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2017-08-21 City Council Agenda Packet
City Council 1 MATERIALS RELATED TO AN ITEM ON THIS AGENDA SUBMITTED TO THE CITY COUNCIL AFTER DISTRIBUTION OF THE AGENDA PACKET ARE AVAILABLE FOR PUBLIC INSPECTION IN THE CITY CLERK’S OFFICE AT PALO ALTO CITY HALL, 250 HAMILTON AVE. DURING NORMAL BUSINESS HOURS. Monday, August 21, 2017 Regular Meeting Council Chambers 6:00 PM Agenda posted according to PAMC Section 2.04.070. Supporting materials are available in the Council Chambers on the Thursday 11 days preceding the meeting. PUBLIC COMMENT Members of the public may speak to agendized items; up to three minutes per speaker, to be determined by the presiding officer. If you wish to address the Council on any issue that is on this agenda, please complete a speaker request card located on the table at the entrance to the Council Chambers, and deliver it to the City Clerk prior to discussion of the item. You are not required to give your name on the speaker card in order to speak to the Council, but it is very helpful. TIME ESTIMATES Time estimates are provided as part of the Council's effort to manage its time at Council meetings. Listed times are estimates only and are subject to change at any time, including while the meeting is in progress. The Council reserves the right to use more or less time on any item, to change the order of items and/or to continue items to another meeting. Particular items may be heard before or after the time estimated on the agenda. This may occur in order to best manage the time at a meeting or to adapt to the participation of the public. To ensure participation in a particular item, we suggest arriving at the beginning of the meeting and remaining until the item is called. HEARINGS REQUIRED BY LAW Applicants and/or appellants may have up to ten minutes at the outset of the public discussion to make their remarks and up to three minutes for concluding remarks after other members of the public have spoken. Call to Order Closed Session 6:00-7:00 PM A. CONFERENCE WITH LABOR NEGOTIATORS City Designated Representatives: City Manager and his Designees Pursuant to Merit System Rules and Regulations (Ed Shikada, Lalo Perez, Eric Nickel, Rumi Portillo, Molly Stump) Employee Organization: International Association of Fire Fighters (IAFF), Local 1319 Authority: Government Code Section 54957.6(a) CONFERENCE WITH CITY ATTORNEY—POTENTIAL LITIGATION Significant Exposure to Litigation Under Section 54956.9(d)(2) (One Potential Case, as Defendant) – Palo Alto-Stanford Fire Protection Agreement REVISED 2 August 21, 2017 MATERIALS RELATED TO AN ITEM ON THIS AGENDA SUBMITTED TO THE CITY COUNCIL AFTER DISTRIBUTION OF THE AGENDA PACKET ARE AVAILABLE FOR PUBLIC INSPECTION IN THE CITY CLERK’S OFFICE AT PALO ALTO CITY HALL, 250 HAMILTON AVE. DURING NORMAL BUSINESS HOURS. Agenda Changes, Additions and Deletions City Manager Comments 7:00-7:10 PM Oral Communications 7:10-6:25 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. Consent Calendar 7:25-7:30 PM Items will be voted on in one motion unless removed from the calendar by three Council Members. 1.Staff and Utilities Advisory Commission Recommendation That the City Council Adopt a Resolution Determining That a Target for the City of Palo Alto Utilities to Procure Energy Storage Systems is not Appropriate due to the Lack of Cost-effective Options 2.Approval of a Professional Services Agreement With Electrical Consultants, Inc. in the Amount of $196,330 for the Maybell Electric Substation Protection/Control Upgrade Project Design, and Authorization for the City Manager to Negotiate and Approve Additional Related Services in a Not-to-Exceed Amount of $39,266 3.Adoption of a Resolution Approving the Standard Form Verified Emission Reduction (VER) (Carbon Offset) Purchase and SaleAgreement; and a Resolution Authorizing the City Manager to Approve the VER Master Agreements With 3Degrees Group, Inc. and Element Markets, LLC.; and Authorizing the City Manager to Purchase VERs From 3Degrees Group, Inc. and Element Markets, LLC. Under Specified Terms and Conditions During Calendar Years 2017 Through 2026, Inclusive, Subject to Limitations 4.Accept the Stanford University Medical Center (SUMC) Annual Report for Fiscal Year 2015-2016 and Find the SUMC Parties in Compliance With the Development Agreement 5.Approval to Name the new Printmaking Studio at Cubberley Community Center as the Paula Kirkeby Press 6.3972, 3980 and 3990 El Camino Real [17PLN-00265]: Approval of a Final Map for a 6.19-Acre Site That Includes the Buena Vista Mobile Home Park Site (3980 El Camino Real) and two Adjacent Commercial Properties (3972 and 3990 El Camino Real), for Lot Reconfiguration and Lot Line Removals to Reduce Five Parcels to Three Parcels and Provide Access and Utilities Easements, Subject to Conditions of a Tentative Map Considered by the City Council on August 14, 2017 Q and A Q and A 3 August 21, 2017 MATERIALS RELATED TO AN ITEM ON THIS AGENDA SUBMITTED TO THE CITY COUNCIL AFTER DISTRIBUTION OF THE AGENDA PACKET ARE AVAILABLE FOR PUBLIC INSPECTION IN THE CITY CLERK’S OFFICE AT PALO ALTO CITY HALL, 250 HAMILTON AVE. DURING NORMAL BUSINESS HOURS. 7. Approval of a Professional Services Agreement With The Shalleck Collaborative, Inc. for Design Services to Upgrade the City of Palo Alto Council Chambers for a Total Not-to-Exceed Amount of $123,708 8. Adoption of a Resolution to Establish a Sister City Relationship Between Heidelberg, Germany and Palo Alto, California, United States Action Items Include: Reports of Committees/Commissions, Ordinances and Resolutions, Public Hearings, Reports of Officials, Unfinished Business and Council Matters. 7:30-7:35 PM 9. PUBLIC HEARING / QUASI-JUDICIAL: 3877 El Camino Real [14PLN-00464]: Adoption of a Mitigation Monitoring and Reporting Plan and Approval of a Site and Design Review for the Demolition of the Vacant 5,860 Square-foot Commercial Building and Construction of a new Mixed-use Project. The Project Includes a 4,027 Square-foot Commercial Building and 17 Dwelling Units (Flats and Townhouses). Parking for the Project is Provided in a Basement. The Applicant Also Requests Approval of a Design Enhancement Exception to Allow the Basement to Encroach Into the Required Rear Yard Setback Below Grade. Environmental Assessment: A Mitigated Negative Declaration was Circulated Between March 6, 2017 and April 7, 2017. Both the Planning & Transportation Commission (March 8, 2017) and Architectural Review Board (May 18, 2017) Have Recommended Approval of the Project. Zoning Districts: CS and RM-30 (STAFF REQUESTS THIS ITEM BE CONTINUED TO AUGUST 28, 2017) 7:35-9:15 PM 10. Approval of a Letter of Intent With Pets In Need to Develop a Financing Study Including Public and Private Financing for a new Animal Shelter Facility and Commit up to $60,000 for the Study, and Outline a Process and Timeline for Negotiating an Operating Agreement and Interim Improvements for the Current Animal Shelter 9:15-10:45 PM 11. Staff, Utilities Advisory Commission, and Policy and Services Committee Recommendation That Council Direct Staff to: (1) Pursue a Municipal Fiber-to-the-Node Network (FTTN) for Fiber and Broadband Expansion; and (2) Expand Wi-Fi to Unserved City Facilities and Discontinue Consideration of City-Provided Wi-Fi in Commercial Areas 4 August 21, 2017 MATERIALS RELATED TO AN ITEM ON THIS AGENDA SUBMITTED TO THE CITY COUNCIL AFTER DISTRIBUTION OF THE AGENDA PACKET ARE AVAILABLE FOR PUBLIC INSPECTION IN THE CITY CLERK’S OFFICE AT PALO ALTO CITY HALL, 250 HAMILTON AVE. DURING NORMAL BUSINESS HOURS. Inter-Governmental Legislative Affairs Council Member Questions, Comments and Announcements Members of the public may not speak to the item(s) Adjournment AMERICANS WITH DISABILITY ACT (ADA) Persons with disabilities who require auxiliary aids or services in using City facilities, services or programs or who would like information on the City’s compliance with the Americans with Disabilities Act (ADA) of 1990, may contact (650) 329-2550 (Voice) 24 hours in advance. 5 August 21, 2017 MATERIALS RELATED TO AN ITEM ON THIS AGENDA SUBMITTED TO THE CITY COUNCIL AFTER DISTRIBUTION OF THE AGENDA PACKET ARE AVAILABLE FOR PUBLIC INSPECTION IN THE CITY CLERK’S OFFICE AT PALO ALTO CITY HALL, 250 HAMILTON AVE. DURING NORMAL BUSINESS HOURS. Additional Information Council and Standing Committee Meetings Sp. Policy and Services Committee Meeting August 22, 2017 Sp. City Council Meeting August 24, 2017 Schedule of Meetings Schedule of Meetings Tentative Agenda Tentative Agenda Public Letters to Council Set 1 City of Palo Alto (ID # 8204) City Council Staff Report Report Type: Consent Calendar Meeting Date: 8/21/2017 City of Palo Alto Page 1 Summary Title: Declining to Set Energy Storage Targets Title: Staff and Utilities Advisory Commission Recommendation That the City Council Adopts a Resolution Determining That a Target for the City of Palo Alto Utilities to Procure Energy Storage Systems is not Appropriate due to the Lack of Cost-effective Options From: City Manager Lead Department: Utilities Recommendation Staff and the Utilities Advisory Commission (UAC) recommend that the City Council adopt a resolution determining that a target for the City of Palo Alto Utilities (CPAU) to procure energy storage systems is not appropriate due to lack of cost-effective options, a determination required under California law (Attachment A). This recommendation does not preclude CPAU from pursuing cost-effective energy storage based technologies that enhance utility operations. Discussion California legislation Assembly Bill 2514 (AB 2514) requires the governing board of each publicly-owned utility (POU) to “determine appropriate targets, if any, for the utility to procure viable and cost-effective energy storage systems...” In addition to requiring that POUs evaluate the feasibility of energy storage targets every three years, starting in October 2014, AB 2514 also requires that all procurement of energy storage systems by POUs be cost-effective. In February 2014, at the recommendation of staff and the UAC, City Council made a determination not to set energy storage targets for CPAU (Resolution 9396). In October 2016, staff presented the UAC an updated analysis on microgrid and energy storage applications (Attachment B). This updated analysis found that energy storage applications in CPAU are still not cost effective. However, staff recommended exploring the feasibility of undertaking a Research Development & Deployment pilot program in order to learn and be ready for the anticipated widespread adoption of customer-sited energy storage systems. Based on the staff analysis results and UAC feedback at the October 5, 2016 meeting, staff on May 3, 2017 recommended that UAC recommend that Council make a determination that City of Palo Alto Page 2 setting a procurement target for energy storage systems is not appropriate for CPAU at this time due to the lack of cost-effective options. Summary of October 5, 2016 and May 3, 2017 UAC Discussions At the October 2016 meeting, Commissioners were supportive of staff’s findings that energy storage systems were not cost-effective for Palo Alto. They also wanted to learn the rationale for undertaking an energy storage pilot. Commissioners were open to considering approval of such a pilot program after staff develops the program more fully. At the May 2017 meeting Commissioners and staff discussed that most of the other smaller municipal utilities had also not set goals because the cost of such systems were high compared to the benefit. Commissioners noted that it was important to explain to the Palo Alto community why CPAU was not providing rebates to customers while the adjoining investor owned utility (IOU), Pacific Gas and Electric, is providing such rebates. The reason being that state law required all IOUs to provide such rebates, without regard for cost-effectiveness, with the expectation to facilitate market transformation and lower cost in the long run. Commissioners also discussed possible energy storage pilot project options. Commissioners proposed a friendly amendment to the wording, modifying it to “encourage exploration and facilitation of budget neutral ways to encourage investment.” Staff’s recommendation, with the friendly amendment, passed unanimously (4-0), with three Commissioners absent at the meeting. Full text of both meeting minutes is provided in Attachment C. Timeline Following Council consideration and approval of the resolution, the Council findings will be filed with the California Energy Commission in September 2017. Resource Impact Not setting an energy storage goal will not have any resource impacts. If an energy storage pilot program is recommended at a later time, it could cost up to $250,000 in customer rebates and take-up approximately 0.3 FTE to administer the program and leverage the storage system for utility applications. This would either be absorbed with existing staff and funding sources or proposed for funding through the budget process. Policy Implications Energy storage is a key technology to enable increased penetration of renewable energy in California and, when installed in customer premises, reduce their utility use. These two aspects conform to Utilities Strategic Plan objectives and Council policy on environmentally sustainable utility and customer programs. Any use of storage systems to benefit from energy market price differentials will be done in conformance with City’s energy risk management policies. Environmental Review Council’s adoption of a resolution declining to set energy storage goals is not a Project requiring California Environmental Quality Act review. City of Palo Alto Page 3 Attachments: Attachment A: Reso Determining Not to Set Energy Storage Targets Attachment B: Energy Storage Report (May 2017 UAC Report) Attachment C: Excerpt from UAC Meeting Minutes of October 5, 2016 and May 3, 2017 Not Yet Approved 170721 jb 1 018 20170721 RESO CPAU to Procure Energy Storage System Inappropriate Resolution No. ___ Resolution of the Council of the City of Palo Alto Determining that a Target for the City of Palo Alto Utilities to Procure Energy Storage Systems is Not Appropriate Due to Lack of Cost-Effective Options R E C I T A L S A. California’s energy storage law, hereinafter referred to as Assembly Bill (AB) 2514, requires the governing board of each local publicly-owned electric utility (POU) to determine appropriate targets, if any, for the utility to procure viable and cost-effective energy storage systems. B. In addition to requiring POUs to evaluate the feasibility of energy storage targets, AB 2514 also requires that all procurement of energy storage systems by a POU be cost- effective. C. To conform to California Public Utilities Code § 2836(b)(1) and § 2836.6, and consistent with the City’s Long-Term Acquisition Plan (LEAP), staff undertook a study in 2013 and again 2016, to determine the viability and cost-effectiveness of energy storage to serve electric utility customers in Palo Alto, which included an investigation into a variety of energy storage technologies and their viability and cost-effectiveness. D. Based on those two studies, staff found in 2013 and once again in 2016, that the least cost energy storage technology today is more costly than the present value of energy storage in the best case application, even when a variety of factors including current CPAU load projections, rooftop PV penetration, and distribution system capacity were considered, such that energy storage systems are not cost-effective at this time. E. Most recently, at its May 3, 2017 meeting, the Utility Advisory Commission (UAC) unanimously recommended that the City Council decline to set an energy storage procurement target for the City of Palo Alto or provide rebate incentives for thermal energy storage because such targets and incentives are not cost-effective. F. The Council has reviewed staff’s study, the resulting staff report and the UAC’s recommendation. G. Based on that review, Council determines that that a target for the City of Palo Alto Utilities to procure energy storage systems is not appropriate due to lack of cost-effective energy storage options. H. AB 2514 requires Palo Alto to reevaluate this determination concerning the need for an energy storage procurement target once every three years. ATTACHMENT A Not Yet Approved 170721 jb 2 018 20170721 RESO CPAU to Procure Energy Storage System Inappropriate The Council of the City of Palo Alto (“City”) RESOLVES as follows: SECTION 1. To satisfy the City’s obligations pursuant to AB 2514 and LEAP, the Council determines that setting a target for the City of Palo Alto Utilities to procure energy storage systems is not appropriate due to lack of cost-effective energy storage system options. SECTION 2. The Council will reevaluate its decision not to set an energy storage system procurement target for the City of Palo Alto Utilities within three years, as required by AB 2514. SECTION 3. The Council finds that the adoption of this resolution is not subject to California Environmental Quality Act review because it does not constitute a project under California Public Resources Code section 21065. INTRODUCED AND PASSED: AYES: NOES: ABSENT: ABSTENTIONS: ATTEST: ___________________________ ___________________________ City Clerk Mayor APPROVED AS TO FORM: APPROVED: ___________________________ ___________________________ Assistant City Attorney City Manager ___________________________ Utilities General Manager ___________________________ Director of Administrative Services 2 MEMORANDUM TO: UTILITIES ADVISORY COMMISSION FROM: UTILITIES DEPARTMENT DATE: MAY 3, 2017 SUBJECT: Staff Recommendation that the Utilities Advisory Commission Recommend that the City Council Decline to Set an Energy Storage System Target Due to Lack of Cost-effective Options RECOMMENDATION Staff recommends that the Utility Advisory Commission (UAC) recommend that the City Council decline to set a procurement target for energy storage systems at this time due to the lack of cost-effective options. DISCUSSION California legislation Assembly Bill 2514 (AB 2514) requires the governing board of each publicly-owned utility (POU) to “determine appropriate targets, if any, for the utility to procure viable and cost-effective energy storage systems...” In addition to requiring that POUs evaluate the feasibility of energy storage targets every three years, starting in October 2014, AB 2514 also requires that all procurement of energy storage systems by POUs be cost-effective. In February 2014, at the recommendation of staff and the UAC, City Council made a determination not to set energy storage targets for CPAU. In October 2016, staff presented the UAC an updated analysis on microgrid and energy storage applications (Attachment A). This updated analysis found that energy storage applications in CPAU are still not cost effective. However, staff recommended exploring the feasibility of undertaking a Research Development & Deployment pilot program in order to learn and be ready for the anticipated widespread adoption of customer-sited energy storage systems. Based on the staff analysis results and UAC feedback at the October 5, 2016 meeting, staff recommends that UAC recommend that Council make a determination that setting a procurement target for energy storage systems is not appropriate for CPAU at this time due to the lack of cost-effective options. Within the next three years, staff will bring the UAC a recommendation regarding a potential energy storage pilot program1. 1 A pilot program with a total budget approx. $250,000 is being evaluated by staff. This will enable CPAU to fund a 50% cost matching rebate of up to $500/kWh for storage cited at residential and customer premises, and made available to the CPAU to dispatch during ‘Demand Response’ periods. Staff believes that this is a reasonable investment to support the integration of this nascent technology in the Palo Alto community at five to ten customer sites. Design of such a pilot program, including legal and regulatory review, will have to be undertaken by staff before bringing a recommendation to the UAC and Council. ATTACHMENT B SUMMARY OF OCTOBER 5, 2016 UAC DISCUSSION Commissioners were supportive of staff's findings that energy storage systems were ·not cost- effective for Palo Alto. They also wanted to learn the rationale for undertaking an energy storage pilot. Commissioners were open to considering approval of such a pilot program after staff develops the program more fully. Full text of the meeting minutes is provided in Attachment B. NEXT STEPS Following UAC consideration of staff's recommendation, if UAC recommends approval of that recommendation, staff plans to seek Council approval of the staff recommendation in June or July, and file with the California Energy Commission by August 2017. RESOURCE IMPACTS Not setting an energy storage goal will not have any resource impacts. If an energy storage pilot program is recommended at a later time, it could cost $250,000 in customer rebates and take- up approximately 0.2 FTE to administer the program and leverage the storage system for utility applications. POLICY IMPLICATIONS Energy storage is a key technology to enable increased penetration of renewable energy in California and, when installed in customer premises, reduce their utility use. These two aspects conform to Utilities Strategic Plan objectives and Council policy on environmentally sustainable utility and customer programs. Any use of storage systems to benefit from energy market price differentials will be done in conformance with City's energy risk management policies. ENVIRONMENTAL REVIEW Council decision not to set energy storage goals is not a Project requiring California Environmental Quality Act review. ATIACHMENTS A. Discussion of Energy Storage and Microgrid Applications in Palo Alto -analysis report provided to the UAC on Oct 5, 2016 B. UAC Meeting minutes (excerpts) related to energy storage discussion of 10/5/2016 PREPARED BY: LENA PERKINS, Resource Planner ~HIVA SWAMINATHAN, Senior Resource Planner ~rCHEIN, Assistant Director, Resource Management REVIEWED BY: APPROVED BY: EDSHIKADA General Manager of Utilities 1 3 MEMORANDUM TO: UTILITIES ADVISORY COMMISSION FROM: UTILITIES DEPARTMENT DATE: OCTOBER 5, 2016 SUBJECT: Discussion of Energy Storage and Microgrid Applications in Palo Alto This report is provided for background to elicit input from the Commission on staff’s preliminary findings to not set energy storage goals and to explore pilot scale storage programs. A final recommendation on whether to establish a goal for storage will be brought back to the Commission in early 2017. No action is required at this time. EXECUTIVE SUMMARY Currently, storage systems are most commonly installed by customers either seeking a higher level of electricity supply reliability or those interested in storing their generated solar electricity onsite. Energy storage systems coupled with solar photovoltaic (PV) systems are becoming increasingly viable technologically and economically. These integrated PV and battery systems sometimes have the capability to maintain electric supply at customer homes or businesses in the event of a power outage,1 or increasing the self-consumption of solar generated onsite. Combined PV and storage systems that can island from the electric grid and function alone are sometimes called microgrids2 or nanogrids3. Storage systems alone, without PV, can also be configured to reduce customer electric utility bills by storing electricity when prices are low and using stored electricity when prices are high. In addition to the small customer-sited storage systems, large utility-scale storage systems are also becoming more prevalent in California as a result of regulatory mandates and market changes. 1 PV systems that are not appropriately coupled with energy storage systems cannot produce energy in the event of an electric grid outage, except in very limited circumstances. Hence such systems cannot enhance customers’ electric reliability. 2 A microgrid is defined as, “a group of interconnected electrical (customer) loads and distributed energy resources within clearly defined electrical boundaries that acts as a single controllable entity with respect to the grid. A microgrid can connect and disconnect from the grid to enable it to operate in both grid-connected or island- mode.” 3 A microgrid which can island from the electrical grid and operates at an individual building or individual customer level is commonly called a “nanogrid”. Because of its simplicity, a nanogrid can be developed without the need for active facilitation by an electric utility. ATTACHMENT A 2 While battery systems and solar PV costs have declined considerably the past three years, cost- effective storage systems are still some years away, particularly in Palo Alto. The primary challenges to cost effectiveness in Palo Alto are the relatively low electric retail rates, the small retail rate differential between on-peak and off-peak periods, and a robust distribution grid providing highly reliable electricity service. Transmission grid-level storage applications are also not currently cost effective for the City of Palo Alto Utilities (CPAU). However, CPAU has incorporated the option into the City’s recent purchase power agreements to site storage systems at the PV project sites in case the economics for storage at the transmission grid level become favorable in the future. In accordance with State law, the City must evaluate storage options and determine whether or not to establish a goal for energy storage every three years. When last evaluated in 2014, the City declined to establish such a goal since there were no cost-effective opportunities. There still appears to be no cost-effective storage options, but staff is evaluating a pilot-scale utility rebate program for energy storage systems installed at customer premises4. A small storage pilot program would enable CPAU to gain first-hand experience with storage technologies and to position itself for widespread adoption if and when they become economically favorable in the future. Staff will return to the UAC and Council in early 2017 with a recommendation on whether to establish a goal for energy storage and whether to undertake any pilot programs related to storage. This report is meant to provide a background for discussion prior to staff’s development of these recommendations. BACKGROUND In February 2014, after examining a detailed analysis from staff, the City Council found a lack of cost-effective energy storage applications in Palo Alto (Staff Report 4384). This analysis and determination was prompted by State law under AB 2514 that required the governing board of each publicly-owned utility (POU) such as CPAU to “determine appropriate targets, if any, for the utility to procure viable and cost-effective energy storage systems.” The law also required “reevaluation of energy storage target determinations not less than every three years.” The findings and recommendations from the 2014 analysis by Palo Alto were: A. Do not establish an energy storage systems procurement target for Palo Alto. This recommendation was made because storage systems were not cost effective from a societal and utility perspective in Palo Alto. 4 A pilot program with a total budget approx. $250,000 is being evaluated. This will enable CPAU to fund a 50% cost matching rebate of up to $500/kWh for storage cited at customer premises, and made available to the CPAU to dispatch during ‘Demand Response’ periods. Staff believes that this is a reasonable investment to support the integration of this nascent technology in the Palo Alto community. Design of such a pilot program, including legal and regulatory review, will be undertaken by staff in the coming months before bringing a recommendation to the UAC. 3 B. Utility incentives for energy storage not recommended. The analysis found that Thermal Energy Storage (TES) and Battery Energy Storage (BES) systems were the most relevant for applications in Palo Alto. However, customer incentives were not recommended since at the time neither of these systems was found to be cost effective from a societal perspective. C. Encourage commercial customers to consider energy storage where cost effective. The analysis found that TES and BES could make load shifting strategies cost effective for Palo Alto commercial electric ratepayers, and recommended that CPAU encourage its customers to evaluate installing such systems at their premises. Energy Storage Systems: Definition and Need The fundamental purpose of energy storage systems is to absorb energy, store it for a period of time with minimal losses, and then release it. When deployed in the electric power system, energy storage provides flexibility that facilitates the real-time balance between electricity supply and demand. Maintaining this balance on an instantaneous basis becomes more challenging as the share of electricity coming from intermittent renewable energy sources grows. Typically this supply-demand balance is achieved by keeping some generating capacity in reserve (to ensure sufficient supply at all times) and by adjusting the output of fast-responding resources like hydropower. As the need for fast-responding energy supplies increases, energy storage systems are expected to play a greater role. Rechargeable batteries are perhaps the most familiar energy storage technology. Large battery systems can be connected to the transmission grid to take up excess wind or solar power when demand for electricity is low, and release it when demand is high. Such transmission grid-tied battery installations also provide valuable frequency regulation more effectively than a typical thermal electricity generation facility. At the other end of the electric grid, customer-sited energy storage can reduce customer costs and increase system reliability while also benefiting the utility by reducing peak demands on the distribution system. Both BES and TES systems can reduce peak demands on the electricity distribution system. TES systems are typically used to shift electricity use of commercial space cooling units from peak to off-peak periods of the day. Alternatively, a common household example of a TES storage device is a networked dispatchable electric hot water heater. Clearly a variety of technologies can be used for energy storage in a wide range of applications throughout the electric grid. The type, performance and location of an energy storage system determine the benefits it can provide. Storage Systems in California In 2014, among the 37 POUs in California, 7 POUs set storage goals under the AB 2514 requirement. The remaining 30, including Palo Alto, declined to set goals, finding storage to not be cost effective for their systems at the time. The storage systems planned by POUs were 4 primarily pumped hydro storage, thermal energy storage, and battery energy storage systems designed for grid service and customer load management service applications. Table 1 lists these goals and highlights that several of the smaller POUs have set very small goals. Table 1. Publicly-Owned Utility Energy Storage Goals Set in 2014 Source: CEC, IEPR 2015 While the goals set for POUs were relatively small (~30MW in 2016 and 160 MW in 2020), the California Public Utilities Commission (CPUC) set a 2,485 MW goal for the investor owned utilities (IOUs), with procurement commitments to be made by 2020 and systems operational by 2024. The large volume of storage procurement by IOUs in 2014-15 and current and future plans for procurements have spurred the storage industry to bring several innovative storage products to the marketplace, including better product warranties and long-term financing options. Microgrid and Nanogrid Applications in Palo Alto A microgrid is defined as, “a group of interconnected electrical (customer) loads and distributed energy resources within clearly defined electrical boundaries that acts as a single controllable entity with respect to the grid. A microgrid can connect and disconnect from the grid to enable it to operate in both grid-connected or island-mode.”5 A nanogrid is very similar to a microgrid, except it operates at an individual building or individual customer level. Because of its simplicity a nanogrid can be developed without the need for active facilitation by an electric utility like CPAU. 5 https://building-microgrid.lbl.gov/microgrid-definitions 5 There are no microgrid applications in Palo Alto currently nor anticipated in the near future6. Nanogrids, on the other hand, are common at buildings that are required to have back-up diesel generation for public health and safety reasons. Examples of nanogrids include hospitals, emergency operations centers such as police and fire stations, and data centers. As PV and energy storage costs decline rapidly, integrated PV and battery systems could provide higher reliability nanogrid services for an expanded group of customers, including residential applications7. DISCUSSION Since 2014, the cost of BES systems has declined and there are a greater number of commercially available storage products in the market place. While small scale TES systems have improved, the application of TES in a mild climate like Palo Alto remains limited. The report analyzes new developments since the 2014 storage assessment and outlines elements of a distributed energy resource plan, including storage systems, for Palo Alto through 2020. This analysis reviews these market changes and outlines a course for storage at CPAU within the broader context of optimizing the value of all distributed energy resources in Palo Alto. There are a wide variety of energy storage technologies available in the marketplace, and a number of these are discussed in Attachment A. Among these technologies BES is the most applicable for Palo Alto and is also the most commercialized with multiple established vendors. TES systems have only few commercial vendors and such systems have relatively low value in Palo Alto due to our mild climate (Attachment D). Application of Energy Storage Systems Figure 1 illustrates that storage systems can serve 13 applications and benefit three broad stakeholder groups: Customers, Utilities, and Transmission operators (Independent System Operators, or ISOs)8. Any of these three stakeholder groups could fund and or derive value from energy storage systems. The concentric circles in the figure also illustrate that storage can provide the broadest range of services if located behind the customer meter and the least number of services if located more centrally on the transmission grid. It is important to keep in mind for CPAU that the different available value streams depend on the physical location of the storage system. 6 Microgrids are most common in military bases in the U.S, where the entire base must often have the capability to function independent of the larger electrical grid. Microgrid applications are also common in large educational campuses that have onsite generation. In early 2000’s Palo Alto considered siting a 50MW natural gas fueled electric generator within Palo Alto. Part of the rationale was to explore the feasibility that that such a large scale generator may enable the City to operate as a microgrid, at a 25% load level, in the event of a natural disaster. The initiative was discontinued due to the lack of available site, cost/complexity, and the pursuit of the carbon neutral electric supply strategy by the community. 7New generation of PV system inverters are capable of providing very limited amount of back-up supply to isolated home circuits in the event of a grid outage when PV system is producing energy. The electrical appliances for such application should not need stable power supply (i.e. medical device) because of the inherent variability of solar power. http://www.sma-america.com/products/solarinverters/sunny-boy-3000tl-us-3800tl-us-4000tl-us-5000tl- us-6000tl-us-7000tl-us-7700tl-us.html#Downloads-137455 8 The Economics of Battery Energy Storage, Rocky Mountain Institute, October 2015 6 Figure 1. Value streams of Energy Storage Systems in Customer, Utility and Transmission Services Customer Service Applications Historically providing backup power (e.g. uninterrupted power supply, or UPS, systems) – has been the primary application of storage systems for customers. Storage could also assist customers in reducing their utility bills as both electricity demand charges to customers increase and the electricity price differential between day time and night time use increases. In addition, as utility incentives for solar PV systems are phased out, there may be greater incentives to store excess solar energy in batteries at customer sites for use during non-solar production periods. Due to the relatively high cost of storage, the storage projects are currently not cost effective with the benefit-cost ratio from 15% to 20%, i.e. not cost effective. Hence, supply reliability is likely to be the main driving factor for home installations of storage systems. For commercial customers, given CPAU electricity demand charges, electricity retail rates, and the cost of storage systems, the annualized benefit-cost ratio for this application appears to be in the range of 30% to 35%, well below the break-even point. 7 Storage systems located at customer sites to provide service to customers directly also have the potential to provide utility distribution and transmission system services. The value streams associated with such services to CPAU or to the California Independent System Operator (CAISO) are relatively small, except under very specific conditions such as when distribution or transmission systems constraints prevail. Distribution systems constraints are not common in CPAU currently9. However, as the electricity load increases with greater electric vehicles (EV) adoption and electrification of natural gas appliances, constraints may arise which may make storage applications more valuable. Utility Services to CPAU As the operator of the electric distribution system, CPAU can utilize storage systems to reduce distribution systems constraints or defer distribution system expansion investments. As outlined above, the value stream associated with such applications in Palo Alto is currently low. Siting of storage to meet CPAU’s resource adequacy requirements imposed by the CAISO, could annually save CPAU approximately $5 to $10 per kWh of energy storage system installed and dispatched during peak load hours10. However, the annualized cost of a storage system is currently about $100 to $150/kWh. The value of transmission congestion relief for Palo Alto load is currently small11. The congestion costs experienced by CPAU’s central solar resources are expected to increase in the future; however, the value of alleviating congestion costs can only captured by siting storage physically adjacent to the large utility scale solar projects (often located in the Central Valley). This increased congestion cost scenario was contemplated and has been incorporated into CPAU’s solar contracts by incorporating an option for CPAU to site storage onsite at the large solar arrays in the future. Transmission Grid Services to the CAISO CAISO procures many ancillary services to operate the electric transmission grid. These include frequency regulation, spinning and non-spinning reserves, and voltage support. Among these services, regulation service is the highest value service and storage systems have the ‘fast- 9 Palo Alto has nine distribution system substations with a total of 28 substation transformers serving 68 distribution feeders. While overall the substation transformers and feeders have sufficient capacity to handle Palo Alto’s loads (which are currently 10-20% below peak loading levels seen in year 2000), there may be areas of significant load growth (e.g. area around Stanford Medical Center) that will require load transfers to adjacent substations to maintain operating flexibility or increases in electric system capacity at certain substations. The role storage systems could play in deferring such investments are evaluated when designing such projects. Currently storage is not anticipated to be an economical solution in such projects. 10 CPAU’s cost of resource adequacy capacity procurement could be reduced by $20 to $40/year for every kW of storage system that has the ability to discharge over a four-hour duration (i.e. a 4 kWh storage system is needed to meet one kW of resource adequacy capacity requirement). Therefore, the annual value of storage systems is estimated at $5 to $10/kWh. 11 Internal analysis of CY 2015 CAISO nodal and aggregation point prices shows that on-off peak congestion and marginal loss differential to be 0.05 cents/kWh for loads and up to 0.5 cents/kWh for central resources. 8 acting’ capability to provide this service; however, the compensation for these services is currently too low to justify storage systems. Alternatively, CPAU will be exploring the feasibility of aggregating smaller customer sited systems to bid into the CAISO market to capture both customer service and grid service value streams. Taking advantage of potential transmission level energy price differences is another value stream that storage systems can capture. This application is similar to time-of-use bill management in the customer-sited storage application, but it should be noted that both of these value streams cannot be harvested simultaneously. Figure 2 below illustrates the annual value of each 13 storage value streams as a percentage of its annualized cost. This means that over the life of the energy storage system, it will recoup some percentage of its cost. Since all of the systems have value of less than 100% of their annualized cost, the revenues generated are all well below the breakeven point. However, the relative economics of each application are informative for the future as storage costs continue to decline. As shown in the figure customer-sited storage for demand charge reduction and backup power for commercial customers have the greatest value. The next most valuable uses of storage are for PV self-consumption, frequency regulation, and resource adequacy which all recoup 15% of the current cost. Transmission congestion relief, spinning and non-spinning reserves, and energy price differences currently provide relatively low values currently. It should be noted that it is difficult to generalize the value of backup power and distribution deferral because each application is very case specific and analyzed on a case-by-case basis by both the customer and CPAU. 9 Figure 2: Illustration of the Relative Value of Energy Storage Applications (% of Annualized Cost)12 Energy Storage Systems Case Studies for Palo Alto Staff analyzed the three storage applications most relevant to Palo Alto: residential customer- sited storage with PV, commercial customer-sited storage, and transmission grid-tied storage. A description and summary of results for these applications are outlined below. The first two applications are potential nanogrid applications if the systems were designed with sensors and controllers to operate independent of the electric grid. A detailed description of the full analysis is provided in Attachment C. I. Residential customer-sited storage with PV: The scenario analyzed storage installed with solar PV panels with the intention of maximizing PV self-consumption and minimizing exports to the electric grid under the net energy metering (NEM) successor program. These systems are small—in the 5 to 10 kWh scale. With an energy cost differential of about 9.5 cents/kWh (difference between the tier 2 rate of 16.901 cents/kWh versus the NEM successor buyback rate of 7.485 cents/kWh) the value of energy storage for this application is about 15% of the annual cost of ownership13. If the customer values the enhanced 12 While each application individually is not currently cost effective, a combination of applications may be cost effective. For Palo Alto, such combinations of opportunities are also very limited at this time. 13 Assumed that PV directly feeds the storage system and the configuration enables the storage system to qualify for the 30% investment tax credit. The annual cost of ownership, net of investment tax credits, was estimated at $42/kWh-year. Energy arbitrage Spin/non-Spin reserve Frequency regulation Voltage support Black start Resource adequacy Transmission congestion reliefTransmission deferral Distribution deferral TOU bill management Demand charge reduction Increased PV self consumption Backup power 20% 40% 60% 80% 100% CUSTOMER SERVICES UTILITIES SERVICES ISO SERVICES 10 reliability provided by such a combined system, this application will become viable solution in the residential market segment. Figure 3 below illustrates how excess solar PV energy could be used to charge the storage system during the day and use the stored energy to meet the electricity needs of the home at night, reducing energy purchases at the retail rate. Figure 3. Illustration of Residential Customer Application: Storage + PV under NEM Successor This configuration enables customer to store excess solar energy for use at night. II. Commercial customer sited storage: This application is to use storage to lower the utility demand charge for the commercial customers. At the current demand charge rate for commercial customers in Palo Alto14, the value of this application is estimated at about 40% of annualized cost of ownership. If CPAU also can harness the storage system to meet CAISO resource adequacy needs, the combined value stream has the potential to break even at the current cost of storage system. If configured appropriately, this storage system in this application can also provide the customer back-up power in the event of an electric grid outage. 14 Medium and Large Commercial customers pay a demand charge in the range of $14 to $19.70/kW-month depending on the season. Assumes these storage systems do not enjoy tax credits. 11 Figure 4 illustrates how medium and large commercial customers, who are subject to a utility demand charge based on the peak load consumption for the month, could use energy storage to lower their monthly utility peak demand. Figure 4. Commercial Customer Application to Lower Utility Electricity Demand Charge III. Transmission grid-tied storage: This scenario assumes storage to be located at one of Palo Alto’s large PV projects in the Central Valley. Such large systems cannot be located within Palo Alto. Storage at such sites could provide CAISO services such as frequency regulation and flexible resource adequacy capacity; could benefit from CAISO energy price differentials when feasible; and could charge the battery with PV output during times when the systems would otherwise be curtailed. The market value of such systems is estimated at about 30% of current cost of ownership15. The analysis found that costs had to decline by about 33% and market value of ancillary services must increase by three fold16 for such systems to economically viable. 15 Annualized cost of ownership is estimated at 80/kWh-year – estimates based on purchase power agreement quotes from potential developers. This assumes the projects do not qualify for investment tax credits. 16 Increase from the current low $9/MW-h levels, back to the $25-30/MW-h levels seen previously. 12 Figure 5 illustrates how transmission grid-tied storage could be used to keep loads and resources in balance at the transmission grid level—by absorbing excess energy (when supplies exceed demands) to charge the battery and providing energy (when demands exceed supplies) by discharging the battery. Figure 5. Transmission Grid-Tied Storage Application for Frequency Regulation & Load Following Demand Response, Energy Storage, and Distributed Energy Resources in Palo Alto Demand Response Program Customer Demand Response (DR) programs are designed to provide an incentive to customers to change their electricity consumption based on signals provided by CPAU or the CAISO. Customers capable of providing DR services can meet many of the applications identified for storage systems without the need for additional storage hardware investments. Over the past 5 years Palo Alto has implemented a DR program that achieved 500 to 900 kW of demand reduction when CPAU requests load reductions from the large customers participating in the program during hot summer days. The cost of administering and compensating participating customers is about $10,000 per year, with similar value to CPAU17. Much of the DR has been achieved by participating customers controlling their air conditioning and lighting loads. To achieve a similar level of load reduction, approximately 2 to 3 MWh of 17 Details of this program and planned next steps are outlined in the UAC Report from March 2016 13 storage systems would be needed, requiring a capital expenditure in excess of $2 million. Due to the relatively favorable economics of DR programs compared to storage, CPAU anticipates continuing its focus on expanding the DR program to other large customers and investigating residential applications. Initiative to Leverage Distributed Energy Resources and Meeting Distribution System Needs Energy storage systems and DR programs are considered distributed energy resources (DER) along with EVs, EV charging equipment, PVs, controllable thermostats and electric water heaters, etc. In February 2016, staff issued a request for proposal to solicit proposals from communicating and controllable DER vendors who already have such systems installed at customer premises in Palo Alto. Examples of services that can be provided by networked and controllable DER devices include the following: • Reduced charging of EVs when the value of energy is high. This application is similar to discharging a battery when the value of electricity is high. • Injecting capacitive energy into the distribution grid from existing PV systems by controlling the inverter operation when CPAU’s distribution power factor is low. Smart inverters in BES can also provide this service18. • Pre-cooling homes in the morning on hot summer days using thermostat controls in order to reduce electricity consumption during afternoon peak load periods. This is equivalent to charging the batteries in the morning and discharging them at night. Staff is in the process of evaluating proposals and anticipates making pilot scale commitments to leverage such resources for the benefit of CPAU operations in conjunction with the services customers are already receiving for such DERs. While these commitments will be for services, staff is evaluating the merits of providing incentives for the installation of related hardware such as storage systems. A comprehensive DER strategy to meet CPAU’s needs in the long term, including potential pilot scale storage system incentives at customer locations, will be brought to the UAC and Council for consideration and approval in 2017, along with a recommendation on whether or not to set energy storage goals for the next 3 years. Role of Distributed Energy Resources in Meeting Palo Alto’s Sustainability Goals To the extent they become cost effective and feasible, DERs such as combined PV and storage systems located at customer premises can enhance customer’s electricity reliability, lower customer utility bills, improve community resiliency, and lower electricity transmission losses. 18 Inverters are becoming more versatile and new inverter standards will enable distributed energy resources such as PV and storage systems to provide fast-acting local grid support services such as responding to changes in system voltage and frequency. CPAU is in the process of testing these features in one of the larger PV systems in town to improve customer and CPAU distribution system power factor during peak load periods. 14 As initiatives such as Community Solar or Ecodistricts19 help leverage the value of DERs, CPAU will be well-positioned to facilitate the adoption of these systems where they benefit the community. Since CPAU’s electric supply is already carbon neutral, wide adoption of DERs in Palo Alto will not reduce the community’s carbon footprint, but could help the statewide goal of increasing the penetration of intermittent renewable electricity. In addition, Palo Alto’s initiative to electrify water heating with efficient heat pump water heaters has the potential to add value as energy storage mechanism in the long run by heating water during the times of day when electricity prices are low20. NEXT STEPS Staff will return to the UAC and Council in early 2017 with a recommendation on whether to set a goal for energy storage and an overall DER strategy. A pilot program may be recommended to site energy storage systems at customer premises, for both residential and commercial applications. Incentives for such a program would be identified as a Resource Impact. RESOURCE IMPACTS If an energy storage pilot program is recommended and approved, it could cost $250,000 in customer rebates. Such a program would be administered along with City’s existing Demand Response program. The staff resources needed for an expanded Demand Response and Distributed Energy Resource program is anticipated to be 0.2 FTE, and would be managed with existing resources. POLICY IMPLICATIONS Energy storage is a key technology to enable increased penetration of renewable energy in California and, when installed in customer premises, reduce their utility use. These two aspects conform to Utilities Strategic Plan objectives and Council policy on environmentally sustainable utility and customer programs. Any use of storage systems to benefit from energy market price differentials will be done in conformance with City’s energy risk management policies. ENVIRONMENTAL REVIEW The UAC’s discussion of energy storage and microgrid technologies is not a Project requiring California Environmental Quality Act review. 19 Ecodistrict is a community level project to achieve various sustainability goals. One such goal could be self- sufficiency in energy by a collective subscription to a larger scale community owned PV system. 20 CPAU’s electrification plan incorporates this possible application of using heat-pump water heaters as energy storage devices in the long term. ATTACHMENTS A. Description of Energy Storage and Microgrid Technologies B. Value of Electricity Storage in Providing Services to the City of Palo Alto C. Case Studies of Battery Energy Storage Applications in Palo Alto D. Thermal Energy Storage in Palo Alto E. Outline of Energy Storage Regulations, Policies and Incentives PREPARED BY: REVIEWED BY: APPROVED BY: ANNE-LAURE CUVILLIEZ, Management Specialist ;fl.ENA PERKINS, Resource Planner y;1vA SWAMINATHAN, Senior Resource Planner 'UjN,J RATC~YE, Assistant Director, R"'es.ource Management /7d11-Vd c£~ J!!' v~ __,ED SHIKADA 4 Interim Director of Utilities 15 Attachment A A-1 Description of Energy Storage Technologies and Microgrid Technologies 1. Energy Storage technologies Please refer to Staff Report 4384 for a review of energy storage technologies. The vast majority of current grid connected energy storage systems1 (90%) are pumped hydro projects, with 28 GW installed in the U.S. Thermal storage is the second most installed storage technology with 855 MW of storage in the US (~3%). 740 MW of Compressed Air energy Storage facilities exist in the U.S, which represents 2.4% of the US capacity. Li-ion batteries (1.4%), lead acid batteries (0.5%), flywheels (0.3%) and flow battery 0.1% follow. The fastest growing residential and commercial applications of storage in California use battery energy storage systems (BES), much of the report outlines applications of such systems. Thermal energy storage (TES) system applications were also reviewed. 2. Microgrids a. Microgrids value The value of microgrids concentrates around four main areas (see Figure A1): - Security: by offering an uninterruptible power supply for critical loads. - Reliability: contiguous quality power supply 24/7 with local generation - Sustainability: allows the integration of local renewable generation - Cost efficiency: opportunities to do peak shaving, demand-response, and hedge against high grid prices Figure A1: Graphical representation of microgrid values 1 http://www.energystorageexchange.org/ Security Reliability Sustainability Cost efficiency UPS for critical loads Islanding Lower CO2 footprint On-site generation Peak shaving Grid independence Hedging Effective energy management Attachment A A-2 Microgrids can provide several services to the main grid: - Ancillary services - Demand/response, Curtailment - Ramping, flexible capacity b. Key components and functions of a microgrid The microgrid needs to be able to operate the loads and energy sources in grid connected or islanded mode and transition smoothly between the two modes. Hence, the microgrid has the following needs: - Islanding detection: During islanding mode the microgrids is responsible of voltage and frequency regulation. The microgrid controller provides these regulation services. Detection can be done locally, by measuring local variables (voltage, frequency) or remotely by communicating with the main grid. - Fault current protection: The microgrids require detection and protection against fault current flows, i.e. short circuits. - Power quality: Harmonic contents and voltage unbalance. This can also provide ancillary services to the main grid. - Black start: when islanded Other desirable functionalities of the microgrids include: - Energy optimization: this includes power curtailment, peak shaving, storage management Those functions are performed by the microgrid master controller (see Figure A2), supported by a strong communication and sensor network. The main function of the master controller is to match loads and generation (See A2 and A3) and to provide monitoring of the microgrid. Figure A2: Master Controller functions within the microgrid Attachment A A-3 Figure A3: example of microgrid block diagram, Experimental Power Grid Centre (EPGC) microgrid test facility2 The main applications of the commercial microgrids are for community-sized systems and campuses that have critical loads to protect (i.e. fire station, police station, and communications) and want to integrate local renewables in the grid. c. Nanogrids Nanogrids are microgrids for a single-load or single-building microgrid. Nanogrids can also island from the main grid. The main commercial applications of nanogrids are residential homes and single commercial buildings with solar panels and back-up battery storage. 2 Thangavelu et al., Integrated Electrical and Thermal Grid Facility - Testing of Future Microgrid Technologies, Energies 2015, 8(9), 10082-10105, http://www.mdpi.com/1996-1073/8/9/10082/htm Attachment A A-4 Figure A4: Illustration of a nanogrid in a residential house The PV panels and battery bank are connected to the inverter. The main breaker is the point at which the house can be islanded from the grid. The battery, PV, critical loads and inverter interaction is managed at the subpanel interface (See Figures A4 and A5). The utility meter is located between the main grid and the main breaker. Figure A5: Main elements of a nanogrid Attachment A A-5 Two different design philosophies can be adopted for nanogrids. Those grids can operate in Direct current (DC) or alternating current (AC) current. The two different strategies and the corresponding systems depicted on Figure A6 depend on how many inverters are used in the system. PV panels produce energy in DC current, and most houses loads requires AC current. Batteries take DC current as well. In the AC strategy, the DC current from the PV panels in converted to AC through an inverter and can serve house loads or be exported to the grid. When charging the battery, the current is converted back to DC through a second inverter. This type of installation is usually chosen when the storage is added after the PV panels were already installed. In the DC strategy, the DC current from the PV panels can be used to charge the battery directly or be converted to AC through an inverter to be used for the house or exporter to the grid. Only one inverter is required. Energy from the grid cannot be used to charge the batteries. Figure A6: Schematic representation of AC (left) and DC (right) energy storage The advantages and differences of both systems are outlined in Table A1. Table A1: Comparison of AC and DC storage system Attachment B B-1 Value of Electricity Storage in Providing Services to the City of Palo Alto This section describes in detail the 13 services that storage systems could provide to the three stakeholder classes—customers, utility and the California Independent System Operator (CAISO)—as outlined in the report. Table B1: Summary table of 13 services provided by storage Service Percentage of cost Evolution A. SO / R T O S e r v i c e s 1. Frequency regulation 15% Possible at medium term. Revenue streams in CAISO are not beneficial at the moment. 2. Spin/Non-Spin Reserve 7% Unlikely to become financially viable in the years to come. Regulation is the service generating the most revenue at the moment 3. Voltage support N/A at the time Unlikely since the burden is on the generators. 4. Energy Price Differentials 8% Not beneficial for this purpose only, but can provide additional value streams for other usage. Could evolve if gas prices go up. B. U t i l i t y Se r v i c e s 5. Resource Adequacy 15% Not beneficial for this purpose only, but can provide additional value streams for other usage. 6. Transmission Deferral 0% Not beneficial in the case of Palo Alto since transmission is billed by unit of energy. 7. Transmission Congestion Relief 10% Could become necessary if congestion becomes a big problem Attachment B B-2 8. Distribution Deferral 50% ( case by case) – but N/A at the moment in PA On a case by case basis. Expensive upgrades unlikely because of current state of transformers. 9. Distribution loss savings <1% Not beneficial for this purpose only, but can provide additional value streams for other usage. C. C u s t o m e r S e r v i c e s 10a. Backup power - residential <1% Not beneficial, especially with high reliability and unlikely to go up enough to justify an investment. 10b. Backup power - commercial case by case Can be 100% Already financially viable if the industry is highly dependent on electricity and critical loads are low (i.e. server vs full building). Likely to become a package with other services to the grid, although those services might be conflicting. 11. Time-of-Use Bill Management <1% Highly dependent on TOU rates. Unlikely to go up because peak consumption is not an issue in Palo Alto. 12. Demand Charge Reduction 40% Getting closer to competitive. Likely to become more competitive as more offerings become available. 13. Increased-PV Self- Consumption 18% Unlikely to go up with CPAU low electricity tariffs. Attachment B B-3 A. ISO/RTO Services Ancillary services provide the CAISO the resources to reliably maintain the balance between generation and load. The different types of ancillary services are described in Table B2. Table B2: Ancillary services description1 Storage technologies like batteries and flywheels are most qualified for fast response times, which cheaper gas peakers struggle to achieve at low standby cost. Gas peakers need to be running continuously at low power and burn fuel in order to be online within minutes, a requirement which is easily achieved by a battery. The City of Palo Alto’s 56 MW share of the Calaveras Hydroelectric Project satisfies the ancillary services needs of the city. This study evaluated the possible value that could come from owning new storage technologies for ancillary services. 1 http://web.ornl.gov/~webworks/cppr/y2001/rpt/122302.pdf Attachment B B-4 1. Frequency regulation Most US electric equipment relies on a grid operating at a frequency of 60 Hz with very low tolerance for variation. When the demand and supply are not exactly matching, the grid frequency varies. Storage, by absorbing or releasing power, can provide regulation to increase or decrease the frequency of the grid. CAISO monthly market performance reports2 contain average ancillary services prices for regulation in the Day Ahead market for 2015. The average payment for regulation in 2015 was $8.77 per MW and per hour. It is noteworthy that ancillary services prices have been trending upward in January 2016. Projected average prices for 2020 are about 15$/MW, but should reach at least 35$/MW for several hours per day.3 FERC Order 755 has stipulated that ISOs implement “a payment for performance that reflects the quantity of frequency regulation service provided by a resource when the resource is accurately following the dispatch signal.”4 However, in the current CAISO market the mileage payment5 that act as payment for performance is too low to be relevant with $0.01-$0.03/MWh in the Real Time market and 0.09$/MWh in the Day-Ahead market. Hence this study did not consider a mileage payment. Data from the model prepared by StrateGen for the California Energy Storage Alliance (CESA)6 was used to assess the cost and revenue of battery for regulation. At the assumed price of $600/kWh, batteries for regulations systems only do not make sense financially. An installed price of under $50/kWh would make battery systems for regulation break even under current pricing. Three strategies were considered: 1) several cycling per day; 2) only bid for the highest hour of the day (~15$/MWh); and 3) only bid for the highest ten hours of the month (~50$/MWh). The optimum is to bid for 5-7 hours a day (see Figure B1) and reserve the use of battery for other services for the rest of the day, which could complement the revenue of the system. The marginal benefice of bidding additional hours on a 20-year system did not map out to a significant increase in revenue because of the replacement cost of the battery. The replacement cost of the battery was assumed equal to the initial installation cost. The ancillary services payment per MW per hour has been lower in the past years due to the low prices of gas. In 2010 prices were around $30/MW. Prices in 2020 should reach at least 2 https://www.caiso.com/market/Pages/ReportsBulletins/Default.aspx 3http://energy.gov/sites/prod/files/2015/12/f27/Ancillary%20Service%20Revenue%20Potential%20for%20Geothermal%20Gen erators%20in%20California.pdf 4 https://www.ferc.gov/whats-new/comm-meet/2011/102011/E-28.pdf 5 https://www.caiso.com/Documents/Pay-PerformanceRegulationFERC_Order755Presentation.pdf 6 http://www.strategen.com/storagealliance/sites/default/files/White%20Papers/CESA_FR_White_Paper_2011- 02-16.pdf Attachment B B-5 35$/MW for 5 hours per day. In this case the breakeven price would be around $150/kWh installed. Note: The utility would be unlikely to own the system as considered in this study, and would have to contract through a third party to own and manage the storage system. This will likely increase the prices of storage and delay the timeline at which regulation could become profitable. Figure B1: Maximum battery system investment cost per kWh needed for a null 20-year NPV regulation in function of cycles per day 2. Spin / Non-Spin Reserve Storage can bid as spinning, non-spinning or supplemental reserve. However, the value of those services is lower than frequency regulation by at least 50%. The return on investment of those services would be lower than for regulations. Hence, this study did not consider the economics of those markets. 3. Voltage support Reactive power is the non-usable part of power (see Figure B2). The power factor is defined as: 𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝 𝑓𝑓𝑓𝑓𝑓𝑓𝑓𝑓𝑝𝑝𝑝𝑝= 𝑃𝑃,𝑝𝑝𝑝𝑝𝑓𝑓𝑟𝑟 𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑆𝑆,𝑓𝑓𝑝𝑝𝑝𝑝𝑓𝑓𝑝𝑝𝑝𝑝𝑎𝑎𝑓𝑓 𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝𝑝 $0.00 $5.00 $10.00 $15.00 $20.00 $25.00 $30.00 $35.00 $40.00 $45.00 $50.00 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24Ma x i n v e s t m e n t c o s t i n $ / k W h Number of cycles per day Attachment B B-6 Figure B2: Real, Apparent and reactive power, By Wikieditor4321 - Own work, CC BY-SA 4.0, https://commons.wikimedia.org/w/index.php?curid=45518503 In order to supply a load, the real power must be equal to the load. A high reactive power increases the ratings necessary in the lines, but decreases the efficiency since only “real power” is usable. For example, if the power factor is 0.6, then apparent power is 1.67 times the load, which increases transmission losses. In order to carry this extra power, all the transmission and distribution system would need to be oversized. This is why grid-tied systems are required to supply power above a defined power factor. However, there might be times where the independent system operator wishes to increase or decrease the apparent power in order to keep the grid operating within the voltage range that it can tolerate. In that case, reactive power is the main source of control of the apparent power experienced by the transmission lines. In order to keep the transmission lines within operational range of voltage, injection or withdrawal of reactive power is necessary. CAISO “maintains acceptable voltage levels and VAR flow on the CAISO Controlled Grid” through participating generators that are required to operate within a specified power factor band. Participating load at interface points are not compensated, only generators.7 Payment to generators is in form of lost opportunity cost to the Locational Marginal Price (LMP) when operating outside of normal conditions. CAISO has also procured voltage control through Reliability-Must-Run facilities at the rate of $50,000/MVAr or $50/kVAr.8 Capacitors are best suited to solve reactive power issues, and increase power factor.9 However, this will need to be procured by power producers. Batteries have been proven effective at controlling power drops from local distributed generation, which would be useful in the case of microgrids.10 Palo Alto would only be concerned if the local generation power factor became problematic. 7 https://www.caiso.com/Documents/3320.pdf 8https://www.caiso.com/Documents/CalPeakandMalagaCommentsReactivePowerRequirementsandFinancialCompensationRevi sedStrawProposal.pdf 9 http://www.hv-eng.com/2011CEDCapacitors.pdf 10 J. Yi, P. Wang, P. C. Taylor, P. J. Davison, P. F. Lyons, D. Liang, S. Brown and D. Roberts, “ Distribution Network Voltage Control Using Energy Storage and Demand Side Response”, 2012 3rd IEEE PES, ISGT Europe, Berlin Attachment B B-7 4. Energy Price Differentials A storage system enables buying electricity when prices are low and use the electricity when prices are high. For Palo Alto, the average price difference between peak and off-peak pricing is 0.00717 $/kWh (expected to rise to $0.011/kWh by 2025). At this revenue, over 10,000 cycles and with 80% round trip efficiency, a battery would only generate $57 per kWh of installed capacity, which does not financially justify such a system. B. System/Utility Benefits 5. Resource Adequacy CAISO mandates that each Load Serving Entity (LSE) must submit a resource adequacy plan “to satisfy its forecasted monthly Peak Demand and Reserve Margin for the relevant reporting period.”11 Palo Alto currently procures capacity at the rate of $28/kW-yr. The offers that the utility received from remote storage have been at least double this value. A current flexible resource adequacy policy is being considered12, but the City’s ownership share of the Calaveras Hydroelectric Project would satisfy those requirements. 6. Transmission Deferral A higher load can trigger a transmission line upgrade to accommodate a higher power rating. However, if the upgrade is triggered by a peak load that happens only a couple hours of the day, months or year, it might be advantageous to procure storage to displace the peak consumption to a later hour of the day instead of upgrading the lines. CPAU is currently paying for transmission charges per unit of energy (kWh) and does not experience demand charges. Therefore peak shifting for avoiding transmission charges does not offer any financial incentive for CPAU. The demand is satisfied by the resource adequacy described in the previous paragraph and procured at a price that do not justify considering storage. 7. Transmission congestion relief CPAU has Power Purchase Agreements (PPAs) with generators in California. CPAU then sells this energy at the Locational Marginal Price (LMP) at the node where generation interconnects. Nodes that experience a higher load than the transmission line can accommodate are called congested node and experience a lower price for energy because of congestion charges. In some cases the energy price can be negative and force the curtailment of the generation. This study analyzed one year of LMP data at the interconnection node for the Hayworth solar farm with which the City has a PPA13 and considered two strategies: 11 https://www.caiso.com/Documents/CIRAResourceAdequacyToolUserGuideforMarketParticipants.pdf 12 https://www.caiso.com/Documents/StrawProposal-FlexibleResourceAdequacyCriteria- MustOfferObligationPhase2.pdf 13 City of Palo Alto Solar PV PPA Projects - https://www.google.com/maps/d/viewer?mid=zm8TOActUeOA.k1KfA2u9T8u4&hl=en_US&usp=sharing Attachment B B-8 1. Store the production of the four most congested hours of the day (between 11AM and 3PM) and sell the storage during the highest three hours of the evening peak; and 2. Store the production of the most congested hour of the day (at 12PM) and sell the storage during the highest priced hour of the evening peak. The power plant’s daily production was estimated using PV watts14, and assumed roundtrip efficiency around 70%. In each case the storage did not make economic sense. For a high efficiency (93%) battery with one discharge per day, the value per kWh displaced increased to 2 cents, which is still below the required value to break even. However, if the trend of negative pricing during peak hours keeps increasing and battery prices keeps falling then there would be scenarios in which batteries would be cost effective. For example, if the amount per kWh displaced reached $0.04/kWh on average and the batteries reached $200/kWh then the storage would be cost effective. 8. Distribution Deferral Distribution deferral uses storage to absorb a growing load on a transformer. The growing load would trigger a transformer upgrade, but with storage peak shaving, the transformer upgrade can be deferred to a later time. This allows for a longer utilization of the infrastructure and lowers the investment risk of the utility. According to the Sandia study “Electric Utility Transmission and Distribution Upgrade Deferral Benefits from Modular Electricity Storage” by Jim Eyer15, the distribution deferral is more profitable in its first year, so the study makes a case for reusable and transportable storage that will defer upgrades up to the point that the upgrade is necessary and then be installed on another transformer. In this case, they find that with an average cost of transformer upgrade around $75/kW, the value of reusing the storage system in 5 different locations would reach a cumulative value of $1,700/kW after 10 years. For three hours battery storage, this represents $566/kWh which could be cost effective in the future. As a case study, data from the 2009 PNNL study “Avoiding Distribution System Upgrade Costs Using Distributed Generation”16 was used. The cost data of different transformer upgrade projects was compared to the cost to defer the entire upgrade capacity with a battery system: 1. Four-hour Li-ion battery system at $600/kWh 2. Three-hour Li-ion battery system at $600/kWh 3. Three-hour 2020 horizon for Li-ion batteries at $300/kWh The results show that most transformer upgrades would be more cost effective than a full upgrade with a battery. Certain projects which are especially costly can beneficiate from a battery system compared to an upgrade, as long as the peak is narrow enough that the battery 14 http://pvwatts.nrel.gov/ 15 http://prod.sandia.gov/techlib/access-control.cgi/2009/094070.pdf 16 http://www.sandia.gov/ess/publications/SAND2010-0815.pdf Attachment B B-9 has sufficient capacity. By 2020, if battery costs are halved, more battery systems could become more cost effective than an upgrade. These results are also confirmed in the Sandia report, mentioning the E3/EPRI study17 which reported values of T&D deferral for PG&E ranging from $230/kW and $1,173/kW, in which the upper range would make batteries close to cost effective. CPAU’s current distribution transformer upgrade costs range from $40 to $220/kW. The best candidates for deferral are transformers where the projected load growth is slow and the peak band is narrow. The smaller the storage needed for the one-year deferral, the more cost effective it is, since the investment is smaller. Smaller upgrades tend to be pretty expensive per kW, but the storage power required is generally too high to make sense for a deferral (>10%). In 2016, the only systems that could be cost effective for a one-year deferral have a slow load growth (under 2%) and high T&D cost (over $100/kW) which is experienced by small distribution overhead transformer upgrades in Palo Alto. However, the storage power required for the distribution overhead transformers is generally above 20%, which makes the deferral not cost effective. In the future, with an average cost of $300/kWh installed for batteries, projects with high cost and moderate growth, or low growth and average cost could benefit from a one-year deferral through battery storage. So far CPAU transformers all have above 20% remaining capacity and the load has been stable, which means that no upgrade will be required in the next years. In the event that several transformers reach capacity in the long-term, mobile battery storage could be beneficial to defer several upgrades. 9. Distribution loss savings The system experiences on average 3% losses to distribute electricity. However, the losses are higher during peak hours (4%) than off-peak (2%). By storing electricity locally during off-peak hours and distributing it during peak hours, CPAU can avoid 2% distribution losses. 𝐸𝐸𝑟𝑟𝑝𝑝𝑓𝑓𝑓𝑓𝑝𝑝𝐸𝐸𝑓𝑓𝐸𝐸𝑓𝑓𝐸𝐸 𝑠𝑠𝑓𝑓𝑠𝑠𝑝𝑝𝑠𝑠(𝑘𝑘𝑘𝑘ℎ)=𝐸𝐸𝑟𝑟𝑝𝑝𝑓𝑓𝑓𝑓𝑝𝑝𝐸𝐸𝑓𝑓𝐸𝐸𝑓𝑓𝐸𝐸 𝑝𝑝𝑝𝑝𝑝𝑝𝑓𝑓ℎ𝑓𝑓𝑠𝑠𝑝𝑝𝑠𝑠 (𝑘𝑘𝑘𝑘ℎ)× �10.98 −10.96� 𝐸𝐸𝑟𝑟𝑝𝑝𝑓𝑓𝑓𝑓𝑝𝑝𝐸𝐸𝑓𝑓𝐸𝐸𝑓𝑓𝐸𝐸 𝑠𝑠𝑓𝑓𝑠𝑠𝑝𝑝𝑠𝑠(𝑘𝑘𝑘𝑘ℎ)=𝐸𝐸𝑟𝑟𝑝𝑝𝑓𝑓𝑓𝑓𝑝𝑝𝐸𝐸𝑓𝑓𝐸𝐸𝑓𝑓𝐸𝐸 𝑝𝑝𝑝𝑝𝑝𝑝𝑓𝑓ℎ𝑓𝑓𝑠𝑠𝑝𝑝𝑠𝑠 (𝑘𝑘𝑘𝑘ℎ)× 2.13% For peak prices around $30/MWh, that’s $0.64/MWh shifted (0.064 cents per kWh). With this revenue, over 10,000 cycles and with 80% round trip efficiency, a battery would only generate $5.10 per kWh of capacity in addition to the $57 per kWh of benefits, which does not justify financially such a system. 17 http://connection.ebscohost.com/c/articles/9508071617/marginal-capacity-costs-electricity-distribution- demand-distributed-generation Attachment B B-10 C. Customer benefits 10. Backup power In order to estimate the cost of customer outage for the different classes of customers given CPAU’s reliability data, the Interruption Cost of Energy tool funded by DOE18 was used using most default parameters with an adjustment for Palo Alto median income to $123,495 from 2013 data19 adjusted to 2016 dollar value (see Table B3). Table B3: Estimation of 2012-2015 average yearly cost of power interruption in Palo Alto for each customer class The average yearly cost of outages shows that residential customers would derive very little economic value in having a backup power given that their annual losses are relatively low. However, for certain commercial customers, investing in storage as a backup power for critical loads can be justified to mitigate losses in case of power interruption, especially if the critical loads are small. Diesel generators cost about $200/kW. However, a 5kW generator will consume about 18 gal/day, which costs about $40-50 per day to run. A larger commercial-scale generator sized at 300 kW will consume 20 gal/hr. A battery system has no running cost. Given the reliability of CPAU, a battery storage system will never be cheaper than a diesel generator for residential or 18 http://www.icecalculator.com/ 19 http://www.city-data.com/income/income-Palo-Alto-California.html Residential customer Small commercial customer (<50,000 kWh) Medium and large commercial customers ( >50,000 kWh) Average yearly cost of power interruption $26.96 $852.86 $65,413.18 $- $10,000.00 $20,000.00 $30,000.00 $40,000.00 $50,000.00 $60,000.00 $70,000.00 Average yearly cost of power interruption per customer class Attachment B B-11 commercial applications. The exception to this rule would be in case of an extended period of time without power (i.e. earthquake related) and with the inability to supply enough diesel to run a generator, a commercial customer could then beneficiate from a PV+storage system that would allow the critical operations to keep running without a diesel supply. 11. Time-of-Use Bill Management When a customer is on a time-of-use (TOU) rate schedule, electricity is more expensive during peak hours. Instead of consuming electricity during peak time, it might be more economical to use the energy stored, and recharge using the grid during off-peak hours. The storage system allows customers to optimize when they buy, store or export power. Peak shaving contributes to lowering the demand on the grid during peak hours. A study carried by Stanford student Tha Zin looked at the net present value (NPV) of peak shaving with current CPAU rates. The dataset used in her analysis was the hourly electricity consumption (load profile) data of 1,923 households in Bakersfield, California from August 1, 2010 to July 31, 2011. To evaluate the NPV of storage, the study varied the following parameters: TOU rates20, roundtrip system efficiency, and system costs as well as different amount of peak shifted. For the last parameter, the battery was sized to shift at the peak load for only a certain percentages of the days per year (5-100%). If the percentage of the days is 5%, then it means that the battery was sized to shift the highest 5% peaks of the year. For each household, the NPV of a storage system was calculated. Results show that given the current values in TOU, efficiency and cost only one customer out of the pool would have a positive NPV with a storage system. 12. Demand Charge Reduction Commercial customers See case study II in Attachment C. 13. Increased-PV Self-Consumption See case study I in Attachment C. 20 http://www.cityofpaloalto.org/civicax/filebank/documents/32678 Attachment C C-1 Three Case Studies of BES Storage Applications in Palo Alto Outlined below is the analysis of three most relevant storage applications for Palo Alto: I. Residential customer application. Storage is installed after solar PV panels with the intent to do time-of-use bill management under the successor net energy metering program to increase PV-self consumption. II. A commercial customer application within Palo Alto (Palo Alto City Hall). The size is in the tens or hundreds of kW/kWh range and designed to provide electric customer demand charges reduction and meet CPAU resource adequacy needs. III. A transmission grid-tied storage unit, either close to Palo Alto or located at one of Palo Alto’s central PV plants. Due to the relatively large size, in the MW/MWh scale, it is assumed that the system cannot be located within Palo Alto due to the lack of suitable land. The application would be to provide CAISO services such as frequency regulation and flexible resource adequacy capacity. I. Residential customer PV+ storage a) Description of the Storage System & Cost: Residential customer installing battery storage to store the energy produced by the solar panels during the day and to use later during the evening and night. The consumer scenario was identical to the one defined in Attachment C of the NEM Successor Program Staff Report1. The three options are: 1) no storage; 2) a 3.3 kW/7 kWh system2; and 3) a 6 kW/12 kWh storage system.3 b) Application: Increased PV Self-Consumption c) Value: energy exported to the grid is paid the NEM successor program export rate of $0.07485/kWh; current electric retail rates are $0.11029/kWh for Tier 1 (up to 11kWh/day) usage and $0.16901/kWh for Tier 2 (over 11 kWh/day) usage. d) Results and Conclusion: Calculations can be found in Table C1 below. Figure C1 shows how the energy delivery is reduced by the battery storage. When taking into account the round trip losses and current energy prices, the 7 kWh system saved $169/year and the 12 kWh system saved $194/year. When taking into account the annualized cost of installation of storage ($130/kWh-yr for a ten-year warrantied system), the benefits are not sufficient to justify the installation of the system, as the payment for solar + storage is higher than solar only (see Figure C2). At a price of $280/kWh installed and a delta between on-peak and off-peak electricity price of $0.10/kWh, storage systems will break even. e) Assumptions: • Round trip efficiency was assumed to be 92%. • In both battery scenarios, the customer stores as much power as possible during the day to use it later at night. 1 https://www.cityofpaloalto.org/civicax/filebank/documents/51848 2 With the 7 kWh system, the customer might not be able to capture fully the excess energy during the summer days. Installed cost was assumed to $9,500. 