.5 PM2.5 Total Bio- CO2 NBio- CO2 Unmitigated Construction Off-Site ROG NOx CO SO2 Fugitive PM10 Exhaust PM10 1,200.638 6 1,200.6386 0.2451 1,205.78610.8078 0.8748 1.6826 0.4221 0.8359 1.2580Total 1.4120 11.9409 8.8138 0.0120 1,200.638 6 1,200.6386 0.2451 1,205.78610.8748 0.8748 0.8359 0.8359Off-Road 1.4120 11.9409 8.8138 0.0120 0.0000 0.00000.8078 0.0000 0.8078 0.4221 0.0000 0.4221Fugitive Dust Category lb/day lb/day Unmitigated Construction Off-Site 1,191.702 1 1,191.7021 0.3558 1,199.17330.9995 0.9995 0.9195 0.9195Total 1.4538 14.3777 8.2983 0.0113 1,191.702 1 1,191.7021 0.3558 1,199.17330.9995 0.9995 0.9195 0.9195Off-Road 1.4538 14.3777 8.2983 0.0113 Total CO2 CH4 N2O CO2e Category lb/day lb/day PM10 Total Fugitive PM2.5 Exhaust PM2.5 PM2.5 Total Bio- CO2 NBio- CO2 3.4 Building Construction - 2015 Unmitigated Construction On-Site ROG NOx CO SO2 Fugitive PM10 Exhaust PM10 4,758.236 2 4,758.2362 0.0445 4,759.17011.1538 0.3149 1.4687 0.3151 0.2896 0.6047Total 1.5339 20.4141 14.6868 0.0469 100.9183 100.9183 5.4800e- 003 101.03340.0943 8.0000e- 004 0.0951 0.0250 7.4000e- 004 0.0258Worker 0.0451 0.0542 0.6329 1.1600e- 003 0.0000 0.0000 0.0000 0.00000.0000 0.0000 0.0000 0.0000 0.0000 0.0000Vendor 0.0000 0.0000 0.0000 0.0000 4,657.317 9 4,657.3179 0.0390 4,658.13671.0595 0.3141 1.3736 0.2901 0.2889 0.5789Hauling 1.4887 20.3599 14.0539 0.0458 Total CO2 CH4 N2O CO2e Category lb/day lb/day PM10 Total Fugitive PM2.5 Exhaust PM2.5 PM2.5 Total Bio- CO2 NBio- CO2 Mitigated Construction Off-Site ROG NOx CO SO2 Fugitive PM10 Exhaust PM10 0.0000 1,200.638 6 1,200.6386 0.2451 1,205.78610.8078 0.8748 1.6826 0.4221 0.8359 1.2580Total 1.4120 11.9409 8.8138 0.0120 Total CO2 CH4 N2O CO2e Category lb/day lb/day PM10 Total Fugitive PM2.5 Exhaust PM2.5 PM2.5 Total Bio- CO2 NBio- CO2 Mitigated Construction Off-Site ROG NOx CO SO2 Fugitive PM10 Exhaust PM10 0.0000 1,191.702 1 1,191.7021 0.3558 1,199.17330.9995 0.9995 0.9195 0.9195Total 1.4538 14.3777 8.2983 0.0113 0.0000 1,191.702 1 1,191.7021 0.3558 1,199.17330.9995 0.9995 0.9195 0.9195Off-Road 1.4538 14.3777 8.2983 0.0113 Total CO2 CH4 N2O CO2e Category lb/day lb/day PM10 Total Fugitive PM2.5 Exhaust PM2.5 PM2.5 Total Bio- CO2 NBio- CO2 Mitigated Construction On-Site ROG NOx CO SO2 Fugitive PM10 Exhaust PM10 340.9333 340.9333 0.0108 341.16070.2069 0.0144 0.2212 0.0558 0.0132 0.0690Total 0.1656 0.8720 1.9569 3.6400e- 003 171.5611 171.5611 9.3200e- 003 171.75680.1603 1.3700e- 003 0.1617 0.0425 1.2500e- 003 0.0438Worker 0.0767 0.0922 1.0759 1.9700e- 003 169.3723 169.3723 1.5000e- 003 169.40380.0465 0.0130 0.0595 0.0133 0.0120 0.0253Vendor 0.0888 0.7798 0.8810 1.6700e- 003 0.0000 0.0000 0.0000 0.00000.0000 0.0000 0.0000 0.0000 0.0000 0.0000Hauling 0.0000 0.0000 0.0000 0.0000 Total CO2 CH4 N2O CO2e Category lb/day lb/day PM10 Total Fugitive PM2.5 Exhaust PM2.5 PM2.5 Total Bio- CO2 NBio- CO2ROG NOx CO SO2 Fugitive PM10 Exhaust PM10 181.6529 181.6529 9.8700e- 003 181.86020.1698 1.4500e- 003 0.1712 0.0450 1.3200e- 003 0.0463Total 0.0812 0.0976 1.1392 2.0900e- 003 181.6529 181.6529 9.8700e- 003 181.86020.1698 1.4500e- 003 0.1712 0.0450 1.3200e- 003 0.0463Worker 0.0812 0.0976 1.1392 2.0900e- 003 0.0000 0.0000 0.0000 0.00000.0000 0.0000 0.0000 0.0000 0.0000 0.0000Vendor 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.00000.0000 0.0000 0.0000 0.0000 0.0000 0.0000Hauling 0.0000 0.0000 0.0000 0.0000 Total CO2 CH4 N2O CO2e Category lb/day lb/day PM10 Total Fugitive PM2.5 Exhaust PM2.5 PM2.5 Total Bio- CO2 NBio- CO2 Unmitigated Construction Off-Site ROG NOx CO SO2 Fugitive PM10 Exhaust PM10 1,093.543 3 1,093.5433 0.2970 1,099.77940.7247 0.7247 0.6703 0.6703Total 1.2092 11.5427 7.3586 0.0111 0.0000 0.00000.0000 0.0000 0.0000 0.0000Paving 0.0000 1,093.543 3 1,093.5433 0.2970 1,099.77940.7247 0.7247 0.6703 0.6703Off-Road 1.2092 11.5427 7.3586 0.0111 Total CO2 CH4 N2O CO2e Category lb/day lb/day PM10 Total Fugitive PM2.5 Exhaust PM2.5 PM2.5 Total Bio- CO2 NBio- CO2 3.5 Paving - 2015 Unmitigated Construction On-Site ROG NOx CO SO2 Fugitive PM10 Exhaust PM10 340.9333 340.9333 0.0108 341.16070.2069 0.0144 0.2212 0.0558 0.0132 0.0690Total 0.1656 0.8720 1.9569 3.6400e- 003 171.5611 171.5611 9.3200e- 003 171.75680.1603 1.3700e- 003 0.1617 0.0425 1.2500e- 003 0.0438Worker 0.0767 0.0922 1.0759 1.9700e- 003 169.3723 169.3723 1.5000e- 003 169.40380.0465 0.0130 0.0595 0.0133 0.0120 0.0253Vendor 0.0888 0.7798 0.8810 1.6700e- 003 0.0000 0.0000 0.0000 0.00000.0000 0.0000 0.0000 0.0000 0.0000 0.0000Hauling 0.0000 0.0000 0.0000 0.0000 3.6 Architectural Coating - 2015 Unmitigated Construction On-Site 181.6529 181.6529 9.8700e- 003 181.86020.1698 1.4500e- 003 0.1712 0.0450 1.3200e- 003 0.0463Total 0.0812 0.0976 1.1392 2.0900e- 003 181.6529 181.6529 9.8700e- 003 181.86020.1698 1.4500e- 003 0.1712 0.0450 1.3200e- 003 0.0463Worker 0.0812 0.0976 1.1392 2.0900e- 003 0.0000 0.0000 0.0000 0.00000.0000 0.0000 0.0000 0.0000 0.0000 0.0000Vendor 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.00000.0000 0.0000 0.0000 0.0000 0.0000 0.0000Hauling 0.0000 0.0000 0.0000 0.0000 Total CO2 CH4 N2O CO2e Category lb/day lb/day PM10 Total Fugitive PM2.5 Exhaust PM2.5 PM2.5 Total Bio- CO2 NBio- CO2 Mitigated Construction Off-Site ROG NOx CO SO2 Fugitive PM10 Exhaust PM10 0.0000 1,093.543 3 1,093.5433 0.2970 1,099.77940.7247 0.7247 0.6703 0.6703Total 1.2092 11.5427 7.3586 0.0111 0.0000 0.00000.0000 0.0000 0.0000 0.0000Paving 0.0000 0.0000 1,093.543 3 1,093.5433 0.2970 1,099.77940.7247 0.7247 0.6703 0.6703Off-Road 1.2092 11.5427 7.3586 0.0111 Total CO2 CH4 N2O CO2e Category lb/day lb/day PM10 Total Fugitive PM2.5 Exhaust PM2.5 PM2.5 Total Bio- CO2 NBio- CO2 Mitigated Construction On-Site ROG NOx CO SO2 Fugitive PM10 Exhaust PM10 0.0000 0.00000.0000 0.0000 0.0000 0.0000Archit. Coating 28.0572 Total CO2 CH4 N2O CO2e Category lb/day lb/day PM10 Total Fugitive PM2.5 Exhaust PM2.5 PM2.5 Total Bio- CO2 NBio- CO2 Mitigated Construction On-Site ROG NOx CO SO2 Fugitive PM10 Exhaust PM10 30.2755 30.2755 1.6500e- 003 30.31000.0283 2.4000e- 004 0.0285 7.5000e- 003 2.2000e- 004 7.7200e- 003 Total 0.0135 0.0163 0.1899 3.5000e- 004 30.2755 30.2755 1.6500e- 003 30.31000.0283 2.4000e- 004 0.0285 7.5000e- 003 2.2000e- 004 7.7200e- 003 Worker 0.0135 0.0163 0.1899 3.5000e- 004 0.0000 0.0000 0.0000 0.00000.0000 0.0000 0.0000 0.0000 0.0000 0.0000Vendor 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.00000.0000 0.0000 0.0000 0.0000 0.0000 0.0000Hauling 0.0000 0.0000 0.0000 0.0000 Total CO2 CH4 N2O CO2e Category lb/day lb/day PM10 Total Fugitive PM2.5 Exhaust PM2.5 PM2.5 Total Bio- CO2 NBio- CO2 Unmitigated Construction Off-Site ROG NOx CO SO2 Fugitive PM10 Exhaust PM10 281.4481 281.4481 0.0367 282.21770.2209 0.2209 0.2209 0.2209Total 28.4638 2.5703 1.9018 2.9700e- 003 281.4481 281.4481 0.0367 282.21770.2209 0.2209 0.2209 0.2209Off-Road 0.4066 2.5703 1.9018 2.9700e- 003 0.0000 0.00000.0000 0.0000 0.0000 0.0000Archit. Coating 28.0572 Total CO2 CH4 N2O CO2e Category lb/day lb/day PM10 Total Fugitive PM2.5 Exhaust PM2.5 PM2.5 Total Bio- CO2 NBio- CO2ROG NOx CO SO2 Fugitive PM10 Exhaust PM10 1,788.201 2 1,788.2012 0.0791 1,789.86151.3648 0.0342 1.3989 0.3651 0.0314 0.3964Unmitigated 1.1005 2.4123 10.8059 0.0199 1,788.201 2 1,788.2012 0.0791 1,789.86151.3648 0.0342 1.3989 0.3651 0.0314 0.3964Mitigated 1.1005 2.4123 10.8059 0.0199 NBio- CO2 Total CO2 CH4 N2O CO2e Category lb/day lb/day Exhaust PM10 PM10 Total Fugitive PM2.5 Exhaust PM2.5 PM2.5 Total Bio- CO2 4.0 Operational Detail - Mobile 4.1 Mitigation Measures Mobile ROG NOx CO SO2 Fugitive PM10 30.2755 30.2755 1.6500e- 003 30.31000.0283 2.4000e- 004 0.0285 7.5000e- 003 2.2000e- 004 7.7200e- 003 Total 0.0135 0.0163 0.1899 3.5000e- 004 30.2755 30.2755 1.6500e- 003 30.31000.0283 2.4000e- 004 0.0285 7.5000e- 003 2.2000e- 004 7.7200e- 003 Worker 0.0135 0.0163 0.1899 3.5000e- 004 0.0000 0.0000 0.0000 0.00000.0000 0.0000 0.0000 0.0000 0.0000 0.0000Vendor 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000 0.00000.0000 0.0000 0.0000 0.0000 0.0000 0.0000Hauling 0.0000 0.0000 0.0000 0.0000 Total CO2 CH4 N2O CO2e Category lb/day lb/day PM10 Total Fugitive PM2.5 Exhaust PM2.5 PM2.5 Total Bio- CO2 NBio- CO2 Mitigated Construction Off-Site ROG NOx CO SO2 Fugitive PM10 Exhaust PM10 0.0000 281.4481 281.4481 0.0367 282.21770.2209 0.2209 0.2209 0.2209Total 28.4638 2.5703 1.9018 2.9700e- 003 0.0000 281.4481 281.4481 0.0367 282.21770.2209 0.2209 0.2209 0.2209Off-Road 0.4066 2.5703 1.9018 2.9700e- 003 147.2163 147.2163 2.8200e- 003 2.7000e- 003 148.11229.3200e- 003 9.3200e- 003 9.3200e- 003 9.3200e- 003 NaturalGas Unmitigated 0.0135 0.1214 0.0939 7.4000e- 004 147.2163 147.2163 2.8200e- 003 2.7000e- 003 148.11229.3200e- 003 9.3200e- 003 9.3200e- 003 9.3200e- 003 NaturalGas Mitigated 0.0135 0.1214 0.0939 7.4000e- 004 NBio- CO2 Total CO2 CH4 N2O CO2e Category lb/day lb/day Exhaust PM10 PM10 Total Fugitive PM2.5 Exhaust PM2.5 PM2.5 Total Bio- CO2 4.4 Fleet Mix Historical Energy Use: N 5.1 Mitigation Measures Energy ROG NOx CO SO2 Fugitive PM10 0.002060 0.003298 0.006596 0.000695 0.001668 5.0 Energy Detail SBUS MH 0.546619 0.062800 0.174631 0.124220 0.034286 0.004915 0.015254 0.022958 LHD2 MHD HHD OBUS UBUS MCY 48.00 19.00 77 19 4 LDA LDT1 LDT2 MDV LHD1 0.00 0.00 0 0 0 General Office Building 9.50 7.30 7.30 33.00 29.10 44.80 86 11 3 Enclosed Parking Structure 9.50 7.30 7.30 0.00 H-S or C-C H-O or C-NW Primary Diverted Pass-by Condo/Townhouse 12.40 4.30 5.40 26.10 4.3 Trip Type Information Miles Trip %Trip Purpose % Land Use H-W or C-W H-S or C-C H-O or C-NW H-W or C- W Total 268.58 80.78 45.84 497,531 497,531 General Office Building 242.22 52.14 21.56 438,622 438,622 Enclosed Parking Structure 0.00 0.00 0.00 Annual VMT Condo/Townhouse 26.36 28.64 24.28 58,909 58,909 4.2 Trip Summary Information Average Daily Trip Rate Unmitigated Mitigated Land Use Weekday Saturday Sunday Annual VMT 6.0 Area Detail 6.1 Mitigation Measures Area 147.2163 147.2163 2.8200e- 003 2.7000e- 003 148.11229.3200e- 003 9.3200e- 003 9.3200e- 003 9.3200e- 003 Total 0.0135 0.1214 0.0939 7.4000e- 004 25.1083 25.1083 4.8000e- 004 4.6000e- 004 25.26111.5900e- 003 1.5900e- 003 1.5900e- 003 1.5900e- 003 Condo/Townhouse 0.21342 2.3000e- 003 0.0197 8.3700e- 003 1.3000e- 004 122.1080 122.1080 2.3400e- 003 2.2400e- 003 122.85117.7300e- 003 7.7300e- 003 7.7300e- 003 7.7300e- 003 General Office Building 1.03792 0.0112 0.1018 0.0855 6.1000e- 004 0.0000 0.0000 0.0000 0.0000 0.00000.0000 0.0000 0.0000 0.0000Enclosed Parking Structure 0 0.0000 0.0000 0.0000 0.0000 Total CO2 CH4 N2O CO2e Land Use kBTU/yr lb/day lb/day PM10 Total Fugitive PM2.5 Exhaust PM2.5 PM2.5 Total Bio- CO2 NBio- CO2 Mitigated NaturalGa s Use ROG NOx CO SO2 Fugitive PM10 Exhaust PM10 147.2163 147.2163 2.8200e- 003 2.7000e- 003 148.11229.3200e- 003 9.3200e- 003 9.3200e- 003 9.3200e- 003 Total 0.0135 0.1214 0.0939 7.4000e- 004 122.1080 122.1080 2.3400e- 003 2.2400e- 003 122.85117.7300e- 003 7.7300e- 003 7.7300e- 003 7.7300e- 003 General Office Building 1037.92 0.0112 0.1018 0.0855 6.1000e- 004 0.0000 0.0000 0.0000 0.0000 0.00000.0000 0.0000 0.0000 0.0000Enclosed Parking Structure 0 0.0000 0.0000 0.0000 0.0000 25.1083 25.1083 4.8000e- 004 4.6000e- 004 25.26111.5900e- 003 1.5900e- 003 1.5900e- 003 1.5900e- 003 Condo/Townhouse 213.42 2.3000e- 003 0.0197 8.3700e- 003 1.3000e- 004 Total CO2 CH4 N2O CO2e Land Use kBTU/yr lb/day lb/day PM10 Total Fugitive PM2.5 Exhaust PM2.5 PM2.5 Total Bio- CO2 NBio- CO2 5.2 Energy by Land Use - NaturalGas Unmitigated NaturalGa s Use ROG NOx CO SO2 Fugitive PM10 Exhaust PM10 Mitigated 107.5647 54.9618 162.5265 0.4087 2.8100e- 003 171.97880.8038 0.8038 0.8037 0.8037Total 3.0255 0.0787 5.4826 0.0118 0.6089 0.6089 6.6000e- 004 0.62271.8300e- 003 1.8300e- 003 1.8300e- 003 1.8300e- 003 Landscaping 0.0115 4.0300e- 003 0.3433 2.0000e- 005 107.5647 54.3529 161.9176 0.4080 2.8100e- 003 171.35600.8019 0.8019 0.8019 0.8019Hearth 1.7842 0.0747 5.1394 0.0118 0.0000 0.00000.0000 0.0000 0.0000 0.0000Consumer Products 0.9416 0.0000 0.00000.0000 0.0000 0.0000 0.0000Architectural Coating 0.2883 Total CO2 CH4 N2O CO2e SubCategory lb/day lb/day PM10 Total Fugitive PM2.5 Exhaust PM2.5 PM2.5 Total Bio- CO2 NBio- CO2 6.2 Area by SubCategory Unmitigated ROG NOx CO SO2 Fugitive PM10 Exhaust PM10 107.5647 54.9618 162.5265 0.4087 2.8100e- 003 171.97880.8038 0.8038 0.8037 0.8037Unmitigated 3.0255 0.0787 5.4826 0.0118 107.5647 54.9618 162.5265 0.4087 2.8100e- 003 171.97880.8038 0.8038 0.8037 0.8037Mitigated 3.0255 0.0787 5.4826 0.0118 NBio- CO2 Total CO2 CH4 N2O CO2e Category lb/day lb/day Exhaust PM10 PM10 Total Fugitive PM2.5 Exhaust PM2.5 PM2.5 Total Bio- CO2ROG NOx CO SO2 Fugitive PM10 Hours/Day Days/Year Horse Power Load Factor Fuel Type 10.0 Vegetation 7.0 Water Detail 7.1 Mitigation Measures Water 8.0 Waste Detail 8.1 Mitigation Measures Waste 9.0 Operational Offroad Equipment Type Number 107.5647 54.9618 162.5265 0.4087 2.8100e- 003 171.97880.8038 0.8038 0.8037 0.8037Total 3.0255 0.0787 5.4826 0.0118 0.6089 0.6089 6.6000e- 004 0.62271.8300e- 003 1.8300e- 003 1.8300e- 003 1.8300e- 003 Landscaping 0.0115 4.0300e- 003 0.3433 2.0000e- 005 107.5647 54.3529 161.9176 0.4080 2.8100e- 003 171.35600.8019 0.8019 0.8019 0.8019Hearth 1.7842 0.0747 5.1394 0.0118 0.0000 0.00000.0000 0.0000 0.0000 0.0000Consumer Products 0.9416 0.0000 0.00000.0000 0.0000 0.0000 0.0000Architectural Coating 0.2883 Total CO2 CH4 N2O CO2e SubCategory lb/day lb/day PM10 Total Fugitive PM2.5 Exhaust PM2.5 PM2.5 Total Bio- CO2 NBio- CO2ROG NOx CO SO2 Fugitive PM10 Exhaust PM10 APPENDIX C Cultural Resources Memo September 30, 2014 Christy Fong, Planner City of Palo Alto Department of Planning and Community Environment 250 Hamilton Avenue Palo Alto, California 94301 Subject: Phase I Archaeological Inventory for the 429 University Avenue Project, City of Palo Alto, Santa Clara County, CA Dear Ms. Fong: This letter documents the Phase I archaeological resources inventory conducted by Dudek for the 429 University Avenue Project (Project), located in the City of Palo Alto, Santa Clara County (Figure 1). The project proposes demolition of two existing commercial buildings on University Avenue totaling 11,633 square feet and construction of a new 33,000 square-foot four-story mixed-use building. A Northwest Information Center (NWIC) records search indicates that no cultural resources have been recorded in the proposed project area. The Palo Alto Comprehensive Plan map of archaeologically sensitive areas (General Plan Figure L-8, Archaeological Resource Areas) indicates that the project site falls within an area of “Moderate Sensitivity.” Inspection of current site photographs and current aerial imagery shows the area to have been fully developed, and has little potential to contain undocumented intact archaeological deposits. A complete historic evaluation of the buildings affected by the proposed project has been provided under a separate cover (Appendix D of the Draft MND). Based on these findings, potential for the inadvertent discovery of subsurface archaeological or historical resources at the project site is very low. No additional archaeological effort is recommended to be necessary beyond standard mitigation measures to address unanticipated discoveries. PROJECT LOCATION AND DESCRIPTION The project site is located at 429 University Avenue in the City of Palo Alto (Figure 2), and is bounded by Kipling Street to the northeast, Lane 30 East (a service alley) to the northwest, and Waverly Street to the southwest. The proposed project would involve demolition of two existing one-story commercial buildings totaling 11,633 square feet on two separate parcels (425 University Avenue and 429 University Avenue), and construction of a new four-story, 33,000 square foot mixed-use building. The Phase I Archaeological Inventory for the 429 University Avenue Project 2 September 2014 proposed building would include ground floor retail, second floor office, three residential units on the third floor, and one residential unit and commercial uses on the fourth floor. REGULATORY SETTING State CEQA requires that all private and public activities not specifically exempted be evaluated for the potential to impact the environment, including effects to historical resources. Historical resources are recognized as part of the environment under CEQA. It defines historical resources as “any object, building, structure, site, area, or place, which is historically significant in the architectural, engineering, scientific, economic, agricultural, educational, social, political, military, or cultural annals of California” (Division I, Public Resources Code, Section 5021.1(b)). Lead agencies have a responsibility to evaluate existing buildings against the California Register criteria prior to making a finding as to a proposed project’s impacts to historical resources. Mitigation of adverse impacts is required if the proposed project will cause substantial adverse change. Substantial adverse change includes demolition, destruction, relocation, or alteration such that the significance of an eligible historical resource would be impaired. While demolition and destruction are fairly obvious significant impacts, it is more difficult to assess when change, alteration, or relocation crosses the threshold of substantial adverse change. The CEQA Guidelines provide that a project that demolishes or alters those physical characteristics of an eligible historical resource that convey its historical significance (i.e., its character-defining features) can be considered to materially impair the resource’s significance. The California Register is used in the consideration of historic resources relative to significance for purposes of CEQA. The California Register includes resources listed in, or formally determined eligible for some California State Landmarks and Points of Historical Interest. Properties of local significance that have been designated under a local preservation ordinance (local landmarks or landmark districts), or that have been identified in a local historical resources inventory may be eligible for listing in the California Register and are presumed to be significant resources for purposes of CEQA unless a preponderance of evidence indicates otherwise. Generally, a resource shall be considered by the lead agency to be “historically significant” if the resource meets the criteria for listing on the California Register of Historical Resources (Pub. Res. Code SS5024.1, Title 14 CCR, Section 4852) consisting of the following: 1. It is associated with events that have made a significant contribution to the broad patterns of local or regional history, or the cultural heritage of California or the United States; or Phase I Archaeological Inventory for the 429 University Avenue Project 3 September 2014 2. It is associated with the lives of persons important to local, California, or national history; or 3. It embodies the distinctive characteristics of a type, period, region, or method of construction, or represents the work of a master, or possesses high artistic values; or 4. It has yielded, or has the potential to yield, information important to the prehistory or history of the local area, California, or the nation. Local City of Palo Alto The City of Palo Alto Comprehensive Plan provides specific policies for preserving historic and archaeological resources. The Land Use and Community Design Element emphasizes the value and importance of the sustainable management of archaeological resources, historic buildings and places (City of Palo Alto Comprehensive Plan). The City of Palo Alto’s Historic Inventory lists noteworthy examples of the work of important individual designers and architectural eras and traditions, as well as those structures whose background is associated with important events in the history of the city, state, or nation. A complete historic evaluation of the buildings affected by the current project has been provided as a separate study (Appendix D of the Draft MND). A number of archaeological surveys have been conducted within Palo Alto in association with specific projects, but no systematic city-wide survey aimed at locating all sites has been undertaken. There may still be undiscovered archaeological resources in many parts of the City. Such resources are most likely to occur near the original locations of streams and springs and northeast of El Camino Real near old tidelands. The Land Use and Community Design Element of the Comprehensive Plan provides general guidelines for the treatment of archaeological resources. In general, these guidelines correspond with the Secretary of the Interior’s Standards and Guidelines for Archeology and Historic Preservation [48 FR 44720–44726]) and the California Office of Historic Preservation (OHP) Instructions for Recording Historical Resources (1995). In addition to these standards and guidelines, the City of Palo Alto Comprehensive Plan Land Use and Community Design Element specifies, “using the archaeological sensitivity map [Figure L-8] in the Comprehensive Plan as a guide, continue to assess the need for archaeological surveys and mitigation plans on a project basis, consistent with the California Environmental Quality Act and the National Historic Preservation Act” (City of Palo Alto Comprehensive Plan). Phase I Archaeological Inventory for the 429 University Avenue Project 4 September 2014 NWIC RECORDS SEARCH A records search for the proposed project area and a half-mile radius was completed by Dudek archaeologist Nicholas Hanten at the NWIC on September 25, 2014 (Confidential Appendix A). This search included their collection of mapped prehistoric, historical and built-environment resources, Department of Parks and Recreation (DPR) Site Records, technical reports, archival resources, and ethnographic references. Additional sources consulted included the National Register of Historic Places (NRHP), California Inventory of Historical Resources/CRHR and listed OHP Archaeological Determinations of Eligibility, California Points of Historical Interest, California Historical Landmarks, and Caltrans Bridge Survey information. Previously Conducted Studies NWIC records indicate that 34 previous cultural resources investigations have been conducted within a half-mile of the proposed project area (Table 1). None of these previous investigations overlap the proposed project area. The closest study (S-035932) occurred across the street from the proposed project area at the Hotel President (488 University Avenue) in regards to the proposed installation of an AT&T wireless antenna on a hotel balcony. Table 1 Previously Conducted Studies within 0.5-mile of the Project Area NWIC Report ID Author(s) Year Title Proximity to Project Area S-004511 Cindy Desgrandchamp 1978 Cultural Resources Survey, 04-SCL-82, Proposed Lane Widening at Quarry Road and Route 82, P.M. 26.2 04220- 402291 Outside S-004626 Dorothy F. Regnery 1975 National Register of Historic Places Nomination Form, Hostess House (Community House, now Veterans Building), Palo Alto, California Outside S-004627 Fern B. Hunt 1971 National Register of Historic Places Nomination Form, John Adam Squire House, Palo Alto, California Palo Alto, California Outside S-004633 Gay Woolley 1973 National Register of Historic Places Nomination Form, T.B. Downing House, Palo Alto, California Outside S-008396 Paula Boghosian and John Beach 1979 Professorville Historic District (National Register Nomination Form) Outside S-008647 William Roop 1979 Reconnaissance of the grounds surrounding the Palo Alto Southern Pacific Depot, Red Cross and Veterans buildings (letter report). Outside S-011396 Biosystems Analysis, Inc. 1989 Technical Report of Cultural Resources Studies for the Proposed WTG- WEST, Inc., Los Angeles to San Francisco and Sacramento, California: Fiber Optic Cable Project Outside S-017993 Brian Hatoff et al. 1995 Cultural Resources Inventory Report for the Proposed Mojave Northward Expansion Project Outside S-020523 Barry A. Price 1998 Cultural Resources Assessment, Pacific Bell Mobile Services Facility SF- 533-07, Palo Alto, Santa Clara County, California (letter report) Outside S-021146 Basin Research Associates, Inc. 1997 Findings of Effect (No Effect), Palo Alto Transit Center Improvements, City of Palo Alto, Santa Clara County Outside Phase I Archaeological Inventory for the 429 University Avenue Project 5 September 2014 NWIC Report ID Author(s) Year Title Proximity to Project Area S-022157 Archaeological Resource Management 1999 Cultural Resource Evaluation of the Property at 955 Alma Street in the City of Palo Alto, California (letter report) Outside S-022183 Archaeological Resource Management 1999 Cultural Resource Evaluation of the Property at 200 Hamilton Avenue in the City of Palo Alto, California Outside S-022359 Hannah Ballard 2000 Archaeological Monitoring at 168 University Avenue, Palo Alto, California (letter report) Outside S-022649 Archaeological Resource Management 2000 Archaeological Testing Program for the Property at 200 Hamilton Avenue in the City of Palo Alto, California Outside S-022670 John Holson 2000 Point to Point, Stanford Utility Boxes (letter report) Outside S-022978 Mike Avina 2000 Final Cultural Resources Inventory Report for Williams Communications, Inc. Fiber Optic Cable System Installation Project, San Francisco to Santa Clara, San Francisco, San Mateo, and Santa Clara Counties: Addendum 1 Outside S-025174 John Holson et al. 2002 Cultural Resources Report for San Bruno to Mountain View lnternodal Level 3 Fiber Optics Project in San Mateo and Santa Clara Counties, California Outside S-029573 Jonathan Goodrich 2000 Final Report, Archaeological Survey and Record Search for the Six Fluor Global Fiber Optic Segments, Mountain View, Palo Alto, and San Mateo County, California. Outside S-029657 Wendy J. Nelson, et al. 2002 Archaeological Inventory for the Caltrain Electrification Program Alternative in San Francisco, San Mateo, and Santa Clara Counties, California Outside S-032169 Leigh A. Martin 2006 Cultural Resource Assessment Report, Palo Alto lntermodal Transit Center Project (PAITC), Santa Clara County, California Outside S-033061 Nancy Sikes et al. 2006 Cultural Resources Final Report of Monitoring and Findings for the Qwest Network Construction Project, State of California Outside S-033475 Jason D. Jones 2006 Verizon Cellular Communications Tower Site--Palo Alto Retail, 219 University Avenue, Palo Alto, CA Outside S-033545 National Park Service 1994 Draft Comprehensive Management and Use Plan and Environmental Impact Statement, Juan Bautista de Anza National Historic Trail, Arizona and California Outside S-035835 HNTB Corps 2007 Finding of Effect (No Adverse Effect), Proposed Modifications to the Palo Alto Southern Pacific Railroad Depot in Palo Alto, California, FTA070326A Outside S-035932 Carolyn Losee 2009 Records Search Results for AT&T Mobility Audit Site CNU0770/13313/1- A, 488 University Avenue, Palo Alto, Santa Clara County, California 94301 (letter report) Outside S-035997 Curt Duke and Korene Russell 2003 Cultural Resource Assessment, Palo Alto Caltrain Transit Center Project, Palo Alto, Santa Clara County, California Outside S-038063 Neal Kaptain 2009 Smart Corridors Geoarchaeological Sensitivity Research (letter report) Outside S-039048 Basin Research Associates and Ward Hill 2008 Historic Property Survey Report, Finding of Effect, 801-875 Alma Street Mixed Use Projects, Palo Alto, Santa Clara County, California Outside Phase I Archaeological Inventory for the 429 University Avenue Project 6 September 2014 NWIC Report ID Author(s) Year Title Proximity to Project Area S-039469 Neal Kaptain 2012 Historical Resources Compliance Report for the San Mateo County SMART Corridors Project, Segment Ill, Redwood City, Atherton, Menlo Park, East Palo Alto, and Palo Alto, San Mateo County & Santa Clara County, California; EA #4A9201 ; EFIS #0400001169, Caltrans District 4; SR 82 PM SM 0/4.8, SCL 24.1 /26.4; SR 84 PM 24.6/28. 7; US 101 PM 0.7/5.5; SR 109PM1 .10/1.87; SR 114 PM 5.0/5.93 Outside S-039643 Jessica Tudor and Kathleen A. Crawford 2012 Cultural Resources Records Search and Site Visit Results for T-Mobile West, LLC, Candidate SF15104A (Channing House), 850 Webster Street, Palo Alto, Santa Clara County, California (letter report) Outside S-039704 Wayne H. Bonner and Kathleen A. Crawford 2012 Direct APE Historic Architectural Assessment for T-Mobile West, LLC Candidate SF15104A (Channing House), 850 Webster Street, Palo Alto, Santa Clara County, California (letter report) Outside S-040641 Cher L. Peterson and Kathleen A. Crawford 2012 Cultural Resources Records Search and Site Visit Results for T-Mobile West, LLC, Candidate SF04340A (BA340 101 Alma Building), 101 Alma Street, Palo Alto, Santa Clara County, California (letter report) Outside S-041536 Michael Corbett and Denise Bradley 2001 Final Survey Report, Palo Alto Historical Survey Update, August 1997- August 2000 Outside S-043468 Rand Herbert and Christopher McMorris 2006 Finding of No Adverse Effect: San Francisquito Creek Bridge (MP 29.70) Knee Braces Modification in the City of Palo Alto, Santa Clara County, California Outside Previously Identified Cultural Resources NWIC records indicate that no cultural resources have been previously identified within the proposed project area. A total of 16 cultural resources have been recorded within 0.5-mile of the proposed project area (Table 2). These consist of 15 historic built environment resources (i.e., buildings and structures) and one possible prehistoric archaeological site (CA-SCL-598). The site was first identified in 1922 and was described as a “mine” of bones encountered 10 feet below the surface, including the skeleton of one adult human. However, no associated artifacts or additional details about the find were reported, so the age and disposition of the remains are entirely unclear. The area has since been fully developed and it is unlikely that any intact cultural deposits (if there in fact ever were any) are still intact. Table 2 Previously Recorded Cultural Resources within 0.5-Mile of the Project Area Primary Number Trinomial Resource Description Recorded By/Year CRHR Status Proximity to Project Area 43-000388 CA-SCL-382H Historic: Hostess House J. Cooper 1979 NRHP Listed 0.4-mile southwest 43-000389 CA-SCL-383H Historic: John Adams Squire House J. Cooper 1979 Unknown 0.5-mile northeast 43-000397 CA-SCL-391H Historic: T.B. Downing House J. Cooper 1979 NRHP Listed 0.2-mile southeast 43-000463 CA-SCL-462H Historic: U.S. Post Office T. McGregor 1981 NRHP Listed 200 meters south 43-000551 CA-SCL-556H Historic: Professorville Historic District T. McGregor 1980 NRHP Listed 0.5-mile southeast Phase I Archaeological Inventory for the 429 University Avenue Project 7 September 2014 Primary Number Trinomial Resource Description Recorded By/Year CRHR Status Proximity to Project Area 43-000593 CA-SCL-598 Prehistoric: human remains W. Caldwell 1949; B. Bocek 1986 Unknown 220 meters southwest 43-001138 — Historic: Old Delta Tau Delta Fraternity House K. Cameron (n.d.) Unknown 0.2-mile southwest 43-001845 — Historic: 219 University Avenue J. Jones 2006 Not evaluated 0.2-mile southwest 43-002204 — Historic: 801 Alma Street W. Hastie 2001; W. Hill 2008 6Z (not eligible) 0.4-mile south 43-002205 — Historic: 853 Alma Street W. Hill 2008 6Z (not eligible) 0.5-mile south 43-002206 — Historic: 875 Alma Street W. Hill 2008 6Z (not eligible) 0.5-mile south 43-002261 — Historic: Hotel President D. Supernowicz 2009 3S (eligible for NRHP) 50 meters east 43-002808 — Historic: Channing House K. Crawford 2012 Not eligible for NRHP (not evaluated at state or local level) 0.3-mile east 43-002867 — Historic: Southern Pacific Railroad Bridge M. Corbett 2000 2S2 (determined eligible for NRHP) 0.5-mile west 43-002868 — Historic: University Avenue Underpass M. Corbett 2001 3S (eligible for NRHP) 0.3-mile southwest 43-002869 — Historic: Palo Alto Southern Pacific Railroad Depot J. McFall and V. Warheit 1995 1D (listed in the NRHP) 0.3-mile southwest Previously identified resources located closest to the proposed project area include the Hotel President (located 50 meters to the east) which was determined eligible for the NRHP; the U.S. Post Office (located 200 meters to the south) which is listed in the NRHP; and the archaeological site containing human remains (CA-SCL-598, located 220 meters to the southwest). The records search results indicate that there are numerous historic built environment resources surrounding the proposed project area, many of which are listed in the NRHP. SURVEY METHODS Because the proposed project area has been fully developed and contains no exposed sediment, an intensive-level archaeological survey would have provided no additional information relating to archaeological sensitivity of the proposed project area, and was therefore not conducted. Project area photographs and aerial imagery were inspected of the entire project area. These further confirmed the fully obscured nature of the ground surface as evidenced by the presence of buildings and fully paved areas. No artifacts or archaeological features are present on the ground surface within the project area. Further, the past construction of existing buildings and parking areas, as well as associated grading activities, have likely severely disturbed/impacted Phase I Archaeological Inventory for the 429 University Avenue Project 8 September 2014 subsurface soils. This degree of disturbance suggests that there is a very low likelihood for encountering intact subsurface cultural deposits. SUMMARY AND MANAGEMENT CONSIDERATIONS Archaeological Sensitivity and Mitigation Measures Dudek’s Phase I cultural resources inventory of the project area suggests that there is a very low potential for the inadvertent discovery of intact archaeological deposits during ground breaking activities related to the proposed project. The Palo Alto Comprehensive Plan map of archaeologically sensitive areas (General Plan Figure L-8, Archaeological Resource Areas) indicates that the project site falls within an area of "Moderate Sensitivity" based on topographic setting, including proximity to major drainages, and potential to encounter undocumented subsurface archaeological deposits. The NWIC records suggest that there are no previously recorded archaeological resources within the project area. The only archaeological site identified within the 0.5-mile radius as a result of the records search is CA-SCL-598. This site was first identified in 1922 and was described as a “mine” of bones encountered 10 feet below the surface, including the skeleton of one adult human. Because no associated artifacts were reported and no additional details about the find were reported, the context of the find is not at all clear. An extended history of past disturbance suggests that there is a very low potential for encountering intact subsurface cultural deposits. Recommendations relating to the buildings within the project area have been provided within a separate study (Appendix D of the Draft MND). Based on these findings, potential for the inadvertent discovery of subsurface archaeological or historical resources at the project site is very low. No additional archaeological effort is recommended at this time. In the event that subsurface cultural resources are encountered during ground-disturbing activities, work in the immediate vicinity shall be stopped and the City of Palo Alto contacted. A qualified archaeologist must be retained, as defined by CEQA and the City of Palo Alto, to evaluate the archaeological discovery for its eligibility for Local and State listing. The discovery or disturbance of any identified cultural resource shall be reported as appropriate to the City of Palo Alto. Identified cultural resources should be recorded on State Department of Parks and Recreation (DPR) form 523 (archaeological sites). Mitigation measures prescribed by these groups and required by the City shall be undertaken before construction activities are resumed. If disturbance of a project area cultural resource cannot be avoided, a mitigation program, including measures set forth in the City's Cultural Resources Management Program and in compliance with sections 15064.5 and 15126.4 of the CEQA Guidelines, shall be implemented. In the event that Native American human remains or related cultural material are encountered, Phase I Archaeological Inventory for the 429 University Avenue Project 9 September 2014 Section 15064.5(e) of CEQA defines the appropriate procedures, to be initiated with the requirement that work to be stopped and the County Coroner notified. Should you have any questions relating to this report and its findings please contact me. Respectfully Submitted, __________________________ Samantha Murray, MA, RPA Archaeologist DUDEK Office: (626) 204-9826 Email: smurray@dudek.com cc: Heather Martinelli, Dudek Attachments: Figure 1. Regional Location Map Figure 2. Project Location Map Confidential Appendix A: NWIC Records Search Information Milpitas SanJose Mountain View PaloAlto Gilroy Campbell SanRamon BlackhawkDanville Moraga Town Alamo Discovery Bay Orinda Lafayette Walnut Creek Clayton Brentwood Pleasant Hill OakleyConcord PrunedaleElkhorn Ho Aptos Hills-Larkin Valley Interlaken Santa Cruz Soquel Aptos Corralitos Felton Day Valley ScottsValley Ben Lomond Boulder Creek Morgan Hill Lexington Hills SanJose Los Gatos Saratoga Cupertino LosAltosHills Los Altos Santa ClaraSunnyvale Portola Valley Woodside Atherton SanCarlosHalfMoon Bay Menlo Park BelmontEl Granada RedwoodCity Montara Hillsborough SanMateo Foster City Burlingame San Bruno Pacifica South SanFrancisco San Francisco Newark Fremont Union City Hayward PleasantonFairview Livermore DublinSanLeandroCastro Valley Alameda Oakland Berkeley Antioch VineHill Richmond BethelIsland Martinez Pittsburg WestPittsburg Pinole Rodeo Hercules Tracy Mill Valley San Rafael Lagunitas-Forest Knolls Lucas Valley- Marinwood Inverness Novato Benicia Vallejo American Canyon Santa C r u z County San MateoCounty San Francisco County Marin County Co n t r a C o s t a Co u n t y S t a n i s l a u s C o Contra Costa C o u n t y nty Marin Count y Sonoma Co u n t y Sacramento County Monter e y County Santa C l a r a C o u n t y S a n t a C l a r a C o u n t y oun t y Santa C r u z C o u n t y Santa Clara County Sa n J o a q u i n C o u n t y Santa Cruz County San Mateo County Alameda Co u n t y Alameda County Al a m e d a C o u n t y Sa n J o a q u i n C o u n t y 35 82 113 24 131 121 29 123 13 61 185 156 25 237 37 17 129 152 12 130 9 160 84 92 4 1 101 101 780 80 205 238 680 280 580 880 FIGURE 1 Regional Map 8576 429 University Avenue Mixed-Use Project 0115.5 Miles Project Area 82 101 FIGURE 2 Project Location Map 8576 429 University Avenue Mixed-Use ProjectJUNE 2011 SOURCE: USGS Topo 7.5 Minute Series - Palo Alto Quadrangle Township 5S, 6S / Range 3W / Section 01, 02, 35, 36 Project Area 0 1,200 2,400 3,600 4,800600Feet 0 340 680 1,020 1,360170Meters Phase I Archaeological Inventory for the 429 University Avenue Project September 2014 APPENDIX A (CONFIDENTIAL): NWIC Records Search Results APPENDIX D Historic Architectural Evaluations 446 17th Street #302 Oakland CA 94612 510.418.0285 mhulbert@earthlink.net June 18, 2014 - rev.September 22, 2014 425 UNIVERSITY AVENUE, PALO ALTO Historic Architectural Evaluation Introduction The property at 425 University Ave. houses a tall 1-1/2 story commercial building facing southeast towards University Ave. (figs.1-2). The structure fills the 25 foot wide and 110 feet deep lot. The rear faces and is accessed via a service alley crossing the block between Kipling and Waverley streets (fig.3). A set of original drawings for this commercial building are dated 1937.1 No other original records or documentation for this property have been located. The purpose of this report is to summarize the history of the subject property and to complete an evaluation to determine if the structure thereon has any potential historical or historic architectural significance based on pertinent evaluation criteria. This effort was undertaken in late-May to mid-June 2014, including a site visit, a research visit to the Special Collections at the Stanford University Libraries, and another research visit to the City of Palo Alto Development Center, all on June 12, 2014. Selected online research was also undertaken. This effort is also based, in part, on previous research and documentation by this author for the adjoining property at 429-447 University Avenue.2 Architectural Description A commercial building type, 425 University Ave. is a 1-1/2 story structure with one storefront facing the main street (University Ave.). Its storefront today consists of a central, framed, clipped-arch door opening with separate, framed clipped-arch window openings at each side. The window and door units are metal and glass. The bulk and remainder of the façade is orange-red facing brick, including the door and window piers and surrounds, and excepting a metal fascia that spans the top of the facade in the form of a flat, contemporary cornice (figs.2,4). No records have been located with which to directly identify the origin of the present façade. It appears to be from the 1970s. In several earlier images (from the Palo Alto Historical Association photographic collection), a portion of the building’s front can be seen c1940 (PAHA image #079-043, fig.5). At that time, the store was Kenyon’s Beauty Salon and Drugs. Its façade then did not appear as it does now. Then, it was a Moderne style façade with prominent Moderne sign lettering (including both a monumentally scaled K and an apostrophe) applied to an upper façade that appears to be plain white stucco. The façade is framed with narrow column-like elements in a dark color, possibly tile, at each side, though ending shy of the top, where the white wall surface spanned the upper wall and returned for a short section along each side. A framing band also spanned the mid- façade and from which a fabric awning projected. One other sign is visible – one projecting from the upper east face of wall and for “Kenyon’s Drugs.” Due to deep shadows, nothing below the awning is visible in early image. 1 From the Birge M. Clark Architectural Drawing Collection, Stanford University Libraries. 2 429-447 University Avenue, Palo Alto, Historic Architectural Evaluation. Preservation Architecture, December 27, 2012. 425 UNIVERSITY AVE., P.A. MHPA EVAL–061814-rev.092214–P2 The c1940 façade was then evidently new, the building having been designed in 1937. That original design, by the architects Birge M. Clark & David B. Clark, is documented in a set of 5 drawing sheets dated June 11, 1937 (revised June 15) and labeled “Store Building for Mrs. Mattie McDougall, 427 University Avenue, Palo Alto”.3 Those original plans did not indicate an occupant or include signage, and there is no evidence that the Clarks designed the Kenyon’s shop front or interior. The current building generally corresponds to the originally designed structure in its general plan and sectional layout, with the mezzanine floor at the upper rear half of the structure and with one enclosed parking space at the rear – though there are presently two garage spaces. The building was and is concrete construction, its roof low-slope with a number of skylights. Per original drawings, the front (southeast) façade as designed incorporated glass brick at the base, a central door, tile frames up each side, a shallow ornamental fascia/awning band, and a stucco upper façade (fig.6). None of those original design elements are present. The original rear walls (the building is some 25 feet deeper than both its neighbors so has three small rear elevations) exposed concrete, 2 stories in height, with punched openings with doors below and steel windows above (fig.7). Original concrete and openings at the rear walls are intact, though one new opening has been created for a second garage, and all doors and windows have been replaced (fig.8). Property History Per Sanborn maps, in the early-20th century the subject property was part of a parcel that housed a large, two-family residential structure. In the 1924 Sanborn, that structure is identified as 425-431 University Avenue. A note card in the files of the Palo Alto Historical Association (PAHA) references a residence – the “residence for Mrs. Frances Patterson” – at 431 University, and records the date of that house to an 1898 permit record. In 1925, a final listing for 431 University Avenue identifies the occupants as “Torrence & Robbins” and a “DeTuncy, Dr. G.P.” (1925 Palo Alto City Directory). As noted above, the subject commercial building is dated by an original 1937 set of drawings. It occupies approximately one-fifth of the earlier residential lot, leaving a separate property to the east (427-449 University) and west (423 University). City and phone directories were not searched in detail as part of this effort. Based on photographic evidence, the original and early occupant was Kenyon’s Beauty Shop & Drugs, who were still in this space in the 1950s. Per permit records, later occupants of the store were The Morris Plan Co. (1966-c1983), Remedy Temp. (1989-c1994), and Cambridge Sound Works (1995-?). The mezzanine office space was separately improved in 1989 and remains in use as office space independent of the commercial unit. Permit records held by the City of Palo Alto extend back no earlier than the 1960s, and most records are from the 1980s on. The earliest alteration record is a 1966 permit application to “Remodel int. as per plan” (no plans were located) as a “loan office” for the Morris Plan Co. The architect was San Francisco’s Wurster Bernardi & Emmons and the builder the Arthur Bros. No evidence was found of that 3 Original plans for this and adjacent buildings used different street numbers. In addition to 425 University, labeled 427 in original drawings, plans for the west adjoiner (#423) – also the work of architect Birge Clark – was originally labeled 423-425, and plans for its west adjoiner was labeled 429-433. 425 UNIVERSITY AVE., P.A. MHPA EVAL–061814-rev.092214–P3 design or whether any portion of it exists today. Since the work was identified as interior, it is assumed that the current façade does not date to then, nor does it appear to. The next subsequent permit-related record is a sketch elevation, dated 1/15/75, showing a range of signage on windows and doors, the layout which looks like the current one of a simple rectangular wall plane with three semi-arched openings, the central one a door, and signage above, yet no architectural materials are identified. A range of other subsequent permit applications are available (on database and microfiche at CPA Development Center), including: reroofing in 1981; additional tenant improvements (for Morris Plan Co.) in 1982; alteration of the mezzanine to office space (for Charles Holman Design) in 1989, which included the additional garage and replacement of rear doors and windows; tenant improvements and signage (for Remedy Temp) in 1990; additional tenant improvements and signage (for Cambridge Sound Works) in 1994 and 1995; and rooftop AC equipment (for Holman) in 1995. No permit was seen for the current tenant. In summary, the exterior of the building at 425 University Avenue has been extensively altered, including the complete loss of the original/early façade and storefront. Consequently, and based on empirical evidence, the original 1930s commercial building character is no longer in existence. Associated Persons Per the original drawings, the originator of the subject commercial building was Mrs. Mattie L. McDougall (c1885-1969). Based on permit records, her son, Kenneth R. McDougall (1904- 1982), retained ownership of the property until 1981, and one further permit-related record identifies a Greg McDougall as owner in 1989. So the McDougall family retained ownership at least into the 1990s (no deed searches were undertaken as part of this effort). In permit records during the 1990s, a Jan Christiansen of Los Gatos is listed as owner. Per census records, in 1940, Mattie and Kenneth McDougall resided at 1290 University Avenue in Palo Alto. No specific historical information about the McDougalls has been uncovered. It does not appear that the McDougalls are of any local historical interest or importance. Other identifiable persons associated with this property include a number of professionals engaged on tenant improvements: • John Bergeson I.B.D. (Morris Plan Co., 1982) • James N. Thorne, A.I.A., Architect (Remedy Temp, 1989) • Frank Rupert Bryant, Architect (Cambridge Sound Works, 1994) No other primary individuals or firms have been identified as having been directly associated with the subject property. Architects The original architects of the building at 425 University Ave. were Birge M. Clark (c1893-1989) and David B. Clark (c?-1944) of Palo Alto. Birge M. Clark and David B. Clark The Clark brothers presided over an influential and highly successful architectural practice in Palo Alto. Though brother and architect David shares attribution for many of their early works, including the subject commercial building and the many completed projects during the latter half 425 UNIVERSITY AVE., P.A. MHPA EVAL–061814-rev.092214–P4 of the 1930s, David passed away in 1944, so it is Birge whose reputation carried the practice forward as far as the 1970s and who carries it still. In the following, writer Peter Gauvin summarizes the professional life of Birge Clark [from www.paloaltoonline.com; dated Wednesday May 25, 1994): “Many of Palo Alto's most treasured architectural landmarks were designed by native son Birge Clark, a 1910 graduate of Palo Alto High School. In a prolific career spanning five decades, the architect designed more than 200 commercial and residential buildings in Palo Alto and on the Stanford campus. Clark was an exponent of Spanish Colonial Revival design, a distinctive style which he called "Early California." The son of Arthur B. Clark, Stanford professor of art and architecture and Mayfield's first mayor, Birge Clark assisted his father as "clerk of the works" for the Lou Henry Hoover house at Stanford. President Herbert Hoover gave the home to Stanford after his wife's death for use as the university president's residence. Between 1922 and 1930, Clark was the only architect with an office in Palo Alto. He designed a total of 98 Palo Alto residences, including all of the homes on Coleridge Avenue between Cowper and Webster streets, and 39 Stanford campus homes. Three homes of which he was proudest were the Dunker House at 420 Maple St., the Charles and Kathleen Norris House at 1247 Cowper St. and the Lucie Stern residence at 1990 Cowper. His close association with the charitable Mrs. Stern led him to design several buildings of the Community Center at 1305 Middlefield Road as well as the Children's Library nearby and the Sea Scout base at the harbor. Other well-known buildings by Clark include the former police-fire station at 450 Bryant St., now the Palo Alto Senior Center, and the Hamilton Avenue branch of the post office. He and his brother David also designed Palo Alto's first junior high school, David Starr Jordan Middle School, which opened in 1937.” While most of Clark’s work tend towards the traditional and colonial varieties, the work of their practice from the late 1930s on focused on the modern. In addition to their Streamlined Moderne buildings, many of their largest and most published projects were strikingly modern. Other associated architects include Wurster, Bernardi & Emmons, who in 1966 were engaged in interior alterations on the subject building. Wurster Bernardi & Emmons The following is a biographical summary of the Wurster Bernardi and Emmons partnership.4 William Wilson Wurster, born in California in 1895, earned his degree in architecture from the University of California, Berkeley, in 1919. After obtaining his license in 1922, he worked briefly in firms in Sacramento and New York, then opened the firm William W. Wurster in 1924. He gained national recognition early in his career with an award-winning design for the Gregory farmhouse (Scotts Valley, 1927), and became the most well-known modernist architect in the Bay Area. In 1944, Wurster formed a partnership with former employee Theodore Bernardi, and with the 4 Inventory of the William W. Wurster/Wurster, Bernardi & Emmons Collection, 1922-1974. Collection number: 1976- 2. Environmental Design Archives, University of California, Berkeley @http://www.oac.cdlib.org/findaid/ark:/13030/tf8k40079x/entire_text/ 425 UNIVERSITY AVE., P.A. MHPA EVAL–061814-rev.092214–P5 addition of Donn Emmons, also a former employee, in 1945, the firm became Wurster, Bernardi, and Emmons (WBE). Bernardi earned his architecture degree at University of California, Berkeley in 1924, and obtained his license in 1933 after completing post-graduate work. He joined Wurster's firm in 1934, and within a few years became one of two chief draftsmen. He spent two years in independent practice before accepting Wurster's offer of partnership. Between 1954 and 1971 he served as a lecturer in the Department of Architecture at U.C. Berkeley. Emmons joined Wurster's firm in 1938. Educated at Cornell University and the University of Southern California, Emmons spent four years in various architectural firms in Los Angeles before moving north to work with Wurster. He spent four years as a draftsman in Wurster's office before joining the Naval Reserves during World War II. Upon his release in 1945, he joined Wurster and Bernardi as a partner in the firm. Wurster returned to the Bay Area in 1950 to become Dean of Architecture at the University of California, Berkeley, a position he held until his retirement in 1963. In 1959 he brought the departments of architecture, landscape architecture, and city and regional planning together to become the College of Environmental Design. WBE incorporated in 1963 and continued to produce award-winning designs, receiving the American Institute of Architects' Architectural Firm Award in 1965. All three partners had been named Fellows of the AIA by this time, and Wurster was later honored with the AIA Gold Medal Award for lifetime achievement in 1969. After Wurster's death in 1973, the two younger partners continued running the firm until the mid- 1980s. As of 1999, WBE continues to exist without the original partners. Historic Context The subject property’s historic context is that of the commercial development of the City of Palo Alto, and specifically of the City’s downtown, which is centered at University Avenue and Alma Street, where it originated in the mid-1890s, coincident to the City’s incorporation in 1894 and directly adjacent to the Southern Pacific Railroad’s train stop. At that time, based on turn-of-the-20th century Sanborn Maps, it was a very small downtown, emanating from the Alma and University Avenue circle to the northeast for just a couple of blocks before giving way to residential uses. That linear, eastward pattern of commercial development continued throughout the 1900s. By the mid-1920s, University Avenue commercial development extended to the corner of Waverley, which defines the western boundary of the subject block. In 1927, the directly adjoining structures on the subject block were constructed. With the Great Depression, little development likely occurred in the early 1930s. Then, in 1937, the subject building at 425 University was built. By 1950, commercial development along University Avenue reached as far east as Cowper. In the mid-to-late 20th century, the downtown expanded further east to Middlefield Road, some 12 blocks from its origins at the Alma and University circle. Buildings in the downtown range from the early-20th century to the present, with a concomitant range of architectural forms, styles and materials. The downtown is predominately yet not strictly low – i.e., single to 1-1/2 stories. The subject building is representative of many throughout the downtown that have been altered beyond recognition of their original and early designs. Earlier structures on many other University Avenue parcels have been replaced with new buildings, which is a pattern that has episodically continued since the mid-1900s. At this juncture, surviving older structures are few relative to the overall downtown and are therefore scattered throughout the downtown. In this downtown commercial setting, there is no identified historical or cultural district, and no 425 UNIVERSITY AVE., P.A. MHPA EVAL–061814-rev.092214–P6 apparent collection of resources, thematically or architecturally, that may constitute an identifiable, future historic district or area. Evaluation The property and structure at 425 University Ave. have not previously been evaluated for historic resource eligibility. In order to address the requirements of the California Environmental Quality Act (CEQA) specific to historic resources, the current effort has been requested and is intended to provide such historic resource evaluation. California Register of Historical Resources: The following evaluates the subject resource using the California Register (CR) criteria, listing each criterion followed by a statement based on the details reported herein. To be eligible for listing on the CR, a resource must be historically significant at the local, state, or national level, under one or more of the following four criteria: 1. It is associated with events that have made a significant contribution to the broad patterns of local or regional history, or the cultural heritage of California or the United States; There are no identified events of importance to local, regional or state history associated with 425 University Avenue. In the early-mid 20th century, this property was part and parcel with general commercial development patterns in downtown Palo Alto. As 425 University Avenue has no associations to events that have contributed to local, regional or state history, the property does not meet CR Criterion 1. 2. It is associated with the lives of persons important to local, California, or national history; No persons of importance to local, regional, state or national history have been identified as having been associated with this commercial property and its building. The identified original and longtime owners (McDougall) are not identifiable persons of historic importance, and no early or subsequent occupants are of identifiable interest or importance. Consequently, the property and structure at 425 University Ave. have no potential historical significance based on any association to persons of potentially historic importance, so the resource does not meet CR criterion 2. 3. It embodies the distinctive characteristics of a type, period, region, or method or construction, or represents the work of a master, or possesses high artistic values; The extant building at 425 University Ave. was constructed c1937. It had a façade and storefront in the Moderne architectural style. It was a commercial design generally typical of its period, yet the subject building was of a spare and less distinctive design than others on this and adjacent downtown blocks, a range of which yet survive, including the adjacent structures to the west. The original architects of the subject building, Birge M. and David B. Clark, are recognized as local masters. In particular, the architect Birge M. Clark was locally important in his time, and remains so in our time. Another architectural firm – Wurster, Bernardi and Emmons – was engaged in the interior design for a new commercial tenant in 1966. While that firm and its individual architects – William Wurster in particular – are noteworthy, there is no specific evidence of who was 425 UNIVERSITY AVE., P.A. MHPA EVAL–061814-rev.092214–P7 associated with this project, and the project itself is understood to have been a tenant improvement. While the original building was the work of master architects Birge M. Clark and David B. Clark, the character that the original building façade and storefront lent this structure has been entirely lost. The current façade cannot be accurately dated but is relatively recent and not potentially before c1970. The current façade is a bland and stoic contemporary design without stylistic interest or importance. Therefore, the commercial structure at 425 University Avenue has no potential historic architectural significance. Though the structure does not embody distinctive stylistic or architectural characteristics or methodologies, or possess artistic value, because its original design was the work of master architects, on that singular basis 425 University Avenue meets CR Criterion 3. However, it is not eligible for inclusion on the CR because its integrity has been compromised as described under Summary below. 4. It has yielded, or has the potential to yield, information important to the prehistory or history of the local area, California, or the nation. 425 University Avenue has not yielded and does not appear to have the potential to yield any important historic information. Therefore, the property does not meet CR Criterion 4. CR Evaluation Summary Per the above evaluation record, 425 University Avenue meets CR criterion 3, in part, as its original design was the work of master architects Birge M. Clark and David B. Clark. Consequently, since the resource meets at least one criterion, then it may be eligible for inclusion on the CR. However, to be eligible for the CR, a resource must meet at least one eligibility criterion and its integrity must be intact and directly relative to its identified basis of significance. In this case, integrity must be demonstrable relative to the property’s original architectural design, as that design would represent the original architects in the present. Per CR evaluation criteria, the following addresses each of seven aspects of integrity (from NR Bulletin 15: How to Apply the National Register Criteria for Evaluation; Section VIII, How to Evaluate the Integrity of a Property). Location: The subject structure remains in its original and early location, so its integrity of location is intact. Setting: The commercial setting of the subject structure from the period of the development of the subject resource is largely intact. Thus, the structure’s integrity of setting is largely intact. Association: There are no specific associations of importance relative to the subject property. However, it has and retains general associations to patterns of commercial development in downtown Palo Alto. Therefore, its general integrity of association is intact. Feeling: The feeling of this property has changed from what it would have felt like at the time of its potential significance. To the extent that, even knowing its original Moderne design character, it is not possible to recognize or conjure that original and early character. Consequently, the integrity of feeling has been lost. Design: The original and early architectural design character is no longer present in the extant structure, as its principal architectural design has been entirely removed. Therefore, the integrity of design is lost. 425 UNIVERSITY AVE., P.A. MHPA EVAL–061814-rev.092214–P8 Materials: As with the design, while its basic structural materials remain, the architectural features and materials of the original building have been lost. Consequently, the structure’s material integrity has been substantially lost. Workmanship: As is the case with its design and materials, examples of original and early workmanship are no longer in evidence. Thus, the integrity of workmanship has also been lost. Conclusion: This analysis of integrity illustrates that the extant structure and property have lost four of the seven aspects of integrity – those of feeling, design, materials and workmanship – the latter of which are the three most important given that the basis of significance is about the original architects and their architectural design. As also documented above, while three aspects of integrity are intact, that of location, setting and association, these are the least important relative to the building’s original architects and their design. The fact is that the most salient aspects of integrity relative to the resource’s potential basis for significance have been lost, and the three least important aspects of integrity are an inadequate basis for a finding of integrity relative to its potential significance as a representation of the work of masterful architects. Therefore, the structure at 425 University Avenue has conclusively lost its integrity and, with it, the ability of the structure to convey its potential significance in the present and its potential for inclusion on the CR. City of Palo Alto (CPA): The following additionally evaluates the subject structure based on the City of Palo Alto’s criteria for designation of historic structures/sites or districts to the City of Palo Alto’s historic inventory (from PAMC Section 16.49.040[b]), again citing each criterion with a statement based on the details reported herein and followed by an evaluation summary. (1) The structure or site is identified with the lives of historic people or with important events in the city, state or nation; No persons of importance to local, regional, state or national history have been identified as having been associated with this commercial property and its building. The identified original and longtime owners (McDougall) are not identifiable persons of historic importance, and no early or subsequent occupants are of identifiable interest or importance. Consequently, the property and structure at 425 University Ave. have no potential historical significance based on any association to persons of potentially historic importance, so the resource does not meet CPA criterion 1. (2) The structure or site is particularly representative of an architectural style or way of life important to the city, state or nation; As summarized above (under CR criterion 3), the character that the original building façade and storefront lent this structure have been entirely lost. The current façade cannot be accurately dated but is relatively recent and not potentially before c1970. The current façade is a bland and stoic contemporary design without stylistic interest or importance. Additionally, the commercial use and character of the property and its structure are not representative of any important way of life. Therefore, the property and building at 425 University Ave. do not meet CPA criterion 2. (3) The structure or site is an example of a type of building which was once common, but is now 425 UNIVERSITY AVE., P.A. MHPA EVAL–061814-rev.092214–P9 rare; The commercial site and its structure are common, so the property and building at 425 University Ave. do not meet CPA criterion 3. (4) The structure or site is connected with a business or use which was once common, but is now rare; Again, the commercial uses of the subject site and its structure are common, so the property and building at 425 University Ave. do not meet CPA criterion 4. (5) The architect or builder was important; The original architects of the subject building, Birge M. and David B. Clark, are recognized as local masters. In particular, the architect Birge M. Clark was locally important in his time, and remains so in our time. Thus, its original design was the work of master architects, so on that basis 425 University Avenue meets CPA Criterion 5. (6) The structure or site contains elements demonstrating outstanding attention to architectural design, detail, materials or craftsmanship. As summarized, the current building exterior is a bland and unadorned contemporary design without stylistic interest or importance. As the structure does not embody distinctive stylistic or architectural characteristics or methodologies, 425 University does not meet CPA criterion 6. Summary of Findings As detailed above, with respect to the structure located at 425 University Avenue in Palo Alto, while there is a potential and partial basis for a finding of significance under the CR, its unequivocal loss of integrity relative to its area of potential significance renders the existing structure ineligible for listing on the CR. Additionally, the property and structure are not located in or near an identified historic district, and the making of any such district does not appear to have any even distant potential. Moreover, while the subject structure meets a single CPA criterion, as summarized, its original architectural design has been entirely lost, and its present character is without stylistic interest or importance. Consequently, 425 University Avenue is neither meritorious of the work of the architects Birge M. and David B. Clark, nor is it a good example of any architectural style and therefore it is unworthy of designation as a historic structure under the City of Palo Alto’s historic inventory (from PAMC Section 16.49.040[b]). Signed: Mark Hulbert Preservation Architect 425 UNIVERSITY AVE., P.A. MHPA EVAL–061814-rev.092214–P10 Fig.1 – 425 University Avenue – Aerial View showing location (north at upper right corner) Fig.2 – 425 University Avenue – Front View Detail of front façade 425 University University Ave. Ki p l i n g A v e . Wa v e r l y A v e . 425 UNIVERSITY AVE., P.A. MHPA EVAL–061814-rev.092214–P11 Fig.3 – 425 University Avenue – Detail of storefront Fig.4 – 425 University Avenue – Rear View (from east) Fig.5 – 425 University Avenue – Rear View (from west) 425 UNIVERSITY AVE., P.A. MHPA EVAL–061814-rev.092214–P12 Fig.6 – 425 University Avenue – c1940 – at left (courtesy Palo Alto Historical Association) 425 UNIVERSITY AVE., P.A. MHPA EVAL–061814-rev.092214–P13 Fig.7 – 425 University Avenue – Original front elevation drawing Fig.8 – 425 University Avenue – Original rear elevation drawing 446 17th Street #302 Oakland CA 94612 510.418.0285 mhulbert@earthlink.net December 27, 2012 – rev.September 22, 2014 429-447 UNIVERSITY AVENUE, PALO ALTO Historic Architectural Evaluation Introduction The property at 429-447 University Ave. houses a corner building of four (nos. 429, 435, 441, 447) contiguous, 1-1/2 story commercial shops, each facing southeast towards University Ave., including the corner shop, no. 447, the side wall of which faces northeast towards Kipling Street (fig.1). The structure fills the 75 foot wide lot and extends 87.5 feet into its 110 foot depth. The remaining depth is a perpendicular parking strip that spans the rear of the lot, and which is accessed via a service alley crossing the block between Kipling and Waverley streets. A small, attached structure stands above the parking area behind the shop at no. 435 (fig.3). No original records have been located for this commercial building. The City of Palo Alto’s property database lists the year built as 1927. The property has not been identified as a potential historic resource by the City or by the State (no listing on State Historic Resources Inventory). It is not included in an historic district. The purpose of this report is to summarize the history of the subject property and to complete an evaluation to determine if the structure thereon has any potential historical or historic architectural significance based on pertinent evaluation criteria. This effort was undertaken in late-2012, including a site visit, a research visit to the Palo Alto Historical Association (for historical photos and documentation) and the Palo Alto Main Library (for city directories), and a permit research visit to the City of Palo Alto Development Center, all on Dec. 20, 2012. Selected online research was also undertaken at that time. Subsequently, in the process of researching and documenting the adjacent commercial building at 425 University Ave., additional information about directly adjoining buildings was collected.1 Architectural Description As a commercial building type, this is a low structure in one part with four enframed storefronts facing the main street (University Ave.). Its storefronts extend high up the otherwise relatively low front wall. Thus, the wall area is minimal, with a narrow, solid band, perhaps five feet tall, spanning the structure, and with narrow piers at each corner as well as separating the storefronts. A storefront window returns along the front-fifth of the corner-side wall, which is otherwise essentially solid, though there are a trio of small windows spaced along that wall. Most wall surfaces, flat and moulded areas alike, are uniformly finished in what appears to be an evenly stippled stucco (cement plaster, or similar). The lintel – the planar, vertical wall segment spanning directly above the storefront openings – is flat, as are the narrow piers. The base of each pier is clad to about a thirty-inch height with stone tiles. Atop each pier is a moulded plaster capital in the form of a simplified and large flora. Each of the storefronts, the 1 Original architectural documents for three of the adjoining buildings on the subject block were located in the Birge M. Clark Architectural Drawings Collection of the Stanford University Libraries. Therein are a set of 1926 plans for a building identified as 429-433 University Ave., and another set of 1937 plans for a building identified as 427 University Ave. Neither set of plans were for the subject building – the latter set is of the extant building at 425 University, the former set is of the extant building at 415-419 University Ave., and a third set is of the extant building at 423 University Ave. 429-447 UNIVERSITY AVE., P.A. MHPA EVAL–122712-rev.092214–P2 tops of which align, is terminated with a row of widely-spaced dentils. In the lintel above no. 447, a pair of cast medallions is recessed into the face of wall on each side of a contemporary sign. Spanning the lintel is a continuous, concatenated frieze consisting of roughly-square recessed panels separated by miniature pilasters, and with a moulded round plaque set in each panel. Altogether, there are some forty-eight panels and plaques across the front. Above the frieze, the wall is capped by a moulded projecting cornice. These top-of-wall features also extend the length of the side-street wall, though with a simple frieze band along the side. One further feature at the front is that the wall segment corresponding to the corner store (no.447) stands slightly proud, with a shallowly returning west edge. This same shallow projection occurs at the corner-side wall, where the store window bay is slightly proud with a return. The existing storefront windows and doors vary in their wall, window and door patterns and materials, as well as signage. No storefronts appear to have any original elements. No original or early mezzanine level windows are present. The oldest storefront looks to be no. 441, which may date to the 1960s. Several early images (from the Palo Alto Historical Association photographic collection) show a portion of the building’s front, essentially in the background, as the images are of parading Palo Altans c1940 (PAHA image #079-043, fig.5). Nonetheless, the architectural characteristics of the street wall and storefronts are discernible. Variations between the existing building and early building fronts are clearly apparent. In the early building front, several rows of what appear to be red clay, mission-type roof tiles overhang the cornice, giving the top of wall a serrated edge. The vertical piers aren’t flush to the upper wall, but are inset, and with a cap moulding that appears partially dentiled with hanging tassels or glyphs. These caps are integrated into the rows of dentils that span across the storefront openings. Directly above each storefront, the wall – the lintel – is kerfed along the bottom edge. A floral ornament sits above each capital, yet is clearly a part of the upper wall and separate from the top of pier. Storefronts aren’t visible, as they are hidden by canvas awnings individual to each shop, and the corner shop is not visible. Above, the mezzanine windows match and are of a form of decorative leaded glass or grillwork. By comparison, and based on direct observation, in the current building: • The storefronts are all changed in their entirety, including the corner and separating piers and their edge ornamentation • The wall is flat and the piers are flush, with contemporary stone tile bases • The original floral emblems that comprise capitals are not original. • The decorative tile roof edge is absent. In this ensemble of elements, the only features of the existing façade that may possibly correspond to the early façade are pieces of the ornamental frieze, the two wall medallions at no. 447 and, perhaps, some dentils. Prior to initiating research about this property, this writer made a visit to the site and its structure. Immediate observations were that there are no old materials on this façade. The surfaces are too smooth and uniform, unmarred, uncracked and undented to be aged material. Exterior cornices and ornamentation that are greater than fifty years of age (these would be eighty-five years of age if original) show evidence of age. The exterior surfaces and ornamentation on this façade show little evidence of age. They are smooth, uniform and seemingly synthetic. Permit records held by the City of Palo Alto extend back no earlier than the 1960s, and most 429-447 UNIVERSITY AVE., P.A. MHPA EVAL–122712-rev.092214–P3 records are from the 1980s on. Evidence for several earlier alterations are included in an assessment record covering the 1950s to the early 1960s (attached, from the CPA permit records database). Therein, the rear structure above parking at shop no. 435 is identified as a 1952 alteration. And two interior alterations, dated to 1951 and 1963, are also noted. During that time, the owner was first listed as Josiah H. Kirk, then as Angeline B. Kirk. A plan diagram shows the rear structure and that the building housed three shops, Cafeteria, Timm’s Radio, and Firestone, with the latter tenant occupying shop nos. 441 and 447. The earliest permit record, from 1963, included schematic elevations of the front façade generally showing new brick piers and infill (possibly the same brickwork that selectively remains at nos. 441 and 447), horizontal blade-like canopies, a boxed cornice, and a façade that is without ornamental features, along with a note to “furr and stucco” the upper wall. Various permit applications and drawings (though limited in number as well as in content) from then through 1991 continue to depict a building without the stylistic character of the original. In the fall of 1995, a permit application identifying the subject structure as The Craig Building (Leonard Craig, owner) proposed “uncovering the building front” and “cosmetic face lift.” A letter with this application called to “restore the building front from above the canopy to the top of the parapet wall…,” as well as to “build back and improve the columns and capitals…”. A subsequent staff report under this application to the City’s Architectural Review Board (Nov. 2, 1995, 95-ARB-190) stated that “the existing flat upper building wall will be articulated through the use of a new crown [cornice], decorative band [frieze], exposed lintel, and details. Many of these elements are repeated from those currently found on the façade of the Reprint Mint space (447)… The existing brick-faced columns [piers] will be resurfaced in stucco and decorated with capitals and a sandstone base. Also, new pilasters are to be added to the Kipling Street elevation.” This 1996 record confirms that the original building had in fact been previously altered to the extent that very little original material remained. Under this same application, a letter from the architect (Binkley Design Group to CPA, Dec. 6, 1995) stated that further exploration had confirmed that the medallions showing above the Reprint Mint store… do not appear to repeat along the balance of the upper wall.” This letter also confirms the study and modification of the design for the new pilaster [pier] capitals. While the term “restoration” is repeated in these documents, there is minimal evidence of bona- fide restoration of this façade. Based on these records and personal observations, there is the possibility that one element may remain from the early or original façade – a pair of medallions in the face of lintel above shop no. 447. There is also the possibility that the portion of the frieze above that shop may be also early or original. However, it is not possible to tell if either element is original based on personal observation and documentation, and physical conditions suggest that these may not be older elements (or that they have been overcoated). In any event, even if some of the original frieze remains, the facts are that all that possibly remains of an original or early façade are minor decorative elements. Moreover, many elements that were replaced are new features that do not match the original. In summary, the exterior of the building at 429-447 University Avenue has been extensively altered, first sometime in the mid-20th century and again in the mid-1990s. The original storefronts that constitute the bulk of this building exterior are entirely lost. Its decorative roof edge has been lost, its cornice apparently replaced, the frieze reconstructed, and the other 429-447 UNIVERSITY AVE., P.A. MHPA EVAL–122712-rev.092214–P4 ornamental features replaced with conjectural elements, all excepting an indeterminate number of pieces of the frieze and the medallions at no. 447. Consequently, the original building façade is no longer in existence, and the architectural building form has lost its characteristic design and material integrity. Property History Evidence for the history of this commercial property is limited. No original or early permit or drawing documentation has been found. Per Sanborn maps, in the early-20th century the existing property was part of a parcel that housed a large, two-family residential structure. In the 1924 Sanborn, that structure is identified as 425-431 University Avenue. A note card in the files of the Palo Alto Historical Association (PAHA) references a residence – the “residence for Mrs. Frances Patterson” – at 431 University, and records the date of that house to an 1898 permit record. In 1925, a final listing for 431 University Avenue identifies the occupants as “Torrence & Robbins” and a “DeTuncy, Dr. G.P.” (1925 Palo Alto City Directory). As noted above, the subject commercial building is dated by an assessor’s record to 1927. It occupies about two-thirds of the earlier residential lot, leaving a separate swath of property to the west and north. (The former was thereafter developed into the current store building at 425 University, and the latter was then developed into the rear service alley.) This commercial building and its recently urbanized setting were first depicted in the 1949 Sanborn Map (fig.4). Though 1927 is given as the date built, the city directory does not include any listing for the span of addresses 427-449 until 1930. That first listings are for the California State Automobile Association at no. 429, and Piggly Wiggly gro[cery] at no. 447. Early information about the conversion of the property from residential to commercial is limited to several news clippings (PAHA, file folder for Piggly Wiggly/Safeway). The earliest though unfortunately undated article states that “Piggly Wiggly will operate two stores in Palo Alto as soon as the new building at Kipling street and University avenue is completed, which will be early in June.” (“Piggly Wiggly Will Operate 2 Store Here,” PA Times, no date – see fig.6) A second clipping from 1934 reports the sale “of the relatively new, reinforced concrete business block at the southwest corner of University avenue and Kipling street to an Oakland investor…” (“Avenue Site Here Bought for $65,000,” Palo Alto Times, Jul. 25, 1934, fig.6). This report identifies the new owners as Mr. and Mrs. M.B. Skaggs of Oakland, and the former owners as Mr. and Mrs. A. Williams of Palo Alto. This article also mentions that Piggly Wiggly has secured a five-year lease on the vacant store adjacent (no. 441). With respect to original and early ownership, these are the extent of records and information located to date. (No search of deeds has been undertaken as part of this work.) In conclusion, the original owners and developers may have been Mr. and Mrs. A. Williams. The original and primary tenant was the grocery merchants Piggly Wiggly, whose name remained until 1934-1935 when they became Safeway Stores. Safeway remained at this location into the 1940s. The other shops have been occupied by a wide variety of commercial offices and stores. Historic Context The subject property’s historic context is that of the commercial development of the City of Palo Alto, and specifically of the City’s downtown, which is centered at University Avenue and Alma 429-447 UNIVERSITY AVE., P.A. MHPA EVAL–122712-rev.092214–P5 Street, where it originated in the mid-1890s, coincident to the City’s incorporation in 1894 and directly adjacent to the Southern Pacific Railroad’s train stop. At that time, based on turn-of-the-20th century Sanborn Maps, it was a very small downtown, emanating from the Alma and University Avenue circle to the northeast for just a couple of blocks before giving way to residential uses. That linear, eastward pattern of commercial development continued throughout the 1900s. By the mid-1920s, University Avenue commercial development extended to the corner of Waverley, which defines the western boundary of the subject block. In 1927, along with several other structures on its block, the subject building at 429-447 University was built. By 1950, commercial development along University Avenue reached as far east as Cowper. In the mid-to-late 20th century, the downtown expanded further east to Middlefield Road, some 12 blocks from its origins at the Alma and University circle. Buildings in the downtown range from the early-20th century to the present, with a concomitant range of architectural forms, styles and materials. The downtown is predominately yet not strictly low – i.e., single to 1-1/2 stories. The subject building is representative of many throughout the downtown that have been altered beyond recognition of their original and early designs. Earlier structures on many other University Avenue parcels have been replaced with new buildings, which is a pattern that has episodically continued since the mid-1900s. At this juncture, surviving older structures are few relative to the overall downtown and are therefore scattered throughout the downtown. In this downtown commercial setting, there is no identified historical or cultural district, and no apparent collection of resources, thematically or architecturally, that may constitute an identifiable, future historic district or area. Evaluation The property and structure at 429-447 University Ave. have not previously been evaluated for historic resource eligibility. In order to address the requirements of the California Environmental Quality Act (CEQA) specific to historic resources, the current effort has been requested and is intended to provide such historic resource evaluation. California Register of Historical Resources: The following evaluates the subject resource using the California Register (CR) criteria, listing each criterion followed by a statement based on the details reported herein. To be eligible for listing on the CR, a resource must be historically significant at the local, state, or national level, under one or more of the following four criteria: 1. It is associated with events that have made a significant contribution to the broad patterns of local or regional history, or the cultural heritage of California or the United States; There are no identified events of importance to local, regional or state history associated with 429-447 University Avenue. In the early 20th century, this property was part and parcel with general commercial development patterns in downtown Palo Alto, and specifically with the expansion of the downtown southeastward. Thus, 429-447 University Avenue has no associations to events that have contributed to local, regional or state history, so the property does not meet CR Criterion 1. 2. It is associated with the lives of persons important to local, California, or national history; No persons of importance to local, regional, state or national history have been identified to have been associated with this commercial property and its building. The identified original 429-447 UNIVERSITY AVE., P.A. MHPA EVAL–122712-rev.092214–P6 and early owners (Williams, Skaggs, Kirk) are not identifiable persons of historic importance. Consequently, the property and structure at 429-447 University Ave. have no potential historical significance based on any association to persons of potentially historic importance. 3. It embodies the distinctive characteristics of a type, period, region, or method or construction, or represents the work of a master, or possesses high artistic values; The extant building at 429-447 University Ave. was constructed c1927. Based on early images, it had a façade with composite ornamentation – including Mediterranean/Colonial style features (cast ornamentation and roof edge) plus some apparently Art Moderne elements (upper storefront windows). It was a commercial design generally typical of its period, as can be evidenced by neighboring structures seen in early photos, whereby each of their façade designs were somewhat unique in order to attract individual attention, yet where the block front had a measure of unity. The subject building was less distinctive than others on this and adjacent downtown blocks, a range of which yet survive. Moreover, the original building façade has been substantially lost. The current façade can be dated to 1996. While the existing upper façade is generally representative of the original design, the original was largely removed and altered in the mid-20th century. Important features of the original/early design are no longer extant, in particular the shop fronts, which make up a large portion of the façade yet have been entirely removed, along with the original capitals/piers as well as the decorative tile roof edge. And other decorative elements have been conjecturally added. While there may be several original ornamental elements at the existing façade, the extent is difficult to ascertain. Such extent of retention does not constitute an original or historic façade. Without its original façade, the remaining building structure/shell does not constitute a work of distinctive architecture. Even were the entire upper wall intact, it would be inappropriate to conclude such as a meaningfully sufficient extent of retention of distinctive characteristics. Plus, there is no detailed evidence of what did exist originally. Therefore, the commercial structure at 429-447 University Avenue has no potential historic architectural significance. Moreover, no architect, engineer, designer or builder of the original building has been identified. As the structure does not embody distinctive stylistic or architectural characteristics or methodologies, or represent the work of a master, or possess artistic value; then 429- 447 University Avenue does not meet CR Criterion 3. 4. It has yielded, or has the potential to yield, information important to the prehistory or history of the local area, California, or the nation. 429-447 University Avenue has not yielded and does not appear to have the potential to yield any important historic information. Therefore, the property does not meet CR Criterion 4. CR Evaluation Summary: Per the above evaluation record and findings, the commercial property and building at 429-447 University Avenue does not meet any CR criterion and, therefore, is not eligible for inclusion on the CR. Further, inclusion on the CR requires that a given property must meet at least one CR criterion and retain its historical integrity. However, as 429-447 University Ave. does not meet any CR criterion and is therefore not CR eligible, an analysis of the building’s integrity is not required. 429-447 UNIVERSITY AVE., P.A. MHPA EVAL–122712-rev.092214–P7 City of Palo Alto (CPA): The following additionally evaluates the subject structure based on the City of Palo Alto’s criteria for designation of historic structures/sites or districts to the City of Palo Alto’s historic inventory (from PAMC Section 16.49.040[b]), again citing each criterion with a statement based on the details reported herein and followed by an evaluation summary. (1) The structure or site is identified with the lives of historic people or with important events in the city, state or nation; No persons of importance to local, regional, state or national history have been identified as having been associated with this commercial property and its building. Consequently, the property and structure at 429-447 University Ave. has no potential historical significance based on any association to persons of potentially historic importance, so the resource does not meet CPA criterion 1. (2) The structure or site is particularly representative of an architectural style or way of life important to the city, state or nation; As summarized above (under CR criterion 3), the character that the original building façade and storefront lent this structure has been substantially altered and lost. The current façade can be dated to 1996. While the existing upper façade is generally representative of the original design, the original was largely removed and altered in the mid-20th century. Important features of the original/early design are no longer extant. Additionally, the commercial use and character of the property and its structure are not representative of any important way of life. Therefore, the property and building at 429-447 University Ave. does not meet CPA criterion 2. (3) The structure or site is an example of a type of building which was once common, but is now rare; The commercial site and its structure are common, so the property and building at 429-447 University Ave. does not meet CPA criterion 3. (4) The structure or site is connected with a business or use which was once common, but is now rare; Again, the commercial uses of the subject site and its structure are common, so the property and building at 429-447 University Ave. does not meet CPA criterion 4. (5) The architect or builder was important; No original architect, engineer, designer or builder of the original building has been identified. Thus, the property has no identifiable association to an important architect or builder. (6) The structure or site contains elements demonstrating outstanding attention to architectural design, detail, materials or craftsmanship. As summarized, the current facades date to 1996, and are a contemporary design with minor stylistic interest. As the structure does not embody distinctive stylistic or architectural 429-447 UNIVERSITY AVE., P.A. MHPA EVAL–122712-rev.092214–P8 characteristics or methodologies, 429-447 University does not meet CPA criterion 6. Summary of Findings As detailed above, the structure located at 429-447 University Avenue in Palo Alto is ineligible for listing on the CR. Additionally, the property and structure are not located in or near an identified historic district, and the making of any such district does not appear to have any even distant potential. Moreover, as summarized, its original architectural design has been lost, and its present character is without historic architectural interest or importance. Consequently, 429-447 University Ave. is unworthy of designation as a historic structure under the City of Palo Alto’s historic inventory (from PAMC Section 16.49.040[b]). Signed: Mark Hulbert Preservation Architect Fig.1 – 429-447 University Avenue – View of front and side 429-447 UNIVERSITY AVE., P.A. MHPA EVAL–122712-rev.092214–P9 Fig.2 – 429-447 University Avenue – Detail of front façade Fig.3 – 429-447 University Avenue - Rear 429-447 UNIVERSITY AVE., P.A. MHPA EVAL–122712-rev.092214–P10 Fig.4 – 429-447 University Avenue, 1945 Sanborn Map 429-447 University 429-447 UNIVERSITY AVE., P.A. MHPA EVAL–122712-rev.092214–P11 Fig.5 – 429-447 University Avenue – c1940 (Palo Alto Historical Association) 429-447 UNIVERSITY AVE., P.A. MHPA EVAL–122712-rev.092214–P12 Fig.6 – 429-447 University Avenue – Newspaper clippings (Palo Alto Historical Association) August 14, 2015 Historic Resource Analysis 429 University Avenue Mixed-Use Project Palo Alto, California HISTORIC RESOURCES MEMORANDUM INTRODUCTION AND METHODOLOGY The City Council introduced the five items below for the historic resources analysis as part of the CEQA environmental review of a proposed project at the northwest corner of University Avenue and Kipling Street. Carey & Co. has reviewed the Initial Study for the project and the historic resources evaluation reports for 425 University Avenue and 429-447 University Avenue prepared by Preservation Architecture. We also reviewed the Evaluation Table associated with a historic resources survey undertaken by Dames & Moore, Palo Alto’s Historic Inventory1 and Downtown Urban Design guidelines. We also reviewed a plan set for the project.2 On July 10, 2015, Carey & Co. conducted a walking tour of University Avenue between Cowper Street and Waverley Street, and Kipling Street between University Avenue and Lytton Avenue. During the walking tour, Carey & Co. observed the project site, its relationship to surrounding properties, noted the types of buildings and their architecture, and verified the integrity of historic resources on University Avenue and Kipling Street. Please note that the walking tour took in an area greater than the proposed Area of Potential Effects (see Item B below). The following memorandum addresses the Historic Resources Board (HRB) action items presented in the final City Council motion. Those five items are listed below. A. The Preservation Architecture report focuses on whether there are criteria for a historic district. There is no need for existence of a district for there to be historic considerations. The HRB should determine whether there are other factors that should be considered. B. What is the applicable “area of potential effect” under CEQA analysis? C. There are a number of historic structures near (e.g. on Kipling), one next to the proposed project and several across the street. How will the project impact these structures? 1 The inventory also identifies properties that are California Registered Historical Landmarks and those listed in the National Register of Historic Places. 2 The plan set is dated August 3, 2015. Carey & Co., Inc. 429 University Avenue Mixed-Use Project August 14, 2015 Historic Resources Memorandum P2 D. Whether the mass, scale, and compatibility of the proposed project has an impact on the existing historic properties should be analyzed. E. Whether the proposed building would change the setting under CEQA has an impact on the historic properties on Kipling or University. EXECUTIVE SUMMARY  Carey and Co. agrees with the Initial Study prepared by the City of Palo Alto (January 2015) which analyzed the proposed project’s potential impacts on 425 and 429-447 University Avenue and concluded that no impacts to historic resources would occur since both properties were not eligible for listing on local, state or national registers.  Carey and Co. recommends that a study area larger than the project site may be analyzed in order to evaluate potential direct and indirect impacts to nearby historic resources that are not part of the project site. A total of eight properties are included in the study area.  Carey & Co. agrees that the proposed project would not have any direct impacts on three historic resources within the study area with the application of standard code regulations. The properties are 423 University Avenue, 436-452 University Avenue and 443 Kipling Street.  Carey & Co. finds that through an evaluation of six of the seven aspects of integrity, the proposed project’s design, mass, scale, and use of materials could not have an indirect impact on the integrity of historic resources. The seventh aspect, setting, is evaluated separately.  Carey & Co. finds that the proposed project would not change the setting of historic properties on Kipling Street or University Avenue. ITEM A. THE PRESERVATION ARCHITECTURE REPORT FOCUSES ON WHETHER THERE ARE CRITERIA FOR A HISTORIC DISTRICT. THERE IS NO NEED FOR EXISTENCE OF A DISTRICT FOR THERE TO BE HISTORIC CONSIDERATIONS. THE HRB SHOULD DETERMINE WHETHER THERE ARE OTHER FACTORS THAT SHOULD BE CONSIDERED. University Avenue between Alma Street and Cowper Street is the center and retail core of downtown Palo Alto. Although a number of individual historical resources are located on the avenue, they do not form a historic district.3 Buildings are typically two- to four-story high and have a 25-50 foot wide pattern of storefronts or similar sized structural bays. Most buildings do not have setbacks and rise to a parapet wall without a distinct roof. The architectural style of the buildings and retail fronts are mixed but recessed doors, window displays, and outdoor seating is typical of the Avenue. Presumably to accommodate outdoor seating, some storefronts have been recessed. This more recent feature contrasts with the smaller, 3 Preservation Architecture, 425 University Avenue, Palo Alto, Historic Architectural Evaluation, September 22, 2014, 5-6 and 429-447 University Avenue, Palo Alto, Historic Architectural Evaluation, September 22, 2014, 5-6. Carey & Co., Inc. 429 University Avenue Mixed-Use Project August 14, 2015 Historic Resources Memorandum P3 recessed entries typically found on historic buildings. The Palo Alto Office Center, the Varsity Theater and the Stanford Theater are among the local landmarks.4 The blocks around the proposed project at 425 and 429-447 University Avenue have similar features as described above. Across University Avenue from the project site, the southern two-thirds of University Avenue between Cowper and Waverly Streets have Spanish Revival style buildings with ground floor retail uses. These buildings, including the Varsity Theater, are listed in the Palo Alto Historic Inventory.5 The remaining one-third of the south side has two contemporary buildings: the four-story 428-432 University Avenue and the one-story 400 University Avenue, neither of which complements the architectural style and/or material use of the adjacent buildings. Most of the buildings on the northern 400 block of University Avenue (including the project site) are one or two stories high and have stucco cladding. On the north side, only 415-419 University Avenue and 423 University Avenue are listed on the Palo Alto Inventory as “contributing resources.” Although the buildings on the north side share some features, they are not exemplary of an architectural style and do not relate to the character of the historic buildings in the area. We feel that the overall historic character of these two blocks has been compromised by intrusions including incompatible materials, height, massing, and architectural features. Kipling Street between University Avenue and Lytton Avenue is a more of a transitional area between the commercial downtown and the residential neighborhoods north of it. Directly east of the proposed building at the corner of University Avenue and Kipling Street is a two-story commercial building with no distinguishing style. Further north, the block has six single family houses, five of which are used for office and retail. These detached one and two-story buildings are set back from the street and have landscaped front yards. Five are listed in the Palo Alto Historic Inventory as “contributing buildings.”6 The western side of the street is a mix of architectural styles and uses: a one-story contemporary commercial building (440 and 444 Kipling), a two-story vernacular building (430 Kipling, listed in the Inventory and converted to offices) and a parking lot at the western corner. Kipling Street was defined as one of the “secondary districts” in the Palo Alto Downtown Urban Design document for having its own distinct characteristics: the development of the block was suggested to be promoted by retaining the single family houses and the architectural character they provide.7 The redevelopment of the parking lot at the corner of Kipling and Lytton was also encouraged in the 1993 document, but has not happened at this time. 4 This paragraph was summarized from City of Palo Alto, “Historic Inventory Category Information,” last updated June 16, 2007, http://www.cityofpaloalto.org/news/displaynews.asp?NewsID=539&TargetID=127 (accessed on July 13, 2015). 5 Buildings on the Palo Alto Historic Inventory are 436- 452 University Avenue (Category 2), Varsity Theater at 456 University Avenue (Category 1), 460,-476 University Avenue (Category 2), and 480-498 University Avenue (Category 2). 6 405 Kipling Street, 411 Kipling Street, 421-423 Kipling Street, 430 Kipling Street, 431-433 Kipling Street, and 443 Kipling Street (City of Palo Alto, Master List of Structures on the Historic Inventory, 2012). 437 Kipling is listed on the Dames and Moore Survey as “NRHP eligible under criteria A and C” (City of Palo Alto, email correspondence, July 16, 2015). 7 City of Palo Alto, Downtown Urban Design, October 1993, http://www.cityofpaloalto.org/civicax/filebank/documents/6514 (accessed on July 14, 2015). Carey & Co., Inc. 429 University Avenue Mixed-Use Project August 14, 2015 Historic Resources Memorandum P4 Lane 30E, the service alley that runs Kipling to Waverly Street, is used for parking and serves the buildings that front onto it. The Urban Design Guide defines these alleys as “shortcut alleys which should be encouraged to use by pedestrians on a regular basis while maintaining their service functions.”8 We see this block of Kipling Street as a transitional area with mixed uses, building types, and different architectural styles. It does not have the density or total commercial character of University Avenue, but neither does it present itself as an intact residential street. ITEM B. WHAT IS THE APPLICABLE “AREA OF POTENTIAL EFFECT” UNDER CEQA ANALYSIS? Item B calls for defining an “area of potential effect.” An Area of Potential Effects (APE) is a term used in Section 106 of the National Historic Preservation Act to define a geographic area within which a proposed project may cause changes to the character of historic properties9. For purposes of this memorandum, we will use the term “study area” instead of APE to avoid confusion between the two historic resource review processes. The CEQA analysis prepared for the Initial Study considered the study area to be the site of the proposed project. Preservation Architecture evaluated the potential historic significance of the two properties that form the site of the proposed project and concluded that the properties did not possess historic significance. The Initial Study used those conclusions to determine that the project had a less than significant impact on the environment. The City Council has asked what an appropriate study area would be for CEQA purposes. The study area is influenced by the scale and nature of a proposed project and its surroundings. In our opinion, an area larger than the project site may be analyzed in order to analyze potential direct and indirect impacts to nearby historic resources that are not part of the project site. Although a study area can be just the site of a project, say a farm property in a rural area, the proposed project is in a dense urban area with immediately adjacent buildings that could be affected by the proposed project. In this case, there are several historical resources adjacent to the proposed project, but no historic districts. We recommend that the study area may consist of the proposed project site and immediately adjacent properties which are 423 University Avenue, 428-432 University Avenue, 436-452 University Avenue, 451 University Avenue, 443 Kipling Street and 440-444 Kipling Street (See Figure 1). Only one of these properties is immediately adjacent to the proposed project, 423 University Avenue, and could be directly affected by the proposed project. The others are across University Avenue, Kipling Street and Lane 30E. These latter properties are included due the potential of indirect impacts. Since a study area is defined early in the CEQA review process, potential impacts are only speculative as no impact analysis has been undertaken at that point. Therefore properties are included that may or may not be affected by the proposed project. 8 City of Palo Alto, Downtown Urban Design, October 1993, page 16, http://www.cityofpaloalto.org/civicax/filebank/documents/6514 (accessed on July 14, 2015). 9 Section 106 of the National Historic Preservation Act requires federal agencies to take into account the effects of projects they carry out, approve or fund on historic properties. Since there is no federal involvement in the proposed project, a Section 106 review is not required. Carey & Co., Inc. 429 University Avenue Mixed-Use Project August 14, 2015 Historic Resources Memorandum P5 Figure 1. The recommended study area; the project site is outlined in yellow. ITEM C. THERE ARE A NUMBER OF HISTORIC STRUCTURES NEAR (E.G. ON KIPLING), ONE NEXT TO THE PROPOSED PROJECT AND SEVERAL ACROSS THE STREET. HOW WILL THE PROJECT IMPACT THESE STRUCTURES? Item C refers to historic resources on Kipling Street and University Avenue. Using the study area recommended in Item B, the previously identified historic resources within the boundaries of the study area include the following:  423 University Avenue: Palo Alto Inventory, Category 3 (contributing building); State Historic Preservation Office, Category 5S2 (individual property that is eligible for local listing or designation),  436-452 University Avenue: Palo Alto Inventory, Category 2 (major building); State Historic Preservation Office, Category 3S (appears eligible for the National Register as an individual property through survey evaluation),  443 Kipling Street: Palo Alto Inventory, Category 3 (contributing building); State Historic Preservation Office, Category 5S2 (individual property that is eligible for local listing or designation).10 10 City of Palo Alto, Master List of Structures on the Historic Inventory, revised July 24, 2012, http://www.cityofpaloalto.org/civicax/filebank/documents/3504 (accessed on July 13, 2015); Office of Historic Preservation, Directory of Properties in the Historic Property Data File for Santa Clara County, August 15, 2011; California State of Historic Preservation, “California Historical Resource Status Codes,” updated December 8, 2003, http://www.ohp.parks.ca.gov/pages/1069/files/chrstatus%20codes.pdf (accessed on July 15, 2015). Carey & Co., Inc. 429 University Avenue Mixed-Use Project August 14, 2015 Historic Resources Memorandum P6 None of these properties are listed on the National Register of Historic Places or the California Register of Historical Resources. The evaluation of historical resources prepared for the Initial Study by Preservation Architecture found “no identified historical or cultural district, and no apparent collection of resources, thematically or architecturally, that may constitute an identifiable, future historic district or area.” 11 The proposed project is not located in a designated historic district recognized by local, state or national historic registers. Based on our survey of the study area and beyond, Carey & Co. agrees with the Preservation Architecture’s conclusion above. This statement is also supported by the City Council Staff Report (dated April 6, 2015) and the City of Palo Alto’s historic inventory (which only includes National Register-listed Professorville Historic District and Ramona Street Architectural District).12 Potential Impacts of the Proposed Project The Initial Study found a Less than Significant Impact to local cultural resources that are recognized by City Council resolution. However, Item C asks for an analysis of the proposed project and its potential impact on historic resources.13 The Initial Study by the City of Palo Alto (January 2015) analyzed the proposed project’s potential impacts on 425 and 429-447 University Avenue and concluded that no impacts to historic resources would occur since both properties were not eligible for listing on local, state or national registers.14 Carey & Co. agrees with this conclusion. We considered a total of eight properties located within the study area. Three are historical resources and were analyzed for potential impacts: 423 University Avenue, 436-452 University Avenue and 443 Kipling Street. 423 University Avenue (Palo Alto Inventory, Category 3) is adjacent to the project site and 436-452 University Avenue (Palo Alto Inventory, Category 2) is located across University Avenue. 443 Kipling Street (Palo Alto Inventory, Category 3) is located across Kipling diagonally from the proposed project site. The City Council Staff Report, dated April 6, 2015, states that: “The proposed work, which is limited to the project site, would not have any physical or material effect on nearby individual historic structures, including the adjacent Category 3 structure. Standard conditions for construction activities would be applied to help ensure the project would not adversely affect the historical and architectural integrity of existing individual historic structures in the vicinity of the project site.” 11 Preservation Architecture, 425 University Avenue, Palo Alto, Historic Architectural Evaluation, September 22, 2014, 5-6 and 429-447 University Avenue, Palo Alto, Historic Architectural Evaluation, September 22, 2014, 5-6. 12 City of Palo Alto, Master List of Structures on the Historic Inventory, revised July 24, 2012, http://www.cityofpaloalto.org/civicax/filebank/documents/3504 (accessed on July 13, 2015). 13 CEQA Guidelines Section 15064.5(b)(1) states: “Substantial adverse change in the significance of an historical resource means physical demolition, destruction, relocation, or alteration of the resource or its immediate surroundings such that the significance of an historical resource would be materially impaired.” A project that demolishes or materially alters in an adverse manner those physical characteristics that account for its inclusion in a local register is one that may have a significant effect of the environment. 14 City of Palo Alto, 429University Avenue Project, Initial Study, draft released November 2014, updated January 2015, 17. Carey & Co., Inc. 429 University Avenue Mixed-Use Project August 14, 2015 Historic Resources Memorandum P7 Carey & Co. agrees that the proposed project would not have any impacts on 423 University Avenue with the application of standard code regulations. We also believe that the proposed project would not have any direct impacts on 436-452 University Avenue and 443 Kipling Street since the construction site is separated by the streets and all construction activity would take place on the north and west side of the streets. Indirect impacts could affect these three properties. Although the method of construction is not identified in the project plans, we assume that vibration will not be an environmental impact such that it could affect the stability of either property. ITEM D. WHETHER THE MASS, SCALE, AND COMPATIBILITY OF THE PROPOSED PROJECT HAS AN IMPACT ON THE EXISTING HISTORIC PROPERTIES SHOULD BE ANALYZED. The proposed project’s design, mass, scale, and use of materials could have an indirect impact on the integrity of historic resources. Integrity is the ability of a property to convey its historic significance through the retention of physical characteristics that justify its inclusion in local, state or national registers. There are seven aspects of integrity: location, design, setting, materials, workmanship, feeling and association. Location Location is the place where the historic property was constructed or the place where the historic event occurred. The relationship between the property and its location is often important to understanding why the property was created or why something happened. The actual location of a historic property, complemented by its setting, is particularly important in recapturing the sense of historic events and persons. 