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Home My WebLink About2019-12-02 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, December 2, 2019 Special Meeting Council Chambers 5:00 PM Agenda posted according to PAMC Section 2.04.070. Supporting materials are available in the Council Chambers on the Thursday 11 days preceding the meeting. PUBLIC COMMENT Members of the public may speak to agendized items; up to three minutes per speaker, to be determined by the presiding officer. If you wish to address the Council on any issue that is on this agenda, please complete a speaker request card located on the table at the entrance to the Council Chambers, and deliver it to the City Clerk prior to discussion of the item. You are not required to give your name on the speaker card in order to speak to the Council, but it is very helpful. Public comment may be addressed to the full City Council via email at City.Council@cityofpaloalto.org. TIME ESTIMATES Time estimates are provided as part of the Council's effort to manage its time at Council meetings. Listed times are estimates only and are subject to change at any time, including while the meeting is in progress. The Council reserves the right to use more or less time on any item, to change the order of items and/or to continue items to another meeting. Particular items may be heard before or after the time estimated on the agenda. This may occur in order to best manage the time at a meeting or to adapt to the participation of the public. To ensure participation in a particular item, we suggest arriving at the beginning of the meeting and remaining until the item is called. HEARINGS REQUIRED BY LAW Applicants and/or appellants may have up to ten minutes at the outset of the public discussion to make their remarks and up to three minutes for concluding remarks after other members of the public have spoken. Call to Order Study Session 5:00-6:00 PM 1. Joint Study Session With the Architectural Review Board Special Orders of the Day 6:00-6:15 PM 2. Proclamation Recognizing Carol Macpherson on her Retirement From Rinconada Masters Agenda Changes, Additions and Deletions City Manager Comments 6:15-6:25 PM Oral Communications 6:25-6:40 PM Members of the public may speak to any item NOT on the agenda. Council reserves the right to limit the duration of Oral Communications period to 30 minutes. Minutes Approval 6:40-6:45 PM 3. Approval of Action Minutes for the November 4 and November 18, 2019 Council Meetings 2 December 2, 2019 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 6:45-6:50 PM Items will be voted on in one motion unless removed from the calendar by three Council Members. 4.Approval of Contract Number C20175534A With MuniServices, LLC for Tax and Fee Consulting Services in a Total Not-to-Exceed Amount of $700,000 Over a Five-year Term; and Approval of a Budget Amendment in the General Fund 5.Approval and Authorization for the City Manager or Designee to Execute Amendment Number 1 to Contract Number S17165514 With Clean Power Research, LLC for the Provision of a Web-based Solar Photovoltaic (PV) and Electric Vehicle (EV) Calculator for City of Palo Alto Utility (CPAU) Customers, Increasing the Term for Five Years and Increasing Compensation by $275,000, for a Total Not-to-Exceed Amount of $410,000 6.Approval of Amendment Number 4 With Verizon Wireless Through December 31, 2020, Utilizing the Western State Contracting Alliance (WSCA) Contract 1907, California Participating Addendum, a Cooperative Agreement for Wireless, Voice and Broadband Services, Accessories, and Equipment for an Annual Cost of Approximately $300,000 7.Adoption of a Resolution Amending Utility Rate Schedule E-15 (Electric Service Connection Charges) and Approving Updates to the City's Program for the use of Revenues From the Sale of Low Carbon Fuel Standard Credits 8.Approval of a Budget Amendment in the General Fund for Amendment Number 2 to Contract Number C18171717 With Perkins + Will to Provide Professional Services Related to the Preparation of the North Ventura Coordinated Area Plan (NVCAP) (Continued From November 18, 2019) 9.SECOND READING: Adoption of an Ordinance Repealing Chapter 16.17 of Title 16 (Building Regulations) Related to the California Energy Code and Adopting a new Chapter 16.17 Incorporating the 2019 California Energy Code With Local Amendments and Amendments to Title 24, Chapter 6 of the California Code of Regulation (FIRST READING: November 4, 2019, PASSED 7-0) Q&A Q&A 3 December 2, 2019 MATERIALS RELATED TO AN ITEM ON THIS AGENDA SUBMITTED TO THE CITY COUNCIL AFTER DISTRIBUTION OF THE AGENDA PACKET ARE AVAILABLE FOR PUBLIC INSPECTION IN THE CITY CLERK’S OFFICE AT PALO ALTO CITY HALL, 250 HAMILTON AVE. DURING NORMAL BUSINESS HOURS. Action Items Include: Reports of Committees/Commissions, Ordinances and Resolutions, Public Hearings, Reports of Officials, Unfinished Business and Council Matters. 6:50-7:30 PM 10. Colleagues’ Memo From Council Members DuBois and Kou Regarding Potential Adoption of an Urgency Ordinance to Provide Just Cause Eviction Protections to Tenants Until California State Assembly Bill 1482 Takes Effect on January 1, 2020 (Continued From November 18, 2019) 7:30-8:15 PM 11. Discussion Regarding Participation of Palo Alto Hotels in the San Mateo County Tourism Business Improvement District and Potential Adoption of a Resolution Requesting Withdrawal 8:15-9:15 PM 12. Review and Possible Direction to Staff on the Structure and Scenarios of Initial Round of Polling for a Potential Local Tax Measure Council Member Questions, Comments and Announcements Members of the public may not speak to the item(s) Closed Session 9:15-10:30 PM Public Comments: Members of the public may speak to the Closed Session item(s); three minutes per speaker. 13. CONFERENCE WITH REAL PROPERTY NEGOTIATORS Authority: Government Code Section 54956.8 Properties: (1) 2416-2460 Park Boulevard (APN 124-29-002); and (2) 249-251 California Avenue (APN 124-29-007); Negotiating Parties: City of Palo Alto; and (1) Marthe Raymann, as Successor Trustee of The Alois and Marthe Raymann Trust Dated July 17,1991; and (2) Duca and Hanley Properties, Inc., a Corporation; City Negotiators: Ed Shikada, Monique le Conge Ziesenhenne, Brad Eggleston, Kiely Nose, and Sunny Tong Subject of Potential Negotiations: Price and Terms of Payment for Subsurface Easements Related to Construction of the Public Safety Building at 250 Sherman Avenue 14. CONFERENCE WITH LABOR NEGOTIATORS Agency Negotiators: Mayor and City Council Members Unrepresented Employees: City Manager, City Attorney, City Clerk Authority: Government Code Section 54957.6(a) 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. 4 December 2, 2019 MATERIALS RELATED TO AN ITEM ON THIS AGENDA SUBMITTED TO THE CITY COUNCIL AFTER DISTRIBUTION OF THE AGENDA PACKET ARE AVAILABLE FOR PUBLIC INSPECTION IN THE CITY CLERK’S OFFICE AT PALO ALTO CITY HALL, 250 HAMILTON AVE. DURING NORMAL BUSINESS HOURS. Additional Information Standing Committee Meetings Sp. Finance Committee Meeting December 3, 2019 (This packet will be produced on Tuesday, November 26, 2019) Sp. City Council Meeting December 4, 2019 Board and Commission Interviews (This packet will be produced on Tuesday, November 26, 2019) Schedule of Meetings Schedule of Meetings Tentative Agenda Tentative Agenda Public Letters to Council Set 1 November 25, 2019 December 2, 2019 Set 1/2 Set 2/2 City of Palo Alto (ID # 10831) City Council Staff Report Report Type: Study Session Meeting Date: 12/2/2019 City of Palo Alto Page 1 Summary Title: Joint ARB / City Council Meeting Title: Joint Study Session With the Architectural Review Board From: City Manager Lead Department: Planning and Development Services Recommendation Staff recommends that the City Council and the Architectural Review Board (ARB) hold a joint meeting to discuss a variety of topics, including but not limited to (a) a review of the annual report of the ARB’s activities and accomplishments, (2) potential discussion topics related to multi-family housing, curbside traffic management, the ARB process and City Council priorities for the ARB. Discussion Staff and representatives from the ARB met with the Mayor and Vice Mayor to identify discussion topics for the Study Session (Attachment A). Previously, ARB Chair Peter Baltay transmitted the Board’s annual report, which was included on the October 21, 2019 Council packet (Attachment B). Consistent with prior joint study sessions, the ARB welcomes the opportunity to receive feedback from the City Council and learn about any Council priorities for the Board and to share board-member perspectives on the review process and types of issues it encounters during project review. Attachments: Attachment A: List of Potential Topics for Discussion Attachment B: ARB's 2018-19 Annual Report Joint Meeting City Council and Architectural Review Board Potential Topics for Discussion •Multi-family Housing o Design Review/Objective Review Standards •Curb Traffic Management •Interrelation of trees and underground parking •ARB Review Process o Demonstration of project improvement o Success of revised ARB Findings Additional Topics (should time permit) •Need for San Antonio Road Design Guidelines •Displacement of small local businesses by larger commercial uses •Parking requirements (i.e El Camino developments, restaurants) To: City Council of the City of Palo Alto Planning and Transportation Commission of the City of Palo Alto From: Architectural Review Board of the City of Palo Alto Re: Annual Report from the ARB Date: July 29, 2019 PAMC Section 2.21.030 directs the Architectural Review Board to report annually our “concerns… with respect to the city’s plans, policies, ordinances and procedures as these affect the projects which the board reviews.” Our reviews are site specific – we look at individual development proposals, not broad policies. At the same time, we are directed to look at each project in both its physical and regulatory context – how it will enhance its neighborhood (or not) and how it will implement the City’s polices, from the Comprehensive Plan to the various design guidelines the City uses. Because we look at many projects each year, and because many board members have years of experience in Palo Alto, patterns emerge and specific areas of concern have been identified. A. Trees. City policy calls for and the Board whole-heartedly supports the inclusion of appropriate, robust, and ample landscaping in all development projects. However, recent development trends towards underground parking and the replacement of single-story structures with multiple story buildings, which the board also generally supports, can cause conflict. We have observed the following: •Small commercial buildings surrounded by parking lots are being replaced with larger commercial/mixed use buildings with underground parking garages that extend beyond the building footprint. While the reduction of surface parking is generally a positive change, less space is available on-site for larger trees to grow and mature. •Replacement of single-story buildings with multiple story buildings can reduce the size of street trees as canopies are constrained by the upper stories. (A look down Lytton Avenue from Alma Street provides examples.) We understand that multiple story buildings are a positive response to urban growth, but strive to also maintain a vibrant and robust urban street canopy. •Higher density zoning for hotels discourages extensive landscaping. The setback of upper floors and use of roof gardens can help mitigate the impact of larger buildings. These issues can be addressed in part through design review but more explicit landscaping standards would be beneficial. B. Curb Management. Curbside traffic management is increasingly important, especially commercial areas. •Underground parking has many advantages over surface parking. However, the elimination of easily accessible surface parking shifts the demand for space for commercial deliveries and ride sharing services to the curb. New buildings need to be designed to accommodate these uses. This is especially true for buildings fronting on streets with no parking permitted and no possibility of temporary double parking for commercial and passenger loading and unloading. •A number of “smart curb” programs have been put in place in other Bay Area cities. Fehr and Peers prepared a Curb Study for Uber for San Francisco in 2018. Mountain View has provided ride service loading zones off Castro Street. Updated standards for commercial delivery areas and more explicit standards for ride sharing pick-up and drop-off zones would be beneficial. C. Displacement of Small Businesses. The redevelopment of commercial sites often eliminates small business spaces in favor of larger sites that appeal to tech companies. (The replacement of many small office spaces at 2600 El Camino Real is an example. This is also occurring in the Downtown and California Avenue business districts.) The displaced businesses typically provide personal and professional services to individuals – barber shops, therapists’ offices, accountancy firms, etc. The City’s current ordinances do not protect these uses. San Francisco’s Neighborhood Commercial zone requires new, large commercial ground floors to carve out street facing spaces (approximately 500 square feet minimum) for smaller tenants. The City of Palo Alto ought to consider the same—small businesses are an important part of the urban landscape and Palo Alto culture. D. Parking. Parking at the Stanford Shopping Center is increasingly congested. Transportation Demand Management programs allow parking requirements to be more carefully tailored to specific needs, but require careful monitoring. • The Stanford Shopping Center’s parking requirements allow the required parking to be provided anywhere on the site. The standard does not distinguish among uses. As a variety of uses (exercise studios, restaurants, etc.) replaces more conventional retail spaces, more users are drawn to the site. This may require new approaches to planning for and managing parking, whether through increased parking requirements, more proximate underground parking or employee parking management programs. • Transportation Demand Management (TDM) agreements are increasingly used by applicants who wish to meet their projects parking needs with fewer spaces than the code would otherwise require. The Board supports providing only the number of parking spaces actually needed. However, TDMs required regular and complaint- based monitoring to be effective. While aerial photos can be used to monitor parking lots, the City needs future access to underground garages to monitor their use. Board members have received comments that internal parking intended for customer or employee use is in fact not available at some sites. The Stanford Shopping Center parking requirements should be reviewed in light of the changing nature of shopping center uses. TDM program enforcement should be monitored and more strongly supported. E. Pedestrian Mobility. For people to move freely in our commercial districts and along El Camino Real, we need more seating available to pedestrians. The City should set and implement street furniture standards that combine public and private seating to make walking possible for those who need to rest. Specific standards, such as the VTA 2003 Pedestrian Technical Guidelines, which call for 13’-18’ wide sidewalks in order to have a furnishing zone, or the 2012 Rail Corridor Study, which recommends 15’ min sidewalks in Main Street areas for cafe seating and retail merchandising, may be helpful references. F. El Camino Real. There is a continuing loss of places to go along El Camino Real. • Zoning encouraging new hotels includes parking standards that discourage the addition of potential neighborhood social spaces such as coffee shops, restaurants, and bars. • Parking standard for El Camino Real development that make it difficult to add restaurant uses on small parcels. Revised parking standards for development along El Camino Real would promote the development of neighborhood retail and restaurant businesses. G. Architectural Review Board-required findings. The City Council modified the required findings for the Architectural Review process in 2017, resulting in six findings which must be made to recommend Architectural Review approval. The revised findings have resulted in an improved review process, as board members, staff and the public are more easily able to reference which finding is applicable and appropriate for any given project or situation. The result has been an increased focus on ensuring compliance with the findings. City of Palo Alto (ID # 10852) City Council Staff Report Report Type: Special Orders of the Day Meeting Date: 12/2/2019 City of Palo Alto Page 1 Summary Title: Proclamation for Carol Macpherson Title: Proclamation Recognizing Carol Macpherson on her Retirement From Rinconada Masters From: City Manager Lead Department: Community Services Attachments: • Attachment A: Proclamation Honoring Carol Macpherson ______________________________ Eric Filseth Mayor Proclamation Honoring Carol Macpherson’s Contributions to the Rinconada Masters Program WHEREAS, Carol Macpherson, in January 1973, co-founded the Rinconada Masters Program at the Rinconada Pool to encourage physical fitness, good health, and swimming in the Bay Area; and WHEREAS, from 1973 to 1979 Carol trained Rinconada Masters swimmers and won National Swim Championship Titles for the following: Championship Team Title in 1974; Championship Women’s Title in 1976; Championship Women’s Title in 1977; and both Championship Women’s Title and Championship Team Title in 1979; and WHEREAS, Carol Macpherson has dedicated 47 years of offering high quality coaching, including physical fitness, improving swimming skills to children and adults at the Rinconada Pool as well as the Palo Alto Hills Country Club, Palo Alto High School, University Club, Gunn High School and the Carol Macpherson Aquatic Center; and WHEREAS, Carol Macpherson is recognized by City staff and the community for her professionalism, knowledge, and for providing outstanding programs and services. NOW, THEREFORE, I, Eric Filseth, Mayor of the City of Palo Alto on behalf of the entire City Council do hereby express our appreciation and gratitude to Carol Macpherson for her hard work and dedication to the aquatics community. Presented: December 2, 2019 CITY OF PALO ALTO OFFICE OF THE CITY CLERK December 2, 2019 The Honorable City Council Attention: Finance Committee Palo Alto, California Approval of Action Minutes for the November 4 and 18, 2019 Council Meeting Staff is requesting Council review and approve the attached Action Minutes. ATTACHMENTS: • Attachment A: 11-4-19 DRAFT Action Minutes (DOCX) • Attachment B: 11-18-19 DRAFT Action Minutes (DOCX) Department Head: Beth Minor, City Clerk Page 2 CITY OF PALO ALTO CITY COUNCIL DRAFT ACTION MINUTES Page 1 of 7 Special Meeting November 4, 2019 The City Council of the City of Palo Alto met on this date in the Council Chambers at 5:03 P.M. Present: Cormack; DuBois arrived at 5:06P.M., Filseth, Fine, Kniss, Kou, Tanaka Absent: Study Session 1. Joint Study Session With the Palo Alto Youth Council. NO ACTION TAKEN Council took a break from 5:50 P.M. and returned at 6:04 P.M. Minutes Approval 2. Approval of Action Minutes for the October 21, 2019 Council Meeting. MOTION: Mayor Filseth moved, seconded by Council Member Cormack to approve the Action Minutes for the October 21, 2019 Council Meeting. MOTION PASSED: 7-0 Consent Calendar MOTION: Council Member Cormack moved, seconded by Mayor Filseth to approve Agenda Item Numbers 3-7. 3. Approval of Amendment Number 1 to Contract Number C17166486 With Tanner Pacific, Inc. to Increase Maximum Compensation for a Not-to- Exceed Amount of $2,240,000 for Continued Construction Management Services for the Sludge Dewatering and Loadout Facility Project, Capital Improvement Program Project (WQ-14001). 4. Approval of Amendment Number 4 to Contract Number S17165080 With Lexington Planning to add $114,440 for a Not-to-Exceed Amount of $230,940 to Continue Work on Reviewing and Modifying Objective Standards for Title 18. DRAFT ACTION MINUTES Page 2 of 7 City Council Meeting Draft Action Minutes: 11/04/2019 5. Resolution 9864 Entitled, “Resolution of the Council of the City of Palo Alto Approving Project Agreement Number 6 With the Transmission Agency of Northern California and its Participating Members for Regulatory Engagement in Participating Transmission Owner Cases Before the Federal Energy Regulatory Commission for an Initial 3-year Term; and Granting the City Manager or his Designee the Authority to Approve Future Operational Amendments to the Agreement.” 6. Approval to Execute two Change Orders With Design Space Modular Buildings, Inc. Totaling an Additional $51,300 to Provide Additional Needed Interior Detail and External Foundation Materials, Decking, Skirting, and Related Installation Services for the Animal Shelter Modular Building, for a new Total Not-to-Exceed Amount of $351,300; and Authorization of Additional Change Orders Not-to-Exceed $35,130, Funded From the Animal Shelter Renovation Capital Improvement Program Project (PE-19002). 7. Appointment of Monique le Conge Ziesenhenne, PhD as Assistant City Manager. MOTION PASSED: 7-0 Action Items 8. TEFRA HEARING: Regarding Conduit Financing for the Bowman International School Project Located at 4000 Terman Drive, and 693 Arastradero Road, Palo Alto; and Resolution 9865 Entitled, “Resolution of the Council of the City of Palo Alto Approving the Issuance of Revenue Obligations by the California Enterprise Development Authority for the Purpose of Financing and Refinancing the Cost of the Acquisition, Development, Construction, Installation, Equipping and Furnishing of Various Educational Facilities and Other Matters Relating Thereto.” TEFRA Hearing opened and closed without public comment at 6:27 P.M. MOTION: Council Member Kniss moved, seconded by Council Member DuBois to: A. Conduct a public hearing under the requirements of the Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA) and the Internal Revenue Code of 1986, as amended (Code); and B. Adopt a resolution approving the issuance of the bonds by the California Enterprise Development Authority (CEDA) (the “Authority”) on behalf of DRAFT ACTION MINUTES Page 3 of 7 City Council Meeting Draft Action Minutes: 11/04/2019 and for the benefit of Bowman International School (aka Bowman School) (the “School”). MOTION PASSED: 7-0 9A. PUBLIC HEARING: Adoption of Eight Ordinances That Repeal and Adopt Various Sections of the Palo Alto Municipal Code Related to the 2019 California Building Code Update and Proposed Local Amendments; including: (1) Repeal Chapter 15.04 of Title 15 and Adopt a new Chapter 15.04 Incorporating the 2019 California Fire Code With Local Amendments Including Title 24 of the California Code of Regulations (CCR), Part 9; (2) Repeal Chapter 16.04 of Title 16 Related to Various Building Codes and Adopt a new Chapter 16.04 Incorporating the 2019 California Building Code With Local Amendments Including Title 24 of the CCR, Part 2; (3) Repeal Chapter 16.05 of Title 16 Related to the Mechanical Code and Adopt a new Chapter 16.05 Incorporating the 2019 California Mechanical Code With Local Amendments Including Title 24 of the CCR, Part 4; (4) Repeal Chapter 16.06 of Title 16 Related to the Residential Code and Adopt a new Chapter 16.06 Incorporating the 2019 California Residential Code With Local Amendments Including Title 24 of the CCR, Part 2.5; (5) Repeal Chapter 16.08 of Title 16 Related to the Plumbing Code and Adopt a new Chapter 16.08 Incorporating the 2019 California Plumbing Code With Local Amendments Including Title 24 of the CCR, Part 5; (6) Repeal Chapter 16.14 of Title 16 Related to the Green Building Standards and Adopt a new Chapter 16.14 Incorporating the 2019 California Green Building Standards With Local Amendments Including Title 24 of the CCR, Part 11, and Amend Section 16.12.035; (7) Repeal Chapter 16.16 of Title 16 Related to the Electrical Code and Adopt a new Chapter 16.16 Incorporating the 2019 California Electrical Code With Local Amendments Including Title 24 of the CCR, Part 3; (8) Repeal Chapter 16.18 of Title 16 Related to the Swimming and Spa Codes and Adopt a new Chapter 16.18 Incorporating the 2018 International Swimming Pool and Spa Code With Local Amendments. This Project is Exempt Under California Environmental Quality Act (CEQA) Guidelines Sections 15061(b) and 15308. 9B. PUBLIC HEARING: Adoption of an Ordinance Repealing Chapter 16.17 of Title 16 (Building Regulations) Related to the California Energy Code and Adopting a new Chapter 16.17 Incorporating the 2019 California Energy Code With Local Amendments and Amendments to Title 24, Chapter 6 of the California Code of Regulations, the Subject Ordinance is Exempt From the California Environmental Quality Act (CEQA) in Accordance With Guidelines Sections 15061 (b) and 15308. DRAFT ACTION MINUTES Page 4 of 7 City Council Meeting Draft Action Minutes: 11/04/2019 Public Hearing for Agenda Item 9A opened and closed without public comment at 6:40 P.M. MOTION FOR 9A: Mayor Filseth moved, seconded by Council Member Kniss to: A. Adopt eight Ordinances that repeal and adopt various chapters of Title 15 and 16 of the Palo Alto Municipal Code related to the 2019 California Building Code update with local amendments and findings; and B. Find that the proposed action is exempt from the provisions of the California Environmental Quality Act (CEQA) in accordance with CEQA Guidelines Sections 15308 and 15061(b)(3). MOTION PASSED: 7-0 AT THIS TIME COUNCIL HEARD AGENDA ITEM NUMBER 9B Public Hearing for Agenda Item 9B opened at 7:43 P.M. Public Hearing for Agenda Item 9B closed at 8:22 P.M. MOTION FOR 9B: Vice Mayor Fine moved, seconded by Council Member DuBois to: A. Adopt an Ordinance repealing and restating Palo Alto Municipal Code Chapter 16.17 and amending the 2019 California Energy Code, Title 24, Part 6, of the California Code of Regulations to include local amendments; B. Adopt a Resolution declaring the City’s intent to mandate all-electric service for new construction effective July 2020; C. Find that the proposed action is exempt from the provisions of the California Environmental Quality Act in accordance with Sections 15308 and 15061(b)(3); and D. Direct Staff to return to Council with a plan for electrification of accessory dwelling units. INCORPORATED INTO THE MOTION WITH THE CONSENT OF THE MAKER AND SECONDER to change Motion Part B to, “direct Staff to return to Council with Ordinances to mandate all-electric service for new construction in effective 2020”. DRAFT ACTION MINUTES Page 5 of 7 City Council Meeting Draft Action Minutes: 11/04/2019 INCORPORATED INTO THE MOTION WITH THE CONSENT OF THE MAKER AND SECONDER to add to the Motion new Part E, the language, “direct Staff to explore a rebate for a retrofit heat pump water heater hooked up to an air conditioner”. INCORPORATED INTO THE MOTION WITH THE CONSENT OF THE MAKER AND SECONDER to change Motion Part E to, “refer to the Utilities Advisory Commission to explore scalable, cost-effective rebates for retrofitting existing homes, such as heat pump water heaters hooked up to air conditioners”. INCORPORATED INTO THE MOTION WITH THE CONSENT OF THE MAKER AND SECONDER to add to Motion Part A, “and to require all-electric residential new construction in April 2020”. INCORPORATED INTO THE MOTION WITH THE CONSENT OF THE MAKER AND SECONDER to change the language in Motion Part A to, “…include local amendments except to require…”. MOTION AS AMENDED RESTATED FOR 9B: Vice Mayor Fine moved, seconded by Council Member DuBois to: A. Adopt an Ordinance repealing and restating Palo Alto Municipal Code Chapter 16.17 and amending the 2019 California Energy Code, Title 24, Part 6, of the California Code of Regulations to include local amendments except to require all-electric residential new construction in April 2020; B. Direct Staff to return to Council with Ordinances to mandate all- electric service for new construction effective 2020; C. Find that the proposed action is exempt from the provisions of the California Environmental Quality Act in accordance with Sections 15308 and 15061(b)(3); D. Direct Staff to return to Council with a plan for electrification of accessory dwelling units; and E. Refer back to Utilities Advisory Commission to explore scalable, cost- effective rebates for retrofitting existing homes, such as retrofit heat pump water heaters hooked up to air conditioners. MOTION AS AMENDED PASSED: 7-0 DRAFT ACTION MINUTES Page 6 of 7 City Council Meeting Draft Action Minutes: 11/04/2019 10. Consideration of a Revenue Generating Ballot Measure Including Review and Approval of Stakeholder Outreach and Initial Polling Framework; Approval of an Exemption From Competitive Solicitation Requirements for Selection of Polling Consultant Fairbank, Maslin, Maullin, Metz & Associates; Approval of an Exemption From Competitive Solicitation Requirements for Contract Number C20177157 With Terris Barnes Walters Boigon Heath Inc., d/b/a TBWB Strategies, for Stakeholder Outreach and Authorization for the City Manager or his Designee to Enter Into This Contract With TBWB Strategies; and Approval of a Budget Amendment in the General Fund. MOTION: Council Member DuBois moved, seconded by Council Member Cormack to: A. Consider a Revenue Generating Ballot Measure Including Review and approval of the stakeholder outreach and initial polling framework as outlined in the Finance Committee report (CMR 10743) and direct Staff to begin stakeholder outreach and conduct initial polling for a potential ballot measure; B. Approve by Council action, per PAMC 2.30.330, an exemption from competitive solicitation requirements for the selected consultant, Fairbank, Maslin, Maullin, Metz & Associates, to conduct public opinion research on the potential ballot measure, described below from the competitive solicitation requirements of the Palo Alto Municipal Code (PAMC); C. Approve by Council action, per PAMC 2.30.330, an exemption from competitive solicitation requirements, and approve and authorize the City Manager or his designee to execute professional services contract, Contract No. C20177157, in an amount not to exceed $94,125 with Terris Barnes Walters Boigon Heath Inc., d/b/a TBWB Strategies, to provide community outreach services related to the potential revenue generating ballot City of Palo Alto Page 2 measure for a one-year term ending October 31, 2020, in the amount of $89,125 with a $5,000 contingency for a total not-to-exceed amount of $94,125; and D. Amend the Fiscal Year 2020 Budget Appropriation Ordinance for the General Fund by: i. Increasing the Administrative Services Department appropriation by $179,125; and ii. Decreasing the General Fund Budget Stabilization Reserve by $179,125. DRAFT ACTION MINUTES Page 7 of 7 City Council Meeting Draft Action Minutes: 11/04/2019 MOTION PASSED: 5-2 Kniss, Tanaka no Adjournment: The meeting was adjourned at 10:50 P.M. CITY OF PALO ALTO CITY COUNCIL DRAFT ACTION MINUTES Page 1 of 6 Regular Meeting November 18, 2019 The City Council of the City of Palo Alto met on this date in the Council Chambers at 6:02 P.M. Present: Cormack; DuBois arrived at 6:15 P.M., Filseth, Kniss, Kou, Tanaka Absent: Fine Closed Session 1. CONFERENCE WITH CITY ATTORNEY-EXISTING LITIGATION Subject: Gustavo Alvarez v. City of Palo Alto, et al. United States District Court, Northern District of California, Case No. 5:19-cv-02328-NC Authority: Government Code Section 54956.9(d)(1). MOTION: Council Member Kniss moved, seconded by Council Member Cormack to go into Closed Session. MOTION PASSED: 5-0 DuBois, Fine absent Council went into Closed Session at 6:03 P.M. Council returned from Closed Session at 6:40 P.M. Mayor Filseth announced no reportable action. Agenda Changes, Additions and Deletions MOTION: Council Member Kniss moved, seconded by Mayor Filseth to continue Agenda Item Number 13, “Approval of a Budget Amendment in the General Fund for Amendment Number 2 to Contract Number C18171717 With Perkins + Will…” to be heard December 2, 2019. MOTION PASSED: 6-0 Fine absent Minutes Approval 2. Approval of Action Minutes for the October 28, 2019 Council Meeting. DRAFT ACTION MINUTES Page 2 of 6 City Council Meeting Draft Action Minutes: 11/18/2019 MOTION: Mayor Filseth moved, seconded by Council Member Cormack to approve the Action Minutes for the October 28, 2019 Council Meeting. MOTION PASSED: 6-0 Fine absent Consent Calendar Council Member Kou registered a no vote on Agenda Item Number 11. MOTION: Council Member DuBois moved, seconded by Council Member Kniss to approve Agenda Item Numbers 3-16. 3. Approval of Contract Number C20176139 With Precision Engineering, Inc. in the Amount of $2,040,841 for Wastewater Collection System Rehabilitation/Augmentation Project 29 (WC-16001) in the Charleston Meadows Neighborhood; and Authorization for the City Manager to Negotiate and Execute Related Change Orders Not-to-Exceed $204,084, for a Total Not-to-Exceed Amount of $2,244,925. 4. Approval of Amendment Number 4 to Contract Number S17166441 With Page and Turnbull for Historic Planning On-call Services to Extend the Contract Term to October 2021 and Increase the Contract Limit by $50,000 for a Total Not-to-Exceed Amount of $134,500. 5. Approval of Amendment Number 3 to Contract Number C14152163 With Townsend Public Affairs for State Legislative Advocacy to Extend the Term for two Additional Years and add $204,000 for a Total Not-to-Exceed Amount of $799,000. 6. Policy and Services Committee Recommends the City Council Accept Status Updates of Audit Recommendations on: 1) Electric Substructure Contract Oversight, 2) the Cross Bore Inspection Contract, and 3) Water Meter Billing Accuracy. 7. Resolution 9870 Entitled, “Resolution of the Council of the City of Palo Alto Authorizing City Participation in the California Electric Vehicle Infrastructure Project (CALeVIP) to Obtain $1 Million in Grant Funding for Electric Vehicle Charger Rebates and to Provide $1 Million in Additional Matching Funds for Electric Vehicle Charger Rebates; and Authorizing the City Manager or City Manager Designee to Execute Implementing Agreements and Documents for Participation in the Project. DRAFT ACTION MINUTES Page 3 of 6 City Council Meeting Draft Action Minutes: 11/18/2019 8. Approval of a Blanket Purchase Order With TMT Enterprises, Inc. for Construction Material/Debris Hauling and Disposal Services in a Not-to-Exceed Amount of $5,561,930 for a term up to Five Years. 9. Resolution 9867 Entitled, “Resolution of the Council of the City of Palo Alto to Execute Clean a Water State Revolving Fund (SRF) Financial Assistance Application and Agreement if Awarded;” and Resolution 9868 Entitled, “Resolution of the Council of the City of Palo Alto to Designate the Amount of Project Expenditures to be Reimbursed by SRF Proceeds for the Advanced Water Purification System, 1 MGD Project, at the Regional Water Quality Control Plant (WQ-19003).” 10. Resolution 9869 Entitled, “Resolution of the Council of the City of Palo Alto Declaring Weeds to be a Public Nuisance and Setting January 13, 2020 for a Public Hearing for Objections to Proposed Weed Abatement." 11. Approval of Modification to the 1050 Page Mill Road Mitigation Monitoring Program to Extend the Time for Completion of Traffic Mitigation Measures for Intersection Improvements on Page Mill Road at Hanover Street and Hansen Way to Allow Coordination With County Proposed Improvements. 12. Approval of Amendment Number 3 to Contract Number C19172281 With Municipal Resource Group (MRG) to Increase the Maximum Compensation by $50,000 for a Total Not-to-Exceed Amount of $250,000 for Transportation Support and Professional Development Services. 13. Approval of a Budget Amendment in the General Fund for Amendment Number 2 to Contract Number C18171717 With Perkins + Will to Provide Professional Services Related to the Preparation of the North Ventura Coordinated Area Plan (NVCAP). 14. Ordinance 5476 Entitled, “Ordinance of the Council of the City of Palo Alto Amending Section 21.20.301 (Flag Lots) of Chapter 21.20 (Design) of Title 20 (Subdivisions and Other Divisions of Land) of the Palo Alto Municipal Code (FIRST READING: October 28, 2019 PASSED: 5-0 DuBois, Filseth Absent).” 15. Ordinance 5477 Entitled, “Ordinance of the Council of the City of Palo Alto to Repeal Chapter 15.04 of the Palo Alto Municipal Code and Amending Title 15 to Adopt a New Chapter 15.04, the California Fire Code (2019 Edition) With Local Amendments and Related Findings”; Ordinance 5478 Entitled, “Ordinance of the Council of the City of Palo DRAFT ACTION MINUTES Page 4 of 6 City Council Meeting Draft Action Minutes: 11/18/2019 Alto Repealing Chapter 16.04 of the Palo Alto Municipal Code and Amending Title 16 to Adopt a New Chapter 16.04, California Building Code, California Historical Building Code, and California Existing Building Code, 2019 Editions, and Local Amendments and Related Findings”; Ordinance 5479 Entitled, “Ordinance of the Council of the City of Palo Alto Repealing Chapter 16.05 of the Palo Alto Municipal Code and Amending Title 16 to Adopt a New Chapter 16.05, California Mechanical Code, 2019 Edition, and Local Amendments and Related Findings”; Ordinance 5480 Entitled, “Ordinance of the Council of the City of Palo Alto Repealing Chapter 16.06 of the Palo Alto Municipal Code and Amending Title 16 to Adopt a New Chapter 16.06, California Residential Code, 2019 Edition, and Local Amendments and Related Findings”; Ordinance 5481 Entitled, “Ordinance of the Council of the City Of Palo Alto Repealing Chapter 16.08 of the Palo Alto Municipal Code and Amending Title 16 to Adopt a New Chapter 16.08, California Plumbing Code, 2019 Edition, and Local Amendments and Related Findings”; Ordinance 5482 Entitled, “Ordinance of the Council of the City of Palo Alto Amending and Restating Chapter 16.14 of the Palo Alto Municipal Code, California Green Building Standards Code 2019 Edition, and Local Amendments and Related Findings, and Amending Section 16.12.035 of Chapter 16.12 to Make Conforming Changes”; Ordinance 5483 Entitled, “Ordinance of the Council of the City of Palo Alto Repealing Chapter 16.16 of the Palo Alto Municipal Code And Amending Title 16 to Adopt a New Chapter 16.16, California Electrical Code, 2019 Edition, and Local Amendments and Related Findings”; Ordinance 5484 Entitled, “Ordinance of the Council of the City of Palo Alto Repealing Chapter 16.18 of the Palo Alto Municipal Code and Amending Title 16 to Adopt a New Chapter 16.18, International Swimming Pool and Spa Code, With Local Amendments.” 16. Selection of Applicants to Interview for the Historic Resources Board, the Parks and Recreation Commission, and the Planning and Transportation Commission. MOTION PASSED FOR AGENDA ITEM NUMBERS 3-10, 12, 14-16: 6-0 Fine absent MOTION PASSED FOR AGENDA ITEM NUMBER 11: 5-1 Kou no, Fine absent Action Items 17. Approval of the Addendum to the 2015 Environmental Impact Report for the City of Palo Alto Recycled Water Program; and Approval of an DRAFT ACTION MINUTES Page 5 of 6 City Council Meeting Draft Action Minutes: 11/18/2019 Agreement Between the City of Palo Alto, the City of Mountain View, and the Santa Clara Valley Water District to Advance Resilient Water Reuse Programs in Santa Clara County, Including Funding for an Advanced Water Purification Facility in Palo Alto, a Long-term Transfer of Effluent from the Regional Water Quality Control Plant to Valley Water, and Related Commitments. MOTION: Council Member DuBois moved, seconded by Council Member Cormack to: A. Approve the Addendum, together with the 2015 Environmental Impact Report for the City of Palo Alto Recycled Water Program, certified and adopted by the Council on September 28, 2015, as adequate and complete under the California Environmental Quality Act (CEQA) for the local salt removal plant; and B. Approve and authorize the City Manager to execute the Agreement between and among Palo Alto, Mountain View, and the Santa Clara Valley Water District to Advance Resilient Water Reuse Programs in Santa Clara County subject to non-substantive changes approved by the City Manager and the City Attorney. MOTION PASSED: 6-0 Fine absent Council took a break at 8:17 P.M. and returned at 8:30 P.M. 18. Approval of Construction Contract Number C20174550 With Granite Construction Company in the Amount of $13,844,921 for the Highway 101 Pedestrian/Bicycle Overpass Project, Capital Improvement Project (PE-11011); Approval of Contract Number C20185214 With Zoon Engineering in the Amount of $1,704,851 to Provide Construction Management Services; Approval of a Grant Agreement With the County of Santa Clara for Grant Funding; and Approval of a Budget Amendment in the Capital Improvement Fund. MOTION: Council Member Kniss moved, seconded by Council Member Cormack to: A. Approve and authorize the City Manager or his designee to execute Construction Contract Number C20174550 with Granite Construction Company in an amount not-to-exceed $13,844,921 for the Highway 101 Pedestrian/Bicycle Overpass Project (Capital Improvement Program (CIP) Project PE-11011); DRAFT ACTION MINUTES Page 6 of 6 City Council Meeting Draft Action Minutes: 11/18/2019 B. Authorize the City Manager or his designee to negotiate and execute one or more change orders to the construction contract with Granite Construction Company for related additional but unforeseen work that may develop during the project, the total value of which shall not exceed $1,384,492; C. Approve and authorize the City Manager or his designee to execute Contract Number C20175214 with Zoon Engineering to provide construction management services for the Highway 101 Pedestrian/Bicycle Overpass Project (CIP Project PE-11011) in an amount not-to-exceed $1,704,851, including $1,549,865 for basic services and $154,986 for additional services; D. Approve and authorize the City Manager or his designee to execute the Project Grant Agreement with the County of Santa Clara for the provisions of grant funding for the project in the amount of $4 million or more; and E. Amend the Fiscal Year 2020 Budget Appropriation for the Capital Improvement Fund by: i. Decreasing the Capital Fund Infrastructure Reserve by $4,200,000; and ii. Increasing the Highway 101 Pedestrian/Bicycle Overcrossing Project (PE11011) appropriation by $4,200,000. MOTION PASSED: 6-0 Fine absent 19. Colleagues' Memo From Council Members DuBois and Kou and Potential Adoption of an Urgency Ordinance to Provide Just Cause Eviction Protections to Tenants Until California State Assembly Bill 1482 Takes Effect on January 1, 2020. Council Member Kniss advised she would recuse herself from this item as she owns a small rental property in Palo Alto. She left the meeting at 9:15 P.M. MOTION: Council Member DuBois moved, seconded by Council Member Kou to continue this item to December 2, 2019. MOTION PASSED: 5-0 Kniss recused, Fine absent Adjournment: The meeting was adjourned at 9:31 P.M. in memory of Palo Alto Utilities employee Donatus Okhomina who lost his life on November 16, 2019 in a work-site accident. City of Palo Alto (ID # 10493) City Council Staff Report Report Type: Consent Calendar Meeting Date: 12/2/2019 City of Palo Alto Page 1 Summary Title: Award Contract for Tax and Fee Consulting Services & Budget Amendment Title: Approval of Contract Number C20175534A With MuniServices, LLC for Tax and Fee Consulting Services in a Total Not-to-Exceed Amount of $700,000 Over a Five-year Term and Approval of a Budget Amendment in the General Fund From: City Manager Lead Department: Administrative Services Recommendation Staff recommends that the City Council: 1. Approve and authorize the City Manager or his designee to execute the attached contract with MuniServices, LLC (Attachment A, Contract No. 20175534A) in an amount not-to-exceed $700,000 for tax and fee program administration, fee payment collection and reporting services over a five-year term, and 2. Amend the Fiscal Year 2020 Budget Appropriation Ordinance for the General Fund by: a. Increasing the City Auditor’s Office expense appropriation for contract services in the amount of $50,000; and, b. Increasing the Administrative Services Department (ASD) expense appropriation for contract services by $25,500; and, c. Decreasing the Budget Stabilization Reserve by $75,500. Executive Summary Staff issued a Request for Proposal (RFP) for tax and fee consulting services: sales and use tax analysis and information services, Transient Occupancy Tax (TOT) and Telecommunication Users Tax (also known as TUT or Telephone UUT) administrative and reporting services, property tax analysis and information services, and business fee collection and reporting services for the City’s Business Registry Certificate (BRC) and the Business Improvement District (BID) programs. This combined RFP spans bodies of work completed previously by three different work groups including the Administrative Services Department, the City Auditor’s Office, and the former Development Services Department. Administrative Services took the lead on issuing and managing this process in coordination with these offices during the past year to ensure continuity of services and coverage considering transitions and staffing City of Palo Alto Page 2 vacancies. Three proposals were received and evaluated based on criteria outlined in the RFP and staff recommends awarding services to two of the three consulting firms that submitted proposals. Based on the evaluation criteria, staff recommends awarding sales and use tax analysis and information services, TOT and TUT administrative and reporting services, and business fee collection and reporting services to MuniServices, LLC. Staff intends to award property tax analysis and information services to HdL Coren & Cone (HdL CC); however, this contract is within the approval levels of the City Manager and therefore no Council action is necessary. Ultimately, as a result of changes in service delivery and updated pricing, amendments to the fiscal year (FY) 2020 budget are recommended to both Administrative Services and the City Auditor’s Office in the total amount of $75,500. Background The City engages with MuniServices for sales and use tax audit and information services (historically managed by the City Auditor’s Office), business fee collection services for the BRC and BID programs (historically managed by the former Development Services Department), and property tax information services (managed by the Administrative Services Department). TOT and Telephone UUT collection and administrative functions are currently performed internally as collateral duties by staff in the Administrative Services Department (ASD) as well. The City Auditor’s Office has historically both managed the contract with MuniServices for sales and use tax reporting and audit and discovery work, while staff also worked on audit and discovery work in tandem. Sales and use tax reports (quarterly) from MuniServices are a valuable tool in the City’s sales and use tax revenue projections and are utilized in regular revenue monitoring, the City’s Long Range Financial Forecast (LRFF), and in the City’s annual budget process. Briefings and analysis from MuniServices include information from the California Department of Tax and Fee Administration (CDTFA), the state agency that administers sales and use tax, of sales and use tax revenue performance; top revenue producers by economic segment and/or geographical area; trend analysis; revenue projections; identification of major businesses that influence change in the City’s tax revenue; and an analysis of potential growth or decline shifts in local, state, and national economy; and legislature related to sales and use tax. In addition, the City Auditor’s Office works closely with MuniServices on sales and use tax audit and discovery efforts as both staff and MuniServices have performed these services in tandem. The BRC program was launched in 2015 and fee administration and collection transitioned from the former Developer Services Department to ASD in July 2019 as approved by the City Council in the FY 2020 adopted budget and realignment of Planning and Development Services Department. In early 2018, the City entered into a two-year agreement with MuniServices to administer fee collection and provide customer support, while staff manages the contract and serves as a liaison between the City, MuniServices, and the business community as required. In 2019, the City amended the contract scope with MuniServices to include fee administration and City of Palo Alto Page 3 collection for the Downtown BID, with the intent that the business community would effectively report and pay for business fees in the same portal. Property tax information services are requested on an ad hoc basis and are needed to supplement limited data available from the County of Santa Clara. Information and reporting frequency may vary and is used for parcel tax or general obligation (GO) bond modeling; LRFF development; the annual budget process; and other special projects in the Treasury, Debt and Investments Division. Discussion The existing contract with MuniServices for sales and use tax expired August 31, 2019. Staff issued a combined Request for Proposal (RFP), which spans bodies of work completed previously by three different work groups including the Administrative Services Department, the City Auditor’s Office, and the former Development Services Department. Administrative Services took the lead on issuing and managing this process in coordination with these offices during the past year to ensure continuity of services and coverage considering transitions and staffing vacancies. Below are the components of the tax and fee consulting services RFP, the workgroup that has historically overseen them, and recommended contract and services award. Sales and Use Tax analysis and information services: The City Auditor’s Office manages the sales and use tax contract so that staff in the City Auditor’s Office can work in tandem with MuniServices on sales tax audit and discovery efforts. Due to recent staff vacancies, the Administrative Services Department stepped in to complete this RFP. It is expected that the City Auditor’s Office will not be performing audit and discovery services due to staff vacancies and that work is expected to be performed by solely by MuniServices for the remainder of the fiscal year. Staff therefore request a budget increase to the City Auditor’s Office budget of $50,000 to support this service until the City Auditor’s Office staffing and management is steadied. Various Tax Collection and Information Services for TOT, Telecommunication Users Tax (also known as TUT or Telephone Utility Users Tax UUT), and Property Taxes: were added to the RFP scope, allowing the City to leverage the economies of scale of a full suite of services and streamline the administration and collection of taxes and assessment fees. Both BRC and BID reporting and payments are done online through the City’s website and the addition of these services would allow for online TOT and Telephone UUT collection so that the City’s business community can report data and remit payment from one online portal. The one-time set up fee for TOT and Telephone UUT is $3,500 and will be absorbed in ASD, however, an ongoing budget increase to fund the annual filing fees, totaling $15,500, is recommended. This is typically a collateral duty assigned to the Treasury Division. In addition, this contract includes audit and discovery services in future years to achieve improved assurance that TOT and TUT revenues are accurate and complete. The scope, work plan, and fees for these services can be found in the attached draft contract and funding for these services is subject to request, approval and appropriation of funds during the annual budget process. City of Palo Alto Page 4 Property tax information services are currently being performed on an ad hoc basis by MuniServices. The data is used to supplement property information from the County of Santa Clara. As a result of the RPF, staff recommends awarding this service to HdL CC for a three-year term at an annual cost of $20,000 per year, for a total not to exceed $60,000. The total contract amount for HdL CC is within the City Manager’s contract authority and therefore not included in this report. Although more costly, this more accessible online platform allows for customer driven customization of data requests and after review of the data needs for more robust reporting and ad hoc modeling analysis, staff recommends contracting with HdL CC’s pending the appropriation of additional funds. An ongoing $10,000 appropriation increase to fund the difference in annual fees from the prior costs is recommended. City’s Business Registry Certificate (BRC) and the Business Improvement District (BID) programs business fee collection and reporting services: The contract for business fee collection (to support the BRC program and BID program) expired on September 30, 2019 and was previously managed by the former Development Services Department. The contract was extended through March 31, 2020 to ensure continuity of service. The FY 2020 Adopted Budget merged the Planning and Community Environment Department and the Development Services Department and, the collection, administration, and financial management of the BRC and BID programs was reassigned to ASD. The FY 2020 Adopted Budget includes $50,000 in consultant funding for this contract. Procurement Process An RFP was issued on May 13, 2019 for tax and fee consulting services and was structured to allow award to multiple firms. Proposals were due by June 11, 2019 and the City received three proposals. Based on criteria outlined in the RFP, MuniServices was selected to perform sales and use tax analysis and information services, TOT and Telephone UUT administrative and reporting services, and business fee collection services for the BRC and BID programs. The existing contracts with MuniServices include all but two of these services (TOT and Telephone UUT administrative and reporting services). SUMMARY OF REQUEST FOR PROPOSAL PROCESS PROPOSAL TITLE & NUMBER Tax and Fee Consulting Services – RFP 175534 PROPOSED LENGTH OF PROJECT 5 years NUMBER OF BID PACKAGES DOWNLOADED 13 TOTAL DAYS TO RESPOND TO PROPOSAL 21 calendar days NUMBER OF PROPOSALS RECEIVED 3 LINK TO PLANET BIDS: WWW.PLANETBIDS.COM/PORTAL/PORTAL.CFM?COMPANYID=25569&BIDID=62512 The City received three proposals from the leading firms in the industry for these services. The table below outlines the fees for the previous contract with MuniServices, the new proposed fees for MuniServices, fees proposed by HdL, and fees proposed by HdL CC. HdL and HdL CC are legally separate companies where HdL provides services for sales and use tax reporting and City of Palo Alto Page 5 compliance and collection, administration and compliance for TOT, TUT, BRC, and BID; while HdL CC only provides property tax information services and compliance. Fees for the selected consulting firms (MuniServices and HdL CC) are noted in bold/italic lettering below. In limited areas, an increase in budgeted funding is recommended and is noted in the resource impact portion of the chart below. TAX AREA SERVICE MUNISERVICES (PREVIOUS) MUNISERVICES (NEW) HDL & HDL CC* SA L E S & US E T A X Reporting Services $8,000 annually $4,000 annually $10,200 annually Audit & Discovery 20% contingency 15% contingency 15% contingency TO T Collection & Administration N/A $150/lodging property annually; $2,500 one- time set up fee $750 per lodging property annually; no set up fee Compliance N/A Analysis phases total $54,000; 30% contingency fee, with on-site auditing services As requested, based on hourly rate TU T Collection & Administration N/A $2.95 filing per transaction; $1,000 one-time set up $14 per filing transaction; no set up fee Compliance N/A 30% contingency fee $170 per hour, as requested BU S I N E S S F E E S : BR C & B I D Collection & Administration $12/initial registry, not to exceed $36,000; $15,000 one-time set up fee $12/initial registry; $3.75 filing per transaction $14 per processed account Compliance 35% contingency, not to exceed $20,000 35% contingency; if City decides to waive collection, MuniServices shall be entitled to ½ of the fee for the waived portion of the deficiency. 35% contingency PR O P E R T Y TA X Reporting & Information Services $10,000 annually $7,500 annually HdL CC: $20,000 annually that includes reporting services, online portal, and compliance services Compliance N/A 25% contingency Overall, fees for services provided by MuniServices are lower compared to HdL and the previous MuniServices contract. TOT and TUT audit and compliance services are not currently performed by the City; the contract with MuniServices for BRC and BID has an audit and compliance component. Compliance services for TOT, TUT, BRC and BID can be done in a City of Palo Alto Page 6 variety of ways and is structured so that analysis and communication with the City is first performed before reaching out to the business for a site visit. For TOT compliance, the fee for the analysis phase of the process assumes that all lodging properties will be reviewed at least one during the five-year term of the contract. The City recommends HdL CC as its property tax consultant and, as noted earlier in this report, the total contract amount for HdL CC is within the City Manager’s contract authority and therefore not included in this report. The evaluation panel found that HdL CC, although more costly, has a more this more accessible online platform that would allow staff to customize data inquiries and independently review data for modeling and reporting. Staff recommends contracting with HdL CCs, pending the appropriation of additional funds. Resource Impact As discussed in this report, the contract with MuniServices is funded partially in the City Auditor’s Office and ASD FY 2020 Adopted Budget including sales and use tax reporting services, partial audit and discovery and the BRC and BID collection, administration, and compliance. Staff requests a net $75,500 General Fund appropriation increase in FY 2020 to fully fund the first year of the contracts with MuniServices and HdL CC. Specifically, the net increase reflects the following adjustments: 1) Increase of $50,000 in the City Auditor’s Office Budget to account for the change in administration of sales tax audit and discovery services (one-time). With vacancies in the Auditor’s Office, it is expected that all audit and discovery services will be performed by MuniServices, whereas, previously this was split between Muni Services and audit staff. 2) Increase of $15,500 for TOT and Telephone UUT administration and collection services (ongoing). Audit and discovery services will be reviewed during the budget process and is subject to the annual appropriations of funds. 3) Increase of $10,000 for Property Tax information services (ongoing) for more robust and independently accessible online platform for more robust reporting and ad hoc modeling analysis. In future years, MuniServices reporting and information services for sales and use tax will be $4,000; sales and use tax compliance service fees will vary based on the amount collected by the consultant. Tax and fee collection and administration for TOT, TUT, BRC and BID will vary between $80,000 to $90,000 per year, depending on number of re-filings and/or new filings. TOT and TUT audit and compliance services will be done once over the five-year term of the contract and total $105,000. BRC and BID compliance review total $20,000 annually. The annual cost of property information services (by HdL CC) is $20,000. Stakeholder Outreach Staff worked closely with the three proposers, the City Auditor’s Office, and former Development Services staff on this RFP, evaluation, and recommended contract award for these services. City of Palo Alto Page 7 Timeline Staff expects to transition TOT and Telephone UUT collection services during FY 2020. The remaining awarded services are currently performed by MuniServices. Environmental Review The approval of an agreement for tax and fee consulting services is not an action subject to environmental review under the California Environmental Quality Act. . 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3URIHVVLRQDO6HUYLFHV 5HY$SULO WĂŐĞϰϭŽĨϰϯ &127,&(2)&$1&(//$7,21 ,) 7+( 32/,&< ,6 &$1&(/(' %()25( ,76 (;3,5$7,21 '$7( )25 $1< 5($621 27+(57+$17+(1213$<0(172)35(0,807+(&2168/7$176+$//3529,'( &,7<$7/($67$7+,57<'$<:5,77(1127,&(%()25(7+(())(&7,9('$7( 2)&$1&(//$7,21 ,)7+(32/,&<,6&$1&(/('%()25(,76(;3,5$7,21'$7()257+(1213$<0(17 2)35(0,807+(&2168/7$176+$//3529,'(&,7<$7/($67$7(1'$< :5,77(1127,&(%()25(7+(())(&7,9('$7(2)&$1&(//$7,21 9(1'256$5(5(48,5('72),/(7+(,5(9,'(1&(2),1685$1&($1'$1<27+(55(/$7('127,&(6:,7+7+(&,7<2)3$/2$/72 $77+()2//2:,1*85/ +7736:::3/$1(7%,'6&203257$/3257$/&)0"&203$1<,' 25 +773:::&,7<2)3$/2$/7225**29'(376$6'3/$1(7B%,'6B+2:B72$63 DocuSign Envelope ID: F39EFA5C-8A40-4C60-9A43-3B8C4E3920CC 3URIHVVLRQDO6HUYLFHV 5HY$SULO WĂŐĞϰϮŽĨϰϯ (;+,%,7) ,1)250$7,2135,9$&<32/,&< ([KLELW)HQWLWOHG³,QIRUPDWLRQ3ULYDF\3ROLF\´LVKHUHE\DWWDFKHGWRWDOLQJSDJHV DocuSign Envelope ID: F39EFA5C-8A40-4C60-9A43-3B8C4E3920CC POLICYS TheCity personsi consisten §§6250 personal ordinary Thesem federala including 1798.79. ofthese business federala goalsand Identifiab Informat thirdpar “Protecte “Persona California reference PURPOSE TheCity pertainin collected services otherin contracto collected regulatio Informat TATEMENT ofPaloAlto inPaloAlto. ntwiththep –6270,to (including, courseand easuresare andCaliforn g,withoutl 8(b),1798.8 provisionsd inamann andCaliforn dobjectives bleInformat tionofperso rtyunderco edCritical allyIdentify aCivilCode e. E y,actingin ngtoperson dbyavariet providedby nformation ors.TheCity dbytheCi onsandpro tioniscollect o(the“City” Inpromotin provisionsof takeappro withoutlim dscopeofc generallyo nialaws,th imitation,t 80(e),1798. donotapply erwhichp ialaws.The ,toensure tion,Protect onsdoingb ontracttoth Infrastructu yingInforma esections, itsgovern swhodobu yofmeans, ytheCity,p portalsma yiscommit ity.TheCit ocedures,a ted,storeda Pa INFORMATI ”)strivesto ngthequalit ftheCalifor opriatemeas mitation,fin conductingt bservedby heCity’sru heprovision 81.5,1798.8 tolocalgov romotesthe eobjectiveo theongoing tedCriticalIn usinesswith heCitytopr ureInforma ation”(coll referredto mentaland usinesswith including,w personsacce intainedby ttedtoprot tyacknowle andindustry andutilized age1of8 ONPRIVACY opromotea tyoflifeoft niaPublicR surestosaf nancial)info theCity’sb federal,stat lesandreg nsofCalifo 82(e),1798. vernmentag eprivacyo ofthisPolic gprotection nfrastructur htheCityan rovideservic ation”,“Per ectively,th oabove,an dproprietar orreceives withoutlimit essingtheC ytheCity’ tectingthep edgesfeder ybestpra incomplian POLICY YPOLICY andsustain theseperson ecordsAct, feguardthe ormationo businessas teandlocal gulations,a orniaCivilC .83(e)(7),an genciesliket fpersonal cyistodesc ofthePers reInformatio ndreceiving ces.Thete rsonallyIde he“Informa ndareinco rycapacitie servicesfrom tation,from City’swebsit sstaffand privacyand alandCali cticesare cewithapp YANDPROC Revised asuperiorq ns,itisthep CaliforniaG securityan fpersons, alocalgove lauthorities ndindustry Code§§179 nd1798.92(c theCity,the information cribetheCit sonalInform onandPerso gservicesfr rms“Person entifiableIn ation”)are orporatedin es,collects mtheCity.T mpersonsap te,andpers d/orauthor securityof fornialaws dedicatedt licablelaws. CEDURES1Ͳ6 :December qualityoflif policyofthe Government ndprivacyo collectedin ernmentag sandreflect ybestprac 98.3(a),179 c).Thoughs Citywillcon ,asreflecte ty’sdatasec mation,Perso onallyIdenti omtheCity nalInformat nformation” definedin nthisPolic theInform heInformat pplyingtore sonswhoa rizedthirdͲ theInform ,policies,r toensuring . 