3 With the 12 kWh system, the customer do not export any energy to the grid year round. Attachment C C-2 • Solar installed cost was assumed to be $3.50/W-DC ( group-buy price) • Investment Task Credit (ITC) was applied toward solar panels but not storage, since the installation of storage was assumed to happen after the customer installed PV. Figure C1: Representation of energy delivered, exported to the grid, consumed out of storage, netted on site and lost in the three storage cases Figure C2: Energy annual cost for no solar and the three storage cases considered, to be compared with no solar case. -4000 -2000 0 2000 4000 6000 8000 10000 12000 14000 Solar only Solar + 3.3 kW/ 7 kWh system Solar + 6 kW/12 kWh system kWh annual Losses Energy delivered Energy exported to the grid Stored energy consumed Solar energy netted $- $500 $1,000 $1,500 $2,000 $2,500 $3,000 $3,500 No solar Solar only Solar + 3.3 kW/ 7 kWh system Solar + 6 kW/12 kWh system An n u a l i z e d c o s t Energy bill Battery cost Solar system cost Attachment C C-3 II. Commercial Customer Storage Application, Located at Customer Premises a) Description of the Storage System & Cost: Commercial customer installing batteries with the goal to reduce demand charges and provide resource adequacy value to CPAU. Using the Palo Alto City Hall’s load, the recommended size for a leased system for the building was about 18 kW/36 kWh (i.e. 18 kW capacity with 2 hours of charge) for an annual cost of about $5,000. b) Application: Demand charges reduction for commercial building customer and (flexible) resource adequacy value to the utility. c) Value: The customer’s cost for demand charges can be reduced (current demand rates on the E-4 Rate Schedule are $14.04/kW-month during the winter and $19.68/kW- month during the summer). In addition, if CPAU is able to dispatch these systems to meet resource adequacy needs, these systems can harness higher value stream currently valued at $28/kW-yr. Since most of these storage systems also come with telemetry and dashboards profiling entire building loads in real time, building operators are able to garner greater insights to more optimally operate the building. However, this value was not considered in this analysis since it is not directly derived from storage. d) Results and Conclusion: The annual cost of the system is compared to the annual revenue stream as shown in Figure C3. Because of the flatter load profile shape, the required capacity to shave off the peak is higher than if the peak was narrow and tall. Resource adequacy related values are also relatively small. Thus, such commercial systems are not cost effective in Palo Alto. e) Assumptions: • System life: 10 years • O&M cost are considered negligible for the self-operated system • Winter peak is 3-hour long and summer peak is 5-hour long. Figure C3: Comparison of yearly revenue to cost of commercial battery storage for Palo Alto City Hall Notes: The commercial systems considered do not offer the ability to island, which would harness additional value, although at a potentially higher cost. $- $1,000 $2,000 $3,000 $4,000 $5,000 $6,000 Third party operated 18 kW/36 kWh system An n u a l r e v e n u e Demand charges reduction Resource Adequacy Cost Attachment C C-4 III. Transmission Grid-Tied Storage Located Outside Palo Alto a) Description of the Storage System & Cost: Battery Energy Storage (BES) located outside Palo Alto and tied to the CAISO grid at 115 kV and sized at 20 MW/80 MWh (i.e. 20MW capacity with 4 hours of charge). Annual capital cost was assumed to be around $190/kW-yr, and O&M cost around $20/MWh with a maximum number of discharge cycles allowed per year (about once per day). b) Application: provision of CAISO ancillary services of frequency regulation and flexible resource adequacy capacity c) Value: Regulation services valued at $9/MW-hour4 (now) and $25/MW-hr (after 2020); capacity is currently valued at $28/kW-yr, flexible capacity valued at $50/kW-year (after 2020) d) Results and Conclusion: The annual cost for the system is compared to the projected revenue stream on Figure C4. While the potential maximal revenue through regulation is high, the charges for battery discharge and the limitation of one discharge per day do not provide an incentive for use for regulation services. The revenue from resource adequacy only would be too low to justify the investment. Currently, additional revenue of $2 million per year would be necessary to break even with being paid twice a day for only one discharge. Being paid four times per day with only one charge-discharge cycle, the revenue could break even by 2020. However, a better understanding of the amount of energy dispatched per period called by the CAISO would be critical to improve the understanding of the revenue stream from the provision of regulation services, since the bidding strategy is essential in deriving value from this investment. e) Assumptions: • Current prices for round-trip regulation are around $8-9/MW-h but prices are expected to rise to $20-30/MW-hr within the next years. • Arbitraging the CAISO energy price differential and relieving economic curtailment could not be considered because they would compete with frequency regulation, as the high frequency regulation prices would happen at the time of curtailment and high energy prices. • Capacity for regulation can be rated from a 320 MW for a 15-minute discharge to 20 MW for a four-hour discharge. However, the payment occurs per MW-hr, so all combinations are equivalent in our calculations. • Capacity for flexible capacity was rated for four0-hour discharge period (20 MW). • The analysis considered the following two cases for regulation dispatching: 1. Paid twice a day: the analysis assumed that the system gets dispatched on average half of the hours that were bid and awarded. In that case the system can bid twice the capacity of regulation-up and regulation-down 2. Paid four times a day: the analysis assumed that the system gets dispatched on average a quarter of the hours that were bid and awarded. In that case the system can bid four times the capacity of regulation-up and regulation- down. 4 Regulation and other ancillary services procured by CAISO is in the form of a capacity payment for every hour. Attachment C C-5 Figure C4: Comparison of economics of grid-tied batteries based on utilization of batteries in CAISO market 20 MW / 80 MWh Attachment C C-6 Table C1: Bill Illustration of a Residential Customer with a Solar PV System only, Solar + 7 kWh system and Solar + 12 kWh battery system under the NEM Successor Rate 1. T o t a l E n e r g y C o n s u m p t i o n ( k W h ) 2. S o l a r E n e r g y P r o d u c t i o n ( k W h ) 3. E n e r g y N e t t e d O n -si t e ( k W h ) 4. S o l a r E n e r g y S e n t t o t h e G r i d - so l a r o n l y ( k W h ) 5. E n e r g y D e l i v e r e d t o C u s t o m e r - so l ar o n l y ( k W h ) 6. E n e r g y D e l i v e r e d t o C u s t o m e r - So l a r + 7 k W h s y s t e m (k W h ) 7. E n e r g y D e l i v e r e d t o C u s t o m e r - So l a r + 1 2 k W h s y s t e m ( k W h ) 8. B i l l C h a r g e s f o r E n e r g y D e l i v e r e d - So l a r o n l y 9. B i l l C h a r g e s f o r E n e r g y D e l i v e r e d - So l a r + 7 k W h s y s t e m (k W h ) 10 . B i l l C h a r g e s f o r E n e r g y D e l i v e r e d - So l a r + 1 2 k W h s y s t e m ( k W h ) 11 . B i l l C r e d i t f o r E n e r g y S e n t t o t h e Gr i d - So l a r o n l y 12 . B i l l C r e d i t f o r E n e r g y S e n t t o t h e Gr i d - So l a r + 7 k W h s y s t e m 13 . M o n t h l y B i l l w i t h S o l a r o n l y 14 . Mo n t h l y b i l l w i t h S o l a r + 7 k W h sy s t e m 15 . Mo n t h l y b i l l w i t h S o l a r + 1 2 k W h sy s t e m Jan 1,400 327 244 84 1,156 1,079 1,079 $175 $162 $162 ($6) $0 $169 $162 $162 Feb 1,204 314 250 64 954 895 895 $143 $133 $133 ($5) $0 $138 $133 $133 Mar 1,061 519 309 210 752 559 559 $107 $74 $74 ($16) $0 $91 $74 $74 Apr 918 610 311 299 607 414 332 $83 $51 $37 ($22) ($7) $61 $44 $37 May 885 704 341 363 543 343 209 $72 $38 $23 ($27) ($11) $45 $27 $23 Jun 882 659 352 307 530 337 248 $70 $38 $27 ($23) ($7) $47 $30 $27 July 929 711 377 334 552 352 245 $73 $40 $27 ($25) ($9) $48 $31 $27 Aug 894 582 312 270 582 382 334 $78 $45 $37 ($20) ($4) $58 $41 $37 Sep 930 551 301 250 629 436 399 $87 $54 $48 ($19) ($3) $68 $51 $48 Oct. 943 467 266 201 677 492 492 $94 $63 $63 ($15) $0 $79 $63 $63 Nov 954 348 191 157 764 620 620 $110 $85 $85 ($12) $0 $98 $85 $85 Dec 1,184 299 198 101 985 892 892 $147 $131 $131 ($8) $0 $139 $131 $131 Tot: 12,184 6092 3452 2640 8732 6,801 6,302 $1,240 $914 $848 ($198) ($41) $1042 $873 $848 Attachment D D-1 Thermal Energy Storage Costs in Palo Alto Thermal Energy Storage Thermal energy storage (TES) is a “technology that stocks thermal energy by heating or cooling a storage medium so that the stored energy can be used at a later time for heating and cooling applications and power generation. TES systems are used particularly in buildings and industrial processes.”1 This study focuses on the use of ice for deferring electric consumption for cooling purposes in HVAC systems. In this process, cheaper night-time electricity is used to freeze a fluid, which then reduces the electricity needed to provide air conditioning when electricity is more expensive during the day. History of TES in Palo Alto In the late 1980s and early 1990s the City of Palo Alto Utilities (CPAU) had a generous incentive program for TES through for commercial customers. These incentives were motivated by steep and ratcheted demand charges imposed on Palo Alto by PG&E. Most of the systems installed under this program have been dismantled or decommissioned due to failures, need for space, or a lack of engaged operation and maintenance staff. A TES study was carried out in 2013 an provided in the 2014 Energy Storage Procurement report (see Attachment E (Thermal Energy Storage in Palo Alto) of Staff Report 4384.2) TES benefits The goal of the incremental addition of a TES system to existing chiller-based cooling systems’ is to be able to turn off (completely or partially) the chiller during peak hours. This results in the following benefits: - Reduction of demand charges for commercial customers - For customers on Palo Alto’s large commercial TOU rate, a TES system also delivers energy charge savings by shifting energy consumption from high-price periods to low- price periods - Increased reliability of the cooling system - Potential participation in Demand-response program However, the need for large spaces for the TES system can be a challenge. Utility-Owned and Operated Thermal Energy Storage Another model for deploying TES which has become more popular is based on utility-ownership and control. The utility-ownership model has been developed by Ice Energy, which makes the “Ice Bear”, a packaged roof-top ice storage units that integrate with refrigerant-based (direct exchange, or DX) roof top units (RTUs) commonly found in commercial cooling applications. When called on by the utility, the Ice Bear will shut down the RTU compressor and condenser 1 https://www.irena.org/DocumentDownloads/Publications/IRENA- ETSAP%20Tech%20Brief%20E17%20Thermal%20Energy%20Storage.pdf 2 https://www.cityofpaloalto.org/civicax/filebank/documents/38915 Attachment D D-2 fans and provide cooling by sending ice-cooled refrigerant through a new evaporator coil placed in series with the RTU’s existing coil. Potential benefits of utility-controlled TES are: - Resource adequacy cost reduction for the utility - On-peak/off-peak energy purchase differentials - Transmission and distribution deferral - Control of additional Demand-Response assets - Energy efficiency upgrade with TES installation The value of TES is substantially lower in Palo Alto due to the milder climate and rather flat load profile during the summer. Update of 2013 study Staff updated the 2013 model with the most current data of the system and utility cost and confirmed that none of the TES systems considered makes economic sense currently. The benefit-cost ratio is 0.39 for a full TES system and 0.7 for a partial TES system. A utility- controlled Ice Bear program had a benefit cost ratio of 0.46. Other TES systems Heat pump or electric resistance water heaters for homes can also be used as TES. Water is heated during off-peaks hours (either at night or with PV during the day) and then stored in a tank for a later usage (see Figure D-1). As CPAU embarks on electrifying natural gas appliances, it may want to evaluate the merits of encouraging customers to install controllable water heaters that can be called upon by the electric utility to meet electric grid optimization needs. Figure D-1: Load profile of traditional water heater vs. use during discounted rate periods Water heated during discounted rate period Attachment E E-1 Energy Storage Regulation, Policies and Incentives Energy Storage Regulations and Policies California’s AB 25141 and the associated regulations are among many state policies designed to encourage energy storage. In October 2013 the California Public Utilities Commission (CPUC) established an energy storage target of 1,325 megawatts for Pacific Gas and Electric Company (PG&E), Southern California Edison (SCE), and San Diego Gas & Electric (SDG&E) by 2020, with installations required by the end of 2024. The CPUC decision also establishes a target for Community Choice Aggregators and electric service providers to procure energy storage equal to 1% of their annual 2020 peak load by 2020 with installation no later than 2024, consistent with the requirements for the Investor Owned Utilities (IOUs)2. On February 28, 2015, the three IOUs (PG&E, SCE and SDG&E), filed their Energy Storage (ES) Application containing a proposal for the first ES procurement period (2014-2016).3 In 2015, Oregon became the second state to approve energy storage targets. According to House Bill 21934, electric companies with more than 25,000 customers will have to put 5 MWh of energy storage in service by January 1, 2020, but it may not exceed 1% of the company peak load (as of 2014). Laws promoting energy storage in New York and Texas have also been passed, although these do not specifically require energy storage targets. Arizona, Connecticut, Minnesota and Vermont added legislation that will clarify and promote storage.5 Washington State gave $14.3 million in matching grants for utilities’ energy storage projects, and their 2015 budget included additional grants. Con Edison in NY offered $2,600/kW for thermal energy storage (TES) and $2,100/kW for battery storage for projects completed by June 2016.6 New Jersey offers $300 per kWh of storage capacity up to $300,000 or 30% of the project cost.7 Several states including Florida, New Jersey and Massachusetts offers loan and grants for the development of resilient solar + storage systems.8 Other legislation indirectly supports the use of storage systems in the case of rooftop solar installation. For example, Docket No. 2014-01929 in the state of Hawaii will support self-supply and benefit from temporal or locational energy price differences with the use of batteries for rooftop solar owners. Hawaiian Electric Company (HECO) issued an RFP for 0 to 200 MW of Energy Storage for Oahu in 2014.10 At the federal level, the Storage Act provide a 20% investment tax credit for grid-connected energy storage systems and a 30% credit for behind-the-meter systems.11 The Federal Energy Regulatory Commission (FERC) is also seeking to level the playing field for energy storage to participate in energy markets. In 2007 and 2008, FERC issued Orders 890 and 719, which 1http://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=200920100AB2514 2http://docs.cpuc.ca.gov/PublishedDocs/Published/G000/M079/K171/79171502.PDF 3 http://www.cpuc.ca.gov/General.aspx?id=3462 4https://olis.leg.state.or.us/liz/2015R1/Downloads/MeasureDocument/HB2193 5http://www.renewableenergyworld.com/ugc/blogs/2016/01/state_energy_storage.html 6http://www.coned.com/energyefficiency/demand_management_incentives.asp 7 https://njcepelectricstorage.programprocessing.com/content/home 8 http://solaroutreach.org/wp-content/uploads/2015/09/SLStorage.pdf 9 http://puc.hawaii.gov/wp-content/uploads/2015/10/DER-Phase-1-DO-Summary.pdf 10 https://www.hawaiianelectric.com/clean-energy-hawaii/request-for-proposals---energy-storage-system 11http://www.energy.senate.gov/public/index.cfm/files/serve?File_id=FEDB4A77-7073-422D-B259-C8AF7F59E627 Attachment E E-2 opened the door for non-generation resources such as energy storage to participate in ancillary services markets. In response, CAISO made changes to its ancillary services operating and technical requirements to enable these non-traditional resources to participate, such as reducing the minimum size and output duration capability for eligible resources.12 In 2011, FERC enacted Order 755 specifically addressing frequency regulation services. As described in Attachment A, some energy storage technologies are able to provide frequency regulation services more quickly and accurately than conventional generating facilities; however, markets for frequency regulation services typically do not differentiate between more effective regulation providers. Order 755 attempts to rectify this by requiring appropriate “pay for performance” in organized ancillary services markets. FERC notice proposes rules to reduce other barriers that prevent energy storage facilities from participating in markets for ancillary services as well as imposing similar “pay for performance” requirements on transmission providers in traditionally regulated states. In July 2013, FERC issued Order 784 which eased the market entry for third-part Ancillary Services providers and improved market transparency. In response to FERC Order 755, CAISO modified the regulation up and regulation down product in May 2013 with a market based mileage payment with accuracy adjustment. Energy Storage Incentives and procurement activities in California In 2009, the CPUC ruled that California’s IOUs must develop a Permanent Load Shift (PLS) program to encourage TES directly. A statewide pilot PLS program from 2008-2011 provided $500/kW of peak demand reduction. The current incentive for IOUs is $875 per kW of electric load shift on the highest on-peak cooling load day of a customer’s annual cooling load profile. The incentive is capped at 50% of project cost and $1.5 million per customer. Customers of California’s IOUs are also eligible for the Self Generation Incentive Program (SGIP), which includes a $1.31/Watt incentive to advanced energy storage systems. California’s IOUs are also actively involved in energy storage project development to satisfy the targets mandated by the CPUC. The first round of procurement RFOs was released in 2014 and the next round of procurement will happen in 2016. The current progress of PG&E, SCE and SDG&E has been summarized in Tables E1 and E2. Most publicly owned utilities (POUs) declined to procure storage in 2014 for lack of cost effective options. Seven POUs did set some procurement targets (see Table E3). Most POUs set smaller goals, except the Los Angeles Department of Water and Power (LADWP). LADWP relied mostly on a 21 MW pumped hydro upgrade to set its 2016 target, in addition to 3 MW of TES systems. 2020 target includes 60 MW of TES at the generation level and 40 MW of TES at the customer level, in addition to 50 MW of transmission level and 4 MW of distribution-level batteries. Redding electric utility and Glendale Water and Power procured Ice Bear TES. 12 2020 Strategic Analysis of Energy Storage in California, 2011. Public Interest Energy Research for the CEC. CEC- 500-2011-047 Attachment E E-3 Table E1: IOUs current projects and projects in development by storage technology MW Li-Ion Zinc Sodium- Sulfur Flywheel PHS Thermal Other TOTAL PG&E 42 13 6 20 10 91 SCE 246 16 26 69 357 SDG&E 20 40 19 79 Table E2: Storage location of current and in-progress projects and comparison to 2020 target Current-in progress (MW)/2020 target (MW) Transmission Distribution Customer Total PG&E 50MW/310MW 33.5 MW/185 MW 8.2MW/85 MW 91 MW/580 MW SCE 100 MW/310 MW 32.3 MW/185 MW 224.4 MW/85 MW 356.7MW/580 MW SDG&E 60 MW/80MW 6.2MW/55MW 13MW/30MW 79 MW/165 MW Table E3: 2016 and 2020 storage procurement target of the seven POUs who elected to procure cost-effective storage Utilities Advisory Commission Minutes Approved on: November 2, 2016 Page 1 of 3 UTILITIES ADVISORY COMMISSION MEETING FINAL MINUTES OF OCTOBER 5, 2016 (EXCERPTS RELATED TO ENERGY STORAGE DISCUSSION) CALL TO ORDER Vice Chair Danaher called to order at 7:05 p.m. the meeting of the Utilities Advisory Commission (UAC). Present: Vice Chair Danaher, Commissioners Forssell, Johnston, and Trumbull Absent: Chair Cook, Commissioners Ballantine, Schwartz, and Council Liaison Scharff ITEM 3. DISCUSSION: Discussion of Energy Storage and Microgrid Applications in Palo Alto Senior Resource Planner Shiva Swaminathan presented the study results on the application of microgrid and energy storage systems in Palo Alto. He outlined that the study did not find any cost-effective application for such system at present, but anticipated the proliferation of energy storage in the coming years as cost decline and value for such services increase. He also outlined elements of a potential storage pilot project for 125kW/500 kWh at a cost of $250,000. Commissioner Trumbull noted the Commission’s recent discussion of potentially encouraging customers to switch from natural gas to electricity, and asked about reliability if a customer used only electricity. Swaminathan acknowledged that, having two fuel sources coming to your home—electricity and natural gas—will have diversification value in the event of an emergency like an earthquake. However, there may be other customers who want to eliminate the smoke coming out of their smoke stacks at home by burning gas; for them, electrification may be the solution. Swaminathan said that it is a trade-off each person has to make. Vice Chair Danaher asked staff to explain the State’s establishment of storage mandates. Swaminathan explained that the State is interested in storage to manage intermittent renewables like solar and wind. Since storage is a fast-acting resource and can respond to the vagaries of intermittent resources, storage is expected to take on a larger role in the coming years. Commissioner Forssell noted that backup power is one value stream shown in the analysis, but there are other values too such as frequency regulation. Swaminathan concurred. Commissioner Forssell asked which customers value backup generation. Swaminathan indicated that many customers such as hospitals and location with computer servers need higher reliability service. He said that if a customer is totally reliant on electricity and does not use natural gas, they may wish to have energy storage systems to improve reliability. ATTACHMENT B Utilities Advisory Commission Minutes Approved on: November 2, 2016 Page 2 of 3 Vice Chair Danaher noted to the visiting students in the audience that the City has large utility- scale solar resources and other renewable supplies, but that the City relies on others to manage the transmission grid to deliver this power to Palo Alto. Vice Chair Danaher mentioned that the energy price arbitrage is a low value. Swaminathan concurred. Commissioner Forssell asked whether the pilot project proposal was to partner with a customer to install storage at their site and learn from the operations. Swaminathan agreed, but mentioned that the objective is to have more than one customer participate in the pilot. Commissioner Johnston asked if staff had identified any customers to participate in the pilot. Swaminathan said no, but that there have been inquiries. Vice Chair Danaher agreed with the analysis finding that there was low value proposition at this time and asked for the rationale for spending $250,000 for a pilot project. Swaminathan said the objective was to learn about the technology, the permitting rules, how to optimally operate the system, and the impact on such systems on the retail rate-making process. Vice Chair Danaher asked if there was a way to reduce the cost. Swaminathan said that the project could be scaled down, but the minimum size to bid ancillary services into the CAISO is 100 kilowatts (kW), the size of the proposed pilot. Vice Chair Danaher mentioned the value is to determine how to bid these resources into the CAISO system. Vice Chair Danaher asked if we have control of Calaveras hydro project operation. Swaminathan replied in the affirmative. Vice Chair Danaher asked about the objective of a pilot. Swaminathan responded that this technology is coming and the idea is to learn about how we could have a win-win solution in conjunction with our customers; the question of whether we can afford such a pilot is part of this discussion. Swaminathan indicated that staff believes that spending $50k/per year for 5 years in R&D funds may be a good use of funds to better prepare for the future. Vice Chair Danaher asked for an explanation of the value chart. Swaminathan outlined the multiple value chains shown in the “spider-chart” in the report. Commissioner Trumbull again asked what storage techniques could be used to protect customers from electrical outages if the City adopted an electrification strategy. Assistant Director Jane Ratchye mentioned that the current reliability level is very high. She also pointed out that no decision has been made about electrification and we are not walking down the road of wholesale electrification yet. Commissioner Forssell added that the purpose of this discussion today is to meet a legislative requirement under AB 25142 and not the topic of electrification at the Commission’s prior meeting. Vice Chair Danaher asked how Demand Response (DR) differs from storage. Swaminathan mentioned that DR resources tend to be less expensive, but storage is faster acting and more reliable. Utilities Advisory Commission Minutes Approved on: November 2, 2016 Page 3 of 3 Vice Chair Danaher asked if there are other DR programs that would be more productive than storage, such as EV batteries. Swaminathan mentioned that staff is working on a program with EVs and expect to come to the Commission in the spring along with the storage recommendation. Vice Chair Danaher asked if staff could describe the City’s new technology program. Swaminathan explained the elements of the Program for Emerging Technology (PET), which is designed to provide an opportunity to demonstrate new technologies on City facilities or using willing Utilities customers, at no cost to the City. Technologies tested under PET include PV on streetlights with a grid monitoring sensor and motion sensing LED lights installed in City Hall’s parking garage. Commissioner Forssell said she supported the R&D pilot like Commissioner Danaher and that she was looking forward to seeing a fleshed out pilot project proposal from staff. Respectfully submitted, Marites Ward City of Palo Alto Utilities Utilities Advisory Commission Minutes Approved on: November 2, 2016 Page 1 of 5 UTILITIES ADVISORY COMMISSION MEETING FINAL MINUTES OF OCTOBER 5, 2016 (EXCERPTS RELATED TO ENERGY STORAGE DISCUSSION) CALL TO ORDER Vice Chair Danaher called to order at 7:05 p.m. the meeting of the Utilities Advisory Commission (UAC). Present: Vice Chair Danaher, Commissioners Forssell, Johnston, and Trumbull Absent: Chair Cook, Commissioners Ballantine, Schwartz, and Council Liaison Scharff ITEM 3. DISCUSSION: Discussion of Energy Storage and Microgrid Applications in Palo Alto Senior Resource Planner Shiva Swaminathan presented the study results on the application of microgrid and energy storage systems in Palo Alto. He outlined that the study did not find any cost-effective application for such system at present, but anticipated the proliferation of energy storage in the coming years as cost decline and value for such services increase. He also outlined elements of a potential storage pilot project for 125kW/500 kWh at a cost of $250,000. Commissioner Trumbull noted the Commission’s recent discussion of potentially encouraging customers to switch from natural gas to electricity, and asked about reliability if a customer used only electricity. Swaminathan acknowledged that, having two fuel sources coming to your home—electricity and natural gas—will have diversification value in the event of an emergency like an earthquake. However, there may be other customers who want to eliminate the smoke coming out of their smoke stacks at home by burning gas; for them, electrification may be the solution. Swaminathan said that it is a trade-off each person has to make. Vice Chair Danaher asked staff to explain the State’s establishment of storage mandates. Swaminathan explained that the State is interested in storage to manage intermittent renewables like solar and wind. Since storage is a fast-acting resource and can respond to the vagaries of intermittent resources, storage is expected to take on a larger role in the coming years. Commissioner Forssell noted that backup power is one value stream shown in the analysis, but there are other values too such as frequency regulation. Swaminathan concurred. Commissioner Forssell asked which customers value backup generation. Swaminathan indicated that many customers such as hospitals and location with computer servers need higher reliability service. He said that if a customer is totally reliant on electricity and does not use natural gas, they may wish to have energy storage systems to improve reliability. ATTACHMENT C Utilities Advisory Commission Minutes Approved on: November 2, 2016 Page 2 of 5 Vice Chair Danaher noted to the visiting students in the audience that the City has large utility- scale solar resources and other renewable supplies, but that the City relies on others to manage the transmission grid to deliver this power to Palo Alto. Vice Chair Danaher mentioned that the energy price arbitrage is a low value. Swaminathan concurred. Commissioner Forssell asked whether the pilot project proposal was to partner with a customer to install storage at their site and learn from the operations. Swaminathan agreed, but mentioned that the objective is to have more than one customer participate in the pilot. Commissioner Johnston asked if staff had identified any customers to participate in the pilot. Swaminathan said no, but that there have been inquiries. Vice Chair Danaher agreed with the analysis finding that there was low value proposition at this time and asked for the rationale for spending $250,000 for a pilot project. Swaminathan said the objective was to learn about the technology, the permitting rules, how to optimally operate the system, and the impact on such systems on the retail rate-making process. Vice Chair Danaher asked if there was a way to reduce the cost. Swaminathan said that the project could be scaled down, but the minimum size to bid ancillary services into the CAISO is 100 kilowatts (kW), the size of the proposed pilot. Vice Chair Danaher mentioned the value is to determine how to bid these resources into the CAISO system. Vice Chair Danaher asked if we have control of Calaveras hydro project operation. Swaminathan replied in the affirmative. Vice Chair Danaher asked about the objective of a pilot. Swaminathan responded that this technology is coming and the idea is to learn about how we could have a win-win solution in conjunction with our customers; the question of whether we can afford such a pilot is part of this discussion. Swaminathan indicated that staff believes that spending $50k/per year for 5 years in R&D funds may be a good use of funds to better prepare for the future. Vice Chair Danaher asked for an explanation of the value chart. Swaminathan outlined the multiple value chains shown in the “spider-chart” in the report. Commissioner Trumbull again asked what storage techniques could be used to protect customers from electrical outages if the City adopted an electrification strategy. Assistant Director Jane Ratchye mentioned that the current reliability level is very high. She also pointed out that no decision has been made about electrification and we are not walking down the road of wholesale electrification yet. Commissioner Forssell added that the purpose of this discussion today is to meet a legislative requirement under AB 25142 and not the topic of electrification at the Commission’s prior meeting. Vice Chair Danaher asked how Demand Response (DR) differs from storage. Swaminathan mentioned that DR resources tend to be less expensive, but storage is faster acting and more reliable. Utilities Advisory Commission Minutes Approved on: November 2, 2016 Page 3 of 5 Vice Chair Danaher asked if there are other DR programs that would be more productive than storage, such as EV batteries. Swaminathan mentioned that staff is working on a program with EVs and expect to come to the Commission in the spring along with the storage recommendation. Vice Chair Danaher asked if staff could describe the City’s new technology program. Swaminathan explained the elements of the Program for Emerging Technology (PET), which is designed to provide an opportunity to demonstrate new technologies on City facilities or using willing Utilities customers, at no cost to the City. Technologies tested under PET include PV on streetlights with a grid monitoring sensor and motion sensing LED lights installed in City Hall’s parking garage. Commissioner Forssell said she supported the R&D pilot like Commissioner Danaher and that she was looking forward to seeing a fleshed out pilot project proposal from staff. Respectfully submitted, Marites Ward City of Palo Alto Utilities UTILITIES ADVISORY COMMISSION MEETING MINUTES OF MAY 3, 2017 SPECIAL MEETING CALL TO ORDER Chair Cook called the meeting to order at 12:15 p.m. Meeting of the Utilities Advisory Commission (UAC). Present: Chair Cook, Vice Chair Danaher, Commissioner Schwartz, and Councilmember Filseth Absent: Commissioners Johnston, Ballantine, Forssell, and Trumbull ITEM 2: ACTION: Staff Recommendation that the Utilities Advisory Commission Recommend that the City Council Declined to Set an Energy Storage System Target Due to Lack of Cost- effective Options Senior Resource Planner Shiva Swaminathan said this was a reprise of a discussion related to storage and microgrids with the UAC in October 2016. AB 2514 required that every three years publicly owned utilities (POUs) are required to make a determination of whether it was cost- effective to set storage goals. The City had made a determination three years ago that such a goal was not cost-effective, and was recommending making the same determination at this time. Staff had reviewed thirteen value propositions for storage in Palo Alto. Many of the potential uses for storage had minimal value in Palo Alto, and the costs of storage still outweighed the benefits. However, staff recommended considering a pilot storage project within the next three years. The best projects would fulfill multiple roles, providing benefits to the customer, the distribution system, and the transmission system. Chair Cook noted this was an action item recommending that the City not set a goal for installation of energy storage systems. He asked what the next steps were. Utilities Advisory Commission Minutes Approved on: November 2, 2016 Page 4 of 5 Swaminathan said that following the UAC recommendation staff would ask for Council's recommendation, and would then file the decision with the California Energy Commission (CEC). Chair Cook asked whether staff anticipated any pressure from the CEC to adopt a goal. Swaminathan said he did not, thought legislative action was always possible to require POUs to set a goal. Shikada asked Swaminathan to discuss whether the City’s assessment was in line with other POUs’ assessments. Swaminathan said most POUs had not set a goal. He said page four of the October 2016 report listed a number of POUs that had set goals. He said the few POU who had set storage goals had use cases that worked well for them specifically. For example, Redding Electric Utility had a hot climate and air conditioning load. Shikada noted that other POUs had unique circumstances. For example, Silicon Valley Power (Santa Clara) had obtained grant funding that enabled installation of storage. Cost-effectiveness was the standard for setting the goal. Commissioner Schwartz noted that she had learned that week that PG&E had a program to offer storage and renewable generation incentives to its customers. This would be happening in neighboring cities, which could lead to Palo Altans not understanding why these programs were not available in Palo Alto. She said it was important to be able to explain the reasons and communicate well with the public. She said it would be good to explore having other programs that reduced barriers, such as an improved permitting process, as a substitute for these programs. It was possible to facilitate storage in Palo Alto without paying customers. She asked staff to articulate the reasons that storage was not ready in Palo Alto when PG&E found it ready. Swaminathan said the PG&E programs, such as the Small Generation Incentive Program (SGIP), were not intended to be cost-effective. They were intended to transform the market. Abendschein said as a very large utility with a large rate base, PG&E could afford to engage in market-transformational programs that would not be affordable or effective in a small utility like Palo Alto. It was more compelling to engage in other programs to reduce barriers for people who wanted to voluntarily install storage. Commissioner Schwartz said the small rate base and difficulty of funding those programs sounded reasonable, and it was important to communicate that effectively and let people know what options they had to take voluntary action on their own and what the City was doing to facilitate that. Swaminathan said that some storage had been installed in Palo Alto voluntarily and there had been some efforts to improve processes. A pilot program was planned to help the utility learn more about how to integrate this sort of technology. Utilities Advisory Commission Minutes Approved on: November 2, 2016 Page 5 of 5 Commissioner Schwartz noted that any pilot should have a different flavor than other pilot projects. It should not be something like a double-blind study, but rather a learning experience. For example, the Fire Department might find they have specific issues to be aware of when responding to a fire at a house with a storage system. Swaminathan agreed. He also said it would be useful to learn about how storage projects could be used to dispatch services into the California Independent System Operator (CAISO). Schwartz said that was an interesting possibility and thought it would be useful to also include other controllable loads like water heaters in that type of a pilot. Commissioner Danaher asked whether technologies like storage and smart grid would be considered in the strategic plan. Shikada said smart grid would require organizational planning. He said storage was an example of one technology in the wide range of new technologies that would need to be planned for in the strategic plan. Swaminathan said he also thought the strategic plan could also influence the City’s strategy by determining what role the utility would play in this type of technology integration, which would inform the projects the utility took on. ACTION: Commissioner Schwartz made a motion to recommend that Council adopt the staff recommendation to decline setting a target for energy storage, but to also encourage exploration and facilitation of ways to encourage investment by members of the community. Vice Chair Danaher proposed a friendly amendment to the wording, modifying it to “encourage exploration and facilitation of budget neutral ways to encourage investment.” Commissioner Schwartz agreed. Commissioner Forssell seconded the motion. The motion passed unanimously (4-0, with Chair Cook, Vice Chair Danaher and Commissioners Forssell and Schwartz voting yes and Commissioners Johnston, Ballantine, and Trumbull absent) City of Palo Alto (ID # 8248) City Council Staff Report Report Type: Consent Calendar Meeting Date: 8/21/2017 City of Palo Alto Page 1 Summary Title: Maybell Electric Substation Protection/Control Upgrade Project Title: Approval of a Professional Services Agreement With Electrical Consultants, Inc. in the Amount of $196,330 for the Maybell Electric Substation Protection/Control Upgrade Project Design, and Authorization for the City Manager to Negotiate and Approve Additional Related Services in a Not to Exceed Amount of $39,266 From: City Manager Lead Department: Utilities Staff recommends that Council: 1. Approve and authorize the City Manager or his designee to execute an eighteen (18) month professional services contract (Attachment A) with Electrical Consultants, Inc. (“ECI”) in the amount of $196,330. 2. Authorize the City Manager or his designee to negotiate and execute requests for additional services to the contract with ECI for related additional, but unforeseen, work which may develop during the project; the total of which shall not exceed $39,266 (20% of contract amount). For a total authorized amount of $235,596 which includes the contract amount of $196,330 plus the 20% additional services provision of $39,266. Background City of Palo Alto Utilities (“CPAU”) owns and operates the electric system serving customers in the City. It consists of a 60,000 Volt (60 kV) subtransmission system linking nine 12,000 or 4,000 Volt (12 kV and 4 kV, respectively) distribution substations. Maybell Electric Substation (“Maybell”) is a 12 kV substation with two, 22,400,000 volt-ampere (22.4 MVA) transformers serving six electric distribution system feeders that provide power to 7,344 commercial and residential customers in the Green Acres, Charleston Meadows, Barron Park, Ventura, and Research Park neighborhoods of the city. Maybell was last upgraded in 1986 and needs replacement. City of Palo Alto Page 2 Discussion The electric substations are used by CPAU to distribute power throughout the City to serve over 29,000 customers. The substations include equipment to control and protect the distribution system safely. Maybell consists of 56 legacy (older technology) protection relays. This equipment is burdensome to operate, difficult to set and calibrate as it operates on mostly mechanical parameters instead of modern microprocessor parameters, prone to failure, and past its 10-year useful life. As a result, Maybell substation has experienced about one unplanned outage every other year. The control scheme at Maybell is unique and does not match any of the City’s other substations, which makes training and maintenance difficult for new substation electricians. CPAU’s other electric substations share a standard control and protection scheme which is different than Maybell’s but also in need of an update. The new installation at Maybell will be an industry proven control scheme using modern equipment that is safer and more reliable. After the Maybell substation upgrade is complete and has successfully operated for 12 months, the scheme developed for Maybell will be replicated to the other substations as the time arrives for their upgrade in the future. An entire protection/controls upgrade all at once is recommended for Maybell as all the equipment must function in an integrated manner. In order to minimize the risk of further unplanned electric outages on the Maybell feeders and due to the complexity and size of the project, Staff is recommending CPAU contract with Electrical Consultants, Inc., to prepare the control and protection system design and create equipment specifications. Once the design is complete, CPAU’s Substation Operations group will perform the actual, physical upgrade, with ECI’s support. Consultant’s Scope of Services A Request for Proposals (RFP #167917) was issued on May 4, 2017 seeking consultant services for the Maybell Electric Substation Protection/Controls Rebuild project. The scope of work includes the following tasks: Creation of a design control document Control scheme refinement and approval Material specification Detailed design Construction support The deliverables will include: Written control scheme Design drawings for demolition and new installations Written specifications of material required Relay logic and settings, formal description of operation Sequencing, testing, and commissioning procedures City of Palo Alto Page 3 The agreement, Attachment A, contains a complete description of the scope of services. Due to the specialized nature of this work, services of a qualified consultant are required. Solicitation Process Summary of Solicitation Process Proposal Title Maybell Electric Substation Protection/Controls Rebuild Proposal Number 167917 Proposed Length of Project 18 months Number of RFPs Emailed 5 Total Days to Respond to Proposal 19 Pre-Proposal Conference May 12, 2017 Number of Company Attendees at Pre-proposal Meeting 7 Number of Proposals Received: 7 Company Name Location (City, State) Amount Electrical Consultants, Inc. San Diego, CA $196,330 See Cost of Services below. Proposal costs ranged from $128,140 to $199,492. Cost of Services The following criteria were used during the evaluation process to identify the successful bidder: Criteria % Weighting Quality and completeness of proposal 20% Proposer’s expertise. 15% Cost to the city. 35% Past experience 15% References. 15% An evaluation committee reviewed the proposals, proposer qualifications, and responses to the criteria identified in the RFP and ranked them accordingly. After interviews of the two highest rated proposing consultants, staff determined that Electrical Consultants, Inc., has by far the necessary expertise and experience to perform the work. Though ECI’s cost was on the higher end of the range, they rated exceptionally high in the other evaluation criteria and performed well during the interview. ECI’s proposal showed that they had the most complete and thorough understanding of the given scope in the RFP. ECI’s proposed scope clearly and succinctly identified the specific tasks they will perform, which was much clearer and more thorough and higher quality than all of the others. ECI’s schedule was more realistic and detailed than all of the others as well. ECI’s proposed innovations show that they have the complex expertise and knowledge to do this project to the standards expected by CPAU Engineering. Their innovations are more appropriate for this type of utility rebuild than City of Palo Alto Page 4 those proposed by the other proposers. ECI’s references were excellent and were offered from managers of similar projects completed for other entities in the western U.S., which suggests that ECI would be a good fit for CPAU’s needs on this project. All of ECI’s references responded and did so very positively. Other proposers did not have references for any projects similar to the project at hand. The City’s second choice proposer did well in a few areas, but not as well overall as ECI. In addition, their cost was higher. The City’s third choice proposer was a smaller firm. Their lesser experience and expertise showed in their lower quality and less complete proposal, and their cost was lower. Lastly, the third proposer’s references were mostly unresponsive. Additional services that are not included within the scope of services in the contract, but that are determined by the City to be necessary for its proper completion, will be paid on a time and material basis up to a maximum amount of $39,266 (20% of the contract amount), using the consultant’s Charge Rates schedule shown in Exhibit C-1 to the Agreement. The City will require the consultant to submit a written proposal detailing the maximum compensation for any additional services. The consultant shall not commence with additional services before the City approves of them in advance and in writing. Past experience with operations and maintenance at Maybell Substation has revealed that the wiring and design shown on the existing original drawings does not always match the installation in the substation. Although this project involves a major replacement, there may be significant work required to reconcile drawings to facilitate the integration of the upgrade properly for construction and CPAU records. For this reason, staff is asking for a 20% contingency for additional services, as needed. The total not to exceed budget amount proposed for this project is $235,596, comprising $196,330 for the base consultant services and $39,266 (20% of contract) for additional services, as needed. The consultant’s final proposal cost matches their original proposal cost, even though enhancements were added including voltage system sizing verification, pre-wired relay panels, and satellite clock. During the RFP process the City negotiated the price of the work, and the scope of work, upon selection of the successful firm. Resource Impact The funds for this project are available in the Substation Protection Improvements Capital Project, EL-89038. Current staffing levels and the level of expertise needed to see this project through to completion prevent City staff from being able to perform this work. Policy Implications The approval of this Enterprise Fund professional services contract is consistent with existing City policies. This recommendation is consistent with the Council-approved Utilities Strategic Plan (Staff Report 1880), especially the strategic objectives to: “Ensure a reliable supply of utility resources”; “Operate the utility systems safely”; and “Replace infrastructure before the end of its useful life”. City of Palo Alto Page 5 Environmental Review Approval of the attached design contract does not require review under the California Environmental Quality Act (CEQA) because it will not cause a direct or indirect physical change in the environment, and thus does not meet the definition of a “project” under Public Resources Code section 21065. Attachments: Attachment A: Contract No. C18167917 DocuSign Envelope ID: 2BCFOEEC-OBB2-4AFO-A972-EB3CF9018F83 CITY OF PALO AL TO CONTRACT NO. C18167917 AGREEMENT BETWEEN THE CITY OF PALO ALTO AND ELECTRICAL CONSULT ANTS, INC. FOR PROFESSIONAL SERVICES This Agreement is entered into on this 21st day of August, 2017, ("Agreement") by and between the CITY OF PALO AL TO, a California chartered municipal corporation ("CITY"), and ELECTRICAL CONSULTANTS, INC., a Montana corporation, located at 3521 Gabel Road, Billings, MT 59102-7307 ("CONSULT ANT"). RECITALS The following recitals are a substantive portion of this Agreement. A. CITY intends to rebuild the controls/protection system of the Maybell Electric Substation ("Project") and desires to engage a consultant to design the rebuild of the Maybell Electric Substation controls/protection system in connection with the Project ("Services"). B. CONSULT ANT 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 CONSULT ANT 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 August 21, 2018 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. CONSULT ANT 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 CONSULT ANT in a reasonably prompt and timely manner based upon the circumstances and direction communicated to the ATTACHMENT A DocuSign Envelope ID: 2BCFOEEC-OBB2-4AFO-A972-EB3CF9018F83 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 CONSULT ANT. SECTION 4. NOT TO EXCEED COMPENSATION. The compensation to be paid to CONSULT ANT for performance of the Services described in Exhibit "A" ("Basic Services"), and reimbursable expenses, shall not exceed One Hundred Ninety-Six Thousand Three Hundred Thirty Dollars ($196,330.00). 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 Two Hundred Thirty-Five Thousand Five Hundred Ninety Six Dollars ($235,596.00). 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 monthly invoices 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- l"). If applicable, the invoice 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 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. OUALIFICATIONS/STANDARD OF CARE. All of the Services shail 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. CONSULT ANT 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 CONSULT ANT 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 2 Professional Services Rev. April 27, 2016 DocuSign Envelope ID: 2BCFOEEC-OBB2-4AFO-A972-EB3CF9018F83 and in compliance with all 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. CONSULT ANT 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. CONSULT ANT 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, CONSULT ANT 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 CONSULT ANT 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 CONSULT ANT are material considerations for this Agreement. CONSULT ANT 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. CONSULT ANT 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. CONSULT ANT shall be responsible for directing the work of any subconsultants and for any compensation due to subconsultants. CITY assumes no responsibility whatsoever concerning compensation. CONSULT ANT shall be fully responsible to CITY for all acts and omissions of a subconsultant. CONSULT ANT shall change or add subconsultants only with the prior approval of the city manager or his designee. SECTION 13. PROJECT MANAGEMENT. CONSULTANT will assign Ted Pfisterer as the Project Supervisor to have supervisory responsibility for the performance, progress, and execution of the Services to represent CONSULT ANT 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 3 Professional Services Rev. April 27, 2016 DocuSign Envelope ID: 2BCFOEEC-OBB2-4AFO-A972-EB3CF9018F83 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 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 Jim Bujtor, Utilities Department, Engineering Division, 1007 Elwell Court, Palo Alto, CA 94303, Telephone (650)566-4543. 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. OWNERSIDP OF MATERIALS. Upon delivery, all work product, including without limitation, all writings, drawings, plans, reports, specifications, calculations, documents, other materials and copyright interests developed under this Agreement shall be and remain the exclusive property of CITY without restriction or limitation upon their use. CONSULT ANT agrees that all copyrights which arise from creation of the work pursuant to this Agreement shall be vested in CITY, and CONSULTANT waives and relinquishes all claims to copyright or other intellectual property rights in favor of the CITY. Neither CONSULT ANT 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. CONSULT ANT 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. CONSULT ANT 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 attorney fees, experts fees, court costs and disbursements ("Claims") that arise out of, pertain to, or relate to the negligence, recklessness, or willful misconduct of CONSULT ANT, 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. CONSULTANT'S total cumulative aggregate liability for all Claims that arise of, pertain to, or relate to the performance of CONSULTANT, its officers, employees, agents or contractors under this Agreement shall be limited to $5,000,000, with the exception that for Claims that arise out of, pertain to, or relate to the gross negligence, recklessness or willful misconduct of CONSULT ANT, its officers, employees, agents or contractors, there shall be no limitation on liability. 16.3. Notwithstanding the above, nothing in this Section 16 shall be construed 4 Professional Services Rev. April 27, 2016 DocuSign Envelope ID: 2BCFOEEC-OBB2-4AFO-A972-EB3CF9D18F83 to require CONSUL TANT to indemnify an Indemnified Party from Claims arising from the active negligence, sole negligence or willful misconduct of an Indemnified Party. 16.4. 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. 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, pi:ovisions, 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.l. 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 CONSULT ANT 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 CONSULT ANT'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. s Professional Services Rev. April 27, 2016 DocuSign Envelope ID: 2BCFOEEC-OBB2-4AFO-A972-EB3CF9D18F83 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. 19 .2. CONSULT ANT 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, whether or not completed, prepared by CONSULT ANT 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 CONSULT ANT, CITY will be obligated to compensate CONSUL TANT only for that portion ofCONSULTANT'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 ECI 5030 Camino de La Siesta San Diego, CA 92108 Attn: Ted Pfisterer Copy to: 6 Professional Services Rev. April 27, 2016 DocuSign Envelope ID: 2BCFOEEC-OBB2-4AFO-A972-EB3CF9D18F83 ECI 3521 Gabel Road Billings, MT 59102 Attn: Legal SECTION 21. CONFLICT OF INTEREST. 21.1. In accepting this Agreement, CONSULT ANT 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. CONSULT ANT further covenants that, in the performance of this Agreement, it will not employ subconsultants, contractors or persons having such an interest. CONSULT ANT 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, CONSULT ANT 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. CONSULT ANT 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. ENVIRONMENT ALLY 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. CONSULT ANT 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, CONSULT ANT 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 CONSULT ANT on behalf of CITY shall be purchased in 7 Professional Services Rev. April 27, 2016 DocuSign Envelope ID: 2BCFOEEC-OBB2-4AFO-A972-EB3CF9018F83 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. CONSULT ANT 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 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.l 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. 26.2 CONSULT ANT shall comply with the requirements of Exhibit "E" for any contract for public works construction, alteration, demolition, repair or maintenance. 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 8 Professional Services Rev. April 27, 2016 DocuSign Envelope ID: 2BCFOEEC-OBB2-4AFO-A972-EB3CF9018F83 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. 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 CONSULT ANT personal information as defined in California Civil Code section 1798.81.5( d) about a California resident ("Personal Information"), CONSULT ANT 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. CONSULT ANT 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 Professional Services Rev. April 27, 2016 DocuSign Envelope ID: 2BCFOEEC-OBB2-4AFO-A972-EB3CF9D18F83 CONTRACT No. C18167917 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 ELECTRICAL CONSULTANTS, INC. City Manager or designee Officer 1 By: APPROVED AS TO FORM: Name: Title: City Attorney or designee Attachments: EXHIBIT "A": EXHIBIT "B": EXHIBIT "C": EXHIBIT "C-1 ": EXHIBIT "D": Officer 2 By: Name: Title: SCOPE OF SERVICES SCHEDULE OF PERFORMANCE COMPENSATION SCHEDULE OF RATES INSURANCE REQUIREMENTS 10 President [!:iD."~ FC9C50906710457 ... David R. Maehl vice President Professional Services Rev. April 27, 2016 DocuSign Envelope ID: 2BCFOEEC-OBB2-4AFO-A972-EB3CF9018F83 EXHIBIT "A" SCOPE OF SERVICES Maybell Electric Substation Protection/Controls Rebuild 1. DESIGN SPECIFICATIONS: CONSUL TANT shall design the foJlowing protection/controls schemes for the Maybell electric distribution substation (MB) in accordance with IEEE C37 guidelines for protective relaying and according to the specifications outlined below. The existing system will be replicated and enhanced by the CONSUL TANT per the new protection scheme in Figure 1. The CITY will procure all materials at the City's cost, according to the schedule outlined in Exhibit B. a. Substation Transformer Protection: i. Each 60/12.47 kilo-volt (kV) power transformer (xf), XF20 and XF21, will have two differential schemes (hmer and Outer Differentials) using Schweitzer Engineering Laboratories (SEL)-787 differential relays and high side overcurrent protection using an SEL-751 overcurrent relay. (See Figure #1 for the protection scheme and Figure #2 for the existing single-line for reference to this Design Specifications section. Reference Table 5.) ii. The Inner Differential relay (SEL-787) will be connected to the high side and low side transformer bushing current transformers (CTs). This relay will also be used to trip and close both high side and low side breakers via the Supervisory Control and Data Acquisition (SCADA) system. The relay will be located on the transformer low side circuit breaker door. iii. The transformer high side phase overcurrent relay (SEL-751) will be connected to the bus side of the 60 kV breaker bushings CTs. In addition to the transformer protection functions, pushbuttons from this relay will be used to trip and close the high side breaker. The relay is to be located on the transformer low side circuit breaker door and it will be connected to SCADA. 1v. The Outer Differential relay (SEL-787) will be connected to CTs on the bus sides of both 60 kV and 12 kV breaker's bushings. In addition to the transformer protection functions, pushbuttons from this relay will be used to trip and close the low side breaker. The relay will be connected to SCADA and located on the transformer low side circuit breaker door. b. Partial Bus Differential Protection: 1. Each 12.47 kV bus section, Bus 3 and Bus 4, will have a SEL-75-1 relay as a partial differential scheme. (Reference Tables 3, 4, 6, and 7 for paragraphs i, ii, iii, and iv.) 11. The partial bus differential relay will be connected to the transformer side of the 12 kV breaker bushing's CTs and the opposite side of the tie breaker bushing's CTs. Each SEL-751 relay will trip its transformer low side breaker and close the bus tie breaker. The scheme will include a 3 cycle fast bus trip feature on each 11 Professional Services Rev. April 27, 2016 DocuSign Envelope ID: 2BCFOEEC-OBB2-4AFO-A972-EB3CF9018F83 bus SEL-751 relay. This fast trip can be blocked by a hard wired blocking signal from any feeder's SEL-7S l relay on its own bus section that detects a feeder fault. 111. The existing loss of potential relays for both bus undervoltage transfer schemes will be removed and replaced with elements within the SEL-751 relays. In this undervoltage scheme, the relays will trip their respective transformer low side breaker and close the bus tie breaker in the event of loss of potential (undervoltage) on the low side of the transformer. Both relays are to be located in the bus tie breaker door. The bus 4 relay will be equipped with push buttons to open and close the bus tie breaker and the bus 3 relay will be used to control the tie breaker via SCADA. iv. If the bus remote/local button is changed via SCADA, it will change. the state of the buttons on both relays so that both status indicators representing the same state do not differ. Locally, both buttons will have to be pushed for control selection. c. 12 kV Feeder Protection: t. Each of the six (6) 12.47 kV feeders will be protected by two (2) SEL-751 relays (Set A and Set B). (Reference Tables 1 and 2 for paragraphs i, ii, iii, and iv.) u. Set "A" relay functions will be set to include SO/SI, SON/SIN, 81 and 79 elements. The Set "A" relay will have pushbuttons to cut-out/cut-in 79 and 81 elements (but not 50N/51N) and to open and close the feeder breaker. iii. Set "B" relay functions will be set to include only 50/51 and 50N/51N. The Set "B" relay has pushbuttons to trip the feeder breaker. The Set "B" relay will be used to open and close the breaker via SCADA. 1v. Both relays will be wired identically so that "Set A" or "Set B" can become the other Set in the case of a failure, only distinguishable by programming Set selection. Both relays will be hard wired to block the partial bus differential relay for feeder faults. In order to accomplish this, a11 CTs connections should be moved from the line side to the bus side of the breakers. The secondary of the zero sequence 200/5 "donut" CT on MB23 feeder should be shorted since it is a mostly overhead circuit. d. Arc Flash Accommodation: Provide all design and setting options to the CITY as part of the project for a phased-in approach of the Arc Flash feature available within the family of SEL relays to the overall Maybell 20/21 switchgear lineup, taking advantage of the Arc Flash, point-source capability. 1. CONSULT ANT will refine the plan with the CITY during design development. The City will approve the plan and may require the Consultant to revise it as needed in the CITY's sole discretion. The CITY expects to implement this Arc Flash scheme after final commissioning of the switchgear, so as not to complicate the successful implementation of the major required protection upgrade, which is the main focus of this Scope of Work. 12 Professional Services Rev. April 27, 2016 DocuSign Envelope ID: 2BCFOEEC-OBB2-4AFO-A972-EB3CF9018F83 2. IJ. CONSULT ANT will take into consideration the 'light-tightness' of the existing switchgear cubicles and new front panels to minimize nuisance Arc Flash tripping, via correct design placement of point Arc Flash sources (in concert with the CITY's knowledge of the switchgear). 111. CONSULTANT will use overcurrent elements to 'supervise' the Arc Flash to eliminate nuisance tripping. Initially, the Arc Flash signal will go to a SCADA alarm until CITY operations personnel are comfortable with its operation. e. General Design Guidelines: CONSULTANT will follow the following guidelines for the entire Scope of this project: 1. The replacement relays will be Schweitzer Engineering Laboratories, Inc. ("SEL") microprocessor based relays and Nexus 1500 relay/power quality meters. 2. Existing control switch relays and latching switch relays will be replaced with integrated relay button functionality. 3. The control and protection wiring will be rewired utilizing existing current and potential transformers ("CT" & "PT" respectively). 4. SCADA connections and all metering will be retained. 5. 60kV line protection, proper, is not part of this scope, yet 60kV interlocks with the 12kV protection system are to remain. 6. Existing terminal blocks within the cubicles will be reused, depending on condition, if needed. DESIGN TASKS: CONSULTANT will perform the following tasks to complete the required designs within the design package deliverables and dictated by the design process and schedule outlined in Exhibit B. a. Design Task 1 -Provide specifications upon CITY' s request for all material to be procured, including relays and accessories. b. Design Task 2 -Prepare demolition/removal drawings for the existing layout, single- lines, control, elementaries, DC schematics, and terminal connection diagrams (approximately 22 drawings). c. Design Task 3 -Prepare all new drawings in AutoCAD (ACAD) format for the new control/protection/power quality devices and facilities for all new installation work (see Exhibit B -Sample Relay Calculation Forms). d. Design Task 4 -Prepare relay coordination study in Aspen and generate relay logic diagrams and relay settings and files for the 20 new relays. e. Design Task 5 -Prepare a Description of Operation for each type of protection scheme and each relay in the scheme. A sample is provided in Exhibit E. 13 Professional Services Rev. April 27, 2016 DocuSign Envelope ID: 2BCFOEEC-OBB2-4AFO-A972-EB3CF9018F83 3. 4. f. Design Task 6 -Provide a construction sequencing plan, testing procedures and commission processes, and construction support. CONSULTANT predicts that a one week outage will be required to remove and replace, test and commission each cubicle for a total of nine (9) weeks of testing, commissioning and construction support. CONSULT ANT will provide on-site support by a testing/commissioning engineer or technician for the first cubicle replacement. These resources would be available with remote assistance as required for the remaining change outs. However, if there are significant problems encountered during any preceding cubicle replacement, CONSULT ANT will provide on-site support for the succeeding cubicle replacement. g. Design Task 7 -Post-Construction support for as-builts, design/construction corrections or finalizations, and contract finalization tasks. ON-SITE SUPPORT and MEETING REQUIREMENTS: a. CONSULTANT will attend a minimum of three (3) design meetings with the CITY. b. CONSULT ANT will hold a kickoff meeting with the CITY to review the scope and execution for the project. The meeting will include the turnover and review of all CITY reference materials. The CONSULTANT will hold design review meetings after the submittals included in the 60 % and 90% Design Packages have been reviewed and approved by the CITY. c. The CONSULT ANT will provide on-site construction management services. The on-site construction management includes assistance with testing and commissioning of the first cubicle relay change out. The CONSULTANT's testing and commissioning resources will be available by phone during the remaining testing and commissioning process. Construction management services may be subcontracted, if approved by CITY as described in Section 12 of the Agreement. DELIVERABLES: a. Schedule. CONSULT ANT will create a 52 week resource loaded schedule in Oracle Primavera by CONSULTANT's design team with the assistance of CONSULTANT's Project Controls Group. This schedule must be reviewed and approved by the City before its use on this project. The Project Controls Group will be an integrated part of the Project Team through the performance period, providing updates of the baseline schedule, cost-to-date vs. effort (earned value) reporting and look-ahead task forecasts. b. Quality Assurance. Prior to submitting any Design Packages described in this Section 4(c) to CITY, all project deliverables will be thoroughly reviewed and checked in accordance with the CONSULTANT's 3-Step QA/QC process. The process ensures that all work products and deliverables have been reviewed and verified that they will meet the CITY's requirements as well as the CONSULTANT's own stringent design standards. c. Design Packages. Design Packages will include the documents and deliverables listed below, including a complete turn-key design set and construction drawing set to meet all design schemes identified in this Scope: 14 Professional Services Rev. April 27, 2016 DocuSign Envelope ID: 2BCFOEEC-OBB2-4AFO-A972-EB3CF9D18F83 i. 10% Design Package (Budget Task I) 1. Design Control Document u. 30% Design Package (Budget Task 2) l. One Line Diagrams 2. Panel Layouts 111. 60% Design Package (Budget Task 3) 1. Three Line Diagrams 2. AC/DC Schematics for each cubicle 3. Communication System Schematic 4. Logic Diagrams 5. Other schematics and elementary drawings as required 6. Coordination Study Results 7. Relay Settings 8. Description of Operation document 9. AC/DC system load calculations and panel board evaluation iv. 90% Design Package (Budget Task 4) 1. Wiring Diagrams for each cubical 2. Interconnection Wiring Diagrams for transformers and switchgear 3. Specifications for all material procurement 4. Final Bills of Material 5. Testing procedures 6. Commissioning processes 7. Construction Sequencing Plan v. Issue for Construction (IFC) Package (Budget Task 5) 1. A complete set of the design and drawing package 2. (The IFC package will be sealed with a California P.E. stamp) d. CITY Review and Approval. Each submittal of each item from each Design Package must be provided to the CITY for CITY's review and approval. CITY will require up to two (2) weeks to review each submittal and provide comments to CONSULT ANT. CONSULTANT will make any requested revisions within one (1) week after receiving the CITY's comments. e. Design Drawing Development: 15 Professional Services Rev. April 27, 2016 DocuSign Envelope ID: 2BCFOEEC--OBB2-4AFO-A972-EB3CF9018F83 5. 1. The demolition or removal drawings for each Design Package will be included as part of each of the design packages, along with the new drawings. CONSULT ANT will make use of existing substation drawings in order to create the demolition/removal drawings. 11. CONSULTANT will prepare all new drawings in ACAD format. If a "typical" drawing exists for several cubicles or transformers, CONSULTANT will create new and unique drawings for each cubicle or transformer. In the preparation of all new drawings, CONSULT ANT will follow the sample for the Quarry Substation Rebuild, which will be provided to the CONSUL TANT at the project kickoff meeting. In the absence of CITY standards and specifications, CONSULT ANT will coordinate closely with the CITY to ensure the new drawings meet relevant requirements for construction, safety, and ongoing operations and maintenance purposes. iii. Within 4 weeks of transmittal, the CONSULT ANT will modify the drawing set from the final as-built drawings which will be marked up in the field by the CITY' s construction resources and provided by City to the CONSUL TANT. ADDITIONAL REQUIREMENTS and DELIVERABLES: a. Prewired Relay Panels Plan: 1. The CONSULTANT will design completely prewired replacement relay panels including all relays, test switches and accessories. The CONSULTANT will provide detailed specifications of the panels and material for bid. The panel design and specifications will be reviewed and approved by the City prior to fabrication. The finaliz.ation of this portion of the scope of work will be prioritized early in the design package stages of the Schedule of Performance to limit the impact of the potentially lengthy procurement phase. The CITY understands that significant design and performance needs to occur before the panel design can be finalized, yet the CITY also needs this panel design package to be issued as soon as possible. ii. The CITY will procure all materials at the City's cost, and will have all final decisions in the selection process of the relay panel supplier and materials. The City will pay competitive direct purchase costs to the supplier, free from CONSULT ANT markup. The selection may require a competitive bidding process, managed by the CITY and requiring the complete design and specification package discussed in Section S(a)(i) from the CONSULTANT. New panels will match the strength and metal thickness/gage of the existing panels and hinges, as a minimum. b. DC/AC System Sizing Verification: 1. CONSULT ANT will verify that the existing DC system (battery charger, battery and panel) is of sufficient size and capacity to serve the new relay schemes. Although CITY does not anticipate that the charger and batteries will have to be replaced for load purposes, CONSULT ANT will perform the necessary calculations in accordance with prudent engineering practice. The number of DC circuits required for the new protection schemes will determine if the existing DC 16 Professional Services Rev. April 27, 2016 DocuSign Envelope ID: 2BCFOEEC-OBB2-4AFO-A972-EB3CF9D18F83 load center has adequate branch circuits and capacity. If additional DC circuits are found to be necessary, the CONSULTANT will prepare the design and specifications for a new or second DC Panel. c. Satellite Clock design: 1. CONSULTANT will include the addition of an inter-range instrumentation group time code (IRIG)-B satellite clock and connection to all new relays. 17 Professional Services Rev. April 27, 2016 :;; "C ;:ca ~~ ~ s· 2:~ Ncn _...., ~ N -· ~~ "' "' I . Bus4 PT ... • I I.;;.;..-... _ ... __ .... ~;;_;!!;;,; -- 25 24 Outer Differential & High Side OC 60k BUS3 TYP. of Feeders 23, 24. & 25 152T TYP. of Feeders 20, 21. & 22 BUS4 Figure #1: Recommended Protection Relays' Connection Bus3 PT . I , ________ ... ev#;~r:.'11~ ~~~-----~, I I ... , ...... --- 21 Feeders lnnor Differential Outer Differential & High Side OC --------1 60k I I I Ni .6 ! I I I I I -------.J w c: r.Q cc :l m ~ i R !\.) CD (") ~ m m g CD ~ ~ ~ --.I ~ m CD w (") "Tl c:o 0 .... 00 "Tl 00 w ::D "<I :;.;; a ~~ > ~:l g == !!?. NfJ> _, <> • :! N_. On -... °'"' MB-EM .~~Pl BBC 15KV SWGR 60KV l LS WEST 4.76 KV SWGR MB-EM 1 (TO BE RETIRED) ,-~~v;----, r -----~KVA f I 12~QV I XFB l I 120/?~fvl <>·+ I J., 1 XF20 TS TS XF2 MB-20 MB-2 I MB-20 v ~B-: ~2_-3~ I ')"' I 600:5 21 4 I 'fl 11' 22 4 I 600:5 . 'fl [J' © 'Y' ' ~ / \)---, w 600·5 7200 6 6 I /"'(' 20 . /120V _J :::,,; 1· cu IPS OS N 12400112DV ~-+I ~ -> I ---., " 1 15120/22.4 MVA 5.0/6.25 MVA I ~ I oo.12.41vn 2 KV G0-4.36Yl2.52KV , ~ , 1200:5 I ~ I 1· ~ 8 ' -~-0·1 M B oc· N L .,; ™B r0 I 23 4 i tlJ I 600:5 24 4 i tlJ .f 600:5 I/) ~ I I I 15/20122.4 MVA l 5.016.25 MVA I L 60.12.47Yl7.2 KV 60-4.36Y/2.52KV _j' 25 I' 7200 ---, 6 OS !:::. - MB-2 N.O. CD 1200:5 50:5 TB MB·112 1200:5 50:5 eoo:s r3' 1120v I ~ f e-1 ;::,/ l2400112ov I ~ J., I 120~ +I 1 ~ I Mx:~1 v L:L~ "--2 __il I ')"' a 'XFe , 1 'Y' 1 ~TS TS F1' \L MB-1 L 15KV~ XF21 MB-21 MB-1 XF1 I I"'(' N.O. I 120/2~0V L 10KVA I ----------o-jl• -~~~----_J CD INDICATES BUS NUMBER LS GS i MB-PBS MB·PB3j ® 601.'J' MB-PBS Figure #2: Maybell Substation 2 Cl 0 n c en i0· :l [ 0 "O (1) ~ l\J c:J () "Tl 0 m Q 0 c:J c:J t "Tl ~ l\J m ~ "Tl co ~ CD "Tl CD w DocuSign Envelope ID: 2BCFOEEC-OBB2-4AFO-A972-EB3CF9D18F83 FEEDER PUSHBUTION ASSIGmfENTS Feeder Set "A" Relay: SEL-751 relay ::"t'OTUSED • • BREAKER. CLOSE Table I: Set "A" SEL-751 Feeder Pushbutton Assignments 20 Professional Services Rev. April 27, 2016 DocuSign Envelope ID: 2BCFOEEC-OBB2-4AFO-A972-EB3CF9D18F83 FEEDER PUSHBUTION ASSIGNMENTS Feeder Set ''B" Relay: SEL~751 relay e • NOTt"SED NOTUSE.D • • • LOCK REMOTE • PUSBBUITOX PAD UNLOCK LOCAL • ~OT USED o:~~ • • ~OT USED NOT USED • Table 2: Set "B" SEL-751 Feeder Pushbutton Assignments 21 J Professional Services Rev. April 27, 2016 DocuSign Envelope ID: 2BCFOEEC-OBB2-4AFO-A972-EB3CF9D18F83 BUS' PUSHBUTTON ASSIGNMENTS Bus 4 Partial Differential Relay: SEL-751 relay • • • • NOTUSD> REMOTE LOCAL ~OT USED • • NOTL"'SED • LOCK • PUSHBUTIO~ PAD UNLOCK • BREAKER CLOSE Table 3: Bus 4 Partial Differential SEL-751 Pushbutton Assignments 22 Professional Services Rev. April 27, 2016 DocuSign Envelope ID: 2BCFOEEC-OBB2-4AFO-A972-EB3CF9D18F83 BUS 3 PUSHBUITON ASSIGmlENTS Bus 3 Partial Differential Relay: SEL-751 relay e NOT USED e a : J REMO TI LOCAL e ~OT USED • :'iOTUSED e e • • • • • NOTt'SED LOCK PUSHBUITO~PAD ~OCK TIE BREAKER TRIP ~OT USED Table 4: Bus 3 Partial Differential SEL-751 Pushbutton Assignments 23 Professional Services Rev. April 27, 2016 DocuSign Envelope ID: 2BCFOEEC-OBB2-4AFO-A972-EB3CF9018F83 TRANSFODIER SEL-751 PUSHBUTTON ASSIGNMENTS Transformer Overcurrent Relay: SEL-751 relay e e • • NOT USED :"OT USED ~OT USED e • • • NOTl:'SED LOCK PUSBBtlTIO~ P.\D UNLOCK Table 5: Transformer Overcorrent SEL-751 Pushbutton Assignments 24 Professional Services Rev. April 27, 2016 DocuSign Envelope ID: 2BCFOEEC-OBB2-4AFO-A972-EB3CF9018F83 OUTER DIFFERENTIAL PUSHBUTTON ASSIGmIENTs Outer Transformer Differential Relay: SEL-787 relay • • • • NOT USED REMOTE LOC..\L XOTUSED ='\OT USED • • NOT USED • LOCK • PUSHBUTTO~ PAD l.>"NLOCK • LOW~BREAKER • • LOWBREAKER CLOSE Table 6: Outer Transformer Differential SEL-787 Pushbutton Assignments 25 Professional Services Rev. April 27, 2016 DocuSign Envelope ID: 2BCFOEEC-OBB2-4AFO-A972-EB3CF9D18F83 INNER DIFFERENTIAL PUSHBUTTON ASSIG1'"AIENTS Inner Transformer Differential Relay: SEL-787 relay • NOT USED • o : REMOTE J LOCAL • LOW SIDE • BR.EAKER 11UP ~OT USED • • • • • • NOTt:SED LOCK PUSBBO I ION P.ID u""NLOCK mCBSID.E BREAKER TRIP XOTUSED Table 7: Inner Transformer Differential SEL-787 Pushbutton Assignments 26 Professional Services Rev. April 27, 2016 DocuSign Envelope ID: 2BCFOEEC-OBB2-4AFO-A972-EB3CF9018F83 27 Professional Services Rev. April 27, 2016 OocuSign Envelope ID: 2BCFOEEC-OBB2-4AFO-A972-EB3CF9018F83 EXHIBIT "B" SCHEDULE OF PERFORMANCE CONSULT ANT 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 CONSULT ANT and CITY so long as all work is completed within the term of the Agreement. CONSULT ANT shall provide a detailed schedule of work consistent with the schedule below within 2 weeks of receipt of the notice to proceed. Tasks 1. 10% Design Package 2. 30% Design Package 3. 60% Design Package 4. 90% Design Package 5. IFC Package 6. Construction Support 7. Post Construction Support 28 Completion No. of Weeks FromNTP 5 10 15 20 25 26-40 41-52 Professional Services Rev. April 27, 2016 DocuSign Envelope ID: 2BCFOEEC-OBB2-4AFO-A972-EB3CF9018F83 EXHIBIT "C" COMPENSATION The CITY agrees to compensate the CONSULT ANT 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 $15,860.00 (10% Design Package) Task2 $20,470.00 (30% Design Package) Task3 $75,460.00 ( 60% Design Package) Task4 $40,480.00 (90% Design Package) Task5 $3,500.00 (IFC Package) Task6 $26,380.00 (Construction Support) Task 7 $14,180.00 (Post construction) Sub-total Basic Services $196,330.00 Reimbursable Expenses $0.00 Total Basic Services and Reimbursable expenses $196,330.00 29 Professional Services Rev. April 27, 2016 DocuSign Envelope ID: 2BCFOEEC-OBB2-4AFO-A972-EB3CF9018F83 Additional Services (Not to Exceed) $39,266.00 Maximum Total Compensation $235,596.00 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 CONSULT ANT 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 CONSULT ANT'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 CONSULT ANT prior to commencement of the services. Payment for additional services is subject to all requirements and restrictions in this Agreement 30 Professional Services Rev. April 27, 2016 DocuSign Envelope ID: 2BCFOEEC-OBB2-4AFO-A972-EB3CF9018F83 Engineering I Management Principal Director/PhD Senior Project Manager Construction Project Manager Project Manager II Project Manager I Senior Engineer II Senior Engineer I Senior Project Supervisor Project Supervisor Project Engineer II Project Engineer I Associate Engineer II Associate Engineer I Design Engineer III Design Engineer II Design Engineer I Designer III Designer II Designer I Construction I Field Testing Senior P&C Technician P&C Technician Field Construction Manager Technician/Inspector III Technician/Inspector II Technician/Inspector I EXHIBIT "C-1" SCHEDULE OF RATES Program Management I Support Staff Project Controls Coordinator Project Controls Specialist III Project Controls Specialist II Project Controls Specialist I Drafter I Designer Drafter II Drafter I Administrative -Executive Administrative I Secretarial Safety Specialist Security Specialist 3 1 Hourly Rate $188.00 $219.00 $171.00 $137.00 $154.00 $140.00 $152.00 $130.00 $128.00 $106.00 $126.00 $107.00 $115.00 $103.00 $99.00 $96.00 $92.00 $102.00 $93.00 $77.00 $142.00 $125.00 $137.00 $115.00 $104.00 $77.00 $142.00 $136.00 $92.00 $72.00 $75.00 $68.00 $64.00 $95.00 $54.00 $109.00 $56.00 Professional Services Rev. April 27, 2016 DocuSign Envelope ID: 2BCFOEEC-OBB2-4AFO-A972-EB3CF9D18F83 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 COMPANlES WITH AM BEST'S KEY RATING OF A-:VIJ, OR HIGHER, LICENSED OR AUTHORIZED TO TRANSACr INSURANCE BUSINESS IN THE STATE OF CALIFORNlA. A WARD IS CONTINGENT ON COMPLIANCE WlTH CITY'S INSURANCE REQUIREMENTS AS SPECIFIED BELOW· ' ' MINIMUM LIMITS REQUIRE TYPE OF COVERAGE REQUIREMENT D YES YES YES YES YES YES EACH OCCURRENCE AGGREGATE WORKER'S COMPENSATION STATUTORY EMPLOYER'S LIABILITY STATUTORY BODILY INJURY $1,000,000 $1,000,000 GENERAL LIABILITY, INCLUDING PERSONAL INJURY, BROAD FORM PROPERTY DAMAGE $1,000,000 $1,000,000 PROPERTY DAMAGE BLANKET CONTRACTUAL, AND FIRE LEGAL BODILY INJURY & PROPERTY DAMAGE $1,000,000 $1,000,000 LIABILITY COMBINED. BODILY INJURY $1,000,000 $1,000,000 -EACH PERSON $1,000,000 $1,000,000 -EACH OCCURRENCE $1,000,000 $1,000,000 AUTOMOBILE LIABILITY, INCLUDING ALL OWNED, HIRED, NON-OWNED PROPERTY DAMAGE $1,000,000 $1,000,000 BODILY INJURY AND PROPERTY $1,000,000 $1,000,000 DAMAGE. COMBINED PROFESSIONAL LIABILITY, INCLUDING, ERRORS AND OMISSIONS, MALPRACTICE (WHEN APPLICABLE), AND NEGLIGENT PERFORMANCE ALL DAMAGES $I,000,000 THE CITY OF PALO ALTO IS TO BE NAMED AS AN ADDITIONAL INSURED: CONTRACTOR, AT ITS SOLE COST AND EXPENSE, SHALL OBT AfN AND MAfNT AfN, fN 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 COUNCll.. 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. CONT ACTOR MUST SUBMIT CERTIFICATES(S) OF INSURANCE EVIDENCING REQUIRED COVERAGE AT THE FOLLOWING URL: https://www.planetbids.com/portal/portal.cfm?CompanylD=25569. In. 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. 32 Professional Services Rev. April 27, 2016 DocuSign Envelope ID: 2BCFOEEC-OBB2-4AFO-A972-EB3CF9D18F83 B. CROSS LIABILITY THE NAMING OF MORE THAN ONE PERSON, FIRM, OR CORPORATION AS INSUREDS UNDER THE POLICY SHALL NOT, FOR THAT REASON ALONE, EXTINGUISH ANY RIGHTS OF THE INSURED AGAINST ANOTHER, BUT THIS ENDORSEMENT, AND THE NAMING OF MULTIPLE INSUREDS, SHALL NOT INCREASE THE TOTAL LIABILITY OF THE COMPANY UNDER THJS POLICY. C. NOTICE OF CANCELLATION I. IF THE POLICY IS CANCELED BEFORE ITS EXPIRATION DA TE FOR ANY REASON OTHER THAN THE NON-PAYMENT OF PREMIUM, THE CONSUL TANT SHALL PROVIDE CITY AT LEAST A THIRTY (30) DAY WRITIENNOTICE BEFORE THE EFFECTIVE DATE OF CANCELLATION. 2. IF THE POLICY IS CANCELED BEFORE ITS EXPIRATION DATE FOR THE NON- PAYMENT OF PREMIUM, THE CONSULT ANT SHALL PROVIDE CITY AT LEAST A TEN (IO) DAY WRITIEN NOTICE BEFORE THE EFFECTIVE DA TE 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/PORT AL/PORT AL.CFM?COMPANYID=25569 OR HTTP://WWW.CITYOFPALOALTO.ORG/GOV/DEPTS/ASD/PLANET BIDS HOW TO.ASP 33 Professional Services Rev. April 27, 2016 DocuSign Envelope ID: 2BCFOEEC-0882-4AFO-A972-EB3CF9018F83 ____......, ELECCON-05 CTHEl "'""' ACORD• CERTIFICATE OF LIABILITY INSURANCE I DATE (llllWDIYYYYJ ~ 0512312017 THIS CERTIFICATE IS ISSUED AS A MATTER OF INFORMATION ONLY AND CONFERS NO RIGHTS UPON THE CERTIFICATE HOLDER THIS CERTIFICATE DOES NOT AFFIRMATIVELY OR NEGATIVELY AMEND, EXTEND OR ALTER THE COVERAGE AFFORDED BYTHEPOUCIES BELOW. THIS CERTIFICATE OF INSURANCE DOES NOT CONSTITUTE A CONTRACT BETWEEN THE ISSUING INSURER(S). AUTHORIZED REPRESENTATIVE OR PRODUCER, AND THE CERTIFICATE HOLDER. IMPORTANT: If the certificate holder is an ADDITIONAL INSURED, the policy(les) must have ADDITIONAL INSURED provisions or be endorsed. If SUBROGATION IS WAIVED, subject to the terms and conditions of the policy, certain policies may require an endorsement. A statement on this certificate does not confer rights to the certificate holder In lieu of such endorsementis). PRODUCER Wft~T Billln~ Office &:lc~L. &ti: (406) 238-1900 I ~ No1:(40&> 245-9&81 P~ne est Insurance, Inc. P •• Box30638 ~:MM!..._, Billings, MT 69107-0638 INSURFAISI AFFORDING COVERAGE NAIC# 1NsuRER A: National Fire Ins of Hartford 20478 INSURED 1NsuRER s: Continental Ins Co 35289 Elec:trlcal Consultants, Inc. INSURER c: Continental Casuattv Cornnanv 20443 3521 Gabel Road INSURER o: Montana State Fund 811212 Biiiings, MT 59102-7307 1NSURER e: Zurich American Insurance Comnanv 16535 IHSURERF: COVERAGES CERTIFICATE NUMBER: REVISION NUMBER: THIS IS TO CERTIFY THAT THE POLICIES OF INSURANCE LISTED BELOW HAVE BEEN ISSUED TO THE INSURED NAMED ABOVE FOR THE POLICY PERIOD INDICATED. NOTWITHSTANDING ANY REQUIREMENT, TERM OR CONDITION OF ANY CONTRACT OR OTHER DOCUMENT WITH RESPECT TO WHICH THIS CERTIFICATE MAY BE ISSUED OR MAY PERTAIN, THE INSURANCE AFFORDED BY THE POLICIES DESCRIBED HEREIN IS SUBJECT TO ALL THE TERMS, EXCLUSIONS AND CONDITIONS OF SUCH POLICIES. LIMITS SHOWN MAY HAVE BEEN REDUCED BY PAID CLAIMS. ir1: TYPE OF INSURANCE '~~ = POLICY NUllBER POUCYEFF POUCYEXP UlllTS A x COMMERCIAL GENERAL UABIUTY EACH OCCURRENCE $ 1,000,000 I CLAIMS-MADE 00 OCCUR x 6015980113 11/01/2016 11/01/2017 ~~~t}~U9c:~ENTEO $ 300,000 -MEDEXPIAnvonenPf"<lln) $ 15,000 -PERSONAL & ADV INJURY $ 1,000,000 2,000,000 ~'L AGGREGATE LIMIT APPLIES PER: GENERAL AGGREGATE $ POLICY 00 m?;= o LOG PRODUCTS· COMP/OP AGG $ 2,000,000 OTHER: Employee Benafi $ 1,000,000 B AUTOMOBILE LIABILITY COMBINED SINGLE LIMIT $ 1,000,000 /C:o orNnont\ -x ANY AUTO 6014616577 11/0112016 11/0112017 BODILY INJURY !Per oersonl $ -OWNED -SCHEDULED -AUTOS ONLY ,____ AUTOS BODILY INJURY !Per accident\ $ -~~f8'soNLY f--~8~C§"i~J[~ fp~?~~~d~t~AMAGE $ $ c x UMBREU.A UAB ~OCCUR EACH OCCURRENCE $ 14,000,000 -6015980127 11/0112016 11/01/2017 14,000,000 EXCESSLIAB CLAIMS-MADE AGGREGATE $ OED I x I RETENTION$ 0 $ D WORKERS COMPENSATION x I ~~~TIJTE I I ~~H-AND EMPLOYERS' LIABILITY YIN 032578445 01/01/2017 01/0112018 1,000,000 ANY PROPRIETOR/PARTNER/EXECUTIVE [!] E.L. EACH ACCIDENT $ NIA fif~=1111wm EXCLUDED? E.L. DISEASE • EA EMPLOYEE $ 1,000,000 g~~~~~ ~?'6PERATIONS below E.L. DISEASE • POLICY LIMIT $ 1,000,000 c Professional and AEH114043145 09/1012016 09/1012017 Pollution Each Claim 10,000,000 E Workers Compensation WC959744506 01/0112017 01/0112018 See Below DESCRIPTION OF OPERATIONS I LOCATIONS I VEHICLES \ACORD 101, AddltlONI RMnarb SchecMe, may be -ched If more apace la niqul~ Blanket Additional lnaured per written contract ncludlng Completed Operations. Primary and Non-Contributory Coverage per written contract. Blanket Waiver of Subrogation per written contract. Blanket addltlonal Insured and waiver appllel on Auto Coverage per written contract Per fonnl CNA74706XX, CNA74706XX, CNA74736XX, CNA76079XX, CA0444 and SCA23600D. Worker's Compensation Waiver of Subrogation applies per written contract per fonn WC000313 .• Umbrella la follow fonn. Blanket Addltlonal lnaurad applies to Umbrella. "Workera Comp lnfonnatlon for Polley WC969744604 -Coverage A States: AZ, CA, CO, FL, ID, llN, MO, NJ, OK, TN, TX, UT, WI SEE ATTACHED ACORD 101 CERTIRCATE HOLDER CANCELLATION SHOULD ANY OF THE ABOVE DESCRIBED POLICIES BE CANCELLED BEFORE City of Palo Alto; Office of the City Clerk THE EXPIRATION DATE THEREOF, NOTICE WILL BE DELIVERED IN P.O. Box 10260 ACCORDANCE WITH THE POLICY PROVISIONS. Palo Alto, CA 94303 AUTHORIZED REPRESENTATIVE I ~~ ACORD 25 (2016/03) © 1988-2015 ACORD CORPORATION. All rights reserved. The ACORD name and logo are registered marks of ACORD DocuSign Envelope ID: 2BCFOEEC-OBB2-4AFO-A972-EB3CF9D18F83 AGENCY CUSTOMER ID: ELECCON-05 CTHELEN ----------------~ LOC#: 1 ------- ADDITIONAL REMARKS SCHEDULE AGENCY NAllEDINSURED llllngs Office Elecbical Consultants, Inc. 3521 Gabel Road 1-PO-UCY_N_Ull_BER ___________________ _,Bllllngs, MT 59102-7307 EEPAGE1 NAICCODE EE PAGE 1 SEE p 1 EFFECTIVE DAT£: ADDmONAL REMARKS THIS ADDITIONAL REMARKS FORM IS A SCHEDULE TO ACORD FORM, FORM NUMBER: ACORD 25 FORM TITLE: Certificate of Llabutty Insurance Description of OperatlonsllocatlonsNehlcles: Page 1 of 1 Coverage A Statutory Employers Liability Limits for Polley WC959744506: Each Accident $1,000,000/Dlsease-Each Employee: $1,000,000JDlsease - Polley Limit $1,000,000 Part 3 Other States Included -All except monopolistic and MT Professional Coverage lnfonnation: Clalms~ade Coverage. Deductible Endorsement -Ded per claim including claim expenses $350,0000 Named Insured Includes: Electrical Consultants, Inc., ECI Engineering Services PC, EPC Services Company: Retro Active Date: 09/10/98 Polley Number: AEH114043145 All operations performed by the above Insured. RE: Maybell Electric Substation Protection/Controls Rebuild The City of Palo Alto, Its Council Members, Officers, Agents, and Employees are Additional Insureds per forms listed above. ACORD 101 (2008101) © 2008 ACORD CORPORATION. All rights reserved. The ACORD name and logo are registered marks of ACORD Certificate Of Completion Envelope Id: 2BCF0EEC0BB24AF0A972EB3CF9D18F83 Status: Completed Subject: Please DocuSign: C18167917 Maybell Substation B1.pdf Source Envelope: Document Pages: 35 Signatures: 2 Envelope Originator: Supplemental Document Pages: 0 Initials: 0 Carolynn Bissett Certificate Pages: 2 AutoNav: Enabled EnvelopeId Stamping: Enabled Time Zone: (UTC-08:00) Pacific Time (US & Canada) Payments: 0 250 Hamilton Ave Palo Alto , CA 94301 carolynn.bissett@cityofpaloalto.org IP Address: 12.220.157.20 Record Tracking Status: Original 8/2/2017 4:47:31 PM Holder: Carolynn Bissett carolynn.bissett@cityofpaloalto.org Location: DocuSign Signer Events Signature Timestamp Richard L. McComish dick.mccomish@eciblgs.com President Security Level: Email, Account Authentication (None)Using IP Address: 162.218.100.250 Sent: 8/2/2017 4:51:19 PM Viewed: 8/3/2017 9:38:03 AM Signed: 8/3/2017 9:38:26 AM Electronic Record and Signature Disclosure: Not Offered via DocuSign David R. Maehl dave.maehl@eciblgs.com Vice President Security Level: Email, Account Authentication (None)Using IP Address: 162.218.100.250 Sent: 8/3/2017 9:38:27 AM Viewed: 8/3/2017 11:22:36 AM Signed: 8/3/2017 11:24:39 AM Electronic Record and Signature Disclosure: Not Offered via DocuSign In Person Signer Events Signature Timestamp Editor Delivery Events Status Timestamp Agent Delivery Events Status Timestamp Intermediary Delivery Events Status Timestamp Certified Delivery Events Status Timestamp Carbon Copy Events Status Timestamp Jim Bujtor jim.bujtor@cityofpaloalto.org Security Level: Email, Account Authentication (None) Sent: 8/3/2017 11:24:40 AM Electronic Record and Signature Disclosure: Not Offered via DocuSign Notary Events Signature Timestamp Envelope Summary Events Status Timestamps Envelope Summary Events Status Timestamps Envelope Sent Hashed/Encrypted 8/3/2017 11:24:40 AM Certified Delivered Security Checked 8/3/2017 11:24:40 AM Signing Complete Security Checked 8/3/2017 11:24:40 AM Completed Security Checked 8/3/2017 11:24:40 AM Payment Events Status Timestamps City of Palo Alto (ID # 8317) City Council Staff Report Report Type: Consent Calendar Meeting Date: 8/21/2017 City of Palo Alto Page 1 Summary Title: Resolution Approving Verified Emission Reduction (Carbon Offset) Purchase Agreements Title: Adoption of a Resolution Approving the Standard Form Verified Emission Reduction (VER) (Carbon Offset) Purchase and Sale Agreement and Resolution Authorizing the City Manager to Approve the VER Master Agreements with 3Degrees Group, Inc. and Element Markets, LLC and Authorizing the City Manager to Purchase VERs from 3Degrees Group, Inc. and Element Markets, LLC Under Specified Terms and Conditions During Calendar Years 2017 through 2026, Inclusive, Subject to Limitations From: City Manager Lead Department: Utilities Recommendation Staff recommends that the City Council (Council): 1. Adopt the attached resolution (Attachment A): a. approving the standard form Verified Emission Reduction (VER) Purchase and Sale Agreement (“Standard Form VER Master Agreement”); and b. for all VER Master Agreements, waiving the application of the investment-grade credit rating requirement of section 2.30.340(c) of the Palo Alto Municipal Code, which applies to energy companies that conduct business with the City; 2. Adopt the attached resolution (Attachment B) approving the Verified Emission Reduction Master Agreements (VER Master Agreements) with 3Degrees Group, Inc. and Element Markets, LLC and authorizing the City Manager to purchase VERs from 3Degrees Group, Inc. and Element Markets, LLC under specified terms and conditions during calendar years 2017 through 2026, inclusive, subject to the following limitations: a. The maximum aggregate transaction limit under these Master Agreements shall be $10 million; b. All transactions are subject to the Palo Alto Municipal Code; and c. All transactions are subject to the City’s Energy Risk Management Policy, Guidelines and Procedures; and 3. Delegate to the City Manager, or his designee, the authority to execute on behalf of the City the VER Master Agreements with 3Degrees Group, Inc. and Element Markets, LLC. City of Palo Alto Page 2 Executive Summary To implement the Council-approved Carbon Neutral Natural Gas Plan (Resolution 9649), the City must purchase an annual quantity of carbon offsets (a.k.a. VERs) equal to the greenhouse gas emissions caused by natural gas use by City gas utility customers. Adoption of the attached resolution (Attachment A) will approve the proposed Standard Form VER Master Agreement (Attachment C) which will be made available to all VER suppliers for execution with non-substantive changes. VER Master Agreements with specific suppliers that include maximum expenditures and transaction term limits will be presented to Council for approval. 