423 University Avenue, 436-452 University Avenue and 443 Kipling Street would remain where they are. The proposed project would not have an impact on the location of these properties. Design Design is the combination of elements that create the form, plan, space, structure, and style of a property. It results from conscious decisions made during the original conception and planning of a property (or its significant alteration) and applies to activities as diverse as community planning, engineering, architecture, and landscape architecture. Design includes such elements as organization of space, proportion, scale, technology, ornamentation, and materials. The design of each property would remain and not be affected by the proposed project. Setting See Item E. Materials Materials are the physical elements that were combined or deposited during a particular period of time and in a particular pattern or configuration to form a historic property. The choice and combination of Carey & Co., Inc. 429 University Avenue Mixed-Use Project August 14, 2015 Historic Resources Memorandum P8 materials reveal the preferences of those who created the property and indicate the availability of particular types of materials and technologies. Indigenous materials are often the focus of regional building traditions and thereby help define an area's sense of time and place. A property must retain the key exterior materials dating from the period of its historic significance. The materials associated with each property would not change or be affected by the proposed project. Workmanship Workmanship is the physical evidence of the crafts of a particular culture or people during any given period in history or prehistory. It is the evidence of artisans' labor and skill in constructing or altering a building, structure, object, or site. Workmanship can apply to the property as a whole or to its individual components. It can be expressed in vernacular methods of construction and plain finishes or in highly sophisticated configurations and ornamental detailing. It can be based on common traditions or innovative period techniques. Workmanship is important because it can furnish evidence of the technology of a craft, illustrate the aesthetic principles of a historic or prehistoric period, and reveal individual, local, regional, or national applications of both technological practices and aesthetic principles. The workmanship evidenced in the buildings at 423 University Avenue, 436-452 University Avenue and 443 Kipling Street would remain embodied in the architectural elements and features of these buildings. The proposed project would not have an impact on the workmanship of the buildings. Feeling Feeling is a property's expression of the aesthetic or historic sense of a particular period of time. It results from the presence of physical features that, taken together, convey the property's historic character. The proposed project would not affect the physical features that convey the historic character of 423 University Avenue and 436-452 University Avenue. The same can be said of 443 Kipling Street. In both cases, the properties would continue to express their “aesthetic and historic sense.” Association Association is the direct link between an important historic event or person and a historic property. A property retains association if it is the place where the event or activity occurred and is sufficiently intact to convey that relationship to an observer. Like feeling, association requires the presence of physical features that convey a property's historic character. The historic significance of 423 University Avenue and 436-452 University Avenue is related to the commercial development of downtown Palo Alto, especially along University Avenue. The proposed project will not affect this relationship. 443 Kipling Street maintains a different relationship – that to the development of a residential neighborhood backing up to the commercial properties on University. Although the setting of Kipling Street (see Item E) has changed over time with fewer residential buildings on the street, 443 Kipling Street would continue to retain its residential character and relationship to the earlier residential development that took place on Kipling Street. Carey & Co., Inc. 429 University Avenue Mixed-Use Project August 14, 2015 Historic Resources Memorandum P9 ITEM E. WHETHER THE PROPOSED BUILDING WOULD CHANGE THE SETTING UNDER CEQA HAS AN IMPACT ON THE HISTORIC PROPERTIES ON KIPLING OR UNIVERSITY. Item E asks whether the proposed building would change the setting of historic properties on Kipling Street and University Avenue under CEQA. Setting is one of the seven aspects of integrity (see above). In the evaluating the historic significance of a property, the property must retain enough integrity in order for it to convey its historic significance. Setting is defined as the physical environment of a historic property: “Whereas location refers to the specific place where a property was built or an event occurred, setting refers to the character of the place in which the property played its historical role. It involves how, not just where, the property is situated and its relationship to surrounding features and open space. Setting often reflects the basic physical conditions under which a property was built and the functions it was intended to serve. (…) The physical features that constitute the setting of a historic property can be either natural or manmade, including such elements as:  Topographic features;  Vegetation;  Simple manmade features; and  Relationships between buildings and other features or open space.”15 Several historic resources are located in and around the study area. These resources are listed in the City’s Inventory and some of them appear eligible for the National Register. However, there are not any previously designated or identified historic districts or there is no apparent collection of resources that may constitute an identifiable historic district. The 400 block of University Avenue has changed over time, including previous demolitions and alterations to older buildings, such that the demolition of the subject properties and addition of the proposed project would not change the existing character of the block. Kipling Street serves as a transition between commercial University Avenue and northern residential neighborhoods of Palo Alto. The proposed project would not impact historic resources on Kipling Street directly since they are not immediately adjacent to the project site. However, potential indirect impacts to the setting of the historic properties on Kipling Street may be considered. The overall setting of Kipling Street is defined by the properties on both sides of the street from the rear of the commercial buildings on University Avenue to Lytton Avenue. The setting of the historic properties has already been compromised in several ways. First, assuming that the street was once lined with residential structures on both the east and west sides of the street, only one altered residential structure remains on the west side.16 Second, the existing parking lot is a major intrusion on the setting of the block having removed buildings and eliminated relationships that buildings on one side of the street 15 U.S. Department of the Interior, National Park Service, How to Apply the National Register Criteria for Evaluation, http://www.nps.gov/nr/publications/bulletins/nrb15/nrb15_8.htm (accessed on July 15, 2015). 16 Carey & Co. was not tasked with conducting research on the history of Kipling Street. Carey & Co., Inc. 429 University Avenue Mixed-Use Project August 14, 2015 Historic Resources Memorandum P10 had to others on the opposite side. Therefore, the larger setting of the Kipling Street properties has been previously compromised. Third, while the group of buildings on Kipling Street may impart character to the street, as described in the Downtown Urban Design Plan, they do not appear to constitute a potential historic district whose resource setting may be affected. The proposed project will replace a commercial building and although larger in scale and height, it will not adversely impact the setting of the existing individual resources on Kipling, including 443 Kipling Street. Additionally, the proposed project will maintain the relationship between the commercial uses on University Avenue and the transitional state of Kipling Street. As previously discussed in Item A University Avenue between Alma Street and Cowper Street is the center and retail core of downtown Palo Alto. Although a number of individual historical resources are located on the avenue, they do not form a historic district. Similar to Kipling Street, the proposed project will not substantially alter the physical environment of the individual historic resources on University such that their integrity would be compromised to the degree that they would lose their historic significance. APPENDIX E Geotechnical Investigation GEOTECHNICAL INVESTIGATION NEW MIXED-USE BUILDING 429-447 UNIVERSITY AVENUE PALO ALTO, CALIFORNIA THIS REPORT HAS BEEN PREPARED FOR: KIPLING POST LP/WHARTON PROPERTIES, LLC P.O. BOX 204 PALO ALTO, CALIFORNIA 94302 SEPTEMBER 2013 935 Fremont Avenue, Los Altos, California 94024 Phone: 650.559.9980 Fax: 650.559.9985 September 26, 2013 Project No. 1755-1R1 Kipling Post LP/ Wharton Properties, LLC P.O. Box 204 Palo Alto, CA 94302 RE: GEOTECHNICAL INVESTIGATION, NEW MIXED-USE BUILDING, 429-447 UNIVERSITY AVENUE, PALO ALTO, CALIFORNIA Ladies and Gentlemen: We are pleased to present the results of our geotechnical investigation relating to design and construction of a new building on the property at 429-447 University Avenue in Palo Alto, California. This report summarizes the results of our field, laboratory, and engineering work, and presents geotechnical recommendations and design criteria for the project. The conclusions and recommendations presented in this report are contingent upon our review of the project plans and our observation and testing of the geotechnical aspects of the construction. If you have any questions concerning our investigation, please call. Very truly yours, MURRAY ENGINEERS, INC. William P. Carter, P.E. Senior Engineer John A. Stillman, G.E., C.E.G. 1868 Principal Geotechnical Engineer JK:WPC:JAS Copies: Addressee (6) TABLE OF CONTENTS Cover Page Page No. Letter of Transmittal TABLE OF CONTENTSINTRODUCTION ....................................................................... 1  Project Description ............................................................................................................. 1  Scope of Services ................................................................................................................. 1  GEOLOGIC & SEISMIC CONDITIONS ............................................................................. 2  Geologic Overview.............................................................................................................. 2  Seismicity .............................................................................................................................. 2  SITE EXPLORATION & RECONNAISSANCE ................................................................ 3  Exploration Program .......................................................................................................... 3  Site Description ................................................................................................................... 3  Subsurface ............................................................................................................................. 4  Laboratory Test Results ...................................................................................................... 4  Groundwater ........................................................................................................................ 4  LIQUEFACTION ANALYSIS ................................................................................................. 5  Computer-Aided Analysis .................................................................................................. 5  Liquefaction Settlement Findings ..................................................................................... 6  CONCLUSIONS .......................................................................................................................... 7  Highest Projected Groundwater Level ............................................................................. 7  Geologic Hazards ................................................................................................................ 8  RECOMMENDATIONS ........................................................................................................... 9  2013 CBC EARTHQUAKE DESIGN PARAMETERS ............................................. 9  BASEMENT MAT FOUNDATION ........................................................................... 10  BASEMENT RETAINING WALLS ............................................................................ 11  Retaining Wall Drainage ......................................................................................... 12  Lateral Earth Pressures ........................................................................................... 12  Retaining Wall Backfill ............................................................................................ 13  SLABS-ON-GRADE ....................................................................................................... 13  Vapor Retarder Considerations ............................................................................. 13  EARTHWORK ................................................................................................................. 14  Clearing & Site Preparation .................................................................................... 14  Material for Fill ......................................................................................................... 14  Compaction ............................................................................................................... 15  Location & Backfill of Temporary Basement Access Ramp ............................. 15  Temporary Slopes & Trench Excavations ........................................................... 16  SURFACE DRAINAGE ................................................................................................. 16  REQUIRED FUTURE SERVICES ....................................................................................... 17  Plan Review ........................................................................................................................ 17  Construction Observation Services ................................................................................ 17  LIMITATIONS .......................................................................................................................... 17  REFERENCES ........................................................................................................................... 19  TABLE OF CONTENTS (continued) APPENDIX A – SITE FIGURES Figure A-1 – Vicinity Map Figure A-2 – Site Plan Figure A-3 – Vicinity Geologic Map Figure A-4 – State Seismic Hazard Zones Map APPENDIX B – SUBSURFACE EXPLORATION – SOIL PROBE Figure B-1 – Log of Boring B-1 Figure B-2 – Log of Boring B-2 Figure B-3 – Key to Boring Logs Figure B-4 – Unified Soil Classification System APPENDIX C – SUMMARY OF LABORATORY TESTS Figure C-1 – Direct Shear Test Data, Boring B-1, 24.5 to 25 Feet Figure C-2 – Direct Shear Test Data, Boring B-2, 11 to 11.5 Feet APPENDIX D – SUMMARY OF LIQUEFACTION SETTLEMENT ANALYSIS Figure D-1 – Liquefaction Settlement Analysis B-1 Figure D-2 – Liquefaction Settlement Analysis B-2 GEOTECHNICAL INVESTIGATION NEW MIXED-USE BUILDING 429-447 UNIVERSITY AVENUE PALO ALTO, CALIFORNIA INTRODUCTION This report presents the results of our geotechnical investigation relating to design and construction of a new mixed-use building on the property at 429-447 University Avenue in Palo Alto. The project location is indicated on Figure A-1, Vicinity Map. The purpose of our investigation was to explore the subsurface soil and geologic conditions on the site in the area of the proposed improvements and to provide geotechnical conclusions and recommendations relating to the foundation and earthwork components of the project. Project Description Although plans are tentative, the project will include construction of a new 3.5-story mixed- use building with two levels of subterranean parking. The lower level parking will extend roughly 27 feet deep below existing grade. The project may include a ramp to access the subterranean parking or a car lift system. We anticipate that structural loads will be typical of construction of this magnitude. The layout of the existing improvements is shown on the Site Plan, Figure A-2. Scope of Services We performed the following services in accordance with our agreement with you dated July 22, 2013 (executed August 9, 2013): Reviewed geologic and seismic conditions in the area and evaluated geologic hazards that could potentially impact the site and the proposed improvements Performed a reconnaissance of the site in the area of the proposed improvements Explored the site subsurface conditions by advancing, sampling, and logging two exploratory borings in the area of the proposed building improvements Performed laboratory testing on selected soil samples for soil classification and to evaluate engineering properties of the subsurface materials Performed geotechnical engineering analyses to evaluate the seismic-induced liquefaction settlement potential at the site and to develop geotechnical engineering design criteria for the proposed improvements Prepared this report presenting a summary of our investigation and our geotechnical conclusions, recommendations, and design criteria New Building – 429-447 University Avenue, Palo Alto Geotechnical Investigation Page 2 GEOLOGIC & SEISMIC CONDITIONS Geologic Overview The subject property is located in the Santa Clara Valley, a broad, sediment-filled basin bounded on the southwest by the Santa Cruz Mountains and on the northeast by the Diablo Mountain range. According to the USGS topographic map of the Palo Alto Quadrangle (see Figure A-1), the site is situated at an approximate elevation of 50 feet above mean sea level. According to the Geologic Map of the Palo Alto and Part of the Redwood Point 7-1/2’ Quadrangles (Pampeyan, 1993), the site is located in an area underlain by Pleistocene age (approximately 10,000 to 2 million years old) older alluvium (Qoa). These materials are generally described as weathered, unconsolidated to moderately consolidated gravel, sand, and silt grading coarser headward and interfingers with stream terrace deposits in narrow drainage channels. According to the State of California Official Seismic Hazard Zones Map for the Palo Alto Quadrangle (California Geological Survey, 2006), the site is located in an area where historical occurrences of earthquake-induced liquefaction, or local geological, geotechnical and groundwater conditions indicate a potential for permanent earthquake-induced ground displacements. A copy of the relevant portion of this map is presented on the State Seismic Hazard Zones Map, Figure A-4. Additionally, the Association of Bay Area Governments liquefaction potential mapping of the area (ABAG, 2006) indicates that the site is located in an area considered to have moderate liquefaction susceptibility. We note that the Historical Ground Failures map included as Plate 1.2 in the State Seismic Hazard report does not include any recorded historical ground failures (including ground cracks and lateral spreading) on or in the immediate vicinity of the site. Seismicity The San Francisco Bay Area, which is affected by the San Andreas Fault system, is recognized by geologists and seismologists as one of the most active seismic regions in the United States. In the Bay Area there are three major faults trending in a northwest direction within the San Andreas Fault system, which have generated about 12 earthquakes per century large enough to cause significant structural damage. These faults include the San Andreas, Hayward, and Calaveras faults. The San Andreas Fault is located approximately 5.7 miles southwest of the site. The Hayward and Calaveras faults are located approximately 13 and 18 miles northeast of the site, respectively. Additionally, the potentially active Monte Vista-Shannon Fault is located approximately 3.9 miles southwest of the site. Seismologic and geologic experts convened by the United States Geological Survey, California Geological Survey, and the Southern California Earthquake Center conclude that there is a 63 percent probability for at least one "large" earthquake of magnitude 6.7 or larger in the Bay Area before the year 2038. The northern portion of the San Andreas fault is New Building – 429-447 University Avenue, Palo Alto Geotechnical Investigation Page 3 estimated to have a 21 percent probability of producing a magnitude 6.7 or larger earthquake by the year 2038 (2007 Working Group on California Earthquake Probabilities, 2008). SITE EXPLORATION & RECONNAISSANCE Exploration Program Our field investigation was performed on September 3, 2013; and included a site reconnaissance and the excavation and logging of two exploratory borings to depths of approximately 45 feet at the locations shown on Figure A-2. The boring locations were approximately determined by measuring distance from building corners and should be considered accurate only to the degree implied by the mapping technique used. Our exploratory borings were advanced using a truck-mounted drill rig equipped with hollow-stem augers. Soil samples were collected with split-spoon samplers driven with a 140-pound hammer repeatedly dropped from a height of 30 inches with a wire line sampling system. The samplers included the 2-inch outside diameter (OD) Standard Penetration Test sampler, as well as 2.5- and 3-inch OD split-spoon samplers. The sampler types used are indicated on the boring logs at the appropriate depths. The number of hammer blows required to drive the samplers were recorded in 6-inch increments for the length of the 18- inch long sampler barrels. The associated blow count data, which is the sum of the second and third 6-inch increment, is presented on the boring logs as sampling resistance in blows per foot. The field blow counts for the 2.5-inch and 3-inch OD samplers have been standardized to Standard Penetration Test blow counts for sampler size; however, the blow count data has not been adjusted for other factors such as hammer efficiency. The logs of our borings are presented in Appendix B as Figures B-1 and B-2. Also included in Appendix B is Figure B-3, Key to Boring Logs; and Figure B-4, Unified Soil Classification System. Our staff geologist logged the borings in general accordance with the Unified Soil Classification System. The boring logs show our interpretation of the subsurface conditions at the locations and on the date indicated and it is not warranted that these conditions are representative of the subsurface conditions at other locations and times. In addition, the stratification lines shown on the logs represent approximate boundaries between the soil materials; however, the transitions may be gradual. Site Description The flat property is located along the northwest side of University Avenue in downtown Palo Alto. The property measures roughly 75 feet wide and 110 feet long and is bounded by University Avenue to the southeast, Kipling Street to the northeast, an alleyway to the northwest, and commercial properties to the southwest. The site is accessed from the University Avenue sidewalk at the front and an alleyway and parking lot off Kipling Street New Building – 429-447 University Avenue, Palo Alto Geotechnical Investigation Page 4 from the rear. The site is currently occupied by a single-story, four-unit retail building with storefronts along University Avenue (at 429, 435, 441, and 447 University Avenue) and one, second-story office unit above a parking area in the rear. The asphalt parking lot accessed from the back alley includes about six parking spaces. Subsurface Two exploratory borings were excavated in the area of the proposed building, in the existing asphalt parking area. In general, below the asphalt pavement section, our exploratory borings B-1 and B-2 encountered alternating layers of fine- and coarse-grained alluvium to the full depth explored of 45 feet. More specifically, the borings encountered approximately 5 to 8 feet of very stiff to hard surficial silty clay, underlain by 4 to 6 feet of medium dense to very dense gravelly to silty sand, and then underlain by 20 to 25 feet of very stiff silty clay. At depths of roughly 35 feet, the clay is underlain by medium dense to very dense clayey to silty sand to the bottom of the borings at depths of 45 feet. The location of each boring is presented on Figure A-2, Site Plan and detailed logs of the borings are presented in Appendix B. Laboratory Test Results Consolidated-undrained direct shear strength tests were performed by Cooper Testing Laboratory on two samples of the alluvial soils underlying the site. Direct shear testing of the silty clay alluvium encountered in Boring B-1 at depths of 24.5 to 25 feet yielded an internal friction (Phi) angle of 25 degrees and a cohesion value (c) of 1670 pounds per square foot (see Figure C-1, Direct Shear Test Data). Direct shear testing of the silty clay alluvium encountered in Boring B-2 at depths of 11 to 11.5 feet yielded an internal friction (Phi) angle of 20 degrees and a cohesion value (c) of 1500 pounds per square foot (see Figure C-2, Direct Shear Test Data). Groundwater Our borings encountered groundwater at depths of approximately 33.5 to 35 feet below existing grade during drilling. Groundwater was re-measured approximately 30 minutes after drilling at depths of approximately 31.5 to 32 feet. The borings were backfilled with grout prior to leaving the site on the day of drilling. According to Plate 1.2 of the Official State Seismic Hazard Zone report for the Palo Alto Quadrangle (California Geological Survey, 2006), the site is located in an area with a historical depth to groundwater of approximately 20 to 30 feet below ground surface. In addition, we recently installed three 32-foot deep piezometers for a property roughly 750 feet to the east at 611 Cowper Street. We measured the groundwater level several times between July and August 2013 to be between approximately 23 and 28 feet below grade. New Building – 429-447 University Avenue, Palo Alto Geotechnical Investigation Page 5 We note that fluctuations in the level of groundwater can occur due to variations in rainfall, landscaping, and other factors that may not have been evident at the time our measurements were made. Therefore, immediately prior to the start of construction, the depth to groundwater should be verified to allow for modification in structural design, if required. LIQUEFACTION ANALYSIS As noted above, the building site is located within a zone designated as potentially susceptible to earthquake-induced liquefaction. Liquefaction is a soil softening response, by which an increase in the excess pore water pressure results in partial to full loss of soil shear strength. In order for liquefaction to occur, the following four factors are required: 1) saturated soil or soil situated below the groundwater table; 2) undrained loading (strong ground shaking), such as by earthquake; 3) contractive soil response during shear loading, which is often the case for a soil which is initially in a loose or uncompacted state; and 4) susceptible soil type; such as clean, uniformly graded sands, non-plastic silts, or gravels. Structures situated above temporarily liquefied soils may sink or tilt, potentially resulting in significant structural damage. To address the potential for liquefaction at the site and its impact on the planned improvements, we performed analyses using our subsurface information combined with site- specific design level earthquake values to develop an estimate of the potential magnitude of liquefaction-induced total and differential settlements. Within Borings B-1 and B-2, we identified the soil layers with sufficiently low clay content to be potentially liquefiable. The layers included the silty sand encountered below approximately 35 feet. However, we note that the silty sand was observed to be predominantly dense to very dense and consequently is likely too dense to be considered liquefiable. The majority of the finer-grained soils encountered in Borings B-1 and B-2 were eliminated from the analysis based on engineering judgment and by recent screening criteria presented by Seed, et al., which identifies silts and clays with liquid limits less than 37%, plasticity indices less than 12%, and moisture contents greater than 80% of their liquid limits as potentially liquefiable. Computer-Aided Analysis Our analyses were performed using the computer program LiquefyPro (Version 5.3c), which calculates a factor of safety (FS) against soil liquefaction by comparing the cyclic resistance ratio (CRR), the ratio of the resistance of the soil to liquefaction during cyclic shaking, to the cyclic stress ratio (CSR), the seismic loading that would be likely to result from a design level earthquake at the study location. If the factor of safety for a soil layer is less than 1.0, it is more likely that the soil layer may liquefy during a moderate to large seismic event. The New Building – 429-447 University Avenue, Palo Alto Geotechnical Investigation Page 6 methods outlined in the above publications were also used to evaluate magnitude of anticipated soil settlement, calculated as the volumetric strain (qualified by the CSR) times the thickness of the liquefiable soil layer. The CRR during a design-level earthquake is a function of groundwater level, earthquake magnitude, soil density, and the depth of the layer being evaluated. Based on the CDC Seismic Hazard Zone report for the Palo Alto Quadrangle (Plate 1.2) and our subsurface investigation, our liquefaction analyses considered a design groundwater level at a depth of 26 feet below the existing ground surface. According to Earthquake Hazards Program (USGS, 2008), the estimated peak ground acceleration in the site vicinity is approximately 0.44g for a 10% exceedance in 50 years based on a predominant earthquake magnitude of 7.9 Mw. The soil density values were estimated based on site-specific data collected during exploratory drilling and sampling and laboratory data. Our CRR calculations are based on normalized standard penetration blow counts corrected for field-testing procedures, such as hammer efficiency, borehole diameter, rod length, and overburden pressures. LiquefyPro calculates liquefaction-induced settlement by dividing the data into thin layers and calculating settlement for each layer. The settlement in each layer was calculated by multiplying the volumetric strain by the thickness of each layer. Volumetric strain was calculated using the factor of safety against liquefaction against corrected SPT data. Liquefaction Settlement Findings Our analysis based on Borings B-1 and B-2 identified relatively thin layers of material with a low to moderate probability of liquefaction as a result of a design-level earthquake, generally below approximately 35 feet. Consequently, we estimated (using the LiquefyPro program) a negligible amount of total and differential seismic-induced settlement may be expected at the site, based on the subsurface data inputted. We note that the methods of analysis used to estimate total and differential settlements do not take into account the possibility of surface ground rupture, but consider the capping layer effects of the relatively stiff and dense, non-liquefiable soils overlying the potentially liquefiable soil layers. For liquefaction-induced sand boils or fissures to occur, the pore water pressures induced within the liquefied strata must exert enough force to break through these overlying layers. Based on work by Youd and Garris (1995), a capping layer of non- liquefiable material on the order of 4.5 to 5 feet thick may be adequate enough to prevent the occurrence of ground surface rupture for a liquefiable layer on the order of 2 to 3 feet in thickness. Based on our subsurface information, the subject site should have a sufficiently thick and relatively dense, non-liquefiable layer above the groundwater table capping the potentially liquefiable layers at greater depths to mitigate the potential for sand boils or surface venting during an earthquake. New Building – 429-447 University Avenue, Palo Alto Geotechnical Investigation Page 7 CONCLUSIONS From a geotechnical perspective, it is our opinion that the site is suitable for the proposed development provided that the recommendations presented in this report are incorporated into the design and construction of the project. In our opinion, the primary geotechnical constraints to the proposed construction are the site’s seismic setting, and the City’s guidelines eliminating the use of subsurface drainage in relation to all new basement construction (see below). In addition, we anticipate that the excavation for the below-grade garage will likely extend to depths on the order of roughly 27 feet below existing site grades, in some cases near or immediately adjacent to existing buildings and public streets and sidewalks. Therefore, to mitigate the issue of differential settlement and potential impact on these structures, the basement excavation will necessitate a well-designed temporary shoring system to be designed by others. As noted above, the groundwater level is expected to typically be on the order of approximately 31 to 32 feet below existing grades. Due to fluctuations in ground water level, it is possible that portions of the basement excavation will encounter ground water. Dewatering should be the responsibility of the contractor if ground water is encountered during construction. Based on our investigation, the site appears to be underlain by alternating layers of fine- and coarse-grained alluvium to the maximum depth explored of 45 feet. In our opinion, the underlying competent alluvial deposits should provide adequate foundation support for the proposed improvements. Highest Projected Groundwater Level In accordance with the requirements of the City of Palo Alto Public Works Department, we have included the following statement: Based on our subsurface investigation and the available historic groundwater data, in our professional judgment, the groundwater at the project site is unlikely to rise above a depth of 26 feet (5-feet above the measured ground water level) as measured from existing site grades. Therefore, from a geotechnical perspective, if all or portions of the basement finished floor elevation will be situated below a depth of 26 feet, in our opinion, the basement slab foundation would be required to resist uplift pressures from regional groundwater buoyancy effects. Waterproofing of the basement is critical and should be designed and installed by an experienced consultant/contractor. Please note that the City of Palo Alto prohibits new basements east of Foothill Expressway from being constructed with subsurface drainage. Therefore, as noted in the Retaining Wall New Building – 429-447 University Avenue, Palo Alto Geotechnical Investigation Page 8 section that follows, basement retaining walls should be designed for the undrained condition and waterproofing (designed by others) should be incorporated in the design. Geologic Hazards As part of our evaluation, we assessed the potential for geologic hazards to impact the site and the proposed improvements. The results of our review are presented below: Fault Rupture – Based on our review of published maps, it is our opinion that no active or potentially active faults cross the subject property. Therefore, in our opinion the potential for fault rupture at the site is very low. Ground Shaking – As noted in the Seismicity section above, moderate to large earthquakes are probable along several active faults in the greater Bay Area. Therefore, strong to violent ground shaking should be expected one or more times during the design-life of the proposed improvements. The improvements should be designed in accordance with current earthquake resistant standards, including the 2013 CBC guidelines and the design parameters presented in this report. It should be clearly understood that these guidelines and parameters will not prevent damage to structures; rather they are intended to prevent catastrophic collapse. Differential Compaction – During moderate and large earthquakes, soft or loose, natural or fill soils can settle and consolidate, often unevenly across a site. In general, the alluvial soils encountered at the site are very stiff to hard or medium dense to very dense and, in our opinion, are not susceptible to differential compaction. Therefore, differential compaction should not constitute a significant hazard to the proposed improvements provided that they are supported on foundations designed in accordance with the recommendations presented in this report. Liquefaction – Please refer to the Liquefaction Analysis section of our report for more detailed information concerning this geologic hazard. In summary, based on the findings presented in the above sections, in our opinion the probability of liquefaction, ground displacement, ground lurching, differential settlement or lateral spreading during major seismic events at the site is low. Potential differential ground settlement resulting from earthquake-induced liquefaction in the area of the proposed building footprint, if it were to occur, has been estimated to be a negligible amount (see discussion above and Appendix D, Summary of Liquefaction Settlement Analysis). Therefore, in our opinion, the potential for liquefaction to occur and adversely affect the building improvements should be very low provided the recommendations contained in this report are implemented in design and construction. New Building – 429-447 University Avenue, Palo Alto Geotechnical Investigation Page 9 RECOMMENDATIONS We recommend that the proposed below-grade parking garage, its retaining walls, and all building loads overlying the basement be supported on a mat foundation bearing in the underlying alluvial deposits. Based on the information found during our subsurface investigation, if the finished floor of the basement will extend below a depth of approximately 26 feet, in our opinion, the basement slab foundation will be required to resist uplift pressures from groundwater buoyancy effects. Due to City guidelines prohibiting subsurface drainage associated with new basement construction, basement retaining walls should be designed for the undrained hydrostatic condition. In addition, there is a potential for encountering isolated zones of relatively clean granular deposits of variable density and consistency during excavations for the proposed basement structure. As a result, in our opinion the foundation and earthwork contractors should be cautioned that vertical and near vertical cuts in the more granular materials may be prone to raveling and potentially more significant caving failure. The building contractor should take appropriate precautions to shore the proposed basement excavation, as necessary. The design and construction of any temporary shoring or dewatering is the responsibility of the building contractor and is beyond the scope of this investigation. In addition, we strongly encourage the use of a waterproofing consultant and/or waterproofing subcontractor to assure adequate protection from surface water that will accumulate adjacent to the basement wall and bottom of mat slab. At-grade concrete slabs-on-grade should be constructed over a section of select granular fill. Any slabs-on-grade planned adjacent to the basement walls should be designed to span the area underlain by any planned basement retaining wall backfill (if present) to mitigate the concerns for backfill settlement. Detailed foundation, grading, and drainage recommendations and geotechnical design criteria are presented below. We should review the proposed layout and design, prior to completion of the final plans, to verify that the following recommendations are appropriate. 2013 CBC EARTHQUAKE DESIGN PARAMETERS We have developed site-specific earthquake design parameters based on the procedures described in Chapter 16, Section 1613 of the 2013 California Building Code (California Building Standards Commission, 2013). These procedures utilize State standardized spectral acceleration values for maximum considered earthquake ground motion taking into account historical seismicity, available paleoseismic data, and activity rates along known fault traces, as well as site-specified soil and bedrock response characteristics. Contour maps of Class B bedrock horizontal spectral acceleration values for the State of California are included as figures in Chapter 16 of the 2013 CBC, representing both short (0.2 seconds) and long (1.0 New Building – 429-447 University Avenue, Palo Alto Geotechnical Investigation Page 10 second) periods of spectral response and taking into account 5 percent of critical damping. The U.S. Geological Survey (2013) has prepared an online seismic design value application tool, based on the 2010 ASCE with a July 2013 CBC errata, for public use, that allows for site-specific adjustments of these acceleration values for different subsurface conditions, which are defined by site classes. Given representative latitude of 37.448 and longitude of -122.160 in accordance with guidelines presented in the 2013 CBC, the following seismic design parameters will apply for this site: Site Class D – Soil Profile Name: Stiff Soil (Table 1613.5.2) Mapped Spectral Accelerations for 0.2-second Period: SS= 1.511 (Site Class B) Mapped Spectral Accelerations for a 1-second Period: S1= 0.692 (Site Class B) Design Spectral Accelerations for 0.2 second Period: SDS= 1.008 (Site Class D) Design Spectral Accelerations for a 1-second Period: SD1= 0.692 (Site Class D) BASEMENT MAT FOUNDATION We recommend that the basement and any loads overlying the basement be supported on a reinforced concrete mat slab foundation bearing on the underlying alluvium. The mat may be designed for allowable bearing pressures of 2,000 pounds per square foot for combined dead plus live loads, with a one-third increase allowed for transient loads, including wind or seismic forces. If the structural engineer will utilize a modulus of subgrade reaction in the mat design, we estimate that the modulus of vertical subgrade reaction for a 1-foot square plate (based on Terzaghi’s method - Figure 6 of the Navy Design Manual, Chapter 5, NAVFAC DM 7.1; and engineering judgment) for the very stiff alluvium to be approximately 80 pounds per cubic inch (pounds per square inch per inch). We caution that the structural engineer should consider the dimensions of the loaded area and the various column and line loading/spacing in evaluating the modulus of subgrade reaction in accordance with the guidance presented in the Navy Design Manual, Section 9.6 of Foundation Analysis and Design (Bowles, 1996), or in accordance with some other suitable reference. If the finished floor of the basement will extend below a depth of 26 feet, the basement slab foundation should be designed to resist uplift pressures from buoyancy effects, assuming a water level at 26 feet below existing grade. Uplift pressures from buoyancy can be resisted by the weight of the structure, including the concrete mat foundation and retaining walls. If necessary, uplift pressures can be resisted by thickening the mat slab, or by using drilled piers or helical anchors. If drilled piers or helical anchors are considered, we should be contacted to provide appropriate design recommendations. New Building – 429-447 University Avenue, Palo Alto Geotechnical Investigation Page 11 Lateral loads may be resisted by friction between the mat and the supporting subgrade. A frictional resistance of 0.30 can be used. In addition to the above, lateral resistance may be provided by passive pressures acting against the lower two-thirds of the basement retaining walls using an equivalent fluid pressure of 350 pounds per cubic foot. The mat foundation should be reinforced with a grid of steel reinforcing bars. The project structural engineer should establish mat thickness and reinforcing based on anticipated loading and the design criteria presented in this report. Our representative should observe the basement excavation upon its completion and prior to placement of the recommended water proofing to evaluate the condition of the subgrade material and to make sure that the conditions are consistent with those anticipated from our subsurface exploration. It may be necessary to compact the subgrade material in the basement excavation, if loose or disturbed areas are created or encountered during construction. We recommend that a qualified waterproofing consultant be retained to provide appropriate recommendations and construction specifications. Murray Engineers, Inc. does not provide waterproofing design or consultation services. Based on our engineering judgment, thirty-year differential movement due to static loads is not expected to exceed approximately ¾-inch across any 20-foot span of the mat-supported improvements. BASEMENT RETAINING WALLS Basement retaining walls should be supported on foundations designed in accordance with the recommendations provided above. The general contractor shall be responsible for all shoring and bracing required to adequately stabilize the basement excavation for the safety of construction workers and protection of any adjacent structures or property lines. Waterproofing or damp-proofing of retaining walls should be included in areas where wall moisture would be undesirable, such as at living space or where wall finishes could be impacted by moisture. The project architect or a waterproofing consultant should provide detailed recommendations for waterproofing or damp proofing, as necessary. Basement mat slab waterproofing should be designed and constructed to be integral with the basement wall waterproofing. New Building – 429-447 University Avenue, Palo Alto Geotechnical Investigation Page 12 Retaining Wall Drainage Please note that the geotechnical standard of care for basement retaining walls is to incorporate a subsurface drainage system behind basement retaining walls (integral with the basement mat foundation drainage system) to mitigate buildup of water pressure from surface water infiltration and/or other possible sources of water. However, in accordance with requirements of the City of Palo Alto Public Works Department, we understand that basement retaining wall and sub-slab drainage systems will no longer be allowed for any new construction within the City of Palo Alto. In our opinion, this poses a significant concern in relation to the potential issues of water permeation through slab surfaces and into the interior basement portions of the structure, which, if it were to occur, could create maintenance issues in the subterranean parking area. Therefore, we recommend the basement and mat slab be appropriately waterproofed. The mat slab floor and the retaining wall waterproofing systems should be designed as an integral system. We recommend that a waterproofing consultant and/or experienced waterproofing contractor be retained to provide appropriate recommendations and construction specifications. Lateral Earth Pressures Because City guidelines prohibit the use of subsurface drainage, we recommend that basement retaining walls be designed for undrained lateral soil loading conditions acting over the entire height of the wall. All portions of unrestrained retaining walls should be designed to resist an equivalent fluid pressure of 85 pounds per cubic foot (pcf) plus one-third of any anticipated surcharge loads. Undrained walls restrained from movement at the top should be designed to resist an equivalent fluid pressure of 85 pcf plus a uniform pressure of 8H pounds per square foot (psf), where H is the height in feet of the retained soil. Restrained walls should also be designed to resist an additional uniform pressure equal to one-half of any surcharge loads applied at the surface. In accordance with the 2013 CBC, where applicable, new retaining walls, such as walls that are incorporated into the building foundation, should also be designed to resist lateral earth pressure from seismic loading. We suggest that the seismic loading be based on a uniform pressure of 10H pounds per square foot (psf)/foot of wall height, where H is the height in feet of the retained soil. We also note that the allowable passive pressures provided for retaining wall foundations may be increased by one-third for short-term seismic forces. Where backfill behind the wall will be sloping upward from the wall (if at all), we recommend that the equivalent fluid pressures given above be increased by 3 pcf for each 4- degree increase in slope inclination. New Building – 429-447 University Avenue, Palo Alto Geotechnical Investigation Page 13 Retaining Wall Backfill Backfill placed behind retaining walls should be compacted in accordance with the recommendations provided in the Compaction section of this report, using light compaction equipment. If heavy compaction equipment is used, the walls should be temporarily braced. Please refer also to the Earthwork section of this report for important recommendations regarding basement backfill. SLABS-ON-GRADE We anticipate concrete slabs-on-grade may be used for access driveway/ramp entries, patios and miscellaneous walkways. We recommend that exterior concrete slabs-on-grade be underlain by at least 8 inches of select granular fill, such as Class 2 aggregate baserock, compacted in accordance with the recommendations provided in the Compaction section of this report. Prior to placement of the select granular fill, the subgrade soils should be scarified and moisture conditioned, as necessary, to a depth of approximately 6 inches and recompacted in accordance with the Compaction section of this report. In general, exterior slabs-on-grade should be designed as “free-floating” slabs, structurally isolated from adjacent foundations. Slabs should be provided with control joints at spacing of not more than about 10 feet. The project structural engineer should determine slab reinforcing based on anticipated use and loading. In addition, any slab-on-grade sections planned adjacent to the basement walls should be designed to span the area underlain by the planned basement retaining wall backfill (approximately 10 feet) to mitigate the concerns for backfill settlement. Select granular fill should be compacted in accordance with the Compaction section of this report. Where slab surface moisture would be a significant concern we recommend that the slabs be underlain by a vapor retarder consisting of a highly durable membrane not less than 10 mils thick (such as Stego Wrap Vapor Barrier by Stego Industries, LLC or equivalent), underlain by a capillary break consisting of 4 inches of ½- to ¾-inch crushed rock. The capillary break may be considered the equivalent thickness as the upper 4 inches of select granular fill recommended above. Please also refer to the Vapor Retarder Considerations section below for additional information. Please note that these recommendations do not comprise a specification for “waterproofing.” For greater protection against concrete dampness, we recommend that a waterproofing consultant be retained. Vapor Retarder Considerations Based on our understanding, two opposing schools of thought currently prevail concerning protection of the vapor retarder during construction. Some believe that 2 inches of sand should be placed above the vapor retarder to protect it from damage during construction and also to provide a small reservoir of moisture (when slightly wetted just prior to concrete New Building – 429-447 University Avenue, Palo Alto Geotechnical Investigation Page 14 placement) to benefit the concrete curing process. Still others believe that protection of the vapor retarder and/or curing of concrete are not as critical design considerations when compared to the possibility of entrapment of moisture in the sand above the vapor retarder and below the slab. The presence of moisture in the sand could lead to post-construction absorption of the trapped moisture through the slab and result in mold or mildew forming at the upper surface of the slab. We understand that recent trends are to use a highly durable vapor retarder membrane (at least 10 mils thick) without the protective sand covering for interior slabs surfaced with floor coverings including, but not limited to, carpet, wood, or glued tiles and linoleum. However, it is also noted that several special considerations are required to reduce the potential for concrete edge curling if sand will not be used, including slightly higher placement of reinforcement steel and a water-cement ratio not exceeding 0.5 (Holland and Walker, 1998). We recommend that you consult with other members of your design team, such as your structural engineer, architect, and waterproofing consultant for further guidance on this matter. EARTHWORK A substantial amount of earthwork is anticipated as part of the proposed construction, including excavation of the below-ground parking levels, subgrade preparation beneath hardscape, placement and compaction of engineered fill beneath hardscape, possible backfill behind basement retaining walls, and backfill in utility trenches. Earthwork should be performed in accordance with the following recommendations. Clearing & Site Preparation All deleterious materials, topsoil, roots, vegetation, and designated utility lines, should be cleared from the areas to receive the planned improvements. Excavations that extend below finished grade should be backfilled with engineered fill placed and compacted as discussed below. Material for Fill On-site soils having an organic content of less than 3 percent organic material by volume (ASTM D 2974) may be suitable for use as engineered fill. In general, fill material should not contain rocks or pieces larger than 6 inches in greatest dimension, and should contain no more than 15 percent larger than 2.5 inches. Any required imported fill should be predominantly granular material or low plasticity material with a plasticity index of less than approximately 15 percent. Any proposed fill for import should be approved by Murray Engineers, Inc. prior to importing to the site. Our approval process may require index testing to establish the expansive potential of the soil; therefore, it is important that we receive samples of any proposed import material at least 3 days prior to planned importing. New Building – 429-447 University Avenue, Palo Alto Geotechnical Investigation Page 15 Class 2 aggregate baserock should meet the specifications outlined in the Caltrans Standard Specifications, latest edition. Compaction Prior to placing engineered fill, the subgrade soil should be scarified, moisture-conditioned, and compacted, as necessary. Material used for fill should be placed in uniform lifts, no more than 8 inches in uncompacted thickness. The fill material should be moisture conditioned, as necessary, and compacted in accordance with the specifications listed in Table 2 below. The relative compaction and moisture content specified in Table 2 are relative to ASTM D 1557, latest edition. Compacted lifts should be firm and non-yielding under the weight of compaction equipment prior to the placement of successive lifts. Table 2. Compaction Specifications Fill Element Relative Compaction* Moisture Content* General fill for raising of site grades, driveway, parking lots, and patio areas (for fills up to 4 feet thick) 90 percent Near optimum For fills greater than 4 feet thick 93 percent (entire fill) Near optimum Upper 6 inches of subgrade beneath slabs-on-grade 90 percent Near optimum Aggregate baserock under slabs-on-grade 95 percent Near optimum ½- to ¾-inch Crushed Rock - Compact with at least 3 passes of a vibratory plate with lift-thickness < 12 inches. see note at left Not critical Backfill of utility trenches using on-site soil 90 percent Near optimum Backfill of utility trenches using imported sand 90 percent Near Optimum *Relative to ASTM D 1557 (latest edition) Location & Backfill of Temporary Basement Access Ramp In planning the location for any temporary basement access ramp, the contractor should consider the future location of any at-grade hardscape. If possible, we recommend that the ramp excavation be kept approximately 5 feet away from proposed hardscape. If placement of the ramp within this zone is unavoidable, it is imperative that the backfilled soils be compacted in accordance with the specifications outlined in Table 2 of the Compaction section of this report. We should observe and test the compaction of the ramp backfill. In addition, we recommend that a note be included on the structural plans referencing these recommendations. New Building – 429-447 University Avenue, Palo Alto Geotechnical Investigation Page 16 Temporary Slopes & Trench Excavations The contractor should be responsible for all temporary slopes and trenches excavated at the site and design and construction of any required shoring. Shoring and bracing should be provided in accordance with all applicable local, state, and federal safety regulations, including the current OSHA excavation and trench safety standards. Those excavations 4 feet high or lower may be cut vertical. Because of the potential for variable soil conditions, field modifications of temporary cut slopes may be required. Unstable materials encountered on the slopes during the excavation should be trimmed off even if this requires cutting the slope back at flatter inclinations. In addition, we recommend that the contractor provide thorough documentation of the condition of nearby buildings, streets, and utilities by video or other means prior to the commencement of the site basement excavation. We also suggest consideration be given to performing regular surveys during excavation and construction to monitor and document any observed settlement of nearby streets and structures. However, the above recommendations should be considered general in form. It should be noted that the general contractor shall be responsible for all shoring and bracing required to adequately stabilize the basement excavation for the safety of construction workers and protection of any adjacent structures or property lines. SURFACE DRAINAGE We recommend that the roof of the new building be sloped to area drains and/or provided with roof gutters; and provided with downspouts. Water collected in the area drainage, gutters and downspouts should not be allowed to discharge freely onto the ground surface adjacent to the building and should be prevented from ponding adjacent to the building. To mitigate ponding water, we recommend that all hardscape surfaces immediately adjacent to the building, if constructed, be provided with a positive gradient away from the structure. Where such surface gradients are difficult to achieve, we recommend that area drains and/or surface drainage swales be installed to direct surface water to a suitable discharge location away from the structure. We recommend that annual maintenance of the surface drainage systems be performed. This maintenance should include inspection and testing to make sure that roof gutters, downspouts, and area drains are in good working order and do not leak; flushing of the drainage systems to make sure that they are free of debris; and inspection of surface drainage outfall locations to verify that introduced water flows freely through the discharge pipes. New Building – 429-447 University Avenue, Palo Alto Geotechnical Investigation Page 17 REQUIRED FUTURE SERVICES Plan Review To better assure conformance of the final design documents with the recommendations contained in this report, and to better comply with the building department’s requirements, Murray Engineers, Inc. must review the completed project plans prior to construction. The plans should be made available for our review as soon as possible after completion so that we can better assist in keeping your project schedule on track. We recommend that the following note be added to the architectural, structural, and civil plans: The geotechnical aspects of the project, including site grading, basement and foundation excavations, retaining wall backfill, subgrade preparation beneath hardscape, placement and compaction of engineered fill, and installation of site drainage should be performed in accordance with the recommendations of the geotechnical report prepared by Murray Engineers, Inc., dated September 26, 2013. Murray Engineers, Inc. should be provided at least 48 hours advance notification (650-599-9980) of any geotechnical aspects of the construction and should be present to observe and test the earthwork, foundation, and drainage installation phases of the project. Construction Observation Services Murray Engineers, Inc. should observe and test (as necessary) the earthwork and foundation phases of construction in order to a) confirm that subsurface conditions exposed during construction are substantially the same as those interpolated from our limited subsurface exploration, on which the analysis and design were based; b) evaluate compliance with the geotechnical design concepts, specifications, and recommendations; and c) allow design changes in the event that subsurface conditions differ from those anticipated. The recommendations in this report are based on limited subsurface information. The nature and extent of variation across the site may not become evident until construction. If variations are exposed during construction, it may be necessary to re-evaluate our recommendations. LIMITATIONS This report has been prepared for Kipling Post LP/Wharton Properties, LLC, specifically for developing geotechnical design criteria relating to design and construction of a new building and associated improvements at 429-447 University Avenue in Palo Alto, California. In the event that any changes in the nature or locations of the proposed improvements are planned, the conclusions and recommendations of this report shall not be considered valid unless such changes are reviewed, and the conclusions and recommendations presented in this report are modified or verified in writing by this firm. New Building – 429-447 University Avenue, Palo Alto Geotechnical Investigation Page 18 The opinions presented in this report are based upon information obtained from exploratory borings at widely separated locations, site reconnaissance, and upon local experience and engineering judgment, and have been formulated in accordance with generally accepted geotechnical engineering practices that exist in the San Francisco Bay Area at the time this report was prepared. Further, our recommendations are based on the assumption that soil and geologic conditions at or between the borings do not deviate substantially from those encountered. In addition, geotechnical issues may arise during the course of construction that were not apparent at the time this report was prepared. No warranty, expressed or implied, is made or should be inferred. In addition, we are not responsible for data presented by others. The recommendations provided in this report are based on the assumption that we will be retained to provide the Future Services described above in order to evaluate compliance with our recommendations. If we are not retained for these services, Murray Engineers, Inc. cannot assume any responsibility for any potential claims that may arise during or after construction, as a result of misuse or misinterpretation of Murray Engineers, Inc.’s report by others. Furthermore, if another geotechnical consultant is retained for follow-up service to this report, Murray Engineers, Inc. will at that time cease to be the Engineer-of-Record. The opinions presented in this report are valid as of the present date for the property evaluated. Changes in the condition of a property can occur with the passage of time, whether due to natural processes or the works of man, on this or adjacent properties. In addition, changes in applicable standards of practice can occur, whether from legislation or the broadening of knowledge. Accordingly, the opinions presented in this report may be invalidated, wholly or partially, by changes outside of our control. Therefore, this report is subject to review and should not be relied upon after a period of three years. In addition, this report should not be used and is not applicable for any property other than that evaluated. New Building – 429-447 University Avenue, Palo Alto Geotechnical Investigation Page 19 REFERENCES 2007 Working Group on California Earthquake Probabilities, 2008, The Uniform California Earthquake Rupture Forecast, Version 2 (UCERF 2): U.S. Geological Survey Open-File Report 2007-1437; California Geological Survey Special Report 203214; Southern California Earthquake Center Contribution #1138. Association of Bay Area Governments (2006), Earthquake and Hazards Program – Earthquake Liuefaction Susceptibility Web Site (retrieved September 24, 2013): http://gis.abag.ca.gov/website/liquefactionsusceptibility/index.html ASTM International, 2012, Annual Book of ASTM Standards, 2012, Section Four, Construction, Volume 04.08, Soil and Rock (I): D 420-D 5876: ASTM International, Baltimore, MD, 1809 p. Bowles, Joseph, E., 1996, Foundation Analysis and Design, Fifth Edition: The McGraw-Hill Companies, Inc., New York, 1175 p. California Building Standards Commission, 2013, 2013 California Building Code, California Code of Regulations, Title 24, Part 2, Volume 2 of 2: California Building Standards Commission, Sacramento, CA. California Geological Survey, 2008, Guidelines for Evaluating and Mitigating Seismic Hazards in California: California Geological Survey, Special Publication 117A. California Geological Survey, 2006, Seismic Hazard Zone Report for the Palo Alto 7.5-Minute Quadrangle, San Mateo and Santa Clara County, California City of Palo Alto, 2006, Basement Exterior Drainage Policy, Department of Public Works. CivilTech Software, Copyright 2006, Liquefy Pro Version 5.3c Department of the Navy, Facilities Engineering Command, 1982, NAVFAC DM-7.1, Soil Mechanics, Design Manual 7.1: U.S. Government Printing Office, Washington, D.C., 348 p. Department of the Navy, Facilities Engineering Command, 1982, NAVFAC DM-7.2, Foundations and Earth Structures, Design Manual 7.2: U.S. Government Print Office, Washington, D.C., 244 p. Holland, J.A., and Walker, W., 1998, Controlling Curling and Cracking in Floors to Receive Coverings: The Aberdeen Group Leyendecker, E.V. Arthur Frankel, Kenneth Rukstales, Eric Martinez, Nicolas Luco, Jeremy Fee, Ned Field, Nitin Gupta, Vipin Gupta, 2011, Ground Motion Parameter Calculator, v. 5.1.0 - 2/10/2011 Pampeyan, E.H., 1993, Geologic Map of the Palo Alto and Part of the Redwood Point 7 1/2’ Quadrangles, San Mateo and Santa Clara Counties, California, U.S. Geological Survey Map I-2371 U.S. Department of the Interior Bureau of Reclamation, 2001, Geology Field Manual, Chapter 22, Second Edition, Volume 2. U.S.G.S. (2008), Earthquake Hazards Program – US Seismic Hazard 2008 Web Site: http://earthquake.usgs.gov/hazards/apps/map/ USGS Geologic Hazards Science Center - U.S. Seismic Design Maps webpage with seismic design value application (retrieved September 25, 2013): http://geohazards.usgs.gov/designmaps/us/application.php. Youd, L.T., and Garris, C.T., 1995, Liquefaction-Induced Ground-Surface Disruption, ASCE Journal of Geotechnical Engineering, Vol. 121, No. 11, pp. 805-809. Base: USGS Topographic Map Palo Alto Quadrangle, 7.5 Minute Series, 1997. Scale: 1 inch = 2,000 feet SEPTEMBER 2013 VICINITY MAP PROJECT NO. 1755-1R1 N FIGURE A-1 NEW MIXED-USE BUILDING 429-447 UNIVERSITY AVENUE PALO ALTO, CALIFORNIA SITE feet meters 100 40 UN I V E R S I T Y A V E N U E KI P L I N G S T R E E T B-3 B-2B-2B-2 KEY NOTES (E) Footprint of 1-Story Residence (Hachured) (N) Footprint of Main Floor (Dashed) (N) Area of Second Floor (Shaded) B-1B-1B-1 NEW MIXED-USE BUILDING429-447 UNIVERSITY AVENUEPALO ALTO, CALIFORNIA PROJECT NO. 1755-1R1 SEPTEMBER 2013 FIGURE A-2 SITE PLAN LEGEND Approximate Location of Boring by Murray Engineers, Inc., September 3, 2013 Base: Google Inc. Pro, 2013, Version 7.0.1.8244 (beta), Latitude 37.447731 and Longitude -122.160193 Approximate Scale: 1 inch = 30 feet B-1 N Approximate Area of Existing Building (Shaded) VICINITY GEOLOGIC MAP PROJECT NO. 1755-1R1 FIGURE A-3 NEW MIXED-USE BUILDING 429-447 UNIVERSITY AVENUE PALO ALTO, CALIFORNIA Base: Geologic Map of the Palo Alto 7.5” Quadrangles, Santa Clara Counties, Earl H. Pampeyan, 1993 Scale: 1 inch = 2,000 feet SEPTEMBER 2013 N Artificial Fill Medium-grained Alluvium Older Alluvium Qf Fine-grained Alluvium Coarse-grained Alluvium Qoa Qaf Legend & Selected Map Symbols Qam SITE Qac Areas where historic occurrence of liquefaction, or local, geological, geotechnical and groundwater conditions indicate a potential for earthquake-induced liquefaction. Legend SITE Base: State of California Seismic Hazard Zone Map, Palo Alto Quadrangle, 7.5 Minute Series, 2006 Scale: 1 inch = 2,000 feet STATE SEISMIC HAZARD ZONES MAP N FIGURE A-4SEPTEMBER 2013 NEW MIXED-USE BUILDING 429-447 UNIVERSITY AVENUE PALO ALTO, CALIFORNIA PROJECT NO. 1755-1R1 P:\ A A B o r i n G S F i l e s \ P r o j e c t s \ W o n g - 1 7 5 5 - 1 . b g s [ M u r r a y N e w 4 5 - W C , T V , P P , D D C o r r e c t . t p l ] FIGURE B-1 LOG OF SEPTEMBER 2013 Date(s) Drilled September 3, 2013 Drilling Method Hollow Stem Auger Drill Rig Type Truck Mounted Groundwater Level and Date Measured 33.5 ft ATD, 32 ft after 30 minutes Borehole Backfill Grout Logged By KP Drill Bit Size/Type 8" OD HSA Drilling Contractor Exploration Geoservices Inc. Sampling Method(s) 3" OD, 2.5" OD, & 2" OD SPT Split Spoon Samplers Location Northeast corner of back parking lot Checked By JK/WPC Total Depth of Borehole 45 feet bgs Approximate Surface Elevation 50 feet above MSL Hammer Data 140 lb, 30 in drop, wireline NEW MIXED-USE BUILDING 429-447 UNIVERSITY AVENUE PALO ALTO, CALIFORNIA PROJECT NO. 1755-1R1 BORING B-1 5 10 15 20 25 30 35 40 45 50 El e v a t i o n , f e e t 0 5 10 15 20 25 30 35 40 45 De p t h , f e e t Sa m p l e T y p e Sa m p l i n g Re s i s t a n c e , bl o w s / f o o t Re l a t i v e Co n s i s t e n c y US C S S y m b o l MATERIAL DESCRIPTION Wa t e r C o n t e n t , %To r v a n e S h e a r St r e n g t h ( T S F ) Po c k e t P e n Co m p . S t r e n g t h (T S F ) Dr y D e n s i t y (P C F ) Very Stiff to Hard CL SANDY CLAY, dark yellowish brown, homogeneous, medium plasticity fines, fine sand, minor fine to medium subrounded gravels, slightly moist (Alluvium) color change to yellowish brown @ 2.5' Very Dense SP GRAVELLY SAND, yellowish brown, homogeneous, fine sand, fine to coarse subrounded gravel, slightly moist (Alluvium) Very Stiff CL SILTY CLAY, yellowish brown, homogeneous, medium plasticity, minor fine to very fine sand, slight iron oxide staining, moist to very moist (Alluvium) Phi=25 degrees; c=1,670 psf (CU direct shear test 24.5' - 25' bgs) very moist, moderate iron oxide staining @ 28.5' Dense SC CLAYEY SAND, yellowish brown, homogeneous, fine to coarse sand, medium plasticity fines, minor fine to medium subrounded gravels, very moist to wet (Alluvium) Very Dense SM SILTY SAND, yellowish brown, poorly graded sand, homogeneous, low plasticity fines, minor fine to medium subrounded gravel, very moist to wet (Alluvium) Bottom of Boring at 45 feet bgs 10 7 6 5 16 17 113 22 104 23 103 19 14 17 27 58 20 52 46 0.5 1.3 28 0.5 1.5 73 Hard 0.6 2.0 16 Stiff to Very Stiff 0.3 1.0 40 51 45 (ATD) (after 30 minutes) P:\ A A B o r i n G S F i l e s \ P r o j e c t s \ W o n g - 1 7 5 5 - 1 . b g s [ M u r r a y N e w 4 5 - W C , T V , P P , D D C o r r e c t . t p l ] FIGURE B-2 LOG OF SEPTEMBER 2013 Date(s) Drilled September 3, 2013 Drilling Method Hollow Stem Auger Drill Rig Type Truck Mounted Groundwater Level and Date Measured 35 ft ATD; 31.5 ft after 30 minutes Borehole Backfill Grout Logged By KP Drill Bit Size/Type 8" OD HSA Drilling Contractor Exploration Geoservices Inc. Sampling Method(s) 3" OD, 2.5" OD, & 2" OD SPT Split Spoon Samplers Location Southeast corner of back parking lot Checked By JK/WPC Total Depth of Borehole 45 feet bgs Approximate Surface Elevation 50 feet above MSL Hammer Data 140 lb, 30 in drop, wireline NEW MIXED-USE BUILDING 429-447 UNIVERSITY AVENUE PALO ALTO, CALIFORNIA PROJECT NO. 1755-1R1 BORING B-2 5 10 15 20 25 30 35 40 45 50 El e v a t i o n , f e e t 0 5 10 15 20 25 30 35 40 45 De p t h , f e e t Sa m p l e T y p e Sa m p l i n g Re s i s t a n c e , bl o w s / f o o t Re l a t i v e Co n s i s t e n c y US C S S y m b o l MATERIAL DESCRIPTION Wa t e r C o n t e n t , %To r v a n e S h e a r St r e n g t h ( T S F ) Po c k e t P e n Co m p . S t r e n g t h (T S F ) Dr y D e n s i t y (P C F ) Hard to Very Stiff CL SANDY CLAY, dark yellowish brown to yellowish brown, homogeneous, medium plasticity fines, fine sand, minor fine to medium subrounded to subangular gravels, slightly moist (Alluvium) Medium Dense SM SILTY SAND, dark yellowish brown, homogeneous, fine to medium sand, medium plasticity fines, minor fine to medium subrounded gravel, slightly moist (Alluvium)Hard CL SILTY CLAY, yellowish brown, homogeneous, medium plasticity, trace to minor fine sand, slight to moderate iron oxide staining, moist to very moist(Alluvium) Phi=20 degrees; c=1,500 psf (CU direct shear test 11' - 11.5' bgs) Very Dense SM SILTY SAND, yellowish brown, poorly graded, homogeneous, low plasticity fines, trace fine subrounded gravels, very moist to wet (Alluvium) Bottom of Boring at 45 feet bgs 33 28 0.9 2.5 20 28 73 0.6 2.3 25 0.3 1.0 16 0.5 2.5 45 0.6 2.8 17 Very Stiff 0.3 1.0 56 50/5" 35 Dense 11 10711 126 9 5 23 101 Very Stiff 20 118 19 Hard 24 101 22 102 16 17 16 (ATD) (after 30 minutes) P:\ A A B o r i n G S F i l e s \ P r o j e c t s \ W o n g - 1 7 5 5 - 1 . b g s [ M u r r a y N e w 4 5 - W C , T V , P P , D D C o r r e c t . t p l ] FIGURE B-3 KEY TO BORING LOGS SEPTEMBER 2013 NEW MIXED-USE BUILDING 429-447 UNIVERSITY AVENUE PALO ALTO, CALIFORNIA PROJECT NO. 1755-1R1 COLUMN DESCRIPTIONS 1 Elevation, feet: Elevation (MSL, feet) 2 Depth, feet: Depth in feet below the ground surface. 3 Sample Type: Type of soil sample collected at the depth interval shown. 4 Sampling Resistance, blows/foot: Number of blows to advance driven sampler per foot (or distance shown) beyond seating interval. Blow counts for coarse-grained soils have been standardized to Standard Penetration Test (SPT) counts by factors of 0.8 and 0.7 for the 2.5-inch OD and 3.0-inch OD samplers, respectively. These factors were derived using the Geology Field Manual (2001), published by the U.S. Bureau of Reclamation. 5 Relative Consistency: Relative consistency of the subsurface material. 6 USCS Symbol: USCS symbol of the subsurface material. 7 MATERIAL DESCRIPTION: Description of material encountered. May include consistency, moisture, color, and other descriptive text. 8 Water Content, %: Water content of the soil sample, expressed as percentage of dry weight of sample. 9 Torvane Shear Strength (TSF): Approximate shear strength in tons per square foot. 10 Pocket Pen Comp. Strength (TSF): Approximate unconfined compressive strength in tons per square foot. 11 Dry Density (PCF): Dry weight per unit volume of soil sample measured in laboratory in pounds per cubic foot. FIELD AND LABORATORY TEST ABBREVIATIONS CHEM: Chemical tests to assess corrosivity COMP: Compaction test CONS: One-dimensional consolidation test LL: Liquid Limit, percent PI: Plasticity Index, percent SA: Sieve analysis (percent passing No. 200 Sieve) UC: Unconfined compressive strength test, Qu, in ksfWA: Wash sieve (percent passing No. 200 Sieve) TYPICAL MATERIAL GRAPHIC SYMBOLS Sandstone Well graded GRAVEL (GW) Poorly graded GRAVEL (GP) Well graded GRAVEL with Silt (GW-GM) Well graded GRAVEL with Clay (GW-GC) Poorly graded GRAVEL with Silt (GP-GM) Poorly graded GRAVEL with Clay (GP-GC) Silty GRAVEL (GM) Clayey GRAVEL (GC) Well graded SAND (SW) Poorly graded SAND (SP) Well graded SAND with Silt (SW-SM) Well graded SAND with Clay (SW-SC) Poorly graded SAND with Silt (SP-SM) Poorly graded SAND with Clay (SP-SC) Silty SAND (SM) Clayey SAND (SC) SILT, SILT w/SAND, SANDY SILT (ML) Lean CLAY, CLAY w/SAND, SANDY CLAY (CL) SILT, SILT w/SAND, SANDY SILT (MH) Fat CLAY, CLAY w/SAND, SANDY CLAY (CH) SILT, SILT with SAND, SANDY SILT (ML-MH) Lean-Fat CLAY, CLAY w/SAND, SANDY CLAY (CL-CH) SILTY CLAY (CL-ML) Lean CLAY/PEAT (CL-OL) Fat CLAY/SILT (CH-MH) Fat CLAY/PEAT (CH-OH) Silty SAND to Sandy SILT (SM-ML) Silty SAND to Sandy SILT (SM-MH) Clayey SAND to Sandy CLAY (SC-CL) Clayey SAND to Sandy CLAY (SC-CH) SILT to CLAY (CL/ML) Silty to Clayey SAND (SC/SM) TYPICAL SAMPLER GRAPHIC SYMBOLS 2 inch-OD Unlined Split Spoon (SPT) 2.5 inch-OD Unlined Split Spoon 3 inch-OD Unlined Split Spoon Shelby Tube (thin-walled, fixed head) Grab Sample Bulk Sample Pitcher Sample Other Sampler OTHER GRAPHIC SYMBOLS Water level (at time of drilling, ATD) Water level (after waiting a given time) Minor change in material properties within a stratum Inferred or gradational contact between strata ?Queried contact between strata GENERAL NOTES 1. Soil classifications are based on the Unified Soil Classification System. Descriptions and stratum lines are interpretive, and actual lithologic changes may be gradual. Field descriptions may have been modified to reflect results of lab tests. 2. Descriptions on these logs apply only at the specific boring locations and at the time the borings were advanced. They are not warranted to be representative of subsurface conditions at other locations or times. El e v a t i o n , f e e t 1 De p t h , f e e t 2 Sa m p l e T y p e 3 Sa m p l i n g Re s i s t a n c e , bl o w s / f o o t 4 Re l a t i v e Co n s i s t e n c y 5 US C S S y m b o l 6 MATERIAL DESCRIPTION 7 Wa t e r C o n t e n t , % 8 To r v a n e S h e a r St r e n g t h ( T S F ) 9 Po c k e t P e n Co m p . S t r e n g t h (T S F ) 10 Dr y D e n s i t y (P C F ) 11 NEW MIXED-USE BUILDING 429-447 UNIVERSITY AVENUE PALO ALTO, CALIFORNIA COARSE COARSE STIFF MEDIUM STIFF UNIFIED SOIL CLASSIFICATION SYSTEM PROJECT NO. 1755-1R1 FIGURE B-4 COARSE * ^ Classification is based on the Unified Soil Classification System; fines refer to soil passing a No. 200 sieve. Standard Penetration Test (SPT) resistance, using a 140 pound hammer falling 30 inches on a 2 inch OD split spoon sampler;Blow counts for coarse-grained soils have been standardized to SPT counts by factors of 0.8 and 0.7 for the 2.5-inch OD and3.0-inch OD samplers, respectively. Shear strength in tons/sq. ft. as estimated by SPT resistance, field and laboratory tests, and/or visual observation. SEPTEMBER 2013 APPENDIX C SUMMARY OF LABORATORY TESTS Samples from the subsurface exploration were selected for tests to establish the physical and engineering properties of the soils. The tests performed are briefly described below. The natural moisture content and dry density was determined on most samples recovered from the soil probe. The samples were initially weighed and subsequently dried in accordance with ASTM D2216. After drying, the weight of each sample was obtained to determine the moisture content representative of field conditions and time the samples were collected. The results are presented on the soil probe log, at the appropriate sample depths. Direct shear strength testing was performed by Cooper Testing Laboratory on a two samples in accordance with ASTM D3080m. This test measures the angle of internal friction (phi) and cohesion (c) of the soil. The results of this test are presented in Figures C-1 and C-2 and on the boring logs, at the appropriate sample depths. DM:yB:# tcejorP:# boJ LTC JP:dekcehC:etaD:tneilC Project Name:Remolding Info: Phi (deg) 24.7 Ult. Phi (deg) 1 2 3 4 Boring: B-1 B-1 B-1 Sample: Depth (ft): 24.5-25 24.5-25 24.5-25 Normal Load (psf)1100 2200 4400 Dry Mass of Specimen (g)133.4 134.9 136.3 Initial Height (in) 1.02 1.02 1.02 Initial Diameter (in)2.42 2.42 2.42 Initial Void Ratio 0.552 0.532 0.523 Initial Moisture (%)18.7 18.3 18.2 Initial Wet Density (pcf)128.9 130.2 130.8 Initial Dry Density (pcf)108.6 110.1 110.6 Initial Saturation (%)91.5 92.8 94.1 Height Consol (in)0.0132 0.0174 0.0175 At Test Void Ratio 0.532 0.505 0.497 At Test Moisture (%)19.0 18.6 18.3 At Test Wet Density (pcf)131.0 132.9 133.3 At Test Dry Density (pcf)110.1 112.1 112.7 At Test Saturation (%)96.4 99.6 99.4 Strain Rate (%/min)1.1 1.0 1.1 Strengths Picked at Peak Peak Peak Shear Stress (psf)2173 2658 3585 Height (in) at Peak Ultimate Stress (psf) © 1755-1 9/19/2013 *DS-CU* A fully undrained condition may not be attained in this test.H is not measured during undrained direct shear tests. Olive Brown Sandy CLAYVisual Description: Olive Brown Sandy CLAY Olive Brown Sandy CLAY Remarks: 1670 Specimen Data )fsp( noisehoC .tlU)fsp( noisehoC Consolidated Undrained Direct Shear (ASTM D3080M) Murray Engineers Wong 560-122 0 500 1000 1500 2000 2500 3000 3500 4000 0.0 5.0 10.0 15.0 20.0 Sh e a r S t r e s s ( p s f ) Deformation (%) Shear Stress vs. Deformation Sample 1 Sample 2 Sample 3 Sample 4 0 2000 4000 6000 8000 00080006000400020 Sh e a r S t r e s s , p s f Normal Load, psf Shear Stress vs. Normal Load Peak Shear Stress Ult. Stress Ultimate 0.0000 0.2000 0.4000 0.6000 0.8000 1.0000 1.2000 0.0 2.0 4.0 6.0 8.0 10.0 12.0 14.0 16.0 18.0 De l t a h ( i n ) Deformation (%)Change in Height Sample 1 Sample 2 Sample 3 Sample 4 SEPTEMBER 2013 DIRECT SHEAR TESTCHART FOR BORING B-124.5-25 FEET BGS PROJECT NO. 1755-1R1 FIGURE C-1 429-447 UNIVERSITY AVENUEPALO ALTO, CALIFORNIA NEW MIXED-USE BUILDING DM:yB:# tcejorP:# boJ LTC JP:dekcehC:etaD:tneilC Project Name:Remolding Info: Phi (deg) 20.3 Ult. Phi (deg)24.7 1 2 3 4 Boring: B-2 B-2 B-2 Sample: Depth (ft): 11-11.5 11-11.5 11-11.5 Normal Load (psf)1000 2000 4000 Dry Mass of Specimen (g)126.4 121.7 125.6 Initial Height (in) 1.03 1.02 1.03 Initial Diameter (in)2.42 2.40 2.42 Initial Void Ratio 0.681 0.708 0.700 Initial Moisture (%)22.4 20.9 23.0 Initial Wet Density (pcf)125.0 121.5 124.2 Initial Dry Density (pcf)102.1 100.5 101.0 Initial Saturation (%)90.4 81.3 90.2 Height Consol (in)-0.0029 0.0144 0.0222 At Test Void Ratio 0.686 0.684 0.664 At Test Moisture (%)24.2 23.7 23.9 At Test Wet Density (pcf)126.6 126.1 128.0 At Test Dry Density (pcf)101.9 102.0 103.3 At Test Saturation (%)97.1 95.0 99.1 Strain Rate (%/min)1.1 1.1 1.1 Strengths Picked at 2.5% 2.5% 2.5% Shear Stress (psf)1888 2270 2987 Height (in) at 2.5% Ultimate Stress (psf)1089 1853 2386 © 1755-1 9/19/2013 *DS-CU* A fully undrained condition may not be attained in this test.H is not measured during undrained direct shear tests. Olive Sandy CLAYVisual Description: Olive Sandy CLAY Olive Sandy CLAY Remarks: 0070051 Specimen Data )fsp( noisehoC .tlU)fsp( noisehoC Consolidated Undrained Direct Shear (ASTM D3080M) Murray Engineers Wong 560-122 0 500 1000 1500 2000 2500 3000 3500 4000 0.0 5.0 10.0 15.0 20.0 Sh e a r S t r e s s ( p s f ) Deformation (%) Shear Stress vs. Deformation Sample 1 Sample 2 Sample 3 Sample 4 0 2000 4000 6000 0 2000 4000 6000 Sh e a r S t r e s s , p s f Normal Load, psf Shear Stress vs. Normal Load Peak Stress Ult. Stress 0.0000 0.2000 0.4000 0.6000 0.8000 1.0000 1.2000 0.0 2.0 4.0 6.0 8.0 10.0 12.0 14.0 16.0 18.0 De l t a h ( i n ) Deformation (%)Change in Height Sample 1 Sample 2 Sample 3 Sample 4 SEPTEMBER 2013 DIRECT SHEAR TESTCHART FOR BORING B-211-11.5 FEET BGS PROJECT NO. 1755-1R1 FIGURE C-2 NEW MIXED-USE BUILDING429-447 UNIVERSITY AVENUEPALO ALTO, CALIFORNIA APPENDIX D SUMMARY OF LIQUEFACTION SETTLEMENT ANALYSIS LIQUEFACTION HAZARD ANALYSIS B-1 FIGURE D-1SEPTEMBER 2013 NEW MIXED-USE BUILDING 429-447 UNIVERSITY AVENUEPALO ALTO, CALIFORNIA PROJECT NO. 1755-1R1 LIQUEFACTION HAZARD ANALYSIS B-2 FIGURE D-2SEPTEMBER 2013 NEW MIXED-USE BUILDING 429-447 UNIVERSITY AVENUEPALO ALTO, CALIFORNIA PROJECT NO. 1755-1R1 Attachment H 429 University Avenue CEQA 3 Appendices F-I (Hard copies have been provided to City Council) http://www.cityofpaloalto.org/civicax/filebank/documents/49911 429 University Avenue Project Mitigation Monitoring Program 429 University Avenue Project Page 1 Mitigation Monitoring Program January 2015 INTRODUCTION Section 15097 of the Guidelines for the California Environmental Quality Act (CEQA) requires that, whenever a public agency approves a project based on a Mitigated Negative Declaration (MND) or an Environmental Impact Report (EIR), the public agency shall establish a mitigation monitoring or reporting program to ensure that all adopted mitigation measures are implemented. This Mitigation Monitoring Program (MMP) is intended to satisfy this requirement of the CEQA Guidelines as it relates to the 429 University Avenue project. This MMP would be used by City staff and mitigation monitoring personnel to ensure compliance with mitigation measures during project implementation. Mitigation measures identified in this MMP were developed in the Initial Study prepared for the proposed project. As noted above, the intent of the MMP is to ensure the effective implementation and enforcement of all adopted mitigation measures. The MMP will provide for monitoring of construction activities, as necessary, and in the field identification and resolution of environmental concerns. MITIGATION MONITORING PROGRAM DESCRIPTION The City of Palo Alto will coordinate monitoring activities and ensure appropriate documentation of mitigation measure implementation. The table below identifies each mitigation measure for the 429 University Avenue Project and the associated implementation, monitoring, timing and performance requirements. The MMP table presented on the following pages identifies: 1. the full text of each applicable mitigation measure; 2. the party or parties responsible for implementation and monitoring of each measure; 3. the timing of implementation of each mitigation measure including any ongoing monitoring requirements; and 4. performance criteria by which to ensure mitigation requirements have been met. Following completion of the monitoring and documentation process, the final monitoring results will recorded and incorporated into the project file maintained by the City’s Department of Planning and Community Environment. It is noted that the mitigation measure numbering reflects the numbering used in the Initial Study prepared for the 429 University Avenue Project (Dudek 2014). 429 University Avenue Project Mitigation Monitoring Program 429 University Avenue Project Page 2 Mitigation Monitoring & Reporting Program January 2015 No mitigation measures are required for the following resources:  Aesthetics  Agricultural Resources  Air Quality  Geology, Soils, and Seismicity  Greenhouse Gas Emissions  Hydrology and Water Quality  Land Use and Planning  Mineral Resources  Population and Housing  Public Services  Recreation  Utilities and Service Systems Mitigation Measure Implementation Responsibility Monitoring Responsibility Timing Performance Evaluation Criteria BIOLOGICAL RESOURCES Mitigation Measure BIO-1: The following measures shall be implemented to reduce impacts to protected trees: • City of Palo Alto (City)-approved Modified Type III fencing shall be installed for the two street trees to be retained along University Avenue. City-approved tree protection signs shall be posted on all fencing. • Soil conditions for the four new trees to be planted along Kipling Street shall be improved by preparing a planting area at least 6 feet square for each tree and installing Silva Cells to reduce compaction. The Silva Cells shall be filled with proper soil amendments and growing medium as determined by the City Arborist. • Unless otherwise approved, each new tree shall be provided with 1,200 cubic feet of rootable soil area, utilizing Standard Drawing #604/513. Rootable soil is defined as compaction less than 90% over the area, not including sidewalk base areas. • Two bubbler drip irrigation units shall be installed for each new tree to adequately water the new planting area. • New sidewalk shall be installed such that the final planting space opening is at least 5 feet by 5 feet for each new tree. Applicant City of Palo Alto Urban Forestry Group/Planning Division Arborist  Prior to issuance of demolition, grading, and building permits  During demolition, excavation, and construction  Approved site plans reflect applicable conditions  Field inspections conducted to verify adherence to conditions 429 University Avenue Project Mitigation Monitoring Program 429 University Avenue Project Page 3 Mitigation Monitoring & Reporting Program January 2015 Mitigation Measure Implementation Responsibility Monitoring Responsibility Timing Performance Evaluation Criteria • Kiva tree grates shall be used around each new tree. • Replacement tree size shall be a 36-inch box, properly structured nursery stock. • Based on growth habit and proven performance, Ginkgo biloba “Autumn Gold” is highly recommended for the replacement trees. Other tree species may be approved by the City Arborist. • All work within the Tree Protection Zone, including canopy pruning of protected trees, shall be supervised by a Certified Arborist approved by the City. CULTURAL RESOURCES Mitigation Measure CUL-1: Prior to commencement of site clearing and project grading, the project applicant shall retain a qualified archaeologist to train construction personnel regarding how to recognize cultural resources (such as structural features, unusual amounts of bone or shell, artifacts, human remains, or architectural remains) that could be encountered during construction activities. If artifacts or unusual amounts of shell or bone or other items indicative of buried archaeological resources or human remains are encountered during earth disturbance associated with the proposed project, the on-site contractor shall immediately notify the City of Palo Alto (City) and the Native American Heritage Commission as appropriate. All soil-disturbing work shall be halted within 100 feet of the discovery until a qualified archaeologist, as defined by the California Environmental Quality Act (CEQA) Guidelines (14 CCR 15000 et seq.) and the City, completes a significance evaluation of the finds pursuant to Section 106 of the National Historic Preservation Act. Any human remains unearthed shall be treated in accordance with California Health and Safety Code, Section 7050.5, and California Public Resources Code, Sections 5097.94, 5097.98, and 5097.99, which include requirements to Applicant City of Palo Alto Prior to and during earth disturbance  Training materials provided to construction contractors  Field inspections conducted to verify compliance 429 University Avenue Project Mitigation Monitoring Program 429 University Avenue Project Page 4 Mitigation Monitoring & Reporting Program January 2015 Mitigation Measure Implementation Responsibility Monitoring Responsibility Timing Performance Evaluation Criteria notify the Santa Clara County Medical Examiner’s office and consult with Native American representatives determined to be the Most Likely Descendants, as appointed by the Native American Heritage Commission. Identified cultural resources shall be recorded on State Department of Parks and Recreation Form 523 (archaeological sites). Mitigation measures prescribed by the Native American Heritage Commission, the Santa Clara County Medical Examiner’s office, and any Native American representatives determined to be the Most Likely Descendants and required by the City shall be undertaken before construction activities are resumed. If disturbance of a project area cultural resource cannot be avoided, a mitigation program, including measures set forth in the City’s Cultural Resources Management Program and in compliance with Sections 15064.5 and 15126.4 of the CEQA Guidelines, shall be implemented. HAZARDS AND HAZARDOUS MATERIALS Mitigation Measure HAZ-1: Prior to building demolition, the project applicant shall demonstrate to the satisfaction of the City of Palo Alto that a survey of the existing buildings has been conducted by a qualified environmental specialist who meets the requirements of the current U.S. Environmental Protection Agency regulations for suspected lead-containing materials (LCMs), including lead-based paint/coatings; asbestos containing materials (ACMs); and the presence of polychlorinated biphenyls (PCBs). Any demolition activities likely to disturb LCMs or ACMs shall be carried out by a contractor trained and qualified to conduct lead- or asbestos- related construction work. If found, LCMs and ACMs shall be disposed of in accordance with state and federal regulations, including the EPA’s Asbestos National Emissions Standards for Hazardous Air Pollutants, the Cal-OSHA Construction Lead Standard (CCR Title 8, Section 1432.1), and California Department of Toxic Substances Control and EPA Applicant City of Palo Alto Department of Planning and Community Environment Prior to issuance of demolition permit and during demolition Building survey report submitted LCMs and ACMs handled by qualified contractor and disposed of in accordance with the U.S. Environmental Protection Agency’s (EPA) Asbestos National Emissions Standards for Hazardous Air Pollutants, the California Occupational Health and Safety’s 429 University Avenue Project Mitigation Monitoring Program 429 University Avenue Project Page 5 Mitigation Monitoring & Reporting Program January 2015 Mitigation Measure Implementation Responsibility Monitoring Responsibility Timing Performance Evaluation Criteria requirements for disposal of hazardous waste. If PCBs are found, these materials shall be managed in accordance with the Metallic Discards Act of 1991 (California Public Resources Code, Sections 42160–42185) and other state and federal guidelines and regulations. Demolition plans and contract specifications shall incorporate any necessary abatement measures in compliance with the Metallic Discards Act, particularly Section 42175, Materials Requiring Special Handling, for the removal of mercury switches, PCB-containing ballasts, and refrigerants. Construction Lead Standard (CCR Title 8, Section 1432.1), and California Department of Toxic Substances Control and EPA requirements for disposal of hazardous waste. PCBs, mercury and other hazardous building materials handled by qualified contractor and disposed of in accordance with applicable regulations as identified. NOISE Mitigation Measure NOI-1: Residential Uses: Window and exterior door assemblies with Sound Transmission Class (STC) rating up to 45 and upgraded exterior walls shall be used in the residential portion of the proposed building to achieve the City’s maximum instantaneous noise guideline for residential uses. The City of Palo Alto shall ensure that these standards are met through review of building plans as a condition of project approval. Commercial Uses: Window and exterior door assemblies for the commercial portions of the building shall have a minimum STC rating of 32 at the corner of University Avenue and Kipling Street, and a minimum STC of 28 at all other commercial Applicant City of Palo Alto Department of Planning and Community Environment Prior to issuance of building permit Approved building plans shall include window sound transmission ratings and interior noise levels verification from a qualified acoustical consultant. 429 University Avenue Project Mitigation Monitoring Program 429 University Avenue Project Page 6 Mitigation Monitoring & Reporting Program January 2015 Mitigation Measure Implementation Responsibility Monitoring Responsibility Timing Performance Evaluation Criteria locations within the proposed building to comply with the State of California CalGreen noise standards (maximum interior noise level of 50 dB during the peak hour of traffic). The City of Palo Alto shall ensure that these standards are met through review of building plans as a condition of project approval. Mitigation Measure NOI-2: The residential portion of the proposed building shall have a ventilation or air-conditioning system to provide a habitable interior environment when windows are closed. Applicant City of Palo Alto Department of Planning and Community Environment Prior to issuance of building permit Approved building plans shall include details of the residential ventilation system. Mitigation Measure NOI-3: Noise levels from rooftop equipment shall be reduced to meet the City of Palo Alto Noise Ordinance requirements. An enclosure or other sound-attenuation measures at the exhaust fans shall be provided to reduce rooftop equipment noise is no greater than 8 dB above the existing ambient level at potential future neighboring buildings to meet the property plane noise limit. Use of quieter equipment than assumed in this analysis may support reduced mitigation, which shall be evaluated by a qualified acoustical consultant. Applicant City of Palo Alto Department of Planning and Community Environment Prior to issuance of building permit Approved building plans shall include garage exhaust fan manufacturer’s information regarding equipment noise levels and noise attenuation details TRANSPORTATION AND TRAFFIC Mitigation Measure TRANS-1: Mirrors shall be installed at the parking garage driveway to allow drivers to see when a pedestrian or vehicle is approaching in Lane 30. Applicant City of Palo Alto Department of Planning and Community Environment Prior to issuance of building permit Approved building plans shall include parking garage mirrors Mitigation Measure-TRANS-2: Mirrors shall be installed at each turn within the parking garage to provide adequate sight distance. Applicant City of Palo Alto Department of Planning and Community Environment Prior to issuance of building permit Approved building plans shall include parking garage mirrors 429 University Avenue Project Mitigation Monitoring Program 429 University Avenue Project Page 7 Mitigation Monitoring & Reporting Program January 2015 Corporate Headquarters 1500 North Mantua Street P.O. Box 5193 Kent, OH 44240-5193 330-673-5685 Toll Free 1-800-828-8312 Fax: 330-673-0860 Western Region Office 6005 Capistrano Suite A Atascadero, CA 93422 805-461-7500 Fax: 805-461-8501 Direct 805-286-0181 Michael.bova@davey.com 6HSWHPEHU201 Elizabeth Wong Kipling Post LLC PO Box 204 Palo Alto, CA 94302 RE: Landscape Plan for the 429 University Avenue Dear Ms. Wong: Thank you for contracting with Davey Resource Group regarding the above Landscape project. Davey Resource Group (DRG) is pleased to provide you with the attached Landscape assessment for the site development at 429 University Avenue. A DRG California licensed Landscape Architect conducted a review of the design concept for the above address in Palo Alto, California. The design was assessed for aesthetics, style, plant growth habit, and irrigation needs. This report will cover the following: (5) Alley Planters (15) Planters on the Third Floor The Street trees are not included in this review as they were covered on the Arborist report. Please feel free to contact me at 281.850.6688 or daniel.howse@davey.com if you would like more information or have any questions. Sincerely, Daniel A. Howse, Davey Resource Gro California Landscape Architect 6010 Attachment I Landscape Plan Review 429 University Avenue Palo Alto, CA Prepared for Elizabeth Wong Kipling Post LLC PO Box 204 Palo Alto, CA 94302 September 2016 Prepared by Davey Resource Group A Division of The Davey Tree Expert Company 1500 North Mantua Street Kent, OH 44240 Contact: Daniel A. Howse Western Region Office 6005 Capistrano Suite A Atascadero, CA 93422 Phone: (281) 850-6688 Toll-Free: (800) 966-2021 E-mail: daniel.howse@davey.com www.daveyresourcegroup.com Notice of Disclaimer Inventory data provided by Davey Resource Group is based on visual recording at the time of inspection. Visual records do not include testing or analysis and do not include aerial or subterranean inspection. Davey Resource group is not responsible for discovery or identification of hidden or otherwise non- observable risks. Records may not remain accurate after inspection due to variable deterioration of inventoried material or site development. Davey Resource Group provides no warranty with respect to the fitness of the inspected trees or future performance for any use or purpose whatsoever. 429 University Avenue Palo Alto, CA 3 Summary In 6HSWHPEHU, Davey Resource Group (DRG), a division of The Davey Tree Expert Company, was contracted by Elizabeth Wong to provide a Conceptual Landscape Design for the property at 429 University Avenue in Palo Alto, California. Due to the constraints of the site it was determined that potted planters, were best suited for this project. Two planting locations were chosen for the containers. The first location is to have pre-fabricated planter boxes in the alley along Lane 30. The second location is on the 3 rd floor terrace, where pre-fabricated pots will again be used. Introduction Background Elizabeth Wong contracted with Davey Resource Group to help with the Landscape Concept at 429 University Avenue. Ms. Wong requested that Davey Resource Group provide a Landscape report for the two identified planting locations on the property. DRG also has provided recommended plant species for the Potted Plants.  Conceptual Design  Alley Plantings Five (5) planters will be used in this location. All Planters are to be sealed, self-irrigating containers, utilizing drip irrigation. Proposed containers to be supplied by Atelier Verikant model # BR80, or approved similar, see (figure 2) and Appendix 1. The planters will be equally spaced along the along the property line. See enlarged Site Plan on Architectural Sheet A1.1 for layout. Irrigation and drainage lines will be designed into each of the containers. Proposed plantings will be (2) 5 gallon Equisetum hyemale (Figure 3) or Horsetail spaced equally across the planter. The containers will require regular watering throughout the year. The Planting medium will be a standard potting soil, with gravel drainage layer at the bottom. 429 University Avenue Palo Alto, CA 4 Figure 2 BR Style Pot Figure 3 Equisetum hyemale in a raised container 7KLUGFloor 7HUUDFH Plantings: Fifteen (15) planters will be used in this location. All Planters are to be sealed, self-irrigating containers, utilizing drip irrigation. Proposed containers to be supplied by Atelier Verikant model # MH80, or approved similar (figure 4) and Appendix 2, and will be equally spaced along University Ave and Kipling Street. See Architectural Sheet A2.6 for layout and locations. Irrigation and drainage lines will be designed into each of the containers. 429 University Avenue Palo Alto, CA 5 Proposed plantings will be (1) 5 gallon Buxus microphylla ‘japonica’ or Boxwood (figure 5) per planter. The containers will require moderate watering throughout the year. The Planting medium will be a standard potting soil, with gravel drainage layer at the bottom. Figure 4 MH Style Pot Figure 5 Buxus sempervirons Conclusion All plant material shown is subject to change as the design progresses. Plant material in the decorative pots may also be substituted or replaced at various times during the growing season. The decorative pots may also be subject to change based on availability at the time of completion of the project. All efforts will be made to use the types and models shown. Efficient use of irrigation and proper drainage will also be a key component of the design process. 429 University Avenue Palo Alto, CA 6 Appendix 1 jt ARCHITECTURE+DESIGN  1366 MISSION ST, STUDIO 2  SF 94103  PHONE/FAX: 415.934.1955/1958  E-MAIL: JTROTTER@JTAD.NET C:\Users\James\Dropbox\429 University\429 University (Shadow Study)\Rev092215\1506-02m(ShadowStudy-429Univ).docx 1 Last printed 9/24/2015 12:58:00 PM S H A D O W S T U D Y : 4 2 9 U n i v e r s i t y A v e , P a l o A l t o , C A Updated September 23, 2015 (see the additional italicized comments after the summary) Ms. Hillary Gitelman Director of Planning and Community Environment 250 Hamilton Avenue Palo Alto, CA 94301 The purpose of this shadow study is to take the data of the proposed building and the surrounding existing physical conditions and provide comparison of the projected changes in shadow lines throughout the course of the year with the existing shadow lines produced by the current conditions. As has been well documented, the proposed mixed-use building at 429 University was originally approved (revision 5) but is now being reevaluated with this latest set of revisions (recorded as revision 6) being used for this shadow study. We have decided not to show the previous versions of the proposed building because the shadow lines produced were found to be virtually the same. The SketchUp model being used includes the proposed building in the immediate neighborhood, fronting University at the corner of University and Kipling. The alleyway at the rear of the property connects the streets Waverley and Kipling while also providing an open space buffer between the commercial properties facing University and the properties facing Waverley and Kipling. The proposed building is also setback 4 feet from the property line at the alley. While the existing buildings at 429 University have trees lining both University and Kipling, the proposed building will be replacing the existing trees on Kipling Street with new trees as shown in the model. The following summary of findings refers to the attached data taken from using the models for the proposed building and the current conditions. The data shows the shadow profiles for all four critical dates of the year, Mar 21st, June 21s, Sept. 21st & Dec 21st. Both the spring (Mar. 21st) and fall (Sept. 21st) equinoxes are included separately even though they essentially show the same results. We have also created a separate set of shadow profiles that show the shadows exclusively for the project site and the current conditions with existing trees. In this way, both the overall shadow lines and the shadows produced by the site exclusively can be properly evaluated. Please note the shadows for this study are the dark monotone gray overlay in the images and the background image of the neighborhood has shadows which are faded and not part of the study. We have not added anymore dates than the four listed because the winter solstice on Dec. 21st is understood to produce the longest shadows of the year while the longest day of the year on the summer solstice, June 21st, has some of the shortest shadows. The shadow profiles are shown in the attached document. Here are our conclusions based on our findings: 1. The shadows at spring/fall and summer are smaller relative to the winter solstice and cause no significant impact. 2. As with any shadow study, the winter solstice cast the longest shadows. However, these shadows are long even for the existing building. The incremental shadows at winter solstice are not significant when comparing the existing building to the proposed building. Also note that with the existing trees on Kipling, the combined shadow with the existing building covers a similar range to the proposed building over Kipling in the afternoon hours. 3. The shadows are cast mostly on the alley, parking stalls at the alley, buildings abutting the alley, streets and rooftops. All these areas are mostly utility areas as opposed to gardens or residential rooms. Furthermore, the buildings at the alley have their main ingress/egress at Waverley and Kipling streets and most do not have windows to the alley. jt ARCHITECTURE+DESIGN  1366 MISSION ST, STUDIO 2  SF 94103  PHONE/FAX: 415.934.1955/1958  E-MAIL: JTROTTER@JTAD.NET C:\Users\James\Dropbox\429 University\429 University (Shadow Study)\Rev092215\1506-02m(ShadowStudy-429Univ).docx 2 Last printed 9/24/2015 12:58:00 PM S H A D O W S T U D Y : 4 2 9 U n i v e r s i t y A v e , P a l o A l t o , C A 4. In none of the scenarios do the shadows have significant impact on the residential-type buildings on both the east and west sides of Kipling Street. The greatest impact is on the winter solstice which is also the shortest day of the year. Also, note that on the winter solstice and on the equinox dates, there is an equal or greater impact on the residential-type buildings by the neighboring properties opposite Kipling and facing University as well as the existing trees lining Kipling that remain. 5. The worst case shadow day, the day on which the net new shadow is longest is estimated to be between on Dec. 21st & Dec. 28th and therefore, the winter solstice can be noted as the worst case shadow day. The net shadow is bigger for the proposed building than it is for the existing building but all the extended shadows are cast over the neighboring commercial properties to the rear of 429 University and across Kipling to the front yards of the residential-type buildings. The existing building’s shadows along with the existing trees lining the existing building cast a shadow over the same walkable areas adjacent to the property. Therefore, the impact of the net shadow is minimal because the extended shadows do not adversely affect the walkable adjacent areas any more than the existing building on the worst case shadow day. 6. Although this is mentioned earlier, it is worth noting separately that the existing building is surrounded by large trees that themselves cast shadows on the alley, parking stalls at the alley, buildings abutting the alley, streets, and rooftops. With the new trees proposed, these shadows will not be as significant nor have an adverse net effect on the neighboring properties. In summary, the architectural drawings & analysis using the SketchUp models of the proposed and existing buildings indicate that the proposed building's shadows do not have a significant shadow impact to the immediate vicinity of the subject site relative to the shadow impact of the current conditions. REVISION COMMENTS (09-23-15): The shadow study was updated with the actual shadows at ground level darkened to monochrome black. The earlier picture appeared a little confusing because the shadows from the base map used in the pictures blended with the study shadows when the pictures were printed in black and white. (If printed in color, the shadows in the base map image would not be blended with the study shadows.) The faded shadows in the base map could not be removed without compromising the base map image so the study shadows were darkened and sharpened to avoid confusion with the base map image that is still needed to identify the existing street conditions. There are no other changes. This shadow study remains the same and its conclusions have not changed. If you have any further questions regarding this shadow study analysis, please contact my office at 415-934-1955 and we will gladly clarify and answer additional questions. Sincerely, Jim Trotter, AIA, NCARB jt Architecture+Design Principal/Owner CA Lic. #C26179 9 AM 12 N 3 PM March 21 Spring Equinox EXISTING BUILDINGS 9 AM 12 N 3 PM March 21 Spring Equinox PROPOSED BUILDING 9 AM 12 N 3 PM March 21 Spring Equinox EXISTING BUILDINGS (Site Only) 9 AM 12 N 3 PM March 21 Spring Equinox PROPOSED BUILDING (Site Only) 9 AM 12 N 3 PM June 21 Summer Solstice EXISTING BUILDINGS 9 AM 12 N 3 PM June 21 Summer Solstice PROPOSED BUILDING 9 AM 12 N 3 PM June 21 Summer Solstice EXISTING BUILDINGS (Site Only) 9 AM 12 N 3 PM June 21 Summer Solstice PROPOSED BUILDING (Site Only) 9 AM 12 N 3 PM Sept 21 Fall Equinox EXISTING BUILDINGS 9 AM 12 N 3 PM Sept 21 Fall Equinox PROPOSED BUILDING 9 AM 12 N 3 PM Sept 21 Fall Equinox EXISTING BUILDINGS (Site Only) 9 AM 12 N 3 PM Sept 21 Fall Equinox PROPOSED BUILDING (Site Only) 9 AM 12 N 3 PM Dec 21 Winter Solstice EXISTING BUILDINGS 9 AM 12 N 3 PM Dec 21 Winter Solstice PROPOSED BUILDING 9 AM 12 N 3 PM Dec 21 Winter Solstice EXISTING BUILDINGS (Site Only) 9 AM 12 N 3 PM Dec 21 Winter Solstice PROPOSED BUILDING (Site Only) Attachment L Project Plans Hardcopies of project plans are provided to the Planning and Community Environment Director. These plans are available to the public by visiting the Planning and Community Environmental Department on the 5th floor of City Hall at 250 Hamilton Avenue. Directions to review Project plans online: 1. Go to: https://paloalto.buildingeye.com/planning 2. Search for “429 University Avenue” and open the record by clicking on the Blue dot 3. Review the record details and open the “more details” option under the second heading for 429 University Avenue 14PLN-00222 4. Use the “Records Info” drop down menu and select “Attachments” 5. Open the attachment named “Option 1 - Project Plans 429 University Avenue 1026201” Attachment M Project Plans Hardcopies of project plans are provided to the Planning and Community Environment Director. These plans are available to the public by visiting the Planning and Community Environmental Department on the 5th floor of City Hall at 250 Hamilton Avenue. Directions to review Project plans online: 1. Go to: https://paloalto.buildingeye.com/planning 2. Search for “429 University Avenue” and open the record by clicking on the Blue dot 3. Review the record details and open the “more details” option under the second heading for 429 University Avenue 14PLN-00222 4. Use the “Records Info” drop down menu and select “Attachments” 5. Open the attachment named “Option 2 - Project Plans 429 University Avenue 10172016” Attachment N Project Plans Hardcopies of project plans are provided to the Planning and Community Environment Director. These plans are available to the public by visiting the Planning and Community Environmental Department on the 5th floor of City Hall at 250 Hamilton Avenue. Directions to review Project plans online: 1. Go to: https://paloalto.buildingeye.com/planning 2. Search for “429 University Avenue” and open the record by clicking on the Blue dot 3. Review the record details and open the “more details” option under the second heading for 429 University Avenue 14PLN-00222 4. Use the “Records Info” drop down menu and select “Attachments” 5. Open the attachment named “Option 3 - Proj Plans – 12-8-16 429 University Avenue.pdf” City of Palo Alto (ID # 7517) City Council Staff Report Report Type: Action Items Meeting Date: 2/6/2017 City of Palo Alto Page 1 Summary Title: Accessory Dwelling Units Ordinance Title: PUBLIC HEARING: Review and Adoption of an Ordinance Amending Chapter 18 (Zoning) of the Palo Alto Municipal Code to Update Code Sections Regarding Accessory Dwelling Units. The Ordinance is Exempt from the California Environmental Quality Act (CEQA) per Sections 15061(b), 15301, 15303 and 15305 and was Recommended for Approval by the Planning & Transportation Commission on November 30, 2016 From: City Manager Lead Department: Planning and Community Environment Recommendation Staff recommends that the City Council adopt the attached draft ordinance (Attachment A) amending Palo Alto Municipal Code provisions regarding accessory dwelling units and finding the ordinance exempt from review under the California Environmental Quality Act. The Planning and Transportation Commission recommended adoption of the ordinance with some modifications on November 30, 2016, as explained further below. Executive Summary In October 2015, the City Council directed the Planning and Transportation (PTC) to review provisions of the Municipal Code related to Accessory Dwelling Units (ADU), which are also referred to as Second Dwelling Units or “granny units.” The Council requested that the Commission review the City’s regulations and recommend ways to increase ADU construction. Subsequent to the Council’s direction and two PTC study sessions, the State of California adopted three laws regarding ADUs and Junior ADUs (JADU) which became effective January 1, 2017: SB 1069, AB2299, and AB 2406. In response to these laws, staff forwarded a draft ordinance to the PTC that reflected the mandatory and some optional provisions of State law, while retaining many existing local provisions. The Commission generally endorsed these City of Palo Alto Page 2 changes and made other proposed refinements, including changing the existing minimum lot size requirement for ADUs from 35% of the minimum lot size to simply meeting minimum lot size requirement for the applicable zone. The attached draft ordinance reflects this PTC recommendation and also does the following:  Changes the terminology throughout the municipal code to use “accessory dwelling units” and “junior accessory units” rather than “second units,” to be consistent with Senate Bill 1069 and Assembly Bills 229 and 2406;  Repeals references throughout the municipal code addressing ADUs and consolidates these regulations into one new chapter ;  Adjusts parking and setback requirements to comply with the State laws;  Allows conversions of existing single family residences and accessory structures in the R-E and R-1 zones into ADUs and the creation of junior accessory dwelling units, which involve conversion of existing building space to a small living unit, without a minimum lot size requirement; and  Limits any single family residential lot to one accessory or junior accessory dwelling unit per parcel (and not one of each). The PTC also requested the City Council to consider directing staff to prepare a parking utilization study and also to prepare an ordinance to allow underground parking in residential neighborhoods. The PTC’s discussion and recommendation are discussed further below. Background In October 2015, the City Council, following a discussion of a Colleagues Memo (Attachment B), directed the Planning and Transportation Commission (PTC) to initiate discussions on ADUs and recommend ways to increase ADU construction. Palo Alto’s high housing cost, demand for a variety of housing types, and change in demographics with a rise in an aging population, prompted the City Council to seek opportunities to increase more affordable housing options for its residents. The City Council perceived ADUs as a potential solution to this problem. The City Council requested that the PTC provide recommendations to update City ordinances on ADUs to facilitate the following:  Increase opportunities to create more ADUs with minimum impact on community character while maintaining neighborhood design standards;  Consider steps to bring existing non-compliant ADUs into compliance; and  Any other relevant recommendations. City of Palo Alto Page 3 PTC Study Sessions Based on City Council direction, staff held two study sessions with the PTC. At the January 27, 2016 PTC Study Session, the PTC was provided with a brief history of Municipal Code changes made during the 2006 Zoning code update and the potential benefits and impacts of ADUs in Palo Alto. Members of the public stated that it was important to balance the impacts of second units in single family zoned areas, while others said it was important to increase second unit production to meet the community’s affordable housing needs. The PTC discussed the existing development standards and identified City regulations which can act as potential constraints in the construction of ADUs. The PTC also reviewed some of the common practices and regulations followed by some Bay Area cities. The following is the link to PTC staff report and meeting minutes of January 27, 2016 meeting. Staff Report: https://www.cityofpaloalto.org/civicax/filebank/documents/50714 Meeting Minutes: http://www.cityofpaloalto.org/civicax/filebank/documents/51618 At the second study session held on July 27, 2016, staff provided an update on the research that was requested by the PTC, including an analysis of the constraints posed by existing zoning regulations that discouraged construction of new second units. The PTC requested staff to gather information on impacts of ADU ordinance changes in cities that have updated their ordinance. The PTC also requested staff to perform a sensitivity analysis of the effects of lot size change, parking regulation change, and adjustment of permit fee regulations on ADU construction. The PTC directed staff to return with a draft ordinance to encourage ADU construction concurrently with the additional data that was requested. Following is the link to the second Study Session and meeting minutes. Staff Report: http://www.cityofpaloalto.org/civicax/filebank/documents/53216 Meeting Minutes: http://www.cityofpaloalto.org/civicax/filebank/documents/53622 State Legislation on ADUs Concurrent with the City’s efforts on ADUs, the State adopted two laws intended to further ease the regulatory burdens of existing local laws and remove barriers that have discouraged homeowners from constructing second units. In September 2016, Governor Jerry Brown signed the two bills which took effect on January 1, 2017. If a jurisdiction does not amend local codes in compliance with these bills, then State laws will supersede local laws. California Government Code Section 65852.2 (a.k.a. Chapter 1062 or Second-Unit Law) was enacted in 1982 and has been amended four times since then (1986, 1990, 1994 and 2002), City of Palo Alto Page 4 to encourage the creation of second-units while maintaining local flexibility for unique circumstances and conditions. The Second-Unit Law imposes standards intended to create greater flexibility to encourage construction while also requiring a ministerial process for the approval of such units. The 2002 update of the Second-Unit Law required all local agencies to review second-unit permit applications ministerially without discretionary review or a public hearing. The city’s current regulations comply with this State requirement. These new laws are intended to further this goal. A short summary of the two new bills is provided below. SB 1069 and AB 2299 SB 1069 and AB 2299 officially designated second dwelling units as Accessory Dwelling Units and amended the State government code accordingly. The two bills include amendments related to maximum unit size, parking, setbacks, and separation between the primary and the accessory dwelling unit. One of the most significant changes involves the conversion of existing structures to an ADU. In all single-family zones, cities are required to allow conversions of portions of existing residences or accessory structures to permit ADUs. The State preempts the local municipalities from using development standards, such as lot size, height and setbacks to prohibit such conversions. However, each lot will be limited to one such conversion because only one ADU or JADU would be allowed. The bills also include changes regarding application of building codes and utility connection fees or charges. This report focuses on changes required for the zoning code or Palo Alto Municipal Code Chapter 18. The changes related to utility fees and the building code will be addressed through a separate process. More information on SB 1069 and AB 2299 can be found through the following links: https://leginfo.legislature.ca.gov/faces/billCompareClient.xhtml?bill_id=201520160SB1069 https://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=201520160AB2299 AB 2406 - Junior Accessory Dwelling Units The State also adopted Assembly Bill 2406, to allow a different type of an accessory dwelling unit called a “junior accessory dwelling unit” (JADU). This bill added a new section on JADUs to the Government Code Section 65852.22. A JADU is defined as the conversion of an existing bedroom within a home containing a kitchenette and not exceeding 500 square feet. The bill authorizes a local agency to create an ordinance on JADUs in single-family residential zones. If a City chooses to allow JADUs, the bill requires the ordinance to include, among other things, standards for the creation of a JADU, processing regulations and occupancy requirements. The bill prohibits local ordinances from requiring, as a condition of granting a permit, water and sewer connection fees or additional parking requirements. On September 28, 2016, Governor City of Palo Alto Page 5 Brown signed this bill and it took effect immediately as an urgency statute. More information on AB 2406 is available here: https://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=201520160AB2406 Draft Ordinance To be in compliance with the State Laws, a draft ordinance was prepared that would bring the City’s Municipal Code into compliance with the new ADU legislations and allow JADUs as another type of ADU. The ordinance was then brought to the PTC for their recommendation on November 30, 2016. The draft ordinance in Attachment A has been amended to reflect the PTC’s input and to better address some of the somewhat confusing (and even contradictory) provisions of state law. Planning and Transportation Public Hearing At the formal action hearing, the PTC recommended that the City Council approve the proposed code amendments to Title 18 (zoning) of the Palo Alto Municipal Code to implement new State law requirements regarding ADUs and JADUs (5-1-1). The motion reflected staff’s recommendation with some amendments. There were eleven public speakers, including representatives from the League of Women Voters and the Sierra Club/Audubon Society. The speakers expressed a range of comments. Attachment C summarizes the comments made at the meeting; minutes of the meeting are available online at: http://www.cityofpaloalto.org/civicax/filebank/documents/55548. In general, the comments supported ADUs with some comments focused on minimizing potential impacts related to noise, privacy, parking, enforcement and potential loss of trees. The PTC had a detailed discussion regarding the proposed ordinance. They acknowledged that the State law changes prompted a change in process that necessitated a revised ordinance immediately. However, they also expressed that there were many issues that warranted further discussion per Council’s direction to explore increasing construction of ADUs. The PTC generally supported the proposed ordinance with a few amendments. With one exception (the PTC’s suggested rental term was not incorporated), as discussed in more detail below, the suggested amendments were incorporated into the attached draft ordinance to further ease constraints to ADU development. The amendments include the following: 1. Modify the minimum lot size requirement to allow legally conforming lot sizes in the R1 and R1-subdistricts to be eligible for an accessory dwelling unit. The current standard requires a lot be 35% greater than the minimum lot size. 2. Add to the Public Transit definition to include a 0.5 mile radius from bus stops with service of 15 minutes or better during both the morning evening peak periods. City of Palo Alto Page 6 3. Add additional development standard to Section 20 (18.42.040(a)(8)(vi)) for new or converted detached accessory dwelling units, there shall be no windows, doors, mechanical equipment, or venting or exhaust systems, located within six feet of a property line. This standard was introduced to address privacy-related concerns from ADUs. The PTC also requested the City Council to consider the following recommendations to examine more ways to encourage construction of ADUs. 1. Consider directing staff to prepare a parking study of residential neighborhoods to assess peak utilization and extend the no parking requirement for ADUs on those blocks with a street parking peak utilization under 50%. 