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2018-05-07 City Council Agenda Packet
City Council 1 MATERIALS RELATED TO AN ITEM ON THIS AGENDA SUBMITTED TO THE CITY COUNCIL AFTER DISTRIBUTION OF THE AGENDA PACKET ARE AVAILABLE FOR PUBLIC INSPECTION IN THE CITY CLERK’S OFFICE AT PALO ALTO CITY HALL, 250 HAMILTON AVE. DURING NORMAL BUSINESS HOURS. Monday, May 7, 2018 Regular Meeting Council Chambers 6:00 PM Agenda posted according to PAMC Section 2.04.070. Supporting materials are available in the Council Chambers on the Thursday 11 days preceding the meeting. PUBLIC COMMENT Members of the public may speak to agendized items; up to three minutes per speaker, to be determined by the presiding officer. If you wish to address the Council on any issue that is on this agenda, please complete a speaker request card located on the table at the entrance to the Council Chambers, and deliver it to the City Clerk prior to discussion of the item. You are not required to give your name on the speaker card in order to speak to the Council, but it is very helpful. 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 Special Orders of the Day 6:00-6:30 PM 1.Proclamation Recognizing Public Employees and Individual Service Accomplishments in Alignment With National Public Service Recognition Week, May 6-12, 2018 2.Appointment of Three Candidates to the Public Art Commission and two Candidates to the Utilities Advisory Commission for Three-year Terms Ending May 31, 2021 Agenda Changes, Additions and Deletions City Manager Comments 6:30-6:40 PM Oral Communications 6:40-6:55 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. MEMO 2 May 7, 2018 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. Consent Calendar 6:55-7:00 PM Items will be voted on in one motion unless removed from the calendar by three Council Members. 3.Approval of the City of Palo Alto's Addendum to the Negative Declaration Adopted by the City of East Palo Alto, and Approval of an Agreement for the Permanent Transfer of a Portion of the City of Palo Alto's Individual Supply Guarantee to the City of East Palo Alto 4.Authorize the City Manager or his Designee to Amend the Contract With WatchGuard Video for the Purchase of 50 Body-worn Cameras for the Field-based Video Program in a Not-to-Exceed Amount of $110,000 and Approve a Budget Amendment in the Law Enforcement Services Fund 5.Approval of a Three-year Contract With Northwest Woodland Services, Inc. in an Amount Not-to-Exceed $657,278 for Trail Maintenance in the Palo Alto Baylands, Pearson-Arastradero Preserve, Foothills Park, and Grounds Maintenance in Utility Reservoir Sites 6.SECOND READING: Adoption of an Ordinance Amending Palo Alto Municipal Code Title 18 (Zoning) to add a new Chapter 18.30(J) (Affordable Housing Combining District) to Promote the Development of 100 Percent Affordable Housing Projects Located Within One-half Mile of a Major Transit Stop or One-quarter Mile of a High-quality Transit Corridor by Providing Flexible Development Standards and Modifying the Uses Allowed in the Commercial Districts and Sub- districts. California Environmental Quality Act (CEQA): This Ordinance is Within the Scope of the Comprehensive Plan Environmental Impact Report (EIR) Certified and Adopted on November 13, 2017 by Council Resolution Nos. 9720 and 9721 (FIRST READING: April 9, 2018 PASSED: 7-2 Holman, Kou no) Action Items Include: Reports of Committees/Commissions, Ordinances and Resolutions, Public Hearings, Reports of Officials, Unfinished Business and Council Matters. 7:00-7:15 PM 7.PUBLIC HEARING: Finance Committee Recommends Adoption of the Fiscal Year 2018-19 Action Plan and Associated 2018-19 Funding Allocations and Adoption of a Resolution Approving the use of Community Development Block Grant Funds for Fiscal Year 2018-19 Consistent With the Human Relations Commission's Recommendation MEMO MEMO Q&A Q&A Q&A 3 May 7, 2018 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. 7:15-8:30 PM 8.Policy and Services Committee and Staff Recommendations on Next Steps Related to Airplane Noise (Continued From April 9, 2018) 8:30-10:00 PM 9.PUBLIC HEARING: Finance Committee Recommends Adoption of an Ordinance Amending Title 16 of the Palo Alto Municipal Code by Establishing an Updated Citywide Transportation Impact Fee and Indefinitely Suspending Application of the Existing Area-specific Transportation Impact Fees for the Stanford Research Park/El Camino Real CS Zone and the San Antonio/West Bayshore Area, and Amending the Municipal Fee Schedule to Update the City’s Transportation Impact Fees in Accordance With These Changes, all in Furtherance of Implementation of the Comprehensive Plan. The Citywide Transportation Impact Fee is a One-time fee on new Development and Redevelopment Throughout Palo Alto to Fund Transportation Improvements to Accommodate and Mitigate the Impacts of Future Development in the City. This Ordinance is Within the Scope of the Comprehensive Plan Environmental Impact Report (EIR) Certified and Adopted on November 13, 2017 by Council Resolution No. 9720 State/Federal Legislation Update/Action 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. Q&A MEMO 4 May 7, 2018 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 May 8, 2018 May 9, 2018 Council and Standing Committee Meetings Sp. Policy and Services Committee Meeting Sp. City Council Meeting Schedule of Meetings Schedule of Meetings Tentative Agenda Tentative Agenda Informational Report Report to City Council on Accessory Dwelling Unit/Junior Accessory Dwelling Unit Development Activity for the First Quarter of 2018 Utilities Q1 and Q2 FY 2018 Quarterly Report Public Letters to Council Set 1 City of Palo Alto (ID # 9214) City Council Staff Report Report Type: Special Orders of the Day Meeting Date: 5/7/2018 City of Palo Alto Page 1 Summary Title: Public Service Proclamation 2018 Title: Proclamation Recognizing Public Employees and Individual Service Accomplishments in Alignment With National Public Service Recognition Week- May 6-12, 2018 From: City Manager Lead Department: Human Res ources Attachments: Public Service Week Proclamation PUBLIC SERVICE RECOGNITION WEEK May 6-14, 2018 WHEREAS, Americans are served every single day by public servants at the federal, state, county and city levels. These unsung heroes do the work that keeps our nation working; and across our nation, public employees take not only jobs, but oaths; and WHEREAS, many public servants risk their lives each day in service to the people of our communities, as well as provide safety inspections, operate our public facilities, and provide the diverse services demanded by the American people with integrity and efficiency; and WHEREAS, public servants provide the institutional knowledge, experience, and continuity that supports the long term sustainability of our community assets and organizational history; and WHEREAS, here in our city, our staff promotes and sustains the superior quality of life in Palo Alto, and in partnership with our community delivers cost-effective services in a personal, responsive, and innovative manner; and WHEREAS, over the past year alone, our City staff have: Provided service to nearly 73,000 electric, water, and gas customer accounts; Resurfaced 40 miles of streets; Processed more than 19,000 Procurement Card transactions totaling $8.1 million to support City operations; Checked out more than 1.5 million library items to over 1 million visitors; Welcomed 91Percent of Palo Alto residents to a local or neighborhood park at least once; Presented more than 180 public safety education presentations, trainings, or other sessions; and Offered nearly 800 recreational classes and programs, maintained parks, and preserved more than 4,000 acres of open space. And much more, all with the professionalism we know and appreciate, day in and day out. NOW, THEREFORE, I, Liz Kniss, the Mayor of the City of Palo Alto do hereby proclaim that May 6, 2018 to May 12, 2018, is Public Service Recognition Week. All citizens are encouraged to recognize the accomplishments and contributions of government employees at all levels — federal, state, county and city – and especially our City of Palo Alto employees. Presented: May 7, 2018 ______________________________ Liz Kniss Mayor CITY OF PALO ALTO OFFICE OF THE CITY CLERK May 7, 2018 The Honorable City Council Palo Alto, California Appointment of Three Candidates to the Public Art Commission and two Candidates to the Utilities Advisory Commission for Three-year Terms Ending May 31, 2021 On Monday, May 7, 2018, the Council is scheduled to appoint three (3) candidates to the Public Art Commission (PAC) and two (2) candidates to the Utilities Advisory Commission for three-year terms ending May 31, 2021. Voting will be by paper ballot. Background On April 24, 2018, the Council interviewed applicants for the PAC. Djibril Drame was not able to participate in the interview process, but remains eligible for appointment to the PAC. On April 2, 2018, Council decided not to interview applicants for the UAC. Applications can be viewed online HERE. The recording of the PAC interviews can be viewed online HERE. Public Art Commission Vote to appoint three (3) three-year terms on the Public Art Commission (PAC) for terms ending May 31, 2021. The first three candidates to receive at least five votes (required) will be appointed. The 9 PAC Candidates are as follows: 1. Djibril Drame 2. Loren Gordon (Incumbent) 3. Marilyn Gottlieb-Roberts 4. Bonnie Hall 5. Yeuen Kim 6. Ian Klaus 7. Shannon McEntee 8. Ben Miyaji (Incumbent) 9. Simcha Moyal Utilities Advisory Commission Vote to appoint two (2) three-year terms on the Utilities Advisory Commission (UAC) for terms ending May 31, 2021. The first two candidates to receive at least five votes (required) will be appointed. Page 2 The 10 UAC Candidates are as follows: 1. Arne Ballantine (Incumbent) 2. Mike Danaher (Incumbent) 3. Claude Ezran 4. Robert Hinden 5. Howard Hoffman 6. Yunteng Huang 7. Kamlesh Oza 8. Curtis Smolar 9. Rajesh Srinivasaraghavan 10. Henry Wong Department Head: Beth Minor, City Clerk Page 3 TO: FROM: DATE: CI TY 0 F PALO ALTO HONORABLE CITY COUNCIL BETH MINOR, CITY CLERK MAY7, 2018 2 SUBJECT: AGENDA ITEM NUMBER 2 -Appointment of Three Candidates to the Public Art Commission and two Candidates to the Utilities Advisory Commission for Three year Terms Ending May 31, 2021. On April 30, 2018, Marilyn Gottlieb-Roberts withdrew her application for the Public Art Commission. Public Art Commission Applicants: 1. Djibril Drame 2. Loren Gordon (Incumbent) 3. Bonnie Hall 4. YeuenK.im 5. Ian Klaus 6. Shannon McEntee 7. Ben Miyaji (Incumbent) 8. Simcha Moyal Beth Minor City Clerk 1of1 City of Palo Alto (ID # 9041) City Council Staff Report Report Type: Consent Calendar Meeting Date: 5/7/2018 City of Palo Alto Page 1 Summary Title: Transfer of Individual Supply Guarantee to East Palo Alto Title: Approval of the City of Palo Alto's Addendum to the Negative Declaration Adopted by the City of East Palo Alto, and Approval of an Agreement for the Permanent Transfer of a Por tion of the City of Palo Alto's Individual Supply Guarantee to the City of East Palo Alto From: City Manager Lead Department: Utilities Recommendation Staff recommends that Council take the following actions: 1. Consider and approve the Addendum, together with the Negative Declaration for the Transfer of Individual Supply Guarantee under the San Francisco Public Utility Commission Water Supply Agreement (ND) adopted by the City of East Palo Alto as the CEQA lead agency on June 20, 2017, as adequate and complete under CEQA for the project described below. 2. Approve and authorize the City Manager or his designee to execute the Permanent Transfer of a Portion of an Individual Supply Guarantee (ISG) from the City of Palo Alto to the City of East Palo (Attachment A). Background Colleagues Memo At its December 5, 2016 meeting the City Council was presented with a Colleague’s memo (Attachment B) from Mayor Burt and Councilmembers Filseth, Holman, and DuBois requesting that the Council either direct staff to schedul e a Council study session to discuss how the City of Palo Alto (Palo Alto) may help support East Palo Alto (EPA) through a transfer or sale of a small portion of the Palo Alto’s ISG, or to refer this topic to the Policy and Services Committee. The memo discussed East Palo Alto’s low residential per-capita water use and the insufficient supply of water available to that city to support economic development. The memo highlighted East Palo Alto’s well-being and its ability to provide affordable and obtainable housing as important for Palo Alto and other surrounding communities. City of Palo Alto Page 2 Vice Mayor Scharff moved, seconded by Council Member Kniss, to refer to the Finance Committee a discussion of how the City of Palo Alto may help support East Palo Alto through a transfer or sale of a small portion of its Individual Supply Guarantee. The motion passed 8 -0. Individual Supply Guarantee Transfer mechanics The City’s ISG represents a permanent contractual entitlement to 17.07 million gallons per day (mgd) of water from the Hetch Hetchy Regional Water System. As described later in this report, Palo Alto uses far less than its entitlement and does not anticipate using its full entitlement in the future. Any transfer of a portion of the City’s ISG is subject to the terms of the 2009 Water Supply Agreement (WSA) between the City and County of San Francisco and Wholesale Customers in Alameda County, San Mateo County and Santa Clara County (CMR: 269:09). Section 3.04 of the WSA states that, as a Wholesale Customer, the City may “transfer a portion [of its ISG] to one or more other Wholesale Customers.”1 Transfers must be permanent and the minimum quantity that may be transferred is 1/10th of an mgd. While the WSA grants the San Francisco Public Utilities Commission (SFPUC) review authority over an ISG transaction, that review is limited to determining that the transaction complies with the Raker Act 2 and whether the affected facilities in the SFPUC system have the operational capability to accommodate increased delivery to the transferee. Staff does not anticipate any objection from the SFPUC regarding this proposed transfer. Discussion Opportunity for Palo Alto to Assist East Palo Alto The water supply shortage currently being experienced by the City of East Palo Alto is an immediate issue, and EPA is pursuing multiple parallel strategies to address it. This includes rehabilitation of an existing well and construction of a new groundwater well in addition to seeking SFPUC water supply allocations from other agencies. Pending additiona l water sources, EPA has adopted a moratorium on new or expanded water service, effectively halting new development. EPA entered into an agreement with the City of Mountain View (MV) to transfer 1.0 mgd of MV’s water supply allocation to EPA. The transact ion between EPA and MV is distinct from an agreement with Palo Alto, in part due to the WSA’s minimum-use requirement which applies to MV, and which, if not met, subjects MV to a penalty payment. The 1.0 mgd transfer from MV to EPA reduces EPA’s estimated water supply shortfall for support of anticipated development to 0.5 mgd. The additional water supply is needed to support EPA long term water needs and 1 The Wholesale Customers, as defined in the 2009 Water Supply Agreement, are the 26 agencies that are members of the Bay Area Water Supply and Conservation Agency (BAWSCA) and include Alameda County Water District, California Water Service Company, Coastside County Water District, Estero Municipal Improvement District, Guadalupe Valley Municipal Improvement District, Mid-Peninsula Water District, North Coast County Water District, Purissima Hills Water District, Skyline County Water District, Stanford University, Westborough Water District, and the Cities of Brisbane, Burlingame, Daly City, East Palo Alto, Hayward, Hillsborough, Menlo Park, Milpitas, Mountain View, Palo Alto, Redwood City, San Bruno, San Jose, Santa Clara, and Sunnyvale. 2 The Raker Act is a 1913 act of the US Congress that permitted building of the O'Shaughnessy Dam, in order to grant access to the water and hydroelectric resources of the Hetch Hetchy Valley in Yosemite National Park. City of Palo Alto Page 3 several planned developments in EPA, including a primary school and affordable housing, as well as to enable EPA’s new planned groundwater wells to be used on a limited basis to preserve their operational capacity as emergency backup wells. Discussions between the EPA and Palo Alto city managers have identified a number of public benefits that would accrue through a 0.5 mgd transfer and additional collaboration between the two cities. In addition to the social and economic benefit to EPA from appropriate development and EPA’s limited groundwater use, staffs from EPA and Palo Alto are continuing to work on ensuring infrastructure spanning the two cities also support s compatible uses. This includes restoration of an emergency water intertie from Palo Alto to EPA at Woodland Ave., and the extension of a water line for recycled water across the Friendship Bridge, as well as development of a jointly supported preferred alternative design for the reconstructed Newell Road Bridge. The Newell Road Bridge reconstruction project is currently undergoing technical studies required for environmental clearance, and staffs from Palo Alto and EPA are working toward joint recommendation of a bridge alternative that maintains compatibility with the adjacent neighborhoods and avoids the potential to attract cut-through traffic. These additional items are parallel efforts provided as background, and not covered by this subject agreement. Reducing Palo Alto’s ISG by 0.5 mgd has No Impact in Non -Drought Years Palo Alto is in a position to alleviate EPA’s long-term water supply deficit because Palo Alto has reduced its potable water consumption and is extremely unlikely to rely on the full 17.07 mgd ISG in the future. Palo Alto’s historical and projected SFPUC purchases compared to the full 17.07 mgd ISG and the ISG resulting from a 0.5 mgd transfer are shown in Figure 1, below. Figure 1: SFPUC Water Use (Historical and Forecast) versus ISG City of Palo Alto Page 4 The Impacts of a 0.5 mgd ISG Reduction are Negligible and May Become Moot The only potential impact of the ISG transfer upon Palo Alto could be during a water shortage. During water shortages, the SFPUC can reduce water sales to both San Francisco and the Wholesale Customers. The Tier II Drought Implementation Plan (Tier II Plan), adopted by the Wholesale Customers in 2010, allocates the collective Wholesale Customer share among the 26 Wholesale Customers based on a combination of ISGs and seasonal water use, with an adjustment for East Palo Alto to ensure it can meet its basic health and safety needs during a drought. Under the current Tier II Plan, a transfer of 0.5 mgd to East Palo Alto could require Palo Alto to reduce its water use by an additional 1% during water shortages. The California Water Code requires urban water suppliers like Palo Alto to have a Water Shortage Contingency Plan (WSCP) that includes stages of action to be undertaken in response to water shortages. Palo Alto’s WSCP identifies a 5% - 10% water use reduction target as Stage I, 10%-20% water use reduction as Stage II, 20% - 35% water use reduction as Stage II, and 35% - 50% water use reduction as Stage IV. Because an additional 1% of required savings is unlikely to trigger a more restrictive stage, a slightly lower ISG for Palo Alto would be extremely unlikely to require any additional water use restrictions. The Tier II Plan will expire in 2018 unless extended by the Wholesale Customers. It is possible that a replacement Tier II allocation formula will cease to be based on ISG, making this transfer immaterial to Palo Alto’s potential drought allocation. Agreement to Transfer 0.5 mgd to EPA At Council’s direction, the City Attorney’s Office prepared the attached agreement to enable a permanent transfer of ISG from Palo Alto to EPA. This transfer will not impact Palo Alto’s water supply in any measurable negative way. Timeline Upon Council approval, staff will provide notice to the SFPUC as requried by the WSA, specifying the amount of the ISG proposed to be transferred, the proposed effective date, which must be at least shall 60 days after the notice is submitted, and the ISGs of both parties resulting from the transfer. The SFPUC has 60 days to act upon the notice or it is deemed approved, and will not unreasonably delay or withhold its approval. Resource Impact The transfer of 0.5 mgd of the Cit y of Palo Alto’s ISG to EPA does not cause a resource impact. Because the City is charged based on the water it actually consumes, not based on its contractual entitlement, there are no direct cost savings from transferring part of Palo Alto’s ISG to East Palo Alto. However, because the transfer will enable more development (and therefore more water consumption) in East Palo Alto, it may result in small long-term savings to all SFPUC Wholesale Customers, because the largely fixed costs of maintaining the Hetch Hetchy water system will be shared by more consumers. City of Palo Alto Page 5 Policy Implications While the transfer of a signifcant portion of the City’s ISG could reduce long -term development potential in Palo Alto, based on historic use, water conservation and reduced demand, a 0.5 mgd transfer will not cause a reduction in development potential . In addition, as noted previously, drought allocations may be renegotiated in the near future, which would make the effects of this transfer immaterial to Palo Alto’s future drought allocation. 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 City’s environmental regulations. On June 20, 2017, EPA, acting as lead agency, adopted a Negative Declaration (ND) for the transfer of up to 1.5 mgd of ISG under the SFPUC Water Supply Agreement. The adopted ND contemplated the transfer of up to 1.5 mgd of contractual entitlements between “one or more willing Wholesale Customers” and EPA. The ND is included in Attachment C. The City of Palo Alto, as a responsible agency, prepared an addendum to the City of East Palo Alto’s adopted ND, which is included in Attachment D. The information in this addendum clarifies and amplifies the information evaluated in the ND by specifying the proposed permanent transfer of 0.5 mgd of the City of Palo Alto’s ISG to EPA as a portion of the 1.5 mgd assessed in the ND, and by amplifying the information provided in East Palo Alto’s prior analysis to analyze the effects of the permanent transfer on the City of Palo Alto. Attachments: Attachment A: Water Transfer Agreement with East Palo Alto Attachment B: City of Palo Alto Colleagues Memo Attachment C: City of East Palo Alto Negative Declaration for Transfer of ISG Attachment D: Addendum to the Previously Adopted Negative Declaration 180409 jb 6053928 1 AGREEMENT FOR THE PERMANENT TRANSFER OF A PORTION OF AN INDIVIDUAL SUPPLY GUARANTEE FROM THE CITY OF PALO ALTO TO THE CITY OF EAST PALO ALTO THIS PERMANENT TRANSFER AGREEMENT (the “Agreement”) is dated _______________, 2018 and is between CITY OF PALO ALTO (“Palo Alto”), a California chartered municipal corporation, located at 250 Hamilton Avenue, Palo Alto, CA 94301, and the CITY OF EAST PALO ALTO (“East Palo Alto”), a municipal corporation, located at 2415 University Avenue, East Palo Alto, CA 94303. Each party may be referred to individually as a “Party” and collectively as the “Parties.” RECITALS A. Palo Alto and East Palo Alto are signatories to the “Water Supply Agreement between the City and County of San Francisco and Wholesale Customers in Alameda County, San Mateo County and Santa Clara County”, executed in July 2009 (“2009 WSA”), and each are Wholesale Customers as defined in the WSA. B. The 2009 WSA guarantees Palo Alto an Individual Supply Guarantee of 8,331,697 HCF (“Hundred Cubic Feet”), also expressed as 17.075 million gallons per day (“MGD”), and guarantees East Palo Alto an Individual Supply Guarantee of 1,445,747 HCF, or 2.963 MGD. C. Section 3.04 of the 2009 WSA authorizes the permanent transfer of Individual Water Supply Guarantees among Wholesale Customers. D. The City of Palo Alto and the City of East Palo Alto have determined to enter into this Agreement in order to facilitate the permanent transfer of a portion of Palo Alto’s Individual Supply Guarantee, in the quantity of approximately 243,967 HCF of water, or .5 MGD, to East Palo Alto at no cost, in accordance with this terms of the 2009 WSA and this Agreement. THEREFORE, IN CONSIDERATION OF THE MUTUAL COVENANTS, PROMISES AND AGREEMENTS CONTAINED HEREIN, THE PARTIES AGREE AS FOLLOWS: SECTION 1. Definitions. Capitalized terms used in this Agreement have the same meaning as identified in the 2009 WSA, unless otherwise noted. SECTION 2. Permanent Transfer. Palo Alto will permanently transfer to East Palo Alto all right, title and interest to 243,967 HCF (.5 MGD) of Palo Alto’s Individual Supply Guarantee at ATTACHMENT A 180409 jb 6053928 2 no cost, as authorized by the 2009 WSA. The transfer is subject to approval by the San Francisco Public Utilities Commission (“SFPUC”) under Section 3.04 of the 2009 WSA, and the quantity transferred shall remain subject the pro rata reduction described in Section 3 .02(C). Except for the transfer as described in this Section 2, nothing in this Agreement is intended to affect the rights or obligations of either Palo Alto or East Palo Alto under the 2009 WSA. SECTION 3. Effective Date. The transfer shall become effective upon approval by the SFPUC (“the Approval Date”) as described in Section 4 of this Agreement. SECTION 4. Approval by San Francisco Public Utilities Commission. The Parties shall comply with the additional terms of approval included in the 2009 WSA as follows: A. Within ten (10) business days after the execution of this Agreement, both Parties shall provide notice to the SFPUC as required by Section 3.04(D) of the WSA, specifying the amount of the Individual Supply Guarantee proposed to be transferred, the proposed effective date of the transfer, which shall not be less than 60 days after the notice is submitted to the SFPUC, and the Individual Supply Guarantees of both Parties resulting from the transfer. B. The Approval Date of the transfer shall be the earlier of the date the SFPUC acts to approve the transfer, or the date the transfer is deemed approved because the SFPUC has failed to act on the notice within sixty (60) days after it is submitted, as described in Section 3.04(D) of the WSA. C. Within thirty (30) days after the Approval Date, both Parties shall provide notice to the SFPUC and the Bay Area Water Supply and Conservation Agency as required by Section 3.04(E). SECTION 5. Public Purpose. The Parties’ implementation of this Agreement furthers a public purpose in that Palo Alto has a local interest in promoting the economic development and public health of the region through responsible water use; the econo mic and environmental sustainability of East Palo Alto is important to Palo Alto due to the geographic interconnectedness of the two neighboring municipalities; and East Palo Alto is committed to water conservation and responsible development as demonstrat ed in the “Water Conservation” section of the East Palo Alto Municipal Code, the implementation of the East Palo Alto Urban Water Management Plan, and the development goals set forth in the 2035 East Palo Alto General Plan. SECTION 6. Indemnity. 180409 jb 6053928 3 A. To the fullest extent permitted by applicable law, East Palo Alto will indemnify, defend and hold harmless Palo Alto and its City Council, commissioners, officers, agents, employees, contractors and volunteers from any and all demands, claims, judgments, legal or administrative proceedings, losses, costs, penalties, fines, liens, damages and liabilities of any kind (including without limitation, sums paid in settlement of claims, actual attorneys' fees, paralegal fees, consultant fees, engineering fees, expert fees and any other professional fees) that arise from or are related in any way to East Palo Alto’s negligent, reckless or wrongful acts, errors, or omissions with respect to or in any way connected with the activities exclusively performed by East Palo Alto under this Agreement, including but not limited to obtaining all approvals necessary to execute this Agreement, except for claims, liabilities and damages caused by Palo Alto’s sole negligence or willful misconduct. B. To the fullest extent permitted by applicable law, Palo Alto will indemnify, defend and hold harmless East Palo Alto and its City Council, commissioners, officers, agents, employees, contractors and volunteers from any and all demands, claims, judgments, legal or administrative proceedings, losses, costs, penalties, fines, liens, damages and liabilities of any kind (including without limitation, sums paid in settlement of claims, actual attorneys' fees, paralegal fees, consultant fees, engineering fees, expert fees and any other professional fees) that arise from or are related in any way to Palo Alto’s negligent, reckless or wrongful acts, errors, or omissions with respect to or in any way connected with the activities exclusively performed by Palo Alto under this Agreement, including but not limited to obtaining all approvals necessary to execute this Agreement, except for claims, liabilities and damages caused by East Palo Alto’s sole negligence or willful misconduct. SECTION 7. Miscellaneous. A. Entire Agreement. This document represents the entire agreement between the Parties in relation to the subject matter contained herein. All prior negotiations and written and/or oral agreements between the Parties with respect to the subject matter of the agreement are merged into this Agreement. B. Amendments. This Agreement may only be amended by a written instrument signed by authorized representatives of the Parties. C. Governing Law, Venue. This Agreement, and all the rights and duties of the parties arising from or relating in any way to the subject matter of this Agreement or the transaction(s) contemplated by it, shall be governed by, construed and enforced in accordance with the law of the State of California. Any suit or proceeding relating to this Agreement, 180409 jb 6053928 4 including arbitration proceedings, shall be brought only in Santa Clara County, California. D. Non-Discrimination. As set forth in Palo Alto Municipal Code section 2.30.510, East Palo Alto certifies that in the performance of this Agreement, it shall not discriminate in the employment of any person because of the race, skin color, gender, age, religion, disability, national origin, ancestry, sexual orientation, housing status, marital status, familial status, weight or height of such person. East Palo Alto acknowledges that it has read a nd understands the provisions of Section 2.30.510 of the Palo Alto Municipal Code relating to Nondiscrimination Requirements and the penalties for violation thereof, and agrees to meet all requirements of Section 2.30.510 pertaining to nondiscrimination in employment. E. Third Party Beneficiaries. This Agreement does not, and is not intended to confer any rights or remedies upon any person or entity other than the Parties. F. Counterparts. This Agreement may be executed in several counterparts, and all of such counterparts so executed together shall be deemed to constitute one and the same agreement, and each such counterpart shall be deemed to be an original. Facsimile or electronic signatures shall have the same legal effect as original or manual signatures if followed by mailing of a fully executed original to the Parties. G. Authority. Each party represents and warrants that it has executed this Agreement freely, fully intending to be bound by the terms and provisions contained in this Agreement and that the persons signing below are authorized to sign on each Party’s behalf. SECTION 8. Notices. Any notices provided herein shall be deemed received when mailed or delivered to the respective parties addressed as follows: James Keene Carlos Martinez City Manager City Manager City of Palo Alto City of East Palo Alto 250 Hamilton Avenue 2415 University Avenue, 2nd floor Palo Alto, CA 94301 East Palo Alto, CA 94303 SECTION 8. CEQA. On June 20, 2017 the Council of the City of East Palo Alto, as the lead agency reviewing the proposed transfer of up to 1.5 MGD of Individual Supply Guarantee under the SFPUC Water Supply Agreement, adopted a Negative Declaration, which contemplated the transfer of up to 1.5 MGD of contractual entitlements between “one or more willing Wholesale Customers” and East Palo Alto. The City of Palo Alto subsequently prepared 180409 jb 6053928 5 an addendum to East Palo Alto’s Negative Declaration, which Palo Alto’s City Council considered and approved together with the Negative Declaration on May 7, 2018. SECTION 9. Severability. If any provision of this Agreement shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining portions of this Agreement shall not in any way be affected or impaired thereby. IN WITNESS WHEREOF, the Cities of Palo Alto and East Palo Alto have executed this Agreement effective on the date set forth in the introductory clause . CITY OF PALO ALTO ___________________________ City Manager ___________________________ Director of Utilities APPROVED AS TO FORM: __________________________ City Attorney CITY OF EAST PALO ALTO __________________________ City Manager __________________________ Director of Public Works APPROVED AS TO FORM: __________________________ City Attorney City of Palo Alto COLLEAGUES MEMO December 05, 2016 Page 1 of 3 (ID # 7545) DATE: December 5, 2016 TO: City Council Members FROM: Council Member Filseth, Council Member Holman, Council Member Burt, Council Member DuBois SUBJECT: Colleagues Memo Regarding East Palo Alto Water Shortage As has been reported recently in the news, our neighboring city of East Palo Alto is facing an impending water shortage. East Palo Alto currently uses its entire water supply allocation from the San Francisco Public Utilities Commission (SFPUC), and in June its City Council was forced to impose a moratorium on new development, putting on hold affordable housing projects and commercial development. East Palo Alto is currently pursuing new groundwater pumping initiatives to address its need, a proposition that would impact the aquifer that it shares with Palo Alto. Given that East Palo Alto has the lowest residential per capita water use in the region, the current situation is inadequate to meet its needs. In addition, the economic wellbeing of East Palo Alto is important to Palo Alto, and its ability to provide affordable and obtainable housing helps support its surrounding communities. Officials of East Palo Alto have expressed a strong interest in exploring with Palo Alto and Mountain View whether some fraction of our cities’ water allocatio ns, or Individual Supply Guarantees, could be permanently transferred to East Palo Alto. We would look to East Palo Alto to collaborate with its neighboring cities to manage any impacts from future development made possible by a transfer. Recommendation We request that the Council either direct staff to schedule a Council study session on this topic, or refer it to the Policy and Services Committee, to discuss how the City of Palo Alto may help support East Palo Alto through a transfer or sale of a small portion of our Individual Supply Guarantee. ATTACHMENT B December 05, 2016 Page 2 of 3 (ID # 7545) Background The SFPUC supplies water to San Francisco and 26 wholesale customers in San Mateo, Santa Clara and Alameda Counties (Palo Alto and East Palo Alto are two of those customers). 2.6 million people and thousands of businesses depend on the Hetch Hetchy Regional Water System to deliver water to the Bay Area from the Tuolumne River in Yosemite National Park. Since 2003, the Bay Area Water Supply and Conservation Agency (BAWSCA) has represented the wholesale customers in negotiations with the SFPUC. Roughly one-third of the water distributed by the SFPUC is used in San Francisco, and the remaining two-thirds by BAWSCA member agencies. History of Individual Supply Guarantees (ISGs) Individual Supply Guarantees (permanent water supply allocations) for the wholesale customers were first established in 1984. The SFPUC allocated a perpetual supply assurance of 184 million gallons of water per day (mgd) to its wholesale customers, and in 1994 the wholesale customers together formally determined how the water would be allocated among them. In 1984, East Palo Alto had just been incorporated, and large projects such as University Circle, IKEA, Gateway 101 and other development were not yet planned. Today, East Palo Alto’s ISG is 1.96 mgd, far lower than its needs and historic usage. Current Status of ISGs In 2008, the SFPUC approved its Water System Improvement Program (WSIP) to upgrade the Hetch Hetchy Regional Water System to be able to withstand a major earthquake. The WSIP capped water sales at 265 mgd: 81 mgd for San Francisco and 184 mgd for the BAWSCA member agencies until at least 2018. The SFPUC’s 2015 Urban Water Management Plan operated under the assumption that the 265 mgd sales cap would likely remain in place after 2018. Last year BAWSCA member agencies purchased about 126 mgd from the SFPUC, well below the 184 cap. SFPUC projects that East Palo Alto will need about 3.5 mgd by 2040. Palo Alto is projected to use 11.9 mgd in 2020, with use slightly decreasing thereafter as water conservation programs continue. (See attached graph from the SFPUC.) These programs have proven significant, as over the past 20 years Palo Alto has reduced its usage by 40%, to approximately 10 mgd, through water efficiency programs, conservation and reductions in our manufacturing sector. These reductions occurred concurrently with increases in the City’s population and employment over that same period. Page 3 of 3 December 05, 2016 (ID # 7545) ISG transfers are permitted under the 2009 Water Supply Agreement (WSA) between the SFPUC and its wholesale customers, but must be permanent, at least 100,000 gallons per day, and approved by the SFPUC.1 Drought Allocations In the case of water shortages, the SFPUC can reduce water sales to both San Francisco and the wholesale customers under the Tier I Water Shortage Allocation Plan, distributing water based on the level of shortage. The Tier II Drought Implementation Plan, adopted by the wholesale customers in 2010, allocates the collective wholesale customer share among each of the 26 wholesale customers, based on a combination of ISGs and seasonal water use, with an adjustment for East Palo Alto to ensure it can meet its basic health and safety needs during a drought. The Tier II Plan will expire in 2018 unless extended by the wholesale customers. Under the Tier II Plan, a transfer of .5 mgd to East Palo Alto could require Palo Alto to reduce its water use by an additional 1% in times of drought, and a 1 mgd transfer could require an additional 2% reduction in water use. These conservation levels assume that the Tier II Plan would remain intact after 2018, the likelihood of which is not yet known. However, State water conservation mandates are independent of both the SFPUC’s Tier I Water Shortage Implementation Plan and the wholesale customers’ Tier II Drought Allocation Plan. The 2015/16 State mandate required communities statewide to reduce their water use by 8% - 36%, depending largely on total per capita use. Because of its very low per capita use, East Palo Alto’s reduction mandate was 8% while Palo Alto’s was 24%. Palo Alto was able to well exceed its mandated reduction. It is possible that State water conservation mandates will continue to be the primary drought reduction driver, rather than implementation of the SFPUC and wholesale customer’s Plans, given that the Hetch Hetchy Regional Water System includes significant storage in proportion to its annual needs. Even after five years of drought and one normal water year, the SFPUC’s reservoirs are currently at close to 80% of capacity, among the highest in the state. 1 Transfers are described in Section 3.04 of the WSA, available at http://www.sfwater.org/modules/showdocument.aspx?documentid=8632 1 Negative Declaration: Transfer of up to 1.5 MGD of Individual Supply Guarantee under the San Francisco Public Utility Commission Water Supply Agreement. May 2017 Prepared by the Planning Division, City of East Palo Alto Guido F. Persicone, AICP, Planning Manager Lead City Agency: City of East Palo Alto CITY OF EAST PALO ALTO Planning and Housing Division 1960 Tate Street, East Palo Alto, CA 94303 Phone (650) 853-3185 ATTACHMENT C 2 City of East Palo Alto Planning Division 1960 Tate Street, East Palo Alto, CA 94303 (650) 853-3185 Phone (650) 853-3179 Fax Purpose of a Negative Declaration The California Environmental Quality Act (CEQA) was enacted in 1970 for the purpose of providing decision-makers and the public with information regarding environmental effects of proposed projects; identifying ways environmental damage can be avoided; and disclosing to the public why a project is approved even if it leads to environmental damage. The City of East Palo Alto has determined the proposed project is subject to CEQA, and no exemptions apply. A negative declaration is a written statement that briefly explains why a proposed project will not have a significant environmental effect. It must include a brief description of the project and location, identification of the project proponent and a proposed finding of no significant effect. The negative declaration is also required to include a copy of the initial study justifying the conclusion that no significant effect would occur. Process In accordance with Section 15063 of the CEQA guidelines, the City Council shall consider the proposed negative declaration (ND) together with any comments received during the public review process. Upon conclusion of the review, the Council shall adopt the proposed negative declaration if after considering the entire record (including comments, and the initial study) that there is no substantial evidence that the project will have a significant effect on the environment and that the ND reflects the lead agency’s independent judgment and analysis. The 20-day public comment period for the MND commences on May 19, 2017 and ends on June 9, 2017. Pursuant to Section 15072 of the CEQA guidelines, a notice of intent (NOI) to adopt a ND shall be provided to the public, responsible agencies, and trustee agencies, including the County Clerk for posting. The notice will also be published in the Daily News, or other newspaper of general circulation within the City, on May 19, 2017. Table 1-Water Transfer Negative Declaration Project Timeline Public Comment Period May 19, 2017- June 9, 2017 City Council Review of Negative Declaration and project. June 20, 2017 Filing the Notice Of Determination June 21, 2017 3 ENVIRONMENTAL CHECKLIST FORM 1. Project title: Transfer of up to 1.5 MGD of Individual Supply Guarantee under the San Francisco Public Utility Commission Water Supply Agreement. 2. Lead agency name and address: City of East Palo Alto Planning Division 1960 Tate Street East Palo Alto, CA 94303 3. Contact person and phone number: Guido F. Persicone, Planning Manager, AICP gpersicone@cityofepa.org (650) 853-3195 4. Project location: Citywide 5. Project sponsor's name and address: City of East Palo Alto 1960 Tate Street East Palo Alto, CA 94303 6. General Plan Designation: Varies 7. Zoning: Varies 8. Description of project: (Describe the whole action involved, including but not limited to later phases of the project, and any secondary, support, or off-site features necessary for its implementation. Attach additional sheets if necessary.) The proposed project consists of a permanent transfer to the City of East Palo Alto of contractual entitlements to purchase from the San Francisco Public Utilities Commission [“SFPUC”] up to 1.5 million gallons per day (MGD) of water in accordance with the Water Supply Agreement between the City and County Of San Francisco and Wholesale Customers in Alameda County, San Mateo County and Santa Clara County, July 2009 [“Water Supply Agreement”]. East Palo Alto is a party to the Water Supply Agreement and currently has a contractual entitlement to purchase, referred to in the Water Supply Agreement as an Individual Supply Guarantee [“ISG”] of 1.963 MGD. The proposed project could result in an increase in the amount of East Palo Alto’s ISG to a total amount of 3.463 MGD. The Water Supply Agreement authorizes Wholesale Customers to permanently transfer ISG to another Wholesale Customer. An ISG transfer does not increase the total amount of water made available by the SFPUC under the Water Supply Agreement. An ISG transfer results in a permanent reduction of the ISG of the transferor and a permanent increase of the ISG of transferee. 4 The ISG transfers would be accomplished by agreements between East Palo Alto and one or more willing Wholesale Customers [“BAWSCA members”]. Potential BAWSCA members having ISG available for transfer include the City of Mountain View, and potentially other BAWSCA members. East Palo Alto has sufficient capacity in its water system and its existing connections to the SFPUC facilities to accommodate delivery of the additional 1.5 MGD, and would take delivery of additional water made available as a result of the project in a manner physically identical to its existing water supply connection with the SFPUC. The transfer would use existing infrastructure and would not require the construction of additional infrastructure. The proposed project would provide East Palo Alto with entitlements to purchase from the SFPUC sufficient water supplies to accommodate, over time, the development that is contemplated by East Palo Alto’s General Plan, which was updated in 2016. Also, the proposed project is consistent with and would implement East Palo Alto’s 2015 Urban Water Management Plan. The proposed project would not provide East Palo Alto with supplies that exceed the amounts needed to accommodate the ultimate buildout of the City as contemplated by the General Plan or exceed the amounts projected by the Urban Water Management Plan. The proposed project does not authorize any particular development project, and the timing, location, and scale of any particular development would depend on future development approvals in following the processing of development applications accordance with East Palo Alto’s General Plan, zoning ordinance, CEQA, and other land use development regulations. 9. Existing Setting In October 2016, the City certified the EIR (SCH 2014092027) for the City of East Palo Alto General Plan Update, which discusses the potential growth-inducing impacts of the General Plan. The General Plan Update would facilitate future development of up to 2,519 additional residential dwellings, 333,406 square feet of retail development, 1.9 million square feet of office development, and 267,987 square feet of new industrial space by the year 2040. Proposed growth envisioned in the General Plan would increase the City’s population by an estimated 7,764 residents, as well as additional employees within the City. The City of East Palo Alto conducted a Water Supply Assessment (WSA) in 2015 and data from the WSA were used in the General Plan Update EIR analysis. The EIR concluded that although the General Plan Update provides appropriate land use goals and policies to accommodate future growth, planned growth would require expansion of water services. A summary of the growth-inducement analysis of the EIR is provided below. The General Plan Update EIR determined that such growth would generate an increase in future water demand that would not be met with the City’s existing or future water supplies. The Updated EIR found that with projected development, water demands could outstrip available supplies by 2020; therefore, growth associated with implementation of the Update would require gradual expansion of existing public works, such as water supply and infrastructure (City of East Palo Alto, 2016a). The General Plan and EIR included policies to seek additional water supply and mitigations to ensure that verifiable water supply was available prior to the approval of projects. The General Plan Update requires new or intensified development project proponents to submit a Water Supply Assessment that demonstrates adequate water would be available before project approval. 5 The City of East Palo Alto prepared an EIR on the Ravenswood/4 Corners TOD Specific Plan in 20121. The Ravenswood/4 Corners Area is estimated to contribute about one third of City-wide projected new housing units and retail space, all new proposed industrial space, and approximately 60 percent of proposed new office space (City of East Palo Alto, 2016a). The EIR includes analysis of the growth-inducement potential of the Specific Plan, which concludes that the construction of new housing units would directly induce growth. The City’s 2015 Urban Water Management Plan (UWMP) was prepared in coordination with the General Plan Update, and the WSAs prepared in support of the General Plan Update and Specific Plan. On April 19, 2016, the City Council adopted Resolution No.4723 titled, A Resolution of the City Council of the City of East Palo Alto advocating for an additional water supply of up to 1.5mgd and authorizing the city manager to work with the City’s partners at the BAWSCA and the SFPUC to secure up to an additional 1.5mgd in water supply. Resolution No. 4723 is intended to assure sufficient water to implement the City’s General Plan, Urban Water Management Plan, and other official plans and policies of the City through a program to obtain additional water supplies. On July 19, 2016, the East Palo Alto City Council adopted Ordinance No. 399 to establish a temporary prohibition of new or expanded water supply connections within the City. The City Council had determined the current ordinary demands and requirements of water consumers within the service territory of the City’s Water System meet or exceed the amount of the water supply available to the City. Demands created by new, additional, or expanded water service connections cannot be satisfied without adversely affecting the health, safety, and welfare of current water uses. Therefore, it is necessary to set aside and allocate all of the City’s currently available water supply to meet the demands of current water users and to establish a temporary prohibition of new or expanded water service connections within the Service Area of the City’s Water System. The City Council also found that the City is experiencing a City-wide water supply shortage and has been working diligently to implement identified solutions, including the design and installation of new wells and water treatment systems, often referred to as the Gloria Way Well and the Pad D Well, to take advantage of potential groundwater resources. However, the completion date and water supply yield of these projects are currently uncertain. The City Council referenced Resolution No. 4723, and found that it was necessary for the City to continue to seek to augment its water supplies in sufficient water amounts to implement the City’s General Plan, Urban Water Management Plan, and other official plans and policies of the City. Therefore, the project is intended to accommodate the City’s existing policies of improving the current jobs housing imbalance, attract development that would generate revenue, provide employment, and create affordable housing (City of East Palo Alto, 2016b). 1 City of East Palo Alto, Ravenswood/4 Corners TOD Specific Plan, Final EIR, State Clearinghouse #2011052006. Available online at http://www.ci.east-palo-alto.ca.us/Archive/ViewFile/Item/126. 6 ENVIRONMENTAL FACTORS POTENTIALLY AFFECTED: The environmental factors listed below would be potentially affected by this project. There are no factors that are considered a “Potentially Significant Impact” as indicated by the checklist on the following pages. Aesthetics Agricultural Resources Air Quality Biological Resources Cultural Resources Geology and Soils Hazards and Hazardous Materials Hydrology and Water Quality Mandatory Findings of Significance Land Use and Planning Mineral Resources Noise Population and Housing Public Services Recreation Transportation and Circulation Utilities and Service Systems 10. 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 the mitigation measures described herein have been added to the project. A NEGATIVE DECLARATION will be prepared. 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 significant effect(s) 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, if the effect is a "potentially significant impact" or "potentially significant unless mitigated." 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, there WILL NOT be a significant effect in this case because all potentially significant effects (a) have been analyzed adequately in an earlier EIR pursuant to applicable standards, and (b) have been avoided or mitigated pursuant to that earlier EIR, including revisions or mitigation measures that are imposed upon the proposed project. _______________________________ Printed Name: Guido F. Persicone, Planning Manager, AICP Date: May 19, 2017 7 THIS PAGE INTENTIONALLY LEFT BLANK 8 ENVIROMENTAL CHECKLIST I. AESTHETICS AESTHETICS PO T E N T I A L L Y SIG N I F I C A N T AD V E R S E I M P A C T LE S S T H A N SIG N I F I C A N T IM P A C T W I T H MI T I G A T I O N IN C O R P O R A T E D LESS THAN SIGNIFICANT IMPACT NO I M P A C T Have a substantially adverse effect on a scenic vista? X Substantially damage scenic resources, including but not limited to trees, rock outcroppings, and historic buildings within a state scenic highway? X Substantially degrade the existing visual character or quality of the site and its surroundings? X Create a new source of light or glare, which would adversely affect day or nighttime views in the area? X Approval of this project does not result in any direct physical changes to the environment and does not propose specific development. The additional water supply could be used to accommodate planned growth included in the City’s recently adopted General Plan and Program EIR (SCH 2014092027). The proposed project would not itself permit any development project to occur. Rather, it would provide a sufficient water supply resource for future development contemplated by the General Plan as that development occurs. Since any new development must comply with the General Plan and other applicable regulations, potential impacts would be less than significant and no mitigation measures are required. 9 II. AGRICULTURAL RESOURCES AGRICULTURAL RESOURCES PO T E N T I A L L Y SIG N I F I C A N T AD V E R S E IM P A C T LE S S T H A N SIG N I F I C A N T IM P A C T W I T H MI T I G A T I O N IN C O R P O R A T E D LESS THAN SIGNIFICANT IMPACT NO I M P A C T Convert prime farmland, unique farmland or farmland of statewide importance, as shown on maps prepared pursuant to the Farmland Mapping and Monitoring Program of the California Resources Agency, to non- agricultural use? x Conflict with existing zoning for agricultural use, or a Williamson Act contract? x Involve other changes in the existing environment which, due to their location or nature, could result in the conversion of farmland to non- agricultural use? x Approval of this project does not result in any direct physical changes to the environment and does not propose specific development. The additional water supply could be used to accommodate planned growth included in the City’s recently adopted General Plan and Program EIR (SCH 2014092027). The proposed project would not itself permit any development project to occur. Rather, it would provide a sufficient water supply resource for future development contemplated by the General Plan as that development occurs. Since any new development must comply with the General Plan and other applicable regulations, potential impacts would be less than significant and no mitigation measures are required. 10 III. AIR QUALITY AIR QUALITY PO T E N T I A L L Y SIG N I F I C A N T AD V E R S E I M P A C T LE S S T H A N SIG N I F I C A N T IM P A C T W I T H MI T I G A T I O N IN C O R P O R A T E D LESS THAN SIGNIFICANT IMPACT NO I M P A C T Conflict with or obstruct implementation of the applicable air quality plan? x Violate any air quality standard or contribute substantially to an existing or projected air quality violation? x Result in 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)? x Expose sensitive receptors to substantial pollutant concentrations? x Create objectionable odors affecting a substantial number of people? x Approval of this project does not result in any direct physical changes to the environment and does not propose specific development. The additional water supply could be used to accommodate planned growth included in the City’s recently adopted General Plan and Program EIR (SCH 2014092027). The proposed project would not itself permit any development project to occur. Rather, it would provide a sufficient water supply resource for future development contemplated by the General Plan as that development occurs. Since any new development must comply with the General Plan and other applicable regulations, potential impacts would be less than significant and no mitigation measures are required. IV. BIOLOGICAL RESOURCES BIOLOGICAL RESOURCES PO T E N T I A L L Y SI G N I F I C A N T AD V E R S E IM P A C T LE S S T H A N SIG N I F I C A N T IM P A C T W I T H MI T I G A T I O N IN C O R P O R A T E D LE S S T H A N SIG N I F I C A N T IM P A C T NO I M P A C T 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? x Have a substantial adverse effect on any riparian habitat or other sensitive natural community identified in local or regional plans, policies or regulations, or by the California Department of Fish and Game or U.S. Fish and Wildlife Service? x Have a substantial adverse effect on 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? x Interfere substantially with the movement of any native resident or migratory fish or wildlife species or with established native resident or migratory wildlife corridors, or impede the use of the native wildlife nursery sites? x Conflict with any local policies or ordinances protecting biological resources, such as tree preservation policy or ordinance? x Conflict with the provisions of any adopted Habitat Conservation Plan, Natural Community Conservation Plan, or other approved local, regional, or state habitat conservation plan? x Approval of this project does not result in any direct physical changes to the environment and does not propose specific development. The additional water supply could be used to accommodate planned growth included in the City’s recently adopted General Plan and Program EIR (SCH 2014092027). The proposed project would not itself permit any development project to occur. Rather, it would provide a sufficient water supply resource for future development contemplated by the General Plan as that development occurs. Since any new development must comply with the General Plan and other applicable regulations, potential impacts would be less than significant and no mitigation measures are required. V. CULTURAL RESOURCES CULTURAL RESOURCES PO T E N T I A L L Y SIG N I F I C A N T AD V E R S E I M P A C T LE S S T H A N SIG N I F I C A N T IM P A C T W I T H MI T I G A T I O N IN C O R P O R A T E D LESS THAN SIGNIFICANT IMPACT NO I M P A C T Cause a substantial adverse change in the significance of a historical resource as defined in Section 15064.5? x Cause a substantial adverse change in the significance of an archaeological resource pursuant to Section 15064.5? x Directly or indirectly destroy a paleontological resource or site or unique geological feature? x Disturb any human remains, including those interred outside of formal cemeteries? x Approval of this project does not result in any direct physical changes to the environment and does not propose specific development. The additional water supply could be used to accommodate planned growth included in the City’s recently adopted General Plan and Program EIR (SCH 2014092027). The proposed project would not itself permit any development project to occur. Rather, it would provide a sufficient water supply resource for future development contemplated by the General Plan as that development occurs. Since any new development must comply with the General Plan and other applicable regulations, potential impacts would be less than significant and no mitigation measures are required. VI. GEOLOGY AND SOILS GEOLOGY AND SOILS PO T E N T I A L L Y SIG N I F I C A N T AD V E R S E I M P A C T LE S S T H A N SIG N I F I C A N T IM P A C T W I T H MI T I G A T I O N IN C O R P O R A T E D LESS THAN SIGNIFICANT IMPACT NO I M P A C T Expose people or structures to potential substantial adverse effects, including the risk of loss, injury, or death involving: x Rupture of known earthquake fault, as delineated on the most recent Alquist-Piolo 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) x Strong seismic ground shaking? x Seismic related ground failure, including liquefaction? x Landslides? x Result in substantial soil erosion or the loss of topsoil? x Be located on a geological 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? x Be located on expansive soil, as defined in Table 18-1-b of the Uniform Building Code (1994), creating substantial risks of life or property? x Have soils incapable of adequately supporting the use of septic tanks or alternative wastewater disposal systems where sewers are not available for the disposal of wastewater? x Approval of this project does not result in any direct physical changes to the environment and does not propose specific development. The additional water supply could be used to accommodate planned growth included in the City’s recently adopted General Plan and Program EIR (SCH 2014092027). The proposed project would not itself permit any development project to occur. Rather, it would provide a sufficient water supply resource for future development contemplated by the General Plan as that development occurs. Since any new development must comply with the General Plan and other applicable regulations, potential impacts would be less than significant and no mitigation measures are required. VII. Hazards and Hazardous Materials HAZARDS AND HAZARDOUS MATERIALS PO T E N T I A L L Y SI G N I F I C A N T AD V E R S E I M P A C T LE S S T H A N SI G N I F I C A N T IM P A C T W I T H MI T I G A T I O N IN C O R P O R A T E D LESS THAN SIGNIFICANT IMPACT NO I M P A C T 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? x Emit hazardous emissions or handle acutely hazardous materials, substances or waste within one- quarter mile of existing or proposed school? x 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 for people residing or working in the project area? x 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? x For a project in the vicinity of a private airstrip, would the project result in a safety hazard for people residing or working in the project area? x Impair implementation of or physically interfere with an adopted emergency response plan or emergency evacuation plan? x 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? x Approval of this project does not result in any direct physical changes to the environment and does not propose specific development. The additional water supply could be used to accommodate planned growth included in the City’s recently adopted General Plan and Program EIR (SCH 2014092027). The proposed project would not itself permit any development project to occur. Rather, it would provide a sufficient water supply resource for future development contemplated by the General Plan as that development occurs. Since any new development must comply with the General Plan and other applicable regulations, potential impacts would be less than significant and no mitigation measures are required. VIII. HYDROLOGY AND WATER QUALITY HYDROLOGY AND WATER QUALITY PO T E N T I A L L Y SI G N I F I C A N T AD V E R S E I M P A C T LE S S T H A N SI G N I F I C A N T IM P A C T W I T H MI T I G A T I O N IN C O R P O R A T E D LE S S T H A N SI G N I F I C A N T IM P A C T NO I M P A C T Violate any water quality standards or waste discharge requirements? x 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)? x Substantially alter the existing drainage pattern of the site or area, including the alteration of the course of a stream or river in a manner, which would result in substantial erosion on- or off-site? x Substantially alter the existing drainage pattern of the site or area, including the alteration of the course of a stream or river, in a manner, which would result in flooding on- or off-site? x Create or contribute runoff water, which would exceed the capacity of existing or planned storm water drainage systems or provide substantial additional sources of pollution runoff? x Otherwise substantially degrade water quality? x Place housing within a 100-year flood hazard as mapped on a federal Flood Hazard Boundary or Flood Insurance Rate Map or other flood hazard delineation map? x Place within a 100-year flood hazard area, structures that would impede or redirect flood flows? x Expose people or structures to a significant risk of loss, injury or death involving flooding, including flooding as a result of the failure of a levee or dam? x Inundation by seiche, tsunami or mudflow?x Approval of this project does not result in any direct physical changes to the environment and does not propose specific development. The additional water supply could be used to accommodate planned growth included in the City’s recently adopted General Plan and Program EIR (SCH 2014092027). The proposed project would not itself permit any development project to occur. Rather, it would provide a sufficient water supply resource for future development contemplated by the General Plan as that development occurs. Since any new development must comply with the General Plan and other applicable regulations, potential impacts would be less than significant and no mitigation measures are required. IX. LAND USE PLANNING LAND USE AND PLANNING PO T E N T I A L L Y SI G N I F I C A N T AD V E R S E IM P A C T LE S S T H A N SI G N I F I C A N T IM P A C T W I T H MI T I G A T I O N IN C O R P O R A T E D LESS THAN SIGNIFICANT IMPACT NO I M P A C T Physically divide an established community? x 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 plan, coastal program or zoning ordinance) adopted for the purpose of avoiding or mitigating an environmental effect? x Conflict with any applicable habitat conservation plan or natural community conservation plan? x Approval of this project does not result in any direct physical changes to the environment and does not propose specific development. The additional water supply could be used to accommodate planned growth included in the City’s recently adopted General Plan and Program EIR (SCH 2014092027). The proposed project would not itself permit any development project to occur. Rather, it would provide a sufficient water supply resource for future development contemplated by the General Plan as that development occurs. Since any new development must comply with the General Plan and other applicable regulations, potential impacts would be less than significant and no mitigation measures are required. X. MINERAL RESOURCES MINERAL RESOURCES PO T E N T I A L L Y SI G N I F I C A N T AD V E R S E IM P A C T LE S S T H A N SI G N I F I C N T IM P A C T W I T H MI T I G A T I O N IN C O R P O R A T E D LESS THAN SIGNIFICANT IMPACT NO I M P A C T 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? x 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? x Approval of this project does not result in any direct physical changes to the environment and does not propose specific development. The additional water supply could be used to accommodate planned growth included in the City’s recently adopted General Plan and Program EIR (SCH 2014092027). The proposed project would not itself permit any development project to occur. Rather, it would provide a sufficient water supply resource for future development contemplated by the General Plan as that development occurs. Since any new development must comply with the General Plan and other applicable regulations, potential impacts would be less than significant and no mitigation measures are required. XI. NOISE NOISE PO T E N T I A L L Y SIG N I F I C A N T AD V E R S E IM P A C T LE S S T H A N SIG N I F I C A N T IM P A C T W I T H MI T I G A T I O N IN C O R P O R A T E D LESS THAN SIGNIFICANT IMPACT NO I M P A C T Generate or expose people to noise levels in excess of standards established in local general plan or noise ordinance or applicable standards or other agencies? x Generate or expose people to excessive ground borne vibration or ground borne noise levels? x Result in a substantial permanent increase in ambient noise levels in the project vicinity above levels existing without the project? x Create substantial temporary or periodic increase in ambient noise levels in the project vicinity above levels existing x For a project located within an airport land use plan or where such a plan has not been adopted, within two miles of an airport or public use airstrip, would the project expose people residing or working in the project area to excessive noise levels? x For a project in the vicinity of a private airstrip, would the project expose people residing of working in the project area to excessive noise levels? x Approval of this project does not result in any direct physical changes to the environment and does not propose specific development. The additional water supply could be used to accommodate planned growth included in the City’s recently adopted General Plan and Program EIR (SCH 2014092027). The proposed project would not itself permit any development project to occur. Rather, it would provide a sufficient water supply resource for future development contemplated by the General Plan as that development occurs. Since any new development must comply with the General Plan and other applicable regulations, potential impacts would be less than significant and no mitigation measures are required. XII. POPULATION AND HOUSING POPULATION AND HOUSING PO T E N T I A L L Y SIG N I F I C A N T AD V E R S E IM P A C T LE S S T H A N SIG N I F I C A N T IM P A C T W I T H MI T I G A T I O N IN C O R P O R A T E D LESS THAN SIGNIFICANT IMPACT NO I M P A C T Induce substantial population growth in an area directly (for example, by proposing new homes and businesses) or indirectly (for example, through extension of roads or other infrastructure)? x Displace substantial numbers of existing housing necessitating the construction of replacement housing elsewhere? x Displace substantial numbers of people, necessitating the construction of replacement housing elsewhere? x Approval of this project does not result in any direct physical changes to the environment and does not propose specific development. The additional water supply could be used to accommodate planned growth included in the City’s recently adopted General Plan and Program EIR (SCH 2014092027). The proposed project would not itself permit any development project to occur. Rather, it would provide a sufficient water supply resource for future development contemplated by the General Plan as that development occurs. Since any new development must comply with the General Plan and other applicable regulations, potential impacts would be less than significant and no mitigation measures are required. XIII. PUBLIC SERVICES PUBLIC SERVICES PO T E N T I A L L Y SI G N I F I C A N T AD V E R S E IM P A C T LE S S T H A N SI G N I F I C A N T IM P A C T W I T H MI T I G A T I O N IN C O R P O R A T E D LESS THAN SIGNIFICANT IMPACT NO I M P A C T Result in substantial adverse physical impacts associated with the provision of new or physically altered governmental facilities, a need for new or physically altered governmental facilities the construction of which could cause significant environmental impacts in order to maintain acceptable service ratios or response time or other performance objectives for any of the following public services: x Fire protection? x Police protection? x Schools? x Parks? x Approval of this project does not result in any direct physical changes to the environment and does not propose specific development. The additional water supply could be used to accommodate planned growth included in the City’s recently adopted General Plan and Program EIR (SCH 2014092027). The proposed project would not itself permit any development project to occur. Rather, it would provide a sufficient water supply resource for future development contemplated by the General Plan as that development occurs. Since any new development must comply with the General Plan and other applicable regulations, potential impacts would be less than significant and no mitigation measures are required. XIV. RECREATION RECREATION PO T E N T I A L L Y SIG N I F I C A N T AD V E R S E I M P A C T LE S S T H A N SIG N I F I C A N T IM P A C T W I T H MI T I G A T I O N IN C O R P O R A T E D LESS THAN SIGNIFICANT IMPACT NO I M P A C T 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? x Include recreational facilities or require the construction or expansion of recreational facilities, which might have an adverse physical effect on the environment? x Approval of this project does not result in any direct physical changes to the environment and does not propose specific development. The additional water supply could be used to accommodate planned growth included in the City’s recently adopted General Plan and Program EIR (SCH 2014092027). The proposed project would not itself permit any development project to occur. Rather, it would provide a sufficient water supply resource for future development contemplated by the General Plan as that development occurs. Since any new development must comply with the General Plan and other applicable regulations, potential impacts would be less than significant and no mitigation measures are required. XV. TRANSPORTATION/TRAFFIC TRANSPORTATION / TRAFFIC PO T E N T I A L L Y SIG N I F I C A N T AD V E R S E IM P A C T LE S S T H A N SIG N I F I C A N T IM P A C T W I T H MI T I G A T I O N IN C O R P O R A T E D LESS THAN SIGNIFICANT IMPACT NO I M P A C T 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)? x Exceed, either individually or cumulatively, a level of service standard established by the county congestion management agency for designation roads or highways? x Result in a change in air traffic patterns, including wither an increase in traffic levels or a change in location that results in substantial safety risks? x Substantially increase hazards due to a design feature (e.g. sharp curves or dangerous intersection) or incompatible uses (e.g. farm equipment)? x Result in inadequate emergency access? x Result in inadequate parking capacity? x Conflict with adopted policies, plans or programs supporting alternative transportation (e.g. bus turnouts, bicycle racks, etc.)