3Degrees Group, Inc. and Element Markets, LLC have agreed to the terms and conditions of the Standard Form VER Master Agreement. The proposed resolution (Attachment B) authorizes the City Manager to execute those agreements and purchase VERs under the agreements within a maximum expenditure and transaction term limits. The proposed VER Master Agreements with 3Degrees Group, Inc. and Element Markets, LLC are included as Attachments D and E. Background Palo Alto Municipal Code Section 2.30.340 (Contracts for Wholesale Utility Commodities) allows for the use of master agreements to buy and/or sell electricity, gas and related services through various preapproved (“enabled”) suppliers. Contracts or transactions executed under Council-approved master agreements must be done in accordance with the City’s Energy Risk Management Policy, Guidelines and Procedures. On August 15, 2016, Council approved an ordinance modifying the Municipal Code to streamline the purchase and sale of wholesale utility commodities and services and to explicitly allow for a Council-approved standard form master agreement (August 15 City Attorney Report). The ordinance modified Section 2.30.140 clarifying the process to enable suppliers by specifically allowing the use of a standard form master agreement that contains the City’s minimum contract terms and conditions. Execution of standard form master agreements and delegation of authority to transact under the standard form master agreements with specific suppliers is subject to Council approval. This process is used when contracting for natural gas commodity. In December 2016, Council adopted Resolution 9649 approving a Carbon Neutral Natural Gas Plan to achieve carbon neutrality for the gas supply portfolio by FY 2018 using high-quality carbon offsets or VERs with a cost cap of no greater than a 10 ₵/therm. Implementation includes executing contracts to enable the City to purchase VERs. Discussion Maintaining a set of active counterparties is essential to achieving competitive pricing. Once adopted, the Standard Form VER Master Agreement (Attachment A) will be available on the City’s website for potential VER suppliers for execution with non-substantive changes. City of Palo Alto Page 3 City of Palo Alto Municipal Code Section 2.30.340 (c) requires that commodity contracts include the following: (1) governing law shall be the laws of the state of California; (2) choice of venue shall be the county of Santa Clara; and (3) a counterparty shall obtain and maintain during the term of the contract the minimum credit rating established as of the date of award of contract of not less than a BBB- credit rating established by Standard & Poor’s and a Baa3 credit rating established by Moody's Investors Services. The proposed Standard Form VER master Agreement developed in-house includes the first 2 provisions. Since this agreement only covers spot purchases (purchases for immediate or near-term delivery) and there is no credit risk associated with these transactions, the third provision regarding credit worthiness is not included. As such, a waiver for the application of investment-grade credit rating requirement is requested. The City’s energy Risk Management Counterparty Contractual Guidelines require master agreement counterparties to provide audited financial statements of the counterparty or its parent and a contract termination provision that does not provide a defaulting party with any termination payment or settlement amount for any product. Since this agreement only covers spot purchases and, there is no credit risk associated with these transactions, these two provisions are not included. Master Agreements with specific VER suppliers, including maximum expenditures and transaction term limits, must be approved by Council. The following suppliers 3Degrees Group, Inc. and Element Markets, LLC have agreed to the terms and conditions of the Standard Form VER Master Agreement. The proposed resolution (Attachment B) authorizes the City Manager to execute those agreements and purchase VERs under the agreements within a maximum expenditure and transaction term limits. The proposed VER Master Agreements with 3Degrees Group, Inc. and Element Markets, LLC are included as Attachments D and E. All transactions under the VER Master Agreements will be executed in accordance with the Council-approved Energy Risk Management Policy. The anticipated annual cost of carbon offsets is $1.3 M to $3M. Staff recommends a maximum transaction limit of $10 million per counterparty. While this Standard Form VER Master Agreement will be utilized to procure VERs in the near term, staff will continue to explore creative alternatives for the carbon neutral gas portfolio. Two such possibilities include local urban forestry offsets and partnerships with Palo Alto’s sister cities across the globe. To the end, Palo Alto is engaged in discussions regarding potential cooperation around a variety of sustainability initiatives including the potential for the City to purchase offsets from a qualifying project in Oaxaca, Mexico. Resource Impact City of Palo Alto Page 4 Funding for purchase of VERs was included in the FY 2018 budget. Approval of the recommendation will not impact the FY 2018 budget. Policy Implications Adoption of the proposed resolutions conforms to the Council-approved Energy Risk Management Policy and the Palo Alto Municipal Code. Further, the recommendation is consistent with the Council-approved Carbon Neutral Gas Plan, the Gas Utility Long-term Plan and the Utilities Strategic Plan objective to manage supply cost by negotiating supply contracts to minimize financial risk. Environmental Review Council’s adoption of the attached resolution, approving a Standard Form VER Master Agreement, and the attached resolution authorizing the City Manager to approve the VER Master Agreements with 3Degrees Group, Inc. and Element Markets, LLC and authorizing the City Manager to purchase VERs from 3Degrees Group, Inc. and Element Markets, LLC, are not subject to California Environmental Quality Act (CEQA) review as an administrative governmental activity that will not result in any direct or indirect physical change to the environment as a result (CEQA Guidelines 15378(b)(5)). Future CEQA review will occur, if necessary, based on the relevant lead agency’s analysis of any impacts from any offset projects that are developed. Attachments: Attachment A: Resoultion Approving Standard Form Master Agreement for Purchase and Sale of Verified Emission Reductions Attachment B: Resolution Authorizing the City Manager to Purchase a Portion of the City's Verified Emission Reduction Requirements Attachment C: Standard Form VER Purchase Agreement Attachment D: Executed VER Agreement with 3Degrees Group Inc Attachment E: Executed VER Agreement Element Markets LLC 170808 jb 6053990 ATTACHMENT A NOT YET APPROVED Resolution No. Resolution of the Council of the City of Palo Alto Approving a Standard Form Master Agreement for the Purchase and Sale of Verified Emission Reductions RECITALS A. On December 5, 2016, the Council adopted Resolution 9649 approving a Carbon Neutral Natural Gas Plan to achieve a carbon neutral gas portfolio by fiscal year 2018 with no greater than a 10¢/therm rate impact. B. In accordance with the Carbon Neutral Plan, the City must purchase environmental offsets or verified emission reductions equal to the annual emissions from natural gas use by all City of Palo Alto Natural Gas Utility customers. C. By Ordinance 5387 adopted August 15, 2016, Council approved changes to the Municipal Code specifically streamlining the purchase and sale of wholesale utility commodities and services and explicitly allowing for standard form Master Agreements. D. Negotiated Master Agreements with specific verified emission reduction gas suppliers will be recommended to Council for approval with maximum expenditure limits and transaction terms. NOW, THEREFORE, the Council of the City of Palo Alto RESOLVES as follows: SECTION 1. The Council hereby approves that attached standard form Verified Emission Reduction Master Agreement. SECTION 2. The Council waives the application of the investment-grade credit rating requirement of Section 2.30.340© of the Palo alto Municipal Code, which applies to energy companies that do business with the City. // // // // // // 170808 jb 6053990 SECTION 3. Adoption of this Resolution is not subject to California Environmental Quality Act (CEQA) review as an administrative governmental activity that will not result in any direct or indirect physical change to the environment as a result (CEQA Guidelines section 15378(b)(5)). INTRODUCED AND PASSED: AYES: NOES: ABSTENTIONS: ABSENT: ATTEST: City Clerk Mayor APPROVED AS TO FORM: APPROVED: Deputy City Attorney City Manager Director of Administrative Services Director of Utilities 170807 jb 6053991 ATTACHMENT B NOT YET APPROVED Resolution No. Resolution of the Council of the City of Palo Alto Authorizing the City Manager to Purchase a Portion of the City’s Verified Emission Reductions Requirements from 3Degrees Group, Inc. and Element Markets, LLC Under Specified Terms and Conditions during Calendar Years 2017 through 2026, Inclusive RECITALS A. On December 5, 2016, the Council adopted Resolution 9649 approving a Carbon Neutral Natural Gas Plan to achieve a carbon neutral gas portfolio by fiscal year 2018 with no greater than a 10¢/therm rate impact. B. In accordance with the Carbon Neutral Plan, the City must purchase environmental offsets or verified emission reductions equal to the annual emissions from natural gas use by all City of Palo Alto Natural Gas Utility customers. C. By Ordinance 5387 adopted August 15, 2016, Council approved changes to the Municipal Code specifically streamlining the purchase and sale of wholesale utility commodities and services and explicitly allowing for standard form Master Agreements. D. The standard form Verified Emissions Reduction Master Agreement was approved by Council on August ___, 2017. E. The City intends to purchase verified emission reductions from one or more prequalified suppliers from delivery during calendar years 2017 through 2026, inclusive, so long as the supplier with whom the City negotiates a specific purchase transaction continues to be qualified and otherwise eligible to transact with the City. NOW, THEREFORE, the Council of the City of Palo Alto RESOLVES as follows: SECTION 1. The Council hereby authorizes the City Manager or his designee, the Director of Utilities, to purchase a portion of the City’s verified emission reduction requirements from 3Degrees Group, Inc. and Element Markets, LLC by negotiating one or more individual transactions, including, but not limited to, contracts, addenda, confirmations, and transactions. SECTION 2. The purchases negotiated under Section 2 with 3Degrees Group, Inc. and Element Markets, LLC shall not exceed $10 million in aggregate. SECTION 3. Adoption of this Resolution is not subject to California Environmental Quality 170807 jb 6053991 Act review as an administrative governmental activity that will not result in any direct or indirect physical change in the environment as a result (CEQA Guidelines section 15378(b)(5)). INTRODUCED AND PASSED: AYES: NOES: ABSTENTIONS: ABSENT: ATTEST: _____________________________ _____________________________ City Clerk Mayor APPROVED AS TO FORM: APPROVED: _____________________________ ______________________________ Deputy City Attorney City Manager ______________________________ Director of Administrative Services ______________________________ Director of Utilities 1 MASTER AGREEMENT FOR THE PURCHASE AND SALE OF VERIFIED EMISSION REDUCTIONS This Master Agreement for the Purchase and Sale of Verified Emission Reductions (the “Master Agreement”) is made as of this _____ day of __________, 2017 (“Effective Date”), by and between the City of Palo Alto, California, a chartered California municipal corporation with its primary business address at 250 Hamilton Avenue, Palo Alto California 94301 (“City” or “Buyer”) and ____________________, a [insert state of formation] [insert type of entity], with its primary business address at _________________(“Seller”). This Master Agreement, together with any and all Confirmation Letters and other schedules and exhibits related to Verified Emissions Reductions (as defined herein) shall be referred to as the “Agreement”. RECITALS: A. The Parties wish to buy and sell Verified Emission Reductions on the terms set forth in this Master Agreement; B. Buyer wishes to enter into this Master Agreement with Seller to facilitate future Verified Emission Reductions purchases to manage various customer programs administered by the Buyer; C. Seller has access to Verified Emission Reductions and wishes to enter into this Master Agreement with Buyer to participate in the future Verified Emissions Reductions purchases that the City may undertake from time to time; and D. This Master Agreement facilitates, but does not guarantee, Seller’s qualifications to competitively participate with other sellers in future Verified Emission Reductions purchases, and it does not guarantee that the City will enter into any future Verified Emission Reductions purchases with the Seller. NOW, THEREFORE, in consideration of the recitals and the covenants, terms and conditions of this Master Agreement, the Parties agree: AGREEMENT 1.Term and Termination. The term of this Master Agreement shall commence on the Effective Date, as set forth above, and shall remain in effect until terminated by either Party upon thirty (30) days’ prior written notice, subject to the provisions of Section 24, except that any such termination shall not be effective until all payments, deliveries and other obligations of the Parties under this Master Agreement, and any Confirmation Letters executed thereunder, have been completed. 2.Definitions. As used in this Master Agreement, the following terms have the respective meanings set forth below, unless the context otherwise clearly indicates. Other capitalized terms are defined elsewhere in this Master Agreement. “Applicable Law” means all legally binding constitutions, treaties, statutes, laws, ordinances, rules, regulations, orders, interpretations, permits, judgments, decrees, injunctions, ATTACHMENT C 2 writs and orders of any Governmental Authority or arbitrator that apply to the Verified Emission Reductions or any one or both of the Parties or the terms hereof. “ARB” means the California Environmental Protection Agency Air Resources Board, or any successor agency thereto. “Bankrupt” means with respect to any entity, such entity (i) files a petition or otherwise commences, authorizes or acquiesces in the commencement of a proceeding or cause of action under any bankruptcy, insolvency, reorganization or similar law, or has any such petition filed or commenced against it, (ii) makes an assignment or any general arrangement for the benefit of creditors, (iii) otherwise becomes bankrupt or insolvent (however evidenced), (iv) has a liquidator, administrator, receiver, trustee, conservator or similar official appointed with respect to it or any substantial portion of its property or assets, or (v) is generally unable to pay its debts as they fall due. ”Business Day" means any day, except a Saturday, Sunday, or any day observed as a legal holiday by the City. A Business Day shall open at 8:00 a.m. and close at 5:00 p.m. Pacific Standard Time or Pacific Daylight Time, as applicable. "Confidential Information" is defined in Section 12. “Confirmation Letter” or “Confirm” means a written confirmation materially in the form of Exhibit A attached hereto. The Confirmation Letter constitutes part of, and is subject to, the terms and provisions of this Master Agreement. “Contract VERs” means the VERs specified in the Confirmation Letter and relating to the GHG Reductions generated by the Project during the Vintage Year(s). "Delivery" has the meaning specified in Section 3(b). “Delivery Deadline” means three (3) Business Days after the Transaction Date specified in an applicable Confirm. “Effective Date” has the meaning given to such term in the opening paragraph of this Master Agreement. “Force Majeure” is defined in Section 21. “Governmental Authority” means any national, federal, provincial, state, municipal, county, regional or local government, administrative, judicial or regulatory entity operating under any Applicable Law and includes any department, commission, bureau, board, administrative agency or regulatory body of any government. “GHGs” means one or more of the six greenhouse gases listed in Annex A to the Kyoto Protocol of the UNFCCC, as amended from time to time. “GHG Reduction” means the removal, limitation, reduction, avoidance, sequestration or mitigation of anthropogenic GHG emissions. “Party” or “Parties” means Buyer and Seller, individually or collectively, as applicable. “Project” means an emission reduction project that is located in the United States and an “Offset Project” as defined by ARB and of a Project Type approved by ARB and is identified in 3 the applicable Confirmation Letter. “Project Documentation” means documents, data or other information, whether in written or electronic form, produced by Seller or to which Seller has access relating to the Project or the Contract VERs. “Project Type” means U.S. Forest, U.S. Urban Forest, U.S. Livestock, U.S. Sourced and Destroyed Ozone Depleting Substances, U.S Mine Methane Capture, and U.S. Rice Cultivation; or any other Project Type subsequently approved by ARB. “Registry” means either the Climate Action Reserve, the Verified Carbon Standard, or the American Carbon Registry or any successor registry thereto. “Transaction” means a written agreement between the Parties in the form of an applicable Confirmation Letter to undertake one or more Deliveries of Contract VERs, subject to the terms of this Master Agreement. “Transaction Date” means the date the Parties enter into a Transaction as specified on the applicable Confirm. “Unit Price” means the price for Contract VERs set forth in the applicable Confirmation Letter. “VER Payment” means an amount equal to the product of the Unit Price multiplied by the number of Contract VERs Delivered to Buyer in accordance with this Agreement. “Verification”, “Verify” and “Verified” means the determination by a Verification Provider that an emissions reduction meets the requirements of the Registry as evidenced by a Verification Report and unique serial number. “Verified Emission Reduction” or “VER” means one (1) metric tonne of CO2 Equivalent (CO2e) of Verified GHG Reductions generated by the Project. “Verification Provider” means an independent verification provider accredited by a Registry (or such other verification provider proposed by Seller and accepted by Buyer in its sole discretion). “Verification Report” means any written report required by a Registry and prepared by a Verification Provider reviewing and verifying that, in accordance with Project Documentation, Registry Protocols and requirements in effect at the date of its production, the Contract VERs have occurred during the Vintage Year and are eligible for registration in the Registry. “Vintage Year” means, in respect of a Contract VER, the calendar year in which the emissions reductions and removals represented thereby occurred as specified in the applicable Confirmation Letter. 3. Purchase and Sale of Verification Emission Reductions. a. Purchase and Sale. Subject to the terms and conditions of this Master Agreement, Seller agrees to Deliver to Buyer the Contract VERs on the terms specified in an executed Confirmation Letter, a form of which is attached hereto as Exhibit A. 4 Buyer agrees to purchase all such Contract VERs to the extent they are Delivered on or before the specified Delivery Date for such Contract VERs. b. Delivery. Seller shall deliver the Contract VERs to Buyer by the Delivery Deadline. Seller will effect delivery by retiring the Contract VERS on behalf of Buyer in Seller’s Registry account identified in the Confirmation Letter, along with the notation “on behalf of the City of Palo Alto” or similar expression. The Contract VERs will be deemed to be delivered upon Buyer’s receipt of an electronic confirmation from such Registry that the relevant retirement has been completed (“Delivery”, and variations of such term shall have their corresponding meanings.) Title to the Contract VERs will pass from Seller to Buyer upon Delivery. c. Project Documentation. i. Verification Reports. Upon the written request of Buyer, Seller shall deliver to Buyer copies of any Verification Report(s) for the Contract VERs within ten (10) Business Days of such request. ii. Other Project Documentation. Upon the reasonable written request of Buyer, Seller shall provide to Buyer copies of Project Documentation (to the extent that such Project Documentation is made available to Seller) within ten (10) Business Days of such request. 4. Price and Payment. i. Price. Buyer agrees to buy the applicable Contract VERs from Seller at the Unit Price specified in the applicable Confirm for each Contract VER Delivered to Buyer. Seller agrees to pay all Registry fees associated with the issuance and Delivery of the Contract VERs to Buyer. ii. Billing and Terms of Payment. a. Buyer will remit the VER Payment to Seller net thirty (30) days after the date Buyer receives a properly prepared and accurate invoice sent to Buyer’s address for Contract VERs that have been Delivered. Buyer has no obligation to make payment for any Contract VERs that have not been Delivered in accordance with Section 3(b). b. An invoice that is properly prepared shall include at a minimum: i. Seller’s complete name and address where payment is to be remitted; ii. Buyer’s complete name and address where bill is to be sent; 5 iii. The Unit Price; iv. The VER Payment; v. Invoice date; vi. Terms of payment, including any applicable discount calculations; and vii. Tax amount/rate information, if applicable. c. Payment may be made by wire transfer. Payment by check shall be considered made when received by Seller. Wiring instructions: Bank Name: __________________ Bank ABA: __________________ Account Name: __________________ Account Number: __________________ iii. Taxes and Fees. a. Seller will pay all taxes and fees arising prior to Delivery. b. Seller will pay all mandatory taxes and fees arising out of the transactions contemplated by this Agreement levied by a government or other competent public taxing authority on the transfer of the Contract VERs to Buyer, including any sales tax (if applicable). c. Each Party will pay for its own income, property or ad valorem taxes. 5. Events of Default. A Party is in default hereunder if that Party does any of the following (each an “Event of Default”): a. the failure of any Party to make any payment when due if such failure is not remedied within thirty (30) days after receipt of written notice of such failure, provided that if the Buyer, in good faith, disputes all or any portion of the payment, the Buyer shall pay only that portion of the payment that it does not dispute; b. in the case of Seller, if by the applicable Delivery Deadline, Seller fails to Deliver to Buyer any Contract VERs specified on an executed Confirmation Letter and 6 that failure is not remedied within five (5) Business Days of Buyer giving notice of that failure, and such failure is not due to Force Majeure or Buyer’s failure to accept such Contract VERs following proper Delivery; c. any representation or warranty provided by either Party herein that shall prove to have been false or misleading in any material respect when made or repeated; d. the failure by a Party to perform any covenant or agreement set forth in this Master Agreement and applicable Confirmation Letters and incorporated exhibits (other than its obligations to make any payment or obligations which are otherwise specifically covered as a separate Event of Default), and such failure is not cured within fifteen (15) Business Days after written notice thereof to the affected Party; e. the Party becomes Bankrupt; or f. the failure by either Party to comply with any of its material obligations under this Agreement and that failure is not remedied within thirty (30) days of the other Party giving notice of that failure. 6. Remedies for Default. In the event of an Event of Default by either Party, the non-defaulting Party may terminate this Agreement and all of the applicable Confirmation Letters immediately upon written notice to the defaulting Party. Upon a valid termination under this provision, Seller (if the non-defaulting Party) will have no further obligation to Deliver additional Contract VERs to Buyer, and Buyer (if the non- defaulting Party) will have no further obligation to purchase additional Contract VERs under this Agreement, including with respect to any applicable Confirmation Letters that have been entered between the Parties but not yet Delivered. Termination of the Agreement under this provision will not limit in any way any remedies available to the Parties under this Agreement. 7. Representations. a. Representations by Both Parties. Each Party represents and warrants to the other Party that: i. it is a legal entity, duly formed and validly existing and in good standing under the laws of the state of its formation; ii. it has the power and authority to enter into and perform its obligations under this Agreement; iii. by entering into this Agreement, it will not breach the material terms of any contract with a third party; iv. it is not relying upon any representations of the other Party other than those expressly set out in this Agreement; 7 v. it has entered into this Agreement after a full opportunity to review its terms and conditions, has a full understanding of those terms and conditions and or their risks, and is capable of assuming those risks; and vi. this Agreement constitutes a legal, valid and binding obligation on it enforceable in accordance with its terms by appropriate legal remedy. b. Seller’s Representations to Buyer. Seller hereby represents and warrants to Buyer that: i. it has not sold, transferred, assigned, licensed, disposed of or encumbered (nor become legally obligated to do the same) any right, title or interest in the Contract VERs covered by an applicable Confirm to any person other than Buyer and other than as contemplated in this Agreement; ii. Seller conveys the Contract VERs to Buyer free and clear of any liens, encumbrances, claims, security interests, or title defects; iii. it has the right to transfer the Contract VERs covered by an applicable Confirm to Buyer; iv. it has good title to each Contract VER and it obtained and possessed, or will obtain and possess at the time of transfer, the Contract VERs lawfully; v. any Project-related data provided to Buyer is true and correct to the best of Seller’s knowledge, information and belief; vi. each Project agreed to under applicable Confirmation Letters to this Agreement is in substantial compliance with all applicable material laws and regulations, including permit requirements for the operation of such a Project; vii. no authorization, consent, notice to or registration or filing with any governmental authority is required for the execution, delivery and performance by Seller; viii. none of the execution, delivery and performance by Seller conflicts with or will results in a breach or violation of any contract or instrument to which such Seller is a party of is bound; ix. there are no proceedings by or before any governmental authority, now pending or (to the knowledge of Seller) threatened, that if adversely determined could have a material adverse effect on Seller’s ability to perform Seller’s obligations hereunder; x. the Contract VERs covered by an applicable Confirmation Letter have not been used by Seller or any third party to meet any international, federal, state or local requirement, renewable energy procurement, renewable portfolio standard or other mandate; xi. Seller will not offer, sell, transfer, dispose, encumber or otherwise deal in 8 the GHG Reductions associated with the applicable Contract VERs other than as provided herein; xii. the Contract VERs are, and will be at the time of Delivery, validly issued and in force in accordance with the protocols of the Registry specified in the applicable Confirmation Letter; xiii. the Contract VERs are, and will be immediately prior to Delivery, duly registered to Seller in the Registry specified in the applicable Confirmation Letter; xiv. neither the Seller, nor any of its associated or parent organizations or affiliates or its customers, has claimed (or will claim) directly or indirectly, including on any voluntary or mandatory greenhouse gas registry program (including EPA Climate Leaders), any of the Contract VERs to be Delivered under this Agreement or any associated GHG Reductions, carbon reductions, offsets, or benefits as part of its own carbon inventory, footprint, or other carbon statement or declaration as anything other than sold to Buyer. Any such reporting of emissions or emissions reductions shall include as Seller's emissions an amount equal to the VER Quantity and Vintages of the Contract VERs sold hereunder, and indicate their sale to Buyer; xv. the Contract VERs have been Verified by the Verification Provider in a Verification Report for the Vintage Year(s); and xvi. no document or information supplied by Seller in connection with this Agreement contains any untrue statement or omits to state a material fact necessary in order to make such document not misleading. 8. Obligations and Liabilities. a. This Master Agreement sets out the full extent of the Parties’ obligations and liabilities arising out of or in connection with this Master Agreement, and there are no conditions, warranties, representations or terms, express or implied, that are binding on the Parties except as specifically stated in this Master Agreement. Any condition, warranty, representation or other term which might otherwise be implied into or incorporated in this Master Agreement, whether by statute, common law or otherwise, is hereby expressly excluded. b. Save as expressly provided otherwise in this Master Agreement, neither Party will be liable under or in connection with this Master Agreement for any loss of income, loss or profits or loss of contracts, or for any consequential, incidental, punitive, exemplary, or indirect losses or damages in tort (including negligence), contract, or otherwise pursuant to this Section 8, except for any claims indemnified pursuant to Section 9. 9 9. Indemnification a. Indemnification of Buyer: To the fullest extent permitted by Applicable Law, Seller agrees to protect, defend, hold harmless and indemnify Buyer, its City Council, commissioners, officers, employees, volunteers and agents from and against any claim, injury, liability, loss, cost, and/or expense or damage, including all costs and reasonable attorney’s fees in providing a defense to any claim arising therefrom, for which Buyer shall become liable arising from Seller’s acts, errors, or omissions with respect to or in any way pursuant to this Master Agreement and subsequent transactions and related Confirmation Letters, except for claims, liabilities and damages caused by the Buyer’s sole negligence or willful misconduct. b. Indemnification of Seller: To the fullest extent permitted by Applicable Law, Buyer agrees to protect, defend, hold harmless and indemnify Seller, its board of directors, officers, employees, volunteers and agents from and against any claim, injury, liability, loss, cost, and/or expense or damage, including all costs and reasonable attorney’s fees in providing a defense to any claim arising therefrom, for which Seller shall become liable arising from Buyer’s negligent, reckless or wrongful acts, errors, or omissions with respect to or in any way connected with the maintenance, assistance and services performed by Buyer pursuant to this Master Agreement and subsequent and related Confirmation Letters, except for claims, liabilities and damages caused by the Seller’s comparative negligence or willful misconduct. 10. Relationship of the Parties. The relationship of the Parties under this Master Agreement is that of independent contractors. The Parties specifically state their intention that this Master Agreement is not intended to create a partnership or any other co-owned enterprise unless specifically agreed to by the Parties in a separate written instrument. Except as specifically provided herein, each Party shall continue to have the right to contract independent of the other Party with individuals and entities. Each Party shall be responsible for its own operating expenses and personnel expenses. 11. Notices. All notices required or permitted to be given hereunder in writing shall, unless expressly provided otherwise, be in writing, properly addressed, postage pre-paid and delivered by hand, facsimile, certified or registered mail, courier or electronic messaging system to the appropriate address as either Party may designate from time to time by providing notice thereof to the other Party. If to Buyer: If to Seller: 10 250 Hamilton Ave. ______________ Palo Alto, CA 94301 ______________ Attention: City Clerk ______________ Phone: 650-329-2571 ______________ Fax: 650-328-3631 ______________ With a copy to: 250 Hamilton Ave. Palo Alto, CA 94301 Attention: Director of Utilities Phone: 650-329-2277 Fax: 650-329-2154 Notices delivered by facsimile or by an electronic messaging system shall require confirmation through a reply facsimile or electronic message. 12. Confidential Information. a. “Confidential Information” shall mean and include information consisting of documents and materials of a disclosing Party and/or any other technical, financial or business information of or about a disclosing Party which is not available to the general public, as well as all information derived from such information, which is furnished or made available to the other Party and is clearly labeled, marked or otherwise identified as “confidential” or “proprietary information.” b. The disclosing Party is the Party to whom the Confidential Information originally belongs and who shall, after appropriate notice from the receiving Party, bear the burden of pursuing any legal remedies to retain the confidential status of the Confidential Information, as set forth in Section 12(e), below. c. Confidential Information disclosed by either Party to the other shall be held by the receiving Party in confidence, and shall not be: i. used by the recipient to the detriment of the disclosing Party; or ii. made available for third parties to use. d. Each Party will direct its employees, contractors, consultants and representatives who have access to any Confidential Information to comply with all the terms of this Section. Information received by the receiving Party shall not be Confidential Information if: i. it is or becomes available to the public through no wrongful act of the 11 receiving Party; ii. it is already in the possession of the receiving Party and not subject to any confidentially agreement between the Parties; iii. it is received from a third party without restriction for the benefit of the disclosing Party and without breach of this Master Agreement; iv. it is independently developed by the receiving Party; or v. it is disclosed pursuant to a requirement of law or a duly empowered government agency or a court of competent jurisdiction after due notice and an adequate opportunity to intervene is given to the disclosing Party, unless such notice is prohibited. e. Seller acknowledges that City is a public agency and is subject to the requirements of the California Public Records Act Cal. Gov. Code section 6250 et seq. Seller may submit Confidential Information to the City pursuant to Section 12(a), above and the City will maintain such identified documents as confidential to the fullest extent allowed by law. However, upon request or demand from any third person or entity not a party to this Master Agreement (“Requestor”) for production, inspection and/or copying of information designated by a disclosing Party as Confidential Information, the receiving Party shall notify the disclosing Party that such request has been made in accordance with Section 12 of this Master Agreement. Upon receipt of this notice, the disclosing Party shall be solely responsible for taking whatever legal steps may be necessary to protect the information deemed by it to be Confidential Information and to prevent release of information to the Requestor by the receiving Party. If within ten (10) days after receiving the foregoing notice from the receiving Party, the disclosing Party takes no such action, the receiving Party shall be permitted to comply with the Requestor’s demand and is not required to defend against it. f. Upon termination or expiration of this Master Agreement, the receiving Party shall, at the disclosing Party’s direction, either return or destroy all of the disclosing Party’s Confidential Information and so certify in writing. The obligations of this provision will survive for one (1) year after any termination or expiration of this Master Agreement. 13. Publicity and Disclosure. Seller shall not use the name, tradename, trademarks, service marks of or owned by Buyer, or logos of Buyer, or share Confidential Information in any publicity releases, news releases, annual reports, product packaging, signage, stationery, print literature, advertising, websites or other media without securing the prior written approval of Buyer. Seller shall not, without the prior written consent of Buyer, represent, directly or indirectly, that any product or service offered by Seller has been approved or endorsed by Buyer. Seller agrees that Buyer may make oral and written reports and other communications regarding this Master Agreement and subsequent Contract VER Transactions to the Palo Alto City Manager, City Council and other public 12 officials as required by law, which reports and communications will be public reports and communications. 14. Nondiscrimination. As set forth in Palo Alto Municipal Code section 2.30.510, Seller agrees that in the performance of this Master 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. Seller acknowledges that it has read and understands the provisions of Chapter 2.30 of the Palo Alto Municipal Code relating to Nondiscrimination Requirements and the penalties for violation thereof, and agrees to meet all requirements of Chapter 2.30 pertaining to nondiscrimination in employment, including completing the form furnished by Buyer and set forth in Exhibit B. 15. Choice of Law. The laws of the State of California shall be applied and be controlling for all purposes and all matters relating to this Master Agreement. In the event that an action is brought, the Parties agree that trial of such action will be vested exclusively in the United States District Court for the Northern District of California in the County of Santa Clara, State of California. 16. Entire Agreement. This Master Agreement constitutes the entire agreement between the Parties relating to the subject matter hereof and supersedes all prior agreements, understandings, negotiations, whether oral or written, of the Parties. 17. Amendments. Except to the extent herein provided, no amendment, supplement, modification, termination or waiver of this Master Agreement shall be enforceable unless executed in writing by the Party to be bound thereby. 18. Assignment. This Master Agreement is binding on any successors and assigns of the Parties. Neither Party may otherwise transfer or assign this Master Agreement, in whole or in part, without the other Party’s written consent. Such consent shall not be unreasonably withheld, conditioned or delayed. 19. Non-Waiver; No third Party Beneficiaries. 13 No waiver by any Party of any of its rights with respect to the other Party or with respect to this Master Agreement or any matter or default arising in connection with this Master Agreement, shall be construed as a waiver of any other right, matter or default. Any waiver shall be in writing signed by the waiving Party. No payment, partial payment, acceptance or partial acceptance by Buyer will operate as a waiver on the part of the Buyer of any of its rights under the Master Agreement. This Master Agreement and subsequent Confirmation Letters are made and entered into for the sole benefit of the Parties, and their permitted successors and assigns, and no other Person shall be a direct or indirect legal beneficiary of, have any rights under, or have any direct or indirect cause of action or claim in connection with this Master Agreement. 20. Severability. In the event that any provision of the Master Agreement is found to be void or unenforceable, such findings shall not be construed to render any other provision of the Master Agreement either void or unenforceable, and all other provisions shall remain in full force and effect unless the provisions which are void or unenforceable shall substantially affect the rights or obligations granted to or undertaken by either Party. 21. Force Majeure. Neither Seller shall be liable in any respect for failure to Deliver the Contract VERs to Buyer, nor Buyer shall be liable in any respect for failure to accept the Contract VERs from Seller, if such performance is hindered or prevented, directly or indirectly, by an event beyond the reasonable control of either Party, including, without limitation, war, public emergency or calamity, fire, earthquake, Acts of God, strikes, labor disturbance or actions, civil disturbances or riots, litigation brought by third parties against the Parties, or any act of a superior Governmental Authority or court order. Force Majeure may not be based on (i) Seller’s ability to sell the Contract VERs to another at a price greater than the Unit Price specified in the Confirmation Letter, (ii) Buyer’s inability economically to use the Contract VERs, or (iii) Buyer’s ability to purchase Contract VERs at a price less than the Unit Price specified in the Confirmation Letter. 22. Exhibits. The exhibits attached hereto are incorporated into this Master Agreement by reference. The exhibits may only be revised upon mutual written agreement between the Parties unless otherwise specified in the exhibits. 23. Compliance with the Law. Each Party will comply with all lawful federal, state and local law, ordinances, 14 resolutions, rate schedules, rules and regulations that may affect its rights and obligations under the Master Agreement. 24. Fiscal Provisions. The Transactions under this Master Agreement are subject to the fiscal provisions of the Charter of the City of Palo Alto and the Palo Alto Municipal Code. The Master Agreement and all related Confirmation Letters and Agreements will terminate without penalty (i) at the end of any fiscal year in the event that funds are not appropriated for the following fiscal year, or (ii) at any time within a fiscal year in the event that funds are only appropriated for a portion of the fiscal years and funds for the City’s obligations are no longer made available. This provision will take precedence in the event of a conflict with any other term or condition of the Master Agreement or a Confirm. 25. Interpretation. In this Agreement, unless the context requires another meaning, a reference : a. To any document (including this Agreement) is to that document as varied, amended, novated, ratified or replaced from time to time; b. To any Party includes that Party’s executors, administrators, successors and permitted assigns, including any person taking by way of novation and, in the case of a trustee, includes any substituted or additional trustee; c. To the singular includes the plural and vice versa, and to a gender includes all genders; d. To the Sections are inserted for convenience of reference only and do not affect the interpretation of this Agreement; e. To a Confirmation Letter is to the active Confirmation Letter; and f. If there is any conflict between the provisions of an applicable Confirmation Letter and any other provisions of this Master Agreement, if it has been signed by both Parties, the terms of that Confirmation Letter will prevail. IN WITNESS WHEREOF, each of the Parties hereto acknowledge that they have read the terms and conditions contained herein, understand and agree to the same and agree to be bound thereby and have caused this Master Agreement to be executed in duplicate originals by its duly authorized representative on the respective dates entered below. 15 CITY OF PALO ALTO (“BUYER”) __________________________ City Manager APPROVED AS TO FORM: __________________________ Counsel to the City of Palo Alto APPROVED: __________________________ Director of Administrative Services __________________________ Director of Utilities XXXX (“SELLER”) By: __________________________ Name: Title: Taxpayer Identification No. 16 EXHIBIT A VERIFIED EMISSION REDUCTIONS CONFIRMATION LETTER PRO FORMA The following describes a Transaction between Buyer and Seller for the sale, purchase and delivery of Contract VERs pursuant to the terms and conditions of the Verified Emission Reductions Purchase and Sale Agreement (“Master Agreement”) between the City of Palo Alto and dated , 20 . Initially capitalized terms used and not otherwise defined herein are defined in the Master Agreement. Basic Commercial Terms: Transaction Date: Seller: Buyer: City of Palo Alto Product: VERs Registry: Project Name and Registry ID: Project Location: Vintage Year(s): Quantity of Contract VERs: Unit Price ($/VER): VER Payment ($): This Confirmation Letter is executed pursuant to and in accordance with the Master Agreement, and constitutes part of and is subject to the terms and provisions of the Master Agreement. The Parties agree to the Transaction set forth herein. City of Palo Alto (“Buyer”) XXX (“Seller”) Signature Signature Name Name Title Title Date Date 17 EXHIBIT B CERTIFICATION OF NONDISCRIMINATION As suppliers of goods or services to the City of Palo Alto, the firm and individuals listed below certify that they do not and will not during the course of this Agreement discriminate in the employment of any person because of the race, skin color, gender, gender identity, age, religion, disability, national origin, ancestry, sexual orientation, pregnancy, genetic information or condition, housing status, marital status, familial status, weight or height of such person and that they are in compliance with all Federal, State and local directives and executive orders regarding nondiscrimination in employment. THE INFORMATION HEREIN IS CERTIFIED CORRECT BY SIGNATURE(S) BELOW. Authorized Signature:____________________________________________________ Date: _____________________ MASTER AGREEMENT FOR THE PURCHASE AND SALE OF VERIFIED EMISSION REDUCTIONS This Master Agreement for the Purchase and Sale of Verified Emission Reductions (the "Master Agreement") is made as of this __ day of , 2017 ("Effective Date"), by and between the City of Palo Alto, California, a chartered California municipal corporation with its primary business address at 250 Hamilton Avenue, Palo Alto California 94301 ("City" or "Buyer") and 3Degrees Group, Inc., a California Corporation, with its primary business address at 407 Sansome Street, 4th Floor, San Francisco, CA 94111 ("Seller"). This Master Agreement, together with any and all Confirmation Letters and other schedules and exhibits related to Verified Emissions Reductions (as defined herein) shall be referred to as the "Agreement". RECITALS: A. The Parties wish to buy and sell Verified Emission Reductions on the terms set forth in this Master Agreement; B. Buyer wishes to enter into this Master Agreement with Seller to facilitate future Verified Emission Reductions purchases to manage various customer programs administered by the Buyer; C. Seller has access to Verified Emission Reductions and wishes to enter into this Master Agreement with Buyer to participate in the future Verified Emissions Reductions purchases that the City may undertake from time to time; and D. This Master Agreement facilitates, but does not guarantee, Seller's qualifications to competitively participate with other sellers in future Verified Emission Reductions purchases, and it does not guarantee that the City will enter into any future Verified Emission Reductions purchases with the Seller. NOW, THEREFORE, in consideration of the recitals and the covenants, terms and conditions of this Master Agreement, the Parties agree: AGREEMENT 1. Term and Termination. The term of this Master Agreement shall commence on the Effective Date, as set forth above, and shall remain in effect until terminated by either Party upon thirty (30) days' prior written notice, subject to the provisions of Section 24, except that any such termination shall not be effective until all payments, deliveries and other obligations of the Parties under this Master Agreement, and any Confirmation Letters executed thereunder, have been completed. 2. Defmitions. As used in this Master Agreement, the following terms have the respective meanings set forth below, unless the context otherwise clearly indicates. Other capitalized terms are defined elsewhere in this Master Agreement. "Applicable Law" means all legally binding constitutions, treaties, statutes, laws, ATTACHMENT D ordinances, rules, regulations, orders, interpretations, pennits, judgments, decrees, injunctions, writs and orders of any Governmental Authority or arbitrator that apply to the Verified Emission Reductions or any one or both of the Parties or the terms hereof. "ARB" means the California Environmental Protection Agency Air Resources Board, or any successor agency thereto. "Bankrupt" means with respect to any entity, such entity (i) files a petition or otherwise commences, authorizes or acquiesces in the commencement of a proceeding or cause of action under any bankruptcy, insolvency, reorganization or similar law, or has any such petition filed or commenced against it, (ii) makes an assignment or any general arrangement for the benefit of creditors, (iii) otherwise becomes bankrupt or insolvent (however evidenced), (iv) has a liquidator, administrator, receiver, trustee, conservator or similar official appointed with respect to it or any substantial portion of its property or assets, or (v) is generally unable to pay its debts as they fall due. "Business Day" means any day, except a Saturday, Sunday, or any day observed as a legal holiday by the City. A Business Day shall open at 8:00 a.m. and close at 5:00 p.m. Pacific Standard Time or Pacific Daylight Time, as applicable. "Confidential Information" is defined in Section 12. "Conf1rmation Letter" or "Confirm" means a written confirmation materially in the form of Exhibit A attached hereto. The Confirmation Letter constitutes part of, and is subject to, the terms and provisions of this Master Agreement. "Contract VERs" means the VERs specified in the Confirmation Letter and relating to the GHG Reductions generated by the Project during the Vintage Year(s). "Delivery" has the meaning specified in Section 3(b ). "Delivery Deadline" means three (3) Business Days after the Transaction Date specified in an applicable Confirm. "Effective Date" has the meaning given to such tenn in the opening paragraph of this Master Agreement. "Force Majeure" is defined in Section 21. "Governmental Authority" means any national, federal, provincial, state, municipal, county, regional or local government, administrative, judicial or regulatory entity operating under any Applicable Law and includes any department, commission, bureau, board, administrative agency or regulatory body of any government. "GHGs" means one or more of the six greenhouse gases listed in Annex A to the Kyoto Protocol of the UNFCCC, as amended from time to time. "GHG Reduction" means the removal, limitation, reduction, avoidance, sequestration or mitigation of anthropogenic GHG emissions. "Party" or "Parties" means Buyer and Seller, individually or collectively, as applicable. "Project" means an emission reduction project that is located in the United States and an 2 "Offset Project" as defined by ARB and of a Project Type approved by ARB and is identified in the applicable Confirmation Letter. "Project Documentation" means documents, data or other information, whether in written or electronic form, produced by Seller or to which Seller has access relating to the Project or the Contract VERs. "Project Type" means U.S. Forest, U.S. Urban Forest, U.S. Livestock, U.S. Sourced and Destroyed Ozone Depleting Substances, U.S Mine Methane Capture, and U.S. Rice Cultivation; or any other Project Type subsequently approved by ARB. "Registry" means either the Climate Action Reserve, the Verified Carbon Standard, or the American Carbon Registry or any successor registry thereto. "Transaction" means a written agreement between the Parties in the form of an applicable Confirmation Letter to undertake one or more Deliveries of Contract VERs, subject to the terms ofthis Master Agreement. "Transaction Date" means the date the Parties enter into a Transaction as specified on the applicable Confirm. "Unit Price" means the price for Contract VERs set forth in the applicable Confirmation Letter. "VER Payment" means an amount equal to the product of the Unit Price multiplied by the number of Contract VERs Delivered to Buyer in accordance with this Agreement. "Verification", "Verify" and "Verified" means the determination by a Verification Provider that an emissions reduction meets the requirements of the Registry as evidenced by a Verification Report and unique serial number. "Verified Emission Reduction" or "VER" means one (1) metric tonne of C02 Equivalent (C02e) of Verified GHG Reductions generated by the Project. "Verification Provider" means an independent verification provider accredited by a Registry (or such other verification provider proposed by Seller and accepted by Buyer in its sole discretion). "Verification Report" means any written report required by a Registry and prepared by a Verification Provider reviewing and verifying that, in accordance with Project Documentation, Registry Protocols and requirements in effect at the date of its production, the Contract VERs have occurred during the Vintage Year and are eligible for registration in the Registry. "Vintage Year" means, in respect of a Contract VER, the calendar year in which the emissions reductions and removals represented thereby occurred as specified in the applicable Confirmation Letter. 3. Purchase and Sale of Verification Emission Reductions. a. Purchase and Sale. Subject to the terms and conditions ofthis Master Agreement, Seller agrees to Deliver to Buyer the Contract VERs on the terms specified in an 3 executed Confirmation Letter, a form of which is attached hereto as Exhibit A. Buyer agrees to purchase all such Contract VERs to the extent they are Delivered on or before the specified Delivery Date for such Contract VERs. b. Delivery. Seller shall deliver the Contract VERs to Buyer by the Delivery Deadline. Seller will effect delivery by retiring the Contract VERS on behalf of Buyer in Seller's Registry account identified in the Confirmation Letter, along with the notation "on behalf of the City of Palo Alto" or similar expression. The Contract VERs will be deemed to be delivered upon Buyer's receipt of an electronic confirmation from such Registry that the relevant retirement has been completed ("Delivery", and variations of such term shall have their corresponding meanings.) Title to the Contract VERs will pass from Seller to Buyer upon Delivery. c. Project Documentation. 1. Verification Reports. Upon the written request of Buyer, Seller shall deliver to Buyer copies of any Verification Report(s) for the Contract VERs within ten (10) Business Days of such request. u. Other Project Documentation. Upon the reasonable written request of Buyer, Seller shall provide to Buyer copies of Project Documentation (to the extent that such Project Documentation is made available to Seller) within ten (10) Business Days of such request. 4. Price and Payment. i. Price. Buyer agrees to buy the applicable Contract VERs from Seller at the Unit Price specified in the applicable Confirm for each Contract VER Delivered to Buyer. Seller agrees to pay all Registry fees associated with the issuance and Delivery of the Contract VERs to Buyer. 11. Billing and Terms of Payment. a. Buyer will remit the VER Payment to Seller net thirty (30) days after the date Buyer receives a properly prepared and accurate invoice sent to Buyer's address for Contract VERs that have been Delivered. Buyer has no obligation to make payment for any Contract VERs that have not been Delivered in accordance with Section 3(b ). b. An invoice that is properly prepared shall include at a minimum: i. Seller's complete name and address where payment is to be remitted; u. Buyer's complete name and address where bill is to be 4 sent; 111. The Unit Price; iv. The VER Payment; v. Invoice date; vi. Terms of payment, including any applicable discount calculations; and vn. Tax amount/rate information, if applicable. c. Payment may be made by wire transfer. Payment by check shall be considered made when received by Seller. Wiring instructions: Bank Name: California Bank of Commerce Bank ABA: 121 144 696 Account Name: ~ccount Number: 3Degrees Group, Inc. 1043868 iii. Taxes and Fees. 5. Events of Default. a. Seller will pay all taxes and fees arising prior to Delivery. b. Seller will pay all mandatory taxes and fees arising out of the transactions contemplated by this Agreement levied by a government or other competent public taxing authority on the transfer of the Contract VERs to Buyer, including any sales tax (if applicable). c. Each Party will pay for its own income, property or ad valorem taxes. A Party is in default hereunder if that Party does any of the following (each an "Event of Default"): a. the failure of any Party to make any payment when due if such failure is not remedied within thirty (30) days after receipt of written notice of such failure, provided that if the Buyer, in good faith, disputes all or any portion of the payment, the Buyer shall pay only that portion of the payment that it does not dispute; b. in the case of Seller, if by the applicable Delivery Deadline, Seller fails to Deliver to Buyer any Contract VERs specified on an executed Confirmation Letter and 5 that failure is not remedied within five (5) Business Days of Buyer giving notice of that failure, and such failure is not due to Force Majeure or Buyer's failure to accept such Contract VERs following proper Delivery; c. any representation or warranty provided by either Party herein that shall prove to have been false or misleading in any material respect when made or repeated; d. the failure by a Party to perform any covenant or agreement set forth in this Master Agreement and applicable Confirmation Letters and incorporated exhibits (other than its obligations to make any payment or obligations which are otherwise specifically covered as a separate Event of Default), and such failure is not cured within fifteen (15) Business Days after written notice thereof to the affected Party; e. the Party becomes Bankrupt; or f. the failure by either Party to comply with any of its material obligations under this Agreement and that failure is not remedied within thirty (30) days of the other Party giving notice of that failure. 6. Remedies for Default. In the event of an Event of Default by either Party, the non-defaulting Party may terminate this Agreement and all of the applicable Confirmation Letters immediately upon written notice to the defaulting Party. Upon a valid termination under this provision, Seller (if the non-defaulting Party) will have no further obligation to Deliver additional Contract VERs to Buyer, and Buyer (if the non- defaulting Party) will have no further obligation to purchase additional Contract VERs under this Agreement, including with respect to any applicable Confirmation Letters that have been entered between the Parties but not yet Delivered. Termination of the Agreement under this provision will not limit in any way any remedies available to the Parties under this Agreement. 7. Representations. a. Representations by Both Parties. Each Party represents and warrants to the other Party that: 1. it is a legal entity, duly formed and validly existing and in good standing under the laws of the state of its formation; ii. it has the power and authority to enter into and perform its obligations under this Agreement; 111. by entering into this Agreement, it will not breach the material terms of any contract with a third party; iv. it is not relying upon any representations of the other Party other than those expressly set out in this Agreement; 6 v. it has entered into this Agreement after a full opportunity to review its tenns and conditions, has a full understanding of those terms and conditions and or their risks, and is capable of assuming those risks; and v1. this Agreement constitutes a legal, valid and binding obligation on it enforceable in accordance with its terms by appropriate legal remedy. b. Seller's Representations to Buyer. Seller hereby represents and warrants to Buyer that: 1. it has not sold, transferred, assigned, licensed, disposed of or encumbered (nor become legally obligated to do the same) any right, title or interest in the Contract VERs covered by an applicable Confirm to any person other than Buyer and other than as contemplated in this Agreement; ii. Seller conveys the Contract VERs to Buyer free and clear of any liens, encumbrances, claims, security interests, or title defects; ni. it has the right to transfer the Contract VERs covered by an applicable Confirm to Buyer; iv. it has good title to each Contract VER and it obtained and possessed, or will obtain and possess at the time of transfer, the Contract VERs lawfully; v. any Project-related data provided to Buyer is true and correct to the best of Seller's knowledge, information and belief; vi. each Project agreed to under applicable Confirmation Letters to this Agreement is in substantial compliance with all applicable material laws and regulations, including permit requirements for the operation of such a Project; vii. no authorization, consent, notice to or registration or filing with any governmental authority is required for the execution, delivery and performance by Seller; viii. none of the execution, delivery and performance by Seller conflicts with or will results in a breach or violation of any contract or instrument to which such Seller is a party of is bound; ix. there are no proceedings by or before any governmental authority, now pending or (to the knowledge of Seller) threatened, that if adversely detennined could have a material adverse effect on Seller's ability to perform Seller's obligations hereunder; x. the Contract VERs covered by an applicable Confirmation Letter have not been used by Seller or any third party to meet any international, federal, state or local requirement, renewable energy procurement, renewable portfolio standard or other mandate; xi. Seller will not offer, sell, transfer, dispose, encumber or otherwise deal in 7 the GHG Reductions associated with the applicable Contract VERs other than as provided herein; xii. the Contract VERs are, and will be at the time of Delivery, validly issued and in force in accordance with the protocols of the Registry specified in the applicable Confirmation Letter; xiii. the Contract VERs are, and will be immediately prior to Delivery, duly registered to Seller in the Registry specified in the applicable Confirmation Letter; xiv. neither the Seller, nor any of its associated or parent organizations or affiliates or its customers, has claimed (or will claim) directly or indirectly, including on any voluntary or mandatory greenhouse gas registry program (including EPA Climate Leaders), any of the Contract VERs to be Delivered under this Agreement or any associated GHG Reductions, carbon reductions, offsets, or benefits as part of its own carbon inventory, footprint, or other carbon statement or declaration as anything other than sold to Buyer. Any such reporting of emissions or emissions reductions shall include as Seller's emissions an amount equal to the VER Quantity and Vintages of the Contract VERs sold hereunder, and indicate their sale to Buyer; xv. the Contract VERs have been Verified by the Verification Provider in a Verification Report for the Vintage Year(s); and xvi. no document or information supplied by Seller in connection with this Agreement contains any untrue statement or omits to state a material fact necessary in order to make such document not misleading. 8. Obligations and Liabilities. a. This Master Agreement sets out the full extent of the Parties' obligations and liabilities arising out of or in connection with this Master Agreement, and there are no conditions, warranties, representations or terms, express or implied, that are binding on the Parties except as specifically stated in this Master Agreement. Any condition, warranty, representation or other term which might otherwise be implied into or incorporated in this Master Agreement, whether by statute, common law or otherwise, is hereby expressly excluded. b. Save as expressly provided otherwise in this Master Agreement, neither Party will be liable under or in connection with this Master Agreement for any loss of income, loss or profits or loss of contracts, or for any consequential, incidental, punitive, exemplary, or indirect losses or damages in tort (including negligence), contract, or otherwise pursuant to this Section 8, except for any claims indemnified pursuant to Section 9. 8 9. Indemnification a. Indemnification of Buyer: To the fullest extent pennitted by Applicable Law, Seller agrees to protect, defend, hold harmless and indemnify Buyer, its City Council, commissioners, officers, employees, volunteers and agents from and against any claim, injury, liability, loss, cost, and/or expense or damage, including all costs and reasonable attorney's fees in providing a defense to any claim arising therefrom, for which Buyer shall become liable arising from Seller's acts, errors, or omissions with respect to or in any way pursuant to this Master Agreement and subsequent transactions and related Confirmation Letters, except for claims, liabilities and damages caused by the Buyer's sole negligence or willful misconduct. b. Indemnification of Seller: To the fullest extent permitted by Applicable Law, Buyer agrees to protect, defend, hold harmless and indemnify Seller, its board of directors, officers, employees, volunteers and agents from and against any claim, injury, liability, loss, cost, and/or expense or damage, including all costs and reasonable attorney's fees in providing a defense to any claim arising therefrom, for which Seller shall become liable arising from Buyer's negligent, reckless or wrongful acts, errors, or omissions with respect to or in any way connected with the maintenance, assistance and services perfonned by Buyer pursuant to this Master Agreement and subsequent and related Confirmation Letters, except for claims, liabilities and damages caused by the Seller's comparative negligence or willful misconduct. 10. Relationship of the Parties. The relationship of the Parties under this Master Agreement is that of independent contractors. The Parties specifically state their intention that this Master Agreement is not intended to create a partnership or any other co-owned enterprise unless specifically agreed to by the Parties in a separate written instrument. Except as specifically provided herein, each Party shall continue to have the right to contract independent of the other Party with individuals and entities. Each Party shall be responsible for its own operating expenses and personnel expenses. 11. Notices. All notices required or pennitted to be given hereunder in writing shall, unless expressly provided otherwise, be in writing, properly addressed, postage pre-paid and delivered by hand, facsimile, certified or registered mail, courier or electronic messaging system to the appropriate address as either Party may designate from time to time by providing notice thereof to the other Party. Jfto Buyer: If to Seller: 9 250 Hamilton Ave. Palo Alto, CA 94301 Attention: City Clerk Phone: 650-329-2571 Fax: 650-328-3631 With a copy to: 250 Hamilton Ave. Palo Alto, CA 94301 Attention: Director of Utilities Phone:650-329-2277 Fax: 650-329-2154 407 Sansome Street 4th Fl. San Francisco, CA 94111 Attn: Trade Operations Phone: 415-308-5214 Fax: 415-680-1561 With a copy to: Email: Settlements@3degreesinc.com Notices delivered by facsimile or by an electronic messaging system shall require confirmation through a reply facsimile or electronic message. 12. Confidential Information. a. "Confidential Information" shall mean and include information consisting of documents and materials of a disclosing Party and/or any other technical, financial or business information of or about a disclosing Party which is not available to the general public, as well as all information derived from such information, which is furnished or made available to the other Party and is clearly labeled, marked or otherwise identified as "confidential" or "proprietary information." b. The disclosing Party is the Party to whom the Confidential Information originally belongs and who shall, after appropriate notice from the receiving Party, bear the burden of pursuing any legal remedies to retain the confidential status of the Confidential Information, as set forth in Section 12( e ), below. c. Confidential Information disclosed by either Party to the other shall be held by the receiving Party in confidence, and shall not be: i. used by the recipient to the detriment of the disclosing Party; or ii. made available for third parties to use. d. Each Party will direct its employees, contractors, consultants and representatives who have access to any Confidential Information to comply with all the terms of this Section. Information received by the receiving Party shall not be Confidential Information if: i. it is or becomes available to the public through no wrongful act of the 10 receiving Party; 11. it is already in the possession of the receiving Party and not subject to any confidentially agreement between the Parties; 111. it is received from a third party without restriction for the benefit of the disclosing Party and without breach of this Master Agreement; iv. it is independently developed by the receiving Party; or v. it is disclosed pursuant to a requirement oflaw or a duly empowered government agency or a court of competent jurisdiction after due notice and an adequate opportunity to intervene is given to the disclosing Party, unless such notice is prohibited. e. Seller acknowledges that City is a public agency and is subject to the requirements of the California Public Records Act Cal. Gov. Code section 6250 et seq. Seller may submit Confidential Information to the City pursuant to Section 12(a), above and the City will maintain such identified documents as confidential to the fullest extent allowed by law. However, upon request or demand from any third person or entity not a party to this Master Agreement ("Requestor") for production, inspection and/or copying of information designated by a disclosing Party as Confidential Information, the receiving Party shall notify the disclosing Party that such request has been made in accordance with Section 12 of this Master Agreement. Upon receipt of this notice, the disclosing Party shall be solely responsible for taking whatever legal steps may be necessary to protect the information deemed by it to be Confidential Information and to prevent release of information to the Requestor by the receiving Party. If within ten ( 10) days after receiving the foregoing notice from the receiving Party, the disclosing Party takes no such action, the receiving Party shall be permitted to comply with the Requester's demand and is not required to defend against it. f. Upon termination or expiration of this Master Agreement, the receiving Party shall, at the disclosing Party's direction, either return or destroy all of the disclosing Party's Confidential Information and so certify in writing. The obligations of this provision will survive for one (1) year after any termination or expiration of this Master Agreement. 13. Publicity and Disclosure. Seller shall not use the name, tradename, trademarks, service marks of or owned by Buyer, or logos of Buyer, or share Confidential Information in any publicity releases, news releases, annual reports, product packaging, signage, stationery, print literature, advertising, websites or other media without securing the prior written approval of Buyer. Seller shall not, without the prior written consent of Buyer, represent, directly or indirectly, that any product or service offered by Seller has been approved or endorsed by Buyer. Seller agrees that Buyer may make oral and written reports and other communications regarding this Master Agreement and subsequent Contract VER Transactions to the Palo Alto City Manager, City Council and other public 11 officials as required by law, which reports and communications will be public reports and communications. 14. Nondiscrimination. As set forth in Palo Alto Municipal Code section 2.30.510, Seller agrees that in the performance of this Master 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. Seller acknowledges that it has read and understands the provisions of Chapter 2.30 of the Palo Alto Municipal Code relating to Nondiscrimination Requirements and the penalties for violation thereof, and agrees to meet all requirements of Chapter 2.30 pertaining to nondiscrimination in employment, including completing the form furnished by Buyer and set forth in Exhibit B. 15. Choice of Law. The laws of the State of California shall be applied and be controlling for all purposes and all matters relating to this Master Agreement. In the event that an action is brought, the Parties agree that trial of such action will be vested exclusively in the United States District Court for the Northern District of California in the County of Santa Clara, State of California. 16. Entire Agreement. This Master Agreement constitutes the entire agreement between the Parties relating to the subject matter hereof and supersedes all prior agreements, understandings, negotiations, whether oral or written, of the Parties. 17. Amendments. Except to the extent herein provided, no amendment, supplement, modification, termination or waiver of this Master Agreement shall be enforceable unless executed in writing by the Party to be bound thereby. 18. Assignment. This Master Agreement is binding on any successors and assigns of the Parties. Neither Party may otherwise transfer or assign this Master Agreement, in whole or in part, without the other Party's written consent. Such consent shall not be unreasonably withheld, conditioned or delayed. 19. Non-Waiver; No third Party Beneficiaries. 12 No waiver by any Party of any of its rights with respect to the other Party or with respect to this Master Agreement or any matter or default arising in connection with this Master Agreement, shall be construed as a waiver of any other right, matter or default. Any waiver shall be in writing signed by the waiving Party. No payment, partial payment, acceptance or partial acceptance by Buyer will operate as a· waiver on the part of the Buyer of any of its rights under the Master Agreement. This Master Agreement and subsequent Confirmation Letters are made and entered into for the sole benefit of the Parties, and their permitted successors and assigns, and no other Person shall be a direct or indirect legal beneficiary of, have any rights under, or have any direct or indirect cause of action or claim in connection with this Master Agreement. 20. Severability. In the event that any provision of the Master Agreement is found to be void or unenforceable, such findings shall not be construed to render any other provision of the Master Agreement either void or unenforceable, and all other provisions shall remain in full force and effect unless the provisions which are void or unenforceable shall substantially affect the rights or obligations granted to or undertaken by either Party. 21. Force Majeure. Neither Seller shall be liable in any respect for failure to Deliver the Contract VERs to Buyer, nor Buyer shall be liable in any respect for failure to accept the Contract VERs from Seller, if such performance is hindered or prevented, directly or indirectly, by an event beyond the reasonable control of either Party, including, without limitation, war, public emergency or calamity, fire, earthquake, Acts of God, strikes, labor disturbance or actions, civil disturbances or riots, litigation brought by third parties against the Parties, or any act of a superior Governmental Authority or court order. Force Majeure may not be based on (i) Seller's ability to sell the Contract VERs to another at a price greater than the Unit Price specified in the Confirmation Letter, (ii) Buyer's inability economically to use the Contract VERs, or (iii) Buyer's ability to purchase Contract VERs at a price less than the Unit Price specified in the Confirmation Letter. 22. Exhibits. The exhibits attached hereto are incorporated into this Master Agreement by reference. The exhibits may only be revised upon mutual written agreement between the Parties unless otherwise specified in the exhibits. 23. Compliance with the Law. Each Party will comply with all lawful federal, state and local law, ordinances, 13 resolutions, rate schedules, rules and regulations that may affect its rights and obligations under the Master Agreement. 24. Fiscal Provisions. The Transactions under this Master Agreement are subject to the fiscal provisions of the Charter of the City of Palo Alto and the Palo Alto Municipal Code. The Master Agreement and all related Confirmation Letters and Agreements will terminate without penalty (i) at the end of any fiscal year in the event that funds are not appropriated for the following fiscal year, or (ii) at any time within a fiscal year in the event that funds are only appropriated for a portion of the fiscal years and funds for the City's obligations are no longer made available. This provision will take precedence in the event of a conflict with any other term or condition of the Master Agreement or a Confirm. 25. Interpretation. In this Agreement, unless the context requires another meaning, a reference : a. To any document (including this Agreement) is to that document as varied, amended, novated, ratified or replaced from time to time; b. To any Party includes that Party's executors, administrators, successors and permitted assigns, including any person taking by way ofnovation and, in the case of a trustee, includes any substituted or additional trustee; c. To the singular includes the plural and vice versa, and to a gender includes all genders; d. To the Sections are inserted for convenience ofreference only and do not affect the interpretation of this Agreement; e. To a Confirmation Letter is to the active Confirmation Letter; and f. If there is any conflict between the provisions of an applicable Confirmation Letter and any other provisions of this Master Agreement, ifit has been signed by both Parties, the terms of that Confirmation Letter will prevail. IN WITNESS WHEREOF, each of the Parties hereto acknowledge that they have read the terms and conditions contained herein, understand and agree to the same and agree to be bound thereby and have caused this Master Agreement to be executed in duplicate originals by its duly authorized representative on the respective dates entered below. 14 CITY OF PALO ALTO ("BUYER") City Manager APPROVED AS TO FORM: Counsel to the City of Palo Alto APPROVED: Director of Administrative Services Director of Utilities 15 JDEGREES GROUP, INC. ("SELLER") 1 ay~An.::N! Name: DARREN KAROPCZYC Title: Dirttto1; Trade Operation.s J~es Group, Inc. Taxpayer Identification No. 208-434582 EXHIBIT A VERIFIED EMISSION REDUCTIONS CONFIRMATION LETTER PROFORMA The following describes a Transaction between Buyer and Seller for the sale, purchase and delivery of Contract VERs pursuant to the terms and conditions of the Verified Emission Reductions Purchase and Sale Agreement ("Master Agreement") between the City of Palo Alto and dated __ , 20_. Initially capitalized terms used and not otherwise defined herein are defined in the Master Agreement. Basic Commercial Terms: Transaction Date: Seller: Buyer: City of Palo Alto Product: VE Rs Registry: Project Name and Recistrv ID: Project Location: Vinta~e Year(s): Quantity of Contract VERs: Unit Price ($NER): VER Payment ($): This Confirmation Letter is executed pursuant to and in accordance with the Master Agreement, and constitutes part of and is subject to the terms and provisions of the Master Agreement~ The Parties agree to the Transaction set forth herein. City of Palo Alto ("Buyer") 3De2rees Group, Inc. ("Seller") Signature Signature Name Name Title Title Date Date 16 EXHIBITB CERTIFICATION OF NONDISCRIMINATION As suppliers of goods or services to the City of Palo Alto, the firm and individuals listed below certify that they do not and will not during the course of this Agreement discriminate in the employment of any person because of the race, skin color, gender, gender identity, age, religion, disability, national origin, ancestry, sexual orientation, pregnancy, genetic information or condition, housing status, marital status, familial status, weight or height of such person and that they are in compliance with all Federal, State and local directives and executive orders regarding nondiscrimination in employment. THE INFORMATION HEREIN IS CERTIFIED CORRECT BY SIGNATURE(S) BELOW. Authorized Signature: _____________________ _ Date: --------~ 17 ATTACHMENT E City of Palo Alto (ID # 8249) City Council Staff Report Report Type: Consent Calendar Meeting Date: 8/21/2017 City of Palo Alto Page 1 Summary Title: SUMC Annual Report 2015-2016 Title: Accept the Stanford University Medical Center (SUMC) Annual Report for Fiscal Year 2015-2016 and Find the SUMC Parties in Compliance With the Development Agreement From: City Manager Lead Department: Planning and Community Environment Recommendation Staff recommends that the City Council: 1. Review the Stanford University Medical Center (SUMC) Annual Report for Fiscal Year 2015-2016 and find that the Parties (Stanford Hospitals & Clinics, Lucile Packard Children’s Hospital, and Stanford University) have complied in good faith with the terms and conditions of the Development Agreement ; and 2. Find that the SUMC Parties are not in default with the terms and conditions of the Agreement. 3. Accept the City of Palo Alto’s (City) Annual Report Supplement regarding the funds received by the SUMC Parties as required under Section 12(d) of the Development Agreement. (Attachment C.) Executive Summary The City Council is required to review the Development Agreement between the SUMC Parties and the City of Palo Alto on an annual basis to ascertain compliance with the terms of the agreement. The SUMC Parties have submitted the annual report for the FY 2015-2016 period summarizing construction activities and other actions taken to fulfill the obligations of the Agreement. Of particular note, the SUMC has achieved a 31.9% alternative transportation mode split which exceeds the Alternative Mode Share target of 30.0% for 2018. Also, as described in the supplement to the annual report, which is prepared by City staff, the SUMC Parties have paid approximately $32.5 million in public benefit fees to the City since June 6, 2011, although there were no required payments from Stanford during this reporting period. During the FY 2015-2016 reporting period, the City Council reviewed and approved use of funding for the Quarry Road Improvements discussed in Development Agreement Section City of Palo Alto Page 2 5(d)(ii), the New Public Safety Building, additional capital projects, and Project Safety Net operations. Background On June 6, 2011, the City Council approved Comprehensive Plan amendments, zoning changes, a conditional use permit, annexation and design applications for the Stanford University Medical Center Facilities Renewal and Replacement Project (the “Projects”). The Projects include the construction of a new Stanford Hospital and clinics buildings, an expansion of the Lucile Packard Children’s Hospital, construction of new School of Medicine buildings, renovation of the existing Hoover Pavilion, construction of a new medical office building and parking garage at Hoover Pavilion, roadway improvements along Welch Road and Durand Way, and SUMC design guidelines. A Development Agreement (the “Agreement”) vesting these approvals was entered into between the SUMC Parties and the City and was deemed effective on June 6, 2011 and continues for thirty (30) years from the effective date. The Agreement requires annual City Council review of the SUMC Parties compliance. This report covers the SUMC Parties activities during FY 2015-2016, the fifth year of the Agreement. Previous SUMC Annual Reports and compliance documentation can be found in the following documents: Fiscal Year 2011-2012 http://www.cityofpaloalto.org/civicax/filebank/documents/31976 Fiscal Year 2012-2013 https://www.cityofpaloalto.org/civicax/filebank/documents/39991 Fiscal Year 2013-2014 http://www.cityofpaloalto.org/civicax/filebank/documents/45631 Fiscal Year 2014-2015 http://www.cityofpaloalto.org/civicax/filebank/documents/51645 The SUMC Parties recently submitted the FY 2016-2017 Alternative Mode Share Report, the 2016-2017 Construction Tax and Sales Report, and the 2016-2017 Annual Report. All of these reports are currently under review by staff and will be brought to City Council after the review and audits are completed. To obtain the latest information regarding the Stanford University Medical Center project construction, members of the public may wish to visit the Stanford-hosted website (http://www.sumcrenewal.org/) and sign up for the 10-day Look Ahead weekly email notifications (http://www.sumcrenewal.org/contact-us/?signup=1). Discussion As described in Development Agreement Section 12, “Periodic Review of Compliance,” the City Council is to review the Agreement annually to ascertain the SUMC Parties’ compliance with the terms of the Agreement. Section 12 also includes the reporting requirement for the SUMC Parties and the City to demonstrate good faith compliance with the Agreement. The attached 2015-2016 Annual Report (Annual Report) dated July 6, 2016 (Attachment A) from SUMC City of Palo Alto Page 3 describes the SUMC Parties’ activities related to implementation of the Agreement and is summarized below along with notable activities from prior reporting periods. Construction Activities Construction activities in past reporting periods included: Hoover Pavilion Renovation- Site work and renovation of the exterior and interior features of the building have been completed and in December 2012, Hoover Pavilion re-opened, providing a modern medical office and clinics to the SUMC community. The renovation project is considered to be complete. Hoover Pavilion Parking Garage- Site work and construction for the new 1,084-stall parking garage was completed in the Fall of 2013. It is now open for use by patients and staff. Welch Road Utilities Project- This project involves the replacement and installation of utilities to support the New Stanford Hospital and the Lucille Packard Children’s Hospital expansion. The construction portion of this project was considered to be largely complete in 2013 and two-way automobile traffic currently operates on Welch Road. The SUMC Parties and the City are currently in the process of finalizing easements and maintenance agreements. Construction activities during this period included: Hoover Medical Office Building “Neuroscience Health Center” – Site work and construction for the building was completed in October 2015 and the Neuroscience Health Center opened for patient care in January 2016. Lucile Packard Children’s Hospital (LPCH) - Construction of the hospital expansion remained underway during the FY 2015-2016 reporting period and LPCH anticipates opening for patient care in 2017-2018. New Stanford Hospital (NSH) - Substantial construction progress continued during the FY 2015-2016 reporting period. NSH is anticipated to complete construction in 2018. School of Medicine Buildings- This project involves the replacement of the Stanford University School of Medicine (SOM) buildings with new state-of-the-art facilities. The School of Medicine project did not commence in the FY 2015-2016 reporting period. A total of 120,800 square feet of floor area was demolished at the Stanford Hospital and Lucile Packard Children’s Hospital sites thus far and buildings under construction at these sites have not yet received occupancy. The 91,605 square foot Hoover Neuroscience Health Center completed construction and received a certificate of occupancy during the FY 2015-2016 reporting period. Taking into account the previously demolished 13,831 square feet of floor area at the Hoover Pavilion site, the occupancy of the Neuroscience Health Center represents 77,774 square feet of net new square footage. Compliance with Development Agreement Obligations In addition to the construction summary and the summary of net new square footage added within the past year, the Annual Report also summarizes the SUMC Parties’ progress in meeting City of Palo Alto Page 4 the terms described in Section 5 of the Agreement, “SUMC Parties’ Promises.” This section of the Annual Report describes the SUMC Parties’ obligations with respect to the following items: Health Care Benefits; Fiscal Benefits; Traffic Mitigation and Reduced Vehicle Trips; Linkages (Pedestrian, Bicycle, and Transit); Infrastructure, Sustainable Neighborhoods & Communities, Affordable Housing, and Climate Change. The Annual Report summarizes the activities within the reporting year. The obligations are further summarized in Table 1: Development Agreement, Section 5 – SUMC Parties’ Promises (Attachment B). City staff has reviewed the information within the Annual Report and has determined that it is complete and correct. Traffic Mitigation and Reduced Vehicle Trips The SUMC Parties have made substantial progress in meeting the traffic and alternative transportation obligations of the Agreement. Specifically, they have accomplished the following: Purchased CalTrain Go Passes annually for all eligible employees as of January 1, 2012, three years ahead of the September 1, 2015 requirement as stated in the Agreement. Annual passes were purchased again for all eligible existing and new employees for 2015; Purchased additional shuttle buses for the Marguerite Shuttle service which now includes five renewable diesel-electric hybrid buses and three all-electric buses, along with plans to add up to 20 additional all electric buses over the next two years; Hired a Transportation Demand Management (TDM) coordinator on March 13, 2012, three years ahead of the September 1, 2015 requirement as stated in the Agreement, and Achieved a 31.9% alternative transportation mode split during this reporting year for the hospital employees, meaning 31.9% of employees are using alternative modes to get to work rather than driving alone. This figure employs a further refined calculation methodology that utilizes additional weights to account for response biases associated with work shift (day / evening / night), work hours (full-time /part-time), and employer (Stanford Health Care / Lucile Packard Children’s Hospital). The goal for any refinement in methodology is to derive increasingly accurate alternative mode share estimates. Please see the table below for a comparison of the mode splits for each year by methodology. Year Past Methodology New Methodology (2014-2015) Refined Methodology (2015-2016) 2012 39% 32.5% 32.5% City of Palo Alto Page 5 2013 40.9% 33.4% 33.4% 2014 N/A 34.4% 31.8% 2015 N/A 36.3% 32.7% 2016 N/A N/A 31.9% The 31.9% mode split exceeds the alternative mode share target for 2018 of 30.0%. It is anticipated that the SUMC Parties will continue to meet or exceed the alternative mode share targets for 2021 (33.0%) and 2025 (35.1%), especially with the implementation of Development Agreement-required pedestrian, bicycle, and transit linkage improvements that are planned for completion in 2017 and 2018. The SUMC Parties and City staff will continue to monitor the TDM program throughout the term of the Agreement and will report annually to City Council. Supplement to the Annual Report In addition to the SUMC Parties’ submittal of the Annual Report, City staff is to prepare a supplement to the Annual Report (the “Supplement”), as described in Development Agreement Section 12(d). The Supplement is to include an accounting of the funds received from the SUMC Parties to satisfy the obligation outlined in Section 5 of the Agreement, a description of the account balances, and a summary and description of expenditures from the funds. The Supplement is contained in Attachment C. In summary, the SUMC Parties have contributed $32,533,666 in public benefit funds as of June 30, 2015. Interest income during the reporting period was $851,222. The SUMC Parties will pay an additional $11.7M upon issuance of the first hospital occupancy permit, expected in late 2017 or early 2018 in association with the Lucile Packard Children’s Hospital (LPCH) opening for patient care. During the reporting period, the City expended funds for the following: $92,004 under the “Quarry Road Improvements” cost center for the first implementation phase of the Public Right-of-Way Improvements to Enhance Pedestrian and Bicycle Connection on Quarry Road, consistent with Development Agreement Section 5(d)(ii). $1,100,000 under the “Infrastructure and Affordable Housing” cost center for the New Public Safety Building (transferred to Capital Project Fund). $1,074,011.98 under the “Community Health & Safety” cost center for the Project Safety Net Program. $1,200,000 under the “Climate Change & Sustainability” cost center for the implementation of the Bicycle & Pedestrian Transportation Plan. City of Palo Alto Page 6 General Fund Sales and Use Tax revenues in calendar year 2015 resulting from construction- related activities totaled approximately $884,649, based on the City Auditor’s review of the Construction Sales & Use Tax Monitoring Report submitted by SUMC on June 30, 2016. The City Auditor submitted a letter to SUMC noting a discrepancy of $74,084 in the Construction Sales & Use Tax Monitoring report, meaning SUMC reported $1,943,572 in General Fund Sales and Tax revenues in calendar year 2015 resulting from construction related activities. The discrepancy mainly stems from the absence of attribution of the City tax area code on the tax returns. The City Auditor suggested filing amended tax returns to resolve the discrepancy. Total General Fund Sales and Use Tax revenues from 2011 to 2015 now total $2,017,656. Future Use of Development Agreement Funds On June 15, 2015 (CMR #5864) City Council approved the Fiscal Year 2016 Budget, which outlined total SUMC Capital Improvement funding of $31.2 million over the course of 2016 - 2020 to support a variety of projects including the Bicycle and Pedestrian Transportation Plan (PL-04010), the New Public Safety Building (PE-15011), the reconstruction of Fire Station 3 (PE- 15003) and Fire Station 4 (PE-18004), the New Downtown Garage (PE-15007), and the Charleston Arastradero Corridor Improvements Project (PE-13011). Additionally, as part of ongoing efforts to develop and implement a mental health plan for Palo Alto youth, a total allocation of $568,000 was included in the Fiscal Year 2016 Operating Budget for Project Safety Net (PSN) administrative staffing and contract security services at Palo Alto rail crossings. For additional information about the development agreement projects and funding allocations, please refer to the following: Fiscal Year 2016 Operating Budget document, Special Revenue Funds section: http://www.cityofpaloalto.org/civicax/filebank/documents/54358; and Fiscal Year 2016 Capital Improvement Budget document: http://www.cityofpaloalto.org/civicax/filebank/documents/54357. Resource Impact There are no negative impacts from the Agreement that affect the City’s General Fund. As summarized above, the SUMC Parties have paid approximately $32.5 million in public benefit fees to the City since June 6, 2011. Policy Implications This report does not represent any changes to existing City policies. Environmental Review Finding Stanford University’s compliance with the Terms of the Agreement is not a project under the California Environmental Quality Act, and no environmental assessment for the annual compliance review is required. An environmental impact report for the entire SUMC City of Palo Alto Page 7 project was prepared and certified by the City Council prior to approval of the Development Agreement. Attachments: Attachment A: SUMC Annual Report 2015-2016 Attachment B: Table 1-Development Agreement Attachment C: (PART 1) SUMC Annual Report Supplement FY2015_16 Attachment C: (PART 2) SUMC Annual Report Supplement FY2015_16 2015-16 ANNUAL REPORT PREPARED FOR THE CITY OF PALO ALTO | JULY 6, 2016 CONTENTS EXECUTIVE SUMMARY 1 BACKGROUND AND PURPOSE 2 2015-2016 SUMMARY OF PROGRESS 3 HOOVER PAVILION SITE 3 LUCILE PACKARD CHILDREN’S HOSPITAL 4 NEW STANFORD HOSPITAL 5 SCHOOL OF MEDICINE 6 NET NEW SQUARE FOOTAGE 6 COMPLIANCE WITH DEVELOPMENT AGREEMENT OBLIGATIONS 7 HEALTH CARE BENEFITS 7 SECTION 5(a)(ii). FUND FOR HEALTHCARE SERVICES 7 SECTION 5(a)(iii). FUND FOR COMMUNITY HEALTH AND SAFETY PROGRAMS 7 PALO ALTO FISCAL BENEFITS 8 SECTIONS 5(b)(i) AND 5(b)(ii). PAYMENT OF SALES AND USE TAXES 8 SECTION 5(b)(iii). FUNDING OF OPERATING DEFICIT 9 SECTION 5(b)(iv). PAYMENT OF UTILITY USER TAX 9 SECTION 5(b)(v). SCHOOL FEES 9 TRAFFIC MITIGATION AND REDUCED VEHICLE TRIPS 10 SECTION 5(c)(ii). MENLO PARK TRAFFIC MITIGATION 10 SECTION 5(c)(iii). EAST PALO ALTO VOLUNTARY MITIGATION 10 SECTION 5(c)(iv). CONTRIBUTIONS TO AC TRANSIT 10 SECTION 5(c)(v). OPTICOM PAYMENTS 11 SECTION 5(c)(vi). CALTRAIN GO PASSES 11 SECTION 5(c)(vii). MARGUERITE SHUTTLE SERVICE 11 SECTION 5(c)(viii). TRANSPORTATION DEMAND MANAGEMENT COORDINATOR 11 SECTION 5(c)(ix). MONITORING OF TDM PROGRAMS 12 LINKAGES 13 SECTION 5(d)(i). INTERMODAL TRANSIT FUND 13 SECTION 5(d)(ii). QUARRY ROAD FUND 13 SECTION 5(d)(iii). STANFORD BARN CONNECTION 14 INFRASTRUCTURE, SUSTAINABLE NEIGHBORHOODS AND COMMUNITIES, AND AFFORDABLE HOUSING 14 SECTION 5(e). 