2. Request the City Council to consider directing staff to prepare an ordinance to enable underground parking in residential neighborhoods. A more detailed discussion of the PTC hearing will be provided below, organized by topic. A short summary of the PTC’s discussion is also provided as Attachment C. The PTC also approved a motion to direct staff to consider a few minor revisions which will be discussed below. The staff report and the meeting minutes are attached and also available at: Staff Report: http://www.cityofpaloalto.org/civicax/filebank/documents/54902 http://www.cityofpaloalto.org/civicax/filebank/documents/55548 As a part of the public outreach, all three of the PTC meetings were noticed in a local paper at least ten days in advance. A project website was developed to solicit participation and public input. Staff has already received multiple requests for more information and valuable comments from this website. The website information has also been shared on City website and social media. (http://www.cityofpaloalto.org/gov/depts/pln/advance/accessory_dwelling_units_regulations_ update.asp) Discussion The proposed code amendments in the draft ordinance focus on the topics described below. Since the PTC’s discussion, staff has also made non-substantive changes for clarity. This discussion includes the purpose of the amendment and PTC comments. Please refer to the attached draft ordinance (Attachment A) for the specific language of the proposed code amendments. City of Palo Alto Page 7 Parking Requirements The new State laws reduce parking requirements for accessory dwelling units and eliminate them for certain conditions, particularly for units that are in existing structures and those near transit. The existing Municipal Code currently generally requires two parking spaces, of which one must be covered, for each new accessory dwelling unit. These spaces can be provided as tandem parking and within the required rear or side setbacks, however, nowhere in the City may parking, including tandem, occur within the front setback or closer than ten feet from the street side property line for corner lots. The following is the recommended proposal, as written in the draft ordinance, to relax parking requirements for ADUs, including the changes to meet the minimum parking requirements for ADUs as required by the State Law: A. Parking requirements for ADUs shall not exceed one parking space per unit or per bedroom, whichever is greater. B. Spaces may be provided as tandem parking, may be located on an existing driveway, and may be located in side and rear setbacks, but not in the front setback. For corner lots, parking may be located within the corner street side setback if located at least 10 feet from the property line. C. Notwithstanding the above, no parking requirements would be imposed on an ADU if any of the following instances are met: 1. The ADU is located within 0.75 miles of a Caltrain station or 0.5 miles of public transit, which includes a bus stop along a fixed route bus service with service intervals of 15 minutes or better during peak commute hours. 2. The ADU is located within a Residential Parking Program District. 3. The ADU is located within an architecturally and historically significant local, state or nationally designated historic district. 4. The SDU is part of the existing primary residence or an existing accessory structure. 5. When on-street parking permits are required but not offered to the occupant of the accessory dwelling unit. 6. When there is a car share vehicle located within one block of the accessory dwelling unit, where the car share vehicle is shall mean part of an established program intended to stay in a fixed location for at least 10 years and available to the public. D. When a garage, carport, or covered parking structure is demolished in conjunction with the construction of an accessory dwelling unit, any required replacement spaces may be located in any configuration on the same lot as the accessory dwelling unit, including, but not limited to, as covered spaces, uncovered spaces, or tandem spaces, City of Palo Alto Page 8 or by the use of mechanical automobile parking lifts. PTC Comments on Parking Requirements The PTC acknowledged that parking can be a significant barrier to the construction of ADUs and there was support for reducing parking requirements. The PTC discussed the impacts of reduced parking requirements for ADUs and felt that all areas of the City would not be similarly impacted. The PTC discussed the need to look at a parking utilization study of residential neighborhoods and suggested relaxing parking standards only in those neighborhoods with less than 50 percent street utilization during peak parking hours. The PTC questioned the definition of public transit for properties to qualify for parking reductions. Because Palo Alto is a major a transit hub served by regional rail as well as bus transit system, with three CalTrain stations and major intersecting bus lines, the PTC recommended to extend the radius of public transit from .5 miles to .75 miles radius from Cal train station. However, one Commissioner would only support this for the University Avenue station. They also recommended requiring no parking for those sites that are subject to Residential Permit Parking programs. Attachment D is a map that identifies eligible parcels located within 0.75 miles of Caltrain stations and 0.5 miles along major bus transit lines. The map has also identified Palo Alto’s designated historic neighborhoods and areas with existing and proposed Residential Permit Parking programs. As noted earlier, the PTC passed separate motion (i.e. not related to language in the ordinance) recommending that the City Council consider directing staff to prepare a parking study of residential neighborhoods to assess peak utilization and extend the no parking requirement for ADUs on those blocks with a street parking peak utilization under 50%. They also requested that the City Council to consider directing staff to prepare an ordinance to enable underground parking in residential neighborhoods. Setback Requirements One of the other major items addressed by the State legislation is the reduction of setback requirements for ADU garage conversions. Specifically, the State law stipulates that no setbacks are to be required for an existing garage that is converted to an ADU. This provision would only apply if the existing garage is not needed as required parking for the principal dwelling or if required parking is provided elsewhere on the property. State Law also permits construction of an above garage ADU with a maximum side and rear property setback of five feet. Palo Alto Municipal Code sections 18.12.070, 18.10.070 and 18.28.070 require a minimum rear setback of 20 feet and interior side yard setback of six to eight feet for all R-1, R-2 and RMD City of Palo Alto Page 9 zoned properties. For RE and OS districts the requirement is higher; 30 feet rear yard and 15 feet interior side yard setback. However, accessory structures (non-habitable), including garages are permitted within the rear and side setbacks, if located at least 75 feet from the front property line, located 20 feet from the street side property line and limited to one story. Accordingly, an existing one story detached garage located in the rear yard, sometimes located at the rear or side property lines, can be converted to an ADU, provided that replacement parking for the primary residence be provided elsewhere in compliance with the Municipal Code. The State provision to permit second-story ADUs above a detached garage with limited setbacks is not applicable because State law allows the City to regulate ADU height. The R-1 zoning district and its subdistricts have a height restriction of 17 feet for both attached and detached ADUs. While the Open Space OS and Residential Estate RE Zoning districts have taller maximum heights for ADUs (25 and 30 feet respectively), detached garages in all residential zoning districts can have a maximum height of one story. This would be applicable only if detached garages are located outside of setbacks. The following is the recommended language regarding setbacks proposed in the draft ordinance to meet the requirements of the State Laws: A. Accessory dwelling units shall comply with the underlying zoning district’s setbacks. B. No setback shall be required for an existing garage or an accessory structure in the R-E or R-1 zones that is converted to an ADU. C. In districts permitting second story ADUs, a setback of no more than five feet from the side and rear lot lines shall be required for an ADU constructed above a garage. PTC Comments on Setbacks Requirements Along with members of the community, Commissioners expressed concerns of privacy issues for ADU garage conversions for structures that are located near or on the rear or side property lines. Commissioners discussed including additional text language to strengthen privacy requirements including placement of windows, doors, mechanical equipment, or venting or exhaust systems when garage conversions to ADUs take place. Staff provided a development standard that would prohibit windows, doors, equipment, venting or exhaust systems from being placed within six feet of a property line for all new or converted ADUs, which the PTC supported and incorporated into their recommendation. City of Palo Alto Page 10 Commissioners also discussed daylight plane requirements in R-1 single family neighborhoods and if that can potentially act as a constraint to garage conversion of ADUs. A minority perspective of the Commission viewed street side setback requirement of 20 feet for corner lots could be too restrictive and act as a constraint in construction of ADUs. Maximum Unit Size Requirements The recent state law established a maximum size and the percentage an ADU may occupy of the existing living area. For attached ADUs the requirement is not to exceed 50% of existing living area, with maximum increase of 1,200 sf and for detached ADUs the size limitation is not to exceed 1,200 sf. The permitted ADU size in Palo Alto Municipal Code varies from 450 sf to 900 sf in all zones subject to overall floor area and lot coverage maximums of the district. The one exception is only in the R-2 zone for lots between 6,000 to 7,500 sf sizes where an ADU with a maximum size of 450 sf is allowed. The City’s current code is below the 1,200 sf maximum, staff proposes no change to the existing requirement. However, the additional requirement that an ADU may not occupy more than 50% of existing living space has been incorporated in Section 18.42.040(a)(7)(iii), to be consistent with State law. The following is recommended proposal regarding minimum unit size to meet the requirements of the State Laws: A. The maximum size of an attached ADU living area shall not exceed 450 square feet and shall not exceed 50% of the existing living area of the primary existing dwelling unit. The ADU and any covered parking shall be included in the total floor area for the site, but the covered parking area is not included in the maximum 450 square feet for attached unit. Any basement space used as an ADU or portion thereof shall be counted as floor area for the purpose of calculating the maximum size of the ADU. B. The maximum size of a detached ADU living area shall not exceed 900 square feet. The ADU and covered parking shall be included in the total floor area for the site, but the covered parking area is not included in the maximum 900 square feet for detached unit. Any basement space used as an ADU or portion thereof shall be counted as floor area for the purpose of calculating the maximum size of the ADU. For R-2 zoned lots of 6,000 square feet or greater, but less than 7,500 square feet, a detached ADU of 450 square feet or less is permitted. City of Palo Alto Page 11 PTC Comments on the Maximum Unit Size Requirements The PTC supported retention of the existing regulations on ADU size limits. One Commissioner suggested including a minimum size threshold for an ADU other than what is prescribed in the building code. It was suggested to include a minimum size of 250 square feet of livable space to maintain Health and Safety code regulations; however, this was not incorporated into the PTC motion. JADU Assembly Bill 2406 allows local jurisdictions to adopt an ordinance to permit JADUs. This is not a requirement, but an option, and was adopted by the State legislature after some communities found the addition of JADUs to be an effective way to add units without increasing the intensity of development (since existing building space is converted to create the unit). The draft ordinance would allow the construction of these smaller units as a way to increase the number of units with minimal impact on neighborhoods since JADUs would be created by converting a bedroom, be limited to 500 square feet and contained entirely within an existing single-family structure. JADUs would not be subject to a minimum lot size, and thus would be permitted in a larger number of properties; however, the ordinance specifies that a property would be allowed either one ADU or one JADU. At no point would a property be allowed more than two units regardless of lot size and other requirements. Permitting the construction of JADUs represents a significant policy shift. Currently, the Municipal Code only allows ADUs on parcels that are at least 35% larger than the minimum lot size. The suggested provision of JADUs would not only allow some form of second unit on all single family parcels, it would also not require any additional parking for these units. The thinking is that JADUs would not increase the occupant capacity of a home or impact infrastructure because it would not increase the size of the structure. PTC Comments on JADUs The PTC unanimously supported the inclusion of JADU requirements to the Palo Alto Municipal Code. It was agreed that JADUs would provide the much needed affordable housing. Since JADUs have fewer restrictions, such as no minimum lot size requirement or any parking requirement, they can provide an opportunity for seniors to age in place by generating income from rentals or by providing a living space for caregivers or family. Minimum Lot Size Requirement City of Palo Alto Page 12 The PTC viewed Palo Alto’s existing lot size requirement to be eligible to construct an ADU as the second most significant constraint after parking. Currently, the Municipal Code requires that a lot be at least 35% larger than the minimum lot size of the district. Following detailed discussion over three hearings, the PTC recommended that there should be no minimum parcel size requirement in the R-1 and R-1 subdistricts, in order to maximize the numbers of parcels that would be eligible for ADUs. Substandard lots are to be excluded. No changes to the minimum lot size was proposed for any of the other lots, including the RE Residential Estate zoning district. To get a better understanding of the potential number of eligible parcels that can accommodate ADUs, the PTC suggested staff to develop scenarios by lowering the existing minimum lot size requirement at 500 sf or five percent intervals, as shown in the Table 1 below. The PTC also suggested studying only those residential parcels on conforming lots with excess of 450 sf of remaining FAR. This would provide a more realistic estimate of the actual number of second units that can be built in future years. The analysis showed the increase in the number of parcels eligible for ADUs if the minimum requirement was lowered at five percent intervals. The table also consolidates all R-1 zone subdistricts together. Currently the City has 15,000+ residentially zoned lots, and approximately 8,680 parcels have 450 square feet or more of unused FAR and are not substandard lots. With the existing Municipal Code lot size requirement of 35 percent more than the minimum, only 2,466 parcels, or 2302 in the R-1 zones, qualify to be allowed an ADU. Table 1: Analysis of Increasing Parcels Eligible for ADUs by Reducing Minimum Lot Size Requirement at Five Percent Intervals Percentage over Minimum Lot Area Number of Qualifying Parcels (all R-1) Zones Number of Qualifying Parcels (R-2, RE, RMD and OS) Zones TOTAL ELIGIBLE PARCELS 35 % Over 2,302 164 2,466 30 % Over 2,703 113 2,816 25 % Over 3,218 152 3,370 20 % Over 3,732 163 3,895 15 % Over 4,280 177 4,457 10 % Over 4,912 193 5,105 5 % Over 5,773 219 5,992 Total Number of 8,216 464 8,680 City of Palo Alto Page 13 Percentage over Minimum Lot Area Number of Qualifying Parcels (all R-1) Zones Number of Qualifying Parcels (R-2, RE, RMD and OS) Zones TOTAL ELIGIBLE PARCELS Parcels Source: City of Palo Alto Planning Department, December 2016 A reduction of in intervals of 5% would increase the number of eligible R-1 parcels between a low of 401 to a high of 3,471 lots. The removal of the minimum lot size would significantly increase the number of eligible parcels by 5,194 for a total of 8,216. Additional Recommendations on ADUs In addition to conforming to the requirements of the State laws, staff also recommended to PTC additional changes to remove development constraints and to minimize neighborhood impacts. These recommendations, reflected in the proposed ordinance, include: A. Clarification that only one ADU or JADU can be constructed on a lot; B. Elimination of current code’s 12 feet separation buffer between existing single family home and detached ADU, requiring compliance with the building code; C. Removal of requirement for design review for ADUs in the RMD (NP) Combining District to comply with State law D. Clarification that ADU may not be sold separately from the unit; E. Requirement that either ADU or single family home be owner occupied; and F. Requirement that ADU’s not be rented for periods of less than 30 days. PTC Comments on Additional Recommendations The PTC supported the additional ADU requirements proposed referenced above with the exception of minimum rental tenure of 30 days. The PTC, as well as members of the public, expressed concern about the potential of ADUs to be used as short term rentals. The majority of the Commissioners spoke in favor of requiring a minimum of 60 days of rental tenure to prevent the use of ADUs for short term rentals. They felt that this could help in achieving neighborhood stability and alleviate concerns of constant neighborhood turnover. However, there are provisions in state law (State Landlord-Tenant laws) and the City’s zoning ordinance that distinguish between residential and non-residential (transitory) uses by using 30 days as the minimum standard. To maintain consistency with these provisions, staff has drafted the ordinance to reflect the 30 day minimum requirement. Additional PTC Concerns City of Palo Alto Page 14 The PTC also identified and discussed other concerns they would like to be addressed in the future. With the exception of item 5, these items have not been included in the draft ADU Ordinance proposed for review. 1. Tree Protection: Some Commissioners expressed concern about the potential of the loss of trees due to the increase in ADU construction. Staff explained that the tree protection ordinance would apply to ADUs, the same as what currently applies to single family homes. 2. Street Side setback: The Commissioners discussed how street side setback requirement of 20 feet for corner lots may be too restrictive and could act as constraint in construction of ADUs. However, no proposals to modify the street side setback were made. 3. Incentives for ADUs: Commissioners suggested providing additional incentives to encourage construction of ADUs including waiving of ADU application fees, preparing pre-approved by right designs for ADUs and exploring options to include provisions of “Tiny Homes” in zoning regulations. 4. Kitchen Facilities: One commissioner suggested a minimum size be required for kitchen facilities. 5. Location of Entryways: The Commission directed staff to consider allowing an ADU to have the entrance face the same direction as the primary unit, i.e. facing the same lot line as the primary unit. The reason for this requirement is to ensure that a property with an ADU would still appear as a single family residential lot. Staff has proposed in the draft ordinance to permit entry ways to face the same lot line if the second entryway is located at the rear half of the lot. This will provide flexibility while still maintaining the appearance of one entry way along the front property line, consistent with the appearance of a single family neighborhood. 6. Enforcement of Ordinance and Absentee Owners: The PTC had expressed concerns about absentee owners and maintenance of properties. The proposed ordinance includes a new requirement that the property owner must reside in the primary unit or ADU. This new requirement would enable Code Enforcement staff to respond to concerns about absentee owners. The requirement for the owner to live onsite provides additional incentives for property maintenance. Timeline/Next Steps The new State laws regarding ADU became effective on January 1, 2017 and apply to current and future ADU applications whether or not the City has updated its municipal code. Therefore, there is some urgency to make many of the code changes included in the draft ordinance as a way to avoid confusion. Nonetheless, there are a number of complex policy options to City of Palo Alto Page 15 consider, and at this evening’s meeting, the City Council could choose to: 1. Adopt the proposed ordinance; or 2. Adopt the proposed ordinance with specific modifications; or 3. Continue their discussion to later date. Any provisions that go beyond the legal requirements of State law would become effective 31 days following the Council’s adoption (on second reading). Policy Implications The City’s Housing Element Goal H1 is “Ensure the preservation of the unique character of the city’s residential neighborhoods,” and Programs H1.1.2 and H3.3.5 encourage modifying existing second unit development standards in the Zoning Code, such as lowering the minimum lot size and allow for increased floor area, in order to facilitate the creation of additional SDUs while maintaining neighborhood character and increasing the City’s affordable housing supply. The City’s Comprehensive Plan emphasizes the importance of the City’s residential neighorhoods and the quality of life for residents. Policy L-13 of the Land Use and Community Design Element emphasizes the need to increase and maintain the diversity of the City’s housing stock and Program L-13 encourages City to create design prototypes and guidelines for second units ensuring compatability with rest of the single family neighborhoods. The proposed ordinance is generally consistent wih these Comprehensive Plan provisions and would advance housing element programs referenced above. Resource Impact Building permits would be required for new ADUs and JADUs and the associated building permit fees would be collected for the review/permitting process. The State laws preclude collection of hook-up fees for JADUs and limit the collection of fees for ADUs. Environmental Review The proposed ordinance change is exempt from the provisions of the California Environmental Quality Act (CEQA) pursuant to CEQA Guideline sections 15061(b)(3), 15301, 15303 and 15305 because it provides a comprehensive permitting scheme for units that are allowed under State law. Any additional ADUs or JADUs that would be allowed under the ordinance (due to changes to minimum lot size requirements for example), would be subject to the development standards contained within the ordinance, which are intended to ensure compatibility with surrounding development. Attachments: City of Palo Alto Page 16 Attachment A: Ordinance Amending Sections of Chapter 18 re: Accessory Dwelling Units (PDF) Attachment B: City Council Colleagues Memo on ADU (PDF) Attachment C: Summary of Nov 30 PTC Public Comments (PDF) Attachment D: MAP (TXT) Attachment D: ID#7517 (PDF) Attachment E: SB 1069, AB 2299 and AB 2406 (PDF) Attachment F: November 30th PTC Staff Report with Attachments (PDF) Attachment G: PTC Meeting Minutes 11/30/2016 (PDF) Not Yet Approved 161018 jb 0131553 1 December 1, 2016 895\04\2046589.1 1/24/2017 Ordinance No. ____ Ordinance of the Council of the City of Palo Alto Amending Chapter 18 (Zoning) of the Palo Alto Municipal Code to Implement New State Law Requirements Relating to Accessory Dwelling Units and Junior Accessory Dwelling Units and to Reorganize and Update City’s Existing Regulations The Council of the City of Palo Alto does ORDAIN as follows: SECTION 1. Findings and Declarations. The City Council finds and declares as follows: A. Housing in California is becoming increasingly unaffordable. The average California home currently costs about 2.5 times the national average home price and the monthly rent is 50% higher than the rest of the nation. Rent in San Francisco, San Jose, Oakland, and Los Angeles are among the top 10 most unaffordable in the nation. With rising population growth, California must not only provide housing but also ensure affordability. B. Despite a high median income in Palo Alto, nearly 30 percent of all households overpaid for their housing (more than 30 percent of their income) in 2010; C. It is estimated that 63 percent of extremely low income renter households and 75 percent of extremely low income owner households overpaid for housing in 2010. Of the estimated 1,520 low income households, 75 percent of renter households and 44 percent of homeowner households paid more than 30 percent of their income for housing. D. The Palo Alto City Council, recognizing the severity of the regional housing crisis, requested that the Planning and Transportation Commission review constraints affecting the production of second (accessory) dwelling units and recommend modifications to the City’s development standards. E. While existing law enables accessory dwellings as a source of housing, recent studies show that local standards like Palo Alto’s, perhaps unintentionally, prevent homeowners from building ADUs with standards like lot coverage, large set-backs, off-street parking, or costly construction requirements. F. In September 2016, Governor Brown signed into law Senate Bill 1069, Assembly Bill 2299 and Assembly Bill 2406 relating to the creation of accessory dwelling units (ADUs) and junior accessory dwelling units. G. These new bills were intended to address the housing crisis by easing regulatory barriers for homeowners who choose to build affordable housing in their own backyards. H. This ordinance is adopted to comply with these new State mandates regarding ADUs and junior accessory dwelling units, and to reduce regulatory constraints affecting their production. I. As required by these new State mandates, the Palo Alto City Council hereby finds that no residential parking is permitted anywhere in the City within front setbacks or closer than ten feet from the street side setback of a corner lot. Not Yet Approved 161018 jb 0131553 2 December 1, 2016 895\04\2046589.1 1/24/2017 SECTION 2. Section 18.04.030 (Definitions) of Chapter 18.04 (Definitions) of Title 18 (Zoning) is amended to read as follows: 18.04.030 Definitions . . . (4) “Accessory dwelling unit” means an attached or a detached residential dwelling unit which provides complete independent living facilities for one or more persons. It shall include permanent provisions for living, sleeping, eating, cooking, and sanitation on the same parcel as the single-family dwelling is situated. An accessory dwelling unit also includes the following: a. An efficiency unit, as defined in Section 17958.1 of the Health and Safety Code. b. A manufactured home, as defined in Section 18007 of the Health and Safety Code. In some instances this Code uses the term second dwelling unit interchangeably with accessory dwelling unit. (46.5) “Dwelling unit, second” means a separate and complete dwelling unit, other than and subordinate to the main dwelling unit, whether a part of the same structure or detached, on the same residential lot. (74.5) “Junior accessory dwelling unit” means a unit that is no more than 500 square feet in size and contained entirely within an existing single-family structure. A junior accessory dwelling unit may include separate sanitation facilities, or may share sanitation facilities with the existing structure. (132) “Single-family use” means the use of a site for only one dwelling unit and, where permitted, an accessory second dwelling unit or a junior accessory dwelling unit. . . . SECTION 3. In Section 18.10.010 (a) substitute the term “accessory dwelling unit(s)” for “second dwelling unit(s)”. SECTION 4. Section 18.10.030 Table 1 and Footnote (2) are amended as follows: TABLE 1 PERMITTED AND CONDITIONALLY PERMITTED LOW-DENSITY RESIDENTIAL USES [P = Permitted Use -- CUP = Conditional Use Permit Required] R-E R-2 RMD Subject to Regulations in: ACCESSORY AND SUPPORT USES Accessory facilities and uses customarily incidental to permitted uses (no limit on number of plumbing fixtures) P P P 18.10.080 Home Occupations, when accessory to permitted residential uses. P P P 18.42.060 Horticulture, gardening, and growing of food products for consumption by occupants of the site. P P P Sale of agricultural products produced on the premises (1) P 18.10.110 Not Yet Approved 161018 jb 0131553 3 December 1, 2016 895\04\2046589.1 1/24/2017 Second Accessory Dwelling Units P P(2) P(2) 18.4210.0470 Junior Accessory Dwelling Units P P(2) P(2) 18.42.040 AGRICULTURE AND OPEN SPACE USES Agriculture P 18.10.110 EDUCATIONAL, RELIGIOUS, AND ASSEMBLY USES Private Educational Facilities CUP CUP CUP Religious Congregations and Institutions CUP CUP CUP PUBLIC/QUASI-PUBLIC USES Community Centers CUP CUP CUP Utility Facilities essential to provision of utility services to the neighborhood, but excluding business offices, construction or storage yards, maintenance facilities, or corporation yards. CUP CUP CUP RECREATION USES Neighborhood Recreational Centers CUP Outdoor Recreation Services CUP CUP RESIDENTIAL USES Single-Family P P P Two-Family use, under one ownership P P Mobile Homes P P P 18.42.100 Residential Care Homes P P P RETAIL USES Cemeteries CUP Commercial Plant Nurseries CUP SERVICE USES Convalescent Facilities CUP Day Care Centers CUP CUP CUP Small Adult Day Care Homes P P P Large Adult Day Care Homes CUP CUP CUP Small Family Day Care Homes P P P Large Family Day Care Homes P P P Bed & Breakfast Inns P(3) Not Yet Approved 161018 jb 0131553 4 December 1, 2016 895\04\2046589.1 1/24/2017 P = Permitted Use CUP = Conditional Use Permit Required . . . (2) Second Units in R-2 and RMD Zones: An accessory second dwelling unit or a Junior Accessory Dwelling Unit associated with a single-family residence on a lot in the R-2 or RMD zones is permitted, subject to the provisions of Section 18.10.07018.42.040, and such that no more than two units result on the lot. . . . SECTION 5. Section 18.10.040 (Development Standards) of Chapter 18.10 (Low-Density Residential (RE, R-2 and RMD) Districts) of Title 18 (Zoning) is amended to read as follows: 18.10.040 Development Standards (a) Site Specifications, Building Size, Height and Bulk, and Residential Density . . . (5) Maximum House Size: The gross floor area of attached garages and attached second accessory dwelling units and junior accessory dwelling units are included in the calculation of maximum house size. If there is no garage attached to the house, then the square footage of one detached covered parking space shall be included in the calculation. This provision applies only to single-family residences, not to duplexes allowed in the R-2 and RMD districts. . . . (B) Flag Lot Development Standards: (i) Individual Review . . . (i) Individual Review The Individual Review provisions of Section 18.12.110 of the Zoning Ordinance shall be applied to any single-family or two-family residence in the R-2 or RMD districts to those sides of a site that share an interior side lot line with the interior side or rear lot line of a property zoned for or used for single- family or two-family dwellings. , except where architectural review board review is required for an accessory second dwelling on an RMD-zoned site. The individual review criteria shall be applied only to the project's effects on adjacent single-family and two-family uses. [NOTE: STATE LAW REQUIRES MINISTERIAL REVIEW OF ADU’S.] SECTION 6. Section 18.10.060 Table 3 is amended as follows: TABLE 3 PARKING REQUIREMENTS FOR R-E, R-2 AND RMD USES Use Minimum Off-Street Parking Requirement Not Yet Approved 161018 jb 0131553 5 December 1, 2016 895\04\2046589.1 1/24/2017 Single-family residential use (excluding second accessory dwelling units) 2 spaces per unit, of which one must be covered Two family (R2 & RMD districts) 3 spaces total, of which at least two must be covered Second Accessory dwelling unit, attached or detached: >450 sf in size ≤450 sf in size 2 spaces per unit, of which one must be covered 1 space per unit, which may be covered or uncovered See Section 18.42.040(a)(10). Junior accessory dwelling unit None Other Uses See Chapter 18.40 . . . [NOTE: THESE PARKING REQUIREMENTS ARE DEFINED IN STATE LAW. THE CITY HAS THE DISCRETION TO REDUCE THESE REQUIREMENTS, BUT NOT TO INCREASE THEM.] SECTION 7. Section 18.10.070 (Second Dwelling Units) of Chapter 18.10 (Low-Density Residential (RE, R-2 and RMD) Districts) of Title 18 (Zoning) is repealed in its entirety and a new 18.10.070 is added to read as follows: 18.10.070 Accessory and Junior Accessory Dwelling Units Accessory Dwelling Units and Junior Accessory Dwelling Units are subject to the regulations set forth in Section 18.42.040. [NOTE: THESE DEVELOPMENT STANDARDS HAVE BEEN MOVED TO SECTION 18.42.040.] SECTION 8. Section 18.10.120 (Architectural Review) of Chapter 18.10 (Low-Density Residential (RE, R-2 and RMD) Districts) of Title 18 (Zoning) is amended to read as follows: 18.10.120 Architectural Review Architectural review, as required in Section 18.76.020, is required in the R-E, R-2, and RMD districts whenever three or more adjacent residential units are intended to be developed concurrently, whether through subdivision or individual applications. Architectural review is also required for second Not Yet Approved 161018 jb 0131553 6 December 1, 2016 895\04\2046589.1 1/24/2017 dwelling units of more than 900 square feet, when located in the Neighborhood Preservation Combining District (NP). [NOTE: STATE LAW REQUIRES MINISTERIAL REVIEW OF ADU’S.] SECTION 9. Section 18.10.140 (Neighborhood Preservation Combining District (NP) Standards) of Chapter 18.10 (Low-Density Residential (RE, R-2 and RMD) Districts) of Title 18 (Zoning) is amended to read as follows: 18.10.140 Neighborhood Preservation Combining District (NP) Standards . . . (2) Design Review Required For properties on which two or more residential units are developed or modified, design review and approval shall be required by the architectural review board in compliance with procedures established in Section 18.76.020 for any new development or modification to any structure on the property and for site amenities. No design review is required for construction of or modifications to single-family structures that constitute the only principal structure on a parcel of land or for accessory dwelling units or junior accessory units. No design review is required for construction of second dwelling units on a parcel except when the second unit exceeds 900 square feet in size. . . . [NOTE: STATE LAW REQUIRES MINISTERIAL REVIEW OF ADU’S.] SECTION 10. In Section 18.10.150(e), substitute the term “accessory dwelling units” for “second dwelling units”. . . . SECTION 11. Section 18.12.010(a) is amended as follows: (a) Single Family Residential District [R-1] The R-1 single family residential district is intended to create, preserve, and enhance areas suitable for detached dwellings with a strong presence of nature and with open area affording maximum privacy and opportunities for outdoor living and children's play. Minimum site area requirements are established to create and preserve variety among neighborhoods, to provide adequate open area, and to encourage quality design. Second Accessory dwelling units, junior accessory dwelling units and accessory structures or buildings are appropriate. where consistent with the site and neighborhood character. Community uses and facilities, such as churches and schools, should be limited unless no net loss of housing would result. . . . SECTION 12. Section 18.12.030 Table 1, is amended as follows: Table 1 PERMITTED AND CONDITIONAL R-1 RESIDENTIAL USES Not Yet Approved 161018 jb 0131553 7 December 1, 2016 895\04\2046589.1 1/24/2017 R-1 and all R-1 Subdistricts Subject to Regulations for: ACCESSORY AND SUPPORT USES Accessory facilities and uses customarily incidental to permitted uses with no more than two plumbing fixtures and no kitchen facility, or of a size less than or equal to 200 square feet P 18.04.030(a)(3) 18.12.080 Accessory facilities and uses customarily incidental to permitted uses with more than two plumbing fixtures (but with no kitchen), and in excess of 200 square feet in size, but excluding second accessory dwelling units CUP 18.12.080 Home occupations, when accessory to permitted residential P 18.42.060 Horticulture, gardening, and growing of food products for consumption by occupants of the site P Second Accessory Dwelling Units P(1) 18.42.04012.070 Junior Accessory Dwelling Unit P(1) 18.42.040 EDUCATIONAL, RELIGIOUS AND ASSEMBLY USES Private Educational Facilities CUP Churches and Religious Institutions CUP PUBLIC/QUASI PUBLIC USES Community Centers CUP Utility Facilities essential to provision of utility services to the neighborhood, but excluding business offices, construction or storage yards, maintenance facilities, or corporation yards CUP RECREATION USES Outdoor Recreation Services CUP RESIDENTIAL USES Single-Family P Mobile Homes P 18.42.100 Residential Care Homes P SERVICE USES Day Care Centers CUP Small Adult Day Care Homes P Large Adult Day Care Homes CUP Small Family Day Care Homes P Large Family Day Care Homes P P = Permitted Use CUP = Conditional Use Permit Required (1) An Accessory Dwelling Unit or a Junior Accessory Dwelling Unit associated with a single- family residence on a lot is permitted, subject to the provisions of Section 18.42.040, and such that no more than two total units result on the lot. Not Yet Approved 161018 jb 0131553 8 December 1, 2016 895\04\2046589.1 1/24/2017 SECTION 13. Section 18.12.040 Table 2, footnote (8) is amended as follows: (8) Maximum House Size: The gross floor area of attached garages and attached accessory second dwelling units and junior accessory dwelling units are included in the calculation of maximum house size. If there is no garage attached to the house, then the square footage of one detached covered parking space shall be included in the calculation. SECTION 14. Section 18.12.060 Table 4 is amended as follows: Table 4 shows the minimum off-street automobile parking requirements for specific uses in the R- 1 district. Table 4 Parking Requirements for Specific R-1 Uses Use Minimum Off-Street Parking Requirement Single-family residential use (excluding second accessory dwelling units) 2 spaces per unit, of which one must be covered. Second Accessory dwelling unit , attached or detached 2 spaces per unit, of which one must be covered See Section 18.42.040(a)(10). Junior Accessory Dwelling Unit None Other Uses See Chs. 18.52 and 18.54 . . . [NOTE: THESE PARKING REQUIREMENTS ARE DEFINED IN STATE LAW. THE CITY HAS THE DISCRETION TO REDUCE THESE REQUIREMENTS, BUT NOT TO INCREASE THEM.] SECTION 15. Section 18.12.070 (Second Dwelling Units) of Chapter 18.12 (R-1 Single-Family Residential District) of Title 18 (Zoning) is repealed in its entirety and a new 18.12.070 is added to read as follows: 18.12.070 Accessory and Junior Accessory Dwelling Units Not Yet Approved 161018 jb 0131553 9 December 1, 2016 895\04\2046589.1 1/24/2017 Accessory Dwelling Units and Junior Accessory Dwelling Units are subject to the regulations set forth in Section 18.42.040. [NOTE: THESE DEVELOPMENT STANDARDS HAVE BEEN MOVED TO SECTION 18.42.040.] SECTION 16. In Section 18.12.090(b)(2), substitute the term “accessory dwelling unit(s)” for “second dwelling unit(s)”. . . . SECTION 17. In Section 18.12.150(d), substitute the term “accessory dwelling unit(s)” for “second dwelling unit(s)”. . . . SECTION 18. Section 18.28.040, Table 1, is amended as follows: Table 1 Land Uses PF OS AC Subject to Regulations in Chapter: ACCESSORY AND SUPPORT USES Accessory facilities and accessory uses P Chs. 18.40 and 18.42 Eating and drinking services in conjunction with a permitted use CUP (1) Retail services as an accessory use to the administrative offices of a non-profit organization, provided that such retail services do not exceed 25% of the gross floor area of the combined administrative office services and retail service uses CUP (1) Retail services in conjunction with a permitted use CUP (1) Sale of agricultural products produced on the premises; provided, that no permanent commercial structure for the sale or processing of agricultural products shall be permitted. P Second Accessory dwelling units, subject to regulations in Section 18.28.07042.040 P(2) 18.28.070 18.42.040 Junior Accessory Dwelling Unit P(2) 18.42.040 AGRICULTURAL AND OPEN SPACE USES Agricultural Uses, including animal husbandry, crops, dairying, horticulture, nurseries, livestock farming, tree farming, viticulture, and similar uses not inconsistent with the intent and purpose of this chapter P P Not Yet Approved 161018 jb 0131553 10 December 1, 2016 895\04\2046589.1 1/24/2017 Botanical conservatories, outdoor nature laboratories, and similar facilities P Native wildlife sanctuaries P Park uses and uses incidental to park operation P EDUCATIONAL, RELIGIOUS, AND ASSEMBLY USES Business or trade schools CUP (1) Churches and religious institutions CUP (1) Educational, charitable, research, and philanthropic institutions CUP Private educational facilities CUP (1) Public or private colleges and universities and facilities appurtenant thereto CUP Special education classes CUP (1) OFFICE USES Administrative office services for non-profit organizations CUP (1) OTHER USES Other uses which, in the opinion of the director, are similar to those listed as permitted or conditionally permitted uses CUP (1) PUBLIC/QUASI-PUBLIC FACILITY USES All facilities owned or leased, and operated or used, by the City of Palo Alto, the County of Santa Clara, the State of California, the government of the United States, the Palo Alto Unified School District, or any other governmental agency P Communication Facilities CUP Community Centers CUP (1) Utility Facilities CUP CUP CUP RECREATIONAL USES Neighborhood recreation centers CUP (1) Outdoor recreation services CUP (1) CUP Recreational uses including riding academies, clubs, stables, country clubs, and golf courses CUP Youth clubs CUP (1) RESIDENTIAL USES Single-family dwellings P Manufactured housing (including mobile homes on permanent foundations) P 18.40. Guest ranches CUP Residential care facilities, when utilizing existing structures on the site CUP (1) Not Yet Approved 161018 jb 0131553 11 December 1, 2016 895\04\2046589.1 1/24/2017 Residential Care Homes P Residential use, and accessory buildings and uses customarily incidental to permitted dwellings; provided, however, that such permitted dwellings shall be for the exclusive use of the owner or owners, or lessee or lessor of land upon which the permitted agricultural use is conducted, and the residence of other members of the same family and bona fide employees of the aforementioned P SERVICE USES Animal care, including boarding and kennels CUP CUP Cemeteries CUP Cemeteries, not including mausolea, crematoria, or columbaria CUP Small day care homes P Large day care homes CUP Day care centers CUP (1) Art, dance, gymnastic, exercise or music studios or CUP (1) Medical Services: Hospitals CUP Outpatient medical facilities with associated medical research CUP TEMPORARY USES Temporary parking facilities, provided that such facilities CUP (1) TRANSPORTATION USES Airports and airport-related uses CUP (1) . . . (2) An accessory dwelling unit or a Junior Accessory Dwelling Unit associated with a single- family residence on a lot in the OS District is permitted, subject to the provisions of Section 18.42.040, and such that no more than two total units result on the lot. SECTION 19. Section 18.28.070(a)(Second Dwelling Units) is amended as follows: 18.28.070 Additional OS District Regulations The following additional regulations shall apply in the OS district: (a) AccessorySecond Dwelling Units and Junior Dwelling Units Accessory Dwelling Units and Junior Accessory Dwelling Units are subject to the regulations set forth in Section 18.42.040. Not more than one attached or detached second dwelling units shall be allowed on a lot in the OS district, and shall be subject to the following regulations: (1) Second dwelling shall only be permitted on sites with a minimum site area of 10 acres; (2) Attached second dwelling units shall comply with the OS district height limitation of 25 feet; and (3) Second dwelling units shall follow the standards set forth in the Residential Estate (R-E) District for second dwelling units (18.10.070(b)), with the exceptions outlined in subsections 1 and 2 above. Not Yet Approved 161018 jb 0131553 12 December 1, 2016 895\04\2046589.1 1/24/2017 [NOTE: THESE DEVELOPMENT STANDARDS HAVE BEEN MOVED TO SECTION 18.42.040.] . . . SECTION 20. Section 18.42.040 (Accessory and Junior Dwelling Units) is added as follows: 18.42.040 Accessory and Junior Dwelling Units The following regulations apply to zoning districts where accessory dwelling units and junior accessory dwelling units are permitted. (a) Accessory Dwelling Units 1. Purpose The intent of this section is to provide regulations to accommodate accessory dwelling units, in order to provide for variety to the city's housing stock and additional affordable housing opportunities. Accessory dwelling units shall be separate, self-contained living units, with separate entrances from the main residence, whether attached or detached. The standards below are provided to minimize the impacts of accessory dwelling units on nearby residents and throughout the city, and to assure that the size, location and design of such dwellings is compatible with the existing residence on the site and with other structures in the area. 2. Minimum Lot Sizes (i) In the R-1 district and all R-1 subdistricts, the minimum lot size for an accessory dwelling unit shall equal the minimum lot size established for the district or subdistrict. (ii) In the RE district, the minimum lot size for an accessory dwelling unit is one acre. However, for flag lots in the RE District, the minimum lot size shall be 35% greater than the minimum lot size established by Section 21.20.301 of the Subdivision Ordinance. (iii) In the R-2 District the minimum lot size for an accessory dwelling unit is 6,000 square feet and in the RMD District it is 5,000 square feet. All flag lots in the R-2 and RMD Districts shall comply with the lot size requirements set forth in Section 21.20.301 of the Subdivision Ordinance. For R-2 zoned lots of 6,000 square feet or greater, but less than 7,500 square feet, an Accessory Dwelling Unit of 450 square feet or less is permitted. (iv) In the OS District, the minimum lot size for an accessory dwelling unit is 10 acres. [NOTE: STATE LAW ALLOWS THE CITY TO MAINTAIN EXISTING REQUIREMENTS FOR MINIMUM LOT SIZES FOR ACCESSORY DWELLING UNITS. AS A POLICY MATTER, THE CITY COULD CONSIDER REVISING OR ELIMINATING SOME OF THESE REQUIREMENTS TO ENCOURAGE ADDITIONAL UNITS, OR COULD LEAVE THESE REQUIREMENTS IN PLACE WITH THE KNOWLEDGE THAT UNDER STATE LAW, JUNIOR UNITS AND UNITS CONSTRUCTED WITHIN EXISTING BUILDINGS ARE ALLOWED ANYWHERE THERE IS AN EXISTING RESIDENCE, REGARDLESS OF LOT SIZE OR NON-CONFORMANCE.] 3. Setbacks Not Yet Approved 161018 jb 0131553 13 December 1, 2016 895\04\2046589.1 1/24/2017 (i) Accessory dwelling units shall comply with the underlying zoning district’s setbacks. (ii) Notwithstanding section (i) above, no setback shall be required for an existing garage that is converted to an accessory dwelling unit, except as provided in subsection (a)(5) below. (iii) In districts permitting second story accessory dwelling units, a setback of no more than five feet from the side and rear lot lines shall be required for an accessory dwelling unit constructed above a garage. [NOTE: STATE LAW SPECIFIES ITEMS (II) AND (III) ABOVE.] 4. Lot Coverage/FAR An accessory dwelling unit shall be included in the lot coverage and FAR requirements applicable to the primary dwelling unit. [NOTE: THIS IS AN EXISTING CODE REQUIREMENT.] 5. Conversion of Space in Existing Single Family Residence or Existing Accessory Structure Notwithstanding the provisions of subsections (a)(2), (a)(3), (a)(4), (a)(7) and (a)(8), in the R-1 and RE Districts only, an Accessory Dwelling Unit shall be permitted if the unit is contained within the existing space of a single-family residence or and existing accessory structure, has independent exterior access from the existing residence, and the side and rear setbacks are sufficient for fire safety, and if the accessory dwelling unit conforms with the following: a. Accessory dwelling units shall not be required to provide fire sprinklers if they are not required for the primary residence. b. For the purposes of this section, the portion of the single-family residence or accessory structure subject to the conversion, must be legally permitted and existing as of January 1, 2017. c. Notwithstanding the allowance in this section, only one accessory dwelling unit or junior accessory dwelling unit may be located on any lot subject to this section. d. No new or separate utility connection may be required between the accessory dwelling unit and utility service, such as water, sewer, and power. e. The accessory dwelling unit shall comply with the provisions of subsections (a)(6), (a)(9), and (a)(10). [NOTE: THESE REQUIREMENTS ARE REQUIRED BY STATE LAW, WITH THE EXCEPTION OF ITEM (I)(C).] 6. Privacy Any window, door or deck of a second story accessory dwelling unit shall utilize techniques to lessen views onto adjacent properties to preserve the privacy of residents. These techniques may include placement of doors, windows and decks to minimize overview of neighboring dwelling units, use of obscured glazing, window placement above eye level, and screening between the properties. Not Yet Approved 161018 jb 0131553 14 December 1, 2016 895\04\2046589.1 1/24/2017 [NOTE: STATE LAW REQUIRES A MINISTERIAL PROCESS FOR APPROVAL OF ADU’S, BUT ALLOWS DEVELOPMENT STANDARDS. CITY POLICY MAKERS SHOULD CONSIDER WHETHER THE PRIVACY-RELATED STANDARDS SUGGESTED HERE ARE SUFFICIENTLY CLEAR SO AS TO BE MINISTERIAL.] 7. Additional Development Standards for Attached Accessory Dwelling Units (i) Attached accessory dwelling units are those attached to the main dwelling. All attached accessory dwelling units shall be subject to the additional development requirements specified below. (ii) Attached unit size counts toward the calculation of maximum house size. (iii) Unit Size: The maximum size of an attached accessory dwelling unit living area shall not exceed 450 square feet and shall not exceed 50% of the existing living area of the primary existing dwelling unit. The accessory dwelling unit and any covered parking shall be included in the total floor area for the site, but the covered parking area is not included in the maximum 450 square feet for attached unit. Any basement space used as an accessory dwelling unit or portion thereof shall be counted as floor area for the purpose of calculating the maximum size of the accessory unit. (iv) Maximum height: one story and 17 feet. However, in the RE District, attached Accessory Dwelling Units may be 30 feet. In the OS zone, attached Accessory Dwelling Units may be 25 feet. (v) Separate Entry Required for Attached Units: A separate exterior entry shall be provided to serve an accessory dwelling unit. (vi) Except on corner lots, the accessory dwelling unit may not have an entranceway facing the same lot line (property line) as the entranceway to the main dwelling unit unless the second entranceway is located in the rear half of the lot. Exterior staircases to second floor units shall be located toward the interior side or rear yard of the property. (vii) In the RE zone, maximum size of covered parking area for the accessory dwelling unit is 200 square feet. [NOTE: DEVELOPMENT STANDARDS IN THIS SECTION DERIVE FROM THE CITY’S EXISTING REQUIREMENTS, AS MODIFIED TO COMPLY WITH STATE LAW. THE CITY COULD CHOOSE TO MODIFY SOME OF THESE STANDARDS.] 8. Additional Development Standards for Detached Accessory Dwelling Units (i) Detached accessory dwelling units are those detached from the main dwelling. All detached accessory dwelling units shall be subject to the additional development standards specified below. (ii) The maximum size of the detached accessory dwelling unit living area shall be 900 square feet. a. The accessory dwelling unit and covered parking shall be included in the total floor area for the site, but the covered parking area is not included within the maximum 900 square feet for detached unit. Not Yet Approved 161018 jb 0131553 15 December 1, 2016 895\04\2046589.1 1/24/2017 b. Any basement space used as an accessory dwelling unit or portion thereof shall be counted as floor area for the purpose of calculating the maximum size of the accessory unit. c. For R-2 zoned lots of 6,000 square feet or greater, but less than 7,500 square feet, a detached Accessory Dwelling Unit of 450 square feet or less is permitted. (iii) Maximum height: one story and 17 feet. (iv) Design: The detached accessory dwelling unit shall be similar to the main residence with respect to style, roof pitch, color and materials. [NOTE: STATE LAW REQUIRES A MINISTERIAL PROCESS FOR APPROVAL OF ADU’S, BUT ALLOWS DEVELOPMENT STANDARDS. CITY POLICY MAKERS SHOULD CONSIDER WHETHER THE ABOVE DESIGN- RELATED STANDARD SUGGESTED HERE ARE SUFFICIENTLY CLEAR SO AS TO BE MINISTERIAL.] (v) In the RE District, the maximum size of covered parking area for the detached accessory dwelling unit is 200 square feet. (vi) There shall be no windows, doors, mechanical equipment, or venting or exhaust systems located within six feet of a property line. [NOTE: DEVELOPMENT STANDARDS IN THIS SECTION DERIVE FROM THE CITY’S EXISTING REQUIREMENTS, AS MODIFIED TO COMPLY WITH STATE LAW. THE CITY COULD CHOOSE TO MODIFY SOME OF THESE STANDARDS.] 9. Additional Requirements for All Accessory Dwelling Units (i) Sale of Units: The Accessory dwelling unit shall not be sold separately from the primary residence. (ii) Short term rentals. The accessory dwelling unit shall not be rented for periods of less than 30 days. (iii) Number of Units Allowed: Only one accessory dwelling unit or junior accessory dwelling unit may be located on any residentially zoned lot. (iv) Existing Development: A single-family dwelling must exist on the lot or shall be constructed on the lot in conjunction with the construction of the accessory dwelling unit. (i)(v) Occupancy: The owner of a parcel proposed for accessory dwelling use shall occupy as a principal residence either the primary dwelling or the accessory dwelling. (vi) Prior to issuance of a building permit for the accessory dwelling unit, the owner shall record a deed restriction in a form approved by the city to notify future owners of the owner occupancy requirements and restrictions on short-term rentals. Not Yet Approved 161018 jb 0131553 16 December 1, 2016 895\04\2046589.1 1/24/2017 (vii) Accessory dwelling units shall not be required to provide fire sprinklers if they are not required for the primary residence. (viii) Street Address Required: Street addresses shall be assigned to all accessory dwellings to assist in emergency response. (ix) Street Access: The accessory dwelling unit shall have street access from a driveway in common with the main residence in order to prevent new curb cuts, excessive paving, and elimination of street trees, unless separate driveway access is permitted by the director upon a determination that separate access will result in fewer environmental impacts such as excessive paving, unnecessary grading or unnecessary tree removal, and that such separate access will not create the appearance, from the street, of a lot division or two-family use. [NOTE: THE STANDARDS SUGGESTED HERE DERIVE FROM STATE LAW AND EXISTING CODE REQUIREMENTS WITH SOME CLARIFICATIONS AND UPDATES.] 10. Parking The following parking criteria apply to both detached and attached accessory dwelling units: (i) One parking space per unit or one parking space per bedroom, whichever is greater, shall be provided for the accessory dwelling unit. (ii) Such parking may be provided as tandem parking, may be located on an existing driveway and may be located in side and rear setbacks, but not in front setback. For a corner lot, parking may be located within the corner street side setback if located at least ten (10) feet from the property line. (iii) Notwithstanding subsection (i) above, no parking shall be required for: a. Accessory dwelling units located within one-half mile of public transit or within 0.75 mile of the Palo Alto, California Avenue, or San Antonio Caltrain stations. For purposes of this section, “public transit” shall include a bus stop with fixed route bus service that provides transit service at 15 minute intervals or better during peak commute periods. b. Accessory dwelling units located within an architecturally and historically significant National, California or locally designated historic district. c. Accessory dwelling units part of the existing primary residence or an existing accessory structure. d. Accessory dwelling units located within a Residential Parking Program District. e. When on-street parking permits are required but not offered to the occupant of the Accessory dwelling unit. f. When there is a car-share vehicle located within one block of the Accessory dwelling unit. For purposes of this section, “car-share vehicle” shall mean part of an established program intended to stay in a fixed location for at least 10 years and available to the public. (iv) If an accessory dwelling unit replaces an existing garage, replacement spaces must be provided. When a garage, carport, or covered parking structure is demolished in conjunction with the construction of an accessory dwelling unit, any required replacement spaces may be located in any Not Yet Approved 161018 jb 0131553 17 December 1, 2016 895\04\2046589.1 1/24/2017 configuration on the same lot as the accessory dwelling unit, including, but not limited to, as covered spaces, uncovered spaces, or tandem spaces, or by the use of mechanical automobile parking lifts. [NOTE: THIS SECTION INCORPORATES NEW STATE LAW PARKING REQUIREMENTS.] (b) Junior Accessory Dwelling Units 1. Purposes: This Section provides standards for the establishment of junior accessory dwelling units, an alternative to the standard accessory dwelling unit. Junior accessory dwelling units will typically be smaller than an accessory dwelling unit, will be constructed within the walls of an existing single family structure and requires owner occupancy in the single family residence where the unit is located. 2. Development Standards. Junior accessory dwelling units shall comply with the following standards: (i) Number of Units Allowed: Either one accessory dwelling unit or one junior accessory dwelling unit, may be located on any residentially zoned lot that permits a single-family dwelling except as otherwise regulated or restricted by an adopted Coordinated Area Plan or Specific Plan. A junior accessory dwelling unit may only be located on a lot which already contains one legal single-family dwelling. (ii) Size: A junior accessory dwelling unit shall not exceed 500 square feet in size. (iii) Lot Coverage/FAR: A junior accessory dwelling unit shall be included in the lot coverage and FAR requirements applicable to the primary dwelling unit. (iii) Owner Occupancy: The owner of a parcel proposed for a junior accessory dwelling unit shall occupy as a principal residence either the primary dwelling or the junior accessory dwelling. Owner-occupancy is not required if the owner is another governmental agency, land trust, or housing organization. (iv) Sale Prohibited: A junior accessory dwelling unit shall not be sold independently of the primary dwelling on the parcel. (v) Short term rentals: The junior accessory dwelling unit shall not be rented for periods of less than 30 days. (vi) Location of Junior Accessory Dwelling Unit: A junior accessory dwelling unit must be created within the existing walls of an existing primary dwelling, and must include conversion of an existing bedroom. (vii) Separate Entry Required: A separate exterior entry shall be provided to serve a junior accessory dwelling unit, with an interior entry to the main living area. A junior accessory dwelling may include a second interior doorway for sound attenuation. Not Yet Approved 161018 jb 0131553 18 December 1, 2016 895\04\2046589.1 1/24/2017 (viii) Kitchen Requirements: The junior accessory dwelling unit shall include an efficiency kitchen, requiring and limited to the following components: a. A sink with a maximum waste line diameter of one-and-a-half (1.5) inches, b. A cooking facility or appliance which does not require electrical service greater than one hundred and twenty (120) volts, or natural or propane gas, and c. A food preparation counter and storage cabinets that are of reasonable size in relation to the size of the junior accessory dwelling unit. (ix) Parking. No additional parking is required beyond that required at the time the existing primary dwelling was constructed. (x) Fire Protection; Utility Service. For the purposes of any fire or life protection ordinance or regulation or for the purposes of providing service for water, sewer, or power, a junior accessory dwelling unit shall not be considered a separate or new unit. (xi) Deed Restriction. Prior to the issuance of a building permit for a junior accessory dwelling unit, the owner shall record a deed restriction in a form approved by the city that includes a prohibition on the sale of the junior accessory dwelling unit separate from the sale of the single-family residence, requires owner-occupancy, does not permit short-term rentals, and restricts the size and attributes of the junior dwelling unit to those that conform with this section. [NOTE: THIS IS A NEW SECTION THAT IMPLEMENTS AB 2406 ABOUT JUNIOR ACCESSORY DWELLING UNITS IN RESIDENTIAL DISTRICTS WHICH CURRENTLY PERMIT ADU’S.] SECTION 21. Section 18.52.040 (6)(c) Table 1, is amended as follows: Table 1 Minimum Off-Street Parking Requirements Use Vehicle Parking Requirement (# of spaces) Bicycle Parking Requirement Spaces Class1 Long Term (LT) and Short Term (ST) RESIDENTIAL USES Single -Family Residential (Primary Unit) Tandem Parking Allowed (a) In the OS district 4 spaces, of which at least one space must be covered None (b) In all other districts 2 spaces, of which at least one space must be covered Not Yet Approved 161018 jb 0131553 19 December 1, 2016 895\04\2046589.1 1/24/2017 (c) Underground parking for single family uses is prohibited, except pursuant to a variance granted in accordance with the provisions of Chapter 18.76 (Permits and Approvals) of this title, in which case the area of the underground garage shall be counted toward the gross floor area. Second Accessory Dwelling Unit (In addition to main dwelling unit requirements) >450 sf in size <450 sf in size 2 spaces, of which at least one must be covered 1 space, covered or uncovered See Section 18.42.040(a)(10). None Junior Accessory Dwelling Units None Two-Family Residential (R-2 & RMD Districts) 1.5 spaces per unit, of which at least one space per unit must be covered Tandem Parking Allowed, with one tandem space per unit, associated directly with another parking space for the same unit 1 space per Unit 100% – LT Not Yet Approved 161018 jb 0131553 20 December 1, 2016 895\04\2046589.1 1/24/2017 Multiple -Family Residential 1.25 per studio unit 1.5 per 1-bedroom unit 2 per 2-bedroom or larger unit At least one space per unit must be covered Tandem parking allowed for any unit requiring two spaces (one tandem space per unit, associated directly with another parking space for the same unit, up to a maximum of 25% of total required spaces for any project with more than four (4) units) 1 per unit 100% – LT (a) Guest Parking For projects exceeding 3 units; 1 space plus 10% of total number of units, provided that if more than one space per unit is assigned or secured parking, then guest spaces equal to 33% of all units is required. 1 space for each 10 units 100% – ST . . . SECTION 21. In Section 18.76.020 (D), substitute the term “accessory dwelling unit(s)” for “second dwelling unit(s)”. SECTION 22. Any provision of the Palo Alto Municipal Code or appendices thereto inconsistent with the provisions of this Ordinance, to the extent of such inconsistencies and no further, is hereby repealed or modified to that extent necessary to effect the provisions of this Ordinance. SECTION 23. If any section, subsection, sentence, clause, or phrase of this Ordinance is for any reason held to be invalid or unconstitutional by a decision of any court of competent jurisdiction, such decision shall not affect the validity of the remaining portions of this Ordinance. The City Council hereby declares that it would have passed this Ordinance and each and every section, subsection, sentence, clause, or phrase not declared invalid or unconstitutional without regard to whether any portion of the ordinance would be subsequently declared invalid or unconstitutional. SECTION 24. The Council finds that the adoption of this ordinance is exempt from the provisions of the California Environmental Quality Act pursuant to CEQA Guideline sections 15061(b) and 15301, 15303 and 15305 because it simply provides a comprehensive permitting scheme. Not Yet Approved 161018 jb 0131553 21 December 1, 2016 895\04\2046589.1 1/24/2017 SECTION 25. This ordinance shall be effective on the thirty-first date after the date of its adoption. INTRODUCED: PASSED: AYES: NOES: ABSENT: NOT PARTICIPATING: ATTEST: ____________________________ ____________________________ City Clerk Mayor APPROVED AS TO FORM: APPROVED: ____________________________ ____________________________ Senior Asst. City Attorney City Manager ____________________________ Director of Planning & Community Environment City of Palo Alto COLLEAGUES MEMO October 19, 2015 Page 1 of 2 (ID # 6249) DATE: October 19, 2015 TO: City Council Members FROM: Council Members Scharff, Schmid, and Wolbach SUBJECT: COLLEAGUES MEMO REGARDING STUDYING POLICY TO INCREASE ACCESSORY DWELLING UNITS (ADU'S) Goal To find opportunities to make available additional housing in Palo Alto with minimal impact on community character. In keeping with our Comprehensive Plan and recently adopted Housing Element, expand opportunities for residents of single family homes by adding Accessory Dwelling Units (ADUs) – also known as Secondary Units or In-law Units. Recommendation We ask our Council Colleagues to refer this matter to the Planning and Transportation Commission, to consider, analyze and make recommendations to the City Council to update our city ordinances relating to ADUs, in order to: (1) facilitate ADU creation while minimizing impacts on community character, with sensitivity to neighborhood design standards; (2) consider steps to bring existing non-compliant ADUs into compliance; and (3) any other relevant recommendations. Background and Discussion Palo Alto's Housing element, adopted November 10, 2014, calls for looking at easing restrictions on ADUs, as did Palo Alto's prior comprehensive plan. Program H1.1.2 of the 2014 Housing Element of the Comprehensive Plan states: Consider modifying development standards for second units, where consistent with maintaining the character of existing neighborhoods. The modifications should encourage the production of second units affordable to very low, low, or moderate income households. Palo Alto's housing crisis and aging population have led many residents to call for a renewed discussion of this topic and timely, appropriate action. Palo Alto has, by some reports, the highest median rent in the country. We have high demand for housing at a variety of income- levels, with limited supply. Particularly considering young adults returning from college or early October 19, 2015 Page 2 of 2 (ID # 6249) in their career, or professionals who work in Palo Alto, there are social, traffic, and environmental benefits to people residing here. Palo Alto's aging population includes many “empty nesters” who live alone in a house meant for a large family. Many senior or disabled residents may prefer to remain in their home but require assistance. Many Palo Alto families would like to have multiple generations together. Other communities such as Menlo Park (2013), Belmont (May of 2015), and the County of San Mateo are also working on this issue and ADUs as a source of affordable housing appear in many cities’ Housing Elements. ADUs may provide benefits for: 1.Aging In-Place: A resident requiring regular in-home assistance can use an ADU to provide greater privacy for a caregiver. 2.Family Ties: A multi-generational family preferring to stay together for familial ties and financial savings can enjoy greater privacy for different generations with an ADU. 3.Supplemental Income: A single resident or fixed-income retired resident or couple may enjoy additional income by offering their ADU as a much needed rental space to a professional or student. 4.Modest Income Residents, Workers, and Students: The resident of an ADU may work in Palo Alto or attend Stanford. By living locally, they will have greater options to bike, walk, or take public transportation locally, rather than drive daily and suffer a long commute (which is also less environmentally sustainable). 5.RHNA Obligation: ADUs can provide a mechanism to meet our required RHNA housing numbers with minimal impacts on our community. ADUs present minimal impact to neighborhoods, retaining the physical character of a neighborhood while strengthening its social character. We have committed in our housing element to consider this issue and to have conducted a study of this issue no later than November 10, 2017. Given escalating rents and the current housing crisis, we should start this process now. Resource Impact The City Manager reports that this project will be an addition to the Planning and Attorney’s staff work plans. We will keep Council informed on the schedule and progress on the project. (It is recognized, as the Colleague’s Memo states, that this task has already been committed to by prior Council action). Summary of Public Comments • General support for ADUs and JADUs to provide economic and population diversity, especially the young and seniors. • Support for proposed changes and request that City study options for greater increase • Some support for reduction or elimination of parking requirement • Request that garage conversions be expedited • Request for more flexibility, including floor area • Some support to reduce minimum qualifying lot size from 35 to 20%, but not floor area • Support for removal of minimum size threshold • City should minimize negative impacts • Need to consider impacts traffic, privacy noise, shopping, services • Concern about definition of transit relative to bus for parking reduction qualification • Some advocated expanding transit definition for greater parking reductions • Concern about parking impacts and proposed parking reductions • Afraid about disproportionate increase in ADUs in midtown and South Palo Alto • Concern about garage ADU conversions near property lines and impacts on privacy. • Concern for loss of trees • Concern about short term rentals and enforcement of 30 day minimum term • Need to improve transparency and provide for appeal process, especially if ministerial • League of Women Voters expressed support for increasing density of single family areas to expand diversity at all economic levels. Also support JADU and reduction in parking. Request that City look at other options to increase ADU • Sierra Club and Audubon Society support streamlining and increase in housing. But concern about removal of trees and reduction of canopy. Request for transparency and ability to appeal tree removals Attachment D ADU MAP (This map will be released for late packet the week of January 39, 2017) 19639 Map will follow. Page 1 SB 1069 Page 1 SB-1069 Land use: zoning. (2015-2016) SECTION 1. Section 65582.1 of the Government Code is amended to read: 65582.1. The Legislature finds and declares that it has provided reforms and incentives to facilitate and expedite the construction of affordable housing. Those reforms and incentives can be found in the following provisions: (a) Housing element law (Article 10.6 (commencing with Section 65580) of Chapter 3). (b) Extension of statute of limitations in actions challenging the housing element and brought in support of affordable housing (subdivision (d) of Section 65009). (c) Restrictions on disapproval of housing developments (Section 65589.5). (d) Priority for affordable housing in the allocation of water and sewer hookups (Section 65589.7). (e) Least cost zoning law (Section 65913.1). (f) Density bonus law (Section 65915). (g) Second Accessory dwelling units (Sections 65852.150 and 65852.2). (h) By-right housing, in which certain multifamily housing are designated a permitted use (Section 65589.4). (i) No-net-loss-in zoning density law limiting downzonings and density reductions (Section 65863). (j) Requiring persons who sue to halt affordable housing to pay attorney fees (Section 65914) or post a bond (Section 529.2 of the Code of Civil Procedure). (k) Reduced time for action on affordable housing applications under the approval of development permits process (Article 5 (commencing with Section 65950) of Chapter 4.5). (l) Limiting moratoriums on multifamily housing (Section 65858). (m) Prohibiting discrimination against affordable housing (Section 65008). (n) California Fair Employment and Housing Act (Part 2.8 (commencing with Section 12900) of Division 3). (o) Community redevelopment law (Part 1 (commencing with Section 33000) of Division 24 of the Health and Safety Code, and in particular Sections 33334.2 and 33413). SEC. 2. SB 1069 Page 2 Section 65583.1 of the Government Code is amended to read: 65583.1. (a) The Department of Housing and Community Development, in evaluating a proposed or adopted housing element for substantial compliance with this article, may allow a city or county to identify adequate sites, as required pursuant to Section 65583, by a variety of methods, including, but not limited to, redesignation of property to a more intense land use category and increasing the density allowed within one or more categories. The department may also allow a city or county to identify sites for second accessory dwelling units based on the number of second accessory dwelling units developed in the prior housing element planning period whether or not the units are permitted by right, the need for these units in the community, the resources or incentives available for their development, and any other relevant factors, as determined by the department. Nothing in this section reduces the responsibility of a city or county to identify, by income category, the total number of sites for residential development as required by this article. (b) Sites that contain permanent housing units located on a military base undergoing closure or conversion as a result of action pursuant to the Defense Authorization Amendments and Base Closure and Realignment Act (Public Law 100-526), the Defense Base Closure and Realignment Act of 1990 (Public Law 101-510), or any subsequent act requiring the closure or conversion of a military base may be identified as an adequate site if the housing element demonstrates that the housing units will be available for occupancy by households within the planning period of the element. No sites containing housing units scheduled or planned for demolition or conversion to nonresidential uses shall qualify as an adequate site. Any city, city and county, or county using this subdivision shall address the progress in meeting this section in the reports provided pursuant to paragraph (1) of subdivision (b) of Section 65400. (c) (1) The Department of Housing and Community Development may allow a city or county to substitute the provision of units for up to 25 percent of the community’s obligation to identify adequate sites for any income category in its housing element pursuant to paragraph (1) of subdivision (c) of Section 65583 where the community includes in its housing element a program committing the local government to provide units in that income category within the city or county that will be made available through the provision of committed assistance during the planning period covered by the element to low- and very low income households at affordable housing costs or affordable rents, as defined in Sections 50052.5 and 50053 of the Health and Safety Code, and which meet the requirements of paragraph (2). Except as otherwise provided in this subdivision, the community may substitute one dwelling unit for one dwelling unit site in the applicable income category. The program shall do all of the following: (A) Identify the specific, existing sources of committed assistance and dedicate a specific portion of the funds from those sources to the provision of housing pursuant to this subdivision. SB 1069 Page 3 (B) Indicate the number of units that will be provided to both low- and very low income households and demonstrate that the amount of dedicated funds is sufficient to develop the units at affordable housing costs or affordable rents. (C) Demonstrate that the units meet the requirements of paragraph (2). (2) Only units that comply with subparagraph (A), (B), or (C) qualify for inclusion in the housing element program described in paragraph (1), as follows: (A) Units that are to be substantially rehabilitated with committed assistance from the city or county and constitute a net increase in the community’s stock of housing affordable to low- and very low income households. For purposes of this subparagraph, a unit is not eligible to be “substantially rehabilitated” unless all of the following requirements are met: (i) At the time the unit is identified for substantial rehabilitation, (I) the local government has determined that the unit is at imminent risk of loss to the housing stock, (II) the local government has committed to provide relocation assistance pursuant to Chapter 16 (commencing with Section 7260) of Division 7 of Title 1 to any occupants temporarily or permanently displaced by the rehabilitation or code enforcement activity, or the relocation is otherwise provided prior to displacement either as a condition of receivership, or provided by the property owner or the local government pursuant to Article 2.5 (commencing with Section 17975) of Chapter 5 of Part 1.5 of Division 13 of the Health and Safety Code, or as otherwise provided by local ordinance; provided the assistance includes not less than the equivalent of four months’ rent and moving expenses and comparable replacement housing consistent with the moving expenses and comparable replacement housing required pursuant to Section 7260, (III) the local government requires that any displaced occupants will have the right to reoccupy the rehabilitated units, and (IV) the unit has been found by the local government or a court to be unfit for human habitation due to the existence of at least four violations of the conditions listed in subdivisions (a) to (g), inclusive, of Section 17995.3 of the Health and Safety Code. (ii) The rehabilitated unit will have long-term affordability covenants and restrictions that require the unit to be available to, and occupied by, persons or families of low- or very low income at affordable housing costs for at least 20 years or the time period required by any applicable federal or state law or regulation. (iii) Prior to initial occupancy after rehabilitation, the local code enforcement agency shall issue a certificate of occupancy indicating compliance with all applicable state and local building code and health and safety code requirements. (B) Units that are located either on foreclosed property or in a multifamily rental or ownership housing complex of three or more units, are converted with committed assistance from the city or county from nonaffordable to affordable by acquisition of the unit or the purchase of affordability covenants and restrictions for the unit, are not acquired by eminent domain, and constitute a net increase in the community’s stock of housing affordable to low- and very low income households. For purposes of this subparagraph, a unit is not converted by acquisition or the purchase of affordability covenants unless all of the following occur: SB 1069 Page 4 (i) The unit is made available for rent at a cost affordable to low- or very low income households. (ii) At the time the unit is identified for acquisition, the unit is not available at an affordable housing cost to either of the following: (I) Low-income households, if the unit will be made affordable to low-income households. (II) Very low income households, if the unit will be made affordable to very low income households. (iii) At the time the unit is identified for acquisition the unit is not occupied by low- or very low income households or if the acquired unit is occupied, the local government has committed to provide relocation assistance prior to displacement, if any, pursuant to Chapter 16 (commencing with Section 7260) of Division 7 of Title 1 to any occupants displaced by the conversion, or the relocation is otherwise provided prior to displacement; provided the assistance includes not less than the equivalent of four months’ rent and moving expenses and comparable replacement housing consistent with the moving expenses and comparable replacement housing required pursuant to Section 7260. (iv) The unit is in decent, safe, and sanitary condition at the time of occupancy. (v) The unit has long-term affordability covenants and restrictions that require the unit to be affordable to persons of low- or very low income for not less than 55 years. (vi) For units located in multifamily ownership housing complexes with three or more units, or on or after January 1, 2015, on foreclosed properties, at least an equal number of new- construction multifamily rental units affordable to lower income households have been constructed in the city or county within the same planning period as the number of ownership units to be converted. (C) Units that will be preserved at affordable housing costs to persons or families of low- or very low incomes with committed assistance from the city or county by acquisition of the unit or the purchase of affordability covenants for the unit. For purposes of this subparagraph, a unit shall not be deemed preserved unless all of the following occur: (i) The unit has long-term affordability covenants and restrictions that require the unit to be affordable to, and reserved for occupancy by, persons of the same or lower income group as the current occupants for a period of at least 40 years. (ii) The unit is within an “assisted housing development,” as defined in paragraph (3) of subdivision (a) of Section 65863.10. (iii) The city or county finds, after a public hearing, that the unit is eligible, and is reasonably expected, to change from housing affordable to low- and very low income households to any other use during the next five years due to termination of subsidy contracts, mortgage prepayment, or expiration of restrictions on use. SB 1069 Page 5 (iv) The unit is in decent, safe, and sanitary condition at the time of occupancy. (v) At the time the unit is identified for preservation it is available at affordable cost to persons or families of low- or very low income. (3) This subdivision does not apply to any city or county that, during the current or immediately prior planning period, as defined by Section 65588, has not met any of its share of the regional need for affordable housing, as defined in Section 65584, for low- and very low income households. A city or county shall document for any housing unit that a building permit has been issued and all development and permit fees have been paid or the unit is eligible to be lawfully occupied. (4) For purposes of this subdivision, “committed assistance” means that the city or county enters into a legally enforceable agreement during the period from the beginning of the projection period until the end of the second year of the planning period that obligates sufficient available funds to provide the assistance necessary to make the identified units affordable and that requires that the units be made available for occupancy within two years of the execution of the agreement. “Committed assistance” does not include tenant-based rental assistance. (5) For purposes of this subdivision, “net increase” includes only housing units provided committed assistance pursuant to subparagraph (A) or (B) of paragraph (2) in the current planning period, as defined in Section 65588, that were not provided committed assistance in the immediately prior planning period. (6) For purposes of this subdivision, “the time the unit is identified” means the earliest time when any city or county agent, acting on behalf of a public entity, has proposed in writing or has proposed orally or in writing to the property owner, that the unit be considered for substantial rehabilitation, acquisition, or preservation. (7) In the third year of the planning period, as defined by Section 65588, in the report required pursuant to Section 65400, each city or county that has included in its housing element a program to provide units pursuant to subparagraph (A), (B), or (C) of paragraph (2) shall report in writing to the legislative body, and to the department within 30 days of making its report to the legislative body, on its progress in providing units pursuant to this subdivision. The report shall identify the specific units for which committed assistance has been provided or which have been made available to low- and very low income households, and it shall adequately document how each unit complies with this subdivision. If, by July 1 of the third year of the planning period, the city or county has not entered into an enforceable agreement of committed assistance for all units specified in the programs adopted pursuant to subparagraph (A), (B), or (C) of paragraph (2), the city or county shall, not later than July 1 of the fourth year of the planning period, adopt an amended housing element in accordance with Section 65585, identifying additional adequate sites pursuant to paragraph (1) of subdivision (c) of Section 65583 sufficient to accommodate the number of units for which committed assistance was not provided. If a city or county does not amend its housing element to identify adequate sites to address any shortfall, or fails to complete the rehabilitation, acquisition, purchase of SB 1069 Page 6 affordability covenants, or the preservation of any housing unit within two years after committed assistance was provided to that unit, it shall be prohibited from identifying units pursuant to subparagraph (A), (B), or (C) of paragraph (2) in the housing element that it adopts for the next planning period, as defined in Section 65588, above the number of units actually provided or preserved due to committed assistance. (d) A city or county may reduce its share of the regional housing need by the number of units built between the start of the projection period and the deadline for adoption of the housing element. If the city or county reduces its share pursuant to this subdivision, the city or county shall include in the housing element a description of the methodology for assigning those housing units to an income category based on actual or projected sales price, rent levels, or other mechanisms establishing affordability. SEC. 3. Section 65589.4 of the Government Code is amended to read: 65589.4. (a) An attached housing development shall be a permitted use not subject to a conditional use permit on any parcel zoned for an attached housing development if local law so provides or if it satisfies the requirements of subdivision (b) and either of the following: (1) The attached housing development satisfies the criteria of Section 21159.22, 21159.23, or 21159.24 of the Public Resources Code. (2) The attached housing development meets all of the following criteria: (A) The attached housing development is subject to a discretionary decision other than a conditional use permit and a negative declaration or mitigated negative declaration has been adopted for the attached housing development under the California Environmental Quality Act (Division 13 (commencing with Section 21000) of the Public Resources Code). If no public hearing is held with respect to the discretionary decision, then the negative declaration or mitigated negative declaration for the attached housing development may be adopted only after a public hearing to receive comments on the negative declaration or mitigated negative declaration. (B) The attached housing development is consistent with both the jurisdiction’s zoning ordinance and general plan as it existed on the date the application was deemed complete, except that an attached housing development shall not be deemed to be inconsistent with the zoning designation for the site if that zoning designation is inconsistent with the general plan only because the attached housing development site has not been rezoned to conform with the most recent adopted general plan. (C) The attached housing development is located in an area that is covered by one of the following documents that has been adopted by the jurisdiction within five years of the date the application for the attached housing development was deemed complete: SB 1069 Page 7 (i) A general plan. (ii) A revision or update to the general plan that includes at least the land use and circulation elements. (iii) An applicable community plan. (iv) An applicable specific plan. (D) The attached housing development consists of not more than 100 residential units with a minimum density of not less than 12 units per acre or a minimum density of not less than eight units per acre if the attached housing development consists of four or fewer units. (E) The attached housing development is located in an urbanized area as defined in Section 21071 of the Public Resources Code or within a census-defined place with a population density of at least 5,000 persons per square mile or, if the attached housing development consists of 50 or fewer units, within an incorporated city with a population density of at least 2,500 persons per square mile and a total population of at least 25,000 persons. (F) The attached housing development is located on an infill site as defined in Section 21061.0.5 of the Public Resources Code. (b) At least 10 percent of the units of the attached housing development shall be available at affordable housing cost to very low income households, as defined in Section 50105 of the Health and Safety Code, or at least 20 percent of the units of the attached housing development shall be available at affordable housing cost to lower income households, as defined in Section 50079.5 of the Health and Safety Code, or at least 50 percent of the units of the attached housing development available at affordable housing cost to moderate-income households, consistent with Section 50052.5 of the Health and Safety Code. The developer of the attached housing development shall provide sufficient legal commitments to the local agency to ensure the continued availability and use of the housing units for very low, low-, or moderate-income households for a period of at least 30 years. (c) Nothing in this section shall prohibit a local agency from applying design and site review standards in existence on the date the application was deemed complete. (d) The provisions of this section are independent of any obligation of a jurisdiction pursuant to subdivision (c) of Section 65583 to identify multifamily sites developable by right. (e) This section does not apply to the issuance of coastal development permits pursuant to the California Coastal Act (Division 20 (commencing with Section 30000) of the Public Resources Code). (f) This section does not relieve a public agency from complying with the California Environmental Quality Act (Division 13 (commencing with Section 21000) of the Public Resources Code) or relieve an applicant or public agency from complying with the Subdivision Map Act (Division 2 (commencing with Section 66473)). SB 1069 Page 8 (g) This section is applicable to all cities and counties, including charter cities, because the Legislature finds that the lack of affordable housing is of vital statewide importance, and thus a matter of statewide concern. (h) For purposes of this section, “attached housing development” means a newly constructed or substantially rehabilitated structure containing two or more dwelling units and consisting only of residential units, but does not include a second an accessory dwelling unit, as defined by paragraph (4) of subdivision (h) (j) of Section 65852.2, or the conversion of an existing structure to condominiums. SEC. 4. Section 65852.150 of the Government Code is amended to read: 65852.150. (a) The Legislature finds and declares all of the following: (1) Accessory dwelling units are a valuable form of housing in California. The (2) Legislature finds and declares that second units are a valuable form of housing in California. Second units Accessory dwelling units provide housing for family members, students, the elderly, in-home health care providers, the disabled, and others, at below market prices within existing neighborhoods. Homeowners who create second units benefit from added income, and an increased sense of security. (3) Homeowners who create accessory dwelling units benefit from added income, and an increased sense of security. (4) Allowing accessory dwelling units in single-family or multifamily residential zones provides additional rental housing stock in California. (5) California faces a severe housing crisis. (6) The state is falling far short of meeting current and future housing demand with serious consequences for the state’s economy, our ability to build green infill consistent with state greenhouse gas reduction goals, and the well-being of our citizens, particularly lower and middle-income earners. (7) Accessory dwelling units offer lower cost housing to meet the needs of existing and future residents within existing neighborhoods, while respecting architectural character. (8) Accessory dwelling units are, therefore, an essential component of California’s housing supply. (b) It is the intent of the Legislature that any second-unit ordinances an accessory dwelling unit ordinance adopted by a local agencies have agency has the effect of providing for the creation of second accessory dwelling units and that provisions in these ordinances this ordinance relating to matters including unit size, parking, fees fees, and other requirements, SB 1069 Page 9 are not so arbitrary, excessive, or burdensome so as to unreasonably restrict the ability of homeowners to create second accessory dwelling units in zones in which they are authorized by local ordinance. SEC. 5. Section 65852.2 of the Government Code is amended to read: 65852.2. (a) (1) Any A local agency may, by ordinance, provide for the creation of second accessory dwelling units in single-family and multifamily residential zones. The ordinance may shall do any all of the following: (A) Designate areas within the jurisdiction of the local agency where second accessory dwelling units may be permitted. The designation of areas may be based on criteria, that may include, but are not limited to, the adequacy of water and sewer services and the impact of second accessory dwelling units on traffic flow. flow and public safety. (B) Impose standards on second accessory dwelling units that include, but are not limited to, parking, height, setback, lot coverage, architectural review, maximum size of a unit, and standards that prevent adverse impacts on any real property that is listed in the California Register of Historic Places. (C) Provide that second accessory dwelling units do not exceed the allowable density for the lot upon which the second accessory dwelling unit is located, and that second accessory dwelling units are a residential use that is consistent with the existing general plan and zoning designation for the lot. (2) The ordinance shall not be considered in the application of any local ordinance, policy, or program to limit residential growth. (3) When a local agency receives its first application on or after July 1, 2003, for a permit pursuant to this subdivision, the application shall be considered ministerially without discretionary review or a hearing, notwithstanding Section 65901 or 65906 or any local ordinance regulating the issuance of variances or special use permits. Nothing in this paragraph may be construed to require a local government to adopt or amend an ordinance for the creation of second units. permits, within 120 days of submittal of a complete building permit application. A local agency may charge a fee to reimburse it for costs that it incurs as a result of amendments to this paragraph enacted during the 2001–02 Regular Session of the Legislature, including the costs of adopting or amending any ordinance that provides for the creation of second accessory dwelling units. (b) (1) When a local agency which that has not adopted an ordinance governing second accessory dwelling units in accordance with subdivision (a) or (c) receives its first application on or after July 1, 1983, for a permit pursuant to this subdivision, the local agency shall accept the application and approve or disapprove the application ministerially without discretionary review pursuant to this subdivision unless it adopts an ordinance in accordance SB 1069 Page 10 with subdivision (a) or (c) within 120 days after receiving the application. Notwithstanding Section 65901 or 65906, every local agency shall grant a variance or special use permit for ministerially approve the creation of a second an accessory dwelling unit if the second accessory dwelling unit complies with all of the following: (A) The unit is not intended for sale separate from the primary residence and may be rented. (B) The lot is zoned for single-family or multifamily use. (C) The lot contains an existing single-family dwelling. (D) The second accessory dwelling unit is either attached to the existing dwelling and located within the living area of the existing dwelling or detached from the existing dwelling and located on the same lot as the existing dwelling. (E) The increased floor area of an attached second accessory dwelling unit shall not exceed 30 50 percent of the existing living area. area, with a maximum increase in floor area of 1,200 square feet. (F) The total area of floorspace for a detached second accessory dwelling unit shall not exceed 1,200 square feet. (G) Requirements relating to height, setback, lot coverage, architectural review, site plan review, fees, charges, and other zoning requirements generally applicable to residential construction in the zone in which the property is located. (H) Local building code requirements which that apply to detached dwellings, as appropriate. (I) Approval by the local health officer where a private sewage disposal system is being used, if required. (2) No other local ordinance, policy, or regulation shall be the basis for the denial of a building permit or a use permit under this subdivision. (3) This subdivision establishes the maximum standards that local agencies shall use to evaluate proposed second accessory dwelling units on lots zoned for residential use which that contain an existing single-family dwelling. No additional standards, other than those provided in this subdivision or subdivision (a), shall be utilized or imposed, except that a local agency may require an applicant for a permit issued pursuant to this subdivision to be an owner- occupant. owner-occupant or that the property be used for rentals of terms longer than 30 days. (4) No changes in zoning ordinances or other ordinances or any changes in the general plan shall be required to implement this subdivision. Any A local agency may amend its zoning ordinance or general plan to incorporate the policies, procedures, or other provisions applicable to the creation of second accessory dwelling units if these provisions are consistent with the limitations of this subdivision. SB 1069 Page 11 (5) A second unit which conforms to the requirements of An accessory dwelling unit that conforms to this subdivision shall not be considered to exceed the allowable density for the lot upon which it is located, and shall be deemed to be a residential use which that is consistent with the existing general plan and zoning designations for the lot. The second accessory dwelling units shall not be considered in the application of any local ordinance, policy, or program to limit residential growth. (c) No local agency shall adopt an ordinance which totally precludes second units within single- family or multifamily zoned areas unless the ordinance contains findings acknowledging that the ordinance may limit housing opportunities of the region and further contains findings that specific adverse impacts on the public health, safety, and welfare that would result from allowing second units within single-family and multifamily zoned areas justify adopting the ordinance. (d) (c) A local agency may establish minimum and maximum unit size requirements for both attached and detached second accessory dwelling units. No minimum or maximum size for a second an accessory dwelling unit, or size based upon a percentage of the existing dwelling, shall be established by ordinance for either attached or detached dwellings which that does not otherwise permit at least an efficiency unit to be constructed in compliance with local development standards. Accessory dwelling units shall not be required to provide fire sprinklers if they are not required for the primary residence. (e) (d) Parking requirements for second accessory dwelling units shall not exceed one parking space per unit or per bedroom. Additional parking These spaces may be required provided that a finding is made that the additional parking requirements are directly related to the use of the second unit and are consistent with existing neighborhood standards applicable to existing dwellings. provided as tandem parking on an existing driveway. Off-street parking shall be permitted in setback areas in locations determined by the local agency or through tandem parking, unless specific findings are made that parking in setback areas or tandem parking is not feasible based upon specific site or regional topographical or fire and life safety conditions, or that it is not permitted anywhere else in the jurisdiction. conditions. This subdivision shall not apply to a unit that is described in subdivision (e). (e) Notwithstanding any other law, a local agency, whether or not it has adopted an ordinance governing accessory dwelling units in accordance with subdivision (a), shall not impose parking standards for an accessory dwelling unit in any of the following instances: (1) The accessory dwelling unit is located within one-half mile of public transit. (2) The accessory dwelling unit is located within an architecturally and historically significant historic district. (3) The accessory dwelling unit is part of the existing primary residence or an existing accessory structure. SB 1069 Page 12 (4) When on-street parking permits are required but not offered to the occupant of the accessory dwelling unit. (5) When there is a car share vehicle located within one block of the accessory dwelling unit. (f) Notwithstanding subdivisions (a) to (e), inclusive, a local agency shall ministerially approve an application for a building permit to create within a single-family residential zone one accessory dwelling unit per single-family lot if the unit is contained within the existing space of a single-family residence or accessory structure, has independent exterior access from the existing residence, and the side and rear setbacks are sufficient for fire safety. Accessory dwelling units shall not be required to provide fire sprinklers if they are not required for the primary residence. (f) (g) (1) Fees charged for the construction of second accessory dwelling units shall be determined in accordance with Chapter 5 (commencing with Section 66000). 