64/IT 2017 fefor eCity, Code ofthe nthe ency. tedin tices, 98.24, some nduct edin curity onally ifying yora tion,” and nthe cyby ation ionis eceive ccess party ation rules, gthe DocuSign Envelope ID: 87E1232D-F46E-405A-95CD-91CC38106A93 &9)*#*5' */'03."5*0/13*7"$:10-*$: DocuSign Envelope ID: F39EFA5C-8A40-4C60-9A43-3B8C4E3920CC POLICYANDPROCEDURES1Ͳ64/IT Revised:December2017 Page2of8 ThegoalsandobjectivesofthePolicyare:(a)asafe,productive,andinoffensivework environmentforallusershavingaccesstotheCity’sapplicationsanddatabases;(b)the appropriatemaintenanceandsecurityofdatabaseinformationassetsownedby,orentrusted to,theCity;(c)thecontrolledaccessandsecurityoftheInformationprovidedtotheCity’sstaff andthirdpartycontractors;and(d)faithfulcompliancewithlegalandregulatoryrequirements. SCOPE ThePolicywillguidetheCity’sstaffand,indirectly,thirdpartycontractors,whichareby contractrequiredtoprotecttheconfidentialityandprivacyoftheInformationofthepersons whosepersonalinformationdataareintendedtobecoveredbythePolicyandwhichwillbe advisedbyCitystafftoconformtheirperformancestothePolicyshouldtheyenjoyconditional accesstothatinformation. CONSEQUENCES TheCity’semployeesshallcomplywiththePolicyintheexecutionoftheirofficialdutiestothe extenttheirworkimplicatesaccesstotheInformationreferredtointhisPolicy.Afailureto complymayresultinemploymentand/orlegalconsequences. EXCEPTIONS IntheeventthataCityemployeecannotfullycomplywithoneormoreelement(s)describedin thisPolicy,theemployeemayrequestanexceptionbysubmittingSecurityExceptionRequest. TheexceptionrequestwillbereviewedandadministeredbytheCity’sInformationSecurity Manager(the“ISM”).Theemployee,withtheapprovalofhisorhersupervisor,willprovide anyadditionalinformationasmayberequestedbytheISM.TheISMwillconductarisk assessmentoftherequestedexceptioninaccordancewithguidelinesapprovedbytheCity’s ChiefInformationOfficer(“CIO”)andapprovedastoformbytheCityAttorney.ThePolicy’s guidelineswillincludeataminimum:purpose,source,collection,storage,access,retention, usage,andprotectionoftheInformationidentifiedintherequest.TheISMwillconsultwiththe CIOtoapproveordenytheexceptionrequest.Afterdueconsiderationisgiventotherequest, theexceptionrequestdispositionwillbecommunicated,inwriting,totheCityemployeeand hisorhersupervisor.Theapprovalofanyrequestmaybesubjecttocountermeasures establishedbytheCIO,actingbytheISM. MUNICIPALORDINANCE ThisPolicywillsupersedeanyCitypolicy,rule,regulationorprocedureregardinginformation privacy. RESPONSIBILITIESOFCITYSTAFF DocuSign Envelope ID: 87E1232D-F46E-405A-95CD-91CC38106A93DocuSign Envelope ID: F39EFA5C-8A40-4C60-9A43-3B8C4E3920CC POLICYANDPROCEDURES1Ͳ64/IT Revised:December2017 Page3of8 A. RESPONSIBILITYOFCIOANDISM TheCIO,actingbytheISM,willestablishaninformationsecuritymanagementframework toinitiateandcoordinatetheimplementationofinformationsecuritymeasuresbythe City’sgovernment. TheCity’semployees,inparticular,softwareapplicationusersanddatabaseusers,and, indirectly,thirdpartycontractorsundercontracttotheCitytoprovideservices,shallby guidedbythisPolicyintheperformanceoftheirjobresponsibilities. TheISMwillberesponsiblefor:(a)developingandupdatingthePolicy,(b)enforcing compliancewithandtheeffectivenessofthePolicy;(c)thedevelopmentofprivacy standardsthatwillmanifestthePolicyindetailed,auditabletechnicalrequirements,which willbedesignedandmaintainedbythepersonsresponsiblefortheCity’sITenvironments; (d)assistingtheCity’sstaffinevaluatingsecurityandprivacyincidentsthatariseinregard topotentialviolationsofthePolicy;(e)reviewingandapprovingdepartmentͲspecific policiesandprocedureswhichfallunderthepurviewofthisPolicy;and(f)reviewingNonͲ DisclosureAgreements(NDAs)signedbythirdpartycontractors,whichwillprovideservices, including,withoutlimitation,localor‘cloudͲbased’softwareservicestotheCity. B. RESPONSIBILITYOFINFORMATIONSECURITYSTEERINGCOMMITTEE TheInformationSecuritySteeringCommittee(the“ISSC”),whichiscomprisedoftheCity’s employees,drawnfromthevariousCitydepartments,willprovidetheprimarydirection, prioritizationandapprovalforallinformationsecurityefforts,includingkeyinformation securityandprivacyrisks,programs,initiativesandactivities.TheISSCwillprovideinputto theinformationsecurityandprivacystrategicplanningprocessestoensurethatinformation securityrisksareadequatelyconsidered,assessedandaddressedattheappropriateCity departmentlevel. C. RESPONSIBILITYOFUSERS AllauthorizedusersoftheInformationwillberesponsibleforcomplyingwithinformation privacyprocessesandtechnologieswithinthescopeofresponsibilityofeachuser. D. RESPONSIBILITYOFINFORMATIONTECHNOLOGY(IT)MANAGERS TheCity’sITManagers,whoareresponsibleforinternal,external,directandindirect connectionstotheCity’snetworks,willberesponsibleforconfiguring,maintainingand securingtheCity’sITnetworksincompliancewiththeCity’sinformationsecurityand privacypolicies.Theyarealsoresponsiblefortimelyinternalreportingofeventsthatmay havecompromisednetwork,systemordatasecurity. DocuSign Envelope ID: 87E1232D-F46E-405A-95CD-91CC38106A93DocuSign Envelope ID: F39EFA5C-8A40-4C60-9A43-3B8C4E3920CC POLICYANDPROCEDURES1Ͳ64/IT Revised:December2017 Page4of8 E. RESPONSIBILITYOFAUTHORIZATIONCOORDINATION TheISMwillensurethattheCity’semployeessecuretheexecutionofNonͲDisclosure Agreements(NDA),wheneveraccesstotheInformationwillbegrantedtothirdparty contractors,inconjunctionwiththeSoftwareasaService(SaaS)SecurityandPrivacyTerms andConditions.AnNDAmustbeexecutedpriortothesharingoftheInformationof personscoveredbythisPolicywiththirdpartycontractors.TheCity’sapproachtomanaging informationsecurityanditsimplementation(i.e.objectives,policies,processes,and proceduresforinformationsecurity)willbereviewedindependentlybytheISMatplanned intervals,orwheneversignificantchangestosecurityimplementationhaveoccurred. TheCIO,actingbytheISM,willreviewandrecommendchangestothePolicyannually,oras appropriate,commencingfromthedateofitsadoption. GENERALPROCEDUREFORINFORMATIONPRIVACY A. OVERVIEW ThePolicyappliestoactivitiesthatinvolvetheuseoftheCity’sinformationassets,namely, theInformationofpersonsdoingbusinesswiththeCityorreceivingservicesfromtheCity, whichareownedby,orentrustedto,theCityandwillbemadeavailabletotheCity’s employeesandthirdpartycontractorsundercontracttotheCitytoprovideSoftwareasa Serviceconsultingservices.Theseactivitiesinclude,withoutlimitation,accessingthe Internet,usingeͲmail,accessingtheCity’sintranetorothernetworks,systems,ordevices. Theterm“informationassets”alsoincludesthepersonalinformationoftheCity’s employeesandanyotherrelatedorganizationswhilethoseassetsareundertheCity’s control.Securitymeasureswillbedesigned,implemented,andmaintainedtoensurethat onlyauthorizedpersonswillenjoyaccesstotheinformationassets.TheCity’sstaffwillact toprotectitsinformationassetsfromtheft,damage,loss,compromise,andinappropriate disclosureoralteration.TheCitywillplan,design,implementandmaintaininformation managementsystems,networksandprocessesinordertoassuretheappropriate confidentiality,integrity,andavailabilityofitsinformationassetstotheCity’semployees andauthorizedthirdparties. B. PERSONALINFORMATIONANDCHOICE Exceptaspermittedorprovidedbyapplicablelaws,theCitywillnotsharetheInformation ofanypersondoingbusinesswiththeCity,orreceivingservicesfromtheCity,inviolationof thisPolicy,unlessthatpersonhasconsentedtotheCity’ssharingofsuchinformation duringtheconductoftheCity’sbusinessasalocalgovernmentagencywiththirdparties undercontracttotheCitytoprovideservices. DocuSign Envelope ID: 87E1232D-F46E-405A-95CD-91CC38106A93DocuSign Envelope ID: F39EFA5C-8A40-4C60-9A43-3B8C4E3920CC POLICYANDPROCEDURES1Ͳ64/IT Revised:December2017 Page5of8 C. METHODSOFCOLLECTIONOFPERSONALINFORMATION TheCitymaygathertheInformationfromavarietyofsourcesandresources,providedthat thecollectionofsuchinformationisbothnecessaryandappropriateinorderfortheCityto conductbusinessasalocalgovernmentagencyinitsgovernmentalandproprietary capacities.Thatinformationmaybegatheredatservicewindowsandcontactcentersas wellasatwebsites,bymobileapplications,andwithothertechnologies,wherevertheCity mayinteractwithpersonswhoneedtosharesuchformationinordertosecuretheCity’s services. TheCity’sstaffwillinformthepersonswhoseInformationarecoveredbythisPolicythat theCity’swebsitemayuse“cookies”tocustomizethebrowsingexperiencewiththeCityof PaloAltowebsite.TheCitywillnotethatacookiecontainsuniqueinformationthataweb sitecanusetotrack,amongothers,theInternetProtocoladdressofthecomputerusedto accesstheCity’swebsites,theidentificationofthebrowsersoftwareandoperating systemsused,thedateandtimeauseraccessedthesite,andtheInternetaddressofthe websitefromwhichtheuserlinkedtotheCity’swebsites.Cookiescreatedontheuser’s computerbyusingtheCity’swebsitedonotcontaintheInformation,andthusdonot compromisetheuser’sprivacyorsecurity.Userscanrefusethecookiesordeletethecookie filesfromtheircomputersbyusinganyofthewidelyavailablemethods.Iftheuserchooses nottoacceptacookieonhisorhercomputer,itwillnotpreventorprohibittheuserfrom gainingaccesstoorusingtheCity’ssites. D. UTILITIESSERVICE IntheprovisionofutilityservicestopersonslocatedwithinPaloAlto,theCityofPaloAlto UtilitiesDepartment(“CPAU”)willcollecttheInformationinordertoinitiateandmanage utilityservicestocustomers.Totheextentthemanagementofthatinformationisnot specificallyaddressedintheUtilitiesRulesandRegulationsorotherordinances,rules, regulationsorprocedures,thisPolicywillapply;provided,however,anysuchRulesand RegulationsmustconformtothisPolicy,unlessotherwisedirectedorapprovedbythe Council.ThisincludesthesharingofCPAUͲcollectedInformationwithotherCity departmentsexceptasmayberequiredbylaw. Businessesandresidentswithstandardutilitymetersand/orhavingnonͲmeteredmonthly serviceswillhavesecureaccessthroughaCPAUwebsitetotheirInformation,including, withoutlimitation,theirmonthlyutilityusageandbillingdata.Inadditiontotheirregular monthlyutilitiesbilling,businessesandresidentswithnonͲstandardorexperimental electric,waterornaturalgasmetersmayhavetheirusageand/orbillingdataprovidedto themthroughnonͲCityelectronicportalsatdifferentintervalsthanwiththestandard monthlybilling. DocuSign Envelope ID: 87E1232D-F46E-405A-95CD-91CC38106A93DocuSign Envelope ID: F39EFA5C-8A40-4C60-9A43-3B8C4E3920CC POLICYANDPROCEDURES1Ͳ64/IT Revised:December2017 Page6of8 BusinessesandresidentswithsuchnonͲstandardorexperimentalmeteringwillhavetheir Informationcoveredbythesameprivacyprotectionsandpersonalinformationexchange rulesapplicabletoInformationunderapplicablefederalandCalifornialaws. E. PUBLICDISCLOSURE TheInformationthatiscollectedbytheCityintheordinarycourseandscopeofconducting itsbusinesscouldbeincorporatedinapublicrecordthatmaybesubjecttoinspectionand copyingbythepublic,unlesssuchinformationisexemptfromdisclosuretothepublicby Californialaw. F. ACCESSTOPERSONALINFORMATION TheCitywilltakereasonablestepstoverifyaperson’sidentitybeforetheCitywillgrant anyoneonlineaccesstothatperson’sInformation.EachCitydepartmentthatcollects Informationwillaffordaccesstoaffectedpersonswhocanreviewandupdatethat informationatreasonabletimes. G. SECURITY,CONFIDENTIALITYANDNONͲDISCLOSURE ExceptasotherwiseprovidedbyapplicablelaworthisPolicy,theCitywilltreatthe InformationofpersonscoveredbythisPolicyasconfidentialandwillnotdiscloseit,or permitittobedisclosed,tothirdpartieswithouttheexpresswrittenconsentoftheperson affected.TheCitywilldevelopandmaintainreasonablecontrolsthataredesignedto protecttheconfidentialityandsecurityoftheInformationofpersonscoveredbythisPolicy. TheCitymayauthorizetheCity’semployeeandorthirdpartycontractorstoaccessand/or usetheInformationofpersonswhodobusinesswiththeCityorreceiveservicesfromthe City.Inthoseinstances,theCitywillrequiretheCity’semployeeand/orthethirdparty contractorstoagreetousesuchInformationonlyinfurtheranceofCityͲrelatedbusiness andinaccordancewiththePolicy. IftheCitybecomesawareofabreach,orhasreasonablegroundstobelievethatasecurity breachhasoccurred,withrespecttotheInformationofaperson,theCitywillnotifythe affectedpersonofsuchbreachinaccordancewithapplicablelaws.Thenoticeofbreachwill includethedate(s)orestimateddate(s)oftheknownorsuspectedbreach,thenatureof theInformationthatisthesubjectofthebreach,andtheproposedactiontobetakenor theresponsiveactiontakenbytheCity. H. DATARETENTION/INFORMATIONRETENTION DocuSign Envelope ID: 87E1232D-F46E-405A-95CD-91CC38106A93DocuSign Envelope ID: F39EFA5C-8A40-4C60-9A43-3B8C4E3920CC POLICYANDPROCEDURES1Ͳ64/IT Revised:December2017 Page7of8 TheCitywillstoreandsecureallInformationforaperiodoftimeasmayberequiredbylaw, orifnoperiodisestablishedbylaw,forseven(7)years,andthereaftersuchinformation willbescheduledfordestruction. I. SOFTWAREASASERVICE(SAAS)OVERSIGHT TheCitymayengagethirdpartycontractorsandvendorstoprovidesoftwareapplication anddatabaseservices,commonlyknownasSoftwareͲasͲaͲService(SaaS). InordertoassuretheprivacyandsecurityoftheInformationofthosewhodobusinesswith theCityandthosewhoreceivedservicesfromtheCity,asaconditionofsellinggoods and/orservicestotheCity,theSaaSservicesprovideranditssubcontractors,ifany, includinganyITinfrastructureservicesprovider,shalldesign,install,provide,andmaintain asecureITenvironment,whileitperformssuchservicesand/orfurnishesgoodstotheCity, totheextentanyscopeofworkorservicesimplicatestheconfidentialityandprivacyofthe Information. Theserequirementsincludeinformationsecuritydirectivespertainingto:(a)theIT infrastructure,bywhichtheservicesareprovidedtotheCity,includingconnectiontothe City'sITsystems;(b)theSaaSservicesprovider’soperationsandmaintenanceprocesses neededtosupporttheITenvironment,includingdisasterrecoveryandbusinesscontinuity planning;and(c)theITinfrastructureperformancemonitoringservicestoensureasecure andreliableenvironmentandserviceavailabilitytotheCity.Theterm“ITinfrastructure” referstotheintegratedframework,including,withoutlimitation,datacenters,computers, anddatabasemanagementdevices,uponwhichdigitalnetworksoperate. PriortoenteringintoanagreementtoprovideservicestotheCity,theCity’sstaffwill requiretheSaaSservicesprovidertocompleteandsubmitanInformationSecurityand PrivacyQuestionnaire.IntheeventthattheSaaSservicesproviderreasonablydetermines thatitcannotfulfilltheinformationsecurityrequirementsduringthecourseofproviding services,theCitywillrequiretheSaaSservicesprovidertopromptlyinformtheISM. J. FAIRANDACCURATECREDITTRANSACTIONACTOF2003 CPAUwillrequireutilitycustomerstoprovidetheirInformationinorderfortheCityto initiateandmanageutilityservicestothem. Federalregulations,implementingtheFairandAccurateCreditTransactionsActof2003 (PublicLaw108Ͳ159),includingtheRedFlagRules,requirethatCPAU,asa“covered financialinstitutionorcreditor”whichprovidesservicesinadvanceofpaymentandwhich canaffectconsumercredit,developandimplementproceduresforanidentitytheft programfornewandexistingaccountstodetect,prevent,respondandmitigatepotential identitytheftofitscustomers’Information. DocuSign Envelope ID: 87E1232D-F46E-405A-95CD-91CC38106A93DocuSign Envelope ID: F39EFA5C-8A40-4C60-9A43-3B8C4E3920CC POLICYANDPROCEDURES1Ͳ64/IT Revised:December2017 Page8of8 CPAUproceduresforpotentialidentitytheftwillbereviewedindependentlybytheISM annuallyorwheneversignificantchangestosecurityimplementationhaveoccurred.The ISMwillrecommendchangestoCPAUidentitytheftprocedures,orasappropriate,soasto conformtothisPolicy. ThereareCalifornialawswhichareapplicabletoidentitytheft;theyaresetforthin CaliforniaCivilCode§1798.92. NOTE:QuestionsregardingthispolicyshouldbereferredtotheInformationTechnology Department,asappropriate. Recommended:__________________________________________________ DirectorInformationTechnology/CIODate Approved: ____________________________________________________ CityManagerDate DocuSign Envelope ID: 87E1232D-F46E-405A-95CD-91CC38106A93 DocuSign Envelope ID: F39EFA5C-8A40-4C60-9A43-3B8C4E3920CC 3URIHVVLRQDO6HUYLFHV 5HY$SULO WĂŐĞϰϯŽĨϰϯ (;+,%,7* 9(1'25&<%(56(&85,7<7(506$1'&21',7,216 ([KLELW*HQWLWOHG³9HQGRU&\EHU6HFXULW\7HUPVDQG&RQGLWLRQV´LVKHUHE\DWWDFKHGWRWDOLQJ SDJHV DocuSign Envelope ID: F39EFA5C-8A40-4C60-9A43-3B8C4E3920CC City of Palo Alto Information Security Document Version: V2.7 Doc:InfoSec 110 Page 1 of 3 EXHIBIT ' VENDOR CYBERSECURITY TERMS AND CONDITIONS This Exhibit shall be made a part of the City of Palo Alto’s Professional Services Agreement or any other contract entered into by and between the City of Palo Alto (the “City”) and OpenCities, Inc. (the “Consultant”) for the provision of Software as a Service services to the City (the “Agreement”). In order to assure the privacy and security of the personal information of the City’s customers and people who do business with the City, including, without limitation, vendors, utility customers, library patrons and other individuals and businesses, who are required to share such information with the City, as a condition of receiving services from the City or selling goods and services to the City, including, without limitation, the Software as a Service services provider (the “Consultant”) and its subcontractors, if any, including, without limitation, any Information Technology (“IT”) infrastructure services provider, shall design, install, provide, and maintain a secure IT environment, described below, while it renders and performs the Services and furnishes goods, if any, described in the Statement of Work, Exhibit B, to the extent any scope of work implicates the confidentiality and privacy of the personal information of the City’s customers. The Consultant shall fulfill the data and information security requirements (the “Requirements”) set forth in Part A below. A “secure IT environment” includes: (a) the IT infrastructure, by which the Services are provided to the City, including connection to the City's IT systems; (b) the Consultant’s operations and maintenance processes needed to support the environment, including disaster recovery and business continuity planning; and (c) the IT infrastructure performance monitoring services to ensure a secure and reliable environment and service availability to the City. “IT infrastructure” refers to the integrated framework, including, without limitation, data centers, computers, and database management devices, upon which digital networks operate. In the event that, after the Effective Date, the Consultant reasonably determines that it cannot fulfill the Requirements, the Consultant shall promptly inform the City of its determination and submit, in writing, one or more alternate countermeasure options to the Requirements (the “Alternate Requirements” as set forth in Part B), which may be accepted or rejected in the reasonable satisfaction of the Information Security Manager (the “ISM”). Part A. Requirements: The Consultant shall at all times during the term of any contract between the City and the Consultant: (a) Appoint or designate an employee, preferably an executive officer, as the security liaison to the City with respect to the Services to be performed under this Agreement. (b) Comply with the City’s Information Privacy Policy: DocuSign Envelope ID: F39EFA5C-8A40-4C60-9A43-3B8C4E3920CC City of Palo Alto Information Security Document Version: V2.7 Doc:InfoSec 110 Page 2 of 3 (c) Have adopted and implemented information security and privacy policies that are documented, are accessible to the City and conform to ISO 27001/2 – Information Security Management Systems (ISMS) Standards. See the following: http://www.iso.org/iso/home/store/catalogue_tc/catalogue_detail.htm?csnumber=42103 http://www.iso.org/iso/iso_catalogue/catalogue_tc/catalogue_detail.htm?csnumber=50297 (d) Conduct routine data and information security compliance training of its personnel that is appropriate to their role. (e) Develop and maintain detailed documentation of the IT infrastructure, including software versions and patch levels. (f) Develop an independently verifiable process, consistent with industry standards, for performing professional and criminal background checks of its employees that (1) would permit verification of employees’ personal identity and employment status, and (2) would enable the immediate denial of access to the City's confidential data and information by any of its employees who no longer would require access to that information or who are terminated. (g) Provide a list of IT infrastructure components in order to verify whether the Consultant has met or has failed to meet any objective terms and conditions. (h) Implement access accountability (identification and authentication) architecture and support role-based access control (“RBAC”) and segregation of duties (“SoD”) mechanisms for all personnel, systems, and software used to provide the Services. “RBAC” refers to a computer systems security approach to restricting access only to authorized users. “SoD” is an approach that would require more than one individual to complete a security task in order to promote the detection and prevention of fraud and errors. (i) Assist the City in undertaking annually an assessment to assure that: (1) all elements of the Services’ environment design and deployment are known to the City, and (2) it has implemented measures in accordance with industry best practices applicable to secure coding and secure IT architecture. (j) Provide and maintain secure intersystem communication paths that would ensure the confidentiality, integrity, and availability of the City's information. (k) Deploy and maintain IT system upgrades, patches and configurations conforming to current patch and/or release levels by not later than one (1) week after its date of release. Emergency security patches must be installed within 24 hours after its date of release. (l) Provide for the timely detection of, response to, and the reporting of security incidents, including on-going incident monitoring with logging. (m) Notify the City within one (1) hour of detecting a security incident that results in the unauthorized access to or the misuse of the City's confidential data and information. (n) Inform the City that any third party service provider(s) meet(s) all of the Requirements. (o)Perform security self-audits on a regular basis and not less frequently than on a quarterly basis, and provide the required summary reports of those self-audits to the ISM on the annual anniversary date or any other date agreed to by the Parties. (p) Accommodate, as practicable, and upon reasonable prior notice by the City, the City’s performance of random site security audits at the Consultant’s site(s), including the site(s) of a third party service provider(s), as applicable. The scope of these audits will extend to the Consultant’s and its third party service provider(s)’ awareness of security policies and DocuSign Envelope ID: F39EFA5C-8A40-4C60-9A43-3B8C4E3920CC City of Palo Alto Information Security Document Version: V2.7 Doc:InfoSec 110 Page 3 of 3 practices, systems configurations, access authentication and authorization, and incident detection and response. (q)Cooperate with the City to ensure that to the extent required by applicable laws, rules and regulations, the Confidential Information will be accessible only by the Consultant and any authorized third party service provider’s personnel. (r) Perform regular, reliable secured backups of all data needed to maximize the availability of the Services. (s) Maintain records relating to the Services for a period of three (3) years after the expiration or earlier termination of this Agreement and in a mutually agreeable storage medium. Within thirty (30) days after the effective date of expiration or earlier termination of this Agreement, all of those records relating to the performance of the Services shall be provided to the ISM. (t)Maintain the Confidential Information in accordance with applicable federal, state and local data and information privacy laws, rules, and regulations. (u) Encrypt the Confidential Information before delivering the same by electronic mail to the City and or any authorized recipient. (v)Unless otherwise addressed in the Agreement, shall not hold the City liable for any direct, indirect or punitive damages whatsoever including, without limitation, damages for loss of use, data or profits, arising out of or in any way connected with the City’s IT environment, including, without limitation, IT infrastructure communications. Part B. Alternate Requirements: Not Applicable DocuSign Envelope ID: F39EFA5C-8A40-4C60-9A43-3B8C4E3920CC City of Palo Alto (ID # 10771) City Council Staff Report Report Type: Consent Calendar Meeting Date: 12/2/2019 City of Palo Alto Page 1 Summary Title: Contract Amendment for Online Solar and EV Calculator Tools Title: Approval and Authorization for the City Manager or Designee to Execute Contract Amendment Number 1 to Contract Number S17165514 With Clean Power Research, LLC, for the Provision of a Web-Based Solar Photovoltaic (PV) and Electric Vehicle (EV) Calculator for CPAU Customers Increasing the Term for Five Years and Increasing Compensation by $275,000, for a Total Not-to-Exceed Amount of $410,000 From: City Manager Lead Department: Utilities Recommendation Staff recommends that Council approve and authorize the City Manager, or designee, to execute the following Utilities Program Services contract amendment: Amendment One to the Clean Power Research, LLC, Contract S17165514 (Attachment A) for provision of a web-based solar photovoltaic (PV) and electric vehicle (EV) calculator tool, extending the contract’s existing three-year term for up to five additional years from an expiration date of December 31, 2019 to an expiration date of December 31, 2024 and to clarify language in the agreement, including that related to invoicing, and with an increase in the not- to-exceed amount of the contract by $275,000, from $135,000 over three years to $410,000 over eight years. Executive Summary Clean Power Research’s WattPlan® Advisor solar and electric vehicle (EV) calculators are web- based tools that enable CPAU customers to run estimates of the economics of purchasing solar, solar+storage, and/or electric vehicles (EVs). The tools are user friendly and they incorporate accurate utility rates in the economic modeling. Clean Power Research is the only vendor that includes all three of these distributed energy resources (DERs) -- solar, battery storage, and EVs – in one calculator tool offering. The City has worked with Clean Power Research over the past three years to update and optimize these web-based tools as the City transitioned from its original Net Energy Metering (NEM 1) solar billing program to the Net Energy Metering Successor (NEM 2) program. Opportunities may exist to enhance the tools’ capabilities further City of Palo Alto Page 2 in the coming years, adding features such as a home electrification module or a Virtual Energy Assessment. More than 600 unique residential addresses ran estimates in 2018, and we expect this number to increase with the upcoming launch of the utility’s new web portal, MyCPAU. The proposed contract amendment adds five additional years and $275,000 to the existing three- year, $135,000 contract so that CPAU customers can continue to benefit from these online resources that have been customized over the past three years. Background In October 2016, the City of Palo Alto issued RFP #165514, soliciting proposals for providing a web-based calculator for evaluating EV and PV systems. Three vendors responded, and Clean Power Research was selected to provide its WattPlan PV/EV Calculator tools. The original contract with Clean Power Research was entered on December 31, 2016 for a period of three years. The total compensation not-to-exceed amount for the Term of the Agreement was $135,000. Discussion In 2016, Palo Alto’s PV Partners solar rebate funds were fully reserved, and the City was approaching the cap for its original Net Energy Metering (NEM 1) program, which compensates solar customers at retail rates for electricity that they export to the utility. Also at that time, the City was developing its Sustainability and Climate Action Plan (S/CAP), which Council adopted in November 2016 (Council Staff Report 7304). The S/CAP included a goal of reducing greenhouse gas (GHG) emissions to 80% below 1990 levels by 2030, and the largest source of emissions was shown to be road transport. In response to the City’s environmental sustainability goals, staff determined that providing online tools that customers could use to evaluate the economics of purchasing rooftop solar and/or electric vehicles would be of value. The City issued an RFP and selected Clean Power Research as provider of these tools. Offering online tools fit well with the City’s transition in solar-related matters from its role as provider of incentives to that of a trusted advisor, providing useful resources and information. Because the PV/EV calculator tools are self-service, they require minimal staff time. Customer Service Representatives benefit from the tools because when customers have questions about solar and EV purchase decisions the Customer Service representatives can refer the customers to these easily accessible and self-intuitive tools. In addition, the tools help protect customers from unscrupulous vendors by providing reasonable estimates to compare with bids. The solar and EV calculator tools are currently accessible via the solar and EV web pages, respectively. Funds from this amendment cover integrating the tools with our new web portal, MyCPAU, adding “Solar” and “EV” tabs to the portal dashboard. Integration with the portal would increase visibility of the tools and we would expect a substantial increase in the number of users. EV Calculator: https://paloalto.wattplan.com/ev/ City of Palo Alto Page 3 Solar Calculator: https://paloalto.wattplan.com/pv/ In 2018, 604 estimates were run from unique addresses -- 317 solar estimates and 287 EV estimates. The annual subscription fee for the solar and EV tools was $23,000 per year, and so the cost of serving 604 unique customers with the solar and EV tools was $38 per customer. The switch to NEM 2 in 2018 increased interest in battery storage. Since under NEM 2 customers are compensated at a rate lower than retail rates for electricity they export to the utility, they can maximize the value of their solar-generated electricity if they use (or store) that electricity while they generate it, rather than exporting. Increased concerns about power outages have also driven interest in combining battery storage with rooftop solar. Including a battery storage module in the solar calculator tool makes the tool more useful for customers as they are able to evaluate the economics of adding battery storage to a rooftop solar system. Set-up of the battery storage module was accomplished in Q4 of 2018 using a portion ($5,000) of the original contract’s Task 3 designated funds for Optional Enhancements. Adding the battery storage module increases WattPlan’s annual subscription fee to $33,000 per year. Data integration adds $5,000 per year, bringing the total to $38,000 per year, as shown in the Task 2, Subscription Fees row in Table 1 below for Years 4 through 8 of the contracts. If the number of unique users increases from 600 per year to 1,000 per year with integration into the new MyCPAU portal, the cost of the solar and EV calculator tools will remain at $38 per unique customer. Additional funds of $15,000 per year are added to the Task 3, Optional Enhancements category of the contract for years 4 through 6, and $20,000 per year for years 7 and 8. Just as Task 3 funds made the addition of the battery storage module possible at the end of 2018, this category of funds may be needed for adding features or enhancements in coming years, such as a home electrification module, or a Virtual Energy Assessment module. These possibilities are intriguing, and they may, on a per customer basis, be a more economical way for the City to provide residential customers with home efficiency and electrification advising in the future. The decrease from $25,000 per year to $15,000 or $20,000 per year in the Task 3 category is based on the experience of adding features during Years 1 through 3 and is believed to be a closer estimate of funds that may be needed. Even as solar incentives have wound down, customers are still drawn to the idea of generating their own clean energy. As they consider an investment in rooftop solar, customers often expand the solar decision to include home efficiency improvements and electrification of their homes and transportation. Investments in these energy projects move our City closer to achieving its sustainability goals, and so we want to support informed decision-making by our customers and remove barriers such as confusion about the economics of the decisions. Continuing to provide online tools that help our customers make energy-related investment decisions is an efficient way to support our City’s sustainability goals while also helping us meet the important goal of customer satisfaction. City of Palo Alto Page 4 A new solicitation at this stage would be impractical and unavailing. Staff and the community are satisfied with the Clean Power Research services and the negotiated rates are fair for the level of services provided. The City has invested significant time and money into customized software enhancements and training for all Clean Power Research modules. If, instead of continuing to contract with Clean Power Research, the City were to go out to competitive solicitation for software that produces economic analyses of investments in distributed energy resources, the City would have to conduct an assessment, conduct the solicitation, prepare for data transfer and implement a transition plan to ensure there are no disruptions to services, where a need for new calculator tools is not currently indicated. For these reasons, conducting a solicitation would be impractical and would be disadvantageous for the City at this time, and Staff therefore requested and received an exemption from competitive solicitation, Ref. PAMC 2.30.360(b). Resource Impact The budget schedule in Table 1 below shows the funds in the original contract (columns marked by year as Y1 through Y3) as well as the proposed funds for an additional five years of contract term (columns marked Y4 through Y8). City of Palo Alto Page 5 Table 1. Budget Schedule. Tas k Description Not to Exceed (NTE) Amount Y1 Y2 Y3 Y4 Y5 Y6 Y7 Y8 1 WattPlan Software -- Set- up/Configuratio n $16,00 0 2 Subscription $23,00 0 $23,00 0 $23,00 0 $38,00 0 $38,00 0 $38,00 0 $38,00 0 $38,00 0 3 Enhancements on an as-needed basis $0 $25,00 0 $25,00 0 $15,00 0 $15,00 0 $15,00 0 $20,00 0 $20,00 0 Sub-total NTE -- Basic Services $39,00 0 $48,00 0 $48,00 0 $53,00 0 $53,00 0 $53,00 0 $58,00 0 $58,00 0 Funding of $53,000 for Year 4 in the contract is available in the FY 2020 Public Benefits and LCFS budgets, which are listed in the Funding Source row of Table 2 below. Funding for future enhancements will be allocated based on the percentages listed in the “% of Total” rows of Table 2. Funding for contract years 5 through 8 is contingent upon appropriation and approval of funds for FY 2021-24. Policy Implications Provision of these online-accessible tools is consistent with the Utilities Strategic Plan, Priority 3, utilizing technology to enhance the customer experience and maximize operational efficiency. The tools are also consistent with the Sustainability Implementation Plan and the City’s Sustainability and Climate Action Plan (S/CAP) as they help customers navigate the process of purchasing an electric vehicle, supporting the acceleration of EV penetration in Palo Alto. City of Palo Alto Page 6 Table 2: Funding sources and cost breakdown for PV/EV Calculator tool subscription fees. PV Calculator EV Calculator Battery Storage Module Data Integration Electrification Module (Enhancement) Virtual Energy Audit (Enhancement) Total $/year Without/With Enhancements Annual Subscription $13,000 $10,000 $10,000 $5,000 $10,000 $5,000 $38,000/ $53,000 % of Total, No Enhancements 35% 26% 26% 13% -- -- % of Total, with Enhancements 25% 19% 19% 9% 19% 9% Funding Source Electric Public Benefits Renewables Low Carbon Fuel Standard (LCFS) Electric Public Benefits R&D 50:50 Electric Public Benefits Renewables and LCFS Electric Public Benefits R&D 50:50 Electric Public Benefits and Gas DSM Stakeholder Engagement Each year staff holds workshops for the community on the topic of solar in Palo Alto in conjunction with the City’s participation in the Bay Area SunShares solar group-buy program. The PV/EV calculator tools are central to the presentation as they are a key offering for customers considering rooftop solar. Similarly, the link to the EV calculator tool is shared at City EV events. The PV and EV calculator tools are cross-compatible because customers considering solar are often considering purchasing an electric vehicle and vice versa, and so both are promoted at solar and EV events. Environmental Review Approval of the Contract Amendment recommended in this staff report does not meet the definition of a project pursuant to Section 21065 of the California Public Resources Code, thus no environmental review under the California Environmental Quality Act (CEQA) is required and the work performed by consultants and staff in connection with these online tools is categorically exempt from CEQA pursuant to section 15301 of Title 14 of the California Code of Regulations. Attachments: • Attachment A: Contract S17165514 • Attachment B: Amendment Number 1 to Contract S17165514 CITY OF PALO ALTO CONTRACT NO. S17165514 AGREEMENT BETWEEN THE CITY OF PALO ALTO AND CLEAN POWER RESEARCH, LLC FOR PROFESSIONAL SERVICES This Agreement is entered into on this 31st day of December, 2016, (“Agreement”) by and between the CITY OF PALO ALTO, a California chartered municipal corporation (“CITY”), and CLEAN POWER RESEARCH, LLC, a limited liability company, located at 1541 3rd Street, Napa, CA 94559 ("CONSULTANT"). RECITALS The following recitals are a substantive portion of this Agreement. A. CITY intends to develop a web based solar photovoltaic (PV) and electric vehicle (EV) calculator for CPAU customers (“Project”) and desires to engage a consultant to design and build the calculator in connection with the Project (“Services”). B. CONSULTANT has represented that it has the necessary professional expertise, qualifications, and capability, and all required licenses and/or certifications to provide the Services. C. CITY in reliance on these representations desires to engage CONSULTANT to provide the Services as more fully described in Exhibit “A”, attached to and made a part of this Agreement. NOW, THEREFORE, in consideration of the recitals, covenants, terms, and conditions, in this Agreement, the parties agree: AGREEMENT SECTION 1. SCOPE OF SERVICES. CONSULTANT shall perform the Services described at Exhibit “A” in accordance with the terms and conditions contained in this Agreement. The performance of all Services shall be to the reasonable satisfaction of CITY. SECTION 2. TERM. The term of this Agreement shall be from the date of its full execution through December 31st, 2019 unless terminated earlier pursuant to Section 19 of this Agreement. SECTION 3. SCHEDULE OF PERFORMANCE. Time is of the essence in the performance of Services under this Agreement. CONSULTANT shall complete the Services within the term of this Agreement and in accordance with the schedule set forth in Exhibit “B”, attached to and made a part of this Agreement. Any Services for which times for performance are not specified in this Agreement shall be commenced and completed by CONSULTANT in a reasonably prompt and timely manner based upon the circumstances and direction communicated to the CONSULTANT. CITY’s agreement to extend the term or the schedule for performance shall not preclude recovery of damages for delay if the extension is required due to the fault of CONSULTANT. 1 of 33 Professional Services Rev. April 27, 2016CLEAN POWER RESEARCH S17165514 DocuSign Envelope ID: EC86705F-DDE5-41D3-9E62-0ECBFA9B8243 SECTION 4. NOT TO EXCEED COMPENSATION. The compensation to be paid to CONSULTANT for performance of the Services described in Exhibit “A” (“Basic Services”), and reimbursable expenses, shall not exceed One Hundred Thirty Five Thousand Dollars ($135,000.00). CONSULTANT agrees to complete all Basic Services, including reimbursable expenses, within this amount. In the event Additional Services are authorized, the total compensation for Basic Services, Additional Services and reimbursable expenses shall not exceed One Hundred Thirty Five Thousand Dollars ($135,000.00). The applicable rates and schedule of payment are set out at Exhibit “C-1”, entitled “HOURLY RATE SCHEDULE,” which is attached to and made a part of this Agreement. Any work performed or expenses incurred for which payment would result in a total exceeding the maximum amount of compensation set forth herein shall be at no cost to the CITY. Additional Services, if any, shall be authorized in accordance with and subject to the provisions of Exhibit “C”. CONSULTANT shall not receive any compensation for Additional Services performed without the prior written authorization of CITY. Additional Services shall mean any work that is determined by CITY to be necessary for the proper completion of the Project, but which is not included within the Scope of Services described at Exhibit “A”. SECTION 5. INVOICES. In order to request payment, CONSULTANT shall submit an invoice for 50% of setup and customization fees (Task I) upon both Parties’ execution of this Agreement. CONSULTANT shall submit an invoice for remaining 50% of setup (Task I) and 100% of annual subscription fee (Task II) upon the completion of setup, subject to not to exceed limits included elsewhere in this Agreement. For Task III, CONSULTANT shall submit monthly reports to the CITY describing the services performed and the applicable charges (including an identification of personnel who performed the services, hours worked, hourly rates, and reimbursable expenses), based upon the CONSULTANT’s billing rates (set forth in Exhibit “C- 1”). If applicable, the reports shall also describe the percentage of completion of each task. The information in CONSULTANT’s payment requests shall be subject to verification by CITY. CONSULTANT shall send all invoices and reports to the City’s project manager at the address specified in Section 13 below. The City will generally process and pay invoices within thirty (30) days of receipt. SECTION 6. QUALIFICATIONS/STANDARD OF CARE. All of the Services shall be performed by CONSULTANT or under CONSULTANT’s supervision. CONSULTANT represents that it possesses the professional and technical personnel necessary to perform the Services required by this Agreement and that the personnel have sufficient skill and experience to perform the Services assigned to them. CONSULTANT represents that it, its employees and subconsultants, if permitted, have and shall maintain during the term of this Agreement all licenses, permits, qualifications, insurance and approvals of whatever nature that are legally required to perform the Services. All of the services to be furnished by CONSULTANT under this agreement shall meet the professional standard and quality that prevail among professionals in the same discipline and of similar knowledge and skill engaged in related work throughout California under the same or similar circumstances. SECTION 7. COMPLIANCE WITH LAWS. CONSULTANT shall keep itself informed of and in compliance with all federal, state and local laws, ordinances, regulations, and orders that 2 of 33 Professional Services Rev. April 27, 2016CLEAN POWER RESEARCH S17165514 DocuSign Envelope ID: EC86705F-DDE5-41D3-9E62-0ECBFA9B8243 may affect in any manner the Project or the performance of the Services or those engaged to perform Services under this Agreement. CONSULTANT shall procure all permits and licenses, pay all charges and fees, and give all notices required by law in the performance of the Services. SECTION 8. ERRORS/OMISSIONS. CONSULTANT is solely responsible for costs, including, but not limited to, increases in the cost of Services, arising from or caused by CONSULTANT’s errors and omissions, including, but not limited to, the costs of corrections such errors and omissions, any change order markup costs, or costs arising from delay caused by the errors and omissions or unreasonable delay in correcting the errors and omissions. SECTION 9. COST ESTIMATES. If this Agreement pertains to the design of a public works project, CONSULTANT shall submit estimates of probable construction costs at each phase of design submittal. If the total estimated construction cost at any submittal exceeds ten percent (10%) of CITY’s stated construction budget, CONSULTANT shall make recommendations to CITY for aligning the PROJECT design with the budget, incorporate CITY approved recommendations, and revise the design to meet the Project budget, at no additional cost to CITY. SECTION 10. INDEPENDENT CONTRACTOR. It is understood and agreed that in performing the Services under this Agreement CONSULTANT, and any person employed by or contracted with CONSULTANT to furnish labor and/or materials under this Agreement, shall act as and be an independent contractor and not an agent or employee of CITY. SECTION 11. ASSIGNMENT. The parties agree that the expertise and experience of CONSULTANT are material considerations for this Agreement. CONSULTANT shall not assign or transfer any interest in this Agreement nor the performance of any of CONSULTANT’s obligations hereunder without the prior written consent of the city manager. Consent to one assignment will not be deemed to be consent to any subsequent assignment. Any assignment made without the approval of the city manager will be void. SECTION 12. SUBCONTRACTING. CONSULTANT shall not subcontract any portion of the work to be performed under this Agreement without the prior written authorization of the city manager or designee. CONSULTANT shall be responsible for directing the work of any subconsultants and for any compensation due to subconsultants. CITY assumes no responsibility whatsoever concerning compensation. CONSULTANT shall be fully responsible to CITY for all acts and omissions of a subconsultant. CONSULTANT shall change or add subconsultants only with the prior approval of the city manager or his designee. SECTION 13. PROJECT MANAGEMENT. CONSULTANT will assign Jennifer Goughas the Project Supervisor to have supervisory responsibility for the performance, progress, and execution of the Services to represent CONSULTANT during the day-to-day work on the Project. If circumstances cause the substitution of the project director, project coordinator, or any other key personnel for any reason, the appointment of a substitute project director and the assignment of any key new or replacement personnel will be subject to the prior written approval of the CITY’s project manager. CONSULTANT, at CITY’s request, shall promptly remove 3 of 33 Professional Services Rev. April 27, 2016CLEAN POWER RESEARCH S17165514 DocuSign Envelope ID: EC86705F-DDE5-41D3-9E62-0ECBFA9B8243 personnel who CITY finds do not perform the Services in an acceptable manner, are uncooperative, or present a threat to the adequate or timely completion of the Project or a threat to the safety of persons or property. CITY’s project manager is Bruce Lesch, Manager, Utility Program Services, or his designee, , 250 Hamilton Avenue, Palo Alto, CA 94303. The project manager will be CONSULTANT’s point of contact with respect to performance, progress and execution of the Services. CITY may designate an alternate project manager from time to time. SECTION 14. OWNERSHIP OF MATERIALS. CONSULTANT shall retain exclusive ownership of any intellectual property in existence before the execution of this Agreement (“Background Intellectual Property”) and shall retain exclusive title and ownership to any intellectual property generated during the Term, (“Foreground Intellectual Property”) that it developed, authored, or conceived in the performance of this Agreement, with the exception of data, reports and outputs specific to CITY’s licensed usage of the service described in this Agreement. Neither CONSULTANT nor its contractors, if any, shall make any of such materials available to any individual or organization without the prior written approval of the City Manager or designee with the exception of non-confidential user-specific data, reports and outputs required to troubleshoot, “debug” and maintain the service during the period of performance. CONSULTANT makes no representation of the suitability of the work product for use in or application to circumstances not contemplated by the scope of work. SECTION 15. AUDITS. CONSULTANT will permit CITY to audit, at any reasonable time during the term of this Agreement and for three (3) years thereafter, CONSULTANT’s records pertaining to matters covered by this Agreement. CONSULTANT further agrees to maintain and retain such records for at least three (3) years after the expiration or earlier termination of this Agreement. SECTION 16. INDEMNITY. 16.1. To the fullest extent permitted by law, CONSULTANT shall protect, indemnify, defend and hold harmless CITY, its Council members, officers, employees and agents (each an “Indemnified Party”) from and against any and all demands, claims, or liability of any nature, including death or injury to any person, property damage or any other loss, including all costs and expenses of whatever nature including attorneys fees, experts fees, court costs and disbursements (“Claims”) resulting from, arising out of or in any manner related to performance or nonperformance by CONSULTANT, its officers, employees, agents or contractors under this Agreement, regardless of whether or not it is caused in part by an Indemnified Party. 16.2. Notwithstanding the above, nothing in this Section 16 shall be construed to require CONSULTANT to indemnify an Indemnified Party from Claims arising from the active negligence, sole negligence or willful misconduct of an Indemnified Party. 16.3. The acceptance of CONSULTANT’s services and duties by CITY shall not operate as a waiver of the right of indemnification. The provisions of this Section 16 shall survive the expiration or early termination of this Agreement. 4 of 33 Professional Services Rev. April 27, 2016CLEAN POWER RESEARCH S17165514 DocuSign Envelope ID: EC86705F-DDE5-41D3-9E62-0ECBFA9B8243 SECTION 17. WAIVERS. The waiver by either party of any breach or violation of any covenant, term, condition or provision of this Agreement, or of the provisions of any ordinance or law, will not be deemed to be a waiver of any other term, covenant, condition, provisions, ordinance or law, or of any subsequent breach or violation of the same or of any other term, covenant, condition, provision, ordinance or law. SECTION 18. INSURANCE. 18.1. CONSULTANT, at its sole cost and expense, shall obtain and maintain, in full force and effect during the term of this Agreement, the insurance coverage described in Exhibit "D". CONSULTANT and its contractors, if any, shall obtain a policy endorsement naming CITY as an additional insured under any general liability or automobile policy or policies. 18.2. All insurance coverage required hereunder shall be provided through carriers with AM Best’s Key Rating Guide ratings of A-:VII or higher which are licensed or authorized to transact insurance business in the State of California. Any and all contractors of CONSULTANT retained to perform Services under this Agreement will obtain and maintain, in full force and effect during the term of this Agreement, identical insurance coverage, naming CITY as an additional insured under such policies as required above. 18.3. Certificates evidencing such insurance shall be filed with CITY concurrently with the execution of this Agreement. The certificates will be subject to the approval of CITY’s Risk Manager and will contain an endorsement stating that the insurance is primary coverage and will not be canceled, or materially reduced in coverage or limits, by the insurer except after filing with the Purchasing Manager thirty (30) days' prior written notice of the cancellation or modification. If the insurer cancels or modifies the insurance and provides less than thirty (30) days’ notice to CONSULTANT, CONSULTANT shall provide the Purchasing Manager written notice of the cancellation or modification within two (2) business days of the CONSULTANT’s receipt of such notice. CONSULTANT shall be responsible for ensuring that current certificates evidencing the insurance are provided to CITY’s Chief Procurement Officer during the entire term of this Agreement. 18.4. The procuring of such required policy or policies of insurance will not be construed to limit CONSULTANT's liability hereunder nor to fulfill the indemnification provisions of this Agreement. Notwithstanding the policy or policies of insurance, CONSULTANT will be obligated for the full and total amount of any damage, injury, or loss caused by or directly arising as a result of the Services performed under this Agreement, including such damage, injury, or loss arising after the Agreement is terminated or the term has expired. SECTION 19. TERMINATION OR SUSPENSION OF AGREEMENT OR SERVICES. 19.1. The City Manager may suspend the performance of the Services, in whole or in part, or terminate this Agreement, with or without cause, by giving ten (10) days prior written notice thereof to CONSULTANT. Upon receipt of such notice, CONSULTANT will immediately discontinue its performance of the Services. 5 of 33 Professional Services Rev. April 27, 2016CLEAN POWER RESEARCH S17165514 DocuSign Envelope ID: EC86705F-DDE5-41D3-9E62-0ECBFA9B8243 19.2. CONSULTANT may terminate this Agreement or suspend its performance of the Services by giving thirty (30) days prior written notice thereof to CITY, but only in the event of a substantial failure of performance by CITY. 19.3. Upon such suspension or termination, CONSULTANT shall deliver to the City Manager immediately any and all copies of studies, sketches, drawings, computations, and other data, including reports and outputs specific to CITY’s licensed usage of the service which were not already delivered to or accessed by CITY, and whether or not completed, which were prepared by CONSULTANT or its contractors, if any, or given to CONSULTANT or its contractors, if any, in connection with this Agreement. Such materials will become the property of CITY. 19.4. Upon such suspension or termination by CITY, CONSULTANT will be paid for the Services rendered or materials delivered to CITY in accordance with the scope of services on or before the effective date (i.e., 10 days after giving notice) of suspension or termination; provided, however, if this Agreement is suspended or terminated on account of a default by CONSULTANT, CITY will be obligated to compensate CONSULTANT only for that portion of CONSULTANT’s services which are of direct and immediate benefit to CITY as such determination may be made by the City Manager acting in the reasonable exercise of his/her discretion. The following Sections will survive any expiration or termination of this Agreement: 14, 15, 16, 19.4, 20, and 25. 19.5. No payment, partial payment, acceptance, or partial acceptance by CITY will operate as a waiver on the part of CITY of any of its rights under this Agreement. SECTION 20. NOTICES. All notices hereunder will be given in writing and mailed, postage prepaid, by certified mail, addressed as follows: To CITY: Office of the City Clerk City of Palo Alto Post Office Box 10250 Palo Alto, CA 94303 With a copy to the Purchasing Manager To CONSULTANT: Attention of the project director at the address of CONSULTANT recited above SECTION 21. CONFLICT OF INTEREST. 21.1. In accepting this Agreement, CONSULTANT covenants that it presently has no interest, and will not acquire any interest, direct or indirect, financial or otherwise, which would conflict in any manner or degree with the performance of the Services. 21.2. CONSULTANT further covenants that, in the performance of this Agreement, it will not employ subconsultants, contractors or persons having such an interest. 6 of 33 Professional Services Rev. April 27, 2016CLEAN POWER RESEARCH S17165514 DocuSign Envelope ID: EC86705F-DDE5-41D3-9E62-0ECBFA9B8243 CONSULTANT certifies that no person who has or will have any financial interest under this Agreement is an officer or employee of CITY; this provision will be interpreted in accordance with the applicable provisions of the Palo Alto Municipal Code and the Government Code of the State of California. 21.3. If the Project Manager determines that CONSULTANT is a “Consultant” as that term is defined by the Regulations of the Fair Political Practices Commission, CONSULTANT shall be required and agrees to file the appropriate financial disclosure documents required by the Palo Alto Municipal Code and the Political Reform Act. SECTION 22. NONDISCRIMINATION. As set forth in Palo Alto Municipal Code section 2.30.510, CONSULTANT certifies that in the performance of this Agreement, it shall not discriminate in the employment of any person because of the race, skin color, gender, age, religion, disability, national origin, ancestry, sexual orientation, housing status, marital status, familial status, weight or height of such person. CONSULTANT acknowledges that it has read and understands the provisions of Section 2.30.510 of the Palo Alto Municipal Code relating to Nondiscrimination Requirements and the penalties for violation thereof, and agrees to meet all requirements of Section 2.30.510 pertaining to nondiscrimination in employment. SECTION 23. ENVIRONMENTALLY PREFERRED PURCHASING AND ZERO WASTE REQUIREMENTS. CONSULTANT shall comply with the CITY’s Environmentally Preferred Purchasing policies which are available at CITY’s Purchasing Department, incorporated by reference and may be amended from time to time. CONSULTANT shall comply with waste reduction, reuse, recycling and disposal requirements of CITY’s Zero Waste Program. Zero Waste best practices include first minimizing and reducing waste; second, reusing waste and third, recycling or composting waste. In particular, CONSULTANT shall comply with the following zero waste requirements: (a) All printed materials provided by CONSULTANT to CITY generated from a personal computer and printer including but not limited to, proposals, quotes, invoices, reports, and public education materials, shall be double-sided and printed on a minimum of 30% or greater post-consumer content paper, unless otherwise approved by CITY’s Project Manager. Any submitted materials printed by a professional printing company shall be a minimum of 30% or greater post- consumer material and printed with vegetable based inks. (b) Goods purchased by CONSULTANT on behalf of CITY shall be purchased in accordance with CITY’s Environmental Purchasing Policy including but not limited to Extended Producer Responsibility requirements for products and packaging. A copy of this policy is on file at the Purchasing Division’s office. (c) Reusable/returnable pallets shall be taken back by CONSULTANT, at no additional cost to CITY, for reuse or recycling. CONSULTANT shall provide documentation from the facility accepting the pallets to verify that pallets are not being disposed. SECTION 24. COMPLIANCE WITH PALO ALTO MINIMUM WAGE ORDINANCE. CONSULTANT shall comply with all requirements of the Palo Alto Municipal Code Chapter 4.62 (Citywide Minimum Wage), as it may be amended from time to time. In particular, for any employee otherwise entitled to the State minimum wage, who performs at least two (2) hours of work in a calendar week within the geographic boundaries of the City, CONSULTANT shall pay 7 of 33 Professional Services Rev. April 27, 2016CLEAN POWER RESEARCH S17165514 DocuSign Envelope ID: EC86705F-DDE5-41D3-9E62-0ECBFA9B8243 such employees no less than the minimum wage set forth in Palo Alto Municipal Code section 4.62.030 for each hour worked within the geographic boundaries of the City of Palo Alto. In addition, CONSULTANT shall post notices regarding the Palo Alto Minimum Wage Ordinance in accordance with Palo Alto Municipal Code section 4.62.060. SECTION 25. NON-APPROPRIATION 25.1. This Agreement is subject to the fiscal provisions of the Charter of the City of Palo Alto and the Palo Alto Municipal Code. This Agreement will terminate without any penalty (a) at the end of any fiscal year in the event that funds are not appropriated for the following fiscal year, or (b) at any time within a fiscal year in the event that funds are only appropriated for a portion of the fiscal year and funds for this Agreement are no longer available. This section shall take precedence in the event of a conflict with any other covenant, term, condition, or provision of this Agreement. SECTION 26. PREVAILING WAGES AND DIR REGISTRATION FOR PUBLIC WORKS CONTRACTS 26.1 This Project is not subject to prevailing wages. CONSULTANT is not required to pay prevailing wages in the performance and implementation of the Project in accordance with SB 7 if the contract is not a public works contract, if the contract does not include a public works construction project of more than $25,000, or the contract does not include a public works alteration, demolition, repair, or maintenance (collectively, ‘improvement’) project of more than $15,000. SECTION 27. MISCELLANEOUS PROVISIONS. 