14 CLIMATE CHANGE 14 SECTION 5(f). CLIMATE CHANGE FUND 14 SATISFACTION OF CONDITIONS OF APPROVAL 15 CONCLUSION 16 ANNUAL REPORT 2015-16 1 On June 6, 2011, the Stanford University Medical Center (now Stanford Medicine)—comprised of Stanford Hospital and Clinics (now Stanford Health Care), Lucile Packard Children’s Hospital, and Stanford University—entered into a Development Agreement with the City of Palo Alto, committing to provide a range of community benefits in exchange for vested development rights to develop and use the Project facilities in accordance with the approvals granted by the City, and a streamlined process for obtaining subsequent project approvals. The Stanford Medicine Renewal and Replacement Project (“Renewal Project”)—driven by a growing demand for healthcare services, state-mandated seismic safety requirements, and the need to replace outmoded facilities with modern, technologically advanced spaces—holds the potential to transform the way that healthcare is delivered and research is conducted. Today, five years after the execution of the Development Agreement, Renewal Project activities continue apace. The New Stanford Hospital and the Lucile Packard Children’s Hospital expansion are moving closer to completion, with the exterior enclosures on both buildings nearly complete and interior construction underway. Meanwhile, on the Hoover Pavilion site, construction of the Stanford Neuroscience Health Center completed in Fall 2015, and the new facility opened to patient care in January 2016. Against this backdrop, Stanford Medicine submits its Annual Report in compliance with Section 12(c) of the Development Agreement, and looks forward to continued collaboration with the City of Palo Alto in advancing the goals of both the Stanford Medicine and the broader community. EXECUTIVE SUMMARY 2 ANNUAL REPORT 2015-16 The Palo Alto City Council’s unanimous approval of the entitlements for the Stanford Medicine Renewal and Replacement Project in July 2011 has paved the way for a historic investment in new and replacement facilities for Stanford Medicine. The project approvals—including new zoning for the Project sites, a conditional use permit, architectural review approval, and the execution of a Development Agreement—allows for the construction of approximately 1.3 million net new square feet of hospital facilities, clinics, medical offices, and medical research spaces, and will enable the hospitals to optimize the delivery of healthcare services to patients, and maintain their position as leading providers of world- class healthcare. In order to facilitate this important replacement and expansion work, the Stanford Medicine parties entered into a Development Agreement with the City of Palo Alto, which includes a comprehensive package of community benefits and voluntary mitigation measures. In exchange for these benefits, the City has vested for a period of 30 years Stanford Medicine’s rights to develop and use the property in accordance with the project approvals, and will streamline the process for obtaining subsequent approvals. The terms of the Development Agreement (Section 12(c)) provide for a periodic review of compliance, and require that Stanford Medicine submit an Annual Report to the City of Palo Alto’s Director of Planning and Community Environment each year within 30 days of the anniversary of the agreement effective date (June 6, 2011). The Annual Report is to summarize the progress on the Renewal Project, including a list of net new square footage for which a certificate of occupancy has been received, and a description of the steps that Stanford Medicine has taken to comply with the obligations listed in the Development Agreement. With this report, Stanford Medicine fulfills these requirements. Within 45 days of receipt of this Annual Report, the City will prepare a Supplement to the Annual Report, to provide an accounting of the City’s expenditures from each of the City Funds and how they were used. BACKGROUND AND PURPOSE ANNUAL REPORT 2015-16 3 The Renewal Project continues to progress, with construction activities for both Hospitals well underway. The section to follow provides an overview of central goals for the project elements that presently are under construction or nearing construction, a synopsis of progress to date, as well as a preview of near- term upcoming activities. HOOVER PAVILION SITE One of the first phases of the Renewal Project was the renovation of Hoover Pavilion to accommodate modern medical offices and clinics. Renovation of the 1931 building—including structural improvements, mechanical and plumbing upgrades, and restoration of historic architectural details— began in Summer 2011, and completed in Fall 2012. Subsequently, construction of the Hoover Garage (PS-9) completed in Fall 2013, and the garage is now open and serving patients, visitors, and staff. And finally, the landscaping at the Hoover Medical Campus was transformed to include varied landscaped spaces, including a lawn parterre, Redwood grove, and Oak grove. The groves feature mature trees which have been transplanted from other locations on the Hoover site, many of which had been boxed and stored offsite during construction. Most recently, construction of a new Neuroscience Health Center was completed in October 2015 on the Hoover site, on Quarry Road immediately west of the Hoover Pavilion, and northwest of the parking garage. The Neuroscience Health Center opened to patient care in January 2016, and provides specialized outpatient services for people with Alzheimer’s, Parkinson’s disease, brain tumors, multiple sclerosis, stroke and other neurological disorders. The site features new landscaped spaces, including a mobility garden beneath a mature oak designed to allow neuroscience patients to practice walking on different surfaces, and a wildflower knoll adjacent to the site’s historic cedar grove. 2015-2016 SUMMARY OF PROGRESS 4 ANNUAL REPORT 2015-16 2015-2016 SUMMARY OF PROGRESS LUCILE PACKARD CHILDREN’S HOSPITAL In response to growing community needs for specialized pediatric and obstetric care, Lucile Packard Children’s Hospital is opening an expanded facility. The new hospital, to be located adjacent to the current Packard Children’s Hospital, will provide patients and doctors with the most modern clinical advancements and technology, while also creating a more patient- and family-centered environment of care, with additional single-patient rooms and more spaces for families to be with their child during treatment and recovery. The Packard Children’s expansion will feature a new entrance lobby, public concourse with dining, three floors of nursing units, and new patient rooms. Spaces have been designed with an attention to natural light and views, and the exterior grounds—more than 3.5 acres of outdoor areas and gardens—will provide a park-like setting for patients, families, and visitors. In the past year, significant construction progress has been made on the LPCH expansion project—the exterior enclosure of the building is nearly complete, and interior construction is underway. Meanwhile, site work continues, with the final form of the hospital’s outdoor spaces beginning to take shape. ANNUAL REPORT 2015-16 5 NEW STANFORD HOSPITAL Stanford Health Care is constructing new and replacement hospital facilities that will usher in a new era of advanced patient care. Growth in patient volumes and rapidly changing medical technology have rendered much of the existing midcentury hospital infrastructure inadequate, while new seismic safety requirements have accelerated the need to construct replacement facilities. The New Stanford Hospital will substantially increase capacity, and will also address a rapidly advancing medical landscape. High-tech spaces such as Surgery, Radiology, and Intensive Care will be replaced to accommodate the latest advances in medical technology, while still retaining the flexibility to adapt to future innovations. Facilities will feature new patient rooms, an enlarged Level-1 trauma center and Emergency Department, and new surgical, diagnostic, and treatment rooms. And foremost, the new facility will create a healing environment responsive to the needs of patients, visitors, and staff. Upper-level pavilions will feature light-filled patient rooms, and a mid-level garden floor will offer dining, conference, and educational facilities, as well as social and spiritual support spaces. Substantial progress has been made on the New Stanford Hospital project over the past year. The exterior enclosure for the Hospital is now nearly complete; mechanical, electrical and plumbing rough-ins are nearly complete; and interior finish construction has recently begun. Meanwhile, at the adjacent New Stanford Hospital Garage, the exterior façade is nearly complete and construction of the rooftop pavilions is underway. A temporary Certificate of Occupancy issued by the City in 2014 allows for contractor parking while construction continues. 2015-2016 SUMMARY OF PROGRESS 2015-2016 SUMMARY OF PROGRESS 6 ANNUAL REPORT 2015-16 2015-2016 SUMMARY OF PROGRESS SCHOOL OF MEDICINE The Stanford University School of Medicine will replace its outmoded research buildings with new state-of-the-art facilities designed to support contemporary translational research. The new facilities will accommodate 21st century medical advancements and enable the development of new medical innovations. The new buildings will feature integrated laboratory suites, with easier access between labs and support facilities, enabling transparency, flexibility, and collaboration. The new facilities will be surrounded by landscaped areas and tree-lined walkways. The School of Medicine development is not yet underway. In the interim, part of the site that will ultimately be developed is currently in use as a temporary valet parking area for Hospital patients and visitors. NET NEW SQUARE FOOTAGE The following table summarizes the net new square footage for which a certificate of occupancy has been issued. PROJECT COMPONENT GROSS SQUARE FOOTAGE NEW STANFORD HOSPITAL 1101 Welch demolished (40,100) Total (40,100) LUCILE PACKARD CHILDREN’S HOSPITAL EXPANSION 701 Welch demolished (56,300) 703 Welch demolished (23,500) Total (79,800) SCHOOL OF MEDICINE None 0 HOOVER PAVILION Misc. shops and storage demolished (13,831) Stanford Neuroscience Health Center (Hoover MOB) 91,605 Total 77,774 PROJECT COMPONENT GROSS SQUARE FOOTAGE ANNUAL REPORT 2015-16 7 This section of the Annual Report summarizes the steps that Stanford Medicine has taken to comply with their obligations in Section 5 of the Development Agreement. HEALTH CARE BENEFITS Stanford Medicine provides certain intrinsic benefits to the community, as both a global leader in medical care and research, and as a community healthcare services provider. The Renewal Project enables Stanford Medicine to continue its important work, and the addition of more beds for adults and children will help to alleviate overcrowding. Additionally, the new hospital facilities will provide critical emergency preparedness and response resources for the community in the event of an earthquake, pandemic, or other major disaster. Section 5(a)(ii). Fund for Healthcare Services The Hospitals have designated the amount of $3 million for Healthcare Services which will increase to $5.6 million by December 31, 2025. No further action is required until 2026. This amount will be reconciled with the construction tax use payments as described in Development Agreement Section 5(b) (ii)(C). Section 5(a)(iii). Fund for Community Health and Safety Programs Stanford Medicine has contributed a single lump-sum payment of $4 million to establish a Community Health and Safety Program Fund for the City of Palo Alto. This fund is to be distributed to selected community health programs that benefit residents of the City, including the Project Safety Net Program, a community-based mental health plan for youth well-being in Palo Alto. A joint committee is to be established to evaluate proposals regarding the other specific programs to receive funding, composed of two representatives selected by the Stanford Medicine Parties and two representatives selected by the City; this committee shall make annual recommendations to the City Council regarding proposed disbursements from the Community Health and Safety Program Fund, and the City Council shall use its reasonable discretion to decide whether to accept, reject, or modify the joint committee recommendations. Stanford Medicine provided the entire required contribution to the Community Health and Safety Program Fund on August 25, 2011. No further action is required by Stanford Medicine to comply with this Development Agreement provision. As required by Development Agreement Section 12(d), the City will provide yearly Supplements to the Annual Report to provide an accounting of the City’s expenditures from this fund, and the purposes for which the expenditures were used. COMPLIANCE WITH DEVELOPMENT AGREEMENT OBLIGATIONS 8 ANNUAL REPORT 2015-16 PALO ALTO FISCAL BENEFITS The Stanford Medicine Renewal Project brings considerable fiscal benefits to the City of Palo Alto. The project is expected to generate at least $8.1 million in sales and use tax revenues for the City, and multiple mechanisms have been put into place to ensure that this target is met. The Development Agreement also provides for further fiscal benefits to the City, including a payment by Stanford Medicine to fund the City’s operating deficit, and the payment of utility user taxes and school fees. Sections 5(b)(i) and 5(b)(ii). Payment of Sales and Use Taxes As required by the Development Agreement, Stanford Medicine submitted its annual Construction Sales and Use Tax monitoring report to the City on June 30, 2016. The Stanford Medicine parties will continue to submit such a report annually during the construction period for the Renewal Project so that the City can determine the share of construction use taxes that it has received as a result of the Renewal Project. Each year, within 60 days of receiving the monitoring report, the City will provide its determination of the amount of construction use taxes that it has received as a result of the Renewal Project during the preceding calendar year. In August 2026, Stanford Medicine and the City will conduct a reconciliation process to confirm that the City has received at least $8.1 million in construction use taxes as a result of the Project, as further described in Development Agreement Section 5(b)(ii). To date, Stanford Medicine has taken the following steps to maximize the City’s allocation of sales and use taxes associated with Project construction and operation. Documentation of each of these items is included in the 2015 construction use tax monitoring report already submitted. • The Stanford Medicine Parties have obtained all permits and licenses necessary to maximize the City’s allocation of construction use taxes derived from the project, including California Seller’s Permits and Use Tax Direct Pay Permits. Copies of permits and licenses are attached to the 2015 monitoring report. • Stanford Medicine has designated and required all contractors and subcontractors to designate the project site as the place of sale of all fixtures furnished or installed as part of the project. • Stanford Medicine has designated and required all contractors and subcontractors to designate the project site as the place of use of all materials used in the construction of the project. • Stanford Medicine has required all contractors and subcontractors to allocate the local sales and use taxes derived from their contracts directly to the city. Stanford Medicine has used best efforts to require contractors and subcontractors to complete and file any forms required by the State Board of Equalization to effect these designations. • Both Hospitals have obtained use tax direct pay permits from the State of California for their existing facilities in order to increase the City tax allocation for the Hospitals’ purchases. The Hospitals will maintain the use tax direct pay permit for the life of the project. • Finally, Stanford Medicine has assisted the City in establishing and administering a Retail Sales and Use Tax Reporting District for the Renewal Project, to enable the City to track the generation, allocation, reporting and payment of sales and use taxes derived from the Project. COMPLIANCE WITH DEVELOPMENT AGREEMENT OBLIGATIONS ANNUAL REPORT 2015-16 9 Section 5(b)(iii). Funding of Operating Deficit In order to assure that City costs associated with the Renewal Project do not exceed revenues to the City resulting from construction and operation of the project, Stanford Medicine has provided to the City a single lump sum payment in the amount of $2,417,000. This payment was made on August 25, 2011. No further action is required by Stanford Medicine to comply with this Development Agreement provision. Section 5(b)(iv). Payment of Utility User Tax Stanford Medicine will pay the City a utility user tax at a minimum rate of 5 percent of all electricity, gas, and water charges allocable to new construction completed as part of the project for the life of the project. This rate may be increased by the City as provided by Section 2.35.100(b) of the Municipal Code. The 5 percent utility user tax is currently being paid by Stanford Medicine. Section 5(b)(v). School Fees Stanford Medicine will pay to the City—who is then to forward to the Palo Alto Unified School District— school fees upon issuance of each building permit from the City or OSHPD, in the amount that is generally applicable to non-residential development at the time of payment based upon net new square footage, as defined in the Development Agreement. School fees were paid in 2012 for LPCH and SHC in the amounts of $188,815 and $153,802, respectively. In July 2013, additional school fees were paid in the amount of $7,051 to account for additional program square footage for the New Stanford Hospital and Garage. In May 2014, an additional payment of school fees in the amount of $16,119 was made to account for the incremental square footage associated with the Hoover Medical Office Building, beyond the 60,000 square feet originally planned. In November 2015, additional school fees in the amount of $461.16 were paid to account for incremental square footage for the New Stanford Hospital Garage. COMPLIANCE WITH DEVELOPMENT AGREEMENT OBLIGATIONS 10 ANNUAL REPORT 2015-16 TRAFFIC MITIGATION AND REDUCED VEHICLE TRIPS Stanford Medicine has taken a number of steps to mitigate the potential traffic impacts projected at full project buildout. Already, Stanford Medicine provides a robust transportation demand management program, offering a variety of incentives for employees to forego driving alone to work. As the Renewal Project moves forward, Stanford Medicine will take the following actions outlined below. Section 5(c)(ii). Menlo Park Traffic Mitigation Stanford Medicine has agreed to contribute to the City of Menlo Park a total of $3,699,000 for use in connection with traffic mitigation, infrastructure enhancements, and the promotion of sustainable neighborhoods and communities and affordable housing. This contribution is to be made in three equal payments; the first payment of $1,233,000 was made on August 19, 2011. The second payment of $1,233,000 was made on December 5, 2012, following the November 2012 issuance of the first Hospital foundation permit. The final payment will be made within 30 days from issuance of the first Hospital Occupancy Permit by the State of California. Section 5(c)(iii). East Palo Alto Voluntary Mitigation Stanford Medicine has contributed a single lump sum payment of $200,000 to East Palo Alto to be used for roadway and traffic signal improvements on University Avenue. This payment was made on August 19, 2011. No further action is required by Stanford Medicine to comply with this Development Agreement provision. In the event that Stanford Medicine does not meet alternative transportation mode goals specified in the Development Agreement by 2025 and is assessed a $4 million payment under Development Agreement section 5(c)(ix)(B), the City will be required to remit $150,000 of such payment to the City of East Palo Alto. Section 5(c)(iv). Contributions to AC Transit The Hospitals have committed to offering the following contributions to AC Transit within 30 days from issuance of the first Hospital occupancy permit: • The Hospitals will contribute a one-time payment of $250,000 to AC Transit to be used for capital improvements to the U-Line to increase capacity (Section 5(c)(iv)(A)). • The Hospitals will offer to make annual payments to AC Transit in a reasonable amount, not to exceed $50,000, to be used for operating costs of the U-Line to maintain a load factor for bus service to the Medical Center of less than 1 (Section 5(c)(iv)(B). • In order to encourage Hospital employees living in the East Bay to use public transit for their commute, the Hospitals have committed to using best efforts to lease 75 parking spaces at the Ardenwood Park and Ride lot, or an equivalent location, at a cost not to exceed $45,000 per year (Section 5(c)(iv)(C)). No action is required at this time; however, since May 2014, a 100-space park- and-ride facility on Kaiser Drive at Campus Drive in Fremont (0.9 mile from Ardenwood Park & Ride) has been under lease for the use of Stanford University and Hospital commuters. These offers have not yet been made to AC Transit because the first Hospital occupancy permit has not yet been issued. COMPLIANCE WITH DEVELOPMENT AGREEMENT OBLIGATIONS ANNUAL REPORT 2015-16 11 COMPLIANCE WITH DEVELOPMENT AGREEMENT OBLIGATIONS Section 5(c)(v). Opticom Payments Within 30 days from issuance of the first Hospital occupancy permit, the Hospitals will pay $11,200 to the City of Palo Alto to be used for the installation of Opticom traffic control systems at the following seven intersections: El Camino Real/Palm Drive/University Avenue; El Camino Real/Page Mill Road; Middlefield Road/Lytton Road; Junipero Serra/Page Mill Road; Junipero Serra/Campus Drive West; Galvez/Arboretum; and the Alpine/280 Northbound ramp. This payment has yet not been made because the first Hospital occupancy permit has not yet been issued. Section 5(c)(vi). Caltrain GO Passes The Development Agreement requires that the hospitals purchase annual Caltrain GO Passes for all existing and new Hospital employees who work more than 20 hours per week at a cost of up to $1.8 million per year, beginning on September 1, 2015. This obligation is to continue for a period of 51 years. Hospital management accelerated the purchase of the annual GO Pass for Hospital employees, and began providing free GO Passes to employees commencing on January 1, 2012. Further details regarding the GO Pass purchase can be found in the Alternative Mode Share report, which was submitted to the City on May 31, 2016. Section 5(c)(vii). Marguerite Shuttle Service The Hospitals will fund the reasonable costs, in an approximate amount of $2 million for the purchase of additional shuttle vehicles for the Marguerite shuttle service, as and when required to meet increased demand for shuttle service between the project sites and the Palo Alto Intermodal Transit Station. In addition, the Hospitals will fund as annual payments the reasonable costs, in an approximate amount of $450,000 per year, to cover the net increase in operating costs for the Marguerite Shuttle. Demand for the Marguerite shuttle increased in 2012, and the Hospitals funded the purchase of three new hybrid shuttles to meet this increased demand. Section 5(c)(viii). Transportation Demand Management Coordinator The Development Agreement requires that the Hospitals employ an onsite qualified Transportation Demand Management (TDM) Coordinator for Stanford Medicine, commencing on September 1, 2015, and continuing through the life of the Renewal Project. Because the Hospitals accelerated the purchase of the Caltrain GO Pass, the Hospitals also accelerated the hiring of the TDM Coordinator, filling this position in March 2012. The TDM Coordinator (Sustainable Transportation Lead) is responsible for analyzing, developing, and implementing programs to advance the Hospitals’ TDM objectives. Specifically, the position supports the Hospitals’ TDM program by raising awareness among commuters about alternative transportation options and Stanford’s commute incentive programs; providing alternative commute planning assistance and responses to customer inquiries; writing and editing electronic and print communications; coordinating and staffing outreach events, such as free transit pass distributions and employee fairs; and providing alternative transportation information and resources at new employee orientations. COMPLIANCE WITH DEVELOPMENT AGREEMENT OBLIGATIONS 12 ANNUAL REPORT 2015-16 COMPLIANCE WITH DEVELOPMENT AGREEMENT OBLIGATIONS Section 5(c)(ix). Monitoring of TDM Programs The Hospitals are required to submit annual monitoring reports showing the current number of employees employed over 20 hours per week; the number of employees using an alternative transportation mode as documented by a study or survey to be completed by the Hospitals using a method mutually agreeable to the City, and the efforts used by the Hospitals to attempt to achieve the Alternative Mode Targets identified in the Development Agreement. The Development Agreement specifies payments to be made in the event that such targets are not met during particular time periods. Stanford Medicine submitted its 2015-16 Alternative Mode Share Report to the City on May 31, 2016; this report shows an alternative mode split of 31.9% for the Hospitals. This mode split exceeds the Alternative Mode Share target for 2018. ANNUAL REPORT 2015-16 13 COMPLIANCE WITH DEVELOPMENT AGREEMENT OBLIGATIONS LINKAGES To further encourage use of Caltrain, bus, and other transit services, and to enhance and encourage use of pedestrian and bicycle connections between Stanford Medicine and Palo Alto, Stanford Medicine has funded or will fund the following specific infrastructure improvements. Section 5(d)(i). Intermodal Transit Fund Stanford Medicine has provided to the City one lump sum payment of $2.25 million for improvements to enhance the pedestrian and bicycle connection from the Palo Alto Intermodal Transit Center to the existing intersection of El Camino Real and Quarry Road. Up to $2 million of this amount is to be used by the City for the development of an attractive, landscaped passive park/green space with a clearly marked and lighted pedestrian pathway, benches, and flower borders. Stanford Medicine paid the entire required amount for the Intermodal Transit Fund on August 25, 2011. No further action is required by Stanford Medicine to comply with this Development Agreement provision. As required by Development Agreement Section 12(d), the City will provide yearly Supplements to the Annual Report to provide an accounting of the City’s expenditures from this fund, and the purposes for which the expenditures were used. The City is required to construct the improvements prior to issuance of the first Hospital Occupancy Permit, currently anticipated to be issued in Summer 2017. The City is moving forward with plans for these improvements, and has shared with the Stanford Medicine Parties preliminary designs for a temporary path with associated lighting, landscaping/green space, benches, and flower borders from the transit center to the existing crosswalk at the intersection of El Camino Real and Quarry Road. Available funds remaining after this work is completed may be applied to the construction of permanent improvements in the future. Section 5(d)(ii). Quarry Road Fund Stanford Medicine has provided to the City one lump sum payment of $400,000 for improvements to and within the public right-of-way to enhance the pedestrian and bicycle connection from the west side of El Camino Real to Welch Road along Quarry Road, including urban design elements and way finding, wider bicycle lanes, as necessary, on Quarry Road, enhanced transit nodes for bus and/or shuttle stops, and prominent bicycle facilities. Stanford Medicine paid the entire required amount for the Quarry Road Fund on August 25, 2011. No further action is required by Stanford Medicine to comply with this Development Agreement provision. As required by Development Agreement Section 12(d), the City will provide yearly Supplements to the Annual Report to provide an accounting of the City’s expenditures from this fund, and the purposes for which the expenditures were used. The City is required to construct the improvements prior to issuance of the first Hospital Occupancy Permit, currently anticipated to be issued in Summer 2017. The City is moving forward with plans for these improvements, and has shared with the Stanford Medicine Parties preliminary designs for bicycle enhancements along Quarry Road. COMPLIANCE WITH DEVELOPMENT AGREEMENT OBLIGATIONS 14 ANNUAL REPORT 2015-16 COMPLIANCE WITH DEVELOPMENT AGREEMENT OBLIGATIONS Section 5(d)(iii). Stanford Barn Connection Stanford Medicine will construct up to $700,000 of improvements to enhance the pedestrian connection between the Main Medical Campus and the Stanford Shopping Center from Welch Road to Vineyard Lane, in the area adjacent to the Stanford Barn. Stanford Medicine is required to construct these improvements prior to issuance of the first Hospital Occupancy permit, currently anticipated to be issued in Summer 2017. Stanford Medicine anticipates submitting its pedestrian connection design to the City for minor architectural review in 2016. INFRASTRUCTURE, SUSTAINABLE NEIGHBORHOODS AND COMMUNITIES, AND AFFORDABLE HOUSING Section 5(e). Infrastructure, Sustainable Neighborhoods and Communities, and Affordable Housing Stanford Medicine will contribute a total amount of $23.2 million toward City of Palo Alto infrastructure, sustainable neighborhoods and communities, and affordable housing. The Development Agreement requires this amount to be contributed in three equal payments. The first payment, in the amount of $7,733,333, was made on August 25, 2011; the second payment of $7,733,333 was made on December 5, 2012, following the November 2012 issuance of the first Hospital foundation permit; and the final payment is to be made within 30 days from issuance of the first Hospital occupancy permit. As required by Development Agreement Section 12(d), the City will provide yearly Supplements to the Annual Report to provide an accounting of the City’s expenditures from this fund, and the purposes for which the expenditures were used. The City will use $1,720,488 of these funds in the same manner as funds collected under the City’s housing fee ordinance. CLIMATE CHANGE Section 5(f). Climate Change Fund Stanford Medicine will contribute a total amount of $12 million toward City projects and programs for a sustainable community, including programs identified in the City’s Climate Action Plan, carbon credits, and investments in renewable energy and energy conservation. The Development Agreement requires this amount to be contributed in three equal payments. The first payment, in the amount of $4 million, was made on August 25, 2011; the second payment of $4 million was made on December 5, 2012, following the November 2012 issuance of the first Hospital foundation permit; and the final payment is to be made within 30 days from issuance of the first Hospital occupancy permit. As required by Development Agreement Section 12(d), the City will provide yearly Supplements to the Annual Report to provide an accounting of the City’s expenditures from this fund, and the purposes for which the expenditures were used. ANNUAL REPORT 2015-16 15 COMPLIANCE WITH DEVELOPMENT AGREEMENT OBLIGATIONS SATISFACTION OF CONDITIONS OF APPROVAL Stanford Medicine will satisfy all Conditions of Approval by the dates and within the time periods required by the project approvals, and has taken several steps in order to ensure that this requirement is met (Section 5(h)). The Conditions of Approval encompass conditions imposed by the Architectural Review Board, mitigation measures enumerated in the Mitigation Monitoring and Reporting Program, and conditions attached to the Conditional Use Permit. In order to implement, monitor, and report on the implementation of this diverse array of conditions, Stanford Medicine, with input from City planning staff, has created two Excel spreadsheet tracking and reporting tools. These spreadsheets serve as a centralized repository for compliance monitoring information and documentation, and are updated by the Stanford Medicine project teams on a regular basis, and reviewed by the City. COMPLIANCE WITH DEVELOPMENT AGREEMENT OBLIGATIONS 16 ANNUAL REPORT 2015-16 CONCLUSION As the Renewal Project completes its fifth year, Stanford Medicine looks forward to continued engagement with the City of Palo Alto as the project continues to forge ahead. Table 1: Development Agreement, Section 5 - SUMC Parties’ Promises 2015-16 1 SUMC Development Agreement Compliance: 2015-2016 DA Section Description Summary Activity Complies? Health Care Benefits 5(a)(ii) Fund for Healthcare Services Financial assistance for Palo Alto residents Establishment of $3M SUMC fund Yes 5(a)(iii) Fund for Community Health and Safety Programs $4M fund for selected community health programs for Palo Alto residents Payment of $4M on August 25, 2011 to establish City fund Yes Fiscal Benefits 5(b)(i), (ii) Payment of Sales and Use Taxes Activities to maximize sales and use taxes paid to the City General Fund Sales and Use Tax revenues in calendar year 2015 resulting from construction- related activities totaled approximately $884,649 based on the 2016 City Auditor’s review of the Construction Sales & Use Tax Monitoring Report submitted by SUMC on June 30, 2016. Ongoing 5(b)(iii) Funding of Operating Deficit $2.417M fund to address long- Payment of $2.417M on August Yes Table 1: Development Agreement, Section 5 - SUMC Parties’ Promises 2015-16 2 SUMC Development Agreement Compliance: 2015-2016 DA Section Description Summary Activity Complies? term deficits 25, 2011 to establish fund. (B11) 5(b)(iv) Payment of Utility Users Tax 5% tax on all electricity, gas and water charges on new construction. Utilities confirmed that billing accounts were created when new meters were set for new construction and the Utility Users Tax has been paid through the normal billing process for the Hoover Neuroscience Building. Yes 5(b)(v) School Fees Payment of PAUSD fees for net new square footage $342,617 fee paid for LPCH and NSH expansion in 2012. $7,051 fee paid for NSH and NSH Garage expansion in July 2013. $16,119 fee paid for Hoover Medical Office Building expansion in May 2014. $461.16 fee paid to account for incremental square footage for the New Stanford Hospital Garage. Yes Table 1: Development Agreement, Section 5 - SUMC Parties’ Promises 2015-16 3 SUMC Development Agreement Compliance: 2015-2016 Traffic Mitigation and Reduced Vehicle Trips DA Section Description Summary Activity Complies? 5(c)(ii) Menlo Park Traffic Mitigation $3.7M payment for traffic mitigation, infrastructure, sustainable neighborhoods, affordable housing First of three $1.23M payments made on August 19, 2011. Second payment of $1.23M made on December 5, 2012. Final Payment to be made within 30 days from issuance of the first Hospital Occupancy Permit. Yes 5(c)(iii) East Palo Alto Voluntary Mitigation $200K for Roadway and single improvements on University Ave. $200K payment made on August 19, 2011. Yes 5(c)(iv) Contributions to AC Transit U-line capital improvements, low load factor ratios, parking spaces at Ardenwood Park & Ride No activity. Payment to be made within 30 days from issuance of the first Hospital Occupancy Permit. NA Table 1: Development Agreement, Section 5 - SUMC Parties’ Promises 2015-16 4 SUMC Development Agreement Compliance: 2015-2016 DA Section Description Summary Activity Complies? 5(c)(v) Opticom Payments $11,200 payment for Opticom traffic control system at 7 intersections No activity. Payment to be made within 30 days from issuance of the first Hospital Occupancy Permit. NA 5(c)(vi) CalTrain Go Passes SUMC purchase of passes for all hospital employees working >20hrs/week Go Passes have been purchased per the Development Agreement since January 1, 2012. Yes 5(c)(vii) Marguerite Shuttle Service Purchase of additional shuttles to meet demand Purchased additional shuttle buses for the Marguerite Shuttle service which now includes five renewable diesel-electric hybrid buses and three all-electric buses. Yes Table 1: Development Agreement, Section 5 - SUMC Parties’ Promises 2015-16 5 SUMC Development Agreement Compliance: 2015-2016 DA Section Description Summary Activity Complies? 5(c)(viii) SUMC Transportation Demand Management (TDM) Coordinator SUMC hires coordinator to promote alternative transportation options TDM Coordinator was hired in March 2012. Yes 5(c)(ix) Monitoring of TDM Programs Yearly report regarding alternative transit mode use 2016 Alternative Mode Share Report indicates 31.9% of SUMC employees using alt modes. Yes Linkages 5(d)(i) Intermodal Transit Fund $2.25M payment to improve pedestrian linkages to PA Intermodal Transit Center Payment of $2.25M on August 25, 2011 to establish City fund. (C11) Yes 5(d)(ii) Quarry Road Fund $400K payment to improve pedestrian linkages along Quarry Road Payment of $400K on August 25, 2011 to establish City fund. (D11) Yes Table 1: Development Agreement, Section 5 - SUMC Parties’ Promises 2015-16 6 SUMC Development Agreement Compliance: 2015-2016 DA Section Description Summary Activity Complies? 5(d)(iii) Stanford Barn Connection SUMC budgets up to $700K for pedestrian connections in the vicinity of barn SUMC is required to construct these improvements prior to the issuance of the first Hospital Occupancy permit. NA Infrastructure, Sustainable Neighborhoods and Communities, and Affordable Housing 5(e) Infrastructure, Sustainable Neighborhoods and Communities, and Affordable Housing Fund $23.2M payment for these uses First of three $7.3M payments made on August 19, 2011. (E11) Second payment of $7.3M made on December 5, 2012. (E13) Final Payment to be made within 30 days from issuance of the first Hospital Occupancy Permit. Yes Table 1: Development Agreement, Section 5 - SUMC Parties’ Promises 2015-16 7 SUMC Development Agreement Compliance: 2015-2016 Climate Change (F11, F13) DA Section Description Summary Activity Complies? 5(f) Climate Change Fund $12M payment for climate change-related projects and programs First of three $4M payments made on August 19, 2011. (F11) Second payment of $4M made on December 5, 2012. (F13) Final Payment to be made within 30 days from issuance of the first Hospital Occupancy Permit. Yes 2015-2016 Annual Report Supplement Prepared by the City of Palo Alto July 27, 2017 Background and Purpose On June 6, 2011, the City Council approved Comprehensive Plan amendments, zoning changes, a conditional use permit, annexation and design applications for the Stanford University Medical Center Facilities Renewal and Replacement Project (the “Projects”). The Projects include the construction of a new Stanford Hospital and clinics buildings, an expansion of the Lucile Packard Children’s Hospital, construction of new School of Medicine buildings, renovation of the existing Hoover Pavilion, construction of a new medical office building and parking garage at Hoover Pavilion, roadway improvements along Welch Road and Durand Way, and SUMC design guidelines. A Development Agreement (the “Agreement”) vesting these approvals was entered into between the SUMC Parties and the City and was effective on June 6, 2011 and continues for thirty (30) years from the effective date. The Agreement requires an annual report, prepared by SUMC that outlines the activities of the preceding year and the efforts to fulfill the obligations of the Agreement. Per the requirements of sections 12(a) and 12(c) of the Agreement, The City of Palo Alto is to prepare a supplement to the annual report that contains an accounting of the funds described in the Section 5 of the Agreement (“SUMC Parties’ Promises”) including the fund balances and expenditures and the purposes for which the expenditures were used. This annual report supplement covers the period during the fifth year of the Agreement: June 6, 2015 through June 6, 2016. Accounting for the funds outlined in the attachment extends through the end of the City’s Fiscal Year 2016, June 30, 2016. Public Benefit Fund Accounting Attachment A to this Supplement contains a spreadsheet showing the funds received and the use of those funds pursuant to the Agreement as of June 30, 2016. In summary, the SUMC Parties have paid approximately $32.5 million in public benefit fees to the City. The first payment of $20,800,333 on August 11, 2011 was for the following funds: Fund for Community Health and Safety, Project Safety Net (Section 5(a)(iii)); Fund for SUMC Project Operating Deficit (Section 5(b)(iii)); Fund for Pedestrian and Bicycle Connections from Intermodal Transit Center to El Camino Real/Quarry Road Intersection (Section 5(d)(i)); Fund for Public Right of Way Improvements to Enhance Pedestrian and Bicycle Connections on Quarry Road (Section 5(d)(ii)); Fund for Infrastructure, Sustainable Neighborhoods and Communities and Affordable Housing (Section 5(e)), and Fund for Sustainable Programs Benefit (Section 5(f)(i)) An additional $11,733,333 payment was made on December 5, 2012 for the following funds: • Fund for Infrastructure, Sustainable Neighborhoods and Communities and Affordable Housing (Section 5(e)), and • Fund for Sustainable Programs Benefit (Section 5(f)(i)) The specific funding amounts as shown on Attachment A are consistent with Section 5 of the Agreement. These funds have been assigned a unique cost center number for accounting purposes. Attachment A to this Supplement also contains the investment earnings and the earnings allocation to the various cost centers. Public Benefit Fund Expenditures Expenditures and other activity occurred in the following funds in Fiscal Year 2015-2016 through June 30, 2016: Fund for Quarry Road Improvements and Fund for Intermodal Transit: $92,004.00 from the Fund for Quarry Road Improvements was utilized for the design, permitting, and design support during construction phases for the following two projects described in Development Agreement Section 5(d)(i) and (ii): Improvements to and within the public right of way to enhance the pedestrian and bicycle connection from the west side of El Camino Real to Welch Road, including urban design elements and way finding, wider bicycle lanes, as necessary on Quarry Road, enhanced transit nodes for bus and/or shuttle stops, and prominent bicycle facilities; and Improvements to Enhance the Pedestrian and Bicycle Connection from the Palo Alto Intermodal Transit Center to the existing intersection at El Camino Real and Quarry Road, including development of an attractive, landscaped passive park/green space with a clearly marked and lighted pedestrian pathway, benches and flower borders. There were no expenditures from the Fund for Intermodal Transit during FY 2015-2016. However, on June 20, 2016 (ID 6838) Council approved concept plans and authorized staff to proceed with final construction documents for both the Quarry Road Improvements (estimated at $400,000) and a Temporary Park Connection (estimated at $350,000). Associated expenditures for both the Fund for Quarry Road Improvements and the Fund for Intermodal Transit will be shown in the FY 2016-2017 reporting period. Fund for Infrastructure and Affordable Housing: $1,100,000 was utilized for the New Public Safety Building capital project. Additional activity included: In August 2016, $720,220 was transferred from the Residential Affordable Housing Fund to the SUMC Fund for Infrastructure and Affordable Housing, where the funds originated. Previously in April 2014, the Palo Alto Housing Corporation (PAHC) returned $720,220 for the Maybell affordable housing project that was overturned by voters and that amount was placed into the Residential Affordable Housing Fund. In August 2016, $1,720,488 was transferred out of the SUMC Fund for Infrastructure and Affordable Housing into the Commercial Housing Fund in order to satisfy the provision in the Development Agreement that the funds shall be used in the same manner as funds collected by the City pursuant to its housing fee ordinance. The $1,720,488 will remain in the Commercial Affordable Housing Fund until an appropriate affordable housing project is identified and the funds are approved by the City Council for use on the project. SUMC Fund (260) Housing Comm Fund (234) Housing Res Fund (233) Transfer from Housing Res Fund 233 to SUMC Fund 260 Transfer In $ 720,220 Transfer out ($ 720,220) Transfer from SUMC fund 260 to Housing Comm Fund 234 Transfer out ($1,720,488) Transfer In $1,720,488 Fund for Community Health and Safety, Project Safety Net: $1,074,011.98 was utilized for Project Safety Net and funding for railroad track security guards, fencing and vegetation removal, and intrusion detection cameras. The Project Safety Net program is specifically identified in the Agreement as a community health program that would be an appropriate program for the use of this fund. Fund for Expansion Cost Mitigation and Climate Change & Sustainability: $1,200,000 was transferred for the implementation of the Bicycle & Pedestrian Transportation Plan. ATTACHMENT C City of Palo Alto Stanford Medical Center Development Agreement (Fund 260) Jul 2015 - June 2016, AUDITED BALANCES Expansion Cost Intermodal Transit Mitigation cost centers 26000000 60260010 Beginning Balances, 7/1/2015 206,365.48 2,088,059.62 Adjustments made in FY 2016 Allocated Investment Earnings 77,603.48 (5.49) Operating Transfers in FY 2014 1,200,000.00 Operating Transfers in FY 2015 1,200,000.00 Adjusted Beginning Balances, 7/1/2015 2,683,968.96 2,088,054.14 Revenues: Revenues From Stanford - - Transfer from Housing Residential (repayment of 2014 advances for Maybell) Investment Earnings 851,552.00 Allocate to categories (851,552.00) Allocated Investment Earnings 90,368.72 70,304.39 Total Revenues 90,368.72 70,304.39 Expenditures: Temp Salaries/Benefits Contract Services Other expenses Interdepartmental Service Charges Transfer to Housing Commercial (Dev Impact Fee portion of SUMC Agreement) Transfer to Capital Projects Total Expenditures - - FY 2016 Revenues less Exp 90,368.72 70,304.39 Net total 6/30/2016, Audited Balances 2,774,337.68 2,158,358.52 Less: Unrealized Gain/Loss, 6/30/16 (52,490.78) (40,836.39) Reserve for Encumbrances, 6/30/2016 (ZFIR44)- - Interest Receivable, 6/30/16 (13,235.58) (10,296.92) Net total available 6/30/2016 (Audited Balances)2,708,611.32 2,107,225.22 Future Revenues from Stanford: Estimated January 2018-1st hospital occupancy permit Quarry Road Infrastructure &Climate Change Community Total FY 2016 FY 2016 Improvements Afford Housing & Sustainability Health & Safety Actuals Budget 60260020 60260030 60260040 80260010 444,183.04 14,699,225.06 8,611,415.17 3,708,298.17 29,757,546.54 (1.17) (38.62) (77,629.86) 71.65 - (1,200,000.00) - (1,200,000.00) - 444,181.87 14,699,186.44 6,133,785.31 3,708,369.82 29,757,546.54 - - - - - 720,220.00 720,220.00 851,552.00 662,800.00 (851,552.00) 11,857.76 424,203.19 166,119.61 88,698.33 851,552.00 - 11,857.76 1,144,423.19 166,119.61 88,698.33 1,571,772.00 662,800.00 (109,036.93) (109,036.93) (112,355.98) (952,956.39) (952,956.39) (1,199,790.50) (6,598.66) (6,598.66) (5,400.00) (5,420.00) (5,420.00) (226.00) (1,720,488.00) (1,720,488.00) (92,004.00) (1,100,000.00) (1,200,000.00) (2,392,004.00) (2,392,004.00) (92,004.00) (2,820,488.00) (1,200,000.00) (1,074,011.98) (5,186,503.98) (3,709,776.48) (80,146.24) (1,676,064.81) (1,033,880.39) (985,313.65) (3,614,731.98) (3,046,976.48) 364,035.63 13,023,121.63 5,099,904.92 2,723,056.17 26,142,814.56 (6,887.60) (246,398.93) (96,490.78) (51,520.53) (494,625.00) - - - (782.00) (782.00) (1,736.71) (62,129.64) (24,330.21) (12,990.93) (124,720.00) - 355,411.33 12,714,593.06 4,979,083.94 2,657,762.70 25,522,687.56 7,733,333.00 4,000,000.00 City of Palo Alto (ID # 7995) City Council Staff Report Report Type: Consent Calendar Meeting Date: 8/21/2017 City of Palo Alto Page 1 Summary Title: Gift of Printmaking Press and Materials and Naming of Printmaking Studio as Paula Kirkeby Press Title: Approval to Name the new Printmaking Studio at Cubberley Community Center as the Paula Kirkeby Press From: City Manager Lead Department: Community Services Recommendation Staff recommends the naming of the new printmaking studio at Cubberley Community Center as the “Paula Kirkeby Press” in honor of Paula Kirkeby. Executive Summary Staff recommends the naming of the new printmaking studio at Cubberley Community Center as the “Paula Kirkeby Press” in honor of Paula Kirkeby. The family of Paula Kirkeby has donated printmaking equipment and supplies from Smith Andersen Editions to the Palo Alto Art Center and the City of Palo Alto. The approximate value of the donation is $25,000-$30,000. The donation is intended to be used to establish a printmaking studio for the greater Palo Alto community and is a collaborative venture for the Art Center and the Cubberley Artist Studio Program (CASP). Background Paula Kirkeby was a local art consultant and dealer, community volunteer, and owner and operator of Smith Andersen Editions, who made an indelible mark on the art world and the local community. Paula’s connections to Palo Alto and printmaking run deep—she first came to Palo Alto in 1956 and opened a gallery at 200 Homer Street in 1969. In 1978 she opened 3EP press with partners Mary Margaret (Moo) Anderson and Joseph Goldyne where she worked with artists such as Nathan Oliveira and Frank Lobdell. In 1984, Paula became sole owner of the press and renamed it Smith Andersen, relocating to its current location on Pepper Avenue in Palo Alto. For more than three decades in a modest building on a residential street, Paula worked to provide extraordinary opportunities for artists to experience monotype printing at the press, developing an impressive roster of editions from artists of national and international acclaim—Bruce Conner, Enrique Chagoya, Sam Francis, George Herms, Ed Moses, Miriam Schapiro, and so City of Palo Alto Page 2 many more. Paula also maintained an independent consultancy and in that capacity helped to support the careers of many artists. Paula was involved at the Palo Alto Art Center as a longtime contributor and volunteer and served on the Palo Alto Public Art Commission, contributing and facilitating the contribution of more than 30 works of art to the Art in Public Places Collection. In 2016, Paula received a posthumous proclamation from the City of Palo Alto honoring her contributions to the community. Discussion The City of Palo Alto is honored to continue the tradition of fine art printmaking established and fostered by Paula through this generous legacy gift and hopes to commemorate Paula in a naming of the space with an exterior plaque. In accordance with Section 1-15(F) of the Naming Policy—Naming Places Within City-Owned Facilities, staff recommends approval to name the space. The impact of the printmaking studio will be significant, providing access to professional equipment and facilities for artists on the Peninsula and beyond. There are currently no public- access printmaking studios in San Francisco, the Peninsula, or the South Bay (Kala Art Institute in Oakland is the only printmaking facility available to artists in the Bay Area). The establishment of this studio at Cubberley enhances opportunities for artists in the CASP program, those working in the Art Center Adult Studios program, and in our greater community. Artists working in a wide range of media and in various levels have maintained a tradition of printmaking. The nature of printmaking allows for innovation, experimentation and discovery. The medium is used by many artists to develop new directions and further enhance their portfolios. This new studio will provide classes and workshops for novice to experienced students. It will also provide an open-access, drop-in program for experienced printmakers to work independently. The studio has the potential to reach approximately 500 students per year. The printmaking studio is located in F-4, one of the dedicated studios of the Cubberley Artist Studio Program (CASP). CASP artists welcome the addition of this resource to the program. With the community gathering spaces of the ArtLab, a public programming space for the arts, the printmaking studio, and the MakeX studio, CASP and Cubberley Community Center have become a dynamic destination for creative endeavors. By accepting this donation, the City is under no obligation to maintain the printmaking studio in perpetuity. The family understands that this donation comes with no obligations, although it is the City’s intent to provide the printmaking studio for the community’s benefit. Steve Staiger of PAHA has been briefed about and supports this request. Policy Implications In accordance with Section 1-15(F) of the Naming Policy—Naming Places Within City Owned Facilities, staff comes forward with this request. Attachments: Attachment A: 1-15 City of Palo Alto Page 3 Attachment B: Paula Kirkeby Proclamation POLICY AND PROCEDURES 1-15/MGR Revised: April 2008 Page 1 of 8 NAMING CITY-OWNED LAND AND FACILITIES POLICY STATEMENT The purpose of this policy is to ensure that City-owned land and facilities, when named for individuals, are persons who have made significant contributions or performed services deemed to have been of major importance to the community. This policy establishes uniform procedures for the naming of City-owned land and facilities as set forth by Council Resolution No. 6211, approved on December 12, 1983, and revised by Council on April 12, 2004. The policy is applicable to new and existing City-owned land and facilities. The policy provides a mechanism for citizens to suggest names which they believe should be considered for new City facilities or land acquisitions and for the renaming of existing facilities and lands. The policy also establishes criteria which will guide the Historical Association and the appropriate City Commission or Committee in recommending names to the Council for approval. Naming and renaming City-owned land and facilities shall be the responsibility of the City Council. However, places within City-owned land or facilities, such as a room or patio within a building or a trail or athletic field within a park, which do not require formal dedication by the City Council, may be named by the City Manager or his/her designee, subject to final approval by the City Council via the consent calendar. This process does not apply to the naming of streets which will continue to be processed through the Planning and Community Environment Department (Policy and Procedure 1-16: Naming of City Streets). The naming of a street may be considered an appropriate alternative means of honoring an individual. The City Council has determined that significant individual, family or foundation contributions to the construction/renovation of City facilities can be recognized through the naming of said facilities after these groups. This document outlines the procedure to be followed when a fund- raising group or board, with the approval of the City Council, embarks upon a capital campaign for the purpose of securing private funds for the acquisition of land, renovation/expansion of an existing building, or the construction of a new facility, and wishes to offer naming opportunities in recognition of significant donations of money or land. The City Council has determined that significant contributions from corporations or corporate foundations to capital campaigns will not be accepted in exchange for the ability to name entire facilities in recognition of these corporate entities. However, the City Council has agreed to allow naming recognition of corporate or commercial entities in facility interiors or on sub-facilities as described in this policy. Business logos associated with any benefactor seeking naming rights shall not be allowed on any City owned land, facility, building or sub-facility under this policy. POLICY AND PROCEDURES 1-15/MGR Revised: April 2008 Page 2 of 8 The City may remove any business name from a City facility or property if the business declares bankruptcy and goes out of business. The City may remove any individual name from a City facility or property if the person is convicted of a felony or other crime of moral turpitude. If a name is removed under this provision, the City shall not be required to return the donation. SECTION 1: PROCEDURE FOR NAMING NEW FACILITIES OR CITY-OWNED LANDS In cases involving a major capital fundraising campaign, there will be a separate and different procedure from the one outlined below. Section 3 below on “Naming Recognition for Capital Campaigns” further outlines this process. A. Responsibility of the Project Manager Implementation of this policy is the responsibility of the department in which the project to be named is managed. In the instance of a new City-owned land or facility, the project manager should incorporate the process for naming into the project schedule so the naming is accomplished in a timely manner. 1. Requests concerning a name to be given to the City-owned land or facility shall be made in writing on an approved suggestion form to the City Clerk. a. The project manager should alert the City Clerk when to expect the submission of names and the anticipated time frame for the naming process. b. The project manager may submit suggested names on an approved suggestion form on behalf of staff or citizens who have been involved in the project development. c. In some instances, it may be appropriate to actively solicit suggestions and, in those cases, the project manager should specify a time frame for submissions and method of notification. d. All submittals, whether from an individual or an organization, must include the name and address of the submitter. No anonymous submittals will be accepted. e. All suggestions will be given the same consideration without regard to the nomination source. 2. The project manager is responsible for conveying the name suggestion forms from the City Clerk to the Palo Alto Historical Association and presenting the recommendations from the Historical Association to the appropriate commission or committee whose sphere of influence is most closely associated with the facility in question. The Parks and Recreation Commission shall review name suggestions for acquired land to be dedicated as a park, recreational facilities, community centers and interpretive centers. The Library POLICY AND PROCEDURES 1-15/MGR Revised: April 2008 Page 3 of 8 Advisory Commission shall review name suggestions for library facilities. The Public Art Commission shall review name suggestions for art facilities. The Policy and Services Committee shall review name suggestions for police, fire or utility facilities as well as major civic complexes. a. The Historical Association may also originate suggestions for names or provide suggestions for appropriate alternatives as part of its recommendations. b. The project manager shall assure that adequate time is allowed for the Historical Association and the appropriate commission or committee to evaluate the recommended names. c. The Historical Association shall determine if the suggested names meet the criteria of appropriate significance, and shall submit the recommendations to the appropriate commission or committee together with the rationale for the recommendations. The response from the Historical Association shall acknowledge all the names that are submitted, but recommend only those which it feels meet the criteria and warrant serious consideration. B. Responsibility of the Reviewing Commission Or Committee 1. The commission or committee shall conduct a public hearing, confirm that the recommended names meet the criteria of appropriate significance, select recommendation(s) provided by the Historical Association, and shall forward its recommendation to the City Council. The report from the commission or committee shall acknowledge all of the recommended names together with their evaluation, but present only the name(s) which it feels best meets the criteria and merits serious consideration by the City Council. 2. Once approved, a transmittal and resolution will be prepared by staff for consideration and approval by the City Council. The transmittal shall include a narrative of historic reference prepared by the Palo Alto Historical Association for the name, a copy of the name suggestion form, and minutes of the Commission meeting when the recommendation was discussed. C. Criteria The following criteria shall be used in selecting an appropriate name for City-owned land and facilities. 1. The name should, if possible, have or preserve the geographic, environmental (relating to natural or physical features), historic or landmark connotation of particular significance to the area in which the land or facility is located, or for the City as a whole. Either connotation is equally valid. POLICY AND PROCEDURES 1-15/MGR Revised: April 2008 Page 4 of 8 2. Acknowledgement of contributions: Consideration may be given to naming the City- owned land or facility after an individual when the land or facility, or the money for its purchase, has been donated by the individual, or when otherwise warranted by some contribution or service which is deemed to be of major and lasting significance to the acquisition of that piece of land, or planning, development, construction or renovation of that particular facility. Donation of land or resources shall not constitute an obligation by the City to name the land or facility or any portion thereof, after an individual, family, or individual/family foundation. City-owned lands, parks, or entire facilities shall not be named for benefactor organizations, groups or businesses, but in special cases, may be considered for sub-facilities such as rooms or playgrounds. In cases involving a major capital fundraising campaign, see Section 3 below – Naming Recognition for Capital Campaigns. 3. Names honoring individuals or families, other than those of recognized historic importance, must be supported by compelling reasons. 4. In the event the City-owned land or facility was formerly school property or had other ownership such that the name of the school, building or site has community significance or community recognition, consideration may be given to preserving that name. 5. The City encourages naming which reflects the City’s ethnic and cultural diversity. 6. No City-owned land or facility shall be named after a seated elected or appointed official. 7. No City-owned land or facility shall be named after a person whose contribution to the City of Palo Alto was or is a part of that individual’s normal duties as an employee of the City. An exception may be made for former such employees who have contributed volunteer services of an exceptional nature beyond their normal duties. 8. When naming sub-facilities or interior spaces, such as rooms or playgrounds, after corporate or commercial entities or foundations, these entities must abide by the City’s anti-discrimination policy. D. Council Action 1. The recommendations received from the Historical Association and the commission or committee shall be placed on the Council agenda for final approval. 2. Action by the Council shall be by Council Resolution. E. Follow-up to Selection of the Name 1. The above-described process for selecting an appropriate name should precede the preparation of a park dedication ordinance. POLICY AND PROCEDURES 1-15/MGR Revised: April 2008 Page 5 of 8 2. Subsequent to approval by the City Council, the name for the City-owned land or facility shall be conveyed to the Department of Public Works for incorporation in City official maps and plans, and to the Palo Alto Historical Association for its records. F. Naming Places Within City-owned Land or Facilities In the case of places within City-owned land or facilities, where the policy does not require a Council resolution, responsibility for requesting Council approval of the new name shall reside with the department head who manages the land or facility. Ideally, the naming of features within a park and specific trails or facilities within open space lands will occur during the master plan or site plan process. Names within parks should be appropriate to the park by reflecting the expression of the place (topography, geology, natural features), flora and fauna, or history of the area. In advance of the naming, the department head shall send a memorandum to the City Manager advising of the proposed action and requesting approval. The City Manager will then seek approval of the name from the City Council via the consent calendar. SECTION 2: PROCEDURE FOR RENAMING EXISTING FACILITIES OR CITY-OWNED LANDS Existing place names are deemed to have historic recognition. City policy is not to change the name of any existing facilities or City-owned land, particularly one whose name has City or regional significance, unless there are compelling reasons to do so. Further, the City will consider renaming to commemorate a person or persons only when the person or persons have made major, overriding contributions to the City and whose distinctions are as yet unrecognized. A. Renaming Suggestions 1. All requests concerning a new name to be given to the City-owned land or facility shall be made in writing on an approved suggestion form to the City Clerk. The suggestion must detail how the proposed name change is consistent with the criteria, the purpose of the name change, and how the new name is directly associated with the land or facility. 2. All submittals, whether from an individual, organization or City staff, must include the name and address or the submitter. No anonymous submittals will be accepted. 3. The City Council shall initiate the renaming process by referral of the public or staff request to the commission or committee whose sphere of influence is most closely associated with the facility in question. Council can also initiate the renaming of lands or a facility without a public request whenever deemed necessary or in the best interest of the City of Palo Alto, following established criteria. Once the referral is made by the City POLICY AND PROCEDURES 1-15/MGR Revised: April 2008 Page 6 of 8 Council to a specific commission or committee, the commission or committee will await comment and evaluation of the new name from the Palo Alto Historical Association. B. Responsibility of the Project Manager 1. The City Clerk is responsible for conveying the name suggestion form(s) received by the deadline to the Project Manager, who will be responsible for forwarding to the Palo Alto Historical Association and then transmitting the recommendation(s) from the Palo Alto Historical Association to the appropriate commission or committee as outlined in Section A above. 2. The recognized neighborhood association in the vicinity of the land or facility will be notified of the proposed name change at the time the reviewing commission or committee receives the report from the Historical Association. C. Responsibility of the Reviewing Commission Or Committee 1. The commission or committee shall conduct a public hearing, confirm that the suggested name(s) meet the criteria of appropriate significance, select recommendation(s) from the names provided by the Historical Association, and shall forward its recommendation to the City Council. The report from the commission or committee shall acknowledge any recommended names together with its evaluation, but present only the name or names which it feels best meets the criteria and merits serious consideration by the Council. 2. Once approved, a transmittal and resolution will be prepared by staff for consideration and approval by the City Council. The transmittal shall include a narrative of historic reference for the name or names, together with a copy of the name suggestion form. D. Criteria Each application for renaming a city park or facility must meet the criteria in this policy, but meeting all criteria does not ensure renaming. City-owned lands and facilities may be renamed for an individual(s) under the following conditions. Where the individual: 1. Has made lasting and significant contributions to the protection of natural or cultural resources of the City of Palo Alto, or 2. Has made substantial contributions to the betterment of a specific facility or park, consistent with the established standards for the facility, or 3. Has made substantial contributions to the advancement of commensurate types of recreational opportunities within the City of Palo Alto. POLICY AND PROCEDURES 1-15/MGR Revised: April 2008 Page 7 of 8 E. Council Action 1. The recommendations received from the Palo Alto Historical Association and commission or committee shall be submitted for Council approval. 2. Action by the Council shall be by Council Resolution. F. Follow-up to Selection of Name 1. Subsequent to approval by the City Council, the new name for the City-owned land or facility shall be conveyed to the Department of Public Works for incorporation in City official maps and plans, and to the Palo Alto Historical Association for its records. NOTE: Questions and/or clarification of this policy should be directed to the City Manager's Office. SECTION 3: PROCEDURE FOR OFFERING NAMING RECOGNITION FOR SIGNIFICANT DONATIONS TO CAPITAL FUNDRAISING CAMPAIGNS This section applies to any organized fundraising initiated by the City, a Board/Commission or other group whose sole purpose is to support City programs and operations in support of the renovation/expansion of an existing building, the construction of a new facility, the acquisition of a building/land, or the furnishings, fixtures and equipment in said facilities. A. Responsibility of the staff liaison to the Board, Commission, Task Force or group conducting the Capital Campaign Implementation of this policy is the responsibility of department in which the project to be acquired/constructed/renovated is managed. A staff liaison appointed to work with the board/committee will guide them through the process and manage appropriate contacts with other departments as necessary during the acquisition, design and construction process. This will ensure that appropriate information and materials are provided to the group and that opportunities and expectations are clear, understandable, and feasible within the framework of the project. B. When a Capital Campaign is initiated by the City, a Commission or other group whose sole purpose is to support City programs and operations, accommodations to the procedures outlined in Sections 1 and 2 shall be made as follows: a. The organizing body may meet and discuss preliminary plans with the City’s liaison, Department Head and the City Attorney’s office in order to facilitate any “silent” fundraising period. b. The organizing body shall request authorization from the City Council for a Naming Recognition Plan in support of a specific project. They shall provide the following information in their request: POLICY AND PROCEDURES 1-15/MGR Revised: April 2008 Page 8 of 8 i. Name of the organizing body; ii. Purpose of the campaign; iii. Monetary goal of the campaign; iv. Expected term of the campaign; v. Plan for naming recognition including a schedule of naming opportunities and associated gift levels vi. Maintenance/replacement of naming recognition items – City staff shall work with the organizing body to ensure that the plan includes acknowledgement of the maintenance responsibilities associated with any naming recognition items within the facility. c. Once the Naming Recognition Schedule has been approved by the City Council, the fund-raising body shall have the authority to proceed with making commitments for naming opportunities with potential donors subject to final Council review. d. The naming of a facility or sub-facility will not occur until the pledged donation is received. e. Consistent with the Gifts to the City policy, all gifts paid directly to the City shall be duly reported to the Administrative Services Department (ASD) Director and recognized appropriately in accordance with that policy (Policies and Procedures 1-18). If a donation was given anonymously, the donor’s identity shall be protected to the extent possible. f. Under this procedure, the organizing body must present a final report to the City Council for approval, detailing the funds received and any naming opportunities granted, along with a timeline for the completion of the recognition. The group may also come to the Council at any time during the capital campaign for approval of one or more naming recognition items. All naming recognition must be adopted by resolution of the City Council. The City Manager or designee can also request that any donations and associated naming recognitions be brought to the City Council at an earlier point in the capital campaign for approval. C. The one exception to this procedure shall be for the naming of an entire building as recognition for a significant monetary or land contribution. If a fund-raising group secures a donation significant enough to warrant naming the entire facility in recognition of that individual, family or foundation, this should be presented directly to the City Council for approval separately and as soon as possible after this type of donation is secured. As part of this approval process, the Council may solicit input from the Palo Alto Historical Association or the appropriate board/commission. Consistent with the policy statement, the City will not recognize significant corporate donations by naming an entire facility in honor of these entities. D. In cases of major building reconfigurations or disasters that destroy or damage portions of the building, the City reserves the right to remove and not replace naming recognitions. However, the City will consider the original donation intent in these instances and make accommodations as feasible. POLICY AND PROCEDURES 1-15/MGR Revised: April 2008 Page 1 of 3 APPLICATION FOR NAMING OR RENAMING CITY-OWNED LANDS OR FACILITIES Naming objectives: 1. Ensure that parks, recreational areas and facilities are easily identified and located. 2. Ensure that names designated for parks, recreational areas and facilities are consistent with the values and character of the area or neighborhood served. 3. Encourage public participation in the naming, renaming and dedication of parks, recreation areas and facilities. 4. Encourage the donation of land, funds for land acquisition or development by individuals and groups. Criteria for naming new facilities or parks: The following criteria shall be used in selecting an appropriate name for City-owned land and facilities. 1. The name shall have or preserve the geographic, environmental (relating to natural or physical features), historic or landmark connotation of particular significance to the area in which the land or facility is located, or for the City as a whole. Either connotation is equally valid. 2. Consideration may be given to naming the City-owned land or facility after an individual when the land or facility, or the money for its purchase, has been donated by the individual, or when otherwise warranted by some contribution or service which is deemed to be of major and lasting significance to the acquisition of that piece of land, or planning, development, construction or renovation of that particular facility. Donation of land or resources shall not constitute an obligation by the City to name the land or facility or any portion thereof, after an individual or family. City-owned lands or parks shall not be named for benefactor organizations, groups or businesses, but in special cases, may be considered for sub-facilities such as rooms or playgrounds. 3. Names honoring individuals or families, other than those of recognized historic importance, must be supported by compelling reasons. 4. In the event the City-owned land or facility was formerly school property or had other ownership such that the name of the school, building or site has community significance or community recognition, consideration may be given to preserving that name. 5. The City encourages naming which reflects the City’s ethnic and cultural diversity. 6. No City-owned land or facility shall be named after a seated elected or appointed official. 7. No City-owned land or facility shall be named after a person whose contribution to the City of Palo Alto was or is a part of that individual’s normal duties as an employee of the City. An exception may be made for former such employees who have contributed volunteer services of an exceptional nature beyond their normal duties. 8. When naming sub-facilities, such as rooms or playgrounds, after corporate or commercial entities or foundations, these entities must abide by the City’s anti-discrimination policy. POLICY AND PROCEDURES 1-15/MGR Revised: April 2008 Page 2 of 3 Criteria for renaming existing facilities of parks: Each application for renaming a city park or facility must meet the criteria listed above, but meeting all criteria does not ensure renaming. Existing place names are deemed to have historic recognition. City policy is not to change the name of any existing facilities or City-owned land, particularly one whose name has City or regional significance, unless there are compelling reasons to do so. Further, the City will consider renaming to commemorate a person or persons only when the person or persons have made major, overriding contributions to the City and whose distinctions are as yet unrecognized. City-owned lands and facilities may be renamed for an individual(s) under the following conditions. Where the individual: 1. Has made lasting and significant contributions to the protection of natural or cultural resources of the City of Palo Alto, or 2. Has made substantial contributions to the betterment of a specific facility or park, consistent with the established standards for the facility, or 3. Has made substantial contributions to the advancement of commensurate types of recreational opportunities within the City of Palo Alto. Suggestions for naming or renaming City-owned lands or facilities shall be evaluated on the basis of the above criteria and upon appropriate documentation. Person making the name suggestion (required): Address (required):_____________________________________________________________ Contact phone number (required):_________________________________________________ E-mail (not required):___________________________________________________________ Location of site or facility to be named:_____________________________________________ Suggested name (required):_______________________________________________________ Biographical information: (Explain) ________________________________________________ ____________________________________________________________________________________________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ____________________________________________________________________________________________________________________________________________________________ ______________________________________________________________________________ Civic involvement: (Explain) ______________________________________________________ ____________________________________________________________________________________________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ POLICY AND PROCEDURES 1-15/MGR Revised: April 2008 Page 3 of 3 ______________________________________________________________________________ ____________________________________________________________________________________________________________________________________________________________ ______________________________________________________________________________ Connection to the facility: (Please explain in depth) ____________________________________ ______________________________________________________________________________ ____________________________________________________________________________________________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ____________________________________________________________________________________________________________________________________________________________ ______________________________________________________________________________ Reason for Nomination (required): _________________________________________________ ____________________________________________________________________________________________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ____________________________________________________________________________________________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ Additional Comments (additional information may be attached): _________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ____________________________________________________________________________________________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ ______________________________________________________________________________ Date Received by the City Clerk: ____________________________________ Submitted to Palo Alto Historical Association: _________________________ Date scheduled for review by commission: ____________________________ Proclamation Whereas, art enthusiast, collector, consultant, gallery professional, community volunteer, and owner and operator of Smith Andersen Editions died in her Palo Alto home on April 1, 2016 at age 81, leaving a legacy that continues to benefit the entire community, and; Whereas, Paula Kirkeby first came to Palo Alto in 1956 and opened an art gallery at 200 Homer Street in 1969. In 1978 she opened 3EP press with partners Mary Margaret “Moo” Anderson and Joseph Goldyne, printing fine-art editions with artist such as Nathan Oliveira and Frank Lobedell; and Whereas, in 1984 Paula Kirkeby became sole owner of the press and named it Smith Andersen, relocating it to its current location on Pepper Avenue in Palo Alto; and Whereas, for more than three decades in a modest Palo Alto building on a residential street, Paula Kirkeby worked to provide extraordinary opportunities for artists to experience printing at the press, developing an impressive roster of editions from artist of national and international acclaim—Bruce Conner, Enrique Chagoya, Sam Francis, George Herms, Ed Moses, Miriam Schapiro and so many more; and Whereas, through an active program of exhibitions at Smith Andersen, Paula Kirkeby actively worked to provide exhibition opportunities for artists from all over the world and educational opportunities for the community; and Whereas, as an active community volunteer, Paula Kirkeby served on the Palo Alto Public Art Commission, facilitating the contribution of more than 30 works of art to the Art in Public Places Collection of the City of Palo Alto and also served on the early capital campaign leadership of the Palo Alto Art Center Foundation; and Whereas, Paula Kirkeby worked tirelessly and passionately to create a vital community of friends, collectors, artists, museum professionals at Smith Andersen Editions, building a legacy of art that will continue to enrich our community. Now, Therefore, I, Patrick Burt Mayor of the City of Palo Alto, on behalf of the City Council do hereby proclaim that the City gratefully records and extends its sincere appreciation to Paula Kirkeby for her significant contributions to Palo Alto and the larger community. INTRODUCED AND PASSED: June 13, 2016 SIGNED: _________________________________ Patrick Burt , Mayor City of Palo Alto (ID # 8318) City Council Staff Report Report Type: Consent Calendar Meeting Date: 8/21/2017 City of Palo Alto Page 1 Summary Title: Final Map Buena Vista Mobile Home Park Title: 3972, 3980 and 3990 El Camino Real [17PLN-00265]: Approval of a Final Map for a 6.19-Acre Site That Includes the Buena Vista Mobile Home Park Site (3980 El Camino Real) and two Adjacent Commercial Properties (3972 and 3990 El Camino Real), for Lot Reconfiguration and Lot Line Removals to Reduce Five Parcels to Three Parcels and Provide Access and Utilities Easements, Subject to Conditions of a Tentative Map Considered by the City Council on August 14, 2017 From: City Manager Lead Department: Planning and Community Environment Recommendation Staff recommends that the City Council approve the final subdivision map for the Buena Vista Mobile Home Park (Attachment A). [Note: The proposed Final Map is consistent with a Tentative Map that will be considered for approval on August 14, 2017 and is being brought forward on an accelerated schedule to allow for recordation of the Final Map in time to meet the applicant’s funding and property acquisition timelines.] Executive Summary The requested action would consolidate and realign parcels on the site of the Buena Vista Mobile Home Park to allow for the acquisition and preservation of the Mobile Home Park by the Housing Authority of the County of Santa Clara. The Final Map (Attachment A), submitted on July 24, 2017 by the Housing Authority of the County of Santa Clara (HACSC), reflects the three parcels and easements shown on the Tentative Map scheduled for the Council’s review on August 14th. The draft Record of Land Use Action (RLUA, Attachment B) presented to Council for the August 14th hearing is attached. City of Palo Alto Page 2 Background & Discussion The Final Map application is the second of a two-phased process to reconfigure the existing parcels of land into three (3) parcels. The Final Map is the official, legal document to be recorded with the County to allow for separate ownership of the three parcels. The Final Map is prepared under the direction of a registered civil engineer or a licensed land surveyor and is based on a survey. Approval of a Final Map is ministerial if the Final Map is in substantial conformance with an approved Tentative Map. While many cities delegate approval of the Final Map to the City Engineer, under PAMC Section 21.16, the City Council is responsible for the approval. Recordation of the Final Map will allow the HACSC to purchase the 4.5-acre parcel (Parcel 1) containing the Buena Vista Park, and also proceed with an agreement, as captured in Tentative Map approval conditions, to lease for up to three years the 0.41-acre residential portion of the 0.7-acre parcel (Parcel 3) that also contains the service station at 3972 El Camino Real. This lease will allow for relocation of residential tenants in that area to Parcel 1 during the three year period. The requested action is consistent with the Tentative Map recommended for approval by the Planning and Transportation Commission (PTC) on July 12th with one change (retention of the 30-foot Standard Oil access easement rather than abandonment), and as considered by the City Council on August 14th. The PTC staff report and minutes are available here: https://www.cityofpaloalto.org/civicax/filebank/documents/58656 and http://midpenmedia.org/planning-transportation-commission-52/. Minutes are also included as Attachment C. The City Council staff report and a video of the meeting will be available here: http://www.cityofpaloalto.org/gov/agendas/council.asp and http://www.cityofpaloalto.org/gov/agendas/council/default.asp. The RLUA for the Tentative Map includes all of the approval conditions, including the lease provision noted above and a requirement for adjustment of a couple of existing motor homes prior to recordation of the Final Map so they are not bisected by the new property lines. One of these coaches (#28) is vacant and will be removed by August 11th. Coach #5 is anticipated to be removed by the week of August 14th, following replacement of that coach on a different space in the Park to house the family currently living there. Additional adjustments may be required following HACSC’s acquisition and assessment of code compliance issues. Policy Implications City of Palo Alto Page 3 The Final Map is the document containing the statements, acknowledgements and agreements from the property owner, surveyor, City officials and beneficiaries that the Final Map is in conformance with all applicable regulations and the approved Tentative Map. There are no policy implications related to the approval of the Final Map, since the map is consistent with the approved Tentative Map. Resource Impact To avoid the loss of affordable housing units at the Buena Vista Park, City Council committed to providing $14.5 million in affordable housing fees via approval of a Memorandum of Understanding (MOU) in June 2016. All MOU parties - the City of Palo Alto, HACSC, and Santa Clara County - committed to preserving the affordable housing at the Park by contributing the same amount of funding. The funding will be used to purchase and make improvements to the housing units in the Park. After the Final Map is recorded, the HACSC will purchase the Buena Vista Park Mobile Home Park located on proposed Lot 1 of the subject property. The HACSC will also begin working with Park residents and planning for any necessary improvements to the Park. Environmental Review Approval of a Final Map is ministerial and therefore exempt from review under the California Environmental Quality Act (CEQA). Attachments: Attachment A: Final Map (DOCX) Attachment B: ROLUA Tentative map BV (DOCX) Attachment C: Excerpt PTC Minutes T Map July 12 2017 (DOC) Attachment Project Plans Hardcopies of the Final Map are provided to Council Members. This map is available to the public online and by visiting the Planning and Community Environmental Department on the 5th floor of City Hall at 250 Hamilton Avenue. Directions to review the final map online: 1. Go to: https://paloalto.buildingeye.com/planning 2. Search for “3990 El Camino Real” and open record by clicking on the green dot 3. Review the record details and open the “more details” option 4. Use the “Records Info” drop down menu and select “Attachments” 5. Open the attachment named “3990 El Camino Real Final Map”. APPROVAL NO. 2017-xx RECORD OF THE COUNCIL OF THE CITY OF PALO ALTO LAND USE ACTION FOR 3972, 3980, 3990 EL CAMINO REAL: TENTATIVE MAP APPLICATION [FILE NO.17PLN- 00197] On August 14, 2017, the City Council approved the Tentative Map application for reconfiguration of lot lines on a 6.19-acre site to three parcels, making the following findings, determination and declarations: SECTION 1. BACKGROUND. The City Council of the City of Palo Alto (“City Council”) finds, determines, and declares as follows: A. On June 2, 2017, the Housing Authority of Santa Clara County applied for a Tentative Map application for the reconfiguration of five lots to three lots on a 6.19-acre site that includes the Buena Vista Modular Home Park (zoned RM-15) and commercial land uses (zoned CN); B. The RM-15 zoning district has a minimum lot size requirement of 8,500 square feet. The Parcel Map would result in a 4.5-acre parcel (Parcel 1) for the Buena Vista Mobile Home Park under RM-15 zoning, and a 0.41-acre (17,859.6 square foot) portion of Parcel 3 that would remain in RM-15 zoning. Multiple family housing use would continue on these RM- 15 zoned sites and compliance with RM-15 standards related to new lot lines would be assured with implementation of approval conditions; C. The CN zoning district will remain on (1) proposed Parcel 2, where no site or building changes are proposed, and where the proposed easements will not adversely impact site improvements and required parking spaces, and (2) the portion of Parcel 3 supporting the 0.29- acre gas station site, where no site or building changes are proposed. Access and utility easements across Parcel 2 to serve housing units on Parcels 1 and 3 are proposed and have been reviewed and approved by relevant City staff; and D. Following staff review, the Planning and Transportation Commission (Commission) reviewed and recommended approval of the Tentative Map on July 12, 2017, supporting a condition of approval requiring up to a three-year lease back of the 0.41-acre housing site on Parcel 3 to the Housing Authority of Santa Clara County. SECTION 2. ENVIRONMENTAL REVIEW. In conformance with the California Environmental Quality Act (CEQA) the project is categorically exempt per CEQA Guidelines Sections CEQA section 15301 (Existing Facilities), and section 15326, Acquisition of Housing for Housing Assistance Programs. SECTION 3. TENTATIVE MAP FINDINGS A legislative body of a city shall deny approval of a Preliminary Parcel Map, if it makes any of the following findings (California Government Code Section 66474): 1. That the proposed map is not consistent with applicable general and specific plans as specified in Section 65451: This finding cannot be made in the affirmative. The proposed Tentative Map, as conditioned, is consistent with applicable Comprehensive Plan policies and programs, including the Housing Element 2015-2023, the design requirements of the Subdivision Ordinance (Palo Alto Municipal Code (PAMC) Section 21.20), and the RM-15 zone district (PAMC Chapter 18.13) development standards. 