? x Approval of this project does not result in any direct physical changes to the environment and does not propose specific development. The additional water supply could be used to accommodate planned growth included in the City’s recently adopted General Plan and Program EIR (SCH 2014092027). The proposed project would not itself permit any development project to occur. Rather, it would provide a sufficient water supply resource for future development contemplated by the General Plan as that development occurs. Since any new development must comply with the General Plan and other applicable regulations, potential impacts would be less than significant and no mitigation measures are required. XVI. UTILITIES AND SERVICE SYSTEMS UTILITIES AND SERVICE SYSTEMS PO T E N T I A L L Y SI G N I F I C A N T AD V E R S E IM P A C T LE S S T H A N SI G N I F I C A N T IM P A C T W I T H MI T I G A T I O N IN C O R P O R A T E D LESS THAN SIGNIFICANT IMPACT NO I M P A C T Exceed wastewater treatment requirements of the applicable Regional Water Quality Control Board? x Require or result in construction of new water or wastewater treatment facilities or expansion of existing facilities, the construction of which could cause significant environmental effects? x Require or result in construction of new storm water drainage facilities or expansion of existing facilities, the construction of which could cause significant environmental effects? x Have sufficient water available to serve the project from existing entitlements and resources, or are new or expanded entitlements needed? x Result in a determination by the wastewater treatment provider, which serves or may serve the project that it has adequate capacity to serve the project’s projected demand in addition to the provider’s existing commitments? x Be served by a landfill with sufficient permitted capacity to accommodate the project’s solid waste disposal needs? x Comply with federal, state, and local statutes and regulations related to solid waste? x Approval of this project does not result in any direct physical changes to the environment and does not propose specific development. The additional water supply could be used to accommodate planned growth included in the City’s recently adopted General Plan and Program EIR (SCH 2014092027). The proposed project would not itself permit any development project to occur. Rather, it would provide a sufficient water supply resource for future development contemplated by the General Plan as that development occurs. Since any new development must comply with the General Plan and other applicable regulations, potential impacts would be less than significant and no mitigation measures are required. XVII. MANDATORY FINDINGS OF SIGNIFICANCE MANDATORY FINDINGS OF SIGNIFICANCE PO T E N T I A L L Y SI G N I F I C A N T AD V E R S E I M P A C T LE S S T H A N SI G N I F I C A N T IM P A C T W I T H MI T I G A T I O N IN C O R P O R A T E D LESS THAN SIGNIFICANT IMPACT NO I M P A C T Have the potential to degrade the quality of the environment, substantially reduce the habitat of a fish or wildlife species, case a fish or wildlife species to drop below self-sustaining levels, threaten to eliminate a plant of animal community, reduce the number or restrict 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? x 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)? x Have environmental effects, which will cause substantial adverse effects on human beings, either directly or indirectly? x Approval of this project does not result in any direct physical changes to the environment and does not propose specific development. The additional water supply could be used to accommodate planned growth included in the City’s recently adopted General Plan and Program EIR (SCH 2014092027). The proposed project would not itself permit any development project to occur. Rather, it would provide a sufficient water supply resource for future development contemplated by the General Plan as that development occurs. Since any new development must comply with the General Plan and other applicable regulations, potential impacts would be less than significant and no mitigation measures are required. References – Other CEQA Considerations City of East Palo Alto, 2012. Ravenswood/4 Corners TOD Specific Plan Final EIR. July 30, 2012. SCH# 2011052006. City of East Palo Alto, 2013. Ravenswood/4 Corners TOD Specific Plan. February 22, 2013. City of East Palo Alto, 2016a. Draft Environmental Impact Report, City of East Palo Alto General Plan Update. (SCH 2014092027)Prepared for the City of East Palo Alto by Circlepoint. April 2016. Available online at http://www.ci.east-palo- alto.ca.us/DocumentCenter/View/2633. Accessed October 10, 2016. City of East Palo Alto, 2016b. City Council Agenda Report, Approving an Ordinance Prohibiting New or Expanded Water Connections to the City of East Palo Alto Water System; July 19, 2016. City of East Palo Alto, 2016c. City Council Regular Meeting, Minutes. Tuesday, July 19, 2016 Page 1 of 4 ATTACHMENT D ADDENDUM TO THE ADOPTED NEGATIVE DECLARATION FOR THE TRANSFER OF UP TO 1.5 MGD OF INDIVIDUAL SUPPLY GUARANTEE UNDER THE SAN FRANCISCO PUBLIC UTILITY COMMISSION WATER SUPPLY AGREEMENT Date: April 3, 2018 Project Name: Transfer of Up to 1.5 MGD of Individual Supply Guarantee Under the San Francisco Public Utility Commission Water Supply Agreement Project Location: Cities of Palo Alto and East Palo Alto Background Through adoption of Resolution No. 4862 on June 20, 2017, the City of East Palo Alto City Council, acting as lead agency, adopted the Negative Declaration for the transfer of up to 1.5 million gallons per day (mgd) of Individual Supply Guarantee (ISG) under the San Francisco Public Utilities Commission Water Supply Agreement (hereinafter, “Project”). The approved Project consists of a permanent transfer to the City of East Palo Alto of contractual entitlements to purchase from the San Francisco Public Utilities Commission [“SFPUC”] up to 1.5 million gallons per day (MGD) of water in accordance with the Water Supply Agreement between the City and County of San Francisco and Wholesale Customers 1 in Alameda County, San Mateo County and Santa Clara County, July 2009 [“Water Supply Agreement”]. The adopted Negative Declaration contemplated the transfer of 1.5 MGD of contractual entitlements between “one or more willing Wholesale Customers [Bay Area Water Supply and Conservation Agency members]” and the City of East Palo Alto. Summary of Proposed Modifications to Negative Declaration The City of Palo Alto, as a responsible agency, prepared this addendum to the City of East Palo Alto’s adopted Negative Declaration in order to disclose the proposed permanent transfer of 0.5 MGD of the City of Palo Alto’s Individual Supply Guarantee (ISG) in accordance with the Water Supply Agreement (WSA) to the City of East Palo Alto. The information in this addendum clarifies and amplifies the information evaluated in the Negative Declaration by clarifying the 1 The Wholesale Customers are the 26 agencies that are members of the Bay Area Water Supply and Conservation Agency (BAWSCA) and include Alameda County Water Di strict, California Water Service Company, Coastside County Water District, Estero Municipal Improvement District, Guadalupe Valley Municipal Improvement District, Mid-Peninsula Water District, North Coast County Water District, Purissima Hills Water Distri ct, Skyline County Water District, Stanford University, Westborough Water District, and the Cities of Brisbane, Burlingame, Daly City, East Palo Alto, Hayward, Hillsborough, Menlo Park, Milpitas, Mountain View, Palo Alto, Redwood City, San Bruno, San Jose, Santa Clara, and Sunnyvale. Page 2 of 4 source of 0.5 MGD of the 1.5 MGD considered in the Negative Declaration and by amplifying the information provided in the prior analysis to address the effects of the permanent transfer on the City of Palo Alto. Based on the information and analysis provided herein, the City of Palo Alto has determined that the proposed modifications of the Negative Declaration to provide this information would not result in new or more significant impacts, and that none of the conditions described in Section 15162 of the CEQA Guidelines (14 Cal. Code of Regs. 15162) have occurred. As a result, an addendum is appropriate and no subsequent ND is required. The following impacts were reviewed with respect to the proposed modifications and found to be adequately considered by the ND: ■ Aesthetics ■ Agriculture and Forest Resources ■ Air Quality ■ Biological Resources ■ Cultural Resources ■ Geology and Soils ■ Greenhouse Gas Emissions ■ Hazards and Hazardous Materials ■ Hydrology / Water Quality ■ Land Use/ Planning ■ Mineral Resources ■ Noise ■ Population / Housing ■ Public Services ■ Recreation ■ Transportation / Traffic ■ Utilities / Service Systems ■ Mandatory Findings of Significance Summary of Potential Impacts The City of Palo Alto’s Individual Supply Guarantee (ISG) represents a permanent contractual entitlement to 17.07 million gallons per day (MGD) of water from the Hetch Hetchy Regional Water System. Figure 1 shows the City of Palo Alto’s historical and projected San Francisco Public Utilities Commission (SFPUC) purchases compared to the contractually entitled 17.07 MGD for past years and the reduced contractually entitled ISG of 16.57 MGD resulting from the permanent transfer to the City of East Palo Alto for future years. Figure 1: SFPUC Water Use (Historical and Forecast) versus ISG Page 3 of 4 The figure shows that Palo Alto has not purchased the entitled 17.07 MGD from the SFPUC in over 40 years. The City’s 2015 Urban Water Management Plan (UWMP) explains that total water sales decreased by 11 percent between 2010 and 2015. In addition, the 2015 UWMP states that although there may be slight increases in water use due to post drought rebound and continued increases in economic development and population, by 2025 the overall trend of decreasing per capita water use is anticipated to resume. Consis tent with these projections, the Draft Environmental Impact Report for the City of Palo Alto Comprehensive Plan Update assessed that the projected peak demand for water from the City of Palo Alto’s SFPUC ISG would be 11,883 AFY (approximately 13.31 mgd) in 2020 with an overall decrease in demand through to 2035 when the projected demand would be 10,879 AFY (approximately 12.18 mgd). Due to historic and projected water needs as well as past and continued efforts to reduce potable water consumption, it is not anticipated that the City of Palo Alto would rely on the full 17.07 MGD ISG in the future. The adopted Negative Declaration assessed the environmental impact associated with the use of increased water supply (an increase from 1.963 to 3.463 MGD) by the City of East Palo Alto as a result of the permanent transfer. The ND concluded that impacts would be less than significant without mitigation. The proposed modification to the adopted ND to disclose the permanent transfer of 0.5 MGD ISG from the City of Palo Alto, which represents one-third of the total increase in ISG previously assessed, would not change this conclusion. As discussed above, historical data and future projections support the conclusion that the additional 0.5 MGD of guaranteed supply would not be requested or used by the City of Palo Alto now or in the future. Therefore, there is no anticipated effect on City of Palo Alto residents and property owners. Further, the permanent reduction in the total contractual entitlement to the City of Palo Alto would not, in itself, result in an environmental impact. Impacts associated with the potential use of the water by the City of East Palo Alto were previously assessed. The California Environmental Quality Act (CEQA) establishes the type of environmen tal document required when changes to a project occur or new information arises after a Negative Declaration (ND) is adopted. An addendum to an adopted ND shall be prepared if only minor technical changes or additions are necessary (CEQA Guidelines §15164). In addition, pursuant to CEQA Guidelines §§15162 and 15164, preparation of an addendum to an ND is appropriate unless subsequent changes are proposed in the project or physical circumstances have changed on the subject property, either of which would require major revisions to the ND due to new significant impacts, or new information of substantial importance becomes available which shows the project will have one or more significant impacts not identified in the ND. The addendum need not be circulated for public review (CEQA Guidelines §15164[c]); however, an addendum is to be considered by the decision maker prior to making a decision on the project (CEQA Guidelines §15164[d]). This addendum together with the ND will be considered by the City of Palo Alto City Council in making a determination with respect to approval of the Agreement to Transfer for the permanent transfer of 0.5 MGD of Individual Supply Agreement from the City of Palo Alto to the City of East Palo Alto. The City of Palo Alto has prepared this Addendum to document changes to the City of East Palo Alto’s adopted ND in accordance with CEQA Guidelines §15164. This Addendum demonstrates Page 4 of 4 that none of the conditions outlined in CEQA Guidelines §15162 are present here and that the environmental analysis in the adopted ND for the Project remains substantively unchanged, supporting the finding that the clarifying and amplifying information pro vided herein does not result in new or more significant impacts than those identified in the Negative Declaration. Therefore, the adopted Negative Declaration together with this Addendum adequately describe the environmental impacts of the City of Palo Alto’s proposed action, and a subsequent negative declaration is not required. Prepared by: 4/3/2018 Date TO: FROM: DATE: CI TY 0 F PALO ALTO HONORABLE CITY COUNCIL JAMES KEENE, CITY MANAGER MAY7, 2018 3 SUBJECT: AGENDA ITEM NUMBER 3-Approval of the City of Palo Alto's Addendum to the Negative Declaration Adopted by the City of East Palo Alto, and Approval of an Agreement for the Permanent Transfer of a Portion of the City of Palo Alto's Individual Supply Guarantee to the City of East Palo Alto. Staff requests this item be removed from the Consent Calendar and be heard as the first Action item as Agenda Item Number 6A. James Keene City Manager 1of1 City of Palo Alto (ID # 9075) City Council Staff Report Report Type: Consent Calendar Meeting Date: 5/7/2018 City of Palo Alto Page 1 Summary Title: Approval of Field -Based Video Contract Title: Authorize the City Manager or his Designee to Amend the Contract With WatchGuard Video for the Purchase of 50 Body -Worn Cameras for the Field -based Video Program Not-to-Exceed Amount of $110,000 and Approve a Budget Amendment in the Law Enforcement Services Fund From: City Manager Lead Department: Police RECOMMENDATION Staff recommends that Council: 1. Authorize the City Manager or his designee approve the purchase of 50 body-worn cameras, warranties for those cameras, licensing for the video library software for body-worn and in-vehicle cameras and cloud storage for archiving the video. The total amount of these purchases is not to exceed $110,000. 2. Amend The Fiscal Year 2018 Budget Appropriation for the Law Enforcement Services Fund by: a. Increasing the COPS funding expense appropriation by $72,000; and, b. Decreasing the Law Enforcement Services Reserve by $72,000. 3. Approve the expenditure of Public Safety (COPS) funds from the State of California. BACKGROUND Video technology has become instrumental in law enforcement training, evidence collection, and for officer safety and accountability. The Police Department installed Mobile Audio Visual (MAV) recording devices in all of the police patrol vehic les in 2006 and replaced the system with an improved high resolution system from WatchGuard Video in 2014. At the time, WatchGuard’s body-worn camera solution utilized third party equipment that was not integrated into the WatchGuard archiving or remote viewing capabilities. In 2015, WatchGuard began offering its own body-worn cameras with an integrated storage and viewing solution. After several production delays and a necessary upgrade of the video library system and on-site storage, the Police Department purchased ten body-worn cameras in 2017. The Department initiated a pilot project to test the cameras’ capabilities and the City of Palo Alto Page 2 integrated video library solution. After extensive testing, the Department concluded that the cameras and the application perform well and meet the Department’s requirements. DISCUSSION In recent years, high profile incidents throughout the country accentuated the need for transparency and accountability in policing. The Department’s experience with in -car video has been positive. In many cases, the video has provided clear documentation of what occurred during incidents in the field. The video evidence has exonerated officers of false accusations, enhanced training and, in rare instances, provided the basis for corrective act ion. The Department believes body-worn cameras will further enhance police transparency and improve accountability and interactions within the community. The Police Department selected WatchGuard Video in a competitive RFP process to replace the legacy in-car video system in 2014. WatchGuard’s equipment and support has been excellent during and after implementation, and the system provides enhanced capabilities to both the officers in the field and the Police Administrators who review the video on a reg ular basis. Purchasing WatchGuard body-worn cameras, will allow for an integrated solution that enables the in-car video and body-worn video to archive and be reviewed in the same format. This solution also ensures the officers wear only one video-related accoutrement, rather than two. WatchGuard’s development of an integrated solution that encompasses the best features of body-worn systems and provides the Department with the preeminent technology available. The purchase of this product is through the NASPO cooperative contract program that insures a competitive procurement process has occurred with ASD Purchasing rules and Municipal Code 2.30.360 (J). Before committing to the purchase of cameras for all officers, the Department undertook a comprehensive pilot program utilizing ten cameras over a six-month period. The assessment criteria included visual and audio acuity, ease of use, field of vision, storage and retrieval capabilities and battery life. In all areas, with the exception of battery life, the units performed well. The integrated video library application provided a view of all five in -car cameras, as well as the body-worn camera. Battery life is a common technical problem not only for body -worn cameras but for other devices and technology. There is a larger battery available but the form factor is an issue for officers wearing the devices. Utilizing a kiosk solution, officers will be able to swap cameras during their shifts as needed mitigating the battery life issues. Video data uses a tremendous amount of storage. The Police Department is required to archive two years of video. The two-year period aligns with window for federal and civil rights claims. The current on-site storage requirement for the data is approximately 80 terabytes. The addition of body-worn video data will exceed the on-site capacity (120TB) of the system. The Department proposes to utilize secure, Department of Justice (DOJ) compliant cloud storage for much of the older data and retain more recent video on -site. City Information Technology (IT) has an existing relationship with Microsoft Azure and the Department would utilize that City of Palo Alto Page 3 agreement to implement a cloud solution. A cloud solution aligns the Department with IT’s “Cloud First” policy and positions Police technology for additional cloud storage in the future. The enhanced capabilities of the video library software will enable the Department to send secure data links to the District Attorney’s office and the courts, eliminating the time consuming process of burning CD’s and physically transporting them to those entities. Finally, the in-car video system was initiated in January 2014 and will be four years old in 2018. The Department expects maintenance and replacement costs to increase in subsequent years and in-car system replacement to occur in 2020. RESOURCE IMPACT Funding for the in-field video program and the on-going maintenance and licensing costs are included in the Police Department budget. Funding for body-worn cameras ($100,000) was initially included in the Fiscal Year 2015-16 budget. The upgrade of the video library and the purchase of ten test cameras used $37,000, leaving $63,000. The cost of the additional 50 cameras with a three-year warranty and maintenance is approximately $110,000. The Department will supplement the remaining budget using $72,000 of available COPS money to make up the difference and provide limited contingency funding for ancillary equipment and upgrades to both the body-worn and in-car video systems. Those funds were reallocated from the E-Citation and Automated License Plate Reader (ALPR) projects. The initial purchase requires no additional City funding. The annual cost of $60,000 for cloud storage is included in the development of the Police Department Fiscal Year 2019 budget and is subject to Council approval. Ongoing maintenance and licensing costs will be funded out of the Police Department budget by reallocating existing funds from legacy technologies. POLICY IMPLICATIONS Expenditure of funds is consistent with City policy. TIMELINE Body-worn cameras will be purchased and installed within six months. ENVIRONMENTAL REVIEW This project is not subject to CEQA pursuant to Title 14 California Code of Regulations Section 15061(b)(3). Attachments: ATTACHMENT A - WATCHGUARD NASPO QUOTE 041618 4RE/VISTA Price Quote 415 Century Parkway • Allen, TX • 75013 Toll Free (800) 605-6734 • Main (972) 423-9777 • Fax (972) 423-9778 www.WatchGuardVideo.com Page 1 of 2 CUSTOMER:Palo Alto Police Department ISSUED: 3/15/2018 5:09 PM EXPIRATION: 8/1/2018 5:00 AM Attn: Accounts Payable, 275 Forest Ave Stop 1C,Ste 6, Palo Alto,CA,United States, 94301-2513 TOTAL PROJECT ESTIMATED AT: $108,166.15 ATTENTION:Brian Furtado SALES CONTACT: Leah Kipp PHONE:650-329-2413 DIRECT: (214) 785-2615 E-MAIL: E-MAIL: LKipp@WatchGuardVideo.com 4RE and VISTA Proposal VISTA HD Cameras and Options Part Number Detail Qty Direct Discount Total Price VIS-EXT-WIF-001 VISTA HD WiFi Additional Camera Only 50.00 $995.00 $5.00 $49,500.00 HDW-ETH-SWT-005 VISTA HD, 4RE, Smart PoE Switch 11.00 $250.00 $0.00 $2,750.00 VIS-VTS-DTC-001 VISTA Transfer Station Assy, 8 Cameras, Ethernet, DEV 144, Enhanced ESD Protection 6.00 $1,495.00 $0.00 $8,970.00 VIS-CHG-WIF-KIT VISTA HD, WiFi Charging Radio Base Kit, incl. Power and Cables 11.00 $250.00 $55.00 $2,145.00 VISTA HD Warranties Part Number Detail Qty Direct Discount Total Price WAR-VIS-WIF-NOF Warranty, VISTA WiFi, 3 Year No-Fault 50.00 $450.00 $0.00 $22,500.00 Evidence Library 4 Web Software and Licensing Part Number Detail Qty Direct Discount Total Price KEY-EL4-DEV-002 EvidenceLibrary.com VISTA Device License Key 50.00 $150.00 $150.00 $0.00 Software Maintenance and CLOUD-Share Part Number Detail Qty Direct Discount Total Price SFW-EL4-CLD-EXT EvidenceLibrary.com Web CLOUD-SHARE- Extended 50.00 $250.00 $0.00 $12,500.00 Shipping and Handling Part Number Detail Qty Direct Discount Total Price Freight Shipping/Handling and Processing Charges 1.00 $870.00 $0.00 $870.00 $99,235.00 Total Estimated Tax, may vary from State to State $8,931.15 4RE/VISTA Price Quote 415 Century Parkway • Allen, TX • 75013 Toll Free (800) 605-6734 • Main (972) 423-9777 • Fax (972) 423-9778 www.WatchGuardVideo.com Page 2 of 2 Configuration Discounts $8,355.00 Additional Quote Discount $0.00 Total Amount $108,166.15 NOTE: This is only an estimate for 4RE & VISTA related hardware, software and WG Technical Services. Actual costs related to a turn-key operation requires more detailed discussion and analysis, which will define actual back-office costs and any costs associated with configuration, support and installation. Please contact your sales representative for more details. To accept this quotation, sign, date and return with Purchase Order: _______________________________ DATE: _______________ CITY OF PALO ALTO TO: HONORABLE CITY COUNCIL FROM: ROBERT JONSEN, CHIEF OF POLICE DATE: MAY 7, 2018 4 SUBJECT: AGENDA ITEM NUMBER 4 - Authorize the City Manager or his Designee to Amend the Contract With WatchGuard Video for the Purchase of 50 Body -Worn Cameras for the Field -based Video Program Not -to -Exceed Amount of $110,000 and Approve a Budget Amendment in the Law Enforcement Services Fund This Staff Report was routed for Staff approval with the intent to supplement existing Department funding with funds from the Law Enforcement Services Fund (Otherwise known as the Citizens' Options for Public Safety (COPS) funds) to purchase cameras. COPS' funds are California State funds which the Police Department receives each year. The stipulation for COPS' funding usage is that it cannot supplant existing funding and must be for new technology or equipment benefitting front-line Law Enforcement efforts. Upon further internal discussion, staff decided not to utilize COPS' funding for this purchase. Instead, the department will use the remainder of the FY16 Budgeted funds for this project as indicated in the Staff Report and FY18 Salary Savings to make up the delta. The not -to -exceed amount remains at $110,000. Any reference to COPS' funding should be replaced with FY18 Salary Savings. Robert Jonsen Chief of Police TOY James Keene City Manager 1 of 1 City of Palo Alto (ID # 9069) City Council Staff Report Report Type: Consent Calendar Meeting Date: 5/7/2018 City of Palo Alto Page 1 Summary Title: Approve 3 -Year Open Space Trail Maintenance Contract with Northwest Woodland Services for $657,278 Title: Approval of a Three -year Contract With Northwest Woodland Services, Inc. in an Amount Not-to-Exceed $657,278 for Trail Maintenance in t he Palo Alto Baylands, Pearson -Arastradero Preserve, Foothills Park, and Grounds Maintenance in Utility Reservoir Sites From: City Manager Lead Department: Community Services Recommendation Staff recommends that Council consider the following motion: 1. Approve and authorize the City Manager or his designee to execute the attached three-year contract with Northwest Woodland Services, Inc. in the amount of $597,525 subject to the annual appropriation of funds, for trail maintenance in the Baylands Nature Preserve, Pearson-Arastradero Preserve, Foothills Park, and ground maintenance in utility reservoir sites (Attachment A). 2. Authorize the City Manager or his designee to negotiate and execute one or more change orders to the contract with Northwest Woodland Services, Inc. for related, additional but unforeseen work which may develop during the project, the total value of which shall not exceed $59,753. Background There are approximately 41 miles of trails in Palo Alto Open Space. Since 2001, the City has contracted with professional trail maintenance contractors to maintain Open Space trails. The trail contractors have specialty equipment and training to ensure the trails are maintained using environmentally appropriate techniques that result in safe trail conditions for park visitors. Discussion The work to be performed under this three-year contract (Attachment A) is for annual and one-time maintenance of trails in Foothills Park, Pearson-Arastradero Preserve, and the Baylands Nature Preserve. Annual work includes grooming of trail treads, improving and cleaning drainages, and clearing vegetation growing into the trail corridor. One- City of Palo Alto Page 2 time maintenance includes adding aggregate to select trails in the Pearson-Arastradero Preserve to improve drainage and stability in wet weather; and repairing a trail drainage area, installing a new bridge, and inspecting and repairing foot bridges in Foothills Park. The scope also includes a day rate with equipment for unscheduled but ongoing grounds maintenance in Open Space. This includes tree clearing and brush chipping, picnic and campground maintenance (replacing tables, barbeques, retaining walls and erosion structures, repairing fencing and other structures), and maintaining trail treads in the Baylands Nature Preserve. The contract also includes a day rate for the City of Palo Alto Utilities Department, which is used for the maintenance of road and trail surfaces, roadside drainage ditches and culverts in the Pearson-Arastradero Preserve and Foothills Park that provide access to utility sites and for ground maintenance in Hale Well and Mayfield Reservoir Sites. There are two trails at Foothills Park (Costanoan Trail and a section of Los Trancos Trail) that were closed due to storm damage last year. Those trail sections will need to be re-routed. This contract does not include the construction of re-routed trail sections. The re-routed trail sections will go out to bid as a separate, stand-alone project. A geologist completed an assessment of the two trails and advised that re-routing is necessary to due to soil instability. A re-routed trail alignment has been proposed by a trail building professional, and biological and cultural asssement of the proposed re- routed trail has been completed. Community Services Department staff is working with Planning Deptarment staff to determine next steps to proceed with the constructing the re-routed trails. Summary of Bid Process On January 4, 2018, a Request for Proposals (RFP) for Open Space Trail Maintenance was issued on the City’s e-Procurement system called "PlanetBids”. A non-mandatory bidder conference was held on January 17, 2018. One bidder attended the conference. There were no questions submitted from other bidders. Bids were due February 1, 2018. Northwest Woodland Services submitted the only bid. Northwest Woodland Services was awarded the contract in the amount of $597,525. The previous three-year trail maintenance contract (CMR #4745 https://www.cityofpaloalto.org/civicax/filebank/documents/42553) was with Northwest Woodland Services and funded for $552,950. The contract cost has increased by $44,575. The scope of the new contract includes some additional services that weren’t included in the previous contract: 1. Add additional rock for the trail surface in Pearson Arastradero Preserve 2. Add a new pedestrian bridge and drainage at Pearson Arastradero Preserve City of Palo Alto Page 3 3. Increase the number of work days for unforeseen work from 50 to 80. (Past years have shown that additional work days are necessary to keep the trails in safe condition.) During the previous contract, Northwest Woodland Services met all the contract requirements and effectively communicated and collaborated with Open Space staff. Timeline Once the contract is approved, the contractor is ready to start work on trails at Foothills Park in April 2018. Resource Impact Funds for the Open Space portion of this project ($522,525) are programmed in the Proposed Capital Budget in project OS-00001 (Open Space Trails and Amenities). Funds for the Utilities Water, Gas, and Wastewater portion ($75,000) are programmed in the Proposed Capital Budget in project GS-11002 (Gas System Improvement). Expenditures over the three years of the contract are subject to Council approval and the annual appropriation of funds. The 10% contract contingency ($60,000) exceeds the available funds in CIP (OS-00001). If the contingency is needed it will be funded from the Parks Emergency CIP (PG-09002). The three-year contract cost is $44,575 more than the previous contract due to some additional tasks added to the contract scope and increased labor costs. Policy Implications This recommendation does not represent any change to existing City policies. Improvement of approved trails is consistent with Comprehensive Plan Policy N-1: Manage existing public open space areas and encourage the management of private open space areas in a manner that meets habitat protection goals, public safety concerns, and low impact recreation needs. All work proposed in this contract is consistent with the adopted Arastradero Preserve Trails Management Plan, the Foothills Park Trail Maintenance Plan and the Foothills Wildland Fire Management Plan. Environmental Review This award of contract is not a project as defined by the California Environmental Quality Act (CEQA); and therefore is not subject to CEQA requirements or environmental review. Attachments: Attachment A- Contract with Northwest Woodland Services C18168186 City of Palo Alto General Services Agreement 1 Rev. February 8, 2017 CITY OF PALO ALTO CONTRACT NO. C18168186 GENERAL SERVICES AGREEMENT THIS AGREEMENT made and entered into on the 30th day of April 2018, by and between the CITY OF PALO ALTO, a California chartered municipal corporation (“CITY”), and NORTHWEST WOODLAND SERVICES, INC., an Oregon corporation, located at 811 Royaldel Lane, Springfield, OR 97477 Telephone Number: 503-780-6394 (“CONTRACTOR”). In consideration of their mutual covenants, the parties hereto agree as follows: 1. SERVICES. CONTRACTOR shall provide or furnish the services (the “Services”) described in the Scope of Services, attached at Exhibit A. 2. EXHIBITS. The following exhibits are attached to and made a part of this Agreement: “A” - Scope of Services “A-1” – On-Call Task Order (Optional) “B” - Schedule of Performance “C” – Schedule of Fees “D” - Insurance Requirements “E” - Performance and/or Payment Bond “F” - Liquidated Damages (Optional) CONTRACT IS NOT COMPLETE UNLESS ALL INDICATED EXHIBITS ARE ATTACHED. 3. TERM. The term of this Agreement is from April 30, 2018 to April 29, 2021 inclusive, subject to the provisions of Sections Q and V of the General Terms and Conditions. 4. SCHEDULE OF PERFORMANCE. CONTRACTOR shall complete the Services within the term of this Agreement in a reasonably prompt and timely manner based upon the circumstances and direction communicated to CONTRACTOR, and if applicable, in accordance with the schedule set forth in the Schedule of Performance, attached at Exhibit B. Time is of the essence in this Agreement. 5. COMPENSATION FOR ORIGINAL TERM. CITY shall pay and CONTRACTOR agrees to accept as not-to-exceed compensation for the full performance of the Services and reimbursable expenses, if any: DocuSign Envelope ID: F69BB0F7-4A7C-453E-A041-A682490AE83E City of Palo Alto General Services Agreement 2 Rev. February 8, 2017 The total maximum lump sum compensation of dollars ($ ); OR The sum of dollars ($ ) per hour, not to exceed a total maximum compensation amount of dollars ($ ); OR A sum calculated in accordance with the fee schedule set forth at Exhibit C, not to exceed a total maximum compensation amount of Five Hundred Ninety Seven Thousand Five Hundred Twenty Five dollars ($597,525.00). CONTRACTOR agrees that it can perform the Services for an amount not to exceed the total maximum compensation set forth above. Any hours worked or services performed by CONTRACTOR for which payment would result in a total exceeding the maximum amount of compensation set forth above for performance of the Services shall be at no cost to CITY. CITY has set aside the sum of Fifty Nine Thousand Seven Hundred Fifty Three dollars ($59,753.00) for Additional Services. CONTRACTOR shall provide Additional Services only by advanced, written authorization from the City Manager or designee. CONTRACTOR, at the CITY’s request, shall submit a detailed written proposal including a description of the scope of services, schedule, level of effort, and CONTRACTOR’s proposed maximum compensation, including reimbursable expense, for such services. Compensation shall be based on the rates set forth above or in Exhibit C (whichever is applicable), or if such rates are not applicable, a negotiated lump sum. CITY shall not authorize and CONTRACTOR shall not perform any Additional Services for which payment would exceed the amount set forth above for Additional Services. Payment for Additional Services is subject to all requirements and restrictions in this Agreement. 6. COMPENSATION DURING ADDITIONAL TERMS. CONTRACTOR’S compensation rates for each additional term shall be the same as the original term; OR CONTRACTOR’s compensation rates shall be adjusted effective on the commencement of each Additional Term. The lump sum compensation amount, hourly rates, or fees, whichever is applicable as set forth in section 5 above, shall be adjusted by a percentage equal to the change in the Consumer Price Index for Urban Wage Earners and Clerical Workers for the San Francisco-Oakland- San Jose area, published by the United States Department of Labor Statistics (CPI) which is published most DocuSign Envelope ID: F69BB0F7-4A7C-453E-A041-A682490AE83E City of Palo Alto General Services Agreement 3 Rev. February 8, 2017 immediately preceding the commencement of the applicable Additional Term, which shall be compared with the CPI published most immediately preceding the commencement date of the then expiring term. Notwithstanding the foregoing, in no event shall CONTRACTOR’s compensation rates be increased by an amount exceeding five percent of the rates effective during the immediately preceding term. Any adjustment to CONTRACTOR’s compensation rates shall be reflected in a written amendment to this Agreement. 7. CLAIMS PROCEDURE FOR “9204 PUBLIC WORKS PROJECTS”. For purposes of this Section 7, a “9204 Public Works Project” means the erection, construction, alteration, repair, or improvement of any public structure, building, road, or other public improvement of any kind. Public Contract Code Section 9204 mandates certain claims procedures for Public Works Projects, which are set forth in “Appendix A Claims for Public Contract Code Section 9204 Public Works Projects”. This project is a 9204 Public Works Project and is required to comply with the claims procedures set forth in Appendix A, attached hereto and incorporated herein. OR This project is not a 9204 Public Works Project. 8. INVOICING. Send all invoices to CITY, Attention: Project Manager. The Project Manager is: Curt Dunn, Community Services Department/Open Space: 3300 Page Mill Rd, Telephone: (650) 329-2423. Please email invoice to Curt.Dunn@cityofpaloalto.org. Invoices shall be submitted in arrears for Services performed. Invoices shall not be submitted more frequently than monthly. Invoices shall provide a detailed statement of Services performed during the invoice period and are subject to verification by CITY. CITY shall pay the undisputed amount of invoices within 30 days of receipt. GENERAL TERMS AND CONDITIONS A.ACCEPTANCE. CONTRACTOR accepts and agrees to all terms and conditions of this Agreement. This Agreement includes and is limited to the terms and conditions set forth in sections 1 through 7 above, these general terms and conditions and the attached exhibits. DocuSign Envelope ID: F69BB0F7-4A7C-453E-A041-A682490AE83E City of Palo Alto General Services Agreement 4 Rev. February 8, 2017 B. QUALIFICATIONS. CONTRACTOR represents and warrants that it has the expertise and qualifications to complete the services described in Section 1 of this Agreement, entitled “SERVICES,” and that every individual charged with the performance of the services under this Agreement has sufficient skill and experience and is duly licensed or certified, to the extent such licensing or certification is required by law, to perform the Services. CITY expressly relies on CONTRACTOR’s representations regarding its skills, knowledge, and certifications. CONTRACTOR shall perform all work in accordance with generally accepted business practices and performance standards of the industry, including all federal, state, and local operation and safety regulations. C. INDEPENDENT CONTRACTOR. It is understood and agreed that in the performance of this Agreement, CONTRACTOR and any person employed by CONTRACTOR shall at all times be considered an independent CONTRACTOR and not an agent or employee of CITY. CONTRACTOR shall be responsible for employing or engaging all persons necessary to complete the work required under this Agreement. D. SUBCONTRACTORS. CONTRACTOR may not use subcontractors to perform any Services under this Agreement unless CONTRACTOR obtains prior written consent of CITY. CONTRACTOR shall be solely responsible for directing the work of approved subcontractors and for any compensation due to subcontractors. E. TAXES AND CHARGES. CONTRACTOR shall be responsible for payment of all taxes, fees, contributions or charges applicable to the conduct of CONTRACTOR’s business. F. COMPLIANCE WITH LAWS. CONTRACTOR shall in the performance of the Services comply with all applicable federal, state and local laws, ordinances, regulations, and orders. G. PALO ALTO MINIMUM WAGE ORDINANCE. CONTRACTOR shall comply with all requirements of the Palo Alto Municipal Code Chapter 4.62 (Citywide Minimum Wage), as it may be amended from time to time. In particular, for any employee otherwise entitled to the State minimum wage, who performs at least two (2) hours of work in a calendar week within the geographic boundaries of the City, CONTRACTOR shall pay such employees no less than the minimum wage set forth in Palo Alto Municipal Code section 4.62.030 for each hour worked within the geographic boundaries of the City of Palo Alto. In addition, CONTRACTOR shall post notices regarding the Palo Alto Minimum Wage Ordinance in accordance with Palo Alto Municipal Code section 4.62.060. DocuSign Envelope ID: F69BB0F7-4A7C-453E-A041-A682490AE83E City of Palo Alto General Services Agreement 5 Rev. February 8, 2017 H. DAMAGE TO PUBLIC OR PRIVATE PROPERTY. CONTRACTOR shall, at its sole expense, repair in kind, or as the City Manager or designee shall direct, any damage to public or private property that occurs in connection with CONTRACTOR’s performance of the Services. CITY may decline to approve and may withhold payment in whole or in part to such extent as may be necessary to protect CITY from loss because of defective work not remedied or other damage to the CITY occurring in connection with CONTRACTOR’s performance of the Services. CITY shall submit written documentation in support of such withholding upon CONTRACTOR’s request. When the grounds described above are removed, payment shall be made for amounts withheld because of them. I. WARRANTIES. CONTRACTOR expressly warrants that all services provided under this Agreement shall be performed in a professional and workmanlike manner in accordance with generally accepted business practices and performance standards of the industry and the requirements of this Agreement. CONTRACTOR expressly warrants that all materials, goods and equipment provided by CONTRACTOR under this Agreement shall be fit for the particular purpose intended, shall be free from defects, and shall conform to the requirements of this Agreement. CONTRACTOR agrees to promptly replace or correct any material or service not in compliance with these warranties, including incomplete, inaccurate, or defective material or service, at no further cost to CITY. The warranties set forth in this section shall be in effect for a period of one year from completion of the Services and shall survive the completion of the Services or termination of this Agreement. J. MONITORING OF SERVICES. CITY may monitor the Services performed under this Agreement to determine whether CONTRACTOR’s work is completed in a satisfactory manner and complies with the provisions of this Agreement. K. CITY’S PROPERTY. Any reports, information, data or other material (including copyright interests) developed, collected, assembled, prepared, or caused to be prepared under this Agreement will become the property of CITY without restriction or limitation upon their use and will not be made available to any individual or organization by CONTRACTOR or its subcontractors, if any, without the prior written approval of the City Manager. L. AUDITS. CONTRACTOR agrees to permit CITY and its authorized representatives to audit, at any reasonable time during the term of this Agreement and for three (3) years from the date of final payment, CONTRACTOR’s records pertaining to matters covered by this Agreement. CONTRACTOR agrees to maintain accurate books and records in accordance with generally accepted accounting principles for at least three (3) following the terms of this Agreement. DocuSign Envelope ID: F69BB0F7-4A7C-453E-A041-A682490AE83E City of Palo Alto General Services Agreement 6 Rev. February 8, 2017 M. NO IMPLIED WAIVER. No payment, partial payment, acceptance, or partial acceptance by CITY shall operate as a waiver on the part of CITY of any of its rights under this Agreement. N. INSURANCE. CONTRACTOR, at its sole cost, shall purchase and maintain in full force during the term of this Agreement, the insurance coverage described at Exhibit D. Insurance must be provided by companies with a Best’s Key Rating of A-:VII or higher and which are otherwise acceptable to CITY’s Risk Manager. The Risk Manager must approve deductibles and self-insured retentions. In addition, all policies, endorsements, certificates and/or binders are subject to approval by the Risk Manager as to form and content. CONTRACTOR shall obtain a policy endorsement naming the City of Palo Alto as an additional insured under any general liability or automobile policy. CONTRACTOR shall obtain an endorsement stating that the insurance is primary coverage and will not be canceled or materially reduced in coverage or limits until after providing 30 days prior written notice of the cancellation or modification to the Risk Manager. CONTRACTOR shall provide certificates of such policies or other evidence of coverage satisfactory to the Risk Manager, together with the required endorsements and evidence of payment of premiums, to CITY concurrently with the execution of this Agreement and shall throughout the term of this Agreement provide current certificates evidencing the required insurance coverages and endorsements to the Risk Manager. CONTRACTOR shall include all subcontractors as insured under its policies or shall obtain and provide to CITY separate certificates and endorsements for each subcontractor that meet all the requirements of this section. The procuring of such required policies of insurance shall not operate to limit CONTRACTOR’s liability or obligation to indemnify CITY under this Agreement. O. HOLD HARMLESS. To the fullest extent permitted by law and without limitation by the provisions of section N relating to insurance, CONTRACTOR shall indemnify, defend and hold harmless CITY, its Council members, officers, employees and agents from and against any and all demands, claims, injuries, losses, or liabilities of any nature, including death or injury to any person, property damage or any other loss and including without limitation all damages, penalties, fines and judgments, associated investigation and administrative expenses and defense costs, including, but not limited to reasonable attorney’s fees, courts costs and costs of alternative dispute resolution), arising out of, or resulting in any way from or in connection with the performance of this Agreement. CONTRACTOR’s obligations under this Section apply regardless of whether or not a liability is caused or contributed to by any negligent (passive or active) act or omission of CITY, except that CONTRACTOR shall not be obligated to indemnify for liability arising from the sole negligence or willful misconduct of CITY. The acceptance of the Services by CITY shall not operate as a waiver of the DocuSign Envelope ID: F69BB0F7-4A7C-453E-A041-A682490AE83E City of Palo Alto General Services Agreement 7 Rev. February 8, 2017 right of indemnification. The provisions of this Section survive the completion of the Services or termination of this Agreement. P. NON-DISCRIMINATION. As set forth in Palo Alto Municipal Code section 2.30.510, CONTRACTOR certifies that in the performance of this Agreement, it shall not discriminate in the employment of any person because of the race, skin color, gender, age, religion, disability, national origin, ancestry, sexual orientation, housing status, marital status, familial status, weight or height of such person. CONTRACTOR acknowledges that it has read and understands the provisions of Section 2.30.510 of the Palo Alto Municipal Code relating to Nondiscrimination Requirements and the penalties for violation thereof, and agrees to meet all requirements of Section 2.30.510 pertaining to nondiscrimination in employment. Q. WORKERS' COMPENSATION. CONTRACTOR, by executing this Agreement, certifies that it is aware of the provisions of the Labor Code of the State of California which require every employer to be insured against liability for workers' compensation or to undertake self-insurance in accordance with the provisions of that Code, and certifies that it will comply with such provisions, as applicable, before commencing and during the performance of the Services. R. TERMINATION. The City Manager may terminate this Agreement without cause by giving ten (10) days’ prior written notice thereof to CONTRACTOR. If CONTRACTOR fails to perform any of its material obligations under this Agreement, in addition to all other remedies provided by law, the City Manager may terminate this Agreement immediately upon written notice of termination. Upon receipt of such notice of termination, CONTRACTOR shall immediately discontinue performance. CITY shall pay CONTRACTOR for services satisfactorily performed up to the effective date of termination. If the termination is for cause, CITY may deduct from such payment the amount of actual damage, if any, sustained by CITY due to CONTRACTOR’s failure to perform its material obligations under this Agreement. Upon termination, CONTRACTOR shall immediately deliver to the City Manager any and all copies of studies, sketches, drawings, computations, and other material or products, whether or not completed, prepared by CONTRACTOR or given to CONTRACTOR, in connection with this Agreement. Such materials shall become the property of CITY. S. ASSIGNMENTS/CHANGES. This Agreement binds the parties and their successors and assigns to all covenants of this Agreement. This Agreement shall not be assigned or transferred without the prior written consent of CITY. No amendments, changes or variations of any kind are authorized without the written consent of CITY. DocuSign Envelope ID: F69BB0F7-4A7C-453E-A041-A682490AE83E City of Palo Alto General Services Agreement 8 Rev. February 8, 2017 T. CONFLICT OF INTEREST. In accepting this Agreement, CONTRACTOR covenants that it presently has no interest, and will not acquire any interest, direct or indirect, financial or otherwise, which would conflict in any manner or degree with the performance of this Contract. CONTRACTOR further covenants that, in the performance of this Contract, it will not employ any person having such an interest. CONTRACTOR certifies that no CITY Officer, employee, or authorized representative has any financial interest in the business of CONTRACTOR and that no person associated with CONTRACTOR has any interest, direct or indirect, which could conflict with the faithful performance of this Contract. CONTRACTOR agrees to advise CITY if any conflict arises. U. GOVERNING LAW. This contract shall be governed and interpreted by the laws of the State of California. V. ENTIRE AGREEMENT. This Agreement, including all exhibits, represents the entire agreement between the parties with respect to the services that may be the subject of this Agreement. Any variance in the exhibits does not affect the validity of the Agreement and the Agreement itself controls over any conflicting provisions in the exhibits. This Agreement supersedes all prior agreements, representations, statements, negotiations and undertakings whether oral or written. W. NON-APPROPRIATION. This Agreement is subject to the fiscal provisions of the Charter of the City of Palo Alto and the Palo Alto Municipal Code. This Agreement will terminate without any penalty (a) at the end of any fiscal year in the event that funds are not appropriated for the following fiscal year, or (b) at any time within a fiscal year in the event that funds are only appropriated for a portion of the fiscal year and funds for this Contract are no longer available. This Section shall take precedence in the event of a conflict with any other covenant, term, condition, or provision of this Contract. X. ENVIRONMENTALLY PREFERRED PURCHASING AND ZERO WASTE REQUIREMENTS. CONTRACTOR shall comply with CITY’s Environmentally Preferred Purchasing policies which are available at CITY’s Purchasing Division, which are incorporated by reference and may be amended from time to time. CONTRACTOR shall comply with waste reduction, reuse, recycling and disposal requirements of CITY’s Zero Waste Program. Zero Waste best practices include first minimizing and reducing waste; second, reusing waste and third, recycling or composting waste. In particular, CONTRACTOR shall comply with the following zero waste requirements: x All printed materials provided by CONTRACTOR to CITY generated from a personal computer and printer including but not limited to, proposals, quotes, invoices, reports, and public education materials, shall be double- DocuSign Envelope ID: F69BB0F7-4A7C-453E-A041-A682490AE83E City of Palo Alto General Services Agreement 9 Rev. February 8, 2017 sided and printed on a minimum of 30% or greater post-consumer content paper, unless otherwise approved by CITY’s Project Manager. Any submitted materials printed by a professional printing company shall be a minimum of 30% or greater post-consumer material and printed with vegetable based inks. x Goods purchased by Contractor on behalf of CITY shall be purchased in accordance with CITY’s Environmental Purchasing Policy including, but not limited to, Extended Producer Responsibility requirements for products and packaging. A copy of this policy is on file at the Purchasing Division’s office. x Reusable/returnable pallets shall be taken back by CONTRCATOR, at no additional cost to CITY, for reuse or recycling. CONTRACTOR shall provide documentation from the facility accepting the pallets to verify that pallets are not being disposed. Y. AUTHORITY. The individual(s) executing this Agreement on behalf of the parties represent and warrant that they have the legal capacity and authority to do so on behalf of their respective legal entities. Z. PREVAILING WAGES This Project is not subject to prevailing wages. Contractor is not required to pay prevailing wages in the performance and implementation of the Project in accordance with SB 7, if the contract is not a public works contract, if contract does not include a public works construction project of more than $25,000, or the contract does not include a public works alteration, demolition, repair, or maintenance (collectively, ‘improvement’) project of more than $15,000. OR Contractor is required to pay general prevailing wages as defined in Subchapter 3, Title 8 of the California Code of Regulations and Section 16000 et seq. and Section 1773.1 of the California Labor Code. Pursuant to the provisions of Section 1773 of the Labor Code of the State of California, the City Council has obtained the general prevailing rate of per diem wages and the general rate for holiday and overtime work in this locality for each craft, classification, or type of worker needed to execute the contract for this Project from the Director of the Department of Industrial Relations (“DIR”). Copies of these rates may be obtained at the Purchasing Division’s office of the City of Palo Alto. Contractor shall provide a copy of prevailing wage rates to any staff or subcontractor hired, and shall pay the adopted prevailing wage rates as a minimum. Contractor shall comply with the provisions of all sections, including, but not limited to, Sections DocuSign Envelope ID: F69BB0F7-4A7C-453E-A041-A682490AE83E City of Palo Alto General Services Agreement 10 Rev. February 8, 2017 1775, 1776, 1777.5, 1782, 1810, and 1813, of the Labor Code pertaining to prevailing wages. AA. DIR REGISTRATION. In regard to any public work construction, alteration, demolition, repair or maintenance work, CITY will not accept a bid proposal from or enter into this Agreement with CONTRACTOR without proof that CONTRACTOR and its listed subcontractors are registered with the California Department of Industrial Relations (“DIR”) to perform public work, subject to limited exceptions. City requires CONTRACTOR and its listed subcontractors to comply with the requirements of SB 854. CITY provides notice to CONTRACTOR of the requirements of California Labor Code section 1771.1(a), which reads: “A contractor or subcontractor shall not be qualified to bid on, be listed in a bid proposal, subject to the requirements of Section 4104 of the Public Contract Code, or engage in the performance of any contract for public work, as defined in this chapter, unless currently registered and qualified to perform public work pursuant to Section 1725.5. It is not a violation of this section for an unregistered contractor to submit a bid that is authorized by Section 7029.1 of the Business and Professions Code or Section 10164 or 20103.5 of the Public Contract Code, provided the contractor is registered to perform public work pursuant to Section 1725.5 at the time the contract is awarded.” CITY gives notice to CONTRACTOR and its listed subcontractors that CONTRCATOR is required to post all job site notices prescribed by law or regulation and CONTRACTOR is subject to SB 854-compliance monitoring and enforcement by DIR. CITY requires CONTRACTOR and its listed subcontractors to comply with the requirements of Labor Code section 1776, including: Keep accurate payroll records, showing the name, address, social security number, work classification, straight time and overtime hours worked each day and week, and the actual per diem wages paid to each journeyman, apprentice, worker, or other employee employed by, respectively, CONTRACTOR and its listed subcontractors, in connection with the Project. The payroll records shall be verified as true and correct and shall be certified and made available for inspection at all reasonable hours at the principal office of CONTRACTOR and its listed subcontractors, respectively. DocuSign Envelope ID: F69BB0F7-4A7C-453E-A041-A682490AE83E City of Palo Alto General Services Agreement 11 Rev. February 8, 2017 At the request of CITY, acting by its project manager, CONTRACTOR and its listed subcontractors shall make the certified payroll records available for inspection or furnished upon request to the project manager within ten (10) days of receipt of CITY’s request. [For state- and federally-funded projects] CITY requests CONTRACTOR and its listed subcontractors to submit the certified payroll records to the project manager at the end of each week during the Project. If the certified payroll records are not produced to the project manager within the 10-day period, then CONTRACTOR and its listed subcontractors shall be subject to a penalty of one hundred dollars ($100.00) per calendar day, or portion thereof, for each worker, and CITY shall withhold the sum total of penalties from the progress payment(s) then due and payable to CONTRACTOR. Inform the project manager of the location of CONTRACTOR’s and its listed subcontractors’ payroll records (street address, city and county) at the commencement of the Project, and also provide notice to the project manager within five (5) business days of any change of location of those payroll records. BB. CONTRACT TERMS. All unchecked boxes do not apply to this Agreement. In the case of any conflict between the terms of this Agreement and the exhibits hereto or CONTRACTOR’s proposal (if any), the Agreement shall control. In the case of any conflict between the exhibits hereto and CONTRACTOR’s proposal, the exhibits shall control. IN WITNESS WHEREOF, the parties hereto have by their duly authorized representatives executed this Agreement on the date first above written. CITY OF PALO ALTO NORTHWEST WOODLAND SERVICES, INC. First officer ______________________________ By________________________________________ City Manager or Designee Name _____________________________________ Title_______________________________________ Second officer Approved as to form: By________________________________________ Name _____________________________________ Title_______________________________________ ___________________________ City Attorney or Designee DocuSign Envelope ID: F69BB0F7-4A7C-453E-A041-A682490AE83E City of Palo Alto General Services Agreement 12 Rev. February 8, 2017 Exhibit A 100 – SCOPE OF WORK Contractor shall perform trail maintenance in the Palo Alto Baylands Preserve, the Pearson Arastradero Preserve and in Foothills Park. This includes furnishing all labor, equipment, supervision, transportation, tools, operating supplies, and incidentals to perform the work in accordance with the specifications and provisions of the contract. The Baylands Preserve trail system is approximately 10 miles of compacted dirt, crushed rock or oyster shells. The Foothills Park trail system is 15.0 miles long and includes approximately 40 drainage dips. Pearson- Arastradero Preserve trail system is 10.3 miles long and includes approximately 15 drainage dips and water bars. The work will consist of, but is not limited to (1) grooming existing trails, (2) reshaping existing drainage dips, (3) installing new drainage dips, water bars and culverts, (4) closing “outlaw trails” using earth berms and natural obstructions to block the area for unauthorized off trail use, and (5) seeding and mulching disturbed areas outside of the travelway, (6) brushing and limbing, (7) construction of replacement wooden foot bridges, and (8) spreading and compacting crushed rock and oyster shell on trail treads. The project manager will make the determination of trail tread material to be used at each site. Equipment must be in good operating condition with a maximum width of 5 feet on the majority of trails at the Pearson Arastradero Preserve and 8 feet for the De Anza Trail within the Pearson Arastradero Preserve. The majority of trails in Foothills Park range from 2 to 4 feet in width and are generally unsuitable for mechanized equipment; exceptions on equipment for Foothills Park trails made by project manager. The majority of the trials in the Baylands Preserve vary from 3 to 6 feet with some of the levee trails being up to 12 feet wide. SECTION 1 ANNUAL OPEN SPACE MAINTENANCE IN PEARSON- ARASTRADERO & FOOTHILLS PARK (FY 2018 – 2020) Work designated as annual maintenance is to be performed twice a year for three years in the spring and fall of each year. Work includes grooming (all) existing trails, tread repair including clearing drain dips and water bars and brushing trail corridor to provide safe and clear passage. All work shall meet specifications in the 2001 Arastradero Preserve Trail Management Plan and the 2002 Foothills Park Trails Maintenance Plan. x Filling ruts with native soil or imported gravel and re-grading the surface slope and cross-slope of existing trails to conform with specifications of the Arastradero Preserve Trail Master Plan (reference page 7-27, Figure 12) and the Foothills Park Trail Maintenance Plan (reference page 6-28 to 6-35) DocuSign Envelope ID: F69BB0F7-4A7C-453E-A041-A682490AE83E City of Palo Alto General Services Agreement 13 Rev. February 8, 2017 x Installing drain dips and lead-off ditches at prescribed locations (reference page 7-30, Figure 13, Arastradero Preserve Trail Master Plan) x Correcting the turning radius of existing switchbacks or creating new switchbacks at the Pearson Arastradero Preserve to reduce the trail slope. (reference page 7-16, Figure 6, Arastradero Preserve Trail Master Plan) x Trimming back encroaching vegetation (reference page 7-38, Figure 16, Arastradero Preserve Trail Master Plan and pages 6-47 through 6-63, Foothills Park Trail Maintenance Plan and sections 4.1 and 4.2 Foothills Fire Management Plan. 1.01 and 1.02: Spring 2018: Maintain trail tread and trailside vegetation. 25 linear miles. 1.03 and 1.04: Fall 2018: Maintain trail tread and trailside vegetation. 25 linear miles. 1.05 and 1.06: Spring 2019: Maintain trail tread and trailside vegetation. 25 linear miles. 1.07 and 1.08: Fall 2019: Maintain trail tread and trailside vegetation. 25 linear miles. 1.08 and 1.09: Spring 2020: Maintain trail tread and trailside vegetation. 25 linear miles. 1.10 and 1.11: Fall 2020: Maintain trail tread and trailside vegetation. 25 linear miles. SECTIONS 2 ONE-TIME MAINTENANCE OF PEARSON-ARASTRADERO PRESERVE (FY 2018-2020) Work designated as one time maintenance of Foothills Park is intended to be completed over the three years of the contract. Contractor shall provide the City with a schedule covering all areas of responsibility specified in this agreement. The schedule will be submitted and agreed upon within 60 calendar days following awards of this contract. This schedule and any changes, deletions, or additions therein, if approved by the City, shall become part of this agreement and shall be used both by the contractor and the City of Palo Alto for performance monitoring and contractor obligations. 2.01: Inspect all Arastradero Preserve bridges, fall 2018. Add date plate to all new and recently built trail bridges. Included tightening bolts and replacing missing bolts on handrails, and securing any loose boards. Check for structural integrity and dry rot that would indicate the bridge needs repair/replacement. DocuSign Envelope ID: F69BB0F7-4A7C-453E-A041-A682490AE83E City of Palo Alto General Services Agreement 14 Rev. February 8, 2017 2.02: Arastradero Preserve, Clean and grade all ditches (all trails). 2.03: Arastradero Preserve, Bay Laurel trail rocking. Add 4-inches of compacted base rock to existing 4-foot wide trail between Ohlone and Woodland Star trail junctions. x Spreading and compacting crushed rock on trail treads in the Pearson- Arastradero Preserve and Foothills Park. Compacted base rock must be wet or moistened to maximize compaction with a rolling two drum compactor. Contractor responsible for purchasing and coordinating delivery of crushed rock. 2.04: Arastradero Preserve, Bay Laurel trail grading. Grade 250 linear feet of existing trail to provide better alignment and drainage for #2.03. x Filling ruts with native soil or imported gravel and re-grading the surface slope and cross-slope of existing trails to conform with specifications of the Arastradero Preserve Trail Master Plan (reference page 7-27, Figure 12) and the Foothills Park Trail Maintenance Plan (reference page 6-28 to 6-35) x Installing drain dips and lead-off ditches at prescribed locations (reference page 7-30, Figure 13, Arastradero Preserve Trail Master Plan) x Correcting the turning radius of existing switchbacks or creating new switchbacks at the Pearson Arastradero Preserve to reduce the trail slope. (reference page 7-16, Figure 6, Arastradero Preserve Trail Master Plan) x Re-conditioning of existing trails to original conditions and width (30” to 36”) using full bench cut method; cut and fill not accepted. Slope upper back to prevent falling loose soil (sluff), and trim/cut protruding roots. See USFS detail sheet for trail cross section details. https://www.fs.fed.us/recreation/programs/trail- management/documents/plans/trail_pdfs/STD_911-30- 01_Exist_Trail_Restoration.pdf 2.05: Arastradero Preserve, Acorn trail bridge replacement. Replace existing bridge with longer span due to creek edge erosion/widening. Existing bridge is 5- feet wide and 12-feet long. New bridge must be a minimum of 6-feet wide and up to 16-feet long. x Construct and install trail bridges using “nail lam” style (progressively nailed 2”x8” pressure treated boards with edge kick rails and hand rails). See USFS detail sheet for our bridge details. https://www.fs.fed.us/recreation/programs/trail- management/documents/plans/trail_bridge_pdfs/STD_962-20_NAIL- LAM.pdf. DocuSign Envelope ID: F69BB0F7-4A7C-453E-A041-A682490AE83E City of Palo Alto General Services Agreement 15 Rev. February 8, 2017 2.06: Arastradero Preserve, Acorn trail drainage repair/reinforce. Add large rock boulders to reinforce drainage to prevent continued erosion. Estimated 5-cubic yards of boulders/rip rap. 2.07: Arastradero Preserve, Red-Tail Loop rocking. Add 4-inches of compacted base rock to existing 4-foot wide trail. 5,000 linear feet. 2.08: Arastradero Preserve, Juan Bautista de Anza trail rocking. Add 4-inches of compacted base rock to existing 4-foot wide trail between Meadowlark and Arastradero Creek trail junctions. 1,700 linear feet. 2.09: Arastradero Preserve, Meadowlark rocking. Add 4-inchs of compacted base rock to 10-foot wide trail between gate-C and Woodland Star trail. 3,000 linear feet. SECTIONS 3 ONE-TIME MAINTENANCE OF FOOTHILLS PARK (FY 2018- 2020) Work designated as one time maintenance of Pearson-Arastradero Preserve and one time maintenance of Foothills Park is intended to be completed over the three years of the contract. Contractor shall provide the City with a schedule covering all areas of responsibility specified in this agreement. The schedule will be submitted and agreed upon within 60 calendar days following awards of this contract. This schedule and any changes, deletions, or additions therein, if approved by the City, shall become part of this agreement and shall be used both by the contractor and the City of Palo Alto for performance monitoring and contractor obligations. 3.01: Inspect all Foothills Park foot bridges in fall 2018. Add date built plate to all new and recently built trail bridges. Includes tightening bolts and replacing any missing bolts on handrails, and securing any loose boards. Check for structural integrity and dry rot that would indicate the bridge needs repair/replacement. 29 bridges. 3.02: Foothills Park, Fern Loop trail grading. Improve trail tread width and alignment for the entire trail. 2,700 linear feet. x Re-conditioning of existing trails to original conditions and width (24” to 30”) using full bench cut method; cut and fill not accepted. Slope upper back to prevent falling loose soil (sluff), and trim/cut protruding roots. See USFS detail sheet for trail cross section details. https://www.fs.fed.us/recreation/programs/trail- management/documents/plans/trail_pdfs/STD_911-30- 01_Exist_Trail_Restoration.pdf DocuSign Envelope ID: F69BB0F7-4A7C-453E-A041-A682490AE83E City of Palo Alto General Services Agreement 16 Rev. February 8, 2017 3.03: Foothills Park, Fern Loop trail, bridge #1 replacement. x Construct and install trail bridges using “nail lam” style (progressively nailed 2”x8” pressure treated boards with edge kick rails and hand rails). See USFS detail sheet for our bridge details. https://www.fs.fed.us/recreation/programs/trail- management/documents/plans/trail_bridge_pdfs/STD_962-20_NAIL- LAM.pdf 3.04: Foothills Park, Panorama trail rocking. Add 4-inches of compacted base to existing 2-foot wide trail; 520 linear feet. x Spreading and compacting crushed rock on trail treads in the Pearson- Arastradero Preserve and Foothills Park. Compacted base rock must be wet or moistened to maximize compaction with a rolling two drum compactor. Contractor responsible for purchasing and coordinating delivery of crushed rock. SECTION 4 ONE-TIME OPEN SPACE MAINTENANCE IN ALL OPEN SPACE PRESERVES (FY 2018 -2020) DAY RATE Provide all labor, equipment, supervision, transportation, tools, operating supplies, and incidentals to perform the work as required. 4.01: Day rate - Two (2) persons with equipment as needed to perform work on trail and inside the parks/preserves. 85 days; 28 days per fiscal year. SECTION 5 - ONE-TIME UTILITIES DEPARTMENT MAINTENANCE IN OPEN SPACE (FY 2018 -2020) DAY RATE Provide all labor, equipment, supervision, transportation, tools, operating supplies, and incidentals to perform the work as required and specified by the Utilities Department. Including maintenance as required on utility access roads to existing water reservoirs and along existing utility corridors through the Pearson-Arastradero Preserve and Foothills Park. Also includes sites outside open space including but not limited to Hale Well and Mayfield Reservoir. 5.01: Day rate – 2 persons with equipment as needed to perform work as needed for Palo Alto utilities. 60 days; 20 days per fiscal year. The Utilities Department is requiring the following: DocuSign Envelope ID: F69BB0F7-4A7C-453E-A041-A682490AE83E City of Palo Alto General Services Agreement 17 Rev. February 8, 2017 1. Utilities Department will require before and after photos for Section 5 work. 2. Utilities Department will require written authorization for all work for Section 5. 3. Utilities Department will require itemized invoices for Section 5 work. 4. All written work authorizations must be signed off by Project Manager, John Reinert prior to any construction for Section 5. All work shall be accomplished within the period Monday through Saturday, between 7 a.m. to 5 p.m. excluding holidays. Work at other times and days of the week must be approved by the project manager. 201 – REQUIREMENTS (1) Grooming and Blading Trails – Grooming and blading shall be conducted as required to remove ruts, potholes, and corrugations, and to outslope berms. All suitable dislodged material shall be smoothly redistributed over the entire traveled way and firmly packed. The trail bed shall be outsloped 2% to 4% (as measured with a clinometer) as discussed on page 6-32 of the Foothills Park Trail Maintenance Plan – Guidelines, Techniques and Tools. The trail bed shall be firm, smooth, and finished to the width of 2’ to 4’ for all trail sections designated for rock and root removal, slough and berm removal, and fill material placement. Assure proper surface drainage following this operation. No undercutting of trail surface at shoulder line or material berms will be allowed unless designated by the Project Manager. Rocks and roots protruding 3 inches or more above graded surface shall be removed from the traveled way. It is permissible to waste rocks over the trail shoulder edge away from drainage ditches. All traveled way widths shall be perpetuated as existing not to exceed 4 feet in Foothills Park, typically 4-feet in the Pearson Arastradero Preserve and typically 3 to 6 feet in the Baylands Preserve. The Arastradero Creek Trail and portions of the de Anza trail within the Pearson Arastradero Preserve follow existing roads and were designed especially for utility access and maintenance of these trails are outside the scope of work of this contract. Dips and swales within DocuSign Envelope ID: F69BB0F7-4A7C-453E-A041-A682490AE83E City of Palo Alto General Services Agreement 18 Rev. February 8, 2017 the traveled way designed to control surface drainage shall be maintained. (2) Drainage – Drainage dips will be reconstructed as shown on Page 6- 39, Figure 6-14 of the Foothills Park Maintenance Plan, or on Page 7- 30, Figure 13, of the Arastradero Preserve Trail Maintenance Plan. Wing ditches shall be cleared and maintained. (3) Installation of New Drainage Dips, Water Bars and Culverts – Drainage dips and water bars will be constructed as shown in the Pearson Arastradero Preserve Trail Master Plan (Pages 7-26 through 7-35 for trails within Pearson Arastradero Preserve) and as shown in the Foothills Park Trail Maintenance Plan (Pages 6-38 through 6-42 for trails within Foothills Park.) (4) Closing Trails - Renegade trails or trails to be abandoned will be closed by using earth berms where practical. When not practical, trails will be closed by using rocks, brush, logs along the trail that can be used to block it, or by the planting of native plants (provided by the City) in the area of closure. This shall be done for a distance of 100 feet and to the satisfaction of the Project Manager. (5) Seeding and Mulching – All disturbed soil outside the travelway shall be seeded and mulched. Native seed mixture shall be specified by the City of Palo Alto and only seed approved or provided by the City may be used. The mulch shall be City-provide compost or Contractor- provided rice straw. (6) Brushing and limbing – Vegetation along the trail corridors will be trimmed on the sides (to a 4-foot minimum passage, above (to an 8- foot minimum passage), and along the hinge of the trails according to the specifications of the two individual trail plans and the fire plan. Care shall be taken so as not to damage species of special concern. The contractor shall keep existing trails that are not undergoing improvements open to safely accommodate traffic. Trails undergoing improvement or construction can be closed by the contractor for safety reasons. Closed trails must be posted at trailheads as to being “CLOSED FOR MAINTENANCE OF TRAIL”. Contractor to provided trail tread materials (Crushed Rock for Arastradero Preserve or Oyster Shells for the Palo Alto Baylands). The contractor will provide and schedule delivery of trail tread material where specified; project manager to determine materials to be used. The contractor will be responsible for meeting the delivery company on site to indicate the drop location(s) near the work site(s). The contractor will be required to install all rock order per specifications during DocuSign Envelope ID: F69BB0F7-4A7C-453E-A041-A682490AE83E City of Palo Alto General Services Agreement 19 Rev. February 8, 2017 the spring or fall construction periods. Crush rock cannot be stored on site between construction periods or over the winter rains. Disposal of Material Except for treated bridge lumber, this project does not anticipate the need to dispose of materials off-site. Soil removed from the trail tread will be distributed in the area of the job site, except where erosion into creeks is a concern. Treated bridge lumber and all other materials that need to be disposed of will be disposed of at location designated by the City and at the City’s expense. Responsibilities Contractor is responsible for working with the City of Palo Alto Utilities Department and any other necessary notifications or precautions including, but not limited to, calling for underground utility marking using Underground Service Alert (USA or 8-1-1). Contractor is responsible for repair to any damaged utility lines. 