66000) and Chapter 7 (commencing with Section 66012). (2) Accessory dwelling units shall not be considered new residential uses for the purposes of calculating local agency connection fees or capacity charges for utilities, including water and sewer service. (A) For an accessory dwelling unit described in subdivision (f), a local agency shall not require the applicant to install a new or separate utility connection directly between the accessory dwelling unit and the utility or impose a related connection fee or capacity charge. (B) For an accessory dwelling unit that is not described in subdivision (f), a local agency may require a new or separate utility connection directly between the accessory dwelling unit and the utility. Consistent with Section 66013, the connection may be subject to a connection fee or capacity charge that shall be proportionate to the burden of the proposed accessory dwelling unit, based upon either its size or the number of its plumbing fixtures, upon the water or sewer system. This fee or charge shall not exceed the reasonable cost of providing this service. (g) (h) This section does not limit the authority of local agencies to adopt less restrictive requirements for the creation of second accessory dwelling units. (h) (i) Local agencies shall submit a copy of the ordinances adopted pursuant to subdivision (a) or (c) to the Department of Housing and Community Development within 60 days after adoption. (i) (j) As used in this section, the following terms mean: (1) “Living area,” area” means the interior habitable area of a dwelling unit including basements and attics but does not include a garage or any accessory structure. (2) “Local agency” means a city, county, or city and county, whether general law or chartered. (3) For purposes of this section, “neighborhood” has the same meaning as set forth in Section 65589.5. SB 1069 Page 13 (4) “Second “Accessory dwelling unit” means an attached or a detached residential dwelling unit which provides complete independent living facilities for one or more persons. It shall include permanent provisions for living, sleeping, eating, cooking, and sanitation on the same parcel as the single-family dwelling is situated. A second An accessory dwelling unit also includes the following: (A) An efficiency unit, as defined in Section 17958.1 of Health and Safety Code. (B) A manufactured home, as defined in Section 18007 of the Health and Safety Code. (j) (k) Nothing in this section shall be construed to supersede or in any way alter or lessen the effect or application of the California Coastal Act (Division 20 (commencing with Section 30000) of the Public Resources Code), except that the local government shall not be required to hold public hearings for coastal development permit applications for second accessory dwelling units. SEC. 5.5. Section 65852.2 of the Government Code is amended to read: 65852.2. (a) (1) Any A local agency may, by ordinance, provide for the creation of second accessory dwelling units in single-family and multifamily residential zones. The ordinance may shall do any all of the following: (A) Designate areas within the jurisdiction of the local agency where second accessory dwelling units may be permitted. The designation of areas may be based on criteria, that may include, but are not limited to, the adequacy of water and sewer services and the impact of second accessory dwelling units on traffic flow. flow and public safety. (B) (i) Impose standards on second accessory dwelling units that include, but are not limited to, parking, height, setback, lot coverage, landscape, architectural review, maximum size of a unit, and standards that prevent adverse impacts on any real property that is listed in the California Register of Historic Places. (ii) Notwithstanding clause (i), a local agency may reduce or eliminate parking requirements for any accessory dwelling unit located within its jurisdiction. (C) Provide that second accessory dwelling units do not exceed the allowable density for the lot upon which the second accessory dwelling unit is located, and that second accessory dwelling units are a residential use that is consistent with the existing general plan and zoning designation for the lot. (D) Require the accessory dwelling units to comply with all of the following: (i) The unit is not intended for sale separate from the primary residence and may be rented. SB 1069 Page 14 (ii) The lot is zoned for single-family or multifamily use and contains an existing, single-family dwelling. (iii) The accessory dwelling unit is either attached to the existing dwelling or located within the living area of the existing dwelling or detached from the existing dwelling and located on the same lot as the existing dwelling. (iv) The increased floor area of an attached accessory dwelling unit shall not exceed 50 percent of the existing living area, with a maximum increase in floor area of 1,200 square feet. (v) The total area of floorspace for a detached accessory dwelling unit shall not exceed 1,200 square feet. (vi) No passageway shall be required in conjunction with the construction of an accessory dwelling unit. (vii) No setback shall be required for an existing garage that is converted to a accessory dwelling unit, and a setback of no more than five feet from the side and rear lot lines shall be required for an accessory dwelling unit that is constructed above a garage. (viii) Local building code requirements that apply to detached dwellings, as appropriate. (ix) Approval by the local health officer where a private sewage disposal system is being used, if required. (x) (I) Parking requirements for accessory dwelling units shall not exceed one parking space per unit or per bedroom. These spaces may be provided as tandem parking on an existing driveway. (II) Offstreet parking shall be permitted in setback areas in locations determined by the local agency or through tandem parking, unless specific findings are made that parking in setback areas or tandem parking is not feasible based upon specific site or regional topographical or fire and life safety conditions, or that it is not permitted anywhere else in the jurisdiction. (III) This clause shall not apply to a unit that is described in subdivision (d). (xi) When a garage, carport, or covered parking structure is demolished in conjunction with the construction of an accessory dwelling unit, and the local agency requires that those offstreet parking spaces be replaced, the replacement spaces may be located in any configuration on the same lot as the accessory dwelling unit, including, but not limited to, as covered spaces, uncovered spaces, or tandem spaces, or by the use of mechanical automobile parking lifts. This clause shall not apply to a unit that is described in subdivision (d). (2) The ordinance shall not be considered in the application of any local ordinance, policy, or program to limit residential growth. (3) When a local agency receives its first application on or after July 1, 2003, for a permit pursuant to this subdivision, the application shall be considered ministerially without discretionary review or a hearing, notwithstanding Section 65901 or 65906 or any local SB 1069 Page 15 ordinance regulating the issuance of variances or special use permits. Nothing in this paragraph may be construed to require a local government to adopt or amend an ordinance for the creation of second units. permits, within 120 days after receiving the application. A local agency may charge a fee to reimburse it for costs that it incurs as a result of amendments to this paragraph enacted during the 2001–02 Regular Session of the Legislature, including the costs of adopting or amending any ordinance that provides for the creation of second units. an accessory dwelling unit. (b) (4) (1) An When existing ordinance governing the creation of an accessory dwelling unit by a local agency which has not adopted an ordinance governing second units in accordance with subdivision (a) or (c) receives its first application on or after July 1, 1983, for a permit pursuant to this subdivision, the local agency shall accept the application and approve or disapprove the application ministerially without discretionary review pursuant to this subdivision unless it or an accessory dwelling ordinance adopted by a local agency subsequent to the effective date of the act adding this paragraph shall provide an approval process that includes only ministerial provisions for the approval of accessory dwelling units and shall not include any discretionary processes, provisions, or requirements for those units, except as otherwise provided in this subdivision. In the event that a local agency has an existing accessory dwelling unit ordinance that fails to meet the requirements of this subdivision, that ordinance shall be null and void upon the effective date of the act adding this paragraph and that agency shall thereafter apply the standards established in this subdivision for the approval of accessory dwelling units, unless and until the agency adopts an ordinance in accordance with subdivision (a) or (c) within 120 days after receiving the application. Notwithstanding Section 65901 or 65906, every local agency shall grant a variance or special use permit for the creation of a second unit if the second unit complies with all of the following: that complies with this section. (A) The unit is not intended for sale and may be rented. (B) The lot is zoned for single-family or multifamily use. (C) The lot contains an existing single-family dwelling. (D) The second unit is either attached to the existing dwelling and located within the living area of the existing dwelling or detached from the existing dwelling and located on the same lot as the existing dwelling. (E) The increased floor area of an attached second unit shall not exceed 30 percent of the existing living area. (F) The total area of floorspace for a detached second unit shall not exceed 1,200 square feet. (G) Requirements relating to height, setback, lot coverage, architectural review, site plan review, fees, charges, and other zoning requirements generally applicable to residential construction in the zone in which the property is located. (H) Local building code requirements which apply to detached dwellings, as appropriate. SB 1069 Page 16 (I) Approval by the local health officer where a private sewage disposal system is being used, if required. (2) (5) No other local ordinance, policy, or regulation shall be the basis for the denial of a building permit or a use permit under this subdivision. (3) (6) This subdivision establishes the maximum standards that local agencies shall use to evaluate proposed second units on lots a proposed accessory dwelling unit on a lot zoned for residential use which contain that contains an existing single-family dwelling. No additional standards, other than those provided in this subdivision or subdivision (a), subdivision, shall be utilized or imposed, except that a local agency may require an applicant for a permit issued pursuant to this subdivision to be an owner-occupant. owner-occupant or that the property be used for rentals of terms longer than 30 days. (4) (7) No changes in zoning ordinances or other ordinances or any changes in the general plan shall be required to implement this subdivision. Any A local agency may amend its zoning ordinance or general plan to incorporate the policies, procedures, or other provisions applicable to the creation of second units an accessory dwelling unit if these provisions are consistent with the limitations of this subdivision. (5) (8) A second unit which conforms to the requirements of An accessory dwelling unit that conforms to this subdivision shall be deemed to be an accessory use or an accessory building and shall not be considered to exceed the allowable density for the lot upon which it is located, and shall be deemed to be a residential use which that is consistent with the existing general plan and zoning designations for the lot. The second units accessory dwelling unit shall not be considered in the application of any local ordinance, policy, or program to limit residential growth. (c) (b) No When a local agency shall adopt an ordinance which totally precludes second units within single-family or multifamily zoned areas unless the ordinance contains findings acknowledging that the ordinance may limit housing opportunities of the region and further contains findings that specific adverse impacts on the public health, safety, and welfare that would result from allowing second units within single-family and multifamily zoned areas justify adopting the ordinance. that has not adopted an ordinance governing accessory dwelling units in accordance with subdivision (a) receives its first application on or after July 1, 1983, for a permit to create an accessory dwelling unit pursuant to this subdivision, the local agency shall accept the application and approve or disapprove the application ministerially without discretionary review pursuant to subdivision (a) within 120 days after receiving the application. (d) (c) A local agency may establish minimum and maximum unit size requirements for both attached and detached second accessory dwelling units. No minimum or maximum size for a second an accessory dwelling unit, or size based upon a percentage of the existing dwelling, shall be established by ordinance for either attached or detached dwellings which that does not permit at least an efficiency unit to be constructed in compliance with local development standards. Accessory dwelling units shall not be required to provide fire sprinklers if they are not required for the primary residence. SB 1069 Page 17 (d) Notwithstanding any other law, a local agency, whether or not it has adopted an ordinance governing accessory dwelling units in accordance with subdivision (a), shall not impose parking standards for an accessory dwelling unit in any of the following instances: (1) The accessory dwelling unit is located within one-half mile of public transit. (2) The accessory dwelling unit is located within an architecturally and historically significant historic district. (3) The accessory dwelling unit is part of the existing primary residence or an existing accessory structure. (4) When on-street parking permits are required but not offered to the occupant of the accessory dwelling unit. (5) When there is a car share vehicle located within one block of the accessory dwelling unit. (e) Parking requirements for second units shall not exceed one parking space per unit or per bedroom. Additional parking may be required provided that a finding is made that the additional parking requirements are directly related to the use of the second unit and are consistent with existing neighborhood standards applicable to existing dwellings. Off-street parking shall be permitted in setback areas in locations determined by the local agency or through tandem parking, unless specific findings are made that parking in setback areas or tandem parking is not feasible based upon specific site or regional topographical or fire and life safety conditions, or that it is not permitted anywhere else in the jurisdiction. Notwithstanding subdivisions (a) to (d), inclusive, a local agency shall ministerially approve an application for a building permit to create within a single-family residential zone one accessory dwelling unit per single-family lot if the unit is contained within the existing space of a single-family residence or accessory structure, has independent exterior access from the existing residence, and the side and rear setbacks are sufficient for fire safety. Accessory dwelling units shall not be required to provide fire sprinklers if they are not required for the primary residence. (f) (1) Fees charged for the construction of second accessory dwelling units shall be determined in accordance with Chapter 5 (commencing with Section 66000). 66000) and Chapter 7 (commencing with Section 66012). (2) Accessory dwelling units shall not be considered new residential uses for the purposes of calculating local agency connection fees or capacity charges for utilities, including water and sewer service. (A) For an accessory dwelling unit described in subdivision (e), a local agency shall not require the applicant to install a new or separate utility connection directly between the accessory dwelling unit and the utility or impose a related connection fee or capacity charge. (B) For an accessory dwelling unit that is not described in subdivision (e), a local agency may require a new or separate utility connection directly between the accessory dwelling unit and the utility. Consistent with Section 66013, the connection may be subject to a connection fee or SB 1069 Page 18 capacity charge that shall be proportionate to the burden of the proposed accessory dwelling unit, based upon either its size or the number of its plumbing fixtures, upon the water or sewer system. This fee or charge shall not exceed the reasonable cost of providing this service. (g) This section does not limit the authority of local agencies to adopt less restrictive requirements for the creation of second units. an accessory dwelling unit. (h) Local agencies shall submit a copy of the ordinances ordinance adopted pursuant to subdivision (a) or (c) to the Department of Housing and Community Development within 60 days after adoption. (i) As used in this section, the following terms mean: (1) “Living area,” area” means the interior habitable area of a dwelling unit including basements and attics but does not include a garage or any accessory structure. (2) “Local agency” means a city, county, or city and county, whether general law or chartered. (3) For purposes of this section, “neighborhood” has the same meaning as set forth in Section 65589.5. (4) “Second “Accessory dwelling unit” means an attached or a detached residential dwelling unit which provides complete independent living facilities for one or more persons. It shall include permanent provisions for living, sleeping, eating, cooking, and sanitation on the same parcel as the single-family dwelling is situated. A second An accessory dwelling unit also includes the following: (A) An efficiency unit, as defined in Section 17958.1 of Health and Safety Code. (B) A manufactured home, as defined in Section 18007 of the Health and Safety Code. (5) “Passageway” means a pathway that is unobstructed clear to the sky and extends from a street to one entrance of the accessory dwelling unit. (j) Nothing in this section shall be construed to supersede or in any way alter or lessen the effect or application of the California Coastal Act (Division 20 (commencing with Section 30000) of the Public Resources Code), except that the local government shall not be required to hold public hearings for coastal development permit applications for second accessory dwelling units. SEC. 6. Section 66412.2 of the Government Code is amended to read: 66412.2. This division shall not apply to the construction, financing, or leasing of dwelling units pursuant to Section 65852.1 or second accessory dwelling units pursuant to Section 65852.2, but this division shall be applicable to the sale or transfer, but not leasing, of those units. SB 1069 Page 19 SEC. 7. Section 5.5 of this bill incorporates amendments to Section 65852.2 of the Government Code proposed by both this bill and Assembly Bill 2299. It shall only become operative if (1) both bills are enacted and become effective on or before January 1, 2017, (2) each bill amends Section 65852.2 of the Government Code, and (3) this bill is enacted after Assembly Bill 2299, in which case Section 5 of this bill shall not become operative. SEC. 8. No reimbursement is required by this act pursuant to Section 6 of Article XIII B of the California Constitution because a local agency or school district has the authority to levy service charges, fees, or assessments sufficient to pay for the program or level of service mandated by this act, within the meaning of Section 17556 of the Government Code. AB 2299 Page 1 AB-2299 Land use: housing: 2nd units. (2015-2016) SECTION 1. Section 65852.2 of the Government Code is amended to read: 65852.2. (a) (1) Any A local agency may, by ordinance, provide for the creation of second accessory dwelling units in single-family and multifamily residential zones. The ordinance may shall do any all of the following: (A) Designate areas within the jurisdiction of the local agency where second accessory dwelling units may be permitted. The designation of areas may be based on criteria, that may include, but are not limited to, the adequacy of water and sewer services and the impact of second accessory dwelling units on traffic flow. flow and public safety. (B) Impose standards on second accessory dwelling units that include, but are not limited to, parking, height, setback, lot coverage, landscape, architectural review, maximum size of a unit, and standards that prevent adverse impacts on any real property that is listed in the California Register of Historic Places. (C) Notwithstanding subparagraph (B), a local agency may reduce or eliminate parking requirements for any accessory dwelling unit located within its jurisdiction. (C) (D) Provide that second accessory dwelling units do not exceed the allowable density for the lot upon which the second accessory dwelling unit is located, and that second accessory dwelling units are a residential use that is consistent with the existing general plan and zoning designation for the lot. (E) Require the accessory dwelling units to comply with all of the following: (i) The unit is not intended for sale separate from the primary residence and may be rented. (ii) The lot is zoned for single-family or multifamily use. (iii) The accessory dwelling unit is either attached to the existing dwelling or located within the living area of the existing dwelling or detached from the existing dwelling and located on the same lot as the existing dwelling. (iv) The increased floor area of an attached accessory dwelling unit shall not exceed 50 percent of the existing living area. (v) The total area of floorspace for a detached accessory dwelling unit shall not exceed 1,200 square feet. (vi) No passageway shall be required in conjunction with the construction of an accessory dwelling unit. AB 2299 Page 2 (vii) No setback shall be required for an existing garage that is converted to a accessory dwelling unit, and a setback of no more than five feet from the side and rear lot lines shall be required for an accessory dwelling unit that is constructed above a garage. (viii) Local building code requirements that apply to detached dwellings, as appropriate. (ix) Approval by the local health officer where a private sewage disposal system is being used, if required. (x) (I) Parking requirements for accessory dwelling units shall not exceed one parking space per unit or per bedroom. These spaces may be provided as tandem parking on an existing driveway. (II) Offstreet parking shall be permitted in setback areas in locations determined by the local agency or through tandem parking, unless specific findings are made that parking in setback areas or tandem parking is not feasible based upon specific site or regional topographical or fire and life safety conditions, or that it is not permitted anywhere else in the jurisdiction. (xi) When a garage, carport, or covered parking structure is demolished in conjunction with the construction of an accessory dwelling unit, and the local agency requires that those offstreet parking spaces be replaced, the replacement spaces may be located in any configuration on the same lot as the accessory dwelling unit, including, but not limited to, as covered spaces, uncovered spaces, or tandem spaces, or by the use of mechanical automobile parking lifts. (2) The ordinance shall not be considered in the application of any local ordinance, policy, or program to limit residential growth. (3) When a local agency receives its first application on or after July 1, 2003, for a permit pursuant to this subdivision, the application shall be considered ministerially without discretionary review or a hearing, notwithstanding Section 65901 or 65906 or any local ordinance regulating the issuance of variances or special use permits. Nothing in this paragraph may be construed to require a local government to adopt or amend an ordinance for the creation of second units. permits, within 120 days after receiving the application. A local agency may charge a fee to reimburse it for costs that it incurs as a result of amendments to this paragraph enacted during the 2001–02 Regular Session of the Legislature, including the costs of adopting or amending any ordinance that provides for the creation of second accessory dwelling units. (b) (4) (1) Any When existing ordinance governing the creation of accessory dwelling units by a local agency which has not adopted an ordinance governing second units in accordance with subdivision (a) or (c) receives its first application on or after July 1, 1983, for a permit pursuant to this subdivision, the local agency shall accept the application and approve or disapprove the application ministerially without discretionary review pursuant to this subdivision unless it or any such ordinance adopted by a local agency subsequent to the effective date of the act adding this paragraph shall provide an approval process that includes only ministerial provisions for the approval of accessory dwelling units and shall not include any discretionary processes, provisions, or requirements for those units except as otherwise provided AB 2299 Page 3 in this subdivision. In the event that a local agency has an existing accessory dwelling unit ordinance that fails to meet the requirements of this subdivision, that ordinance shall be null and void upon the effective date of the act adding this paragraph and that agency shall thereafter apply the standards established in this subdivision for the approval of accessory dwelling units, unless and until the agency adopts an ordinance in accordance with subdivision (a) or (c) within 120 days after receiving the application. Notwithstanding Section 65901 or 65906, every local agency shall grant a variance or special use permit for the creation of a second unit if the second unit complies with all of the following: that complies with this section. (A) The unit is not intended for sale and may be rented. (B) The lot is zoned for single-family or multifamily use. (C) The lot contains an existing single-family dwelling. (D) The second unit is either attached to the existing dwelling and located within the living area of the existing dwelling or detached from the existing dwelling and located on the same lot as the existing dwelling. (E) The increased floor area of an attached second unit shall not exceed 30 percent of the existing living area. (F) The total area of floorspace for a detached second unit shall not exceed 1,200 square feet. (G) Requirements relating to height, setback, lot coverage, architectural review, site plan review, fees, charges, and other zoning requirements generally applicable to residential construction in the zone in which the property is located. (H) Local building code requirements which apply to detached dwellings, as appropriate. (I) Approval by the local health officer where a private sewage disposal system is being used, if required. (2) (5) No other local ordinance, policy, or regulation shall be the basis for the denial of a building permit or a use permit under this subdivision. (3) (6) This subdivision establishes the maximum standards that local agencies shall use to evaluate proposed second accessory dwelling units on lots zoned for residential use which that contain an existing single-family dwelling. No additional standards, other than those provided in this subdivision or subdivision (a), subdivision, shall be utilized or imposed, except that a local agency may require an applicant for a permit issued pursuant to this subdivision to be an owner-occupant. (4) (7) No changes in zoning ordinances or other ordinances or any changes in the general plan shall be required to implement this subdivision. Any A local agency may amend its zoning ordinance or general plan to incorporate the policies, procedures, or other provisions applicable to the creation of second accessory dwelling units if these provisions are consistent with the limitations of this subdivision. AB 2299 Page 4 (5) (8) A second unit which conforms to the requirements of An accessory dwelling unit that conforms to this subdivision shall be deemed to be an accessory use or an accessory building and shall not be considered to exceed the allowable density for the lot upon which it is located, and shall be deemed to be a residential use which that is consistent with the existing general plan and zoning designations for the lot. The second accessory dwelling units shall not be considered in the application of any local ordinance, policy, or program to limit residential growth. (c) (b) No When a local agency shall adopt an ordinance which totally precludes second units within single-family or multifamily zoned areas unless the ordinance contains findings acknowledging that the ordinance may limit housing opportunities of the region and further contains findings that specific adverse impacts on the public health, safety, and welfare that would result from allowing second units within single-family and multifamily zoned areas justify adopting the ordinance. that has not adopted an ordinance governing accessory dwelling units in accordance with subdivision (a) receives its first application on or after July 1, 1983, for a permit pursuant to this subdivision, the local agency shall accept the application and approve or disapprove the application ministerially without discretionary review pursuant to subdivision (a) within 120 days after receiving the application. (d) (c) A local agency may establish minimum and maximum unit size requirements for both attached and detached second accessory dwelling units. No minimum or maximum size for a second accessory dwelling unit, or size based upon a percentage of the existing dwelling, shall be established by ordinance for either attached or detached dwellings which that does not permit at least an efficiency unit to be constructed in compliance with local development standards. (e) Parking requirements for second units shall not exceed one parking space per unit or per bedroom. Additional parking may be required provided that a finding is made that the additional parking requirements are directly related to the use of the second unit and are consistent with existing neighborhood standards applicable to existing dwellings. Off-street parking shall be permitted in setback areas in locations determined by the local agency or through tandem parking, unless specific findings are made that parking in setback areas or tandem parking is not feasible based upon specific site or regional topographical or fire and life safety conditions, or that it is not permitted anywhere else in the jurisdiction. (f) (d) Fees charged for the construction of second accessory dwelling units shall be determined in accordance with Chapter 5 (commencing with Section 66000). (g) (e) This section does not limit the authority of local agencies to adopt less restrictive requirements for the creation of second units. accessory dwelling units, provided those requirements comply with subdivision (a). (h) (f) Local agencies shall submit a copy of the ordinances adopted pursuant to subdivision (a) or (c) to the Department of Housing and Community Development within 60 days after adoption. AB 2299 Page 5 (i) (g) As used in this section, the following terms mean: (1) “Living area,” area” means the interior habitable area of a dwelling unit including basements and attics but does not include a garage or any accessory structure. (2) “Local agency” means a city, county, or city and county, whether general law or chartered. (3) For purposes of this section, “neighborhood” has the same meaning as set forth in Section 65589.5. (4) “Second “Accessory dwelling unit” means an attached or a detached residential dwelling unit which provides complete independent living facilities for one or more persons. It shall include permanent provisions for living, sleeping, eating, cooking, and sanitation on the same parcel as the single-family dwelling is situated. A second An accessory dwelling unit also includes the following: (A) An efficiency unit, as defined in Section 17958.1 of Health and Safety Code. (B) A manufactured home, as defined in Section 18007 of the Health and Safety Code. (C) “Passageway” means a pathway that is unobstructed clear to the sky and extends from a street to one entrance of the accessory dwelling unit. (j) (h) Nothing in this section shall be construed to supersede or in any way alter or lessen the effect or application of the California Coastal Act (Division 20 (commencing with Section 30000) of the Public Resources Code), except that the local government shall not be required to hold public hearings for coastal development permit applications for second accessory dwelling units. SEC. 1.5. Section 65852.2 of the Government Code is amended to read: 65852.2. (a) (1) Any A local agency may, by ordinance, provide for the creation of second accessory dwelling units in single-family and multifamily residential zones. The ordinance may shall do any all of the following: (A) Designate areas within the jurisdiction of the local agency where second accessory dwelling units may be permitted. The designation of areas may be based on criteria, that may include, but are not limited to, the adequacy of water and sewer services and the impact of second accessory dwelling units on traffic flow. flow and public safety. (B) (i) Impose standards on second accessory dwelling units that include, but are not limited to, parking, height, setback, lot coverage, landscape, architectural review, maximum size of a unit, and standards that prevent adverse impacts on any real property that is listed in the California Register of Historic Places. AB 2299 Page 6 (ii) Notwithstanding clause (i), a local agency may reduce or eliminate parking requirements for any accessory dwelling unit located within its jurisdiction. (C) Provide that second accessory dwelling units do not exceed the allowable density for the lot upon which the second accessory dwelling unit is located, and that second accessory dwelling units are a residential use that is consistent with the existing general plan and zoning designation for the lot. (D) Require the accessory dwelling units to comply with all of the following: (i) The unit is not intended for sale separate from the primary residence and may be rented. (ii) The lot is zoned for single-family or multifamily use and contains an existing, single-family dwelling. (iii) The accessory dwelling unit is either attached to the existing dwelling or located within the living area of the existing dwelling or detached from the existing dwelling and located on the same lot as the existing dwelling. (iv) The increased floor area of an attached accessory dwelling unit shall not exceed 50 percent of the existing living area, with a maximum increase in floor area of 1,200 square feet. (v) The total area of floorspace for a detached accessory dwelling unit shall not exceed 1,200 square feet. (vi) No passageway shall be required in conjunction with the construction of an accessory dwelling unit. (vii) No setback shall be required for an existing garage that is converted to a accessory dwelling unit, and a setback of no more than five feet from the side and rear lot lines shall be required for an accessory dwelling unit that is constructed above a garage. (viii) Local building code requirements that apply to detached dwellings, as appropriate. (ix) Approval by the local health officer where a private sewage disposal system is being used, if required. (x) (I) Parking requirements for accessory dwelling units shall not exceed one parking space per unit or per bedroom. These spaces may be provided as tandem parking on an existing driveway. (II) Offstreet parking shall be permitted in setback areas in locations determined by the local agency or through tandem parking, unless specific findings are made that parking in setback areas or tandem parking is not feasible based upon specific site or regional topographical or fire and life safety conditions, or that it is not permitted anywhere else in the jurisdiction. (III) This clause shall not apply to a unit that is described in subdivision (d). AB 2299 Page 7 (xi) When a garage, carport, or covered parking structure is demolished in conjunction with the construction of an accessory dwelling unit, and the local agency requires that those offstreet parking spaces be replaced, the replacement spaces may be located in any configuration on the same lot as the accessory dwelling unit, including, but not limited to, as covered spaces, uncovered spaces, or tandem spaces, or by the use of mechanical automobile parking lifts. This clause shall not apply to a unit that is described in subdivision (d). (2) The ordinance shall not be considered in the application of any local ordinance, policy, or program to limit residential growth. (3) When a local agency receives its first application on or after July 1, 2003, for a permit pursuant to this subdivision, the application shall be considered ministerially without discretionary review or a hearing, notwithstanding Section 65901 or 65906 or any local ordinance regulating the issuance of variances or special use permits. Nothing in this paragraph may be construed to require a local government to adopt or amend an ordinance for the creation of second units. permits, within 120 days after receiving the application. A local agency may charge a fee to reimburse it for costs that it incurs as a result of amendments to this paragraph enacted during the 2001–02 Regular Session of the Legislature, including the costs of adopting or amending any ordinance that provides for the creation of second units. an accessory dwelling unit. (b) (4) (1) An When existing ordinance governing the creation of an accessory dwelling unit by a local agency which has not adopted an ordinance governing second units in accordance with subdivision (a) or (c) receives its first application on or after July 1, 1983, for a permit pursuant to this subdivision, the local agency shall accept the application and approve or disapprove the application ministerially without discretionary review pursuant to this subdivision unless it or an accessory dwelling ordinance adopted by a local agency subsequent to the effective date of the act adding this paragraph shall provide an approval process that includes only ministerial provisions for the approval of accessory dwelling units and shall not include any discretionary processes, provisions, or requirements for those units, except as otherwise provided in this subdivision. In the event that a local agency has an existing accessory dwelling unit ordinance that fails to meet the requirements of this subdivision, that ordinance shall be null and void upon the effective date of the act adding this paragraph and that agency shall thereafter apply the standards established in this subdivision for the approval of accessory dwelling units, unless and until the agency adopts an ordinance in accordance with subdivision (a) or (c) within 120 days after receiving the application. Notwithstanding Section 65901 or 65906, every local agency shall grant a variance or special use permit for the creation of a second unit if the second unit complies with all of the following: that complies with this section. (A) The unit is not intended for sale and may be rented. (B) The lot is zoned for single-family or multifamily use. (C) The lot contains an existing single-family dwelling. AB 2299 Page 8 (D) The second unit is either attached to the existing dwelling and located within the living area of the existing dwelling or detached from the existing dwelling and located on the same lot as the existing dwelling. (E) The increased floor area of an attached second unit shall not exceed 30 percent of the existing living area. (F) The total area of floorspace for a detached second unit shall not exceed 1,200 square feet. (G) Requirements relating to height, setback, lot coverage, architectural review, site plan review, fees, charges, and other zoning requirements generally applicable to residential construction in the zone in which the property is located. (H) Local building code requirements which apply to detached dwellings, as appropriate. (I) Approval by the local health officer where a private sewage disposal system is being used, if required. (2) (5) No other local ordinance, policy, or regulation shall be the basis for the denial of a building permit or a use permit under this subdivision. (3) (6) This subdivision establishes the maximum standards that local agencies shall use to evaluate proposed second units on lots a proposed accessory dwelling unit on a lot zoned for residential use which contain that contains an existing single-family dwelling. No additional standards, other than those provided in this subdivision or subdivision (a), subdivision, shall be utilized or imposed, except that a local agency may require an applicant for a permit issued pursuant to this subdivision to be an owner-occupant. owner-occupant or that the property be used for rentals of terms longer than 30 days. (4) (7) No changes in zoning ordinances or other ordinances or any changes in the general plan shall be required to implement this subdivision. Any A local agency may amend its zoning ordinance or general plan to incorporate the policies, procedures, or other provisions applicable to the creation of second units an accessory dwelling unit if these provisions are consistent with the limitations of this subdivision. (5) (8) A second unit which conforms to the requirements of An accessory dwelling unit that conforms to this subdivision shall be deemed to be an accessory use or an accessory building and shall not be considered to exceed the allowable density for the lot upon which it is located, and shall be deemed to be a residential use which that is consistent with the existing general plan and zoning designations for the lot. The second units accessory dwelling unit shall not be considered in the application of any local ordinance, policy, or program to limit residential growth. (c) (b) No When a local agency shall adopt an ordinance which totally precludes second units within single-family or multifamily zoned areas unless the ordinance contains findings acknowledging that the ordinance may limit housing opportunities of the region and further contains findings that specific adverse impacts on the public health, safety, and welfare that AB 2299 Page 9 would result from allowing second units within single-family and multifamily zoned areas justify adopting the ordinance. that has not adopted an ordinance governing accessory dwelling units in accordance with subdivision (a) receives its first application on or after July 1, 1983, for a permit to create an accessory dwelling unit pursuant to this subdivision, the local agency shall accept the application and approve or disapprove the application ministerially without discretionary review pursuant to subdivision (a) within 120 days after receiving the application. (d) (c) A local agency may establish minimum and maximum unit size requirements for both attached and detached second accessory dwelling units. No minimum or maximum size for a second an accessory dwelling unit, or size based upon a percentage of the existing dwelling, shall be established by ordinance for either attached or detached dwellings which that does not permit at least an efficiency unit to be constructed in compliance with local development standards. Accessory dwelling units shall not be required to provide fire sprinklers if they are not required for the primary residence. (d) Notwithstanding any other law, a local agency, whether or not it has adopted an ordinance governing accessory dwelling units in accordance with subdivision (a), shall not impose parking standards for an accessory dwelling unit in any of the following instances: (1) The accessory dwelling unit is located within one-half mile of public transit. (2) The accessory dwelling unit is located within an architecturally and historically significant historic district. (3) The accessory dwelling unit is part of the existing primary residence or an existing accessory structure. (4) When on-street parking permits are required but not offered to the occupant of the accessory dwelling unit. (5) When there is a car share vehicle located within one block of the accessory dwelling unit. (e) Parking requirements for second units shall not exceed one parking space per unit or per bedroom. Additional parking may be required provided that a finding is made that the additional parking requirements are directly related to the use of the second unit and are consistent with existing neighborhood standards applicable to existing dwellings. Off-street parking shall be permitted in setback areas in locations determined by the local agency or through tandem parking, unless specific findings are made that parking in setback areas or tandem parking is not feasible based upon specific site or regional topographical or fire and life safety conditions, or that it is not permitted anywhere else in the jurisdiction. Notwithstanding subdivisions (a) to (d), inclusive, a local agency shall ministerially approve an application for a building permit to create within a single-family residential zone one accessory dwelling unit per single-family lot if the unit is contained within the existing space of a single-family residence or accessory structure, has independent exterior access from the existing residence, and the side and rear setbacks are sufficient for fire safety. Accessory dwelling units shall not be required to provide fire sprinklers if they are not required for the primary residence. AB 2299 Page 10 (f) (1) Fees charged for the construction of second accessory dwelling units shall be determined in accordance with Chapter 5 (commencing with Section 66000). 66000) and Chapter 7 (commencing with Section 66012). (2) Accessory dwelling units shall not be considered new residential uses for the purposes of calculating local agency connection fees or capacity charges for utilities, including water and sewer service. (A) For an accessory dwelling unit described in subdivision (e), a local agency shall not require the applicant to install a new or separate utility connection directly between the accessory dwelling unit and the utility or impose a related connection fee or capacity charge. (B) For an accessory dwelling unit that is not described in subdivision (e), a local agency may require a new or separate utility connection directly between the accessory dwelling unit and the utility. Consistent with Section 66013, the connection may be subject to a connection fee or capacity charge that shall be proportionate to the burden of the proposed accessory dwelling unit, based upon either its size or the number of its plumbing fixtures, upon the water or sewer system. This fee or charge shall not exceed the reasonable cost of providing this service. (g) This section does not limit the authority of local agencies to adopt less restrictive requirements for the creation of second units. an accessory dwelling unit. (h) Local agencies shall submit a copy of the ordinances ordinance adopted pursuant to subdivision (a) or (c) to the Department of Housing and Community Development within 60 days after adoption. (i) As used in this section, the following terms mean: (1) “Living area,” area” means the interior habitable area of a dwelling unit including basements and attics but does not include a garage or any accessory structure. (2) “Local agency” means a city, county, or city and county, whether general law or chartered. (3) For purposes of this section, “neighborhood” has the same meaning as set forth in Section 65589.5. (4) “Second “Accessory dwelling unit” means an attached or a detached residential dwelling unit which provides complete independent living facilities for one or more persons. It shall include permanent provisions for living, sleeping, eating, cooking, and sanitation on the same parcel as the single-family dwelling is situated. A second An accessory dwelling unit also includes the following: (A) An efficiency unit, as defined in Section 17958.1 of Health and Safety Code. (B) A manufactured home, as defined in Section 18007 of the Health and Safety Code. (5) “Passageway” means a pathway that is unobstructed clear to the sky and extends from a street to one entrance of the accessory dwelling unit. AB 2299 Page 11 (j) Nothing in this section shall be construed to supersede or in any way alter or lessen the effect or application of the California Coastal Act (Division 20 (commencing with Section 30000) of the Public Resources Code), except that the local government shall not be required to hold public hearings for coastal development permit applications for second accessory dwelling units. SEC. 2. Section 1.5 of this bill incorporates amendments to Section 65852.2 of the Government Code proposed by both this bill and Senate Bill 1069. It shall only become operative if (1) both bills are enacted and become effective on or before January 1, 2017, (2) each bill amends Section 65852.2 of the Government Code, and (3) this bill is enacted after Senate Bill 1069, in which case Section 1 of this bill shall not become operative. SEC. 3. No reimbursement is required by this act pursuant to Section 6 of Article XIII B of the California Constitution because a local agency or school district has the authority to levy service charges, fees, or assessments sufficient to pay for the program or level of service mandated by this act, within the meaning of Section 17556 of the Government Code. AB 2406 Page 1 AB-2406 Housing: junior accessory dwelling units. (2015-2016) SECTION 1. Section 65852.22 is added to the Government Code, immediately following Section 65852.2, to read: 65852.22. (a) Notwithstanding Section 65852.2, a local agency may, by ordinance, provide for the creation of junior accessory dwelling units in single-family residential zones. The ordinance may require a permit to be obtained for the creation of a junior accessory dwelling unit, and shall do all of the following: (1) Limit the number of junior accessory dwelling units to one per residential lot zoned for single- family residences with a single-family residence already built on the lot. (2) Require owner-occupancy in the single-family residence in which the junior accessory dwelling unit will be permitted. The owner may reside in either the remaining portion of the structure or the newly created junior accessory dwelling unit. Owner-occupancy shall not be required if the owner is another governmental agency, land trust, or housing organization. (3) Require the recordation of a deed restriction, which shall run with the land, shall be filed with the permitting agency, and shall include both of the following: (A) A prohibition on the sale of the junior accessory dwelling unit separate from the sale of the single-family residence, including a statement that the deed restriction may be enforced against future purchasers. (B) A restriction on the size and attributes of the junior accessory dwelling unit that conforms with this section. (4) Require a permitted junior accessory dwelling unit to be constructed within the existing walls of the structure, and require the inclusion of an existing bedroom. (5) Require a permitted junior accessory dwelling to include a separate entrance from the main entrance to the structure, with an interior entry to the main living area. A permitted junior accessory dwelling may include a second interior doorway for sound attenuation. (6) Require the permitted junior accessory dwelling unit to include an efficiency kitchen, which shall include all of the following: (A) A sink with a maximum waste line diameter of 1.5 inches. (B) A cooking facility with appliances that do not require electrical service greater than 120 volts, or natural or propane gas. (C) A food preparation counter and storage cabinets that are of reasonable size in relation to the size of the junior accessory dwelling unit. AB 2406 Page 2 (b) (1) An ordinance shall not require additional parking as a condition to grant a permit. (2) This subdivision shall not be interpreted to prohibit the requirement of an inspection, including the imposition of a fee for that inspection, to determine whether the junior accessory dwelling unit is in compliance with applicable building standards. (c) An application for a permit pursuant to this section shall, notwithstanding Section 65901 or 65906 or any local ordinance regulating the issuance of variances or special use permits, be considered ministerially, without discretionary review or a hearing. A permit shall be issued within 120 days of submission of an application for a permit pursuant to this section. A local agency may charge a fee to reimburse the local agency for costs incurred in connection with the issuance of a permit pursuant to this section. (d) For the purposes of any fire or life protection ordinance or regulation, a junior accessory dwelling unit shall not be considered a separate or new dwelling unit. This section shall not be construed to prohibit a city, county, city and county, or other local public entity from adopting an ordinance or regulation relating to fire and life protection requirements within a single- family residence that contains a junior accessory dwelling unit so long as the ordinance or regulation applies uniformly to all single-family residences within the zone regardless of whether the single-family residence includes a junior accessory dwelling unit or not. (e) For the purposes of providing service for water, sewer, or power, including a connection fee, a junior accessory dwelling unit shall not be considered a separate or new dwelling unit. (f) This section shall not be construed to prohibit a local agency from adopting an ordinance or regulation, related to parking or a service or a connection fee for water, sewer, or power, that applies to a single-family residence that contains a junior accessory dwelling unit, so long as that ordinance or regulation applies uniformly to all single-family residences regardless of whether the single-family residence includes a junior accessory dwelling unit. (g) For purposes of this section, the following terms have the following meanings: (1) “Junior accessory dwelling unit” means a unit that is no more than 500 square feet in size and contained entirely within an existing single-family structure. A junior accessory dwelling unit may include separate sanitation facilities, or may share sanitation facilities with the existing structure. (2) “Local agency” means a city, county, or city and county, whether general law or chartered. SEC. 2. This act is an urgency statute necessary for the immediate preservation of the public peace, health, or safety within the meaning of Article IV of the Constitution and shall go into immediate effect. The facts constituting the necessity are: In order to allow local jurisdictions the ability to promulgate ordinances that create secure income for homeowners and secure housing for renters, at the earliest possible time, it is necessary for this act to take effect immediately. Planning & Transportation Commission Staff Report (ID # 7368) Report Type: Action Items Meeting Date: 11/30/2016 City of Palo Alto Planning & Community Environment 250 Hamilton Avenue Palo Alto, CA 94301 (650) 329-2442 Summary Title: Accessory Dwelling Unit Ordinance Title: The Planning and Transportation Commission will Consider a Recommendation to the City Council for Adoption of an Ordinance to Update the City's Municipal Code Sections Regarding Accessory Dwelling Units (Second Dwelling Units) for Compliance with Recent State Laws and Other Changes to Encourage Construction of Accessory Dwelling Units. The Proposed Ordinance is Exempt from the California Environmental Quality Act (CEQA) per Sections 15301 and 15303. From: Hillary Gitelman Recommendation Staff recommends that the Planning and Transportation Commission (PTC) adopt a motion recommending that the City Council adopt an ordinance (Attachment A) amending Title 18 (zoning) of the Palo Alto Municipal Code to implement new State law requirements regarding Accessory Dwelling Units and Junior Accessory Dwelling Units and to make other changes encouraging construction of such units and finding the ordinance exempt from review under the California Environmental Quality Act (CEQA). Executive Summary In October 2015, the City Council directed the PTC to review the existing Accessory Dwelling Unit/Second Dwelling Unit regulations and recommend ways to increase construction. Subsequent to the Council’s direction, the PTC conducted two study sessions, enabling extensive dialog regarding potential code changes and the impacts and benefits that might result. Following the study sessions, the PTC anticipated that staff would return to the Commission with further analysis of potential code changes and a draft ordinance for the Commission’s consideration. While staff’s analysis was ongoing, the State of California adopted three laws regarding City of Palo Alto Planning & Community Environment Department Page 2 Accessory Dwelling Units (ADUs) and Junior Accessory Dwelling Units (JADUs): SB 1069, AB 2299 and AB 2406. In response to this, staff has prepared a draft ordinance (Attachment A) that would bring the City’s Municipal Code into compliance with the new ADU legislation and allow JADUs, as allowed for under AB2406. Highlights of the draft ordinance include:  Changing the terminology throughout the municipal code to use “accessory dwelling units” and “junior accessory units” rather than “second units;”  Repealing Section 18.10.070,18.12.070 and 18.28.070 (regarding Second Dwelling Units in the RE, R-2, RMD,R-1 and OS Districts) and adding a new Section 18.42.040 with development standards applicable to accessory dwelling units and junior accessory dwelling units in all zoning districts;  Adjusting parking and setback requirements to the minimum extent necessary to comply with the State laws;  Maintaining existing minimum lot size requirements for accessory dwelling units;  Allowing junior accessory dwelling units, which involve conversion of existing building space to a small living unit, without a minimum lot size requirement; and  Ensuring that any residential lot may only have one accessory or junior accessory unit per parcel (and not one of each). The PTC could consider additional changes to the Municipal Code (i.e. changes not required by State law) affecting parking and setback requirements, minimum lot sizes, and other standards, and could also consider a different stance on junior accessory units, which are enabled but not required by State law. This staff report provides an analysis of potential changes to the minimum lot sizes for the PTC’s consideration, and the draft ordinance is annotated to explain where local discretion is available. Background In October 2015, the City Council in a Colleagues Memo directed the PTC to review the existing zoning regulations on Accessory Dwelling Units (ADUs), which are referred to as second dwelling units in the Municipal Code, and recommend ways to increase ADU construction. The City Council also directed PTC to consider ways to bring existing non-compliant ADUs into compliance and provide any other relevant recommendations. Palo Alto’s high housing cost, demand for a variety of housing types, and change in demographics with a rise in an aging population, has encouraged the City to find opportunities to increase more affordable housing options for its residents. The Colleagues Memo proposes ADUs as a potential solution to these problems. The City Council was supportive of the facilitation of construction of ADUs, provided that impacts on community character and neighborhood design standards are minimized. The retention of the physical and social character of the existing residential neighborhoods was also deemed to be important. To date, the PTC had two study sessions on the item (January 27, 2016 Staff Report ID# 6462 and July 27, 2016 Staff Report ID #6944) on this subject. City of Palo Alto Planning & Community Environment Department Page 3 PTC Study Sessions At the January 27, 2016 PTC Study Session, the PTC was provided with a brief history of Municipal Code changes made during the 2006 Zoning code update and the potential benefits and impacts of ADUs in Palo Alto. This meeting was well attended by several community members who provided detailed input. Some members of the public stated that it was important to balance the impacts of second units in single family zoned areas, while other said it was important to increase second unit production to meet the community’s affordable housing needs. The PTC discussed the existing development standards of the Palo Alto Municipal Code (PAMC Sections 18.12.070 and 18.10.070) and identified City regulations which can act as potential constraints in the construction of ADUs. The PTC also reviewed some of the common practices and regulations followed by some Bay Area cities. The following is the link to PTC staff report and meeting minutes of January 27, 2016 meeting. Staff Report: https://www.cityofpaloalto.org/civicax/filebank/documents/50714 Meeting Minutes: http://www.cityofpaloalto.org/civicax/filebank/documents/51618 At the second study session held on July 27, 2016 staff provided the PTC with an update on the research that was requested by the PTC. The report also included analysis of the constraints posed by existing zoning regulations that discouraged construction of new second units. At this meeting, the PTC requested staff to gather information on impacts of ADU ordinance changes in cities that have updated their ordinance. The PTC also requested staff to perform a sensitivity analysis of the effects of lot size change, parking regulation change, and adjustment of permit fee regulations on ADU construction. The PTC directed staff to return with a draft ordinance to encourage ADU construction concurrently with the additional data that was requested. Following is the link to the second Study Session and meeting minutes. Staff Report: http://www.cityofpaloalto.org/civicax/filebank/documents/53216 Meeting Minutes: http://www.cityofpaloalto.org/civicax/filebank/documents/53622 State Legislation on ADUs The State’s Government Code Section 65852.2 Chapter 1062 (a.k.a. Second-Unit Law) was enacted in 1982 and has been amended four times since then (1986, 1990, 1994 and 2002) to encourage the creation of second-units while maintaining local flexibility for unique circumstances and conditions. The State recognizes there is a housing crisis and has adopted legislation to address it. The Second-Unit Law imposes standards intended to create greater flexibility to encourage construction while also requiring a ministerial process for the approval of such units. Specifically, the 2002 update of the Second-Unit Law (Government Code Section 65852.2(a)(3)) required all local agencies to review second-unit permit applications ministerially without discretionary review or a public hearing. The city’s current regulations comply with this State requirement. SB 1069 and AB 2299: City of Palo Alto Planning & Community Environment Department Page 4 Concurrent with the City’s efforts on ADUs, the State recently adopted two laws intended to further ease the regulatory burdens of existing local laws and remove barriers that have discouraged homeowners from constructing second units. In September 2016, Governor Jerry Brown signed the two bills which will take effect on January 1, 2017. If a jurisdiction does not amend their local codes in compliance with these bills, then, the State laws will supersede local laws. A short summary of the two bills is provided below. SB 1069 and AB 2299 were introduced by Senator Wieckowski and Assembly Member Bloom in February of 2016 to amend different sections of the Second Unit Law.1 The bills officially designated second dwelling units as Accessory Dwelling Units and amend the State government code accordingly. The two bills include amendments related to maximum unit size, parking, setbacks, and separation between the primary and the accessory dwelling unit. The bills also include changes regarding application of building codes and utility connection fees or charges. This report focuses on changes required for the zoning code or Palo Alto Municipal Code Chapter 18. The changes related to utility fees and the building code will be addressed through a separate process. More information on SB 1069 and AB 2299 can be found through the following links: https://leginfo.legislature.ca.gov/faces/billCompareClient.xhtml?bill_id=201520160SB1069 https://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=201520160AB2299 Junior Accessory Dwelling Units The State also adopted Assembly Bill 2406, introduced by Assembly Member Thurmond and Assembly Member Levine, governing a different type of an accessory dwelling unit called a “junior accessory dwelling unit.” This bill adds a new section on Junior Accessory Dwelling Units (JADU)2 to the Government Code Section 65852.2. A JADU is defined as the conversion of an existing bedroom within a home containing a kitchenette and not exceeding 500 square feet. The bill authorizes a local agency to create an ordinance on JADUs, in single-family residential zones. If a City chooses to allow JADUs, the bill would require the ordinance to include, among other things, standards for the creation of a JADU, processing regulations and occupancy requirements. The bill would prohibit the local ordinances from requiring, as a condition of granting a permit, water and sewer connection fees or additional parking requirements. Governor Brown on September 28, 2016 signed this bill and it takes effect immediately as an urgency statute. More information on AB 2406 is available here: https://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=201520160AB2406 Discussion 1 Last minute changes were made to the final version of the bill creating some potential ambiguities and it is expected that the Housing and Community Development Commission (HCD) will be issuing some clarifying guidelines. 2 “Junior accessory dwelling unit” means a unit that is no more than 500 square feet in size and contained entirely within an existing single-family structure. A junior accessory dwelling unit may include separate sanitation facilities, or may share sanitation facilities with the existing structure. City of Palo Alto Planning & Community Environment Department Page 5 Consistent with Council and PTC direction as well as the new State legislation, staff is requesting that the PTC review and recommend adoption of an ordinance that would encourage construction of ADUs by adopting the State mandated changes and modifying the Municipal Code to allow JADUs. The draft ordinance included as Attachment A would bring the City’s Municipal Code into compliance with State requirements and adopt changes that would immediately reduce constraints affecting the construction of second units. The PTC could recommend the ordinance as drafted, or with specific additions or changes, as long as the recommended adjustments do not conflict with State law. The attached draft ordinance structure repeals the existing ADU regulations in each of the relevant residential zones that currently permit second units (R1, RE, R2, RMD and OS) and creates a new chapter 18.42.040 titled “Accessory and Junior Dwelling Units.” The PAMC permits single family uses in the multi-family zoning districts, when the R-1 regulations would apply. This new chapter consolidates all ADU and JADU regulations in one place. The new chapter carries forward all existing local ADU development standards that do not conflict with State law, and adds the State law requirements. The section below focuses on the required ADU changes and the proposed JADU amendments. It does not focus on the other parts of the new laws that the City is not required or proposing to change, which include maximum size, height and setbacks, except for setbacks for garage conversions. For example, the City can regulate the minimum and maximum size of ADUs as long as the maximum size does not exceed 1,200 square feet (sf). Because the PAMC already complies with a smaller maximum size, no changes are proposed regarding the maximum size of ADUs. Staff has also identified additional optional changes to the PAMC that might encourage construction of new ADUs. If the PTC is supportive of these optional changes, staff will modify the draft ordinance accordingly prior to bringing the item to the City Council for their consideration next February. Changes for Compliance to the State Legislation for ADUs SB 1069 and AB 2299 require that our existing Municipal Code be amended in regards to parking, conversion of existing garages located within setbacks, and the maximum percentage that an ADU may occupy of the existing living area. All other local requirements, including lot coverage and floor area maximums, may remain in place. 1. Proposed changes to the parking requirements Palo Alto’s existing parking standards has been identified as one of the prime constraints in the construction of ADUs. At the PTC study session held in January, several members of the public identified parking to be the single biggest impediment preventing construction of new ADUs. The Municipal Code currently requires two parking spaces, of which one must be covered, for each new unit. The spaces can be provided as tandem parking and within the rear or side setbacks, as long as is outside the front setback and at least ten feet from the street side property line for corner lots. The new State laws generally reduce parking requirements and eliminate them for certain types of ADUs, particularly for units that are in existing structures and those near transit. This change may encourage owners to build smaller one bedroom units. The following changes to parking requirements for ADUs are proposed: City of Palo Alto Planning & Community Environment Department Page 6 A. Parking requirements for ADUs shall not exceed one parking space per unit or per bedroom, whichever is greater. B. Spaces may be provided as tandem parking, may be located on an existing driveway, and may be located in side and rear setbacks, but not a front setback. For corner lots, parking may be located within the corner street side setback if located at least 10 feet from the property line. C. Notwithstanding the above, no parking standards would be imposed on an ADU if any of the following instances are met: (1) The accessory dwelling unit is located within one-half mile of public transit. Public transit shall include a rail transit station and a bus stop with two or more lines that provide transit service at 15 minute intervals or better during peak commute periods. (2) The accessory dwelling unit is located within an architecturally and historically significant local, state or nationally designated historic district. (3) The accessory dwelling unit is part of the existing primary residence or an existing accessory structure. (4) When on-street parking permits are required but not offered to the occupant of the accessory dwelling unit. (5) When there is a car share vehicle located within one block of the accessory dwelling unit, where the car share vehicle is part of an established program available to the public. 2. Setbacks in the Case of Conversion or Additions to Existing Garages The new State laws stipulate that no setback shall be required for an existing garage that is converted to an ADU, and a setback of no more than five feet from the side and rear lot lines shall be required for an ADU that is constructed above a garage. Palo Alto Municipal Code sections 18.12.070, 18.10.070 and 18.28.070 require a minimum rear setback of 20 feet and interior side yard setback of six to eight feet for all R-1, R-2 and RMD zoned properties. For RE and OS the requirement is higher; 30 feet rear yard and 15 feet interior side yard setback. However, accessory structures (non-habitable), including garages are permitted within the rear and side setbacks, if located at least 75 feet from the front property line and 20 feet from the street side property line. The proposed ordinance amends our Code to comply with State law allowing conversion of existing garages to ADUs with no requirements for setbacks. This provision would only apply if an existing garage is not needed as required parking for the principal dwelling unit. The State law also permits construction of an ADU above a garage with a maximum side and rear property setback of five feet. The proposed ordinance changes the setback requirements to be consistent with State law. However, since State law allows the City to regulate ADU height and the R-1 district currently prohibits second story ADU’s this state law change is not expected City of Palo Alto Planning & Community Environment Department Page 7 to result in new units in the R-1 neighborhood. In districts allowing for second story ADU’s (i.e. in RE and OS districts), this change could result in additional units. 3. Maximum Percentage An ADU May Occupy of Living Area The recent state law established a maximum size and the percentage an ADU may occupy of the existing living area. The City’s current code is below the 1,200 sf maximum, so no changes are proposed to that requirement. However, the additional requirement that an ADU may not occupy more than 50% of existing living space has been incorporated in Section 18.42.040(a)(7)(iii), consistent with State law. JADU Ordinance Change Assembly Bill 2406 allows local jurisdiction to adopt an ordinance to permit JADUs. This is not a requirement, but an option, and was adopted by the State legislature after some communities found the addition of JADUs to be an effective way to add units without increasing the intensity of development (since existing building space is converted to create the unit). Staff is proposing to amend the PAMC to permit these smaller units as a way to increase the number of units with minimal impact on neighborhoods since JADUs would be limited to 500 square feet and contained entirely within an existing single-family structure. JADUs would not be subject to a minimum lot size, and thus would be permitted in a larger number of properties, however the ordinance specifies that a property would be allowed either one ADU or one JADU. At no point would a property be allowed more than two units regardless of lot size and other requirements. Permitting the construction of JADUs represents a significant policy shift and the PTC should consider whether they wish to include JADUs in their recommendation. Currently, the Municipal Code only allows ADUs on parcels that are at least 35% larger than the minimum lot size. The suggested provisions regarding JADUs would not only allow some form of second unit on all single family parcels, it would also not require any additional parking for these units, which would be added within existing building space. The thinking is that JADUs would not increase the occupant capacity of a home or impact infrastructure because it would not increase the size of the structure. Additionally, they would provide an opportunity for seniors to age in place by generating income from rentals or by providing a living space for caregivers or family. Additional ADU Requirements In addition to conforming to the State law, staff also is recommending additional changes to both remove development constraints and to avoid neighborhood impacts. These changes include:  Clarification that only one ADU or JADU can be constructed on a lot;  Elimination of current code’s 10 foot separation buffer between existing single family home and detached ADU; City of Palo Alto Planning & Community Environment Department Page 8  Clarification that ADU may not be sold separately from the unit;  Requirement that either ADU or single family home be owner occupied; and  Requirement that ADU’s not be rented for periods of less than 30 days. Analysis of the Minimum Lot Size Requirement As discussed by the PTC in both the study sessions, Palo Alto’s existing lot size requirement to construct an ADU is the second most significant constraint in construction of new ADUs after parking. The Municipal Code requires that a lot be at least 35% larger than the minimum lot size of the district. To get a better understanding of the potential number of eligible parcels that can accommodate ADUs, the PTC suggested staff to develop scenarios by lowering the existing minimum lot size requirement at 500 sf or five percent intervals. The PTC also suggested studying only those residential parcels with excess of 450 sf of remaining FAR. This would provide a more realistic estimate of the actual number of second units that can be built in future years. The Palo Alto Municipal Code has different minimum lot size requirement for different zone types including all subdistricts of R-1, R-2, RE RMD and OS. Furthermore, the lot size requirement varies based on the lot type; regular lots and flag lots3. The following table describes the existing Municipal code requirements for lot sizes in all zones that permit second units. Table 1: Existing Minimum Lot Size Requirements for R-1 R-2, RE, RMD and OS Zones Minimum Site Area Requirement R-1, R-1 (7,000), R-1 (8,000), R-1 (10,000), R-1 (20,000) R-E R-2 RMD OS This applies for both attached and detached units Not more than one attached or detached second dwelling units shall be allowed on a lot 35% greater than the minimum lot size for the district. R-1: 8,100 sf R-1 (7,000): 9,450 sf R-1 (8,000): 10,800 sf R-1 (10,000): 13,500 sf R-1 (20,000): 27,000 sf (See Table 5 of 18.12.070). Flag Lot specifications according to Section 21.20.301 of Subdivision Ord. In the RE district, the minimum lot size for a second dwelling unit is one acre. Provided, for flag lots, the minimum lot size shall be 35% greater than the minimum lot size established by Section 21.20.301 of the Subdivision Ordinance. Second dwelling units are permitted that meet lot size requirements. But for R-2 zoned lots of 6,000 square feet or greater, but less than 7,500 square feet, a second dwelling unit with a max size of 450 sf is permitted subject to R-1 regulations Second dwelling units are permitted in lots with a minimum of 5,000 square feet or greater In the OS zone Second dwelling shall only be permitted on sites with a minimum site area of 10 acres Source: City of Palo Alto Planning Department, November 2016 Below is a Parcel Size Analysis based on the PTC’s earlier suggestion. For the purpose of this analysis, all substandard lots4 in each zoning category that do not meet the minimum lot size 3 Definitions Chapter 18.04 ( 84) (B) Flag Lot means an interior lot that is either a landlocked parcel which has a driveway easement across another lot abutting a street, or a lot having limited frontage providing only enough width for a driveway to reach the buildable area of the lot which is located behind another lot abutting a street. City of Palo Alto Planning & Community Environment Department Page 9 requirement have been excluded, however, this analysis includes all flag lots since they comprise of less than two percent of all residential zoned lots. Additionally, this table only includes parcels that have more than 450 sf of unused FAR5 left for development. Staff believes that including the above three conditions make the analysis more realistic in deriving the potential number of parcels that can be developed with an ADU in future. Table 2: Number of Parcels & Lot Size Requirements in R-1 R-2, RE, RMD and OS Zones (in SF) R-1 R-1 (7,000) R-1 (8,000) R-1 (10,000) R-1 (20,000) R-2 RE RMD OS Total To t a l N u m b e r of P a r c e l s * 5,969 518 1,028 668 33 107 201 41 115 8,680 Nu m b e r > 35 % a b o v e mi n . l o t s i z e 1824 (8,100) 39 (9,450) 101 (10,800) 334 (13,500) 4 (27,000) 106 (6,000) 19 (1 acre) 16 (5,000) 23 (588,060) 2,466 Source: City of Palo Alto Planning Department, November 2016 * Excludes substandard lots in each zoning category and lots with less than 450 sf of FAR remaining. The table above shows the total number of parcels per zoning designations and the number of parcels that meeting the existing ADU requirement of 35 percent above minimum lot size. Currently the City has 15,000+ residentially zoned lots, and approximately 8,680 parcels have 450 sf or more of unused FAR and are not substandard lots. With the existing Municipal Code lot size requirement of 35 percent more than the minimum, only 2,466 parcels qualify to develop an ADU. The following table shows the increase in the number of parcels eligible for ADUs if the minimum requirement was lowered at five percent intervals. The table consolidates all R-1 zone subdistricts together and consolidates the R-2, RE, RMD and OS zones. 4 Substandard Lot: A substandard lots does not meet either the lot area, width or depth requirements required by the Municipal code. 5 The “unused capacity” was estimated from the difference of total square feet allowed by zoning (FAR) and the actual “square feet built” on the lot. Staff used the actual “square feet built” data from Santa Clara County Assessor’s Office. This is the best available information that can be used for this purpose. City of Palo Alto Planning & Community Environment Department Page 10 Table 3: Analysis of Increasing Parcels Eligible for ADUs by Reducing Minimum Lot Size Requirement at Five Percent Intervals Percentage over Minimum Lot Area Number of Qualifying Parcels (all R-1) Zones Number of Qualifying Parcels (R-2, RE, RMD and OS) Zones TOTAL ELIGIBLE PARCELS 35 % Over 2,302 164 2,466 30 % Over 2,703 113 2,816 25 % Over 3,218 152 3,370 20 % Over 3,732 163 3,895 15 % Over 4,280 177 4,457 10 % Over 4,912 193 5,105 5 % Over 5,773 219 5,992 Total Number of Parcels 8,216 464 8,680 Source: City of Palo Alto Planning Department, November 2016 Timeline/Next Steps The new State laws regarding ADU become effective on January 1, 2017 whether or not the City has updated its municipal code and therefore there is some urgency to make many of the code changes included in the draft ordinance as a way to avoid confusion. Nonetheless, there are a number of complex policy options to consider, and at this evening’s meeting, the PTC could choose to: 1. Forward a recommendation to the City Council (including the proposed ordinance, or the proposed ordinance with specific modifications); or 2. Continue their discussion to December 12, with the expectation that they will be able to formulate and forward their recommendation at that time. Staff hopes to forward the PTC’s recommendation to the City Council for consideration at a meeting in January or February 2017. Any provisions that go beyond the legal requirements of State law would become effective 31 days following the Council’s adoption (on second reading). Policy Implications The City’s Housing Element Goal H1 is “Ensure the preservation of the unique character of the city’s residential neighborhoods,” and Programs H1.1.2 and H3.3.5 encourage modifying existing second unit development standards in the Zoning Code, such as lowering the minimum lot size and allow for increased floor area, in order to facilitate the creation of additional SDUs while maintaining neighborhood character and increasing the City’s affordable housing supply. The City’s Comprehensive Plan emphasizes the importance of the City’s residential neighorhoods and the quality of life for residents. Policy L-13 of the Land Use and Community City of Palo Alto Planning & Community Environment Department Page 11 Design Element emphasizes the need to increase and maintain the diversity of the City’s housing stock and Program L-13 encourages City to create design prototypes and guidelines for second units ensuring compatability with rest of the single family neighborhoods. The proposed ordinance is generally consistent wih these Comprehensive Plan provisions and would advance housing element programs referenced above. Public Outreach The Palo Alto Municipal Code requires notice of this public hearing be published in a local paper at least ten days in advance. Notice of a public hearing for this project was published in the Palo Alto Weekly on November 18, 2016. A project website (http://www.cityofpaloalto.org/gov/depts/pln/advance/accessory_dwelling_units_regulations_ update.asp) has been made available for this project where interested members of the public can find more information and also sign up for an email list. The website has been shared on City website and social media. Staff has already received multiple requests for more information. Environmental Review The proposed ordinance change is exempt from the provisions of the California Environmental Quality Act (CEQA) pursuant to CEQA Guideline sections 15061(b), 15301, 15303 and 15305 because it simply provides a comprehensive permitting scheme. Any future ADUs or JADUs would be approved ministerially and thus would be statutorily exempt from CEQA pursuant to Section 15268 (Ministerial Projects) of the State CEQA Guidelines. Not Yet Approved 161018 jb 0131553 1 November 21, 2016 Ordinance No. ____ Ordinance of the Council of the City of Palo Alto Amending Chapter 18 (Zoning) of the Palo Alto Municipal Code to Implement New State Law Requirements Relating to Accessory Dwelling Units and Junior Accessory Dwelling Units and to Reorganize and Update City’s Existing Regulations The Council of the City of Palo Alto does ORDAIN as follows: SECTION 1. Findings and Declarations. The City Council finds and declares as follows: A. Housing in California is becoming increasingly unaffordable. The average California home currently costs about 2.5 times the national average home price and the monthly rent is 50% higher than the rest of the nation. Rent in San Francisco, San Jose, Oakland, and Los Angeles are among the top 10 most unaffordable in the nation. With rising population growth, California must not only provide housing but also ensure affordability. B. Housing costs in Palo Alto are out of reach for many families and a majority of owners and renters pay 30% or more of their gross income for housing, and many pay 50% or more. C. The Palo Alto City Council, recognizing the severity of the regional housing crisis, requested that the Planning and Transportation Commission review constraints affecting the production of second (accessory) dwelling units and recommend modifications to the City’s development standards. D. While existing law enables accessory dwellings as a source of housing, recent studies show that local standards like Palo Alto’s, perhaps unintentionally, prevent homeowners from building ADUs with standards like lot coverage, large set-backs, off-street parking, or costly construction requirements. E. In September 2016, Governor Brown signed into law Senate Bill 1069, Assembly Bill 2299 and Assembly Bill 2406 relating to the creation of accessory dwelling units (ADUs) and junior accessory dwelling units. F. These new bills were intended to address the housing crisis by easing regulatory barriers for homeowners who choose to build affordable housing in their own backyards. G. This ordinance is adopted to comply with these new State mandates regarding ADUs and junior accessory dwelling units, and to reduce regulatory constraints affecting their production. SECTION 2. Section 18.04.030 (Definitions) of Chapter 18.04 (Definitions) of Title 18 (Zoning) is amended to read as follows: 18.04.030 Definitions . . . Not Yet Approved 161018 jb 0131553 2 November 21, 2016 (4) “Accessory dwelling unit” means an attached or a detached residential dwelling unit which provides complete independent living facilities for one or more persons. It shall include permanent provisions for living, sleeping, eating, cooking, and sanitation on the same parcel as the single-family dwelling is situated. An accessory dwelling unit also includes the following: a. An efficiency unit, as defined in Section 17958.1 of the Health and Safety Code. b. A manufactured home, as defined in Section 18007 of the Health and Safety Code. In some instances this Code uses the term second dwelling unit interchangeably with accessory dwelling unit. (46.5) “Dwelling unit, second” means a separate and complete dwelling unit, other than and subordinate to the main dwelling unit, whether a part of the same structure or detached, on the same residential lot. (74.5) “Junior accessory dwelling unit” means a unit that is no more than 500 square feet in size and contained entirely within an existing single-family structure. A junior accessory dwelling unit may include separate sanitation facilities, or may share sanitation facilities with the existing structure. (132) “Single-family use” means the use of a site for only one dwelling unit and, where permitted, an accessory second dwelling unit or a junior accessory dwelling unit. . . . SECTION 3. In Section 18.10.010 (a) substitute the term “accessory dwelling unit(s)” for “second dwelling unit(s)”. SECTION 4. Section 18.10.030 Table 1 and Footnote (2) are amended as follows: TABLE 1 PERMITTED AND CONDITIONALLY PERMITTED LOW-DENSITY RESIDENTIAL USES [P = Permitted Use -- CUP = Conditional Use Permit Required] R-E R-2 RMD Subject to Regulations in: ACCESSORY AND SUPPORT USES Accessory facilities and uses customarily incidental to permitted uses (no limit on number of plumbing fixtures) P P P 18.10.080 Home Occupations, when accessory to permitted residential uses. P P P 18.42.060 Horticulture, gardening, and growing of food products for consumption by occupants of the site. P P P Sale of agricultural products produced on the premises (1) P 18.10.110 Second Accessory Dwelling Units P P(2) P(2) 18.4210.0470 Junior Accessory Dwelling Units P P(2) P(2) 18.42.040 AGRICULTURE AND OPEN SPACE USES Agriculture P 18.10.110 Not Yet Approved 161018 jb 0131553 3 November 21, 2016 EDUCATIONAL, RELIGIOUS, AND ASSEMBLY USES Private Educational Facilities CUP CUP CUP Religious Congregations and Institutions CUP CUP CUP PUBLIC/QUASI-PUBLIC USES Community Centers CUP CUP CUP Utility Facilities essential to provision of utility services to the neighborhood, but excluding business offices, construction or storage yards, maintenance facilities, or corporation yards. CUP CUP CUP RECREATION USES Neighborhood Recreational Centers CUP Outdoor Recreation Services CUP CUP RESIDENTIAL USES Single-Family P P P Two-Family use, under one ownership P P Mobile Homes P P P 18.42.100 Residential Care Homes P P P RETAIL USES Cemeteries CUP Commercial Plant Nurseries CUP SERVICE USES Convalescent Facilities CUP Day Care Centers CUP CUP CUP Small Adult Day Care Homes P P P Large Adult Day Care Homes CUP CUP CUP Small Family Day Care Homes P P P Large Family Day Care Homes P P P Bed & Breakfast Inns P(3) P = Permitted Use CUP = Conditional Use Permit Required . . . (2) Second Units in R-2 and RMD Zones: An accessory second dwelling unit or a Junior Accessory Dwelling Unit associated with a single-family residence on a lot in the R-2 or RMD zones is Not Yet Approved 161018 jb 0131553 4 November 21, 2016 permitted, subject to the provisions of Section 18.10.07018.42.040, and such that no more than two units result on the lot. . . . SECTION 5. Section 18.10.040 (Development Standards) of Chapter 18.10 (Low-Density Residential (RE, R-2 and RMD) Districts) of Title 18 (Zoning) is amended to read as follows: 18.10.040 Development Standards (a) Site Specifications, Building Size, Height and Bulk, and Residential Density . . . (5) Maximum House Size: The gross floor area of attached garages and attached second accessory dwelling units and junior accessory dwelling units are included in the calculation of maximum house size. If there is no garage attached to the house, then the square footage of one detached covered parking space shall be included in the calculation. This provision applies only to single-family residences, not to duplexes allowed in the R-2 and RMD districts. . . . (B) Flag Lot Development Standards: (i) Individual Review . . . (i) Individual Review The Individual Review provisions of Section 18.12.110 of the Zoning Ordinance shall be applied to any single-family or two-family residence in the R-2 or RMD districts to those sides of a site that share an interior side lot line with the interior side or rear lot line of a property zoned for or used for single- family or two-family dwellings. , except where architectural review board review is required for an accessory second dwelling on an RMD-zoned site. The individual review criteria shall be applied only to the project's effects on adjacent single-family and two-family uses. [NOTE: STATE LAW REQUIRES MINISTERIAL REVIEW OF ADU’S.] SECTION 6. Section 18.10.060 Table 3 is amended as follows: TABLE 3 PARKING REQUIREMENTS FOR R-E, R-2 AND RMD USES Use Minimum Off-Street Parking Requirement Single-family residential use (excluding second accessory dwelling units) 2 spaces per unit, of which one must be covered Two family (R2 & RMD districts) 3 spaces total, of which at least two must be covered Not Yet Approved 161018 jb 0131553 5 November 21, 2016 Second Accessory dwelling unit, attached or detached: >450 sf in size ≤450 sf in size 2 spaces per unit, of which one must be covered 1 space per unit, which may be covered or uncovered 1 space per unit or 1 space per bedroom, whichever is greater(1), (2) Parking may be provided as tandem parking. Parking may be located within side and rear setbacks, but not in front setback See also Section 18.42.040. Junior accessory dwelling unit None Other Uses See Chapter 18.40 (1) No parking is required for an accessory dwelling unit that is part of an existing primary residence or an existing accessory structure. (2) For a corner lot, parking permitted within the corner street side setback if located at least ten (10) feet from the property line. . . . [NOTE: THESE PARKING REQUIREMENTS ARE DEFINED IN STATE LAW. THE CITY HAS THE DISCRETION TO REDUCE THESE REQUIREMENTS, BUT NOT TO INCREASE THEM.] SECTION 7. Section 18.10.070 (Second Dwelling Units) of Chapter 18.10 (Low-Density Residential (RE, R-2 and RMD) Districts) of Title 18 (Zoning) is repealed in its entirety and a new 18.10.070 is added to read as follows: 18.10.070 Accessory and Junior Accessory Dwelling Units Accessory Dwelling Units and Junior Accessory Dwelling Units are subject to the regulations set forth in Section 18.42.040. [NOTE: THESE DEVELOPMENT STANDARDS HAVE BEEN MOVED TO SECTION 18.42.040.] SECTION 8. Section 18.10.120 (Architectural Review) of Chapter 18.10 (Low-Density Residential (RE, R-2 and RMD) Districts) of Title 18 (Zoning) is amended to read as follows: 18.10.120 Architectural Review Not Yet Approved 161018 jb 0131553 6 November 21, 2016 Architectural review, as required in Section 18.76.020, is required in the R-E, R-2, and RMD districts whenever three or more adjacent residential units are intended to be developed concurrently, whether through subdivision or individual applications. Architectural review is also required for second dwelling units of more than 900 square feet, when located in the Neighborhood Preservation Combining District (NP). [NOTE: STATE LAW REQUIRES MINISTERIAL REVIEW OF ADU’S.] SECTION 9. Section 18.10.140 (Neighborhood Preservation Combining District (NP) Standards) of Chapter 18.10 (Low-Density Residential (RE, R-2 and RMD) Districts) of Title 18 (Zoning) is amended to read as follows: 18.10.140 Neighborhood Preservation Combining District (NP) Standards . . . (2) Design Review Required For properties on which two or more residential units are developed or modified, design review and approval shall be required by the architectural review board in compliance with procedures established in Section 18.76.020 for any new development or modification to any structure on the property and for site amenities. No design review is required for construction of or modifications to single-family structures that constitute the only principal structure on a parcel of land. No design review is required for construction of second dwelling units on a parcel except when the second unit exceeds 900 square feet in size. . . . [NOTE: STATE LAW REQUIRES MINISTERIAL REVIEW OF ADU’S.] SECTION 10. In Section 18.10.150(e), substitute the term “accessory dwelling units” for “second dwelling units”. . . . SECTION 11. Section 18.12.010(a) is amended as follows: (a) Single Family Residential District [R-1] The R-1 single family residential district is intended to create, preserve, and enhance areas suitable for detached dwellings with a strong presence of nature and with open area affording maximum privacy and opportunities for outdoor living and children's play. Minimum site area requirements are established to create and preserve variety among neighborhoods, to provide adequate open area, and to encourage quality design. Second Accessory dwelling units, junior accessory dwelling units and accessory structures or buildings are appropriate. where consistent with the site and neighborhood character. Community uses and facilities, such as churches and schools, should be limited unless no net loss of housing would result. . . . SECTION 12. Section 18.12.030 Table 1, is amended as follows: Table 1 PERMITTED AND CONDITIONAL R-1 RESIDENTIAL USES Not Yet Approved 161018 jb 0131553 7 November 21, 2016 R-1 and all R-1 Subdistricts Subject to Regulations for: ACCESSORY AND SUPPORT USES Accessory facilities and uses customarily incidental to permitted uses with no more than two plumbing fixtures and no kitchen facility, or of a size less than or equal to 200 square feet P 18.04.030(a)(3) 18.12.080 Accessory facilities and uses customarily incidental to permitted uses with more than two plumbing fixtures (but with no kitchen), and in excess of 200 square feet in size, but excluding second accessory dwelling units CUP 18.12.080 Home occupations, when accessory to permitted residential P 18.42.060 Horticulture, gardening, and growing of food products for consumption by occupants of the site P Second Accessory Dwelling Units P(1) 18.42.04012.070 Junior Accessory Dwelling Unit P(1) 18.42.040 EDUCATIONAL, RELIGIOUS AND ASSEMBLY USES Private Educational Facilities CUP Churches and Religious Institutions CUP PUBLIC/QUASI PUBLIC USES Community Centers CUP Utility Facilities essential to provision of utility services to the neighborhood, but excluding business offices, construction or storage yards, maintenance facilities, or corporation yards CUP RECREATION USES Outdoor Recreation Services CUP RESIDENTIAL USES Single-Family P Mobile Homes P 18.42.100 Residential Care Homes P SERVICE USES Day Care Centers CUP Small Adult Day Care Homes P Large Adult Day Care Homes CUP Small Family Day Care Homes P Large Family Day Care Homes P P = Permitted Use CUP = Conditional Use Permit Required (1) An Accessory Dwelling Unit or a Junior Accessory Dwelling Unit associated with a single- family residence on a lot is permitted, subject to the provisions of Section 18.42.040, and such that no more than two units result on the lot. Not Yet Approved 161018 jb 0131553 8 November 21, 2016 SECTION 13. Section 18.12.040 Table 2, footnote (8) is amended as follows: (8) Maximum House Size: The gross floor area of attached garages and attached accessory second dwelling units and junior accessory dwelling units are included in the calculation of maximum house size. If there is no garage attached to the house, then the square footage of one detached covered parking space shall be included in the calculation. SECTION 14. Section 18.12.060 Table 4 is amended as follows: Table 4 shows the minimum off-street automobile parking requirements for specific uses in the R- 1 district. Table 4 Parking Requirements for Specific R-1 Uses Use Minimum Off-Street Parking Requirement Single-family residential use (excluding second accessory dwelling units) 2 spaces per unit, of which one must be covered. Second Accessory dwelling unit , attached or detached 2 spaces per unit, of which one must be covered 1 space per unit or 1 space per bedroom, whichever is greater(1), (2) Parking may be provided as tandem parking. Parking may be located within side and rear setbacks, but not in front setback See also Section 18.42.040. Junior Accessory Dwelling Unit None Other Uses See Chs. 18.52 and 18.54 (1) No parking is required for an accessory dwelling unit that is part of an existing primary residence or an existing accessory structure. (2) For a corner lot, parking permitted within the corner street side setback if located at least ten (10) feet from the property line. . . . [NOTE: THESE PARKING REQUIREMENTS ARE DEFINED IN STATE LAW. THE CITY HAS THE DISCRETION TO REDUCE THESE REQUIREMENTS, BUT NOT TO INCREASE THEM.] SECTION 15. Section 18.12.070 (Second Dwelling Units) of Chapter 18.12 (R-1 Single-Family Residential District) of Title 18 (Zoning) is repealed in its entirety and a new 18.12.070 is added to read as follows: Not Yet Approved 161018 jb 0131553 9 November 21, 2016 18.12.070 Accessory and Junior Accessory Dwelling Units Accessory Dwelling Units and Junior Accessory Dwelling Units are subject to the regulations set forth in Section 18.42.040. [NOTE: THESE DEVELOPMENT STANDARDS HAVE BEEN MOVED TO SECTION 18.42.040.] SECTION 16. In Section 18.12.090(b)(2), substitute the term “accessory dwelling unit(s)” for “second dwelling unit(s)”. . . . SECTION 17. In Section 18.12.150(d), substitute the term “accessory dwelling unit(s)” for “second dwelling unit(s)”. . . . SECTION 18. Section 18.28.040, Table 1, is amended as follows: Table 1 Land Uses PF OS AC Subject to Regulations in Chapter: ACCESSORY AND SUPPORT USES Accessory facilities and accessory uses P Chs. 18.40 and 18.42 Eating and drinking services in conjunction with a permitted use CUP (1) Retail services as an accessory use to the administrative offices of a non-profit organization, provided that such retail services do not exceed 25% of the gross floor area of the combined administrative office services and retail service uses CUP (1) Retail services in conjunction with a permitted use CUP (1) Sale of agricultural products produced on the premises; provided, that no permanent commercial structure for the sale or processing of agricultural products shall be permitted. P Second Accessory dwelling units, subject to regulations in Section 18.28.07042.040 P(2) 18.28.070 18.42.040 Junior Accessory Dwelling Unit P(2) 18.42.040 AGRICULTURAL AND OPEN SPACE USES Not Yet Approved 161018 jb 0131553 10 November 21, 2016 Agricultural Uses, including animal husbandry, crops, dairying, horticulture, nurseries, livestock farming, tree farming, viticulture, and similar uses not inconsistent with the intent and purpose of this chapter P P Botanical conservatories, outdoor nature laboratories, and similar facilities P Native wildlife sanctuaries P Park uses and uses incidental to park operation P EDUCATIONAL, RELIGIOUS, AND ASSEMBLY USES Business or trade schools CUP (1) Churches and religious institutions CUP (1) Educational, charitable, research, and philanthropic institutions CUP Private educational facilities CUP (1) Public or private colleges and universities and facilities appurtenant thereto CUP Special education classes CUP (1) OFFICE USES Administrative office services for non-profit organizations CUP (1) OTHER USES Other uses which, in the opinion of the director, are similar to those listed as permitted or conditionally permitted uses CUP (1) PUBLIC/QUASI-PUBLIC FACILITY USES All facilities owned or leased, and operated or used, by the City of Palo Alto, the County of Santa Clara, the State of California, the government of the United States, the Palo Alto Unified School District, or any other governmental agency P Communication Facilities CUP Community Centers CUP (1) Utility Facilities CUP CUP CUP RECREATIONAL USES Neighborhood recreation centers CUP (1) Outdoor recreation services CUP (1) CUP Recreational uses including riding academies, clubs, stables, country clubs, and golf courses CUP Youth clubs CUP (1) RESIDENTIAL USES Single-family dwellings P Manufactured housing (including mobile homes on permanent foundations) P 18.40. Not Yet Approved 161018 jb 0131553 11 November 21, 2016 Guest ranches CUP Residential care facilities, when utilizing existing structures on the site CUP (1) Residential Care Homes P Residential use, and accessory buildings and uses customarily incidental to permitted dwellings; provided, however, that such permitted dwellings shall be for the exclusive use of the owner or owners, or lessee or lessor of land upon which the permitted agricultural use is conducted, and the residence of other members of the same family and bona fide employees of the aforementioned P SERVICE USES Animal care, including boarding and kennels CUP CUP Cemeteries CUP Cemeteries, not including mausolea, crematoria, or columbaria CUP Small day care homes P Large day care homes CUP Day care centers CUP (1) Art, dance, gymnastic, exercise or music studios or CUP (1) Medical Services: Hospitals CUP Outpatient medical facilities with associated medical research CUP TEMPORARY USES Temporary parking facilities, provided that such facilities CUP (1) TRANSPORTATION USES Airports and airport-related uses CUP (1) . . . (2) An accessory dwelling unit or a Junior Accessory Dwelling Unit associated with a single- family residence on a lot in the OS District is permitted, subject to the provisions of Section 18.42.040, and such that no more than two units result on the lot. SECTION 19. Section 18.28.070(a)(Second Dwelling Units) is amended as follows: 18.28.070 Additional OS District Regulations The following additional regulations shall apply in the OS district: (a) AccessorySecond Dwelling Units and Junior Dwelling Units Accessory Dwelling Units and Junior Accessory Dwelling Units are subject to the regulations set forth in Section 18.42.040. Not more than one attached or detached second dwelling units shall be allowed on a lot in the OS district, and shall be subject to the following regulations: (1) Second dwelling shall only be permitted on sites with a minimum site area of 10 acres; (2) Attached second dwelling units shall comply with the OS district height limitation of 25 feet; and Not Yet Approved 161018 jb 0131553 12 November 21, 2016 (3) Second dwelling units shall follow the standards set forth in the Residential Estate (R-E) District for second dwelling units (18.10.070(b)), with the exceptions outlined in subsections 1 and 2 above. [NOTE: THESE DEVELOPMENT STANDARDS HAVE BEEN MOVED TO SECTION 18.42.040.] . . . SECTION 20. Section 18.42.040 (Accessory and Junior Dwelling Units) is added as follows: 18.42.040 Accessory and Junior Dwelling Units The following regulations apply to zoning districts where accessory dwelling units and junior accessory dwelling units are permitted. (a) Accessory Dwelling Units 1. Purpose The intent of this section is to provide regulations to accommodate accessory dwelling units, in order to provide for variety to the city's housing stock and additional affordable housing opportunities. Accessory dwelling units shall be separate, self-contained living units, with separate entrances from the main residence, whether attached or detached. The standards below are provided to minimize the impacts of accessory dwelling units on nearby residents and throughout the city, and to assure that the size, location and design of such dwellings is compatible with the existing residence on the site and with other structures in the area. 2. Minimum Lot Sizes (i) In the R-1 district and all R-1 subdistricts, the minimum lot size for an accessory dwelling unit shall be 35% greater than the minimum lot size otherwise established for the district. Provided, for flag lots, the minimum lot size shall be 35% greater than the minimum lot size established by Section 21.20.301 of the Subdivision Ordinance. (ii) Table 1 shows the minimum lot size required for an accessory dwelling unit in the R-1 districts, provided, in the event of a conflict between subsection (i) and this subsection (ii), subsection (i) shall control. TABLE 1 MINIMUM LOT SIZES FOR ACCESSORY DWELLING UNITS District Minimum Lot Size (all lots except flag lots) Minimum Lot Size (flag lots) R-1 8,100 square feet ("sf") 9,720 sf R-1 (7,000) 9,450 sf 11,340 sf R-1 (8,000) 10,800 sf 12,960 sf R-1 (10,000) 13,500 sf 16,200 sf R-1 (20,000) 27,000 sf 32,400 sf Exclusive of any portion of the lot used for access to the street Not Yet Approved 161018 jb 0131553 13 November 21, 2016 (iii) In the RE district, the minimum lot size for an accessory dwelling unit is one acre. However, for flag lots in the RE District, the minimum lot size shall be 35% greater than the minimum lot size established by Section 21.20.301 of the Subdivision Ordinance. (iv) In the R-2 District the minimum lot size for an accessory dwelling unit is 6,000 square feet and in the RMD District it is 5,000 square feet. All flag lots in the R-2 and RMD Districts shall comply with the lot size requirements set forth in Section 21.20.301 of the Subdivision Ordinance. For R-2 zoned lots of 6,000 square feet or greater, but less than 7,500 square feet, an Accessory Dwelling Unit of 450 square feet or less is permitted. (v) In the OS District, the minimum lot size for an accessory dwelling unit is 10 acres. [NOTE: STATE LAW ALLOWS THE CITY TO MAINTAIN EXISTING REQUIREMENTS FOR MINIMUM LOT SIZES FOR ACCESSORY DWELLING UNITS. AS A POLICY MATTER, THE CITY COULD CONSIDER REVISING OR ELIMINATING SOME OF THESE REQUIREMENTS TO ENCOURAGE ADDITIONAL UNITS, OR COULD LEAVE THESE REQUIREMENTS IN PLACE WITH THE KNOWLEDGE THAT UNDER STATE LAW, JUNIOR UNITS ARE ALLOWED ANYWHERE THERE IS AN EXISTING RESIDENCE, REGARDLESS OF LOT SIZE OR NON-CONFORMANCE.] 3. Setbacks (i) Accessory dwelling units shall comply with the underlying zoning district’s setbacks. (ii) Notwithstanding section (i) above, no setback shall be required for an existing garage that is converted to an accessory dwelling unit. (iii) In districts permitting second story accessory dwelling units, a setback of no more than five feet from the side and rear lot lines shall be required for an accessory dwelling unit constructed above a garage. [NOTE: STATE LAW SPECIFIES ITEMS (II) AND (III) ABOVE.] 4. Lot Coverage/FAR An accessory dwelling unit shall be included in the lot coverage and FAR requirements applicable to the primary dwelling unit. [NOTE: THIS IS AN EXISTING CODE REQUIREMENT.] 5. Conversion of Space in Existing Single Family Residence or Existing Accessory Structure Notwithstanding the lot size, setback, height and parking requirements in this Section 18.42.040, in the R-1 and RE Districts only, an Accessory Dwelling Unit shall be permitted if the unit is contained within the existing space of a single-family residence or and existing accessory structure, has independent exterior access from the existing residence, and the side and rear setbacks are sufficient for fire safety. a. Accessory dwelling units shall not be required to provide fire sprinklers if they are not required for the primary residence. Not Yet Approved 161018 jb 0131553 14 November 21, 2016 b. For the purposes of this section, the portion of the single-family residence or accessory structure subject to the conversion, must be legally permitted and existing as of January 1, 2017. c. Notwithstanding the allowance in this section, only one accessory dwelling unit or junior accessory dwelling unit may be located on any lot subject to this section. [NOTE: THESE REQUIREMENTS ARE REQUIRED BY STATE LAW, WITH THE EXCEPTION OF ITEM (I)(C).] 6. Privacy Any window, door or deck of a second story accessory dwelling unit shall utilize techniques to lessen the privacy impacts onto adjacent properties. These techniques may include placement of doors, windows and decks to minimize overview of neighboring dwelling units, use of obscured glazing, window placement above eye level, and screening treatments. [NOTE: STATE LAW REQUIRES A MINISTERIAL PROCESS FOR APPROVAL OF ADU’S, BUT ALLOWS DEVELOPMENT STANDARDS. CITY POLICY MAKERS SHOULD CONSIDER WHETHER THE PRIVACY-RELATED STANDARDS SUGGESTED HERE ARE SUFFICIENTLY CLEAR SO AS TO BE MINISTERIAL.] 7. Additional Development Standards for Attached Accessory Dwelling Units (i) Attached accessory dwelling units are those attached to the main dwelling. All attached accessory dwelling units shall be subject to the additional development requirements specified below. (ii) Attached unit size counts toward the calculation of maximum house size. (iii) Unit Size: The maximum size of an attached accessory dwelling unit living area shall not exceed 450 square feet and shall not exceed 50% of the existing living area of the primary existing dwelling unit. The accessory dwelling unit and any covered parking shall be included in the total floor area for the site, but the covered parking area is not included in the maximum 450 square feet for attached unit. Any basement space used as an accessory dwelling unit or portion thereof shall be counted as floor area for the purpose of calculating the maximum size of the accessory unit. (iv) Maximum height: one story and 17 feet. However, in the RE District, attached Accessory Dwelling Units may be 30 feet. In the OS zone, attached Accessory Dwelling Units may be 25 feet. (v) Separate Entry Required for Attached Units: A separate exterior entry shall be provided to serve an accessory dwelling unit. (vi) Except on corner lots, the accessory dwelling unit may not have an entranceway facing the same lot line (property line) as the entranceway to the main dwelling unit, and exterior staircases to second floor units shall be located toward the interior side or rear yard of the property. (vii) In the RE zone, maximum size of covered parking area for the accessory dwelling unit is 200 square feet. Not Yet Approved 161018 jb 0131553 15 November 21, 2016 [NOTE: DEVELOPMENT STANDARDS IN THIS SECTION DERIVE FROM THE CITY’S EXISTING REQUIREMENTS, AS MODIFIED TO COMPLY WITH STATE LAW. THE CITY COULD CHOOSE TO MODIFY SOME OF THESE STANDARDS.] 8. Additional Development Standards for Detached Accessory Dwelling Units (i) Detached accessory dwelling units are those detached from the main dwelling. All detached accessory dwelling units shall be subject to the additional development standards specified below. (ii) The maximum size of the detached accessory dwelling unit living area shall be 900 square feet. a. The accessory dwelling unit and covered parking shall be included in the total floor area for the site, but the covered parking area is not included within the maximum 900 square feet for detached unit. b. Any basement space used as an accessory dwelling unit or portion thereof shall be counted as floor area for the purpose of calculating the maximum size of the accessory unit. c. For R-2 zoned lots of 6,000 square feet or greater, but less than 7,500 square feet, a detached Accessory Dwelling Unit of 450 square feet or less is permitted. (iii) Maximum height: one story and 17 feet. (iv) Design: The detached accessory dwelling unit shall be similar to the main residence with respect to style, roof pitch, color and materials. [NOTE: STATE LAW REQUIRES A MINISTERIAL PROCESS FOR APPROVAL OF ADU’S, BUT ALLOWS DEVELOPMENT STANDARDS. CITY POLICY MAKERS SHOULD CONSIDER WHETHER THE ABOVE DESIGN- RELATED STANDARD SUGGESTED HERE ARE SUFFICIENTLY CLEAR SO AS TO BE MINISTERIAL.] (v) In the RE District, the maximum size of covered parking area for the detached accessory dwelling unit is 200 square feet. [NOTE: DEVELOPMENT STANDARDS IN THIS SECTION DERIVE FROM THE CITY’S EXISTING REQUIREMENTS, AS MODIFIED TO COMPLY WITH STATE LAW. THE CITY COULD CHOOSE TO MODIFY SOME OF THESE STANDARDS.] 9. Additional Requirements for All Accessory Dwelling Units (i) Sale of Units: The Accessory dwelling unit shall not be sold separately from the primary residence. (ii) Short term rentals. The accessory dwelling unit shall not be rented for periods of less than 30 days. (iii) Number of Units Allowed: Only one accessory dwelling unit or junior accessory dwelling unit may be located on any residentially zoned lot that permits a single-family dwelling and which is either not developed or contains only one existing legal single-family dwelling. Not Yet Approved 161018 jb 0131553 16 November 21, 2016 (iv) Existing Development: A single-family dwelling must exist on the lot or shall be constructed on the lot in conjunction with the construction of the accessory dwelling unit. (v) Occupancy: The owner of a parcel proposed for accessory dwelling use shall occupy as a principal residence either the primary dwelling or the accessory dwelling. (vi) Accessory dwelling units shall not be required to provide fire sprinklers if they are not required for the primary residence. (vii) Street Address Required: Street addresses shall be assigned to all accessory dwellings to assist in emergency response. (viii) Street Access: The accessory dwelling unit shall have street access from a driveway in common with the main residence in order to prevent new curb cuts, excessive paving, and elimination of street trees. Separate driveway access may be permitted by the director upon a determination that separate access will result in fewer environmental impacts such as excessive paving, unnecessary grading or unnecessary tree removal, and that such separate access will not create the appearance, from the street, of a lot division or two-family use. [NOTE: THE STANDARDS SUGGESTED HERE DERIVE FROM STATE LAW AND EXISTING CODE REQUIREMENTS WITH SOME CLARIFICATIONS AND UPDATES.] 10. Parking The following parking criteria apply to both detached and attached accessory dwelling units: (i) One parking space per unit or one parking space per bedroom, whichever is greater, shall be provided for the accessory dwelling unit. (ii) Such parking may be provided as tandem parking, may be located on an existing driveway and may be located in side and rear setbacks, but not in front setback. For a corner lot, parking may be located within the corner street side setback if located at least ten (10) feet from the property line. (iii) Notwithstanding subsection (i) above, no parking shall be required for: a. Accessory dwelling units located within one-half mile of public transit. For purposes of this section, “public transit” shall include a rail transit station and a bus stop with two or more lines that provide transit service at 15 minute intervals or better during peak commute periods. The Director shall have the authority to further interpret this section. b. Accessory dwelling units located within an architecturally and historically significant National, California or locally designated historic district. c. Accessory dwelling units part of the existing primary residence or an existing accessory structure. d. When on-street parking permits are required but not offered to the occupant of the Accessory dwelling unit. Not Yet Approved 161018 jb 0131553 17 November 21, 2016 e. When there is a car-share vehicle located within one block of the Accessory dwelling unit. For purposes of this section, “car-share vehicle” shall mean part of an established program intended to stay in a fixed location for at least 10 years and available to the public. The Director shall have the authority to further interpret this section. (iv) When a garage, carport, or covered parking structure is demolished in conjunction with the construction of an accessory dwelling unit, any required replacement spaces may be located in any configuration on the same lot as the accessory dwelling unit, including, but not limited to, as covered spaces, uncovered spaces, or tandem spaces, or by the use of mechanical automobile parking lifts. [NOTE: THIS SECTION INCORPORATES NEW STATE LAW PARKING REQUIREMENTS.] (b) Junior Accessory Dwelling Units 1. Purposes: This Section provides standards for the establishment of junior accessory dwelling units, an alternative to the standard accessory dwelling unit. Junior accessory dwelling units will typically be smaller than an accessory dwelling unit, will be constructed within the walls of an existing single family structure and requires owner occupancy in the single family residence where the unit is located. 