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HomeMy WebLinkAbout2018-08-20 City Council Agenda PacketCity Council 1 MATERIALS RELATED TO AN ITEM ON THIS AGENDA SUBMITTED TO THE CITY COUNCIL AFTER DISTRIBUTION OF THE AGENDA PACKET ARE AVAILABLE FOR PUBLIC INSPECTION IN THE CITY CLERK’S OFFICE AT PALO ALTO CITY HALL, 250 HAMILTON AVE. DURING NORMAL BUSINESS HOURS. Monday, August 20, 2018 Regular Meeting Council Chambers 6:00 PM Council Member Tanaka will participate remotely from Percolata 16F, Maple Plaza, Nanhai Road, Nanshan, Shenzhen 518052, China Agenda posted according to PAMC Section 2.04.070. Supporting materials are available in the Council Chambers on the Thursday 11 days preceding the meeting. PUBLIC COMMENT Members of the public may speak to agendized items; up to three minutes per speaker, to be determined by the presiding officer. If you wish to address the Council on any issue that is on this agenda, please complete a speaker request card located on the table at the entrance to the Council Chambers, and deliver it to the City Clerk prior to discussion of the item. You are not required to give your name on the speaker card in order to speak to the Council, but it is very helpful. Public comment may be addressed to the full City Council via email at City.Council@cityofpaloalto.org. TIME ESTIMATES Time estimates are provided as part of the Council's effort to manage its time at Council meetings. Listed times are estimates only and are subject to change at any time, including while the meeting is in progress. The Council reserves the right to use more or less time on any item, to change the order of items and/or to continue items to another meeting. Particular items may be heard before or after the time estimated on the agenda. This may occur in order to best manage the time at a meeting or to adapt to the participation of the public. To ensure participation in a particular item, we suggest arriving at the beginning of the meeting and remaining until the item is called. HEARINGS REQUIRED BY LAW Applicants and/or appellants may have up to ten minutes at the outset of the public discussion to make their remarks and up to three minutes for concluding remarks after other members of the public have spoken. Call to Order Agenda Changes, Additions and Deletions City Manager Comments 6:00-6:10 PM Oral Communications 6:10-6:30 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 6:30-6:35 PM Items will be voted on in one motion unless removed from the calendar by three Council Members. 1.Approval of Contract Number C18171695 With Kone, Inc. in an Amount Not-to-Exceed $687,760 for the Modernization of the two Elevators Located at the Cowper/Webster, Lot J, Parking Garage, Funded in the Capital Improvement Project PF-18000 REVISED-2 8/17/18 2 August 20, 2018 MATERIALS RELATED TO AN ITEM ON THIS AGENDA SUBMITTED TO THE CITY COUNCIL AFTER DISTRIBUTION OF THE AGENDA PACKET ARE AVAILABLE FOR PUBLIC INSPECTION IN THE CITY CLERK’S OFFICE AT PALO ALTO CITY HALL, 250 HAMILTON AVE. DURING NORMAL BUSINESS HOURS. 2.Approval of Mitigation Measures Minimizing Risk of Wildfires From Overhead Electrical Lines Within the Foothills Area West of Highway 280 3.Policy and Services Committee Recommendation to Accept the Auditor’s Office Quarterly Report as of March 31, 2018 4.Policy and Services Committee Recommendation to Accept the ERP Planning: Information Technology and Data Governance Audit 6.Approval of Amendment Number 5 to the Palo Alto-Stanford Fire Protection Agreement With the Board of Trustees of the Leland Stanford Junior University Extending the Term to June 30, 2018 for an Additional fee of $6,773,624 Action Items Include: Reports of Committees/Commissions, Ordinances and Resolutions, Public Hearings, Reports of Officials, Unfinished Business and Council Matters. 7:30-8:45 PM 7.PUBLIC HEARING/QUASI-JUDICIAL: Consideration of the Appeal of the Planning and Community Environment Director’s Decision to Approve the Architectural Review Application for 620 Emerson Street (17PLN-00331) to Allow Demolition of an Existing Single Story Building and Construction of a new Two-story 4,063 Square Foot Commercial Building for the Expansion of Nobu Restaurant. The Project Includes Replacement of Three On-site Parking Spaces With Five In-lieu Spaces in the Downtown Parking Assessment District. Environmental Assessment: Exempt From the Provisions of the California Environmental Quality Act (CEQA) per Guideline Section 15303 (New Construction) Zoning District: CD-C(GF)(P) (Downtown Commercial) (Continued From June 4, 2018) 8:45-9:30 PM 8.Approval of Agreements Between the City of Palo Alto and the Board of Trustees of the Leland Stanford Junior University: 1) Agreement for Fire Protection Services to Stanford University for the Period July 1, 2018 – June 30, 2023; and 2) Settlement Agreement for Overpayment Claim by Stanford University Regarding Fire Protection Services Adoption of a Resolution Supporting the Objective of the State Water Resources Control Board’s Bay Delta Plan and a Negotiated Voluntary Settlement of Water Issues on the Tuolumne River 5. 6:35-7:30 PM Q&A Q&A Q&A Q&A MEMO 3 August 20, 2018 MATERIALS RELATED TO AN ITEM ON THIS AGENDA SUBMITTED TO THE CITY COUNCIL AFTER DISTRIBUTION OF THE AGENDA PACKET ARE AVAILABLE FOR PUBLIC INSPECTION IN THE CITY CLERK’S OFFICE AT PALO ALTO CITY HALL, 250 HAMILTON AVE. DURING NORMAL BUSINESS HOURS. 9:30-9:45 PM 9.Approval of Employment Agreement With Edward Shikada as City Manager 9:45-10:00 PM 10.Adoption of: (1) a Resolution of Intent; and (2) an Ordinance to Amend the Contract Between the Board of Administration of the California Public Employees’ Retirement System (CalPERS) and the City of Palo Alto to Implement the Share of Employer Contribution in Accordance With Section 20516 of the California Government Code and the Compensation Plan Between the City of Palo Alto and the Management and Professional Personnel and Council Appointees State/Federal Legislation Update/Action Council Member Questions, Comments and Announcements Members of the public may not speak to the item(s) Adjournment AMERICANS WITH DISABILITY ACT (ADA) Persons with disabilities who require auxiliary aids or services in using City facilities, services or programs or who would like information on the City’s compliance with the Americans with Disabilities Act (ADA) of 1990, may contact (650) 329-2550 (Voice) 24 hours in advance. 11.Review and Comment on the Letter Sent to the Santa Clara County Board of Supervisors Regarding the Stanford General Use Plan (GUP) 10:00-11:00 PM 4 August 20, 2018 MATERIALS RELATED TO AN ITEM ON THIS AGENDA SUBMITTED TO THE CITY COUNCIL AFTER DISTRIBUTION OF THE AGENDA PACKET ARE AVAILABLE FOR PUBLIC INSPECTION IN THE CITY CLERK’S OFFICE AT PALO ALTO CITY HALL, 250 HAMILTON AVE. DURING NORMAL BUSINESS HOURS. Additional Information Standing Committee Meetings Finance Committee Meeting Cancellation August 21, 2018 Schedule of Meetings Schedule of Meetings Tentative Agenda Tentative Agenda Public Letters to Council Set 1 City of Palo Alto (ID # 9447) City Council Staff Report Report Type: Consent Calendar Meeting Date: 8/20/2018 City of Palo Alto Page 1 Summary Title: Modernization of the Two Elevators Located at the Cowper/Webster, Lot J, Parking Title: Approval of a Contract With Kone, Inc. in an Amount Not -to-Exceed $687,760 for the Modernization of the two Elevators Located at the Cowper/Webster, Lot J, Parking Garage, Funded in the Capital Improvement Project PF -18000 From: City Manager Lead Department: Public Works Recommendation Staff recommends that Council: 1. Approve and authorize the City Manager or his designee to execute contract C18171695 with Kone, Inc. (Attachment A) in the amount of $687,760 for the modernization of the two elevators in the Cowper/Webster, Lot J, parking garage, funded in the Capital Improvement Program project, Parking Lot J Elevator Modernization (PF-18000); 2. Authorize the City Manager or his designee to negotiate and execute one or more change orders to the contract with Kone, Inc. for related, additional but unforeseen work, which may develop during the project, the total value of which shall not exceed $62,240. Background The Cowper/Webster parking garage was constructed in 1984 and is located at 520 Webster Street. The two traction elevators were installed at that time, and have frequent maintenance issues and repair parts are difficult to find, rendering them inoperative, sometimes for extended periods of time. Entrapments are not City of Palo Alto Page 2 uncommon. Additionally, the elevators neither meet current ADA or fire codes nor are energy efficient. Discussion Project Description The primary scope of this project is modernizing the elevator equipment and controls, updating the cab interiors and bringing the elevators up to ADA and fire code compliance. A detailed scope of work is provided in the attached contract and includes: · replacing controllers, motor drives, and hoist machines; · replacing hoist ropes, rope brakes, and governors; · replacing entrance equipment, door operators, and car wiring; · installing new ADA compliant hall stations and car fixtures; · updating car interiors; and · installing new smoke detectors in each of the elevator lobbies. One elevator will be modernized at a time to lessen the impact on users during the project. Vendor Selection Process Section 2.30.360(j) of Title 2 of the Palo Alto Municipal Code identifies the process that allows the use of Intergovernmental Cooperative Purchasing agreements. Bids for this purchase were obtained through US Communities Government Purchasing Alliance, an approved cooperative group. A request for quotation was sent to Kone, and a quote was received on March 19, 2018. Timeline Pending Council approval of this contract, the project is expected to begin in April 2019 and be complete by December of 2019. Resource Impact Funding for this project is available in Capital Improvement Program project, Parking Lot J Elevator Modernization (PF-18000). Policy Implications This recommendation does not represent any change to existing City policies. City of Palo Alto Page 3 Environmental Review This project is categorically exempt from the provisions of the California Environmental Quality Act (CEQA) under Sections 15301 and 15302 of the CEQA Guidelines as repair, maintenance and alteration of an existing facility and no further environmental review is necessary. Attachments:  Attachment A: C18171695 Kone - Lot J Elevator Moderizaton ClTY OF PALO ALTO CONTRACT NO. C18171695 GENERAL SERVICES AGREEMENT THIS AGREEMENT made and entered into on the 20th day of August, 2018, by and between the CITY OF PALO ALTO, a California chartered municipal corporation ("CITY"), and KONE INC., a California corporation, located at 15021 Wicks Blvd., San Leandro, CA 94577, Telephone Number: (510)351-5141 DIR Number: 1000003806 ("CONTRACTOR"). In consideration of their mutual covenants, the parties hereto agree as follows: 1. SERVICES. CONTRACTOR shall provide or furnish the services (the "Services") described in the Scope of Services, attached at Exhibit A. 2. EXHIBITS. The following exhibits are attached to and made a part of this Agreement: [gi "A" -Scope of Services D "A-1" -On-Call Task Order (Optional) !gj "B" -Schedule of Performance !gj "C" -Schedule of Fees IZI "D" -Insurance Requirements !gj "E" -Performance and/or Payment Bond D "F" -Liquidated Damages (Optional) CONTRACT IS NOT COMPLETE UNLESS ALL INDICATED EXHIBITS ARE AITACHED. 3. TERM. The term of this Agreement is from April 23, 2018 to January 31, 2020 inclusive, subject to the provisions of Sections R and W of the General Terms and Conditions. 4. SCHEDULE OF PERFORMANCE. CONTRACTOR shall complete the Services within the term of this Agreement in a reasonably prompt and timely manner based upon the circumstances and direction communicated to CONTRACTOR, and if applicable, in accordance with the schedule set forth in the Schedule of Performance, attached at Exhibit B. Time is of the essence in this Agreement. 5. COMPENSATION FOR ORIGINAL TERM. CITY shall pay and CONTRACTOR agrees to accept as not-to-exceed compensation for the full performance of the Services and reimbursable expenses, if any: City of Palo Alto General Services Agreement 1 Rev. March 29, 2018 r The total maximum lump sum compensation of OR dollars($ ); r The sum of dollars ($ per hour, not to exceed a total maximum compensation amount of dollars ($ ); OR P A sum calculated in accordance with the fee schedule set forth at Exhibit C, not to exceed a total maximum compensation amount of Six Hundred Eighty-Seven Thousand Seven Hundred Fifty-Nine dollars and Fifty Cents ($687,759.50). CONTRACTOR agrees that it can perform the Services for an amount not to exceed the total maximum compensation set forth above. Any hours worked or services performed by CONTRACTOR for which payment would result in a total exceeding the maximum amount of compensation set forth above for performance of the Services shall be at no cost to CITY. P CITY has set aside the sum of Sixty-Two Thousand Two Hundred Forty dollars ($62,240.00) for Additional Services. CONTRACTOR shall provide Additional Services only by advanced, written authorization from the City Manager or designee. CONTRACTOR, at the CITY's request, shall submit a detailed written proposal including a description of the scope of services, schedule, level of effort, and CONTRACTOR's proposed maximum compensation, including reimbursable expense, for such services. Compensation shall be based on the hourly rates set forth above or in Exhibit C (whichever is applicable), or if such rates are not applicable, a negotiated lump sum. CITY shall not authorize and CONTRACTOR shall not perform any Additional Services for which payment would exceed the amount set forth above for Additional Services. Payment for Additional Services is subject to all requirements and restrictions in this Agreement. 6. COMPENSATION DURING ADDITIONAL TERMS. r CONTRACTOR'S compensation rates for each additional term shall be the same as the original term; OR r CONTRACTOR's compensation rates shall be adjusted effective on the commencement of each Additional Term. The lump sum compensation amount, hourly rates, or fees, whichever is applicable as set forth in section 5 above, shall be adjusted by a percentage equal to the change in the Consumer Price Index for Urban Wage Earners and Clerical Workers for the San Francisco-Oakland-San Jose area, published by the United States Department of Labor Statistics (CPI) which is published most immediately preceding the commencement of the applicable Additional City of Palo Alto General Services Agreement 2 Rev. March 29, 2018 Term, which shall be compared with the CPI published most immediately preceding the commencement date of the then expiring term. Notwithstanding the foregoing, in no event shall CONTRACTOR's compensation rates be increased by an amount exceeding five percent of the rates effective during the immediately preceding term. Any adjustment to CONTRACTOR's compensation rates shall be reflected in a written amendment to this Agreement. 7. CLAIMS PROCEDURE FOR "9204 PUBLIC WORKS PROJECTS". For purposes of this Section 7, a "9204 Public Works Project" means the erection, construction, alteration, repair, or improvement of any public structure, building, road, or other public improvement of any kind. Public Contract Code Section 9204 mandates certain claims procedures for Public Works Projects, which are set forth in "Appendix A Claims for Public Contract Code Section 9204 Public Works Projects". 17 This project is a 9204 Public Works Project and is required to comply with the claims procedures set forth in Appendix A, attached hereto and incorporated herein. OR r This project is not a 9204 Public Works Project. 8. INVOICING. Send all invoices to CITY, Attention: Project Manager. The Project Manager is: Dennis Huebner, Dept.: Public Works Facilities, Telephone: 650-496- 6970. Invoices shall be submitted in arrears for Services performed. Invoices shall not be submitted more frequently than monthly. Invoices shall provide a detailed statement of Services performed during the invoice period and are ' subject to verification by CITY. CITY shall pay the undisputed amount of invoices within 30 days of receipt. GENERAL TERMS AND CONDITIONS A. ACCEPTANCE. CONTRACTOR accepts and agrees to all terms and conditions of this Agreement. This Agreement includes and is limited to the terms and conditions set forth in sections 1 through 8 above, these general terms and conditions and the attached exhibits. B. QUALIFICATIONS. CONTRACTOR represents and warrants that it has the expertise and qualifications to complete the services described in Section 1 of this Agreement, entitled "SERVICES," and that every individual charged with the performance of the services under this Agreement has sufficient skill and City of Palo Alto General Services Agreement 3 Rev. March 29, 2018 experience and is duly licensed or certified, to the extent such licensing or certification is required by law, to perform the Services. CITY expressly relies on CONTRACTOR's representations regarding its skills, knowledge, and certifications. CONTRACTOR shall perform all work in accordance with generally accepted business practices and performance standards of the industry, including all federal, state, and local operation and safety regulations. C. INDEPENDENT CONTRACTOR. It is understood and agreed that in the performance of this Agreement, CONTRACTOR and any person employed by CONTRACTOR shall at all times be considered an independent CONTRACTOR and not an agent or employee of CITY. CONTRACTOR shall be responsible for employing or engaging all persons necessary to complete the work required under this Agreement. D. SUBCONTRACTORS. CONTRACTOR may not use subcontractors to perform any Services under this Agreement unless CONTRACTOR obtains prior written consent of CITY. CONTRACTOR shall be solely responsible for directing the work of approved subcontractors and for any compensation due to subcontractors. E. TAXES AND CHARGES. CONTRACTOR shall be responsible for payment of all taxes, fees, contributions or charges applicable to the conduct of CONTRACTOR's business. F. COMPLJANCE WITH LAWS. CONTRACTOR shall in the performance of the Services comply with all applicable federal, state and local laws, ordinances, regulations, and orders. G. PALO ALTO MINIMUM WAGE ORDINANCE. CONTRACTOR shall comply with all requirements of the Palo Alto Municipal Code Chapter 4.62 (Citywide Minimum Wage), as it may be amended from time to time. In particular, for any employee otherwise entitled to the State minimum wage, who performs at least two (2) hours of work in a calendar week within the geographic boundaries of the City, CONTRACTOR shall pay such employees no less than the minimum wage set forth in Palo Alto Municipal Code section 4.62.030 for each hour worked within the geographic boundaries of the City of Palo Alto. In addition, CONTRACTOR shall post notices regarding the Palo Alto Minimum Wage Ordinance in accordance with Palo Alto Municipal Code section 4.62.060. H. DAMAGE TO PUBLIC OR PRIVATE PROPERTY. CONTRACTOR shall, at its sole expense, repair in kind, or as the City Manager or designee shall direct, any damage to public or private property that occurs in connection with CONTRACTOR's performance of the Services. CITY may decline to approve and may withhold payment in whole or in part to such extent as may be necessary to protect CITY from loss because of defective work not remedied or other damage City of Palo Alto General Services Agreement 4 Rev. March 29, 2018 to the CITY occurring in connection with CONTRACTOR'S performance of the Services. CITY shall submit written documentation in support of such withholding upon CONTRACTOR's request. When the grounds described above are removed, payment shall be made for amounts withheld because of them. I. WARRANTIES. CONTRACTOR expressly warrants that all services provided under this Agreement shall be performed in a professional and workmanlike manner in accordance with generally accepted business practices and performance standards of the industry and the requirements of this Agreement. CONTRACTOR expressly warrants that all materials, goods and equipment provided by CONTRACTOR under this Agreement shall be fit for the particular purpose intended, shall be free from defects, and shall conform to the requirements of this Agreement. CONTRACTOR agrees to promptly replace or correct any material or service not in compliance with these warranties, including incomplete, inaccurate, or defective material or service, at no further cost to CITY. The warranties set forth in this section shall be in effect for a period of one year from completion of the Services and shall survive the completion of the Services or termination of this Agreement. J. MONITORING OF SERVICES. CITY may monitor the Services performed under this Agreement to determine whether CONTRACTOR's work is completed in a satisfactory manner and complies with the provisions of this Agreement. K. CITY'S PROPERTY. Any reports, information, data or other material (including copyright interests) developed, collected, assembled, prepared, or caused to be prepared under this Agreement will become the property of CITY without restriction or limitation upon their use and will not be made available to any individual or organization by CONTRACTOR or its subcontractors, if any, without the prior written approval of the City Manager. l. AUDITS. CONTRACTOR agrees to permit CITY and its authorized representatives to audit, at any reasonable time during the term of this Agreement and for three (3) years from the date of final payment, CONTRACTOR's records pertaining to matters covered by this Agreement. CONTRACTOR agrees to maintain accurate books and records in accordance with generally accepted accounting principles for at least three {3) following the terms of this Agreement. M. NO IMPLIED WAIVER. No payment, partial payment, acceptance, or partial acceptance by CITY shall operate as a waiver on the part of CITY of any of its rights under this Agreement. N. INSURANCE. CONTRACTOR, at its sole cost, shall purchase and maintain in full force during the term of this Agreement, the insurance coverage described at Exhibit D. Insurance must be provided by companies with a Best's Key Rating of City of Palo Alto General Services Agreement 5 Rev. March 29, 2018 A-:VII or higher and which are otherwise acceptable to CITY's Risk Manager. In addition, all policies, endorsements, certificates and/or binders are subject to approval by the Risk Manager as to form and content. CONTRACTOR shall provide an Owners and Contractors Protective Liability policy which lists CITY as the Named Insured. Policy limits shall be at least $2,000,000. CONTRACTOR shall obtain an endorsement stating that the insurance is primary coverage and will not be canceled or materially reduced in coverage or limits until after providing 30 days prior written notice of the cancellation or modification to the Risk Manager. CONTRACTOR shall provide certificates of such policies or other evidence of coverage satisfactory to the Risk Manager, together with the required endorsements, to CITY concurrently with the execution of this Agreement and shall throughout the term of this Agreement provide current certificates evidencing the required insurance coverages and endorsements to the Risk Manager. CONTRACTOR shall include all subcontractors as insured under its policies or shall obtain and provide to CITY separate certificates and endorsements for each subcontractor that meet all the requirements of this section. The procuring of such required policies of insurance shall not operate to limit CONTRACTOR's liability or obligation to indemnify CITY under this Agreement. 0. HOLD HARMLESS. To the fullest extent permitted by law and without limitation by the provisions of section N relating to insurance, CONTRACTOR shall indemnify, defend and hold harmless CITY, its Council members, officers, employees and agents from and against any and all demands, claims, injuries, losses, or liabilities of any nature, including death or injury to any person, property damage or any other loss and including without limitation all damages, penalties, fines and judgments, associated investigation and administrative expenses and defense costs, including, but not limited to reasonable attorney's fees, courts costs and costs of alternative dispute resolution), arising out of, or resulting in any way from or in connection with the performance of this Agreement. CONTRACTOR's obligations under this Section apply regardless of whether or not a liability is caused or contributed to by any negligent (passive or active) act or omission of CITY, except that CONTRACTOR shall not be obligated to indemnify for liability arising from the sole negligence or willful misconduct of CITY. The acceptance of the Services by CITY shall not operate as a waiver of the right of indemnification. The provisions of this Section survive the completion of the Services or termination of this Agreement. 0.1 LIMITATION OF LIABILITY. 0.1 (a) LIMITATION OF LIABILITY OF CONSULTANT. Notwithstanding any other provision of this Agreement, in no event shall CONTRACTOR be liable to CITY, regardless of whether any claim is based on contract or tort, for special, consequential, indirect or incidental damages or for any loss of profit or loss of City of Palo Alto General Services Agreement 6 Rev. March 29, 2018 business by CITY, even if CONTRACTOR has been advised of the possibility of any such potential claim, loss or damage. Except as provided in the immediately following sentence, in no event shall the total aggregate liability under this Agreement of CONTRACTOR to CITY exceed the dollar amount provided for in section S ("not to exceed compensation") of this Agreement. CONTRACTOR's liability limit set forth herein shall not apply to (1} damages caused by CONTRACTOR'S gross negligence or willful misconduct, (2) CONTRACTOR's obligations to indemnify and defend CITY pursuant to section O {"Hold Harmless") of this Agreement, (3} limit claims or general damages that fall within the insurance coverage of this Agreement, (4) statutory damages, and (5) wrongful death caused by CONTRACTOR. 0.1(b) LIMITATION OF LIABILITY OF CITY. CITY'S payment obligations under this Agreement shall be limited to the payment of the compensation provided for in section 5 ("not to exceed compensation") of this Agreement. Notwithstanding any other provision of this Agreement, in no event shall CITY be liable, regardless of whether any claim is based on contract or tort, for any special, consequential, indirect or incidental damages, including, but not limited to, lost profits, arising out of or in connection with this Agreement or the services performed in connection with this Agreement. P. NON-DISCRIMINATION. As set forth in Palo Alto Municipal Code section 2.30.510, CONTRACTOR certifies that in the performance of this Agreement, it shall not discriminate in the employment of any person because of the race, skin color, gender, age, religion, disability, national origin, ancestry, sexual orientation, housing status, marital status, familial status, weight or height of such person. CONTRACTOR acknowledges that it has read and understands the provisions of Section 2.30.510 of the Palo Alto Municipal Code relating to Nondiscrimination Requirements and the penalties for violation thereof, and agrees to meet all requirements of Section 2.30.510 pertaining to nondiscrimination in employment. Q. WORKERS• COMPENSATION. CONTRACTOR, by executing this Agreement, certifies that it is aware of the provisions of the Labor Code of the State of California which require every employer to be insured against liability for workers' compensation or to undertake self-insurance in accordance with the provisions of that Code, and certifies that it will comply with such provisions, as applicable, before commencing and during the performance of the Services. R. TERMINATION. The City Manager may terminate this Agreement without cause by giving ten (10) days' prior written notice thereof to CONTRACTOR. If CONTRACTOR fails to perform any of its material obligations under this Agreement, in addition to all other remedies provided by law, the City Manager may terminate this Agreement immediately upon written notice of termination. City of Palo Alto General Services Agreement 7 Rev. March 29, 2018 Upon receipt of such notice of termination, CONTRACTOR shall immediately discontinue performance. CITY shall pay CONTRACTOR for services satisfactorily performed and proven costs incurred by reason of procurement of materials and/or equipment necessary to perform the Services, up to the effective date of termination. If the termination is for cause, CITY may deduct from such payment the amount of actual· damage, if any, sustained by CITY due to CONTRACTOR's failure to perform its material obligations under this Agreement. Upon termination, CONTRACTOR shall immediately deliver to the City Manager any and all copies of studies, sketches, drawings, computations, and other material or products, whether or not completed, prepared by CONTRACTOR or given to CONTRACTOR, in connection with this Agreement. Such materials shall become the property of CITY. S. ASSIGNMENTS/CHANGES. This Agreement binds the parties and their successors and assigns to all covenants of this Agreement. This Agreement shall not be assigned or transferred without the prior written consent of CITY. No amendments, changes or variations of any kind are authorized without the written consent of CITY. , T. CONFLICT OF INTEREST. In accepting this Agreement, CONTRACTOR covenants that it presently has no interest, and will not acquire any interest, direct or indirect, financial or otherwise, which would conflict in any manner or degree with the performance of this Agreement. CONTRACTOR further covenants that, in the performance of this Agreement, it will not employ any person having such an interest. CONTRACTOR certifies that no CITY officer, employee, or authorized representative has any financial interest in the business of CONTRACTOR and that no person associated with CONTRACTOR has any interest, direct or indirect, which could conflict with the faithful performance of this Agreement. CONTRACTOR agrees to advise CITY if any conflict arises. U. GOVERNING LAW. This Agreement shall be governed and interpreted by the laws of the State of California. V. ENTIRE AGREEMENT. This Agreement, including all exhibits, represents the entire agreement between the parties with respect to the services that may be the subject of this Agreement. Any variance in the exhibits does not affect the validity of the Agreement and the Agreement itself controls over any conflicting provisions in the exhibits. This Agreement supersedes all prior agreements, representations, statements, negotiations and undertakings whether oral or written. W. NON-APPROPRIATION. This Agreement is subject to the fiscal provisions of the Charter of the City of Palo Alto and the Palo Alto Municipal Code. This Agreement will terminate without any penalty (a) at the end of any fiscal year in City of Palo Alto General Services Agreement 8 Rev. March 29, 2018 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. X. ENVIRONMENTALLY PREFERRED PURCHASING ANO ZERO WASTE REQUIREMENTS. CONTRACTOR shall comply with CITY's Environmentally Preferred Purchasing policies which are available at CITY's Purchasing Division, which are incorporated by reference and may be amended from time to time. CONTRACTOR shall comply with waste reduction, reuse, recycling and disposal requirements of CITY's Zero Waste Program. Zero Waste best practices include first minimizing and reducing waste; second, reusing waste and third, recycling or composting waste. In particular, CONTRACTOR shall comply with the following zero waste requirements: • All printed materials provided by CONTRACTOR to CITY generated from a personal computer and printer including but not limited to, proposals, quotes, invoices, reports, and public education materials, shall be double­ 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-<;onsumer material and printed with vegetable based inks. • Goods purchased by Contractor on behalf of CITY shall be purchased in accordance with CITY's Environmental Purchasing Policy including, but not limited to, Extended Producer Responsibility requirements for products and packaging. A copy of this policy is on file at the Purchasing Division's office. • Reusable/returnable pallets shall be taken back by CONTRCATOR, at no additional cost to CITY, for reuse or recycling. CONTRACTOR shall provide documentation from the facility accepting the pallets to verify that pallets are not being disposed. Y. AUTHORITY. The individual(s) executing this Agreement on behalf of the parties represent and warrant that they have the legal capacity and authority to do so on behalf of their respective legal entities. Z. PREVAILING WAGES D This Project is not subject to prevailing wages. CONTRACTOR is not required to pay prevailing wages in the performance and implementation of the Project in accordance with SB 7, if the Agreement is not a public works contract, if Agreement does not include a public works construction project of more than $25,000, or the Agreement does not include a public works alteration, City of Palo Alto General Services Agreement 9 Rev. March 29, 2018 OR demolition, repair, or maintenance (collectively, 'improvement') project of more than $15,000. !gj Contractor is required to pay general prevailing wages as defined in Subchapter 3, Title 8 of the California Code of Regulations and Section 16000 et seq. and Section 1773.1 of the California Labor Code. Pursuant to the provisions of Section 1773 of the labor Code of the State of California, the City Council has obtained the general prevailing rate of per diem wages and the general rate for holiday and overtime work in this locality for each craft, classification, or type of worker needed to execute the Agreement for this Project from the Director of the Department of Industrial Relations ("DIR"}. Copies of these rates may be obtained ·at the Purchasing Division's office of the City of Palo Alto. Contractor shall provide a copy of prevailing wage rates to any staff or subcontractor hired, and shall pay the adopted prevailing wage rates as a minimum. Contractor shall comply with the provisions of all sections, including, but not limited to, Sections 1775, 1776, 1777.5, 1782, 1810, and 1813, of the Labor Code pertaining to prevailing wages. AA.DIR REGISTRATION. In regard to any public work construction, alteration, demolition, repair or maintenance work, CITY will not accept a bid proposal from or enter into this Agreement with CONTRACTOR without proof that CONTRACTOR and its listed subcontractors are registered with the California Department of Industrial Relations ("DIR") to perform public work, subject to limited exceptions. City requires CONTRACTOR and its listed subcontractors to comply with the requirements of SB 854. CITY provides notice to CONTRACTOR of the requirements of California Labor Code section 1771.l(a}, which reads: "A contractor or subcontractor shall not be qualified to bid on, be listed in a bid proposal, subject to the requirements of Section 4104 of the Public Contract Code, or engage in the performance of any contract for public work, as defined in this chapter, unless currently registered and qualified to perform public work pursuant to Section 1725.5. It is not a violation of this section for an unregistered contractor to submit a bid that is authorized by Section 7029.1 of the Business and Professions Code or Section 10164 or 20103.5 of the Public Contract Code, provided the contractor is registered to perform public work pursuant to Section 1725.5 at the time the Agreement is awarded." CITY gives notice to CONTRACTOR and its listed subcontractors that CONTRACTOR is required to post all job site notices prescribed by law or City of Palo Alto General Services Agreement 10 Rev. March 29, 2018 regulation and CONTRACTOR is subject to SB 854-compliance m~nitoring and enforcement by DIR. CITY requires CONTRACTOR and its listed subcontractors to comply with the requirements of Labor Code section 1776, including: Keep accurate payroll records, showing the name, address, social security number, work classification, straight time and overtime hours worked each day and week, and the actual per diem wages paid to each journeyman, apprentice, worker, or other employee employed by, respectively, CONTRACTOR and its listed subcontractors, in connection with the Project. The payroll records shall be verified as true and correct and shall be certified and made available for inspection at all reasonable hours at the principal office of CONTRACTOR and its listed subcontractors, respectively. At the request of CITY, acting by its project manager, CONTRACTOR and its listed subcontractors shall make the certified payroll records available for inspection or furnished upon request to the project manager within ten (10) days of receipt of CITY's request. D [For state-and federally-funded projects) CITY requests CONTRACTOR and its listed subcontractors to submit the certified payroll records to the project manager at the end of each week during the Project. If the certified payroll records are not produced to the project manager within the 10-day period, then CONTRACTOR and its listed subcontractors shall be subject to a penalty of one hundred dollars ($100.00) per calendar day, or portion thereof, for each worker, and CITY shall withhold the sum total of penalties from the progress payment(s) then due and payable to CONTRACTOR. Inform the project manager of the location of CONTRACTOR' s and its listed subcontractors' payroll records (street address, city and county} at the commencement of the Project, and also provide notice to the project manager within five (5) business days of any change of location of those payroll records. BB. CONTRACT TERMS. All unchecked boxes do not apply to th is Agreement. In the case of any conflict between the terms of this Agreement and the exhibits hereto or CONTRACTOR's proposal (if any), the Agreement shall control. In the case of any conflict between the exhibits hereto and CONTRACTOR's proposal, the exhibits shall control. City of Palo Alto General Services Agreement 11 Rev. March 29, 2018 IN WITNESS WHEREOF, the parties hereto have by their duly authorized representatives executed this Agreement on the date first above written. CITY OF PALO AL TO KONE, INC. 151 Officer By _______________ _ City Manager or Designee Name ______________ _ Title _______________ _ Approved as to form: 2"d Officer By _______________ _ City Attorney or Designee Name ______________ _ Title _______________ _ City of Palo Alto General Services Agreement 12 Rev. March 29, 2018 EXHIBIT A SCOPE OF SERVICES CONTRACTOR shall update the two City of Palo Alto's Parking Garage Lot J elevators, located at 520 Webster Street, Palo Alto, CA, with elevator equipment consistent with the specifications and components set forth below: Solution Specification: Modernization (2) Traction Elevators Building Name: Building/ Unit# State# KONE# Rated Load Rated Speed Travel Height # of Floors Scope of work in Summery Machine Room Controllers & Drives Operation Hoist Machines Hoist Ropes Rope Brake Governors Hoist cables Speed Travel & Capacity Seismic Switch Holstway Openings / Stops Sheaves Entrance Equpment Gibs, Astrigals Traveling Cable Hoistway Wiring Cwt Roller Guides Car Frame & Safeties Car Shell & Cwt Buffers Final Limit Switches Leveling Switches Car top Inspection Car Rollers Guides Cab Interiors 520 Webster Garage 01 02 078310 078309 20274198 20274199 2000 2000 350 350 58 58 07 07 New -KONE AC (Regenerative Drive) Retain -Duplex New -HW Basement Geared Elevator New New -Hollister Whitney, Seismic Engineered for New Machine New -Located in Overhead New Retain Retain New Retain Retain New -All Hoistway Doors, Tracks, Headers, Hangers, Rollers, Closers, New New New -Elsco Retain Retain New New New New -Elsco Retain -Alternate Add (Stainless as Lot Q) City of Palo Alto General Services Agreement 13 Rev. March 29, 2018 Fixtures Door Operator Package New -ReNova, Header, Tracks, Hanger, Door, Clutch, Gibs Door Return Light Curtin New Car Wiring New Hall Stations New Car Fixtures New Hoistway Access New Products to be provided In Detail: KONE Controller KONE ReSolve KONE ReSolve is a modular modernization solution for elevator control and electrical systems, based on the latest in control technology. This replaces outdated technology such as relays and older electronic systems, improving the levels of performance, reliability, safety and energy efficiency of your elevator. The modular structure of KONE ReSolve is designed to correctly interface with many types of existing elevator components, thus ensuring a swift, trouble-free installation for the building users. A new microprocessor-based control system shall be provided to perform the functions of safe elevator motion. Included shall be all of the hardware required to connect, transfer and interrupt power, and to protect the motor against overloading. The control for the hoist motor will be by means of a solid-state drive system. The system will be a controlled pulse-width modulated AC vector drive. The variable voltage variable frequency drive will convert the AC power supply using a two-step process to a variable voltage variable frequency power supply for use by the hoist motor. Varying the frequency and voltage of the motor will automatically and continuously control the speed, acceleration and deceleration. The system will be closed loop. Each controller cabinet containing memory equipment shall be properly shielded from line pollution. The microcomputer system shall be designed to accept reprogramming with minimum system down time. All high voltage (110V or above) contact points inside the controller cabinet shall be protected from accidental contact in a situation where the controller doors are open. The microprocessor-based control system shall utilize on-board diagnostics for servicing, trouble-shooting, and adjusting without requiring the use of an outside service tool. City of Palo Alto General Services Agreement 14 Rev. March 29, 2018 New Hoist Machines: (2) New Geared Basement Machines A new geared traction machine shall be provided; designed to meet the service encountered in elevator operation. A properly grooved sheave will be driven through a worm and gear by a moderate speed motor. The sheave wheel will be mounted with heavy antifriction bearings on a rigid shaft, or will be firmly pressed onto a shaft supported by a sleeve or antifriction bearing of ample capacity. The bedplate will be of cast iron or steel in one piece, either separate or integral with the machine frame. The gear housing, brake support and motor support will be mounted on the machine, rigid bedplate or they will be a single casting. This gear case will have gasketed hand holes to permit inspection of worm gear face, worm gear and worm contact, and worm gear mounting bolts. The complete assembly will be arranged to effectively prevent oil leakage from the gear case and worm shaft opening. The machine will be mounted in compact soundproofing units to attenuate the predominated frequency of the elevator system. The sheave and gear spider will be pressed on and keyed to the shaft. The worm gear will have an accurately machined bronze rim or such a composition that it will not show appreciable wear after one year. The worm gear will be securely bolted to the spider. The sheave material will be of hard alloy cast iron, smooth turned grooves and flanges. These sheaves will be tested until proven free from cracks and holes or other imperfections. The worm will be accurately machined in one piece from a solid steel forging or heat treated steel bar stock and be integral with the worm shaft. The worm shaft will be mounted on at least two bearings, one of which will be an oversized double active preloaded ball bearing, or guide bearing. All thrust bearings will be removable without dismantling the machine. The brake will be spring actuated, electrically released of heavy construction and having a proper braking area for the load and speed. The two brake shoes will be spring operated. The springs will have sufficient power to stop and hold the elevator at 125 % of contract load. Hoist cable guards will be installed at the front and rear of each machine. Guards will be installed in such a manner so as to cover all pinch points. City of Palo Alto General Services Agreement 15 Rev. March 29, 201& Door Operators ReNova Door Operator Guides A closed loop permanent magnet PWM high-performance door operator shall be provided to open and close the car and hoistway doors simultaneouslv. • Door movement shall be cushioned at both limits of traveL An electric contact shall be provided on the car at each car entrance to prevent the operation of the elevator unless the car door is closed. • The door operator shall be arranged so that , in case of interruption or failure of electric power, the doors can be readily opened by hand from within the car, in accordance with applicable code. • Doors shall open automatically when the car has arrived at or is leveling at the respective landings. • Door shall close after a predetermined time interval or immediately upon pressing of a car button. • Door-hangers and tracks shall be provided for each car door. • Tracks shall be contoured to match the hanger sheaves . The hangers shall be designed for power operation with provisions for vertical and lateral adjustment. Hanger sheaves shall have polyurethane tires and pre-lubricated sealed-for-life bearinas . New ELSCO Roller Guides shall be provided on the Car & Cwt to reduce vibration and noise. City of Palo Alto General Services Agreement 16 Rev. March 29, 2018 Governor Fixtures Car & Hall ®®© • ._:r:=.. ·-­-------... ----- 00 111111 ao tlO DOGIO a o a o •O- • The car safety will be activated by a new speed governor located overhead, driven by a governor rope suitably connected to the car safety. The governor will be equipped with rope grip jaws designed to clamp the governor rope so as to actuate the car safety upon a predetermined over speed downward. The governor will be set at not less than 115% of specified rated car speed and not more than the maximum governor tripping speed specified in the code for the specified rated car speed. The rope grip jaws must be positively tripped within the permitted range of speed. The governor rope-tripping device will be so designed that no appreciable damage to or deformation of the governor rope will result from the stopping action of the device in operating the car safety. The governor over speed switches will conform to ANSI A17.1 code requirements and be so located and enclosed that excess lubricant will not enter the switch enclosure . Upon activation of the safety switch, the switch will remain in the open position until manually reset. The governor will be accurately adjusted and sealed with tripping speed specified. Date tags indicating the test date will be applied. New Hall & Car Operating Fixtures including Hall Lanterns; Stations; Access Switches; Car Operating Panels; Position Indicators -All serial linked to KONE Resolve Controller • ti CASE~ FflE USE STABNAY FOREXJT 00 t()T USE ELEVATORS. i i II El a IE) City of Palo Alto General Services Agreement 17 Rev. March 29, 2018 Curtain of Light The elevator car shall be equipped with an electronic protective device extending the full height of the car. When activated, this sensor shall prevent the doors from closing or cause them to stop and reopen if they are in the process of closing. The doors shall remain open as long as the flow of traffic continues and shall close shortly after the last person passes through the door opening .. City of Palo Alto General Services Agreement 18 Rev. March 29, 2018 Cab Interiors: Downtime period Cab Interiors Add 1 week per elevator Included: Both Cabs (Installed) SWL Textured Stainless Steel: Interbay Design Quick Cab, 2000# Standard Height Cab: • Provide drawings prior to manufacturing for approval. • Provide three (3) 5WL textured stainless steel true vent base supports. • Provide twelve (12) horizontal 5WL textured stainless steel panels. • Provide SWL textured stainless steel reveals. • Provide three (3) l Yi'' round #4 brushed stainless steel sectional handrails. Handrail ends will be straight except where required by code. • Provide SWL textured stainless steel frieze for three (3) walls. • Provide aluminum pad studs for three (3) walls. Stainless Steel Suspended Ceiling, 2000# Cab: • Provide drawings prior to manufacturing for approval. • Provide a six (6) pan #4 brushed stainless steel suspended ceiling with six (6) Man-D-Tec Solo Beam LED down lights. Lighting transfonner will be equipped with a standard dimmer. City of Palo Alto General Services Agreement 19 Rev. March 29, 2018 Asbestos: Notwithstanding anything to the contrary, KONE's work shall not include any abatement or disturbance of asbestos containing material (ACM) or presumed asbestos containing materials (P ACM). Any work in a regulated area as defined by Section 1910 or 1926 of the Federal OSHA regulations is excluded from KONE's scope of work without an applicable change order to reflect the additional costs and time. In accordance with OSHA requirements, the CITY shall infonn KONE and its employees who will perfonn work activities in areas which contain ACM and/ or P ACM of the presence and location of ACM and /or P ACM in such areas which may be contacted during work before entering the area. Other than as expressly disclosed in writing, CITY warrants that KONE's work area at all times meets applicable OSHA permissible exposure limits (PELs). KONE shall have the right to discontinue its work in any location where suspected ACM or P ACM is encountered or disturbed. Any asbestos removal or abatement, or delays caused by such, required in order for KONE to perfonn its work shall be the CITY's sole responsibility and expense. After any removal or abatement, CITY shall provide documentation that the asbestos has been abated from the KONE work area and air clearance reports shall be made available upon request prior to the start of KONE' s work. Electrical and Fire Alarm Subcontractor: Muscio Electric 901 D Palmetto Ave. Pacifica, CA 94044 Lie. No. C10 309056 ACO 3696 Scope of Work: Provide and install the following electrical and fire alarm work needed for elevator modernization. • Two elevator disconnects with new lockable fused type and aux switch. • Conduit and wire from elevator disconnects to new elevator equipment, with equipment ground wire from distribution panel. • 120V circuits for car lights, machine room, sheave room, and pits • Provide fused lockable switches for 120V devices. • Install new protective lights and GFI outlet in machine room space. • Install new switch, caged lighting fixture, and GFI outlet in elevator pit area. • Telephone wire and conduit to controller. • Replace Fire Alarm System to addressable type. • FA initiating devises for elevator recall including one device at each landing, machine room, and sheave room. City of Palo Alto General Services Agreement 20 Rev. March 29, 2018 • Inspections and pretesting of elevator recall with State inspector and elevator mechanic. • Fire Alarm System drawings, permit, and standing inspections with local AHJ. Surface EMT conduit will be used for above work. Building floor plans to be provided in PDF format. Additional work and/or change orders requested by Owner and/or inspectors will be billed separately. Above work to be performed during normal hours. Exclusions: • Fire alarm speakers and/or phone jacks • Fire alarm work outside of elevator related area. • Relocating existing electrical conduit/devices not related to elevators in elevator areas. City of Palo Alto General Services Agreement 21 Rev. March 29, 2018 EXHIBITB SCHEDULE OF PERFORMANCE CONTRACTOR shall perform the Services so as to complete each task within the time period specified below. The time to complete each task may be increased or decreased by mutual written agreement of the project managers for CONTRACTOR and CITY so long as all work is completed within the term of the Agreement. Upon request CONTRACTOR shall provide a detailed schedule of work consistent with the schedule below. The design and engineering work for the Project shall commence upon execution of the Agreement. Project site work shall start on or before April I, 2019, and Project site work and final inspections shall be complete by December 14, 2019. In the event CONTRACTOR's performance is delayed by an act of the CITY or force majeure, CONTRACTOR shall not be liable for any delay damages, and the performance time shall be adjusted as necessary to reflect the delay. City of Palo Alto General Services Agreement 22 Rev. March 29, 2018 EXHIBITC SCHEDULE OF FEES Compensation based upon task CONTRACTOR shall perform the tasks as described and budgeted below. CITY's Project Manager may approve in writing the transfer of budget amounts between any of the tasks or categories listed below provided the total compensation for the Services including reimbursable expenses, does not exceed the amounts set forth in Sections 5 and 6 of the Agreement. Any services provided or hours worked for which payment would result in a total exceeding the maximum amount of compensation set forth herein shall be at no cost to CITY. DESCRIPTION OFT ASK Base Modernization Cab Interior Capital Electric Bonds Total Sales Price (including tax) NOT TO EXCEED COMPENSATION PER TASK INCLUDING REIMBURSABLE$ $575,000.00 $ 47,355.00 $ 58,595.00 ($ X 10/10%) $6,809.50 $ 687,759.50 Compliance with US Communities Contract 2019 Labor & Margins City of Palo Alto General Services Agreement 23 Rev. March 29, 2018 EXHIBITD INSURANCE REQUIREMENTS CONTRACTORS TO THE CITY OF PALO AL TO (CITY), AT THEIR SOLE EXPENSE, SHALL FOR THE TERM OF THE CONTRACT OBTAIN AND MAINTAIN INSURANCE IN THE AMOUNTS FOR THE COVERAGE SPECIFIED BELOW, AFFORDED BY COMPANIES WITH AM BEST'S KEY RATING OF A-:VII, OR HIGHER, LICENSED OR AUTHORIZED TO TRANSACT INSURANCE BUSINESS IN THE STATE OF CALIFORNIA. AWARD IS CONTINGENT ON COMPLIANCE WITH CITY'S INSURANCE REQUIREMENTS, AS SPECIFIED, BELOW· MINIMUM LIMITS REQUIRED TYPE OF COVERAGE REQUIREMENT EACH YES YES YES YES NO YES 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 Sl,000,000 $1,000,000 PROPERTY DAMAGE BLANKET CONTRACTUAL, AND FIRE LEGAL BODILY INJURY & PROPERTY $1,000,000 $1,000,000 LIABILITY DAMAGE COMBINED. BODJL Y INJURY $1,000,000 $1,000,000 . EACH PERSON $1,000,000 $1,000,000 AUTOMOBILE LIABILITY, . EACH OCCURRENCE $1,000,000 $1,000,000 INCLUDING ALL OWNED, HIRED, PROPERTY DAMAGE $1,000,000 $1,000,000 NON-OWNED BODILY INJURY AND PROPERTY $1,000,000 Sl,000,000 DAMAGE, COMBINED PROFESSIONAL LIABILITY, INCLUDING, ERRORS AND OMISSIONS, MALPRACTICE (WHEN APPLICABLE), AND NEGLIGENT PERFORMANCE ALL DAMAGES Sl,000,000 CONTRACTOR, AT ITS SOLE COST AND EXPENSE, SHALL OBTAIN AND MAINTAIN, IN FULL FORCE AND EFFECT THROUGHOUT THE ENTIRE TERM OF ANY RESULT ANT AGREEMENT, THE INSURANCE COVERAGE HEREIN DESCRIBED. I. INSURANCE COVERAGE MUST rNCLUDE: A. A PROVISION FOR A WRITTEN THIRTY DAY ADVANCE NOTICE TO CITY OF CHANGE IN COVERAGE OR OF COVERAGE CANCELLATION; AND 8. 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. Ill. ENDORSEMENT PROVISIONS, WITH RESPECT TO THE INSURANCE AFFORDED TO "ADDITIONAL INSUREDS" City of Palo Alto General Services Agreement 24 Rev. March 29, 2018 A. PRIMARY COVERAGE WITH RESPECT TO CLAIMS ARISlNG OUT OF THE OPERATIONS OF THE NAMED lNSURED, INSURANCE AS AFFORDED BY THIS POLICY IS PRIMARY AND IS NOT ADDITIONAL TO OR CONTRIBUTING WITH ANY OTHER INSURANCE CARRIED BY OR FOR THE BENEFIT OF THE ADDITIONAL INSUREDS. B. CROSS LIABILITY THE NAMING OF MORE THAN ONE PERSON, FIRM, OR CORPORATION AS INSUREDS UNDER THE POLICY SHALL NOT, FOR THAT REASON ALONE, EXTINGUISH ANY RIGHTS OF THE lNSURED 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 I. lF THE POLICY IS CANCELED BEFORE ITS EXPIRATION DATE FOR ANY REASON OTHER THAN THE NON-PAYMENT OF PREMIUM, THE ISSUING COMPANY SHALL PROVIDE CITY AT LEAST A THIRTY (30) DAY WRITTEN NOTICE BEFORE THE EFFECTIVE DATE OF CANCELLATION. 2. IF THE POLICY IS CANCELED BEFORE ITS EXPIRATION DATE FOR THE NON­ PAYMENT OF PREMIUM, THE ISSUING COMPANY SHALL PROVIDE CITY AT LEAST A TEN (10) DAY WRITTEN NOTICE BEFORE THE EFFECTIVE DATE OF CANCELLATION. NOTICES SHALL BE MAILED TO: PURCHASING AND CONTRACT ADMINISTRATION CITY OF PALO ALTO P.O. BOX 10250 PALO ALTO, CA 94303 City of Palo Alto General Services Agreement 25 Rev. March 29, 2018 EXHIBITE BONDS [BOND FORMS ARE REQUIRED] City of Palo Alto General Services Agreement 26 Rev. March 29, 2018 , City of Palo Alto General Services Agreement 27 Rev. March 29, 2018 Appendix A: Claims for Public Contract Code Section 9204 Public Works Projects The provisions of this this Appendix are provided in compliance with Public Contract Code Section 9204; they provide the exclusive procedures for any claims related to the Services performed under this Agreement. 1. Claim Definition. "Claim" means a separate demand by the Contractor sent by registered mail or certified mail with return receipt requested, for one or more of the following: 2. {A} A time extension, including, without limitation, for relief from damages or penalties for delay assessed by the City. (B) Payment by the City of money or damages arising from the Services performed by, or on behalf of, the Contractor pursuant to the Agreement and payment for which is not otherwise expressly provided or to which the Contractor is not otherwise entitled. (C) Payment of an amount that is disputed by the City. Claim Process. (A) Timing. Any Claim must be submitted to City in compliance with the requirements of this Appendix no later than fourteen {14) days following the event or occurrence giving rise to the Claim. This time requirement is mandatory; failure to submit a Claim within fourteen (14) days will result in its being deemed waived. (8) Submission. The Claim must be submitted to City in writing, clearly identified as a "Claim" submitted pursuant to this Appendix, and must include reasonable documentation substantiating the Claim. The Claim must clearly identify and describe the dispute, including relevant references to applicable portions of the Agreement, and a chronology of relevant events. Any Claim for additional payment must include a complete, itemized breakdown of all labor, materials, taxes, insurance, and subcontract, or other costs. Substantiating documentation such as payroll records, receipts, invoices, or the like, must be submitted in support of each claimed cost. Any Claim for an extension of time or delay costs must be substantiated with schedule analysis and narrative depicting and explaining claimed time impacts. (C) Review. Upon receipt of a Claim in compliance with this Appendix, the City shall conduct a reasonable review of the Claim and, within a period not to exceed 45 days from receipt, shall provide the Contractor a written statement identifying what portion of the Claim is disputed and what portion is undisputed. Upon receipt of a Claim, the City and Contractor may, by mutual agreement, extend the time period provided in this paragraph 2. (D) If City Council Approval Required. If the City needs approval from the City Council to provide the Contractor a written statement identifying the disputed portion and the undisputed portion of the Claim, and the City Council does not meet within the 45 days or within the mutually agreed to extension of time following receipt of a Claim sent by registered mail or certified mail, return receipt requested, the City shall have up to three days following the next duly publicly noticed meeting of the City Council after the 45-day period, or extension, expires to provide the Contractor a written statement identifying the disputed portion and the undisputed portion. Appendix for General Services Agmt 1 February 8, 2017 (E) Payment. Any payment due on an undisputed portion of the Claim shall be processed and made within 60 days after the City issues its written statement. If the City fails to issue a written statement, paragraph 3, below, shall apply. 3. Disputed Claims (A) Meet and Confer. If the Contractor disputes the City's written response, or if the City fails to respond to a Claim submitted pursuant to this Appendix within the time prescribed, the Contractor may demand in writing an informal conference to meet and confer for settlement of the issues in dispute. Upon receipt of a demand in writing sent by registered mail or certified mail, return receipt requested, the City shall schedule a meet and confer conference within 30 days for settlement of the dispute. Within 10 business days following the conclusion of the meet and confer conference, if the Claim or any portion of the Claim remains in dispute, the City shall provide the Contractor a written statement identifying the portion of the Claim that remains in dispute and the portion that is undisputed. Any payment due on an undisputed portion of the Claim shall be processed and made within 60 days after the City issues its written statement. {B) Mediation. Any remaining disputed portion of the Claim, as identified by the Contractor in writing, shall be submitted to nonbinding mediation, with the City and the Contractor sharing the associated costs equally. The City and Contractor shall mutually agree to a mediator within 10 business days after the disputed portion of the Claim has been identified in writing by the Contractor. If the parties cannot agree upon a mediator, each party shall select a mediator and those mediators shall select a qualified neutral third party to mediate the disputed portion of the Claim. Each party shall bear the fees and costs charged by its respective mediator in connection with the selection of the neutral mediator. If mediation is unsuccessful, the parts of the Claim remaining in dispute shall be subject to any other remedies authorized by the Agreement and laws. (i} For purposes of this paragraph 3.8, mediation includes any nonbinding process, including, but not limited to, neutral evaluation or a dispute review board, in which an independent third party or board assists the parties in dispute resolution through negotiation or by issuance of an evaluation. Any mediation utilized shall conform to the timeframes in this section. {ii) Unless otherwise agreed to by the City and the Contractor in writing, the mediation conducted pursuant to this section shall excuse any further obligation, if any, under Public Contract Code Section 20104.4 to mediate after litigation has been commenced. 4. Cit'/s Failure to Respond. Failure by the City to respond to a Claim from the Contractor within the time periods described in this Appendix or to otherwise meet the time requirements of this Appendix shall result in the Claim being deemed rejected in its entirety. A Claim that is denied by reason of the City's failure to have responded to a Claim, or its failure to otherwise meet the time requirements of this Appendix, shall not constitute an adverse finding with regard to the merits of the Claim or the responsibility or qualifications of the Contractor. 5. Interest. Amounts not paid in a timely manner as required by this section shall bear interest at seven (7) percent per annum. 6. Approved Subcontractor Claims. If an approved subcontractor or a lower tier subcontractor lacks legal standing to assert a Claim against the City because privity of contract does not exist, the Contractor may present to the City a Claim on behalf of a subcontractor or lower tier subcontractor. A subcontractor may request in writing, either on his or her own behalf or on behalf of a lower tier Appendix for General Services Agmt 2 February 8, 2017 subcontractor, that the Contractor present a Claim for work which was performed by the subcontractor or by a lower tier subcontractor on beha If of the subcontractor. The subcontractor requesting that the Claim be presented to the City shall furnish reasonable documentation to support the Claim. Within 45 days of receipt of this written request, the Contractor shall notify the subcontractor in writing as to whether the Contractor presented the claim to the City and, if the Contractor did not present the claim, provide the subcontractor with a statement of the reasons for not having done so. 7. Waiver of Provisions. A waiver of the rights granted by Public Contract Code Section 9204 is void and contrary to public policy, provided, however, that (1) upon receipt of a Claim, the parties may mutually agree to waive, in writing, mediation and proceed directly to the commencement of a civil action or binding arbitration, as applicable; and (2) the City may prescribe reasonable change order, claim, and dispute resolution procedures and requirements in addition to the provisions of Public Contract Code Section 9204, so long as the contractual provisions do not conflict with or otherwise impair the timeframes and procedures set forth in this section. AppendiJ< for General Services Agmt 3 Februarv 8, 2017 City of Palo Alto (ID # 9442) City Council Staff Report Report Type: Consent Calendar Meeting Date: 8/20/2018 City of Palo Alto Page 1 Summary Title: Determination of potential risk of wildfires cause by electric lines Title: Approval of Mitigation Measures Minimizing Risk of Wildfires From Overhead Electrical Lines Within the Foothills Area West of Highway 280 From: City Manager Lead Department: Utilities Recommendation Staff recommends, pursuant to a 2017 state law related to electric utilities and wildfires, that Council take the following actions: 1. Determine that the area within City limits west of Highway 280 is at significant risk of catastrophic wildfire resulting from electric lines, and 2. Approve mitigation measures presented in this report which the City’s Public Works and Utilities Departments will undertake to minimize the risk of overhead electric lines causing wildfires. Discussion In 2017, a new law1 mandated that the governing boards of local publicly owned electric utilities make a determination regarding wildfires risk in certain geographic areas. Specifically, governing bodies are to determine whether any portion of an area within its jurisdiction has a “significant risk of catastrophic wildfire” resulting from the utility’s electrical lines and equipment. This determination is to be made based on historical fire data and local conditions and in consultation with entities responsible for controlling wildfires, such as fire departments. The timing of the new law works well with current staff efforts. For many months, Utilities staff has worked with stakeholders, including various City Departments such as Fire and Public Works as well as state agencies, on a statewide effort to map all areas in California considered an elevated fire risk. This effort first began years ago by the State’s firefighting agency, and initially identified areas with an elevated hazard for fast spreading fire due to strong winds, abundant dry vegetation, and other environmental conditions. As part of the State’s mandated project to update the California fire map, 1 Public Utilities Code 8387, created from SB 1028 (Hill). The law also requires investor-owned electric utilities to make the same determination and approve mitigation plans for affected areas. City of Palo Alto Page 2 local utilities assisted in developing territory-specific maps for incorporation into the larger statewide map. While the State’s goal for this project was to produce an updated fire map of California, City staff also used the data to produce our own local assessment. Through analysis developed for the State project as well as Palo Alto-specific historical data, fire and fuel models, vegetation management practices, and with assistance from a company experienced in fire science, Utilities staff determined that the area west of Highway 280 meets the definition of an area at significant risk of catastrophic wildfire resulting from contact with overhead electrical lines and equipment.2 This area is generally known as the Foothills and is shown in the visual here as the area to the left of the orange line (Highway 280), outlined in black. Therefore, to meet the new legal requirement of a formal Council determination and as a result of months of collaborative work assessing wildfire risks, staff recommends that Council determine the following: The area of Palo Alto west of Highway 280 is at significant risk of catastrophic wildfire resulting from our electric utility’s electrical lines and equipment. Once a determination is made, the law mandates a second step: Council approval of mitigation efforts 2 This area is also the only area within Palo Alto that met the State’s threshold of a “high fire threat area” fo r map inclusion. City of Palo Alto Page 3 that the electric Utility “intends to undertake to minimize the risk of its overhead electrical lines and equipment causing a catastrophic wildfire.” Council may determine how often it receives a report of such measures. City staff began preparing general Foothill wildfire mitigation efforts years ago. For example, the City prepares a Foothills Fire Mitigation Plan3 and Fire Department staff held a Wildland Training Drill in Foothill Park in June 2017. Indeed, the City has known for years that the area west of Highway 280 is a particularly fire-prone area, and has prepared for such events. The following is a list of the mitigation measures in effect now, as well as two measures under investigation for implementation if needed: 1. Public Works Urban Forestry staff will trim trees to increase the minimum clearance areas between vegetation and power lines from 18 inches to 48 inches. The minimum trimming requirement will also increase from 4 feet to 12 feet. 2. Utilities staff will increase the frequency of inspection of overhead electric facilities from once every two years to once per year. 3. Utilities staff will ensure the protection equipment on the distribution system is sufficient. 