27.1. This Agreement will be governed by the laws of the State of California. 27.2. In the event that an action is brought, the parties agree that trial of such action will be vested exclusively in the state courts of California in the County of Santa Clara, State of California. 27.3. The prevailing party in any action brought to enforce the provisions of this Agreement may recover its reasonable costs and attorneys' fees expended in connection with that action. The prevailing party shall be entitled to recover an amount equal to the fair market value of legal services provided by attorneys employed by it as well as any attorneys’ fees paid to third parties. 27.4. This document represents the entire and integrated agreement between the parties and supersedes all prior negotiations, representations, and contracts, either written or oral. This document may be amended only by a written instrument, which is signed by the parties. 27.5. The covenants, terms, conditions and provisions of this Agreement will apply to, and will bind, the heirs, successors, executors, administrators, assignees, and consultants of the parties. 8 of 33 Professional Services Rev. April 27, 2016CLEAN POWER RESEARCH S17165514 DocuSign Envelope ID: EC86705F-DDE5-41D3-9E62-0ECBFA9B8243 27.6. If a court of competent jurisdiction finds or rules that any provision of this Agreement or any amendment thereto is void or unenforceable, the unaffected provisions of this Agreement and any amendments thereto will remain in full force and effect. 27.7. All exhibits referred to in this Agreement and any addenda, appendices, attachments, and schedules to this Agreement which, from time to time, may be referred to in any duly executed amendment hereto are by such reference incorporated in this Agreement and will be deemed to be a part of this Agreement. 27.8 In the event of a conflict between the terms of this Agreement and the exhibits hereto or CONSULTANT’s proposal (if any), the Agreement shall control. In the case of any conflict between the exhibits hereto and CONSULTANT’s proposal, the exhibits shall control. 27.9 If, pursuant to this contract with CONSULTANT, CITY shares with CONSULTANT personal information as defined in California Civil Code section 1798.81.5(d) about a California resident (“Personal Information”), CONSULTANT shall maintain reasonable and appropriate security procedures to protect that Personal Information, and shall inform City immediately upon learning that there has been a breach in the security of the system or in the security of the Personal Information. CONSULTANT shall not use Personal Information for direct marketing purposes without City’s express written consent. 27.10 All unchecked boxes do not apply to this agreement. 27.11 The individuals executing this Agreement represent and warrant that they have the legal capacity and authority to do so on behalf of their respective legal entities. 27.12 This Agreement may be signed in multiple counterparts, which shall, when executed by all the parties, constitute a single binding agreement 9 of 33 Professional Services Rev. April 27, 2016CLEAN POWER RESEARCH S17165514 DocuSign Envelope ID: EC86705F-DDE5-41D3-9E62-0ECBFA9B8243 CONTRACT No. S17165514 SIGNATURE PAGE IN WITNESS WHEREOF, the parties hereto have by their duly authorized representatives executed this Agreement on the date first above written. CITY OF PALO ALTO Purchasing Manager APPROVED AS TO FORM: City Attorney or designee CLEAN POWER RESEARCH, LLC Officer 1 By: Name: Title: Officer 2 By: Name: Title: Attachments: EXHIBIT “A”: SCOPE OF SERVICES EXHIBIT “B”: SCHEDULE OF PERFORMANCE EXHIBIT “C”: COMPENSATION EXHIBIT “C-1”: SCHEDULE OF RATES EXHIBIT “D”: INSURANCE REQUIREMENTS EXHIBIT “E”: INFORMATION PRIVACY POLICY EXHIBIT “F”: SOFTWARE AS A SERVICE SECURITY AND PRIVACY TERMS AND CONDITIONS 10 of 33 Professional Services Rev. April 27, 2016CLEAN POWER RESEARCH S17165514 DocuSign Envelope ID: EC86705F-DDE5-41D3-9E62-0ECBFA9B8243 VP of Engineering Carlos Brito President, Software Services Jeffrey S. Ressler EXHIBIT “A” SCOPE OF SERVICES TASK I: WattPlan Software – Set-up/Configuration 1.1. WattPlan Set-Up: CONTRACTOR shall setup two separate WattPlan URLs, one for the PV calculator and one for the EV calculator. The EV calculator includes an option for the customer to add PV to their EV assessment. CITY will develop related website content on their website which will then link to each of these URLs. 1.2. Standard Configuration Description: WattPlan guides users through the analysis one step at a time, highlighting the most important information needed to make a decision. 1.2.1. The PV calculator will require the customer’s address, whether they are a residential either their average monthly electric bill or their previous 12 months of electricity usage and finally a Review Terms screen. The EV calculator will require the customer to specify the make and model of the plug-in and conventional vehicles they want to compare, their address, their commute distance, an option to include PV in the assessment, either their average monthly electric bill or their previous 12 months of electricity usage and finally a Review Terms screen. CITY will have the option of configurable text and default values for these screens. Once the calculations are complete, the customer will see a series of sections which summarize key aspects of the assessment. The PV and EV calculators will have their own unique screens as are relevant for the specific technology being assessed. CITY will have the option to configure text, colors, and default values for these screens. Finally, the customer will have the option to fine tune their estimate by adjusting assumption values in the Customize Assumptions menu and WattPlan will re-calculate and refresh their results. CITY will have the option to configure text and default values for this menu. 1.2.2. CITY’s Requested WattPlan Configuration: The table below outlines the CITY’s required features of the web-based PV and EV calculator and CONTRACTOR’s proposed approach. In some cases, CONTRACTOR’s approach is exactly as described in the RFP, in other cases the "CONTRACTOR Approach" column will outline any further definition of the approach and any options for alternative approaches. 1.2.2.1. Hosted Solution: Hosted, managed and maintained by CONTRACTOR. 1.2.2.2. Customer Types: Residential single-family home, and multi-family house accounts. Note that the EV calculator is residential focused and thus does not support commercial electric rates. A residential user can specify how much public (e.g., workplace) charging they expect to do. 1.2.2.3. Utility Branding: Using CITY color scheme, fonts and logos; customers should feel like they are using the CITY website. The calculator will be available to utility customers with a link from CITY’s website. WattPlan allows for customization of color scheme and logos, and the calculator may be linked to from any CITY webpage. While the content of all text will be made configurable (to the extent that page layout is not adversely affected), the text font itself will not be configurable as a standard option. 1.2.2.4. User Defined Inputs: Ability for users to enter their monthly electric usage (or use CITY-defined default for customer type), and select the following options, as applicable: electric rates, average daily/monthly driving miles, EV charging hours, PV system size, orientation, tilt, PV and EV purchase options (loan, lease, Power Purchase Agreements, or cash), terms and costs. Regarding EV mileage, the user may input their daily miles and 11 of 33 Professional Services Rev. April 27, 2016CLEAN POWER RESEARCH S17165514 DocuSign Envelope ID: EC86705F-DDE5-41D3-9E62-0ECBFA9B8243 easily view the equivalent annual miles or they can tell WattPlan where they typically commute to and let WattPlan calculate the commute distance for them. 1.2.2.5. Electric Consumption History and Load Profile: The calculator should be able to accept user-entered monthly energy usage history and the software should have the capability to use sample Palo Alto residential customer load profiles for the customized customer analysis. The calculator should be able to modify the default load shape for customers who already have any or all of the following equipment: solar PV, electric vehicle and/or an all-electric home. Users can perform a quick estimate by inputting their average monthly electric bill or their estimated 12 monthly electricity usage values. Users with 12 months of energy usage history can enter these monthly kWh usage values for each month of the year. Based on these user inputs, typical load profiles will be scaled to derive an hourly customer load profile. Optionally, CITY can provide CONTRACTOR with typical customer load data for a one-year period can be provided to CONTRACTOR (as a CSV or other standardized file format) in either 15 minute, 30 minute, or hourly resolutions, and CONTRACTOR will transform the data into an hourly 12x24 (an hourly load profile for each month representing an average day in each month) format for use in the analysis. Alternatively, CONTRACTOR maintains a database of typical residential customer load profiles for several climate zones and rate classes from which representative load profiles for CITY customers may be chosen. 1.2.2.6. Rate Structure: Use the relevant CITY electric rates for the financial analysis results created by the PV and EV calculator. Update the rates used in the PV and EV calculator when requested by CITY to provide the most accurate rate analysis possible. CITY rates are usually updated annually for a July 1st effective date. Analysis to include all relevant electric charges including tiered residential energy use, time-of-use energy charges, monthly peak demand charge, minimum bill charge, and utility users tax. 1.2.2.7. Financial Analysis: Calculator should be able to model PV-only, EV-only and combined PV and EV options. a. PV analysis: Show 20-year cost analysis including electric retail rate escalations, initial system cost, long-term savings, and simple payback time frame. Analysis should provide side-by-side, easy to understand financial and pictorial representation of the various ownership options. A community solar component may be added to the calculator options in the future, if requested by CITY. b. EV analysis: Provide comparison of annual costs and benefits of selecting an electric vehicle compared to a standard car based on user-selected vehicles, miles per day/month/year, and purchase type (lease, loan, cash) including operating and maintenance costs, and available tax incentives. Regarding EV mileage, the user may input their daily miles and easily view the equivalent annual miles or they can tell WattPlan where they typically commute to and let WattPlan calculate this for them. 1.2.2.8. Roof Top Analysis: WattPlan incorporates LIDAR data from a third-party provider, Sun Number. 1.2.2.9. Reporting: Provide consumer friendly web visualization tools showing personalized results of monthly energy use and energy costs with and without solar PV and/or EV. Reporting should be part of the tool and immediately available to customers for viewing, printing and saving the results from each scenario entered. Personalized results reported by WattPlan can be visualized instantly. The user can optionally download and/or print a summary of the results as a PDF. Note: the Save as PDF feature is not yet available for the EV calculator, though we expect it to be in the near future. 1.3. TECHNICAL SUPPORT 12 of 33 Professional Services Rev. April 27, 2016CLEAN POWER RESEARCH S17165514 DocuSign Envelope ID: EC86705F-DDE5-41D3-9E62-0ECBFA9B8243 1.3.1. Support Hours. CITY will provide first-tier support to users. For second-tier support, CONTRACTOR shall provide email based support from 9:00 AM to 5:00 PM (PST) Monday through Friday, excluding national holidays (“CONTRACTOR Service Hours”). CONTRACTOR will provide second-tier support that includes direct communications with Customer but excludes any direct communication with end users. CONTRACTOR shall also provide ability to escalate email support incident to phone or interactive (phone with web- based screen sharing) as necessary. Customer may report an incident 24 hours/day, 7 days/week as described in Support Request. 1.3.2. Outages. CONTRACTOR will notify CITY about outages affecting the servers in a timely manner as described in Outage Notification. CONTRACTOR will contact CITY using the data in CONTRACTOR’s contact database. CITY is responsible in keeping the contact information correct and up to date by communicating any changes to support@wattplan.com. 1.3.3. Outage Notification. 1.3.3.1. Planned Outages. CONTRACTOR will communicate planned Service outages to CITY that are either a) inside Support Hours or b) outside Support Hours and expected to be more than 15 minutes. Depending on the breadth and impact of the outage, notification may be by email. Notification will be provided using the contact information, provided by CITY, in the CONTRACTOR’s contact database. 1.3.3.2. Unplanned Outages. An unplanned outage occurs when the Service becomes unavailable due to any issue not scheduled or planned. CONTRACTOR will communicate unplanned outages that are 15 minutes or longer as soon as practicable to the CITY contact by email with follow-up by phone if acknowledgement is not received by CONTRACTOR promptly through email. 1.3.4. SUPPORT REQUEST. All incidents shall be reported to support@wattplan.com and CONTRACTOR’s designated or other knowledgeable staff member will respond by email to the CITY’s incident as follows: 1.3.4.1. Urgent: The Service is unavailable to all users for more than 1 hour and is not down as a result of a planned outage. For an Urgent Support Request, CONTRACTOR will use reasonable efforts to contact CITY during the CONTRACTOR Service Hours no later than 4 hours after receipt of an urgent incident report Resolution time will depend on the nature of the report, request, or inquiry. 1.3.4.2. Non-Urgent: Abnormal or inconsistent system behavior or a system problem that does not prevent work on the system. For a Non-Urgent Support Request or a Business Inquiry, CONTRACTOR will use reasonable efforts to contact CITY during the CONTRACTOR Service Hours no later than 5 business days after receipt. Resolution time will depend on the nature of the report, request, or inquiry. 1.4. SECURITY AND IT PROVISIONS. 1.4.1. CONTRACTOR agrees to implement and maintain during the term of this Agreement, a Business Continuity Plan and Disaster Recovery Plan (the “Plans”), access to which each shall be provided to CITY for CITY’s review. The Plans may be reviewed annually, or as required due to significant changes in risk or the business or regulatory environment. The Plans will also be updated to reflect lessons learned from real recovery events. CONTRACTOR agrees to maintain an effective business continuity, disaster recovery and crisis management response capability, consistent with the level of risk associated with the Service. 1.4.2. CITY may audit CONTRACTOR’s records relating to the Services to ensure CONTRACTOR’s compliance with the terms of this Agreement, provided that CITY has 13 of 33 Professional Services Rev. April 27, 2016CLEAN POWER RESEARCH S17165514 DocuSign Envelope ID: EC86705F-DDE5-41D3-9E62-0ECBFA9B8243 provided reasonable notice to CONTRACTOR and any such records of CONTRACTOR’s will be treated by CITY as Confidential Information. 1.4.3. Data transmissions of CITY Information via the Internet between the CITY and Services must be at least SSL 128 bit encrypted. 1.4.4. CONTRACTOR warrants that it shall (i) use reasonable physical and systems security measures to prevent unauthorized access to or tampering with the Service, its site, including to protect the confidentiality and integrity of any CITY Information, which means all data provided by u sers via the CITY’s implementation of the Service, including without limitation Personally Identifiable Information, and to prevent viruses and similar destructive code from being placed on the Service, on its site, or in its programming; and (ii) use reasonable physical security and precautionary measures to prevent unauthorized access or damage to a facility under its control or that of its subcontractors, including to protect the confidentiality and integrity of any CITY Information. CONTRACTOR shall, at a minimum, protect CITY Information and provide the same measures it uses to protect its own confidential information. Services shall be hosted in a facility that has been audited to SSAE16 SOC2 standards or those that are equal to or better standards. 1.4.5. Any breach of the obligations contained in this document shall be reported to CITY within 24 hours of discovery. CONTRACTOR shall make its employees, agents, and subcontractors available to facilitate investigations related to any such breach. CONTRACTOR will present its remediation plan to CITY for approval (which approval shall not be unreasonably withheld). CONTRACTOR shall promptly remediate the effects of any such breach, at its sole expense. 1.4.6. CONTRACTOR shall, and it shall cause its employees and subcontractors to, comply, at CONTRACTOR’s sole cost and expense, with all laws, rules, regulations, reasonable practices and standards applicable to the obligations assumed by CONTRACTOR under this Agreement including those related to data privacy, data protection, international communications and the transmission of technical or personal data. 1.4.7. CONTRACTOR shall not use any Customer Confidential Information (including Personally Identifiable Information), for application testing purposes for any reason or in any manner whatsoever, without the prior written consent of CITY. A sample of anonymized and transformed Customer data may be used upon occasion for internal testing to ensure continued quality of operation of the Services for CITY’s use of the Services only. 1.4.8. CITY may scan CONTRACTOR’s application infrastructure, with CONTRACTOR’s express prior written consent, whenever CITY scans its own site for security confirmation and testing. 1.4.9. CONTRACTOR shall provide CITY, with a copy of its third party audited SSAE16 SOC2 report (or its equivalent or better), as permitted, immediately upon release, at no cost to CITY as such report is released from CONTRACTOR and/or its subcontractor. Otherwise, CITY may access subcontractor’s same or similar report as it is made publicly available upon notice from CONTRACTOR. 14 of 33 Professional Services Rev. April 27, 2016CLEAN POWER RESEARCH S17165514 DocuSign Envelope ID: EC86705F-DDE5-41D3-9E62-0ECBFA9B8243 Task II: Subscription Clean Power Research (“CONTRACTOR”) shall provide the City of Palo Alto (“CITY”) with the WattPlan software service. WattPlan is a web-based application that enables users to quickly and remotely estimate their home or business potential for rooftop solar and understand its financial impacts through a simple step-by-step user interface. In addition, WattPlan provides a personalized estimate of the benefits of driving electric vehicle compared to a standard vehicle, including energy impact, economics and environmental savings. TASK III: Enhancements on an as-needed basis In the future, CITY may desire customized enhancements to the calculator evaluating some of the following technologies and program options: energy efficiency, battery storage, demand control devices, community solar, heat pump water heaters, and other technologies and behavior modeling. These features may incur additional one-time and/or on-going license fees outside of what is described in this proposal. 15 of 33 Professional Services Rev. April 27, 2016CLEAN POWER RESEARCH S17165514 DocuSign Envelope ID: EC86705F-DDE5-41D3-9E62-0ECBFA9B8243 EXHIBIT “B” SCHEDULE OF PERFORMANCE CONSULTANT shall perform the Services so as to complete each milestone within the number of days/weeks specified below. The time to complete each milestone may be increased or decreased by mutual written agreement of the project managers for CONSULTANT and CITY so long as all work is completed within the term of the Agreement. CONSULTANT shall provide a detailed schedule of work consistent with the schedule below within 2 weeks of receipt of the notice to proceed. Milestones Completion No. of Weeks From NTP 1. Task I: WattPlan Software – Set-up/Configuration 18 weeks 2. Task II: Subscription Annual 3. Task III : Enhancements on an as-needed basis TBD 16 of 33 Professional Services Rev. April 27, 2016CLEAN POWER RESEARCH S17165514 DocuSign Envelope ID: EC86705F-DDE5-41D3-9E62-0ECBFA9B8243 EXHIBIT “C” COMPENSATION The CITY agrees to compensate the CONSULTANT for professional services performed in accordance with the terms and conditions of this Agreement, and as set forth in the budget schedule below. Compensation shall be calculated based on the hourly rate schedule attached as Exhibit C-1 up to the not to exceed budget amount for each task set forth below. CONSULTANT shall perform the tasks and categories of work as outlined and budgeted below. The CITY’s Project Manager may approve in writing the transfer of budget amounts between any of the tasks or categories listed below provided the total compensation for Basic Services, including reimbursable expenses, and the total compensation for Additional Services do not exceed the amounts set forth in Section 4 of this Agreement. BUDGET SCHEDULE NOT TO EXCEED AMOUNT Task 1 $16,000.00 (One-time set-up and customization) Task 2 $69,000.00 (Annual Subscription - $23,000/year x 3 years) Task 3 $50,000.00 (Optional Enhancements on an as-needed basis) Sub-total Basic Services $135,000.00 Total Basic Services and Reimbursable expenses $135,000.00 Additional Services (Not to Exceed) $0 Maximum Total Compensation $135,000.00 17 of 33 Professional Services Rev. April 27, 2016CLEAN POWER RESEARCH S17165514 DocuSign Envelope ID: EC86705F-DDE5-41D3-9E62-0ECBFA9B8243 REIMBURSABLE EXPENSES The administrative, overhead, secretarial time or secretarial overtime, word processing, photocopying, in-house printing, insurance and other ordinary business expenses are included within the scope of payment for services and are not reimbursable expenses. CITY shall reimburse CONSULTANT for the following reimbursable expenses at cost. Expenses for which CONSULTANT shall be reimbursed are: . All requests for payment of expenses shall be accompanied by appropriate backup information. Any expense anticipated to be more than $250 shall be approved in advance by the CITY’s project manager. ADDITIONAL SERVICES The CONSULTANT shall provide additional services only by advanced, written authorization from the CITY. The CONSULTANT, at the CITY’s project manager’s request, shall submit a detailed written proposal including a description of the scope of services, schedule, level of effort, and CONSULTANT’s proposed maximum compensation, including reimbursable expense, for such services based on the rates set forth in Exhibit C-1. The additional services scope, schedule and maximum compensation shall be negotiated and agreed to in writing by the CITY’s Project Manager and CONSULTANT prior to commencement of the services. Payment for additional services is subject to all requirements and restrictions in this Agreement 18 of 33 Professional Services Rev. April 27, 2016CLEAN POWER RESEARCH S17165514 DocuSign Envelope ID: EC86705F-DDE5-41D3-9E62-0ECBFA9B8243 EXHIBIT “C-1” SCHEDULE OF RATES Software Engineer • Senior: $200 • Junior: $150 Program/Project Management • Senior: $160 • Junior: $135 19 of 33 Professional Services Rev. April 27, 2016CLEAN POWER RESEARCH S17165514 DocuSign Envelope ID: EC86705F-DDE5-41D3-9E62-0ECBFA9B8243 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 PROFESSIONAL LIABILITY, INCLUDING, ERRORS AND OMISSIONS, MALPRACTICE (WHEN APPLICABLE), AND NEGLIGENT PERFORMANCE ALL DAMAGES $1,000,000 YES THE CITY OF PALO ALTO IS TO BE NAMED AS AN ADDITIONAL INSURED: CONTRACTOR, AT ITS SOLE COST AND EXPENSE, SHALL OBTAIN AND MAINTAIN, IN FULL FORCE AND EFFECT THROUGHOUT THE ENTIRE TERM OF ANY RESULTANT AGREEMENT, THE INSURANCE COVERAGE HEREIN DESCRIBED, INSURING NOT ONLY CONTRACTOR AND ITS SUBCONSULTANTS, IF ANY, BUT ALSO, WITH THE EXCEPTION OF WORKERS’ COMPENSATION, EMPLOYER’S LIABILITY AND PROFESSIONAL INSURANCE, NAMING AS ADDITIONAL INSUREDS CITY, ITS COUNCIL MEMBERS, OFFICERS, AGENTS, AND EMPLOYEES. I. INSURANCE COVERAGE MUST INCLUDE: A. A PROVISION FOR A WRITTEN THIRTY (30) DAY ADVANCE NOTICE TO CITY OF CHANGE IN COVERAGE OR OF COVERAGE CANCELLATION; AND B. A CONTRACTUAL LIABILITY ENDORSEMENT PROVIDING INSURANCE COVERAGE FOR CONTRACTOR’S AGREEMENT TO INDEMNIFY CITY. C. DEDUCTIBLE AMOUNTS IN EXCESS OF $5,000 REQUIRE CITY’S PRIOR APPROVAL. II. CONTACTOR MUST SUBMIT CERTIFICATES(S) OF INSURANCE EVIDENCING REQUIRED COVERAGE AT THE FOLLOWING URL: https://www.planetbids.com/portal/portal.cfm?CompanyID=25569. III. ENDORSEMENT PROVISIONS, WITH RESPECT TO THE INSURANCE AFFORDED TO “ADDITIONAL INSUREDS” A. PRIMARY COVERAGE WITH RESPECT TO CLAIMS ARISING OUT OF THE OPERATIONS OF THE NAMED INSURED, INSURANCE AS AFFORDED BY THIS POLICY IS PRIMARY AND IS NOT ADDITIONAL TO OR CONTRIBUTING WITH ANY OTHER INSURANCE CARRIED BY OR FOR THE BENEFIT OF THE ADDITIONAL INSUREDS. B. CROSS LIABILITY 20 of 33 Professional Services Rev. April 27, 2016CLEAN POWER RESEARCH S17165514 DocuSign Envelope ID: EC86705F-DDE5-41D3-9E62-0ECBFA9B8243 THE NAMING OF MORE THAN ONE PERSON, FIRM, OR CORPORATION AS INSUREDS UNDER THE POLICY SHALL NOT, FOR THAT REASON ALONE, EXTINGUISH ANY RIGHTS OF THE INSURED AGAINST ANOTHER, BUT THIS ENDORSEMENT, AND THE NAMING OF MULTIPLE INSUREDS, SHALL NOT INCREASE THE TOTAL LIABILITY OF THE COMPANY UNDER THIS POLICY. C. NOTICE OF CANCELLATION 1. IF THE POLICY IS CANCELED BEFORE ITS EXPIRATION DATE FOR ANY REASON OTHER THAN THE NON-PAYMENT OF PREMIUM, THE CONSULTANT SHALL PROVIDE CITY AT LEAST A THIRTY (30) DAY WRITTEN NOTICE BEFORE THE EFFECTIVE DATE OF CANCELLATION. 2. IF THE POLICY IS CANCELED BEFORE ITS EXPIRATION DATE FOR THE NON-PAYMENT OF PREMIUM, THE CONSULTANT SHALL PROVIDE CITY AT LEAST A TEN (10) DAY WRITTEN NOTICE BEFORE THE EFFECTIVE DATE OF CANCELLATION. VENDORS ARE REQUIRED TO FILE THEIR EVIDENCE OF INSURANCE AND ANY OTHER RELATED NOTICES WITH THE CITY OF PALO ALTO AT THE FOLLOWING URL: HTTPS://WWW.PLANETBIDS.COM/PORTAL/PORTAL.CFM?COMPANYID=25569 OR HTTP://WWW.CITYOFPALOALTO.ORG/GOV/DEPTS/ASD/PLANET_BIDS_HOW_TO.ASP 21 of 33 Professional Services Rev. April 27, 2016CLEAN POWER RESEARCH S17165514 DocuSign Envelope ID: EC86705F-DDE5-41D3-9E62-0ECBFA9B8243 EXHIBIT “E” INFORMATION PRIVACY POLICY Information Privacy Policy Release and Version: 1st Release, Version 2.2 Release Date: 31 January, 2013 Need to Know Document Classification: 22 of 33CLEAN POWER RESEARCH S17165514 DocuSign Envelope ID: EC86705F-DDE5-41D3-9E62-0ECBFA9B8243 Information P Version 2.2 CONTEN DOCUMENT CHANGE RE APPROVAL . DISTRIBUTIO 1.OBJE A) INTEN B) SCOP C) CONS D) EXCE E) MUNIC 2.RESP A) RESP B)RESP C)RESP D) RESP E) RESP 3.PRIVA A) OVER B) PERSO C) METH D) UTILIT E) PUBLI F) ACCE G) SECU H) DATA I) SOFTW J) FAIR A 4.CONT Privacy Policy TS CONTROLS... ECORD .......... ..................... ON ................ ECTIVE ........... NT .................. E .................. SEQUENCES.... PTIONS.......... CIPAL ORDINAN PONSIBILITIES ONSIBILITY OF ONSIBILITY OF ONSIBILITY OF ONSIBILITY OF ONSIBILITY OF ACY POLICY .. RVIEW ............ ONAL INFORMA ODS OF COLLE TIES SERVICE . C DISCLOSUR SS TO PERSON RITY, CONFIDE RETENTION / I WARE AS A SE AND ACCURAT TACTS ........... y ..................... ..................... ..................... ..................... ..................... ..................... ..................... ..................... ..................... NCE ............... OF CITY STAF CIO AND ISM INFORMATION USERS ......... F INFORMATION F AUTHORIZATI ..................... ..................... ATION AND CH ECTION OF PER ..................... E ................... NAL INFORMAT ENTIALITY AND INFORMATION RVICE (SAAS) E CREDIT TRA ..................... ..................... ..................... ..................... ..................... ..................... ..................... ..................... ..................... ..................... ..................... F ................... M .................... N SECURITY ST ..................... N TECHNOLOGY ON COORDINA ..................... ..................... OICE .............. RSONAL INFOR ..................... ..................... TION ............... NON-DISCLOS RETENTION ... ) OVERSIGHT .. ANSACTION ACT ..................... ...................... ...................... ...................... ...................... ...................... ...................... ...................... ...................... ...................... ...................... ...................... ...................... TEERING COMM ...................... Y (IT) MANAGE ATION ............. ...................... ...................... ...................... RMATION ......... ...................... ...................... ...................... SURE ............. ...................... ...................... T OF 2003 (FA ...................... ..................... ..................... ..................... ..................... ..................... ..................... ..................... ..................... ..................... ..................... ..................... ..................... MITTEE .......... ..................... ERS ............... ..................... ..................... ..................... ..................... ..................... ..................... ..................... ..................... ..................... ..................... ..................... ACT) ............. ..................... In Informa ..................... ..................... ..................... ..................... ..................... ..................... ..................... ..................... ..................... ..................... ..................... ..................... ..................... ..................... ..................... ..................... ..................... ..................... ..................... ..................... ..................... ..................... ..................... ..................... ..................... ..................... ..................... ..................... City of nformation Te ation Security Pa 31 Janua ...................... ...................... ...................... ...................... ...................... ..................... ..................... ..................... ..................... ..................... ...................... ..................... ..................... ..................... ..................... ..................... ...................... ..................... ..................... ..................... ..................... ..................... ..................... ..................... ..................... ..................... ..................... ...................... Palo Alto chnology Services age 1 of 8 ary, 2013 ............ 2 ............ 2 ............ 2 ............ 2 ............ 3 ............ 3 ............ 3 ............ 3 ............ 3 ............ 4 ............ 4 ............ 4 ............ 4 ............ 4 ............ 5 ............ 5 ............ 5 ............ 5 ............ 5 ............ 5 ............ 6 ............ 6 ............ 6 ............ 6 ............ 7 ............ 7 ............ 7 ............ 8 23 of 33CLEAN POWER RESEARCH S17165514 DocuSign Envelope ID: EC86705F-DDE5-41D3-9E62-0ECBFA9B8243 Information P Version 2.2 DOCUME CHANGE APPROVA DISTRIBU Privacy Policy ENT CONT Documen Location Documen Documen Contributo E RECORD Date 12-Jul-12 26-Sep-12 09-Nov-12 19-Nov-12 22-Nov-12 26-Nov-12 6-Dec-12 14-Jan-13 31-Jan-13 VAL Date 06-Dec-12 06-Dec-12 06-Dec-12 14-Jan-13 14-Jan-13 UTION Name City of Pa Providers y TROLS nt Title nt Author nt Manager ors D Author Raj Pat 2 Raj Pat 2 Raj Pat 2 Raj Pat 2 Raj Pat 2 Raj Pat Raj Pat 3 Raj Pat 3 Raj Pat Name 2 Raj Pate 2 Jonatha 2 Tom Auz 3 Grant Ko 3 Informat Steering alo Alto Emplo , Residents a Informatio City of Pa Raj Patel Raj Patel Jonathan Joe Black r Versi tel 0.01 tel 1.0 tel 1.5 tel 1.6 tel 1.7 tel 1.8 tel 1.92 tel 2.0 tel 2.2 el n Reichental zenne olling tion Security g Committee oyees, Servic and Businesse on Privacy Po alo Alto Webs Reichental, kwell, Grant K on Chang First d First d Update Additio Revise Revise Reiche Revise Jonath Revise Grant Revise from In Comm Role Informa Manag Techno CIO; In Techno Assista Utilities Senior Attorne Office Sponso Lo ce es Cit Sh olicy ite and Share Shiva Swam Kolling ge Reference draft develope draft released ed first draft f onal updates ed table of co ed followed b ental and Tom ed according han Reichenta ed according Kolling ed according nformation Se mittee ation Security ger; Informatio ology Departm nformation ology Departm ant Director, s Department r Assistant Cit ey; City Attorn or ocation ty of Palo Alto harePoint In Informa ePoint minathan, Tom e ed for review for review as identified ontent y review from m Auzenne to comments al to comments to recommen ecurity Steeri Com y on ment Appr ment Appr t Appr ty ney’s Appr Appr o Website an City of nformation Te ation Security Pa 31 Janua m Auzenne, m Jonathan s from s from ndations ng mments roved roved roved roved roved d Palo Alto chnology Services age 2 of 8 ary, 2013 24 of 33CLEAN POWER RESEARCH S17165514 DocuSign Envelope ID: EC86705F-DDE5-41D3-9E62-0ECBFA9B8243 Information P Version 2.2 1. O The C Palo provi appro finan busin local indus 1798 some busin Califo to en Prote busin provi “Pers “Info in thi A)I The C perso of me perso the C and s polic Infor The g all us secu and s comp B)S The requ inform confo C)C The C their Privacy Policy Objective City of Palo A Alto. In prom isions of the C opriate meas ncial) informat ness as a loca authorities a stry best prac 8.24, 1798.79 e of these pro ness in a man ornia laws. Th nsure the ong ected Critical ness with the ide services. sonally Identif rmation”) are s Policy by re INTENT City, acting in ons who do b eans, includin ons accessing City’s staff and security of the ies, rules, reg mation is coll goals and obj sers having a rity of databa security of the pliance with le SCOPE Policy will gu ired to protec mation data a orm their perf CONSEQUENCE City’s employ work implicat y e Alto (the “City” moting the qua California Pub ures to safeg tion of person al governmen nd reflected i ctices, includin .8(b), 1798.80 ovisions do no nner which pr he objective o oing protectio Infrastructure City and rece The terms “P fiable Informa defined in the eference. n its governme business with ng, without lim g the City’s w d/or authorize e Information gulations and ected, stored jectives of the ccess to the C ase informatio e Information egal and regu ide the City’s ct the confiden are intended t formances to ES yees shall com tes access to ”) strives to p ality of life of t blic Records A uard the secu ns, collected in nt agency. Th n federal and ng, without lim 0(e), 1798.81 ot apply to loc omotes the p of this Policy i on of the Pers e Informationa eiving service Personal Infor ation” and “Pe e California C ental and pro or receive se mitation, from website, and p ed third-party collected by procedures, and utilized i e Policy are: ( City’s applica on assets own provided to t ulatory require staff and, ind ntiality and pr to be covered the Policy sh mply with the the Informati romote and s these persons Act, California urity and priva n the ordinary ese measure d California law mitation, the p .5, 1798.82(e cal governme rivacy of pers is to describe sonal Informa and Personal es from the Ci rmation,” “Pro ersonally Iden Civil Code sec prietary capa ervices from th persons appl persons who a contractors. T the City. The and industry in compliance (a) a safe, pro tions and dat ned by, or ent he City’s staff ements. directly, third p ivacy of the In d by the Policy ould they enj Policy in the ion referred to sustain a supe s, it is the pol a Governmen acy of the per y course and es are genera ws, the City’s provisions of C e), 1798.83(e nt agencies li sonal informa e the City’s da ation, Persona ly Identifying ity or a third p otected Critica ntifying Inform ctions, referre acities, collect he City. The I lying to receiv access other The City is co City acknow best practice e with applica oductive, and tabases; (b) th trusted to, the ff and third pa party contract nformation of y and which w oy conditiona execution of o in this Polic In Informa erior quality o icy of the City nt Code §§ 62 rsonal (includ scope of con lly observed b s rules and re California Civ e)(7), and 179 ike the City, t ation, as reflec ata security go ally Identifiabl Information o party under co al Infrastructu mation” (collec ed to above, a ts the Informa Information is ve services p information p ommitted to p ledges federa es are dedicat able laws. inoffensive w he appropriat e City; (c) the arty contractor tors, which ar f the persons will be advised al access to th their official d cy. A failure to City of nformation Te ation Security Pa 31 Janua of life for perso y, consistent w 250 – 6270, to ding, without l nducting the C by federal, sta gulations, an vil Code §§ 17 98.92(c). Thou the City will co cted in federa oals and obje le Information of persons do ontract to the ure Informatio ctively, the and are incorp ation pertainin s collected by rovided by th portals mainta protecting the al and Califor ted to ensurin work environm te maintenanc controlled ac rs; and (d) fai re by contract whose perso d by City staf hat informatio duties to the e o comply may Palo Alto chnology Services age 3 of 8 ary, 2013 ons in with the o take imitation, City’s ate and d 798.3(a), ugh onduct al and ectives, n, oing City to on”, porated ng to a variety e City, ained by privacy nia laws, ng the ment for ce and ccess ithful t onal ff to on. extent y result in 25 of 33CLEAN POWER RESEARCH S17165514 DocuSign Envelope ID: EC86705F-DDE5-41D3-9E62-0ECBFA9B8243 Information P Version 2.2 empl D)E In the Polic exce “ISM as m acco form stora will c the re and h by th E)M This 2. RE A)R The C coord The C party perfo The and t in de respo incid depa Non- inclu B)R The draw for a initia plann addre Privacy Policy loyment and/o EXCEPTIONS e event that a cy, the employ ption request ”). The empl may be reques ordance with g by the City A age, access, r consult with th equest, the e his or her sup he CIO, acting MUNICIPAL OR Policy will su SPONSIB RESPONSIBILIT CIO, acting b dinate the imp City’s employ y contractors ormance of th ISM will be re the effectiven etailed, audita onsible for the ents that aris artment-specif -Disclosure A ding, without RESPONSIBILIT Information S wn from the va ll information tives and acti ning processe essed at the a y or legal conse a City employ yee may requ t will be review oyee, with the sted by the IS guidelines app Attorney. The P retention, usa he CIO to app xception requ pervisor. The g by the ISM. RDINANCE persede any BILITIES O TY OF CIO AND y the ISM, wi plementation yees, in partic under contrac eir job respon esponsible for ness of the Po ble technical e City’s IT env e in regard to fic policies an greements (N limitation, loc TY OF INFORMA Security Steer arious City de security effor ivities. The IS es to ensure t appropriate C equences. ee cannot ful est an excep wed and adm e approval of M. The ISM w proved by the Policy’s guide age, and prote prove or deny uest dispositio approval of a City policy, ru OF CITY S D ISM ll establish an of information cular, software ct to the City t nsibilities. r: (a) develop olicy; (c) the d requirements vironments; ( o potential vio nd procedures NDAs) signed cal or ‘cloud-b ATION SECURI ring Committe partments, w rts, including SSC will provid that informatio City departme ly comply with tion by subm ministered by t his or her su will conduct a e City’s Chief elines will incl ection of the I the exception on will be com ny request m ule, regulation STAFF n information n security me e application to provide ser ing and upda development o s, which will b d) assisting th lations of the s which fall un by third party based’ softwa TY STEERING ee (the “ISSC will provide the key informatio de input to th on security ris nt level. h one or more itting Security the City’s Info pervisor, will a risk assessm Information O lude at a mini nformation id n request. Af mmunicated, i may be subjec n or procedur security man easures by the users and da rvices, shall b ating the Polic of privacy sta be designed a he City’s staff Policy; (e) re nder the purv y contractors are services to COMMITTEE ”), which is co e primary dire on security an e information sks are adequ In Informa e element(s) y Exception R ormation Secu provide any a ment of the re Officer (“CIO” imum: purpos dentified in the fter due cons in writing, to t ct to counterm re regarding i nagement fram e City’s gove atabase users by guided by cy, (b) enforci andards that w and maintaine ff in evaluating eviewing and view of this Po , which will pr o the City. omprised of t ection, prioritiz nd privacy ris n security and uately consid City of nformation Te ation Security Pa 31 Janua described in Request.The urity Manager additional info quested exce ) and approve se, source, co e request. The ideration is gi the City emplo measures esta nformation pr mework to init rnment. s, and, indirec this Policy in ng complianc will manifest t ed by the pers g security and approving olicy; and (f) r rovide service he City’s emp zation and ap sks, programs privacy strat ered, assess Palo Alto chnology Services age 4 of 8 ary, 2013 this r (the ormation eption in ed as to ollection, e ISM iven to oyee ablished rivacy. tiate and ctly, third the ce with he Policy sons d privacy reviewing es, ployees, pproval s, tegic ed and 26 of 33CLEAN POWER RESEARCH S17165514 DocuSign Envelope ID: EC86705F-DDE5-41D3-9E62-0ECBFA9B8243 Information P Version 2.2 C)R All au proce D)R The C City’s comp intern E)R The (NDA the S exec contr objec by th occu The C appro 3. PR A)O The Infor by, o contr activ other The t other desig inform comp main confi third B)P Exce doing perso as a Privacy Policy RESPONSIBILIT uthorized use esses and tec RESPONSIBILIT City’s IT Man s networks, w pliance with th nal reporting RESPONSIBILIT ISM will ensu A), whenever Software as a cuted prior to t ractors. The C ctives, policie he ISM at plan rred. CIO, acting b opriate, comm IVACY PO OVERVIEW Policy applies mation of per or entrusted to ractors under ities include, r networks, sy term “informa r related orga gned, implem mation assets promise, and ntain informati dentiality, inte parties. PERSONAL INF ept as permitte g business wi on has conse local governm y TY OF USERS ers of the Info chnologies wi TY OF INFORMA agers, who a will be respons he City’s infor of events that TY OF AUTHOR ure that the Ci access to the Service (Saa the sharing of City’s approac s, processes nned intervals y the ISM, wi mencing from OLICY s to activities rsons doing b o, the City and contract to th without limita ystems, or de ation assets” a anizations whi ented, and m s. The City’s s inappropriate ion managem egrity, and av FORMATION AN ed or provide ith the City, o ented to the C ment agency rmation will b ithin the scop ATION TECHNO re responsibl sible for confi rmation secur t may have co RIZATION COOR ity’s employee e Information aS) Security a f the Informat ch to managin , and procedu s, or wheneve ll review and the date of it that involve t usiness with t d will be mad he City to pro ation, accessin evices. also includes ile those asse maintained to e staff will act to e disclosure o ment systems, vailability of its ND CHOICE d by applicab r receiving se City’s sharing o with third par be responsible e of responsi OLOGY (IT) MA e for internal, guring, maint rity and privac ompromised RDINATION es secure the will be grante and Privacy T tion of person ng information ures for inform er significant c recommend ts adoption. he use of the the City or re e available to vide Software ng the Interne the personal ets are under ensure that o o protect its in or alteration. T networks an s information ble laws, the C ervices from th of such inform rties under co e for complyin ibility of each ANAGERS , external, dir taining and se cy policies. T network, syst e execution of ed to third par Terms and Co ns covered by n security and mation securit changes to se changes to th e City’s inform ceiving servic o the City’s em e as a Service et, using e-ma information o the City’s con nly authorize nformation as The City will p nd processes assets to the City will not sh he City, in vio mation during ontract to the C In Informa ng with inform user. rect and indire ecuring the C hey are also tem or data s f Non-Disclos rty contractor onditions. An y this Policy w d its impleme ty) will be rev ecurity implem he Policy ann mation assets, ces from the C mployees and e consulting s ail, accessing of the City’s e ntrol. Securit d persons wil ssets from the plan, design, in order to as e City’s emplo hare the Infor olation of this the conduct City to provid City of nformation Te ation Security Pa 31 Janua mation privacy ect connection City’s IT netwo responsible fo ecurity. sure Agreeme rs, in conjunct NDA must be with third party entation (i.e. viewed indepe mentation hav nually, or as namely, the City, which ar d third party services. The g the City’s int employees an ty measures w ll enjoy acces eft, damage, l implement an ssure the app oyees and aut rmation of any Policy, unles of the City’s b e services. Palo Alto chnology Services age 5 of 8 ary, 2013 y ns to the orks in or timely ents tion with e y endently ve re owned se tranet or nd any will be ss to the oss, nd ropriate thorized y person ss that business 27 of 33CLEAN POWER RESEARCH S17165514 DocuSign Envelope ID: EC86705F-DDE5-41D3-9E62-0ECBFA9B8243 Information P Version 2.2 C)M The C colle busin may and w forma The C site m City w the In the b Inter the u comp their on hi sites D)U In the Depa custo Utiliti apply other with Busin have mont resid and/o the s Busin cove Infor E)P The could unles F)A The C acce affec Privacy Policy METHODS OF C City may gath ction of such ness as a loca be gathered with other tec ation in order City’s staff wi may use “coo will note that nternet Protoc browser softw net address o user’s comput promise the u computers by is or her com . UTILITIES SERV e provision of artment (“CPA omers. To the ies Rules and y; provided, h rwise directed other City dep nesses and re e secure acce thly utility usa dents with non or billing data standard mon nesses and re red by the sa mation under PUBLIC DISCLO Information th d be incorpora ss such inform ACCESS TO PE City will take ss to that per cted persons w y COLLECTION O her the Inform information is al governmen at service win chnologies, wh r to secure the ll inform the p kies” to custo a cookie cont col address o ware and oper of the website ter by using th user’s privacy y using any o puter, it will n VICE f utility service AU”) will colle e extent the m d Regulations however, any d or approved partments ex esidents with ss through a age and billing n-standard or a provided to t thly billing. esidents with ame privacy p r applicable fe OSURE hat is collecte ated in a publ mation is exem ERSONAL INFO reasonable s rson’s Informa who can revie OF PERSONAL mation from a s both necess nt agency in it ndows and co herever the C e City’s servic persons whos omize the brow tains unique i of the compute ating systems e from which t he City’s web or security. U of the widely a ot prevent or es to persons ect the Informa management or other ordi such Rules a d by the Coun cept as may b standard utili CPAU websi g data. In add experimenta them through such non-sta rotections an ederal and Ca ed by the City lic record that mpt from disc ORMATION teps to verify ation. Each C ew and updat INFORMATION variety of sou sary and appr ts governmen ontact centers City may intera ces. se Information wsing experie information th er used to ac s used, the da the user linke site do not c Users can refu available meth prohibit the u s located withi ation in order of that inform nances, rules and Regulatio ncil. This inclu be required b ity meters and te to their Info dition to their r l electric, wat non-City elec andard or exp d personal in alifornia laws. in the ordina t may be subj closure to the a person’s id City departmen te that informa urces and res ropriate in ord ntal and propr s as well as a act with perso n are covered ence with the hat a web site ccess the City ate and time ed to the City’s contain the Inf use the cooki hods. If the us user from gain in Palo Alto, t r to initiate an mation is not s s, regulations ns must conf udes the shar by law. d/or having n ormation, incl regular month ter or natural ctronic portal perimental me nformation exc ry course and ject to inspec public by Ca dentity before nt that collect ation at reaso In Informa sources, prov der for the Cit rietary capaci at web sites, b ons who need d by this Polic e City of Palo A e can use to tr y’s web sites, a user access s web sites. C formation, and ies or delete t ser chooses n ning access t the City of Pa d manage uti specifically ad or procedure form to this Po ring of CPAU- on-metered m luding, withou hly utilities bil gas meters m s at different etering will ha change rules d scope of co ction and copy alifornia law. e the City will g ts Information onable times. City of nformation Te ation Security Pa 31 Janua ided that the ty to conduct ties. That inf by mobile app d to share suc cy that the Cit Alto web site rack, among o the identificat sed the site, a Cookies creat d thus do not the cookie file not to accept to or using the alo Alto Utilitie ility services t ddressed in th es, this Policy olicy, unless -collected Info monthly servic ut limitation, th ling, business may have thei intervals than ave their Inform applicable to onducting its b ying by the pu grant anyone n will afford ac Palo Alto chnology Services age 6 of 8 ary, 2013 formation plications, ch ty’s web . The others, tion of and the ted on t es from a cookie e City’s es to he y will ormation ces will heir ses and ir usage n with mation o business ublic, e online ccess to 28 of 33CLEAN POWER RESEARCH S17165514 DocuSign Envelope ID: EC86705F-DDE5-41D3-9E62-0ECBFA9B8243 Information P Version 2.2 G)S Exce perso partie reaso perso The C Infor insta such If the occu breac date( and t H)D The C perio destr I)S The C servi In ord those the S provi servi confi Thes whic servi inclu moni term comp Prior servi even requ prom J)F CPA mana Privacy Policy SECURITY, CO ept as otherwi ons covered b es without the onable contro ons covered b City may auth mation of per nces, the City Information o e City become rred, with res ch in accorda (s) of the know the proposed DATA RETENTI City will store od is establish ruction. SOFTWARE AS City may eng ces, common der to assure e who receive SaaS services ider, shall des ces and/or fu dentiality and se requiremen h the services ces provider’ ding disaster itoring service “IT infrastruc puters, and da r to entering in ces provider nt that the Saa irements duri mptly inform th FAIR AND ACC U will require age utility ser y NFIDENTIALITY ise provided b by this Policy e express writ ols that are de by this Policy horize the City rsons who do y will require only in further es aware of a spect to the In ance with app wn or suspec action to be ION / INFORMA e and secure a hed by law, fo A SERVICE (S age third part nly known as the privacy a ed services fro s provider and sign, install, p urnishes good d privacy of th nts include inf s are provided s operations recovery and es to ensure a cture” refers to atabase man nto an agreem to complete a aS services p ng the course he ISM. URATE CREDIT utility custom rvices to them Y AND NON-DIS by applicable as confidenti tten consent o esigned to pro . y’s employee business with the City’s em rance of City- breach, or ha nformation of licable laws. cted breach, t taken or the r ATION RETENTI all Information or seven (7) ye SAAS) OVERSI ty contractors Software-as- and security o om the City, a d its subcontr provide, and m ds to the City, he Information formation sec d to the City, and maintena d business co a secure and o the integrate agement dev ment to provid and submit an provider reaso e of providing T TRANSACTIO mers to provid m. SCLOSURE law or this Po ial and will no of the person otect the conf and or third p h the City or r ployee and/o -related busin as reasonable a person, the The notice of he nature of t responsive ac ION n for a period ears, and the GHT s and vendors a-Service (Sa of the Informa as a condition ractors, if any maintain a sec to the extent n. curity directive including con ance process ontinuity plann reliable envir ed framework vices, upon wh de services to n Information onably determ services, the ON ACT OF 200 de their Inform olicy, the City ot disclose it, n affected. The fidentiality and party contrac receive servic or the third pa ness and in ac e grounds to e City will notif f breach will in the Informatio ction taken by d of time as m ereafter such i s to provide s aaS). ation of those n of selling go y, including an cure IT enviro t any scope of es pertaining nnection to th es needed to ning; and (c) t ronment and k, including, w hich digital ne o the City, the Security and mines that it ca e City will requ 03 mation in orde In Informa y will treat the or permit it to e City will dev d security of t ctors to acces ces from the C rty contractor ccordance wit believe that a fy the affecte nclude the da on that is the y the City. may be require information w software appli who do busin oods and/or s ny IT infrastru onment, while f work or serv to: (a) the IT e City's IT sy o support the the IT infrastr service availa without limitat etworks opera e City’s staff w Privacy Que annot fulfill th uire the SaaS er for the City City of nformation Te ation Security Pa 31 Janua e Information o o be disclosed velop and ma the Informatio s and/or use City. In those rs to agree to th the Policy. a security bre d person of s ate(s) or estim subject of the ed by law, or i will be schedu cation and da ness with the ervices to the cture service e it performs s vices implicat infrastructure stems; (b) the IT environme ructure perfor ability to the C tion, data cen ate. will require the estionnaire. In e information S services pro to initiate and Palo Alto chnology Services age 7 of 8 ary, 2013 of d, to third aintain on of the use ach has such mated e breach, if no led for atabase City and e City, s such tes the e, by e SaaS ent, rmance City. The ters, e SaaS n the n security ovider to d 29 of 33CLEAN POWER RESEARCH S17165514 DocuSign Envelope ID: EC86705F-DDE5-41D3-9E62-0ECBFA9B8243 Information P Version 2.2 Fede 108- credi and i preve CPA when chan Ther § 179 4. CO Info Chie Utili City Privacy Policy eral regulation 159), includin itor” which pro implement pro ent, respond U procedures never significa nges to CPAU e are Californ 98.92. ONTACTS rmation Secu ef Information ties Departm y Attorney’s O y ns, implement ng the Red Fla ovides service ocedures for and mitigate s for potential ant changes t U identity theft nia laws which urity Manager n Officer: Rei ent: Auzenne Office: Kolling, ting the Fair a ag Rules, req es in advance an identity th potential iden identity theft to security im t procedures, h are applicab r: Patel, Raj < chental, Jona e, Tom <Tom Grant <Gran and Accurate quire that CPA e of payment eft program fo ntity theft of its will be review plementation or as approp ble to identity Raj.Patel@C athan <Jonath m.Auzenne@C nt.Kolling@Ci Credit Trans AU, as a “cov and which ca for new and e s customers’ wed independ n have occurre priate, so as to y theft; they ar CityofPaloAlto han.Reichent CityofPaloAlto tyofPaloAlto.o In Informa sactions Act o ered financia an affect cons existing accou Information. dently by the ed. The ISM w o conform to re set forth in .org> tal@CityofPal o.org org> City of nformation Te ation Security Pa 31 Janua of 2003 (Publi l institution or sumer credit, unts to detect, ISM annually will recomme this Policy. California Ci loAlto.org> Palo Alto chnology Services age 8 of 8 ary, 2013 c Law r develop , y or nd vil Code 30 of 33CLEAN POWER RESEARCH S17165514 DocuSign Envelope ID: EC86705F-DDE5-41D3-9E62-0ECBFA9B8243 City of Palo Alto Information Security Document Version: V2.5 [11/01/2012] Doc: InfoSec 110 Page 1 of 3 EXHIBIT "F" SOFTWARE AS A SERVICE SECURITY AND PRIVACY TERMS AND CONDITIONS This Exhibit shall be made a part of the City of Palo Alto’s Professional Services Agreement or any other contract entered into by and between the City of Palo Alto (the “City”) and ___CLEAN POWER RESEARCH, LLC _ (the “Consultant”) for the provision of Software as a Service to the City (the “Agreement”). In order to assure the privacy and security of the personal information of the City’s customers and people who do business with the City, including, without limitation, vendors, utility customers, library patrons and other individuals and businesses, who are required to share such information with the City, as a condition of receiving services from the City or selling goods and services to the City, including, without limitation, the Software as a Service services provider (the “Consultant”) and its subcontractors, if any, including, without limitation, any Information Technology (“IT”) infrastructure services provider, shall design, install, provide, and maintain a secure IT environment, described below, while it renders and performs the Services and furnishes goods, if any, described in the Statement of Work, Exhibit B, to the extent any scope of work implicates the confidentiality and privacy of the personal information of the City’s customers. The Consultant shall fulfill the data and information security requirements (the “Requirements”) set forth in Part A below. A “secure IT environment” includes: (a) the IT infrastructure, by which the Services are provided to the City, including connection to the City's IT systems; (b) the Consultant’s operations and maintenance processes needed to support the environment, including disaster recovery and business continuity planning; and (c) the IT infrastructure performance monitoring services to ensure a secure and reliable environment and service availability to the City. “IT infrastructure” refers to the integrated framework, including, without limitation, data centers, computers, and database management devices, upon which digital networks operate. In the event that, after the Effective Date, the Consultant reasonably determines that it cannot fulfill the Requirements, the Consultant shall promptly inform the City of its determination and submit, in writing, one or more alternate countermeasure options to the Requirements (the “Alternate Requirements” as set forth in Part B), which may be accepted or rejected in the reasonable satisfaction of the Information Security Manager (the “ISM”). Part A. Requirements: The Consultant shall at all times during the term of any contract between the City and the Consultant: (a)Appoint or designate an employee, preferably an executive officer, as the security liaison to 31 of 33CLEAN POWER RESEARCH S17165514 DocuSign Envelope ID: EC86705F-DDE5-41D3-9E62-0ECBFA9B8243 City of Palo Alto Information Security Document Version: V2.5 [11/01/2012] Doc: InfoSec 110 Page 2 of 3 the City with respect to the Services to be performed under this Agreement. (b)Provide a full and complete response to the City’s Supplier Security and Privacy Assessment Questionnaire (the “Questionnaire”) to the ISM, and also report any major non-conformance to the Requirements, as and when requested. The response shall include a detailed implementation plan of required countermeasures, which the City requires the Consultant to adopt as countermeasures in the performance of the Services. In addition, as of the annual anniversary date of this Agreement the Consultant shall report to the City, in writing, any major changes to the IT infrastructure. (c)Have adopted and implemented information security and privacy policies that are documented, are accessible to the City and conform to ISO 27001/2 – Information Security Management Systems (ISMS) Standards. See the following: http://www.iso.org/iso/home/store/catalogue_tc/catalogue_detail.htm?csnumber=42103 http://www.iso.org/iso/iso_catalogue/catalogue_tc/catalogue_detail.htm?csnumber=50297 (d)Conduct routine data and information security compliance training of its personnel that is appropriate to their role. (e)Develop and maintain detailed documentation of the IT infrastructure, including software versions and patch levels. (f)Develop an independently verifiable process, consistent with industry standards, for performing professional and criminal background checks of its employees that (1) would permit verification of employees’ personal identity and employment status, and (2) would enable the immediate denial of access to the City's confidential data and information by any of its employees who no longer would require access to that information or who are terminated. (g)Provide a list of IT infrastructure components in order to verify whether the Consultant has met or has failed to meet any objective terms and conditions. (h)Implement access accountability (identification and authentication) architecture and support role-base access control (“RBAC”) and segregation of duties (“SoD”) mechanisms for all personnel, systems and software used to provide the Services. “RBAC” refers to a computer systems security approach to restricting access only to authorized users. “SoD” is an approach that would require more than one individual to complete a security task in order to promote the detection and prevention of fraud and errors. (i)Assist the City in undertaking annually an assessment to assure that: (1) all elements of the Services’ environment design and deployment are known to the City, and (2) it has implemented measures in accordance with industry best practices applicable to secure coding and secure IT architecture. (j)Provide and maintain secure intersystem communication paths that would ensure the confidentiality, integrity and availability of the City's information. (k)Deploy and maintain IT system upgrades, patches and configurations conforming to current patch and/or release levels by not later than one (1) week after its date of release. Emergency security patches must be installed within 24 hours after its date of release. (l)Provide for the timely detection of, response to, and the reporting of security incidents, including on-going incident monitoring with logging. (m)Notify the City within one (1) hour of detecting a security incident that results in the unauthorized access to or the misuse of the City's confidential data and information. 