202 – STANDARDS OF PERFORMANCE Work under this contract will be required to meet the following standards. The contractor will be responsible for quality control and assuring that the work meets the standards. (1) Blading Trails – The trail bed is firm, smooth, and finished to a width not exceeding existing widths without berms or undercutting at shoulders. No roots or rocks are protruding 3 inches or more from the graded surface. (2) Drainage – Dips and swales properly control surface drainage and ditches are clear. (3) Closing Trails – Closed trails are no longer accessible. (4) Foot bridges – Tread surface is level and flush. All tread surfaces are to be free of major splinters or exposed deck screws that could cause a tripping hazard. Pier foundations are constructed of stabilized stone or concrete and provide the lowest step height possible. (5) Erosion Control – Silt fence and hay bales are used as appropriate. All disturbed soil outside the travel way is seeded and mulched with the proper mixtures and quantities to prevent erosion. (6) Performance Time – The performance time for the annual maintenance aspect of this project is estimated to be 60 calendar days per year. Work must be completed each year by December 31st. DocuSign Envelope ID: F69BB0F7-4A7C-453E-A041-A682490AE83E City of Palo Alto General Services Agreement 20 Rev. February 8, 2017 300 – INSPECTION Inspection of work performed under this contract will be made by the Project Manager or designated open space staff. Inspections will be made as the work progresses at such intervals as are necessary to ensure compliance with the contract requirements. A final inspection by the project manager will be required before the project will be considered complete. Any accidents, damage, or work done outside the scope of work shall be reported to the project manager immediately.100% of work will be inspected. 400 - PAYMENT Payment shall be made upon completion and acceptance of the work at the bid rate. If upon inspection, work does not meet the performance standards, rework will be required before payment is processed. No payment will be made for items of work not meeting the standards of performance. Partial payments can be made after inspection and acceptance by the Project Manager DocuSign Envelope ID: F69BB0F7-4A7C-453E-A041-A682490AE83E City of Palo Alto General Services Agreement 21 Rev. February 8, 2017 EXHIBIT B SCHEDULE OF PERFORMANCE CONTRACTOR shall perform the Services so as to complete each task within the time period specified below. The time to complete each task may be increased or decreased by mutual written agreement of the project managers for CONTRACTOR and CITY so long as all work is completed within the term of the Agreement. Upon request CONTRACTOR shall provide a detailed schedule of work consistent with the schedule below. Section 1 (Annual Maintenance) Annual Open Space Maintenance in Pearson Arastradero Preserve & Foothills Park (2018- 2020) Grooming all 25-miles of existing trails. Tread repair including clearing drain dips, slough and berm, and clean out water bars - total 25 miles of trail. Clearing/cutting back trail vegetation (including but not limited to trees, brush and grasses) per each of the Foothills Park and Arastradero Preserve's Trail Management Plans specifications. No. Spring 2018 Quantity Unit 1.03 Maintain trail tread 25 miles 1.04 Maintain trailside vegetation 25 miles Fall 2018 Quantity Unit 1.05 Maintain trail tread 25 miles 1.06 Maintain trailside vegetation 25 miles Spring 2019 Quantity Unit 1.07 Maintain trail tread 25 miles 1.08 Maintain trailside vegetation 25 miles Fall 2019 Quantity Unit 1.09 Maintain trail tread 25 miles 1.1 Maintain trailside vegetation 25 miles Spring 2020 Quantity Unit 1.11 Maintain trail tread 25 miles 1.12 Maintain trailside vegetation 25 miles Fall 2020 Quantity Unit 1.13 Maintain trail tread 25 miles 1.14 Maintain trailside vegetation 25 miles DocuSign Envelope ID: F69BB0F7-4A7C-453E-A041-A682490AE83E City of Palo Alto General Services Agreement 22 Rev. February 8, 2017 Section 2 One time work - Arastradero Preserve Inspect all Arastradero Preserve bridges Fall 2018. Add date plate to all new and recently built trail bridges. Includes tightening bolts and replacing and missing bolts on handrails, and securing any loose boards. Check for structural integrity and dry rot that would indicate the bridge needs repair/replacement. Quantity Unit 2.01 4 bridge Quantity Unit 2.02 Arastradero Preserve, Clean and grade ditches (all trails) 10,000 Feet Arastradero Preserve, Bay Laurel rocking Add 4" of compacted base to 4-ft wide trail between Ohlone and Woodland Star junctions. Quantity Unit 2.03 900 feet Arastradero Preserve, Bay Laurel trail grading. Grade 250 linear feet of existing trail to provide better alignment and drainage for #2.03 Quantity Unit 2.04 250 feet Arastradero Preserve, Acorn trail bridge replacement, replace existing bridge with longer span due to creek edge erosion/widening. Existing bridge is 5-ft wide and 12-ft long. New bridge must be a minimum of 6-ft wide and up to 16-ft long. Quantity Unit 2.05 1 bridge Arastradero Preserve, Acorn trail drainage repair/reinforce Add large rock boulders to reinforce drainage to prevent continued erosion. Estimated 5 cubic yards of boulders/rip rap. Quantity Unit 2.06 1 drainage Arastradero Preserve, Red-Tail Loop rocking Add 4" of compacted base to 4-ft wide trail to the balance of the existing trail (once completed, entire trail will be rocked). Quantity Unit 2.07 5,000 feet Arastradero Preserve, Juan Bautista de Anza rocking Add 4" of compacted base to 6-ft wide trail between meadowlark and Arastradero Creek trail junctions. Quantity Unit 2.08 1,700 feet DocuSign Envelope ID: F69BB0F7-4A7C-453E-A041-A682490AE83E City of Palo Alto General Services Agreement 23 Rev. February 8, 2017 Arastradero Preserve, Meadowlark rocking Add 4" of compacted base to 10-ft wide trail between Gate-C and Woodrat Trail 2.09 3,000 feet Section 3 One-time work, Foothills Park Description Quantity Unit Inspect all Foothills Park bridges Fall 2017. Add date built plate to all new and recently built trail bridges. Includes tightening bolts and replacing any missing bolts on handrails, and securing any loose boards. Check for structural integrity and dry rot that would indicate the bridge needs repair/replacement. Quantity Unit 3.01 29 bridges Foothills Park, Fern Loop trail grading. Improve trail tread width and alignment for the entire trail Quantity Unit 3.02 2,700 feet 3.03 Foothills Park, Fern Loop Bridge #1 replacement Quantity Unit 1 bridge Foothills Park, Panorama trail rocking Add 4" of compacted base to existing 2-ft wide trail. Quantity Unit 3.04 520 feet Section 4 One time Day Rate CSD Open Space Description Quantity Unit Day rate - 2 Persons with Equipment as needed to perform work on trails and inside the parks/preserves. Quantity Unit 4.1 85 days Section 5 - One time Day Rate Utilities Dept. Description Quantity Unit Day rate - 2 Persons with Equipment as needed to perform Quantity Unit 5.1 work as needed for Palo Alto Utilities Dept. 60 Days DocuSign Envelope ID: F69BB0F7-4A7C-453E-A041-A682490AE83E City of Palo Alto General Services Agreement 24 Rev. February 8, 2017 EXHIBIT C SCHEDULE OF FEES CONTRACTOR shall perform the tasks as described and budgeted below. CITY’s Project Manager may approve in writing the transfer of budget amounts between any of the tasks or categories listed below provided the total compensation for the Services including reimbursable expenses, does not exceed the amounts set forth in Sections 5 and 6 of the Agreement. Any services provided or hours worked for which payment would result in a total exceeding the maximum amount of compensation set forth herein shall be at no cost to CITY. DESCRIPTION OF TASK NOT TO EXCEED COMPENSATION PER TASK INCLUDING REIMBURSABLES Exhibit C - Compensation Foothills Park and Pearson Arastradero Preserve Trail Maintenance Contract FY '18 - '20 Contract: C18168186 In accordance with the requirements contained in Section-I - Request for Quotation and Bidder required information, please quote price and availability on the items below. Section 1 (Annual Maintenance) Annual Open Space Maintenance in Pearson Arastradero Preserve & Foothills Park (2018-2020) Grooming all 25-miles of existing trails. Tread repair including clearing drain dips, slough and berm, and clean out water bars - total 25 miles of trail. Clearing/cutting back trail vegetation (including but not limited to trees, brush and grasses) per each of the Foothills Park and Arastradero Preserve's Trail Management Plans specifications. No. Spring 2018 Qty Unit Unit cost Total 1.01 Maintain trail tread 25 Miles 525 $13,125.00 1.02 Maintain trailside vegetation 25 Miles 525 $13,125.00 DocuSign Envelope ID: F69BB0F7-4A7C-453E-A041-A682490AE83E City of Palo Alto General Services Agreement 25 Rev. February 8, 2017 Fall 2018 Qty Unit Unit cost Total 1.03 Maintain trail tread 25 Miles 525 $13,125.00 1.04 Maintain trailside vegetation 25 Miles 525 $13,125.00 Spring 2019 Qty Unit Unit cost Total 1.05 Maintain trail tread 25 Miles 550 $13,750.00 1.06 Maintain trailside vegetation 25 Miles 550 $13,750.00 Fall 2019 Quantity Unit Unit cost Total 1.07 Maintain trail tread 25 Miles 575 $14,375.00 1.08 Maintain trailside vegetation 25 Miles 575 $14,375.00 Spring 2020 Qty Unit Unit cost Total 1.09 Maintain trail tread 25 Miles 600 $15,000.00 1.10 Maintain trailside vegetation 25 Miles 600 $15,000.00 Fall 2020 Qty Unit Unit cost Total 1.11 Maintain trail tread 25 Miles 635 $15,875.00 1.12 Maintain trailside vegetation 25 Miles 635 $15,875.00 Section 1 Sub total $170,500.00 Section 2 One time work, Arastradero Preserve Project schedule to be determined Inspect all Arastradero Preserve bridges fall 2018. Add date plate Qty Unit Unit cost Total to all new and recently built trail bridges. Includes tightening bolts and replacing and missing bolts on handrails, and securing any loose boards. Check for structual integrity and 2.01 dry rot that would indicate the bridge needs repair/replacement. 4 bridge $100.00 $400.00 Qty Unit Unit cost Total 2.02 Arastradero Preserve, Clean and grade ditches (all trails) 10,000 feet 1 $10,000.00 DocuSign Envelope ID: F69BB0F7-4A7C-453E-A041-A682490AE83E City of Palo Alto General Services Agreement 26 Rev. February 8, 2017 Arastradero Preserve, Bay Laurel rocking Add 4" of compacted base to 4-ft wide trail between Ohlone Qty Unit Unit cost Total 2.03 and Woodland Star junctions. 900 feet 15 $13,500.00 Arastradero Preserve, Bay Laurel trail grading. Grade 250 linear feet Qty Unit Unit cost Total 2.04 of existing trail to provide better alignment and drainage for #2.03 250 feet 1.5 $375.00 Arastradero Preserve, Acorn trail bridge replacement Replace existing bridge with longer span due to creek edge erosion/widening. Existing bridge is 5-ft wide and 12-ft long. Qty Unit Unit cost Total 2.05 New bridge must be a minimum of 6-ft wide and upto 16-ft long. 1 bridge 6500 $6,500.00 Arastradero Preserve, Acorn trail drainage repair/reinforce Add large rock boulders to reinforce drainage to prevent Qty Unit Unit cost Total 2.06 continued erosion. Estimated 5 cubic yards of boulders/rip rap. 1 drainage 2,500 $2,500.00 Arastradero Preserve, Red-Tail Loop rocking Add 4" of compacted base to 4-ft wide trail to the balance Qty Unit Unit cost Total 2.07 of the existing trail (once completed, entire trail will be rocked). 5,000 feet 20 $100,000.00 Arastradero Preserve, Juan Bautista de Anza rocking Add 4" of compacted base to 6-ft wide trail between Qty Unit Unit cost Total 2.08 meadowlark and Arastradero Creek trail junctions. 1,700 feet 16 $ 27,200.00 Arasradero Preserve, Meadowlark rocking Add 4" of compacted base to 10-ft wide trail between 2.09 Gate-C and Woodrat Trail 3,000 feet 20 $60,000.00 Section 2 Sub total $220,475.00 Section 3 One-time work, Foothills Park DocuSign Envelope ID: F69BB0F7-4A7C-453E-A041-A682490AE83E City of Palo Alto General Services Agreement 27 Rev. February 8, 2017 Project schedule to be determined Description Qty Unit Unit cost Total Inspect all Foothills Park bridges Fall 2018. Add date built plate to all new and recently built trail bridges. Includes tightening bolts and replacing any missing bolts on handrails, and securing any loose boards. Check for structural integrity and Qty Unit Unit cost Total 3.01 dry rot that would indicate the bridge needs repair/replacement. 29 bridges 100 $2,900 .00 Foothills Park, Fern Loop trail grading. Improve trail tread Qty Unit Unit cost Total 3.02 width and alignment for the entire trail 2,700 feet 3 $8,100.00 Qty Unit Unit cost Total 3.03 Foothills Park, Fern Loop bridge #1 replacement 1 bridge 6500 $6,500.00 Foothills Park, Panorama trail rocking Qty Unit Unit cost Total 3.04 Add 4" of compacted base to existing 2-ft wide trail. 520 feet 15 $7,800.00 Section 3 Sub total $25,300.00 Section 4 One time Day Rate CSD Open Space Project schedule to be determined Day rate - 2 Persons with Equipment as needed to perform Qty Unit Unit cost Total 4.1 work on trails and inside the parks/preserves. 85 days 1,250 $106,250.00 Fiscal year '18 (ending June 30, 2018) 15 days Fiscal year '19 (ending June 30, 2019) 28 days Fiscal year '20 (ending June 30, 2020) 28 days Fiscal year '21 (ending Nov 30, 2020) 14 days DocuSign Envelope ID: F69BB0F7-4A7C-453E-A041-A682490AE83E City of Palo Alto General Services Agreement 28 Rev. February 8, 2017 Section 4 Sub total $106,250.00 Section 5 One time Day Rate Utilities Dept. Project schedule to be determined Day rate - 2 Persons with Equipment as needed to perform Qty Unit Unit cost Total 5.1 work as needed for Palo Alto Utilities Dept. 60 days $1,250 $75,000.00 Fiscal year '18 (ending June 30, 2018) 10 days Fiscal year '19 (ending June 30, 2019) 20 days Fiscal year '20 (ending June 30, 2020) 20 days Fiscal year '21 (ending Nov 30, 2020) 10 days Sect. 5 Total $75,000.00 Totals For All Bids Section 1 $170,500.00 Section 2 $220,475.00 Section 3 $25,300.00 Section 4 $106,250.00 Section 5 $75,000.00 Grand Total $597,525.00 DocuSign Envelope ID: F69BB0F7-4A7C-453E-A041-A682490AE83E City of Palo Alto General Services Agreement 29 Rev. February 8, 2017 EXHIBIT D INSURANCE REQUIREMENTS CONTRACTORS TO THE CITY OF PALO ALTO (CITY), AT THEIR SOLE EXPENSE, SHALL FOR THE TERM OF THE CONTRACT OBTAIN AND MAINTAIN INSURANCE IN THE AMOUNTS FOR THE COVERAGE SPECIFIED BELOW, AFFORDED BY COMPANIES WITH AM BEST’S KEY RATING OF A-:VII, OR HIGHER, LICENSED OR AUTHORIZED TO TRANSACT INSURANCE BUSINESS IN THE STATE OF CALIFORNIA. AWARD IS CONTINGENT ON COMPLIANCE WITH CITY’S INSURANCE REQUIREMENTS, AS SPECIFIED, BELOW: REQUIRED TYPE OF COVERAGE REQUIREMENT MINIMUM LIMITS EACH OCCURRENCE AGGREGATE YES YES WORKER’S COMPENSATION EMPLOYER’S LIABILITY STATUTORY STATUTORY YES GENERAL LIABILITY, INCLUDING PERSONAL INJURY, BROAD FORM PROPERTY DAMAGE BLANKET CONTRACTUAL, AND FIRE LEGAL LIABILITY BODILY INJURY PROPERTY DAMAGE BODILY INJURY & PROPERTY DAMAGE COMBINED. $1,000,000 $1,000,000 $1,000,000 $1,000,000 $1,000,000 $1,000,000 YES AUTOMOBILE LIABILITY, INCLUDING ALL OWNED, HIRED, NON-OWNED BODILY INJURY - EACH PERSON - EACH OCCURRENCE PROPERTY DAMAGE BODILY INJURY AND PROPERTY DAMAGE, COMBINED $1,000,000 $1,000,000 $1,000,000 $1,000,000 $1,000,000 $1,000,000 $1,000,000 $1,000,000 $1,000,000 $1,000,000 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: CONTRACTOR, AT ITS SOLE COST AND EXPENSE, SHALL OBTAIN AND MAINTAIN, IN FULL FORCE AND EFFECT THROUGHOUT THE ENTIRE TERM OF ANY RESULTANT AGREEMENT, THE INSURANCE COVERAGE HEREIN DESCRIBED, INSURING NOT ONLY CONTRACTOR AND ITS SUBCONSULTANTS, IF ANY, BUT ALSO, WITH THE EXCEPTION OF WORKERS’ COMPENSATION, EMPLOYER’S LIABILITY AND PROFESSIONAL INSURANCE, NAMING AS ADDITIONAL INSUREDS CITY, ITS COUNCIL MEMBERS, OFFICERS, AGENTS, AND EMPLOYEES. I. INSURANCE COVERAGE MUST INCLUDE: A. A PROVISION FOR A WRITTEN THIRTY DAY ADVANCE NOTICE TO CITY OF CHANGE IN COVERAGE OR OF COVERAGE CANCELLATION; AND B. A CONTRACTUAL LIABILITY ENDORSEMENT PROVIDING INSURANCE COVERAGE FOR CONTRACTOR’S AGREEMENT TO INDEMNIFY CITY. C. DEDUCTIBLE AMOUNTS IN EXCESS OF $5,000 REQUIRE CITY’S PRIOR APPROVAL. II. CONTACTOR MUST SUBMIT CERTIFICATES(S) OF INSURANCE EVIDENCING REQUIRED COVERAGE. III. ENDORSEMENT PROVISIONS, WITH RESPECT TO THE INSURANCE AFFORDED TO “ADDITIONAL INSUREDS” DocuSign Envelope ID: F69BB0F7-4A7C-453E-A041-A682490AE83E City of Palo Alto General Services Agreement 30 Rev. February 8, 2017 A. PRIMARY COVERAGE WITH RESPECT TO CLAIMS ARISING OUT OF THE OPERATIONS OF THE NAMED INSURED, INSURANCE AS AFFORDED BY THIS POLICY IS PRIMARY AND IS NOT ADDITIONAL TO OR CONTRIBUTING WITH ANY OTHER INSURANCE CARRIED BY OR FOR THE BENEFIT OF THE ADDITIONAL INSUREDS. B. CROSS LIABILITY THE NAMING OF MORE THAN ONE PERSON, FIRM, OR CORPORATION AS INSUREDS UNDER THE POLICY SHALL NOT, FOR THAT REASON ALONE, EXTINGUISH ANY RIGHTS OF THE INSURED AGAINST ANOTHER, BUT THIS ENDORSEMENT, AND THE NAMING OF MULTIPLE INSUREDS, SHALL NOT INCREASE THE TOTAL LIABILITY OF THE COMPANY UNDER THIS 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. NOTICES SHALL BE MAILED TO: PURCHASING AND CONTRACT ADMINISTRATION CITY OF PALO ALTO P.O. BOX 10250 PALO ALTO, CA 94303 DocuSign Envelope ID: F69BB0F7-4A7C-453E-A041-A682490AE83E Appendix for General Services Agmt 1 February 8, 2017 Appendix A: Claims for Public Contract Code Section 9204 Public Works Projects The provisions of this this Appendix are provided in compliance with Public Contract Code Section 9204; they provide the exclusive procedures for any claims related to the Services performed under this Agreement. 1. Claim Definition. “Claim" means a separate demand by the Contractor sent by registered mail or certified mail with return receipt requested, for one or more of the following: (A)A time extension, including, without limitation, for relief from damages or penalties for delay assessed by the City. (B)Payment by the City of money or damages arising from the Services performed by, or on behalf of, the Contractor pursuant to the Agreement and payment for which is not otherwise expressly provided or to which the Contractor is not otherwise entitled. (C)Payment of an amount that is disputed by the City. 2. Claim Process. (A) Timing. Any Claim must be submitted to City in compliance with the requirements of this Appendix no later than fourteen (14) days following the event or occurrence giving rise to the Claim. This time requirement is mandatory; failure to submit a Claim within fourteen (14) days will result in its being deemed waived. (B) Submission. The Claim must be submitted to City in writing, clearly identified as a “Claim” submitted pursuant to this Appendix, and must include reasonable documentation substantiating the Claim. The Claim must clearly identify and describe the dispute, including relevant references to applicable portions of the Agreement, and a chronology of relevant events. Any Claim for additional payment must include a complete, itemized breakdown of all labor, materials, taxes, insurance, and subcontract, or other costs. Substantiating documentation such as payroll records, receipts, invoices, or the like, must be submitted in support of each claimed cost. Any Claim for an extension of time or delay costs must be substantiated with schedule analysis and narrative depicting and explaining claimed time impacts. (C) Review. Upon receipt of a Claim in compliance with this Appendix, the City shall conduct a reasonable review of the Claim and, within a period not to exceed 45 days from receipt, shall provide the Contractor a written statement identifying what portion of the Claim is disputed and what portion is undisputed. Upon receipt of a Claim, the City and Contractor may, by mutual agreement, extend the time period provided in this paragraph 2. (D) If City Council Approval Required. If the City needs approval from the City Council to provide the Contractor a written statement identifying the disputed portion and the undisputed portion of the Claim, and the City Council does not meet within the 45 days or within the mutually agreed to extension of time following receipt of a Claim sent by registered mail or certified mail, return receipt requested, the City shall have up to three days following the next duly publicly noticed meeting of the City Council after the 45-day period, or extension, expires to provide the Contractor a written statement identifying the disputed portion and the undisputed portion. DocuSign Envelope ID: F69BB0F7-4A7C-453E-A041-A682490AE83E Appendix for General Services Agmt 2 February 8, 2017 (E) Payment. Any payment due on an undisputed portion of the Claim shall be processed and made within 60 days after the City issues its written statement. If the City fails to issue a written statement, paragraph 3, below, shall apply. 3. Disputed Claims (A) Meet and Confer. If the Contractor disputes the City's written response, or if the City fails to respond to a Claim submitted pursuant to this Appendix within the time prescribed, the Contractor may demand in writing an informal conference to meet and confer for settlement of the issues in dispute. Upon receipt of a demand in writing sent by registered mail or certified mail, return receipt requested, the City shall schedule a meet and confer conference within 30 days for settlement of the dispute. Within 10 business days following the conclusion of the meet and confer conference, if the Claim or any portion of the Claim remains in dispute, the City shall provide the Contractor a written statement identifying the portion of the Claim that remains in dispute and the portion that is undisputed. Any payment due on an undisputed portion of the Claim shall be processed and made within 60 days after the City issues its written statement. (B) Mediation. Any remaining disputed portion of the Claim, as identified by the Contractor in writing, shall be submitted to nonbinding mediation, with the City and the Contractor sharing the associated costs equally. The City and Contractor shall mutually agree to a mediator within 10 business days after the disputed portion of the Claim has been identified in writing by the Contractor. If the parties cannot agree upon a mediator, each party shall select a mediator and those mediators shall select a qualified neutral third party to mediate the disputed portion of the Claim. Each party shall bear the fees and costs charged by its respective mediator in connection with the selection of the neutral mediator. If mediation is unsuccessful, the parts of the Claim remaining in dispute shall be subject to any other remedies authorized by the Agreement and laws. (i) For purposes of this paragraph 3.B, mediation includes any nonbinding process, including, but not limited to, neutral evaluation or a dispute review board, in which an independent third party or board assists the parties in dispute resolution through negotiation or by issuance of an evaluation. Any mediation utilized shall conform to the timeframes in this section. (ii) Unless otherwise agreed to by the City and the Contractor in writing, the mediation conducted pursuant to this section shall excuse any further obligation, if any, under Public Contract Code Section 20104.4 to mediate after litigation has been commenced. 4. City’s Failure to Respond. Failure by the City to respond to a Claim from the Contractor within the time periods described in this Appendix or to otherwise meet the time requirements of this Appendix shall result in the Claim being deemed rejected in its entirety. A Claim that is denied by reason of the City's failure to have responded to a Claim, or its failure to otherwise meet the time requirements of this Appendix, shall not constitute an adverse finding with regard to the merits of the Claim or the responsibility or qualifications of the Contractor. 5. Interest. Amounts not paid in a timely manner as required by this section shall bear interest at seven (7) percent per annum. 6. Approved Subcontractor Claims. If an approved subcontractor or a lower tier subcontractor lacks legal standing to assert a Claim against the City because privity of contract does not exist, the Contractor may present to the City a Claim on behalf of a subcontractor or lower tier subcontractor. A subcontractor may request in writing, either on his or her own behalf or on behalf of a lower tier DocuSign Envelope ID: F69BB0F7-4A7C-453E-A041-A682490AE83E Appendix for General Services Agmt 3 February 8, 2017 subcontractor, that the Contractor present a Claim for work which was performed by the subcontractor or by a lower tier subcontractor on behalf of the subcontractor. The subcontractor requesting that the Claim be presented to the City shall furnish reasonable documentation to support the Claim. Within 45 days of receipt of this written request, the Contractor shall notify the subcontractor in writing as to whether the Contractor presented the claim to the City and, if the Contractor did not present the claim, provide the subcontractor with a statement of the reasons for not having done so. 7. Waiver of Provisions. A waiver of the rights granted by Public Contract Code Section 9204 is void and contrary to public policy, provided, however, that (1) upon receipt of a Claim, the parties may mutually agree to waive, in writing, mediation and proceed directly to the commencement of a civil action or binding arbitration, as applicable; and (2) the City may prescribe reasonable change order, claim, and dispute resolution procedures and requirements in addition to the provisions of Public Contract Code Section 9204, so long as the contractual provisions do not conflict with or otherwise impair the timeframes and procedures set forth in this section. DocuSign Envelope ID: F69BB0F7-4A7C-453E-A041-A682490AE83E DATE (MM/DD/YYYY)CERTIFICATE OF LIABILITY INSURANCE THIS CERTIFICATE IS ISSUED AS A MATTER OF INFORMATION ONLY AND CONFERS NO RIGHTS UPON THE CERTIFICATE HOLDER. THIS CERTIFICATE DOES NOT AFFIRMATIVELY OR NEGATIVELY AMEND, EXTEND OR ALTER THE COVERAGE AFFORDED BY THE POLICIES BELOW. THIS CERTIFICATE OF INSURANCE DOES NOT CONSTITUTE A CONTRACT BETWEEN THE ISSUING INSURER(S), AUTHORIZED REPRESENTATIVE OR PRODUCER, AND THE CERTIFICATE HOLDER. IMPORTANT: If the certificate holder is an ADDITIONAL INSURED, the policy(ies) must be endorsed. If SUBROGATION IS WAIVED, subject to the terms and conditions of the policy, certain policies may require an endorsement. A statement on this certificate does not confer rights to the certificate holder in lieu of such endorsement(s). CONTACTPRODUCERNAME: FAXPHONE(A/C, No):(A/C, No, Ext): E-MAILADDRESS: INSURER(S) AFFORDING COVERAGE NAIC # INSURER A : INSURED INSURER B : INSURER C : INSURER D : INSURER E : INSURER F : COVERAGES CERTIFICATE NUMBER: REVISION NUMBER: THIS IS TO CERTIFY THAT THE POLICIES OF INSURANCE LISTED BELOW HAVE BEEN ISSUED TO THE INSURED NAMED ABOVE FOR THE POLICY PERIOD INDICATED. NOTWITHSTANDING ANY REQUIREMENT, TERM OR CONDITION OF ANY CONTRACT OR OTHER DOCUMENT WITH RESPECT TO WHICH THIS CERTIFICATE MAY BE ISSUED OR MAY PERTAIN, THE INSURANCE AFFORDED BY THE POLICIES DESCRIBED HEREIN IS SUBJECT TO ALL THE TERMS, EXCLUSIONS AND CONDITIONS OF SUCH POLICIES. LIMITS SHOWN MAY HAVE BEEN REDUCED BY PAID CLAIMS. ADDL SUBRINSR POLICY EFF POLICY EXPTYPE OF INSURANCE LIMITSPOLICY NUMBERLTR (MM/DD/YYYY) (MM/DD/YYYY)INSR WVD GENERAL LIABILITY EACH OCCURRENCE $ DAMAGE TO RENTEDCOMMERCIAL GENERAL LIABILITY $PREMISES (Ea occurrence) CLAIMS-MADE OCCUR MED EXP (Any one person) $ PERSONAL & ADV INJURY $ GENERAL AGGREGATE $ GEN'L AGGREGATE LIMIT APPLIES PER:PRODUCTS - COMP/OP AGG $ PRO-$POLICY LOCJECT COMBINED SINGLE LIMITAUTOMOBILE LIABILITY (Ea accident) $ BODILY INJURY (Per person) $ANY AUTO ALL OWNED SCHEDULED BODILY INJURY (Per accident) $AUTOS AUTOSNON-OWNED PROPERTY DAMAGE $HIRED AUTOS (Per accident)AUTOS $ UMBRELLA LIAB EACH OCCURRENCE $OCCUR EXCESS LIAB CLAIMS-MADE AGGREGATE $ $DED RETENTION $ WC STATU- OTH-WORKERS COMPENSATION TORY LIMITS ERAND EMPLOYERS' LIABILITY Y / NANY PROPRIETOR/PARTNER/EXECUTIVE E.L. EACH ACCIDENT $N / AOFFICER/MEMBER EXCLUDED? (Mandatory in NH)E.L. DISEASE - EA EMPLOYEE $ If yes, describe under E.L. DISEASE - POLICY LIMIT $DESCRIPTION OF OPERATIONS below DESCRIPTION OF OPERATIONS / LOCATIONS / VEHICLES (Attach ACORD 101, Additional Remarks Schedule, if more space is required) CERTIFICATE HOLDER CANCELLATION SHOULD ANY OF THE ABOVE DESCRIBED POLICIES BE CANCELLED BEFORE THE EXPIRATION DATE THEREOF, NOTICE WILL BE DELIVERED IN ACCORDANCE WITH THE POLICY PROVISIONS. AUTHORIZED REPRESENTATIVE © 1988-2010 ACORD CORPORATION. All rights reserved. The ACORD name and logo are registered marks of ACORDACORD 25 (2010/05) NORTH65 OP ID: KAWA 03/11/14 Liberty Mutual Insurance PO Box 188065Fairfield, OH 45018 American States Insurance 19704 Northwest Woodland Services, Inc. 13665 SE Leann Court Boring, OR 97009 1,000,000 A X X 01CH93904550 04/05/13 04/05/14 200,000 X 10,000 1,000,000 2,000,000 2,000,000 X X 1,000,000 A X 01XS13846200 04/05/13 04/05/14 1,000,000 A Employee Liabilty 01CH93904550 04/05/14 04/05/15 AGG 10,000 ECH CLAIM 10,000 City of Palo Alto California Purchasing & Contract Administration it's council members, officers, and agents is Additional Insured if required in a written contract, agreement or permit, subject to General Liability Additional Insured Provision. CITPAL9 City of Palo Alto California Purchasing & Contract Administration 250 Hamilton Ave Palo Alto, CA 94301 DocuSign Envelope ID: F69BB0F7-4A7C-453E-A041-A682490AE83E Certificate Of Completion Envelope Id: F69BB0F74A7C453EA041A682490AE83E Status: Completed Subject: Please DocuSign: C18168186 Open Space Trail B1 .pdf Source Envelope: Document Pages: 34 Signatures: 2 Envelope Originator: Certificate Pages: 2 Initials: 0 Cliff Wright AutoNav: Enabled EnvelopeId Stamping: Enabled Time Zone: (UTC-08:00) Pacific Time (US & Canada) 250 Hamilton Ave Palo Alto , CA 94301 cliff.wright@cityofpaloalto.org IP Address: 12.220.157.20 Record Tracking Status: Original 3/26/2018 7:39:25 AM Holder: Cliff Wright cliff.wright@cityofpaloalto.org Location: DocuSign Signer Events Signature Timestamp Dennis Smith dennistrails@gmail.com President Security Level: Email, Account Authentication (None)Using IP Address: 174.238.1.186 Sent: 3/26/2018 7:50:51 AM Resent: 3/26/2018 10:38:54 AM Viewed: 3/26/2018 10:55:30 AM Signed: 3/26/2018 10:57:49 AM Electronic Record and Signature Disclosure: Not Offered via DocuSign Tamsen Smith tamsensmithrn@gmail.com Secretary/Treasurer Security Level: Email, Account Authentication (None)Using IP Address: 67.160.129.82 Sent: 3/26/2018 7:50:51 AM Viewed: 3/26/2018 9:12:46 AM Signed: 3/26/2018 9:54:38 AM Electronic Record and Signature Disclosure: Not Offered via DocuSign In Person Signer Events Signature Timestamp Editor Delivery Events Status Timestamp Agent Delivery Events Status Timestamp Intermediary Delivery Events Status Timestamp Certified Delivery Events Status Timestamp Carbon Copy Events Status Timestamp Jeanette Serna Jeanette.Serna@CityofPaloAlto.org Security Level: Email, Account Authentication (None) Sent: 3/26/2018 10:57:50 AM Electronic Record and Signature Disclosure: Not Offered via DocuSign Notary Events Signature Timestamp Envelope Summary Events Status Timestamps Envelope Sent Hashed/Encrypted 3/26/2018 10:57:50 AM Envelope Summary Events Status Timestamps Certified Delivered Security Checked 3/26/2018 10:57:50 AM Signing Complete Security Checked 3/26/2018 10:57:50 AM Completed Security Checked 3/26/2018 10:57:50 AM Payment Events Status Timestamps City of Palo Alto (ID # 9188) City Council Staff Report Report Type: Consent Calendar Meeting Date: 5/7/2018 City of Palo Alto Page 1 Summary Title: AH Combining District Ordinance (2nd Reading) Title: SECOND READING: Adoption of an Ordinance Amending Palo Alto Municipal Code Title 18 (Zoning) to add a New Chapter 18.30(J) (Affordable Housing Combining District) to Promote the Developmen t of 100 Percent Affordable Housing Projects Located Within One -half Mile of a Major Transit Stop or One-quarter Mile of a High -Quality Transit Corridor by Providing Flexible Development Standards and Modifying the Uses Allowed in the Commercial Districts and Subdistricts. CEQA: This Ordinance is Within the Scope of the Comprehensive Plan Environmental Impact Report (EIR) Certified and Adopted on November 13, 2017 by Council Resolution Nos. 9720 and 9721. (FIRST READING: April 9, 2018 PASSED: 7 -2 Holman , Kou no) From: City Manager Lead Department: Planning and Community Environment Recommendation Staff recommends that the Council conduct a second reading and adopt the attached ordinance (Attachment A). Background On April 9, 2018, the City Council reviewed and adopted on first reading a draft ordinance amending Section 18.30 of the municipal code. The staff report and video of the April 9, 2018 hearing are linked below: Staff Report: https://www.cityofpaloalto.org/civicax/filebank/documents/64347 Video: http://midpenmedia.org/city-council-152-2-3-2-2-2/ The ordinance has been modified to incorporate changes directed by the Council on first reading, which are summarized below. City of Palo Alto Page 2 1. Specifies that the provisions of the ordinance apply to 100% affordable projects that provide rental units only. 2. Clarifies that the ordinance applies to deed restricted units at 120% of AMI and below. 3. Specifies that the Town and Country Village Shopping Center, Midtown Shopping Center, and Charleston Shopping Center shall not be eligible for the application of the combining district. 4. Modifies the development standards table to include a provision authorizing the Planning Director to recommend a waiver from the transitional height standard. 5. Modifies the minimum vehicle parking standard to 0.75 per bedroom. 6. States that the Council shall have the ability to modify retail parking requirements. The modifications to the ordinance in Attachment A from the draft ordinance presented at the first reading on April 9, 2018 are shown in strikethrough (deletions) and underlines (additions). Attachments: Attachment A: AH Combining District Ordinance (DOCX) Attachment B: Action Minutes AH Ordinance First Reading (DOCX) Attachment C: Public Letters to Council regarding the Affordable Housing Combining District (PDF) Not Yet Adopted 180206 SL/PCE Planning/AH Combining District Page 1 of 5 Ordinance No. ____ Ordinance of the Council of the City of Palo Alto Amending Chapter 18.30 of Title 18 (Zoning) of the Palo Alto Municipal Code to Add a New Chapter 18.30(J), Affordable Housing (AH) Combining District 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 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. The lack of an adequate supply of housing at all levels of affordability drives up the rents and costs of ownership of housing, which has a detrimental effect upon residents who may be displaced from their community and local employees who must endure longer commutes for lack of housing opportunities near work. D. It is in the public interest that a continuum of housing be provided for a broad spectrum of persons, including those earning moderate, low, and very low incomes. E. The high cost of land acquisition and development, construction, and operation of housing projects have discouraged the production of affordable housing projects. Allowing higher density housing, reduced parking requirements, and an increase in the allowable gross floor area in appropriate locations improves the feasibility of affordable housing projects. F. Encouraging the development of transit-oriented multi-family housing affordable to moderate, low, and very low-income residents supports City and State goals to reduce vehicle miles traveled and associated greenhouse gas and other air emissions. SECTION 2. Chapter 18.30 (Combining Districts) of Title 18 (Zoning) of the Palo Alto Municipal Code is hereby amended to add Section 18.30(J) as follows: New Chapter 18.30(J) AFFORDABLE HOUSING (AH) COMBINING DISTRICT REGULATIONS Sections: 18.30(J).010 Specific Purpose 18.30(J).020 Applicability of Regulations 18.30(J).030 Definitions Not Yet Adopted 180206 SL/PCE Planning/AH Combining District Page 2 of 5 18.30(J).040 Zoning Map Designation 18.30(J).050 Site Development Review Process 18.30(J).060 Conformance to Other Combining Districts and Retail Preservation 18.30(J).070 Permitted Uses 18.30(J).080 Conditional Uses 18.30(J).090 Development Standards 18.30(J).010 Specific Purpose The affordable housing combining district is intended to promote the development of 100% affordable rental housing projects located within one-half mile of a major transit stop or one-quarter mile of a high- quality transit corridor, as defined in subdivision (b) of Section 21155 of the Public Resources Code, by providing flexible development standards and modifying the uses allowed in the commercial districts and subdistricts. 18.30(J).020 Applicability of Regulations (a) The affordable housing combining district may be combined with the CD, CN, CS, and CC districts set forth in Chapters 18.16 and 18.18 of this Title, in accord with the Chapter 18.08 and Chapter 18.80. Where so combined, the regulations established by this Chapter shall apply for 100% affordable housing projects in lieu of the uses allowed and development standards and procedures applied in the underlying district. A property owner may elect to use the site consistent with the underlying district, in which case the applicable regulations in Chapter 18.16 and 18.18 for the commercial districts shall apply. The Town and Country Village Shopping Center, Midtown Shopping Center, and Charleston Shopping Center shall not be considered eligible for the application of the affordable housing combining district. (b) The affordable housing combining district provides flexibility in development standards that allow for a density increase that would in most cases exceed density bonuses under state law, Government Code Section 65915. Therefore, a project applicant may utilize the affordable housing combining district and the provisions of this Chapter as an alternative to use of the state density bonus law implemented through Chapter 18.15 (Density Bonus) of this Title, but may not utilize both the affordable housing combining district and density bonuses. If an applicant utilizes state density bonus law, the regulations in Chapter 18.16 or 18.18 for the applicable underlying commercial district shall apply. 18.30(J).030 Definitions For purposes of this Chapter, the following definitions shall apply. (a) “100% affordable housing project” means a multiple-family housing project consisting entirely of for-rent Affordable Units, as defined in Section 16.65.020 of this code, and available only to households with income levels at or below 120 percent of the area median income for Santa Clara County, as defined in Chapter 16.65. 18.30(J).040 Zoning Map Designation The affordable housing combining district shall apply to properties designated on the zoning map by the symbol “AH” within parentheses, following the commercial designation with which it is combined. 18.30(J).050 Site Development Review Process Not Yet Adopted 180206 SL/PCE Planning/AH Combining District Page 3 of 5 All projects shall be subject to architectural review as provided in Section 18.76.020 and shall not be subject to the requirements of site and design review in Chapter 18.30(G). 18.30(J).060 Conformance to Other Combining Districts and Retail Preservation The following requirements shall apply to projects in the AH affordable housing combining district: (a) Where applicable, the requirements of Chapter 18.30(A) (Retail Shopping (R) Combining District Regulations), Chapter 18.30(B) (Pedestrian Shopping (P) Combining District Regulations), and Chapter 18.30(C) (Ground Floor (GF) Combining District Regulations), and Pedestrian Shopping (P) Combining Districts shall apply. (b) Where applicable, the retail preservation requirements of Section 18.40.180 shall apply except as provided below. i. Waivers and Adjustments A. Except in the R or GF combining districts, the City Council shall have the authority to reduce or waive the amount of retail or retail like gross floor area required in Section 18.40.180 for any 100% affordable housing project if the City Council determines that it would be in the public interest. Any such reduction or waiver shall not be subject to the waiver and adjustments requirements in Section 18.40.180(c). In the R and GF combining districts, any reduction or waiver in retail or retail like gross floor area shall remain subject to the requirements of Section 18.40.180(c) or the combining district as applicable. A.B. The City Council shall have the authority to modify retail parking requirements associated with a 100% affordable housing project that also require ground floor retail. 18.30(J).070 Permitted Uses The following uses shall be permitted in the AH affordable housing combining district: (a) 100% affordable housing projects; (b) In conjunction with a 100% affordable housing project, any uses permitted in the underlying district, provided the uses are limited to the ground floor. 18.30(J).080 Conditional Uses The following uses may be permitted in the AH affordable housing combining district in conjunction with an 100% affordable housing project, subject to issuance of a conditional use permit in accord with Chapter 18.76 (Permits and Approvals), provided that the uses are limited to the ground floor: (a) Business or trade school. (b) Adult day care home. (c) Office less than 5,000 square feet when deed-restricted for use by a not-for-profit organization. (d) All other uses conditionally permitted in the applicable underlying zoning district. 18.30(J).090 Development Standards Not Yet Adopted 180206 SL/PCE Planning/AH Combining District Page 4 of 5 The following development standards shall apply to projects subject to the AH affordable housing combining district in lieu of the development standards for the underlying zoning district, except where noted below: Table 1 Development Standards AH Combining District(1) Minimum Site Specifications Subject to regulations in: Site Area (ft 2 ) None required Site Width (ft) Site Depth (ft) Minimum Setbacks Setback lines imposed by a special setback map pursuant to Chapter 20.08 of this code may apply Front Yard (ft) Same as underlying district Rear Yard (ft) Same as underlying district Rear Yard abutting residential zoning district (ft) Same as underlying district Interior Side Yard if abutting residential zoning district (ft) Same as underlying district Street Side Yard (ft) Same as underlying district Build-to-Lines Same as underlying district Permitted Setback Encroachments Same as underlying district Maximum Site Coverage None Required Landscape/Open Space Coverage 20%(2) Usable Open Space 25 sq ft per unit for 5 or fewer units (2), 50 sq ft per unit for 6 units or more (2) Maximum Height (ft) 50’ For those portions of a site within 50 ft of a R1, R-2, RMD, RM-15, or RM-30 zoned property 35’(3) Daylight Plane for lot lines abutting one or more residential zoning districts Daylight plane height and slope shall be identical to those of the most restrictive residential zoning district abutting the lot line Maximum Residential Density (net) None Required Maximum Residential Floor Area Ratio (FAR) – Residential Portion of a Project 2.0:1 Maximum Non-Residential FAR 0.4:1 Not Yet Adopted 180206 SL/PCE Planning/AH Combining District Page 5 of 5 Notes: (1) These developments shall be designed and constructed in compliance with the performance criteria outlined in Chapter 18.23, as well as the context-based design criteria outlined in Section 18.13.060 for residential-only projects, Section 18.16.090 for mixed use projects in the CN, CC, and CS districts, and Section 18.18.110 for mixed use projects in the CD district, provided that more restrictive regulations may be recommended by the architectural review board and approved by the director of planning and community environment, pursuant to Section 18.76.020. (2) Landscape coverage is the total area of the site covered with landscaping as defined in Chapter 18.04. For the purposes of this Chapter 18.30(J), areas provided for usable open space may be counted towards the landscape site coverage requirement. Landscape and open space areas may be located on or above the ground level, and may include balconies, terraces, and rooftop gardens. (3) The Planning Director may recommend a waiver from the transitional height standard. SECTION 3. 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 4. 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. Vehicle Parking 0.755 per bedroom or unit, whichever is greater, except as preempted by state law. The Director may modify this standard based on findings from a parking study that show fewer spaces are needed for the project. The required parking ratio for special needs housing units, as defined in Section 51312 of the Health and Safety Code shall not exceed 0.3 spaces per unit. Adjustments to the required ratios shall be considered per Chapter 18.52 (Parking). For Commercial Uses, See Chapters 18.52 and 18.54 (Parking). TDM Plan A transportation demand management (TDM) plan shall be required pursuant to Section 18.52.050(d) and associated administrative guidelines 18.52.050(d) Not Yet Adopted 180206 SL/PCE Planning/AH Combining District Page 6 of 5 SECTION 5. The City Council finds that the environmental impacts of this Ordinance were disclosed, analyzed and evaluated as part of that certain Final Environmental Impact Report for the Comprehensive Plan Update considered and certified by the City Council on November 13, 2017, by Resolution Nos. 9720 and 9721 (“EIR”). The City Council considered the EIR prior to taking action on this Ordinance, in conformance with the California Environmental Quality Act (“CEQA”), together with state and local regulations implementing CEQA. SECTION 6. This ordinance shall be effective on the thirty-first date after the date of its adoption. INTRODUCED: PASSED: AYES: NOES: ABSENT: ABSTENTIONS: ATTEST: ____________________________ ____________________________ City Clerk Mayor APPROVED AS TO FORM: APPROVED: ____________________________ _____________________________ Deputy City Attorney City Manager _____________________________ Director of Planning and Community Environment Attachment B: Action Minutes - AH Combining District First Reading Action Items PUBLIC HEARING: Adoption of an Ordinance Amending Palo Alto Municipal Code Title 18 (Zoning) to add a new Chapter 18.30(J) (Affordable Housing Combining District) to Promote the Development of 100 Percent Affordable Housing Projects Located Within One -half Mile of a Major Transit Stop or One-quarter Mile of a High-quality Transit Corridor by Providing Flexible Development Standards and Modifying the Uses Allowed in the Commercial Districts and Subdistricts. California Environmental Quality Act (CEQA): This Ordinance is Within the Scope of the Comprehensive Plan Environmental Impact Report (EIR) Certified and Adopted on November 13, 2017 by Council Resolution Numbers 9720 and 9721. The Planning and Transportation Commission Suggested an Alternative and did not Recommend Adoption of the Ordinance at Their Meeting on March 14, 2018. MOTION: Vice Mayor Filseth moved, seconded by Council Member Holman to continue Agenda Item Number 8 – to a date uncertain. MOTION PASSED: 8-1 Kou no Public Hearing opened at 8:21 P.M. Public Hearing closed at 9:51 P.M. MOTION: Council Member Fine moved, seconded by Council Member Scharff to: 1. Find the proposed draft Ordinance within the scope of the Comprehensive Plan Environmental Impact Report (EIR) and adopt the proposed Ordinance amending Chapter 18.30 of Title 18 of the Municipal Code to add a new chapter establishing an Affordable Housing (AH) Combining District and related regulations; 2. Direct Staff to improve the Ordinance with the following changes: a. Explore including the RP, RM15, and RM30 zones in the Combining District; b. Add an additional 1.5 residential Floor Area Ratio (FAR) to the maximum residential FAR; c. Allow the Planning Director to recommend a waiver for transitional height standards; d. Specify a parking requirement of 0.75 per unit, except as preempted by state law, and allow the Planning Director to modify this standard based on a parking study that shows fewer spaces are needed. For special needs housing units, maintain a requirement of no more than 0.3 spaces per unit; and e. Clarify that this Overlay includes all AMI standards including up to 120 percent Area Median Income (AMI); INCORPORATED INTO THE MOTION WITH THE CONSENT OF THE MAKER AND SECONDER to replace in the Motion Part 2.b., “allow the Planning Director to” with “if requested by an applicant, allow the Planning Director to recommend adding up.” INCORPORATED INTO THE MOTION WITH THE CONSENT OF THE MAKER AND SECONDER to add to the Motion, “excluding Town and Country Village Shopping Center.” (New Part 1.a.) INCORPORATED INTO THE MOTION WITH THE CONSENT OF THE MAKER AND SECONDER restate Motion Part 2.b., “explore, if requested by an applicant, the City Council may authorize adding up to an additional 1.5 residential Floor Area Ratio (FAR) to the maximum residential FAR.” INCORPORATED INTO THE MOTION WITH THE CONSENT OF THE MAKER AND SECONDER to add to the Motion Part 1.a., “the Midtown Shopping Center, and Charleston Shopping Center.” SUBSTITUTE MOTION: Council Member Holman moved, seconded by Council Member Kou to accept the Planning and Transportation Commission’s (PTC) recommendations and direct Staff to: A. Work with the property owner of a site at El Camino Real and Wilton Court to develop a site-specific Planned Community (PC) zoning ordinance and development agreement for affordable housing; and B. Work with the PTC on the series of additional recommendations developed by an ad hoc committee of the PTC with the following modifications: 1. We recommend the City pursue a PC with PAH to advance the Wilton Court project. We believe a serious negotiation over the Wilton Court project will inform how to write a better city-wide ordinance. Solutions; 2. We recommend separating affordable housing into two work items: under 60% AMI (AH60) and 60% to 120% AMI (AH120); 3. For AH60 we recommend the following options for retail preservation: i. Where retail is retained, offer a zoning (height) concession; ii. Where affordable housing provider financing precludes retail: City or a 3rd party may participate in project financing, potentially in exchange for an ownership position; iii. As a last resort, City may waive the retail requirement as provided by the retail preservation ordinance; 4. For AH60 we recommend City financial contributions to develop parking to meet demand based on measured parking utilization rates of comparable properties. The City may exercise an option to build additional parking available to the public; 5. We recommend maintaining the transition height standards in all the C districts adjacent to residential districts. We recommend a community process with outreach before changing transition heights for AH60 housing; 6. We recommend an open space standard for AH60, but we recommend against roof gardens adjacent to low density residential districts; 7. We recommend folding AH120 work into the Housing Workplan effort. The regional consensus is to accomplish AH120 with inclusionary standards. We are not in a position today to make a recommendation on the right inclusionary standard; 8. With a goal to develop a by-right process for 100 percent 60 percent AMI projects. SUBSTITUTE MOTION FAILED: 3-6 DuBois, Holman, Kou yes AMENDMENT: Council Member Holman moved, seconded by Vice Mayor Filseth to add to the Motion, “remove the 0.4 Maximum Non-Residential FAR allowance.” AMENDMENT RESTATED: Council Member Holman moved, seconded by Vice Mayor Filseth to add to the Motion, “remove Section 18.30(J).070.(b).” AMENDMENT RESTATED: Council Member Holman moved, seconded by Vice Mayor Filseth to add to the Motion, “replace in Section 18.30(J).070.(b), ‘any uses permitted in the underlying district’ with ‘retail or retail like used.’” AMENDMENT AS AMENDED FAILED: 4-5 DuBois, Filseth, Holman, Kou yes AMENDMENT: Vice Mayor Filseth moved, seconded by Council Member Holman to replace in the Motion Part 2.d., “0.75 per unit” with “1.00 per bedroom.” AMENDMENT WITHDRAWN BY THE MAKER INCORPORATED INTO THE MOTION WITH THE CONSENT OF THE MAKER AND SECONDER to add to the Motion “return to Council following the parking study to reevaluate parking requirements.” (New Part 2.f.) INCORPORATED INTO THE MOTION WITH THE CONSENT OF THE MAKER AND SECONDER to add to the Motion “Council has the ability to modify retail parking requirements.” (New Part 2.g.) AMENDMENT: Council Member Tanaka moved, seconded by Council Member DuBois to add to the Motion Part 1, “limit the Combining District to rental Below Market Rate (BMR) units.” (New Part 1.b.) AMENDMENT PASSED: 7-2 Fine, Wolbach no AMENDMENT: Council Member Wolbach moved, seconded by Council Member XX to add to the Motion, “with a goal to develop a by-right process for 100 affordable units eligible for tax credits.” AMENDMENT WITHDRAWN BY THE MAKER MOTION AS AMENDED RESTATED: Council Member Fine moved, seconded by Council Member Scharff to: 1. Find the proposed draft Ordinance within the scope of the Comprehensive Plan Environmental Impact Report (EIR) and adopt the proposed Ordinance amending Chapter 18.30 of Title 18 of the Municipal Code to add a new chapter establishing an Affordable Housing (AH) Combining District and related regulations: a. Excluding Town and Country Village Shopping Center, the Midtown Shopping Center, and Charleston Shopping Center; b. Limit the Combining District to rental Below Market Rate (BMR) units 2. Direct Staff to improve the Ordinance with the following changes: a. Explore including the RP, RM15, and RM30 zones in the Combining District,; b. Explore, if requested by an applicant, the City Council may authorize adding up to an additional 1.5 residential Floor Area Ratio (FAR) to the maximum residential FAR; c. Allow the Planning Director to recommend a waiver for transitional height standards; d. Specify a parking requirement of 0.75 per unit, except as preempted by state law, and allow the Planning Director to modify this standard based on a parking study that shows fewer spaces are needed. For special needs housing units, maintain a requirement of no more than 0.3 spaces per unit; e. Clarify that this Overlay includes all AMI standards including up to 120 percent Area Median Income (AMI); f. Return to Council following the parking study to reevaluate parking requirements; and g. Council has the ability to modify retail parking requirements. MOTION AS AMENDED PASSED: 7-2 Holman, Kou no City of Palo Alto | City Clerk's Office | 4/20/2018 2:47 PM 1 Carnahan, David From:trudy myrrh-art.com <trudy@myrrh-art.com> Sent:Thursday, April 19, 2018 2:18 PM To:Council, City Subject:Housing zning City Council— I have been concerned about housing for the least of these, the truly poor for years. Until recently, “poor” was not in the lexicon of the discussion. I approve a housing zoning district. —Gertrude Gertrude Reagan 967 Moreno Ave Palo Alto, CA 94303 650-856-9593 trudy@MYRRH-ART.COM resident since 1963 City of Palo Alto (ID # 9128) City Council Staff Report Report Type: Action Items Meeting Date: 5/7/2018 City of Palo Alto Page 1 Summary Title: Fiscal Year 2019 CDBG Allocations Title: PUBLIC HEARING: Finance Committee Recommends Adoption of the Fiscal Year 2018 -19 Action Plan and Associated 2018 -19 Funding Allocations and Adoption of a Resolution Approving the use of Community Dev elopment Block Grant Funds for Fiscal Year 2018 -19 Consistent With the Human Relations Commission's Recommendation From: City Manager Lead Department: Planning and Community Environment Recommendation Staff and the Finance Committee recommend that the City Council hold a public hearing and take the following actions: 1. Adopt the resolution (Attachment A) allocating CDBG funding as recommended in the draft Fiscal Year 2018-2019 Action Plan and as described in this report; 2. Allocate CDBG funding as recommended in the draft Fiscal Year 2018-19 Action Plan and as described in this report including the contingency plan policies recommended by the Finance Committee; 3. Authorize the City Manager to execute the Fiscal Year 2018-2019 CDBG application and Fiscal Year 2018-2019 Action Plan for CDBG funds, any other necessary documents concerning the application, and to otherwise bind the City with respect to the applications and commitment of funds; and 4. Authorize staff to submit the Fiscal Year 2018 -2019 Action Plan to the U.S. Department of Housing and Urban Development (HUD) by the May 15, 2018 deadline. Executive Summary The City of Palo Alto receives funds annually from the U.S. Department of Housing and Urban City of Palo Alto Page 2 Development (HUD) as an entitlement city under the Community Development Block Grant (CDBG) Program. The CDBG program is the principal Federal program providing localities with grants to devise innovative and constructive neighborhood approaches to improve the physical, economic, and social conditions in their communities through “the development of viable urban communities, by providing decent housing and a suitable living environment and expanding economic opportunities, principally for persons of low and moderate income.” HUD requirements include preparation of a five-year strategic plan of action, referred to as a Consolidated Plan, to address priority housing and community development needs and to set goals for attaining identified objectives. An Action Plan is prepared annually to identify specific projects to be funded in that year to implement the strategies identified in the Consolidated Plan. Currently, Palo Alto’s CDBG program is guided by the 2015-2020 Consolidated Plan adopted by Council May 4, 2015. The draft Fiscal Year 2018-19 Action Plan (Attachment B) was made available for Public review from March 16, 2018 through April 16, 2018. The Council is being asked to review the draft Fiscal Year 2018-19 Action Plan and recommend funding allocations by continuing last year’s funding strategies with minor modifications described below. The City plans to submit its Annual Action Plan no later than the May 15, 2018 deadline. Background CDBG federal appropriations for Fiscal Year 2018 -2019 have not yet been determined. For budgeting purposes, City staff has estimated the City’s HUD Entitlement Grant for Fiscal Year 2018-19 based on a 10% reduction in funds from Fiscal Year 2017 -2018. 2015-2020 Consolidated Plan The 2015-2020 Consolidated Plan is a 5-year strategic plan of action that addresses priority housing and community development needs. It also sets specific goals for attaining identified objectives. Each year, an Annual Action Plan is prepared to identify specific projects to be funded to implement the Consolidated Plan. The Consolidated Plan and the Annual Action Plan updates are required by HUD for the City to receive federal funding from programs such as the CDBG. The 2015-2020 Consolidated Plan is available on the City’s website: https://www.cityofpaloalto.org/civicax/filebank/documents/49948 . Review by Human Relations Commission and Finance Committee The CDBG selection committee, comprised of three members of the Human Relations Commission (HRC) and staff, met on February 15, 2018 to discuss the applications and make recommendations for funding for Fiscal Year 2018 -2019. On March 8, 2018 the HRC considered the funding recommendations of the selection committee at a public hearing. Staff and the HRC’s CDBG funding recommendations, as outlined in Report No. 9027 available online at: https://www.cityofpaloalto.org/civicax/filebank/documents/64248 , were presented at a public City of Palo Alto Page 3 hearing before the Finance Committee on April 3, 2018. The Finance Committee voted 4 -0 to recommend to Council adoption of the recommendations, as recorded in the Finance Committee meeting minutes (https://cityofpaloalto.org/gov/agendas/finance/default.asp). CDBG Applications Currently, the CDBG program operates under a two-year funding request cycle. Applications for Fiscal Years 2017-2018 and 2018-2019 were made available in November 2016. A notice of CDBG funding availability was published in the Palo Alto Weekly on November 18, 2016 with completed applications due January 6, 2017. Mandatory pre-proposal conferences were conducted on December 7, 2016, December 15, 2016 and December 5, 2017 to assist applicants with program regulations and project eligibility questions. Since this is the second year of the two year funding cycle, the City will continue funding the same providers as in FY 2017-18 under the Public Services, Administration and Planning and Economic Development category. After funding these three categories, there will be $54,471 remaining to allocate to the Housing Rehabilitation category for FY 2018 -19. Although a number of non-profits expressed interest, there were no applications for the Minor Home Repair Program that comes under the Housing Rehabilitation Category when the first notice of CDBG funding availability for a program administrator was published in November 2017. City staff reissued a notice of CDBG funding availability on February 9, 2018 with completed applications due February 22, 2018 for the Minor Home Repair Program and received one application. The application is under review and the program is expected to commence in late Spring 2018. The CDBG applications considered for funding for Fiscal Year 2018-2019 are identified on the attached chart (Attachment C). Discussion Palo Alto’s CDBG program continues to be directed towards expanding and maintaining existing affordable housing supply, promoting housing o pportunities and choices, and providing supportive services for targeted low-income groups including persons who are homeless, persons with disabilities, the elderly, and other special needs groups. Moreover, the CDBG program places a high priority to expand the goal of creating economic opportunities for low - income persons. All of the proposed projects for CDBG funding for Fiscal Year 2018 -2019, as presented in the draft 2018-2019 Action Plan, address the priority housing and community development needs identified in the draft Consolidated Plan. Finance Committee Recommendation: Contingency Plan Because the amount of CDBG funding for Fiscal Year 2018-19 is still unknown, the Finance Committee has made recommendations for a contingency plan in the case o f an increase in funding, as well as if there is a decrease in funding. It is recommended that Council approve this contingency plan. City of Palo Alto Page 4 In the case of funding increase, the following plan is recommended: Public Services: Distribute the additional available amount in the public services cap until an applicant is fully funded. If an applicant reaches the funding amount requested, any remaining funds will be distributed evenly to other applicants who have not yet reached the maximum funding amount. Planning and Administration: Prioritize funding for Project Sentinel, once Project Sentinel is fully funded, any remaining funds are to be allocated to the City of Palo Alto for CDBG administration. Economic Development: Maintain recommended funding levels for the Downtown Streets Team Housing/Public Facilities Rehabilitation: Any additional funds will be allocated to the City of Palo Alto Minor Home Repair program. In the case of a decrease in funding, the following plan is recommended: Public Services: Distribute any funding decrease proportionately among the public service applicants, but maintain a minimum funding allocation of $5,000 for any applicant. Planning and Administration: Maintain funding allocation for Project Sentinel, any decrease in funding will be absorbed by the City of Palo Alto for CDBG administration. Economic Development: Maintain recommended funding levels for the Downtown Streets Team Housing/Public Facilities Rehabilitation: Reduce funding for the City of Palo Alto Minor Home Repair Program Applicant Agency Fiscal Year 2018 Final Allocation Fiscal Year 2019 Funding Request Finance Committee Recommendation for Fiscal Year 2019 Public Services Palo Alto Housing Corporation – SRO Hotels Supportive Services $23,327 $ 49,457 $ 24,023 Catholic Charities of Santa Clara County – Long Term Care Ombudsman $9,327 $ 10,000 $ 10,000 LifeMoves (formerly InnVision Shelter Network)- Opportunity Services Center $37,328 $ 50,000 $ 38,023 City of Palo Alto Page 5 *Includes $220,000 allocation to Opportunity Center Rehab Project for FY 2017-18 Timeline The funding recommendation made by the City Council will be incorporated into the final Fiscal Year 2018-19 Action Plan. Subsequently, the adopted Action Plan will be submitted to HUD by May 15, 2018. Resource Impact Several measures have been taken to ensure there is no General Fund subsidy for the administration of the CDBG Program. This includes streamlining the program to reduce staffing needs and revised monitoring guidelines to improve efficiency of the program. Currently, staff recovery from the CDBG entitlement grant is approximately $65,000. The total staff recovery from the CDBG entitlement grant proposed for Fiscal Year 2018 -2019 is approximately 0.58 full time equivalency, or approximately $67,006, thus not further substantial ly impacting the General Fund. The Senior Housing/CDBG Planner assigned to CDBG works on CDBG administration for approximately 0.10 FTE and the balance of their time, 0.90 FTE, is spent on other affordable housing programs. In addition, an hourly Staff Specialist spends 0.48 FTE on CDBG administration. YWCA/Support Network – Domestic Violence Services $10,000 $ 10,000 $ 10,000 Silicon Valley Independent Living Center – Housing and Emergency Services $5,032 $ 5,032 $ 5,032 Subtotal $85,014 $124,489 $ 87,078 Admin/Fair Housing Services Project Sentinel – Fair Housing Services $32,012 $ 33,698 $ 32,012 City of Palo Alto - CDBG Administration $82,460 $ 85,000 $ 73,733 Subtotal $114,472 $118,698 $105,745 Economic Development Downtown Streets Inc. – Workforce Development Program $336,400 $336,400 $331,002 Subtotal $336,400 $336,400 $331,002 Housing/Public Facilities Rehabilitation Minor Home Repair Program $145,529 $100,000 $54,471 Subtotal $145,529 $100,000 $54,471 Grand Total $901,415* $679,587 $578,296 City of Palo Alto Page 6 On April 3, 2018 the Finance Committee approved the Fiscal Year 2018 -19 CDBG budget, which included a preliminary estimate of $578,296. Contingent upon City Council review of the Action Plan, staff will make corresponding adjustments to the Fiscal Year 2019 Operating Budget. Policy Implications All of the applications recommended for funding in Fiscal Year 2018 -2019 are consistent with the priorities established in the City’s adopted 2015 -2020 Consolidated Plan. Moreover, they are consistent with the housing programs and policies in the adopted Comprehensive Plan. Environmental Review For purposes of the National Environmental Policy Act (NEPA) and the California Environmental Quality Act (CEQA), budgeting in itself is not a project. Prior to commitment or release of funds for each of the proposed projects, staff will carry out the required environmental reviews or assessments and certify that the review procedures under CEQA, HUD and NEPA regulations have been satisfied for each particular project Attachments: Attachment A: Resolution CDBG Fiscal Year 2018-19 (PDF) Attachment B: Draft Fiscal Year 2018-19 Annual Action Plan (DOCX) Attachment C: Fiscal Year 2018-19 CDBG Funding Recommendations (PDF) ATTACHMENT A Resolution No. XXXX Resolution of the Council of the City of Palo Alto Approving The Use of Community Development Block Grant Funds for Fiscal Year 2018-2019 A. On May 4, 2015, the Palo Alto City Council approved and adopted a document entitled “Consolidated Plan” which identified and established the Palo Alto housing and non-housing community development needs, objectives and priorities for the period July 1, 2015 to June 30, 2020. B. The Fiscal Year 2018-2019 Action Plan, the annual funding update to the Consolidated Plan, was subjected to public review and commentary during the period from March 16, 2018 through April 16, 2018. C. The potential uses of Community Development Block Grant (CDBG) funds were evaluated in light of the needs and objectives identified in the Consolidated Plan and reflected in the recommendations and comments of the Human Relations Commission and other interested citizens. D. Under the CDBG program, the highest priority is given to activities which will benefit persons with low and moderate incomes. E. The City Council and the Finance Committee of the City Council have held publicly noticed public hearings on the proposed uses of the CDBG funds for Fiscal Year 2018-2019. F. CDBG funds allocated to the City for Fiscal Year 2018-2019 are proposed to implement the programs described in this resolution. NOW, THEREFORE, the Council of the City of Palo Alto does RESOLVE as follows: SECTION 1. The uses of CDBG funds for Fiscal Year 2018-2019 are hereby approved and authorized for the following programs: Name of Program Amount 1. Catholic Charities of Santa Clara County – Long Term Care Ombudsman Program. Advocate for the rights of seniors and disabled residents in long term care facilities. $ 10,000 2. LifeMoves – Opportunity Services Center. Provide comprehensive, one-stop, multi-service day drop-in center for critical homeless services. $ 38,023 3. Palo Alto Housing Corporation – SRO Resident Support. Provide in-house SRO Service Coordinator for support counseling, employment assistance and crisis intervention. $ 24,023 ATTACHMENT A 4. Silicon Valley Independent Living Center – Housing and Emergency Services. Assist low-income individuals and families in search for affordable, accessible housing. $ 5,032 5. YWCA of Silicon Valley – Domestic Violence Services. Provide crisis intervention, emergency shelter, comprehensive case management, counseling/ therapy, children’s play therapy and legal services $ 10,000 6. Project Sentinel – Fair Housing Services. Provide fair housing services including complaint investigation, counseling, advocacy and community education $ 32,012 7. City of Palo Alto Department of Planning and Community Environment – CDBG Program Administration. $ 73,733 8. Downtown Streets – Workforce Development Program. Provide comprehensive support services for homeless/ unemployed to secure employment. $ 331,002 9. City of Palo Alto – Minor Home Repair Program. Provide minor home repairs, including repairs that address health and safety issues and accessibility upgrades. $ 54,471 TOTAL $ 578,296 SECTION 2. The total amount set forth under Section 1 of this resolution represents the proposed estimated allocation of $392,678, in CDBG funds from the United States Department of Housing and Urban Development (HUD) for Fiscal Year 2018-2019, $136,049 in anticipated program income for Fiscal Year 2018-2019 from Palo Alto Housing Corporation, and a total of $49,569 in prior year resources (Silicon Valley Independent Living Center, Downtown Streets and CDBG Administration FY 2017 - $10,666; City of Palo Alto Microenterprise Assistance Program, FY 2014 - $171 and $38,732 in FY 2016 excess program income). SECTION 3. The City staff is hereby authorized to submit the Fiscal Year 2018-2019 annual Action Plan, update and appropriate application forms to HUD for the Fiscal Year 2018-2019 CDBG funds, and such money shall be spent as set forth in this resolution. The Mayor, City Manager and any other designated City staff or officials are hereby authorized to execute such application forms and any other necessary documents to secure these funds. The City Manager or designee is authorized to sign all necessary grant agreements with the program providers set forth in Section 1. SECTION 4. The funding amounts set forth in Section 1 of this resolution are based on estimated allocation amounts from the Federal Fiscal Year 2018 HUD appropriations; City Staff is authorized to make adjustments increasing or decreasing the funding amounts set forth herein as consistent with the adopted Citizen Participation Plan. ATTACHMENT A SECTION 5. The City Council hereby finds that the Fiscal Year 2018-2019 CDBG program authorized under Section 1 of this resolution is not a project under the California Environmental Quality Act (CEQA). However, the Council further authorizes and directs City staff to prepare certifications that may be required, under CEQA and the National Environmental Policy Act (NEPA), for each project under the Fiscal Year 2018-2019 CDBG program prior to the release of funds for any such project. // // // // // ATTACHMENT A INTRODUCED AND PASSED: AYES: NOES: ABSTENTIONS: ABSENT: ATTEST: APPROVED: City Clerk Mayor APPROVED AS TO FORM: City Manager Sr. Assistant City Attorney Director of Planning and Community Environment APPROVED AS TO CONTENT: Director of Administrative Services CDBG Coordinator Annual Action Plan 2018 1 OMB Control No: 2506-0117 (exp. 06/30/2018) Annual Action Plan 2018 2 OMB Control No: 2506-0117 (exp. 06/30/2018) Executive Summary AP-05 Executive Summary - 24 CFR 91.200(c), 91.220(b) 1. Introduction The Department of Housing & Urban Development (HUD) requires that entitlement jurisdictions complete a Consolidated Plan every five years. Additionally, entitlement jurisdictions must also submit an Annual Action Plan. The City’s 2015-2020 Consolidated Plan was approved by Council on May 4, 2015. The five year goals from the Consolidated Plan include: Assist in the creation & preservation of affordable housing for low income & special needs households. Support activities to end homelessness. Support activities that strengthen neighborhoods through the provision of community services & public improvements to benefit low income & special needs households. Promote fair housing choice. Expand economic opportunities for low income households. The City of Palo Alto is an entitlement jurisdiction that receives federal funding from HUD through the Community Development Block Grant (CDBG) Program. The purpose of CDBG funding is to help jurisdictions address their community development needs. The purpose of CDBG funding is to help jurisdictions address their community development needs. CDBG grantees are eligible to use the resources they receive for Public Services, Community and Economic Development, Capital Improvement Projects (CIP) Public Facilities/Infrastructure, and CIP Housing Rehabilitation. Public Service projects provide social services and/or other direct support to individuals and households in need of assistance. Community and Economic Development projects are focused on assisting businesses and organizations with small business loans, façade improvements, and other initiatives. CIP Public Facilities/Infrastructure projects are those which aim to improve public facilities and infrastructure. CIP Housing Rehabilitation projects are for housing rehabilitation improvements of single and multi-unit housing. An estimated total of $578,296 is available for funding projects & programs during the 2018 Program Year. The City anticipates receiving $392,678 from the federal CDBG program, approximately $136,049 in program income & $49,569 in reallocated funds from previous years. Please see Table 1, “Fiscal Year 2019 CDBG Budget” below which summarizes the uses of the funds proposed during Fiscal Year 2019. Annual Action Plan 2018 3 OMB Control No: 2506-0117 (exp. 06/30/2018) 2. Summarize the objectives and outcomes identified in the Plan This could be a restatement of items or a table listed elsewhere in the plan or a reference to another location. It may also contain any essential items from the housing and homeless needs assessment, the housing market analysis or the strategic plan. This could be a restatement of items or a table listed elsewhere in the plan or a reference to another location. It may also contain any essential items from the housing and homeless needs assessment, the housing market analysis or the strategic plan. The City is part of the San Francisco Metropolitan Bay Area, located 35 miles south of San Francisco and 14 miles north of San José. The City is located within the County of Santa Clara, borders San Mateo County, and encompasses an area of approximately 26 square miles, one-third of which consists of open space. According to Quickfacts data provided by the U.S. Census Bureau https://www.census.gov/quickfacts/fact/table/paloaltocitycalifornia/PST045216, the City's total resident population is 67,024. The City has the most educated residents in the country and is one of the most expensive cities to live in. In Silicon Valley, the City is considered a central economic focal point and is home to over 7,000 businesses while providing jobs to more than 98,000 people. See Attachment 1 for a summary of the Needs Assessment in the 2015-2020 Consolidated Plan. 3. Evaluation of past performance This is an evaluation of past performance that helped lead the grantee to choose its goals or projects. The City recognizes that the evaluation of past performance is critical to ensure the City and its sub recipients are implementing activities effectively and that those activities align with the City’s overall strategies and goals. The performance of programs and systems are evaluated to ensure the goals and projects are addressing critical needs in the community. Palo Alto has historically allocated CDBG funds to activities that benefit LMI persons, with a top priority to increase affordable housing opportunities in the City. However, due to Palo Alto’s expensive housing market coupled with a decrease in CDBG entitlement funds, it is becoming more difficult to create opportunities for affordable housing. As such, during this Consolidated Planning period the City will be focusing on rehabilitating existing affordable housing stock that is in need of repair. Planning Staff works closely with sub recipients to leverage resources and create opportunities for partnership and collaboration. The City’s sub recipients are challenged to think creatively about working together to address the needs in our community. Annual Action Plan 2018 4 OMB Control No: 2506-0117 (exp. 06/30/2018) 4. Summary of Citizen Participation Process and consultation process Palo Alto encourages citizen participation through the Action Plan process. This includes consulting local organizations, holding public meetings, and encouraging public comment during the public review period. A total of three public hearings have been planned in order to allow for public input. The City actively reached out to all applicants and posted updates on the CDBG website. A 30-day comment period from March 16, 2018 through April 16, 2018 gave citizens an opportunity to offer comments on the draft Action Plan. The draft was posted on the City’s CDBG website and copies were made available to the public at the Planning and Community Environment Department at Palo Alto City Hall. 5. Summary of public comments This could be a brief narrative summary or reference an attached document from the Citizen Participation section of the Con Plan. There were no public comments received during the public review period. (To be updated after the review period ends) 6. Summary of comments or views not accepted and the reasons for not accepting them The City accepts and responds to all comments that are submitted. 