4. Utilities staff will investigate additional measures such as adding extra insulation on wires where trees might touch and changing the configuration of how electric wires attach to poles. 5. And in the near future, Utilities staff will examine criteria for shut-off of power under specific criteria, such as high wind and fire warnings. Full implementation of all of the above efforts is expected by June 2019, with the exception of one measure already taken: elimination of the automatic reclosing operation in the Foothills. A recloser is a switch that shuts power off when it detects a problem on electric lines. It then automatically tests the line to determine if the trouble is resolved, and if so, restores power. By eliminating the automatic restoration function to the most fire-prone area of the City, staff is able to first inspect and ensure the risk of fire is fully reduced before manually restoring power to the lines. It should be noted that the increased vegetation clearances are an extremely important aspect of the mitigation efforts. Trees touching electric lines are the determined cause of four of last year’s California fires, underscoring the importance of proper vegetation management.4 The City understands this specific risk, and is taking ameliorative steps now. To fulfill the second portion of the new law, staff recommends Council approve the above mitigation measures, and direct staff to again seek Council acceptance whenever such efforts are significantly modified. Resource Impact There is no resource impact associated with this legally required action, in that no specific activities will begin as a result of Council’s determination. Any needed action has already begun. Environmental Review The Council’s adoption of this item is not a project requiring California Environmental Quality Act review, because it is an administrative governmental activity which will not cause a direct or indirect physical change in the environment. 3 Council adopted this Plan on October 26, 2009 (CMR 326:09). The Plan was last updated in 2016. 4 See the CAL FIRE press release of May 25, 2018 CITY OF PALO ALTO OFFICE OF THE CITY AUDITOR August 20, 2018 The Honorable City Council Palo Alto, California Policy and Services Committee Recommendation to Accept the Auditor’s Office Quarterly Report as of March 31, 2018 The Office of the City Auditor recommends acceptance of the Auditor’s Office Quarterly Report as of March 31, 2018. At its meeting on June 21, 2018, the Policy and Services Committee approved and unanimously recommended that the City Council accept the report. The City Auditor’s report to the Policy and Services Committee and the transcript minutes are available on the City’s Policy and Services Committee website. Respectfully submitted, Harriet Richardson City Auditor ATTACHMENTS:  Attachment A: Auditor's Office Quarterly Report as of March 31, 2018 (PDF) Department Head: Harriet Richardson, City Auditor Page 2       Quarterly Report as of March 31, 2018    Office of the City Auditor  “Promoting honest, efficient, effective, economical, and fully  accountable and transparent city government.”      Attachment A PAGE 2  Fiscal Year (FY) 2018 Third Quarter Update (January – March 2018)  Overview  The audit function is essential to the City of Palo Alto’s public accountability. The mission of the Office of the City Auditor,  as mandated by the City Charter and Municipal Code, is to promote honest, efficient, effective, economical, and fully  accountable and transparent city government. We conduct performance audits and reviews to provide the City Council  and City management with information and evaluations regarding how effectively and efficiently resources are used; the  adequacy of internal control systems; and compliance with policies, procedures, and regulatory requirements. Taking  appropriate action on our audit recommendations helps the City reduce risks and protect its good reputation.  Activity Highlights  Engaged our consultant, MuniServices, to conduct a study session for the City Council on March 26, 2018, regarding sales taxes and their trends. City Auditor Harriet Richardson accepted an invitation and went to Ohlone Elementary School to give a presentation on the activities and responsibilities of the Office of the City Auditor as part of the students’ “Volcanic City” project for learning how the City of Palo Alto operates. Received notification from the Association of Local Government Auditors that our audit, Accuracy of Utility Meter Billing, will receive a Distinguished Audit Award at the May 2018 annual conference. Audit and Project Work  Below is a summary of our audit and project work for the third quarter of FY 2018:  Title Objective(s) Start  Date  End  Date  Status Results/Comments  Enterprise  Resource  Planning (ERP)  Planning Audit:  Data and System  Governance and  Security  Evaluate the adequacy of data and  system governance and security in the  current SAP system and make  recommendations to ensure that  identified deficiencies are corrected for  the new ERP system.  05/17 06/18 In Process The audit is in the report  writing phase, and we expect  to complete the audit in mid‐ 2018.  ERP Planning  Audit: Data  Reliability and  Integrity  Evaluate the integrity and reliability of  data in the current SAP system and  make recommendations to ensure that  identified deficiencies are corrected  prior to transferring data to the new  ERP system.  05/17 06/18 In Process This will be a series of reports  that focus on different aspects  of data reliability or specific  data sets. Our first two audits  are data standardization and  the human resources/ payroll  data set. These audits are  currently in the report writing  phase, and we expect to  complete them by mid‐ 2018,  with more audits to follow.  ERP Planning  Audit: Separation  of Duties  Evaluate the adequacy of separation of  duties for various activities in the  current SAP system and make  recommendations to ensure that  identified deficiencies are corrected for  the new ERP system.  05/17 06/18 In Process The audit is in the report  writing phase, and we expect  to complete in mid‐ 2018.  Attachment A PAGE 3  Title Objective(s) Start  Date  End  Date  Status Results/Comments  Code  Enforcement  Audit  Evaluate the timeliness and  effectiveness of code enforcement  actions, the effectiveness of  communication with the public, and the  accuracy and completeness of code  enforcement case tracking for decision  making purposes. We conducted a  resident survey to help inform our audit  recommendations, as described below.  05/17 06/18 In Process The audit is in the report  writing phase. We expect to  complete the audit in mid‐  2018.  Mobile Device  Inventory and  Security  Determine if the City accurately  inventories and securely manages city‐ owned mobile devices, including  laptops, tablets, cell/smart phones, and  radios.  03/18 10/18 In Process The audit is in the planning  phase. We expect to complete  the audit in late 2018.  Business Registry Evaluate the rules and processes used  to establish the business registry and  make recommendations to help clean  up the data and ensure accuracy in the  future.  02/18 06/18 In Process The audit is in the report  writing phase. We expect to  complete the report in mid‐  2018.  ERP Nonaudit  Service  Provide advisory services to the  Department of Information Technology  regarding its planning of a new ERP  system.  09/16  Ongoing We attended 13 tactical team  meetings during the third  quarter of FY 2018 and  provided verbal and written  advice based on our technical  expertise and best practice  information readily available  to us. Our interaction with the  tactical team was limited due  to their participation in vendor  demonstrations and other due  diligence activities. We did not  issue a memo this quarter  because the fundamental  issues we communicated in  our previous memos continue  to be our main concerns.  Custom Citizen  Survey  Conduct a citizen survey, separate from  the annual National Citizen Survey™, to  obtain resident opinions about code  enforcement activities and the built  environment.  06/17 01/18 Completed The National Research Center  mailed the survey to 3,000  residents. We compiled the  results into a report and  presented them at the annual  Council retreat on February 3,  2018.  Attachment A PAGE 4  Title Objective(s) Start  Date  End  Date  Status Results/Comments  National Citizen  Survey™  Obtain resident opinions about the  community and services provided by  the City of Palo Alto and benchmark  our results against other jurisdictions.  06/17 01/18 Completed The National Research Center  has mailed the survey to 3,000  residents. We received the  results, did some analysis of  the results, and prepared an  executive summary. We  presented the results at the  annual Council retreat on  February 3, 2018. We are  currently reviewing the  questions to identify ones that  can be deleted in the 2018  survey to potentially increase  the response rate.  Annual  Performance  Report  Provides citywide information for key  areas, including spending, staffing,  workload, and performance  08/17 01/18 Completed Departments provided data,  which we compiled into the  annual report and presented  at the annual Council retreat  on February 3, 2018.  Citizen Centric  Report  Provides City and community  information, performance results, and  summary revenue and expenditure  data in an easy‐to‐ready four‐page  format.  12/17 01/18 Completed We collected and compiled  data into the report, which we  presented at the annual  Council retreat on February 3,  2018.    Other Monitoring and Administrative Assignments  Below is a summary of other assignments as of March 31, 2018:  Title Objective(s) Status Results/Comments  City Auditor  Advisory Roles  Provide guidance and advice to  key governance committees  within the City.  Ongoing The City Auditor serves as an advisor to the Utilities Risk  Oversight Committee and Information Security Steering  Committee. We are also serving as an advisor for the  strategic and technical planning groups for planning the  new ERP system (see comment in the Audit and Project  Work section above).  Attachment A PAGE 5  Title Objective(s) Status Results/Comments  Sales and Use  Tax Allocation  Reviews  1) Identify businesses that do  business in Palo Alto that may  have underreported or misallo‐ cated their sales and use tax and  submit inquiries to the state for  review and tax reallocation.  2) Monitor sales taxes received  from the Stanford University  Medical Center Project and  notify Stanford of any differences  between their reported taxes  and state sales tax information,  in accordance with the  development agreement.  3) Provide Quarterly Status  Updates and Sales Tax Digest  Summaries for Council review.  Ongoing 1) Total sales and use tax recoveries for the third quarter  of FY 2018 were $0 from our inquiries and $41,592 from  the vendor’s inquiries, for a total of $41,592 for the  quarter and $313,120 for the fiscal year‐to‐date. Due to  processing delays at the State Board of Equalization, 39  potential misallocations are waiting to be researched and  processed: 15 from our office and 24 from the vendor.  2) We receive calendar‐year sales tax information for the  Stanford Medicine development project about six months  after the end of the calendar year. We will report the  2017 sales tax information for this project in our June  2018 quarterly report. The City has received $2,896,941  for calendar years 2011 through 2016 as a result of this  agreement.  3) Quarterly sales tax reports are published on the Office  of the City Auditor website at  www.cityofpaloalto.org/gov/depts/aud/reports/default.asp.    Status of Audit Recommendations  Sixty‐four recommendations were open at the beginning of the third quarter of FY 2018, and 11 were closed. One status  report that was due in the third quarter of FY 2018 is scheduled to be presented to the Policy and Services Committee in  June 2018, but we have already verified the implementation of two recommendations for that audit. One status report  is past due, and five other status reports are due during the fourth quarter of FY 2018. Below is a summary of the open  audit recommendations as of March 31, 2018:  Audit Title and  Report Date  Due Date and  Prior Status  Report Dates  Total  Recommendations/  Number Open Summary of Open Recommendations  Citywide Cash  Handling and Travel  Expense  Issued 09/15/10  Due – 09/18  03/21/18  08/22/17  11/10/15  09/23/14  09/10/13  10/22/12  04/19/11  Recommendations: 11  Open: 1  Implemented during  quarter: 0  Review practice of reimbursing employee meals when  not in a travel status and report the amounts as income  to employees to conform to Internal Revenue Service  requirements (ASD)  Inventory  Management  Issued 02/18/14  Due – 05/18  11/02/17  09/23/14  Recommendations: 14  Open: 4  Implemented during  quarter: 0   Implement City’s inventory management policies and  procedures (ASD/UTL/PWD/IT)   Update and enforce inventory count policies and  procedures to ensure consistent and accurate  inventory records (ASD)   Identify, formalize, and communicate inventory  management goals and objectives to City  departments (ASD)   Ensure staff identify and use key SAP inventory  management reports and appropriately configure and  update SAP parameters that affect inventory levels  (ASD/IT)  Attachment A PAGE 6  Audit Title and  Report Date  Due Date and  Prior Status  Report Dates  Total  Recommendations/  Number Open Summary of Open Recommendations  Utility Meters:  Procurement,  Inventory, and  Retirement  Issued 03/10/15  Due – 05/18  11/02/17  Recommendations: 15  Open: 1  Implemented during  quarter: 0   Correct purchase order documents to accurately  reflect engineering specifications (ASD)  NOTE: Two recommendations were closed because they  were deemed to be no longer relevant.  Parking Funds  Issued 12/15/15  Due – 05/18  11/14/17  Recommendations: 8  Open: 3  Implemented during  quarter: 0   Develop policies and procedures to clarify roles and  responsibilities and ensure accurate calculation and  reporting of parking‐in‐lieu fees (PCE, ASD, PWD, CLK)   Establish policies and procedures to clarify roles and  responsibilities for parking programs and parking  permit funds (ASD/PCE/PWD/POL)   Identify financial and performance data required for  effective evaluation of parking program  (PCE/ASD/POL)  Disability Rates and  Workers’  Compensation  Issued 05/10/16  Due – 08/18  02/13/18  Recommendations: 15  Open: 8  Implemented during  quarter: 7   Update the safety manual/supplemental tools (HR)   Review departmental procedures and safety  requirements to ensure they align with citywide  policies and procedures (HR)   Identify and provide industry‐specific ergonomics and  general wellness training opportunities (HR)   Address the disability leave benefits incorrectly  reported as compensation to CalPERS (HR)   Review claims that had differences in additional city  benefits and correct any errors identified (HR)   Determine optimal structure, update tools and  procedures, and allocate sufficient and skilled  resources to ensure accuracy of benefit eligibility and  work status of injured employees (HR)   Ensure that data for managing disability leave is  accurately captured through SAP time reporting (HR)   Identify useful performance measures and establish  procedures to ensure reliable reporting (HR)  Attachment A PAGE 7  Audit Title and  Report Date  Due Date and  Prior Status  Report Dates  Total  Recommendations/  Number Open Summary of Open Recommendations  Cable Franchise and  Public, Education,  and Government  (PEG) Fees  Issued 06/14/16  Due – 09/18  03/21/18  08/22/17  Recommendations: 9  Open: 6  Implemented during  quarter: 0   Assess ongoing need for PEG fees; place fees in  restricted account until decisions are made about use  of fees (CMO/ATTY/ASD/IT)   Determine whether to allocate unrestricted funds,  instead of PEG fees, to subsidize the Media Center’s  operations. (CMO/ATTY/ASD/IT)   Send letters to cable companies to demand payment  of underpaid franchise and PEG fees  (CMO/ATTY/ASD/IT)   Develop criteria for assessing the accuracy of future  cable franchise and PEG fee payments and require  more detail with payment remittances (ASD)   Assign responsibility for the cable communications  program and provide effective oversight of the  program (CMO/CLK)   Draft an ordinance to update the Palo Alto Municipal  Code based on clarified assignment of responsibility  (CMO/ASD/ATTY/CLK)  Community Services  Department (CSD):  Fee Schedule Audit  Issued 02/14/17  Due – 05/18  11/14/17  Recommendations: 3  Open: 2  Implemented during  quarter: 0   Revise City’s cost recovery policy to align with  relevant laws and reconfigure the Questica budget  system to support fees that recover more than  100 percent of costs (ASD)   Configure SAP or the new ERP system to align cost  centers with CSD programs (CSD)  Continuous  Monitoring:  Payments  Issued 04/13/17  Due – 09/18  03/21/18  Recommendations: 7  Open: 5  Implemented during  quarter: 2   Build a continuous monitoring process into the new  ERP system to identify potential duplicate invoices  and seek recovery of duplicate payments (ASD)   Update invoice processing policies and procedures to  facilitate identification of duplicate payments (ASD)   Update policies and procedures to clarify guidance for  creation of vendor master records and develop  standardized coding vendor records (ASD)   Build a continuous monitoring process into the new  ERP system to identify duplicate, incomplete, or  unused vendor records (ASD)   Clean vendor master file before merging data into  new ERP system (ASD)  Attachment A PAGE 8  Audit Title and  Report Date  Due Date and  Prior Status  Report Dates  Total  Recommendations/  Number Open Summary of Open Recommendations  Green Purchasing  Practices  Issued 04/13/17  Scheduled for  06/18  None  Recommendations: 8  Open: 6  Implemented during  quarter: 2   Clearly define department(s) responsible for  implementing green purchasing policies and  determine if additional staffing and funding are  needed to implement the policies (ASD/CMO)   Develop consolidated procedures to implement green  purchasing policies (CMO/ASD/PWD)   Educate City staff on green purchasing policies (ASD)   Evaluate if new e‐procurement system or other  technology solution can help with tracking and  reporting green purchases and establish appropriate  green purchasing performance measures (ASD/PWD)   Require vendors to provide data on amounts of green  products and services that City purchases from them  (ASD/PWD)  Utilities  Department: Cross  Bore Inspection  Contract  Issued 06/01/17  Past Due  None  Recommendations: 4  Open: 4  Implemented during  quarter: 0   Prioritize uninspected sewer pipelines for inspection  and disclose potential inspection challenges in future  contract solicitations (UTL)   Identify and update missing data in laterals database  (UTL)   Incorporate relevant provisions from National  Association of Sewer Service Companies’ contract  template in future sewer inspection contracts (UTL)   Identify gaps in staff expertise and develop a training  and certification plan for field staff who will monitor  field inspections (UTL)  Attachment A PAGE 9  Audit Title and  Report Date  Due Date and  Prior Status  Report Dates  Total  Recommendations/  Number Open Summary of Open Recommendations  Accuracy of Water  Meter Billing  Issued 08/16/17  Due – 05/18  None  Recommendations: 11  Open: 11  Implemented during  quarter: 0   Correct billing errors identified (UTL)   Investigate 123 other meter records with  discrepancies and correct as necessary (UTL)   Review and correct meter records for meters larger  than 2 inches (UTL)   Explore options for addressing equity in meter size  rates (UTL)   Until new ERP system is implemented, implement a  temporary monitoring or reporting system to identify  and correct discrepancies that may result in billing  errors and ensure new ERP system has controls to  prevent and identify such discrepancies (UTL)   Develop a policy and procedures to report significant,  systemic infrastructure changes to Council and  update City of Palo Alto Utilities’ (CPAU) Rules and  Regulations as needed (UTL)   Seek direction from Council before proceeding with  installing additional electronic meters (UTL)   Determine if installed eMeters should be replaced  and if billing adjustments are required (UTL)   Clarify purchasing policy and procedures for product  standardization and sole source (ASD)   Retrain staff on purchasing policies and procedures  and completion of required forms (ASD)   Determine roles and responsibilities and develop a  procedure for tracking sole source purchases to avoid  overspending approved amounts (ASD)  Continuous  Monitoring:  Overtime  Issued 09/06/17  Due – 10/18  None  Recommendations: 2  Open: 2  Implemented during  quarter: 0   Explore potential of developing a continuous  monitoring process for overtime (ASD)   Form a work group to design standardized overtime  management processes in the new ERP environment  (ASD)    Attachment A PAGE 10          Open Recommendations by Audit Issuance Date  Fiscal  Year  Audit Title Number of Open  Recommendations  2011 Citywide Cash Handling and Travel Expense 1 of 11  2014 Inventory Management 4 of 14  2015 Utility Meters: Procurement, Inventory, and Retirement 1 of 15  2016 Parking Funds 3 of 8  Disability Rates and Workers’ Compensation 8 of 15  Cable Franchise and Public, Education, and Government (PEG) Fees 6 of 9  2017 Community Services Department: Fee Schedule 2 of 3  Continuous Monitoring: Payments 5 of 7  Green Purchasing Practices 6 of 8  Utilities Department: Cross Bore Inspection Contract 4 of 4  2018 Accuracy of Water Meter Billing 11 of 11  Continuous Monitoring: Overtime 2 of 2    Fraud, Waste, and Abuse Hotline Administration  The hotline review committee, composed of the City Auditor, the City Attorney, and the City Manager, or their  designees, meets as needed to review hotline‐related activities. No complaints were received during the third quarter of  FY 2018. All prior‐year complaints have been closed. The chart below summarizes the status of complaints received in  each fiscal year since the hotline was implemented.      9 1 11 00 2 4 6 8 10 12 Q1 Q2 Q3 Q4 Number of Implemented  Recommendations by Quarter 23 17 13 0 20 40 60 80 100 Number of Open Recommendations FY 18 FY 17 Prior Fiscal Years 7 3 2 13 9 0 0 2 4 6 8 10 12 14 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 Status of Complaints Received by Fiscal Year Closed Complaints Open Complaints Attachment A CITY OF PALO ALTO OFFICE OF THE CITY AUDITOR August 20, 2018 The Honorable City Council Palo Alto, California Policy and Services Recommendation to Accept the ERP Planning: Information Technology and Data Governance Audit The Office of the City Auditor recommends acceptance of the ERP Planning: Information Technology and Data Governance Audit. At its meeting on June 21, 2018, the Policy and Services Committee approved and unanimously recommended that the City Council accept the report. The City Auditor’s report to the Policy and Services Committee and the transcript minutes are available on the City’s Policy and Services Committee website. Respectfully submitted, Harriet Richardson City Auditor ATTACHMENTS:  Attachment A: Information Technology and Data Governance Audit (PDF) Department Head: Harriet Richardson, City Auditor Page 2 ERP Planning: Information Technology and Data Governance June 13, 2018 Office of the City Auditor Harriet Richardson, City Auditor Steve Hendrickson, Management Specialist Houman Boussina, Senior Performance Auditor Attachment A Page intentionally left blank for double-sided printing Attachment A Office of the City Auditor ● 250 Hamilton Avenue, 7th Floor ● Palo Alto, CA 94301 ● 650.329.2667 Copies of the full report are available on the Office of the City Auditor website at: https://www.cityofpaloalto.org/gov/depts/aud/reports/performance/default.asp OFFICE OF THE CITY AUDITOR EXECUTIVE SUMMARY ERP Planning: Information Technology and Data Governance June 13, 2018 PURPOSE OF THE AUDIT The purpose of this audit was to determine if the City has: Information technology (IT) governance policies and procedures to align City IT systems with City goals and objectives. Data governance policies and procedures to maintain confidentiality, integrity, availability, and usefulness of the City's data. The audit also assessed whether IT or data governance changes need to be made to prepare for future IT systems. CONCLUSION The City does not have a sufficient IT or data governance structure, including policies and procedures that clearly define roles and responsibilities. It is essential for the City to develop IT and data governance processes prior to implementing a new ERP system to ensure that implementation and ongoing operation of the system are successful, in alignment with City goals and objectives, and that existing data are accurate, consistent, and complete before being migrated into the new system. REPORT HIGHLIGHTS Finding 1: (Page 6) The City does not have a mature information technology (IT) governance structure to ensure that the City’s IT systems, including the new ERP system, fully align with departments’ operational goals and objectives, prevent project cost overruns, and protect unauthorized access to confidential information. Finding 2: (Page 14) The City has important data that are not sufficiently accurate, consistent, and complete, which creates a risk of operational failures, financial losses, and legal claims. This can cause decision makers and the public to draw inaccurate conclusions from the data and will present challenges in the City's migration to the future ERP system. Key Recommendations: Assign roles and responsibilities for IT and data governance to ensure that governance covers all key aspects of the City’s information systems and data management. Adopt industry standard frameworks, such as COBIT for IT governance overall and the Data Management Association’s Data Management Body of Knowledge, for data governance. Attachment A Page intentionally left blank for double-sided printing Attachment A TABLE OF CONTENTS Objective ................................................................................................................................................. 1 Background ............................................................................................................................................. 1 Scope ...................................................................................................................................................... 3 Methodology .......................................................................................................................................... 3 Finding: 1 Better information technology governance can help ensure that information technology systems, including the new ERP system, support City goals and objectives .................................................... 6 Finding 1 Recommendations ........................................................................................................... 12 Finding: 2 Better data governance will lead to better data in the new ERP system ........................................ 14 Finding 2 Recommendations ........................................................................................................... 19 Appendix 1: Industry Standard Information Technology and Data Governance Frameworks ............ 20 Appendix 2: Summary of Information Technology Governance Components and City Status ........... 21 Appendix 3: Summary of Data Governance Components and City Status .......................................... 22 Appendix 4: City Manager’s Response ................................................................................................ 23 ABBREVIATIONS ASD Administrative Services Department DAMA Data Management Association DMBOK Data Management Body of Knowledge GTAG Global Technology Audit Guide ISO International Organization for Standardization IIA Institute of Internal Auditors IEC International Electrotechnical Commission IT Information Technology NIST National Institute of Standards and Technology SOD Segregation of Duties Attachment A Page intentionally left blank for double-sided printing Attachment A ERP Planning: Information Technology and Data Governance 1 INTRODUCTION Objective The purpose of this audit was to determine if the City has a citywide: Information technology (IT) governance structure, including policies and procedures to align City IT systems with City goals and objectives. Data governance structure, including policies and procedures to maintain confidentiality, integrity, availability, and usefulness of the City's data. The audit also assessed whether IT or data governance changes need to be made to prepare for future IT systems, including the new City’s new ERP system. Background Information Technology Governance Defined IT governance is the leadership, organizational structures, policies, and processes to ensure that IT supports the organization’s strategies and objectives within budgetary and staffing constraints. Data governance is a subset of IT governance. It focuses on data management overall by providing the guidance necessary to manage data as an asset, including its availability, usability, integrity, and security. Governance activities are broad and set the stage for more specific management and operational activities. For example, project governance is another subset of IT governance that establishes governance structures and management responsibilities for individual projects, such as projects for acquiring and implementing new IT systems. Finding 1 discusses selected governance activities recommended by The Institute of Internal Auditors (The IIA) and by ISACA, an international body that publishes IT best practices and sets standards for information technology.1 Data governance and security Data is the representation of text, numbers, graphics, images, sound, or video. It is the foundation of information and informed decisions and actions. Data quality is synonymous with information quality, since poor data quality results in inaccurate information and poor business performance. Data governance requires authority and oversight of data management. Effective data security policies and procedures ensure that the right people can 1 ISACA previously stood for Information Systems Audit and Control Association, but the organization now calls itself ISACA. Attachment A 2 ERP Planning: Information Technology and Data Governance use and update data in the right way, and that all inappropriate access and change is restricted.2 Master data provides information and context about key business elements such as employees and vendors (e.g., connected electronic records in the ERP system that uniquely identify an employee and provide identifying, payroll, and benefits information that does not change often). Business transactions, such as vendor and employee payments, require accurate, consistent, and complete master data. Roles and responsibilities The Palo Alto Municipal Code requires the IT Department to provide leadership to the City Council and management on alignment of technology with City initiatives, policies, and strategic objectives and to direct and manage interdepartmental technology governance. The IT Department has established a goal to maintain and mature an IT governance process to ensure alignment between technology priorities, project risks, City goals, and available funds. ERP Planning and Risks In 2014, the City hired Plante Moran, a consulting firm, to evaluate the City’s current Enterprise Resource Planning (ERP) environment and provide an updated vision of the City’s ERP needs. The ERP is business management software and technology that integrates key business activities of the City, such as purchasing, inventory, utilities, accounting, payroll, and information technology. In its report, Plante Moran recommended that the City replace the existing ERP system (SAP) that has been in place since 2003. As part of this effort, the IT Department gathered business requirements from each City department and issued a Request for Proposal (RFP), with a goal of selecting a new ERP system for the City by April 2018. The IT Department has planned a phased process to migrate the City’s business data and processes into a new ERP system. The migration process is expected to be completed by June 2022. ERP risks may prevent the City from realizing the anticipated benefits of an ERP system once it is implemented. Risk areas include: 2 Data Management Association, The Data Management Body of Knowledge, Technics Publications, LLC, New Jersey, 2010, available for purchase at https://dama.org/content/body-knowledge Attachment A ERP Planning: Information Technology and Data Governance 3  Insufficient project management and program governance  Poor data quality  Inefficient or ineffective interfaces with other systems  Incompatibility with business processes  Underused software functionality  Ineffective access controls/security  Insufficient technical infrastructure The risks involved with acquiring and implementing a new ERP system were the impetus for us to initiate this IT governance audit. Scope While we assessed the City’s information technology and data governance activities and controls that apply to current IT systems, including the current SAP system and other applications that may be migrated or interfaced with the new ERP system, we considered IT governance as it relates to the City as a whole. We focused on Citywide IT and data governance rather than more specific project governance and management activities. Methodology To accomplish our objective, we:  Identified and reviewed applicable standards for IT and data governance (see Appendix 1) including: o Global Technology Audit Guide (GTAG) 17: Auditing IT Governance, a publication from The Institute of Internal Auditors that covers the IT governance needed to support organizational strategies and objectives.3 o COBIT 5, an ISACA online publication that provides a comprehensive IT governance and management framework. It provides globally accepted principles, practices, analytical tools and models to help increase the trust in, and value from, information systems.4 o Data Management Body of Knowledge (DMBOK), a Data Management Association (DAMA) publication that provides a data governance and management framework to ensure 3 The Institute of Internal Auditors (IIA), Global Technology Audit Guide (GTAG) 17: Auditing IT Governance, 2018, available for purchase at https://na.theiia.org/standards-guidance/recommended-guidance/practice-guides/Pages/GTAG17.aspx. 4 ISACA, COBIT 5: A Business Framework for the Governance and Management of Enterprise IT , available for purchase at http://www.isaca.org/cobit/pages/default.aspx. Attachment A 4 ERP Planning: Information Technology and Data Governance high-quality data, which is the foundation for information and informed decisions and actions.5 Conducted a risk assessment to identify and prioritize risks associated with IT and data governance. Created and administered to all City departments a questionnaire to understand the City’s data governance activities. We separately administered an IT governance survey to the IT Department and a modified data governance survey to reflect the department’s responsibilities and expertise in these areas. To assess the overall sufficiency of the City’s IT and data governance processes, we converted the responses to a numeric rating based on a simplified application of the COBIT Self-assessment Guide, which provides a framework to rate the maturity of business processes.6 Exhibit 1 provides an overview of the COBIT process capability levels, which show the evolution of a business process, from incomplete to optimized. Exhibit 2 shows the nine process attributes used to determine process capability levels. EXHIBIT 1 Process Capability Levels 0 = Incomplete The process is not implemented or fails to achieve its process purpose. At this level, there is little or no evidence of any systematic achievement of the process purpose. 1 = Performed The implemented process achieves its process purpose. 2 = Managed The performed process is now implemented in a managed fashion (planned, monitored and adjusted) and its work products are appropriately established, controlled and maintained. 3 = Established The managed process is now implemented using a defined process that is capable of achieving its process outcomes. 4 = Predictable The established process now operates within defined limits to achieve its process outcomes. 5 = Optimizing The predictable process is continuously improved to meet relevant current and projected business goals. SOURCE: ISACA, Self-assessment Guide: Using COBIT® 5, 2013 5 Data Management Association (DAMA), Data Management Body of Knowledge (DMBOK), available for purchase at https://dama.org/content/body-knowledge. 6 ISACA, COBIT 5 Self-assessment Guide: Using COBIT 5, available for purchase at http://www.isaca.org/cobit/pages/default.aspx Attachment A ERP Planning: Information Technology and Data Governance 5 EXHIBIT 2 Process Attributes SOURCE: ISACA, Self-assessment Guide: Using COBIT® 5, 2013 Compliance with government auditing standards We conducted this performance audit of information technology and data governance in accordance with our FY 2017 Annual Audit Work Plan and generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives. We would like to thank City management and staff for their time, cooperation, and assistance during the audit process. Attachment A 6 ERP Planning: Information Technology and Data Governance Finding 1 Better information technology governance can help ensure that IT systems, including the new ERP system, support City goals and objectives Summary The City does not have a mature information technology (IT) governance structure, including policies and procedures to ensure that its IT systems, including the new ERP system, will align with departments’ operational goals and objectives; prevent unexpected and excessive project costs associated with poor ERP planning, budgeting, and execution; and protect unauthorized access to confidential information. It is essential for the City to develop IT governance processes prior to implementing a new ERP system to ensure that roles and responsibilities are understood and to achieve success in the implementation and ongoing operation of the new system. Existing information technology governance processes not mature or complete The Palo Alto Municipal Code requires the IT Department to direct and manage interdepartmental technology governance. While the IT Department has implemented some governance processes, their focus is on project governance, or ensuring that individual IT Department projects meet their intended goals. The processes are not sufficient to ensure that the overall portfolio of IT Department projects and activities support all departments’ business goals and objectives. We compared the IT Department's responses to our questionnaire to the COBIT 5 process capability model, and developed maturity ratings for the IT Department’s governance processes. The results show that IT does not have sufficient policies and procedures or clearly assigned and defined roles and responsibilities for the following governance components on a citywide basis. There is not clear:  Assignment of governance roles and responsibilities  Alignment of IT with City departments’ priorities  Definition of IT staffing and funding  Identification and mitigation of IT risks  Measurement and monitoring of outcomes The sections below discuss gaps between the City’s existing IT governance and COBIT standards (see Appendix 2). IT governance can help ensure that the City selects and implements its new ERP to better align with departments’ operational goals and objectives and prevent unexpected and excessive project costs associated with poor ERP planning, budgeting, and execution. Attachment A ERP Planning: Information Technology and Data Governance 7 The City has not adopted an information technology governance framework Although the IT Department is responsible for information technology governance, IT governance is managed within the IT Department instead of on a citywide level. The processes the IT Department has are not sufficient or complete, based on our comparison with the COBIT IT governance and management framework. The City has not adopted an industry-recognized framework, such as COBIT, or rated its information technology governance processes using such standards to identify gaps and risks in its governance practices. The IT Department has a goal in the City’s operating budget book to maintain and mature an IT governance model but does not include any performance metrics to show progress or whether a model has been developed and implemented. The IT Department has not created IT governance policies and procedures to ensure governance activities consistently address all departments’ IT needs on an ongoing basis. COBIT sets forth standards to ensure that IT activities align with entitywide business unit goals and objectives and support development of IT policies and procedures, assignment of roles and responsibilities, and the adoption of performance metrics to measure success. Governance roles and responsibilities not clearly or sufficiently assigned COBIT standards call for allocating governance responsibility, authority, and accountability. Applying the standards can help ensure that communication and reporting mechanisms provide the appropriate information for oversight and decision making. The IT Department has defined IT roles and responsibilities for its staff, created workplans to manage its projects, and currently leads various committees to manage the City’s systems and security. However, the City does not have sufficiently defined and clearly assigned governance roles citywide, nor specific policies and procedures, to ensure ongoing alignment of IT services and systems with departments’ goals and objectives. For example, in our 2017 audit of Continuous Monitoring: Overtime, we found that the City’s public safety departments could not connect their stand- alone scheduling systems to SAP. This required staff to enter their time in two different systems and manually reconcile the entries to identify inconsistences between the systems. Attachment A 8 ERP Planning: Information Technology and Data Governance Governance should ensure information technology supports all departments’ goals and objectives In 2012, the IT Department created a dedicated IT governance and planning manager position who reported to the IT Department director and an IT Governance Review Board (board). The board included staff from various City departments. The IT Department took these steps to ensure proper planning and prioritization of IT activities, create partnerships between departments and IT for inclusive decision making, and increase project visibility to better prepare for project impacts. However, the City no longer staffs the IT governance and planning manager position, and there is no process to comprehensively manage all of the City’s information systems to align specifically with departments’ goals and objectives. The board meetings now only include IT management staff, and governance responsibilities are assigned to a senior technologist who reports to the manager of the IT Project Services Division. The senior technologist meets with selected department contacts to discuss their needs, and the manager meets with staff in the Administrative Services, Utilities, and Public Works Departments to identify operational concerns in SAP and to manage SAP projects on an ongoing basis. The City also has an SAP steering committee and project management office with representatives from some City departments who meet to provide oversight of projects and issues specific to SAP. Although the IT Department currently includes staff from all departments in the limited process to select and implement the City’s new ERP system, the specific and limited nature of this inclusiveness does not represent an ongoing governance process. Governance should be embedded in the enterprise and continually identify and engage with the enterprise’s stakeholders to clearly understand, document, and address their business requirements. Governance must be properly staffed and funded The IT Department follows the City’s standard budget processes to staff and fund its operations and systems. It also has internal staff development plans to provide and track training to develop staff and support the City’s IT systems. Governance standards call for the availability of adequate and sufficient IT-related capabilities, including funding, staffing, process, and technology, to support enterprise objectives and ensure optimal use of the IT systems’ capabilities. For example, having sufficient and well-trained staff to support City staff in how to use the new ERP system, remain current on existing and future system capabilities, and improve business Attachment A ERP Planning: Information Technology and Data Governance 9 processes based on system features and capabilities would ensure a long-term and successful implementation of the new ERP system. Past City Auditor’s Office audits identified numerous examples of implemented information systems that had not been leveraged. For example, the 2014 Inventory Management Audit identified that although the City had implemented the SAP inventory system, ASD staff were not aware of important, out-of-the-box functions such as reports on dead stock and inventory turnover. Staff in City departments did not have an understanding of the system configuration or access to staff with technical expertise and time to optimize the system to better align with its business needs. Increased City department involvement needed to address information security risks The IT Department has completed several internal and external information security risk assessments and has adopted security policies and procedures. In 2015, Coalfire Systems, Inc. (Coalfire), a consultant, issued an information security risk assessment report that identified 232 risks covering 15 operational areas (e.g., IT policies, data privacy) in the City. The IT Department has identified and tracked the status of the risks over time, including priority, actions, and decisions to accept risks. However, the IT Department has emphasized the confidentiality of the Coalfire report and has not shared details or sufficiently explained these risks to City departments and stakeholders who should have been included in the decision making process to address the risks. The IT Department’s chief information security officer organizes and leads an Information Security Steering Committee (committee) to inform departments about security matters and initiatives.7 The committee met in June 2015 to discuss Coalfire’s findings, but the IT Department did not provide the report or documentation of its risk management decisions or recommendations to the committee and did not include committee members in a meaningful, informed decision making process to address the security risks. Governance standards call for an understanding of the enterprise’s tolerance for risk and say that this should be properly communicated citywide, but this has not been done. As of March 2018, the IT Department had decided to accept 115 (44 percent) of the 263 risks identified in the Coalfire report. 7 The ISSC generally meets quarterly at City Hall and includes representatives from each City department. Attachment A 10 ERP Planning: Information Technology and Data Governance IT Department risk management document contains errors and may be misleading In response to our concerns about broader information security governance activities, the IT Department provided documentation of its decisions and actions to address the Coalfire report findings. Although specific risk management actions are beyond the scope of this governance audit, we noted items in the document that raise concerns about its validity and usefulness in addressing the large number of security risks in the Coalfire report, including information and physical security risks in the City. For example, in response to Coalfire’s observation that a segregation of duties (SOD) analysis is not formally performed on a periodic basis, the response shows the City’s disposition as: “Per SOD Policy this is completed.” The same SOD policy is referenced as the remedy for an observation that only one individual understands how to maintain and manage the City’s Geographic Information System. The City’s only formal SOD policy addresses the IT Department’s own system administrator responsibilities and not segregation of duties among the various City business process, which was the context of the Coalfire report finding. Better governance needed to address unresolved security vulnerabilities The City’s IT Department has prioritized security, but there are unresolved, long-standing security vulnerabilities that will require a citywide effort to address. For example, our office has informed the IT department and senior management of ongoing concerns about unsecured, personally identifiable information in the City’s shared-access network drives. These drives are unorganized and contain thousands of folders and files that are not governed by any policies or procedures. This report omits further details pertaining to the security vulnerabilities to avoid inappropriate access and dissemination of sensitive or confidential information. We have provided City management a separate, confidential report with details and recommendations to address the security vulnerabilities. Knowledge of City’s data is a prerequisite to effective security A recent ISACA announcement states that before you can secure your data, you have to know your data, including what data you have, where you have it, why you have it, and how you are using it. A good governance framework not only covers data visibility, intelligence and insight, but also provides strategic direction for security activities to ensure that cybersecurity objectives, such as effective risk and resource management, are achieved. Finding 2 discusses the need for better citywide data governance. Attachment A ERP Planning: Information Technology and Data Governance 11 No metrics to show whether information systems meet citywide business goals and objectives The IT Department has developed key performance indicators, such as service work order counts and response times, costs by City department, computer counts, and user login counts. It also participates in the City’s budgeting and performance reporting processes that show overall user satisfaction, service desk requests resolved, and workload metrics. However, IT has not established metrics that provide information regarding whether information systems meet departments’ business goals and objectives. Governance standards include sample metrics such as: Percent of management roles with clearly defined accountabilities for IT decisions Percent of IT services where expected benefits are realized Percent of enterprise goals and requirements supported by IT strategic goals Level of business executive awareness Understanding of IT innovation possibilities Plante Moran identified governance concerns Plante Moran reported challenges that can be addressed through implementing COBIT or other industry-recognized governance standards. Plante Moran’s survey of City staff identified: Inefficiencies due to redundant data entry, manual processes and unused system functionality Unrealized benefits from current City SAP investments Heavy reliance on IT and outside consultants for SAP enhancement requests Limited reporting capabilities Lack of an intuitive user interface Limited ongoing training available SAP complexities frustrate users and discourage use of current systems to satisfy business needs Loss of SAP institutional knowledge due to staff attrition Models of information technology governance policies and procedures are available from other jurisdictions Other cities and public sector agencies have implemented IT governance policies and procedures. For example, Portland, OR, has a Technology Project Intake policy that requires maintaining a citywide enterprise IT perspective, in which the Technology Oversight Committee places importance on understanding customer business needs as they relate to technology and providing IT management with greater visibility of its customers Attachment A 12 ERP Planning: Information Technology and Data Governance plans and priorities; and Modesto, CA, has an IT Steering Committee Charter that requires the committee to oversee IT strategic alignment and investment priorities. We also identified several universities that have IT governance policies and procedures. Recommendations To ensure the successful implementation of the new ERP system, we recommend that the City Manager place emphasis on developing and implementing a strong, citywide IT governance structure prior to implementing a new ERP system by implementing the following recommendations: 1.1. Assign roles and responsibilities for IT governance (e.g., “chief governance officer”) to an existing City position that reports or could potentially report directly to the City Manager or the Chief Information Officer. The roles and responsibilities should include:  Ensuring that City departments and stakeholders who are the users of the City’s information systems are included in governance processes and decision making, including decisions to address security risks.  Ensuring that there is a process to validate the accuracy and completeness of key IT reports that are used in decision making or reporting (e.g., the City’s document that shows decisions on addressing risks identified in the Coalfire report; decisions regarding departmental roles and responsibilities for the new ERP system).  Ensuring that governance covers all key aspects of the City’s information systems (e.g., ensuring that the IT Department has policies and procedures to address the use, organization, security, and access rights for the City’s network drive). 1.2. Adopt an industry standard IT Governance framework, such as COBIT, and a process assessment and rating or maturity model, such as the COBIT 5 process assessment model. Create a plan to achieve a process capability model of 3 (i.e., “established”) or higher for:  IT staffing and funding  IT governance roles and responsibilities  Aligning IT with departments' priorities Attachment A ERP Planning: Information Technology and Data Governance 13  Measuring and monitoring IT governance outcomes  Identifying and mitigating IT risks Attachment A 14 ERP Planning: Information Technology and Data Governance Finding 2 Better citywide data governance will lead to better data in the new ERP system Summary The City has not assigned data governance roles and responsibilities to ensure that its data is available, usable, accurate, and consistent. Most City departments do not have sufficient governance processes to ensure that their data is reliable, secure, and useful. The City has important data that is not sufficiently accurate, consistent, and complete, which creates a risk of operational failures, financial losses, and legal claims. This can cause decision makers and the public to draw inaccurate conclusions from the data and will present challenges in the City's migration to the future ERP system. It is essential for the City to develop data governance processes prior to implementing a new ERP system to ensure that data is accurate, consistent, and complete before being migrated into the new system. Limited and poor quality data has adversely impacted the City Data and the information created from data are widely recognized as organizational assets that need the partnership of business leadership and technical expertise to effectively manage. Accurate data and information are needed for decision making, operations, and public transparency. Although City departments, rather than the IT Department, are considered the data owners, departments generally do not have sufficient data governance processes to provide reliable, secure, and useful information. Past City Auditor’s Office reports provide a broad, yet consistent perspective of ongoing, negative outcomes associated with insufficient data governance roles, responsibilities, and processes for the following areas (see Appendix 3): Data Integrity refers to the accuracy, consistency and completeness of city data. Our 2017 Continuous Monitoring Audit: Payments identified that almost 41,000 (94 percent) of the City’s 43,642 active vendor records in SAP are unused, duplicates, inconsistent, and/or incomplete, which increased the risk of duplicate, erroneous, and fraudulent payments, as well as incorrectly reported tax information. Data Inventory is a comprehensive list of system data, including descriptions and interrelationships of data items that underlie a particular business process. Our 2015 Utility Meter Audit: Procurement, Inventory, and Retirement identified incomplete, inaccurate, inconsistent, and irreconcilable Attachment A ERP Planning: Information Technology and Data Governance 15 information in the City’s data inventory of utility meters. SAP’s capabilities were not fully used to support and coordinate the meter workflow process and its data, which resulted in customer billing errors. The Utilities Department subsequently identified some of these errors, and we identified others and cited them in our audit, Accuracy of Water Meter Billing. Data Migration is the transfer of data between systems. Our 2013 Employee Health Benefits Administration Audit identified incomplete City retiree data in SAP because it had not been migrated from the City’s legacy Lawson system. This resulted in using time consuming manual processes and Excel spreadsheets to track retiree health benefits and the City’s payment obligations. Data Security and Access exists to prevent unauthorized access, use, and change of city data. Our 2011 SAP Security Audit identified improperly secured super user accounts that allowed unrestricted access to the City’s data. SAP logs lacked sufficient information to effectively assess the vulnerabilities. Legal Compliance is the aspect of data governance that ensures that managing and disclosing city data complies with data security and access laws. Our 2012 Special Advisory Memorandum identified a significant SAP security vulnerability that allowed certain individuals with SAP access to view employee personal information that they did not have a business need to know. Under state law, the combination of name and social security number is “personal information.” Agencies must notify individuals if their personal information is acquired by an unauthorized person in a way that amounts to a security breach under the law.8 Availability means the city’s data is easily available for its intended purpose. In our 2016 Disability Rates and Workers' Compensation Audit, we found that the data necessary for disability leave management had not been captured through SAP time reporting. We also found that Human Resources Department staff did not have online access to workers’ compensation claims data maintained by a third-party provider. 8 See citation in California Civil Code, available at http://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=CIV&sectionNum=1798.29 . Attachment A 16 ERP Planning: Information Technology and Data Governance Usability is the aspect of data governance that ensures the data readily meets users’ requirements. Our 2011 SAP Security Audit discussed limitations on our SAP access and that an important, free auditing tool in SAP had not been configured, tested, or provided to us. The audit explained that ASD, at the time responsible for the IT function, did not view the Auditor’s Office access as high priority. The Palo Alto Municipal Code provides that the Office of the City Auditor will have unrestricted access to obtain sufficient and appropriate evidence to conduct audits. Most City departments do not have data policies and procedures Most City departments do not have sufficient data governance processes to provide reliable, secure, and useful information. We compared the departments’ responses to our questionnaire to the criteria in the COBIT 5 process capability model and developed maturity ratings for citywide governance processes. The results show that the City does not have sufficient data governance policies and procedures or clearly assigned and defined roles and responsibilities for data inventory, integrity, migration, security & access, legal compliance, availability, and usability. The City has not adopted a data governance framework The City has not assigned data governance roles and responsibilities to ensure that its data is available, usable, accurate, and consistent. Achieving long-term data quality is more feasible when people throughout the organization understand the value of high-quality data and the negative impact of poor-quality data. Establishing clear roles and responsibilities for ensuring high quality data is essential to achieve this. The IT Department has adopted an information security framework, assigned security roles and responsibilities, and created security policies and procedures. However, these do not address Citywide data governance, which should include a citywide approach to data and information that has been adopted as a set of policies and procedures that encompass the full lifecycle of data, from planning to creating/acquiring through use and disposal. This includes establishing decision-making authority and standards regarding data security, data inventories, content and records management, data quality control, data access, and data sharing, as well as ongoing compliance monitoring of all of the above. Regular monitoring of data quality helps to catch and fix issues before they cause major problems. Attachment A ERP Planning: Information Technology and Data Governance 17 Using the DAMA-DMBOK or a similar framework can help ensure that the City makes informed data governance decisions and implements relevant and useful data management processes. A process maturity framework such as the COBIT Self-assessment Guide can help the City rate and monitor its data governance processes in conjunction with the use of DAMA-DMBOK or a similar framework. Plante Moran identified data concerns Plante Moran, the City’s consultant for the new ERP and Utility Billing Planning systems, stated in its November 2014 Enterprise Resource Planning System Evaluation report that the City’s installation of its current SAP system uses a process that perpetuates data errors in the system and continues to cause data integrity issues. 9 Plante Moran identified examples of data reliability, access, reporting, and usability limitations in the current SAP system and recommended that the City establish a governance structure to successfully select, implement, and maintain the new ERP system. The City has implemented a project governance structure to select and implement the new ERP system but not a broad IT or data governance framework (see Finding 2) to address the City’s data integrity challenges that could carry over into the new ERP system. Security policies and procedures not available to staff The IT Department has adopted data security standards and internal security policies and procedures for the City that are published by the International Organization of Standardization (ISO) and International Electrotechnical Commission (IEC). It also engaged private-sector security experts to assess security vulnerabilities. In response to our concerns about the lack of access to and visibility of these City’s security policies and procedures, the IT Department published them on the City’s intranet in December 2017 to inform all City staff of the adopted standards and acceptable secure practices. In addition, the City has adopted the proprietary ISO/IEC 27000 security standard. However, this standard cannot be openly distributed, shared, or incorporated into the City’s policies and procedures without specific permission and licensing.10 The IT Department purchases 9 Plante Moran’s report is available at http://www.cityofpaloalto.org/civicax/filebank/documents/51141 10 ISO/IEC 2700 is described at https://www.iso.org/isoiec-27001-information-security.html Attachment A 18 ERP Planning: Information Technology and Data Governance additional copies of the ISO/IEC 27000 standard as needed and prepares work products, such as presentations, that are based on the standard. The IT Department has not assessed whether the City’s security policies and procedures meet the ISO/IEC 27000 standard (i.e., to identify any gaps between the City’s policies and procedures and relevant controls in ISO/IEC 27000). National Institute of Standards and Technology (NIST) security standards are comprehensive and appropriate for the City A more appropriate standard for citywide adoption would be the National Institute of Standards and Technology (NIST) security standards because they are designed for the government sector, are not copyrighted, and are readily accessible, without charge, on the internet.11 NIST SP 800-53 is a comprehensive control framework that provides 276 controls; ISO/IEC 27000 addresses only 196 of those controls. For example, NIST control “AC-22” requires specific steps to ensure that publicly accessible information is appropriate (e.g., does not include information protected under the Privacy Act), but ISO/IEC 27000 does not address this issue. Although there is no specific requirement for local governments to use NIST standards, a May 2017 presidential executive order requires federal executive departments and agencies to use the more comprehensive NIST cybersecurity framework to manage cybersecurity risks. A previous external financial audit firm recommended that the City adopt and implement the NIST SP 800-53 control framework, which NIST designed for the federal government but also recommended to state, local, and tribal governments, as well as private sector organizations. Data governance policies and procedures from other jurisdictions Other cities and public sector agencies, such as the cities of Portland and Modesto, have implemented citywide data governance policies and procedures. For example, Modesto has a data governance charter, a data governance board that oversees the charter, and data governance committees to address citywide, initiative-specific data issues and requirements. Modesto’s procedures include a data checklist to help verify data quality, usability, and security. At the federal level, the Office of Management and Budget has formally chartered the Data Standards Committee as an advisory body to focus on clarifying 11 The NIST security standards are available at https://csrc.nist.gov/CSRC/media//Publications/sp/800-53/rev- 5/draft/documents/sp800-53r5-draft.pdf Attachment A ERP Planning: Information Technology and Data Governance 19 existing data element definitions and identifying needs for new standards. Recommendations To ensure the successful implementation of the new ERP system, we recommend that the City Manager place emphasis on developing and implementing a strong citywide data governance structure prior to implementing a new ERP system by implementing the following recommendations: 2.1. Assign roles and responsibilities for data governance (e.g., a “chief data governance officer”) to an existing position that reports or could potentially report directly to the City Manager or the Chief Information Officer. 