2. Development Standards. Junior accessory dwelling units shall comply with the following standards: (i) Number of Units Allowed: Only one accessory dwelling unit or, junior accessory dwelling unit, may be located on any residentially zoned lot that permits a single-family dwelling except as otherwise regulated or restricted by an adopted Coordinated Area Plan or Specific Plan. A junior accessory dwelling unit may only be located on a lot which already contains one legal single-family dwelling. (ii) Size: A junior accessory dwelling unit shall not exceed 500 square feet in size. (iii) Lot Coverage/FAR: A junior accessory dwelling unit shall be included in the lot coverage and FAR requirements applicable to the primary dwelling unit. (iii) Owner Occupancy: The owner of a parcel proposed for a junior accessory dwelling unit shall occupy as a principal residence either the primary dwelling or the junior accessory dwelling. (iv) Sale Prohibited: A junior accessory dwelling unit shall not be sold independently of the primary dwelling on the parcel. (v) Short term rentals: The junior accessory dwelling unit shall not be rented for periods of less than 30 days. (vi) Location of Junior Accessory Dwelling Unit: A junior accessory dwelling unit must be created within the existing walls of an existing primary dwelling, and must include conversion of an existing bedroom. Not Yet Approved 161018 jb 0131553 18 November 21, 2016 (vii) Separate Entry Required: A separate exterior entry shall be provided to serve a junior accessory dwelling unit, with an interior entry to the main living area. A junior accessory dwelling may include a second interior doorway for sound attenuation. (viii) Kitchen Requirements: The junior accessory dwelling unit shall include an efficiency kitchen, requiring and limited to the following components: a. A sink with a maximum waste line diameter of one-and-a-half (1.5) inches, b. A cooking facility or appliance which does not require electrical service greater than one hundred and twenty (120) volts, or natural or propane gas, and c. A food preparation counter and storage cabinets that are of reasonable size in relation to the size of the junior accessory dwelling unit. (ix) Parking. No additional parking is required beyond that required at the time the existing primary dwelling was constructed. [NOTE: THIS IS A NEW SECTION THAT IMPLEMENTS AB 2406 ABOUT JUNIOR ACCESSORY DWELLING UNITS IN RESIDENTIAL DISTRICTS WHICH CURRENTLY PERMIT ADU’S.] SECTION 21. Section 18.52.040 (6)(c) Table 1, is amended as follows: Table 1 Minimum Off-Street Parking Requirements Use Vehicle Parking Requirement (# of spaces) Bicycle Parking Requirement Spaces Class1 Long Term (LT) and Short Term (ST) RESIDENTIAL USES Single -Family Residential (Primary Unit) Tandem Parking Allowed (a) In the OS district 4 spaces, of which at least one space must be covered None (b) In all other districts 2 spaces, of which at least one space must be covered (c) Underground parking for single family uses is prohibited, except pursuant to a variance granted in accordance with the provisions of Chapter 18.76 (Permits and Approvals) of this title, in which case the area of the underground garage shall be counted toward the gross floor area. Not Yet Approved 161018 jb 0131553 19 November 21, 2016 Second Accessory Dwelling Unit (In addition to main dwelling unit requirements) >450 sf in size <450 sf in size 2 spaces, of which at least one must be covered 1 space, covered or uncovered 1 space per unit or 1 space per bedroom, whichever is greater(2), (3) Parking may be provided as tandem parking. Parking may be located within side and rear setbacks, but not in front setback See also Section 18.42.040. None Junior Accessory Dwelling Units None Two-Family Residential (R-2 & RMD Districts) 1.5 spaces per unit, of which at least one space per unit must be covered Tandem Parking Allowed, with one tandem space per unit, associated directly with another parking space for the same unit 1 space per Unit 100% – LT Multiple -Family Residential 1.25 per studio unit 1.5 per 1-bedroom unit 2 per 2-bedroom or larger unit At least one space per unit must be covered Tandem parking allowed for any unit requiring two spaces (one tandem space per unit, associated directly with another parking space for the same unit, up to a maximum of 25% of total required spaces for any project with more than four (4) units) 1 per unit 100% – LT Not Yet Approved 161018 jb 0131553 20 November 21, 2016 (a) Guest Parking For projects exceeding 3 units; 1 space plus 10% of total number of units, provided that if more than one space per unit is assigned or secured parking, then guest spaces equal to 33% of all units is required. 1 space for each 10 units 100% – ST . . . (2) No parking is required for an accessory dwelling unit that is part of an existing primary residence or an existing accessory structure. (3) For a corner lot, parking permitted within the corner street side setback if located at least ten (10) feet from the property line. SECTION 21. In Section 18.76.020 (D), substitute the term “accessory dwelling unit(s)” for “second dwelling unit(s)”. SECTION 22. Any provision of the Palo Alto Municipal Code or appendices thereto inconsistent with the provisions of this Ordinance, to the extent of such inconsistencies and no further, is hereby repealed or modified to that extent necessary to effect the provisions of this Ordinance. SECTION 23. If any section, subsection, sentence, clause, or phrase of this Ordinance is for any reason held to be invalid or unconstitutional by a decision of any court of competent jurisdiction, such decision shall not affect the validity of the remaining portions of this Ordinance. The City Council hereby declares that it would have passed this Ordinance and each and every section, subsection, sentence, clause, or phrase not declared invalid or unconstitutional without regard to whether any portion of the ordinance would be subsequently declared invalid or unconstitutional. SECTION 24. The Council finds that the adoption of this ordinance is exempt from the provisions of the California Environmental Quality Act pursuant to CEQA Guideline sections 15061(b) and 15301, 15303 and 15305 because it simply provides a comprehensive permitting scheme. SECTION 25. This ordinance shall be effective on the thirty-first date after the date of its adoption. INTRODUCED: PASSED: AYES: NOES: Not Yet Approved 161018 jb 0131553 21 November 21, 2016 ABSENT: NOT PARTICIPATING: ATTEST: ____________________________ ____________________________ City Clerk Mayor APPROVED AS TO FORM: APPROVED: ____________________________ ____________________________ Senior Asst. City Attorney City Manager ____________________________ Director of Planning & Community Environment SB 1069 Page 1 SB-1069 Land use: zoning. (2015-2016) SECTION 1. Section 65582.1 of the Government Code is amended to read: 65582.1. The Legislature finds and declares that it has provided reforms and incentives to facilitate and expedite the construction of affordable housing. Those reforms and incentives can be found in the following provisions: (a) Housing element law (Article 10.6 (commencing with Section 65580) of Chapter 3). (b) Extension of statute of limitations in actions challenging the housing element and brought in support of affordable housing (subdivision (d) of Section 65009). (c) Restrictions on disapproval of housing developments (Section 65589.5). (d) Priority for affordable housing in the allocation of water and sewer hookups (Section 65589.7). (e) Least cost zoning law (Section 65913.1). (f) Density bonus law (Section 65915). (g) Second Accessory dwelling units (Sections 65852.150 and 65852.2). (h) By-right housing, in which certain multifamily housing are designated a permitted use (Section 65589.4). (i) No-net-loss-in zoning density law limiting downzonings and density reductions (Section 65863). (j) Requiring persons who sue to halt affordable housing to pay attorney fees (Section 65914) or post a bond (Section 529.2 of the Code of Civil Procedure). (k) Reduced time for action on affordable housing applications under the approval of development permits process (Article 5 (commencing with Section 65950) of Chapter 4.5). (l) Limiting moratoriums on multifamily housing (Section 65858). (m) Prohibiting discrimination against affordable housing (Section 65008). (n) California Fair Employment and Housing Act (Part 2.8 (commencing with Section 12900) of Division 3). (o) Community redevelopment law (Part 1 (commencing with Section 33000) of Division 24 of the Health and Safety Code, and in particular Sections 33334.2 and 33413). SEC. 2. SB 1069 Page 2 Section 65583.1 of the Government Code is amended to read: 65583.1. (a) The Department of Housing and Community Development, in evaluating a proposed or adopted housing element for substantial compliance with this article, may allow a city or county to identify adequate sites, as required pursuant to Section 65583, by a variety of methods, including, but not limited to, redesignation of property to a more intense land use category and increasing the density allowed within one or more categories. The department may also allow a city or county to identify sites for second accessory dwelling units based on the number of second accessory dwelling units developed in the prior housing element planning period whether or not the units are permitted by right, the need for these units in the community, the resources or incentives available for their development, and any other relevant factors, as determined by the department. Nothing in this section reduces the responsibility of a city or county to identify, by income category, the total number of sites for residential development as required by this article. (b) Sites that contain permanent housing units located on a military base undergoing closure or conversion as a result of action pursuant to the Defense Authorization Amendments and Base Closure and Realignment Act (Public Law 100-526), the Defense Base Closure and Realignment Act of 1990 (Public Law 101-510), or any subsequent act requiring the closure or conversion of a military base may be identified as an adequate site if the housing element demonstrates that the housing units will be available for occupancy by households within the planning period of the element. No sites containing housing units scheduled or planned for demolition or conversion to nonresidential uses shall qualify as an adequate site. Any city, city and county, or county using this subdivision shall address the progress in meeting this section in the reports provided pursuant to paragraph (1) of subdivision (b) of Section 65400. (c) (1) The Department of Housing and Community Development may allow a city or county to substitute the provision of units for up to 25 percent of the community’s obligation to identify adequate sites for any income category in its housing element pursuant to paragraph (1) of subdivision (c) of Section 65583 where the community includes in its housing element a program committing the local government to provide units in that income category within the city or county that will be made available through the provision of committed assistance during the planning period covered by the element to low- and very low income households at affordable housing costs or affordable rents, as defined in Sections 50052.5 and 50053 of the Health and Safety Code, and which meet the requirements of paragraph (2). Except as otherwise provided in this subdivision, the community may substitute one dwelling unit for one dwelling unit site in the applicable income category. The program shall do all of the following: (A) Identify the specific, existing sources of committed assistance and dedicate a specific portion of the funds from those sources to the provision of housing pursuant to this subdivision. SB 1069 Page 3 (B) Indicate the number of units that will be provided to both low- and very low income households and demonstrate that the amount of dedicated funds is sufficient to develop the units at affordable housing costs or affordable rents. (C) Demonstrate that the units meet the requirements of paragraph (2). (2) Only units that comply with subparagraph (A), (B), or (C) qualify for inclusion in the housing element program described in paragraph (1), as follows: (A) Units that are to be substantially rehabilitated with committed assistance from the city or county and constitute a net increase in the community’s stock of housing affordable to low- and very low income households. For purposes of this subparagraph, a unit is not eligible to be “substantially rehabilitated” unless all of the following requirements are met: (i) At the time the unit is identified for substantial rehabilitation, (I) the local government has determined that the unit is at imminent risk of loss to the housing stock, (II) the local government has committed to provide relocation assistance pursuant to Chapter 16 (commencing with Section 7260) of Division 7 of Title 1 to any occupants temporarily or permanently displaced by the rehabilitation or code enforcement activity, or the relocation is otherwise provided prior to displacement either as a condition of receivership, or provided by the property owner or the local government pursuant to Article 2.5 (commencing with Section 17975) of Chapter 5 of Part 1.5 of Division 13 of the Health and Safety Code, or as otherwise provided by local ordinance; provided the assistance includes not less than the equivalent of four months’ rent and moving expenses and comparable replacement housing consistent with the moving expenses and comparable replacement housing required pursuant to Section 7260, (III) the local government requires that any displaced occupants will have the right to reoccupy the rehabilitated units, and (IV) the unit has been found by the local government or a court to be unfit for human habitation due to the existence of at least four violations of the conditions listed in subdivisions (a) to (g), inclusive, of Section 17995.3 of the Health and Safety Code. (ii) The rehabilitated unit will have long-term affordability covenants and restrictions that require the unit to be available to, and occupied by, persons or families of low- or very low income at affordable housing costs for at least 20 years or the time period required by any applicable federal or state law or regulation. (iii) Prior to initial occupancy after rehabilitation, the local code enforcement agency shall issue a certificate of occupancy indicating compliance with all applicable state and local building code and health and safety code requirements. (B) Units that are located either on foreclosed property or in a multifamily rental or ownership housing complex of three or more units, are converted with committed assistance from the city or county from nonaffordable to affordable by acquisition of the unit or the purchase of affordability covenants and restrictions for the unit, are not acquired by eminent domain, and constitute a net increase in the community’s stock of housing affordable to low- and very low income households. For purposes of this subparagraph, a unit is not converted by acquisition or the purchase of affordability covenants unless all of the following occur: SB 1069 Page 4 (i) The unit is made available for rent at a cost affordable to low- or very low income households. (ii) At the time the unit is identified for acquisition, the unit is not available at an affordable housing cost to either of the following: (I) Low-income households, if the unit will be made affordable to low-income households. (II) Very low income households, if the unit will be made affordable to very low income households. (iii) At the time the unit is identified for acquisition the unit is not occupied by low- or very low income households or if the acquired unit is occupied, the local government has committed to provide relocation assistance prior to displacement, if any, pursuant to Chapter 16 (commencing with Section 7260) of Division 7 of Title 1 to any occupants displaced by the conversion, or the relocation is otherwise provided prior to displacement; provided the assistance includes not less than the equivalent of four months’ rent and moving expenses and comparable replacement housing consistent with the moving expenses and comparable replacement housing required pursuant to Section 7260. (iv) The unit is in decent, safe, and sanitary condition at the time of occupancy. (v) The unit has long-term affordability covenants and restrictions that require the unit to be affordable to persons of low- or very low income for not less than 55 years. (vi) For units located in multifamily ownership housing complexes with three or more units, or on or after January 1, 2015, on foreclosed properties, at least an equal number of new- construction multifamily rental units affordable to lower income households have been constructed in the city or county within the same planning period as the number of ownership units to be converted. (C) Units that will be preserved at affordable housing costs to persons or families of low- or very low incomes with committed assistance from the city or county by acquisition of the unit or the purchase of affordability covenants for the unit. For purposes of this subparagraph, a unit shall not be deemed preserved unless all of the following occur: (i) The unit has long-term affordability covenants and restrictions that require the unit to be affordable to, and reserved for occupancy by, persons of the same or lower income group as the current occupants for a period of at least 40 years. (ii) The unit is within an “assisted housing development,” as defined in paragraph (3) of subdivision (a) of Section 65863.10. (iii) The city or county finds, after a public hearing, that the unit is eligible, and is reasonably expected, to change from housing affordable to low- and very low income households to any other use during the next five years due to termination of subsidy contracts, mortgage prepayment, or expiration of restrictions on use. SB 1069 Page 5 (iv) The unit is in decent, safe, and sanitary condition at the time of occupancy. (v) At the time the unit is identified for preservation it is available at affordable cost to persons or families of low- or very low income. (3) This subdivision does not apply to any city or county that, during the current or immediately prior planning period, as defined by Section 65588, has not met any of its share of the regional need for affordable housing, as defined in Section 65584, for low- and very low income households. A city or county shall document for any housing unit that a building permit has been issued and all development and permit fees have been paid or the unit is eligible to be lawfully occupied. (4) For purposes of this subdivision, “committed assistance” means that the city or county enters into a legally enforceable agreement during the period from the beginning of the projection period until the end of the second year of the planning period that obligates sufficient available funds to provide the assistance necessary to make the identified units affordable and that requires that the units be made available for occupancy within two years of the execution of the agreement. “Committed assistance” does not include tenant-based rental assistance. (5) For purposes of this subdivision, “net increase” includes only housing units provided committed assistance pursuant to subparagraph (A) or (B) of paragraph (2) in the current planning period, as defined in Section 65588, that were not provided committed assistance in the immediately prior planning period. (6) For purposes of this subdivision, “the time the unit is identified” means the earliest time when any city or county agent, acting on behalf of a public entity, has proposed in writing or has proposed orally or in writing to the property owner, that the unit be considered for substantial rehabilitation, acquisition, or preservation. (7) In the third year of the planning period, as defined by Section 65588, in the report required pursuant to Section 65400, each city or county that has included in its housing element a program to provide units pursuant to subparagraph (A), (B), or (C) of paragraph (2) shall report in writing to the legislative body, and to the department within 30 days of making its report to the legislative body, on its progress in providing units pursuant to this subdivision. The report shall identify the specific units for which committed assistance has been provided or which have been made available to low- and very low income households, and it shall adequately document how each unit complies with this subdivision. If, by July 1 of the third year of the planning period, the city or county has not entered into an enforceable agreement of committed assistance for all units specified in the programs adopted pursuant to subparagraph (A), (B), or (C) of paragraph (2), the city or county shall, not later than July 1 of the fourth year of the planning period, adopt an amended housing element in accordance with Section 65585, identifying additional adequate sites pursuant to paragraph (1) of subdivision (c) of Section 65583 sufficient to accommodate the number of units for which committed assistance was not provided. If a city or county does not amend its housing element to identify adequate sites to address any shortfall, or fails to complete the rehabilitation, acquisition, purchase of SB 1069 Page 6 affordability covenants, or the preservation of any housing unit within two years after committed assistance was provided to that unit, it shall be prohibited from identifying units pursuant to subparagraph (A), (B), or (C) of paragraph (2) in the housing element that it adopts for the next planning period, as defined in Section 65588, above the number of units actually provided or preserved due to committed assistance. (d) A city or county may reduce its share of the regional housing need by the number of units built between the start of the projection period and the deadline for adoption of the housing element. If the city or county reduces its share pursuant to this subdivision, the city or county shall include in the housing element a description of the methodology for assigning those housing units to an income category based on actual or projected sales price, rent levels, or other mechanisms establishing affordability. SEC. 3. Section 65589.4 of the Government Code is amended to read: 65589.4. (a) An attached housing development shall be a permitted use not subject to a conditional use permit on any parcel zoned for an attached housing development if local law so provides or if it satisfies the requirements of subdivision (b) and either of the following: (1) The attached housing development satisfies the criteria of Section 21159.22, 21159.23, or 21159.24 of the Public Resources Code. (2) The attached housing development meets all of the following criteria: (A) The attached housing development is subject to a discretionary decision other than a conditional use permit and a negative declaration or mitigated negative declaration has been adopted for the attached housing development under the California Environmental Quality Act (Division 13 (commencing with Section 21000) of the Public Resources Code). If no public hearing is held with respect to the discretionary decision, then the negative declaration or mitigated negative declaration for the attached housing development may be adopted only after a public hearing to receive comments on the negative declaration or mitigated negative declaration. (B) The attached housing development is consistent with both the jurisdiction’s zoning ordinance and general plan as it existed on the date the application was deemed complete, except that an attached housing development shall not be deemed to be inconsistent with the zoning designation for the site if that zoning designation is inconsistent with the general plan only because the attached housing development site has not been rezoned to conform with the most recent adopted general plan. (C) The attached housing development is located in an area that is covered by one of the following documents that has been adopted by the jurisdiction within five years of the date the application for the attached housing development was deemed complete: SB 1069 Page 7 (i) A general plan. (ii) A revision or update to the general plan that includes at least the land use and circulation elements. (iii) An applicable community plan. (iv) An applicable specific plan. (D) The attached housing development consists of not more than 100 residential units with a minimum density of not less than 12 units per acre or a minimum density of not less than eight units per acre if the attached housing development consists of four or fewer units. (E) The attached housing development is located in an urbanized area as defined in Section 21071 of the Public Resources Code or within a census-defined place with a population density of at least 5,000 persons per square mile or, if the attached housing development consists of 50 or fewer units, within an incorporated city with a population density of at least 2,500 persons per square mile and a total population of at least 25,000 persons. (F) The attached housing development is located on an infill site as defined in Section 21061.0.5 of the Public Resources Code. (b) At least 10 percent of the units of the attached housing development shall be available at affordable housing cost to very low income households, as defined in Section 50105 of the Health and Safety Code, or at least 20 percent of the units of the attached housing development shall be available at affordable housing cost to lower income households, as defined in Section 50079.5 of the Health and Safety Code, or at least 50 percent of the units of the attached housing development available at affordable housing cost to moderate-income households, consistent with Section 50052.5 of the Health and Safety Code. The developer of the attached housing development shall provide sufficient legal commitments to the local agency to ensure the continued availability and use of the housing units for very low, low-, or moderate-income households for a period of at least 30 years. (c) Nothing in this section shall prohibit a local agency from applying design and site review standards in existence on the date the application was deemed complete. (d) The provisions of this section are independent of any obligation of a jurisdiction pursuant to subdivision (c) of Section 65583 to identify multifamily sites developable by right. (e) This section does not apply to the issuance of coastal development permits pursuant to the California Coastal Act (Division 20 (commencing with Section 30000) of the Public Resources Code). (f) This section does not relieve a public agency from complying with the California Environmental Quality Act (Division 13 (commencing with Section 21000) of the Public Resources Code) or relieve an applicant or public agency from complying with the Subdivision Map Act (Division 2 (commencing with Section 66473)). SB 1069 Page 8 (g) This section is applicable to all cities and counties, including charter cities, because the Legislature finds that the lack of affordable housing is of vital statewide importance, and thus a matter of statewide concern. (h) For purposes of this section, “attached housing development” means a newly constructed or substantially rehabilitated structure containing two or more dwelling units and consisting only of residential units, but does not include a second an accessory dwelling unit, as defined by paragraph (4) of subdivision (h) (j) of Section 65852.2, or the conversion of an existing structure to condominiums. SEC. 4. Section 65852.150 of the Government Code is amended to read: 65852.150. (a) The Legislature finds and declares all of the following: (1) Accessory dwelling units are a valuable form of housing in California. The (2) Legislature finds and declares that second units are a valuable form of housing in California. Second units Accessory dwelling units provide housing for family members, students, the elderly, in-home health care providers, the disabled, and others, at below market prices within existing neighborhoods. Homeowners who create second units benefit from added income, and an increased sense of security. (3) Homeowners who create accessory dwelling units benefit from added income, and an increased sense of security. (4) Allowing accessory dwelling units in single-family or multifamily residential zones provides additional rental housing stock in California. (5) California faces a severe housing crisis. (6) The state is falling far short of meeting current and future housing demand with serious consequences for the state’s economy, our ability to build green infill consistent with state greenhouse gas reduction goals, and the well-being of our citizens, particularly lower and middle-income earners. (7) Accessory dwelling units offer lower cost housing to meet the needs of existing and future residents within existing neighborhoods, while respecting architectural character. (8) Accessory dwelling units are, therefore, an essential component of California’s housing supply. (b) It is the intent of the Legislature that any second-unit ordinances an accessory dwelling unit ordinance adopted by a local agencies have agency has the effect of providing for the creation of second accessory dwelling units and that provisions in these ordinances this ordinance relating to matters including unit size, parking, fees fees, and other requirements, SB 1069 Page 9 are not so arbitrary, excessive, or burdensome so as to unreasonably restrict the ability of homeowners to create second accessory dwelling units in zones in which they are authorized by local ordinance. SEC. 5. Section 65852.2 of the Government Code is amended to read: 65852.2. (a) (1) Any A local agency may, by ordinance, provide for the creation of second accessory dwelling units in single-family and multifamily residential zones. The ordinance may shall do any all of the following: (A) Designate areas within the jurisdiction of the local agency where second accessory dwelling units may be permitted. The designation of areas may be based on criteria, that may include, but are not limited to, the adequacy of water and sewer services and the impact of second accessory dwelling units on traffic flow. flow and public safety. (B) Impose standards on second accessory dwelling units that include, but are not limited to, parking, height, setback, lot coverage, architectural review, maximum size of a unit, and standards that prevent adverse impacts on any real property that is listed in the California Register of Historic Places. (C) Provide that second accessory dwelling units do not exceed the allowable density for the lot upon which the second accessory dwelling unit is located, and that second accessory dwelling units are a residential use that is consistent with the existing general plan and zoning designation for the lot. (2) The ordinance shall not be considered in the application of any local ordinance, policy, or program to limit residential growth. (3) When a local agency receives its first application on or after July 1, 2003, for a permit pursuant to this subdivision, the application shall be considered ministerially without discretionary review or a hearing, notwithstanding Section 65901 or 65906 or any local ordinance regulating the issuance of variances or special use permits. Nothing in this paragraph may be construed to require a local government to adopt or amend an ordinance for the creation of second units. permits, within 120 days of submittal of a complete building permit application. A local agency may charge a fee to reimburse it for costs that it incurs as a result of amendments to this paragraph enacted during the 2001–02 Regular Session of the Legislature, including the costs of adopting or amending any ordinance that provides for the creation of second accessory dwelling units. (b) (1) When a local agency which that has not adopted an ordinance governing second accessory dwelling units in accordance with subdivision (a) or (c) receives its first application on or after July 1, 1983, for a permit pursuant to this subdivision, the local agency shall accept the application and approve or disapprove the application ministerially without discretionary review pursuant to this subdivision unless it adopts an ordinance in accordance SB 1069 Page 10 with subdivision (a) or (c) within 120 days after receiving the application. Notwithstanding Section 65901 or 65906, every local agency shall grant a variance or special use permit for ministerially approve the creation of a second an accessory dwelling unit if the second accessory dwelling unit complies with all of the following: (A) The unit is not intended for sale separate from the primary residence and may be rented. (B) The lot is zoned for single-family or multifamily use. (C) The lot contains an existing single-family dwelling. (D) The second accessory dwelling unit is either attached to the existing dwelling and located within the living area of the existing dwelling or detached from the existing dwelling and located on the same lot as the existing dwelling. (E) The increased floor area of an attached second accessory dwelling unit shall not exceed 30 50 percent of the existing living area. area, with a maximum increase in floor area of 1,200 square feet. (F) The total area of floorspace for a detached second accessory dwelling unit shall not exceed 1,200 square feet. (G) Requirements relating to height, setback, lot coverage, architectural review, site plan review, fees, charges, and other zoning requirements generally applicable to residential construction in the zone in which the property is located. (H) Local building code requirements which that apply to detached dwellings, as appropriate. (I) Approval by the local health officer where a private sewage disposal system is being used, if required. (2) No other local ordinance, policy, or regulation shall be the basis for the denial of a building permit or a use permit under this subdivision. (3) This subdivision establishes the maximum standards that local agencies shall use to evaluate proposed second accessory dwelling units on lots zoned for residential use which that contain an existing single-family dwelling. No additional standards, other than those provided in this subdivision or subdivision (a), shall be utilized or imposed, except that a local agency may require an applicant for a permit issued pursuant to this subdivision to be an owner- occupant. owner-occupant or that the property be used for rentals of terms longer than 30 days. (4) No changes in zoning ordinances or other ordinances or any changes in the general plan shall be required to implement this subdivision. Any A local agency may amend its zoning ordinance or general plan to incorporate the policies, procedures, or other provisions applicable to the creation of second accessory dwelling units if these provisions are consistent with the limitations of this subdivision. SB 1069 Page 11 (5) A second unit which conforms to the requirements of An accessory dwelling unit that conforms to this subdivision shall not be considered to exceed the allowable density for the lot upon which it is located, and shall be deemed to be a residential use which that is consistent with the existing general plan and zoning designations for the lot. The second accessory dwelling units shall not be considered in the application of any local ordinance, policy, or program to limit residential growth. (c) No local agency shall adopt an ordinance which totally precludes second units within single- family or multifamily zoned areas unless the ordinance contains findings acknowledging that the ordinance may limit housing opportunities of the region and further contains findings that specific adverse impacts on the public health, safety, and welfare that would result from allowing second units within single-family and multifamily zoned areas justify adopting the ordinance. (d) (c) A local agency may establish minimum and maximum unit size requirements for both attached and detached second accessory dwelling units. No minimum or maximum size for a second an accessory dwelling unit, or size based upon a percentage of the existing dwelling, shall be established by ordinance for either attached or detached dwellings which that does not otherwise permit at least an efficiency unit to be constructed in compliance with local development standards. Accessory dwelling units shall not be required to provide fire sprinklers if they are not required for the primary residence. (e) (d) Parking requirements for second accessory dwelling units shall not exceed one parking space per unit or per bedroom. Additional parking These spaces may be required provided that a finding is made that the additional parking requirements are directly related to the use of the second unit and are consistent with existing neighborhood standards applicable to existing dwellings. provided as tandem parking on an existing driveway. Off-street parking shall be permitted in setback areas in locations determined by the local agency or through tandem parking, unless specific findings are made that parking in setback areas or tandem parking is not feasible based upon specific site or regional topographical or fire and life safety conditions, or that it is not permitted anywhere else in the jurisdiction. conditions. This subdivision shall not apply to a unit that is described in subdivision (e). (e) Notwithstanding any other law, a local agency, whether or not it has adopted an ordinance governing accessory dwelling units in accordance with subdivision (a), shall not impose parking standards for an accessory dwelling unit in any of the following instances: (1) The accessory dwelling unit is located within one-half mile of public transit. (2) The accessory dwelling unit is located within an architecturally and historically significant historic district. (3) The accessory dwelling unit is part of the existing primary residence or an existing accessory structure. SB 1069 Page 12 (4) When on-street parking permits are required but not offered to the occupant of the accessory dwelling unit. (5) When there is a car share vehicle located within one block of the accessory dwelling unit. (f) Notwithstanding subdivisions (a) to (e), inclusive, a local agency shall ministerially approve an application for a building permit to create within a single-family residential zone one accessory dwelling unit per single-family lot if the unit is contained within the existing space of a single-family residence or accessory structure, has independent exterior access from the existing residence, and the side and rear setbacks are sufficient for fire safety. Accessory dwelling units shall not be required to provide fire sprinklers if they are not required for the primary residence. (f) (g) (1) Fees charged for the construction of second accessory dwelling units shall be determined in accordance with Chapter 5 (commencing with Section 66000). 66000) and Chapter 7 (commencing with Section 66012). (2) Accessory dwelling units shall not be considered new residential uses for the purposes of calculating local agency connection fees or capacity charges for utilities, including water and sewer service. (A) For an accessory dwelling unit described in subdivision (f), a local agency shall not require the applicant to install a new or separate utility connection directly between the accessory dwelling unit and the utility or impose a related connection fee or capacity charge. (B) For an accessory dwelling unit that is not described in subdivision (f), a local agency may require a new or separate utility connection directly between the accessory dwelling unit and the utility. Consistent with Section 66013, the connection may be subject to a connection fee or capacity charge that shall be proportionate to the burden of the proposed accessory dwelling unit, based upon either its size or the number of its plumbing fixtures, upon the water or sewer system. This fee or charge shall not exceed the reasonable cost of providing this service. (g) (h) This section does not limit the authority of local agencies to adopt less restrictive requirements for the creation of second accessory dwelling units. (h) (i) Local agencies shall submit a copy of the ordinances adopted pursuant to subdivision (a) or (c) to the Department of Housing and Community Development within 60 days after adoption. (i) (j) As used in this section, the following terms mean: (1) “Living area,” area” means the interior habitable area of a dwelling unit including basements and attics but does not include a garage or any accessory structure. (2) “Local agency” means a city, county, or city and county, whether general law or chartered. (3) For purposes of this section, “neighborhood” has the same meaning as set forth in Section 65589.5. SB 1069 Page 13 (4) “Second “Accessory dwelling unit” means an attached or a detached residential dwelling unit which provides complete independent living facilities for one or more persons. It shall include permanent provisions for living, sleeping, eating, cooking, and sanitation on the same parcel as the single-family dwelling is situated. A second An accessory dwelling unit also includes the following: (A) An efficiency unit, as defined in Section 17958.1 of Health and Safety Code. (B) A manufactured home, as defined in Section 18007 of the Health and Safety Code. (j) (k) Nothing in this section shall be construed to supersede or in any way alter or lessen the effect or application of the California Coastal Act (Division 20 (commencing with Section 30000) of the Public Resources Code), except that the local government shall not be required to hold public hearings for coastal development permit applications for second accessory dwelling units. SEC. 5.5. Section 65852.2 of the Government Code is amended to read: 65852.2. (a) (1) Any A local agency may, by ordinance, provide for the creation of second accessory dwelling units in single-family and multifamily residential zones. The ordinance may shall do any all of the following: (A) Designate areas within the jurisdiction of the local agency where second accessory dwelling units may be permitted. The designation of areas may be based on criteria, that may include, but are not limited to, the adequacy of water and sewer services and the impact of second accessory dwelling units on traffic flow. flow and public safety. (B) (i) Impose standards on second accessory dwelling units that include, but are not limited to, parking, height, setback, lot coverage, landscape, architectural review, maximum size of a unit, and standards that prevent adverse impacts on any real property that is listed in the California Register of Historic Places. (ii) Notwithstanding clause (i), a local agency may reduce or eliminate parking requirements for any accessory dwelling unit located within its jurisdiction. (C) Provide that second accessory dwelling units do not exceed the allowable density for the lot upon which the second accessory dwelling unit is located, and that second accessory dwelling units are a residential use that is consistent with the existing general plan and zoning designation for the lot. (D) Require the accessory dwelling units to comply with all of the following: (i) The unit is not intended for sale separate from the primary residence and may be rented. SB 1069 Page 14 (ii) The lot is zoned for single-family or multifamily use and contains an existing, single-family dwelling. (iii) The accessory dwelling unit is either attached to the existing dwelling or located within the living area of the existing dwelling or detached from the existing dwelling and located on the same lot as the existing dwelling. (iv) The increased floor area of an attached accessory dwelling unit shall not exceed 50 percent of the existing living area, with a maximum increase in floor area of 1,200 square feet. (v) The total area of floorspace for a detached accessory dwelling unit shall not exceed 1,200 square feet. (vi) No passageway shall be required in conjunction with the construction of an accessory dwelling unit. (vii) No setback shall be required for an existing garage that is converted to a accessory dwelling unit, and a setback of no more than five feet from the side and rear lot lines shall be required for an accessory dwelling unit that is constructed above a garage. (viii) Local building code requirements that apply to detached dwellings, as appropriate. (ix) Approval by the local health officer where a private sewage disposal system is being used, if required. (x) (I) Parking requirements for accessory dwelling units shall not exceed one parking space per unit or per bedroom. These spaces may be provided as tandem parking on an existing driveway. (II) Offstreet parking shall be permitted in setback areas in locations determined by the local agency or through tandem parking, unless specific findings are made that parking in setback areas or tandem parking is not feasible based upon specific site or regional topographical or fire and life safety conditions, or that it is not permitted anywhere else in the jurisdiction. (III) This clause shall not apply to a unit that is described in subdivision (d). (xi) When a garage, carport, or covered parking structure is demolished in conjunction with the construction of an accessory dwelling unit, and the local agency requires that those offstreet parking spaces be replaced, the replacement spaces may be located in any configuration on the same lot as the accessory dwelling unit, including, but not limited to, as covered spaces, uncovered spaces, or tandem spaces, or by the use of mechanical automobile parking lifts. This clause shall not apply to a unit that is described in subdivision (d). (2) The ordinance shall not be considered in the application of any local ordinance, policy, or program to limit residential growth. (3) When a local agency receives its first application on or after July 1, 2003, for a permit pursuant to this subdivision, the application shall be considered ministerially without discretionary review or a hearing, notwithstanding Section 65901 or 65906 or any local SB 1069 Page 15 ordinance regulating the issuance of variances or special use permits. Nothing in this paragraph may be construed to require a local government to adopt or amend an ordinance for the creation of second units. permits, within 120 days after receiving the application. A local agency may charge a fee to reimburse it for costs that it incurs as a result of amendments to this paragraph enacted during the 2001–02 Regular Session of the Legislature, including the costs of adopting or amending any ordinance that provides for the creation of second units. an accessory dwelling unit. (b) (4) (1) An When existing ordinance governing the creation of an accessory dwelling unit by a local agency which has not adopted an ordinance governing second units in accordance with subdivision (a) or (c) receives its first application on or after July 1, 1983, for a permit pursuant to this subdivision, the local agency shall accept the application and approve or disapprove the application ministerially without discretionary review pursuant to this subdivision unless it or an accessory dwelling ordinance adopted by a local agency subsequent to the effective date of the act adding this paragraph shall provide an approval process that includes only ministerial provisions for the approval of accessory dwelling units and shall not include any discretionary processes, provisions, or requirements for those units, except as otherwise provided in this subdivision. In the event that a local agency has an existing accessory dwelling unit ordinance that fails to meet the requirements of this subdivision, that ordinance shall be null and void upon the effective date of the act adding this paragraph and that agency shall thereafter apply the standards established in this subdivision for the approval of accessory dwelling units, unless and until the agency adopts an ordinance in accordance with subdivision (a) or (c) within 120 days after receiving the application. Notwithstanding Section 65901 or 65906, every local agency shall grant a variance or special use permit for the creation of a second unit if the second unit complies with all of the following: that complies with this section. (A) The unit is not intended for sale and may be rented. (B) The lot is zoned for single-family or multifamily use. (C) The lot contains an existing single-family dwelling. (D) The second unit is either attached to the existing dwelling and located within the living area of the existing dwelling or detached from the existing dwelling and located on the same lot as the existing dwelling. (E) The increased floor area of an attached second unit shall not exceed 30 percent of the existing living area. (F) The total area of floorspace for a detached second unit shall not exceed 1,200 square feet. (G) Requirements relating to height, setback, lot coverage, architectural review, site plan review, fees, charges, and other zoning requirements generally applicable to residential construction in the zone in which the property is located. (H) Local building code requirements which apply to detached dwellings, as appropriate. SB 1069 Page 16 (I) Approval by the local health officer where a private sewage disposal system is being used, if required. (2) (5) No other local ordinance, policy, or regulation shall be the basis for the denial of a building permit or a use permit under this subdivision. (3) (6) This subdivision establishes the maximum standards that local agencies shall use to evaluate proposed second units on lots a proposed accessory dwelling unit on a lot zoned for residential use which contain that contains an existing single-family dwelling. No additional standards, other than those provided in this subdivision or subdivision (a), subdivision, shall be utilized or imposed, except that a local agency may require an applicant for a permit issued pursuant to this subdivision to be an owner-occupant. owner-occupant or that the property be used for rentals of terms longer than 30 days. (4) (7) No changes in zoning ordinances or other ordinances or any changes in the general plan shall be required to implement this subdivision. Any A local agency may amend its zoning ordinance or general plan to incorporate the policies, procedures, or other provisions applicable to the creation of second units an accessory dwelling unit if these provisions are consistent with the limitations of this subdivision. (5) (8) A second unit which conforms to the requirements of An accessory dwelling unit that conforms to this subdivision shall be deemed to be an accessory use or an accessory building and shall not be considered to exceed the allowable density for the lot upon which it is located, and shall be deemed to be a residential use which that is consistent with the existing general plan and zoning designations for the lot. The second units accessory dwelling unit shall not be considered in the application of any local ordinance, policy, or program to limit residential growth. (c) (b) No When a local agency shall adopt an ordinance which totally precludes second units within single-family or multifamily zoned areas unless the ordinance contains findings acknowledging that the ordinance may limit housing opportunities of the region and further contains findings that specific adverse impacts on the public health, safety, and welfare that would result from allowing second units within single-family and multifamily zoned areas justify adopting the ordinance. that has not adopted an ordinance governing accessory dwelling units in accordance with subdivision (a) receives its first application on or after July 1, 1983, for a permit to create an accessory dwelling unit pursuant to this subdivision, the local agency shall accept the application and approve or disapprove the application ministerially without discretionary review pursuant to subdivision (a) within 120 days after receiving the application. (d) (c) A local agency may establish minimum and maximum unit size requirements for both attached and detached second accessory dwelling units. No minimum or maximum size for a second an accessory dwelling unit, or size based upon a percentage of the existing dwelling, shall be established by ordinance for either attached or detached dwellings which that does not permit at least an efficiency unit to be constructed in compliance with local development standards. Accessory dwelling units shall not be required to provide fire sprinklers if they are not required for the primary residence. SB 1069 Page 17 (d) Notwithstanding any other law, a local agency, whether or not it has adopted an ordinance governing accessory dwelling units in accordance with subdivision (a), shall not impose parking standards for an accessory dwelling unit in any of the following instances: (1) The accessory dwelling unit is located within one-half mile of public transit. (2) The accessory dwelling unit is located within an architecturally and historically significant historic district. (3) The accessory dwelling unit is part of the existing primary residence or an existing accessory structure. (4) When on-street parking permits are required but not offered to the occupant of the accessory dwelling unit. (5) When there is a car share vehicle located within one block of the accessory dwelling unit. (e) Parking requirements for second units shall not exceed one parking space per unit or per bedroom. Additional parking may be required provided that a finding is made that the additional parking requirements are directly related to the use of the second unit and are consistent with existing neighborhood standards applicable to existing dwellings. Off-street parking shall be permitted in setback areas in locations determined by the local agency or through tandem parking, unless specific findings are made that parking in setback areas or tandem parking is not feasible based upon specific site or regional topographical or fire and life safety conditions, or that it is not permitted anywhere else in the jurisdiction. Notwithstanding subdivisions (a) to (d), inclusive, a local agency shall ministerially approve an application for a building permit to create within a single-family residential zone one accessory dwelling unit per single-family lot if the unit is contained within the existing space of a single-family residence or accessory structure, has independent exterior access from the existing residence, and the side and rear setbacks are sufficient for fire safety. Accessory dwelling units shall not be required to provide fire sprinklers if they are not required for the primary residence. (f) (1) Fees charged for the construction of second accessory dwelling units shall be determined in accordance with Chapter 5 (commencing with Section 66000). 66000) and Chapter 7 (commencing with Section 66012). (2) Accessory dwelling units shall not be considered new residential uses for the purposes of calculating local agency connection fees or capacity charges for utilities, including water and sewer service. (A) For an accessory dwelling unit described in subdivision (e), a local agency shall not require the applicant to install a new or separate utility connection directly between the accessory dwelling unit and the utility or impose a related connection fee or capacity charge. (B) For an accessory dwelling unit that is not described in subdivision (e), a local agency may require a new or separate utility connection directly between the accessory dwelling unit and the utility. Consistent with Section 66013, the connection may be subject to a connection fee or SB 1069 Page 18 capacity charge that shall be proportionate to the burden of the proposed accessory dwelling unit, based upon either its size or the number of its plumbing fixtures, upon the water or sewer system. This fee or charge shall not exceed the reasonable cost of providing this service. (g) This section does not limit the authority of local agencies to adopt less restrictive requirements for the creation of second units. an accessory dwelling unit. (h) Local agencies shall submit a copy of the ordinances ordinance adopted pursuant to subdivision (a) or (c) to the Department of Housing and Community Development within 60 days after adoption. (i) As used in this section, the following terms mean: (1) “Living area,” area” means the interior habitable area of a dwelling unit including basements and attics but does not include a garage or any accessory structure. (2) “Local agency” means a city, county, or city and county, whether general law or chartered. (3) For purposes of this section, “neighborhood” has the same meaning as set forth in Section 65589.5. (4) “Second “Accessory dwelling unit” means an attached or a detached residential dwelling unit which provides complete independent living facilities for one or more persons. It shall include permanent provisions for living, sleeping, eating, cooking, and sanitation on the same parcel as the single-family dwelling is situated. A second An accessory dwelling unit also includes the following: (A) An efficiency unit, as defined in Section 17958.1 of Health and Safety Code. (B) A manufactured home, as defined in Section 18007 of the Health and Safety Code. (5) “Passageway” means a pathway that is unobstructed clear to the sky and extends from a street to one entrance of the accessory dwelling unit. (j) Nothing in this section shall be construed to supersede or in any way alter or lessen the effect or application of the California Coastal Act (Division 20 (commencing with Section 30000) of the Public Resources Code), except that the local government shall not be required to hold public hearings for coastal development permit applications for second accessory dwelling units. SEC. 6. Section 66412.2 of the Government Code is amended to read: 66412.2. This division shall not apply to the construction, financing, or leasing of dwelling units pursuant to Section 65852.1 or second accessory dwelling units pursuant to Section 65852.2, but this division shall be applicable to the sale or transfer, but not leasing, of those units. SB 1069 Page 19 SEC. 7. Section 5.5 of this bill incorporates amendments to Section 65852.2 of the Government Code proposed by both this bill and Assembly Bill 2299. It shall only become operative if (1) both bills are enacted and become effective on or before January 1, 2017, (2) each bill amends Section 65852.2 of the Government Code, and (3) this bill is enacted after Assembly Bill 2299, in which case Section 5 of this bill shall not become operative. SEC. 8. No reimbursement is required by this act pursuant to Section 6 of Article XIII B of the California Constitution because a local agency or school district has the authority to levy service charges, fees, or assessments sufficient to pay for the program or level of service mandated by this act, within the meaning of Section 17556 of the Government Code. AB 2299 Page 1 AB-2299 Land use: housing: 2nd units. (2015-2016) SECTION 1. Section 65852.2 of the Government Code is amended to read: 65852.2. (a) (1) Any A local agency may, by ordinance, provide for the creation of second accessory dwelling units in single-family and multifamily residential zones. The ordinance may shall do any all of the following: (A) Designate areas within the jurisdiction of the local agency where second accessory dwelling units may be permitted. The designation of areas may be based on criteria, that may include, but are not limited to, the adequacy of water and sewer services and the impact of second accessory dwelling units on traffic flow. flow and public safety. (B) Impose standards on second accessory dwelling units that include, but are not limited to, parking, height, setback, lot coverage, landscape, architectural review, maximum size of a unit, and standards that prevent adverse impacts on any real property that is listed in the California Register of Historic Places. (C) Notwithstanding subparagraph (B), a local agency may reduce or eliminate parking requirements for any accessory dwelling unit located within its jurisdiction. (C) (D) Provide that second accessory dwelling units do not exceed the allowable density for the lot upon which the second accessory dwelling unit is located, and that second accessory dwelling units are a residential use that is consistent with the existing general plan and zoning designation for the lot. (E) Require the accessory dwelling units to comply with all of the following: (i) The unit is not intended for sale separate from the primary residence and may be rented. (ii) The lot is zoned for single-family or multifamily use. (iii) The accessory dwelling unit is either attached to the existing dwelling or located within the living area of the existing dwelling or detached from the existing dwelling and located on the same lot as the existing dwelling. (iv) The increased floor area of an attached accessory dwelling unit shall not exceed 50 percent of the existing living area. (v) The total area of floorspace for a detached accessory dwelling unit shall not exceed 1,200 square feet. (vi) No passageway shall be required in conjunction with the construction of an accessory dwelling unit. AB 2299 Page 2 (vii) No setback shall be required for an existing garage that is converted to a accessory dwelling unit, and a setback of no more than five feet from the side and rear lot lines shall be required for an accessory dwelling unit that is constructed above a garage. (viii) Local building code requirements that apply to detached dwellings, as appropriate. (ix) Approval by the local health officer where a private sewage disposal system is being used, if required. (x) (I) Parking requirements for accessory dwelling units shall not exceed one parking space per unit or per bedroom. These spaces may be provided as tandem parking on an existing driveway. (II) Offstreet parking shall be permitted in setback areas in locations determined by the local agency or through tandem parking, unless specific findings are made that parking in setback areas or tandem parking is not feasible based upon specific site or regional topographical or fire and life safety conditions, or that it is not permitted anywhere else in the jurisdiction. (xi) When a garage, carport, or covered parking structure is demolished in conjunction with the construction of an accessory dwelling unit, and the local agency requires that those offstreet parking spaces be replaced, the replacement spaces may be located in any configuration on the same lot as the accessory dwelling unit, including, but not limited to, as covered spaces, uncovered spaces, or tandem spaces, or by the use of mechanical automobile parking lifts. (2) The ordinance shall not be considered in the application of any local ordinance, policy, or program to limit residential growth. (3) When a local agency receives its first application on or after July 1, 2003, for a permit pursuant to this subdivision, the application shall be considered ministerially without discretionary review or a hearing, notwithstanding Section 65901 or 65906 or any local ordinance regulating the issuance of variances or special use permits. Nothing in this paragraph may be construed to require a local government to adopt or amend an ordinance for the creation of second units. permits, within 120 days after receiving the application. A local agency may charge a fee to reimburse it for costs that it incurs as a result of amendments to this paragraph enacted during the 2001–02 Regular Session of the Legislature, including the costs of adopting or amending any ordinance that provides for the creation of second accessory dwelling units. (b) (4) (1) Any When existing ordinance governing the creation of accessory dwelling units by a local agency which has not adopted an ordinance governing second units in accordance with subdivision (a) or (c) receives its first application on or after July 1, 1983, for a permit pursuant to this subdivision, the local agency shall accept the application and approve or disapprove the application ministerially without discretionary review pursuant to this subdivision unless it or any such ordinance adopted by a local agency subsequent to the effective date of the act adding this paragraph shall provide an approval process that includes only ministerial provisions for the approval of accessory dwelling units and shall not include any discretionary processes, provisions, or requirements for those units except as otherwise provided AB 2299 Page 3 in this subdivision. In the event that a local agency has an existing accessory dwelling unit ordinance that fails to meet the requirements of this subdivision, that ordinance shall be null and void upon the effective date of the act adding this paragraph and that agency shall thereafter apply the standards established in this subdivision for the approval of accessory dwelling units, unless and until the agency adopts an ordinance in accordance with subdivision (a) or (c) within 120 days after receiving the application. Notwithstanding Section 65901 or 65906, every local agency shall grant a variance or special use permit for the creation of a second unit if the second unit complies with all of the following: that complies with this section. (A) The unit is not intended for sale and may be rented. (B) The lot is zoned for single-family or multifamily use. (C) The lot contains an existing single-family dwelling. (D) The second unit is either attached to the existing dwelling and located within the living area of the existing dwelling or detached from the existing dwelling and located on the same lot as the existing dwelling. (E) The increased floor area of an attached second unit shall not exceed 30 percent of the existing living area. (F) The total area of floorspace for a detached second unit shall not exceed 1,200 square feet. (G) Requirements relating to height, setback, lot coverage, architectural review, site plan review, fees, charges, and other zoning requirements generally applicable to residential construction in the zone in which the property is located. (H) Local building code requirements which apply to detached dwellings, as appropriate. (I) Approval by the local health officer where a private sewage disposal system is being used, if required. (2) (5) No other local ordinance, policy, or regulation shall be the basis for the denial of a building permit or a use permit under this subdivision. (3) (6) This subdivision establishes the maximum standards that local agencies shall use to evaluate proposed second accessory dwelling units on lots zoned for residential use which that contain an existing single-family dwelling. No additional standards, other than those provided in this subdivision or subdivision (a), subdivision, shall be utilized or imposed, except that a local agency may require an applicant for a permit issued pursuant to this subdivision to be an owner-occupant. (4) (7) No changes in zoning ordinances or other ordinances or any changes in the general plan shall be required to implement this subdivision. Any A local agency may amend its zoning ordinance or general plan to incorporate the policies, procedures, or other provisions applicable to the creation of second accessory dwelling units if these provisions are consistent with the limitations of this subdivision. AB 2299 Page 4 (5) (8) A second unit which conforms to the requirements of An accessory dwelling unit that conforms to this subdivision shall be deemed to be an accessory use or an accessory building and shall not be considered to exceed the allowable density for the lot upon which it is located, and shall be deemed to be a residential use which that is consistent with the existing general plan and zoning designations for the lot. The second accessory dwelling units shall not be considered in the application of any local ordinance, policy, or program to limit residential growth. (c) (b) No When a local agency shall adopt an ordinance which totally precludes second units within single-family or multifamily zoned areas unless the ordinance contains findings acknowledging that the ordinance may limit housing opportunities of the region and further contains findings that specific adverse impacts on the public health, safety, and welfare that would result from allowing second units within single-family and multifamily zoned areas justify adopting the ordinance. that has not adopted an ordinance governing accessory dwelling units in accordance with subdivision (a) receives its first application on or after July 1, 1983, for a permit pursuant to this subdivision, the local agency shall accept the application and approve or disapprove the application ministerially without discretionary review pursuant to subdivision (a) within 120 days after receiving the application. (d) (c) A local agency may establish minimum and maximum unit size requirements for both attached and detached second accessory dwelling units. No minimum or maximum size for a second accessory dwelling unit, or size based upon a percentage of the existing dwelling, shall be established by ordinance for either attached or detached dwellings which that does not permit at least an efficiency unit to be constructed in compliance with local development standards. (e) Parking requirements for second units shall not exceed one parking space per unit or per bedroom. Additional parking may be required provided that a finding is made that the additional parking requirements are directly related to the use of the second unit and are consistent with existing neighborhood standards applicable to existing dwellings. Off-street parking shall be permitted in setback areas in locations determined by the local agency or through tandem parking, unless specific findings are made that parking in setback areas or tandem parking is not feasible based upon specific site or regional topographical or fire and life safety conditions, or that it is not permitted anywhere else in the jurisdiction. (f) (d) Fees charged for the construction of second accessory dwelling units shall be determined in accordance with Chapter 5 (commencing with Section 66000). (g) (e) This section does not limit the authority of local agencies to adopt less restrictive requirements for the creation of second units. accessory dwelling units, provided those requirements comply with subdivision (a). (h) (f) Local agencies shall submit a copy of the ordinances adopted pursuant to subdivision (a) or (c) to the Department of Housing and Community Development within 60 days after adoption. AB 2299 Page 5 (i) (g) As used in this section, the following terms mean: (1) “Living area,” area” means the interior habitable area of a dwelling unit including basements and attics but does not include a garage or any accessory structure. (2) “Local agency” means a city, county, or city and county, whether general law or chartered. (3) For purposes of this section, “neighborhood” has the same meaning as set forth in Section 65589.5. (4) “Second “Accessory dwelling unit” means an attached or a detached residential dwelling unit which provides complete independent living facilities for one or more persons. It shall include permanent provisions for living, sleeping, eating, cooking, and sanitation on the same parcel as the single-family dwelling is situated. A second An accessory dwelling unit also includes the following: (A) An efficiency unit, as defined in Section 17958.1 of Health and Safety Code. (B) A manufactured home, as defined in Section 18007 of the Health and Safety Code. (C) “Passageway” means a pathway that is unobstructed clear to the sky and extends from a street to one entrance of the accessory dwelling unit. (j) (h) Nothing in this section shall be construed to supersede or in any way alter or lessen the effect or application of the California Coastal Act (Division 20 (commencing with Section 30000) of the Public Resources Code), except that the local government shall not be required to hold public hearings for coastal development permit applications for second accessory dwelling units. SEC. 1.5. Section 65852.2 of the Government Code is amended to read: 65852.2. (a) (1) Any A local agency may, by ordinance, provide for the creation of second accessory dwelling units in single-family and multifamily residential zones. The ordinance may shall do any all of the following: (A) Designate areas within the jurisdiction of the local agency where second accessory dwelling units may be permitted. The designation of areas may be based on criteria, that may include, but are not limited to, the adequacy of water and sewer services and the impact of second accessory dwelling units on traffic flow. flow and public safety. (B) (i) Impose standards on second accessory dwelling units that include, but are not limited to, parking, height, setback, lot coverage, landscape, architectural review, maximum size of a unit, and standards that prevent adverse impacts on any real property that is listed in the California Register of Historic Places. AB 2299 Page 6 (ii) Notwithstanding clause (i), a local agency may reduce or eliminate parking requirements for any accessory dwelling unit located within its jurisdiction. (C) Provide that second accessory dwelling units do not exceed the allowable density for the lot upon which the second accessory dwelling unit is located, and that second accessory dwelling units are a residential use that is consistent with the existing general plan and zoning designation for the lot. (D) Require the accessory dwelling units to comply with all of the following: (i) The unit is not intended for sale separate from the primary residence and may be rented. (ii) The lot is zoned for single-family or multifamily use and contains an existing, single-family dwelling. (iii) The accessory dwelling unit is either attached to the existing dwelling or located within the living area of the existing dwelling or detached from the existing dwelling and located on the same lot as the existing dwelling. (iv) The increased floor area of an attached accessory dwelling unit shall not exceed 50 percent of the existing living area, with a maximum increase in floor area of 1,200 square feet. (v) The total area of floorspace for a detached accessory dwelling unit shall not exceed 1,200 square feet. (vi) No passageway shall be required in conjunction with the construction of an accessory dwelling unit. (vii) No setback shall be required for an existing garage that is converted to a accessory dwelling unit, and a setback of no more than five feet from the side and rear lot lines shall be required for an accessory dwelling unit that is constructed above a garage. (viii) Local building code requirements that apply to detached dwellings, as appropriate. (ix) Approval by the local health officer where a private sewage disposal system is being used, if required. (x) (I) Parking requirements for accessory dwelling units shall not exceed one parking space per unit or per bedroom. These spaces may be provided as tandem parking on an existing driveway. (II) Offstreet parking shall be permitted in setback areas in locations determined by the local agency or through tandem parking, unless specific findings are made that parking in setback areas or tandem parking is not feasible based upon specific site or regional topographical or fire and life safety conditions, or that it is not permitted anywhere else in the jurisdiction. (III) This clause shall not apply to a unit that is described in subdivision (d). AB 2299 Page 7 (xi) When a garage, carport, or covered parking structure is demolished in conjunction with the construction of an accessory dwelling unit, and the local agency requires that those offstreet parking spaces be replaced, the replacement spaces may be located in any configuration on the same lot as the accessory dwelling unit, including, but not limited to, as covered spaces, uncovered spaces, or tandem spaces, or by the use of mechanical automobile parking lifts. This clause shall not apply to a unit that is described in subdivision (d). (2) The ordinance shall not be considered in the application of any local ordinance, policy, or program to limit residential growth. (3) When a local agency receives its first application on or after July 1, 2003, for a permit pursuant to this subdivision, the application shall be considered ministerially without discretionary review or a hearing, notwithstanding Section 65901 or 65906 or any local ordinance regulating the issuance of variances or special use permits. Nothing in this paragraph may be construed to require a local government to adopt or amend an ordinance for the creation of second units. permits, within 120 days after receiving the application. A local agency may charge a fee to reimburse it for costs that it incurs as a result of amendments to this paragraph enacted during the 2001–02 Regular Session of the Legislature, including the costs of adopting or amending any ordinance that provides for the creation of second units. an accessory dwelling unit. (b) (4) (1) An When existing ordinance governing the creation of an accessory dwelling unit by a local agency which has not adopted an ordinance governing second units in accordance with subdivision (a) or (c) receives its first application on or after July 1, 1983, for a permit pursuant to this subdivision, the local agency shall accept the application and approve or disapprove the application ministerially without discretionary review pursuant to this subdivision unless it or an accessory dwelling ordinance adopted by a local agency subsequent to the effective date of the act adding this paragraph shall provide an approval process that includes only ministerial provisions for the approval of accessory dwelling units and shall not include any discretionary processes, provisions, or requirements for those units, except as otherwise provided in this subdivision. In the event that a local agency has an existing accessory dwelling unit ordinance that fails to meet the requirements of this subdivision, that ordinance shall be null and void upon the effective date of the act adding this paragraph and that agency shall thereafter apply the standards established in this subdivision for the approval of accessory dwelling units, unless and until the agency adopts an ordinance in accordance with subdivision (a) or (c) within 120 days after receiving the application. Notwithstanding Section 65901 or 65906, every local agency shall grant a variance or special use permit for the creation of a second unit if the second unit complies with all of the following: that complies with this section. (A) The unit is not intended for sale and may be rented. (B) The lot is zoned for single-family or multifamily use. (C) The lot contains an existing single-family dwelling. AB 2299 Page 8 (D) The second unit is either attached to the existing dwelling and located within the living area of the existing dwelling or detached from the existing dwelling and located on the same lot as the existing dwelling. (E) The increased floor area of an attached second unit shall not exceed 30 percent of the existing living area. (F) The total area of floorspace for a detached second unit shall not exceed 1,200 square feet. (G) Requirements relating to height, setback, lot coverage, architectural review, site plan review, fees, charges, and other zoning requirements generally applicable to residential construction in the zone in which the property is located. (H) Local building code requirements which apply to detached dwellings, as appropriate. (I) Approval by the local health officer where a private sewage disposal system is being used, if required. (2) (5) No other local ordinance, policy, or regulation shall be the basis for the denial of a building permit or a use permit under this subdivision. (3) (6) This subdivision establishes the maximum standards that local agencies shall use to evaluate proposed second units on lots a proposed accessory dwelling unit on a lot zoned for residential use which contain that contains an existing single-family dwelling. No additional standards, other than those provided in this subdivision or subdivision (a), subdivision, shall be utilized or imposed, except that a local agency may require an applicant for a permit issued pursuant to this subdivision to be an owner-occupant. owner-occupant or that the property be used for rentals of terms longer than 30 days. (4) (7) No changes in zoning ordinances or other ordinances or any changes in the general plan shall be required to implement this subdivision. Any A local agency may amend its zoning ordinance or general plan to incorporate the policies, procedures, or other provisions applicable to the creation of second units an accessory dwelling unit if these provisions are consistent with the limitations of this subdivision. (5) (8) A second unit which conforms to the requirements of An accessory dwelling unit that conforms to this subdivision shall be deemed to be an accessory use or an accessory building and shall not be considered to exceed the allowable density for the lot upon which it is located, and shall be deemed to be a residential use which that is consistent with the existing general plan and zoning designations for the lot. The second units accessory dwelling unit shall not be considered in the application of any local ordinance, policy, or program to limit residential growth. (c) (b) No When a local agency shall adopt an ordinance which totally precludes second units within single-family or multifamily zoned areas unless the ordinance contains findings acknowledging that the ordinance may limit housing opportunities of the region and further contains findings that specific adverse impacts on the public health, safety, and welfare that AB 2299 Page 9 would result from allowing second units within single-family and multifamily zoned areas justify adopting the ordinance. that has not adopted an ordinance governing accessory dwelling units in accordance with subdivision (a) receives its first application on or after July 1, 1983, for a permit to create an accessory dwelling unit pursuant to this subdivision, the local agency shall accept the application and approve or disapprove the application ministerially without discretionary review pursuant to subdivision (a) within 120 days after receiving the application. (d) (c) A local agency may establish minimum and maximum unit size requirements for both attached and detached second accessory dwelling units. No minimum or maximum size for a second an accessory dwelling unit, or size based upon a percentage of the existing dwelling, shall be established by ordinance for either attached or detached dwellings which that does not permit at least an efficiency unit to be constructed in compliance with local development standards. Accessory dwelling units shall not be required to provide fire sprinklers if they are not required for the primary residence. (d) Notwithstanding any other law, a local agency, whether or not it has adopted an ordinance governing accessory dwelling units in accordance with subdivision (a), shall not impose parking standards for an accessory dwelling unit in any of the following instances: (1) The accessory dwelling unit is located within one-half mile of public transit. (2) The accessory dwelling unit is located within an architecturally and historically significant historic district. (3) The accessory dwelling unit is part of the existing primary residence or an existing accessory structure. (4) When on-street parking permits are required but not offered to the occupant of the accessory dwelling unit. (5) When there is a car share vehicle located within one block of the accessory dwelling unit. (e) Parking requirements for second units shall not exceed one parking space per unit or per bedroom. Additional parking may be required provided that a finding is made that the additional parking requirements are directly related to the use of the second unit and are consistent with existing neighborhood standards applicable to existing dwellings. Off-street parking shall be permitted in setback areas in locations determined by the local agency or through tandem parking, unless specific findings are made that parking in setback areas or tandem parking is not feasible based upon specific site or regional topographical or fire and life safety conditions, or that it is not permitted anywhere else in the jurisdiction. Notwithstanding subdivisions (a) to (d), inclusive, a local agency shall ministerially approve an application for a building permit to create within a single-family residential zone one accessory dwelling unit per single-family lot if the unit is contained within the existing space of a single-family residence or accessory structure, has independent exterior access from the existing residence, and the side and rear setbacks are sufficient for fire safety. Accessory dwelling units shall not be required to provide fire sprinklers if they are not required for the primary residence. AB 2299 Page 10 (f) (1) Fees charged for the construction of second accessory dwelling units shall be determined in accordance with Chapter 5 (commencing with Section 66000). 66000) and Chapter 7 (commencing with Section 66012). (2) Accessory dwelling units shall not be considered new residential uses for the purposes of calculating local agency connection fees or capacity charges for utilities, including water and sewer service. (A) For an accessory dwelling unit described in subdivision (e), a local agency shall not require the applicant to install a new or separate utility connection directly between the accessory dwelling unit and the utility or impose a related connection fee or capacity charge. (B) For an accessory dwelling unit that is not described in subdivision (e), a local agency may require a new or separate utility connection directly between the accessory dwelling unit and the utility. Consistent with Section 66013, the connection may be subject to a connection fee or capacity charge that shall be proportionate to the burden of the proposed accessory dwelling unit, based upon either its size or the number of its plumbing fixtures, upon the water or sewer system. This fee or charge shall not exceed the reasonable cost of providing this service. (g) This section does not limit the authority of local agencies to adopt less restrictive requirements for the creation of second units. an accessory dwelling unit. (h) Local agencies shall submit a copy of the ordinances ordinance adopted pursuant to subdivision (a) or (c) to the Department of Housing and Community Development within 60 days after adoption. (i) As used in this section, the following terms mean: (1) “Living area,” area” means the interior habitable area of a dwelling unit including basements and attics but does not include a garage or any accessory structure. (2) “Local agency” means a city, county, or city and county, whether general law or chartered. (3) For purposes of this section, “neighborhood” has the same meaning as set forth in Section 65589.5. (4) “Second “Accessory dwelling unit” means an attached or a detached residential dwelling unit which provides complete independent living facilities for one or more persons. It shall include permanent provisions for living, sleeping, eating, cooking, and sanitation on the same parcel as the single-family dwelling is situated. A second An accessory dwelling unit also includes the following: (A) An efficiency unit, as defined in Section 17958.1 of Health and Safety Code. (B) A manufactured home, as defined in Section 18007 of the Health and Safety Code. (5) “Passageway” means a pathway that is unobstructed clear to the sky and extends from a street to one entrance of the accessory dwelling unit. AB 2299 Page 11 (j) Nothing in this section shall be construed to supersede or in any way alter or lessen the effect or application of the California Coastal Act (Division 20 (commencing with Section 30000) of the Public Resources Code), except that the local government shall not be required to hold public hearings for coastal development permit applications for second accessory dwelling units. SEC. 2. Section 1.5 of this bill incorporates amendments to Section 65852.2 of the Government Code proposed by both this bill and Senate Bill 1069. It shall only become operative if (1) both bills are enacted and become effective on or before January 1, 2017, (2) each bill amends Section 65852.2 of the Government Code, and (3) this bill is enacted after Senate Bill 1069, in which case Section 1 of this bill shall not become operative. SEC. 3. No reimbursement is required by this act pursuant to Section 6 of Article XIII B of the California Constitution because a local agency or school district has the authority to levy service charges, fees, or assessments sufficient to pay for the program or level of service mandated by this act, within the meaning of Section 17556 of the Government Code. AB 2406 Page 1 AB-2406 Housing: junior accessory dwelling units. (2015-2016) SECTION 1. Section 65852.22 is added to the Government Code, immediately following Section 65852.2, to read: 65852.22. (a) Notwithstanding Section 65852.2, a local agency may, by ordinance, provide for the creation of junior accessory dwelling units in single-family residential zones. The ordinance may require a permit to be obtained for the creation of a junior accessory dwelling unit, and shall do all of the following: (1) Limit the number of junior accessory dwelling units to one per residential lot zoned for single- family residences with a single-family residence already built on the lot. (2) Require owner-occupancy in the single-family residence in which the junior accessory dwelling unit will be permitted. The owner may reside in either the remaining portion of the structure or the newly created junior accessory dwelling unit. Owner-occupancy shall not be required if the owner is another governmental agency, land trust, or housing organization. (3) Require the recordation of a deed restriction, which shall run with the land, shall be filed with the permitting agency, and shall include both of the following: (A) A prohibition on the sale of the junior accessory dwelling unit separate from the sale of the single-family residence, including a statement that the deed restriction may be enforced against future purchasers. (B) A restriction on the size and attributes of the junior accessory dwelling unit that conforms with this section. (4) Require a permitted junior accessory dwelling unit to be constructed within the existing walls of the structure, and require the inclusion of an existing bedroom. (5) Require a permitted junior accessory dwelling to include a separate entrance from the main entrance to the structure, with an interior entry to the main living area. A permitted junior accessory dwelling may include a second interior doorway for sound attenuation. (6) Require the permitted junior accessory dwelling unit to include an efficiency kitchen, which shall include all of the following: (A) A sink with a maximum waste line diameter of 1.5 inches. (B) A cooking facility with appliances that do not require electrical service greater than 120 volts, or natural or propane gas. (C) A food preparation counter and storage cabinets that are of reasonable size in relation to the size of the junior accessory dwelling unit. AB 2406 Page 2 (b) (1) An ordinance shall not require additional parking as a condition to grant a permit. (2) This subdivision shall not be interpreted to prohibit the requirement of an inspection, including the imposition of a fee for that inspection, to determine whether the junior accessory dwelling unit is in compliance with applicable building standards. (c) An application for a permit pursuant to this section shall, notwithstanding Section 65901 or 65906 or any local ordinance regulating the issuance of variances or special use permits, be considered ministerially, without discretionary review or a hearing. A permit shall be issued within 120 days of submission of an application for a permit pursuant to this section. A local agency may charge a fee to reimburse the local agency for costs incurred in connection with the issuance of a permit pursuant to this section. (d) For the purposes of any fire or life protection ordinance or regulation, a junior accessory dwelling unit shall not be considered a separate or new dwelling unit. This section shall not be construed to prohibit a city, county, city and county, or other local public entity from adopting an ordinance or regulation relating to fire and life protection requirements within a single- family residence that contains a junior accessory dwelling unit so long as the ordinance or regulation applies uniformly to all single-family residences within the zone regardless of whether the single-family residence includes a junior accessory dwelling unit or not. (e) For the purposes of providing service for water, sewer, or power, including a connection fee, a junior accessory dwelling unit shall not be considered a separate or new dwelling unit. (f) This section shall not be construed to prohibit a local agency from adopting an ordinance or regulation, related to parking or a service or a connection fee for water, sewer, or power, that applies to a single-family residence that contains a junior accessory dwelling unit, so long as that ordinance or regulation applies uniformly to all single-family residences regardless of whether the single-family residence includes a junior accessory dwelling unit. (g) For purposes of this section, the following terms have the following meanings: (1) “Junior accessory dwelling unit” means a unit that is no more than 500 square feet in size and contained entirely within an existing single-family structure. A junior accessory dwelling unit may include separate sanitation facilities, or may share sanitation facilities with the existing structure. (2) “Local agency” means a city, county, or city and county, whether general law or chartered. SEC. 2. This act is an urgency statute necessary for the immediate preservation of the public peace, health, or safety within the meaning of Article IV of the Constitution and shall go into immediate effect. The facts constituting the necessity are: In order to allow local jurisdictions the ability to promulgate ordinances that create secure income for homeowners and secure housing for renters, at the earliest possible time, it is necessary for this act to take effect immediately. AB 2406 Page 3 Accessory Dwelling Unit (ADU) Requirements *Note: Other residential districts have different development standards 161014 jb 0131560 Rev. November 22, 2016 Development Standards Current Ordinance (R-1 Standards)* State Law Restrictions Staff Proposal Attached ADUs Maximum size of living area (attached) 450sf ▪ Not including covered parking ▪ Basement area Included Shall not exceed 50% of existing living area, with maximum increase of 1,200sf No Change Maximum house size (attached) 6,000sf (attached ADU included) No No Change Maximum height (attached) One story & 17ft No No Change Detached ADUs Minimum separation from main dwelling (detached) 12ft No Delete Maximum size of living area (detached) 900sf ▪ Not including covered parking ▪ Basement area included Not to exceed 1,200sf No Change Maximum height (detached) One story & 17ft No No Change Attached and Detached Lot coverage ▪ Equivalent to FAR for single story ▪ 35% for two story No No Change Accessory Dwelling Unit (ADU) Requirements *Note: Other residential districts have different development standards 161014 jb 0131560 Rev. November 22, 2016 Development Standards Current Ordinance (R-1 Standards)* State Law Restrictions Staff Proposal FAR ▪ .45 (1st 5,000sf) ▪ .30 (in excess of 5,000sf) No No Change Minimum lot size (attached & detached) 35% greater than minimum lot size for R-1 lots No No Change Parking ▪ 2 parking spaces/1 covered ▪ Cannot be in front setback ▪ Not closer than 10ft from street in street side setback ▪ Not to exceed 1 per unit or per bedroom ▪ May be located in setbacks or tandem, unless special findings ▪ No parking required for Junior ADU ▪ No parking required for ADU part of existing primary residence or existing accessory structure ▪ 1 per unit or 1 per bedroom, whichever is greater ▪ No parking required for junior units or retrofit of existing structure PUBLIC COMMENTS RECEIVED AS OF NOVEMBER 23, 2016 From: Steve Baker Date Received: 11/20/2016 I believe SDUs are an easy way to create more housing for couples or single people. However, they will probably also create more housing for families in palo alto, as empty nesters may move into SDUs on their own property and rent out their houses to newcomers. It seems like a win-win to me! I support removing the minimum lot size requirement for SDUs and also relaxing the FAR requirement for the purposes of SDUs. Thank you, Steve Baker From: Abby Boyd Date Received: 11/20/2016 Please address: First, is this instead of the single story overlay? Will neighborhoods with a single story overlay be changed to a less height restrictive zoning? I WANT TO KEEP THE SINGLE STORY OVERLAY. Houses in a cul-de-sac have parking issues, which include the ability of garbage and recycling containers being up out for pickup I don’t want people looking into my house and backyard. This privacy is a plus that is disappearing and does not need to disappear in Eichler neighborhoods I can’t plant trees to block neighbor homes or insure privacy. I have had to cut down trees because of telephone lines Will you increase traffic in residential areas? I already have cut through traffic and employees at the Jewish Campus parking on my street. Sunlight. I need it for my vegetable garden and I like to look at the sky. What about solar panels? Some houses back up to enormous lots, the one behind me is 17000 square feet. I don’t want second stories that would loom over my house as people drove up to it. This has been done on Montrose and looks awful. Higher grades and flood plains. These need to be taken into account when looking at the final height of buildings. Access areas for repairs. Don’t forget to keep these free. Granny units are another structure that needs to not block sunlight, end my privacy, and increase parking. I think they may become homes for Stanford students, not low income employees. Are you going to have rent restrictions on these so low income people can live in Palo Alto? Is this a can of worms? Who decides the guidelines? Please address these issues and consider that Palo Alto has increased density at the expense of quality of life. From: K JM Date Received: 11/20/2016 Question: so now, neighbor remodeling garage on churchill where plans are stamped not to be used for sleeping (or some similar designation...) - will they now be permitted to have a tenant? From: Virginia Van Kuran Date Received: 11/17/2016 I am in full support for updating the regulations regarding ADUs and JADUs to provide much needed additional housing options in Palo Alto. I would like to be informed about this project. Thank you. Regards, Virginia Van Kuran 879 Garland Drive Palo Alto, CA 94303 virginia@vankuran.com From: Tammy Kwan Date Received: 11/17/2016 My name is Tammy and I was referred to you by Samuel Gutierrez, one of the City Planning technicians. I own a duplex in Palo Alto and we had hopes to build expand one unit by adding a second floor to maximize our square footage. Our local family of four would love to be able to live in the expanded side while keeping the other unit as a rental. It is zoned as R2 and since it is on a lot sized less than 7500 sq feet, we are considered a grandfathered, legal, non-conforming duplex. Therefore, we are not able to add any additional square footage. Unfortunately, we learned this too late and already drew up our plans. According to Samuel, the only option we have if we want to increase the floor space is to convert it to a single family home. However, we'd like to keep it as 2 units to provide us that extra rental income. Also, it seems like a shame to take away a unit from the already short pool of housing in Palo Alto. I also hear from news outlets that there is a push to allow more second unit dwellings on more properties. Do you know the latest on this in Palo Alto? Is there a chance that the City may decrease the 7500 sq foot lot minimum for 2 units in an R-2 zone? Samuel mentioned that I can be added to a newsletter to receive the latest info? If so, that would be great. Thanks and looking forward to hearing your thoughts, Tammy From: Diane Reklis Date Received: 11/21/2016 Dear Cory and members of the PTC, Relaxing the setback from the street slightly would allow many Eichlers to either convert the front bedroom to a studio and/or add an apartment to half the garage. This would not impact the neighbors or the homeowner nearly as much as a second story addition or a separate structure and it should be considered while you are thinking about ADUs. The setbacks were put in place when we had water for front lawns; times have changed and we should examine what makes sense for today and the future. There used to be an ordnance or zoning that would not allow bedroom in ½ garage – not sure if it is state or local, but if it is still restricted it needs to be changed. With appropriate firewalls this restriction does not make sense. Now many folks put in an “office” in part of the garage and use it for a bedroom. I’d rather make it legal and safe than illegal and therefore have no possibility of regulating for safety. Many of the ideas I proposed in my editorial last April are relevant to this discussion. Please include copies of this editorial in your meeting packet. http://www.paloaltoonline.com/news/2016/04/30/guest-opinion-be-creative-in-embracing- change-preserving-neighborhood The city should make ADUs easy, including helping with getting simple designs through the permit process and helping (at cost) to develop appropriate leases (leases might include minor repairs or computer advice in lieu of some rent). There is no need to demand that each homeowner reinvent the basic design, particularly when many homes in the neighborhood are similar. A well-designed ADU might have many different uses during the time that a homeowner has control of their house and that flexibility is a good thing and should be encouraged. Many homes that are suitable for ADUs are owned by older folks who are more likely to do the work of adding an ADU and renting it out (or renting out the main part of the house and moving into the new part) if the city makes the process easy. This would also allow many to age in place while allowing new folks to share the space. I am glad that this idea is gaining traction. Thank you for letting me give input. Diane Reklis 650-814-3410 _______________________ 1.Spokespersons that are representing a group of five or more people who are identified as present at the meeting at the time of the spokesperson’s presentation will be allowed up to fifteen (15) minutes at the discretion of the Chair, provided that the non-speaking members agree not to speak individually. 2.The Chair may limit Oral Communications to 30 minutes for all combined speakers. 3.The Chair may reduce the allowed time to speak to three minutes to accommodate a larger number of speakers. Planning & Transportation Commission 1 Regular Meeting Agenda: November 30, 2016 2 Council Chambers 3 250 Hamilton Avenue 4 6:00 PM 5 6 Call to Order / Roll Call 6:10 pm 7 All Commissioners present 8 9 Chair Alcheck: Alright, good evening. I'd like to begin our Planning and Transportation 10 Commission (PTC) meeting. Can we have a roll call? 11 12 Yolanda Cervantes, Administrative Assistant: Chair Alcheck, Commissioner Fine, Commissioner 13 Gardias, Commissioner Rosenblum, Commissioner Tanaka, and Vice-Chair Waldfogel. All six 14 members present. 15 16 Oral Communications 17 The public may speak to any item not on the agenda. Three (3) minutes per speaker.1,218 19 Chair Alcheck: Are there any agenda changes, additions or deletions that we need to go over at 20 this time? 21 22 Jonathan Lait, Assistant Director: Nothing from staff. That's up to the Commission. 23 24 DRAFT _______________________ 1. Spokespersons that are representing a group of five or more people who are identified as present at the meeting at the time of the spokesperson’s presentation will be allowed up to fifteen (15) minutes at the discretion of the Chair, provided that the non-speaking members agree not to speak individually. 2. The Chair may limit Oral Communications to 30 minutes for all combined speakers. 3. The Chair may reduce the allowed time to speak to three minutes to accommodate a larger number of speakers. 1 The Commission took a break 2 3 5. The Planning and Transportation Commission will Consider a Recommendation to the 4 City Council for Adoption of an Ordinance to Update the City's Municipal Code 5 Sections Regarding Accessory Dwelling Units (Second Dwelling Units) for Compliance 6 with Recent State Laws and Other Changes to Encourage Construction of Accessory 7 Dwelling Units. The Proposed Ordinance is Exempt from the California 8 Environmental Quality Act (CEQA) per Sections 15301 and 15303. 9 10 Chair Alcheck: Testing. Ok, we are going to get started with Item Number 5 regarding Accessory 11 Dwelling Units (ADU). I'm going to ask staff to present the agendized item then we're going to 12 give individuals in the audience an opportunity to speak. If you haven't submitted a speaker 13 card and you want to speak on this item the speaker cards are right there you can fill them out 14 and hand them to staff. Ok. 15 16 Chitra Moitra, Planner: Good evening, Commissioners; I’m Chitra Moitra, Planner, Long Range 17 Planning. Tonight staff requests the Planning and Transportation Commission (PTC) to adopt a 18 Motion recommending that the City Council adopt a draft the draft ordinance which is 19 Attachment A of your staff report amending Title 18 of the Municipal Code to implement the 20 new state regulations on ADUs and Junior Accessory Dwelling Units (JADU). In November, in 21 the October of 2015 City Council in a colleague's memo requested the PTC to look into ways to 22 increase opportunities to create more ADUs and consider steps to bring existing non-compliant 23 ADUs into compliance. But they were asked to do so while minimizing the impacts on 24 DRAFT _______________________ 1. Spokespersons that are representing a group of five or more people who are identified as present at the meeting at the time of the spokesperson’s presentation will be allowed up to fifteen (15) minutes at the discretion of the Chair, provided that the non-speaking members agree not to speak individually. 2. The Chair may limit Oral Communications to 30 minutes for all combined speakers. 3. The Chair may reduce the allowed time to speak to three minutes to accommodate a larger number of speakers. community character and maintaining the sensitivity to neighborhood design standards. So far 1 PTC had two study sessions on this item, one in January of 2016 and the other in July of 2016. 2 PTC in the study sessions discussed the constraints which prevented construction of the ADUs. 3 Staff provided a lot of research the best practices followed by other cities. And PTC requested 4 staff to estimate the number of units that can be generated if changes were made to the 5 minimum lot size requirement and parking standards. 6 7 While staff was working on this some significant changes happened. Governor Brown adopted 8 three new legislations on ADUs in September of 2016. These are Assembly Bill (AB) 1069, sorry, 9 Senate Bill (SB) 1069, AB 2299. These two are effective from January 1, 2017, and AB 2406 on 10 JADU is not a mandated requirement, but if adopted is effective immediately because of this 11 urgency statute. Now Slide 4 here out of is the brief outline of the state regulations which we 12 have on ADUs right now. AB 1866 otherwise known as the State Second Unit Law was adopted 13 in 1982. While it was mainly encouraged to create secondary units while maintaining the local 14 flexibility for unique circumstances and conditions. This line includes details on locational 15 criteria for ADUs, parking requirement for ADUs, unit size requirement for ADUs, and the type 16 of views required for ADUs. 17 18 The next slide shows the SB 1069 and AB 2299 which were adopted in September. These two 19 bills further simplifies the requirements for ADUs and some of the highlights are like on parking 20 DRAFT _______________________ 1. Spokespersons that are representing a group of five or more people who are identified as present at the meeting at the time of the spokesperson’s presentation will be allowed up to fifteen (15) minutes at the discretion of the Chair, provided that the non-speaking members agree not to speak individually. 2. The Chair may limit Oral Communications to 30 minutes for all combined speakers. 3. The Chair may reduce the allowed time to speak to three minutes to accommodate a larger number of speakers. a local agency can choose to completely eliminate the parking requirement if necessary and 1 parking requirements there will be no parking requirements for ADUs which are located within 2 half a mile of public transit, which are located within historically significant district, ADUs which 3 are part of existing primary residence or ADUs which have which are located on street parking 4 permits required, but not offered to the occupant of the ADUs. And lastly where there is a car 5 share vehicle located within a block of the ADUs no parking should be required. 6 7 The next slide also shows additional requirements for the law, for these two regulations. First 8 one is on setback. It says that no setback would be required if an existing garage is converted 9 to an ADU or there can be setback of no more than five feet from the side and rear lot lines if 10 an ADU is constructed over a garage. This bill also discusses other standards like ADU is not 11 intended for separate sale. ADUs can be rented out with terms longer than 30 days. 12 13 The next slide which is AB 2406 Junior Second Dwelling Units defines the second dwelling, a 14 junior second dwelling unit as living space of no more than 500 square feet (sq ft) and 15 contained entirely within the existing single family structure. The next slide shows the number 16 the some of the characteristics of the junior secondary units, but the most important ones are 17 no additional parking is required for a junior accessory second dwelling unit or no minimum lot 18 size is required for it. 19 20 DRAFT _______________________ 1. Spokespersons that are representing a group of five or more people who are identified as present at the meeting at the time of the spokesperson’s presentation will be allowed up to fifteen (15) minutes at the discretion of the Chair, provided that the non-speaking members agree not to speak individually. 2. The Chair may limit Oral Communications to 30 minutes for all combined speakers. 3. The Chair may reduce the allowed time to speak to three minutes to accommodate a larger number of speakers. What staff is proposing tonight is to make the minimum amendments required to comply with 1 these newly adopted state laws, which means these, the changes which it means including 2 changing the terminology of second units or second dwelling units to ADUs throughout the 3 document, repealing Sections 18.10.070, 18.12.070, and 18.28.070 and adding an entirely new 4 Section 18.42.040 with development standards applicable to ADUs and JADUs for all the zones. 5 It also includes adjusting the parking requirements and following the state mandates excepting 6 allowing parking in the front setback. It also includes eliminating separation of the separation 7 requirement of 12 feet between the primary structure and the ADU. And last complete 8 complying with the setback requirements for garage conversions and second story above 9 garage ADUs. The proposed garage conversion to ADU would only be permitted if an existing 10 garage is not needed as required parking for the principal dwelling unit. 11 12 State law also permits the construction of above garage ADUs. The proposed ordinance 13 changes the setback requirement to be consistent with the state law. However, since state 14 laws only regulate state laws does not regulate ADU height limits the R-1 district is currently 15 prohibiting second story ADUs. This is only allowed in RE and OS zones. And no changes would 16 be made to any other development standards on ADUs. Staff also recommends that allowing 17 junior secondary units which involves convert conversion of existing building space to small 18 living units without a minimum lot size requirement or parking requirement. 19 20 DRAFT _______________________ 1. Spokespersons that are representing a group of five or more people who are identified as present at the meeting at the time of the spokesperson’s presentation will be allowed up to fifteen (15) minutes at the discretion of the Chair, provided that the non-speaking members agree not to speak individually. 2. The Chair may limit Oral Communications to 30 minutes for all combined speakers. 3. The Chair may reduce the allowed time to speak to three minutes to accommodate a larger number of speakers. This staff report also includes at the end a parcel analysis at PTC’s request if PTC chooses to 1 reduce the minimum lot size requirement from the required 35 percent. A clarification I want 2 to make at the end of the presentation is to the ordinance Section 1b and that with the 3 following text “Housing cost in Palo Alto are out of reach for many families with 33 percent 4 renters and 24 percent owners paying more than 30 percent of their gross income for housing.” 5 So with this the next steps for staff is to present the PTC recommendations and the draft ADU 6 ordinance to the City Council in February or January, as early as February or January, of next 7 year. This concludes staff presentation on ADUs. 8 9 Chair Alcheck: Ok, thank you. At this time I would like to invite the speakers up to speak. Every 10 speaker will be given three minutes to speak. We have approximately ten speakers so that is 30 11 minutes. When the buzzer goes off please end your comments as quickly as you possibly can. 12 Ok, thank you. 13 14 Jonathan Lait, Assistant Director: Chair just to reiterate I think it’s five minutes per speaker if 15 they choose to (interrupted) 16 17 Chair Alcheck: Oh is it? 18 19 Mr. Lait: Unless you're limiting it to according to your rules. 20 DRAFT _______________________ 1. Spokespersons that are representing a group of five or more people who are identified as present at the meeting at the time of the spokesperson’s presentation will be allowed up to fifteen (15) minutes at the discretion of the Chair, provided that the non-speaking members agree not to speak individually. 2. The Chair may limit Oral Communications to 30 minutes for all combined speakers. 3. The Chair may reduce the allowed time to speak to three minutes to accommodate a larger number of speakers. 1 Chair Alcheck: Yeah, sorry. So let me be more specific. I want to reduce the time today from 2 five to three minutes so that we can effectively get all of these speakers in within the hour. 3 4 Mr. Lait: It’s certainly within your discretion. Thank you. 5 6 Chair Alcheck: And then give them an opportunity to hear sort of our discussion. Ok, so will you 7 begin that process? 8 9 Vice-Chair Waldfogel: Great. Let's start with Dave Wills followed by Debbie Nielsen. 10 11 Dave Wills: Hi, my name's Dave Wills. I live on Waverly Street in Old Palo Alto and I live on the 12 wrong side of the tracks. And Waverly doesn't cross the tracks so if you don't know what that 13 means you have a gap in your knowledge of Palo Alto. I'm late to the game here so I apologize 14 about if might some of my comments may not make sense. And I don't have a whole lot of 15 structure to them so I'll just give them out as I’ve jotted some notes. 16 17 One note I made is maybe the housing problem is going to go away because many of the 18 residents are going to leave because of the airplane noise. Infrastructure includes a lot of 19 things not only affordable housing, but you have to consider traffic and other services which I'm 20 DRAFT _______________________ 1. Spokespersons that are representing a group of five or more people who are identified as present at the meeting at the time of the spokesperson’s presentation will be allowed up to fifteen (15) minutes at the discretion of the Chair, provided that the non-speaking members agree not to speak individually. 2. The Chair may limit Oral Communications to 30 minutes for all combined speakers. 3. The Chair may reduce the allowed time to speak to three minutes to accommodate a larger number of speakers. sure you've done. But these need to be considered and I don't see how you could do an ADU 1 Motion without really thinking about how it affects traffic, noise, shopping, services, and 2 whatever. 