32 of 33CLEAN POWER RESEARCH S17165514 DocuSign Envelope ID: EC86705F-DDE5-41D3-9E62-0ECBFA9B8243 City of Palo Alto Information Security Document Version: V2.5 [11/01/2012] Doc: InfoSec 110 Page 3 of 3 (n)Inform the City that any third party service provider(s) meet(s) all of the Requirements. (o)Perform security self-audits on a regular basis and not less frequently than on a quarterly basis, and provide the required summary reports of those self-audits to the ISM on the annual anniversary date or any other date agreed to by the Parties. (p)Accommodate, as practicable, and upon reasonable prior notice by the City, the City’s performance of random site security audits at the Consultant’s site(s), including the site(s) of a third party service provider(s), as applicable. The scope of these audits will extend to the Consultant’s and its third party service provider(s)’ awareness of security policies and practices, systems configurations, access authentication and authorization, and incident detection and response. (q)Cooperate with the City to ensure that to the extent required by applicable laws, rules and regulations, the Confidential Information will be accessible only by the Consultant and any authorized third party service provider’s personnel. (r)Perform regular, reliable secured backups of all data needed to maximize availability of the Services. (s)Maintain records relating to the Services for a period of three (3) years after the expiration or earlier termination of this Agreement and in a mutually agreeable storage medium. Within thirty (30) days after the effective date of expiration or earlier termination of this Agreement, all of those records relating to the performance of the Services shall be provided to the ISM. (t)Maintain the Confidential Information in accordance with applicable federal, state and local data and information privacy laws, rules and regulations. (u)Encrypt the Confidential Information before delivering the same by electronic mail to the City and or any authorized recipient. (v)Unless otherwise addressed in the Agreement, shall not hold the City liable for any direct, indirect or punitive damages whatsoever including, without limitation, damages for loss of use, data or profits, arising out of or in any way connected with the City’s IT environment, including, without limitation, IT infrastructure communications. Part B. Alternate Requirements: 33 of 33CLEAN POWER RESEARCH S17165514 DocuSign Envelope ID: EC86705F-DDE5-41D3-9E62-0ECBFA9B8243 AMENDMENT NO. 1 TO CONTRACT NO. S17165514 BETWEEN THE CITY OF PALO ALTO AND CLEAN POWER RESEARCH This Amendment No. 1 (this “Amendment”) to Contract No. S17165514 (the “Contract” as defined below) is entered into as of December 2, 2019, by and between the CITY OF PALO ALTO, a California chartered municipal corporation (“CITY”), and CLEAN POWER RESEARCH, a limited liability company, located at 1541 3rd Street, Napa CA 94559 (“CONSULTANT”). CITY and CONSULTANT are referred to collectively as the “Parties” in this Amendment. R E C I T A L S A. The Contract (as defined below) was entered into by and between the Parties hereto for the provision of web-based solar photovoltaic (PV) and electric vehicle (EV) calculator for CPAU customers, as detailed therein. B. The Parties now wish to amend the Contract in order to extend the term, increase compensation by $275,000 from $135,000 to $410,000 and to revise invoicing terms. NOW, THEREFORE, in consideration of the covenants, terms, conditions, and provisions of this Amendment, the Parties agree: SECTION 1. Definitions. The following definitions shall apply to this Amendment: a. Contract. The term “Contract” shall mean Contract No. S17165514 between CONSULTANT and CITY, dated December 31, 2016. b. Other Terms. Capitalized terms used and not defined in this Amendment shall have the meanings assigned to such terms in the Contract. SECTION 2. Section 2. TERM of the Contract is hereby amended to read as follows: “SECTION 2. TERM. The term of this Agreement shall be from the date December 31, 2019 through December 31, 2024 unless terminated earlier pursuant to Section 19 of this Agreement.” SECTION 3. Section 4. NOT TO EXCEED COMPENSATION of the Contract is hereby amended to read as follows: “SECTION 4. NOT TO EXCEED COMPENSATION. The compensation to be paid to CONSULTANT for performance of the Services described in Exhibit "A" ("Basic Services") shall not exceed Four Hundred and Ten Thousand Dollars ($410,000.00). CONSULTANT agrees to complete all Basic Services within this amount. In the event Additional Services are authorized, the total compensation for Basic Services and Additional Services shall not exceed Four Hundred and Ten Thousand Dollars ($410,000.00). The applicable rates and schedule of payment are set out at Exhibit “C-1”, entitled “HOURLY RATE SCHEDULE,” which is attached to and made a part of this DocuSign Envelope ID: 53ACA787-8D0C-4CEB-A15A-A2E2784F68E8 Agreement. Any work performed or expenses incurred for which payment would result in a total exceeding the maximum amount of compensation set forth herein shall be at no cost to the CITY.” SECTION 4. Section 5. INVOICES of the Contract is hereby amended to read as follows: “SECTION 5. INVOICES. In order to request payment, CONSULTANT shall submit an invoice for 50% of setup and customization fees (Task I) upon both Parties' execution of this Agreement. CONSULTANT shall submit an invoice for remaining 50% of setup (Task I) and 50% of annual subscription fees (Task II) on a bi-annual basis, subject to not to exceed limits included elsewhere in this Agreement. For Task III, CONSULTANT shall submit an invoice for 100% of setup and customization fees once Optional Enhancement features are operational. CONSULTANT shall submit an invoice for 50% of annual subscription fees for Optional Enhancement features on a bi-annual basis. If hourly services are performed, CONSULTANT will submit monthly reports to the CITY describing the services performed and the applicable charges (including an identification of personnel who performed the services, hours worked, hourly rates, and reimbursable expenses), based upon the CONSULTANT's billing rates (set forth in Exhibit "C- 1”). If applicable, the reports shall also describe the percentage of completion of each task. The information in CONSULTANT's payment requests shall be subject to verification by CITY. CONSULTANT shall send all invoices and reports to the City's project manager at the address specified in Section 13 below. The City will generally process and pay invoices within thirty (30) days of receipt.” SECTION 5. Section 6. QUALIFICATIONS/STANDARD OF CARE is hereby amended to read as follows: “SECTION 6. QUALIFICATIONS/STANDARD OF CARE. All of the Services shall be performed by CONSULTANT or under CONSULTANT’s supervision. CONSULTANT represents that it possesses the professional and technical personnel necessary to perform the Services required by this Agreement and that the personnel have sufficient skill and experience to perform the Services assigned to them. CONSULTANT represents that it, its employees and subconsultants, if permitted, have and shall maintain during the term of this Agreement all licenses, permits, qualifications, insurance and approvals of whatever nature that are legally required to perform the Services. All of the services to be furnished by CONSULTANT under this agreement shall meet the professional standard and quality that prevail among professionals in the same discipline and of similar knowledge and skill engaged in related work throughout California under the same or similar circumstances. SECTION 6A. WARRANTIES 6.A.1. Warranty of Performance. CONSULTANT hereby warrants that when fully implemented, the Services to be configured and provided under this Agreement shall perform materially in accordance with the specifications applicable thereto. With respect to all Services to be performed by CONSULTANT under this Agreement, including the Services outlined in Exhibit A, and any Additional Services, CONSULTANT warrants that it will use reasonable care and skill. All Services shall be performed in a professional, competent and timely manner by CONSULTANT personnel appropriately qualified and trained to perform such Services. 6.A.2. Compliance with Description of Services. CONSULTANT represents and warrants that the software and Services specified in this Agreement, and all updates and improvements to the software and Services, will comply in all material respects with the specifications and DocuSign Envelope ID: 53ACA787-8D0C-4CEB-A15A-A2E2784F68E8 representations specified in the scope of work (including performance, capabilities, accuracy, completeness, characteristics, specifications, configurations, standards, functions and requirements) as set forth (i) herein or in any amendment hereto, and (ii) the updates thereto. 6.A.3. Title. CONSULTANT represents and warrants to CITY that, to its knowledge, it is the lawful owner or license holder of all software, materials, and property identified by CONSULTANT as CONSULTANT-owned, and used by it in the performance of the Services contemplated hereunder, and that, to its knowledge, it has the right to permit CITY access to or use of the software and Services and each component thereof. 6.A.4. Warranty of Suitability for Intended Purpose. CONSULTANT warrants that the software and Services will be suitable for the intended purpose of providing the Services described in Exhibit A, and any Additional Services described in the applicable statement of work. 6.A.5. CONSULTANT shall, as its sole obligation and CITY’s sole and exclusive remedy for any breach of the warranties set forth in Section 6 or this Section 6A, re- perform the Services or repair the software which gave rise to the breach or, at CONSULTANT’s option, refund the fees paid by CITY for the Services or software which gave rise to the breach; provided that CITY notifies CONSULTANT in writing of the breach within 12 months following performance of the defective Services, specifying the breach in reasonable detail. 6.A.6 EXCEPT FOR THE WARRANTIES SET FORTH IN THIS SECTION, THE SERVICES AND SOFTWARE ARE PROVIDED WITHOUT ANY OTHER WARRANTIES OF ANY KIND, CONSULTANT EXPRESSLY DISCLAIMS ALL OTHER WARRANTIES, EXPRESS, IMPLIED, OR STATUTORY, INCLUDING BUT NOT LIMITED TO THE IMPLIED WARRANTIES OF MERCHANTABILITY, TITLE, FITNESS FOR A PARTICULAR PURPOSE AND NONINFRINGEMENT, AND ANY IMPLIED WARRANTIES ARISING OUT OF COURSE OF PERFORMANCE OR COURSE OF DEALING.” SECTION 7 COMPLIANCE WITH LAWS; CONFIDENTIAL REQUIREMENTS of the Contract is hereby amended to read as follows: “SECTION 7. COMPLIANCE WITH LAWS; CONFIDENTIAL REQUIREMENTS. 7.1. CONSULTANT shall keep itself informed of and in compliance with all applicable federal, state and local laws, ordinances, regulations, and orders that may affect in any manner the Project or the performance of the Services or those engaged to perform Services under this Agreement. CONSULTANT shall procure all permits and licenses, pay all charges and fees, and give all notices required by law in the performance of the Services. 7.2. Definition. “Confidential Information” means all information disclosed by one party (“Discloser”) to the other party (“Recipient”) relating to or disclosed in the course of the performance of this Agreement. Confidential Information includes information that is marked or identified as confidential and, if not marked or identified as confidential, information that should reasonably have been understood by Recipient to be proprietary and confidential to Discloser or to a third party, because of legends or other markings, the circumstances of disclosure or the nature of the information itself. 7.3 Protection. Recipient will not use any Confidential Information of the Discloser for any purpose not expressly permitted by this Agreement, and will disclose Confidential Information DocuSign Envelope ID: 53ACA787-8D0C-4CEB-A15A-A2E2784F68E8 only to the employees or, subject to any license restrictions, individual independent contractors of Recipient who have a need to know such Confidential Information for purposes of this Agreement and who are under a duty of confidentiality no less restrictive than Recipient’s duty hereunder. Recipient will protect Confidential Information from unauthorized use, access, or disclosure in the same manner as Recipient protects its own confidential or proprietary information of a similar nature and with no less than reasonable care. 7.4 Exceptions. Recipient’s obligations under Section 7.3 with respect to any Confidential Information of Discloser will terminate if and when Recipient can document that such information: (a) was already lawfully known to Recipient at the time of disclosure by Discloser, (b) is disclosed to Recipient by a third party who had the right to make such disclosure without any confidentiality restrictions, (c) is, or through no fault of Recipient has become, generally available to the public, or (d) is independently developed by Recipient without access to or use of the Confidential Information. In addition, Recipient may disclose Confidential Information to the extent that such disclosure is required by law or by the order of a court or similar judicial or administrative body, provided that Recipient notifies Discloser of such required disclosure in writing prior to making such disclosure and cooperates with Discloser, at Discloser’s reasonable request and expense, in any lawful action to contest or limit the scope of such required disclosure. 7.5 CONSULTANT understands and agrees that the performance of the Services under this Agreement may involve access to CITY data which is Confidential Information. CONSULTANT and any subcontractors or agents shall use Confidential Information only in accordance with all applicable local, state and federal laws restricting the access, use, and disclosure of confidential information and only as necessary in the performance of this Agreement or as otherwise permitted in this Agreement. CONSULTANT shall not use Confidential Information for direct marketing purposes without CITY’s express written consent or as otherwise authorized in this Agreement. CONSULTANT's failure to comply with any such requirements shall be deemed a material breach for which CITY may terminate the Agreement, in addition to any other remedies it may have at law and equity. CONSULTANT agrees to include substantially similar terms and conditions regarding Confidential Information contained in this Agreement in all subcontractor or agency contracts providing services under this Agreement. CONSULTANT shall comply with CITY’s “SOFTWARE as a SERVICE TERMS AND CONDITIONS”, as set forth in Exhibit “E”, attached to and made a part of this Agreement, and, to the extent applicable, with CITY’s “Information Privacy Policy,” as set forth in Exhibit “G”, attached to and made a part of this Agreement. Notwithstanding anything to the contrary in this Agreement, CITY acknowledges that CONSULTANT may collect, compile, synthesize, and modify certain non- personally identifiable data and content made available to it in the course of CITY’s and its users’ access to and use of the software and Services.” SECTION 7. The following exhibit(s) to the Contract is/are hereby amended or added, as indicated below, to read as set forth in the attachment(s) to this Amendment, which is/are hereby incorporated in full into this Amendment and into the Contract by this reference: a. Exhibit “A” entitled “SCOPE OF SERVICES”, AMENDED, REPLACES PREVIOUS. b. Exhibit “C” entitled “COMPENSATION”, AMENDED, REPLACES PREVIOUS. DocuSign Envelope ID: 53ACA787-8D0C-4CEB-A15A-A2E2784F68E8 c. Exhibit “E” entitled “SAAS, SECURITY AND PRIVACY TERMS AND CONDITIONS”, REPLACES PREVIOUS. d. Exhibit “F” entitled “INFORMATION PRIVACY POLICY”, REPLACES PREVIOUS. SECTION 8. Legal Effect. Except as modified by this Amendment, all other provisions of the Contract, including any exhibits thereto, shall remain in full force and effect. SECTION 9. Incorporation of Recitals. The recitals set forth above are terms of this Amendment and are fully incorporated herein by this reference. (SIGNATURE BLOCK FOLLOWS ON THE NEXT PAGE.) DocuSign Envelope ID: 53ACA787-8D0C-4CEB-A15A-A2E2784F68E8 SIGNATURES OF THE PARTIES IN WITNESS WHEREOF, the Parties have by their duly authorized representatives executed this Amendment effective as of the date first above written. CITY OF PALO ALTO City Manager APPROVED AS TO FORM: City Attorney or designee CLEAN POWER RESEARCH, LLC Officer 1 By: Name: Title: Officer 2 By: Name: Title: Attachments: EXHIBIT “A”: SCOPE OF SERVICES, REPLACES PREVIOUS. EXHIBIT “C”: COMPENSATION, REPLACES PREVIOUS. EXHIBIT “E”: SAAS, SECURITY AND PRIVACY TERMS AND CONDITIONS, REPLACES PREVIOUS. EXHIBIT “F”: INFORMATION PRIVACY POLICY, REPLACES PREVIOUS. DocuSign Envelope ID: 53ACA787-8D0C-4CEB-A15A-A2E2784F68E8 Alan Saunders Vice President, Sales and Business Dev Jeffrey S. Ressler Chief Executive Officer Amy Bartell Ed Shikada EXHIBIT “A” SCOPE OF SERVICES TASK I: WattPlan Software – Set-up/Configuration 1.1. WattPlan Set-Up: CONTRACTOR shall setup two separate WattPlan URLs, one for the PV calculator and one for the EV calculator. The EV calculator includes an option for the customer to add PV to their EV assessment. CITY will develop related website content on their website which will then link to each of these URLs. 1.2. Standard Configuration Description: WattPlan guides users through the analysis one step at a time, highlighting the most important information needed to make a decision. 1.2.1. The PV calculator will require the customer’s address, whether they have gas or electric heat, their average monthly electric bill or their previous 12 months of electricity usage and finally a Review Terms screen. The EV calculator will require the customer to specify the make and model of the plug-in and conventional vehicles they want to compare, their address, their commute distance, an option to include PV in the assessment, either their average monthly electric bill or their previous 12 months of electricity usage and finally a Review Terms screen. CITY will have the option of configurable text and default values for these screens. Once the calculations are complete, the customer will see a series of sections which summarize key aspects of the assessment. The PV and EV calculators will have their own unique screens as are relevant for the specific technology being assessed. CITY will have the option to configure text, colors, and default values for these screens. Finally, the customer will have the option to fine tune their estimate by adjusting assumption values in the Customize Assumptions menu and WattPlan will re-calculate and refresh their results. CITY will have the option to configure text and default values for this menu. 1.2.2. CITY’s Requested WattPlan Configuration: The table below outlines the CITY’s required features of the web-based PV and EV calculator and CONTRACTOR’s proposed approach. In some cases, CONTRACTOR’s approach is exactly as described in the RFP, in other cases the "CONTRACTOR Approach" column will outline any further definition of the approach and any options for alternative approaches. 1.2.2.1. Hosted Solution: Hosted, managed and maintained by CONTRACTOR. 1.2.2.2. Customer Types: Residential single-family home, and multi- family house accounts. Note that the EV calculator is residential focused and thus does not support commercial electric rates. A residential user can specify how much public (e.g., workplace) charging they expect to do. 1.2.2.3. Utility Branding: Using CITY color scheme, fonts and logos; customers should feel like they are using the CITY website. The calculator will be available to utility customers with a link from CITY’s website. WattPlan allows for customization of color scheme and logos, and the calculator may be linked to from any CITY webpage. While the content of all text will be made configurable (to the extent that page layout is not adversely affected), the text font itself will not be configurable as a standard option. DocuSign Envelope ID: 53ACA787-8D0C-4CEB-A15A-A2E2784F68E8 1.2.2.4. User Defined Inputs: Ability for users to enter their monthly electric usage (or use CITY- defined default for customer type), and select the following options, as applicable: electric rates, average daily/monthly driving miles, EV charging hours, PV system size, orientation, tilt, PV and EV purchase options (loan, lease, Power Purchase Agreements, or cash), terms and costs. 1.2.2.5. Regarding EV mileage, the user may input their daily miles and easily view the equivalent annual miles or they can tell WattPlan where they typically commute to and let WattPlan calculate the commute distance for them. 1.2.2.6. Electric Consumption History and Load Profile: The calculator should be able to accept user-entered monthly energy usage history and the software should have the capability to use sample Palo Alto residential customer load profiles for the customized customer analysis. The calculator should be able to modify the default load shape for customers who already have any or all of the following equipment: solar PV, electric vehicle and/or an all-electric home. Users can perform a quick estimate by inputting their average monthly electric bill or their estimated 12 monthly electricity usage values. Users with 12 months of energy usage history can enter these monthly kWh usage values for each month of the year. Based on these user inputs, typical load profiles will be scaled to derive an hourly customer load profile. Optionally, CITY can provide CONTRACTOR with typical customer load data for a one-year period (as a CSV or other standardized file format) in either 15 minute, 30 minute, or hourly resolutions, and CONTRACTOR will transform the data into an hourly 12x24 (an hourly load profile for each month representing an average day in each month) format for use in the analysis. Alternatively, CONTRACTOR maintains a database of typical residential customer load profiles for several climate zones and rate classes from which representative load profiles for CITY customers may be chosen. 1.2.2.7. Rate Structure: Use the relevant CITY electric rates for the financial analysis results created by the PV and EV calculator. Update the rates used in the PV and EV calculator when requested by CITY to provide the most accurate rate analysis possible. CITY rates are usually updated annually for a July 1st effective date. Analysis to include all relevant electric charges including tiered residential energy use, time-of-use energy charges, monthly peak demand charge, minimum bill charge, and utility users tax. 1.2.2.8. Financial Analysis: Calculator should be able to model PV- only, EV-only and combined PV and EV options. a. PV analysis: Show 20-year cost analysis including electric retail rate escalations, initial system cost, long-term savings, and simple payback time frame. Analysis should provide side- by-side, easy to understand financial and pictorial representation of the various ownership options. A community solar component may be added to the calculator options in the future, if requested by CITY. b. EV analysis: Provide comparison of annual costs and benefits of selecting an electric vehicle compared to a standard car based on user-selected vehicles, miles per day/month/year, and purchase type (lease, loan, cash) including operating and maintenance costs, and available tax incentives. Regarding EV mileage, the user may input their daily miles and easily view the equivalent annual miles or they can tell WattPlan where they typically commute to and let WattPlan calculate this for them. 1.2.2.9. Roof Top Analysis: WattPlan incorporates LIDAR data from a third-party provider, Sun Number. DocuSign Envelope ID: 53ACA787-8D0C-4CEB-A15A-A2E2784F68E8 1.2.2.10. Reporting: Provide consumer friendly web visualization tools showing personalized results of monthly energy use and energy costs with and without solar PV and/or EV. Reporting should be part of the tool and immediately available to customers for viewing, printing and saving the results from each scenario entered. Personalized results reported by WattPlan can be visualized instantly. The user can optionally download and/or print a summary of the results as a PDF. Note: the Save as PDF feature is not yet available for the EV calculator, though we expect it to be in the near future. 1.3. TECHNICAL SUPPORT 1.3.1. Support Hours. CITY will provide first-tier support to users. For second-tier support, CONTRACTOR shall provide email based support from 9:00 AM to 5:00 PM (PST) Monday through Friday, excluding national holidays (“CONTRACTOR Service Hours”). CONTRACTOR will provide second-tier support that includes direct communications with Customer but excludes any direct communication with end users. CONTRACTOR shall also provide ability to escalate email support incident to phone or interactive (phone with web- based screen sharing) as necessary. Customer may report an incident 24 hours/day, 7 days/week as described in Support Request. 1.3.2. Outages. CONTRACTOR will notify CITY about outages affecting the servers in a timely manner as described in Outage Notification. CONTRACTOR will contact CITY using the data in CONTRACTOR’s contact database. CITY is responsible in keeping the contact information correct and up to date by communicating any changes to support@wattplan.com. 1.3.3. Outage Notification. 1.3.3.1. Planned Outages. CONTRACTOR will communicate planned Service outages to CITY that are either a) inside Support Hours or b) outside Support Hours and expected to be more than 15 minutes. Depending on the breadth and impact of the outage, notification may be by email. Notification will be provided using the contact information, provided by CITY, in the CONTRACTOR’s contact database. 1.3.3.2. Unplanned Outages. An unplanned outage occurs when the Service becomes unavailable due to any issue not scheduled or planned. CONTRACTOR will communicate unplanned outages that are 15 minutes or longer as soon as practicable to the CITY contact by email with follow- up by phone if acknowledgement is not received by CONTRACTOR promptly through email. 1.3.4. SUPPORT REQUEST. All incidents shall be reported to support@wattplan.com and CONTRACTOR’s designated or other knowledgeable staff member will respond by email to the CITY’s incident as follows: 1.3.4.1. Urgent: The Service is unavailable to all users for more than 1 hour and is not down as a result of a planned outage. For an Urgent Support Request, CONTRACTOR will use reasonable efforts to contact CITY during the CONTRACTOR Service Hours no later than 4 hours after receipt of an urgent incident report Resolution time will depend on the nature of the report, request, or inquiry. DocuSign Envelope ID: 53ACA787-8D0C-4CEB-A15A-A2E2784F68E8 1.3.4.2. Non-Urgent: Abnormal or inconsistent system behavior or a system problem that does not prevent work on the system. For a Non-Urgent Support Request or a Business Inquiry, CONTRACTOR will use reasonable efforts to contact CITY during the CONTRACTOR Service Hours no later than 5 business days after receipt. Resolution time will depend on the nature of the report, request, or inquiry. 1.4. SECURITY AND IT PROVISIONS. 1.4.1. CONTRACTOR agrees to implement and maintain during the term of this Agreement, a Business Continuity Plan and Disaster Recovery Plan (the “Plans”), access to which each shall be provided to CITY for CITY’s review. The Plans may be reviewed annually, or as required due to significant changes in risk or the business or regulatory environment. The Plans will also be updated to reflect lessons learned from real recovery events. CONTRACTOR agrees to maintain an effective business continuity, disaster recovery and crisis management response capability, consistent with the level of risk associated with the Service. 1.4.2. CITY may audit CONTRACTOR’s records relating to the Services to ensure CONTRACTOR’s compliance with the terms of this Agreement, provided that CITY has provided reasonable notice to CONTRACTOR and any such records of CONTRACTOR’s will be treated by CITY as Confidential Information. 1.4.3. Data transmissions of CITY Information via the Internet between the CITY and Services must be at least SSL 128 bit encrypted. 1.4.4. CONTRACTOR warrants that it shall (i) use reasonable physical and systems security measures to prevent unauthorized access to or tampering with the Service, its site, including to protect the confidentiality and integrity of any CITY Information, which means all data provided by users via the CITY’s implementation of the Service, including without limitation Personally Identifiable Information, and to prevent viruses and similar destructive code from being placed on the Service, on its site, or in its programming; and (ii) use reasonable physical security and precautionary measures to prevent unauthorized access or damage to a facility under its control or that of its subcontractors, including to protect the confidentiality and integrity of any CITY Information. CONTRACTOR shall, at a minimum, protect CITY Information and provide the same measures it uses to protect its own confidential information. Services shall be hosted in a facility that has been audited to SSAE16 SOC2 standards or those that are equal to or better standards. 1.4.5. Any breach of the obligations contained in this document shall be reported to CITY within 24 hours of discovery. CONTRACTOR shall make its employees, agents, and subcontractors available to facilitate investigations related to any such breach. CONTRACTOR will present its remediation plan to CITY for approval (which approval shall not be unreasonably withheld). CONTRACTOR shall promptly remediate the effects of any such breach, at its sole expense. 1.4.6. CONTRACTOR shall, and it shall cause its employees and subcontractors to, comply, at CONTRACTOR’s sole cost and expense, with all laws, rules, regulations, reasonable practices and standards applicable to the obligations assumed by CONTRACTOR under this Agreement including those related to data privacy, data protection, international communications and the transmission DocuSign Envelope ID: 53ACA787-8D0C-4CEB-A15A-A2E2784F68E8 of technical or personal data. 1.4.7. CONTRACTOR shall not use any Customer Confidential Information (including Personally Identifiable Information), for application testing purposes for any reason or in any manner whatsoever, without the prior written consent of CITY. A sample of anonymized and transformed Customer data may be used upon occasion for internal testing to ensure continued quality of operation of the Services for CITY’s use of the Services only. 1.4.8. CITY may scan CONTRACTOR’s application infrastructure, with CONTRACTOR’s express prior written consent, whenever CITY scans its own site for security confirmation and testing. 1.4.9. CONTRACTOR shall provide CITY, with a copy of its third party audited SSAE16 SOC2 report (or its equivalent or better), as permitted, immediately upon release, at no cost to CITY as such report is released from CONTRACTOR and/or its subcontractor. Otherwise, CITY may access subcontractor’s same or similar report as it is made publicly available upon notice from CONTRACTOR. Task II: Subscription Clean Power Research (“CONTRACTOR”) shall provide the City of Palo Alto (“CITY”) with the WattPlan software service. WattPlan is a web-based application that enables users to quickly and remotely estimate their home or business potential for rooftop solar and understand its financial impacts through a simple step-by-step user interface. In addition, WattPlan provides a personalized estimate of the benefits of driving electric vehicle compared to a standard vehicle, including energy impact, economics and environmental savings. TASK III: Enhancements on an as-needed basis In the future, CITY may desire customized enhancements to the calculator evaluating technologies and program options that may include but are not limited to the following: energy efficiency, battery storage, demand control devices, community solar, heat pump water heaters, and other technologies and behavior modeling. These features may incur additional one-time and/or on-going license fees outside of what is described in this proposal. In addition, license fee increases commensurate with new price scheduling may occur in Year 7 or 8. DocuSign Envelope ID: 53ACA787-8D0C-4CEB-A15A-A2E2784F68E8 Vers.: Aug. 5, 2019 Page 13 of 17 EXHIBIT “C” COMPENSATION The CITY agrees to compensate the CONSULTANT for professional services performed in accordance with the terms and conditions of this Agreement, and as set forth in the budget schedule below. Compensation shall be calculated based on the task-based budget schedule shown below in Table C-1 and on the hourly rate schedule attached as Exhibit C-1 up to the not to exceed budget amount for each task set forth below. CONSULTANT shall perform the tasks and categories of work as outlined and budgeted below. The CITY’s Project Manager may approve in writing the transfer of budget amounts between any of the tasks or categories listed below provided the total compensation for Basic Services and the total compensation for Additional Services do not exceed the amounts set forth in Section 4 of this Agreement. Table C-1 Budget Schedule Task Description Not to Exceed (NTE) Amount Y1 Y2 Y3 Y4 Y5 Y6 Y7 Y8 1 WattPlan Software -- Set- up/Configuration $16,000 2 Subscription $23,000 $23,000 $23,000 $38,000 $38,000 $38,000 $38,000 $38,000 3 Enhancements on an as-needed basis $0 $25,000 $25,000 $15,000 $15,000 $15,000 $20,000 $20,000 Sub-total NTE -- Basic Services $39,000 $48,000 $48,000 $53,000 $53,000 $53,000 $58,000 $58,000 Sub-total NTE Basic Services Y1- Y3 $135,000 Sub-total NTE Basic Services Y4- Y8 $275,000 Total NTE Y1-Y8 $410,000 DocuSign Envelope ID: 53ACA787-8D0C-4CEB-A15A-A2E2784F68E8 Vers.: Aug. 5, 2019 Page 14 of 17 REIMBURSABLE EXPENSES The administrative, overhead, secretarial time or secretarial overtime, word processing, photocopying, in-house printing, insurance and other ordinary business expenses are included within the scope of payment for services and are not reimbursable expenses. ADDITIONAL SERVICES The CONSULTANT shall provide additional services only by advanced, written authorization from the CITY. The CONSULTANT, at the CITY’s project manager’s request, shall submit a detailed written proposal including a description of the scope of services, schedule, level of effort, and CONSULTANT’s proposed maximum compensation, for such services based on the rates set forth in Exhibit C-1. The additional services scope, schedule and maximum compensation shall be negotiated and agreed to in writing by the CITY’s Project Manager and CONSULTANT prior to commencement of the services. Payment for additional services is subject to all requirements and restrictions in this Agreement. DocuSign Envelope ID: 53ACA787-8D0C-4CEB-A15A-A2E2784F68E8 Vers.: Aug. 5, 2019 Page 15 of 17 EXHIBIT “E” In order to assure the privacy and security of the personal information of the City’s customers and people who do business with the City, including, without limitation, vendors, utility customers, library patrons and other individuals and businesses, who are required to share such information with the City, as a condition of receiving services from the City or selling goods and services to the City, including, without limitation, the Software as a Service services provider (the “Consultant”) and its subcontractors, if any, including, without limitation, any Information Technology (“IT”) infrastructure services provider, shall design, install, provide, and maintain a secure IT environment, described below, while it renders and performs the Services and furnishes goods, if any, described in the Statement of Work, Exhibit B, to the extent any scope of work implicates the confidentiality and privacy of the personal information of the City’s customers. The Consultant shall fulfill the data and information security requirements (the “Requirements”) set forth in Part A below. A “secure IT environment” includes: (a) the IT infrastructure, by which the Services are provided to the City, including connection to the City's IT systems; (b) the Consultant’s operations and maintenance processes needed to support the environment, including disaster recovery and business continuity planning; and (c) the IT infrastructure performance monitoring services to ensure a secure and reliable environment and service availability to the City. “IT infrastructure” refers to the integrated framework, including, without limitation, data centers, computers, and database management devices, upon which digital networks operate. In the event that, after the Effective Date, the Consultant reasonably determines that it cannot fulfill the Requirements, the Consultant shall promptly inform the City of its determination and submit, in writing, one or more alternate countermeasure options to the Requirements (the “Alternate Requirements” as set forth in Part B), which may be accepted or rejected in the reasonable satisfaction of the Information Security Manager (the “ISM”). Part A. Requirements: The Consultant shall at all times during the term of any contract between the City and the Consultant: VENDOR CYBERSECURITY TERMS AND CONDITIONS (AKA: SAAS SECURITY AND PRIVACY TERMS AND CONDITIONS) This Exhibit shall be made a part of the City of Palo Alto’s Professional Services Agreement or any other contract entered into by and between the City of Palo Alto (the “City”) and (the “Consultant”) for the provision of Software as a Service services to the City (the “Agreement”). DocuSign Envelope ID: 53ACA787-8D0C-4CEB-A15A-A2E2784F68E8 Vers.: Aug. 5, 2019 Page 16 of 17 (a) Appoint or designate an employee, preferably an executive officer, as the security liaison to the City with respect to the Services to be performed under this Agreement. (b) Comply with the City’s Information Privacy Policy: (c) Have adopted and implemented information security and privacy policies that are documented, are accessible to the City and conform to ISO 27001/2 – Information Security Management Systems (ISMS) Standards. See the following: http://www.iso.org/iso/home/store/catalogue_tc/catalogue_detail.htm?csnumber=42103 http://www.iso.org/iso/iso_catalogue/catalogue_tc/catalogue_detail.htm?csnumber=5029 7 (d) Conduct routine data and information security compliance training of its personnel that is appropriate to their role. (e) Develop and maintain detailed documentation of the IT infrastructure, including software versions and patch levels. (f) Develop an independently verifiable process, consistent with industry standards, for performing professional and criminal background checks of its employees that (1) would permit verification of employees’ personal identity and employment status, and (2) would enable the immediate denial of access to the City's confidential data and information by any of its employees who no longer would require access to that information or who are terminated. (g) Provide a list of IT infrastructure components in order to verify whether the Consultant has met or has failed to meet any objective terms and conditions. (h) Implement access accountability (identification and authentication) architecture and support role-based access control (“RBAC”) and segregation of duties (“SoD”) mechanisms for all personnel, systems, and software used to provide the Services. “RBAC” refers to a computer systems security approach to restricting access only to authorized users. “SoD” is an approach that would require more than one individual to complete a security task in order to promote the detection and prevention of fraud and errors. (i) Assist the City in undertaking annually an assessment to assure that: (1) all elements of the Services’ environment design and deployment are known to the City, and (2) it has implemented measures in accordance with industry best practices applicable to secure coding and secure IT architecture. (j) Provide and maintain secure intersystem communication paths that would ensure the confidentiality, integrity, and availability of the City's information. (k) Deploy and maintain IT system upgrades, patches and configurations conforming to current patch and/or release levels by not later than one (1) week after its date of release. Emergency security patches must be installed within 24 hours after its date of release. (l) Provide for the timely detection of, response to, and the reporting of security incidents, including on-going incident monitoring with logging. (m) Notify the City within one (1) hour of detecting a security incident that results in the unauthorized access to or the misuse of the City's confidential data and information. (n) Inform the City that any third party service provider(s) meet(s) all of the Requirements. (o) Perform security self-audits on a regular basis and not less frequently than on a quarterly basis, and provide the required summary reports of those self-audits to the ISM on the annual anniversary date or any other date agreed to by the Parties. DocuSign Envelope ID: 53ACA787-8D0C-4CEB-A15A-A2E2784F68E8 Vers.: Aug. 5, 2019 Page 17 of 17 (p) Accommodate, as practicable, and upon reasonable prior notice by the City, the City’s performance of random site security audits at the Consultant’s site(s), including the site(s) of a third party service provider(s), as applicable. The scope of these audits will extend to the Consultant’s and its third party service provider(s)’ awareness of security policies and practices, systems configurations, access authentication and authorization, and incident detection and response. (q) Cooperate with the City to ensure that to the extent required by applicable laws, rules and regulations, the Confidential Information will be accessible only by the Consultant and any authorized third party service provider’s personnel. (r) Perform regular, reliable secured backups of all data needed to maximize availability of the Services. (s) Maintain records relating to the Services for a period of three (3) years after the expiration or earlier termination of this Agreement and in a mutually agreeable storage medium. Within thirty (30) days after the effective date of expiration or earlier termination of this Agreement, all of those records relating to the performance of the Services shall be provided to the ISM. (t) Maintain the Confidential Information in accordance with applicable federal, state and local data and information privacy laws, rules, and regulations. (u) Encrypt the Confidential Information before delivering the same by electronic mail to the City and or any authorized recipient. (v) Unless otherwise addressed in the Agreement, shall not hold the City liable for any direct, indirect or punitive damages whatsoever including, without limitation, damages for loss of use, data or profits, arising out of or in any way connected with the City’s IT environment, including, without limitation, IT infrastructure communications. Part B. Alternate Requirements: DocuSign Envelope ID: 53ACA787-8D0C-4CEB-A15A-A2E2784F68E8 DocuSign Envelope ID: 87E1232D-F46E-405A-95CD-91CC38106A93 Page 1 of 8 EXHIBIT F POLICY AND PROCEDURES 1-64/IT Revised: December 2017 INFORMATION PRIVACY POLICY POLICY STATEMENT The City of Palo Alto (the “City”) strives to promote and sustain a superior quality of life for persons in Palo Alto. In promoting the quality of life of these persons, it is the policy of the City, consistent with the provisions of the California Public Records Act, California Government Code §§ 6250 – 6270, to take appropriate measures to safeguard the security and privacy of the personal (including, without limitation, financial) information of persons, collected in the ordinary course and scope of conducting the City’s business as a local government agency. These measures are generally observed by federal, state and local authorities and reflected in federal and California laws, the City’s rules and regulations, and industry best practices, including, without limitation, the provisions of California Civil Code §§ 1798.3(a), 1798.24, 1798.79.8(b), 1798.80(e), 1798.81.5, 1798.82(e), 1798.83(e)(7), and 1798.92(c). Though some of these provisions do not apply to local government agencies like the City, the City will conduct business in a manner which promotes the privacy of personal information, as reflected in federal and California laws. The objective of this Policy is to describe the City’s data security goals and objectives, to ensure the ongoing protection of the Personal Information, Personally Identifiable Information, Protected Critical Infrastructure Information and Personally Identifying Information of persons doing business with the City and receiving services from the City or a third party under contract to the City to provide services. The terms “Personal Information,” “Protected Critical Infrastructure Information”, “Personally Identifiable Information” and “Personally Identifying Information” (collectively, the “Information”) are defined in the California Civil Code sections, reference. DocuSign Envelope ID: 53ACA787-8D0C-4CEB-A15A-A2E2784F68E8 DocuSign Envelope ID: 87E1232D-F46E-405A-95CD-91CC38106A93 Page 2 of 8 referred to above, and are incorporated in this Policy by PURPOSE The City, acting in its governmental and proprietary capacities, collects the Information pertaining to persons who do business with or receive services from the City. The Information is collected by a variety of means, including, without limitation, from persons applying to receive services provided by the City, persons accessing the City’s website, and persons who access other information portals maintained by the City’s staff and/or authorized third-party contractors. The City is committed to protecting the privacy and security of the Information collected by the City. The City acknowledges federal and California laws, policies, rules, regulations and procedures, and industry best practices are dedicated to ensuring the Information is collected, stored and utilized in compliance with applicable laws. DocuSign Envelope ID: 53ACA787-8D0C-4CEB-A15A-A2E2784F68E8 DocuSign Envelope ID: 87E1232D-F46E-405A-95CD-91CC38106A93 Page 3 of 8 POLICY AND PROCEDURES 1-64/IT Revised: December 2017 The goals and objectives of the Policy are: (a) a safe, productive, and inoffensive work environment for all users having access to the City’s applications and databases; (b) the appropriate maintenance and security of database information assets owned by, or entrusted to, the City; (c) the controlled access and security of the Information provided to the City’s staff and third party contractors; and (d) faithful compliance with legal and regulatory requirements. SCOPE The Policy will guide the City’s staff and, indirectly, third party contractors, which are by contract required to protect the confidentiality and privacy of the Information of the persons whose personal information data are intended to be covered by the Policy and which will be advised by City staff to conform their performances to the Policy should they enjoy conditional access to that information. CONSEQUENCES The City’s employees shall comply with the Policy in the execution of their official duties to the extent their work implicates access to the Information referred to in this Policy. A failure to comply may result in employment and/or legal consequences. EXCEPTIONS In the event that a City employee cannot fully comply with one or more element(s) described in this Policy, the employee may request an exception by submitting Security Exception Request. The exception request will be reviewed and administered by the City’s Information Security Manager (the “ISM”). The employee, with the approval of his or her supervisor, will provide any additional information as may be requested by the ISM. The ISM will conduct a risk assessment of the requested exception in accordance with guidelines approved by the City’s Chief Information Officer (“CIO”) and approved as to form by the City Attorney. The Policy’s guidelines will include at a minimum: purpose, source, collection, storage, access, retention, usage, and protection of the Information identified in the request. The ISM will consult with the CIO to approve or deny the exception request. After due consideration is given to the request, the exception request disposition will be communicated, in writing, to the City employee and his or her supervisor. The approval of any request may be subject to countermeasures established by the CIO, acting by the ISM. MUNICIPAL ORDINANCE This Policy will supersede any City policy, rule, regulation or procedure regarding information privacy. RESPONSIBILITIES OF CITY STAFF DocuSign Envelope ID: 53ACA787-8D0C-4CEB-A15A-A2E2784F68E8 DocuSign Envelope ID: 87E1232D-F46E-405A-95CD-91CC38106A93 Page 4 of 8 POLICY AND PROCEDURES 1-64/IT Revised: December 2017 A. RESPONSIBILITY OF CIO AND ISM The CIO, acting by the ISM, will establish an information security management framework to initiate and coordinate the implementation of information security measures by the City’s government. The City’s employees, in particular, software application users and database users, and, indirectly, third party contractors under contract to the City to provide services, shall by guided by this Policy in the performance of their job responsibilities. The ISM will be responsible for: (a) developing and updating the Policy, (b) enforcing compliance with and the effectiveness of the Policy; (c) the development of privacy standards that will manifest the Policy in detailed, auditable technical requirements, which will be designed and maintained by the persons responsible for the City’s IT environments; (d) assisting the City’s staff in evaluating security and privacy incidents that arise in regard to potential violations of the Policy; (e) reviewing and approving department-specific policies and procedures which fall under the purview of this Policy; and (f) reviewing Non- Disclosure Agreements (NDAs) signed by third party contractors, which will provide services, including, without limitation, local or ‘cloud-based’ software services to the City. B. RESPONSIBILITY OF INFORMATION SECURITY STEERING COMMITTEE The Information Security Steering Committee (the “ISSC”), which is comprised of the City’s employees, drawn from the various City departments, will provide the primary direction, prioritization and approval for all information security efforts, including key information security and privacy risks, programs, initiatives and activities. The ISSC will provide input to the information security and privacy strategic planning processes to ensure that information security risks are adequately considered, assessed and addressed at the appropriate City department level. C. RESPONSIBILITY OF USERS All authorized users of the Information will be responsible for complying with information privacy processes and technologies within the scope of responsibility of each user. D. RESPONSIBILITY OF INFORMATION TECHNOLOGY (IT) MANAGERS The City’s IT Managers, who are responsible for internal, external, direct and indirect connections to the City’s networks, will be responsible for configuring, maintaining and securing the City’s IT networks in compliance with the City’s information security and privacy policies. They are also responsible for timely internal reporting of events that may have compromised network, system or data security. DocuSign Envelope ID: 53ACA787-8D0C-4CEB-A15A-A2E2784F68E8 DocuSign Envelope ID: 87E1232D-F46E-405A-95CD-91CC38106A93 Page 5 of 8 POLICY AND PROCEDURES 1-64/IT Revised: December 2017 E. RESPONSIBILITY OF AUTHORIZATION COORDINATION The ISM will ensure that the City’s employees secure the execution of Non-Disclosure Agreements (NDA), whenever access to the Information will be granted to third party contractors, in conjunction with the Software as a Service (SaaS) Security and Privacy Terms and Conditions. An NDA must be executed prior to the sharing of the Information of persons covered by this Policy with third party contractors. The City’s approach to managing information security and its implementation (i.e. objectives, policies, processes, and procedures for information security) will be reviewed independently by the ISM at planned intervals, or whenever significant changes to security implementation have occurred. The CIO, acting by the ISM, will review and recommend changes to the Policy annually, or as appropriate, commencing from the date of its adoption. GENERAL PROCEDURE FOR INFORMATION PRIVACY A. OVERVIEW The Policy applies to activities that involve the use of the City’s information assets, namely, the Information of persons doing business with the City or receiving services from the City, which are owned by, or entrusted to, the City and will be made available to the City’s employees and third party contractors under contract to the City to provide Software as a Service consulting services. These activities include, without limitation, accessing the Internet, using e-mail, accessing the City’s intranet or other networks, systems, or devices. The term “information assets” also includes the personal information of the City’s employees and any other related organizations while those assets are under the City’s control. Security measures will be designed, implemented, and maintained to ensure that only authorized persons will enjoy access to the information assets. The City’s staff will act to protect its information assets from theft, damage, loss, compromise, and inappropriate disclosure or alteration. The City will plan, design, implement and maintain information management systems, networks and processes in order to assure the appropriate confidentiality, integrity, and availability of its information assets to the City’s employees and authorized third parties. B. PERSONAL INFORMATION AND CHOICE Except as permitted or provided by applicable laws, the City will not share the Information of any person doing business with the City, or receiving services from the City, in violation of this Policy, unless that person has consented to the City’s sharing of such information during the conduct of the City’s business as a local government agency with third parties under contract to the City to provide services. DocuSign Envelope ID: 53ACA787-8D0C-4CEB-A15A-A2E2784F68E8 DocuSign Envelope ID: 87E1232D-F46E-405A-95CD-91CC38106A93 Page 6 of 8 POLICY AND PROCEDURES 1-64/IT Revised: December 2017 C. METHODS OF COLLECTION OF PERSONAL INFORMATION The City may gather the Information from a variety of sources and resources, provided that the collection of such information is both necessary and appropriate in order for the City to conduct business as a local government agency in its governmental and proprietary capacities. That information may be gathered at service windows and contact centers as well as at web sites, by mobile applications, and with other technologies, wherever the City may interact with persons who need to share such formation in order to secure the City’s services. The City’s staff will inform the persons whose Information are covered by this Policy that the City’s web site may use “cookies” to customize the browsing experience with the City of Palo Alto web site. The City will note that a cookie contains unique information that a web site can use to track, among others, the Internet Protocol address of the computer used to access the City’s web sites, the identification of the browser software and operating systems used, the date and time a user accessed the site, and the Internet address of the website from which the user linked to the City’s web sites. Cookies created on the user’s computer by using the City’s web site do not contain the Information, and thus do not compromise the user’s privacy or security. Users can refuse the cookies or delete the cookie files from their computers by using any of the widely available methods. If the user chooses not to accept a cookie on his or her computer, it will not prevent or prohibit the user from gaining access to or using the City’s sites. D. UTILITIES SERVICE In the provision of utility services to persons located within Palo Alto, the City of Palo Alto Utilities Department (“CPAU”) will collect the Information in order to initiate and manage utility services to customers. To the extent the management of that information is not specifically addressed in the Utilities Rules and Regulations or other ordinances, rules, regulations or procedures, this Policy will apply; provided, however, any such Rules and Regulations must conform to this Policy, unless otherwise directed or approved by the Council. This includes the sharing of CPAU-collected Information with other City departments except as may be required by law. Businesses and residents with standard utility meters and/or having non-metered monthly services will have secure access through a CPAU website to their Information, including, without limitation, their monthly utility usage and billing data. In addition to their regular monthly utilities billing, businesses and residents with non-standard or experimental electric, water or natural gas meters may have their usage and/or billing data provided to them through non-City electronic portals at different intervals than with the standard monthly billing. DocuSign Envelope ID: 53ACA787-8D0C-4CEB-A15A-A2E2784F68E8 DocuSign Envelope ID: 87E1232D-F46E-405A-95CD-91CC38106A93 Page 7 of 8 POLICY AND PROCEDURES 1-64/IT Revised: December 2017 Businesses and residents with such non-standard or experimental metering will have their Information covered by the same privacy protections and personal information exchange rules applicable to Information under applicable federal and California laws. E. PUBLIC DISCLOSURE The Information that is collected by the City in the ordinary course and scope of conducting its business could be incorporated in a public record that may be subject to inspection and copying by the public, unless such information is exempt from disclosure to the public by California law. F. ACCESS TO PERSONAL INFORMATION The City will take reasonable steps to verify a person’s identity before the City will grant anyone online access to that person’s Information. Each City department that collects Information will afford access to affected persons who can review and update that information at reasonable times. G. SECURITY, CONFIDENTIALITY AND NON-DISCLOSURE Except as otherwise provided by applicable law or this Policy, the City will treat the Information of persons covered by this Policy as confidential and will not disclose it, or permit it to be disclosed, to third parties without the express written consent of the person affected. The City will develop and maintain reasonable controls that are designed to protect the confidentiality and security of the Information of persons covered by this Policy. The City may authorize the City’s employee and or third party contractors to access and/or use the Information of persons who do business with the City or receive services from the City. In those instances, the City will require the City’s employee and/or the third party contractors to agree to use such Information only in furtherance of City-related business and in accordance with the Policy. If the City becomes aware of a breach, or has reasonable grounds to believe that a security breach has occurred, with respect to the Information of a person, the City will notify the affected person of such breach in accordance with applicable laws. The notice of breach will include the date(s) or estimated date(s) of the known or suspected breach, the nature of the Information that is the subject of the breach, and the proposed action to be taken or the responsive action taken by the City. H. DATA RETENTION / INFORMATION RETENTION DocuSign Envelope ID: 53ACA787-8D0C-4CEB-A15A-A2E2784F68E8 DocuSign Envelope ID: 87E1232D-F46E-405A-95CD-91CC38106A93 Page 8 of 8 POLICY AND PROCEDURES 1-64/IT Revised: December 2017 The City will store and secure all Information for a period of time as may be required by law, or if no period is established by law, for seven (7) years, and thereafter such information will be scheduled for destruction. I. SOFTWARE AS A SERVICE (SAAS) OVERSIGHT The City may engage third party contractors and vendors to provide software application and database services, commonly known as Software-as-a-Service (SaaS). In order to assure the privacy and security of the Information of those who do business with the City and those who received services from the City, as a condition of selling goods and/or services to the City, the SaaS services provider and its subcontractors, if any, including any IT infrastructure services provider, shall design, install, provide, and maintain a secure IT environment, while it performs such services and/or furnishes goods to the City, to the extent any scope of work or services implicates the confidentiality and privacy of the Information. These requirements include information security directives pertaining to: (a) the IT infrastructure, by which the services are provided to the City, including connection to the City's IT systems; (b) the SaaS services provider’s operations and maintenance processes needed to support the IT environment, including disaster recovery and business continuity planning; and (c) the IT infrastructure performance monitoring services to ensure a secure and reliable environment and service availability to the City. The term “IT infrastructure” refers to the integrated framework, including, without limitation, data centers, computers, and database management devices, upon which digital networks operate. Prior to entering into an agreement to provide services to the City, the City’s staff will require the SaaS services provider to complete and submit an Information Security and Privacy Questionnaire. In the event that the SaaS services provider reasonably determines that it cannot fulfill the information security requirements during the course of providing services, the City will require the SaaS services provider to promptly inform the ISM. J. FAIR AND ACCURATE CREDIT TRANSACTION ACT OF 2003 CPAU will require utility customers to provide their Information in order for the City to initiate and manage utility services to them. Federal regulations, implementing the Fair and Accurate Credit Transactions Act of 2003 (Public Law 108-159), including the Red Flag Rules, require that CPAU, as a “covered financial institution or creditor” which provides services in advance of payment and which can affect consumer credit, develop and implement procedures for an identity theft program for new and existing accounts to detect, prevent, respond and mitigate potential identity theft of its customers’ Information. DocuSign Envelope ID: 53ACA787-8D0C-4CEB-A15A-A2E2784F68E8 DocuSign Envelope ID: 87E1232D-F46E-405A-95CD-91CC38106A93 Page 9 of 8 POLICY AND PROCEDURES 1-64/IT Revised: December 2017 CPAU procedures for potential identity theft will be reviewed independently by the ISM annually or whenever significant changes to security implementation have occurred. The ISM will recommend changes to CPAU identity theft procedures, or as appropriate, so as to conform to this Policy. There are California laws which are applicable to identity theft; they are set forth in California Civil Code § 1798.92. NOTE: Questions regarding this policy should be referred to the Information Technology Department, as appropriate. Recommended: 12/5/2017 Director Information Technology/CIO Date Approved: 12/13/2017 City Manager Date DocuSign Envelope ID: 53ACA787-8D0C-4CEB-A15A-A2E2784F68E8 City of Palo Alto (ID # 10811) City Council Staff Report Report Type: Consent Calendar Meeting Date: 12/2/2019 City of Palo Alto Page 1 Summary Title: Approval of Extension with Verizon WSCA/NASPO Contract Title: Approval of Contract Amendment Number 4 with Verizon Wireless Through December 31, 2020, Utilizing the Western State Contracting Alliance (WSCA) Contract 1907, California Participating Addendum, a Cooperative Agreement for Wireless, Voice and Broadband Services, Accessories and Equipment for an Annual Cost of Approximately $300,000 From: City Manager Lead Department: IT Department Recommendation Staff recommends that Council approve and authorize the City Manager or his designee to enter into Contract Amendment No.4 with Verizon Wireless, utilizing the Western States Contracting Alliance (“WSCA”) Master Service Agreement, State of California Participating Addendum No. 7-11-70-16 (WSCA No.1907), a cooperative agreement, for wireless, voice, and broadband services, accessories and equipment, through December 31, 2020, at an annual cost of approximately $300,000 citywide (Attachment A). Executive Summary WSCA, also known as NASPO ValuePoint, is a cooperative procurement and contracting consortium for state and local agencies and political subdivisions. Contract Amendment No. 4 with Verizon Wireless utilizes a cooperative agreement between Verizon Wireless and NASPO ValuePoint, with a State of California Department of General Services- negotiated Participating Addendum that applies California law and other protections for California contracting entities. The underlying NASPO ValuePoint master agreement was entered into pursuant to a competitive request for proposals process. The cooperative agreement allows the City to utilize Verizon Wireless, T-Mobile, AT&T and/or Sprint networks. Background The City has over 500 devices which consist of cell phones, wireless devices and equipment with an annual spend of roughly $300,000 per year. By using the NASPO ValuePoint cooperative agreement, the City can leverage the significant cost savings that this cooperative agreement sets forth. City of Palo Alto Page 2 Staff prepared a presentation for Finance Committee on October 16, 2018 (https://www.cityofpaloalto.org/civicax/filebank/documents/67394), pages 8 – 11 outlining the benefits and discounts afforded to the City by utilizing this cooperative agreement. The Finance Committee approved a motion to move the approval of this cooperative agreement to Council for approval. On November 5, 2018, Council approved the use of this cooperative agreement (CMR 9766 - https://www.cityofpaloalto.org/civicax/filebank/documents/67454) through June 30, 2019. The cooperative agreement was extended by NASPO ValuePoint for six months through December 31, 2019 (Attachment B) and again through December 31, 2020. Contract Amendment No.4 is exempt from competitive solicitation requirements under Palo Alto Municipal Code section 2.30.360(j) (exemption for cooperative purchases). The City currently has an account with Verizon Wireless with the IT Department as the master account. Sub-accounts are created under the master account for each city department as necessary based on department usage. Each city department is responsible for payment of its respective accounts each month. Staff recommends continuing to use the NASPO ValuePoint cooperative agreement for the City’s mobile technology needs. Discussion By utilizing this cooperative agreement, the City can benefit from competitive cellular rate plans and realize significant hardware cost savings. In addition to cellular services and hardware, the City will also be utilizing the beneficial cooperative contract pricing to purchase tablet devices, equipment and accessories. A contract such as this allows IT to keep-up with the demand for mobile computing and lead the way in supporting a mobile workforce; leveraging the cooperative agreement streamlines the process while ensuring competitive pricing for a wide variety of mobile services. Consistent with analysis provided previously for prior amendments, below is a comparison of what a consumer would pay direct from Verizon Wireless compared to utilizing this cooperative agreement. Phone Specification WSCA Price Per Month Verizon Direct Price Per Month (as of 10/28/2019) iPhone 8 $0.99 one-time – 1 Year contract $18.74/month – 2 Year contract ($449.99) Capacity 64GB 64GB Unlimited Data $24.99 $70.00 - $90.00 Voice Minutes $0.06/min Included City of Palo Alto Page 3 Text 100 free, 400=$3; 1100=$10; unlimited=$12 Included Support Provided Government Enterprise Advisor, Major Account Manager, 1- 800 Number 1 - 800 Number Central Management Company Web Portal N/A Line Fee N/A N/A Samsung S9 $99.99 one time – 1Year contract $24.99/month – 2 Year contract ($599.99) Capacity 64GB 64GB Data, Voice, Text, Support, Central Management and Line Fee Same as above Same as above Resource Impact The annual cost of this contract, citywide, is approximately $300,000. Funding for this contract is available in the FY 2020 Operating Budget for each City Department/Fund. Funding for future years is subject to the annual budget process and contingent upon Council approval. Environmental Review Approval of this contract does not constitute a project under the California Environmental Quality Act (CEQA); therefore, no Environmental Assessment is required. Attachments: • Attachment A: Verizon Amendment 4 MSA 1907 extension 12312020 • Attachment B: Verizon Wireless Master Amendment 3 For Furchnsing Use Only; RFP/CONTRACTS1907 AMENDMENT #4 TO CONTRACT Between the State of Nevada Acting By and Through Its Various State Agencies Monitored By: Department of Administration Purchasing Division 515 East Musser Street, Suite 300 Carson City, NV 89701 Contact: TeriBecker Phone: (775)684-0178 Fax: (775)684-0188 Email: tbeckeriSiadmin.ny.gov and Cellco Partnership d/b/a/ Verizon Wireless One Verizon Way Basking Ridge, NJ 07920 Contact: DougRobertson Phone: (949) 246-8700 Email: doue,robertson(%verizonwireless.com I. AMENDMENTS. For and in consideration of mutual promises and/or their valuable considerations, all provisions of the contract between the above-referenced parties resulting from Request for Proposal #1907 and dated April 16, 2012 (the "Contract"), remain in fill! force and effect with the exception of the following: A. The Contract temi shall be extended to December 31, 2020 to allow time for execution of the new NASPO ValuePoint Contract Number CJ 18012. During the extended time, from Januaiy I, 2020 through December 31,2020, no Product Addition Requests or new Participating Addenda will be accepted under Master Contract Number 1907. 