2.2. Adopt an industry standard data governance framework, such as the DAMA-DMBOK, and a process maturity model, such as the COBIT 5 process assessment model. Create a plan to achieve a process capability model of 3 (i.e., “established”) or higher for: Inventory Integrity Migration Security & Access Legal Compliance Availability Usability Attachment A ERP Planning: Data and System Governance 20 APPENDIX 1 – Industry Standard IT and Data Governance Frameworks Framework Description and Reference Global Technology Audit Guide (GTAG) 17: Auditing IT Governance An Institute of Internal Auditors (IIA) online publication that covers the IT governance needed to support organizational strategies and objectives. Available for purchase at: https://na.theiia.org/standards-guidance/recommended- guidance/practice-guides/Pages/GTAG17.aspx COBIT 5: A Business Framework for the Governance and Management of Enterprise IT An ISACA online publication that provides a comprehensive IT governance and management framework to create optimal value from IT. Available for purchase at: http://www.isaca.org/cobit/pages/default.aspx Data Management Association, The Data Management Body of Knowledge Data Management Body of Knowledge, a Data Management Association publication that provides a data management framework. Available for purchase at: https://dama.org/content/body-knowledge National Institute of Standards and Technology (NIST) Special Publication 800-53: Security and Privacy Controls for Information Systems and Organizations U.S. Federal Government publication containing a comprehensive catalog of technical and nontechnical security and privacy controls designed for the government sector. Available at: https://csrc.nist.gov/CSRC/media//Publications/sp/800-53/rev- 5/draft/documents/sp800-53r5-draft.pdf Attachment A ERP Planning: Data and System Governance 21 APPENDIX 2 - Summary of Information Technology Governance Components and City Status Component of IT Governance Status Assign IT Governance Roles & Responsibilities IT governance and planning position no longer staffed and IT Governance Review Board no longer includes departments. No citywide IT governance policies and procedures or roles and responsibilities. Align IT with Departments' Priorities Senior technologist informally meets with departments. Various project management committees. No citywide IT alignment policies and procedures or roles and responsibilities. Establish IT Staffing & Funding IT Department follows City’s budget and staffing processes. No citywide IT system-specific staffing policies and procedures or roles and responsibilities. Identify and Mitigate IT Risks IT Department has completed internal and external information security assessments and adopted security policies and procedures. No citywide information system risk assessments to more broadly identify information system security, operational, financial, health and safety, and reputational risks. Measure & Monitor IT Governance Outcomes The IT Department has developed Key Performance Indicators such as service work order counts, costs by City department, computer counts, and user login counts. No IT metrics that provide information regarding whether information systems meet departments’ business goals and objectives. Attachment A ERP Planning: Data and System Governance 22 APPENDIX 3 – Summary of Data Governance Components and City Status Key Components of Data Governance Status of City Practices Inventory: The City should have created a comprehensive list of system data which includes descriptions and interrelationships of data items. Some departments have limited data inventories. No citywide policies and procedures, standards, or roles and responsibilities exist outlining the City’s policies on creating data inventories. Integrity: Calls for the City to maintain accurate and complete city data Some systems have limited preventive measures to ensure integrity. Some departments periodically review selected data to ensure it continues to be accurate and complete. No citywide policies and procedures, standards, or roles and responsibilities define the City’s measures to maintain the integrity of its data. Migration: That aspect of data governance in which city departments properly plan for the transfer of data between systems. Some departments have planned data migration for selected projects. No citywide policies and procedures, standards, or roles and responsibilities describing to City departments’ best practices for migrating data between systems. Security & Access: Refers to steps the City should take to prevent the unauthorized access, use and change of city data. IT Department has information security roles and responsibilities and policies and procedures. City uses a basic access control process for SAP. However, security policies and procedures are not available citywide and no citywide standard for access controls for departments’ information systems. Legal Compliance: Ensures that the handling and disclosure of city data follow state and federal laws. IT Department and Utilities Department have legal compliance policies and procedures. No citywide legal compliance policies and procedures, standards, or roles Attachment A ERP Planning: Data and System Governance 23 and responsibilities. Availability: Means that city data is readily available. No citywide data availability policies and procedures or roles and responsibilities have been established. Usability: Ensures that the data meets the users’ requirements. No citywide data usability policies and procedures or roles and responsibilities have been established. APPENDIX 4 – City Manager’s Response The City Manager has agreed to take the following actions in response to the audit recommendations in this report. The City Manager will report progress on implementation six months after the Council accepts the audit report, and every six months thereafter until all recommendations have been implemented. Recommendation Responsible Department(s) Agree, Partially Agree, or Do Not Agree and Target Date and Corrective Action Plan To be completed 6 months after Council acceptance and every 6 months thereafter until all recommendations are implemented Current Status Implementation Update and Expected Completion Date Finding 1: Better information technology governance can help ensure that IT systems, including the new ERP system, support City goals , and objectives To ensure the successful implementation of the new ERP system, we recommend that the City Manager place emphasis on developing and implementing a strong, citywide IT governance structure prior to implementing a new ERP system by implementing the following recommendations: 1.1. Assign roles and responsibilities for IT governance (e.g., “chief governance officer”) to an existing City position that reports or could potentially report directly to the City Manager or the Chief Information Officer. The roles and responsibilities should include: Information Technology Agree. Target Date: December 31, 2019 Corrective Action Plan: The IT Department implemented IT Governance citywide in 2012 and since then it has been rightsized to reflect Attachment A ERP Planning: Data and System Governance 24 Recommendation Responsible Department(s) Agree, Partially Agree, or Do Not Agree and Target Date and Corrective Action Plan To be completed 6 months after Council acceptance and every 6 months thereafter until all recommendations are implemented Current Status Implementation Update and Expected Completion Date Ensuring that City departments and stakeholders who are the users of the City’s information systems are included in governance processes and decision making, including decisions to address security risks. Ensuring that there is a process to validate the accuracy and completeness of key IT reports that are used in decision making or reporting (e.g., the City’s document that shows decisions on addressing risks identified in the Coalfire report; decisions regarding departmental roles and responsibilities for the new ERP system). Ensuring that governance covers all key aspects of the City’s information systems (e.g., ensuring that the IT Department has policies and procedures to address the the evolving needs of the City. The roles and responsibilities for a leader in IT governance have already been assigned to an individual who reports to the Chief Information Officer (CIO). The IT Department agrees that work is required to address gaps in our city IT governance processes today including leadership roles, communications, reporting, and decision-making. Attachment A ERP Planning: Data and System Governance 25 Recommendation Responsible Department(s) Agree, Partially Agree, or Do Not Agree and Target Date and Corrective Action Plan To be completed 6 months after Council acceptance and every 6 months thereafter until all recommendations are implemented Current Status Implementation Update and Expected Completion Date use, organization, security, and access rights for the City’s network drive). 1.2. Adopt an industry standard IT Governance frameworks, such as COBIT, and a process assessment and rating or maturity model, such as the COBIT 5 process assessment model. Create a plan to achieve a process capability model of 3 (i.e., “established”) or higher for: IT staffing and funding IT governance roles and responsibilities Aligning IT with departments' priorities Measuring and monitoring IT governance outcomes Identifying and mitigating IT risks Information Technology Agree. Target Date: December 31, 2019 Corrective Action Plan: IT Department agrees to identify and adopt an appropriate, rightsized, industry-recognized, IT governance framework. The IT Department working with the City Manager’s Office will determine the appropriate level of IT Governance maturity required for enabling organizational success. Finding 2: Better citywide data governance will lead to better data in the new ERP system To ensure the successful implementation of the new ERP system, we recommend that the City Manager place emphasis on developing and implementing a strong citywide data governance structure prior to implementing a new ERP system by implementing the following recommendations: 2.1. Assign roles and responsibilities for data governance (e.g., a “chief data governance officer”) to an Information Technology Agree. Target date: July 1, 2019 Attachment A ERP Planning: Data and System Governance 26 Recommendation Responsible Department(s) Agree, Partially Agree, or Do Not Agree and Target Date and Corrective Action Plan To be completed 6 months after Council acceptance and every 6 months thereafter until all recommendations are implemented Current Status Implementation Update and Expected Completion Date existing position that reports or could potentially report directly to the City Manager or the Chief Information Officer. Corrective Action Plan. In January 2017, the IT Department hired a qualified data analyst with responsibility for citywide data governance. The role currently reports up through the Chief Information Officer (CIO). The IT Department agrees to request elevation of this role from City Council to a more senior classification to reflect the increased responsibilities expected as a result of implementing an industry- standard data governance framework. 2.2. Adopt an industry standard data governance framework, such as the DAMA-DMBOK, and a process maturity model, such as the COBIT 5 process assessment model. Create a plan to achieve a process capability model of 3 (i.e., “established”) or higher for:  Inventory  Integrity  Migration Information Technology Agree Target date: December 31, 2019 Corrective Action The IT data lead will work to implement the citywide data strategy that is currently being developed and is part of the FY19-21 IT strategy. Adoption of a standard data governance Attachment A ERP Planning: Data and System Governance 27 Recommendation Responsible Department(s) Agree, Partially Agree, or Do Not Agree and Target Date and Corrective Action Plan To be completed 6 months after Council acceptance and every 6 months thereafter until all recommendations are implemented Current Status Implementation Update and Expected Completion Date Security & Access Legal Compliance Availability Usability framework was already identified as a goal in this plan. IT Department agrees to identify and adopt an appropriate, rightsized, industry-recognized, data governance framework. The IT Department working with the City Manager’s Office will determine the appropriate level of data governance maturity required for enabling organizational success. Attachment A City of Palo Alto (ID # 9510) City Council Staff Report Report Type: Consent Calendar Meeting Date: 8/20/2018 City of Palo Alto Page 1 Summary Title: Resolution Supporting a Bay Delta Plan Negotiated Settlement Title: Adoption of a Resolution Supporting the Objective of the State Water Resources Control Board’s Bay Delta Plan and a Negotiated Voluntary Settlement of Water Issues on the Tuolomne River From: City Manager Lead Department: Utilities Recommended Motion Staff recommends that the City Council consider the following motion: Adopt the proposed resolution (Attachment A - Resolution). Recommendation Staff recommends that the City Council adopt a resolution supporting the objectives of the State Water Resources Control Board’s (SWRCB) Bay Delta Plan and favoring a negotiated and voluntary settlement process. Executive Summary On July 6, 2018, the SWRCB issued a Draft Final Bay Delta Plan Update (Bay Delta Plan) calling for increased flows on the Tuolumne River to 40% of unimpaired flow between the months of February and June, regardless of water supply conditions. While the City of Palo Alto supports the objectives of the Bay Delta Plan to improve conditions on the Tuolumne River, the City favors resolving these complex water issues via a negotiated settlement process. Alternatives, such as the one proposed by the San Francisco Public Utilities Commission (SFPUC), the City’s potable water supplier, combine target functional flows with non-flow improvements that will result in a better outcome for the fisheries as well as urban and agricultural water users. The status quo on the Tuolumne River is unsustainable; a joint settlement will avoid lengthy and costly legal proceedings and allow science-based solutions to be applied in a more timely fashion. The SFPUC’s proposed alternative can be seen https://sfwater.org. The Bay Area Water Supply & Conservation Agency (BAWSCA) also supports the objective of Bay Delta Plan, City of Palo Alto Page 2 but opposes SWRCB’s proposed unilateral plan, and strongly favors the idea of a neg otiated settlement (Attachment B – BAWSCA statement). Background Palo Alto Water Supply Palo Alto receives 100% of its potable water from the City and County of San Francisco’s Regional Water System (RWS), operated by the SFPUC. This supply is predominantly from the Sierra Nevada, delivered through the Hetch Hetchy aqueducts, but also includes treated water produced by the SFPUC from its local watersheds and facilities in Alameda and San Mateo Counties. About 85% of the supply on the RWS is from the Tuolumne River. The amount of imported water available to the SFPUC’s retail and wholesale customers is constrained by hydrology, physical facilities and the institutional limitations that allocate the water supply of the Tuolumne River. The SFPUC operates its system to manage an 8.5 year “design drought” with the objective to limit system-wide water use reductions to 20% in a dry year. This “design drought” matches the severity of the 1987-1992 drought followed by the 1976-1977 drought. Recognizing the reality of drought cycles in California and the expectation that droughts will become more severe and more frequent with climate change, planning for dry cycles by using storage and conservation are critical tools for all of the customers relying on the RWS. BAWSCA The Bay Area Water Supply and Conservation Agency (BAWSCA) is a special district enabled by an act of the California Legislature and formed by its member agencies in 2003. BAWSCA members are the 16 cities, 8 water districts, and 2 private water providers that receive water from the SFPUC RWS. BAWSCA agencies provide water to over 1.8 million people and 40,000 commercial, industrial and institutional accounts in Alameda, San Mateo and Santa Clara Counties. BAWSCA provides regional water supply planning, resource development, and conservation program services. Its goal is to ensure the member agencies get a reliable supply of high quality water at a fair price. The City is represented on the BAWSCA Board of Directors. ACWA BAWSCA is a member of the Association of California Water Agencies (ACWA). ACWA is the largest statewide coalition of public water agencies in the country made up of more than 430 public agency members collectively responsible for 90% of the water delivered to cities, farms and businesses in California. ACWA’s mission is to help members promote the development, management and use of good quality water at the lowest practical cost and in an environmentally responsible manner. ACWA serves the water industry and the public by promoting local agencies as the most efficient means of providing water service, sharing reliable scientific and technical information, tracking and shaping state and federal water City of Palo Alto Page 3 policy, advocating for sound legislation and regulation, and facilitating cooperation and consensus among all interest groups. SWRCB The SWRCB is charged with setting water quality object ives to protect beneficial uses of water in the Bay Delta through its Water Quality Control Plan for the San Francisco Bay/Sacramento - San Joaquin Delta Estuary (Bay Delta Plan). The SWRCB is proposing to update two elements of the 2006 Bay Delta Plan: The San Joaquin River flow objectives to protect fish and wildlife and the Southern Delta salinity objectives. Water Conservation and Alternative Resources BASWCA agencies and the SFPUC are committed to water conservation and projects that reduce the dependence on imported water. The average water use for residents in the three counties during the height of the drought was 56 gallons per day, one of the lowest levels in California. While agencies continue to promote additional water use efficiency and conservation, there are limits to what can be achieved. BAWSCA agencies and the SFPUC have dedicated resources to projects that reduce the demand for imported water , including recycled water distribution expansion, a groundwater recovery project, water transfer agreements, and preliminary work on a potential advanced treated water project. Bay Delta Plan On July 6, 2018, the SWRCB released the Bay Delta Plan update requiring flows of 40% of unimpaired flow from February through June every year, whether it is wet or dry, on the San Joaquin River and its tributaries - the Stanislaus, Tuolumne and Merced Rivers. At the same time, the SWRCB is working on a similar proposal for the Sacramento River. BAWSCA, ACWA, and the SFPUC support the objectives of the Bay Delta Plan but oppose the SWRCB’s proposal. Comments stating this position were submitted to the SWRCB in March 2017 by the SFPUC, BAWSCA, ACWA, and the City of Palo Alto. Key features of the SWRCB’s proposed Bay Delta Plan have not changed in the July 6, 2018 version. On July 9, 2018, ACWA released the following statement: “ACWA recognizes that the State Water Board is wrestling with an enormously difficult problem that has bedeviled California resource managers for decades. ACWA and several water suppliers from throughout California previously urged the State to move in a new direction, embracing comprehensive, integrated strategies for fishery management that we believe would be better for fisheries and water supply. However, the substance of the latest draft is the same as the original proposal that raised so much controversy. If we don’t find a way to better implement the state’s core value of advancing both the environment and water supply, California will be missing a critically important opportunity.” The California Department of Fish and Wildlife (CDFW) submitted a joint letter with the California Department of Water Resources (DWR) that specifically asks for (1) a negotiated City of Palo Alto Page 4 settlement and (2) expresses CDFW’s agreement that functional flows are critical to restore the viability of anadromous fisheries. The appropriateness of a settlement process approach is the central theme of DWR/CDFW’s comments. Discussion If implemented, the SWRCB’s proposed Bay Delta Plan would result in drastically reduced available water supply during the next drought forcing severe water restrictions for the City’s residents and businesses. Under the Bay Delta Plan, at normal water demand levels, 40 -50% rationing could be necessary during dry years. Even at current depressed water usage levels, 20-30% rationing would be required in a dry year. The number of dry year shortages would double or triple from the existing projected number of 1 in every 10 years to 2 or 3 in every 10 years. Reductions of this magnitude and frequency will threaten the economic health of the region, community development, and new housing. Maintaining Palo Alto’s urban canopy will be a challenge; many trees were lost in the most recent drought and many more were stressed. The SFPUC has developed an alt ernative to the proposed Bay Delta Plan that could provide adequate water for people and businesses, as well as for wildlife and the environment without draconian reduction measures. This alternative, based on the findings of multiple credible Tuolomne River studies, includes reasonable, functional flows with a commitment to other non-flow measures such as habitat restoration and predator control. Finding a solution that addresses the sustainability issues on the Tuolumne River and strikes a balance between the competing needs of water uses can be achieved through a negotiated settlement. From the beginning, Governor Brown has supported a settlement process. The parties included in the settlement meetings have been determined by the Governor’s office and have included the SFPUC along with agricultural interests and environmental non-governmental organizations. BAWSCA is privy to the information resulting from the discussions although it is not one of the parties invited to the meetings. A voluntary settleme nt agreement would permit the interested parties to negotiate a reasonable alternative to the SWRCB’s proposed Bay Delta Plan, avoiding potentially lengthy and costly litigation and providing benefits for fisheries as well as agricultural and urban water users. The SFPUC, with the full support of BAWSCA agencies including Palo Alto, fills an important role in the negotiation process, and may increases the probability that a settlement will be achieved. The support of the collation, formed by the SFPUC an d BAWSCA as well as the state’s Department of Water Resources, for the negotiated settlement process described in the attached resolution sends a clear message to the governor and to the SWRCB that the settlement process can be successful. City of Palo Alto Page 5 As a result, staff recommends that the Council express its support for the objectives of the State Board’s Bay Delta Plan, along with support for a negotiated settlement process. Resource Impact The financial impact of the proposed Bay Delta Plan could be significant . More expensive water supply alternatives will need to be developed. Local businesses, community development, and new housing could be impacted. A required 40-50% reduction in water use would significantly impact the SFPUC rates charged to BAWSCA agencies because fixed costs associated with the RWS would be collected over fewer units of water sold. Policy Implications The adoption of the proposed resolution supports the 2018 Utilities Strategic Plan which calls for managing our finances optimally and using resources efficiently to meet our customers’ service priorities. Environmental Review Council’s adoption of the proposed resolution does not meet the definition of a project, under Public Resources Code section 21065, therefore California Environmental Quality Act (CEQA) review is not required. Attachments:  Attachment A: Resolution Supporting a Bay Delta Plan Negotiated Settlement  Attachment B - BAWSCA Statement 1 Resolution No. ____ Resolution of the Council of the City of Palo Alto Supporting the Objective of the State Water Resources Control Board’s Bay Delta Plan and a Negotiated and Voluntary Settlement of Water Issues on the Tuolumne River R E C I T A L S A. The City of Palo Alto (City) purchases 100% of its potable water supply from the San Francisco Public Utilities Commission (SFPUC), of which approximately 85% is sourced from the Tuolumne River. B. The Bay Area Water Supply and Conservation Agency (BAWSCA) is a special district that provides regional water supply planning, resource development, and conservation program services to enhance the reliability of the 16 cities, 8 water districts, and 2 private water providers that provide water to over 1.8 million people and 40,000 commercial, industrial and institutional accounts in Alameda, San Mateo and Santa Clara Counties. C. BAWSCA was enabled by a special act of the California Legislature and was formed by its member agencies in 2003. D. The City is a BAWSCA member and is represented on the BAWSCA Board of Directors. E. The SFPUC operates the Regional Water Supply System in accordance with an 8.5 year “design drought”; climate change is expected to result in more frequent and more severe droughts in the future. F. BAWSCA agencies and the SFPUC are committing resources to reduce the need for imported water , including recycled water, groundwater recovery , and water transfer agreements. G. On July 6, 2018, the State Water Resources Control Board (SWRCB) issued a Draft Final Bay Delta Plan Update (Bay Delta Plan) calling for increased flows on the Tuolumne River to 40% of unimpaired flows between the months of February and June, regardless of water supply conditions . H. The proposed Bay Delta Plan could d rastically reduce available water supply during the next drought forcing severe water restrictions for the City’s residents and businesses. I. The SFPUC has been participating in settlement discussions with agricultural interests and environmental non -govern mental organizations. ATTACHMENT A 2 J. The SFPUC p roposed , and BAWSCA supports, an alternative to the Bay Delta Plan based on multiple credible scientific studies of the Tuolomne River, that includes habitat restoration, predatory species control and target flow increases . The Council of the City of Palo Alto RESOLVES as follows: SECTION 1. The City supports the objectives of the Bay Delta Plan to improve conditions on the Tuolumne River. SECTION 2. The City supports a negotiated and voluntary settlement process of water issues on the Tuolumne River that will provide adequate water for people and businesses as well as for wildlife and the environment. SECTION 3. Council’s adoption of this resolution does not meet the definition of a project, under Public Resources Code section 21065, therefore California Environmental Quality Act review is not required. INTRODUCED AND PASSED: XXX, 2018 AYES: NOES: ABSENT: ABSTENTIONS: ATTEST: __________________________ _____________________________ City Clerk Mayor APPROVED AS TO FORM: APPROVED: __________________________ _____________________________ Assistant City Attorney City Manager _____________________________ Director of Utilities _____________________________ Director of Administrative Services 155 Bovet Road, Suite 650, San Mateo, CA 94402 ph 650 349 3000 fx 650349 8395 www.bawsca.org Statement from Nicole Sandkulla, Chief Executive Officer, About the State Water Resources Control Board (State Board)’s “Draft Final Bay-Delta Plan Update,” Which Could Severely Reduce the Water Supply for Residents and Businesses in Alameda, San Mateo, and Santa Clara Counties July 18, 2018 Released on July 6th, the State Board’s “Draft Final Bay-Delta Plan Update” could seriously reduce water supply during the next drought; forcing severe water reductions for the 1.8 million residents, many of the 30,000 businesses and thousands of community agencies in Alameda, San Mateo, and Santa Clara counties; to provide more water for the environment, including fish. BAWSCA’s analysis of this plan indicates that, if implemented, water users could be required to reduce their average per person water use to 41 gallons a day during a drought, from the recent pre-drought level of 79 gallons per day, and for some water users, to 25 gallons per day or less. This severe water cutback could also threaten jobs as business activity might be reduced or prevented, and some businesses might have to move elsewhere. Community development might be delayed, and new housing might not be built. A community without enough water for job growth and fully operational businesses, hospitals and public institutions is unsustainable. The average water use of residents in the three counties at the height of the most-recent drought was 56 gallons per day, one of the lowest levels in California. Obviously, the opportunity for these residents to conserve more water is very limited. In earlier comments to the State Board on the prior draft plan, 11 of the 26 BAWSCA agencies, which distribute water to users in the three counties specifically cited health and safety concerns from mandated reductions in their water supply. The State Board indicated that it believes this vital water for residents and businesses can be easily replaced. But no replacement supply exists or can be identified for this amount of water. Fortunately, there is a good, reasonable alternative to the State Board’s plan that could provide adequate water for people and businesses, as well as for wildlife and the environment without draconian reduction measures. That alternative is a negotiated settlement of the water issues. This alternative has been recommended to the State Board by the San Francisco Public Utilities Commission, which operates the Bay Area Regional Water System, and by other water providers in the area. From the beginning of the State Board’s process, Governor Brown also has supported a negotiated settlement to resolve the issues. A voluntary settlement agreement would be the most logical, helpful, and responsible way to proceed, rather than a unilateral order from the State Board. BAWSCA supports the objective of the State Board’s Bay-Delta Plan, opposes the Board’s proposed unilateral Plan for the Tuolumne River, and strongly favors the idea of a negotiated settlement. ##### ATTACHMENT B CITY OF PALO ALTO TO: 5 HONORABLE CITY COUNCIL FROM: ED SHIKADA, ASSISTANT CITY MANAGER/ UTILITIES GENERAL MANAGER DATE: AUGUST 20, 2018 SUBJECT: SUPPLEMENTAL INFORMATION FOR AGENDA ITEM 5 This is an informational addendum to assist with discussion of the August 20, 2018 Council Agenda Item 5 (Adoption of a Resolution Supporting the Objectives of the State Water Resources Control Board's Bay Delta Plan and a Negotiated Voluntary Settlement of Water Issues on the Tuolumne River). Last week the State Water Resources Control Board chose not to make a decision on the Bay Delta Plan at its meeting tomorrow, continuing the ·action to a later date and emphasizing the value of a voluntary settlement. The letter was based on a request from the California Natural Resources Agency. Both letters are attached. Ed Shikada General Manager I Assistant City Manager Utilities Department 6053954 August 15, 2018 Felicia Marcus, Chair Steven Moore, Vice-Chair Tam M. Doduc, Member Dorene D'Adamo, Member E. Joaquin Esquivel, Member State Water Resources Control Board 1001 I Street, 24th Floor Sacramento, CA 95814 EDMUND G. BROWN JR., Governor JOHN LAIRD, Secretary for Natural Resources Re: August 21, 2018 Meeting, Agenda Item 4: Consideration of a Proposed Resolution to Adopt Amendments to the Water Quality Control Plan for the San Francisco Bay/Sacramento San Joaquin Delta Estuary and Adopt the Final Substitute Environmental Document Dear Chair Marcus, Vice-Chair Moore, and Members: I write on behalf of my agency and the Departments of Water Resources and Fish and Wildlife (Departments) pursuant to the procedures stated in your "Notice of Public Meeting" (July 6, 2018), p. 3. Specifically, I request that you give the Departments the opportunity to discuss information they could present on scientific methods available to evaluate the relative benefits of flow and non-flow actions to protect native salmonid fish species in the San Joaquin Basin. We request 30 minutes for the presentation. This information bears on adaptive implementation, as well as the voluntar)' settlement agreer:nents which the Departments expect to complete and submit. SEO Appendix K, pp. 30, 36. Further, we request that the State Water Board exercise your authority to continue the meeting beyond August 22 , 2018 (Notice, p. 1) so that final board action will take place at a future board meeting. Thank you for consideration of this request. Sincerely, cr~dltw& Secretary for Natural Resources 1416 Ninth Street, Suite 1311, Sacramento . CA 95814 Ph. 916.653.5656 Fax 916.653.8102 http://resources.ca.gov Baldwin Hills Comtrvancy • Californ ia Coastal Commiss ion • Cal1fomia Coastal Conmvancy • Ca/iforniaConsetV?o°" Corps • Ca6fom1a Tahoe ConsttVOn<y Coachtlla Valley Mountains Constrvancy • Colorado River Boord of CaNforrna • ~ta Prottctron Commission • Delta Sttwardship Council • ~rtm•nt of Booting & Wattrways • Department of Conservation Department of Fish & Garn• • Dtparrment of Forestry & Firt Protection • Departmtnt of Parks & Rtcrtation • Dtpartmtnt of Rtsourcts Rtcyc6ng and RtcO>fl)' • Dtpartmtnt af Wattr Resources ftJ69yResources, Conservation & Dem~nt Comm1Ssion • Nattve Atm'rican Htntage Commission • Sacromento·Sanloaqum ~Ira ConRrvancy • San Dkgo River Conservancy San Francisco Bay Conservation & Dc!velopmtnt Commission • San Gabrkl & Lower Los Angeks Rivers & Mountains ConSttVancy • SanJoaqwn RtverConservancy Santa Monica Mountains Conservancy • Sierra Nevada Conservancy • State Lands Comm iSSlon • Wiidiife Conservation Board Water Boards State Water Resources Control Board August 15, 2018 Honorable John Laird Secretary for Natural Resources California Natural Resources Agency 1416 Ninth Street, Suite 1311 Sacramento . CA 95814 Dear Secretary Laird : VIA U.S. MAIL AND EMAIL I have received the request you submitted on behalf of the California Natural Resources Agency, Department of Fish and Wildlife, and Department of Water Resources for an opportunity to present at next week's board meeting on adaptive implementation and voluntary settlement agreements. Your letter also requests that the board defer final action on the item As discussed below and after conferring with the Executive Director , both requests are granted . Throughout the last two years, board members and staff have repeatedly emphasized that voluntary settlement agreements can provide a faster , more durable solution to reasonably protect beneficial uses in the Lower San Joaquin River and its tributaries . The pending board action recognizes the important of both flow and non-flow actions to enhance the fisheries and provides significant flexibility for adaptive implementation . Voluntary settlement agreements present the opportunity to make the non-flow elements more concrete and reduce the potential water supply impact . I look forward to hearing from the parties involved in the voluntary settlement agreement process about their progress in this regard . Board staff will issue a revised agenda that makes clear final action will occur at a subsequent board meeting . The agenda item next week will provide the final opportunity for comment on the staff-proposed action, but final board action on the water quality control plan update will be continued to a future board meeting . Sincerely . \ L-~uk: )lL~ Yelicia Marcus Chair FELICIA MARCUS, CHAIR I E1~1EEN SoaecK, EXECUTl\11! OIR£CTOR 1001 I Strff'l. Sacramento . CA 9S814 l MelUnv AcJdrns P 0 Box 100 . Sacr11tnento , CA 95812-01 00 I www waterbOarch ca gov CITY OF PALO ALTO OFFICE OF THE CITY ATTORNEY August 20, 2018 The Honorable City Council Palo Alto, California Approval of Amendment Number Five to the Palo Alto -Stanford Fire Protection Agreement With the Board of Trustees of the Leland Stanford Junior University Extending the Term to June 30, 2018 for an Additional Fee of $6,773,624 Recommendation Staff recommends the City Council approve the attached Fifth Amendment to the Palo Alto- Stanford Fire Protection Agreement with the Board of Trustees of the Leland Stanford Junior University (“Stanford”) in the amount of $6,773,624 for the extended term of twelve (12) months through June 30, 2018. Background The City of Palo Alto has provided fire protection services to Stanford University since 1976, when the City’s fire department and Stanford’s private fire protection c ompany were consolidated. The City and Stanford entered into a fire services Agreement for a term of 50 years, providing however that either party could terminate the Agreement by providing written notice to the other party. The Agreement was amended in 19 81 and restated in 2006 related to services provided to the Stanford Linear Accelerator (SLAC). In 2012, fire protection services to SLAC were transitioned from the City of Palo Alto to the Menlo Park Fire Protection District. On October 8, 2013, Stanford notified the City that it was exercising its option to terminate the Agreement effective at least one year, and no more than two years, from the date of notice. Stanford subsequently solicited proposals from other fire protection service providers, but did not select an alternative provider. In January 2016, Stanford and Palo Alto agreed that Palo Alto would continue to provide fire services to Stanford through October 8, 2016 through a Third Amendment, and would continue to negotiate for a new long term agreement to be effective thereafter. In December 2016, the parties once again continued negotiations and approved a Fourth Amendment to continue services through June 30, 2017. The parties have continued these negotiations through FY 2018 despite the term of the fourth amendment lapsing; however, eventually City and Stanford were able to reach an agreement for prospective fire protection services and the agreement will be considered by Council on August 20, 2018. Discussion Page 2 The City and Stanford have met periodically to discuss alternative service and cost allocation models for current and future service requirements. While progress was made, the parties did not reach agreement on a full set of terms and the proposed alternative service and cost models were not implemented during the term of the Fourth Amendment ending June 30, 2017. However, over the course of June 30, 2017 and June 30, 2018, the City and Stanford have reached agreement on both a full set of terms for fire services moving forward and a settlement to terminate the original agreement from 1976. The two agreements recommended to be approved will maintain the partnership between the City and Stanford however, update for new terms based on current staffing, deployment models, and revised cos ting models. The Palo Alto Fire Department continued to provide fire services to Stanford University during these ongoing negotiations. The recommended Fifth Amendment (Exhibit A) will ensure full continuity of agreements for fire services rendered by the City up to the start of the recommended new Agreement for Service beginning on July 1, 2018 through 2023. The amount of $6.8 million recommended for this extension is based on the fire staffing models in place over the course of FY 2018. The new staffing model and revised cost allocation methodology was not implemented until January 2018. This amendment recognizes this timeframe and level of services through the quarterly invoice levels. Lastly, this amendment identifies two capital improvement projects and additional fees for these projects – Self- Contained Breathing Apparatus (SCBA) and a Ringdown System (an audible alert and dispatching system). Both of these capital improvement projects were scheduled for implementation during FY 2018. In this amendment and the Agreement for Services in the future, capital investments will be invoiced based on actual costs. Resource Impact City and Stanford negotiators agree that the City continued to provide fire protection services during the twelve month extension period for the fee of $6,773,624 and will be accounted for in the City’s FY 2018 financials to be reported in the Comprehensive Annual Financial Reports. Policy Implications The recommended Fifth Amendment provides the contract bridge for the time that was necessary for the City and Stanford to reach mutually agreeable terms for the continued provision of fire protection services into the future as outlined in the separate staff report for the new Agreement for Services. ATTACHMENTS: • Attachment A: Fifth Amendment to Fire Services Contract (1976 agreement) (PDF) Department Head: Molly Stump, City Attorney Page 3 FIFTH AMENDMENT TO PALO ALTO-STANFORD FIRE PROTECTION AGREEMENT This Fifth Amendment to the Palo Alto-Stanford Fire Protection Agreement is made effective as of July 1, 2017, between the BOARD OF TRUSTEES OF THE LELAND STANFORD JUNIOR UNIVERSITY ("Stanford"), a body having corporate powers under the laws of the State of California, and the CITY OF PALO ALTO ("Palo Alto"), a municipal corporation duly organized and existing under and by virtue of the laws of the State of California. R E C I T A L S A.Stanford and Palo Alto agreed for Palo Alto to provide fire protection services for the Stanford Campus for a term of fifty years and entered into the "Palo Alto-Stanford Fire Protection Agreement" dated October 1, 1976, as amended on September 1, 1980 and June 26, 2006 ("Agreement"). B.In 2012, the parties agreed that Palo Alto would no longer provide fire protection service to the Stanford Linear Accelerator Center (“SLAC”). C.In 2013, Stanford notified Palo Alto that it intended to terminate the Agreement. Under the terms of the Agreement and the notice of termination, the effective termination date was October 8, 2015. D.In January 2016, Stanford and Palo Alto further amended the Agreement to provide that Palo Alto would continue to provide fire services to Stanford continuously through and including October 8, 2016, for a fixed fee (“Third Amendment”). E.In October 2016, the parties further amended the Agreement (“Fourth Agreement”) to provide for an additional temporary extension of services under terms described in the amendment. F.The parties now wish to further amend the Agreement through this Fifth Amendment to provide for an additional temporary extension of services under terms described herein. During the extension period, it is the parties’ intention to negotiate the terms of a long-term agreement to provide fire services. NOW, THEREFORE, in consideration of the covenants, terms, conditions, and provisions of this Fifth Amendment, the parties agree to amend the Agreement, as modified by the Third and Fourth Amendments, as follows. Except as amended, the Agreement, as modified by the Third and Fourth Amendments, shall remain in full force and effect. SECTION 1. Article 1 is amended by adding Section 1.2.3 to read as follows: Attachment A “Article 1: Operative Date and Termination 1.2.3 July 1, 2017 through June 30, 2018 Notwithstanding any notices of termination issued under the Agreement, the parties agree that the Agreement shall remain in force and effect through and including June 30, 2018.Unless extended by mutual agreement of the parties, the Agreement shall terminate at the close of business on June 30, 2018. SECTION 2. Article 3 is amended by adding Section 3.14 to read as follows: “Article 3: Funding 3.14 Fees for Fire Services from July 1, 2017 through June 30, 2018: (a) Notwithstanding the terms of any other Section of this Article, including but not limited to Sections 3.2, 3.3, 3.4, 3.5, 3.6, and 3.8, the parties agree that Stanford will pay Palo Alto a fixed fee in the amounts described in Section 3.14(c) below for the services described in this Agreement for the period July 1, 2017 through June 30, 2018, less revenue received for medical transport generated from calls for service on the Stanford campus for this period. This fee includes all costs and revenues for the identified period, including but not limited to personnel, vehicles, IT and revenue credits. (b) Additional Fees for Capital Projects. In addition to the fees in subsection (a) above, the parties agree that Stanford will pay Palo Alto the following fees for two capital improvement projects: (1) Self-Contained Breathing Apparatus (SCBA). Stanford shall pay 23% of the cost of replacing SCBA equipment for fire protection personnel. The total cost of the project is estimated at $800,000. Palo Alto will invoice Stanford based on actual expenditures with each installment billing. (2) Ringdown System. Stanford shall pay 16.7%, or one sixth of the total system costs of replacing the Ringdown System, an audible alert and dispatching system, to be installed in the six fire stations. The total cost of the project is estimated at $400,000. Palo Alto will invoice Stanford based on actual expenditures with each installment billing. (c) For the extension period beginning July 1, 2017 and ending June 30, 2018, Stanford shall pay Palo Alto the fee for fire service in the amounts set forth below, to be paid by the 10th day following the payment date below or by the 10th day following Stanford's receipt of an invoice for the payment, whichever is later. Invoices (Service Period) Expected Invoice Date Amount First Payment (July 1-Sept 30, 17) September 30, 2017 $1,818,534 Second Payment (Oct 1- December 31, 2017) December 31, 2017 $1,818,534 Third Payment (Jan 1-March 31, 2018) March 31, 2018 $1,568,278 Fourth Payment (April 1- June 30, 2018) June 30, 2018 $1,568,278 Payments shall be delivered to: Administrative Services Director 250 Hamilton Avenue Palo Alto, California 94301 (d) If Stanford shall fail to pay any sum to Palo Alto when due, then such late payment shall accrue interest on a daily basis at the rate equal to the current annualized yield earned by the City's investment Portfolio for the prior fiscal quarter, until fully paid. The City acknowledges the receipt of the first two payments described above and hereby waives the late fees for such payments, if any. SECTION 3. Except as herein modified, all other provisions of the Agreement, including any exhibits and the Third and Fourth Amendments, shall remain in full force and effect. IN WITNESS WHEREOF, IN WITNESS WHEREOF, the parties have by their duly authorized representatives executed this Amendment on the date first above written. CITY OF PALO ALTO James R. Keene, Jr. City Manager THE BOARD OF TRUSTEES OF THE LELAND STANFORD JR. UNIVERSITY By: Debra Zumwalt Vice President and General Counsel Eric Nickel Palo Alto Fire Chief APPROVED AS TO FORM: Molly S. Stump City Attorney City of Palo Alto (ID # 9353) City Council Staff Report Report Type: Action Items Meeting Date: 8/20/2018 City of Palo Alto Page 1 Summary Title: 620 Emerson (Nobu Restaurant Annex): Appeal of Director's Decision Title: PUBLIC HEARING/QUASI -JUDICIAL: Consideration of Appeals of the Planning and Community Environment Director’s Decision to Approve the Architectural Review Application for 620 Emerson Street (17PLN -00331) to Allow Demolition of an Existing Single Story Building and Construction of a new Two -story 4,063 Square Foot Commercial Building for the Expansion of Nobu Restaurant. The Project Includes Replacement of Three On -site Parking Spaces With Five In -lieu Spaces in the Downtown Parking Assessment District. Environmental Assessment: Exempt From the Provisions of the California Environmental Quality Act (CEQA) per Guideline Section 15303 (New Construction) Zoning District: CD -C(GF)(P) (Downtown Commercial) From: City Manager Lead Department: Planning and Community Environment Recommendation Staff recommends that Council take the following action(s): 1. Adopt the attached Record of Land Use Action, thereby denying the appeal, upholding the Director’s approval of an Architectural Review application and finding the proposed project exempt from review under the California Environmental Quality Act. Background The subject project is an application for Architectural Review to construct a new commercial building and includes a request to participate in the City’s in -lieu parking program. The Planning and Community Environment Director tentatively approved the project, which was subsequently appealed. On June 4, 2018, three Councilmembers pulled the appeal off the consent calendar to be heard at a future ‘date uncertain’, as permitted by local regulations. The June 4, 2018 staff report includes all the pertinent information related t o this project. The staff report is attached to this report. City of Palo Alto Page 2 Attachments: Attachment A: June 4, 2018 Council Staff Report for the Appeal (PDF) Attachment B: Appeal Letter (PDF) Attachment C: Director's Tentative Approval Letter (PDF) Attachment D: Draft Record of Land Use Action (DOC) Attachment E: Applicant Response to Appeal (PDF) Attachment F: Public Letters to Council (PDF) Attachment G: Project Plans (DOCX) City of Palo Alto (ID # 9231) City Council Staff Report Report Type: Consent Calendar Meeting Date: 6/4/2018 City of Palo Alto Page 1 Summary Title: 620 Emerson (Nobu Restaurant Annex): Appeal of Director's Decision Title: QUASI-JUDICIAL: Consideration of Appeals of the Planning and Community Environment Director’s Decision to Approve the Architectural Review Application for 620 Emerson Street (17PLN-00331) to Allow Demolition of an Existing Single Story Building and Construction of a new Two-story 4,063 Square Foot Commercial Building for the Expansion of Nobu Restaurant. The Project Includes Replacement of Three On-site Parking Spaces With Five In-lieu Spaces in the Downtown Parking Assessment District. Environmental Assessment: Exempt From the Provisions of the California Environmental Quality Act (CEQA) per Guideline Section 15303 (New Construction). Zoning District: CD-C(GF)(P) (Downtown Commercial) For More Information Contact the Project Planner Samuel Gutierrez at samuel.gutierrez@cityofpaloalto.org From: City Manager Lead Department: Planning and Community Environment Recommendation Staff recommends that Council take the following action(s): 1.Adopt the attached Record of Land Use Action, thereby denying the appeal, upholding the Director’s approval of an Architectural Review application and finding the proposed project exempt from review under the California Environmental Quality Act. Background The project seeks to demolish the existing building and construct a new 4,063 square foot (sf) building to accommodate the expansion of the Nobu restaurant currently located at the neighboring Epiphany hotel at 180 Hamilton. The project was reviewed by the ARB on two occasions and unanimously approved. Public comments similar to the appeal topics below were received at the hearings. Prior ARB reports are available online: City of Palo Alto Page 2 February 1, 2018 Report: https://www.cityofpaloalto.org/civicax/filebank/documents/63068 Minutes: https://www.cityofpaloalto.org/civicax/filebank/documents/63703 April 5, 2018 Report: https://www.cityofpaloalto.org/civicax/filebank/documents/64363 Minutes: https://www.cityofpaloalto.org/civicax/filebank/blobdload.aspx?BlobID=65143 The project involves the loss of three existing noncomplying on-site parking spaces. As discussed below, the new construction necessitates a new van-accessible disable access space, which substantial limits parking options and layout. Combined with the project site and alley characteristics, staff and a majority of the Board, found payment into the city’s in-lieu parking fund an acceptable means for addressing the parking requirement. On April 19, 2018, the Director of Planning issued a tentative approval of the subject project. (Attachment B) On April 27, 2018, Elizabeth Wong filed a timely appeal for the project. The key issues from the appeal are further described below. Discussion Director decisions on ARB projects are subject to a 14 day appeal period. Appeals must be scheduled on the City Council’s consent calendar within 45 days from the date of appeal. Acceptance of the report on the consent calendar accepts the Director’s determination. However, three or more council members may pull the item from consent and an appeal hearing would be scheduled for a future date. The appellant has noted the following objections to the project; the complete appeal statement is provided in Attachment A. Parking The appellant appears to object to the use of the in lieu parking fee for the redevelopment of the site and asserts underground parking and mechanical lifts should be considered for this development. Staff did explore with the applicant and other city departments the feasibility of providing underground parking and mechanical lifts. And, it is feasible to provide one accessible parking space onsite. However, the location and size of the property combined with compliance with the American Disability Act, local standards for refuse collection and other standards make it infeasible to provide additional parking onsite in an efficient or convenient parking layout. The site was previously assessed for its parking deficiency and payment of in-lieu parking fees is authorized by PAMC 18.18.090. Redevelopment would result in the loss of three noncompliant parking spaces. To make up for these three spaces, the applicant request participation in the in lieu parking program, which is permitted if it is not feasible to provide required parking on-site. City of Palo Alto Page 3 Traffic and Circulation The appellant asserts that another restaurant may bring traffic and circulation on the block to a standstill, especially during peak hours. This block is located within a developed urban environment with existing business establishments, including other restaurants. Redevelopment is consistent with applicable zoning requirements and exempt from environmental review from the California Environmental Quality Act. The City of Palo Alto typically requires a focused traffic analysis, which quantifies potential project impacts, for projects generating more than 50 trips per peak hour; the proposed development falls below this threshold. Moreover, the applicant has not provided any information to substantiate the claim that traffic flow will be impacted. Loading The applicant asserts that the loss of the three parking spaces also impacts loading zone activities that previously used those spaces for loading and notes the challenges of delivery vehicles accessing the site given the alley characteristics. While the prior tenant may have used the substandard parking spaces to provide a loading opportunity for its goods, the code provides the standard for when a code compliant parking space is required. For eating and drinking establishments, buildings over 4,999 square feet in area require one loading space. The subject project is below this standard and does not require on-site loading. Restroom Facilities The project is proposed to connect to the existing hotel (180 Hamilton) via interior access on the ground level of both sites. The hotel lobby will have remodeled restroom facilities that will be sufficient to support the restaurant operations at 620 Emerson and the hotel operations at 180 Hamilton. The appellant states concern with this design approach and future enforcement and monitoring. A condition of approval was added to the project that if the interior connections between the two sites terminate, 620 Emerson will need to provide code compliant restroom facilities. Compliance with this condition would be verified during the plan check review process in the event there is a request to close of the interior access. Moreover, the city’s building official has the authority to require that covenants be recorded against the two properties prior to building permit or final inspection if such documentation were determined necessary to meet building code requirements. Policy Implications The proposed project has been reviewed by the Architectural Review Board, applicable city departments and found to be compliant with applicable zoning regulations. The Director’s determination details compliance with applicable comprehensive plan policies. The appellant list several concerns that are not supported by the municipal code or is conjecture. Environmental Review City of Palo Alto Page 4 The subject project has been assessed in accordance with the authority and criteria contained in the California Environmental Quality Act (CEQA), the State CEQA Guidelines, and the environmental regulations of the City. Specifically, this project is categorically exempt from the provision of the CEQA as it falls under a Class 3 exemption (CEQA Guidelines Section 15303) for “new construction or conversion of small structures.” The project meets the criteria for this exemption as it is a new building that is below 10,000 square feet in area and is located within an urban area with a proposed use that is permitted within the CD-C(GF)(P) zone district. Attachments: Attachment A: Appeal Letter (PDF) Attachment B: Director's Tentative Approval Letter (PDF) Attachment C: Draft Record of Land Use Action (DOC) Attachment D: Project Plans (DOCX) CITY OF PALO ALTO CITY OF PALO ALTO. CA Office of the City Clerk CITY CLERK'S OFFICE APPEAL FROM THE DECISION OF DIRECTOR OF PLANNING AND COMMUNITY ENVIRONMENT' 18 APR 27 PH 3: 51 For appeals of final decisions on Architectural Review Board and Home Improvement Exception applications (rendered after public hearing), this appeal form shall be completed and submitted by appellant within fourteen days from date of the Director's decision. Appeals of final decisions on Individual Review applications (rendered after pubic hearing) must be submitted within ten days of the Director's decision. Complete form, the current fee and a letter stating reasons for the appeal shall be submitted to front desk staff of the Planning Division, 5* floor, City Hall, 250 Hamilton Avenue, except for 980 Fridays when City Hall is closed, when these items shall be submitted to Planning staff at the Development Center, 285 Hamilton Avenue (glass storefront across from City Hall on the corner of Bryant and Hamilton). Director of Planning includes his designees, which are Planning Managers or the Chief Planning Official Appeal Application No. Receipt No. Name of Appellant a LL G Phone (GS)a 811 — 3 o5 Po )o ( 2_04 2 yao Z Street City ZIP Address LOCATION OF PROPERTY SUBJECT TO APPEAL Street Address (Z o ia of - Name of Property Owner ('d other than appellant) Property Owner's Address Street AtO C-44 ZIP The decision of the Director of Planning and Community Environment dated , 20 wherebythe application 1<-4. P!-iJ 6°331 . .,,g-ge U.5 ./ is aArc. (file number) (original project applicant) was Q. ro v .41• , is hereby appealed for the reasons stated in the attached letter (in duplicate) ( didenied) 2 -t 1 YDDate: Signature of AppelMarrt a�-- �, PLANNING COMMISSION RECOMMENDATION TO THE CITY COUNCIL (TO BE FILLED OUT BY STAFF): Date Approved Rem and/or Conditions: Denied CITY COUNCIL DECISION (TO BE FILLED OUT BY STAFF): Date Remarks and/or Conditions: Approved Denied SUBMITTAL REQUIREMENTS SATISFIED: 1. Letter stating reasons for appeal ,..1-4/1 Received by: -4C TV\ 2. Fee (currently $280.00) Received by: •r Appeal of the Approval by the Director of Planning & Community Environment for demolition and construction of new two story building at 620 Emerson Street, Palo Alto, CA Introduction The Director of Planning & Community Environment approved on April 19, 2018, a construction project to allow demolition of an existing commercial building and the construction of a new two-story restaurant at 620 Emerson Street [17PLN-00331], following a Minor Board Level Architectural Review hearing by the Architectural Review Board on April 5, 2018. This project should not be approved or constructed as presented because of severe deficiencies in the proposal regarding parking , traffic and loading, issues of very great concern in the City of Palo Alto, and even more so in the downtown commercial core. Also, there is a requirement regarding providing independent, code -compliant restroom facilities that needs to be strengthened. Parking The proposed project will remove existing on -site parking. On page 5 of the ARB findings for approval, it states that the on -site parking will be replaced "... via the Downtown Parking Assessment Districts in -lieu fee, which provides parking off site within walking distance of the site." This is sugar-coating the fact that there is no provision for off site parking within walking distance. The nearest proposed garage that is expected to provide for this removal is a half -mile away and a couple of years away from completion. Moreover, the proposal never addressed other options such as mechanical lifts and underground parking which other developments in Palo Alto have been asked to provide or at least consider. Traffic and Congestion Additionally, there is the issue of congestion to consider. Yes, the 600 block of Emerson Street is a successful location for several food service establishments. Location of another restaurant may bring traffic and circulation on this block to a standstill, especially during the peak evening hours. This congestion is exacerbated by the elimination of three existing on -site parking. Loading The three existing parking spaces also act as loading space for this site. The elimination of on -site parking creates loading problems for this site. Access to the three existing parking spaces is through the rear alleyway. ARB Finding #4 mentions that "... the site has access to a rear alleyway which can be utilized by service and delivery vehicles that support the day to day operation of the proposed restaurant." This is indeed the case for the prior use as a flower shop. However, a large restaurant is a more intensive use and the alleyway is already heavily used by vans and small delivery trucks. Larger delivery trucks and vehicles that service the grease traps for example cannot make the two sharp turns in the alley. So they also wind up blocking Emerson Street while they go about their business. Restroom Facilities Item 10 of the Conditions of Approval from Planning Division requires that "...if and when access to 180 Hamilton is terminated, on site code compliant restroom facilities shall be provided." There is no provision for monitoring or enforcement of this provision once the building permit is approved. There should be provisions for either a permanent recorded easement to use the facilities at 180 Hamilton in perpetuity or until the independent restrooms are provided on -site. Submitted by: Yo, LIC By Elizabeth Wong, Manager 0 CITY OF PALO ALTO PLANNING & COMMUNITY ENVIRONMENT 250 Hamilton Avenue. 5th Floor Palo Alto, CA 94301 650 .329.2441 Montalba Architects, Inc/Blake Hussey 2525 Michigan Ave., Building T4 Santa Monica, CA 90404 Subject: 620 Emerson St -Minor Board Level Architectural Review 17PLN-00331 Dear Blake, April 19, 2018 On April 5, 2018 the Architectural Review Board recommended approval of the application referenced above and as described below. The Director of Planning and Community Environment (Director} approved the project on April 19th, 2018. The approval will become effective 14 days from the postmark date of this letter, unless an appeal is filed in accordance with Title 18 of the Palo Alto Municipal Code. The approval was based on the findings in Attachment A, and is subject to the conditions of approval in Attachment B for the project. The project is described as follows: 620 Emerson St [17PLN-00331): Request for Architectural Review to Allow the Demolition of an existing commercial building and the construction of a new two-Story approximately 4,063 Square Foot Restaurant. Environmental Assessment: Class 3 exemption (CEQA Guidelines Section 15303) for "new construction or conversion of small structures." The project meets the criteria for this exemption as it is a new building that is below 10,000 square feet in area and is located within an urban area with a proposed use that is permitted within the CD-C(GF)(P) zone district (Downtown Commercial). Unless an appeal is filed, this project approval shall be effective for one year from May 3rc1, 2018, within which time construction of the project shall have commenced. Application for extension of this entitlement may be made prior to the one year expiration. The time period for a project may be extended once for an additional year by the Director of Planning and shall be open to appeal at that time. In the event the building permit is not secured for the project within the time limits specified above, the Architectural Review approval shall expire and be of no further force or effect. Should you have any questions regarding this ARB action, please do not hesitate to contact the Project Planner, Samuel Gutierrez, by email at samuel.gutierrez@cityofoaloalto.org by phone at (650) 329- 2225. Sincerely, ~ ~ Jodie Gerhardt, AlCP Current Planning Manager cc: PA Hotel Holding LLC, 101 Ygnacio Valley Rd., Suite 320 Walnut Creek, CA 94596 Attachments: A: Findings for Architectural Review Approval B: Conditions of Approval City Of Pal oA lto.o rg ATTACHMENT A ARB FINDINGS FOR APPROVAL 620 Emerson Street 17PLN-00331 The design and architecture of the proposed improvements, as conditioned, complies with the Findings for Architectural Review as required in Chapter 18. 76 of the PAMC. Finding #1: The design is consistent with applicable provisions of the Palo Alto Comprehensive Plan, Zoning Code, coordinated area plans (including compatibility requirements), and any relevant design guides. On balance, the project has been found in conformance with the Comprehensive Plan Goals and Policies. @mp Plan Goqls and Polities i How project adheres or does hQt ailhere~ Comp Plan The Comprehensive Plan land use designation The project continues the Regional for the site is Regional Commercial. Commercial land use. Land Uii'and Community Design Element GOAL B-6 : Attractive, vibra nt retail centers, each with a mix of uses and a distinctive character. POLICY B-6.1 Support and enhance the University Avenue/ Downtown area as a vital mixed use area prioritizing retail, personal service, small office, start-ups, restaurant, residential and arts and entertainment uses. Recognize the importance of an appropriate retail mix, including small local businesses, to the continued vitality of Downtown. The proposal would result in no net loss of retail as the proposed restaurant use is considered retail like, maintaining a similar mixture of uses in the i ndicative of the Downtown area. I ' I I GOAL L-4: Inviting pedestrian scale centers that offer a variety of retail and commercial services and provide focal points and community gathering places for the city's residential neighborhoods and employment districts. The new building would have large windows that connect the proposed restaurant to the street and will provide a large awning that 1 spans the length of the building, creating a more pleasant pedestrian environment. POLICY L-4.4 : Ensure all Regional Centers and Multi-Neighborhood Centers provide centrally located gathering spaces that create a sense The project will create a new building with a new restaurant use which includes new pedestrian furniture for public use on private Page 2 of 17 of identity and encourage economic revitalization. Encourage public amenities such as benches, street trees, kiosks, restrooms and public art. POLICY L-4.7: Maintain and enhance the University Avenue/Downtown area as a major commercial center of the City, with a mix of commercial, civic, cultural, recreational and residential uses. Promote quality design that recognizes the regional and historical importance of the area and reinforces its pedestrian character. POLICY L-4.8: Ensure that University Avenue/Downtown is pedestrian-friendly and supports bicycle use. Use public art, trees, bicycle racks and other amenities to create an environment that is inviting to pedestrians and bicyclists POLICY L-6.1: Promote high-quality design and site planning that is compatible with surrounding development and public spaces. POLICY L-9.10.2: Encourage the use of compact and well-designed utility elements, such as transformers, switching devices, backflow preventers and telecommunications infrastructure. Place these elements in locations that will minimize their visual intrusion. property, maintaining the Downtown area's pedestrian identity. The large windows that allow clear views into the proposed restaurant. This design feature is consistent with the existing design of the businesses along Emersion that also have large open windows that reinforce the pedestrian characteristic of Downtown Palo Alto. The project includes new street furniture (bench seating) within the recessed window area of the fa~ade and will install a new bike rack within the public right of way, enhancing the pedestrian and bicycle friendly environment of the area. The project proposes a new building that is in scale with the adjacent single story buildings along Emerson Street and will include the use of high quality materials such as bronze and stone. The project locates new backflow preventers within the fa~ade via hidden cabinets, removing them from public view. The project would be consistent the Downtown Design Guidelines as it involves an active retail­ like use (eating and drinking use) and the new fa~ade materials are consistent with those listed in the Guidelines. The new fa~ade provides a recessed entry, a new awning, and glass windows with bench seats that fit the character of the smaller store front pattern and setbacks of the adjacent buildings. These features will also help to activate the street. The proposed green roof would further enhance views from the adjacent hotel and other taller buildings in the area. Finding #2: The project has a unified and coherent design, that: a. creates an internal sense of order and desirable environment for occupants, visitors, and the general community, b. preserves, respects and integrates existing natural features that contribute positively to the site and the historic character including historic resources of the area when relevant, Page 3 of 17 c. is consistent with the context-based design criteria of the applicable zone district, d . provides harmonious transitions in scale, mass and character to adjacent land uses and land use designations, e. enhances living conditions on the site (if it includes residential uses) and in adjacent residential areas. T he project is proposing a new building with a fa~ade that will enhance the immediate neighborhood and pat rons of the local businesses alike. The design of the new building is consist ent with the context-based design criteria within the CD-C(GF)(P) zone, as further described below. In addition , the project will integrate the exterior ground floor fa~ade of the adjacen t hotel, as it expands the existing restaurant from 180 Hamilton Avenue to 620 Emerson Street. The proposed fa~ade would also better connect the building with the existing character and streetscape along Emerson Street. The new building will be built to the property lines similar to other existi ng buildings in the area and would preserve the pedestrian scale of the area . In add it ion, new bench seats are proposed within the window recesses and new bicycle racks will be installed in the public right way, improving the pedestrian and bicycle environment of the area. Pursuant to PAMC 18.16.090{b), the following context-based design considerations and findings are applicab l e to this project. These context-based design criteria are intended to provide additional standa r ds to be used in the design and evaluation of development in a commercial district. The purpose is to encourage development in a commercial district to be responsible to its context and compatib ility with adjacent development as we ll as to promote the estab li sh ment of pedestrian oriented design . 