2. That the design or improvement of the proposed subdivision is not consistent with applicable general and specific plans: This finding cannot be made in the affirmative. The site is physically suitable for the existing uses, and the revised lot configuration is compatible with the pattern and scale of existing and neighboring development, with implementation of approval conditions. There is no specific plan designated for the area; 3. That the site is not physically suitable for the type of development: This finding cannot be made in the affirmative. The site’s lot reconfiguration will allow for continuation of existing land uses. No development is proposed at this time; repair and unit footprint(s) adjustment are necessary prior to Final Map recordation. The site is adjacent to commercial, single-family residential and multi-family residential uses, and is zoned to allow the continuation of uses and densities. 4. That the site is not physically suitable for the proposed density of development: This finding cannot be made in the affirmative. As conditioned, the subdivision would be consistent with the site’s development regulations of the RM-15 zone district. The existing densities are not proposed to be changed; in particular, the overall number of housing units will not be increased with this map. 5. That the design of the subdivision or the proposed improvements is likely to cause substantial environmental damage or substantially and avoidably injure fish or wildlife or their habitat: This finding cannot be made in the affirmative. The subdivision would not cause environmental damage or injure fish, wildlife, or their habitat. The project site is located in an established urban area with no riparian or tree habitat for the candidate, sensitive, or special status species in the area. The final map will comply with conditions of approval for protected tree preservation. 6. That the design of the subdivision or type of improvements is likely to cause serious public health problems: This finding cannot be made in the affirmative. The subdivision of the existing parcel will not cause serious health problems. The map is designed to provide easements allowing access for emergency services, and utility services, such as electricity, gas, sanitation and water, and is designed per City and State standards to ensure public safety. 7. That the design of the subdivision or the type of improvements will conflict with easements, acquired by the public at large, for access through or use of, property within the proposed subdivision. In this connection, the governing body may approve a map if it finds that alternate easements, for access or for use, will be provided, and that these will be substantially equivalent to ones previously acquired by the public. This subsection shall apply only to easements of record or to easements established by judgment of a court of competent jurisdiction and no authority is hereby granted to a legislative body to determine that the public at large has acquired easements for access through or use of property within the proposed subdivision. This finding cannot be made in the affirmative. The reconfiguration of existing parcels will not conflict with existing public easements, and new public and private easements are proposed for utilities and vehicular access. Because none of the statutory findings authorizing denial can be met, the City Council hereby approves the subject “Tentative Map”. SECTION 4. Conditions of Approval. 1. This matter is subject to the California Code of Civil Procedures (CCP) Section 1094.5; the time by which judicial review must be sought is governed by CCP Section 1094.6. 2. To the extent permitted by law, the Applicant shall indemnify and hold harmless the City, its City Council, its officers, employees and agents (the “indemnified parties”) from and against any claim, action, or proceeding brought by a third party against the indemnified parties and the applicant to attack, set aside or void, any permit or approval authorized hereby for the Project, including (without limitation) reimbursing the City for its actual attorneys’ fees and costs incurred in defense of the litigation. The City may, in its sole discretion, elect to defend any such action with attorneys of its own choice. APPROVAL CONDITIONS FROM CITY DEPARTMENTS, IN RESPONSE TO MAP SUBMITTAL OF JULY 6, 2017, SHALL BE PROVIDED IN A REVISED ROLUA SET AT COMMISSIONERS’ PLACES SECTION 6. Term of Approval. Tentative Map Approval. Within two years of the approval or conditional approval of a tentative map the subdivider shall cause the subdivision or any part thereof to be surveyed, and a final map, as specified in Chapter 21.08, to be prepared in conformance with the tentative map as approved or conditionally approved, and in compliance with the provisions of the Subdivision Map Act and this title and submitted to the city engineer PASSED: AYES: NOES: ABSENT: ABSTENTIONS: ATTEST: APPROVED: ________________________ ________________________ City Clerk Director of Planning and Community Environment APPROVED AS TO FORM: __________________________ Senior Assistant City Attorney 1 Planning & Transportation Commission 1 Draft Verbatim Minutes 2 July 12, 2017 3 Excerpt 4 5 6 Public Hearing 7 Action Item 3 8 PUBLIC HEARING/QUASI JUDICIAL 3980 El Camino Real [17PLN-00197]: Request by the 9 Housing Authority of Santa Clara County for a Tentative Map for a 6.19-Acre Site that 10 Includes the Buena Vista Park Site (3980 El Camino Real) and Two Adjacent Commercial 11 Properties (3972 and 3990 El Camino Real), for Lot Reconfiguration and Lot Line 12 Removals to Reduce Five Parcels to Three Parcels, and Provide Access and Utilities 13 Easements. The Three New Parcels Will Be: (1) Parcel 1, at 4.5 Acres, Zoned RM-15 for 14 Multiple Family Residential Use (Buena Vista Park), (2) Parcel 2 at 1.0 Acre, Zoned CN for 15 Neighborhood Commercial Use (Existing Retail Building), (3) Parcel 3 at 0.7 Acres, Zoned 16 CN (Existing Gas Station Site) and RM-15 (0.41-Acre Rear Portion Supporting More than 17 Eight Buena Vista Park Studios/Modular Units). The 0.41-Acre Residential Portion Would 18 Be Leased to the Housing Authority for Up To Three Years, Allowing Tenants to Remain 19 Until They can be Accommodated on Parcel 1. For More Information Contact Project 20 Planner Amy French at Amy.French@CityofPaloAlto.com 21 22 Chair Alcheck: Why don’t we begin with item number three, the Buena Vista Mobile Home area 23 adjacent commercial lots tentative map. Let me just reiterate, if there are speaker cards for 24 this item… if anybody wishes to speak on this item please fill out a speaker card and had it to 25 staff so that I can call it out. 26 27 Ms. Amy French, Chief Planning Official: Excellent. Good evening, may I present? I’m Amy 28 French, Chief Planning Official. I am here to present the tentative map for the six plus acre site 29 which houses the Buena Vista Mobile Home Park or manufactured home park. The site is 30 located in Barron Park. It has existing zoning of RM-15, otherwise known as residential multi-31 family, 15 units per acre, and commercial neighborhood zoning. There are currently five parcels 32 on this site. The proposal is to reduce it to three parcels. The site is on the corner of Los Robles 33 and El Camino Real. 34 35 This image shows the three parcels that are proposed. Parcel One would be a mobile home 36 park known at Buena Vista Mobile Home Park, Parcel Three is the gas station parcel, next to El 37 Camino Real. This Parcel Three would include existing mobile home units at the rear. The Parcel 38 2 Two is entirely commercial, CN zone. I should mention that Parcel Three has split zoning; RM-15 1 where the mobile homes are, and CN where the gas station is. 2 3 The proposal would provide an easement for access and utilities across Parcel Two from El 4 Camino and across Parcel Two from Los Robles. The mobile home park currently has an 5 entrance on Los Robles. The parcel currently on the mobile home park has existing trees, both 6 within the park boundaries and along the right of way. There is no proposal to remove trees, 7 there’s no proposal to change zoning, there is no development proposed, there are no land use 8 changes proposed. 9 10 This is a simple matter, the reason it’s before the Planning Commission is because there are six 11 plus acres. Otherwise, it would just be a preliminary parcel map, a different process. The only 12 adjustments that would need to be made to the mobile home park are to observe the new lot 13 lines that are proposed, separating parcels one and three, and parcels three and two. As you 14 see the easement along the back of the retail building would provide the 10-foot setback 15 required by the zoning code, and I can say that the proposed easement will not affect the 16 parking spaced on parcel two; no impact there. 17 18 So, what’s great about this? Housing is going to be preserved, affordable housing. Luckily the 19 Housing Authority, who is here tonight represented by Flaherty Ward, is coming forward to 20 purchase the mobile home park and improve the mobile home park; the existing units. The 21 existing owner, Joe Jisser, would retain the commercial parcels on the parcels fronting El 22 Camino Real. And we are on a direct path to recordation to make sure that this deal goes 23 through. The escrow closes on September 1st, a very quick time line. 24 25 There will be no displacements. Families that are in housing units will remain, including on the 26 rear of parcel three, for up to 3-years. This happens to be the same lease term as the gas 27 station. 28 29 And our condition of approval, in the Record of Land Use Action At Places, includes such a 30 condition to ensure that this 3-year lease term lease-back to the Housing Authority is observed. 31 I should also note that in the At Places Memo there are two plan sheets, shrunk down. The only 32 change on these tentative map sheets is to indicate the dimension of 4.8-feet of easement 33 along El Camino Real, to ensure that we have the sidewalk width that is needed along El Camino 34 Real that’s dedicated back to the City for public access. 35 36 I’ll just quickly breeze through some images here. We have… the neighborhood is single-family 37 residences backing up to the park. We have RM-30 across Los Robles and RM-15 again, backing 38 up to the park on the other side. And then we have one and two-story development primarily 39 and we have retail along El Camino; CN zoning. These are some images of the residential 40 neighborhood context, the RM-30 development. We have… you can see here there are no 41 sidewalks along Los Robles adjacent to the park. In the future, should redevelopment be 42 proposed, that would be the time there would be improvements along this edge but there was 43 nothing proposed to date. The neighborhood retail context is neighborhood commercial zoning. 44 3 The retail building you can see here. We have a cell tower here in a fake magnolia and we have 1 sidewalks that begin here and continue on El Camino Real. These are some other images of the 2 nearby commercial on El Camino. This is an image that just shows the proposed easement, a 3 20-foot easement to get… just as there is there now, an easement to get to the mobile home 4 park from El Camino Real. And that concludes staff’s presentation. The applicant is here for 5 questions. Staff is here to answer questions as well. I should note that we did receive an email 6 today from Mr. Herb Borock, who has submitted a speaker card and let’s see if there’s 7 something else. 8 9 Ms. Gitelman: I’m hoping that I can take the director’s prerogative and jump in for a second 10 before we hear from the Housing Authority representative. Again, Hillary Gitelman the Planning 11 Director. I personally want to thank Amy French, she’s a senior member of our staff and she’s 12 the one who gets these short time frame projects. We think this is a pretty simple one, it’s just 13 a map to preserve an existing condition but it’s an existing condition that we all treasure in Palo 14 Alto. The City and the County have put a great deal of money into preserving the mobile home 15 park and this is one of the prerequisites to closing escrow and letting the Authority actually 16 follow through with the purchase. So, we’re hoping for the Commission’s support with this, this 17 evening and I want to thank Amy for jumping on this so fast. So, we’ll hear from the Housing 18 Authority and then any member of the public who would want to address the Commission. 19 20 Chair Alcheck: Yeah, let me just…before you begin. I have a speaker card also from the 21 [unintelligible]… separately right? She is not speaking as part of the public comment, she’s 22 speaking as an applicant, is that right? Flaherty Ward. 23 24 Ms. Gitelman: Yes, yes. 25 26 Chair Alcheck: Yeah, so why don’t we have you come up and speak as part of the presentation 27 and then... 28 29 Ms. Flaherty Ward: Is it on? Yep. Good evening Commissioners, I am Flaherty Ward, I represent 30 the Santa Clara County Housing Authority. I just wanted to introduce myself. Also, reiterate big 31 thank you to Amy. While it is a simple task, in theory, we have an expedited time line to 32 purchase the park while we have the fund available to us. That is why the close is September 1st 33 so a big thank you to Amy and her Staff. And then we also… we’re looking forward to the 34 purchase and preserving the park so the residents, a lot of who are here tonight, can remain in 35 the park you know, in perpetuity. So, I am here to answer any questions that you might have. 36 Also, with me tonight is Palo Hernandez who is our land use consultant, who was instrumental 37 in getting the application submitted. So, we are both here to field any questions you might 38 have. 39 40 Chair Alcheck: Ok, why don’t… do you have a question? Ok. 41 42 Commissioner Lauing: Just briefly, the funding, does it also include annual maintenance? 43 44 4 Ms. Ward: Yeah, so we’re… the… there’s a… that’s a big question but yes, we… the park… the 1 residents pay space rent so the park actually kicks off cash flow. We envision that there is going 2 to be some upfront investment on the infrastructure that needs to happen and we’re hopeful 3 that after that, the property… we’re going to finance it in a way so that the property cash flow 4 is based on the rent that is kicked off of the space rents. We realize that between now and then 5 there might be some infusion that’s needed. 6 7 Commissioner Lauing: I just didn’t know if every 3-years you needed ‘X’ more just for ongoing 8 maintenance. 9 10 Ms. Ward: Yeah, at this point we’re in the preliminary stages of developing the operating and 11 income budget. A lot of those questions will be answered. You know we’ve had limited access 12 to the site and the residents so we’re just kicking off those assessments to determine what the 13 operating budget will look like. And we’ll have more of those answers as we get into the 14 process but the Housing Authority operates… you know we have 30 assets in our portfolio. All 15 multi-family housing throughout the County. We… it’s something that we’re good at, it’s 16 something that we are sensitive too, we spend a lot of time on our operating budgets to make 17 sure that maintenance, security, up keep and stable housing is what’s kept in mind. 18 19 Commissioner Lauing: This is a wonderful outcome. 20 21 Chair Alcheck: Ok. For her? Ok. 22 23 Commissioner Summa: So, just a quick question about the eight units that are on the gas 24 station parcel. So, they can stay for 3-years and then after that I assume you want to absorb 25 them into the parcel one. 26 27 Ms. Ward: Yeah, for instance, we learned recently and this is what we were hoping for. There 28 are actually twelve vicinities on this site. Either site vacancies where there is no structures or 29 empty coaches so the hope is by improving the park, improving flow, we can absorb those 30 coaches into the site easily. 31 32 Commissioner Summa: So, you won’t be… they won’t be in the position of being… 33 34 Ms. Ward: Nobody is getting displaced. Yeah, everybody can stay. That’s why the 3-years was 35 negotiated so that it gives us the time to pull them in. 36 Commission Summa: Ok, congratulations and thank you. 37 38 Ms. Ward: Thank you. 39 40 Chair Alcheck: Ok, why don’t I invite Herb Borock to speak and then I’ll close the public 41 comment and then we can have a discussion. And if there more question for Staff or the County 42 representative, we can get back into that. 43 44 5 Mr. Herb Borock: Ok, thank you. I attended the Board of Supervisors hearing 2 ½-years ago on 1 January 2015 to support the mobile home park remaining. Rather than saying as some people 2 did, just have a site for affordable housing without an emphasis on the mobile home park. And I 3 estimated that the cost would be 40 million dollars so I am pleased that we’ve gotten to this 4 point. I provided you a letter at your places about my concern about the zoning compliance and 5 that goes to the findings on the tentative map on both finding one and four, as to whether it 6 does comply with the zoning ordinance. The site was originally annexed to the City and already 7 existed and so has been allowed to continue even though the density is much more than the 8 existing zoning. However, I don’t believe you can just arbitrarily draw a line and say that 9 whatever’s on one side of the line since it’s in part of the entire mobile home park suddenly 10 now also complies with the zoning. And I provided you a suggestion of how to remedy that 11 concern. Even if you agree that the existing proposal for 4.5-acres is entitled to keep what was 12 there before, there is a question of what happens when the units from the adjoining parcel that 13 is being created get moved over. Unless the applicant is saying that they are going to reduce 14 the total number to what is on the 4.5-acre parcel. I am not aware that the State overrides the 15 zoning on the mobile home park, such as when another government agency owns land such as 16 like the Veterans Administration Hospital and can build whatever they want. In any event, if you 17 accept the argument that what would be on the new parcel, 4.5-acres, is entitled to be there 18 because it’s there now, what about the units that are going to be moved within the next 3-19 years? Thank you. 20 21 Chair Alcheck: Ok, so seeing no other speaker cards, I am going to close the… what is it? Public 22 comment and then open it up to Commissioners to make comments or ask questions. 23 Commissioner Gardias, do you want to start us off? 24 25 Commissioner Gardias: Sure, but I think that… thank you very much. So, I mean thank you very 26 much for the presentation and of course, kudos to you for backing this problem. So, I think the 27 question that Mr. Borock brought up is a very interesting one. So… and definitely suppresses 28 the questions that I had so could you help us to understand the core of this issue? I understand 29 that right now there is more units per existing zone that’s zone designated. And then once you 30 explain this to us, could you just take us through the response from your side. Thank you. 31 32 Ms. French: Sure. Well, as I noted in the presentation, there will not be any zoning change; so 33 the Parcel Three, I should go back to that slide, will have the same number of housing units 34 within the first 3-years. Should, in the future, Mr. Jisser wish to redevelop this, the back area is 35 still zoned for housing. So, in a redevelopment scenario, density units per acre would apply. The 36 same number of housing units here today and that would not change with this first map, or I 37 should say tentative map. As I noted, this is not a development project, there is no change. I 38 understand the gist of the concern, which is a reduction of acreage and what does that do to 39 the housing units on the other side. It’s not an issue for the parcel one; parcel three there’s no 40 change so it’s not an issue for that one either. I did the review of parcel three to see if that was 41 going to be a problem; it’s not, under today’s zoning. There is no change in zoning, there is no 42 proposal to remove those housing units. 43 44 6 Commissioner Gardias: So, if I understand this correctly, that the current condition because 1 there is no zoning change, it’s pretty much… there is no concern. However, if there was a new… 2 if this… we would be populating this lot of the mobile housing, then we would not be able to 3 have as many of those homes on RM-15 for lot three, is this right? 4 5 Ms. French: That’s not necessarily true. If for instance, all of the mobile homes were to be 6 removed and a new development came in with affordable housing, in this case, I believe it’s 7 one hundred percent of affordable housing, there are density bonuses that allow you to 8 increase beyond the maximum density in the underlying zone, and Hillary can comment on 9 that. 10 11 Ms. Gitelman: Yeah, I just… I just want to avoid speculation about what might happen in the 12 future. What’s happening today is that we’re preserving the existing homes; the subdivision 13 enables that to happen. There is a nonconforming situation where there’s more units on this 14 parcel than would be allowed under the existing zoning but it’s not proposed to change. To the 15 extent that the Housing Authority undertakes renovation in the future, they mentioned utility 16 work and other site improvements, potentially removing some vacant coaches to put in the 17 coaches from the other parcel. All of those things are going to require permits; they will have to 18 be reviewed at the time they are proposed. We can’t really speculate today about what those 19 site changes are because they haven’t planned them but we do know that what we are 20 proposing here is consistent with our interpretation of the map back and with CEQA. We don’t 21 think there’s an issue and while I appreciate Mr. Borock’s input, we think that we’re good to go 22 on this, this evening. 23 24 Commissioner Gardias: Very good, thank you but we always appreciate Mr. Borock’s comments 25 and his presence here; I just wanted to mention this. When there’s going to be renovation 26 probably this… no, let me just talk to Amy because otherwise, we would have to reopen the 27 hearing. So, if there is going to be renovation with the houses and the houses are possibly 28 moved, I don’t know if there will be… under renovation, there might be some movement of the 29 houses within some boundaries. Would they have to comply with the setbacks? I believe that 30 some of them are entering the setbacks. 31 32 Ms. French: Yeah, so for new parcels line being created, then we would want the… you know, 33 any relocated homes to observe the setbacks. For the existing nonconforming coaches that are 34 within the setbacks, we’re not going to have them… relocate those. They are in an existing 35 nonconforming state that we inherited from when the area was annexed back in the 1970’s. 36 We’re not going to go and actively have all of those moved. They probably wouldn’t withstand 37 such a move; relocation. 38 39 Commissioner Gardias: I understand so let me maybe reformulate the question and maybe talk 40 to the representative from the Santa Clara Housing Authority. So, the question is like this, do 41 you expect that any renovation would require movement of any houses? Yes, please. Oh, 42 where’s Mike? Yes, please, if you could… 43 44 7 Ms. Ward: We don’t know yet. We are still in the assessment and fact-finding state of our 1 diligence to purchase the property. So, it is really hard to speculate on what that could look like 2 but am I understand it, any major renovation that we do will have to come through the 3 Planning Department as a land use application. I think at that time we would get comments 4 back on what requirements would be conditioned upon that approval. We would work with 5 planning Staff on trying to think of a thoughtful proposal on how to do all that. We know that 6 there are non-conforming uses out there. 7 8 Commissioner Gardias: Ok, and then if it’s not a so dumb question back to Amy, so say that 9 there may be a need to, because of the renovation, to move… to shift some of the houses that 10 are on the lot. Would it be… would that require a need for an exception… zoning exception or it 11 would be… or this would be a result at the Director’s level? 12 13 Ms. Gitelman: Again, we can’t speculate. We don’t have a specific proposal in front of us. They 14 just don’t know what they are going to need to do to upgrade the site. 15 16 Commissioner Gardias: Ok, let me move that to some other questions. So that 4.5-feet setback 17 along El Camino, I understand that this would allow… I am sorry, easement. That this would 18 allow for an 8-feet sidewalk. 19 20 Ms. French: It would allow … it would meet the El Camino Real Master Plan that prescribes a 21 certain setback. I can’t tell you where the curb is related to the property line. I am sorry but … 22 they are ensuring that 4.8-feet easement along the front of that parcel, and that was coming 23 from our Public Works Department to ensure that we’re meeting our plan lines that are shown 24 on the El Camino Real Master Plan. 25 26 Commissioner Gardias: Yeah, my question was getting to this point, which I hope that this is 27 going to be the result of this easement because as you know, we have an 8-foot minimum of 28 the sidewalk requirement at other areas so probably this would be the same. 29 30 Ms. French: Actually, I would say that, if and when let’s say a redevelopment were to come 31 forward on those commercial parcels, you know we have our El Camino Real Guidelines and the 32 CN zone standards that ask for even more than 8-feet. So, you know, it’s a minimum of a 33 sidewalk but there could be additional setbacks for any redevelopment, but there’s no 34 development proposed right now on those parcels. 35 36 Commissioner Gardias: Very good, thank you very much. Those are my questions, thanks. 37 38 Commissioner Monk: I wanted to also thank Ms. French and Ms. Ward for their presentations 39 today. It’s appreciated and I also want to acknowledge the number of residents that have come 40 out so that it’s reflected in the record when City Council reviews our transcript, I am counting 41 approximately 50 or so residents here. You’re here with your families and some children and it 42 really is important that you are here. That we see you here and it’s definitely noted that you are 43 here. Your presence is very much felt and it’s meaningful so thank you for coming here and 44 8 being a part of this process just by your presences alone. I did have some concerns about the 1 future development of parcel three as well but as Flaherty mentioned, we’re not looking at that 2 at this point so we will revisit that. This might not be within our purview but if there is further 3 development on Los Robles Avenue, I think parking in that area is really difficult. Especially for 4 parcel two and so if there is going to be any parking developed, perhaps you can consider 5 diagonal parking space or something in that area. I don’t think I have anything else so thank you 6 very much. 7 8 Commissioner Summa: There, I think, 117 structures… residential structures on… presently, if 9 that is right. So, kind of what you are saying is that number of residential structures will be 10 retained through grandfather in, is that correct? 11 12 Ms. French: There may end up being some removal of some of the coaches because we don’t 13 know about the building code compliance. We’re going to have to be having a look at a lot of 14 things out there, so we may reduce the number of housing units in the short term and we’ll see 15 in the long term. We don’t have a proposal. 16 17 Ms. Gitelman: Can I just pile on there? I mean I just want to be super clear, the purpose of the 18 map is to enable the purchase of the site with all of the existing structures in their current 19 locations, period. Then what’s going to happen is that the new owner of the parcel, once it 20 closes, is going to do an assessment of the site and what needs to be done to address utilities 21 and other things. At that point, they will know better whether there are, for example, vacant 22 coaches that can be removed so that some of these other ones can be moved on and whether 23 there are other physical changes. What we’ll have to do when they come in for permits for any 24 of these future things that we don’t know what they are, we’ll have to review them for 25 conformance with our codes to make sure that they meet the building code standard and the 26 planning standard, which is that you can’t accentuate or make a nonconforming situation more 27 nonconforming. 28 29 Commissioner Summa: Right but they would… through grandfathering, they retain the right to 30 have that number of units… 31 32 Ms. Gitelman: Correct. 33 34 Commissioner Summa: That’s what I was asking, I am sorry. So, I also appreciate Mr. Borock 35 coming in and I didn’t have a lot of time to study his letter. Is there any additional benefit to the 36 method that he’s suggesting or is it… I was not clear on it so I just wanted to ask your opinion 37 on that because he’s always full of good ideas. 38 39 Ms. Gitelman: It sounds like Mr. Borock is proposing to re-zone the site. You know so a 40 legislative change that would happen concurrent with the map and that’s just really not 41 something that the property owner or the purchaser had anticipated. It’s a lengthy process as 42 you know and it didn’t seem necessary to basically perpetuate the existing condition. 43 44 9 Commissioner Summa: And would that take too long to meet the requirement of the deadline? 1 2 Ms. Gitelman: Certainly. 3 4 Commissioner Summa: Ok, thanks. 5 6 MOTION 7 8 Chair Alcheck: I would like to congratulate the County as well. I think everybody in this 9 community is well aware sort of what’s been taking place and all the effort that’s been made. 10 And I… it’s pretty unique opportunity and I’m thankful that the City also invested its own funds 11 and is sort of achieving sort of a mutual goal here. So, it’s… I think this is a unique and special 12 event. We have a small role here in the review but I’ll make a motion now to… excuse me… to 13 recommend approval to the City Council of the tentative map application based on the findings 14 and subject to the conditions of approval and the draft record of land use. 15 16 SECOND 17 18 Commissioner Lauing: Second. 19 20 Chair Alcheck: Ok, would you like to speak to the motion at all? 21 22 Commissioner Lauing: You were eloquent. 23 24 Chair Alcheck: Ok, thank you. Make sure that is on the record. 25 26 Commissioner Lauing: I said it very loudly. 27 28 VOTE 29 30 Chair Alcheck: Ok, well let’s take a vote. All those in favor of the motion on the floor, please 31 raise your hand and say aye. That’s all-in favor; it's unanimous. Thank you all for your time. 32 Thank you for attending and let’s take a 5-minute break and begin with item number four after 33 that. Thank you 34 35 MOTION PASSED UNANIMOUSLY (5-0-2, Commissioner Rosenblum and Commissioner 36 Waldfogel absent) 37 38 Commission Action: Recommend approval to the City Council of Tentative Map Application 39 based on the finding and conditions in the draft Record of Land Use Action (Motion made by 40 Chair Alcheck, seconded by Commissioner Lauing, motion passed 5-0 (Rosenblum and 41 Waldfogel absent) 42 City of Palo Alto (ID # 8254) City Council Staff Report Report Type: Consent Calendar Meeting Date: 8/21/2017 City of Palo Alto Page 1 Summary Title: Shalleck Collaborative Professional Services Agreement Title: Approval of a Professional Services Agreement With The Shalleck Collaborative, Inc. for Design Services to Upgrade the City of Palo Alto Council Chambers for a Total Not-to-Exceed Amount of $123,708 From: City Manager Lead Department: City Clerk Recommended Motion Authorize the City Manager or his designee to execute the attached professional services agreement (Agreement) with The Shalleck Collaborative, Inc. (Attachment A) in a total not-to-exceed amount of $123,708 for architectural and broadcast audio-visual consultant services, including study, recommendations, cost estimate, and design services to upgrade and improve the City of Palo Alto Council Chambers located in Palo Alto City Hall at 250 Hamilton Ave, Palo Alto. Executive Summary Staff is requesting City Council approve a professional services agreement with The Shalleck Collaborative, Inc. for consultant services for the development of a preliminary design to upgrade and improve the City of Palo Alto Council Chambers. The currently installed audio-visual equipment in the Chambers is past its serviceable life and has not been under warranty since 2013. In addition, the current system has no back-up or redundancy capability. If the system stops working, the meetings will not be streamed to the public, will not be recorded, and the general function of City Council meetings will be disrupted. This agreement will provide the City with complete space planning and architectural/broadcast audio-visual design services including a needs study verification, inventory and survey of existing conditions, three preliminary designs, and delivery of construction related documents. The goal of the Council Chambers upgrade project is to increase the quality and reliability of the media equipment and meeting space in the Council Chambers. A new digital system will also eliminate manual processes currently in place to operate and manage the old analog system. In addition, the project will address all space and accessibility upgrades necessary to make the City of Palo Alto Council Chambers a City of Palo Alto Page 2 top-of-the-line facility. Background Solicitation Process A Request for Proposals entitled “Council Chambers AV, ADA, Voting System Preliminary Design” (RFP #167038) was issued on February 28, 2017. The prospective bidders were given 30 days to respond to the proposal, with a due date of March 30, 2017. A pre-bid conference and walk-through of the Council Chambers was held on March 14, 2017, with a dozen potential bidders in attendance. The City received five proposals. An evaluation committee was asked to review and score the proposals, proposer qualifications and responses based on the criteria identified in the RFP. The committee selected The Shalleck Collaborative as the most qualified proposer. Discussion The following is a summary of the Design Consultant’s Scope of Services: Design an upgrade to replace existing audio-visual, broadcast, and data storage equipment serving the Council Chambers and to integrate with ancillary networked meeting rooms located both at Palo Alto City Hall, and at three City libraries. Redesign of the Council Chambers Broadcast Booth to safely accommodate operators in an Americans with Disabilities Act (ADA) compliant work space. Propose an upgrade solution for a large format video display for Council Chambers. Propose an upgrade solution for the Council Chambers voting system. Recommend audio-visual upgrades to existing furnishings in the space including but not limited to, Council Dais, Staff Area, and Speaker Podium. Ensure all designs meet ADA requirements for this public space. The deliverables will include: Review and confirm an internal needs study, which will be conducted to collect information from managers and staff regarding workspace, storage, broadcast and other operational requirements and needs in order to prepare a set of preliminary designs. Provide at least three alternative layout and equipment options to meet the City’s needs. Preliminary project duration and cost estimates shall be included with each option. After presenting the three design options, the City Council will choose one option for the consultant to develop into bridging documents for a design-build procurement process. Attachment A, the Agreement, contains a complete description of the Scope of Services. City of Palo Alto Page 3 Timeline The Design Phase covered by this Professional Services Agreement is projected to be completed by January, 2018. Cost of Services BUDGET SCHEDULE NOT TO EXCEED AMOUNT Task A: Survey, Verify, Cost Impact Study $26,760 Task B: Prepare Design-Build Bridging Documents $42,420 Task C: Meetings $12,580 Task D: Work Product Submittals/Reimbursables $0.00 Task E: Construction Administration $2,100 Subtotal Basic Services and Reimbursable Expenses $103,090 Additional Services (Not-to-Exceed) $20,618 Maximum Total Cost $123,708 A full summary of the Cost of Services for this project can be found in the Agreement (Attachment A), Exhibit “C” Compensation. Resource Impact The funds for this Professional Services Agreement are budgeted in the Information Technology Fund. These funds were originally approved by Council in the Fiscal Year 2016 adopted budget and reappropriated to Fiscal Year 2017. The necessary funding for this contract is available in the Information Technology Fund in Fiscal Year 2018. This project will require the participation of staff and stakeholders from various City departments including, but not limited to, Information Technology Department, Public Works, City Clerk’s Office and the City Manager’s Office. Attachments: Attachment A: Professional Services Agreement with Shalleck Collaborative, Inc. CITY OF PALO ALTO CONTRACT NO: C17167038 AGREEMENT BETWEEN THE CITY OF PALO ALTO AND SHALLECK COLLABORATIVE, INC. FOR PROFESSIONAL SERVICES This Agreement is entered into on this 1st day of July, 2017, by and between the CITY OF PALO ALTO, a California chartered municipal corporation CITY ), and SHALLECK COLLABORATIVE, INC., a California corporation, located at 1553 Martin Luther King Jr. Way, Berkeley, CA 94709 ("CONSULTANT"). RECITALS The following recitals are a substantive portion of this Agreement. A. CITY intends for architectural and broadcast audio-visual consultant services, including study, recommendations, cost estimate, and design services to upgrade and improve the City of Palo Alto Council Chambers located in Palo Alto City Hall at 250 Hamilton Ave, Palo Alto provide services in connection with the Project 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 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 performance of all Services shall be to the reasonable satisfaction of CITY. Optional On-Call Provision (This provision only applies if checked and only applies to on- call agreements.) Services will be authorized by CITY, as needed, with a Task Order assigned and approved by CITY - 1. Each Task Order shall designate a CITY Project Manager and shall contain a specific scope of work, a specific schedule of performance and a specific compensation amount. The total price of all Task Orders issued under this Agreement shall not exceed the amount of Compensation set forth in Section 4 of this Agreement. CONSULTANT shall only be compensated for work Professional Services Rev. April 27, 2016 2 performed under an authorized Task Order and CITY may elect, but is not required, to authorize work up to the maximum compensation amount set forth in Section 4. SECTION 2. TERM. The term of this Agreement shall be from the date of its full execution through June 30, 2020 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 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 reement 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. SECTION 4. NOT TO EXCEED COMPENSATION. The compensation to be paid to CONSULTANT , and reimbursable expenses, shall not exceed One Hundred and Three Thousand and Ninety Dollars ($103,090.00). 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 Twenty Three Thousand Seven Hundred Eight Dollars ($123,708.00). The applicable rates and schedule of payment are set out at -1 HOURLY RATE SCHEDULE 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 ion 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 SECTION 5. INVOICES. In order to request payment, CONSULTANT shall submit monthly invoices 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 C-1 information in CON 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 Professional Services Rev. April 27, 2016 3 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 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 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 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 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. Professional Services Rev. April 27, 2016 4 Option A: No Subcontractor: 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. Option B: Subcontracts Authorized: Notwithstanding Section 11 above, CITY agrees that subconsultants may be used to complete the Services. The subcontractors authorized by CITY to perform work on this Project are: & Myer (Electrical Engineer0, Meme Architecture (Architect) and Thorton Tomasetti (Structural Engineer). CONSULTANT shall be responsible for directing the work of any subcontractors and for any compensation due to subcontractors. CITY assumes no responsibility whatsoever concerning compensation. CONSULTANT shall be fully responsible to CITY for all acts and omissions of a subcontractor. CONSULTANT shall change or add subcontractors only with the prior approval of the city manager or his designee. SECTION 13. PROJECT MANAGEMENT. CONSULTANT will assign Ian Hunter as the Principal A-V Lead to have supervisory responsibility for the performance, progress, and execution of the Services and Ian Hunter as the Project Manager 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 request, shall promptly remove 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 Joel Dino, Information Services Department, Project Services Division, for architectural and broadcast audio-visual consultant services, including study, recommendations, cost estimate, and design services to upgrade and improve the City of Palo Alto Council Chambers located in Palo Alto City Hall at 250 Hamilton Ave, Palo Alto, CA 94303, Telephone: 650-329-2686. 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. Upon delivery, all work product, including without limitation, all writings, drawings, plans, reports, specifications, calculations, documents, other materials and copyright interests developed under this Agreement shall be and remain the exclusive property of CITY without restriction or limitation upon their use. CONSULTANT agrees that all copyrights which arise from creation of the work pursuant to this Agreement shall be vested in CITY, and CONSULTANT waives and relinquishes all claims to copyright or other intellectual property rights in favor of the CITY. 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. 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. Professional Services Rev. April 27, 2016 5 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. [Option A applies to the following design professionals pursuant to Civil Code Section 2782.8: architects; landscape architects; registered professional engineers and licensed professional land surveyors.] 16.1. To the fullest extent permitted by law, CONSULTANT shall protect, indemnify, defend and hold harmless CITY, its Council members, officers, 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 that arise out of, pertain to, or relate to the negligence, recklessness, or willful misconduct of CONSULTANT, its officers, employees, agents or contractors under this Agreement, regardless of whether or not it is caused in part by an Indemnified Party. [Option B applies to any consultant who does not qualify as a design professional as defined in Civil Code Section 2782.8.] 16.1. To the fullest extent permitted by law, CONSULTANT shall protect, indemnify, defend and hold harmless CITY, its Council members, 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 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 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. 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. Professional Services Rev. April 27, 2016 6 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 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 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 CONSULTANT, CONSULTANT shall provide the Purchasing Manager written notice of the cancellation or modification within two (2) business such notice. CONSULTANT shall be responsible for 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. 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, whether or not completed, prepared by CONSULTANT or its contractors, if any, or Professional Services Rev. April 27, 2016 7 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 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. 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 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 Professional Services Rev. April 27, 2016 8 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 Environmentally Preferred Purchasing policies which are available at CITY 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 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 CCONSULTANT 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 CITYby 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 limited to Extended Producer Responsibility requirements for products and packaging. A copy of this policy is on file at the Purchasing ffice. (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 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 Professional Services Rev. April 27, 2016 9 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, OR 26.1 CONSULTANT is required to pay general prevailing wages as defined in Subchapter 3, Title 8 of the California Code of Regulations and Section 16000 et seq. and Section 1773.1 of the California Labor Code. Pursuant to the provisions of Section 1773 of the Labor Code of the State of California, the City Council has obtained the general prevailing rate of per diem wages and the general rate for holiday and overtime work in this locality for each craft, classification, or type of worker needed to execute the contract for this Project from the Director of the Department Copies of these rates may be City of Palo Alto. CONSULTANT shall provide a copy of prevailing wage rates to any staff or subcontractor hired, and shall pay the adopted prevailing wage rates as a minimum. CONSULTANT shall comply with the provisions of all sections, including, but not limited to, Sections 1775, 1776, 1777.5, 1782, 1810, and 1813, of the Labor Code pertaining to prevailing wages. 26.2 contract for public works construction, alteration, demolition, repair or maintenance. 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 Professional Services Rev. April 27, 2016 10 action. The prevailing party shall be entitled to recover an amount equal to the fair market value 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. 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 e of any conflict between the exhibits , 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) 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 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 11 of 23 CONTRACT No. C17167038 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 City Manager APPROVED AS TO FORM: City Attorney or designee SHALLECK COLLABORATIVE, INC. Officer 1 By: Name: Adam Shalleck Title: Founder Officer 2 (Required for Corp. or LLC) By: Name: Ian Hunter Title: Principal Attachments: EXHIBIT A : SCOPE OF SERVICES EXHIBIT B : SCHEDULE OF PERFORMANCE EXHIBIT C : COMPENSATION - SCHEDULE OF RATES INSURANCE REQUIREMENTS 12 of 23 SCOPE OF SERVICES A. BACKGROUND INFORMATION This scope of work is for architectural and broadcast audio-visual consultant services, including study, recommendations, cost estimate, and design services to upgrade and improve the City of Palo Alto Council Chambers located in Palo Alto City Hall at 250 Hamilton Ave, Palo Alto. The Council Chambers is a multi-purpose meeting room where City Council (and other) meetings are held and broadcast live via local cable television and internet streaming made possible by a partnership between the City of Palo Alto and Midpeninsula Community Media Center, Inc. The currently installed audio-visual equipment is past its serviceable life and has not been under warranty since 2013. In addition, the current system has no back-up or redundancy capability; if it stops working the meetings will not be streamed to the public, will not be recorded, and the general function of City Council meetings will be disrupted. CONSULTANT will study and propose a solution to increase the quality and reliability of the media equipment in the Council Chambers. A digital system will also eliminate manual processes that are currently in place to operate and manage the old analog system. B. DESCRIPTION OF PROJECT CONSULTANT shall: (1) Design an upgrade to replace existing audio-visual, broadcast, and data storage equipment serving the Council Chambers and integrate with ancillary networked meeting rooms located both at Palo Alto City Hall, and at three City libraries. (2) Redesign the Council Chambers Broadcast Booth to safely accommodate operators in an Americans with Disabilities Act (ADA) compliant work space. (3) Propose an upgrade solution for a large format video display for Council Chambers. (4) Propose an upgrade solution for the Council Chambers voting system. (5) Recommend audio-visual upgrades to existing furnishings in the space including but not limited to, Council Dais, Staff Area, and Speaker Podium. (6) Ensure all designs meet ADA requirements for this public space. An internal needs study has been conducted to collect information from managers and staff regarding workspace, storage, broadcast and other operational requirements and needs in order to prepare a set of preliminary designs. Consultant shall review and confirm the study and shall include the summary of the needs and at least three alternative layout and equipment options to meet these needs. Preliminary project duration and cost estimates shall be included with each option. Layout options shall range from the least impacting to the current floor configuration to the most disruptive and/or costly option. 13 of 23 TASK A - Survey of Existing Conditions, Needs Study Verification and Analysis, and Design Cost Impact Study Task A1: Review and verify the layout and as-built drawings provided by the City. The survey of existing conditions shall be focused on the electrical, data/telephone, audio-visual and broadcast equipment that are pertinent to the scope of the project. Additionally, structural, mechanical, fire protection, any other relevant systems shall be included to the extent that they may impact the eventual design options (i.e., installation of large format video displays for Council Chambers may require assessment of the structural system for the wall where the displays will be mounted). Task A2: Review and verify existing needs study and provide an analysis of this study. Verification shall consist of interviewing and gathering information from managers and staff to confirm the needs study and to gather additional information needed to develop a Design Cost Impact study. Task A3: The Design Cost Impact study shall include a summary of the needs study analysis and at least three schematic design options to meet the needs. For each option, an analysis shall be provided discussing the costs and benefits, potential impacts to staff operations during and after the construction, and if all the staff requirements from the needs study are met. For all options, provide preliminary cost estimates and general project timelines taking into consideration construction phasing, costs for night/weekend construction work to minimize disruptions, and relocation of regular public meetings as the last resort for all options. The Design Cost Impact study shall be reviewed by the City. All review comments from the City staff need to be addressed by CONSULTANT before proceeding to the next design task. TASK B - Preparation of Design-Build Bridging Documents After presenting the three design options, the City will choose one option for the consultant to develop into bridging documents for a design-build procurement process. The Bridging Documents shall consist of, but not be limited to: basic system schematics, live video process flow diagrams, recorded video production process flow diagrams, system commissioning requirements, performance specifications for all equipment, locations, resolutions and minimum sizes for electronic displays, locations, resolutions and size limitations for digital pan, tilt, zoom (PTZ) cameras, locations requiring hearing assistance equipment, and other items that may be identified in the selected option from Task A3 Description of and schematic level design of structural, mechanical, fire protection, ADA or other improvements that are needed to implement the selected design-build option The intent of the Bridging Documents is for use in procuring a Design-Build contractor with a guaranteed maximum price (GMP) for complete system delivery. 14 of 23 CONSULTANT will observe field conditions and confirm key measurements adequate for conducting the design work TASK C - Meetings Coordinate, prepare and actively participate in meetings related to Tasks A and B as directed by the City. Prepare and distribute agendas and minutes for the meetings. CONSULTANT shall incorporate the time and expenses for travel in the fee proposal for each meeting. Meetings are anticipated to be 2 hours in length. TASK A Meetings: Kickoff meeting, interviews with staff, Design Cost Impact study review meetings. Allow for 5 meetings. TASK B Meetings: Bridging Document development submittal meetings. Allow for 2 meetings. TASK E Meetings: Design-Build Procurement meetings. Allow for 3 meetings. TASK D - Work Product Submittals / Reimbursables In addition to postage, progress prints, copying and materials needed for presentations, submittals are required at the following stages for staff review: Design Cost Impact Study: Digital version (PDF) 5 digital copies 3 digital copies Design-Build Bridging Documents: Digital version (PDF) 5 digital half-size plan sets- 2 digital copies full size 2 digital copies of half- sized plan sets, 2 digital copies of full size TASK E - Design-Build Procurement Assistance Assist which will define the scope of work and special provisions that must be included in the bid package, other related bid documents, and any addenda needed to ensure complete bid package. CONSULTANT will attend a pre-proposal conference for interested firms. CONSULTANT will assist Project Manager in writing answers to technical questions from prospective firms during the Design-Build procurement period. Evaluate proposals and provide input to City staff for the selection of the Design-Build firm in accordance with the policies and procedures established by the Purchasing Division of the Administrative Services Department (ASD) TASK F - Construction Administration Services CONSULTANT shall perform weekly Site Observations walks during the construction. CONSULTANT shall: 15 of 23 Review Design-Build design, construction schedules and logistics plan Monitor and document progress of construction Visit the site at intervals appropriate to the stage of operations Attend weekly construction meetings and prepare weekly meeting minutes Review and take action upon submittals and shop drawings Review change order requests and construction change directives Review invoices and recommend payment Develop punch lists and inspect to determine whether the work is substantially complete Review Design-Build list of items to be completed prior to final payment Complete checkout of designed systems. 16 of 23 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 Days/Weeks from NTP 1. Task #1 Meeting #1 Kickoff Meeting, Staff Interviews, Site Survey 08/23 2. Task #2 Meeting #2 Staff Interviews 08/30 3. Task #3 Meeting #3 Staff Interviews 09/06 4. Task #4 Out Lines 3 Options Initial Budget Report a. and Engineering Report DUE 09/15 5. Task #5 Meeting #4 Present three options to City Team 09/20 6. Task #6 City provides direction on which option (or combination) to pursue 10/4 7. Task # 7 50% Design/Build Documents DUE 10/27 8. Task # 8 Meeting #5 Present 50% D/B documents to City Team 11/01 9. Task #9 City comments on 50% DB documents du 11/15 10. Task #10 100% Design/Build Documents DUE 12/15 11. Task #11 Meeting #6 Present 100% D/B documents to City Team 12/20 12. Task #12 City comments on 100% DB documents due 1/13 13. Task #13 Final Bid Package DUE 1/27 17 of 23 18 of 23 (Version 1 - use for task based compensation) 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 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 A $26,760 (Survey, Verify, Cost Impact Study) Task B $42,420 (Prepare Design-Build Bridging Documents) Task C $12,580. (Meetings) Task D $0.00 (Work Product Submittals/Reimbursables) Task E $2,100. (Construction Administration) Task F $19,320 (Construction Management) Sub-total Basic Services $103,090 Reimbursable Expenses $ Total Basic Services and Reimbursable expenses $103,090. Additional Services (Not to Exceed) $20,618 19 of 23 Maximum Total Compensation $123,708 Chapter 8: COST PROPOSAL The Shalleck Collaborative SCOPE LABOR CATEGORIES HOURLY RATE Task A1 AV $175.00 Existing Conditions Survey Project Architect $175.00 Architect $135.00 Structural (1 meeting) $260.00 Electrical (1 meeting) $175.00 Task A2 AV $175.00 Review/Analyze Needs Study Project Architect $175.00 Architect $135.00 Structural $260.00 Electrical $175.00 Task A3 AV $175.00 Cost Study Project Architect $175.00 Architect $135.00 Structural $260.00 Electrical $175.00 Task B AV $175.00 Prepare Bridging Documents Project Architect $175.00 Architect $135.00 Structural $260.00 Electrical $175.00 Task C AV $175.00 Meetings (non- Construction) Project Architect $175.00 Architect $135.00 Structural $260.00 20 of 23 Electrical $175.00 Task D AV $175.00 Work Product Submittals / Reimbursables Project Architect $175.00 Architect $135.00 *NO PRINTED MEDIA* Structural $260.00 *ALL DELIVERABLES PDF* Electrical $175.00 Task E AV $175.00 Design/Build Procurement Assistance Project Architect $175.00 Architect $135.00 Structural $260.00 Electrical $175.00 Task F AV $175.00 Construction Management Project Architect $175.00 Architect $135.00 Structural $260.00 Electrical $175.00 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: $0.00 A. Travel outside the San Francisco Bay area, including transportation and meals, will be reimbursed at actual cost subject to travel and meal expenses for City of Palo Alto employees. B. Long distance telephone service charges, cellular phone service charges, facsimile transmission and postage charges are reimbursable at actual cost. 21 of 23 All requests for payment of expenses shall be accompanied by appropriate backup information. Any expense anticipated to be more than $00.0 shall be approved in advance ADDITIONAL SERVICES The CONSULTANT shall provide additional services only by advanced, written request, shall submit a detailed written proposal including a description of the scope of services, sch 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 Project Manager and CONSULTANT prior to commencement of the services. Payment for additional services is subject to all requirements and restrictions in this Agreement Work required because the following conditions are not satisfied or are exceeded shall be considered as additional services: 22 of 23 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 -:VII, OR HIGHER, LICENSED OR AUTHORIZED TO TRANSACT INSURANCE BUSINESS IN THE STATE OF CALIFORNIA. REQUIRED TYPE OF COVERAGE REQUIREMENT MINIMUM LIMITS EACH OCCURRENCE AGGREGATE YES YES 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 YES 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 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 C. 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. 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 23 of 23 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 City of Palo Alto (ID # 8379) City Council Staff Report Report Type: Consent Calendar Meeting Date: 8/21/2017 City of Palo Alto Page 1 Summary Title: Sister City Relationship with Heidelberg, Germany Title: Adoption of a Resolution to Establish a Sister City Relationship between Heidelberg, Germany and Palo Alto, California, United States From: City Manager Lead Department: City Manager Recommendation: Staff recommends that City Council adopt the attached resolution to establish a Sister City relationship between Heidelberg, Germany and Palo Alto, California, United States. Background On August 12, 2013 City Council reviewed the City of Palo Alto / Neighbors Abroad Sister cities program, discussed the international relations strategy, and explored future Smart City partnerships. The City had been discussing the potential of a Sister City relationship with Heidelberg during that time, which was an interest of the City of Heidelberg. Our local Neighbors Abroad group could have been quite overtaxed at that time supporting a new Sister City and Palo Alto was most interested in establishing new partnerships focused on innovation, shared learning, and best practices with other cities in the world. Hence, the City Council authorized a “Smart City Partnership Agreement” with the City of Heidelberg. On September 23, 2013 the City Council formally adopted the partnership agreement with Heidelberg titled the “Smart Cities Alliance between the City of Heidelberg, Germany, and the City of Palo Alto, California, USA.” The Mayor and City Manager visited Heidelberg in 2013 for the official signing of the partnership. Since 2013 a handful of intergovernmental exchanges between Palo Alto and Heidelberg have occurred, some with our Sister City/Smart City partner Enschede, The Netherlands, and recently including Sister City Linkoping, Sweden. These have led staff to share best practices and explore program collaboration. They have also further developed professional, business and community relationships. One of the driving factors for the City of Palo Alto support for a Sister City relationship is the enhanced capacity of our Neighbor’s Abroad program. Thanks to many people for this, but special thanks to Bob Wenzlau. On May 17, 2017 the Board of Neighbors Abroad voted unanimously to request that the City Council establish a sister city relation with Heidelberg. Neighbors Abroad was formed in the early 1960s by citizen leaders to create and manage the City of Palo Alto Page 2 City’s emerging international relations strategy based on the principles of Sister Cities International (SCI). SCI was created in 1956 by President Dwight D. Eisenhower, who “envisioned an organization that could be the hub of peace and prosperity by creating bonds between people from different cities around the world.” Over the years, the City’s partnership with Neighbors Abroad has led to sister city relations with Palo, Philippines; Oaxaca, Mexico; Enschede, Netherlands; Linkoping, Sweden; Albi, France; and Tsuchiura, Japan. On June 1, 2017, the Heidelberg City Council approved the relevant agreements to establish a sister city with Palo Alto. Discussion By approving the attached resolution City Council will expand the Palo Alto - Heidelberg relationship beyond our Smart City Alliance and establish sister city relations. Neighbors Abroad and the City envision a new future for the City’s international relations program, one which could blend the traditions of sister city activities with new shared smart city objectives. The vision originated from citizen feedback that volunteerism with our sister city program would be more appealing if it focused not only on cultural, arts and youth exchanges but also include shared common interests such as technology, sustainability and innovation. The City in conjunction with Neighbor’s Abroad and others is investigating the opportunities for more blended relationships with other cities also. In September the Mayor and City Manager will visit Heidelberg to officially celebrate the new affiliation. The trip will may include a visit to Enschede, The Netherlands, and Linkoping, Sweden. Palo Alto currently has an economic development alliance and sister city relationship with Enschede. Palo Alto and Linkoping also share a sister city relationship. Attached are several briefing documents which provide information about Heidelberg, the intended smart sister city programs and Neighbors Abroad’s formal letter to the City Council requesting establishment of a sister city relation with Heidelberg. Resource Impact No additional funding is required. Funding for activities related to Neighbors Abroad and our sister city relationships are budgeted within the City Council, City Manager’s Office and City Clerk’s Office. Annual dues for Sister Cities International are approximately $800. Attachments: Attachment A - Draft Resolution for Palo Alto - Heidelberg Sister City Attachment B - Neighbors Abroad Heidelberg Sister City Request Attachment C - Introducing Heidelberg Attachment D - Neighbors Abroad Summary of Programs Attachment E - City of Heidelberg Proposal Report Attachment F - City of Heidelberg Beschlussvorlage (Decision) Attachment G - City of Heidelberg Beschlussvorlage (Decison) English Translation Attachment H - City of Heidelberg Summary Report City of Palo Alto Page 3 Attachment I - August 12, 2013 Palo Alto Staff Report Attachment J - September 23, 2013 Palo Alto Staff Report Not Yet Approved Resolution No. _____ Resolution of the Council of the City of Palo Alto establishing a Sister City relationship between Heidelberg, Germany and Palo Alto, California, United States Whereas, the sister city concept was inaugurated by the President of the United States in 1956 to establish greater friendship and understanding between the peoples of the United States and other nations through the medium of direct personal contact; and Whereas, the City of Palo Alto has assigned the responsibility for carrying out the Palo Alto Sister City program to Neighbors Abroad; and Whereas, Neighbors Abroad recommends that the City of Palo Alto establish a sister city relationship between the cities of Palo Alto and Heidelberg; and Whereas, the City of Palo Alto, through Neighbors Abroad, recognizes and endorses this program with the hope that it will lead to a lasting friendship between the people of Palo Alto and Heidelberg; and Whereas, the cities of Palo Alto and Heidelberg share similar goals of international cooperation, mutual prosperity, and world peace; and place similar values on cultural understanding, training, youth leadership, exchanges to educate citizens, environmental stewardship, economic development; and Whereas, on September 23, 2013 the Palo Alto City Council established the “Smart Cities Alliance between the City of Heidelberg, Germany, and the City of Palo Alto, California, USA.” the cities established a Smart City Partnership since 2013 for collaboration on sustainability and information technology within local government; and Whereas, the purpose of this relationship is to increase cultural exchanges, educational opportunities, sustainability and economic development for both cities, and to increase awareness of both cities as being educational, sustainability and centers of innovation; and Whereas, both cities are committed to mutual support for organizing and developing the experiences, common activities, and future programs of the Sister City relationship on the basis of previous agreements of mutual cooperation and directions set forth by this declaration. NOW, THEREFORE, the City Council of the City of Palo Alto RESOLVES, as follows: Section 1. The Council, on behalf of the people of Palo Alto, does hereby enter into a sister city relationship with the government and the people of the City of Heidelberg, Germany, for the purpose of creating greater mutual understanding between the peoples of our two cities and nations. Section 2. The Mayor hereby authorizes Neighbors Abroad of Palo Alto to act as official representatives of the City of Palo Alto to carry out this program. Not Yet Approved Section 3. Copies of this Resolution are to the sent to the Mayor and Council of the City of Heidelberg, Germany, Sister Cities International in Washington, D.C., and German Embassy, and the United States Embassy in Germany. Section 4. This resolution shall take effect immediately upon its passage. INTRODUCED AND PASSED: AYES: NOES: ABSENT: ABSTENTIONS: ATTEST: ______________________________ __________________________ City Clerk Mayor APPROVED AS TO FORM: APPROVED: ______________________________ __________________________ City Attorney City Manager August 3, 2017 Honorable Greg Scharff Mayor City of Palo Alto, California Re: Request to Form a Sister City Relationship Between Heidelberg Germany and Palo Alto. The Board of Neighbors Abroad of Palo Alto voted unanimously on May 17, 2017 to request from the Palo Alto City Council the establishment of a sister city relation with Heidelberg Germany. The Board sensed a strong and endearing basis for a perpetual relationship between our communities. We hold a mutual and binding interests in arts, youth programs, sustainability and commerce. This letter conveys background toward the formation of relationship. a sister city. The letter assimilates the evaluation and interest toward this Sister City Agreement, and introduces our respective sister city committees. As background, Palo Alto and Heidelberg Germany have common traditions in culture, education and sustainability. In 2013 a Smart City Partnership between Palo Alto and Heidelberg was created for the purpose of collaboration between our respective local governments and business community. A Sister City extends relationship to embrace community interactions in addition to these government interactions and embraces cultural topics often with a focus on youth and adult exchanges in the arts and education. Neighbors Abroad has formed a strong local Heidelberg sister city committee. Ms. Jeannet Kiessling will serve as the Vice President for the sister city relationship. The committee now is composed of Mr. Markus Fromherz focused on sustainability, Mr. Michael Kelly focused on business relationships, and Ms. Barbara Evans joined with Ms. Kiessling focused on youth and cultural exchange. All have strong connections to Heidelberg, some were even born or worked many years in Heidelberg. Heidelberg offers a separate sister city organization to maintain the sister city relationship. Since the Board’s vote, Heidelberg has formed a reciprocal sister city committee to develop programs with Palo Alto. We also understand that Heidelberg has completed a complimentary vote to form a sister city relationship with the City of Palo Alto. On September 28, 2017 representatives of Palo Alto are invited to Heidelberg to commemorate this mutual commitment as sister cities. This letter conveys two attachments prepared by Neighbors Abroad providing background the Palo Alto City Council and City Staff can rely upon to move toward a sister relationship. 1. Introducing Heidelberg. An overview document titled “Sister City Project Heidelberg – Palo Alto” offers an introduction to Heidelberg and reveals background on the common areas with sustainability, arts and business. 2. Report on the Sister City Project. From this document grew this document offering a more tactical view toward building a sister city relationship. We look forward celebrating the formation of our new sister city in Heidelberg in September understanding that our Mayor and City Manager may attend such a celebration. Sincerely, Neighbors Abroad of Palo Alto Bob Wenzlau President cc. City Manager Heidelberg Sister City Committee 1 Introducing Heidelberg, Germany May 2017 Heidelberg is located in the Neckar-Valley on the brink of the Odenwald (Odin’s Forest). The Neckar River flows through the city and into the Rhine River 10 miles downstream. Heidelberg is situated in southwestern Germany in the State of Baden-Württemberg, approximately 60 miles south of Frankfurt (nearest international airport). It has 150.000 inhabitants, 40.000 are students. Heidelberg is young (40% younger than 30), diverse (17.000 inhabitants have a different cultural background) and educated (35 percent have a university degree). Its history goes back to the Celts and the Romans, but the area was settled long before, as the famous 600.000 year old Homo Heidelbergensis documents. The Celts moved in 500 B.C., were succeeded by the Romans in the first century A.D. and later by the Empire of the Franks who brought Christianity to the area (several monasteries from that time are still standing, with the World-Heritage-listed nearby “Kloster Lorsch” being the most famous). The actual city was founded around 1200 A.D., the world-famous castle – Germany’s number one tourist site – was started around the same time. The university was founded in 1386, making it the oldest university in Germany. It is also the university with the highest number of Nobel Prize Winners in Germany (56). 2 Due to its location close to France, Heidelberg was often the focal point of the German- French hereditary enmity which lasted until the 20th century and culminated in several devastating wars, including WWI and WWII. Sister City projects with France had an important role in overcoming the animosities between the two countries and turning former foes into friends. Heidelberg is one of the few cities in Germany that was hardly destroyed in WWII. American occupation forces had one of their largest headquarters in Heidelberg, with approximately 20.000 military personnel and their families stationed there at peak times. After unification in 1990, Heidelberg became the seat of NATO’s LANDCENT until all remaining US soldiers were relocated to Wiesbaden in 2013 and the military bases were closed. AREAS OF CCOPERATION Palo Alto and Heidelberg have several things in common, just to name a few: • Medium-sized city with international recognition • Affluent diverse community • Universities with excellent world-wide reputation • Focus on Technology and Research These common aspects are the bases for a productive relationship in a number of fields: Smart City (Livability, Workability, Sustainability) Heidelberg has a long tradition in implementing environmental rules and climate control measures. In 1992, Heidelberg was the first German city to introduce a climate protection concept. The city is home to the worldwide biggest passive house development in its newest neighborhood district Bahnstadt. 3 Heidelberg won the Passive House Award 2014 and the European Sustainable City Award (twice). The city is participating in the Masterplan 100% climate protection concept of the federal government. In 2015, Heidelberg won the Global Green City Award of the United Nations, honoring cities which are leading in sustainability. Heidelberg has a high standard in trash separation, while charging low fees for its waste management. The city invites its inhabitants each spring to help clean the city on Spring Cleaning Week. A lot of schools, clubs and private citizens participate. Business Heidelberg is part of the Rhein-Neckar-Metropolregion which includes the nearby cities of Mannheim and Ludwigshafen. The Metropolregion is one of the most dynamic business regions in Germany. 10 of the 100 most successful German public companies are headquartered there, i.e. SAP, BASF, Roche, Heidelberger Druckmaschinen, HeidelbergerCement, KSB, Fuchs Petrolub. Germany’s economic strength lies in the Mittelstand (small to medium-sized companies), and the Metropolregion is strong in that sector too, with companies in the automobile and mechanical engineering sectors, to name a few. 4 Business relations might be the most difficult to include into a sister city concept. This area should be primarily channeled through business associations like the German Accelerator and the Chamber of Commerce in Palo Alto or the Robert-Bosch-Stiftung, the Klaus- Tschirra-Stiftung and Dietmar-Hopp-Stiftung in Heidelberg. Such organizations can help identify relevant subjects of interest to businesses on both sides as well as organizing potential events. SAP, who has both a strong presence near Heidelberg and Silicon Valley, could be approached. Youth Youth projects and exchange is traditionally the core of any sister city project. The idea is to provide young people with the opportunity to learn more about other cultures, languages and habits. The Deutsch-Amerikanisches-Institut (German-American-Institute, DAI, http://dai-heidelberg.de/en/) could help organize youth projects since they have the resources and the experience for it. Furthermore, Heidelberg has a number of outstanding high schools (high school encompasses Middle School in Germany) which could be approached. High schools in Europe usually have several partner schools abroad with which they organize student exchanges. Our natural partner for youth exchange is the Stadtjugendring e.V. http://www.sjr-heidelberg.de/angebote/jugendaustausch3, a city- funded program organizing youth exchange with partner cities. Heidelberg conducts an International Summer Science School (ISH), a yearly exchange program to enhance exchange between youths interested in science. It is specifically designed for sister city projects http://www.ish-heidelberg.de/. ISH already cooperates with the John Ernest Foundation in Palo Alto. 5 Culture From the newly-constructed Theater to the resident Symphonic Orchestra, the many privately-organized clubs and cultural institutions, Heidelberg has a rich cultural scene. In 2014 Heidelberg became and remained UNESCO City of Literature within UNESCO’s Creative Cities Network. With its existing sister cities, diverse projects like Culture Weeks with Kumamoto, Japan (Heidelberg-Week in Kumamoto, Kumamoto-Week in Heidelberg), a mutual representative office (with Montpellier, France) and art exhibitions (Simferopol, Ukraine, since annexation Russia) have developed over time. Cultural exchanges are mainly at the initiative of active citizen groups and could take on a range of topics. The biggest festivity in Heidelberg is the Heidelberger Herbst – a fall, city-wide fest attracting over a hundred thousand visitors each year. It is organized by Heidelberg Event http://www.heidelberg-event.com/events/heidelberger- herbst/?lang=en, who also organizes the three Castle Illuminations and Firework events taking place each summer, as well as the yearly Christmas Market. In the spring Heidelberg organizes the renowned music festival Heidelberger Frühling (Heidelberg Spring) with concerts ranging from classical to contemporary. In the fall, the greater Heidelberg region (Rhein-Neckar-Region) hosts the Enjoy Jazz-Festival with many American performers. 6 Heidelberg is not only home to former tennis stars Boris Becker and Steffi Graf, it also hosts on of the German Olympic preparation centers. In the past, Olympic teams from partner cities have used these facilities and German teams have trained abroad. The organization of the program is conducted by Sportkreis Heidelberg http://www.sportkreis-heidelberg.de/ Heidelberg hosts a number of Marathons. The most popular is the marathon sponsored by SAS, a Heidelberg based software firm https://www.runme.de/deutschland/sas- halbmarathon-heidelberg/, with several thousand participants. Heidelberg University and Stanford University have a lot in common. Both have an excellent international reputation and a high academic standard. They share a similar motto (Stanford’s motto is even in German: “Die Luft der Freiheit weht”, Heidelberg University: “Semper apertus”). However, like most universities in Germany, Heidelberg University is a public institution. Tuition is free and partner projects are generally welcome. Heidelberg University has a number of partner universities beyond those in sister cities https://www.uni-heidelberg.de/international/profil/partneruniversitaeten.html. Heidelberg is also home to the European Laboratory for Molecular Biology (Europäisches Laboratorium für Molekulare Biologie, EMBL), the German Cancer Reasearch Institute (Deutsches Krebsforschungszentrum, DKFZ) and four Max-Planck-Institutes. For an overview of Heidelberg, see http://www.heidelberg.de/hd,Len/300652.html Prospective Program Activities for Heidelberg Sister City Program May 2017 Scope of Report The goal of establishing sister cities is to engage in a productive, mutually beneficial exchange of ideas, programs and people. This report summarizes the evaluation of potential projects that Heidelberg and Palo Alto could engage in as a part of their sister city relationship. It has been assessed by the Neighbors Abroad Heidelberg Committee, headed by Bob Wenzlau (President of Neighbors Abroad, NA) and Jeannet Kiessling (Heidelberg Committee, NA) and will be shared with their counterparts from Heidelberg. The report identifies four major areas of cooperation (names of responsible NA members in brackets): 1. Smart City (Markus Fromherz) 2. Business (Michael Kelly) 3. Youth Exchange (Barbara Evans, Jeannet Kiessling) 4. Culture (Jeannet Kiessling) Each area of cooperation is structured around the following goals: to exchange ideas and learn from each other (Learn), to connect people from both cities (Connect), and to implement selected projects (Implement). The report mainly focuses on ideas/goals that were researched by the Palo Alto Neighbors Abroad Heidelberg Team. They are shared with our counterparts in Germany and their feedback will be implemented. After the Sister City contract has been signed, we will commence working on the projects. 1. Smart City The Smart City concept focuses on the use of Information and Communication Technology to improve the livability, workability, and sustainability for current residents and future generations (e.g., in areas such as IT and IoT [Internet of Things] infrastructure, transportation, water supply networks, and waste management). Both Palo Alto and Heidelberg have pushed the boundaries of the Smart City movement. Palo Alto is a member of the Smart City Council, has an aggressive long-range sustainability and climate action plan, and has pursued dozens of Smart City projects over the recent years. As leaders in this field, close cooperation provides a platform from which the cities can learn from one other and thereby help improve the implementation of such initiatives in both cities. Palo Alto and Heidelberg signed a Smart City alliance contract in 2013. While this remains in place, the Sister City concept will expand on the Smart City efforts. Learn Heidelberg Palo Alto • City of Short Distances. This concept has already been enacted in Heidelberg and focuses on increasing the number of walking and cycling paths, thereby reducing the need for motor traffic. • Environmental Budget. This concept has also already been implemented in Heidelberg and is similar to a financial budget. It determines the environmental impact of the city’s emissions and is subject to annual approval. • Environmental Awareness. This includes a broad range of information and communication opportunities with the goal of motivating people to undertake more environmentally conscious activities. • Environmentally Compatible Transport. This includes initiatives that connect districts by trams/bus, making sure new developments have public transportation options, as well as replacing short local trips with walking, biking, or public transportation. Palo Alto Heidelberg • Apps for Smart City Applications. The focus of this exchange is to encourage the use of apps that add value to city life and to discuss the development of potential new apps that would add additional value. For Example: PaloAlto311 Mobile App, Open Geospatial Information System Implementation for community use, CityCamp Palo Alto (outdoor civic innovation event), Mobile App Challenge. • Smart Use of GIS Data. Palo Alto has implemented a Global Information System that provides residents and businesses with a wide range of information, including locations, road centerlines, land use, (city-owned) trees, public projects, trench plates, trails, pavement sections, zone districts, building roof outlines, park locations, road edges, rooftop solar technical potential, automated external defibrillator locations, and City of Palo Alto boundary. • Sustainability Projects. PaloAltoGreen (electricity, gas), sustainability information and rebates (SMART energy, new constructions, water efficiency, solar systems, electric vehicles), 10-year plans (electric, gas), Zero Waste, Zero Net Energy, Transportation (commuting has bicycle focus, Palo Alto Shuttle with real-time location information). • IT Projects on Modern IT Infrastructure. Over the recent years, the city of Palo Alto has implemented several IT modernization projects, such as cloud-based Communication and Productivity Suite Implementation, Interactive Voice Response System, network upgrades, online Parking Permit System, e911, and many more. Connect • Summer Exchange Program for high schoolers/university students. Both cities are willing to host students to work on Smart City concepts. • Monthly Exchange between the respective Smart City collaborators (already in place, including other cities such as Enschede and Linköping). Implement • Evaluate and assess Apps for Mobility (like rideshare or trip planning). • Facilitate Bartering Services, e.g., driving each other to a grocery store or to the airport. • Establish relationship between Stanford/University of Heidelberg to engage in Smart City topics. • Link with Smart City Council (international organization). • Establish Budget for Smart City projects. • Promote (NA) the smart city projects in both cities. • Join Forces on supporting a less affluent city (e.g. Oaxaca). 