7. Summary Table 1, Fiscal Year 2019 CDBG Budget, summarized the uses of the funds proposed during Fiscal Year 2018. Specific funding resources will be utilized based on the opportunities and constraints of each particular project or program. Annual Action Plan 2018 5 OMB Control No: 2506-0117 (exp. 06/30/2018) Applicant Agency Budget Public Services Palo Alto Housing Corporation - SRO Resident Supportive Services $24,023 Catholic Charities of Santa Clara County – Long Term Care Ombudsman Program $10,000 LifeMoves (Formerly InnVision) - Opportunity Center - Drop-In Center $38,023 YWCA/Support Network - Domestic Violence Services $10,000 Silicon Valley Independent Living Center – Housing and Emergency Services $5,032 Sub-total $87,078 Planning and Administration Project Sentinel – Fair Housing Services $32,012 City of Palo Alto Administration $73,733 Sub-total $105,745 Economic Development Downtown Streets – Workforce Development Program $331,002 Sub-total $331,002 Housing Minor Home Repair Program – City of Palo Alto $54,471 Sub-total $54,471 Grand Total $578,296 Table 1. Fiscal Year 2019 Budget Annual Action Plan 2018 6 OMB Control No: 2506-0117 (exp. 06/30/2018) Annual Action Plan 2018 7 OMB Control No: 2506-0117 (exp. 06/30/2018) PR-05 Lead & Responsible Agencies – 91.200(b) 1. Agency/entity responsible for preparing/administering the Consolidated Plan Describe the agency/entity responsible for preparing the Consolidated Plan and those responsible for administration of each g rant program and funding source. Agency Role Name Department/Agency Lead Agency PALO ALTO CDBG Administrator PALO ALTO Planning and Community Environment Department HOPWA Administrator HOME Administrator HOPWA-C Administrator Table 12 – Responsible Agencies Narrative (optional) The City of Palo Alto (City) is the Lead Agency for the United States Department of Housing and Urban Development (HUD) entitlement programs. The City’s CDBG Coordinator is responsible for the administration of HUD entitlements, which include the Community Development Block Grant Program (CDBG). By federal law, each jurisdiction is required to submit to HUD a five-year Consolidated Plan and Annual Action Plans listing priorities and strategies for the use of federal funds. The Consolidated Plan is a guide for how the City will use its federal funds to meet the housing and community development needs of its populations. For the 2015-2020 Consolidated Plan process, the City worked collaboratively with the County of Santa Clara (County) and other entitlement jurisdictions in the County to identify and prioritize housing and housing-related needs across the region, and strategies to meet those needs. The fiscal year 2018/19 Annual Action Plan represents the fourth year of CDBG funding of the 2015-2020 Consolidated Plan. Annual Action Plan 2018 8 OMB Control No: 2506-0117 (exp. 06/30/2018) Consolidated Plan Public Contact Information Erum Maqbool, CDBG Staff Specialist City of Palo Alto Department of Planning and Community Environment 250 Hamilton Avenue, 5th Floor Palo Alto, CA 94301 E-mail: erum.maqbool@cityofpaloalto.org Phone: (650) 329-2660 Annual Action Plan 2018 9 OMB Control No: 2506-0117 (exp. 06/30/2018) AP-10 Consultation – 91.100, 91.200(b), 91.215(l) 1. Introduction During Fiscal Year 2018-19, the City will continue to work with non-profit organizations to provide programs and services for low-income households; private industry, including financial and housing development groups, to encourage the development of affordable housing opportunities regionally and within the City; and other local jurisdictions, including the County of Santa Clara, in carrying out and monitoring regional projects in a coordinated and cost-effective manner. The City will provide technical assistance to the public service agencies it funds with CDBG dollars and will continue to attend the Regional CDBG/Housing Coordinators meetings. Provide a concise summary of the jurisdiction’s activities to enhance coordination between public and assisted housing providers and private and governmental health, mental health and service agencies (91.215(l)) Describe coordination with the Continuum of Care and efforts to ad dress the needs of homeless persons (particularly chronically homeless individuals and families, families with children, veterans, and unaccompanied youth) and persons at risk of homelessness. The Santa Clara County Continuum of Care (CoC) is a multi-sector group of stakeholders dedicated to ending and preventing homelessness in the County. The CoC's primary responsibilities are to coordinate large-scale implementation of efforts to prevent and end homelessness in the County. The CoC is governed by the Santa Clara CoC Board (CoC Board), which stands as the driving force committed to supporting and promoting a systems change approach to preventing and ending homelessness in the County. The CoC Board is comprised of the same individuals who serve on the Destination: Home Leadership Board. Destination: Home is a public-private partnership committed to collective impact strategies to end chronic homelessness, and leads the development of community-wide strategy related to the CoC's work. The County's Office of Supportive Housing serves as the Collaborative Applicant for the CoC, and is responsible for implementing by-laws and protocols that govern the operations of the CoC. The Office of Supportive Housing is also responsible for ensuring that the CoC meets the requirements outlined under the Homeless Emergency Assistance and Rapid Transition to Housing Act of 2009 (HEARTH). In the winter of 2015, Destination: Home and the CoC released a Community Plan to End Homelessness in Santa Clara County (the Plan), which outlines a roadmap for community-wide efforts to end homelessness in the County by 2020. The strategies and action steps included in the plan were informed Annual Action Plan 2018 10 OMB Control No: 2506-0117 (exp. 06/30/2018) by members who participated in a series of community summits designed to address the needs of homeless populations from April to August 2014. The Plan identifies strategies to address the needs of homeless persons in the County, including chronically homeless individuals and families, families with children, veterans, and unaccompanied youth. Additionally, it also intended to address the needs of persons at risk of homelessness. The City is represented on the CoC by its Human Services Manager. Members of the CoC meet on a monthly basis in various work groups to ensure successful implementation components of the Plan action steps. A Community Plan Implementation Team, which includes members of the CoC and other community stakeholders, meets quarterly to evaluate progress toward the Plan's goals, identify gaps in homeless services, establish funding priorities, and pursue an overall systematic approach to address homelessness. Describe consultation with the Continuum(s) of Care that serves the jurisdiction's area in determining how to allocate ESG funds, develop performance standards for and evaluate outcomes of projects and activities assisted by ESG funds, and develop funding, policies and procedures for the operation and administration of HMIS The City of Palo Alto does not receive ESG funds. 2. Describe Agencies, groups, organizations and others who participated in the process and describe the jurisdiction’s consultations with housing, social service agencies and other entities Annual Action Plan 2018 11 OMB Control No: 2506-0117 (exp. 06/30/2018) Table 23 – Agencies, groups, organizations who participated 1 Agency/Group/Organization Abilities United Agency/Group/Organization Type Services-Persons with Disabilities What section of the Plan was addressed by Consultation? Non-Homeless Special Needs Briefly describe how the Agency/Group/Organization was consulted. What are the anticipated outcomes of the consultation or areas for improved coordination? Agency attended Community Forum as part of the 2015-2020 Consolidated Plan process. 2 Agency/Group/Organization Afghan Center Agency/Group/Organization Type Cultural Organization What section of the Plan was addressed by Consultation? Needs Assessment and Strategic Plan Briefly describe how the Agency/Group/Organization was consulted. What are the anticipated outcomes of the consultation or areas for improved coordination? Agency attended Community Forum as part of the 2015-2020 Consolidated Plan process. 3 Agency/Group/Organization Aging Services Collaborative of Santa Clara County Agency/Group/Organization Type Services-Elderly Persons What section of the Plan was addressed by Consultation? Needs Assessment & Strategic Plan Briefly describe how the Agency/Group/Organization was consulted. What are the anticipated outcomes of the consultation or areas for improved coordination? Agency attended Community Forum as part of the 2015-2020 Consolidated Plan process. 4 Agency/Group/Organization California Housing Odd Fellows Foundation Agency/Group/Organization Type Housing Services-Children Community/Family Services Organization What section of the Plan was addressed by Consultation? Needs Assessment & Strategic Plan Briefly describe how the Agency/Group/Organization was consulted. What are the anticipated outcomes of the consultation or areas for improved coordination? Agency attended Community Forum as part of the 2015-2020 Consolidated Plan process. Annual Action Plan 2018 12 OMB Control No: 2506-0117 (exp. 06/30/2018) 5 Agency/Group/Organization Casa de Clara San Jose Catholic Worker Agency/Group/Organization Type Services-homeless Services-Health What section of the Plan was addressed by Consultation? Needs Assessment & Strategic Plan Briefly describe how the Agency/Group/Organization was consulted. What are the anticipated outcomes of the consultation or areas for improved coordination? Agency attended Community Forum as part of the 2015-2020 Consolidated Plan process. 6 Agency/Group/Organization Catholic Charities of Santa Clara County Agency/Group/Organization Type Services-Elderly Persons What section of the Plan was addressed by Consultation? Needs Assessment & Strategic Plan Briefly describe how the Agency/Group/Organization was consulted. What are the anticipated outcomes of the consultation or areas for improved coordination? Agency attended Community Forum as part of the 2015-2020 Consolidated Plan process. 7 Agency/Group/Organization City of Campbell Agency/Group/Organization Type Other government - Local What section of the Plan was addressed by Consultation? Strategic Plan and Needs Assessment Briefly describe how the Agency/Group/Organization was consulted. What are the anticipated outcomes of the consultation or areas for improved coordination? Agency attended Community Forum as part of the 2015-2020 Consolidated Plan process. 8 Agency/Group/Organization City of Cupertino Agency/Group/Organization Type Other government - Local What section of the Plan was addressed by Consultation? Strategic Plan & Needs Assessment Briefly describe how the Agency/Group/Organization was consulted. What are the anticipated outcomes of the consultation or areas for improved coordination? Agency attended Community Forum as part of the 2015-2020 Consolidated Plan process. 9 Agency/Group/Organization City of Gilroy Agency/Group/Organization Type Other government - Local Annual Action Plan 2018 13 OMB Control No: 2506-0117 (exp. 06/30/2018) What section of the Plan was addressed by Consultation? Strategic Plan & Needs Assessment Briefly describe how the Agency/Group/Organization was consulted. What are the anticipated outcomes of the consultation or areas for improved coordination? Agency attended Community Forum as part of the 2015-2020 Consolidated Plan process. 10 Agency/Group/Organization City of Mountain View Agency/Group/Organization Type Other government - Local What section of the Plan was addressed by Consultation? Strategic Plan & Needs Assessment Briefly describe how the Agency/Group/Organization was consulted. What are the anticipated outcomes of the consultation or areas for improved coordination? Agency attended Community Forum as part of the 2015-2020 Consolidated Plan process. 11 Agency/Group/Organization Bill Wilson Center Agency/Group/Organization Type Services-Children What section of the Plan was addressed by Consultation? Strategic Plan & Needs Assessment Briefly describe how the Agency/Group/Organization was consulted. What are the anticipated outcomes of the consultation or areas for improved coordination? Agency attended Community Forum as part of the 2015-2020 Consolidated Plan process. 12 Agency/Group/Organization City of Palo Alto - Human Relations Commission Agency/Group/Organization Type Other government - Local Civic Leaders What section of the Plan was addressed by Consultation? Needs Assessment & Strategic Plan Briefly describe how the Agency/Group/Organization was consulted. What are the anticipated outcomes of the consultation or areas for improved coordination? Agency attended Community Forum as part of the 2015-2020 Consolidated Plan process. 13 Agency/Group/Organization City of San Jose Agency/Group/Organization Type Other government - Local What section of the Plan was addressed by Consultation? Needs Assessment and Strategic Plan Annual Action Plan 2018 14 OMB Control No: 2506-0117 (exp. 06/30/2018) Briefly describe how the Agency/Group/Organization was consulted. What are the anticipated outcomes of the consultation or areas for improved coordination? Agency attended Community Forum as part of the 2015-2020 Consolidated Plan process. 14 Agency/Group/Organization City of Santa Clara Agency/Group/Organization Type Other government - Local What section of the Plan was addressed by Consultation? Needs Assessment and Strategic Plan Briefly describe how the Agency/Group/Organization was consulted. What are the anticipated outcomes of the consultation or areas for improved coordination? Agency attended Community Forum as part of the 2015-2020 Consolidated Plan process. 15 Agency/Group/Organization City of Sunnyvale Agency/Group/Organization Type Other government - Local What section of the Plan was addressed by Consultation? Needs Assessment and Strategic Plan Briefly describe how the Agency/Group/Organization was consulted. What are the anticipated outcomes of the consultation or areas for improved coordination? Agency attended Community Forum as part of the 2015-2020 Consolidated Plan process. 16 Agency/Group/Organization Coldwell Banker Agency/Group/Organization Type Business Leaders What section of the Plan was addressed by Consultation? Needs Assessment and Strategic Plan Briefly describe how the Agency/Group/Organization was consulted. What are the anticipated outcomes of the consultation or areas for improved coordination? Agency attended Community Forum as part of the 2015-2020 Consolidated Plan process. 17 Agency/Group/Organization Community School of Music and Arts Agency/Group/Organization Type Community Family Services and Organizations What section of the Plan was addressed by Consultation? Needs Assessment and Strategic Plan Briefly describe how the Agency/Group/Organization was consulted. What are the anticipated outcomes of the consultation or areas for improved coordination? Agency attended Community Forum as part of the 2015-2020 Consolidated Plan process. Annual Action Plan 2018 15 OMB Control No: 2506-0117 (exp. 06/30/2018) 18 Agency/Group/Organization Community Services Agency of Mountain View and Los Altos Agency/Group/Organization Type Services-Elderly Persons What section of the Plan was addressed by Consultation? Needs Assessment and Strategic Plan Briefly describe how the Agency/Group/Organization was consulted. What are the anticipated outcomes of the consultation or areas for improved coordination? Agency attended Community Forum as part of the 2015-2020 Consolidated Plan process. Identify any Agency Types not consulted and provide rationale for not consulting There were no agency types that were not consulted during the Consolidated Plan process. Other local/regional/state/federal planning efforts considered when preparing the Plan Name of Plan Lead Organization How do the goals of your Strategic Plan overlap with the goals of each plan? Continuum of Care Regional Continuum of Care Council The CoC works to alleviate the impact of homelessness in the community through the cooperation and collaboration of social service providers. This effort aligns with the Strategic goal to support activities to end homelessness. City of Palo Alto Housing Element (2015-2023) City of Palo Alto The Housing Element serves as a policy guide to help the City meet its existing and future housing needs. This effort aligns with the Strategic Plan's goal to assist in the creation and preservation of affordable housing. 2012-2014 Comprehensive HIV Prevention & Care Santa Clara County HIV Planning Council for Prevention and Care This plan provides a roadmap for the Santa Clara County HIV Planning Council for Prevention and Care to provide a comprehensive and compassionate system of HIV prevention and care services for the County. This effort aligns with the Strategic Plan's goal to support activities that strengthen neighborhoods through the provision of community services and public improvements. Annual Action Plan 2018 16 OMB Control No: 2506-0117 (exp. 06/30/2018) Name of Plan Lead Organization How do the goals of your Strategic Plan overlap with the goals of each plan? Affordable Housing Funding Landscape & Local Best Cities Association of Santa Clara County and Housing Trust Silicon Valley This report provides a comparison of the different funding strategies available for affordable housing in the County, and the best practices for funding new affordable housing. This effort aligns with the Strategic Plan's goal to assist in the creation and preservation of affordable housing. Regional Housing Need Plan for the San Francisco B Association of Bay Area Governments This plan analyzes the total regional housing need for the County and all of the Bay Area. This effort aligns with the Strategic Plan's goal to assist in the creation and preservation of affordable housing Community Plan to End Homelessness in Santa Clara Destination: Home The Community Plan to End Homelessness in the County is a five-year plan to guide governmental actors, nonprofits, and other community members as they make decisions about funding, programs, priorities and needs. This effort aligns with the Strategic Plan's goal to support activities to end homelessness. Palo Alto's Infrastructure: Catching Up, Keeping U City of Palo Alto Infrastructure Blue Ribbon Plan This plan details recommendations for infrastructure maintenance and replace, as well as identifies potential sources of funding. This effort aligns with the Strategic Plan's goal to support activities that strengthen neighborhoods through the provision of community services and public improvements. City of Palo Alto Comprehensive Plan (2030) City of Palo Alto This plan is the primary tool for guiding future development in Palo Alto. It provides a guide for long term choices and goals for the City future. This effort aligns with the Strategic Plan's goal to support activities that strengthen neighborhoods through the provision of community services and public improvements. Table 34 – Other local / regional / federal planning efforts Narrative (optional) The Entitlement Jurisdictions in Santa Clara County collaborated on preparation of their 2015- 2020 Consolidated Plans. The outreach and the regional needs assessment for these jurisdictions was a coordinated effort. The CoC and the County were involved in the forma tion of the Consolidated Plan and will be integral in its implementation. Annual Action Plan 2018 17 OMB Control No: 2506-0117 (exp. 06/30/2018) As standard practice, CDBG entitlement jurisdictions from throughout the County hold quarterly meetings known as the CDBG Coordinators Group. These meetings are often attended by HUD representatives and their purpose is to share information, best practices, new developments, and federal policy and appropriations updates among the local grantee staff, as well as to offer a convenient forum for HUD to provide ad-hoc technical assistance related to federal grant management. Meeting agendas cover such topics as projects receiving multi- jurisdictional funding, performance levels and costs for contracted public services, proposed annual funding plans, HUD program administration requirements, and other topics of mutual concern. These quarterly meetings provide the opportunity for the City to consult with other jurisdictions on its proposed use of federal funds for the upcoming Program Year. The CDBG Coordinators Group meetings are often followed by a Regional Housing Working Group meeting, which is open to staff of entitlement and non-entitlement jurisdictions. The Working Group provides a forum for jurisdictions to develop coordinated responses to regional housing challenges. Annual Action Plan 2018 18 OMB Control No: 2506-0117 (exp. 06/30/2018) AP-12 Participation – 91.105, 91.200(c) 1. Summary of citizen participation process/Efforts made to broaden citizen participation Summarize citizen participation process and how it impacted goal -setting On October 18, 2010, the Palo Alto City Council adopted an amended Citizen Participation Plan that utilizes the Human Relations Commission (HRC), rather than a separate Citizen Advisory Committee, to promote and encourage citizen participation in the planning, implementation and assessment of the CDBG Program. The HRC is uniquely positioned to understand and consider the needs of low and very low income persons, members of minority groups, the elderly, persons with disabilities, and residents of neighborhoods where CDBG activities may be undertaken. Thus far the revisions to the Citizen Participation Plan have promoted a more coordinate and effective response by the City to the human service needs in the community. A summary of public participation is outlined in Table 5, Citizen Participation Outreach. The Draft Action Plan was made available for a 30-day comment period to give citizens an opportunity to offer comments. (Revise for final plan) Citizen Participation Outreach Sort Order Mode of Outreach Target of Outreach Summary of response/attendance Summary of comments received Summary of comments not accepted and reasons URL (If applicable) 1 Public Meeting Non- targeted/broad community The Human Relations Commission met on March 8, 2018 to discuss the FY 18/19 funding allocations. Representatives from agencies requesting CDBG funds for FY 18/19 were present. Annual Action Plan 2018 19 OMB Control No: 2506-0117 (exp. 06/30/2018) Sort Order Mode of Outreach Target of Outreach Summary of response/attendance Summary of comments received Summary of comments not accepted and reasons URL (If applicable) 2 Public Meeting Non- targeted/broad community The Finance Committee held a public hearing on April 3, 2018 to discuss the FY 18/19 funding allocations 3 Public Meeting Non- targeted/broad community The City Council held a public hearing on May 7, 2018 to discuss the FY 18/19 funding allocations 4 Newspaper Ad Non- targeted/broad community A public hearing notice was published in the Palo Alto Weekly on March 16, 2018 There were no public comments received on the draft FY 19 Action Plan.(Revise for final plan) Table 45 – Citizen Participation Outreach Annual Action Plan 2018 20 OMB Control No: 2506-0117 (exp. 06/30/2018) Expected Resources AP-15 Expected Resources – 91.220(c)(1,2) Introduction In Fiscal Year 2019, Palo Alto will allocate approximately $578,296 to eligible activities that address the needs identified in the Consolidated Plan. Anticipated Resources Program Source of Funds Uses of Funds Expected Amount Available Year 1 Expected Amount Available Remainder of ConPlan $ Narrative Description Annual Allocation: $ Program Income: $ Prior Year Resources: $ Total: $ CDBG public - federal Acquisition Admin and Planning Economic Development Housing Public Improvements Public Services 392,678 136,049 49,569 578,296 0 CDBG funds will be used for improvements in lower income neighborhoods, and public services that benefit low income and special needs households. Table 56 - Expected Resources – Priority Table Annual Action Plan 2018 21 OMB Control No: 2506-0117 (exp. 06/30/2018) Explain how federal funds will leverage those additional resources (private, state and local funds), including a description of how matching requirements will be satisfied Leverage, in the context of the CDBG and HOME, means bringing other local, state, and federal financial resources to maximize the reach and impact of the City’s HUD Programs. HUD, like many other federal agencies, encourages the recipients of federal monies to demonstrate that efforts are being made to strategically leverage additional funds in order to achieve greater results. Leverage is also a way to increase project efficiencies and benefit from economies of scale that often come with combining sources of funding for similar or expanded scopes. Funds will be leveraged if financial commitments toward the costs of a project from a source other than the originating HUD program are documented. The City joined the Santa Clara County's HOME Consortium in 2015. HOME funds can be used to fund eligible affordable housing projects for acquisition, construction and rehabilitation. Starting in FY 2015-2016 developers of affordable housing projects were eligible to competitively apply through an annual RFP process directly to the County for HOME funds to help subsidize affordable housing projects in Palo Alto. If the City receives HOME dollars from its participation in the HOME consortium, the required 25 percent matching funds will be provided from the City’s Affordable Housing Fund, which is comprised of two sub-funds: the Commercial Housing Fund and the Residential Housing Fund. As of January 2018, the Commercial Housing Fund had an available balance of approximately $6,238,470 and the Residential Housing Fund had an available balance of $6,968,506. To date, no projects within the City have been funded through the HOME Consortium. Moving forward, the City plans to increase outreach to developers in the City to provide additional information on the HOME Consortium and available funding. Other Federal Grant Programs In addition to the entitlement dollars listed above, the federal government has several other funding programs for community development and affordable housing activities. These include: the Section 8 Housing Choice Voucher Program, Section 202, Section 811, the Affordable Housing Program (AHP) through the Federal Home Loan Bank, and others. It should be noted that, in most cases, the City would not be t he applicant for these funding sources as many of these programs offer assistance to affordable housing developers rather than local jurisdictions. County and Local Housing and Community Development Sources There are a variety of countywide and local resources that support housing and community development programs. Some of these programs offer assistance to local affordable housing developers and community organizations while others provide assistance directly to individuals. These resources are discussed below: Annual Action Plan 2018 22 OMB Control No: 2506-0117 (exp. 06/30/2018) Palo Alto Commercial Housing Fund: The Commercial Housing fund is used primarily to increase the number of new affordable housing units for Palo Alto’s work force. It is funded with mitigation fees required from developers of commercial and industrial projects. As of January, 2018 the Commercial Housing Fund had an available balance of approximately $6,238,470. Palo Alto Residential Housing Fund: The Residential Housing Fund is funded with mitigation fees provided under Palo Alto's Below Market Rate (BMR) housing program from residential developers and money from other miscellaneous sources, such as proceeds from the sale or lease of City property. As of January, 2018 the Residential Housing Fund had an available balance of $6,968,506. Annual Action Plan 2018 23 OMB Control No: 2506-0117 (exp. 06/30/2018) If appropriate, describe publically owned land or property located within the jurisdiction that may be used to address the needs identified in the plan The City has no surplus vacant land that would be available for the development of housing or services. Sixty-five percent of land in the City is open space. Discussion The City of Palo Alto’s (City) Fiscal Year (FY) 2018-2019 Action Plan covers the time period from July 1, 2018 to June 30 2019 (HUD Program Year 2018). The City’s FY 2019 entitlement amount is $392,678. Additionally, the City estimates approximately $136,049 in program income and an estimated $49,569 in available uncommitted funds from the prior program year, bringing the total estimated budget for FY 2018-2019 to $578,296. While U.S. Department of Housing and Urban Development (HUD) allocations are critical, they are not sufficient to overcome all barriers and address all needs that low income individuals and families face in attaining self-sufficiency. The City will continue to leverage additional resources to successfully provide support and services to the populations in need. Currently, the City is not eligible to receive direct funding under the HOME Investment Partnership Act (HOME), Emergency Solutions Grant (ESG), or Housing Opportunities. Annual Action Plan 2018 24 OMB Control No: 2506-0117 (exp. 06/30/2018) Annual Goals and Objectives AP-20 Annual Goals and Objectives Goals Summary Information Sort Order Goal Name Start Year End Year Category Geographic Area Needs Addressed Funding Goal Outcome Indicator 1 Homelessness 2015 2020 Homeless CDBG: $62,046 Public service activities for Low/Moderate Income Housing Benefit: 431 Households Assisted 2 Affordable Housing 2015 2020 Affordable Housing CDBG: $54,471 Homeowner Housing Rehabilitated: 5 Household Housing Unit 3 Strengthen Neighborhoods 2015 2020 Non-Homeless Special Needs Non-Housing Community Development CDBG: $25,032 Public service activities other than Low/Moderate Income Housing Benefit: 291 Persons Assisted 4 Fair Housing 2015 2020 Non-Housing Community Development CDBG: $32,012 Public service activities other than Low/Moderate Income Housing Benefit: 15 Persons Assisted 5 Economic Development 2015 2020 Non-Housing Community Development CDBG: $331,002 Jobs created/retained: 30 Jobs Table 67 – Goals Summary Goal Descriptions Annual Action Plan 2018 25 OMB Control No: 2506-0117 (exp. 06/30/2018) 1 Goal Name Homelessness Goal Description Support activities to end homeless. 2 Goal Name Affordable Housing Goal Description Assist in the creation and preservation of affordable housing for low income and special needs households. 3 Goal Name Strengthen Neighborhoods Goal Description Support activities that strengthen neighborhoods through the provision of community services and public improvements to benefit low income and special needs households 4 Goal Name Fair Housing Goal Description Promote fair housing choice. 5 Goal Name Economic Development Goal Description Expanded economic opportunities for low income households. Annual Action Plan 2018 26 OMB Control No: 2506-0117 (exp. 06/30/2018) Projects AP-35 Projects – 91.220(d) Introduction The Consolidated Plan goals below represent high priority needs for the City of Palo Alto and serve as the basis for the strategic actions the City will use to meet these needs. The goals, listed in no particular order, are: 1. Assist in the creation and preservation of affordable housing for low income and special needs households. 2. Support activities to end homelessness. 3. Support activities that strengthen neighborhoods through the provision of community services and public improvements to benefit low income and special needs households. 4. Promote fair housing choice. 5. Expand economic opportunities for low income households. Projects # Project Name 1 Silicon Valley Independent Living Center 2 Catholic Charities 3 LifeMoves 4 PAHC Management & Services Corporation 5 YWCA of Silicon Valley 6 Project Sentinel 7 City of Palo Alto 8 Downtown Streets Inc. 9 Minor Home Repair Program Table 78 - Project Information 1 Project Name Silicon Valley Independent Living Center Target Area Goals Supported Strengthen Neighborhoods Needs Addressed Community Services and Public Improvements Funding CDBG: $5,032 Description Housing and Emergency Housing Services Annual Action Plan 2018 27 OMB Control No: 2506-0117 (exp. 06/30/2018) Target Date of Completion 6/30/2019 Estimate the number and type of families that will benefit from the proposed activities 15 persons will be assisted. Location Description Citywide. Planned Activities Silicon Valley Independent Living Center provides assistance for individuals with disabilities and their families to transition from homelessness, health care facilities, unstable or temporary housing to permanent affordable, accessible, integrated housing with emergency assistance, security deposits, rent, information, & referral, and other basic essentials. 2 Project Name Catholic Charities Target Area Goals Supported Strengthen Neighborhoods Needs Addressed Community Services and Public Improvements Funding CDBG: $10,000 Description Long-Term Care Ombudsman Program Target Date of Completion 6/30/2019 Estimate the number and type of families that will benefit from the proposed activities 236 persons will be assisted. Location Description Long-term care and skilled nursing facilities throughout the City. Planned Activities Catholic Charities assists in problem resolution and advocates for the rights of residents of long term care facilities in Palo Alto. The majority of the clients assisted are low-income, frail, elderly, and chronically ill. This program assists these vulnerable, dependent and socially isolated residents receive the care and placement to which they are entitled. 3 Project Name LifeMoves Target Area Goals Supported Homelessness Needs Addressed Homelessness Annual Action Plan 2018 28 OMB Control No: 2506-0117 (exp. 06/30/2018) Funding CDBG: $38,023 Description Opportunity Services Center Target Date of Completion 6/30/2019 Estimate the number and type of families that will benefit from the proposed activities 300 persons will be assisted. Location Description 33 Encina Way, Palo Alto, CA 94301 Planned Activities LifeMoves provides basic necessities for persons who are homeless or at- risk of becoming homeless. The Opportunity Services Center is a comprehensive, one-stop, multi-service, day drop-in center that provides critical services for homeless Palo Alto residents. Specifically, the facility provides showers, laundry, clothing, snacks, case management, and shelter/housing referral services. 4 Project Name PAHC Management & Services Corporation Target Area Goals Supported Strengthen Neighborhoods Needs Addressed Community Services and Public Improvements Funding CDBG: $24,023 Description SRO Resident Support Services Target Date of Completion 6/30/2019 Estimate the number and type of families that will benefit from the proposed activities 131 persons will be assisted Location Description 439 Emerson Street and 735 Alma Street Palo Alto, CA 94301 Planned Activities Palo Alto Housing Corporation will provide counseling and supportive case management services for low-income residents of single room occupancy facilities in order to help them maintain housing stability. Activities include financial counseling, health maintenance, information and referral, problem solving, employment assistance, crisis intervention and case management. 5 Project Name YWCA of Silicon Valley Annual Action Plan 2018 29 OMB Control No: 2506-0117 (exp. 06/30/2018) Target Area Goals Supported Strengthen Neighborhoods Needs Addressed Community Services and Public Improvements Funding CDBG: $10,000 Description Domestic Violence Services Target Date of Completion 6/30/2019 Estimate the number and type of families that will benefit from the proposed activities 40 persons will be assisted Location Description Citywide Planned Activities Support Network for Battered Women, a Division of YWCA will provide individuals and families experiencing domestic violence, the program provides a bilingual domestic violence hotline, an emergency shelter, crisis counseling, legal assistance, court accompaniment, individual and group therapy, support groups, children’s therapy groups, preventative education, safety planning and community referrals. 6 Project Name Project Sentinel Target Area Goals Supported Fair Housing Needs Addressed Fair Housing Funding CDBG: $32,012 Description Fair Housing Services Target Date 6/30/2018 Estimate the number and type of families that will benefit from the proposed activities 15 persons will be assisted Location Description Citywide Annual Action Plan 2018 30 OMB Control No: 2506-0117 (exp. 06/30/2018) Planned Activities Project Sentinel will provide community education and outreach regarding fair housing law and practices, investigation, counseling and legal referral for victims of housing discrimination, and analyses for City staff and officials regarding fair housing practices. California and federal fair housing laws assure specific protected classes the right to be treated in terms of their individual merits and qualifications in seeking housing. Unfortunately, some people are not aware of the law or their rights. 7 Project Name City of Palo Alto Target Area Goals Supported Affordable Housing Homelessness Strengthen Neighborhoods Fair Housing Economic Development Needs Addressed Affordable Housing Homelessness Community Services and Public Improvements Fair Housing Economic Development Funding CDBG: $73,733 Description Planning and Administration Target Date of Completion 6/30/2019 Estimate the number and type of families that will benefit from the proposed activities The City will provide general administrative support to the CDBG program. Location Description Citywide Planned Activities Administer the Administrative costs for the overall management, coordination, and evaluation of the CDBG program, and the project delivery costs associated with bringing projects to completion. 8 Project Name Downtown Streets Inc. Target Area Goals Supported Economic Development Needs Addressed Economic Development Annual Action Plan 2018 31 OMB Control No: 2506-0117 (exp. 06/30/2018) Funding CDBG: $331,002 Description Workforce Development Program Target Date of Completion 6/30/2019 Estimate the number and type of families that will benefit from the proposed activities 30 jobs will be created for very low income and low income individuals. Location Description Citywide. Planned Activities The Workforce Development Program will provide a transition from unemployment and homelessness to regular employment and housing through case management, job training, mentoring, housing, and transportation assistance. Downtown Streets Team will screen and prepare applicants and will use their community connections to provide training and job opportunities. 9 Project Name Minor Home Repair Program Target Area Goals Supported Strengthen Neighborhoods Needs Addressed Funding CDBG: $54,471 Description The Minor Home Repair Program will provide funds to address health and safety and accessibility concerns for income qualified Palo Alto homeowners. To participate in the program, a homeowner must be low income. Target Date of Completion 6/30/2019 Estimate the number and type of families that will benefit from the proposed activities 5 households will be assisted with minor homeowners Location Description City wide. Program will be administered by a non-profit partner. Planned Activities Complete home repairs that address health and safety concerns and provide accessibility to low income homeowners throughout the City of Palo Alto. Annual Action Plan 2018 32 OMB Control No: 2506-0117 (exp. 06/30/2018) Describe the reasons for allocation priorities and any obstacles to addressing underserved needs The City awards CDBG funding to nonprofit agencies to provide public services and housing for low income and special needs households. The City operates on a two-year grant funding cycle for CDBG grants. The City allocates its CDBG funds to projects and programs that will primarily benefit 0-50% AMI households, the homeless and special needs populations. The allocation of funds is made based on the needs identified in the 2015-2020 Consolidated Plan. Annual Action Plan 2018 33 OMB Control No: 2506-0117 (exp. 06/30/2018) Annual Action Plan 2018 34 OMB Control No: 2506-0117 (exp. 06/30/2018) AP-50 Geographic Distribution – 91.220(f) Description of the geographic areas of the entitlement (including areas of low -income and minority concentration) where assistance will be directed Not applicable. The City has not established specific target areas to focus the investment of CDBG funds. Geographic Distribution Target Area Percentage of Funds Table 89 - Geographic Distribution Rationale for the priorities for allocating investments geographically Not applicable. Discussion See discussion above. Annual Action Plan 2018 35 OMB Control No: 2506-0117 (exp. 06/30/2018) Affordable Housing AP-55 Affordable Housing – 91.220(g) Introduction Palo Alto has identified affordable housing as the primary objective for the expenditure of CDBG funds in the Consolidated Plan. The City will continue to allocate funding available to activities and projects that meet this objective. A detailed discussion of how HUD entitlements will be used to support affordable housing needs within the City is provided in AP-20, with the number of households to be assisted itemized by goal. One Year Goals for the Number of Households to be Supported Homeless 0 Non-Homeless 0 Special-Needs 0 Total 0 Table 910 - One Year Goals for Affordable Housing by Support Requirement One Year Goals for the Number of Households Supported Through Rental Assistance 0 The Production of New Units 0 Rehab of Existing Units 5 Acquisition of Existing Units 0 Total 5 Table 1011 - One Year Goals for Affordable Housing by Support Type Discussion Please see discussion above. Annual Action Plan 2018 36 OMB Control No: 2506-0117 (exp. 06/30/2018) AP-60 Public Housing – 91.220(h) Introduction The Santa Clara County Housing Authority (SCCHA) assists approximately 17,546 households through the federal Section 8 Housing Choice Voucher program (Section 8). The Section 8 waiting list contains over 20,000 households (estimated to be a 10-year wait). SCCHA also develops, controls, and manages more than 2,100 affordable rental housing properties throughout the County. SCCHA’s programs are targeted toward LMI households and more than 80 percent of their client households are extremely low income families, seniors, veterans, persons with disabilities, and formerly homeless individuals. In 2008, SCCHA entered a ten-year agreement with HUD to become a Moving to Work (MTW) agency. The MTW program is a federal demonstration program that allows greater flexibility to design and implement more innovative approaches for providing housing assistance. Additionally, SCCHA has used LIHTC financing to transform and rehabilitate 535 units of public housing into SCCHA-controlled properties. The agency is an active developer of affordable housing and has either constructed, rehabilitated, or assisted with the development of more than 30 housing developments that service a variety of households, including special needs households. Actions planned during the next year to address the needs to public housing Not applicable. SCCHA owns and manages four public housing units, which are all located in the City of Santa Clara. Actions to encourage public housing residents to become more involved in management and participate in homeownership Although the majority of their units have been converted to affordable housing stock, SCCHA is proactive in incorporating resident input into the agency’s policy-making process. An equitable and transparent policy-making process that includes the opinions of residents is achieved through the involvement of two tenant commissioners on the SCCHA board. SCCHA has been a MTW agency since 2008. In this time the agency has developed 31 MTW activities. The vast majority of its successful initiatives have been aimed at reducing administrative inefficiencies, which provides resources for programs aimed at LMI families. If the PHA is designated as troubled, describe the manner in which financial assistance will be provided or other assistance Not applicable. Annual Action Plan 2018 37 OMB Control No: 2506-0117 (exp. 06/30/2018) Discussion Please see discussion above. Annual Action Plan 2018 38 OMB Control No: 2506-0117 (exp. 06/30/2018) AP-65 Homeless and Other Special Needs Activities – 91.220(i) Introduction The Santa Clara County region is home to the fourth-largest population of homeless individuals (7,394 single individuals) and the highest percentage of unsheltered homeless of any major city (74 percent of homeless people sleep in places unfit for human habitation). The homeless assistance program planning network is governed by the Santa Clara Continuum of Care (CoC), governed by the Destination: Home Leadership Board, who serves as the CoC Board of Directors. The membership of the CoC is a collaboration of representatives from local jurisdictions comprised of community-based organizations, the Housing Authority of Santa Clara, governmental departments, health service agencies, homeless advocates, consumers, the faith community, and research, policy and planning groups. For many years, the CoC utilized a homeless services system referred to as the Homeless Management Information System (HMIS). The HMIS monitored outcomes and performance measures for all the homeless services agencies funded by the County. Last year, the CoC and service providers transitioned to a new system referred to as Clarity. The system provides additional tools and resources to assist the CoC and service providers to track information regarding clients served. Describe the jurisdictions one-year goals and actions for reducing and ending homelessness including Reaching out to homeless persons (especially unsheltered persons) and assessing their individual needs In January 2017, a Point in Time (PIT) count was conducted for Santa Clara County by the City of San Jose in conjunction with the County of Santa Clara. The PIT is an intense survey used to count the number of homeless living throughout Santa Clara County on the streets, in shelters, safe havens or in transitional housing, or in areas not meant for human habitation. The survey was conducted by hundreds of volunteers who asked those living on the streets, as well as the residents of shelters, safe havens and transitional housing, to respond to questions related to their needs. A portion of the survey addresses the needs of those surveyed. Palo Alto financially contributed to this effort. The next PIT is scheduled for January 2019. Addressing the emergency shelter and transitional housing needs of homeless persons In addressing the Consolidated Plan and the Continuum of Care strategic plans, Palo Alto will provide funding for essential services and operations to local emergency shelters and transitional housing facilities. The facilities provide shelter and services to homeless families with children, single parents with children, single men and women, victims of domestic violence and sexual abuse, homeless veterans, and the population living on the street. One example includes the Hotel de Zink rotating shelter, which provides overnight shelter to approximately 15 individuals every night. Annual Action Plan 2018 39 OMB Control No: 2506-0117 (exp. 06/30/2018) Helping homeless persons (especially chronically homeless individuals and families, families with children, veterans and their families, and unaccompanied youth) make the transition to permanent housing and independent living, including shortening the period of time that individuals and families experience homelessness, facilitating access for homeless individuals and families to affordable housing units, and preventing individuals and families who were recently homeless from becoming homeless again The City spends part of its CDBG funds and local funds toward a variety of public services to address the needs of homeless and very low income persons. Services provided include free food, clothing, medical care, legal assistance, and rental assistance. The City allocates funding to the following homeless service providers: CDBG Funded LifeMoves - Opportunity Services Center $38,023. The Opportunity Services Center facility in Palo Alto provides a clean, safe environment and resources for low income or homeless persons including bagged groceries, hot meals, a rotating church shelter program, information and referral, shower and laundry facilities, case management, and money management (payee) programs, clothing and health services. A daily hot meal is provided at a different location each day and bagged groceries are distributed daily at the Downtown Food Closet. The Hotel de Zink rotating church shelter program is housed at a different location each month. Downtown Streets Team – Workforce Development Program $331,002. This economic development program helps motivated graduates of the Downtown Streets Team programs move on to stable employment. The program includes mentoring, counseling, job readiness, job training, and assistance. Palo Alto Housing Corporation – SRO Tenant Counseling $24,023. Provides counseling and case- management services for the low-income residents and prospective residents of single room occupancy hotels in Palo Alto. Many SRO residents have a history of homelessness and special needs. The program plays a vital role in helping residents maintain their stability and housing. City of Palo Alto – Minor Repair Program $54,471. The Minor Repair Program will provide funds to low income Palo Alto homeowners to address health and safety issues and improve accessibility. To participate in the program, a homeowner must be low income. A non-profit partner will administer the program for the City. Note: Please see "discussion" section for HSRAP Funded homeless service providers. Helping low-income individuals and families avoid becoming homeless, especially extremely low-income individuals and families and those who are: being discharged from publicly funded institutions and systems of care (such as health care facilities, mental health facilities, Annual Action Plan 2018 40 OMB Control No: 2506-0117 (exp. 06/30/2018) foster care and other youth facilities, and corrections programs and institutions); or, receiving assistance from public or private agencies that address housing, health, social services, employment, education, or youth needs. HSRAP Funded Abilities United – Disability Services:$44,691. Provides services and activities for adults & children with mental & physical disabilities. Adolescent Counseling Services (Outlet Program) -$10,250. Supports the wellbeing of all teens, tweens, & young adults in Santa Clara & San Mateo Counties. Community Working Group - $30,000. Support for continued operation & maintenance of the Day Services Center Counseling & Support Services for Youth (CASSY) -$35,000. A school-based youth mental health support program Downtown Streets Team – Downtown Streets:$74,572. Identifies motivated homeless individuals & provides them with jobs cleaning & beautifying the downtown area in exchange for housing & food vouchers. The program includes counseling, coaching & training to help program participants build self- esteem, confidence & connections in the community. Dreamcatchers - $23,609. Creates vibrant afterschool classrooms where students learn to thrive. KARA - $18,565. KARA provides grief support to children, teens, families & adults. La Comida de California – Hot Meals for The Elderly: $36,372. Daily meal program for the elderly. LifeMoves – $35,257. A nonprofit committed to ending the cycle of homelessness for families & individuals in San Mateo & Santa Clara Counties. May View Health Center – Health Care for Low Income & Homeless Palo Alto residents: $26,990. Basic primary health care services & health education & referral services for uninsured low-income & homeless individuals from the Palo Alto area. Momentum for Mental Health – Homeless Outreach Program: $44,724. Momentum for Mental Health outreach program provides emergency on-call services to assist local mentally ill homeless persons. Palo Alto Housing - $20,001. This non-profit agency builds, develops, acquires, & manages low- & moderate-income housing in Palo Alto & the San Francisco Bay Area. Annual Action Plan 2018 41 OMB Control No: 2506-0117 (exp. 06/30/2018) PARCA - $10,959. On-site supervision, independent living training & social & recreational activities at the Page Mill Court assisted living apartment complex Peninsula HealthCare Connection – Project Downtown Connect: $29,684. Provider of health care services at the Opportunity Center of Palo Alto. Project Downtown Connect provides Section 8 vouchers to eligible homeless individuals & families. SALA – Legal Assistance to Elders: $14,401. Senior Adults Legal Assistance (SALA) provides affordable legal assistance to elders. Vista Center for the Blind or Visually Impaired - $26,475. Empowers individuals who are blind or visually impaired to embrace life to the fullest through evaluation, counseling, education & training. Youth Community Service - $21,663. Builds life skills & leadership through meaningful service learning experiences that encourage youth to make purposeful school & life choices. Annual Action Plan 2018 42 OMB Control No: 2506-0117 (exp. 06/30/2018) AP-75 Barriers to affordable housing – 91.220(j) Introduction: The incorporated and unincorporated jurisdictions within the County face barriers to affordable housing that are common throughout the Bay Area. High on the list is the lack of developable land, which increases the cost of available lands and increases housing development costs. Local opposition is another common obstacle as many neighbors have strong reactions to infill and affordable housing developments. Their opposition is often based on misconceptions, such as a foreseen increase in crime; erosion of property values; increase in parking and traffic congestion; and overwhelmed schools. However, to ensure a healthy economy the region must focus on strategies and investment that provide housing for much of the region’s workforce – for example, sales clerks, secretaries, firefighters, police, teachers, and health service workers – whose incomes significantly limit their housing choices. It should be noted that in a constrained housing supply market, when housing developments produce housing that is relatively affordable, higher income buyers and renters generally outbid lower income households. A home’s final sale or rental price will typically exceed the projected sales or rental costs. Public subsidies are often needed to guarantee affordable homes for LMI households. Actions it planned to remove or ameliorate the negative effects of public policies that s erve as barriers to affordable housing such as land use controls, tax policies affecting land, zoning ordinances, building codes, fees and charges, growth limitations, and policies affecting the return on residential investment Palo Alto is addressing the barriers to affordable housing through the following programs and ordinances: Context-Based Design Codes The City adopted form-based codes in 2006 to ensure and encourage residential development by following context-based design guidelines to meet increased density needs. The code encourages the creation of walkable, pedestrian-oriented neighborhoods, following green building design principles, and increasing density along transit corridors and in mixed-use neighborhoods. The Context-Based Design Code allows for increased density and mixed-use buildings in a way that enhances neighborhood character and walkability. Density Bonus Ordinance Density bonus provisions are a tool for attracting and assisting developers in constructing affordable housing. Density bonuses allow a developer to increase the density of a development above what is allowed under standard zoning regulations and provides regulatory relief in the form of concessions. In Annual Action Plan 2018 43 OMB Control No: 2506-0117 (exp. 06/30/2018) exchange, a developer provides affordable units in the development. In 2004, the California State Legislature lowered the thresholds required to receive a density bonus and increased the number of concessions a developer can receive. The City adopted a Density Bonus Ordinance in January 2014. The density bonus regulations allow for bonuses of 20 to 35 percent, depending on the amount and type of affordable housing provided. As required by state law, the regulations also allow for exceptions to applicable zoning and other development standards, to further encourage development of affordable housing. Below Market Rate Housing Program Established in 1974, the City’s BMR Housing Program has been instrumental in the production of affordable housing by requiring developers to provide a certain percentage of units as BMR in every approved project of three units or more. The program originally required that for developments on sites of less than five acres, the developer must provide 15 percent of the total housing units as BMR housing units. If the site was larger than five acres, the developer was required to provide 20 percent of the units as BMR housing. Several court cases have challenged the BMR, or “inclusionary zoning” ordinances in California. Two factors that have received recent attention by the courts include whether inclusionary housing is considered rent control, and whether inclusionary housing and related housing mitigation fees are considered exactions. As a result of ongoing litigation, many cities have suspended or amended the portions of their inclusionary housing requirements that require affordable units to be included in market rate rental developments and many cities have turned, instead, to the use of development impact fees charged on new, market-rate housing and/or commercial development. Known as “Housing Impact Fees” and “Commercial Linkage Fees,” these fees are based on an assessment of the extent to which the development of new market-rate housing or commercial uses, respectively, generates additional demand for affordable housing. The City recently updated its Commercial and Residential Impact Fee Nexus Studies and adopted two ordinances to make changes to its BMR program and adopted a new fee structure. The ordinances became effective on June 19, 2017. Discussion: Please see above. Annual Action Plan 2018 44 OMB Control No: 2506-0117 (exp. 06/30/2018) AP-85 Other Actions – 91.220(k) Introduction: This section discusses the City’s efforts in addressing the underserved needs, expanding and preserving affordable housing, reducing lead-based paint hazards, and developing institutional structure for delivering housing and community development activities. Actions planned to address obstacles to meeting underserved needs The diminishing amount of available funds continues to be an obstacle to addressing the needs of underserved populations. To address this, the City supplements its CDBG funding with other resources and funds, including: The City’s Human Service Resource Allocation Process (HSRAP) provides approximately $1,464,146 from the General Fund in support of human services. The HSRAP funds, in conjunction with the CDBG public service funds, are distributed to local non-profit agencies. The Palo Alto Commercial Housing Fund is utilized to increase the number of new affordable housing units for Palo Alto’s work force. It is funded with mitigation fees required from developers of commercial and industrial projects. The Palo Alto Residential Housing Fund is funded with mitigation fees provided under Palo Alto’s BMR housing program from residential developers and monies from other miscellaneous sources, such as proceeds from the sale or lease of City property. The City’s Below Market Rate Emergency Fund was authorized in 2002 to provide funding on an ongoing basis for loans to BMR owners for special assessment loans and for rehabilitation and preservation of the City’s stock of BMR ownership units. HOME Program funds are available on an annual competitive basis through the State of California HOME program, and the County’s HOME Consortium. Actions planned to foster and maintain affordable housing The City will foster and maintain affordable housing by continuing the following programs and ordinances: The Below Market Rate Emergency Fund which provides funding on an ongoing basis for loans to BMR owners for special assessment loans and for rehabilitation and preservation of the City’s stock of BMR ownership units. The Commercial Housing Fund is utilized to increase the number of new affordable housing units for Palo Alto’s work force. The Residential Housing Fund is used to assist new housing development and/or the acquisition, rehabilitation or the preservation of existing housing for affordable housing. The Density Bonus Ordinance, adopted by the City Council in January 2014, allows for bonuses Annual Action Plan 2018 45 OMB Control No: 2506-0117 (exp. 06/30/2018) of 20 to 35 percent, depending on the amount and type of affordable housing provided. The City’s participation in the County's HOME Consortium allows developers of affordable housing projects in Palo Alto to be eligible to competitively apply through an annual RFP process directly to the County for HOME funds to help subsidize the Actions planned to reduce lead-based paint hazards The City’s housing and CDBG staff provides information and referral to property owners, developers, and non-profit organizations rehabilitating older housing about lead-based paint (LBP) hazards. Any house to be rehabilitated with City financial assistance is required to be inspected for the existence of LBP and LBP hazards. The City provides financial assistance for the abatement of LBP hazards in units rehabilitated with City funding. The City also requires that contractors are trained and certified in an effort to decrease the risk of potential use of LBP in new units. All development and rehabilitation projects must be evaluated according to HUD’s Lead Safe Housing Rule 24 CFR Part 35. Actions planned to reduce the number of poverty-level families The City, in its continuing effort to reduce poverty, will prioritize funding agencies that provide direct assistance to the homeless and those in danger of becoming homeless. In FY 2018-2019, these programs will include the following: Downtown Streets Team is a nonprofit in the City that works to reduce homelessness through a “work first” model. Downtown Streets Team uses their community connections to provide training and job opportunities to homeless people, specifically in the downtown area. The Downtown Streets Team has helped 802 people find housing and 745 find jobs since its inception in 2005. The Downtown Streets Team has initiatives in Palo Alto, Sunnyvale, San Jose, and San Rafael. Actions planned to develop institutional structure The City is striving to improve intergovernmental and private sector cooperation to synergize efforts and resources and develop new revenues for community service needs and the production of affordable housing. Collaborative efforts include: Regular quarterly meetings between entitlement jurisdictions at the CDBG Coordinators Meeting and Regional Housing Working Group. Joint jurisdiction Request for Proposals and project review committees Coordination on project management for projects funded by multiple jurisdictions The established of the HOME Consortium with the county of Santa Clara and the cities of Gilroy and Cupertino to provide additional funding opportunities for affordable housing projects. Annual Action Plan 2018 46 OMB Control No: 2506-0117 (exp. 06/30/2018) Recent examples include the effort by the County to create a regional affordable housing fund, using former redevelopment funds that could be returned to the County to use for affordable housing. Another effort underway involves the possible use of former redevelopment funds to create a countywide pool for homeless shelters and transitional housing. These interactions among agencies generate cohesive discussion and forums for bridging funding and service gaps on a regional scale. Actions planned to enhance coordination between publi c and private housing and social service agencies The City benefits from region-wide network of housing and community development partners, such as the County and the CoC. To improve intergovernmental and private sector cooperation, the City will continue to participate with other local jurisdictions and developers in sharing information and resources. In addition to the actions listed above, the City will continue to coordinate with the City’s human services funding efforts to comprehensively address its community needs. Discussion: Please see discussions above. Annual Action Plan 2018 47 OMB Control No: 2506-0117 (exp. 06/30/2018) Program Specific Requirements AP-90 Program Specific Requirements – 91.220(l)(1,2,4) Introduction: The charts below provide additional information regarding the CDBG program income and other CDBG program requirements. Community Development Block Grant Program (CDBG) Reference 24 CFR 91.220(l)(1) Projects planned with all CDBG funds expected to be available during the year are identified in the Projects Table. The following identifies program income that is available for use that is included in projects to be carried out. 1. The total amount of program income that will have been received before the start of the next program year and that has not yet been reprogrammed 136,049 2. The amount of proceeds from section 108 loan guarantees that will be used during the year to address the priority needs and specific objectives identified in the grantee's strategic plan. 0 3. The amount of surplus funds from urban renewal settlements 0 4. The amount of any grant funds returned to the line of credit for which the planned use has not been included in a prior statement or plan 0 5. The amount of income from float-funded activities 0 Total Program Income: 136,049 Other CDBG Requirements 1. The amount of urgent need activities 0 2. The estimated percentage of CDBG funds that will be used for activities that benefit persons of low and moderate income. Overall Benefit - A consecutive period of one, two or three years may be used to determine that a minimum overall benefit of 70% of CDBG funds is used to benefit persons of low and moderate income. Specify the years covered that include this Annual Action Plan. 100.00% Annual Action Plan 2018 48 OMB Control No: 2506-0117 (exp. 06/30/2018) Annual Action Plan 2018 49 OMB Control No: 2506-0117 (exp. 06/30/2018) Attachments Annual Action Plan 2018 50 OMB Control No: 2506-0117 (exp. 06/30/2018) Citizen Participation Comments Annual Action Plan 2018 51 OMB Control No: 2506-0117 (exp. 06/30/2018) Annual Action Plan 2018 52 OMB Control No: 2506-0117 (exp. 06/30/2018) Grantee Unique Appendices Annual Action Plan 2018 53 OMB Control No: 2506-0117 (exp. 06/30/2018) Annual Action Plan 2018 54 OMB Control No: 2506-0117 (exp. 06/30/2018) Grantee SF-424's and Certification(s) Annual Action Plan 2018 55 OMB Control No: 2506-0117 (exp. 06/30/2018) Annual Action Plan 2018 56 OMB Control No: 2506-0117 (exp. 06/30/2018) Annual Action Plan 2018 57 OMB Control No: 2506-0117 (exp. 06/30/2018) Annual Action Plan 2018 58 OMB Control No: 2506-0117 (exp. 06/30/2018) Annual Action Plan 2018 59 OMB Control No: 2506-0117 (exp. 06/30/2018) 2018 2019 Annual Action Plan 2018 60 OMB Control No: 2506-0117 (exp. 06/30/2018) Annual Action Plan 2018 61 OMB Control No: 2506-0117 (exp. 06/30/2018) Attachment C CITY OF PALO ALTO CDBG APPLICATIONS FISCAL YEAR 2019 AGENCY PROGRAM NAME FY 2018 FINAL ALLOCATIONS FY 2019 REQUEST FINANCE COMMITTEE RECOMMENDATIONS FOR FY 2019 Public Services (15% CAP = $87,078) Palo Alto Housing Corp. SRO Resident Support Program $ 23,327 $ 49,457 $ 24,023 Catholic Charities of Santa Clara County Long-Term Care Ombudsman Program $ 9,327 $ 10,000 $ 10,000 LifeMoves (formerly Inn Vision) Opportunity Services Center $ 37,328 $ 50,000 $ 38,023 YWCA/Support Network Domestic Violence Services $ 10,000 $ 10,000 $ 10,000 Silicon Valley Independent Living Center Housing and Emergency Services $ 5,032 $ 5,032 $ 5,032 Public Service Total $ 85,014 $ 124,489 $ 87,078 Planning & Administration (20% CAP = $105,745) Project Sentinel Fair Housing Services $ 32,012 $ 33,698 $ 32,012 City of Palo Alto CDBG Administration $ 82,460 $ 85,000 $ 73,733 Planning & Administration Total $ 114,472 $ 118,698 $ 105,745 Economic Development Downtown Streets Workforce Development Program $ 336,400 $ 336,400 $ 331,002 Economic Development Total $ 336,400 $ 336,400 $ 331,002 Public Facilities/Housing Rehabilitation City of Palo Alto Minor Home Repair Program $ 145,529 $ 100,000 $ 54,471 Public Facilities/Housing Rehab Total $ 145,529 $ 100,000 $ 54,471 GRAND TOTAL $ 901,415* $ 679,587 $ 578,296 *Includes $220,000 in FY17-18 CDBG funding for Opportunity Center rehab project Estimated Funds Available $ 578,296 Available for Public Service (15% Cap) $ 87,078 Available for Planning/Admin (20% Cap) $ 105,745 Available for Economic Development/Public Facilities $ 385,473 City of Palo Alto (ID # 9195) City Council Staff Report Report Type: Action Items Meeting Date: 5/7/2018 City of Palo Alto Page 1 Summary Title: P&S Committee Recommendations re Airplane Noise Title: Policy and Services Committee and Staff Recommendations on Next Steps Related to Airplane Noise (Continued From April 9, 2018) From: City Manager Lead Department: City Manager Recommendation The Policy and Services Committee and staff recommend the City Council commits to regularly assign one or more Council Members to actively participate on available community roundtables related to aircraft impacts; and directs staff to: i. Request temporary noise monitoring from San Francisco International Airport; and ii. Provide support to Palo Alto Council Members participating on available community roundtables related to aircraft impacts; and iii. Continue to include the health impacts of aircraft noise and emissions in the City’s regional, state and federal legislative priorities and engage with policy makers and associated advocacy groups as appropriate; and iv. Include in the above efforts Palo Alto’s support for: a. Improvements to SFO’s Fly Quiet Program, b. Adherence to the agreement to, whenever able, increase the altitude of aircraft over the Peninsula, c. Maximizing the use of the BDEGA East Arrival route to SFO when possible, d. Collaboration with other jurisdictions to develop a regional position in support system-wide solutions by the FAA, e. Development of a noise-monitoring plan in concert with other jurisdictions, f. Maximizing sequencing under current conditions and prioritizing the application of air traffic control technology to improve sequencing and aircraft management to minimize community impacts, g. Adoption of improved metrics for airplane noise and related impacts, and h. Greater community engagement by the FAA and SFO and SJC airports. In addition to the action above, Policy and Services recommends that Counci l endorse a number of additional proposals advanced at the Committee meeting by members of the public. A number of the citizen-initiated proposals have been incorporated into revised and updated City of Palo Alto Page 2 language with respect to i-iv, above. Several of the proposals deserve further evaluation and consideration; these are noted and discussed in greater detail below. Background On June 19, 2017, the City Council voted 7-0 (Fine, Scharff absent) to direct staff to: 1. Obtain expert opinion on aircraft noise monitoring strategy; and 2. Meet with neighboring cities to establish a regional position on the issue of aircraft noise; and 3. Align resources to be prepared to respond to the Federal Aviation Administration’s (FAA) response to the reports of the Select Committee on South Bay Arrivals and San Francisco International Airport (SFO)/Community Roundtable. The City of Palo Alto submitted a letter to the FAA on July 7, 2017 (Attachment A) to express its positions in alignment with several recommendations from the Select Committ ee and the SFO Roundtable. In late July 2017, the FAA released its initial response to the Select Committee and SFO Roundtable recommendations in the form of the “Phase Two report on the FAA Initiative to Address Noise Concerns of Santa Cruz/Santa Clara/San Mateo/San Francisco Counties, compiled at the requests of Representatives Farr (Panetta), Eshoo and Speier.” On November 15, 2017, the City of Palo Alto submitted a letter to the FAA (Attachment B) expressing its concerns about the Phase Two report and clarifying its positions on the need to reduce the concentration of SFO arrivals using the MENLO waypoint, increase the minimum altitude of flights in this vicinity, and reduce vectoring of flights. The letter also underscored the positions the Select Committee had taken with regard to reverting the SERFR track to the previous BSR track and the importance of improved noise metrics. The cities of East Palo Alto and Menlo Park sent similar letters to the FAA in mid-November. In late November 2017, the FAA released its “Update on the Phase Two report on the FAA Initiative to Address Noise Concerns of Santa Cruz/Santa Clara/San Mateo/San Francisco Counties, compiled at the requests of Representatives Farr (Panetta), E shoo and Speier” (Phase Two Update) (Attachment C). On October 3, 2017, the San José City Council authorized the establishment of the Ad Hoc Committee on South Flow Arrivals to explore possible solutions to address the noise impacts on residents from certain landing configurations at Mineta San Jose International Airport (SJC). All cities in Santa Clara County, and the county, were invited to participate with one vote except San José, which has two votes. Council Member Lydia Kou represents the City of Palo Alto on this body, which was envisioned to complete its work in 120 days. The south flow committee has held five meetings since first convening in November 2017. Council Member Kou may wish to update Council on the committee’s work. City of Palo Alto Page 3 At the recommendation of the Select Committee and of Representatives Eshoo, Khanna and Panetta, the Cities Association of Santa Clara County has formed a separate Ad Hoc Committee to explore building the framework for a permanent Roundtable for the South Bay (Santa Clara and Santa Cruz Counties) regarding aircraft noise issues related to SFO and SJC. Palo Alto Council Member Greg Scharff chairs this committee, which has seven members. The Cities Association’s Ad Hoc Committee has held four meetings since first convening in August 2017. Council Member Scharff may wish to update Council on the committee’s work. At the Policy and Services Committee meeting of February 13, 2018, the Committee voted unanimously to incorporate into a set of staff recommendations the comments contained in a letter from a Palo Alto resident who spoke at the committee meeting (Attachment I). A discussion of these comments is included at the end of the “Discussion” section below. On March 13, 2018, Council Members Fine, Kniss, Kou, Scharff and Wolbach joined with City Manager James Keene and staff at FAA headquarters in Washington, D.C. to meet with several FAA executives, including Brian Langdon, Manager of Government and Industry Affairs; George Gonzalez from the PBN Technical Support Services Team; James Arrighi from the Metroplex team, and Lois Yoshida from the FAA Office of the Chief Counsel. City representatives presented the arguments summarized in the City of Palo Alto’s information paper on FAA Noise and Community Engagement (Attachment H). Discussion With respect to item #1 in Council’s June 2017 direction to staff (obtain expert opinion on aircraft noise monitoring strategy), staff has consulted experts, interested community members, and the SFO Noise Office. SFO staff have confirmed that SFO will honor a previous offer to provide temporary noise monitoring in the City of Palo Alto. Policy and Services Committee concurred with staff’s recommendation that the City pursue this option with SFO. With respect to item #2 in Council’s June 2017 direction to staff (meet with neighboring cities to establish a regional position on the issue of aircraft noise), city staff began reaching out to city staff of neighboring jurisdictions last summer. In addition, the mayors of Palo Alto, East Palo Alto and Menlo Park met with residents to discuss shared perspectives, resulting in the three cities communicating consistent messages to the FAA in November 2017. The formation of one or more roundtable entities would provide a more effective, comprehensive and transparent means of establishing a regional position on aircraft noise. Policy and Services Committee concurred with staff’s recommendation that the City participate collaboratively on the currently established and proposed roundtables described above. With respect to item #3 in Council’s June 2017 direction t o staff (align resources to be prepared to respond to the FAA Phase Two report), staff has reviewed the agency’s Phase Two Update with aviation experts and interested members of the community. In the Phase Two Update, the FAA categorizes its responses to community positions in four categories: “Addressed Concerns”, City of Palo Alto Page 4 “Feasible and Could Be Implemented in the Short Term”, “Feasible and Could Be Implemented in the Long Term”, or “Not Endorsed”. Unfortunately, the majority of Palo Alto’s positions were not endorsed by the FAA or, if found feasible, present limited potential relief due to the considerable restrictions faced by a metropolitan region juggling arrivals and departures for three large airports (SFO, SJC, and Oakland [OAK]). A brief summary of those Cit y positions (which were adopted in support of formal positions articulated by the Select Committee and/or the SFO Roundtable), and FAA responses provided in its Phase Two Update is presented here in items A – G, followed by a brief discussion of recurring themes in the report. A. Reduce Concentration of Arrivals through MENLO Waypoint: Not Endorsed. Palo Alto supported reducing the concentration of SFO arrivals using the MENLO waypoint. The FAA has explained it cannot endorse this proposal because shifting arrivals to variously proposed points to the east or north would conflict with SJC airspace, which cannot be modified due to safety requirements for SJC.1 B. Relocate Arrivals from the South to the East: Not Endorsed. Palo Alto supported the notion of redirecting flights arriving from the south farther to the east (towards the hills to the west of Interstate 5). Although the majority – approximately 53% to 60% – of SFO’s arriving traffic is currently routed over Palo Alto (via SERFR, OCEANIC and BDEGA West), the FAA has explained that the current flow of arriving flights from the east (via FAITH waypoint and DYAMD as well as BDEGA East arrivals) is already “saturated” and could not accommodate the addition of flights currently arriving from the south.2 The FAA also argues against the inefficiency of routing flights from southern California (and Phoenix, and Mexico , etc.) farther to the northeast of their current route into the approach used by the flights arriving from the east coast and Midwest.3 C. Fly Higher Over the Peninsula: Not Endorsed; Addressed Concerns. (This is an example of apparent contractions in the Phase Two Update.) Palo Alto supported proposals to increase the minimum altitude for flights in our vicinity from 4,000 to 5,000 feet. In one portion of the Phase Two Update, the FAA states this recommendation is not endorsed for safety reasons because, to fly a stabilized approach, aircraft are subject to specific descent gradient requirements that essentially prohibit being too high, too close to landing. According to the FAA, to stay above 5,000 feet over our area, SFO arrivals would have to travel farther away from SFO to descend to the appropriate altitude for approach, thereby forcing them into prohibited SJC airspace.2 However, in another section of the Phase Two Update, the FAA categorizes this matter as an “addressed concern,” referencing the existing agreement between the SFO Aircraft Noise Abatement Office and the FAA’s Northern California TRACON that calls for 1 Attachment C, page 108. 