2, INCORPORATED DOCUMENTS The Contract is incorporated herein by reference. 3, REQUIRED APPROVAL. This amendment to the original contract shall not become effective until and unless approved by the NASPO Directors, IN WITNESS intend to bj [the parties hereto have caused this amendment to the original contract to be signed and fereby ._ .TbddLocclMiw VP • Contract Managanwtt (WLgw-wIndependet)(yContracto'i's Signature 7^_.. ^. Date Independent's Contractoi's Title d. I; Kevin D. Doty, Acting Administrator, StaU-bf Nevada APPROVED BY NASPO Directors On. Approved as to foim by:(Date) 7,^ Deputy Attorney Geriergrfor Attorney General On. (Date) Amendment 2 Page I of! For I'urcliasing Use Only: RFP/CONTRACT#1907 AMENDMENT #3 TO CONTRACT Between the State of Nevada Acting By and Through Its Various State Agencies Monitored By: Department of Administration Purchasing Division 515 East Musser Street, Suite 300 Carson City, NV 89701 Contact: Teri Becker Phone: (775)684-0178 Fax: (775)684-0188 Email: tbecker(S)admin.ny.goy and Cellco Partnership d/b/a/ Verizon Wireless One Verizon Way Basking Ridge, NJ 07920 Contact: Doug Robertson Plione: (949) 246-8700 Email: douK.robertson(%verizon\vireless.com I. AMENDMENTS. For and in consideration of mutual promises and/or their valuable considerations, all provisions oftlie contract between the above-referenced parties resulting fi-om Request for Proposal #1907 and dated April 16, 2012 (the "Contract"), remain in full force and effect with (lie exception of the following: A. Tlie Contract term shall be extended to December 31, 2019 to allow time for execution of new Participating Addenda. During the extended time, from July 1,2019 through December 31,2019, no Product Addition Requests will be accepted. 2, INCORPORATED DOCUMENTS Tlie Contract is incorporated herein by reference. 3. REQUIRED APPROVAL. This amendment to llie original contract sliall not become effective until and unless approved by the NASPO Directors. IN WITNESS WHEREQH, the parties hereto have caused tliis amendment to the original contract to be signed and intend to^p legall/bo/nd thereby, ^dd Locclsano Executive DirectorContracting Indeps.iidei^Contractor's Signature Je(fre)^Haag, Administrator, Slate of NevadaTm'f / Date Independent's Contractoi's Title APPROVED BY NASPO Directors On.^•^^^^ Approved as to form by: fA ^;\ Deputy Atlpfncytifencral ftifAltorm•- h •:-•- iencrat On. (Dale) /"/ ^(^- ltl (Date) Amendment 2 Page I of I City of Palo Alto (ID # 10846) City Council Staff Report Report Type: Consent Calendar Meeting Date: 12/2/2019 City of Palo Alto Page 1 Summary Title: Amend E-15 Electric Service Connection Charges to Provide Credit/Rebate using LCFS funds Title: Adoption of a Resolution Amending Utility Rate Schedule E-15 (Electric Service Connection Charges) and Approving Updates to the City's Program for the use of Revenues From the Sale of Low Carbon Fuel Standard Credits From: City Manager Lead Department: Utilities Recommendation Staff recommends the adoption of the attached Resolution (Attachment A) amending Utility Rate Schedule E-15 (Electric Service Connection Charges) and approving updates to the City’s Program for the Use of Revenues from Low Carbon Fuel Standard Program. Executive Summary A portfolio of Electric Vehicle customer programs is currently administered by City of Palo Alto Utilities (CPAU) with revenues from the California Air Resources Board’s (CARB) Low Carbon Fuel Standards (LCFS) program,1 with minimal use of electric ratepayer funds. In October 2016 (Council Staff Report #7301) Council approved a plan authorizing the use of LCFS revenues in a variety of ways to promote Electric Vehicles (EVs) and Compressed Natural Gas Vehicles (CNGV), including customer programs to promote EV charger installation and to educate the community on the benefit of EV transportation. One such EV customer program provides a bill credit on Electric Service Connection Charges (as shown on Utility Rate Schedule E-15) in the event a customer requires an electric service upgrade triggered by a customer need to install EV charger(s). The proposed amendment to rate schedule E-15 removes language about LCFS program credit amounts and eligibility requirements in order to permit more efficient program administration (Attachment B). The credits themselves will remain available and information about them will continue to be provided on CPAU’s website. CPAU will provide incentive in the form of a credit or rebate on Electric Service Connection Charges of up to $10,000 for single family homes and up to $100,000 for multi-family, mixed use and commercial properties. 1 CARB’s LCFS program overview is provided here: http://www.arb.ca.gov/fuels/lcfs/lcfs.htm City of Palo Alto Page 2 In January 2019, CARB extended the state’s LCFS program regulations through 20302. In accordance with the timeline in the state’s updated regulations, and experience gained from implementing CPAU’s LCFS program, staff recommends Council approve an update to Palo Alto’s 2016 LCFS Program (Attachment C). Staff anticipates that LCFS revenues and funds available for EV Customer Programs over the next three years will be approximately $8.7 million, of which $3.3 million is already available. Annual revenues are expected to range of $1.5 to $2 million in the next three years and will likely increase substantially by 2030 as the number of EVs registered in Palo Alto increase in the next decade. Background Electrification of transportation is a primary strategy for the community to lower greenhouse gases. CPAU’s EV customer programs are part of a broader City-wide collaboration on EVs involving other departments including Development Services, Publics Works, Planning, Transportation Departments, and the Sustainability Office. These departments have worked together to develop and implement a portfolio of programs to facilitate the adoption of Electric Vehicles (EV) in Palo Alto. These actions are outlined in the Sustainability Implementation Plan (SIP) to achieve Palo Alto’s climate goals. Staff presented the current version of the EV SIP to the Utilities Advisory Commission (UAC) in June 2019 and presented an update of CPAU EV customer programs in September 2019. A summary of CPAU’s current EV customer programs is provided in Attachment D. There will be further opportunities to comment on this program portfolio during the 2020 update to the Sustainability and Climate Action Plan (S/CAP). Discussion One of the EV customer programs, funded by revenues from the LCFS program, provides a credit on CPAU’s Electric Service Connection Charges (as shown on Utility Rate Schedule E-15) in the event a customer requires an electric service upgrade triggered by a customer need to install EV charger(s)3. The credit amount is currently specified within the E-15 rate schedule. The proposed amendment to rate schedule E-15 removes language about LCFS program credit amounts and eligibility requirements in order to permit more efficient program administration (Attachment B). The credits themselves will remain available and information about them will continue to be provided on CPAU’s website. In October 2016 the City Council provided the City Manager broad authority to administer and update EV related customer programs, including the ability to set rebate and credit amounts. CPAU will be providing incentives in the form of a credit or rebate on customer Connection Charges of up to $10,000 2 The January 4, 2019 LCFS program regulations approved by CARB increased the goal to lower the carbon intensity of California’s transportation fuels from 10% by 2020, to 20% by 2030 (below 2010 baseline). The extension of the program through 2030 has provided greater certainty of LCFS revenues to electric distribution companies, such as CPAU, to invest in electrical infrastructure to promote EV adoption. See details of the regulations here: LCFS Regulation 2018-19, Background Presentation of LCFS Regulations 3 Because electric vehicle supply equipment (EVSE or EV charger) can draw a significant amount of power from the utility’s distribution system, sometimes the utility must upgrade its system in order to accommodate a customer’s EVSE. If the customer is requesting a service larger than 200 amperes (A), the customer will be charged for the utility’s actual costs rather than being charged for a flat fee. Utility Rate Schedule E-15 currently provides a credit of up to $3,000 for a residential property subject to Electric Service Connection Charge (Utility Rate Schedule E-15) in this situation. City of Palo Alto Page 3 for single family homes and up to $100,000 for multi-family, mixed use and commercial properties. When Council delegated authority to the City Manager to manage the LCFS program in October 2016, the duration of the delegation was through 2020. Staff therefore recommends that Council extend delegation of authority to the City Manager through 2030, the duration of the state’s 2019 LCFS regulation. The updated CPAU Program for the Use of Revenues from the Sale of LCFS Credits is provided as Attachment C. The LCFS Program includes four primary elements: A. Use of revenues from the sale of LCFS credits for EVs to provide customer rebates, discounts, technical assistance, education and other programs to encourage EV adoption and lower CPAU’s cost to serve current and future EV drivers; B. Use of revenues from the sale of LCFS credits for CNG vehicles to facilitate CNG vehicle adoption; C. City Manager authority to determine credit/rebate amounts, allocate funds to individual programs, and suspend or change program details; and D. Program terms and reporting requirements, which specify that the program will be in place until the end of 2030 and that annual reports to the Council will be provided. A summary of CPAU’s current EV customer programs is provided in Attachment D. Resource Impact The cost associated with EV customer programs will be funded by revenues from CARB’s LCFS program. Minimal rate-payer funds will be utilized. Overall budget for customer EV programs over the next three years is projected to be $8.7 million, of which approximately $1 million is projected to be expended on credits or rebates related to Electric Service Connection Charges. Policy Implications This recommendation is consistent with the Council-approved Utilities Strategic Plan to manage finances optimally and use resources efficiently to meet customer service priorities. Effectively administering EV customer programs will also help achieve the community’s GHG reduction goals. Stakeholder Engagement The portfolio of EV customer programs was developed based on customer survey results and with input from various City departments, the Utilities Advisory Commission, and a group of EV enthusiasts in Palo Alto. CPAU also requested feedback on the EV customer program update through e-mail blasts and other outreach encouraging customers to comment on the plan prior to the September 2019 UAC meeting or to go to that meeting to provide comments. Individual EV customer programs are being promoted through the Chamber of Commerce and through Commercial and Residential Customer newsletters. Customer utility bill inserts are also being planned. The Electric Service Connection Charges Credit/Rebate program will be publicized by CPAU’s EV Advisor with the EV Charging Technical Assistance and Home Efficiency Genie customer outreach programs. Multi-unit dwellings, non-profits and schools interested in installing EV chargers can also seek expert assistance by emailing EVAdvisor@cityofpaloalto.org or by calling 650-729-2064. City of Palo Alto Page 4 When customers seek cost estimates for electric service upgrades from CPAU’s Electrical Engineering Division, they will be provided with cost estimates along with the amount of bill credit or rebates they may be eligible for. Environmental Review Approval of this resolution to amend the E-15 utility rate schedule and update the City’s LCFS Program does not meet the California Environmental Quality Act’s definition of a “project” under Public Resources Code Section 21065, thus environmental review is not required. Attachments: • Attachment A: Resolution • Exhibit A to the Resolution: Amended Utility Rate Schedule E-15 (Electric Service Connection Charges) • Exhibit B to the Resolution: Palo Alto Program for the Use of Revenues from the Sale of LCFS Credits - Updated 2019 • Attachment B: Detailed Description and Projected Expenditures of EV Customer Programs Attachment A *Not Yet Passed* 6055297 Resolution No. _____ Resolution Amending Utility Rate Schedule E-15 (Electric Service Connection Charges), and Approving Updates to the City’s Program for use of Revenues from the Sale of Low Carbon Fuel Standard Credits RECITALS A.In October 2016 City Council approved Palo Alto’s first Low Carbon Fuel Standards (LCFS) Program; and B.In January 2019 the California Air Resources Board adopted updated LCFS program regulations and extended the state’s LCFS program until 2030; and C.In light of CARB’s updated LCFS regulations and the City’s experience in implementing the Council approved-LCFS program in Palo Alto since 2016, staff seeks to update the City’s existing Program for the Use of Revenues from the Sale of Low Carbon Fuel Standard Credits; and D.In order to permit more efficient program administration, staff also seeks to amend Utility Rate Schedule E-15 (Electric Service Connection Charges) to remove language about LCFS program credit amounts and eligibility requirements. The credits themselves will remain available and information about them will continue to be provided on CPAU’s website. The Council of the City of Palo Alto does Hereby RESOLVE, as follows: SECTION 1. Pursuant to section 12.20.010 of the Palo Alto Municipal Code, Utility Rate Schedule E-15 (Electric Service Connection Charges) of the Palo Alto Utilities Rates and Charges (Exhibit A), is hereby amended to read as attached and incorporated. The foregoing Utility Rate Schedule, as amended, shall become effective January 1, 2020. SECTION 2. The Council of the City of Palo Alto hereby approves the updated Low Carbon Fuel Standard Program for Use of Revenues from the Sale of Low Carbon Fuel Standard Credits (Exhibit B). // // // // // Attachment A *Not Yet Passed* 6055297 SECTION 3. The Council finds that the adoption of this resolution does not meet the California Environmental Quality Act’s definition of a “project” under Public Resources Code 21065, thus environmental review is not required. INTRODUCED AND PASSED: AYES: NOES: ABSENT: ABSTENTIONS: ATTEST: APPROVED: ________________________________ ________________________________ City Clerk Mayor ________________________________ ________________________________ Assistant City Attorney City Manager ________________________________ Director of Utilities Exhibit A to Resolution ELECTRIC SERVICE CONNECTION CHARGES UTILITY RATE SCHEDULE E-15 CITY OF PALO ALTO UTILITIES Issued by the City Council Supersedes Sheet No. E-15-1 Sheet No.E-15-1 dated 11-01-16 Effective 09-01-2019 A. APPLICABILITY: This Rate Schedule applies to all connections, interconnections, expansions, and upgrades to theCity's Electric Distribution System, except connections that serve street lighting or traffic signals. B.TERRITORY: This Rate Schedule applies anywhere the City of Palo Alto provides Electric Service. C. CHARGES: All Charges must be pre-paid by the Applicant prior to the scheduling of any construction orconnections to the City's Electrical Distribution System. 1.ADVANCE ENGINEERING FEES The Applicant must pay all Advance Engineering Fees to start the engineering process which are non-refundable. The Advance Engineering Fees will be credited against the estimated job cost prior to the collection of construction fees. For Service connections that do not require a job estimate, CPAU will not require Advance Engineering Fees. 2.UNDERGROUND SYSTEMS (A)Service Connection Charges: Service Connection Charges are required when the City connects any Customer to the City’s electrical Distribution System. A one-time waiver of this fee may be granted forServices connected during the construction of an underground conversion district. (1)Residential - Single Family These fees apply to a development in which Electric Metering will be on a single-family basis. (a)For a 250 volt maximum, 200 amp or less service .......................................$1,040 Exhibit A to Resolution ELECTRIC SERVICE CONNECTION CHARGES UTILITY RATE SCHEDULE E-15 CITY OF PALO ALTO UTILITIES Issued by the City Council Supersedes Sheet No. E-15-2 Sheet No.E-15-2 dated 11-01-16 Effective 09-01-2019 (b)For any connection requiring greater capacity the fee shall be CPAU’s estimate of the installation cost or $1040, whichever is greater. (c)For a 250 volt maximum, 200 amp max service from a reareasement.................................................................................. ........................$2,330 (d)For any rear easement connection requiring greater capacity the fee shall be CPAU’s estimate of the installation cost or $2330, whichever is greater. (2)Commercial/Industrial These fees apply to commercial, industrial, and multi-family residential services. (a)For a 250 volt maximum, 200 amp or less service .......................................$1,420 (b)For any connection requiring greater capacity, the fee shall be CPAU’s estimateof the installation costs or $1420, whichever is greater. (B)On-site Distribution System Charges: Where CPAU installs or will install the underground conductors (primary or secondary),switches or transformers in and on facilities provided by the developer within the boundaries of a sub-division or other development, an on-site distribution system fee shall be charged, based on CPAU’s estimate of all applicable installation costs. (C) Off-Site Distribution System Charges: Where CPAU installs or will install an Electric Distribution system, system extension, or system reinforcement outside the boundaries of a sub-division or other development to be served, an off-site distribution system fee shall apply, based on CPAU’s estimate of all applicable installation costs. 3.OVERHEAD SYSTEMS Connection Charges shall apply for all new Services or Service upgrades exceeding 200 amps. (A)Overhead Service Connection Replacement Charges: (1)Residential – Single Family Exhibit A to Resolution ELECTRIC SERVICE CONNECTION CHARGES UTILITY RATE SCHEDULE E-15 CITY OF PALO ALTO UTILITIES Issued by the City Council Supersedes Sheet No. E-15-3 Sheet No.E-15-3 dated 11-01-16 Effective 09-01-2019 These fees apply to development in which Electric Metering will be on a single- family basis. (a)For a 250 volt maximum, 200 amp or less, 3 and 4 wire services, 100 feet in length maximum services ........................................................$1,040 (b)For a 250 volt maximum, 200 amp or less, 3 and 4 wire services, 100 feet in length maximum services, mid-span connection .....................$2,370 (c)For all others the fee shall be CPAU’s estimate of the installation cost or $1040,whichever is greater. (2)Commercial/Industrial These fees apply to commercial, industrial, multi-family residential Services. (a)For a 250 volt maximum, 200 amp or less, 3 and 4 wire services, 100 feet in length maximum service ..........................................................$1,440 (b)For all others the fee shall be CPAU’s estimate of the installation cost or $1440, whichever is greater. (3)Charges for replacement of Overhead Services not described above, shall be based on CPAU’s estimate of applicable costs. 4.TEMPORARY SERVICE (A)Overhead Temporary Service Charges: (1)For a 250 volt, 200 amp, 3 wire service,100 feet in length maximum service ...................................................................$1,190 (2)Fees for a Temporary Service of greater length and capacity or voltage shall be based on CPAU’s estimate of all applicable installation and removal costs, or $1,190, whichever is greater. (B)Underground Temporary Service Charges: (1)For a 250 volt, 200 amp, 3-wire maximum service, If a Service box is available at the property .......................................................$1,190 Exhibit A to Resolution ELECTRIC SERVICE CONNECTION CHARGES UTILITY RATE SCHEDULE E-15 CITY OF PALO ALTO UTILITIES Issued by the City Council Supersedes Sheet No. E-15-4 Sheet No.E-15-4 dated 11-01-16 Effective 09-01-2019 (2) If a Service box is not available at the property, the Customer will be responsible for fees to provide a Service box. (3)Fees for a Temporary Service of greater length and capacity or Voltage shall be based on CPAU’s estimate of the installation and removal costs, or $1190, whichever is greater. 5.GENERATOR INTERCONNECTION CPAU shall charge a fee for evaluation of Generator Interconnection Applications performed pursuant to Rule and Regulation 27. (A)Advance Engineering Fees: (1)Net Energy Metering projects or projects with a size less than or equal to 10 kW taking Service under the Net Energy Metering Successor Program............................$0 (2)All Projects not covered under section 4(A)(1), which are greater than 10 kW and lessthan 100 kW in capacity ........................................................................................$840 (3)All Projects not covered under section 4(A)(1), which are greater than or equal to 100 kW and less than 500 kW in capacity .................................................................$5,550 (4)All Projects not covered under section 4(A)(1), which are 500 kW or greater in capacity .............................................................................................................$10,700 (B)Detailed Study: (1)Net Energy Metering projects or projects with a size less than or equal to 10 kW taking Service under the Net Energy Metering Successor Program) ..........................$0 (2)Detailed Study fees for all Projects not covered under section 4(B)(1) shall be basedon CPAU’s estimate. (C)Interconnection Charges: Exhibit A to Resolution ELECTRIC SERVICE CONNECTION CHARGES UTILITY RATE SCHEDULE E-15 CITY OF PALO ALTO UTILITIES Issued by the City Council Supersedes Sheet No. E-15-5 Sheet No.E-15-5 dated 11-01-16 Effective 09-01-2019 (1)Net Energy Metering projects or projects taking Service under the Net Energy Metering Successor Program) .....................................................................................$0 (2)All projects less than or equal to 10 kW not under section 4(C)(1) ........................$152 (3)Interconnection fees for all Projects not covered under section 4(C)(1) or 4(C)(2) will be based on CPAU’s estimate. 6.PALO ALTO CLEAN LOCAL ENERGY ACCESSIBLE NOW PROGRAM Meter maintenance and administrative service Charge for Generators participating in the Palo Alto Clean Local Energy Accessible Now (CLEAN) Program..............................................$34.73 G.CREDITS: Electric Vehicle Supply Equipment (EVSE) Credit: Rebates or credits may be available to defray electric service connection chargers, if the service upgrade is a result of higher electrical loads caused by electric vehicle charging. For additional information visit: https://www.cityofpaloalto.org/gov/depts/utl/ or call 650-329-2241 H.NOTES: 1.These Charges apply to all vacant land except where the Charges are recorded as previously paid. 2.CPAU can generally provide service availability from 30 to 45 days after all Charges are paid except when long lead-time equipment or materials are required. Consult the City for estimated lead-times. 3.CPAU is not responsible for delays in Service connection caused by conditions beyond itscontrol, including, but not limited to, delays in the arrival of equipment such as transformers, switches and cable. {End} Exhibit B to Resolution 6055298 CITY OF PALO ALTO PROGRAM FOR USE OF REVENUES FROM THE SALE OF LOW CARBON FUEL STANDARD CREDITS (Updated December 2019) Low Carbon Fuel Standard (LCFS) credits are allocated to the City of Palo Alto by the California Air Resources Board (CARB) based on the estimated amount of electricity used by electric vehicles (EVs) served by City of Palo Alto Utilities (CPAU), the amount of electricity dispensed by EV chargers owned and operated by the City, and Compressed Natural Gas (CNG) dispensed at the Municipal Service Center for CNG-fueled vehicles. This document outlines programs the City intends to promote to benefit current and future EV drivers, in compliance with the state’s LCFS regulations.1 A.Use of Revenues from the Sale of LCFS Credits for Electric Vehicles CPAU may use LCFS credit sales revenue to provide rebates, discounts or funding for any of the following purposes: 1.Rebates for the installation of Electric Vehicle Supply Equipment (EVSE), focusing on multi-family residential buildings and shared parking areas. 2.Rebate or Credit Electric Service Connection Charges related to the installation of EVSE. 3.Rebates for the purchase of EVs, including, but not limited to participation in statewide EV rebate programs, regional Light Electric Vehicle (LEV) rebate programs which may include electric scooters and bicycles, or targeted income-qualified customer programs. 4.Discounts to residential off-peak electricity rates for customers with registered EVs, who elect to be on a time-of-use electricity rate. 5.Incentives for EV owners willing to provide CPAU access to EV charging information or willing to participate in grid-interactive EV charging programs. 6.Funding for CPAU programs designed to lower the cost of electric utility services for EV charging or enable EV owners to modulate charging patterns to lower charging cost. 7.Support for pilot-scale programs to expedite EV adoption. 8.Education and outreach activities to accelerate EVSE installations and EV adoption. B.Use of Revenues from the Sale of LCFS Credits for CNGVs The City may use LCFS credit sales revenues to facilitate CNG vehicle adoption in the following order of preference: 1.Fund capital and maintenance costs associated with the CNG station at the Municipal Service Center to facilitate expanding the CNG vehicle customer base. 2.Fund activity to dispense carbon neutral CNG (e.g. use of certified environmental off- sets or renewable natural gas supplies). 3.Reduce the CNG retail rate charged for vehicles. 1 CARB regulations currently require CPAU’s LCFS revenues generated from non-metered residential EV charging to be used to: 1)benefit current and future electric vehicle drivers in California; 2) educate the public and customers on the benefits of EV transportation, and 3) provide rate options that encourage off-peak charging and minimize adverse grid impacts (17 CCR Sec. 95491(d)(3)(A)(2) – (4)). CARB’s LCFS program overview is provided here: http://www.arb.ca.gov/fuels/lcfs/lcfs.htm. Exhibit B to Resolution 6055298 C.City Manager Authority 1.The actual rebate and discount amounts and individual program budgets shall be based on funds available and customer demand for programs, and shall be determined by the City Manager. The CNG retail rate, including the discount offered based on available LCFS sales revenue available, shall be determined by the City Manager. 2.The City Manager is authorized to: a.Annually make changes to the programs and implementation details to optimally utilize the revenues to benefit of EV and CNG vehicle owners. b.Suspend customer programs if funds are depleted or if a program is found to be ineffective at meeting stated program goals or regulatory requirements. D.Program Term and Reporting Requirements 1.This Program shall be in place until December 31, 2030, unless revised by Council. 2.The Council shall be provided annual reports on LCFS credit sales revenues and customer program expenditures. 3.The rebate amounts and related detailed guidelines shall be published on the City’s website. Page 1 of 2 Attachment B Description of Portfolio of Electric Vehicle Customer Programs The Utilities Department is anticipating to devote Low-Carbon Fuel Standard Program Revenues to the following programs for CY 2019 through CY 2021. These are estimates, actual expenditure could change considerably based on the customer demand for individual programs. The total expenditure of all programs would be within budgetary limits approved by Council annually. 1.Point of Purchase EV Rebates: In accordance with Section 95483(c) of CARB’s Low Carbon Fuel Standard regulations, 20% of funds will be provided to the State to provide point of purchase rebates to EV buyers. Palo Alto share is estimated at $1M over 3 years. 2.Electric Vehicle Supply Equipment (EVSE) Rebates: Up to $3.7 million will be devoted to providing rebates for multi-unit dwellings (MUDs), non-profits, and schools, with rebate levels as described below, and up to $600,000 for new technical assistance program to be launched in fall 20191 to these customers. 3.Transformer Upgrades: •MUDs, non-profits, and schools - Up to $800,000 may be used to provide rebates when the installation of EV chargers necessitates a new electrical service or transformer upgrade. •Single-family homes - Up to $230,000 may be used to reimburse customers for utility connection fees when the installation of EVSE results in the need for a utility transformer upgrade 4.CEC Grant for Workplace Charging: Up to $1 million may be used as matching funds for the California Energy Commission’s CALeVIP (California Electric Vehicle Infrastructure Project) program to provide rebates for EV charging infrastructure (focus on publicly available Level 3 chargers at neighborhood centers and Level 2 workplace chargers, but multi-family buildings are also eligible). 5.Pilot Programs: Up to $150,000 may be used for EV-related pilot programs, to be approved by the Utilities Director or his designee. Programs may include time-of-use rates to encourage off-peak charging of electric vehicles. 6.Program Administration and Marketing: Up to $400,000 total over three years may be used for program administration, education, outreach, and marketing. 7.Other Programs to be Determined: Explore use of remaining funds ($680,000) for other EV-related purposes, subject to additional Council and/or City Manager approval, including but not limited to: a.All-Electric Home Rebates: Explore using up to $400,000 to provide rebates for equipment in all- electric homes related to EV charger installation. b.Program for Low-Income Residents: Explore using up to $300,000 to provide incentives to low- income customers for purchase of a used EV. c.LEV (Light Electric Vehicle) rebate program: Explore using up to $30,000 to provide rebates for e- bikes, e-scooters, e-skateboards and other LEVs. 1 EV Solutions and Technical Assistance Program Staff Report Page 2 of 2 CY2019-2021 Draft Allocation of Projected $8+ Million in Anticipated Low-Carbon Fuel Standard Funding Sector Program CY 2019 – 2021 Funding Goal All Palo Alto residents Funding for State-mandated, State-run Point of Purchase rebate program currently in development $1,000,000* TBD, will provide additional incentives for EV buyers Multi-family, Non-profits, and Schools Charger rebates $3,700,000 Install 200-400 EV charging ports at 60-90 locations supporting 1800-2400 vehicles, 10-20% of population Consultant for Technical Assistance $600,000 Transformer Upgrades $800,000 Non-residential (multi-family and City also eligible) Matching funds for CEC’s CALeVIP grant program providing rebates for private charging infrastructure. Expected to receive $1M from CEC. $1,000,000** Install Level 3 chargers at neighborhood commercial centers, fund 200-400 additional workplace chargers Single-family All-Electric Home Incentives $400,000** Reduce costs of single-family EV adoption and building electrification Reimburse utility connection upgrade fees $230,000 Low-Income Low-income EV purchase incentives $300,000** TBD, additional incentives for low-income EV buyers in PA All Administration $300,000 Promote EV adoption, other goals TBD as new pilots and programs are developed Education, Marketing and Outreach $100,000 Pilot programs $150,000 Other programs to be determined $150,000 LCFS FUNDING TOTAL $8,730,000 *State run point of purchase EV rebate program – Palo Alto required to provide 20% of LCFS credits sales proceeds ** These three programs will be explored and require additional Council and City Manager approvals City of Palo Alto (ID # 10872) City Council Staff Report Report Type: Consent Calendar Meeting Date: 12/2/2019 City of Palo Alto Page 1 Summary Title: Approval of a Budget Amendment for NVCAP Title: Approval of a Budget Amendment in the General Fund for Amendment Number 2 to Contract Number C18171717 With Perkins + Will to Provide Professional Services Related to the Preparation of the North Ventura Coordinated Area Plan (NVCAP) (Continued From November 18, 2019) From: City Manager Lead Department: Planning and Development Services Recommendation Staff recommends that Council amend the Fiscal Year 2020 Budget Appropriation Ordinance for the General Fund by: a. Increasing the Planning and Development Services appropriation for Contract Services in the amount of $368,758; and b. Decreasing the General Fund Budget Stabilization Reserve in the amount of $368,758. Executive Summary On October 21, 2019 the City Council took an affirmative action to amend the contract with the City’s consultant for the North Ventura Coordinated Area Plan (NVCAP). Concurrent with this request was a General Fund budget amendment to pay for the additional scope of services. While the contract was amended by a Council majority (4-2-1), the requested budget amendment requires a two-thirds majority vote. With two dissenting votes and one absent Councilmember, the budget amendment failed to receive the necessary five votes for approval. This reports transmits without any changes the previously requested budget amendment to pay for the Council approved contract amendment. Five or more affirmative votes will provide the necessary funds to support the additional work proposed in the amended contract. Background On August 19, 2019,1 Council directed staff to return with a contract amendment to expand the project scope, increase the budget, and extend the NVCAP project timeline. The City Council 1 Staff report for City Council meeting 8-19-19: https://www.cityofpaloalto.org/civicax/filebank/blobdload.aspx?t=59214.46&BlobID=72899 City of Palo Alto Page 2 also directed staff to return with a separate consultant contract to study improvements to Matadero Creek.2 The City Council considered and approved the latter contract with WRA Inc. on September 16, 2019.3 On October 21, 20194, the City Council approved and authorized the City Manager or his designee to execute Amendment No. 2 to Contract C18171717 with Perkins + Will (Attachment A), amending the scope of services, increasing maximum compensation in the amount of $368,758 for a total not to exceed amount of $1,137,826, and extending the term one additional year through December 31, 2021. The amended contract with Perkins + Will, the lead consultant assisting with the development of the North Ventura Coordinated Area Plan, expanded scope includes: • Economic Value of NVCAP • Evaluation of Proposed Policies • Additional Alternative (for a total of three additional analyses, incorporating the creek study and historic study) • Parking Model Calibration • Increase Working Group meeting from 2 hours to 3 hours per meeting • Additional Decision-Maker Meetings (5 additional meetings) • Expanded CEQA review options to include possible Environmental Impact Report • Financial Analysis • Project Management Extension including Coordination between Consultant and City Staff The City Council approved this recommendation on a 4-2-1 vote with Councilmembers Kou and Cormack opposed, and Councilmember Kniss absent. As part of that same item, the City Council also considered the recommended budget amendment in the General Fund to provide funding for this contract amendment and increased compensation. While Councilmembers voted in favor of this action (4-2-1, with Councilmembers Kou and Cormack opposed, and Councilmember Kniss absent), the vote was insufficient to enact the budget amendment. A total of 5 affirmative votes were required to pass the appropriation per Municipal Code Section 2.28.080 (Amendments After Adoption) and City Charter Section 12. These sections require a two-thirds vote for additional appropriations in excess of those contained in the adopted budget. This appropriation is returning to Council for consideration. Five or more affirmative votes will 2 Minutes from City Council meeting on 8-19-19: https://www.cityofpaloalto.org/civicax/filebank/blobdload.aspx?t=73229.57&BlobID=73621 3 Staff report for City Council meeting on 9-16-19: https://www.cityofpaloalto.org/civicax/filebank/blobdload.aspx?t=59425.16&BlobID=73288 4 Staff report for 10-21-19 City Council Meeting: https://www.cityofpaloalto.org/civicax/filebank/blobdload.aspx?t=59815.38&BlobID=73638 City of Palo Alto Page 3 provide the necessary funds to support the additional work proposed in the amended contract. Discussion This appropriation is returning to Council for consideration in order to comply with the Municipal Code and City Charter. Work with Perkins + Will included as part of this Amendment No. 2 which was approved by the City Council requires additional funding as there is not sufficient funding in current appropriated funds to absorb these new costs. Five or more affirmative votes will provide the necessary funds to support the amended contract. Excerpts from the City’s Charter and Municipal Code that regulate these appropriations in excess of adopted amounts are below for reference. It should be noted that the transfer or reallocation of funds within appropriated levels requires a majority vote. Charter Sec. 12 Budget contents – Transfer of funds Additional appropriations of receipts in excess of the total appropriations made by the budget may be made by a two-thirds vote of the council. Municipal Code Section 2.28.080 Amendments after adoption During the fiscal year, the city manager shall amend the budgetary accounts of the city to reflect the following: (a) Additional Appropriations. By a two-thirds vote, the council may make additional appropriations of receipts that are in excess of the total estimated receipts and appropriations contained in the adopted budget. If there is not sufficient support to approve the budget amendment, staff would return to Council at a future date to present options on how best to proceed with the project. Resource Impact The recommended budget amendment would provide the necessary funding to continue work with Perkins + Will and complete the additional scope of services. Staff requests a budget amendment of $368,758 from the Budget Stabilization Reserve. Based on estimates through May 2019, the FY 2020 Budget included a contribution to the Budget Stabilization Reserve to ensure it met City Council’s target level of 18.5% of General Fund Expenses. The action recommended in this report will decrease the Budget Stabilization Reserve by $368,758 which is anticipated to bring Budget Stabilization Reserve to approximately $100,000, or 0.005%, below the City Council’s target. However, staff is currently in the process of completing the year-end analysis of FY 2019 through the Comprehensive Annual Financial Report (CAFR) and it is anticipated that sufficient savings will be identified to ensure that the Budget Stabilization Reserve remains at City Council’s target of 18.5%. Stakeholder Engagement The NVCAP project includes a robust community engagement process. It includes a Working Group; City Council appointed the members of the Working Group. These stakeholders, as well as other members of the public who attend the meetings and participate in community City of Palo Alto Page 4 meetings, remain dedicated to the NVCAP. This funding will enable the Working Group to work with the consultants to realize the stated goals of the NVCAP. Environmental Review Approval of the budget amendment is not a project for the purposes of the California Environmental Quality Act. City of Palo Alto (ID # 10875) City Council Staff Report Report Type: Consent Calendar Meeting Date: 12/2/2019 City of Palo Alto Page 1 Summary Title: Energy Reach Code for Building Construction Title: SECOND READING: Adoption of an Ordinance Repealing Chapter 16.17 of Title 16 (Building Regulations) Related to the California Energy Code and Adopting a New Chapter 16.17 Incorporating the 2019 California Energy Code With Local Amendments and Amendments to Title 24, Chapter 6 of the California Code of Regulation (FIRST READING: November 4, 2019, PASSED 7-0) From: City Manager Lead Department: Planning and Development Services Recommendation Staff recommends City Council take the following actions: 1.Adopt the attached ordinance approving the 2019 California Building Energy Efficiency Standards, Title 24, Part 6, of the California Code of Regulations to include local amendments with certain exceptions, modification and additions which serve as a reach code to promote building electrification and increase building efficiencies and to mandate all-electric residential new construction in April 2020 (Attachment A); and 2.Find that the proposed action is exempt from the provisions of the California Environmental Quality Act in accordance with Sections 15308 and 15061(b)(3). Background On November 4, 2020, the City Council adopted on first reading an ordinance to approve local amendments to the 2019 California Energy Code1. As part of the motion, Council also directed: 1 November 4, 2019, Staff Report, ID # 10538, retrieved from: https://www.cityofpaloalto.org/civicax/filebank/documents/73790 City of Palo Alto Page 2 1. The ordinance be amended to include an all-electric requirement for new low rise construction to be effective in April 2020 (this has been incorporated into the attached ordinance) 2. For staff to return with a subsequent ordinance to require all-electric service for new construction, including accessory dwelling units; and 3. To engage the Utilities Advisory Commission on scalable, cost-effective rebates for retrofitting existing homes to promote more electric utility service. Discussion Attachment A includes an updated ordinance the reflects the Council’s direction. The all-electric mandate will cover one- and two-family dwellings and multi-family dwellings of three-stories or less in height and was deemed cost-effective from the Statewide Study.2 Staff anticipates returning to the City Council within the next 12 months with an updated energy code ordinance to mandate an all-electric design for all new buildings to be effective by the end of 2020. This ordinance will include all new non-residential buildings, new hotel and motel buildings, new high-rise residential buildings and new detached accessory dwelling units (ADU’s), with possible exceptions as necessary. Staff will consult with third party energy consultants on the viability of a cost-effectiveness study for an all-electric design for large commercial buildings greater than 54,000 square feet and for ADU’s less than 900 square feet and greater than 150 square feet in area. Staff will continue to research efficient electric alternatives to replace gas appliances in existing homes and plans to present future customer rebates and outreach activities targeting existing homes, along with funding sources, to the Utilities Advisory Commission in the first quarter of 2020. In parallel, staff is developing a longer term building electrification plan as part of the 2020 Sustainability/Climate Action Plan update, which will be completed in early 2021. Additionally, staff will begin a process to engage community members and stakeholders in a discussion regarding changes to the zoning and building codes to define when a substantially remodeled structure is considered new construction and therefore, subject to current standards. While there are several aspects to consider with this policy initiative, one anticipated result is that more development projects would be subject to meeting contemporary energy codes helping the City achieve its greenhouse gas emissions reduction goals. Environmental Review 2 See November 4, 2019, Staff Report, ID # 10538, Attachment B: 2019 Residential New Construction Cost- Effectiveness Study (2019, August 1). retrieved from: https://www.cityofpaloalto.org/civicax/filebank/documents/73790 City of Palo Alto Page 3 The proposed action is exempt from the provisions of the California Environmental Quality Act in accordance with Sections 15308 and 15061(b)(3) because the proposed standards are more stringent than the State energy standards, there are no reasonably foreseeable adverse environmental impacts and there is no possibility that the activity in question may have a significant effect on the environment. Attachments: Attachment A: Ordinance of the Council of the City of Palo Alto Repealing and Restating Chapter 16.17 of the Palo Alto Municipal Code, California Energy Code, 2019 Edition, and Local Amendments and Related Findings 6055283A (AB) 1 Ordinance No. Ordinance of the Council of the City of Palo Alto Repealing and Restating Chapter 16.17 of the Palo Alto Municipal Code, California Energy Code, 2019 Edition, and Local Amendments and Related Findings The Council of the City of Palo Alto does ORDAIN as follows: SECTION 1. Chapter 16.17 of the Palo Alto Municipal is hereby amended by repealing in its entirety Chapter 16.17 and adopting a new Chapter 16.17 to read as follows: 16.17 CALIFORNIA ENERGY CODE 16.17.010 2019 California Energy Code adopted. The California Energy Code, 2019 Edition, Title 24, Part 6 of the California Code of Regulations together with those omissions, amendments, exceptions and additions thereto, is adopted and hereby incorporated in this Chapter by reference and made a part hereof the same as if fully set forth herein. Except as amended herein, all requirements of the California Energy Code, 2019 Edition, Title 24, Part 6 of the California Code of Regulations shall apply. Unless superseded and expressly repealed, references in City of Palo Alto forms, documents and regulations to the chapters and sections of the former California Code of Regulations, Title 24, shall be construed to apply to the corresponding provisions contained within the California Code of Regulations, Title 24, 2016. Ordinance No. 5383 of the City of Palo Alto and all other ordinances or parts of ordinances in conflict herewith are hereby suspended and expressly repealed. One copy of the California Energy Code, 2019 Edition, has been filed for use and examination of the public in the Office of the Building Official of the City of Palo Alto. 16.17.020 Violations -- Penalties. It is unlawful for any person to violate any provision or to fail to comply with any of the requirements of this Chapter or any permits, conditions, or variances granted under this Chapter. Violators shall be subject to any penalty or penalties authorized by law, including but not limited to: administrative enforcement pursuant to Chapters 1.12 and 1.16 of the Palo Alto Municipal Code; and criminal enforcement pursuant to Chapter 1.08 of the Palo Alto Municipal Code. Each separate day or any portion thereof during which any violation of this Chapter occurs or continues shall be deemed to constitute a separate offense. When the chief building official determines that a violation of this Chapter has occurred, the chief building official may record a notice of pendency of code violation with the Office of the County Recorder stating the address and owner of the property involved. When the violation has been corrected, the chief building official shall issue and record a release of the notice of 2 pendency of code violation. 16.17.030 Enforcement -- Criminal Enforcement authority. The employee positions designated in this section are authorized to exercise the authority provided in California Penal Code section 836.5 for violations of this Chapter. The designated employee positions are: (1) chief building official, (2) assistant chief building official, (3) building inspection manager, and (4) code enforcement officer. 16.17.040 Local Amendments. The provisions of this Chapter shall constitute local amendments to the cross-referenced provisions of the California Energy Code, 2019 Edition, and shall be deemed to replace the cross-referenced sections of said Code with the respective provisions set forth in this Chapter. 16.17.050 Section 100.1 Definitions and Rules of Construction Section 100.1(b) is amended by adding the following definitions: ALL-ELECTRIC BUILDING or ALL-ELECTRIC DESIGN is a building or building design that uses a permanent supply of electricity as the source of energy for all space heating, water heating (including pools and spas), cooking appliances, and clothes drying appliances, and has no natural gas or propane plumbing installed in the building. CERTIFIED ENERGY ANALYST is a person registered as a Certified Energy Analyst with the California Association of Building Energy Consultants as of the date of submission of a Certificate of Compliance as required under Section 10-103 of the Building Energy Efficiency Standards for Residential and Non-Residential Buildings. FREE STANDING ACCSESSORY DWELLING UNIT is a detached building that is not intended for sale separate from the primary residence, on a lot that is zoned for single-family or multifamily use, located on the same lot as an existing dwelling, and does not exceed 900 square feet of total floor area. MIXED-FUEL BUILDING or MIXED-FUEL DESIGN is a building or building design that uses natural gas or propane as fuel for space heating, water heating (including pools and spas), cooking appliances or clothes drying appliances or is plumbed for such equipment. 16.17.060 Section 110.10 Mandatory Requirements For Solar Ready Buildings. Section 110.10 Mandatory Requirements for Solar Ready Buildings is amended as follows: (f) Subsection 110.10(f) is added to read: (f) Existing tree canopies. In the event of a conflict between the provisions of this Code, the Solar Shade Act of 2009, and the Palo Alto Tree Ordinance (Chapter 8.10), the most protective of existing tree canopies shall prevail. 3 16.17.070 SUBCHAPTER 5 -NONRESIDENTIAL, HIGH-RISE RESIDENTIAL AND HOTEL/MOTEL OCCUPANCIES – PERFORMANCE AND PRESECRIPTIVE COMPLIANCE APPROACHES FOR ACHIEVING ENERGY EFFICIENCY Section 140.0 - Performance and Prescriptive Compliance Approaches Section 140.0 of the 2019 California Energy Code is amended to as follows: (b) The requirements of Sections 120.0 through 130.5 (mandatory measures for nonresidential, high-rise residential and hotel/motel buildings) and: for all newly constructed buildings and additions, including new equipment installed to serve additions: 1. The entire solar zone, as specified in Section 110.10, shall have a solar PV system installed that meets the minimum qualification requirements as specified in Joint Appendix JA11, subject to the exceptions in Section 110.10. A. Exception to 140.0(b)1. Additions. 2. Electric-Ready Mixed-Fuel Buildings. Mixed-fuel buildings shall meet the following requirements: A. Water Heating i. A dedicated 240 volt 30-amp electrical receptacle is required, that is connected to the electric panel with conductors of adequate capacity, within 3 feet from the water heater and accessible to the water heater with no obstructions. ii. Both ends of the unused conductor shall be labeled with the words “For Future Heat Pump Water Heater” and shall be electrically isolated. iii. A condensate drain is required, that is no more than 2 inches higher than the base of the installed water heater and allows natural draining without pump assistance. iv. Water heaters shall be located in an area with a minimum of 700 cubic feet of volume, or a ducting plan is required for eight-inch supply and exhaust ducts to the exterior or to a space with 700 cubic feet of volume. Exception to 140.0(b)2.A.iv. The space and ventilation requirements may be reduced to conform with the manufacturer’s recommendations for a specific heat pump hot water heater that meets the requirements of Sections 110.0, 110.1 and 110.3. 1. Clothes Drying i. A dedicated 240-volt, 40 amp electrical receptacle is required that is connected to the electric panel with conductors of adequate capacity, within 3 feet of the appliance and accessible with no obstructions. 4 ii. Both ends of the unused conductor shall be labeled with the words “For Future Heat Pump Clothes Drying” and be electrically isolated. 2. Cooktop or Range. i. A dedicated 240-volt, 50 amp electrical receptacle that is connected to the electric panel with conductors of adequate capacity, within 3 feet of the appliance and accessible with no obstructions. ii. Both ends of the unused conductor shall be labeled with the words “For Future Inductive Range” and shall be electrically isolated. EXCEPTION to 140.0(b)2.A, B, and C: If gas or propane plumbing is not installed for the specified end uses. 3. Other Gas Equipment. i. For equipment that is specified or connected to natural gas or propane plumbing, the building shall include designated raceways and reserved capacity on the main electrical panel and subpanels, if applicable, sufficient to power electric equipment that provides the equivalent function to the intended function of the gas equipment; or, ii. If gas plumbing exists but no gas equipment is specified or connected, the building shall include designated raceways and reserved capacity on the main electrical panel and subpanels, if applicable, sufficient to provide equivalent power at a maximum gas flow rate under normal gas service pressure. Plans shall include calculations for delivered gas power and equivalent electrical power, conductors, raceway sizes and panel capacities. Exception to 140.0(b)2.D. If the applicant demonstrates that there is no viable electrical equipment that can perform the intended function of the gas equipment. 