2. Business The goal is to establish a platform for the exchange of ideas, and to promote mutually productive business opportunities for companies in both the Palo Alto/Silicon Valley, and the Heidelberg/Rhein-Neckar areas. Of particular interest would be to establish an entity in Heidelberg to assist Palo Alto/Silicon Valley technology companies navigate the local business environments and accelerate their development in the German/EU market. This entity would also promote and develop Heidelberg/Rhein-Neckar technology companies' relationships in the Palo Alto/Silicon Valley area. Learn • From Start-up to Successful Company: conditions and tools for an entrepreneurial environment. • Doing Business in the U.S. / doing business in Germany (Europe). Rules and regulations in both markets. Connect • German Accelerator, Palo Alto • Chamber of Commerce, Palo Alto • GABA – California German-American Business Association, Mountain View • German-American Chambers of Commerce, San Francisco • Internationale Handelskammer, Heidelberg • AmChamGermany, Frankfurt • Technologiepark Heidelberg GmbH Implement • Establish Sister Cities Accelerator (SCS) an incubator/accelerator in a co-working space in Heidelberg where companies will be provided with the expertise and business infrastructure necessary to accelerate their access to the German/EU market. SCS is a project by the cities of Heidelberg and Palo Alto to support internationally competitive small to medium sized Silicon Valley technology companies to scale in Germany and the EU. This will establish Heidelberg as a major center for technology entrepreneurship in Germany, and as the gateway to Germany and the EU for Silicon Valley technology companies. SCS will create an entrepreneurial ecosystem through a public-private partnership bridging the Heidelberg/Rhein-Neckar and Palo Alto/Silicon Valley regions to support German and Silicon Valley technology companies to scale in the EU. It will position Palo Alto as the initial information gateway to the EU for SV small to medium sized companies lacking the knowledge, facilities or perspective to consider entering this market. Furthermore, it will position Palo Alto as the location for local SV companies to acquire access to German technology for further commercialization. For more information please see (LINK). Before the project is started: Test the hypothesis with stakeholders in Heidelberg and Palo Alto. Palo Alto area: German-American Business Association, German-American Chambers of Commerce, VCs, accelerators, banks, universities, and others working with local small to medium- sized companies. Heidelberg/Rhein-Neckar area: Organizations: Internationale Handelskammer, AmChamGerman, Heidelberg City administration and Technologie Park, area universities, banks, lawyers, accountants Sponsors: local companies, investment groups, federal and local government support organizations • Digital Business Network. Establish and formalize a link between Heidelberg and Palo Alto business communities. • • SAP-AppHouse Connection. Engage SAP to establish a Palo Alto – Heidelberg App-Connection through their AppHouses in both places. This digital connection could help young IT-entrepreneurs to develop their ideas. 3. Youth Exchange Youth Exchange is at the heart of every Sister City Project. The idea is to give future generations a better understanding of different countries and cultures as well as to raise their cross-cultural competence level. Given the distance between Heidelberg and Palo Alto, the focus here is also on virtual exchange in order to establish contact between youths in both cities. Learn • Compare notes on the organizational structures to enhance youth exchange in both cities. • Explore Language Training programs in the respective cities. • Explore Digital Training programs in the respective cities. Connect • Stadtjugendring • Representatives of School Systems • Representatives of Digital Training Programs Implement • Develop the first Youth Exchange Program for 2018 (start with small number of children). • Heidelberg Musicians Meeting. The City of Heidelberg will host a get-together of musicians from various sister cities in 2018 and will extend an invitation to musicians from Palo Alto. • Install a “Wormwhole”. This 24/7 digital connection will be installed at an easily accessible location in each city and enable random connections between youths in both cities (need sponsors for this). • Digital Youth Book Club. Selection of book lists with opportunities to exchange comments and thoughts (engage German-American Institute DAI in Heidelberg). • Establish Sister School. This program could either be limited to one school in either city or encompass both school districts. • Internship Program. Engage companies to offer internships to students from Heidelberg and Palo Alto. • Connecting the Stanford German Department with the Germanistik Fakultät at the University of Heidelberg. • Connecting the Anglistik Fakultät of the University of Heidelberg with the English Department at Stanford. 4. Culture This topic encompasses a variety of activities ranging from music, theater and other entertaining programs to festivities and events throughout the respective cities’ cultural calendars. Such connections between the Sister Cities help foster mutual interest and understanding of the respective values and customs. Learn • Exchange ideas on City Marketing. • Explore Art and Music Scene Connect • City Representatives engage in cultural events (i.e. Heidelberg Marketing) • Representatives of Cultural and Special Interest Clubs interested in cultural exchange (i.e. Lions and Rotary Clubs, Sports Clubs, Orchestras) Implement • Establish a Cultural Calendar of the Sister City with festivities and events. • Regular Reporting about Sister City events in local media. • Create a Travel Kit for tourists to who want to visit the Sister City (suggestions for accommodations, transportation, sights, etc.). • Create a List of Clubs wishing to engage in exchange. • Exhibition to introduce the Sister City in Libraries, DAI, other institution. • Heidelberg Stand (operated by NA) at the German Christmas market in Mountain View. • Palo Alto Stand at “Heidelberger Herbst” (biggest annual Street festivity in Heidelberg). • Sister City Beer. Gordon Biersch (of Gordon Biersch Brewery in Palo Alto) suggested to brew a Heidelberg beer and talk to representatives from Heidelberger Brauerei to brew a Palo Alto beer. • Enjoy Jazz. Palo Alto Jazz musicians could participate in this annual Heidelberg event. • Reading by Silicon Valley writer Tad Williams at Schmitt&Hahn in Heidelberg. Fall 2017. First Sister City Event. About Neighbors Abroad Neighbors Abroad represents the City of Palo Alto in its relations with its sister cities around the world and coordinates the activities of six sister-city committees within this volunteer organization. Neighbors Abroad represents a community of people with a deep interest in the world at large and a committed belief that peace can be grown one friend at a time. Contact Information Neighbors Abroad Bob Wenzlau President, Neighbors Abroad, bob@wenzlau.net Jeannet Kiessling Heidelberg Committee, Culture and Youth Exchange Subcommittees, jeannet.kiessling@hotmail.de Markus Fromherz Smart City Subcommittee, markus@fromherz.us Michael Kelly Business Subcommittee, mwkelly2000@gmail.com Barbara Evans Youth Exchange Subcommittee, evansbanjo@sbcglobal.net Contacts in Heidelberg Nicole Huber Head of Office, Mayor of Heidelberg, Dr. Eckart Würzner Nicole.huber@heidelberg.de Ina Nolte International Relations, Mayor’s Office, ina.nolte@heidelberg.de Steffen Wörner Managing Director, Stadtjugendring e.V. (Youth Exchange Org.), woerner@sjr-heidelberg.de City Heidelberg Document: 0201/2017/BV Date: 01.06.2017 Lead management: Department I, Office 01 Subject: Finalization of city partnership agreement with Palo Alto Proposal Advisory results: Committee: Meeting Date: Procedure: Central and Finance Committee 20.6.2017 Ö Municipal Council 29.06.2017 Ö - 2.1 - Administration Proposal: The central and finance committee recommends the following to the municipal council: The municipal council agrees to the official formation of a city partnership between Heidelberg and Palo Alto in the United States of America, and commisions the administration to sign the relevant contracts. Summary of rationale: The expansion and strengthening of international relationships, through signing of a city partnership agreement with Palo Alto, is a significantly strategic step for Heidelberg. A partnership with such a recognizable and economically strong city, particularly in the fields of economy and science, creates considerable added value for Heidelberg. - 3.1 - Rationale: City partnership with Palo Alto (USA): Palo Alto (approximately 67,000 inhabitants) is considered to be the capital of Silicon Valley. In 2013, Heidelberg and Palo Alto signed the “Smart City Alliance“ agreement, to formally reinforce a strategic partnership between both cities. Central themes of the agreement are: culture, science, sustainability and innovation, with special attention given to “Smart City“ as core focus. Contact with Palo Alto since signing of the agreement has increased notably. Constructive discourse between representatives of both cities occur regularly to implement collaborative projects and ideas. Among other ideas, particular emphasis is placed on exchange within the areas of youth and sports. The representatives of the organisation Neighbours Abroad (Palo Alto) remain in frequent contact with Mr. Steffen Wörner, director of the Stadtjugendring e.V. in Heidelberg, to initiate exchange projects. Since 2013, young students from Palo Alto have regularly participated in the International Summer Science School in Heidelberg, thereby enrich the program not only with regards to cultural diversity, but also with their scientific knowledge. Situated in the heart of the Sillcion Valley, Palo Alto is especially unique, with a density of enterprises in research-intensive industries, as well as IT-based firms. The wealth of knowledge in various fields that exists in Palo Alto, as well as the presence of local internationally renowned Stanford University, offers enormous potential through the partnership. In particular, the interrelationship between local higher education institutions in Heidelberg and Stanford University enables increased exchange of knowledge, and therefore the ability to capitalize on and benefit from mutual outcomes. The organisation Neighbours Abroad (Palo Alto) has already unanimously agreed to the planned partnership with Heidelberg.The relevant proposal documents will be submitted to the municipal council at the end of June for final approval. Authorities of both cities are in agreement that the existing strategic partnership should now be taken to the next level. Having a genuine city partnership emerge from the Smart City Alliance is a mutual goal. Official representatives from Palo Alto are visiting Heidelberg from September 23 to 30, 2017. Conclusion: The creation of a partnership with such a reputable city gives Heidelberg the opportunity to make strategic advancements in international relations. Heidelberg could greatly profit from collaborations with Palo Alto, as well as from increased intercultural exchange, while fostering mutual understanding. As a result of globalisation, there is great demand for partnerships in distant countries, especially among youth and young professionals. These opportunities offer unique possibilities for exchange. Palo Alto has assisted Heidelberg by making significant contributions to the Bitkom application. The successful and well-orchestrated meetings in Palo Alto with key players in the fields of politics, economy, culture and tourism have demonstrated great interest in a city partnership with Heidelberg. - 3.2 - Evaluation of sustainabilty mesasures relating to city development planning goals / Heidelberg local agenda goals. 1. City development planning target goals Numbers(s): + / - achieved: Goal(s): + Goal(s): AB03 + Location advantages in expansion as a science city + Rationale: Exchange with American universities and research insitutions offers Heidelberg the opportunity to accumulate skills and expertise, and benefit from mutual collaboration. AB07 + Establish innovative enterprises + Rationale: The opportunity exists, not only to establish American companies in Heidelberg, but also, with the assistance of local partners, actively support local companies in expansion plans abroad. KU02 + Promote cultural diversity + Rationale: Heidelberg is able to foster intercultural appreciation, through cultural exchange with Palo Alto. QU07 + Cultivate university partnerships + Rationale: Palo Alto boasts a notable academic landscape (Stanford). Collaborations can be actively utilized. Soz. 6 + Great consideration given to interests of children and youth. Rationale: + Youth exchange programs between the cities make youth associations central institutions for recreational facilities for children and young people. 2. Critical assessment / Comments on goal conflicts: None - 3.3 - INTERNAL REMARKS AND CO-SIGNING Evaluation of concerns of individuals with disabilities 1. Does the proposal deal with concerns of individuals with disabilities? ☐ Yes (Please continue to question 2) ☒ No (Evaluation ends here) 2. Was the advisory council for individuals with disabilities (bmb) involved in drafting the proposal? ☐ Yes (Participation is recorded in template proposal with a maximum of two sentences; Evaluation ends here) Release for Publication: GI (Committee Information system) MI (Employeer-information system) BI (Resident- information system = Internet) Authorisation for internet publication by third parties available! Bureau delivers system: Proposal / Equipment produced Column: 1 2 3 4 5 6 7 NO NO NO YES YES YES Proposal: ☐ ☐ ☐ ☐ ☐ 01.3 Nolte ges.: OB ges.: 01 Date Signature. Drucksache: 0201/2017 /BV ... 00274080.doc Stadt Heidelberg Drucksache: 0201/2017/BV Datum: 02.06.2017 Federführung: Dezernat I, Referat des Oberbürgermeisters Beteiligung: Betreff: Abschluss von Städtepartnerschaften mit den Städten Palo Alto/Hangzhou Beschlussvorlage Beratungsfolge: Gremium: Sitzungstermin: Behandlung: Zustimmung zur Beschlussempfehlung: Handzeichen: Haupt- und Finanzausschuss 20.06.2017 Ö ( ) ja ( ) nein ( ) ohne Gemeinderat 29.06.2017 Ö ( ) ja ( ) nein ( ) ohne Drucksache: 0201/2017 /BV ... 00274080.doc - 2.1 - Beschlussvorschlag der Verwaltung: Der Haupt- und Finanzausschuss empfiehlt dem Gemeinderat folgenden Beschluss: Der Gemeinderat stimmt dem Abschluss der Städtepartnerschaften der Stadt Heidelberg mit den Städten Hangzhou in China und Palo Alto in den Vereinigten Staaten von Amerika zu und beauftragt die Verwaltung die entsprechenden Verträge zu unterzeichnen. Finanzielle Auswirkungen: Bezeichnung: Betrag: Ausgaben / Gesamtkosten: - Einnahmen: - Finanzierung: Ansatz in 2017: Projektmittel Palo Alto Projektmittel China 10.000 € 30.000 € Ansatz in 2018: Projektmittel Palo Alto Projektmittel China 10.000 € 30.000 € Zusammenfassung der Begründung: Der Ausbau sowie die Intensivierung der internationalen Beziehungen durch die Unterzeichnung von Städtepartnerschaftsabkommen mit den Städten Hangzhou und Palo Alto ist ein wichtiger strategischer Schritt für Heidelberg. Eine Städtepartnerschaft mit diesen beiden namhaften und wirtschaftlich starken Partnern, besonders in den Bereichen Wirtschaft und Wissenschaft, schafft einen bedeutenden Mehrwert für Heidelberg. Als „internationale Drehscheibe“ - im Westen Palo Alto (Sillicon Valley) und im Osten Hangzhou - würde Heidelberg somit eine bedeutende Mittlerrolle einnehmen. - 3.1 - Drucksache: 0201/2017 /BV ... 00274080.doc Begründung: Städtepartnerschaft Hangzhou (China) Bei intensiven Gesprächen in China im Jahr 2016 haben sich Herr Oberbürgermeister Prof. Dr. Würzner und die Vertreter der Stadt Hangzhou bereits über die Ansiedlung von Unternehmen sowie Möglichkeiten für internationale Kooperationen ausgetauscht. Im Ergebnis unterzeichneten die Vertreter beider Städte während eines Gegenbesuchs in Heidelberg im September 2016 eine Kooperationsvereinbarung in den Bereichen Wirtschaft und Wissenschaft sowie Kultur und Tourismus. In dieser Vereinbarung formulierte man bereits das Ziel einer „städtepartnerschaftlichen Beziehung“. Im Zuge einer Delegationsreise mit Vertretern des Gemeinderates haben sich die Stadtspitzen beider Städte erneut über die Intensivierung der Zusammenarbeit ausgetauscht. Seitens der Stadt Hangzhou, die das interne Genehmigungsverfahren bereits in die Wege geleitet hat, besteht starkes Interesse an einer Städtepartnerschaft mit der Stadt Heidelberg. Die Stadt Hangzhou befindet sich im Norden der Provinz Zhejing, eine der kleinsten, aber und zugleich reichsten Provinzen Chinas. Hangzhou, überzeugt mit seinen rund 9 Millionen Einwohnern nicht nur durch seine wirtschaftliche Stärke - zahlreiche namhafte Unternehmen (zum Beispiel Alibaba), Wissenschaftseinrichtungen/Technologieparks sowie Bildungseinrichtungen und Universitäten haben ihren Sitz in Hangzhou - sondern auch durch seine kulturelle Vielfalt, die jährlich mehrere Millionen Touristen anzieht. Besonders in den High-Tech Bereichen Biomedizin, Informatik und digitale neue Medien verfügt die Stadt Hangzhou über eine enorme Wirtschaftskraft. Die Entwicklungen der ehemaligen Konversionsflächen „Patton Barracks“ und dem dort geplanten Heidelberg InnovationPark bergen starke Potentiale für die Stadt Heidelberg, um forschungsintensive und innovationsstarke Unternehmen anzusiedeln. Dies ist nicht nur aus wirtschaftlichen Gesichtspunkten als große Chance zu betrachten, sondern auch im Hinblick auf die Intensivierung des aktiven Austauschs von Know-how sowie dem Ausbau des interkulturellen Verständnisses zwischen den Städten Hangzhou und Heidelberg. Städtepartnerschaft Palo Alto (USA): Palo Alto (rund 67.000 Einwohner) gilt als die Hauptstadt des Silicon Valley. Bereits im Jahr 2013 haben die Städte Heidelberg und Palo Alto die Vereinbarung „Smart City Alliance“ unterzeichnet, um die strategische Partnerschaft der beiden Städte formal zu untermauern. Die Schwerpunktthemen dieser Vereinbarung sind die Bereiche Kultur, Wirtschaft, Nachhaltigkeit und Innovation mit dem Augenmerk auf das Oberthema „Smart City“. Seit der Unterzeichnung hat sich der Kontakt zu der Stadt Palo Alto sukzessive intensiviert. Bisweilen finden in sehr regelmäßigen Abständen konstruktive Gespräche zwischen Vertretern beider Städte statt, um gemeinsame Projekte und Ideen umzusetzen. Darüber hinaus liegt ein besonderes Augenmerk auf dem Austausch im Bereich Jugend und Sport. So stehen die Vertreter der Organisation Neighbours Abroad (Palo Alto) mit Herrn Steffen Wörner, Geschäftsführer des Stadtjugendrings, in regem Kontakt, um Austauschprojekte ins Leben zu rufen. Bereits seit 2013 nehmen regelmäßig junge Schülerinnen und Schüler aus Palo Alto an der International Summer Science School Heidelberg teil und bereichern nicht nur im Hinblick auf die kulturelle Vielfalt, sondern auch mit ihren wissenschaftlichen Kenntnissen das Sommerprogramm. - 3.2 - Drucksache: 0201/2017 /BV ... 00274080.doc Im Herzen des Sillcion Valley’s gelegen, überzeugt die Stadt Palo Alto besonders mit ihrer Unternehmensdichte im Bereich der forschungsintensiven Industrie sowie IT-basierten Unternehmen. Durch das vorhandene Know-how in diesen Bereichen sowie der vor Ort angesiedelten, international bekannten Stanford Universität birgt eine Partnerschaft mit der Stadt Palo Alto enorme Potentiale. Besonders die Verzahnung der hiesigen Hochschulen mit der Stanford Universität birgt Chancen um den Wissensaustausch zu intensivieren und daraus resultierende Synergieeffekte zu nutzen. Die Organisation Neighbours Abroad (Palo Alto) hat die geplante Städtepartnerschaft mit Heidelberg bereits einstimmig beschlossen. Die entsprechende Vorlage wird dem dortigen Gemeinderat ebenfalls Ende Juni zur finalen Entscheidung vorgelegt. Die Stadtspitzen beider Städte sind sich einig, dass die bereits bestehende strategische Partnerschaft nun auf die nächste Ebene gehoben werden soll. So ist das gemeinsame Ziel, eine echte Städtepartnerschaft aus der Smart City Alliance entstehen zu lassen. Die offiziellen Vertreter der Stadt Palo Alto werden Heidelberg im Zeitraum vom 23.- 30. September 2017 besuchen. Fazit: Der Abschluss der Städtepartnerschaften mit diesen beiden namhaften Partnern - aus China im Osten und den USA im Westen- geben Heidelberg die Möglichkeit im Bereich der internationalen Beziehungen einen wichtigen strategischen Schritt zu gehen. Heidelberg könnte so die Rolle einer „internationalen Drehscheibe“ zwischen Ost und West einnehmen, durch den Schulterschluss mit diesen beiden Partnern stark profitieren und überdies den interkulturellen Austausch intensivieren und so das gegenseitige Verständnis fördern. Darüber hinaus sind Partnerstädte in entfernten Länder aufgrund der Globalisierung gerade bei Jugendlichen und Nachwuchskräften sehr gefragt und bieten eine einmalige Möglichkeit des Austausches. Beide Städte haben die Stadt Heidelberg bei der Bitkom-Bewerbung aktiv durch Beiträge unterstützt. Die beeindruckenden, gut vorbereiteten Begegnungen mit den Hauptverantwortlichen aus Politik, Wirtschaft, Kultur und Tourismus sowohl in Palo Alto als auch in Hangzhou ließen starkes Interesse an einer Städtepartnerschaft mit Heidelberg erkennen. - 3.3 - Drucksache: 0201/2017 /BV ... 00274080.doc Prüfung der Nachhaltigkeit der Maßnahme in Bezug auf die Ziele des Stadtentwicklungsplanes / der Lokalen Agenda Heidelberg 1. Betroffene Ziele des Stadtentwicklungsplanes Nummer/n: (Codierung) + / - berührt: Ziel/e: AB 3 + Standortvorteile als Wissenschaftsstadt ausbauen Begründung: Der Austausch sowohl mit chinesischen als auch amerikanischen Universitäten und Forschungseinrichtungen gibt Heidelberg die Möglichkeit Know-how zu sammeln und entsprechende Synergien zu nutzen. Ziel/e: AB 7 + Innovative Unternehmen ansiedeln Begründung: Es besteht die Chance nicht nur in Heidelberg amerikanische oder chinesische Unternehmen anzusiedeln, sondern ebenfalls hiesige Unternehmen bei Expansionsplänen im Ausland aktiv durch unsere Partner vor Ort zu unterstützen. Ziel/e: KU 2 + Kulturelle Vielfalt unterstützen Begründung: Durch den kulturellen Austausch mit den Städten Palo Alto und Hangzhou kann Heidelberg besonders das interkulturelle Verständnis ausbauen. Ziel/e: QU 7 + Partnerschaft mit der Universität ausbauen Begründung: Sowohl die Stadt Hangzhou als auch die Stadt Palo Alto verfügen über namhafte Universitäten und eine ausgeprägte Hochschullandschaft. Synergien können aktiv genutzt werden. Ziel/e: SOZ 6 + Interessen von Kindern und Jugendlichen stärker berücksichtigen Begründung: Mit den Jugendaustauschprogrammen mit den Partnerstädten ist der Stadtjugendring eine zentrale Institution für Freizeitangebote für Kinder und Jugendliche. 2. Kritische Abwägung / Erläuterungen zu Zielkonflikten: keine gezeichnet Prof. Dr. Eckart Würzner City Heidelberg Document: 0201/2017/BV Date: 01.06.2017 Lead management: Department I, Office 01 Subject: Finalization of city partnership agreement with Palo Alto Proposal Advisory results: Committee: Meeting Date: Procedure: Central and Finance Committee 20.6.2017 Ö Municipal Council 29.06.2017 Ö - 2.1 - Administration Proposal: The central and finance committee recommends the following to the municipal council: The municipal council agrees to the official formation of a city partnership between Heidelberg and Palo Alto in the United States of America, and commisions the administration to sign the relevant contracts. Summary of rationale: The expansion and strengthening of international relationships, through signing of a city partnership agreement with Palo Alto, is a significantly strategic step for Heidelberg. A partnership with such a recognizable and economically strong city, particularly in the fields of economy and science, creates considerable added value for Heidelberg. - 3.1 - Rationale: City partnership with Palo Alto (USA): Palo Alto (approximately 67,000 inhabitants) is considered to be the capital of Silicon Valley. In 2013, Heidelberg and Palo Alto signed the “Smart City Alliance“ agreement, to formally reinforce a strategic partnership between both cities. Central themes of the agreement are: culture, science, sustainability and innovation, with special attention given to “Smart City“ as core focus. Contact with Palo Alto since signing of the agreement has increased notably. Constructive discourse between representatives of both cities occur regularly to implement collaborative projects and ideas. Among other ideas, particular emphasis is placed on exchange within the areas of youth and sports. The representatives of the organisation Neighbours Abroad (Palo Alto) remain in frequent contact with Mr. Steffen Wörner, director of the Stadtjugendring e.V. in Heidelberg, to initiate exchange projects. Since 2013, young students from Palo Alto have regularly participated in the International Summer Science School in Heidelberg, thereby enrich the program not only with regards to cultural diversity, but also with their scientific knowledge. Situated in the heart of the Sillcion Valley, Palo Alto is especially unique, with a density of enterprises in research-intensive industries, as well as IT-based firms. The wealth of knowledge in various fields that exists in Palo Alto, as well as the presence of local internationally renowned Stanford University, offers enormous potential through the partnership. In particular, the interrelationship between local higher education institutions in Heidelberg and Stanford University enables increased exchange of knowledge, and therefore the ability to capitalize on and benefit from mutual outcomes. The organisation Neighbours Abroad (Palo Alto) has already unanimously agreed to the planned partnership with Heidelberg.The relevant proposal documents will be submitted to the municipal council at the end of June for final approval. Authorities of both cities are in agreement that the existing strategic partnership should now be taken to the next level. Having a genuine city partnership emerge from the Smart City Alliance is a mutual goal. Official representatives from Palo Alto are visiting Heidelberg from September 23 to 30, 2017. Conclusion: The creation of a partnership with such a reputable city gives Heidelberg the opportunity to make strategic advancements in international relations. Heidelberg could greatly profit from collaborations with Palo Alto, as well as from increased intercultural exchange, while fostering mutual understanding. As a result of globalisation, there is great demand for partnerships in distant countries, especially among youth and young professionals. These opportunities offer unique possibilities for exchange. Palo Alto has assisted Heidelberg by making significant contributions to the Bitkom application. The successful and well-orchestrated meetings in Palo Alto with key players in the fields of politics, economy, culture and tourism have demonstrated great interest in a city partnership with Heidelberg. - 3.2 - Evaluation of sustainabilty mesasures relating to city development planning goals / Heidelberg local agenda goals. 1. City development planning target goals Numbers(s): + / - achieved: Goal(s): + Goal(s): AB03 + Location advantages in expansion as a science city + Rationale: Exchange with American universities and research insitutions offers Heidelberg the opportunity to accumulate skills and expertise, and benefit from mutual collaboration. AB07 + Establish innovative enterprises + Rationale: The opportunity exists, not only to establish American companies in Heidelberg, but also, with the assistance of local partners, actively support local companies in expansion plans abroad. KU02 + Promote cultural diversity + Rationale: Heidelberg is able to foster intercultural appreciation, through cultural exchange with Palo Alto. QU07 + Cultivate university partnerships + Rationale: Palo Alto boasts a notable academic landscape (Stanford). Collaborations can be actively utilized. Soz. 6 + Great consideration given to interests of children and youth. Rationale: + Youth exchange programs between the cities make youth associations central institutions for recreational facilities for children and young people. 2. Critical assessment / Comments on goal conflicts: None - 3.3 - INTERNAL REMARKS AND CO-SIGNING Evaluation of concerns of individuals with disabilities 1. Does the proposal deal with concerns of individuals with disabilities? ☐ Yes (Please continue to question 2) ☒ No (Evaluation ends here) 2. Was the advisory council for individuals with disabilities (bmb) involved in drafting the proposal? ☐ Yes (Participation is recorded in template proposal with a maximum of two sentences; Evaluation ends here) Release for Publication: GI (Committee Information system) MI (Employeer- information system) BI (Resident- information system = Internet) Authorisation for internet publication by third parties available! Bureau delivers system: Proposal / Equipment produced Column: 1 2 3 4 5 6 7 NO NO NO YES YES YES Proposal : ☐ ☐ ☐ ☐ ☐ 01.3 Nolte ges.: OB ges.: 01 Date Signature. Sister Project Palo Alto – Heidelberg There are roughly 15.000 Sister City projects worldwide, the great majority within Europe (12.000). In Europe, most projects started with the clear intention to increase understanding between countries and peoples who had longstanding problems in their relations. Sister City projects between the U.S. and Europe differ in their intentions from similar intra-European projects. They were mostly seen as a tool to maintain close transatlantic ties after the end of the Cold War. Due to the great distance, transatlantic partnerships are much more cost- intensive than intra- European partnerships. Hence, the focus of any Sister City project needs to be pinpointed and well-thought through in order to be successful. AREAS OF COOPERATION Palo Alto and Heidelberg have several things in common, just to name a few: Medium sized city with international recognition Strong interest in realizing smart city projects Affluent diverse community Universities with excellent world-wide reputation Focus on technology and research Various youth and sports programs Vibrant citizen involvement These common aspects are the bases for a productive relationship in a number of fields. Following are suggestions on potential areas of cooperation and exchange. A. Sustainability Heidelberg has a long tradition in implementing environmental rules and climate control measures. In 1992, Heidelberg was the first German city to introduce a climate protection concept. Heidelberg is home to the worldwide biggest passive house development in its newest neighborhood district Bahnstadt. It won the “Passive House Award 2014” and the European Sustainable City Award (twice). The city is participating in the “Masterplan 100% climate protection” concept of the federal government. In 2015, Heidelberg won the “Global Green City Award” of the United Nations, honoring cities which are leading in sustainability. Heidelberg has a high standard in trash separation, while charging low fees for its waste management. The city invites its inhabitants each spring to help clean the city on Smart City Energy & Environment Security Retail & Trade Health Administration Traffic & Transport Education Society IT- Infrastructure Civic Data Plattform Spring Cleaning Week. A lot of schools, clubs and private citizens participate. The “Smart City Alliance” which was built between the two cities in 2013 to enhance the strategic collaboration in this special field. As the topic smart city is closely linked to the area of sustainability, we recommend to put a main focus on this theme and to basically stick to this agreement. One aspect which should be especially outlined is the change management within an organization (such as Palo Alto and Heidelberg). Focus should be how an organization can ensure that the newly introduced technologies and processes fit into every day’s working life so that the workflow is on its most efficient level. New projects can only be put in the path of success if people are willing to push and support them. In the course of the Bitkom competition in which Heidelberg took part, numerous project ideas were worked out and concretized in different fields of action (pictured below). In a series of events and workshops, the public was involved in fruitful discussions and brain storming processes related to the ten fields of action of a smart city. The basis of the cooperation should be –as mentioned in the Smart City Alliance-to share information and best practices. For each organization, there should be one person responsible for the coordination of activities. Afterwards common interests should be identified and both cities should bring in their strengths and experiences to push the collaboration. From Heidelberg’s point of view, this topic should be one of the main focus areas in the future collaboration. B. Science/ Innovation & Business This area should be primarily channeled through business associations like the German Accelerator in Palo Alto or the Robert-Bosch-Stiftung, the Klaus-Tschira- Stiftung and Dietmar-Hopp- Stiftung in Heidelberg. Such organizations can help identify relevant subjects of interest to businesses on both sides as well as organizing potential events. SAP, who has both a strong presence near Heidelberg and Silicon Valley could be approached. As Palo Alto and Heidelberg have quite a similar branch structure therefore there are various fields that offer opportunities and chances for collaboration and exchange. 1. Potential Alliance Organizations as mentioned in the Smart City Alliance City of Heidelberg City of Palo Alto Heidelberg University Stanford University Heidelberg Technologiepark Stanford Research Park Chamber of Industry and Commerce Palo Alto Chamber of Commerce Rhein-Neckar Heidelberg Club International Palo Alto Community Environmental Stadtjugendring Heidelberg e.V. Action, Neighbors Abroad Heidelberg is known as one of the “Cities of Science” as well as “knowledge pearl” and is home of numerous excellent higher education and research institutions that provide well-educated scientists and academics. 2. Higher education institutions Heidelberg University (Rank 1 in medicine) College of education SRH University of applied sciences College of Jewish Studies Subsidiaries of international universities (e.g. Pepperdine University, Schiller International University, University of Maryland) 3. Excellent research institutes: EMBL (European European Molecular Biology Laboratory) 4 Max-Planck-Institutes DKFZ HIT NCT 4. Heidelberg Technology Park The Heidelberg Technology Park is home of more than 90 small and medium sized enterprises in the field of biotechnology and medical research. Around 2800 scientific and technical employees are working in these companies. The Technology Park will respond to the growing demand for space, by both established companies and institutions as well as start-ups, with the fifth construction phase as of 2017. The Business Development Center Organic Electronics (BDC OE) will be established on the conversion areas of the former conversion area, Patton Barracks and will open its doors at the end of 2018. The BDC is incorporated into the future Heidelberg Innovation Park (HIP). A new district for researchers, developers, producers, entrepreneurs as well as branch offices of established companies – in other words, a very modern economic area – on approximately 17 hectares is planned. Innovation climate is attracting scientists and academic professionals throughout the globe. 5. Research intensive industry, e.g. HeidelbergCement ProMinent Lamy SAS ABB HeidelbergPrinting NEC Europe Ltd. 6. IT-based companies SAP (Heidelberg/Palo Alto) SAP APPHaus (Heidelberg) HANA Haus (Palo Alto) SAP subsidiaries located both in Palo Alto and Heidelberg The federal state Baden-Württemberg holds a leading role concerning business software. Regarding the global comparison, the federal state ranks directly after the Silicon Valley in this special field. It has to be emphasized that Heidelberg as well as the region nearby has the highest density of IT-based companies. Enhancing the exchange with respect to this field of activity could be realized by constant delegation visits on both sides (exchange programs in different disciplines also and in particular to simplify settlement of companies from Palo Alto/Heidelberg). C. Youth An important partner for youth exchange between Heidelberg und Palo Alto is the Stadtjugendring e.V. Stadtjugendring Heidelberg is the umbrella organization of urban youth organizations and in charge of youth exchange programs between Heidelberg and their sister cities (www.heidelberg-weltweit.de). One example for an exchange could be the youth orchestra project, which takes place every three years in Heidelberg with young musicians from Montpellier, Cambridge and Heidelberg. Youth projects and exchange is traditionally the core of any sister city project. The idea is to provide young people with the opportunity to learn more about other cultures, languages and habits. Heidelberg has a number of outstanding high schools. High schools in Europe usually have several partner schools abroad with which they organize student exchanges. Heidelberg conducts an International Summer Science School (ISH), a yearly exchange program to enhance exchange between youths interested in science. It is specifically designed for sister city projects http://www.ish-heidelberg.de/. ISH already cooperates with the John Ernest Foundation in Palo Alto. D. Culture & Tourism From the newly-constructed theater to the resident Symphonic Orchestra, the many privately-organized clubs and cultural institutions, Heidelberg has a rich cultural scene. With its existing sister cities, diverse projects like “Culture Weeks” with Montpellier, France (German-Week in Montpellier, French-Week in Heidelberg), a mutual representative office (with Montpellier, France) and art exhibitions (Simferopol, Ukraine, since annexation Russia) have developed over time. Cultural exchanges are mainly at the initiative of active citizen groups and could take on a range of topics. The biggest festivity in Heidelberg is the “Heidelberger Herbst” –a city-wide fest attracting over a hundred thousand visitors at the end of September each year. It is organized by Heidelberg Marketing http://www.heidelberg- event.com/events/heidelberger- herbst/?lang=en, who also organizes the three castle illumination and firework events taking place each summer, as well as the yearly Christmas Market. Besides, numerous other annual events in Heidelberg provide the opportunity to present the similarities of both cities in terms of a specific stand, performance, e.g., and therefore enhance the intercultural understanding within the citizenship. E. Sports In the past, Olympic teams from partner cities have used these facilities and German teams have trained abroad. The organization of the program is conducted by Sportkreis Heidelberg http://www.sportkreis-heidelberg.de/ Heidelberg hosts a number of Marathons. The most popular is the marathon sponsored by SAS, a Heidelberg based software firm https://www.runme.de/deutschland/sas- halbmarathon-heidelberg/, with several thousand participants. Moreover, the wheel chair marathon http://www.rollstuhl- marathon.de/index.php?lang=de is To enhance sportive projects, it would be useful actively involving foundations as those have different key topics and are willing to invest in corresponding projects. Especially sport exchange offers the chance to create intercultural understanding as well as connectedness, in all social classes and age groups. . City of Palo Alto (ID # 3973) City Council Staff Report Report Type: Action Items Meeting Date: 8/12/2013 City of Palo Alto Page 1 Summary Title: International Relationships Title: Review of the City of Palo Alto/ Neighbor's Abroad Sister Cities Program, Discussion of International Relationships Strategy, Authorization to Engage in a Non-Binding "Smart Cities Partnership Agreement" with the City of Heidelberg, Germany, and Direction on Exploring Future "Smart City" Partnerships From: City Manager Lead Department: City Manager Recommendation Staff recommends that Council review and discuss the background and history of the City’s international relationships, and Motion: 1. Authorize the Mayor to execute the attached “Smart Cities Partnership Agreement” (Attachment 5) with the City of Heidelberg, Germany at a ceremony to be held in October, 2013. 2. Discuss the Bay Area Council’s invitation to the Mayor and/or other Council Members to represent the Council in the US-China Collaboration Symposium in October, 2013, with special focus on the Smart Cities Conference in Yangpu, Shanghai 3. Direct staff to work with Stanford University to explore the creation of a Government Innovations and Entrepreneurship Fellowship. 4. Direct staff to work in collaboration with Neighbors Abroad and other community volunteers to explore the addition of the “Smart City” concepts to existing Sister Cities who might be interested. City of Palo Alto Page 2 Background Sister Cities International and Neighbors Abroad Sister Cities International (SCI) was created in 1956 by President Dwight D. Eisenhower, who “envisioned an organization that could be the hub of peace and prosperity by creating bonds between people from different cities around the world.” In a post-war era, SSI promoted “citizen diplomacy”; promoting peace and prosperity by creating opportunities for people to learn about other people and cultures and build lifetime friendships [see additional sources 1 below]. The intent was that upon a foundation of mutual understanding, a new era of peaceful collaboration between cities, and ultimately nations, would be catalyzed. In the early 1960s, citizen leaders in Palo Alto formed Neighbors Abroad, an organization meant to create and manage the City’s emerging international relations strategy based on the principles of SCI, focused primarily on cultural and educational exchanges. Palo Alto’s first official Sister City relationship was forged in 1963 with Palo, Leyte, Philippines. It was followed in 1964 by Oaxaca, Mexico. Since then, several more official Sister City relationships developed: Enschede, Netherlands (1980); Linkoping, Sweden (1987); Albi, France (1994); and Tsuchiura, Japan (2009). With the goal of “promot[ing] international and inter-cultural understanding” [see additional sources 2 below], the 50 years of international relationships for Palo Alto through Neighbors Abroad has been very successful. This is evidenced not only by the continued relationships between citizens in Palo Alto and our sister cities, but also in the numerous programs, visits, and student exchanges that continue to be organized and produced by Neighbors Abroad. Many of these events are documented in El Chisme de Neighbors Abroad, their bi-monthly publication. In fact, within the last year, the City has partnered with Neighbors Abroad to host visits from citizens and leaders from 5 of our 6 Sister Cities (Palo, Oaxaca, Enschede, Linkoping, and Tsuchiura). It is important to note that in conversations with each of our Sister Cities it has become clear that they are all interested in a more focused relationship, especially as it relates to economic development. City of Palo Alto Page 3 Managing an official Sister-City relationship requires a great deal of energy and commitment. Neighbors Abroad established a program management structure that largely relies on a volunteer Vice President to lead each relationship. This creates a risk to the sustainability of the program if their effort to engage new members in the leadership pipeline is unsuccessful. Further, while SCI has adapted its emphasis to include economic partnerships as a focus area, Neighbors Abroad has deliberatively not done so. Staff recommends working together with Neighbors Abroad to ensure that our established relationships continue, allowing the flexibility to transition the nature of our collaborations as appropriate. “Smart Cities” Partnerships In the 50 years since 1963, Palo Alto/Stanford has emerged as a global center for technology and innovation. This has had an important impact on our appeal to other cities as a potential strategic partner. This interest is evidenced by the regular visits by leaders from cities all over the world. Environmental sustainability, innovation-driven economic development, and educational exchanges are just a few areas where a mutually beneficial, strategic, and focused relationship could be fruitful for those cities and ours. Especially in the last decade, changes in the geo-political landscape, technological advancements, and the globalization of the world economy have made new types of collaboration and partnership possible. It is now appropriate to review our international relationships and explore structures and strategies attuned to this changing landscape and which allow for the flexibility to experiment with new approaches. Because the Sister-City model does not allow for such smaller, focused, relationships, the concept of a “Smart-City” partnership has materialized as a potential new model worth testing. A smart city, as defined by the United Cities for Local Governments, is “a type of city that uses new technologies to make them more livable, functional, competitive, and modern through the use of new technologies, the promotion of innovation and knowledge management, bringing together 6 key fields of performance: the economy, mobility, the environment, citizenship, quality of life and, finally, management.” [See additional sources 3 below] City of Palo Alto Page 4 The idea of the “Smart City” partnership is to create a vehicle by which the City can engage with another city or region of the world around strategically targeted topic areas that benefits the City, its people, and community. The partnership would be short-term (less than 5 years) in duration, and be expected to provide valuable results measured through mutually-established metrics. These topic areas could draw from the Smart City movement, which includes: Support for Entrepreneurship Retaining and attracting talent and promoting creativity Education Online public services Transparent governance Promoting ICT (information and communications technology) and Innovation Smart mobility Culture and Identity Accessibility and e-inclusion [3] City of Heidelberg, Germany For several years, the City of Heidelberg, Germany, has been in discussions with City Leaders about engaging in such a partnership. In October, a presentation was given to the Council by representatives from Heidelberg and SAP regarding the City of Heidelberg. This presentation is attached (Attachment 4), and highlights several of the key aspects of Heidelberg as well as areas of potential collaboration with the City of Palo Alto. Heidelberg is a city of approximately 150,000 people that takes up approximately 68 square miles at the center of the Neckar River Triangle in Germany. It is home to several institutions of scientific and technical research, and boasts an economy largely driven by invention and innovation. City of Palo Alto Page 5 Staff was especially impressed with their leadership in the area of environmental sustainability, both in terms of their City’s goals as well as their robust programs- especially those that engaged their citizenry in behavioral changes. This is exemplified by their inclusion in the C40, an internationally respected Climate Leadership Group, made up mostly of much larger cities. An overview of their environmental efforts is included in their collateral entitled “Climate Protection Commitment” included in this report (Attachment 6) Staff has also identified several current residents in Palo Alto from the Heidelberg region who have expressed their interest in volunteering in any effort to connect our two cities. In follow-up efforts and meetings, a “Smart City Partnership Agreement” has been drafted for the Council’s Consideration (Attachment 5) Yangpu District of Shanghai, China In November of 2012, the Council authorized the Mayor to execute an exploratory agreement with the District of Yangpu, Shanghai, China (Attachment 3). Staff and Council Members traveled to China with a Bay Area Council (BAC) Delegation, and returned with a presentation on their experiences in December. At that point, staff was given directions specific to continuing the Yangpu/Palo Alto relationship. An update of the efforts of staff and volunteers thus far was included in the Council Packet for 8/5/13 as an informational item. Of particular note is the successful completion of a pilot student exchange/ experiential learning program by six teens from Palo Alto High Schools. Staff was also directed to return to Council with a study session on International Relations. This action session of the Council is intended to allow for discussion, but also includes the flexibility for some specific actions for Council’s consideration. As noted in the informational report on 8/5/13, The City has also been invited by the Bay Area Council to take part in the “Smart City” Conference 2013 to be held in China. It begins outside Beijing in Tianjin and concludes in Yangpu, Shanghai. The Mayor and the City Manager (or appointees) have been invited to speak at the conference. Vice Mayor Shepherd has been participating in the steering committee process and expects to have an informative program involving green tech leaders, government officials and industry. The purpose is to promote 21st Century thinking on green efforts as China develops their domestic economy and City of Palo Alto Page 6 public services. The conference is scheduled for October 13-20, and all council members are welcome to attend. The Bay Area Council has created a special government rate for those interested in participating. City of Espoo, Finland and Aalto University In late May, 2013, The Mayor, Vice Mayor, City Manager, and Asst. Planning Director met with representatives from the Stanford Technology Venture Program, leaders from the City of Espoo, Finland, and the University of Aalto in Espoo. Through this interesting discussion, an idea emerged that a program between Palo Alto and a Stanford graduate student could be developed with a focus on government innovations and entrepreneurship. If such a program was also developed simultaneously between the City of Espoo and Aalto University, it could form the initial foundation for a very interesting “Smart Cities” Partnership as well. Discussion The City of Palo Alto has an opportunity to build on its international identity and the existing strong foundation of international relationships to create new value for the City. In this Digital Age, it is appropriate to build upon our goodwill and cultural exchanges to reach beyond to form new economic, technical, and innovation focused programs with other cities in the world. We can leverage our existing international relationships and add some new ones, especially those that benefit our city and enhance our position in the global marketplace. A nimble model such as the “Smart Cities” partnership allows us to explore potential relationships and engage in shorter term, focused collaboration towards specific and measureable goals. The “Sister City” model has an important place in the history of Palo Alto. It has provided a strong foundation for our international relations. The efforts of the Neighbors Abroad volunteers and Staff over the last 50 years have been remarkably valuable and fruitful for the City, especially from a cultural, City of Palo Alto Page 7 educational, and ambassadorial perspective. Staff recommends that the City continue to support the Sister City programs, visits, and exchanges largely managed by Neighbors Abroad. At the same time Staff can also work with Neighbors Abroad and other interested community members to create new strategic opportunities as well. These results-oriented relationships need not rise to the level of depth and permanence of the “Sister City”, and indeed should be lithe and flexible in their structure. It is intended that through the inclusion of a new Smart Cities model, Staff and Neighbors Abroad can work to attract a broader range of citizens to volunteer in the efforts. Given the background and meetings between the City of Palo Alto and the City of Heidelberg, a short term Smart City Partnership between the two cities is a good chance to experiment with a new model and a chance to develop some measurable results. Additionally, Staff anticipates using it as a test case to draw new people and interest into our collaboration with Neighbors Abroad. A draft of a non-binding and exploratory agreement with Heidelberg was created for the Council’s consideration and approval, and is attached as (Attachment 5) Government Innovation and Entrepreneurship Fellowship Staff is also seeking the Council’s direction to work with Stanford to explore the interest in designing a fellowship that would focus on innovations in local government and entrepreneurialism. Staff would develop a framework for a potential program and return to Council for discussion/ action at a later time. Timeline Staff intends to return to Council with an update in the first quarter of 2014. Resource Impact Some staff time will be dedicated to this effort. it is likely that additional resources may be requested as part of any further staff recommendations, especially the creation of a Government Innovations/ Entrepreneurship Fellowship. City of Palo Alto Page 8 Additional Sources [1] www.sister-cities.org/mission-and-history [2] www.neighborsabroad.org [3] http://www.cities- localgovernments.org/committees/cdc/Upload/formations/smartcitiesstudy_en.pdf Attachments: Attachment 1: Excerpt Minutes 10-22-12 (Heidelberg Presentation) (JPG) Attachment 2: Excerpt Minutes 12-17-12 (Yangpu Partnership and Direction for Study Session) (PDF) Attachment 3: Yangpu Partnership Agreement_Final (PDF) Attachment 4: Heidelberg Presentation 10-12 PPT (PPTX) Attachment 5: Heidelberg-Palo Alto Draft MOU_7-1-13 (DOCX) Attachment 6: Heidelberg Climate Protection Commitment (PDF) City of Palo Alto (ID # 4122) City Council Staff Report Report Type: Consent Calendar Meeting Date: 9/23/2013 City of Palo Alto Page 1 Summary Title: Update to Heidelberg Agreement Title: Reauthorization to Engage in a Non-Binding "Smart Cities Alliance Agreement" with the City of Heidelberg, Germany, and Direction on Exploring Future "Smart City" Alliance From: City Manager Lead Department: City Manager Recommendation Staff recommends that City Council reapprove the agreement between the City of Heidelberg, Germany and the City of Palo Alto, replacing the word “partnership” with “alliance”. Background On August 12, 2013, City Council approved Staff Report #3973 to authorize the Mayor to execute the “Smart Cities Partnership Agreement” with the City of Heidelberg, Germany at a ceremony to be held in October, 2013. Discussion The City of Palo Alto received a request from Heidelberg’s Mayor to change the word “partnership,” in the agreement to “alliance.” The term “alliance” is more typically used in Europe than “partnership”. While we may continue to refer to our Smart City initiatives as partnerships, this change would be appropriate. The word change would not change the conditions of the agreement. The Heidelberg Mayor feels that the word change better highlights the difference between smart city agreements and sister city agreements. City of Palo Alto Page 2 The Mayor and City Manager will also be traveling to our Sister City Enschede, The Netherlands, on this trip. Enschede is also interested in exploring a Smart City “alliance” with Palo Alto. Mayor Scharff and I will be discussing this with their Mayor and City Manager. Our trip will occur October 6-13. In related matters, Vice Mayor Shepherd will traveling to China on behalf of the City with the Bay Area Council, October 12-20. On that trip, she will be participating in a Smart City Symposium in Yangpu District Shanghai (our Smart City Partner in China). Attachments: Attachment A: Heidelberg Agreement with Edits (PDF) Attachment B: Heidelberg Agreement Final (PDF) Attachment C: 8-12-13 Staff Report (PDF) Attaachment D: 08-12-13 CC Minutes Excerpt (DOC) City of Palo Alto (ID # 8383) City Council Staff Report Report Type: Action Items Meeting Date: 8/21/2017 City of Palo Alto Page 1 Summary Title: 3877 El Camino Real Mixed-Use Project Title: PUBLIC HEARING / QUASI-JUDICIAL. 3877 El Camino Real [14PLN- 00464]: Adoption of a Mitigation Monitoring and Reporting Plan and Approval of a Site and Design Review for the Demolition of the Vacant 5,860 Square-Foot Commercial Building and Construction of a new Mixed-Use Project. The Project Includes a 4,027 Square Foot Commercial Building and 17 Dwelling Units (Flats and Townhouses). Parking for the Project is Provided in a Basement. The Applicant Also Requests Approval of a Design Enhancement Exception to Allow the Basement to Encroach Into the Required Rear Yard Setback Below Grade. Environmental Assessment: A Mitigated Negative Declaration was circulated between March 6, 2017 and April 7, 2017. Both the Planning & Transportation Commission (March 8, 2017) and Architectural Review Board (May 18, 2017) have Recommended Approval of the Project. Zoning Districts: CS and RM-30 (STAFF REQUESTS THIS ITEM BE CONTINUED TO AUGUST 28, 2017) From: City Manager Lead Department: Planning and Community Environment Staff requests this item be continued to August 28, 2017. City of Palo Alto (ID # 8354) City Council Staff Report Report Type: Action Items Meeting Date: 8/21/2017 City of Palo Alto Page 1 Summary Title: Letter of Intent with Pets In Need Title: Approval of a Letter of Intent With Pets In Need to Develop a Financing Study Including Public and Private Financing for a New Animal Shelter Facility and Commit up to $60,000 for the Study, and Outline a Process and Timeline for Negotiating an Operating Agreement and Interim Improvements for the Current Animal Shelter From: City Manager Lead Department: Community Services Recommendation Staff recommends that Council authorize the City Manager or designee to sign the attached Letter of Intent to Pets In Need to Commit Up to $60,000 for a Capital Campaign Planning Study for a new Animal Shelter and outline a process and timeline, subject to subsequent Council approval, for making interim improvements to the current Animal Shelter, negotiating an operating agreement for the new shelter, and planning for construction and operation of a new shelter. Background Palo Alto has faced financial challenges with the Animal Shelter since 2012, when Mountain View ended their animal services contract with the City. In response to these challenges, as well as facility inadequacies noted in a report by the City Auditor, the City Council directed staff to evaluate alternative service delivery options in FY 2016. Later that year, the City issued two Requests for Proposals for shelter operations and veterinary clinic services. Pets In Need’s submittal was evaluated and selected for exclusive negotiations. Since then, the City has shifted from contracting out services to engaging in public private partnership negotiations with Pets In Need (PIN) to operate the City’s Animal Shelter. The City and PIN have made significant progress but have not been able to finalize an agreement, due in large part, to the aging and inadequate sheltering facility. As noted in the City Auditor’s Report, the building is not large enough to house all the animals received, keep incompatible animals apart, and meet modern kennel size standards, among other issues. Discussion City of Palo Alto Page 2 Because the existing Palo Alto Animal Shelter is inadequate in size and design to meet the sheltering needs of Palo Alto and its partner agencies (Los Altos and Los Altos Hills), the City and PIN have agreed to concurrently negotiate both an Operations and Management Agreement for the existing shelter, as well as an agreement for the financing and construction of a new Animal Shelter. To move forward in this process, staff recommends providing $60,000 for a Capital Fundraising Campaign Planning Study to evaluate the likely private fundraising capacity for a new shelter. Recognizing the potential need for a public funding component for a new Animal Shelter, staff may also advance for City Council consideration a recommendation to explore the feasibility of public financing, which could include a tax measure to be submitted to the voters or other new public revenue source, potentially covering up to 50% of design and construction. Exploration of a public financing component is contingent on the outcome of the Capital Fundraising Campaign Planning Study; agreement on preliminary design concept, scope of programs and services, and ongoing operating costs; and environmental review. These proposals are detailed more fully in the attached Letter of Intent. If approved by the City Council, this letter will be the basis for continued discussions on management and operation of the current shelter and funding and building a new shelter. Earlier this year, the City entered into a Mutual Cooperation and Support Agreement with Pets In Need to complete a needs assessment for animal sheltering in Palo Alto. The assessment was completed in May 2016. The firm presented six preliminary conceptual options for a community oriented facility which could not only meet the sheltering needs of Palo Alto but could also serve as a community center of sorts, aimed at education around animals and animal care. The estimated budget for facilities of this type ranged from approximately $9 to $20 million. If the City and PIN agree to build a new Animal Shelter, a complete design and planning effort, including public input process, board and commission review and California Environmental Quality Act (CEQA) requirements will need to occur. Operating Agreement Status Update The City and PIN have had broad discussions on the scope of services for an operating agreement, but anticipate discussing specific terms after mutual approval of this Letter of Intent. At a high level, the scope includes a plan to maintain a shelter with high quality animal care and affordable medical services, as well as a robust volunteer program and increased public hours. PIN has, in principle, agreed to provide these services to the City for a management fee of $650,000 per year; approximately $200,000 less than the City’s costs, and providing greater services and programs. The timeline below outlines steps the City and PIN will need to complete for PIN to agree to begin operations of the existing Animal Shelter in March-July 2018 (target PIN start date). August to December 2017: City of Palo Alto Page 3 PIN to continue development of site review and preliminary programmatic and conceptual designs for a new Animal Shelter PIN to conduct Capital Fundraising Campaign Planning Study Parties to prepare Operations and Management Services Agreement for PIN to operate the existing Animal Shelter pending construction of a new Animal Shelter Parties to develop a proposed financing plan for a new Animal Shelter based on approved preliminary programmatic and conceptual designs, and taking into account the results of the Capital Fundraising Campaign Planning Study City and PIN to evaluate interim capital improvements necessary for PIN to begin operations at the existing Animal Shelter and/or other site needs January to March 2018: Council to review and approve an Operations and Management Services Agreement with PIN and initiate environmental review on a proposed Capital Improvement Plan for a new facility to include a financing plan based on the results of the Capital Fundraising Campaign Study Upon Council approval of aforementioned items, PIN prepares to assume operations of the existing shelter City, in collaboration with PIN, completes any interim capital improvement projects at existing shelter March to July 2018: PIN begins operating the existing shelter Capital Campaign for a new Animal Shelter begins Update on Negotiations with SEIU City representatives have been meeting with Service Employees International Union local 521 (SEIU 521) since late 2016 regarding changes in Animal Shelter operations. These negotiations with SEIU 521 are in the final stages and will now be focused directly on the 5 impacted employees at the Palo Alto Animal Shelter. The City under its contract with SEIU 521 will offer employees priority hiring for any vacancies within the City which they qualify and are committed to providing internal and external training resources to assist employees with this transition. SEIU 521 has discussed and signaled its intent to propose severance options for impacted employees, above and beyond that which is currently outlined in the SEIU 521 contract. The City is committed to working through the impact bargaining process with SEIU 521 and its impacted members. Policy Implications and Environmental Review Any new facility proposals will require PIN to obtain and maintain all required City permits and other authorizations comply with state and local laws, including the California Environmental Quality Act (CEQA), and furnish or caused to be furnished any financial and non-financial security, during the construction, as appropriate. Upon request, PIN will provide to the City, insurance, indemnity, lien waivers, performance and payment bonds and covenants, among City of Palo Alto Page 4 other things. All design and construction work will be reviewed by one or more of the City's Departments of Community Services, Planning and Community Environment, Development Services, Utilities, and Public Works. Design and construction will be reviewed and approved, as appropriate, by the City's boards and commissions, including, but not limited to, the Architectural Review Board, the Planning and Transportation Commission and the City Council. The City will provide reasonable staff support and other assistance, upon request, in connection with the execution of the Project. Resource Impact The funds for the execution of Capital Campaign Planning Study ($60,000) are budgeted in the City Manager’s Office, dedicated to Animal Services Assessment activities and within the City Manager’s authority to execute. Staff resources from various departments will continue to be dedicated to this project with coordination from the City Manager’s Office. Attachments: Attachment A - Letter of Intent between City and Pets In Need Attachment B - Letter of Support from Friends of Palo Alto Animal Shelter Attachment C - Letter of Support from Palo Alto Humane Society Attachment D - Staff Report 7699 Facility Concept Master Planning for Animal Shleter A A P 8 R D T " a c a C T P s T P l A D a it a i w p c T a t s O I M a o August 21, 2 Al Mollica, Ex Pets In Need 871 5th Aven RE: Letter of Dear Mr. Mo The City of "Parties"), in and the Palo components and its partn City, togethe This Letter o Partnership t service for P The existing Palo Alto an ong‐term fu Auditor’s An Department and achievin ts mission t animal a lovi n Palo Alto, will be const programs an comprised o The Parties agreements, the Parties a submitted to Operations a nitially, and Meyers Milia and manage of beginning 017 xecutive Dir d nue Redwood Intent Rega ollica, Palo Alto ( n collaborati o Alto Human s: (1) PIN ass ner cities of L er with sust of Intent re to accomplis alo Alto resi Palo Alto A d its partner unding. Reno nimal Service . The City de ng long‐term to advance t ing home. Th initially in th tructed on C nd services w f excellent c are intere subject to m gree to nego o the City Co and Manage d subject to as Brown Ac ment agreem PIN’s role w ector d City, CA 94 arding Opera (the "City") on with com ne Society (P suming anim Los Altos an tainable long presents th sh these goa dents. nimal Shelte r agencies. A ovation of t es Audit fro esires a mod m financial su the no‐kill m he parties in he current sh ity‐owned la will be enha communicat sted in und mutually acc otiate in goo ouncil and PI ement Servic legal requi ct, the City a ment provid within the M 4063 ation and Re and Pets I mmunity par PAHS), wish mal shelterin d Los Altos H g‐term fund e Parties co als resulting er is inadequ At the same the existing m April 201 dern and ad ustainability movement, r ntend to adv helter facilit and in Palo A nced with a ion and mut dertaking a ceptable term od faith tow N Board of D es Agreeme irements inc nd PIN inten ding for PIN t arch to July ebuilding of t n Need (“P rtners the F to collabora g operations Hills; and (2) ding of ongo ommon inte in a sustain uate in size time, shelte facility is n 15 and a sta dequate Anim for shelter p reduce pet vance these g ty, and subse Alto. The Pa strong pub tual understa nd complet ms and cond ards develop Directors for nt for Existin cluding the nd to negoti to operate t 2018 timefr the Palo Alto PIN”) (each Friends of Pa ate and nego s in Palo Alt ) the buildin oing program erests and c able and co and design ering operat not recomm ff assessme mal Shelter programs an homelessne goals by PIN equently in a arties envisio lic‐private p anding. ting the Pr ditions. On e pment of th r their consid ng Shelter obligation iate and ent the City’s ex rame. o Animal She a "Party" a alo Alto Anim otiate on a p to to serve r ng of a new A ms and serv commitment mmunity‐su to meet the tions lack st mended as d ent from the facility whil nd services. ess, and find N assuming s a new and e on that the A partnership b roject in ac execution of e two agree deration. to meet an ter into a co isting anima elter and collectiv mal Shelter ( project inclu esidents of Animal Shelt vices (“the P t to a Publi upported ani e sheltering able and su described in e City’s Publ le stabilizing PIN seeks to d every dog, sheltering op expanded fac Animal Shelt between the ccordance w f this Letter o ements, whic nd confer u mprehensiv al shelter, wi 1 vely, the (FoPAAS) uding two Palo Alto ter in the Project”). c Private imal care needs of stainable the City ic Works g funding o expand , cat and perations cility that ter’s core e Parties, with two of Intent, ch will be nder the ve service ith a goal DocuSign Envelope ID: CD3D7A06-3772-48EC-9B19-FD4537BD7DD5 2 It is the parties’ goal to continue an Operations and Management Services Agreement until a new Shelter is constructed, and a replacement management and operations agreement for the new facility is negotiated. The parties intend to ensure that the existing facility meets PIN’s operating requirements. Capital Fundraising and Construction Agreement for New Animal Shelter At the same time that the Parties are negotiating and finalizing an Operations and Management Agreement for the existing shelter, the City and PIN also intend to begin negotiations toward the building and operation of a new Animal Shelter. The parties contemplate that a new shelter Capital Fundraising and Construction Agreement will include at least the following elements: Define the roles and responsibilities of the City and PIN, and their community partners FoPAAS and the PAHS, regarding the funding, building and operation of a new Animal Shelter. Identify an appropriate site for a new Shelter. It is the City’s goal to identify and provide existing City land, without cost, for this purpose. Define programmatic and conceptual shelter design, or several design options, together with construction and operations budgets. The City of Palo Alto provided PIN $50,000 in the spring of 2017 for a facility and program needs assessment, which was completed on May 24 2017. The parties will negotiate regarding the City’s and PIN’s responsibilities for funding and conducting design development, including environmental review, and the timing of these activities. Design options shall be presented to the City Council for consideration. Establish a capital funding plan for design, construction and operation of a new Shelter. To that end: o The City intends to immediately provide funding in the amount of $60,000 for the Parties to undertake a Capital Fundraising Campaign Planning Study to evaluate the likely private fundraising capacity for a new Shelter. o Recognizing the potential need for a public funding component for a new Animal Shelter, staff may advance for City Council consideration a recommendation to explore the feasibility of public financing, which could include a tax measure to be submitted to the voters or other new public revenue source, potentially covering up to 50% of design and construction. Exploration of a public financing component is contingent on the outcome of the Capital Fundraising Campaign Planning Study, and agreement on preliminary design concept, scope of programs and services, and ongoing operating costs. o PIN intends to engage in a campaign to raise private funds sufficient, when combined with available public funding, to fund design and construction of a new facility, and to establish stable and sustainable funding, including reserves, for ongoing operations of a new facility. o FoPAAS and PAHS agree to provide community organizing and fundraising assistance for a shared vision that is mutually beneficial under the direction of PIN. Establish a plan for post‐construction operations and management of the new Shelter, including an operations and management budget, definition of the Parties roles and responsibilities, and a plan for sustainable long‐term funding. DocuSign Envelope ID: CD3D7A06-3772-48EC-9B19-FD4537BD7DD5 3 The potential timeline for the Capital Campaign Planning Study, defining a funding plan for a new Animal Shelter and the transition to PIN operating the existing Animal Shelter is as follows: August to December 2017: PIN to continue development of site review and preliminary programmatic and conceptual designs for a new Animal Shelter PIN to conduct Capital Fundraising Campaign Planning Study Parties to prepare Operations and Management Services Agreement for PIN to operate the existing Animal Shelter pending construction of a new Animal Shelter Parties to develop a proposed financing plan for a new Animal Shelter based on approved preliminary programmatic and conceptual designs, and taking into account the results of the Capital Fundraising Campaign Planning Study City and PIN to evaluate interim capital improvements necessary for PIN to begin operations at the existing Animal Shelter and/or other site needs January to March 2018: Council to review and approve an Operations and Management Services Agreement with PIN and initiate environmental review on a proposed Capital Improvement Plan for a new facility to include a financing plan based on the results of the Capital Fundraising Campaign Study Upon Council approval of aforementioned items, PIN prepares to assume operations of the existing shelter City, in collaboration with PIN, completes any interim capital improvement projects at existing shelter March to July 2018: PIN begins operating the existing shelter Capital Campaign for a new Animal Shelter begins Any new facility will be require the Parties to obtain and maintain all required City permits and other authorizations, comply with state and local law, including the California Environmental Quality Act (CEQA), and furnish or caused to be furnished any financial and non‐financial security, during the construction, as appropriate. Upon request, PIN will provide to the City, insurance, indemnity, lien waivers, performance and payment bonds and covenants, among other things. All design and construction work will be reviewed by one or more of the City's Departments of Community Services, Planning and Community Environment, Development Services, Utilities, and Public Works. Design and construction will be reviewed and approved, as appropriate, by the City's boards and commissions, including, but not limited to, the Architectural Review Board, the Planning and Transportation Commission and the City Council. The City will provide reasonable staff support and other assistance, upon request, in connection with the execution of the Project. This letter is not intended to be a binding contract between the Parties with respect to the Project. It is intended to facilitate discussion of the key contract terms and conditions of the agreement relating to the Project, and it is only an expression of the parties’ intentions for further negotiations. DocuSign Envelope ID: CD3D7A06-3772-48EC-9B19-FD4537BD7DD5 4 The City requests PIN's acknowledgement of this letter in order that the City may proceed with PIN to develop the key terms and conditions of the two agreements concerning the Project. Once these key terms and conditions have been identified, the City will draft agreements for submission to the City Council and PIN Board. Final agreement is subject to approval of the City Council, in its sole discretion. Sincerely, James Keene City Manager Pets In Need hereby acknowledges a mutual interest in developing appropriate agreements and plans between the Parties to complete the Project as described above. ________________________ Al Mollica, Executive Director Pets In Need DocuSign Envelope ID: CD3D7A06-3772-48EC-9B19-FD4537BD7DD5 We, the Friends of the Palo Alto Animal Shelter (FoPAAS), enthusiastically support the plans outlined in the Letter of Intent drawn up by Pets In Need and the City Manager’s Office. We look forward to seeing these plans brought to fruition. City Staff members have worked constructively with the management of Pets In Need. The parties involved have spent many hours analyzing and defining ways to accomplish their objective. We expect that PIN’s shelter management skills, combined with City support, can bring a new and stellar shelter to Palo Alto. As part of the process, FoPAAS intends to work with PIN, the Palo Alto Humane Society (PAHS), and the community to raise funds for design and construction of an impressive modern shelter. Sincerely, Board of Directors Friends of the Palo Alto Animal Shelter 3072 Waverley Street Palo Alto, CA 94306 Attachment B Attachment C City of Palo Alto (ID # 7699) City Council Staff Report Report Type: Informational Report Meeting Date: 2/6/2017 City of Palo Alto Page 1 Summary Title: Facility Concept/Master Planning for Animal Shelter Title: Update on Negotiations With Pets In Need Regarding Animal Care Services and Intention to Advance Prior City Council Direction Regarding Facility Construction or Rehabilitation From: City Manager Lead Department: City Manager Background In 2012 City Council directed staff to explore various cost savings strategies for providing animal services for the City of Palo Alto. This directive was the result of the loss of the City’s largest partner, the City of Mountain View, who chose to purchase its services from Silicon Valley Animal Control Authority. This departure precipitated discussion of the services and shelter condition of the Palo Alto Animal Shelter and its cost effectiveness. The City Council directed staff to pursue reductions in the level of subsidy to the shelter and potential service improvements. Despite an initial reduction in subsidy level, over recent years funding has grown, relying on approximately $800,000 of subsidy, per year, from the City’s General Fund. Currently, animal services are provided by City staff at a municipal facility at 3281 E. Bayshore Road in Palo Alto. The facility, which operates 6.5 hours per day, six days a week, was built in 1972 and has been identified as inadequate to meet current needs and requires modernization. After an extensive Request for Proposal process conducted over many months, City Council directed staff in September 2016 to proceed with exclusive negotiations with a nonprofit organization, Pets In Need, to operate the City’s animal care services and address facility needs. City Council authorized up to $250,000 for transition-related costs. Additional background information can be found in the attached staff report. Furthermore the City has established a dedicated website with previous staff reports and documents related to this project: www.cityofpaloalto.org/animalservicesassessment. Discussion Since receiving City Council direction in September 2016, staff is continuing to actively negotiate with Pets In Need to achieve an agreement that meets the needs of the parties. To Attachment D City of Palo Alto Page 2 date, negotiations have focused on identifying service levels, cost of services, specifying transition issues and discussing facility needs. A term sheet approved by City Council in September 2016 between the City and Pets In Need states that within one year of commencing operations Pets In Need will lead a capital campaign to fundraise for facility improvements. At this point in the negotiations, further information is needed to determine the extent of facility improvements and options that may be needed and the level of fundraising that will be required. To obtain the necessary information, up to $50,000 of the pre-authorized $250,000 in transition funding will be used for schematic concept designs. The City will contract with Pets In Need to hire an architecture firm that specializes in animal facility development. Pets In Need has experience with animal shelter development, staff resources to dedicate to the study, and the ability to quickly bring on a consultant. Pets In Need will work on the City’s behalf and closely with City staff. The design results will assist the City and Pets In Need in identifying the costs associated with the facility. We expect that some level of City investment in the capital costs of improvements to the shelter may be requested to assist with the fundraising campaign. The facility planning effort will also comply with the City Auditor’s recommendation to “…assess the feasibility of obtaining sufficient funding through fundraising, public/private partnerships, general fund subsidies, or a bond initiative, to build a new animal shelter that meets modern- day standards for animal care and safety.” It is anticipated that the options and costs will be presented to Council within a timeframe that aligns with the City’s fiscal year budget process, with a target of May 2017. Resource Impact The funds are budgeted in the City Manager’s Office, dedicated to Animal Services Assessment activities and within the City Manager’s authority to execute. Staff resources from various departments will continue to be dedicated to this project with coordination from the City Manager’s Office. Attachments: Attachment A: 9-6-16 Staff Report Attachment D City of Palo Alto (ID # 7259) City Council Staff Report Report Type: Action Items Meeting Date: 9/6/2016 City of Palo Alto Page 1 Summary Title: Animal Services Assessment and Possible New Service Model Title: Direct Staff to Proceed with Discussions with Pets In Need Regarding Animal Care Services and the Construction or Rehabilitation of the Animal Shelter Facility From: City Manager Lead Department: City Manager Recommendation Direct staff to proceed with exclusive negotiations with Pets In Need, a 501(c)3 nonprofit organization, to provide animal care services and develop a plan for animal shelter facility construction or rehabilitation, and to return to City Council by December 2016 with a recommended agreement. Background Following the Great Recession and withdrawal of an agency (City of Mountain View) previously receiving Animal services from Palo Alto, in May 2012 the City Council's Policy and Services Committee and Finance Committees discussed the City’s current service and revenue models. As a result, the City Council directed staff to take immediate steps to make the operation more self-sufficient to reduce reliance on the General Fund. After a series of subsequent actions and service changes, through Fiscal Year 2014 the goals of establishing sustainable service levels and expenses were not achieved. In fact, over time, the costs and general fund subsidy to shelter operations have increased. In June 2014, the City Council referred a Colleagues Memo regarding the Palo Alto Humane Society’s (PAHS) interest in partnering with the City to the Finance Committee. The City Auditor was then engaged, and in April 2015 the City Auditor presented an audit concluding that Animal Services could not become revenue neutral under its current financial model, and faced challenges that were unlikely to be resolved if it continued operating as solely a city-managed function without a significant increase in general fund subsidy, donations, and/or revenue- generating contracts. In approving the Fiscal Year 2016 budget, the City Council directed staff to pursue an alternative service model and allocated $250,000 to assist with possible transition costs. Attachment D City of Palo Alto Page 2 During Fiscal Year 2016, the City Manager’s Office continued outreach and engagement with various community and City department stakeholders, including the Friends of the Palo Alto Animal Shelter (FoPAAS) and PAHS. With active participation from these stakeholders, staff conducted two Requests for Proposals (RFP) to assess the market for alternative services providers. Through the process of developing the first RFP and documenting the services and organizational support structure being sought, both FoPAAS and PAHS determined that they would not submit proposals. The first RFP was issued on October 15, 2015 and closed December 11, 2015 with one respondent, Pets In Need, a local animal rescue service provider located in Redwood City. Due to the low response rate and in accordance with procurement best practices, staff conducted debriefing sessions with local animal care providers who did not submit a response to better understand current market conditions. These included Peninsula Humane Society, Silicon Valley Animal Control Authority, Humane Society of Silicon Valley and the County of Santa Clara. The consistent feedback was that the initial RFP was too prescriptive and limited their abilities to apply existing business models and best practices. City staff met with community stakeholders and the Services Employees International Union (SEIU) about the feedback. In collaboration with the stakeholders, the City re-issued a revised RFP with a less strictly defined scope. The new RFP was issued on January 27, 2016 and after one extension, closed on March 18, 2016. The City received one proposal from Pets In Need, a letter from the County of Santa Clara and a letter from the Humane Society of Silicon Valley. Staff conducted an evaluation of the responses and has concluded that the proposal most advantageous to the City is from Pets In Need. Staff has therefore negotiated with Pets In Need to outline the terms of an agreement for animal care services. Recognizing that the City has multiple goals for animal care services, including the manner and level of care, improvement of the animal shelter, and community engagement, in addition to financial terms, staff is seeking City Council discussion and direction prior to finalizing an agreement for services. Staff also recognizes that as a nonprofit organization, Pets In Need is a prospective partner for whom this agreement represents a significant decision and commitment that must align with its mission and organizational capabilities. As has been demonstrated by the RFP process to date, there is not a robust marketplace of providers bidding for this service as defined. Discussion In consultation with Pets In Need, staff has developed the attached Term Sheet that outlines the substantive issues to be finalized in an agreement for services. City Council direction is recommended to finalize terms into a recommended contract and to return to City Council before the end of the calendar year for approval. The purpose of the Term Sheet is to identify the manner in which key policy issues are being addressed. These policy items are summarized below and further defined in the Term Sheet. The Term Sheet is nonbinding and presents the parameters for negotiations. Attachment D City of Palo Alto Page 3 Why Pets In Need? Pets In Need was selected as providing the most advantageous proposal due to their commitment to retain the shelter in Palo Alto, to lead a fundraising campaign to remodel or build a new shelter, to work closely with the Friends of Palo Alto Animal Shelter and the Palo Alto Humane Society, and to provide the services in a cost effective manner. The County of Santa Clara’s letter was deemed not cost effective. Additionally, the County was not willing to contribute or fundraise in the same capacity as a nonprofit could to a new or remodeled facility. The Humane Society of Silicon Valley’s letter did not meet the City’s required level of service due to their recommendation to turn the Palo Alto shelter into a stray holding facility and to outsource services to Silicon Valley Animal Control Authority and Pets In Need. Facility Improvements As recommended in the audit and supported by the City Manager, the shelter is in need of a substantial remodel or possibly a new facility. The City and Pets In Need are committed to a partnership to develop a plan to remodel or rebuild a new shelter. The Term Sheet outlines initial commitments between the City and Pets In Need. To summarize: An initial needs assessment will be conducted to determine immediate improvements. The City and Pets In Need will ensure the facility is in a condition that meets the expectations of the new contract. Within one year of commencing operations, Pets In Need will finalize a plan and begin to lead a capital campaign to fundraise for facility improvements. Cost of Services The RFP requested potential service partners to provide: a two year financial plan with quarterly financial targets which includes earned income, fundraising and other revenue; direct labor rates for proposed staff; overhead rate and breakdown of overhead elements; sub- consultant billing rates and mark-up percentage for other direct costs; all reimbursable expenses; any other cost and price information; a not-to-exceed amount; bank and audit statements. Pets In Need was the only responsible bidder and provided the requested data. In discussions with animal care providers throughout the RFP process, and prior to that through various internal and external stakeholder engagement processes, it became apparent to staff that, in order to retain animal care services in Palo Alto, a certain level of General Fund subsidy would have to be provided for a defined set of shelter services and that a fully cost-recovery model with high service level expectations is not viable. Therefore, staff considered analogous public private partnerships and concluded that the ideal agreement would be a fee for service model where the City pays an annual management fee and provides a facility at minimal charge in return for services. This model provides a predictable subsidy level. In the preliminary discussions, Pets In Need requested that the City consider a fee for service model which is based on a $30 per animal per day cost with a cap of thirty days. Pets In Need would then be responsible for the ongoing cost after the thirty days. The attached Term Sheet adds additional parameters for this model. Recognizing that the details of the financial structure will need to be negotiated between the City and Pets In Need, Council approval of this report will direct staff to negotiate a fee structure with Pets In Need. The three-year average cost for shelter operations Attachment D City of Palo Alto Page 4 is approximately $520,000. The City’s subsidy amount will stay at or below the three-year average cost. Staff will return to City Council for approval of an operating contract before the end of the calendar year. Types of Animals and Quantity of Animals Currently the Palo Alto Animal Shelter takes dogs, cats, rabbits, wildlife, chickens, horses, goats, and other animals. The City’s expects that Pets In Need will be responsible for intakes of all animals and maintain the same service levels as the City currently provides. In preliminary discussions Pets In Need has committed to maintaining services levels and meeting the community expectations. As discussions continue between the City and Pets In Need, adjustments may be required to service levels based on the negotiated fee structure and facility’s capacity. Moreover, Pets In Need has a “no kill” philosophy which is a fundamental principle of the organization. Staff will need to work with Pets in Need to evaluate their ability, given the facility constraints, to continue current service levels as a “no kill” shelter operation. Contracts with Los Altos and Los Altos Hills Partner agencies agreements make up of 15% of the City’s total annual Animal Shelter and Animal Control costs, 11% from Los Altos and 4% from Los Altos Hills. The partner agencies are billed annually, during the summer months, by calculating previous year costs with projected upcoming year forecasts. For the purposes of a partnership with Pets In Need we do not recommend disrupting the agreements with Los Altos or Los Altos Hills. Both agencies are aware of our RFP and City Council direction. If the City enters into a contract with Pets In Need, the contract will impact the City’s budget for Fiscal Year 2017. This impact could be positive or negative depending on the contract’s start date and transition issues as finalized. Staff expects that a contract with Pets In Need can be finalized before beginning discussions with partner agencies about service changes. In the short term, service levels for Los Altos and Los Altos Hills will be held constant. City Staff and Ongoing Staffing Currently, the City’s budget includes staffing for 10.66 FTE’s (Full-Time Equivalent positions) in the Animal Services program. Of the budgeted positions, 4 FTE’s are dedicated to Animal Control (including 1 Lead Animal Control Officer and 3 Animal Control Officers). As always planned, the 4 Animal Control positions will remain budgeted with the City and will not be included in the transition to Pets In Need. As such, the 4 Animal Control positions would remain represented by SEIU. Additionally, 2 FTE’s (Veterinarian Technician and Superintendent of Animal Services) are currently vacant. The Animal Shelter contract to be negotiated between the City and Pets In Need will outline the proposed staffing levels, exclusive of Animal Control. The City will strive to minimize the negative impacts to current City employees. Any impacts to union-represented employees resulting from a future transfer of services will be identified and discussed with SEIU. The City is committed to meeting any obligations related to collective bargaining and the City’s Merit Rules. Attachment D City of Palo Alto Page 5 Ongoing City Support Currently the Animal Services is a division of the Police Department. The City Manager’s Office, working closely with the department, has been leading the assessment process. Under the proposed model, the Police Department will retain the Animal Control functions. As a non- profit partnership, however, shelter operations through the Pets in Need contract is expected to be managed of the Community Services Department. When the item returns to City Council, staff will provide a recommendation and resource needs to manage the contract. Resource Impact The Animal Services budget was approved by City Council on June 13, 2016. Funding is in place to continue operations through June 30, 2017. Additionally, City Council in the Fiscal Year 2016 budget process allocated $250,000 for transition costs. This funding was not expended in Fiscal Year 2016 and was reappropriated to Fiscal Year 2017. As noted in the Cost of Services section, discussions need to continue with Pets In Need with regards to the City’s ongoing General Fund subsidy and fee for services model. Any necessary adjustment to the Fiscal Year 2017 budget will be proposed to City Council at the time of contract approval. Attachments: Attachment A: Term Sheet - City and Pets In Need (PDF) Attachment B: Pets In Need Letter and Narrative (PDF) Attachment C: County of Santa Clara Letter (PDF) Attachment D: Humane Society of Silicon Valley Letter (PDF) Attachment E: Blank (PDF) Attachment D Term Sheet Framework between the City of Palo Alto and Pets in Need This Term Sheet provides a summary of key business terms to be addressed in a Contract for Animal Care Services (Contract) between Pets in Need (PIN) and the City of Palo Alto (City). This non‐binding term sheet provides the foundation for negotiation and definition of a full Agreement for Services to be recommended for approval by the Palo Alto City Council and the Pets In Need Board of Directors. 