2 Attachment C, pages 106-107. City of Palo Alto Page 5 aircraft to cross the MENLO waypoint “at 5,000 feet during visual conditions and 4,000 feet during instrument landing conditions” when able. The SFO roundtable requested that this agreement stay in place and be followed, and the FAA states it agrees with the Roundtable’s recommendation “to the extent feasible.”3 Policy and Services Committee concurred with staff’s recommendation that the City of Palo Alto advocate for adherence to this agreement. D. Relocate Northern Arrivals from Peninsula to Bay: Concern Addressed; Feasible in Short-Term. (This is an example of an “addressed concern” and a “short -term feasible” solution that presents little to no improvement from the current state.) Palo Alto supported calls for BDEGA arrivals to be shifted from the west leg to the east leg. (The BDEGA arrival from the north is characterized by two options. The BDEGA West Downwind leg brings arrivals from north of San Francisco southbound over the Peninsula before they make a easterly U-turn into a north-facing approach over the Bay into SFO. The BDEGA East Downwind leg brings arrivals from north of San Francisco southeasterly over the Bay before they make a westerly U-turn to approach SFO over the Bay. See Figure 1.) The FAA classifies its answer to this proposal as an “Addressed Concern” because it concurs with the recommendation to utilize BDEGA East when possible. In fact, the FAA “currently routes BDEGA arrivals to the East downwind to the extent operationally feasible.”4 However, the FAA report underscores the limitations of utilizing BDEGA East because it shares its final approach with the DYAMD arrival from the east (which carries the majority of SFO’s arrivals). Folding BDEGA arrivals in with DYAMD arrivals is a challenge not only due to DYAMD’s density of use, but also because DYAMD is constrained by OAK airspace to the north and SJC airspace to the south, thereby limiting the ability of air traffic controllers to vector DYAMD arrivals (to make space for BDEGA arrivals) without creating “a ripple effecting, jeopardizing safety and resulting in delays” potentially across all three airports (See Figure 2). Furthermore, the limited space in between DYAMD arrivals that can be used for routing BDEGA arrivals on the East leg instead of the West leg will likely continually decrease as SFO’s overall traffic counts are expected to continually increase.5 Therefore, while this solution demonstrates a willingness on the part of the FAA to mitigate impacts on the Peninsula, it is not likely to produce any improvement from the current state (since it is already being utilized) and, instead, will likely shrink in value over time as a mitigating solution – at least with respect to daytime noise. With respect to nighttime hours, the FAA identifies a “feasible short -term” solution as it reports it is working to update its procedures to accommodate maximizing use of BDEGA East from the beginning of Nose Abatement Procedure hours until 6:00AM. The 3 Attachment C, page 88. 4 Attachment C, page 98. 5 Attachment C, pages 71-72, 81-82. City of Palo Alto Page 6 FAA commits to “continue to reinforce the use of this procedure to personnel through training and briefings.”6 Policy and Services Committee concurred with staff’s recommendation that the City communicate its acknowledgement of the FAA’s commitment to this short-term solution and encourage continued exploration of other ways to maximize use of BDEGA East whenever possible. E. Reduce Vectoring over the Peninsula: Requirements Not Endorsed; Study Feasible Short-Term. The City joined with others in calls for reduced vectoring of arriving flights. The FAA insists that speed control and vectoring are tactical decisions used by air traff ic controllers to manage the sequencing of aircraft and it will not support any proposed formal restrictions on when air traffic controllers may or may not use this “vital component” of their tools for accomplishing their mission.7 However, the FAA “is continuously working to improve aircraft setup and sequencing between facilities” and agrees that the BDEGA Arrival route has light enough traffic that it is a candidate for studying whether in-trail spacing may result in a decrease in vectoring.8 Policy and Services Committee concurred with staff’s recommendation that the City seek opportunities to maximize the FAA’s use of sequencing on BDEGA in the near term and, when beneficial, on additional routes in the long term. F. Organize Aircraft Schedules, Use Flow Management to Limit Noise: Feasible Long- Term. The City of Palo Alto has supported recommendations to encourage the FAA staff to work across its divisions to minimize noise through efficient organization of aircraft schedules and utilizing arrival descents that limit the use of speed brakes. In response to calls for new, more effective, time-based flow management tools that allow for better sequencing of aircraft that are vectored or held prior to final approach, the FAA has stated it is committed to incorporating these improvements as they become available.9 Policy and Services Committee concurred with staff’s recommendation that the City continue to advocate for such solutions to be implemented by the FAA as quickly and thoroughly as possible. G. Develop Improved Metrics for Airplane Noise: “Not FAA’s Action” The City of Palo Alto has supported recommendations by the Select Committee calling for Congressional action to direct the FAA to adopt supplemental metrics that better characterize the true impact of aircraft on people on the ground. Although the adoption of new metrics would fall under the purview of the FAA, the FAA’s Phase Two Update declined to speak to this policy recommendation; apparently because the 6 Attachment C, page 98. 7 Attachment C, page 110. 8 Attachment C, page 97. 9 Attachment C, page 101. City of Palo Alto Page 7 recommendation’s phrasing is, technically, directed to the legislative branch of the federal government. The City of Palo Alto, through its legislative advocacy team in Washington, D.C., has been monitoring the progress of FAA reauthorization legislation. As reported to the Policy & Services Committee during its discussion of legislative priorities on November 14, 2017, while the Senate bill does not address aircraft noise and community engagement, the House bill includes several provisions related to noise and community engagement. These include a requirement for the FAA to conduct a review of the relationship between aircraft noise exposure and its effects on communities around airports, to inform future recommendations for revising the FAA’s land use compatibility guidelines (See attachment E). Policy and Services Committee concurred with staff’s recommendation that the City continue to advocate for improved noise metrics and other solutions to negative impacts of aircraft, including greater FAA community engagement. The FAA’s Phase Two Update addresses several community concerns by citing its request that SFO update its Fly Quiet Program. Staff recommends the City partner with other jurisdictions, including through community roundtables, to work with SFO in developing detailed improvements as part of its update to its Fly Quiet Program. Throughout the Phase Two Update, the FAA makes clear that safety considerations are paramount; City staff concurs. Several times in the Phase Two Update, the FAA reiterates it will not support solutions that result in shifting the problem of noise from one community to another. It also repeatedly identifies increased flying distance as an unacceptable outcome of many community-proposed solutions that conflict with the economic, environmental, and operational efficiency benefits gained from shorter flying distances. In addition, it repeatedly points to the anticipated inevitability of increases in congestion as airports increase their number of flight operations. The report explicitly states it will not move forward on certain feasible recommendations “until issues of congestion, noise shifting and flying distance have been addressed with the airline stakeholders and the affected communities by the Select Committee and/or SFO Roundtable.”10 While the Select Committee has disbanded, the South Bay Roundtable envisioned by the Cities Association would likely be viewed as an appropriate surrogate for this function in partnership with the SFO Roundtable. The City of Palo Alto is one of over 100 municipalities in the Bay Are a. The ability of any single community of 67,000 to influence the complex operations of a federal agency serving a region of 8 million people is, by definition, limited. In addition, the impacts of airplane noise must be considered amid the competing interests of the flying public, airline industry priorities, airport 10 Attachment C, page 103 City of Palo Alto Page 8 operational requirements, broader economic and environmental impacts and, above all else, safety. The successful navigation of these public interest challenges requires effective collaboration. Policy and Services Committee concurred with staff’s recommendation that the City seek cooperative opportunities to team with neighboring jurisdictions through community roundtables and similar partnerships to most effectively address the community impacts of aircraft operations. Palo Alto’s Representative Anna Eshoo, as well as Representatives Khanna, Panetta and Speier, have expressed support for aircraft noise solutions. In addition, Congresswoman Eshoo joined with other Members of Congress to form the Quiet Skies Caucus in Congress to support policy solutions to address airplane noise. Staff recommends the City continue to express appreciation to Congresswoman Eshoo and the rest of the region’s Congressional delegation, as well as California’s two Senators, for their continued support on these issues. Staff also recommends the City continue partnering with national organizations like the National Association to Insure a Sound Controlled Environment (N.O.I.S.E.) (see Attachment F) to advocate at the federal level for improved noise metrics, community engagement, and other solutions to the negative impacts of aircraft operations. The Policy and Services Committee concurred with these staff recommendations. Regarding the comments submitted by a resident at the February 13, 2018 Policy and Services Committee meeting: Portions a, b and c of Request #1 are respectively incorporated into portions iii, iv.d, and iv.e of the staff recommendation presented in this memorandum. Request #2 was addressed in a separate memorandum from the City Attorney’s Office. Request #3 proposes that the City of Palo Alto advocate on a recommendation by the Select Committee related to the movement of the SERFR ground track to the old BSR ground track. This matter has caused controversy among other jurisdictions in our region and the City of Palo Alto has been contacted by residents who both support and oppose this request. Therefore, staff do not recommend that the City Council includ e this request in its actions at this time. Attachments: Attachment A; July 2017 Letter to FAA Attachment B; Nov 2017 Letter to FAA Attachment C; FAA Phase Two Update - Placeholder w-Link Attachment D; Maps Attachment E; VanScoyoc Attachment F; NOISE Attachment G; Mercury News Article Attachment H; Information Paper on FAA Noise and Community Engagement Attachment I; Resident Letter Attachment J: Public Letters to Council City of Palo Alto Office of the Mayor and City Council July 7,2017 Michael P. Huerta, Administrator Federal Aviation Administration 800 Independence Ave SW Washington D.C. 20024 Subject: FAA response to reports of the Select Committee on South Bay Arrivals and San Francisco International Airport (SFO)/Community Roundtable Dear Administrator Huerta, On behalf of the Palo Alto City Council, I would like to recognize the hard work of FAA staff to address aircraft noise over the skies of Palo Alto and Silicon Valley. This was evident by former Western Regional Director Glen Martin's commitment to the local Select Committee meetings. The city of Palo Alto is located approximately 20 miles from SFO and is the birthplace of Silicon Valley. We are the location for many of our nation's top companies, neighbor to Stanford University, and home to approximately 66,000 residents. The impacts from aircraft noise have a negative impact on the quality of life and health of the people who live and work in our city. Palo Alto places a high value on working with other communities to maintain Silicon Valley's important role in the national and international economy. It is critical that no single community be disproportionately affected by aircraft flights. It is our understanding that in the coming weeks the FAA will submit for Department of Transportation (DOT) review your agency's response to the reports of the Select Committee on South Bay Arrivals and SFO Community Roundtable. On several occasions the City has recommended that the FAA should: 1. Create more "points" for aircraft to use while entering SFO. There is currently one point (MENLO waypoint) used for flights coming in from the north, west, and south. This point centralizes all arrival aircraft and noise over Palo Alto. (Aligns with Select Committee report sections 1.2, 2.5, 2.6, 2.7, 2.8, 2.9 and SFO Roundtable report recommendations 16 and 17.) 2. Redirect flights arriving from the south to the east; away from the Pacific Ocean coast to the hills west of Interstate 5 and have aircraft enter the Bay from the east. (Aligns with Select Committee report sections 2.14 and SFO Roundtable report recommendations 8 and 9.) P O. Box 10250 Palo Alto, CA 94303 650.329.257I 650.328 3631 fax 3. Shift the flights arriving from the north away from the Peninsula to the Bay. (Aligns with Select Committee report sections 2.2 and SFO Roundtable report recommendations 1, 7, and 11.) 4. Encourage the divisions and staff within FAA to work in partnership with each other to minimize noise through efficient organization of aircraft schedules and routes while also utilizing arrival descents that limit speed brakes. (Aligns with Select Committee report sections 1.6, 2.6, 2.7, 2.8 and SFO Roundtable report recommendations 6 and 8.) We sincerely hope the FAA takes these recommendations into account. Additionally, we ask that the FAA: 1. Create a permanent forum or ad hoc committee to address aircraft noise and the health risk concerns of residents of cities not represented by the SFO Community Roundtable. If not, then amend the SFO Community Roundtable structure to be inclusive of cities beyond San Mateo County. (Aligns with Select Committee report sections 3.1.) 2, Adopt supplemental metrics in recognition of the limitations of the Day -Night Average Sound Level (DNL). (Aligns with Select Committee report sections 3,3. ) The Palo Alto City Council is committed to working with the FAA, SFO, San Jose International Airport, neighboring cities, counties and all stakeholders to ensure a reasonable solution is identified for Silicon Valley. Sincerely, Greg Scharff Mayor Cc: Dianne Feinstein, California Senator Kamala D. Harris, California Senator Anna G. Eshoo, Congresswoman California's 18th Congressional District Dennis Roberts, Federal Aviation Administration, Regional Administrator Palo Alto City Council James Keene, City Manager Molly Stump, City Attorney P.O. Box 10250 Palo Alto, CA 94303 650.329.2571 650 328 3631 fax Michael P. Huerta, Administrator Federal Aviation Administration 800 Independence Ave. SW Washington, D.C. 20024 Ci~ of Palo Alto Office of the Mayor and City Council Subject: City of Palo Alto Response to FAA Initiative Phase Two Report Issued July 2017 Dear Administrator Huerta: On behalf of the Palo Alto City Council and further to our letter dated July 7, 2017, I want to reiterate our continuing appreciation for the work of FAA staff to address the problems Palo Alto and neighboring cities have experienced since implementation of the NextGen program in the Northern California Metroplex. NextGen added substantial air traffic to our skies, mainly due to the high concentration of jets that now fly over or near MENLO waypoint, at low altitudes, throughout the day and night. It remains critical to achieve meaningful relief since jet noise -as well as emissions -have a negative impact on the quality of life and health of people who live, work and study in our City. We recognize that the FAA Initiative to Address Noise Concerns of Santa Cruz/Santa Clara/San Mateo/San Francisco Counties is intended to explore changes to published procedures that would help mitigate noise complaints . The purpose of this letter is to highlight Palo Alto's top three priorities as they relate to specific items in the FM's Phase Two report issued July 2017 (the "Report") as part of the initiative. While the Report signals some relief is in progress at last, we are concerned the FAA does not provide adequate assurance that solutions will include higher, more distributed flights, as well as fewer overnight flights, sooner rather than later. Nor does it sufficiently commit to a transparent process - including credible impact assessments -before any final implementation decisions. We urge the FM to consider the below priorities as it prepares for Phase Three of the initiative process. 1. Reduce the concentration of SFO arrivals using MENLO waypoint. Per FAA data, 60% of SFO arrivals pass over or near MENLO waypoint, mostly on the SERFR and BDEGA West-leg paths. One action that would greatly alleviate this problem is to designate alternative waypoint(s) to MENLO for a portion of SERFR southern arrivals {which represent 30% of all SFO arrivals). The Report indicates this proposal is "currently under evaluation" {4.d .iv). Some alternative waypoints have been proposed that could enable aircraft to fly at significantly higher altitudes -and over less-populated areas-and then descend the length of the Bay. We also encourage the FM to develop other options based on its analysis and modeling . To address potential objections to moving some flights (in both this and other contexts), the FAA should specify objective criteria for what constitutes "noise shifting."1 1 One such standard appears i n the FAA's Finding of No Significant Impact and Record of Decision for the NorCal OAPM Project issued July 2014 (at http://www .metroplexenvironmental.com/docs/norcal metroplex/ NorCal OAPM FONSl-ROD .pdf). On page 5, it states that noise impacts need only be evaluated for proposed changes in arrival procedures up to 7,000 feet above ground level (AGL), which implies that re -routing flights to above 7,000 feet AGL would not be considered to cause noise-shifting . To the extent some overflights of populated areas will occur below 7,000-foot altitudes, the FAA should establish an equitable dispersal approach that uses a "pre-NextGen baseline" of flight concentrations . P.O. Box 10250 Palo Alto, CA 94303 650.329.2477 650.328 .3631 fax November 15, 2017 Another action that would help reduce MENLO concentration is to rebalance BDEGA West northern arrivals {which come down the Peninsula and make a U-turn over Palo Alto area) and BDEGA East arrivals {which fly more over the Bay). We appreciate that the Report indicates rerouting night flights is feasible and could be implemented in the short term {l.c.vi, 2.a.i). The Report additionally states that rerouting flights during certain times of the day is also feasible but implementation would be in the long term {3.a.i), and that restoring the West/East balance to its pre-2010 level {SO/SO) is "currently under evaluation" (4.a.iii). Although these changes would still leave a significant number of BDEGA flights over Palo Alto, they would provide some relief, and we therefore hope the FAA proceeds with these steps as expeditiously as possible. 2. Increase minimum altitude for all flights over/in vicinity of MENLO waypoint to at least 5,000 feet. The current minimum altitude at MENLO is 4,000 feet {although anecdotal data from users of the stop.jetnoise.net app show a significant portion of jets overfly MENLO below 4,000 feet), which is lower than before NextGen. The Select Committee on South Bay Arrivals unanimously recommended increasing the minimum altitude to S,000 feet for all traffic over and around MENLO. The Report states that a S,000 minimum altitude for vectored flights in the vicinity of Menlo, as well as aircraft crossing Menlo/vicinity under visual conditions, is "currently under evaluation" (4.d.i, 4.d.ii). The Report rejects a 4,000-foot minimum altitude for instrument approaches over MENLO as "not feasible" due to "procedural development criteria & safety standards" (6.c.viii). While we are encouraged that S,000-foot minimums are under evaluation for vectored and visual approaches and urge prompt action, we believe strongly that similar relief must be extended to instrument arrivals, which constitute much of the MENLO traffic. The FAA provided assurance that NextGen would allow aircraft to "maintain higher altitudes and lower thrust for longer periods" in its draft Environmental Assessment for the NorCal OAPM published in March 2014.2 No sound reason has been given why a S,000-foot minimum for instrument flights would not be feasible if, for example, the glide slopes for RWYs 28R and/or 28L were increased even slightly to allow for higher descending altitudes, especially considering that technological advances such as RNAV and GPS enable aircraft to follow more accurate and better-defined routes. We therefore urge the FAA to reconsider its position and to further provide a means for ongoing monitoring and enforcement to assure compliance once new procedures are established. 3. Reduce vectoring of SFO arrivals without worsening MENLO concentration. About SO% of arrivals on SERFR, plus those on BDEGA and OCEANIC, are routinely turned off their assigned procedure by Air Traffic Control to sequence them for merging onto final SFO approach. This causes substantial noise due to more aircraft miles, turning, and changes in speed. The Report notes that a proposal for the FAA to work with the SFO Roundtable "to determine where aircraft can be vectored with the least noise impact" is feasible/short-term {2.d.i). Increased in-trail separation on SERFR and possibly BDEGA, which may entail ground delays at departing airports, is noted as feasible/long-term (3.c.ii). We appreciate the intent to direct aircraft to be vectored so as to cause "the least noise impact," but request more specific criteria for how this determination will be made. Also, under no circumstances should a reduction in vectoring lead to even higher concentrations on flight paths over and around MENLO waypoint. 2 At http://www.metroplexenvironmental.com/docs/norcal metroplex/NorCal OAPM DEA Complete.pdf, section 1.2.5.3. 2 In addition, the FAA is considering reverting the SERFR track to the old BSR track (2.f.i). The Select Committee had conditioned its approval of this proposal on several criteria to prevent moving noise as compared to 2014 levels, and it is important these are followed. Further, we continue to believe that improved, supplemental noise metrics are critical to properly assess the true impact experienced by people on the ground, and we encourage prompt action on the FAA's evaluation of this issue (4.e.xi). The Palo Alto City Council remains committed to working with the FAA, San Francisco International Airport, San Jose International Airport, Congressional leaders, our neighboring cities and counties, and all stakeholders to ensure a reasonable solution is identified for our region. Sincerely, ~ H. G egory Scharff Mayor cc: Senator Dianne Feinstein of California Senator Kamala D. Harris of California Representative Anna Eshoo Representative Jackie Speier Dennis Roberts, Federal Aviation Administration, Regional Administrator Palo Alto City Council James Keene, City Manager Molly Stump, City Attorney 3 Attachment C: FAA Initiative to Address Noise Concerns of Santa Cruz/Santa Clara/San Mateo/San Francisco Counties UPDATE ON PHASE TWO Compiled at the Requests of Representatives Farr (Panetta), Eshoo and Speier November 2017 This attachment can be found at the following link: https://www.cityofpaloalto.org/civicax/filebank/documents/62294 Attachment D Figure 1: BDEGA Arrivals, West and East Legs Figure 2: DYAMD Arrival, SFO Final Approach, and Surrounding Airspace 1 Memorandum TO: Heather Dauler and Khashayar Alaee FROM: Steve Palmer, Channon Hanna, and David Haines RE: Update: Committee Votes on House and Senate FAA Reauthorization Bills / Summary of Noise and Community Engagement Provisions DATE: June 30, 2017 This memo is an update to the memo dated June 23 which outlined the noise and community engagement provisions in H.R. 2997, the 21st Century Aviation Innovation, Reform, and Reauthorization Act (21st Century AIRR Act) and S. 1405, the Federal Aviation Administration Reauthorization Act of 2017. The additional information reflects in this memo reflects how both bills were treated during Committee consideration. H.R. 2997, the 21st Century Aviation Innovation, Reform, and Reauthorization Act House Committee Markup On June 27, the Transportation and Infrastructure Committee approved by a vote of 32-25, H.R. 2997, the 21st Century AIRR Act. The six-year bill creates a private, nonprofit organization to run the nation’s air traffic control system and provides additional language on airport noise and community engagement. During the markup, only one amendment on noise was offered by Rep. Michael Capuano (D-MA). The amendment would have given FAA the exclusive authority to resolve noise disputes and require any change in air traffic management procedures, including standard instrument departure procedures, standard terminal arrival routes, and instrument approach procedures, or other necessary activities by the new corporation affecting the airspace to reduce noise exposure. During the discussion, Chairman Shuster voiced opposition to the amendment saying that he believes the bill already provides this authority on noise issues to FAA. He continued by saying that he would agree to continue to work on this issue with Rep. Capuano, if he would agree to withdraw his amendment. In response, Rep. Capuano withdrew the amendment saying he looked forward to working with the Chairman on the issue. H.R. 2997 – Noise and Community Engagement Provisions The following provisions are in the bill and did not change during this week’s committee action: • Addressing Community Noise Concerns. When proposing or amending area navigation departure procedures that would have flights between the surface and 6,000 feet over noise sensitive areas, the bill requires FAA to consider other procedures to address community noise concerns if: 1) the affected airport, in consultation with the affected community, submits a 2 request to FAA to consider other procedures; 2) the airport’s request would not conflict with the safe and efficient operation of the national airspace system; and 3) the effect of a modified departure procedure would not significantly increase the noise over noise sensitive areas. • Study on Potential Heath Impacts of Overflight Noise. The bill requires FAA to conduct a study on the heath impacts of noise from aircraft flights on residents exposed to a range of noise levels. The study must include: an examination of the incremental health impacts of noise exposure including sleep disturbance and elevated blood pressure; consider the incremental heath impacts on residents living partly or wholly underneath flight paths most frequently used by aircraft flying below 10,000 feet, including during takeoff and landing; include an assessment of the relationship between a perceived increase in aircraft noise and an actual increase in noise, particularly in areas with high or variable levels or non-aircraft ambient noise. The study is required to focus on the following metropolitan areas: Boston, Chicago, New York, the Northern California Metroplex, Phoenix, and any other area the FAA believes should be considered. A report to Congress is due within 90 days of FAA completing the study. • Community Involvement in FAA NextGen Projects Located in Metroplexes. The bill requires that within 180 days of enactment, FAA complete a review of the agency’s community involvement practices for Next Generation Air Transportation System (NextGen) projects located in FAA- identified metroplexes. There is a requirement that the review include a determination of how and when to engage airports and communities in performance based navigation proposals. • The FAA is required to submit a report to Congress within 60 days of the review which describes: 1) how FAA will improve community involvement practices for NextGen projects located in metroplexes; 2) how and when FAA will engage airports and communities in performance based navigation proposals; and 3) lessons learned from NextGen projects and pilot programs and how those lessons are being integrated into community involvement practices for future NextGen projects located in metroplexes. • Noise Exposure Study. The bill requires that FAA conduct a review of the relationship between aircraft noise exposure and its effects on communities around airports. The FAA is required to send a report to Congress within two years containing the results of the review. Based on the results of the review and in coordination with other agencies, the report should include FAA’s preliminary recommendations for revising the land use compatibility guidelines. S. 1405, the Federal Aviation Administration Reauthorization Act of 2017 Senate Committee Markup On June 29, the Commerce, Science, and Transportation Committee approved S. 1405, the Federal Aviation Administration Reauthorization Act of 2017. The bill does not contain any relevant language on airport noise and community engagement. During the markup, several amendments were offered and accepted, none of which touched on airport noise or community engagement. Next Steps While both House Transportation and Infrastructure Chairman Bill Shuster and Senate Commerce, Science, and Transportation Chairman John Thune have said they would like to see floor action on their 3 respective bills in July, both have admitted that time may not be available given the packed Congressional agenda before August recess. We will continue to track these bills as they move through both the House and the Senate and notify you of any changes made that are relevant to airport noise and community engagement. N.O.I.S.E. National Association to Insure a Sound Controlled Environment 2017 Legislative Priorities 1. COMMUNITY ENGAGEMENT // ADVOCACY N.O.I.S.E. supports expanding community engagement/review and the elimination of Categorical Exclusions (CATEX) when implementing Performance Based Navigation (PBN). Although N.O.I.S.E. supports NextGen and its goal of modernizing the air traffic control system, Performance Based Navigation (PBN) has the potential to bring significant changes to flight patterns across the country. N.O.I.S.E. contends that the community impacts of aviation noise should be considered as a crucial part of the calculation that determines the overall benefits of the proposed changes. Changes should not be solely based on improved capacity and fuel savings. With the increased concentration of overflights due to the narrowing of flight paths and the decrease in separation between aircraft enabled by PBN, air traffic changes have become even more closely tied to changes on the ground. Aviation noise is a health issue. Aviation noise is an economic issue. To that end, robust, two-way communication with affected communities is vital to ensuring that the impact and concerns of communities are heard and incorporated into the final design of new airspace as much asfuel savings and efficiency of airspace. This would allow communities under a new or concentrated flight path, guaranteed participation in a due process during the implementation of PBN. As a part of efforts to ensure adequate community engagement, N.O.I.S.E. believes that both regulatory and legislative Categorical Exclusions or “CATEXes” in current NEPA regulation are not appropriate for the implementation of significant changes to our aviation system. N.O.I.S.E. supports efforts by the FAA and Congress to develop, implement and maintain a more robust community impacts process, in addition to or outside of the traditional NEPA process. This process should insure that ground impacts are considered and community concerns are not only heard, but also incorporated into PBN and traditional track changes that will change noise exposure, even if it does not reach the current FAA threshold of “measurable impacts” In December of 2016, the following language was included in the National Defense Authorization Act, which promotes this priority: Performance-Based Navigation : This section improves the Federal Aviation Administration's (FAA) advance consultation with communities underneath the flight paths of proposed "NextGen" departure and arrival procedures, and requires the Administrator to reopen his assessment of new NextGen procedures at Phoenix Sky Harbor International Airport and to mitigate any adverse effects on the human environment that resulted from those procedures." 2. NOISE METRICS REVIEW N.O.I.S.E. supports investigation and review of DNL and its current level of 65 as the only metric used to measure noise impact and expanding noise metrics to take into account the increased concentration of overflights due to the narrowing of flight paths and the decrease in separation between aircraft enabled by PBN procedures to insure that noise impacts are appropriately measured. N.O.I.S.E. National Association to Insure a Sound Controlled Environment In order to adequately understand and address the impacts of aviation noise, we must first establish adequate metrics to measure those impacts. The FAA and Members of Congress are in the process of studying whether 65 is still the appropriate DNL level for measuring noise impacts. As we move forward with NextGen, implement PBN and undertake major airport overhauls, lowering the DNL level may allow for further mitigation for impacted communities and N.O.I.SE supports investigation of lowering the DNL level, however it will not address impacts that are caused by concentrated flight paths characterized by PBN procedures. As DNL is an average and humans do not perceive noise in averages but rather as individual events, we believe it is time to investigate alternative metrics that could measure impacts such as: • The psychological impact of concentrated, extended noise • The physiological impact of infrequent, significant noise spikes during nighttime hours • Impact of less audible low frequency noise who’s vibration induces audible noise • The length of each period of frequent, regular noise spikes “rush hours” due to over-flights • The number of rush hours per day • The average dB of a rush hour’s noise—not day-night average • The intensity of spikes above the average dB of a rush hour’s noise • The intensity and number of spikes above the average, for non-rush hours from 10 PM to 7 AM Investigating a more appropriate metric to measure aviation noise impacts is crucial and will supplement efforts to greater engage the community to understand their concerns. 3. HEALTH IMPACTS STUDI ES N.O.I.S.E. supports increased funding for studies on the health impacts of aviation noise. There are currently very few federal studies pertaining to the human impact of the concentration of flights associated with PBN procedures. Some communities do not have the ability to mitigate noise below flight paths and their citizens are exposed to continuous concentrated noise. Although there may not necessarily be an increase in decibels from the planes, there are unknown potential impacts from the increased number and frequency of flights under a given PBN procedure. Although N.O.I.S.E. has supported the implementation of NextGen technologies as a part of their formal legislative platform in the past, we assert that there must be proper investment into research and development on the health and psychological impacts of that type of the resulting noise due to the more concentrated flight paths. These studies need to begin as soon as possible in order to protect the health of affected communities and mitigate avoidable damage. 4. SOUND INSULATION PRO GRAM FUNDING N.O.I.S.E. supports implementing Sound Insulation Programs Resulting from Part 150 Program studies to the standards used prior to the September, 2012 Public Guidance Letter (PGL-12-09). A Part 150 program is a noise mitigation master plan developed by the airport and communities to address noise impacts and is funded by the Federal Aviation Administration (FAA) out of the Airport Improvement Program (AIP). One outcome or tool of a Part 150 is a sound insulation program where homes are mitigated for noise by providing improvements to windows or heating and cooling systems. N.O.I.S.E. National Association to Insure a Sound Controlled Environment Insulation programs historically have mitigated homes within the 65 DNL noise contour. A Public Guidance Letter (PGL) was issued by the FAA to change the AIP handbook in August, 2012 and amended in November, 2012. In order to be eligible for insulation, properties must meet a 2-stage eligibility test: the property must be in the 65 contour and the property must meet an interior noise level requirement (45 dB or greater). Additionally, use of Passenger Facility Charges (PFC’s) is no longer considered eligible to be used to mitigate beyond the stated criteria. The FAA maintains that this is not a new policy and that this PGL serves to clarify their noise policy that has been in place since the mid-1980’s. Previously, however, common practice dictated that properties need only be within the 65 DNL to qualify for mitigation. In addition, given the age of some SIP programs in the Unites States, as well as the increase in traffic density at our nation’s airports and improved technologies, N.O.I.S.E. supports the development of criteria for eligibility for SIP funding for “second round” implementations. 5. AIR TRAFFIC CONTROL PRIVATIZATION N.O.I.S.E. opposes privatization of the air traffic control N.O.I.S.E. has advocated strongly for community engagement opportunities when air traffic patterns are changed. Under a federally-operated Air Traffic Control (ATC) system, those opportunities are the result of persistent advocacy by the community and often times at the request of elected officials at the Congressional level. Although small communities have a role in the proposed advisory board of the new private air traffic control, airport-adjacent communities are concerned that without a mechanism for compelling the private company to meet and discuss their concerns over ground and noise impacts of airport traffic. Authors of this proposal in the House have assured interest groups that community concerns will still be managed by the FAA and not the private ATC. However, because of the great importance that N.O.I.S.E. and its members place on the ability to build relationships and trust with local air traffic employees, our concerns with this proposal remain. 6. N.O.I.S.E. SUPPORTS EFFORTS TO REINSTITU TE THE ENVIRONMENTAL PR OTECTION AGENCY’S (EPA) OFFICE OF NOIS E ABATEMENT AND CONTROL (ONAC). The EPA office of Noise Abatement and Control was previously responsible for oversight and regulation of aviation noise, however, in 1981, the Office was defunded due to budget cuts. There are currently legislative efforts, such as Congresswoman Grace Meng’s (NY) “Quiet Communities Act of 2015” (H.R.3384) which requires the Environmental Protection Agency (EPA) to combat aviation noise pollution. This legislation would reinstate the ONAC, and also require the EPA Administrator to conduct a study of airport noise and examine the FAA’s selection of noise measurement methodologies, health impact thresholds, and abatement program effectiveness. N.O.I.S.E. supports this legislation and the reinstitution of the ONAC in order to provide proper checks and balances to FAA noise policies and procedures that impact residents and the environment on the ground under flight paths and in airport- adjacent communities. New and cheaper flights fueled by resurgence at Bay Area airports The surge in flights at SJC and OAK has been a delight to East Bay and South Bay travelers By JOHN WOOLFOLK | jwoolfolk@bayareanewsgroup.com | PUBLISHED: January 28, 2018 at 6:00 am | UPDATED: January 29, 2018 at 5:53 am It’s a good time to fly in the Bay Area. In a turnaround that seemed unimaginable a decade ago, airlines that were rocked by spiking fuel prices, a sour economy and a rash of bankruptcies are now flying high, filling Bay Area airports with new and cheaper domestic and international flights. Flights once available only in San Francisco have flocked to San Jose, now the nation’s fastest growing airport, and Oakland, which has seen a surge in international travel. Gone are the days when the only San Jose to New York flight was a red-eye and the city airport’s only international destination was Mexico. Silicon Valley travelers now fly from San Jose to the Big Apple throughout the day, and jet straight to Japan, China, England, Canada and Germany. At Oakland’s airport, international no longer means just late night flights to Mexico and a weekly departure to the Azores during the summer. It now boasts flights to Spain, England, Denmark, Sweden, Norway, and coming this year, Italy and France. “The Bay Area and Silicon Valley in particular has become the center of the universe, and every airline wants to be part of the action,” said Chris McGinnis, founder of San Francisco-based travel blog Travelskills.com. “San Francisco appears to be running out of space to accommodate all this, so everyone’s running to San Jose and Oakland to get into the market. With all those new seats and new flights, it means fares are coming down.” A couple could book a weekend getaway in April with nonstop roundtrip flights from San Jose to Beijing for as low as $470 on Hainan Airlines. They could fly from Oakland to Barcelona nonstop on Norwegian for $588 round trip each. The resurgence of the Bay Area’s smaller airports has been a delight to travelers, particularly those who find San Jose or Oakland closer to work or home. “It’s a lot more convenient,” said Tim Renouf, 50, a software engineer at Advanced Micro Devices who now flies direct between home in England and work in Silicon Valley. “It beats sitting on 101 after a long flight to San Francisco,” co-worker David Stuttard, 47, said with a smile. For Veronica Niegsch of Pleasanton, more options to fly direct from Oakland to visit family in Mexico have been a blessing. “I love it,” said Niegsch, 44, a Federal Aviation Administration budget official who was waiting last week to board a Volaris flight to Guadalajara. Not only is Oakland closer to home, but she finds it much quicker to park and get through security. “It’s small, but you have a lot of options.” The air travel surge has been a relief to Bay Area airport officials, who bet big on modernizing their 1960s-era facilities during the downturn a decade ago. Shortly after San Jose approved its biggest-ever bond sale for a $1.3 billion airport makeover, the airport’s top official warned that the U.S. airline industry was “facing its worst crisis in its history.” Fuel prices were soaring, carriers were reporting record losses and a half-dozen airlines had filed for bankruptcy protection. San Jose and Oakland watched anxiously as struggling airlines consolidated routes at major hubs like San Francisco. Passenger traffic was still falling to 8.2 million in 2010 when San Jose unveiled its gleaming new, spacious high-tech terminal, which had been scaled back from a more ambitious plan. Oakland invested in a $300 million terminal improvement program and a BART transit connection that opened in 2014. Yet passenger traffic that peaked at 14.6 million in 2007 plummeted to 9.3 million with the onset of the Great Recession. But in the last five years, annual passenger traffic has jumped 25 percent to 55.8 million at San Francisco International, 31 percent to 13.1 million at Oakland International and a stunning 51 percent to 12.5 million at Norman Y. Mineta San Jose International Airport. “To some extent San Jose has bounced back the most because it had lost the most before,” said Alan R. Bender, professor of aeronautics at Embry-Riddle Aeronautical University Worldwide in Daytona Beach, Florida. Falling fuel prices and a now-booming economy helped pull the airlines out of their tailspin, along with a wave of mergers and a new generation of highly efficient jetliners. Aircraft like the Boeing 787 and Airbus A350 have allowed airlines more freedom to take chances on routes from smaller airports. “With fuel prices low and these very economical jets, that favors medium markets like San Jose,” Bender said. “They can take risks they couldn’t take a few years ago.” But patience, persistence and some smart plays helped San Jose and Oakland take advantage as the industry recovered. In San Jose, city officials spent years courting a direct flight to Asia, something Silicon Valley executives had been craving. They worked with business leaders to assure airlines there was pent up demand for new routes. It eventually paid off when All Nippon Airways launched a direct flight to Japan in 2013 on the new 787 Dreamliner. A wave of other flights quickly followed. “If a couple carriers go to a new airport, others do follow,” said Carl Guardino, chief executive of the Silicon Valley Leadership Group, which represents major technology companies. “But it’s really hard to get the first ones to make that bet. We tell that airline that if they come here, we’ll do everything we can to make them successful.” In five years San Jose went from 29 domestic and two international destinations in 2012 to 43 domestic and 11 international destinations in 2017. “The rate of growth has been tremendous,” said Marc Casto, president of Casto Travel in San Jose, one of the largest travel management companies in the Bay Area. “It’s one of the fastest growing airports in passenger growth around the nation.” The growth has been so rapid that San Jose added two gates, bringing the total to 30, and is planning an expansion of up to 10 more. “We’ve experienced tremendous passenger growth and it’s been a great thing,” said San Jose Airport Director John Aitken. “But with that growth comes some deficiencies in our facilities we’ll have to deal with pretty soon.” Oakland airport officials bored into travel data and found a huge proportion of international travelers flying out of San Francisco lived in the East Bay or Wine Country, and pursued a strategy to tap that market. “You can go over to another airport and be the fourth airline going to a European market, or go to Oakland and be the only one,” said John Albrecht, Oakland International’s manager of aviation marketing. It paid off. Oakland has gone from 29 domestic and three international destinations in 2012 to 48 domestic and 14 international destinations today. International traffic surged 134 percent in the past year, and the airport just completed a $45 million renovation and expansion that doubled its international arrival operations capacity. San Francisco meanwhile continues to set new records in passenger traffic. Some airports have seen double-digit growth,” said SFO spokesman Doug Yakel, noting the bounce-back at the Bay Area’s smaller airports. “Our growth has been steady for a number of years.” McGinnis said the turnabout at the smaller airports has been stunning. “Multiple flights to Asia from San Jose is something I never thought I’d see,” McGinnis said. “And I never thought I’d see Oakland be the first airport (in the Bay Area) to get a nonstop to Rome. They beat San Francisco to that, that’s a big deal.” Guardino said businesses don’t see the airports in competition, but that “the goal is to balance out three great airports so that the whole region is successful.” At the moment, that seems to be working, for both business and leisure travelers. Albrecht said that with so many oversees flights pushing prices down, Bay Area travelers are making weekend getaways to Europe. “You wouldn’t do it if air fare was $2,000, but now that it’s $500 round trip, it’s suddenly on the list of things to do,” Albrecht said. “That used to be ‘Lifestyles of the Rich and Famous.'” FAA NOISE AND COMMUNITY ENGAGEMENT FAA’s Next Generation Air Transportation System (NextGen) initiative is designed to modernize the nation’s air traffic control system by implementing satellite navigation, allowing for more direct routes, fuel savings, improved safety, and enhanced efficiencies. However, new NextGen arrival and departure procedures have dramatically increased the aircraft noise for many communities, especially in the City of Palo Alto. Specifically, at San Francisco International Airport (SFO), three arrival routes converge through a waypoint that directs the majority of airport arrivals directly over the residential community of Palo Alto at low altitudes and with louder procedures than prior to NextGen. Below, we note specific challenges faced by residents: • Palo Alto uniquely bears the brunt of 60% of SFO arrivals flying at low altitudes over its residential community. The FAA should redistribute arrivals more equitably. • Despite an agreement between SFO and the FAA’s Northern California TRACON to maintain arrivals in the vicinity of Palo Alto at 5,000 feet during visual conditions and 4,000 feet during instrument landing conditions, the November 2017 Update on the Phase Two Report from the FAA claims that while the Administration now supports this agreement “to the extent feasible,” it does not endorse this position. The FAA should, at a minimum, stand by its established agreement and, further, limit all flights in the vicinity of Palo Alto to 5,000 feet. • NextGen arrival procedures include new speed constraints, resulting in large-scale use of noisy speed brakes and accelerations over densely populated residential areas. These new practices require the development of new mitigation strategies by the FAA. • The science of NextGen has changed the nature of aircraft environmental impacts on residential communities, including how many communities are affected and at which distances from airports. Therefore, the FAA should recognize the correlating need for new scientific approaches to sound and air quality measurement and mitigation for affected communities. Yet in its November 2017 Update on the Phase Two Report, the FAA identified these issues as not under its responsibility. • The frequency and volume of air traffic has increased with planes routinely flying over some Palo Alto neighborhoods 60 to 90 seconds apart. The FAA should take into consideration the current and anticipated growth of airports in our metroplex and acknowledge the magnitude of the need for associated corrective air traffic control action to mitigate impacts, and take that action. • In the November 2017 Update on the Phase Two Report, the FAA declares its refusal to consider a variety of potential solutions “until issues of congestion, noise shifting and flying distance have been addressed with the airline stakeholders and the affected communities by the Select Committee and/or SFO Roundtable.” The City of Palo Alto supported our regional partners in the development of an extraordinary number of proposals from the Select Committee and the SFO Roundtable. The responses to these many proposals in the FAA’s November 2017 Update on the Phase Two Report amount to no solutions of any significance for the residents of Palo Alto. The City of Palo Alto asks that the FAA develop solutions to mitigate the considerable and disproportionate burden imposed on Palo Alto by SFO arrivals. • In addition to supporting the work of the Select Committee and the SFO Roundtable, the City of Palo Alto submitted additional solution proposals through letters to the FAA dated July 7, 2017 and November 15, 2017. The FAA has not responded. The City of Palo Alto requests the courtesy of a reply to its communications with the FAA. Dear Council Members, My name is Marie-Jo Fremont. I am here tonight to make specific requests on the subject of Airplane Noise on behalf of other Palo Alto residents who have paid close attention to this issue since 2015: 1. Request #1: we support the Staff recommendations and would like to propose 3 more items a. Advocate for solutions to reduce the health impact of both airplane noise AND emissions. The negative health effects of both noise and emissions have been documented through various studies. b. Collaborate with other elected officials to establish a regional position and ask the FAA to solve the problem with system-wide solutions, not independent point solutions. c. Develop a noise-monitoring plan in concert with others (be it airports, roundtables, airplane noise committees, other cities affected by airplane noise) 2. Request #2: direct staff to put in place a fast track process by the end of June to allow the City, if necessary, to file a complaint within 60 days of the FAA implementing a change. a. The City may never have to use it but must be ready to act if necessary under the 60-day FAA deadline to file. 3. Request #3: write a letter to the FAA and Congressional Reps as a response to the FAA Update on Phase Two report from November. The response should highlight in particular that the Select Committee recommendation to move the SERFR ground track to the old BSR ground track was for a new procedure that would follow nine criteria, including flying at idle power all the way to the Bay and at altitudes at or higher than the previous BSR procedure along the entire route. Thank you. City of Palo Alto | City Clerk's Office | 4/23/2018 1:09 PM 1 Carnahan, David From:suekemp@AOL.com Sent:Saturday, April 21, 2018 12:14 PM To:Council, City Subject:Airplane noise! Gosh darn it, I go out into my formerly peaceful garden, either to read or to work in the garden, and there's a two-engine plane heading for San Francisco airport going low overhead at least once every ten minutes. It's just maddening! It ruins the peace of the day. Why aren't they going up the middle of the Bay, the was they used to() How come all of a sudden I'm stuck with that awful noise??!!!! Sue Kemp 271 Seale Avenue Palo Alto, CA 94301 650-321-9392 City of Palo Alto | City Clerk's Office | 4/25/2018 11:16 AM 1 Carnahan, David From:Robert Finn <bckp@stanford.edu> Sent:Tuesday, April 24, 2018 11:00 PM To:Council, City Subject:airplane noise May I request information as to whether PACC has studied the CATEX procedure published on March 29 which is being implemented by the FAA? I understand that there is a 60 day limit for appeal on this apparently unilateral action. Has the city taken steps to evaluate the action, so as to be in a position to appeal any objectionable procedures within the legal time limit? More generally, I am puzzled by recent events in which (as I learned indirectly) the Council decided in closed session not to take legal action "at this time”. It is hard for me to figure out what in current issues requires secrecy from a public that continues to display active interest on the topic. I am dubious that any “state secrets” could be at issue in such a matter. Could you give me some idea of the legal criteria determining when the Council is required to place items of public interest into “closed sessions”? I would be grateful. Thank you, Robert Finn City of Palo Alto | City Clerk's Office | 4/23/2018 1:12 PM 1 Carnahan, David From:Hartmut Wiesenthal <hartmut_uwe@hotmail.com> Sent:Monday, April 23, 2018 12:50 PM To:Palo Alto Airport; Council, City; 9-awa-noiseombudsman@faa.gov; Moylan, Christopher Subject:Noise complain: Mon 4/23/2018 around 8:00am: Piper PA-28R-200 with Registration N5472T is circling for 40 minutes over Fremont Dear Palo Alto Airport, Dear Palo Alto City Council, Noise complain: Mon 4/23/2018 around 8:00am: Piper PA‐28R‐200 with Registration N5472T is circling for 40 minutes over Fremont. The plane took off and landed at Palo Alto Airport. Please contact the pilot and ask him to voluntary avoid circling over Fremont in the future. Residents of Fremont are afraid that low flying airplanes circling over Fremont are a serious safety threat. Fremont already experienced multiple plane crashes in the past, one hit a school which was not in session (N8998S, December 19, 1968, Cessna 150F; Jun 30, 2017 ‐ Small plane crashes near Dixon. FREMONT (KRON) ‐‐ A deadly crash has closed a city street in Fremont Friday afternoon, according to police. Osgood Road between Blacow Road and Seldon Court is closed in both directions while officers investigate a fatal traffic collision.). Please also advice any pilots, who plan to take off and land again at Palo Alto airport on the same day, to voluntary avoid circling over Fremont. KInd regards, Hartmut Wiesenthal 3600 Braxton Common Fremont, CA 94538 City of Palo Alto | City Clerk's Office | 4/23/2018 1:12 PM 2 From: No Reply <noreply@bksv.com> Sent: Monday, April 23, 2018 12:23 PM To: hartmut_uwe@hotmail.com Subject: Your complaint has been received (WebTrak) Thank you for contacting our office regarding your aircraft noise concerns using WebTrak. Your complaint number is 96484. Your noise complaints have been documented into the Aviation Noise Complaint and Communication Record System and will be included in the upcoming quarterly report. If you have any additional questions, please call the noise office at (510) 563-6463, or e-mail at oaknoiseprogram@portoakland.com. For additional information about our noise management program please visit our website at FlyQuietOAK.com. This e-mail is confidential and may be read, copied and used only by the intended recipient. If you have received it in error, please contact the sender immediately by return e-mail. Please then delete the e-mail and do not disclose its contents to any other person. CITY OF PALO ALTO TO: HONORABLE CITY COUNCIL FROM: MICHELLE POCHE FLAHERTY, DEPUTY CITY MANAGER DATE: MAY 7, 2018 SUBJECT: AGENDA ITEM NUMBER 8 - Policy and Services Committee and Staff Recommendations on Next Steps Related to Airplane Noise (Continued From April 9, 2018) This memo provides updates to three topics of information discussed in City Council Staff Report #9195 for the May 7, 2018 Council Meeting: 1) a summary of information provided by the FAA in a new report issued in late April 2018; 2) an update on issues related to the South Flow Ad Hoc Advisory Committee, including a letter sent to the FAA by the City of Palo Alto together with neighboring jurisdictions; and 3) a legislative update on federal action related to airplane noise. 1. New FAA Report In late April 2018, the Federal Aviation Administration (FAA) released a "Further Update on the Phase Two report on the FAA Initiative to Address Noise Concerns of Santa Cruz/Santa Clara/San Mateo/San Francisco Counties, compiled at the requests of Representatives Farr (Panetta), Eshoo and Speier" (April 2018 Phase Two Update) (Attachment K). In the report, the FAA also commits to release another quarterly report no later than 90 days from the release of this report. The April 2018 Phase Two Update provides limited additional information regarding issues of interest to the City of Palo Alto as summarized in City Council Staff Report #9195. A summary of this information follows. Fly Higher Over the Peninsula (Staff Report #9195 Item C): There are no direct references in the April 2018 Phase Two Update to opportunities to increase altitudes over the Palo Alto area. There is a reference to maintaining the highest altitudes possible on the BRIXX router; however, this route is an arrival into Mineta San Jose International Airport (SJC), not San Francisco International Airport (SFO), and crosses the Peninsula roughly over La Honda and Boulder Creek 1 Attachment K, page 5. 1 of 3 before continuing south to make a U-turn into SJC. These arrivals historically have been designed to fit under SFO arrivals as necessary. Relocate Northern Arrivals from Peninsula to Bay (Staff Report #9195 Item D): Arguably the most positive news in this report for the City of Palo Alto, the FAA confirms it issued a notice in March 2018 to Northern California TRACON to strengthen the language in its standard operating procedures to recognize BDEGA East as the preferred route during nighttime hours. This action by the FAA responds to a portion of the more forceful requests communicated by Palo Alto City Council Members in their meeting with FAA representatives in early March, 2018. The FAA report now classifies the Select Committee's recommendation to increase use of BDEGA East as an "Addressed Concern."2 Reduce Vectoring over the Peninsula (Staff Report #9195 Item E): The FAA report confirms the FAA is continuing to study whether an increase in in -trail spacing on BDEGA will result in decreased vectoring over the Peninsula.3 Use Flow Management to Limit Noise (Staff Report #9195 Item F): The FAA report reiterates the agency's commitment to leveraging technology to further this possibility in the long term.4 SERFR 3: The FAA report confirms the agency altered the SERFR route on March 29, 2018 in a manner that moves its trajectory approximately %-mile east of the Menlo waypoint.5 (In the November 2017 Phase Two Update, the FAA stated its intention to amend the SERFR STAR route.6) In addition, the report speaks to the movement of the SERFR alignment toward the historical BSR ("Big Sur") route and the agency's continuing design work to develop an Optimized Profile Descent overlay for this route. The FAA reiterates its commitment to meet with a local ad -hoc committee within three months of completion of this overlay.' 2. South Flow Arrivals Update The Ad Hoc Committee on South Flow Arrivals is developing its final set of recommendations and is scheduled to discuss them at its next meeting. In late March, the consultants hired by the cities of Los Altos and Mountain View identified a new arrival route proposed for south flow arrivals into SJC that could significantly impact neighboring communities including Palo Alto and for which no information had been shared with the Ad Hoc Committee. At the March 27 meeting of the Ad Hoc Committee, a representative of the FAA expressed regret over this occurrence and confirmed the proposal was on hold and that community engagement would be a part of any future consideration of the route. The City of Palo Alto joined with the cities of Mountain View and Los Altos to express concern over this incident by sending a letter of objection to the FAA (please see Attachment L). 2 Attachment K, page 4. 3 Attachment K, page 3. 4 Attachment K, page 4. 5 Attachment K, page 6. 6 Attachment C, page 126. Attachment K, page 3. 2 of 3 Michelle Po, Flaherty Deputy C. Manager 3. Legislative Update On April 27, 2018, the U.S. House of Representatives passed H.R. 4, the FAA reauthorization bill, by a vote of 393 —13. While the bill included a handful of amendments related to airplane noise, the strongest amendments did not make it into the final version of the House -passed bill. For this reason, Palo Alto's representative, Congresswoman Anna G. Eshoo, was one of the few who voted against the bill. She made the following statement regarding her vote: From Congresswoman Eshoo, "This week, the House passed legislation to reauthorize the Federal Aviation Administration (FAA), the first long-term update to the law that governs this important agency since 2012. This bill includes provisions to improve airline safety, strengthen the rights of passengers, and promote controlled testing of commercial unmanned aerial vehicles. "While the underlying bill includes a pilot program to find innovative ways to reduce noise in our communities and a study of the health effects of aircraft noise on communities near large airports, including the Northern California Metroplex, my constituents do not need new studies to tell them that aircraft noise diminishes their quality of life because they experience it every day. What they need is for the FAA to take action to reduce the noise, this bill unfortunately fails to do that, and I voted against it. "I'm committed to continuing to work with the FAA and the hundreds of engaged constituents in my District until this issue is resolved, but I could not vote for hollow legislation that does nothing to address airplane noise due to the NextGen Program launched by the FAA." The next step for the FAA reauthorization bill would be consideration by the U.S. Senate, where additional amendments may be offered. Senate leadership has not recognized this legislation as a priority, associating greater urgency with the scheduling of Senate floor votes for the approval of Administration and Judicial nominations. The City of Palo Alto's lobbying team is in communication with the Senate Aviation Subcommittee to monitor indications of when, or if, the legislation might be scheduled for a floor vote by the Senate before the FAA's current authorization expires on October 1, 2018. Finally, also attached for your information is another recent article describing the increase in air traffic anticipated at SJC. (Attachment M.) it J e Keene CI anager 3 of 3 1 | P a g e NorCal Update April 2018 FAA Initiative to Address Noise Concerns of Santa Cruz/Santa Clara/San Mateo/San Francisco Counties FURTHER UPDATE ON PHASE TWO Compiled at the Requests of Representatives Farr (Panetta), Eshoo and Speier April 2018 Federal Aviation Administration 2 | P a g e NorCal Update April 2018 EXECUTIVE SUMMARY The FAA’s November 2017 Update on Phase Two Report detailed the agency’s determinations for the full set of recommendations by the Select Committee on South Bay Arrivals (Select Committee) and the San Francisco International Airport / Community Roundtable (SFO Roundtable). The November report detailed 203 items which consisted of the original 104 recommendations and each of their sub- recommendations. Of those, 101 had already been addressed*, 25 would be addressed in the future and 77 were not endorsed. Additionally, some recommendations covered multiple topics. Those additional topics are captured in the numbers below. Each item was explained in the November report and its appendices. This April 2018 Further Update on Phase Two shares the current status of the FAA’s efforts on 12 topics that collectively total 10 Select Committee items and 24 SFO Roundtable items. Each topic references the specific Select Committee recommendation(s) and/or SFO Roundtable recommendation(s), from the November 2017 Update to Phase Two “Response Tables” and “Appendices” (pages 11 through 125) This April 2018 report does not represent the end of our work. The FAA continues to commit to work collaboratively with communities and local members of Congress to address a wide range of noise concerns. Since release of the November 2015 Northern California (NorCal) Initiative, the FAA has undertaken enhanced community outreach efforts. Although not specifically referenced within the November 2017 report or this report, and even if there is no legal requirement to do so, the FAA remains willing to address community noise concerns. As a result, the FAA undertakes its community outreach efforts and considers potential adjustments to address community concerns while remaining mindful that all arrival and departure procedures within the Northern California airspace are interconnected, interdependent and designed to improve safety and efficiency within the National Airspace System (NAS). To the extent the FAA determines a new requested procedure is initially feasible, flyable, and operationally acceptable from a safety point of view, then the FAA will conduct its formal environmental and safety reviews for this new federal action. Further, although not specifically detailed within the NorCal Initiative or any of its subsequent reports/updates, the FAA’s processes and standards for evaluating noise impacts associated with potential amendments to currently published procedures—consistent with FAA Order 1050.1F, Environmental Impacts: Policies and Procedures (effective July 16, 2015)—will be followed before implementing any airspace or procedural changes. Finally, this update does not constitute either a final decision of the FAA or a re-opening of the FAA’s August 6, 2014 final decision for the NorCal Optimization of Airspace and Procedures in the Metroplex (OAPM). * The attached Appendix (15 pages) identifies the 101 “Addressed Concern” items contained in the FAA’s November 2017 Update on Phase Two. Federal Aviation Administration 3 | P a g e NorCal Update April 2018 Class B Redesign • Reference: Select Committee Recommendation 1.1 (SC 1.1, Pg. 11) • A redesign of the SFO Class B airspace is proposed to be implemented in August, 2018. The FAA previously held public workshops to give the public an opportunity to better understand the proposed action and issued its Notice of Proposed Rulemaking for the Class Bravo Redesign in the Federal Register in January 2018. This airspace redesign does not change existing procedures. Once implemented, this redesign will allow for Optimized Profile Descent (OPD) procedures to be fully utilized as intended. • Status: Based on the rule-making process and operating criteria, the FAA anticipates the modified Class B airspace to be published in August 2018. BSR Overlay • References: SC 1.2 R1 (Pg. 11), SC 1.2 R2 (Pg. 11), and SC 1.2 R4 (Pg. 12) • The Select Committee on South Bay Arrivals voted 8 to 4 to recommend that the FAA design an Optimized Profile Descent (OPD) overlay of the conventional Big Sur (BSR) arrival into SFO. Based on the three California Representatives Eshoo, Speier and Farr (Panetta)’s December 2, 2016 approval of the Select Committee’s recommendations and request that the FAA implement those recommendations as soon as possible, the FAA has continued its extensive work and efforts associated with Select Committee’s recommendations. • Status: The FAA is currently engaged in the design stage work of this Optimized Profile Descent (OPD) overlay and anticipates the Full Work Group will meet on May 8, 2018. We anticipate a more detailed timeline to accompany the next quarterly Update. That update will occur no later than 90 business days after the publication of this April 2018 update. FAA to meet with Ad-Hoc Subcommittee after BSR Overlay complete • Reference: SC 1.2 R3 (Pg. 11) • Status: This Select Committee recommendation (e.g. Ad-Hoc Subcommittee within three months of completing the new Big Sur (BSR) overlay procedure) remains feasible, pending completion of BSR Overlay. BDEGA In-Trail Spacing • Reference: SFO Roundtable Recommendation B 6 (RT B 6, Pg 24) • The SFO Roundtable asked the FAA to study whether an increase in in-trail spacing on the BDEGA arrival will result in the decrease in vectoring over the Peninsula. • Status: Under evaluation by the Northern California TRACON (NCT), Oakland Air Route Traffic Control Center (ZOA) and the Western Service Center. Federal Aviation Administration 4 | P a g e NorCal Update April 2018 NorCal TRACON Update Standard Operating Procedure – BDEGA “Down the Bay” • References: SC 2.2 R1 part 2 (Pg 13), and RT C Woodside COL 4 (Pg. 35) • The Select Committee asked the FAA to assess the potential of formalizing the procedure so that it is more likely to be used. The SFO Roundtable asked the Northern California TRACON (NCT) to update its Standard Operating Procedures (SOP) to reflect that use of a “down the Bay” procedure is preferred during nighttime hours. • Status: Addressed Concern. Northern California TRACON (NCT) updated their SOP in 2017, followed by a Notice in March, 2018 to strengthen the language. NIITE / HUSSH / CNDEL to GOBBS and South • References: SC 1.4 (Pg. 12) and RT B 19 (Pg. 27), B 20 (Pg. 27), B 29 (Pg. 29), B 30 part 2 (Pg. 30), B 33 (Pg. 30), C NITTE ST 1 (Pg. 38), C NIITE LT 1 (Pg 39), C NIITE COL 1 in part (Pg. 40), C Nighttime ST 1 (Pg 43), C Nighttime LT 1 (Pg. 46), C CNDEL ST 3 (Pg. 48), D 1.f. iii, (Pg. 61), D 2.a.ii. (b) Req c. (Pg. 64) • Status: Although entry into the Instrument Flight Procedure (IFP) Gateway typically allows design stage work to begin, forward progress has been temporarily delayed until issues associated with congestion, anticipated noise-shifting concerns and increased flight distances have been addressed with airline stakeholders and the affected communities within the jurisdictions of the Select Committee and SFO Roundtable. (For further detailed explanation, see November 2017 Update to Phase Two, Appendix C, 3.23, pages 102 through 103). SEE BELOW QUOTE: [As noted previously by the FAA, while this recommendation is feasible, the FAA will not move forward on this recommendation until issues of Congestion, Noise Shifting and Flying Distance have been addressed with the airline stakeholders and the affected communities by the Select Committee and/or SFO Roundtable.] FAA use new, more effective, time-based flow management tools for better sequencing • Reference: SC 1.6 (Pg. 13) • Status: The FAA is currently engaged and anticipates continued, long-term efforts regarding this endeavor. The FAA is continuously seeking and identifying safety improvements to effectively manage the National Airspace System (NAS). Through technology and innovation, programs are being developed to safely address capacity/demand imbalances at select airports, departure waypoints, arrival waypoints and en route points across the NAS. As newer technology and more effective programs become available, the FAA is committed to incorporate needed improvements into the NAS to address local communities’ concerns. Federal Aviation Administration 5 | P a g e NorCal Update April 2018 Revise Woodside VOR OTA • Reference: SC 2.3 R2 (Pg. 14) • The Ocean Tailored Arrival, an existing private arrival procedure, is being replaced by a new public PIRAT RNAV STAR which will be used primarily by oceanic airlines for arrival into SFO. The PIRATE RNAV STAR will be an Optimized Profile Descent (OPD) procedure, and will require aircraft crossing ARGGG, which is in the vicinity of the Woodside VOR (OSI), at 8,000 MSL. • Status: The FAA anticipates proceeding consistent with its non-rulemaking processes as explained in the November 2017 Updated (see page 7) and anticipates implementation on November 8, 2018. Following BSR overlay, evaluate BRIXX to maintain highest possible altitude • Reference: SC 2.11 (Pg. 18) • Status: This Select Committee recommendation (i.e. seeks the FAA’s consideration of a successor committee’s new, proposed procedure associated with BRIXX) remains feasible, pending completion of BSR Overlay, as well as the establishment of a successor committee. Create an RNAV Visual Approach to SFO’s Runway 28L • References: RT B 17 (Pg. 26), D 1.a.i.