1. Pedestrian and Bicycle Environment The design of new projects shall promote pedestrian walkabi/ity, a bicycle friendly environment, and con nectivity through design elements 2. Street Building Facades Street facades shall be designed to provide a strong relationship with the sidewalk and the street (s), to create an environment that supports and encourages pedestrian activity through design elements 3. Massing and Setbacks Project Consistency The project will have the same scale as the existing buildings in the area, mainta i ning the areas pedestrian environment and scale. The project includes benches along i ts front fa~ade to promote a pedestrian friendly environment. The pr oposed build i ng includes a recessed entry and awning that will funct i on as a shelter for pedestrians. The project also in clu d es new seating that can be utilized by the public supporting pedestrian act ivity. The proposed bu il ding will have large clear w in dows that connect the interior of the building to the sidewalk and street, promoting pedestrian activity. Page 4 of 17 Buildings shall be designed to minimize massing and conform to proper setbacks 4. Low Density Residential Transitions Where new projects are built abutting existing lower scale residential development, care shall be taken to respect the scale and privacy of neighboring properties S. Project Open Space Private and public open space shall be provided so that it is usable for the residents and visitors of the site 6. Parking Design Parking shall be accommodated but shall not be allowed to overwhelm the character of the project or detract from the pedestrian environment 7. Large Multi~Acre Sites Large sites (over one acre) shall be designed so that street, block, and building patterns are consistent with those of the surrounding neighborhood 8. Sustainability and Green Building Design Project design and materials to achieve sustainability and green building design should be incorporated into the project The proposed project will not substantially increase the existing massing or setbacks from the street. This finding does not apply. This finding does not apply. The proposed project will remove existing on-site parking and replace them via the Downtown Parking Assessment Districts in­ lieu fee, which provides parking off site within walking distance of the site. This finding does not apply The project will be constructed in accordance with current green building energy efficiency requirements. The project will also utilize a green roof that would reduce runoff from the roof and lower the heat absorption of the building, leading to lower demands on the HVAC systems. Finding #3: The design is of high aesthetic quality, using high quality, integrated materials and appropriate construction techniques, and incorporating textures, colors, and other details that are compatible with and enhance the surrounding area. The project involves materials which are durable and of high quality finishes consisting of bronze and stone. The new fa~ade will have a light colored textured stone finish that will better fit with the existing character of the area and will enhance the surrounding area. Page 5 of 17 Finding #4: The design is functional, allowing for ease and safety of pedestrian and bicycle traffic and providing for elements that support the building's necessary operations (e.g. convenient vehicle access to property and utilities, appropriate arrangement and amount of open space and integrated signage, if applicable, etc.). The proposed building will mainta i n the pedestrian scale of the area and promote a pedestrian friendly environment by including benches along its front fa~ade. A recessed entry and awning that will function as a shelter for pedestrians are proposed and would provide a refuge for pedestrians from the elements. The proposed building w ill also have large clear windows that connect the interior of the building to the sidewalk and street, promoti n g pedestrian activity. The project includes new utilities w h ich w ill be easily accessible via hidden panels within the fa~ade keeping them out of the public right of way and out of sight. The site is located within the downtown parking assessment district which all ows for more convenient parking options. Additiona lly, the site has access to a rear alleyway wh ich can be utilized by service and delivery vehicles that support the day to day operation of the proposed rest aurant. Finding #5: The landscape design complements and enhances the building design and its surroundings, is appropriate to the site's functions, and utilizes to the extent practical, regional indigenous drought resistant plant materia l capable of p r oviding desirable habitat that can be appropriately maintained. The project includes new planters along the si dewalk and a green roof which can be viewed partially through the open skylight within the building and will be clearly visible to patrons within the adjacent hotel and other taller build i ngs in the area. The green roof and new planters will contribute to the overall character of Downtown. Finding #6: The project incorporates design principles that achieve sustainability in areas related to energy efficiency, water conservation, building materials, landscaping, and site planning. The p roject will comply with all applicable green building codes for energy efficient buildings such as the use of energy efficient lighting and the construction debris diversion rate requirement minimizing trips to landfi ll s. The proposed green roof will reduce runoff and reduce the heat island effect while providing additional green space over a more traditional roof Page 6 of 17 PLANNING DIVISION ATTACHMENT B 620 Emerson Street 17PLN-00331 1. CONFORMANCE WITH PLANS. Construction and development shall conform to the approved plans entitled, "NOBU PA 620" stamped as received by the City on March 26th, 2018 on file with the Planning Department, 250 Hamilton Avenue, Palo Alto, California except as modified by these conditions of approval. 2. BUILDING PERMIT. Apply for a building permit and meet any and all conditions of the Planning, Fire, Public Works, and Building Departments. 3. BUILDING PERMIT PLAN SET. The Architectural Review (AR) approval letter including all Department conditions of approval for the project shall be printed on the plans submitted for building permit. 4. PROJECT MODIFICATIONS: All modifications to the approved project shall be submitted for review and approval prior to construction. If during the Building Permit review and construction phase, the project is modified by the applicant, it is the responsibility of the applicant to contact the Planning Division/project planner directly to obtain approval of the project modification. It is the applicant's responsibility to highlight any proposed changes to the project and to bring it to the project planner's attention. 5. PROJECT EXPIRATION. The project approval shall be valid for a period of two years from the original date of approval. In the event a building permit(s), if applicable, is not secured for the project within the time limit specified above, the AR approval shall expire and be of no further force or effect. Application for a one year extension of this entitlement may be made prior to the expiration. 6. PARKING IN-LIEU FEES: Parking in-lieu fees shall be paid for five (5) parking spaces prior to issuance of Building permits at the rate set, per in-lieu space, at the time of payment (See condition #13) 7. BICYCLE PARKING: One new short term bicycle rack shall be installed within the public right of way, and one long term bicycle rack shall be installed on site to the satisfaction of the Chief Transportation Official. All bicycle racks shall be installed prior to final Planning Inspection. 8. VEHICLE LOADING: Vehicle loading and unloading shall not impede the movement of traffic for extended periods of time. 9. REAR DOOR: The rear door (door 103 on plans) shall remain closed during business hours to minimize noise from projecting into in rear property of the adjacent single family residence. 10. RESTROOM FACILITIES: If and when access to 180 Hamilton is terminated, on site code compliant restroom facilities shall be provided. Page 7 of 17 11. ARB SUBCOMMITIEE: Prior to the i ssuance of buHding permits, the appl ica nt shall return to the ARB subcommittee for approva • of the following items, t o the satisfaction of the Director of Planning and Commun ity Environme nt: a. Review of t h e landsca p ing design of th e green roof area to ens u re conformance with Finding #5. 12. TRASH ROOM: The trash room shall be used so te &y for the temporary storage of refuse and recycli n g that is disposed o n a reg u lar basis and sha ll be closed and locked during non-business hours. 13. ESTIMATED IMPACT FEE: Estimated Deve topment Impa ct Fees in the amoun t of $340,320.34, shall be paid prior to the iss uance of the r ela ted building perm it . 14. IMPACT FEE 90-DAY PROTEST PERIOD. Ca li forn i a Govern ment Code Section 660 20 provides that a project applicant w h o desires to protest the fees, dedications, reservations, or other exactions imposed on a development project must initiate the protest at the time the development project is approved or conditionally approved or within ninety (90) days afte r the date that fees, dedications, reservations or exactio n s are impose d on the Projec t. Additionally, procedural requirements for protesting these development fees, dedications ; reservations and exactions are set forth in Government Code Section 66020. IF YOU FAIL TO INITIATE A PROTEST WITHIN THE 90-DAY PERIOD OR FOLLOW THE PROTEST PROCEDURES DESCRIBED I N GOVERNMENT CODE SECTION 66020, YOU Will BE BARRED FROM CHALLENGING THE VA LI DITY OR REASONABLENESS OF THE FEES, DEDICATIONS, RESERVATIONS, AND EXACTIONS. If these requirements constitu te fees, taxes, a ssessments, dedications, reservations, or other exactions as specified in Government Code Sections 66020(a) or 66021, this is to provide notification that, as of the date of this notice, the 90-day period has begun in which you may p rotest these requirements. This matter is subject t o the California Code of Civil Procedu r es (CCP) Section 1094.5; the time by which judicial review must be sought is governed by CCP Section 1094.6. 15. INDEMNITY: To the extent permitted by law, the Applicant shall indemnify and hold harmless the City, its City Council, its officers, employees and age n ts (the "indemnified parties") from and against any claim, action, or proceeding brought by a t hird party against the i ndemnifie d parties and the applicant to attack, set aside or void, any permit or approval authorized hereby for the Project, including (without lim itation) reimbursing the City for its actual attorneys' fees a nd costs incurred in defense of the litiga t ion . The City may, i n its sole discretion, elect to defend any such action with attorneys of its own cho ice . 16. FINAL INSPECTION: A Planning Division Final inspection w m be required to determi n e substanttal compliance with the appr oved plans prior to the scheduling of a Building Division fina l. A ny revisions during the building process must be approved by Planning, including but not li mited to; materials, landscaping and hard surface locations . Contact your Project Pl anner, Samuel Gutierrez at samuel.gutierrez@ci ty o fpaloalto.org to schedule t his inspecti on . PUBLIC WORKS ENGINEERING 17. Teak p •a nters proposed in the right-of-way shall be removable and moved out of the righ t of way at the end of each business day. Pa ge 8 of 17 18. SIDEWALK, CURB & GUTIER: As part of this project, the applicant must replace those portions of the existing sidewalks, curbs, gutters or driveway approaches in the public right-of-way along the frontage(s) of the property that are broken, badly cracked, displaced, or non-standard, and must remove any unpermitted pavement in the planter strip. Contact Public Works' inspector at 650- 496-6929 to arrange a site visit so the inspector can determine the extent of replacement work. The site plan submitted with the building permit plan set must show the extent of the replacement work or include a note that Public Works' inspector has determined no work is required. The plan must note that any work in the right-of-way must be done per Public Works' standards by a licensed contractor who must first obtain a Street Work Permit from Public Works at the Development Center. 19. STREET TREES: The applicant may be required to replace existing and/or add new street trees in the public right-of-way along the property's frontage(s). Call the Public Works' arborist at 650- 496-5953 to arrange a site visit so he can determine what street tree work, if any, will be required for this project. The site plan submitted with the building permit plan set must show the street tree work that the arborist has determined, including the tree species, size, location, staking and irrigation requirements, or include a note that Public Works' arborist has determined no street tree work is required. The plan must note that in order to do street tree work, the applicant must first obtain a Permit/or Street Tree Work in the Public Right-of-Way from Public Works' arborist (650-496-5953). 20. GRADING & DRAINAGE PLAN: The plan set must include a grading & drainage plan prepared by a licensed professional that includes existing and proposed spot elevations and drainage flow arrows to demonstrate proper drainage of the site. Adjacent grades must slope away from the house a minimum of 2%. Downspouts and splashblocks should be shown on this plan, as well as any site drainage features such as swales. Grading will not be allowed that increases drainage onto, or blocks existing drainage from, neighboring properties. Public Works generally does not allow rainwater to be collected and discharged into the street gutter, but encourages the developer to keep rainwater onsite as much as feasible by directing runoff to landscaped and other pervious areas of the site. See the Grading & Drainage Plan Guidelines for New Single Family Residences: http://www.cityofpaloalto.org/civicax/filebank/documents/2717 21. GRADING PERMIT: The site plan must include an earthworks table showing cut and fill volumes. If the total is more than 100 cubic yards, a grading permit will be required. An application and plans for a grading permit are submitted to Public Works separately from the building permit plan set. The application and guidelines are available at the Development Center and on our website. 22. STORM WATER POLLUTION PREVENTION: The City's full-sized "Pollution Prevention -It's Part of the Plan" sheet must be included in the plan set. The sheet is available here: http://www.cityofpaloalto.org/civicax/filebank/ documents/2 732 23. STREET TREES: Show all existing street trees in the public right-of-way. Any removal, relocation or planting of street trees; or excavation, trenching or pavement within 10 feet of street trees must be approved by Public Works' arborist (phone: 650-496-5953). This approval shall appear on the plans. Show construction protection of the trees per City requirements. 24. WORK IN THE RIGHT-OF-WAY: The plans must clearly indicate any work that is proposed in the Page 9 of 17 public right-of-way, such as sidewalk replacement, driveway approach, or utility late r als. T he plans must include notes that the work must be done per City standards and that the con t ractor performing this work must first obta in a Street Work Permit from Public Works at the Development Center. If a new driveway is in a different loca tion than the existing driveway,. then the sidewalk associated w i th the new driveway must be replaced w ith a thickened (6" thick instead of the standard 4" thick) section . Addi tionally, curb cuts and driveway approaches for abandoned driveways must be replaced with n ew cu r b, gutter and planter strip. 25. IMPERVIOUS SURFACE AREA: The project w iH be creating or replacing 500 square feet or more of impervious surface. AccordingSy, the appl icant sha ll p r ovide calcula tions of the existing and proposed impervious surface areas with the building permit applica tion . The Impervious Area Worksheet/or Land Developments form and instructions are available at the Development Center or on our website. 26. STORM WATER TREATMENT~ This proj ect may trigger the California Regional Water Quality Control Board's revised provision C.3 for storm water regulations (incorporated into the Palo Alto Municipal Code, Section 16.11) that apply t o residential land development projects that create or replace between 2,500 and 10,000 square feet of impervious surface area. The applicant must implement one or more of the fo Howing site design measures: • Direct roof runoff i nto cist erns or rain ba rrels for reuse. • Direct roof runoff on t o vegetated areas. • Direct runoff from sidewalks, walkways, and/or patios onto vegetated areas. • Direct runoff from driveways and/or un covered pa r king lots onto vegetated areas. • Construct sidewalks, wa lkways, and/or pa t ios with permeable surfaces. • Construct driveways, and/or uncovered parking lots with permeable surfaces. 27. SIDEWALK ENCROACHMENT: Add a note to the site plan tha t says, "The contractor using the city sidewalk to work on an adjacent p rivate building must do so in a manner that is safe for pedestrians using the sidewalk. Pedestrian protection must be provided per the 2007 California Building Code Chapter 33 requ i rements. If the height of construction is 8 feet o r less, t h e contractor must place construct ion railings sufficient to direct pedestrians around construct ion areas. If the height of construction is more than 8 feet, the contractor must obtain an encroachment permit from Pu blic Works at the Development Center in order to provide a barrier and covered walkway or to close the sidewalk." 28. LOGISTICS PLAN: The contractor must submit a logistics plan to the Pu blic Works Department prior to commencing work that addresses all impacts to the City's right-of-way, including, but not limited to: pedestrian control, traffic control, truck ro utes, ma t erial deliveries, contractor's parking, concret e pours, crane lifts, work hours, noise control, dust control , storm water pollution prevention, contr actor's contact, noticing of affected businesses, and schedule of work. The plan will be attached t o a street work permit. a. The applicant will further explain how t hey will ensu r e additional care and attention is taken d u ring construction to protect the adjacent Historic buildings terracotta fa~ade and tiled roof. Page 10 of 17 PUBLIC WORKS ZERO WASTE 29. Trash enclosure must be large enough to accommodate at least 2 bins and a cart. UTILITIES ENGINEERING 30. Industrial and large commercial customers must allow sufficient lead-time for Electric Utility Engineering and Operations (typically 8-12 weeks after advance engineering fees have been paid) to design and construct the electric service requested. 31. A completed Utility Service Application and a full set of plans must be included with all applications involving electrical work. The Application must be included with the preliminary submittal. 32. The applicant shall submit a request to disconnect all existing utility services and/or meters including a signed affidavit of vacancy, on the form provided by the Building Inspection Division. Utilities will be disconnected or removed within 10 working days after receipt of request. The demolition permit will be issued after all utility services and/or meters have been disconnected and removed. 33. All utility meters, lines, transformers, backflow preventers, and any other required equipment shall be shown on the landscape and irrigation plans and shall show that no conflict will occur between the utilities and landscape materials. In addition, all aboveground equipment shall be screened in a manner that is consistent with the building design and setback requirements. 34. Contractors and developers shall obtain permit from the Department of Public Works before digging in the street right-of-way. This includes sidewalks, driveways and planter strips. 35. At least 48 hours prior to starting any excavation, the customer must call Underground Service Alert (USA) at 1-800-227-2600 to have existing underground utilities located and marked. The areas to be checked for underground facility marking shall be delineated with white paint. All USA markings shall be removed by the customer or contractor when construction is complete. 36. The customer is responsible for installing all on-site substructures (conduits, boxes and pads) required for the electric service. No more than 270 degrees of bends are allowed in a secondary conduit run. All conduits must be sized according to California Electric Code requirements and no 1/2 -inch size conduits are permitted. All off-site substructure work will be constructed by the City at the customer's expense. Where mutually agreed upon by the City and the Applicant, all or part of the off-site substructure work may be constructed by the Applicant. 37. All primary electric conduits shall be concrete encased with the top of the encasement at the depth of 30 inches. No more than 180 degrees of bends are allowed in a primary conduit run. Conduit runs over 500 feet in length require additional pull boxes. 38. All new underground conduits and substructures shall be installed per City standards and shall be inspected by the Electrical Underground Inspector before backfilling. Page 11 of 17 39. For services larger t han 1600 amps, a transition cab i net as t he interconnection point between the utility's pad mount transformer and the customer's main switchgear may be requ ir ed. See City of Palo Alto Utilities Standard Drawing SR-XF-E-1020. The cabi n et design drawings must be submitted to the Electric Utility Engineering Division for review and approval. 40. For unde r gr ound services, no more than four (4) 750 MCM conductors per phase can be connected to the t r ansformer secondary terminals; ot herwise, b u s duct or x-flex cable m u st be used for connections to pad mount transformers. If customer inst alls a bus duct directly between the transformer secondary terminals and the mai n switchgea r , the installation of a transition cabinet will not be required. 41. The customer is responsible for installing all u nderg r ound electric service conductors, bus duct, t ransition cabinets, and other required equipment. The installation shall meet the Ca tifo rn ia Electric Code and the City Standards. 42. Meter and switchboard requireme n ts shall be in accordance with Electric Utility Service Equipment Requirements Committee (EUSERC) d r awings accepted by Utili ty and CPA standards for meter installations. 43. Shop/factory drawi ngs for swi t chboards (400A and greater) and associated ha r dware m ust be submitted for review and ap p roval prior to installing the switchgear to: Gopal Jagannath, P.E. Supervising Ele ct ric Project Engineer Utilities Engineering (Ele ctrical) 1007 Elwe ll Court Pa l o Alto, CA 94303 44. For 400A switchboards 2!Jh!, catalog cut sheets may be substituted in place of factory drawings. 45. AH new underground electric services shall be inspected and approved by both the Building Inspec t i on Division and the Electrical Underground Inspector before energizing. 46. The customer shall p rovide as-built drawings showing the location of all switchboards, conduits (number and size), conductors (number and size), splice boxes, vaults and switch/transformer pads. 47. The follow mus t be completed before Utilities will make the connection to the utility system and energize the service : • A H fees must be paid. • A ll required inspections have been completed and approved by both the Building Inspection Division and t he Electrical Underground Inspector. • All Special Faci li ties contr acts or other agreements need to be signed by the City and applicant. • Easement do cuments must be completed. Page 12 of 17 BUILDING DIVISION 48. For the proposed property line openings from 620 Emerson St into 180 Hamilton Ave, provide a recorded restricted covenant on both properties that assures that the proposed openings will not be increased at any time and will be filled in with solid rated walls as required by the 2016 or most recent California Building Code once the ownership and/or tenant vacates either structure prior to the issuance of the building permit. 49. The proposed restaurant occupancy use of A-2 from the former M (florist shop) occupancy is considered a change of occupancy to a higher risk category. When a change in occupancy results in a structure being reclassified to a higher risk category, the structure shall conform to the seismic requirements for a new structure of a higher risk category. A seismic evaluation of the existing structure will be required for the change of occupancy for the submittal of the building permit. (CBC Part 10 Existing Building Code Section 407.4) SO. If the proposed tenant improvement of less than 5,000 s.f. also includes the replacement of at least two of the following: HVAC system, building envelope, not water system, or lighting system, then this project shall comply with the CALGreen Mandatory+ Tier 1 requirement when submitting for the building permit. The City of Palo Alto GB Mandatory+ Tier 1 plan sheets can be downloaded from the following website address: http://www.cityofpaloalto.org/gov/depts/ds/green_building/compliance.asp 51. The review and approval of this project does not include any other items of construction other than those written in the ARB project review application included with the project plans and documents under this review. 1f the plans include items or elements of construction that are not included in the written description, it or they may not have been known to have been a part of the intended review and have not, unless otherwise specifically called out in the approval, been reviewed. WATERSHED PROTECTION Designated Food Service Establishment (FSE} Projects: A. Grease Control Device (GCD) Requirements, PAMC Section 16.09.075 & Cited Building/Plumbing Codes 1. The plans shall specify the manufacturer details and installation details of all proposed GCDs. (CBC 1009.2} 2. GCD(s) shall be sized in accordance with the 2007 California Plumbing Code. 3. GCD(s) shall be installed with a minimum capacity of 500 gallons. 4. GCD sizing calculations shall be included on the plans. See a sizing calculation example below. 5. The size of all GCDs installed shall be equal to or larger than what is specified on the plans. 6. GCDs targer than 50 gallons (100 pounds} shall not be installed in food preparation and storage areas. Santa Clara County Department of Environmental Health prefers GCDs to be installed outside. GCDs shall be installed such that all access points or manholes are readily accessible for inspection, cleaning and removal of all contents. GCDs located Page 13 of 17 outdoors shall be installed in such a manner so as to exclude the entrance of surface and stormwater. (CPC 1009.5) 7. All large, in-ground interceptors shall have a minimum of three manholes to allow visibility of each inlet piping, baffle (divider) wall, baffle pip ing and outlet piping. The plans shall clearly indicate the number of proposed manholes on the GCO . The Environmental Compliance Division of Public Works Department may authorize variances which allow GCOs w ith less than three manholes due to manufacture available options or adequate visibility. 8 . Sample boxes sha ll be installed downstream of all GCDs. 9 . All GCDs shall be fitted with rel ief vent(s). (CPC 1002.2 & 1004) 10. GCO(s) installed In vehicle traffic areas shall be rated and i ndicated on plans. B. Drainage Fixture Requirements, PAMC Section 16.09.075 & Cited Building/Plumbing Codes 1. To ensure all FSE drainage fixtures are connected to the correct drain lines, each drainage fixture sh all be clearly ~abeled on the plans. A list of all fixtures and their discharge connection, i .e. sanitary sewer or grease waste line, shall be included on the plans. 2. A list indicating all connect ions to each proposed GCD shall be included on the plans. This can be incorporated into the sizing calculation . 3 . All grease generating dra in age fixtures shall connect to a GCD. These include but are not limited to: a. Pre-rinse (scullery) sinks b. Three compartment sinks (pot sinks) c. Drainage fixtures i n di shwashi ng room except for dishwashers sh all connect to a GCO d. Examples: trough drains (sma ll drai ns prior to entering a dishwasher), small drains on busing counters adjacent to pre-rinse sinks or silverware soaking sinks e. Floor drains in dishwashing ar ea and kitchen s f. Prep sinks g. Mop (janitor) sinks h. Ou tside areas designated for equipment washing shall be covered and any drains conta i ned therein shall connect to a GCD. i. Drains in trash/recycling enclosures j . Wok stoves, rotisserie ovens/broilers or other grease generating cooking equipment with drip lines k. Kettles and tilt/braising pans and associated floor drains/sinks 4. The co n nection of any high temperature discharge lines and non -grease generating drainage fixtures to a GCD is proh ibited . The followi ng shall not be connected to a GCD: a. Dishwashers b . Steamers c. Pasta cookers d. Hot lines from buffet coun t ers and ki,tchens e. Hand sinks f. Ice machine drip lines g. Soda machine drip li nes h . Drainage lines in b ar area s 5 . No garbage disposers (gri nders) shall be installed in a FSE. (PAMC 16.09.075(d)). Page 14 of 17 6. Plumbing lines shall not be installed above any cooking, food preparation and storage areas. 7. Each drainage fixture discharging into a GCD shall be individually trapped and vented. (CPC 1014.5) C. Covered Dumpsters, Recycling and Tallow Bin Areas PAMC, 16.09.075(q)(2) 1. Newly constructed and remodeled FSEs shall include a covered area for all dumpsters, bins, carts or container used for the collection of trash, recycling, food scraps and waste cooking fats, oils and grease (FOG) or tallow. 2. The area shall be designed and shown on plans to prevent water run-on to the area and runoff from the area. 3. Drains that are installed within the enclosure for recycle and waste bins, dumpsters and tallow bins serving FSEs are optional. Any such drain installed shall be connected to a GCD. 4. If tallow is to be stored outside then an adequately sized, segregated space for a tallow bin shall be included in the covered area. S. These requirements shall apply to remodeled or converted facilities to the extent that the portion of the facility being remodeled is related to the subject of the requirement. D. Large Item Cleaning Sink, PAMC 16.09.075(m)(2)(B) 1. FSEs shall have a sink or other area drain which is connected to a GCD and large enough for cleaning the largest kitchen equipment such as floor mats, containers, carts, etc. Recommendation: Generally, sinks or cleaning areas larger than a typical mop/janitor sink are more useful. E. GCD sizing criteria and an example of a GCD sizing calculation (2007 CPC) Sizing Criteria: GCD Sizing: Drain Fixtures DFUs Total DFUs GCD Volume (gallons} Pre-rinse sink 4 8 500 3 compartment sink 3 21 750 2 compartment sink 3 35 1,000 Prep sink 3 90 1,250 Mop/Janitorial sink 3 172 1,500 Floor drain 2 216 2,000 Floor sink 2 Example GCD Sizing Calculation: Quantity Drainage Fixture & Item Number DFUs Total 1 Pre-rinse sink, Item 1 4 4 1 3 compartment sink, Item 2 3 3 2 Prep sinks, Item 3 & Floor sink, Item 4 3 6 1 Mo p sink, Item 5 3 3 1 Floor trou gh, Item 6 & tilt skillet, Item 7 2 2 1 Floor trough, Item 6 & steam kettle, Item 8 2 2 1 Floor sink, Item 4 & wok stove, Item 9 2 2 4 Floor drains 2 8 1,000 gallon GCD minimum sized . Total: 30 Page 15 of 17 Note; • All resubmitted plans to Build i ng Department which include FSE projects shall be resubm i tted to Water Quality. • It is frequently to the FSE's advantage to install the next size larger GCD to allow for more efficient grease discharge prevention and may allow for longer times between cleaning. There are many manufacturers of GCDs which are available in different shapes, sizes and materials (p lastic, reinforced fiberglass, reinforced concrete and metal) • The requirements will assist FSEs with FOG discharge prevention to the sanitary sewer and storm drain pollution prevention. The FSE at aH times shall comply with the Sewer Use Ordinance of the Palo Alto Municipal Code. The ordinances include requirements for GCDs, GCD maintenance, drainage fixtures, record keeping and constructi on projects. Plastic Foam and Non-Recyclable Food Service Containers and Packaging Items A. Prohibitions on the Use of Plastic Foam and Non-Recyclable Plastics, PAMC 5.30.020 1. Except as pr ovided by PAMC Section 5.30 .030, Food Service Establishments are prohibited f ro m provi ding prepared food in Disposable Food Service Containers made from Plastic Foam or other Non-Recyclable Plastic; 2. Except as provided by PAMC Secti on 5.30.030, Retail Service Establ ishments are prohibited from selling, leasing or otherwise providing Plastic Foam Products; 3. Except as p r ovided by PAMC Section 5.30.030, all City facil ities and vendors at City sponsored events or City owned facilities are prohibited from using Disposable Food Service Conta i ners, packaging or other p r oducts made from Plastic Foam or Non­ Recyclable Plastic; 4. Nothing in PAMC Section 5.30 shall be interp r eted to restrict the use or sale of any form of fiber or paper disposable food service container, or t h e use of any form of biodegradable or plastic food service container mee t ing ASTM Standards or other products authorized by Administrative Regulation. B. Exemptions to the Prohibitions on the Use of Plastic Foam and Non-Recyclable Plastics, PAMC S.30.030 1. Th e fo llowi n g exemptions sha ll apply: i. Foods prepared o r packaged outside the City of Palo Alto ar e exempt from the provisions of PAMC Section 5.30. Purveyors of food prepa r ed or packaged outside the City of Palo Alto are encouraged to fo ll ow the provisions of this PAMC Section 5.30. ii. The Director of Public Works, or his/her designee, may exempt a Food Service Establishment, Retail Service Establishment or City facil ity/vendor from the requirements of this Ordinance for a period of up to o ne year, if t he applicant for such exemption can demo n strate that the condi tions of t hts Ordinance would cause an undue hardsh i p. An "undue hardship" includes, but is n ot limited to situations u nique to the appl icant where there are no reasonable alternatives to Plastic Foam Products or Non-recyclable Plastic Disposable Food Service Containers and compliance with PAMC Section 5.30 would cause significant economic hardship to that applicant, or cause them to be deprived of a legally protected right. Page 16 of 17 iii. A Food Service Establishment, Retail Service Establishment or City facility/vendor seeking an exemption application shall include all information necessary for the City to make its decision, including but not limited to documentation showing the factual support for the claimed exemption. The Director may require the applicant to provide additional information to permit the Director to determine facts regarding the exemption application. iv. Emergency Supplies and Service Procurement. City facilities, Food Service Establishments, Retail Service Establishments, City contractors and vendors doing business with the City shall be exempt from the provisions of PAMC Section 5.30, in a situation deemed by the City Manager to be an emergency for the immediate preservation of the public peace, health or safety. Page 17 of 17 Page 1 of 12 Draft APPROVAL NO. 2018-____ RECORD OF THE COUNCIL OF THE CITY OF PALO ALTO LAND USE ACTION FOR 620 EMERSON STREET: MINOR ARCHITECTURAL REVIEW BOARD APPROVAL (17PLN-00331) On ______, 2018, the Council of Palo Alto held a duly-noticed public hearing and, after considering all of the evidence presented, approved the Minor Architectural Review application to allow the demolition of an existing single story commercial building and construct a new two story 4,063 square foot commercial building for the expansion of Nobu Restaurant. The Project includes replacement of three (3) on-site parking spaces with five (5) In-Lieu spaces in the Downtown Parking Assessment District in the CD-C(GF)(P) Zoning District. In approving the application, the Council made the following findings, determination and declarations: SECTION 1. Background. A. An application for a Minor Board Level Architectural Review was submitted by Blake Hussey of Montalba Architects was submitted on September 12, 2017. B. Planning Staff reviewed the submitted application and referred the application to the Architectural Review Board for a recommendation of approval to the Director of Planning and Community Environment. C. The Architectural Review to allow the demolition of an existing single story c ommercial building and construct a new two story 4,063 square foot commercial building for the expansion of Nobu Restaurant. The Project includes replacement of three (3) on-site parking spaces with five (5) In-Lieu spaces in the Downtown Parking Assessment District. The project site is located within the CD-C(GF)(P) zoning District. D. The Project has gone to the Architectural Review Board twice prior to being recommended for approval with the draft conditions submitted to the Architectural Review Board on April 5, 2018. The Architectural Review Board included a condition of approval, requiring the landscaping for the project to return to the Architectural Review Board Subcommittee for approval which changes to the landscaping. The Architectural Review Board Subcommittee reviewed the revision to the landscaping and recommended approval of the changes on May 3, 2018. SECTION 2. Environmental Review. The proposed project has determined to be categorically exempt under a Class 3 exemption (CEQA Guidelines Section 15303) for “new construction or conversion of small structures” of the California Environmental Quality Act Guidelines. The project meets the criteria for this exemption as it is a new building that is below 10,000 square feet in area and i s located within an urban area with a proposed use that is permitted within the CD -C(GF)(P) zone district. SECTION 3. Exception to On-Site Parking Requirements. An exception for on-site parking requirements for new buildings located within the Downtown Parking Assessment District per section 18.18.090 (d) “In-lieu Parking Provisions” pursuant to meeting the criteria within this code section as determine by the Director of Planning Community Environment, whose decision shall be final. The criteria state only sites satisfying one or more of the following criteria, as determined by the Director of Planning and Community Environment, shall be eligible to participate in the in -lieu parking program: Page 2 of 12 (1) Construction of on-site parking would necessitate destruction or substantial demolition of a designated historic structure; (2) The site area is less than 10,000 square feet, but of such an unusual configuration that it would not be physically feasible to provide the required on -site parking; (3) The site is greater than 10,000 square feet, but of such an unusual configuration that it would not be physically feasible to provide the required on -site parking; (4) The site is located in an area where city policy precludes curb cuts o r otherwise prevents use of the site for on-site parking; or (5) The site has other physical constraints, such as a high groundwater table, which preclude provision of on-site parking without extraordinary expense. (e) Underground Parking Underground parking deeper than two levels below grade shall be prohibited unless a soils report or engineering analysis demonstrates that regular pumping of subsurface water will not be required. The existing site has paid into the Downtown Parking Assessment District for an equivalent of eleven spaces and has provided three parking spaces on site that are accessed from the rear a lleyway. The proposed project involves removing these noncompliant on-site parking spaces and adding additional square footage to create space for a new trash room and kitchen. The site has been analyzed by Staff, who explored various parking configuration with the applicant and other City departments. The feasibility of providing underground parking, parking via mechanical lifts, and surface parking accessed via the rear alleyway resulted in the project being able to p rovide one feasible parking space physically onsite. However, the location and size of the property combined with compliance with the American Disability Act, local standards for refuse collection and other standards make it infeasible to provide additional parking onsite in an efficient or convenient parking layout. With these findings the Director of Planning and Community Environment determined that the project is eligible to participate in the parking in-lieu program for five (5) in-lieu parking spaces. SECTION 4. Architectural Review Findings. Finding #1: The design is consistent with applicable provisions of the Palo Alto Comprehensive Plan, Zoning Code, coordinated area plans (including compatibility requirements), and any relevant design guides. The project is consistent with the applicable regulations within the Zoning Code and the Architectural Review Findings. In addition, the project is consistent with the Palo Alto Comprehensive Plan Goals and Policies in that the project would result in no net loss of retail as the proposed restaurant use is considered retail like, maintaining a similar mixture of uses in the indicative of the Downtown area. The design of the new building includes large windows that connect the proposed use to the street while providing pedestrian amenities such as a large awning that spans across the building, pedestrian seating, new bicycle racks, and new creating a more pleasant p edestrian environment. The project will create a new building with a new restaurant use which includes new pedestrian furniture for public use on private property, maintaining the Downtown area’s pedestrian identity. The project Page 3 of 12 includes large windows that allow clear views into the proposed restaurant and is consistent with the existing businesses along Emersion reinforcing the pedestrian characteristic of Downtown Palo Alto. The project includes new street furniture (bench seating) within the recessed window area of the façade and will install a new bike racks within the public right of way, enhancing the pedestrian and bicycle friendly environment of the area. The project proposes a new building that is in scale with the adjacent single - story buildings along Emerson Street and will include the use of high-quality materials such as solid bronze and stone. The project locates new backflow preventers within the façade via hidden cabinets, removing them from public view. The project would be consistent the Downtown Design Guidelines as it involves an active retail-like use (eating and drinking use) and the new façade materials are consistent with those listed in the Guidelines. The new façade provides a recessed entry, a new awning, and glass windows with bench seats that fit the character of the smaller storefront pattern and setbacks of the adjacent buildings. These features will also help to activate the street. The proposed green roof would further enhance views from the adjacent hotel and other taller buildings in the area. Finding #2: The project has a unified and coherent design, that: a. “creates an internal sense of order and desirable environment for occupants, visitors, and the general community,” b. “preserves, respects and integrates existing natural features that contribute positively to the site and the historic character including historic resources of the area when relevant,” c. “is consistent with the context-based design criteria of the applicable zone district,” d. “provides harmonious transitions in scale, mass and character to adjacent land uses and land use designations,” e. “enhances living conditions on the site (if it includes residential uses) and in adjacent residential areas.” The project proposes a new building with a façade tha t will enhance the immediate neighborhood and patrons of the local businesses alike. The design of the new building is consistent with the context -based design criteria within the CD-C(GF)(P) zone. In addition, the project will integrate the exterior ground floor façade of the adjacent hotel, as it expands the existing restaurant from 180 Hamilton Avenue to 620 Emerson Street. The proposed façade would also better connect the building with the existing character and streetscape along Emerson Street. The new building will be built to the property lines similar to other existing buildings in the area and would preserve the pedestrian scale of the area. In addition, the new public furniture (bench seats) proposed within the window recesses and new bicycle racks in the public right way will improve the pedestrian and bicycle environment of the Downtown area. Pursuant to PAMC 18.16.090(b), the following context -based design considerations and findings are applicable to this project. These context-based design criteria are intended to provide additional standards to be used in the design and evaluation of development in a commercial district. The purpose is to encourage development in a commercial district to be responsible for its context and compatibility with adjacent development as well as to promote the establishment of pedestrian-oriented design. The project will have the same scale as the existing buildings in the area, maintaining the areas pedestrian environment and scale. The project includes benches along its front façade to promote a pedestrian- friendly environment. The proposed building includes a recessed entry and awning that will function as a shelter for pedestrians. The project also includes new seating that can be utilized by the public supporting pedestrian activity. The proposed building will have large clear windows that connect the interior of the building to the sidewalk and street, promoting pedestrian activity. The proposed project will not Page 4 of 12 substantially increase the existing massing or setbacks from the street. The proposed project will remove existing on-site parking and replace them via the Downtown Parking Assessment Districts in -lieu fee, which provides parking off site within walking distance of the site. The project will be constr ucted in accordance with current green building energy efficiency requirements. The project will also utilize a green roof that would reduce runoff from the roof and lower the heat absorption of the building, leading to lower demands on the HVAC systems. Finding #3: The design is of high aesthetic quality, using high quality, integrated materials, and appropriate construction techniques, and incorporating textures, colors, and other details that are compatible with and enhance the surrounding area. The project involves materials which are durable and of high-quality finishes consisting of bronze and stone. The new façade will have a light colored textured stone finish that will better fit with the existing character of the area and will enhance the surrounding area. Finding #4: The design is functional, allowing for ease and safety of pedestrian and bicycle traffic and providing for elements that support the building’s necessary operations (e.g. convenient vehicle access to property and utilities, appropriate arrangement and amount of open space and integrated signage, if applicable, etc.). The proposed building will maintain the pedestrian scale of the area and promote a pedestrian -friendly environment by including benches along its front façade. A recessed entry and awning that will function as a shelter for pedestrians are proposed and would provide a refuge for pedestrians from the elements. The proposed building will also have large clear windows that connect the interior of the building to the sidewalk and street, promoting pedestrian activity. The project includes new utilities which will be easily accessible via hidden panels within the façade keeping them out of the public right of way and out of sight. The site is located in the downtown parking assessment district which allows for more convenient parking options. Additionally, the site has access to a rear alleyway which can be utilized by service and delivery vehicles that support the day to day operation of the proposed restaurant. Finding #5: The landscape design complements and enhances the building design and its surroundings, is appropriate to the site’s functions, and utilizes to the extent practicable, regional indigenous drought-resistant plant material capable of providing desirable habitat that can be appropriately maintained. The project includes new planters along the sidewalk and a green roof which can be viewed partially through the open skylight within the building and will be clearly visible to patrons within the adjacen t hotel and other taller buildings in the area. The green roof and new planters will contribute to the overall character of Downtown and do incorporate native plants. Finding #6: The project incorporates design principles that achieve sustainability in a reas related to energy efficiency, water conservation, building materials, landscaping, and site planning. Page 5 of 12 The project will comply with all applicable green building codes for energy efficient buildings such as the use of energy-efficient lighting and the construction debris diversion rate requirement minimizing trips to landfills. The proposed green roof will reduce runoff and reduce the heat island effect while providing additional green space over a more traditional roof. SECTION 5. Conditions of Approval. 1. CONFORMANCE WITH PLANS. Construction and development shall conform to the approved plans entitled, "NOBU PA 620” stamped as received by the City on March 26 th, 2018 on file with the Planning Department, 250 Hamilton Avenue, Palo Alto, Californ ia except as modified by these conditions of approval. 2. BUILDING PERMIT. Apply for a building permit and meet any and all conditions of the Planning, Fire, Public Works, and Building Departments. 3. BUILDING PERMIT PLAN SET. The Architectural Review (AR) approval letter including all Department conditions of approval for the project shall be printed on the plans submitted for building permit. 4. PROJECT MODIFICATIONS: All modifications to the approved project shall be submitted for review and approval prior to construction. If during the Building Permit review and construction phase, the project is modified by the applicant, it is the responsibility of the applicant to contact the Planning Division/project planner directly to obtain approval of the project modification. It is the applicant’s responsibility to highlight any proposed changes to the project and to bring it to the project planner’s attention. 5. PROJECT EXPIRATION. The project approval shall be valid for a period of two years from the original date of approval. In the event a building permit(s), if applicable, is not secured for the project within the time limit specified above, the AR approval shall expire and be of no further force or effect. Application for a one year extension of this entitlement may be made prior to the expiration. 6. PARKING IN-LIEU FEES: Parking in-lieu fees shall be paid for five (5) parking spaces prior to issuance of Building permits at the rate set, per in -lieu space, at the time of payment (See condition #13) 7. BICYCLE PARKING: One new short term bicycle rack shall be installed within the public right of way, and one long term bicycle rack shall be installed on site to the satisfaction of the Chief Transportation Official. All bicycle racks shall be installed prior to final Planning Inspection. 8. VEHICLE LOADING: Vehicle loading and unloading shall not impede the movement of traffic for extended periods of time. Page 6 of 12 9. REAR DOOR: All rear doors shall remain closed during business hours to minimize noise projecting into adjacent residences. 10. RESTROOM FACILITIES: If and when access to 180 Hamilton Avenue is terminated, on site code compliant restroom facilities shall be provided. 11. ARB SUBCOMMITTEE: Prior to the issuance of building permits, the applicant shall return to the ARB subcommittee for approval of the following items, to the satisfaction of the Director of Planning and Community Environment: a. Review of the landscaping design of the green roof area to ensure conformance with Finding #5. (Note – ARB reviewed and approved a landscape plan on May 3, 2018.) 12. TRASH ROOM: The trash room shall be used solely for the temporary storage of refuse and recycling that is disposed on a regular basis and shall be closed and locked during non -business hours. 13. ESTIMATED IMPACT FEE: The project is exempt from most impact fees, but must pay the housing impact fee and for the in-lieu parking spaces as specified in Condition #6. Development Impact Fees, currently estimated in the amount of $340,320.34, shall be paid prior to the issuance of the related building permit. 14. IMPACT FEE 90-DAY PROTEST PERIOD. California Government Code Section 66020 provides that a project applicant who desires to protest the fees, dedications, reservations, or other exactions imposed on a development project must in itiate the protest at the time the development project is approved or conditionally approved or within ninety (90) days after the date that fees, dedications, reservations or exactions are imposed on the Project. Additionally, procedural requirements for protesting these development fees, dedications, reservations and exactions are set forth in Government Code Section 66020. IF YOU FAIL TO INITIATE A PROTEST WITHIN THE 90-DAY PERIOD OR FOLLOW THE PROTEST PROCEDURES DESCRIBED IN GOVERNMENT CODE SECTION 66020, YOU WILL BE BARRED FROM CHALLENGING THE VALIDITY OR REASONABLENESS OF THE FEES, DEDICATIONS, RESERVATIONS, AND EXACTIONS. If these requirements constitute fees, taxes, assessments, dedications, reservations, or other exactions as specified in Government Code Sections 66020(a) or 66021, this is to provide notification that, as of the date of this notice, the 90-day period has begun in which you may protest these requirements. 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. 15. INDEMNITY: 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. Page 7 of 12 16. FINAL INSPECTION: A Planning Division Final inspection will be required to determine substantial compliance with the approved plans prior to the scheduling of a Building Division final. Any revisions during the building process must be approved by Planning, including but not limited to; materials, landscaping and hard surface locations. Contact your Project Planner, Samuel Gutierrez at samuel.gutierrez@cityofpaloalto.org to schedule this inspection. PUBLIC WORKS ENGINEERING 17. PLANTERS IN THE RIGHT-OF-WAY: Teak planters proposed in the right-of-way shall be removable and moved out of the right of way at the end of each business day. 18. SIDEWALK, CURB & GUTTER: As part of this project, the applicant must replace those portions of the existing sidewalks, curbs, gutters or driveway approaches in the public right -of-way along the frontage(s) of the property that are broken, badly cracked, displaced, or non -standard, and must remove any unpermitted pavement in the planter strip. Contact Public Works’ inspector at 650-496-6929 to arrange a site visit so the inspector can determine the extent of replacement work. The site plan submitted with the building permit plan set must show the extent of the replacement work or include a note that Public Wor ks’ inspector has determined no work is required. The plan must note that any work in the right -of-way must be done per Public Works’ standards by a licensed contractor who must first obtain a Street Work Permit from Public Works at the Development Center. 19. STREET TREES: The applicant may be required to replace existing and/or add new street trees in the public right-of-way along the property’s frontage(s). Call the Public Works’ arborist at 650- 496-5953 to arrange a site visit so he can determine what street tree work, if any, will be required for this project. The site plan submitted with the building permit plan set must show the street tree work that the arborist has determined, including the tree species, size, location, staking and irrigation requirements, or include a note that Public Works’ arborist has determined no street tree work is required. The plan must note that in order to do street tree work, the applicant must first obtain a Permit for Street Tree Work in the Public Right-of-Way from Public Works’ arborist (650-496-5953). 20. GRADING & DRAINAGE PLAN: The plan set must include a grading & drainage plan prepared by a licensed professional that includes existing and proposed spot elevations and drainage flow arrows to demonstrate proper drainage of the site. Adjacent grades must slope away from the house a minimum of 2%. Downspouts and splashblocks should be shown on this plan, as well as any site drainage features such as swales. Grading will not be allowed that increases drainage onto, or blocks existing drainage from, neighboring properties. Public Works generally does not allow rainwater to be collected and discharged into the street gutter, but encourages the developer to keep rainwater onsite as much as feasible by directing runoff to landscaped and other pervious areas of the site. See the Grading & Drainage Plan Guidelines for New Single Family Residences: http://www.cityofpaloalto.org/civicax/filebank/documents/2717 Page 8 of 12 21. GRADING PERMIT: The site plan must include an earthworks table showing cut and fill volumes. If the total is more than 100 cubic yards, a grading permit will be required. An application and plans for a grading permit are submitted to Pu blic Works separately from the building permit plan set. The application and guidelines are available at the Development Center and on our website. 22. STORM WATER POLLUTION PREVENTION: The City's full-sized "Pollution Prevention - It's Part of the Plan" sheet must be included in the plan set. The sheet is available here: http://www.cityofpaloalto.org/civicax/filebank/documents/2732 23. STREET TREES: Show all existing street trees in the public right -of-way. Any removal, relocation or planting of street trees; or excavation, trenching or pavement within 10 feet of street trees must be approved by Public Works' arborist (phone: 650 -496-5953). This approval shall appear on the plans. Show construction protection of the trees per City requirements. 24. WORK IN THE RIGHT-OF-WAY: The plans must clearly indicate any work that is proposed in the public right-of-way, such as sidewalk replacement, driveway approach, or utility laterals. The plans must include notes that the work must be done per City standards and t hat the contractor performing this work must first obtain a Street Work Permit from Public Works at the Development Center. If a new driveway is in a different location than the existing driveway, then the sidewalk associated with the new driveway must be replaced with a thickened (6” thick instead of the standard 4” thick) section. Additionally, curb cuts and driveway approaches for abandoned driveways must be replaced with new curb, gutter and planter strip. 25. IMPERVIOUS SURFACE AREA: The project will be creating or replacing 500 square feet or more of impervious surface. Accordingly, the applicant shall provide calculations of the existing and proposed impervious surface areas with the building permit application. The Impervious Area Worksheet for Land Developments form and instructions are available at the Development Center or on our website. 26. STORM WATER TREATMENT: This project may trigger the California Regional Water Quality Control Board’s revised provision C.3 for storm water regulations (incorporated into the Palo Alto Municipal Code, Section 16.11) that apply to residential land development projects that create or replace between 2,500 and 10,000 square feet of impervious surface area. The applicant must implement one or more of the following site design measures:  Direct roof runoff into cisterns or rain barrels for reuse.  Direct roof runoff onto vegetated areas.  Direct runoff from sidewalks, walkways, and/or patios onto vegetated areas.  Direct runoff from driveways and/or uncovered parking lot s onto vegetated areas.  Construct sidewalks, walkways, and/or patios with permeable surfaces.  Construct driveways, and/or uncovered parking lots with permeable surfaces. 27. SIDEWALK ENCROACHMENT: Add a note to the site plan that says, “The contractor using the city sidewalk to work on an adjacent private building must do so in a manner that is safe for Page 9 of 12 pedestrians using the sidewalk. Pedestrian protection must be provided per the 2007 California Building Code Chapter 33 requirements. If the height of const ruction is 8 feet or less, the contractor must place construction railings sufficient to direct pedestrians around construction areas. If the height of construction is more than 8 feet, the contractor must obtain an encroachment permit from Public Works at the Development Center in order to provide a barrier and covered walkway or to close the sidewalk.” 28. LOGISTICS PLAN: The contractor must submit a logistics plan to the Public Works Department prior to commencing work that addresses all impacts to the City’s right-of-way, including, but not limited to: pedestrian control, traffic control, truck routes, material deliveries, contractor’s parking, concrete pours, crane lifts, work hours, noise control, dust control, storm water pollution prevention, contractor’s contact, noticing of affected businesses, and schedule of work. The plan will be attached to a street work permit. a. The applicant will further explain how they will ensure additional care and attention is taken during construction to protect the adja cent Historic buildings terracotta façade and tiled roof. Public Works Zero Waste 29. TRASH ENCLOSURE: At the Building permit stage, the applicant shall verify that the trash enclosure is large enough to accommodate at least 2 collection bins and a cart. UTILITIES ENGINEERING 30. Industrial and large commercial customers must allow sufficient lead-time for Electric Utility Engineering and Operations (typically 8-12 weeks after advance engineering fees have been paid) to design and construct the electric service requested. 31. A completed Utility Service Application and a full set of plans must be included with all applications involving electrical work. The Application must be included with the preliminary submittal. 32. The applicant shall submit a request to disconnect all existing utility services and/or meters including a signed affidavit of vacancy, on the form provided by the Building Inspection Division. Utilities will be disconnected or removed within 10 working days after receipt of request. The demolition permit will be issued after all utility services and/or meters have been disconnected and removed. 33. All utility meters, lines, transformers, backflow preventers, and any other required equipment shall be shown on the landscape and irrigation plans and sh all show that no conflict will occur between the utilities and landscape materials. In addition, all aboveground equipment shall be screened in a manner that is consistent with the building design and setback requirements. Page 10 of 12 34. Contractors and developers shall obtain permit from the Department of Public Works before digging in the street right-of-way. This includes sidewalks, driveways and planter strips. 35. At least 48 hours prior to starting any excavation, the customer must call Underground Service Alert (USA) at 1-800-227-2600 to have existing underground utilities located and marked. The areas to be checked for underground facility marking shall be delineated with white paint. All USA markings shall be removed by the customer or contractor when construct ion is complete. 36. The customer is responsible for installing all on -site substructures (conduits, boxes and pads) required for the electric service. No more than 270 degrees of bends are allowed in a secondary conduit run. All conduits must be sized according to California Electric Code requirements and no 1/2 – inch size conduits are permitted. All off-site substructure work will be constructed by the City at the customer’s expense. Where mutually agreed upon by the City and the Applicant, all or part of the off-site substructure work may be constructed by the Applicant. 37. All primary electric conduits shall be concrete encased with the top of the encasement at the depth of 30 inches. No more than 180 degrees of bends are allowed in a primary conduit run . Conduit runs over 500 feet in length require additional pull boxes. 38. All new underground conduits and substructures shall be installed per City standards and shall be inspected by the Electrical Underground Inspector before backfilling. 39. For services larger than 1600 amps, a transition cabinet as the interconnection point between the utility’s padmount transformer and the customer’s main switchgear may be required. See City of Palo Alto Utilities Standard Drawing SR-XF-E-1020. The cabinet design drawings must be submitted to the Electric Utility Engineering Division for review and approval. 40. For underground services, no more than four (4) 750 MCM conductors per phase can be connected to the transformer secondary terminals; otherwise, bus duct or x -flex cable must be used for connections to padmount transformers. If customer installs a bus duct directly between the transformer secondary terminals and the main switchgear, the installation of a transition cabinet will not be required. 41. The customer is responsible for installing all underground electric service conductors, bus duct, transition cabinets, and other required equipment. The installation shall meet the California Electric Code and the City Standards. 42. Meter and switchboard requirements shall be in accordance with Electric Utility Service Equipment Requirements Committee (EUSERC) drawings accepted by Utility and CPA standards for meter installations. 43. Shop/factory drawings for switchboards (400A and greater) and associated hardware must be submitted for review and approval prior to installing the switchgear to: Gopal Jagannath, P.E. Supervising Electric Project Engineer Page 11 of 12 Utilities Engineering (Electrical) 1007 Elwell Court Palo Alto, CA 94303 44. For 400A switchboards only, catalog cut sheets may be substituted in place of factory drawings. 45. All new underground electric services shall be inspected and approved by both the Building Inspection Division and the Electrical Underground Inspector before energizing. 46. The customer shall provide as-built drawings showing the location of all switchboards, conduits (number and size), conductors (number and size), splice boxes, vaults and switch/transformer pads. 47. The follow must be completed before Utilities will make the connection to the utility system and energize the service:  All fees must be paid.  All required inspections have been completed and approved by both the Building Inspection Division and the Electrical Underground Inspector.  All Special Facilities contracts or other agreements need to be signed by the City and applicant.  Easement documents must be completed. BUILDING DIVISION 48. For the proposed property line openings from 620 Emerson St into 180 Hamilton Ave, provide a recorded restricted covenant on both properties that assures that the proposed openings will not be increased at any time and will be filled in with solid rated walls as required by the 2016 or most recent California Building Code once the ownership and/or tenant vacates either structure prior to the issuance of the building permit. 