4. All newly installed raceways between the main electric panel and any subpanels, and the point at which the conductors serving the building connect to the common conductors of the utility distribution system shall be sized for conductors adequate to serve all of the building’s electrical requirements, including PV as specified Section 140.0(b)1 and future electric loads as specified in Section 140.0(b)2.  5. If the building includes an electrical transformer(s) feeding the main panel or any subpanels, the transformer(s) shall be located in a space large enough to accommodate a transformer(s) with a rated capacity sufficient to serve all of the building’s electrical requirements, including PV as specified in Section 140.0(b)1 and future electric loads as specified in Section 140.0(b)2. 5 16.17.080 Section 140.1 – Performance Approach: Energy Budgets Section 140.1 of the 2019 California Energy Code is amended to read as follows: A newly constructed All-Electric Building complies with the performance approach if the energy budget calculated for the proposed design building under Subsection (b) is no greater than the energy budget calculated for the Standard Design Building under Subsection (a). A newly constructed Mixed-Fuel Building complies with the performance approach if the energy budget calculated for the proposed design building under Subsection (b) has a compliance margin, relative to the energy budget calculated for the Standard Design Building under Subsection (a), of at least the value specified for the corresponding occupancy type in Table 140.1-A below. Table 140.1-A Mixed Fuel Building Compliance Margins Occupancy Type Compliance Margins Office Building 12% Retail Store 12% Hotel/motel and High-rise residential 5% Industrial/Manufacturing 0% All other Nonresidential occupancies 5% (a) Energy Budget for the Standard Design Building. The energy budget for the Standard Design Building is determined by applying the mandatory and prescriptive requirements to the proposed design building. The energy budget is the sum of the TDV energy for space-conditioning, indoor lighting, mechanical ventilation, service water heating, and covered process loads. (b) Energy Budget for the Proposed Design Building. The energy budget for a proposed design building is determined by calculating the TDV energy for the proposed design building. The energy budget is the sum of the TDV energy for space-conditioning, indoor lighting, mechanical ventilation and service water heating and covered process loads. (c) Calculation of Energy Budget. The TDV energy for both the Standard Design Building and the proposed design building shall be computed by Compliance Software certified for this use by the Commission. The processes for Compliance Software approval by the Commission are documented in the ACM Approval Manual. (d) Certificate of Compliance. The Certificate of Compliance shall be prepared and signed by a Certified Energy Analyst and the energy budget for the Proposed Design shall be no greater than the Standard Design Building. 6 16.17.090 Section 140.2 - Prescriptive Approach Section 140.2 of the 2019 California Energy Code is amended to read as follows: To comply using the prescriptive approach, a building shall be designed with and shall have constructed and installed systems and components meeting the applicable requirements of Sections 140.3 through 140.9, and the following requirements, as applicable: (a) Mixed-Fuel Buildings of Hotel, Motels or High-Rise Multifamily Occupancies 1. Install fenestration with a solar heat gain coefficient no greater than 0.22. 2. Design Variable Air Volume (VAV) box minimum airflows to be equal to the zone ventilation minimums. 3. Include economizers and staged fan control in air handlers with a mechanical cooling capacity ≥ 33,000 Btu/h. 4. Reduce the lighting power density (Watts/ft2) by ten percent (10%) from that required from Table 140.6-C. 5. In common areas, improve lighting without claiming any Power Adjustment Factor credits: A. Control to daylight dimming plus off per Section 140.6(a)2H, and B. Perform Institutional Tuning per Section 140.6(a)2J 6. Install one drain water heat recovery device per every three guest rooms that is field verified as specified in the Reference Appendix RA3.6.9. (b) All Other Nonresidential Mixed-Fuel Buildings 1. Install fenestration with a solar heat gain coefficient no greater than 0.22. 2. Limit the fenestration area on east-facing and west-facing walls to one-half of the average amount of north-facing and south-facing fenestration. 3. Design Variable Air Volume (VAV) box minimum airflows to be equal to the zone ventilation minimums where VAV systems are installed. 4. Include economizers and staged fan control in air handlers with a mechanical cooling capacity ≥ 33,000 Btu/h. 5. Reduce the lighting power density (Watts/ft2) by ten percent (10%) from that required from Table 140.6-C. 6. Improve lighting without claiming any Power Adjustment Factor credits: A. Perform Institutional Tuning per Section 140.6(a)2J, and B. In office spaces, control to daylight dimming plus off per Section 140.6(a)2H, and C. Install Occupant Sensing Controls in Large Open Plan Offices per Section 140.6(a)2I. 7 16.17.100 SUBCHAPTER 7 - LOW-RISE RESIDENTIAL BUILDINGS- MANDATORY FEATURES AND DEVICES Section 150.0 - Mandatory Features and Devices. Section 150.0 of the 2019 California Energy Code is amended to read as follows: Low-rise residential buildings shall comply with the applicable requirements of Sections 150(a) through 150(r). NOTE: The requirements of Sections 150.0 (a) through (r) apply to newly constructed buildings. Sections 150.2(a) and 150.2(b) specify which requirements of Sections 150.0(a) through 150.0(r) also apply to additions or alterations. The amendments to sections 150.0 (h), 150.0 (n), and 150.0 (s) do not apply to additions, alterations, or ADUs. Sections 150.0 (a) – (d) are adopted without modifications Section 150.0(e) Installation of fireplaces. Fireplaces shall be electric, not fueled by natural gas. Section 150.0(f) is adopted without modifications. Section 150.0(h) is amended to read: Section 150.0(h) Space-conditioning equipment. Space-conditioning equipment shall be electric, not fueled by natural gas. Sections 150.0(i) - (m) are adopted without modifications Section 150.0(n) Water heating system. Section 150.0 (n) is modified as follows: (n) Water Heating System. 1. Water heating systems and equipment shall be electric, not fueled by natural gas. A. Deleted B. Deleted C. A condensate drain that is no more than 2 inches higher than the base of the installed water heater, and allows natural draining without pump assistance, and D. Deleted 2. Water heating recirculation loops serving multiple dwelling units shall meet the requirements of Section 110.3(c)5. 8 3. Solar water-heating systems and collectors shall be certified and rated by the Solar Rating and Certification Corporation (SRCC), the International Association of Plumbing and Mechanical Officials, Research and Testing (IAPMO R&T), or by a listing agency that is approved by the chief building official. 4. Deleted Sections 150.0(o) – (r) are adopted without modifications. Section 150.0 is amended to add a new subsection (s) as follows: (s) Clothes Drying and Cooking. 1. Clothes Drying. Clothes dryers shall be electric, not fueled by natural gas. 2. Cooking Range. Cooking appliances shall be electric, not fueled by natural gas. 16.17.110 SUBCHAPTER 8 – LOW-RISE RESIDENTIAL BUILDINGS- PERFORMANCE AND PRESCRIPTIVE COMPLIANCE APPROACHES Section 150.1 - Performance and Prescriptive Compliance Approaches for Low-Rise Residential Buildings. Section 150.1 of the 2019 California Energy Code is amended to read as follows: (a) Section (a) is adopted without modification (b) Performance Standards. A building complies with the performance standards if the energy consumption for the proposed design building is no greater than the energy budget calculated for the Standard Design Building using Commission- certified compliance software as specified by the Alternative Calculation Methods Approval Manual. 1. Newly Constructed Buildings. The Energy Budget for newly constructed buildings is expressed in terms of the Energy Design Rating, which is based on TDV energy. The Energy Design Rating (EDR) has two components, the Energy Efficiency Design Rating, and the Solar Electric Generation and Demand Flexibility Design Rating. The Solar Electric Generation and Demand Flexibility Design Rating shall be subtracted from the Energy Efficiency Design Rating to determine the Total Energy Design Rating. The Proposed Building shall separately comply with the Energy Efficiency Design Rating and the Total Energy Design Rating. A. An All-Electric Building complies with the performance standard if both the Total Energy Design Rating and the Energy Efficiency Design Rating for the Proposed Building are no greater than the corresponding Energy Design Ratings for the Standard Design Building. 9 2. Additions and Alterations to Existing Buildings. The Energy Budget for additions and alterations is expressed in terms of TDV energy. A building complies with the performance standards if the energy consumption calculated for the Proposed Building is no greater than the energy budget calculated for the Standard Design Building. 3. Compliance demonstration requirements for performance standards. Section 150.1(b)3A is modified to add subsection is as follows: i. Certificate of Compliance. The Certificate of Compliance is prepared and signed by a Certified Energy Analyst and the Total Energy Design Rating of the Proposed Design shall be no greater than the Standard Design Building. 16.17.120 Infeasibility Exemption. (a) Exemption. If an applicant for a Covered Project believes that circumstances exist that makes it infeasible to meet the requirements of this Chapter, the applicant may request an exemption as set forth below. In applying for an exemption, the burden is on the Applicant to show infeasibility. (b) Application. If an applicant for a Covered Project believes such circumstances exist, the applicant may apply for an exemption at the time of application submittal in accordance with the Planning and Development Services administrative guidelines. The applicant shall indicate the maximum threshold of compliance he or she believes is feasible for the covered project and the circumstances that make it infeasible to fully comply with this Chapter. Circumstances that constitute infeasibility include, but are not limited to the following: (1) There is conflict with the compatibility of the currently adopted green building ordinance and/or California Building Standards Code; (2) There is conflict with other City goals, such as those requiring historic preservation or the Architectural Review criteria; (3) There is a lack of commercially available materials and technologies to comply with the requirements of this Chapter; (4) Applying the requirements of this Chapter would effectuate an unconstitutional taking of property or otherwise have an unconstitutional application to the property. (c) Review by Architectural Review Board (ARB). For any covered project for which an exemption is requested and Architectural Review is required by the ARB, the ARB shall provide a recommendation to the Director of Planning and Development Services or designee regarding whether the exemption shall be granted or denied, along with its recommendation on the project. 10 (d) Granting of Exemption. If the Director of Planning and Development Services, or designee, determines that it is infeasible for the applicant to fully meet the requirements of this Chapter based on the information provided, the Director, or designee, shall determine the maximum feasible threshold of compliance reasonably achievable for the project. The decision of the Director, or designee, shall be provided to the applicant in writing. If an exemption is granted, the applicant shall be required to comply with this Chapter in all other respects and shall be required to achieve, in accordance with this Chapter, the threshold of compliance determined to be achievable by the Director or designee. (e) Denial of Exemption. If the Director of Planning and Development Services or designee determines that it is reasonably possible for the applicant to fully meet the requirements of this Chapter, the request shall be denied and the Director or designee shall so notify the applicant in writing. The project and compliance documentation shall be modified to comply with this Chapter prior to further review of any pending planning or building application. (f) Council Review of Exemption. For any covered project that requires review and action by the City Council, the Council shall act to grant or deny the exemption, based on the criteria outlined above, after recommendation by the Director of Planning and Development Services. 16.17.130 Appeal. (a) Any aggrieved Applicant may appeal the determination of the Director of Planning and Development Services or designee regarding the granting or denial of an exemption pursuant to 16.17.070. (b) Any appeal must be filed in writing with the Planning and Development Services Department not later than fourteen (14) days after the date of the determination by the Director. The appeal shall state the alleged error or reason for the appeal. (c) The appeal shall be processed and considered by the City Council in accordance with the provisions of Section 18.77.070(f) of the City of Palo Alto Municipal Code. SECTION 2. The Council adopts the findings for local amendments to the California Energy Code, 2019 Edition, attached hereto as Exhibit “A” and incorporated herein by reference. SECTION 3. Under the authority granted by Public Resources Code Section 25402.1(h)(2), which permits local California Energy Code amendments, and based on staff’s analysis of the “2019 Nonresidential New Construction Reach Code Cost Effectiveness Study” and “2019 Cost- effectiveness Study: Low-Rise Residential New Construction” developed for the California Energy Codes and Standards Program and attached to staff’s report to Council, the Council finds the proposed local amendments to the 2019 California Energy Code that affect building energy performance to be cost-effective and consume less energy than permitted by Title 24, Part 6. 11 SECTION 4. If any section, subsection, clause or phrase of this Ordinance is for any reason held to be invalid, such decision shall not affect the validity of the remaining portion or sections of the Ordinance. The Council hereby declares that it should have adopted the Ordinance and each section, subsection, sentence, clause or phrase thereof irrespective of the fact that any one or more sections, subsections, sentences, clauses or phrases be held invalid. SECTION 5. The Council finds that this action is exempt from the provisions of the California Environmental Quality Act (“CEQA”), under Section 15308 of the CEQA Guidelines, because it is a regulatory action for the protection of the environment, and under Section 15061(b)(3) on the grounds that the proposed standards are more stringent than the State energy standards, there are no reasonably foreseeable adverse environmental impacts and there is no possibility that the activity in question may have a significant effect on the environment. SECTION 6. This Ordinance shall be effective on April 1, 2020. INTRODUCED: PASSED: AYES: NOES: ABSENT: ABSTENTIONS: ATTEST: ____________________________ ____________________________ City Clerk Mayor APPROVED AS TO FORM: APPROVED: ____________________________ ____________________________ Assistant City Attorney City Manager ____________________________ Director of Planning and Development Services ____________________________ Director of Administrative Services 12 Exhibit A FINDINGS FOR LOCAL AMENDMENTS TO CALIFORNIA ENERGY CODE, 2019 EDITION Section 17958 of the California Health and Safety Code provides that the City may make changes to the provisions in the uniform codes that are published in the California Building Standards Code. Sections 17958.5 and 17958.7 of the Health and Safety Code require that for each proposed local change to those provisions in the uniform codes and published in the California Building Standards Code which regulate buildings used for human habitation, the City Council must make findings supporting its determination that each such local change is reasonably necessary because of local climatic, geological, or topographical conditions. Regarding the Energy Code, local jurisdictions have the authority to adopt local energy efficiency ordinances—or reach codes—that exceed the minimum standards defined by Title 24 (as established by Public Resources Code Section 25402.1(h)2 and Section 10-106 of the Building Energy Efficiency Standards, provided the City Council finds that the requirements of the proposed ordinance are cost-effective and do not result in buildings consuming more energy than is permitted by Title 24. Local building regulations having the effect of amending the uniform codes, which were adopted by the City prior to November 23, 1970, were unaffected by the regulations of Sections 17958, 17958.5 and 17958.7 of the Health and Safety Code. Therefore, amendments to the uniform codes which were adopted by the City Council prior to November 23, 1970, and have been carried through from year to year without significant change, need no required findings. Also, amendments to provisions not regulating buildings used for human habitation, including amendments made only for administrative consistency, do not require findings. Code: Cal Green Section(s) Title Add Deleted Amended Justification (See below for keys) 100.1 Definitions  C & E 100.3 and 100.4 Local Energy Efficiency Reach Code and Exceptions  C & E 110.10 Mandatory Requirements For Solar Ready Buildings   C 140.0 Nonresidential Performance and Prescriptive Compliance Approaches   C & E 140.1 Performance Approach: Energy Budgets   C & E 140.2 Prescriptive Approach   C & E 150.0 Low-Rise Residential – Mandatory Features and Devices   C & E 150.1 Compliance Approaches for Low-Rise Residential Buildings   C & E 13 Key to Justification for Amendments to Title 24 of the California Code of Regulations C This amendment is justified on the basis of a local climatic condition. The seasonal climatic conditions during the late summer and fall create severe fire hazards to the public health and welfare in the City. The hot, dry weather frequently results in wild land fires on the brush covered slopes west of Interstate 280. The aforementioned conditions combined with the geological characteristics of the hills within the City create hazardous conditions for which departure from California Energy Code is required. Failure to address and significantly reduce greenhouse gas (GHG) emissions could result in rises in sea level, including in San Francisco Bay, that could put at risk Palo Alto homes and businesses, public facilities, and Highway 101 (Bayshore Freeway), particularly the mapped Flood Hazard areas of the City. Energy efficiency is a key component in reducing GHG emissions, and construction of more energy efficient buildings can help Palo Alto reduce its share of the GHG emissions that contribute to climate change. The burning of fossil fuels used in the generation of electric power and heating of buildings contributes to climate change, which could result in rises in sea level, including in San Francisco Bay, that could put at risk Palo Alto homes and businesses 1 public facilities, and Highway 101. Due to decrease in annual rain fall, Palo Alto experiences the effect of drought and water saving more than some other communities in California. E Energy efficiency enhances the public health and welfare by promoting the environmental and economic health of the City through the design, construction, maintenance, operation and deconstruction of buildings and sites by incorporating green practices into all development. The provisions in this Chapter are designed to achieve the following goals: (a) Increase energy efficiency in buildings; (b) Increase resource conservation; (c) Provide durable buildings that are efficient and economical to own and operate; (d) Promote the health and productivity of residents, workers, and visitors to the city; (e) Recognize and conserve the energy embodied in existing buildings; and (f) Reduce disturbance of natural ecosystems. G This amendment is justified on the basis of a local geological condition. The City of Palo Alto is subject to earthquake hazard caused by its proximity to San Andreas fault. This fault runs from Hollister, through the Santa Cruz Mountains, epicenter of the 1989 Loma Prieta earthquake, then on up the San Francisco Peninsula, then offshore at Daly City near Mussel Rock. This is the approximate location of the epicenter of the 1906 San Francisco earthquake. The other fault is Hayward Fault. This fault is about 74 mi long, situated mainly along the western base of the hills on the east side of San Francisco Bay. Both of these faults are 14 T considered major Northern California earthquake faults which may experience rupture at any time. Thus, because the City is within a seismic area which includes these earthquake faults, the modifications and changes cited herein are designed to better limit property damage as a result of seismic activity and to establish criteria for repair of damaged properties following a local emergency. The City of Palo Alto topography includes hillsides with narrow and winding access, which makes timely response by fire suppression vehicles difficult. Palo Alto is contiguous with the San Francisco Bay, resulting in a natural receptor for storm and waste water run-off. Also the City of Palo Alto is located in an area that is potentially susceptible to liquefaction during a major earthquake. The surface condition consists mostly of stiff to dense sandy clay, which is highly plastic and expansive in nature. The aforementioned conditions within the City create hazardous conditions for which departure from California Building Standards Codes is warranted. City of Palo Alto (ID # 10879) City Council Staff Report Report Type: Action Items Meeting Date: 12/2/2019 City of Palo Alto Page 1 Summary Title: Colleagues' Memo Regarding Urgency Ordinance Regarding Renter Protections Title: Colleagues' Memo From Council Members Kou and DuBois and Potential Adoption of an Urgency Ordinance to Provide Just Cause Eviction Protections to Tenants Until California State Assembly Bill 1482 Takes Effect on January 1, 2020 (Continued From November 18, 2019) From: City Manager Lead Department: City Clerk Goals To temporarily prohibit no-fault evictions through December 31, 2019, for all residential real property that will be covered by Assembly Bill 1482 beginning on January 1, 2020. Background and Discussion: Assembly Bill 1482, the Tenant Protections Act of 2019, was signed by Governor Newsom on October 8, 2019. Escalating real estate values with the assistance of the deregulation of zoning provides an incentive to landlords to evict long-term, lower- income tenants, in order to raise rents and attract wealthier tenants, reducing the local diversity socio-economic of Palo Alto’s population. It has been reported, since the anticipation of the Tenant Protection Act of 2019 legislation, there has been an escalation of harassment by landlords in order to encourage tenants to move out voluntarily. However, since the Governor’s signing of the legislation, there is a surge of calls and inquiries from community advocates and tenants facing steep rent increases, some as much as 30% rent increase and facing evictions, also facing increases in costs of parking, lock services and other bundled amenities. While landlords may properly evict tenants for cause under the provision of state law, landlords should not be able to evict tenants in good standing without cause simply to avoid the limitation on rent- gouging afforded to renters under the new law. Hence, it is imperative for the City of Palo Alto to issue an emergency ordinance to keep people housed and provide a sense of stability. Proposal Request the City Attorney to report on: City of Palo Alto Page 2 1. An emergency ordinance implementing a temporary moratorium on no-fault evictions for rental units built prior to January 1, 2012, effective through December 31, 2019. 2. The use State of California price gouging laws to prevent prohibitive rent increases before Assembly Bill 1482 takes effect on January 1, 2020. 3. This emergency ordinance shall apply to tenancies where the tenant remains in possession and the eviction lawsuit has not been adjudicated. Direct City Manager staff to: 1. Inform Palo Alto rental residents of legal resources to help them address any disputes with their landlords. 2. Inform property owners and landlords of rental property of their obligations under Assembly Bill 1482 and any locally-established ordinances. Resource Impact Due to the short timeframe to adopt tenant protections (through January 1, 2020), existing resources in the City Manager’s Office, City Attorney’s Office and Planning and Development Services are being redirected to draft an ordinance for the Council’s consideration on November 18th. Also due to the short timeframe, any outreach on a potential urgency ordinance will be limited to electronic (email and social media) distribution methods. If the Council adopts an ordinance, some staff resources will be needed for public outreach and education regarding the rights and responsibilities of landlords and tenants, responding to public inquiries, and making referrals. Tenant protections are enforced by tenants in private litigation with their landlords. The City does not investigate alleged violations or adjudicate tenant-landlord disputes. This is true for protections provided by a temporary City ordinance (before January 1st) as well as by AB 1482 (after January 1st). The City provides voluntary mediation services through Project Sentinel and can refer tenants to other resources, such as non-profit legal services agencies. Appendices: Report by City of Los Angeles City Attorney http://clkrep.lacity.org/onlinedocs/2019/19- 1232_misc_10-22-2019.pdf City of Los Angeles Draft Ordinance http://clkrep.lacity.org/onlinedocs/2019/19- 1232_ord_draft_10-22-2019.pdf City of Los Angeles Final Ordinance http://clkrep.lacity.org/onlinedocs/2019/19- 1232_ORD_186340_10-24-2019.pdf City of Redwood City Draft Ordinance https://meetings.redwoodcity.org/AgendaOnline/Documents/ViewDocument/ATTACHME NT%20B%20- %20URGENCY%20ORDINANCE.pdf?meetingId=2048&documentType=Agenda&itemId =2741&publishId=4267&isSection=false Attachments: • Attachment A: Urgency Ordinance Not Yet Approved Ordinance No. _____ Urgency Ordinance of the Council of the City of Palo Alto Temporarily Prohibiting Evictions without Just Cause through December 31, 2019, for Residential Real Property Built Prior to January 1, 2005 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. The “Tenant Protection Act of 2019” (Assembly Bill [“AB”] 1482) was approved by the California Legislature on September 11, 2019 and signed by the Governor on October 8, 2019; and B. Effective January 1, 2020 the Tenant Protection Act of 2019 codified as California Civil Code sections 1946.2 (Just Cause Eviction) and 1947.12 (Rent Caps) will provide eviction protections and limits on rent increases in the State of California; and C. The City Council, pursuant to its police powers, has broad authority to maintain public peace, health, and safety of its community and preserving the quality of life for its residents; and D. Housing instability threatens the public peace, health, and safety as eviction from one’s home can lead to prolonged homelessness; increased residential mobility; loss of community; strain on household finances due to the necessity of paying rental application fees and security deposits; stress and anxiety experienced by those displaced; increased commute times and traffic impacts if displaced workers cannot find affordable housing within the city in which they work; and interruption of the education of children in the home; and E. Eviction creates particular hardships for individuals and households of limited means, given the shortage of housing, particularly affordable housing, within the City of Palo Alto and the San Francisco Bay Area region generally; and F. As AB 1482 does not go into effect until January 1, 2020, landlords could seek to evict tenants without cause in order to implement rent increases that would not otherwise be possible after the effective date; and G. The City desires to prohibit evictions without just cause during this transition period; and H. The City Council finds and determines that regulating the relations between residential landlords and tenants will increase certainty and fairness within the residential Not Yet Approved 20191121 th 0140204 2 rental market in the City and thereby serve the public peace, health, and safety; and I. Palo Alto Municipal Code Section 2.04.270 authorizes the adoption of an urgency ordinance to protect the public peace, health or safety, where there is a declaration of the facts constituting the urgency and the ordinance is adopted by four-fifths of Council Members present; and J. This urgency ordinance would essentially establish the just cause eviction protections that will go into effect on January 1, 2020 under AB 1482 immediately within the City of Palo Alto; and K. An urgency ordinance that is effective immediately is necessary to avoid the immediate threat to public peace, health, and safety as failure to adopt this urgency ordinance could result in the displacement of the City’s residents and community members. SECTION 2. Just Cause Eviction Protections. This urgency ordinance shall be known as the “Just Cause Eviction Protection Ordinance.” (a) Notwithstanding any other law, after a tenant has continuously and lawfully occupied a residential real property for 12 months, the owner of the residential real property shall not terminate the tenancy without just cause, which shall be stated in the written notice to terminate tenancy. (b) For purposes of this Ordinance, just cause includes either of the following: 1. At-fault just cause, which is any of the following: (A) Default in the payment of rent. (B) A breach of a material term of the lease, as described in paragraph (3) of Section 1161 of the Code of Civil Procedure, including, but not limited to, violation of a provision of the lease after being issued a written notice to correct the violation. (C) Maintaining, committing, or permitting the maintenance or commission of a nuisance as described in paragraph (4) of Section 1161 of the Code of Civil Procedure. (D) Committing waste as described in paragraph (4) of Section 1161 of the Code of Civil Procedure. (E) Criminal activity by the tenant on the residential real property, including any common areas, or any criminal activity or criminal threat, as defined in subdivision (a) of Section 422 of the Penal Code, on or off the residential real Not Yet Approved 20191121 th 0140204 3 property, that is directed at any owner or agent of the owner of the residential real property. (F) Assigning or subletting the premises in violation of the tenant’s lease, as described in paragraph (4) of Section 1161 of the Code of Civil Procedure. (G) The tenant’s refusal to allow the owner to enter the residential real property as authorized by Sections 1101.5 and 1954 of the Civil Code, and Sections 13113.7 and 17926.1 of the Health and Safety Code. (H) Using the premises for an unlawful purpose as described in paragraph (4) of Section 1161 of the Code of Civil Procedure. (I) The employee, agent, or licensee’s failure to vacate after their termination as an employee, agent, or a licensee as described in paragraph (1) of Section 1161 of the Code of Civil Procedure. (J) When the tenant fails to deliver possession of the residential real property after providing the owner written notice as provided in Section 1946 of the Civil Code of the tenant’s intention to terminate the hiring of the real property, or makes a written offer to surrender that is accepted in writing by the landlord, but fails to deliver possession at the time specified in that written notice as described in paragraph (5) of Section 1161 of the Code of Civil Procedure. 2. No-fault just cause, which includes any of the following: (A) Intent to occupy the residential real property by the owner or their spouse, domestic partner, children, grandchildren, parents, or grandparents. (B) Withdrawal of the residential real property from the rental market. (C) The owner complying with any of the following: (i) An order issued by a government agency or court relating to habitability that necessitates vacating the residential real property. (ii) An order issued by a government agency or court to vacate the residential real property. (iii) A local ordinance that necessitates vacating the residential real property. (D) Intent to demolish or substantially remodel the residential real property. For purposes of this subparagraph, “substantially remodel” means the replacement or substantial modification of any structural, electrical, plumbing, or mechanical system that requires a permit from a governmental agency, or Not Yet Approved 20191121 th 0140204 4 the abatement of hazardous materials, including lead-based paint, mold, or asbestos, in accordance with applicable Federal, State, and local laws, that cannot be reasonably accomplished in a safe manner with the tenant in place and that requires the tenant to vacate the residential real property for at least 30 days. Cosmetic improvements alone, including painting, decorating, and minor repairs, or other work that can be performed safely without having the residential real property vacated, do not qualify as substantial rehabilitation. (E) Before an owner of residential real property issues a notice to terminate a tenancy for just cause that is a curable lease violation, the owner shall first give notice of the violation to the tenant with an opportunity to cure the violation pursuant to paragraph (3) of Section 1161 of the Code of Civil Procedure. If the violation is not cured within the time period set forth in the notice, a three- day notice to quit without an opportunity to cure may thereafter be served to terminate the tenancy. (c) This section shall not apply to the following types of residential real properties or residential circumstances: 1. Transient and tourist hotel occupancy as defined in subdivision (b) of Section 1940 of the Civil Code. 2. Housing accommodations in a nonprofit hospital, religious facility, extended care facility, licensed residential care facility for the elderly, as defined in Section 1569.2 of the Health and Safety Code, or an adult residential facility, as defined in Chapter 6 of Division 6 of Title 22 of the Manual of Policies and Procedures published by the State Department of Social Services. 3. Dormitories owned and operated by an institution of higher education or a kindergarten and grades 1 to 12, inclusive, school. 4. Housing accommodations in which the tenant shares bathroom or kitchen facilities with the owner who maintains their principal residence at the residential real property. 5. Single-family owner-occupied residences, including a residence in which the owner-occupant rents or leases no more than two units or bedrooms, including, but not limited to, an accessory dwelling unit or a junior accessory dwelling unit. 6. A duplex in which the owner occupied one of the units as the owner’s principal place of residence at the beginning of the tenancy, so long as the owner continues in occupancy. 7. Housing that has been issued a certificate of occupancy within the previous 15 years. 8. Residential real property that is alienable separate from the title to any other dwelling unit, provided that the owner is not any of the following: (A) A real estate investment trust, as defined in Section 856 of the Internal Revenue Code. (B) A corporation. Not Yet Approved 20191121 th 0140204 5 (C) A limited liability company in which at least one member is a corporation. 9. Housing restricted by deed, regulatory restriction contained in an agreement with a government agency, or other recorded document as affordable housing for persons and families of very low, or moderate income, as defined in Section 50093 of the Health and Safety Code, or subject to an agreement that provides housing subsidies for affordable housing for persons and families of very low, low, or moderate income, as defined in Section 50093 of the Health and Safety Code or comparable federal statutes. (d) Any waiver of the rights under this section shall be void as contrary to public policy. (e) For the purposes of this Ordinance, the following definitions shall apply: 1. “Owner” and “residential real property” have the same meaning as those terms are defined in Civil Code Section 1954.51. 2. “Tenancy” means the lawful occupation of residential real property and includes a lease or sublease. (f) Applicability. This Ordinance shall apply to tenancies where the tenant remains in possession of the residential real property and an eviction lawsuit, if any, has not been finally adjudicated. (g) Statement of Urgency. The City Council finds and declares that this Ordinance is required for the immediate protection of the public peace, health and safety as failure to adopt this urgency ordinance could result in irreversible displacement of residents resulting from no-fault evictions during the period before AB1482 becomes effective. The Council, therefore, adopts this Ordinance to become effective immediately upon adoption. (h) Enforcement. An owner's failure to comply with any requirement of this Ordinance shall render any notice of termination of tenancy void. A tenant may assert this Ordinance as a complete affirmative defense in an unlawful detainer or other action brought by the owner to recover possession of the residential real property. A tenant may bring a civil suit in the courts of the state alleging that an owner has violated any of the provisions of this ordinance. An owner’s failure to comply with this Ordinance does not constitute a criminal offense. SECTION 3. If any section, subsection, clause or phrase of this Ordinance is for any reason held to be invalid, such decision shall not affect the validity of the remaining portion or sections of the Ordinance. The Council hereby declares that it should have adopted the Ordinance and each section, subsection, sentence, clause or phrase thereof irrespective of the fact that any one or more sections, subsections, sentences, clauses or phrases be declared invalid. Not Yet Approved 20191121 th 0140204 6 SECTION 4. The Council finds that this project is exempt from the provisions of the California Environmental Quality Act (“CEQA”), pursuant to Section 15061 of the CEQA Guidelines, because it can be seen with certainty that there is no possibility that the ordinance will have a significant effect on the environment. SECTION 5. This ordinance shall be effective immediately upon adoption and shall remain in effect until December 31, 2019. On January 1, 2020, this ordinance shall be repealed and shall be of no further force and effect. INTRODUCED: PASSED: AYES: NOES: ABSENT: ABSTENTIONS: ATTEST: ____________________________ ____________________________ City Clerk Mayor APPROVED AS TO FORM: APPROVED: ____________________________ ____________________________ City Attorney City Manager ____________________________ Director of Administrative Services City of Palo Alto (ID # 10814) City Council Staff Report Report Type: Action Items Meeting Date: 12/2/2019 City of Palo Alto Page 1 Summary Title: Participation of Palo Alto Hotels in the San Mateo County Tourism Business Improvement District Title: Discussion Regarding Participation of Palo Alto Hotels in the San Mateo County Tourism Business Improvement District and Potential Adoption of a Resolution Requesting Withdrawal From: City Manager Lead Department: City Manager Executive Summary Representatives from some of the hotels in the City of Palo Alto have requested that the City withdraw from the San Mateo County Tourism Business Improvement District (TBID) effective January 2020. According to the request for withdrawal, 19 of the 27 properties currently operating in Palo Alto – or 70% – concurred with the proposal to withdraw. The San Mateo County/Silicon Valley CVB has expressed its desire to continue serving the City of Palo Alto and reports they have sought to be responsive to the concerns of the Palo Alto hotels and to demonstrate their value to the City of Palo Alto. The Palo Alto Chamber of Commerce, which receives a portion of the TBID funding for performing visitor services, has also communicated a need to maintain this funding in order to continue their information and referral function. Please see Attachments B and C for communications from those requesting and opposing withdrawal, respectively. Recommended Motions Staff recommends that Council consider the following motions: A) Direct staff to transmit to the City of Burlingame a letter confirming that the City of Palo Alto intends to maintain its participation in the San Mateo County Tourism Business Improvement District; And/Or: B) Direct staff to: 1) monitor the progress of the San Mateo County/Silicon Valley Convention and Visitors Bureau to: a) demonstrate its value to the City of Palo Alto, and b) work with all hotels in the City of Palo Alto to resolve key concerns regarding the San Mateo County Tourism Business Improvement District; and 2) return to the City Council in autumn of 2020 with a status report and staff recommendation regarding continued participation in the San Mateo County Tourism Business Improvement District; City of Palo Alto Page 2 And/Or: C) Adopt the Resolution and direct staff to transmit the Resolution to the City of Burlingame with a request to take all steps necessary to implement withdrawal from the San Mateo County Tourism Business Improvement District effective January 2020 or as soon thereafter as possible. Authorize the City Manager to negotiate and pay necessary and reasonable administrative costs of the City of Burlingame to effectuate this request. Recommendations Should the City Council wish to continue participation with the San Mateo County Tourism Business Improvement District (TBID), for a year or indefinitely, staff recommends that Council direct staff to communicate this intention to the City of Burlingame to clarify any potential confusion resulting from the City of Palo Alto’s consideration of this request to withdraw from the TBID. Should the City Council wish to postpone a final decision on the question of withdrawal pending further research and/or community engagement, staff recommends that the San Mateo County/Silicon Valley Convention and Visitors Bureau (CVB) be encouraged to report its value to the City of Palo Alto over the next three to four quarters and collaborate with all hotels in the City of Palo Alto in an effort to address their key concerns regarding the work of the CVB on their behalf. Staff would then be in a position to report on this performance data, and on the results of collaboration, with an associated staff recommendation in time for the City Council to make a determination in the autumn of 2020 regarding participation in the San Mateo County TBID so that any change could be effective January 2021. Should the City Council wish to withdraw from the San Mateo County TBID effective January 2020 (or as soon thereafter as feasible), staff recommends the attached Resolution (Attachment D) be adopted and transmitted to the City of Burlingame. Background On March 8, 2010, the Palo Alto City Council voted 9-0 in favor of a consent calendar including the adoption of a resolution to consent to the City of Palo Alto being included within the boundaries of the San Mateo County TBID. According to the associated staff report (Attachment A), this action was the culmination of efforts directed by the City Council in October 2005 and involving a committee of Palo Alto stakeholders convened by the City Manager in 2006, which led to a City Council action on October 6, 2008 to begin contracting with the San Mateo County/Silicon Valley CVB for “visitorship” services in fiscal years 2009 and 2010 in support of a “Destination Palo Alto” two-year pilot program. The City then transitioned from the pilot program to formal participation in the San Mateo County TBID following a multi-step process that included outreach to all Palo Alto hotels by the San Mateo County/Silicon Valley CVB. (Please see Attachment A for more details.) Discussion The economic ecosystem of a community is largely dependent on three key contributing City of Palo Alto Page 3 factors: residents, businesses and visitors. In addition to Palo Alto, other communities in Santa Clara County that focus on visitor services and revenues through the formation of a convention and visitors bureau, a visitors bureau and/or a tourism business improvement district include the cities of San José, Santa Clara, Gilroy and Morgan Hill. Economic development strategies related to visitors may vary depending on whether business or recreational visitors are target markets and the nature of a community’s brand as well as its attractions and amenities. Resource Impact The TBID assessment generates approximately $309,040 annually from Palo Alto hotels and is paid to the San Mateo County/Silicon Valley CVB for visitor services and marketing for the community of Palo Alto as a member of the broader region served by the TBID. Approximately $31,890 of this funding is transferred from the CVB to the Palo Alto Chamber of Commerce to support its function as a local visitor’s bureau specific to Palo Alto. There are no City of Palo Alto funds budgeted to support visitor services or marketing functions such as those provided by the San Mateo County/Silicon Valley CVB and the Palo Alto Chamber of Commerce in its capacity as a visitor’s bureau. The request for withdrawal from the TBID does not propose any alternative source of funding for these purposes. Visitor services and marketing functions are typically associated with promoting economic vitality and revenue from visitors (as opposed to residents or businesses) within a city or county jurisdiction. In the City of Palo Alto, Transient Occupany Tax (TOT) from visitors to Palo Alto hotels currently generates approximately $29.3 million in annual City revenues. In the General Fund, TOT represents approximatley 13% of General Fund revenues. (For context, property taxes, the largest revenue sourece in the General Fund, represent approximately 21% of General Fund revenues.) Staff does not have an estimate of the degree to which TOT or other secondary revenues generated by visitors, such as sales tax, might be impacted by the loss of visitor services and marketing functions provided by the San Mateo County/Silicon Valley CVB and the Palo Alto Chamber of Commerce through a withdrawal of Palo Alto from the San Mateo County TBID. If the Council adopts the Resolution to withdraw from the San Mateo County TBID, City staff will work with the City of Burlingame to implement the withdrawal, including negotiating and paying reasonable administrative fees to the City of Burlingame. Stakeholder Engagement The City of Palo Alto received the request for TBID withdrawal on October 28, 2019 and was contacted by the San Mateo County/Silicon Valley CVB regarding this matter on November 5, 2019. In an attempt to accommodate the request for this withdrawal to become effective in January 2020, staff placed this matter on the earliest possible City Council agenda of December 2, 2019. As a result, time has not allowed for any substantive stakeholder engagement by City staff. Environmental Review City of Palo Alto Page 4 This item is not a project for purposes of the California Environmental Quality Act (CEQA). Environmental review is not required. Attachments: • Attachment A - City Managers TBID Report 03.08.2010 • Attachment B - Withdrawal Request • Attachment C - Objections to Withdrawal • Attachment D - Tourism BID Resolution TO: HONORABLE CITY COUNCIL FROM: CITY MANAGER DATE: MARCH 8, 2010 REPORT TYPE: CONSENT DEP ARTMENT:PLANNING AND COMMUNITY ENVIRONMENT CMR: 154:10 SUBJECT: Adoption of a Resolution to Consent to the City of Palo Alto Being Included Within the Boundaries of the San Mateo County Tourism Business Improvement District and Direction to Terminate Destination Palo Alto Contract RECOMMENDATION Staff recommends that the City Council: 1) Approve the attached Resolution to Consent to the City of Palo Alto being included within the boundaries of the San Mateo County Tourism Business Improvement District; and 2) Direct City Manager to formally provide written notice to the Convention Visitors Bureau that the contract between the City of Palo Alto and the San Mateo County/Silicon Valley Convention Visitors Bureau be terminated effective June 6, 2010, providing the required 60 day notice for this action. EXECUTIVE SUMMARY The purpose of this report is to provide City Council with the Resolution of Consent which will initiate the process to include Palo Alto hotels as participants in the San Mateo County Tourism Business Improvement (TBID). Following adoption of the Resolution of Consent, the City of Burlingame, as lead agency for the San Mateo County TBID will propose the addition of Palo Alto Hotels into the TBID. The participation of Palo Alto hotels in the TBID would result in the hotel guest paying a small increment of approximately ($.15 to $1.00) per room, per night rather than the City providing funds in the Destination Palo Alto contract. (The exact amount of assessments would depend on a property's projected occupancy.) Essentially, the same service level would be provided to hotels through this approach, as was provided under Destination Palo Alto. The SMC/SVCVB has also indicated continuation of the Palo Alto Visitors' Center at the Palo Alto Chamber of Commerce. The potential cost savings to the City would be $80,000 in FY 2010. CMR: 154:10 lof5 Attachment A BACKGROUND In October 2005, the City Council directed staff to agendize a Council discussion that would explore enhancing Palo Alto's economy by improving visitor outreach. In February 2006, staff convened a committee of stakeholders for a Palo Alto visitorship effort. The Destination Palo Alto committee was chaired by the City Manager and held its first meeting on March 15,2006. Stakeholders included: the Palo Alto Chamber of Commerce, Stanford Athletics, Palo Alto Business Improvement District, Palo Alto Weekly, Stanford Visitor's Center, Palo Alto Online, California Avenue Area Development Association (CAADA), Stanford Shopping Center, Stanford University, Town and Country Shopping Center, Palo Alto Arts Center and business representatives from the hotel, retail and hospitality industries. On October 6, 2008, City Council authorized the City Manager or his designee to execute the agreement with the San Mateo County/Silicon Valley Convention and Visitors Bureau (SMC/SVCVB) in an amount not to exceed $455,000 for visitorship services for the fiscal year 2009 and fiscal year 2010. The first year of the contract included $215,000 to the SMC/SVCVB, and $25,000 to the Palo Alto weekly for an update of the Destination Palo Alto website and additional marketing materials. In the second year of the contract, the full amount of $240,000 was allocated for the provision of visitors hip services by the SMC/SVCVB. On November 2,2009, City Council confirmed the extension of the contract but requested that staff return with a description of the methodology and specific metrics to be used to quantify the City's return on its investment. The Council also directed that the contract be amended to provide for a 60-day termination clause by either party (which has been completed). In December, the Council received a request from the SMC/SVCVB that the City vote to approve inclusion in the Bureau's TBID, switching from a contractual arrangement with the City. In February 2010, staff presented baseline information and metrics quantifying the City's return on investment for Destination Palo Alto to assess the effectiveness of the program thus far, and considered a letter from the CVB to move to include the Palo Alto hotels in its TBID and terminate the Destination Palo Alto contract. Following this review, City Council unanimously approved the staff recommendation to consider adoption of a Resolution of Consent to participate in the San Mateo County TBID. DISCUSSION Attached to this staff report is a letter dated December 18, 2009 which staff received from the SMC/SVCVB. In the letter, the CVB indicates that inclusion of Palo Alto hotels into the Tourism Business Improvement District which encompasses most of San Mateo County (with whom Palo Alto would otherwise compete for hotel room bookings without inclusion into the CVB) would be a more effective way to deliver tourism services in the Palo Alto marketplace. Eventual transition of the Destination Palo Alto to a TBID was the longer term outcome when it was initiated. Should Palo Alto opt into the TBID, the CVB will retain its visitor center presence in the Palo Alto Chamber office, at no additional cost to the City, so service would be uninterrupted. In addition, a Palo Alto hotel owner will be included on the TBID's advisory board. CMR: 154:10 20f5 The CVB proposed that the contract between the CVB and the City of Palo Alto end in April or May of2010 (to allow for public notifications regarding transition, etc.) and that the City Council pursue participation in the existing TBID. Inclusion into the TBID would result in a nominal additional cost to travelers. The range of cost is approximately 15 cents to $1 per room night based on the projected occupancy of each hotel. Smaller hotels with limited services and meeting space with lower occupancy pay less than larger, full-service hotels. The CVB's TBID has been in place successfully since April of2001. The City of Burlingame is the lead city for the TBID and conducts the notifications and public hearings for the TBID. Other areas competing for meetings with TBIDs of their own include San Jose, San Francisco, Santa Clara, Sacramento County, San Diego and Santa Cruz County. The CVB has already conducted outreach to the largest hotels in Palo Alto that represent a majority of rooms in the City. Several Palo Alto hotels, including the Westin, Sheraton, Cabana, Garden Court and Dinah's Court, have indicated their support for inclusion into the TBID. The CVB is continuing its outreach and will update the City Council on the outreach to both large and small hotels. Expanding the TBID to include Palo Alto hotels is a multi step process. To initiate the process, the Palo Alto Council must adopt a Resolution of Consent to be included within the San Mateo County TBID (Attachment 3). Once the initiating resolution is adopted, the Burlingame City Council as lead agency of the TBID conducts two additional public hearings to formalize the inclusion of the Palo Alto hotels as District C of the TBID. At these hearings, affected hotels will be given the right to file written protests. If protests are not received from owners of hotels or other lodging establishments responsible for 50% or more of the total value of the projected Palo Alto hotel assessment, the district will be amended to include Palo Alto hotels and the assessments will be levied against the hotels. The entire TBID inclusion process may take up to 90 days due to the, notification and public hearing process. Once the Palo Alto hotels are included in the TBID, the Burlingame City Council will conduct annual re-authorization hearings. This process is similar to that used to establish the Palo Alto Downtown Business Improvement District. To provide for an effective transition of this program, the contract with the San Mateo County/Silicon Valley Convention and Visitor's Bureau (SMC/SVCVB) would continue through May with an effective termination date of June 6, 2010. As discussed at the February 8, 2010 City Council meeting, City Council, staff, and the Convention Visitors Bureau believe that termination of the Destination Palo Alto contract and participation in the Tourism Business Improvement District is the best option for the delivery of services to the hotels in Palo Alto. Since hotels would not begin paying TBID assessments until the beginning of the first full quarter of inclusion, anticipated to be July 2010, there would be ample time to transition from the Destination Palo Alto contract to the Tourism BID. The SMC/SVCVB has met with the City's largest hotels and thus far the Sheraton/Westin, Cabana, Dinah's, Garden Court hotels and Creekside have indicated support for the transition to a TBID. Immediately following the City Council meeting on February 8, 2010, all Palo Alto hotels received a letter explaining the plan to make a transition TBID (Attachment 4). The letter provided contacts for questions and comments. To date, only one clarification request was CMR: 154:10 30f5 received from the Stanford Terrace hotel. No other comments, questions or concerns have been communicated to the CVB or the City. RESOURCE IMPACT The first year of Destination Palo Alto Visitor Program was funded through an allocation of the City's General Fund for FY 2009. The Destination Palo Alto program is a two-year pilot with $240,000 for the second year allocated as a part of the 2009-10 budgets. If the contract is ended on June 6, 2010, $80,000 of the original contract amount will not be expended. City Council will consider how to redirect the remaining Destination Palo Alto funds as a part of the FYI0 mid- year or FY 2011 budget process. Should the City collect the TBID remittances directly, there will be additional administrative workload for the Administrative Services Department. In light of past and future budget reductions and general policy to become more effective and efficient, staff recommends that remittances be sent directly from hotels to the City of Burlingame. There appear to be no benefits to the City from it acting as an intermediary or second step in the remittance process. It is important to note that most cities in the TBID collect TBID assessments while collecting the transient occupancy tax. By remitting fees directly to Burlingame, hotels will experience a modest increase in work and mailing expenses. ENVIRONMENTAL REVIEW This action by the City Council is not considered a project pursuant to Section 21065 of the California Environmental Quality Act. PREPARED BY: DEPARTMENT HEAD: CITY MANAGER APPROVAL: CMR: 154:10 ~cb.