3 4 I live on a street where there I’m sure probably most of you do. There is a house on either side 5 of me and three houses directly across the street. So just in that six house area there are 6 currently seven families. And according to the way you're adding ADUs since it's unlimited it 7 could easily expand to 11 families. I won't have an ADU in my house. That's quite a big 8 addition to my neighborhood and I’m sure it would be to your neighborhood too. Also I believe 9 that ADUs may disproportionately be expand in Midtown and South Palo Alto as opposed to 10 Old Palo Alto and North Palo Alto where the houses are bigger the people earn more money. 11 And their ADUs are likely to be servant quarters. 12 13 I’m big, I'm very concerned about parking. In general, in generalization is that people no matter 14 what your income level is you have three things: you have a smartphone, you have a large flat 15 panel television (TV), and you have a car. So if there are no parking requirements you're just 16 going to make the parking in Palo Alto much more unbearable especially for other residents. 17 I’m concerned about ADU conversions on property line. My bedroom is six feet from the 18 property line. There's a garage on the property line. If you allow that garage to turn into an 19 ADU I now have a neighbor in my bedroom. I don't think that's fair. I'm very concerned about 20 DRAFT _______________________ 1. Spokespersons that are representing a group of five or more people who are identified as present at the meeting at the time of the spokesperson’s presentation will be allowed up to fifteen (15) minutes at the discretion of the Chair, provided that the non-speaking members agree not to speak individually. 2. The Chair may limit Oral Communications to 30 minutes for all combined speakers. 3. The Chair may reduce the allowed time to speak to three minutes to accommodate a larger number of speakers. short term rentals. I like knowing who my neighbors are. I like to see them and I’m concerned 1 that 30 days may not be long enough. Thank you. 2 3 Vice-Chair Waldfogel: Thank you very much. Debbie Nielsen followed by Julien Schaller. 4 5 Debbie Nielsen: Hi, I'm Debbie Nielsen. I live in Barron Park. We have been here since 1977. I 6 have two young boys and an 86 year old mother in law who is in need of our care and I would 7 love not to have her in my house. I think all this is great. I love the proposals, but the one thing 8 that I'm hung up on is the Floor Area Ratio (FAR). If you guys or we could increase it by just five 9 percent that can give somebody the 200/300 extra sq ft they need to build an ADU. When I 10 built my house in 1990 I didn't max out my a lot, but because of the two story limitation I only 11 have 35 percent of my lot. I can only build 150 square foot ADU. So if they’ve changed the FAR 12 just five percent I think a lot of people who have bought here and have built we have the option 13 to add an ADU to our property. Basically I think we need to change the FAR. Thank you. 14 15 Vice-Chair Waldfogel: Whoops. 16 17 Julien Schaller: Greetings, Commission; Julien Schaller, The Tiny House Network. Thank you for 18 your time and for addressing this topic today. I think since our last meeting in July there's been 19 a couple things, developments in the Bay Area relative to ADUs and micro housing, tiny house, 20 DRAFT _______________________ 1. Spokespersons that are representing a group of five or more people who are identified as present at the meeting at the time of the spokesperson’s presentation will be allowed up to fifteen (15) minutes at the discretion of the Chair, provided that the non-speaking members agree not to speak individually. 2. The Chair may limit Oral Communications to 30 minutes for all combined speakers. 3. The Chair may reduce the allowed time to speak to three minutes to accommodate a larger number of speakers. tiny homes. First of all, in October of 2016 on the 28th Kansas City the ICC has adopted a 1 version of ADUs, tiny homes, and micro housing. I would strongly suggest that if you would like 2 to go into the weeds of zoning and planning to review some of the codes that were expressed 3 in that committee by the American Tiny House Association. Also more closer to home in San 4 Jose Mayor Licardo has passed an emergency measure for tiny micro housing to benefit 5 students, homeless, homeless veterans. So that might be a project to look into as well. 6 7 Beyond that I think that some of these structures and the language in the ADUs, Secondary 8 Dwelling Units (SDU), JADUs could benefit the community. I think that there's a lot of 9 multigenerational families here that are looking to expand, families looking to stay closer 10 together. We have a family, personal family business and corporate relocation so we have a 11 pretty good idea of the influx and out flux of labor coming in and out of the Bay Area. It's very 12 disproportionate and I think that in this crisis of housing ADUs, SDUs and maybe even opening 13 up the definition to tiny homes would be the logical, sensible approach allowing the private 14 sector, consumers, and citizens to address these needs. Other than that I applaud the work 15 that you've done in the fee structures and bring a Motion to review a tiered pricing. Thank you 16 very much for your time. 17 18 Vice-Chair Waldfogel: Thank you. Bonnie Packer followed by Hamilton Hitchings. 19 20 DRAFT _______________________ 1. Spokespersons that are representing a group of five or more people who are identified as present at the meeting at the time of the spokesperson’s presentation will be allowed up to fifteen (15) minutes at the discretion of the Chair, provided that the non-speaking members agree not to speak individually. 2. The Chair may limit Oral Communications to 30 minutes for all combined speakers. 3. The Chair may reduce the allowed time to speak to three minutes to accommodate a larger number of speakers. Bonnie Packer: Am I on? Oh yeah. Good evening Commissioner Alcheck [note-Chair] and 1 Commissioners, My name is Bonnie Packer. I'm President of the League of Women Voters of 2 Palo Alto. So I am speaking for the League tonight. The League of Women Voters supports 3 increasing the density of single family residential areas in various ways to improve the diversity 4 of housing opportunities for all economic levels. ADUs is one way to do this. For this reason at 5 this time the League supports the changes proposed by staff to the existing ordinance to meet 6 new state requirements permitting ADUs and defining the JADUs. The League supports the 7 inclusion of these JADUs in this ordinance. In particular having an ADU within the envelope of 8 the existing unit will not change the mass of the main single family home and allows no more 9 residents than are currently permitted in the home today. A separate entrance allows for 10 privacy for the principal unit. And the reduction in parking requirements and the placement of 11 the space is more realistic than in the current requirements. 12 13 The regulations in the ordinance however continue to be limiting and we hope that the 14 Commission will continue to look at other options that will encourage the building of more of 15 these small units. The League requests that the Commission recommend passage of the 16 proposed ordinance, but continue to study additional options that will encourage the inclusion 17 of more ADUs in our single family residential areas. Thank you. 18 19 Vice-Chair Waldfogel: Thank you. Hamilton Hitchings followed by Doria Summa. 20 DRAFT _______________________ 1. Spokespersons that are representing a group of five or more people who are identified as present at the meeting at the time of the spokesperson’s presentation will be allowed up to fifteen (15) minutes at the discretion of the Chair, provided that the non-speaking members agree not to speak individually. 2. The Chair may limit Oral Communications to 30 minutes for all combined speakers. 3. The Chair may reduce the allowed time to speak to three minutes to accommodate a larger number of speakers. 1 Hamilton Hitchings: Hi, I’m Hamilton Hitchings. I’m a member of the Citizen Advisory 2 Committee (CAC) for the Comp Plan and also on the Land Use Subcommittee. So we have 3 spent some time talking about this; however, these comments are my own and not those of the 4 committee. 5 6 I support ADUs and JADUs. They are way to provide young people and senior family members 7 affordable housing options. And there's a good case to be made for using ADUs to increase 8 housing for local workers and elderly although many local residents do not welcome erosion of 9 R-1 zoning. I strongly support the staff's additional ADU requirements/recommendations and 10 hope you adopt all of them; specifically these four: only one ADU can be considered 11 constructed on a lot, that ADU may not be sold separately, that house or ADU must be owner… 12 the house or the ADU must be owner occupied, and the ADUs not be rented for less than 30 13 days. Although I'd actually recommend increasing it to at least 60 days because the idea of the 14 ADUs is to increase housing supply and if it's a short term rentals it doesn't really do that. 15 16 Up zoning our single family residential neighborhoods to R-2 is a big deal and should not be 17 taken lightly. I do however think that relaxing ADU minimum lot size requirement from 35 18 percent to 20 percent would significantly increase the percentage of qualifying parcels, but I do 19 not support increasing the total FAR of the lot. If you're allowed to get more FAR by claiming 20 DRAFT _______________________ 1. Spokespersons that are representing a group of five or more people who are identified as present at the meeting at the time of the spokesperson’s presentation will be allowed up to fifteen (15) minutes at the discretion of the Chair, provided that the non-speaking members agree not to speak individually. 2. The Chair may limit Oral Communications to 30 minutes for all combined speakers. 3. The Chair may reduce the allowed time to speak to three minutes to accommodate a larger number of speakers. the structure would be used for an ADU it's likely there’d be a lot of abuse of this and many of 1 those new units may not actually be used for ADUs. In terms of parking I support only one off 2 street parking spot unless the house is located in a parking permit area. I don't see how living 3 near public transportation or car share results in the majority of those renters not owning cars. 4 5 And I don't profess to understand all the details of the state bills and what you have to do to 6 comply with those. However, the biggest source of long term rental stock erosion is the 7 conversion to Airbnb type rentals. This increases scarcity, drives up long term rental prices, and 8 deprives the City of tax revenue. We need to crack down on the Airbnbs in R-1 neighborhoods. 9 So let's use this opportunity to thoughtfully support updating our ADU requirements to comply 10 with the new California state laws while being sensitive to our R-1 neighborhood character and 11 in particular in the ways I've outlined above. Thank you. 12 13 Vice-Chair Waldfogel: Thank you. Doria Summa followed by Linnea Widstrom. 14 15 Doria Summa: So good evening, Chair and Commissioners. And I understand that we have to 16 comply with state law, but I encourage you to use your discretion to minimize negative impacts 17 as much as possible. I think JADUs make a lot of sense. People are doing it already and it just 18 improves the conditions for renters, but I am concerned about reduction of parking 19 requirements. ADUs however that violate setbacks reduce neighbors privacy, they reduce 20 DRAFT _______________________ 1. Spokespersons that are representing a group of five or more people who are identified as present at the meeting at the time of the spokesperson’s presentation will be allowed up to fifteen (15) minutes at the discretion of the Chair, provided that the non-speaking members agree not to speak individually. 2. The Chair may limit Oral Communications to 30 minutes for all combined speakers. 3. The Chair may reduce the allowed time to speak to three minutes to accommodate a larger number of speakers. backyard habitat, and they have the potential to negatively affect our urban forest if trees are 1 cut down. There's an assumption that residents of these units will not need cars which I don't 2 agree with. 3 4 Parking in many neighborhoods is already a problem and the rejection of onsite parking spaces 5 should be carefully considered so as not to exacerbate existing parking problems. Santa Clara 6 Valley Transportation Authority (VTA) is reducing our bus service and even with the existing 7 service the routes do not have the flexibility and the frequency to realistically provide a reliable 8 commute experience for most people. Caltrain is at capacity during commute hours and cities 9 up and down the peninsula claim that proximity to Caltrans to under park their buildings and 10 meet Transportation Demand Management (TDM) goals etcetera. It's impossible to imagine 11 with all these people making these claims that Caltrans could ever have the capacity to support 12 them. 13 14 I'm concerned that it will be overwhelming and not possible to enforce the 30 day minimum 15 rental and that these units will become hotel like uses removing the ability of renters who are 16 part of the community from living in them and generally degrading a sense of community and 17 our neighborhoods. Finally, I am concerned I know that this is a ministerial process now, but I 18 think if we're going to have a lot more of them there will be a way to improve transparency and 19 DRAFT _______________________ 1. Spokespersons that are representing a group of five or more people who are identified as present at the meeting at the time of the spokesperson’s presentation will be allowed up to fifteen (15) minutes at the discretion of the Chair, provided that the non-speaking members agree not to speak individually. 2. The Chair may limit Oral Communications to 30 minutes for all combined speakers. 3. The Chair may reduce the allowed time to speak to three minutes to accommodate a larger number of speakers. there should be a way to improve transparency and also to have an appeal process. Some say 1 that fences make good neighbors and I say setbacks do also. Thanks. 2 3 Vice-Chair Waldfogel: Thank you. Linnea Widstrom followed by Peter Maresca. 4 5 Linnea Widstrom: Hello, good evening. My name is Linnea Widstrom. I live on Monroe Drive in 6 Palo Alto. My letter is in the packet. There are lot of details in there so I'm not going to read 7 that to you. I'm a 20 year resident of Palo Alto with a disabled young adult son and I want to 8 build an ADU for multiple potential uses, for an aging mother, for myself when I can no longer 9 do stairs in my house, for my son or for a caretaker for both of us or three of us. 10 11 I've been heartened by the City Council's new look at ADUs as one method of increasing 12 affordable housing and accommodating the needs of all sorts of residents. However, I was 13 disheartened by the proposed amendment. I think we need a good deal more flexibility if the 14 amendment is to accomplish the City's stated intent. I'm particularly disheartened by the 15 staff’s minimum required to meet state law. For example, I have a 10,000 square foot lot a 16 hundred yards off El Camino, 6/10ths of a mile from San Antonio and all of the services there, 17 with a two story 2,000 square foot house. My property would not qualify for an ADU under this 18 proposed amendment because of transit. We still have suburban level, read sparse, transit 19 DRAFT _______________________ 1. Spokespersons that are representing a group of five or more people who are identified as present at the meeting at the time of the spokesperson’s presentation will be allowed up to fifteen (15) minutes at the discretion of the Chair, provided that the non-speaking members agree not to speak individually. 2. The Chair may limit Oral Communications to 30 minutes for all combined speakers. 3. The Chair may reduce the allowed time to speak to three minutes to accommodate a larger number of speakers. requiring two lines at 15 minute intervals within half a mile eliminates even properties like mine 1 less than a mile from four bus lines and even Caltrain and 200 yards from the VTA 22. 2 3 Lot size was a real surprise to me. I haven't been paying attention over the years. Requiring 4 that any lot that is the standard size for its zone be any percentage larger than standard is 5 exclusionary. Please require only standard lot size and/or provide a FAR option to qualify. I 6 could put up a 5,000 square foot house. Why not a FAR option for a 2,000 square foot house 7 and a 900 square foot maximum ADU? 8 9 I wonder how many properties in the City could actually qualify for transit and lot size. I hope 10 you'll review the restrictive aspects of this proposed amendment and ask staff to take another 11 crack at this before approving something as the minimum required to meet state law, but 12 which I do not I hope does not match the City's true intent. Thank you. 13 14 Vice-Chair Waldfogel: Thank you; Peter Maresca and then Shani Kleinhaus. 15 16 Peter Maresca: Hello again, whoops, my fault. Yes, I’m also a resident at 450 Monroe Drive and 17 I consider myself a pretty smart guy, but I’ve got to tell you I’ve been flummoxed by all of these 18 percentages and numbers and zones, etcetera. And fortunately my wife's the wonk in the 19 family so she can handle all of that, but I have very personal feelings about why we would like 20 DRAFT _______________________ 1. Spokespersons that are representing a group of five or more people who are identified as present at the meeting at the time of the spokesperson’s presentation will be allowed up to fifteen (15) minutes at the discretion of the Chair, provided that the non-speaking members agree not to speak individually. 2. The Chair may limit Oral Communications to 30 minutes for all combined speakers. 3. The Chair may reduce the allowed time to speak to three minutes to accommodate a larger number of speakers. to have an ADU. And I'm sure I'm not the only citizen in Palo Alto with a mother or a father or 1 son or daughter, brother or sister with a disability or someone who's aged and needs some 2 assistance. Someone who needs the assistance, but at the same time needs an independence 3 for a certain quality of life. So a quality of life and having your basic needs met the solution to 4 me seems that can be easily found with ADUs. And ADUs that should be made accessible in 5 many more circumstances than they are. 6 7 Now I fully understand the concerns some founded and some unfounded that what about the 8 future use? What happens in 10 to 20 years when it's not a nice small family with their disabled 9 or aged person? Well, I think that the possibility that in 10 to 30 years, 10, 20, or even thirty 10 years there might be an extra car out on the street I think most of citizens in Palo Alto are 11 willing to take that risk to know that people now today living in our community could have a 12 better quality of life. And we might not even need cars another 10 or 20 years. Even in Palo 13 Alto we’ll probably all be time sharing a thousand Tesla's and that will be it so years from now 14 this property with an ADU that we have might not even be a concern of rentals or extra cars. 15 There may be, it may be a very desirable piece of property for someone with an aged parent or 16 someone with a disabled child. So we don't have to always assume that it's going to be 17 someone coming in so they can rent out the properties in an Airbnb unit. 18 19 DRAFT _______________________ 1. Spokespersons that are representing a group of five or more people who are identified as present at the meeting at the time of the spokesperson’s presentation will be allowed up to fifteen (15) minutes at the discretion of the Chair, provided that the non-speaking members agree not to speak individually. 2. The Chair may limit Oral Communications to 30 minutes for all combined speakers. 3. The Chair may reduce the allowed time to speak to three minutes to accommodate a larger number of speakers. Now all over the peninsula housing for the elderly and disabled units have been denied to the 1 needy. Yes, even in liberal compassionate Palo Alto the response has been Not in My Backyard 2 (NIMBY). Well, I think I'm not alone in responding YIMBY. Literally, Yes in My Backyard. The 3 best solution is to have a unit that can provide for members of our family in need. It’s the best 4 solution for individuals and the community at large. Let’s… you know this problem is solvable 5 and there is some sort of compromise an equitable solution that we can come up with so you 6 guys are pretty smart and I think you can figure it out. Thank you. 7 8 Shani Kleinhaus: Thank you, Shani Kleinhaus, I’m a resident of Palo Alto. I’m on the CAC; do not 9 speak for the CAC. I am on the Executive Committee of the Loma Prieta Chapter of the Sierra 10 Club and I am the [unintelligible] advocate for Audubon in this area. And I speak other than not 11 for the CAC the other I am speaking for. So Palo Alto neighborhood character is defined by our 12 urban forest. And the Urban Forest Master Plan looks to integrate habitat into the City and the 13 lattice that builds habitat and the urban forest in Palo Alto is our Oaks. So with this preamble I 14 would like to say that we are glad that the State has streamlined JADUs. These units increase 15 housing stock and have very little impact to the environment and those are things that I wish 16 Palo Alto had done years ago, streamline that process. 17 18 In terms of the attached and detached housing units we support staff recommendations and 19 are concerned about those units that have the potential to remove trees, especially oak trees 20 DRAFT _______________________ 1. Spokespersons that are representing a group of five or more people who are identified as present at the meeting at the time of the spokesperson’s presentation will be allowed up to fifteen (15) minutes at the discretion of the Chair, provided that the non-speaking members agree not to speak individually. 2. The Chair may limit Oral Communications to 30 minutes for all combined speakers. 3. The Chair may reduce the allowed time to speak to three minutes to accommodate a larger number of speakers. or remove canopy. And so I think what we would like to ask is for transparency in general. So 1 people will know if somebody is going to remove the tree next door. And also potentially look 2 at the tree ordinance to see if there is a way that one can appeal if somebody wants to remove 3 an old oak next door for the purpose of building something there. There should be enough 4 room to build without harming the urban forest too much and so I think that's one thing that is 5 really important is to figure out how to protect the urban forest and our ecological lattice as we 6 grow and provide more housing. Thank you. 7 8 Vice-Chair Waldfogel: Thank you. John Kelley and then Becky Sanderson or Sanders, I’m sorry. 9 10 John Kelley: Thank you, Chair, Vice-Chair, Commissioners. I've been speaking about ADUs in 11 this chamber probably four or five times now over the last year and if you've been in any of the 12 Council meetings I think there's an overwhelming consensus in our community that we need 13 more housing. And I've repeatedly tried to advocate for ADUs because I think that's the 14 cheapest, fastest, most effective way that we can get more housing and more affordable 15 housing in Palo Alto. So I want to commend you for having this on your agenda tonight and I 16 want to commend the staff report in general for particularly the advocacy and the support for 17 JADUs. But like many of the other speakers tonight I think that we have not gone far enough. 18 In fact we haven't even gotten close to where we should be going to really address the housing 19 DRAFT _______________________ 1. Spokespersons that are representing a group of five or more people who are identified as present at the meeting at the time of the spokesperson’s presentation will be allowed up to fifteen (15) minutes at the discretion of the Chair, provided that the non-speaking members agree not to speak individually. 2. The Chair may limit Oral Communications to 30 minutes for all combined speakers. 3. The Chair may reduce the allowed time to speak to three minutes to accommodate a larger number of speakers. needs of our community. Since we've only got three minutes and not five I'm going to try to be 1 very specific about what I think has to be changed. 2 3 First, you need an overall plan for creating more ADUs. This plan if it were adopted I think it 4 might lead to an additional 200 or 500 units when there's an opportunity probably over ten 5 years to put in 5,000 units of ADU. So I think you have to think order of magnitude greater 6 number of ADUs. Secondly, to reach that greater number you're going to need to change the 7 lot size requirement as it exists. I would advocate taking the incremental lot size requirement 8 to zero. Certainly not to 35 percent and I think the speaker before was suggesting 20 percent 9 would find that that's not going to come close to meeting the needs of the community. 10 11 Secondly, if you look at this map which I really want to commend the staff for putting together 12 you will see two things. First of all there's a total lack of except for part of Barron Park there's a 13 total lack of congruity between the transit proposal or the transit regulations that staff has 14 advocated and where the ADUs stock, where the potentially ADU stock exists. There's just a 15 complete mismatch. So I would also say that either and related to that I don't know where staff 16 got this definition of transit. As I understand the State statute it simply says transit. It doesn't 17 talk about two bus lines simultaneously for every 15 minutes. So that should go. 18 19 DRAFT _______________________ 1. Spokespersons that are representing a group of five or more people who are identified as present at the meeting at the time of the spokesperson’s presentation will be allowed up to fifteen (15) minutes at the discretion of the Chair, provided that the non-speaking members agree not to speak individually. 2. The Chair may limit Oral Communications to 30 minutes for all combined speakers. 3. The Chair may reduce the allowed time to speak to three minutes to accommodate a larger number of speakers. Since I've got less than a minute left I just want to talk about a couple other points. We have a 1 natural experiment going right now for years we've avoided doing a census of existing ADUs. I 2 think there are many of them in South Palo Alto. They should, we should understand where the 3 existing ADUs are. We should get rid of the lot size multiple altogether. There should be no 4 parking requirement at all. If an ADU is under fifteen, under 500 feet whether it's attached or 5 detached and the maximum should be one uncovered lot which should allow for that being in 6 the front setback. We should also have safe [harbor] standards and expedited plans that I think 7 should be made available to anyone in the community who wants to convert a garage. That's 8 going to be the simplest fastest way to increase the housing stock in Palo Alto. And finally as 9 you see what's happening with housing in Palo Alto we're getting more bigger houses with big 10 basements. If you're in a, if you're on a lot that does not have a basement and you're going to 11 forswear adding a basement while you're building an ADU you should get an FAR boost. I 12 would suggest that that should be five percent. Thank you. 13 14 Vice-Chair Waldfogel: Thank you. Becky Sanders. That’s our last one. Are there any other 15 cards that haven’t been brought forward? No. 16 17 Becky Sanders: I'm looking for that green button. Ok. Thank you. My name is Becky Sanders. 18 I'm the Moderator of the Ventura Neighborhood Association though I'm not here speaking for 19 them. I live in Ventura. And I this map I take issue with the assumption that bus and shuttle 20 DRAFT _______________________ 1. Spokespersons that are representing a group of five or more people who are identified as present at the meeting at the time of the spokesperson’s presentation will be allowed up to fifteen (15) minutes at the discretion of the Chair, provided that the non-speaking members agree not to speak individually. 2. The Chair may limit Oral Communications to 30 minutes for all combined speakers. 3. The Chair may reduce the allowed time to speak to three minutes to accommodate a larger number of speakers. routes are actually commuter serving options. So yeah I live three miles from where I work 1 which is great. For me to take the bus there would be an hour and a half. And so there are 2 going to be cars all over these neighborhoods. So I would recommend I just think the one half 3 mile circle from a train stop seems reasonable to me even though I also agree with some of the 4 issues that Miss Suma brought up about that the commuter trains are already kind of maxed 5 out at peak commuter times. But I'm very concerned about the parking in Ventura. We're 6 already heavily parked and when you start like I don't of course we have tiny lots in Ventura so 7 I'm not sure how many ADUs will be built, but I just want to make sure that people have a 8 realistic understanding that Palo Alto North County is well served by buses. I mean Arthur 9 Keller the day after he wasn't seated, granted a seat, he was emailing about the 88 and the 35. 10 I have to give it to Arthur. So anyway that’s just a real concern for me and thank you very 11 much. 12 13 Chair Alcheck: Ok, thank you to those of you that participated in that comment section. Alright 14 before we start things off I want to give a little context to tonight's meeting. This is the third 15 time this year that we will be discussing ADUs; however, this is the first time that we're 16 reviewing a draft ordinance. I want to provide a sort of a little clarity here. Our past two 17 meetings were study sessions where the discussion really revolved around the idea of should 18 we be encouraging development of ADUs and if so what are the ways that we could 19 theoretically encourage their development. The legislation that has recently passed has 20 DRAFT _______________________ 1. Spokespersons that are representing a group of five or more people who are identified as present at the meeting at the time of the spokesperson’s presentation will be allowed up to fifteen (15) minutes at the discretion of the Chair, provided that the non-speaking members agree not to speak individually. 2. The Chair may limit Oral Communications to 30 minutes for all combined speakers. 3. The Chair may reduce the allowed time to speak to three minutes to accommodate a larger number of speakers. changed the timetable with which we would like to operate in which is why staff prepared the 1 draft that they did which brings us into compliance arguably as quickly and as efficiently as 2 possible. So comments from community members about whether this effectively goes far 3 enough are appreciated, but just so that you understand the effort that staff put to today was 4 an effort to bring us into compliance with state law. 5 6 Today we will have an opportunity to discuss changes to that ordinance that we think are 7 relevant. I want to suggest that our goal for this meeting should be to move forward this draft 8 ordinance to City Council so that we can continue this process of falling into compliance with 9 state law. I think that based off the last two meetings that we had where we had study sessions 10 and I'll leave it to you guys to sort of decide how you want to go about this, but there's sort of 11 two comment categories. I think they're going to comments tonight about promotion and 12 there's going to be comments about the specific ordinance and how we can amend it. And I 13 think if there is interest in exploring some of these concepts of promotion we should be mindful 14 that that shouldn't prevent us from potentially moving forward a draft ordinance tonight that 15 Council can review so that we can be in compliance with state law. 16 17 So with that I'd like to kick our discussion off and what we'll do is we'll take notes just like in our 18 last agendized item of any specific language changes if there are and we can review them at the 19 tail end of this discussion. Ok, Commission… We're going to Commissioner Rosenblum you’re 20 DRAFT _______________________ 1. Spokespersons that are representing a group of five or more people who are identified as present at the meeting at the time of the spokesperson’s presentation will be allowed up to fifteen (15) minutes at the discretion of the Chair, provided that the non-speaking members agree not to speak individually. 2. The Chair may limit Oral Communications to 30 minutes for all combined speakers. 3. The Chair may reduce the allowed time to speak to three minutes to accommodate a larger number of speakers. the first light and why don't we actually for the purposes of this item move all the way down so 1 that we can just efficiently have a discussion? So Commissioner Rosenblum lead us off and 2 then Fine. 3 4 Commissioner Rosenblum: Ok. Thank you, so excited to start getting some specific language 5 down; just a quick preamble. I do think ADUs are a great idea, but I think it needs be part of 6 this holistic set of solutions for providing more housing and I don't even think in the end it’s 7 going to be one of the largest source of housing. Even in cities where ADUs are a big success in 8 the United States (US) like Portland it only accounts for something like 700 plus units, about 9 one percent of their housing stock. However, there are examples of places where they go well 10 beyond just making ADUs more attractive, they actually encourage ADUs like Vancouver where 11 it has been able to get up to 35 percent of housing stock. So the naysayers I think that there's 12 going to be some experimentation. There are some examples of cities where it's become a 13 significant portion of total housing. Or I'm sorry, in Vancouver 35 percent of homes that have… 14 35 percent of single family homes have added an ADU. 15 16 The thing I like about ADUs is that it does spread a minor amount of density throughout the city 17 as opposed to just concentrating it. In general you want density around transit, but in this case 18 because of the nature of ADUs you're spreading it very thin and so it adds meaningful relatively 19 cheap housing units for the kinds of uses that several of the petitioners came forward 20 DRAFT _______________________ 1. Spokespersons that are representing a group of five or more people who are identified as present at the meeting at the time of the spokesperson’s presentation will be allowed up to fifteen (15) minutes at the discretion of the Chair, provided that the non-speaking members agree not to speak individually. 2. The Chair may limit Oral Communications to 30 minutes for all combined speakers. 3. The Chair may reduce the allowed time to speak to three minutes to accommodate a larger number of speakers. particularly around the care of aged, disabled, etcetera family members that want to live with 1 them, but in addition for very young and very old. 2 3 So a couple specifics, the things that I would favor just off the bat based on the staff report and 4 based on some of the speakers and based on research. No minimum lot size for standard R-1 5 lots. Meaning I would not approve for substandard, but also not 35 percent above, not 20 6 percent above, not 5 percent above. I think that if you have the lot so long as you don't violate 7 the current FAR regulations that you should be allowed. I do not support petitioners requests 8 for additional FAR. I do think that that adds potential room for abuse. 9 10 Around parking requirements I think this is sort of bifurcated there is this around transit we are 11 proposing reducing parking requirements in accordance with state law. I agree that the Palo 12 Alto definition of transit being two lines of certain frequency seems overly arduous. I also think 13 that the circle that we've drawn around major transit hubs seems overly narrow. My home is 14 0.6 miles from Caltrain. When I had to commute I took Caltrain every day. It was not difficult. 15 It was about a three minute bicycle ride I think or something like a eight minute walk or 16 something like that. It certainly was not arduous. Others that live further from me were going 17 on skateboards or scooters. It's certainly a viable option. 18 19 DRAFT _______________________ 1. Spokespersons that are representing a group of five or more people who are identified as present at the meeting at the time of the spokesperson’s presentation will be allowed up to fifteen (15) minutes at the discretion of the Chair, provided that the non-speaking members agree not to speak individually. 2. The Chair may limit Oral Communications to 30 minutes for all combined speakers. 3. The Chair may reduce the allowed time to speak to three minutes to accommodate a larger number of speakers. On the other hand as was pointed out there's a mismatch between that and eligible plots and 1 so I’d suggest something additional which is there a lot of areas in Palo Alto where parking is 2 not an issue. I used to live in South Palo Alto on Ortega Court and off street/on street it wasn’t 3 an issue with our neighborhood. I now live in Downtown North where it is an issue and 4 neighbors clearly were very passionate about support for Residential Preferential Parking (RPP), 5 etcetera. But there are a lot of places where it's not and so I propose something additional 6 which is a City sponsored study of parking capacity. And I'm going make an arbitrary figure, but 7 in places where there is less than 50 percent capacity utilization in those neighborhoods there 8 should they should also be excluded from additional parking requirements. 9 10 I am sympathetic to the 30 day rental restriction. I don't want the ADUs just turn into 11 additional Airbnb rental units. I will have an additional question later how we enforce that, 12 how we know if that is the case. I don't recommend going any higher to say 60 days. I think a 13 30 day restriction is good. 14 15 And then the final bit where I'm just going to end with this and then maybe my fellow 16 Commissioners have additional ideas. I would like to go beyond just relaxing certain 17 restrictions, but go towards making incentives. Again if we acknowledge that we have a 18 housing crisis in Palo Alto and the region and this is a good way that other cities have used. 19 There are things like what Santa Cruz has done in waiving application fees or having pre-20 DRAFT _______________________ 1. Spokespersons that are representing a group of five or more people who are identified as present at the meeting at the time of the spokesperson’s presentation will be allowed up to fifteen (15) minutes at the discretion of the Chair, provided that the non-speaking members agree not to speak individually. 2. The Chair may limit Oral Communications to 30 minutes for all combined speakers. 3. The Chair may reduce the allowed time to speak to three minutes to accommodate a larger number of speakers. approved by right designs so that if you have a ADU that came from an approved set of 1 guidelines that it will be approved by right. A speaker talked about zoning regulations that 2 enable tiny homes. I hadn’t thought of it. I don't know if there are any particular zoning 3 regulations that are needed around adding a tiny home on property. So it's something that 4 wasn't included in our study pack. I don't know if this is actually becoming a significant thing, 5 but it's certainly worth at least from my perspective understanding if there are any zoning 6 requirements. So that's my full laundry list. 7 8 Commissioner Fine: Thank you and thank you staff for the report. It was very helpful and glad 9 to get this item for the third time. Two quick questions and a number of comments; if we were 10 to pass this as is today and [so were] to Council what are the protections around trees? If 11 somebody is building and ADU [and their] protected oak are things that goes through all the 12 normal processes, is that correct? 13 14 Mr. Lait: Yes, we do have a set of standards that one defines what are protected tree is and a 15 process by which removing a protected tree would be reviewed by the City's Urban Forestry 16 Department. 17 18 Commissioner Fine: Ok, great. Thank you. Second question is about setback, side setbacks in 19 the current ordinance it keeps them at 20 feet from the side setback. I'm wondering what's the 20 DRAFT _______________________ 1. Spokespersons that are representing a group of five or more people who are identified as present at the meeting at the time of the spokesperson’s presentation will be allowed up to fifteen (15) minutes at the discretion of the Chair, provided that the non-speaking members agree not to speak individually. 2. The Chair may limit Oral Communications to 30 minutes for all combined speakers. 3. The Chair may reduce the allowed time to speak to three minutes to accommodate a larger number of speakers. purpose there? To me it seems like this is some kind of like urban design or architectural 1 purpose in terms of making the ADUs more internal to the lot than the house itself. I'm 2 wondering what's the purpose of that and if there's any downside to having ADUs? Respect 3 just [unintelligible] questions. 4 5 Chair Alcheck: No, I just wanted to clarify which… what specific requirement again? 6 7 Commissioner Fine: The side setback. 8 9 Mr. Lait: Can you point to us in the ordinance (interrupted) 10 11 Commissioner Fine: It was 20 feet. 12 13 Mr. Lait: I’m sorry? 14 15 Commissioner Fine: So I’m looking on Page 121. Excess restructures 20 feet from the side, 16 street side property lines. Sorry, so not just side setback, street side of property line. 17 18 Woman: Oh this is? Oh, ok. So you're referring to basically for detached accessory structures. 19 20 DRAFT _______________________ 1. Spokespersons that are representing a group of five or more people who are identified as present at the meeting at the time of the spokesperson’s presentation will be allowed up to fifteen (15) minutes at the discretion of the Chair, provided that the non-speaking members agree not to speak individually. 2. The Chair may limit Oral Communications to 30 minutes for all combined speakers. 3. The Chair may reduce the allowed time to speak to three minutes to accommodate a larger number of speakers. Commissioner Fine: Yes. 1 2 Woman: If a unit was at the backyard. So basically that those are that's based on existing 3 zoning code requirements for any structure that would be allowed in the backyard. So I guess 4 the presumption for that is making sure that there is enough separation on the street side so 5 for example, if somebody had a driveway on that side. So there's enough room for somebody 6 to pull in and park safely in front of their garage. 7 8 Commissioner Fine: Ok. I would float to my fellow Commissioners that may be something to 9 explore. This may knock out a good number of ADUs if we require that same 20 foot street side 10 property line setback. Those are my two questions; just a few other comments. I concur a fair 11 bit with Commissioner Rosenblum on the importance of ADUs, what they can do to serve our 12 community and different folks who are residents here in Palo Alto. I think the minimum lot size 13 is a huge issue here. And if you look at the data in here the largest number, the largest group of 14 properties are within that five percent range which means most of our lots were cut to the 15 zoning size, but they're still ineligible for ADUs. So if we do want to make ADUs eligible for a 16 number of properties that something we should explore. 17 18 DRAFT _______________________ 1. Spokespersons that are representing a group of five or more people who are identified as present at the meeting at the time of the spokesperson’s presentation will be allowed up to fifteen (15) minutes at the discretion of the Chair, provided that the non-speaking members agree not to speak individually. 2. The Chair may limit Oral Communications to 30 minutes for all combined speakers. 3. The Chair may reduce the allowed time to speak to three minutes to accommodate a larger number of speakers. The parking requirements, I would encourage us to make them more responsive to programs 1 like RPP. As they are there's no mention of RPPs in this ordinance. If not that perhaps we 2 eliminate the parking requirement or relax it even further to encourage ADUs. 3 4 I also agree that ADU should be regulated by FAR. I am somewhat moved by the one speaker 5 who had a mention of another 50 sq ft would allow her to build an ADU in her backyard, but I 6 think that does get us into a different set of territories for this ordinance that we're looking at. 7 And then just a question; what was 30 feet for the Airbnb regulation, was such as pulled out of 8 the air or what's the reason for 30 days? 9 10 Mr. Lait: Yeah, it's a standard that we have for our multifamily zones. 11 12 Commissioner Fine: Ok. Alright, that's all for now. 13 14 Chair Alcheck: Ok, I’ll go through my comments. I strongly agree with Commissioner 15 Rosenblum’s assessment of the eliminating the bonus requirement. Excuse me, eliminating the 16 size bonus requirement so that standard lots within their designated zoning should be eligible. 17 18 I'll touch upon the rental terms. I agree that this the Airbnb component or short term rentals is 19 a problem. I don't know, I have a different view about whether 60 days is appropriate. I'll tell 20 DRAFT _______________________ 1. Spokespersons that are representing a group of five or more people who are identified as present at the meeting at the time of the spokesperson’s presentation will be allowed up to fifteen (15) minutes at the discretion of the Chair, provided that the non-speaking members agree not to speak individually. 2. The Chair may limit Oral Communications to 30 minutes for all combined speakers. 3. The Chair may reduce the allowed time to speak to three minutes to accommodate a larger number of speakers. you in the City of Mountain View for rental housing right now they require annual leases. You 1 have to provide any renter an annual lease option. The renter has the option of electing to go 2 month to month, but the month to month option… the annual option can't be more expensive 3 than the month to month option. It's a little nuanced and it's a newer sort of legislative policy 4 in place in Mountain View. The reason why I mention this is that in most cases when you sign a 5 lease you sign a twelve month lease and then it moves to a 30 day term after the fact. I think 6 that what they've done in Mountain View is a little complicated because it requires that you 7 essentially have a conversation with your tenant every year and they have to make an election. 8 Which for an individual who is not in the rental business that could be a little difficult, but I 9 would suggest that beginning with an annual lease term is something that I think is reasonable. 10 So I would support this notion of requiring greater than 30 day terms and more specifically an 11 annual term that could then turn into a month to month term so as to not be overly 12 complicated. And the reason why is because again I think we need to create long term housing 13 supply as opposed to create a situation where someone could have a 30 day rental. 14 15 I also want to suggest that that element in and of itself that sort of continuity can alleviate 16 concerns in a neighborhood where there's just constant turnover. And 30 days is not constant, 17 but it can that could be a lot. It could feel dramatic if every 30 days or every 60 days there's a 18 new individual in your community. So I'll stop there and see what other Commissioners feel 19 about that. 20 DRAFT _______________________ 1. Spokespersons that are representing a group of five or more people who are identified as present at the meeting at the time of the spokesperson’s presentation will be allowed up to fifteen (15) minutes at the discretion of the Chair, provided that the non-speaking members agree not to speak individually. 2. The Chair may limit Oral Communications to 30 minutes for all combined speakers. 3. The Chair may reduce the allowed time to speak to three minutes to accommodate a larger number of speakers. 1 I will say this that in our discussions in other meetings and in our preparation for this there is a 2 general sense that the changes that we are discussing today will not lead to a significant 3 development of ADUs. And I just want to share that with the community because I think that's 4 important. We're talking about how we are hearing about a dramatic need. We're hearing 5 from passionate community members about how this could help them, but there is a general 6 sort of response that the individuals involved in this process and planning are not convinced 7 that we're going to see in 2017 assuming that we move this forward a development that's in 8 excess of even 15 ADUs. And I think it's important to know that. I don't believe that you're 9 going to find cul-de-sacs that have seven lots now turn into 11 families overnight. 10 11 I’ll… let me continue. I think that the discussion of bonus FAR is a discussion that should take 12 place at some time, but not tonight. I think we need to explore the notion of eligibility. I 13 would, I don't know if there's a way that we can incorporate a process by which individuals who 14 are interested in ADUs could somehow communicate their interest and identify whether 15 they're ineligible for some reason and then we could say well look, there are so many 16 individuals that have reached out to us that are ineligible and here's why they’re ineligible. And 17 these are the little changes that you can make that could create eligibility for those individuals. 18 I don't know that 5 percent one of our speakers asked for a 5 percent bonus FAR. I don't know 19 DRAFT _______________________ 1. Spokespersons that are representing a group of five or more people who are identified as present at the meeting at the time of the spokesperson’s presentation will be allowed up to fifteen (15) minutes at the discretion of the Chair, provided that the non-speaking members agree not to speak individually. 2. The Chair may limit Oral Communications to 30 minutes for all combined speakers. 3. The Chair may reduce the allowed time to speak to three minutes to accommodate a larger number of speakers. that that I would be curious as a Commission to exploring that further, but I don't know that 1 tonight is the night to make any suggestion like that. 2 3 Ok, the other comment I want to make is there is a… I'm also in favor tonight of exploring or I 4 should say supporting the JADU. There is a requirement in the JADU that the owner of the 5 property can't live in it. Well, hold on. Let me pull it up. Maybe I’m misreading, but it says 6 here an ADU can... hold on. Hold on. Yeah. Ok, maybe I read that wrong. I was going to 7 suggest that that, the JADU could be occupied by the owner of the parcel because that could in 8 sense be an empowerment opportunity. Ok, so I won't have to say that. 9 10 I want to respond to a few of the comments that were made tonight. One of the other things 11 that as Commissioners and in the planning process we've been thinking a lot about is sort of the 12 evolution of the relationship to vehicles. I want to suggest that we are not informed about… we 13 are at the beginning of potentially a dramatic change and we have had conversations in the 14 past where we have suggested that we want to be ready for changes, but it's very difficult at 15 this period of time to understand how the relationship with respect to vehicles is going to 16 change. So it's tough for us to really evaluate parking requirements based on some future 17 relationship to vehicles. That said I would like to echo Commissioner Rosenblum’s request that 18 some parking utilization study occur that identifies neighborhoods that really don't have a 19 dramatic problem. And in those neighborhoods this, the relaxation of the parking standard 20 DRAFT _______________________ 1. Spokespersons that are representing a group of five or more people who are identified as present at the meeting at the time of the spokesperson’s presentation will be allowed up to fifteen (15) minutes at the discretion of the Chair, provided that the non-speaking members agree not to speak individually. 2. The Chair may limit Oral Communications to 30 minutes for all combined speakers. 3. The Chair may reduce the allowed time to speak to three minutes to accommodate a larger number of speakers. could happen immediately. And in neighborhoods where… because again what we don't want 1 is we don't want to create a situation where individuals are oppose the development of ADUs 2 on a citywide basis because in their particular neighborhood parking might become particularly 3 tenacious. So understanding that I think would go a long way and I don't obviously that is not 4 going to happen before this goes toward City Council, but maybe if the second part of this 5 discussion involves a meeting where we get to discuss opportunities to continue to promote 6 the development of ADUs under that that particular information would be really useful. 7 8 Ok, I'm going to go into a little nuanced here section which is that and this came up during one 9 of our discussions in the past which is this idea that we have garages and someone mentioned 10 today we have garages that are on lot of lines. And if your bedroom is six feet from your side 11 setback and your neighbor's garage is on the lot line and that garage becomes and ADU then 12 you are six feet from a neighbor and that's not particularly appealing. I 100 percent appreciate 13 that sentiment. This notion of a garage, the whole notion of a garage being on a lot line, 14 literally on the fence, is one I find particularly bewildering. This is a part of our current 15 development standards that theoretically could change. And I believe one of the reasons why 16 that particular standard exists is it's sort of an opportunity for an individual who's forced to 17 have a rear contextual garage placement to be able to have better access to their rear yard by 18 not having their garage in the middle of their yard. That said it's problematic. It's problematic 19 to know that the ADU that could be developed could be literally right on your fence. I don't 20 DRAFT _______________________ 1. Spokespersons that are representing a group of five or more people who are identified as present at the meeting at the time of the spokesperson’s presentation will be allowed up to fifteen (15) minutes at the discretion of the Chair, provided that the non-speaking members agree not to speak individually. 2. The Chair may limit Oral Communications to 30 minutes for all combined speakers. 3. The Chair may reduce the allowed time to speak to three minutes to accommodate a larger number of speakers. know how we address that. I don't know if Commissioners have ideas of that. I don't know 1 that we would say look let's not develop ADUs because they could potentially be on your lot 2 line. I think we need to sort of address this idea of why are we requiring, why are we allowing 3 structures to be built on lot lines. And if the reason why we're doing it is because we're forcing 4 garages to be in the rear maybe then we should ask ourselves well why are we forcing garages 5 to be in the rear? 6 7 That's a bigger discussion. I want to just suggest that I appreciate, I am sensitive to that 8 individual's concern. I think lots of people in the community are concerned about that, that 9 notion of privacy. Ok. I think I’m going to stop there. Commissioner Waldfogel [note-Vice-10 Chair] will you continue? 11 12 Vice-Chair Waldfogel: Thank you. Let’s see, I generally support the staff recommendation to 13 comply with state law. I think that it's urgent that we move on that tonight and reach some 14 consensus about that. I think there are other things we can take up later. 15 16 I also I'm compelled by the argument that there are family urgency situations and I'd like to 17 think of ways to address those about taking care of family members. The question is if there's a 18 way to do that for the duration of that need and not potentially create the 20 year 19 downstream, downstream issue of what do we do with this unit if the family situation no longer 20 DRAFT _______________________ 1. Spokespersons that are representing a group of five or more people who are identified as present at the meeting at the time of the spokesperson’s presentation will be allowed up to fifteen (15) minutes at the discretion of the Chair, provided that the non-speaking members agree not to speak individually. 2. The Chair may limit Oral Communications to 30 minutes for all combined speakers. 3. The Chair may reduce the allowed time to speak to three minutes to accommodate a larger number of speakers. exists or if the house is sold. I'm not quite sure how to address that, but there are there may be 1 some clever ways to do that. 2 3 I want to push back a little bit on Commissioner Rosenblum and Commissioner Alcheck’s [note-4 Chair] relaxing parking in districts that don't have that are lightly parked or parked less than 50 5 percent that don't have a parking problem per se. I think if you go out and poll the community 6 there are some people who believe that a lightly parked street is an opportunity, there are 7 other people who believe that a lightly parked street is an amenity. And I don't think we know 8 today which of those two things governs so I think we need to do some work on generally in the 9 parking issue to figure out whether it's an amenity or an opportunity. 10 11 Couple… I agree with Commissioner Alcheck [note-Chair] on the privacy lot line issues. I think I 12 saw some draft text to improve privacy, so privacy at lot lines in terms of placement of windows 13 and mechanical equipment. So maybe we can look at that. 14 15 I also agree with the comments about tree protection. We heard that from members of the 16 public, also heard that from Commissioner Fine. So I think that the language that addresses 17 that is pretty important. 18 19 DRAFT _______________________ 1. Spokespersons that are representing a group of five or more people who are identified as present at the meeting at the time of the spokesperson’s presentation will be allowed up to fifteen (15) minutes at the discretion of the Chair, provided that the non-speaking members agree not to speak individually. 2. The Chair may limit Oral Communications to 30 minutes for all combined speakers. 3. The Chair may reduce the allowed time to speak to three minutes to accommodate a larger number of speakers. Two technical clarifications, I’d just like staff clarification. The tandem parking requirements for 1 ADUs, can we just clarify whether those tandems can stack with parking for the principal 2 residence or whether those tandems need to be stacked separately. 3 4 Woman: Thank you. So the way the draft ordinance is written you could have the accessory 5 unit parking behind the primary units’ space. 6 7 Vice-Chair Waldfogel: Could we clarify, could we I guess I'd like to see other people's view on 8 that, but that seems like a unlikely to be used configuration if the ADU can stack with the 9 principal residence. So I'll just I want to put that comment out there. I'd like clarification that 10 we wouldn’t that I would prefer that we not do that. The other clarification is on daylight 11 planes. So I'm just going to clarify that daylight plane still govern ADUs and setbacks. 12 13 Woman: Yes. So if the ADU was part of the primary the primary residence then the primary 14 residence daylight plane requirements are the same. There is a separate daylight plane 15 equipment requirement for a detached or rather not detached, but for any in the rear yard. 16 17 Vice-Chair Waldfogel: So what would that, what does that look like? If there's, if so if there's an 18 existing garage in a rear yard setback then that's governed by a separate daylight plane? 19 20 DRAFT _______________________ 1. Spokespersons that are representing a group of five or more people who are identified as present at the meeting at the time of the spokesperson’s presentation will be allowed up to fifteen (15) minutes at the discretion of the Chair, provided that the non-speaking members agree not to speak individually. 2. The Chair may limit Oral Communications to 30 minutes for all combined speakers. 3. The Chair may reduce the allowed time to speak to three minutes to accommodate a larger number of speakers. Woman: Correct. 1 2 Vice-Chair Waldfogel: And a new ADU (interrupted) 3 4 Woman: It would be the same requirement. So if the new, if the garage is converted to a new 5 ADU the same daylight plane requirement would apply. 6 7 Vice-Chair Waldfogel: What about a de novo construction of a detached ADU? 8 9 Woman: If it's a new construction of a detached ADU… I mean basically the way the code is 10 written is that a ADU would be allowed in the rear yard only if it's a converted from an existing 11 garage. 12 13 Vice-Chair Waldfogel: Ok, that wasn't clear to me, but thank you. Is that true? 14 15 Chair Alcheck: [unintelligible-off microphone]. 16 17 Vice-Chair Waldfogel: Well, like you build a garage and then you build a… then you convert it. 18 19 DRAFT _______________________ 1. Spokespersons that are representing a group of five or more people who are identified as present at the meeting at the time of the spokesperson’s presentation will be allowed up to fifteen (15) minutes at the discretion of the Chair, provided that the non-speaking members agree not to speak individually. 2. The Chair may limit Oral Communications to 30 minutes for all combined speakers. 3. The Chair may reduce the allowed time to speak to three minutes to accommodate a larger number of speakers. Woman: Correct. I'm sorry just to clarify that that you can have a detached accessory, 1 detached ADU within the buildable area, but it can also be in within the rear setback only if it's 2 converted from an existing garage; just wanted to provide that clarification. 3 4 Cara Silver, Senior Assistant City Attorney: So said another way it can be a detached ADU a de 5 novo one, a new one, can be located in the rear guard; however, it needs to comply with the 6 rear setback requirements. 7 8 Vice-Chair Waldfogel: So just hypothetically could an applicant then apply to build a garage in 9 the setback and then the following year convert that? 10 11 Mr. Lait: That's correct. The way I mean the way the ordinance is presently written a garage 12 that was built today in the year from now wanted to, were to be converted to ADU that could 13 happen. 14 15 Vice-Chair Waldfogel: So I hope that we would will look into garage applications and make sure 16 there's actually a driveway leading to them. 17 18 Mr. Lait: Yes we would require that. 19 20 DRAFT _______________________ 1. Spokespersons that are representing a group of five or more people who are identified as present at the meeting at the time of the spokesperson’s presentation will be allowed up to fifteen (15) minutes at the discretion of the Chair, provided that the non-speaking members agree not to speak individually. 2. The Chair may limit Oral Communications to 30 minutes for all combined speakers. 3. The Chair may reduce the allowed time to speak to three minutes to accommodate a larger number of speakers. Vice-Chair Waldfogel: Great. Thank you. 1 2 Chair Alcheck: I’m sorry. Commissioner Tanaka. 3 4 Commissioner Tanaka: So a few quick questions. I was listening to the conversation about the 5 daylight planes and I had something about that as well. So I think Commissioner Fine 6 mentioned about the fact that if the rear setbacks too deep it eliminates a lot of potential 7 ADUs. Doesn't that also hold true for the daylight plane as well? And so can you explain a little 8 bit how you said the same as the main house so how does the daylight plane work? 9 10 Woman: So the way that the daylight plane is required is that basically you take the structure 11 and you start at an initial height, so for example at the interior side lot line you start at ten feet, 12 ten feet above grade and then you do a 45 degree angle. 13 14 Commissioner Tanaka: Ok. 15 16 Woman: So anything outside that angle would not be allowed. You'd have to build within. 17 18 Commissioner Tanaka: Ok. Ok. 19 20 DRAFT _______________________ 1. Spokespersons that are representing a group of five or more people who are identified as present at the meeting at the time of the spokesperson’s presentation will be allowed up to fifteen (15) minutes at the discretion of the Chair, provided that the non-speaking members agree not to speak individually. 2. The Chair may limit Oral Communications to 30 minutes for all combined speakers. 3. The Chair may reduce the allowed time to speak to three minutes to accommodate a larger number of speakers. Woman: And then so for a detached structure it's a different require, the daylight plane 1 requirement is a little different. And that… and then there are also exceptions for daylight 2 plane. And for accessory units the let’s see… so it’s so for a detached structure if it’s within the 3 rear yard, the rear setback, the rear 20 feet it's measured at 8 feet at the property line. 4 5 Commissioner Tanaka: So why more restrictive then the main house? 6 7 Woman: It's closer to the property line. So there's more of a privacy potential. 8 9 Chair Alcheck: Just to clarify it can be inside the set back and so it could theoretically be on the 10 property line as opposed to the setback line. 11 12 Commissioner Tanaka: Yeah, no I understand. But I mean if to the idea of if you don't 13 [unintelligible] actually encourage or enable ADUs, right? I mean so I think the same Adrian, 14 Commissioner Fine, was talking about, right? To loosen up the rear setback because if you have 15 more restrictive daylight plane it also makes it harder for a ADU to happen, right? 16 17 Mr. Lait: So I think there was a distinction if I may the comment about the 20 foot setback is 18 unique to corner lots and wouldn’t apply to an interior property. That the setback is 20 feet for 19 typically 20 feet for a R-1 the rear. 20 DRAFT _______________________ 1. Spokespersons that are representing a group of five or more people who are identified as present at the meeting at the time of the spokesperson’s presentation will be allowed up to fifteen (15) minutes at the discretion of the Chair, provided that the non-speaking members agree not to speak individually. 2. The Chair may limit Oral Communications to 30 minutes for all combined speakers. 3. The Chair may reduce the allowed time to speak to three minutes to accommodate a larger number of speakers. 1 Ms. Moitra: For a detached structure. 2 3 Mr. Lait: Ok, so it's a typically a 20 foot step back for a rear yard setback for interior lots, also 4 for corner lots. The corner lot setback was a side setback adjacent to the street. Detached 5 structures could encroach into those areas if they meet certain standards. So (interrupted) 6 7 Commissioner Tanaka: Yeah, I guess for me [unintelligible]. I mean we could talk about what 8 the side setback should be, but to me it doesn't make sense that for the ADU it would have a 9 more restrictive daylight plane than the main house. So… 10 11 Commissioner Fine: So I think there's two issues here. There's the different daylight planes 12 depending how close you are to the lot line and then there's a specific case I brought up which 13 is corner lots and there's the side street setback which is 20 feet and that's just us saying hey, 14 we don't want (interrupted) 15 16 Commissioner Tanaka: No, no (interrupted) 17 18 Commissioner Fine: [Unintelligible] closer to the corner. 19 20 DRAFT _______________________ 1. Spokespersons that are representing a group of five or more people who are identified as present at the meeting at the time of the spokesperson’s presentation will be allowed up to fifteen (15) minutes at the discretion of the Chair, provided that the non-speaking members agree not to speak individually. 2. The Chair may limit Oral Communications to 30 minutes for all combined speakers. 3. The Chair may reduce the allowed time to speak to three minutes to accommodate a larger number of speakers. Commissioner Tanaka: Yeah, I get that, but what I'm saying is more about ADUs have a more 1 restrictive daylight plane than the main house which is… 2 3 Mr. Lait: I apologize. I don't think we're being clear in our explanation, to just take a step back a 4 primary so a primary residence is built within the setbacks, the front the rear and the sides. A 5 an ADU detached also would have to comply with those setback requirements. A detached 6 accessory structure, a garage, a bonus room but not unit could encroach into the setback. 7 That's not an ADU. We have talked about garages being located in a setback and those possibly 8 and those being able to convert to an ADU. That's where we run into some of the 9 conversations that we had about privacy and windows, but ADUs do not, ADUs in a detached 10 ADUs built new do not are not any more restricted than the primary residence. 11 12 Commissioner Tanaka: Ok, great. Thank you for clarifying. Because [unintelligible] I would say 13 that doesn't make sense, but ok great. So let's see. So ok, so basements. Right now I think the 14 code and correct me if I’m wrong, but the code says that if you try to put the cars underground 15 in R-1 that counts towards your FAR, right? 16 17 Woman: Actually below grade parking in R-1 is not allowed. 18 19 DRAFT _______________________ 1. Spokespersons that are representing a group of five or more people who are identified as present at the meeting at the time of the spokesperson’s presentation will be allowed up to fifteen (15) minutes at the discretion of the Chair, provided that the non-speaking members agree not to speak individually. 2. The Chair may limit Oral Communications to 30 minutes for all combined speakers. 3. The Chair may reduce the allowed time to speak to three minutes to accommodate a larger number of speakers. Commissioner Tanaka: Not allowed any more. Ok. Is, when did that change? Because I 1 thought at one point it is allowed, but it counts towards the FAR. 2 3 Woman: I'm not sure when the regulation was, but it's been quite a while since parking below 4 grade in the R-1 has been restricted. 5 6 Commissioner Tanaka: Ok. 7 8 Woman: I mean it's allowed in potentially in other residential zoning districts, but in R-1 9 specifically it's not permitted. 10 11 Commissioner Tanaka: Because the reason why I bring this up is because we have this issue of 12 ok we do ADUs, people convert garages to ADUs, but then we lose parking and then we have 13 this issue of parking. And rather than this kind look at a win/lose type of situation a potential 14 win-win is if you actually allow people to put the cars underground. Because [unintelligible] 15 different ways to have actually putting cars underground without having to have a massive 16 ramp to the to get for the cars. And so I don't understand what's the rational towards banning 17 cars underground? 18 19 Woman: I mean it could be aesthetics because (interrupted) 20 DRAFT _______________________ 1. Spokespersons that are representing a group of five or more people who are identified as present at the meeting at the time of the spokesperson’s presentation will be allowed up to fifteen (15) minutes at the discretion of the Chair, provided that the non-speaking members agree not to speak individually. 2. The Chair may limit Oral Communications to 30 minutes for all combined speakers. 3. The Chair may reduce the allowed time to speak to three minutes to accommodate a larger number of speakers. 1 Commissioner Tanaka: But if you have a garage and it had a little elevator it takes the car down 2 how is that going to affect aesthetics? 3 4 Woman: Well I think it's because an R-1 lot typically isn't very deep. 5 6 Commissioner Tanaka: Yeah. 7 8 Woman: And so in order to get that slope, safe slope down (interrupted) 9 10 Commissioner Tanaka: No, no. Forget the slope, forget the ramp, I'm talking about there’s all 11 these kind of they call it puzzle lifts or these lifts for the cars that could jack the car up and 12 down and there's no ramp. 13 14 Woman: Right, well and so basically when this prohibition against underground parking was 15 done it was before we knew about puzzle lifts so I mean that could potentially change the 16 discussion. 17 18 Commissioner Tanaka: Yeah so it sounds like it's kind of dated because I think the situation is 19 and the kind of contention I think the other Commissioners have brought up is well ok if you 20 DRAFT _______________________ 1. Spokespersons that are representing a group of five or more people who are identified as present at the meeting at the time of the spokesperson’s presentation will be allowed up to fifteen (15) minutes at the discretion of the Chair, provided that the non-speaking members agree not to speak individually. 2. The Chair may limit Oral Communications to 30 minutes for all combined speakers. 3. The Chair may reduce the allowed time to speak to three minutes to accommodate a larger number of speakers. allow ADUs and you get rid of the parking restriction then you have parking problems on the 1 street potentially, but if you actually allow the cars to go underground where does a very low 2 visual impact, you get the parking and get the more housing units and then it could be a win-3 win. So I think one thing we should really look at is allowing underground parking in R-1 which 4 to me made no sense to ban anyways, especially with the advent of these kind of lift 5 technologies. They're very prevalent. You don't need any more turning radius or anything. You 6 don't need a some sort of lazy susan on your lot to let the cars move out. You don't need to 7 have a gigantic 100 foot ramp to get a car down either anymore. And so this is one way to 8 make it a win-win and lessen the parking issues that would be brought up if you keep on 9 banning the banning cars underground. 10 11 Mr. Lait: I see the provision in the code. I think you're certainly remembering it correctly 12 because it does say that underground parking is prohibited in single family uses except 13 pursuant to a variance granted in accordance with our requirements and in which case the area 14 of the underground parking shall be counted toward the FAR for the site. So you have that 15 memory of that and I believe Elaina’s [Note-is this woman?] correct. It's probably where I've 16 seen it in other cities. It's the visual aesthetic of the neighborhood and so forth (interrupted) 17 18 Commissioner Tanaka: Yeah, but with the elevator there’s no such thing. 19 20 DRAFT _______________________ 1. Spokespersons that are representing a group of five or more people who are identified as present at the meeting at the time of the spokesperson’s presentation will be allowed up to fifteen (15) minutes at the discretion of the Chair, provided that the non-speaking members agree not to speak individually. 2. The Chair may limit Oral Communications to 30 minutes for all combined speakers. 3. The Chair may reduce the allowed time to speak to three minutes to accommodate a larger number of speakers. Mr. Lait: Absolutely, absolutely. And we haven't updated this code provision in a long time. So 1 I've got this flagged as a discussion point that may be continued. 2 3 Commissioner Tanaka: Because I think the idea of ADUs makes sense, but everyone’s worried 4 about the FAR, we’re worried about parking impacts, but by actually allowing the cars to be 5 underground with these elevators which are not terribly expensive anymore it solves a lot of 6 problems, right? You could get the housing units. You could get the parking without the… you 7 could get the additional units without the parking impacts. Visually there's not much 8 difference. It looks almost identical. So I think that we need to update the code and think a 9 little bit more creatively on this. 10 11 So let's see, my last point here is so in the case when there is no chance to put the cars 12 underground which I think is to the right solution is when one other thing for us to think about 13 is potentially having some sort of large impact fee if there is no parking. So let's say the streets 14 are impacted or might be impacted to assess a large fee for that ADU to make up for the 15 parking. Because then that could go into a program some sort of traffic mitigation program or 16 parking mitigation program and so that could maybe make up for it kind of like an in lieu fee so 17 to speak. So that’s another thing that I’d like to Commission to consider. 18 19 Chair Alcheck: Commissioner Gardias. 20 DRAFT _______________________ 1. Spokespersons that are representing a group of five or more people who are identified as present at the meeting at the time of the spokesperson’s presentation will be allowed up to fifteen (15) minutes at the discretion of the Chair, provided that the non-speaking members agree not to speak individually. 2. The Chair may limit Oral Communications to 30 minutes for all combined speakers. 3. The Chair may reduce the allowed time to speak to three minutes to accommodate a larger number of speakers. 1 Commissioner Gardias: Thank you. I'm going to say like this way. So I like the way that staff 2 approach it that pretty much when I was reviewing the proposed regulation it just puts us into 3 the compliance with the state law, nothing more nothing less. I think there is an embedded risk 4 in moving beyond today in moving today beyond the compliance requirement because we 5 would need to start changing the code in the variety of the ways. And I think that at this 6 moment we are pretty much not prepared to look into those issues because there will be those 7 would be very complex. They would include the privacy, the change of the daylight planes, 8 number of the issues that we cannot foresee at the moment and it will be require farther study. 9 So that's I think that's the way to approach it today. In the future we should maybe discuss 10 other options knowing that there is a desire within the community to increase the supply. 11 12 The second aspect is that I think that what this study is lacking although we must do this 13 because it we must comply with the law, I think that we need to understand the nominal vs real 14 change. There is number of the units ADUs that are being currently occupied because of 15 various reasons. So I'd like to understand what staff what research can be provided to put the 16 data in front of this Commission and the Council to tell us what would be the real number of 17 the occupants giving that some of the units are currently being occupied. Because the number 18 that we have currently of the 2,466 potential units at the current 35 percentage threshold is 19 just a theoretical the way they understand it. We would need to somehow do a study to count 20 DRAFT _______________________ 1. Spokespersons that are representing a group of five or more people who are identified as present at the meeting at the time of the spokesperson’s presentation will be allowed up to fifteen (15) minutes at the discretion of the Chair, provided that the non-speaking members agree not to speak individually. 2. The Chair may limit Oral Communications to 30 minutes for all combined speakers. 3. The Chair may reduce the allowed time to speak to three minutes to accommodate a larger number of speakers. units that are being currently occupied. I don't know how to do it. I know that that people may 1 not come forward and not declare themselves not to be compliant, but there may be some 2 statistical way or some other smart approach that would just convert those units into the 3 number of the potential increase in the occupancy. 4 5 There is another issue that needs to be addressed in the proposed regulation which is a 6 compliance. And maybe I will just give an example of my neighborhood that is changing in this 7 way that some streets there is number of the housing, houses that are being owned by some 8 outside ownership and being leased to those that want to live in Palo Alto thus decreasing the 9 local ownership of those houses. Which from the perspective of me as a resident of the 10 [community] center it just decreases number of the owners that come and care about their 11 properties. They pretty much participate and then contribute to the community and which is 12 attribute and the value of Palo Alto. That’s the way I see it. So saying this I'd like to understand 13 and there should be some compliance measure to make sure that those units are truly being 14 occupied by the owners as it is required in this regulation. 15 16 Thank you. I stop at this. I have more comments, but they are granular at in their scope so I 17 will just participate in the second round. Thank you. 18 19 DRAFT _______________________ 1. Spokespersons that are representing a group of five or more people who are identified as present at the meeting at the time of the spokesperson’s presentation will be allowed up to fifteen (15) minutes at the discretion of the Chair, provided that the non-speaking members agree not to speak individually. 2. The Chair may limit Oral Communications to 30 minutes for all combined speakers. 3. The Chair may reduce the allowed time to speak to three minutes to accommodate a larger number of speakers. Chair Alcheck: Ok, so for the second round I'm going to let you guys light it up and decide who 1 wants to speak. I want to reiterate that what Commissioner Gardias is saying and some of the 2 other Commissioners have sort of said are suggestions on what would be a more involved 3 approach to reviewing this. When City Council sent us this the idea was to look into ways of 4 encouraging potentially the development of ADUs and what policies we could change. This is 5 sort of a divergent process and I wonder if there's a way for us to do both. Move this on and 6 also create a process by which we could explore some of these deeper questions about changes 7 that would result in sort of the consequences that we'd like to do. So I have one light. It's 8 Commissioner Rosenblum. If you guys want to speak please just light it up and then maybe 9 after this round we'll move forward with a Motion. 10 11 Commissioner Rosenblum: Ok, so a couple things. First, this is the third session so we've had 12 two study sessions and so I do think that we've had adequate time to review information, 13 request additional information, request additional information from staff, hear from residents, 14 and so I do think that now is the time where based on what we’ve understood to date to make 15 some recommendations. 16 17 I wanted to just give a little bit of context in the comment I made about the difference between 18 Vancouver and Portland because I think it's edifying. Yeah. So Portland only has one percent of 19 their housing stock converted to ADUs despite relaxing many regulations and being cited as one 20 DRAFT _______________________ 1. Spokespersons that are representing a group of five or more people who are identified as present at the meeting at the time of the spokesperson’s presentation will be allowed up to fifteen (15) minutes at the discretion of the Chair, provided that the non-speaking members agree not to speak individually. 2. The Chair may limit Oral Communications to 30 minutes for all combined speakers. 3. The Chair may reduce the allowed time to speak to three minutes to accommodate a larger number of speakers. of America's top cities for ADUs. And so a lot of folks out there that are worried about Palo Alto 1 if we hit it out of the park with this you're talking about one percent additional units created. 2 Where Vancouver went further is pretty dramatic. So they don't require off street parking for 3 each ADU. They don't require the owner to live on site. They allow both an attached ADU and 4 a detached ADU. They allow two ADUs on the property. They award additional occupancy. 5 They give extra FAR bonuses. They don't have design criteria to match the design of the site. 6 So they really are encouraging this well beyond what any other city has done. The most 7 American cities have been able to really create in terms of new housing stock even with the 8 things, even the most radical things that we've talked about are one percent more. And so I 9 this I've made a joke before this is like Schrodinger's housing unit. Everyone says A. it's not to 10 produce much, but B. It's going to clog my neighborhood with traffic. And I think that the 11 answer unfortunately is it won't produce a lot yet, but it's a great start and we should learn 12 more and start pushing the envelope. 13 14 So I have nothing further. After listening to all the Commissioners I like in addition to the things 15 I had said I agree with the Chair that I had said I didn't want more than 30 days, but I agree 60 16 days and more. I don't see I think transience isn’t a is an issue. I don't see like a logical 17 objection for why I would want a longer tenancy requirement. I agree with protections, existing 18 protections for trees. I think that’s important to not endanger our canopy. Other than that I 19 DRAFT _______________________ 1. Spokespersons that are representing a group of five or more people who are identified as present at the meeting at the time of the spokesperson’s presentation will be allowed up to fifteen (15) minutes at the discretion of the Chair, provided that the non-speaking members agree not to speak individually. 2. The Chair may limit Oral Communications to 30 minutes for all combined speakers. 3. The Chair may reduce the allowed time to speak to three minutes to accommodate a larger number of speakers. feel good about the first round of trying to go at least to encourage ADUs as much as possible 1 without going all the way to the Vancouver model. 2 3 Chair Alcheck: Ok, I don't have a lot of… I have one more light. If you guys are ready and you 4 don't want to continue in this round we can move forward with the Motion and some 5 amendments in sort of the same vein that we did the last one. Did you light it up or is that just? 6 Ok, Commissioner Gardias. 7 8 Commissioner Gardias: Well I have a number of the comments so if you could just at least take 9 this into account. So just this map and the distance from transportation and we discussed this 10 at the break with Assistant Director Jonathan Lait. There is a definition of the transportation 11 that was updated by the Green Building Council in the Version 5 of Leadership in Energy & 12 Environmental Design (LEED) regulations that is that went into life I believe on October 31st of 13 2016 that defines public transportation in a more strict way. And my proposal would be to 14 adopt in absence of the state definition my proposal would be to adopt that definition although 15 it would be stricter than this one. And for those that may not be familiar with this definition it 16 requires public transportation to be available on Saturday and excludes certain types of 17 transportation. So for example municipal buses are not included and certain transportation 18 that doesn't come on during the weekend I believe that Sunday is excluded are also excluded. 19 So in this case I'm not sure if Marguerite buses would be included in this definition. So it's 20 DRAFT _______________________ 1. Spokespersons that are representing a group of five or more people who are identified as present at the meeting at the time of the spokesperson’s presentation will be allowed up to fifteen (15) minutes at the discretion of the Chair, provided that the non-speaking members agree not to speak individually. 2. The Chair may limit Oral Communications to 30 minutes for all combined speakers. 3. The Chair may reduce the allowed time to speak to three minutes to accommodate a larger number of speakers. much stricter definition, but there is a congruency with the Green Building Council definition 1 would meet the drive of location of certain Below Market Rate (BMR) and additional units 2 closer to the transportation centers. So that is in terms of the transportation definition. 3 4 Now I have a couple of other comments that I would like to run by you. And they are rather 5 random. First, (interrupted) 6 7 Chair Alcheck: Actually before you go on why don’t we get clarification? Is that definition 8 possible? 9 10 Mr. Lait: Yes. So the state law puts the term out of public transit, but didn't define it in this 11 ordinance. And so we wanted to put something around it and for a starting place we included 12 the language that we have here in the ordinance on packet Page 142. I will say that our 13 transcription here is not exactly aligned, I’m sorry? I'm on packet Page 142, Page 16 of the 14 ordinance. So we had this idea of borrowing from the SB 743 which does set forth some 15 definitions of what public transit would be and while that was our guide I think what we 16 ultimately ended up putting in the ordinance didn't quite align with that regulation. So I could 17 talk about that. I think that the what would be helpful from the Commission is to know which 18 way you want to go on this. If you want to maximize the number of properties that would be 19 exempt from parking because of a proximity to a bus line that meet that has a head way of 15 20 DRAFT _______________________ 1. Spokespersons that are representing a group of five or more people who are identified as present at the meeting at the time of the spokesperson’s presentation will be allowed up to fifteen (15) minutes at the discretion of the Chair, provided that the non-speaking members agree not to speak individually. 2. The Chair may limit Oral Communications to 30 minutes for all combined speakers. 3. The Chair may reduce the allowed time to speak to three minutes to accommodate a larger number of speakers. minutes during the peak morning and afternoon times and the rail stations and the fixed 1 railway possibly inclusive of the Marguerite shuttle that's the map that you have in front of you. 2 I think that's the most aggressive way to go. Another map would be and I actually have it in 3 front of me and I’ll I can show it to you and I could pass it around if there is interest in this 4 would be to do a half mile radius around each of the two stations in Palo Alto and the one that's 5 over in Mountain View. There's also one at I think it’s what, San Antonio and El Camino? 6 Arastradero and El Camino. There is a bus line that would also qualify, two bus lines that would 7 qualify by the definition that we're trying to… another definition. So this would be a more 8 minimalist approach. 9 10 Chair Alcheck: So just to be clear we can in theory tonight amend the language in this draft 11 ordinance for example to treat buses and rail separately. So you could say three quarters of a 12 mile for rail and half a mile for the bus? I mean do we have a lot of liberty here? 13 14 Mr. Lait: So the half mile standard is set forth in the state law and it says public transit. We can 15 I think there’s some latitude and obviously so Cara can speak to that, but there is some latitude 16 in how we define what public transit is. 17 18 Chair Alcheck: But it has to be we can't increase that radius is what you're saying? For example 19 tonight we had multiple speakers who suggested they were 0.6 miles from a railway station. I 20 DRAFT _______________________ 1. Spokespersons that are representing a group of five or more people who are identified as present at the meeting at the time of the spokesperson’s presentation will be allowed up to fifteen (15) minutes at the discretion of the Chair, provided that the non-speaking members agree not to speak individually. 2. The Chair may limit Oral Communications to 30 minutes for all combined speakers. 3. The Chair may reduce the allowed time to speak to three minutes to accommodate a larger number of speakers. mean I'm only asking in theory is it all up on the table as long as we expand it and we and not 1 contract it? 2 3 Mr. Lait: Right. You can contract but not expand the radius. 4 5 Chair Alcheck: You can contract the radius, but not… 6 7 Mr. Lait: You can make it a smaller radius not a bigger radius. 8 9 Chair Alcheck: Ok. I thought it was the opposite. That's why… 10 11 Mr. Lait: It’s something like that. 12 13 Chair Alcheck: Ok, so for clarity Cara (interrupted) 14 15 Mr. Lait: I’ll work on my contractions. 16 17 Ms. Silver: Right. It at a minimum you have to give these parking exemptions to units that are 18 within a half mile radius of public transit. If you also want to provide additional parking 19 exemptions you can go beyond that by specifying 0.6 six miles or greater. 20 DRAFT _______________________ 1. Spokespersons that are representing a group of five or more people who are identified as present at the meeting at the time of the spokesperson’s presentation will be allowed up to fifteen (15) minutes at the discretion of the Chair, provided that the non-speaking members agree not to speak individually. 2. The Chair may limit Oral Communications to 30 minutes for all combined speakers. 3. The Chair may reduce the allowed time to speak to three minutes to accommodate a larger number of speakers. 1 Chair Alcheck: And can it be separate, like if you wanted to choose to treat railway stations as 2 0.6, but (interrupted) 3 4 Ms. Silver: Yes. 5 6 Chair Alcheck: Bus terminals. You can, you have real liberty? 7 8 Ms. Silver: Yes, provided you meet the minimum of 0.5. 9 10 Chair Alcheck: Ok. Alright. Why don't we go back? 11 12 Ms. Silver: And one other point that I did want to add on this issue and we should have said this 13 is at the starting is that this ordinance these three bills that have just been adopted were on a 14 very tight time frame and they came down very quickly and there are a lot of ambiguities in the 15 state language and in the minimum requirements. And so HCD the housing of Housing and 16 Community Development Department (HCD) at the state level has received a lot of questions 17 from cities about implementing regulations. And the and HCD is expected to issue at some 18 clarifications in the next maybe couple weeks actually. So we'll be monitoring that and when 19 this comes to Council we may find that the definition of public transit has become more clear, 20 DRAFT _______________________ 1. Spokespersons that are representing a group of five or more people who are identified as present at the meeting at the time of the spokesperson’s presentation will be allowed up to fifteen (15) minutes at the discretion of the Chair, provided that the non-speaking members agree not to speak individually. 2. The Chair may limit Oral Communications to 30 minutes for all combined speakers. 3. The Chair may reduce the allowed time to speak to three minutes to accommodate a larger number of speakers. but at this point it's not defined. You have several options. You could just use the term public 1 transit and then wait and see what the state does with that definition. You could have the 2 Director promulgate regulations or you could try to define that in the ordinance as a 3 recommendation to Council tonight. 4 5 Chair Alcheck: Ok, let's go back to Commissioner Gardias and his proposal. 6 7 Commissioner Gardias: Yeah so giving this discussion I think this is still an open item because it 8 may have a general impact. So let's say that Middlefield becomes based on this definition if 9 value, if VTA Number 35 is continues its run, is recognized as a public transportation say that as 10 opposed to half an hour run it runs every 15 minutes then pretty much it would allow the 11 properties along Middlefield to have ADUs recognized. So without parking, yes. So that's 12 pretty much I think it's very significant so for this reason I believe that we should just not wait 13 on this tonight, just direct staff to come back to us with farther clarification either from the 14 state or explore various options and green council, Green Building Council would be one of 15 those. 16 17 So if I may continue on some other items I'd like to just ask a couple of questions because I 18 need some clarification. We have if I go through the detailed pronouncements we talk about 19 fire sprinklers and then example is on Page 139 and this is Paragraph 18.42.040a that speaks 20 DRAFT _______________________ 1. Spokespersons that are representing a group of five or more people who are identified as present at the meeting at the time of the spokesperson’s presentation will be allowed up to fifteen (15) minutes at the discretion of the Chair, provided that the non-speaking members agree not to speak individually. 2. The Chair may limit Oral Communications to 30 minutes for all combined speakers. 3. The Chair may reduce the allowed time to speak to three minutes to accommodate a larger number of speakers. that fire sprinklers are not required, they are not required in the primary residence I believe 1 that this is subject of the building code as opposed to the planning. So for this reason I propose 2 to strike it out of this regulation. 3 4 Mr. Lait: Yeah, this is just straight from the state law. This is in the bill that was passed by the 5 Governor. 6 7 Commissioner Gardias: Oh so it's just a copy of this? 8 9 Mr. Lait: Yes. 10 11 Commissioner Gardias: But is the place is this regulation place for this pronouncement? 12 13 Mr. Lait: Yeah, I guess (interrupted) 14 15 Commissioner Gardias: The reason is like pretty much because if I am... from your perspective, 16 right, it just goes through the planning and then goes through the building, right? So if I am a 17 building inspector and the reviewer of the plans I'd be looking for this particular paragraph in 18 the building regulations as opposed to planning regulation. 19 20 DRAFT _______________________ 1. Spokespersons that are representing a group of five or more people who are identified as present at the meeting at the time of the spokesperson’s presentation will be allowed up to fifteen (15) minutes at the discretion of the Chair, provided that the non-speaking members agree not to speak individually. 2. The Chair may limit Oral Communications to 30 minutes for all combined speakers. 3. The Chair may reduce the allowed time to speak to three minutes to accommodate a larger number of speakers. Mr. Lait: Yes. 1 2 Commissioner Gardias: So… 3 4 Mr. Lait: Yeah and I think it's helpful because when people are designing something they’re first 5 looking at these codes because builders have a sense for and the architects have a sense for 6 what the building code requirements are, but they also look at these things as they're 7 developing their plans or conceptual plans. So having that notation here I think is helpful to 8 inform what's going to the total cost of building this and so forth. So it's it doesn't exempt or 9 preempt in any way the building code that we have adopted. 10 11 Commissioner Gardias: I understand, but I just want to make sure that this is pretty much it's 12 not omitted on the other side because the builders would not read this, they would read the 13 other regulations. So I mean it's up to you. I thought that it would be clean just to remove it 14 here and just put it in the other document, but it's I'm not very hard on this. 15 16 So there is to another item that I would like to discuss which is and just to give you an example 17 we're talking on the Page 141 we talk about that the maximum size of the accessory, detached 18 ADU is there a minimum requirement in this regulation or some other regulation of the ideal 19 that cannot be built? Is there a minimum size that cannot be erected? 20 DRAFT _______________________ 1. Spokespersons that are representing a group of five or more people who are identified as present at the meeting at the time of the spokesperson’s presentation will be allowed up to fifteen (15) minutes at the discretion of the Chair, provided that the non-speaking members agree not to speak individually. 2. The Chair may limit Oral Communications to 30 minutes for all combined speakers. 3. The Chair may reduce the allowed time to speak to three minutes to accommodate a larger number of speakers. 1 Mr. Lait: Ok, so other than any minimums that might be set forth in the building technical codes 2 in terms of size of bedrooms and things of that nature there is no minimum. There are 3 maximums established, but no minimums. 4 5 Commissioner Gardias: Right. And so I believe that there should be a minimum unless it would 6 not be compliant with the law because of the a I mean first of all I would ask you to research it 7 please. That's number one. Number two is that because there are because of the health and 8 safety regulations, health regulations they may require certain minimum sizes of the dwelling 9 units or the rooms, right? Because we cannot, so human cannot live only one square foot 10 facility. So but if so there should be somewhere written about the minimum size. 11 12 Regardless I believe that we should establish a minimum of 250 sq ft which would be equivalent 13 of the 25 square meters. And the reason why I am giving these number is because in the 14 number of the countries that size is recognized as the micro as the bottom micro unit that we 15 should not go lower than this. If you proof if you prove me that this should be higher because 16 of some other regulations I will agree with you, right? But I think that 250 sq ft should be 17 minimum. 18 19 DRAFT _______________________ 1. Spokespersons that are representing a group of five or more people who are identified as present at the meeting at the time of the spokesperson’s presentation will be allowed up to fifteen (15) minutes at the discretion of the Chair, provided that the non-speaking members agree not to speak individually. 2. The Chair may limit Oral Communications to 30 minutes for all combined speakers. 3. The Chair may reduce the allowed time to speak to three minutes to accommodate a larger number of speakers. Another item is can I continue? So another item is on Page 140 and this is about the privacy. 1 This is paragraph at the top, six… six of… yeah, it’s a continuation of from the paragraph from 2 the prior page. It talks about the privacy. I think that this is not clear from the planning 3 perspective. It refers to the building techniques and methodologies as opposed to address 4 planning regulations. So it's just such just like obscure glazing, placement of the windows and 5 decks. This is Page one four zero, 140. I think that this particular paragraph is a subject to 6 interpretation and my suggestion would be just to rewrite it, remove the sentence that talks 7 about the techniques because the planning regulation is not about the building techniques. 8 There’s room in some other place and we talk about this, but I think that the language should 9 speak about that second story ADU should not intrude the privacy of the adjacent properties. 10 And also would need to refer to the privacy of the main residence as well. Because the reason 11 is like this, that if there is a second unit is being rented out or the owners, original owners lives 12 in the second unit then there may be a privacy violation on the both sites. I don't have a 13 specific language so for this reason I'm asking staff just to propose the language just giving 14 those reasons. 15 16 Mr. Lait: May I comment to that? 17 18 Chair Alcheck: Hold on. What I'm going to suggest that we do is essentially work the same way 19 we did the last agenda item which is that we're going proceed with a Motion at some point and 20 DRAFT _______________________ 1. Spokespersons that are representing a group of five or more people who are identified as present at the meeting at the time of the spokesperson’s presentation will be allowed up to fifteen (15) minutes at the discretion of the Chair, provided that the non-speaking members agree not to speak individually. 2. The Chair may limit Oral Communications to 30 minutes for all combined speakers. 3. The Chair may reduce the allowed time to speak to three minutes to accommodate a larger number of speakers. then each of these suggestions I’m going to create, I’m going to ask you to make a Friendly 1 Amendment for and then if you get a second or excuse me, and if it's accepted by the makers 2 or an Unfriendly Amendment that you can get a second for and then what we’ll do is we'll just 3 take a vote on it. In this particular case we don't have specific, in this particular case where we 4 don't have specific language that's a little trickier. So I'm not… how would you like to proceed 5 in that regard? 6 7 Commissioner Gardias: So I agree with you, right? And I think that I agree with the way that 8 you want to approach it. I think that because the way that staff wrote it that it’s compliant with 9 the law and from this perspective it's good to go. I totally agree with your approach just to 10 move it out of door and just send it to the Council, but giving that there are some items like this 11 one up and proximity to transportation is another one and a couple of others they have. 12 13 Chair Alcheck: Right. 14 15 Commissioner Gardias: I’m not really sure how to pursue in those, with those items. I think that 16 maybe we can just recommend this to the Council as a general approach and then maybe give 17 ourselves ability or time to work on those details and then return to the Council with those 18 specific calls that we are addressing. 19 20 DRAFT _______________________ 1. Spokespersons that are representing a group of five or more people who are identified as present at the meeting at the time of the spokesperson’s presentation will be allowed up to fifteen (15) minutes at the discretion of the Chair, provided that the non-speaking members agree not to speak individually. 2. The Chair may limit Oral Communications to 30 minutes for all combined speakers. 3. The Chair may reduce the allowed time to speak to three minutes to accommodate a larger number of speakers. Chair Alcheck: No, I appreciate that. I guess my what I would like to do is determine whether 1 there is sort of a shared interest among Commissioners to explore some of the nuanced 2 questions you have. I do think that this particular paragraph which I think there is some 3 additional language for the privacy paragraph that is out there I think there are sort of notions 4 of how that could be edited, but before I would suggest we encourage staff to sort of pursue 5 something I want to make sure there's consensus. Do you want to? Go ahead. 6 7 Commissioner Rosenblum: I have a suggestion for maybe a process. 8 9 Chair Alcheck: Good. 10 11 Commissioner Rosenblum: And let me know if you would agree with this. I would structure this 12 into a series of parameters. So first is lot size. Second is FAR. Third as parking requirements 13 and just go one by one. So in terms of lot size there's different opinions here. One opinion 14 might be no bonus above minimal conforming lots. Another might be 20 percent bonus, 15 etcetera. And let's decide that first and then next there's parking requirements. Some would 16 say well it has to be within a half a mile of transit and transit defined is X. I've had a proposal 17 for neighborhoods with parking below 50 percent utilization to be studied and perhaps park 18 your car [unintelligible]. So I would think that we could knock a few of them off and there 19 might be then we'll get to some others that are much more difficult and I think Commissioner 20 DRAFT _______________________ 1. Spokespersons that are representing a group of five or more people who are identified as present at the meeting at the time of the spokesperson’s presentation will be allowed up to fifteen (15) minutes at the discretion of the Chair, provided that the non-speaking members agree not to speak individually. 2. The Chair may limit Oral Communications to 30 minutes for all combined speakers. 3. The Chair may reduce the allowed time to speak to three minutes to accommodate a larger number of speakers. Gardias has brought up some points that I hadn't really considered. So it may be that there's 1 still some that we don't really know how to handle. Privacy requirements between different 2 units and daylight planes between different units for example which I'd never considered. 3 4 Chair Alcheck: Right. 5 6 Commissioner Rosenblum: But I think some of them we probably do have informed opinions on 7 already and we could probably knock those out and then get down to the (interrupted) 8 9 Chair Alcheck: No, I appreciate that. My, I want to avoid a straw poll process so my goal would 10 be to have the Motion go on the table and then amendments that would for example I mean I 11 don't want to have a discussion about I don't want to go through a process where everybody 12 can opine on the lot size requirement. I’d like an individual to make a Motion on what they 13 think that lot size requirement should be and if the community, if there's another individual 14 that has a separate amendment we can make that, we can vote on them. Because I think we 15 are we understand each other. I think everybody has an opinion on it and I think we need to 16 figure out where we are. 17 18 My concern is that when I create that amendment opportunity that some of these amendments 19 aren't specific. They're very general and they're requests for more information. And I think 20 DRAFT _______________________ 1. Spokespersons that are representing a group of five or more people who are identified as present at the meeting at the time of the spokesperson’s presentation will be allowed up to fifteen (15) minutes at the discretion of the Chair, provided that the non-speaking members agree not to speak individually. 2. The Chair may limit Oral Communications to 30 minutes for all combined speakers. 3. The Chair may reduce the allowed time to speak to three minutes to accommodate a larger number of speakers. what I would like to do is let's like we did in the last session let's see if we can maybe get 1 through the Motion process and then if you want to make a secondary Motion to explore 2 specific topics in maybe a second because I also think that there is interest among this 3 Commission to continue exploring maybe the this topic with more time. And maybe we you 4 create a Motion that can get support for specific sort of investigative analysis. I want to do 5 both. I want to do both. Can you wrap up so that we can begin that process? Do you have 6 some specific? 7 8 Commissioner Gardias: Yeah, I will run a couple of more by (interrupted) 9 10 Chair Alcheck: Ok. 11 12 Commissioner Gardias: By the staff and by yourself, but yeah I totally agree, right? I think that 13 this item that I am addressing it’s those are just the subjects that or some specific 14 pronouncements that may open disagreements when specific [quality us of the quality aspects] 15 and for this reason I just would not like would at least as a minimum would like to have Council 16 being informed that we would provide farther clarification on those specific paragraphs. I 17 would be pretty much afraid of just sending this card blank to Council and then hearing pretty 18 much comments that we didn't review some loopholes or bad apples. 19 20 DRAFT _______________________ 1. Spokespersons that are representing a group of five or more people who are identified as present at the meeting at the time of the spokesperson’s presentation will be allowed up to fifteen (15) minutes at the discretion of the Chair, provided that the non-speaking members agree not to speak individually. 2. The Chair may limit Oral Communications to 30 minutes for all combined speakers. 3. The Chair may reduce the allowed time to speak to three minutes to accommodate a larger number of speakers. Chair Alcheck: Yeah, I can appreciate that. 1 2 Commissioner Gardias: Ok, so I'm going to just finish this very quickly in the interest of time, 3 right? So there is a in the on the Page 141 I think that there is lack of the kitchen facility 4 requirements for those ADUs. It appears in some paragraphs and then it seems to me that 5 some others they have no kitchen facility. There should be kitchen facility for all the units. So 6 I'm asking just to look into those and just provide uniform requirement for kitchen facilities 7 throughout. 8 9 Ms. Silver: Just to address that comment the kitchen facilities are contained in the definitional 10 sections, not in the development standards. So it's in the beginning part of the ordinance. 11 12 Commissioner Gardias: That’s right, but I think that they also appear on the on some other 13 subsequent sections so in (interrupted) 14 15 Mr. Lait: It's called out more specifically for the JADUs. 16 17 Commissioner Gardias: Exactly. Yeah. So for this reason I caught it and then I just saw this was 18 a discrepancy. So either it should be removed from the junior and just left only in the 19 definitions or just provide it throughout because otherwise it's confusing. 20 DRAFT _______________________ 1. Spokespersons that are representing a group of five or more people who are identified as present at the meeting at the time of the spokesperson’s presentation will be allowed up to fifteen (15) minutes at the discretion of the Chair, provided that the non-speaking members agree not to speak individually. 2. The Chair may limit Oral Communications to 30 minutes for all combined speakers. 3. The Chair may reduce the allowed time to speak to three minutes to accommodate a larger number of speakers. 1 So a couple of others and I just in the interest of time I just don't want to spend more time, 2 right? So other items was that amperage of the, I'm sorry, voltage of the electrical service and 3 I'm not sure if this was also a copy of the state law. Was it? Because the ranges, some ranges 4 may be on the 208 volts as opposed to 120. So that was the same thinking when I was reading 5 this, why is it here as opposed to in the building code? 6 7 Ms. Silver: Exactly. It’s a state law requirement. 8 9 Commissioner Gardias: Ok. So we can leave it if that's the case, but I think that the place should 10 be somewhere else. Also which was the most probably controversial was the paragraph 11 about… hold on a second, let me just find this; just a moment. Yeah this is [unintelligible] just 12 ask a question of on Page 143 there is a Paragraph E right at the top of the page that talks 13 about the car share vehicle and that's probably also copy from the state law. It has nothing to 14 do with our? Ok. So that's that clarifies this. 15 16 And probably I also I wanted to have a clarification. It's on Page 140. It talks about the 17 entrances. This is Paragraph 6 at the bottom, second paragraph from the bottom. It talks 18 about the dwelling units may not have entranceways facing the same lot line property. And 19 DRAFT _______________________ 1. Spokespersons that are representing a group of five or more people who are identified as present at the meeting at the time of the spokesperson’s presentation will be allowed up to fifteen (15) minutes at the discretion of the Chair, provided that the non-speaking members agree not to speak individually. 2. The Chair may limit Oral Communications to 30 minutes for all combined speakers. 3. The Chair may reduce the allowed time to speak to three minutes to accommodate a larger number of speakers. now I understanding how it was written, I understand that this is another copy from the state 1 law. So could you tell me please what they were thinking when they were writing this? 2 3 Mr. Lait: This is actually our local ordinance that we have in place today. And the interest here I 4 believe is to maintain the yeah, right. Two, I guess two things. One is sort of maintain the 5 pattern and character of development of a single family neighborhood and also that the ADU 6 be subordinate to the principal structure. So I think the interest here is to make one more not 7 as prominently visible from the street so that they are… right. So it maintains that existing 8 neighborhood pattern. 9 10 Commissioner Gardias: So you are telling me that pretty much the entryways cannot be 11 oriented the same way. When I am reading this it says that they… 12 13 Mr. Lait: You don't want two front, you don’t want two front doors in front of the house, one 14 going to the ADU and one going to the primary residence. 15 16 Commissioner Gardias: Exactly. Even if the second attached unit is behind the first one and that 17 it's pretty much it’s setback let's say 20 feet and that door would be the logically the shortest 18 entryway to the unit. 19 20 DRAFT _______________________ 1. Spokespersons that are representing a group of five or more people who are identified as present at the meeting at the time of the spokesperson’s presentation will be allowed up to fifteen (15) minutes at the discretion of the Chair, provided that the non-speaking members agree not to speak individually. 2. The Chair may limit Oral Communications to 30 minutes for all combined speakers. 3. The Chair may reduce the allowed time to speak to three minutes to accommodate a larger number of speakers. Mr. Lait: That's how this reads. 