1. Term of Agreement. The Agreement for services will commence on a date to be mutually agreed upon by the parties, but no sooner than January 1, 2017 and no later than July 1, 2017 for a five year period; and will extend for a period mutually determined by PIN and the City. The option to extend the Contract will be exercised no less than one year in advance of the expiration of the Contract. 2. Scope of Services. PIN will provide animal care services within Palo Alto and other communities under contract (Los Altos and Los Altos Hills). These services will be acceptance and care of animals, owner redemptions, veterinary care, spaying/neutering, vaccinations, adoptions, partnerships, foster care, marketing, community education and ongoing work with local stakeholder’s groups. a. Relationship to Animal Control Services: Animal Control will be provided by the City. These field services involved with responding to animal‐related issues are not included in the Scope of Services, except where interfacing with Animal Care at the shelter. b. Commitment to operation in Palo Alto: PIN understands that maintaining a local animal shelter is critically important to the City and will operate a shelter in Palo Alto except as may be necessary to accommodate renovations, new construction or unanticipated circumstances. c. PIN and the City will mutually draft policies and procedures that may limit the intake of animals for the purpose of improving animal care and to operate the shelter as a “No Kill” shelter, a fundamental principle of PIN. d. PIN and the City will mutually draft performance metrics and measures for services along with rewards for exceeding and consequences for not meeting expectations. e. The City will finalize the reporting relationship of PIN with a City department before the agreement is finalized. Currently, Animal Services is a division with the Palo Alto Police Department. PIN understands that the City may transition the reporting relationship of PIN to the Community Services Department with Police retaining the Animal Control unit. 3. Costs of Services. PIN has proposed a fee structure based on the number and duration of stray of animals brought into the shelter by Animal Care Officers and through owner surrenders. The parties will negotiate and finalize contract terms to address maximum and minimum fees to be paid to PIN. Additionally, the Contract will itemize the revenues that will be collected by PIN and those to be retained by the City. The Contract will also finalize whether PIN will act as the fiscal agent for the City on revenues collected to offset Animal Control costs. 4. Transition Issues. Prior to execution of the Agreement: a. The City will satisfy its remaining obligations, if any, with applicable employee bargaining units. Attachment D b.PIN will meet with current City employees at the Animal Shelter to discuss employment opportunities with PIN, but PIN is under no obligation to retain current shelter staff. c.PIN and the City will conduct an assessment of the physical condition, inventory and equipment at the shelter to determine which items will be allocated to PIN and Animal Control and what will need to be replaced. 5.Animal Shelter Facility Improvements. Prior to the execution of the Agreement, PIN will engage an architect for the purpose of assessing repairs and improvements needed to be made to the Palo Alto Animal Shelter facility. a.The City and PIN will agree upon the cost and responsibilities of any immediate facility improvements needed for PIN to begin operation at the shelter, the amount of which is to be approved by City Council upon approval of the Contract. b.Upon mutual agreement, PIN will operate the current shelter while renovations and facility upgrades are being performed. c.PIN will operate the facility in will maintain the facility in good working condition during the term of the Contract. d.PIN will be responsible for all ongoing operations and routine facility maintenance costs, except as noted in the Contract. e.The City will provide the use of the existing facility at no lease cost to PIN, and as part of discussions associated with fees for service will evaluate providing utilities such as electricity, gas, water, and Internet connectivity at no cost to PIN during the duration of this Contract. f.Within one year of commencement of services, PIN will begin consultation with the City and community stakeholders on more comprehensive facility improvements. It is the intent of the parties that, either through remodeling of the current building or construction of a new building the shelter will meet industry and community standards. g.The City will continue to own the land, facility and all improvements. 6.Volunteer Engagement. PIN will develop a volunteer development program as described in its proposal and will consult with the City before making substantive change in the City’s existing volunteer engagement programs. 7.Termination. Either party may terminate the Agreement with at least twelve months written notice based upon terms to be mutually determined by the City and PIN. 8.Insurance and Indemnification: The Contract, at minimum, will include the City’s standard liability language. The City currently requires $1 million dollar liability coverage. PIN and the City will discuss additional liability insurance. Attachment D Attachment D Pal I. Org II. Qu Alth vol effo mo inco sev lo Alto Ani ganizational p Pets In N Pets In N PIN is a Our ope We have Our Red for 160 In 2015, We are We offe 1,426 fr We have includin alifications an 1. Pets In N 2. Our med 15% of a 3. We have shelter i 4. We can develop 5. Pets In N 6. We have 7. We have 2013 to 8. We have 9. We are 10. We have hough Pets In unteer netwo orts, we have obile surgical v ome commun veral rescue g imal Shelte profile Need was est Need’s missio 501 (c) 3 non erating budge e an endowm dwood City fa animals and i , we successfu governed by er free spaying ee surgeries a e rescued ani g the followin nd Certificatio Need was the dical operatio animal shelte e animal shel in 2008 into a bring “econo pment, financ Need has had e a vibrant vo e a cost‐effec a projected t e an excellent a member of e relationship n Need’s facil ork, a visible s e been able to van to travel nities with ch groups that br er RFP (#1 ablished in 19 on is to rescue n‐profit suppo et (FY 2016) is ment fund wit cility, refurbi is operated w ully complete a volunteer b g/neutering f at our Redwo imals and per ng cities: Mod ons e first no‐kill a on is fully acc ers in the U.S. ter construct a LEED certifie omies of scale e and animal d balanced bu olunteer prog ctive fundrais total of $825, t reputation w f the WeCare ps with Friend ity’s capacity social media o increase ado throughout N ronic pet hom ring animals t 161631A) r 965 as North e dogs and ca orted through s $1.4M and w h a current va shed in 2008 with a staff of ed 627 adopti board compri for the pets o ood City facilit rformed surge desto, Los Ba animal shelte redited by th have achieve tion and desig ed [silver leve e” opportunit care staff an udgets for the gram, includin ing program t ,000 at the co within the an Alliance (com ds of Palo Alto is limited (ap presence and options and s Northern CA t melessness p to our shelter response fr ern California ats and find th h private gifts we expect to alue of $5M. at a cost of a 20. ions, up from sed of 13 com of all CA reside ty and throug eries through nos, Vallejo, r in Northern e American A ed this distinc gn experience el] facility) ties in using P nd resources e last several y ng a foster fam that has grow onclusion of F nimal welfare mprised of she o Animal She pproximately d aggressive m surgeries ove to perform fr roblems. We r for free spay rom Pets I a’s first no‐kil hem safe, lov s, adoption an end the year approximately m 462 in 2014 mmunity and ents. In 2015 gh our mobile hout Northern Hollister, Mil n California Animal Hospit ction) e (having reno Pets In Need’s years. mily network wn from $597 FY 2016 (April community elters in Sant elter and the P 160 animals) marketing and r the last two ee spay/neut also work ex ying/neuterin n Need (P ll animal shelt ving homes. nd program fe with a surplu y $6M, has ca and 399 in 2 business lead we complete e surgical van n California, pitas and San tal Associatio ovated our ex s medical, ken 7,000 raised i l 30, 2016). ta Clara Count PA Humane S ), through a s d advertising o years. We u ter surgeries xtensively wit ng and medic IN) ter. ees. us. apacity 013. ders. ed n. n Jose. on (only xisting nnel, n FY ty) Society trong se our in low‐ h al care. Attachment D Our Executive Director, Al Mollica, came to PIN in June 2014. Al has a master’s degree in education, a Certified Fund Raising Executive (CFRE) credential and more than 37 years of experience in the non‐profit sector. Prior to coming to PIN, Al was executive director of a financially solvent and well‐ respected statewide no‐kill and open access animal shelter with two locations, statewide law enforcement responsibilities and an animal control contract with a metropolitan city. Al’s experience as a director of a major animal shelter, his track record at Pets In Need and his extensive experience in leadership positions in the non‐profit sector make him uniquely qualified to manage the operations of multiple shelters. Al’s depth of experience in fundraising and business management, including direction of several successful capital campaigns, make him ideally suited to manage the development, marketing and business operations of PAAS. III. Work Plan Animals collected by PAAS animal control officers will be delivered to the Palo Alto shelter (or to Pets In Need’s facility in Redwood City if a shelter does not exist in Palo Alto). Processing will occur in accordance with PIN intake procedures (Manuals describing intake procedures in detail are available upon request). Animals will be examined, behaviorally assessed by trained staff and treated for any medical problems. Assuming a facility remains in Palo Alto, animals collected will be kept in Palo Alto to make it easier for residents to collect lost animals. If a facility does not remain in Palo Alto, intake, adoptions and returns will occur out of our Redwood City shelter. The staff structure at PAAS (again, assuming a facility remains in PA) will be similar to what currently exists at PIN. Staff would consist of medical, animal care, kennel and administrative teams. The current intake and processing procedures at Pets In Need are well‐honed and efficient. We would anticipate a comparable structure at PAAS, which would include twice‐daily feeding and kennel/cage cleaning, twice‐daily outdoor time, and extensive socializing by volunteers (a more detailed explanation of shelter operations and procedures is available upon request). We propose to handle owner‐requested euthanasia requests in accordance with standard practices for no‐kill shelters. Our protocol will involve a careful assessment by our medical staff and shelter manager of all animals surrendered, including those from owners requesting euthanasia. No animal will be euthanized unless, in the professional opinion of our veterinarian, certified vet tech and shelter manager, the animal poses a risk to staff, other animals, the general public, or is so physically disabled that there is no other viable alternative. Under the model we are proposing, PAAS will be financially self‐sufficient within the first year of operations. Revenue will be generated through payments from the City of Palo Alto for each animal collected within the PAAS service area, private sector fundraising and adoption, licensing and program fees. Included in the array of program fees that would provide revenue would be income from a humane education program that will be developed and implemented in cooperation with Friends of the Palo Alto Shelter and the Palo Alto Humane Society. Programming for youth through summer camps, local schools and libraries, and the general public will be offered. IV. Proposed innovations 1. There is precedent that having a no‐kill and open access shelter is possible. Long‐term success in operating the Palo Alto Animal Shelter as a no‐kill/open access facility will validate the no‐kill Attachment D movement, enhance the reputation of PAAS and the City, establish PAAS as an important community resource, and increase fundraising opportunities. 2. Pets In Need provides free spaying/neutering at our Redwood City facility and via a mobile surgical van that travels to communities throughout the Bay Area with the most chronic pet homelessness problems. We believe that reducing the flow of animals into the pipeline is the most effective way to impact the number of homeless, neglected and abused animals that enter shelters. Fewer animals entering the system will drive down operational costs. We would propose continuing this popular and effective program. Pets In Need will provide free spay/neuter services at our Redwood City facility, in Palo Alto and through our mobile van. 3. PIN proposes to implement a humane education program, in cooperation with the local volunteer groups, that will generate revenue, educate the public and engage the community in the life of the shelter. Pets In Need currently has relationships with several local schools (e.g., Everett High School and Summit Charter School), the Redwood City library, Girl Scouts troops from Atherton and Menlo Park, and a number of Redwood City‐based senior and community centers. Youth visit our Redwood City shelter to learn about animal care as part of internship programs and spring break and summer camp programs. The humane education program will include summer camps and volunteer opportunities for older youth. 4. Finally, an immediate priority would be for PIN staff and volunteers to work with Palo Alto City officials and local volunteers to assess options and address the functional shortcomings with the current facility. At some point, assuming the decision is made to retain a shelter in Palo Alto, there will need to be a feasibility study conducted as a precursor to a campaign to raise funds to renovate PAAS or construct a new shelter. V. Project staffing Pets In Need processes approximately 650 animals per year, roughly the same number of animals processed by PAAS. We operate our shelter with a staff of 20 – nine full‐time and 11 part‐time. Assuming there is a facility in Palo Alto, we would propose the following staff structure for PAAS: FTE Position 1 – veterinarian (FT) 1 – Registered Veterinary Technician (FT) 2 – vet assistants (FT) 1 – lead kennel attendant (FT) 1 – volunteer and adoption manager (FT) 1 – administrative assistant (FT) 4 – kennel staff (eight part‐time staff working 25 to 35 hrs. per week) 11 FTE VI. Proposal cost sheet and rates See attachments for proposed cost breakdown and budget. Attachment D County of Santa Clara Department of Agriculture and Environmental Management Animal Care and Control Division Licensing/Field Services 80 W. Highland Ave., Bldg. K San Martin, CA95046 (408) 201-0660 Fax (408) 683-4247 Animal Shelter 12370 Murphy Ave. San Martin, CA 95046 (408) 686-3900 Fax (408) 683-2776 San Jose Office 1553 Berger Dr., Bldg. I San Jose, CA95ll2 (408) 918-4600 (408)286-2460 http ://www. sccountypets.org February 17,2016 City of Palo Alto Purchasing and Contract Administration 250 Hamilton Avenue Palo Alto, CA 94301 Letter of Interest: Palo Alto Animal Shelter Operations Re: RFP NO. 1616314 City of Palo Alto Purchasing and Contract Administration: The County of Santa CIara desires to express interest in submitting a bid to provide professional services for animal care operations at the Palo Alto Animal Shelter. The County of Santa Clara currently operates a shelter with an intake of approximately 3,000 dogs/cats annually. Our shelter has maintained a live-release rate of over 90Yo since 2012. We pride ourselves on excellent care of animals, great customer service and a wonderful reputation in our community. ,. Our proposal for staffrng would include oversight by the Animal Control Program Manager ,.' 1 (existing) as well as recruitment, supervision and training of a Shelter Supervisor, 4 full-time Kennel Attendants, Veterinarian, Veterinarian Assistant and an Office Specialist III. These new positions would be supported by existing administrative "County" staff. Our estimate also includes supplies and materials related to care and keep of shelter animals, clerical duties, adoptions, veterinary care, spaylneuter services, record keeping, computer services, euthanasia and return-to-owner. As our estimate is based on cost-recovery only, we would anticipate use of existing supplies and materials within the shelter. Below is an itemized estimate of the yearly costs associated with operating a full service animal shelter; these costs are based on costs we incur at the County animal shelter. This cost estimate does not include oversight of development of a new shelter facility. Additional costs would apply if the City desired County staff involvement in that endeavor. Personnel: Uniforms/Safety Shoes : Communications/Telephone Services : FeedlBedding/Litter: Veterinary Supplies TrainingÆducation Emergency/Specialty Medical Services I)ata Processing Services $1,4020828.91$ 3,396.00s 1,626.49 $ 3,896.43 s 35,307.77$ 1,oo7.oo $ 38,349.64 $ 20,184.00 Board of Supervisors: Mike Wasserman, Cindy Chavez, Dave Cortese, Ken Yeager, S. Joseph Simitian County Executive: Jeffrey V. Smith Attachment D Janitorial/Landscape Services Disposal Services Small ToolsÆquipment TraveUMileage Misc. Supplies Facility Maintenance $ 1,134.84$ 2,864.33$ 319.72 $ 1,717.97 $ 6,630.22 $ 8.676.51 $ 1,527,939.83 The County of Santa Clara proposes integrating on-call duties with City of Palo Animal Control so that officers from both agencies benefit. Animal Control Officers could divide rotational duties so that each individual officer would serve less. When ACOs serve on-call, they would respond to both City of Palo Alto and Unincorporated Santa Clara County. This letter does not constitute an official offer. We are interested in engaging in an interactive process with the City of Palo Alto to clarify the deliverables and finalize our bid. We look forward to hearing from you. Please forward inquiries to: Lisa Jenkins Interim Program Manager, Animal Care and Control (408) 201-0661 Lisa. j enkins@cep. sccgov.org Y, "il^C,t Lisa Program Manager Animal Care and Control County of Santa Claru Cc : Christopher Anastole, Contract Administrator Khashayar "Cash" Alaee, Sr. Management Analyst Attachment D Attachment D Attachment D Attachment D Attachment D Attachment D Attachment D Attachment D Attachment D Attachment D Attachment D Attachment D Attachment D City of Palo Alto (ID # 7616) City Council Staff Report Report Type: Action Items Meeting Date: 8/21/2017 City of Palo Alto Page 1 Summary Title: Work Plan for Fiber-to-the-Premises and Wireless Network Title: Staff, Utilities Advisory Commission, and Policy and Services Committee Recommendation that Council Direct Staff to: (1) Pursue a Municipal Fiber-to-the-Node Network (FTTN) for Fiber and Broadband Expansion; and (2) Expand Wi-Fi to Unserved City Facilities and Discontinue Consideration of City-Provided Wi-Fi in Commercial Areas From: City Manager Lead Department: IT Department Recommendation Staff, Utilities Advisory Commission and City Council Policy and Services Committee Recommend that Council direct staff to: 1. Develop a business case for a municipal-provided Fiber-to-the-Node (FTTN) network for fiber and broadband expansion (“Option 2”); engage an engineering firm to design a FTTN network including an expansion option to build a citywide Fiber-to-the-Premises (FTTP) network; and work to identify potential partners and/or service providers, including identification of last mile funding models; and 2. Expand Wi-Fi to unserved City facilities and discontinue consideration of City-provided Wi-Fi in commercial areas. On May 23, 2017, the Policy and Services Committee specifically moved to recommend to the City Council: A. Approve the recommendation for the Municipal Fiber-to-the-Node network with neighborhood/private last mile provision; and B. Expand Wi-Fi to unserved City facilities while minimizing the investment in facilities that are being redeveloped; and C. Discontinue consideration of City-provided Wi-Fi in commercial areas; and D. Direct staff on the following: i. Define more clearly the goals of FTTN; and City of Palo Alto Page 2 ii. Reach out to other communities on the approaches post Google and share strategy and funding models; and iii. Include ROI estimates; and iv. Present a rollout strategy with an estimate of how many homes will be passed; and v. Draft a communication strategy The Policy and Services Committee Motion passed 3-0 (Kniss absent) – Exhibit A (Policy and Services Final Action Minutes May 23, 2017). Background Staff reviewed fiber expansion options and wireless recommendations with the Utilities Advisory Commission (“UAC”) on April 5, 2017 and with the City Council Policy and Services Committee on May 23, 2017. Fiber expansion options: OPTION 1. Municipally-Owned Fiber-to-the-Premises (FTTP). Explore potential funding models, such as general obligation bonds requiring a ballot measure with two-thirds voter approval, or revenue bonds secured by ongoing dark fiber license revenues and fiber reserves, to build and maintain a ubiquitous, municipally-owned Fiber-to-the-Premises network; the estimated build costs for a FTTP network is between $50 million to $78 million; or OPTION 2. Municipally-Owned Fiber-to-the-Node (FTTN) Network with Neighborhood/Private Last Mile Provision. Develop a business case for a Fiber-to-the-Node network,1 which may be a platform for Public Safety and Utilities wireless communication in the field, Smart Grid and Smart City applications, and new dark fiber licensing opportunities; engage an engineering consultant to design a citywide FTTP network; identify potential partners and/or service providers, and identify last mile funding models; the estimated build cost to build a FTTN network is between $12 million to $15 million; or OPTION 3. Pause Municipal FTTP Development Efforts; Increase Transparency and Predictability for Third Party Providers. Direct staff to identify additional resources and opportunities to assist Internet service providers committed to deploying gigabit-speed broadband service; in addition, pause internal efforts to pursue municipal FTTP as the telecommunications industry and associated technologies rapidly evolve. 1 FTTN is one of several options for providing fiber cable telecommunications services to multiple neighborhood access points. FTTN helps to provide broadband connections and other data services through a common network box, which is often called a node. The node provides a neighborhood access point to build the so-called “last mile” to deliver services to the customer premise. The last mile is typically the most expensive portion to build in a FTTP network. Fiber-to-the-Node is also called “Fiber-to-the-Neighborhood.” City of Palo Alto Page 3 Wireless Recommendations: Expand the City’s OverAir Wi-Fi Hotspots to unserved City facilities and request that Council approve an estimated $165,100 for one-time equipment and installation costs funded by the Fiber-Optic Fund and allocation of monthly recurring charges of approximately $6,239 to the respective departments; and Discontinue consideration of building a City-provided public Wi-Fi network in high traffic commercial areas. Fiber Utility Given the increasingly competitive telecommunications landscape, including new hybrid fiber/wireless technologies and emerging services and applications requiring access to networks capable of gigabit- speeds and beyond, staff recommended to the UAC and the Policy and Services Committee to pursue one of three identified approaches to fiber-optic expansion. Staff is requesting feedback, direction and approval by Council to direct staff work concerning the fiber utility for the next twenty-four (24) months to best facilitate citywide access to gigabit-speed broadband services. On May 23, 2017, staff recommended the Policy and Services Committee select one of the three options proposed above for approval by Council. UAC Recommendations Fiber Options: At its April 5, 2017 meeting, the UAC unanimously recommended Option #2 (Municipally- Owned FTTN, with Neighborhood/Private Last Mile Provision) with the conditions that a business case be developed establishing the benefits to the City and quantify the return on investment (“ROI”). Staff should also identify potential last mile service provider models. Staff agreed with the UAC’s conditions and included them in the Option 2 proposal presented to the Policy and Services Committee on May 23, 2017. Wireless Deployment: With respect to Wi-Fi, staff recommended expanding the City’s existing Wi-Fi service to unserved City facilities such as common areas at the Cubberley Community Center, Palo Alto Municipal Golf Course, Lucie Stern Community Center and Lytton Plaza. However, staff does not recommend pursuing deployment of City-provided public Wi-Fi connectivity in high traffic commercial areas such as University Avenue and California Avenue. The UAC unanimously approved Wi-Fi expansion to unserved City facilities with the exception of the Golf Course Pro Shop and Café, and discontinuing consideration of building a City-provided public Wi-Fi network in high traffic commercial areas. Staff agrees with UAC’s wireless recommendations, but suggests including the Golf Course Pro Shop and Café consistent with services provided in other City facilities. This expansion of Wi-Fi at unserved City locations will minimize investment in facilities that are being redeveloped. In general, the UAC indicated that Option 1 is too challenging since voter approval will most likely be required; Option 2 may be feasible, but a viable business case must be developed first in terms of confirming what the FTTN network would be used for and to establish the public benefits, ROI and potential last mile service provider models. Regarding Option 3, the UAC stated that the support of third party network upgrades should be considered a standard activity by the City. There was significant discussion by the UAC Commissioners regarding Option 2 (FTTN Network with Neighborhood/Private Last Mile Provision). There is a concern that FTTN has potential, but is City of Palo Alto Page 4 speculative; therefore, the UAC requested staff to analyze the benefits and quantify the potential ROI on investment if the City spent $12 million to $15 million to build the network. Additionally, the City should consider deploying Fiber-to-the-Premises in one neighborhood as a pilot project, thereby limiting the City’s financial exposure and gauging the level of community interest. Staff should also research potential last mile service provider models. These models need to be identified and should be technology independent, otherwise, the City will not know how to design and build the network. The City needs to consider emerging technologies and next-generation Internet speeds provided by the existing Internet Service Providers (“ISPs”). Service upgrades by the ISPs may affect overall community demand for a municipally-owned network. Moreover, staff should identify applications and services that require gigabit-speed broadband such as virtual reality, telemedicine, telepresence or telecommunication, and develop a strategic plan outlining phased deployments of these applications. FTTN has the potential to be a foundational technology that may allow the City to support smart grid applications such as communicating with smart meters, utility supply and demand applications, and gas and water leakage detection. These applications are available and currently being deployed by other municipal and investor-owned utilities. Policy and Services Committee Recommendations On May 23, 2017, the Policy and Services Committee reviewed the three above-noted options and the two wireless recommendations. In general, the Committee members agreed with the UAC’s recommendation to pursue Option 2 and the wireless recommendations, with the following general comments: FTTN benefits and the costs should be made clear to residents with measurable goals and an understanding of what kind of private partners would be interested in the FTTN network; Provide an ROI calculation to understand the revenue potential; A FTTP pilot has already been done; the City should not consider conducting another pilot; This evaluation period is a good opportunity to share ideas and funding models with other cities; staff should reach out to other communities on approaches “post Google Fiber” (e.g. San Francisco); Evaluate implementing “dig once” and “one touch make ready” policies, in addition to determining the feasibility of using the microtrenching construction method to reduce fiber build costs; A fiber rollout strategy should be developed with an estimate of how many homes will be passed by the network; Develop a communications strategy to inform residents; and Establish if there are Utilities funds available for the project for smart grid applications. Staff will address these items as part of the business case. Staff would need to issue an RFP for professional services to develop the business case, engineering design, implementation plan and communication strategy. Staff has researched and contacted other California municipalities in regards to their fiber, wireless and broadband initiatives (Exhibit B - Overview of Municipal Broadband in California). Discussion The dark fiber optic backbone network (“fiber network”) was originally conceived by the City in the mid- 1990s and is maintained and operated by City of Palo Alto Utilities (“CPAU”). Exhibit C – Fiber History and Initiatives provides a comprehensive history of various efforts to expand the network from 1996 to City of Palo Alto Page 5 the present. The most recent activities under the Council’s “Technology and the Connected City” initiative involved the preparation of a Fiber-to-the-Premises Master Plan (“FTTP Master Plan”) and a Wireless Network Plan, in addition to working with Google Fiber for more than two years on a potential citywide FTTP network build. The FTTP Master Plan and Wireless Network Plan were prepared by the City’s consultant, CTC Technology & Energy (“CTC”). Since 2014, staff has also worked closely with a Citizen Advisory Committee (“CAC”) on various fiber and wireless issues. In 2016, the CAC was expanded from six to eleven members. The committee meets approximately every two months and has provided valuable feedback and guidance to staff. Since the FTTP Master Plan and Wireless Network Plan were completed and reviewed by the Council in September 2015, staff has worked to complete the various tasks in the Council’s September 28, 2015 (staff report #6104) and November 30, 2015 (staff report #6301) motions. The status of the Council motion items can be found in Exhibit D – Council Motion Status. In the past year, the competitive landscape in the telecommunications industry has changed dramatically throughout the country, including Palo Alto. The most significant change affecting Palo Alto occurred in July 2016, when Google Fiber advised staff that it was “pausing” its plans to build a fiber- optic network in Silicon Valley and other cities where construction had not yet started. Other significant changes include upgrades to existing wired and wireless networks by AT&T Fiber, Comcast, AT&T Mobility and Verizon Wireless. At the November 2, 2016 UAC meeting, staff reviewed several elements of the above-noted recommendations and provided other information related to network and service improvements by AT&T Fiber, Comcast and the wireless carriers, in addition to the status of Google Fiber. Information was also provided about the responses to the Request for Information (“RFI”) for a partnership for deployment of a citywide FTTP network issued in May 2016. Staff reported that none of the responses to the RFI completely aligned with the City’s objective for a public-private partnership. Commissioners provided feedback and suggestions which includes incentivizing the incumbents to accelerate their network upgrades while providing ubiquitous coverage and identifying the public benefits of a municipally-owned fiber network. (Exhibit E – Excerpted Final UAC Minutes of November 2, 2016). At the November 2016 UAC meeting, City Manager James Keene observed that an incremental Fiber-to- the-Node (“FTTN”) approach has potential because of the need to reinvest in the fiber network and the cost is manageable. The fiber ring could be expanded in a way to stay competitive. For example, the fiber network was extended to the school district and there may be other opportunistic expansions. Also, since staff does not exactly know now where the technology is headed for fiber and wireless deployments, FTTN may be back-filler for fiber backhaul opportunities to support citywide coverage and possibly facilitate future 5G services.2 On December 12, 2016, staff provided Council with an informational update regarding fiber and wireless activities (Staff report #6221): http://www.cityofpaloalto.org/civicax/filebank/documents/55016 In light of the rapidly evolving telecommunications marketplace, staff has attempted to pursue and keep all options open. Nonetheless, this staff report is designed to allow the Council to select one of the three options to direct staff to focus on a single effort over the next 24 months. The following provides 2 5th generation mobile networks or 5th generation wireless systems, abbreviated 5G, are the proposed next telecommunications standards beyond the current 4G/IMT-Advanced standards. City of Palo Alto Page 6 additional information about the three options, in addition to recommendations for wireless deployment. Option 1: Municipally-Owned Fiber-to-the-Premises (FTTP). The 2015 FTTP Master Plan indicated that the City will require an estimated overall capital investment of approximately $78 million one-time cost to build and approximately $8 million annually to operate and maintain the network. The estimated network construction and operating costs are subject to change based on real-world variables. Certain challenges inherent to FTTP deployment are especially pronounced in the Palo Alto. The City’s primary challenge in its pursuit of an FTTP buildout is that its costs will be high compared to other metropolitan areas for labor and materials. The cost of outside plant (“OSP”)3 and drop cables4 will be greater than in other metropolitan areas because Bay Area costs tend to be higher. For example, many of the easements where the City must build are privately owned, which may require every drop cable to be placed in conduit. Additionally, many back yard utility poles in private easements will need to be replaced, because they’re too short for new fiber-optic attachments. The high construction and labor costs result in a higher necessary take rate for the City’s FTTP enterprise to obtain and maintain positive cash flow. Based on the financial projections (and the underlying assumptions), a 72 percent take rate is required to financially sustain the network. The FTTP Master Plan also stated that if approximately $20 million from the Fiber Optic Fund was used to finance the network, then the take rate required would be about 57 percent. These take rates are not only much higher than overbuilders5 have been able to achieve in other communities, but also higher than the required take rates for other potential municipal fiber enterprises. As a comparison, other recent analyses performed by CTC for municipalities have shown a required take rate in the mid-40 percent range in order to maintain positive cash flow. In the FTTP Master Plan, CTC provided an analysis of potential funding models. A key consideration for network implementation is how to fund both capital construction costs and ongoing operational expenses. The importance of factoring in the ongoing cost of operations cannot be overstated; these expenses fluctuate based on the success of the enterprise, and can vary considerably each year, and even month to month. The capital and operating costs associated with a full-scale communitywide build- out will be significant, and the City will have to seek a combination of outside funding, internal subsidies, and/or other financing alternatives such as user-financing, creating Assessment Districts or finding a private sector partner to provide additional funding to support construction and the FTTP network’s startup costs. Each of these potential funding mechanisms would require a more detailed legal and practical feasibility analysis, should the Council elect to pursue this option. It’s important to note, however, that some private entities involved in financing and building municipal broadband networks may require an ownership stake to secure loans from the private lending markets. Examples of potential financing models are bond issuances, City subsidies and loans, user-financing and Assessment Districts. Municipalities typically rely on General Obligation Bond and Revenue Bond 3 OSP is physical assets like overhead and underground fiber, accompanying ducts and splice cases, and other network components 4 Drop cables connect the fiber optic backbone to the customer premises. 5 An “overbuilder” is a private entity or a government entity that builds a new network in the public rights-of-way that will operate and compete with existing networks already built by the cable TV and telecom incumbents. City of Palo Alto Page 7 issuances for capital projects; therefore, the City may be able to issue a bond (i.e., borrow funds) to enable construction of an FTTP network. General Obligation (“GO”) bonds are directly tied to the City’s credit rating and ability to tax its citizens. This type of bond is not related to any direct revenues from specific projects, but is connected instead to citywide taxes and revenues that can be used to repay this debt. GO bonds can be politically challenging, because it requires approval by two-thirds of the voters. Because GO bonds can only be used for physical improvements and not for services, they are generally issued for projects such as libraries, museums, community centers, schools, public parks, roadways and other infrastructure improvements. Revenue bonds are directly tied to a specific revenue source to secure the bond and guarantee repayment of the debt. As of June 30, 2017, the Fiber Optic Fund has accumulated approximately $27 million dollars in reserves. The Fiber Optic Fund currently generates a positive net income between $2.5 million to $3.0 million annually depending on the level of capital improvement activity. In addition to funding the construction cost, it is also possible that ongoing internal subsidies from other City funds will be necessary to support regular operations if customer take rates are not sufficient. Examples of these operational costs include network equipment license fees, ongoing hardware and software replenishments, labor-intensive customer support, customer acquisition costs, and network maintenance. City of Palo Alto Page 8 Option 2: Municipally-Owned Fiber-to-the-Node (FTTN) Network with Neighborhood/Private Last Mile Provision. To evaluate a potential incremental step for citywide FTTP, staff worked with CTC to develop a preliminary, high-level analysis of the cost to build a FTTN network.6 A FTTN network would require construction of approximately 62 miles of fiber plant, compared to 230 miles for a citywide FTTP network deployment. The FTTN network would provide an access point to connect neighborhood-area backhaul communications links.7 Building a FTTN network would be an incremental approach for fiber expansion and may lower the barriers for potential FTTP providers to build the “last mile” from neighborhood access nodes to individual premises. FTTN would provide the City with a phased and economically viable deployment approach to push fiber closer to residential neighborhoods and create a potential “jumping off point” to bring fiber to individual premises (i.e. building the “last mile”). Ancillary benefits would also occur by expanding the functionality and the choices of technology that can be implemented for Utilities and Public Safety and to support Smart City, Smart Grid and wireless applications dependent on fiber-optic communication links. Additional opportunities to license dark fiber to third parties for commercial purposes may also develop. If fiber was expanded to residential neighborhoods, it would be available to the wireless carriers who need to build small cell sites in not just commercial areas, but also in residential areas to improve coverage and capacity for their networks. This is known as “network densification.” These small cell sites, located primarily on utility and streetlight poles in the public rights-of-way, will need to be connected to fiber to “backhaul” traffic to a central point in a wireless carrier’s network. The carriers can build this fiber themselves, but if City fiber is available it could be licensed to the carriers at a more expedient and cost-effective manner. According to RCR Wireless News, fiber is expected to be a significant focus on planned 5G network deployments. Similar to 3G and 4G before it, 5G is the “next generation” of wireless connectivity built specifically to keep up with the proliferation of devices that need either a fixed or mobile Internet connection, connecting not just a smartphone and computer, but home appliances, door locks, security cameras, cars, wearables, and many other inert devices beginning to connect to the web. This is commonly known as the “Internet of Things” (“IoT”). In effect, these dark fiber licensing opportunities for the wireless carriers and builders of shared wireless infrastructure may facilitate a new opportunity to increase revenues under the existing business model. Additionally, this expansion could also create a communications platform for Smart City and Smart Grid applications, especially for communication with utility meters, streetlights, parking, traffic and City news. 6 CTC advises that there are variations of the concept of building some subset of the physical plant to entice private investment. For example, Lincoln, NE used 300 miles of conduit to attract an FTTP provider. Holly Springs, NC built a middle-mile fiber network to serve their own town sites, but designed it specifically with capacity and other attributes intended to make it attractive as a backbone for FTTP. This attracted Ting Internet, who is leasing large quantities of fiber strands (144-count) throughout Holly Spring’s approximately 20-mile backbone. 7 Backhaul communications fiber links are required to transmit data back to a network backbone or central office. City of Palo Alto Page 9 The following is a high-level breakdown of the FTTN cost components and total estimated network costs provided by CTC: Cost Components Total Estimated Costs Outside Plant (OSP Engineering) $1,110,000 Quality Control/Quality Assurance 290,000 General OSP Construction Cost 7,110,000 Special Crossings 150,000 Backbone & Distribution Plant Splicing 310,000 Backbone Hub, Termination & Testing 2,410,000 Drop Connections (Tap to WAP) 45,000 Total Estimated Cost *This estimate does not include any of the network electronics, wireless or otherwise $11,425,000 The $11.4 million estimate is within the capacity of the existing Fiber Fund reserves. At this time, staff does not know the ongoing costs to operate and maintain a FTTN network since its contingent on the use(s) of the network. With regard to business case development, a number of approaches could be considered and staff requests Council feedback on next steps. Preliminarily, staff would recommend proceeding with the following steps if Council directs proceeding with Option 2: 1. Staff will engage an engineering consultant to initiate a preliminary design for FTTP and FTTN. Any such design will need to make certain assumptions driven by business case model(s), public- private partnership opportunities, and technologies for last mile service delivery. The components of developing a FTTP network design includes identifying the type of services which will be carried over the network and cost estimates for the geographic layout of fiber routes and outside plant, nodes and transmission equipment required. Upon completion of the design and confirmation of the business model, the consultant scope of services will be structured to enable full citywide FTTP design, but with the expectation that authorization to proceed will occur in phases, based on cost estimation, community interest, and/or partnership agreements. 2. Utilities staff will develop a public outreach program to solicit neighborhood interest in participating in verifying the business case for FTTP. Residents will be advised that as City of Palo Alto Page 10 envisioned, the City would fund extension of the fiber network to the neighborhood with the understanding that residents may be responsible for some or all of the costs to reach individual homes. An up-front cost estimate per home would be communicated (e.g. estimated range of $800-$5,000 per home for wired service or undetermined costs at this time for wireless service), with cost estimates to be refined as the evaluation proceeds. Residents will also be advised that decisions have not been made regarding service provider(s). Depending on the level of interest expressed, a handful of neighborhoods may be selected to proceed with preliminary network design. 3. IT staff will explore marketplace interest in (a) participating in the last mile buildout and (b) providing gigabit service to neighborhood residents. Participation in (a) and (b) could be described as integrated or separable levels of involvement. 4. Subject to positive responses to the steps above, staff would engage stakeholders in identifying priority characteristics of prospective service provider(s). Topics would likely include characteristics such as services to be provided, customer service expectations, and policies on issues such as data privacy. Staff would report to the UAC, Policy and Services Committee and Council on the results and conclusions from these steps, ultimately leading to Council action prior to proceeding with construction of the FTTN network. Under Option 2, staff would likely issue competitive solicitation(s) for a FTTN design and concurrently evaluate other last mile funding models to pay for the connections between neighborhood nodes and homes and businesses. If a certain level of interest is met and property owners are willing to pay for the connections, fiber and/or wireless technologies could be deployed to deliver faster broadband services. Potential funding models for the “Last Mile” include: User-Financing. User-financing which relies on homeowners to pay on a voluntary basis for some or all of the cost to build-out the City’s existing dark fiber backbone network into residential neighborhoods. Homeowners would voluntarily finance system build-out costs by paying a one-time upfront connection fee that could range from $800 to $5,000, or more. The City would provide a wholesale transport-only service to one or more ISPs on an “open access” basis and the homeowner would directly pay the ISP for Internet connectivity. The City would be responsible for building and maintaining the core network while leaving customer service, provisioning, technical support and billing to the ISP. Property owners could self-organize, or a third party could potentially facilitate neighborhood participation, or the City could facilitate the formation of Community Facilities Districts or Assessment Districts. Assessment Districts; Mello-Roos/Community Facilities Districts (CFDs). City staff could also explore using Assessment Districts or CFDs to fund Last Mile development. More study would be required to determine whether using such districts for fiber buildout would be practically and administratively feasible and also adhere to all applicable legal requirements, including statutory requirements for establishing assessment districts in a charter city and constitutional requirements such as Proposition 218. City of Palo Alto Page 11 Assessment Districts may be used to finance new public improvements or other additions to the community. Generally speaking, an Assessment District is formed with property owner mail ballot proceedings involving each property that will be assessed in the district. Owners vote yes or no, and votes are weighted by the assessed amount. A simple majority of “yes” votes is required in order for an assessment to be levied. Assessment districts are still subject to Proposition 218, which requires identification of special rather than general benefits. Under the Mello-Roos Community Facilities Act of 1982 (Gov. Code §§ 53311, et seq.), cities and other local government agencies can form a community facilities district to finance certain facilities and services. These districts can levy a special tax, and issue bonds secured by that tax, upon approval by two-thirds of the registered voters or property owners within the district. Public-Private Partnership for Last Mile Expansion. Explore the potential for a public-private partnership, where the City and a private entity work together to achieve mutual goals for an FTTP network. In light of the high cost to build and the extremely high required take rate, it may seem that there is little incentive for any provider (public or private) to pursue an FTTP deployment in Palo Alto. A private entity and a public entity could complement one another by developing a partnership that can take advantage of each entity’s strengths, which may significantly reduce cost and risk. While this model is newly emerging, engaging a private partner may enable the City to take advantage of opportunities to mitigate risk and maximize opportunity. The public and private sectors each have unique advantages and disadvantages that may impact their ability to undertake a standalone overbuild. Option 3. Pause Municipal FTTP Development Efforts; Increase Transparency and Predictability for Third Party Providers. In light of the aggressive upgrade plans by the incumbents and the development of emerging technologies such as gigabit-speed fixed wireless and 5G that will significantly enhance the delivery of consumer and business broadband services, another potential option is pausing any further municipal FTTP development efforts at this time. Obtaining viable market share and acquiring new customers is necessary to financially sustain a City FTTP offering. A new City FTTP network would compete directly with existing local incumbent cable, telco, and other ISPs to offer services to customers. Generally, fiber overbuilds do not offer a high rate of return, which is why there are not many private sector providers seeking to build fiber networks in markets where customers are already served. The likelihood that a municipally-owned FTTP network could be financially viable is doubtful, unless the City was willing to subsidize the network indefinitely, or if one of the aforementioned funding approaches was feasible, or if a partner from the private sector was willing to assume a portion of the financial risk. The ability of the City to acquire more than 70 percent market share on its own is highly unlikely, thus the financial risk would be very high. In the FTTP Master Plan a market assessment report was provided in an appendix. This market assessment provides an overview of providers that currently offer services with which the City’s potential new fiber-to-the-premises (FTTP) enterprise might compete (Exhibit F – Palo Alto Existing Market Assessment). The City’s existing dark fiber enterprise is viable, because it is a niche service with little or no competition. Nonetheless, success in providing commercial dark fiber does not translate into a feasible business case for the City to enter a very competitive industry. In the interest of improving broadband in Palo Alto and based on the concerns noted above, another approach is to identify resources and improve coordination of City policies and processes to facilitate City of Palo Alto Page 12 network upgrades by third-parties such as AT&T, Comcast and other wired and wireless ISPs. This will enhance transparency and predictability for third party providers. Municipal strategies that advance broadband deployment can be grouped into three general categories: (1) ways to facilitate access to key assets such as fiber, conduit, utility poles, and real estate; (2) ways to make useful information available to potential broadband service providers; and (3) ways to streamline and publicize local processes. Access by third-parties to infrastructure data and assets such as poles, conduits and rights-of-ways is essential to encouraging broadband improvements. Ensuring efficient and predictable processes that enhance deployments is equally important, as with any public project. According to a study published by CTC in 2014,8 local governments balance the needs of broadband providers with the public cost of the processes necessary to support them and with other priorities that clamor for the same resources. To balance these competing interests, local processes such as permitting and inspection can be formalized and publicized. Timelines can be determined based on local needs, publicized, and then met. Transparency about processes and timelines enables broadband companies to expeditiously plan and deploy networks, enabling localities to manage the costs and burdens of the processes necessary to meet broadband providers’ needs. The City and broadband providers can cooperatively plan before construction so as to understand respective schedules and needs, and so that the provider can plan to stage its work around known and predictable local processes. In order to implement these strategies, staff will need to identify additional internal and/or external resources to better facilitate planning approvals, environmental reviews, permitting, inspections and legal reviews. The work to identify resources was well underway when staff was working with Google Fiber to manage the anticipated large volume of activities to build a fiber-optic network in Palo Alto. The City Attorney’s office, Development Center, Public Works, Planning & Community Environment and Utilities reviewed multiple City policies, practices and procedures to accommodate these activities. The Google Fiber City Checklist process, which required all of the above-mentioned departments to work in concert to identify information about existing infrastructure (e.g. utility poles and available conduit), review various policies and procedures to facilitate access to the public rights-of-way and utility poles, in addition to reviewing infrastructure data such as utility routes to make construction speedy and predictable. An example of this staff review is the “pole intent process” required to manage hundreds of applications to attach fiber-optic cables and other equipment to utility poles jointly-owned by the City and AT&T. Another example was the review of construction methods and various construction constraints to ensure the integrity of the public rights-of-ways and street conditions that would be significantly impacted by large scale excavations and directional boring required to install new conduit and fiber-optic cables in the public rights-of-way, in addition to placing thousands of below-grade vaults citywide. The following includes information about current and upcoming third-party provider upgrades: AT&T Fiber plans to upgrade their network beginning in January 2018 in Palo Alto in order to provide gigabit-speed broadband services to the community. AT&T plans to select 8 GIGABIT COMMUNITIES - Technical Strategies for Facilitating Public or Private Broadband Construction in Your Community http://www.ctcnet.us/wp-content/uploads/2014/01/GigabitCommunities.pdf City of Palo Alto Page 13 neighborhoods with high potential for adoption and will use consumer demand levels to determine further deployments in the city. Comcast now provides a 1GB and 2GB service in Palo Alto. Comcast has launched DOCSIS 3.1 technology citywide to offer multi-gigabit service to its residential customers. Data over Cable Service Interface Specification (“DOCSIS”) is an international telecommunications standard that permits the addition of high-bandwidth data transfer to an existing cable TV system. DOCSIS technology is employed by many cable television operators to provide Internet access over their existing hybrid fiber-coaxial (HFC) infrastructure. DOCSIS 1.0 was released in 1997. The most recent version of DOCSIS (3.1) was released in 2014. The DOCSIS 3.1 specification supports Internet speeds of 10 Gigabits per second (Gbps) for downloads downstream and 1Gbps upstream - the level of speeds typically only available with a fiber optic connection. For business services, bandwidth will be scalable from 1 Mbps to 10 Gbps, and as high as 100 Gbps if specific criteria are met. The brand name for this service is Gig-speed Internet from XFINITY. Upgrading to Gig-speed Internet requires the customer to swap out their existing modem for a new DOCSIS 3.1 compatible modem. The modem swap requires a professional installation. The pricing for Gig-speed Internet is $110 per month with a one year contract and $120 per month with no contract. Comcast also currently offers a 2 Gigabit Per Second (“Gbps”) broadband service called Gigabit Pro when certain conditions are met. Other Telecommunication Service Providers: Several wireless carriers and builders of shared infrastructure for the cellular industry are seeking to deploy new communication facilities such as distributed antenna systems (“DAS”) and small cell technologies in Palo Alto. In the past few years, AT&T Mobility and Crown Castle have deployed approximately ninety-five (95) DAS and small cell sites in several areas of the city to improve the coverage and capacity of the carriers’ mobile networks. These facilities are typically located on City-owned utility poles and streetlight poles in the public rights-of-way. More deployments are planned by AT&T Mobility (16 small cell installations), Verizon Wireless (93 small cell installations) and other carriers, in addition to the builders of shared wireless infrastructure such as Crown Castle (16 small cell installations to add to the 19 small cell sites built in the downtown area in 2016). WIRELESS DEPLOYMENT The expansion of Wi-Fi technology at unserved City facilities and public areas was evaluated with the Community Services Department (“CSD”). Most City facilities already have Wi-Fi access (“OverAir Wi-Fi Hotspot”). The outcome of the evaluation reflected concern from CSD regarding the deployment of Wi- Fi at Rinconada Pool and City parks due to safety concerns. The potential for distracted parents in the areas of the City where parents are expected to supervise their children is the primary concern. In addition to potential safety concerns, parks and other open spaces provide an important respite from technology, a place to “unplug” and focus on spending time with family and friends and to connect with the outdoors and nature. The areas of the City where CSD recommends Wi-Fi deployment at common areas in the Cubberley Community Center, Lucie Stern, the Golf Course Pro Shop and Cafe, and Lytton Plaza. A high-level cost estimate for the recommended sites is $165,100 for installation and $6,239 for monthly recurring charges. Exhibit G – Wi-Fi CSD Site Summary provides estimated costs of the individual sites. City of Palo Alto Page 14 Multiple interviews conducted during the assessment for the Wireless Network Plan indicated there have been no specific requests from the business community or the general public for City-provided Wi- Fi services in high traffic commercial areas. A significant number of Palo Alto businesses already offer free Wi-Fi service to patrons as an amenity. Additionally, companies such as AT&T and Comcast have installed and operate Wi-Fi access points for their customers in many areas of the City and are planning upgrades to these services in 2017. It should be noted, too, that other cities’ implementations of municipal Wi-Fi services generally did not develop the anticipated level of acceptance. Part of the problem with those deployments was related to the speed and reliability of earlier Wi-Fi technology compared to commercial wireless options. In the same timeframe that those cities implemented municipal Wi-Fi, the commercial wireless carriers successfully deployed 3G and 4G data access technologies that have developed a high degree of consumer acceptance based on cost, performance, and the convenience of essentially universal service. In contrast, many municipal Wi-Fi deployments served only a limited area and performance in many cases fell short of user expectations. Ongoing Initiatives Fiber Network Rebuild Project In fiscal year 2016, the City established a new capital improvement project, Fiber Optic System Rebuild (CIP FO-16000), to rebuild portions of the dark fiber network for improved reliability and increased capacity. The rebuild project will install new aerial duct or substructures (conduit and boxes) and additional fiber backbone cable to increase capacity for sections of the dark fiber ring that are at or near capacity and allows CPAU to meet commercial customer requests for service. See Exhibit H - Fiber Optic Network Rebuild Project for project description and current status. In the FTTP Master Plan, CTC noted that it’s important to recognize that the rebuild reinvestment does not increase the attractiveness of the fiber to encourage a partner to build FTTP. The current commercial dark fiber reach would be a relatively small portion of the total FTTP investment, and a citywide FTTP endeavor will likely benefit little from commercial dark fiber expansion. Dig Once Policy The Council’s September 28, 2015 Motion directed staff to develop a “dig once” ordinance. The basic objective of dig once is to promote broadband by lowering the cost of building infrastructure by making it unnecessary to tear up the streets every time a company wants to reach new homes with its underground network. In the above-noted informational update provided to the Council on December 12, 2016, staff provided a summary of the issues related to developing an ordinance or policy in view of the changes nationwide and in Palo Alto with the third party telecommunications providers. The assumption in 2015 was that the City should actively encourage or require simultaneous underground construction and co-location of broadband infrastructure in the public rights-of-way with the intention of creating benefits for both the City and private sector communications providers. Establishing a dig once policy may reduce the long-term cost of building communications facilities by capitalizing on significant economies of scale as outlined in the informational update. At this time, telecommunications providers are not proposing the same citywide, large scale excavations or builds that the City was anticipating back in 2015 with a Google Fiber build. Instead, with Google Fiber’s reorganization and apparent retreat from a comprehensive infrastructure build, the City is finding that incumbent telecommunications providers are more inclined to explore incremental City of Palo Alto Page 15 expansions or, where the scope of a project is larger, above ground builds on utility poles. As a result, staff is reevaluating the approach to dig once and has met with AT&T, Comcast and other companies that may propose large scale excavation projects in the future. These discussions are ongoing. Staff is also reviewing existing Municipal Code provisions governing Third Party Coordination in the public rights-of-ways and Joint Trench Coordination in Underground Districts, including specifically an assessment of how cross-departmental teams (Utilities, Public Works, Development Center and Planning) currently work together on both City-initiated and third party infrastructure projects to determine if there are other joint opportunities for streamlining and improvement. Public Safety Point-to-Multipoint Wireless Network A Request for Quotation (“RFQ”) was issued in June 2017, for equipment to expand and upgrade the existing Point-to-Multipoint public safety wireless network. The overall goals are to: Improve coverage throughout the City and areas outside the City limits in the area of operations for public safety mutual aid, with focus on mobile command vehicles, including the Mobile Emergency Operations Center (MEOC) Enhance data throughput and quality of service (QoS) Expand client applications supported on the network Staff will return to Council with a recommendation to approve a vendor contract and the funding source for the equipment purchase and installation costs. Public Safety Wireless Mobile Network Staff is developing a competitive solicitation for a pilot project to support public safety officers in the field with a broadband mobile network that will provide: Enhanced vehicular day-to-day network coverage and capacity by deploying approximately fifteen wireless access points on traffic signals poles throughout the City; Coverage redundancy in key areas of the city; In vehicle mobile broadband and phone access is provided by Verizon Wireless. This access will continue, but this alternative, private network with controlled user access, will supplement that access when the Verizon Wireless network performance is impacted due to high consumer demand. This pilot project will first support a limited number of vehicles (approximately 5), and if deemed feasible, eventually support all public safety vehicles. Staff will return to Council for approval to fund the equipment purchase and installation costs. RESOURCE IMPACT Depending on the option selected for fiber and broadband expansion, staff will develop cost estimates and a work plan and return to Council for approval. An estimated $165,100 for one-time equipment and installation costs and monthly recurring charges of $6,239 are required to expand Wi-Fi in unserved City facilities. Funding is available in the FY 2018 operating and capital budgets for the Fiber Fund for the contract amendment and one-time installation fees. The monthly recurring charges will be allocated to the respective departments consistent with the City’s existing chargeback model. City of Palo Alto Page 16 POLICY IMPLICATIONS The fiber and wireless activities are consistent with the Telecommunications Policy adopted by the Council in 1997, to facilitate advanced telecommunications services in Palo Alto in an environmentally sound manner (Reference CMR: 369:97 - Proposed Telecommunications Policy Statements). ENVIRONMENTAL REVIEW The recommended actions in this staff report are exempt from the California Environmental Quality Act (“CEQA”) under section 15262 (Feasibility and Planning Studies for possible future action) and section 15301 (Negligible Expansion of Existing Facilities). Environmental review will be conducted, where required, prior to approval of subsequent projects. Attachments: Attachment A: Policy and Services Final Action Minutes May 23 2017 Attachment B: Overview of Municipal Broadband in California Attachment C: Fiber History and Initiatives Attachment D: Council Motion Status Attachment E: Excerpted UAC Minutes April 5 2017 Attachment F: Palo Alto Existing Market Assessment Attachment G: WiFi CSD Site Summary Attachment H: Fiber Optic Network Rebuild Project POLICY AND SERVICES COMMITTEE ACTION MINUTES Page 1 of 3 Special Meeting Tuesday, May 23, 2017 Chairperson Wolbach called the meeting to order at 6:14 P.M. in the Community Meeting Room, 250 Hamilton Avenue, Palo Alto, California. Present: DuBois, Kou, Wolbach (Chair) Absent: Kniss Agenda Items 1. Discuss the Topic of Aircraft Noise, Review Federal Legislative Updates and Recommend That City Council Reaffirm City's Positions to Reduce Aircraft Noise and Make Other Recommendations as Needed to Advance City’s Goals to Reduce Aircraft Noise Over the Skies of Palo Alto. MOTION: Council Member DuBois moved, seconded by Chair Filseth to recommend the City Council direct Staff to: A. Take into account the public comments made tonight and received in writing, and reaffirm the City’s position to reduce aircraft noise over the skies of Palo Alto; and B. Endorse and advocate a seat on the Select Committee's proposed Ad- Hoc Committee and any new permanent entities whose actions will impact Palo Alto and communicate that interest to Representative Eshoo; and C. Obtain an expert opinion on aircraft noise monitoring strategy and make a recommendation to Council; and D. Reach out to neighboring communities such as Portola Valley, Woodside, Menlo Park, Mountain View, Los Altos, Sunnyvale and East Palo Alto to establish a regional position on this issue; and E. Be prepared to respond to the FAA Select Committee Report in the form of legal or professional representation; and ACTION MINUTES Page 2 of 3 Policy and Services Committee Special Meeting Action Minutes 05/23/17 F. Emphasize as a priority a focus on minimizing noise, the equitable dispersion of noise and improving technology and flight methods to minimize the noise in general; and G. Recognize that on the ground noise matters, even if it is within the vicinity of an airport and establish an objective standard for noise at certain elevations and flight methods; and H. Ask FAA to consider emissions from aircraft MOTION PASSED: 3-0 Kniss absent The Committee took a break from 8:09 P.M. to 8:18 P.M. 2. Staff and Utilities Advisory Commission Recommendation That the Policy and Services Committee Make a Recommendation That Council Recommend: (1) Option 2 for the Municipal Fiber-to-the-Node Network (FTTN) for Fiber and Broadband Expansion; and (2) Expand Wi-Fi to Unserved City Facilities and Discontinue Consideration of City-Provided Wi-Fi in Commercial Areas. MOTION: Council Member DuBois moved, seconded by Chair Wolbach to recommend the City Council: A. Approve the Option 2 recommendation for the Municipal Fiber-to-the- Node Network (FTTN) with Neighborhood/Private Last Mile Provision; and B. Expand Wi-Fi to unserved City facilities while minimizing the investment in facilities that are being redeveloped; and C. Discontinue consideration of City-provided Wi-Fi in commercial areas; and D. Direct Staff on the following: i. Define more clearly the goals of FTTN; and ii. Reach out to other communities on approaches post Google and share strategy and funding models; and ACTION MINUTES Page 3 of 3 Policy and Services Committee Special Meeting Action Minutes 05/23/17 iii. Include ROI estimates; and iv. Present a rollout strategy with an estimate of how many homes will be passed; and v. Draft a communication strategy; and MOTION PASSED: 3-0 Kniss absent 3. Recreational and Medical Marijuana: Review and Discussion of State Law Developments and Input to Staff on Next Steps, Including Possible Ordinance Adopting Local Regulations Regarding Commercial Marijuana Activity, Outdoor Cultivation, and Marijuana Dispensaries. This Action is Exempt Under Section 15061(b)(3) of the California Environmental Quality Act. STAFF REQUESTED THIS ITEM BE MOVED TO JUNE 13, 2017. Future Meetings and Agendas ADJOURNMENT: Meeting was adjourned at 9:19 P.M. Utilities \ IT Departments Version:1.0 Author: ConnectedCity Core Team Page 1 of 10 Date Last Updated 7/24/2017 Email: officeofthecio@cityofpaloalto.org Overview of Municipal Broadband in California FIBER-TO-THE-PREMISES AND WIRELESS COMMUNICATIONS INITIATIVES # CITY MODEL, SERVICES OFFERED, BROADBAND INITIATIVES CURRENT STATUS & NEW ACTIVITIES 1 Anaheim/Public Utilities Department Dark Fiber No update available. 2 Atherton FTTP Atherton Fiber is a locally owned company operated by Mike Farmwald of Atherton and Robert Hayes of Palo Alto. Note: This network is not a public-private partnership. Atherton Fiber will run at least one fiber to the easement in front of every home in Atherton. This fiber may be leased by any ISP to offer internet access, video or phone to that home. The connection from the easement to the house will be for the homeowner's account. Homeowners have the option to purchase an irrevocable right-of-use (IRU) for either two or four dedicated fibers. These will be “home-runs”, i.e. each fiber will be a direct, unshared optical connection from the home to the Atherton Fiber central office. Atherton Fiber is currently working with homeowners who want fiber-optic internet service, and doing site assessments of individual properties. The company doing that work is Paxio, a subcontractor to Atherton Fiber. 3 Berkeley Broadband Development Assessment In 2015, the city and Tellus Venture Associates prepared a Broadband Development Assessment: http://www.tellusventure.com/downloads/berkeley/tva_c ity_of_berkeley_broadband_development_assessment_2 9may2015.pdf The objective of the assessment was to gain a better understanding of the types of conduit the city currently uses. The assessment also aimed to identify conduit that could accommodate high-speed fiber in the future. Berkeley is a Webpass city. Webpass, is a wireless internet provider that Google Fiber bought in 2016. Webpass uses radio devices to connect with existing Ethernet wiring, making it less infrastructure-heavy than traditional Google Fiber, which brings fiber cables directly to homes. 4 Beverly Hills Developing plan for citywide FTTP City currently owns and maintains a scalable high-speed fiber-optic network designed to support additional capacity to benefit businesses and residences. The city is planning to invest in a citywide Fiber-to-the-Premises (FTTP) network for all homes and businesses, including apartments and condos, inside the city. A pilot installation will begin in July 2017. 5 Brentwood FTTP Public-private partnership between city and Sonic.net. Residential and business Internet and phone provided by Sonic.net. The city began installing conduit as a regular practice in 1999; the community adopted the policy as a local ordinance, requiring new developers to install it in all new construction. Per MuniNetworks.org, the city has experienced significant growth and the conduit has grown to over 150 miles, reaching over 8,000 homes and a large segment of Brentwood's commercial property. As a result, Brentwood incrementally developed an extensive network of fiber-ready conduit. In an agreement with the city, Sonic.net agreed to install fiber-optic cables in businesses and homes in the city’s Yamanaka neighborhood, located in the eastern section of town. In return, the city agreed to maintain the conduit, and lease the fiber-optic cables over Utilities \ IT Departments Version:1.0 Author: ConnectedCity Core Team Page 2 of 10 Date Last Updated 7/24/2017 Email: officeofthecio@cityofpaloalto.org to Sonic. The company has also agreed to provide free Internet to the city’s public schools, provided that at least 30 percent of households within those schools’ jurisdictions are Sonic customers. 6 Burbank Water & Power/ONE Burbank Dark Fiber and Business Internet Services ONE Burbank offers: Dark Fiber, Dedicated Internet Access (DIA), Virtual Private LAN Services (VPLS), Wave Lambda Services, and Communication Transport Services (CTS). 7 Culver City/Culver Connect Business Internet Services Culver Connect is the Municipal Fiber Network for facilitating high speed connectivity to the business community, the Culver City Unified School District, and for municipal services to promote economic development in Culver City. Since 2013, city staff has been consulting with the Culver City business community about their need for enhanced broadband connectivity. A consultant was then engaged to assist with developing a high-level network design & potential business models. In November 2015, the City Council appropriated funding for the design and construction of a Municipal Fiber Network. The City has partnered with Culver City-based Mox Networks to provide professional services to design, implement, and operate Culver Connect. The City will install an open access network, where it is envisioned that any Internet Service Provider (ISP) will have the opportunity to utilize the City’s fiber infrastructure to service the business community. The Network is currently under construction and is expected to be completed in August 2017. 8 Fresno Issued Request for Qualifications for Gigabit Fresno initiative (seeking public-private broadband partnership). In October 2016, city issued Request for Qualifications (RFQ) for a Gigabit Wireless and/or Wired/Fiber System for affordable, ubiquitous Gigabit-class broadband services and capabilities available throughout the City. Gigabit Fresno https://www.fresno.gov/informationservices/gigabit- fresno/ RFQ https://www.fresno.gov/informationservices/wp- content/uploads/sites/15/2016/10/WiFiRFQwithAppendic es_FINAL.pdf Fresno wants to build citywide high-speed internet system http://www.fresnobee.com/news/local/article109779602. html 9 Glendale/ Glendale Fiber Optic Solutions Commercial Dark Fiber Program Overview Glendale Fiber Optic Solutions provides both large and small commercial customers optical fiber lease services both within the City limits and to adjacent cities. Glendale Water & Power owns and operates approximately 98 miles of dark fiber network within Glendale. Recent Activity Glendale Fiber Optic Solutions connects libraries and Fire Stations. Recently strung over 17 miles of dark fiber in order to add additional capacity and coverage through the entire Glendale fiber optic system. 10 Hayward Fiber deployment in industrial zones for economic development. The federal government awarded a $2.74 million grant to Hayward to help fund the design and installation of conduit and fiber-optic network in the city’s industrial zone. The grant, from the U.S. Department of Commerce’s Economic Development Administration, will enable Hayward (pop. 150,000) to install at least 11 miles of new conduit and fiber optic cable. Construction will begin in September 2017, and should be finished by the fall of 2019. The $2.74 million grant award is 50 percent of the total estimated project cost, roughly $5.4 million. The city’s Utilities \ IT Departments Version:1.0 Author: ConnectedCity Core Team Page 3 of 10 Date Last Updated 7/24/2017 Email: officeofthecio@cityofpaloalto.org matching share of the project includes a $2.1 million in- kind contribution of the city's publicly-owned right-of-way property, $480,000 in general funds, and an additional $156,000 that has already been committed to the construction and installation of fiber-optic conduit in the Whitesell Street segment of the fiber loop. 11 Huntington Beach City retained consulting firm for broadband strategic plan initiative and connectivity survey. Retained consulting firm to study city’s broadband infrastructure and develop a plan that will involve either helping private companies better connect with customers or for the city to develop its own broadband service. Broadband Strategic Plan Initiative & Connectivity Survey http://www.huntingtonbeachca.gov/announcements/ann ouncement.cfm?id=959 Magellan Advisors http://www.magellan-advisors.com/resources/city-of- huntington-beach-ca-retains-magellan-advisors-for- broadband-wireless-strategic-plan.stml Huntington Beach could take over broadband service http://www.latimes.com/socal/hb-independent/news/tn- hbi-me-0114-broadband-20160113-story.html 12 Loma Linda City FTTP provided to homes built since 2004. Funding Method: in part, requirements for private developers to include fiber optics and wiring in new construction projects. Internet access. Top residential speed 15 Mbps symmetrical. In 2004, fiber connections and structured wiring were required in any home newly built or significantly remodeled in the city. Since 2005, 600 new homes were built and all are connected to the muni fiber network, with half choosing to buy Internet bandwidth from the city. The service is $30 per month for 5 Mbps service, going up to $100 for 15 Mbps. 13 Lompoc/Lompocnet Citywide Wi-Fi Lompocnet is a municipal Wi-Fi network that provides broadband level, internet service to citizens, businesses and city agencies. 14 Long Beach Commercial Dark Fiber Fiber Expansion Plans The City owns approximately 60 miles of fiber optic cable in the City. Expanding the capacity and adding more City facilities to the Fiber Infrastructure is operationally and strategically critical to the City’s business processes due to three major trends: 1. Significant increase in network traffic 2. Significant increase in connected devices moving applications to the cloud 3. In FY 2015, the city had over 8,000 feet of optical fiber installed to connect the Airport, Fire Headquarters and Police Field Support. The city will be developing plans to expand even further to satisfy the demand for a high performance network backbone. The Internet of Everything (IoE) phenomenon, or the next wave of the Internet in which people, processes, data, and things connect to the Internet and each other, is showing tangible growth. The move to cloud applications necessitates good end to end connection from the tenant host site to each City facilities because the cloud applications rely primary on the network connectivity and less on the CPU, memory and hard drive on the user’s local workstation. With that, the fiber infrastructure is a critical operational and strategic City asset that hand in hand with City workers, facilitates the delivery services to our constituents, businesses and visitors. 15 Los Angeles Department of Water & Power/Fiber Optic Enterprise Commercial Dark Fiber and Business Internet Services The Los Angeles Department of Water & Power (LADWP) Fiber Optic Enterprise manages an extensive fiber-optic infrastructure, offering various fiber optic transport services to the Los Angeles area businesses including Utilities \ IT Departments Version:1.0 Author: ConnectedCity Core Team Page 4 of 10 Date Last Updated 7/24/2017 Email: officeofthecio@cityofpaloalto.org Metro-Ethernet, digital video transport, and dark fiber leasing to both private businesses and the public sector throughout the Los Angeles City area. LADWP does not provide residential fiber service. City of Los Angeles Broadband Expansion Plans In June 2015, the Los Angeles City Council approved a Request for Participants (RFP) to identify one or more providers to commit to deploying advanced wireline and wireless networks that can provide one gigabit broadband speed or more to residences and businesses. The RFP asked proposers to provide a free level of service, including free basic wireless services, and to complete build-out within the next five years. The RFP was issued as part of CityLinkLA, the long-term initiative led by Mayor Eric Garcetti and City Councilmember Bob Blumenfield to ensure that Los Angeles is among the most connected cities worldwide. The RFP received unanimous approval from the City Council. The city will not pay for the network, but will leverage city assets and expedited permitting for high-speed broadband and free Wi-Fi. The RFP responses and subsequent negotiations were not satisfactory for elected officials and all proposals were rejected. The city’s Information Technology Agency is leading a cross-department task force (Connectivity & Digital Inclusion Group), which is coordinating a large number of tactical efforts (e.g. connectivity around the Port using Private LTE, free Wi-Fi in parks, and expedited 5G permits for digital inclusion). CityLinkLA http://citylinkla.org/about/index.htm Los Angeles is a “potential” Google Fiber city. 16 Modesto/LinkMODESTO May 2017: City released Fiber Network Infrastructure Master Plan. The City of Modesto currently utilizes a combination of aerial and in-ground fiber optic cables for City communications – primarily used for the advanced traffic management system (ATMS) that controls the City’s signal system. There is also a fiber-optic connection between City Hall and the Police Department downtown. The City leases space on the Modesto Irrigation District’s aerial poles for fiber where conduit is not available or existing. The in- ground fiber optic cable is mainly located in the downtown district where aerial is not present, but is also located around the City. In addition, the City is working with private-sector communications companies (e.g. CVIN, Wave) to install additional empty conduits for City use as these companies build out their fiber networks. The City’s existing fiber optic network was mainly funded by federal funds (Congestion Management and Air Quality Funds - CMAQ) and thus cannot be used for commercial purposes. For this reason, the City is exploring the option of installation of an additional, somewhat parallel separate fiber optic network that may be used for commercial purposes, as well as other City uses. This effort to for a City- wide fiber optic network is collectively referred to as LinkMODESTO. 17 Mountain View Mountain View is a “potential” Google City, but has no plans to pursue fiber-to-the-premises on its own. 18 Oakland Existing fiber-optic network to support city services and infrastructure: Information Technology Department In 2015, the city prepared a Fiber-Optic Network Master Plan file:///C:/Users/jflemin/Downloads/OAK052667.pdf The Master Plan presented documentation and evaluation of the existing city fiber-optic infrastructure. The report laid Utilities \ IT Departments Version:1.0 Author: ConnectedCity Core Team Page 5 of 10 Date Last Updated 7/24/2017 Email: officeofthecio@cityofpaloalto.org Electrical Services Division Transportation Services Division Economic Development (would also serve as conduit for public- private partnerships) Public Safety Fiber connections with Port of Oakland and BART the groundwork for developing a strategic approach to implementing projects and policies that will: Strengthen the City’s IT fiber-optic network; Expand the capacity of the fiber-optic network; Integrate and connect City facilities; Establish system redundancy; and, Position the City for strategic and methodical expansion of the system in the future. Oakland is a Webpass city. Webpass, is a wireless internet provider that Google Fiber bought in 2016. Webpass uses radio devices to connect with existing Ethernet wiring, making it less infrastructure-heavy than traditional Google Fiber, which brings fiber cables directly to homes. 19 Ontario/Ontario Net Dark Fiber and Business Data Services Planned expansion of the network. City is developing a Fiber Optic Master Plan to guide design, construction and operation of a fiber optic backbone infrastructure as a long term investment. The City has planned the Ontario Net infrastructure that will connect city facilities in the New Model Colony area to ultimately provide a City owned Fiber-to-the-Home (FTTH) to begin once there is sufficient potential subscribers to support operational costs. 20 Palo Alto/Utilities Department Commercial dark fiber. 49 mile dark optical fiber backbone network to support City infrastructure and facilities (e.g. traffic signal system and electric substations). Network routed to pass commercial areas and business parks. Network serves the Palo Alto Unified School District. CPAU Fiber Program http://www.cityofpaloalto.org/gov/depts/utl/business/pr ograms/fibernet.asp Palo Alto is a “potential” Google Fiber city. 21 Pasadena/Department of Information Technology Commercial Dark Fiber and Business Internet services The City owns and operates approximately 50 miles of fiber network. The fiber infrastructure supports City business and transportation operations, and also provides the foundation for a variety of business-oriented services that the City offers currently and plans to expand in the future. Currently the City does not provide service in residential areas. For businesses seeking to connect multiple facilities within Pasadena, the City offers either dark fiber leases or lit services between locations within Pasadena. With a dark fiber lease, the customer lights the fiber itself. For customers that prefer service, the City can offer the security and dependability of a private, secure campus network, with bandwidths of 1 Gbps, or 10 Gbps. Access to Lit Services For businesses interested in Internet access and related services, Pasadena can also provide access to lit services, such as Internet access and connectivity to local collocation and regional collocation and peering sites. The City offers 100 Mbps, 1 Gbps, and 10 Gbps connections. 