(a) part 2 (Pg. 55) • Status: The FAA’s November 2017 Update to Phase Two carries forward the agency’s initial feasibility determination. However, development of the requested visual approach is on hold due to safety concerns. Create an OAK departure procedure that flies down the Bay • References: RT B 24 Part 2 (Pg 28), B 33 (Pg. 30), C 050° ST 2 (Pg. 40), C Nighttime ST 4 part 2 (Pg. 44), C CNDEL COL 1 in part (Pg. 50), D 1.a.ii. Resp 3 part 2 (Pg 56), D 1.b.ii. Resp 4 part 2 (Pg. 59) • Status: On March 9, 2018, this proposed action was entered into the IFP Gateway with an anticipated January 30, 2020 charting date. Mindful of the environmental and safety information requirements mentioned in the November 2017 Update to Phase Two, to the extent an earlier publication date becomes available, implementation may occur sooner. Federal Aviation Administration 6 | P a g e NorCal Update April 2018 SERFR 3 Amendment • Reference: This was not a SC recommendation, but pertains to the Southern San Francisco Bay area and has been the subject of a great deal of interest to communities in this area. • On February 1, an outside vendor that loads route databases into aircraft flight computers sent out an update of the San Francisco SERFR arrival that the FAA wasn’t prepared to use yet. As a result, the FAA immediately transitioned to the conventional Big Sur arrival route, which is west of the SERFR flight path. The database has been corrected, and the FAA resumed using the existing SERFR on Friday, March 2. • On March 29, the FAA began using an updated version of the SERFR. This updated version is a safety and operational enhancement that will be contained within the highly controlled, existing Class B airspace around San Francisco International Airport. This route passes approximately ¼-mile east of the MENLO waypoint. • Status: The FAA implemented this procedure on March 29, 2018. Federal Aviation Administration April 30, 2018 Mr. Dennis Roberts Regional Administrator FAA Western-Pacific Region 15000 Aviation Blvd Lawndale, CA 90261 Dear Mr. Roberts: It has come to our attention that the Federal Aviation Administration (FAA) recently published a notice on the Instrument Flight Procedures Information Gateway on the FAA website that a new arrival procedure is being designed by the FAA for use at Mineta San Jose International Airport (SJC) during certain South Flow configurations. This possible new procedure is deeply concerning to our communities. Our cities suffer from the constant challenges presented by aircraft noise and emissions in and out of San Francisco International Airport and, now, with the South Flow arrivals, in to SJC. We have participated on various regional committees and are currently actively involved in the San Jose ad hoc committee on south flow arrivals. That is why we are shocked that this new arrival path was not brought to the attention of that group in a timely manner, nor has public input been sought for this significant change to the flight path. In addition, our research indicates there are no environmental reports available for public inspection. This new flight path could have a significant impact on our communities as the track moves closer to the foothills than currently and moves the track further north. And, the impacts would be even greater as the proposal lowers the altitude of the flight path over our communities, including directly over schools and potentially over historic districts. We respectfully request that the FAA delay implementation of this plan until a robust public and community input strategy can be formulated and implemented. We offer the services our agencies to assist you in publicizing opportunities for the public to participate in this important process. Please let us know how you plan to proceed. Sincerely, Jean Mordo, Mayor Lenny Siegel, Mayor Liz Kniss, Mayor City of Los Altos City of Mountain View City of Palo Alto cc: Hon. Anna G. Eshoo, Member of Congress 5/3/2018 San Jose airport to add four passenger gates; flights surge https://www.mercurynews.com/2018/05/02/san-jose-airport-will-add-four-passenger-gates-amid-flights-surge/1/3 SAN JOSE — Mineta San Jose International Airport will jet ahead with a plan to build four passenger gates to accommodate its growing traf c, the air traf c hub said Wednesday. The four boarding gates, which will be interim facilities, are due to open in the summer of 2019, airport of cials said. BusinessEconomy San Jose airport will add four passenger gates amid surge in ights Gary Reyes/ Bay Area News Group San Jose International Airport will jet ahead with a plan to build fourpassenger gates to accommodate its growing traf c, the air traf chub said Wednesday. By GEORGE AVALOS | gavalos@bayareanewsgroup.com | Bay Area News Group PUBLISHED: May 2, 2018 at 2:57 pm | UPDATED: May 3, 2018 at 4:53 am 5/3/2018 San Jose airport to add four passenger gates; flights surge https://www.mercurynews.com/2018/05/02/san-jose-airport-will-add-four-passenger-gates-amid-flights-surge/2/3 Passengers should bene t directly from the new interim gates: Airlines will be able to wield greater exibility in scheduling and carriers should be able to reduce delays for air travelers. “With four more gates, our passengers will continue to enjoy the enhanced customer service levels they have come to expect from our facilities and operation,” said John Aitken, San Jose’s director of aviation. During the rst three months of 2018, passenger traf c at Mineta San Jose International Airport soared by 18.5 percent compared to the similar period in 2017. Based on recent announcements of new routes, as well as launches of new service, of cials believe San Jose airport will reach 14.2 million passengers during 2018. That would equal the peak passenger levels reached in 2001. Interim gates 31, 32, 33 and 34 will be connected to the airport’s Terminal B at the south end of the facility. Airport of cials believe the new gates are necessary even after the opening of three new gates that opened in recent months since last fall. The four gates will be equipped with passenger boarding bridges, a hold room with seating for 400 travelers, concession spaces and restrooms. The project is expected to cost $50 million. While the four gates will be temporary, it’s anticipated they will last seven years. During that time, airport of cials will plan permanent gates and support facilities, and eventually, construct them. 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Follow George Avalos @georgeavalos City of Palo Alto (ID # 8435) City Council Staff Report Report Type: Action Items Meeting Date: 5/7/2018 City of Palo Alto Page 1 Summary Title: Transportation Impact Fee Nexus Study and Fee Adoption Title: PUBLIC HEARING: Finance Committee Recommends Adoption of an Ordinance Amending Title 16 of the Palo Alto Municipal Code by Establishing an Updated Citywide Transportation Impact Fee and Indefinitely Suspending Application of the Existing Area -specific Transportation Impact Fees for the Stanford Research Park/El Camino Real CS Zone and the San Antonio/West Bayshore Area, and Amending the Municipal Fee Schedule to Update the City’s Transportation Impact Fees in Accordance With These Changes, all in Furtherance of Implementation of the Comprehensive Plan. The Citywide Transportation Impact Fee is a One -time fee on new Development and Redevelopment Throughout Palo Alto to Fund Transpor tation Improvements to Accommodate and Mitigate the Impacts of Future Development in the City. This Ordinance is Within the Scope of the Comprehensive Plan Environmental Impact Report (EIR) Certified and Adopted on November 13, 2017 by Council Resolution N o. 9720 From: City Manager Lead Department: Planning and Community Environment Recommendation Staff recommends that the City Council conduct a public hearing, accept the Draft Transportation Impact Fee Nexus Study included as Attachment B (“Nexus Study”), and adopt the Ordinance in Attachment A, modifying and increasing the Citywide Transportation Impact Fee based on the Nexus Study, suspending collection of two area-specific transportation impact fees and amending the Municipal Fee Schedule to reflect t hese changes, and finding the Ordinance within the scope of the Comprehensive Plan Environmental Impact Report (EIR) certified and adopted on November 13, 2017 by Council Resolution No. 9720. Note: the Finance Committee reviewed the Draft Transportation Impact Fee Nexus Study on February 6, 2018 and recommended preparation and adoption of an ordinance with the City of Palo Alto Page 2 components included in the attached draft ordinance. Action minutes of the Finance Committee meeting are here: https://www.cityofpaloalto.org/civicax/filebank/documents/63672 . Executive Summary State law allows the City to charge transportation impact fees to new development based on that development’s contribution to the need for capital improvements designed to reduce motor vehicle trips, or to address traffic congestion and other impacts of new motor vehicle trips. The recently adopted Comprehensive Plan calls for an update to the City’s transportation impact fee program. The draft nexus study, included as Attachment B, provides the information required to accomplish this task. Specifically, the draft nexus study reviews the City’s current traffic impact fees, development projected to occur during the life of the Comprehensive Plan (i.e. by 2030), and anticipated capital improvements that will be needed during the same timeframe. Based on this information, the study recommends increasing the citywide transportation impact fee charged to new development based on the number of peak hour vehicle trips that are anticipated after implementation of enforceable transportation demand management (TDM) plans. The recommended fee is $8,083 per net new peak hour trip , which is more than double the current citywide fee. At the same time, the study also recommends elimination of two area-specific transportation impact fees that are charged in the San Antonio and Stanford Research Park areas. Operationally, adoption of the ordinance will mean that most new development will be subject to one fee, rather than multiple fees, and that fee will be reduced to reflect direct investments in trip reduction via TDM plans. For example, the new requirement for TDM plans in the California Avenue Area in Comprehensive Plan Program T1.2.2 (and EIR mitigation measure Trans 1a) is to achieve a 35% reduction below motor-vehicle trip-generation rates established by the Institute of Traffic Engineers (ITE). Therefore, new development will have to provide an enforceable plan to meet this requirement and pay a fee of $8,083 for each remaining peak hour trip. Based on input from the Finance Committee, the draft ordinance in Attachment A would not only increase the Citywide fee on a per-trip basis, referencing the quantitative TDM goals in the Comprehensive Plan and transitioning away from district-specific fees, but also reduce the types of projects that would be exempt from the payment of the updated impact fee. The ordinance also references the TDM plan requirements included in Comprehensive Plan Program T1.2.2. Staff will be bringing forward a separate ordinance to codify these requirements in Title 18 (the zoning code). See the Next Steps section below for more explanation. City of Palo Alto Page 3 Background & Discussion Impact fees are established based on the reasonable relationship (i.e. nexus) between the impacts caused by new development and the improvements to mitigate those impacts that will be funded by the fee. Existing Transportation Impact Fees As shown in Table 1 below, the City currently charges one or m ore transportation impact fees for new development based on location. Exemptions are provided for the following uses: single family home remodels or additions; 100% affordable housing projects; below market rate housing units provided in excess of the number required by ordinance; public buildings and schools; retail, personal service, or automotive service uses that are 1,500 sq. ft. or smaller; daycare, nursery schools and preschools, on-site cafeteria/recreation/child care for employees only; and hazardous materials storage. (See Table 3.) All existing transportation impact fees were adopted some time ago and have generated significant funding for transportation improvements over the years. The amount generated annually depends on the amount and location of development approved. Please see the summary in Attachment B for more information. Table 1. Summary of Existing Transportation Impact Fees in Palo Alto Area Date Established Current Fee Amount (1) Approximate Funds Generated (2)(5) Citywide 2007 $3,575.00 per PM peak hour trip $5 million San Antonio/West Bayshore 1986 $2.56/ft(3) $0.3 million Stanford Research Park/ El Camino Real CS Zone 1989 $12.42/ft(3) $4.5 million Charleston – Arastradero Corridor Pedestrian and Bicycle Safety 2005 $0.38/ft $1,306/du (4) $1 million (1) FY2018 Municipal Fee Schedule (2) Administrative Services Department, amounts are total fees paid from inception (3) Residential uses are exempt (4) Commercial development is charged per square foot; residential development is charged per unit. (5) Fund balances shown in Attachment B include accrued interest and investment income City of Palo Alto Page 4 Source: Planning & Community Environment, January 2018 With the proposed ordinance, the City would cease collecting the San Antonio/West Bayshore area-specific fee. Most of the development anticipated in the San Antonio/West Bayshore area at the time the fee was established in 1986 has occurred, and while not all of the original projects envisioned for funding have been pursued by the City, remaining funds will be programmed for alternative improvements in the area, subject to a nexus analysis/finding and City Council approval. With the proposed ordinance, the City would also cease collecting the Stanford Research Park/El Camino Real CS Zone fee established in 1989. Two of the projects envisioned for funding have been completed and two are in process. The proposed ordinance would leave in place the Charleston-Arastradero Corridor fee established in 2005 because the improvements envisioned for funding have not been completed yet. Comprehensive Plan Changes The Comprehensive Plan, adopted in November 2017, includes an implementation program (Program T1.2.2) calling for a formal process for adopting and monitoring transportation demand management (TDM) plans for new developments and to pay a transportation impact fee (TIF) “for all those peak hour motor vehicle trips that cannot be reduced via TDM measures.” Consistent with State law, the plan anticipated that all impact fees collected would be used for capital improvements aimed at reducing motor vehicle trips and traffic congestion. Comprehensive Plan Program T1.25.1 reiterated that “Modifications to the impact fee program should be structured in keeping with the City’s desire to require new development t o reduce peak-hour motor vehicle trips to the extent feasible through TDM plans and by contributions to the provision of transit services, shuttles, carpool/rideshare incentives, and similar programs.” Over the life of the Comprehensive Plan (i.e. to 20 30), the Final Environmental Impact Report (EIR), certified on November 13, 2017, anticipated development of 3,545 to 4,420 new dwelling units, and 9,850 to 11,500 new jobs (including jobs associated with the Stanford University Medical Center). These assumptions form the basis for the transportation impact fee calculations in Attachment B, despite the fact that some of the new dwelling units are likely to be exempt from the fee (because they will be in affordable housing projects) and that many of the jobs will result from already approved development (i.e. SUMC), and may occur within existing building space. This is because State law allows the City to charge transportation impact fees to new development based on that development’s proportional “fair -share” contribution to the impact and required remedy (improvement). The City would need to fund or identify other funding for the portion attributable to vehicle trips from exempt projects as City of Palo Alto Page 5 well as existing development. Nexus Study Methodology State law requires agencies to identify a reasonable relationship (or nexus) between an impact fee and new development, and to make findings regarding (a) the purpose of the fee; (b) what mitigation projects the fee will be used to fund; (c) the nexus between the need ed mitigation projects and the type of development that will be charged a fee; and (d) the nexus between the amount of the fee and the cost of the needed mitigation. The draft study in Attachment B is designed to support these findings and is structured a s shown below: Table 2. Summary of Nexus Study Methodology Step 1 Project Future Growth by 2030 (based on the Comprehensive Plan Update Final EIR) Step 2 Estimate Total & Net New PM Peak Hour Vehicle Trips (based on the Comprehensive Plan Update Final EIR, the 2,855 net new PM Peak Hour trips represent 5.7% of the total PM Peak Hour trips) Step 3 Identify Impacts or Deficiencies Caused by the Additional Trips (based on the Comprehensive Plan Update Final EIR) Step 4 & 5 Identify Projects that Would Mitigate Impacts or Deficiencies and their Cost (See List of Capital Improvements, Attachment B, Table 8.) Step 6 Calculate the Base Fee to be Charged Per PM Vehicle Trip (5.7% of total costs = $23,075,783; divided by 2,855 trips = $8,083) Source: Planning & Community Environment, January 2018 Similar to existing Citywide transportation impact fees, the new fees would be applied to projects based on the net new PM Peak hour trips that would be generated, which are calculated by applying trip generation rates provided in the ITE Manual to the proposed land use(s).1 Proposed Fee Exemptions With the proposed ordinance, a few selected uses would be exempted as shown in Table 3 below. Table 3. List of Exemptions: Existing & Proposed Existing Exemptions Proposed Exemptions Single family home remodels or additions Single family home remodels or additions(1) 100% affordable housing projects 100% affordable housing projects(2) 1 The ITE Manual is professional guidance provided by the Institute of Transportation Enginee rs. City of Palo Alto Page 6 Existing Exemptions Proposed Exemptions Below market rate housing units provided in excess of the number required by ordinance Below market rate housing units(2) Public buildings and schools Retail, personal service, or automotive service uses that are 1,500 sq. ft. or smaller 50% of new retail trips(3) Daycare, nursery schools and preschools Daycare uses(4) On-site cafeteria/recreation/child care for employees only Hazardous materials storage Notes: (1) While not recommended as an exemption by the Finance Committee, this existing exemption would be perpetuated by the proposed ordinance, which would charge a fee only when the proposed project would increase the number of PM Peak Hour trips. Single family home remodels and additions are not considered trip generating unless the result is a net new dwelling unit. (2) Exemption as describe in the Housing Element (page 113). (3) The Finance Committee recommended applying the fee to 50% of new retail trips in recognition of the desire for retail and the high rate of trip generation . (4) The Finance Committee recommended exempting daycare, but not other uses listed here. Source: Planning & Community Environment, February 2018 The exemptions in Table 3 and the attached ordinance reflect the recommendation of the Finance Committee except where noted above. Staff requests careful consideration of the Finance Committee recom mendation to modify the list of existing exemptions. The existing exemptions currently apply consistently to all of the City’s impact fees2 and modifying them as recommended would make the new transportation impact fee complex to implement (increasing the potential for errors) and would increase the cost of City projects. TDM Plan Requirements The proposed ordinance requires fees that would be based on the number of PM Peak Hour trips after a percent reduction based on the location of the project and th e applicable TDM 2 The only exception is the exemption provided to Accessory Dwelling Units for housing impact fees. City of Palo Alto Page 7 requirement (if any), as shown in Table 4. Table 4. TDM Requirements District % Trip Reduction Required (1) Downtown 50% California Avenue Area 35% Stanford Research Park 30% El Camino Real Corridor 30% Remainder of the City 20% Note: (1) Comprehensive Plan Program T1.2.2 Source: Planning & Community Environment, January 2018 The Comprehensive Plan includes a program about formalizing the City’s TDM requirements by ordinance, requiring new developments above a certain size thre shold to prepare and implement TDM plans to meet the performance standards in Table 4 above (Program T1.2.2). The program references the need for regular monitoring/reporting and enforcement with meaningful penalties for non-compliance. Recent changes to the Palo Alto Municipal Code have established clear criteria for when TDM plans are required in the entitlement process and staff is currently working on operationalizing the review, approval, filing, and monitoring of TDM plans, which will enable enfor cement of performance goals and the issuance of fines for non-compliance. The relevant code sections adopted in 2017 are included below and the draft ordinance would reference the performance targets from the Comprehensive Plan. (As explained in the Next Steps section below, staff is developing a separate ordinance to codify those requirements in Title 18.) 18.52.030 Basic Parking Regulations (i) Transportation Demand Management Plan (1) Requirement for TDM Plan: A Transportation Demand Management (TDM) Plan to reduce and manage the number of single-occupant motor vehicle trips generated by the project shall be prepared and submitted by the applicant in the following circumstances: A. For all projects that generate 50 or more net new weekday (AM or PM peak hour) or weekend peak hour trips; B. For all projects claiming a reduction in net new trips due to proximity to public transit or the implementation of a TDM plan; and C. For all projects requesting a parking reduction. (2) The Director shall have the authority to adopt guidelines for preparing TDM plans and when applicable shall coordinate such guidelines with the Transportation Management Association. City of Palo Alto Page 8 18.52.050 Adjustments by the Director (d) Transportation Demand Management (TDM) (1) A Transportation Demand Management (TDM) program may be (a) proposed by an applicant, or may be (b) required by the director for any project requesting a reduction in parking or generating 50 or more net new weekday (AM or PM peak hour) or weekend peak hour trips, or (c) may be required as CEQA mitigation for identified potential significant parking impacts. (2) Where a Transportation Demand Management (TDM) program is proposed or required, the TDM program shall outline parking and/or traffic demand measures to be implemented to reduce parking need and trip generation. The Director shall have the authority to adopt guidelines for preparing TDM plans. Required measures may include, but are not limited to: participation in the Transportation Management Association or similar organization, limiting “assigned” parking to one space per residential unit, providing for transit passes, parking cash-out, enhanced shuttle service (or contributions to extend or enhance existing shuttle service or to create new shared or public shuttle service), car-sharing, traffic-reducing housing, providing priority parking spaces for carpools/vanpools or “green” vehicles (zero emission vehicles, inherently low emission vehicles, or plug-in hybrids, etc.), vehicle charging stations, additional bicycle parking facilities, or other measures to encourage transit use or to reduce parking needs. The program shall be proposed to the satisfaction of the director, shall include proposed performance targets for parking and/or trip reduction and indicate the basis for such estimates, and shall designate a single entity (property owner, homeowners association, etc.) to implement the proposed measures. (3) Monitoring reports shall be submitted to the director two years after building occupancy and again every year thereafter, noting the effectiveness of the proposed measures as compared to the initial performance targets, and implementing modifications if necessary to enhance parking and/or trip reductions. (4) Where the monitoring reports indicate that performance measures are not met, the director may require program modifications and may impose administrative penalties if identified deficiencies are not addressed within six months. Examples With & Without the New Fees With the proposed ordinance, the City would increase the current Citywide traffic impact fee, sunset two area-specific fees, reduce the number of exemptions, and require applicants of projects generating more than 50 PM Peak Hour trips to invest in trip -reduction (TDM) measures. The end result would be an increase in fees charged to many, but not all projects, City of Palo Alto Page 9 since some areas of the City are currently charged multiple fees and would now be charged only one. Several examples are provided in Table 5 below. City of Palo Alto Page 10 Table 5. Existing & Proposed Transportation Impact Fees (TIF), Examples Location Land Use PM Peak Hour Trips Existing TIF Proposed TIF (Based on TDM Trip Reduction) Cal Ave 50,000 sq.ft. Office 75 prior to TDM 49 with TDM $175,175 $396,067(1) Downtown 50,000 sq. ft. Office 75 prior to TDM 38 with TDM $135,850 $307,154(2) Stanford Research Park 200,000 sq. ft. Office replacing 100,000 sq. ft. R&D 298 prior to TDM 209 with TDM 102 after subtracting existing trips $1,606,650 (citywide fee plus Stanford Research Park fee) $824,466(3) El Camino Corridor (outside disrict-specific TIF areas) 80 Units of Market Rate Multifamily Housing 50 prior to TDM 35 with TDM $125,125 $282,905(3) Notes: (1) Requires investment in TDM to reduce PM Peak Hour trips by 35% in addition to payment of the TIF. (2) Requires investment in TDM to reduce PM Peak Hour trips by 50% in addition to payment of the TIF. (3) Requires investment in TDM to reduce PM Peak Hour trips by 30% in addition to payment of the TIF. Source: Hexagon Transportation Consultants, Inc., February 2018. Comparison to Other Jurisdictions Nexus Study Table 9 (page 27) provides a comparison of the proposed fee to surrounding jurisdictions that was completed in mid-2017. This comparison converts the City’s fee from a per-trip fee to a fee per dwelling unit or 1,000 square feet of non -residential land use to allow for an apples to apples comparision. An excerpt is provided in Table 6, below. Table 6. Comparison to Transportation Impact Fees in Other Jurisdictions Jurisdiction Fee per Dwelling Unit (Multifamily Market Rate) Fee per 1,000 sq. ft. of Office Fee per Hotel Room Palo Alto – Existing $2,217 $5,327 $2,145 Palo Alto – Proposed $5,011(1) $12,043(1) $4,850(1) Menlo Park $1,927 $4,630 $1,834 San Carlos $1,892 $4,547 $1,831 City of Palo Alto Page 11 Jurisdiction Fee per Dwelling Unit (Multifamily Market Rate) Fee per 1,000 sq. ft. of Office Fee per Hotel Room San Mateo $2,101 $3,135 N/A Los Altos $3,777 $9,076 N/A Mountain View – North Bayshore N/A $23,260 $2,071 Los Gatos $6,185 $10,258 $7,598 San Jose – North San Jose Area $7,742 $14,440 4,299 Notes: (1) This represents the maximum amount based on standard trip rates (for peak hour trips), however the number of trips and therefore the total fee charged to project(s) would be reduced in exchange for investments in TDM. See examples in Table 5. Source: Transportation Impact Fee Nexus Study, Hexagon Transportation Consultants Inc., September 2017 Public Notice Under State law, the City must notify all persons requesting notice of fee increases of the time and place of hearing, while providing a general description of the proposal and the location of staff report (Government Code Section 66016). In keeping with this requirement, a notice was published in the newspaper on April 27, 2018 and again on May 4, 2018. The backup data justifying the fees were available to the public with publication of this staff report 11 days in advance of the hearing on May 7, 2018. Timeline and Next Steps As provided in Section 2.04.330 (a)(3) of the Palo Alto Municipal Code, this ordinance shall become effective 60 days after adoption (on second reading). Development of an ordinance updating and codifying requirements for TDM plans will be an important next step. Historically, TDM plans have not always been as rigorous or enforceable as they should be, partly because many TDM plans were optional until the 2017 ordinance cited above, and they were not always included as enforceable conditions of approval. The City also does not have a good system for tracking and monitoring adopted plans. More recently, the City Council and members of the community have asked for and expect quantitative goals (provided in the Comprehensive Plan), meaningful and effective TDM plans, monitoring and enforcement. The code changes adopted in 2017 and cited above began this effort, but there is more to do. Staff is working on a draft ordinance to implement the Comprehensive Plan TDM requirements. The draft ordinance will be provided to the Planning and Transportation Commission for review/recommendation and to the City Cou ncil for thei City of Palo Alto Page 12 rconsideration later this year. Staff is also preparing the administrative guidelines referenced in Section 18.52.030, and an update to Accela, the City’s permit tracking system, to allow for tracking and monitoring of adopted TDM plans. The se improvements will also be completed this year. Resource Impact The draft nexus study identifies a list of capital projects that would cost close to $1 billion in total ($954.8 million), with the City’s share approximately $404.8 million, assuming a City contribution to the county and regional projects on the list. Funding for these projects will be included in the Capital Improvement Program and are subject to annual review and approval in future budget cycles. If all development projected to occur by 2030 proceeds as predicted, the impact fee recommended would generate 5.7% of the total cost, or $23.0 million. Policy Implications Updating the City’s transportation impact fee program is a key implementation action identified in the City’s Comprehensive Plan and resulted from a mitigation measure in the associated Final EIR. Environmental Review The proposed update to the City’s traffic impact fee program was evaluated in the Final EIR for the Comprehensive Plan (certified and adopted November 13, 2017) and identified as a mitigation measure (Measure Trans1b) for the Plan. Projects to be funded by the fee will be subject to review pursuant to the California Environmental Quality Act (CEQA) prior to implementation when preliminary designs are available to enable that review. Attachments: Attachment A: Ordinance Amending Citywide Transportation Impact Fee (PDF) Attachment B: Draft Nexus Study 09-21-2017 (PDF) Not Yet Approved SL/PCE Transportation TIF Ordinance for CC 5-7-18 1 Ordinance No. _____ Ordinance of the Council of the City of Palo Alto Amending Title 16 of the Palo Alto Municipal Code By Establishing an Updated Citywide Transportation Impact Fee and Indefinitely Suspending Application of the Existing Area- Specific Transportation Impact Fees for the Stanford Research Park/El Camino Real CS Zone and the San Antonio/West Bayshore Area, and Amending the Municipal Fee Schedule to Update the City’s Transportation Impact Fees in Accordance with these Changes, All in Furtherance of Implementation of the Comprehensive Plan, Including Policy T-1.25 and Programs T1.2.3 and T1.25.1 The Council of the City of Palo Alto ORDAINS as follows: SECTION 1. Findings and Declarations. The City Council finds and declares as follows: (a) On November 13, 2017, the City Council adopted an update to the City of Palo Alto Comprehensive Plan to guide projected growth and development within the City through 2030. As described in the certified Final Environmental Impact Report (EIR) for the Comprehensive Plan Update, new development would worsen traffic congestion and result in significant environmental impacts related to transportation. The Final EIR also identified mitigation measures to address those impacts, which were adopted by the Council and are reflected in the Comprehensive Plan’s policies and programs as well as the adopted Mitigation Monitoring and Reporting Program. (b) The Comprehensive Plan includes a policy (T-1.25) to pursue funding opportunities for ongoing transportation improvements that will help mitigate impacts of future development and protect residents’ quality of life. To implement that policy, the Comprehensive Plan includes a program (T1.25.1) to regularly evaluate the City’s existing transportation impact fee and modify it as needed to implement transportation infrastructure improvements. This program provides that “[m]odifications to the impact fee program should be structured in keeping with the City’s desire to require new development to reduce peak hour motor vehicle trips to the extent feasible through TDM plans and by contributions to the provision of transit services, shuttles, carpool/rideshare incentives and similar programs.” (c) The Comprehensive Plan also includes a program (T1.2.2) to require new developments to implement transportation demand management (TDM) plans to achieve identified targets in vehicle trip generation, and to require payment of a transportation impact fee for those peak hour vehicle trips that cannot be reduced through TDM measures. (d) Consistent with the Comprehensive Plan, the Council desires to implement the identified policy and programs and adopt an updated citywide transportation impact fee to offset the traffic impacts from new development throughout Palo Alto. (e) The City has prepared a study entitled “City of Palo Alto Transportation Not Yet Approved SL/PCE Transportation TIF Ordinance for CC 5-7-18 2 Fee Nexus Study” dated September 21, 2017 and accepted by the City Council on _______, 2018 (hereinafter the “Nexus Study”), which specifies transportation improvements required to serve future development and recommends the amount of the impact fee on new development. The Nexus Study is available for public inspection during normal business hours at the Office of the City Clerk at 250 Hamilton Avenue, 1st Floor, Palo Alto, California, and the Planning & Community Environment Department at 250 Hamilton Avenue, 5th Floor, Palo Alto, California. The City Council has reviewed the Nexus Study and accepts the findings and conclusions of the study. (e) The Nexus Study concluded that all new land uses in Palo Alto will generate an increased demand for transportation infrastructure and services, and recommended that the citywide transportation impact fee apply to both residential and non- residential development in the city. While the Nexus Study found that all new land uses will generate this increased demand for transportation, the Council finds that it is in the public interest to exempt some uses from payment of the fee, in order to promote other important City policies and priorities, such as 100% affordable housing developments. (f) The improvements specified in the Nexus Study are intended to mitigate those traffic impacts identified in the Final EIR for the Comprehensive Plan and other recent traffic studies, and achieve a balanced transportation network. The range of improvements includes bicycle and pedestrian facilities, as well as intersection and roadway improvements, and is rooted in the City’s policies of encouraging alternative mode use, discouraging single- occupant vehicle trips, improving traffic flow without major capacity enhancements, and encouraging motorists to use arterials rather than local residential streets. The cost estimates for the improvements in the Nexus Study are planning-level estimates and will be adjusted over time as more detailed engineering, design and other project-level work is completed. (g) The fee rates charged herein are no higher than necessary to cover the reasonable costs of providing transportation infrastructure to the population associated with new development, such as residents, visitors, employees and customers. In accordance with the Mitigation Fee Act, California Government Code Section 66001, et seq., the impact fees collected will be used for capital improvements, and not for operation and maintenance. (h) Based on the above findings and the Nexus Study, the City determines that the Citywide Transportation Impact Fee satisfies the requirements of the Mitigation Fee Act, California Government Code Section 66001, et seq. as follows: (1) The purpose of the fee is to help meet the demands imposed on the City’s transportation network by new development projects. (2) Funds from the collection of the fee will be used to meet the demand for pedestrian and bicycle infrastructure, as well as roadway and intersection improvements, generated by new development. (3) There is a reasonable relationship between the proposed uses of the fee and the impacts of the development projects subject to the fee on the transportation network in the city. Not Yet Approved SL/PCE Transportation TIF Ordinance for CC 5-7-18 3 (4) There is a reasonable relationship between the types of development projects on which the fee will be imposed and the need to fund transportation network improvements. (5) There is a reasonable relationship between the amount of the fee to be imposed on the development projects and the impact on the transportation network resulting from such projects. (i) The City currently has several transportation impact fees – one citywide fee, and three that are specific to certain geographical areas of the city – which were adopted over time to fund different sets of improvements. The Council desires to transition to a single citywide transportation impact fee, and cease collection of the fees established in Chapters 16.45 (Stanford Research Park/El Camino Real CS Zone) and 16.46 (San Antonio/West Bayshore Area) of the Code with the remaining funds to be applied to planned improvements in the covered geographical areas as identified by the Chief Transportation Official and subject to approval of the Council, as provided for in the Municipal Code. One area-specific fee, for Charleston-Arastradero Corridor Pedestrian and Bicyclist Safety improvements, would remain in effect until the identified improvements are constructed. This Ordinance amends and updates the existing citywide transportation impact fee consistent with the Comprehensive Plan and the Nexus Study. SECTION 2. Chapter 16.59 (Citywide Transportation Impact Fee) of Title 16 (Building Regulations) of the Palo Alto Municipal Code is hereby amended to read as follows: 16.59.010 Short title. This chapter may be referred to as the "Citywide Transportation Impact Fee Ordinance." 16.59.020 Definitions. For the purposes of this chapter, the following definitions shall apply: (a) "Affordable housing" shall mean housing with a purchase price or rent that is affordable to a "moderate," "low" or "very low" income household, as those terms are defined by the California Department of Housing and Community Development, as applicable to Santa Clara County. (b) "Citywide transportation capacity enhancements" shall mean public facilities and services that relieve citywide traffic congestion caused by new development projects. Citywide transportation capacity enhancements include, but are not limited to, advanced transportation management and information systems, expanded shuttle transit services, and bicycle and pedestrian improvements, and roadway and intersection improvements. Citywide transportation capacity enhancements do not include (i) intersection improvements designed primarily to accommodate increased traffic generated by a specific development or (ii) the addition of through-traffic lanes designed for primary use by private motorized vehicles. (c) "Construction cost index" shall mean the construction cost index for the San Francisco Bay Area set forth in the Engineering News Record published by McGraw Not Yet Approved SL/PCE Transportation TIF Ordinance for CC 5-7-18 4 Hill and Associates. In the event the Engineering News Record ceases to calculate and publish this index, then the city manager may designate a comparable, alternative index to serve as the construction cost index. (d) "Eligible citywide transportation capacity enhancements" shall mean (i) the citywide transportation capacity enhancements identified in the most recent citywide transportation impact fee nexus study approved by the city council, and (ii) other citywide transportation capacity enhancements that are approved by the city council that may be substituted for an identified improvement or service because they will mitigate similar congestion. (e) "Existing development" shall mean structures present (at the time the amount of the fee is calculated) and in use (within the two years prior to the time the amount of the fee is calculated) on parcels upon which new development is planned to occur. Where it is necessary to project PM peak hour vehicle trips generated by existing development, such projection shall be made based on either (i) the trip generation estimates used to determine the fee owed with respect to such existing development when the fee was last paid with respect to such existing development or (ii) if the fee has not been paid with respect to such existing development (or any portion thereof), the most recent use of the existing development. (f) "Fee" shall mean the citywide transportation impact fee imposed pursuant to this chapter. (g) Any reference in this chapter to the "Government Code" or to a section of the "Government Code" shall refer to the California Government Code as it exists at the time this ordinance chapter is applied and shall include amendments to that codethe Government Code made subsequently to the adoption of this chapter, it being the intent of the city to maintain the fee in compliance with applicable law. (h) "New development" shall mean the construction of new structures or additions to existing structures in the city and, with respect to residential development, any development project that creates additional residential units. "New development" shall not mean replacement or expansion of an existing residential unit. With respect to nonresidential development, "new development" shall also mean any development project that creates additional square footage of useful areagross floor area or involves a change in use that requires a use permit or other planning approval. (i) "Transportation Impact Analysis Guidelines" shall mean the most recent edition of the "Transportation Impact Analysis Guidelines" promulgated by the Valley Transportation Authority or such other trip projection methodology adopted by the city for the purpose of traffic impact analysis reports. 16.59.030 Fee imposed. The fee is hereby imposed as a condition of the issuance of any permit for any new development, unless expressly exempted by this chapter. Not Yet Approved SL/PCE Transportation TIF Ordinance for CC 5-7-18 5 16.59.040 Exemptions. The provisions of this chapter shall not apply to: (a) City buildings or structures. (b) Public school buildings or structures. (ca) Affordable housing units, either for sale or rental, that exceed the minimum number required for projects under the city’s below market rate (BMR) housing program or other provisions of this code, which units are, by recordable means, is permanently obligated to be and remain 100% affordable housing for a period consistent with the requirements of Section 16.65.075(c) of this code. (d) Retail service, eating and drinking service, personal service, or automotive service when the total square footage (including new development) is 1,500 square feet or less. (eb) Day care centers used for childcare, nursery school or preschool education. (f) Below market rate housing units above and beyond the minimum number required for projects subject to the city's below market rate (BMR) housing program. The additional units must be offered and constructed consistently with the requirements of the BMR program. (g) A change in tenancy that does not result in a change in use and which does not involve either (i) a demolition of an existing structure or (ii) an expansion of square footage of useful area. (hc) New development which is exempt from the fee by virtue of the Constitutions of the United States and or California or by virtue of other applicable state or federal law. 16.59.050 Timing of payment. (a) The fee shall be paid as set forth in Chapter 16.64 of this code. (b) A credit against the fee may be given for dedications of eligible citywide transportation capacity enhancements constructed or provided at private expense and for the value of land dedicated to the city that is necessary or useful to an eligible citywide transportation capacity enhancement. Such credit will be granted only if the city council determines that: (i) the city will experience a substantial cost savings or service quality improvement as a result of private construction or provision of the capacity enhancement or the dedication of land, (ii) the capacity enhancement can be expected to immediately and significantly relieve citywide traffic congestion, and (iii) the grant of the credit, in lieu of the fee, will not cause the city to delay the implementation of elements of the city’s transportation plan that are of higher priority, in the judgment of the city council, than the land or capacity enhancement Not Yet Approved SL/PCE Transportation TIF Ordinance for CC 5-7-18 6 that will be dedicated. The credit shall be applied at the time the city accepts the land or capacity enhancement. Where the city council has made the determinations required by this subdivision, payment of a portion of the fee equal to the amount of an expected credit against the fee may be deferred to the date of final building inspection approval of the development, provided the owner of the real property for which the fees are required enters into a recordable agreement with the city prior to issuance of the building permit for the development, which from the date of recordation, shall constitute a lien on the property and shall be enforceable against successors in interest to the property owner. The agreement shall provide that final occupancy approval shall not be given until the fees are paid or the credit issued. The agreement shall also provide that, in any action to collect the fees or any portion thereof, the city shall be entitled to all of its costs of enforcement and collection, including reasonable attorney’s fees. The director of planning and community environment may execute the agreement on behalf of the city in a form acceptable to the city attorney. Any deferral granted pursuant to this paragraph (b) shall be consistent with the requirements of Government Code Section 66007. Where a credit is given for the provision of a service that is an eligible capacity enhancement, the deferral of the fee, and the application of the credit, may be according to a schedule set forth in the recorded agreement, which schedule shall be designed to ensure that no credit is applied in advance of the provision of services for which the credit is made. 16.59.060 Calculation of fee. (a) The fee imposed upon a new development shall be calculated by multiplying (i) the number of new PM peak hour vehicle trips projected to be generated by a new development by (ii) the current fee rate. (b) The number of new PM peak hour vehicle trips projected to be generated by a new development shall be calculated by subtracting the projected PM peak hour vehicle trips generated by existing development on the parcel(s) to contain the new development from the projected PM peak hour vehicle trips generated by the new development (including any existing structures to remain on the parcel after the construction of the new development). In no event shall a new development be projected to generate less than zero new PM peak hour vehicle trips as a result of this calculation. (c) For purposes of subsection (b), the number of PM peak hour vehicle trips projected to be generated by a new development shall be calculated pursuant to the transportation impact analysis guidelines. For development projects required to prepare, receive approval of, implement and monitor a transportation demand management (TDM) plan consistent with Comprehensive Plan Program T1.2.3, a target-based trip reduction approach allowed under the transportation impact analysis guidelines may be used, provided that the TDM plan is subject to an enforceable agreement approved by the city. Not Yet Approved SL/PCE Transportation TIF Ordinance for CC 5-7-18 7 (d) To the extent existing development on a parcel qualified qualifies as new development after the effective date of the most recent ordinance amending this section, but was exempt from the fee by virtue of Section 16.59.040 of this code in effect at the time the existing development was permitted, the PM peak hour vehicle trips projected to be generated by that existing development, shall not be subtracted (as otherwise required by subdivision (b) of this section) from the projected PM peak hour vehicle trips generated by the new development. (e) The rate of the fee shall be established from time to time by resolution or ordinance of the city council in the manner required by Government Code Sections 66004 and 66018. (f) The rate of the fee shall be subject to annual adjustment for inflation pursuant to Section 16.64.110. (g) The department of planning and community environment shall be responsible for the calculation of the fee at the time of plan review or when the fee is due, whichever is earlier. Applicants shall supply the city with the necessary information to calculate the fee in a format acceptable to the city. (h) The number of new PM peak hour vehicle trips projected to be generated by a new development shall be calculated in a manner that accounts for peak hour vehicle trips expected to be reduced by any Transportation Demand Management (TDM) Plan approved or required by the city. (i) New retail service developments, as defined Section 18.04.030(a)(125) of this code, shall be charged a fee at 50% of the ordinary rate set under subdivision (e) of this section. 16.59.070 Special fund. (a) There is hereby established a special fund, entitled the "Citywide Transportation Impact Mitigation Fund", into which all fee proceeds and any interest thereon shall be deposited. The fund shall be maintained as required by Government Code Section 66006. (b) Moneys in the fund shall be expended only on the installation, acquisition, and construction, maintenance and operation of eligible citywide transportation capacity enhancements. 16.59.080 Accountability measures. (a) At least annually and as required by Government Code Section 66006, the city manager, or his or her designee, shall review the estimated cost of the public improvements to be funded by the fee, the continued need for those improvements and the reasonable relationship between such need and the impacts of pending or Not Yet Approved SL/PCE Transportation TIF Ordinance for CC 5-7-18 8 anticipated new developments. The city manager, or his or her designee, shall report his or her findings to the city council at a noticed public hearing and recommend any adjustment to the fee or other action as may be needed. (b) The city council shall review such report in the manner required by Government Code Section 66006(b)(2). (c) To the extent required by Government Code Section 66001(d), the city council shall make the findings required by that section. 16.59.090 Enforcement and pPenalties. (a) Any person violating or failing to comply with any of the requirements of this chapter shall be subject to an administrative penalty or administrative compliance order as set forth in Chapters 1.12 and 1.16 of this code. (b) The city attorney shall be authorized to enforce the provisions of this chapter and all agreements entered into in accordance with this chapter, by civil action and any other proceeding or method permitted by law. (c) Each person is guilty of a separate offense for each and every day during any portion of which any violation of any provision of this chapter is committed, continued or permitted by such person. (d) All remedies provided for in this section shall be cumulative and not exclusive and shall not preclude the city from any other remedy or relief to which it otherwise would be entitled under law or equity. (e) Failure of any official to fulfill the requirements of this chapter shall not excuse any developer from the requirements of this chapter. (a) All remedies provided for in this chapter shall be cumulative and not exclusive. (b) Violation of any provision of this chapter, including, but not limited to, converting an exempt use to a use to which this chapter applies without paying the fee, is a misdemeanor punishable as provided in this code. (c) Each person is guilty of a separate offense for each and every day during any portion of which any violation of any provision of this chapter is committed, continued or permitted by such person. (d) Any person violating any provision of this chapter, including, but not limited to, converting an exempt use to a use to which this chapter applies, without paying the fee, shall be liable civilly to the city in a sum not to exceed five hundred dollars for each day in which such violation occurs. Not Yet Approved SL/PCE Transportation TIF Ordinance for CC 5-7-18 9 (e) Persons employed in the following designated employee positions are authorized to exercise the authority provided in the California Penal Code Section 836.5 and are authorized to issue citation for violations of this chapter: development services director, director of planning and community environment and their designee. SECTION 3. Collection of the fee established in Chapter 16.45 (Transportation Impact Fee for New Nonresidential Development in the Stanford Research Park/El Camino Real CS Zone) of Title 16 (Building Regulations) of the Palo Alto Municipal Code is hereby suspended. It is the Council’s intent to take further action to repeal the provisions of Chapter 16.45 upon expenditure of the collected funds. SECTION 4. Collection of the fee established in Chapter 16.46 (Approval of Projects with Impacts on Traffic in the San Antonio/West Bayshore Area) of Title 16 (Building Regulations) of the Palo Alto Municipal Code is hereby suspended. It is the Council’s intent to take further action to repeal the provisions of Chapter 16.46 upon expenditure of the collected funds. SECTION 5. The City Council hereby amends the Municipal Fee Schedule by amending the Citywide Transportation Impact Fee and deleting the Stanford Research Park/El Camino Real CS Zone and San Antonio/West Bayshore Area traffic impact fees, as shown in Exhibit "A", attached hereto and incorporated herein by reference. When effective, the fees as amended by this Ordinance shall supersede any prior inconsistent fees charged by the Department of Planning and Community Environment. The amount of the new or increased fees and charges is no more than necessary to cover the reasonable costs of the governmental activity, and the manner in which those costs are allocated to a payer bears a fair and reasonable relationship to the payer’s burden on, or benefits received from, the governmental activity. Pursuant to Government Code Section 66017, these changes shall become effective sixty (60) days from the date of adoption. SECTION 6. If any section, subsection, clause or phrase of this Ordinance is for any reason held to be invalid, such decision shall not affect the validity of the remaining portion of the Ordinance. The Council hereby declares that it should have adopted the Ordinance and each section, subsection, sentence, clause or phrase thereof irrespective of the fact that any one or more sections, subsections, sentences, clauses or phrases be declared invalid. SECTION 7. The Council finds that the potential environmental impacts related to this Ordinance were analyzed in the Final EIR for the Comprehensive Plan Update, which was certified and adopted by the Council by Resolution No. 9720 on November 13, 2017. The Ordinance is consistent with and implements the program evaluated in the EIR. SECTION 8. Severability. If any section, subsection, sentence, clause, phrase or word of this Ordinance is for any reason held to be invalid by a 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 and adopted this Ordinance, and each and all provisions hereof, irrespective of the fact that one or more provisions may be declared invalid. Not Yet Approved SL/PCE Transportation TIF Ordinance for CC 5-7-18 10 SECTION 9. This Ordinance shall be effective on the sixtieth (60th) day after the date of its adoption. INTRODUCED: PASSED: AYES: NOES: ABSENT: ABSTENTIONS: ATTEST: ____________________________ ____________________________ City Clerk Mayor APPROVED AS TO FORM: APPROVED: ____________________________ ____________________________ Assistant City Attorney City Manager ____________________________ Director of Planning and Community Environment Not Yet Approved SL/PCE Transportation TIF Ordinance for CC 5-7-18 11 EXHIBIT A Municipal Fee Schedule Planning and Community Environment Traffic Impact Fees Stanford Research Park/El Camino Real CS Zone $12.42 per net sq. ft. San Antonio/West Bayshore area $2.56 per sq. ft. Citywide Transportation Impact Fee $3,575.008,083.00 per net new PM peak hour trip City of Palo Alto Transportation Impact Fee Nexus Study Draft Report Prepared for: City of Palo Alto September 21, 2017 Hexagon Transportation Consultants, Inc. Hexagon Office: 4 North Second Street, Suite 400 San Jose, CA 95113 Phone: 408.971.6100 Client Name: City of Palo Alto Hexagon Job Number: 16JC05 Transportation Impact Fee Nexus Study September 21, 2017 P a g e | i i Table of Contents Executive Summary ............................................................................................................................... iii 1. Introduction and Existing Impact Fees .......................................................................................... 1 2. Projected Growth and Its Impacts ............................................................................................... 11 3. Transportation Impact Fee Improvements .................................................................................. 16 4. Recommended Fee Program ..................................................................................................... 21 5. Transportation Impact Fees in Other Cities ................................................................................ 26 6. Conclusions ................................................................................................................................ 33 Appendix Appendix A: Project Descriptions of Transportation Impact Fee Improvements List of Tables Table ES- 1 TIF Rates for Multi-Family Residential and Office Uses in Nearby Cities ........................ vi Table 1 Summary of Existing Palo Alto Impact Fees ........................................................................ 3 Table 2 San Antonio/West Bayshore Traffic Impact Fee Projects ..................................................... 5 Table 3 Stanford Research Park/El Camino Real Traffic Impact Fee Projects .................................. 7 Table 4 Citywide Transportation Impact Fee Projects ...................................................................... 9 Table 5 Projected Growth by the Year 2030 under the Preferred Scenario .................................... 12 Table 6 Projected PM-Peak-Hour Vehicle Trips Generated by the Preferred Scenario……………..13 Table 7 Projected Increase in PM-Peak-Hour Motor Vehicle Trips ............................................... 134 Table 8 Citywide Transportation Impact Fee Improvements ........................................................... 20 Table 9 Transportation Impact Fees in Nearby Cities ..................................................................... 27 List of Figures Figure 1 Areas Subject to Transportation Impact Fees ...................................................................... 4 Transportation Impact Fee Nexus Study September 21, 2017 P a g e | i i i Executive Summary This nexus study reviews the City of Palo Alto’s existing transportation impact fees and makes recommendations regarding the impact fee program in the future. Findings have been made in accordance with the requirements of the Mitigation Fee Act (AB 1600). Existing Transportation Impact Fees The City of Palo Alto currently has four transportation-related impact fees, of which three are applied in specific areas of the city and one is applied citywide. These four impact fees, the year when each was first adopted, and a brief summary of their current status are as follows: San Antonio / West Bayshore Area Traffic Impact Fee, 1986: This area has been redeveloped since the EIR and nexus study were prepared in 1986. Stanford Research Park / El Camino Real CS Zone Transportation Impact Fee, 1989: Of the four intersection improvement projects listed in the municipal code for this area-specific fee, two are complete. The City is currently coordinating with the Santa Clara County Department of Roads and Airports, which has jurisdiction over county expressways, to make improvements to three intersections on Page Mill Road. Charleston – Arastradero Corridor Pedestrian and Bicyclist Safety Impact Fee, 2005: The corridor project is not yet complete. The City plans to continue to use these impact fee funds towards completion of the Charleston-Arastradero Corridor Plan, as provided for in the original nexus study. Citywide Transportation Impact Fee, 2007: The City has used funds from the citywide TIF to fund bicycle and pedestrian improvements and an upgraded traffic signal system. Projected Future Growth and Resulting Impacts The Preferred Scenario of the Palo Alto Comprehensive Plan Update includes a range of 8,435 – 10,455 new residents and a range of 9,850 – 11,500 new jobs, The number of PM-peak-hour motor vehicle trips was projected for the low end and the high end of those growth assumptions and then averaged. It is estimated for purposes of this nexus study that there will be 4,202 additional PM-peak- hour motor vehicle trips generated by the Preferred Scenario in 2030. The Comprehensive Plan Update FEIR includes a mitigation measure that would require all new development projects to develop Transportation Demand Management (TDM) plans to reduce the number of PM-peak-hour motor vehicle trips by a specified amount, depending on the location of the project. In other words, the City is requiring an upfront investment in ongoing trip reductions by new Transportation Impact Fee Nexus Study September 21, 2017 P a g e | i v development through the implementation of robust TDM plans. The range of required reductions is from 20% to 50%. Based on the amount of growth projected for each area and the TDM trip reduction target for that area, there would be an estimated reduction of 1,347 PM-peak-hour trips, assuming all projects meet their TDM targets. Thus, with this upfront investment in trip reductions through TDM measures, it is estimated that 2,855 new PM-peak-hour trips would be generated by the future housing and employment growth defined by the Preferred Scenario, which is 5.7% of the total estimated citywide PM-peak-hour trips in the year 2030. The total estimated citywide PM-peak-hour vehicle trips were estimated with the Palo Alto travel demand forecasting model used in the Comprehensive Plan Update analysis. The level of growth included in the six planning scenarios that were analyzed as part of the Comprehensive Plan Update would result in significant impacts to intersections, to freeway segments, to transit travel times (due to increased congestion), and to local residential streets (due to drivers avoiding increased congestion on arterials). Because all six of the planning scenarios that were examined in the Comprehensive Plan Update would result in some significant transportation impacts and because the City’s Preferred Scenario represents a level of growth that is within the range of the six planning scenarios analyzed, there would be significant and unavoidable transportation impacts with the Preferred Scenario. The purpose of the improvements to be funded by the Transportation Impact Fee is to mitigate or offset these projected impacts to the extent feasible. Improvements to Mitigate Impacts Hexagon recommends transitioning to a single citywide Transportation Impact Fee (TIF) rather than the current structure of three fees that apply in specific areas and one citywide fee. However, we recommend retention of the Charleston-Arastradero Corridor fee until that bicycle and pedestrian safety project has been completed. The City’s Comprehensive Plan Update EIR is the basis for the nexus between the projected future development in the City and the proposed citywide TIF. The proposed citywide TIF expenditure plan is rooted in the City’s policies of encouraging alternative mode use, discouraging single-occupant vehicle trips, improving traffic flow without major capacity enhancements, and encouraging motorists to use arterials rather than local residential streets. The total estimated cost of the improvements to be funded partially with the citywide TIF is $954,778,300. For projects for which an annual expenditure amount has been provided, the total cost assumes 14 years (2017 – 2030) of that annual amount. The City’s estimated share of these total costs is $404,838,300. Based on the fact that 5.7% of the total PM-peak-hour motor vehicle trips generated in the year 2030 would be generated by new development, 5.7% of the City’s share of improvement costs, $23,075,783, is attributed to new development and should be funded by the citywide TIF. As noted earlier, new development will also be responsible for a significant upfront and ongoing investment in trip reductions, through implementation of TDM plans. Proposed Citywide Transportation Impact Fee The proposed amount of the citywide Transportation Impact Fee has been calculated by dividing the cost of the improvements to be funded by the TIF by the number of additional PM-peak-hour motor vehicle trips. The resulting impact fee is $8,083 per PM-peak-hour trip (23,075,783 / 2855 = $8,082.59). Additional recommendations include: The City should continue to charge the TIF on a “per PM-peak-hour trip” basis and use the trip rates included in the most recent edition of the ITE Trip Generation Manual. Trip reductions due Transportation Impact Fee Nexus Study September 21, 2017 P a g e | v to implementation of TDM plans should be applied in accordance with the policies of the Comprehensive Plan Update. It is recommended that the existing exemptions from the citywide TIF be retained, for consistency with Palo Alto’s community facilities impact fees and to continue to encourage development of those land uses. The City may wish to consider a lower per PM-peak-hour trip fee for retail uses or increasing the size of retail uses that would be exempt from the TIF. The rationale for such a change is that many retail projects serve to reduce vehicle miles travelled (VMT) and result in lower traffic impacts than their trip generation rate suggests, due to short trip lengths, pass-by trips, and diverted linked trips. The City should consider adding accessory dwelling units to the list of exemptions from the citywide TIF in order to encourage their development. The City currently includes “second units” in the list of uses that are subject to the TIF and other impact fees. It is recommended that development projects on parcels that have been vacant for two or more years do not receive credit for the existing uses on the parcel, when calculating the TIF. Such a policy is consistent with VTA’s Transportation Impact Analysis Guidelines requirement to use traffic counts that are no more than two years old. If a parcel has been vacant for two or more years, existing traffic conditions reflect that vacancy, rather than the historical usage of the site. The City should continue to adjust fee levels annually, in line with the Construction Cost Index. Impact Fees in Other Cities The Transportation Impact Fees of numerous nearby cities were tabulated in order to provide context for considering Palo Alto’s existing citywide TIF of $3,575 and proposed TIF of $8,083 per net new PM- peak-hour vehicle trip. Table ES-1 presents a summary of the TIF rates for two common land uses, multi-family housing and offices, in nearby cities, most of which specify their rates on a per dwelling unit and per thousand square feet basis. To facilitate comparison with other cities’ rates, Palo Alto’s “per PM-peak-hour vehicle trip” existing and proposed rates were converted to rates per dwelling unit and per thousand square feet, based on standard ITE Trip Generation Manual rates. The apartment land use rate (ITE category 220) has been used for multi-family housing. The proposed TIF of $8,083 per net new PM-peak-hour trip results in a “pre-TDM reduction” rate of $5,011 per multi-family dwelling unit and $12,043 per thousand square feet of office space. However, because Palo Alto would require development projects to achieve a trip reduction of between 20% and 50% via robust TDM plans, depending on a project’s location, no project would pay the “pre- TDM reduction” rates. The derived TIF rates for Palo Alto are shown after accounting for TDM trip reductions that would apply in different parts of the City. As shown in Table ES-1, although there would be a single citywide rate of $8,083 per net new PM-peak-hour vehicle trip, the effective rate that would be paid by a specific project would depend on the estimate of the number of PM-peak-hour trips it would generate after achieving the trip reduction target for its location. The cost of achieving those trip reductions through implementation of TDM plans has not been included and rests solely with the developer. Of the cities surveyed, three cities currently have TIFs that are higher than the proposed “pre-TDM reduction” level in Palo Alto: Mountain View’s TIF for office and R&D uses in the North Bayshore Area, Los Gatos’s TIF for some land uses, and San Jose’s four TIF programs for some land uses. Los Altos and the Moffett Park area of Sunnyvale have rates than are lower than the proposed “pre-TDM reduction” level in Palo Alto, but higher than the amount that would be charged in some areas after TDM reductions are accounted for. The TIF amounts in all other cities in the survey are lower than the proposed citywide TIF even when the highest trip reduction (50% in downtown area) is accounted for, and many are also lower than Palo Alto’s current citywide TIF. Transportation Impact Fee Nexus Study September 21, 2017 P a g e | v i Table ES- 1 TIF Rates for Multi-Family Residential and Office Uses in Nearby Cities Source: Hexagon Transportation Consultants, Inc., 2017 Multi-Family TIF Office TIF City or Area within City (per d.u.)