~~ $USAN BARNES{ Manager Economic Development/Redevelopment CURTIS WILLIAMS, Director Planning and Community Environment 40f5 ATTACHMENTS Attachment 1: Attachment 2: Attachment 3: Attachment 4: CMR: 154:10 . Letter from SMC/SVCVB of December 21,2009 CMR 138:10 (February 8, 2010) Resolution of Consent for inclusion of Palo Alto hotels into the San Mateo County Tourism Business Improvement District Letter from SMC/SVCVB re: Joining San Mateo County TBID 50f5 December 21, 2009 Palo Alto City Council 250 Hamilton St. Palo Alto, CA 9430 I ATTACHMENT 1 111 Anza Boulevard, Suite 410, Burlingame, CA 94010 650-348-7600 • 1-800-288-4748 Fax 650-348-7687 info@sanmateocountycvb.com • www.visitsanmateocounty.com Dear Mayor Drekmeier and Members of the Council: As you know, we began representing Palo Alto hotels and motels in October, 2008, promoting your properties in the same manner as the properties in the cities we represent as part of ollr TOllrism Business Improvement District (TBID). We have appreciated your Council's support and we believe that the relationship has resulted, and will continue to result, in a positive economic benefit for your city. When we entered into a contract with your city, our hope was that after two years under contract, Palo Alto properties would become patt of Ollr tourism business improvement district, with no Palo Alto City money involved. In these challenging times, ollr desire as a board is to maximize the time our staff spends on selling and promoting the area as a whole. It is the regional efforts that maximize the return on investment and bring people i11to ollr properties. What we are tinding lately. however, is that a disprop01tionate amollnt of staff time is being spent on local Palo Alto meetings, questions, etc. In an eff0l1 to allow our team to foclls on regional promotion, we voted at Ollr December Board meeting to spend the next fe\v weeks talking to Palo Alto properties about becoming part of our existing TBID midway through the second year of our contract with the City of Palo Alto, rather than operating under a system under which the City of Palo Alto pays for the equivalent of their assessments. Should such a change occur, it would save your city approximately $120,000. We will repOIt back to your city staff well in advance of your February 8 council meeting. If the hotels have an interest and your council wishes to be part of the TBlD (with hotel guests paying for the assessments, rather than using any city money), it would mean the City of Palo could simply pass a resolution requesting that Palo Alto be included in the existing TBID. The request would then go to the City of Burlingame as lead agency for our TBID, to handle all noticing requirements. We look forward to a continued positive relationship with the City of Palo Alto, We want to commend Susan Barnes in particular for doing everything possible to promote your businesses and city. It is a pleasure working with her. Sincerely, Ken Landis E~~O~ (tid» Chairman of the Board (2009) Chairman of the Board (2010) ATTACHMENT 2 City of Palo Alto City Manager's Report TO: HONORABLE CITY COUNCIL 14' FROM: CITY MANAGER DATE: FEBRUARY 8, 2010 REPORT TYPE: ACTION DEPARTMENT:PLANNING AND COMMUNITY ENVIRONMENT CMR: 138:10 SUBJECT: Review of Destination Palo Alto Metrics and Direction to Staff to Pursue Transition to Participation in the San Mateo County Tourism Business Improvement District RECOMMENDATION Staff recommends that the City Council: 1) Review the baseline data, methodology and Destination Palo Alto return on investment information; and , 2) Direct staff to explore participation in the San Mateo County Tourism Business Improvement District operated by the San Mateo County/Silicon Valley Convention Visitors Bureau. EXECUTIVE SUMMARY The purpose of this report is to respond to City Council questions and concerns regarding the City's return on investment for the City's visitorship effort, Destination Palo Alto. At the November 2,2009 City Council Meeting, staff was directed to return to City Council within three months with details of metrics t6 be used to measure performance of the program. This staff report contains detailed baseline data on transient occupancy tax revenue, occupancy rates, and total number of hotel rooms for Palo Alto and 7 other area cities. In addition, a specific estimate is provided for transient occupancy tax revenue generated as a-result of the San Mateo/Silicon Valley Convention and Visitors Bureau (SM/SVCVB) through Destination Palo Alto. The period covered in this review is November 2008 through December 2009. The data indicates the City received $187,061 in revenues, as compared to the $249,000 cost of the program which includes the $25,000 paid directly to the Palo Alto Weekly (for local marketing-website, visitors' guides, rack brochure) and operation of the Visitors' Center at the Chamber of Commerce. CMR: 138:10 10f6 Since the City Council meeting in November, staff has received communication from the SM/SVCVB regarding its desire to transition from the existing contract to the inclusion of Palo Alto hotels into the existing Tourism Business Improvement District operated by the CVB. This change would result in the hotel guest paying a small increment ($.15 to $1.00) per room, per night rather than the City providing funds in the Destination Palo Alto contract. Essentially, the same service level would be provided to hotels through this approach, following up on the success of Destination Palo Alto. The SMlSVCVB has also indicated continuation of the Palo Alto Visitors' Center at the Palo Alto Chamber of Commerce. The potential cost savings to the City would be approximately $60,000 -$120,000 in FY 2010. BACKGROUND In October 2005, the City Council directed staff to agendize a Council discussion that would explore enhancing Palo Alto's economy by improving visitor outreach. In February 2006, staff convened a committee of stakeholders for a Palo Alto visitorship effort. The committee, Destination Palo Alto, was chaired by the City Manager and held its first meeting on March 15, 2006. Stakeholders included: the Palo Alto Chamber of Commerce, Stanford Athletics, Palo Alto Business Improvement District, Palo Alto Weekly, Stanford Visitor's Center, Palo Alto Online, California Avenue Area Development Association (CAADA), Stanford Shopping Center, Stanford University, Town and Country Shopping Center, Palo Alto Arts Center and business representatives from the hotel, retail and hospitality industries. The goals of Destination Palo Alto included the development of a specific, actionable and achievable plan that would strengthen visitorship in Palo Alto. Three key objectives included: 1. Attracting more visitors to Palo Alto 2. Promoting return visitorship to Palo Alto 3. EntiCing visitors to stay longer, use additional amenities and spend more money locally Staff issued an RFP for visitorship services on April 14, 2008. Staff was directed to include $240,000 for the Destination Palo Alto program in the FY 2009 proposed budget and $240,000 in the FY 2010 proposed budget. Based on input from the Administrative Services Department, a formula was identified for estimating the City's return on its investment for Destination Palo Alto. Based on a 5% increase in the occupied room days for the five largest hotels in Palo Alto, the growth in revenue was estimated to be approximately $240,000 yearly. This amount was proposed for two years as a part of the FY 2009 and FY 2010 budgets. On October 6, 2008, City Council authorized the City Manager or his designee to execute the agreement with the San Mateo County/Silicon Valley Convention and Visitors Bureau (SMC/SVCVB) in an amount not to exceed $455,000 for visitorship services for the fiscal year 2009 and fiscal year 2010. $25,000 of the total $240,000 contract amount was awarded to the Palo Alto Weekly for an upgrade of the Destination Palo Alto website ($15,000) and for the provision of two visitor CMR: 138:10 20f6 · guides ($10,000). The cost of the visitor guides and website upgrade are one time costs. No rate of return was calculated for this portion of the contract. Thus, in the first year of the contract, the SMC/SVCVB portion of the contract was only $215,000. In the second year of the contract, the full amount of $240,000 was allocated for the provision of visitorship services by the SMC/SVCVB. On November 2,2009, City Council confirmed the extension of the contract but requested that staff return with a description of the methodology and specific metrics to be used to quantify the City's return on its investment. The Council also directed that the contract be amended to provide for a 60-day termination clause by either party (which has been completed). DISCUSSION Staff has collected baseline data from a number of other cities in an effort to address the questions from City Council. Attached is a spreadsheet that identifies the transient occupancy tax (TOT) revenue, occupancy rates (when available) and the tot~:tl number of hotel rooms in Palo Alto, Berkeley, Redwood City, Cupertino, Campbell, Mountain View, Menlo Park and Sunnyvale (Attachment 2). Baseline Metrics Staff analyzed FY2007, 2008, and 2009 data related to TOT revenue, percentage occupancy rates and number of hotel beds from 8 cities: Palo Alto, Menlo Park, Cupertino, Berkeley, Redwood City, Campbell and Sunnyvale. The statistical analysis did not identify any significant differences accounted for by either the presence or absence of a convention bureau, or the rate of TOT. Overall, the statistical results of the TOT analysis indicated that macroeconomic factors, especially the downturn in the economy in the Bay Area Region, swamped any other effects. While no specific inferences can be made from this data, the collection of baseline figures will allow staff to determine the impact of Destination Palo Alto as the program continues to develop. Rate of Return The Destination Palo Alto contract was initiated in October of 2008. Events and hotel room bookings are planned months and even years in advance. For this reason, the CVB cannot attribute any hotel bookings to the program for that 2008, therefore the table below begins with calendar year 2009. The following table illustrates rooms booked in Palo Alto for 2009, and 2010 (based on bookings through 12/15/2009). In addition, revenues generated through transient occupancy tax, secondary impacts (such as sales tax) and costs to operate Destination Palo Alto are detailed. CMR: 138:10 30f6 Table I Destination Palo Alto 2009 2010 (Full year estimate) 10 .. Rooms bookedl , 9,900 12,000 Palo Alto hotel room revenue generated by $1,439,559 $1,744, 920 DPA2 ... Secondary Revenue· Impact 3 $1,439,059 $1,735,080 . A. TOT Revenue to Palo Alto from DP A $172,747 $209,390 bookings 4 B. Sales tax revenue 5 $14,314 $17,351 Total TOT and Sales Tax Revenue 6 $187,061 $226,741 Annual Cost ofDPA 7 $240,000 $240,000 C. Return on investment 8 78% 94.4% D. Rate of Return (without Visitor Center) 117% 142% The following summarizes some of the key assumptions used to prepare the table (corresponding to the footnotes): 1. Rooms booked by SMC/SVCVB 2. Average room rate (9,900 x $ 145.41/night = hotel room revenues) 3. Secondary Revenue Impact (retail sales, restaurant sales, services purchased by travelers) -144.59 per room per day per Smith Travel Research 4. TOTrateofl2% 5. Sales tax at 1 % of retail impacts 6. A+B 7. Amount includes $25,000 to PA Weekly (2009) and $80,000 for Visitor Center at Chamber of Commerce 8. Ratio of total City revenue to cost ofDPA ($240,000) 9. Data through 12115/2009 10. Contract period is 10 months in 2010 Staff notes that there is an anticipated 21 % increase in total transient occupancy tax, and sales tax revenue comparing 2009 figures to 2010. This trend is expected to continue as the program matures and as additional room nights are booked. The ROR is estimated at 78% for 2009, including the dollars allocated to the Palo Alto Weekly ($25,000) and for the Visitor Center ($80,000). For 2010, the return on investment is projected at 94% (again including the Visitor Center costs). The figures above assume all room nights booked become actual room stays, which may tend to overstate bookings. However, this overstatement is somewhat offset by other revenues not captured in this metric, such as room night revenue, sales tax and total economic impact generated from leisure travelers generated by numerous articles and advertisements featuring Palo Alto, and rooms generated by features or ads in publications aimed at meeting planners. CMR: 138:10 40f6 Tourism Business Improvement District Attached to this staff report is a letter dated December 18, .2009 which staff received from the SM/SVCVB. In the letter, the CVB indicates that inclusion of Palo Alto hotels into the Tourism Business Improvement District (TBID) which encompasses most of San Mateo County (with whom Palo Alto would otherwise compete for hotel room bookings without inclusion into the CVB) would be a more effective way to deliver tourism services in the Palo Alto marketplace. This was the longer term outlook for Destination Palo Alto when it was initiated. Should Palo Alto opt into the TBID, the CVB will retain its visitor center presence in the Palo Alto Chamber office at no additional cost to the City, so service would be uninterrupted. The CVB proposes that the contract between the CVB and the City of Palo Alto end in April or May of 2010 (depending on the timeframe for public notifications, etc.) and that the City Council direct staff to pursue participation in the existing TBID. Inclusion into the TBID would result in a nominal additional cost to travelers. The range of cost is approximately 15 cents to $1 per room night based on the projected occupancy of each hotel. Smaller hotels with limited services and meeting space with lower occupancy pay less than larger, full-service hotels. The CVB' s TBID has been in place successfully since April of 200 1. Other areas competing for meetings with TBIDs of their own include San Jose, San Francisco, Santa Clara, Sacramento County, San Diego and Santa Cruz County. The CVB has already conducted outreach to the largest four hotels and others in Palo Alto that represent a majority of rooms in the City. Currently· a number of Palo Alto hotels including the Westin, Sheraton and Dinah's Court have indicated their support for inclusion into the TBID. The CVB is continuing its outreach arid will report these outcomes at City Council. Should City Council determine that participation in the TBID be explored, staff will return to City Council tentatively on March 8, 2010, with a resolution of intention for inclusion into the TBID by Palo Alto hotels. The entire TSID inclusion process may take up to 90 days with notifications. This process is similar to that used to establish the Palo Alto Downtown Business Improvement District. RESOURCE IMPACT The first year of Destination Palo Alto Visitor Program was funded through an allocation of the City's General Fund for FY 2009. The amount of the funding allocated for the program was based on the expected growth in hotel occupancy that results from implementation of the program. The expected growth in occupancy was estimated to be 5 percent, which translates into $240,000. It is estimated that approximately $187,061 was generated in revenue to the City in transient occupancy tax and sales tax alone for 2009. The Destination Palo Alto program is a two-year pilot with $240,000 for the second year allocated as a part of the 2009-11 budgets. If the contract is ended in April-June, 2010, approximately $60,000-$120,000 of the original contract amount will not be expended. Staff has recommended the flexibility to terminate the contract in April or May, depending on the time required for TBID inclusion to ensure uninterrupted services to the hotels and visitor's center at the Chamber of Commerce. CMR: 138:10 50f6 ENVIRONMENTAL REVIEW This action by the City Council is not considered a project pursuant to Section 21065 of the California Environmental Quality Act. PREPARED BY: S SAN BARNES, anager Economic Development/Redevelopment DEPARTMENT HEAD: . CURTIS WILLIAMS, Director Planning and Community Environment CITY MANAGER APPROVAL: ATTACHMENTS Attachment 1: Attachment 2: Attachment 3: CMR: 138:10 Letter from SMC/SVCVB of December 21, 2009 Baseline data on transient occupancy tax revenue, number of hotel rooms and occupancy for selected cities CMR: 386:09 dated November 2,2009: Approval of the Extension of the Agreement between San Mateo County Convention and Visitors Bureau and the City of Palo Alto for the Provision of Destination Palo Alto Visitorship Services in the amount of $240,000 for Fiscal Year 200911 0 60f6 Not Yet Approved ATTACHMENT 3 Resolution No. --- Resolution of the Council of the City of Palo Alto to Consent to the City of Palo Alto Being Included Within the Boundaries of the San Mateo County Tourism Business Improvement District WHEREAS, Section 36521.5 of the California Streets and Highways Code authorizes this City to consent to its inclusion within the boundaries of a Business Improvement District; and WHEREAS, it is proposed that the City of Palo Alto be included in the boundaries of the San Mateo County Tourism Business Improvement District for the purpose of collecting assessments from commercial lodging facilities (hotels, motels, etc); and WHEREAS, pursuant to the Streets and Highways Code sections 36500 and following, the City of Burlingame will hold necessary hearings, provide required notices, and receive testimony and protests; and WHEREAS, this City has reviewed the ordinances establishing the San Mateo County Tourism Business Improvement District, including but not limited to the proposed district boundaries, assessments, and purposes for the District. NOW, THEREFORE, the Council of the City of Palo Alto does RESOLVE as follows: SECTION 1. The City of Palo Alto hereby consents to being included in the boundaries of the San Mateo County Tourism Business Improvement District for hotels and authorizes the City of Burlingame to take necessary steps and actions to formalize its inclusion in the boundaries of the District. SECTION 2. The City further requests that the Burlingame City Council amend Section 14 of Ordinance 1648 to require an owner or manager of a hotel or property occupied by a hotel in the City of Palo Alto be appointed to the advisory board. II II II II II II 100210jb 0130565 Not Yet Approved SECTION 3. The Council finds that this is not a project under the California Environmental Quality Act and, therefore, no environmental impact assessment is necessary. INTRODUCED AND PASSED: AYES: NOES: ABSENT: ABSTENTIONS: ATTEST: , City Clerk APPROVED AS TO FORM: City Attorney 100302 jb 0130565 Mayor APPROVED: City Manager Director of Director of Administrative Services February 9, 2010 To: Palo Alto Properties ATTACHMENT 4 111 Anza Boulevard, Suite 410, Burlingame, CA 94010 650-348-7600 • 1-800-288-4748 Fax 650-348-7687 info@sanmateocountycvb.com • www.visitsanmateocounty.com From: The San Mateo County/Silicon Valley Convention and Visitors Bureau Re: Joining Existing San Mateo County (Silicon Valley) Tourism Business Improvement District Dear Property Owners and Managers: A few years ago, we approached some of the largest properties in Palo Alto with an offer to have Palo Alto hotels and motels join our tourism business improvement district (TBID). In our TBID, hotels are assigned an assessment*, which is passed on to guests on the guest folio as a small "tourism fee". These TBIDs are now in place all over California, including Sacramento County, San Francisco/San Francisco County, Monterey County, the City of San Jose, the City of Santa Clara, San Diego and, of course, San Mateo County. They have become commonplace and visitors have become used to paying a tourism or TBID fee. At that time, it was proposed that instead of joining the TBID, the hotels get representation and sales outreach from our Bureau, but funded by the City of Palo Alto in a contract. In October of 2008, a contract was signed with the City of Palo Alto and all promises in that contract honored. We have found, however, that the "strictly local" meetings, reports and requests are detracting from our sales outreach for our area. We are all about sales and marketing, and our Board is convinced your properties would benefit far more from joining the TBID. At a Council meeting on March 8, the Palo Alto City Council will vote on a resolution requesting Palo Alto's inclusion in our TBID. If approved, the process would take up to 90 days, with Palo Alto properties officially in the TBID as of Mayor June, but with no assessments passed on until the quarter beginning July 2010, to allow collection of the fees prior to any billing, so no money would be out-of-pocket. We have already met with multiple properties in Palo Alto that would have the highest assessments and all five to whom we have spoken so far support giving the TBID a try, particularly in today's challenging economic times. (Hotels are notified annually when the renewal process is pending.) We are now reaching out to notify Palo Alto properties whose assessments would be at much lower levels to let them know this is under discussion. Enclosed is a list of services we offer. Worth noting for smaller properties are the opportunities we provide in terms of generating editorial about the area, leisure room nights, film crew leads and tour and travel. In addition, a general rule of thumb is that,even when we book a large conference into an area hotel, 20% of the attendees will book elsewhere in the area, "outside the block", in order to get a lower rate. Large meetings usually also generate overflow rooms for smaller properties. Please let us know if you have any questions or concerns prior to March 80 Thank you! Sincerely, Anne LeClair President & CEO * According to our calculations, since your property has over 20 sleeping rooms, if your occupancy is at 60%, your assessment would be covered with a tourism fee of 15 cents per night. The fee is adjustable. So, if your occupancy were at 30%, you could pass on a fee of30 cents per night. (All of this is explained in documentation that goes out to participating properties.) 111 Anza Boulevard, Suite 410, Burlingame, CA 94010 650-348-7600 • 1-800-288-4748 Fax 650-348-7687 info@sanmateocountycvb.com • www.visitsanmateocounty.com Your best contacts for questions about: Sales efforts in general/how small properties benefit most: Teipo Brown teipo@smccvb.com Billing/payment process: Gina Allhands gina@smccvb.com General Questions: Anne LeClair AnneL@smccvb.com Office Number: 650-348-7600 1 From: Barbara Gross <barbara.ellen.gross@gmail.com> Sent: Wednesday, October 30, 2019 2:03 PM To: Council, City <city.council@cityofpaloalto.org>; City Mgr <CityMgr@cityofpaloalto.org>; Shikada, Ed <Ed.Shikada@CityofPaloAlto.org>; Flaherty, Michelle <Michelle.Flaherty@CityofPaloAlto.org>; Stump, Molly <Molly.Stump@CityofPaloAlto.org> Cc: Jim Rebosio <JRebosio@sheratonpaloalto.com>; Barbara Feldman Gross <barbara.ellen.gross@gmail.com>; Stephanie Wansek <stephanie@cardinalhotel.com>; Yatin Patel <ykpatel@gmail.com> Subject: Withdrawal from San Mateo Convention County Convention Visitors Bureau Dear Council Members, Ed Shikada, Michelle Flaherty , Molly Stump, The above attachments are the necessary documents for Palo Alto Hotels, Motels and Inns to withdraw from the San Mateo County Convention Visitors Bureau. The attachments include: A letter to the City Council to take such action Origins and history of the relationship List of Hotels, Motels and Inns requesting withdrawal Membership fees vs. relative value PLEASE NOTE: At the inception of this agreement, outreach was limited to six hotels ‐ believing that a rising tide would positively effect all hospitality in the city. This is notated in the City Managers Report. The decision to withdraw is represented by a clear majority of current operators and owners. We are most grateful to Michelle Flaherty and Molly Stump for their assistance in researching the proper process for this action. As stated previously, please feel free to contact Jim Rebosio or Barbara Gross with questions or clarification. Thank you for your attention. Attachment B Palo Alto City Council 250 Hamilton Avenue Palo Alto, CA 94301 October 28, 2019 RE: Withdrawal from the San Mateo County Tourism Business Improvement District (TBID) Hon. Mayor Filseth and Council Members: On behalf of the undersigned hotels, please find here our request to withdraw from participation in the San Mateo County TBID effective January 1, 2020. Twenty-one (21) out of twenty-seven (27) hotels/motels in Palo Alto responded to inquiries of whether they wished to continue participation in the TBID. Of the respondents, 19 out of 21 signatures from owners and/or General Managers were obtained in support of withdrawal. Please see Attachment A. This reflects an overwhelming support for withdrawal. HISTORY The San Mateo County / Silicon Valley Convention & Visitors Bureau (SMCCVB) is the lead agency for the San Mateo County TBID, which is administered by the City of Burlingame. The San Mateo County TBID was formed in 2001 to promote and generate leads for all hotels/motels in San Mateo County. In 2008, the City Manager contracted with SMCCVB for visitorship services for Palo Alto for fiscal year 2009 and 2010. Per CMR: 154:10, beginning in July 2010, Palo Alto hotels participated directly in, and paid assessments directly to, the San Mateo County TBID (See Attachment B). Prior to adopting this resolution, the City conducted limited outreach to hotels/motels in Palo Alto to determine industry support for joining the TBID. The outreach was limited to the following large hotels: Sheraton, Westin, Crowne Plaza Cabana, Dinah’s Garden Hotel, Garden Court Hotel, and Creekside Inn (See Attachment B). Out of these original six (6) hotels, four (4) have signed the request to withdraw – the Sheraton, Westin, Crowne Plaza Cabana, and the Garden Court Hotel. The purpose of joining the TBID was to generate business and demonstrate a return on investment for Palo Alto hotels/motels. OUTREACH TO SMCCVB In January 2019, John Hutar, Dinah’s Garden Hotel’s then General Manager, invited SMCCVB President Anne LeClair and her team to present to Palo Alto hotels/motels its relevant activities in promoting Palo Alto as a destination. Many properties, including the larger hotels, questioned whether the SMCCVB was effectively marketing Palo Alto and requested to have a meeting. Unlike when the original decision to participate in the TBID was made, this meeting was well attended by a broader representation of properties affected by participation in the TBID. At this meeting, SMCCVB made it clear that they are an organization focused on lead generation rather than conversion. Many properties questioned whether there were an adequate amount of leads being generated for the Palo Alto market. Many Palo Alto hotels and motels followed up with SMCCVB in an effort to fully engage in potential future business opportunities. In June 2019, Stephanie Wansek, Cardinal Hotel GM and Barbara Gross, former GM of the Garden Court Hotel and current Hospitality Consultant, met with the recently appointed President of the SMCCVB and former Dinah’s Garden Hotel GM, John Hutar, and with the Chair of the Board for SMCCVB to discuss the Palo Alto relationship. There was a collegial exchange of information and enumerated potential business opportunities. During that meeting, another SMCCVB meeting with Palo Alto hotel/motel owners/GMs was planned for August 2019 at the Sheraton Hotel. On August 29th, John Hutar and team presented sales plans, direct sales and convention sales results and recent changes to the organization. PALO ALTO HOTEL COUNCIL (PAHC) MEETING Following the August meeting, the PAHC conducted outreach to hotels/motels for their feedback regarding their experience with the SMCCVB over the past decade or so, their return on investment in participating, and how they valued the relationship. On September 18, 2019 the PAHC held a meeting at which the status of the relationship with SMCCVB was an agenda item. The agenda item was discussed with many individual viewpoints and stances. Also discussed was the monthly contribution of $2,200 from SMCCVB to the Palo Alto Chamber of Commerce, to support their effort as a Visitor’s Bureau, which would cease as a result of a withdrawal. Any general manager and/or owner who expressed a desire to withdraw from the San Mateo County TBID was asked to sign a document expressing his/her/their intent (See Attachment A). Properties that were not present at this meeting or were unable to sign pending management approval were visited separately in order to survey as many properties as possible. Many of the smaller properties reported that historically, they responded to many leads over the past decade and have yielded nothing in return. They expressed concern that given the vast territory covered – San Mateo County plus Palo Alto, and given the lack of Palo Alto specific leads, their responses almost never yielded anything of value. It is also interesting to note that four (4) of the largest hotels in Palo Alto, the ones you would expect to benefit the most by participating in the SMCCVB, endorse withdrawal. Reasons for withdrawal from the larger properties included “not a good fit” and the rates of Palo Alto properties, especially the larger ones, are too high for the budgets of the majority of leads generated through SMCCVB efforts. The purpose of joining the TBID was to generate business and demonstrate a return on investment for Palo Alto hotels/motels. A decade later, with this request to withdraw from the San Mateo County TBID, a majority of Palo Alto hoteliers are voicing their opinion that this partnership has not yielded a return on investment to warrant continued participation. The undersigned properties thank you in advance for supporting their request to withdraw from the San Mateo County TBID effective January 1, 2020. For questions or further information, please contact: Barbara Gross, The Garden Court Hotel, Former GM barbara.ellen.gross@gmail.com Jim Rebosio, Sheraton / Westin, GM JRebosio@sheratonpaloalto.com Sincerely, Sheraton Palo Alto Hotel Crowne Plaza Cabana Palo Alto The Westin Palo Alto Comfort Inn Palo Alto The Cardinal Hotel Garden Court Hotel The Nest Palo Alto Hotel Keen Oak Motel Hotel Parmani Stanford Motor Inn Travelodge Palo Alto America's Best Value Sky Ranch Inn Glass Slipper Inn Palo Alto Inn The Clement Hotel Coronet Motel Berbeda Place Cowper Inn Attachment A Attachment B City Manager Resolution -CMR 154:10 - pages 15 1 From:John Hutar <john@smccvb.com> Sent:Tuesday, November 5, 2019 2:06 PM To:Council, City Subject:Palo Alto Hotels Attachments:Letter to Palo Alto City Council 10-31-19.pdf; Cover Page of upcoming Visitor Guide.pdf; Simply Ming in Palo Alto.pdf; SMCSVCVB Palo Alto Presentation 8-29-19.pdf Dear Mayor Filseth and Members of the Palo Alto City Council, On August 29, the Convention and Visitors Bureau met with Palo Alto hotels to address concerns articulated to me by Barbara Gross and Stephanie Wansek when I met with them on June 12 (I formally started my role on June 3). Those in attendance represented 70% of Palo Alto’s total room inventory. The attached letter summarizes that meeting and highlights initiatives we have completed since that presentation was made. I have also attached the 40 slide presentation in its entirety. One key takeaway from my discussions with Palo Alto members is that our domain name, www.visitsanmateocounty.com excludes Palo Alto and is not representative of the area we serve. Based on that feedback, we have changed our domain name to www.visitsmcsv.com (live 11/08/19) which will be reflected in the most current Visitor’s Guide and all other materials going forward. This example demonstrates our ability to accept feedback and react quickly in making improvements. I welcome the opportunity to discuss the Palo Alto Hotels situation with you personally and/or answer any questions you may have. Sincerely, John John M. Hutar | President and CEO San Mateo County/Silicon Valley Convention and Visitors Bureau 111 Anza Blvd., Suite 410 | Burlingame, CA 94010 Phone: 650.348.7600 / 800.288.4748 Email: john@smccvb.com Attachment C October 31, Mayor Eric F 250 Hamilto Palo Alto, CA Dear Mayor Thank you fo Palo Alto Ho The first ord Stephanie W take-away fr results regard it. Barbara a to Palo Alto h familiarizatio they were no On August 2 hotel partner (for those w presentation, been part of were no ques Our effo Y G I G t Between the eight Belgium, and attra , 2019 Filseth and M on Avenue A 94301 r Filseth and C or the opport otels. er of busines Wansek and un rom our June ding the Bure nd Stephanie hotels. Our th on (FAM) tou ot in a position 29, 2019, the rs. 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Of from China, s, restaurants 10 f 2 The Clement, Cowper Inn, Crowne Plaza Palo Alto, Dinah’s Garden Hotel, Garden Court Hotel, Nobu Hotel, Sheraton Palo Alto, The Westin Palo Alto, Stanford University, The Sea by Alexander’s Steakhouse, St. Michael’s Alley, shopping free time at Stanford Shopping Center and shops on University Avenue, Cantor Arts Museum, visits to Google and Facebook campuses, Computer History Museum and Silicon Valley Innovation Center. Airlines who offered assistance included United and TAP Air Portugal. Feedback was very positive from the attendees, partner members showcased, and airlines who offered complimentary/reduced fares. During 2018-2019, our Bureau handled 27 media requests, which resulted in expansive print and electronic coverage of our area. Seven of the 27 media appearances have specific mentions of Palo Alto. (We will also e- mail you a copy of this letter so you can click on the links.) 1.“Festive Fall in Silicon Valley,” by Susan Lanier-Graham, Wander with Wonder, October 18, 2018 https://www.wanderwithwonder.com/2018/10/18/festive-fall-in-silicon-valley | Travel website/blog receives 87k unique visitors/month. 2.“An Unexpected Wine Pairing: San Mateo County and the Silicon Valley’s Wine Country,” Hill City Bride Magazine, March 17, 2019. (Attached) https://issuu.com/theclutchguide/docs/hill_city_bride_-_volume_i_2019/38 | Prints 6k copies twice a year with a social reach of 34k. 3.“What to Do in Silicon Valley: 7 Must-See Attractions”, by Amanda Noventa, Amanda Viaja (Brazil), June 2019 http://www.amandaviaja.com.br/o-que-fazer-no-vale-do-silicio-7-atracoes-imperdiveis | Brazilian blog has a reach of 100k/month with 53.5k Instagram followers and 64.6k likes on Facebook. 4.“Things to Do in San Francisco in 3 Days: Basic Itinerary and Alternatives,” by Amanda Noventa, Amanda Viaja (Brazil), June 2019. Brazilian blog with reach of 100k/month. http://www.amandaviaja.com.br/o-que-fazer-em-san-francisco | Blog has a reach of 100k/month with 53.5k Instagram followers and 64.6k likes on Facebook. 5.“Sustentabilidad al Plato” by Mariana Vega, Food & Travel (Mexico) Magazine, April 2019 | Reach/Visibility: Food & Travel Magazine (Mexico) has a print run of 35k copies and 150k monthly readers. Their website has a monthly average of 575k page views and 278k unique visitors. (Attached) 6.“From Facebook to Google and Apple to Intel, a Selfie Tour of Silicon Valley’s Tech Giants,” by Peter Neville-Hadley, South Morning China Post, September 4, 2019, https://www.scmp.com/magazines/post- magazine/travel/article/3025517/facebook-google-and-apple-intel-selfie-tour-silicon | Reach/Visibility: The SMCP has a print circulation of 105,347k (Monday-Saturday) and 82,117k (Sunday) and a readership of 330,000k. Their website has an average of 21M active users/month and 87M page views/month. 7.“6 Best fall weekend getaways for eco-conscious couples in North America,” by Jennifer Prince, Drink Tea & Travel, August 10, 2019 https://www.drinkteatravel.com/fall-weekend-getaways-north-america | Reach/Visibility: Website receives an average of 50k monthly visitors and 80k monthly page views. Our web and social media presence continues to grow. We recently re-deployed our staff, giving web/social media efforts an even higher priority and continuously seek opportunities to further our reach. Over the past year, we distributed 70,000 copies of our Visitor Guide. We see the highest demand for these guides at Stanford, SFO, SJO and California Welcome Centers. One question that surfaced after the meeting was the TBID funding amount. We are following up with the hotels on how to apply the $.15/$.25/$.50/or $1.00 per room night fee to the guest folio. We are finding that many hotels are not passing on the Visit California fee to guests either (this fee is 3-4 times the amount of the TBID). San Mateo County/Silicon Valley OFFICIAL VISITORS GUIDE The Best of the San Francisco Bay Area visitsmcsv.com Emmy Aw Ming Tsai he was in The host o visited Th Palo Alto Ming, acc met with delicious, live sea ur and sake. The episo airing) an This episo “On the R California us throug in which w helped co About Sim Simply Mi and delici “on the ro weekly vie The last fu channels all the top For media 650.348.7 ward‐winning , was back in Palo Alto! of the popula he Sea by Alex on Sunday, O ompanied by Executive Ch fresh seafoo rchins and wa ode will be pa d it is schedu ode was stop Road” episode destinations h our partner we recommen oordinate the mply Ming ing is a culina ous meals “o oad,” using lo ewers and av ull year (Octo with 96.66 pe p 50 markets a inquiries, ple 7600. chef and rest the kitchen ‐ ar PBS show, S xander’s Stea October 27, 20 y local chef, K ef Yu Min Lin d dishes feat agyu – all pair rt of season 1 led to air in e number one es that will fe . The opportu rship with Vis nded the feat filming. ary show with on the fly,” fin ocal ingredien verages 884,0 ober 1, 2017 t ercent covera across the US ease contact Simply M taurateur, ‐ and this tim Simply Ming, akhouse in 019, Chef enji Lopez, , who served uring raw fish red with wine 17 (currently early 2020. out of four o ature other unity came to sit California, tured chef an h national PBS nding inspirat nts as he trave 000 weekly im through Octo age in all mar S, which acco Media & PR M Ming in Palo A e , h, e f o nd S distribution ion from Min els to exotic d mpressions. ber 1, 2018) – kets (source: ount for 65% o Manager, Jua Alto that shows v ng’s own East‐ destinations. – Simply Min TRAC Media of the viewer an Camero, at viewers how t ‐Meets‐West The show ha g had 56,014 Service). The rs in the coun t juan@smcc to prepare sim t pantry, as w s 1.1 million t 4 telecasts on e show is seen ntry. cvb.com or ca mple well as total all n in ll SMCCVB Palo Alto Hotel Meeting August 29, 2019 1 About the Bureau San Mateo County/Silicon Valley CVB The San Mateo County/Silicon Valley Convention and Visitors Bureau is a 501 C-(6) not for profit corporation chartered by the State of California and governed by a 28-member Board of Directors. SMCCVB Palo Alto Hotel Meeting August 29, 2019 2 Board of Directors San Mateo County/Silicon Valley CVB CHAIR OF THE BOARD -Mr. Mitch Postel, San Mateo County History Museum IMMEDIATE PAST CHAIR -Ms. Dana Dahl, Beach House Hotel SECRETARY -Mr. Michael McKee, DoubleTree by Hilton SFO TREASURER -Mr. Jeffery Bass, Hiller Aviation Museum VICE CHAIR -Mr. Trevor Bridge, Costanoa Resort VICE CHAIR -Mr. Bill Dixon, Hotel Focus SFO Hotel Representatives Mr. Fettah Aydin, Embassy Suites SF Airport - Waterfront Mr. Nick Dell’Ergo, Residence Inn Redwood City-San Carlos Mr. Christopher Holbrook, San Mateo Marriott Mr. Derek Hudson, Hilton Garden Inn San Mateo Ms. Lisa Kershner, SFO Airport Marriott Waterfront Mr. Kevin Kretsch, Hyatt Regency San Francisco Airport Mr.ReggieKumar,ACHotelSFO/Oyster Point Waterfront Mr. Ben Ly, Embassy Suites SF Airport South San Francisco Mr. Henning Nopper, Grand Hyatt at SFO Mr. Barry Ongerth, The Dylan at SFO Mr. Jonathan Powers, Courtyard San Francisco Airport Mr. Ricardo Ramirez, The Westin Hotel SFO & Aloft SFO Mr. Jim Rebosio, Sheraton Palo Alto Hotel Mr. Florian Riedel, Four Seasons Hotel Silicon Valley Mr.J.D.Smith,DoubleTreeSFONorth Mr. Richard Uribe, Pullman San Francisco Bay Mr. Yakub Yakubi, Courtyard San Mateo Foster City Non Hotel Representatives Mr. Jon Ballesteros, San Francisco International Airport Mr. Daniel Herbst, Enterprise Rent-a-Car Ms. Christine Kupczak, Hillsdale Shopping Center Ms.LindaLarson,TheShopsatTanforan Ms. Daisy Li, Moonstar Buffet Objective of the Bureau San Mateo County/Silicon Valley CVB The organization is the region’s official convention and visitors’ bureau. Our objective is to attract meetings, conventions, business and individual travelers, thereby enhancing the economic growth of the area we serve. Our focus is to identify new business, giving partners the opportunity to rebook existing business. In industry jargon, we are known as a Destination Management Organization (DMO). SMCCVB Palo Alto Hotel Meeting August 29, 2019 3 Marketing Plan 2.0 by HiSlide.io Strategies to Fulfill our Mission San Mateo County/Silicon Valley CVB Identify, solicit and book conventions and groups which occupy member hotels, restaurants and event venues, and utilize convention services, to create maximum economic impact for the region. Convention & Group Sales Marketing Secure positive press for our partners and our region via traditional and social media channels. Create and manage graphics in electronic and print form to support these efforts. Public Relations EffortsInternational Marketing Create awareness of our destination to the international travel market, positioning our region as a top choice for international travelers when choosing the San Francisco Bay Area. Marketing Plan 2.0 by HiSlide.io At-a-Glance •471 square miles, including Palo Alto (25.77 sq. mi.) and nearly 90 miles of unique San Francisco Bay and Pacific Ocean coastline. •Over 20 charming and picturesque cities and towns. •Over 170 hotels (27 in Palo Alto), offering a combined total of more than 18,000 guest rooms (2,117 guest rooms in Palo Alto). •Over 60 hotels (10 in Palo Alto) offering a combined total of over 400,000 sq. ft. of meeting space (50,433 sq. ft. in Palo Alto). •65 non-hotel venues with meeting space, including multiple unique venues and four conference/event centers: Cow Palace, SSF Conference Center, SMC Event Center, Seaport Conference Center. •Home to SFO International Airport and Stanford University. •Funded via TBID in 15 separate Peninsula municipalities. Brisbane to Palo Alto, Pacifica to Pescadero. San Mateo County/Silicon Valley CVB SMCCVB Palo Alto Hotel Meeting August 29, 2019 4 Marketing Plan 2.0 by HiSlide.io Annual Budget Revenue + Support San Mateo County/Silicon Valley CVB 2019 Voluntary Assessment 17% 77% TBID6% Partnership/Events Marketing Plan 2.0 by HiSlide.io Annual Budget Expenses San Mateo County/Silicon Valley CVB 2019 77% Sales: Marketing & Promotion Efforts 23% Management, Support Staff & General Bureau contribution to Palo Alto Chamber = $32k per year For Visitor Center Operations SMCCVB Palo Alto Hotel Meeting August 29, 2019 5 Marketing Plan 2.0 by HiSlide.io Sales: Marketing & Promotion San Mateo County/Silicon Valley CVB 2019 Sales Missions 3% 22% Tradeshows 43% Salaries 7% Convention Promotion 4% FAM Tours 21% Advertising & Promotion Meeting Planners Receptions 3% Sponsorships 3% Marketing Plan 2.0 by HiSlide.io Advertising & Promotion San Mateo County/Silicon Valley CVB 2019 41% Convention Promotion 16% Website 35% Leisure International 7% SMCCVB Palo Alto Hotel Meeting August 29, 2019 6 Meetings & International Sales San Mateo County/Silicon Valley CVB Marketing Plan 2.0 by HiSlide.io Our Team San Mateo County/Silicon Valley CVB Teipo Brown BAY AREA/SOCAL NV/AZ/UT Quincy Smith MIDWEST Karalee Adams NORCAL-NV/ NORTHWEST Heidi Alvarado SOUTH Faye Pastor MID-ATLANTIC/ NORTHEAST Nina Ramos INTERNATIONAL Burlingame Office: John Hutar – President/CEO Gina Allhands – VP/COO Nova Maldonado – Partnership Juan Camero – Media & PR Carole Self – Executive Assistant Joey Jiang – Sales Assistant Three Part-Time – Admin Support SMCCVB Palo Alto Hotel Meeting August 29, 2019 7 Marketing Plan 2.0 by HiSlide.io San Mateo County/Silicon Valley CVB Director of Sales Based in the Burlingame Headquarters, Teipo has over years 25 years of sales experience and has been with the CVB for 11 years. His groups ranges from 10-1,000 people. Throughout the year, Teipo attends tradeshows such as MPI Northern CA Chapter Annual Conference & Expo, IMEX America and CVENT Connect. Teipo Brown Director of Int’l Market & Leisure Development Based out of Sacramento, Nina has over 40 years of sales experience and has been with the CVB for 19 years. Her groups range between 20-25 rooms/night for two nights. Throughout the year, Nina attends tradeshows such as IPW and Go West, as well as International Sales Missions. Nina is also part of MPI, NTA, US Travel Assoc., Visit USA-France, Visit California and Go West. Nina Ramos Marketing Plan 2.0 by HiSlide.io San Mateo County/Silicon Valley CVB National Account Executive Based out of Chicago, Quincy has over 15 years of sales experience and has been with the CVB for six years. His focus, at this moment, is finding programs that will book over a weekend. Throughout the year, Quincy attends tradeshows such as MPI and Connect Association, as well many networking events. Quincy is proud to currently serve as 2019 Chair of the Communications Committee for PCMA Greater Midwest. Quincy Smith National Account Executive Based out of Washington, DC, Faye has over 35 years of sales experience and has been with the CVB for two years. Her groups range from 25 people & up. Throughout the year, Faye attends tradeshows such as DMAI Destination Showcase and Meet New York, as well as other networking events. Faye is proud to be a Certified Meeting Professional and is an active member in her local MPI, PCMA & Assoc. of Meeting Professionals chapters. Faye Pastor, CMP SMCCVB Palo Alto Hotel Meeting August 29, 2019 8 Marketing Plan 2.0 by HiSlide.io San Mateo County/Silicon Valley CVB National Account Executive Based out of Hollister, CA, Heidi has over eight years of sales experience and has been with the CVB for over four years. Her groups range between 250-400 people. She also attends tradeshows periodically throughout the year such as IPEC and MIC. She served as a liaison during Super Bowl 50 and was also part of the College Football Championship committee. Heidi Alvarado National Account Executive Based out of Sacramento, CA, Karalee has over 25 years of sales experience and has been with the CVB for 17 years. Throughout the year, Karalee attends tradeshows such as Connect Pacific Northwest and CalSAE Seasonal Spectacular. She is a member of the California Society of Association Executives, MPI Sacramento/Sierra Nevada Chapter. In 2018, Karalee was honored with the MPISSN Supplier of the Year Award. Karalee Adams Marketing Plan 2.0 by HiSlide.io Convention Sales Results for Palo Alto San Mateo County/Silicon Valley CVB Hotel/Unique Venues RFPs Received Awarded RFPs Awarded Room Nights Hotel Revenue Total Economic*** Impact Grand Total (2018)584 18 818 $406,308 $905,500 YTD June 2019 555 13 472 $198,842 $648,717 •CVB only credited with original booking – repeat bookings not included in CVB production goals. •City of Palo Alto Turn Down Rate: 45.3% •San Francisco Market Turn Down Rate 2018: 42.2% •San Jose/Silicon Valley Market Turn Down Rate 2018: 44.4% ***Destinations International Impact Calculator created by Oxford Economics SMCCVB Palo Alto Hotel Meeting August 29, 2019 9 Marketing Plan 2.0 by HiSlide.io Corporate Tradeshows & Events San Mateo County/Silicon Valley CVB TRADE SHOW / EVENT LOCATION SALES REP 1American Express Interaction Denver Teipo 2 MPISSN Crab Feed Sacramento Karalee 3MPI Mid‐America Conference (OH & KY Chapters)Lexington, KY Quincy 4MPI Northern CA Chapter Annual Conference & Expo San Francisco Teipo 5 MPISSN Chapter Annual Tradeshow & Ed Workshop Sacramento Karalee 6MPI Kansas City Professional Education Conference Kansas City Quincy 7MPI Cascadia Tacoma, WA Karalee 8MPI Great Lakes Conference TBD Quincy 9 Connect CORPORATE Louisville, KY Teipo 10 All Things Meetings East Bay Teipo Participate in 45 sales events per year for all markets Marketing Plan 2.0 by HiSlide.io Association Tradeshows & Events San Mateo County/Silicon Valley CVB TRADE SHOW / EVENT LOCATION SALES REP 1CalSAE Seasonal Spectacular Sacramento Karalee/Teipo 2CalSAE Elevate Annual Conference Palm Springs Karalee 3 Assn Forum Chicagoland Holiday Showcase Chicago Quincy 4Meet New York New York Faye 5DMAI Destination Showcase DC Washington DC Faye 6 Connect ASSOCIATION Louisville, KY Quincy 7Meetings Industry Council (MIC)Denver Heidi SMCCVB Palo Alto Hotel Meeting August 29, 2019 10 Marketing Plan 2.0 by HiSlide.io Third Party/Independent Planners (All Markets) San Mateo County/Silicon Valley CVB TRADE SHOW / EVENT LOCATION SALES REP 1IMEX America Las Vegas Teipo 2HelmsBriscoe Annual Partner Faire Houston, TX Teipo 3Cvent Connect Las Vegas Teipo 4HelmsBriscoe Western Region Partner Exchange Seattle Teipo 5 Independent Planners Education Conference IPEC San Antonio Heidi 6Smart Meetings Southern CA Los Angeles Teipo 7Smart Meetings West National Las Vegas Teipo 8 Destination CA Marketplace Los Angeles Karalee 9All Things Meetings Silicon Valley Teipo 10 Connect Pacific Northwest Seattle Karalee Marketing Plan 2.0 by HiSlide.io Sales Missions & Client Events (All Markets) San Mateo County/Silicon Valley CVB TRADE SHOW / EVENT LOCATION SALES REP 1Arizona Sales Trip Tucson/Scottsdale Teipo 2Texas Sales Mission & Client Event Dallas, Houston, Austin Heidi 3NY Sales Mission New York Faye 4Midwest Sales Mission Columbus, OH Quincy 5NorCal/Sacramento CVB Satellite Offices Events Bay Area, Sacramento Karalee 6Chicago Area CB Satellite Offices Events Chicago Quincy 7 Destination Reps (DC) Satellite Offices Events Washington DC Faye 8Southwest Meeting Planners Reception San Diego, LA, OC Teipo 9Sacramento Meeting Planners Reception Sacramento Karalee 10 Northwest Meeting Planners Reception Seattle Karalee 11 DC/East Coast Meeting Planners Reception Washington, DC Faye 12 Midwest Meeting Planners Reception Ohio, Minneapolis Quincy SMCCVB Palo Alto Hotel Meeting August 29, 2019 11 International Market San Mateo County/Silicon Valley CVB Marketing Plan 2.0 by HiSlide.io Top International Markets San Mateo County/Silicon Valley CVB Canada Mexico Brazil Japan South Korea France Germany United Kingdom China SMCCVB Palo Alto Hotel Meeting August 29, 2019 12 Marketing Plan 2.0 by HiSlide.io International Tradeshows & Events San Mateo County/Silicon Valley CVB TRADE SHOW / EVENT LOCATION SALES REP 1Go West Summit Boise, ID Nina 2International Pow Wow (IPW) Anaheim Nina 3Euro Sales Mission Amsterdam, Paris, Milan and Rome Nina 4 Visit CA China/Korea Sales Mission Korea and Taiwan Nina 5Los Angeles Sales Mission Los Angeles Nina Italian FAM Tour •Twelve selling agents from a large tour operator in Milan. •Visiting our destination on September 14-16, 2019. •Objective is to find new and unique products for new packages being developed for 2020. Silicon Valley is of high interest. Lucia Alessi, Product Development Manager, is very interested in finding fresh ideas on how to develop Silicon Valley as a leisure destination for her clients. •Itinerary will include stops at Dinah’s Garden Hotel for lunch, Stanford University, Stanford Shopping Center, University Avenue, among others. Group will be staying at the Pullman San Francisco Bay in Redwood City. French FAM Tour •Eight selling agents from top producing tour operators in Paris, including XL Airways. •Visiting our destination on September 8, 2019. •Objective is to focus on “Silicon Valley” experiences. Tour will be in Palo Alto for the most part. •Itinerary will include lunch at Saint Michael’s Alley, and stops at Stanford University, Computer History Museum and Googleplex. International FAM Tours San Mateo County/Silicon Valley CVB SMCCVB Palo Alto Hotel Meeting August 29, 2019 13 UK Super FAM Tour •Ten top producing agents from various UK companies selling California destinations. This opportunity came via Visit California. •Visiting our destination October 3-4, 2019. •Objective of this tour is to familiarize attendees with our local cuisine due to Visit California’s new partnership with MICHELIN Guide. •Itinerary will include stops at Filoli Mansion & Gardens, a restaurant in San Mateo for lunch, and a restaurant in Burlingame for dinner. Group will be staying at the new Grand Hyatt at SFO. Belgium FAM Tour •Group Bookings Director and a Journalist from a Belgian company that books MICE, Luxury and Incentive groups. •Visiting our destination on September 4-9, 2019. •Objective is to acquaint the group director with Silicon Valley and San Francisco for a particular group of 30-40 French-speaking business professionals in the high- tech field, who are planning a trip to this area in September 2020, with potential for an ongoing meeting to take place every year. •Itinerary will include stops at Stanford University, Computer History Museum, Silicon Valley Innovation Center and the new Grand Hyatt at SFO. The group will be staying at The Westin/Sheraton Palo Alto, as well as the Embassy Suites SFO - Waterfront. International FAM Tours San Mateo County/Silicon Valley CVB Media Promotion San Mateo County/Silicon Valley CVB SMCCVB Palo Alto Hotel Meeting August 29, 2019 14 Marketing Plan 2.0 by HiSlide.io Visitor Guide Distribution San Mateo County/Silicon Valley CVB 70,000 20K SFO Kiosks 1.5K Hiller Aviation Museum 19.3K Partners & City Government 10K OAK/SJC/CWC/SF Travel Tradeshows/ Convention Services 6.8K 2.2K Direct Request 200 Palo Alto Visitor Center 10K Stanford Visitor Center 10,000 – Pet-Friendly Guides | 5,000 – Coastal Visitor Guides Marketing Plan 2.0 by HiSlide.io Media San Mateo County/Silicon Valley CVB Exposure 77% National Coverage 23% International Coverage •Since 2018, our destination was featured over 50 times on a number of media channels such as magazines, blogs, videos, travel websites, etc. •Pieces were published by a number of travel writers and journalists that we invited for FAMs/site visits, as well as those that reached out directly requesting information. •Contacts were made at travel-media tradeshows such as Travel Media’s IMM, IPW Media Day, NATJA Conference, SATW Convention, and Visit California’s leads. •Recent features include: Food & Travel (Mexico), Luxury Magazine, Metro Newspaper (UK), Smart Meetings Magazine, TRAVEL: Food & Travel, and Via Magazine, among others. SMCCVB Palo Alto Hotel Meeting August 29, 2019 15 Marketing Plan 2.0 by HiSlide.io Featured Media San Mateo County/Silicon Valley CVB Website Stats San Mateo County/Silicon Valley CVB # of Users 104,902 # of Sessions 131,575 # of Sessions per User 1.25 Page Views 254,437 Pages per Session 1.93 Avg. Session Duration 00:01:28 VisitSanMateoCounty.com Data range: Jul 1, 2018 – Jul 30, 2019 SMCCVB Palo Alto Hotel Meeting August 29, 2019 16 Marketing Plan 2.0 by HiSlide.io Social Media Stats San Mateo County/Silicon Valley CVB PostsImpressionsEngagement# of Followers 17,55 9 591,127 1,515 Data range: Jul 1, 2018 – Jul 31, 2019 11,58 2 #playbythebay #meetbythebay Partnerships & Special Events San Mateo County/Silicon Valley CVB SMCCVB Palo Alto Hotel Meeting August 29, 2019 17 Marketing Plan 2.0 by HiSlide.io Non-Hotel Partners San Mateo County/Silicon Valley CVB 324 Business Services & Community 17% 43% Restaurants, Wineries, Breweries and Catering 9% Transportation/Tours 3% Farm-Related 11% Convention Services 17% Museums/Attractions Marketing Plan 2.0 by HiSlide.io Palo Alto Non-Hotel Partners San Mateo County/Silicon Valley CVB •Elizabeth F. Gamble Gardens •The Fish Market •The Foster •MacArthur Park Restaurant •Palo Alto Chamber of Commerce •Stanford Shopping Center •The Sea by Alexander’s Steakhouse •Vina Enoteca at the Stanford Barn SMCCVB Palo Alto Hotel Meeting August 29, 2019 18 Marketing Plan 2.0 by HiSlide.io Annual Events San Mateo County/Silicon Valley CVB Venues determined by request and waiting list. Region is taken into consideration when finalizing schedule, each region needs to be represented. Planned 2020 Mixers in Palo Alto: February 2020 hosted by Garden Court Hotel December 2020 hosted by The Foster Networking Mixers (Six per year) Honoring restaurants who purchase and use local items in their kitchens. Each year our June Mixer honors recipients and features a few of our local producers. The Annual August Farm Tour is hosted by us for restaurant owners, chefs and staff to encourage use of local produce and items. “As Fresh as it Gets” Awards & Annual Farm Tour Annual Partner Luncheon & PROPS Award Presentation Held Annually in January at the Board Chair’s property. 200 attendees celebrate hospitality and the Peninsula Recognition of Passionate Service Awards (PROPS), honoring the unsung heroes in our industry. 2020 Venue TBD Marketing Plan 2.0 by HiSlide.io Annual Luncheon & PROPS Award Presentation Partner Mixer San Mateo Marriott 2019 Garden Court 2020 Partner Mixer & “As Fresh as it Gets” Awards Half Moon Bay Partner Mixer Filoli 2019 Partner Mixer SSF 2019 Partner Mixer Embassy Suites 2019 The Foster 2020 Annual Farm Tour Coastside Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec2019 Partner Mixer Pedro Point Brewing 2019 Event Timeline San Mateo County/Silicon Valley CVB Goal is to hold events throughout all areas of the region SMCCVB Palo Alto Hotel Meeting August 29, 2019 19 Marketing Plan 2.0 by HiSlide.io •Sales leads are sent via Simpleview (CRM) and shared via CVENT and email. •Using our Partner Portal, you may manage property records, listing information, photos, and more. •Monthly E-Bulletin recaps partner updates: staff changes, renovations, happenings, changes in the market, etc. For inclusion, please contact: carole@smccvb.com. •Monthly Visitor Newsletter sent to our external mailing list, highlighting upcoming events, recent blogs, media mentions, etc. For inclusion, please contact: juan@smccvb.com. •Partner Mixers and Annual Luncheon – keep an eye out for email invitations and RSVP through Eventbrite. •Emails from CVB staff or info@smccvb.com. •Feel free to call us anytime, we are here to serve you! How We Communicate San Mateo County/Silicon Valley CVB Marketing Plan 2.0 by HiSlide.io •Partner Portal Training Webinar When: September 18 & October 2 Where: Online/Dial-In •Familiarization (FAM) Tours: Meeting Planners FAM – August 22-24, 2019 French FAM Tour – September 8, 2019 (Palo Alto Spotlight) Italian FAM Tour – September 14-16, 2019 (Palo Alto Spotlight) Belgium FAM Tour – September 4-9, 2019 (Palo Alto Spotlight) UK Super FAM Tour – October 3-4, 2019 Upcoming Partner Events San Mateo County/Silicon Valley CVB SMCCVB Palo Alto Hotel Meeting August 29, 2019 20 Marketing Plan 2.0 by HiSlide.io •Special Mixer with Meeting Planners When: Thursday, September 19, 2019 Where: Par 3 & The LODGE at Poplar Creek. •As Fresh as it Gets Dinner When: Saturday, September 28, 2019 Where: Long Branch Saloon (Half Moon Bay) •October Partner Mixer When: Tuesday, October 15, 2019 Where: Pedro Point Brewing (Pacifica) Upcoming Partner Events San Mateo County/Silicon Valley CVB •December Partner Mixer When: Thursday, December 19, 2019 Where: Embassy Suites SFO – Waterfront (Burlingame) •Annual Partner Luncheon When: January 2020 Where: TBD •February 2020 Partner Mixer When: February 2020 Where: Garden Court Hotel (Palo Alto) THANK YOU 1 From:Matt Dolan <Matt.Dolan@hilton.com> Sent:Saturday, November 9, 2019 2:00 AM To:Council, City Subject:FW: ACTION to WITHDRAW from SMCCVB Attachments:2019_2_San Jose-Santa Cruz.pdf; SMCSVCVB Palo Alto Presentation 8-29-19.pdf Hello Council Members, As this conversation regarding Barbara Gross, a hospitality consultant, requesting an action to withdraw from the agreement between City of Palo Alto and SMCSVCVB no doubt updates will be forthcoming from all concerned. I have noted the tentative December 2nd and will continue watch for updates and confirmations. In advance of those updates I thought it may be helpful to share my request to Barbara Gross about what she and PAHC propose for replacing the benefits of the existing relationship if the agreement is terminated. Also, it may be worth confirming my POV to ensure the narrative remains focused and does not become distracted by any one personality. The PAHC initially formed to resist the TOT increase that went into effect April 1st 2019. My perception was effort spent fighting the increase were not best use of my time and resources. That does not reflect on the merits of the issue but my response to issue. Additionally, I had concerns about PAHC that remain unresolved. I removed myself from participation with the group. PAHC directed by Barbara Gross aggressively moves toward the goal of terminating the agreement with SMCSVCVB. Participating in this endeavor in my view is ill‐advised, incorrectly aligned with resentment of TOT increases and counter intuitive considering the downward economic indicators. This is the period of time when robust marketing and sales efforts are necessary. I am not in favor of terminating the agreement and for whatever flaws may exist it is far more valuable than not Most importantly I want to confirm the narrative remains focused on the issue at hand and not be perceived as the opposite view points of individuals regarding the renewal or termination. My perspective is based on continuing with a reputable, known entity operating within industry standards for a CVB or terminating the agreement with no discernable replacement for the benefits provided. SMCSVCVB provides resources and expertise in attracting conventions and actively promoting Silicon Valley as a destination. Certainly there are improvements needed but nothing remotely approaching termination. I am advocating for continuing with the agreement not in opposition to any one individual but in support of the resources and benefits I need and utilize to reach my properties financial performance. Equally so, I am advocating for continuing as it benefits the entire Palo Alto hotel industry, ancillary goods and services providers along with restaurants, retailers and social venues that thrive providing services for residents and visitors alike. My priority is to maintain the connection to a strategic hospitality/tourism partner and if PAHC presents a marketing plan, destination marketing strategy, budget guidelines and effective cost control I am more than agreeable to evaluating and would fully support the transition if their plans are equal to SMCSVCVB. I am available to review this topic as needed and appreciate your time in considering this matter and what is the best option for Palo Alto hospitality! Best, 2 ‐Matt From: Matt Dolan Sent: Friday, November 08, 2019 9:41 PM To: 'Barbara Gross' <barbara.ellen.gross@gmail.com>; Sean Brender <sean@seanbrender.com>; Ella Herman <ella@gardencourt.com>; Anand Karsan <akarsan@gmail.com>; Manix Patel <manix@carrasco.com>; Christopher Custer <christophercuster@cardinalhotel.com>; Luis Carreno <lcarreno@creekside‐inn.com>; Brian Fox <bfox@dinahshotel.com>; Eric Rivera <gmcountryinn4345@gmail.com>; Sundip Karsan <sskarsan@gmail.com>; Sophia Huang <sti9119@gmail.com>; Ben Robledo <brobledo@thenestpaloalto.com>; Vik Patel <travelodgepaloalto@gmail.com>; Neal Nair <nealnair@aol.com>; Hemant Mistry <hrmistry@hotmail.com>; Marlon Smith <marlon.smith@bprproperties.com>; Grace Juan <gracejuan1@yahoo.com>; Heidi May <reservations@coronetmotel.net>; Denise Wallace <gm.ca610@yahoo.com>; Sebastien Stacey <sstacey@theclementpaloalto.com>; Julie Handley <jhandley@dinahshotel.com>; 'John Hutar' <john@smccvb.com>; Alyssa Robin <alyssa.robin@cabanapaloalto.com>; B.B. Patel <bbp1944@gmail.com>; Tom McEvoy <Tom.McEvoy@Hilton.com>; Cc: Hugo Santos <reservations@cowperinn.com>; Stephanie Wansek <stephanie@cardinalhotel.com>; Jim Rebosio <jrebosio@sheratonpaloalto.com>; Yatin Patel <info@hotelparmani.com> Cc: Judy Kleinberg <judy@paloaltochamber.com>; Flaherty, Michelle <Michelle.Flaherty@CityofPaloAlto.org> Subject: RE: ACTION to WITHDRAW from SMCCVB Hi Barbara, Thank you for sharing this update. As the Palo Alto hoteliers consider this action evaluate the decision to support or oppose the requested action some additional information may be helpful. Is this an official Palo Alto Hotel Council email and distribution list? If this is a personal email, are you agreeable receiving communication regarding PAHC matters? On the request for action to withdraw the Garden Court, with approximately 60 hotel rooms, is listed as a large hotel supporting termination of the agreement. Is that a correct identification of the hotels status as “large?” If the agreement is terminated what strategies and action plans can we expect from Palo Alto Hotel Council to replace this lost resource? Would it be possible to see a PAHC presentation deck outlining the council’s priorities and action plans? If the agreement were terminated, neighboring communities and markets would change from cooperative Silicon Valley attractions to direct competitors. What strategies are in place to respond to the disadvantage of not being included in destination marketing for Silicon Valley? Is that included in your marketing and strategy deck? With Palo Alto Hotel Council acting as an industry, voice what action plans are in place to advocate for hotels and hospitality businesses regarding Palo Alto’s proposed business tax? Does PAHC have a deck available outlining these action steps? Understanding the legal jeopardy of anti‐trust violations and previous lack of compliance with PAHC documents/communications has this been effectively addressed and is PAHC membership fully informed of the necessary steps to maintain compliance? If the agreement is terminated and access to SMCSVCVB resources are no longer available, for Palo Alto hotels, what is the expected PAHC funding source, vehicle for collection, compliance requirements to support PAHC marketing endeavors and is this planned as an expense or pass through fee? Can PAHC share an operational budget outlining projected expenditures for print, trade show, direct selling and associated travel and accommodation expenses for PAHC sales, marketing and promotional efforts? 