1 2 Commissioner Gardias: Yeah, so I just I didn't understand it. There may be some logic. So my 3 question would be to the staff, right, just if we can just prove it. That may be the valid point, 4 but I just when I was reading it was not logical to me giving that one unit could be offset in the 5 relationship to the other. 6 7 Mr. Lait: Thank you. Yeah, I think we can look at that. 8 9 Commissioner Gardias: Ok. So I think that and then there was a last question that I had here 10 was about we talk about the rent, the rental of the unit. We don't talk about the lease of the 11 unit. What's the, why this pronouncement only talks about the rental, rents of the units as 12 opposed to leasing. 13 14 Chair Alcheck: I’m just I believe those words are interchangeable. I don't think there's actually a 15 legal discrepancy there. 16 17 Commissioner Gardias: Are they? They are. Very good. Ok, so I think that those were all the 18 comments that I had. Thank you. 19 20 DRAFT _______________________ 1. Spokespersons that are representing a group of five or more people who are identified as present at the meeting at the time of the spokesperson’s presentation will be allowed up to fifteen (15) minutes at the discretion of the Chair, provided that the non-speaking members agree not to speak individually. 2. The Chair may limit Oral Communications to 30 minutes for all combined speakers. 3. The Chair may reduce the allowed time to speak to three minutes to accommodate a larger number of speakers. Chair Alcheck: Ok, I'm going to… do you have a comment? Commissioner Rosenblum do you 1 have a comment? Ok. I’d like to open the floor up to see if there's anybody who'd like to make 2 a Motion. Commissioner Waldfogel [note-Vice-Chair]. 3 4 MOTION 5 6 Vice-Chair Waldfogel: Trying to find the right button to push here. I would like to make a 7 Motion for the staff recommendation to adopt the ordinance in Attachment A. 8 9 SECOND 10 11 Chair Alcheck: Ok. I will second that Motion. And at this time I want to ask if there are any 12 amendments, specific amendments to the draft. Commissioner Tanaka. 13 14 FRIENDLY AMENDMENT #1 15 16 Commissioner Tanaka: Yeah, so what I’d like to do and staff’s probably going to have some 17 issues on this, but since I’m not sure it’s actually in this ordinance something that I talked about 18 earlier which is that I think basement parking should be allowed and it should not count 19 towards the FAR. Because I think this is probably the one thing that will enable ADUs to really 20 DRAFT _______________________ 1. Spokespersons that are representing a group of five or more people who are identified as present at the meeting at the time of the spokesperson’s presentation will be allowed up to fifteen (15) minutes at the discretion of the Chair, provided that the non-speaking members agree not to speak individually. 2. The Chair may limit Oral Communications to 30 minutes for all combined speakers. 3. The Chair may reduce the allowed time to speak to three minutes to accommodate a larger number of speakers. be acceptable and proliferate here in Palo Alto is to have underground parking. So I want to 1 make the Friendly Amendment to add that. 2 3 Chair Alcheck: Would you like to accept that as a Friendly Amendment? You don’t have to. 4 5 Mr. Lait: So can I just ask a question on that? 6 7 Chair Alcheck: Yes. 8 9 Mr. Lait: Is the interest there to allow subterranean or basement parking as it relates to ADUs 10 only or would you is your interest more broad and it would apply to any single family? 11 12 Commissioner Tanaka: I think it should be more broad. I think it’s something which maybe 13 before they had the car lifts or elevators or whatever you’re going to call them, puzzle lifts, 14 maybe there was kind of significant issue, but I think this solves a lot of problems. And 15 especially some neighborhoods there’s a lot of parking issues and if you could get more cars off 16 the street it’s a good thing. So but I don't know in terms of the purview of this Motion; if not 17 then for ADUs least, right? Because I think this is going to be a key enabling element to allow 18 ADUs to be successful here. 19 20 DRAFT _______________________ 1. Spokespersons that are representing a group of five or more people who are identified as present at the meeting at the time of the spokesperson’s presentation will be allowed up to fifteen (15) minutes at the discretion of the Chair, provided that the non-speaking members agree not to speak individually. 2. The Chair may limit Oral Communications to 30 minutes for all combined speakers. 3. The Chair may reduce the allowed time to speak to three minutes to accommodate a larger number of speakers. Mr. Lait: Yeah, I think my concern is the way we've agendized this item. We're focused on 1 ADUs and so if (interrupted) 2 3 Commissioner Tanaka: Ok so in context of ADUs then. 4 5 Mr. Lait: Ok. 6 7 FRIENDLY AMENDMENT #1 REJECTED 8 9 Vice-Chair Waldfogel: So I'd prefer not to accept this as a Friendly Amendment for the reason 10 that I think this is an important question that needs to be looked at more globally. I don't think 11 it's an ADU specific question. I think we need to look at a broadly and in the R-1 district. So 12 that's why I would not accept it as a Friendly Amendment. 13 14 UNFRIENDLY AMENDMENT #1 15 16 Chair Alcheck: Ok, as an Unfriendly Amendment do I have a… hold on. There are a lot of lights 17 on right now. So you're going to have to speak, you just speak up if you have I need a second 18 for this Unfriendly Amendment. Yeah, please. 19 20 DRAFT _______________________ 1. Spokespersons that are representing a group of five or more people who are identified as present at the meeting at the time of the spokesperson’s presentation will be allowed up to fifteen (15) minutes at the discretion of the Chair, provided that the non-speaking members agree not to speak individually. 2. The Chair may limit Oral Communications to 30 minutes for all combined speakers. 3. The Chair may reduce the allowed time to speak to three minutes to accommodate a larger number of speakers. Commissioner Fine: I'm not going to support it at this moment, but I agree with Commissioner 1 Tanaka that this is something to be explored, but I would actually say citywide beyond just 2 ADUs. 3 4 UNFRIENDLY AMENDMENT #1 FAILED 5 6 Chair Alcheck: Ok, so without a second I'm going to move on. Do we have, I have four lights so 7 Commissioner Fine would you like to propose an amendment? 8 9 UNFRIENDLY AMENDMENT #2 10 11 Commissioner Fine: I'd like to propose removing the minimum lot size standard. 12 13 SECOND 14 15 Commissioner Rosenblum: Second. 16 17 Chair Alcheck: Well, hold on. Let's see if it's a friendly. 18 19 Vice-Chair Waldfogel: Let's just take the second. 20 DRAFT _______________________ 1. Spokespersons that are representing a group of five or more people who are identified as present at the meeting at the time of the spokesperson’s presentation will be allowed up to fifteen (15) minutes at the discretion of the Chair, provided that the non-speaking members agree not to speak individually. 2. The Chair may limit Oral Communications to 30 minutes for all combined speakers. 3. The Chair may reduce the allowed time to speak to three minutes to accommodate a larger number of speakers. 1 Chair Alcheck: Ok, alright. Ok, so would you like to speak to your amendment? 2 3 Commissioner Fine: Sure. So I mean if you just look at the charts the two largest impediments 4 to ADU development in the City aside from providing incentives are parking requirements and 5 minimum lot sizes. Most of our lot sizes were cut very close to their zoning designation 6 therefore they're ineligible for ADUs if we require them to be above that. I think it's very 7 important for us to a allow a good number of parcels to be included or eligible for ADUs if 8 they’re able to create it and removing the lot size is a good way to do that. 9 10 Chair Alcheck: Ok. Commissioner Rosenblum would you like to speak to your second? 11 12 Commissioner Rosenblum: Yes, but first I want to make sure that we're in agreement. I'd say 13 that remove minimum lot sizes providing the lot is compliant. 14 15 Commissioner Fine: Yes. Not substandard. Yes. 16 17 Commissioner Rosenblum: Ok, yeah. No other further comment as long as it's compliant with 18 an existing zoning for that zoning area. 19 20 DRAFT _______________________ 1. Spokespersons that are representing a group of five or more people who are identified as present at the meeting at the time of the spokesperson’s presentation will be allowed up to fifteen (15) minutes at the discretion of the Chair, provided that the non-speaking members agree not to speak individually. 2. The Chair may limit Oral Communications to 30 minutes for all combined speakers. 3. The Chair may reduce the allowed time to speak to three minutes to accommodate a larger number of speakers. VOTE 1 2 Chair Alcheck: Ok. We are going to vote on this Unfriendly Amendment. All those in favor 3 please say aye and raise your hand. I count four. All those not favor please raise your hand. Ok 4 we have a vote of four to two amending the current Motion. Alright, Commissioner Rosenblum 5 do you have an amendment? 6 7 UNFRIENDLY AMENDMENT #2 PASSED (4-2) 8 9 UNFRIENDLY AMENDMENT #3 10 11 Commissioner Rosenblum: Yes, I'd like to extend the radius around our three Caltrain stations 12 or around the University Avenue, California Avenue, and San Antonio train stations to 0.75 for 13 the reduced parking requirement. 14 15 Chair Alcheck: Commissioner Waldfogel [note-Vice-Chair] do you accept this as a Friendly 16 Amendment? 17 18 Vice-Chair Waldfogel: I’d prefer to take everything unfriendly. 19 20 DRAFT _______________________ 1. Spokespersons that are representing a group of five or more people who are identified as present at the meeting at the time of the spokesperson’s presentation will be allowed up to fifteen (15) minutes at the discretion of the Chair, provided that the non-speaking members agree not to speak individually. 2. The Chair may limit Oral Communications to 30 minutes for all combined speakers. 3. The Chair may reduce the allowed time to speak to three minutes to accommodate a larger number of speakers. Chair Alcheck: Ok. So I think that’s fair. 1 2 Vice-Chair Waldfogel: I think it's a nice process. 3 4 Chair Alcheck: Ok, I think that's fair. Do we have a second for this Unfriendly Amendment? We 5 have a second. 6 7 SECOND 8 9 Commissioner Fine: I'll second it for the time being. I think we could be more aggressive on the 10 parking stuff. I'd also like to point out there's one other Caltrain station, the Stanford station. 11 12 Chair Alcheck: Ok, so [unintelligible] all four then? Ok, alright. Would you care to speak to? 13 14 Commissioner Rosenblum: Actually no, not on the Stanford Station. I don't think it makes sense 15 for the purpose of this. I'll speak to it briefly. I'm going to do another just there’s going to be a 16 couple of parking amendments. The next one is more significant, but we’ll do one at a time. 17 18 Chair Alcheck: Yeah, I let’s deal with them. [Unintelligible] I would characterize this as the 19 transit (interrupted) 20 DRAFT _______________________ 1. Spokespersons that are representing a group of five or more people who are identified as present at the meeting at the time of the spokesperson’s presentation will be allowed up to fifteen (15) minutes at the discretion of the Chair, provided that the non-speaking members agree not to speak individually. 2. The Chair may limit Oral Communications to 30 minutes for all combined speakers. 3. The Chair may reduce the allowed time to speak to three minutes to accommodate a larger number of speakers. 1 Commissioner Rosenblum: Yes, transit oriented. 2 3 Chair Alcheck: Amendment so let’s do [unintelligible]. 4 5 Commissioner Rosenblum: So I’ll speak to it. Based on the map that was provided actually this 6 probably won't have a huge effect. There are not that many properties affected; however, I 7 want to divide this in two parts. There is Part A where people seeking a car light lifestyle living 8 near an area that is both commercially vibrant and has access transportations which is why I am 9 saying for the Caltrain stations versus bus lines. This is intended for people who are living a 10 lifestyle that is close to services and fairly close to transportation. I agree with several of the 11 petitioners that I'm not sure I buy that a bus line will replace your need for cars especially 12 because you're often not near a commercial center. I also don't believe this affects that many 13 units because the units based on the map that are close to these stations are many of them 14 would not be able to support this, but I think it's important that we recognize that for car light 15 lifestyles this would be an ideal living situation. 16 17 The reason to extend it is based on my personal experience. Again I live 0.6. If I draw or eyeball 18 a line 0.75 it's well within range of people looking to achieve car light lifestyles. 19 20 DRAFT _______________________ 1. Spokespersons that are representing a group of five or more people who are identified as present at the meeting at the time of the spokesperson’s presentation will be allowed up to fifteen (15) minutes at the discretion of the Chair, provided that the non-speaking members agree not to speak individually. 2. The Chair may limit Oral Communications to 30 minutes for all combined speakers. 3. The Chair may reduce the allowed time to speak to three minutes to accommodate a larger number of speakers. Chair Alcheck: Commissioner Fine would you like speak your second? 1 2 Commissioner Fine: No comment. 3 4 Chair Alcheck: Ok. I’d like to place this to a vote. You know actually I just realized that I didn't 5 give the dissenters of our last Unfriendly Amendment an opportunity to speak. So… ok so, but I 6 will moving forward. So if you do you want to speak before we take the vote? 7 8 Vice-Chair Waldfogel: Yes, may I speak before we take the vote? 9 10 Chair Alcheck: Ok. 11 12 Vice-Chair Waldfogel: Is that procedure that we allow? 13 14 Chair Alcheck: I will allow it this time, but I will decide each time. 15 16 Vice-Chair Waldfogel: Strict. I would support this specifically around the University Ave. Caltrain 17 station, but which I does think meets the criteria that Commissioner Rosenblum spoke to, but I 18 don't believe the Cal. Ave., the Stanford station meet that criteria and I am not sure that I could 19 speak to the San Antonio/Mountain View station. 20 DRAFT _______________________ 1. Spokespersons that are representing a group of five or more people who are identified as present at the meeting at the time of the spokesperson’s presentation will be allowed up to fifteen (15) minutes at the discretion of the Chair, provided that the non-speaking members agree not to speak individually. 2. The Chair may limit Oral Communications to 30 minutes for all combined speakers. 3. The Chair may reduce the allowed time to speak to three minutes to accommodate a larger number of speakers. 1 Chair Alcheck: Ok. Let me quickly ask the Commissioners who proposed this amendment are 2 you willing to bifurcate this vote based on each station or would you like to do it as all three? 3 4 Commissioner Rosenblum: Again, just to be clear on this to Vice-Chair. The main reason for this 5 is not the that the San Antonio Caltrain per se will replace a car, but that it's a dense 6 commercially viable area that's anchored by a transit station. And so those seeking car light 7 lifestyles would likely seek one of these three areas and so I'd rather not bifurcate station by 8 station and especially given the fact that within the University Avenue corridor as you can see 9 on the map there is really no lots available so that doing this would not really add anything. 10 11 Commissioner Fine: I’ll just follow up on that. I’m also against bifurcating these based on 12 stations. I think California Ave. and University with regards to Caltrain exhibits similar land use 13 and housing patterns. This moves a little bit more into Old Palo Alto in some ways and then the 14 Cal. Ave. one would be able to cover this little corner of College Terrace that’s not covered. I'll 15 note it's kind of funny I live two blocks from my parents. My house is currently within the green 16 marker, but theirs is not because of this half mile radius currently. 17 18 VOTE 19 20 DRAFT _______________________ 1. Spokespersons that are representing a group of five or more people who are identified as present at the meeting at the time of the spokesperson’s presentation will be allowed up to fifteen (15) minutes at the discretion of the Chair, provided that the non-speaking members agree not to speak individually. 2. The Chair may limit Oral Communications to 30 minutes for all combined speakers. 3. The Chair may reduce the allowed time to speak to three minutes to accommodate a larger number of speakers. Chair Alcheck: Ok, I'm I would like us to proceed with a vote on this Unfriendly Amendment. All 1 those in favor please say aye and raise your hand. Ok, that is four. All those dissenting please 2 raise your hand. Ok, we have two dissenters. Would either of you like to speak to your 3 dissent? Please. Commissioner Waldfogel [note-Vice-Chair]. 4 5 UNFRIENDLY AMENDMENT #3 PASSED (4-2) 6 7 Vice-Chair Waldfogel: Yeah, I'm sorry. The comment is that on in Cal. Ave. in particular there's 8 the Caltrain track forms a natural barrier between the Cal. Ave. business district and the 9 neighborhood on the other side and so I don't think we're really… I'm sorry? Right, but it's a 10 natural, It's a natural city barrier. So in terms of how those two districts function it's completely 11 different and so I think that we're doing something we're it's an unnatural act to combine those 12 two whereas it's a natural act to combine them on the University Ave. corridor. 13 14 Chair Alcheck: Ok. I just before we continue I just want to make sure are, is staff following this? 15 So we have a Motion with two Unfriendly Amendments that have passed. 16 17 Mr. Lait: Totally got it. 18 19 DRAFT _______________________ 1. Spokespersons that are representing a group of five or more people who are identified as present at the meeting at the time of the spokesperson’s presentation will be allowed up to fifteen (15) minutes at the discretion of the Chair, provided that the non-speaking members agree not to speak individually. 2. The Chair may limit Oral Communications to 30 minutes for all combined speakers. 3. The Chair may reduce the allowed time to speak to three minutes to accommodate a larger number of speakers. Chair Alcheck: Ok, alright. I have did you relight? Ok. I'm going to move to Commissioner 1 Waldfogel [note-Vice-Chair]. Do you have an amendment to your Motion? 2 3 Vice-Chair Waldfogel: Yes. I have in a an addition. Let me get the right page in the document. 4 It's a privacy amendment addition. 5 6 Chair Alcheck: We are on Page 140. 7 8 Vice-Chair Waldfogel: We’re on Page 140. 9 10 Chair Alcheck: Number 6. 11 12 Vice-Chair Waldfogel: [Unintelligible] this specifically is in it's in Number 8. So it's on Page 141. 13 14 Chair Alcheck: Ok. 15 16 FRIENDLY AMENDMENT #2 17 18 Vice-Chair Waldfogel: And it's it adds an additional development standard, Standard 5, for 19 newer converted detached ADUs. There shall be no windows, doors, mechanical equipment or 20 DRAFT _______________________ 1. Spokespersons that are representing a group of five or more people who are identified as present at the meeting at the time of the spokesperson’s presentation will be allowed up to fifteen (15) minutes at the discretion of the Chair, provided that the non-speaking members agree not to speak individually. 2. The Chair may limit Oral Communications to 30 minutes for all combined speakers. 3. The Chair may reduce the allowed time to speak to three minutes to accommodate a larger number of speakers. venting or exhaust systems located within six feet of a property line. So this is just 1 guaranteeing some privacy and protection from noise for neighbors. 2 3 FRIENDLY AMENDMENT #2 ACCEPTED, VOTE 4 5 Chair Alcheck: I presume you accept that as a Friendly Amendment. I do as well. I just want to 6 before we take a vote on this does anybody need any clarification on what we're talking about 7 here? I'd be happy to help clarify this. What this particular edit does is it suggests that if a that 8 in the event of a garage conversion there are certain aspects, certain development standards 9 that will apply that are very typical of our current development standards for units that are 10 developed within the interior lot lines and this would basically take the language a step further 11 to make sure that you didn't have a window within three feet of a fence or a kitchen exhaust 12 fan or any kind of mechanical equipment that because of the fact that a garage could 13 theoretically be within a site setback that would not permit other elements that are potentially 14 less appealing to be in that same side setback. Ok? That's what that language does. 15 16 Ok, let's take a vote on it. Any, all those in favor of this amended language please say aye and 17 raise your hand. Ok, I have four. All those not in favor of the amended language? I have two. 18 Would those not in favor of the amended language like to speak to their dissent? 19 20 DRAFT _______________________ 1. Spokespersons that are representing a group of five or more people who are identified as present at the meeting at the time of the spokesperson’s presentation will be allowed up to fifteen (15) minutes at the discretion of the Chair, provided that the non-speaking members agree not to speak individually. 2. The Chair may limit Oral Communications to 30 minutes for all combined speakers. 3. The Chair may reduce the allowed time to speak to three minutes to accommodate a larger number of speakers. FRIENDLY AMENDMENT #2 PASSED (4-2) 1 2 Commissioner Rosenblum: Yeah it’s I think that design requirements even those that seem as 3 logical as the way you've described them open up a can of worms for people to find all kinds of 4 objections that prevent the harmonious and smooth construction of ADUs. So I think that 5 finding like additional loopholes for people to challenge you is exactly what's kept ADUs from 6 being developed in many places. So design requirements have been cited as an example of 7 how Santa Cruz accelerated the development of ADUs is by having by right if you adhere to 8 basically a playbook. 9 10 Chair Alcheck: Ok. Would you like to speak to the dissent? 11 12 Commissioner Gardias: Yes. So I just it wasn't clear, the intent was not clear to me. I didn't 13 understand where that three feet it was coming from. So for this reason because there was no 14 reason I just couldn't support it. 15 16 Chair Alcheck: Yeah, ok. The next time we do that maybe we'll put it up on a screen or 17 something so that it's really clear. That was a little difficult. Alright, moving on, I have 18 Commissioner Rosenblum; do you have an amendment? 19 20 DRAFT _______________________ 1. Spokespersons that are representing a group of five or more people who are identified as present at the meeting at the time of the spokesperson’s presentation will be allowed up to fifteen (15) minutes at the discretion of the Chair, provided that the non-speaking members agree not to speak individually. 2. The Chair may limit Oral Communications to 30 minutes for all combined speakers. 3. The Chair may reduce the allowed time to speak to three minutes to accommodate a larger number of speakers. MOTION #2 (TABLED) 1 2 Commissioner Rosenblum: Alright this is part two of the parking amendments. So language 3 wise don't know what the I'm not sure if this belongs in the ordinance so Chair you can dismiss 4 this if you choose, but I'd like to ask for the City to do a parking study of R-1 neighborhoods and 5 consider eliminating parking requirements or treating those as transit oriented same basically 6 no additional parking requirements for those with under 50 percent utilization using standard 7 methodology that underpinned our RPP studies for example. So studies taken at 9:00 a.m., 8 12:00, a series of peak utilization under 50 percent equals no additional parking requirement. 9 10 Chair Alcheck: Ok, This came up in our discussion. I just want to sort of ask a quick question to 11 staff. I'm not sure this is sort of an appropriate edit to the ordinance language itself, but I do 12 want… would be possible to come back to this maybe as a Motion and that if we supported it as 13 a Commission it could be explored? I mean how would that work? 14 15 Mr. Lait: Yeah, I think as you were setting up the conversation earlier in the evening I think this 16 is one of the ones that would be transmitted to the City Council as an interest of the 17 Commission that we would include in the staff report and say that there is this expressed 18 interest and asking the Council to endorse our exploring that further with the Commission. 19 20 DRAFT _______________________ 1. Spokespersons that are representing a group of five or more people who are identified as present at the meeting at the time of the spokesperson’s presentation will be allowed up to fifteen (15) minutes at the discretion of the Chair, provided that the non-speaking members agree not to speak individually. 2. The Chair may limit Oral Communications to 30 minutes for all combined speakers. 3. The Chair may reduce the allowed time to speak to three minutes to accommodate a larger number of speakers. Commissioner Rosenblum: I’m satisfied with that. 1 2 Chair Alcheck: Ok, so why don't when at the tail end of this you can make that a Motion. You 3 don’t even have to repeat yourself. I think we're all there and then we can vote on it and see if 4 there's consensus on having that be strongly communicated to City Council. Ok, Commissioner 5 Gardias do you have an amendment? 6 7 Commissioner Gardias: Yes I think that, let me think about it. So it would be in the same spirit 8 that we can come back to the Council with a with farther clarification, right? Is this how this 9 would work? 10 11 Chair Alcheck: I’m sorry. Do you want to do something similar to Commissioner Rosenblum? 12 13 Commissioner Gardias: That’s right. 14 15 Chair Alcheck: Alright, so what I would like to do is after we make after we finish this mode as 16 opposed to amending the language we can make a Motion on something that you'd like to 17 encourage City Council to allow us to do or to explore. Would you be comfortable coming back 18 to it as its own Motion? Like we're going to do the Motion that he just discussed? 19 20 DRAFT _______________________ 1. Spokespersons that are representing a group of five or more people who are identified as present at the meeting at the time of the spokesperson’s presentation will be allowed up to fifteen (15) minutes at the discretion of the Chair, provided that the non-speaking members agree not to speak individually. 2. The Chair may limit Oral Communications to 30 minutes for all combined speakers. 3. The Chair may reduce the allowed time to speak to three minutes to accommodate a larger number of speakers. Commissioner Gardias: Say it again (interrupted) 1 2 Chair Alcheck: Ok, so just to be clear right now if you would like to amend the language of the… 3 currently we have a Motion on the table that has some amended amendments that relates this 4 draft. If you want to amend this draft as it is then I'd love for you to make that amendment at 5 this time. But if what you would like to do is make a suggestion on something that you'd like to 6 explore and you would like City Council to hear that and give us the opportunity to explore that 7 or to encourage staff to then explore it then I would prefer we do it the way that we're going to 8 deal with Commissioner Rosenblum’s request which is at the conclusion of this initial 9 amendment, Motion that we’re on the floor on we will, I will accept Motions and you can 10 propose a Motion where you can assert a request to investigate or to pursue some line of 11 analysis if you’d like. And then we can vote on it as a group to see if there is consensus for that 12 and then staff will communicate that we have really made a request that we pursue something 13 to City Council. 14 15 Commissioner Gardias: Yeah, I see a little bit differently so the, but it could be put it the way 16 that you were proposing with some caveat because I don't just don't want to leave it open. I 17 want to make it clear to the Council that I or eventually some others will accept this Motion 18 that concerns about number of the items that are not quality items with this. And Council 19 would allow us to upend or revise consequently this regulation. 20 DRAFT _______________________ 1. Spokespersons that are representing a group of five or more people who are identified as present at the meeting at the time of the spokesperson’s presentation will be allowed up to fifteen (15) minutes at the discretion of the Chair, provided that the non-speaking members agree not to speak individually. 2. The Chair may limit Oral Communications to 30 minutes for all combined speakers. 3. The Chair may reduce the allowed time to speak to three minutes to accommodate a larger number of speakers. 1 Chair Alcheck: Ok, well let me say this, I think that if there are (interrupted) 2 3 Commissioner Gardias: So it's not, it would not be a research item. It would be (interrupted) 4 5 Chair Alcheck: No. 6 7 Commissioner Gardias: Would be eventual revision to this regulation. 8 9 Chair Alcheck: What I would in response to that I would suggest that if you have if there are 10 specific… I think at issue here is that if you had a specific suggestion for a language change then 11 you could propose it as an amendment at this time. What I'm gathering from your comment is 12 that you don't necessarily have specific language, but you have concerns about some of the 13 language and you wish you had more time to explore specific language. That is more difficult. 14 15 Commissioner Gardias: Yes so pretty much my Motion would be like this that there would be a 16 subsequent revision to this regulation that would include the following would be eventually 17 including the following items and then we can just have the list of the items that would be 18 subject of this research. And then I can just (interrupted) 19 20 DRAFT _______________________ 1. Spokespersons that are representing a group of five or more people who are identified as present at the meeting at the time of the spokesperson’s presentation will be allowed up to fifteen (15) minutes at the discretion of the Chair, provided that the non-speaking members agree not to speak individually. 2. The Chair may limit Oral Communications to 30 minutes for all combined speakers. 3. The Chair may reduce the allowed time to speak to three minutes to accommodate a larger number of speakers. Chair Alcheck: Ok I have a suggestion. At the conclusion of this initial Motion process what I 1 would suggest you do is start create a Motion requesting an opportunity within a certain 2 timeframe to review the ordinance and improve upon it. So like we have a process now in 3 place where we have an annual review of our… no, the one where we go through all the 4 language. Yeah. And maybe as Assistant Attorney Cara Silver has mentioned earlier this is a 5 sort of a rushed process and so maybe in… there will be an… maybe your Motion could suggest 6 that in not the law in not in some certain time frame we could re-approach this and see if we 7 can improve upon some of the vague issues or conflicts that might exist as a result of some of 8 the nuance that hasn't even really come to light yet. 9 10 Commissioner Gardias: So let me ask a question, right? What's the timeframe of just this going 11 to the Council? Can we, will we have time to do subsequent research and then provide the 12 revision before the Council takes up on it? Or we already know that this would not be a 13 chance? 14 15 Mr. Lait: I suppose it depends on what you're asking us to research. Depending on what you’re 16 asking for (interrupted) 17 18 Commissioner Gardias: Exactly. So I think that from my perspective research would be very 19 light, but I know that from your perspective it may be heavier. So but it just say that it's going 20 DRAFT _______________________ 1. Spokespersons that are representing a group of five or more people who are identified as present at the meeting at the time of the spokesperson’s presentation will be allowed up to fifteen (15) minutes at the discretion of the Chair, provided that the non-speaking members agree not to speak individually. 2. The Chair may limit Oral Communications to 30 minutes for all combined speakers. 3. The Chair may reduce the allowed time to speak to three minutes to accommodate a larger number of speakers. to take a [unintelligible] several items, right? Like Commissioner Rosenblum and I may have 1 some of them. Is there a possibility that we can just return to those items within two months 2 say and then it would we would still have time just to go back to Council with those improved 3 items. So before the Council takes up on it first time. 4 5 Mr. Lait: Ok, well then I would engage the Chair on the timing on that. I mean I think we’re 6 interested in wanting to implement state law, but it as I'm looking at my notes of the concerns 7 that you had expressed you had interest in the compliance consideration, the public transit 8 definition, researching the minimum requirements for ADUs of 250, you had some privacy 9 related concerns which I think we could easily address, and more recently you had the item 10 about the doors, the doorways facing the street. I believe all of those we can certainly review 11 and include in a staff report that's going to the Council with your or if there’s a support on the 12 Commission of interest of these things then we can include that as part of the discussion and 13 the ordinance if there was support for that. For example, if the Commission thought that a 250 14 minimum was desirable and we would just make sure that it's permissible we could include that 15 in the ordinance. I think we can address all the ones that you're talking about. The green, the 16 public transit one I think it's maybe getting modified a little bit here as I'm understanding the 17 conversation going on, but I of the items that you've addressed if there is Commission support I 18 think we can incorporate that and still stay on the schedule that we have placed and planned. 19 20 DRAFT _______________________ 1. Spokespersons that are representing a group of five or more people who are identified as present at the meeting at the time of the spokesperson’s presentation will be allowed up to fifteen (15) minutes at the discretion of the Chair, provided that the non-speaking members agree not to speak individually. 2. The Chair may limit Oral Communications to 30 minutes for all combined speakers. 3. The Chair may reduce the allowed time to speak to three minutes to accommodate a larger number of speakers. Commissioner Gardias: That would work with me. So pretty much the Motion that I would 1 propose (interrupted) 2 3 Chair Alcheck: Oh hold on. 4 5 Commissioner Gardias: [Unintelligible] 6 7 Chair Alcheck: What I’d like to do, but here’s what I’m trying to do. I’m trying to get you to 8 propose that Motion after we deal with the Motion on the floor because the Motion on the 9 floor is on the floor and this would my interpretation of that Motion is that there is a consensus 10 to move forward the draft ordinance as it is as amended. And I'd like to if you would like to 11 make a Substitute Motion at this time you can, but what I'm suggesting is I think you'll have 12 potentially more success if you allow this Motion to complete its process and then make a 13 second Motion which there will be a process for other Motions to explore other items. But if 14 you would like to make a Substitute Motion at this time you can attempt to do that, but there is 15 a Motion on the table to move this forward as amended and unless there is a Substitute Motion 16 I'm going to allow that Motion to have a vote. 17 18 Commissioner Gardias: That’s fine. So I will go with for your proposal I propose my Motion 19 once this is considered. 20 DRAFT _______________________ 1. Spokespersons that are representing a group of five or more people who are identified as present at the meeting at the time of the spokesperson’s presentation will be allowed up to fifteen (15) minutes at the discretion of the Chair, provided that the non-speaking members agree not to speak individually. 2. The Chair may limit Oral Communications to 30 minutes for all combined speakers. 3. The Chair may reduce the allowed time to speak to three minutes to accommodate a larger number of speakers. 1 Chair Alcheck: Ok, great. I have lights. Commissioner Tanaka do you have an amendment? 2 3 FRIENDLY AMENDMENT #3 4 5 Commissioner Tanaka: Yeah, so I’d like to propose a Friendly Amendment, something I talked 6 about earlier which is there are some places which either can't have, can't meet the parking 7 permit or doesn't want to for whatever reason and in exchange for that it will cost the City 8 roughly about $65,000 or so to build a new parking spot. And if the homeowner wishes to 9 contribute or something on that order I think that's probably one way to actually allow ADUs 10 and still help with the parking requirements. So I’d like to make that as a Friendly Amendment. 11 12 Chair Alcheck: Ok, I imagine you're going to continue? 13 14 FRIENDLY AMENDMENT #3 REJECTED 15 16 Vice-Chair Waldfogel: I'm really liking this process. 17 18 Chair Alcheck: Ok, so can we get a second of this? Does everybody understand? Would you 19 mind just restating a little bit what you meant? 20 DRAFT _______________________ 1. Spokespersons that are representing a group of five or more people who are identified as present at the meeting at the time of the spokesperson’s presentation will be allowed up to fifteen (15) minutes at the discretion of the Chair, provided that the non-speaking members agree not to speak individually. 2. The Chair may limit Oral Communications to 30 minutes for all combined speakers. 3. The Chair may reduce the allowed time to speak to three minutes to accommodate a larger number of speakers. 1 UNFRIENDLY AMENDMENT #4 2 3 Commissioner Tanaka: Ok, so there are some properties that can't or don't want to meet the 4 parking requirement for the ADU. And so that's going to wipe out a bunch of possible ADUs. So 5 in order to actually enable ADUs in these kind of situations what I propose is allowing an in lieu 6 fee. So it costs the City roughly $65,000 or so to actually build parking spots. And so by paying 7 this in lieu fee essentially or maybe it goes to some sort of parking mitigation program or 8 something in that order, but it basically used money to make up for the fact that you can't park, 9 but it has to be enough money to actually truly make up for it. So I think it's something on the 10 order of $65,000 or on that some sort of inflation indexed fee, but I think if we don't do that 11 there are going to be a lot of properties that are going to be ADU eliminated. 12 13 Chair Alcheck: Ok, let me just ask a clarifying question. So the idea here is one of the 14 requirements for some ADUs may be that there be a parking on the on the premises and if an if 15 an individual wanted to develop and ADU, but not have to provide that parking then they could 16 still be eligible if they paid a fee which would exempt them. It's essentially an exemption 17 opportunity. You could exempt yourself from the parking requirement if it was applicable by 18 paying some fee. 19 20 DRAFT _______________________ 1. Spokespersons that are representing a group of five or more people who are identified as present at the meeting at the time of the spokesperson’s presentation will be allowed up to fifteen (15) minutes at the discretion of the Chair, provided that the non-speaking members agree not to speak individually. 2. The Chair may limit Oral Communications to 30 minutes for all combined speakers. 3. The Chair may reduce the allowed time to speak to three minutes to accommodate a larger number of speakers. Commissioner Tanaka: Yeah, correct. Basically it's taking care of the problem, the parking 1 problem, with money because the money could build a new parking spot. 2 3 Chair Alcheck: Ok. 4 5 Commissioner Tanaka: Or it could pay for a parking mitigation program or it could whatever, 6 something like that. 7 8 Chair Alcheck: Ok. I need a second. 9 10 SECOND 11 12 Commissioner Fine: So that’ll have my second. I would just ask staff to explore where that 13 money would go whether it’s the parking assessment district or somewhere else. 14 15 Chair Alcheck: Ok, so this is a little vague because we don't have a number. So it’s not going to 16 be easy to create language, but what I would suggest and I think we can proceed with it. I’m 17 not entirely sure how this would be incorporated, but essentially the amendment is to include 18 language that would allow an individual to be eligible for not having a parking requirement if 19 they pay a fee that would be somehow related to the cost of creating a parking space 20 DRAFT _______________________ 1. Spokespersons that are representing a group of five or more people who are identified as present at the meeting at the time of the spokesperson’s presentation will be allowed up to fifteen (15) minutes at the discretion of the Chair, provided that the non-speaking members agree not to speak individually. 2. The Chair may limit Oral Communications to 30 minutes for all combined speakers. 3. The Chair may reduce the allowed time to speak to three minutes to accommodate a larger number of speakers. elsewhere in the City. That's as specific as I think this can be. Ok, we have a second. Would, do 1 either of you like to speak to this Friendly Amendment [note-Unfriendly]? 2 3 Commissioner Tanaka: Well I think it's kind of like this is like conservation of parking in the 4 universe, right? So we have to have parking somewhere and you can use money to transport 5 where that parking is. It still solves a problem, allows ADUs, and doesn't… you know I think the 6 problem with totally getting rid of the parking requirement is that it may push it somewhere 7 else, but if you actually get, if you actually, if the homeowner actually pays money to build new 8 parking spot then parking is created somewhere else or some form of parking is created 9 somewhere else and so it allows ADUs to happen that couldn’t normally happen. 10 11 Chair Alcheck: Ok, would you like to speak? Ok. Alright (interrupted) 12 13 Ms. Silver: So through the Chair? Before you take a vote on this I'm trying to understand 14 whether you're thinking that staff will come back with specific language to implement this or is 15 this part of a Phase 2 implementation? 16 17 Chair Alcheck: I think right now you have there are elements of this ordinance that exempt 18 particular parcels from parking requirements. 19 20 DRAFT _______________________ 1. Spokespersons that are representing a group of five or more people who are identified as present at the meeting at the time of the spokesperson’s presentation will be allowed up to fifteen (15) minutes at the discretion of the Chair, provided that the non-speaking members agree not to speak individually. 2. The Chair may limit Oral Communications to 30 minutes for all combined speakers. 3. The Chair may reduce the allowed time to speak to three minutes to accommodate a larger number of speakers. Ms. Silver: Right. 1 2 Chair Alcheck: I think what he is suggesting I think and correct me if I’m wrong, I think 3 Commissioner Tanaka is suggesting is that there could be another option for exemption which 4 would be a fee. And what I would suggest is that Council in the interim of time between today 5 and the time it goes to City Council suggest that the Commission supported a amendment to 6 this ordinance that reflected a fee that related to the development of a parking space 7 somewhere in town that would allow a parcel to also be eligible for the exemption of the 8 parking requirement. I don't want us to get into the process of figuring out that fee and I also 9 don't want to delay this. I think that [unintelligible] I think you could incorporate that language 10 or at least communicate (interrupted) 11 12 Ms. Silver: Right. 13 14 Chair Alcheck: That that language be included. 15 16 Ms. Silver: Right. So what we could do is we could include an exemption for any Council 17 adopted (interrupted) 18 19 Chair Alcheck: Yes. 20 DRAFT _______________________ 1. Spokespersons that are representing a group of five or more people who are identified as present at the meeting at the time of the spokesperson’s presentation will be allowed up to fifteen (15) minutes at the discretion of the Chair, provided that the non-speaking members agree not to speak individually. 2. The Chair may limit Oral Communications to 30 minutes for all combined speakers. 3. The Chair may reduce the allowed time to speak to three minutes to accommodate a larger number of speakers. 1 Ms. Silver: Fee program and then that fee program would be developed later. 2 3 Chair Alcheck: Are you, is that amenable to you? 4 5 Ms. Silver: Or in parallel. 6 7 Commissioner Tanaka: I'm fine with that. I mean we can know how much parking costs in Palo 8 Alto. It’s around $65,000. We [just the fee in mine]. We're not talking about someone pays a 9 dollar and you're done. We're talking about a fee that actually covers the cost of creating 10 parking. 11 12 VOTE 13 14 Chair Alcheck: Ok. I’d like to put this to a vote. All those in favor of Commissioner Tanaka’s 15 Unfriendly Amendment please raise your and say aye. That’s three yes. All those opposed? 16 That is three. So that fails. Ok, I'm going to continue. Commissioner Fine do you have a 17 amendment? 18 19 UNFRIENDLY AMENDMENT #4 FAILED (3-3) 20 DRAFT _______________________ 1. Spokespersons that are representing a group of five or more people who are identified as present at the meeting at the time of the spokesperson’s presentation will be allowed up to fifteen (15) minutes at the discretion of the Chair, provided that the non-speaking members agree not to speak individually. 2. The Chair may limit Oral Communications to 30 minutes for all combined speakers. 3. The Chair may reduce the allowed time to speak to three minutes to accommodate a larger number of speakers. 1 UNFRIENDLY AMENDMENT #5 2 3 Commissioner Fine: Yeah. I'd like to propose that in RPP district we eliminate the off street 4 parking requirement. 5 6 SECOND 7 8 Commissioner Rosenblum: I second that. 9 10 Chair Alcheck: Ok, would you guys like to speak to your amendment? 11 12 Commissioner Fine: Sure. So part of the point of having an off street parking requirement is to 13 mitigate the impact of parking when you create a second unit, but that parking supply is already 14 controlled in an RPP district. So if you do create an ADU that unit may get a permit that already 15 exists for the lot or for the household. It’s just being split among two households now and we 16 already have controls upon it. Furthermore, it's a good incentive if the permits are already used 17 to force people onto other modes of transportation: car, sorry, sorry, bike, ped, walking, transit, 18 etcetera. 19 20 DRAFT _______________________ 1. Spokespersons that are representing a group of five or more people who are identified as present at the meeting at the time of the spokesperson’s presentation will be allowed up to fifteen (15) minutes at the discretion of the Chair, provided that the non-speaking members agree not to speak individually. 2. The Chair may limit Oral Communications to 30 minutes for all combined speakers. 3. The Chair may reduce the allowed time to speak to three minutes to accommodate a larger number of speakers. Chair Alcheck: Would you like to speak to your second? 1 2 Commissioner Rosenblum: Nothing to add. 3 4 Chair Alcheck: Just for the purposes of clarification obviously we don't have a real time map 5 here, but we would, you would be… it would be helpful in my opinion if we were going to vote 6 on this to be able to identify which areas of town were in an RPP and essentially this bubble 7 would grow and we would understand the exemption. But because we can't do that would you 8 mind staff listing the areas of town that are currently under an RPP program so that as we vote 9 on this we are just aware of it. And then if you find if there is any in that particular list that you 10 are not including let me know. 11 12 Commissioner Fine: So the only ones I can think of there’s Downtown, there’s College Terrace, 13 Evergreen’s up on the table, Crescent Park has their overnight, but I don't think that really 14 counts for this. 15 16 Chair Alcheck: Ok, so we're talking about two. 17 18 Commissioner Fine: Yes, currently, but I think it should (interrupted) 19 20 DRAFT _______________________ 1. Spokespersons that are representing a group of five or more people who are identified as present at the meeting at the time of the spokesperson’s presentation will be allowed up to fifteen (15) minutes at the discretion of the Chair, provided that the non-speaking members agree not to speak individually. 2. The Chair may limit Oral Communications to 30 minutes for all combined speakers. 3. The Chair may reduce the allowed time to speak to three minutes to accommodate a larger number of speakers. Chair Alcheck: Apply. 1 2 Commissioner Fine: Be applied to future RPPs. 3 4 Chair Alcheck: Ok. All those in favor? Clarifying question? Please. 5 6 Commissioner Tanaka: Ok, so just be clear so are you saying for the RPP that… let’s say they 7 don't have the onsite parking that they can use one of the RPP, one of the permits for the ADU. 8 Is that what you’re saying? 9 10 Commissioner Fine: Well they could choose to do that or they could say whoever's living in the 11 ADU you don't get a parking permit, figure something else out. 12 13 Commissioner Tanaka: I see. And the logic being that if they didn't provide the parking in their 14 RPP and they tried parking on the street (interrupted) 15 16 Commissioner Fine: They’re not parking in your, that neighborhood. 17 18 Commissioner Tanaka: Ok, that makes sense. 19 20 DRAFT _______________________ 1. Spokespersons that are representing a group of five or more people who are identified as present at the meeting at the time of the spokesperson’s presentation will be allowed up to fifteen (15) minutes at the discretion of the Chair, provided that the non-speaking members agree not to speak individually. 2. The Chair may limit Oral Communications to 30 minutes for all combined speakers. 3. The Chair may reduce the allowed time to speak to three minutes to accommodate a larger number of speakers. VOTE 1 2 Chair Alcheck: This would be for a carless lifestyle. Ok, alright. All those in favor of 3 Commissioner Fine’s amendment please raise your hand and say aye. That is four. All those 4 opposed? Two. 5 6 UNFRIENDLY AMENDMENT #5 PASSED (4-2) 7 8 Vice-Chair Waldfogel: I need more time to think about that one, but… 9 10 Chair Alcheck: Ok, that's fine. Would you like to speak to your dissent? 11 12 Vice-Chair Waldfogel: I just need more time to process that one because I'm trying to grasp 13 what situations in what situations that would work and what situations that would create new 14 burdens and what situations that would create new benefits and I just don't have enough time 15 to process that tonight. 16 17 Chair Alcheck: Ok, thank you. Would you like to speak your dissent? 18 19 DRAFT _______________________ 1. Spokespersons that are representing a group of five or more people who are identified as present at the meeting at the time of the spokesperson’s presentation will be allowed up to fifteen (15) minutes at the discretion of the Chair, provided that the non-speaking members agree not to speak individually. 2. The Chair may limit Oral Communications to 30 minutes for all combined speakers. 3. The Chair may reduce the allowed time to speak to three minutes to accommodate a larger number of speakers. Commissioner Gardias: Yes, I think that I have the same feeling that pretty much this Motion 1 [Note-Unfriendly Amendment] may be justifiable, but I think that due to the lack of 2 understanding of the impact as well as the other Motions [Note-Amendments?] that we 3 processed that we may… I think that this is pretty much too early to make the justifiable or 4 scientific decision without knowing the background and the impact that it would create. 5 6 Chair Alcheck: Ok, thank you. Alright we're going to do… Yeah. We’re going to do I have 7 Commissioner Rosenblum then Waldfogel and Tanaka. So Commissioner Rosenblum do you 8 have an amendment. 9 10 UNFRIENDLY AMENDMENT #6 11 12 Commissioner Rosenblum: Yeah, increase the rental restriction to 60 days. 13 14 SECOND 15 16 Chair Alcheck: Ok. Do we have a second? I will second that. Would you like to speak to it? 17 18 Commissioner Rosenblum: Yeah. There were a couple of residents who brought up their 19 concern with encouraging a more transit neighborhood. Although I originally thought 30 days 20 DRAFT _______________________ 1. Spokespersons that are representing a group of five or more people who are identified as present at the meeting at the time of the spokesperson’s presentation will be allowed up to fifteen (15) minutes at the discretion of the Chair, provided that the non-speaking members agree not to speak individually. 2. The Chair may limit Oral Communications to 30 minutes for all combined speakers. 3. The Chair may reduce the allowed time to speak to three minutes to accommodate a larger number of speakers. was sufficient I don't see a downside to 60 days and it will help some residents have some 1 peace of mind. 2 3 Chair Alcheck: Ok, I’ll speak to the second. I would have supported any increase of the 30 day 4 minimum including up to a year for a lease that could then turn into a month a month. So this 5 is a step in the right direction. 6 7 VOTE 8 9 Chair Alcheck: Let's put it to a vote. All Commissioners in favor increasing the minimum rental 10 period from 30 to 60 days please raise your hand and say aye. Oh, alright. That is six in favor. 11 Ok. Commissioner Waldfogel [Note-Vice-Chair] do you have an amendment? 12 13 UNFRIENDLY AMENDMENT #6 PASSED (6-0) 14 15 UNFRIENDLY AMENDMENT #7 16 17 Vice-Chair Waldfogel: Yes I do and this speaks to the tree issue that several commenters raised 18 and I spoke with Assistant Director Lait about this prior to the meeting and he recommended 19 adding some specific language in oh, what is it? It’s on Page 142 of the packet. It adds a clause 20 DRAFT _______________________ 1. Spokespersons that are representing a group of five or more people who are identified as present at the meeting at the time of the spokesperson’s presentation will be allowed up to fifteen (15) minutes at the discretion of the Chair, provided that the non-speaking members agree not to speak individually. 2. The Chair may limit Oral Communications to 30 minutes for all combined speakers. 3. The Chair may reduce the allowed time to speak to three minutes to accommodate a larger number of speakers. line under the street access clause and it’s in the additional requirements for all ADUs. And it 1 says an ADU shall not result in the removal of any protected tree as defined in Section 8.10.020. 2 3 Chair Alcheck: I suspect that you support your own amendment as a Friendly Amendment, but I 4 will not accept it as a Friendly Amendment. I generally oppose redundancy. I believe these 5 trees are protected already in our code so repeating it is unnecessary. So I will ask if there is a 6 second for this? Go ahead. 7 8 Commissioner Fine: Is this already supported in the code? I know I kind of asked this question 9 earlier, but… 10 11 Mr. Lait: Well so the code has a process for seeking a removal. This amendment would prohibit 12 using that process. 13 14 Chair Alcheck: I want to provide some clarification here. When you say removal you mean 15 removal of protected tree? 16 17 Mr. Lait: Yes. 18 19 Chair Alcheck: Can you explain that process? 20 DRAFT _______________________ 1. Spokespersons that are representing a group of five or more people who are identified as present at the meeting at the time of the spokesperson’s presentation will be allowed up to fifteen (15) minutes at the discretion of the Chair, provided that the non-speaking members agree not to speak individually. 2. The Chair may limit Oral Communications to 30 minutes for all combined speakers. 3. The Chair may reduce the allowed time to speak to three minutes to accommodate a larger number of speakers. 1 Mr. Lait: Yeah. There is a I mean generally there’s a [unintelligible] 2 3 Woman: So basically generally the way the code is written is that for a protected tree, basically 4 for a single family properties if you want to remove a protected tree you have to request a tree 5 removal permit and that is processed by our Public Works Department. And protected trees 6 would be trees of a certain size, oaks, and redwoods. Oaks, redwoods. Right. 7 8 Chair Alcheck: Actually correct me if I’m wrong, I don't believe it applies to trees of a certain 9 size. I think it applies to oaks, redwoods, and designated trees. I don't believe there is a size 10 requirement to our… 11 12 Mr. Lait: Yeah, I actually happen to have the standard here. Any tree of the species Coastal Live 13 Oak or Valley Oak which is 11.5 inches in diameter (interrupted) 14 15 Chair Alcheck: Got it. 16 17 Mr. Lait: 36 inches in circumference and it goes on to talk about redwoods with their diameter. 18 And then there’s heritage trees designated by the Council. 19 20 DRAFT _______________________ 1. Spokespersons that are representing a group of five or more people who are identified as present at the meeting at the time of the spokesperson’s presentation will be allowed up to fifteen (15) minutes at the discretion of the Chair, provided that the non-speaking members agree not to speak individually. 2. The Chair may limit Oral Communications to 30 minutes for all combined speakers. 3. The Chair may reduce the allowed time to speak to three minutes to accommodate a larger number of speakers. Chair Alcheck: Sorry, I meant other species; so oaks and redwoods of a certain size, but not size 1 requirements for all trees. 2 3 Commissioner Fine: So just a question. I thought the Vice-Chair’s proposed amendment here 4 was to ensure that ADUs have to play by the normal rules for tree protection. Am I incorrect in 5 that? 6 7 Vice-Chair Waldfogel: Well let's look for, I guess I'm looking for some clarification on this. 8 Because with the (interrupted) 9 10 Mr. Lait: Right. So this, this is something that… right. So this is something this is a question that 11 came up in response to I think some of the comments that we received about the item. And 12 I've tried to reach out to our Urban Forestry Department to understand clearly how we process 13 these particular requests. In my read of the regulations there was I had some concern that 14 some trees may not be protected that could be removed in order to accommodate an ADU. So 15 at a minimum to answer Commissioner Fine’s comment ADUs would be subject to the same 16 standards that are in place today. A question would be would you want to heighten that 17 standard to ensure that these protected trees are not lost due to the construction of an ADU? 18 19 DRAFT _______________________ 1. Spokespersons that are representing a group of five or more people who are identified as present at the meeting at the time of the spokesperson’s presentation will be allowed up to fifteen (15) minutes at the discretion of the Chair, provided that the non-speaking members agree not to speak individually. 2. The Chair may limit Oral Communications to 30 minutes for all combined speakers. 3. The Chair may reduce the allowed time to speak to three minutes to accommodate a larger number of speakers. Chair Alcheck: Ok, so for clarity it would essentially would be making it a little bit more difficult 1 to place an ADU if there was a protected tree because the removal process wouldn’t apply. 2 That is the suggestion. Is that what your intention was? 3 4 Vice-Chair Waldfogel: Yes. 5 6 UNFRIENDLY AMENDMENT #7 FAILED 7 8 Chair Alcheck: Ok. So I need a second. Ok. We don't have a second. Commissioner Tanaka so 9 you have an amendment? Does anybody else have an amendment of this Motion that's 10 currently on the table? Awesome. Ok. Did you just hit the button? 11 12 Commissioner Fine: Just a quick question, a query for the Commission up here. Does everyone 13 feel we've dealt with conversions and bringing ADUs into compliance? Have we dealt with that 14 sufficiently? 15 16 Chair Alcheck: Can you be a little bit more specific what you're asking? 17 18 Commissioner Fine: So part of our directive, our directive was two part here from the Council 19 memo. One was figure out how to make, how to enable the construction of ADUs, and two, 20 DRAFT _______________________ 1. Spokespersons that are representing a group of five or more people who are identified as present at the meeting at the time of the spokesperson’s presentation will be allowed up to fifteen (15) minutes at the discretion of the Chair, provided that the non-speaking members agree not to speak individually. 2. The Chair may limit Oral Communications to 30 minutes for all combined speakers. 3. The Chair may reduce the allowed time to speak to three minutes to accommodate a larger number of speakers. how to bring them into compliance. I just feel throughout this whole process it seems like 1 we're getting near a vote to pass this on the Council we really have skirted around that a little 2 bit and not quite dealt with it. And we all have lots of friends and family here in Palo Alto who 3 have illegal ADUs, so just a question. 4 5 Chair Alcheck: Yeah, no so this goes back to the process. When we began this process it was 6 sort of directed by a City Council memo. This agendized item is not the result of staff's work in 7 response to our last meeting and sort of following up on that. This particular agendized item is 8 in response to the law. In theory the topics and concerns and ideas that we came up with in 9 our last study session theoretically would have come back to us, but not tonight, maybe with a 10 little bit more staff work. And so my hope is that City Council will not get the impression that 11 we have somehow skirted their directive because I don't know that staff has really come back 12 to us with some of the ideas that we discussed at the last two meetings about compliance and 13 grandfathering. That said, if you have been of how we can incorporate it I, ok, alright, so you 14 don't. I'm just acknowledging that you're hand signal there. 15 16 Alright, I would like to put the Motion put forth by Commissioner Waldfogel [note-Vice-Chair] 17 seconded by myself as amended, sorry. Go ahead. 18 19 DRAFT _______________________ 1. Spokespersons that are representing a group of five or more people who are identified as present at the meeting at the time of the spokesperson’s presentation will be allowed up to fifteen (15) minutes at the discretion of the Chair, provided that the non-speaking members agree not to speak individually. 2. The Chair may limit Oral Communications to 30 minutes for all combined speakers. 3. The Chair may reduce the allowed time to speak to three minutes to accommodate a larger number of speakers. Mr. Lait: One question, a clarification point on the Commissioner Rosenblum’s comment about 1 the transit, the public transit. Are we not including buses at all? Where just folks (interrupted) 2 3 Chair Alcheck: What he amended was the radius of the Cal. of the train. 4 5 Mr. Lait: Ok. 6 7 Chair Alcheck: The buses would remain as they are currently (interrupted) 8 9 Mr. Lait: 45. And would this be intersections of bus lines of bus stops or at routes? The route is 10 all of El Camino. 11 12 Commissioner Rosenblum: Stations. 13 14 Mr. Lait: Bus stops. 15 16 Commissioner Rosenblum: So I my amendment was only as pertains a radius around three 17 stations. 18 19 Mr. Lait: Ok. Beyond the stations and then focusing in on the… 20 DRAFT _______________________ 1. Spokespersons that are representing a group of five or more people who are identified as present at the meeting at the time of the spokesperson’s presentation will be allowed up to fifteen (15) minutes at the discretion of the Chair, provided that the non-speaking members agree not to speak individually. 2. The Chair may limit Oral Communications to 30 minutes for all combined speakers. 3. The Chair may reduce the allowed time to speak to three minutes to accommodate a larger number of speakers. 1 Commissioner Rosenblum: We’re not (interrupted) 2 3 Chair Alcheck: He didn't amend the language related to the bus stops. 4 5 Mr. Lait: Right, so I guess I'm seeking clarification from the Commission then about do we want 6 it to be along a fixed route like El Camino or do we want to be at bus stops? Because 7 (interrupted) 8 9 Chair Alcheck: Let me ask you for clarification. What is currently in your draft? 10 11 Mr. Lait: Right now it is well, the way it's drafted it's some variation of state law which isn't 12 quite what we wanted to do. We wanted to align it with A.B. 743 which would have allowed 13 fixed routes of buses that have a 15 minute headway in peak times, morning and afternoon or 14 evening. 15 16 Chair Alcheck: Ok. Alright, thank you for bringing this up. What I'm going to ask is if there is a 17 Commissioner who would like to make a specific suggestion on how we should treat this 18 language light it up. Commissioner Fine. 19 20 DRAFT _______________________ 1. Spokespersons that are representing a group of five or more people who are identified as present at the meeting at the time of the spokesperson’s presentation will be allowed up to fifteen (15) minutes at the discretion of the Chair, provided that the non-speaking members agree not to speak individually. 2. The Chair may limit Oral Communications to 30 minutes for all combined speakers. 3. The Chair may reduce the allowed time to speak to three minutes to accommodate a larger number of speakers. Commissioner Fine: I think it should be based on station stops. There's no effect. If you're 1 living at Loma Verde and Alma it doesn't matter that the Caltrain line is right there, right? In 2 terms of affecting your ADU which should (interrupted) 3 4 Chair Alcheck: Well he’s actually talking about bus travel. 5 6 Commissioner Fine: Bus, but for bus it’s the same, right? It’s actually not the fixed route and I 7 believe Commissioner Rosenblum’s suggestion was simply changing the train radius from 0.5 to 8 0.75. 9 10 Chair Alcheck: Ok, so I can accept your comment as a suggestion that the language in the in this 11 amendment in this ordinance be amended to reflect that the radiuses for the bus transit lines 12 be half a mile from each bus stop? 13 14 UNFRIENDLY AMENDMENT #8 15 16 Commissioner Fine: Yes. 17 18 SECOND, VOTE 19 20 DRAFT _______________________ 1. Spokespersons that are representing a group of five or more people who are identified as present at the meeting at the time of the spokesperson’s presentation will be allowed up to fifteen (15) minutes at the discretion of the Chair, provided that the non-speaking members agree not to speak individually. 2. The Chair may limit Oral Communications to 30 minutes for all combined speakers. 3. The Chair may reduce the allowed time to speak to three minutes to accommodate a larger number of speakers. Chair Alcheck: Ok. And do we have a second? OK you’re the proposer. I need a second. And 1 do I have a second? Good. Ok, are there any questions or in need of clarification for this? Ok, 2 good. Let's put it to a vote. All Commissioners in favor of the proposed Unfriendly Amendment 3 please raise your hand and say I. That's four. All opposed? That’s two. Commissioners who 4 oppose would you like to speak your dissent? 5 6 UNFRIENDLY AMENDMENT #8 PASSED (4-2) 7 8 Commissioner Gardias: I can speak to it. So pretty much the reason why I vote against this that 9 while it may increase the number of the compliant units it would not preclude folks from having 10 a car. So I thought that this should be congruent with promoting the different lifestyle and 11 using the public transportation. 12 13 Chair Alcheck: Ok, thank you. I see no other lights of amendments. I’ll ask before we move. Is 14 there any other clarifications you wish to receive from us Planning staff? Ok, I have a light. 15 Commissioner Fine. 16 17 Commissioner Fine: One question. I'm just actually thinking about your comment there. Is 18 there any standard incentive the City measures for a household without cars where we could 19 DRAFT _______________________ 1. Spokespersons that are representing a group of five or more people who are identified as present at the meeting at the time of the spokesperson’s presentation will be allowed up to fifteen (15) minutes at the discretion of the Chair, provided that the non-speaking members agree not to speak individually. 2. The Chair may limit Oral Communications to 30 minutes for all combined speakers. 3. The Chair may reduce the allowed time to speak to three minutes to accommodate a larger number of speakers. say if you can prove that you’re household without cars you may not have to build the 1 additional parking spot? Is there anything we can do around that? 2 3 Ms. Silver: Well legally you can. We don't currently have a standard in place if that's your 4 question. 5 6 Commissioner Fine: Ok, I'm not going to make an amendment here, but there is something to 7 be said for households that do not have cars. There may be an opportunity here to provide 8 them a different or a special exemption here on the parking requirement. 9 10 VOTE 11 12 Chair Alcheck: Ok, at this time I'm going to call for a vote on the Motion as amended numerous 13 times tonight. All Commissioners in favor of the Motion, the Motion as amended please raise 14 your hand and say aye. Aye. Ok that is five Commissioners in support. And all Commissioners 15 opposed? One. Would you like to speak your opposition? 16 17 MOTION PASSED (5-1) 18 19 DRAFT _______________________ 1. Spokespersons that are representing a group of five or more people who are identified as present at the meeting at the time of the spokesperson’s presentation will be allowed up to fifteen (15) minutes at the discretion of the Chair, provided that the non-speaking members agree not to speak individually. 2. The Chair may limit Oral Communications to 30 minutes for all combined speakers. 3. The Chair may reduce the allowed time to speak to three minutes to accommodate a larger number of speakers. Commissioner Gardias: Sure. So the reason that I withheld my vote and voted against and why 1 I’m opposing this because of the numerous reasons. So compliance with the state law as staff 2 proposed this originally it was the right approach. A removal of the minimum requirement is 3 something that it may be the right move, but not at this time because of this that we didn't 4 have that public that would be able to engage with this change. And with this we may just end 5 up with a number of the surprise citizens. Some may be of course for it and some of them 6 attended this meeting, but some may be opposing this measure and for this reason we don't 7 have a good feeling about this what this what change it would this proposed regulation would 8 create and we would just set up on our constituents by surprise by just not being informative 9 about this what this may was this regulation may bring to the neighborhoods. 10 11 Chair Alcheck: Ok, thank you. Alright, at this time I'm going to open the floor up for anyone 12 who would like to make a Motion on the topic of… say that again? No, no, no. I want to open 13 the floor up if you’d like to make a Motion. For example, Commissioner Rosenblum suggested 14 earlier he’d like make a Motion about potentially requesting City Council to allow Planning to 15 explore some parking utilizations study. I’m opening the floor up to anybody who would like to 16 make a Motion at this time. Commissioner Rosenblum. 17 18 MOTION #2 19 20 DRAFT _______________________ 1. Spokespersons that are representing a group of five or more people who are identified as present at the meeting at the time of the spokesperson’s presentation will be allowed up to fifteen (15) minutes at the discretion of the Chair, provided that the non-speaking members agree not to speak individually. 2. The Chair may limit Oral Communications to 30 minutes for all combined speakers. 3. The Chair may reduce the allowed time to speak to three minutes to accommodate a larger number of speakers. Commissioner Rosenblum: Yeah I’ll repeat my earlier Motion which is a recommendation that 1 staff do a parking study of neighborhood parking utilization and for those with below 50 2 percent utilization consider waiving the parking requirement for ADUs. 3 4 Chair Alcheck: Can I ask for a point of clarification? Could those to be very specific would we 5 need a parking utilization study on RPP districts if we've already exempted them? 6 7 Commissioner Rosenblum: No. 8 9 Chair Alcheck: Ok. So this would be minus two neighborhoods, even less work because need 10 the parking utilization study in those neighborhoods. Ok, do we have a second for this Motion? 11 12 SECOND 13 14 Commissioner Gardias: I will second. 15 16 Chair Alcheck: Great. Would either of you like to speak to your Motion very concisely? 17 18 Commissioner Rosenblum: Yeah. So this is the second part I think that there's two reasons to 19 have to get rid of the car requirement. One is car light lifestyle which is around dense 20 DRAFT _______________________ 1. Spokespersons that are representing a group of five or more people who are identified as present at the meeting at the time of the spokesperson’s presentation will be allowed up to fifteen (15) minutes at the discretion of the Chair, provided that the non-speaking members agree not to speak individually. 2. The Chair may limit Oral Communications to 30 minutes for all combined speakers. 3. The Chair may reduce the allowed time to speak to three minutes to accommodate a larger number of speakers. commercial areas and transit areas. And the second is in places where there's simply not an 1 issue where there's plentiful parking because we're trying to encourage the development of 2 these units. 3 4 Commissioner Gardias: I will only add that when I was reading some of the literature that was 5 provided to us before the meeting one of the key elements in the incentivizing of ADUs was the 6 removal of the car parking requirement. So for this reason and that could be our next step and 7 for this reason this research may be very valuable. Thank you. 8 9 Chair Alcheck: Commissioner Tanaka do you have a question? 10 11 Commissioner Tanaka: Sorry. So I’d like to make a Friendly Amendment. 12 13 Chair Alcheck: Please do. 14 15 UNFRIENDLY AMENDMENT #1 TO MOTION #2 16 17 Commissioner Tanaka: Ok. So a couple friendly amendments actually so and it’s the ones I 18 made before so these are, these are not new ones. So one would be that as part of the study 19 we also look at enabling underground parking in R-1 zones that don't count towards the FAR. 20 DRAFT _______________________ 1. Spokespersons that are representing a group of five or more people who are identified as present at the meeting at the time of the spokesperson’s presentation will be allowed up to fifteen (15) minutes at the discretion of the Chair, provided that the non-speaking members agree not to speak individually. 2. The Chair may limit Oral Communications to 30 minutes for all combined speakers. 3. The Chair may reduce the allowed time to speak to three minutes to accommodate a larger number of speakers. 1 Chair Alcheck: [Unintelligible] to include in this study process an exploration of underground 2 parking opportunities. 3 4 Commissioner Rosenblum: I'm just not sure the two things are related to each other and so I’m 5 not saying good idea or bad idea, I’m just not sure how these two things are actually… Yeah I 6 would treat it as an Unfriendly Amendment. 7 8 Chair Alcheck: Ok do we have a second of this Unfriendly Amendment? 9 10 Mr. Lait: Could I suggest? 11 12 Chair Alcheck: Yes, please. 13 14 Mr. Lait: That is seems like there may be a few items. 15 16 Chair Alcheck: Right. 17 18 Mr. Lait: And rather than do (interrupted) 19 20 DRAFT _______________________ 1. Spokespersons that are representing a group of five or more people who are identified as present at the meeting at the time of the spokesperson’s presentation will be allowed up to fifteen (15) minutes at the discretion of the Chair, provided that the non-speaking members agree not to speak individually. 2. The Chair may limit Oral Communications to 30 minutes for all combined speakers. 3. The Chair may reduce the allowed time to speak to three minutes to accommodate a larger number of speakers. Chair Alcheck: I agree. 1 2 Mr. Lait: A vote on that maybe this one goes on its own and then we can take this one up and I 3 think Commissioner Gardias had a couple. 4 5 Chair Alcheck: Yeah, that's a good idea. Why don’t, may we suggest that you rescind your 6 Unfriendly Amendment or if there's anything specific to this particular study then let's deal with 7 that and then if not why don’t we deal that Motion and you can lump all your study session 8 Motions into one. 9 10 UNFRIENDLY AMENDMENT #1 RESCINDED 11 12 FRIENDLY AMENDMENT #1 TO MOTION #2 13 14 Commissioner Tanaka: Ok, sounds good. The one thing I get the idea behind this, the only thing 15 that concerns me about it which is why I'm going to make another hopefully Friendly 16 Amendment this time is that parking changes, right? So and when you build the ADU as you 17 build it kind of like once for a while it’s not a change, but the parking in the area may change for 18 whatever reason and so while today may be the there’s no problem in that neighborhood that 19 this situation is that there might be one in the future. So to help make this thing more 20 DRAFT _______________________ 1. Spokespersons that are representing a group of five or more people who are identified as present at the meeting at the time of the spokesperson’s presentation will be allowed up to fifteen (15) minutes at the discretion of the Chair, provided that the non-speaking members agree not to speak individually. 2. The Chair may limit Oral Communications to 30 minutes for all combined speakers. 3. The Chair may reduce the allowed time to speak to three minutes to accommodate a larger number of speakers. palatable here's a Friendly Amendment for you. And it's one I've made before which is that the 1 homeowner could make a in lieu fee to pay for parking should there not be… if they couldn't 2 actually have parking spots on their lot or don't want it for whatever reason. So it’s the same 3 thing I did before. 4 5 FRIENDLY AMENDMENT #1 TO MOTION #2 REJECTED 6 7 Commissioner Rosenblum: I don't accept the logic of it for the simple reason that doesn't offset 8 anything in that neighborhood. So it shouldn't really eliminate the concerns those neighbors. I 9 thought you were going to say that should be subject to review every X years in order to 10 confirm there’s still not a parking problem which I would have accepted, but and but any rate 11 you could propose that as a separate thing around in lieu fees. I just don't think addresses this 12 particular thing so I don't accept it as part of this. 13 14 Chair Alcheck: Would you like me to ask for a second to that or would you like to withhold that 15 and do it as a separate Motion? Ok, alright. Let's vote on this Motion that’s on… you would like 16 to speak to this Motion? 17 18 Vice-Chair Waldfogel: Yes. 19 20 DRAFT _______________________ 1. Spokespersons that are representing a group of five or more people who are identified as present at the meeting at the time of the spokesperson’s presentation will be allowed up to fifteen (15) minutes at the discretion of the Chair, provided that the non-speaking members agree not to speak individually. 2. The Chair may limit Oral Communications to 30 minutes for all combined speakers. 3. The Chair may reduce the allowed time to speak to three minutes to accommodate a larger number of speakers. Chair Alcheck: Ok. Go ahead. 1 2 Vice-Chair Waldfogel: Yeah I think that this is a, it's an interesting idea, but I think it's a really, 3 really, really bad idea. The Council in instituting RPPs made it very clear that quality of life in 4 the neighborhoods was something that they were focused on and that the only districts where 5 they saw high parking utilization as acceptable was the neighborhoods near the Downtown 6 core. They made it very clear through that process that they wouldn't extend higher density 7 parking into other neighborhoods. And I think that we need a just a much broader discussion 8 about parking in neighborhoods about as I mentioned earlier this question of whether empty 9 streets are an amenity or whether they're an opportunity. I don't think we should jump to a 10 conclusion tonight on which they are. So I think this is a bad idea. 11 12 Chair Alcheck: Ok I'm going to just suggest that I think correct me if I’m wrong, I think 13 supporting this Motion is not necessarily opining on whether it's an opportunity or an amenity I 14 think it's simply asking us to be provided with the information in those neighborhoods so that 15 then at that point we could assess whether it would be an amenity or an opportunity. So with 16 that I'm going to ask for a vote on this Motion for a study of parking utilization in all the 17 neighborhoods except the two RPP neighborhoods we've already exempted. 18 19 Commissioner Tanaka: So what is the Motion exactly? 20 DRAFT _______________________ 1. Spokespersons that are representing a group of five or more people who are identified as present at the meeting at the time of the spokesperson’s presentation will be allowed up to fifteen (15) minutes at the discretion of the Chair, provided that the non-speaking members agree not to speak individually. 2. The Chair may limit Oral Communications to 30 minutes for all combined speakers. 3. The Chair may reduce the allowed time to speak to three minutes to accommodate a larger number of speakers. 1 Chair Alcheck: Go [unintelligible] 2 3 Mr. Lait: Can I restate it because I actually have the [unintelligible] here. 4 5 Chair Alcheck: Yeah, go ahead. 6 7 Mr. Lait: Ok, so this will help ensure that I've got it right. Ask the City Council to direct staff to 8 prepare a parking study of residential neighborhoods to assess peak utilization and extend the 9 no parking requirement for ADUs on those blocks with a street parking peak utilization under 10 50 percent not including the two existing RPP neighborhoods and presumably any future RPP 11 neighborhoods. 12 13 Commissioner Rosenblum: Yeah. I would add the word consider. 14 15 Mr. Lait: Consider. Thank you. 16 17 Commissioner Rosenblum: It's a study for them to consider adding that. 18 19 DRAFT _______________________ 1. Spokespersons that are representing a group of five or more people who are identified as present at the meeting at the time of the spokesperson’s presentation will be allowed up to fifteen (15) minutes at the discretion of the Chair, provided that the non-speaking members agree not to speak individually. 2. The Chair may limit Oral Communications to 30 minutes for all combined speakers. 3. The Chair may reduce the allowed time to speak to three minutes to accommodate a larger number of speakers. Commissioner Tanaka: So just to be clear so it's not actually saying we will… it’s a study to see 1 whether it's feasible not a ok we'll get rid of the parking requirement. Even for lightly utilized 2 neighborhoods. 3 4 Commissioner Rosenblum: That's correct, but the intent in making this Motion is to say that I 5 would be in favor of such an act. And again to answer Commissioner Waldfogel [note-Vice-6 Chair] it is prioritizing people above empty parking spaces. So there is an explicit value 7 judgement that you're making and more particularly we're saying there are many 8 neighborhoods where parking is simply not a major issue, but housing is an issue throughout 9 the City. And so that's the that is the value judgment that we're making, but the Motion is to 10 just make a study. But the value inherent in that Motion is to say it is to try to make 11 construction of ADU more palatable in places where parking is not a primary issue. 12 13 Chair Alcheck: Ok Commissioner Waldfogel [note-Vice-Chair] last comment. 14 15 Vice-Chair Waldfogel: I'll decline. There's no point saying in saying any more about that. I 16 mean I think that this notion of people versus people over cars is a really offensive way to 17 describe the quality of life versus housing question which is a urgent issue that we need to 18 resolve, but this is not the time or place to put a finger on the scale. 19 20 DRAFT _______________________ 1. Spokespersons that are representing a group of five or more people who are identified as present at the meeting at the time of the spokesperson’s presentation will be allowed up to fifteen (15) minutes at the discretion of the Chair, provided that the non-speaking members agree not to speak individually. 2. The Chair may limit Oral Communications to 30 minutes for all combined speakers. 3. The Chair may reduce the allowed time to speak to three minutes to accommodate a larger number of speakers. VOTE 1 2 Chair Alcheck: Ok so at this time I would like to call vote on this Motion. All Commissioners in 3 favor of this Motion as articulated by staff please raise your hand and say aye. I have four. All 4 those opposed. I have two. Would those who oppose the Motion care to discuss it further? 5 6 MOTION #2 PASSED (4-2) 7 8 Commissioner Tanaka: Yeah, so in general I actually I think what Commissioner Rosenblum was 9 trying to do makes sense. The only issue I have is just that parking changes though. I mean it's 10 at one point in the neighborhood the parking may be great and then a couple years later it's 11 terrible and then a bunch of ADUs get built that don’t have parking. And people are like 12 [unintelligible] what happened there. So and I thought well it’s just a study it’s probably ok, but 13 then I thought well even if it study says this neighborhood is ok right now it may not be ok later. 14 So I that's why I didn’t support it, but I understand what you’re trying to do and I think that's 15 admirable. 16 17 Chair Alcheck: I see Commissioner Rosenblum’s light. Are you proposing? Ok. Alright do we 18 have any other Motions? Commissioner Tanaka. Commissioner Gardias [unintelligible]. 19 20 DRAFT _______________________ 1. Spokespersons that are representing a group of five or more people who are identified as present at the meeting at the time of the spokesperson’s presentation will be allowed up to fifteen (15) minutes at the discretion of the Chair, provided that the non-speaking members agree not to speak individually. 2. The Chair may limit Oral Communications to 30 minutes for all combined speakers. 3. The Chair may reduce the allowed time to speak to three minutes to accommodate a larger number of speakers. MOTION #3 1 2 Commissioner Tanaka: I'm going to bring it up for the third time now. So which is I really think 3 that residential underground parking needs to be revisited and it should not count towards 4 gross FAR. And so my Motion is that the Commission looks at that and maybe some future date 5 with staff's research and if we understand the pros and cons and figures out how to enable this 6 because I think without I think this is the one solution that will truly enable ADUs is 7 underground parking. And so I think we should fix this. I think there’s technology out there 8 today that enables it to happen without massive ramps or aesthetic issues. And so I'm hoping 9 that someone else will second it and the Commission will vote for it and make it happen. 10 11 Chair Alcheck: I want to ask quick point of clarification because it's not entirely clear to me 12 whether we can simply Motion and direct staff to do certain work in excess of one hour. So 13 would you be willing to revise your Motion to request that City Council direct staff to provide us 14 with, I mean there is a distinction there. I mean correct me from wrong? 15 16 Mr. Lait: Yeah, I that’s kind of what I thought actually was being suggested is the same notion 17 that we had here before which was requesting the Council consider directing staff to… that's? 18 19 Chair Alcheck: Right. 20 DRAFT _______________________ 1. Spokespersons that are representing a group of five or more people who are identified as present at the meeting at the time of the spokesperson’s presentation will be allowed up to fifteen (15) minutes at the discretion of the Chair, provided that the non-speaking members agree not to speak individually. 2. The Chair may limit Oral Communications to 30 minutes for all combined speakers. 3. The Chair may reduce the allowed time to speak to three minutes to accommodate a larger number of speakers. 1 Mr. Lait: Right. That's the… 2 3 Chair Alcheck: I just wanted to make sure that’s how you read it. Because what will happen is I 4 believe that this (interrupted) 5 6 Mr. Lait: This will go (interrupted) 7 8 Chair Alcheck: You will move it to Council with these Motions asking for these requests 9 essentially and if they approve that Motion then theoretically we would be able to explore 10 these topics. 11 12 Mr. Lait: That’s right. We’ll advance the ordinance with the changes and in addition to the 13 ordinance the Commission had these other interests that they're asking that Council consider. 14 15 SECOND 16 17 Chair Alcheck: Are you comfortable with that Commissioner Tanaka? Ok. Do we have a 18 second? I will second that Motion. Ok, do you need to speak to your Motion? 19 20 DRAFT _______________________ 1. Spokespersons that are representing a group of five or more people who are identified as present at the meeting at the time of the spokesperson’s presentation will be allowed up to fifteen (15) minutes at the discretion of the Chair, provided that the non-speaking members agree not to speak individually. 2. The Chair may limit Oral Communications to 30 minutes for all combined speakers. 3. The Chair may reduce the allowed time to speak to three minutes to accommodate a larger number of speakers. Vice-Chair Waldfogel: Is this the agendized item? I mean are we moving outside of our agenda 1 scope if we consider this? 2 3 Ms. Silver: So the earlier clarification was that this was in the context of ADUs and as I heard the 4 current request it was in an effort to increase possibly ADU production so I think that if that is 5 the premise of the Motion that it is within the ambit. 6 7 VOTE 8 9 Chair Alcheck: Ok, so for the purposes of determining consensus all those in favor of this 10 Motion please raise your hand and say aye. That is five. All those opposed. Ok. [Unintelligible] 11 12 MOTION #3 PASSED (5-1) 13 14 Commissioner Gardias: And I will provide explanation why not, right? So I mean it's clear 15 winner on the commercial site. It's a loser on the residential site. So for this reason I think 16 that... 17 18 Commissioner Tanaka: [Unintelligible]. 19 20 DRAFT _______________________ 1. Spokespersons that are representing a group of five or more people who are identified as present at the meeting at the time of the spokesperson’s presentation will be allowed up to fifteen (15) minutes at the discretion of the Chair, provided that the non-speaking members agree not to speak individually. 2. The Chair may limit Oral Communications to 30 minutes for all combined speakers. 3. The Chair may reduce the allowed time to speak to three minutes to accommodate a larger number of speakers. Commissioner Gardias: Ok I understand. So that’s what I’m saying (interrupted) 1 2 Chair Alcheck: I’m comfortable with that explanation. 3 4 Commissioner Gardias: I pretty much know the outcome that it's going to be too costly and it 5 would not be adopted so for this reason I vote no. 6 7 Chair Alcheck: Ok, no thank you. Ok I have one light left. Do you have a Motion that you'd like 8 to make Commissioner Gardias? 9 10 Commissioner Gardias: Yes I do. 11 12 Chair Alcheck: Ok, what I would like to do is make your Motion and then if you get a second. I 13 will let you speak to your Motion. Go ahead. 14 15 MOTION #4 16 17 Commissioner Gardias: So my Motion is to empower staff to study and research and provide 18 resolution that would revise the adopted ordinance before the City Council for this following 19 topics: for the privacy for entry ways for entrance ways, for the minimum size of the unit, for 20 DRAFT _______________________ 1. Spokespersons that are representing a group of five or more people who are identified as present at the meeting at the time of the spokesperson’s presentation will be allowed up to fifteen (15) minutes at the discretion of the Chair, provided that the non-speaking members agree not to speak individually. 2. The Chair may limit Oral Communications to 30 minutes for all combined speakers. 3. The Chair may reduce the allowed time to speak to three minutes to accommodate a larger number of speakers. compliance and enforcement of those ADUs, and also to research and provide the best 1 definition of the of the proximity of the public transportation. 2 3 Chair Alcheck: Commissioner Gardias in an effort to make your Motion more successful may I 4 suggest the same edit that we I’ve suggested for Commissioner Tanaka which that we request 5 that City Council direct us to explore those topics or to revisit those topics the same way you 6 just suggested it, but with the request that it be to City Council to direct us to do that. 7 8 Commissioner Gardias: So the why I propose it this way because I believe that staff can 9 research those items with the minimum time and then provide their revisions because those 10 are mainly technical revisions to the regulation without just being directed and just going 11 through excessive way. I think those are simple research items that (interrupted) 12 13 Chair Alcheck: I understand. 14 15 Commissioner Gardias: Addressed very easily. 16 17 Chair Alcheck: Ok, I just I want to highlight that I think what you've just proposed is a suggestion 18 that they come back to us. 19 20 DRAFT _______________________ 1. Spokespersons that are representing a group of five or more people who are identified as present at the meeting at the time of the spokesperson’s presentation will be allowed up to fifteen (15) minutes at the discretion of the Chair, provided that the non-speaking members agree not to speak individually. 2. The Chair may limit Oral Communications to 30 minutes for all combined speakers. 3. The Chair may reduce the allowed time to speak to three minutes to accommodate a larger number of speakers. Commissioner Gardias: No. I propose that they will be empowered to research and provide the 1 reasonable direction directly to the Council. 2 3 Chair Alcheck: Got it. Ok, so explore those topics that you listed in the interim between now 4 and the time this agendized item goes to the Council. 5 6 Commissioner Gardias: Exactly and provides yes (interrupted) 7 8 Chair Alcheck: Staff do you have a comment? 9 10 Mr. Lait: I think that some of these things I think we can pretty easily address even now, but I 11 just if I can have a minute of your time to explain the compliance issue we just need to look into 12 that. The concern there was the absentee owners and leasing out the primary and the ADUs. 13 That’s a legal consideration. 14 15 Chair Alcheck: Let me ask for a quick clarification. He gave you a specific list. Can you identify 16 the items that you are going that you anticipate exploring without even our direction? 17 18 Mr. Lait: Yes. 19 20 DRAFT _______________________ 1. Spokespersons that are representing a group of five or more people who are identified as present at the meeting at the time of the spokesperson’s presentation will be allowed up to fifteen (15) minutes at the discretion of the Chair, provided that the non-speaking members agree not to speak individually. 2. The Chair may limit Oral Communications to 30 minutes for all combined speakers. 3. The Chair may reduce the allowed time to speak to three minutes to accommodate a larger number of speakers. Chair Alcheck: So that the remainder of the… can you actually just list the remainder of the 1 items that we would need to vote on? 2 3 Mr. Lait: Where I would like guidance for the Commission is on the minimum ADU size of 250. 4 Because if we say yeah that could be done what's the Commission's recommendation on that? 5 And I think the other issues and then the only other issue would be does the Commission have 6 a concern about two front doors being visible from the public right away if one was set back say 7 20 feet? 8 9 Chair Alcheck: Ok, so what I'm understanding Commissioner Gardias is that out of the list of 10 topics you suggested they are going to do all of them except the two that he just listed without 11 further direction from us. So what I would like to suggest is that we vote on whether we want 12 to direct them to do the other those two specific items because the rest they're going to do 13 with the without our direction. Does it make sense? 14 15 Commissioner Gardias: Well why we why they cannot why you cannot to do all of them? 16 Because I think that the reason is that the same I would entranceway I would approach the 17 same way from the reasonability perspective. If you can prove it one way or the other, right, 18 you don't need to just give you directions. And I'm going to entrust your judgment to decide it 19 DRAFT _______________________ 1. Spokespersons that are representing a group of five or more people who are identified as present at the meeting at the time of the spokesperson’s presentation will be allowed up to fifteen (15) minutes at the discretion of the Chair, provided that the non-speaking members agree not to speak individually. 2. The Chair may limit Oral Communications to 30 minutes for all combined speakers. 3. The Chair may reduce the allowed time to speak to three minutes to accommodate a larger number of speakers. if this is the right language probably it can stay, but then if that can be waived because there is 1 lack of supporting reason you just wave it. 2 3 Chair Alcheck: Ok, let me make a suggestion. Would staff be willing to include that in their 4 assessment of language and so that we could simply vote on whether or not we wanted them 5 to explore the 250 minimum? 6 7 Mr. Lait: Yeah. 8 9 MOTION #4 FAILED 10 11 Chair Alcheck: Ok, alright. I believe the 250 minimum request is different than all of the rest 12 because it's essentially you're asking them to assess a development standard that doesn't 13 currently exist. And the implication of that development standard might result in a lot less ADU 14 development and so before they will proceed on that I think we're going to ask to have 15 Commission directed consensus. So is there a second for exploring for directing staff to explore 16 a minimum size requirement for ADUs? Just speak up. There’s a second. Going once? Ok. 17 That fails. Are there any other Motions? I see a light from Commissioner Rosenblum. 18 19 DRAFT _______________________ 1. Spokespersons that are representing a group of five or more people who are identified as present at the meeting at the time of the spokesperson’s presentation will be allowed up to fifteen (15) minutes at the discretion of the Chair, provided that the non-speaking members agree not to speak individually. 2. The Chair may limit Oral Communications to 30 minutes for all combined speakers. 3. The Chair may reduce the allowed time to speak to three minutes to accommodate a larger number of speakers. Commissioner Rosenblum: Yeah, sorry this is going to be in response to the previous which say 1 in that list something's not like the other. Some I support some I would have suggested taking 2 out, but since the Motions has failed I’ll hold my peace. 3 4 Chair Alcheck: Ok, just so we're about clarity here I don't know the precise number how many 5 items he listed, but all of them with the exception of the minimum lot size requirement are 6 going to be addressed by Planning staff in an… 7 8 Commissioner Rosenblum: In that case that the one that was objecting to in addition in your list 9 your last item was transportation definition of the radius around transportation hubs and we 10 already voted on that as a Commission and resolved I think the two issues, the radius of the 11 stations of the Caltrain stations and the definition of where you count from with bus routes. So 12 if that's in your list I think we already determined those so I would have extracted that from the 13 others. 14 15 Chair Alcheck: Ok. I don't really see the need of placing a vote on that item because we've 16 already dealt with it. So I'm going (interrupted) 17 18 Commissioner Gardias: So that's fine. So this leaves me with the three items with the 19 compliance and enforcement, with the privacy item and the entrance ways. 20 DRAFT _______________________ 1. Spokespersons that are representing a group of five or more people who are identified as present at the meeting at the time of the spokesperson’s presentation will be allowed up to fifteen (15) minutes at the discretion of the Chair, provided that the non-speaking members agree not to speak individually. 2. The Chair may limit Oral Communications to 30 minutes for all combined speakers. 3. The Chair may reduce the allowed time to speak to three minutes to accommodate a larger number of speakers. 1 Chair Alcheck: Which they will (interrupted) 2 3 MOTION #5 4 5 Commissioner Gardias: That’s the Motion that I'm proposing to entrust stuff to provide to 6 revisions to the adopted regulation. 7 8 SECOND 9 10 Chair Alcheck: Ok. Do have a second? 11 12 VOTE 13 14 Commissioner Rosenblum: Second. 15 16 Chair Alcheck: Ok, all those in favor of staff exploring those items in anticipation of the City 17 Council meeting and preparing language please say aye. That is six in favor. 18 19 DRAFT _______________________ 1. Spokespersons that are representing a group of five or more people who are identified as present at the meeting at the time of the spokesperson’s presentation will be allowed up to fifteen (15) minutes at the discretion of the Chair, provided that the non-speaking members agree not to speak individually. 2. The Chair may limit Oral Communications to 30 minutes for all combined speakers. 3. The Chair may reduce the allowed time to speak to three minutes to accommodate a larger number of speakers. Ok. Ok, I have no other lights. There are no other Motions. I'm going to close this agendized 1 item. Thank you for your participation all those audience members that are still here. 2 3 MOTION #5 PASSED (6-0) 4 5 Commission Action: Main motion: Vice-Chair Waldfogel motioned to approve the 6 recommendation that the City Council Adopt an Ordinance to Update the City's 7 Municipal Code Sections Regarding Accessory Dwelling Units (Second Dwelling Units) 8 for Compliance with Recent State Laws and Other Changes to Encourage 9 Construction of Accessory Dwelling Units. The motion was seconded by Chair 10 Alcheck. The following amendments were added: 11 12 AMENDMENTS 13 1. Modify the minimum lot sizes requirement to allow legally conforming lot sizes in the R1 14 and R1-subdistricts to be eligible for an accessory dwelling unit. Chair Alcheck and 15 Commissioner Rosenblum seconded the motion. The amendment passed 4-2. ( 16 Commissioner Gardias and Waldfogel against) 17 2. Allow parking in the R1 and R1-subdistricts to satisfy the accessory dwelling unit parking 18 requirement through subterranean parking. Motion failed due to a lack of a second. 19 3. Extend the parking exemption provision for the two CalTrain Stations in Palo Alto and 20 the San Antonio CalTrain station to .75 mile radius. Commissioner Rosenblum motioned 21 to accept and Chair Fine seconded the motion. The amendment passed 4-2( Vice-Chair 22 Waldfogel and Commissioner Gardias against) 23 4. Add additional development standard to Section 20 18.42 (a) 8'(v) For new or converted 24 detached accessory dwelling units, there shall be no windows, doors, mechanical 25 equipment, or venting or exhaust systems, located within six feet of a property line' 26 Vice-Chair Waldfogel motioned to accept and Chair Alcheck seconded the motion. The 27 amendment passed 4-2 (Commissioner Rosenblum and Commissioner Gardias against) 28 5. Establish a regulatory program that would allow accessory dwelling unit parking 29 requirements to be satisfied paying an in-lieu parking fee. Commissioner Tanaka 30 motioned to accept and Chair Fine seconded the motion. Amendment failed 3-3 31 6. Eliminate the parking requirement for those properties located within a Residential 32 Parking Program District. Commissioner Fine motioned to accept and Commissioner 33 Rosenblum seconded the motion. The amendment passed 4-2 (Vice-Chair Waldfogel 34 and Commissioner Gardias against) 35 DRAFT _______________________ 1. Spokespersons that are representing a group of five or more people who are identified as present at the meeting at the time of the spokesperson’s presentation will be allowed up to fifteen (15) minutes at the discretion of the Chair, provided that the non-speaking members agree not to speak individually. 2. The Chair may limit Oral Communications to 30 minutes for all combined speakers. 3. The Chair may reduce the allowed time to speak to three minutes to accommodate a larger number of speakers. 7. Modify 18.42.040 (a) 9 (ii) Short term rentals limitation from 30 to 60 days. 1 Commissioner Rosenblum motioned to accept and Chair Alcheck seconded the motion. 2 The amendment passed 6-0. 3 8. Modify 18.42.040 (a) 9 to add "(ix) An accessory dwelling unit shall not result in the 4 removal of any protected tree as defined in Section 8.10.020." Vice-Chair Waldfogel 5 motioned to accept; amendment fails due a lack of a second. 6 9. Modify the Public Transit definition for busses to be a .5 mile radius from bus stops 7 along a fixed route bus service with service intervals of 15 minutes or better during peak 8 commute hours. Chair Fine motioned to accept and Commissioner Rosenblum seconded 9 the motion. The amendment passed 4-2 (Vice-Chair Waldfogel and Commissioner 10 Gardias against) 11 The main motion with the above referenced amendments was passed 5-1 with Commissioner 12 Gardias against. 13 14 ADDITIONAL MOTIONS 15 16 1. Request the City Council to consider directing staff to prepare a parking study of 17 residential neighborhoods to assess peak utilization and extend the no parking 18 requirement for ADUs on those blocks with a street parking peak utilization under 50%. 19 NIC the properties located within RPP neighborhoods Commissioner Rosenblum 20 motioned to accept and Commissioner Gardias seconded the motion. The amendment 21 passed 4-2 (Vice-Chair Waldfogel and Commissioner Tanaka against). 22 2. Request the City Council to consider directing staff to prepare an ordinance to enable 23 underground parking in residential neighborhoods. Commissioner Tanaka motioned to 24 accept and Chair Alcheck seconded the motion. The amendment passed 5-1 25 3. Direct staff to consider and revise as appropriate Section 18.42.040 (a) 7 (vi) to allow an 26 accessory dwelling unit to have an entrance facing the same lot line as the primarily 27 dwelling unit's entrance; explore changes to Section 18.42.040 (a) 6 to make this 28 requirements more clear; and, include information in the council report that addresses 29 concerns regarding absentee owners and enforcement of the ordinance. Commissioner 30 Gardias motioned to accept, Commissioner Rosenblum seconded the motion. The 31 amendment passed 6-0. 32 Approval of Minutes 33 Public Comment is Permitted. Five (5) minutes per speaker.1,3 34 6. October 26, 2016 Planning & Transportation Commission Minutes 35 7. November 9, 2016 Planning & Transportation Committee Minutes 36 37 DRAFT _______________________ 1. Spokespersons that are representing a group of five or more people who are identified as present at the meeting at the time of the spokesperson’s presentation will be allowed up to fifteen (15) minutes at the discretion of the Chair, provided that the non-speaking members agree not to speak individually. 2. The Chair may limit Oral Communications to 30 minutes for all combined speakers. 3. The Chair may reduce the allowed time to speak to three minutes to accommodate a larger number of speakers. Chair Alcheck: Ok there are two things we need to do and one thing I'd like to say before we 1 leave. First I want a can I get a Motion to approve the minutes from October 26th and 2 November 9th? 3 4 MOTION 5 6 Commissioner Fine: I move we approve the minutes from October/November. 7 8 Chair Alcheck: Any second? 9 10 SECOND 11 12 Commissioner Rosenblum: Second. 13 14 Chair Alcheck: Thank you. All those in favor approving the minutes please say aye. Excellent. 15 That’s six in favor, zero dissenting. 16 17 MOTION PASSED (6-0) 18 19 DRAFT _______________________ 1. Spokespersons that are representing a group of five or more people who are identified as present at the meeting at the time of the spokesperson’s presentation will be allowed up to fifteen (15) minutes at the discretion of the Chair, provided that the non-speaking members agree not to speak individually. 2. The Chair may limit Oral Communications to 30 minutes for all combined speakers. 3. The Chair may reduce the allowed time to speak to three minutes to accommodate a larger number of speakers. Commission Action: A motion was made by Commissioner Fine to accept the minutes from 1 October 26, 2016 and November 9, 2016 and was seconded by Chair Alcheck. The motion 2 passed 6-0. 3 Committee Items 4 5 Chair Alcheck: Ok. Are there any committee items that need to be addressed at this late hour? 6 No we're not there yet. 7 8 Commissioner Fine: Just one quick thing please keep in mind we will need a new liaison to the 9 Citizen’s Advisory Committee (CAC). 10 11 Chair Alcheck: Right. We will deal with that in January. 12 Commissioner Questions, Comments or Announcements 13 14 Chair Alcheck: Ok it's an opportunity right now for Commissioners to raise any questions, 15 comments or announcements. Are there any comments, questions, or announcements at this 16 late hour? 17 18 Vice-Chair Waldfogel: I'm really sorry to do this this late at night, but I've heard some 19 community issues about large buses that are parked and orbiting in neighborhoods and I 20 believe that we do have some code discretion to deal with this. So I just want to make sure 21 that this is publicly aired and that there's some activity going on to look at, to explore this issue. 22 DRAFT _______________________ 1. Spokespersons that are representing a group of five or more people who are identified as present at the meeting at the time of the spokesperson’s presentation will be allowed up to fifteen (15) minutes at the discretion of the Chair, provided that the non-speaking members agree not to speak individually. 2. The Chair may limit Oral Communications to 30 minutes for all combined speakers. 3. The Chair may reduce the allowed time to speak to three minutes to accommodate a larger number of speakers. 1 Jonathan Lait, Assistant Director: Yes. Apologize, yes there is we’ll, we can report back to the 2 Commission on that. 3 4 Vice-Chair Waldfogel: Thank you. 5 6 Chair Alcheck: Ok, it's late, but I just want to quickly make a comment that in the future in our 7 future meetings if there are topics that are a little bit, if there are topics of interest that 8 Commissioners have moving forward and they would like to explore them you are welcome to 9 email me and if there is a second Commissioner that you'd like to work with on a topic and then 10 propose it during this comments and questions and announcements section for staff to help us 11 explore that's going to be a process that we will have moving forward. So if there is a specific 12 item that you think this Commission should be exploring and you would like to create an 13 opportunity to agendize that item in one of our future meetings please let me know and then 14 we can prepare an opportunity for you to raise that at one of these comment opportunities and 15 then we can have a process to have it agendized in the future. I have one question. Go ahead. 16 17 Commissioner Gardias: Yeah I mean this is the technical question about the meeting minutes 18 that we approved from the prior meeting. So no because I had no time to edit the minutes. 19 There was no specific request from Yolanda as it was coming from Robin in the past to provide 20 DRAFT _______________________ 1. Spokespersons that are representing a group of five or more people who are identified as present at the meeting at the time of the spokesperson’s presentation will be allowed up to fifteen (15) minutes at the discretion of the Chair, provided that the non-speaking members agree not to speak individually. 2. The Chair may limit Oral Communications to 30 minutes for all combined speakers. 3. The Chair may reduce the allowed time to speak to three minutes to accommodate a larger number of speakers. the edit which of course we should be doing regardless of such a specific request. I just want to 1 make sure that we can still provide those edits regardless of our vote. 2 3 Cara Silver, Senior Assistant City Attorney: So if that's the case if you have amendments to 4 minutes that have already been approved we would then you can send those to Yolanda and 5 then we will reagendize the amended minutes for approval. 6 7 Chair Alcheck: Yeah I think in light of that why don't we just make sure that our secretary sends 8 us the minutes and if there is an issue will you communicate it to staff so they can reagendize? 9 If there are amendments communicated to staff they can reagendize it and we will revote on 10 those approvals. 11 12 Jonathan Lait, Assistant Director: So how did it go before? We would send you the minutes? 13 14 Chair Alcheck: Typically we get the minutes. 15 16 Mr. Lait: As a part of the packet. Did, do you not get them? 17 18 Chair Alcheck: Actually we get them separately. We get them separately as an email. 19 20 DRAFT _______________________ 1. Spokespersons that are representing a group of five or more people who are identified as present at the meeting at the time of the spokesperson’s presentation will be allowed up to fifteen (15) minutes at the discretion of the Chair, provided that the non-speaking members agree not to speak individually. 2. The Chair may limit Oral Communications to 30 minutes for all combined speakers. 3. The Chair may reduce the allowed time to speak to three minutes to accommodate a larger number of speakers. Mr. Lait: Ok. 1 2 Chair Alcheck: And we there is a process by which any issues related to misunderstanding of the 3 mike or whatnot we can… 4 5 Mr. Lait: Ok, because we’ve included this that’s this whole back section of your report here, 6 your packet is this is all the minutes. Do you not? 7 8 Chair Alcheck: Actually if that's the case may I suggest that in the future you actually send us 9 the minutes in a digital form. Because the and the reason and she's in the past she's done it as 10 a Word document and that's particularly helpful because it allows us to basically search our 11 own name and find our own sections and make edits that are relevant to just us. 12 13 Mr. Lait: Ok. 14 15 Chair Alcheck: Thank you. 16 17 Adjournment 18 19 Chair Alcheck: Ok that concludes I think our meeting. Everybody thank you for your hard work 20 tonight and we'll see you in December. Bye bye. 21 DRAFT _______________________ 1. Spokespersons that are representing a group of five or more people who are identified as present at the meeting at the time of the spokesperson’s presentation will be allowed up to fifteen (15) minutes at the discretion of the Chair, provided that the non-speaking members agree not to speak individually. 2. The Chair may limit Oral Communications to 30 minutes for all combined speakers. 3. The Chair may reduce the allowed time to speak to three minutes to accommodate a larger number of speakers. 1 Meeting was adjourned at 11:15pm 2 DRAFT _______________________ 1. Spokespersons that are representing a group of five or more people who are identified as present at the meeting at the time of the spokesperson’s presentation will be allowed up to fifteen (15) minutes at the discretion of the Chair, provided that the non-speaking members agree not to speak individually. 2. The Chair may limit Oral Communications to 30 minutes for all combined speakers. 3. The Chair may reduce the allowed time to speak to three minutes to accommodate a larger number of speakers. Palo Alto Planning & Transportation Commission 1 Commissioner Biographies, Present and Archived Agendas and Reports are available online: 2 http://www.cityofpaloalto.org/gov/boards/ptc/default.asp. The PTC Commission members are: 3 4 Chair Michael Alcheck 5 Vice Chair Asher Waldfogel 6 Commissioner Adrian Fine 7 Commissioner Przemek Gardias 8 Commissioner Eric Rosenblum 9 Commissioner Greg Tanaka 10 11 Get Informed and Be Engaged! 