49. The proposed restaurant occupancy use of A-2 from the former M (florist shop) occupancy is considered a change of occupancy to a higher risk category. When a change in occupancy results in a structure being reclassified to a higher risk category, the stru cture shall conform to the seismic requirements for a new structure of a higher risk category. A seismic evaluation of the existing structure will be required for the change of occupancy for the submittal of the building permit. (CBC Part 10 Existing Building Code Section 407.4) 50. If the proposed tenant improvement of less than 5,000 s.f. also includes the replacement of at least two of the following: HVAC system, building envelope, not water system, or lighting system, then this project shall comply with the CALGreen Mandatory + Tier 1 requirement when submitting for the building permit. The City of Palo Alto GB Mandatory + Tier 1 plan sheets can be downloaded from the following website address: http://www.cityofpaloalto.org/gov/depts/ds/green_building/compliance.asp Page 12 of 12 51. The review and approval of this project does not include any other items of construction other than those written in the ARB project review application in cluded with the project plans and documents under this review. If the plans include items or elements of construction that are not included in the written description, it or they may not have been known to have been a part of the intended review and have not, unless otherwise specifically called out in the approval, been reviewed. WATERSHED PROTECTION 52. At the Building permit stage, the project shall show compliance with the following Municipal Code Sections: a. Section 16.09.075 (Grease Control, Drainage Fixtures), b. Section 16.09.075(q)(2) (Covered Dumpsters, Recycling and Tallow Bin Areas), c. Section 16.09.075(m)(2)(B) (Large Item Cleaning Sink), and d. Section 5.30.020 (Prohibitions on the Use of Plastic Foam and Non-Recyclable Plastics) SECTION 6. Term of Approval. Architectural Review Approval. The project approval shall be valid for a period of two years of council approval. In the event a building permit(s), if applicable, is not secured for the project within the time limit specified above, the AR approval shall expire and be of no further force or effect, pursuant to Palo Alto Municipal Code Section 18.77.070. PASSED: AYES: NOES: ABSENT: ABSTENTIONS: ATTEST: APPROVED: _________________________ ____________________________ City Clerk Director of Planning and Community Environment APPROVED AS TO FORM: ___________________________ Senior Asst. City Attorney PLANS AND DRAWINGS REFERENCED: 1. Those plans prepared by Montalba Architects titled “Nobu PA 620”, consisting of 28 pages, dated received by the City on March 14, 2018 . {3233-00002/00838264;} 575 MARKET STREET, SUITE 2700 SAN FRANCISCO, CA 94105 TELEPHONE: 415.814.6400 FACSIMILE: 415.814.6401 business@ssllawfirm.com CHRISTINE R. WADE DIRECT TEL: 415.243.2088 chris@ssllawfirm.com August 8, 2018 VIA FEDEX AND EMAIL City Council and Mayor of the City of Palo Alto City Hall 250 Hamilton Avenue Palo Alto, CA 94301 city.council@cityofpaloalto.org RE: August 20, 2018 City Council Meeting Regarding Architectural Review Application No. 17PLN00331 -- Yo, LLC Appeal from Decision of Director of Planning & Community Development Approving Project at 620 Emerson Street Dear Councilmembers and Madam Mayor: We represent PA Hotel Holdings, LLC (“Applicant”), the owner of the property located at 620 Emerson Street in Palo Alto (the “Property”) and recipient of the project approval that is at issue in the above-referenced appeal. The Property contains a currently vacant, 4,000 square foot commercial building, formerly the site of the Stanford Florist flower shop. Applicant proposes to replace the building with a 4,063 square foot commercial space to allow for expansion of the existing Nobu Restaurant located within the Nobu Hotel—Epiphany Palo Alto next door (the “Project”). After carefully studying the Project over the course of two hearings, the Architectural Review Board (“ARB”) voted unanimously, 5 to 0, to approve the Project as currently designed and conditioned. This Appeal was filed by Yo, LLC. In addition to its role as appellant, Yo, LLC is involved in active litigation against Applicant related to Yo, LLC’s failed attempt to purchase the Property from its previous owner. Yo, LLC’s owner/representative is Elizabeth Wong, a local property owner and developer. The Notice of Appeal alleges that parking, traffic, loading, and restroom issues justify reversing the ARB’s decision. However, as discussed below, all of these arguments miss the mark. Each of these issues is addressed by the staff report and the record, which provide ample support to sustain the ARB’s unanimous approval of the Project. City Council and Mayor of the City of Palo Alto August 8, 2018 Page 2 of 9 {3233-00002/00838264;} In-Lieu Parking Fees The Project’s reliance on in-lieu parking fees to satisfy the City’s parking requirements is consistent with both the spirit and the letter of the Municipal Code provisions governing in-lieu fees, and with the City’s planning documents for the Downtown area. The City has made a conscious choice to design its Downtown Commercial District as a pedestrian and bicycle-friendly zone, featuring a variety of small shops and restaurants housed in separate, architecturally-distinct structures. That preference is reflected in a number of General Plan policies that encourage the use of shared parking and reduction of parking requirements for restaurants.1 The City’s Downtown Urban Design Guidelines likewise emphasize the “existing building pattern of storefronts or structural bays,” which “create the human scale of Downtown”; and Municipal Code § 18.18.110 creates design criteria that “promote pedestrian walkability” by directing vehicle access away from store-fronts and reserving public street frontages for pedestrian access. These policies demonstrate the City’s commitment to funneling parking demand into the public garages disbursed throughout the area, rather than attempting to accommodate all parking demand generated by each redevelopment project on-site. Consistent with these policies, Municipal Code § 18.18.090(d) allows certain projects to satisfy the City’s parking requirements through payment of in-lieu fees.2 These provisions apply, among other things, where the project occupies less than 10,000 square feet in site area and it is not physically feasible to provide the required on-site parking due to an unusual lot configuration; or where the site is located in an area where city policy precludes curb cuts or otherwise prevents use of the site for on-site parking. The Project satisfies the requirements for eligibility to participate in the in-lieu parking program. First, the site area is 4,063 square feet, well below the 10,000 square foot threshold in subsection (d)(2), and Applicant has conclusively demonstrated that it would not be physically feasible to provide the required parking spaces on-site. Specifically, Applicant’s representatives commissioned an independent study of the feasibility of integrating on-site parking into the Project by expert traffic and parking consultants Nelson/Nygaard Consulting Associates, Inc. The study evaluated 13 separate parking layout scenarios with respect to turning feasibility, physical site constraints, adjacent private property constraints, sight distance adequacy, and bicycle/pedestrian safety. Nelson/Nygaard determined that all 13 scenarios were infeasible for a variety of reasons, including inadequate visibility of pedestrians in the alley, insufficient turning radii, and other issues related to the Property’s unusual configuration, with its narrow rear frontage on a one-way alley that contains several other nearby obstructions. The study concluded that, “there was no feasible way to provide parking within or on the project site that could meet parking space size, ingress and egress movements, or vehicle/bicycle/pedestrian safety standards.” The Project therefore satisfies the in-lieu fee eligibility requirements of Section 18.18.090(d)(2). 1 Relevant General Plan policies are listed in Appendix A to this letter for the Council’s reference. 2 The complete text of Section 18.18.090(d) is set forth in Appendix B. City Council and Mayor of the City of Palo Alto August 8, 2018 Page 3 of 9 {3233-00002/00838264;} Second, the site is located in an area where city policy strongly disfavors curb cuts, because they disrupt pedestrian circulation. As ARB member Wynne Furth observed during the first of the two ARB hearings, “I don’t think there’s anybody who would support … a curb cut on Emerson. That would go against everything we’re trying to accomplish here.” This restriction significantly constrains the Property’s ability to accommodate on-site parking, since it prevents any arrangement by which cars would enter and exit a garage from the Emerson Street side, thereby requiring all cars to enter and exit from the public alley in the rear of the Property. As the Nelson/Nygaard study concluded, the alley cannot serve as a safe entrance and exit for parking on the Property for all of the reasons discussed above. The Project therefore satisfies the eligibility requirements of subsection (d)(4), as well. The Notice of Appeal argues that the City should reject the Project because the Project will remove three existing on-site parking spaces. While it is true that there are currently three parking spaces on the Property, the spaces are too small for current City parking requirements, and there is no disabled access-compliant space. In fact, the garage is only large enough to accommodate two legal parking spaces under existing City standards. Moreover, in practice these spaces have been used as a loading zone and for storage of trash generated on the Property – not for parking. The ARB took all of these facts into account in reaching its decision approving the Project, and as ARB member Robert Gooyer stated, the Applicant provided “the most thorough explanation as to why we need to … get rid of those three parking spaces I think I have ever heard.” The Notice of Appeal next argues that the Project’s payment of in-lieu parking fees “is sugar-coating the fact that there is no provision for off site parking within walking distance.” That is simply untrue. There are five public parking lots within a two-block radius of the Property: • High/Alma North Garage (Q), 550 High Street • High/Hamilton Lot (P), 549 High Street • Emerson/Ramona Lot (N), 561 Emerson Street • Civic Center Garage (CC), 250 Hamilton Street • Ramona/University Garage (B), 533a Ramon Street We also understand that the City recently expanded its garage on Lytton Avenue, and is working on an expansion of another garage on Hamilton Avenue. Accordingly, there is a large amount of existing public parking located in the Project’s immediate vicinity, and the supply of public parking spaces continues to grow. Further, restaurant patrons will have access to valet parking at the entrance to the Epiphany Hotel, directly next door to the Project. As it does now, the valet service will continue to utilize licensed spaces in private garages or lots outside of the immediate vicinity of the Project, rather than taking up spaces in the closest public garages. City Council and Mayor of the City of Palo Alto August 8, 2018 Page 4 of 9 {3233-00002/00838264;} It is possible that in referring to the lack of “provision for off site parking within walki ng distance,” Yo, LLC is arguing that the City must assign individual parking spaces in specific public garages to projects with in-lieu parking fee components, so that there are designated spots available for the project’s use. However, nothing in the text of the Municipal Code supports such a requirement, and it is our understanding that the City has never taken that approach to in- lieu parking. Yo, LLC has not provided an example of a project for which in lieu spaces were specifically designated, we were unable to locate such an example in our search of City records, and Planning Department staff knows of none. To the contrary, the City recently approved a project at 429 University Avenue, which we understand was sponsored by Yo, LLC’s principal, Ms. Wong. That project requires 87 parking spaces, 34 of which will be accommodated on-site. The project relies on past payments of in- lieu fees to provide 37 of the remaining spaces. Consistent with the Project at issue here, the approval documents do not mention any assignment of specific parking spaces. Likewise, the City recently approved a 7,158 square foot expansion of a senior citiz en center at 450 Bryant Street, which is zoned the same as the Property and located just 3 blocks away. That project generated a need for 29 additional parking spaces, which it will satisfy entirely through payment of in-lieu fees and a transportation demand management plan. Again, the approval documents do not mention any assignment of specific parking spaces. Nor would such an approach make sense. A big part of the reason for accommodating parking demand in large, public garages is to allow flexibility in the use of parking spaces, so that spaces not being used for one business at any given moment are available to patrons of the other businesses in the area. Assigning specific spaces to individual businesses would defeat that purpose. Yo, LLC next argues that the Project proposal “never addressed other options such as mechanical lifts and underground parking….” That is incorrect. The 13 scenarios studied in the Nelson/Nygaard report specifically included underground parking and mechanical lift options. The expert consultant found these options to be infeasible for a variety of reasons, including the difficulties created by forcing cars to back out of an underground garage or lift into a one-way alley already occupied with other parking spaces and physical obstructions. Thus, while the Applicant has submitted substantial evidence showing that the Project is eligible for payment of in-lieu parking fees, Yo, LLC has failed to submit any evidence or credible argument to the contrary. Traffic & Congestion The next issue raised in the Appeal concerns the Project’s purported traffic impacts. Referring to the presence of other restaurants on the 600 block of Emerson Street, Yo, LLC argues that “Location of another restaurant may bring traffic and circulation on this block to a standstill, especially during the peak evening hours.” The Notice of Appeal again offers no evidence to support its claim. City Council and Mayor of the City of Palo Alto August 8, 2018 Page 5 of 9 {3233-00002/00838264;} We understand that the City typically requires a locally focused traffic analysis for projects generating more than 50 trips per peak hour; and only requires a complete analysis to be performed for projects generating more than 100 new weekday peak hour trips.3 The Planning & Transportation Commission staff has concluded that projects generating less than 50 new peak hour trips, “would generate an insignificant amount of traffic relative to the local street network (i.e. they would not have the potential to result in direct, indirect, or ‘considerable’ contributions to cumulative impacts).” Here, the Project would replace an existing 4,000 square foot commercial use with a new 4,063 square foot commercial use. The Planning Department staff concluded that in light of the type of use, square footage, and location, the Project’s impact on traffic and circulation will be negligible. Yo, LLC has offered no facts or evidence to rebut that conclusion. Accordingly, the record does not support overturning the ARB’s decision on this basis. Loading Requirements Yo, LLC next argues that the Project’s elimination of the three on-site parking spaces “creates loading problems for this site” because the three spaces “also act as loading space.” Notably, this argument conflicts with Yo, LLC’s previous argument regarding parking, since spaces that are consistently used for parking could not be used for loading. However, in addition to this logical inconsistency, the Council should reject this argument for several other reasons. First, the Municipal Code unambiguously provides that the Project does not need to have a loading zone. Table 3 in Municipal Code § 18.52.040 sets forth the Minimum Off-Street Loading Requirements for various uses. The requirement for “Eating and Drinking Services” with 0 to 4,999 square feet of space, such as the Project, is zero. Second, the lack of a separate loading zone is consistent with the City’s existing policy of encouraging the use of alleys behind commercial properties as loading zones. Indeed, Ms. Wong benefited from the same policy when the City approved her 429 University Avenue project, despite the fact that the project included a loading zone that was too small to satisfy the City’s requirements. As noted in the Staff Report for the March 20, 2017 City Council meeting regarding the 429 University Avenue project, There is a loading zone at Kipling Street and the alley provides sufficient loading space for the project and service alleys throughout downtown have historically been used for the purpose of shared loading and access. Using the alley is consistent with prior projects reviewed by the City and with previous iterations of the project design, and meets the intent of the City’s Code requirement. 3 This understanding, and the quotation in the next sentence, come from a City Planning & Transportation Commission Staff Report dated December 11, 2013, titled “Traffic Impact Analysis Guidelines and Traffic Model Update.” City Council and Mayor of the City of Palo Alto August 8, 2018 Page 6 of 9 {3233-00002/00838264;} There is no reason why the same logic should not apply to this Project, which will generate considerably less demand for loading and unloading than Ms. Wong’s four-story, mixed-use project at 429 University. Third, Yo, LLC’s argument ignores the fact that the Project has access to the existing loading zone for the adjacent hotel. The hotel’s loading and trash area is located off of Hamilton Avenue, and includes a 145 square foot indoor trash area, a 231 square foot indoor loading and elevator access area, and a 290 square foot outdoor loading space located outside of the public right of way. All of these areas are approximately 155 feet from the proposed connection between the hotel and the Project’s kitchen. While the Project has access to sufficient space for loading even without these facilities, and the City’s Municipal Code unequivocally does not require further loading space, the Project’s access to such extensive facilities for the foreseeable future is also worth noting in assessing this issue. The Notice of Appeal also argues that “Larger delivery trucks and vehicles that service the grease traps for example cannot make the two sharp turns in the alley.” Yo, LLC again offers no evidence or credible argument to support its assertion. According to the staff reports for the Project and Mr. Gutierrez’s testimony to the ARB, Planning Department staff specifically measured the width of the alley and concluded that the alley is wide enough to be used for service and delivery vehicles. Although parking on the Property is infeasible because the alley is a one-way street and has existing obstructions in the specific area where cars would have to back out from any parking spaces on the Property, those issues would not apply to service vehicles proceeding through the alley in the permitted direction. Further, there are already two other restaurants (Tacolicious and Dan Gordon’s) on the same side of the same block of Emerson Street, in front of the same alley. There is no evidence that either of these restaurants are having any problems with servicing of their grease traps. Yo, LLC’s purported concerns regarding the lack of a loading zone are therefore entirely unfounded. Access to Restrooms Finally, the Notice of Appeal argues that the Project’s provisions for access to restrooms are insufficient. Because the Project will include two physical connections between the new restaurant space and the existing hotel next door (one for staff, the other for customers), the Project provides for the restaurant’s restroom needs to be satisfied through the existing restrooms in the hotel lobby. The end result will be similar to many existing restaurants in the City, where customers make a short walk from the dining area to restrooms located just outside the restaurant.4 This arrangement fully complies with all legal requirements. The law does not require that restrooms be placed on the same parcel of real estate as the facilities they serve. Instead, t he Plumbing Code states that restrooms must be provided within a maximum travel distance. In 4 For example, several restaurants at Stanford Shopping Center utilize the center’s common restro oms, rather than providing separate facilities. City Council and Mayor of the City of Palo Alto August 8, 2018 Page 7 of 9 {3233-00002/00838264;} non-mall facilities, that distance is 500 feet. The Retail Food Code (part of the Health and Safety Code) contains various other requirements for travel distances in the 200 to 300 foot range. The maximum travel distance for the Project will be 150 feet, comfortably complying with all of these requirements. Further, in case the restaurant access to the hotel is ever severed, the Conditions of Approval require the Property to construct its own, Code-compliant restrooms; and the Project plans require Applicant to install plumbing on the Property to allow restrooms to be quickly installed, should that ever prove to be necessary. Yo, LLC argues that these Conditions of Approval are insufficient because, “There is no provision for monitoring or enforcement of this provision once the building permit is approved.” However, putting aside the fact that whoever owns the restaurant space at the time of severance would have a strong incentive to provide restrooms for staff and customers, severing the restaurant’s access to the hotel would also require physical changes that would necessitate issuance of new permits. Those permits could only be issued after a plan check, during which the City would have to determine whether the separate structures resulting from the severance comply with all applicable codes. Accordingly, the requirement that the Property’s owner install separate restrooms upon severance of the structures is fully enforceable, both practically speaking and as a matter of law. Conclusion The Project complies with all City requirements, and none of the objections raised in the Appeal withstands close scrutiny. The undersigned therefore respectfully requests that the City Council affirm the ARB’s carefully considered, unanimous approval of the Project. Sincerely, SSL LAW FIRM LLP Christine R. Wade cc: Associate Planner Samuel Gutierrez (via email) Greg Stutheit, Architect and Associate Principal, Montalba Architects, Inc. (via email) City Council and Mayor of the City of Palo Alto August 8, 2018 Page 8 of 9 {3233-00002/00838264;} APPENDIX A General Plan Policies Relevant to Project The following General Plan policies express the City’s conscious desire to develop the Downtown Commercial District in a pedestrian and bicycle-friendly manner, rather than forcing every project to accommodate demand for parking on-site: • Policy T-5.1: “All new development projects should manage parking demand generated by the project, without the use of onstreet parking, consistent with the established parking regulations. As demonstrated parking demand decreases over time, parking requirements for new construction should decrease.” • Policy T5.1.2: “Consider reducing parking requirements for retail and restaurant uses as a way to encourage new businesses and the use of alternative modes.” • Policy T5.2.2: “Study and implement pricing strategies for public parking in commercial districts, taking into consideration both employee parking demand and the needs of retailers and customers. Use pricing to encourage short term parking on street, long term parking in parking garages and the use of alternative modes of transportation.” • Policy T5.3: “Work with merchants when designating dedicated employee (long term) parking areas in public parking lots and garages.” • Policy T5.4: “Encourage shared parking where complementary demand timing is demonstrated in order to optimize parking spaces in commercial centers and employment districts.” • Policy T5.6: “Strongly encourage the use of below-grade or structured parking, and explore mechanized parking instead of surface parking for new developments of all types while minimizing negative impacts including on groundwater and landscaping where feasible.” City Council and Mayor of the City of Palo Alto August 8, 2018 Page 9 of 9 {3233-00002/00838264;} APPENDIX B Municipal Code § 18.18.090(d) The requirements for the City’s in-lieu parking program are set forth in Municipal Code § 18.18.090(d), which provides: (d) In-lieu Parking Provisions In connection with any expansion of the supply of public parking spaces within the CD commercial downtown district, the city shall allocate a number of spaces for use as "in -lieu parking" spaces to allow development to occur on sites which would otherwise be precluded from development due to parking constraints imposed by monetary contribution to the city to defray the cost of providing such parking. Contributions for each required parking space shall equal the incremental cost of providing a net new parking space in an assessment district project plus cost for the administration of the program, all as determined pursuant to Chapter 16.57 of Title 16 of this code, by the director of planning and community environment, whose decision shall be final. Only sites satisfying one or more of the following criteria, as determined by the director of planning and community environment, shall be eligible to participate in the in -lieu parking program: (1) Construction of on-site parking would necessitate destruction or substantial demolition of a designated historic structure; (2) The site area is less than 10,000 square feet, but of such an unusual configuration that it would not be physically feasible to provide the required on-site parking; (3) The site is greater than 10,000 square feet, but of such an unusual configuration that it would not be physically feasible to provide the required on-site parking; (4) The site is located in an area where city policy precludes curb cuts or otherwise prevents use of the site for on-site parking; or (5) The site has other physical constraints, such as a high groundwater table, which preclude provision of on-site parking without extraordinary expense. City of Palo Alto | City Clerk's Office | 8/9/2018 10:21 AM 1 Carnahan, David From:Ryan Palmer <ryan@SSLLAWFIRM.COM> Sent:Wednesday, August 08, 2018 11:40 AM To:Council, City Cc:Ivo Keller; Chris Wade; Gutierrez, Samuel; gstutheit@montalbaarchitects.com Subject:620 Emerson/ARB Application No. 17PLN00331 Attachments:CRW Letter to Palo Alto City Council re Yo LLC Appeal (08-08-18) (00838307xA4507).PDF Good Morning, Please see the attached correspondence from Chris Wade regarding the above referenced property and  application.  Hard copies will be send via FedEx Overnight.    Thank  you,    RYAN PALMER | LEGAL ASSISTANT | SSL LAW FIRM LLP | 575 Market Street, Suite 2700 | San Francisco, CA 94105 | Direct: 415.243.2680 | Main: 415.814.6400 | Fax: 415.814.6401 | Email: ryan@ssllawfirm.com This email and any attachments may contain material that is confidential, privileged and/or attorney work product for the sole use of the intended recipient. Any review, reliance or distribution by others or forwarding without express permission is strictly prohibited. If you are not the intended recipient, please contact the sender and delete all copies. Legal Advice Disclaimer: You should recognize that responses provided by this e-mail means are akin to ordinary telephone or face-to-face conversations and do not reflect the level of factual or legal inquiry or analysis which would be applied in the case of a formal legal opinion. A formal opinion could reach a different result.    {3233-00002/00838264;} 575 MARKET STREET, SUITE 2700 SAN FRANCISCO, CA 94105 TELEPHONE: 415.814.6400 FACSIMILE: 415.814.6401 business@ssllawfirm.com CHRISTINE R. WADE DIRECT TEL: 415.243.2088 chris@ssllawfirm.com August 8, 2018 VIA FEDEX AND EMAIL City Council and Mayor of the City of Palo Alto City Hall 250 Hamilton Avenue Palo Alto, CA 94301 city.council@cityofpaloalto.org RE: August 20, 2018 City Council Meeting Regarding Architectural Review Application No. 17PLN00331 -- Yo, LLC Appeal from Decision of Director of Planning & Community Development Approving Project at 620 Emerson Street Dear Councilmembers and Madam Mayor: We represent PA Hotel Holdings, LLC (“Applicant”), the owner of the property located at 620 Emerson Street in Palo Alto (the “Property”) and recipient of the project approval that is at issue in the above-referenced appeal. The Property contains a currently vacant, 4,000 square foot commercial building, formerly the site of the Stanford Florist flower shop. Applicant proposes to replace the building with a 4,063 square foot commercial space to allow for expansion of the existing Nobu Restaurant located within the Nobu Hotel—Epiphany Palo Alto next door (the “Project”). After carefully studying the Project over the course of two hearings, the Architectural Review Board (“ARB”) voted unanimously, 5 to 0, to approve the Project as currently designed and conditioned. This Appeal was filed by Yo, LLC. In addition to its role as appellant, Yo, LLC is involved in active litigation against Applicant related to Yo, LLC’s failed attempt to purchase the Property from its previous owner. Yo, LLC’s owner/representative is Elizabeth Wong, a local property owner and developer. The Notice of Appeal alleges that parking, traffic, loading, and restroom issues justify reversing the ARB’s decision. However, as discussed below, all of these arguments miss the mark. Each of these issues is addressed by the staff report and the record, which provide ample support to sustain the ARB’s unanimous approval of the Project. City Council and Mayor of the City of Palo Alto August 8, 2018 Page 2 of 9 {3233-00002/00838264;} In-Lieu Parking Fees The Project’s reliance on in-lieu parking fees to satisfy the City’s parking requirements is consistent with both the spirit and the letter of the Municipal Code provisions governing in-lieu fees, and with the City’s planning documents for the Downtown area. The City has made a conscious choice to design its Downtown Commercial District as a pedestrian and bicycle-friendly zone, featuring a variety of small shops and restaurants housed in separate, architecturally-distinct structures. That preference is reflected in a number of General Plan policies that encourage the use of shared parking and reduction of parking requirements for restaurants.1 The City’s Downtown Urban Design Guidelines likewise emphasize the “existing building pattern of storefronts or structural bays,” which “create the human scale of Downtown”; and Municipal Code § 18.18.110 creates design criteria that “promote pedestrian walkability” by directing vehicle access away from store-fronts and reserving public street frontages for pedestrian access. These policies demonstrate the City’s commitment to funneling parking demand into the public garages disbursed throughout the area, rather than attempting to accommodate all parking demand generated by each redevelopment project on-site. Consistent with these policies, Municipal Code § 18.18.090(d) allows certain projects to satisfy the City’s parking requirements through payment of in-lieu fees.2 These provisions apply, among other things, where the project occupies less than 10,000 square feet in site area and it is not physically feasible to provide the required on-site parking due to an unusual lot configuration; or where the site is located in an area where city policy precludes curb cuts or otherwise prevents use of the site for on-site parking. The Project satisfies the requirements for eligibility to participate in the in-lieu parking program. First, the site area is 4,063 square feet, well below the 10,000 square foot threshold in subsection (d)(2), and Applicant has conclusively demonstrated that it would not be physically feasible to provide the required parking spaces on-site. Specifically, Applicant’s representatives commissioned an independent study of the feasibility of integrating on-site parking into the Project by expert traffic and parking consultants Nelson/Nygaard Consulting Associates, Inc. The study evaluated 13 separate parking layout scenarios with respect to turning feasibility, physical site constraints, adjacent private property constraints, sight distance adequacy, and bicycle/pedestrian safety. Nelson/Nygaard determined that all 13 scenarios were infeasible for a variety of reasons, including inadequate visibility of pedestrians in the alley, insufficient turning radii, and other issues related to the Property’s unusual configuration, with its narrow rear frontage on a one-way alley that contains several other nearby obstructions. The study concluded that, “there was no feasible way to provide parking within or on the project site that could meet parking space size, ingress and egress movements, or vehicle/bicycle/pedestrian safety standards.” The Project therefore satisfies the in-lieu fee eligibility requirements of Section 18.18.090(d)(2). 1 Relevant General Plan policies are listed in Appendix A to this letter for the Council’s reference. 2 The complete text of Section 18.18.090(d) is set forth in Appendix B. City Council and Mayor of the City of Palo Alto August 8, 2018 Page 3 of 9 {3233-00002/00838264;} Second, the site is located in an area where city policy strongly disfavors curb cuts, because they disrupt pedestrian circulation. As ARB member Wynne Furth observed during the first of the two ARB hearings, “I don’t think there’s anybody who would support … a curb cut on Emerson. That would go against everything we’re trying to accomplish here.” This restriction significantly constrains the Property’s ability to accommodate on-site parking, since it prevents any arrangement by which cars would enter and exit a garage from the Emerson Street side, thereby requiring all cars to enter and exit from the public alley in the rear of the Property. As the Nelson/Nygaard study concluded, the alley cannot serve as a safe entrance and exit for parking on the Property for all of the reasons discussed above. The Project therefore satisfies the eligibility requirements of subsection (d)(4), as well. The Notice of Appeal argues that the City should reject the Project because the Project will remove three existing on-site parking spaces. While it is true that there are currently three parking spaces on the Property, the spaces are too small for current City parking requirements, and there is no disabled access-compliant space. In fact, the garage is only large enough to accommodate two legal parking spaces under existing City standards. Moreover, in practice these spaces have been used as a loading zone and for storage of trash generated on the Property – not for parking. The ARB took all of these facts into account in reaching its decision approving the Project, and as ARB member Robert Gooyer stated, the Applicant provided “the most thorough explanation as to why we need to … get rid of those three parking spaces I think I have ever heard.” The Notice of Appeal next argues that the Project’s payment of in-lieu parking fees “is sugar-coating the fact that there is no provision for off site parking within walking distance.” That is simply untrue. There are five public parking lots within a two-block radius of the Property: • High/Alma North Garage (Q), 550 High Street • High/Hamilton Lot (P), 549 High Street • Emerson/Ramona Lot (N), 561 Emerson Street • Civic Center Garage (CC), 250 Hamilton Street • Ramona/University Garage (B), 533a Ramon Street We also understand that the City recently expanded its garage on Lytton Avenue, and is working on an expansion of another garage on Hamilton Avenue. Accordingly, there is a large amount of existing public parking located in the Project’s immediate vicinity, and the supply of public parking spaces continues to grow. Further, restaurant patrons will have access to valet parking at the entrance to the Epiphany Hotel, directly next door to the Project. As it does now, the valet service will continue to utilize licensed spaces in private garages or lots outside of the immediate vicinity of the Project, rather than taking up spaces in the closest public garages. City Council and Mayor of the City of Palo Alto August 8, 2018 Page 4 of 9 {3233-00002/00838264;} It is possible that in referring to the lack of “provision for off site parking within walki ng distance,” Yo, LLC is arguing that the City must assign individual parking spaces in specific public garages to projects with in-lieu parking fee components, so that there are designated spots available for the project’s use. However, nothing in the text of the Municipal Code supports such a requirement, and it is our understanding that the City has never taken that approach to in- lieu parking. Yo, LLC has not provided an example of a project for which in lieu spaces were specifically designated, we were unable to locate such an example in our search of City records, and Planning Department staff knows of none. To the contrary, the City recently approved a project at 429 University Avenue, which we understand was sponsored by Yo, LLC’s principal, Ms. Wong. That project requires 87 parking spaces, 34 of which will be accommodated on-site. The project relies on past payments of in- lieu fees to provide 37 of the remaining spaces. Consistent with the Project at issue here, the approval documents do not mention any assignment of specific parking spaces. Likewise, the City recently approved a 7,158 square foot expansion of a senior citiz en center at 450 Bryant Street, which is zoned the same as the Property and located just 3 blocks away. That project generated a need for 29 additional parking spaces, which it will satisfy entirely through payment of in-lieu fees and a transportation demand management plan. Again, the approval documents do not mention any assignment of specific parking spaces. Nor would such an approach make sense. A big part of the reason for accommodating parking demand in large, public garages is to allow flexibility in the use of parking spaces, so that spaces not being used for one business at any given moment are available to patrons of the other businesses in the area. Assigning specific spaces to individual businesses would defeat that purpose. Yo, LLC next argues that the Project proposal “never addressed other options such as mechanical lifts and underground parking….” That is incorrect. The 13 scenarios studied in the Nelson/Nygaard report specifically included underground parking and mechanical lift options. The expert consultant found these options to be infeasible for a variety of reasons, including the difficulties created by forcing cars to back out of an underground garage or lift into a one-way alley already occupied with other parking spaces and physical obstructions. Thus, while the Applicant has submitted substantial evidence showing that the Project is eligible for payment of in-lieu parking fees, Yo, LLC has failed to submit any evidence or credible argument to the contrary. Traffic & Congestion The next issue raised in the Appeal concerns the Project’s purported traffic impacts. Referring to the presence of other restaurants on the 600 block of Emerson Street, Yo, LLC argues that “Location of another restaurant may bring traffic and circulation on this block to a standstill, especially during the peak evening hours.” The Notice of Appeal again offers no evidence to support its claim. City Council and Mayor of the City of Palo Alto August 8, 2018 Page 5 of 9 {3233-00002/00838264;} We understand that the City typically requires a locally focused traffic analysis for projects generating more than 50 trips per peak hour; and only requires a complete analysis to be performed for projects generating more than 100 new weekday peak hour trips.3 The Planning & Transportation Commission staff has concluded that projects generating less than 50 new peak hour trips, “would generate an insignificant amount of traffic relative to the local street network (i.e. they would not have the potential to result in direct, indirect, or ‘considerable’ contributions to cumulative impacts).” Here, the Project would replace an existing 4,000 square foot commercial use with a new 4,063 square foot commercial use. The Planning Department staff concluded that in light of the type of use, square footage, and location, the Project’s impact on traffic and circulation will be negligible. Yo, LLC has offered no facts or evidence to rebut that conclusion. Accordingly, the record does not support overturning the ARB’s decision on this basis. Loading Requirements Yo, LLC next argues that the Project’s elimination of the three on-site parking spaces “creates loading problems for this site” because the three spaces “also act as loading space.” Notably, this argument conflicts with Yo, LLC’s previous argument regarding parking, since spaces that are consistently used for parking could not be used for loading. However, in addition to this logical inconsistency, the Council should reject this argument for several other reasons. First, the Municipal Code unambiguously provides that the Project does not need to have a loading zone. Table 3 in Municipal Code § 18.52.040 sets forth the Minimum Off-Street Loading Requirements for various uses. The requirement for “Eating and Drinking Services” with 0 to 4,999 square feet of space, such as the Project, is zero. Second, the lack of a separate loading zone is consistent with the City’s existing policy of encouraging the use of alleys behind commercial properties as loading zones. Indeed, Ms. Wong benefited from the same policy when the City approved her 429 University Avenue project, despite the fact that the project included a loading zone that was too small to satisfy the City’s requirements. As noted in the Staff Report for the March 20, 2017 City Council meeting regarding the 429 University Avenue project, There is a loading zone at Kipling Street and the alley provides sufficient loading space for the project and service alleys throughout downtown have historically been used for the purpose of shared loading and access. Using the alley is consistent with prior projects reviewed by the City and with previous iterations of the project design, and meets the intent of the City’s Code requirement. 3 This understanding, and the quotation in the next sentence, come from a City Planning & Transportation Commission Staff Report dated December 11, 2013, titled “Traffic Impact Analysis Guidelines and Traffic Model Update.” City Council and Mayor of the City of Palo Alto August 8, 2018 Page 6 of 9 {3233-00002/00838264;} There is no reason why the same logic should not apply to this Project, which will generate considerably less demand for loading and unloading than Ms. Wong’s four-story, mixed-use project at 429 University. Third, Yo, LLC’s argument ignores the fact that the Project has access to the existing loading zone for the adjacent hotel. The hotel’s loading and trash area is located off of Hamilton Avenue, and includes a 145 square foot indoor trash area, a 231 square foot indoor loading and elevator access area, and a 290 square foot outdoor loading space located outside of the public right of way. All of these areas are approximately 155 feet from the proposed connection between the hotel and the Project’s kitchen. While the Project has access to sufficient space for loading even without these facilities, and the City’s Municipal Code unequivocally does not require further loading space, the Project’s access to such extensive facilities for the foreseeable future is also worth noting in assessing this issue. The Notice of Appeal also argues that “Larger delivery trucks and vehicles that service the grease traps for example cannot make the two sharp turns in the alley.” Yo, LLC again offers no evidence or credible argument to support its assertion. According to the staff reports for the Project and Mr. Gutierrez’s testimony to the ARB, Planning Department staff specifically measured the width of the alley and concluded that the alley is wide enough to be used for service and delivery vehicles. Although parking on the Property is infeasible because the alley is a one-way street and has existing obstructions in the specific area where cars would have to back out from any parking spaces on the Property, those issues would not apply to service vehicles proceeding through the alley in the permitted direction. Further, there are already two other restaurants (Tacolicious and Dan Gordon’s) on the same side of the same block of Emerson Street, in front of the same alley. There is no evidence that either of these restaurants are having any problems with servicing of their grease traps. Yo, LLC’s purported concerns regarding the lack of a loading zone are therefore entirely unfounded. Access to Restrooms Finally, the Notice of Appeal argues that the Project’s provisions for access to restrooms are insufficient. Because the Project will include two physical connections between the new restaurant space and the existing hotel next door (one for staff, the other for customers), the Project provides for the restaurant’s restroom needs to be satisfied through the existing restrooms in the hotel lobby. The end result will be similar to many existing restaurants in the City, where customers make a short walk from the dining area to restrooms located just outside the restaurant.4 This arrangement fully complies with all legal requirements. The law does not require that restrooms be placed on the same parcel of real estate as the facilities they serve. Instead, t he Plumbing Code states that restrooms must be provided within a maximum travel distance. In 4 For example, several restaurants at Stanford Shopping Center utilize the center’s common restro oms, rather than providing separate facilities. City Council and Mayor of the City of Palo Alto August 8, 2018 Page 7 of 9 {3233-00002/00838264;} non-mall facilities, that distance is 500 feet. The Retail Food Code (part of the Health and Safety Code) contains various other requirements for travel distances in the 200 to 300 foot range. The maximum travel distance for the Project will be 150 feet, comfortably complying with all of these requirements. Further, in case the restaurant access to the hotel is ever severed, the Conditions of Approval require the Property to construct its own, Code-compliant restrooms; and the Project plans require Applicant to install plumbing on the Property to allow restrooms to be quickly installed, should that ever prove to be necessary. Yo, LLC argues that these Conditions of Approval are insufficient because, “There is no provision for monitoring or enforcement of this provision once the building permit is approved.” However, putting aside the fact that whoever owns the restaurant space at the time of severance would have a strong incentive to provide restrooms for staff and customers, severing the restaurant’s access to the hotel would also require physical changes that would necessitate issuance of new permits. Those permits could only be issued after a plan check, during which the City would have to determine whether the separate structures resulting from the severance comply with all applicable codes. Accordingly, the requirement that the Property’s owner install separate restrooms upon severance of the structures is fully enforceable, both practically speaking and as a matter of law. Conclusion The Project complies with all City requirements, and none of the objections raised in the Appeal withstands close scrutiny. The undersigned therefore respectfully requests that the City Council affirm the ARB’s carefully considered, unanimous approval of the Project. Sincerely, SSL LAW FIRM LLP Christine R. Wade cc: Associate Planner Samuel Gutierrez (via email) Greg Stutheit, Architect and Associate Principal, Montalba Architects, Inc. (via email) City Council and Mayor of the City of Palo Alto August 8, 2018 Page 8 of 9 {3233-00002/00838264;} APPENDIX A General Plan Policies Relevant to Project The following General Plan policies express the City’s conscious desire to develop the Downtown Commercial District in a pedestrian and bicycle-friendly manner, rather than forcing every project to accommodate demand for parking on-site: • Policy T-5.1: “All new development projects should manage parking demand generated by the project, without the use of onstreet parking, consistent with the established parking regulations. As demonstrated parking demand decreases over time, parking requirements for new construction should decrease.” • Policy T5.1.2: “Consider reducing parking requirements for retail and restaurant uses as a way to encourage new businesses and the use of alternative modes.” • Policy T5.2.2: “Study and implement pricing strategies for public parking in commercial districts, taking into consideration both employee parking demand and the needs of retailers and customers. Use pricing to encourage short term parking on street, long term parking in parking garages and the use of alternative modes of transportation.” • Policy T5.3: “Work with merchants when designating dedicated employee (long term) parking areas in public parking lots and garages.” • Policy T5.4: “Encourage shared parking where complementary demand timing is demonstrated in order to optimize parking spaces in commercial centers and employment districts.” • Policy T5.6: “Strongly encourage the use of below-grade or structured parking, and explore mechanized parking instead of surface parking for new developments of all types while minimizing negative impacts including on groundwater and landscaping where feasible.” City Council and Mayor of the City of Palo Alto August 8, 2018 Page 9 of 9 {3233-00002/00838264;} APPENDIX B Municipal Code § 18.18.090(d) The requirements for the City’s in-lieu parking program are set forth in Municipal Code § 18.18.090(d), which provides: (d) In-lieu Parking Provisions In connection with any expansion of the supply of public parking spaces within the CD commercial downtown district, the city shall allocate a number of spaces for use as "in -lieu parking" spaces to allow development to occur on sites which would otherwise be precluded from development due to parking constraints imposed by monetary contribution to the city to defray the cost of providing such parking. Contributions for each required parking space shall equal the incremental cost of providing a net new parking space in an assessment district project plus cost for the administration of the program, all as determined pursuant to Chapter 16.57 of Title 16 of this code, by the director of planning and community environment, whose decision shall be final. Only sites satisfying one or more of the following criteria, as determined by the director of planning and community environment, shall be eligible to participate in the in -lieu parking program: (1) Construction of on-site parking would necessitate destruction or substantial demolition of a designated historic structure; (2) The site area is less than 10,000 square feet, but of such an unusual configuration that it would not be physically feasible to provide the required on-site parking; (3) The site is greater than 10,000 square feet, but of such an unusual configuration that it would not be physically feasible to provide the required on-site parking; (4) The site is located in an area where city policy precludes curb cuts or otherwise prevents use of the site for on-site parking; or (5) The site has other physical constraints, such as a high groundwater table, which preclude provision of on-site parking without extraordinary expense. Attachment E Project Plans Hardcopies of project plans are provided to Board members. These plans are available to the public online and/or by visiting the Planning and Community Environmental Department on the 5th floor of City Hall at 250 Hamilton Avenue. Directions to review Project plans online: 1. Go to: http://bit.ly/PaloAltoPlanningProjects 2. Scroll down the center of the page and click “View pending projects” 3. Scroll to find “620 Emerson St” and click the address link 4. On this project specific webpage you will find a link to the project plans and other important information Direct Link to Project Webpage: https://www.cityofpaloalto.org/news/displaynews.asp?NewsID=4260 City of Palo Alto (ID # 9393) City Council Staff Report Report Type: Action Items Meeting Date: 8/20/2018 City of Palo Alto Page 1 Summary Title: Stanford Fire Protection Services Agreement and Settlement of Prior Claim Title: Approval of Agreements Between the City of Palo Alto and the Board of Trustees of the Leland Stanford Junior University: 1) Agreement for Fire Protection Servi ces to Stanford University for the Period July 1, 2018 - June 30, 2023, and 2) Settlement Agreement for Overpayment Claim by Stanford University regarding Fire Protection Services From: City Manager Lead Department: City Manager Recommendation Staff recommends that City Council approve the attached agreements with the Board of Trustees of the Leland Stanford Junior University (“Stanford”) 1) Settlement of a claim by Stanford for prior overpayment (“Settlement Agreement”), through payment by the City to Stanford University in the amount of $5.5 million and credit for termination of prior agreement apparatus value (Attachment A); and 2) Palo Alto-Stanford Fire Protection Agreement for the provision of Fire Protection Services by the City to the Stanford University campus (“Agreement for Services”) for the period of July 1, 2018 to June 30, 2023, to automatically renew to June 30, 2028 unless terminated by either party (Attachment B). Executive Summary The original 1976 agreement has demonstrated the efficiency and mutual benefit to both agencies gained by integrated services on campus and throughout the City. The two agreements recommended to be approved will maintain the partnership between the City and Stanford that began in 1976 however, updated for new te rms based on current staffing, deployment models, and costing models. Through settlement of an outstanding claim from Stanford filed in 2013 concurrent with notice to terminate the 1976 agreement for fire services, and a new fire agreement services contract for the near term through 2023 with a renewal through 2028 unless otherwise terminated, these agreements provide a framework for both City of Palo Alto Page 2 the City and Stanford to move forward with. Background The City of Palo Alto has provided fire protection services to Stanford University since October 1976, when the City’s fire department and Stanford’s private fire protection company were consolidated. The City and Stanford entered into a fire services Agreement for a term of 50 years, providing however that either party could terminate the Agreement by providing written notice to the other party. The Agreement was amended in 1981 and restated in 2006 related to services provided to the Stanford Linear Accelerator (SLAC). In 2012, fire protection services to SLAC were transitioned from the City of Palo Alto to the Menlo Park Fire Protection District. On October 8, 2013, Stanford notified the City that it was exercising its option to terminate the Agreement effective at least one year, and no more than two years, from t he date of notice. Stanford also asserted a claim for overpayment since discontinuance of City fire services to SLAC. Stanford subsequently solicited proposals from other fire protection service providers, but did not select an alternative provider. In January 2016, Stanford and Palo Alto agreed that Palo Alto would continue to provide fire services to Stanford while the parties negotiated a new long term agreement. Amendments to the Palo Alto-Stanford Fire Protection Agreement have been approved during this interim period to continue a negotiated payment and services. A final fifth amendment is also recommended to be considered on this August 20, 2018 Council meeting for services up to this recommended longer term agreement. • Amendment Three: extension of terms through October 8, 2016 (December 2015, City Manager Report 6399 https://www.cityofpaloalto.org/civicax/filebank/documents/50022 • Amendment Four: extension of terms through June 30, 2017 (December 2016, Office of the City Attorney https://www.cityofpaloalto.org/civicax/filebank/documents/55187 ) • Amendment Five: recommended extension of terms through June 30, 2018 (to be considered by City Council on August 20, 2018) Discussion Since 2016, representatives from the City and Stanford have met periodically to discuss alternative service and cost allocation models for current and future service requirements. The City also began formal meet and confer sessions with the International Association of Firefighters (IAFF). These discussions have resulted in staffing and deployment changes as now reflected in the Fire Department FY 2019 Adopted Budget, as approved by the City Council in October 2017 (City Manager Report 8530 https://www.cityofpaloalto.org/civicax/filebank/documents/61420 ). The parties have now reached agreement on a full set of terms to address future fire service City of Palo Alto Page 3 terms included in the “Agreement for Services” as well as the resolution of Stanford’s claim for overpayment for services received since demobilization of the SLAC station in the “Settlement Agreement.” Key business terms of the recommended Settlement Agreement (Attachment A) include: 1. In consideration of the release of claims and mutual agreements related to past services, the City will pay Stanford the sum of $5.5 million on or on or before July 1, 2019. 2. The original (1976) agreement for fire services will be terminated in full. 3. The original agreement provides for liquidation of fire apparatus provided by Stanford at the outset of the agreement, at present value. The parties have mutually determined this value to be $1,010,000. The City will credit this value against payments due from Stanford for future fire protection services as determined by the Agreement for Services (future) over the next four years. Key terms of the Agreement for Services for future fire services (Attachment B) include: 1. The agreement will span the period of July 1, 2018 through June 30, 2023. Unless either party notifies the other party of non-renewal by January 1, 2022, the agreement will automatically renew for one five-year term through June 30, 2028. 2. Either party can terminate the agreement with two years written notice. In the event of termination, the City and Stanford will endeavor to create a transition plan to ensure continuity of service within 12 months of notice. 3. The City will provide all-risk emergency services as provided by Palo Alto Fire Department (PAFD) to other areas of Palo Alto. Ambulance services will be provided, however, Stanford shall not pay for these services. 4. The City and Stanford will work together to design and institute a fire alarm reduction program on the Stanford Campus that is customized to meet Stanford’s requirements to reduce unwanted, unwarranted and false smoke, fire, and water flow alarms. The City will no longer respond to supervisory or troubled alarms, these will be forwarded to the Stanford Fire Marshal’s Office. 5. The City will ensure response times 90% of the time, consistent with service in Palo Alto and system-wide performance standards. These standards are (1) 8 minutes or less within the urban response zone, (2) 15 minutes within the non-residential but high pedestrian traffic area, and (3) 20 minutes within the remote open-space area. Exhibit A to the agreement outlines a map identifying these different zones. City of Palo Alto Page 4 6. The City will provide quarterly reports of actual response times. Should response times not meet the standard, the Fire Chief and Stanford’s Contract Administrator may request review and recommend actions to meet the standards. Response time issues that cannot be resolved by the Fire Chief and Contract Administrator will be referred to the City Manager and Stanford’s Vice President for resolution. Should the City Manager and Vice President be unable to resolve the issue, a specified dispute resolution process involving mediation and potentially arbitration would be followed. 7. Stanford will notify the City monthly of upcoming on -campus changes such as construction projects, road modifications, events, and other changes likely to impact emergency response performance. If determined to impact response times, the parties will negotiate regarding the additional resources or other actions needed to mitigate the identified impact within a reasonable time within 6 months of identification . 8. The Stanford Fire Station (Station 6) will be staffed with six daily positions and no less than one fire engine, the equivalent of one rapid response vehicle (“RRV”), and one fire ladder truck. The Fire Chief retains sole operational authority and responsibility for deployment of PAFD personnel and equipment. Except for temporary or emergency situations or otherwise agreed, the City will notify Stanford prior to making material changes and demonstrate no disproportionate impact to Stanford. A dispute resolution process is specified for any disagreement on changes. 9. Costs to Stanford will be based on an agreed-upon methodology that allocates expenses for 4.5 daily positions and associated equipment directly to Stanford, and a proportionate share of other citywide positions as shared resources. Annual escalation factors are established based on negotiated labor agreements and the annual adopted budget. 10. Stanford will contribute incremental charges for the maintenance and replacement of vehicles and equipment. Should the agreement be terminated, the City may at its option refund replacement charges paid by Stanford or sell vehicles and equipment purchased for the Stanford Fire Station to Stanford, for up to the depreciated value. 11. Stanford will reimburse the City for capital improvements for the Stanford Station or a proportional share of system-wide projects. In order to provide sufficient time for the parties to finalize the required agreements and approvals, the City Attorney’s Office executed an extension to August 31, 2018 of the tolling agreement preserving Stanford’s claim for prior overpayment. In addition, as reported earlier in this report, a fifth amendment to extend services through June 30, 2018, or until this new long term Agreement for Services is executed, is recommended for City Council review and approval on August 20, 2018. City of Palo Alto Page 5 Resource Impact Funding for the Settlement Agreement of $5.5 million to be paid no later than July 1, 2019, will need to be identified in both the FY 2019 budget and/or during the FY 2020 b udget process. It is anticipated that some funding can be provided from the General Fund Budget Stabilization Reserve (BSR) which is currently above the City Council approved target of 18.5% by approximately $2 million in the FY 2019 Adopted Budget. The BSR levels will be monitored closely through the close of the FY 2018 financials and should additional funding be available, staff will provide an update to the City Council either through the Comprehensive Annual Financial Report or through the FY 2019 Mid-Year Budget Review on the BSR levels. The FY 2019 Adopted Budget assumed $6.5 million payments from Stanford University for fire services throughout the year in the General Fund. Based on the terms of these agreements, it is anticipated that revenues of $6.1 million (including the credit for vehicles and equipment outlined in the Settlement Agreement) would fall approximately $400,000 below budget estimates. Staff recommends delaying any change in the current FY 2019 budget appropriation ordinance to allow for a review of all General Fund revenues during the course of FY 2019. Balancing adjustments, if needed, would be brought forward as part of the FY 2019 Mid-Year Budget Review to align with these final contract terms. The ongoing implications of these agreements will be factored into the development of the FY 2020 budget, beginning with the FY 2020-2029 Long Range Financial Forecast. Policy Implications The recommended agreements resolve a longstanding (since 2012) dispute between the City and Stanford University as well as establish a mutually agreeable basis for continued services for the next five years. Subject to continued positive experiences by both parties during this period, services will continue for an additional five years. Experience under the prior agreements has demonstrated the efficiency and mutual benefit to both agencies gained by integrated services on campus and throughout the City; therefore, the recommended action is in the City’s best interest to finalize a new long-term relationship between the parties. Environmental Review This action does not constitute a project as defined by California Environmental Quality Act (CEQA) Guidelines Section 15378. Attachments: • Attachment A: Settlement Agreement • Attachment B: Agreement for Services 1 MUTUAL TERMINATION, SETTLEMENT AND RELEASE This Mutual Termination, Settlement and Release Agreement (hereinafter, the “Settlement Agreement”) is made and entered into as of July 1, 2018 (the “Effective Date”), between The Board of Trustees of the Leland Stanford Junior University (“Stanford”), a body having corporate powers under the laws of the State of California, and the City of Palo Alto (“Palo Alto”), a municipal corporation duly organized and existing under and by virtue of the laws of the State of California. Stanford, on the one hand, and Palo Alto, on the other, shall be referred to individually as “Party” and collectively as the “Parties.” Recitals WHEREAS, Stanford and Palo Alto entered into the “Palo Alto-Stanford Fire Protection Agreement,” dated October 1, 1976, as amended on September 1, 1980 (the “First Amendment”), June 26, 2006 (the “Second Amendment”), January 25, 2016 (the “Third Amendment”), on or about October 2016 (the “Fourth Amendment”), and by the fifth amendment that is to be entered into by the Parties on or before the Effective Date (the “Fifth Amendment”), collectively with all subsequent amendments as referenced above, the “Original Agreement”; WHEREAS, Stanford terminated the fire protection services from Palo Alto for the Stanford Linear Accelerator Laboratory (“SLAC”) in April of 2012; WHEREAS, Stanford asserts that it may have claims against Palo Alto concerning payments that were made by Stanford under the Original Agreement after April 2012 (the “Payment Dispute”); WHEREAS, the Parties desire to terminate the Original Agreement, settle all disputes arising out of the Original Agreement (including, without limitation, the Payment Dispute), and enter into a new fire service agreement (the “New Service Agreement”) on the Effective Date; NOW THEREFORE, in consideration of good and valuable consideration of the releases, mutual promises and covenants contained herein, the receipt and sufficiency of which are hereby acknowledged by the Parties, Stanford and Palo Alto, intending to be legally bound, agree as follows: I. Settlement Payments and Termination 1. Palo Alto shall pay the sum of $5,500,000 (Five Million and Five Hundred Thousand US Dollars) (the “Settlement Funds”) to Stanford no later than July 1, 2019. 2. The Original Agreement is hereby terminated effective as of the Effective Date. 3. In lieu of Palo Alto’s obligations to sell all excess fire department vehicles under Section 3.10(b) of the Original Agreement and its obligations to return the property as described in Section 4.1 and Section 4.2 of the Original Agreement to Stanford, which are due upon termination of the Original Agreement, Palo Alto shall instead, provide a service credit to Stanford in the amount of $1,010,000 (One Million and Ten Thousand US Dollars) (“Apparatus Credit”), which shall be used to offset the fees payable by Stanford under the New Service Agreement as further described below: (a) Palo Alto shall deduct $252,500 (Two Hundred Fifty-Two Thousand and Five Hundred Dollars) from the final invoice of each fiscal year during the Term of the New Service Agreement (i.e. the June 30th invoice) until the Apparatus Credit is exhausted (i.e. after 4 years); and Attachment A 2 (b) If the New Service Agreement is terminated early for any reason, Palo Alto shall refund the remaining Apparatus Credit, if any, to Stanford, upon termination of the New Service Agreement. 4. If any amount payable under this Settlement Agreement (or any portions thereof) is not paid or credited in accordance with Section 1 or Section 3 hereof, Stanford shall have the right (without limiting any other remedy that Stanford may have) to offset the unpaid or uncredited amount, plus an interest from any fees that are payable by Stanford under the New Service Agreement. Such interest shall accrue at the rate of Three Percent (3%) per annum from the Effective Date, until it is paid or credited. II. Mutual Releases and Covenant Not to Sue 5. Stanford, for itself, its trustees, officers, employees, agents, administrators, successors and assigns, hereby releases and forever discharges, and covenants not to sue Palo Alto, its past and present officers, employees, agents, administrators, successors, and assigns, from any claims, causes of actions, and damages of whatsoever kind or nature, either in law or in equity, past, present and future, known or unknown which Stanford now has, or which may hereafter accrue or otherwise be acquired by Stanford, on account of, related to, or in any way arising out of the Original Agreement. 6.Palo Alto, for itself, its officers, employees, agents, administrators, successors and assigns, hereby releases and forever discharges, and covenants not to sue Stanford, its past and present trustees, officers, employees, agents, administrators, successors, assigns, from any claims, causes of actions, and damages of whatsoever kind or nature, either in law or in equity, present and future, known or unknown which Palo Alto now has, or which may hereafter accrue or otherwise be acquired by Stanford, on account of, related to, or in any way arising out of the Original Agreement. 7. Each Party expressly acknowledges and agrees that the releases contained in this Settlement Agreement include a waiver of all rights under Section 1542 of the California Civil Code, which provides: A general Release does not extend to claims which the creditor does not know or suspect to exist in his or her favor at the time of executing the release, which if known by him or her must have materially affected his settlement with the debtor. The Parties, and each of them, may hereafter discover facts other than or different from those which they know or believe to be true with respect to the subject matter of the released claims, but they hereby expressly waive and fully, finally, and forever settle and release any known or unknown, suspected or unsuspected, asserted or unasserted, contingent or non-contingent, accrued or unaccrued claim, loss, or damage with respect to the released claims, whether or not concealed or hidden, without regard to the subsequent discovery or existence of such additional or different facts. The foregoing release of unknown, unanticipated, unsuspected, or unaccrued losses or claims with respect to the released claims is contractual and intentional, and not a mere recital. III. Additional Terms and Conditions 8. This Settlement Agreement sets forth and constitutes the entire agreement between the Parties with respect to its subject matter and supersedes any and all prior agreements, understandings, promises, warranties, and representations made by each to the other concerning its subject matter. This Settlement Agreement may be modified only by a written document signed by the Parties. No waiver of 3 this Settlement Agreement or of any of the promises, obligations, terms, or conditions in this Settlement Agreement is valid unless it is written and signed by the Party against whom the waiver is to be enforced. 