(per KSF)Notes Palo Alto a Current Citywide TIF 2,217$ 5,327$ Based on $3,575 per PM-peak-hour trip. Proposed TIF, no TDM reduction 5,011$ 12,043$ Based on $8,083 per PM-peak-hour trip. Proposed TIF less 20% for TDM 4,009$ 9,634$ Based on $8,083 per PM-peak-hour trip; all other areas of City. Proposed TIF less 30% for TDM 3,508$ 8,430$ Based on $8,083 per PM-peak-hour trip; Stanford Research Park or El Camino Corridor location. Proposed TIF less 35% for TDM 3,257$ 7,828$ Based on $8,083 per PM-peak-hour trip; Calif. Ave. location. Proposed TIF less 50% for TDM 2,506$ 6,022$ Based on $8,083 per PM-peak-hour trip; downtown location. Menlo Park Citywide 1,927$ 4,630$ Supplemental Downtown a 235$ 565$ Based on $379 per PM-peak-hour trip . Redwood City Non-Downtown 992$ 2,380$ Downtown 744$ 1,790$ San Carlos 1,892$ 4,547$ San Mateo 2,101$ 3,135$ Los Altos 3,777$ 9,076$ Mountain View North Bayshore Area N.A.23,260$ No rate given for residential uses in this area. Sunnyvale South of S.R. 237 1,931$ 4,640$ North of S.R. 237 N.A. 6,375$ No rate given for residential uses in this area. R&D TIF rate is $6,375; used for offices north of SR 237. Los Gatos a 6,185$ 10,258$ TIF is $902 per DAILY trip. TIF calculated with ITE daily trip rates times $902. Santa Clara N.A.1,000$ TIF applies only in defined area (north of Caltrain tracks). No rate given for residential uses in this area. San Jose North San Jose Area 7,742$ 14,440$ Industrial TIF rate is $14,440; used for offices in this area. Evergreen-East Hills Area N.A.13,170$ No rate for Multi-Family. Single-Family is $15,148 per unit. US 101/Oakland Ave/Mabury Rd TIF is $35,767 per PM peak hour trip that would use one of the planned interchange improvements. I-280/Winchester Blvd.TIF is $25,641 per PM peak hour trip that would use the proposed off-ramp improvement. Fremont 2,382$ 5,297$ Multi-Family rate shown is for units with 2-3 bedrooms. Note: TIF amounts are from each city's website. (a) Where TIF fees are specified by a city on a per vehicle trip basis, standard ITE trip generation rates have been used to calculate the rate per dwelling unit for multi-family residential and per KSF for offices. Transportation Impact Fee Nexus Study September 21, 2017 P a g e | 1 1. Introduction and Existing Impact Fees This report presents the results of a nexus study prepared to update the City of Palo Alto’s existing transportation impact fees. Development impact fees are commonly used throughout California to require new development to pay for the needs that it creates. In Palo Alto, impact fees are currently charged for transportation, housing, community facilities, public art, and parkland dedication. The purpose of this study is to allow the City to make the necessary findings in order to revise its existing transportation-related impact fees. The City of Palo Alto currently has four transportation-related impact fees, of which three are applied in specific areas of the city and one is applied citywide. These four impact fees and the year when each was first adopted are as follows: San Antonio / West Bayshore Area Traffic Impact Fee, 1986 Stanford Research Park / El Camino Real CS Zone Transportation Impact Fee, 1989 Charleston – Arastradero Corridor Pedestrian and Bicyclist Safety Impact Fee, 2005 Citywide Transportation Impact Fee, 2007 Development Impact Fees in California The Mitigation Fee Act (Government Code Sections 66000-66025) was originally enacted through Assembly Bill 1600 in 1987 and requires that a reasonable relationship (nexus) be established between the projects or mitigations to be funded by an impact fee and the impacts caused by new development. Impact fees are one-time fees that are charged by a local government agency and are distinct from taxes and special assessments. When imposing an impact fee as a condition of approval of a development project, a local agency must make the following findings: Identify the purpose of the fee; Identify the use to which the fee is to be put; Determine how there is a reasonable relationship between the need for the public facility and the type of development project on which the fee is imposed; Determine how there is a reasonable relationship between the amount of the fee and the cost of the public facility or portion of the public facility attributable to the development on which the fee is imposed. This study provides the necessary evidentiary basis to support these findings. The current status of each of the four transportation impact fees in Palo Alto is also provided in order to address the question of whether it would be preferable for the City to retain four separate transportation impact fees or consolidate some or all of them. Transportation Impact Fee Nexus Study September 21, 2017 P a g e | 2 Existing Impact Fees in Palo Alto The City of Palo Alto currently charges development impact fees for the following broad purposes: transportation, affordable housing, community facilities, public art, and parkland dedication. Within the category of community facilities, separate impact fees are charged for parks, community centers, libraries, public safety facilities, and general government facilities. Within the category of transportation, there are currently four separate impact fees, of which three are imposed only in specific areas of the city and one is applied citywide. A summary of Palo Alto’s impact fees for Fiscal Year 2017-18 (effective as of August 28, 2017) is presented in Table 1. The first impact fee established by Palo Alto was for affordable housing, in 1984. This was followed by adoption of two of the transportation-related impact fees in the late 1980s, around the time that AB 1600 was passed. The other two transportation-related fees were adopted approximately ten years ago, in the mid-2000s. Community facilities fees (for parks, libraries, community centers, public safety facilities, and general government facilities) were established in 2002 and 2015, and the housing impact fee was significantly revised in 2017. It should be noted that the city also has an in-lieu parking fee for the Downtown Parking Assessment District, but this is not an impact fee and is not addressed in this nexus study. Exemptions from impact fees for specific land uses vary for the different fees. The Citywide Transportation Impact Fee (TIF) and the Charleston-Arastradero Corridor Safety Fee have the same exemptions as all of the community facilities impact fees. These exemptions, as identified in the July 1, 2017 update of the “Palo Alto Development Impact Fees” document, include: Single-family home remodels or additions, Housing projects with 100% affordable housing units, Below Market Rate (BMR) housing units beyond the minimum number required by the City’s BMR housing program, Public buildings and schools, Retail, personal service, or automotive service that is 1,500 s.f. or smaller, Daycare, nursery schools, and preschools, On-site cafeteria/recreation/childcare facilities for employee use only, Hazardous materials storage. All residential uses are exempt from the San Antonio-West Bayshore and the Stanford Research Park traffic impact fees, but the following residential uses are subject to the Citywide TIF and the Charleston/Arastradero TIF: new homes on an empty parcel, second units, multi-family residential projects, and required Below Market Rate units. Replacement single-family homes are not subject to the citywide TIF. Figure 1 shows the areas covered by the three transportation-related impact fees that apply in specific areas of the city. Any new project that is within one of the three areas would pay at least two transportation-related impact fees: the appropriate area-specific fee and the citywide fee. Because of the overlap of the three areas, there are locations where a new development may be subject to three transportation impact fees: the citywide fee, the Charleston-Arastradero Corridor fee, and either the San Antonio/West Bayshore fee or the Stanford Research Park fee. Transportation Impact Fee Nexus Study September 21, 2017 P a g e | 3 Table 1 Summary of Existing Palo Alto Impact Fees Source: City of Palo Alto, “Development Impact Fees”, updated 7/1/17 Year Fee Was First Multi- Family Multi- Family Hotel/ Impact Fee Adopted < 900 s.f.> 900 s.f.Commercial Motel Institutional Industrial Transportation San Antonio/West Bayshore 1986 Stanford Research Park/El Camino Real 1989 Charleston-Arastradero Corridor 2005 Citywide 2007 Community Facilities Parks 2002 11,917$ 17,795$ 3,944$ 7,801$ 5.061$ 2.288$ 5.061$ 5.061$ Community Centers 2002 3,089$ 4,626$ 1,026$ 2,033$ 0.286$ 0.129$ 0.286$ 0.286$ Libraries 2002 1,079$ 1,606$ 355$ 645$ 0.272$ 0.114$ 0.272$ 0.272$ Public Safety Facilities 2015 1,036$ 1,036$ 829$ 829$ 0.579$ 0.579$ 0.772$ 0.193$ General Govt Facilities 2015 1,305$ 1,305$ 1,044$ 1,044$ 0.729$ 0.729$ 0.974$ 0.243$ Total Community Facilities 18,426$ 26,368$ 7,198$ 12,352$ 6.927$ 3.839$ 7.365$ 6.055$ Housing 2017 Single-Family Detached: $75 per s.f.Office/R&D: $35 per s.f. Condos, Single-Family Attached: $50 per s.f.Hotel, Retail, Other Non-Residential: $20.37 per s.f. Apartments: $20 per s.f. Public Art 2013 Parkland Dedication 2006 Note: All fees are as of August 28, 2017. Fee amounts are revised annually. Residential Non-Residential Single Family >3000 s.f. Single Family <3000 s.f. $0.38 per square foot $3,575 per net new PM peak hour trip Per dwelling unit Per square foot Applies only to projects that require a subdivision or parcel map with less than 50 parcels when land is not dedicated. If over 50 parcels, project must dedicate land. 1% of first $109 million construction valuation and 0.9% of construction valuation in excess, for commercial buildings with floor area > 10,000 s.f. and construction value >$200,000 All residential uses exempt All non-residential uses exempt All residential uses exempt $2.56 per square foot All residential uses exempt $12.42 per net new square foot $1,306 per residential unit Figure 1 Traffic Impact Fee Areas Palo Alto Impact Fee Nexus Study LEGEND = Stanford Research Park/El Camino Real Area = City of Palo Alto = San Antonio/W. Bayshore Area = Charleston/Arastradero Corridor Area 101 280 Alm a S t El Cam i n o R e a l Page Mill R d Fo oth i l l Expy Ore g o n E x p y Sa n An t o n io Rd E Ch a r l eston Rd Embarcadero Rd E Meadow D r Ara str a d ero R dLos R oble s Av e Transportation Impact Fee Nexus Study September 21, 2017 P a g e | 5 All four of the transportation impact fees provide for annual adjustments to the fees based on the Construction Cost Index published by the Engineering News Record. The following sections provide more detail on the history and the projects included in each of the city’s four transportation-related impact fees. San Antonio/West Bayshore Area Adopted in 1986, Chapter 16.46 of the Palo Alto Municipal Code (PAMC) is entitled “Approval of Projects with Impacts on Traffic in the San Antonio/West Bayshore Area,” which is generally bounded by U.S. Highway 101, Middlefield Road, Fabian Way, and the city limits. The municipal code identifies four specific projects to be funded with this impact fee, as shown in Table 2, but also states that the funds may be spent on “alternative improvements in the area as determined by the Chief Transportation Official, subject to the approval of the City Council.” The need for this impact fee was established in the San Antonio/West Bayshore Environmental Impact Report (EIR). Most of the development that was analyzed in that EIR has occurred. This impact fee was primarily intended for capacity-enhancing intersection improvements to accommodate the projected growth in traffic resulting from new development. The City’s approach to accommodating traffic growth has shifted in the last 30 years and is now geared more towards encouraging alternative mode use than towards adding roadway and intersection capacity. Therefore, as shown in Table 2, not all of the projects specifically identified in the municipal code in 1986 have been completed. Table 2 San Antonio/West Bayshore Traffic Impact Fee Projects Source: Hexagon Transportation Consultants, Inc., 2017 Projects Listed in Municipal Code a Current Status San Antonio Road/Middlefield Road:City currently plans to widen Middlefield to add bike lanes, but Feasibility study for a second left-turn lane no longer plans to add a second left-turn lane to westbound on westbound Middlefield at San Antonio Middlefield at San Antonio. San Antonio Road/Charleston Road:Project not implemented and City does not plan to pursue project. Right-turn lane on westbound Charleston Mountain View has recently resurfaced westbound approach. Signalized intersection at Ford Aerospace Project is no longer needed. Former Ford Aerospace site is driveway now JCC site. Interconnections of area traffic signals Project Complete. Note: (a) Projects listed in Palo Alto Municipal Code Chapter 16.46. Transportation Impact Fee Nexus Study September 21, 2017 P a g e | 6 The current status of the projects, as presented in Table 2, is based on input from City staff and on Resolution No. 9389, passed by the City Council on January 14, 2014, which included an update on projects to be funded by impact fees that had not yet been completed at that time.1 The current amount of this fee, as of August 28, 2017, is $2.56 per square foot for non-residential projects only. The current balance in the San Antonio /West Bayshore Fund, as of June 30, 2016, is $876,563, according to the “Annual Report on Development Impact Fees for Fiscal Year 2016,” as presented to the City Council on February 6, 2017. No funds have been spent from the San Antonio/West Bayshore Traffic Impact Fee fund for many years. The following projects have been proposed for expenditure from this fund: US 101/Adobe Creek Bicycle/Pedestrian Bridge. The current budget for this project does not include any TIF funds. However, if additional funds are needed to complete this project, it would be the first priority for San Antonio/West Bayshore TIF funds, and funds would be directed as needed to the US 101/Adobe Creek bridge. Fabian Way Enhanced Bikeway, which is part of the “Waverley Multi-Use Path Improvements and East Meadow Drive and Fabian Way Enhanced Bikeways” project, for which the City has applied to VTA for funding. This project has three components and the Fabian Way component is within the San Antonio/West Bayshore area. The City proposes to use $200,000 from the TIF fund as the local match for this project. San Antonio Road and East Charleston Road Intersection Improvements. The project would construct multi-modal safety and operational improvements at this intersection. The City proposes to use $250,000-$500,000 from the TIF for this project. San Antonio Road/Avenue Enhanced Bikeway Project. This project includes a Class I shared-use path with improved intersection treatments and wayfinding between East Charleston and Byron Street and a Class III bicycle boulevard with traffic calming between Byron Street and Alma Street. The Class I portion of the project is in the San Antonio/West Bayshore area. All remaining San Antonio/West Bayshore TIF funds would be directed to this project. Stanford Research Park / El Camino Real CS Zone The “Transportation Impact Fee for New Non-Residential Development in the Stanford Research Park/ El Camino Real CS Zone” (PAMC Chapter 16.45) was adopted in 1989. Improvements to eight intersections were originally identified as the purpose of the impact fee, based on the impacts identified in the Citywide Land Use and Transportation Study Environmental Impact Report, September 1988, and certified by the City Council on March 6, 1989. The project list was updated in 2002 to reflect the four capacity improvements identified in the 1998-2010 Comprehensive Plan Environmental Impact Report. These four projects, as currently specified in the municipal code, and their current status are presented in Table 3. Of these four projects, two have been completed and two will be completed soon. Three of the four intersections currently identified in the municipal code as the projects to be funded with this impact fee were studied extensively in the Draft Expressway Plan 2040 by the Santa Clara County Department of Roads and Airports and in the Page Mill Road Expressway Corridor Study 1 California law (Government Code Section 66001(d)) requires local agencies to make certain findings with respect to development fees which remain unexpended or uncommitted five or more fiscal years after deposit of such fees. Transportation Impact Fee Nexus Study September 21, 2017 P a g e | 7 Report, prepared for Santa Clara County, the City of Palo Alto, and the Town of Los Altos Hills. The Santa Clara County Department of Roads and Airports has jurisdiction over all expressways in Santa Clara County, including two in Palo Alto: Foothill Expressway and Oregon Expressway/Page Mill Road. The City plans to implement improvements at three Page Mill Road intersections, at El Camino Real, Hansen Way, and Hanover Street, using the project descriptions included in the Page Mill Road Expressway Corridor Study Report. The City is currently developing an agreement with the County for the design and construction of these improvements, which will include $3.2 million in City funds. At the intersection of Foothill/Arastradero/Miranda, which currently functions as two closely spaced signalized intersections, the project described in the municipal code has been completed. However, the County has proposed a major reconstruction of that intersection to include grade separation of Foothill and Arastradero, a roundabout at Miranda and Arastradero, and a signalized intersection for the southbound Foothill off-ramp on Arastradero. As with the San Antonio/West Bayshore Impact Fee, the Stanford Research Park/El Camino Real impact fee funds may be used for alternative improvements or alternative intersections, subject to the City Council’s approval. The current amount of this fee, as of August 28, 2017, is $12.42 per net new square foot for non-residential projects only. The current balance in the Stanford Research Park/El Camino Real Fund, as of June 30, 2016, is $3,223,649, according to the “Annual Report on Development Impact Fees for Fiscal Year 2016”, as presented to the City Council on February 6, 2017. These funds will provide the City’s share of the budget for the Page Mill Road intersection improvements described above. Table 3 Stanford Research Park/El Camino Real Traffic Impact Fee Projects Source: Hexagon Transportation Consultants, Inc., 2017 Projects Listed in Municipal Code a Current Status Page Mill Expressway/Hanover Street:Page Mill Corridor Study: "Add a northbound and Add southbound right-turn lane;southbound left-turn lane and convert signal to 8-phase operation. restripe northbound approach. (Hanover Convert Hanover to one through lane each direction and add is the N-S street)bike lanes." Page Mill Expressway/El Camino Real:Page Mill Corridor Study: "Modify alignment of westbound Add right lanes to all approaches.left-turn lane to provide additional capacity; provide dedicated westbound right-turn lane; extend bike lanes." City plans to implement project using Corridor Study definition. Foothill Expressway/Arastradero/Miranda:Project as defined in PAMC has been completed. Add additional westbound lane on County's 2040 Expwy Plan proposes major reconstruction of Arastradero at Miranda to provide two left-turn this intersection, including grade separation and a roundabout. lanes and a right-turn lane at Foothill. Middlefield Road/Oregon Expressway:Project complete. Portion of project not implemented due to Add northbound and southbound need for tree removal. left-turn lanes (Middlefield is the N-S street) Note: (a) Projects listed in Palo Alto Municipal Code Chapter 16.45. Transportation Impact Fee Nexus Study September 21, 2017 P a g e | 8 Charleston-Arastradero Corridor The “Charleston Arastradero Corridor Pedestrian and Bicyclist Safety Impact Fee” (PAMC Chapter 16.60) was adopted in 2005. It applies to both residential and non-residential development within one- half mile of the corridor, beginning at Fabian Way and ending at Miranda Avenue, near Foothill Expressway. The purpose of the impact fee is to provide funding for the Charleston Arastradero Corridor Plan, a streetscape improvement plan intended to address the safety concerns of pedestrians and bicyclists using the corridor. As described in the 2005 nexus study prepared for this impact fee, the improvements include: Reorganization of auto travel lanes throughout the corridor, with removal of auto travel lanes in some locations in favor of bike lanes and landscaped medians; Provision of a bike lane in each direction that is tinted or painted to enhance safety; Lighted (in-pavement, pedestrian-activated) crosswalks in several locations, particularly near schools; Pedestrian bulb-outs and median island refuges for pedestrian safety, along with an irrigated, planted center median interspersed with left-turn pockets; Installation of frontage improvements, including new street lighting to improve pedestrian and bicyclist visibility and safety. The 2005 nexus study characterized the Charleston Arastradero Corridor Plan as a defined project with a defined timeline, and noted that there was no need for funds after the project had been fully implemented. Thus, it was assumed that the impact fee would terminate after project construction was complete. The City has partially completed the project, and has recently received an updated cost estimate of $11,316,200 for the remaining work. Funds have been transferred annually to the City’s Capital Improvement Program since the inception of this impact fee fund, for use on improvements in the corridor. The current amount of the fee, as of August 28, 2017, is $1,306 per residential unit and $0.38 per square foot for non-residential development. The current balance in the Charleston-Arastradero Corridor Pedestrian and Bicyclist Safety Fund, as of June 30, 2016, is $8,708, according to the “Annual Report on Development Impact Fees for Fiscal Year 2016”, as presented to the City Council on February 6, 2017. The City plans to also use other fund sources to complete this project. Citywide Transportation Impact Fee The “Citywide Transportation Impact Fee” (PAMC Chapter 16.59) was adopted in 2007. However, the original nexus study for this impact fee was conducted in 2004, prior to the adoption of the Charleston Arastradero Corridor Impact Fee in 2005. The nexus study for the citywide fee was updated in 2007 to incorporate revised project costs and traffic projections. One key difference between the Citywide TIF and the three other TIFs is that it is based on PM peak hour trips generated by a project, rather than on a per square foot or per dwelling unit basis. This fee basis provides an even closer nexus between the transportation impacts caused by new development and the amount that a given project is required to pay. The nexus study identified projects for the Citywide Transportation Impact Fee, as shown in Table 4. Because the fee was to be charged on a citywide basis, a geographically balanced expenditure plan was developed in order to ensure geographic equity. None of the projects to be funded by the citywide fee were capacity enhancements as identified in the San Antonio/West Bayshore fee or the Stanford Research Park/El Camino Real fee. Because the citywide fee was intended to fund different types of projects than those specific area fees, the area fees were retained when the citywide fee was adopted. Transportation Impact Fee Nexus Study September 21, 2017 P a g e | 9 The current amount of the fee, as of August 28, 2017, is $3,575 per net new PM peak hour trip for both residential and non-residential development. The current balance in the Citywide Transportation Fund, as of June 30, 2016, is $2,979,023, according to the “Annual Report on Development Impact Fees for Fiscal Year 2016”, as presented to the City Council on February 6, 2017. An updated list of projects to be funded with the Citywide TIF is presented in Chapter 3. Table 4 Citywide Transportation Impact Fee Projects Source: Hexagon Transportation Consultants, Inc., 2017 Report Organization The remainder of this report addresses the following steps in order to make the necessary findings for updating the City’s transportation impact fee program: 1. The level of future growth in Palo Alto in terms of residential dwelling units and new jobs is projected; 2. The number of PM-peak-hour motor vehicle trips that would be generated by that growth is estimated; 3. The transportation impacts or deficiencies caused by those additional PM-peak-hour trips are identified; 4. Projects that would mitigate or offset those impacts or deficiencies to the extent feasible are identified; 5. The cost of those projects is estimated; 6. A proposed impact fee to be charged to future growth is calculated. Projects Listed in Nexus Study a Current Status Citywide Transportation Demand Management:TIF funds have not been used for this project. (State law 0.5 FTE for a city staffperson to manage currently limits the use of impact fees to capital projects.) and market a TDM program. Advanced Transportation Management and Project complete. Information System Expanded Palo Alto Shuttle Service:TIF funds have not been used for this project. (State law Nexus study included both operating cost currently limits the use of impact fees to capital projects.) of shuttle service and capital cost of replacing 7 buses. Bicycle and Pedestrian Projects: Bicycle Many specific projects have been completed. City has boulevards, bike/ped undercrossings,updated its Bicycle + Pedestrian Transportation Plan since bike lanes/routes on major arterials and streets,Nexus Study was conducted. This plan is the current source of spot bike/ped improvements.bike/ped project priorities. Note: (a) Projects listed in the 2004 Transportation Impact Fee Nexus Study and the 2007 Addendum to the Transportation Impact Fee Nexus Study. Transportation Impact Fee Nexus Study September 21, 2017 P a g e | 1 0 Chapter 2 covers the City’s projected growth, the trips it would generate, and their projected impacts. Chapter 3 presents the improvements and programs that would mitigate those impacts. Chapter 4 addresses the recommended transportation impact fee structure and recommended fee level. Chapter 5 summarizes the impact fees currently charged by other municipalities on the peninsula and in the South Bay. Chapter 6 summarizes the findings of this report. Transportation Impact Fee Nexus Study September 21, 2017 P a g e | 1 1 2. Projected Growth and Its Impacts This chapter describes the level of growth projected to occur in Palo Alto through the horizon year of 2030, the number of PM-peak-hour motor vehicle trips expected to be generated by that growth, and the transportation impacts resulting from those additional motor vehicle trips. Projected Development The City of Palo Alto is currently engaged in a planning effort to update its Comprehensive Plan. The forecast year for the Comprehensive Plan Update is the year 2030. As part of this process, six hypothetical planning scenarios have been developed in order to capture a range of possible outcomes stemming from different growth assumptions. Each of the different planning scenarios makes different land use assumptions regarding household growth and job growth, as well as different assumptions regarding transportation investments and policies. These scenarios were analyzed in the February 2016 Draft EIR and the February 2017 Supplement to the Draft EIR. Based on the analysis of the six planning scenarios, the City Council has identified a Preferred Scenario for the Comprehensive Plan Update, which is within the range of the growth assumptions in the six scenarios. The growth assumptions for the City of Palo Alto, excluding its Sphere of Influence, under the Preferred Scenario are presented in Table 5. All of the data in this table and in the remainder of this chapter are from the Comprehensive Plan Update Final EIR, dated August 30, 2017. The Preferred Scenario’s projections of housing and employment for the year 2030 include a range of 3,545 – 4,420 new residential units and 9,850 – 11,500 new jobs (see Table 5). Transportation Impact Fee Nexus Study September 21, 2017 P a g e | 1 2 Table 5 Projected Growth by the Year 2030 under the Preferred Scenario Source: Hexagon Transportation Consultants, Inc., 2017 Projected Increase in PM-Peak-Hour Motor Vehicle Trips The Comprehensive Plan Update process has used the Palo Alto 2030 travel demand forecasting model to project the number of PM-peak-hour motor vehicle trips that each of the six planning scenarios and the Preferred Scenario would generate. Palo Alto’s model is based on Santa Clara Valley Transportation Authority’s (VTA’s) travel demand forecasting model, which is based, in turn, on the Metropolitan Transportation Commission’s (MTC’s) regional model for the entire Bay Area. Palo Alto’s citywide model has calculated PM-peak-hour traffic volumes projected to occur in the year 2030 based on both the low end and the high end of the range of input land use assumptions shown in Table 5 above. As shown in Table 6, it is estimated that the level of development at the low end of the Preferred Scenario’s range would generate 3,710 additional PM-peak-hour vehicle trips with origins and/or destinations within the City of Palo Alto in the year 2030. The level of development at the high end of the Preferred Scenario’s range would generate 4,693 additional PM-peak-hour vehicle trips. For purposes of this nexus study, 4,202 PM-peak-hour vehicle trips, which is the average of the two estimates, is used as the projection of new PM-peak-hour vehicle trips that would be generated by the Preferred Scenario. This projection does not include trips for which both the origin and the destination are outside Palo Alto and are “pass through” trips of a regional nature. Existing Increase Under Land Use Assumption Conditions a Preferred Scenario b % Increase Housing Units 28,545 3,545 - 4,420 12.4 - 15.5% Population c 65,685 8,435 - 10,455 12.8 - 15.9% Jobs 95,460 9,850 - 11,500 10.3 - 12.0% Notes: (a) From the Comprehensive Plan Update EIR, reflects 2014 conditions. (b) Increase by 2030, based on the Preferred Scenario of the Comprehensive Plan Update EIR, excluding the Sphere of Influence. (c) Based on a housing unit vacancy rate of 5 percent and an average household size of 2.41 persons per household in 2030. Transportation Impact Fee Nexus Study September 21, 2017 P a g e | 1 3 Table 6 Projected PM-Peak-Hour Vehicle Trips Generated by the Preferred Scenario Source: Hexagon Transportation Consultants, Inc., 2017 Trip Reduction Due to TDM Plans One of the mitigation measures included in the Comprehensive Plan Update Final EIR for impacted intersections would require all new development projects above a certain size to prepare a Transportation Demand Management (TDM) Plan to reduce the number of peak hour motor vehicle trips generated by the project. The mitigation measure sets different trip reduction requirements for different areas of City, ranging from 20% to 50%. This TDM requirement will also be included in one of the policies in the Comprehensive Plan Update itself. Mitigation Measure Trans-1A in the Final EIR reads as follows: “Adopt a programmatic approach to reducing motor vehicle traffic with the goal of achieving no net increase in peak-hour motor vehicle trips from new development, with an exception for uses that directly contribute to the neighborhood character and diversity of Palo Alto (such as ground- floor retail and below-market-rate housing). The program should, at a minimum: Require new development projects above a specific size threshold to prepare and implement a Transportation Demand Management (TDM) plan to achieve at least the following reduction in peak-hour motor vehicle trips from the rates included in the Institute of Transportation Engineers’ Trip Generation Manual for the appropriate land use category and size. These reductions are deemed aggressive, yet feasible, for the districts indicated: o 50 percent reduction in the Downtown district o 35 percent reduction in the California Avenue area o 30 percent reduction in the Stanford Research Park o 30 percent reduction in the El Camino Real Corridor o 20 percent reduction in other areas of the city TDM plans must be approved by the City and monitored by the property owner or the project proponent on an annual basis. The Plans must contain enforcement mechanisms or penalties that accrue if targets are not met and may achieve reductions by contributing to citywide or employment district shuttles or other proven transportation programs that are not directly under the property owner’s control. Existing 2030 Scenario Assumption a Conditions Conditions Increase Low End of Preferred Scenario's growth assumptions 47,206 50,916 3,710 High End of Preferred Scenario's growth assumptions 47,206 51,899 4,693 Average of the two projections 47,206 51,408 4,202 Notes: (a) Based on the Preferred Scenario of the Comprehensive Plan Update FEIR, excluding Sphere of Influence. (b) PM-Peak-Hour Vehicle Trips includes both single-occupant and shared ride vehicle trips. PM-Peak-Hour Vehicle Trips b Transportation Impact Fee Nexus Study September 21, 2017 P a g e | 1 4 Require new development projects to pay a Transportation Impact Fee for all those peak hour motor vehicle trips that cannot be reduced via TDM measures. Fees collected would be used for capital improvements aimed at reducing motor vehicle trips and motor vehicle traffic congestion.” The Transportation Impact Fee referred to in the second bullet point of the mitigation measure is the subject of this nexus study. For purposes of estimating the total citywide reduction in peak hour motor vehicle trips through implementation of TDM plans by new development projects, Hexagon has assumed that all projects would meet the reduction target for the area where they are located. Hexagon has used the PM-peak-hour as the basis of analysis, since it is the basis of the existing citywide TIF and is typically more congested than the AM-peak-hour. The number of PM-peak-hour motor vehicle trips generated in each of the Traffic Analysis Zones (TAZs) used in the travel demand forecasting model was used as the basis for the appropriate trip reduction target for each area. When the amount of projected growth in each area and the appropriate trip reduction targets are taken into account, an estimated 1,347 PM-peak-hour motor vehicle trips would be eliminated on a citywide basis. After the TDM reduction is accounted for, the future growth included in the Preferred Scenario would generate 2,855 PM-peak-hour motor vehicle trips (see Table 7). This increase in vehicle trips represents 5.7% of the total PM-peak-hour vehicle trips projected for Palo Alto in the year 2030. Table 7 Projected Increase in PM-Peak-Hour Motor Vehicle Trips After TDM Reductions Source: Hexagon Transportation Consultants, Inc., 2017 Number of PM Peak-Hour Vehicle Trips Existing Conditions 47,206 2030 Conditions: Preferred Scenario (Average) a 51,408 Increase in PM-Peak-Hour Vehicle Trips 4,202 Trip Reduction due to TDM Plans b (1,347) New PM-Peak-Hour Vehicle Trips Generated 2,855 New Trips Generated as Percentage of Total 2030 Trips c 5.7% Notes: a Based on the average of the low end and the high end of growth assumptions in the Preferred Scenario. b Based on trip reduction targets for different areas of the city in Mitigation Measure TRANS-1a in the Comprehensive Plan Update FEIR. c The trip reduction of 1,347 is also subtracted from the total of 51,408 trips to calculate percentage. [2,855 / (51,408 - 1,347)=0.057] Transportation Impact Fee Nexus Study September 21, 2017 P a g e | 1 5 Trips Generated by Exempt Uses As described in Chapter 1, the citywide transportation impact fee currently exempts certain land uses from payment of the fee. However, the Planning Department has indicated that the number of projects that have been included in the model’s 2030 growth estimates and that would be exempt from the TIF is negligible. Therefore, trips generated by exempt uses have not been deducted from the estimate of 2030 PM-peak-hour vehicle trips. Projected Impacts Due to Growth As documented in the Comprehensive Plan Update Final EIR, all six of the planning scenarios examined would result in some significant transportation impacts. Because the Preferred Scenario is within the range of growth assumptions defined by the six planning scenarios, the Final EIR concluded that the Preferred Scenario would also result in significant and unavoidable transportation impacts, including impacts to intersections, to freeway segments, and to transit travel times (due to increased congestion). A significant impact to local residential streets (due to drivers avoiding increased congestion on arterials) was also projected, but would be mitigated to a less than significant level through a traffic calming program. Construction of traffic calming improvements is one element of the impact fee expenditure program presented in the next chapter. The purpose of all the improvements presented in the next chapter is to mitigate or offset to the extent feasible the impacts of the Preferred Scenario’s projected growth on all components of the transportation system, both through modifications to the roadway network and by reducing the number of single-occupant vehicle trips. Transportation Impact Fee Nexus Study September 21, 2017 P a g e | 1 6 3. Transportation Impact Fee Improvements This chapter presents the improvements proposed by the City to mitigate to the extent feasible the impacts of increased congestion caused by future growth. The growth in demand for the transportation system will be accommodated by the development of a safe, efficient, and environmentally sensitive multimodal transportation system. An effective multimodal transportation system will allow people to choose modes of transportation other than the single-occupant vehicle and will make bicycling, walking, taking transit, and ridesharing attractive, safe, cost-competitive and time-competitive choices. As envisioned by the City’s Sustainability and Climate Action Plan and the Comprehensive Plan Update , by providing adequate infrastructure for all modes, the City’s multimodal transportation system will lead to increases in alternative mode usage and reduce the number of motor vehicle trips. The City’s goal is to provide access by all transportation modes to employment, housing, shopping, schools, health care, entertainment, dining, and other common trip purpose destinations. Users of the transportation system would not have rely on a car to get where they need to go. Scope of Improvements and Fees With the over-arching goal of transportation system balance, the City has included a very broad range of improvements in its list of projects to be funded through Transportation Impact Fees. It focuses on bicycle and pedestrian facilities, and also includes intersection and roadway improvements that would mitigate impacts identified in the Comprehensive Plan Update Final EIR and other recent traffic studies, such as the Expressway Plan 2040 and the Page Mill Expressway Corridor Study Report. The expenditure plan is rooted in the City’s policies of encouraging alternative mode use, discouraging single-occupant vehicle trips, improving traffic flow without major capacity enhancements, and encouraging motorists to use arterials rather than local residential streets. Transitioning to a Single Citywide TIF As described in Chapter 1, there are currently four separate Transportation Impact Fees and four separate lists of improvements to be funded with them. The improvements to be funded with the San Antonio / West Bayshore and the Stanford Research Park / El Camino Real impact fees, both of which were initiated in the 1980s, were focused primarily on adding lanes at key intersections. The Charleston – Arastradero Corridor impact fee is dedicated to improvements that will enhance bicycle and pedestrian safety in that corridor. The citywide impact fee has been spent on upgrading the City’s traffic signals and on bicycle and pedestrian facilities. Hexagon recommends transitioning to a single citywide TIF rather than the current structure of three fees that apply in specific areas and one citywide fee. The City should identify improvements in each Transportation Impact Fee Nexus Study September 21, 2017 P a g e | 1 7 area that can be funded with the money that has already been collected for that area, but collect TIFs in the future (after completion of specified projects) on a citywide basis. The three area-specific fees would be allowed to “sunset” when their current balances are expended on appropriate projects. The reasons for this recommendation are as follows: 1. Areas that are (or will be) past their identified purpose: The development identified in the San Antonio/West Bayshore EIR and in the original nexus study for the San Antonio/West Bayshore area has already occurred. No funds have been spent out of the San Antonio/West Bayshore area funds in a very long time, and the city has either completed the projects on the list or no longer plans to do them. Thus, this area-specific fee is obsolete since the area has already been redeveloped. Of the four projects defined in the Palo Alto Municipal Code for the Stanford Research Park / El Camino area, two are already complete (intersection of Foothill/Arastradero/Miranda and intersection of Middlefield/Oregon Expressway) and two will completed soon (Page Mill/El Camino and Page Mill/Hanover). The City and the County have recently planned further improvements for the Foothill/Arastradero/Miranda intersection complex, but the project defined when the project list for this fee was updated in 2002 (adding an additional westbound lane on Arastradero at Miranda to provide two left-turn lanes and a right-turn lane at Foothill) was completed years ago. The nexus study for the Charleston-Arastradero fee stated that it was intended to fund a specific project, and the fee would terminate when that project was constructed. After the Charleston- Arastradero Corridor Project has been completed, the TIF that was created to help fund it should be eliminated, as its identified purpose would be accomplished. 2. Overlapping areas of the three specific area fees: Because the Charleston/ Arastradero area overlaps with portions of the San Antonio/West Bayshore area and the Stanford Research Park/El Camino Real area, it is now possible for one parcel to be subject to three different fees (two area-specific TIFs and the citywide TIF), while another parcel is only subject to the citywide TIF. All three of the specific area fees obviously overlap with the citywide fee. This overlap raises an equity issue. The nature of a boundary is that it arbitrarily indicates that development projects inside the boundary have impacts, but that projects outside the boundary do not. However, traffic patterns and traffic impacts are generally not so black and white. This issue is compounded when defined area boundaries overlap, and the resulting boundaries indicate that one location would generate far more impacts than another location. Most cities that have defined specific areas for TIFs do not have overlapping areas, whereby projects are subject to multiple transportation-related impact fees. Cities that define specific areas for impact fees (even if they do not overlap) need to be especially careful that the boundary defined for a fee is based on clear and recent data indicating that the projects within that area will result in impacts whereas projects outside the area will not. 3. Equity benefits with a single citywide TIF: When the citywide TIF was established, the projects it included (TDM program, shuttle, bike/ped projects) were clearly differentiated from the types of projects that were funded by the two older area fees (San Antonio/West Bayshore and Stanford Research Park), which were specific intersection improvements (capacity enhancements). Thus, certain areas having to pay two fees made sense, because they funded very different types of improvements. The types of improvement projects that are currently being proposed are a mixture citywide. It is hard to justify that Stanford Research Park/El Camino Real developments pay for specific improvements in that area and pay for improvements across Transportation Impact Fee Nexus Study September 21, 2017 P a g e | 1 8 town when other development areas don’t have the same burden. The impacts to be mitigated by the updated impact fee are those identified in the Comprehensive Plan Update FEIR, which is a citywide document. 4. Administrative Complexity and Project Readiness: It is clear that having four separate fees makes it harder for staff to keep project lists current for each fee, to collect funds, and to track funds available for specific projects. Hexagon believes that transitioning to a single list of TIF- eligible projects would simplify administration and would allow the City to spend money on projects in a more timely way, rather than waiting for a project in a specific area to become active. Geographic equity can be maintained by funding projects from all parts of the city from the single list. The only area-specific fee that Hexagon recommends be retained in the near-term is the Charleston – Arastradero Corridor impact fee, because it is being used to fund a specific project that is not yet completed. When the improvements identified in the Charleston - Arastradero Corridor Plan are fully implemented, we recommend that this fee be terminated, as proposed in the original nexus study. Hexagon recommends that the current balances in the San Antonio / West Bayshore and the Stanford Research Park / El Camino Real impact fee accounts be applied towards the cost of planned improvements in their respective areas. Recently proposed projects for both specific areas were described in Chapter 1. As provided for in the municipal code, the Chief Transportation Official can propose “alternative improvements in the area,” subject to the City Council’s approval. After the current TIF balances have been expended and the projects identified for their use have been completed, we recommend that the City eliminate the three specific area fees and charge only a citywide TIF to new development projects. Improvements To Be Funded by Transportation Impact Fees Table 8 lists the improvements that will be funded through a citywide transportation impact fee, the estimated total cost of each improvement, and an estimate of the City’s share of the cost (local match). Appendix A includes a complete project description for each project listed in Table 8. The list has been prepared by City staff to achieve a balanced transportation network and includes projects identified in the Comprehensive Plan Update, the Bicycle and Pedestrian Transportation Plan, the Page Mill Corridor Study, the Draft Expressway Plan 2040, and the City’s Capital Improvement Program. The list has been developed to benefit all parts of the City. All cost and local match estimates have been provided by City staff, based on the most recent planning estimates available. For projects for which an annual expenditure amount has been provided, the total cost assumes 14 years (2017 – 2030) of that annual amount. As shown in Table 8, the total cost of the improvements is $954,778,300, and the estimated City share of these improvements is $404,838,300. The City’s share of project costs is based on a 10% or 20% local match requirement for projects where federal, state, or county funding is anticipated, or in some cases, the balance required after expected outside grants. Four of the projects listed may also receive funding from the San Antonio / West Bayshore TIF Fund. Direct developer funding will also fund a portion of the cost for a few of the listed improvement projects. The direct developer funding is generally set forth in individual development agreements and is intended to reflect a fair-share contribution towards significant project impacts. Hexagon recommends that fair-share payments towards improvements that are included in the City’s impact fee program be credited (in the amount of any such payment) towards the project’s TIF Transportation Impact Fee Nexus Study September 21, 2017 P a g e | 1 9 payment, in order to avoid double-charging developers for planned improvements. No credit would be given for off-site improvements that are not included in the impact fee expenditure plan. California’s Mitigation Fee Act (AB 1600) does not permit new development to pay for existing deficiencies. A reasonable relationship must be established between the amount of the impact fee and the improvement costs that are attributed to future development. Because virtually all the improvements listed in Table 8 are projects that the City would pursue even if there were no additional growth in Palo Alto, it would not be appropriate to require future development to pay for the City’s entire share of the improvement costs. Since the number of additional PM-peak-hour trips to be generated by new development represents 5.7% of the total PM-peak-hour trips in the year 2030, as was shown in Table 7, that is the percentage of the City’s share of total project costs that should be funded through an impact fee. As shown in Table 8, 5.7% of the City’s share of the improvement costs is $23,075,783. This is the amount that is used to calculate the citywide transportation impact fee. Transportation Impact Fee Nexus Study September 21, 2017 P a g e | 2 0 Table 8 Citywide Transportation Impact Fee Improvements Source: Hexagon Transportation Consultants, Inc., 2017 Total City's Est. Est. Project Share Citywide Transportation Impact Fee Projects Cost a of Cost a Alma Street Enhanced Bikeway 2,000,000$ 2,000,000$ Adobe Reach Trail 100,000$ 100,000$ Bicycle and Ped Transportation Plan Implementation: $4 M/year 56,000,000$ 56,000,000$ Bol Park Path Reconstruction 1,125,000$ 1,125,000$ California Ave Caltrain Undercrossing ADA Retrofit/Reconstruction 13,000,000$ 13,000,000$ Citywide Bicycle Sharing System - Capital Costs 2,000,000$ 2,000,000$ Citywide Traffic Improvements (signage, striping): $500K/year 7,000,000$ 7,000,000$ Citywide Traffic Calming Program: $500K/year 7,000,000$ 7,000,000$ Downtown Mobility and Safety Improvements 1,447,100$ 1,447,100$ El Camino Real at Olive Avenue Traffic Signal 500,000$ 500,000$ El Camino Real at Page Mill Rd Intersection Improvements 2,400,000$ 240,000$ El Camino Real Pedestrian Safety and Streetscape Project 5,300,000$ 600,000$ Embarcadero Rd at El Camino Real Improvements 4,526,200$ 4,526,200$ Embarcadero Road at East Bayshore Road Traffic Signal 500,000$ 500,000$ Embarcadero Road at Middlefield Road Traffic Signal 500,000$ 500,000$ Fabian Way Complete Street 1,000,000$ 1,000,000$ Foothill Expwy and Arastradero Rd and Miranda Ave Improvements 60,000,000$ 6,000,000$ Geng Road Extension 2,200,000$ 2,200,000$ Hansen Way Connector Path 1,000,000$ 1,000,000$ Middlefield Rd Enhanced Bikeway 2,000,000$ 2,000,000$ Middlefield Rd Midtown Corridor Improvements 2,300,000$ 2,300,000$ Page Mill Rd at Hanover Street Intersection Improvements 2,400,000$ 240,000$ Page Mill Rd at Porter Drive Intersection Improvements 300,000$ 30,000$ Page Mill Road Expresssway Corridor Improvements 97,000,000$ 9,700,000$ Palo Alto Intermodal Transit Center 50,000,000$ 10,000,000$ Quarry Road Improvements and Transit Center Access 1,000,000$ 1,000,000$ Railroad Grade Separations 600,000,000$ 250,000,000$ San Antonio Rd/Ave Enhanced Bikeway 2,180,000$ 2,180,000$ San Antonio Rd/E Charleston Rd intersection improvements 1,000,000$ 1,000,000$ South Palo Alto Caltrain Pedestrian/Bicycle Grade Separation 8,000,000$ 8,000,000$ Traffic Signal and Intelligent Transportation Systems: $400K/year 5,600,000$ 5,600,000$ Transit Traffic Signal Pre-emption and Priority 1,400,000$ 1,400,000$ US 101/Adobe Creek Bicycle-Pedestrian Bridge 14,000,000$ 4,650,000$ Total 954,778,300$ 404,838,300$ Percentage to be Funded by Citywide TIF (5.7%)23,075,783$ Notes: (a) Both the estimated project cost and the estimated city share of the project cost are planning level estimates. For projects with an annual capital cost, the total estimated cost is based on 14 years (2017-2030). Transportation Impact Fee Nexus Study September 21, 2017 P a g e | 2 1 4. Recommended Fee Program This chapter presents the recommended fee structure and recommended fee level for the citywide Transportation Impact Fee. Motor Vehicle Trip-Based Fee When the citywide impact fee was adopted in 2007, it was decided to charge fees on a per-trip basis, based on PM-peak-hour motor vehicle trips, rather than on a per residential unit or per square foot basis. Levying fees on a per trip basis provides the closest possible nexus between the traffic impact caused by a new development project and the amount that it is required to pay. Projects that would generate little additional traffic on the City’s roadway network are not required to pay as much as projects that would generate more traffic. Both the City’s and VTA’s standards for preparing Transportation Impact Analyses (TIAs) require preparation of peak hour trip generation estimates. Thus, an estimate of PM-peak-hour trip generation is prepared for most development projects proposed in the City of Palo Alto as part of a TIA or, in the case of some small projects, a feasibility study or traffic operations study. These trip generation estimates have been used as the basis for calculating the citywide TIF during the approval process for all development projects since the citywide TIF was established in 2007, and would continue to be used for this purpose in the future. In the case of proposed projects that are so small that the City does not require a trip generation estimate to be prepared, City staff is responsible for calculating PM-peak-hour trip generation, using the same methodology as used for larger projects. Methodology for Estimating PM-Peak-Hour Trips The City currently requires that a development project’s estimate of PM-peak-hour trips follow the guidelines in VTA’s Transportation Impact Analysis Guidelines (TIA Guidelines). These guidelines require use of the trip generation rates in the most recent version of the Institute of Transportation Engineers’ (ITE) Trip Generation Manual, or other documented source when the ITE manual does not include an appropriate rate. The most recent version of ITE’s Trip Generation Manual is the 9th Edition, published in 2012. As discussed in Chapter 2, one of the mitigation measures proposed in the Comprehensive Plan Update Final EIR would require projects to develop strong TDM Plans to achieve specific reductions in PM-peak-hour motor vehicle trips from the ITE rates. The target reductions vary, depending on where Transportation Impact Fee Nexus Study September 21, 2017 P a g e | 2 2 the project is located, and would be enforced through monitoring and penalties. These targets take into account each district’s proximity to transit services provided by Caltrain, VTA, SamTrans, the Palo Alto Shuttle, Stanford’s Marguerite service, and the Dumbarton Express. The full text of the mitigation measure was provided in Chapter 2, but for ease of reference a portion of it is repeated here. Require new development projects above a specific size threshold to prepare and implement a transportation demand management (TDM) plan to achieve at least the following reduction in peak-hour motor vehicle trips from the rates included in the Institute of Transportation Engineers’ Trip Generation Manual for the appropriate land use category and size. These reductions are deemed aggressive, yet feasible, for the districts indicated: o Downtown area: 50 percent reduction o California Avenue area: 35 percent reduction o Stanford Research Park: 30 percent reduction o El Camino Real Corridor: 30 percent reduction o Other Areas: 20 percent reduction TDM plans must be approved by the City and monitored by the property owner or the project proponent on an annual basis. The plans must contain enforcement mechanisms or penalties that accrue if targets are not met and may achieve reductions by contributing to citywide or employment district shuttles or other proven transportation programs that are not directly under the property owner’s control. If the City requires development projects to implement TDM Plans that meet these targets, then it will also need to allow those projects to reduce their trip generation estimates by these same percentages for impact fee calculation purposes. These reduction percentages are substantially higher than the standard trip reduction percentages set forth in VTA’s TIA Guidelines in Table 1, “Standard Auto Trip Reduction Rates (page 33)” for proximity to transit, preparation of a TDM Plan, and mixed-use developments. However, the TIA Guidelines also allow projects to use target-based trip reductions instead of the standard trip reductions when estimating a project’s trip generation. In order to avoid potential confusion, Hexagon recommends that development projects use the target-based trip reduction approach when estimating trip generation in a TIA, so that the PM-peak-hour vehicle trip estimate in the project’s TIA is the same as the estimate used for impact fee calculation purposes. No additional reductions should be taken beyond the target percentage established by the City. If, however, a project uses the standard reduction percentages in the TIA Guidelines in preparing a TIA, the PM-peak-hour vehicle trip generation estimate in the TIA will be higher than the estimate for TIF calculation purposes, because the standard trip reduction percentages are lower than the City’s targets. Calculation of the Transportation Impact Fee The proposed amount of the citywide Transportation Impact Fee has been calculated by dividing the cost of the improvements to be funded by the TIF by the number of additional PM-peak-hour motor vehicle trips. The cost of the improvements to be funded with impact fees, as shown in Table 8, is $23,075,783. This amount represents 5.7% of the City’s share of the total cost, so that there is a reasonable relationship between the cost being borne by projected development and the traffic generated by that development. The projected number of trips generated by new development, as shown in Table 7, is 2,855 additional PM-peak-hour vehicle trips. The resulting impact fee is $8,083 per net new PM-peak-hour motor vehicle trip ($23,075,783 / 2,855 = $8,082.59). This fee would be applied to all development projects, except those exempt from the TIF, throughout the City of Palo Alto. Projects within the Charleston-Arastradero Corridor Area would also be required to pay that area-specific fee until the corridor project is completed and the fee is terminated. Transportation Impact Fee Nexus Study September 21, 2017 P a g e | 2 3 The citywide TIF rate for FY 2017-2018 is $3,575 per net new PM-peak-hour vehicle trip. The proposed rate of $8,083 is 126% higher than the current rate. If the City no longer charges fees for the San Antonio/West Bayshore area or the Stanford Research Park/El Camino Real area, the difference between the amount collected in total transportation impact fees under the existing fee structure and under the proposed fee structure will vary, depending on the location of the development project. The amount that would be collected also depends, of course, on the size and trip generation rate associated with the existing land use that would be replaced, if any. It is also important to note that the proposed TIF will be collected on an estimated 2,855 PM-peak-hour vehicle trips, which is significantly fewer trips than the 2007 “Addendum to the Palo Alto TIF Nexus Study” used in its fee calculation (4,029 PM-peak-hour trips). Because the Comprehensive Plan Update Final EIR includes a mitigation measure that requires projects in different areas of the city to reduce their trips by from 20% to 50%, new development will generate fewer trips than had been assumed in the past. From the standpoint of reducing traffic congestion and achieving the goals in the City’s Sustainability and Climate Action Plan, this is a clear advantage. It also means that the “per PM- peak-hour vehicle trip” TIF rate will be higher than in the past, but that the TIF will be collected on fewer trips. Indexing the TIF The amount of all four of the existing transportation-related impact fees is adjusted annually to reflect inflation. The Construction Cost Index, published by Engineering News Record, is used to adjust the amount of the fees. It is recommended that fee levels continue to be adjusted annually, in line with the Construction Cost Index. Since most of the improvements to be funded with the citywide TIF are capital projects for which cost estimates will increase with time, indexing the TIF will allow the fees collected to also increase over time in order to keep up with construction costs. In addition, the City should continue to follow the requirements of the Mitigation Fee Act with regard to reporting annually on expenditures from the TIF accounts and making findings every five years regarding the continuing need for development impact fees that remain unexpended or uncommitted five or more years after deposit of such fees. Exemptions from the TIF The citywide TIF currently exempts certain types of development from the TIF, consistent with the City’s impact fees for parks, community centers, libraries, and other community facilities. The existing exemptions are land uses that the City wishes to encourage. As stated in Chapter 1, the exempt uses include: Single-family home remodels or additions, Housing projects with 100% affordable housing units, Below Market Rate (BMR) housing units beyond the minimum number required by the City’s BMR housing program, Public buildings and schools, Retail, personal service, or automotive service that is 1,500 s.f. or smaller, Daycare, nursery schools, and preschools, On-site cafeteria/recreation/childcare facilities for employee use only, Hazardous materials storage. For reasons of administrative simplicity and consistency with other Palo Alto development impact fee programs and to continue to encourage development of the exempted land uses, the City should continue the above exemptions. Transportation Impact Fee Nexus Study September 21, 2017 P a g e | 2 4 As noted in Chapter 1, replacement single-family homes are not subject to the citywide TIF, because a new home would generate the same number of PM-peak-hour vehicle trips as an older home, based on the ITE trip generation rates. The residential uses that are subject to the citywide TIF include: new homes on an empty parcel, second units, multi-family residential projects, and required Below Market Rate units. Exemption for Accessory Dwelling Units The Palo Alto City Council approved an ordinance regarding Accessory Dwelling Units (ADUs) and Junior Accessory Dwelling Units (JADUs), also referred to as second units, on May 8, 2017, in response to recent state legislation and so as to provide more variety in the City’s housing stock and additional affordable housing opportunities. In light of these recent changes, the City may also wish to reconsider its existing policy of charging a TIF on second units. Adding ADUs and JADUs to the list of exemptions to the TIF would be consistent with the changes included in Ordinance No. 5412 designed to reduce the cost of creating such units. For example, ADUs and JADUs are exempt from the housing impact fee and from standard parking requirements. They are not, however, exempt from the community facilities impact fees. There is no clear source of revenue that would replace the revenue that would be lost by exempting ADUs and/or JADUs from the TIF. The City’s need for funding to address transportation needs would need to be balanced against the City’s desire to increase affordable housing opportunities when deciding whether to make this change. Exemption for Retail Uses The City currently exempts retail, personal service, and automotive service projects that are less than 1,500 square feet from the TIF, but it may wish to consider increasing the size of retail projects that are exempt from the TIF or establishing a lower TIF rate for neighborhood-serving retail development. Although very large regional destination retail projects tend to have large traffic impacts, smaller projects may actually facilitate shorter shopping trips by residents, less congestion, and reduced vehicle miles travelled (VMT). Even though retail projects have high trip generation rates, the traffic impacts of neighborhood-serving retail can be fairly low because of short trip lengths. Depending on where a retail project is located, it may serve to reduce VMT, if its location allows some people to drive shorter distances than they otherwise would to a shopping destination. Shorter trips are also more likely to be made by walking or bicycling. Retail projects also generate sales tax revenue for a municipality. The ITE average trip generation rate for retail (category 820) is 3.71 PM-peak-hour vehicle trips per thousand square feet (KSF). This is a much higher rate than the PM-peak-hour vehicle trip rates for residential or office uses. Based on the proposed TIF of $8,083 per net new PM-peak-hour trip, this amounts to a TIF of $29,986 per thousand square feet for retail projects, before accounting for any TDM trip reduction and before accounting for any existing land use. In parts of the city where a 20% TDM reduction is required, the TIF would be the equivalent of $23,989 per thousand square feet. On the El Camino corridor, the TIF would be the equivalent of $20,990 per thousand square feet after accounting for the required 30% TDM reduction. In the downtown district, the TIF would be the equivalent of $14,993 per thousand square feet after accounting for the required 50% TDM reduction in that area. It may be challenging for some retail projects to achieve the higher TDM reductions, since it is generally not feasible to institute TDM measures that apply to customers. Thus, the City may wish to consider increasing the size of retail projects that it exempts from the TIF or reducing the TIF for neighborhood-serving ground-floor retail projects. Hexagon recommends reducing the TIF rate by 50% (from the proposed level of $8,083 to $4,041) for retail projects that are less than 50,000 square feet. Transportation Impact Fee Nexus Study September 21, 2017 P a g e | 2 5 However, as with accessory dwelling units, there is no clear source of revenue that would replace the revenue that would be lost by exempting somewhat larger retail projects from the TIF. The City’s need for funding to address transportation needs would need to be balanced against the City’s desire to encourage neighborhood-serving ground-floor retail uses when deciding whether to make this change. Applying the TIF to Vacant Parcels In addition to the trip reductions described above, development projects typically receive credit for the trips generated by existing uses on the project site, in accordance with VTA’s TIA Guidelines. For example, if a proposed project would generate 70 PM-peak-hour trips and the existing use on the site generates 50 PM-peak-hour trips, then the net new trips generated would be 20 PM-peak-hour trips. However, if a site has been vacant for at least two years, then it is recommended that the credit for existing uses not be given when calculating the Transportation Impact Fee. To extend the above example, if the existing structure on the site has been unoccupied for over two years, then the fee should be calculated based on the full 70 PM-peak-hour trips that would be generated. The rationale for this is that the project would generate 70 new trips compared to recent and existing conditions, regardless of the site’s historical use. The rationale for two years as the minimum period of vacancy is that it is consistent with VTA’s TIA Guidelines requiring traffic studies to use traffic counts that are no more than two years old. Applying the TIF on Changing Land Uses Under the existing citywide impact fee, if a new use replaces a use that was exempt from the TIF, the trips generated by the exempt use cannot be subtracted from the proposed trips when the TIF is calculated. Further, the TIF is applied when the land use on a given parcel changes, due to the wide variation in trip generation rates for different uses. The TIF for changing land uses is triggered when a permit for construction, a zoning change, or a conditional use permit is required. Hexagon recommends that these provisions in the City’s current method for calculating the fee be retained. Transportation Impact Fee Nexus Study September 21, 2017 P a g e | 2 6 5. Transportation Impact Fees in Other Cities In order to consider the proposed citywide transportation impact fee of $8,083 per PM-peak-hour trip in the context of TIFs charged by other cities in the Bay Area, Hexagon has compiled information on current TIF levels in nearby cities. Our survey focused on nearby cities on the Peninsula and in the South Bay in order to provide relevant data on existing fee amounts in the vicinity of Palo Alto. Transportation impact fees in San Francisco and Oakland are also discussed. Most, but not all, nearby cities currently have a Traffic/Transportation Impact Fee. Cities that do not currently have a TIF include East Palo Alto, Belmont, Foster City, and Cupertino. However, Cupertino has recently conducted a nexus study, and it is likely that a TIF will be established in 2017. The TIF in many cities is provided on a per square foot basis or per dwelling unit basis, rather than on a per vehicle trip basis. In those cases, the underlying nexus study typically has calculated a per trip amount and then converted it to a rate for common land uses, using the trip generation rates in the ITE Trip Generation Manual. Sometimes a per trip rate is also provided for projects that do not fall into one of the land uses for which rates have been provided. Key distinguishing points about each city’s TIF program follows the TIF summary presented in Table 9. In order to facilitate the comparison of Palo Alto’s citywide TIF with TIFs charged in other municipalities that specify their TIF on a per unit or square footage basis, Hexagon has converted Palo Alto’s proposed per PM-peak-hour vehicle trip rate to a per thousand square feet (KSF) rate and per dwelling unit rate for the land uses most commonly used by other cities in their TIF programs. These have been calculated with the ITE trip generation rates for the PM-peak-hour, as follows (the ITE land use code for each is shown in parentheses): Single family home (210): 1.00 per dwelling unit Multi-family housing (Apartments 220): 0.62 per dwelling unit Office (710): 1.49 per thousand square feet (KSF) R&D (760): 1.07 per KSF Industrial (Light Industrial 110): 0.42 per KSF Retail (820): 3.71 per KSF Hotel (310): 0.60 per room Because the City would require projects to achieve a trip reduction based on a project’s location, Table 9 also presents the calculated TIF rate with a 20%, 30%, 35% and 50% reduction, corresponding to the TDM trip reduction targets in the Comprehensive Plan Update. These rates illustrate the range of fees on a per unit basis and per KSF basis after accounting for the TDM trip reductions. As shown in Table Transportation Impact Fee Nexus Study September 21, 2017 P a g e | 2 7 9, the rate per thousand square feet for retail uses is substantially higher than the other non-residential uses because the PM-peak-hour trip rate for retail uses is higher. Table 9 Transportation Impact Fees in Nearby Cities Source: Hexagon Transportation Consultants, Inc., 2017 Per PM Light Peak Hour Single Family Multi-Family Office R&D Industrial Retail Hotel City or Area within City Trip Per d.u.Per d.u.Per KSF Per KSF Per KSF Per KSF Per Room Palo Alto a Current Citywide TIF 3,575$ 3,575$ 2,217$ 5,327$ 3,825$ 1,502$ 13,263$ 2,145$ Proposed TIF, no TDM reduction 8,083$ 8,083$ 5,011$ 12,043$ 8,648$ 3,395$ 29,986$ 4,850$ Proposed TIF less 20% TDM reduction 6,466$ 4,009$ 9,634$ 6,919$ 2,716$ 23,989$ 3,880$ Proposed TIF less 30% TDM reduction 5,658$ 3,508$ 8,430$ 6,054$ 2,376$ 20,990$ 3,395$ Proposed TIF less 35% TDM reduction 5,254$ 3,257$ 7,828$ 5,621$ 2,207$ 19,491$ 3,152$ Proposed TIF less 50% TDM reduction 4,041$ 2,506$ 6,022$ 4,324$ 1,697$ 14,993$ 2,425$ Menlo Park Citywide 3,108$ 3,139$ 1,927$ 4,630$ 3,330$ 2,280$ 4,630$ 1,834$ Supplemental Downtown 379$ per PM peak hour trip within ECR/Downtown Specific Plan area Redwood City Non-Downtown 1,617$ 992$ 2,380$ 1,710$ 1,550$ 940$ 945$ Downtown 1,212$ 744$ 1,790$ 1,280$ 1,160$ 2,960$ 709$ San Carlos 3,052$ 1,892$ 4,547$ 3,266$ 2,228$ 11,323$ 1,831$ San Mateo 3,763$ 3,422$ 2,101$ 3,135$ 2,042$ 5,893$ Los Altos 6,152$ 3,777$ 9,076$ 11,269$ Mountain View North Bayshore Area 23,260$ 23,260$ 2,430$ 2,071$ Sunnyvale b Moffett Park 5,958$ 6,375$ 6,375$ 5,779$ 11,052$ 3,575$ South of S.R. 237 3,114$ 3,114$ 1,931$ 4,640$ 3,332$ 3,021$ 5,776$ 1,868$ Los Gatos c 9,300$ 8,854$ 6,185$ 10,258$ 7,542$ 6,482$ 39,711$ 7,598$ Santa Clara 1,000$ 1,000$ 670$ 400$ San Jose North San Jose Area d 15,410$ 9,677$ 7,742$ 14,440$ 19,880$ 4,299$ Evergreen-East Hills Area 15,148$ 13,170$ 13,170$ US 101/Oakland Ave/Mabury Rd 35,767$ per PM peak hour trip that would use one of the improved interchanges I-280/Winchester Blvd.25,641$ per PM peak hour trip that would use the proposed off-ramp improvement Fremont e 2,382$ 2,382$ 5,297$ 3,803$ 3,839$ 7,253$ 2,169$ Oakland 1,000$ 750$ 850$ 550$ 750$ 650$ Sources: TIF amounts are from each city's website. (a) The Palo Alto citywide TIF is on a per PM peak trip basis. TIF amounts for specific land uses have been calculated using ITE trip generation rates to facilitate comparison with other cities' fees. Derived rates for different land uses also shown with TDM reductions that would apply In downtown (50%), California Ave. (35%), Stanford Research Park and El Camino corridor (30%), and the rest of the city (20%). (b)Sunnyvale applies its R&D rate to office uses in Moffett Park. Retail rates reflect 50% reduction from ITE trip generation rates. (c) Los Gatos specifies its TIF as $930 per DAILY trip. PM peak hour trip amount has been approximated as 10 times the daily amount. Amounts for specific land uses are calculated using DAILY ITE trip generation rates and $930 per daily trip, and do not reflect any TDM reductions. (d) Retail uses under 100,000 square feet in North San Jose are exempt from TIF. (e) Fremont specifies TIF amounts for residential uses based on the number of bedrooms. Amount shown is for 2-3 bedroom units. Transportation Impact Fee Nexus Study September 21, 2017 P a g e | 2 8 The three area-specific TIFs are not shown in Table 9 because it is recommended that Palo Alto transition to a single citywide TIF. If they are also considered, then the differential between Palo Alto’s TIF program and the amounts charged by many other cities would be even greater. Highlights of Other Cities’ TIF Programs Because every city’s TIF program is unique, we have summarized below some of the key points about each city included in Table 9. Menlo Park Menlo Park is the only Peninsula city in our survey that has both a citywide TIF and an overlapping area-specific TIF, like Palo Alto currently has. Thus, it is the only other city where a parcel may be subject to more than one TIF. The citywide TIF is provided on a per unit or per square foot basis for common land uses and as a “per PM-peak-hour trip” rate of $3,108 for all other land uses. The supplemental TIF is applicable to properties within the El Camino Real/Downtown Specific Plan Area, and is specified as $379.40 per PM-peak-hour trip. Even when Menlo Park’s two TIFs are combined, the PM-per-peak hour rate is comparable to Palo Alto’s existing citywide PM-peak-hour rate, and far less than the proposed citywide rate. Redwood City Redwood City provides two different TIF rates for each land use category: a downtown rate and a non- downtown rate. The downtown rates are generally 25% lower than the non-downtown rates and take into account the downtown area’s proximity to transit, better bicycle and pedestrian connectivity, and the City’s requirement that downtown projects prepare a TDM Plan. The City’s fee schedule provides fee rates for 24 different land uses. San Carlos San Carlos provides TIF rates for 11 different land uses, and includes different rates for apartments and condominiums. Based on the rate of $3,052 for single-family residential uses and the fact that the ITE trip generation rate for that use in the PM-peak-hour is 1.0, it can be assumed that the underlying per PM-peak-hour rate is $3,052, which is less than Palo Alto’s current rate of $3,575 and much less than the proposed rate of $8,083. San Mateo San Mateo provides TIF rates for five different land uses, and states that $3,763 is the per PM-peak- hour trip rate to be used for other land uses. The fact that the per trip amount is higher than Palo Alto’s existing per trip TIF, but the San Mateo fees shown for specific land uses