22 Riverside/Riverside Public Utilities Commercial Dark Fiber Riverside Public Utilities installed a fiber optic network in the 1990s to help protect its electric system. The network is also a commercial asset that officials hope to market to make money for the utility. Riverside’s utility makes about $420,000 a year by leasing fiber to five customers, according to a city report. The biggest user is Riverside City Hall, followed by UC Riverside, California Baptist University, Charter Communications and TelePacific Communications. Utilities \ IT Departments Version:1.0 Author: ConnectedCity Core Team Page 6 of 10 Date Last Updated 7/24/2017 Email: officeofthecio@cityofpaloalto.org The system could be expanded further, making room for more business customers who would use the cables for communication and internet service. Riverside Public Utilities will spend $2.1 million to add fiber to an already planned city traffic signal project. 23 Riverside County/RIVCOconnect County issued RFP for broadband initiative seeking a public-private partnership. The California county of Riverside issued an RFP in April 2017, seeking proposals as part of its RIVCOconnect Broadband Initiative, a public-private partnership valued at $2 billion to $4 billion and aimed at developing what it believes will be the nation’s largest broadband network. Proposals are due August 15, 2017. RIVCOconnect is a Riverside County initiative, supported by the Riverside County Board of Supervisors and Executive Office, and led by Riverside County Information Technology (RCIT), that seeks to remove the road blocks that obstruct service providers from building out the current infrastructure. RIVCOconnect seeks to invite the private sector, either incumbent vendors or business entities new to the County, to work in cooperative fashion and create partnerships to deliver Broadband services Countywide at speeds of 1 Gbps and above. 24 San Bruno/San Bruno Cable Citywide residential and business Cable TV/Broadband/Telephone The city is the incumbent cable TV operator in San Bruno. Comcast does not operate in San Bruno. The cable system was built in the early 1970s and has been periodically upgraded to deliver high-speed Internet, digital phone and advanced cable TV services. Business services currently offered include: Business Phone Line, Business Fax, SIP Trunks, DIDs, LNP, Hosted IP PBX service (Cisco Unified Communications Manager based), Ethernet services including point-to-point and up to 1 Gbps IP circuits. 25 San Jose Developing digital inclusion and broadband strategy. The city has retained the consulting services of Price Waterhouse Coopers to help develop a digital inclusion and broadband strategy. The project will develop a citywide strategy to achieve the goals of: Improving the City’s existing digital infrastructure to support San Jose’s Smart City Vision and improve digital inclusion; Understanding options to improve residential and business broadband and Internet choices, quality and pricing; and Promoting availability of gigabit level broadband Internet to support economic development and inclusion. https://www.sanjoseca.gov/index.aspx?NID=5557 San Jose is a “potential” Google Fiber city. 26 San Leandro/Lit San Leandro Public-Private Partnership Commercial Dark Fiber with ISP Partners Lit San Leandro LLC and San Leandro Dark Fiber LLC comprise the private partnership that works with the City of San Leandro to create the Fiber Loop. The City brings their underground conduit to this partnership. San Leandro Dark Fiber owns the fiber optic cable that runs through the City’s underground conduit. Lit San Leandro owns and operates the switch and routing facilities that bring Internet access to the community. In March 2017, the City posted a Request for Proposal to engage with an experienced “Smart City” consultant to assist in development of a Fiber Optic Master Plan. 27 San Luis Obispo Public-Private Partnership Business Internet Services As part of the City’s Economic Development Strategic Plan, the City partnered with a local provider to bring high speed fiber to government buildings and provide the opportunity for fiber connectivity to local business and residences. Utilities \ IT Departments Version:1.0 Author: ConnectedCity Core Team Page 7 of 10 Date Last Updated 7/24/2017 Email: officeofthecio@cityofpaloalto.org Currently, 23 miles of fiber optic network are already in place, providing 75 “lit” commercial buildings with Internet services. 28 Santa Clara/Silicon Valley Power Commercial Dark Fiber In 2000, SVP developed its 145 conduit mile dark fiber backbone to link the electrical substations that serve the community. The fiber backbone was overbuilt to allow the city to act as a wholesale provider and lease dark fiber within the City of Santa Clara. The Dark Fiber Enterprise Program serves: Business and institution sectors throughout the City Co-locations to the proximity of local exchange data center central offices Key data centers within Santa Clara Long distance points of presence (POPs) SVP is responsible for installing network attachments and maintaining the backbone throughout Santa Clara Santa Clara is a “potential” Google Fiber city. 29 Santa Clarita Dark Fiber lease to one client: Wilcon Fiber began in the City Traffic Engineering Division when the City received federal grants for the implementation of Intelligent Transportation System (ITS) throughout the city. In 2012 a proof of concept was started for using fiber installed by the City for commercial use. The City is still very new at providing any services other than dark fiber. The City currently leases 86 miles of dark fiber to Wilcon, a provider of dark fiber, lit transport and colocation services in southern California. In April 2017, Crown Castle announced an agreement to acquire privately-held Wilcon Holdings LLC (“Wilcon”) for approximately $600 million. 30 Santa Cruz/Santa Cruz Fiber FTTP Public-Private Partnership: In 2016, the City and local ISP Curzio Internet agreed to build citywide FTTP under a public-private partnership agreement branded. The network is called Santa Cruz Fiber. Services: Business and Residential Internet The City Council has approved encroachment permits for Santa Cruz Fiber to begin building the first segment of the citywide fiber optic network. The broadband upgrade will provide internet speeds of 1 Gigabit per second to both businesses and residents. With the permit’s approval, construction in the downtown area is expected to begin in the summer of 2017. The network will be built using a construction technique called “horizontal boring,” which allows the installation of fiber conduit with minimal street trenching, and almost no traffic interruptions. 31 Santa Monica/Santa Monica City Net Commercial Dark Fiber and Business Internet Services FTTP digital inclusion Pilot in affordable housing. Unlike the majority of municipal fiber networks, Santa Monica does not have a municipal power provider. City Net is run out of the Information Systems Department. City Net offers business broadband, wavelength services and dark fiber. The network also supports city facilities and public Wi-Fi hotspots. The City Council approved funding for a Digital Inclusion Pilot in 2015. The City has connected the first of 10 affordable housing buildings with 10 Gigabit Broadband. City Net’s model is considered to be one of the more innovative in the country. 32 San Francisco Commercial Dark Fiber Fiber network primarily supports city functions, services and facilities In March 2017, San Francisco Supervisor Mark Farrell formed a group of business, privacy and academic experts to discuss and study the issues related to Farrell’s plan to The City has constructed approximately 216 miles of fiber optic network. The City’s current fiber optic network was originally developed beginning in 2002 when the Department of Emergency Management (then the Emergency Communications Department) issued a bond to construct a fiber-optic network to connect public safety buildings. Since then, the Department of Technology has taken over the management of the network, which has expanded to service 231 City buildings. The City leases out a small portion of its excess fiber capacity, commonly known as “dark fiber”, to private companies and nonprofit Utilities \ IT Departments Version:1.0 Author: ConnectedCity Core Team Page 8 of 10 Date Last Updated 7/24/2017 Email: officeofthecio@cityofpaloalto.org wire the city with high-speed Internet service. The San Francisco Municipal Fiber Blue Ribbon Panel will conduct research and provide recommendations on the feasibility of deploying a network that could cost up to $1 billion. organizations. These leases generate $279,000 in annual revenue. Plans for Expansion The City plans to spend $5.45 million over the three fiscal years between FY 2015-16 and FY 2017-18 to expand the existing fiber network, City Fiber, to connect the remaining 178 City buildings that are still using private Internet Service Providers (primarily AT&T) to access the Internet. Of the $5.45 million, $4.3 million was appropriated by the Board of Supervisors for FYs 2015-16 and 2016-17. Blue Ribbon Panel to Wire the City with High-speed Internet Service In March 2017, San Francisco Supervisor Mark Farrell assembled a group of business, privacy and academic experts to discuss crucial, early-stage questions surrounding Farrell’s plan to wire the city with high-speed Internet service. Farrell will serve as the panel’s co-chair alongside Harvard Law School Professor Susan Crawford. Crawford, who teaches courses on municipal uses of technology, Internet law and communications law, worked as an assistant to the president for science, technology and innovation policy in Barack Obama’s administration and co- led the FCC’s transition team between the Bush and Obama administrations. In addition to providing recommendations for the most cost-effective ways to finance the fiber project and how to create and maintain privacy and security standards for customers, the volunteer panel will also evaluate whether to operate the network as a public or private utility, or a combination of the two. Farrell said the panel’s work would build on a report published by the San Francisco budget and legislative analyst’s office that laid out a number of possible scenarios. Financial Analysis of Options for a Municipal Fiber Network for City Internet Access: http://sfbos.org/sites/default/files/FileCenter/Documents /55324-BLA.MuniGigabitFiberFinance031516.pdf The Blue Ribbon Panel issued its first report in June 2017: WHY FIBER? SHOULD SAN FRANCISCO DEPLOY A FIBER BROADBAND NETWORK? San Francisco Blue Ribbon Panel on Municipal Fiber Subcommittee on Technology & Infrastructure https://sfmunifiber.files.wordpress.com/2017/06/why- fiber-report.pdf San Francisco is a Webpass city. Webpass, is a wireless internet provider that Google Fiber bought in 2016. Webpass uses radio devices to connect with existing Ethernet wiring, making it less infrastructure-heavy than traditional Google Fiber, which brings fiber cables directly to homes. 33 Shafter/Shafter Connect Business and residential FTTP Service providers include Level 3 and Vast Networks (ISP). Shafter Connect uses qualified vendors to provide faster and more reliable high speed Internet and telephone service over a fiber optic network. The Shafter Connect network consists of a 30+ mile backbone ring serving key areas of the City. Additional backbone and ring extensions are planned and under construction to expand the service reach of the network. The network is designed and built to industry standard metro-Ethernet or “Finished E” specifications. Utilities \ IT Departments Version:1.0 Author: ConnectedCity Core Team Page 9 of 10 Date Last Updated 7/24/2017 Email: officeofthecio@cityofpaloalto.org The city currently operates a 10 Gbps Ethernet network over the Shafter Connect all-fiber optic network. The installed infrastructure supports 100 Gbps and faster speeds as technology standardizes. Business and residential services are provisioned and supported directly by established, qualified service providers (Level 3 and Vast Networks). Bandwidth to the customer premise is limited only by the capabilities of the selected service provider. Additional capabilities such as high-speed intra-network connections and video are planned as the Shafter Connect network grows. 34 Sunnyvale SmartCities Assessment City in the process of conducting a SmartCities Assessment using the SmartCities Council Readiness Guide and as part of that effort, the city will be defining what infrastructure will be needed to support the city as a whole. Sunnyvale is a “potential” Google Fiber city, but has no plans to pursue fiber-to-the-premises at this time. 35 Truckee/Truckee Donner Public Utilities District Dark Fiber No update available. 36 Union City Provide fiber in a former industrial area to encourage business development and retention. Union City spent $318,000 of bond money to run new high- speed Internet fiber lines underground near the Union City BART station as part of its larger effort to try to attract and retain businesses. In February 2017, the City Council authorized Communication Network Resources to pull the lines through a three-block area of 11th Street between Decoto Road and Cheeves Way, in the city’s southern end. The underground conduit where the fiber will be installed is already in place, a result of the city’s more than 15-year effort to revitalize a former industrial area into transit- oriented housing and office space known as the Station District. The fiber will be “dark” at first, as the city will need to work out a deal with an Internet provider to eventually add service to the lines. The goal is to create incentives for businesses to move to Union City. 37 Vallejo Public-Private Partnership Business Internet services In 2016, the City developed a Fiber Optic Master Plan. The City owns and operates approximately 36 miles of three- inch conduit. The majority of the conduit was built for traffic communications. Fiber is routed from City locations to Ethernet switches at eight hub locations and the main hub at City Hall. The Ethernet switches are interconnected with the main City network hub at City Hall. The remainder of the conduit not containing fiber generally contains twisted-pair copper cables used for traffic signal interconnection. In February 2017, the city agreed to lease its existing fiber network to Inyo Networks, Inc., which will then provide internet service to city facilities, along with businesses, medical facilities, other governmental agencies, and educational institutions. 38 Vernon: Vernon Gas & Electric Department Fiber Optic Division Citywide FTTP Business and Residential Internet services Vernon is the smallest incorporated city in the state of California. Describing itself as "exclusively industrial," the city is home to over 1,800 businesses that employ 50,000 people from surrounding communities. The residential population is only 112 in 31 existing households. The fiber network offers these few residents an opportunity to connect. Utilities \ IT Departments Version:1.0 Author: ConnectedCity Core Team Page 10 of 10 Date Last Updated 7/24/2017 Email: officeofthecio@cityofpaloalto.org Note: This information was obtained from various city and county web sites, news outlets, and other entities that track municipal broadband projects. The City of Palo Alto cannot guarantee the accuracy of this information. Utilities Department Version: 2.0 Fiber-to-Fiber Premises and Wireless Communication Initiative Page 1 of 5 Date Last Updated 02/04/17 HISTORY OF THE CITY OF PALO ALTO DARK FIBER OPTIC BACKBONE NETWORK FIBER‐TO‐THE‐PREMISES AND WIRELESS COMMUNICATIONS INITIATIVES This document is intended to provide a summary of the highlights of the City’s dark fiber optic backbone network, in addition to various initiatives to expand the network for citywide fiber‐to‐the‐premises and wireless services. City of Palo Alto Dark Fiber Optic Backbone Network The dark fiber optic backbone network (“fiber network”) was originally conceived by the City in the mid‐1990s and is maintained and operated by City of Palo Alto Utilities (“CPAU”). The City’s initial telecommunications strategy was to build a dark fiber ring around Palo Alto that would be “capable of supporting multiple network developers and/or service providers with significant growth potential.” In the mid‐1990s, most investor‐owned and public utilities invested in fiber optics to improve command and control of their utility infrastructure. Many of these networks typically had excess capacity that could be licensed or leased to third parties. The first phase of the fiber backbone construction occurred in 1996‐1997. The initial portions of the network were constructed in a backbone ring architecture in existing utility rights‐of‐way. The fiber backbone was routed to pass and provide access to key City facilities and offices. The majority of the City’s business parks (e.g. Stanford Research Park) and commercial properties are also passed by the fiber backbone. The original fiber backbone consisted of 33 route miles with 144 or more strands of single‐mode fiber along most routes. Since the late 1990s, the fiber backbone has been expanded to approximately 49 route miles of mostly 144‐ or 288‐count single‐mode fiber. Fiber network construction was financed internally by the Electric Enterprise Fund through a 20‐year, $2 million loan at a 0% interest rate. These funds were used to construct the network and to cover operating expenses. At the end of Fiscal Year 2008, the fiber optics business completed the loan repayment to the Electric Enterprise Fund for all capital and operating expenses from the beginning of the project. A separate Fiber Optics Enterprise Fund, capable of maintaining its own capital and operating budgets and financial operating reserve, was also created. In Fiscal Year 2009, a Fiber Optics Enterprise Fund Rate Stabilization Reserve (RSR) was established. The fiber network was built in part in response to telecommunications service providers such as emerging Competitive Local Exchange Carriers (CLECs) that would use available dark fiber to provide various telecom services. In the mid‐1990s, there was a high demand for fiber transport facilities to support the expansion of bandwidth‐intensive broadband services. By the late 1990s, many CLECs left the market either through mergers with other CLECs or bankruptcy; the so‐called “dot com bust” also occurred at roughly the same time. As a result, the anticipated demand for dark fiber in the original target market proved to be somewhat limited. By the late 1990s there was a glut of available dark fiber in many areas of the country. Nonetheless, it was evident that a fiber network would be a valuable asset for command and control of City of Palo Alto Utilities (CPAU) facilities (e.g. electric substations) and other critical City infrastructure such as traffic signals. The network would also support a wide range of broadband voice, data and video applications for City departments, in addition to various commercial users, telecommunications service providers, and the community as a whole. EXHIBIT A Utilities Department Version: 2.0 Fiber-to-Fiber Premises and Wireless Communication Initiative Page 2 of 5 Date Last Updated 02/04/17 In 2000, the City began to license “dark fiber” for commercial purposes. Dark fiber is unused fiber through which no light is transmitted, or installed fiber optic cable not carrying a signal. The basic business model is to provide dark fiber connectivity to users requiring access to large amounts of bandwidth. Customers are responsible for providing and maintaining the equipment to “light‐up” or provision licensed fiber strands. Dark fiber is licensed or leased by a provider such as the City without the accompanying transmission service. In contrast, traditional telecommunication service providers only make available certain products (commonly known as “managed services”) within their service options that may not adequately meet the requirements of the specific applications. The fiber network has high market share and brand awareness among commercial enterprises and other organizations that need the quantity and quality of bandwidth provided by direct fiber optic connections. By connecting to the City’s fiber backbone, the customer gains fiber access to their Internet Service Provider (ISP) of choice. A dark fiber customer can interconnect communications systems or computer networks across multiple Palo Alto locations and can also connect directly to their local and/or long distance carrier(s) of choice with a full range of communications services. Dark fiber customers can also have redundant telecommunication connections for enhanced reliability. Many of the City’s commercial dark fiber customers gain access to the Internet through the Palo Alto Internet Exchange (PAIX, now owned by Equinix). PAIX is a carrier‐neutral collocation facility and hosts over 70 ISPs at their facility located in downtown Palo Alto. Equinix has 21 similar facilities in the United States and other collocation facilities in Asia and Europe. The City currently licenses dark fiber connections to 107 commercial customers. The fiber network also serves the following City accounts: IT Infrastructure Services, Utilities Substations, Utilities Engineering, Public Works, Water Quality Control Plant and Community Services (Art Center). The total number of dark fiber service connections serving commercial customers and the City is 219 (some customers have more than one connection). At the end of fiscal year 2016, the licensing of dark fiber service connections resulted in a fiber reserve of approximately $24 million. There is a separate $1.0 million Emergency Plant Replacement fund. According to the proposed Fiscal Year 2017 Budget, the fiber reserve is projected to increase by $2.3 million. Annual dark fiber license revenues come from the following customer categories: • City service connections: 27% of gross revenues. Private sector entities licensing dark fiber from the City: Resellers: 42% of gross revenues. “Resellers” are telecommunication companies that purchase large amounts of transmission capacity from other carriers and resell it to smaller end‐users. Examples of resellers are telecom companies that sell broadband, telephony and video services to the commercial and residential markets. Various commercial enterprises: 31% of gross revenues. Examples of private end‐users are companies involved in various technologies, web hosting, social media, finance, medical, pharmaceuticals, research and development, software, law firms, consulting firms, e‐commerce, etc. Utilities Department Version: 2.0 Fiber-to-Fiber Premises and Wireless Communication Initiative Page 3 of 5 Date Last Updated 02/04/17 Service offerings: Dark fiber backbone license fees are based on the number of fiber miles per month. The base license price is $272.25 per fiber mile, per month. Quantity, route, length, topology, and other discounts are available. The minimum backbone license fee is $425 per month. Lateral connection (premises to backbone) fees are based on the length and type of the lateral, with a minimum fee of $210. Available configurations include point‐to‐point and diverse rings. The majority of business parks and commercial properties are passed by the fiber backbone. In 2014, CPAU completed a project to serve all Palo Alto Unified School District facilities with dark fiber service connections. 2016 ‐ 2017: In 2016, CPAU retained Celerity Integrated Services, Inc. to provide a one‐time comprehensive review and audit of the City dark fiber optic network. Celerity completed the review and audit and provided a physical description of the network; documented the number of fiber strands, in addition to conducting an inspection of 90 fiber nodes/cabinets (i.e. network splice points) to identify what is labeled within the individual nodes/cabinets. CPAU Engineering is currently working with CAD Masters to reconcile the audit data provided by Celerity with various fiber databases, in addition to rebuilding front‐end databases to facilitate fiber assignments at the engineering level and to improve network mapping. In 2017, CPAU initiated a $1.3 million backbone rebuild project that will install new aerial duct or substructure (conduit and boxes), in addition to fiber backbone cable to increase capacity for sections of the dark fiber ring that are at or near capacity. This project will allow CPAU to meet customer requests for services. The project areas primarily cover the Stanford Research Park, Palo Alto Internet Exchange/Equinix at 529 Bryant, and Downtown areas. This project basically “overlays” new fiber over existing fiber routes in the network. Existing fiber will continue to serve City facilities and commercial dark fiber customers. Fiber‐to‐the‐Premises For more than fifteen years, the City has worked to develop a business case to build a citywide fiber‐to‐the‐premises (“FTTP”) network to serve homes and business. A number of business models have been evaluated. The following is a summary of the highlights to develop a network: 1999: A Request for Proposal (RFP) was issued to build citywide FTTP. There were no viable bids. 2000‐2005: The City Council approved a Fiber‐to‐the‐Home (“FTTH”) trial to determine the feasibility of providing citywide FTTH access in Palo Alto. The FTTH trial passed 230 homes and included 66 participants in the Community Center neighborhood. The purpose of the trial was to test the concept of fiber‐to‐the‐home. The FTTH trial proved successful (i.e., proved technical feasibility), but when initial investment and overhead expenditures were included in the calculation to create a business case, it was not profitable for the City and the trial was ended. 2006‐2009: In 2006, the City issued another RFP and negotiated with a consortium of private firms to build FTTP under a public‐private partnership model. In 2009, Staff recommended to Council termination of the RFP process and negotiations due to the lack of financial resources of the private firms. 2010: The City responded to Google Fiber’s Request for Information. Utilities Department Version: 2.0 Fiber-to-Fiber Premises and Wireless Communication Initiative Page 4 of 5 Date Last Updated 02/04/17 2011: Staff worked with two telecommunications consulting firm to evaluate the expansion of the existing dark fiber network for its commercial dark fiber licensing enterprise and also to expand the network on an incremental basis to attract a “last mile” FTTP builder and operator. This is a link to the staff report provided to the Utilities Advisory Commission in June of 2011, and the Council Finance Committee in November of 2011: Subject: Provide Feedback on the Development of a Business Plan for the Citywide Ultra‐High‐Speed Broadband System Project http://www.cityofpaloalto.org/civicax/filebank/documents/27421 2012: Staff worked with a telecommunications consulting firm to study the feasibility of an alternative model for citywide FTTP which would rely on homeowners paying on a voluntary basis for some or all of the cost to build‐out the existing dark fiber network into residential neighborhoods. The name of this model is “user‐financed” FTTP. The analysis concluded that an opt‐in FTTP network can be built using a combination of upfront user fees and City financing; however, there is very little probability of the debt incurred being repaid through operations. Ongoing subsidies would be required, very likely in excess of surpluses in the Fiber Optics Fund reserve generated by licensing dark fiber. The study was supported by a market survey which concluded there was limited interest among residents in this model. This is a link to the staff report provided to the Utilities Advisory Commission in June 2012: Subject: Request for Feedback Concerning the Dark Fiber Optic Backbone Network http://www.cityofpaloalto.org/civicax/filebank/documents/30112 2013 ‐ 2015: The City Council started it’s “Technology and the Connected City” initiative and directed staff to prepare a Fiber‐to‐the‐Premises Master Plan and a Wireless Network Plan. In 2015, staff worked with a telecommunications consulting firm to prepare these plans and they are provided for your review in this September 28, 2015 Council staff report: Summary Title: Discussion of Fiber‐to‐the‐Premises and Direction on Next Steps for Fiber and City Wireless Services http://www.cityofpaloalto.org/civicax/filebank/documents/49073 At the September 28, 2015 Council meeting, staff and the consultant reviewed these plans with the Council Members. As a result, a Council Motion directed staff to pursue several initiatives, which are described in this August 16, 2016 staff report which updated the Council about the various activities from the Motion: Summary Title: Fiber‐to‐the‐Premises update on City Council Motions and Google Fiber http://www.cityofpaloalto.org/civicax/filebank/documents/53363 2014 ‐ 2016: Google Fiber announced Palo Alto as a potential “Google Fiber City” for a build‐out of their fiber optic network. Since early 2014, staff has been engaged with Google personnel to complete an extensive checklist process regarding City infrastructure and processes, in addition to negotiating agreements for a project description, utility pole attachments, encroachment permits, environmental reviews and other agreements for cost recovery for use of staff time. Based on Council direction, staff has also worked with Google to develop a “co‐build” concept which would explore the feasibility of building a City network in parallel with Google’s network. In July 2016, Google announced a delay in their plans for up to six (6) months to build a fiber optic network in Silicon Valley, which also included Mountain View, San Jose, Utilities Department Version: 2.0 Fiber-to-Fiber Premises and Wireless Communication Initiative Page 5 of 5 Date Last Updated 02/04/17 Santa Clara and Sunnyvale. Google advised staff that they are exploring more innovative ways to deploy their network, which may include implementing wireless technologies. Co‐build discussions have also been delayed. In the summer of 2016, the City approved permits for two cabinets so AT&T can begin to deploy their “AT&T Fiber” service. AT&T is exploring deployment of additional cabinets in 2017. Based on Council direction, staff is also pursuing co‐build discussions with AT&T. On December 12, 2016, staff provided Council with an informational update regarding Fiber‐to‐the‐Premises and wireless initiatives: Summary Title: Update for Fiber‐to‐the‐Premises and Wireless Initiatives: http://www.cityofpaloalto.org/civicax/filebank/documents/55016 Wireless Network Plan Based on the above‐mentioned Wireless Network Plan, Council directed staff to issue an RFP for a Point‐to‐Multipoint Secure Access Network for Public Safety and Utilities communications, in addition to an RFP for a Mobile Broadband Network to improve “in‐vehicle” broadband access in Public Safety vehicles. Staff is also working to extend the City’s existing Wi‐Fi service to other City facilities that are currently unserved. Most key City facilities already have Wi‐Fi available for staff and public use. Staff Work Plan Update: City Council Motion from September 28, 2015 (CMR ID #6104) and status of November 30, 2015 (CMR ID #6301) staff recommendations: Task Target Date Status 1 Council requests an update to the consultant’s report including: a In the FTTP Master Plan: 12/31/2015 Completed. Reviewed assumptions for outside plant costs and capital additions in FTTP Master Plan with CAC and CTC on 1/21/16 and 2/18/16. CAC now in agreement with CTC’s FTTP network cost estimates and there are no discrepancies to report. Detailed assumptions, and their impacts, used to forecast the FTTP capital additions are to be reviewed by Citizen Advisors if there is a disagreement between the consultant’s report and the CAC’s recommendation, the Staff Report to Council will highlight the discrepancy. Once this is accomplished, a revised forecast is to be provided to the Council as an Action Item; b In the Wireless Network Report: i. A 20-year forecast should be provided consistent with the FTTP report; 12/31/2015 Completed ii. The description of Scenario 1 lacked both a price forecast and fiber backhaul details for the proposed municipal properties to be served. These details should be included in an update prior to an RFP. Evaluate expanding wireless access in retail areas, with an option for expanding Wi-Fi coverage at City facilities and public areas as part of the RFP (Scenario 1); 9/30/2016 Completed. The cost estimates for the extension of existing City Wi-Fi to unserved City facilities & public areas/parks are shown in Exhibit A. The evaluation of expanding Wi-Fi access in retail areas showed that Wi-Fi coverage in retail areas is adequately provided by the retail institutions. Expanding Wi-Fi coverage in these areas is not recommended by City Staff. 2 Issue RFP to add dedicated wireless communications to increase communication for Public Safety and Utilities departments (Scenarios 3 and 4); 9/30/2017 In progress. The RFQ for the equipment to support the Point-to-Multipoint Network for Secure City Enterprise Access (Public Safety & Utilities) was issued in June 2017. Currently, Public Safety is obtaining a quotation for installation of the equipment. The draft RFP for the Citywide Mobile Data Network for Public Safety is completed and currently being reviewed by the CAO. 3 Direct Staff to bring a dig-once Ordinance; Fall/Winter 2017 In Progress. The CTC draft report was provided on 5/16/16. The report evaluates existing dig once models from other municipalities and provides recommendations for the City to consider. The CAO, in consultation with cross-departmental staff, is currently reviewing the recommendations contained in the report. 4 Direct Staff to discuss co-build with AT&T and Google how the City can lay its own conduit to the premise during the buildouts; a AT&T 12/30/2016 Completed. The City met with AT&T representatives to discuss a co- build opportunity as AT&T deploys their AT&T Fiber Internet service in Palo Alto. AT&T representatives subsequently indicated the company is not interested in a co-build at this time. b Google TBD On-Hold. At Google Fiber’s request, the discussion regarding deployment of FTTP for the 5 proposed Bay Area cities is on hold while they examine new, innovative methods for fiber deployment. 5 Move forward with RFI exploring both Muni- owned model with contractors for build and ongoing operations, and Public—private model with City owned fiber and private partner (such as Sonic) operating and owning electronics, considering both Google in the market and not; 9/30/2016 Completed. The 8 RFIs received have been reviewed and CTC provided an evaluation report of the RFIs in Exhibit B. 3 of the respondent firms were interviewed, none of the respondent’s proposals completely align with city goals. 6 Approve a temporary contract position for a Fiber and Wireless Telecommunications Project Manager, dedicated to Fiber-to-the- Premises and wireless initiatives, in the amount of $228,000 annually, $684,000 for a period up to three (3) years; TBD On-Hold. The decision was made to put this position on hold due to the Google Fiber “pause”. Staff will evaluate whether a contract position or professional services agreement is needed dependent on City Council’s decision regarding next steps for the project. 7 Approve and authorize the City Manager or his designee to execute amendments to two contracts with Columbia Telecommunications Corporation dba CTC Technology & Energy (“CTC”) as follows: a Increasing the not-to-exceed amount for Contract No. C15152568 (Wireless Network Plan) by $94,490 from $131,650 to $226,140 (includes a 10% contingency for the provision of related additional, but unforeseen consulting services) and extend the contract to June 30, 2016 to develop a Request for Proposal for dedicated wireless communications for Public Safety and Utilities, in addition to evaluating the expansion of wireless access in retail areas 12/31/2015 Completed. Amendment finalized on 1/6/16. b Increasing the not-to-exceed amount for Contract No. C15152569 (FTTP Master Plan) by $58,850 from $144,944 to $203,794 (includes a 10% contingency for the provision of related additional, but unforeseen consulting services) and extend the contract to June 30, 2016 to provide technical analysis of the Request for Information (RFI) responses and any consulting services needed to help develop a “Dig Once” Ordinance for consideration by the Council 12/31/2015 Completed. Amendment finalized on 1/6/16. UTILITIES ADVISORY COMMISSION MEETING MINUTES OF April 5, 2017 MEETING ITEM 2: ACTION: Utilities Advisory Commission Recommendation that Council Approve a Recommendations Concerning: (1) Future Plans for Fiber and Broadband Expansion; and (2) Expansion; and (2) Expand Wi-Fi to Unserved City Facilities; and Discontinue Consideration of City-Provided Wi-Fi in Commercial Areas Strategic Business Manager Dave Yuan gave an overview of past Fiber-to-the-Premises (FTTP) efforts to build a municipally owned network including multiple studies and issuance of various request for proposals (RFPs) and request for information (RFI). In the last couple years, under advisement from Council, UAC, City Manager’s Office, and Citizen Advisory Committee (CAC), we’ve pursed numerous FTTP initiatives such as the master plan, Google Fiber effort, co-build discussions with Google and AT&T, and RFI issuance for a public-private partnership. We have gathered a lot of valuable information through these endeavors. We’ve come to a point where we’re asking UAC and Council to provide us direction on where we should focus our efforts towards in the next year or so. We present you with three options and we would like the UAC to recommend one of these options to Policy & Services Committee (P&S) and Council. Option 1 – Explore funding models to finance a municipal FTTP network with an estimated cost of $77.6M. Option 2 – Pursue a design a fiber-to-the-node network with an estimated cost of $12M; in addition, explore different funds models to finance the “last mile” build. Option 3 – Discontinue pursuing FTTP thus pausing municipal FTTP efforts, redirect resources to streamline 3rd party upgrades and allow the market to play out. Chief Information Officer Jonathan Reichental spoke about the future of wireless services, stating that most industries will be using wireless for most applications in the future. One of five U.S. households are now mobile only access to internet. The number of households with mobile only access is increasing rapidly. It doubled in the last two years from one in ten households in 2013. He discussed the coming Fifth generation (5G) standard, which is intended to be a connection fast enough to replace fixed connections such as cable. 5G specifications is not complete but anticipate it will move to mainstream around 2020. There’s a lot of experimentation happening today with 5G. It will be far faster than 4G LTE, a minimum of 20 Gigabits for download and 10 Gigabits for upload, and is far faster than physical connections. 5G will be about 2000x faster than 4G and average U.S. broadband will be 400x faster. Google DRAFT had stopped its fiber rollout to focus on wireless broadband. Verizon currently has 5G fixed wireless technology testing underway in “eleven geographies” and “different environments” including urban and suburban settings. AT&T is piloting in Austin, TX with Intel and Ericsson using millimeter wave reaching 1GB speeds up and down. Mobile World Congress 2017, the mobile industry’s biggest trade show, 5G was everywhere. Big players Qualcomm, Ericsson, Intel, Nokia, and all chip and mobile leaders betting the future on it. Telecom Italia says Turin, Italy will become 100% 5G by 2020. Senior Management Analyst Jim Fleming discussed three options being offered tonight for action on Fiber to the Premises (FTTP). The first option was to implement municipal FTTP. The cost was estimated at $78M for construction, $8M annual O&M, and would require a 72% take rate. If the City used $20M from its fiber reserves, required take rate could decrease to 57%. A key consideration for network implementation is how to fund both capital construction costs and ongoing operational expenses. Acknowledging that capital and operating costs associated with a full-scale citywide build-out will be significant, the City will likely have to seek outside funding and/or internal subsidies to support construction and the FTTP network’s startup costs. Certain challenges inherent to FTTP deployment are especially pronounced in the Palo Alto. In particular, high construction and labor costs in the Bay Area result in a higher necessary take rate to obtain and maintain positive cash flow. As a comparison, other recent analyses performed by our consultant for municipalities have shown a required take rate in the mid-40 percent range in order to maintain positive cash flow. The second option was to explore the design of a Fiber-to-the-Node Network, which may provide a platform for Public Safety and Utilities wireless communication in the field, communications support for Smart Grid and Smart City applications, and new dark fiber licensing opportunities. This approach may also create a basis to explore alternative “last mile” models for Fiber-to-the-Premises, including user-financing, creating Assessment Districts, Mello-Roos Community Facilities Districts and/or public-private partnerships. Construction costs were estimated at $12M to $15M, with unknown ongoing O&M cost and would be dependent on usage of the network. A FTTN network would require construction of approximately 62 miles of fiber plant, compared to 230 miles for a citywide FTTP network deployment. This network would provide access points to connect neighborhood-area backhaul communications links. The network could be a phased approach for fiber expansion and it may lower the barriers for potential providers to build the so-called “last mile” from neighborhood access nodes to the premises, and provide the City with an economically viable deployment approach. Additionally, this approach may expand the functionality and the choices of technology that can be implemented for Utilities and Public Safety communications, and possibly support communication requirements to implement future Smart City and Smart Grid applications. New opportunities to license dark fiber may also occur, particularly for the wireless carriers who will be densifying their networks to improve coverage and capacity with more wireless communication facilities such as small cell antennas deployed within residential neighborhoods and high traffic commercial areas such as University Ave. These small cell antennas and other distributed antenna systems will need fiber for backhaul purposes to connect to the wireless carriers’ macro cellular towers and other network hub sites. This potential opportunity aligns with the existing commercial dark fiber enterprise. A FTTN network may include an option for the City to build the “last mile” at a later date, or as a means of creating an incentive for a private sector partner to build and operate the last mile. Another potential approach is to direct new investment to neighborhoods that meet established subscription requirements – in other words “take rates.” If a certain level of interest was met and property owners were willing to pay for the connections between the neighborhood node and homes and businesses, assessment districts could be created as an incentive to build FTTP The third option was to stop evaluation of either FTTP or FTTN and focus on streamlining the ability for third parties to perform network upgrades in the City, where feasible. In light of the anticipated upgrade plans by the cable and telco incumbents and challenge in obtaining sufficient market share, another potential option is pausing any further municipal FTTP development efforts at this time. In the interest of improving broadband in Palo Alto, another option is to identify resources and improve coordination of City policies and processes to facilitate network upgrades by the incumbents and other independent ISPs. To that end, the objective of this recommendation is to enhance transparency and predictability for third party providers. Access by third-parties to infrastructure data and assets such as poles, conduits and public rights-of-ways is essential to encouraging broadband improvements. Ensuring efficient and predictable processes that enhance deployments is equally important, as with any public project. Staff also has two wireless recommendations. The first recommendation is to expand Wi-Fi to unserved City facilities at common areas in Cubberley, Lucie Stern, the Golf Course Pro Shop and Cafe, and Lytton Plaza. A high-level cost estimate for the recommended sites is $165,000 for installation and $6,200 for monthly recurring charges. The second wireless recommendation is to discontinue consideration of City Wi-Fi in commercial areas since there have been no specific requests from the business community or the general public for Wi-Fi services in high traffic commercial areas. A significant number of Palo Alto businesses already offer free Wi-Fi service to patrons as an amenity. Citizen Jeff Hoel serves on the CAC, but expressed his personal views. Hoel referenced a lengthy email that was sent to the UAC. There is $25M in fiber fund and the dark fiber has revenue stream of $2.5M per year. User financed approach could be used for part of funding. If planning smart meters in Palo Alto, City could use Electric Special Project fund for fiber. There seems to be enough funding to do FTTP. A previous staff report couldn't find the necessary funds. We can still afford to pay for a very large phase 1 of the project. Sandy, OR had a contest that showed many neighborhoods were interested. Citizen Herb Borock stated the FTTP project has been managed under multiple departments and no decision has been made on whether it’s a project or not. The City just conducted another lengthy study but now no one wants to give it the time of day. The CAC is not present tonight, the sense I have is the CAC is simply responding to what staff says should be done. There have not been substantive discussions, although staff promises stronger action in the future. The CAC can help, but not in role they have today. Create a demand-driven dark fiber partnership, then lease fiber to partner. PA is unique, we have bridge funding for the additional fiber. The main thing is Council needs to make a choice. If we study for 2 more years, it will take too long. Commissioner Ballantine said he did not think much about the options had changed since the previous year’s discussion. He thought the best idea was some kind of citizen referendum about whether it would be possible to raise funds for the rollout. He said tonight’s recommendation did not align with the Council’s guidance. He did not see any way to reasonably approve any of the three options. It was not reasonable to abandon the effort given Council direction. He thought FTTN might end up coming for free as a result of the smart grid buildout. He understood the issue with financing. Commissioner Johnston said a member of the public had e-mailed with questions about conflicts of interest. He said he did not have a conflict, and that he did not own the stocks cited in the e-mail. He asked what the revenue might be from an FTTN rollout. Fleming said it was difficult to predict the revenue, but the business model was in line with the City’s current business model. The City currently partnered with resellers of the City’s dark fiber service. By contrast, competition in the area of FTTP was very difficult, a new service for the City, with two existing incumbents to compete with. Commissioner Schwartz asked staff to confirm that FTTN would support a 5G rollout. Reichental confirmed fiber was essential to support better wireless. Commissioner Schwartz said it would be helpful to talk about applications that would be enabled by 5G, rather than listing speeds. It helped people relate to the discussion effectively. She also suggested something such as a “scholarship fund.” If there was a startup or nonprofit that required fiber, she would like to see the City provide that service at a lower rate. She said she had seen progress since the previous year’s discussion, particularly the inclusion of the FTTN option. Lastly, she clarified that in her Commissioner comments, when she had mentioned Chattanooga Electric Power Board, that organization was evaluated as a utility rather than a telecom. Yuan spoke to the “scholarship fund” idea, saying staff could consider adding fiber under the Emerging Technology program. He said regarding the comments on lack of progress, most of the work over the last couple years have been focused on a potential partnership with Google Fiber, which had not panned out. Commissioner Danaher said option three was not that feasible. Staff had seen how difficult it was to work with a third party when collaborating with Google Fiber, and he had seen AT&T make excuses and delay, such as the color requirements for equipment cabinets, to delay rollouts. He asked about FTTP, and whether the City would be the service provider or license to third parties. He also said that option #1 will pass all homes, but there’s no data collection. Fleming said in an FTTP rollout it was best for the City to be the provider, but pulling together those services, such as providing cable services, was difficult. It was typically a money-losing business for a small operator. The classic “triple-play” model is outdated. It was possible to partner with an ISP, but that would be a revenue sharing situation, meaning it would be difficult to make any return on investment. The breakeven take rate required to make FTTP work was very high, making it difficult even without a revenue sharing arrangement. Commissioner Danaher said it would be a matter of what the City was willing to subsidize. Fleming said that was the case. He noted that Chattanooga, a commonly cited public provider, had built their system using Federal grants, had built it out to roll out a smart grid service, and had been underserved by other telecom providers. One-third of the build costs came from federal grants and they were able to allocate costs against their electric utility. Comcast answered by performing upgrades in Chattanooga to maintain their market share. Commissioner Danaher asked whether there would be just one provider on the City network. He noted the challenges with that approach. He asked how the buildout of the last mile of an FTTN network would work. How does FTTN get us to FTTP? Fleming said there were few ISPs who would be interested in partnering and capable of providing services to all homes in the community. Fleming said it's speculative, we might attract a partner. The last mile is the most expensive part of the build and the provider would probably want a guaranteed take rate. Commissioner Danaher asked about the alternative in which citizens signed up as a neighborhood to fund the last mile. Fleming said user-financing has been considered but there wasn’t enough community interest given the costs. Nowadays, connections to homes could be wireless, which costs much less. The home owner could pay for the wireless connection. Reichental noted that it was more likely that the last mile would be served wirelessly by 5G providers. Fleming said that was the likely future business model for Google Fiber. Commissioner Danaher said it was important to distinguish between the business model and the technology. The business model must be thought through. He said the City could subsidize connections and amortize them over twenty years. He agreed with the assessment on the technology, but still had questions about the technology. Councilmember Filseth asked whether future wireless technologies could replace the need for fiber backhaul. Reichental said it was hard to predict, but he did not see anything on the horizon. There was a need for fiber backhaul for good wireless services. Councilmember Filseth said two things have changed in the past one and a half years. First is whether we get on the Google train? Second, there’s more clarity on 5G and it’s looking more realistic where fiber to node and wireless to the home is more likely. The fundamental question regularly raised was why the City would want to be in this business in the first place given there are commercial providers and there are a lot of technology services the City does not provide such as ISP, commercial cellular or citywide commercial Wi-Fi. He said he could not speak for the whole Council, but for some the motivation related to a “bad scenario” was one in which laying fiber was so expensive that the first provider in became the sole provider, and he was concerned that with a natural monopoly the operator could end up being rapacious. The concern is we don’t want to operate the network but if the monopoly provider is not servicing our community, we wanted an insurance policy against the “bad scenario” such as “dig once” with Google. It seems that 5G and wireless are looking concrete enough at this point, that if we pursue the same path as the incumbents, we would avoid the “bad scenario” because there will be multiple providers. Under option 1, there's a risk that we could have a $50M - $100M boat anchor years down the road; if the service provider could provide enough bandwidth through wireless and avoid the massive investment in trenching and adding fiber. He would be cautious in making the investment now under option 1 and would want to see what happens with wireless. The City would likely not lose by delaying a short time. FTTN is a much cheaper option; it could work if wireless is used for the last mile. He also wondered whether FTTN might be obsolete eventually. Is this a logical thought process? Reichental agreed. This is similar to Clay Christensen’s “disruptive innovation” model where a company goes along a path of innovation but an upstart enters the market and makes the technology obsolete. This happens often. Commissioner Ballantine suggests to prevent a “bad scenario” under option 2, can we implement a neighborhood lottery? Build to the node and extend to premise in one neighborhood, gather data, and experiment partnership models. If a “bad scenario” materializes, we can stop and the cost is marginal. Chair Cook thanked staff for the presentation. He said option one was infeasible without a vote, given the high costs and take rate required. His “bad scenario” was spending a lot of City money and having it become worthless. Option 2 seemed promising on its face since the Fiber Fund has $20M - $25M in reserves, but wondered whether there was really enough value in that option to move forward. Per Jeff Hoel, is this “fiber to the nothing” or “fiber to the node”? He said the benefits for option 2 had to be quantified before the City moved forward. Is there really a tie-in with smart grid and what’s the advantage of advanced meters and smart devices? He said some of the possible benefits sounded interesting, but a clearer benefit had to be shown. He was skeptical about 5G, and wanted a clearer explanation of the value. Will FTTN encourage something, not just something speculative? He did not like option 3. He also did not think municipal Wi-Fi was a good idea. He thought the golf course can pay for its own Wi-Fi. Vice Chair Danaher said he agreed that more work needed to be done on the service provider model associated with FTTN. Under option 2, need to explore design of FTTN, identify service provider model and financing mechanisms. It should be technology independent. Councilmember Filseth said in looking at option 2, it seems pretty likely that next generation wireless will be much faster than now. If the incumbents are offering 20Mb-40Mb and citizens can get these speeds directly from them without going through the city; we need to think about this when researching. We need to assess the value of option 2. Some customers will pay more for faster speed but most are probably content with their existing service. Reichental said he was 100% confident various wireless providers would provide speeds above what Filseth stated. Councilmember Filseth said 3G had not rolled out anywhere near as quickly as had been expected. 2.5G carried people a long way. Vice Chair Danaher said there were many virtual reality startups, and there were a variety of applications even beyond entertainment such as work, medical, telepresence and other applications that have not been invented. It would require very fast gigabit connection speeds. Commissioner Schwartz said option 2 is a foundational technology. FTTN which would enable a variety of new technological applications, such as smart grid, interval meters, supply and demand applications and gas and water leak detection which already exists. She said it was hard to find any businesses really using telepresence. But she said that if virtual reality became more prevalent, the FTTN investment would not be a waste of money since it would enable technology for these types of applications. She expected that the consultants hired for the strategic plan would address these issues. We need to build a strategic plan outlining phased application deployment. Commissioner Ballantine said Palo Alto doesn't have underground wiring citywide. Earlier underground wiring costs more to maintain but future undergrounding was made better because of lessons learned. Utilities has a plan to underground in a piecemeal fashion. For option 2, add an element of option 1 as an experiment so we’re able to learn from it. ACTION: Commissioner Schwartz made a motion to recommend Council approval of Option Two, taking into account UAC feedback on that option including the idea of a neighborhood beta. Commissioner Danaher seconded the motion. The motion passed unanimously (5-0), with Chair Cook, Vice Chair Danaher and Commissioners Ballantine, Johnston, and Schwartz voting yes and Commissioners Forssell and Trumbull absent) Second motion – Commissioner Schwartz, second Ballantine, approve the recommendations on wireless expansion, excluding extension of Wi-Fi to the golf course and discontinue consideration of City Wi-Fi in commercial areas. (5-0) Appendix A: Existing Market Assessment Final Prepared for City of Palo Alto July 2015 EXHIBIT D CTC Report | City of Palo Alto – Appendix A: Existing Market Assessment | July 2015 i Contents 1 Existing Market Assessment ................................................................................................... 1 2 Enterprise Market ................................................................................................................... 1 1.1 Dark Fiber Services ........................................................................................................... 1 1.1.1 Integra Telecom ........................................................................................................ 1 1.1.2 Level(3) ...................................................................................................................... 2 1.1.3 Zayo ........................................................................................................................... 3 1.2 Ethernet Services .............................................................................................................. 4 1.2.1 AT&T .......................................................................................................................... 4 1.2.2 CenturyLink ............................................................................................................... 5 1.2.3 Cogent Communications ........................................................................................... 5 1.2.4 Comcast ..................................................................................................................... 5 1.2.5 Level(3) ...................................................................................................................... 6 1.2.6 Megapath .................................................................................................................. 6 1.2.7 Integra Telecom ........................................................................................................ 6 1.2.8 Verizon ...................................................................................................................... 6 1.2.9 Windstream Communications .................................................................................. 7 1.2.10 XO Communications ................................................................................................. 7 1.2.11 Zayo ........................................................................................................................... 7 2 Residential and Small Business Services ................................................................................. 8 2.1 Cable ................................................................................................................................. 8 2.2 DSL .................................................................................................................................... 9 2.2.1 AT&T .......................................................................................................................... 9 2.2.2 EarthLink ................................................................................................................. 10 2.2.3 MegaPath ................................................................................................................ 10 2.2.4 Sonic ........................................................................................................................ 10 2.3 Satellite ........................................................................................................................... 10 2.3.1 HughesNet .............................................................................................................. 10 CTC Report | City of Palo Alto – Appendix A: Existing Market Assessment | July 2015 ii 2.3.2 Exede ....................................................................................................................... 11 2.3.3 DishNET ................................................................................................................... 11 2.4 Wireless .......................................................................................................................... 11 2.4.1 Verizon .................................................................................................................... 11 2.4.2 Sprint ....................................................................................................................... 12 2.4.3 AT&T ........................................................................................................................ 12 2.4.4 Cricket Wireless ...................................................................................................... 12 2.4.5 T‐Mobile .................................................................................................................. 12 2.4.6 Etheric Networks ..................................................................................................... 13 Figures Figure 1: Integra Telecom Network Map ........................................................................................ 2 Figure 2: Level(3) Dark Fiber Routes ............................................................................................... 3 Figure 3: Zayo Fiber Map ................................................................................................................ 4 Tables Table 1: Overview of Residential and Small Business Data Services in Palo Alto ........................... 8 Table 2: Comcast Residential Internet – Internet Only .................................................................. 9 Table 3: Comcast Small Business Internet – Internet Only ............................................................. 9 Table 4: AT&T Residential Internet – Internet Only ..................................................................... 10 Table 5: Etheric Networks Internet Services ................................................................................ 13 CTC Report | City of Palo Alto – Appendix A: Existing Market Assessment | July 2015 1 1 Existing Market Assessment This existing market assessment provides an overview of providers that currently offer services with which the City’s potential new fiber‐to‐the‐premises (FTTP) enterprise might compete. The information provided here is based on what was publicly available—providers often do not publish extensive information about their networks (e.g., capacity and other specific details). 2 Enterprise Market This section summarizes competitors for dark fiber and Ethernet services with respect to the enterprise customers within the City of Palo Alto. During the course of our research, we identified 11 service providers in the Palo Alto area that offer a range of services from dark fiber connectivity to data transport services, with speeds that range from 1 Megabit per second (Mbps) to 100 Gigabits per second (Gbps). Individual providers tailor these services to a customer’s requirements, such as speed and class of service. Greater proximity to the provider’s existing network infrastructure results in lower service pricing. Providers prefer to offer transport services between locations on their network (On‐Net) and provision Multiprotocol Label Switching (MPLS) based services for connecting locations that are Off‐Net. A trend that we expect to continue is the consolidation of competitors through mergers and acquisitions. Competitors are discussed in detail in the following sections. 1.1 Dark Fiber Services In addition to the City of Palo Alto Utilities (CPAU) dark fiber offering,1 our analysis found that three service providers in the City offer dark fiber services2: Integra Telecom, Level (3) and Zayo.3 There may be other providers that offer dark fiber (e.g., on a case‐by‐case basis), but this analysis yielded information only about the three discussed here. 1.1.1 Integra Telecom Integra Telecom offers dark fiber services within the city. They provide flexible options in securing dark fiber through bundles, lease, and indefeasible rights of use (IRU). The dark fiber routes are depicted in Figure 1.4,5 Dark fiber pricing varies individually, based on distance from the 1 CPAU is engaged in capital improvements for added capacity and to provide additional dark fiber routes. 2 An assessment of the potential impact of alternative dark fiber provider offerings to City of Palo Alto’s existing dark fiber enterprise is beyond the scope of this analysis. 3 While this analysis yielded only these three, there may be other providers offering dark fiber—for example, on a case‐by‐case basis. 4 http://www.integratelecom.com/pages/network‐map.aspx, accessed March 2015. 5 As we noted, carriers typically do not publish details such as whether they directly own the routes depicted on their publicly‐available maps. CTC Report | City of Palo Alto – Appendix A: Existing Market Assessment | July 2015 2 provider’s fiber ring. A difference in a few tenths of a mile can lead to significant differences in the price of dark fiber connectivity due to additional construction costs. Figure 1: Integra Telecom Network Map 1.1.2 Level(3) Level(3) has multiple dark fiber routes in Palo Alto as depicted in Figure 2.6 Services are offered only to select customers based on their application requirements. 6 As we noted, carriers typically do not publish details such as whether they directly own the routes depicted on their publicly‐available maps. CTC Report | City of Palo Alto – Appendix A: Existing Market Assessment | July 2015 3 Figure 2: Level(3) Dark Fiber Routes7 1.1.3 Zayo Zayo provides dark fiber connectivity over its national network of metro and intercity fiber.8 The company claims to have proven expertise in deploying major new dark fiber networks and offers multiple financing options including lease or Indefeasible Rights of Use (IRU). Pricing varies significantly depending on whether the building is On‐Net or not; if the location is Off‐Net, construction and splicing costs would apply.9 7 http://maps.level3.com/default/, accessed May 2015. 8 Zayo is also a CPAU Value Added Reseller (VAR), based on conversations with CPAU staff. 9 http://zayofibersolutions.com/why‐dark‐fiber, accessed May 2015. CTC Report | City of Palo Alto – Appendix A: Existing Market Assessment | July 2015 4 Figure 3: Zayo Fiber Map10 1.2 Ethernet Services Most existing service providers offer enterprise‐grade Ethernet based services. These are typically classified under two categories: point‐to‐point connectivity and access services, such as Dedicated Internet Access (DIA) and IP Virtual Private Networks (IP‐VPN). Bandwidths range from 1 Mbps to 100 Gbps. Providers prefer to offer MPLS based IP‐VPN services when the service locations are Off‐Net to avoid construction and installation costs. MPLS based networks provide high performance for real‐time applications like voice and video, and are typically priced higher. The carriers who provide these services in the Palo Alto region are AT&T, CenturyLink, Cogent Communications, Comcast,11 Integra Telecom, Level (3), Megapath, Verizon, Windstream Communications, XO Communications and Zayo. Prices depend on the bandwidth, location, and network configuration, whether the service is protected or unprotected, and whether the service has a switched or mesh structure. 1.2.1 AT&T AT&T has four different types of Ethernet products—GigaMAN, DecaMAN, Opt‐E‐MAN, and Metro Ethernet. GigaMAN provides a native‐rate interconnection of 1 Gbps between customer end points. It is a dedicated point‐to‐point fiber optic based service between customer locations which includes the supply of the GigE Network Terminating Equipment (NTE) at the customer 10 http://www.zayo.com/network/interactive‐map, accessed March 2015. 11 It appears Comcast may be pursuing the enterprise market more aggressively through means like going into wireless backhaul. http://www.fiercetelecom.com/offer/gc_backhaul?sourceform=Organic‐GC‐Backhaul‐ FierceTelecom, accessed July 2015. CTC Report | City of Palo Alto – Appendix A: Existing Market Assessment | July 2015 5 premises. DecaMAN connects the end points at 10 Gbps and is transmitted in native Ethernet format similar to GigaMAN, only 10 times faster. Opt‐E‐MAN service provides a switched Ethernet service within a metropolitan area. It supports bandwidths ranging from 1 Mbps to 1,000 Mbps, and configurations such as point‐to‐point, point‐to‐multipoint, and multipoint‐to‐ multipoint. Metro Ethernet service provides various transport capabilities ranging from 2 Mbps through 1 Gbps while meeting IEEE 802.3 standards.12 1.2.2 CenturyLink CenturyLink provides point‐to‐point inter‐city and intra‐city configurations for full‐duplex data transmission.13 The company offers speeds of 100 Mbps to 10 Gbps.14 1.2.3 Cogent Communications Cogent Communications’ Ethernet services are available at speeds of 1.5 Mbps to 10 Gbps.15 The company provides middle mile services with the last mile service provisioned through local exchange carriers (LEC).16 Often, more competitive pricing and better customer support is available through Cogent even though the company utilizes the LECs’ last‐mile services. Cogent has two on‐net locations (data centers) in the City. 1.2.4 Comcast Comcast provides Ethernet Private Line (EPL) services. EPL service enables customers to connect their Customer premises equipment (CPE) using a lower cost Ethernet interface, as well as using any Virtual Local Area Networks (VLAN) or Ethernet control protocol across the service without coordination with Comcast. EPL service is offered with 10Mbps, 100Mbps, 1 Gbps or 10 Gbps Ethernet User‐to‐Network Interfaces (UNI) and is available in speed increments from 1 Mbps to 10 Gbps.17 It is important to note that Comcast began offering “Gigabit Pro” service in 2015, a 2 Gbps service priced at $300 per month with installation fees of up to $1,000.18 Given the installation and monthly fees, this service is priced out of most residential users’ reach. Further, the service does not have the bells and whistles that traditional Metro Ethernet has—such as committed interface 12 http://www.business.att.com/service_overview.jsp?repoid=Product&repoitem=w_ethernet&serv=w_ethernet&se rv_port=w_data&serv_fam=w_local_data&state=California&segment=whole, accessed March 2015. 13 CenturyLink is also a CPAU VAR and typically uses ring configuration for redundancy, based on conversations with CPAU staff. 14 http://www.centurylink.com/business/products/products‐and‐services/data‐networking/private.html, accessed May 2015. 15 http://www.cogentco.com/en/products‐and‐services, accessed May 2015. 16 Cogent is also a CPAU VAR, based on conversations with CPAU staff. 17 http://business.comcast.com/ethernet/products/ethernet‐private‐line‐technical‐specifications, accessed April 2015. 18 http://www.theverge.com/2015/7/13/8949207/comcast‐gigabit‐pro‐price‐300, accessed July 2015. CTC Report | City of Palo Alto – Appendix A: Existing Market Assessment | July 2015 6 rates. However, if Gigabit Pro is successful, it could disrupt the Metro Ethernet market by filling a mid‐range gap with service and pricing that has not previously existed. 1.2.5 Level(3) Level (3)’s Metro Ethernet dedicated service is available in bandwidth options of 3 Mbps to 1 Gbps and its Ethernet Virtual Private Line (VPL) offers in speeds ranging from 3 Mbps to 10 Gbps.19 It is an end‐to‐end Layer 2 switched Ethernet service delivered via a Multi‐protocol Label Switched (MPLS) backbone. Internet services are available in a range of 14 speeds up to 10 Gbps.20 1.2.6 Megapath Megapath offers business Ethernet services in the Palo Alto area with advertised speeds up to 45 Mbps. Higher speeds are available on a case‐ by‐case basis.21 1.2.7 Integra Telecom Integra Telecom offers Ethernet services from 1.5 Mbps to 10 Gbps. The point‐to‐point E‐Line and multipoint ‐to ‐multipoint E‐LAN configurations are available.22 1.2.8 Verizon Verizon offers Ethernet services under three different product categories—Ethernet Local Area Network (LAN), EPL, and EVPL. The Ethernet LAN is a multipoint‐to‐multipoint bridging service at native LAN speeds. It is configured by connecting customer User‐to‐ Network Interfaces (UNIs) to one multipoint‐to‐multipoint Ethernet Virtual Connection or Virtual LAN (VLAN), and provides two Class of Service options—standard and real time. The Ethernet Private Line is a managed, point‐to‐point transport service for Ethernet frames. It is provisioned as Ethernet over SONET (EoS) and speeds of 10 Mbps to 10 Gbps are available. The EVPL is an all‐fiber optic network service that connects subscriber locations at native LAN speeds; EVPL uses point‐to‐point Ethernet virtual connections (EVCs) to define site‐to‐site connections. It can be configured to support multiple EVCs to enable a hub and spoke configuration and supports bandwidths from 1 Mbps to 10 Gbps.23 19 http://www.level3.com/en/products‐and‐services/data‐and‐internet/vpn‐virtual‐private‐network/evpl/, accessed March 2015. 20 http://www.level3.com/~/media/files/factsheets/en_ethernet_fs_ethernetmatrix.pdf, accessed April 2015. 21 http://www.megapath.com/data/ethernet/, accessed May 2015. 22 http://www.integratelecom.com/enterprise/products/pages/carrier‐ethernet‐services.aspx, accessed May 2015. 23 http://www.verizonenterprise.com/products/networking/ethernet/, accessed April 2015. CTC Report | City of Palo Alto – Appendix A: Existing Market Assessment | July 2015 7 1.2.9 Windstream Communications Windstream Communications has a nationwide presence serving major metropolitan areas, including the City, with private line and MPLS VPN services with speeds up to 10 Gbps.24, 25 1.2.10 XO Communications XO Communications offers carrier Ethernet services at multiple bandwidth options from 3 Mbps to 100 Gbps over their Tier 1 IP network.26, 27 1.2.11 Zayo Zayo delivers Ethernet in three service types with bandwidth ranging from 100 Mbps to 10 Gbps and options like quality of service (QoS) guarantees and route protection based on customer needs. The different types of services offered are: Ethernet‐Line, which provides point‐to‐point and point‐to‐multipoint configurations with reserved bandwidth availability; Ethernet‐LAN, with multipoint configurations having a guaranteed service level; and Ethernet Private Dedicated Network (E‐PDN) with a completely private, managed network operated by Zayo with dedicated fiber and equipment.28 As an example of pricing, Zayo charges a monthly recurring cost of $1,613 to $2,090 (depending on contract term) for 1 Gbps point‐to‐point Ethernet service between On‐ Net sites in the Los Angeles region that are three miles apart. 24 http://carrier.windstreambusiness.com/wordpress/wp‐content/uploads/2014/10/Carrier‐Ethernet‐Ordering‐ Guide‐10.8.14.pdf, accessed April 2015. 25 http://www.windstreambusiness.com/shop/products/ca/palo‐alto, accessed May 2015. 26 http://www.xo.com/carrier/transport/ethernet/, accessed May 2015. 27 http://www.xo.com/network‐services/internet‐access/ip‐transit/100G/, accessed May 2015. 28 http://www.zayo.com/ethernet, accessed April 2015. CTC Report | City of Palo Alto – Appendix A: Existing Market Assessment | July 2015 8 2 Residential and Small Business Services Residential and small business customers in the Palo Alto region have access to a range of services, though individual service options are dependent on location. Table 1 lists the service providers and minimum price for each type of service that is available in at least some part of the City. Table 1: Overview of Residential and Small Business Data Services in Palo Alto Service Type Provider Minimum Price (per month) Cable Comcast $29.99 DSL AT&T $29.95 Earthlink $80 MegaPath $45 Sonic $40 Satellite DishNET $49.99 Exede $49.99 HughesNet $49.99 3G/4G/ WISP AT&T $50 Cricket $35 Sprint $35 Verizon $60 T‐Mobile $20 Etheric Networks $85 2.1 Cable Comcast offers internet service from 3 Mbps to 150 Mbps download speeds starting at $29.99 per month in the City as illustrated in Table 2. Promotional rates are available for the first year after which the rates increase. Discounted prices are available if bundled with another service like voice or TV.29 On the small business side, multiple options are available starting at 16 Mbps download speeds up to 150 Mbps download speeds as illustrated in Table 3.30 Bundling with voice introduces a savings of $30‐$40. 29 http://www.comcast.com/internet‐service.html, accessed March 2015. 30 http://business.comcast.com/internet/business‐internet/plans‐pricing, accessed May 2015. CTC Report | City of Palo Alto – Appendix A: Existing Market Assessment | July 2015 9 Table 2: Comcast Residential Internet – Internet Only PACKAGE INTERNET SPEED REGULAR PRICE PROMO RATE Economy Up to 3 Mbps download $39.95/mo ‐ Performance Starter Up to 6 Mbps download $49.95/mo $29.99/mo Performance Up to 25 Mbps download $61.95/mo $39.99/mo Blast! Blast! Internet ‐ up to 105 Mbps download $78.95/mo ‐ Extreme up to 150 Mbps download $114.95/mo ‐ Table 3: Comcast Small Business Internet – Internet Only PACKAGE INTERNET SPEED PRICE Starter 16 Mbps download/3 Mbps upload $69.95/mo Deluxe 50 50 Mbps download/ 10 Mbps upload $109.95/mo Deluxe 75 75 Mbps download/15 Mbps upload $149.95/mo Deluxe 100 100 Mbps download/20 Mbps upload $199.95/mo Deluxe 150 150 Mbps download/20 Mbps upload $249.95/mo 2.2 DSL Four providers offer DSL services in Palo Alto: AT&T, EarthLink, MegaPath, and Sonic. 2.2.1 AT&T AT&T offers DSL service for residential customers in Palo Alto starting at as $29.95 per month for unbundled or standalone DSL service at 3 Mbps with a 12‐month commitment. Additional options up to 45 Mbps are available as indicated in Table 4. CTC Report | City of Palo Alto – Appendix A: Existing Market Assessment | July 2015 10 Table 4: AT&T Residential Internet – Internet Only INTERNET SPEED REGULAR PRICE PROMO RATE Up to 3 Mbps download $42/mo $29.95/mo Up to 6 Mbps download $52/mo $34.95/mo Up to 18 Mbps download $62/mo $44.95/mo up to 45 Mbps download $82/mo $44.95/mo 2.2.2 EarthLink EarthLink provides DSL based business services in the region starting at $80 per month and offering speeds up to 6 Mbps with 99.9% network availability.31 2.2.3 MegaPath MegaPath is an Internet service provider that offers speeds of up to 20 Mbps download and 1 Mbps upload for business customers in certain parts of Palo Alto.32 The lowest plan offered by them is for 1.5 Mbps download speeds at $45 per month. 2.2.4 Sonic Sonic offers residential internet services at 20 Mbps and 40 Mbps at a rate of $40 per month and $60 per month respectively in Palo Alto. The service also includes a phone connection. The provider is promoting the development of gigabit fiber connectivity on a neighborhood by neighborhood basis depending on the interest shown by consumers.33 Sonic also offers business internet and phone service in some locations in Palo Alto for $89.95 per month for speeds of 40 Mbps. 2.3 Satellite Satellite Internet access is available in the area as well and three providers offer the service: HughesNet, Exede, and DishNET. 2.3.1 HughesNet HughesNet has four packages available for residential users: 1) Connect Satellite with speeds up to 5 Mbps download/1 Mbps upload, a monthly data cap of 5 GB, and 5 GB of “bonus” data (10 GB total) for $49.99 per month2) HughesNet Power with speeds up to 10 Mbps download/1 31 http://www.earthlinkbusiness.com/DSL/, accessed March 2015. 32 http://www.megapath.com/services/, accessed May 2015. 33 https://www.sonic.com/availability ,accessed May 2015. CTC Report | City of Palo Alto – Appendix A: Existing Market Assessment | July 2015 11 Mbps upload, a 10 GB monthly data cap, and 10 GB of bonus data (20 GB total) for $59.99 per month; and 3) HughesNet Power Pro with speeds up to 10 Mbps/2 Mbps, a monthly data cap of 15 GB, and 15 GB bonus bytes (30 GB total) for $79.99 per month; and 4) HughesNet Power Max with speeds up to 15 Mbps/2 Mbps, a monthly data cap of 20 GB, and 20 GB of bonus data (40 GB total) for $129.99 per month. HughesNet offers two packages for Internet services to small businesses. The Business 50 package provides speeds of up to 5 Mbps download and 1 Mbps upload for $69.99 per month with a 5 GB per month anytime allowance and 10 GB bonus bytes from 2am to 10 am for a total monthly data allowance of 15 GB. This package requires a two year agreement and only supports up to five users. The Business 100 package provides the same download and upload speeds of the Business 50 package, but offers a higher data allowance threshold of 10 GB per month anytime and 15 GB bonus bytes from 2 am to 10 am for a monthly data allowance of 25 GB. This package also requires a two year agreement and is best for 5 to just over 10 users. 2.3.2 Exede Exede offers three Internet packages in the region each with up to 12 Mbps download and 3 Mbps upload speeds. These packages are: 1) Evolution 5 with a monthly 5 GB data cap (excluding emails and web pages) for $49.99 per month 2) Evolution 20 with a 20 GB monthly data cap for $69.99 per month and 3) Freedom with unlimited access for $99.99 per month. 2.3.3 DishNET DishNET offers three residential Internet packages in the region. These packages are: 1) Up to 5 Mbps download speed with a monthly 5 GB data cap and 5 GB of bonus data for $49.99 per month with a 24‐month commitment; 2) download speeds up to 10 Mbps with a 10 GB monthly data cap and 10 GB of bonus data for $59.99 per month with a 24‐month commitment; and 3) up to 10 Mbps download speed with a 15 GB monthly data cap and 15 GB of bonus data for $79.99 per month with a 24‐month commitment. 2.4 Wireless There are six providers that offer wireless Internet services in Palo Alto: Verizon, Sprint, AT&T, Cricket Wireless, T‐Mobile, and Etheric Networks. 2.4.1 Verizon Verizon offers two 4G LTE data packages with multiple choices for data allowances and pricing depending on the desired mobility and equipment chosen. The HomeFusion Broadband Package is a data‐only 4G LTE service with WiFi connectivity and wired Ethernet for up to four devices. There are download speeds of 5 Mbps to 12 Mbps and upload speeds of 2 Mbps to 5 Mbps. Monthly prices range from $60 for a 10 GB data allowance to $120 for a 30 GB data cap. Overages are charged at $10 per additional GB. A two‐year contract is required with a $350 early CTC Report | City of Palo Alto – Appendix A: Existing Market Assessment | July 2015 12 termination fee. Verizon offers a $10 monthly deduction for every month completed in the contract. The Ellipsis JetPack provides a mobile solution with download speeds of 5 Mbps to 12 Mbps and upload speeds of 2 Mbps to 5 Mbps. Prices for the 12 options of data allowances range from $30 per month for a 4 GB data allowance to $335 per month for 50 GB of data, in addition to a monthly line access charge of $20.The device is $0.99 with a two‐year contract. There is a $35 activation fee. 2.4.2 Sprint Sprint offers 4G LTE wireless data in Palo Alto. The three data packages offered range from 100 MB per month data allowance for $15 per month to 6 GB per month data allowance for $50 per month to 12 GB per month data allowance for $80 per month. Each MB over the limits is billed at a cost of $.05. A two‐year contract is required as well as an activation fee of $36, and equipment charges for three different types of devices. There is also an early termination fee of $200. 2.4.3 AT&T AT&T also provides 4G LTE wireless data service in the area, but only offers one package type with a 5 GB per month download allowance for $50 per month. There is an overage fee of $10 per 1 GB over the limit. There are also equipment charges with or without a contract and an activation fee. 2.4.4 Cricket Wireless Cricket Wireless, which recently became a subsidiary of AT&T, offers 4G LTE wireless service in Palo Alto with a download speed of up to 8 Mbps with three options for data allowance packages. Starting at $35 per month for 1 GB of data allowed there are also options for data allowances of 3 GB ($45) and 10 GB ($55).Data used beyond allowances are at reduced speeds. There is a $79.99 modem fee for an additional device. There is a $15 activation fee, but no contract or early termination fees. 2.4.5 T‐Mobile Of the cellular wireless providers in the area, the least expensive wireless data option offered is from T‐Mobile for $20 per month with a limit of 1 GB per month. T‐Mobile offers additional capabilities and increasing data limits at incremental costs in a total of six packages up to $70 per month for up to 11 GB of data. Depending upon current promotions, the $35 activation fee may be waived. CTC Report | City of Palo Alto – Appendix A: Existing Market Assessment | July 2015 13 2.4.6 Etheric Networks Etheric Networks is a wireless internet service provider (WISP) that provides services in Palo Alto for speeds up to 30 Mbps.34 The range of speeds and pricing available are indicated in Table 5. A radio and antenna fee of $299 is also charged during setup and installation. Table 5: Etheric Networks Internet Services PACKAGE INTERNET SPEED PRICE Bronze Up to 5 Mbps download $85/mo Silver Up to 10 Mbps download $99/mo Gold Up to 20 Mbps download $139/mo Platinum up to 25Mbps download $179/mo Diamond up to 30 Mbps download $229/mo 34 http://ethericnetworks.com/residential/. accessed May 2015. Fiber Exterior WAP Equipment Aerohive WAP NW Equip Site #Site name: # sites Address:Monthly Install Mount NIU Monthly WAP Cabling Equipment Totals Proceed with Deployment 2 Cubberley 1 4000 Middlefield Rd. 2,361$ 4,200$ 3,500$ 142$ 8,500$ 16,200$ Theater waiting area 2 47$ 2,800$ 800$ 3,600$ Classrooms A ‐ H8 560$ 33,600$ 24,000$ 57,600$ Artist Studio 1 70$ 4,200$ 3,000$ 7,200$ Dance Studio U1 23$ 1,400$ 400$ 1,800$ 3 Lucie Stern 1 1305 Middlefield Rd. 647$ 2,400$ 6,000$ 8,400$ Children's Theatre Lobby 2 47$ 2,800$ 800$ 3,600$ Courtyard in front of outdoor theatre 2 47$ 2,800$ 800$ 3,600$ 4 & 5 Golf course: Pro Shop & Bay Café 2 1875 Embarcadero Rd. 1,351$ 3,900$ 7,000$ 1,000$ 11,900$ Pro Shop 4 93$ 5,600$ 1,600$ 7,200$ Bay Café 4 93$ 5,600$ 1,600$ 7,200$ 9 Lytton Plaza: entire plaza 1 202 University Ave. 635$ 21,000$ 4,500$ 3,500$ 123$ 1,400$ 400$ 6,000$ 36,800$ Monthly Total 4,994$ 1,245$ 6,239$ Installation Total 31,500$ 4,500$ 14,000$ 60,200$ 33,400$ 21,500$ 165,100$ Assumptions and notes:Notes 1 Each connection contains two new fibers from specified location to CC Level A.WAP ‐ Wireless Access Point ‐ $1400 2 Established government rate applied NIU‐ Network interface Unit ‐ $3500 3 Prevaling Utility construction costs Splice ‐ tap point into existing fiber 4 CPAU Fiber does not perform substructure work 5 Support during business hours only (8‐5) 6 Estimates use existing poles at all locations 7 These estimates are high level "desktop" estimates. Actual fees to be determined by field investigation and contractor bids. Construction Fees Overhead per span is $1,500 Underground is $75/ft. Small splice box in the sidewalk $5,000+ Palo Alto Wi‐Fi sites Installation & Monthly Costs (City Staff Estimates ) EXHIBIT E Utilities Department Version:1.0 Fiber-to-Fiber Premises and Wireless Communication Initiative Page 1 of 1 Date Last Updated February 1, 2017 Fiber Optic Network Rebuild Project Summary FIBER-TO-THE-PREMISES AND WIRELESS COMMUNICATIONS INITIATIVES February 1, 2017 Project Description: The rebuild project will install new aerial duct or substructure (conduit and boxes), in addition to fiber backbone cable to increase capacity for sections of the dark fiber ring that are at or near capacity. This project will allow City of Palo Alto Utilities (“CPAU”) to meet customer requests for services. The project areas primarily cover the Stanford Research Park, Palo Alto Internet Exchange/Equinix at 529 Bryant, and Downtown areas. This project basically “overlays” new fiber over existing fiber routes in the network. Existing fiber will continue to serve City facilities and commercial dark fiber customers. 2016: As a first step, CPAU retained Celerity Integrated Services, Inc. to provide a one-time comprehensive review and audit of the City dark fiber optic network. Celerity completed the review and audit and provided a physical description of the network; documented the number of fiber strands, in addition to conducting an inspection of 90 fiber nodes/cabinets (i.e. network splice points) to identify what is labeled within the individual nodes/cabinets. •CPAU Engineering is currently working with CAD Masters to reconcile the audit data provided by Celerity with various fiber databases, in addition to rebuilding front-end databases to facilitate fiber assignments at the engineering level and to improve network mapping. 2017-2021 Capital Improvement Projects: The budget for the rebuild was reduced by the City Council during the Fiscal Year 2016 budget process. The Fiscal Year 2017 budget reflects this adjustment from $2.4 million to $1.3 million. The rebuild is a CIP charged to “system improvements.” Rebuild Work in Progress o Route from PAIX at 529 Bryant to the Park Boulevard Substation. Substructure work, fiber pulling and cabinet installation are nearing completion. The new fiber installed for the backbone rebuild is 312- count single-mode fiber (2 x 144-count single-mode fiber, plus 24-count single-mode fiber). •Upcoming work scheduled over the next 12 months: o Route from Park Substation to Hansen Substation o Route from Hansen Substation to Stanford Research Park o Additional phases/routes to be determined. Estimated cost is between $500,000 and up to $1,000,000 for substructure work. Approximately another $250,000 for the overhead portion of the work. CPAU crews are performing the equipment installation, cable pulling and terminations. CPAU’s substructure contractor is installing the conduit and boxes. EXHIBIT F