9. This Settlement Agreement may be executed in identical counterparts, each of which shall constitute an original and all of which shall constitute one and the same Agreement. Copies of all or part of this Settlement Agreement, including signatures thereto, which are copied or transmitted by facsimile or electronic mail are presumed valid. 10. This Settlement Agreement is binding on the Parties, their predecessors, successors, parents, subsidiaries, affiliates, assignees, agents, directors, officers, employees, shareholders, and attorneys. Each of the signatories of this Settlement Agreement represents and warrants that he or she is authorized to execute this Settlement Agreement on behalf of his or her respective Party and by such signature to bind that Party to this Settlement Agreement and that it has not sold assigned, transferred, conveyed or otherwise disposed of any of the claims, demands, obligations or causes of action referred to in this Settlement Agreement. 11. By signing this Settlement Agreement, each Party agrees to bear its own attorneys’ fees and costs arising prior to the date of execution of this Settlement Agreement. Furthermore, in entering this Settlement Agreement, the Parties represent that they have relied upon the legal advice of counsel and that the terms of this Settlement Agreement have been completely read and explained to each Party by its attorneys, and that those terms are fully understood and voluntarily accepted by both Parties. 12. This Settlement Agreement and all matters related to or arising out of it are governed by and will be construed in accordance with the laws of the State of California, with exclusive jurisdiction in State or Federal courts located in Santa Clara County, California. If any part or provision of this Settlement Agreement is finally determined to be invalid or unenforceable under applicable law by a court of competent jurisdiction, that part or provision is ineffective to the extent of such invalidity or unenforceability, without affecting the remaining parts of the part or provision or the remaining parts or provisions of this Settlement Agreement. 13. Each Party shall keep this Settlement Agreement and its terms confidential, except (a) as required by law or governmental audit, (b) to accountants for tax and accounting purposes, (c) for the internal business needs of each Party, or (d) as is necessary to effectuate any term or provision of this Settlement Agreement or to enter, obtain or enforce this Settlement Agreement or the releases set forth herein. Stanford understands and agrees that Palo Alto may be required to disclose this Agreement pursuant to one or more provisions of local, state or federal law, including without limitation the California Public Records Act. 14. It is understood and agreed that this is a compromise settlement of disputed claims, and that nothing herein shall be construed as an admission of liability or acceptance of responsibility by any Party with respect to any of the claims or rights covered by this Settlement Agreement. 15. The Parties have participated jointly in the negotiation, drafting, and editing of this Agreement. In the event an ambiguity or question of intent or interpretation arises with respect to this Agreement, this Agreement shall be construed as if drafted jointly by the Parties, and no presumption or burden of proof shall arise favoring or disfavoring one Party by virtue of the authorship of any of the provisions of this Agreement. 4 IN WITNESS WHEREOF, each Party has caused this Settlement Agreement to be executed by its duly authorized officers or representatives. The Board of Trustees of the Leland Stanford Junior University By: _________________________ Print Name: __________________ Print Title: ____________________ Date Signed: __________________ City of Palo Alto By: _________________________ Print Name: __________________ Print Title: ____________________ Date Signed: __________________ Palo Alto-Stanford Fire Protection Agreement Page 1 of 36 Execution Copy PALO ALTO-STANFORD FIRE PROTECTION AGREEMENT DRAFT TO STANFORD This Palo Alto-Stanford Fire Protection Agreement (“Agreement”) is entered by and between the BOARD OF TRUSTEES OF THE LELAND STANFORD JUNIOR UNIVERSITY (“Stanford”), a body having corporate powers under the laws of the State of California, and the CITY OF PALO ALTO (“Palo Alto” or the “City”), a chartered municipal corporation duly organized and existing under and by virtue of the laws of the State of California. RECITALS WHEREAS, Stanford and Palo Alto entered into the “Palo Alto-Stanford Fire Protection Agreement,” dated October 1, 1976, as amended on September 1, 1980 (“First Amendment”), June 26, 2006 (“Second Amendment”), January 25, 2016 (the “Third Amendment”), on or about October 2016 (the “Fourth Amendment”), and by the fifth amendment that is to be entered into by the Parties before the Effective Date, collectively with all subsequent amendments as referenced below, the “Original Agreement”; WHEREAS, the Parties enter into a separate mutual termination, settlement and mutual release agreement on the same Effective Date to terminate and settle all claims related to the Original Agreement (the “Settlement Agreement”). WHEREAS, the parties desire to establish new terms for provision of the Fire Protection Services (as defined in Section 2.1(a) below) under this Agreement; NOW THEREFORE, in consideration of the mutual promises and covenants contained herein, it is agreed as follows: 1 EFFECTIVE DATE AND TERMINATION. 1.1 Effective Date. This Agreement shall be effective as of July 1, 2018 (“Effective Date”). 1.2 Term. Unless sooner terminated pursuant to section 1.4 (Option to Terminate) or section 1.5 (Termination for Substantial Failure of Performance), or unless extended by agreement of the parties, this Agreement shall terminate on June 30, 2023 (the “Initial Term”). This Agreement will renew automatically for one (1) five-year term (from July 1, 2023 through June 30, 2028) (the “Renewal Term”), unless either party provides the other with written notice of non-renewal by January 1, 2022. The parties are under no obligation to renew the Agreement. If the Agreement is automatically renewed during the Renewal Term as provided for herein, and the parties agree to begin negotiation of an extension to the term of this Agreement, then the parties shall commence the negotiation on or before July 1, 2026, in order to allow time for an orderly extension of the term, including negotiation of amendments to the substantive provisions of this Agreement, if needed. Attachment B Palo Alto-Stanford Fire Protection Agreement Page 2 of 36 Execution Copy 1.3 Notice of New Provider. In the event of non-renewal or termination of the Agreement for any reason, to facilitate the transition to a new provider of Fire Protection Services, the parties shall work together to ensure a smooth transition and Stanford shall share the identity of the party with whom Palo Alto shall work with to begin the transition as soon as possible, which can be a new provider, an intermediary, or Stanford’s own operation (the “New Provider”). The Parties acknowledge and agree that it is in their mutual interest to ensure a smooth transition and Stanford shall endeavor to notify the City of the identity of the New Provider at least six (6) months before the effective date of termination. The parties shall work together to begin transition planning as soon as the notice for non-renewal or termination is provided hereunder, and shall endeavor to create a transition plan within 12 months from the date of such notice. Stanford’s failure to timely identify the New Provider shall not operate to extend or renew the term of this Agreement beyond the date identified in the notice of non- renewal or the effective date of termination. 1.4 Option to Terminate. Either party may terminate this Agreement for convenience at any time with two years’ written notice of termination, except for modified notice and termination periods as provided in section 3.4.1(f) below. Except for the shorter notice period provided in section 3.4.1(f), the termination shall become effective 2 years from the date of written notice. Stanford shall notify Palo Alto in writing of the New Provider of Fire Protection Services for the Stanford Campus in accordance with Section 1.3 above. The terminating party shall not be liable for any loss or damage caused by a termination pursuant to this section 1.4 and section 3.4.1(f) below. It is expressly provided that termination pursuant to this section may be made with or without cause, for any reason whatsoever, at the sole discretion of the terminating party. 1.5 Termination for Substantial Failure of Performance. Without limiting any other remedy that may be available, this Agreement may be terminated for a substantial failure of performance pursuant to the following procedure. The party aggrieved by a substantial failure of performance shall, if it elects to exercise its right to terminate pursuant to this Section, serve a written notice describing the substantial failure. If the substantial failure is not cured within 60 days (except as provided in Section 2.6.1(d) below), the aggrieved party may serve a written notice of termination. This Agreement shall then terminate on the earlier of (a) the date that a New Provider is ready to provide Fire Protection Services to the Stanford Campus (“Transition Date”), as determined by Stanford, provided that Stanford has provided Palo Alto written notice of the Transition Date no less than 3 months prior, (b) two years after the delivery of the notice of termination for breach; or (c) the end of the term of this Agreement as set out in section 1.2 (Term), unless the aggrieved party agrees to extend the termination date in writing during the Dispute Resolution process set out in Section 8 hereof. The rights accorded to the aggrieved party by this section 1.5 shall be in addition to any other rights accorded by this Agreement or by law. 2 FIRE PROTECTION SERVICES. 2.1 Stanford Campus - Fire Protection Service Area. (a) Palo Alto shall provide firefighting, first responder, rescue, fire investigation, Palo Alto-Stanford Fire Protection Agreement Page 3 of 36 Execution Copy and such other services as described herein or as provided by the Palo Alto Fire Department within the City of Palo Alto during the Term (collectively, “Fire Protection Services”) under this Agreement to the Stanford Campus, as shown on the map attached as Exhibit A and defined below in section 9.1 (Definitions). (b) If at any time during the Term of this Agreement the State of California’s Division of Forestry, Menlo Park Fire Department, or the Woodside Fire District, should withdraw primary responsibility for providing fire protection services to those areas indicated in Exhibit A, then this Agreement may be amended, by mutual agreement of the parties in writing, to cover such additional areas. (c) In the event that the area of the Stanford Campus as defined in this Agreement is expanded or reduced, or there are material changes to the number, size or type of structures, or changes in the number of residents, students, or employees on the Stanford Campus and such material changes result in a material increase or decrease in the utilization of the Fire Protection Services or a material impact on the City’s ability to meet its Response Time Standards, Fire Protection Services resources allocated to Stanford under this Agreement may be modified by the parties as provided under section 2.7(c) of this Agreement or upon mutual agreement in writing. 2.2 Palo Alto Fire Protection Services. (a) Palo Alto shall provide at least such Fire Protection Services as the Palo Alto Fire Department (“PAFD”) provides within the City of Palo Alto and as are normally rendered by fire departments in San Mateo and Santa Clara Counties, in similar circumstances, at the time such response is made. Without limiting the generality of the foregoing, Palo Alto shall provide fire suppression, technical rescue (including confined space rescue and support), paramedic and medical services, hazardous material response, fire investigation, appropriate technical alarms and other services, and such other services as described in this Section 2, as part of the Fire Protection Services. Palo Alto shall provide Fire Protection Services in a manner consistent with (i) industry standards for similar types of services in the United States; and (ii) the level and quality it provides to the rest of the City of Palo Alto for similar types of services, except as otherwise expressly provided herein. (b) Palo Alto shall also participate in Stanford’s emergency drills, as appropriate. 2.3 Ambulance Services. Palo Alto shall provide emergency medical services, including both first responder and Ambulance Service, in the same manner and scope it has done since June 1, 1980 for both the City and the Stanford Campus (which is part of the Santa Clara County). Palo Alto is the approved paramedic services provider as defined under the California Health and Safety Code section 1797.201. This includes pre-hospital, emergency 9-1-1 basic and advanced life support services and ambulance transportation. Except as expressly provided in Section 2.9 below, Stanford shall not pay for ambulance services, including, without limitation, equipment, staffing, administrative and other associated costs in connection with the provision of ambulance service (the “Ambulance Service”), nor shall Stanford receive any revenue credit from cost recovery for Ambulance Service. For the avoidance of doubt, (i) the first responder and other emergency medical services (excluding Ambulance Service) shall be deemed part of Palo Alto-Stanford Fire Protection Agreement Page 4 of 36 Execution Copy the Fire Protection Service and shall be subject to the Response Time and other performance standards set forth in Section 2.6 hereof; and (ii) even though Ambulance Service is not paid for by Stanford, Stanford shall be entitled to receive the same level of Ambulance Service as Palo Alto provides within the City of Palo Alto and as required by applicable laws. City will bill the transported patients its usual and customary ambulance transportation costs as allowed under Federal and State regulations. Stanford is not obligated to reimburse City for costs not reimbursed by health insurance carriers. 2.4 Fire Investigations, Building and Hazard Inspections. (a) Palo Alto shall lead investigations of fires on the Stanford Campus in coordination with the Stanford Department of Public Safety and the University Fire Marshal. Nothing herein shall prevent Palo Alto from reporting any violations of law to applicable governmental authorities. (b) Palo Alto fire crews shall conduct periodic familiarity examinations of buildings on the Stanford Campus, which shall be no less than once a year for key buildings identified jointly by the Stanford Contract Administrator and Chief. Palo Alto shall maintain a campus specific response map by addresses, building numbers and commonly-used place names to ensure rapid response. (c) Nothing in this Agreement shall be construed to confer on Palo Alto, or any of its agents or employees any law enforcement power or law enforcement authority (including, without limitation, Building and Fire Codes) outside the city limits of Palo Alto, except such powers and authority as would exist in the absence of this Agreement. Similarly, nothing in this Agreement shall be construed as applying to the Stanford Campus any governmental statute, ordinance, code, or regulation, except that which would exist in the absence of this Agreement. (d) Palo Alto shall provide timely and periodic real-time updates to the Stanford Contract Administrator and other designated communications contacts (if identified by Stanford) of fire investigations, significant hazardous materials spills, and other incidents likely to require coordination with Stanford stakeholders or those likely to generate media attention, as soon as possible and shall endeavor to coordinate with Stanford prior to responding to any media inquiry about such instances. Palo Alto shall promptly share all reports of fire investigations and reports on all responses to alarms within the Stanford Campus to the Stanford Contract Administrator upon completion of the final written reports. 2.5 Stanford Fire Protection Systems. (a) Stanford in its sole discretion and at its own expense shall install, modify, operate, test and maintain the following fire protection systems on the Stanford Campus: 1) All water supply, storage, distribution and outlet facilities and equipment, including without limiting the generality of the foregoing, all fire hydrants, fire standpipe systems, automatic fire extinguishing systems, and like systems; 2) All fire detection and fire alarm systems (which will be connected to the Palo Alto 911 communication center); and 3) All portable fire extinguishers except those maintained by Palo Palo Alto-Stanford Fire Protection Agreement Page 5 of 36 Execution Copy Alto in fire stations or on fire vehicles. (b) Palo Alto shall not be responsible for the design, installation, modification, operation, testing, or maintenance of the systems described in subsection (a) of this section 2.5, except that Palo Alto shall provide periodic fire crew familiarity examinations in accordance with section 2.4 (Fire Investigations, Building/Hazard Inspections) herein along with monitoring with Stanford to ensure that the fire detection and fire alarm systems described in Section 2 are connected to the Palo Alto 911 communication center. (c) Palo Alto and Stanford shall work together to design and institute a fire alarm reduction program on the Stanford Campus that is customized to meet Stanford’s requirements. The program is designed to reduce unwanted, unwarranted and false smoke, fire and water flow alarms. The program shall not be more restrictive than that used in the City of Palo Alto and will not impose fines on Stanford or its residents, tenants and other occupants on the Stanford Campus. Stanford and Palo Alto will work collaboratively to reduce the instances of monitored fire and supervisory alarms. (d) Palo Alto shall not respond to Supervisory or Trouble Alarms (except for fire pumps) as defined by the National Fire Protection Association (NFPA) National Fire Alarm and Signaling Code Standard 72. When such Supervisory or Trouble Alarms (except for fire pumps) are received in the dispatch center, the alarm details shall be forwarded to the on-duty or on-call technicians in the Stanford Fire Marshal’s Office. 2.6 Performance and Monitoring. 2.6.1. Response Time Standard. (a) Except as otherwise expressly set forth herein, Palo Alto’s Response Time Standards should be system-wide and non-discriminatory for applicable neighborhoods of effort. In meeting the Response Time Standards for incidents on the Stanford Campus, Palo Alto shall timely respond with the engine companies and truck companies reasonably expected for the severity of the incident, but in no event less than the response it would normally provide to the rest of the City and Palo Alto shall, at minimum, respond without delay from the time of notice of the alarm to all active fire alarms with at least one apparatus, unless cancelled before arrival. As used throughout this Agreement, “Response Time” shall mean the time elapsed from the receipt by Palo Alto Communication of a request by anyone for emergency assistance, including, but not limited to a report of a fire and/or emergency medical incident and all active fire alarms to the time the first company and/or unit arrives at the scene of the emergency which prompted the request. Palo Alto shall respond to emergency calls for Fire Protection Services (including EMS calls) for the Stanford Campus within the Response Time and apparatus type and performance standards as set by the Palo Alto City Council for the City, except as modified by the minimum performance standards expressly set forth below (collectively, “Response Time Standards”). (b) During the Term, (1) the Response Time Standards for the portion of Stanford Campus that is labeled as “Area A” in Exhibit A, shall meet the Response Time and performance standards set by the City for the urban response zone, and shall be no less than eight minutes Response Time, 90 percent of the time, (2) the Response Time Standards for the non-residential but high pedestrian traffic area that is labeled as “Area B” in Exhibit A, shall be no less than 15 minutes Response Time, 90 percent of the time, and (3) the Response Time Palo Alto-Stanford Fire Protection Agreement Page 6 of 36 Execution Copy Standards for the remote open-space area that is labeled as “Area C” in Exhibit A, shall meet the Response Time and performance standards set by the City for rural response zone, and shall be no less than 20 minutes Response Time, 90 percent of the time. (c) Palo Alto shall provide to Stanford quarterly reports of actual system-wide Response Times and actual Response Times for the Stanford Campus as further described in Section 2.6.3 below. (d) If Palo Alto does not meet the system-wide Response Time Standards required under this Agreement during a preceding quarter, either party may request that the Palo Alto Fire Chief and the Stanford Contract Administrator review Response Time performance and recommend actions to achieve the Response Time Standards. (e) Palo Alto shall make good faith efforts to reach the Response Time Standards within a reasonable period not to exceed three months after the end of any quarter in which the standard was not achieved. Subject to any Response Time Exception agreed to by the parties as set forth in Section 2.6.4 below, the parties hereby acknowledge and agree that, (i) if any Response Time Standard failure is not cured within six (6) months after the end of any quarter in which the standard was not met; or (ii) if any Response Time Standard is not cured for more than 6 months in any rolling 12-month period, such failures shall be deemed substantial failure to perform and Stanford shall have the right, at its option, to terminate the Agreement pursuant to Section 1.5 of the Agreement, without any additional cure period, upon the occurrence of (i) or (ii) set forth above, notwithstanding anything contained herein to the contrary. (f) Any issue regarding Response Times that is not resolved between the Chief and the Stanford Contract Administrator will be referred to Stanford’s Vice President and Palo Alto’s City Manager or their designees for resolution. Any issue regarding Response Time that the Vice President and City Manager or their designees do not resolve may be referred to dispute resolution as set out in section 8 (Dispute Resolution) below. (g) Palo Alto’s failure to meet the Response Time Standards shall not entitle Stanford to a reduction in payments under this Agreement, service credit, or other liquidated damages under this Agreement. 2.6.2. Response Time Performance Measures. (a) Palo Alto shall measure system-wide Response Time performance in accordance with its Community Risk Assessment and Standards of Cover, unless otherwise specified in this Agreement. (b) Response Time performance measures shall include the following emergency incidents: 1) Fires of all type; 2) Emergency Medical Services (“EMS”) calls that are prioritized Charlie (C), Delta (D) and Echo (E) using the Palo Alto’s adopted Medical Priority Dispatching System (MPDS) approved by the Santa Clara County EMS Medical Director; 3) Motor vehicle accidents with injuries; Palo Alto-Stanford Fire Protection Agreement Page 7 of 36 Execution Copy 4) Rescue assignments to include vehicle accidents with entrapment and all technical rescues; and 5) Hazardous Materials incidents designated Level 2 defined as: An incident involving a greater hazard or larger area than Level 1, and poses a threat to life and property. It may require an evacuation of the surrounding area or sheltering in place. (c) Response Time performance measures shall not include the following non- emergency incidents: 1) Fire alarm calls where there is no confirmation of a fire or other emergency incident; 2) Low acuity EMS calls that are prioritized Omega, Alpha (A) and Bravo (B) using the Palo Alto’s adopted Medical Priority Dispatching System (MPDS) approved by the Santa Clara County EMS Medical Director; 3) Non-injury motor vehicle accidents; 4) Minor, non-life or property threatening, Hazardous Materials incidents designated as Level 1; 5) Any call where units were cancelled prior to arrival; and 6) Service or public assistance calls where no threat to life or property exists. 2.6.3 Response Time Reporting. (a) Palo Alto shall monitor the actual counts of and Response Times for all incidents responded to occurring within the Stanford Campus in all three areas as identified in Exhibit A. Palo Alto shall provide Response Time reports to Stanford as described below: 1) For any emergency incident Response Time performance within Area A of the Stanford Campus where the first arriving unit’s Response Time exceeds 8 minutes (or such revised Response Time Standard as adopted by the City in accordance with Section 2.6.1 above), a non-compliance report will be prepared that explains the delay in Response Time. Such reports shall be provided to the Stanford Contract Administrator on a monthly basis provided however, that upon specific request by the Stanford Contract Administrator, a non-compliance report will be sent within three (3) business days of the request. 2) At least quarterly, the Palo Alto Fire Chief shall report the following information to the Stanford Contract Administrator or designee: a. Response Time for the first arriving unit for each and all emergency incidents on the Stanford Campus, separated by the three areas identified on Exhibit A; b. Response Time for the first arriving unit for all emergency incidents within Palo Alto City’s identified service zones (i.e. Urban vs Rural); c. Response Time for all non-emergency incidents on the Stanford Palo Alto-Stanford Fire Protection Agreement Page 8 of 36 Execution Copy Campus, which will be reported but not included in the performance time measures as described in Section 2.6.2(c) above, d. Summary of non-compliance reports for responses to the three response areas on Stanford Campus; e. Number of incidents and total time spent for incident response into the City of Palo Alto from the Stanford Fire Station and the number of incidents and total time spent for incident response into Stanford from each of the other non-Stanford stations; f. Recap of significant Stanford Campus’ Central Campus incidents; g. Confirmation that it has met the 90% Response Time Standards set forth for all three areas in subsection (a) of Section 2.6.1 (Response Time Standard), or if not met, (i) the parties shall discuss if a Response Time Exception shall apply in accordance with Section 2.6.4(c); or (ii) the City shall provide reasons for non- compliance and the City’s proposed remediation plan (“Remediation Proposal”); and h. Upon receipt of City’s Remediation Proposal, the Chief and the Stanford Contract Administrator shall discuss and direct or recommend actions to resolve any non-compliance issues in accordance with Section 2.6.4(c) below. The parties shall use good faith to correct any inability to meet the Response Time Standards, within a reasonable time period of no more than 3 months from the date the issues are identified. (3) The quarterly reports described in this Section 2.6.3, are due within thirty days of July 1, October 1, January 1, and April 1 each fiscal year. Failure to timely provide the reports in accordance with this Agreement, if not cured within the 60 day cure period after Stanford’s provision of notice to the City, shall be deemed a substantial failure or performance as set forth in Section 1.5 hereof. 2.6.4 Response Time Performance Impacts Notification by Stanford. (a) Stanford shall notify Palo Alto on a monthly basis of upcoming construction projects, road network modifications, Stanford campus events, and other material changes that are known to the Stanford Contract Administrator that are likely to adversely impact emergency response performance. (b) Upon request by the Palo Alto Fire Chief, Stanford shall share with Palo Alto its analysis of the emergency response impact of planned projects and road networks including traffic calming devices, or such other information as reasonably requested by the Palo Alto Fire Chief to evaluate the situation. (c) Should Stanford’s analysis as described above or should the Palo Alto Chief, in accordance with Section 2.7(c) below, identify a potential impact to Palo Alto’s ability to meet Response Time standards on the Stanford Campus under this Agreement, the parties shall negotiate regarding the additional resources necessary to mitigate the impact identified and/or Palo Alto-Stanford Fire Protection Agreement Page 9 of 36 Execution Copy any necessary adjustments to the Reponses Time standards for the affected areas. Palo Alto Chief may implement actions and adjustments to the extent permitted under Section 2.7(c) below. Otherwise, all other changes shall only be implemented upon mutual agreement by the parties. Furthermore, any adjustments to the Response Time standards to take account of the potential impact shall be approved in writing by the parties (“Response Time Exceptions”), which approval shall specify the areas affected and the date, time and expected duration of the exception. (d) If planned projects create new hazards, in particular hazards that require additional training or equipment, the parties shall negotiate regarding the additional resources necessary to mitigate the impact identified. (e) The parties shall use good faith to address any inability to meet the Response Time standards within a reasonable time of no more than 6 months from the date the issues are identified. 2.7 Deployment of Resources. (a) As of the Effective Date of this Agreement, Palo Alto shall provide the Stanford Fire Station with PAFD personnel and equipment as further described in Exhibit B. The Stanford Fire Station shall be staffed with six daily positions and associated backfill positions necessary for three daily shifts, as further described in Exhibit B. Palo Alto shall equip the Stanford Fire Station with no less than one fire engine, one rapid response vehicle (“RRV”), and one fire ladder truck. As used in this Agreement, Shift Staff shall mean the staff assigned to each station, as shown in Exhibit B. (b) The Palo Alto Fire Chief has sole operational authority and responsibility for deployment of PAFD personnel and equipment to meet Response Time standards and any other performance standards under this Agreement, subject to Section 2.7(c) below. The parties commit to cooperating in good faith to achieve these standards. (c) Except for temporary or emergency situations or by agreement of the parties after the Effective Date, the City and the Palo Alto Fire Chief shall not make any material change in personnel or equipment at the Palo Alto and Stanford Fire Stations during the Term except as provided below. The City and Palo Alto Fire Chief may make such changes, upon a minimum of 60 days’ prior written notice, if the City or Palo Alto Fire Chief can demonstrate that the material change in personnel or equipment will not have a disproportionate adverse impact on the Response Times on Stanford Campus, Stanford’s payment obligations, Stanford’s share of the costs relative to the other Palo Alto Stations and relative to actual deployment at the Stanford Fire Station, or otherwise have a material adverse impact to the Fire Protection Services for the Stanford Campus. The written notice shall explain the rationales for implementing the material changes, demonstrate how the material changes can conform to the requirements set forth in the preceding sentence, and provide sufficient information for Stanford to evaluate the likely impact. Subject to the foregoing, Stanford shall provide any objection to the material change within twenty-one days after receipt the written notice from the Palo Alto Fire Chief to the Stanford Contact Administrator. Any dispute as to deployment levels will be first reviewed and addressed by the Chief and the Stanford Contract Administrator. Any issue regarding deployment levels that is not resolved between the Chief and the Stanford Contract Administrator will be referred to Stanford’s Vice President and Palo Alto’s City Manager or their designees for resolution. Any Palo Alto-Stanford Fire Protection Agreement Page 10 of 36 Execution Copy issue regarding deployment levels that the Vice President and City Manager or their designees do not resolve may be referred to dispute resolution as set out in section 8 (Dispute Resolution) below. For the avoidance of doubt, any increase in cost or share of costs (both relative to the other stations and relative to actual deployment at the Stanford Fire Station) that may result from the City or Palo Alto Fire Chief’s exercise of the rights granted under this section shall not become effective unless the increase is approved by the parties via a written amendment to Exhibit B. 2.8 Dispatching and Communications. Dispatching and emergency communications shall be covered by a separate dispatch service agreement between the parties and should be excluded from the Cost Allocation Methodology. Palo Alto shall exclude all fees payable by Stanford under such dispatch service agreement (including any overheads already allocated to Stanford under the dispatch services agreement), if any, from the calculation of costs payable by Stanford hereunder. 2.9 Events. (a) For routine events on Stanford Campus that do not require a heightened level of fire protection services resources, Palo Alto will provide the usual and customary Fire Protection and EMS services in accordance with the Agreement. (b) For Designated On-Site Presence Events (as defined below), Palo Alto shall provide the services described below for no additional fees: (1) a dedicated crew of five (5) personnel, cross-staffed to perform fire-fighting and ambulance service; (2) within the five (5) personnel crew, there shall be an officer (minimum of captain) who will attend pre-event briefings and remain at the venue joint command post for the duration of the event; and (3) within the five personnel staffing and assigned apparatus, there shall be at least one onsite dedicated ambulance unit staffed by 2 personnel. As used herein, “Designated On-Site Presence Events” shall be defined to include Stanford NCAA home football games, Commencement including related graduation ceremonies, and any 2 events as designated by Stanford per contract year when the attendance at a venue is expected to exceed 20,000 persons. (c) For any event that (1) could require the on-site presence or a heightened level of fire protection emergency response at the event venue, such as a visit by a controversial speaker to deliver a speech to a large audience on Stanford Campus, but is not a Designated On-Site Presence Event as defined above, or (2) is a Designated On-Site Presence Event and is determined by Stanford to require additional support beyond the level described in Section 2.9(b) above, Stanford shall notify the City in advance of the event and the parties shall discuss the appropriate staffing and preparation in advance of the event, including any stand- by-ambulance service if requested by Stanford. The City will invoice Stanford based on hourly actual costs incurred by Palo Alto plus overhead, per the staffing plan mutually agreed to by the parties. For Designated On-Site Presence Events that require additional support beyond the level described in Section 2.9(b) above, Stanford shall be invoiced only for the portion of the services beyond what is provided under Section 2.9(b) above. (d) Stanford may obtain additional stand-by-ambulance service from Palo Alto, via third party vendors contracted by the City (“Authorized Ambulance Providers”), for any event if Palo Palo Alto-Stanford Fire Protection Agreement Page 11 of 36 Execution Copy Alto does not agree to provide its own ambulance service as provided in Section 2.9(c) above, provided that (i) Palo Alto shall ensure that such Authorized Ambulance Providers adhere to the County of Santa Clara Emergency Medical Services Agency, and the City of Palo Alto’s protocols as required under applicable laws and regulations; and (ii) the City shall contractually require the Authorized Ambulance Providers to provide at least the same level of service as they provide to the City and to deliver the services in accordance with the agreements between the City of Palo Alto and such Authorized Ambulance Providers, with Stanford as the intended third party beneficiary to the terms set forth therein for services provided to Stanford hereunder. Palo Alto will invoice Stanford the amounts the City is obligated to pay under its contracts with the Authorized Ambulance Providers without any markup, and shall provide cost estimates to Stanford prior to the engagement. Palo Alto shall complete in a timely manner any and all authorizations required by the County Emergency Medical Services Agency to enable such arrangement. Palo Alto agrees that Authorized Ambulance Providers shall be authorized to perform ambulance transports for requests originating within the defined perimeter of the venue if Palo Alto’s ambulance is not available to provide the transport, and with the goal that the closet available ambulance unit should be authorized to make the most expeditious transport unless the City’s discretion to do so is limited by applicable laws, regulations, or the City’s contractual obligations with the Authorized Ambulance Providers. The parties also acknowledge and agree that the decision by Palo Alto to allow an Authorized Ambulance Provider shall not be deemed an abdication of Palo Alto’s rights or obligations pursuant to California Health and Safety Code section 1797.201. 3. STANFORD PAYMENTS. 3.1 Cost Allocation Methodology. The parties agree to a “Cost Allocation Methodology” that equitably allocates costs based upon the resources assigned during the Term to each of the seven PAFD Fire Stations while dividing shared resources system-wide based upon actual deployment of personnel and resources per fire station during the Term, as provided for in the Cost Allocation Methodology Model and associated assumptions and explanations that are attached hereto and incorporated herein as Exhibit B-1 and Exhibit B -2 of this Agreement (collectively, Exhibit B). Upon request, at least annually, the City shall also provide Stanford with a copy of an active excel spreadsheet with built-in formulas based on the Cost Allocation Methodology for the current fiscal year so Stanford can verify the payment calculation on its own, provided however, that the Parties acknowledge that in the event of conflict between the active spreadsheet and the terms of this Agreement, this Agreement shall control. The Cost Allocation Methodology captures the full cost of the PAFD and the associated Citywide Overhead (defined below). Stanford’s payments for Fire Protection Services shall be based on its allocated share of costs under the parties’ agreed-upon Cost Allocation Methodology. The parties agree that the Cost Allocation Methodology and any subsequent changes made thereto as permitted hereunder shall adhere to the following principles: (i) Stanford shall only pay for its proportionate share of costs that is based on actual costs incurred and timely billed during the Term as agreed to per the Cost Allocation Methodology set forth herein, (ii) Stanford shall not be responsible for increases in a fire budget due to a disproportionate allocation (as measured historically) of interdepartmental and other non-personnel overhead costs to the fire department that could be disproportionately increased to make up for other City General Fund Palo Alto-Stanford Fire Protection Agreement Page 12 of 36 Execution Copy structural budget deficits; (iii) the Cost Allocation Methodology and Stanford’s total percentage share of the cost may not be modified unless mutually agreed to by the parties in writing as permitted under this Agreement; and (iv) as previously stated in Section 2.3, Stanford shall not pay for Ambulance Service, including Direct Station Costs, Shared Resources Costs, Administrative Costs, or otherwise associated with the Ambulance Service. 3.2 “Allocated Cost” Defined. “Allocated Cost” shall mean Stanford’s Direct Station Costs (defined below) and Stanford’s allocated share of Shared Resources Costs (defined below), Administrative Costs (defined below), and Citywide Overhead associated with Palo Alto providing Fire Protection Services as determined under the Cost Allocation Methodology, and as further described below, but specifically exclude any costs for Ambulance Services or fire prevention services. 3.3 Allocated Cost Components. 3.3.1 “Direct Station Costs” Defined. (a) As used herein, “Direct Station Costs” shall include the direct costs to Palo Alto of providing Fire Protection Services to areas within Palo Alto City limits or to the Stanford Campus for each of the stations based on consistent application of generally accepted accounting principles and practices that result in equitable charges to such services, as further detailed in Exhibit B, and based on the following methodology: 1) Salaries and benefits based on the average salary and benefits per job classification type using actual data used in the development of the applicable Palo Alto Adopted Fiscal Year Budget and the number of employees at each fire station that is allocated as that station’s Direct Station Costs; 2) The Actuarially Determined Contributions (ADC) payments for Palo Alto’s CalPERS retirement contributions, other post employment benefit costs, and Stanford’s proportionate share of supplement contributions paid by the City into a Section 115 Trust equivalent not to exceed 10% of the annual ADC. Pre-funding or other payments above the aforementioned amount will only be included into the cost share formula for this Agreement by mutual agreement confirmed in writing; 3) Uniforms based upon the distribution of uniformed personnel in PAFD by dividing the PAFD annual uniform budget by the total number of PAFD uniformed personnel, excluding PAFD uniformed personnel in the prevention division, and applying the resulting per employee cost to total number of positions per fire station; 4) Service delivery supplies (e.g. medical supplies, small tools) based upon the distribution of PAPD Shift Staff in PAFD by dividing the PAFD annual service delivery supplied budget by the total number of PAFD Shift Staff and applying the resulting per employee cost to the total number of PAFD Shift Staff positions Palo Alto-Stanford Fire Protection Agreement Page 13 of 36 Execution Copy per fire station; and 5) Fleet maintenance and replacement costs based on the allocated charges to each station from the Palo Alto Public Works Department for the maintenance and replacement of the equipment at each fire station 3.3.2. “Shared Resources Costs” Defined. (a) As used herein, “Shared Resources Costs” are the costs for resources shared by all seven PAFD stations which are allocated proportionately based upon annual operating hours of the PAFD stations. All PAFD stations operate the same number of hours each year except PAFD Station 8, which is a seasonal station and operates only on high fire danger days for a 12-hour period. With approximately ten high fire danger days each year, PAFD Station 8 is expected to operate for 120 hours each year. (b) “Shared Resources Personnel and Equipment” shall include a Battalion Chief, Breathing Support Unit, Wildland Engines, Specialty Equipment Trailers and Reserve Engines. Staffing for shared resources includes one daily position (the Battalion Chief) which constitutes to three overall positions (three shifts) and no backfill positions for a total of three overall positions. Salary and benefits for Shared Resources Personnel shall be based on the classification type and number of employees, the cost of which is allocated across each fire station by station percentage of total operating hours. (c) Uniform Costs for Shared Resources Personnel shall be allocated based upon the distribution of uniformed personnel in the PAFD by dividing the PAFD’s annual uniform budget by total number of uniformed personnel and applying the resulting per employee cost by the total number of Shared Resources Personnel positions, and allocating the costs proportionately among the fire stations based upon total operating hours. (d) Service delivery supply costs for Shared Resources Personnel shall be allocated based upon Shift Staff in the PAFD by dividing the PAFD’s annual cost of service delivery supplies by the total number of Shift Staff and applying the resulting per employee cost by the total number of Shared Resources Personnel positions, and allocating the costs proportionately among the fire stations based upon total operating hours. (e) Fleet maintenance and replacement costs for Shared Resources Equipment shall be allocated based on the allocated charges to the PAFD from the Palo Alto Public Works Department for the maintenance and replacement of the Shared Resources Equipment. (f) Administrative costs for the Shared Resources Personnel shall be allocated based upon the Shared Resources Personnel positions and allocating the costs proportionately among the stations based upon total operating hours. 3.3.3 “Administrative Costs” Defined. (a) As used herein, “Administrative Costs” shall include Fire Administration Costs, Support Services Costs, Information Technology Costs, Utilities Costs, and Fleet maintenance and replacement costs, as each is defined below, but specifically excludes any disaster emergency management services or fire prevention services. (b) “Fire Administration Costs” include the salary and benefits based on the classification type and number of employees assigned to Fire Administration, as well as all Palo Alto-Stanford Fire Protection Agreement Page 14 of 36 Execution Copy training, service and supply costs attributed to Fire Administration activities and shall be allocated across each fire station based upon the percentage of full- time equivalent positions (“FTE”) in each fire station. (c) “Support Services Costs” include employee training and recruitment costs, EMS administration (but excluding costs directly related to Ambulance Service), and facilities management costs and shall be allocated based upon the number of personnel assigned to a fire station and then divided among the stations based upon operating hours. (d) “Information Technology Costs” are based on the allocated charges to the PAFD from the Information Technology Department for the acquisition, maintenance and support of technology attributed to the Shared Resources personnel and shall be allocated across each PAFD fire station by FTE proportion. (e) “Utilities Costs” are based on the allocated charges to the PAFD from the Palo Alto Utilities Department for the use of gas, electricity, water, sewer and garbage and are based on actual use from the prior year, unless otherwise already paid for by Stanford or covered by other agreement(s) between the parties. These costs are then allocated across each fire station based upon square footage of each station. No utility costs shall be allocated to the Stanford Fire Station under this Agreement as long as Stanford pays utilities directly for the Stanford Fire Station. (f) “Fleet maintenance and replacement costs” are based on the allocated charges to the PAFD from the Public Works Department for the maintenance and replacement of the vehicles used by Fire Administration and Support Services personnel and shall be allocated across each PAFD fire station by FTE proportion. 3.3.4 “Citywide Overhead” Defined. Citywide Overhead includes the total costs charged to the PAFD for shared administrative support provided by other departments/offices (e.g. City Attorney, City Auditor, City Clerk, City Manager, Administration Services, Human Resources, and Facilities Maintenance), but excluding the Director of the City Communication Center, to the non- administrative General Fund Departments, to the extent permitted under Federal Grant Payment Rules for state and local governments overhead charges. A systematic and rational methodology is used to calculate the amounts allocated depending on the nature of the overhead charge, determined by each administrative support and other department/office, as applicable. 3.4 Allocated Cost Calculation. A baseline Cost Allocation Methodology will be completed based on the Fiscal Year 2018 Adopted Budget. Palo Alto will recalculate using the Cost Allocation Methodology after City Council’s adoption of a successor memorandum of agreement with the International Association of Firefighters (IAFF). In interim years, an Annual Cost Allocation Adjustment will be applied as defined further below. 3.4.1 Annual Costs Allocation Adjustment. (a) An Annual Cost Allocation Adjustment will be applied to years between Cost Allocation Methodology calculations and will be based on the percentage change year over year from the Palo Alto’s Adopted Fiscal Year Budget. Advance notification of the estimated Palo Alto-Stanford Fire Protection Agreement Page 15 of 36 Execution Copy percentage increase shall be provided to Stanford through Palo Alto’s proposed budget process, which shall be no later than June 30th of the prior year (known as the “June Estimate”). (b) To accommodate the Stanford fiscal year budget planning process, no later than February 1 of each year during the term of this Agreement, Palo Alto shall deliver to Stanford a preliminary estimate of the Fire Protection Services allocated cost to Stanford under the parties’ Cost Allocation Methodology for the next projected Palo Alto fiscal year (“February Forecasted Allocated Cost”). Should Stanford wish to meet to discuss the basis for the Forecasted Allocated Costs for the next fiscal year, Stanford must notify Palo Alto in writing no later than May 31st. (c) In addition to the February Forecasted Allocated Cost and June Estimate, Palo Alto shall notify Stanford of the final Costs Allocation Adjustment annually by July 31st of the prior year (“Final Cost Adjustment”), and Palo Alto shall provide all data reasonably requested by Stanford to verify the calculation by August 15th of that year. This calculation will result in the “Adopted Cost Allocation”. (d) Palo Alto shall use its best efforts to prevent the Adopted Cost Allocation from exceeding February Forecasted Allocated Cost, and shall keep and maintain an audit trail of all relevant expenses. (e) If Palo Alto fails to timely provide Stanford the June Estimate, February Forecasted Allocated Cost, or Final Cost Adjustment in accordance with this Agreement, Stanford’s payment for the Adopted Cost Allocation will be equitably delayed, without interest, for each day of delay by Palo Alto. (f) At any time during the Term, if the total annual cost percentage increase for Stanford’s Adopted Cost Allocation (vs. the prior year’s Adopted Cost Allocation) is more than the percentage increase for the annual average salary and benefits per job classification type for the positions assigned to Station 6 vs the prior year, (the “Annual Adjustment Cap”), Stanford shall have the right, upon written notice to the City, to renegotiate the cost model and shall only pay up to the Annual Adjustment Cap (instead of the Adopted Cost Allocation) until a new cost methodology is agreed to by the parties in writing. If the parties fail to reach an agreement within a year, either party may issue a termination notice in accordance with Section 1.4 above and the effective date of termination shall be one (1) year from the date of written notice. 3.5 Capital Acquisitions and Capital Costs. (a) Palo Alto shall provide Stanford with the Annual Capital Improvement Plan as approved by City Council. (b) “Capital acquisitions” shall mean the purchase, acquisition, lease of greater than one year, or fabrication of equipment (other than minor equipment), and any other acquisition of a right to use such equipment. (c) “Capital Costs” shall mean the monetary costs of any purchase, acquisition, lease of greater than one year, or fabrication of equipment (other than minor equipment), and any other acquisition of a right to use such equipment. (d) Palo Alto’s purchase, acquisition, lease, development, landscaping, construction, substantial improvement and substantial alteration of real property or of Palo Alto-Stanford Fire Protection Agreement Page 16 of 36 Execution Copy buildings, structures, roads or other improvements of real property, and the acquisition of a right to occupy or use such real property, buildings, etc., shall be without cost to Stanford. (e) Capital Costs Related to Vehicles/Equipment. Stanford shall reimburse Palo Alto for Capital Costs related to vehicles and equipment under the Cost Allocation Methodology on an annual basis for vehicles and equipment specified in Exhibit B (currently one engine, one RRV, and 50% of the fire ladder truck). As part of the Shared Resources Equipment (as specified in Exhibit B), including Cost Allocation Methodology, costs associated with the replacement of vehicles and equipment shall be incrementally charged based on a replacement cycle schedule under Palo Alto’s existing policy that requires that a pro-rated value annually be charged to Palo Alto departments and reserved in the Vehicle Replacement & Maintenance Fund. Costs to Stanford for future replacement of equipment used system-wide as Shared Resources Costs as well as Direct Station Costs associated with equipment directly used will be allocated as set forth in the Cost Allocation Methodology. (f) However, should this Agreement terminate, the City may at its option, either (1) refund Stanford for the vehicles and equipment replacement charges paid by Stanford during the Term; or (2) sell any vehicles and/or equipment purchased for the Stanford Fire Station to Stanford and Stanford shall pay the City the depreciated value up to the expected life cycle replacement cost that the replacement charges were based on, for such vehicles and/or equipment. The Cost Allocation for Stanford under the current Cost Allocation Methodology provides for one fire engine, one RRV, and 50 percent of one fire ladder truck. Stanford’s Capital Cost contributions will be accounted for separately by Palo Alto to facilitate the refund or the calculation of residual end of agreement purchase cost(s) in the event of the termination of this Agreement, as provided above. The accrued equipment/vehicle replacement payments shall be reported annually as part of the reconciliation report described in Section 3.7 below. All other vehicle costs associated with Shared Resources Equipment, including the Wildland Engines, shall remain with Palo Alto. (g) Capital Costs Related to Improvements to the Stanford Fire Station. Stanford shall reimburse Palo Alto for Capital Costs related to any enhancements or necessary retrofitting of the Stanford Fire Station under the Cost Allocation Methodology Model on an annual basis in accordance with this section, but specifically excluding the training tower located at the Stanford Fire Station. Any station enhancements or modifications that are specific to the Stanford Fire Station alone and are not being implemented system-wide as part of an overall upgrade/change to Palo Alto's fire service provision must be reviewed and approved by Stanford in writing prior to implementation. Stanford reserves the right to implement necessary facility improvements to the Stanford Fire Station that do not also involve other Palo Alto fire stations using Stanford’s own approved contractors. In the event that Palo Alto makes system-wide changes, such as upgrading the fire crew alert system, in all fire stations in the Palo Alto’s first responder system, Stanford shall reimburse for the costs associated with the acquisition of materials and installation for the Stanford Fire Station. In the event that a specific station calculation is not feasible, Stanford shall pay the proportional share based on the number of stations impacted by the capital improvement. For example if the capital investment was constructed in all six stations, Stanford would reimburse 1/6 of the total project cost. However, if the system was installed in three stations, of which the Stanford Fire Station is one of the three, Stanford shall reimburse 1/3 of the total project cost. With respect to the training tower that is currently located at the Stanford Fire Station, the parties hereby Palo Alto-Stanford Fire Protection Agreement Page 17 of 36 Execution Copy acknowledge and agree all above-the-ground repairs and upkeep shall be shared among the stations (i.e. Stanford shall be responsible for 1/6th of the costs) and that Stanford does not guarantee the City’s use of that ground if the station is moved or if Stanford needs the ground for a different use. If the station is moved, Stanford shall provide notice to the City in accordance with Section 4.7 hereof. If Stanford needs the ground for a different use, it shall endeavor to provide reasonable advance notice to the City to allow the City to relocate the training tower. (h) Personnel-Related Capital Costs. Stanford shall reimburse Palo Alto for personnel-related Capital Costs for equipment necessary for individual PAFD fire and rescue personnel who are paid for by Stanford for the Stanford Fire Station to safely complete their duties, which would include self-contained breathing apparatus, breathing apparatus. Such costs would be allocated based on the proportional share of total positions as described in the Cost Allocation Methodology. (i) For the avoidance of doubt, Stanford is not responsible for ambulances or any related replacement or maintenance costs. 3.6 Payments. (a) During each fiscal y.ear hereof, Stanford shall pay Palo Alto its Adopted Cost Allocation as determined under the parties’ Cost Allocation Methodology for such fiscal year in equal quarterly installments, each installment to be paid by the 30th day following the quarterly payment date or by the 30th day following Stanford’s receipt of an invoice for the quarterly payment, whichever is later, unless otherwise adjusted per Section 3.4.1 (e), Section 3.4.1(f), or Section 3.7. The invoice dates for each quarter shall be as follows: First quarter September 30 Second quarter December 31 Third quarter March 31 Fourth quarter June 30 Payments shall be delivered to: Administrative Services Director 250 Hamilton Avenue Palo Alto, California 94301 The first invoice shall include detailed calculation and relevant supporting documents as reasonably required for Stanford to verify the calculation for its payment obligation for the new fiscal year. The payments payable under this Agreement (inclusive of the Capital Acquisitions and Costs payable hereunder) represent the entire fees for the Fire Protection Services, and shall cover all personnel, apparatus and other costs. (b) For the avoidance of doubt, the fees for Fire Protection Services from July 1, 2018, to June 30, 2019, shall be based on the numbers set forth in Exhibit B-1 hereof, which will be deemed as Final Cost Adjustment for this fiscal year. (c) Palo Alto shall deduct the Apparatus Credit from the fourth quarter invoices during the Term in accordance with the terms set forth in Section 3 of the Settlement Agreement. Palo Alto-Stanford Fire Protection Agreement Page 18 of 36 Execution Copy 3.6.1 Capital Payments. Palo Alto will invoice Stanford based on actual expenditures identified as Capital Acquisitions and Costs, with each installment to be invoiced pursuant to section 3.6 (Payments) above. 3.7 Reconciliation of Adopted Allocated Cost vs. Actual Allocated Cost. On or before the submission to Stanford of the second quarter invoice of any given fiscal year, Palo Alto shall report final prior fiscal year PAFD actual costs versus the PAFD Adopted Budget including overhead charges (not typically displayed in the budget documents) and shall include detailed calculations of adjusted payments and relevant supporting documents as reasonably required for Stanford to verify the calculations. (a) If the PAFD actual costs fall below the PAFD Adopted Budget, Palo Alto shall credit Stanford its share of the entirety of such savings based on the proportional share of the Cost Allocation Methodology model, which credit shall be applied to the second quarter’s invoice payable under Section 3.6 above. (b) If the PAFD actual costs exceed the PAFD Adopted Budget, then Stanford shall pay to Palo Alto its share of the entirety of these costs based on the proportional share of the Cost Allocation Methodology Model, subject to the terms set forth in Section 3.4.1(f) hereof, if applicable. Palo Alto will provide Stanford with an invoice for all amounts due by Stanford pursuant to this section 3.7(b) and the payment shall be due 45 days after the receipt of the invoice by Stanford. 3.8 Late Payments. If Stanford shall fail to pay any sum to Palo Alto when due, then such late payment shall accrue interest on a daily basis at the rate equal to the current annualized yield earned by the City’s investment portfolio for the prior fiscal quarter, until fully paid, except as provided in Section 3.4.1 (e) or Section 3.4.1(f) above. 3.9 Reporting. Stanford and Palo Alto staff will communicate quarterly to discuss the delivery of Fire Protection Services (including any proposed material changes in service to Stanford), any performance and operational issues not already covered by the response time reports described in Section 2.6(b) above, the terms of this Agreement, and financial updates, including an update on: the next fiscal year budget; current fiscal year expenditures; the capital plan, budget and assumptions; long-range plan and assumptions; and any contractual or other arrangement that may materially impact Stanford’s expenses under this Agreement. Meetings can be scheduled to optimize the transmittal of updated financial information from Palo Alto for the Stanford budget process. Review of information may include: (a) Annual long range financial plan by month of February; (b) PAFD budget proposal submitted to Palo Alto’s Finance Committee by the month of June; (c) Update of the PAFD budget monitoring, including a Budget to Actual report by expense group; Palo Alto-Stanford Fire Protection Agreement Page 19 of 36 Execution Copy (d) Portions of the Palo Also Finance Committee “wrap up memo” which outlines changes to the PAFD budget proposal by the month of June; (e) The final budget for the PAFD approved by the City Council by the month of July; (f) Updated five-year capital plan annually by the month of July; a status update of capital acquisitions if there is material change; and (g) Annual Citywide Performance Report on the services delivered under this Agreement. 4 STANFORD FIRE STATION. 4.1 Operation of Stanford Fire Station. Beginning on the Effective Date and continuing until the expiration, non- renewal or termination of this Agreement (as set forth below), Palo Alto, as an independent contractor and not as a lessee or tenant, shall occupy and operate the Stanford Fire Station (the “premises”). Palo Alto shall neither abandon nor vacate the premises without Stanford’s prior written approval except upon expiration, non- renewal or termination under Sections 1.2 (Term), 1.3 (Non-Renewal—Notice of New Provider) or 1.4 (Option to Terminate). 4.2 Use. (a) Palo Alto shall use the premises solely for the purpose of providing Fire Protection Services, fire department-wide fire crew training at the training tower, and community risk reduction education programs (such as, but not limited to public self-help training programs) as are set forth in this Agreement. (b) Palo Alto agrees that it will not commit or permit waste on the premises, shall allow no nuisances to exist or be maintained therein, and shall allow no spirituous, vinous, malt or other intoxicating liquors to be manufactured, stored, sold, consumed or permitted on, in or about the premises. 4.3 Conditions of Premises and Maintenance. (a) Palo Alto shall keep the premises (i.e. the Stanford Fire Station) in a safe, neat and clean condition meeting at minimum, building and fire codes and the safety standards of Cal OSHA. Palo Alto shall also maintain in good working order, and replace when necessary, all furnishings, appliances, and minor fixtures, including those which have been transferred to Palo Alto. Palo Alto agrees not to remove any of said furnishings, appliances, or fixtures from the premises, except with the prior written approval of Stanford, and to deliver same to Stanford at the termination of this Agreement in good condition, reasonable wear and tear thereof excepted. (b) Notwithstanding subsection (a) of this Section 4.3, Palo Alto at any time may and, upon any termination or expiration of this Agreement if so requested in writing by Stanford, shall remove from the premises any trade fixtures or equipment installed therein by Palo Alto, whether or not such fixtures are fastened to the improvements on the premises and regardless of the manner in which they are so fastened, but Palo Alto shall not remove any trade Palo Alto-Stanford Fire Protection Agreement Page 20 of 36 Execution Copy fixtures without Stanford’s written consent if such removal would result in impairing the structural strength of such improvements, and Palo Alto shall fully repair any damage occasioned by such removal and leave the improvements in a good, clean and neat condition. For the purposes hereof, fixtures or equipment installed by Palo Alto and relocated by Stanford pursuant to Section 4.7 (Relocation by Stanford of Stanford Fire Station) shall be deemed to have been installed by Stanford. (c) Stanford shall maintain in good condition and repair the grounds surrounding the premises, the walls, ceiling, floors, and other structural components of the premises, the plumbing, heating and cooling systems, electrical conduits, outlets, switches and emergency generators. Stanford shall provide parking for on-duty personnel at the Stanford Fire Station. 4.4 Alterations. Palo Alto shall not make or suffer to be made any alterations of or additions to the premises, the improvements thereon, or any part thereof without first obtaining the written consent of Stanford first, and any additions to or alterations of the premises, except movable furniture and trade fixtures, shall become a part of the realty and belong to Stanford, provided, however, that if so notified by Stanford at the time Stanford consents to such alteration, Palo Alto shall, prior to such termination, at its sole cost remove such alterations or additions so specified and restore the premises to their condition existing at the Effective Date of this Agreement. 4.5 Mechanics’ Liens. Palo Alto agrees to keep all of the premises and every part thereof and any improvements thereon free and clear of and from any and all mechanics’, materialmen’s or other liens for work, labor, services or materials used or furnished to be used upon the premises for or in connection with any operations of Palo Alto, any alteration, improvement or repairs or additions which Palo Alto may make or permit or cause to be made or any work or construction by, for or permitted by Palo Alto on the premises and at all times promptly and fully to pay and discharge any and all claims upon which any such lien may or could be based and to save and hold Stanford and all of the premises and any improvements thereon free and harmless of and from any and all such liens and claims of liens and suits or other proceedings pertaining thereto. Palo Alto agrees to give Stanford written notice in advance of making any alteration, addition or improvement so that Stanford may post notice of Stanford’s non-responsibility. 4.6 Destruction of Premises. (a) If the premises are totally or partially destroyed or damaged by any cause, Stanford shall be responsible for rebuilding or replacing the destroyed or damaged portion of the premises with materials and to the design at least equivalent to those existing prior to the destruction or damage within a reasonable time, not to exceed one year. Until the destroyed or damaged portions are fully and permanently rebuilt or replaced, Stanford shall provide reasonable temporary facilities to Palo Alto, and Palo Alto shall continue to perform in accordance with this Agreement to the extent reasonably permitted by such temporary facilities. Costs of the rebuilding or replacement shall be borne as hereinafter set forth. (b) Stanford shall insure the entire building in which the premises are located, Palo Alto-Stanford Fire Protection Agreement Page 21 of 36 Execution Copy including all improvements thereto. Such policy of insurance shall include provisions for: 1) A ninety percent (90%) replacement value. 2) A blanket amount for building and contents. 3) Fire, extended coverage, vandalism and malicious mischief, and such other perils ordinarily insured by Stanford on its own properties. 