are lower than Palo Alto’s derived rates for those uses, is because standard ITE rates were not used for the San Mateo land use categories. San Mateo is currently in the process of conducting a new nexus study and updating its TIF rates. Los Altos Los Altos specifies Traffic Impact Fees for five different land uses: single-family residential, multi-family residential, senior residential units, commercial, and office. Its rates for most uses are higher than Palo Alto’s current rates (as they have been derived from its current per PM-peak-hour trip fee), but lower than the proposed Palo Alto rates before TDM reductions are accounted for. Compared with Palo Alto’s derived rates after accounting for TDM reductions, Los Altos’s rates are higher than the rates for areas where a 30% or greater TDM reduction would be required. Transportation Impact Fee Nexus Study September 21, 2017 P a g e | 2 9 Mountain View Mountain View does not have a citywide TIF, although it is currently considering adopting one. It established the North Bayshore Development Impact Fees in 2016 for transportation, water, and sewer purposes. This fee applies only in the North Bayshore area of Mountain View, and the transportation fee is specified for Office/R&D, retail, and hotel uses. Its fee of $23.26 per square foot for office and R&D uses is the second highest rate in our survey (only the fees in San Jose are higher). The rates for retail and hotel uses are much more moderate, since the city is trying to encourage those uses within the North Bayshore area in order to reduce overall vehicle miles traveled (VMT) to and from the area. Sunnyvale The City of Sunnyvale recently completed a new nexus study and approved new TIF rates. Sunnyvale has two different TIF rates: one for the area south of State Route 237 (SR 237) and one for the area north of SR 237. Rates are significantly higher for the area that is north of 237, commonly referred to as Moffett Park. For uses that are not otherwise specified, the per PM-peak-hour trip fee is $3,114 for the area south of 237 and $5,938 for the area north of 237. In Moffett Park, the city typically applies the R&D rate to office development projects. The city’s retail rates reflect a 50% reduction from the ITE rates: $6,375 per KSF in Moffett Park and $3,332 in the remainder of the city. Like Mountain View, the City is trying to encourage more neighborhood retail within its main office park area, so that employees do not have to leave the area to shop. The retail rate for the area south of 237 is also 50% lower than it would be if based on the ITE rate of 3.71 PM-peak-hour trips per thousand square feet. Los Gatos Los Gatos is the only city in this survey that specifies its TIF solely on a “per trip” basis (as does the Palo Alto citywide TIF), and does not specify TIF rates for any land uses. However, Los Gatos’s TIF is charged on a per daily trip basis, rather than a per PM-peak-hour trip basis. Because most land uses have a daily trip rate that is many times the PM-peak-hour trip rate, the Los Gatos rate of $902 per daily trip is higher than Palo Alto’s existing rate for most land uses, but lower than the proposed rate. For example, office uses (ITE category 710) have a daily trip generation rate of 11.03 trips per KSF and a PM-peak-hour trip rate of 1.49 trips per KSF. Thus, an office with 100,000 square feet would be required to pay $1,025,790 in Los Gatos (11.03 x 100 x $930 = $1,025,790) before accounting for existing uses or TDM or other reductions, and $532,675 in Palo Alto today (1.49 x 100 x $3,575) and $1,204,306 under the proposed rate of $8,083 per PM-peak-hour trip before accounting for existing uses or TDM reductions. Santa Clara Santa Clara does not have a citywide TIF. The city collects traffic mitigation fees only within a defined area and only on certain land uses within that area. Santa Clara’s Traffic Mitigation Program area is mostly north of the Caltrain tracks that run through the city. TIF rates are specified for the following four uses: office/R&D, industrial, warehousing/utilities/communications, and hotels. As seen in Table 9, Santa Clara’s TIF rates are the lowest in this survey, except Oakland. Because Santa Clara has not revised its TIF rates annually based on the Construction Cost Index or other inflation metric (as Palo Alto does), its rates have not changed since 2010, when the last nexus study update was conducted. The City of Santa Clara is in the process of conducting a new nexus study in 2017 in order to update its Traffic Impact Fees. San Jose San Jose has four different transportation impact fees that apply in specific areas of the city, but does not have a citywide TIF. The four areas defined for the four fees do not overlap, so no proposed project Transportation Impact Fee Nexus Study September 21, 2017 P a g e | 3 0 ever pays more than one TIF, and projects that do not fall into any of the four areas would not pay any TIF. San Jose has the highest impact fees of all the cities included in this survey. North San Jose Area The North San Jose TIF rates were established by the travel demand forecasting model used to project future traffic volumes in the area, not by standard ITE rates, and therefore account for internalization of trips within the area and much higher transit use and bicycle use than the ITE rates assume. North San Jose TIF rates are specified for the following five land uses: single-family residential, multi-family residential, industrial, hotel, and large-scale commercial, which is defined as regional-serving destination retail. Retail uses that are under 100,000 s.f. are exempt from the TIF. The industrial rate is typically applied to office use development in the area. For uses that do not fall into one of these categories, a rate of $15,410 per PM-peak-hour trip is used. This per trip fee is higher than the proposed citywide Palo Alto TIF per trip fee. However, in recent years, the City of San Jose has offered to significantly reduce these impact fees in order to stimulate more development in the area. Evergreen – East Hills Area This traffic impact fee is charged to all new development within the boundaries of the Evergreen-East Hills Development Policy area. Just two fee amounts are specified: the residential fee is $15,148 per unit and the commercial/office fee is $13.17 per square foot. This residential fee is higher than the proposed fee in Palo Alto, but the commercial/office fee is lower than Palo Alto’s proposed fee. U.S. 101/Oakland/Mabury TIF The U.S. 101/Oakland/Mabury TIF was established to partially fund the improvement of the U.S. 101/Oakland Road interchange and the construction of a new U.S. 101 interchange at Mabury Road. The TIF is charged to all new development in the vicinity of the existing U.S.101/Oakland Road interchange and the planned U.S. 101/Mabury interchange where the project-specific traffic analysis indicates that the development will generate net new vehicle trips on those interchanges. The current trip fee per PM-peak-hour trip is $35,767. This is the highest fee shown in Table 9. Interstate 280/Winchester Boulevard TIF The Interstate 280 (I-280)/Winchester Boulevard TIF is charged to all new development within the boundaries of the I-280/Winchester Transportation Development Policy area, that is projected to generate vehicle trips utilizing the planned improvement. The planned improvement is the design and construction of a new northbound off-ramp from I-280 to Winchester Boulevard. The TIF will provide partial funding for this project, and was established in 2016. The fee is $25,641 per PM-peak-hour trip projected to use the planned improvement. This TIF is also higher than the proposed Palo Alto fee. Fremont Fremont is included in the survey because it is on the other side of the Dumbarton Bridge and is thus the closest city in Alameda County to Palo Alto. Unlike other cities in this survey, it specifies its rates for residential uses in terms of the number of bedrooms in each dwelling unit. For studios and 1- bedroom units, the TIF is $2,133; for units with 2 or 3 bedrooms, the TIF is $2,382; and for units with 4 or more bedrooms, the TIF is $3,626. Oakland Oakland adopted new transportation, capital improvements, and affordable housing impact fees as of September 2016. Oakland’s transportation impact fees are lower than the rates of all the other cities included in the survey, except Santa Clara for residential uses. Transportation Impact Fee Nexus Study September 21, 2017 P a g e | 3 1 San Francisco San Francisco replaced its previous citywide Transit Impact Development Fee with a citywide Transportation Sustainability Fee (TSF) in 2015. The current fee is $8.13 per s.f. for residential projects with 21-99 units and $9.18 per s.f. for residential projects over 99 units. San Francisco is the only city in this survey that uses square footage as the basis of its residential rates, rather than dwelling units or vehicle trips. For non-residential projects, the fee is $18.94 per s.f. for projects under 99,999 s.f. and $19.99 per s.f. for projects over 99,999 s.f. Residential projects that are less than 20 units and non- residential projects with less than 800 s.f. are exempt from the fee. The non-residential rates are higher than Palo Alto’s proposed citywide TIF. San Francisco also has seven development impact fees that apply only in specific neighborhoods that include funding for transportation purposes. For example, a Community Infrastructure Impact Fee in the Market-Octavia Area includes funding for pedestrian and streetscape improvements, bicycle facilities, and transit, as well as funding for non-transportation purposes. The impact fees that apply to these seven specific districts or neighborhoods are based on adopted area plans. Some area fees are further subdivided into tiers or apply only if a project exceeds a specified Floor Area Ratio (FAR). Because of the complexity of the TSF and the area plan fees, San Francisco’s TIF rates are not included on Table 9. The nexus study that underlies the citywide Transportation Sustainability Fee addressed the relationship between the TSF and the area plan transportation fees. The area plan transportation fees were developed to address local impacts from new development, while the TSF is designed to fund projects and programs that address citywide impacts. The nexus study notes: “Regardless of the separation or overlap between area plan fees and the TSF, the TSF should be adopted at a level such that the combined area plan and TSF amounts are less than the maximum justified TSF amounts…This approach would ensure that new development is not overpaying for transportation impacts.” The TSF nexus study identified the maximum justified transportation fee for various transportation purposes and presented the amounts of the area plan fees and the TSF to ensure that the combined rates would not exceed the maximum justified amount. The maximum justified rate is $30.93 per s.f. for residential projects, $87.42 per s.f. for non-residential projects (except production, distribution, and repair uses), and $26.07 per s.f. for production, distribution, and repair uses. Summary Three Silicon Valley cities included in this survey currently have TIFs that are higher than the proposed Palo Alto fee of $8,083 per net new PM-peak-hour vehicle trip: Mountain View’s TIF for office/R&D uses in the North Bayshore Area, Los Gatos’s TIF for some land uses, and San Jose’s four TIF programs for some land uses. San Francisco’s Transportation Sustainability Fee is also higher than Palo Alto’s proposed TIF. Los Altos and the Moffett Park area of Sunnyvale have rates than are lower than the proposed “pre-TDM reduction” fee in Palo Alto, but higher than the amount that would be charged in some areas of Palo Alto after TDM reductions are accounted for. The TIF amounts in all other cities in the survey are lower than the proposed citywide Palo Alto TIF even when the highest trip reduction (50% in the downtown area) is accounted for, and many are lower than Palo Alto’s current citywide TIF of $3,575 per PM-peak-hour trip. Given that Palo Alto currently also charges area-specific fees in three defined areas of the city, the total TIF amount for parcels located in one or more of those areas is currently even higher than what is shown in Table 9 and much higher than most other cities. This is especially true in the Stanford Research Park/El Camino Real area, with a TIF of $12.42 per square foot. By eventually eliminating the Transportation Impact Fee Nexus Study September 21, 2017 P a g e | 3 2 three area-specific TIFs and transitioning to a single citywide TIF, the administrative process would be simplified in Palo Alto and the total TIF burden would be higher than what is charged in many other nearby cities but the differential would not be as great as it would be if the proposed new citywide rate were adopted and the area-specific TIFs were retained. Transportation Impact Fee Nexus Study September 21, 2017 P a g e | 3 3 6. Conclusions This nexus study reviews the City of Palo Alto’s existing transportation impact fees and makes recommendations regarding the impact fee program in the future. Findings have been made in accordance with the requirements of the Mitigation Fee Act (AB 1600). Existing Transportation Impact Fees The City of Palo Alto currently has four transportation-related impact fees, of which three are applied in specific areas of the city and one is applied citywide. These four impact fees, the year when each was first adopted, and key findings about each area are as follows: San Antonio / West Bayshore Area Traffic Impact Fee, 1986: This area has been redeveloped since the EIR and nexus study were prepared in 1986. . Stanford Research Park / El Camino Real CS Zone Transportation Impact Fee, 1989: Of the four intersection improvement projects listed in the municipal code for this area, two are complete. The City is currently coordinating with the Santa Clara County Department of Roads and Airports, which has jurisdiction over county expressways, to make improvements to three intersections on Page Mill Road. Charleston – Arastradero Corridor Pedestrian and Bicyclist Safety Impact Fee, 2005: The corridor project is not yet complete. The City plans to continue to use these impact fee funds towards completion of the Charleston-Arastradero Corridor Plan, as provided for in the original nexus study. Citywide Transportation Impact Fee, 2007: The City has used funds from the citywide TIF to fund bicycle and pedestrian improvements and an upgraded traffic signal system. Projected Future Growth and Resulting Impacts The Preferred Scenario of the Palo Alto Comprehensive Plan Update includes a range of 8,435 – 10,455 new residents and a range of 9,850 – 11,500 new jobs, The number of PM-peak-hour motor vehicle trips was projected for the low end and the high end of those growth assumptions and then averaged. It is estimated for purposes of this nexus study that there will be 4,202 additional PM-peak- hour motor vehicle trips generated by the Preferred Scenario. The Comprehensive Plan Update FEIR includes a mitigation measure that would require all new development projects to develop TDM plans to reduce the number of PM-peak-hour vehicle trips by a specified amount, depending on the location of the project. The range of required reductions is from Transportation Impact Fee Nexus Study September 21, 2017 P a g e | 3 4 20% to 50%. Based on the amount of growth projected for each area and the TDM trip reduction target for that area, there would be an estimated reduction of 1,347 PM-peak-hour trips, assuming all projects meet their TDM targets. Thus, it is estimated that 2,855 new PM-peak-hour trips would be generated by the future growth defined by the Preferred Scenario, which is 5.7% of the total estimated citywide PM-peak-hour trips in the year 2030. The level of growth included in the six planning scenarios that were analyzed as part of the Comprehensive Plan Update process would result in significant impacts to intersections, to freeway segments, to transit travel times (due to increased congestion), and to local residential streets (due to drivers avoiding increased congestion on arterials). Because all six of the planning scenarios that were examined in the Comprehensive Plan Update would result in some significant transportation impacts and because the City’s Preferred Scenario represents a level of growth that is within the range of the six planning scenarios analyzed, there would be significant and unavoidable transportation impacts with the Preferred Scenario. The purpose of the improvements to be funded by the TIF is to mitigate or offset these projected impacts to the extent feasible. Improvements to Mitigate Impacts Hexagon recommends transitioning to a single citywide Transportation Impact Fee (TIF) rather than the current structure of three fees that apply in specific areas and one citywide fee. However, we recommend retention of the Charleston-Arastradero Corridor fee until that bicycle and pedestrian safety project has been completed. The City’s Comprehensive Plan Update Final Environmental Impact Report is the basis for the nexus between the projected future development in the City and the proposed citywide TIF. The proposed citywide TIF expenditure plan is rooted in the City’s policies of encouraging alternative mode use, discouraging single-occupant vehicle trips, improving traffic flow without major capacity enhancements, and encouraging motorists to use arterials rather than local residential streets. The total estimated cost of the improvements to be funded partially with the citywide TIF is $954,778,300. For projects for which an annual expenditure amount has been provided, the total cost assumes 14 years (2017 – 2030) of that annual amount. The City’s estimated share of these total costs is $404,838,300. Based on the fact that 5.7% of the total PM-peak-hour motor vehicle trips generated in the year 2030 would be generated by new development, 5.7% of the City’s share of improvement costs, $23,075,783, is attributed to new development and should be funded by the citywide TIF. As noted earlier, new development will also be responsible for a significant upfront and ongoing investment in trip reductions, through implementation of TDM plans. Proposed Citywide Transportation Impact Fee The proposed amount of the citywide Transportation Impact Fee has been calculated by dividing the cost of the improvements to be funded by the TIF by the number of additional PM-peak-hour motor vehicle trips. The resulting impact fee is $8,083 per PM-peak-hour trip (23,075,783 / 2855 = $8,082.59). Additional recommendations include: The City should continue to charge the TIF on a “per PM-peak-hour trip” basis and use the trip rates included in the most recent edition of the ITE Trip Generation Manual. Trip reductions due to implementation of TDM Plans should be applied in accordance with the policies of the Comprehensive Plan Update. It is recommended that the existing exemptions from the citywide TIF be retained, for consistency with Palo Alto’s community facilities impact fees and to continue to encourage Transportation Impact Fee Nexus Study September 21, 2017 P a g e | 3 5 development of those land uses. The City may wish to consider a lower per PM-peak-hour trip fee for retail uses or increasing the size of retail uses that would be exempt from the TIF. The rationale for such a change is that since many retail projects serve to reduce vehicle miles travelled (VMT) and result in lower traffic impacts than their trip generation suggests, due to short trip lengths, pass-by trips, and diverted linked trips. Consider adding accessory dwelling units to the list of exemptions from the citywide TIF in order to encourage their development. The City currently includes “second units” in the list of uses that are subject to the TIF. It is recommended that development projects on parcels that have been vacant for two or more years do not receive credit for the existing uses on the parcel, when calculating the TIF. Continue to adjust fee levels annually, in line with the Construction Cost Index. Impact Fees in Other Cities The Transportation Impact Fees of numerous nearby cities were tabulated in order to provide context for considering Palo Alto’s existing citywide TIF of $3,575 and proposed TIF of $8,083 per net new PM- peak-hour vehicle trip. To facilitate comparison with other cities’ rates, Palo Alto’s “per PM-peak-hour vehicle trip” rates were converted to rates per dwelling unit, per thousand square feet, and per hotel room. Of the cities surveyed, four cities currently have TIFs that are higher than the proposed level in Palo Alto: Mountain View’s TIF for office and R&D uses in the North Bayshore Area, Los Gatos’s TIF for some land uses, San Jose’s four TIF programs for some land uses, and San Francisco’s Transportation Sustainability Fee. Los Altos and the Moffett Park area of Sunnyvale have rates than are lower than the proposed “pre-TDM reduction” level in Palo Alto, but higher than the amount that would be charged in some areas of Palo Alto after TDM reductions are accounted for. The TIF amounts in all other cities in the survey are lower than the proposed citywide TIF even when the highest trip reduction (50% in the downtown area) is accounted for, and many are also lower than Palo Alto’s current citywide TIF. Transportation Impact Fee Nexus Study Technical Appendices Appendix A Project Descriptions for Proposed TIF Improvements City of Palo Alto (ID # 8969) City Council Staff Report Report Type: Informational Report Meeting Date: 5/7/2018 City of Palo Alto Page 1 Summary Title: First Quarter 2018 ADU Development Report Title: Report to City Council on Accessory Dwelling Unit/Junior Accessory Dwelling Unit Development Activity for the First Quarter 0f 2018 From: City Manager Lead Department: Planning and Community Environment Recommendation This is an informational report and no action is requested. Background On May 8, 2017, City Council adopted Ordinance No. 5412 amending Title 18 (Zoning) of the Palo Alto Municipal Code to implement the new State requirements related to Accessory Dwelling Units (ADU) and Junior Accessory Dwelling Units (JADU). These new regulations have eased the development requirements for ADUs for property owners and support the creation of additional, more affordable, housing units. At the time of the adoption of the updated regulations, Council directed staff to provide quarterly reports on permits filed for the construction of accessory dwelling units. The City Council has received two Quarterly Reports (Report # 8068 and Report # 8871) on building permit activity for the last two quarters of 2017. Discussion This report includes data on the first quarter of 2018 ADU building permit activity and shows six ADU building permit applications were filed. All of the ADU applications are in the R-1 single family zone, with three of them located in South Palo Alto and three in North Palo Alto. The ADU applications are for detached units including new construction and garage conversions. Two of the proposed ADU applications are for studio units while the rest are for one bedroom units. The average unit size is around 380 square feet and one project proposes to utilize the floor area bonus and lot coverage exemption allowed under the City’s City of Palo Alto Page 2 ordinance. This project, however, proposed at 150 square feet, falls below the City’s current building code standards for minimum unit size. The building code provides that 220 square feet is the mini mum area for an efficiency unit, which is the smallest defined space for a unit. Although state law authorizes cities to permit efficiency units as small as 150 square feet, Palo Alto has not adopted such an ordinance. Staff has heard, but is unable to confirm if the State will modify the building code in the future to allow for smaller units by default. At present, the ADU incentive of an additional 175 square feet for properties that have reached the maximum amount of floor area does is less than the City’s minimum unit size and staff will be exploring options to address this in the upcoming ordinance. Since January 1, 2017 to March 31, 2018, a cumulative total of 36 ADU projects have been filed with the City. So far 17 of these projects have been approved and 18 projects are under review. Table -1 ADU Applications Filed Since January 1, 20171 Total Number of Applications Applications Approved Applicatio ns Under Review2 Application Withdrawn / Not Approved BP filed from January 1 - June 8 (Prior adoption of new ADU ordinance) 6 5 1 BP filed from June 9 – September 8 (Q3, 2017) 4 0 3 1 (Withdrawn) BP filed from Sept 9 - December 31 (Q4, 2017) 20 12 8 BP filed from January 1- March 31 (Q1, 2018) 6 0 6 Total 36 17 18 1 Source: Planning Department Accela Data 2017. Includes all projects with Building Permit applications filed from January 1, 2017. City of Palo Alto Page 3 Note 1: Applications filed in 2016 and receiving Building Permit approval in 2017 are not included in this dataset. Note 2: This category includes projects pending applicant resubmittals. ADU Code Updates In the fall of 2017, two additional state legislature bills, AB 494 and SB 229, were passed that clarified the previously adopted State ADU legislation; these became effective on January 1, 2018. The City made minor modifications to the local ordinance to reflect the state mandated requirements, and this was adopted by Council on January 29, 2018. (Ordinance 5430 In addition, as directed by Council, staff is in the process of reviewing the implementation of the ADU regulations and identifying potential changes in local policy that may be incorporated into a revised ordinance. Staff conducted two Study Sessions with the Planning and Transportation Commission (PTC) to discuss the potential changes and clarifications required to better implement the existing regulations. These study sessions were held on December 13, 2017, and January 10, 2018. Staff report links (Report # 8607, Report # 8773). On March 28, 2018 the PTC held a public hearing to discuss a draft ordinance as proposed by staff with amendments to Ordinance 5412 (Report # 9059 ). A second hearing is scheduled for April 25, 2018. Staff anticipates returning to the City Council in June with a draft ordinance. Attachments: Attachment A: List of ADU Applications from Jan 1-March 31 2018 (PDF) Attached Detached Attached Detached Garage Other Accessory Structure/ Space 1 South Palo Alto R-1 1/18/2018 Not Yet In Plan check x One bedroom 480 2 South Palo Alto R-1 2/23/2018 Not Yet In Plan check x One bedroom 159 3 North Palo Alto R-1 2/28/2018 Not Yet In Plan check x Studio 378 4 South Palo Alto R-1 3/1/2018 Not Yet In Plan check x x Studio 400 5 North Palo Alto R-1 3/8/2018 Not Yet In Plan check x x One bedroom 370 6 North Palo Alto R-1 3/27/2018 Not Yet In Plan check x x One bedroom 499 Building Permits Applied in 2018 Number of Bedrooms ADU Size (SQFT) Number of Applications Project Location Zoning Date Filed Building Permit Issued Application Status Type of ADU (New)Type of ADU (Converted)Type of Conversion City of Palo Alto (ID # 9179) City Council Staff Report Report Type: Informational Report Meeting Date: 5/7/2018 City of Palo Alto Page 1 Summary Title: Utilities Q1 and Q2 FY2018 Quarterly Report Title: Utilities Q1 and Q2 FY 2018 Quarterly Report From: City Manager Lead Department: Utilities Recommendation This is an informational report and no Council action is required. Executive Summary This update (Attachment A), on water, gas, electric, wastewater collection and fiber utilities, efficiency programs, legislative/regulatory issues, utility-related capital improvement programs, operations reliability impact measures and a utility financ ial summary, is for the Council and Utilities Advisory Commission’s (UAC’s) information. This update has been prepared to keep the UAC and Council apprised of the major issues that are facing the water, gas, electric, wastewater collection and fiber utilities. Items of special interest this quarter include: Electric supply costs through Q2 FY 2018 have been $3.7M lower than budgeted due to higher than forecasted precipitation in early 2017, leading to higher hydroelectric output in late 2017 (page 6). Natural gas costs were 15% lower than projected through Q2 FY 2018. These savings were passed directly to consumers through a gas rate adjuster that is adjusted monthly (page 10). Water use in Palo Alto has rebounded to approximately 2013 levels. While Sierra snowpack is below average for the year so far, the SFPUC does not anticipate a water shortage because reservoir levels are still high from the high precipitation in 2017 (page 13). The City ended its first generation net energy metering program as of December 2017 and transitioned to its successor net energy metering program. In the final months of 2017, 29 residents signed up for the regional SunShares group buy program for a total of 157 kW of rooftop solar, a significant share (15%) of the total solar installed through the program (page 16). The City is sponsoring a variety of education and outreach activities in spring 2018. See page 17 for more details. The City is supporting a Stanford University project to develop a platform to enable solar-based community microgrids using blockchain technology (page 18). A significant amount of legislation and regulation is in progress in 2018. See page 19 for highlights. Topics include water quality and affordability, carbon reduction efforts in generation, buildings, City of Palo Alto Page 2 and transportation, wildfires, transmission costs, and utility pole attachments for wireless facilities. The Operations Reserve funds for all utilities are projected to remain within guidelines through the end of the fiscal year (see page 22). Attachments: Attachment A - Utilities Update for First and Second Quarter of FY 2018 Utilities Quarterly Update First and Second Quarters of Fiscal Year 2018 April 2018 ATTACHMENT A Quarterly Update for First and Second Quarters of FY 2018 April 2018 i Utilities Quarterly Update Table of Contents I. Electricity ................................................................................................................... 3 Electric Supplies ............................................................................................................................................ 3 Electric Budget and Portfolio Performance Measures ................................................................................. 6 II. Natural Gas................................................................................................................. 9 Gas Supply Retail Rates ................................................................................................................................. 9 Gas Budget and Portfolio Performance Measures ....................................................................................... 9 III. Water ....................................................................................................................... 11 Water Availability ........................................................................................................................................ 12 Water Use Compared to Targets ................................................................................................................ 12 Recycled Water Strategic Plan .................................................................................................................... 13 Water Budget Performance Measures ....................................................................................................... 13 IV. Fiber Optics .............................................................................................................. 13 Commercial Dark Fiber Service ................................................................................................................... 13 Citizen Advisory Committee ........................................................................................................................ 15 V. Public Benefit, Demand Side Management Programs and Communications ............... 15 Energy Efficiency Program Achievements .................................................................................................. 15 Local Renewable Energy Programs ............................................................................................................. 15 VI. Research and Development and Innovation .............................................................. 17 Program for Emerging Technologies ........................................................................................................... 17 Electrification Activities .............................................................................................................................. 17 VII. Legislative and Regulatory Issues .............................................................................. 18 Summary ..................................................................................................................................................... 18 State Regulatory Proceedings ..................................................................................................................... 20 VIII. Utility Financial Summary ......................................................................................... 21 Electric Utility Overview .............................................................................................................................. 21 Gas Utility Overview.................................................................................................................................... 22 Wastewater Collection Utility Overview ..................................................................................................... 22 Water Utility Overview ............................................................................................................................... 23 Fiber Optic Utility Overview ........................................................................................................................ 23 Residential Bill Comparisons ....................................................................................................................... 25 Quarterly Update for First and Second Quarters of FY 2018 April 2018 ii List of Figures Figure 1: Electric Supply Resource Actual and Projection, 2017 to 2019 (as of March 8, 2018) .................. 4 Figure 2: CY 2018 Monthly Electric Supply Resource Projection (as of March 8, 2018) ............................... 5 Figure 3: Northern California Peak Electric Prices (as of March 9, 2018) ..................................................... 6 Figure 4: FY 2018 Electric Load and Resource Balance ................................................................................. 7 Figure 5: FY 2018 Electric Market Prices ....................................................................................................... 8 Figure 6: CPAU’s Gas Commodity Rates—July 2010 through June 2017 ..................................................... 9 Figure 7: Natural Gas – Budget vs. Actual ................................................................................................. 10 Figure 8: FY 2017 Natural Gas Prices ($/MMBtu) – Expected vs. Actual .................................................... 10 Figure 9: Cumulative Redwood Pipeline Cost vs. Market Benchmarks ...................................................... 11 Figure 10: Hetch Hetchy Precipitation as of March 5, 2018 ....................................................................... 12 Figure 11: Potable Water Use ..................................................................................................................... 12 Figure 12: Water Consumption and Cost – Budget vs. Actual .................................................................... 13 List of Tables Table 1: FY 2018 Electric Utility Supply Cost Summary ............................................................................... 7 Table 2: FY 2018 Electric Load and Generation Compared to Budget Projections ....................................... 8 Table 3: Status to date of all applications to the Program for Emerging Technologies ............................. 17 Table 4: Financial Projections, FY 2018 ....................................................................................................... 24 Table 5: FY 2018 Operations Reserves ($000) ............................................................................................ 24 Table 6: Residential Electric Bill Comparison ($/month) ............................................................................ 25 Table 7: Residential Natural Gas Bill Comparison ($/month) ..................................................................... 25 Table 8: Residential Water Bill Comparison ($/month) .............................................................................. 25 Table 9: Residential Wastewater Collection (Sewer) Bill Comparison ($/month) ...................................... 25 Table 10: Median Residential Overall Bill Comparison ($/month) ............................................................. 26 Table 11: FY 2018 Q2 Reserve Report from the City’s Financial System .................................................... 27 Quarterly Update for First and Second Quarters of FY 2018 April 2018 3 I. Electricity Electric Supplies Western Area Power Administration (Western) Issues 2017 was a historically wet year that resulted in very high reservoir levels across the state. The current water year, however, has so far been significantly drier than average. With statewide snowpack levels at only 34% of seasonal average as of March 5 th, hydro operators may attempt to conserve water, resulting in average to below average output through the end of the calendar year in spite of the robust reservoir levels. For the first two quarters of FY 2018, Western delivered 199 GWh to the City (24 GWh above long-term average levels for this period, and 48 GWh higher than the same period in FY 2017). For FY 2018 as a whole, Western is projected to supply 455 GWh (25% above long-term average levels, but 8% below FY 2017 supply levels). Calaveras Hydroelectric Project Issues Although storage levels at New Spicer Meadow Reservoir remain slightly above the long-term average level as of the end of February, generation projections for the remainder of this year have been scaled back dramatically over the last few dry months. For the first two quarters of FY 2018, Palo Alto’s share of the Calaveras project’s generation was 60 GWh (3% below the long-term average level). For FY 2018 as a whole, Calaveras is projected to supply 107 GWh (19% below long-term average levels, and 49% below FY 2017 supply levels). Electric Load and Resource Balance The size of the committed and planned market purchases over the last calendar year (CY) (shown in Figure 1 below) reflects a historically high level of hydroelectric output, which led to large quantities of market energy sales. For CY 2017, due to hydroelectric conditions and new solar projects coming online, the City was a net seller of 100 GWh of energy on a fixed -price forward basis, and a net seller of 269 GWh of energy on a short-term (spot market) basis. For CYs 2018 and 2019, approximately average levels of hydro output are projected, and long-term renewable resources (landfill gas, wind and solar) are projected to provide 55% of the City’s total load. Overall electric supply resources were surplus to load by about 2 8% for CY 2017 and this figure is expected to be 5% for CY 2018 and 6% for CY 2019; however, some periods are expected to see significant surplus positions while other periods see deficit positions (see Figure 2 below). Some of the surplus positions will be sold as generic energy ahead of the prompt month while the rest will be settled in the spot market through the California Independent System Operator, thus allowing the City to retain full credit for the environmental attributes of our renewable and hydroelectric generation. Quarterly Update for First and Second Quarters of FY 2018 April 2018 4 Figure 1: Electric Supply Resource Actual and Projection, 2017 to 2019 (as of March 8, 2018) Quarterly Update for First and Second Quarters of FY 2018 April 2018 5 Figure 2: CY 2018 Monthly Electric Supply Resource Projection (as of March 8, 2018) Electric Market Price History and Projections As of March 9, 2018, the price for on-peak energy for April 2018 in Northern California was $31.00 per megawatt-hour (MWh)1, while the prices for May and June 2018 were $31.75/MWh and $35.98/MWh, respectively. These values are approximately $3.50/MWh higher than they were at the time of the last quarterly report.2 On-peak prices for calendar year strips are in the range of $35 to $40/MWh for 2019 through 2021. These prices are approximately $2.00/MWh lower than they were at the time of the last quarterly report. Figure 3: Northern California Peak Electric Prices (as of March 9, 2018) below illustrates historical monthly on-peak prices and projected monthly forward prices for Northern California from 2005 through 2023. 1 Note that $31 per megawatt-hour is equal to 3.1 cents per kilowatt-hour. 2 Market prices for the previous quarterly report were from December 5, 2017. Quarterly Update for First and Second Quarters of FY 2018 April 2018 6 Figure 3: Northern California Peak Electric Prices (as of March 9, 2018) Electric Budget and Portfolio Performance Measures FY2018 Quarterly Update for First and Second Quarters of FY 2018 April 2018 7 Table 1 below shows the City of Palo Alto Utilities’ (CPAU’s) supply cost by cost category through the second quarter of FY 2018. Supply costs were $3.7 million (8.24 %) under budget primarily due to higher than expected market sales. Quarterly Update for First and Second Quarters of FY 2018 April 2018 8 Table 1: Q2 FY 2018 Electric Utility Supply Cost Summary Figure 4: FY 2018 Electric Load and Resource Balance Quarterly Update for First and Second Quarters of FY 2018 April 2018 9 Table 2: Q2 FY 2018 Electric Load and Generation Compared to Budget Projections Electric Market Prices Figure 5 shows monthly market prices. Electric market prices experienced fluctuations around the first quarter of FY 2018. Figure 5: FY 2018 Electric Market Prices Quarterly Update for First and Second Quarters of FY 2018 April 2018 10 II. Natural Gas Gas Supply Retail Rates Since July 1, 2012, the commodity portion of CPAU’s retail gas rates for all customers varies every month depending on the market price of natural gas . Figure 6 below shows the actual commodity rates charged from July 2010 through December 2017. These rates can also be found on the web at: http://www.cityofpaloalto.org/civicax/filebank/documents/30399. Note that gas commodity rates have risen from the low rates in the spring of 2016. Figure 6: CPAU’s Gas Commodity Rates—July 2010 through December 2017 Gas Budget and Portfolio Performance Measures Natural Gas Consumption and Costs: Budget vs. Actual Figure 7 compares actual natural gas supply volumes and costs with the FY 2018 budget. Natural gas use through the second quarter of FY 2018 was 0.8% higher than the budget forecast, but costs were 15.4% lower than budgeted amounts. Quarterly Update for First and Second Quarters of FY 2018 April 2018 11 Figure 7: Natural Gas – Budget vs. Actual Figure 8 shows actual gas prices at Malin and PG&E Citygate versus gas prices that were projected at the time the FY 2018 budget was developed. During FY 2018, gas prices have been significantly lower than budget. Figure 8: FY 2017 Natural Gas Prices ($/MMBtu) – Expected vs. Actual Value of CPAU’s Share of Redwood Pipeline Capacity Figure 9 shows the value of the Redwood gas transmission line at month-ahead market prices and the volumetric cost of that using that transmissionline. The Redwood pipeline allows the City to buy gas at the receipt point of Malin, Oregon and transport the gas to “PG&E Citygate”, which is normally a higher priced receipt point. The City’s share of the Redwood pipeline was a Quarterly Update for First and Second Quarters of FY 2018 April 2018 12 net benefit to the Gas Utility of approximately $435,349 through the second quarter of FY 2018. This is the difference between the cumulative value of Redwood capacity of $516,430 (the difference of the monthly index prices at the ends of the Redwood pipeline in Malin, Oregon and PG&E Citygate) and the cumulative volumetric transportation cost of using the Redwood pipeline of $81,081. Figure 9: Cumulative Redwood Pipeline Cost vs. Market Benchmarks Quarterly Update for First and Second Quarters of FY 2018 April 2018 13 III. Water Water Availability Sierra snowpack is below average as of the first week in March. The SFPUC does not anticipate a water supply shortage this year due above normal precipitation and water available on Tuolumne River last year. Figure 10 shows the precipitation at Hetch Hetchy. Figure 10: Hetch Hetchy Precipitation as of March 5, 2018 Water Use Palo Alto’s mandated water conservation target remains at zero. Water use in July through October was greater than in 2017 but less than the baseline in 2013. Winter use rebounded to 2013 levels. Water use this summer will reveal the extent to which Palo Altans invested in permanent water use reductions during the drought. Figure 11 shows the monthly water purchases from the SFPUC. Figure 11: Potable Water Use Quarterly Update for First and Second Quarters of FY 2018 April 2018 14 Recycled Water Strategic Plan Work continues on the Northwest County Recycled Water Strategic Plan (see Staff Report 6700). Ninety percent is being funded by the SCVWD (not to exceed $1.8 million) and the remaining ten percent is being paid by all the partne rs of the Regional Water Quality Control Plant. The feasibility study and risk assessment of expanding the existing recycled water distribution system to the Stanford Research Park will be presented to the UAC June. Water Budget Performance Measures Figure 12 below compare actual water supply volumes and costs to the FY 2018 budget projections. Actual water use through the second quarter of FY 2018 was 8.2% higher than budget estimates. Actual supply costs through the second quarter of FY 2018 were 1.6% above budget. Figure 12: Water Consumption and Cost – Budget vs. Actual IV. Fiber Optics Commercial Dark Fiber Service The total number of commercial dark fiber customers was 108 as of the end of the first and second quarters of FY 2018. The total number of active dark fiber service connections serving commercial customers was 224 at the end of the first quarter of FY 2018, and decreased to 211 in the second quarter of FY 2018 (some customers have multiple connections). Commercial customers generate approximately 81% of the dark fiber license revenues. Fiber Optic Network Rebuild Project The rebuild project will install new aerial duct or substructure (conduit and boxes), in addition to fiber backbone cable to increase capacity for sections of the dark fiber ring that are at or near capacity. This project will allow CPAU to meet customer requests for services. The projec t areas primarily cover the Stanford Research Park, Palo Alto Internet Exchange/Equinix at 529 Quarterly Update for First and Second Quarters of FY 2018 April 2018 15 Bryant, and Downtown areas. This project basically “overlays” new fiber over existing fiber routes in the network. Existing fiber will continue to serve City facilities and commercial dark fiber customers. 2017-2021 Capital Improvement Projects The budget for the rebuild project was reduced by the City Council during the Fiscal Year 2016 budget process. The Fiscal Year 2017 budget reflects this adjustment from $2 .4 million to $1.3 million. The rebuild is a CIP charged to system improvements. Rebuild Work Completed The route from PAIX at 529 Bryant to the Park Boulevard Substation has been completed. This phase of the project included substructure work, fiber pulling and cabinet installation. The new fiber installed for the backbone rebuild is 312 -count single-mode fiber (2 x 144-count single- mode fiber, plus 24-count single-mode fiber). Upcoming work scheduled over the next 12 months: Route from Park Substation to Hansen Substation Route from Hansen Substation to Stanford Research Park Additional phases/routes to be determined. The estimated cost for the rebuild is between $500,000 and up to $1,000,000 for substructure work. Another $250,000 for the overhead portion of the work is allocated for the project. CPAU crews are performing the equipment installation, cable pulling and terminations. CPAU’s substructure contractor is installing the conduit and boxes. Fiber-to-the-Premises Staff is currently working on the following tasks related to fiber expansion: On August 21, 2017, the City Council directed staff to develop a business case for a municipal - provided Fiber-to-the-Node (FTTN) network. The directive asked staff to: Engage a Management Consultant (“Consultant”) to develop the business case, funding plans, identify potential partners and/or service providers; Prepare a high level network design; Engage an engineering firm to design a FTTN network including an expansion optio n to build a citywide Fiber-to-the-Premises (FTTP) network; Draft ordinances that will lower the City's fiber construction costs, such as a Dig Once, String Once (a.k.a. One Touch Make Ready), Microtrenching and Multi -unit housing access. Staff is finalizing the Request for Proposal ("RFP") to retain a consulting firm to complete the above-noted items in the Council's directive. It is anticipated the RFP will be issued in late March, or early April 2018. Quarterly Update for First and Second Quarters of FY 2018 April 2018 16 Citizen Advisory Committee Staff continues to meet on a regular basis with the committee regarding fiber and wireless initiatives. The committee will review the above-noted RFP and provide feedback before it is issued. The most recent meeting of the committee occurred on December 14, 2017. V. Public Benefit, Demand Side Management Programs and Communications Energy Efficiency Program Achievements Newly Designed Program Webpages Our marketing and communications teams have been updating Utilities webpages for a fresh design and presentation. Updated pages include information on Carbon Neutrality, EV Chargers, Solar, Heat Pump Water Heaters and The Efficiency Genie program. More recently, staff created video and graphics for an engaging and dynamic display of information about the Home Efficiency Genie and Heat Pump Water Heater programs. City Rebate for HP Energy Efficiency Pays Back with New Sustainable Garden On Wednesday January 31, Mayor Liz Kniss joined HP in unveiling its new sustainable garden at its global headquarters in Palo Alto, partly funded by a rebate from Utilities for an energy efficiency project at the campus. By participating in the City’s Empower Palo Alto Program for energy efficiency, the company received a rebate for the energy savings and used the funds for a number of employee sustainability engagement projects, including the garden which employees will be able to tend. The City worked with HP on a sit e wide retro-commissioning project to optimize the efficiency of existing heating, ventilation and air conditioning (HVAC) systems, upgrade building energy management software, and install LED lighting. HP is already seeing energy savings results including a year-over-year site-wide electricity reduction of 1,430,149 kilowatt hours (kWh) and close to 105,000 therms. This is equivalent to the amount of energy needed to power roughly 250 homes in Palo Alto for a year. Local Renewable Energy Programs Net Energy Metering Successor Program Now Open The City’s original solar Net Energy Metering (NEM) program reached its capacity during the month of December and was extended through the end of 2017 following approval of a rule change by City Council. New solar customers will now be enrolled in the NEM Successor program, which provides customers with credit for hourly electricity generated and exported to the grid. With 62 new applications in December for reservation in the original NEM program, the City surpassed its NEM capacity of 10.8 megawatts (MW). Customers wanting to enroll in the original NEM program will be placed on a waiting list in the event additional capacity opens up. More information on solar in Palo Alto and NEM is available at cityofpaloalto.org/solar Quarterly Update for First and Second Quarters of FY 2018 April 2018 17 Sunshares Solar Group-Buy Program The final tallies are in and Palo Alto was the top “Outreach Partner” in the 2017 Bay Area SunShares solar group-buy program, both in terms of the number of solar contracts signed and kilowatts (kW) of rooftop solar capacity that will be installed through the program. In Palo Alto, 29 residents signed contracts for a total of 156.94 kW of rooftop solar. Customers in all nine Bay Area counties participating in the 2017 SunShares program contracted for a total of over 1 MW solar capacity. Of that total, Palo Alto’s share accounts for 14.5% of the solar capacity volume. Thanks, as always, go to our actively engaged and environmentally-conscious community members for their participation. Communications Highlights This section summarizes communications highlights, updates on major campaigns and noteworthy events. Copies of all current and past ads and bill inserts are available online at cityofpaloalto.org/UTLbillinsert Education, Workshops and Community Outreach Activities CPAU will be hosting or participating in the following activities over the next few months. Date Topic Location Time 10-Mar Graywater: Laundry to Landscape Mitchell Park CC 10am - 12noon 22-Mar Silicon Valley Water Awards Mitchell Park CC 6pm-9pm 24-Mar Designing Native Garden Mitchell Park CC 9am - 12noon 28-Mar All- Electric MF building tour for residents 430 Forest 6pm-8pm 29-Mar All- Electric MF building tour for professionals 430 Forest 3pm-5pm 31-Mar Avenidas Housing Conference MPCC 8am - 2pm 14-Apr Earth Day Festival & Great Race for Saving Water Mini Lecture 1: Lawn Replacement 101 Mini Lecture 2: Easy-to-Grow Native Plants EV Ride and Drive w/ Acterra Baylands Athletic Center 9am-2pm 14-Apr EV Ride and Drive @ the Great Race Earth Day Festival w/ Acterra Baylands Athletic Center 9am-2pm 24-Apr HPWH mini summit with manufacturers and various Cities Mitchell Park CC 11am-2pm 24-Apr HPWH workshop with Passive House California Mitchell Park CC 3pm-6pm 17-May EV Ride and Drive and Workshop w/ Stanford HIP Mitchell Park CC 4:30pm-8pm 12-May MSC Open House Mini Lecture 1: Easy-to-Grow Native Plants Mini Lecture 2: Easy-to-Grow Native Plants MSC 9am - 12noon 26-May Maintaining Native Gardens & Leak Detection Mitchell Park CC 9am - 12noon Quarterly Update for First and Second Quarters of FY 2018 April 2018 18 VI. Research and Development and Innovation Program for Emerging Technologies CPAU’s Program for Emerging Technologies, or PET, (www.cityofpaloalto.org/UTLInnovation) provides the opportunity for local businesses and organizations to submit proposals for innovative and impactful products to CPAU for review as a prospective partner. The goal is to find and nurture creative products and services that will manage and better use electricity, gas, water and fiber optic services. From the program’s inception in June 2012 through the second quarter of FY 2018, the program has received a total of 76 applications. Table 3 below summarizes the status of all applications through the second quarter of FY 2018. Table 3: Status to date of all applications to the Program for Emerging Technologies Deadline Total Received Under Review Declined/Closed Active Completed FY 2013 13 0 11 0 2 FY 2014 15 0 11 1 3 FY 2015 15 0 11 2 2 FY 2016 14 0 9 0 5 FY 2017 10 4 3 2 2 FY 2018 9 3 4 0 1 TOTAL 76 7 49 5 15 PET Project Highlight from the first half of FY 2018: Active Learning for Distributed Energy Resources Integration – A team from SLAC and Stanford is working on a project (“SolarChainX”) concerned with the power system’s integration of Distributed Energy Resources (DERs) into the distribution grid. The project will aim to demonstrate the systems integration of blockchain within the SLAC VADER platform for a solar-based community microgrid. The project could help CPAU examine the cost-effectiveness of alternative approaches to enhan cing reliability with behind- the-meter solar generation and battery storage. CPAU staff submitted a letter of support for SLAC and Stanford’s application for grant funding from the U.S. Department of Energy (DOE) Solar Energies Technology Office. Electrification Activities Heat Pump Water Heater Pilot Program The City launched a Heat Pump Water Heater (HPWH) pilot program in late Spring 2016 to encourage residents replace their gas water heaters with efficient HPWHsS. The pilot program website provides information such as rebate levels (up to $1,500), qualifying models that meet the minimum efficiency standard required by the California Energy Commission and installation considerations. With Development Center and Utilities collaboration, the City develope d a permit submittal check list for installing a HPWH. In May 2017, the program was expanded to include rebates (at a lower rate) for new construction projects as well. As of March 2018, over 40 residents have signed up for the program and the City has paid a rebate to 13 households, with expectations to double this number in the next couple of months. At the end of this month, the City is hosting an Open House at an all -electric multifamily new construction Quarterly Update for First and Second Quarters of FY 2018 April 2018 19 project, highlighting heat pump technology and ot her carbon free equipment. In April 2018 the City is also hosting its second HPWH workshop. With increased interest in HPWHs, the City is also looking into collaborating with other cities and agencies to create a midstream program to encourage regional market transformation. EV Charger Rebate Program The City began offering rebates in March 2017 for Electric Vehicle Charging Stations installed at schools, multi-family complexes, and non-profit buildings with common area charging accommodations using funds from Low Carbon Fuel Standard (LCFS) Credits. R ebates up to $30,000 are available for schools and non-profits and up to $18,000 are available for multi- family and mixed use buildings. As of March 2018 we have paid EV charger rebates out to 4 organizations. However, staff has been working with a number of multifamily complexes and non-profits and expect participation to be much more robust in the months ahead. Additionally, an online PV and EV calculator is available to help customers understand the costs associated with the use of solar PV and EVs in Palo Alto. The calculator uses City of Palo Alto Utility rates and takes into account customers’ roof exposures for solar generation. In the coming months we will host an EV ride and drive event at the Great Race for Saving Water again this year, along with co-hosting our second EV ride and drive and workshop with Stanford’s Health Improvement Program in May. View the City’s December 2017 utility bill insert. VII. Legislative and Regulatory Issues While the City operates on the Fiscal Year (July through June), the State legislature and Congress operate on the Calendar Year, and federal agencies follow the Federal Fiscal Year (October to September). In order to provide accurate information in this re port, staff notes here current issues, regardless of each entity’s operating year. Summary The State legislature began on January 3rd, and by February 16th, about 2,300 new bills were introduced. Some of these new bills relate to wildfires, with a focus on utilities and their electric lines. Most of the utility wildfire bills are specific to investor owned utilities and not publicly owned utilities. The legislation CPAU is tracking is summarized below. While these bills often have multiple potential impacts, only the CPAU-specific impacts are noted. Lastly, staff is tracking many spot bills, which are vague bills meant only to ensure a legislator can later come and insert specific language while meeting the February 16 bill introduction deadline. As the se bills are fleshed out, they will appear in future reports. State bills Water AB 2370 (Holden) Lead exposure: child day care facilities: family day care homes . Requires the testing of lead levels in the potable water of all child daycare facilities by July 2020. Quarterly Update for First and Second Quarters of FY 2018 April 2018 20 AB 3206 (Friedman): Water conservation: water meters: accuracy and performance standards. Requires the Energy Commission to set accuracy standards for water meters by 2020. Requires the State Water Board, by 2020, to adopt protocols related to the sampling and testing of water meters, and establish accuracy testing requirements by 2021. SB 623 (Monning): Water quality: Safe and Affordable Drinking Water Fund. Hold over from 2017. Imposes a two year fee on the utility bills of every water customer to fund a new state program. Money is distributed to communities lacking safe drinking water . The fee amount depends on the size of the water meter. SB 998 (Dodd): Water shutoffs: urban and community water systems. Prohibits water systems from shutting off water for non-payment until certain steps are taken, some of which require involvement form outside entities. May prohibit any shutoff altogether. Electricity AB 2809 (Patterson): California Renewables Portfolio Standard Program: hydroelectric generation facilities. Revises the definition of an eligible renewable energy resource for the purposes of the Renewables Portfolio Standard (RPS) Program to include hydroelectric generation facilities of greater than 30 megawatts, referred to as large hydro. AB 2814 (Gray): California Renewables Portfolio Standard Program: hydroelectric generation facilities. Like AB 2809, revises the definition of an eligible renewable energy resource for the purposes of the Renewables Portfolio Standard (RPS) Program to include hydroelectric generation facilities of greater than 30 megawatts. Other AB 1906 (Irwin): Business regulations: information privacy: connected devices: security features . Creates the “Internet of Things Botnet Prevention Act.” A manufacturer selling a connected device must equip the device with reasonable security features appropriate to the nature of the device and the information it may collect. AB 1995 (Eduardo Garcia): Local publicly owned electric and gas utilities: weatherization. For municipal utilities, allows current residential low income weatherization/energy efficiency programs to include (a) water conservation measures and, (b) products and services or software that allow customers to better understand and manage their electric and gas usage. AB 3232 (Friedman): Zero-emissions buildings and sources of heat energy . Establishes a goal of zero GHG emitting buildings built after January 1, 2030 and requires the CEC to develop reporting standards for utilities to report to customers GHG emissions associated with energy supply. Quarterly Update for First and Second Quarters of FY 2018 April 2018 21 SB 831 (Wieckowski): Land use: ADUs. Prevents a local agency, water utilities, and others from charging certain fees. Installation of a separate utility connection on some types of ADUs cannot be required. SB 901 (Dodd): Wildfire mitigation plans and measures. Requires POUs the development of policies and procedures by which we may assess when it may be necessary to deenergize electrical lines and, if so, which should be deenergized . Also requires the policies and procedures to include certain additional information . Potential November ballot measure: The Tax Fairness, Transparency and Accountability Act of 2018. Amends the state constitution to require a supermajority approval for local and state revenue measures. Expands the definition of a tax to include some charges local governments currently treat as regulatory and service fees. According to the independent Legislative Analyst’s Office, this measure could “substantially decrease annual local revenues.” Federal bills H.R. 2371 (Goser R-AZ): Western Area Power Administration Transparency Act. Requires the Western Area Power Administration (WAPA) to establish a 7 year pilot project to provide increased transparency for customers. H.R. 4858 (Eshoo): Clearing Local Impediments Makes Broadband Open to New Competition and Enhancements Act (CLIMB ONCE Act). Clarifies that the federal Pole Attachment Act does not limit the ability of a State to adopt a “one touch make ready” policy for pole attachments State Regulatory Proceedings Below, staff notes the issues we are currently tracking in various regulatory agencies. California Air Resources Board Cap-and-Trade, the Low Carbon Fuel Standard, and Sulfur Hexafluoride emissions from gas insulated switchgear. California Energy Commission POU-Specific GHG Emission Reduction Targets, continue RPS regulatory proceedings, and carbon intensity factor reporting in the Power Content Labels. State Water Resources Control Board Permanent water conservation regulations and Water Loss Audits/Water Loss Control Reporting. California Public Utilities Commission While the CPUC maintains jurisdiction over IOUs and not POUs such as Palo Alto, we engage in some of their efforts. These include: physical security, updating state fire maps, and the possibility of a statewide utility pole database. Quarterly Update for First and Second Quarters of FY 2018 April 2018 22 On November 17, 2017 PG&E filed its 2019 Gas Transmission and Storage (GT&S) application, requesting a rate increase. If adopted without changes, PG&E’s rate proposal would increase Palo Alto’s costs by $1.8M per year or 13%. The proposed cost increases are largely due to the 2015 Aliso Canyon storage leak and the resulting storage field regulations effective in the near future. Additionally, PG&E’s storage facilities will require significant upgrades. Part of PG&E’s plan involves retiring older storage fields that will be too expensive to operate under the new rules and relying heavily on Independent Storage Providers (ISPs) to provide the needed storage services on the system. Palo Alto is a party to the proceeding; a pre-hearing conference was held on January 4, 2018. California Independent System Operator (CAISO) The CAISO is embarked on a Transmission Allocation Cost (TAC) structure stakeholder initiative that CPAU is tracking, primarily though our participation in the Bay Area Mun icipalTransmission Group (BAMx). Federal Regulatory items The FCC continues it’s proceedings regarding regulating pole attachments (small cells) VIII. Utility Financial Summary This section describes the unaudited actual financial results for FY 2018 for all Utilities funds. The Council-adopted long-term Financial Plans for the Electric, Gas, Wastewater Collection, and Water Funds will be updated for FY 2019 during the budget review process. Electric Utility Overview Sales for FY 2018 are currently projected to be 0.1% higher than budgeted, with sales revenues consequently higher than budget by about $1.5 million. With the end of the drought, deliveries from Western and Calaveras hydroelectric resources have been larger than projected, which resulted in surplus energy revenues being greater by $1.8 million. Other revenues, including transfers in and interest income, have been revised downwards based upon FY 2017 actuals. Purchased electricity cost projections for 2018 are anticipated to be $4.5 million lower than in last year’s financial plan. Lower cost projections have stemmed from better than anticipated hydro production, though Transmission Access Charges (TAC) continue to be higher than originally budgeted. Capital cost estimates and operations cost estimates (which includes other than purchased electricity costs) increased by $5.3 million and $3.8 million, respectively. The net effect on reserves is projected to be an additional withdrawal of $2.2 million. Both the Electric Distribution and Electric Supply Operations Reserves were below the FY 2017 reserve minimum guideline levels based on these figures. In the FY17 Financial Plan, several proposed transfers from the Hydro Rate Stabilization (up to $9 million) and Rate Stabilization reserves (up to $9 million) were proposed and approved, as well as an additional $10 million from the Electric Special Projects reserve as a short term loan . The City did not execute the Quarterly Update for First and Second Quarters of FY 2018 April 2018 23 transfers, but had they been performed, reserves would be above minimum levels. Necessary transfers will be performed in FY 2018 to bring these reserves back above minimum levels. The Electric Utility CIP Reappropriation and Commitment Reserves totaled $22.8 million at the end of Q2 FY 2018. Gas Utility Overview Current projections for Gas Utility sales in FY 2018 are slightly higher than last year’s forecast. However staff anticipates capital investment costs will be substantially higher in FY 2018 than projected in the prior financial plan. The gas main replacement (GMR) program is in the final stages of completing a major milestone with the replacement of gas mains made from Acrylonitrile-Butadiene-Styrene (ABS) plastic. The current budget for the gas main replacement program takes into acc ount the recent rise in construction costs. Several factors are contributing to the increase in construction costs and include economic recovery in the Bay Area, a greater focus on infrastructure improvement by many municipal agencies, and the higher demand for utility contractors within these fields. CPAU has seen the replacement cost per linear foot increase by 25% to 50% over the last couple of years. In operations costs there is a short run addition of $1 million, starting in FY 2019 for cross-bore inspections as well as general inflationary increases of around 2-3% per year. Staff projects the Gas Operations Reserve to be within guideline levels throughout the forecast period and for the Rate Stabilization Reserve to be exhausted by the end of 2020 to help smooth rate increases over several years. The Gas Utility CIP Reappropriation and Commitment Reserves totaled $5.8 million at the end of Q2 FY 2018, of which $600,000 was committed to projects under contract. Wastewater Collection Utility Overview Staff estimates higher costs in FY 2018 than forecast. Capital improvement costs increased by around $0.8 million for main replacement project design costs not included in last year’s projections. Another contributing factor is that staff projects higher treatment costs due to increasing capital and operations costs at the RWQCP. Additionally, staff project s less revenue from connection and capacity fees and interest because actual revenues from these sources were lower than projected in FY 2017. Staff projects the Wastewater Collection Operations Reserve to be within the guideline levels for FY 2018. Should it be needed, the CIP reserve has an additional $0.98 million that could be utilized in case of emergency. The Wastewater Collection Utility CIP Reappropriation and Commitment Reserves totaled $3.3 million at the end of Q2 FY 2018, of which $2 million was committed to projects under contract. Quarterly Update for First and Second Quarters of FY 2018 April 2018 24 Water Utility Overview After the end of the drought, water sales have started to increase. Water usage plateaus post- drought and the speed with which usage reaches that level is difficult to predict. Purchases were also commensurately higher. Staff anticipates the effort to rehabilitate mains along University Avenue will have much higher costs than initially projected. Additionally staff anticipate expense increases from higher water supply costs associated with higher water sales. Staff project the Water Operations Reserve to be above the minimum guideline range; should it be needed, the Rate Stabili zation and CIP Reserves have an additional $4.1 million and $2.7 million, respectively, that could be utilized. The Water Utility CIP Reappropriation and Commitment Reserves totaled nearly $15 million at the end of Q2 FY 2018, of which $9.2 million was for projects under contract. Fiber Optic Utility Overview Staff projects Fiber sales and expenses through the end of FY 2018 to be $4.5 million and $4.1 million respectively. Expenses have dramatically increased over the past few years, primarily due to the Fiber Optic System Rebuild CIP project. The dark fiber network was constructed in the early 1990s. Several sections of the dark fiber system have either reached capacity or are in need of repair, thus limiting the City’s ability to add new customer connections. As shown in Table 11, the Fiber Optics Rate Stabilization Reserve was $25.6 million as of the end of Q2 FY 2018. Quarterly Update for First and Second Quarters of FY 2018 April 2018 25 Table 4: Financial Projections, FY 2018 Sales Volumes Revenue ($000) Expense ($000) Net Reserve Change ($000) Electric Utility Financial Plan 908,459 MWh 158,675 (158,360) 315 Current Forecast 909,595 MWh 161,185 (163,114) (1,929) Change from Financial Plan 1,136 MWh 2,510 (4,754) (2,244) 0.1% 1.6% 3.0% Gas Utility Financial Plan 27,434,000 therms 38,225 (40,098) (1,873) Current Forecast 27,584,182 therms 36,214 (37,727) (1,514) Change from Financial Plan 150,182 therms (2,011) 2,371 359 0.5% (5.3%) (5.9%) Water Utility Financial Plan 4,037,731 CCF 42,391 (43,494) (1,102) Current Forecast 4,580,430 CCF 48,269 (48,333) (65) Change from Financial Plan 542,699 CCF 5,878 (4,840) 1,037 13.4% 13.9% 11.1% Wastewater Collection Utility Financial Plan 19,170 (17,613) 1,557 Current Forecast 18,692 (19,296) (605) Change from Financial Plan (478) (1,683) (2,162) (2.5%) 9.6% Fiber Optic Utility Financial Plan 4,891 (4,144) 747 Current Forecast 4,526 (4,144) 382 Change from Financial Plan (365) (7.5%) 0 0% (365) Table 5: FY 2018 Operations Reserves ($000) Electric Supply Electric Distribution Gas Water Wastewater Collection Fiber Optic * Beginning 12,891 7,022 13,549 12,735 6,393 25,420 Projected Change 5,813 2,916 (4,341) 1,006 (605) 382 FY 2018 Ending Projected 18,704 9,938 9,208 13,741 5,788 25,802 Reserve Minimum 16,860 9,114 5,574 7,016 2,686 896 Reserve Maximum 33,721 13,550 11,147 13,741 6,715 1,793 * For Fiber Optics, the Reserve is the Rate Stabilization (not the Operations) Reserve Quarterly Update for First and Second Quarters of FY 2018 April 2018 26 Residential Bill Comparisons Table 6: Residential Electric Bill Comparison ($/month) As of December 1, 2017 Season Usage (KWh/mo) Palo Alto PG&E Santa Clara Roseville Summer (May -Oct) 300 36.48 60.23 34.21 55.67 365 (Median) 46.78 78.04 43.08 62.10 650 100.93 157.12 75.58 97.85 1200 205.45 309.74 140.59 179.96 Table 7: Residential Natural Gas Bill Comparison ($/month) As of October 1, 2017 Season Usage (therms) Palo Alto Menlo Park, Redwood City, Mountain View, Los Altos, and Santa Clara (PG&E Zone X) Roseville (PG&E Zone S) Summer (Jun-Oct) 15 18.73 19.45 19.84 18 (Median) 25.45 23.34 25.34 30 40.57 45.12 47.26 45 61.26 72.54 74.68 Table 8: Residential Water Bill Comparison ($/month) As of January 1, 2018 Usage CCF/month Palo Alto Menlo Park Redwood City Mountain View Santa Clara Hayward 4 43.41 50.51 50.10 37.10 22.76 33.20 (Winter median) 7 65.91 73.36 70.56 57.50 39.83 54.62 (Annual median) 9 84.27 88.60 84.20 71.10 51.21 68.90 (Summer median) 14 130.17 126.70 128.86 105.10 79.66 106.51 25 231.15 210.50 247.97 220.70 142.25 199.02 Based on the FY 2013 BAWSCA survey, the fraction of SFPUC as the source of potable water supply was 100% for Palo Alto, 95% for Menlo Park, 100% for Redwood City, 87% for Mountain View, 10% for Santa Clara and 100% for Hayward. Table 9: Residential Wastewater Collection (Sewer) Bill Comparison ($/month) As of February 1, 2018 Palo Alto Menlo Park Redwood City Mountain View Los Altos Santa Clara Hayward 34.83 89.33 76.68 37.75 36.27 41.65 31.29 Quarterly Update for First and Second Quarters of FY 2018 April 2018 27 Table 10: Median Residential Overall Bill Comparison ($/month) As of December 1, 2017 Utility and Usage Palo Alto Menlo Park Redwood City Mountain View Santa Clara Hayward Electricity (365 kWh/mo) $ 46.78 $ 78.04 $ 78.04 $ 78.04 $ 43.08 $ 78.04 Gas (18 th/mo) 25.45 23.41 23.41 23.41 23.41 23.41 Wastewater 34.83 89.33 76.68 37.75 41.65 31.29 Water (9 CCF/mo) 84.27 88.60 84.20 71.10 51.21 68.90 TOTAL $191.33 $279.38 $262.33 $210.30 $159.35 $201.64 Quarterly Update for First and Second Quarters of FY 2018 April 2018 28 Table 11: FY 2018 Q2 Reserve Report from the City’s Financial System (‘000)