12 View online: http://midpenmedia.org/category/government/city-of-palo-alto or on Channel 26. 13 14 Show up and speak. Public comment is encouraged. Please complete a speaker request card 15 located on the table at the entrance to the Council Chambers and deliver it to the Commission 16 Secretary prior to discussion of the item. 17 18 Write to us. Email the PTC at: Planning.Commission@CityofPaloAlto.org. Letters can be 19 delivered to the Planning & Community Environment Department, 5th floor, City Hall, 250 20 Hamilton Avenue, Palo Alto, CA 94301. Comments received by 2:00 PM the Tuesday preceding 21 the meeting date will be included in the agenda packet. Comments received afterward through 22 2:00 PM the day of the meeting will be presented to the Commission at the dais. 23 24 Material related to an item on this agenda submitted to the PTC after distribution of the 25 agenda packet is available for public inspection at the address above. 26 Americans with Disability Act (ADA) 27 It is the policy of the City of Palo Alto to offer its public programs, services and meetings in a 28 manner that is readily accessible to all. Persons with disabilities who require materials in an 29 appropriate alternative format or who require auxiliary aids to access City meetings, programs, 30 or services may contact the City’s ADA Coordinator at (650) 329-2550 (voice) or by emailing 31 ada@cityofpaloalto.org. Requests for assistance or accommodations must be submitted at least 32 24 hours in advance of the meeting, program, or service. 33 TO: FROM: DATE: CITY OF PALO ALTO HONORABLE CITY COUNCIL 12 HILLARY GITELMAN, DIRECTOR, PLANNING AND COMMUNITY ENVIRONMENT FEBRUARY 6, 2016 SUBJECT: AGENDA ITEM NUMBER 12-PUBLIC HEARING: REVIEW AND ADOPTION OF AN ORDINANCE AMENDING CHAPTER 18 (ZONING) OF THE PALO ALTO MUNICIPAL CODE TO UPDATE CODE SECTIONS REGARDING ACCESSORY DWELLING UNITS. THE ORDINANCE IS EXEMPT FROM THE CALIFORNIA ENVIRONMENTAL QUALITY ACT (CEQA} PER SECTIONS 15061(B), 15301, 15303 AND 15305 AND WAS RECOMMENDED FOR APPROVAL BY THE PLANNING & TRANSPORTATION COMMISSION ON NOVEMBER 30, 2016 As a result of time constraints due to the number of items under consideration on the agenda February 6, 2017 , staff is requesting that agenda item number 12-Accessory Dwelling Units (ADU'S} be continued to March 6, 2017. 1 of I City of Palo Alto (ID # 7668) City Council Staff Report Report Type: Informational Report Meeting Date: 2/6/2017 City of Palo Alto Page 1 Summary Title: Investment Activity Report Title: City of Palo Alto Investment Activity Report for the Second Quarter, Fiscal Year 2017 From: City Manager Lead Department: Administrative Services The purpose of this report is to inform Council of the City’s investment portfolio status as of the end of the second quarter. The City’s investment policy requires that staff report quarterly to Council on the City’s portfolio composition compared to Council-adopted policy, portfolio performance, and other key investment and cash flow information. Discussion The City’s investment portfolio is detailed in Attachment B. It is grouped by investment type and includes the investment issuer, date of maturity, current market value, the book and face (par) value, and the weighted average maturity of each type of investment and of the entire portfolio. The par value of the City’s portfolio is $498.8 million; in comparison, last quarter it was $480.0 million. The growth in the portfolio of $18.8 million since the last quarter primarily results from timing of cash flows. Contributing factors include not having to pay the bi-weekly pensions to Public Employers’ Retirement System (PERS) because the annual employer contribution of $30.8 million was fully paid in July 2016, the ending of the decade old sales tax (“triple flip”) program resulting in the City receiving the full monthly sales tax amount instead of receiving a quarter of the sales tax in January and May, property tax receipts, and receiving a substantial development assurance deposit from an electric renewable project counterparty. By prepaying PERS instead of making payments with each payroll period, the City expects savings of $1.1 million in PERS payments; however, the savings will be offset by the loss of approximately $0.25 million in interest income. This results in net citywide savings of $0.85 million. The saving is a consequence of PERS’ ability to earn interest earlier and at a higher rate than the City could realize. Property taxes are primarily paid around December/January and April/May. Seasonality and the timing of remittances and expenditures affect cash flow. City of Palo Alto Page 2 The portfolio consists of $37.6 million in liquid accounts and $461.2 million in U. S. government treasury investments, agency securities, bonds of State of California local government agencies, bonds of some of the fifty United States, medium-term corporate notes, and certificates of deposit. The $461.2 million includes $137.8 million in investments maturing in less than two years, comprising 29.9 percent of the City’s investment in notes and securities. The investment policy requires that at least $50 million be maintained in securities maturing in less than two years. The current market value of the portfolio is 99.4 percent of the book value. The market value of securities fluctuates, depending on how interest rates perform. When interest rates decrease, the market value of the securities in the City’s portfolio will likely increase; likewise, when interest rates increase, the market value of the securities will likely decrease. Understanding and showing market values is not only a reporting requirement, but essential to knowing the principal risks in actively buying and selling securities. It is important to note, however, that the City’s practice is to buy and hold investments until they mature so changes in market price do not affect the City’s investment principal. The market valuation is provided by Union Bank of California, which is the City’s safekeeping agent. The average life to maturity of the investment portfolio is 3.81 years compared to 3.76 years last quarter. Investments Made During the Second Quarter During the second quarter, $39.2 million of government agency securities with an average yield of 2.3% percent matured. During the same period, government securities totaling $39.7 million with an average yield of 2.2% percent were purchased. The expectation is interest rates and City’s portfolio’s average yield will rise. The City’s short-term money market and pool account increased by $18.3 million compared to the first quarter. Staff increased the available cash due to the potential purchase of the Post Office on Hamilton Avenue. Investment staff continually monitors the City’s short-term cash flow needs and adjusts liquid funds to meet them. Availability of Funds for the Next Six Months Normally, the flow of revenues from the City’s utility billings and General Fund sources is sufficient to provide funds for ongoing expenditures in those respective funds. Projections indicate receipts will be $230.6 million and expenditures will be $200.3 million over the next six months, indicating an overall growth in the portfolio of $30.3 million. As of December 31, 2016, the City had $37.6 million deposited in the Local Agency Investment Fund (LAIF) and a money market account that could be withdrawn on a daily basis. In addition, investments totaling $35.2 million will mature between January 1, 2017 and June 30, 2017. On the basis of the above projections, staff is confident that the City will have more than sufficient funds or liquidity to meet expenditure requirements for the next six months. City of Palo Alto Page 3 Compliance with City Investment Policy During the second quarter, staff complied with all aspects of the investment policy. Attachment C lists the major restrictions in the City’s investment policy compared with the portfolio’s actual performance. Investment Yields Interest income on an accrual basis for the second quarter was $2.3 million; similar to the last quarter. As of December 31, 2016, the yield to maturity of the City’s portfolio was 1.93 percent; same as the last quarter. The rising interest rate is expected to gradually increase the portfolio’s yields. The City’s portfolio yield of 1.93 percent compares to LAIF’s average yield for the quarter of 0.69 percent and an average yield on the two-year and five-year Treasury bonds during the second quarter of approximately 1.0 percent and 1.60 percent, respectively. Yield Trends After one year, the Federal Open Market Committee (FOMC), raised the federal funds and discount rates in December 2016 by a quarter percent to 0.75 and 1.25 percent, respectively. FOMC’s December 2016 report is consistent with the prior two quarter reports, the FOMC again cited strengthening consumer spending, improving labor market and moderate economic growth with inflation rising but still remaining below the FOMC’s long-term goal of 2 percent. At the national level, business spending has and continues to remain weak. The FOMC expects future rate increase to be gradual and dependent on the economic outlook. Though the expectation is rates will rise, factors that could keep a lid on rate increases include: low inflation, weak wage growth, and global economic weakness. Funds Held by the City or Managed Under Contract Attachment A is a consolidated report of all City investment funds, including those not held directly in the investment portfolio. These include cash in the City’s regular bank account with US Bank and Wells Fargo. The bond proceeds, reserves, and debt service payments being held by the City’s fiscal agents are subject to the requirements of the underlying debt indenture. The trustees for the bond funds are U.S. Bank and California Asset Management Program (CAMP). Bond funds with U.S. Bank are invested in federal agency and money market mutual funds that consist exclusively of U.S. Treasury securities. Bond funds in CAMP are invested in banker’s acceptance notes, certificates of deposit, commercial paper, federal agency securities, and repurchase agreements. The most recent data on funds held by the fiscal agent is as of December 31, 2016. Fiscal Impact This is an information report. Environmental Review This information report is not a project under the California Environmental Quality Act; therefore, an environmental review is not required. Attachments: City of Palo Alto Page 4  Attachment A: Consolidated Report of Cash Management  Attachment B: Investment Portfolio  Attachment C: Investment Policy Compliance Book Value Market Value City Investment Portfolio (see Attachment B)504,251,012$ 501,526,402$ Other Funds Held by the City Cash with Wells Fargo Bank 607,680 607,680 (includes general and imprest accounts) Cash with US Bank 6,214,995 6,214,995 (includes general and imprest accounts) Petty/Working Cash 12,678 12,678 Total - Other Funds Held By City 6,835,353 6,835,353 Funds Under Management of Third Party Trustees * US Bank Trust Services ** 2002 Downtown Parking Impvt. (Taxable) Certificates of Participation Reserve Fund 237,334 237,334 2009 Water Revenue Bonds (Build America Bonds) Project, Debt Service, Reserve, Cost of Issuance Funds 2,611,797 2,611,797 2010 General Obligation Bonds Debt Service 5 5 2011 Utility Revenue Refunding Bonds Debt Service, Reserve, and Cost of Issuance Funds 1,487,976 1,487,976 2013 General Obligation Bonds Debt Service 19,215 19,215 California Asset Management Program (CAMP) *** 2012 University Ave. Parking Refunding Bonds Reserve Fund 2,544,545 2,544,545 2013 General Obligation (Library) Bond Project Fund 712,973 712,973 Total Under Trustee Management 7,613,845 7,613,845 GRAND TOTAL 518,700,210$ 515,975,600$ * These funds are subject to the requirements of the underlying debt indenture. ** U.S. Bank investments are in money market mutual funds that exclusively invest in U.S. Treasury securities. *** CAMP investments are in money market mutual fund which invest in bankers acceptance, certificate of deposit, commercial paper, federal agency securities, and repurchase agreements. Second Quarter, Fiscal Year 2016-17 (Unaudited) (Debt Service Proceeds) Attachment A Consolidated Report of Cash Management City of Palo Alto Cash and Investments City of Palo Alto City of Palo Alto Administration Svcs. Dept. 250 Hamilton Ave., 4th Floor Palo Alto, CA 94301 (650)329-2362 December 31, 2016 Fund ALL - Portfolio Listings Investments by Fund Par Value Days To Maturity Maturity Date Current RateMarket ValueCUSIPInvestment #Issuer PurchaseDate Book Value YTM 360 YTM 365 Managed Pool Accounts Fidelity Investments158 3,817,514.30SYS158 10.01007/01/2015 3,817,514.30 0.009 0.0103,817,514.30 Local Agency Investment Fund159 33,778,902.66SYS159 10.73007/01/2015 33,759,440.03 0.720 0.73033,778,902.66 Subtotal and Average 37,596,416.96 37,596,416.96 37,576,954.33 0.648 0.657 1 Negotiable CD's Comenity Capital Bank1183 NCD 245,000.0020033ABE5 05/03/2018 4871.00005/03/2013 245,842.80 0.986 1.000245,000.00 American Federal Bank1476 NCD 245,000.0002600ADE4 09/30/2022 2,0982.45009/30/2015 247,878.75 2.418 2.451245,000.00 Alpine Bank1525 NCD 245,000.0002082CBG4 08/16/2023 2,4182.40002/16/2016 245,536.55 2.367 2.400245,000.00 American City Bank1692 NCD 245,000.00025140BC7 03/30/2021 1,5491.45009/30/2016 240,070.60 1.429 1.449245,000.00 American Eagle Bank1371 NCD 245,000.0002554BCE9 05/28/2019 8771.85008/26/2014 247,538.20 1.825 1.850245,000.00 American Express Centurion Bk1178 NCD 245,000.0002587DMV7 05/02/2018 4861.10005/02/2013 245,840.35 1.084 1.100245,000.00 American Express Centurion Bk1333 NCD 245,000.0002587CAC4 07/10/2019 9201.95007/10/2014 248,170.30 1.923 1.950245,000.00 Barclays Bank / Delaware1187 NCD 245,000.0006740AZB8 04/30/2018 4840.70005/07/2013 247,579.85 0.690 0.699245,000.00 Bank of Wisconsin Dells1696 NCD 245,000.00065847DH5 10/12/2021 1,7451.50010/12/2016 239,041.60 1.480 1.500245,000.00 Bankers Bank of the West1421 NCD 245,000.0006610TDB8 12/30/2019 1,0931.85012/29/2014 248,785.25 1.824 1.850245,000.00 Belmont Savings Bank1280 NCD 245,000.00080515AT6 11/13/2018 6811.55005/13/2014 247,092.30 1.528 1.550245,000.00 Bar Harbor Bank & Trust1377 NCD 245,000.00066851SG2 08/27/2019 9681.75008/27/2014 246,639.05 1.726 1.750245,000.00 Bank Champaign1477 NCD 245,000.0006607ABD2 09/30/2022 2,0982.50009/30/2015 245,338.10 2.467 2.501245,000.00 Bank of Deerfield1396 NCD 245,000.00061785CM1 09/30/2020 1,3682.20009/30/2014 248,868.55 2.171 2.201245,000.00 Bank of Holland Michigan1302 NCD 245,000.00062649ZV3 05/21/2019 8701.70005/21/2014 248,182.55 1.677 1.701245,000.00 Frontier Bank Madison NE1498 NCD 245,000.0035907XCL9 11/22/2021 1,7862.00011/20/2015 244,282.15 1.974 2.001245,000.00 Bank West1472 NCD 245,000.00063615AX6 09/16/2022 2,0842.25009/16/2015 245,784.00 2.220 2.251245,000.00 Apex Bank1693 NCD 245,000.0003753XAN0 09/30/2022 2,0981.70009/30/2016 238,456.05 1.676 1.700245,000.00 BMW Bank of North America1202 NCD 245,000.0005568P3E5 05/24/2017 1430.90005/24/2013 245,193.55 0.887 0.900245,000.00 Beneficial Bank1680 NCD 245,000.0008173QBR6 09/13/2021 1,7161.50009/12/2016 239,058.75 1.479 1.500245,000.00 BankWest, Inc.1380 NCD 150,000.0006652CEY3 09/16/2019 9881.90009/15/2014 151,573.50 1.873 1.900150,000.00 Bofi Federal Bank1381 NCD 50,000.0009710LAF2 08/30/2022 2,0672.25008/25/2014 50,063.50 2.493 2.52749,293.82 Bofi Federal Bank1382 NCD 100,000.0009710LAE5 08/08/2022 2,0452.35008/25/2014 100,174.00 2.592 2.62898,592.08 Bofi Federal Bank1402 NCD 100,000.0009710LAF2 08/30/2022 2,0672.25010/21/2014 100,127.00 2.462 2.49698,739.63 Banco Poplar North America1478 NCD 245,000.0005965GVP8 10/07/2020 1,3752.25010/07/2015 249,270.35 2.219 2.250245,000.00 Bridgewater Bank Bloom MN1393 NCD 245,000.00108622EA5 09/24/2019 9961.85009/24/2014 247,234.40 1.825 1.850245,000.00 Portfolio CPA AP Run Date: 01/23/2017 - 14:46 FI (PRF_FI) 7.1.1 Report Ver. 7.3.3a December 31, 2016 Par Value Days To Maturity Maturity Date Current RateMarket Value Fund ALL - Portfolio Listings Investments by Fund Page 2 CUSIP Investment #Issuer Purchase Date Book Value YTM 360 YTM 365 Negotiable CD's Business Bank1531 NCD 245,000.0012325EHA3 02/10/2021 1,5011.55002/10/2016 242,001.20 1.530 1.551245,000.00 Worlds Foremost Bank1387 NCD 200,000.00981571AT9 09/04/2019 9762.10009/04/2014 202,628.00 2.072 2.101200,000.00 Campbell County Bank1307 NCD 245,000.00134204BZ8 05/30/2019 8791.65005/30/2014 248,251.15 1.628 1.650245,000.00 Cathay Bank1194 NCD 245,000.00149159HS7 04/30/2018 4841.00005/14/2013 244,971.83 0.987 1.000244,999.35 CBC National Bank1571 NCD 245,000.0012480LDV6 04/15/2021 1,5651.50004/15/2016 240,923.20 1.479 1.500245,000.00 Celtic Bank1362 NCD 245,000.0015118RJW8 08/20/2019 9611.90008/20/2014 248,172.75 1.875 1.901245,000.00 Central State Bank1538 NCD 245,000.0015524EAA2 02/16/2022 1,8721.70002/16/2016 240,126.95 1.678 1.701245,000.00 CIT Bank1175 NCD 245,000.0017284CCN2 04/24/2018 4781.20004/24/2013 245,210.70 1.183 1.200245,000.00 Citizens Deposit Bank1677 NCD 245,000.0017453FBP6 08/24/2021 1,6961.40008/24/2016 239,041.60 1.380 1.400245,000.00 Citizens State Bank1541 NCD 250,000.0017670BAQ1 02/17/2023 2,2381.75002/19/2016 242,757.50 1.727 1.751250,000.00 Enerbank USA1246 NCD 245,000.0029266NYZ4 01/30/2020 1,1242.05001/30/2014 248,400.60 2.021 2.050245,000.00 Community State Bank1536 NCD 245,000.0020404YBQ7 02/24/2022 1,8801.95002/24/2016 243,074.30 1.924 1.951245,000.00 Capital One Bank USA NA1384 NCD 250,000.00140420NR7 09/04/2019 9761.80009/04/2014 253,217.50 1.775 1.800250,000.00 Capital One Bank USA NA1457 NCD 245,000.0014042E5M8 08/12/2020 1,3192.30008/12/2015 249,885.30 2.268 2.300245,000.00 Community Bank Pasadena1627 NCD 245,000.00203507BA5 06/15/2021 1,6261.55006/16/2016 241,344.60 1.529 1.550245,000.00 Commuincity Finl Svcs Bank1530 NCD 245,000.0020364ABA2 02/17/2021 1,5081.60002/17/2016 242,425.05 1.579 1.601245,000.00 Commercial Bank1369 NCD 245,000.0020143PDB3 05/20/2019 8691.85008/19/2014 247,543.10 1.824 1.850245,000.00 Community State Bank, IA1471 NCD 245,000.0020404MAN1 09/12/2022 2,0802.25009/11/2015 245,801.15 2.224 2.255245,000.00 Discover Bank / Delaware1176 NCD 245,000.00254671NJ5 05/01/2018 4851.15005/01/2013 245,833.00 1.134 1.150245,000.00 East Boston Savings Bank1463 NCD 245,000.0027113PAL5 08/24/2020 1,3311.90008/24/2015 246,411.20 1.876 1.902245,000.00 Ever Bank1454 NCD 245,000.0029976DZK9 07/30/2020 1,3062.00007/30/2015 247,381.40 1.972 2.000245,000.00 Farmer's and Merchants Bank1360 NCD 250,000.00308702BQ1 02/16/2021 1,5072.20008/15/2014 253,325.00 2.169 2.200250,000.00 First Bank of Highland1330 NCD 245,000.00319141BV8 07/03/2019 9131.85007/03/2014 245,688.45 1.824 1.850245,000.00 First Business Bank1250 NCD 245,000.0031938QF25 02/19/2020 1,1442.00002/19/2014 247,976.75 1.972 2.000245,000.00 First Choice Bank / NJ1297 NCD 245,000.00319464AR4 05/28/2019 8771.70005/28/2014 248,243.80 1.677 1.701245,000.00 State Bank of Fenton (MI)1283 NCD 245,000.00856188AU1 02/15/2019 7751.65005/15/2014 246,362.20 1.630 1.653245,000.00 First Federal S&L Bank1626 NCD 245,000.0032018YAW8 06/22/2023 2,3631.80006/22/2016 238,725.55 1.776 1.800245,000.00 1st Financial Bank1485 NCD 245,000.0032022RFD4 03/16/2022 1,9002.10010/19/2015 244,750.10 2.120 2.150244,403.21 Flushing Bank1413 NCD 245,000.0034387ABA6 12/10/2018 7081.80012/10/2014 246,545.95 1.776 1.801245,000.00 First General Bank1222 NCD 245,000.00320337AR9 07/03/2018 5481.30007/03/2013 245,563.50 1.282 1.300245,000.00 First Eagle National Bank1400 NCD 245,000.0032008JAG8 10/15/2021 1,7482.45010/17/2014 252,293.65 2.416 2.449245,000.00 First National Bank of America1391 NCD 240,000.0032110YEF8 08/03/2022 2,0402.35009/09/2014 240,312.00 2.665 2.703235,757.37 Portfolio CPA AP Run Date: 01/23/2017 - 14:46 FI (PRF_FI) 7.1.1 Report Ver. 7.3.3a December 31, 2016 Par Value Days To Maturity Maturity Date Current RateMarket Value Fund ALL - Portfolio Listings Investments by Fund Page 3 CUSIP Investment #Issuer Purchase Date Book Value YTM 360 YTM 365 Negotiable CD's First Nationnal Bank / KS1537 NCD 245,000.00334342BU5 02/26/2021 1,5171.55002/26/2016 241,868.90 1.530 1.551245,000.00 The FNB of Mcgregor1480 NCD 245,000.0032112UBW0 09/30/2021 1,7332.00010/01/2015 244,706.00 1.972 1.999245,000.00 First Nat. Bank of Park Falls1473 NCD 245,000.0032114RAQ9 09/17/2021 1,7202.20009/17/2015 245,142.10 2.171 2.201245,000.00 First Premier Bank1255 NCD 245,000.0033610RNX7 03/08/2021 1,5272.50003/07/2014 251,083.35 2.465 2.500245,000.00 First Merchants Bank1351 NCD 245,000.0032082BDH9 08/06/2019 9471.90008/06/2014 248,231.55 1.873 1.900245,000.00 Community First Bank1555 NCD 250,000.0020369JAA9 03/17/2022 1,9011.70003/17/2016 244,835.00 1.677 1.700250,000.00 Farmer's & Merchant's SVG Bank1551 NCD 245,000.00308863AH2 02/26/2021 1,5171.55002/29/2016 245,671.30 1.528 1.550245,000.00 First Neighbor Bank, NA1469 NCD 245,000.0033581VAF6 09/03/2021 1,7062.40009/03/2015 250,358.15 2.367 2.400245,000.00 First Savings Bank Northwest1335 NCD 245,000.0033621JAB4 07/18/2019 9281.80007/18/2014 245,115.15 1.776 1.801245,000.00 First State Bank1366 NCD 245,000.0033648RAT6 08/20/2019 9611.85008/20/2014 248,236.45 1.825 1.851245,000.00 First State Bank of Purdy1475 NCD 248,000.0033646TAE7 04/13/2022 1,9282.35009/25/2015 249,173.04 2.321 2.353247,980.01 Fox Chase Bank1305 NCD 245,000.0035137QAV6 06/06/2019 8861.70006/06/2014 248,243.80 1.677 1.700245,000.00 Gulf Coast Bank & Trust1462 NCD 200,000.00402194ES9 05/20/2021 1,6002.00008/13/2015 200,376.00 1.972 1.999200,000.00 Gold Coast Bank1375 NCD 245,000.0038058KDA1 08/05/2019 9461.80009/04/2014 247,991.45 1.775 1.800245,000.00 GE Capital Bank1184 NCD 245,000.0036161TJR7 05/03/2018 4871.00005/03/2013 244,544.30 0.986 1.000245,000.00 GE Capital Bank1262 NCD 245,000.0036157PXV6 03/22/2021 1,5412.65003/21/2014 252,521.50 2.613 2.650245,000.00 Goldman Sachs Bank USA1177 NCD 245,000.0038147JEC2 05/01/2018 4851.15005/01/2013 245,034.30 1.134 1.150245,000.00 Happy State Bank1683 NCD 245,000.00411394AN9 09/16/2021 1,7191.50009/16/2016 239,120.00 1.500 1.520245,000.00 HSBC Bank1564 NCD 245,000.0040434AR84 10/07/2021 1,7402.00004/07/2016 244,438.95 1.972 2.000245,000.00 Dubuque Bank & Trust1372 NCD 245,000.00263849BD2 08/21/2019 9621.90008/21/2014 248,162.95 1.873 1.900245,000.00 Iroquois Federal Sav Loan Asso1535 NCD 245,000.0046355PBV9 08/12/2020 1,3191.60002/12/2016 243,912.20 1.578 1.600245,000.00 Investors Bank1460 NCD 245,000.0046176PEJ0 08/25/2020 1,3322.00008/25/2015 249,880.40 1.972 2.000245,000.00 Inst. for Sav in Newburyport1455 NCD 245,000.0045780PAN5 07/30/2021 1,6712.30007/31/2015 250,029.85 2.269 2.301245,000.00 Iowa State Bank1343 NCD 250,000.0046256YAB5 07/23/2019 9331.80007/23/2014 253,240.00 1.775 1.800250,000.00 JP Morgan Chase BAnk NA1200 NCD 245,000.0048124JD39 12/05/2018 7031.25006/05/2013 244,608.00 1.232 1.250245,000.00 Lakeside Bank1686 NCD 245,000.0051210SLR6 09/18/2023 2,4511.80009/16/2016 236,454.40 1.775 1.800245,000.00 LCA Bank Corporation1306 NCD 245,000.00501798FJ6 05/30/2019 8791.65005/30/2014 248,246.25 1.627 1.650245,000.00 Leader Bank1364 NCD 245,000.0052168UCN0 08/22/2019 9632.00008/22/2014 245,171.50 1.973 2.001245,000.00 Legends Bank1533 NCD 245,000.0052465JGM3 02/11/2022 1,8671.70002/12/2016 248,035.55 1.678 1.701245,000.00 Live Oak Banking Company1671 NCD 245,000.00538036CH5 08/19/2021 1,6911.40008/19/2016 239,183.70 1.381 1.400245,000.00 Luana Savings Bank1367 NCD 245,000.00549103QA0 09/07/2021 1,7102.25009/05/2014 247,606.80 2.219 2.250245,000.00 Machias Savings Bank1358 NCD 245,000.00554479DN2 08/28/2019 9691.80008/28/2014 248,302.60 1.776 1.801245,000.00 Portfolio CPA AP Run Date: 01/23/2017 - 14:46 FI (PRF_FI) 7.1.1 Report Ver. 7.3.3a December 31, 2016 Par Value Days To Maturity Maturity Date Current RateMarket Value Fund ALL - Portfolio Listings Investments by Fund Page 4 CUSIP Investment #Issuer Purchase Date Book Value YTM 360 YTM 365 Negotiable CD's Mascoma Savings Bank1319 NCD 248,000.0057461PAG1 01/15/2019 7441.80006/20/2014 250,956.16 1.627 1.650248,729.21 Medallion Bank - Salt Lake1238 NCD 245,000.0058403BJ31 01/10/2019 7391.85001/10/2014 247,864.05 1.825 1.850245,000.00 Merrick Bank1464 NCD 245,000.0059013JHE2 08/20/2020 1,3271.90008/20/2015 246,433.25 1.876 1.902245,000.00 Merchants National Bank OH1534 NCD 245,000.00588806AV1 02/17/2022 1,8731.80002/17/2016 247,280.95 1.776 1.801245,000.00 Mifflinburg Bank & Trust Co.1321 NCD 132,000.00598580AB4 04/30/2019 8491.65006/20/2014 133,710.72 1.627 1.649132,000.00 Marlin Business Bank1483 NCD 245,000.0057116AKU1 10/21/2020 1,3891.75010/21/2015 249,277.70 1.727 1.751245,000.00 Mutual One Bank1407 NCD 250,000.0062847HAA7 11/21/2019 1,0541.85011/21/2014 253,882.50 1.825 1.850250,000.00 MY Safra Bank FSB1467 NCD 245,000.0055406JAL6 09/03/2020 1,3411.90009/03/2015 249,941.65 1.873 1.900245,000.00 NBT Bank1322 NCD 156,000.00628779FJ4 06/06/2019 8861.80006/20/2014 158,021.76 1.775 1.799156,000.00 NBT Bank1373 NCD 94,000.00628779FN5 08/20/2019 9612.10008/20/2014 95,218.24 2.071 2.10094,000.00 Customers Bank1388 NCD 250,000.0023204HCA4 09/10/2019 9822.10009/10/2014 253,200.00 2.071 2.100250,000.00 NCB Savings Bank1344 NCD 245,000.00628825JL6 07/25/2019 9351.80007/25/2014 247,001.65 1.775 1.800245,000.00 National Bank Commerce1607 NCD 245,000.00633368DY8 05/11/2023 2,3211.80005/11/2016 242,361.35 1.776 1.800245,000.00 Nebraska State Bank & Trust1466 NCD 245,000.0063969ABL7 08/26/2022 2,0632.25008/26/2015 251,818.35 2.220 2.251245,000.00 Lake Sunapee Bank FSB1309 NCD 245,000.00510868AG7 06/05/2019 8851.75006/05/2014 248,241.35 1.727 1.750245,000.00 Connectone Bank1355 NCD 245,000.0020786AAT2 08/13/2019 9541.85008/13/2014 248,231.55 1.824 1.850245,000.00 Bank of Northern Michigan1298 NCD 245,000.0006414TNW9 05/21/2020 1,2362.00005/21/2014 249,779.95 1.972 2.000245,000.00 Northfield Bank1365 NCD 245,000.0066612AAA6 08/12/2019 9531.85008/13/2014 248,106.60 1.824 1.850245,000.00 Northstar Bank1326 NCD 245,000.0066704MEG2 07/18/2019 9281.75007/18/2014 248,248.70 1.727 1.751245,000.00 National Bank of NY City1312 NCD 245,000.00634116CB1 06/18/2019 8981.65006/18/2014 248,185.00 1.627 1.650245,000.00 Oostburg State Bank1532 NCD 245,000.00683430BU5 02/09/2021 1,5001.55002/09/2016 247,352.00 1.530 1.551245,000.00 Williamette Valley Bank1524 NCD 245,000.00969294BY2 02/06/2023 2,2272.10002/04/2016 249,008.20 2.072 2.101245,000.00 Orrstown Bank1465 NCD 245,000.00687377DR9 08/20/2020 1,3272.00008/20/2015 245,151.90 1.974 2.002245,000.00 Peoples United Bank1378 NCD 245,000.0071270QGB6 08/27/2019 9681.95008/27/2014 248,158.05 1.923 1.950245,000.00 Peapack-Gladstone Bank1275 NCD 245,000.00704692AK8 04/17/2019 8361.80004/17/2014 248,160.50 1.776 1.801245,000.00 Planters Bank1363 NCD 245,000.0072741PCU9 08/20/2021 1,6922.50008/20/2014 239,433.60 2.467 2.501245,000.00 Prime Alliance Bank1331 NCD 245,000.0074160NED8 07/11/2019 9211.70007/11/2014 248,189.90 1.677 1.701245,000.00 Park National Bank1395 NCD 250,000.00700654AV8 03/26/2019 8142.10009/26/2014 251,992.50 2.070 2.099250,000.00 Providence Bank1445 NCD 245,000.00743738BQ8 02/25/2022 1,8812.10002/26/2015 251,619.90 2.072 2.101245,000.00 Peoples State Bank, WI1304 NCD 245,000.00712515GY5 05/23/2019 8721.70005/23/2014 248,175.20 1.676 1.700245,000.00 Private Bank & Trust Co.1293 NCD 245,000.0074267GUN5 11/21/2018 6891.65005/21/2014 247,129.05 1.627 1.650245,000.00 Ohio Valley Bank1338 NCD 250,000.00677721CE0 07/23/2019 9331.80007/23/2014 253,312.50 1.776 1.801250,000.00 Portfolio CPA AP Run Date: 01/23/2017 - 14:46 FI (PRF_FI) 7.1.1 Report Ver. 7.3.3a December 31, 2016 Par Value Days To Maturity Maturity Date Current RateMarket Value Fund ALL - Portfolio Listings Investments by Fund Page 5 CUSIP Investment #Issuer Purchase Date Book Value YTM 360 YTM 365 Negotiable CD's Reliance Savings Bank1636 NCD 245,000.0075950XAD1 06/22/2021 1,6331.45006/22/2016 241,268.65 1.430 1.450245,000.00 Sallie Mae Bank1350 NCD 245,000.00795450SC0 07/30/2019 9402.05007/30/2014 248,224.20 2.021 2.050245,000.00 State Bank Definace1233 NCD 245,000.00855736CX0 07/19/2018 5641.65007/19/2013 247,175.60 1.628 1.650245,000.00 State Bank of India1390 NCD 245,000.00856284Z98 09/11/2019 9832.15009/11/2014 248,197.25 2.120 2.150245,000.00 State Bank of Texas1230 NCD 245,000.00856528CG7 07/17/2018 5621.60007/17/2013 245,088.20 1.578 1.600245,000.00 Security National Bank1499 NCD 245,000.00814414AC2 11/19/2021 1,7832.00011/19/2015 244,306.65 1.974 2.001245,000.00 Somerset Trust Company Bank1616 NCD 245,000.00835104BL3 06/12/2023 2,3531.80006/10/2016 238,830.90 1.776 1.800245,000.00 Bank of New England1704 NCD 245,000.00063847AW7 10/19/2021 1,7521.50010/19/2016 238,407.05 1.480 1.500245,000.00 Bell State Bank & Trust1223 NCD 245,000.0007815AAG2 06/28/2018 5431.30006/28/2013 245,536.55 1.282 1.300245,000.00 Sterns Bank NA1221 NCD 245,000.00857894NG0 06/28/2018 5431.30006/28/2013 245,573.30 1.282 1.300245,000.00 Stockman Bank1557 NCD 245,000.0086128QBX5 03/30/2023 2,2792.00003/30/2016 245,022.05 1.973 2.000245,000.00 Third Federal Savings and Loan1242 NCD 245,000.0088413QAF5 10/22/2018 6591.75001/22/2014 247,646.00 1.726 1.750245,000.00 Thomasville Natl Bank1266 NCD 245,000.00884693BJ0 04/12/2021 1,5622.40004/11/2014 252,538.65 2.367 2.400245,000.00 Uinta Bank1639 NCD 245,000.00903572BC8 12/26/2023 2,5501.70006/24/2016 237,454.00 1.676 1.700245,000.00 United Bankers' Bank1379 NCD 245,000.00909557EA4 04/29/2019 8481.80008/29/2014 247,268.70 1.776 1.800245,000.00 United Community Bank1694 NCD 245,000.0090983WBD2 03/28/2022 1,9121.60009/29/2016 239,467.90 1.577 1.599245,000.00 Unity Bank1529 NCD 245,000.0091330ABF3 02/26/2021 1,5171.60002/26/2016 247,354.45 1.579 1.601245,000.00 Valley Central Savings Bank1422 NCD 245,000.0091944RAF5 12/30/2019 1,0931.85012/29/2014 248,785.25 1.824 1.850245,000.00 Washington Trst Westerly1345 NCD 245,000.00940637GJ4 07/31/2019 9411.90007/31/2014 248,231.55 1.873 1.900245,000.00 Webster Bank NA1252 NCD 245,000.0094768NJM7 02/12/2019 7721.90002/12/2014 247,631.30 1.873 1.900245,000.00 Northwest Bank1308 NCD 245,000.0066736AAK5 05/29/2019 8781.65005/29/2014 248,246.25 1.628 1.650245,000.00 Western State Bank1392 NCD 245,000.0095960NJA6 03/26/2020 1,1802.10009/26/2014 248,630.90 2.071 2.100245,000.00 Wells Fargo Bank1656 NCD 245,000.009497486H5 06/30/2021 1,6411.60006/30/2016 241,204.95 1.578 1.600245,000.00 Woodford State Bank1459 NCD 245,000.00979424AA6 07/29/2022 2,0352.35008/12/2015 251,198.50 2.317 2.349245,000.00 Zions First National Bank1417 NCD 250,000.0098970TU79 12/10/2019 1,0731.90012/08/2014 252,490.00 1.873 1.899250,000.00 Subtotal and Average 35,035,494.68 35,043,000.00 35,199,560.15 1.799 1.824 1,293 Medium Term Notes Apple, Inc.1342 MTN 2,000,000.00037833AQ3 05/06/2019 8552.10007/15/2014 2,018,980.00 1.982 2.0102,003,993.13 Apple, Inc.1461 MTN 750,000.00037833AX8 02/07/2020 1,1321.55008/13/2015 740,835.00 1.980 2.008739,856.43 Apple, Inc.1497 MTN 1,500,000.00037833BD1 05/06/2020 1,2212.00011/05/2015 1,502,790.00 1.854 1.8791,505,753.67 Apple, Inc.1543 MTN 700,000.00037833BS8 02/23/2021 1,5142.25002/23/2016 699,419.00 2.140 2.169702,158.43 Portfolio CPA AP Run Date: 01/23/2017 - 14:46 FI (PRF_FI) 7.1.1 Report Ver. 7.3.3a December 31, 2016 Par Value Days To Maturity Maturity Date Current RateMarket Value Fund ALL - Portfolio Listings Investments by Fund Page 6 CUSIP Investment #Issuer Purchase Date Book Value YTM 360 YTM 365 Medium Term Notes Alphabet (Google) Inc.1657 MTN 100,000.0002079KAA5 05/19/2021 1,5993.62507/11/2016 106,047.00 1.271 1.288109,894.10 Alphabet (Google) Inc.1658 MTN 946,000.0038259PAB8 05/19/2021 1,5993.62507/11/2016 1,003,204.62 1.271 1.2881,039,598.15 Alphabet (Google) Inc.1660 MTN 1,500,000.0002079KAA5 05/19/2021 1,5993.62507/12/2016 1,590,705.00 1.238 1.2551,650,637.13 Johnson & Johnson1411 MTN 2,000,000.00478160BM5 12/05/2019 1,0681.87511/24/2014 2,012,380.00 1.874 1.9001,998,603.20 Johnson & Johnson1418 MTN 1,500,000.00478160BM5 12/05/2019 1,0681.87512/08/2014 1,509,285.00 1.824 1.8501,501,037.28 Johnson & Johnson1624 MTN 1,000,000.00478160BS2 03/01/2021 1,5201.65006/07/2016 984,420.00 1.530 1.5511,003,855.63 Microsoft Corporation1448 MTN 2,000,000.00594918AV0 02/12/2020 1,1371.85002/12/2015 1,998,720.00 1.785 1.8102,002,340.28 Microsoft Corporation1496 MTN 2,000,000.00594918BG8 11/03/2020 1,4022.00011/05/2015 2,002,080.00 1.913 1.9402,004,304.34 Microsoft Corporation1515 MTN 900,000.00594918BG8 11/03/2020 1,4022.00001/07/2016 900,936.00 1.887 1.913902,837.24 Stanford University1336 MTN 300,000.00854403AC6 05/01/2019 8504.75007/10/2014 320,928.00 1.966 1.993318,309.23 Stanford University1347 MTN 150,000.00854403AC6 05/01/2019 8504.75007/24/2014 160,464.00 1.896 1.922159,409.27 Stanford University1349 MTN 225,000.00854403AC6 05/01/2019 8504.75007/25/2014 240,696.00 1.895 1.921239,122.13 Stanford University1419 MTN 105,000.00854403AC6 05/01/2019 8504.75012/11/2014 112,324.80 1.893 1.920111,617.79 Subtotal and Average 17,993,327.43 17,676,000.00 17,904,214.42 1.777 1.801 1,236 Federal Agency Issues - Coupon Federal Agricultural Mortgage1028 3,000,000.0031315PPC7 02/21/2019 7811.79002/21/2012 3,027,720.00 1.765 1.7903,000,000.00 Federal Agricultural Mortgage1031 2,000,000.0031315PQC6 09/06/2018 6131.55003/06/2012 2,009,840.00 1.528 1.5502,000,000.00 Federal Agricultural Mortgage1052 1,500,000.0031315PTW9 04/10/2019 8291.87004/10/2012 1,514,565.00 1.844 1.8701,500,000.00 Federal Agricultural Mortgage1055 1,500,000.0031315PTQ2 04/10/2017 991.26004/10/2012 1,502,925.00 1.242 1.2601,500,000.00 Federal Agricultural Mortgage1090 2,000,000.0031315PZQ5 06/05/2017 1551.11006/05/2012 2,003,280.00 1.094 1.1102,000,000.00 Federal Agricultural Mortgage1096 2,000,000.0031315PZQ5 06/05/2017 1551.11006/20/2012 2,003,280.00 0.998 1.0122,000,814.43 Federal Agricultural Mortgage1098 2,000,000.0031315PPK9 07/03/2017 1831.02007/03/2012 2,001,720.00 1.006 1.0202,000,000.00 Federal Agricultural Mortgage1109 2,000,000.0031315PSX8 08/23/2017 2341.03008/23/2012 2,002,180.00 1.015 1.0302,000,000.00 Federal Agricultural Mortgage1123 Call 1,500,000.0031315PQL6 11/29/2021 1,7932.00011/29/2012 1,507,035.00 1.972 2.0001,500,000.00 Federal Agricultural Mortgage1130 1,500,000.0031315PPX1 07/05/2022 2,0112.20012/13/2012 1,482,330.00 1.930 1.9571,518,233.84 Federal Agricultural Mortgage1134 750,000.0031315PB32 11/21/2022 2,1502.00012/19/2012 737,685.00 2.081 2.110745,633.29 Federal Agricultural Mortgage1136 1,500,000.0031315PTY5 12/27/2019 1,0901.48012/27/2012 1,492,275.00 1.395 1.4151,502,760.45 Federal Agricultural Mortgage1137 1,500,000.0031315PUE7 12/27/2022 2,1862.18001/04/2013 1,477,950.00 2.165 2.1961,498,711.98 Federal Agricultural Mortgage1138 740,000.0031315PEY1 12/30/2019 1,0934.50001/04/2013 803,395.80 1.514 1.535802,118.66 Federal Agricultural Mortgage1139 500,000.0031315PWN5 06/01/2021 1,6123.84001/04/2013 533,180.00 1.946 1.973537,811.74 Federal Agricultural Mortgage1141 1,500,000.0031315PUE7 12/27/2022 2,1862.18001/08/2013 1,477,950.00 2.195 2.2251,496,341.59 Portfolio CPA AP Run Date: 01/23/2017 - 14:46 FI (PRF_FI) 7.1.1 Report Ver. 7.3.3a December 31, 2016 Par Value Days To Maturity Maturity Date Current RateMarket Value Fund ALL - Portfolio Listings Investments by Fund Page 7 CUSIP Investment #Issuer Purchase Date Book Value YTM 360 YTM 365 Federal Agency Issues - Coupon Federal Agricultural Mortgage1142 1,200,000.0031315PTW9 04/10/2019 8291.87001/09/2013 1,211,652.00 1.400 1.4201,211,711.95 Federal Agricultural Mortgage1143 451,000.0031315PPC7 02/21/2019 7811.79001/09/2013 455,167.24 1.372 1.392454,667.15 Federal Agricultural Mortgage1144 1,500,000.0031315PUE7 12/27/2022 2,1862.18001/23/2013 1,477,950.00 2.111 2.1411,503,130.84 Federal Agricultural Mortgage1147 2,595,000.0031315PUE7 12/27/2022 2,1862.18001/28/2013 2,556,853.50 2.199 2.2292,588,055.46 Federal Agricultural Mortgage1152 2,000,000.0031315PPF0 01/30/2019 7591.32002/11/2013 1,998,720.00 1.220 1.2372,003,318.05 Federal Agricultural Mortgage1155 1,500,000.0031315PPF0 01/30/2019 7591.32002/21/2013 1,499,040.00 1.262 1.2801,501,193.36 Federal Agricultural Mortgage1160 1,500,000.0031315PQM4 03/06/2018 4290.94003/07/2013 1,495,095.00 0.925 0.9371,500,034.52 Federal Agricultural Mortgage1163 1,500,000.0031315PQM4 03/06/2018 4290.94003/08/2013 1,495,095.00 0.987 1.0011,498,943.41 Federal Agricultural Mortgage1179 1,500,000.0031315PXM6 05/02/2018 4860.85005/02/2013 1,491,375.00 0.864 0.8771,499,471.70 Federal Agricultural Mortgage1186 1,450,000.0031315PXH7 01/09/2019 7382.10005/01/2013 1,470,720.50 1.055 1.0701,479,219.71 Federal Agricultural Mortgage1199 1,500,000.0031315PZZ5 03/09/2018 4320.77005/15/2013 1,493,190.00 0.961 0.9751,496,434.57 Federal Agricultural Mortgage1209 1,500,000.0031315PZZ5 03/09/2018 4320.77005/30/2013 1,493,190.00 1.151 1.1671,493,133.70 Federal Agricultural Mortgage1224 1,500,000.0031315PC98 06/12/2018 5271.18006/21/2013 1,495,260.00 1.549 1.5701,491,865.59 Federal Agricultural Mortgage1225 1,500,000.0031315PC98 06/12/2018 5271.18006/21/2013 1,495,260.00 1.575 1.5971,491,316.67 Federal Agricultural Mortgage1226 1,500,000.0031315PC98 06/12/2018 5271.18006/25/2013 1,495,260.00 1.783 1.8081,487,016.25 Federal Agricultural Mortgage1243 1,500,000.0031315PQT9 03/06/2020 1,1601.41001/15/2014 1,486,245.00 2.462 2.4961,452,203.63 Federal Agricultural Mortgage1244 1,500,000.0031315P3G2 09/09/2020 1,3472.80001/15/2014 1,541,835.00 2.635 2.6721,506,431.98 Federal Agricultural Mortgage1256 1,500,000.0031315PXH7 01/09/2019 7382.10003/05/2014 1,521,435.00 1.702 1.7261,510,826.08 Federal Agricultural Mortgage1257 300,000.0031315PTU3 03/09/2021 1,5284.16003/06/2014 322,131.00 2.574 2.609317,697.03 Federal Agricultural Mortgage1258 1,500,000.0031315P6P9 03/05/2024 2,6203.40003/07/2014 1,566,495.00 3.325 3.3721,502,531.57 Federal Agricultural Mortgage1259 1,500,000.0031315P6P9 03/05/2024 2,6203.40003/10/2014 1,566,495.00 3.424 3.4711,493,531.02 Federal Agricultural Mortgage1264 1,500,000.0031315PK40 03/26/2021 1,5452.50003/26/2014 1,520,655.00 2.495 2.5301,498,229.91 Federal Agricultural Mortgage1265 1,800,000.0031315PJ67 02/28/2019 7881.70003/28/2014 1,811,898.00 1.784 1.8091,795,958.28 Federal Agricultural Mortgage1271 1,000,000.0031315P4B2 01/30/2024 2,5853.46004/09/2014 1,047,930.00 3.297 3.3431,006,951.82 Federal Agricultural Mortgage1279 1,250,000.0031315PPX1 07/05/2022 2,0112.20004/23/2014 1,235,275.00 2.889 2.9301,205,567.22 Federal Agricultural Mortgage1399 500,000.0031315PVF3 04/03/2020 1,1881.47510/15/2014 497,115.00 1.857 1.882493,717.17 Federal Agricultural Mortgage1406 1,500,000.0031315PA58 11/20/2019 1,0531.31011/07/2014 1,489,140.00 1.854 1.8801,476,558.03 Federal Agricultural Mortgage1408 2,000,000.0031315PM22 11/20/2019 1,0531.84011/20/2014 2,015,260.00 1.814 1.8402,000,000.00 Federal Agricultural Mortgage1410 1,500,000.0031315PM22 11/20/2019 1,0531.84011/20/2014 1,511,445.00 1.848 1.8731,498,614.67 Federal Agricultural Mortgage1423 1,500,000.0031315PZ85 12/23/2019 1,0861.85012/23/2014 1,508,325.00 1.851 1.8761,498,865.47 Federal Agricultural Mortgage1427 675,000.0031315P2C2 05/05/2021 1,5852.51001/09/2015 687,075.75 2.110 2.140685,088.52 Federal Agricultural Mortgage1428 404,000.0031315PL23 03/27/2024 2,6423.33001/09/2015 417,820.84 2.540 2.575423,514.37 Portfolio CPA AP Run Date: 01/23/2017 - 14:46 FI (PRF_FI) 7.1.1 Report Ver. 7.3.3a December 31, 2016 Par Value Days To Maturity Maturity Date Current RateMarket Value Fund ALL - Portfolio Listings Investments by Fund Page 8 CUSIP Investment #Issuer Purchase Date Book Value YTM 360 YTM 365 Federal Agency Issues - Coupon Federal Agricultural Mortgage1433 1,604,000.0031315PD89 06/12/2023 2,3532.61001/22/2015 1,604,336.84 2.269 2.3011,632,893.03 Federal Agricultural Mortgage1447 1,450,000.0031315PD89 06/12/2023 2,3532.61002/09/2015 1,450,304.50 2.377 2.4101,466,821.65 Federal Agricultural Mortgage1452 1,000,000.003130H0AJ2 03/01/2022 1,8852.15003/05/2015 987,970.00 2.120 2.1501,000,000.00 Federal Agricultural Mortgage1552 Call 1,500,000.003132X0EU1 01/27/2026 3,3132.93002/26/2016 1,447,635.00 2.831 2.8701,506,941.74 Federal Agricultural Mortgage1554 Call 1,500,000.003132X0EU1 01/27/2026 3,3132.93003/02/2016 1,447,635.00 2.878 2.9181,501,374.19 Federal Agricultural Mortgage1576 1,000,000.0031315PZS1 01/24/2023 2,2142.13004/06/2016 981,210.00 1.839 1.8641,015,016.15 Federal Agricultural Mortgage1580 474,000.0031315PEM7 08/04/2025 3,1374.35004/08/2016 530,339.64 2.296 2.328547,623.00 Federal Agricultural Mortgage1595 1,500,000.0031315P2J7 05/01/2024 2,6773.30004/21/2016 1,557,405.00 2.084 2.1121,619,512.53 Federal Agricultural Mortgage1604 1,500,000.0031315P2J7 05/01/2024 2,6773.30004/26/2016 1,557,405.00 2.159 2.1891,611,429.05 Federal Agricultural Mortgage1617 500,000.0031315PUE7 12/27/2022 2,1862.18005/26/2016 492,650.00 1.844 1.870508,674.92 Federal Agricultural Mortgage1655 1,500,000.0031315PQT9 03/06/2020 1,1601.41007/01/2016 1,486,245.00 0.992 1.0051,518,879.54 Federal Agricultural Mortgage1663 510,000.0031315PQT9 03/06/2020 1,1601.41007/21/2016 505,323.30 1.135 1.150514,101.97 Federal Agricultural Mortgage1665 2,000,000.003132X0BH3 07/15/2022 2,0212.38007/25/2016 2,009,320.00 1.499 1.5202,090,722.36 Federal Agricultural Mortgage1681 1,750,000.003132X0BG5 06/15/2020 1,2611.75008/24/2016 1,736,787.50 1.136 1.1521,785,271.85 Federal Agricultural Mortgage1698 1,500,000.003132X0EQ0 01/25/2021 1,4851.55010/03/2016 1,476,045.00 1.256 1.2741,516,314.36 Federal Agricultural Mortgage1710 1,500,000.0031315PRA9 02/03/2026 3,3204.81010/18/2016 1,728,120.00 2.131 2.1601,825,586.01 Federal Agricultural Mortgage839 1,500,000.0031315PEY1 12/30/2019 1,0934.50012/30/2009 1,628,505.00 4.438 4.5001,500,000.00 Federal Agricultural Mortgage840 2,000,000.0031315PGE3 01/19/2017 184.12501/19/2010 2,003,840.00 4.068 4.1252,000,000.00 Federal Agricultural Mortgage866 1,000,000.0031315PAT6 05/17/2017 1363.75005/17/2010 1,012,290.00 3.698 3.7501,000,000.00 Federal Agricultural Mortgage923 1,500,000.0031315PNM7 12/28/2017 3613.15012/28/2010 1,532,040.00 3.106 3.1501,500,000.00 Federal Agricultural Mortgage942 1,500,000.0031315PTU3 03/09/2021 1,5284.16003/09/2011 1,610,655.00 4.103 4.1601,500,000.00 Federal Farm Credit Bank1092 1,500,000.003133EAUF3 06/14/2019 8941.50006/14/2012 1,497,870.00 1.479 1.5001,500,000.00 Federal Farm Credit Bank1205 575,000.0031331JQM8 06/04/2018 5193.40005/23/2013 592,457.00 1.045 1.060593,622.72 Federal Farm Credit Bank1206 950,000.0031331YW63 06/12/2018 5274.90005/23/2013 999,751.50 1.045 1.0601,001,271.93 Federal Farm Credit Bank722 2,000,000.0031331YCJ7 10/30/2017 3024.90010/30/2007 2,065,100.00 4.832 4.9002,000,000.00 Federal Farm Credit Bank725 2,000,000.0031331YHQ6 12/15/2017 3484.62512/12/2007 2,065,600.00 4.561 4.6242,000,000.00 Federal Farm Credit Bank850 2,000,000.0031331JFZ1 03/08/2017 663.37503/08/2010 2,012,500.00 3.328 3.3752,000,000.00 Federal Farm Credit Bank870 1,000,000.0031331JQB2 06/02/2017 1523.00006/02/2010 1,009,880.00 2.958 3.0001,000,000.00 Federal Farm Credit Bank903 1,000,000.0031331JN90 09/29/2020 1,3672.87509/29/2010 1,031,260.00 2.835 2.8751,000,000.00 Federal Farm Credit Bank918 2,000,000.0031331J5F6 12/16/2020 1,4453.62512/16/2010 2,122,320.00 3.575 3.6252,000,000.00 Federal Farm Credit Bank937 2,000,000.0031331KBX7 02/10/2017 402.87502/10/2011 2,005,300.00 2.835 2.8752,000,000.00 Federal Farm Credit Bank959 1,500,000.0031331KQD5 06/27/2017 1772.30006/27/2011 1,510,380.00 2.268 2.3001,500,000.00 Portfolio CPA AP Run Date: 01/23/2017 - 14:46 FI (PRF_FI) 7.1.1 Report Ver. 7.3.3a December 31, 2016 Par Value Days To Maturity Maturity Date Current RateMarket Value Fund ALL - Portfolio Listings Investments by Fund Page 9 CUSIP Investment #Issuer Purchase Date Book Value YTM 360 YTM 365 Federal Agency Issues - Coupon Federal Farm Credit Bank .1181 Call 1,500,000.003133EA4J4 10/11/2018 6481.15004/30/2013 1,491,270.00 1.137 1.1531,499,902.09 Federal Farm Credit Bank .1189 Call 1,500,000.003133ECMF8 04/24/2018 4780.98005/06/2013 1,497,855.00 0.986 1.0001,499,603.19 Federal Farm Credit Bank .1227 1,500,000.003133ECTM6 07/02/2018 5471.90007/02/2013 1,515,225.00 1.873 1.9001,500,000.00 Federal Farm Credit Bank .1241 500,000.003133ECRH9 06/06/2023 2,3472.45001/09/2014 499,795.00 3.383 3.430473,254.81 Federal Farm Credit Bank .1526 625,000.003133EAA65 07/26/2023 2,3972.12501/27/2016 614,487.50 2.024 2.052627,760.19 Federal Farm Credit Bank .1563 500,000.0031331XSS2 03/14/2022 1,8985.16003/17/2016 577,465.00 1.876 1.902579,726.67 Federal Farm Credit Bank .1565 Call 1,000,000.003133EFT98 03/28/2025 3,0082.62003/28/2016 978,870.00 2.596 2.632999,084.26 Federal Farm Credit Bank .1582 Call 1,500,000.003133EF3D7 04/21/2025 3,0322.54004/21/2016 1,472,070.00 2.505 2.5401,500,000.00 Federal Farm Credit Bank .1584 Call 1,500,000.003133EF3D7 04/21/2025 3,0322.54004/21/2016 1,472,070.00 2.505 2.5401,500,000.00 Federal Farm Credit Bank .1585 Call 1,500,000.003133EF4A2 04/19/2022 1,9341.92004/19/2016 1,481,250.00 1.893 1.9201,500,000.00 Federal Farm Credit Bank .1591 Call 1,500,000.003133EF2D8 04/13/2026 3,3892.64004/19/2016 1,468,125.00 2.603 2.6391,500,000.00 Federal Farm Credit Bank .1593 250,000.003133EC4L5 11/23/2021 1,7871.61004/21/2016 243,535.00 1.558 1.580250,348.11 Federal Farm Credit Bank .1596 1,000,000.003133ECPF5 05/13/2022 1,9581.87504/21/2016 985,330.00 1.578 1.6001,014,007.44 Federal Farm Credit Bank .1598 Call 1,000,000.003133EFX44 10/05/2022 2,1032.05004/22/2016 984,830.00 2.021 2.0491,000,000.00 Federal Farm Credit Bank .1603 Call 1,930,000.003133EFYV3 02/17/2026 3,3342.82004/26/2016 1,930,000.00 2.722 2.7601,939,160.04 Federal Farm Credit Bank .1606 Call 1,605,000.003133EFYF8 02/10/2025 2,9622.73004/28/2016 1,581,936.15 2.621 2.6571,613,297.27 Federal Farm Credit Bank .1609 Call 1,000,000.003133EF6T9 05/12/2025 3,0532.47005/12/2016 971,860.00 2.436 2.4701,000,000.00 Federal Farm Credit Bank .1612 Call 1,000,000.003133EFWF0 01/26/2023 2,2162.34005/10/2016 998,530.00 2.191 2.2211,006,624.64 Federal Farm Credit Bank .1615 1,000,000.003133EC7D0 12/13/2024 2,9032.12505/13/2016 957,040.00 1.930 1.9561,012,244.54 Federal Farm Credit Bank .1623 Call 1,500,000.003133EGEB7 06/09/2026 3,4462.57006/09/2016 1,436,280.00 2.534 2.5701,500,000.00 Federal Farm Credit Bank .1630 Call 1,000,000.003133EF2D8 04/13/2026 3,3892.64006/13/2016 978,750.00 2.522 2.5571,006,702.88 Federal Farm Credit Bank .1634 Call 1,000,000.003133EF2D8 04/13/2026 3,3892.64006/16/2016 978,750.00 2.489 2.5241,009,448.69 Federal Farm Credit Bank .1638 Call 2,000,000.003133EGGR0 06/22/2026 3,4592.50006/22/2016 1,925,820.00 2.582 2.6182,000,000.00 Federal Farm Credit Bank .1641 Call 1,500,000.003133EGHN8 06/30/2025 3,1022.42006/30/2016 1,468,380.00 2.386 2.4201,500,000.00 Federal Farm Credit Bank .1647 Call 1,500,000.003133EGJH9 01/06/2025 2,9272.24007/06/2016 1,446,765.00 2.209 2.2401,500,000.00 Federal Farm Credit Bank .1650 1,500,000.003133EGKM6 07/06/2020 1,2821.00007/06/2016 1,453,230.00 0.986 1.0001,500,000.00 Federal Farm Credit Bank .1659 500,000.0031331XSS2 03/14/2022 1,8985.16007/08/2016 577,465.00 1.215 1.232598,382.85 Federal Farm Credit Bank .1664 Call 1,500,000.003133EGFB6 06/16/2025 3,0882.36007/25/2016 1,446,555.00 2.309 2.3411,502,140.35 Federal Farm Credit Bank .1675 Call 1,500,000.003133EGQA6 11/08/2023 2,5021.85008/09/2016 1,422,930.00 1.859 1.8851,496,666.86 Federal Farm Credit Bank .1679 Call 1,350,000.003133EGQH1 08/10/2026 3,5082.14008/18/2016 1,278,220.50 2.110 2.1391,350,000.00 Federal Farm Credit Bank .1701 Call 1,625,000.003133EGXB6 10/05/2026 3,5642.14010/06/2016 1,520,090.00 2.154 2.1841,618,653.51 Federal Farm Credit Bank .1705 Call 1,000,000.003133EGYL3 10/17/2025 3,2112.09010/17/2016 943,570.00 2.061 2.0901,000,000.00 Portfolio CPA AP Run Date: 01/23/2017 - 14:46 FI (PRF_FI) 7.1.1 Report Ver. 7.3.3a December 31, 2016 Par Value Days To Maturity Maturity Date Current RateMarket Value Fund ALL - Portfolio Listings Investments by Fund Page 10 CUSIP Investment #Issuer Purchase Date Book Value YTM 360 YTM 365 Federal Agency Issues - Coupon Federal Home Loan Bank1012 2,000,000.00313376BR5 12/14/2018 7121.75012/16/2011 2,020,940.00 1.725 1.7492,000,000.00 Federal Home Loan Bank1017 2,000,000.00313376V36 01/25/2017 241.00001/25/2012 2,000,480.00 0.986 1.0002,000,000.00 Federal Home Loan Bank1027 2,000,000.003133787M7 02/27/2017 571.05002/21/2012 2,001,300.00 1.035 1.0492,000,000.00 Federal Home Loan Bank1038 1,500,000.003133782N0 03/10/2017 680.87503/08/2012 1,500,555.00 0.999 1.0131,499,613.45 Federal Home Loan Bank1039 1,500,000.003133782M2 03/08/2019 7961.50003/08/2012 1,504,530.00 1.574 1.5961,497,025.33 Federal Home Loan Bank1041 1,500,000.00313378LA7 02/25/2022 1,8812.33003/20/2012 1,516,395.00 2.298 2.3301,500,000.00 Federal Home Loan Bank1045 2,000,000.00313378QP9 03/28/2017 861.26003/28/2012 2,002,940.00 1.242 1.2602,000,000.00 Federal Home Loan Bank1049 1,500,000.00313378VG3 05/22/2019 8711.85004/09/2012 1,511,940.00 1.824 1.8501,500,000.00 Federal Home Loan Bank1057 1,500,000.00313378ZW4 04/17/2017 1061.05004/17/2012 1,501,545.00 1.035 1.0501,500,000.00 Federal Home Loan Bank1058 1,500,000.003133792L2 10/20/2017 2921.23004/20/2012 1,504,545.00 1.213 1.2301,500,000.00 Federal Home Loan Bank1068 1,500,000.00313379BL2 12/29/2017 3621.25004/30/2012 1,501,815.00 1.232 1.2501,500,000.00 Federal Home Loan Bank1070 1,500,000.00313379BG3 04/27/2017 1161.07004/27/2012 1,501,785.00 1.055 1.0701,500,000.00 Federal Home Loan Bank1073 2,000,000.00313379EC9 11/18/2020 1,4172.00005/18/2012 1,998,980.00 1.972 2.0002,000,000.00 Federal Home Loan Bank1089 2,000,000.00313379PD5 09/20/2017 2621.09006/07/2012 2,003,740.00 1.075 1.0902,000,000.00 Federal Home Loan Bank1125 1,500,000.00313381C94 12/13/2019 1,0761.25011/30/2012 1,486,290.00 1.196 1.2121,501,574.32 Federal Home Loan Bank1126 Call 750,000.00313381DA0 12/05/2022 2,1642.19012/05/2012 741,277.50 2.165 2.195749,777.71 Federal Home Loan Bank1127 1,500,000.00313381GB5 11/30/2018 6981.00011/30/2012 1,492,110.00 0.986 1.0001,500,000.00 Federal Home Loan Bank1131 1,500,000.00313381C94 12/13/2019 1,0761.25012/13/2012 1,486,290.00 1.232 1.2491,500,000.00 Federal Home Loan Bank1135 1,500,000.00313376BR5 12/14/2018 7121.75012/19/2012 1,515,705.00 1.075 1.0901,518,665.38 Federal Home Loan Bank1140 1,500,000.00313376BR5 12/14/2018 7121.75001/08/2013 1,515,705.00 1.117 1.1321,517,436.77 Federal Home Loan Bank1146 Call 212,500.00313381DA0 12/05/2022 2,1642.19001/25/2013 210,028.63 2.201 2.232212,020.98 Federal Home Loan Bank1154 1,500,000.003133XRFZ8 06/08/2018 5234.75002/21/2013 1,576,875.00 1.020 1.0351,577,668.74 Federal Home Loan Bank1156 1,315,000.003133XHRJ3 12/10/2021 1,8045.00002/25/2013 1,498,403.05 1.825 1.8501,503,059.94 Federal Home Loan Bank1157 2,000,000.003133XSR59 12/14/2018 7123.75002/25/2013 2,095,480.00 1.128 1.1442,098,168.95 Federal Home Loan Bank1168 530,000.003133XSR59 12/14/2018 7123.75003/11/2013 555,302.20 1.165 1.182555,617.58 Federal Home Loan Bank1182 Call 1,500,000.00313381C29 06/04/2018 5191.05004/30/2013 1,488,165.00 1.039 1.0541,499,916.09 Federal Home Loan Bank1204 Call 557,958.01313383EP2 06/20/2018 5351.25006/20/2013 558,043.38 1.232 1.250557,958.01 Federal Home Loan Bank1212 1,500,000.00313379DT3 06/08/2018 5231.25006/05/2013 1,503,420.00 1.222 1.2391,500,227.96 Federal Home Loan Bank1213 2,000,000.00313379DT3 06/08/2018 5231.25006/06/2013 2,004,560.00 1.191 1.2082,001,165.72 Federal Home Loan Bank1216 Call 1,500,000.00313382Y98 05/16/2018 5001.00006/12/2013 1,493,220.00 1.412 1.4321,491,419.81 Federal Home Loan Bank1217 Call 1,000,000.00313382FP3 03/20/2018 4431.00006/12/2013 997,410.00 1.372 1.391995,400.47 Federal Home Loan Bank1228 1,500,000.00313373UU4 06/08/2018 5232.75007/01/2013 1,533,495.00 1.605 1.6271,523,144.55 Portfolio CPA AP Run Date: 01/23/2017 - 14:46 FI (PRF_FI) 7.1.1 Report Ver. 7.3.3a December 31, 2016 Par Value Days To Maturity Maturity Date Current RateMarket Value Fund ALL - Portfolio Listings Investments by Fund Page 11 CUSIP Investment #Issuer Purchase Date Book Value YTM 360 YTM 365 Federal Agency Issues - Coupon Federal Home Loan Bank1240 1,500,000.00313371U79 12/11/2020 1,4403.12501/09/2014 1,575,645.00 2.615 2.6511,525,402.73 Federal Home Loan Bank1248 1,500,000.003130A0J27 01/07/2020 1,1012.22001/23/2014 1,529,295.00 2.194 2.2251,499,779.66 Federal Home Loan Bank1253 1,500,000.003130A12B3 03/13/2020 1,1672.12502/24/2014 1,520,520.00 2.095 2.1241,500,000.00 Federal Home Loan Bank1261 1,500,000.00313382K69 03/12/2021 1,5311.75003/13/2014 1,484,445.00 2.418 2.4511,459,627.69 Federal Home Loan Bank1267 1,500,000.00313370US5 09/11/2020 1,3492.87504/02/2014 1,565,970.00 2.271 2.3031,529,292.69 Federal Home Loan Bank1270 200,000.00313379EC9 11/18/2020 1,4172.00004/08/2014 199,898.00 2.263 2.295197,885.72 Federal Home Loan Bank1272 550,000.00313379EC9 11/18/2020 1,4172.00004/09/2014 549,719.50 2.263 2.295544,183.28 Federal Home Loan Bank1278 325,000.003133XTYY6 06/14/2019 8944.37504/22/2014 348,136.75 1.889 1.916343,578.70 Federal Home Loan Bank1314 1,500,000.00313379EE5 06/14/2019 8941.62506/04/2014 1,507,275.00 1.700 1.7241,496,509.47 Federal Home Loan Bank1318 1,500,000.00313379EE5 06/14/2019 8941.62506/16/2014 1,507,275.00 1.774 1.7991,493,903.30 Federal Home Loan Bank1324 Call 1,250,000.003133836A4 05/22/2019 8710.80006/24/2014 1,229,037.50 1.766 1.7911,221,693.65 Federal Home Loan Bank1332 1,500,000.003130A2FH4 06/14/2019 8941.75007/02/2014 1,512,690.00 1.686 1.7101,501,397.34 Federal Home Loan Bank1577 1,500,000.003130A7Q73 12/08/2021 1,8021.53004/08/2016 1,464,285.00 1.450 1.4701,504,228.21 Federal Home Loan Bank1583 Call 1,690,000.003130A7RS6 04/27/2026 3,4032.65004/27/2016 1,635,007.40 2.619 2.6551,689,212.27 Federal Home Loan Bank1587 Call 1,500,000.003130A7TA3 04/28/2023 2,3082.07004/28/2016 1,447,635.00 2.041 2.0701,500,000.00 Federal Home Loan Bank1605 1,000,000.00313382K69 03/12/2021 1,5311.75004/27/2016 989,630.00 1.490 1.5111,009,608.41 Federal Home Loan Bank1619 500,000.003133827D9 02/08/2021 1,4991.75006/02/2016 494,560.00 1.476 1.496505,000.86 Federal Home Loan Bank1620 400,000.003133XDVS7 12/11/2020 1,4405.25006/02/2016 450,980.00 1.461 1.481457,304.89 Federal Home Loan Bank1628 Call 1,500,000.003130A8F99 06/15/2026 3,4522.58006/15/2016 1,435,035.00 2.544 2.5801,500,000.00 Federal Home Loan Bank1632 Call 2,000,000.003130A8J46 06/29/2026 3,4662.52006/29/2016 1,926,800.00 2.485 2.5202,000,000.00 Federal Home Loan Bank1633 Call 1,363,636.273130A8J79 12/27/2024 2,9172.35006/27/2016 1,308,845.36 2.317 2.3501,363,636.27 Federal Home Loan Bank1635 Call 1,500,000.003130A8JG9 06/22/2023 2,3632.07006/22/2016 1,461,285.00 2.041 2.0701,500,000.00 Federal Home Loan Bank1637 Call 909,091.003130A8J79 12/27/2024 2,9172.35006/27/2016 872,563.72 2.317 2.350909,091.00 Federal Home Loan Bank1640 Call 1,500,000.003130A8JX2 06/29/2026 3,4662.54006/29/2016 1,500,030.00 2.505 2.5401,500,000.00 Federal Home Loan Bank1643 Call 1,500,000.003130A8HF3 09/23/2025 3,1872.44006/23/2016 1,445,835.00 2.430 2.4641,497,169.37 Federal Home Loan Bank1644 Call 1,500,000.003130A8HT3 12/29/2025 3,2842.47006/29/2016 1,500,150.00 2.451 2.4851,498,196.38 Federal Home Loan Bank1648 Call 1,500,000.003130A8J46 06/29/2026 3,4662.52006/29/2016 1,445,100.00 2.425 2.4591,500,427.25 Federal Home Loan Bank1649 250,000.003130A0EN6 12/10/2021 1,8042.87506/28/2016 259,502.50 1.232 1.249269,350.71 Federal Home Loan Bank1651 Call 1,500,000.003130A8MQ3 10/12/2022 2,1101.87507/12/2016 1,470,945.00 1.849 1.8751,500,000.00 Federal Home Loan Bank1652 Call 980,000.003130A8F99 06/15/2026 3,4522.58006/29/2016 937,556.20 2.524 2.560981,620.52 Federal Home Loan Bank1661 Call 1,000,000.003130A8SJ3 11/01/2024 2,8612.15008/01/2016 937,450.00 2.120 2.1501,000,000.00 Federal Home Loan Bank1662 Call 1,500,000.003130A8R54 07/28/2023 2,3991.80007/28/2016 1,436,490.00 1.795 1.8201,498,155.71 Portfolio CPA AP Run Date: 01/23/2017 - 14:46 FI (PRF_FI) 7.1.1 Report Ver. 7.3.3a December 31, 2016 Par Value Days To Maturity Maturity Date Current RateMarket Value Fund ALL - Portfolio Listings Investments by Fund Page 12 CUSIP Investment #Issuer Purchase Date Book Value YTM 360 YTM 365 Federal Agency Issues - Coupon Federal Home Loan Bank1667 Call 1,500,000.003130A8VP5 08/23/2024 2,7912.00008/23/2016 1,436,700.00 1.972 2.0001,500,000.00 Federal Home Loan Bank1668 Call 1,500,000.003130A8VN0 11/17/2023 2,5111.94008/17/2016 1,425,990.00 1.913 1.9401,500,000.00 Federal Home Loan Bank1690 Call 1,000,000.003130A94L2 09/02/2026 3,5312.12509/15/2016 929,080.00 2.129 2.158997,088.65 Federal Home Loan Bank1695 Call 1,500,000.003130A9N64 10/06/2026 3,5652.15010/06/2016 1,436,460.00 2.120 2.1501,500,000.00 Federal Home Loan Bank1697 Call 1,000,000.003130A9N64 10/06/2026 3,5652.15010/06/2016 957,640.00 2.131 2.161999,023.61 Federal Home Loan Bank1699 500,000.003133827E7 02/06/2023 2,2272.13010/05/2016 491,925.00 1.578 1.600515,300.53 Federal Home Loan Bank1700 Call 1,500,000.003130A9P62 10/13/2026 3,5722.20010/13/2016 1,419,525.00 2.169 2.2001,500,000.00 Federal Home Loan Bank1702 Call 2,000,000.003130A9PT2 10/26/2026 3,5852.23010/26/2016 1,871,660.00 2.199 2.2302,000,000.00 Federal Home Loan Bank1706 Call 310,000.003130A9PT2 10/26/2026 3,5852.23010/26/2016 290,107.30 2.214 2.245309,592.10 Federal Home Loan Bank1707 Call 1,000,000.003130A9RH6 10/20/2026 3,5792.30010/20/2016 939,520.00 2.270 2.302999,803.94 Federal Home Loan Bank1709 Call 1,000,000.003130A9RH6 10/20/2026 3,5792.30010/20/2016 939,520.00 2.271 2.302999,754.93 Federal Home Loan Bank1713 Call 2,000,000.003130A9XC0 11/17/2026 3,6072.36011/17/2016 1,923,340.00 2.327 2.3602,000,000.00 Federal Home Loan Bank1716 Call 1,500,000.003130A9XC0 11/17/2026 3,6072.36011/17/2016 1,442,505.00 2.361 2.3931,495,555.00 Federal Home Loan Bank1717 Call 1,500,000.003130AA2Z0 11/23/2026 3,6132.69011/23/2016 1,460,715.00 2.653 2.6901,500,000.00 Federal Home Loan Bank1718 Call 205,000.003130AA2Z0 11/23/2026 3,6132.69011/23/2016 199,631.05 2.682 2.720204,468.57 Federal Home Loan Bank1719 Call 1,500,000.003130A7C29 02/24/2026 3,3412.75011/16/2016 1,485,885.00 2.712 2.7491,500,000.00 Federal Home Loan Bank1720 Call 1,500,000.003130AAAZ1 12/14/2026 3,6342.90012/14/2016 1,484,430.00 2.860 2.9001,500,000.00 Federal Home Loan Bank1722 Call 1,500,000.003130AACF3 12/30/2021 1,8242.15012/30/2016 1,490,415.00 2.120 2.1501,500,000.00 Federal Home Loan Bank1723 Call 1,500,000.003130AAD21 12/30/2021 1,8242.25012/30/2016 1,492,935.00 2.219 2.2501,500,000.00 Federal Home Loan Bank1724 Call 800,000.003130AAEX2 12/28/2021 1,8222.15012/28/2016 796,680.00 2.120 2.150800,000.00 Federal Home Loan Bank1725 Call 550,000.003130AAEF1 12/23/2021 1,8172.15012/23/2016 548,971.50 2.120 2.150550,000.00 Federal Home Loan Bank1726 Call 1,500,000.003130AAGF9 12/30/2021 1,8242.25012/30/2016 1,500,030.00 2.219 2.2501,500,000.00 Federal Home Loan Bank1727 1,000,000.003130AABG2 11/29/2021 1,7931.87512/16/2016 993,560.00 2.168 2.198984,951.67 Federal Home Loan Bank822 3,000,000.003133XUMS9 09/13/2019 9854.50008/12/2009 3,237,330.00 4.437 4.4993,000,000.00 Federal Home Loan Bank940 2,000,000.003133X0PF0 08/15/2018 5915.37502/17/2011 2,132,300.00 3.423 3.4702,053,984.28 Federal Home Loan Bank982 2,000,000.00313375KP1 03/15/2017 731.50009/15/2011 2,003,900.00 1.479 1.5002,000,000.00 Federal Home Loan Bank992 2,000,000.00313371ZX7 12/08/2017 3412.62509/13/2011 2,032,080.00 1.526 1.5472,019,148.20 Fed. Home Loan Mortgage Corp.1036 1,500,000.003137EABA6 11/17/2017 3205.12503/01/2012 1,554,360.00 1.227 1.2441,549,161.36 Fed. Home Loan Mortgage Corp.1106 1,500,000.003134G3A91 08/22/2019 9631.40008/22/2012 1,497,990.00 1.380 1.4001,500,000.00 Fed. Home Loan Mortgage Corp.1113 1,500,000.003134G3L73 12/26/2019 1,0891.50009/26/2012 1,494,375.00 1.479 1.5001,500,000.00 Fed. Home Loan Mortgage Corp.1153 1,500,000.003137EADP1 03/07/2018 4300.87502/11/2013 1,498,050.00 0.960 0.9731,498,300.67 Fed. Home Loan Mortgage Corp.1166 1,500,000.003137EADN6 01/12/2018 3760.75003/15/2013 1,496,940.00 0.948 0.9621,496,804.53 Portfolio CPA AP Run Date: 01/23/2017 - 14:46 FI (PRF_FI) 7.1.1 Report Ver. 7.3.3a December 31, 2016 Par Value Days To Maturity Maturity Date Current RateMarket Value Fund ALL - Portfolio Listings Investments by Fund Page 13 CUSIP Investment #Issuer Purchase Date Book Value YTM 360 YTM 365 Federal Agency Issues - Coupon Fed. Home Loan Mortgage Corp.1273 2,000,000.003134G45T1 12/10/2021 1,8042.00004/10/2014 1,991,840.00 2.564 2.6001,946,526.87 Fed. Home Loan Mortgage Corp.1277 1,000,000.003134G45T1 12/10/2021 1,8042.00004/22/2014 995,920.00 2.643 2.680969,780.31 Fed. Home Loan Mortgage Corp.1282 300,000.003134G3A91 08/22/2019 9631.40005/01/2014 299,598.00 1.914 1.941295,939.22 Fed. Home Loan Mortgage Corp.1286 300,000.003134G35V8 03/13/2020 1,1671.65005/02/2014 300,945.00 2.053 2.082296,110.16 Fed. Home Loan Mortgage Corp.1287 300,000.003134G3U40 11/21/2019 1,0541.45005/02/2014 298,617.00 1.938 1.965295,785.89 Fed. Home Loan Mortgage Corp.1291 1,000,000.003134G3K58 03/19/2020 1,1731.50005/06/2014 997,440.00 2.041 2.070982,813.59 Fed. Home Loan Mortgage Corp.1292 1,000,000.003134G44G0 05/22/2020 1,2371.50005/06/2014 987,110.00 2.091 2.120980,355.14 Fed. Home Loan Mortgage Corp.1301 1,000,000.003134G3L73 12/26/2019 1,0891.50005/13/2014 996,250.00 1.945 1.972986,715.27 Fed. Home Loan Mortgage Corp.1352 1,000,000.003134G43G1 05/07/2019 8561.20007/25/2014 995,880.00 1.765 1.790986,765.39 Fed. Home Loan Mortgage Corp.1678 Call 1,000,000.003134GAEF7 09/29/2021 1,7321.65009/29/2016 964,520.00 1.627 1.6501,000,000.00 Fed. Home Loan Mortgage Corp.1728 Call 1,000,000.003134GAC77 12/30/2021 1,8242.45012/30/2016 1,000,230.00 2.416 2.4501,000,000.00 Fed. Home Loan Mortgage Corp.1729 Call 1,500,000.003134GAC51 12/20/2021 1,8142.42012/20/2016 1,500,315.00 2.386 2.4201,500,000.00 Fed. Home Loan Mortgage Corp.993 2,000,000.003137EAAY5 08/23/2017 2345.50009/13/2011 2,059,740.00 1.415 1.4352,050,046.95 Federal National Mortgage Asso1022 2,000,000.0031398ADM1 06/12/2017 1625.37501/25/2012 2,041,000.00 1.317 1.3362,034,743.42 Federal National Mortgage Asso1023 2,590,000.003136FPXN2 11/24/2017 3272.30001/25/2012 2,621,701.60 1.406 1.4262,609,417.67 Federal National Mortgage Asso1033 3,000,000.003135G0JA2 04/27/2017 1161.12503/01/2012 3,004,530.00 1.134 1.1502,999,765.62 Federal National Mortgage Asso1035 2,000,000.0031398ALG5 01/23/2018 3874.37703/01/2012 2,065,820.00 1.388 1.4082,060,252.31 Federal National Mortgage Asso1048 2,000,000.003136G0AW1 10/16/2020 1,3842.35004/16/2012 2,026,960.00 2.317 2.3502,000,000.00 Federal National Mortgage Asso1059 2,000,000.003136G0DU2 04/30/2020 1,2152.00004/30/2012 2,023,880.00 1.972 2.0002,000,000.00 Federal National Mortgage Asso1061 1,500,000.003136G0EC1 04/30/2020 1,2152.05004/30/2012 1,518,210.00 2.021 2.0501,500,000.00 Federal National Mortgage Asso1066 2,000,000.003136G0FJ5 10/30/2020 1,3982.00004/30/2012 2,014,060.00 1.972 2.0002,000,000.00 Federal National Mortgage Asso1082 450,000.003136FPYB7 05/23/2017 1422.05005/11/2012 452,290.50 1.070 1.085451,662.39 Federal National Mortgage Asso1118 500,000.003136FPXN2 11/24/2017 3272.30010/18/2012 506,120.00 0.927 0.940505,943.17 Federal National Mortgage Asso1149 1,500,000.003135G0TG8 02/08/2018 4030.87501/31/2013 1,498,980.00 1.019 1.0341,497,442.68 Federal National Mortgage Asso1174 1,500,000.003135G0WJ8 05/21/2018 5050.87504/15/2013 1,495,800.00 0.905 0.9171,499,125.82 Federal National Mortgage Asso1190 Call 1,000,000.003135G0XD0 05/21/2018 5051.00005/21/2013 995,950.00 0.996 1.010999,861.11 Federal National Mortgage Asso1191 Call 2,000,000.003135G0XA6 05/21/2018 5051.03005/21/2013 1,986,140.00 1.015 1.0302,000,000.00 Federal National Mortgage Asso1197 1,500,000.003135G0WJ8 05/21/2018 5050.87505/21/2013 1,495,800.00 0.986 1.0001,497,465.83 Federal National Mortgage Asso1210 Call 1,500,000.003135G0XK4 05/25/2018 5091.05005/30/2013 1,496,880.00 1.035 1.0501,500,000.00 Federal National Mortgage Asso1214 Call 1,500,000.003135G0XD0 05/21/2018 5051.00006/07/2013 1,493,925.00 1.262 1.2791,494,366.59 Federal National Mortgage Asso1268 1,500,000.003136FTR43 08/28/2020 1,3352.00004/08/2014 1,504,200.00 2.172 2.2021,489,684.45 Federal National Mortgage Asso1276 1,000,000.003136G0U58 04/30/2021 1,5801.75004/16/2014 991,190.00 2.364 2.397974,344.79 Portfolio CPA AP Run Date: 01/23/2017 - 14:46 FI (PRF_FI) 7.1.1 Report Ver. 7.3.3a December 31, 2016 Par Value Days To Maturity Maturity Date Current RateMarket Value Fund ALL - Portfolio Listings Investments by Fund Page 14 CUSIP Investment #Issuer Purchase Date Book Value YTM 360 YTM 365 Federal Agency Issues - Coupon Federal National Mortgage Asso1288 250,000.003136G0M57 04/09/2021 1,5591.75005/02/2014 246,450.00 2.452 2.486242,811.99 Federal National Mortgage Asso1290 1,000,000.003136G0Y70 01/30/2019 7591.08005/05/2014 996,450.00 1.633 1.656988,516.80 Federal National Mortgage Asso1315 1,200,000.003136G0YK1 08/28/2019 9691.50006/05/2014 1,198,176.00 1.815 1.8401,189,693.06 Federal National Mortgage Asso1317 1,000,000.003136G02P5 04/29/2019 8481.20006/12/2014 991,510.00 1.765 1.790986,902.60 Federal National Mortgage Asso1546 Call 1,000,000.003136G3AN5 03/16/2021 1,5351.50003/16/2016 993,590.00 1.978 2.0061,000,000.00 Federal National Mortgage Asso1654 1,000,000.003136G0EG2 04/23/2021 1,5732.28006/30/2016 1,007,800.00 1.171 1.1871,045,644.74 Federal National Mortgage Asso1669 Call 1,350,000.003136G3XZ3 07/28/2021 1,6691.50007/28/2016 1,310,134.50 1.505 1.5261,348,455.94 Federal National Mortgage Asso1687 Call 1,050,000.003136G36A8 09/27/2024 2,8262.00009/27/2016 1,003,138.50 1.972 2.0001,050,000.00 Federal National Mortgage Asso1715 500,000.0031364CCC0 04/30/2026 3,4067.12511/10/2016 676,185.00 2.367 2.400696,122.35 Federal National Mortgage Asso991 2,000,000.0031359M4D2 02/13/2017 435.00009/13/2011 2,009,700.00 1.272 1.2902,008,334.52 State of Tennessee1676 MUN 700,000.00880541XX0 08/01/2025 3,1342.06608/25/2016 661,367.00 1.893 1.920708,017.09 Tennessee Valley Authority1132 500,000.00880591EL2 02/15/2021 1,5063.87512/14/2012 538,010.00 1.596 1.618543,399.81 Tennessee Valley Authority1133 1,010,000.00880591EN8 08/15/2022 2,0521.87512/14/2012 995,375.20 1.893 1.9201,007,671.52 Tennessee Valley Authority1145 1,500,000.00880591EL2 02/15/2021 1,5063.87501/23/2013 1,614,030.00 1.647 1.6691,627,063.03 Tennessee Valley Authority1170 1,500,000.00880591EC2 04/01/2018 4554.50003/25/2013 1,562,790.00 0.913 0.9261,565,331.48 Tennessee Valley Authority1260 1,160,000.00880591EL2 02/15/2021 1,5063.87503/12/2014 1,248,183.20 2.427 2.4611,221,800.59 Tennessee Valley Authority1508 1,000,000.00880591CJ9 11/01/2025 3,2266.75011/20/2015 1,309,150.00 2.807 2.8461,298,436.92 Tennessee Valley Authority1519 750,000.00880591ER9 09/15/2024 2,8142.87501/15/2016 767,257.50 2.564 2.600764,130.06 Tennessee Valley Authority1589 775,000.00880591CJ9 11/01/2025 3,2266.75004/18/2016 1,014,591.25 2.337 2.3701,041,959.98 Tennessee Valley Authority1703 1,490,000.00880591EN8 08/15/2022 2,0521.87510/07/2016 1,468,424.80 1.538 1.5601,515,107.49 Tennessee Valley Authority1714 1,250,000.00880591CJ9 11/01/2025 3,2266.75011/10/2016 1,636,437.50 2.317 2.3501,685,712.16 Tennessee Valley Authority861 2,000,000.00880591EA6 07/18/2017 1985.50004/26/2010 2,051,700.00 3.602 3.6522,017,616.43 Tennessee Valley Authority954 2,000,000.00880591CU4 12/15/2017 3486.25005/23/2011 2,098,860.00 2.624 2.6612,062,549.16 Subtotal and Average 358,810,539.31 355,386,185.28 356,943,108.15 1.960 1.988 1,490 Treasury Securities - Coupon U.S. Treasury1201 TB 2,000,000.00912828UJ7 01/31/2018 3950.87505/16/2013 1,998,520.00 0.779 0.7902,001,793.11 U.S. Treasury1237 TB 2,000,000.00912828SD3 01/31/2019 7601.25001/07/2014 2,001,180.00 1.682 1.7051,981,898.65 U.S. Treasury1284 TB 1,500,000.00912828TH3 07/31/2019 9410.87505/02/2014 1,482,600.00 1.726 1.7501,467,805.21 U.S. Treasury1285 TB 1,500,000.00912828TN0 08/31/2019 9721.00005/02/2014 1,485,885.00 1.755 1.7801,470,426.63 U.S. Treasury1289 TB 1,500,000.00912828SX9 05/31/2019 8801.12505/05/2014 1,493,910.00 1.692 1.7161,479,620.01 U.S. Treasury1299 TB 1,500,000.00912828SX9 05/31/2019 8801.12505/13/2014 1,493,910.00 1.654 1.6771,480,929.70 Portfolio CPA AP Run Date: 01/23/2017 - 14:46 FI (PRF_FI) 7.1.1 Report Ver. 7.3.3a December 31, 2016 Par Value Days To Maturity Maturity Date Current RateMarket Value Fund ALL - Portfolio Listings Investments by Fund Page 15 CUSIP Investment #Issuer Purchase Date Book Value YTM 360 YTM 365 Treasury Securities - Coupon U.S. Treasury1316 TB 1,500,000.00912828TC4 06/30/2019 9101.00006/10/2014 1,488,285.00 1.687 1.7111,474,639.64 Subtotal and Average 11,357,112.95 11,500,000.00 11,444,290.00 1.537 1.558 797 Municipal Bonds Acalanes Union High School Dis1494 MUN 1,000,000.00004284B38 08/01/2021 1,6732.38110/30/2015 1,004,140.00 2.120 2.1501,009,895.22 Burlingame School District1548 MUN 730,000.00121457EQ4 08/01/2025 3,1346.23802/24/2016 832,878.90 3.557 3.606868,650.12 Carlsbad Unified School Dist .1547 MUN 300,000.00142665DH8 08/01/2021 1,6734.58402/24/2016 327,066.00 2.130 2.159331,272.04 Carlsbad Unified School Dist .1556 MUN 1,250,000.00142665DH8 08/01/2021 1,6734.58403/04/2016 1,362,775.00 2.138 2.1681,379,687.13 Cerritos Community College Dis1523 MUN 500,000.00156792GV9 08/01/2021 1,6732.78101/27/2016 509,110.00 2.012 2.040515,980.22 Fremon Union High School Distr1646 MUN 525,000.00357172VA0 02/01/2026 3,3186.08006/28/2016 624,823.50 2.994 3.035651,779.97 State of Georgia1613 MUN 500,000.00373384RU2 10/01/2022 2,0993.57005/17/2016 530,305.00 1.878 1.904545,009.42 State of Georgia1645 MUN 365,000.00373384W69 02/01/2023 2,2223.25006/27/2016 380,640.25 1.898 1.925392,499.12 State of Georgia1666 MUN 1,825,000.003733844V5 02/01/2025 2,9532.37507/29/2016 1,748,459.50 1.972 1.9991,875,627.30 State of Georgia1691 MUN 385,000.00373384RU2 10/01/2022 2,0993.57009/26/2016 408,334.85 1.630 1.653425,303.95 State of Hawaii1685 MUN 1,045,000.00419792DA1 10/01/2026 3,5603.15010/19/2016 1,052,931.55 2.431 2.4651,106,511.38 State of Maryland1689 MUN 485,000.005741925C0 03/01/2022 1,8854.30009/16/2016 534,421.50 1.534 1.555550,828.05 Mtn. View-Whisman School Dist.1348 MUN 500,000.0062451FFK1 08/01/2021 1,6732.97307/24/2014 511,135.00 2.893 2.933504,616.34 Mt. San Antonio Community Coll1489 MUN 1,335,000.00623040GX4 08/01/2023 2,4034.10310/26/2015 1,434,203.85 2.490 2.5251,460,188.28 State of Ohio1550 MUN 1,500,000.00677522HZ0 05/01/2021 1,5811.57003/09/2016 1,476,345.00 1.548 1.5691,500,000.00 State of Ohio1688 MUN 800,000.00677522JB1 05/01/2023 2,3112.11009/13/2016 774,016.00 1.764 1.788815,276.38 State of Oregon1682 MUN 570,000.0068609BGH4 05/01/2022 1,9462.50008/29/2016 576,526.50 1.528 1.550597,536.86 Palo Alto Unified School Dist.1192 MUN 2,000,000.00697379UE3 08/01/2021 1,6732.44105/10/2013 2,018,680.00 2.031 2.0602,031,952.38 Palo Alto Unified School Dist.1193 MUN 1,800,000.00697379UE3 08/01/2021 1,6732.44105/13/2013 1,816,812.00 2.031 2.0601,828,756.19 Palo Alto Unified School Dist.1195 MUN 1,990,000.00697379UE3 08/01/2021 1,6732.44105/15/2013 2,008,586.60 2.051 2.0802,020,102.45 Palo Alto Unified School Dist.1437 MUN 200,000.00697379UE3 08/01/2021 1,6732.44101/27/2015 201,868.00 2.041 2.070203,164.85 Palo Alto Unified School Dist.1610 MUN 1,000,000.00697379UE3 08/01/2021 1,6732.44105/12/2016 1,009,340.00 1.528 1.5501,039,067.86 Palo Alto Unified School Dist.1684 MUN 600,000.00697379UD5 08/01/2020 1,3082.29109/02/2016 606,702.00 1.290 1.308620,533.80 City & County of San Francisco1441 MUN 360,000.00797646NL6 06/15/2022 1,9914.95002/09/2015 399,956.40 2.416 2.450404,674.99 City & County of San Francisco1509 MUN 1,000,000.00797646NC6 06/15/2025 3,0875.45011/27/2015 1,181,120.00 3.067 3.1101,170,031.93 City & County of San Francisco1711 MUN 2,105,000.00797646T48 06/15/2025 3,0872.29011/01/2016 1,973,142.80 2.219 2.2492,111,399.36 City & County of San Francisco1712 MUN 245,000.00797646T55 06/15/2026 3,4522.39011/01/2016 228,320.40 2.376 2.410244,583.49 San Jose Unified School Dist.1435 MUN 580,000.00798186C83 08/01/2023 2,4032.50001/29/2015 565,181.00 2.663 2.700573,216.78 Portfolio CPA AP Run Date: 01/23/2017 - 14:46 FI (PRF_FI) 7.1.1 Report Ver. 7.3.3a December 31, 2016 Par Value Days To Maturity Maturity Date Current RateMarket Value Fund ALL - Portfolio Listings Investments by Fund Page 16 CUSIP Investment #Issuer Purchase Date Book Value YTM 360 YTM 365 Municipal Bonds San Mateo Union High School Dt1516 MUN 245,000.00799017KT4 09/01/2019 9732.19301/08/2016 247,900.80 1.775 1.800247,472.02 San Mateo Union High School Dt1518 MUN 180,000.00799017KV9 09/01/2021 1,7042.72001/19/2016 182,660.40 2.046 2.075185,086.36 State of Tennessee1673 MUN 1,000,000.00880541XY8 08/01/2026 3,4992.11608/25/2016 928,150.00 1.923 1.9501,014,384.65 State of Tennessee1674 MUN 1,650,000.00880541XX0 08/01/2025 3,1342.06608/25/2016 1,558,936.50 1.893 1.9201,668,897.43 State of Texas1482 MUN 920,000.00882723PP8 10/01/2021 1,7342.58910/14/2015 935,640.00 1.864 1.890948,752.85 State of Texas1586 MUN 1,000,000.00882722KA8 10/01/2023 2,4645.64304/19/2016 1,090,710.00 3.339 3.3851,133,650.00 State of Texas1592 MUN 235,000.00882722JZ5 10/01/2022 2,0995.50304/21/2016 256,145.30 3.047 3.090264,354.74 State of Texas1621 MUN 500,000.00882723A41 10/01/2020 1,3691.77706/07/2016 494,830.00 1.450 1.470505,551.16 State of Texas1625 MUN 485,000.00882722KC4 10/01/2025 3,1955.91306/09/2016 531,366.00 3.831 3.885556,606.44 State of Texas1708 MUN 110,000.00882722VJ7 04/01/2022 1,9163.67310/19/2016 116,549.40 1.825 1.850119,969.03 University of California1340 MUN 1,875,000.0091412GSB2 07/01/2019 9111.79607/14/2014 1,880,325.00 2.007 2.0351,864,385.84 University of California1356 MUN 425,000.0091412GGU3 05/15/2020 1,2303.34807/31/2014 440,856.75 2.281 2.313438,802.41 University of California1368 MUN 250,000.0091412GGT6 05/15/2019 8643.04808/08/2014 256,417.50 1.982 2.010255,839.23 University of California1383 MUN 955,000.0091412GSB2 07/01/2019 9111.79608/27/2014 957,712.20 1.972 2.000950,367.37 University of California1414 MUN 750,000.0091412GSB2 07/01/2019 9111.79611/28/2014 752,130.00 1.923 1.950747,247.73 University of California1420 MUN 1,500,000.0091412GSB2 07/01/2019 9111.79612/12/2014 1,504,260.00 1.943 1.9701,493,781.27 University of California1481 MUN 260,000.0091412GQB4 05/15/2020 1,2301.99510/08/2015 260,509.60 1.824 1.850261,211.51 State of Utah1622 MUN 750,000.00917542QT2 07/01/2020 1,2773.28906/07/2016 779,977.50 1.430 1.450796,707.79 State of Vermont1456 MUN 2,000,000.00924258TT3 08/15/2023 2,4174.25008/06/2015 2,063,100.00 3.275 3.3202,107,242.87 State of Washington1672 MUN 250,000.0093974DHW1 08/01/2022 2,0382.74008/08/2016 251,100.00 1.504 1.524266,141.17 State of Washington1721 MUN 515,000.0093974CPH7 08/01/2022 2,0384.63612/05/2016 566,716.30 2.465 2.500571,928.17 West Valley-Mission Community1479 MUN 250,000.0095640HBT4 08/01/2024 2,7696.09010/01/2015 274,660.00 4.030 4.086281,594.60 Subtotal and Average 43,458,120.50 41,600,000.00 42,428,474.85 2.205 2.235 2,087 Total Investments and Average 504,251,011.83 498,801,602.24 501,496,601.90 1.856 1.882 1,392 Portfolio CPA AP Run Date: 01/23/2017 - 14:46 FI (PRF_FI) 7.1.1 Report Ver. 7.3.3a 1 General Investment Guidelines: a) The max. stated final maturity of individual securities in the portfolio should be 10 years.Full Compliance b) A max. of 30 percent of the par value of the portfolio shall be invested in securities with maturities beyond 5 years.22.4% c) The City shall maintain a minimum of one month's cash needs in short term investments.Full Compliance d) At least $50 million shall be maintained in securities maturing in less than 2 years. Plus two managed pool accounts which provide instant liquidity: - Local Agency Investment Fund (LAIF) - maximum investment limit is $50 million $33.8 million - Fidelity Investments e) Should market value of the portfolio fall below 95 percent of the book value, report this fact within a reasonable time to the City Council and evaluate if there are risk of holding securities to maturity.99.4% d) Commitments to purchase securities newly introduced on the market shall be made no more than three (3) working days before pricing.Full Compliance f) Whenever possible, the City will obtain three or more quotations on the purchase or sale of comparable securities (excludes new issues, LAIF, City of Palo Alto bonds, money market accounts, and mutual funds).Full Compliance 2 U.S. Government Securities:Full Compliance a) There is no limit on purchase of these securities. b) Securities will not exceed 10 years maturity. 3 U.S. Government Agency Securities:Full Compliance a) There is no limit on purchase of these securities except for: Callable and Multi-step-up securities provided that: - The potential call dates are known at the time of purchase;Full Compliance - the interest rates at which they "step-up" are known at the time of purchase; and Full Compliance - the entire face value of the security is redeemed at the call date.Full Compliance - No more than 25 percent of the par value of portfolio.20.9% b) Securities will not exceed 10 years maturity. 4 Bonds of the State of California Local Government Agencies Full Compliance a)Having at time of investment a minimum Double A (AA/AA2) rating as provided by a nationally 8.3% recognized rating service (e.g., Moody’s and/or Standard and Poor’s). b)May not exceed 10 percent of the par value of the portfolio. 5 Certificates of Deposit:Full Compliance a) May not exceed 20 percent of the par value of the portfolio; b) No more than 10 percent of the par value of the portfolio in collateralized CDs in any institution. c) Purchase collateralized deposits only from federally insured large banks that are rated by a nationally recognized rating agency (e.g. Moody's, Standard & Poor's, etc.). d) For non-rated banks, deposit should be limited to amounts federally insured (FDIC) e) Rollovers are not permitted without specific instruction from authorized City staff. 6 Banker's Acceptance Notes:None Held a) No more than 30 percent of the par value of the portfolio. b) Not to exceed 180 days maturity. c) No more than $5 million with any one institution. Attachment C Investment Policy Compliance As of December 31, 2016 Investment Policy Requirements Compliance Check $137.8 million $3.8 million 2.3% Attachment C Investment Policy Compliance As of December 31, 2016 Investment Policy Requirements Compliance Check 7 Commercial Paper:None Held a) No more than 15 percent of the par value of the portfolio. b) Having highest letter or numerical rating from a nationally recognized rating service. c) Not to exceed 270 days maturity. d) No more than $3 million or 10 percent of the outstanding commercial paper of any one institution, whichever is lesser. 8 Short-Term Repurchase Agreement (REPO):None Held a) Not to exceed 1 year. b) Market value of securities that underlay a repurchase agreement shall be valued at 102 percent or greater of the funds borrowed against those securities. 9 Money Market Deposit Accounts Full Compliance a) Liquid bank accounts which seek to maintain a net asset value of $1.00. 10 Mutual Funds:None Held a) No more than 20 percent of the par value of the portfolio. b) No more than 10 percent of the par value with any one institution. 11 Negotiable Certificates of Deposit (NCD):Full Compliance a) No more than 10 percent of the par value of the portfolio.7.0% b) No more than $5 million in any one institution.FDIC Insured 12 Medium-Term Corporate Notes:Full Compliance a) No more than 10 percent of the par value of the portfolio.3.5% b) Not to exceed 5 years maturity. c) Securities eligible for investment shall have a minimum rating of AA from a nationally recognized rating service. d) No more than $5 million of the par value may be invested in securities of any single issuer, other than the U.S. Government, its agencies and instrumentality. e) If securities owned by the City are downgraded by either rating agencies to a level below AA it shall be the City's policy to review the credit situation and make a determination as to whether to sell or retain such securities. 13 Prohibited Investments: a) Reverse Repurchase Agreements b) Derivatives as defined in Appendix B of the Investment Policy 14 All securities shall be delivered to the City's safekeeping custodian, and held in the name of the City, with the exception of : - Certificates of Deposit, Mutual Funds, and LAIF Full Compliance None Held Full Compliance City of Palo Alto (ID # 7699) City Council Staff Report Report Type: Informational Report Meeting Date: 2/6/2017 City of Palo Alto Page 1 Summary Title: Facility Concept/Master Planning for Animal Shelter Title: Update on Negotiations With Pets In Need Regarding Animal Care Services and Intention to Advance Prior City Council Direction Regarding Facility Construction or Rehabilitation From: City Manager Lead Department: City Manager Background In 2012 City Council directed staff to explore various cost savings strategies for providing animal services for the City of Palo Alto. This directive was the result of the loss of the City’s largest partner, the City of Mountain View, who chose to purchase its services from Silicon Valley Animal Control Authority. This departure precipitated discussion of the services and shelter condition of the Palo Alto Animal Shelter and its cost effectiveness. The City Council directed staff to pursue reductions in the level of subsidy to the shelter and potential service improvements. Despite an initial reduction in subsidy level, over recent years funding has grown, relying on approximately $800,000 of subsidy, per year, from the City’s General Fund. Currently, animal services are provided by City staff at a municipal facility at 3281 E. Bayshore Road in Palo Alto. The facility, which operates 6.5 hours per day, six days a week, was built in 1972 and has been identified as inadequate to meet current needs and requires modernization. After an extensive Request for Proposal process conducted over many months, City Council directed staff in September 2016 to proceed with exclusive negotiations with a nonprofit organization, Pets In Need, to operate the City’s animal care services and address facility needs. City Council authorized up to $250,000 for transition-related costs. Additional background information can be found in the attached staff report. Furthermore the City has established a dedicated website with previous staff reports and documents related to this project: www.cityofpaloalto.org/animalservicesassessment. Discussion Since receiving City Council direction in September 2016, staff is continuing to actively negotiate with Pets In Need to achieve an agreement that meets the needs of the parties. To City of Palo Alto Page 2 date, negotiations have focused on identifying service levels, cost of services, specifying transition issues and discussing facility needs. A term sheet approved by City Council in September 2016 between the City and Pets In Need states that within one year of commencing operations Pets In Need will lead a capital campaign to fundraise for facility improvements. At this point in the negotiations, further information is needed to determine the extent of facility improvements and options that may be needed and the level of fundraising that will be required. To obtain the necessary information, up to $50,000 of the pre-authorized $250,000 in transition funding will be used for schematic concept designs. The City will contract with Pets In Need to hire an architecture firm that specializes in animal facility development. Pets In Need has experience with animal shelter development, staff resources to dedicate to the study, and the ability to quickly bring on a consultant. Pets In Need will work on the City’s behalf and closely with City staff. The design results will assist the City and Pets In Need in identifying the costs associated with the facility. We expect that some level of City investment in the capital costs of improvements to the shelter may be requested to assist with the fundraising campaign. The facility planning effort will also comply with the City Auditor’s recommendation to “…assess the feasibility of obtaining sufficient funding through fundraising, public/private partnerships, general fund subsidies, or a bond initiative, to build a new animal shelter that meets modern- day standards for animal care and safety.” It is anticipated that the options and costs will be presented to Council within a timeframe that aligns with the City’s fiscal year budget process, with a target of May 2017. Resource Impact The funds are budgeted in the City Manager’s Office, dedicated to Animal Services Assessment activities and within the City Manager’s authority to execute. Staff resources from various departments will continue to be dedicated to this project with coordination from the City Manager’s Office. Attachments:  Attachment A: 9-6-16 Staff Report City of Palo Alto (ID # 7259) City Council Staff Report Report Type: Action Items Meeting Date: 9/6/2016 City of Palo Alto Page 1 Summary Title: Animal Services Assessment and Possible New Service Model Title: Direct Staff to Proceed with Discussions with Pets In Need Regarding Animal Care Services and the Construction or Rehabilitation of the Animal Shelter Facility From: City Manager Lead Department: City Manager Recommendation Direct staff to proceed with exclusive negotiations with Pets In Need, a 501(c)3 nonprofit organization, to provide animal care services and develop a plan for animal shelter facility construction or rehabilitation, and to return to City Council by December 2016 with a recommended agreement. Background Following the Great Recession and withdrawal of an agency (City of Mountain View) previously receiving Animal services from Palo Alto, in May 2012 the City Council's Policy and Services Committee and Finance Committees discussed the City’s current service and revenue models. As a result, the City Council directed staff to take immediate steps to make the operation more self-sufficient to reduce reliance on the General Fund. After a series of subsequent actions and service changes, through Fiscal Year 2014 the goals of establishing sustainable service levels and expenses were not achieved. In fact, over time, the costs and general fund subsidy to shelter operations have increased. In June 2014, the City Council referred a Colleagues Memo regarding the Palo Alto Humane Society’s (PAHS) interest in partnering with the City to the Finance Committee. The City Auditor was then engaged, and in April 2015 the City Auditor presented an audit concluding that Animal Services could not become revenue neutral under its current financial model, and faced challenges that were unlikely to be resolved if it continued operating as solely a city-managed function without a significant increase in general fund subsidy, donations, and/or revenue- generating contracts. In approving the Fiscal Year 2016 budget, the City Council directed staff to pursue an alternative service model and allocated $250,000 to assist with possible transition costs. City of Palo Alto Page 2 During Fiscal Year 2016, the City Manager’s Office continued outreach and engagement with various community and City department stakeholders, including the Friends of the Palo Alto Animal Shelter (FoPAAS) and PAHS. With active participation from these stakeholders, staff conducted two Requests for Proposals (RFP) to assess the market for alternative services providers. Through the process of developing the first RFP and documenting the services and organizational support structure being sought, both FoPAAS and PAHS determined that they would not submit proposals. The first RFP was issued on October 15, 2015 and closed December 11, 2015 with one respondent, Pets In Need, a local animal rescue service provider located in Redwood City. Due to the low response rate and in accordance with procurement best practices, staff conducted debriefing sessions with local animal care providers who did not submit a response to better understand current market conditions. These included Peninsula Humane Society, Silicon Valley Animal Control Authority, Humane Society of Silicon Valley and the County of Santa Clara. The consistent feedback was that the initial RFP was too prescriptive and limited their abilities to apply existing business models and best practices. City staff met with community stakeholders and the Services Employees International Union (SEIU) about the feedback. In collaboration with the stakeholders, the City re-issued a revised RFP with a less strictly defined scope. The new RFP was issued on January 27, 2016 and after one extension, closed on March 18, 2016. The City received one proposal from Pets In Need, a letter from the County of Santa Clara and a letter from the Humane Society of Silicon Valley. Staff conducted an evaluation of the responses and has concluded that the proposal most advantageous to the City is from Pets In Need. Staff has therefore negotiated with Pets In Need to outline the terms of an agreement for animal care services. Recognizing that the City has multiple goals for animal care services, including the manner and level of care, improvement of the animal shelter, and community engagement, in addition to financial terms, staff is seeking City Council discussion and direction prior to finalizing an agreement for services. Staff also recognizes that as a nonprofit organization, Pets In Need is a prospective partner for whom this agreement represents a significant decision and commitment that must align with its mission and organizational capabilities. As has been demonstrated by the RFP process to date, there is not a robust marketplace of providers bidding for this service as defined. Discussion In consultation with Pets In Need, staff has developed the attached Term Sheet that outlines the substantive issues to be finalized in an agreement for services. City Council direction is recommended to finalize terms into a recommended contract and to return to City Council before the end of the calendar year for approval. The purpose of the Term Sheet is to identify the manner in which key policy issues are being addressed. These policy items are summarized below and further defined in the Term Sheet. The Term Sheet is nonbinding and presents the parameters for negotiations. City of Palo Alto Page 3 Why Pets In Need? Pets In Need was selected as providing the most advantageous proposal due to their commitment to retain the shelter in Palo Alto, to lead a fundraising campaign to remodel or build a new shelter, to work closely with the Friends of Palo Alto Animal Shelter and the Palo Alto Humane Society, and to provide the services in a cost effective manner. The County of Santa Clara’s letter was deemed not cost effective. Additionally, the County was not willing to contribute or fundraise in the same capacity as a nonprofit could to a new or remodeled facility. The Humane Society of Silicon Valley’s letter did not meet the City’s required level of service due to their recommendation to turn the Palo Alto shelter into a stray holding facility and to outsource services to Silicon Valley Animal Control Authority and Pets In Need. Facility Improvements As recommended in the audit and supported by the City Manager, the shelter is in need of a substantial remodel or possibly a new facility. The City and Pets In Need are committed to a partnership to develop a plan to remodel or rebuild a new shelter. The Term Sheet outlines initial commitments between the City and Pets In Need. To summarize: An initial needs assessment will be conducted to determine immediate improvements. The City and Pets In Need will ensure the facility is in a condition that meets the expectations of the new contract. Within one year of commencing operations, Pets In Need will finalize a plan and begin to lead a capital campaign to fundraise for facility improvements. Cost of Services The RFP requested potential service partners to provide: a two year financial plan with quarterly financial targets which includes earned income, fundraising and other revenue; direct labor rates for proposed staff; overhead rate and breakdown of overhead elements; sub- consultant billing rates and mark-up percentage for other direct costs; all reimbursable expenses; any other cost and price information; a not-to-exceed amount; bank and audit statements. Pets In Need was the only responsible bidder and provided the requested data. In discussions with animal care providers throughout the RFP process, and prior to that through various internal and external stakeholder engagement processes, it became apparent to staff that, in order to retain animal care services in Palo Alto, a certain level of General Fund subsidy would have to be provided for a defined set of shelter services and that a fully cost-recovery model with high service level expectations is not viable. Therefore, staff considered analogous public private partnerships and concluded that the ideal agreement would be a fee for service model where the City pays an annual management fee and provides a facility at minimal charge in return for services. This model provides a predictable subsidy level. In the preliminary discussions, Pets In Need requested that the City consider a fee for service model which is based on a $30 per animal per day cost with a cap of thirty days. Pets In Need would then be responsible for the ongoing cost after the thirty days. The attached Term Sheet adds additional parameters for this model. Recognizing that the details of the financial structure will need to be negotiated between the City and Pets In Need, Council approval of this report will direct staff to negotiate a fee structure with Pets In Need. The three-year average cost for shelter operations City of Palo Alto Page 4 is approximately $520,000. The City’s subsidy amount will stay at or below the three-year average cost. Staff will return to City Council for approval of an operating contract before the end of the calendar year. Types of Animals and Quantity of Animals Currently the Palo Alto Animal Shelter takes dogs, cats, rabbits, wildlife, chickens, horses, goats, and other animals. The City’s expects that Pets In Need will be responsible for intakes of all animals and maintain the same service levels as the City currently provides. In preliminary discussions Pets In Need has committed to maintaining services levels and meeting the community expectations. As discussions continue between the City and Pets In Need, adjustments may be required to service levels based on the negotiated fee structure and facility’s capacity. Moreover, Pets In Need has a “no kill” philosophy which is a fundamental principle of the organization. Staff will need to work with Pets in Need to evaluate their ability, given the facility constraints, to continue current service levels as a “no kill” shelter operation. Contracts with Los Altos and Los Altos Hills Partner agencies agreements make up of 15% of the City’s total annual Animal Shelter and Animal Control costs, 11% from Los Altos and 4% from Los Altos Hills. The partner agencies are billed annually, during the summer months, by calculating previous year costs with projected upcoming year forecasts. For the purposes of a partnership with Pets In Need we do not recommend disrupting the agreements with Los Altos or Los Altos Hills. Both agencies are aware of our RFP and City Council direction. If the City enters into a contract with Pets In Need, the contract will impact the City’s budget for Fiscal Year 2017. This impact could be positive or negative depending on the contract’s start date and transition issues as finalized. Staff expects that a contract with Pets In Need can be finalized before beginning discussions with partner agencies about service changes. In the short term, service levels for Los Altos and Los Altos Hills will be held constant. City Staff and Ongoing Staffing Currently, the City’s budget includes staffing for 10.66 FTE’s (Full-Time Equivalent positions) in the Animal Services program. Of the budgeted positions, 4 FTE’s are dedicated to Animal Control (including 1 Lead Animal Control Officer and 3 Animal Control Officers). As always planned, the 4 Animal Control positions will remain budgeted with the City and will not be included in the transition to Pets In Need. As such, the 4 Animal Control positions would remain represented by SEIU. Additionally, 2 FTE’s (Veterinarian Technician and Superintendent of Animal Services) are currently vacant. The Animal Shelter contract to be negotiated between the City and Pets In Need will outline the proposed staffing levels, exclusive of Animal Control. The City will strive to minimize the negative impacts to current City employees. Any impacts to union-represented employees resulting from a future transfer of services will be identified and discussed with SEIU. The City is committed to meeting any obligations related to collective bargaining and the City’s Merit Rules. City of Palo Alto Page 5 Ongoing City Support Currently the Animal Services is a division of the Police Department. The City Manager’s Office, working closely with the department, has been leading the assessment process. Under the proposed model, the Police Department will retain the Animal Control functions. As a non- profit partnership, however, shelter operations through the Pets in Need contract is expected to be managed of the Community Services Department. When the item returns to City Council, staff will provide a recommendation and resource needs to manage the contract. Resource Impact The Animal Services budget was approved by City Council on June 13, 2016. Funding is in place to continue operations through June 30, 2017. Additionally, City Council in the Fiscal Year 2016 budget process allocated $250,000 for transition costs. This funding was not expended in Fiscal Year 2016 and was reappropriated to Fiscal Year 2017. As noted in the Cost of Services section, discussions need to continue with Pets In Need with regards to the City’s ongoing General Fund subsidy and fee for services model. Any necessary adjustment to the Fiscal Year 2017 budget will be proposed to City Council at the time of contract approval. Attachments:  Attachment A: Term Sheet - City and Pets In Need (PDF)  Attachment B: Pets In Need Letter and Narrative (PDF)  Attachment C: County of Santa Clara Letter (PDF)  Attachment D: Humane Society of Silicon Valley Letter (PDF)  Attachment E: Blank (PDF) Term Sheet  Framework between the City of Palo Alto and Pets in Need    This Term Sheet provides a summary of key business terms to be addressed in a Contract for Animal Care  Services (Contract) between Pets in Need (PIN) and the City of Palo Alto (City).  This non‐binding term sheet  provides the foundation for negotiation and definition of a full Agreement for Services to be recommended for  approval by the Palo Alto City Council and the Pets In Need Board of Directors.    1. Term of Agreement.  The Agreement for services will commence on a date to be mutually agreed upon  by the parties, but no sooner than January 1, 2017 and no later than July 1, 2017 for a five year period;  and will extend for a period mutually determined by PIN and the City. The option to extend the  Contract will be exercised no less than one year in advance of the expiration of the Contract.    2. Scope of Services. PIN will provide animal care services within Palo Alto and other communities under  contract (Los Altos and Los Altos Hills). These services will be acceptance and care of animals, owner  redemptions, veterinary care, spaying/neutering, vaccinations, adoptions, partnerships, foster care,  marketing, community education and ongoing work with local stakeholder’s groups.  a. Relationship to Animal Control Services: Animal Control will be provided by the City. These  field services involved with responding to animal‐related issues are not included in the Scope  of Services, except where interfacing with Animal Care at the shelter.    b. Commitment to operation in Palo Alto: PIN understands that maintaining a local animal shelter  is critically important to the City and will operate a shelter in Palo Alto except as may be  necessary to accommodate renovations, new construction or unanticipated circumstances.  c. PIN and the City will mutually draft policies and procedures that may limit the intake of  animals for the purpose of improving animal care and to operate the shelter as a “No Kill”  shelter, a fundamental principle of PIN.   d. PIN and the City will mutually draft performance metrics and measures for services along with  rewards for exceeding and consequences for not meeting expectations.  e. The City will finalize the reporting relationship of PIN with a City department before the  agreement is finalized. Currently, Animal Services is a division with the Palo Alto Police  Department. PIN understands that the City may transition the reporting relationship of PIN to  the Community Services Department with Police retaining the Animal Control unit.    3. Costs of Services. PIN has proposed a fee structure based on the number and duration of stray of  animals brought into the shelter by Animal Care Officers and through owner surrenders.  The parties  will negotiate and finalize contract terms to address maximum and minimum fees to be paid to PIN.  Additionally, the Contract will itemize the revenues that will be collected by PIN and those to be  retained by the City. The Contract will also finalize whether PIN will act as the fiscal agent for the City  on revenues collected to offset Animal Control costs.     4. Transition Issues.  Prior to execution of the Agreement:  a. The City will satisfy its remaining obligations, if any, with applicable employee bargaining units.  b. PIN will meet with current City employees at the Animal Shelter to discuss employment  opportunities with PIN, but PIN is under no obligation to retain current shelter staff.  c. PIN and the City will conduct an assessment of the physical condition, inventory and  equipment at the shelter to determine which items will be allocated to PIN and Animal Control  and what will need to be replaced.    5. Animal Shelter Facility Improvements.  Prior to the execution of the Agreement, PIN will engage an  architect for the purpose of assessing repairs and improvements needed to be made to the Palo Alto  Animal Shelter facility.    a. The City and PIN will agree upon the cost and responsibilities of any immediate facility  improvements needed for PIN to begin operation at the shelter, the amount of which is to be  approved by City Council upon approval of the Contract.   b. Upon mutual agreement, PIN will operate the current shelter while renovations and facility  upgrades are being performed.  c. PIN will operate the facility in will maintain the facility in good working condition during the  term of the Contract.  d. PIN will be responsible for all ongoing operations and routine facility maintenance costs,  except as noted in the Contract.  e. The City will provide the use of the existing facility at no lease cost to PIN, and as part of  discussions associated with fees for service will evaluate providing utilities such as electricity,  gas, water, and Internet connectivity at no cost to PIN during the duration of this Contract.  f. Within one year of commencement of services, PIN will begin consultation with the City and  community stakeholders on more comprehensive facility improvements. It is the intent of the  parties that, either through remodeling of the current building or construction of a new  building the shelter will meet industry and community standards.  g. The City will continue to own the land, facility and all improvements.    6. Volunteer Engagement. PIN will develop a volunteer development program as described in its proposal  and will consult with the City before making substantive change in the City’s existing volunteer  engagement programs.    7. Termination.  Either party may terminate the Agreement with at least twelve months written notice  based upon terms to be mutually determined by the City and PIN.    8. Insurance and Indemnification: The Contract, at minimum, will include the City’s standard liability  language. The City currently requires $1 million dollar liability coverage. PIN and the City will discuss  additional liability insurance.   Pal   I. Org II. Qu   Alth vol effo mo inco sev   lo Alto Ani ganizational p  Pets In N  Pets In N  PIN is a   Our ope  We have  Our Red for 160   In 2015,  We are   We offe 1,426 fr  We have includin   alifications an 1. Pets In N 2. Our med 15% of a 3. We have shelter i 4. We can  develop 5. Pets In N 6. We have 7. We have 2013 to  8. We have 9. We are  10. We have hough Pets In unteer netwo orts, we have obile surgical v ome commun veral rescue g imal Shelte profile  Need was est Need’s missio 501 (c) 3 non erating budge e an endowm dwood City fa animals and i , we successfu governed by  er free spaying ee surgeries a e rescued ani g the followin nd Certificatio Need was the dical operatio animal shelte e animal shel in 2008 into a bring “econo pment, financ Need has had e a vibrant vo e a cost‐effec a projected t e an excellent a member of e relationship n Need’s facil ork, a visible s e been able to van to travel  nities with ch groups that br er RFP (#1 ablished in 19 on is to rescue n‐profit suppo et (FY 2016) is ment fund wit cility, refurbi is operated w ully complete a volunteer b g/neutering f at our Redwo imals and per ng cities: Mod ons  e first no‐kill a on is fully acc ers in the U.S. ter construct a LEED certifie omies of scale e and animal d balanced bu olunteer prog ctive fundrais total of $825, t reputation w f the WeCare  ps with Friend ity’s capacity  social media  o increase ado throughout N ronic pet hom ring animals t   161631A) r 965 as North e dogs and ca orted through s $1.4M and w h a current va shed in 2008  with a staff of  ed 627 adopti board compri for the pets o ood City facilit rformed surge desto, Los Ba animal shelte redited by th  have achieve tion and desig ed [silver leve e” opportunit  care staff an udgets for the gram, includin ing program t ,000 at the co within the an Alliance (com ds of Palo Alto is limited (ap presence and options and s Northern CA t melessness p to our shelter   response fr ern California ats and find th h private gifts we expect to  alue of $5M. at a cost of a 20.  ions, up from sed of 13 com of all CA reside ty and throug eries through nos, Vallejo,  r in Northern e American A ed this distinc gn experience el] facility)   ties in using P nd resources e last several y ng a foster fam that has grow onclusion of F nimal welfare  mprised of she o Animal She pproximately  d aggressive m surgeries ove to perform fr roblems. We  r for free spay rom Pets I a’s first no‐kil hem safe, lov s, adoption an end the year approximately m 462 in 2014  mmunity and  ents. In 2015 gh our mobile hout Northern Hollister, Mil n California  Animal Hospit ction)  e (having reno Pets In Need’s years.  mily network wn from $597 FY 2016 (April community  elters in Sant elter and the P 160 animals) marketing and r the last two ee spay/neut also work ex ying/neuterin n Need (P ll animal shelt ving homes.  nd program fe  with a surplu y $6M, has ca and 399 in 2 business lead  we complete e surgical van n California,  pitas and San tal Associatio ovated our ex s medical, ken   7,000 raised i l 30, 2016).  ta Clara Count PA Humane S ), through a s d advertising  o years. We u ter surgeries  xtensively wit ng and medic IN)  ter.   ees.   us.  apacity  013.   ders.   ed  n.   n Jose.  on (only  xisting  nnel,  n FY  ty)  Society  trong  se our  in low‐ h  al care.  Our Executive Director, Al Mollica, came to PIN in June 2014. Al has a master’s degree in education,  a Certified Fund Raising Executive (CFRE) credential and more than 37 years of experience in the  non‐profit sector. Prior to coming to PIN, Al was executive director of a financially solvent and well‐ respected statewide no‐kill and open access animal shelter with two locations, statewide law  enforcement responsibilities and an animal control contract with a metropolitan city.   Al’s experience as a director of a major animal shelter, his track record at Pets In Need and his  extensive experience in leadership positions in the non‐profit sector make him uniquely qualified to  manage the operations of multiple shelters. Al’s depth of experience in fundraising and business  management, including direction of several successful capital campaigns, make him ideally suited  to manage the development, marketing and business operations of PAAS.    III. Work Plan  Animals collected by PAAS animal control officers will be delivered to the Palo Alto shelter (or to  Pets In Need’s facility in Redwood City if a shelter does not exist in Palo Alto). Processing will occur  in accordance with PIN intake procedures (Manuals describing intake procedures in detail are  available upon request). Animals will be examined, behaviorally assessed by trained staff and  treated for any medical problems. Assuming a facility remains in Palo Alto, animals collected will be  kept in Palo Alto to make it easier for residents to collect lost animals. If a facility does not remain  in Palo Alto, intake, adoptions and returns will occur out of our Redwood City shelter.    The staff structure at PAAS (again, assuming a facility remains in PA) will be similar to what  currently exists at PIN. Staff would consist of medical, animal care, kennel and administrative  teams. The current intake and processing procedures at Pets In Need are well‐honed and efficient.  We would anticipate a comparable structure at PAAS, which would include twice‐daily feeding and  kennel/cage cleaning, twice‐daily outdoor time, and extensive socializing by volunteers (a more  detailed explanation of shelter operations and procedures is available upon request).    We propose to handle owner‐requested euthanasia requests in accordance with standard practices  for no‐kill shelters. Our protocol will involve a careful assessment by our medical staff and shelter  manager of all animals surrendered, including those from owners requesting euthanasia. No animal  will be euthanized unless, in the professional opinion of our veterinarian, certified vet tech and  shelter manager, the animal poses a risk to staff, other animals, the general public, or is so  physically disabled that there is no other viable alternative.     Under the model we are proposing, PAAS will be financially self‐sufficient within the first year of  operations. Revenue will be generated through payments from the City of Palo Alto for each animal  collected within the PAAS service area, private sector fundraising and adoption, licensing and  program fees. Included in the array of program fees that would provide revenue would be income  from a humane education program that will be developed and implemented in cooperation with  Friends of the Palo Alto Shelter and the Palo Alto Humane Society. Programming for youth through  summer camps, local schools and libraries, and the general public will be offered.    IV. Proposed innovations  1. There is precedent that having a no‐kill and open access shelter is possible. Long‐term success  in operating the Palo Alto Animal Shelter as a no‐kill/open access facility will validate the no‐kill  movement, enhance the reputation of PAAS and the City, establish PAAS as an important  community resource, and increase fundraising opportunities.      2. Pets In Need provides free spaying/neutering at our Redwood City facility and via a mobile  surgical van that travels to communities throughout the Bay Area with the most chronic pet  homelessness problems. We believe that reducing the flow of animals into the pipeline is the  most effective way to impact the number of homeless, neglected and abused animals that  enter shelters. Fewer animals entering the system will drive down operational costs. We would  propose continuing this popular and effective program. Pets In Need will provide free  spay/neuter services at our Redwood City facility, in Palo Alto and through our mobile van.     3. PIN proposes to implement a humane education program, in cooperation with the local  volunteer groups, that will generate revenue, educate the public and engage the community in  the life of the shelter. Pets In Need currently has relationships with several local schools (e.g.,  Everett High School and Summit Charter School), the Redwood City library, Girl Scouts troops  from Atherton and Menlo Park, and a number of Redwood City‐based senior and community  centers. Youth visit our Redwood City shelter to learn about animal care as part of internship  programs and spring break and summer camp programs. The humane education program will  include summer camps and volunteer opportunities for older youth.     4. Finally, an immediate priority would be for PIN staff and volunteers to work with Palo Alto City  officials and local volunteers to assess options and address the functional shortcomings with  the current facility. At some point, assuming the decision is made to retain a shelter in Palo  Alto, there will need to be a feasibility study conducted as a precursor to a campaign to raise  funds to renovate PAAS or construct a new shelter.     V. Project staffing  Pets In Need processes approximately 650 animals per year, roughly the same number of animals  processed by PAAS. We operate our shelter with a staff of 20 – nine full‐time and 11 part‐time.  Assuming there is a facility in Palo Alto, we would propose the following staff structure for PAAS:      FTE Position         1 – veterinarian (FT)        1 – Registered Veterinary Technician (FT)        2 –  vet assistants (FT)        1 –  lead kennel attendant (FT)       1 –  volunteer and adoption manager (FT)      1 –  administrative assistant (FT)      4 –  kennel staff (eight part‐time staff working 25 to 35 hrs. per week)   11 FTE             VI. Proposal cost sheet and rates  See attachments for proposed cost breakdown and budget.   County of Santa Clara Department of Agriculture and Environmental Management Animal Care and Control Division Licensing/Field Services 80 W. Highland Ave., Bldg. K San Martin, CA95046 (408) 201-0660 Fax (408) 683-4247 Animal Shelter 12370 Murphy Ave. San Martin, CA 95046 (408) 686-3900 Fax (408) 683-2776 San Jose Office 1553 Berger Dr., Bldg. I San Jose, CA95ll2 (408) 918-4600 (408)286-2460 http ://www. sccountypets.org February 17,2016 City of Palo Alto Purchasing and Contract Administration 250 Hamilton Avenue Palo Alto, CA 94301 Letter of Interest: Palo Alto Animal Shelter Operations Re: RFP NO. 1616314 City of Palo Alto Purchasing and Contract Administration: The County of Santa CIara desires to express interest in submitting a bid to provide professional services for animal care operations at the Palo Alto Animal Shelter. The County of Santa Clara currently operates a shelter with an intake of approximately 3,000 dogs/cats annually. Our shelter has maintained a live-release rate of over 90Yo since 2012. We pride ourselves on excellent care of animals, great customer service and a wonderful reputation in our community. ,. Our proposal for staffrng would include oversight by the Animal Control Program Manager ,.' 1 (existing) as well as recruitment, supervision and training of a Shelter Supervisor, 4 full-time Kennel Attendants, Veterinarian, Veterinarian Assistant and an Office Specialist III. These new positions would be supported by existing administrative "County" staff. Our estimate also includes supplies and materials related to care and keep of shelter animals, clerical duties, adoptions, veterinary care, spaylneuter services, record keeping, computer services, euthanasia and return-to-owner. As our estimate is based on cost-recovery only, we would anticipate use of existing supplies and materials within the shelter. Below is an itemized estimate of the yearly costs associated with operating a full service animal shelter; these costs are based on costs we incur at the County animal shelter. This cost estimate does not include oversight of development of a new shelter facility. Additional costs would apply if the City desired County staff involvement in that endeavor. Personnel: Uniforms/Safety Shoes : Communications/Telephone Services : FeedlBedding/Litter: Veterinary Supplies TrainingÆducation Emergency/Specialty Medical Services I)ata Processing Services $1,4020828.91$ 3,396.00 s 1,626.49 $ 3,896.43 s 35,307.77$ 1,oo7.oo $ 38,349.64 $ 20,184.00 Board of Supervisors: Mike Wasserman, Cindy Chavez, Dave Cortese, Ken Yeager, S. Joseph Simitian County Executive: Jeffrey V. Smith Janitorial/Landscape Services Disposal Services Small ToolsÆquipment TraveUMileage Misc. Supplies Facility Maintenance $ 1,134.84$ 2,864.33$ 319.72 $ 1,717.97 $ 6,630.22 $ 8.676.51 $ 1,527,939.83 The County of Santa Clara proposes integrating on-call duties with City of Palo Animal Control so that officers from both agencies benefit. Animal Control Officers could divide rotational duties so that each individual officer would serve less. When ACOs serve on-call, they would respond to both City of Palo Alto and Unincorporated Santa Clara County. This letter does not constitute an official offer. We are interested in engaging in an interactive process with the City of Palo Alto to clarify the deliverables and finalize our bid. We look forward to hearing from you. Please forward inquiries to: Lisa Jenkins Interim Program Manager, Animal Care and Control (408) 201-0661 Lisa. j enkins@cep. sccgov.org Y, "il^C,t Lisa Program Manager Animal Care and Control County of Santa Claru Cc : Christopher Anastole, Contract Administrator Khashayar "Cash" Alaee, Sr. Management Analyst