4) A provision that the replacement cost can permit reconstruction on another site. The ninety percent (90%) replacement value of the building and property to be insured as of the Effective Date is _____________ [_______________________ Dollars] ($________.00). As long as this Agreement is in effect, the staffs of Stanford and Palo Alto shall agree to a statement setting forth the then current ninety percent (90%) replacement value of the building and property to be insured within sixty (60) days of the anniversary date of this Agreement. The “replacement value” shall be deemed to be the cost to rebuild or replace the destroyed or damaged property with like materials and to the design at least equivalent to those existing prior to destruction or damage, increased by the cost of any change which would be required by applicable governmental regulations. The cost of said insurance shall be borne jointly by Palo Alto and Stanford on a pro rata basis reflecting the relative percentage of the square footage used by each. Any deductible applicable under said insurance policy to a particular claim shall be shared by Palo Alto and Stanford on a pro rata basis in accordance with their respective interest in, and the extent of damage to, the portion of the building and/or items destroyed or damaged, provided that neither party has primary or secondary liability for the destruction or damage. Any damages, claims or liabilities not covered by said insurance policy shall be governed by the provisions of section 7.6 (Indemnity) hereof. (c) Neither partial nor total destruction of the premises shall cause this Agreement to terminate. (d) Nothing in this Section 4.6 shall be construed as waiving or releasing either party from any liability or obligation arising from this Agreement or by law, including without limitation liability for negligence or willful acts. 4.7 Relocation by Stanford of Stanford Fire Station. Stanford may relocate the premises to a different portion of the Stanford Campus or to any other building then existing so long as such new premises are reasonably comparable to the previous premises, and such relocation may or may not include the training tower at the Stanford Fire Station. Such relocation may be effected at any time and for any reason. Palo Alto shall not have any right to any particular location or design of the premises, but Stanford will consider Palo Alto’s technical input. When the final move date is determined, Stanford shall give Palo Alto 120 days’ prior written notice of such relocation and, before the expiration of such 120 days, Palo Alto shall have completely vacated the previous premises and shall have completely relocated to the new premises. All cost and expense of removing, transporting, Palo Alto-Stanford Fire Protection Agreement Page 22 of 36 Execution Copy and installing all furniture, appliances, fixtures and equipment from the previous premises to the new premises shall be borne by Stanford. Palo Alto shall be relieved of its obligation to meet or exceed the level of services, set forth in Section 2 (Fire Protection Services) hereof, but only to the extent it is prevented from doing so during and by the relocation of the premises. 4.8 Public Utilities. All water, gas, electricity or other public utilities used upon or furnished to the premises (except telecommunication service) during the term hereof shall be paid by Stanford, provided that the quantities thereof shall at all times be reasonable for the use of the premises herein provided. Palo Alto agrees to use the premises in accordance with reasonable guidelines, programs and policies for energy conservation promulgated by Stanford. 4.9 Rights Reserved. No leasehold interest or other interest in real property is created by this Agreement. 5 PERSONNEL. 5.1 Independent Contractor Relationship. This Agreement creates only an independent contractor relationship between Stanford and Palo Alto and shall not be construed as creating an employer-employee relationship. Firefighters and other employees engaged by Palo Alto shall be employees of Palo Alto and not the employees of Stanford for any purpose, and all such firefighters and other employees shall be under Palo Alto’s supervision, direction and control. 6 ASSIGNMENT; ANNEXATION. 6.1 No Assignment. Except as expressly provided herein, neither Palo Alto nor Stanford shall voluntarily or involuntarily assign, delegate, subcontract, pledge, hypothecate, or encumber any right, duty or interest, in whole or in part, in or of this Agreement. 6.2 Assignment to Fire Protection District. (a) If part of the Stanford Campus shall be included in a fire protection district, then the appropriate part of the rights, duties, and interests hereunder may be assigned to said fire protection district. If such assignment is refused, in whole or in part, by such district, then this Agreement shall be amended so, as to terminate the rights, duties and interests refused by the district. (b) If all of the Stanford Campus shall be included in a fire protection district, then all of Stanford’s interest in this Agreement and the duties required of Stanford hereunder may be assigned to said district. If said district shall refuse to accept such assignment, then this Agreement shall be terminated as provided in section 1.4 (Option to Terminate). If said district shall refuse to accept a part of such assignment, then this Agreement shall be amended so as to terminate the rights, duties and interests refused by the district. (c) The assignments referred to in this section 6.2 shall be tendered to the fire Palo Alto-Stanford Fire Protection Agreement Page 23 of 36 Execution Copy protection district as soon as possible after the district is formed. (d) If any governmental entity, other than Palo Alto, assumes responsibility for providing full fire protection services to part or all of the Stanford Campus, then the provisions of this section 6.2 shall apply to such entity in the same manner as if such entity were a fire protection district. 6.3 Annexation. If all or any part of the Stanford Campus hereafter is annexed to Palo Alto, then this Agreement shall terminate as to the lands so annexed and the costs funded by Stanford shall be revised accordingly. 7 MISCELLANEOUS. 7.1 Notices. All notices, demands or other writings in this Agreement provided to be given or made or sent, or which may be given or made or sent, by either party hereto to the other, shall be deemed to have been fully given or made or sent when made in writing and deposited in the United States mail, registered or certified and postage prepaid, and addressed as follows: To Stanford: Director of Public Safety Stanford University 711 Serra Street Stanford, California 94305 Copy to: Vice President and General Counsel Stanford University Building 170, Third Floor, Main Quad P.O Box 20386 Stanford, California 94305 To Palo Alto: City Clerk City Hall 250 Hamilton Avenue Palo Alto, California 94301 Copy to: City Manager City Hall 250 Hamilton Avenue Palo Alto, California 94301 The address to which any notice, demand or other writing may be given or made or sent to any party may be changed by written notice given by such party as above provided. 7.2 Governmental Laws and Regulations. Palo Alto and Stanford agree to comply with and abide by all federal, state, county, municipal and other governmental statutes, ordinances, laws and regulations which Palo Alto-Stanford Fire Protection Agreement Page 24 of 36 Execution Copy affect this Agreement or any activity, duty, obligation, performance, or occupancy or use of real or personal property which arise from this Agreement. 7.3 No implied Waiver. Neither party may waive or release any of its rights or interests in this Agreement except in writing. Failure to assert any right arising from this Agreement shall not be deemed or construed to be a waiver of such right. 7.4 No Third Party Beneficiaries. This Agreement shall not be deemed or construed to confer upon any person or entity, other than the parties hereto, any right or interest, including, without limiting the generality of the foregoing, any third-party beneficiary status or any right to enforce any provision of this Agreement. 7.5 Insurance. (a) During the term of this Agreement, each party hereto shall procure and maintain in full force and effect (i) bodily injury liability insurance and (ii) property damage liability insurance with a combined single incident limit of not less than Five Million Dollars ($5,000,000.00) per occurrence. All of such insurance shall inure (to the extent of the aforesaid limits, subject, however, to such changes in said limits as may be made from time to time as set forth below) to the performance by such party of the indemnity agreement as to liability for injury to or death of persons and injury or damage to property in Section 7.6 (Indemnity) hereof. (b) If either party shall at any time deem the limits of any of such insurance then carried to be either excessive or insufficient, or the cost thereof to be prohibitive, the parties shall endeavor to agree upon the proper and reasonable limits for such insurance, if any, then to be carried. If the parties shall be unable to agree thereon, the proper and reasonable limits for such insurance, if any, then to be carried shall be determined by an impartial third person chosen by the Presiding Judge of the Superior Court of the County of Santa Clara, acting in an individual and not a judicial capacity, upon application by either party made after thirty (30) days’ prior written notice to the other party of the time and place of such application, and the decision of such impartial third person as to such limits then to be carried shall be binding upon the parties. Such insurance, if any, shall be carried with the limits as thus agreed upon or determined until such limits shall again be changed pursuant to the provisions of this subsection (b). The expenses of such determination shall be borne equally between Palo Alto and Stanford. (c) All of the insurance provided for under this Section 7.5 and all renewals thereof shall be issued by good, responsible and standard companies and in such form and substance as are customarily carried by parties in similar circumstances. Each party shall provide thirty (30) days’ prior written notice to the other party in the event of cancellation or material alteration of coverage. Each party shall deliver a certificate of insurance evidencing coverage upon request by the other party. (d) Either party may elect to insure for its bodily injury and/or property damage risk exposure provided for under this Agreement either through insurance, self- insurance or through joint entity pooled risk arrangements. Palo Alto-Stanford Fire Protection Agreement Page 25 of 36 Execution Copy 7.6 Indemnity. (a) Each Party (the “Indemnitor”) shall indemnify and defend the other Party (“Indemnitee”) and its officers, employees, agents, administrators, successors, and assigns, from and against any and all claims made or threatened by any third party and all related losses, expenses, damages, costs and liabilities, including reasonable attorneys' fees and expenses incurred in investigation or defense, to the extent the foregoing arises out of or relates to any error, negligent act, omission or willful misconduct by the Indemnitor, its employees, and/or agents in Indemnitor’s performance under this Agreement. (b) The Indemnitee shall promptly notify the Indemnitor once it is aware of a potential action and shall cooperate with the Indemnitor in all reasonable respects in connection with the defense of any such action at the expense of the Indemnitor. The Indemnitor may, upon written notice to the Indemnitee, undertake to conduct all proceedings or negotiations in connection with the action, assume the defense thereof, including settlement negotiations in connection with the action, and will be responsible for the costs of such defense, negotiations and proceedings. The Indemnitor will have sole control of the defense and settlement of any claims for which it provides indemnification hereunder, provided that the Indemnitor will not enter into any settlement of such claim without the prior approval of the Indemnitee, which approval will not be unreasonably withheld. The Indemnitee shall have the right to retain separate counsel and participate in the defense of the action or claim at its own expense. 7.7 Streets and Roads. Stanford hereby reserves the right at any time during the term hereof to close to travel any of its lands, to erect and maintain gates at any point thereon, to regulate and prevent traffic of every or any kind thereon, to prescribe the methods of use thereof, and to maintain complete dominion over the same, including the right to prescribe the kind or kinds of vehicles that may travel the same or any designated part thereof, provided that at all times during the term hereof: (a) Stanford shall provide Palo Alto with reasonable access to the fire stations located on the Stanford Campus (subject to interruptions caused by maintenance operations), (b) Stanford consents, to the extent it is able, to Palo Alto’s entry onto the Stanford Campus for the purpose of responding to emergency alarms, and (c) Stanford shall advise Palo Alto in advance of all material changes in its roadway systems that are known to the Stanford Contract Administrator. If any change is likely to preclude Palo Alto from satisfying the Response Time standards, such changes shall be reported and reviewed in accordance with Section 2.6.4 (Response Time Performance Impacts Notification by Stanford) above. 7.8 Force Majeure. A party hereto shall not be liable for any failure to perform as required by this Agreement to the extent such failure to perform is caused by any reason beyond the reasonable control of such party, including for example and without limitation: Strikes, labor disturbances or labor disputes of any character, accidents, failure of any governmental approval required for full performance, riots, civil disorders or commotions, war, acts of aggression, floods, earthquakes, Acts of God, explosion, or similar occurrences; provided Palo Alto-Stanford Fire Protection Agreement Page 26 of 36 Execution Copy that, such party shall exercise its best efforts to provide the best possible alternative performance and to prevent the foregoing occurrences from obstructing full performance. Such occurrences shall not constitute a basis for termination of this Agreement under Section 1.5 (Termination for Substantial Failure of Performance) and shall not affect this Agreement except as expressly provided for in this Section 7.8. 7.9 No Warranties. ALL PERSONAL PROPERTY TRANSFERRED HEREUNDER BY STANFORD TO PALO ALTO, OR BY PALO ALTO TO STANFORD UPON ANY TERMINATION OR EXPIRATION OF THIS AGREEMENT, INCLUDING ALL VEHICLES, EQUIPMENT, MACHINERY, FURNISHINGS, APPLIANCES, SUPPLIES, GOODS AND MATERIALS, ARE TRANSFERRED “AS IS, WHERE IS,” WITHOUT ANY WARRANTY WHATSOEVER, WHETHER EXPRESS OR IMPLIED. PALO ALTO AND STANFORD AGREE THAT THERE ARE NO EXPRESS OR IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. Palo Alto and Stanford shall fully inspect all such personal property before accepting delivery thereof and before using such property. 7.10 Inspection by Fire Chief. At the request of the Palo Alto Fire Chief, Stanford shall make available copies of any plans and specifications for the systems described in Section 2.5 (Stanford Fire Protection Systems), building plans and proposals for changes in the roadway system, to the extent available to the Stanford Contract Administrator, for inspection by the Palo Alto Fire Chief on site at Stanford, provided that such documents pertain to the Stanford Campus. The Palo Alto Fire Chief may comment on such documents but in no event shall Stanford be obligated to change any of such plans, specifications or proposals. Any such documents delivered to Palo Alto shall be returned to Stanford within a reasonable time. Stanford may, at its discretion, restrict access to any such documents for the purpose of preserving the confidentiality of such documents. 7.11 Non-Discrimination. In satisfying the obligations created hereunder, neither party shall discriminate against any person on the basis of 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. 7.12 Authorized Representative. All consents, approvals, interpretations, and waivers relating to this Agreement shall bind a party only when executed by such party’s Authorized Representative. Palo Alto’s Authorized Representative shall be its City Manager and Stanford’s shall be its Vice President and General Counsel. Superiors and successors of, and agents expressly authorized in writing by, said City Manager or Vice President and General Counsel, as the case may be, shall also be Authorized Representatives. 7.13 Entire Agreement; Modification of Agreement. This Agreement, including all exhibits attached to and incorporated herein, represents the entire agreement between the parties with respect to the subject matter of this Palo Alto-Stanford Fire Protection Agreement Page 27 of 36 Execution Copy Agreement. This Agreement supersedes all prior agreements, representations, statements, negotiations and undertakings whether oral or written, with regard to the subject matter of this Agreement. Any amendment or modification to this Agreement shall be by written instrument and shall only be effective upon execution by the duly authorized representatives of the parties and approval in the same manner as this Agreement. 7.14 Governing Law; Venue. This Agreement shall be governed and interpreted by the laws of the State of California without regard to its conflict of law provisions. The venue for any dispute relative to this Agreement shall be in Santa Clara County, California. 7.15 Section Headings. The section headings contained in this Agreement are for convenience of reference and are not intended to define the scope of any provision of this Agreement. 7.16 Execution; Counterparts. (a) Original copies of this Agreement shall be executed by the respective party’s authorized signatory(ies). (b) This Agreement may be executed in one or more counterparts, each of which shall be deemed an original agreement, but all of which shall be considered one instrument and shall become a binding agreement when one or more counterparts have been signed by the authorized representatives of the parties and delivered to the other party. 7.17 Severability. If any term or provision of this Agreement shall be found illegal or unenforceable, this Agreement shall remain in full force and effect and such term or provision shall be deemed stricken. 8 DISPUTE RESOLUTION. Any dispute, controversy or claim concerning or relating to this Agreement (a “Dispute”) shall be resolved in the following manner: (a) Disputes shall first be referred to the Chief and the Stanford Contract Administrator, and if either of them decides at any time that the Chief and the Stanford Contract Administrator are unable to resolve the dispute among themselves, elevated to the City Manager and Vice President or their designees for resolution, as further described below. (b) The parties shall use all reasonable efforts to resolve the Dispute through direct discussions in accordance with this Section 8. Either party may give the other party written notice of any Dispute, and within ten (10) days after such notice is given, the receiving party shall submit to the other party a written response. The notice and response shall include a statement of that party’s position and a summary of arguments supporting that position. (c) Within twenty (20) days of written notice that there is a Dispute, the parties shall agree on the name and title of the person who will represent that party in any negotiation and meet and confer in an effort to reach an amicable resolution of the Dispute; (d) If the Dispute has not been resolved as a result of the procedures stated above Palo Alto-Stanford Fire Protection Agreement Page 28 of 36 Execution Copy within thirty (30) days of written notice that there is a Dispute, the Dispute shall be submitted to mediation before a mediator chosen by the parties, prior to and as a condition precedent to either party proceeding with litigation to resolve the Dispute, provided, however, that if the parties do not mutually agree on a mediator within forty (40) days of written notice that there is a Dispute, or if the Dispute is not resolved through mediation within ninety (90) days of written notice that there is a Dispute, then either party may pursue any remedy available under California law. (e) As authorized and permitted by Government Code Sections 930.2 through 930.6, the dispute-resolution procedure set forth in Sections 8(a) through 8(d) of this Agreement satisfies the requirement that Stanford present a government claim to the City for claims and causes of action arising out of or relating to this Agreement. Stanford shall not be required to present a claim pursuant to Government Code Sections 905 and 910 through 913.2 as a prerequisite to filing a civil action for money or damages against Palo Alto on any cause of action arising from or related to this Agreement. Either party must file any civil action for money or damages arising from or related to this Agreement within two years of accrual of the cause of action. The limitations period for commencing a civil action hereunder shall be automatically tolled during the pendency of any dispute resolutions procedures set forth in Sections 8(b) to 8(d) above for a period not to exceed 120 days. Informal discussions before submission of a written notice of dispute pursuant to section 8(b) will not automatically toll the limitations period. The parties may agree in writing to additional periods of tolling. No tolling period under this Agreement, whether automatic or otherwise, will revive a claim that accrued more than two years before the commencement of the tolling period. In addition to automatic tolling set out above, the two-year limitations period under this Agreement is subject to tolling under the discovery rule, equitable tolling, and any other applicable principle under California law. For example, under the discovery rule, the limitations period for a cause of action that was revealed in a report or information required and due under this Agreement would be tolled for any period of delay in providing the report or information to the extent that the aggrieved party would not have reasonably known or suspected the basis for the cause of action before the delivery of the report or information. Except as expressly provided in this Agreement, the parties understand and agree that nothing in this Agreement waives, excuses, or modifies any provision, requirement, or procedure of the Government Claims Act, Government Code section 810 et seq. The provisions of this subsection 8(e) shall survive the termination or expiration of this Agreement. (f) The parties may (but are not required to) elect to submit a Dispute to binding arbitration instead of judicial resolution. Palo Alto has declined to agree to the blanket use of binding arbitration to resolve disputes. However, if Palo Alto elects to not proceed with a binding arbitration, Stanford shall have the right to disclose to the public that a lawsuit is filed because Palo Alto does not want to arbitrate. Any arbitration agreed to by the parties shall be administered in Santa Clara County, California by JAMS pursuant to its Comprehensive Arbitration Rules and Procedures, except that parties shall agree on the arbitrator. Any court proceedings in aid of arbitration shall be commenced in Santa Clara County. 9 DEFINITIONS AND EXHIBITS. 9.1 Definitions. The following words and phrases shall have the following meanings for the Palo Alto-Stanford Fire Protection Agreement Page 29 of 36 Execution Copy purposes of this Agreement. (a) “PAFD” refers to the Palo Alto Fire Department. (b) “Chief” shall refer to the Palo Alto Fire Chief. (c) “Stanford Contract Administrator” refers to Stanford’s Director of Public Safety, or that person’s designee. Stanford may designate a new Stanford Contract Administrator upon prior written notice to the City. (d) “City Manager” shall refer to the Palo Alto City Manager, or that person’s designee. (e) “Vice President” shall refer to Stanford’s Vice President and General Counsel, or that person’s designee. Stanford may designate a new Vice President upon prior written notice to the City. (f) “Response Time” shall have the meaning set forth in Section 2.6(a) hereof. (g) “Stanford Campus” shall mean all areas, excluding SLAC, whether in San Mateo or in Santa Clara Counties, enclosed by the outer boundaries of the Lands of the Leland Stanford Junior University, as shown in Exhibit A hereof, but excluding those areas which are shown on Exhibit A as served by the State of California’s Division of Forestry, Menlo Park Fire Departments, or the Woodside Fire District. For the avoidance of doubt, Stanford Campus shall include the Areas A, B, and C as defined in Section 2.6.1(a), unless otherwise expressly excluded in this Agreement. (h) “Term” shall mean the Effective Date of the Agreement until expiration or termination of this Agreement as provided herein. 9.2 Exhibits. The following exhibits are attached and incorporated into this Agreement by reference as though fully set forth herein. A. Exhibit A, “Stanford Campus Map” B. Exhibit B-1, “Cost Allocation Methodology” C. Exhibit B-2, “Fire Services Deployment and Cost Allocation Model Methodology Assumptions” [SIGNATURE BLOCK FOLLOWS ON THE NEXT PAGE.] Palo Alto-Stanford Fire Protection Agreement Page 30 of 36 Execution Copy Party Signatures to the Agreement IN WITNESS WHEREOF, the parties hereto have caused this instrument to be executed in duplicate by the persons thereunto duly authorized as of the date first mentioned. City of Palo Alto The Board of Trustees of the Leland Stanford Junior University By: By: Name: Name: Title: Title. Date Signed: Date Signed: Palo Alto-Stanford Fire Protection Agreement Page 31 of 36 Execution Copy Exhibit A Stanford Campus Map See Attached Exhibit A-1 and Exhibit A-2 Exhibit A. Palo Alto Fire Department Response Areas at Stanford University • MENLO PARK SLAG National Accelerator Laboratory Stanford University GOLF COURSE GOLF COURSE SHOPPING CENTER Aron MEDICAL CENTER MAIN QUAD Lagunita LATHROP "THE DISH" PALO ALTO STADIUM PALO.AiT© N ESCONDIDO VILLAGE RESEARCH PARK LOS ALTOS,HILLS Area A: Primary Central Campus Response Area/Urban Area B: Academic Reserve/Dish Loop Area C: Rural 0 RESEARCH PARK 0.5 Miles Stanford LBRE, Land Use and Environmental Planning, 6/19/18 PA_F i t e_ R e s p on s e_A rea s .m x d Exhibit A-2 Palo Alto-Stanford Fire Protection Agreement Page 32 of 36 Execution Copy Exhibit B-1 Cost Allocation Methodology See attached Exhibit B-1 Please refer to Exhibit B-2 and Section 3 of the Agreement for assumptions, definitions and methods for the Cost Allocation Methodology calculations. 1 23 4 5 6 7 8 9 10 11 12 13 14 1516 17 18 19 20 21 2223 24 25 26 27 28 29 3031 32 33 34 35 36 37 3839 40 4142 4344 45 46 A B C D E F G H I J K Station Number Station 1 Station 2 Station 3 Station 4 Station 5 Station 6 ‐ SU Station 6‐PA Station 8 TOTAL Address 301 Alma St 2675 Hanover Street 799 Embarcadero Rd 3600 Middlefield Rd 600 Arastradero Rd 3000 Page Mill Rd Station Operating Hours 8760 8760 8760 8760 8760 120 52680 Percentage of Total Operating Hours 17%17%17%17%17%0%100% Size (Sq. Ft)10,436 8,131 4,300 4,300 3,666 1,569 32,402  Size Proportion 32%25%13%13%11%5%100% Assigned Equipment Engine 61 Medic 61  Engine 62  Medic 62  (12 hr OT) Engine 63 Medic 63 (XS 12 Hr PM) Engine 64 Medic 64 (XS 24 Hr)  Engine 65 (XS 24 Hr)  Engine 362 Daily Staffing 5 Daily Positions 3 Daily Positions 3 Daily Positions 3 Daily Positions 3 Daily Positions 4.5 Daily Positions 1.5 Daily Positions (50% of Truck Crew) Staffed only on high fire  danger days 23.0 Shift Staff (Daily x 3 shifts)15 9.0 9.0 9.0 9 13.5 4.5 Overtime 69.0 Backfill 3.0 1.5 1.5 1.5 1.5 2.2 0.7 0.00 12.0 Total FTE (Shift Staff + Backfill + OT)18.0 13.5 10.5 10.5 10.5 15.7 5.2 0.12 84.1 FTE Proportion 21%16%12%12%12%19%6%0%100% Station Direct Costs Salary & Benefits $4,720,192 $3,414,244 $2,827,324 $2,827,324 $2,827,324 $4,240,986 $1,413,662 $24,508 $22,295,565  Uniforms***$16,879 $12,626 $9,812 $9,812 $9,812 $14,719 $4,906 $116 $78,682  Service delivery supplies (medical supplies, small tools,  etc.)*** $145,775 $109,045 $84,747 $84,747 $84,747 $127,120 $42,373 $999 $679,553  Fleet Maintenance & Replacement Allocation $135,313 $186,873 $138,670 $116,837 $157,692 $195,662 $117,291 $0 $1,048,337  Subtotal $5,018,159 $3,722,788 $3,060,553 $3,038,720 $3,079,575 $4,578,487 $1,578,233 $25,622 $24,102,137  Shared Resources (Battalion Chief, Breathing Support Unit, Wildland Engines, Specialty Equipment Trailers, and Reserve Engines. 1 Full Time Daily Staff, 3 FTE with overtime and backfill positions) Salary & Benefits*$183,648 $183,648 $183,648 $183,648 $183,648 $183,648 $0 $2,516 $1,104,405  Uniforms*$467.23 $467 $467 $467 $467 $467 $0 $6 $2,810  Service delivery supplies (medical supplies, small tools,  etc.)* $4,035 $4,035 $4,035 $4,035 $4,035 $4,035 $0 $55 $24,267  Fleet Maintenance & Replacement Allocation*$106,448.17 $106,448 $106,448 $106,448 $106,448 $106,448 $0 $1,458 $640,147  Administrative Cost Share* (Share for 3.0 FTE)$31,339 $31,339 $31,339 $31,339 $31,339 $31,339 $0 $429 $188,460  Subtotal $325,937 $325,937 $325,937 $325,937 $325,937 $325,937 $0 $4,465 $1,960,090  Administrative Costs   Fire Administration (Executive Administration, Technical  and Support Staff)*** $463,896 $347,012 $269,688 $269,688 $269,688 $404,532 $134,844 $3,178 $2,162,525  Support Services (Training/Recruitment, EMS  Administration, Facilities Management)*** $466,091 $348,654 $270,964 $270,964 $270,964 $406,446.30 $135,482 $3,193 $2,172,759  Information Technology (Computers, tablets, software,  maintenance, support)*** $193,749 $144,932 $112,637 $112,637 $112,637 $168,956 $56,319 $1,327 $903,194  Utilities (Gas, Electricity, Garbage)**$38,896 $30,305 $16,027 $16,027 $13,664 $0 $0 $5,848 $120,767  Fleet Maintenance & Replacement Allocation***$8,351 $6,247 $4,855 $4,855 $4,855 $7,282 $2,427 $57 $38,929  Subtotal $1,170,984 $877,150 $674,171 $674,171 $671,808 $987,216 $329,072 $13,603 $5,398,173  Grand Total $6,515,080 $4,925,875 $4,060,661 $4,038,828 $4,077,320 $5,891,641 $1,907,305 $43,690 $31,460,400  Total Cost Fire Department Proportion 21%16%13%13%13%19%6%0%100% Citywide Overhead**** $421,625 $321,238 $261,006 $261,006 $261,006 $381,471 $120,464 $0 $2,007,740  Grand Total + Overhead $6,936,705 $5,247,113 $4,321,668 $4,299,835 $4,338,327 $6,273,111 $2,027,769 $43,690 $33,488,217  Grand Total with Overhead Proportion 21%16%13%13%13%19%6%0%100% M e t r i c s Palo Alto Fire Department Stanford Cost Allocation Methodology  All costs are based on FY18 Adopted Budget Co s t  Al l o c a t i o n s 711 Serra St 8760 17% Not Included 0% Engine 66 Truck 66 RRV 66 (new) Page 1 of 13 3/19/18 Calculation Notes *Costs allocated by Station Proportion (% of number of overall stations) **Costs allocated by Size Proportion (% of overall station square footage) ***Costs allocated by FTE Proportion (or total FTE) ****City overhead per city indirect cost plan, which has been allocated based on total station percentage of Department Costs.  Fleet costs are estimated based upon vehicle type, prior years actual maintenance, and estimated replacement costs.  All Office of Emergency Services and Fire Prevention Costs have been removed Page 2 of 13 3/19/18 Salary Calculations Position FTE  Average Salary   Average Overtime   Average  Benefits   Average Total  Cost*  Administrative Assistant 1.00 82,790$                ‐$                         86,195$              168,985$          Administrative Associate 2.00 72,903$                ‐$                         55,853$              128,756$          Battalion Chief 3.00 169,161$              ‐$                         198,974$            368,135$          Business Analyst 0.80 114,401$              ‐$                         79,128$              193,529$          Deputy Director Technical Services 0.20 39,593$                ‐$                         34,561$              74,154$             Deputy Fire Chief 2.00 209,362$              ‐$                         170,476$            379,837$          EMS Chief 1.00 143,517$              ‐$                         158,134$            301,651$          EMS Data Specialist 1.00 78,541$                ‐$                         77,822$              156,364$          Fire Apparatus Operator 26.00 128,561$              9,570$                     124,574$            262,704$          Fire Captain 21.00 146,656$              10,917$                  144,138$            301,711$          Fire Chief 1.00 243,384$              ‐$                         175,229$            418,613$          Fire Inspector 1.10 148,005$              ‐$                         145,462$            293,468$          Fire Marshall 0.05 9,467$                  ‐$                         8,345$                17,812$             Firefighter 34.00 121,272$              9,027$                     120,227$            250,527$          GIS Specialist 0.50 60,015$                ‐$                         41,146$              101,161$          Hourly 0.55 51,966$                ‐$                         12,305$              64,272$             Senior Management Analyst 1.00 143,898$              ‐$                         115,643$            259,541$          Training Battlalion Chief 1.00 174,718$              ‐$                         206,989$            381,707$          Training Captain 1.00 151,539$              ‐$                         149,750$            301,289$          Position  Daily  Positions   Total w/Backfill   Salary & Benefits  Fire Captain 1.00 3.00 905,132$                 Fire Apparatus Operator 1.00 3.71 975,758$                 Firefighter 1.00 3.78 946,434$                 24 Hr Medic Unit (Station TBD)2.00 7.56 1,892,868$              Total 5.00 18.05 4,720,192$              Position  Daily  Positions   Total w/Backfill   Salary & Benefits  Fire Captain 1.00 3.00 905,132$                 Fire Apparatus Operator 1.00 3.71 975,758$                 Firefighter 1.00 3.78 946,434$                 12 Hour Ambulance Overtime 3.01 586,920$                 Total 3.00 13.50 3,414,244$              Salary and benefits are shown based on the amounts used to develop the FY18 Adopted budget. Benefits include medical,  dental, pension as well as departmentwide costs such as disability and workers comp.  Average Salaries and Benefits by Position, FY18 Station 1 Station 2 *For all positions over 1.0 FTE costs are shown on the average for 1.0 FTE. For positions that are less than 1.0 FTE costs are  shown as the total cost for the partial FTE.  C18 D18 Page 3 of 13 3/19/18 Salary Calculations Salary and benefits are shown based on the amounts used to develop the FY18 Adopted budget. Benefits include medical,  dental, pension as well as departmentwide costs such as disability and workers comp.  Position  Daily  Positions   Total w/Backfill   Salary & Benefits  Fire Captain 1.00 3.00 905,132$                 Fire Apparatus Operator 1.00 3.71 975,758$                 Firefighter 1.00 3.78 946,434$                 Total 3.00 10.49 2,827,324$              Position  Daily  Positions   Total w/Backfill   Salary & Benefits  Fire Captain 1.00 3.00 905,132$                 Fire Apparatus Operator 1.00 3.71 975,758$                 Firefighter 1.00 3.78 946,434$                 Total 3.00 10.49 2,827,324$              Position  Daily  Positions   Total w/Backfill   Salary & Benefits  Fire Captain 1.00 3.00 905,132$                 Fire Apparatus Operator 1.00 3.71 975,758$                 Firefighter 1.00 3.78 946,434$                 Total 3.00 10.49 2,827,324$              Station 5 Station 4  Station 3  E18 F18 G18 Page 4 of 13 3/19/18 Salary Calculations Salary and benefits are shown based on the amounts used to develop the FY18 Adopted budget. Benefits include medical,  dental, pension as well as departmentwide costs such as disability and workers comp.  Position  Daily  Positions   Total w/Backfill   Salary & Benefits  Engine 66 Fire Captain 1.00 3.00 905,132$                 Fire Apparatus Operator 1.00 3.71 975,758$                 Firefighter 1.00 3.78 946,434$                 Truck 66 Fire Captain 0.50 1.50 452,566$                 Fire Apparatus Operator 0.50 1.86 487,879$                 Firefighter 0.50 1.89 473,217$                 Total 4.50 15.74 4,240,986$              Position  Daily  Positions   Total w/Backfill   Salary & Benefits  Fire Captain 0.50 1.50 452,566$                 Fire Apparatus Operator 0.50 1.86 487,879$                 Firefighter 0.50 1.89 473,217$                 Total 1.50 5.25 1,413,662$              Position Annual  Budgeted  Salary Overtime rate Hours Total Fire Captain $146,656  $                   75.54 120 $9,065 Fire Apparatus Operator $128,561  $                   66.22 120 $7,947 Firefighter $121,272  $                   62.47 120 $7,496 Total 360                         $24,508 Position  Daily  Positions   Total w/Backfill   Salary & Benefits  Battalion Chief 1.00 3.00 1,104,405$               Total 1.00 3.00 1,104,405$              Station 8 Station 8 is staffed on overtime on high fire danger days only. This is approximately 10 days per year  for 12 hours each day for a total of 120 staff hours. With shift positions working a total of 2,912 per  Shared Resources Station 6 ‐ Stanford Share Station 6 ‐ Palo Alto Share H18 I18 J18 K25 Page 5 of 13 3/19/18 Fleet Costs ‐ FY18 Allocations Per Station Station Assignment O&M Replacement TOTAL Station 1 25,313$      110,000$       135,313$              C21 Station 2 84,873$      102,000$       186,873$              D21 Station 3 44,670$      94,000$          138,670$              E21 Station 4 22,335$      94,502$          116,837$              F21 Station 5 41,692$      116,000$       157,692$              G21 Station 6 ‐ PA 28,291$      89,000$          117,291$              I21 Shared Resources 320,297$    319,850$       640,147$              K28 Administration & Support Services 25,313$      15,006$          40,319$                 Pg. 8 Grand Total 592,783$    940,358$       1,533,141$            Station 6 ‐ Stanford Share Detail Vehicles O&M Replacement TOTAL Fire Engine 14,890$      ‐$                14,890$                  Ladder Truck ‐ 50%28,291$      89,000$          117,291$               RRV (Based on average ambulance costs) 18,364$      45,117$          63,481$                  Grand Total 61,545$      134,117$       195,662$              H21 Fleet Allocations Fleet is managed through the Public Works Department and all maintenance and  replacement costs are charged to the Fire Department through an annual allocation. The  Existing  maintenance and replacement costs totaled $1.7 million for FY18. The costs for the  New Stanford Vehicles are estimated on allocated costs for similar vehicle costs.  Cell on Main  Page Page 6 of 13 3/19/18 Fleet Detailed Costs  Unit Year Manufacturer Vehicle Type Description Station Assignment  FY18 Fleet O&M  FY18 Fleet  Replacement  6002 2010 FORD ESCAPE XLS Deputy Chief Vehicle Administration & Support Services 9,678$                  4,000$                          6003 2012 HONDA CIVIC GX SEDAN CNG Fire Chief Vehicle Administration & Support Services 7,445$                  5,000$                          6006 2002 CHEVROLET BLAZER Training Battalion Chief Vehicle Administration & Support Services 2,233$                  ‐$                               6007 2016 GMC TERRAIN Deputy Chief Vehicle Administration & Support Services 1,489$                  586$                              6034 2003 FORD RANGER EXT CAB PICKUP Fire Inspector Vehicle Prevention 2,233$                  ‐$                               6047 2013 CHEVROLET E‐450/BRAUN AMBULANCE Ambulance Station 5 ‐$                      44,000$                        6048 2013 CHEVROLET E‐450/BRAUN AMBULANCE Ambulance Station 3 ‐$                      44,000$                        6045 2011 CHEVROLET G4500/LEADER AMBULANCE Ambulance Station 4 22,335$                44,502$                        6046 2011 CHEVROLET G4500/LEADER AMBULANCE Reserve Ambulance Shared Resources 29,780$                44,200$                        6050 2015 CHEVROLET G4500/LEADER AMBULANCE Ambulance Station 1 25,313$                47,000$                        6051 2015 CHEVROLET G4500/LEADER AMBULANCE Ambulance Station 2 32,758$                47,000$                        6117 1991 PIERCE‐ARROW FIRE ENGINE Reserve Engine Shared Resources 17,868$                ‐$                               6120 1992 INTERNATIONAL E‐9 4800 4X4 CREW CAB PUM Specialty Equipment Shared Resources 4,467$                  ‐$                               6121 2008 SPARTAN/LTI INTERNATIONAL/PIERCE TYPE III Specialty Equipment Shared Resources 16,379$                74,000$                        6123 2005 SPARTAN/KME AIR LIGHT AND POWER UNIT Specialty Equipment Shared Resources 3,722$                  ‐$                               6124 1999 SPARTAN/LTI 75' QUINT FIRE AERIAL Reserve Truck Shared Resources 14,890$                ‐$                               6125 2014 PIERCE‐ARROW TRACTOR DRAWN AERIAL ‐ 50%Ladder Truck ‐ 50%Station 6 ‐ Stanford 28,291$                89,000$                        6125 2014 PIERCE‐ARROW TRACTOR DRAWN AERIAL ‐ 50%Ladder Truck ‐ 50%Station 6 ‐ PA 28,291$                89,000$                        6127 2017 PIERCE‐ARROW 100 FT LADDER Reserve Truck Shared Resources 22,335$                ‐$                               6144 2009 PIERCE‐ARROW FIRE ENGINE Fire Engine Station 1 ‐$                      63,000$                        6145 2009 PIERCE‐ARROW FIRE ENGINE Fire Engine Station 2 52,115$                55,000$                        6146 2009 PIERCE‐ARROW FIRE ENGINE Fire Engine Station 3 44,670$                50,000$                        6147 2009 PIERCE‐ARROW FIRE ENGINE Fire Engine Station 4 ‐$                      50,000$                        6148 2009 PIERCE‐ARROW FIRE ENGINE Reserve Engine Shared Resources 96,785$                40,000$                        6149 2009 PIERCE‐ARROW FIRE ENGINE Reserve Engine Shared Resources 78,917$                40,000$                        6150 2017 PIERCE‐ARROW FIRE ENGINE Fire Engine Station 5 41,692$                72,000$                        6151 2018 PIERCE‐ARROW FIRE ENGINE Fire Engine Station 6 ‐ Stanford 14,890$                ‐$                               6160 2015 CHEVROLET SUBURBAN 4X4 Battalion Chief Vehicle Shared Resources ‐$                      23,000$                        6170 1995 PACE AMERI HAZARDOUS MATERIALS RESPO Specialty Equipment Shared Resources ‐$                      3,000$                          6176 2001 FORD F‐550 WILDLAND FIREFIGHTING UNIT Specialty Equipment Shared Resources 4,467$                  14,000$                        6178 2008 FORD F‐550 WILDLAND FIREFIGHTING UNIT Specialty Equipment Shared Resources 25,313$                24,950$                        6185 2000 FORD F‐550 UTILITY VEHICLE Specialty Equipment Shared Resources ‐$                      35,000$                        6215 2001 CHEVROLET K‐2500 SUBURBAN Specialty Equipment Administration & Support Services 4,467$                  13,382$                        6216 2000 WELLS CARGO 14' CARGO TRAILER Specialty Equipment Shared Resources ‐$                      2,900$                          6217 2003 WELLS CARGO 14' CARGO TRAILER Specialty Equipment Shared Resources 3,722$                  1,600$                          6218 2006 WELLS CARGO 16' CARGO TRAILER Specialty Equipment Shared Resources ‐$                      1,500$                          6219 2009 MIRAGE 20' ENCLOSURE Specialty Equipment Shared Resources 1,653$                  ‐$                               6220 2000 WELLS CARGO 14' CARGO TRAILER Specialty Equipment Shared Resources ‐$                      4,000$                          6242 2002 MAGNUM FIRE C02 EXTINGUISHER TRAILER Specialty Equipment Shared Resources ‐$                      1,700$                          6430 1998 FORD WINDSTAR PASSENGER VAN Fire Inspector Vehicle Prevention ‐$                      (6,723)$                         6433 1998 FORD WINDSTAR PASSENGER VAN EMS Chief Vehicle Administration & Support Services ‐$                      (7,962)$                         6453 2007 HONDA CIVIC GX SEDAN Fire Inspector Vehicle Prevention ‐$                      1,800$                          6455 2012 HONDA HONDA CIVIC GX SEDAN Fire Inspector Vehicle Prevention ‐$                      2,900$                          6456 2007 HONDA CIVIC GX SEDAN Fire Inspector Vehicle Prevention ‐$                      2,000$                          6457 2016 GMC TERRAIN Fire Marhsall Vehicle Prevention 32,758$                ‐$                               6432 1998 FORD WINDSTAR PASSENGER VAN Fire Inspector Vehicle Prevention ‐$                      (8,868)$                         6501 2009 FORD F‐550 UTILITY Specialty Equipment Shared Resources ‐$                      ‐$                               6540 1999 PACE AMERICAN 12' CARGO TRAILER Specialty Equipment Shared Resources ‐$                      2,000$                          6541 1999 PACE AMERICAN 12' CARGO TRAILER Specialty Equipment Shared Resources ‐$                      1,000$                          6542 1999 PACE AMERICAN 12' CARGO TRAILER Specialty Equipment Shared Resources ‐$                      1,000$                          6543 1999 PACE AMERICAN 12' CARGO TRAILER Specialty Equipment Shared Resources ‐$                      1,000$                          6544 1999 PACE AMERICAN 12' CARGO TRAILER Specialty Equipment Shared Resources ‐$                      1,000$                          6545 2000 WELLS CARGO 14' CARGO TRAILER Specialty Equipment Shared Resources ‐$                      4,000$                          TBD TBD TBD TBD RRV (Based on average ambulance costs)Station 6 ‐ Stanford 18,364$                45,117$                        Equipment Management Division 2018 Fire Vehicle Allocated Charges Detail Page 7 of 13 3/19/18 Allocation of Costs based on FTE Proportion FTE Share Station Direct Costs Shared Resources Total FTE Count 84.01 3.00 87.01 FTE Proportion 97%3%100% Direct Costs Uniforms*78,682$                       2,810$                     81,492$                 Service delivery supplies (medical supplies, small tools, etc.)679,553$                     24,267$                  703,820$               Administrative Costs Fire Administration (Executive Administration, Technical and Support Staff)**2,162,525$                  77,225$                  2,239,750$           Support Services (Training/Recruitment, EMS Administration, Facilities Management)2,172,759$                  77,591$                  2,250,350$           Information Technology (Computers, tablets, software, maintenance, support)903,194$                     32,254$                  935,448$               Utilities (Gas, Electricity, Garbage) (allocated by station size, not FTE)120,767$                     ‐$                         120,767$               Fleet Maintenance & Replacement Allocation 38,929$                       1,390$                     40,319$                 Administrative Costs Subtotal 5,398,173$                 188,460$               5,586,633$           *$5,433 has been allocated to Fire Prevention and removed from total Uniform budget shown on page13. This outlines the share of FTE driven costs for Station Personnel and Shared Resources Personnel, which is used to derive the per station costs.  **Seven percent (7%) of the Fire Chief in the amount of $29,108 has been allocated to Fire Prevention and removed from the total Fire Administration Costs  shown on pg. 11 K19 K20 K38 K29 K26 K27 Page 8 of 13 3/19/18 Fire Administration Costs Staff, Supply and Services Cost Calculation Position FTE Salary Benefits Total Cost Administrative Assistant 1.00 $82,790 $86,195 $168,985 Administrative Associate II 2.00 $72,903 $55,853 $257,512 Business Analyst 0.80 $114,401 $79,128 $193,529 Deputy Fire Chief 1.00 $209,362 $170,476 $379,837 Deputy Director Technical Services 0.20 $39,593 $34,561 $74,154 Fire Chief 1.00 $243,384 $175,229 $418,613 GIS Specialist 0.50 $60,015 $41,146 $101,161 Sr. Management Analyst 1.00 $143,898 $115,643 $259,541 Hourly Support 0.55 $51,966 $12,305 $64,272 Training (meetings, courses, conferences, and professional development)$25,090 Services & Supplies (communication, professional services, office supplies, printing)$326,164 Total Fire Administration Costs $2,268,858 Fire Administration Fire Administration staff, supply and services costs are shown below. These include all administrative and management  staff primarily focused on the Administration of the Fire Department as a whole.  Page 9 of 13 3/19/18 Support Services Costs Staff, Supply and Services Cost Calculation Position FTE Salary Benefits Total Cost Training Battalion Chief 1.00 $174,718 $206,989 $381,707 Training Captain 1.00 $151,539 $149,750 $301,289 Deputy Fire Chief 1.00 $209,362 $170,476 $379,837 EMS Chief 1.00 $143,517 $158,134 $301,651 EMS Data Specialist 1.00 $78,541 $77,822 $156,364 Training (meetings, courses, conferences, and professional development)$199,292 Services & Supplies (backgrounds, testing, professional services, training equipment, office supplies)$530,210 Total Salary and Fringe Benefits $2,250,350 Support Services (Training/Recruitment, EMS Administration, Facilities Management) Fire Support Services staff, supply and services costs are shown below. As shown in the organizational chart on page 250 of the Budget,  support services includes EMS Administration, Training and recruitment, as well as facilities management. The costs shown below include  all administrative and management staff primarily focused on the Support Services activities of the Fire Department. The total does not  match the amount shown on page 256 of the budget book in the Dollars by Division Table because the some personnel are shown in the  Emergency Response and Training categories. The amounts below accurately reflect Support Services staff and costs.   Page 10 of 13 3/19/18 Salaries and Benefits Position Amount 0.05 FTE Fire Marshall $17,812 1.10 FTE Fire Inspector $322,814 Subtotal $340,626 Operating Costs Type Amount Professional Services 5,000$                                    Subtotal 5,000$                                    Fleet Costs Type Amount Fleet O&M 34,991$                                  Fleet Replacement*(8,891)$                                   Subtotal 26,100$                                  Administrative Cost Share Type Amount Uniforms for 6.0 FTE Prevention Staff 5,433$                                    Fire Chief (7%)29,108$                                  Subtotal 34,541$                                  Grand Total 406,268$                               Fire Prevention Costs Excluded  *In FY18 an adjustment was made to correct an overestimation of  replacement costs for the Prevention Vehicles.  Fire Prevention costs have been excluded, as these activites are not  included in services provided to Stanford.  Page 11 of 13 3/19/18 Allocated Charges to Fire Department FY18 Budget Charge Sum of Original Budget Citywide Overhead 2,007,740$                             Information Technology 935,448$                                Utilities 120,767$                                Vehicle Maintenance 670,955$                                Vehicle Replacement 1,020,467$                             Grand Total 4,755,377$                             K43 Page 12 of 13 3/19/18 All Non‐Salary Costs by Area, FY18 Budget Area Budget Fire Administration 351,254$                               City Allocations 4,755,377$                            Direct & Shared Resources Service Supplies and Tools 703,820$                               Direct & Shared Resources Uniform replacement 86,925$                                  Support Services 729,502$                               Prevention 5,000$                                    Grand Total 6,631,877$                            Page 13 of 13 3/19/18 Palo Alto-Stanford Fire Protection Agreement Page 33 of 36 Execution Copy Exhibit B-2 Fire Services Deployment and Cost Allocation Model Methodology Assumptions Stanford and Palo Alto agree that Stanford will be charged for the Direct Station Cost associated with fire department staffing and apparatus located at Station 6 located on the Stanford campus as further clarified in the deployment section below and a portion of shared cost as further described in this Exhibit and the Agreement. Specific details are explained below. By agreement, the expenses associated with the Fire Prevention Office within the Palo Alto Fire Department will be excluded from the calculations during the Term. The Fire Prevention expenses that have been excluded are shown on page 11 of Exhibit B-1. Stanford is not responsible for paying expenses attributable to the Office of Emergency Services (OES), which is its own department separate from the Fire Department. If at some point in the future the OES were to become part of the Fire Department, the expenses would be excluded from calculations to determine Stanford's cost similar to the way in which Fire Prevention expenses are excluded. Direct and indirect costs associated with Station 6 (i.e. the Stanford Station) operations will be $6,342,115 for year one of the contract (July 1, 2018 to June 30, 2019). The cost allocation summary is based upon the Fiscal Year (FY) 2018 Budget to serve as the base for the new long term contract. The FY 2019 Adopted Budget for the Fire Department increased 1.1% therefore, the FY 2019 invoicing will be $6,273,111 + $69,004 = $6,342,115. Station 6 Deployment Model and Cost Allocation During the Term, Station Six, located on Stanford Campus, will be staffed with a total of six daily positions with a potential staffing complement including two Captains, two Fire Apparatus Operators and two Firefighters. The six daily positions translate to 18 overall positions (three shifts) and 3.0 backfill positions for a total of 21.0 positions. During the Term, equipment and staffing assigned to Station 6 will include one Fire Engine, one Rapid Response Vehicle (RRV), and one fire ladder truck (the “Fire Truck”). Utilizing a new cross-staffed deployment model, the Fire Engine crew will be cross-staffed with the Rapid Response Vehicle. The crew will either respond on the engine or the RRV depending upon the type of call. As the Fire Truck is a specialty response apparatus primarily used for high-rise rescues and Stanford campus has a significant number of high rise residential buildings in the PAFD service area, the Fire Truck will be housed at Station 6 and the costs for the staffing and the apparatus cost for the Fire Truck will be shared 50/50 between Palo Alto and Stanford. Therefore, the direct resources designated for Stanford University will be a Fire Engine staffed with 3 Daily Personnel plus backfill, 50% of the Fire Truck staffed by 3 Daily Personnel, which equates to 1.5 FTEs plus back fill for Stanford and 1.5 FTEs for Palo Alto plus backfill. Total daily staffing will be 6 FTEs of which Stanford pay for 4.5 daily FTEs plus its portion of backfill and Palo Alto pays for 1.5 FTEs and its portion of backfill. With 3 shifts and a 0.5 backfill factor, the total annual FTE designated as Stanford’s share will be 15.7 FTEs. These staffing assumptions can be found in lines 11 through 15 on page 1 of Exhibit B-1. In summary, the Parties agree that during the Term, (1) Stanford will only be responsible for applicable costs associated with 4.5 daily positions plus a proportional share of backfill and Palo Alto will be Palo Alto-Stanford Fire Protection Agreement Page 34 of 36 Execution Copy responsible for applicable costs associated with 1.5 daily positions (i.e. 50% of the Fire ruck crew), even though the total number of personnel for Station 6 is 6 daily positions; and (2) Stanford will be responsible for the costs associated with 1 fire engine, 1 RRV, and 50% of the Fire Truck and Palo Alto will be responsible for 50% of the costs associated with the Fire Truck, and the Fire Truck shall be located at Station 6. The Parties agree that such allocation cannot not be modified during the Term except as provided under section 2.7(c) or via written amendment signed by the Parties. Shared Resources This model also assumes that the Battalion Chief and Reserve apparatus are resources shared by all stations and will be allocated proportionately based upon annual operating hours per each station. During the Term, this model assumes all stations will operate the same number of hours each year except Station 8 which is a seasonal station and operates only on high fire danger days for a 12 hour period. With approximately 10 high fire danger days each year, Station 8 is expected to operate for 120 hours each year though may vary depending on risks of a particular season. Shared resources include the Battalion Chief, Breathing Support Unit, Wildland Engines, Specialty Equipment Trailers and Reserve Engines. Staffing for shared resources includes 1 daily position (the Battalion Chief) which results in 3 overall positions for the three shifts and no backfill positions. Allocation Methodology Costs have been allocated using criteria related to the expense type in an effort to share costs in the fairest manner. As a result, employee training and recruitment costs, EMS administration (but excluding any costs for the Ambulance Service), and overall Fire administration costs have been allocated based upon the number of personnel assigned to a station (but excluding the portion of personnel at Station 6 that is paid for by the City as expressly provided herein for the Fire Truck staffing) since most of these costs are associated with personnel. These costs have also been allocated to the Shared Resources based upon staffing and then divided among the stations based upon operating hours. Salaries and benefits and fleet costs have been allocated based upon actual personnel and vehicles assigned to a station or the shared resources (but excluding the portions of personnel and vehicles at Station 6 that are paid for by the City). The primary objective of this approach was to allocate costs based upon the resources assigned to a station while dividing shared resources proportionate to operating hours of each station since all stations stand to benefit from access to these resources. If any portion of the Fire Protection Service is privatized or otherwise restructured (e.g. privatization of the EMS Service) and such change may increase Stanford’s cost or share or cost, such change shall be deemed a modification to the Cost Allocation Methodology and should therefore be reviewed by the Parties in accordance with this Agreement. The number of personnel assigned to each Station during the Term is described in Exhibit B-1 above and shall only be adjusted in accordance with Section 2.7(c) of this Agreement or via a written amendment to Exhibit B-1. Allocation Details Station Direct Costs Salary and benefits (line 18) are based on the average salary and benefits per job classification type, using Palo Alto-Stanford Fire Protection Agreement Page 35 of 36 Execution Copy actual data used in the development of the Adopted Fiscal Year (FY) 2018 Budget. Salary and benefits are based on the classification type and number of employees at each station . Back up for these costs are shown on the Salary Calculation pages (page 3 - 5). Uniform costs (line 19) are allocated based upon the distribution of uniformed personnel in the department. The annual uniform budget was divided by total number of uniformed personnel. Uniformed personnel in Prevention were accounted for and those costs were removed. This per employee cost was then applied to the number of total positions per station (line 14) (but excluding the portion of personnel at Station 6 that is paid for by the City). Service delivery supply costs (line 20) were also allocated based upon personnel in each station (but excluding the portion of personnel at Station 6 that is paid for by the City). The annual cost of service delivery supplies was divided by the total number of shift staff. This cost was then applied to the number of total positions in each station (line 14). Fleet maintenance and replacement allocation costs (line 21) are based on the allocated charges to the Fire Department from the Public Works Department for the maintenance and replacement of the equipment at each station (line 10) (but excluding the portion of the apparatus costs at Station 6 that is paid for by the city (e.g. 50% of the Fire Truck)). Pages 6 and 7 provide further detail on the cost breakdown though when the cost model is updated, allocations may be adjusted based on replacement costs and replacement cycles, for example, the current FY 2018 worksheet assumes no replacement cost for the Fire Engine at Station 6 as it was recently replaced, however, in future years a cost for replacement would be added. The City’s fleet is governed by the “Vehicle and Equipment use, Maintenance, and Replacement” policy which currently articulates the following replacement schedule: Fire pumper engines 20 years/85,000 miles, Truck aerial’s 15 years/85,000 miles. The number and type of equipment and apparatus assigned to each station during the Term is described in Exhibit B-1 above and shall only be adjusted in accordance with Section 2.7(c) of this Agreement or via a written amendment to Exhibit B-1. Shared Resources Salary and benefits (line 25) are based on the average salary and benefits per job classification type, using actual data used in the development of the Adopted FY 2018 Budget. Salary and benefits are based on the classification type and number of employees assigned to Shared Resources, which are then spread across each station by station percentage of total operating hours (line 7). Back up for these costs are shown on the Salary Calculation pages (page 3 - 5). Uniform costs for shared resources personnel (line 26) are allocated based upon the distribution of uniformed personnel in the Department. The annual uniform budget was divided by total number of uniformed personnel. This per employee cost was then applied to the number of total positions assigned to Shared Resources section (3.0 positions). These costs are then shared proportionately among the stations based upon total operating hours (line 7). Service delivery supply costs for shared resources (line 27) are also allocated based upon shift staff in the Department. The annual cost of service delivery supplies was divided by the total number of shift staff. This cost was then applied to the number of total positions in the Shared Resources section (3.0 positions). These costs are then shared proportionately among the stations based upon total operating hours (line 7). Fleet maintenance and replacement allocation costs for shared resources (line 28) are based on the allocated charges to the Fire Department from the Public Works Department for the maintenance and replacement of the equipment in the Shared Resources section. Pages 6 and 7 provide further detail on the cost breakdown. Palo Alto-Stanford Fire Protection Agreement Page 36 of 36 Execution Copy The Administrative Cost Share (line 29) calculations are addressed in the next section. Administrative Costs Fire Administration (line 33) includes the salary and benefits based on the classification type and number of employees assigned to Fire Administration, as well as all training, service and supply costs attributed to Fire Administration activities. These costs are detailed on the Fire Administration back-up pages (pages 8-9), and are spread across each station based upon the percentage of FTE in each station (line 15). Administrative costs associated with the Shared Resource personnel have been allocated based upon the 3.0 personnel assigned to Shared Resources (line 29); these costs are spread to the stations based upon proportion of total operating hours. Support Services (line 34) includes the salary and benefits based on the classification type and number of employees assigned to Support Services, as well as all training, service and supply costs attributed to Support Services activities. These costs are detailed on the Support Services page (page 10), and are spread across each station by percentage of FTE at each station (line 15). Information Technology costs (line 35) are based on the allocated charges to the Fire Department from the Information Technology Department for the acquisition, maintenance and support of technology attributed to the Shared Resources personnel. These costs are then spread across each station by FTE proportion (line 15). Utilities costs (line 36) are based on the allocated charges to the Fire Department from the Utilities Department for the use of gas, electricity, water, sewer and garbage. These charges are based on actual use from the prior year. These costs are then spread across each station, excluding Station 6, based upon square footage of each station (line 9). No utility costs are allocated to Station 6 since Stanford pays utilities directly for this Station. Fleet maintenance and replacement allocation costs (line 37) are based on the allocated charges to the Fire Department from the Public Works Department for the maintenance and replacement of the vehicles used by Fire Administration and Support Services personnel, which are then spread across each station based upon the percentage of FTE at each station (line 15). Pages 6 and 7 provide further detail on the cost breakdown. Citywide Overhead Citywide Overhead (line 43) includes the total costs charged to the Fire Department based upon the City’s indirect cost plan, which is then spread to each station based upon the total station cost percentage of department costs (line 41). These charges include administration and support provided by the City Attorney, City Auditor, City Clerk, City Manager, Administrative Services, Human Resources, and Facilities Maintenance (PWD) to the non-administrative General Fund Departments. The non- administrative General Fund Departments are the Community Services, Fire, Library, Police, Planning and Community Environment, Development Services, and Public Works. The basis of allocation depends on the nature of the charge, which is determined by each administration/support department. For example, ratio of square footage may be used to allocate facilities management charges. Other charges may be allocated based on number of work orders, budgeted dollars, or FTE count. The departments which allocate charges out are asked to verify the basis for allocation as part of the budget process. City of Palo Alto (ID # 9461) City Council Staff Report Report Type: Action Items Meeting Date: 8/20/2018 City of Palo Alto Page 1 Summary Title: Appointment of new City Manager Title: Approval of Employment Agreement With Edward Shikada as City Manager From: City Manager Lead Department: Human Resources Recommended Motion Staff recommends that Council approve the employment agreement of Edward Shikada providing for his employment as City Manager for the City of Palo Alto effective December 20, 2018 or the date of retirement of current City Manager James R. Keene, Jr., whichever is sooner. Executive Summary The Council Appointed Officer Committee of the City Council is charged with overseeing the selection process for Officers of the City (Municipal Code section 2.08.010.) After several closed session meetings, the City Council selected Ed Shikada as City Manager effective December 20, 2018 or the date of retirement of current City Manager James R. Keene, Jr., whichever is sooner. The Council must approve an employment agreement for salary or benefits for the City Manager that are not already included in the Compensation Plan for Management and Professional Personnel. Effective on the employment start date of Edward Shikada as City Manager, the Employment Agreement between City of Palo Alto and Edward Shikada, initially entered into on October 5, 2015, for the purpose of employing Shikada as Assistant City Manager, as amended in October 2016 for the purpose of employing Shikada as Utilities General Manager (Utilities Director)/Assistant City Manager, will be terminated and will be of no further force or effect. Mr. Shikada has been serving Palo Alto since April 8, 2015 as Assistant City Manager (serving on an interim basis for the first several months), and has had the added responsibilities of General Manager of the Utilities Department since October 2016. Mr. Shikada has diverse experiences relevant to Palo Alto. He has served as the City City of Palo Alto Page 2 Manager of San Jose and prior to that served in San Jose as the Assistant City Manager, Sr. Deputy City Manager and Deputy City Manager. Mr. Shikada also held a variety of key positions in the City of Long Beach including Director of Public Works. He has a Bachelor of Science degree in Civil Engineering from University of Hawaii, a Master’s degree in Public Administration from the University of California, Los Angeles and he attended the Senior Executives in State and Local Government Program at Harvard University’s Kennedy School of Government. Resource Impact Mr. Shikada will be an “at will” employee, which means he will serve at the pleasure of the City Council and can be terminated or asked to resign at any time. His annual salary will be $356,000, including $18,500 City contribution annually to a 401(a) defined contribution retirement plan. Mr. Shikada will be entitled to severance pay equivalent to twelve months salary and benefits if he is terminated or asked to resign. Consistent with other lateral executive hires and in recognition of extensive prior public service, Shikada will accrue vacation at the longterm employee rate. On or about the Employment Start Date, Shikada agrees to reside within the corporate limits of the City; the City will compensate up to $4,000 per month for rental or lease costs within the city limits. All of the other benefits Mr. Shikada will receive are consistent with the Compensation Plan for Management and Professional Personnel. Policy Implications This recommendation is consistent with existing City Policies. Attachments:  Exhibit A - Shikada Employment Agreement Page 1 Edward Shikada / Employment Agreement EMPLOYMENT AGREEMENT BETWEEN THE CITY OF PALO ALTO AND EDWARD SHIKADA THIS AGREEMENT is between the City of Palo Alto, a California municipal corporation and chartered city ("City") and Edward Shikada, an individual ("Shikada"). It is effective on the latest date next to the signatures on the last page. This Agreement is entered into on the basis of the following facts, among others: A. City hired Shikada in April 2015 to be City’s Assistant City Manager. Since then, Shikada has also served as City’s Utilities General Manager while continuing to serve as Assistant City Manager; B. City, acting by and through its duly elected City Council, now desires to employ Shikada as its City Manager, effective December 20, 2018 or on the date of retirement of current City Manager James R. Keene, Jr., whichever is sooner, subject to the terms and conditions set forth in this Agreement and in the provisions of the Charter of the City of Palo Alto (the "Charter"); C. The Charter provides, among other things, that the City Manager shall be appointed for an indefinite term by a majority vote of the City Council and that he or she may be removed at the pleasure of the City Council by a two-thirds vote on a resolution passed for that purpose; D. Shikada desires to be employed by the City of Palo Alto as its City Manager, subject to the terms and conditions set forth in this Agreement and in the Charter; E. City and Shikada desire to establish specific terms and conditions relating to compensation and benefits, housing assistance, performance evaluations, and related matters; BASED UPON THE FOREGOING, CITY AND SHIKADA AGREE AS FOLLOWS: 1.Employment Start Date. City hereby appoints and employs Shikada as City Manager, and Shikada hereby accepts the appointment and employment, for an indefinite term that begins on December 20, 2018 or on the date of retirement of current City Manager James R. Keene, Jr., whichever is earlier (the “Employment Start Date”), provided Shikada actually reports for and starts work on that date. If Shikada does not actually report for and start work on or before December 20, 2018, the Employment Start Date will be the date, if any, as otherwise mutually agreed by the parties. 