3 As we review this action to withdraw, it is wise to keep in mind outlying indicators that will have downward pressure nationally, in the Bay Area and specifically Palo Alto. I know we have all felt the impact of International inbound travel contracting 0.4 percent in September, marking the fifth negative month in 2019 while outbound international travel and global international travel for non‐American destinations continues to grow. Additional hotel supply in our market is affecting occupancy numbers as these events occur (think Nia, Hyatt and an endless list along 101.) The United States Travel Association is pushing Congress to renew the Brand USA program, a destination marketing organization tasked with promoting travel to the U.S. The USTA has argued before Congress that Brand USA helps keep the U.S. competitive in the global travel market and could prevent the U.S. slide in the global travel market from being worse. For political reasons Congress is failing to act. Just as the lack of destination, marketing has negatively affected the hotel industry on the national level the same would apply to Palo Alto without destination marketing from SMCSVCVB. Considering the agreement is an annual renewal it seems prudent to approve the agreement for 2020. Having the agreement in force for 12 months is not an excessive commitment and provides Palo Alto hotels the opportunity to focus more on the benefits of participation, could lessen the impact of downward economic indicators in Palo Alto and provides a specific time period to evaluate if continuing is worthwhile. Of course, the PAHC may have strategy, action plans and financial resources that are equal to SMCSVCVB. If we could review PAHC material prior to the decision date that could change the conversation entirely. As I believe, we all understand this is more than just a conversation between two individuals and must be evaluated in terms of the benefits and risks to the whole. The outcome of this decision has the potential to impact hotels, restaurants, venues and ancillary service providers such as rental cars, dry cleaners, the mall and retailers who rely on tourism to achieve their business goals. The wrong decision would negatively affect overall business revenues and reduce tax revenues in Palo Alto thereby diminishing their efforts to operate effectively operate city services. Barbara, would it be possible to distribute PAHC marketing plan, sales/marketing materials and budget plans so we have adequate time to compare with SMCSVCVB organizational structure. Even if it is not final drafts that information would be extremely helpful to the hotels and would be a benefit to the city of Palo Alto as they budget for expected TOT revenues in 2020. Thanks so much for following up on this important topic. While hotel operators are required to make the best decision for their stakeholders I think we can all agree the best decision for Palo Alto benefits the whole. I look forward to reviewing the PAHC materials. Best, ‐Matt P.S I have attached two documents. The economic report reads San Jose‐Santa Cruz but the information applies to Palo Alto. The second document is from SMCSVCVB and attached for convenience when reviewing PAHC marketing and budget plans. From: Barbara Gross [mailto:barbara.ellen.gross@gmail.com] Sent: Friday, November 08, 2019 3:10 PM To: Sean Brender <sean@seanbrender.com>; Ella Herman <ella@gardencourt.com>; Anand Karsan <akarsan@gmail.com>; Manix Patel <manix@carrasco.com>; Christopher Custer <christophercuster@cardinalhotel.com>; Luis Carreno <lcarreno@creekside‐inn.com>; Brian Fox <bfox@dinahshotel.com>; Eric Rivera <gmcountryinn4345@gmail.com>; Sundip Karsan <sskarsan@gmail.com>; Sophia Huang <sti9119@gmail.com>; Ben Robledo <brobledo@thenestpaloalto.com>; Vik Patel <travelodgepaloalto@gmail.com>; Neal Nair <nealnair@aol.com>; Hemant Mistry <hrmistry@hotmail.com>; Marlon Smith <marlon.smith@bprproperties.com>; Grace Juan <gracejuan1@yahoo.com>; Heidi May <reservations@coronetmotel.net>; Denise Wallace <gm.ca610@yahoo.com>; Sebastien Stacey <sstacey@theclementpaloalto.com>; Julie Handley <jhandley@dinahshotel.com>; Alyssa Robin <alyssa.robin@cabanapaloalto.com>; B.B. Patel <bbp1944@gmail.com>; Tom McEvoy <Tom.McEvoy@Hilton.com>; Cc: 4 Hugo Santos <reservations@cowperinn.com>; Stephanie Wansek <stephanie@cardinalhotel.com>; Jim Rebosio <jrebosio@sheratonpaloalto.com>; Yatin Patel <info@hotelparmani.com>; Matt Dolan <Matt.Dolan@hilton.com> Cc: Judy Kleinberg <judy@paloaltochamber.com>; Flaherty, Michelle <Michelle.Flaherty@CityofPaloAlto.org> Subject: ACTION to WITHDRAW from SMCCVB Importance: High Dear Hoteliers, Following the discussion regarding the value of the San Mateo County Convention and Visitors Bureau (SMCCVB) and Palo Alto Hotels, Motels and Inns at the PAHC meeting on September 18th, the following progress has been made: Attached please find the email sent to City Staff and City Council outlining the request for Palo Alto Hotels, Motels and Inns to withdraw from the SMCCVB by year-end 2019. You will notice the request is accompanied by City Manager’s Reports documenting the origins of the relationship, the signatures of those operators and/or owners in support of the withdrawal and the fee structure currently in place. We have just been notified that the tentative date for council to address the withdrawal request is December 2, 2019. Please mark your calendars to attend this council meeting to express your opinions and urge action. Future reminders will be forwarded to keep you informed. Additionally, Matt Dolan has sent emails to the group expressing his opinion regarding this action. Everyone is encouraged to share his or her thoughts and experiences. Please contact us for further information and questions: Barbara Gross – Barbara.ellen.gross@gmail.com Jim Rebosio – jrebosio@pahotel.com This transmission is not a digital or electronic signature and cannot be used to form, document, or authenticate a contract. Hilton and its affiliates accept no liability arising in connection with this transmission. Copyright 2019 Hilton Proprietary and Confidential REGIONAL ECONOMIC SUMMARY HOTEL MARKET SUMMARY San Jose-Santa Cruz Forecast Summary YEAR OCC Δ OCC ADR Δ ADR REVPAR Δ REVPAR 2014 75.8% 2.3% $148.74 13.0% $112.68 15.7% 2015 77.3% 2.1% $170.30 14.5% $131.70 16.9% 2016 76.5% -1.1% $181.47 6.6% $138.78 5.4% 2017 76.7% 0.3% $186.54 2.8% $143.09 3.1% 2018 76.9% 0.2% $196.25 5.2% $150.85 5.4% 2019F 73.3% -4.6% $200.49 2.2% $146.97 -2.6% 2020F 71.8% -2.1% $204.40 2.0% $146.71 -0.2% 2021F 72.4% 0.9% $208.11 1.8% $150.76 2.8% 2022F 72.7% 0.4% $211.80 1.8% $154.05 2.2% 2023F 73.6% 1.2% $217.28 2.6% $159.97 3.8% Source: CBRE Hotels Research, STR, Q2 2019 EXHIBIT 1**: Performance Grade vs. Long Run Average Source: CBRE Hotels Research, STR, Q2 2019 Source: CBRE Hotels Research, Q2 2019 **See Appendix for exhibit descriptions SEPTEMBER - NOVEMBER 2019 EDITION -3 -2 -1 0 1 2 3 '14 '15 '16 '17 '18 '19F '20F '21F '22F '23F Nu m b e r o f S t a n d a r d D e v i a t i o n s Occupancy ADR Change RevPAR Change HOTEL MARKET SUMMARYREGIONAL ECONOMIC SUMMARY SAN JOSE-SANTA CRUZ San Jose-Santa Cruz: Next 4 Quarters EXHIBIT 1**: Performance Grade vs. Long Run Average The arrows show the forecast direction of change over the next 4 quarters vs. the previous 4 quarters. Green indicates the change will be above the long run average, yellow indicates it will be the same, and orange indicates it will be below. San Jose-Santa Cruz Forecast Summary Long Run Averages 1988 to 2018 Occupancy: 68.7%, ADR Change: 4.3%, RevPAR Change: 5.3% SEPTEMBER - NOVEMBER 2019 EDITION PRICE: $545VOLUME XIII - ISSUE III Occupancy Average Daily Rate Revenue Per Available Room Supply (orange indicates above long-term average) Demand SEPTEMBER - NOVEMBER 2019 EDITION PRICE: $545VOLUME XIII - ISSUE III “Economic activity in the Twelfth District continued to expand at a moderate pace during the reporting period of mid-November through December. Conditions in the labor market remained tight, and wage growth was moderate. Price inflation was flat. Sales of retail goods expanded moderately, while activity in consumer and business services was solid. Conditions in the manufacturing sector strengthened modestly, and conditions in agriculture deteriorated slightly. On balance, contacts reported that residential and commercial real estate market activity expanded at a solid pace. Lending activity ticked down. Overall, price inflation was flat over the reporting period. Contacts in manufacturing and utilities observed upward pricing pressures due mainly to a further moderate pickup in the cost of metal inputs and higher financing costs for capital-intensive production. Food and beverage prices increased somewhat, reflecting higher labor costs at producers. The growth of building material prices slowed a bit, due in part to noticeably lower lumber costs, which fell because of the moderation in the housing market. Lower oil prices resulted in reduced fuel surcharges at shipping and logistics businesses and a modest decline in the price of some petroleum-based inputs to manufacturing. In the agriculture sector, prices declined modestly as demand from abroad weakened in response to trade policy changes and the stronger dollar." Federal Reserve Bank Beige Book, July 2019 By year-end 2019, San Jose-Santa Cruz hotels are forecast to see a RevPAR decrease of 2.6%. This is the result of an estimated decline in occupancy of 4.6% and a 2.2% gain in average daily room rates (ADR). The 2.6% decline in San Jose- Santa Cruz RevPAR is less than the national projection of a 0.9% increase. Both the upper and lower-priced segments of San Jose-Santa Cruz are expected to show negative RevPAR change by year end. Lower-priced hotels are forecast to attain a 1.7% gain in ADR, but suffer a 4.3% decrease in occupancy, resulting in a 2.6% RevPAR decline. Upper-priced hotels are projected to experience an ADR growth rate of 1.9%, along with a 5.0% loss in occupancy, resulting in a 3.2% RevPAR decline. Looking towards 2020, San Jose-Santa Cruz RevPAR is expected to decline 0.2%. This is better than the decline in 2019. Prospects for RevPAR growth in the upper-priced segment (positive 0.2%) are better than in the lower-priced segment (negative 2.0%). San Jose-Santa Cruz market occupancy levels are expected to range from 71.8% to 73.6% during the 5-year forecast period. Occupancy will decrease to 71.9%, a decline over the past 4 quarters' rate of 75.2%, but above the long run average of 68.7% ADR growth expectations are weakening, 1.5% vs. the past 4 quarters' rate of 4.2%, and are below the long run average of 4.3% RevPAR change projections are falling to negative 3.0% as compared to the past 4 quarters' rate of positive 1.7%, and are lower than the long run average of positive 5.3% Supply growth is climbing, 8.9% vs. the past 4 quarters' rate of 1.0%, and greater than the long run average of 1.9% Forecast demand growth is climbing, positive 4.1% vs. the past 4 quarters' rate of negative 1.4%, and is greater than the long run average of positive 2.6% Se e u s e a n d d i s t r i b u t i o n r e s t r i c t i o n s o n t h e l a s t p a g e o f t h i s r e p o r t . D o w n l o a d e d b y E l e n a Q u a c h , C B R E H o t e l s San Jose-Santa Cruz Economic Summary *See Appendix for exhibit descriptions P. 2 / CBRE HOTELS RESEARCH Below are a select number of variables that drive the CBRE Hotels | Research econometric forecasts contained in this report. Income and employment are important barometers of economic health and are used in every Hotel Horizons® forecast model. The lodging market is part of the larger economy, and the forces that affect us nationally also affect lodging, but in different magnitudes and time periods (see Exhibits 4 and 5 below). Exhibits 2 - 6 provide an overview of current economic history and forecast, and provide explanation of what to expect in the future, and how that affects the lodging industry. 1.3% 2.6% 4.9% 3.7% 0.7% 1.7% 2.5%2.8% 0% 1% 2% 3% 4% 5% 6% Change in Total Employment Change in Consumer Price Index Change in Gross Metro Product Change in Real Personal Income San Jose-Santa Cruz 1988 to 2018 San Jose-Santa Cruz 2019 to 2023 -20.0% -15.0% -10.0% -5.0% 0.0% 5.0% 10.0% 15.0% 20.0% '01 '03 '05 '07 '09 '11 '13 '15 '17 '19 '21 '23 Real Personal Income -14.0% -12.0% -10.0% -8.0% -6.0% -4.0% -2.0% 0.0%2.0% 4.0% 6.0% '01 '03 '05 '07 '09 '11 '13 '15 '17 '19 '21 '23 Total Payroll Employment Employment (Left)Demand (Right) Source: CBRE EA, Moody's Analytics, Q2 2019 Source: CBRE EA, Q2 2019 Source: CBRE EA, Q2 2019 Income (Left)RevPAR (Right) Source: CBRE EA, CBRE Hotels, STR, Q2 2019 Source: CBRE EA, CBRE Hotels, STR, Q2 2019 Exhibit 3*: Employment ChangeExhibit 2*: Income Change Exhibit 4*: Quarterly Income vs. RevPAR Change Exhibit 5*: Quarterly Employment vs. Demand Change Exhibit 6*: Average Annual Growth Rates See graph below See graph below SEPTEMBER - NOVEMBER 2019 EDITION SAN JOSE / SANTA CRUZHOTEL HORIZONS® San Jose-Santa Cruz Hotel Summary The graphs on the left illustrate the magnitude of change in performance during the historical and forecasted period 2014 to 2023. Used as a relative benchmark, each market segment is plotted against a common index value of 2014 = 100. This method provides clear insight of how each market segment performed and is expected to perform in relation to others in the specified period. The charts on the right compare near-term historical compound annual growth rates (CAGR) to the CAGRs for the forecast period. P. 3 / CBRE HOTELS RESEARCH 100 105 110 115 120 125 130 135 140 145 150 All U.S.Upper-Priced Hotels Lower-Priced Hotels All Hotels 100105110115120125130135140145150 All U.S.Upper-Priced Hotels Lower-Priced Hotels All Hotels 90 92 94 96 98 100 102 104 All U.S.Upper-Priced Hotels Lower-Priced Hotels All Hotels 0.9% 2.8% -1.2% 4.2% 4.9% 3.2% -2.0% -1.0% 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% All Hotels Upper-Priced Lower-Priced Past 5 Years Next 5 Years Source: CBRE Hotels, STR, Q2 2019 7.6% 6.7% 7.7% 2.1%2.4% 0.9% 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% 8.0% 9.0% All Hotels Upper-Priced Lower-Priced Past 5 Years Next 5 Years 1.2% 3.0% -0.9% 4.3% 5.2% 2.9% -2.0% -1.0% 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% All Hotels Upper-Priced Lower-Priced Past 5 Years Next 5 Years Exhibit 8*: ADR Change Exhibit 10*: Compound Average Annual Supply Change Exhibit 11*: Compound Average Annual Demand Change Exhibit 9*: RevPAR Change Exhibit 12*: Compound Average Annual RevPAR Change Exhibit 7*: Occupancy Change SEPTEMBER - NOVEMBER 2019 EDITION SAN JOSE / SANTA CRUZHOTEL HORIZONS® *See Appendix for exhibit descriptions Source: CBRE Hotels, STR, Q2 2019 Source: CBRE Hotels, STR, Q2 2019 *See Appendix for exhibit descriptions Source: CBRE Hotels, STR, Q2 2019 Source: CBRE Hotels, STR, Q2 2019 Source: CBRE Hotels, STR, Q2 2019 San Jose-Santa Cruz Forecast - All Hotels YEAR PERIOD OCC Δ OCC ADR Δ ADR REVPAR Δ REVPAR Δ SUPPLY Δ DEMAND 2014 Annual 75.8% 2.3% $148.74 13.0% $112.68 15.7% 1.0% 3.4% 2015 Annual 77.3% 2.1% $170.30 14.5% $131.70 16.9% 0.9% 3.0% 2016 1 72.5% -3.6% $184.84 12.3% $133.97 8.2% 1.2% -2.5% 2016 2 80.3% -0.4% $182.08 6.2% $146.29 5.8% 0.4% 0.0% 2016 3 81.7% -1.2% $183.23 5.0% $149.63 3.8% -0.2% -1.4% 2016 4 71.4% 0.8% $175.37 3.1% $125.25 3.9% -0.2% 0.6% 2016 Annual 76.5% -1.1% $181.47 6.6% $138.78 5.4% 0.3% -0.8% 2017 1 72.6% 0.2% $184.50 -0.2% $133.97 0.0% 0.9% 1.1% 2017 2 80.0% -0.4% $188.20 3.4% $150.65 3.0% 0.8% 0.4% 2017 3 82.5% 1.1% $189.07 3.2% $156.06 4.3% 1.0% 2.1% 2017 4 71.7% 0.4% $183.86 4.8% $131.78 5.2% 2.1% 2.4% 2017 Annual 76.7% 0.3% $186.54 2.8% $143.09 3.1% 1.2% 1.5% 2018 1 73.3% 1.0% $191.87 4.0% $140.73 5.0% 1.4% 2.5% 2018 2 80.5% 0.6% $200.15 6.3% $161.12 6.9% 1.5% 2.0% 2018 3 82.4% -0.2% $199.62 5.6% $164.48 5.4% 1.2% 1.0% 2018 4 71.2% -0.6% $192.45 4.7% $137.10 4.0% 0.4% -0.2% 2018 Annual 76.9% 0.2% $196.25 5.2% $150.85 5.4% 1.1% 1.3% 2019 1 71.0% -3.3% $202.32 5.4% $143.57 2.0% 1.1% -2.2% 2019 2 76.1% -5.5% $202.77 1.3% $154.31 -4.2% 1.5% -4.0% 2019F 3 78.2% -5.1% $202.26 1.3% $158.11 -3.9% 6.1% 0.6% 2019F 4 68.1% -4.4% $194.36 1.0% $132.42 -3.4% 8.5% 3.8% 2019F Annual 73.3% -4.6% $200.49 2.2% $146.97 -2.6% 4.3% -0.5% 2020F Annual 71.8% -2.1% $204.40 2.0% $146.71 -0.2% 9.2% 7.0% 2021F Annual 72.4% 0.9% $208.11 1.8% $150.76 2.8% 4.3% 5.3% 2022F Annual 72.7% 0.4% $211.80 1.8% $154.05 2.2% 2.0% 2.4% 2023F Annual 73.6% 1.2% $217.28 2.6% $159.97 3.8% 1.3% 2.5% 2018 2Q Year to Date 76.9% 0.8% $196.20 5.2% $150.92 6.1% 1.5% 2.2% 2019 2Q Year to Date 73.5% -4.4% $202.56 3.2% $148.95 -1.3% 1.3% -3.2% 2019 2Q Trailing 4 Qtrs 75.2% -2.4% $199.37 4.2% $149.86 1.7% 1.0% -1.4% Source: CBRE Hotels Research, STR, Q2 2019 Exhibit 13*: San Jose-Santa Cruz Standardized Changes in Real RevPAR Movements Over Time Source: CBRE Hotels Research, STR, Q2 2019 *See Appendix for exhibit description P. 4 / CBRE HOTELS RESEARCH -4 -3 -2 -1 0 1 2 3 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019F 2021F 2023F Nu m b e r o f S t a n d a r d D e v i a t i o n s U.S.San Jose-Santa Cruz Exhibit 13*: San Jose-Santa Cruz Standardized Changes in Real RevPAR Movements Over Time SEPTEMBER - NOVEMBER 2019 EDITION SAN JOSE / SANTA CRUZHOTEL HORIZONS® San Jose-Santa Cruz Forecast - Upper-Priced Hotels YEAR PERIOD OCC Δ OCC ADR Δ ADR REVPAR Δ REVPAR Δ SUPPLY Δ DEMAND 2014 Annual 77.9% 1.7% $180.48 12.0% $140.58 13.9% 2.1% 3.8% 2015 Annual 78.1% 0.2% $205.25 13.7% $160.23 14.0% 4.3% 4.5% 2016 1 74.6% -2.3% $224.53 10.9% $167.42 8.3% 5.5% 3.0% 2016 2 82.2% 1.2% $216.87 5.1% $178.35 6.4% 3.5% 4.8% 2016 3 83.0% 0.5% $215.04 3.8% $178.45 4.3% 1.9% 2.4% 2016 4 73.1% 1.3% $210.03 2.7% $153.57 4.0% 1.1% 2.4% 2016 Annual 78.2% 0.2% $216.61 5.5% $169.44 5.7% 3.0% 3.2% 2017 1 75.4% 1.1% $222.38 -1.0% $167.63 0.1% 1.4% 2.5% 2017 2 81.7% -0.7% $223.80 3.2% $182.77 2.5% 1.3% 0.6% 2017 3 83.4% 0.6% $220.57 2.6% $184.05 3.1% 1.9% 2.4% 2017 4 72.9% -0.4% $217.89 3.7% $158.75 3.4% 3.6% 3.2% 2017 Annual 78.3% 0.1% $221.20 2.1% $173.23 2.2% 2.0% 2.2% 2018 1 75.8% 0.6% $229.37 3.1% $173.92 3.8% 2.4% 3.0% 2018 2 82.5% 1.0% $236.58 5.7% $195.13 6.8% 2.4% 3.4% 2018 3 83.6% 0.2% $232.84 5.6% $194.76 5.8% 1.8% 2.1% 2018 4 72.7% -0.3% $228.31 4.8% $165.88 4.5% 0.5% 0.2% 2018 Annual 78.6% 0.4% $231.93 4.9% $182.40 5.3% 1.8% 2.2% 2019 1 73.3% -3.4% $242.70 5.8% $177.79 2.2% 1.6% -1.8% 2019 2 77.7% -5.8% $239.15 1.1% $185.81 -4.8% 2.5% -3.4% 2019F 3 78.7% -5.9% $234.57 0.7% $184.68 -5.2% 8.7% 2.3% 2019F 4 69.5% -4.4% $229.10 0.3% $159.19 -4.0% 11.5% 6.7% 2019F Annual 74.7% -5.0% $236.28 1.9% $176.58 -3.2% 6.1% 0.8% 2020F Annual 73.9% -1.1% $239.26 1.3% $176.86 0.2% 10.8% 9.6% 2021F Annual 74.7% 1.1% $243.96 2.0% $182.24 3.0% 5.1% 6.2% 2022F Annual 75.0% 0.4% $249.35 2.2% $187.04 2.6% 2.4% 2.9% 2023F Annual 75.8% 1.0% $256.47 2.9% $194.29 3.9% 1.5% 2.5% 2018 2Q Year to Date 79.2% 0.8% $233.13 4.5% $184.53 5.3% 2.4% 3.2% 2019 2Q Year to Date 75.5% -4.6% $240.87 3.3% $181.82 -1.5% 2.1% -2.7% 2019 2Q Trailing 4 Qtrs 76.8% -2.3% $235.75 4.2% $181.05 1.8% 1.6% -0.7% Source: CBRE Hotels Research, STR, Q2 2019 FULL-SERVICE HOTELS - PERCENT OF TOTAL REVENUE - 2018 Financial Line Item Mountain / Pacific Region ADR Between $125 & $250†150 to 300 Rooms‡ Rooms Revenue 72.1%73.8%75.3% Food and Beverage Revenue 22.2%21.8%20.1% Total Departmental Expenses 37.6%34.3%35.6% Total Departmental Profit 62.4%65.7%64.4% Total Undistributed Expenses 24.0%25.8%26.3% Gross Operating Profit**38.4%39.8%38.2% *Data from 2019 Trends ® in the Hotel Industry report †San Jose-Santa Cruz Upper-Price Average ADR: $231.93 **Before deductions for management fees and non-operating income and expenses.‡San Jose-Santa Cruz Upper-Price Average Size: 164 Rooms Source: CBRE Hotels Research, 2018 For a more comparable and detailed financial comparison, we recommend a BenchmarkerSM report. Please contact Viet Vo at +1 404 812 5112 for more information. P. 5 / CBRE HOTELS RESEARCH San Jose-Santa Cruz Financial Benchmarks* - Full-Service Hotels HOTEL HORIZONS®SEPTEMBER - NOVEMBER 2019 EDITION SAN JOSE / SANTA CRUZ San Jose-Santa Cruz Forecast - Lower-Priced Hotels YEAR PERIOD OCC Δ OCC ADR Δ ADR REVPAR Δ REVPAR Δ SUPPLY Δ DEMAND 2014 Annual 73.5% 3.0% $113.18 14.5% $83.18 17.9% -0.1% 2.8% 2015 Annual 76.5% 4.1% $129.90 14.8% $99.39 19.5% -2.7% 1.3% 2016 1 70.0% -5.3% $133.99 10.1% $93.75 4.3% -3.6% -8.7% 2016 2 78.1% -2.5% $138.07 5.0% $107.79 2.4% -3.1% -5.5% 2016 3 80.1% -3.1% $143.81 4.8% $115.16 1.6% -2.7% -5.7% 2016 4 69.4% 0.0% $131.56 2.6% $91.28 2.6% -1.7% -1.7% 2016 Annual 74.4% -2.8% $137.14 5.6% $102.00 2.6% -2.8% -5.5% 2017 1 69.3% -1.0% $134.42 0.3% $93.09 -0.7% 0.4% -0.6% 2017 2 78.1% 0.0% $142.96 3.5% $111.62 3.5% 0.2% 0.2% 2017 3 81.4% 1.7% $149.71 4.1% $121.93 5.9% -0.1% 1.6% 2017 4 70.2% 1.2% $140.11 6.5% $98.38 7.8% 0.3% 1.5% 2017 Annual 74.7% 0.5% $142.15 3.7% $106.25 4.2% 0.2% 0.7% 2018 1 70.3% 1.5% $141.67 5.4% $99.54 6.9% 0.3% 1.7% 2018 2 78.0% 0.0% $152.43 6.6% $118.96 6.6% 0.4% 0.3% 2018 3 80.9% -0.7% $157.12 4.9% $127.04 4.2% 0.4% -0.3% 2018 4 69.5% -1.0% $145.84 4.1% $101.34 3.0% 0.2% -0.9% 2018 Annual 74.7% -0.1% $149.64 5.3% $111.73 5.2% 0.3% 0.2% 2019 1 68.1% -3.1% $147.76 4.3% $100.59 1.1% 0.4% -2.8% 2019 2 74.1% -5.1% $154.42 1.3% $114.40 -3.8% 0.2% -4.8% 2019F 3 77.4% -4.2% $159.30 1.4% $123.37 -2.9% 2.8% -1.5% 2019F 4 66.3% -4.5% $146.23 0.3% $97.01 -4.3% 4.8% 0.1% 2019F Annual 71.5% -4.3% $152.24 1.7% $108.80 -2.6% 2.1% -2.3% 2020F Annual 68.9% -3.6% $154.66 1.6% $106.60 -2.0% 7.3% 3.5% 2021F Annual 69.4% 0.7% $155.90 0.8% $108.17 1.5% 3.3% 4.0% 2022F Annual 69.6% 0.3% $156.55 0.4% $109.00 0.8% 1.4% 1.8% 2023F Annual 70.7% 1.5% $159.58 1.9% $112.82 3.5% 0.9% 2.5% 2018 2Q Year to Date 74.2% 0.7% $147.34 6.0% $109.26 6.7% 0.3% 1.0% 2019 2Q Year to Date 71.1% -4.1% $151.23 2.6% $107.49 -1.6% 0.3% -3.9% 2019 2Q Trailing 4 Qtrs 73.1% -2.5% $151.58 3.6% $110.84 1.0% 0.3% -2.2% Source: CBRE Hotels Research, STR, Q2 2019 LIMITED-SERVICE HOTELS - PERCENT OF TOTAL REVENUE - 2018 Financial Line Item Mountain / Pacific Region ADR Over $115†Under 100 Rooms‡ Rooms Revenue 96.8%96.5%98.2% Food and Beverage Revenue 0.0%0.0%0.0% Total Departmental Expenses 27.6%24.7%27.3% Total Departmental Profit 72.4%75.3%72.7% Total Undistributed Expenses 28.0%28.0%31.7% Gross Operating Profit**44.4%47.3%41.0% *Data from 2019 Trends ® in the Hotel Industry report †San Jose-Santa Cruz Lower-Price Average ADR: $149.64 **Before deductions for management fees and non-operating income and expenses.‡San Jose-Santa Cruz Lower-Price Average Size: 69 Rooms Source: CBRE Hotels Research, 2018 For a more comparable and detailed financial comparison, we recommend a BenchmarkerSM report. Please contact Viet Vo at +1 404 812 5112 for more information. P. 6 / CBRE HOTELS RESEARCH San Jose-Santa Cruz Financial Benchmarks* - Limited-Service Hotels SEPTEMBER - NOVEMBER 2019 EDITION SAN JOSE / SANTA CRUZHOTEL HORIZONS® San Jose-Santa Cruz Airbnb Summary Fig. 1: July 2018 – June 2019 Airbnb Performance METRIC 2019 Y-o-Y CHANGE Occupancy 65.1% 3.9% ADR $160.15 0.4% RevPAR $104.22 4.3% Available Supply 1,673,042 25.0% Units Sold 1,089,236 29.9% Total Revenue $174,547,665 30.4% Source: Airdna, CBRE Hotels Research, Q2 2019 Fig. 3: July 2018 – June 2019 Active/Available Units by Month Fig. 4: July 2018 – June 2019 ADRs by Unit Type Detailed data on Airbnb in your market can be purchased directly from Airdna at airdna.co. P. 7 / CBRE HOTELS RESEARCH Below is an overview of Airbnb’s presence in this market. The estimates of Airbnb performance come from Airdna, a firm that provides data and analytics on Airbnb rental performance for 4 million+ Airbnb listings worldwide. Figure 1 shows the total number of units available, sold and revenue generated during July 2018 – June 2019 along with the calculated Occupancy, Average Daily Rate (ADR), RevPAR, and year-over-year growth rates. Figure 2 shows the percent of units and revenue by unit type. Figure 3 shows the average daily number of active Airbnb units by month. Figure 4 lists the ADRs broken down by unit types over the past 12 months. More detailed data on Airbnb in your market can be purchased directly from Airdna at airdna.co. Fig. 2: Percent of Active Units and Revenue by Listing Type 51.2%43.7% 5.1%2019 Trailing 12 Active Units 78.3% 20.6% 1.1%2019 Trailing 12 Revenue 0% 5% 10% 15% 20% 25% 30% 35% 0 1,000 2,000 3,000 4,000 5,000 6,000 JUL 2018 AUG 2018 SEP 2018 OCT 2018 NOV 2018 DEC 2018 JAN 2019 FEB 2019 MAR 2019 APR 2019 MAY 2019 JUN 2019 Y- O - Y C h a n g e Ac t i v e U n i t s Active Units Y-o-Y Change $244.76 $74.81 $35.58 Entire home/apt Private room Shared room Average Daily Rate ($)Glossary Active Units - A unit is considered active if it had at least one night sold during the month. Available Units -Total number of listings available for booking on Airbnb in that month. Average Daily Rate (ADR)- The revenue collected divided by the units sold. Unit Types: Entire Home - The guest has complete and sole access to the entire Unit during the stay. Private Room -The guest has their own sleeping area, but shares access to the Unit common areas with others. Shared Room -The guest rents a common area, like an airbed in a living SEPTEMBER - NOVEMBER 2019 EDITION SAN JOSE / SANTA CRUZHOTEL HORIZONS® Entire Home/Apt Private Room Shared Room National Horizon Profile 2 Albany 4 Dayton 4 Milwaukee 4 Raleigh-Durham 4 Albuquerque 3 Denver 1 Minneapolis 2 Richmond 3 Anaheim 1 Detroit 3 Nashville 4 Sacramento 2 Atlanta 2 Fort Lauderdale 3 New Orleans 2 Saint Louis 3 Austin 1 Fort Worth 1 New York 1 Salt Lake City 3 Baltimore 4Hartford 1 Newark 4 San Antonio 1 Boston 1 Houston 2 Norfolk-VA Beach 1 San Diego 1 Charleston 4 Indianapolis 2 Oahu 3 San Francisco 1 Charlotte 3 Jacksonville 1 Oakland 1 San Jose-Santa Cruz 3 Chicago 3 Kansas City 4 Omaha 1 Savannah 3 Cincinnati 4Long Island2 Orlando 1 Seattle 2 Cleveland 3 Los Angeles 1 Philadelphia 4 Tampa 2 Columbia 3 Louisville 3 Phoenix 4 Tucson 4 Columbus 4Memphis 4Pittsburgh 1 Washington DC 1 Dallas 2 Miami 2 Portland 1 West Palm Beach Greater Than 1.0%Between 1.0% and 0%Between 0% and -1%Less Than -1% Source: CBRE Hotels Research, STR, Q2 2019 This page showcases the CBRE Hotels Research Hotel Horizons® 60- city forecasting universe. The map below displays average annual year-over-year change in occupancy level for 2019. Quarterly Hotel Horizons® reports are available for the nation and all the markets shown below. P. 8 | CBRE HOTELS RESEARCH SEPTEMBER - NOVEMBER 2019 EDITION SAN JOSE / SANTA CRUZ 2019 Average Annual Year-over-Year Change in Occupancy https://pip.cbrehotels.com HOTEL HORIZONS® San Jose-Santa Cruz Market Profile Total Room Supply:36,051 UPPER-PRICED BRANDS PROPERTIES ROOMS % MARKET LOWER-PRICED BRANDS PROPERTIES ROOMS % MARKET Residence Inn 12 1,823 5.1% Extended Stay America 14 1,837 5.1% Marriott 3 1,626 4.5% Motel 6 11 1,326 3.7% Courtyard 10 1,527 4.2% TownePlace Suites 6 663 1.8% Hilton 3 811 2.2% Best Western 9 610 1.7% Fairmont 1 805 2.2% Comfort Inn 8 561 1.6% Source: STR, Q2 2019 PHASE PROPERTIES ROOMS % MARKET PROPERTIES ROOMS % MARKET PROPERTIES ROOMS % MARKET Unconfirmed 0 0 0.0% 0 0 0.0% 0 0 0.0% Planning 13 1,906 5.3% 15 1,635 4.5% 0 0 0.0% Final Planning 9 1,273 3.5% 12 1,468 4.1% 0 0 0.0% In Construction 20 3,307 9.2% 10 1,406 3.9% 0 0 0.0% Total 42 6,486 18.0% 37 4,509 12.5% 0 0 0.0% Source: STR, CBRE Hotels Research, Q2 2019 Source: STR, Q2 2019 *Formerly Pre-Planning P. 9 / CBRE HOTELS RESEARCH Unclassified / IndependentUpper-Priced Lower-Priced San Jose-Santa Cruz Top Brands San Jose-Santa Cruz Supply Pipeline Pipeline Status Definitions SEPTEMBER - NOVEMBER 2019 EDITION SAN JOSE / SANTA CRUZHOTEL HORIZONS® Unconfirmed*Potential projects that remain unconfirmed at this time. STR is unable to verify the existence of these projects through a corporate chain feed or other verifiable source. Planning Confirmed, under contract projects where construction will begin in more than 12 months. Final Planning Confirmed, under contract projects where construction will begin within the next 12 months. In Construction Vertical construction on the physical building has begun. This does not include construction on any sub-grade structures including, but not limited to, parking garages, underground supports/footers or any other type of sub-grade construction. PHASE DEFINITION San Jose-Santa Cruz Submarket Map Total Room Supply:36,051 Source: CBRE EA, Q2 2019 Properties Rooms % Market Properties Rooms % Market Properties Rooms % Market San Jose/Campbell 31 6,165 17.1% 52 3,850 10.7% 83 10,015 27.8% Santa Cruz/San Jose Surrounding Areas 20 1,869 5.2% 83 4,119 11.4% 103 5,988 16.6% Northwest/Palo Alto 27 3,128 8.7% 26 1,424 3.9% 53 4,552 12.6% Santa Clara/Sunnyvale/Milpitas 34 6,887 19.1% 48 3,987 11.1% 82 10,874 30.2% Fremont/Newark 11 2,134 5.9% 21 2,488 6.9% 32 4,622 12.8% Total 123 20,183 56.0% 230 15,868 44.0% 353 36,051 100.0% Source: STR, Q2 2019 P. 10 / CBRE HOTELS RESEARCH UPPER-PRICED LOWER-PRICED TOTALSSUBMARKET San Jose-Santa Cruz Submarket Summary SEPTEMBER - NOVEMBER 2019 EDITION SAN JOSE / SANTA CRUZHOTEL HORIZONS® Submarket Profile - San Jose/Campbell Total Room Supply:10,015 San Jose/Campbell Submarket Inventory UPPER-PRICED PROPERTIES ROOMS %SUBMKT LOWER-PRICED PROPERTIES ROOMS %SUBMKT Inventory 31 6,165 61.6% Inventory 52 3,850 38.4% UPPER-PRICED BRANDS BY SHARE PROPERTIES ROOMS %SUBMKT LOWER-PRICED BRANDS BY SHARE PROPERTIES ROOMS %SUBMKT Fairmont 1 805 8.0% Extended Stay America 4 510 5.1% Residence Inn 4 586 5.9% Wyndham Garden Hotel 2 405 4.0% Marriott 1 510 5.1% Holiday Inn 1 354 3.5% San Jose/Campbell Construction Pipeline Source: STR, Q2 2019 PHASE PROPERTIES ROOMS %SUBMKT PROPERTIES ROOMS %SUBMKT PROPERTIES ROOMS %SUBMKT Unconfirmed 0 0 0.0% 0 0 0.0% 0 0 0.0% Planning 3 535 5.3% 7 616 6.2% 0 0 0.0% Final Planning 5 708 7.1% 4 413 4.1% 0 0 0.0% In Construction 1 150 1.5% 1 115 1.1% 0 0 0.0% TOTAL 9 1,393 13.9% 12 1,144 11.4% 0 0 0.0% Source: STR, CBRE Hotels Research, Q2 2019 San Jose/Campbell Performance - All Hotels All Hotels Penetration vs. Market Total YEAR OCC Δ OCC ADR Δ ADR REVPAR Δ REVPAR YEAR OCC ADR REVPAR 2014 76.7% - $149.07 - $114.40 -2014 101.3% 100.2% 101.5% 2015 77.6% 1.2% $171.07 14.8% $132.81 16.1%2015 100.4% 100.5% 100.8% 2016 78.2% 0.7% $184.09 7.6% $143.92 8.4%2016 102.2% 101.4% 103.7% 2017 78.1% -0.1% $190.49 3.5% $148.76 3.4%2017 101.8% 102.1% 104.0% 2018 79.6% 1.9% $202.21 6.2% $160.92 8.2%2018 103.5% 103.0% 106.7% 2Q18 YTD 80.0% 2.1% $204.26 5.8% $163.34 8.0%2Q18 YTD 104.0% 104.1% 108.2% 2Q19 YTD 77.0% -3.7% $212.95 4.3% $163.92 0.4%2Q19 YTD 104.7% 105.1% 110.0% San Jose/Campbell Performance - Upper-Priced Hotels Source: STR, Q2 2019 YEAR OCC Δ OCC ADR Δ ADR REVPAR Δ REVPAR 2014 79.3% - $176.27 - $139.70 - 2015 79.0% -0.4% $200.08 13.5% $157.98 13.1% 2016 80.0% 1.3% $212.55 6.2% $170.06 7.6% 2017 79.7% -0.4% $218.81 2.9% $174.34 2.5% 2018 80.8% 1.5% $232.46 6.2% $187.93 7.8% 2Q18 YTD 82.0% 1.4% $234.78 5.6% $192.46 7.1% 2Q19 YTD 78.8% -3.9% $244.84 4.3% $192.84 0.2% San Jose/Campbell Performance - Lower-Priced Hotels YEAR OCC Δ OCC ADR Δ ADR REVPAR Δ REVPAR 2014 73.7% - $113.86 - $83.93 - 2015 76.0% 3.0% $133.06 16.9% $101.07 20.4% 2016 75.5% -0.6% $140.33 5.5% $105.97 4.8% 2017 75.7% 0.2% $145.07 3.4% $109.78 3.6% 2018 77.6% 2.6% $152.97 5.4% $118.73 8.1% 2Q18 YTD 76.8% 3.2% $153.40 5.6% $117.86 8.9% 2Q19 YTD 74.2% -3.5% $159.37 3.9% $118.19 0.3% Source: STR, Q2 2019 Source: STR, Q2 2019 P. 11 / CBRE HOTELS RESEARCH UNCLASSIFIED/INDEPENDENT Submarket Rank* 108%1 *Submarket RevPAR penetration expressed as a percentage of the market RevPAR for the previous 4 quarters. Direction of arrow indicates if penetration is increasing or decreasing relative to one year ago's performance. UPPER-PRICED LOWER-PRICED Out of 5 *Based on RevPAR change over the last 4 quarters. Submarket Penetration* The San Jose / Campbell submarket includes properties located in downtown San Jose, as well as in the suburbs south and west of town located along Interstate 280 to Cupertino. 90 100 110 2014 2015 2016 2017 2018 Market ADROcc RevPAR 95 105 115 2014 2015 2016 2017 2018 Upper-Priced Penetration vs. Market Total Lower-Priced Penetration vs. Market Total SEPTEMBER - NOVEMBER 2019 EDITION SAN JOSE / SANTA CRUZHOTEL HORIZONS® Submarket Profile - Santa Cruz/San Jose Surrounding Areas Total Room Supply:5,988 Santa Cruz/San Jose Surrounding Areas Submarket Inventory UPPER-PRICED PROPERTIES ROOMS %SUBMKT LOWER-PRICED PROPERTIES ROOMS %SUBMKT Inventory 20 1,869 31.2% Inventory 83 4,119 68.8% UPPER-PRICED BRANDS BY SHARE PROPERTIES ROOMS %SUBMKT LOWER-PRICED BRANDS BY SHARE PROPERTIES ROOMS %SUBMKT Hilton 1 178 3.0% Best Western Plus 4 314 5.2% Autograph Collection 1 170 2.8% Best Western 4 270 4.5% Hilton Garden Inn 1 137 2.3% Motel 6 2 253 4.2% Santa Cruz/San Jose Surrounding Areas Construction Pipeline Source: STR, Q2 2019 PHASE PROPERTIES ROOMS %SUBMKT PROPERTIES ROOMS %SUBMKT PROPERTIES ROOMS %SUBMKT Unconfirmed 0 0 0.0% 0 0 0.0% 0 0 0.0% Planning 3 309 5.2% 1 165 2.8% 0 0 0.0% Final Planning 0 0 0.0% 3 270 4.5% 0 0 0.0% In Construction 2 280 4.7% 3 269 4.5% 0 0 0.0% TOTAL 5 589 9.8% 7 704 11.8% 0 0 0.0% Source: STR, CBRE Hotels Research, Q2 2019 Santa Cruz/San Jose Surrounding Areas Performance - All Hotels All Hotels Penetration vs. Market Total YEAR OCC Δ OCC ADR Δ ADR REVPAR Δ REVPAR YEAR OCC ADR REVPAR 2014 64.6% - $136.32 - $88.13 -2014 85.3% 91.6% 78.2% 2015 69.6% 7.7% $147.65 8.3% $102.80 16.6%2015 90.0% 86.7% 78.1% 2016 69.0% -0.9% $153.64 4.1% $106.04 3.2%2016 90.3% 84.7% 76.4% 2017 70.2% 1.6% $158.25 3.0% $111.02 4.7%2017 91.5% 84.8% 77.6% 2018 71.6% 2.0% $165.19 4.4% $118.22 6.5%2018 93.1% 84.2% 78.4% 2Q18 YTD 69.3% 2.9% $155.19 5.0% $107.58 8.0%2Q18 YTD 90.1% 79.1% 71.3% 2Q19 YTD 66.9% -3.4% $159.32 2.7% $106.63 -0.9%2Q19 YTD 91.0% 78.7% 71.6% Santa Cruz/San Jose Surrounding Areas Performance - Upper-Priced Hotels Source: STR, Q2 2019 YEAR OCC Δ OCC ADR Δ ADR REVPAR Δ REVPAR 2014 65.8% - $196.74 - $129.54 - 2015 68.0% 3.2% $214.45 9.0% $145.76 12.5% 2016 66.3% -2.4% $222.48 3.7% $147.56 1.2% 2017 67.8% 2.3% $225.98 1.6% $153.30 3.9% 2018 69.7% 2.7% $230.94 2.2% $160.94 5.0% 2Q18 YTD 67.7% 4.1% $218.20 2.3% $147.80 6.4% 2Q19 YTD 64.0% -5.5% $220.19 0.9% $140.99 -4.6% Santa Cruz/San Jose Surrounding Areas Performance - Lower-Priced Hotels YEAR OCC Δ OCC ADR Δ ADR REVPAR Δ REVPAR 2014 64.2% - $110.71 - $71.02 - 2015 70.3% 9.6% $121.26 9.5% $85.24 20.0% 2016 70.1% -0.3% $127.49 5.1% $89.37 4.8% 2017 71.1% 1.4% $131.80 3.4% $93.72 4.9% 2018 72.4% 1.8% $138.14 4.8% $99.97 6.7% 2Q18 YTD 70.0% 2.5% $129.19 5.1% $90.42 7.7% 2Q19 YTD 68.2% -2.5% $133.41 3.3% $91.05 0.7% Source: STR, Q2 2019 Source: STR, Q2 2019 UPPER-PRICED LOWER-PRICED UNCLASSIFIED/INDEPENDENT P. 12 / CBRE HOTELS RESEARCH Submarket Rank* Submarket Penetration* 2 78% Out of 5 *Submarket RevPAR penetration expressed as a percentage of the market RevPAR for the previous 4 quarters. Direction of arrow indicates if penetration is increasing or decreasing relative to one year ago's performance. *Based on RevPAR change over the last 4 quarters. The Santa Cruz / San Jose Area submarket extends south San Jose along Route 101, and west towards the Pacific Ocean. Major cities include Gilroy, Morgan Hill, Santa Cruz, and Watsonville. 60 110 2014 2015 2016 2017 2018 70 90 110 2014 2015 2016 2017 2018 Upper-Priced Penetration vs. Market Total Lower-Priced Penetration vs. Market Total SEPTEMBER - NOVEMBER 2019 EDITION SAN JOSE / SANTA CRUZHOTEL HORIZONS® Market ADROcc RevPAR Submarket Profile - Northwest/Palo Alto Total Room Supply:4,552 Northwest/Palo Alto Submarket Inventory UPPER-PRICED PROPERTIES ROOMS %SUBMKT LOWER-PRICED PROPERTIES ROOMS %SUBMKT Inventory 27 3,128 68.7% Inventory 26 1,424 31.3% UPPER-PRICED BRANDS BY SHARE PROPERTIES ROOMS %SUBMKT LOWER-PRICED BRANDS BY SHARE PROPERTIES ROOMS %SUBMKT Residence Inn 3 531 11.7% Best Western 2 166 3.6% Sheraton Hotel 1 346 7.6% Extended Stay America 1 132 2.9% Hilton Garden Inn 2 334 7.3% Quality Inn 1 71 1.6% Northwest/Palo Alto Construction Pipeline Source: STR, Q2 2019 PHASE PROPERTIES ROOMS %SUBMKT PROPERTIES ROOMS %SUBMKT PROPERTIES ROOMS %SUBMKT Unconfirmed 0 0 0.0% 0 0 0.0% 0 0 0.0% Planning 2 279 6.1% 2 200 4.4% 0 0 0.0% Final Planning 0 0 0.0% 1 78 1.7% 0 0 0.0% In Construction 3 661 14.5% 2 455 10.0% 0 0 0.0% TOTAL 5 940 20.7% 5 733 16.1% 0 0 0.0% Source: STR, CBRE Hotels Research, Q2 2019 Northwest/Palo Alto Performance - All Hotels All Hotels Penetration vs. Market Total YEAR OCC Δ OCC ADR Δ ADR REVPAR Δ REVPAR YEAR OCC ADR REVPAR 2014 81.0% - $195.88 - $158.76 -2014 107.0% 131.7% 140.9% 2015 79.4% -2.0% $222.96 13.8% $177.10 11.6%2015 102.7% 130.9% 134.5% 2016 79.1% -0.4% $234.47 5.2% $185.50 4.7%2016 103.4% 129.2% 133.7% 2017 78.6% -0.7% $243.53 3.9% $191.32 3.1%2017 102.4% 130.6% 133.7% 2018 78.2% -0.5% $253.36 4.0% $198.07 3.5%2018 101.7% 129.1% 131.3% 2Q18 YTD 78.6% -0.1% $256.84 4.8% $201.80 4.7%2Q18 YTD 102.1% 130.9% 133.7% 2Q19 YTD 75.2% -4.3% $260.07 1.3% $195.53 -3.1%2Q19 YTD 102.2% 128.4% 131.3% Northwest/Palo Alto Performance - Upper-Priced Hotels Source: STR, Q2 2019 YEAR OCC Δ OCC ADR Δ ADR REVPAR Δ REVPAR 2014 82.4% - $220.04 - $181.39 - 2015 80.3% -2.6% $245.76 11.7% $197.32 8.8% 2016 81.0% 0.8% $256.68 4.4% $207.83 5.3% 2017 80.2% -1.0% $265.62 3.5% $212.96 2.5% 2018 80.1% -0.1% $274.66 3.4% $220.04 3.3% 2Q18 YTD 80.3% -0.5% $279.39 4.0% $224.26 3.4% 2Q19 YTD 77.2% -3.8% $283.50 1.5% $218.87 -2.4% Northwest/Palo Alto Performance - Lower-Priced Hotels YEAR OCC Δ OCC ADR Δ ADR REVPAR Δ REVPAR 2014 78.8% - $154.70 - $121.88 - 2015 77.8% -1.3% $176.89 14.3% $137.55 12.9% 2016 75.1% -3.5% $182.34 3.1% $136.88 -0.5% 2017 75.0% -0.1% $191.53 5.0% $143.66 5.0% 2018 73.9% -1.5% $202.66 5.8% $149.80 4.3% 2Q18 YTD 74.8% 0.9% $203.73 8.0% $152.49 9.0% 2Q19 YTD 70.7% -5.5% $203.90 0.1% $144.25 -5.4% Source: STR, Q2 2019 Source: STR, Q2 2019 UPPER-PRICED LOWER-PRICED UNCLASSIFIED/INDEPENDENT P. 13 / CBRE HOTELS RESEARCH Submarket Rank* Submarket Penetration* 4 130% Out of 5 *Submarket RevPAR penetration expressed as a percentage of the market RevPAR for the previous 4 quarters. Direction of arrow indicates if penetration is increasing or decreasing relative to one year ago's performance. *Based on RevPAR change over the last 4 quarters. The Palo Alto / Northwest submarket extends north and west of Sunnyvale along Interstate 280 and Route 101. The cities of Los Altos, Mountain View and Palo Alto are included in this submarket. 100 110 120 130 2014 2015 2016 2017 2018 95 115 135 2014 2015 2016 2017 2018 Upper-Priced Penetration vs. Market Total Lower-Priced Penetration vs. Market Total SEPTEMBER - NOVEMBER 2019 EDITION SAN JOSE / SANTA CRUZHOTEL HORIZONS® Market ADROcc RevPAR Submarket Profile - Santa Clara/Sunnyvale/Milpitas Total Room Supply:10,874 Santa Clara/Sunnyvale/Milpitas Submarket Inventory UPPER-PRICED PROPERTIES ROOMS %SUBMKT LOWER-PRICED PROPERTIES ROOMS %SUBMKT Inventory 34 6,887 63.3% Inventory 48 3,987 36.7% UPPER-PRICED BRANDS BY SHARE PROPERTIES ROOMS %SUBMKT LOWER-PRICED BRANDS BY SHARE PROPERTIES ROOMS %SUBMKT Marriott 1 759 7.0% Extended Stay America 4 553 5.1% Hyatt Regency 1 505 4.6% TownePlace Suites 3 343 3.2% Courtyard 3 457 4.2% Motel 6 3 323 3.0% Santa Clara/Sunnyvale/Milpitas Construction Pipeline Source: STR, Q2 2019 PHASE PROPERTIES ROOMS %SUBMKT PROPERTIES ROOMS %SUBMKT PROPERTIES ROOMS %SUBMKT Unconfirmed 0 0 0.0% 0 0 0.0% 0 0 0.0% Planning 2 294 2.7% 5 654 6.0% 0 0 0.0% Final Planning 1 90 0.8% 3 597 5.5% 0 0 0.0% In Construction 11 1,814 16.7% 4 567 5.2% 0 0 0.0% TOTAL 14 2,198 20.2% 12 1,818 16.7% 0 0 0.0% Source: STR, CBRE Hotels Research, Q2 2019 Santa Clara/Sunnyvale/Milpitas Performance - All Hotels All Hotels Penetration vs. Market Total YEAR OCC Δ OCC ADR Δ ADR REVPAR Δ REVPAR YEAR OCC ADR REVPAR 2014 77.9% - $153.15 - $119.23 -2014 102.8% 103.0% 105.8% 2015 78.3% 0.5% $177.16 15.7% $138.64 16.3%2015 101.2% 104.0% 105.3% 2016 77.2% -1.3% $187.66 5.9% $144.87 4.5%2016 100.9% 103.4% 104.4% 2017 77.2% 0.0% $190.40 1.5% $147.03 1.5%2017 100.7% 102.1% 102.8% 2018 77.5% 0.3% $199.86 5.0% $154.87 5.3%2018 100.8% 101.8% 102.7% 2Q18 YTD 78.3% 1.2% $200.43 4.5% $156.94 5.8%2Q18 YTD 101.8% 102.2% 104.0% 2Q19 YTD 73.9% -5.6% $209.34 4.4% $154.69 -1.4%2Q19 YTD 100.5% 103.3% 103.9% Santa Clara/Sunnyvale/Milpitas Performance - Upper-Priced Hotels Source: STR, Q2 2019 YEAR OCC Δ OCC ADR Δ ADR REVPAR Δ REVPAR 2014 78.4% - $179.08 - $140.32 - 2015 78.0% -0.5% $205.76 14.9% $160.41 14.3% 2016 78.3% 0.5% $214.78 4.4% $168.27 4.9% 2017 78.2% -0.1% $216.92 1.0% $169.73 0.9% 2018 78.6% 0.4% $226.86 4.6% $178.28 5.0% 2Q18 YTD 79.4% 1.2% $228.72 4.0% $181.60 5.2% 2Q19 YTD 74.7% -6.0% $238.96 4.5% $178.44 -1.7% Santa Clara/Sunnyvale/Milpitas Performance - Lower-Priced Hotels YEAR OCC Δ OCC ADR Δ ADR REVPAR Δ REVPAR 2014 77.1% - $113.84 - $87.76 - 2015 78.7% 2.1% $131.39 15.4% $103.44 17.9% 2016 75.3% -4.4% $140.62 7.0% $105.87 2.4% 2017 75.5% 0.3% $144.31 2.6% $108.96 2.9% 2018 75.6% 0.2% $152.52 5.7% $115.38 5.9% 2Q18 YTD 76.5% 1.3% $150.93 5.7% $115.39 7.1% 2Q19 YTD 72.6% -5.1% $156.70 3.8% $113.69 -1.5% Source: STR, Q2 2019 Source: STR, Q2 2019 UPPER-PRICED LOWER-PRICED UNCLASSIFIED/INDEPENDENT P. 14 / CBRE HOTELS RESEARCH Submarket Rank* Submarket Penetration* 3 103% Out of 5 *Submarket RevPAR penetration expressed as a percentage of the market RevPAR for the previous 4 quarters. Direction of arrow indicates if penetration is increasing or decreasing relative to one year ago's performance. *Based on RevPAR change over the last 4 quarters. The Santa Clara / Sunnyvale / Milpitas submarket surrounds the northern boundaries of Palo Alto. It extends from Sunnyvale in the west, through Santa Clara, and to Milpitas in the east. 95 100 105 2014 2015 2016 2017 2018 95 105 115 2014 2015 2016 2017 2018 Upper-Priced Penetration vs. Market Total Lower-Priced Penetration vs. Market Total SEPTEMBER - NOVEMBER 2019 EDITION SAN JOSE / SANTA CRUZHOTEL HORIZONS® Market ADROcc RevPAR Submarket Profile - Fremont/Newark Total Room Supply:4,622 Fremont/Newark Submarket Inventory UPPER-PRICED PROPERTIES ROOMS %SUBMKT LOWER-PRICED PROPERTIES ROOMS %SUBMKT Inventory 11 2,134 46.2% Inventory 21 2,488 53.8% UPPER-PRICED BRANDS BY SHARE PROPERTIES ROOMS %SUBMKT LOWER-PRICED BRANDS BY SHARE PROPERTIES ROOMS %SUBMKT Marriott 1 357 7.7% Extended Stay America 4 550 11.9% Courtyard 2 327 7.1% Motel 6 2 367 7.9% Crowne Plaza 1 268 5.8% Comfort Inn 2 214 4.6% Fremont/Newark Construction Pipeline Source: STR, Q2 2019 PHASE PROPERTIES ROOMS %SUBMKT PROPERTIES ROOMS %SUBMKT PROPERTIES ROOMS %SUBMKT Unconfirmed 0 0 0.0% 0 0 0.0% 0 0 0.0% Planning 0 0 0.0% 0 0 0.0% 0 0 0.0% Final Planning 3 475 10.3% 1 110 2.4% 0 0 0.0% In Construction 3 402 8.7% 0 0 0.0% 0 0 0.0% TOTAL 6 877 19.0% 1 110 2.4% 0 0 0.0% Source: STR, CBRE Hotels Research, Q2 2019 Fremont/Newark Performance - All Hotels All Hotels Penetration vs. Market Total YEAR OCC Δ OCC ADR Δ ADR REVPAR Δ REVPAR YEAR OCC ADR REVPAR 2014 78.0% - $107.19 - $83.61 -2014 103.0% 72.1% 74.2% 2015 82.2% 5.4% $129.22 20.6% $106.20 27.0%2015 106.3% 75.9% 80.6% 2016 78.1% -5.0% $138.82 7.4% $108.42 2.1%2016 102.1% 76.5% 78.1% 2017 79.2% 1.3% $144.47 4.1% $114.35 5.5%2017 103.2% 77.4% 79.9% 2018 75.1% -5.2% $152.13 5.3% $114.21 -0.1%2018 97.7% 77.5% 75.7% 2Q18 YTD 75.2% -4.6% $151.94 6.2% $114.19 1.4%2Q18 YTD 97.7% 77.4% 75.7% 2Q19 YTD 72.2% -3.9% $154.44 1.6% $111.53 -2.3%2Q19 YTD 98.2% 76.2% 74.9% Fremont/Newark Performance - Upper-Priced Hotels Source: STR, Q2 2019 YEAR OCC Δ OCC ADR Δ ADR REVPAR Δ REVPAR 2014 77.1% - $130.89 - $100.91 - 2015 81.0% 5.0% $154.81 18.3% $125.34 24.2% 2016 78.4% -3.2% $166.18 7.3% $130.25 3.9% 2017 80.4% 2.6% $169.84 2.2% $136.62 4.9% 2018 77.8% -3.3% $180.27 6.1% $140.29 2.7% 2Q18 YTD 78.1% -1.8% $180.62 5.7% $141.00 3.8% 2Q19 YTD 76.3% -2.3% $184.86 2.3% $141.05 0.0% Fremont/Newark Performance - Lower-Priced Hotels YEAR OCC Δ OCC ADR Δ ADR REVPAR Δ REVPAR 2014 78.7% - $89.30 - $70.28 - 2015 83.2% 5.7% $108.90 21.9% $90.58 28.9% 2016 77.9% -6.4% $116.32 6.8% $90.59 0.0% 2017 78.1% 0.3% $123.13 5.9% $96.16 6.2% 2018 72.8% -6.7% $127.59 3.6% $92.93 -3.4% 2Q18 YTD 72.8% -6.9% $126.83 5.8% $92.30 -1.5% 2Q19 YTD 68.9% -5.4% $126.69 -0.1% $87.23 -5.5% Source: STR, Q2 2019 Source: STR, Q2 2019 UPPER-PRICED LOWER-PRICED UNCLASSIFIED/INDEPENDENT P. 15 / CBRE HOTELS RESEARCH Submarket Rank* Submarket Penetration* 5 75% Out of 5 *Submarket RevPAR penetration expressed as a percentage of the market RevPAR for the previous 4 quarters. Direction of arrow indicates if penetration is increasing or decreasing relative to one year ago's performance. *Based on RevPAR change over the last 4 quarters. The Freemont / Newark submarket includes hotels in Fremont, Newark, and Union City. 70 90 110 2014 2015 2016 2017 2018 75 95 115 2014 2015 2016 2017 2018 Upper-Priced Penetration vs. Market Total Lower-Priced Penetration vs. Market Total SEPTEMBER - NOVEMBER 2019 EDITION SAN JOSE / SANTA CRUZHOTEL HORIZONS® Market ADROcc RevPAR Fairmont Embassy Suites Courtyard by Marriott Best Western Plus Best Western Days Inn Four Seasons Hilton Crowne Plaza Comfort Inn Red Lion Econo Lodge Loews Hyatt Hyatt Place Hampton Inn La Quinta Extended Stay America Ritz Carlton Marriott Radisson Holiday Inn Mainstay Suites Red Roof W Hotels Westin Residence Inn TownePlace Suites Quality Inn Woodspring Suites Exhibit 1 Exhibits 2 - 5 Exhibit 6 Exhibits 7 - 9 Exhibits 10 - 12 Exhibit 13 Upper-Priced Lower-Priced P. 16 / CBRE HOTELS RESEARCH The financial benchmarks come from the 2018 edition (2017 data) of Trends ® in the Hotel Industry , CBRE Hotels Research’s annual analysis of hotel financial statements from thousands of properties located across the nation. To benchmark the performance of hotels in the local market, we relied on national operating data from hotels of a similar profile to the average hotel in the subject market. The average room count, occupancy, and ADR of upper-priced hotels were used to analyze the performance of full-service hotels. The average room count, occupancy, and ADR of lower-priced hotels were used to analyze the performance of limited-service hotels. For a more in-depth report with a custom comparable set designed for your individual property or the subject market, see our CBRE Hotels BenchmarkerSM service. (pip.cbrehotels.com) Econometric forecasting represents one of the most sophisticated approaches to gaining insight into future economic activity. Unlike some forecasting methods used in business practice, the models that underlie econometric forecasts contain variables based in economic theory. The forecasts come from historical relationships, similar to statistical correlations, among hotel market measures and economic variables. The measures for the variables come from actual market transactions involving individuals and firms interacting in the economy. Positive Features of Econometric Models: • The variables included in the models follow from economic theory. • The relationships between variables are estimated with advanced statistical methods. • The forecasts developed with econometric models are objectively determined, unlike forecasts based only on judgmental approaches. Occupancy levels, ADR change and RevPAR change are plotted on a fixed "grade" scale. Measured as current value minus the mean, divided by the series' standard deviation. Grades: A: Very strong, greater than one standard deviation above long run average. B: Strong, within one standard deviation above long run average C: Somewhat weak, within one standard deviation below long run average. D: Weak, below one standard deviation of the long run average. Year over year change in Income, Employment, RevPAR and Demand, displayed as annual (Exhibits 2 and 3) and quarterly (Exhibits 4 and 5). Average annual Employment, Consumer Price Index, Gross Domestic Product, and Real Personal Income change for the MSA. Index based change charts with base year 2014 = 100, illustrating the magnitude of change. Compound average annual RevPAR, Demand and Supply change for Upper Priced, Lower Priced, and combined (All) hotels within the MSA. Real RevPAR change (inflation adjusted, CPI) of the current period minus the historical mean of Real RevPAR change, divided by the historical standard deviation of Real RevPAR change. CBRE Hotels Research prepares hotel market forecasts based on accepted econometric procedures and sound judgment. The two- stage process for producing the forecasts firstly involves econometric estimation of future hotel market activity and financial performance based on historical relationships between economic and hotel market variables, and secondly, a judgmental review of modeled outputs by experienced hotel market analysts. CBRE Hotels and others believe that errors in forecasting are minimized by relying on both data analytics and judgment. EXHIBIT DEFINITIONS FINANCIAL BENCHMARKS HOW WE FORECAST ECONOMETRIC MODELS MARKET SEGMENTS - REPRESENTATIVE BRANDS SEPTEMBER - NOVEMBER 2019 EDITION SAN JOSE / SANTA CRUZHOTEL HORIZONS® Economic Data from July 2019 Hotel Data from June 2019 P. 17 / CBRE HOTELS RESEARCH Gaining insight into the futures of complicated economic environments requires the introduction of multi-level forecasting models. Several equations often need to be identified and estimated to model complex economic conditions such as the national economy. Multi-equation models have considerable appeal for economic forecasting because they explicitly recognize the interdependence of relationships commonly encountered in markets. Perhaps the best example of this type of model is one that involves both the demand side and the supply side of markets, in which prices of goods are set by the interaction of buyers and sellers. Thus, price appears as a variable in both the demand and supply equations. A committee of hotel experts from CBRE Hotels Research performs a thorough review of each model prediction. These assessments are made by locally-based hotel experts working in the various offices around the U.S. The quarterly forecasts for the current and forecast period years are subject to review. The committee modifies the model’s market prediction when there is compelling evidence that factors have come into play that the model could not possibly foresee. A Super Bowl-type event, as an extreme example, would cause the committee’s forecast to differ noticeably from the model's prediction—not only in the city in which the event will occur, but also competing cities within the region. In most instances, however, the committee either defers to the model prediction or makes modest adjustments. The Hotel Horizons ® econometric forecasting models fall into the category of multi-equation, demand and supply models. These models have the structure defined below, but vary in their construction for particular market applications (e.g., different cities and hotel market segments). The three estimated equations are: 1. Demand for hotel rooms is primarily driven by the general level of economic activity in the nation or city, as measured by income and employment. The equation recognizes the fundamental relationship between room purchasing behavior and either growth or decline in the relevant economy. Both economic theory and historical data relationships strongly support the inclusion of ADR in the demand equation because lower ADRs motivate increases in travel and leisure spending, while higher ADRs motivate decreases. 2. Supply change - In historical lodging data, a strong relationship exists between growth in the supply of new hotel rooms and prior- period lodging market conditions. In the equation, new hotel room growth in modeled as a function of past levels of new room growth, past ADR, and past occupancy levels. 3. ADR movements are correlated with room scarcity in the market. The equation which estimates ADR defines ADR as a function of past room rates and contemporaneous occupancy levels. The parameters (i.e., coefficients on each variable) then are used to forecast demand, supply change, and RADR by multiplying the parameters by CBRE Econometric Advisors and Moody’s Analytics forecasts of the economic variables and relevant previously estimated values (lagged variables). Three additional calculations are made with these results, as follows: 1. Supply change is added to the previous-period number of available rooms to produce an available rooms level in future periods. 2. Number of rooms sold is divided by number of available rooms to obtain occupancy percent in each future period. 3. Expected inflation is added to real ADR to convert to nominal ADR. JUDGMENTAL INTERVENTION THE EQUATIONS SEPTEMBER - NOVEMBER 2019 EDITION SAN JOSE / SANTA CRUZHOTEL HORIZONS® What Has Changed Since The Last Report? 2019 2020 2021 1st Qtr 2nd Qtr 3rd Qtr F 4th Qtr F Year End Year End Year End This Report 3.6% 2.7% 3.4% 3.2% 3.2% 3.1% 1.6% Last Report 3.8% 2.9% 3.4% 3.5% 3.4% 3.4% 0.6% This Report 2.3% 2.3% 2.1% 1.9% 2.1% 0.6% -0.3% Last Report 2.1% 1.8% 1.6% 1.6% 1.8% 0.8% -0.7% This Report 1.1% 1.5% 6.1% 8.5% 4.3% 9.2% 4.3% Last Report 1.1% 1.3% 5.4% 7.8% 3.9% 9.0% 4.2% This Report -2.2% -4.0% 0.6% 3.8% -0.5% 7.0% 5.3% Last Report -2.2% 2.5% 3.5% 5.5% 2.3% 7.1% 3.2% This Report -3.3% -5.5% -5.1% -4.4% -4.6% -2.1% 0.9% Last Report -3.3% 1.1% -1.8% -2.1% -1.5% -1.7% -1.0% This Report 5.4% 1.3% 1.3% 1.0% 2.2% 2.0% 1.8% Last Report 5.4% 5.2% 3.7% 2.7% 4.3% 1.5% 1.1% This Report 2.0% -4.2% -3.9% -3.4% -2.6% -0.2% 2.8% Last Report 2.0% 6.4% 1.9% 0.5% 2.7% -0.3% 0.1% * Economic data (history and forecast) are from CBRE EA, Q2 2019 ** Hotel performance data: History supplied by STR; Forecast developed by CBRE Hotels Research, Q2 2019 Source: CBRE Hotels Research, Q2 2019 P. 18 / CBRE HOTELS RESEARCH 2019 and 2020 Year End Forecast Change in RevPAR At the beginning of each year, STR, our source for historical lodging data, repositions the chain-scale classifications for branded properties, and chain-class categories for independent hotels. The reclassifications are based on the ADR achieved the prior year. Because of these reclassifications, the historical data presented in this report may differ from the historical data presented in prior Hotel Horizons® reports. Further, the reclassifications may have influenced our forecasts of future performance. Forecasts are valuable tools for developing expectations of key variables. Changes to forecasts occur for two primary reasons. The first is adjustments to historical series made by the data provider, causing future periods to vary due to changes in their base. The second is that economic expectations tend to shift as more information becomes available, thus moving the hotel variables according to their underlying relationships. We are constantly re-evaluating the performance of our forecasts, and presented below is a view on how the world has changed since the June - August 2019 issue, presented in same period, prior year change format. All data under "This Report" are actual through 2nd Quarter 2019. Data marked as "Last Report" are actual through 1st Quarter 2019, with 2nd Quarter 2019 being the first forecast period for that report. As noted on earlier pages, all of the hotel variables below are modeled using data from Moody's Analytics. It is important to note that all historical data are subject to revision. -2.6% -0.2% 2.7% -0.3% 2019 2020 This Report Last Report 2020 2021 CHANGE IN REAL PERSONAL INCOME* CHANGE IN TOTAL PAYROLL EMPLOYMENT* CHANGE IN SUPPLY** CHANGE IN DEMAND** CHANGE IN OCCUPANCY** CHANGE IN ADR** CHANGE IN REVPAR** SEPTEMBER - NOVEMBER 2019 EDITION SAN JOSE / SANTA CRUZHOTEL HORIZONS® 2019 2019 ADR Occupancy RevPAR Supply Demand LRA Penetration Standard Deviation CBRE HOTELS CBRE HOTELS ADVISORY LEADERSHIP National Administration Midwest Division Kevin Mallory Tommy Crozier Mark Eble CBRE Hotels Global Head National Practice Leader Advisory Leader kevin.mallory@cbre.com tommy.crozier@cbre.com mark.eble@cbre.com CBRE HOTELS RESEARCH Northeast Division South Central Division Mark VanStekelenburg Jeff Binford Mark Woodworth Practice Leader Advisory Leader Senior Managing Director mark.vanstekelenburg@cbre.com jeffrey.binford@cbre.com mark.woodworth@cbre.com Southeast Division National & West Division Jack Corgel Hank Staley Bruce Baltin Managing Director Practice Leader Marketing Leader jack.corgel@cbre.com hank.staley@cbre.com bruce.baltin@cbre.com Tim Dick Jamie Lane Practice Leader West Division Senior Economist tim.dick@cbre.com Jeff Lugosi jamie.lane@cbre.com Practice Leader South Florida, Caribbean &jeff.lugosi@cbre.com Latin America Division Fernando Garcia-Chacon Advisory Leader fernando.garciachacon@cbre.com https://pip.cbrehotels.com/ For more reports visit our store at GLOSSARY OF TERMS SEPTEMBER - NOVEMBER 2019 EDITION SAN JOSE / SANTA CRUZHOTEL HORIZONS® For more information about this market please contact: Julie Purnell at julie.purnell@cbre.com Average Daily Rate - rooms revenue divided by paid rooms occupied. Revenue per Available Room - rooms revenue divided by available rooms. (Accommodated Demand) Average daily room nights occupied per quarter, represented as a change over previous year, same quarter except where noted annually. Long Run Average - Annual average from 1988 to last complete year end. Average daily room nights available per quarter, represented as a change over previous year, same quarter except where noted annually. Market area (or sub-market area) measurement as a percent of national (or market area) measurement. The plotting of a normal data series and how far each individual data point lies from the mean: 68.2% of the series will fall within 1 standard deviation, 95.4% of all data points will fall within 2 standard deviations, and 99.7% falling within 3 standard deviations of the mean. Paid rooms occupied divided by available rooms. Hotel Horizons® is compiled and produced by CBRE Hotels Americas Research. Readers are advised that CBRE Hotels Americas Research do not represent the data herein to be definitive, neither should the contents be construed as a recommendation on policies or actions. Quotation, reproduction or transmittal (in any form or by any means, whether electronic, photocopying, recording or otherwise) is not permitted without consent from CBRE Hotels’ Americas Research. Please address inquiries to Hotel Horizons®, 3280 Peachtree Road NE, Suite 1400, Atlanta, GA 30305. Phone: (855) 223-1200. Copyright © 2019 CBRE Hotels Americas Research. All rights reserved. Email Attachment: SMCSVCVB Palo Alto Presentation 8-29-19.pdf The attachment titled “SMCSVCVB Palo Alto Presentation 8-29-19.pdf” in Matt Dolan’s email to City Council dated 11/9/19 can be found at the below link: https://www.cityofpaloalto.org/civicax/filebank/documents/74128 1 From:Charlie Weidanz <charlie@paloaltochamber.com> Sent:Wednesday, November 20, 2019 3:38 PM To:Council, City Cc:Shikada, Ed; Flaherty, Michelle; Minor, Beth Subject:Hotel TBID Attachments:Hotel TBID letter.pdf Please see attached letter related to the Hotel TBID matter that will be presented to the council on December 2nd 2019 Charlie Charlie Weidanz CEO 355 Alma Street | Palo Alto, CA. 94301 Tel: 650‐324‐3125 | Cell: 650‐773‐6414 www.paloaltochamber.com Palo Alto Business Directory & Community Guide Attachment D Not Yet Approved 20191121 th 0140203 Resolution No. _____ Resolution of the Council of the City of Palo Alto to Withdraw the City of Palo Alto from the Boundaries of the San Mateo County Tourism Business Improvement District A. The San Mateo County Tourism Business Improvement District (SMCTBID) is a district organized under the California Streets and Highways Code Sections 36500, and following, for the purpose of collecting assessments from commercial lodging facilities such as hotels and motels and providing tourism and visitor support services; and B. In March 2010, the Council of the City of Palo Alto adopted Resolution No. 9043 consenting to Palo Alto being included in the boundaries of the SMCTBID and authorizing the City of Burlingame, which administers the SMCTBID, to take all necessary steps and actions to formalize the inclusion of Palo Alto in the boundaries of the SMCTBID; and C. The City of Burlingame effectuated the Palo Alto Council’s request to be included in the boundaries of the SMCTBID; and D. Since 2010, commercial lodging facilities in Palo Alto have been assessed fees according to the procedures of the SMCTBID, and an owner or manager of a hotel has served on the SMCTBID advisory board; and D. At the request of certain hotel and motel owners and operators in Palo Alto who have articulated a desire to no longer participate in the SMCTBID, the City of Palo Alto now wishes to withdraw from the boundaries of the SMCTBID; and E. Accordingly, the Palo Alto Council now requests the City of Burlingame to take all necessary steps to effectuate the withdrawal of the City of Palo Alto from the boundaries of the SMCTBID, according to procedure and law, and as soon as it is feasible to do so. NOW, THEREFORE, the Council of the City of Palo Alto does RESOLVE as follows: SECTION 1. The City of Palo Alto hereby requests to withdraw from the boundaries of the San Mateo County Tourism Business Improvement District for hotels effective January 1, 2020, or as soon as feasible thereafter, and authorizes and requests the City of Burlingame to take all necessary steps and actions to implement its withdrawal from the boundaries of the SMCTBID. / / / / Attachment D Not Yet Approved 20191121 th 0140203 SECTION 2. The Council finds that this is not a project under the California Environmental Quality Act and, therefore, no environmental impact assessment is necessary. INTRODUCED AND PASSED: AYES: NOES: ABSENT: ABSTENTIONS: ATTEST: __________________________ ______________________________ City Clerk Mayor APPROVED AS TO FORM: APPROVED: __________________________ ______________________________ City Attorney City Manager ______________________________ Director of Planning and Community Environment ______________________________ Director of Administrative Services City of Palo Alto (ID # 10889) City Council Staff Report Report Type: Action Items Meeting Date: 12/2/2019 City of Palo Alto Page 1 Summary Title: Structure and Scenarios of Initial Round of Polling for a Potential Local Tax Measure Title: Late Packet: Review and Possible Direction to Staff on the Structure and Scenarios of Initial Round of Polling for a Potential Local Tax Measure From: City Manager Lead Department: Administrative Services This report will be a special late packet release on Tuesday, November 26, 2019.