2.Termination of Prior Agreement. Effective on the Employment Start Date, the Employment Agreement between City of Palo Alto and Edward Shikada, initially entered into on October 5, 2015, for the purpose of employing Shikada as Assistant City Manager, as amended in October 2016 for the purpose of employing Shikada as Utilities General Manager (Utilities Director)/Assistant City Manager, is terminated and shall be of no further force or effect. 3.Duties of Manager. Shikada shall perform the duties established for the City Manager by the Charter, Palo Alto Municipal Code, direction of the City Council, or as otherwise provided by law, ordinance, or regulation. 3.1. Full Energy and Skill. Shikada shall devote his full energy, skill, ability, and productive time to the performance of the City Manager's duties. Shikada understands that the Charter requires that the City Manager devote his entire work time to the discharge of the duties of the office. Attachment A Page 2 Edward Shikada / Employment Agreement 3.2. No Conflict. Shikada shall not engage in any activity which is actually or potentially in conflict with, inimical to, or which interferes with the performance of Shikada's duties. 3.3. Uncompensated Professional Activities. Shikada may attend and/or participate in uncompensated professional activities, including but not limited to the activities described in subsections 9.3 and 9.4, provided that Shikada's ability to perform the duties described in this Section 3 is not unreasonably compromised or impaired. Shikada shall inform the City Council in writing in advance of absences of more than one day related to such activities. 4. Compensation. Shikada shall be compensated as provided in this Section 4. 4.1. Initial Compensation. Commencing on and continuing from the Employment Start Date, Shikada will receive an initial base annual salary of Three Hundred Fifty-Six Thousand Dollars ($356,000), prorated and paid on City's normal paydays. 4.2. Salary Adjustments. Not less than once each year, the City Council shall meet for the express purpose of evaluating the performance of Shikada and determining whether to grant him an increase in annual base salary based on performance. The City Council will act in good faith in determining whether to provide an increase based on performance, but the ultimate decision in this regard is within the sole discretion of the City Council. The Council may also adjust Shikada’s annual base salary due to labor market and/or internal equity conditions. 5. Regular Benefits and Allowances. Except as otherwise provided in this Agreement, Shikada will be eligible for, and shall receive, all regular benefits (e.g., health insurance, CalPERS contributions paid by City) and vacation, sick leave, and management leave as are generally set forth in the Compensation Plan for Management and Professional Personnel and Council Appointees, as it may be amended or updated from time-to-time by the City Council. Shikada shall comply with all rules and procedures, and shall make any and all employee contributions (such as employee contributions towards the City’s CalPERS contribution) set forth in the Compensation Plan for Management and Professional Personnel and Council Appointees. 6. Additional Benefits and Allowances. In addition to the benefits specified in section 5, Shikada will receive the following additional benefits and allowances. 6.1. 401(a) Defined Contribution Retirement Plan. City will contribute Eighteen Thousand Five Hundred Dollars ($18,500) annually, prorated and contributed on the City’s normal paydays, to a 401(a) retirement plan account established for Shikada. 6.1.1 Shikada will make any additional contributions required under the plan, if any, and may make additional voluntary contributions, if permitted. 6.2. Parking. City shall provide parking at the Civic Center at no cost to Shikada. 6.3. Vacation Accrual Rate. Shikada's vacation accrual rate will be based on the maximum accrual rate as specified in the Compensation Plan for Management and Professional Personnel and Council Appointees, which is currently two hundred (200) hours per year. Page 3 Edward Shikada / Employment Agreement 7. Housing Assistance. On or about the Employment Start Date, Shikada agrees to reside within the corporate limits of the City. 7.1. Initial Temporary Housing. The parties contemplate that initially, and continuing until a residence is purchased as described in Section 7.2 below, the City will provide assistance for housing in Palo Alto through a monthly cash payment. The City will bear the actual and reasonable monthly rental or lease cost, not to exceed Four Thousand Dollars ($4,000) per month, for rental housing located within the corporate limits of the City. 7.1.1 Shikada will keep an accurate record of all such expenses and present such records with his request for payment or reimbursement. City will advance any refundable deposits and will be reimbursed for such deposits by Shikada (including interest, if any, paid by the deposit holder) at the time the refund is paid or if the refund is refused by holder, at the time it would otherwise be due. 7.2. Long Term Housing. Within a reasonable period of time as agreed to by the parties, Shikada agrees to make his primary residence within the corporate limits of the City. The amount of the City contribution and any contribution from Shikada, the method of financing, and other elements of a purchase transaction will be determined through good faith negotiations and mutual agreement, and documented in an amendment to this Agreement. 8. Duration of Employment. Shikada understands and agrees that he has no constitutionally protected property or other interest in his employment as City Manager. He understands and agrees that he works at the will and pleasure of the City Council and that he may be terminated or asked to resign at any time, with or without cause, subject only to the requirements of Section 3 of Article IV of the Charter, a copy of which has been provided to Shikada. Shikada understands and agrees that the public hearing accorded to the City Manager upon termination as provided in Section 3 of Article IV of the Charter is not a hearing in which witnesses will be called and examined nor in which the City Manager may formally contest the reasons for termination. The hearing is solely for the purpose of affording the City Manager an opportunity to publicly respond to any reasons given for his termination by the City Council. 8.1. Severance Pay. If Shikada is terminated or asked to resign in lieu of termination, he shall receive a cash payment, or payments (without interest) at intervals specified by Shikada, equivalent to the sum of his then-current monthly salary multiplied by twelve (12) and the cash value, as reasonably determined by City, of his monthly non-salary benefits multiplied by twelve (12). The monthly non-salary benefits shall be those specified in sections 5 and 6. All normal withholdings as required by law shall be made with respect to any amounts paid under this section. 8.2. Non-Payment of Severance Under Certain Conditions. If Shikada were to be terminated after conviction of a felony, he would not be eligible for severance pay. 9. Payment of Expenses of Employment. City shall pay the following usual and customary employment expenses: 9.1. The cost of any fidelity or other bonds required by law for the City Manager. 9.2. The cost to defend and indemnify Shikada to the full extent of the law as provided by the California Government Claims Act (Government Code § 810 et seq.). Page 4 Edward Shikada / Employment Agreement 9.3. Reasonable dues for Shikada's membership in professional organizations associated with the office of City Manager. City will allow Shikada reasonable time away from the City to attend the meetings and annual conferences of such organizations and will pay the cost of such attendance in accord with applicable City policies and procedures. The organizations and activities include but are not limited to the International City/County Management Association, League of California Cities, Alliance for Innovation and California City Management Foundation. 9.4. The cost of attending other conferences or events (i.e. retirement dinners, out of town meetings, etc.) necessary to the proper discharge of his duties. 10. Miscellaneous. 10.1. Notices. Notices given under this Agreement shall be in writing and shall be either: a. Served personally; or b. Delivered by first-class United States mail, certified, with postage prepaid and a return receipt requested; or c. Sent by Federal Express, or some equivalent private mail delivery service. Notices shall be deemed received at the earlier of actual receipt or three (3) days following deposit in the United States mail, postage prepaid. Notices shall be directed to the addresses shown below, provided that a party may change such party's address for notice by giving written notice to the other party in accordance with this subsection. CITY: Attn: Mayor City of Palo Alto 250 Hamilton Avenue Palo Alto, CA 94301 Phone: (650) 329-2226 SHIKADA: Edward Shikada c/o 250 Hamilton Avenue Palo Alto, CA 94301 Phone: (650) 329-2563 10.2. Entire Agreement/Amendment. This Agreement constitutes the entire understanding and agreement between the parties as to those matters contained in it, and supersedes any and all prior or contemporaneous agreements, representations and understandings of the parties. This Agreement may be amended at any time by mutual agreement of the parties. Any such amendment must be in writing, dated, approved in the same manner as the original Agreement, and signed by the parties and attached hereto. 10.3. Attorney's Fees. If any legal action or proceeding is brought to enforce or interpret this Agreement, the prevailing party as determined by the court shall be entitled to recover from the other party all reasonable costs and attorney's fees, including such fees and costs as may be incurred in enforcing any judgment or order entered in any such action. 10.3.1 Alternate Dispute Resolution. Nothing in this subsection shall be read to prevent the parties from agreeing to some alternative method of dispute resolution. Page 5 Edward Shikada / Employment Agreement 10.4. Severability. In the event any portion of this Agreement is declared void or unenforceable, such portion shall be severed from this Agreement and the remaining provisions shall remain in effect, unless the result of such severance would be to substantially alter this Agreement or the obligations of the parties, in which case this Agreement shall be immediately terminated. 10.5. Waiver. Any failure of a party to insist upon strict compliance with any term, undertaking, or condition of this Agreement shall not be deemed to be a waiver of such term, undertaking, or condition. To be effective, a waiver must be in writing, signed and dated by the parties. 10.6. Employee's Independent Review. Employee acknowledges that he has had the opportunity and has conducted an independent review of the financial, tax and legal effect of this Agreement. Employee acknowledges that he has made an independent judgment upon the financial, tax and legal effects of this Agreement and has not relied upon any representation of City, its officers, agents or employees other than those expressly set forth in this Agreement. 10.7. Governing Law and Venue. This Agreement shall be governed by and construed in accordance with the laws of the State of California. Shikada and City agree that venue for any dispute shall be in Santa Clara County, California. 10.8. Section Headings. The headings on each of the sections and subsections of this Agreement are for the convenience of the parties only and do not limit or expand the contents of any such section or subsection. Dated: CITY OF PALO ALTO By Liz Kniss, Mayor Attest City Clerk Dated: Shikada By Approved as to Form: City Attorney Dated: Edward Shikada Dated: City of Palo Alto (ID # 9402) City Council Staff Report Report Type: Action Items Meeting Date: 8/20/2018 City of Palo Alto Page 1 Summary Title: Amend the Contract Between the Board of Administration of the California Public Title: Adoption of: (1) a Resolution of Intent, and (2) an Ordinance to Amend the Contract Between the Board of Administration of the California Public Employees ’ Retirement System (CalPERS) and the City of Palo Alto to Implement the Share of Employer Contribution in Accordance With Section 20516 of the California Government Code and the Compensation Plan Between the City of Palo Alto and the Management and Profes sional Personnel and Council Appointees From: City Manager Lead Department: Human Resources Recommendation Staff recommends the City Council: (1) Adopt the attached Resolution of Intention of the Council of the City of Palo Alto stating its intent to amend the contract between the California Public Employees’ Retirement System (CalPERS) and the City of Palo Alto in order to implement the pension cost share provision in accordance with California Government Code section 20516 and the Compensation Plan between the City of Palo Alto and the Management and Professional Personnel (MGMT) employee group. (2) Adopt, on first reading, the attached ordinance amending the City’s contract with CalPERS. This ordinance will return to the Council on second reading in accordance with state law. Background In the most recent compensation plan for MGMT (approved by the City Council in April 2016), provisions were included for employees to accept a greater share of pension costs to assist in curtailing the City’s growing pension expense. While Council has already approved these provisions in the Compensation Plan, approval of this resolution to amend the pension contracts is an administrative step required by CalPERS. City of Palo Alto Page 2 The pension cost sharing agreement includes a phase-in schedule for the employee pick-up of the employer contribution. This chart outlines the total employee share over the current Memorandums Of Agreement (MOA) and Compensation Plan terms (all ending by the close of calendar year 2018): Employee share of CalPERS Employer Contribution Following council approval of this contract amendment with CalPERS Total contribution over the course of the current MOA/Compensation Plan IAFF completed 3.00% FCA completed 3.00% PAPOA completed 3.00% PAPMA completed 3.00% SEIU completed 1.00% Management and Professional 0.50% 1.00% UMPAPA* N/A N/A *No current agreement for a cost share of the CalPERS Employer contribution has been reached with the Utilities Management group at this time. Discussion The first step in the process is for the Council to adopt a Resolution of Intent and conduct a first reading of the ordinance amending the California Public Employees Retirement System (CalPERS) contract. An amendment to the contract, which changes the employees’ rate of contribution, requires a secret ballot election among the employees affected. This election must follow adoption of the Resolution of Intention and precede adoption of the final documents. The final ordinance will return to Council for approval of the second reading and adoption on September 10, 2018. The contract amendment will become effective during the payroll period 31 days after this ordinance is adopted. With the employer contribution of pension costs continuing to rise, it was in the City’s b est interest to negotiate a cost share arrangement with all bargaining units and implement for the non-represented groups as well. The table below shows the total contributions paid by each of the unrepresented MGMT employee groups: City of Palo Alto Page 3 Employee Type Classic: in pensions system prior to 2013 New Employee (PEPRA): 2013 and after Total Employee Contribution After Amendment Unrepresented Management Classic Employee New Employee 9.00% 7.25% Unrepresented Police Chief, Assistant Police Chief, Fire Chief and Fire Deputy Chiefs Classic Employee New Employee 12.00% 13.75% Although the cost share arrangements have already been agreed upon through the Compensation Plan, CalPERS requires this administrative step for Council to adopt a resolution in order to amend the pension contracts. This amendment seeks to bring the CalPERS contract in alignment with the current adopted Compensation Plan. Policy Implications This recommendation supports the City Council’s goal of reducing pension costs to the City and is consistent with existing City policies. Resource Impact Per the adopted Compensation Plan, the additional employee contribution to CalPERS employer contribution as outlined in this staff report is anticipated to save approximately $166,000 across all funds, including $115,000 in the General Fund and General Capital Fund. This savings is factored into the development of the annual budget process per the terms in the Compensation Plan. Attachments: Attachment A: Resolution of Intention Attachment B: Ordinance amending CalPERS contract Attachment C: CalPERS Sample Amendment RESOLUTION OF INTENTION TO APPROVE AN AMENDMENT TO CONTRACT BETWEEN THE BOARD OF ADMINISTRATION CALIFORNIA PUBLIC EMPLOYEES' RETIREMENT SYSTEM AND THE CITY COUNCIL CITY OF PALO ALTO WHEREAS, the Public Employees' Retirement Law permits the participation of public agencies and their employees in the Public Employees' Retirement System by the execution of a contract, and sets forth the procedure by which said public agencies may elect to subject themselves and their employees to amendments to said Law; and WHEREAS, one of the steps in the procedures to amend this contract is the adoption by the governing body of the public agency of a resolution giving notice of its intention to approve an amendment to said contract, which resolution shall contain a summary of the change proposed in said contract; and WHEREAS, the following is a statement of the proposed change: To provide Section 20516 (Employees Sharing Additional Cost) of an additional 0.5% for local miscellaneous members in the Unrepresented Management group and an additional 1.5% for local safety members in the Unrepresented Safety Management group. NOW, THEREFORE, BE IT RESOLVED that the governing body of the above agency does hereby give notice of intention to approve an amendment to the contract between said public agency and the Board of Administration of the Public Employees' Retirement System, a copy of said amendment being attached hereto, as an "Exhibit" and by this reference made a part hereof. By:_________________________________ Presiding Officer _________________________________ Title ________________________________ Date adopted and approved (Amendment) CON-302 (Rev. 3/9/2016 rc) Attachment A Not Yet Approved 1 AY/HR/2017-07-26 Ord Amending CalPERS Contract Ordinance No. Ordinance of the Council of the City of Palo Alto Authorizing an Amendment to the Contract between the City of Palo Alto and the Board of Administration of the California Public Employees’ Retirement System to Add Cost-Sharing Pursuant to Government Code Section 20516 The Council of the City of Palo Alto ORDAINS as follows: SECTION 1. That an amendment to the contract between the City of Palo Alto and the Board of Administration, California Employees’ System is hereby authorized, a copy of said amendment hereto, marked Exhibit A, and such reference made a part hereof as though herein set out in full. SECTION 2. The City Manager, or his designee is authorized, empowered, and directed to execute said amendment for and on behalf of the City of Palo Alto. adoption. SECTION 3. This ordinance shall be effective on the thirty-first day after the date of its INTRODUCED: PASSED: AYES: NOES: ABSENT: ABSTENTIONS: ATTEST: City Clerk Mayor APPROVED AS TO FORM: APPROVED: City Attorney City Manager Director of Human Resources Director of Administrative Service Attachment B Not Yet Approved 2 AY/HR/2017-07-26 Ord Amending CalPERS Contract Attachment C PLEASE DO NOT SIGN "EXHIBIT ONLY" 1. All words and terms used herein which are defined in the Public Employees' Retirement Law shall have the meaning as defined therein unless otherwise specifically provided. "Normal retirement age" shall mean age 55 for classic local miscellaneous members entering membership in the miscellaneous classification on or prior to July 17, 2010, age 60 for classic local miscellaneous members entering membership for the first time in the miscellaneous classification after July 17, 2010, age 62 for new local miscellaneous members, age 50 for classic local fire members entering membership in the fire classification on or prior to June 8, 2012 and for those classic local police members entering membership in the police classification on or prior to December 7, 2012, age 55 for classic local fire members entering membership for the first time in the fire classification after June 8, 2012 and for those classic local police members entering membership for the first time in the police classification after December 7, 2012 and 57 for new local safety members 2. Public Agency shall participate in the Public Employees' Retirement System from and after January 1, 1942 making its employees as hereinafter provided, members of said System subject to all provisions of the Public Employees' Retirement Law except such as apply only on election of a contracting agency and are not provided for herein and to all amendments to said Law hereafter enacted except those, which by express provisions thereof, apply only on the election of a contracting agency. 3. Public Agency agrees to indemnify, defend and hold harmless the California Public Employees' Retirement System (CaIPERS) and its trustees, agents and employees, the CaIPERS Board of Administration, and the California Public Employees' Retirement Fund from any claims, demands, actions, losses, liabilities, damages, judgments, expenses and costs, including but not limited to interest, penalties and attorney fees that may arise as a result of any of the following: (a) Public Agency's election to provide retirement benefits, provisions or formulas under this Contract that are different than the retirement benefits, provisions or formulas provided under the Public Agency's prior non-CaIPERS retirement program. (b) Any dispute, disagreement, claim, or proceeding (including without limitation arbitration, administrative hearing, or litigation) between Public Agency and its employees (or their representatives) which relates to Public Agency's election to amend this Contract to provide retirement benefits, provisions or formulas that are different than such employees' existing retirement benefits, provisions or formulas. (c) Public Agency's agreement with a third party other than CaIPERS to provide retirement benefits, provisions, or formulas that are different than the retirement benefits, provisions or formulas provided under this Contract and provided for under the California Public Employees' Retirement Law. PLEASE DO NOT SIGN "EXHIBIT ONLY" 4. Employees of Public Agency in the following classes shall become members of said Retirement System except such in each such class as are excluded by law or this agreement: a. Local Fire Fighters (herein referred to as local safety members); b. Local Police Officers (herein referred to as local safety members); c. Employees other than local safety members (herein referred to as local miscellaneous members). 5. In addition to the classes of employees excluded from membership by said Retirement Law, the following classes of employees shall not become members of said Retirement System: a. PROJECT PROFESSIONAL; PROJECT MANAGER; PROJECT TECHNICIAN; PROJECT ASSISTANT; PROJECT LABORER; LANDSCAPE MAINTENANCE TRAINEE; LIBRARY PAGE; WATER SAFETY INSTRUCTOR /LIFEGUARD; RECREATION LEADER; AND POOL MANAGER HIRED ON OR AFTER OCTOBER 14, 1999. 6. The percentage of final compensation to be provided for each year of credited prior and current service as a classic local miscellaneous member in employment before and not on or after January 6, 2007 shall be determined in accordance with Section 21354 of said Retirement Law (2% at age 55 Full). 7. The percentage of final compensation to be provided for each year of credited prior and current service as a classic local miscellaneous member in employment on or after January 6, 2007 and not entering membership for the first time in the miscellaneous classification after July 17, 2010 shall be determined in accordance with Section 21354.5 of said Retirement Law. 8. The percentage of final compensation to be provided for each year of credited current service as a classic local miscellaneous member entering membership for the first time with this agency in the miscellaneous classification after July 17, 2010 shall be determined in accordance with Section 21353 of said Retirement Law (2% at age 60 Full). 9. The percentage of final compensation to be provided for each year of credited prior and current service as a new local miscellaneous member shall be determined in accordance with Section 7522.20 of said Retirement Law (2% at age 62 Full). 10. The percentage of final compensation to be provided for each year of credited prior and current service as a classic local fire member entering membership in the fire classification on or prior to June 8, 2012 and for those classic local police members entering membership in the police classification on or prior to December 7, 2012 shall be determined in accordance with Section 21362.2 of said Retirement Law (3% at age 50 Full). PLEASE DO NOT SIGN "EXHIBIT ONLY" 11. The percentage of final compensation to be provided for each year of credited current service as a classic local fire member entering membership for the first time with this agency in the fire classification after June 8, 2012 and for those classic local police members entering membership for the first time with this agency in the police classification after December 7, 2012 shall be determined in accordance with Section 21363.1 of said Retirement Law (3% at age 55 Full). 12. The percentage of final compensation to be provided for each year of credited prior and current service as a new local safety member shall be determined in accordance with Section 7522.25(d) of said Retirement Law (2.7% at age 57 Full). 13. Public Agency elected and elects to be subject to the following optional provisions: a. Section 21571 (Basic Level of 1959 Survivor Benefits). b. Section 21222.1 (One -Time 5% Increase - 1970). repealed said Section effective January 1, 1980. c. Section 21222.2 (One -Time 5% Increase - 1971). repealed said Section effective January 1, 1980. Legislation Legislation d. Section 21319 (One -Time 15% Increase for Local Miscellaneous Members Who Retired or Died Prior to July 1, 1971). Legislation repealed said Section effective January 1, 2002. e. Section 21325 (One -Time 3% to 15% Increase For Local Miscellaneous Members and Local Safety Members Who Retired or Died Prior to January 1, 1974). Legislation repealed said Section effective January 1, 2002. f. Section 20042 (One -Year Final Compensation) for classic local miscellaneous members, those classic local fire members entering membership on or prior to June 8, 2012 and for classic local police members entering membership on or prior to December 7, 2012. g. Section 21317 (One -Time 15% Increase for Certain Local Safety Members Who Retired for Service Retirement). Legislation repealed said Section effective January 1, 2002. h. Section 21326 (One -Time 1% to 7% Increase For Local Miscellaneous Members and Local Safety Members Who Retired or Died Prior to July 1, 1974). Legislation repealed said Section effective January 1, 2002. i. Section 21024 (Military Service Credit as Public Service). PLEASE DO NOT SIGN "EXHIBIT ONLY" Section 20692 (Employer Paid Member Contributions Converted to Payrate During the Final Compensation Period) for classic local miscellaneous members and classic local safety members in the following groups: Local miscellaneous members who are Management and confidential employees; Local police members who are Management and confidential employees; Local fire members entering membership on or prior to June 8, 2012 who are Management and confidential employees; Local miscellaneous members represented by local 715, SEIU AFL- CIO and CLC; and Local police members represented by the Palo Alto Peace Officer's Association.). k. Section 20434.5 ("Local Fire Fighter" shall include any officer or employee of a fire department employed to perform hazardous materials services as described in Government Code Section 20434.5). I. Section 21548 (Pre -Retirement Option 2W Death Benefit) for local fire members only. m. Section 20475 (Different Level of Benefits). Section 21353 (2% @ 60 Full formula) is applicable to classic local miscellaneous members entering membership for the first time with this agency in the miscellaneous classification after July 17, 2010. Section 21363.1 (3% @ 55 Full formula) and Section 20037 (Three - Year Final Compensation) without Section 20692 (Employer Paid Member Contributions Converted to Payrate During the Final Compensation Period) are applicable to classic local fire members entering membership for the first time with this agency in the fire classification after June 8, 2012. Section 21363.1 (3% @ 55 Full formula) and Section 20037 (Three - Year Final Compensation) are applicable to classic local police members entering membership for the first time with this agency in the police classification after December 7, 2012. PLEASE DO NOT SIGN "EXHIBIT ONLY" n. Section 20516 (Employees Sharing Additional Cost): From October 14, 2017 and until June 9, 2018, .5% for local miscellaneous members in the Service Employees International Union (SEIU) Local 521. From and after October 14, 2017, 3% for local safety members in the International Association of Fire Fighters, Palo Alto Fire Chief's Association, Palo Alto Peace Officers' Association and Palo Alto Police Management Association. From and after June 9, 2018, 1% for local miscellaneous members in the Service Employees International Union (SEIU) Local 521. From June 9, 2018 and until the effective date of this amendment to contract, .5% for local miscellaneous members in the Unrepresented Management group. From June 9, 2018 and until the effective date of this amendment to contract, 1.5% for local safety members in the Unrepresented Safety Management group. From and after the effective date of this amendment to contract, 1% for local miscellaneous members in the Unrepresented Management group. From and after the effective date of this amendment to contract, 3% for local safety members in the Unrepresented Safety Management group. The portion of the employer's contribution that the member agrees to contribute from his or her compensation, over and above the member's normal contribution ("Cost Sharing Percentage"), shall not exceed the Employer Normal Cost Rate, as that rate is defined in the CaIPERS Actuarial Valuation for the relevant fiscal year. If the Cost Sharing Percentage will exceed the relevant Employer Normal Cost Rate, the Cost Sharing Percentage shall automatically be reduced to an amount equal to, and not to exceed, the Employer Normal Cost Rate for the relevant fiscal year. 14. Public Agency, in accordance with Government Code Section 20790, ceased to be an "employer" for purposes of Section 20834 effective on September 11, 1977. Accumulated contributions of Public Agency shall be fixed and determined as provided in Government Code Section 20834, and accumulated contributions thereafter shall be held by the Board as provided in Government Code Section 20834. 15. Public Agency shall contribute to said Retirement System the contributions determined by actuarial valuations of prior and future service liability with respect to local miscellaneous members and local safety members of said Retirement System. 16. Public Agency shall also contribute to said Retirement System as follows: a. A reasonable amount, as fixed by the Board, payable in one installment within 60 days of date of contract to cover the costs of administering said System as it affects the employees of Public Agency, not including the costs of special valuations or of the periodic investigation and valuations required by law. b. A reasonable amount, as fixed by the Board, payable in one installment as the occasions arise, to cover the costs of special valuations on account of employees of Public Agency, and costs of the periodic investigation and valuations required by law. 17. Contributions required of Public Agency and its employees shall be subject to adjustment by Board on account of amendments to the Public Employees' Retirement Law, and on account of the experience under the Retirement System as determined by the periodic investigation and valuation required by said Retirement Law. 18. Contributions required of Public Agency and its employees shall be paid by Public Agency to the Retirement System within fifteen days after the end of the period to which said contributions refer or as may be prescribed by Board regulation. If more or less than the correct amount of contributions is paid for any period, proper adjustment shall be made in connection with subsequent remittances. Adjustments on account of errors in contributions required of any employee may be made by direct payments between the employee and the Board. B. This amendment shall effective on the day of BOARD OF ADMINISTRA -i'�N CITY COUNCIL &. PUBLIC EMPLOYEES' Rt�TREMENT SYSTEM CITY OF PALO ALTO ��' O N. BY ,�<ti BY ,� ARNITA PAIGE, CHIEF PRESIDING OFFICCJ PENSION COF* ACTS AND PREFUNDING ,�' PROGRA VISION ..? PUBLIC EMPLOYEES' RETIREMENT SYSTEM �J �O �O ���' Witness D Q� Attest: ? Clerk AMENDMENT CaIPERS ID #6373437857 PERs-CON-702A City of Palo Alto (ID # 9543) City Council Staff Report Report Type: Action Items Meeting Date: 8/20/2018 City of Palo Alto Page 1 Summary Title: Stanford General Use Plan Title: Review and Comment on the Letter Sent to the Santa Clara County Board of Supervisors Regarding the Stanford General Use Plan (GUP) From: City Manager Lead Department: City Manager Recommendation Discuss and potentially forward additional Council comments to Santa Clara County regarding the Stanford University 2018 GUP Recirculated Draft Environmental Impact Report (RDEIR). Background Attached is the letter City Staff sent to the County on July 26 with our comments on the RDEIR. Staff drafted this letter based upon comments and discussion at the Council’s June 25, 2018 meeting. Staff submitted the City’s comment letter during the Council’s summer recess, in advance of the deadline established by the County. While that deadline has passed, City Council Members asked that tonight’s session be scheduled for Council to discuss and provide additional comments on the 2018 GUP and RDEIR. To assist with that discussion, attached are the City’s Letter and PAUSD’s letter to the County. Attachments: • Attachment A: Stanford Letter 6 PLAN: ING & COMMUNITY ENVIRONMENT CITY OF 250 Hamilton Avenue, 5th Floor PALO . Pa o Alto, CA 94301 ALTO 650.329.2441 July 24, 2018 Mr. David Rader Santa Clara County Planning Office County Government Center 70 W. Hedding Street, 7th Floor, East Wing San Jose, CA 95110 Dear Mr. Rader, Thank you for the opportunity to comment on the Stanford University 2018 GUP Recirculated Draft Environmental Impact Report (RDEIR). The City of Palo Alto supports Stanford University's (University) academic interests and recognizes and appreciates the positive contributions, direct and indirect, that the region, and specifically, Palo Alto, receives from the University's location. And, we believe that Palo Alto's reputation for its excellent residential neighborhoods, pedestrian -oriented commercial districts, spirit of innovation, community parks and schools, likewise enhance the University's appeal when recruiting Stanford Affiliatesl. Accordingly, these two entities and many of the surrounding communities, including the Santa Clara County, have shared interests ensuring any future University expansion adequately mitigates its impacts to surrounding communities. For Palo Alto, the RDEIR reveals that housing and transportation impacts are not adequately disclosed or mitigated, among other concerns. Environmental Consequences of Off -Campus Housing (New Significant & Unavoidable Impact) The RDEIR recognizes for the first time that the Stanford 2018 General Use Permit (Project) will result in a significant unavoidable impact to housing. It also notes that Palo Alto is disproportionally impacted by the housing demand that is generated by the Project. The document, however, fails to anticipate how Palo Alto and surrounding communities would be impacted by this housing demand. There is reference to University records that suggest Palo Alto historically accounts for 19% of the University's off -campus housing units, but it is unclear if the County projects this ratio to the Project's future housing demand. Rather than disclosing Project -related housing impacts in Palo Alto, the County suggests the City's own Comprehensive Plan accounted for the Project's population growth. This statement however, is unfounded and there is no evidence in the administrative record to support this assertion with respect to Palo Alto or the other surrounding cities. The Comprehensive Plan EIR's projections for cumulative growth in surrounding areas, for purposes of modeling traffic, air quality and greenhouse gas emissions, and noise, were sufficiently high to consider certain plans and projects including the Project's 3,150 t Includes students, faculty, staff, and other workers CityOfPaloAlto.org Printed with soy -based inks on 100% recycled paper processed without chlorine. units/beds. However, at the time of certification, the City was unaware of the additional 2,342 housings units now being reported in the RDEIR to support Stanford Affiliates. The City's Comprehensive Plan anticipates a housing goal of up to 4,420 units through 2030. Citing the City's Comprehensive Plan and suggesting it anticipated this additional population growth is not only wrong, failure to disclose impacts renders the document inadequate under the California Environmental Quality Act (CEQA). The RDEIR identifies one mitigation measure to address the description of the housing impact, which reads: local agencies in which off -campus housing would be located can and should mitigate the environmental impacts from off -campus housing to the extent feasible. (Emphasis Added) This is not a satisfactory mitigation under CEQA and irresponsibly shifts the burden from the University to Palo Alto and surrounding communities to mitigate the housing impact. The University has the land and resources to mitigate housing -related impacts and the County can and should require greater analysis of how induced population growth will impact Palo Alto and to require mitigation measures that reduce this impact. Examples of some reasonable mitigation measures include the following: • Require all or a greater portion of Stanford Affiliate housing to be located on -campus near services and major transit • For new academic and academic support facilities added within the City of Palo Alto's Sphere of Influence, require the University comply with the City's housing impact fee ordinance • Phase new academic and academic support facilities to coincide with the University's construction of new housing units to accommodate anticipated housing needs If the County determines recirculation is not required and pursues a Development Agreement with the University, as suggested by Robert Reidy, Vice President of Land, Buildings and Real Estate, in the July 23, 2018 edition of the Daily Post (page 8), City officials expect to have a role in negotiating outcomes with the County and University to represent Palo Alto interests. Housing Alternatives: Traffic and Air Quality The City appreciates the County's incorporation of the Housing Alternatives (Alternatives). The comments in this section relate primarily to Alternative A. The Alternative includes 2,342 additional on -campus housing units, but otherwise retains all other components of the Project. Operational emissions from the new housing units results in three new significant and unavoidable impacts related to air quality (PM10). Ninety-four percent of these emissions are attributed to mobile sources. The RDEIR provides an analysis that shows VMT will increase under the Alternative compared to the Project. Accordingly, the County finds that the Alternative will have greater impacts than the Project, result in greater VMT and worsen air quality. This comparative analysis is flawed, however, because the County has not conducted a similar review of the Project impacts associated with Stanford Affiliate off - campus housing. Instead of analyzing this impact, the County, as noted above, identified a new significant and unavoidable impact on the operation of off -site housing and stated this housing would result in unspecified off -site environmental impacts. Two of these impacts not specified and not disclosed or analyzed relates to VMT and air quality. The County asserts, in fact requires as a mitigation measure, that surrounding communities absorb the need for housing units generated by the Project. These housing units are principally located in Palo Alto, Menlo Park, and Mountain View. The University reports that nearly 30% of all off -campus housing is in these three communities. A small percentage is located on site, and the balance, is presumably distributed throughout the Bay Area. The County has not properly Page 2 of 5 analyzed the VMT and air quality impacts of locating 2,342 additional housing units so far from the University campus in the Project. Any comparison between the Project and the Alternatives is meaningless and misrepresents the environmental impacts to decision -makers. The RDEIR also notes concern that the University may not be able to achieve compliance with the No Net New Commute Trips (NNNCT) mitigation measure. While the City supports all efforts to reduce single occupancy trips and the University's efforts to reduce traffic to the campus core, the City remains concerned that NNNCT does not adequately address direct and indirect traffic -related impacts. The City reiterates its concerns regarding the methodology and feasibility of NNNCT specifically with respect to the lengthening of the peak period and definition of peak hours, direction of travel limitations, trip credits, and feasibility of mode split required to meet NNNCT standards. The City's traffic consultant's comments, dated November 13, 2017 and previously transmitted to the County during the DEIR comment period are hereby incorporated by reference. By not identifying the true traffic -related impacts of the Project, the burden of responsibility shifts from the University to Palo Alto and surrounding communities. Not only is this not equitable, it is inconsistent with CEQA. Annually, the City has a National Citizen Survey prepared to gauge resident satisfaction in several topic areas. Since 2003, near the approval of the 2000 GUP, trendline data shows a steady drop in resident satisfaction on travel by car in Palo Alto, with citywide residents in 2017 reporting ease of travel by car as good or excellent at 42% - the lowest level in fourteen years of data collection. For residents nearest the University, this figure drops to 31%. Development under the 2000 GUP and, as proposed with the 2018 GUP, has placed a significant strain on the City's transportation network. The RDEIR for the first time begins to recognize these impacts in its Alternatives analysis, but does not identify these impacts for the Project and does not provide sufficient measures to mitigate these impacts. While the City supports the concept behind NNNCT, it remains concerned that NNNCT does not fully account for traffic generated by the Project and is weak in identifying when mitigation measures would be employed. The University relies heavily on non -motorized trips to support its goals and the City encourages the following reasonable mitigation measures be required in an updated DEIR or included as conditions of approval: • The University shall provide up front funding to improve the efficiency, capacity and reliability of Caltrain and the Palo Alto Inter -Modal Transit Center, including fair share contributions to Caltrain grade separation • The University shall coordinate with the City of Palo Alto to support the City's Shuttle Program and enhance connections with the Marguerite Shuttle. • Academic, academic support facilities and housing unit production within the City of Palo Alto's Sphere of Influence shall make fair share payments to the City in line with the City's Transportation Impact Fee requirements Housing Alternatives: Aesthetics The City supports increased housing density on campus land for the University to mitigate its housing impact. However, the notion that future housing must be up to 134 feet tall adjacent El Camino Real exaggerates the impact of placing housing in the identified locations. The City encourages the County to take a closer look at how and where housing could be placed so it respects and preserves the surrounding character. If such further analysis does not result in meaningful changes, it is difficult to support the Page 3 of 5 conclusion based on information contained in the RDEIR that such housing would not degrade the existing visual character or quality of its surroundings. El Camino Real in Palo Alto has low profile buildings and construction contemplated in the Alternative would significantly alter the character of the street and by extension the character of Palo Alto. The need for modifications to the County's Plan for the El Camino Real Frontage to extend the height limit and reduce the building setback would have a dramatic impact on visual character and may impact scenic vistas. Clearly reasonable mitigation measures could be established that focus increases in height in locations most appropriate to accommodate it, building articulation, upper level setbacks and landscaping could be employed to minimize mass, and developing more site -specific regulations could be established to minimize impacts. Prior to adopting either Alternative, the City requests a more careful examination and mitigation of these potential impacts to Palo Alto. The DEIR should evaluate the placement of additional housing on campus in locations that would not impact the character of the surrounding area, for example, in more interior areas of the campus that are still outside of the academic core and where on -campus housing currently exists. Housing Alternatives: Project Objectives The County notes that the Alternative is not consistent with the Project objectives, which, in part, seeks to minimize potential negative impacts on the surrounding community; balance academic and academic support facilities with historical housing growth; and to prioritize the use of campus lands within unincorporated County land for academic space, students and faculty housing. The City supports efforts to minimize impacts to surrounding communities, but the RDEIR fails to disclose these impacts. Also, using the University's historic housing growth rates as a metric for future housing production artificially constrains housing development and pushes the burden to meet this need on adjacent jurisdictions. The City supports and appreciates the University's interests in cultivating a campus environment that focuses on education, student learning and discovery. The University has sufficient resources and land area to meet this objective and still off -set the impacts it generates. Housing Alternatives: Public Services Public Services include services provided to the University by the City of Palo Alto Fire and Police Departments. It should be noted that while the analysis of Fire Service assumes fire protection and emergency services from Palo Alto, these are contracted services with the University and will be reviewed periodically as development on campus occurs. While the Santa Clara County Sherriff's Department provides on campus patrol for the University, the Palo Alto Police Department provides dispatch services for the campus. They also provide parking enforcement on city streets impacted by University construction workers. Increased campus housing may require mitigation to include an annual evaluation of calls for service from the University and, if applicable, contribution to off -set unanticipated demand on City resources. PAUSD Impacts The City values and supports the educational opportunities offered by the University and the Palo Alto Unified School District (PAUSD). PAUSD has identified undisclosed impacts to local schools and inadequacies of the RDEIR. The Palo Alto City Council encourages the County and University to work closely with PAUSD to address these concerns and ensure the District maintains its neighborhood enrollment standards. The impacts to PAUSD, new school sites and funding for increased enrollment, should be more clearly disclosed to the public in an updated environmental document. Unmitigated impacts to the school district is a significant concern to the City. Page 4 of 5 Previous Comments on DEIR The City, by reference herein, reiterates the comments it made on the DEIR on January 29, 2018. The City appreciates the time of County staff, its consultants, and the Board of Supervisors in their consideration of the above comments. If further clarification is needed, or when appropriate, there is time to meet and discuss Palo Alto's interest further, please contact me. Sincerely, an Lait, AICP rim Director C. Palo Alto City Council James Keene, City Manager Ed Shikada, Assistant City Manager Molly Stump, City Attorney Catherine Palter, Associate Vice President at Stanford Meg Monroe, Management Specialist Page 5 of 5 goldfarb lipman attorneys M David Kroot Lynn Hutchins Karen M. Tiedemann Thomas H. Webber Dionne Jackson McLean Michelle D. Brewer Jennifer K. Be'l Robert C. Mills Isobel L. Brown James T. Diamond, Jr. Margaret F. Jung Heaiher J. Gould William F. DiCamillo Amy DeVaudreurl Barbara E. Kautz Erko Williams Orcharton Luis A. Rodriguez Rafael Yaquif n Celia W. Lee Dolores Bastian Dalton Joshua J. Mason Eric S. Phillips Elizabeth R. Klueck Jeffrey A. Slreiffer Daniel S. Maroon Justin D. Bigelow Nahai Hamidi Adler Aileen T. Nguyen Son Francisco 415 788-6336 Los Angeles 213 627-6336 Son Diego 619 239-6336 Goldfarb & Lipman LLP 1300 Clay Street, Eleventh Floor Oakland, California 94612 510 836-6336 July 23, 2018 David Rader Santa Clara County Planning Office County Government Center 70 W. Hedding Street, 7th Floor, East Wing San Jose, CA 95110 david.raderrii'pin.sccgov.org 6 via electronic mail Re: PAUSD Comments on Recirculated Portions of Draft EIR (SCH# 2017012022) for Stanford University 2018 General Use Permit Dear Mr. Rader: Our firm represents the Palo Alto Unified School District (PAUSD) in connection with the Environmental Impact Report (EIR) for Stanford University's 2018 General Use Permit application. As stated in the February 1, 2018 letter from PAUSD Interim Superintendent of Schools Karen Hendricks regarding the Draft EIR, the entirety of which is incorporated by reference as though fully set forth in this letter, PAUSD is one of the premier school districts in the United States, and it values both its ongoing partnership with Stanford University and also its role in serving Palo Alto, the Stanford University Campus, and portions of Los Altos hills and Portola Valley by providing high -quality K-12 education for the community's children. To that end, PAUSD appreciates that the County has provided opportunities to comment on the original Draft EIR for Stanford's project and the recirculated portions of the Draft EIR, which were revised in response to public comments and concerns regarding the project and the original Draft EIR (Recirculated Draft EIR). Unfortunately, the revisions discussed in the Recirculated Draft EIR do not correctly identify the scope of the project's potential impacts, properly mitigate the project's impacts, or fully inform the public and public agencies like PAUSD about the project's potential environmental effects. As more fully explained below, the Draft EIR, as revised and partially recirculated, remains legally inadequate. Accordingly, PAUSD requests that the County revise the Draft EIR to identify and mitigate all of the project's environmental impacts and that the County recirculate the entire Draft EIR so that the public has the opportunity to understand and meaningfully comment on the project's environmental effects. 1185%03\2399264.4 July 23, 2018 Page 2 I. New Impact 5-17 obfuscates the Project's scale and impacts. When "significant new information" is added to an EIR after the draft document is circulated, the California Environmental Quality Act (CEQA) requires the lead agency to recirculate the Draft EIR. (CEQA Guidelines § 15088.5(a).) "Significant new information" requiring recirculation includes the identification of new significant environmental impacts or when the draft EIR is "so fundamentally and basically inadequate and conclusory in nature that meaningful public review and comment were precluded." (Id. at § 15088.5(a)(1)-(4).) When revisions only affect one portion of an EIR, the lead agency is only required to recirculate the portions of the draft that are affected by the revisions. (Id. at 15088.5(c).) One of the reasons the County determined to recirculate portions of the Draft EIR is because it identified a new, previously undisclosed significant impact. Starting on page 2-7, the recirculated Draft EIR describes a new Environmental Impact related to the "Environmental Consequences of Stanford Providing Off -Campus Housing under the Proposed Project." Impact 5.17-1, which is identified as significant and unavoidable, simply concludes that "the construction and'or operation of off -site housing would result in off -site environmental impacts." (Recirculated Draft EIR, p. 2-7.) The Recirculated Draft EIR says that Stanford proposes to develop some unspecified amount of affordable housing within one-half mile of "any major transit stop . . . in the Bay Area," concluding that the impacts associated with this development would most directly and "disproportionally" affect Palo Alto, Menlo Park, and Mountain View. (Id.) Despite acknowledging this fact, the Recirculated Draft EIR makes no effort to quantify the effect this planned housing would have on any of the three identified communities. In the place of analysis, the Recirculated Draft EIR recites policies and impacts from the three cities' recent general plan updates. (Id. pp. 2-8 to 2-12.) This approach precludes any meaningful form of public review or comment on the scope of the impacts, and is "so fundamentally and basically inadequate and conclusory in nature" that the Recirculated Draft EIR must be revised and recirculated in its entirety. (CEQA Guidelines § 15088.5(a)(4).) Identifying that Stanford's project would result in "environmental impacts" is not a substitute for disclosing and analyzing those impacts themselves. The Recirculated Draft EIR leaves readers to guess how much housing is actually proposed under the project, where such housing would be developed, and what effect such housing would have on the sixteen environmental impact areas discussed in the Draft EIR. In essence, Impact 5.17-1 modifies the project description, because it changes the nature, scope, and scale of the project; however, it does so without providing any detail as to what are those precise changes. This approach violates CEQA's requirement that every EIR include a reasonably definite project description. "An accurate, stable and finite project description is the sine qua non of an informative and legally sufficient EIR." (Washoe Meadows Community v. Department of Parks and Recreation (2017) 17 1185\03\2399264.4 July 23, 2018 Page 3 Cal.App.5th 277, 287; citing County of Inyo v. City of Los Angeles (1977) 71 Cal.App.3d 185, 192-193.) Without an adequate project description and corresponding analysis of the specific environmental impacts of a project, the EIR fails to include relevant information and "precludes informed decisionmaking and informed public participation, thereby thwarting the statutory goals of the EIR process." (Washoe Meadows Community 17 Cal.App.5th at 290.) Therefore, to comply with CEQA, the County must revise the Draft EIR so that it discloses more details regarding Stanford's plan for off -campus housing in the project description. Then those details must be used as the basis for updated environmental analysis throughout the EIR, and the full document should be recirculated for public review. II. Mitigation Measure 5.17-1 is vague and unenforceable. The Recirculated Draft E1R adds a new mitigation measure, Mitigation Measure 5.17-1, in an attempt to address Impact 5.17-1. (Recirculated Draft EIR, p. 2-12.) Even if Impact 5.17-1 were a legitimate category of impact to discuss, the mitigation offered is so vague and indefinite that it amounts to improperly deferred mitigation. Any mitigation measures included in an EIR must be "fully enforceable through permit conditions, agreements, or other measures" to reduce the significance of an impact. (Federation of Hillside & Canyon Associations v. City of Los Angeles (2000) 83 Cal. App. 4th 1252, 1261.) Mitigation Measure 5-17.1 does not include any of these mechanisms to ensure it is enforceable. Instead, it says other local governments "can and should" mitigate the impacts caused by the project's off -campus housing development. This amounts to an improper deferral of mitigation, and an abdication of the responsibility to identify and incorporate feasible mitigation that would reduce a projects impacts in an EIR. Mitigation Measure 5.17-1 should be replaced with some definite action or actions that the County or Stanford can take that are enforceable and would reduce the severity of the project's impacts related to off -campus housing development, and the EIR should be recirculated. III. The two new alternatives distract from the public's ability to comment on the Project and Stanford's development plans. In addition to discussing Impact 5.17-1, the Recirculated Draft EIR introduces two new alternatives: an increased on -campus housing option and an increased off -campus housing option. As discussed above, the project itself has not been revised to specify what level of off -campus development is associated with the project, so it is unclear how to evaluate how these two alternatives compare with the project itself. I I85.03\2399264.4 July 23, 2018 Page 4 By providing hundreds of pages of new information on alternatives, but not fully describing the project itself, the Recirculated Draft EIR improperly "presents the public with a moving target and requires a commenter to offer input on a wide range of alternatives that may not be in any way germane to the project ultimately approved." (Washoe Meadows Community 17 Cal.App.5th at 288.) When the EIR is revised and recirculated as requested above, it should be clearer about what development scenarios are feasible and acceptable to Stanford so that it is not necessary to review different sets of impacts, requiring different mitigation measures, for projects with vastly different approaches and development footprints that may never come to fruition. IV. The EIR understates current and future school enrollment impacts. The Recirculated Draft EIR makes the same mistake the Draft EIR made by relying on outdated student generation rates to project future PAUSD school enrollment demand created by Stanford's development. (Recirculated Draft EIR p. 2-161.) As discussed in PAUSD's February 1, 2018 letter regarding the Draft EIR, current student generation rates range from 0.66 to 0.98 students per household, depending on the type of housing being developed. Because the housing proposed as part of the project and the alternatives in the Recirculated Draft EIR focus on graduate student, faculty, and staff housing (groups that tend to have school age children), it is appropriate to use the 0.98 student generation rate, which would provide a conservative estimate of the extent of the environmental impacts. At a minimum, a student generation rate of 0.66 should be used, although this could cause environmental impacts to be undisclosed or understated. The Recirculated Draft EIR uses an even lower figure: a student generation rate of 0.5. (Recirculated Draft EIR p. 2-161.) This lower figure understates future enrollment demand by almost 50 percent, and every attendant impact — from the need to new facilities to the traffic associated with taking twice as many students to school — is also correspondingly understated. Accordingly, the EIR should be revised to disclose the project's and the alternatives' actual impact on PAUSD facilities and related impacts using more recent and accurate enrollment projection data. V. The EIR does not attempt to fully mitigate impacts related to school operations. Throughout the Draft EIR and the Recirculated Draft EIR, analysis of school impacts are dismissed as being less than significant because Stanford would commit to paying the school impact fees required by Government Code section 65996. (See, e.g., Recirculated Draft EIR pp. 2-160 to 2-162 and 2-363 to 2-366.) It is correct that the Government Code caps development fees, and that the collection of such fees is 1185 03\2399264 4 July 23, 2018 Page 5 adequate mitigation for CEQA purposes regarding impacts on school facilities and the need to develop new school facilities. However, the EIR must still examine environmental impacts that affect school operations but are not directly related to the need for new school facilities. (See Chawanakee Unified School Dist. v. County of :Madera (2011) 196 Cal.App.4th 1016, 1029.) For example, the two schools that would serve development on Stanford campus, Escondido Elementary and Nixon Elementary, have capacities of 595 and 460 students, respectively. For the 2017-2018 PAUSD academic year, Escondido Elementary enrolled 537 students, and Nixon Elementary enrolled 441 students. Potentially, new students could be accommodated at Barron Park Elementary, which has capacity for 380 students and a current enrollment of 255 students. However, sending students from the Stanford campus to Barron Park Elementary, which is further from campus and not a "neighborhood school," would directly contravene PAUSD Board Policy 7110 (BP 7110). BP 7110 calls for PAUSD to "provide sufficient capacity so new student residents and siblings have predictable and routine access to neighborhood schools." In addition, BP 7110 says that PAUSD shall "plan and preserve educationally effective school sizes throughout the district that promote positive student connections and community, strengthen adult -student relationships, and build a sense of individual belonging in the schools." PAUSD places a high value on this policy and historically has made efforts to maintain a connection between a child's place of residence and place of education. For example, following the development of Stanford's University Terrace residential project, Barron Park Elementary had the most capacity for new enrollment, but it is further from the development than Nixon Elementary. Rather than reassigning existing students, disrupting their connections to school, or forcing new students to travel outside their neighborhood to attend school, PAUSD absorbed the new students into Nixon Elementary, bringing it even closer to capacity. Moreover, reassigning students to schools outside of their residential neighborhoods would likely result in secondary environmental impacts. For example, shifting students from Escondido Elementary or Nixon Elementary to Barron Park Elementary would require students to cross Page Mill Road, exacerbating traffic impacts (and the attendant noise, greenhouse gas, and air quality impacts) and creating safety concerns by increasing the potential for traffic accidents involving pedestrians. The Recirculated Draft EIR claims that PAUSD could "reactivate" other existing school sites or use school properties leased to other providers, including the Ventura site, to meet the demand created by new students. (Recirculated Draft EIR p. 2-161.) As an initial matter, the Ventura site is not owned by PAUSD, and the EIR should be corrected to reflect this fact. Furthermore, none of the sites or schools listed in the Recirculated Draft EIR are located in the neighborhoods where new development is proposed. Even if it were feasible to use sites identified in the Recirculated Draft EIR, assigning children to schools outside of their neighborhoods would result in the same increase in traffic, noise, greenhouse gas, and air quality impacts discussed above. Despite these H85,0312399264 4 July 23, 2018 Page 6 facts, the Recirculated Draft EIR makes no effort to address these secondary impacts, even though case law makes clear that "these types of impacts to the nonschool physical environment are caused indirectly by the project and should be considered in the EIR." (Chawanakee Unified School Dist. 196 Cal.App.4th at 1029.) Similarly, the Recirculated Draft EIR makes no effort to address how development fees would be used or analyze the environmental effects associated with developing new PAUSD facilities that would be required to serve Stanford's development. In order to maintain PAUSD neighborhood enrollment standards, for every 400-500 new elementary students generated by Stanford, PAUSD would need to construct an additional neighborhood school, with each school requiring a three to four -acre site. New schools would need to be carefully sited to ensure they serve neighborhoods where they are needed and maintain effective classroom sizes in accordance with BP 7110, but their development would be sure to influence traffic patterns, increasing vehicle miles traveled throughout the City and associated impacts such as greenhouse gas emissions and air quality. However the Recirculated Draft EIR ignores the secondary potential environmental impacts associated with this new development that would be needed as a direct result of Stanford's development. In addition to failing to discuss the indirect environmental effects of the project or the alternatives, the Recirculated Draft EIR ignores Stanford's impact on PAUSD's ongoing operations. Using the conservative student generation rate of 0.98 discussed above, the 2,892 additional units created under Additional Housing Alternative A would result in 2,834 additional students enrolling in PAUSD (nearly twice as much as the Recirculated Draft EIR discloses). The cost of educating these additional students generated by Stanford's development would exceed $51 million per year, maintaining PAUSD's current expenditure per student. PAUSD is a "basic aid" school district, and so it get very limited state funding; its operations are essentially funded directly by property taxes in Palo Alto. Much of Stanford's development is on land that is exempt from paying property tax, yet the EIR and other project documentation is silent regarding how PAUSD and the people of Palo Alto can be expected to educate the incoming students created by Stanford's development while maintaining the level of excellence for which PAUSD is known. Therefore, the EIR must be revised to include analysis of the project's environmental effects and recirculated so that the public has the opportunity to consider and comment on the development's full range impacts. **** As demonstrated throughout this letter, the Recirculated Draft EIR does not yet provide a legally adequate analysis of the project's or the alternatives' environmental effects. The EIR must be revised to clarify what Stanford intends to develop, disclose the full nature of the project's impacts, and include legally adequate mitigation for those impacts. 1185 03\2399264 4 July 23, 2018 Page 7 We hope that the EIR can be revised to address these concerns and recirculated so that decision -makers and the public can understand the true impacts of the Stanford's proposal before deciding to support its approval. Thank you for your consideration. Very truly yours, REN NI. TIEDEMANN cc: Palo Alto Unified School District Board of Trustees Dr. Don Austin, Superintendent 1185103l2399264 4